THE AAL MUTUAL FUNDS
                          INVESTMENT ADVISORY AGREEMENT

     AGREEMENT  made this 28th day of  November,  1990,  by and  between THE AAL
MUTUAL FUNDS (the "Trust"),  a Massachusetts  Business  Trust,  and AAL ADVISORS
INC. (the "Adviser").

                                  WITNESSETH:

     In consideration of the mutual promises and agreements herein contained and
other  good  and  valuable  consideration,   the  receipt  of  which  is  hereby
acknowledged, it is hereby agreed by and between the parties hereto as follows:

1.   In General

     The Trust hereby  appoints the Adviser to act as investment  adviser to the
Trust  with  respect  to its  series of shares  described  on Exhibit A attached
hereto.  Each  series  is  referred  to  herein  individually  as "a  Fund"  and
collectively  as "the  Funds." The Adviser  agrees,  all as more fully set forth
herein,  to  provide  professional  investment  management  with  respect to the
investment  of the assets of each Fund and to supervise and arrange the purchase
and sale of  securities  and other assets held in the portfolio of each Fund and
generally administer the affairs of the Trust. The Adviser may engage, on behalf
of the  Trust  or any  Fund,  the  services  of a  Sub-Adviser,  subject  to any
limitations imposed by the Investment Company Act of 1940 (the "Act").

2.   Duties and  Obligations  of the Adviser With Respect to  Management  of the
     Trust

     (a)  Subject to the  succeeding  provisions  of this section and subject to
          the direction  and control of the Board of Trustees of the Trust,  the
          Adviser (and the Sub-Adviser when authorized by the Adviser), as agent
          and attorney-in-fact with respect to the Trust, is authorized,  in its
          discretion and without prior consultation with the Trust to:

          (i)  Buy, sell,  exchange,  convert,  lend and otherwise  trade in any
               stocks, bonds and any other securities or assets; and

          (ii) Place  orders  and  negotiate  the  commissions  (if any) for the
               execution of  transactions  in securities or other assets with or
               through such  brokers,  dealers,  underwriters  or issuers as the
               Adviser may select.

     (b)  Any  investment  purchases  or sales  made by the  Adviser  and/or any
          Sub-Adviser  shall at all times conform to, and be in accordance with,
          any requirements  imposed by: (1) the provisions of the Act and of any
          rules or regulations  in force  thereunder;  (2) any other  applicable
          provisions of law; (3) the provisions of the  Declaration of Trust and
          By-Laws of the Trust as amended  from time to time;  (4) any  policies
          and  determinations of the Board of Trustees of the Trust; and (5) the
          fundamental  policies of the Trust,  as reflected in its  Registration
          Statement  under the Act,  or as  amended by the  shareholders  of the
          Trust.

     (c)  The  Adviser  shall also  administer  the affairs of the Trust and, in
          connection  therewith,  shall be responsible  for (i)  maintaining the
          Trust's books and records  (other than  financial or accounting  books
          and  records  maintained  by any  accounting  services  agent and such
          records  maintained by the Trust's custodian or transfer agent);  (ii)
          overseeing the Trust's  insurance  relationships;  (iii) preparing for
          the Trust (or assisting counsel and/or auditors in the preparation of)
          all required tax returns,  proxy statements and reports to the Trust's
          shareholders  and Trustees  and reports to and other  filings with the
          Securities and Exchange  Commission and any other governmental  agency
          (the Trust  agreeing  to supply or cause to be supplied to the Adviser
          all necessary  financial and other  information in connection with the
          foregoing);  (iv)  preparing such  applications  and reports as may be
          necessary to register or maintain the Trust's  registration and/or the
          registration  of the shares of the Funds under the securities or "Blue
          Sky" laws of the various states selected by the Trust's distributor (a
          Fund or Funds agreeing to pay all filing fees or other similar fees in
          connection  therewith);  (v)  responding  to all inquiries or to other
          communications  of  shareholders,  if any,  which are  directed to the
          Adviser,  or if any such inquiry or  communication is more properly to
          be responded to by the Trust's custodian, transfer agent or accounting
          services agent, overseeing their response thereto; (vi) overseeing all
          relationships  between  the  Trust  and  its  custodian(s),   transfer
          agent(s) and accounting  services agent(s),  including the negotiation
          of  agreements  and  the   supervision  of  the  performance  of  such
          agreements;  and (vii)  authorizing and directing any of the Adviser's
          directors,  officers and  employees  who may be elected as Trustees or
          officers  of the Trust to serve in the  capacities  in which  they are
          elected.  All  services  to be  furnished  by the  Adviser  under this
          Agreement  may be  furnished  through  the  medium  of any  directors,
          officers or employees of the Adviser.

     (d)  The Adviser  shall give the Trust the benefit of its best judgment and
          effort in  rendering  services  hereunder.  In the  absence of willful
          misfeasance,  bad faith,  gross  negligence  or reckless  disregard of
          obligations or duties ("disabling  conduct")  hereunder on the part of
          the  Adviser  (and  its  officers,   directors,   agents,   employees,
          controlling  persons,  shareholders  and any  other  person  or entity
          affiliated  with the  Adviser)  the  Adviser  shall not be  subject to
          liability to the Trust or to any  shareholder of the Trust for any act
          or omission in the course of, or  connected  with  rendering  services
          hereunder,  including  without  limitation,  any error of  judgment or
          mistake of law or for any loss  suffered by any of them in  connection
          with the matters to which this  Agreement  is  related,  except to the
          extent specified in Section 36(b) of the Act concerning loss resulting
          from a breach  of  fiduciary  duty  with  respect  to the  receipt  of
          compensation  for services.  Except for such  disabling  conduct,  the
          Trust  shall  indemnify  the  Adviser  (and its  officers,  directors,
          agents,  employees,  controlling  persons,  shareholders and any other
          person or  entity  affiliated  with the  Adviser)  from any  liability
          arising from the  Adviser's  conduct under the Agreement to the extent
          permitted by the Declaration of Trust and applicable law.

     (e)  Nothing in this Agreement shall prevent the Adviser or any "affiliated
          person"  (as  defined  in the  Act)  of the  Adviser  from  acting  as
          investment  adviser or manager and/or  principal  underwriter  for any
          other person,  firm or  corporation  and shall not in any way limit or
          restrict  the  Adviser  or any such  affiliated  person  from  buying,
          selling or trading any securities for its or their own accounts or the
          accounts  of  others  for  whom it or they  may be  acting,  provided,
          however,  that the Adviser expressly represents that it will undertake
          no  activities  which,  in its  judgment,  will  adversely  affect the
          performance of its obligations to the Trust under this Agreement.

     (f)  It is  agreed  that  the  Adviser  shall  have  no  responsibility  or
          liability for the accuracy or completeness of the Funds'  Registration
          Statement  under  the Act or the  Securities  Act of 1933  except  for
          information supplied by the Adviser for inclusion therein.

3.   Broker-Dealer Relationships

     In  connection  with its  duties  set  forth in  Section  2(a)(ii)  of this
Agreement to arrange for the purchase  and sale of  securities  and other assets
held by each Fund by placing  purchase and sale orders for the Fund, the Adviser
and/or any Sub-Adviser shall select such broker-dealers ("brokers") as shall, in
the Adviser's or  Sub-Adviser's  judgment,  implement the policy of the Trust to
achieve  "best  execution,"  i.e.,  prompt and  efficient  execution at the most
favorable net price. In making such selection, the Adviser and/or Sub-Adviser is
authorized to consider the reliability, integrity and financial condition of the
broker.  The Adviser and/or  Sub-Adviser is also authorized to consider  whether
the broker provides brokerage and/or research services to the Trust and/or other
accounts of the Adviser or Sub-Adviser. The commissions paid to such brokers may
be higher than another  broker would have charged is a good faith  determination
is made by the Adviser and/or  Sub-Adviser  that the commission is reasonable in
relation to the  services  provided,  viewed in terms of either that  particular
transaction or the Adviser's or Sub-Adviser's overall responsibilities as to the
accounts as to which it  exercises  investment  discretion.  The Adviser  and/or
Sub-Adviser shall use its judgment in determining that the amount of commissions
paid are reasonable in relation to the value of brokerage and research  services
provided and need not place or attempt to place a specific  dollar value on such
services or on the portion of commission  rates  reflecting  such  services.  To
demonstrate that such determinations were in good faith, and to show the overall
reasonableness  of commissions  paid, the Adviser  and/or  Sub-Adviser  shall be
prepared to show that  commissions  paid (i) were for purposes  contemplated  by
this Agreement;  (ii) provide lawful and  appropriate  assistance to the Adviser
and/or Sub-Adviser in the performance of its  decision-making  responsibilities;
and (iii) were within a  reasonable  range as  compared to the rates  charged by
qualified  brokers  to other  institutional  investors  as such rates may become
known from available  information.  The Trust recognizes that, on any particular
transaction, a higher than usual commission may be paid due to the difficulty of
the transaction in question.  The Adviser and/or  Sub-Adviser is also authorized
to consider  sales of shares as a factor in the  selection of brokers to execute
brokerage  and  principal  transactions,  subject to the  requirements  of "best
execution," as defined above.


4.   Allocation of Expenses

     The  Adviser  agrees  that it will  furnish  the  Trust,  at the  Adviser's
expense,  with all office space,  facilities,  equipment and clerical  personnel
necessary  for carrying out its duties  under this  Agreement.  The Adviser will
also pay all  compensation of all Trustees,  officers and employees of the Trust
who are affiliated persons of the Adviser.  All costs and expenses not expressly
assumed  by the  Adviser  under  this  Agreement  shall  be paid  by the  Trust,
including,   but  not  limited  to  (i)  interest  and  taxes;   (ii)  brokerage
commissions;  (iii) insurance  premiums;  (iv)  compensation and expenses of its
Trustees  other  than those  affiliated  with the  Adviser;  (v) legal and audit
expenses; (vi) fees and expenses of the Trust's custodian, shareholder servicing
or transfer agent and accounting  services agent; (vii) expenses incident to the
issuance of its shares,  including stock  certificates and issuance of shares on
the payment of, or reinvestment of, dividends; (viii) fees and expenses incident
to the  registration  under Federal or state securities laws of the Trust or its
shares;  (ix) expenses of preparing,  printing and mailing  reports and notices,
proxy material and  prospectuses  to  shareholders  of the Trust;  (x) all other
expenses incidental to holding meetings of the Trust's  shareholders;  (xi) dues
or assessments of or  contributions to the Investment  Company  Institute or any
successor or other industry  association;  (xii) such non-recurring  expenses as
may arise,  including  litigation  affecting the Trust and the legal obligations
which the Trust may have to indemnify  its  officers  and Trustees  with respect
thereto; and (xiii) all expenses which the Trust or a Fund agrees to bear in any
distribution  agreement  or in any  plan  adopted  by the  Trust  and/or  a Fund
pursuant to Rule 12b-1 under the Act.

5.   Compensation of the Adviser

     (a)  The Trust  agrees to pay the Adviser and the Adviser  agrees to accept
          as full compensation for all services rendered by the Adviser as such,
          an annual  management fee, payable monthly and computed on the average
          daily net  asset  value of each  Fund as shown on  Exhibit A  attached
          hereto.

     (b)  In the event the expenses of a Fund (including the fees of the Adviser
          and  amortization of organization  expenses,  but excluding  interest,
          taxes, brokerage commissions, extraordinary expenses and sales charges
          and  distribution  fees) for any fiscal  year exceed the limits set by
          applicable  regulations of state securities  commissions,  the Adviser
          will  reduce  its fee by up to the  amount  of such  excess.  Any such
          reductions are subject to readjustment during the year. The payment of
          the  management  fee  at the  end of any  month  will  be  reduced  or
          postponed or, if necessary, a refund will be made to a Fund so that at
          no time will there be any accrued,  but unpaid,  liability  under this
          expense limitation.

6.   Duration and Termination

     (a)  this  Agreement  shall go into effect for The AAL Capital Growth Fund,
          The AAL Income Fund,  The AAL Municipal  Bond Fund,  and The AAL Money
          Market Fund on the first business day following  approval by a vote of
          a  "majority"  (as  defined  in the  Act)  of the  outstanding  voting
          securities  of the  Fund,  replacing  any  prior  agreement;  and  for
          additional  funds initiated after the date of this Agreement,  on such
          date as specified on Schedule A hereto;  and shall,  unless terminated
          as hereinafter  provided,  continue in effect  thereafter from year to
          year, but only so long as such continuance is specifically approved at
          least  annually by a majority of the Trust's Board of Trustees,  or by
          the vote of the holders of a "majority" (as defined int he Act) of the
          outstanding  voting  securities  of the Fund,  and, in either  case, a
          majority  of the  Trustees  who are not parties to this  Agreement  or
          "interested persons" (as defined in the Act) of any such party cast in
          person at a meeting called for the purpose of voting on such approval.

     (b)  This  Agreement  may be  terminated by the Adviser at any time without
          penalty upon giving the Trust sixty (60) days'  written  notice (which
          notice may be waived by the Trust) and may be  terminated by the Trust
          at any time without  penalty upon giving the Adviser  sixty (60) days'
          written  notice (which notice may be waived by the Adviser),  provided
          that such  termination  by the Trust  shall be directed or approved by
          the vote of a majority of all of its Trustees in office at the time or
          by the vote of the  holders of a majority  of the  outstanding  voting
          securities  of the Trust or with  respect to any Fund by the vote of a
          majority of the outstanding voting shares of such Fund. This Agreement
          shall  automatically  terminate in the event of its  "assignment"  (as
          defined in the Act).

     (c)  The  Trust  hereby  agrees  that if (i) the  Adviser  ceases to act as
          investment  adviser to the Trust and (ii) continued use of the Trust's
          present  name would create  confusion in the context of the  Adviser's
          business or that of Aid  Association  for Lutherans or its affiliates,
          the Trust  will use its best  efforts  to change  its name in order to
          delete the abbreviation "AAL" from its name.

7.   Agreement Binding Only on Trust Property

     The Adviser  understands  that the  obligations  of this  Agreement are not
binding upon any shareholder of the Trust personally,  but bind only the Trust's
property;  the Adviser  represents  that it has notice of the  provisions of the
Trust's  Declaration  of Trust  disclaiming  shareholder  liability  for acts or
obligations of the Trust.



     IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument
to be  executed  by duly  authorized  persons  and  their  seals to be  hereunto
affixed, all as of the day and year first above written.

ATTEST:                                      THE AAL MUTUAL FUNDS


/s/Robert G. Same                            /s/John H. Pender
---------------------------                  ---------------------------
Robert G. Same, Secretary                    John H. Pender, President





ATTEST:                                      AAL ADVISORS INC.


/s/Robert G. Same                            /s/Rochelle Lamm Wallach
---------------------------                  ---------------------------
Robert G. Same, Secretary                    Rochelle Lamm Wallach, President





                                    EXHIBIT A
                                       TO
               THE AAL MUTUAL FUNDS INVESTMENT ADVISORY AGREEMENT
                            (DATED NOVEMBER 28, 1990)


1.       The AAL Capital Growth Fund (effective November 28, 1990)

         The management fee for this Fund, calculated in accordance with
         paragraph 5 of The AAL Mutual funds Investment Advisory Agreement,
         shall be at the annual rate of 0.75 of 1% on the first $250 million of
         average daily net assets and 0.65 of 1% on average daily net assets
         over $250 million.

2.       The AAL Income Fund (effective December 21, 1990)

         The management fee for this Fund, calculated in accordance with
         paragraph 5 of The AAL Mutual Funds Investment Advisory Agreement,
         shall be at the annual rate of 0.60 of 1% on the first $250 million of
         average daily net assets and 0.525 of 1% on average daily net assets
         over $250 million.

3.       The AAL Municipal Bond Fund (effective December 21, 1990)

         The management fee for this Fund, calculated in accordance with
         paragraph 5 of The AAL Mutual Funds Investment Advisory Agreement,
         shall be at the annual rate of 0.60 of 1% on the first $250 million of
         average daily net assets and 0.525 of 1% on average daily net assets
         over $250 million.

4.       The AAL Money Market Fund (effective December 21, 1990)

         The management fee for this Fund, calculated in accordance with
         paragraph 5 of The AAL Mutual Funds Investment Advisory Agreement,
         shall be at the annual rate of 0.50 of 1% on the first $500 million of
         average daily net assets and 0.45 of 1% on average daily net assets
         over $500 million.

5.       The AAL U.S. Government Zero Coupon Target Fund, Series 2001
         (effective November 13, 1991)

         the management fee for this Fund, calculated in accordance with
         paragraph 5 of The AAL Mutual Funds Investment Advisory Agreement,
         shall be at the annual rate of 0.50 of 1% of average daily net assets.

6.       The AAL U.S. Government Zero Coupon Target Fund, Series 2006
         (effective November 13, 1991)

         The management fee for this Fund, calculated in accordance with
         paragraph 5 of The AAL Mutual Funds Investment Advisory Agreement,
         shall be at the annual rate of 0.50 of 1% of average daily net assets.





                                AMENDMENT NO. 12
                                       TO
                          INVESTMENT ADVISORY AGREEMENT


The Investment Advisory Agreement between The AAL Mutual Funds and AAL Capital
Management Corporation (f/k/a AAL Advisors, Inc.), effective November 28, 1990,
is hereby amended, effective December 31, 1999, as follows:

1.            Schedule A attached to the Investment Advisory Agreement is
              modified to add The AAL Large Company Index Fund, The AAL Mid Cap
              Index Fund, and The AAL Bond Index Fund.

A revised Exhibit A, effective as of the date of this Amendment No. 12 is
attached and incorporated herein.

IN WITNESS WHEREOF the parties hereto have caused this Amendment to be signed by
the respective officers effective as of December 31, 1999.


ATTEST:                                      THE AAL MUTUAL FUNDS


By: /s/Frederick D. Kelsven                  By: /s/Robert G. Same
    ---------------------------                  ---------------------------
    Frederick D. Kelsven                         Robert G. Same



ATTEST:                                      AAL CAPITAL MANAGEMENT CORPORATION


By: /s/Frederick D. Kelsven                  By: /s/Robert G. Same
    ---------------------------                  ---------------------------
    Frederick D. Kelsven                         Robert G. Same






                                    EXHIBIT A
                                       TO
               THE AAL MUTUAL FUNDS INVESTMENT ADVISORY AGREEMENT
                             Dated November 28, 1990

1.   The AAL Capital Growth Fund (effective September 1, 1998)

The management fee for this Fund, calculated in accordance with paragraph 5 of
The AAL Mutual Funds Investment Advisory Agreement, shall be at the annual rate
of 0.65 of 1% on the first $500 million of average daily net assets, 0.575 of 1%
on the next $500 million of average daily net assets, and 0.50 of 1% of average
daily net assets over $1 billion.

2.   The AAL Bond Fund (effective September 1, 1998)

The management fee for this Fund, calculated in accordance with paragraph 5 of
The AAL Mutual Funds Investment Advisory Agreement, shall be at the annual rate
of 0.45 of 1% of average daily net assets.

3.   The AAL Municipal Bond Fund (effective September 1, 1998)

The management fee for this Fund, calculated in accordance with paragraph 5 of
The AAL Mutual Funds Investment Advisory Agreement, shall be at the annual rate
of 0.45 of 1% of average daily assets.

4.   The AAL Money Market Fund (effective date December 21, 1990)

The management fee for this Fund, calculated in accordance with paragraph 5 of
The AAL Mutual Funds Investment Advisory Agreement, shall be at the annual rate
of 0.50 of 1% on the first $500 million of average daily net assets and 0.45 of
1% of average daily net assets over $500 million.

5.   The AAL U.S.  Government  Zero Coupon Target Fund,  Series 2001  (effective
     November 13, 1991)

The management fee for this Fund, calculated in accordance with paragraph 5 of
The AAL Mutual Funds Investment Advisory Agreement, shall be at the annual rate
of 0.50 of 1% of average daily net assets.

6.   The AAL U.S.  Government  Zero Coupon Target Fund,  Series 2006  (effective
     November 13, 1991)

The management fee for this Fund, calculated in accordance with paragraph 5 of
The AAL Mutual Funds Investment Advisory Agreement, shall be at the annual rate
of 0.50 of 1% of average daily net assets.

7.   The AAL Mid Cap Stock Fund (effective September 1, 1998)

The management fee for this Fund, calculated in accordance with paragraph 5 of
The AAL Mutual Funds Investment Advisory Agreement, shall be at the annual rate
of 0.70 of 1% on the first $200 million of average daily net assets and 0.65 of
1% of average daily net assets over $200 million.

8.   The AAL Equity Income Fund (f/k/a Utilities Fund)  (effective  September 1,
     1998)

The management fee for this Fund, calculated in accordance with paragraph 5 of
The AAL Mutual Funds Investment Advisory Agreement, shall be at the annual rate
of 0.45 of 1% of average daily net assets.

9.   The AAL International Fund (effective November 1, 1998)

The management fee for this Fund, calculated in accordance with paragraph 5 of
The AAL Mutual Funds Investment Advisory Agreement, shall be at the annual rate
of 0.65 of 1% on the first $50 million of average daily net assets and .60 of 1%
of average daily net assets over $50 million.

10.  The AAL Small Cap Stock Fund (effective September 1, 1998)

The management fee for this Fund, calculated in accordance with paragraph 5 of
The AAL Mutual Funds Investment Advisory Agreement, shall be at the annual rate
of 0.70 of 1% on the first $200 million of average daily net assets and 0.65 of
1% of average daily net assets over $200 million.

11.  The AAL High Yield Bond Fund (effective September 1, 1998)

The management fee for this Fund, calculated in accordance with paragraph 5 of
The AAL Mutual Funds Investment Advisory Agreement, shall be at the annual rate
of 0.55 of 1% of average daily net assets.

12.  The AAL Balanced Fund (effective September 1, 1998)

The management fee for this Fund, calculated in accordance with paragraph 5 of
The AAL Mutual Funds Investment Advisory Agreement, shall be at the annual rate
of 0.55 of 1% of average daily net assets.

13.  The AAL Large Company Index Fund (effective December 31, 1999)

The management fee for this Fund, calculated in accordance with paragraph 5 of
The AAL Mutual Funds Investment Advisory Agreement, shall be at an annual rate
of 0.25 of 1% on the first $50 million of average daily net assets and 0.175 of
1% of average daily net assets over $50 million.

14.  The AAL Mid Cap Index Fund (effective December 31, 1999)

The management fee for this Fund, calculated in accordance with paragraph 5 of
The AAL Mutual Funds Investment Advisory Agreement, shall be at an annual rate
of 0.25 of 1% on the first $50 million of average daily net assets and 0.20 of
1% of average daily net assets over $50 million.

15.  The AAL Bond Index Fund (effective December 31, 1999)

The management fee for this Fund, calculated in accordance with paragraph 5 of
The AAL Mutual Funds Investment Advisory Agreement, shall be at an annual rate
of 0.25 of 1% on the first $50 million of average daily net assets and 0.175 of
1% of average daily net assets over $50 million.