1933 Act Registration No. 33-12911
                                              1940 Act Registration No. 811-5075

             As filed with the Securities and Exchange Commission on
                                 June 29, 2000.
--------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM N-1A

                        REGISTRATION STATEMENT UNDER THE
                             SECURITIES ACT OF 1933

                          Pre-Effective Amendment No.
                         Post-Effective Amendment No. 40         X

                                     and/or

                        REGISTRATION STATEMENT UNDER THE
                         INVESTMENT COMPANY ACT OF 1940

                                 Amendment No. 42                X

                              THE AAL MUTUAL FUNDS
               (Exact name of registrant as specified in charter)


                             222 WEST COLLEGE AVENUE
                         APPLETON, WISCONSIN 54919-0007
               (Address of Principal Executive Offices)(Zip Code)

       Registrant's Telephone Number, including Area Code: (920) 734-5721

                                 ROBERT G. SAME
                                    President
                              THE AAL MUTUAL FUNDS
                             222 WEST COLLEGE AVENUE
                         APPLETON, WISCONSIN 54919-0007
                     (Name and Address of Agent for Service)

Approximate Date of Proposed Public Offerings:  Continuous

It is proposed that this filing will become effective:

          immediately upon filing pursuant to paragraph (b):
     X    on July 1, 2000 pursuant to paragraph (b)
          60 days after filing pursuant to paragraph (a)(1)
          on July 1, 2000 pursuant to paragraph (a)(1)
          75 days after filing pursuant to paragraph (a)(2)
          on July 1, 2000 pursuant to paragraph (a)(2) of Rule 485.

If appropriate, check the following box:

     this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

<PAGE>


                              THE AAL MUTUAL FUNDS

                      EQUITY AND BALANCED FUNDS PROSPECTUS
                           CLASS A AND CLASS B SHARES
                                  JULY 1, 2000


                          The AAL Technology Stock Fund

                         The AAL Aggressive Growth Fund

                          The AAL Small Cap Stock Fund

                           The AAL Mid Cap Stock Fund

                           The AAL International Fund

                           The AAL Capital Growth Fund

                           The AAL Equity Income Fund

                              The AAL Balanced Fund



As with other mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.



<PAGE>





                                TABLE OF CONTENTS
                                                                    PAGE
RISK/RETURN INFORMATION: INVESTMENT PROGRAMS AND PERFORMANCE


         PROSPECTUS SUMMARY                                           2
         Reading the Prospectus                                       2
         The Funds                                                    2
         Principal Risks Common to All Funds                          2
         Class A Versus Class B Shares                                3
         Institutional Shares                                         3

         THE AAL TECHNOLOGY STOCK FUND                                4
         Investment Objective                                         4
         Principal Investment Strategies                              4
         Principal Risks                                              4
         Past Performance                                             5
         Expenses                                                     6

         THE AAL AGGRESSIVE GROWTH FUND                               7
         Investment Objective                                         7
         Principal Investment Strategies                              7
         Principal Risks                                              7
         Past Performance                                             8
         Expenses                                                     9

         THE AAL SMALL CAP STOCK FUND                                 10
         Investment Objective                                         10
         Principal Investment Strategies                              10
         Principal Risks                                              10
         Past Performance                                             10
         Expenses                                                     12

         THE AAL MID CAP STOCK FUND                                   14
         Investment Objective                                         14
         Principal Investment Strategies                              14
         Principal Risks                                              14
         Past Performance                                             14
         Expenses                                                     16

         THE AAL INTERNATIONAL FUND                                   17
         Investment Objective                                         17
         Principal Investment Strategies                              17
         Principal Risks                                              17
         Past Performance                                             18
         Expenses                                                     20

         THE AAL CAPITAL GROWTH FUND                                  21
         Investment Objective                                         21
         Principal Investment Strategies                              21
         Principal Risks                                              21
         Past Performance                                             21
         Expenses                                                     23

         THE AAL EQUITY INCOME FUND                                   24
         Investment Objective                                         24
         Principal Investment Strategies                              24
         Principal Risks                                              24
         Past Performance                                             25
         Expenses                                                     26

         THE AAL BALANCED FUND                                        28
         Investment Objective                                         28
         Principal Investment Strategies                              28
         Principal Risks                                              28
         Past Performance                                             29
         Expenses                                                     31

MANAGEMENT, ORGANIZATION, AND CAPITAL STRUCTURE                       32
         Investment Adviser                                           32
         Adviser Fees per Fund                                        33
         Portfolio Management                                         33

SHAREHOLDER INFORMATION                                               36
         Pricing Funds' Shares                                        36
         How to Buy Shares                                            36
         How to Redeem (Sell) Shares                                  45

DIVIDENDS                                                             50

TAX CONSIDERATIONS                                                    51

DISTRIBUTION ARRANGEMENTS                                             52
         12b-1 Fees                                                   52
         Distribution Fees                                            52
         Service Fees                                                 52
         Shareholder Maintenance Agreement                            52

FINANCIAL HIGHLIGHTS                                                  53

ADDITIONAL INFORMATION                                                60



<PAGE>


RISK/RETURN INFORMATION: INVESTMENT PROGRAMS AND PERFORMANCE

PROSPECTUS SUMMARY

READING THE PROSPECTUS

References to "you" and "your" in the prospectus refer to prospective investors
or shareholders. References to "we," "us" or "our" refer to the Trust or The AAL
Mutual Funds ("Funds") and Fund management, the adviser, and/or sub-adviser for
The AAL Aggressive Growth Fund and The AAL International Fund, distributor,
administrator, transfer agent and custodians.


THE FUNDS

The AAL Mutual Funds are a series of separate mutual fund portfolios within a
single trust, each with a specific investment objective. The Funds offer
investment opportunities to eligible Lutherans, including their families and
their enterprises. The Funds are also available to those who serve or are
associated with Lutherans or Lutheran organizations, but who are not Lutherans.

In this prospectus, we provide you with information on: the investment
objectives and policies of the Funds; risks of investing in the Funds; historic
performance information; how to buy and sell Class A and Class B shares;
management and services provided to the Funds; and other information. This
prospectus describes two share classes, Class A shares and Class B shares. You
pay a sales charge immediately when you purchase Class A shares (front-end sales
charge or load). You pay a sales charge when you redeem Class B shares held for
less than five years (contingent deferred sales charge). In addition, you pay
higher "12b-1 fees" for Class B shares than Class A shares. 12b-1 fees are
ongoing asset-based fees that we charge pursuant to a plan to cover the costs of
certain activities related to the distribution and service of the Funds' shares.


PRINCIPAL RISKS COMMON TO ALL FUNDS
You assume certain risks when you invest in any of the Funds. Risks specific to
each Fund are discussed on the following pages. More generally, the investment
style and strategies that we use to select stocks, bonds and other securities
for each Fund depends on our ability to select those that perform well over
time. Our selections may not always achieve our growth and/or income
expectations, and securities we select could decline in value. There can be no
assurance that any of the Funds will achieve its objective and you could lose
money.

CLASS A VERSUS CLASS B SHARES
Whether you should purchase Class A or Class B shares depends on how long you
intend to own the shares and the size of your investment. If you intend to own
shares for more than five years and plan to invest less than $100,000, you
should consider Class B shares. If you plan to redeem shares in less than five
years or invest $100,000 or more, you should consider Class A shares. The
following table shows some of the differences between Class A and Class B
shares:


<TABLE>
<CAPTION>
<S>                                          <C>
CLASS A SHARES                               CLASS B SHARES

o Maximum 4% front-end sales charge          o No front-end sales charge
o No contingent deferred sales charge        o Maximum 5% contingent deferred sales charge
o Lower annual expenses, which include       o Higher annual expenses, which include
  12b-1 fees, than Class B shares              12b-1 fees, than Class A shares
o No conversion to Class B shares            o Automatic conversion to Class A shares
                                               after 5 years
</TABLE>

INSTITUTIONAL SHARES

We also offer an institutional class of shares ("Institutional shares"). They
are described in a separate prospectus. Institutional shares are for Lutheran
organizations or enterprises with a minimum initial investment in the Funds of
$500,000. We designed Institutional shares to give Lutheran organizations and
enterprises (non-natural persons) or financial institutions acting in a
fiduciary or agency capacity for these organizations a convenient means of
accumulating an interest in The AAL Mutual Funds. Lutheran organizations or
enterprises that invest in Institutional shares purchase shares at net asset
value. They do not pay initial sales charges, redemption fees or 12b-1fees. The
performance of Class A, Class B and Institutional shares will vary based on
differences in sales charges and fees. For more information on the Funds'
Institutional shares and a prospectus, you may call The AAL Mutual Funds Service
Center at (800)-553-6319.



<PAGE>


THE AAL TECHNOLOGY STOCK FUND

INVESTMENT OBJECTIVE
The AAL Technology Stock Fund seeks long-term capital appreciation by investing
primarily in a diversified portfolio of common stocks and securities convertible
into common stocks.

PRINCIPAL INVESTMENT STRATEGIES

Under normal circumstances, we invest at least 65% of the Fund's total assets in
technology stocks. We focus on equity securities of companies engaged in
offering and/or developing products, processes or services that utilize new or
improved technologies. Within this group, we look for companies that we believe
have strong potential for future growth. We may invest the remaining 35% of the
Fund's total assets in additional common stocks, preferred stocks, and
securities convertible into these stocks. We limit our investment in convertible
securities to no more than 5% of the Fund's net assets. The technology companies
in which we invest may be in any of the following industries, among others:

o computers, including products, software, hardware, electronic
  components, and semiconductors;
o network applications;
o the Internet;
o telecommunications;
o media and information services;
o medical devices and medical technology;
o pharmaceutical research and development;
o defense and aerospace; and
o biotechnology.

The Fund may also invest in securities of foreign issuers. Foreign securities
are generally selected on a stock-by-stock basis without regard to any defined
allocation among countries or geographic regions. Foreign securities for the
Fund are selected, in part, based on analysis of the technology the company
provides and the company's financial strength. However, we also consider other
factors when analyzing an individual, foreign security, such as; expected levels
of inflation, government policies influencing business conditions, the outlook
for currency relationships and prospects for economic growth among countries,
regions or geographic areas. Typically, we consider an issuer as domiciled in a
particular country if it:


o is incorporated under the laws of that country;
o has at least 50% of the value of its assets located in that country; or
o derives at least 50% of its income from operations or sales in that country.


The technology sector is composed of many companies representing different
market capitalizations. The Fund invests in companies of any size, from small
cap companies, to large cap companies. We take a "bottom up" approach to
investing for the Fund, meaning each stock in the portfolio is individually
selected, in part, based on analysis of the technology the company provides and
the company's financial strength. A company in the Fund's portfolio will usually
have a number of the following qualities: new technology, capable management and
a strong outlook for growth. We sell a stock when the company no longer offers
sustainable growth and we believe there are better, alternative investments.
This investment strategy may result in short-term gains or losses for the Fund.


PRINCIPAL RISKS

FINANCIAL RISK: Many factors affect the performance of a company in which the
Fund may invest. Some examples include strength of management, demand for a
company's products or services and general economic conditions. A company's
performance will affect the market price of its stock, and consequently, the
value of the Fund's portfolio. You could lose money investing in the Fund.

MARKET RISK: Over time, the stock market tends to move in cycles, with periods
when stock prices rise generally and periods when stock prices decline
generally. The value of the Fund's investments may move with these cycles, and
in some instances, increase or decrease more than the stock market, as measured
by the S&P 500(R) Index.

INDUSTRY SPECIFIC CONCENTRATION RISK: Sector funds may be more volatile than
funds that diversify across many industries. Fund investments are primarily
concentrated in technology-related industries. At times, stocks of companies in
technology industries may experience periods of significant price fluctuations.
As a consequence, the Fund may be subject to more price volatility than a fund
which invests in a broader range of industries.

FOREIGN INVESTMENT RISKS: The Fund faces particular risks associated with
foreign investing. Foreign investment risks include currency, liquidity,
political, economic and market risks, as well as risks associated with
governmental regulation and non-uniform corporate disclosure standards.


SMALL CAP COMPANY RISKS: When compared with large companies, small,
less-established companies may have relatively lower revenues, limited product
lines, less management depth and a lower share of the market for their products
or services. Because of these and other factors, stocks of small companies
present a greater risk of losing value than stocks of larger, more established
companies.



[Sidebar:]

Please note: recent returns in technology-related industries were primarily
achieved during favorable conditions in the market . Such favorable returns
involve the risk of volatility and investors should not expect that they will be
consistently achieved.


PAST PERFORMANCE
The Fund commenced operations on July 1, 2000. Because the Fund has been in
operation for less than a full calendar year, we have not included any
performance information.

EXPENSES
Like any investor, you directly pay certain expenses related to your
investments. We refer to these direct expenses as Shareholder Fees. Other
expenses, called Annual Fund Operating Expenses, are paid from Fund assets, so
they reduce your share price. Both types of expenses are outlined below.

Fee Table
This table describes the fees and expenses you may pay if you buy and hold the
Fund's shares:

<TABLE>
<CAPTION>
<S>                                                     <C>                        <C>
Shareholder Fees
(fees paid directly from your investment)               Class A Shares             Class B Shares

Maximum sales charge (load) imposed on                  4.00%                      None
purchases (as a percentage of offering price)

Maximum deferred sales charge (load)                    None                       5.00%
(as a percentage of net asset value)


Annual Fund Operating Expenses
(expenses deducted from Fund assets)                    Class A Shares             Class B Shares


Management Fees                                         0.75%                      0.75%

Distribution and Service (12b-1) Fees                   0.25%                      1.00%

Other Expenses                                          0.59%                      0.59%

Total Fund Operating Expenses*                          1.59%                      2.34%

</TABLE>

* Operating expenses are expressed as a percentage of average daily net assets
based on management's estimate of expenses for the fiscal year ending April 30,
2001.

Expense Example
This example is intended to help you compare the costs of investing in the Fund
with the costs of investing in other mutual funds. It assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all your
shares at the end of those periods. It also assumes that your investment has a
5% return each year, and that the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on the foregoing
assumptions your costs would be:

                  CLASS A SHARES       CLASS B SHARES         CLASS B SHARES NO
TIME PERIOD                                                   REDEMPTIONS
1 Year            $558                 $740                   $240
3 Year            $890                 $1,040                 $740


You should use the expense example for comparison purposes only. It does not
represent the Fund's actual expenses and returns, either past or future. Actual
expenses may be greater or less than those shown.


THE AAL AGGRESSIVE GROWTH FUND

INVESTMENT OBJECTIVE
The AAL Aggressive Growth Fund seeks long-term capital appreciation by investing
primarily in a diversified portfolio of common stocks and securities convertible
into common stocks.

PRINCIPAL INVESTMENT STRATEGIES

We invest in companies that offer the potential for accelerated earnings or
revenue growth. Stocks of these companies are generally referred to as "growth"
stocks. Under normal circumstance we invest at least 65% of the Fund's total
assets in common stocks, not including convertible securities. The Fund invests
in companies of any size, from small cap companies, to large cap companies. The
Fund may invest in any industry and sector.

We take a "bottom up" approach to investing for the Fund. In other words we seek
to identify individual companies with earnings growth potential that may not be
recognized by the market at large. We make this assessment by looking at
companies one at a time, regardless of size, country of organization, place of
principal business activity, industry or other similar selection criteria. We
sell a stock when the company no longer offers sustainable growth and we believe
there are better, alternative investments. This investment strategy may result
in short-term gains or losses for the Fund.

The Fund may invest in securities of foreign issuers. Foreign securities are
generally selected on a stock-by-stock basis without regard to any defined
allocation among countries or geographic regions. However, certain factors such
as expected levels of inflation, government policies influencing business
conditions, the outlook for currency relationships and prospects for economic
growth among countries, regions or geographic areas may warrant greater
consideration in selecting foreign securities. There are no limitations on the
countries in which the Fund may invest and at times the Fund may have
significant foreign exposure.

We may invest up to 35% of the Fund's total assets in additional  common stocks,
preferred stocks illiquid securities and high yield bonds or "junk bonds." While
high yield bonds have the  potential  for a higher  yield than  investment-grade
bonds,  they also have  speculative  characteristics  including a higher risk of
default on principal and interest payments.

The Fund may also invest in investment-grade bonds, however, the Fund does not
invest in bonds for capital growth or for long time periods, but may invest in
bonds for temporary defensive measures. We limit our investment in convertible
securities to no more than 5% of the Fund's net assets.


PRINCIPAL RISKS

FINANCIAL RISK: Many factors affect the performance of a company in which the
Fund may invest. Some examples include strength of management, demand for a
company's products or services and general economic conditions. A company's
performance will affect the market price of its stock, and consequently, the
value of the Fund's portfolio. You could lose money investing in the Fund.

MARKET RISK: Over time, the stock market tends to move in cycles, with periods
when stock prices rise generally and periods when stock prices decline
generally. The value of the Fund's investments may move with these cycles, and
in some instances, increase or decrease more than the stock market, as measured
by the S&P 500(R) Index.

AGGRESSIVE GROWTH INVESTMENT RISK: "Growth" stocks tend to have greater price
volatility than stocks of larger, well-established companies. Generally, the
value of the Fund's investments tends to increase more than the stock market, as
measured by the S&P 500(R) Index, during periods of rising stock prices.
Conversely, the value of the Fund's investments tends to decrease more than the
stock market during periods of declining stock prices. However, these price
trends may not always occur.


SMALL CAP COMPANY RISKS: When compared with large companies, small,
less-established companies may have relatively lower revenues, limited product
lines, less management depth and a lower share of the market for their products
or services. Because of these and other factors, stocks of small companies
present a greater risk of losing value than stocks of larger, more established
companies.


FOREIGN INVESTMENT RISKS: The Fund faces particular risks associated with
foreign investing. Foreign investment risks include currency, liquidity,
political, economic and market risks, as well as risks associated with
governmental regulation and non-uniform corporate disclosure standards.


DERIVATIVE RISK: The Fund may use futures, options, swaps, and other derivative
instruments to hedge or protect the Fund from adverse movements in securities
prices and interest rates. The Fund may also use a variety of currency hedging
techniques, including foreign currency contracts, to manage exchange rate risk.
The use of these instruments may benefit the Fund. However, if the Fund
Manager's judgment proves incorrect, the Fund's performance could be worse than
if the Fund had not used such instruments.

HIGH YIELD BOND RISK: High-yield bonds have a higher yield to compensate for
greater risk that the issuer might not make its interest and principal payments.
High-yield bonds are speculative and, therefore, typically considered to be
below investment-grade bonds by national ratings agencies.


PAST PERFORMANCE
The Fund commenced operations on July 1, 2000. Because the Fund has been in
operation for less than a full calendar year, we have not included any
performance information.

EXPENSES
Like any investor, you directly pay certain expenses related to your
investments. We refer to these direct expenses as Shareholder Fees. Other
expenses, called Annual Fund Operating Expenses, are paid from Fund assets, so
they reduce your share price. Both types of expenses are outlined below.

Fee Table
This table describes the fees and expenses you may pay if you buy and hold the
Fund's shares:

<TABLE>
<CAPTION>
<S>                                                     <C>                        <C>
Shareholder Fees
(fees paid directly from your investment)               Class A Shares             Class B Shares

Maximum sales charge (load) imposed on                  4.00%                      None
purchases (as a percentage of offering price)

Maximum deferred sales charge (load)                    None                       5.00%
(as a percentage of net asset value)


Annual Fund Operating Expenses
(expenses deducted from Fund assets)                    Class A Shares             Class B Shares


Management Fees                                         0.80%                      0.80%

Distribution and Service (12b-1) Fees                   0.25%                      1.00%

Other Expenses                                          0.59%                      0.59%

Total Fund Operating Expenses*                          1.64%                      2.39%

</TABLE>

* Operating expenses are expressed as a percentage of average daily net assets
based on management's estimate of expenses for the fiscal year ending April 30,
2001.

Expense Example
This example is intended to help you compare the costs of investing in the Fund
with the costs of investing in other mutual funds. It assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all your
shares at the end of those periods. It also assumes that your investment has a
5% return each year, and that the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on the foregoing
assumptions your costs would be:

                    CLASS A SHARES       CLASS B SHARES        CLASS B SHARES NO
TIME PERIOD                                                    REDEMPTIONS
1 Year              $563                 $745                  $245
3 Year              $905                 $1,055                $755


You should use the expense example for comparison purposes only. It does not
represent the Fund's actual expenses and returns, either past or future. Actual
expenses may be greater or less than those shown.


THE AAL SMALL CAP STOCK FUND

INVESTMENT OBJECTIVE
The AAL Small Cap Stock Fund seeks long-term capital growth by investing
primarily in small company common stocks and securities convertible into small
company common stocks.

PRINCIPAL INVESTMENT STRATEGIES
Under normal circumstances, we invest at least 65% of the Fund's total assets in
small company common stocks. We may invest the remaining 35% of the Fund's total
assets in any combination of small-cap, mid-cap, large-cap stocks and securities
convertible into these stocks.

By small companies, we mean those with market capitalizations of less than $1.5
billion. We often refer to small company stocks as small-cap stocks. Small-cap
stocks trade in the over-the-counter market as well as on U.S. securities
exchanges. We focus on companies with market capitalizations ranging from $100
million to $1 billion. Generally, small companies have not yet gained a
reputation for quality. Further, small companies tend to be less recognizable
than companies listed in the S&P 500(R) Index or the S&P MidCap 400(R) Index. We
look for small companies (including companies initially offering stock to the
public) that, in our opinion:


o  are in the early stages of development or positioned in new and
   emerging industries;
o  have an opportunity for rapid growth;
o  have capable management; and
o  are financially sound.

Due to certain market inefficiencies, we believe properly selected small company
stocks offer greater opportunities for long-term capital growth. We tend to sell
the stocks of companies when we think that other investments offer better
opportunities. This investment strategy may result in short-term gains or losses
for the Fund.

PRINCIPAL RISKS


FINANCIAL RISK: Many factors affect the performance of a company in which the
Fund may invest. Some examples include strength of management, demand for a
company's products or services and general economic conditions. A company's
performance will affect the market price of its stock, and consequently, the
value of the Fund's portfolio. You could lose money investing in the Fund.


MARKET RISK: Over time, the stock market tends to move in cycles, with periods
when stock prices rise and periods when stock prices decline. Historically,
small-cap stocks have experienced more price volatility than mid-cap and
large-cap stocks.

Small company  stocks tend to have greater price  volatility  than large company
stocks.  Generally,  the value of the Fund's  investments tends to increase more
than the stock  market,  as  measured  by the S&P 500(R)  Index,  in a period of
rising stock prices.  Conversely,  the value of the Fund's  investments tends to
decrease  more than the stock  market in a period  of  declining  stock  prices.
However,  these price trends do not always occur. You could lose money investing
in the Fund.


SMALL CAP COMPANY RISKS: When compared with large companies, small,
less-established companies may have relatively lower revenues, limited product
lines, less management depth and a lower share of the market for their products
or services. Because of these and other factors, stocks of small companies
present a greater risk of losing value than stocks of larger, more established
companies.


PAST PERFORMANCE
The following table and chart reflect the Fund's annual return and long-term
performance. The bar chart and table show the risks of investing in the Fund by
demonstrating the variability in the Fund's annual total returns. As with all
investments, past performance is not a guarantee of future results.

Annual Total Returns
The following chart shows calendar year total returns for Class A shares since
the Fund started operations. Total returns assume reinvestment of all dividends
and distributions, but do not reflect any deduction for sales charges. If the
chart reflected sales loads, returns would be less than those shown.

Annual Return
Class A shares
Year Ended December 31st

[Bar chart with following data:]


12/31/97          16.85%
12/31/98          (2.49)%
12/31/99          13.16%

The Fund's year-to-date return as of March 31, 2000 was 11.85%.


                        Best and Worst Quarterly Returns

Best Quarter                 2nd Quarter of 1997                    20.48%
Worst Quarter                3rd  Quarter of 1998                   (21.33)%

Average Annual Total Returns
The tables below compare the Fund's average annual total returns for Class A and
B shares with the S&P SmallCap 600(R) Index.* Performance of the Fund reflects
the maximum sales load you would pay for the stated period. The average annual
return for both the Fund and the S&P SmallCap 600(R) Index is calculated as of
the close of the Fund's fiscal year, which ends April 30, 2000. Returns for
Class A shares are shown for a one-year period and since inception of the Fund.
For Class B shares, returns are shown for a one-year period and since inception
of Class B shares.


Small Cap Stock Fund                   1 Year                 Since Inception
Class A Shares(1)                      28.75%                 12.20%
S&P SmallCap 600(R)Index               20.50%                 12.69%

Small Cap Stock Fund                   1 Year                 Since Inception
Class B Shares(2)                      27.71%                 9.54%
S&P SmallCap 600(R)Index               20.50%                 11.71%


(1)      Inception of the Fund, July 1, 1996
(2)      Inception of Class B Shares, January 8, 1997

* The S&P SmallCap 600(R) Index is an unmanaged index comprised of 600 stocks
designed to represent performance of the small-cap segment of the U.S. equity
markets.

PLEASE NOTE, INVESTMENT RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE. WHEN SHARES
ARE REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN THE PRICE YOU PAID.

EXPENSES
Like any investor, you directly pay certain expenses related to your
investments. We refer to these direct expenses as Shareholder Fees. Other
expenses, called Annual Fund Operating Expenses, are paid from Fund assets, so
they reduce your share price. Both types of expenses are outlined below.

Fee Table
This table describes the fees and expenses you may pay if you buy and hold the
Fund's shares:

<TABLE>
<CAPTION>
<S>                                               <C>                                <C>
SHAREHOLDER FEES                                  CLASS A SHARES                     CLASS B SHARES
(fees paid directly from your investment)

Maximum sales charge (load) imposed on            4.00%                              None
purchases (as a percentage of offering price)

Maximum deferred sales charge (load) imposed on   None                               5.00%
redemptions (as a percentage of net asset value)


ANNUAL FUND OPERATING EXPENSES                    CLASS A SHARES                     CLASS B SHARES
(expenses deducted from Fund assets)

Management Fees                                   0.70%                              0.70%

Distribution and Service (12b-1) Fees             0.25%                              1.00%

Other Expenses                                    0.70%                              0.98%

Total Fund Operating Expenses                     1.65%                              2.68%

</TABLE>

Expense Example
This example is intended to help you compare the costs of investing in the Fund
with the costs of investing in other mutual funds. It assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all your
shares at the end of those periods. It also assumes that your investment has a
5% return each year, and that the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on the foregoing
assumptions your costs would be:


<TABLE>
<CAPTION>
<S>                       <C>                         <C>                          <C>
TIME PERIOD               CLASS A SHARES              CLASS B SHARES               CLASS B SHARES NO REDEMPTIONS
1 Year                    $564                        $774                         $274
3 Year                    $908                        $1,142                       $842
5 Year                    $1,275                      $1,436                       $1,436
After 10 Years            $2,307                      N/A*                         N/A*

</TABLE>

* Class B shares convert into Class A shares after five years.

You should use the expense example for comparison purposes only. It does not
represent the Fund's actual expenses and returns, either past or future. Actual
expenses may be greater or less than those shown.


THE AAL MID CAP STOCK FUND

INVESTMENT OBJECTIVE
The AAL Mid Cap Stock Fund seeks long-term capital growth by investing primarily
in common stocks and securities convertible into common stocks, of mid-sized
companies.

PRINCIPAL INVESTMENT STRATEGIES
Under normal circumstances, we invest at least 65% of the Fund's total assets in
mid-sized company stocks. By mid-sized companies, we mean those with market
capitalizations ranging from $100 million to $7.5 billion. Within this category,
we generally focus on companies with market capitalizations ranging from $500
million to $3.5 billion. Mid-cap companies tend to be smaller and less-seasoned
than large-cap companies listed in the S&P 500(R) Index. Mid-cap companies may
trade in the over-the-counter market as well as on national securities
exchanges.

We may invest the remaining 35% of the Fund's total assets in any combination of
additional mid-cap stocks, large-cap stocks and securities convertible into such
stocks. We look for mid-sized companies (including companies initially offering
stock to the public) that, in our opinion:

o  have prospects for growth in their sales and earnings;
o  are in an industry with a good economic outlook;
o  have high-quality management; and
o  have a strong financial position.

We usually pick companies in the middle stages of their development. These
companies tend to have established a record of profitability and possess a new
technology, unique product or market niche. We tend to sell stocks of companies
when we think other investments offer better opportunities. Due to this policy,
the Fund may from time to time have short-term gains or losses.

PRINCIPAL RISKS

FINANCIAL RISK: Stocks of mid-sized companies may present a greater risk of
losing value than stocks of larger, more established companies, but may present
less risk than stocks of smaller companies. Mid-sized companies tend to have
relatively smaller revenues, narrower product lines, less management depth and
smaller shares of the market for their products or services than large
companies.

MARKET RISK: Over time, the stock market tends to move in cycles, with periods
when stock prices rise generally and periods when stock prices decline
generally. Due to the tendency for mid-cap stocks to have less liquidity in the
market than large company stocks, the value of the Fund's investments might
increase and decrease more than the stock market in general, as measured by the
S&P 500(R). You could lose money investing in the Fund.

PAST PERFORMANCE
The following table and chart reflect the Fund's annual return and long-term
performance. The bar chart and table show the risks of investing in the Fund by
demonstrating the variability in the Fund's annual total returns. As with all
investments, past performance is not a guarantee of future results.

Annual Total Returns
The following chart shows calendar year total returns for Class A shares since
the Fund started operations. Total returns assume reinvestment of all dividends
and distributions, but do not reflect any deduction for sales charges. If the
chart reflected sales loads, returns would be less than those shown.

Annual Return
Class A shares
Year Ended December 31st

[Bar chart with following data:]


12/31/94          (4.79)%
12/31/95          44.49%
12/31/96          8.75%
12/31/97          18.03%
12/31/98          2.08%
12/31/99          18.33%

The Fund's year- to-date return as of March 31, 2000 was 10.11%.


                        Best and Worst Quarterly Returns

Best Quarter                   4th Quarter of 1998            22.85%
Worst Quarter                  3rd Quarter of 1998            (21.26)%

Average Annual Total Returns
The tables below compare the Fund's average annual total returns for Class A and
B shares with the S&P MidCap 400(R) Index.* Performance of the Fund reflects the
maximum sales load you would pay for the stated period. The average annual
return for both the Fund and the S&P MidCap 400(R) Index is calculated as of the
close of the Fund's fiscal year, which ends April 30, 2000. For Class A shares,
returns are shown for one and five-year periods, and since inception of the
Fund. For Class B shares, returns are shown for a one-year period and since
inception of Class B shares.


Mid Cap Stock Fund             1 Year         5 Year             Since Inception
Class A Shares(1)              22.19%         16.85%             13.51%
S&P Mid Cap 400(R)Index        23.52%         22.69%             18.48%

Mid Cap Stock Fund             1 Year         Since Inception
Class B Shares(2)              20.71%         11.70%
S&P Mid Cap 400(R)Index        23.52%         22.26%


(1)      Inception of the Fund, June 30, 1993
(2)      Inception of Class B Shares, January 8, 1997

* The S&P MidCap 400(R) Index is an unmanaged index that represents the average
performance of a group of 400 medium capitalization stocks.

PLEASE NOTE, INVESTMENT RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE. WHEN SHARES
ARE REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN THE PRICE YOU PAID.

EXPENSES
Like any investor, you directly pay certain expenses related to your
investments. We refer to these direct expenses as Shareholder Fees. Other
expenses, called Annual Fund Operating Expenses, are paid from Fund assets, so
they reduce your share price. Both types of expenses are outlined below.

Fee Table
This table describes the fees and expenses you may pay if you buy and hold the
Fund's shares:

<TABLE>
<CAPTION>
<S>                                               <C>                                <C>
SHAREHOLDER FEES                                  CLASS A SHARES                     CLASS B SHARES
(fees paid directly from your investment)

Maximum sales charge (load) imposed on            4.00%                              None
purchases (as a percentage of offering price)

Maximum deferred sales charge (load) imposed on   None                               5.00%
redemptions (as a percentage of net asset value)


ANNUAL FUND OPERATING EXPENSES                    CLASS A SHARES                     CLASS B SHARES
(expenses deducted from Fund assets)

Management Fees                                   0.66%                              0.66%

Distribution and Service (12b-1) Fees             0.25%                              1.00%

Other Expenses                                    0.33%                              0.89%

Total Fund Operating Expenses                     1.24%                              2.55%

</TABLE>

Expense Example
This example is intended to help you compare the costs of investing in the Fund
with the costs of investing in other mutual funds. It assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all your
shares at the end of those periods. It also assumes that your investment has a
5% return each year, and that the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on the foregoing
assumptions your costs would be:


<TABLE>
<CAPTION>
<S>                       <C>                         <C>                          <C>
TIME PERIOD               CLASS A SHARES              CLASS B SHARES               CLASS B SHARES NO REDEMPTIONS
1 Year                    $524                        $761                         $261
3 Year                    $785                        $1,103                       $803
5 Year                    $1,066                      $1,372                       $1,372
After 10 Years            $1,867                      N/A*                         N/A*

</TABLE>

* Class B shares convert into Class A shares after five years.

You should use the expense example for comparison purposes only. It does not
represent the Fund's actual expenses and returns, either past or future. Actual
expenses may be greater or less than those shown.


THE AAL INTERNATIONAL FUND

INVESTMENT OBJECTIVE
The AAL International Fund seeks long-term capital growth by investing primarily
in a diversified portfolio of foreign stocks.

PRINCIPAL INVESTMENT STRATEGIES
Under normal circumstances, we invest at least 65% of the Fund's total assets in
foreign stocks primarily traded in at least three countries, not including the
United States. We do not have any limitations on how much of the Fund's assets
we may invest in securities primarily traded in any one country. Typically, we
consider an issuer as domiciled in a particular country if it:


o  is incorporated under the laws of that country;
o  has at least 50% of the value of its assets located in that country; or
o  derives  at  least  50% of its  income  from  operations  or  sales in that
   country.

We may invest the remaining 35% of the Fund's total assets in a combination of
any of the following: additional foreign stocks; U.S. stocks; structured notes
and/or preferred stocks; and up to 20% of the Fund's total assets in U.S. and
foreign bonds and other debt obligations, including lower-rated debt, commonly
referred to as "junk bonds." We do not place any restrictions on the debt
ratings of securities acquired or the portion of the Fund's assets we may invest
in a particular rating category for the Fund.

[Sidebar: Mature and Emerging Markets]
Mature Markets: A mature market is generally defined as a stable and efficient
country economy with well-developed governmental entities and an advanced
financial infrastructure.

Emerging Markets: An emerging market refers to a lesser-developed country
economy. An emerging market is characterized by relatively weak governmental
entities and a developing financial infrastructure with market inefficiencies.

The following examples help distinguish mature markets and emerging markets.

Mature Markets             Emerging Markets

United States              Czech Republic
Japan                      Poland
Canada                     Malaysia
United Kingdom             Brazil

We focus on stocks primarily trading in the United Kingdom, Western Europe,
Australia, Far East, Latin America and Canada. Many of these markets are mature,
while others are emerging. There are no limits on the extent to which we can
invest in either mature or emerging markets. We may invest up to 100% of the
Fund's total assets in emerging markets.

Pending the investment of cash from new sales or to meet ordinary daily cash
needs, we may, subject to the fundamental investment objective, hold cash
temporarily (U.S. dollars, foreign currencies or multinational foreign currency
units) for the Fund. For defensive purposes, we may temporarily invest any
portion of the Fund's total assets in money market instruments.

PRINCIPAL RISKS

FOREIGN INVESTMENT RISKS: The Fund faces particular risks associated with
foreign investing. Foreign investment risks include currency, liquidity,
political, economic and market risks, as well as risks associated with
governmental regulation and non-uniform corporate disclosure standards.

CURRENCY  FLUCTUATIONS:  A change in the value of a foreign currency against the
U.S.  dollar  may  affect the value (in terms of U.S.  dollars)  of the  foreign
stocks  held by the Fund.  The value of the Fund's  foreign  stocks  also may be
affected  significantly by currency  restrictions and currency  exchange control
regulations enacted from time to time by foreign governments.

MARKET CHARACTERISTICS AND LIQUIDITY: Foreign exchanges and markets may be more
volatile than those in the United States and foreign stocks may be less liquid
than domestic securities. Settlement practices for transactions in foreign stock
markets may differ from those practices in U.S. stock markets and may involve
delays beyond customary periods in the United States.

POLITICAL AND ECONOMIC FACTORS: The economies of some foreign countries may
differ favorably or unfavorably from the United States economy in such respects
as growth of gross domestic product, rate of inflation, capital reinvestment,
resource self-sufficiency, diversification and balance of payments position.
Also, some foreign governments participate to a significant degree, through
ownership interests or regulation, in their economies. Actions by these
governments could include restrictions on foreign investments, nationalization,
expropriation of goods or imposition of taxes, and could have a significant
effect on the prices of stocks and the payment of interest on bonds. The
economies of many foreign countries are highly dependent on international trade
and therefore, are affected by trade policies and economic conditions of their
trading partners. If those trading partners engage in protectionist trade
legislation, the price of the stocks of the foreign country and the markets in
which they trade could be affected.

FOREIGN REGULATION: Some foreign countries have less supervision and regulation
of securities markets, broker/dealers and issuers of securities than is the case
in the United States. Also, many foreign countries do not require publicly
traded companies to disclose information which is as extensive and detailed as
that which public companies in the United States are required to disclose. This
lack of regulation and disclosure makes our assessment of the growth potential
of stocks we select less certain than might be the case for domestic stocks.

These risks tend to be more pronounced in emerging markets than is the case for
mature markets. We may invest up to 100% of the Fund's net assets in emerging
growth countries.

PAST PERFORMANCE
The following table and chart reflect the Fund's annual return and long-term
performance. The bar chart and table show the risks of investing in the Fund by
demonstrating the variability in the Fund's annual total returns. As with all
investments, past performance is not a guarantee of future results.

Annual Total Returns
The following chart shows calendar year total returns for Class A shares since
the Fund started operations. Total returns assume reinvestment of all dividends
and distributions, but do not reflect any deduction for sales charges. If the
chart reflected sales loads, returns would be less than those shown.

Annual Return
Class A shares
Year Ended December 31st

[Bar chart with following data:]


12/31/96          12.21%
12/31/97          0.97%
12/31/98          11.06%
12/31/99          39.66%

The Fund's year-to-date return as of March 31, 2000 was 2.88%.


                        Best and Worst Quarterly Returns

Best Quarter                   4th Quarter of 1999                    23.40%
Worst Quarter                  3rd Quarter of 1998                    (12.50)%


Average Annual Total Returns
The tables below compare the Fund's average annual total returns for Class A and
B shares with the EAFE(R) Index.* Performance of the Fund reflects the maximum
sales load you would pay for the stated period. The average annual return for
both the Fund and the EAFE(R) Index is calculated as of the close of the Fund's
fiscal year, which ends April 30, 2000. Returns for Class A shares are shown for
a one-year period and since inception of the Fund. For Class B shares, returns
are shown for a one-year period and since inception of Class B shares.


International Fund                 1 Year                  Since Inception
Class A Shares(1)                  18.98%                  10.55%
EAFE(R)Index                       13.89%                  8.63%

International Fund                 1 Year                  Since Inception
Class B Shares(2)                  17.44%                  10.73%
EAFE(R)Index                       13.89%                  16.26%


(1)      Inception of the Fund, August 1, 1995
(2)      Inception of Class B Shares, January 8, 1997

* The Morgan Stanley Capital International, Europe, Australasia, Far East Index
(EAFE(R) Index) is a stock index designed to measure the investment returns of
the developed countries outside North America. The EAFE(R) Index currently
includes stocks from 21 countries.

PLEASE NOTE, INVESTMENT RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE. WHEN SHARES
ARE REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN THE PRICE YOU PAID

EXPENSES
Like any investor, you directly pay certain expenses related to your
investments. We refer to these direct expenses as Shareholder Fees. Other
expenses, called Annual Fund Operating Expenses, are paid from Fund assets, so
they reduce your share price. Both types of expenses are outlined below.

Fee Table
This table describes the fees and expenses you may pay if you buy and hold the
Fund's shares:

<TABLE>
<CAPTION>
<S>                                               <C>                                <C>
SHAREHOLDER FEES                                  CLASS A SHARES                     CLASS B SHARES
(fees paid directly from your investment)

Maximum sales charge (load) imposed on            4.00%                              None
purchases (as a percentage of offering price)

Maximum deferred sales charge (load) imposed on   None                               5.00%
redemptions (as a percentage of net asset value)


ANNUAL FUND OPERATING EXPENSES                    CLASS A SHARES                     CLASS B SHARES
(expenses deducted from Fund assets)

Management Fees                                   0.61%                              0.61%

Distribution and Service (12b-1) Fees             0.25%                              1.00%

Other Expenses                                    0.55%                              0.98%

Total Fund Operating Expenses                     1.41%                              2.59%

</TABLE>

Expense Example
This example is intended to help you compare the costs of investing in the Fund
with the costs of investing in other mutual funds. It assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all your
shares at the end of those periods. It also assumes that your investment has a
5% return each year, and that the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on the foregoing
assumptions your costs would be:


<TABLE>
<CAPTION>
<S>                       <C>                         <C>                          <C>
TIME PERIOD               CLASS A SHARES              CLASS B SHARES               CLASS B SHARES NO REDEMPTIONS
1 Year                    $540                        $765                         $265
3 Year                    $836                        $1,115                       $815
5 Year                    $1,153                      $1,392                       $1,392
After 10 Years            $2,052                      N/A*                         N/A*

</TABLE>

* Class B shares convert into Class A shares after five years.

You should use the expense example for comparison purposes only. It does not
represent the Fund's actual expenses and returns, either past or future. Actual
expenses may be greater or less than those shown.


THE AAL CAPITAL GROWTH FUND

INVESTMENT OBJECTIVE
The AAL Capital Growth Fund seeks long-term capital growth by investing
primarily in a diversified portfolio of common stocks and securities convertible
into common stocks.

PRINCIPAL INVESTMENT STRATEGIES
Under normal circumstances, we invest at least 65% of the Fund's total assets in
common stocks, not including convertible securities. Generally, we focus on
dividend-paying stocks issued by companies with earnings growth per share that
is higher than stocks included in the S&P 500(R) Index. In selecting stocks, we
look for quality, operating growth predictability and financial strength.

We may invest the remaining 35% of the Fund's total assets in additional common
stocks, preferred stocks and bonds. The Fund does not invest in bonds for
capital growth or for long time periods. We limit our investments in convertible
securities to no more than 5% of the Fund's net assets.

PRINCIPAL RISKS

FINANCIAL RISK: Many factors affect the performance of a company in which the
Fund may invest. Some examples include strength of management, demand for a
company's products or services and general economic conditions. A company's
performance will affect the market price of its stock, and consequently, the
value of the Fund's portfolio. You could lose money investing in the Fund.

MARKET RISK: Over time, the stock market tends to move in cycles, with periods
when stock prices rise generally and periods when stock prices decline
generally. The value of the Fund's investments may increase and decrease more
than the stock market in general, as measured by the S&P 500(R) Index.

PAST PERFORMANCE
The following table and chart reflect the Fund's annual return and long-term
performance. The bar chart and table show the risks of investing in the Fund by
demonstrating the variability in the Fund's annual total returns. As with all
investments, past performance is not a guarantee of future results.

Annual Total Returns
The following chart shows calendar year total returns for Class A shares for the
past 10 years. Total returns assume reinvestment of all dividends and
distributions, but do not reflect any deduction for sales charges. If the chart
reflected sales loads, returns would be less than those shown.

Annual Return
Class A shares
Year Ended December 31st

[Bar chart with following data:]


12/31/90          0.83%
12/31/91          30.19%
12/31/92          5.71%
12/31/93          6.06%
12/31/94          (1.38)%
12/31/95          31.00%
12/31/96          22.05%
12/31/97          33.57%
12/31/98          28.19%
12/31/99          22.61%

The Fund's year-to-date return as of March 31, 2000 was 0.45%.


                        Best and Worst Quarterly Returns

Best Quarter                   4th Quarter of 1998                    21.92%
Worst Quarter                  3rd Quarter of 1990                    (11.88)%


Average Annual Total Returns
The tables below compare the Fund's average annual total returns for Class A and
B shares with the S&P 500(R) Index.* Performance of the Fund reflects the
maximum sales load you would pay for the stated period. The average annual
return is calculated as of the close of the Fund's fiscal year, which ends April
30, 2000. Returns for Class A shares are shown for one, five and ten-year
periods. For Class B shares, returns are shown for a one-year period and since
inception of Class B shares.


Capital Growth Fund         1 Year               5 Year              10 Year
Class A Shares              4.92%                23.15%              16.97%
S&P 500(R)Index             10.13%               25.26%              18.78%

Capital Growth Fund                 1 Year              Since Inception
Class B Shares(1)                   3.09%               22.18%
S&P 500(R)Index                     10.13%              22.15%


(1)  Inception of Class B Shares, January 8, 1997

* The S&P 500(R) Index is a broad-based composite unmanaged index that
represents the average performance of a group of 500 widely-held,
publicly-traded stocks.

PLEASE NOTE, INVESTMENT RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE. WHEN SHARES
ARE REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN THE PRICE YOU PAID.

EXPENSES
Like any investor, you directly pay certain expenses related to your
investments. We refer to these direct expenses as Shareholder Fees. Other
expenses, called Annual Fund Operating Expenses, are paid from Fund assets, so
they reduce your share price. Both types of expenses are outlined below.

Fee Table
This table describes the fees and expenses you may pay if you buy and hold the
Fund's shares:

<TABLE>
<CAPTION>
<S>                                               <C>                                <C>
SHAREHOLDER FEES                                  CLASS A SHARES                     CLASS B SHARES
(fees paid directly from your investment)

Maximum sales charge (load) imposed on            4.00%                              None
purchases (as a percentage of offering price)

Maximum deferred sales charge (load) imposed on   None                               5.00%
redemptions (as a percentage of net asset value)


ANNUAL FUND OPERATING EXPENSES                    CLASS A SHARES                     CLASS B SHARES
(expenses deducted from Fund assets)

Management Fees                                   0.53%                              0.53%

Distribution and Service (12b-1) Fees             0.25%                              1.00%

Other Expenses                                    0.14%                              0.43%

Total Fund Operating Expenses                     0.92%                              1.96%

</TABLE>

Expense Example
This example is intended to help you compare the costs of investing in the Fund
with the costs of investing in other mutual funds. It assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all your
shares at the end of those periods. It also assumes that your investment has a
5% return each year, and that the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on the foregoing
assumptions your costs would be:


<TABLE>
<CAPTION>
<S>                       <C>                         <C>                          <C>
TIME PERIOD               CLASS A SHARES              CLASS B SHARES               CLASS B SHARES NO REDEMPTIONS
1 Year                    $492                        $702                         $202
3 Year                    $687                        $924                         $624
5 Year                    $899                        $1,073                       $1,073
After 10 Years            $1,508                      N/A*                         N/A*

</TABLE>

* Class B shares convert into Class A shares after five years.

You should use the expense example for comparison purposes only. It does not
represent the Fund's actual expenses and returns, either past or future. Actual
expenses may be greater or less than those shown.


THE AAL EQUITY INCOME FUND

INVESTMENT OBJECTIVE
The AAL Equity Income Fund seeks current income, long-term income growth and
capital growth by investing primarily in a diversified portfolio of
income-producing equity securities.

PRINCIPAL INVESTMENT STRATEGIES
Under normal circumstances, we invest at least 65% of the Fund's total assets in
income-producing equity securities. By "income-producing equity securities," we
mean equity securities, including securities exchangeable or convertible into
equity securities, that offer dividend yields that exceed the average dividend
yields on stocks comprising the S&P 500(R) Index. We may invest the remainder of
the Fund's total assets, in whole or in part, in additional income-producing
equity securities, bonds and commercial paper.

In selecting equity securities for the Fund, we look for companies that:


o  have a good growth rate and return on capital;
o  have favorable aspects for future growth and dividends;
o  are financially sound;
o  have high-quality management; and
o  are in a favorable competitive environment.

We buy bonds, including convertible securities, if, at the time of purchase at
least two nationally recognized statistical rating organizations (NRSROs) have
rated them investment grade, or, if unrated, we have determined them to be of a
credit quality comparable to investment grade. We may invest up to 5% of the
Fund's total assets in such securities rated below investment grade, otherwise
known as "high yield bonds" or "junk bonds. High-yield bonds generally offer a
higher yield than investment-grade bonds, but also expose the Fund to greater
risk that the issuer might not make its interest and principal payments. We buy
commercial paper rated in the top two categories by a NRSRO. We may buy unrated
commercial paper if we determine the commercial paper is of a credit quality
comparable to investment grade.

We expect to receive income from dividends paid on equity investments and
interest earned on debt securities. We seek capital growth by attempting to
select income-producing equity securities that we believe are under-priced
relative to the securities of companies with comparable fundamentals.


PRINCIPAL RISKS

INDUSTRY CONCENTRATION: Income-producing equity securities, in which the Fund
invests, tend to be more prevalent in some market sectors than others, for
example; communications, retail, energy, utilities, financial services and
consumer non-cyclical and cyclical market sectors. Prices of stocks of companies
in these industries may not always move in tandem with the market, generally,
causing the Fund's performance to lag or outperform the overall market.

FINANCIAL RISK: The market sectors in which companies tend to issue
income-producing equity securities usually have high operating, interest and
other regulatory expenses, such as the public utilities industry. Also, some of
these sectors are maturing, meaning that growth is peaking. Companies in these
market sectors frequently use their profits for paying higher dividends rather
than reinvesting for company growth. As a result, income-producing equity
securities typically have lower capital growth potential than equity securities
in other sectors. Capital growth for many income-producing equity securities
corresponds to the company's competitive position, in particular its capability
to capture market share from its competitors. You could lose money investing in
the Fund.

INTEREST RATE RISK: Like bonds, changes in the level of interest rates affect
the value of income-producing equity securities and the value of the Fund as a
whole. Their values tend to move in the opposite direction of interest rates.

MARKET RISK: Market cycles affect all equity securities over time, with periods
when stock prices rise generally and periods when stock prices decline
generally. However, income-producing equity securities may rise less and fall
less than the market as a whole, because of the higher income component of these
securities.

PAST PERFORMANCE
The following table and chart reflect the Fund's annual return and long-term
performance. The bar chart and table show the risks of investing in the Fund by
demonstrating the variability in the Fund's annual total returns. As with all
investments, past performance is not a guarantee of future results.

Annual Total Returns
The following chart shows calendar year total returns for Class A shares since
the Fund started operations. Total returns assume reinvestment of all dividends
and distributions, but do not reflect any deduction for sales charges. If the
chart reflected sales loads, returns would be less than those shown.

Annual Return
Class A shares
Year Ended December 31st

[Bar chart with following data:]


12/31/95          29.17%
12/31/96          4.81%
12/31/97          22.37%
12/31/98          13.29%
12/31/99          4.09%

The Fund's year-to-date return as of March 31, 2000 was 2.86%.


                        Best and Worst Quarterly Returns

Best Quarter                   4th Quarter of 1998               15.04%
Worst Quarter                  3rd Quarter of 1998               (10.34)%

Average Annual Total Returns
The tables below compare the Fund's average annual total returns for Class A and
B shares with the S&P 500(R) Index.* Performance of the Fund reflects the
maximum sales load you would pay for the stated period. The average annual
return for both the Fund and the S&P 500(R) Index is calculated as of the close
of the Fund's fiscal year, which ends April 30, 2000. Returns for Class A shares
are shown for one and five-year periods, and since inception of the Fund. For
Class B shares, returns are shown for a one-year period and since inception of
Class B shares.


Equity Income Fund          1 Year            5 Year           Since Inception
Class A Shares(1)           (4.76)%           12.44%           9.67%
S&P 500(R)Index             10.13%            25.26%           23.66%

Equity Income Fund                 1 Year             Since Inception
Class B Shares(2)                  (5.73)%            10.62%
S&P 500(R)Index                    10.13%             22.15%


(1)      Inception of the Fund, March 18, 1994
(2)      Inception of Class B Shares, January 8, 1997

* The S&P 500(R) Index is a broad-based composite unmanaged index that
represents the average performance of a group of 500 widely-held,
publicly-traded stocks.

PLEASE NOTE, INVESTMENT RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE. WHEN SHARES
ARE REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN THE PRICE YOU PAID.

EXPENSES
Like any investor, you directly pay certain expenses related to your
investments. We refer to these direct expenses as Shareholder Fees. Other
expenses, called Annual Fund Operating Expenses, are paid from Fund assets, so
they reduce your share price. Both types of expenses are outlined below.

Fee Table
This table describes the fees and expenses you may pay if you buy and hold the
Fund's shares:

<TABLE>
<CAPTION>
<S>                                               <C>                                <C>
SHAREHOLDER FEES                                  CLASS A SHARES                     CLASS B SHARES
(fees paid directly from your investment)

Maximum sales charge (load) imposed on            4.00%                              None
purchases (as a percentage of offering price)

Maximum deferred sales charge (load) imposed on   None                               5.00%
redemptions (as a percentage of net asset value)


ANNUAL FUND OPERATING EXPENSES                    CLASS A SHARES                     CLASS B SHARES
(expenses deducted from Fund assets)

Management Fees                                   0.45%                              0.45%

Distribution and Service (12b-1) Fees             0.25%                              1.00%

Other Expenses                                    0.28%                              0.60%

Total Fund Operating Expenses                     0.98%                              2.05%

</TABLE>

Expense Example
This example is intended to help you compare the costs of investing in the Fund
with the costs of investing in other mutual funds. It assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all your
shares at the end of those periods. It also assumes that your investment has a
5% return each year, and that the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on the foregoing
assumptions your costs would be:


<TABLE>
<CAPTION>
<S>                       <C>                         <C>                          <C>
TIME PERIOD               CLASS A SHARES              CLASS B SHARES               CLASS B SHARES NO REDEMPTIONS
1 Year                    $498                        $711                         $211
3 Year                    $706                        $952                         $652
5 Year                    $930                        $1,119                       $1,119
After 10 Years            $1,576                      N/A*                         N/A*

</TABLE>

* Class B shares convert into Class A shares after five years.

You should use the expense example for comparison purposes only. It does not
represent the Fund's actual expenses and returns, either past or future. Actual
expenses may be greater or less than those shown.


THE AAL BALANCED FUND

INVESTMENT OBJECTIVE
The AAL Balanced Fund seeks long-term total return through a balance between
income and the potential for long-term capital growth by investing primarily in
a diversified portfolio of common stocks, bonds and money market instruments.

PRINCIPAL INVESTMENT STRATEGIES
Under normal circumstances, we invest from 50% to 60% of the Fund's total assets
in common stocks, from 30% to 40% in fixed-income securities (bonds) and up to
20% in money market instruments. However, we will at all times maintain an
investment mix within the following ranges:


o  35% to 75% in common stocks;
o  25% to 50% in fixed-income securities (bonds); and
o  0% to 40% in money market instruments.

We select investments in each category of security by using the following
criteria:

o  common  stocks,  including the  securities in which The AAL Capital  Growth
   Fund may invest;
o  bonds and other debt  securities with  maturities  generally  exceeding one
   year, including securities in which The AAL Bond Fund may invest; and
o  money  market   instruments  and  other  debt  securities  with  maturities
   generally not exceeding 397 days, including the securities in which The AAL
   Money Market Fund may invest.


We periodically review and adjust the mix of investments among these three
categories to capitalize on potential variations in returns produced by the
interaction of changing financial markets and economic conditions. Changes in
the investment mix may occur several times within a year or over several years,
depending on market and economic conditions.

PRINCIPAL RISKS

Stock Investment Risks

FINANCIAL RISK: Many factors affect the performance of a company in which the
Fund may invest. Some examples include strength of management, demand for a
company's products or services and general economic conditions. A company's
performance will affect the market price of its stock, and consequently, the
value of the Fund's portfolio. You could lose money investing in the Fund.

MARKET RISK: Over time, the stock market tends to move in cycles, with periods
when stock prices rise generally and periods when stock prices decline
generally. The value of the Fund's investments may increase or decrease more
than the stock market in general, as measured by the S&P 500(R). Because we
invest 35% to 75% of the Fund's assets in stocks, fluctuating stock prices will
have a significant impact on the Fund's value (the price of the Fund's shares).

Bond and Money Market Instrument Investment Risks

INTEREST  RATE RISK:  Changes in interest  rate  levels  affect the value of the
bonds and money market instruments in the portfolio and the value of the Fund as
a whole.

CREDIT RISK: The creditworthiness of bond issuers will affect the value of their
bonds and money market instruments, which may decline during the Fund's holding
periods and affect the value of the Fund as a whole.

Asset Allocation Risks
We may shift the portfolio's asset mix of stocks, bonds and money market
instruments based on existing or anticipated market conditions. The returns you
receive will depend on how we have allocated the Fund's investments across these
asset categories. As the allocation fluctuates over time, your returns fluctuate
as well. The Fund's performance will depend on our ability to successfully
predict market and economic trends and to achieve optimal allocation.

The Fund seeks total return, consisting of capital appreciation, current income
and long-term income growth, by following an asset allocation strategy. The
Fund, however, may not achieve as high a level of either capital appreciation or
income as a mutual fund that has only one of these as a primary objective.

PAST PERFORMANCE
The following table and chart reflect the Fund's annual return and long-term
performance. The bar chart and table show the risks of investing in the Fund by
demonstrating the variability in the Fund's annual total returns. As with all
investments, past performance is not a guarantee of future results.

Annual Total Returns
The following chart shows calendar year total returns for Class A shares since
the Fund started operations. Total returns assume reinvestment of all dividends
and distributions, but do not reflect any deduction for sales charges. If the
chart reflected sales loads, returns would be less than those shown.

Annual Return
Class A shares
Year Ended December 31st

[Bar chart with following data:]


12/31/98          18.04%
12/31/99          10.97%

The Fund's year-to-date return as of March 31, 2000 was 0.90%.


                        Best and Worst Quarterly Returns

Best Quarter                   4th Quarter of 1998                    11.28%
Worst Quarter                  3rd Quarter of 1998                    (4.54)%

Average Annual Total Returns
The tables below compare the Fund's average annual total returns for Class A and
B shares with the S&P 500(R) Index and the Lehman Brothers Aggregate Bond
Index(R).* Performance of the Fund reflects the maximum sales load you would pay
for the stated period. The average annual return for the Fund, the S&P 500(R)
Index and the Lehman Brothers Aggregate Bond Index(R), is calculated as of the
close of the Fund's fiscal year, which ends April 30, 2000. Returns for Class A
and B shares are shown for a one-year period and since inception of the Fund.


Balanced Fund                                   1 Year         Since Inception
Class A Shares(1)                               0.56%          9.91%
S&P 500(R)Index                                 10.13%         21.43%
Lehman Brothers Aggregate Bond Index(R)         1.26%          3.61%

Balanced Fund                                   1 Year         Since Inception
Class B Shares(2)                               (1.26)%        9.74%
S&P 500(R)Index                                 10.13%         21.43%
Lehman Brothers Aggregate Bond Index(R)         1.26%          3.61%


(1)      Inception of the Fund, December 29, 1997
(2)      Inception of Class B shares, December 29, 1997

* The S&P 500(R) Index is a broad-based composite unmanaged index that
represents the average performance of a group of 500 widely-held,
publicly-traded stocks. The Lehman Brothers Aggregate Bond Index(R) is an
unmanaged index that encompasses four 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.

PLEASE NOTE, INVESTMENT RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE. WHEN SHARES
ARE REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN THE PRICE YOU PAID.

EXPENSES
Like any investor, you directly pay certain expenses related to your
investments. We refer to these direct expenses as Shareholder Fees. Other
expenses, called Annual Fund Operating Expenses, are paid from Fund assets, so
they reduce your share price. Both types of expenses are outlined below.

Fee Table
This table describes the fees and expenses you may pay if you buy and hold the
Fund's shares:

<TABLE>
<CAPTION>
<S>                                               <C>                                <C>
SHAREHOLDER FEES                                  CLASS A SHARES                     CLASS B SHARES
(fees paid directly from your investment)

Maximum sales charge (load) imposed on            4.00%                              None
purchases (as a percentage of offering price)

Maximum deferred sales charge (load) imposed on   None                               5.00%
redemptions (as a percentage of net asset value)


ANNUAL FUND OPERATING EXPENSES                    CLASS A SHARES                     CLASS B SHARES
(expenses deducted from Fund assets)

Management Fees                                   0.55%                              0.55%

Distribution and Service (12b-1) Fees             0.25%                              1.00%

Other Expenses                                    0.34%                              0.53%

Total Fund Operating Expenses                     1.14%                              2.08%

</TABLE>

Expense Example
This example is intended to help you compare the costs of investing in the Fund
with the costs of investing in other mutual funds. It assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all your
shares at the end of those periods. It also assumes that your investment has a
5% return each year, and that the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on the foregoing
assumptions your costs would be:


<TABLE>
<CAPTION>
<S>                       <C>                         <C>                          <C>
TIME PERIOD               CLASS A SHARES              CLASS B SHARES               CLASS B SHARES NO REDEMPTIONS
1 Year                    $514                        $714                         $214
3 Year                    $754                        $961                         $661
5 Year                    $1,014                      $1,135                       $1,135
After 10 Years            $1,756                      N/A*                         N/A*

</TABLE>

* Class B shares convert into Class A shares after five years.

You should use the expense example for comparison purposes only. It does not
represent the Fund's actual expenses and returns, either past or future. Actual
expenses may be greater or less than those shown.


MANAGEMENT, ORGANIZATION, AND CAPITAL STRUCTURE

INVESTMENT ADVISER

AAL Capital Management Corporation ("AAL CMC") serves as investment adviser and
distributor to the Funds. AAL CMC was organized in 1986 as a Delaware
corporation. AAL Holdings Inc., a wholly owned subsidiary of Aid Association for
Lutherans ("AAL") owns all of AAL CMC's shares. AAL is a non-profit, non-stock,
membership organization licensed to do business as a fraternal benefit society
in all states. AAL has approximately 1.7 million members and is one of the
world's largest fraternal benefit societies in terms of assets and life
insurance in force. AAL ranks in the top two percent of all life insurers in the
United States in terms of ordinary life insurance (nearly $88 billion in force).
Membership is open to Lutherans, including their families and their enterprises.
Membership is also available to those who serve or are associated with Lutherans
or Lutheran organizations, but who are not Lutheran. AAL offers life, health,
and disability income insurance and fixed annuities to its members, and all
members are part of one of approximately 10,000 local AAL branches throughout
the United States. Through AAL CMC, AAL offers The AAL Mutual Funds to persons
who are eligible for membership in AAL. AAL CMC has served as adviser to The AAL
Mutual Funds since the commencement of operations. As of June 1, 2000, AAL CMC
managed over $7.7 billion for The AAL Mutual Funds.


[Sidebar: The adviser's principal address is:]

AAL Capital Management Corporation
222 West College Avenue
Appleton, WI 54919-0007

AAL's principal address is:


Aid Association for Lutherans
4321 North Ballard Road
Appleton, WI 54919-0001


Pursuant to an investment advisory agreement with the Funds, AAL CMC manages the
investment and reinvestment of the Funds' assets. AAL CMC also provides the
Funds with personnel, facilities, administrative services, and supervises the
Funds' daily business affairs. Services provided by AAL CMC to the Funds are
subject to the supervision of the Funds' Board of Trustees. AAL CMC formulates
and implements a continuous investment program for the Funds consistent with
each Fund's investment objectives, policies and restrictions.

ADVISER FEES PER FUND

The table below reflects advisory fees paid by each Fund as a percentage of
average daily net assets (effective advisory fees), for the fiscal year ended
April 30, 2000.

<TABLE>
<CAPTION>
<S>                                               <C>
THE AAL TECHNOLOGY STOCK FUND*                    0.75% on the average daily net assets
THE AAL AGGRESSIVE FUND*                          0.25% on the average daily net assets above the Sub-Adviser's fee
      Sub-Adviser  Fees
      Janus                                       0.55% on the first $100 million
                                                  0.50% on the next $400 million
                                                  0.45% on the average daily net assets over $500 million
THE AAL SMALL CAP STOCK FUND                      0.70% on the average daily net assets
THE AAL MID CAP STOCK FUND                        0.66% on the average daily net assets
THE AAL INTERNATIONAL FUND                        0.61% on the average daily net assets [total]
      Sub-Adviser Fees
      Oechsle International Advisors, LLC         0.36% on the average daily net assets
THE AAL CAPITAL GROWTH FUND                       0.53% on the average daily net assets
THE AAL EQUITY INCOME FUND                        0.45% on the average daily net assets
THE AAL BALANCED FUND                             0.55% on the average daily net assets
</TABLE>

*The contractual advisory and sub-advisory fees pursuant to the Investment
Advisory and Sub-Advisory Agreement for The AAL Technology Stock Fund and The
AAL Aggressive Growth Fund, respectively.


PORTFOLIO MANAGEMENT

THE AAL TECHNOLOGY STOCK FUND
Brian J. Flanagan CFA, has been the co-portfolio manager of The AAL Technology
Stock Fund since it commenced operations on July 1, 2000. Mr. Flanagan is also
portfolio manager of The AAL Small Cap Index Fund II, which commenced operations
on July 1, 2000. He is also the portfolio manager of the AAL Variable Product
Series Fund Small Company Portfolio, a series of an affiliated mutual fund group
with an investment objective similar to the Funds. From 1996 to 1998, he served
first as analyst and later as portfolio manager for the small cap portfolio of
the AAL Savings Plan. From 1994 to 1995, Mr. Flanagan was the analyst for the
fixed-income portfolio for the plan.

James A. Grossman has been co-portfolio manager for The AAL Technology Stock
Fund since it commenced operations on July 1, 2000. From 1996 through 2000, Mr.
Grossman served as a securities analyst, following selected technology
investments for The AAL Mutual Funds. Prior to joining AAL CMC, Mr. Grossman
served as a securities analyst for Monetta Financial Services.

THE AAL AGGRESSIVE GROWTH FUND

Janus Capital Corporation ["Janus"] makes the day-to-day investment decisions
for The AAL Aggressive Growth Fund under AAL CMC's direction and control. Janus
determines which securities to purchase and sell, arranges the purchases and
sales and gives other help in formulating and implementing the investment
program for the Fund's portfolio.

Michael Dugas has been the portfolio manager of The AAL Aggressive Growth Fund
since it commenced operations on July 1, 2000. Mr. Dugas is Assistant Portfolio
Manager of Janus Mercury Fund and also manages separate accounts in the
diversified growth discipline. Previously, he performed equity security
analysis, focusing his research efforts on large-capitalization domestic
healthcare and technology companies. Prior to joining Janus in 1993, Mr Dugas
was an audit senior at Price Waterhouse, analyzing financials of large
investment firms. He was also controller of the U.S. branch of a European
manufacturing firm. Mr. Dugas holds a bachelors degree in Spanish from Louisiana
State University, where he graduated magna cum laude, and an MBA in professional
accounting from the University of Texas. He is a Level II candidate in the CFA
Program and has nine years of professional investment experience.


THE AAL SMALL CAP STOCK FUND
Kevin A. Schmitting, CFA, has managed the day-to-day Fund investments since its
inception on July 1, 1996. Mr. Schmitting also managed The AAL Mid Cap Stock
Fund from November 1, 1995, through March 17, 1997. Prior to November 1, 1995,
Mr. Schmitting served as investment director and in other investment capacities
for the State of Wisconsin Investment Board from 1984 through 1995.

THE AAL MID CAP STOCK FUND
Michael R. Hochholzer, CFA, has managed the day-to-day Fund investments since
March 1997. Mr. Hochholzer also serves as Portfolio Manager for The AAL Mid Cap
Index Fund and The AAL Mid Cap Index Fund II, another series of The AAL Mutual
Funds. Prior to managing The AAL Mid Cap Fund, Mr. Hochholzer served as a
securities analyst and portfolio manager for Aid Association for Lutherans, the
parent company of AAL Capital Management Corporation, from 1989 through 1997.

THE AAL INTERNATIONAL FUND

Oechsle International Advisers, LLC ["Oechsle"] makes the day-to-day investment
decisions for The AAL International Fund under AAL CMC's direction and control.
Oechsle determines which securities to purchase and sell, arranges the purchases
and sales and gives other help in formulating and implementing the investment
program for the Fund's portfolio.


The portfolio  managers for The AAL  International  Fund are Kathleen Harris and
Sean Roche.  Ms. Harris has been a portfolio  manager at Oechsle since  January,
1995. Previously, to this, she was portfolio manager and investment director for
the State of Wisconsin  Investment  Board and a fund manager and equity  analyst
for Northern Trust Company.  Mr. Roche has been a general  partner and portfolio
manager with Oechsle since 1986.

THE AAL CAPITAL GROWTH FUND
Frederick L. Plautz has managed the day-to-day Fund investments since November
1, 1995. Prior to managing the Fund, Mr. Plautz served as vice president and
portfolio manager for Federated Investors from 1990 through October 1995.

THE AAL EQUITY INCOME FUND
Lewis A. Bohannon, CFA, has managed the day-to-day Fund investments since
November 1, 1995. From 1980 through 1994, Mr. Bohannon was at Cigna Corporation,
serving as managing director and portfolio manager from 1990 to 1994.

THE AAL BALANCED FUND

Frederick L. Plautz, portfolio manager of The AAL Capital Growth Fund and Alan
D. Onstad, manager of The AAL Bond Fund, serve as co-managers of the Fund. Mr.
Onstad currently manages the AAL Variable Product Money Market Portfolio, The
AAL Government Zero Coupon Target Fund Series 2001 and 2006, the money market
portfolio of the AAL Savings Plan, and the utility portfolio of AAL's general
account. Mr. Onstad has been employed by AAL since 1973, most recently as
Assistant Vice-President of Securities.



SHAREHOLDER INFORMATION

PRICING FUNDS' SHARES

The price of a Fund's share is based on the Fund's net asset value. The Funds
determine the net asset value ("NAV") per share once daily at the close of
trading (normally 3:00 p.m. Central Time) on the New York Stock Exchange
("NYSE"). The Funds do not determine NAV on holidays observed by the NYSE or
AAL. To determine the NAV, the Funds value their securities at current market
value using readily available market quotations. The Funds value securities that
do not have readily available market quotations at fair value, as determined in
good faith under policies and guidelines approved by The AAL Mutual Funds' Board
of Trustees. The Funds may use pricing services as approved by the Board of
Trustees to determine the net asset value of their securities.


Some of the Funds hold securities that trade primarily on foreign exchanges.
These exchanges may trade on weekends or other days when the Funds do not price
their shares. Accordingly, it is possible that the value of a Fund's shares may
change at times when those shares may not be purchased or redeemed.

The price at which you purchase or redeem shares of the Funds is based on the
NAV next determined after the Funds receive your payment or your redemption
request.

INTERNET TRANSACTIONS

You are able to perform various AAL Mutual Fund transactions over the internet
at WWW.AAL.ORG. You are able to purchase (pre-authorized bank information is
required prior to purchase), redeem, and exchange shares within your Fund
accounts. To protect your Fund assets, we require a Personal Identification
Number ("PIN") prior to authorizing transactions on your Fund accounts. Please
call AAL Capital Management Corporation at (800) 553-6319 ("The AAL Mutual Funds
Service Center") to request information about obtaining a PIN. You will receive
your PIN approximately 5-7 days after your request.


HOW TO BUY SHARES
You can buy Class A and Class B shares in the Funds through a Registered
Representative, by mail or wire transfer. Sales charges and ongoing asset-based
distribution fees mark the primary differences between Class A and Class B
shares. We describe the differences between the types of shares below.

BUYING CLASS A SHARES
Class A shares have an up-front sales charge which is commonly referred to as a
front-end load. You buy Class A shares of each Fund at net asset value (NAV)
plus a maximum sales charge (front-end load) of 4.00% of the public offering
price (POP). You pay this sales charge when you buy your shares. We do not
impose any sales charge when you redeem Class A shares of a Fund. We may reduce
or waive sales charges on certain purchases. The chart below shows the sales
charge percentage for Class A shares imposed at different dollar level
purchases.

                                   BREAKPOINTS

<TABLE>
<CAPTION>
<S>                       <C>                    <C>                     <C>                    <C>
Your Investment Amount    Sales Charge as a      Sales Charge as a       50% Sales Charge as    50% Sales Charge as
                          Percent of POP*        Percent of Net Amount   a Percent of POP*      a Percent of Net
                                                 Invested*                                      Amount Invested*

Less than $25,000         4.00%                  4.17%                   2.00%                  2.04%
$25,000 but less than     3.75%                  3.90%                   1.88%                  1.91%
$50,000
$50,000 but less than     3.00%                  3.09%                   1.50%                  1.52%
$100,000
$100,000 but less than    2.00%                  2.04%                   1.00%                  1.01%
$250,000**
$250,000 but less than    1.00%                  1.01%                   0.50%                  0.50%
$500,000
$500,000 and up*          0.00%                  0.00%                   0.00%                  0.00%
</TABLE>

* Registered Representatives may receive compensation of 55% of the sales charge
on amounts purchased, plus a bonus based on total commissions. Registered
Representatives may also receive compensation of .50 of 1% on amounts invested
of $500,000 or more.

** You should purchase Class A shares at this level of investment and above.

Please note, you buy Class A shares of The AAL Money Market Fund at net asset
value without a sales charge and you do not pay a fee upon redemption.

Reducing Your Sales Charges
We may reduce your sales charges on purchases of Class A shares under certain
circumstances, described below. If you are eligible for one of these reductions,
you must tell us or your Registered Representative at the time you purchase
Class A shares in order to assure you receive the appropriate reduction.
Trustees, directors and employees of the Funds and the adviser and sub-advisers,
as well as persons licensed to receive commissions for sales of the Funds, do
not pay a sales charge on their purchases or on purchases made by family members
living with them. We reserve the right to stop or change these reductions at any
time. Prior to making any changes, we will notify shareholders with a prospectus
supplement.

50% REDUCTION: Non-profit organizations, charitable trusts, charitable remainder
unitrusts, endowments, AAL branches and congregations pay only 50% of the normal
sales charge so long as there is an affiliation with a Lutheran organization.
The reduction does not apply to 403(b)(7) retirement plan accounts.

RIGHTS OF ACCUMULATION: You can combine all your Class A, Class B and
Institutional share purchases, including the purchases of family members who
live with you, when computing your current sales charge for Class A shares.
Eligible shares for combination in computing the sales charge include those
contained in individual, joint tenant, gift/transfer to minor, trust and IRA
accounts. Employer sponsored plans can link the shares in the plan for purposes
of calculating a sales charge reduction. Rights of accumulation includes the
value of all Class A shares at the public offering price, all Class B shares,
all Institutional shares and reinvested dividends and capital gains.

LETTER OF INTENT

To reduce your sales charge on purchases over the breakpoints listed above, you
can sign a letter of intent if you intend to invest new dollars exceeding the
amount of any one breakpoint during the next 13 months. Class A or Class B share
purchases fulfill the letter of intent, but you receive a reduced sales charge
on Class A shares only. You can include purchases in accounts you have linked
for purposes of the rights of accumulation, as well as, purchases made in the
last 90 days. However, shares you purchase through employer sponsored retirement
plans will not be linked for your letter of intent. We will not recalculate the
sales charge on prior purchases.


You do not have any obligation to buy additional shares. During the letter of
intent period, we will escrow shares totaling 5% of the investment goal. If for
some reason you do not fulfill the letter of intent within the 13-month period,
we will sell escrowed shares to cover any additional sales charges due from you.
You should sign only one letter of intent for all accounts combined under rights
of accumulation.

Share purchases in The AAL Money Market Fund do not apply toward your letter of
intent, unless you originally purchased shares in another Fund and paid a sales
charge, and later exchanged those shares for your shares of The AAL Money Market
Fund.

BUYING CLASS B SHARES
Class B shares have a contingent deferred sales charge, which is commonly
referred to as a back-end load. You buy Class B shares of each Fund at net asset
value with no initial sales charge. However, you may pay a contingent deferred
sales charge (expressed as a percentage of the lesser of the current net asset
value or original cost) of up to 5% if you redeem shares within five years after
purchase. We do not impose a contingent deferred sales charge on shares you
acquire through the reinvestment of dividends and capital gains. To reduce your
cost, when you redeem shares in a Fund, you will redeem either shares that are
not subject to a contingent deferred sales charge (i.e., those bought through
reinvestment of dividends and capital gains) or shares with the lowest
contingent deferred sales charge. We waive the contingent deferred sales charge
upon redemption of shares following the death or disability of a shareholder or
for mandatory or hardship distributions from retirement plans, IRAs and 403(b)
plans or to meet certain retirement plan requirements. Also, we reduce the
amount of the contingent deferred sales charge depending on the amount of years
from the purchase of Class B shares until the sale of those shares according to
the following table:

Years After Purchase                     Deferred Sales Charge on Shares Sold*
1st Year                                 5.00%
2nd Year                                 4.00%
3rd Year                                 3.00%
4th Year                                 2.00%
5th Year                                 1.00%
After 5th Year                           0.00%

*Registered Representatives may receive compensation in connection with your
purchase of Class B shares in the amount of up to 1.25% of the purchase amount,
plus a bonus based on total commissions, even if such shares are not redeemed
within five years of purchase and thus not subject to a back-end load. We base
the sales charge on the lesser of the net asset value of the shares at the time
of the purchase or at the time of the sale.

You should not consider buying Class B shares if you can elect the 50% reduction
for purchases of Class A shares or you are investing $100,000 or more in the
Funds. Also, because of the higher expenses, you should not consider buying
Class B shares of The AAL Money Market Fund unless you intend to exchange them
for other Class B shares or as part of The AAL Mutual Funds Capital Builder
Plan.

Conversion to Class A shares
Your Class B shares automatically convert to Class A shares after 5 years from
the purchase date, reducing future annual expenses. Class B shares provide the
benefit of putting all of your dollars to work from the time you make your
investment. However, until your Class B shares convert to Class A shares, you
will have a higher expense ratio, receive lower dividends and may have a lower
net asset value than Class A shares due to the higher 12b-1 fees.

You should consider the amount and intended length of time of your investment
when determining which share class would benefit you the most. In general, if
you intend to make a large investment, thus qualifying for a reduced sales
charge, you might consider purchasing Class A shares. If you intend to make a
smaller investment, you might consider Class B shares because 100% of your
purchase is invested immediately.

Minimum Purchase Amounts
The following minimum amounts apply to purchases of shares of each Fund:

              MINIMUM PURCHASE AMOUNT PER ACCOUNT PER TRANSACTION*

Account                                Initial Purchase      Additional Purchase
Regular Account                        $1,000                $50
Custodial, IRA or other Retirement     $250                  $50
Plan Account
Automatic Investment Plan              $0                    $25


* Minimum amounts may be waived for qualified group retirement plans and payroll
deduction plans with prior approval or when required by law.

OPENING A NEW ACCOUNT

Your AAL Capital Management Corporation Registered Representative is ready to
help you open a new account. If you do not know the name of your Registered
Representative, please call The AAL Mutual Funds Service Center at (800)
553-6319. The Telecommunications Device for the Deaf (TDD) is (800) 684-3416.


Purchasing Shares for the First Time by Mail To open your new account, just
follow these steps:

Step One:
After reviewing this prospectus, complete an AAL Mutual Funds application and
new account form, for every different account registration. For example, you
need a separate application for an individual account in The AAL Bond Fund and a
separate application for an IRA account invested in The AAL Bond Fund. Remember
to designate whether you are purchasing Class A shares or Class B shares. If you
do not complete the application properly, your purchase may be delayed or
rejected;

Step Two:
Make your  check  payable  to the Fund you are  buying,  for  example,  "The AAL
Balanced Fund." If you are buying more than one Fund, make your check payable to
"THE AAL MUTUAL  FUNDS." DO NOT MAKE YOUR  CHECK  PAYABLE TO AAL OR AAL  CAPITAL
MANAGEMENT CORPORATION; and

Step Three:
Mail your completed application and check to:

The AAL Mutual Funds
Attn:  New Accounts
222 W. College Ave.
P.O. Box 8004
Appleton, WI 54912-8004

Please note, how you register your account with the Funds can affect your legal
interests as well as the rights and interests of your family and beneficiaries.
You should always consult with your legal and/or tax adviser to determine the
account registration that best meets your needs. You must clearly identify the
type of account you want on your AAL Mutual Funds application. Some account
registrations may require additional documents.

Purchasing Shares for the First Time By Wire
If your bank is a member of, or has a corresponding relationship with a member
of the Federal Reserve System, you can buy shares of the Funds by wire transfer
by following these steps:

Step One:

Call AAL Capital Management Corporation at (800)553-6319 ("The AAL Mutual Funds
Service Center") and provide the following information:


o    your account registration;
o    the name of the Fund(s) in which you want to invest and whether you wish to
     buy Class A or Class B shares;
o    your address;
o    your Social Security or tax identification number;
o    the dollar amount;
o    the name of the wiring bank; and
o    the name and telephone  number of the person at your bank who the Funds can
     contact about your purchase.

We must receive your wire order before the closing of the NYSE (normally 3:00
p.m. Central Time) to receive that day's price.

Step Two:
Instruct your bank to use the following instructions when wiring funds:

o        Wire To:          Firstar Bank
                           Milwaukee, N.A.
                           ABA #0705000022

o        Credit:           Firstar Mutual Fund Services, LLC
                           Account 112-952-137
o        Further Credit:   Name of Fund
                           New Account FBO
                           Shareholder Registration


Please call (800) 553-6319 prior to sending the wire in order to obtain a
confirmation number and to ensure prompt and accurate handling of funds.

The Fund and its transfer agent are not responsible for the consequences of
delays resulting from the banking or Federal Reserve Wire system, or from
incomplete wiring instructions.

Step Three:
Complete The AAL Mutual Funds application and mail it immediately to:

The AAL Mutual Funds
Attn:  New Accounts
222 W. College Ave.
P.O. Box 8004
Appleton, WI 54912-8004

Additional Purchases in Existing Accounts
After you have opened an account with The AAL Mutual Funds, you may purchase
additional shares in your account by mail or wire.

Additional Purchases by Mail
Payment for additional purchases in existing Fund accounts should be sent
directly to the Funds' transfer agent at the following address:

REGULAR MAIL


The AAL Mutual Funds
c/o Firstar Mutual Fund Services, LLC
615 E. Michigan St.

P. O. Box 2981
Milwaukee, WI 53201-2981

EXPRESS MAIL/PRIVATE DELIVERY


The AAL Mutual Funds
c/o Firstar Mutual Fund Services, LLC
Mutual Fund Services, Third Floor
615 E. Michigan St.

P.O. Box 2981
Milwaukee, WI 53202

Please indicate your AAL Mutual Fund account number on the face of all
subsequent investment checks and make your check payable to the specific Fund in
which you are investing. If you have more than one account, always verify that
you are investing in the proper account. This will help to ensure the proper
handling of the transaction.

Additional Purchase by Wire
You may make additional wire purchases in an existing Fund account by following
Step (2) of the wire transfer instructions shown for "Initial Purchase by Wire,"
and in addition, by providing your existing Fund account number.


The Funds' transfer agent, Firstar Mutual Fund Services, LLC , must receive your
wire order funds in its offices prior to the close of the NYSE (normally 3:00
p.m. Central Time), to purchase shares on that day. Money received after the
close of the NYSE will go toward the purchase of shares the next day at that
day's price.


Additional Purchase by Telephone

Before you can buy additional shares by telephone, you must have selected the
Request for Telephone Purchase option on the application. Once you have selected
this option, you can call The AAL Mutual Funds Service Center and we will
withdraw money from your bank checking or savings account to make your
investment. You pay the next price computed after the Funds have received your
investment from your bank, which is usually three business days after you
authorize the transfer. If you need to invest sooner, you should consider making
a bank wire purchase.


AUTOMATIC INVESTMENT PLANS

The Funds offer several automatic investment plans to make periodic investing
more convenient. These plans are not required to meet a minimum initial
investment. Using The AAL Mutual Funds automatic investment plans, you may
implement a strategy called dollar cost averaging. Dollar cost averaging
involves investing a fixed amount of money at regular intervals. When you dollar
cost average, you purchase more shares when the price is low and fewer shares
when the price is high. Dollar cost averaging does not ensure a profit or
protect against a loss during declining markets. Because such a program involves
continuous investment regardless of changing share prices, you should consider
your ability to continue the program through times when the share prices are
high.


Please note, it takes 12 days from the time you invest for the transfer agent to
validate any electronic transfer. This will cause some delay in your ability to
write checks on an AAL Money Market Fund account or to redeem or transfer from
your account.

The Bank Draft Plan

Investors who wish to make regular additional investments in an existing Fund
account may do so through the Funds' bank draft plan. Under this plan the Funds
will draft an investor's bank checking or savings account in the amount
specified -- which may not be less than $25 per account -- on specified dates,
up to two transactions per month (at least 10 days apart), and have the proceeds
invested in shares of the specified Fund at the applicable offering price
determined on the date of the draft. To use this plan you must authorize the
plan on your application form, or subsequently in writing, and submit additional
documents. Your instructions to establish a bank draft plan or to change the
bank on an existing plan, must be received by the Funds' transfer agent at least
13 business days prior to the transaction date. Your instructions for stopping a
bank draft plan or changing the dollar amount on an existing plan must be
received by the Funds' transfer agent at least 5 business days prior to the
transaction date. For further information contact AAL Capital Management
Corporation ("The AAL Mutual Funds Service Center") at (800) 553-6319 or your
Registered Representative. Instructions for changes, additions or termination of
a bank draft plan must be in writing and signed by all bank account owners.


The Capital Builder Plan
The capital builder plan also allows investors to make regular automatic
investments in an existing account in any of The AAL Mutual Funds by redemption
of shares from their AAL Money Market Fund account. The capital builder plan
allows investors to select the transaction date. If you do not select the date,
it will automatically be drawn from your account on the 15th of the month. All
such investments will be subject to the applicable sales charge. These
transactions must meet the minimum purchase amounts described above. To start,
stop or change the plan, you must notify the Funds at least 24 hours prior to
the transaction date.

Payroll Deduction Savings and Investment Plan

The payroll deduction savings and investment plan allows employees of AAL and
employees of Lutheran-affiliated institutions to invest in the Funds through
direct deduction from their paychecks or commission checks.


The Government Allotment Plan
The Government Allotment Plan allows Lutheran Social Security recipients,
federal employees and military personnel to invest in The AAL Mutual Funds
through direct deduction from their paychecks.

Prestige Account
Investors who maintain a significant share balance will be provided with
additional benefits, including personal attention from Prestige Account
representatives, an exclusive toll-free telephone number, personalized
investment analysis, complimentary financial information, a Prestige Account
organizer and more. Your AAL CMC Registered Representative can provide more
detailed information.

Retirement Plans

AAL members and their enterprises and Lutheran organizations may establish their
own individual or business retirement plans, with assets invested in The AAL
Mutual Funds. These accounts may offer you tax advantages. You should consult
with your legal and/or tax adviser before you establish a retirement plan. A
third-party maintenance fee may apply to some retirement accounts. Please review
plan documents for more information. Your AAL CMC Registered Representative will
provide you with the materials, documents and forms you need, and will work with
you in establishing your retirement and education plan from among these choices:

o    IRA (Individual Retirement Account);
o    "Rollover" IRA;
o    Roth IRA -- annual  contributions  are not tax deductible but distributions
     may not be subject to income tax;
o    Education  IRA  --  annual  contributions  are  not  tax  deductible,   but
     distributions may not be subject to income tax;
o    SEP-IRA (Simplified Employee Pension Plan);
o    SARSEP-IRA  (Salary Reduction  Simplified  Employee Pension Plan) -- No new
     plans may start after 1996, but existing  plans may continue;
o    SIMPLE-IRA (Savings Incentive Match Plan for Employees);
o    403(b)(7)  Custodial Account -- for employees of public schools and certain
     non-profit organizations;
o    Money Purchase Pension Plan;
o    Profit Sharing Plan; and
o    401(k) Plan.

Please note, The AAL Municipal Bond Fund is generally not an appropriate
investment for a retirement account or Education IRA.


OTHER PURCHASE INFORMATION

Earning Income
You begin earning income, if any, on your shares on the business day following
the day our transfer agent receives your payment.

Purchases
Your purchase must be in U.S. dollars and your check must be drawn on a U.S.
bank. We do not accept cash or traveler's checks. If your check does not clear,
we will cancel your purchase and hold you liable for any losses and any
applicable fees. If you buy shares by any type of check, electronic funds
transfer (other than bank wires) or automatic investment plan, and you elect to
redeem your shares soon thereafter, we may postpone paying the redemption
proceeds for 12 days, or until your check has cleared, whichever is later. This
does not limit your right to redeem shares. Rather, it operates to make sure
that payment for the shares redeemed has been received by the transfer agent.

Confirmation
We generally mail written confirmation of your purchases, except for The AAL
Money Market Fund, within two business days following the date of your purchase.
We mail confirmation of additional purchases in The AAL Money Market Fund
monthly. We mail confirmation of your automatic investment plan purchases at
least quarterly.

Share Certificates

We issue share certificates only upon written request, and then only for full
shares. You must make a new written request for a share certificate each time
you purchase shares. We do not charge a fee to issue share certificates. If you
have asked for or have received share certificates, you cannot use certain
shareholder services, including wire, check and telephone redemption, share
exchange and any systematic withdrawal. Before you can redeem, transfer or
exchange your shares, you must deliver the share certificates to our transfer
agent in negotiable form (with asignature guarantee). We may not have share
certificates available for some retirement accounts. If you lose your share
certificate(s), you will be unable to redeem your shares until you receive a
replacement certificate. To replace your share certificates contact The AAL
Mutual Funds Service Center at (800) 553-6319 for instructions. There may be a
charge for replacement.


Other Information
The U.S. Postal Service or private delivery services are not agents of the
Funds, the distributor, or the transfer agent. We do not legally receive your
purchase application or your request for redemption when you deposit them in the
mail, send them with a private delivery service or when you deposit them in our
Post Office Box. We must have physical possession of your request to consider
your request received. Current law will determine the legal effect of posting
for deadline purposes.

We reserve the right to suspend the offering of shares for a period of time and
the right to reject any specific purchase of shares.

Changes to Your Account

After opening your AAL Mutual Fund account, you may wish to make changes to your
account. Certain types of changes, such as moving to a new address or getting a
new telephone number, do not have any other effect on an account. Any feature
such as telephone exchange or participation in an automatic investment plan
would continue uninterrupted. Other changes, such as exchanging from one Fund to
another or transferring shares from a regular account to an IRA or adding a
joint owner, will affect your account options because a new account is actually
created. Account options, such as an automatic investment plan, are discontinued
unless additional action is taken. These changes may require additional
instructions and specific forms. If you are not sure whether a change affects
your account, please contact your Registered Representative or The AAL Mutual
Funds Service Center at (800) 553-6319. When making these types of changes,
please use The AAL Mutual Funds Account Change Request Form, which is available
from your Registered Representative or from the Mutual Funds Service Center.

Householding
As a shareholder of The AAL Mutual Funds, you currently receive a great deal of
information from us through the mail. To help reduce the volume of mail that you
receive, we will "household" all regulatory materials from this point. When we
household mailings, we simply identify addresses on file that have two or more
accounts and send only one copy of items such as prospectuses and
annual/semi-annual reports to that address. These "shared" addresses will be
used for mailings even if the accounts' owners of record are not exactly the
same.

For example, suppose you and your spouse each hold individual AAL IRA accounts
in The AAL Capital Growth Fund, and you both live at the same address. Instead
of sending you both separate copies of the latest shareholder reports for The
AAL Capital Growth Fund, we will send only one copy to your address.

Householding helps to save money through reduced printing and mailing costs,
which benefits all shareholders. From this point forward, we will continue to
household your regulatory materials unless you tell us otherwise. If you would
like to discontinue householding for your account(s), please call The AAL Mutual
Fund Service Center at (800) 553-6319. When we receive notice from you to stop
householding, we will begin sending you multiple copies of the same materials
free of charge within 30 days.

PLEASE NOTE, THIS POLICY APPLIES ONLY TO REGULATORY DOCUMENTS AND NOT TO
QUARTERLY ACCOUNT STATEMENTS.


HOW TO REDEEM (SELL) SHARES
You can sell your shares on any business day we price The AAL Mutual Funds'
shares. When you sell your shares, you receive the net asset value per share,
except for Class B shares for which you will receive the net asset value per
share minus the back-end load, if any, depending on how long you have held the
shares redeemed. If we receive your request in good order, which includes all
the information listed below, before the close of the NYSE (normally 3:00 p.m.
Central Time) you will receive that day's price. If we receive your redemption
request in good order on a holiday, weekend or day the NYSE is closed, we will
process your transaction request on the next business day. You can sell shares
several ways. Please note that transfers via Electronic Funds Transfer (EFT)
generally take up to three business days to reach your bank account.

Redemptions by Mail
Shareholders of any of the Funds may have their shares redeemed at any time at
the net asset value per share next determined after a written request and all
additional documents, if required, are received in good order by the Funds'
transfer agent.


The Funds determine payment for shares presented for redemption at a Fund's net
asset value next computed after a request is received in good order by the
transfer agent. Shareholders earn income and receive dividends paid on Funds
through the date of redemption. The Funds will mail payment proceeds within
seven days following receipt of all required documents. The Funds may postpone
payment or suspend the right of redemption in unusual circumstances, as
permitted by the U.S. Securities and Exchange Commission. When you purchase
shares by check, the Funds may delay payment for redemption requests for the
shares purchased for 12 days or until your check has cleared, if later.

In order for your redemption request to be in good order, you must include the
name(s) of the account owner(s), your account number and specify the dollar or
share amount you wish to redeem. You and any other persons registered as
shareholders on the account must sign your redemption request. You must sign the
request exactly as the account is registered. If you wish to redeem shares with
a value in excess of $100,000, you must have your signature(s) guaranteed. The
transfer agent will acceptsignature guarantees from all institutions that are
eligible to provide signature guarantees under federal or state law, provided
that the individual giving the signature guarantee is authorized to do so.
Institutions that usually are eligible to provide signature guarantees include
commercial banks, trust companies, brokers, dealers, national securities
exchanges, savings and loan institutions and credit unions. Please note that a
signature guarantee is not the same as a notarized signature. If shares are held
in the name of a corporation, trust, estate, custodianship, guardianship,
partnership or pension and profit sharing plan, or if you have requested and
received share certificates, additional documentation may be necessary. If you
wish to redeem any type of IRA account you must indicate on the redemption
request whether or not federal income tax should be withheld. Redemption
requests that fail to indicate an election not to have federal tax withheld will
be subject to withholding.


You may redeem shares of any of the Funds by mail, by sending a written request
for redemption to:

REGULAR MAIL


The AAL Mutual Funds
c/o Firstar Mutual Fund Services, LLC
615 E. Michigan St

P. O. Box 2981
Milwaukee, WI 53201-2981

EXPRESS MAIL/PRIVATE DELIVERY


The AAL Mutual Funds
c/o Firstar Mutual Fund Services, LLC
Mutual Fund Services, Third Floor
615 E. Michigan St

P.O. Box 2981
Milwaukee, WI 53202

Redemptions by Telephone

The privilege to redeem shares by telephone is automatically extended to all
accounts, unless the option is specifically declined. If you do not want the
telephone redemption option, please call The AAL Mutual Funds Service Center at
(800) 553-6319. By accepting this privilege, you assume some risks for
unauthorized transactions. Once a telephone request has been made, it cannot be
canceled or modified. AAL CMC has implemented procedures designed to reasonably
ensure that telephone instructions are genuine. These procedures include
recording telephone conversations, requesting verification of certain personal
information, restricting transmittal of redemption proceeds to pre-authorized
account owners and addresses and supplying transaction verification information.
AAL CMC will not be liable for losses from telephone redemptions if they follow
these reasonable procedures.


The following conditions apply to telephone redemptions described above:


o      telephone redemption checks will be issued to the same payee(s) as the
       account registration and sent only to the address of record;
o      there has been no change of address in the preceding 60 days;
o      the request is for $100,000 or less;
o      retirement plan accounts are generally not eligible;
o      shares to be redeemed cannot be in certificate form; and
o      only one telephone redemption is permitted within any 30 day period
       for each authorized account.

Please note: individual retirement plan accounts can be redeemed by phone only
with 10% Federal Tax withholding.

Redemptions by Bank Wire

Existing  shareholders  must  send an  Account  Change  Request  Form  with  the
appropriate  section  completed  prior  to  exercising  the  privilege  of  wire
redemption to:


REGULAR MAIL


The AAL Mutual Funds
c/o Firstar Mutual Fund Services, LLC
615 E. Michigan St

P. O. Box 2981
Milwaukee, WI 53201-2981

EXPRESS MAIL/PRIVATE DELIVERY


The AAL Mutual Funds
c/o Firstar Mutual Fund Services, LLC
Mutual Fund Services, Third Floor
615 E. Michigan St

P.O. Box 2981
Milwaukee, WI 53202


When redeeming shares by bank wire, please be aware of the following conditions:

o wire redemptions can be made for any amount;
o a $12.00 fee is assessed for redemptions by wire;
o requests received in good order before the close of the NYSE (usually
  3:00 p.m. Central Time) receive that day's price; and
o if an account has multiple owners, AAL CMC may rely on the instructions
  of any one account owner. This privilege may not be available on all
  retirement plan accounts.


Systematic Withdrawal Plan (Usually Only Appropriate for Class A Shares)

You can have money automatically withdrawn from your AAL Mutual Funds account(s)
on a regular basis by using our systematic withdrawal plan. The plan allows you
to receive funds or pay a bill at regular intervals. The following rules and/or
guidelines apply:


o you need a minimum of $5,000 in your account to start the plan;
o you can select the date(s) on which the money is withdrawn.  If you don't
  select the date(s), we will withdraw the money automatically from your account
  on the 15th of the month;
o to start the plan or change the payee(s), you must notify us in writing at
  least 13 business days prior to the first withdrawal and you must have all
  account owner(s) sign the appropriate form;
o money can be sent by check or bank wire;
o to stop or change your plan, you must notify us at least 5 business days prior
  to the next withdrawal; and
o because of sales charges, you must consider carefully the costs of frequent
  investments in and withdrawals from your account.

Please note, for minimum required distributions from IRA accounts, we will waive
the back-end load on Class B shares.


Reinstatement Privilege (Class A Shares Only)

You have 60 days after you sell shares to reinvest the dollar amount you
redeemed without having to pay another sales charge. You will pay the net asset
value per share on the day you make your reinvestment and not on the day you
sold your investment. The following rules and/or guidelines apply:

o you may use this privilege only ONCE per account;
o you must send a written request and a check for the amount you wish to
  reinvest to the Funds' transfer agent:


REGULAR MAIL


The AAL Mutual Funds
c/o Firstar Mutual Fund Services, LLC

P. O. Box 2981
615 E. Michigan St.
Milwaukee, WI 53201-2981

EXPRESS MAIL/PRIVATE DELIVERY


The AAL Mutual Funds
c/o Firstar Mutual Fund Services, LLC
Mutual Funds Services, Third Floor
615 E. Michigan St.

Milwaukee, WI 53202;


o the dollar amount you reinvest cannot exceed the dollar amount you sold;
o the sale of your shares may be a taxable event despite the reinstatement; and
o the reinstatement privilege does not apply to qualified retirement plan
  accounts (i.e., 403(b) and 401(k) accounts).


Involuntary Redemption
Because all account owners share the high cost of maintaining accounts with low
balances, the Funds reserve the right to involuntarily redeem a shareholder's
account, other than a retirement plan account, at any time the value of the
account falls below $250 as a result of redemption. Shareholders will be
notified in writing of any planned involuntary redemption and will be allowed 30
days to increase the account balance above the stated minimum before the
redemption is processed.

Exchange Privilege
Shares of the Funds held for at least 12 days may be exchanged for shares of any
other AAL Mutual Fund with the same registration, without additional sales
charge, at the net asset value per share next computed after receipt of a
written exchange request in proper form by the transfer agent. However, if you
initially purchased Class A shares of The AAL Money Market Fund, and did not pay
an initial sales charge, you would not be able to exchange these shares for
another Fund without paying a sales charge.

Minimum investment rules may apply when you open a new account by exchanging
shares, and you may have to submit a new application (i.e., you must exchange at
least $1,000 worth of shares to another Fund and fill out a new account form, if
you have not invested shares in the other AAL Mutual Fund account before). You
can exchange for the same class of shares only (for example, Class A shares for
Class A shares and Class B shares for Class B shares).

Shareholders of a Fund may only exchange into such other Funds as are legally
available for sale in any state. If shares are held in the name of a
corporation, trust, estate, custodianship, guardianship, partnership or pension
and profit sharing plan, or if you have requested and received share
certificates, additional documentation may be necessary.

An exchange constitutes a redemption of the shares of one mutual fund and the
purchase of shares of another. Exchanges are sales for tax purposes and could
result in a gain or loss, depending on the original cost of shares exchanged.


An excessive number of exchanges may be disadvantageous to the Funds. Therefore,
the Funds reserve the right to terminate the exchange privilege of any
shareholder who makes more than twelve exchanges in a year. Further, the Funds
reserve the right to modify or terminate the exchange privilege at any time with
respect to any Fund, if the Funds' Trustees determine that continuing the
privilege may be detrimental to shareholders. The Funds will provide at least 60
days notice prior to modifying or terminating the exchange privilege. In the
event your exchange privilege is terminated for any reason, you will still have
the right to redeem your shares for cash as described in this prospectus.


Exchanges by Mail
You can make an exchange by mail by sending your request to the Funds' transfer
agent:

REGULAR MAIL


The AAL Mutual Funds
c/o Firstar Mutual Fund Services, LLC

P. O. Box 2981
615 E. Michigan St.
Milwaukee, WI 53201-2981

EXPRESS MAIL/PRIVATE DELIVERY


The AAL Mutual Funds
c/o Firstar Mutual Fund Services, LLC
Mutual Funds Services, Third Floor
615 E. Michigan St.

Milwaukee, WI 53202;

Please include the following information in your exchange request:


o  name(s) of the account owner(s);
o  account number(s);
o  amount of shares (or dollar amount) you want to exchange;
o  the name of the Fund you are exchanging into; and
o  signatures of all account owners.


Exchanges by Telephone
You can sell or exchange shares by phone. By doing so, you assume some risks for
unauthorized transactions. AAL CMC has implemented procedures designed to
reasonably assure that telephone instructions are genuine. These procedures
include recording telephone conversations, requesting verification of various
pieces of personal information, restricting transmittal of redemption proceeds
to pre-authorized designations, and supplying transaction/taping identification
numbers and/or symbols. Please note, however, that The AAL Mutual Funds, AAL
CMC, the custodian, the transfer agent or any of their employees will not be
liable for losses suffered by a shareholder that result from following telephone
instructions reasonably believed to be authentic after verification pursuant to
these procedures.

Telephone exchanges (transactions in which the registration does not change) are
subject to the requirements described above, and additional requirements as
follows.


You may exchange shares for which certificates have not been issued by
telephoning The AAL Mutual Funds Service Center at (800) 553-6319 or (920)
734-7633. Telephone exchange requests received prior to the close of the NYSE
(usually 3:00 p.m. Central Time) will receive that day's price.


Telephone exchanges will be permitted only if you elect the telephone exchange
option on your initial purchase application, or request the telephone exchange
privilege in a subsequent written request, signed by all registered owners, with
all signatures guaranteed.

During periods of extreme volume caused by dramatic economic or stock market
changes, shareholders may have difficulty reaching the Mutual Funds Service
Center by phone, and a telephone exchange may be difficult to implement at those
times. The Funds reserve the right to temporarily discontinue the telephone
exchange privilege during such periods of extreme volume.


DIVIDENDS

The Funds endeavor to qualify annually for, and elect tax treatment applicable
to, a regulated investment company under Subchapter M of the Internal Revenue
Code of 1986 as amended (Code). Pursuant to the requirements of the Code, we
intend to distribute substantially all of the Funds' net investment income and
net realized capital gains, if any, less any available capital loss carryover,
to shareholders annually. We do this to avoid paying income tax on the Funds'
net investment income and net realized capital gains or being subject to a
federal excise tax on undistributed net investment income and net realized
gains. Annually, we intend to comply with all of the requirements to qualify as
a regulated investment company for each Fund. We provide you with full
information on dividends and capital gains distributions for each Fund on an
annual basis.

Below, we provide you with a general description of the distribution policies
and some of the tax consequences for the Funds' shareholders. You should always
check with your tax adviser to determine whether any dividends and distributions
paid to you by a Fund are subject to any taxes, including state and local taxes.

The AAL Technology  Stock , Aggressive  Growth,  Small Cap Stock, Mid Cap Stock,
International, Capital Growth, Equity Income, and Balanced Funds

The dividends from net investment income of each of these Funds, including net
short-term capital gains, are taxable as ordinary income to shareholders,
whether paid in additional shares or in cash. Any long-term capital gains
distributed to shareholders are taxable as capital gains to shareholders,
whether they receive them in cash or in additional shares, and regardless of the
length of time a shareholder has owned the shares.

We distribute substantially all net investment income and any net realized
capital gains, if any, for the Funds as shown in the table below.

FUND                               DIVIDENDS (IF ANY)     CAPITAL GAINS (IF ANY)
The AAL Technology Stock Fund      Annually               Annually
The AAL Aggressive Growth Fund     Annually               Annually
The AAL Small Cap Stock Fund       Annually               Annually
The AAL Mid Cap Stock Fund         Annually               Annually
The AAL International Fund         Annually               Annually
The AAL Capital Growth Fund        Semi-Annually          Annually
The AAL Equity Income Fund         Quarterly              Annually
The AAL Balanced Fund              Quarterly              Annually

Reinvestment of Fund Distributions
You can reinvest all of your income dividends and/or capital gains distributions
into the Funds at net asset value and pay no up-front (Class A shares) or
contingent deferred (Class B shares) sales charges. You also can have your
distributions paid in cash. When you receive a distribution you may have to pay
taxes whether or not you reinvested them or had them paid out to you in cash. If
you have requested cash distributions and we cannot locate you, we will reinvest
your dividends.


TAX CONSIDERATIONS

As with all funds distributing taxable income, you as a tax-paying investor will
be subject to income taxes on all dividends and distributions, regardless of
whether you elect to take them in cash or have them reinvested.

Each Fund intends to distribute in December and, if necessary, at such other
times as the Fund may determine, its net investment income and any net realized
capital gains resulting from investment activity. Any dividend (including a
capital gains dividend) declared in October, November or December with a record
date in such a month and paid during the following January will be treated by
shareholders for federal income tax purposes as if received on December 31, of
the calendar year declared. Cumulative statements showing all activity in the
account for the prior year will be mailed annually to all shareholders.

All income and capital gains distributions are reinvested in full and fractional
shares of a Fund at net asset value, without sales charges, on a payment date
unless a shareholder has requested payment in cash on the shareholder
application or by separate written request. The shareholder returns that we
project at maturity assume the reinvestment of all income and capital gains
distributions. If a shareholder elects to receive these distributions in cash,
the return at maturity will be substantially less than our projections at the
time of purchase.

Each Fund intends to qualify as a "regulated investment company" under the
Internal Revenue Code (the Code) and to take all other action required so that
no federal income tax will be payable by the Funds themselves. Each Fund will be
treated as a separate regulated investment company under the Code. Shareholders
are provided annually with full information on income and capital gains
distributions for tax purposes. Shareholders should consult their tax advisers
regarding the applicability of state and local taxes to dividends and
distributions. The Funds are required by federal law to withhold 31% of
reportable payments (which include dividends, capital gain distributions and
redemption proceeds) paid to certain shareholders who have not properly
certified that the Social Security or other taxpayer identification number
provided by the shareholder is correct and that he or she is not otherwise
subject to backup withholding. The Funds' shareholder application includes the
required certification.

This discussion provides no information as to state and local tax consequences
of ownership of shares of the Funds. You should consult your personal tax
adviser to determine the consequences of state and local taxes, and for a more
detailed assessment of federal tax consequences for your particular
circumstances.


DISTRIBUTION ARRANGEMENTS

12B-1 FEES
In addition to the sales charge deducted at the time of purchase, each Fund is
authorized, pursuant to a Rule 12b-1 Distribution Plan it has adopted (12b-1
Distribution Plan or Plan), to use a portion of its assets to cover the costs of
certain activities relating to the distribution of its shares to investors.

The 12b-1 Distribution Plan permits each Fund to reimburse the distributor for
expenses incurred in distributing the Funds' shares to investors, which includes
expenses relating to: sales representative compensation (excluding the initial
sales charge); advertising; preparation and distribution of sales literature and
prospectuses to prospective investors; implementing and operating the Plan; and
performing other promotional or administrative activities on behalf of the
Funds.

Pursuant to the Plan, we may also reimburse the distributor for overhead
expenses incurred in distributing the Funds' shares. We may not reimburse the
distributor for expenses of past fiscal years or in contemplation of expenses
for future fiscal years. We may not use distribution fees we pay for one Fund to
finance the distribution of shares for another Fund. The table below shows the
maximum 12b-1 distribution and service fee paid by each Fund.

                                DISTRIBUTION FEES

FUND                                     CLASS A SHARES       CLASS B SHARES
The AAL Technology Stock Fund            None                 0.75%
The AAL Aggressive Growth Fund           None                 0.75%
The AAL Small Cap Stock Fund             None                 0.75%
The AAL Mid Cap Stock Fund               None                 0.75%
The AAL International Fund               None                 0.75%
The AAL Capital Growth Fund              None                 0.75%
The AAL Equity Income Fund               None                 0.75%
The AAL Balanced Fund                    None                 0.75%

                                  SERVICE FEES

FUND                                     CLASS A SHARES       CLASS B SHARES
The AAL Technology Stock Fund            0.25%                0.25%
The AAL Aggressive Growth Fund           0.25%                0.25%
The AAL Small Cap Stock Fund             0.25%                0.25%
The AAL Mid Cap Stock Fund               0.25%                0.25%
The AAL International Fund               0.25%                0.25%
The AAL Capital Growth Fund              0.25%                0.25%
The AAL Equity Income Fund               0.25%                0.25%
The AAL Balanced Fund                    0.25%                0.25%

SHAREHOLDER MAINTENANCE AGREEMENT

Under contracts approved by the Board of Trustees, AAL CMC provides certain
shareholder maintenance services. AAL CMC receives an annual fee for providing
these services. This fee is based upon, and limited by, the difference between
the current account fees charged and the normal full-service fee schedule
established by our transfer agent. It also includes reimbursement for
out-of-pocket costs including postage and telephone charges. This account
differential, including reimbursement for expenses, is approximately $3.75 per
account per year.



<PAGE>


FINANCIAL HIGHLIGHTS INFORMATION

The AAL Technology Stock Fund and The AAL Aggressive Growth Fund commenced
operation on July 1, 2000, and consequently do not have financial highlights
information.

The financial highlights table is intended to help you understand the Fund's
financial performance for the past five years or, if shorter, the period of the
Fund's operations. Certain information reflects financial results for a single
Fund share. The total returns in the table represent the rate that an investor
would have earned or lost on an investment in the Fund (assuming reinvestment of
all dividends and distributions). This information has been audited by the
accounting firm of PricewaterhouseCoopers LLP, whose report, along with each
Fund's financial statements are included in the annual report, which is
available upon request.


                                              THE AAL SMALL CAP STOCK FUND

<TABLE>
<CAPTION>
<S>                                                                  <C>          <C>          <C>          <C>
CLASS A SHARES                                                       YEAR ENDED   YEAR ENDED   YEAR ENDED   PERIOD:
                                                                     4/30/00      4/30/99      4/30/98      7/16/96 TO
                                                                                                            4/30/97
PER SHARE DATA [IN $ DOLLARS]

Net Asset Value - Beginning of Period                                $10.89       $13.84       $9.84        $10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss)                                         (0.08)       (0.12)       (0.10)       (0.06)
Net Realized and Unrealized Gain (Loss) on Investments               3.79         (2.51)       4.73         0.17
Total From Investment Operations                                     3.71         (2.63)       4.63         0.11
DISTRIBUTIONS FROM:
Net Investment Income                                                -            -            -            -
Net Realized Capital Gains                                           -            (0.32)       (0.63)       (0.27)
Total Distributions                                                  -            (0.32)       (0.63)       (0.27)
Net Asset Value - End of Period                                      $14.60       $10.89       $13.84       $9.84
Total Return (1)                                                     34.07%       (18.97)%     47.97%       (0.78)%
SUPPLEMENTAL DATA AND RATIOS
Net Assets at End of Period (in millions)                            $191.3       $116.0       $120.3       $44.5
Ratio of Expenses to Average Net Assets (2)*                         1.53%        1.82%        1.71%        2.06%
Ratio of Investment Income (Loss) to Average Net Assets (2)*         (0.72)%      (1.15)%      (1.05)%      (1.20)%
Portfolio Turnover Rate                                              147.01%      112.96%      105.60%      138.50%
*  If the Fund had paid all of its expenses for Class A Shares,

the ratios would be as follows:

Ratio of Expenses to Average Net Assets                              1.65%        1.82%        1.71%        2.06%
Ratio of Net Investment Income (Loss) to Average Net Assets          (0.85)%      (1.15)%      (1.05)%      (1.20)%

</TABLE>

(1)  Total Return assumes reinvestment of all dividends and distributions but
     does not reflect any deduction for sales charge. The aggregate, not
     annualized total return is shown for periods less than one year.
(2)  For periods less than one year, both the ratio of net operating expenses to
     average net assets and the ratio of net investment income (loss) to average
     net assets are calculated on an annualized basis.


<PAGE>





                                              THE AAL SMALL CAP STOCK FUND

<TABLE>
<CAPTION>
<S>                                                                  <C>          <C>          <C>          <C>
CLASS B SHARES                                                       YEAR ENDED   YEAR ENDED   YEAR ENDED   PERIOD:
                                                                     4/30/00      4/30/99      4/30/98      1/8/97 TO
                                                                                                            4/30/97
PER SHARE DATA [IN $ DOLLARS]

Net Asset Value - Beginning of Period                                $10.74       $13.73       $9.81        $11.17
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss)                                         (0.19)       (0.22)       (0.16)       (0.03)
Net Realized and Unrealized Gain (Loss) on Investments               3.69         (2.50)       4.67         (1.33)
Total From Investment Operations                                     3.50         (2.72)       4.51         (1.36)
DISTRIBUTIONS FROM:
Net Investment Income                                                -            -            -            -
Net Realized Capital Gains                                           -            (0.27)       (0.59)       -
Total Distributions                                                  -            (0.27)       (0.59)       -
Net Asset Value - End of Period                                      $14.24       $10.74       $13.73       $9.81
Total Return (1)                                                     32.71%       (19.85)%     46.86%       (12.18)%
SUPPLEMENTAL DATA AND RATIOS
Net Assets at End of Period (in millions)                            $24.6        $15.8        $14.4        $3.4
Ratio of Expenses to Average Net Assets (2)*                         2.56%        2.89%        2.60%        3.20%
Ratio of Investment Income (Loss) to Average Net Assets (2)*         (1.76)%      (2.22)%      (1.94)%      (2.39)%
Portfolio Turnover Rate                                              147.01%      112.96%      105.60%      138.50%
*  If the Fund had paid all of its expenses for Class BShares, the
ratios would be as follows:
Ratio of Expenses to Average Net Assets                              2.68%        2.89%        2.60%        3.21%
Ratio of Net Investment Income (Loss) to Average Net Assets          (1.88)%      (2.22)%      (1.94)%      (2.40)%

</TABLE>

(1)  Total Return assumes reinvestment of all dividends and distributions but
     does not reflect any deduction for sales charge. The aggregate, not
     annualized total return is shown for periods less than one year.
(2)  For periods less than one year, both the ratio of net operating expenses to
     average net assets and the ratio of net investment income (loss) to average
     net assets are calculated on an annualized basis.


<PAGE>



                                                 THE AAL MID CAP STOCK FUND

<TABLE>
<CAPTION>
<S>                                                                <C>          <C>         <C>         <C>         <C>
CLASS A SHARES                                                     Year Ended   Year Ended  Year Ended  Year Ended  Year
                                                                   4/30/00      4/30/99     4/30/98     4/30/97     Ended
                                                                                                                    4/30/96
PER SHARE DATA [IN $ DOLLARS]

Net Asset Value - Beginning of Period                              $13.89       $15.93      $12.71      $17.11      $10.92
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss)                                       (0.00)       (0.04)      (0.04)      (0.12)      (0.10)
Net Realized and Unrealized Gain (Loss) on Investments             3.67         (1.25)      4.75        (1.63)      6.29
Total From Investment Operations                                   3.67         (1.29)      4.71        (1.75)      6.19
DISTRIBUTIONS FROM:
Net Investment Income                                              -            -           -           -           -
Net Realized Capital Gains                                         (0.83)       (0.75)      (1.49)      (2.65)      -
Total Distributions                                                (0.83)       (0.75)      (1.49)      (2.65)      -
Net Asset Value - End of Period                                    $16.73       $13.89      $15.93      $12.71      $17.11
Total Return (1)                                                   27.29%       (7.62)%     38.73%      (11.08)%    56.59%
SUPPLEMENTAL DATA AND RATIOS
Net Assets at End of Period (in millions)                          $759.0       $584.9      $671.5      $461.7      $425.0
Ratio of Expenses to Average Net Assets (2)*                       1.14%        1.37%       1.30%       1.35%       1.39%
Ratio of Investment Income (Loss) to Average Net Assets (2)*       (0.02)%      (0.28)%     (0.27)%     (0.94)%     (0.82)%
Portfolio Turnover Rate                                            142.26%      125.94%     104.73%     112.60%     90.14%
*  If the Fund had paid all of its expenses for Class A Shares,

the ratios would be as follows:

Ratio of Expenses to Average Net Assets                            1.24%        1.37%       1.30%       1.35%       1.39%
Ratio of Net Investment Income (Loss) to Average Net Assets        (0.12)%      (0.28)%     (0.27)%     (0.94)%     (0.82)%

</TABLE>

(1)  Total Return assumes reinvestment of all dividends and distributions but
     does not reflect any deduction for sales charge. The aggregate, not
     annualized total return is shown for periods less than one year.
(2)  For periods less than one year, both the ratio of net operating expenses to
     average net assets and the ratio of net investment income (loss) to average
     net assets are calculated on an annualized basis.


<PAGE>



                                            THE AAL MID CAP STOCK FUND
<TABLE>
<CAPTION>
<S>                                                                  <C>         <C>         <C>         <C>
CLASS B SHARES                                                       YEAR        YEAR ENDED  YEAR        PERIOD:
                                                                     ENDED       4/30/99     ENDED       1/8/97 TO
                                                                     4/30/00                 4/30/98     4/30/97
PER SHARE DATA [IN $ DOLLARS]

Net Asset Value - Beginning of Period                                $13.64      $15.78      $12.69      $13.67
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss)                                         (0.17)      (0.17)      (0.12)      (0.03)
Net Realized and Unrealized Gain (Loss) on Investments               3.56        (1.27)      4.65        (0.95)
Total From Investment Operations                                     3.39        (1.44)      4.53        (0.98)
DISTRIBUTIONS FROM:
Net Investment Income                                                -           -           -           -
Net Realized Capital Gains                                           (0.83)      (0.70)      (1.44)      -
Total Distributions                                                  (0.83)      (0.70)      (1.44)      -
Net Asset Value - End of Period                                      $16.20      $13.64      $15.78      $12.69
Total Return (1)                                                     25.71%      (8.70)%     37.41%      (7.17)%
SUPPLEMENTAL DATA AND RATIOS
Net Assets at End of Period (in millions)                            $26.9       $17.0       $13.6       $3.3
Ratio of Expenses to Average Net Assets (2)*                         2.46%       2.56%       2.33%       2.29%
Ratio of Investment Income (Loss) to Average Net Assets (2)*         (1.33)%     (1.46)%     (1.30)%     (1.41)%
Portfolio Turnover Rate                                              142.26%     125.94%     104.73%     112.60%
*  If the Fund had paid all of its expenses for Class B Shares,

the ratios would be as follows:

Ratio of Expenses to Average Net Assets                              2.55%       2.56%       2.33%       2.29%
Ratio of Net Investment Income (Loss) to Average Net Assets          (1.43)%     (1.46)%     (1.30)%     (1.41)%

</TABLE>

(1)  Total Return assumes reinvestment of all dividends and distributions but
     does not reflect any deduction for sales charge. The aggregate, not
     annualized total return is shown for periods less than one year.
(2)  For periods less than one year, both the ratio of net operating expenses to
     average net assets and the ratio of net investment income (loss) to average
     net assets are calculated on an annualized basis.


<PAGE>




                                                THE AAL INTERNATIONAL FUND
<TABLE>
<CAPTION>
<S>                                                                  <C>        <C>         <C>        <C>        <C>
CLASS A SHARES                                                       Year       Year Ended  Year       Year       Year
                                                                     Ended      4/30/99     Ended      Ended      Ended
                                                                     4/30/00                4/30/98    4/30/97    4/30/96
PER SHARE DATA [IN $ DOLLARS]

Net Asset Value - Beginning of Period                                $11.35     $11.15      $11.37     $11.08     $10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss)                                         -          0.08        0.17       0.01       0.05
Net Realized and Unrealized Gain (Loss) on Investments               2.71       0.65        0.56       0.68       1.05
Total From Investment Operations                                     2.71       0.73        0.73       0.69       1.10
DISTRIBUTIONS FROM:
Net Investment Income                                                -          (0.44)      (0.37)     (0.34)     (0.02)
Net Realized Capital Gains                                           -          (0.09)      (0.58)     (0.06)     -
Total Distributions                                                  -          (0.53)      (0.95)     (0.40)     (0.02)
Net Asset Value - End of Period                                      $14.06     $11.35      $11.15     $11.37     $11.08
Total Return (1)                                                     23.91%     6.82%       7.34%      6.32%      11.07%
SUPPLEMENTAL DATA AND RATIOS
Net Assets at End of Period (in millions)                            $226.7     $146.9      $144.2     $116.2     $57.1
Ratio of Expenses to Average Net Assets (2)*                         1.36%      1.74%       1.91%      2.10%      2.15%
Ratio of Investment Income (Loss) to Average Net Assets (2)*         (0.01)%    0.64%       1.36%      0.88%      0.94%
Portfolio Turnover Rate                                              43.5%      100.90%     19.90%     12.95%     1.30%
*  If the Fund had paid all of its expenses for Class A Shares,

the ratios would be as follows:

Ratio of Expenses to Average Net Assets                              1.41%      1.74%       1.91%      2.10%      2.32%
Ratio of Net Investment Income (Loss) to Average Net Assets          (0.07)%    0.64%       1.36%      0.88%      0.77%

</TABLE>

(1)  Total Return assumes reinvestment of all dividends and distributions but
     does not reflect any deduction for sales charge. The aggregate, not
     annualized total return is shown for periods less than one year.
(2)  For periods less than one year, both the ratio of net operating expenses to
     average net assets and the ratio of net investment income (loss) to average
     net assets are calculated on an annualized basis.


<PAGE>




                                           THE AAL INTERNATIONAL FUND
<TABLE>
<CAPTION>
<S>                                                                  <C>        <C>         <C>        <C>
CLASS B SHARES                                                       YEAR       YEAR ENDED  YEAR       PERIOD:
                                                                     ENDED      4/30/99     ENDED      1/8/97 TO
                                                                     4/30/00                4/30/98    4/30/97
PER SHARE DATA [IN $ DOLLARS]

Net Asset Value - Beginning of Period                                $11.23     $11.05      $11.34     $10.98
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss)                                         (0.13)     (0.03)      0.13       -
Net Realized and Unrealized Gain (Loss) on Investments               2.65       0.64        0.49       0.36
Total From Investment Operations                                     2.52       0.61        0.62       0.36
DISTRIBUTIONS FROM:
Net Investment Income                                                -          (0.34)      (0.33)     -
Net Realized Capital Gains                                           -          (0.09)      (0.58)     -
Total Distributions                                                  -          (0.43)      (0.91)     -
Net Asset Value - End of Period                                      $13.75     $11.23      $11.05     $11.34
Total Return (1)                                                     22.44%     5.72%       6.30%      3.28%
SUPPLEMENTAL DATA AND RATIOS
Net Assets at End of Period (in millions)                            $15.6      $9.8        $7.9       $2.6
Ratio of Expenses to Average Net Assets (2)*                         2.53%      2.85%       2.90%      2.94%
Ratio of Investment Income (Loss) to Average Net Assets (2)*         (1.19)%    (0.52)%     0.34%      (0.03)%
Portfolio Turnover Rate                                              43.59%     100.90%     19.90%     12.95%
*  If the Fund had paid all of its expenses for Class B Shares,

the ratios would be as follows:

Ratio of Expenses to Average Net Assets                              2.59%      2.85%       2.90%      2.94%
Ratio of Net Investment Income (Loss) to Average Net Assets          (1.25)%    (0.52)%     0.34%      (0.03)%

</TABLE>

(1)  Total Return assumes reinvestment of all dividends and distributions but
     does not reflect any deduction for sales charge. The aggregate, not
     annualized total return is shown for periods less than one year.
(2)  For periods less than one year, both the ratio of net operating expenses to
     average net assets and the ratio of net investment income (loss) to average
     net assets are calculated on an annualized basis.


<PAGE>



                           THE AAL CAPITAL GROWTH FUND
<TABLE>
<CAPTION>
<S>                                                                <C>          <C>         <C>         <C>         <C>
CLASS A SHARES                                                     Year Ended   Year Ended  Year Ended  Year Ended  Year Ended
                                                                   4/30/00      4/30/99     4/30/98     4/30/97     4/30/96
PER SHARE DATA [IN $ DOLLARS]

Net Asset Value - Beginning of Period                              $35.87       $29.64      $21.50      $18.79      $15.56
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss)                                       0.13         0.09        0.10        0.13        0.20
Net Realized and Unrealized Gain (Loss) on Investments             3.19         6.69        9.26        3.68        3.76
Total From Investment Operations                                   3.32         6.78        9.36        3.81        3.96
DISTRIBUTIONS FROM:
Net Investment Income                                              (0.09)       (0.09)      (0.08)      (0.15)      (0.22)
Net Realized Capital Gains                                         (0.43)       (0.46)      (1.14)      (0.95)      (0.51)
Total Distributions                                                (0.52)       (0.55)      (1.22)      (1.10)      (0.73)
Net Asset Value - End of Period                                    $38.67       $35.87      $29.64      $21.50      $18.79
Total Return (1)                                                   9.28%        23.20%      44.48%      20.55%      25.85%
SUPPLEMENTAL DATA AND RATIOS
Net Assets at End of Period (in millions)                          $4,115.1     $3,594.5    $2.766.7    $1,794.4    $1,381.4
Ratio of Expenses to Average Net Assets (2)*                       0.90%        0.97%       0.98%       1.06%       1.12%
Ratio of Investment Income (Loss) to Average Net Assets (2)*       0.35%        0.30%       0.39%       0.62%       1.16%
Portfolio Turnover Rate                                            7.50%        8.74%       17.96%      24.30%      44.26%
*  If the Fund had paid all of its expenses for Class A Shares,

the ratios would be as follows:

Ratio of Expenses to Average Net Assets                            0.92%        0.97%       0.98%       1.06%       1.12%
Ratio of Net Investment Income (Loss) to Average Net Assets        0.33%        0.30%       0.39%       0.62%       1.16%

</TABLE>


(1)  Total Return assumes reinvestment of all dividends and distributions but
     does not reflect any deduction for sales charge. The aggregate, not
     annualized total return is shown for periods less than one year.
(2)  For periods less than one year, both the ratio of net operating expenses to
     average net assets and the ratio of net investment income (loss) to average
     net assets are calculated on an annualized basis.



<PAGE>



                                          THE AAL CAPITAL GROWTH FUND
<TABLE>
<CAPTION>
<S>                                                                  <C>        <C>        <C>       <C>
CLASS B SHARES                                                       YEAR       YEAR       YEAR      PERIOD:
                                                                     ENDED      ENDED      ENDED     1/8/97 TO
                                                                     4/30/00    4/30/99    4/30/98   4/30/97
PER SHARE DATA [IN $ DOLLARS]

Net Asset Value - Beginning of Period                                $35.29     $29.38     $21.45    $20.66
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss)                                         (0.22)     (0.19)     0.04      (0.01)
Net Realized and Unrealized Gain (Loss) on Investments               3.07       6.56       9.06      0.80
Total From Investment Operations                                     2.85       6.37       9.10      0.79
DISTRIBUTIONS FROM:
Net Investment Income                                                -          -          (0.03)    -
Net Realized Capital Gains                                           (0.43)     (0.46)     (1.14)    -
Total Distributions                                                  (0.43)     (0.46)     (1.17)    -
Net Asset Value - End of Period                                      $37.71     $35.29     $29.38    $21.45
Total Return (1)                                                     8.09%      21.94%     43.25%    3.82%
SUPPLEMENTAL DATA AND RATIOS
Net Assets at End of Period (in millions)                            $148.6     $107.6     $54.9     $11.0
Ratio of Expenses to Average Net Assets (2)*                         1.95%      1.99%      1.90%     1.89%
Ratio of Investment Income (Loss) to Average Net Assets (2)*         (0.69)%    (0.74)%    (0.58)%   (0.39)%
Portfolio Turnover Rate                                              7.50%      8.74%      17.96%    24.30%
*  If the Fund had paid all of its expenses for Class B , the
ratios would be as follows:
Ratio of Expenses to Average Net Assets                              1.96%      1.99%      1.90%     1.89%
Ratio of Net Investment Income (Loss) to Average Net Assets          (0.71)%    (0.74)%    (0.58)%   (0.39)%

</TABLE>

(1)  Total Return assumes reinvestment of all dividends and distributions but
     does not reflect any deduction for sales charge. The aggregate, not
     annualized total return is shown for periods less than one year.
(2)  For periods less than one year, both the ratio of net operating expenses to
     average net assets and the ratio of net investment income (loss) to average
     net assets are calculated on an annualized basis.


<PAGE>




                                               THE AAL EQUITY INCOME FUND
<TABLE>
<CAPTION>
<S>                                                                  <C>        <C>        <C>       <C>        <C>
CLASS A SHARES                                                       Year       Year       Year      Year       Year
                                                                     Ended      Ended      Ended     Ended      Ended
                                                                     4/30/00    4/30/99    4/30/98   4/30/97    4/30/96
PER SHARE DATA [IN $ DOLLARS]

Net Asset Value - Beginning of Period                                $14.68     $14.31     $11.34    $10.90     $9.47
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss)                                         0.18       0.16       0.27      0.39       0.36
Net Realized and Unrealized Gain (Loss) on Investments               (0.30)     1.17       3.44      0.46       1.42
Total From Investment Operations                                     (0.12)     1.33       3.71      0.85       1.78
DISTRIBUTIONS FROM:
Net Investment Income                                                (0.16)     (0.17)     (0.29)    (0.41)     (0.35)
Net Realized Capital Gains                                           -          (0.79)     (0.45)    -          -
Total Distributions                                                  (0.16)     (0.96)     (0.74)    (0.41)     (0.35)
Net Asset Value - End of Period                                      $14.40     $14.68     $14.31    $11.34     $10.90
Total Return (1)                                                     (0.80)%    10.08%     33.50%    7.88%      18.90%
SUPPLEMENTAL DATA AND RATIOS
Net Assets at End of Period (in millions)                            $277.6     $262.2     $197.7    $134.2     $114.5
Ratio of Expenses to Average Net Assets (2)*                         0.92%      1.05%      1.11%     1.15%      1.20%
Ratio of Investment Income (Loss) to Average Net Assets (2)*         1.24%      1.22%      2.17%     3.57%      3.58%
Portfolio Turnover Rate                                              26.93%     13.35%     64.00%    5.14%      21.79%
*  If the Fund had paid all of its expenses for Class A Shares,

the ratios would be as follows:

Ratio of Expenses to Average Net Assets                              0.98%      1.05%      1.11%     1.15%      1.20%
Ratio of Net Investment Income (Loss) to Average Net Assets          1.18%      1.22%      2.17%     3.57%      3.58%

</TABLE>

(1)  Total Return assumes reinvestment of all dividends and distributions but
     does not reflect any deduction for sales charge. The aggregate, not
     annualized total return is shown for periods less than one year.
(2)  For periods less than one year, both the ratio of net operating expenses to
     average net assets and the ratio of net investment income (loss) to average
     net assets are calculated on an annualized basis.


<PAGE>



                                           THE AAL EQUITY INCOME FUND
<TABLE>
<CAPTION>
<S>                                                                  <C>        <C>        <C>       <C>
CLASS B SHARES                                                       YEAR       YEAR       YEAR      PERIOD:
                                                                     ENDED      ENDED      ENDED     1/8/97 TO
                                                                     4/30/00    4/30/99    4/30/98   4/30/97
PER SHARE DATA [IN $ DOLLARS]

Net Asset Value - Beginning of Period                                $14.66     $14.31     $11.37    $11.40
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss)                                         0.02       0.02       0.19      0.05
Net Realized and Unrealized Gain (Loss) on Investments               (0.28)     1.17       3.41      (0.06)
Total From Investment Operations                                     (0.26)     1.19       3.60      (0.01)
DISTRIBUTIONS FROM:
Net Investment Income                                                (0.02)     (0.05)     (0.21)    (0.02)
Net Realized Capital Gains                                           -          (0.79)     (0.45)    -
Total Distributions                                                  (0.02)     (0.84)     (0.66)    (0.02)
Net Asset Value - End of Period                                      $14.38     $14.66     $14.31    $11.37
Total Return (1)                                                     (1.80)%    8.97%      32.42%    (0.04)%
SUPPLEMENTAL DATA AND RATIOS
Net Assets at End of Period (in millions)                            $11.6      $9.6       $3.8      $0.5
Ratio of Expenses to Average Net Assets (2)*                         1.99%      2.09%      2.04%     1.99%
Ratio of Investment Income (Loss) to Average Net Assets (2)*         0.17%      0.16%      0.96%     2.36%
Portfolio Turnover Rate                                              26.93%     13.35%     64.00%    5.14%
*  If the Fund had paid all of its expenses for Class B s, the
ratios would be as follows:
Ratio of Expenses to Average Net Assets                              2.05%      2.09%      2.04%     1.99%
Ratio of Net Investment Income (Loss) to Average Net Assets          0.11%      0.16%      0.96%     2.36%

</TABLE>

(1)  Total Return assumes reinvestment of all dividends and distributions but
     does not reflect any deduction for sales charge. The aggregate, not
     annualized total return is shown for periods less than one year.
(2)  For periods less than one year, both the ratio of net operating expenses to
     average net assets and the ratio of net investment income (loss) to average
     net assets are calculated on an annualized basis.


<PAGE>



                                                THE AAL BALANCED FUND
<TABLE>
<CAPTION>
<S>                                                                  <C>              <C>              <C>
CLASS A SHARES                                                       YEAR ENDED       YEAR ENDED       PERIOD:
                                                                     4/30/00          4/30/99          12/29/97 TO
                                                                                                       4/30/98
PER SHARE DATA [IN $ DOLLARS]

Net Asset Value - Beginning of Period                                $12.15           $10.81           $10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss)                                         0.32             0.21             0.04
Net Realized and Unrealized Gain (Loss) on Investments               0.25             1.34             0.80
Total From Investment Operations                                     0.57             1.55             0.84
DISTRIBUTIONS FROM:
Net Investment Income                                                (0.31)           (0.20)           (0.03)
Net Realized Capital Gains                                           -                (0.01)           -
Total Distributions                                                  (0.31)           (0.21)           (0.03)
Net Asset Value - End of Period                                      $12.41           $12.15           $10.81
Total Return (1)                                                     4.78%            14.14%           8.37%
SUPPLEMENTAL DATA AND RATIOS
Net Assets at End of Period (in millions)                            $256.1           $158.3           $27.7
Ratio of Expenses to Average Net Assets (2)*                         1.09%            1.15%            1.37%
Ratio of Investment Income (Loss) to Average Net Assets (2)*         2.76%            2.26%            2.19%
Portfolio Turnover Rate                                              64.58%           213.46%          11.52%
*  If the Fund had paid all of its expenses for Class B Shares,

the ratios would be as follows:

Ratio of Expenses to Average Net Assets                              1.14%            1.23%            1.63%
Ratio of Net Investment Income (Loss) to Average Net Assets          2.72%            2.17%            1.93%

</TABLE>

(1)  Total Return assumes reinvestment of all dividends and distributions but
     does not reflect any deduction for sales charge. The aggregate, not
     annualized total return is shown for periods less than one year.
(2)  For periods less than one year, both the ratio of net operating expenses to
     average net assets and the ratio of net investment income (loss) to average
     net assets are calculated on an annualized basis.


<PAGE>



                                                THE AAL BALANCED FUND
<TABLE>
<CAPTION>
<S>                                                                  <C>              <C>              <C>
CLASS B SHARES                                                       YEAR ENDED       YEAR ENDED       PERIOD:
                                                                     4/30/00          4/30/99          12/29/97 TO
                                                                                                       4/30/98
PER SHARE DATA [IN $ DOLLARS]

Net Asset Value - Beginning of Period                                $12.10           $10.79           $10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss)                                         0.21             0.14             0.03
Net Realized and Unrealized Gain (Loss) on Investments               0.24             1.31             0.78
Total From Investment Operations                                     0.45             1.45             0.81
DISTRIBUTIONS FROM:
Net Investment Income                                                (0.20)           (0.13)           (0.02)
Net Realized Capital Gains                                           -                (0.01)           -
Total Distributions                                                  (0.20)           (0.14)           (0.02)
Net Asset Value - End of Period                                      $12.35           $12.10           $10.79
Total Return (1)                                                     3.74%            13.47%           8.10%
SUPPLEMENTAL DATA AND RATIOS
Net Assets at End of Period (in millions)                            $18.2            $11.9            $2.3
Ratio of Expenses to Average Net Assets (2)*                         2.03%            1.98%            2.11%
Ratio of Investment Income (Loss) to Average Net Assets (2)*         1.82%            1.42%            1.45%
Portfolio Turnover Rate                                              64.58%           213.46%          11.52%
*  If the Fund had paid all of its expenses for Class B Shares,

the ratios would be as follows:

Ratio of Expenses to Average Net Assets                              2.08%            2.18%            2.50%
Ratio of Net Investment Income (Loss) to Average Net Assets          1.77%            1.22%            1.06%

</TABLE>

(1)  Total Return assumes reinvestment of all dividends and distributions but
     does not reflect any deduction for sales charge. The aggregate, not
     annualized total return is shown for periods less than one year.
(2)  For periods less than one year, both the ratio of net operating expenses to
     average net assets and the ratio of net investment income (loss) to average
     net assets are calculated on an annualized basis.



<PAGE>


ADDITIONAL INFORMATION


You will find additional information in the statement of additional information
and the annual and semi-annual reports to shareholders. The Funds' statement of
additional information and annual and semi-annual reports are available, without
charge, upon request. To request this or other information about the Funds,
please call (800) 553-6319 (TTY- (800) 684-3416).



Annual and Semi-Annual Reports
In the Funds' annual report, you will find a discussion of the market conditions
and investment strategies that significantly affected the Funds' performances
during their last fiscal year.


Statement of Additional Information
The Funds' statement of additional information provides more detailed
information about the Funds.

You also may review and copy information about the Funds (including the
statement of additional information) at the Securities and Exchange Commission's
Public Reference Room in Washington, D.C. For information on the operation of
the Public Reference Room call 1-800-SEC-0330. You also may obtain reports and
other information about the Funds on the Securities and Exchange Commission's
Internet site at http://www.sec.gov. You may obtain copies of this information,
upon payment of a duplication fee, by electronic request to e-mail address:
PUBLICINFO@SEC.GOV, or by writing the Public Reference Section of the Securities
and Exchange Commission at 405 5th Street, N. W., Washington, D. C. 20549-6009.



The Funds' Investment Company Act File No. is 811-5075


[Logo]
THE AAL MUTUAL FUNDS
222 West College Ave.
Appleton, WI 54919-0007
Telephone: (800) 553-6319
TDD: 800-684-3416
www.aal.org     e-mail: aalcmc@aal.org

<PAGE>




                              THE AAL MUTUAL FUNDS

                             INDEX FUNDS PROSPECTUS

                           Class A and Class B Shares

                                  July 1, 2000





                       The AAL Large Company Index Fund II

                          The AAL Mid Cap Index Fund II

                         The AAL Small Cap Index Fund II






As with other mutual  funds,  the  Securities  and Exchange  Commission  has not
approved or  disapproved  these  securities or determined if this  prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.








                                TABLE OF CONTENTS

                                                                         PAGE

RISK/RETURN INFORMATION: INVESTMENT PROGRAMS AND PERFORMANCE               2
         PROSPECTUS SUMMARY                                                2
         Reading the Prospectus                                            2
         The Funds                                                         2
         Principal Risks Common to All Funds                               2
         Class A Versus Class B Shares                                     3
         Institutional Shares                                              3

         THE AAL LARGE COMPANY INDEX FUND II                               4
         Investment Objective                                              4
         Principal Investment Strategies                                   4
         Principal Risks                                                   4
         Past Performance                                                  4
         Expenses                                                          5

         THE AAL MID CAP INDEX FUND II                                     6
         Investment Objective                                              6
         Principal Investment Strategies                                   6
         Principal Risks                                                   6
         Past Performance                                                  6
         Expenses                                                          7

         THE AAL SMALL CAP INDEX FUND II                                   8
         Investment Objective                                              8
         Principal Investment Strategies                                   8
         Principal Risks                                                   8
         Past Performance                                                  8
         Expenses                                                          9

MANAGEMENT, ORGANIZATION, AND CAPITAL STRUCTURE                            10

         Investment Adviser                                                10
         Adviser Fees per Fund                                             10
         Portfolio Management                                              10

SHAREHOLDER INFORMATION                                                    13

         Pricing Funds' Shares                                             13
         How to Buy Shares                                                 13
         How to Redeem (Sell) Shares                                       22

DIVIDENDS                                                                  27

TAX CONSIDERATIONS                                                         28

DISTRIBUTION ARRANGEMENTS                                                  29

         12b-1 Fees                                                        29
         Distribution Fees                                                 29
         Service Fees                                                      29
         Shareholder Maintenance Agreement                                 29


ADDITIONAL INFORMATION                                                     30



<PAGE>


RISK/RETURN INFORMATION: INVESTMENT PROGRAMS AND PERFORMANCE

PROSPECTUS SUMMARY

Reading the Prospectus

References to "you" and "your" in the prospectus refer to prospective  investors
or shareholders. References to "we," "us" or "our" refer to the Trust or The AAL
Mutual Funds ("Funds") and Fund  management,  the adviser,  and/or  sub-adviser,
distributor, administrator, transfer agent and custodians.


The Funds
The AAL Mutual Funds are a series of separate  mutual fund  portfolios  within a
single  Trust,  each with a  specific  investment  objective.  The  Funds  offer
investment  opportunities  to eligible  Lutherans,  including their families and
their  enterprises.  The  Funds  are also  available  to those  who serve or are
associated with Lutherans or Lutheran organizations, but who are not Lutherans.


In  this  prospectus,  we  provide  you  with  information  on:  the  investment
objectives and policies of the Funds; risks of investing in the Funds;  historic
performance  information;  how to buy  and  sell  Class A and  Class  B  shares;
management  and  services  provided to the Funds;  and other  information.  This
prospectus  describes two share classes,  Class A shares and Class B shares. You
pay a sales charge immediately when you purchase Class A shares (front-end sales
charge or load).  You pay a sales charge when you redeem Class B shares held for
less than five years (contingent  deferred sales charge).  In addition,  you pay
higher  "12b-1  fees" for Class B shares  than  Class A shares.  12b-1  fees are
ongoing asset-based fees that we charge pursuant to a plan to cover the costs of
certain activities related to the distribution and service of the Funds' shares.


Principal Risks Common to All Funds
You assume certain risks when you invest in any of the Funds.  Risks specific to
each Fund are discussed on the following pages.  More generally,  the investment
style and strategies  that we use to select stocks,  bonds and other  securities
for each Fund  depends on our  ability to select  those that  perform  well over
time.   Our   selections  may  not  always  achieve  our  growth  and/or  income
expectations,  and securities we select could decline in value.  There can be no
assurance  that any of the Funds will achieve its  objective  and you could lose
money.

Class A Versus Class B Shares
Whether you should  purchase  Class A or Class B shares  depends on how long you
intend to own the shares and the size of your  investment.  If you intend to own
shares  for more than five  years and plan to  invest  less than  $100,000,  you
should  consider Class B shares.  If you plan to redeem shares in less than five
years or invest  $100,000  or more,  you  should  consider  Class A shares.  The
following  table  shows  some of the  differences  between  Class A and  Class B
shares:


CLASS A SHARES                          CLASS B SHARES

o Maximum 4% front-end sales charge     o No front-end sales charge
o No contingent deferred sales charge   o Maximum 5% contingent deferred
                                          sales charge
o Lower annual expenses, which include  o Higher annual expenses, which include
  12b-1 fees, than Class B shares         12b-1 fees, than Class A shares
o  No conversion to Class B shares      o Automatic conversion to Class A shares
                                          after 5years

Institutional Shares

We also offer an institutional class of shares  ("Institutional  shares").  They
are described in a separate  prospectus.  Institutional  shares are for Lutheran
organizations or enterprises  with a minimum initial  investment in the Funds of
$500,000.  We designed  Institutional shares to give Lutheran  organizations and
enterprises   (non-natural  persons)  or  financial  institutions  acting  in  a
fiduciary or agency  capacity  for these  organizations  a  convenient  means of
accumulating  an interest in The AAL Mutual  Funds.  Lutheran  organizations  or
enterprises  that invest in  Institutional  shares  purchase shares at net asset
value. They do not pay initial sales charges,  redemption fees or 12b-1fees. The
performance  of Class A,  Class B and  Institutional  shares  will vary based on
differences  in sales  charges  and fees.  For more  information  on the  Funds'
Institutional shares and a prospectus, you may call The AAL Mutual Funds Service
Center at (800)-553-6319.



<PAGE>


THE AAL LARGE COMPANY INDEX FUND II

Investment Objective
The AAL  Large  Company  Index  Fund II  seeks  total  returns  that  track  the
performance  of the S&P 500(R)  Index,  by investing  primarily in common stocks
comprising the Index.

Principal Investment Strategies
We  select  stocks  through  the  use  of  computer  models,  instead  of  using
traditional  analysis,  to duplicate  the S&P 500 Index in  proportion  to their
weightings in the Index.  We try to hold all the stocks that comprise the Index,
however,  there may be  variations  and delays from time to time due to periodic
changes to the Index. We expect portfolio turnover of no more than 50% per year.
We seek a correlation factor of 0.95% of the S&P 500 Index.

To the  extent  possible,  the Fund will be fully  invested  in the  Index.  Our
ability to match the  performance  of the S&P 500 Index will be  affected by the
size and timing of cash  flows  into and out of the Fund.  We will try to manage
the Fund to minimize such effects.  The Fund has expenses that an index does not
have,  so the Fund  will not be able to  exactly  match the  performance  of its
comparable index.

We may also invest to some degree in money market instruments.  We do not expect
to have more than 5% of the Fund's assets in money market instruments.

Stocks have historically performed better as an asset class than bonds. Although
there is a greater  potential  for reward,  there are also greater  risks.  Even
though we  attempt  to follow the  performance  of the S&P 500 Index,  we cannot
guarantee these results. You could lose money investing in the Fund

Principal Risks

Financial  Risk:  Many factors affect the  performance of a company in which the
Fund may invest.  Some examples  include  strength of  management,  demand for a
company's  products or services  and general  economic  conditions.  A company's
performance  will affect the market price of its stock,  and  consequently,  the
value of the Fund's portfolio.

Market Risk:  Over time, the stock market tends to move in cycles,  with periods
when  stock  prices  rise  generally  and  periods  when  stock  prices  decline
generally.  The value of the Fund's  investments may move with these cycles, and
in some  instances,  increase or decrease more than the stock market as measured
by the S&P 500 Index.

Past Performance
The Fund  commenced  operations  on July 1, 2000.  Because  the Fund has been in
operation  for  less  than a full  calendar  year,  we  have  not  included  any
performance information.

Expenses
Like  any  investor,   you  directly  pay  certain   expenses  related  to  your
investments.  We refer to these  direct  expenses  as  Shareholder  Fees.  Other
expenses,  called Annual Fund Operating Expenses,  are paid from Fund assets, so
they reduce your share price. Both types of expenses are outlined below.

Fee Table
This table  describes  the fees and expenses you may pay if you buy and hold the
Fund's shares:

Shareholder Fees
(fees paid directly from your investment)       Class A Shares   Class B Shares

Maximum sales charge (load) imposed on          4.00%            None
purchases (as a percentage of offering price)


Maximum deferred sales charge (load)            None             5.00%
(as a percentage of net asset value)



Annual Fund Operating Expenses
(expenses deducted from Fund assets)            Class A Shares   Class B Shares


Management Fees                                 0.25%            0.25%


Distribution and Service (12b-1) Fees           0.25%            1.00%


Other Expenses                                  0.58%            0.58%

Total Fund Operating Expenses*                  1.08%            1.83%


* Operating  expenses are  expressed as a percentage of average daily net assets
based on management's  estimate of expenses for the fiscal year ending April 30,
2001.

Expense Example
This  example is intended to help you compare the costs of investing in the Fund
with the costs of investing in other  mutual  funds.  It assumes that you invest
$10,000  in the Fund for the time  periods  indicated  and then  redeem all your
shares at the end of those periods.  It also assumes that your  investment has a
5% return each year,  and that the Fund's  operating  expenses  remain the same.
Although  your  actual  costs may be higher  or  lower,  based on the  foregoing
assumptions your costs would be:


Time Period   Class A Shares    Class B Shares    Class B Shares No Redemptions
1 Year        $508              $689              $189
3 Year        $736              $885              $585


You should use the expense  example for  comparison  purposes  only. It does not
represent the Fund's actual expenses and returns,  either past or future. Actual
expenses may be greater or less than those shown.


THE AAL MID CAP INDEX FUND II

Investment  Objective
The AAL Mid Cap Index Fund II seeks total returns that track the  performance of
the S&P MidCap 400(R) Index, by investing  primarily in common stocks comprising
the Index.

Principal  Investment  Strategies
We select stocks through the use of computer models instead of using traditional
analysis to duplicate the S&P MidCap 400 Index in proportion to their weightings
in the index.  We try to hold all the stocks that  comprise the Index,  however,
there may be variations and delays from time to time due to periodic  changes to
the Index. We expect portfolio turnover of no more than 50% per year.

To the  extent  possible,  the Fund will be fully  invested  in the  Index.  Our
ability to match the performance of the S&P MidCap 400 Index will be affected by
the size and  timing  of cash  flows  into and out of the  Fund.  We will try to
manage the Fund to minimize  such  effects.  The Fund has expenses that an index
does not have, so the Fund will not be able to exactly match the  performance of
its comparable index.

We may also invest to some degree in money market instruments.  We do not expect
to have more than 5% of the Fund's  assets in money market  instruments.  Stocks
have historically  performed better as an asset class than bonds. Although there
is a greater  potential for reward,  there are also greater  risks.  Although we
attempt  to follow  the  performance  of the S&P  MidCap  400  Index,  we cannot
guarantee these results. You could lose money investing in the Fund

Principal Risks

Financial  Risk:  Stocks of  mid-sized  companies  may present a greater risk of
losing value than stocks of larger, more established companies,  but may present
less risk than stocks of smaller  companies.  Mid-sized  companies  tend to have
relatively  smaller revenues,  narrower product lines, less management depth and
smaller  shares  of the  market  for  their  products  or  services  than  large
companies.

Many factors  affect the  performance of a company in which the Fund may invest.
Some examples include strength of management, demand for a company's products or
services and general economic  conditions.  A company's  performance will affect
the  market  price of its  stock,  and  consequently,  the  value of the  Fund's
portfolio. You could lose money investing in the Fund.

Market Risk:  Over time, the stock market tends to move in cycles,  with periods
when  stock  prices  rise  generally  and  periods  when  stock  prices  decline
generally.  Due to the tendency for mid-cap stocks to have less liquidity in the
market than large  company  stocks,  the value of the Fund's  investments  might
increase or decrease  more than the stock market in general,  as measured by the
S&P 400 MidCap Index.

Past Performance
The Fund  commenced  operations  on July 1, 2000.  Because  the Fund has been in
operation  for  less  than a full  calendar  year,  we  have  not  included  any
performance information.

Expenses
Like  any  investor,   you  directly  pay  certain   expenses  related  to  your
investments.  We refer to these  direct  expenses  as  Shareholder  Fees.  Other
expenses,  called Annual Fund Operating Expenses,  are paid from Fund assets, so
they reduce your share price. Both types of expenses are outlined below.

Fee Table
This table  describes  the fees and expenses you may pay if you buy and hold the
Fund's shares:

Shareholder Fees
(fees paid directly from your investment)        Class A Shares   Class B Shares

Maximum sales charge (load) imposed on
Purchases (as a percentage of offering price)    4.00%            None

Maximum deferred sales charge (load)
(as a percentage of net asset value)             None             5.00%



Annual Fund Operating Expenses
(expenses deducted from Fund assets)             Class A Shares   Class B Shares


Management Fees                                  0.25%            0.25%


Distribution and Service (12b-1) Fees            0.25%            1.00%


Other Expenses                                   0.58%            0.58%

Total Fund Operating Expenses*                   1.08%            1.83%


* Operating  expenses are  expressed as a percentage of average daily net assets
based on management's  estimate of expenses for the fiscal year ending April 30,
2001.

Expense Example
This  example is intended to help you compare the costs of investing in the Fund
with the costs of investing in other  mutual  funds.  It assumes that you invest
$10,000  in the Fund for the time  periods  indicated  and then  redeem all your
shares at the end of those periods.  It also assumes that your  investment has a
5% return each year,  and that the Fund's  operating  expenses  remain the same.
Although  your  actual  costs may be higher  or  lower,  based on the  foregoing
assumptions your costs would be:


Time Period    Class A Shares    Class B Shares    Class B Shares No Redemptions
1 Year         $508              $689              $189
3 Year         $736              $885              $585


You should use the expense  example for  comparison  purposes  only. It does not
represent the Fund's actual expenses and returns,  either past or future. Actual
expenses may be greater or less than those shown.

THE AAL SMALL CAP INDEX FUND II

Investment  Objective
The AAL Small Cap Index Fund II seeks capital growth that tracks the performance
of the S&P SmallCap 600(R) Index, by investing primarily in common stocks of the
index.

Principal  Investment  Strategies
This Fund is indexed  against the S&P  SmallCap  600 Index by holding the stocks
that make up the index in proportion to their  weighting in the index. We select
stocks through the use of computer models instead of using traditional  analysis
to duplicate the index. We try to hold all of the stocks that make up the index,
however  there may be  variations  and delays  from time to time due to periodic
changes made to the index. We expect portfolio  turnover of no more than 50% per
year.

To the extent  possible,  the Fund will be fully invested.  Our ability to match
the performance of the S&P SmallCap 600 Index will be affected to some extent by
the size and  timing  of cash  flows  into and out of the  portfolio.  Since the
portfolio has expenses  that an index does not have,  the  performance  will not
match the index  exactly.  We will try to manage the  portfolio  to reduce  such
effects.

We may also invest to some degree in money market instruments.  We do not expect
them to exceed 5% of the portfolio's assets.  Although we will attempt to follow
the  performance  of the S&P  SmallCap  600  Index,  we cannot  guarantee  these
results. You could lose money investing in the Fund.

Principal  Risks
Small company stocks are considerably more risky than large company stocks since
small  companies  are less mature and don't have access to  financial  resources
that a large company would have. While the risks are greater so is the potential
for greater reward.  There are three primary types of risk to which this Fund is
subject: financial risk, market risk, and volatility risk.

Financial Risk: With financial risk there is the possibility  that an individual
company  may not  perform  well and,  as a result,  the value of that  company's
security may decline.  Financial  risk is more  pronounced in the  securities of
small, less established companies that make up the bulk of the Fund's portfolio.

Market  Risk:  There is the risk that the value of the  Fund's  shares go up and
down,  to some  degree,  with the market.  Stocks of these  companies  present a
greater risk of losing value than stocks of larger, more established  companies.
The stock  market  tends to move in cycles,  with periods when stock prices rise
generally and periods when stock prices decline generally.

Volatility:  Historically,  small  capitalization  stocks have  experienced more
price  volatility  than mid-size and large  capitalization  stocks.  Some of the
reasons they have greater volatility include:

o less certain growth prospects of small firms;

o lower degree of liquidity in the markets for such stocks; and

o greater sensitivity of small companies to changing economic conditions.

As a result,  the value of the Fund's  investments  may  increase  and  decrease
substantially more than the stock market in general,  as measured by the S&P 500
Index. As a result, you have a greater risk of losing money in this Fund.

Past Performance
The Fund  commenced  operations  on July 1, 2000.  Because  the Fund has been in
operation  for  less  than a full  calendar  year,  we  have  not  included  any
performance information.

Expenses
Like  any  investor,   you  directly  pay  certain   expenses  related  to  your
investments.  We refer to these  direct  expenses  as  Shareholder  Fees.  Other
expenses,  called  Annual Fund  Operating  Expenses,  are paid from Fund assets,
Class A Shares  Class B Shares so they  reduce your share  price.  Both types of
expenses are outlined below.

Fee Table
This table  describes  the fees and expenses you may pay if you buy and hold the
Fund's shares:

Shareholder Fees
(fees paid directly from your investment)        Class A Shares   Class B Shares

Maximum sales charge (load) imposed on
Purchases (as a percentage of offering price)    4.00%            None

Maximum deferred sales charge (load)
(as a percentage of net asset value)             None             5.00%



Annual Fund Operating Expenses
(expenses deducted from Fund assets)             Class A Shares   Class B Shares


Management Fees                                  0.25%            0.25%


Distribution and Service (12b-1) Fees            0.25%            1.00%


Other Expenses                                   0.58%            0.58%

Total Fund Operating Expenses*                   1.08%            1.83%


* Operating  expenses are  expressed as a percentage of average daily net assets
based on management's  estimate of expenses for the fiscal year ending April 30,
2001.

Expense Example
This  example is intended to help you compare the costs of investing in the Fund
with the costs of investing in other  mutual  funds.  It assumes that you invest
$10,000  in the Fund for the time  periods  indicated  and then  redeem all your
shares at the end of those periods.  It also assumes that your  investment has a
5% return each year,  and that the Fund's  operating  expenses  remain the same.
Although  your  actual  costs may be higher  or  lower,  based on the  foregoing
assumptions your costs would be:


Time Period    Class A Shares    Class B Shares    Class B Shares No Redemptions
1 Year         $508              $689              $189
3 Year         $736              $885              $585


You should use the expense  example for  comparison  purposes  only. It does not
represent the Fund's actual expenses and returns,  either past or future. Actual
expenses may be greater or less than those shown.



MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE


Investment  Adviser
AAL Capital Management  Corporation ("AAL CMC") serves as investment adviser and
distributor  to  the  Funds.  AAL  CMC  was  organized  in  1986  as a  Delaware
corporation. AAL Holdings Inc., a wholly owned subsidiary of Aid Association for
Lutherans ("AAL") owns all of AAL CMC's shares. AAL is a non-profit,  non-stock,
membership  organization  licensed to do business as a fraternal benefit society
in all  states.  AAL has  approximately  1.7  million  members and is one of the
world's  largest  fraternal  benefit  societies  in  terms  of  assets  and life
insurance in force. AAL ranks in the top two percent of all life insurers in the
United States in terms of ordinary life insurance (nearly $88 billion in force).
Membership is open to Lutherans, including their families and their enterprises.
Membership is also available to those who serve or are associated with Lutherans
or Lutheran  organizations,  but who are not Lutheran.  AAL offers life, health,
and  disability  income  insurance and fixed  annuities to its members,  and all
members are part of one of  approximately  10,000 local AAL branches  throughout
the United  States.  Through AAL CMC, AAL offers The AAL Mutual Funds to persons
who are eligible for membership in AAL. AAL CMC has served as adviser to The AAL
Mutual Funds since the  commencement of operations.  As of June 1, 2000, AAL CMC
managed over $7.7 billion for The AAL Mutual Funds.


[Sidebar: The adviser's principal address is:]

AAL Capital Management
Corporation
222 West College Avenue
Appleton, WI 54919-0007

AAL's principal address is:

Aid Association for
Lutherans
4321 North Ballard Road
Appleton, WI 54919-0001


Pursuant to an investment advisory agreement with the Funds, AAL CMC manages the
investment  and  reinvestment  of the Funds'  assets.  AAL CMC also provides the
Funds with personnel,  facilities,  administrative  services, and supervises the
Funds' daily  business  affairs.  Services  provided by AAL CMC to the Funds are
subject to the  supervision of the Funds' Board of Trustees.  AAL CMC formulates
and implements a continuous  investment  program for the Funds  consistent  with
each Fund's investment objectives, policies and restrictions.


Adviser  Fees per Fund
The table below shows the advisory fees for each Fund pursuant to the Investment
Advisory Agreement between the Funds and AAL CMC.


THE AAL LARGE COMPANY INDEX FUND II        0.25% on the average daily net assets

THE AAL MID CAP INDEX FUND II              0.25% on the average daily net assets

THE AAL SMALL CAP INDEX FUND II            0.25% on the average daily net assets



Portfolio Management

THE AAL LARGE COMPANY INDEX FUND II
David J. Schnarsky, CFA, has been the portfolio manager of The AAL Large Company
Index Fund II since it commenced operations on July 1, 2000. He also manages The
AAL Large  Company Index Fund,  which is another  series of The AAL Mutual Funds
with the same investment  objective as the Fund. Mr. Schnarsky is also portfolio
manager of the AAL Variable Product Series Fund Large Company Stock Portfolio, a
series of an affiliated  mutual fund group with an investment  objective similar
to the Funds.  He also serves as  portfolio  manager of the equity  portfolio of
AAL's general account and the AAL Savings Plan.

THE AAL MID CAP INDEX FUND II
Michael R. Hochholzer,  CFA, has managed the day-to-day Fund investments for The
AAL Mid Cap Index Fund II since it  commenced  operations  on July 1, 2000.  Mr.
Hochholzer  also serves as Portfolio  Manager for The AAL Mid Cap Stock Fund and
The AAL Mid Cap Index  Fund II,  another  series of The AAL  Mutual  Funds.  Mr.
Hochholzer  previously served as a securities  analyst and portfolio manager for
AAL from 1989 through 1997.

THE AAL SMALL CAP INDEX FUND II
Brian J. Flanagan CFA, has been the portfolio manager of The AAL Small Cap Index
Fund II since it  commenced  operations  on July 1, 2000.  Mr.  Flanagan is also
co-portfolio   manager  of  The  AAL  Technology  Stock  Fund,  which  commenced
operations on July 1, 2000. He is also the portfolio manager of the AAL Variable
Product Series Fund Small Company  Portfolio,  a series of an affiliated  mutual
fund group with an investment objective similar to the Funds. From 1996 to 1998,
he served  first as analyst  and later as  portfolio  manager  for the small cap
portfolio  of the AAL Savings  Plan.  From 1994 to 1995,  Mr.  Flanagan  was the
analyst for the fixed-income portfolio for the plan.

Index Information

On a monthly  basis,  we compare the  performance  of each Fund with that of its
benchmark  index.  At  that  time  we  may  re-balance  each  Fund's  securities
portfolios. The AAL Large Company Index Fund II, Mid Cap Index Fund II and Small
Cap Index  Fund II are each  considered  to be an  indexed  Fund.  That means we
passively  manage them; we maintain the securities held by each Fund so they are
the same as the securities in Fund's benchmark index, or a representative sample
of securities of that index.  Fund  performance may not exactly  correspond with
the  performance of its index due to the timing of Fund portfolio  transactions,
shifts in the composition of the index, and Fund expenses.


S&P 500,  S&P MidCap 400, and the S&P SmallCap 600 Indices
Standard  &  Poor's  ("S&P")  compiles  several   broad-based  indices  used  as
benchmarks for tracking  certain types of markets.  The most widely known is the
S&P 500  Composite  Stock  Price  Index  ("S&P  500  Index").  The S&P 500 Index
consists of 500 stocks  chosen for market size,  liquidity  and  industry  group
representation.  It is a  market-value  weighted  index  (stock  price times the
number  of  shares   outstanding),   with  each  stock's  weight  in  the  index
proportionate  to its market value.  Most of the largest 500 companies listed on
the U.S. stock  exchanges are included in the index.  The companies whose stocks
are included in the index tend to be the leading companies in leading industries
within the U.S. economy.

The weightings make each company's  influence on the index performance  directly
proportional to that company's market value.  This  characteristic  has made the
S&P 500 Index the investment  industry standard for measuring the performance of
Funds comprised of large-capitalization stocks.

Another index from Standard & Poor's we use as a benchmark is the S&P MidCap 400
Index.  The S&P MidCap 400 Index is a  benchmark  for  tracking  performance  of
medium-capitalization  stocks.  As  of  December  6,  1999,  the  median  market
capitalization  for stocks in the S&P MidCap 400 was $1.56  billion.  While this
index is  relatively  new, the industry  recognizes  it as a good  benchmark for
tracking mid-cap stocks. The 400 stocks that make up the index are listed on the
New York Stock  Exchange,  The American Stock  Exchange or the NASDAQ  quotation
system. In addition,  the stocks that make up the index are liquid, meaning they
are easily  traded.  These  characteristics  of the S&P MidCap 400 Index make it
relatively easy to emulate.  The easier it is to track an index, the more likely
it is for a Fund to track that index's performance.

We also us Standard & Poor's S&P SmallCap 600 Index.  The S&P SmallCap 600 Index
is a benchmark index for tracking  small-capitalization  stocks ranging in value
from  approximately $29 million to $2.9 billion.  While this index is relatively
new, the  industry  recognizes  it as a good  benchmark  for tracking  small-cap
stocks.  The 600 stocks that comprise the index are listed on the New York Stock
Exchange,  The  American  Stock  Exchange  or the NASDAQ  quotation  system.  In
addition,  the stocks that make up the index are liquid, meaning they are easily
traded.  These  characteristics of the S&P SmallCap 600 Index make it relatively
easy to emulate. The easier it is to track an index, the more likely it is for a
Fund to track that index's performance.

The S&P 500 Index,  the S&P MidCap 400 Index and The S&P  SmallCap 600 Index are
comprised of U.S. equity stocks.  S&P periodically makes additions and deletions
of stocks to its respective  indices.  Selection of a stock for inclusion in any
of the S&P Indices in no way implies an opinion by S&P as to its  attractiveness
as an  investment.  Standard  &  Poor's  only  relationship  to the  Fund is the
licensing of the Standard & Poor's Marks,  the S&P 500 Index, the S&P MidCap 400
Index and the S&P SmallCap 600 Index. These indices are determined, composed and
calculated by Standard & Poor's without regard to any particular Fund.

"Standard &  Poor's(R),"  "S&P(R),"  "Standard & Poor's  500," "S&P 500," "500,"
"Standard & Poor's MidCap 400 Index," "S&P MidCap 400 Index," "Standard & Poor's
SmallCap  600  Index"  and  "S&P  SmallCap  600  Index"  are  trademarks  of The
McGraw-Hill Companies,  Inc. and have been licensed for use by AAL. The Fund and
the certificates are not sponsored,  endorsed, or sold or promoted by Standard &
Poor's. Standard & Poor's makes no representation  regarding the advisability of
investing  in  the  Fund.  See  the  Statement  of  Additional  Information  for
additional disclaimers and limitations of liabilities on behalf of S&P.

SHAREHOLDER INFORMATION

PRICING FUNDS' SHARES

The price of a Fund's  share is based on the Fund's net asset  value.  The Funds
determine  the net asset  value  ("NAV")  per share  once  daily at the close of
trading  (normally  3:00  p.m.  Central  Time)  on the New York  Stock  Exchange
("NYSE").  The Funds do not  determine  NAV on holidays  observed by the NYSE or
AAL. To determine the NAV, the Funds value their  securities  at current  market
value using readily available market quotations. The Funds value securities that
do not have readily  available market quotations at fair value, as determined in
good faith under policies and guidelines approved by The AAL Mutual Funds' Board
of  Trustees.  The Funds may use  pricing  services  as approved by the Board of
Trustees to determine the net asset value of their securities.


Some of the Funds hold  securities  that trade  primarily on foreign  exchanges.
These  exchanges may trade on weekends or other days when the Funds do not price
their shares.  Accordingly, it is possible that the value of a Fund's shares may
change at times when those shares may not be purchased or redeemed.

The price at which you  purchase  or redeem  shares of the Funds is based on the
NAV next  determined  after the Funds  receive your  payment or your  redemption
request.

Internet Transactions

You are able to perform various AAL Mutual Fund  transactions  over the internet
at www.aal.org.  You are able to purchase  (pre-authorized  bank  information is
required  prior to  purchase),  redeem,  and  exchange  shares  within your Fund
accounts.  To protect  your Fund  assets,  we require a Personal  Identification
Number ("PIN") prior to authorizing  transactions on your Fund accounts.  Please
call AAL Capital Management Corporation at (800) 553-6319 ("The AAL Mutual Funds
Service Center") to request  information about obtaining a PIN. You will receive
your PIN approximately 5-7 days after your request.


HOW TO BUY SHARES
You can buy  Class A and  Class B  shares  in the  Funds  through  a  Registered
Representative,  by mail or wire transfer. Sales charges and ongoing asset-based
distribution  fees  mark the  primary  differences  between  Class A and Class B
shares. We describe the differences between the types of shares below.

Buying Class A Shares
Class A shares have an up-front sales charge which is commonly  referred to as a
front-end  load.  You buy Class A shares of each Fund at net asset  value  (NAV)
plus a maximum  sales charge  (front-end  load) of 4.00% of the public  offering
price  (POP).  You pay this sales  charge  when you buy your  shares.  We do not
impose any sales charge when you redeem Class A shares of a Fund.  We may reduce
or waive  sales  charges on certain  purchases.  The chart below shows the sales
charge  percentage  for  Class  A  shares  imposed  at  different  dollar  level
purchases.

                                   Breakpoints
<TABLE>
<CAPTION>
<S>                  <C>                <C>                <C>                  <C>
Your Investment      Sales Charge as    Sales Charge as a  50% Sales Charge  50% Sales Charge as
Amount               a Percent of POP*    Percent of Net    as a Percent of    a Percent of Net
                                         Amount Invested*        POP*          Amount Invested*

Less than $25,000      4.00%               4.17%              2.00%               2.04%
$25,000 but less       3.75%               3.90%              1.88%               1.91%
than $50,000

$50,000 but less       3.00%               3.09%              1.50%               1.52%
than $100,000

$100,000 but less      2.00%               2.04%              1.00%               1.01%
than $250,000**

$250,000 but less      1.00%               1.01%              0.50%               0.50%
than $500,000

$500,000 and up*       0.00%               0.00%              0.00%               0.00%
</TABLE>

* Registered Representatives may receive compensation of 55% of the sales charge
on  amounts  purchased,  plus a bonus  based  on total  commissions.  Registered
Representatives  may also receive  compensation of .50 of 1% on amounts invested
of $500,000 or more.

** You should purchase Class A shares at this level of investment and above.

Reducing Your Sales Charges
We may reduce your sales  charges on purchases  of Class A shares under  certain
circumstances, described below. If you are eligible for one of these reductions,
you must  tell us or your  Registered  Representative  at the time you  purchase
Class A  shares  in order to  assure  you  receive  the  appropriate  reduction.
Trustees, directors and employees of the Funds and the adviser and sub-advisers,
as well as persons  licensed to receive  commissions  for sales of the Funds, do
not pay a sales charge on their purchases or on purchases made by family members
living with them. We reserve the right to stop or change these reductions at any
time. Prior to making any changes, we will notify shareholders with a prospectus
supplement.

50% Reduction: Non-profit organizations, charitable trusts, charitable remainder
unitrusts, endowments, AAL branches and congregations pay only 50% of the normal
sales charge so long as there is an  affiliation  with a Lutheran  organization.
The reduction does not apply to 403(b)(7) retirement plan accounts.

Rights  of  Accumulation:  You  can  combine  all  your  Class  A,  Class  B and
Institutional  share  purchases,  including the purchases of family  members who
live with you,  when  computing  your  current  sales charge for Class A shares.
Eligible  shares for  combination  in computing  the sales charge  include those
contained in individual,  joint tenant,  gift/transfer  to minor,  trust and IRA
accounts.  Employer sponsored plans can link the shares in the plan for purposes
of calculating a sales charge  reduction.  Rights of  accumulation  includes the
value of all Class A shares at the public  offering  price,  all Class B shares,
all Institutional shares and reinvested dividends and capital gains.

Letter of Intent

To reduce your sales charge on purchases over the breakpoints  listed above, you
can sign a letter of intent if you intend to invest new  dollars  exceeding  the
amount of any one breakpoint during the next 13 months. Class A or Class B share
purchases  fulfill the letter of intent,  but you receive a reduced sales charge
on Class A shares  only.  You can include  purchases in accounts you have linked
for purposes of the rights of  accumulation,  as well as,  purchases made in the
last 90 days. However, shares you purchase through employer sponsored retirement
plans will not be linked for your letter of intent.  We will not recalculate the
sales charge on prior purchases.


You do not have any  obligation to buy additional  shares.  During the letter of
intent period,  we will escrow shares totaling 5% of the investment goal. If for
some reason you do not fulfill the letter of intent within the 13-month  period,
we will sell escrowed shares to cover any additional sales charges due from you.
You should sign only one letter of intent for all accounts combined under rights
of accumulation.

Share  purchases in The AAL Money Market Fund do not apply toward your letter of
intent,  unless you originally purchased shares in another Fund and paid a sales
charge, and later exchanged those shares for your shares of The AAL Money Market
Fund.

Buying Class B Shares
Class B shares  have a  contingent  deferred  sales  charge,  which is  commonly
referred to as a back-end load. You buy Class B shares of each Fund at net asset
value with no initial sales charge.  However,  you may pay a contingent deferred
sales charge  (expressed  as a percentage of the lesser of the current net asset
value or original cost) of up to 5% if you redeem shares within five years after
purchase.  We do not impose a  contingent  deferred  sales  charge on shares you
acquire through the  reinvestment of dividends and capital gains. To reduce your
cost,  when you redeem shares in a Fund,  you will redeem either shares that are
not subject to a contingent  deferred  sales charge (i.e.,  those bought through
reinvestment  of  dividends  and  capital  gains)  or  shares  with  the  lowest
contingent  deferred sales charge. We waive the contingent deferred sales charge
upon redemption of shares  following the death or disability of a shareholder or
for mandatory or hardship  distributions  from retirement plans, IRAs and 403(b)
plans or to meet  certain  retirement  plan  requirements.  Also,  we reduce the
amount of the contingent  deferred sales charge depending on the amount of years
from the purchase of Class B shares until the sale of those shares  according to
the following table:

Years After Purchase           Deferred Sales Charge on Shares Sold*
1st Year                       5.00%
2nd Year                       4.00%
3rd Year                       3.00%
4th Year                       2.00%
5th Year                       1.00%
After 5th Year                 0.00%

*Registered  Representatives  may receive  compensation  in connection with your
purchase of Class B shares in the amount of up to 1.25% of the purchase  amount,
plus a bonus based on total  commissions,  even if such shares are not  redeemed
within five years of purchase and thus not subject to a back-end  load.  We base
the sales  charge on the lesser of the net asset value of the shares at the time
of the purchase or at the time of the sale.

You should not consider buying Class B shares if you can elect the 50% reduction
for  purchases  of Class A shares or you are  investing  $100,000 or more in the
Funds.  Also,  because of the higher  expenses,  you should not consider  buying
Class B shares of The AAL Money  Market Fund unless you intend to exchange  them
for other  Class B shares or as part of The AAL  Mutual  Funds  Capital  Builder
Plan.

Conversion to Class A shares
Your Class B shares  automatically  convert to Class A shares after 5 years from
the purchase date,  reducing future annual expenses.  Class B shares provide the
benefit  of  putting  all of your  dollars  to work  from the time you make your
investment.  However,  until your Class B shares convert to Class A shares,  you
will have a higher expense ratio,  receive lower  dividends and may have a lower
net asset value than Class A shares due to the higher 12b-1 fees.

You should  consider the amount and intended  length of time of your  investment
when  determining  which share class would benefit you the most. In general,  if
you  intend to make a large  investment,  thus  qualifying  for a reduced  sales
charge,  you might consider  purchasing Class A shares.  If you intend to make a
smaller  investment,  you might  consider  Class B shares  because  100% of your
purchase is invested immediately.

Minimum Purchase Amounts
The following minimum amounts apply to purchases of shares of each Fund:

                          Minimum Purchase Amount per Account per Transaction*


Account                        Initial Purchase        Additional Purchase
Regular Account                $1,000                  $50
Custodial, IRA or other        $250                    $50
RetirementPlan Account
Automatic Investment Plan      $0                      $25


* Minimum amounts may be waived for qualified group retirement plans and payroll
deduction plans with prior approval or when required by law.

Opening a New Account

Your AAL Capital Management  Corporation  Registered  Representative is ready to
help you  open a new  account.  If you do not  know the name of your  Registered
Representative,  please  call  The AAL  Mutual  Funds  Service  Center  at (800)
553-6319. The Telecommunications Device for the Deaf (TDD) is (800) 684-3416.


Purchasing  Shares  for the First  Time by Mail
To open your new account, just follow these steps:

Step One:
After reviewing this  prospectus,  complete an AAL Mutual Funds  application and
new account form, for every different  account  registration.  For example,  you
need a separate application for an individual account in The AAL Bond Fund and a
separate  application for an IRA account invested in The AAL Bond Fund. Remember
to designate whether you are purchasing Class A shares or Class B shares. If you
do not  complete  the  application  properly,  your  purchase  may be delayed or
rejected;

Step Two:
Make your check payable to the Fund you are buying, for example,  "The AAL Large
Company  Index Fund II." If you are buying  more than one Fund,  make your check
payable to "THE AAL MUTUAL  FUNDS." DO NOT MAKE YOUR CHECK PAYABLE TO AAL OR AAL
CAPITAL MANAGEMENT CORPORATION; and

Step Three:
Mail your completed application and check to:

The AAL Mutual Funds
Attn:  New Accounts
222 W. College Ave.
P.O. Box 8004
Appleton, WI 54912-8004

Please note,  how you register your account with the Funds can affect your legal
interests as well as the rights and interests of your family and  beneficiaries.
You should  always  consult with your legal and/or tax adviser to determine  the
account  registration  that best meets your needs. You must clearly identify the
type of account  you want on your AAL Mutual  Funds  application.  Some  account
registrations may require additional documents.

Purchasing Shares for the First Time By Wire
If your bank is a member of, or has a corresponding  relationship  with a member
of the Federal Reserve System,  you can buy shares of the Funds by wire transfer
by following these steps:

Step One:

Call AAL Capital Management Corporation at (800) 553-6319 ("The AAL Mutual Funds
Service Center") and provide the following information:


o your account registration;
o the name of the Fund(s) in which you want to invest and whether you wish to
  buy Class A or Class B shares;
o your address;
o your Social Security or tax identification number;
o the dollar amount;
o the name of the wiring bank; and
o the name and  telephone  number  of the  person at your bank who the Funds can
  contact about your purchase.

We must receive your wire order  before the closing of the NYSE  (normally  3:00
p.m. Central Time) to receive that day's price.

Step Two:
Instruct your bank to use the following instructions when wiring funds:

o        Wire To:          Firstar Bank
                           Milwaukee, N.A.
                           ABA #0705000022

o        Credit:           Firstar Mutual Fund Services, LLC
                           Account 112-952-137
o        Further Credit:   Name of Fund
                           New Account FBO
                           Shareholder Registration


Please  call  (800)  553-6319  prior to  sending  the wire in order to  obtain a
confirmation number and to ensure prompt and accurate handling of funds.

The Fund and its transfer  agent are not  responsible  for the  consequences  of
delays  resulting  from the  banking or Federal  Reserve  Wire  system,  or from
incomplete wiring instructions.

Step Three:
Complete The AAL Mutual Funds application and mail it immediately to:

The AAL Mutual Funds
Attn:  New Accounts
222 W. College Ave.
P.O. Box 8004
Appleton, WI 54912-8004

Additional Purchases in Existing Accounts
After you have opened an account  with The AAL Mutual  Funds,  you may  purchase
additional shares in your account by mail or wire.

Additional Purchases by Mail
Payment for  additional  purchases  in  existing  Fund  accounts  should be sent
directly to the Funds' transfer agent at the following address:

REGULAR MAIL


The AAL Mutual Funds
c/o Firstar Mutual Fund Services, LLC
615 E. Michigan St.

P. O. Box 2981
Milwaukee, WI 53201-2981

EXPRESS MAIL/PRIVATE DELIVERY


The AAL Mutual Funds
c/o Firstar Mutual Fund Services, LLC
Mutual Fund Services, Third Floor
615 E. Michigan St.

P.O. Box 2981
Milwaukee, WI 53202

Please  indicate  your  AAL  Mutual  Fund  account  number  on the  face  of all
subsequent investment checks and make your check payable to the specific Fund in
which you are investing.  If you have more than one account,  always verify that
you are  investing  in the proper  account.  This will help to ensure the proper
handling of the transaction.

Additional Purchase by Wire
You may make  additional wire purchases in an existing Fund account by following
Step (2) of the wire transfer instructions shown for "Initial Purchase by Wire,"
and in addition, by providing your existing Fund account number.


The Funds' transfer agent, Firstar Mutual Fund Services, LLC , must receive your
wire order funds in its offices  prior to the close of the NYSE  (normally  3:00
p.m.  Central  Time),  to purchase  shares on that day. Money received after the
close of the NYSE will go toward  the  purchase  of shares  the next day at that
day's price.


Additional Purchase by Telephone

Before you can buy  additional  shares by telephone,  you must have selected the
Request for Telephone Purchase option on the application. Once you have selected
this  option,  you can call The AAL  Mutual  Funds  Service  Center  and we will
withdraw  money  from  your  bank  checking  or  savings  account  to make  your
investment.  You pay the next price  computed after the Funds have received your
investment  from your  bank,  which is  usually  three  business  days after you
authorize the transfer. If you need to invest sooner, you should consider making
a bank wire purchase.


Automatic Investment Plans

The Funds offer several  automatic  investment plans to make periodic  investing
more  convenient.  These  plans  are  not  required  to meet a  minimum  initial
investment.  Using The AAL Mutual  Funds  automatic  investment  plans,  you may
implement  a strategy  called  dollar  cost  averaging.  Dollar  cost  averaging
involves investing a fixed amount of money at regular intervals. When you dollar
cost  average,  you purchase  more shares when the price is low and fewer shares
when the  price is high.  Dollar  cost  averaging  does not  ensure a profit  or
protect against a loss during declining markets. Because such a program involves
continuous  investment  regardless of changing share prices, you should consider
your  ability to continue  the program  through  times when the share prices are
high.


Please note, it takes 12 days from the time you invest for the transfer agent to
validate any electronic transfer.  This will cause some delay in your ability to
write checks on an AAL Money  Market Fund account or to redeem or transfer  from
your account.

The Bank Draft Plan

Investors who wish to make regular  additional  investments  in an existing Fund
account may do so through the Funds' bank draft plan.  Under this plan the Funds
will  draft an  investor's  bank  checking  or  savings  account  in the  amount
specified -- which may not be less than $25 per account -- on  specified  dates,
up to two transactions per month (at least 10 days apart), and have the proceeds
invested  in shares  of the  specified  Fund at the  applicable  offering  price
determined  on the date of the draft.  To use this plan you must  authorize  the
plan on your application form, or subsequently in writing, and submit additional
documents.  Your  instructions  to  establish a bank draft plan or to change the
bank on an existing plan, must be received by the Funds' transfer agent at least
13 business days prior to the transaction date. Your instructions for stopping a
bank  draft  plan or  changing  the dollar  amount on an  existing  plan must be
received  by the Funds'  transfer  agent at least 5  business  days prior to the
transaction  date.  For  further  information  contact  AAL  Capital  Management
Corporation  ("The AAL Mutual Funds Service  Center) at (800)  553-6319) or your
Registered Representative. Instructions for changes, additions or termination of
a bank draft plan must be in writing and signed by all bank account owners.


The Capital Builder Plan
The  capital  builder  plan also  allows  investors  to make  regular  automatic
investments in an existing  account in any of The AAL Mutual Funds by redemption
of shares from their AAL Money  Market Fund  account.  The capital  builder plan
allows investors to select the transaction  date. If you do not select the date,
it will  automatically  be drawn from your account on the 15th of the month. All
such  investments  will  be  subject  to  the  applicable  sales  charge.  These
transactions  must meet the minimum purchase amounts  described above. To start,
stop or change the plan,  you must  notify the Funds at least 24 hours  prior to
the transaction date.

Payroll Deduction Savings and Investment Plan

The payroll  deduction  savings and investment plan allows  employees of AAL and
employees of  Lutheran-affiliated  institutions  to invest in the Funds  through
direct deduction from their paychecks or commission checks.


The Government Allotment Plan
The  Government  Allotment  Plan allows  Lutheran  Social  Security  recipients,
federal  employees  and  military  personnel  to invest in The AAL Mutual  Funds
through direct deduction from their paychecks.

Prestige Account
Investors  who  maintain a  significant  share  balance  will be  provided  with
additional   benefits,   including  personal  attention  from  Prestige  Account
representatives,   an  exclusive   toll-free   telephone  number,   personalized
investment analysis,  complimentary  financial  information,  a Prestige Account
organizer  and more.  Your AAL CMC  Registered  Representative  can provide more
detailed information.

Retirement Plans

AAL members and their enterprises and Lutheran organizations may establish their
own individual or business  retirement  plans,  with assets  invested in The AAL
Mutual Funds.  These accounts may offer you tax  advantages.  You should consult
with your legal and/or tax adviser  before you  establish a  retirement  plan. A
third-party maintenance fee may apply to some retirement accounts. Please review
plan documents for more information. Your AAL CMC Registered Representative will
provide you with the materials, documents and forms you need, and will work with
you in establishing your retirement and education plan from among these choices:

o IRA (Individual Retirement Account);
o "Rollover" IRA;
o Roth IRA -- annual  contributions are not tax deductible but distributions may
  not be subject to income tax;
o Education  IRA  --  annual   contributions   are  not  tax  deductible,   but
  distributions may not be subject to income tax;
o SEP-IRA (Simplified Employee Pension Plan);
o SARSEP-IRA (Salary Reduction Simplified Employee Pension Plan) -- No new plans
  may start after 1996, but existing plans may continue;
o SIMPLE-IRA (Savings Incentive Match Plan for Employees);
o 403(b)(7)  Custodial  Account -- for  employees of public  schools and certain
  non-profit organizations;
o Money Purchase Pension Plan;
o Profit Sharing Plan; and
o 401(k) Plan.

Please  note,  The AAL  Municipal  Bond  Fund is  generally  not an  appropriate
investment for a retirement account or Education IRA.


Other Purchase Information

Earning Income
You begin earning  income,  if any, on your shares on the business day following
the day our transfer agent receives your payment.

Purchases
Your  purchase  must be in U.S.  dollars  and your check must be drawn on a U.S.
bank. We do not accept cash or traveler's  checks. If your check does not clear,
we will  cancel  your  purchase  and  hold you  liable  for any  losses  and any
applicable  fees.  If you buy  shares  by any type of  check,  electronic  funds
transfer (other than bank wires) or automatic  investment plan, and you elect to
redeem  your shares  soon  thereafter,  we may  postpone  paying the  redemption
proceeds for 12 days, or until your check has cleared,  whichever is later. This
does not limit your right to redeem  shares.  Rather,  it  operates to make sure
that payment for the shares redeemed has been received by the transfer agent.

Confirmation
We generally mail written  confirmation  of your  purchases,  except for The AAL
Money Market Fund, within two business days following the date of your purchase.
We mail  confirmation  of  additional  purchases  in The AAL Money  Market  Fund
monthly.  We mail  confirmation  of your automatic  investment plan purchases at
least quarterly.

Share Certificates

We issue share  certificates  only upon written request,  and then only for full
shares.  You must make a new written request for a share  certificate  each time
you purchase shares. We do not charge a fee to issue share certificates.  If you
have asked for or have  received  share  certificates,  you  cannot use  certain
shareholder  services,  including wire,  check and telephone  redemption,  share
exchange  and any  systematic  withdrawal.  Before you can  redeem,  transfer or
exchange your shares,  you must deliver the share  certificates  to our transfer
agent in  negotiable  form (with a signature  guarantee).  We may not have share
certificates  available  for some  retirement  accounts.  If you lose your share
certificate(s),  you will be unable to redeem  your  shares  until you receive a
replacement  certificate.  To replace  your share  certificates  contact The AAL
Mutual Funds Service Center at (800) 553-6319 for  instructions.  There may be a
charge for replacement.


Other Information
The U.S.  Postal  Service or  private  delivery  services  are not agents of the
Funds,  the  distributor,  or the transfer agent. We do not legally receive your
purchase application or your request for redemption when you deposit them in the
mail, send them with a private  delivery service or when you deposit them in our
Post Office Box. We must have  physical  possession  of your request to consider
your request  received.  Current law will  determine the legal effect of posting
for deadline purposes.

We reserve the right to suspend the  offering of shares for a period of time and
the right to reject any specific purchase of shares.

Changes to Your Account

After opening your AAL Mutual Fund account, you may wish to make changes to your
account.  Certain types of changes, such as moving to a new address or getting a
new telephone  number,  do not have any other effect on an account.  Any feature
such as telephone  exchange or  participation  in an automatic  investment  plan
would continue uninterrupted. Other changes, such as exchanging from one Fund to
another  or  transferring  shares  from a regular  account to an IRA or adding a
joint owner,  will affect your account options because a new account is actually
created. Account options, such as an automatic investment plan, are discontinued
unless  additional  action  is  taken.  These  changes  may  require  additional
instructions  and specific  forms.  If you are not sure whether a change affects
your account,  please contact your Registered  Representative  or The AAL Mutual
Funds  Service  Center at (800)  553-6319.  When making  these types of changes,
please use The AAL Mutual Funds Account Change Request Form,  which is available
from your Registered Representative or from the Mutual Funds Service Center.

Householding
As a shareholder of The AAL Mutual Funds, you currently  receive a great deal of
information from us through the mail. To help reduce the volume of mail that you
receive,  we will "household" all regulatory  materials from this point. When we
household  mailings,  we simply identify addresses on file that have two or more
accounts   and  send  only  one  copy  of  items   such  as   prospectuses   and
annual/semi-annual  reports to that address.  These  "shared"  addresses will be
used for  mailings  even if the  accounts'  owners of record are not exactly the
same.

For example,  suppose you and your spouse each hold  individual AAL IRA accounts
in The AAL Capital Growth Fund,  and you both live at the same address.  Instead
of sending you both separate  copies of the latest  shareholder  reports for The
AAL Capital Growth Fund, we will send only one copy to your address.

Householding  helps to save money through  reduced  printing and mailing  costs,
which benefits all  shareholders.  From this point forward,  we will continue to
household your regulatory  materials unless you tell us otherwise.  If you would
like to discontinue householding for your account(s), please call The AAL Mutual
Fund Service Center at (800)  553-6319.  When we receive notice from you to stop
householding,  we will begin sending you multiple  copies of the same  materials
free of charge within 30 days.

Please  note,  this  policy  applies  only to  regulatory  documents  and not to
quarterly account statements.


HOW TO REDEEM (SELL) SHARES
You can sell your  shares on any  business  day we price The AAL  Mutual  Funds'
shares.  When you sell your  shares,  you receive the net asset value per share,
except for Class B shares  for which you will  receive  the net asset  value per
share minus the back-end  load, if any,  depending on how long you have held the
shares  redeemed.  If we receive your request in good order,  which includes all
the information  listed below,  before the close of the NYSE (normally 3:00 p.m.
Central Time) you will receive that day's price.  If we receive your  redemption
request in good order on a holiday,  weekend or day the NYSE is closed,  we will
process your  transaction  request on the next business day. You can sell shares
several ways.  Please note that  transfers via  Electronic  Funds Transfer (EFT)
generally take up to three business days to reach your bank account.

Redemptions by Mail
Shareholders  of any of the Funds may have their shares  redeemed at any time at
the net asset value per share next  determined  after a written  request and all
additional  documents,  if  required,  are  received in good order by the Funds'
transfer agent.


The Funds determine  payment for shares presented for redemption at a Fund's net
asset  value  next  computed  after a request is  received  in good order by the
transfer  agent.  Shareholders  earn income and receive  dividends paid on Funds
through the date of  redemption.  The Funds will mail  payment  proceeds  within
seven days following receipt of all required  documents.  The Funds may postpone
payment  or  suspend  the  right of  redemption  in  unusual  circumstances,  as
permitted  by the U.S.  Securities  and Exchange  Commission.  When you purchase
shares by check,  the Funds may delay  payment for  redemption  requests for the
shares purchased for 12 days or until your check has cleared, if later.

In order for your redemption  request to be in good order,  you must include the
name(s) of the account  owner(s),  your account number and specify the dollar or
share  amount  you wish to  redeem.  You and any  other  persons  registered  as
shareholders on the account must sign your redemption request. You must sign the
request exactly as the account is registered.  If you wish to redeem shares with
a value in excess of $100,000, you must have your signature(s)  guaranteed.  The
transfer agent will accept signature  guarantees from all institutions  that are
eligible to provide  signature  guarantees under federal or state law,  provided
that the  individual  giving the  signature  guarantee is  authorized  to do so.
Institutions that usually are eligible to provide signature  guarantees  include
commercial  banks,  trust  companies,   brokers,  dealers,  national  securities
exchanges,  savings and loan institutions and credit unions.  Please note that a
signature guarantee is not the same as a notarized signature. If shares are held
in the  name  of a  corporation,  trust,  estate,  custodianship,  guardianship,
partnership  or pension and profit  sharing plan,  or if you have  requested and
received share certificates,  additional  documentation may be necessary. If you
wish to redeem  any type of IRA  account  you must  indicate  on the  redemption
request  whether  or not  federal  income  tax  should be  withheld.  Redemption
requests that fail to indicate an election not to have federal tax withheld will
be subject to withholding.


You may redeem shares of any of the Funds by mail, by sending a written  request
for redemption to:

REGULAR MAIL


The AAL Mutual Funds
c/o Firstar Mutual Fund Services, LLC
615 E. Michigan St

P. O. Box 2981
Milwaukee, WI 53201-2981

EXPRESS MAIL/PRIVATE DELIVERY


The AAL Mutual Funds
c/o Mutual Fund Services, LLC
Mutual Fund Services, Third Floor
615 E. Michigan St

P.O. Box 2981
Milwaukee, WI 53202

Redemptions by Telephone

The  privilege to redeem  shares by telephone is  automatically  extended to all
accounts,  unless the option is  specifically  declined.  If you do not want the
telephone redemption option,  please call The AAL Mutual Funds Service Center at
(800)  553-6319.  By  accepting  this  privilege,  you  assume  some  risks  for
unauthorized transactions.  Once a telephone request has been made, it cannot be
canceled or modified.  AAL CMC has implemented procedures designed to reasonably
ensure  that  telephone  instructions  are  genuine.  These  procedures  include
recording telephone  conversations,  requesting verification of certain personal
information,  restricting  transmittal of redemption  proceeds to pre-authorized
account owners and addresses and supplying transaction verification information.
AAL CMC will not be liable for losses from telephone  redemptions if they follow
these reasonable procedures.


The following conditions apply to telephone redemptions described above:

o    telephone  redemption  checks  will be issued to the same  payee(s)  as the
     account registration and sent only to the address of record;

o    there has been no change of address in the preceding 60 days;

o    the request is for $100,000 or less;

o    retirement plan accounts are generally not eligible;

o    shares to be redeemed cannot be in certificate form; and

o    only one  telephone  redemption  is permitted  within any 30 day period for
     each authorized account.

Please note:  individual  retirement plan accounts can be redeemed by phone only
with 10% Federal Tax withholding.


Redemptions by Bank Wire


Existing  shareholders  must  send an  Account  Change  Request  Form  with  the
appropriate  section  completed  prior  to  exercising  the  privilege  of  wire
redemption to:


REGULAR MAIL


The AAL Mutual Funds
c/o Firstar Mutual Fund Services, LLC
615 E. Michigan St

P. O. Box 2981
Milwaukee, WI 53201-2981

EXPRESS MAIL/PRIVATE DELIVERY


The AAL Mutual Funds
c/o Firstar Mutual Fund Services, LLC
Mutual Fund Services, Third Floor
615 E. Michigan St

P.O. Box 2981
Milwaukee, WI 53202


When redeeming shares by bank wire, please be aware of the following conditions:

o    wire redemptions can be made for any amount;

o    a $12.00 fee is assessed for redemptions by wire;

o    requests  received in good order before the close of the NYSE (usually 3:00
     p.m. Central Time) receive that day's price;

o    and if an account has multiple owners, AAL CMC may rely on the instructions
     of any one account  owner.  This privilege may not be available on all
     retirement plan accounts.

Systematic Withdrawal Plan (Usually Only Appropriate for Class A Shares)

You can have money automatically withdrawn from your AAL Mutual Funds account(s)
on a regular basis by using our systematic  withdrawal plan. The plan allows you
to receive funds or pay a bill at regular intervals.  The following rules and/or
guidelines apply:


o    you need a minimum of $5,000 in your account to start the plan;
o    you can select the  date(s) on which the money is  withdrawn.  If you don't
     select the  date(s),  we will  withdraw the money  automatically  from your
     account on the 15th of the month;
o    to start the plan or change the payee(s), you must notify us in writing at
     least 13 business days prior to the first  withdrawal and you must have all
     account owner(s) sign the appropriate form;
o    money can be sent by check or bank wire;
o    to stop or change your plan,  you must  notify us at least 5 business  days
     prior to the next withdrawal; and
o    because of sales charges, you must consider carefully the costs of frequent
     investments in and withdrawals from your account.

Please note, for minimum required distributions from IRA accounts, we will waive
the back-end load on Class B shares.


Reinstatement Privilege (Class A Shares Only)

You have 60 days  after you sell  shares  to  reinvest  the  dollar  amount  you
redeemed without having to pay another sales charge.  You will pay the net asset
value  per share on the day you make  your  reinvestment  and not on the day you
sold your investment. The following rules and/or guidelines apply:

o    you may use this privilege only ONCE per account;
o    you must send a written  request  and a check  for the  amount  you wish to
     reinvest to the Funds' transfer agent:


REGULAR MAIL


The AAL Mutual Funds
c/o Firstar Mutual Fund Services, LLC

P. O. Box 2981
615 E. Michigan St.
Milwaukee, WI 53201-2981

EXPRESS MAIL/PRIVATE DELIVERY


The AAL Mutual Funds
c/o Firstar Mutual Fund Services, LLC
Mutual Funds Services, Third Floor
615 E. Michigan St.

Milwaukee, WI 53202;


o    the dollar amount you reinvest cannot exceed the dollar amount you sold;
o    the sale of your shares may be a taxable event  despite the  reinstatement;
     and
o    the  reinstatement  privilege does not apply to qualified  retirement  plan
     accounts (i.e., 403(b) and 401(k) accounts).


Involuntary Redemption
Because all account owners share the high cost of maintaining  accounts with low
balances,  the Funds reserve the right to  involuntarily  redeem a shareholder's
account,  other than a  retirement  plan  account,  at any time the value of the
account  falls  below  $250 as a  result  of  redemption.  Shareholders  will be
notified in writing of any planned involuntary redemption and will be allowed 30
days to  increase  the  account  balance  above the  stated  minimum  before the
redemption is processed.

Exchange Privilege
Shares of the Funds held for at least 12 days may be exchanged for shares of any
other AAL  Mutual  Fund with the same  registration,  without  additional  sales
charge,  at the net asset  value per share  next  computed  after  receipt  of a
written exchange request in proper form by the transfer agent.  However,  if you
initially purchased Class A shares of The AAL Money Market Fund, and did not pay
an initial  sales  charge,  you would not be able to exchange  these  shares for
another Fund without paying a sales charge.

Minimum  investment  rules may apply when you open a new  account by  exchanging
shares, and you may have to submit a new application (i.e., you must exchange at
least $1,000 worth of shares to another Fund and fill out a new account form, if
you have not invested shares in the other AAL Mutual Fund account  before).  You
can exchange for the same class of shares only (for example,  Class A shares for
Class A shares and Class B shares for Class B shares).

Shareholders  of a Fund may only  exchange  into such other Funds as are legally
available  for  sale  in  any  state.  If  shares  are  held  in the  name  of a
corporation, trust, estate, custodianship,  guardianship, partnership or pension
and  profit   sharing  plan,  or  if  you  have  requested  and  received  share
certificates, additional documentation may be necessary.

An exchange  constitutes  a redemption  of the shares of one mutual fund and the
purchase of shares of another.  Exchanges  are sales for tax  purposes and could
result in a gain or loss, depending on the original cost of shares exchanged.


An excessive number of exchanges may be disadvantageous to the Funds. Therefore,
the  Funds  reserve  the  right  to  terminate  the  exchange  privilege  of any
shareholder who makes more than twelve exchanges in a year.  Further,  the Funds
reserve the right to modify or terminate the exchange privilege at any time with
respect to any Fund,  if the  Funds'  Trustees  determine  that  continuing  the
privilege may be detrimental to shareholders. The Funds will provide at least 60
days notice prior to modifying or  terminating  the exchange  privilege.  In the
event your exchange  privilege is terminated for any reason,  you still have the
right to redeem your shares for cash as described in this prospectus.


Exchanges by Mail
You can make an exchange by mail by sending your request to the Funds'  transfer
agent:

REGULAR MAIL


The AAL Mutual Funds
c/o Firstar Mutual Fund Services, LLC

P. O. Box 2981
615 E. Michigan St.
Milwaukee, WI 53201-2981

EXPRESS MAIL/PRIVATE DELIVERY


The AAL Mutual Funds
c/o Firstar Mutual Fund Services, LLC
Mutual Funds Services, Third Floor
615 E. Michigan St.

Milwaukee, WI 53202;

Please include the following information in your exchange request:


o   name(s) of the account owner(s);
o   account number(s);
o   amount of shares (or dollar amount) you want to exchange;
o   the name of the Fund you are exchanging into; and
o   signatures of all account owners.


Exchanges by Telephone
You can sell or exchange shares by phone. By doing so, you assume some risks for
unauthorized  transactions.  AAL  CMC has  implemented  procedures  designed  to
reasonably  assure that telephone  instructions  are genuine.  These  procedures
include recording telephone  conversations,  requesting  verification of various
pieces of personal information,  restricting  transmittal of redemption proceeds
to pre-authorized designations, and supplying transaction/taping  identification
numbers and/or symbols.  Please note,  however,  that The AAL Mutual Funds,  AAL
CMC, the  custodian,  the transfer  agent or any of their  employees will not be
liable for losses suffered by a shareholder that result from following telephone
instructions  reasonably believed to be authentic after verification pursuant to
these procedures.

Telephone exchanges (transactions in which the registration does not change) are
subject to the  requirements  described  above,  and additional  requirements as
follows.


You may  exchange  shares  for  which  certificates  have  not  been  issued  by
telephoning  The AAL Mutual  Funds  Service  Center at (800)  553-6319  or (920)
734-7633.  Telephone  exchange  requests received prior to the close of the NYSE
(usually 3:00 p.m. Central Time) will receive that day's price.


Telephone  exchanges will be permitted only if you elect the telephone  exchange
option on your initial purchase  application,  or request the telephone exchange
privilege in a subsequent written request, signed by all registered owners, with
all signatures guaranteed.

During  periods of extreme  volume  caused by dramatic  economic or stock market
changes,  shareholders  may have  difficulty  reaching the Mutual Funds  Service
Center by phone, and a telephone exchange may be difficult to implement at those
times.  The Funds  reserve the right to  temporarily  discontinue  the telephone
exchange privilege during such periods of extreme volume.

DIVIDENDS

The Funds endeavor to qualify  annually for, and elect tax treatment  applicable
to, a regulated  investment  company under  Subchapter M of the Internal Revenue
Code of 1986 as amended  (Code).  Pursuant to the  requirements  of the Code, we
intend to distribute  substantially  all of the Funds' net investment income and
net realized  capital gains, if any, less any available  capital loss carryover,
to  shareholders  annually.  We do this to avoid paying income tax on the Funds'
net  investment  income and net  realized  capital  gains or being  subject to a
federal  excise tax on  undistributed  net  investment  income and net  realized
gains.  Annually, we intend to comply with all of the requirements to qualify as
a  regulated  investment  company  for each  Fund.  We  provide  you  with  full
information  on dividends  and capital gains  distributions  for each Fund on an
annual basis.

Below, we provide you with a general  description of the  distribution  policies
and some of the tax consequences for the Funds' shareholders.  You should always
check with your tax adviser to determine whether any dividends and distributions
paid to you by a Fund are subject to any taxes, including state and local taxes.

The AAL Large Company Index II, Mid Cap Index II and Small Cap Index II Funds

The dividends from net investment  income of each of these Funds,  including net
short-term  capital  gains,  are  taxable as  ordinary  income to  shareholders,
whether  paid in  additional  shares or in cash.  Any  long-term  capital  gains
distributed  to  shareholders  are  taxable  as capital  gains to  shareholders,
whether they receive them in cash or in additional shares, and regardless of the
length of time a shareholder has owned the shares.

We  distribute  substantially  all net  investment  income and any net  realized
capital gains, if any, for the Funds as shown in the table below.

Fund                                  Dividends (If Any)  Capital Gains (If Any)
The AAL Large Company Index Fund II   Annually            Annually
The AAL Mid Cap Index Fund II         Annually            Annually
The AAL Small Cap Index Fund II       Annually            Annually

Reinvestment of Fund Distributions
You can reinvest all of your income dividends and/or capital gains distributions
into the  Funds at net  asset  value and pay no  up-front  (Class A  shares)  or
contingent  deferred  (Class B  shares)  sales  charges.  You also can have your
distributions  paid in cash. When you receive a distribution you may have to pay
taxes whether or not you reinvested them or had them paid out to you in cash. If
you have requested cash distributions and we cannot locate you, we will reinvest
your dividends.

TAX CONSIDERATIONS

As with all funds distributing taxable income, you as a tax-paying investor will
be subject to income taxes on all  dividends  and  distributions,  regardless of
whether you elect to take them in cash or have them reinvested.

Each Fund intends to distribute  in December  and, if  necessary,  at such other
times as the Fund may determine,  its net investment income and any net realized
capital gains  resulting from  investment  activity.  Any dividend  (including a
capital gains dividend) declared in October,  November or December with a record
date in such a month and paid during the  following  January  will be treated by
shareholders  for federal  income tax purposes as if received on December 31, of
the calendar year declared.  Cumulative  statements  showing all activity in the
account for the prior year will be mailed annually to all shareholders.

All income and capital gains distributions are reinvested in full and fractional
shares of a Fund at net asset value,  without sales  charges,  on a payment date
unless  a  shareholder  has  requested   payment  in  cash  on  the  shareholder
application or by separate  written  request.  The  shareholder  returns that we
project at maturity  assume the  reinvestment  of all income and  capital  gains
distributions.  If a shareholder elects to receive these  distributions in cash,
the return at maturity will be  substantially  less than our  projections at the
time of purchase.

Each Fund  intends to  qualify as a  "regulated  investment  company"  under the
Internal  Revenue Code (the Code) and to take all other action  required so that
no federal income tax will be payable by the Funds themselves. Each Fund will be
treated as a separate regulated investment company under the Code.  Shareholders
are  provided  annually  with full  information  on  income  and  capital  gains
distributions for tax purposes.  Shareholders  should consult their tax advisers
regarding  the   applicability  of  state  and  local  taxes  to  dividends  and
distributions.  The  Funds  are  required  by  federal  law to  withhold  31% of
reportable  payments (which include  dividends,  capital gain  distributions and
redemption  proceeds)  paid  to  certain  shareholders  who  have  not  properly
certified  that the Social  Security  or other  taxpayer  identification  number
provided  by the  shareholder  is  correct  and that he or she is not  otherwise
subject to backup withholding.  The Funds' shareholder  application includes the
required certification.

This discussion  provides no information as to state and local tax  consequences
of  ownership  of shares of the Funds.  You should  consult  your  personal  tax
adviser to determine the  consequences of state and local taxes,  and for a more
detailed   assessment   of  federal  tax   consequences   for  your   particular
circumstances.

DISTRIBUTION ARRANGEMENTS

12b-1 Fees
In addition to the sales charge  deducted at the time of purchase,  each Fund is
authorized,  pursuant to a Rule 12b-1  Distribution  Plan it has adopted  (12b-1
Distribution Plan or Plan), to use a portion of its assets to cover the costs of
certain activities relating to the distribution of its shares to investors.

The 12b-1  Distribution  Plan permits each Fund to reimburse the distributor for
expenses incurred in distributing the Funds' shares to investors, which includes
expenses relating to: sales representative  compensation  (excluding the initial
sales charge); advertising; preparation and distribution of sales literature and
prospectuses to prospective investors;  implementing and operating the Plan; and
performing  other  promotional  or  administrative  activities  on behalf of the
Funds.

Pursuant  to the  Plan,  we may also  reimburse  the  distributor  for  overhead
expenses  incurred in distributing  the Funds' shares.  We may not reimburse the
distributor  for expenses of past fiscal years or in  contemplation  of expenses
for future fiscal years. We may not use distribution fees we pay for one Fund to
finance the  distribution  of shares for another Fund. The table below shows the
maximum 12b-1 distribution and service fee paid by each Fund.

                             DISTRIBUTION FEES

Fund                                     Class A Shares         Class B Shares
The AAL Large Company Index Fund II      None                   0.75%
The AAL Mid Cap Index Fund II            None                   0.75%
The AAL Small Cap Index Fund II          None                   0.75%

                               SERVICE FEES

Fund                                     Class A Shares         Class B Shares
The AAL Large Company Index Fund II      0.25%                  0.25%
The AAL Mid Cap Index Fund II            0.25%                  0.25%
The AAL Small Cap Index Fund II          0.25%                  0.25%

Shareholder Maintenance Agreement

Under  contracts  approved by the Board of Trustees,  AAL CMC  provides  certain
shareholder  maintenance services.  AAL CMC receives an annual fee for providing
these services.  This fee is based upon, and limited by, the difference  between
the current  account  fees  charged  and the normal  full-service  fee  schedule
established  by  our  transfer  agent.  It  also  includes   reimbursement   for
out-of-pocket  costs  including  postage and  telephone  charges.  This  account
differential,  including  reimbursement for expenses, is approximately $3.75 per
account per year.



<PAGE>


ADDITIONAL INFORMATION


You will find additional  information in the statement of additional information
and the annual and semi-annual reports to shareholders.  The Funds' statement of
additional information and annual and semi-annual reports are available, without
charge,  upon  request.  To request this or other  information  about the Funds,
please call (800) 553-6319 (TTY-(800) 684-3416).


Annual and Semi-Annual Reports
In the Funds' annual report, you will find a discussion of the market conditions
and investment  strategies that significantly  affected the Funds'  performances
during their last fiscal year.

Statement of Additional Information
The  Funds'   statement  of  additional   information   provides  more  detailed
information about the Funds.

You  also may  review  and copy  information  about  the  Funds  (including  the
statement of additional information) at the Securities and Exchange Commission's
Public  Reference Room in Washington,  D.C. For  information on the operation of
the Public Reference Room call  1-800-SEC-0330.  You also may obtain reports and
other  information  about the Funds on the Securities and Exchange  Commission's
Internet site at http://www.sec.gov.  You may obtain copies of this information,
upon payment of a  duplication  fee, by  electronic  request to e-mail  address:
publicinfo@sec.gov, or by writing the Public Reference Section of the Securities
and Exchange Commission at 405 5th Street, N. W., Washington, D. C. 20549-6009.


The Funds' Investment Company Act File No. is 811-5075


                                     [Logo]

                              THE AAL MUTUAL FUNDS
                              222 West College Ave.
                             Appleton, WI 54919-0007
                            Telephone: (800) 553-6319
                                TDD: 800-684-3416
                       www.aal.org e-mail: aalcmc@aal.org

<PAGE>


                              THE AAL MUTUAL FUNDS

                          FIXED-INCOME FUNDS PROSPECTUS
                           CLASS A AND CLASS B SHARES
                                  JULY 1, 2000


                          The AAL High Yield Bond Fund

                           The AAL Municipal Bond Fund

                                The AAL Bond Fund

                            The AAL Money Market Fund







As with other mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.





<PAGE>





                                TABLE OF CONTENTS
                                                                     PAGE
RISK/RETURN INFORMATION: INVESTMENT PROGRAMS AND PERFORMANCE

         PROSPECTUS SUMMARY                                           2
         Reading the Prospectus                                       2
         The Funds                                                    2
         Principal Risks Common to All Funds                          2
         Class A Versus Class B Shares                                3
         Institutional Shares                                         3

         THE AAL HIGH YIELD BOND FUND                                 4
         Investment Objective                                         4
         Principal Investment Strategies                              4
         Principal Risks                                              4
         Past Performance                                             5
         Expenses                                                     7

         THE AAL MUNICIPAL BOND FUND                                  8
         Investment Objective                                         8
         Principal Investment Strategies                              8
         Principal Risks                                              9
         Past Performance                                             9
         Expenses                                                     11

         THE AAL BOND FUND                                            12
         Investment Objective                                         12
         Principal Investment Strategies                              12
         Principal Risks                                              12
         Past Performance                                             12
         Expenses                                                     15

         THE AAL MONEY MARKET FUND                                    16
         Investment Objective                                         16
         Principal Investment Strategies                              16
         Principal Risks                                              16
         Past Performance                                             16
         Expenses                                                     18

MANAGEMENT, ORGANIZATION, AND CAPITAL STRUCTURE                       20
         Investment Adviser                                           20
         Adviser Fees per Fund                                        20
         Portfolio Management                                         21

SHAREHOLDER INFORMATION                                               22
         Pricing Funds' Shares                                        22
         How to Buy Shares                                            22
         How to Redeem (Sell) Shares                                  31

DIVIDENDS                                                             36

DISTRIBUTION ARRANGEMENTS                                             39
         12b-1 Fees                                                   39
         Distribution Fees                                            39
         Service Fees                                                 39
         Shareholder Maintenance Agreement                            39

FINANCIAL HIGHLIGHTS                                                  40

ADDITIONAL INFORMATION                                                45




<PAGE>


RISK/RETURN INFORMATION: INVESTMENT PROGRAMS AND PERFORMANCE

PROSPECTUS SUMMARY

READING THE PROSPECTUS

References to "you" and "your" in the prospectus refer to prospective investors
or shareholders. References to "we," "us" or "our" refer to the Trust or the AAL
Mutual Funds ("Funds") and Fund management, the adviser, and/or sub-adviser for
The AAL High Yield Bond Fund, distributor, administrator, transfer agent and
custodians.


THE FUNDS
The AAL Mutual Funds are a series of separate mutual fund portfolios within a
single Trust, each with a specific investment objective. The Funds offer
investment opportunities to eligible Lutherans, including their families and
their enterprises. The Funds are also available to those who serve or are
associated with Lutherans or Lutheran organizations, but who are not Lutherans.


In this prospectus, we provide you with information on: the investment
objectives and policies of the Funds; risks of investing in the Funds; historic
performance information; how to buy and sell Class A and Class B shares;
management and services provided to the Funds; and other information. This
prospectus describes two share classes, Class A shares and Class B shares. You
pay a sales charge immediately when you purchase Class A shares (front-end sales
charge or load). You pay a sales charge when you redeem Class B shares held for
less than five years (contingent deferred sales charge). In addition, you pay
higher "12b-1 fees" for Class B shares than Class A shares. 12b-1 fees are
ongoing asset-based fees that we charge pursuant to a plan to cover the costs of
certain activities related to the distribution and service of the Funds' shares.


PRINCIPAL RISKS COMMON TO ALL FUNDS
You assume certain risks when you invest in any of the Funds. Risks specific to
each Fund are discussed on the following pages. More generally, the investment
style and strategies that we use to select stocks, bonds and other securities
for each Fund depends on our ability to select those that perform well over
time. Our selections may not always achieve our growth and/or income
expectations, and securities we select could decline in value. There can be no
assurance that any of the Funds will achieve its objective and you could lose
money.

CLASS A VERSUS CLASS B SHARES
Whether you should purchase Class A or Class B shares depends on how long you
intend to own the shares and the size of your investment. If you intend to own
shares for more than five years and plan to invest less than $100,000, you
should consider Class B shares. If you plan to redeem shares in less than five
years or invest $100,000 or more, you should consider Class A shares. The
following table shows some of the differences between Class A and Class B
shares:


<TABLE>
<CAPTION>
<S>                                               <C>
CLASS A SHARES                                    CLASS B SHARES
o Maximum 4% front-end sales charge               o No front-end sales charge
o No contingent deferred sales charge             o Maximum 5% contingent deferred sales charge
o Lower annual expenses, which include 12b-1      o Higher annual expenses, which include 12b-1
  fees, than Class B shares                         fees, than Class A shares
o No conversion to Class B shares                 o Automatic conversion to Class A shares after 5
                                                    years
</TABLE>


INSTITUTIONAL SHARES

We also offer an institutional class of shares ("Institutional shares"). They
are described in a separate prospectus. Institutional shares are for Lutheran
organizations or enterprises with a minimum initial investment in the Funds of
$500,000. We designed Institutional shares to give Lutheran organizations and
enterprises (non-natural persons) or financial institutions acting in a
fiduciary or agency capacity for these organizations a convenient means of
accumulating an interest in The AAL Mutual Funds. Lutheran organizations or
enterprises that invest in Institutional shares purchase shares at net asset
value. They do not pay initial sales charges, redemption fees or 12b-1 fees. The
performance of Class A, Class B and Institutional shares will vary based on
differences in sales charges and fees. For more information on the Funds'
Institutional shares and a prospectus, you may call The AAL Mutual Funds Service
Center at (800)-553-6319.



<PAGE>


THE AAL HIGH YIELD BOND FUND

INVESTMENT OBJECTIVE
The AAL High Yield Bond Fund 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." The Fund actively seeks
to achieve the secondary objective of capital growth to the extent it is
consistent with the primary objective of high current income.

PRINCIPAL INVESTMENT STRATEGIES
Under normal circumstances, we invest at least 65% of the Fund's total assets in
high-yield bonds. We may invest the remaining 35% of the Fund's total assets in
any combination of:


o  additional high-yield bonds;
o  investment-grade bonds;
o  common and preferred stocks (including structured preferred stocks); and
o  securities issued or guaranteed by the U.S. government, its agencies or
   instrumentalities ("U.S. government obligations").


We may invest up to 20% of the Fund's net assets in bonds of foreign issuers. In
evaluating the quality of a particular high-yield bond for investment in the
Fund, we do not rely exclusively on ratings assigned by the NRSRO's. In
appropriate circumstances, we perform our own credit analysis. We consider the
issuer's:


o  financial resources;
o  operating history;
o  sensitivity to economic conditions and trends;
o  management's abilities;
o  debt maturity schedules;
o  borrowing requirements; and
o  relative values based on anticipated cash flow, interest and asset
   coverage and earnings prospects.

We attempt to identify those issuers of high-yield bonds whose financial
condition is adequate to meet future obligations and has improved or is expected
to improve in the future. However, there are no restrictions on the rating level
of the securities in the Fund's portfolio, and we may purchase and hold
securities in default.

[Sidebar: Junk Bonds]

High-yield bonds have a higher yield to compensate for greater risk that the
issuer might not make its interest and principal payments. Most bonds are rated
by national rating agencies according to the issuers ability to maintain
interest payments and repay the principal amount at the time the bond comes due.
High-yield bonds are speculative and, therefore, typically considered to be
below investment-grade bonds by national ratings agencies. High-yield bonds
include:

o  fixed rate bonds;
o  variable rate bonds;
o  convertible bonds;
o  zero coupon bonds;
o  pay-in-kind bonds;
o  floating rate interest debt obligations;
o  deferred interest debt obligations;
o  structured debt obligations;
o  asset-backed debt obligations; and
o  mortgage-backed debt obligations.

PRINCIPAL RISKS

INTEREST  RATE RISK:  Changes in interest  rate  levels  affect the value of the
bonds in the portfolio and the value of the Fund as a whole.

CREDIT RISK: The primary risk of investing in the high-yield sector is the
credit risk. Bonds rated below investment grade have greater risks of default
than investment-grade bonds and, may in fact, be in default. Issuers of
high-yield bonds usually do not have strong historical financial conditions,
requiring them to offer higher yields to compensate for the greater risk of
default on the payment of interest and principal. These bonds have speculative
characteristics or are speculative. As a result, their market values are less
sensitive to interest rate changes on a short-term basis, but more sensitive to
adverse economic developments or individual corporate developments because of
their lower credit quality. During an economic downturn or period of rising
interest rates, issuers of lower rated bonds may have more difficulty meeting
their principal and interest payment obligations or obtaining additional
financing to make the interest payments on their debt. When issuers have
difficulty meeting projected goals or obtaining additional financing, the
default rate on high-yield bonds will likely rise.

MARKET RISK: Frequently, high-yield bonds have a less liquid resale market than
the market for investment-grade bonds. This may be true for bonds that have gone
into default. In some cases, these bonds have no resale market at all. As a
result, we may have difficulty valuing portfolio securities, choosing the
securities to sell to meet redemption requests, and/or selling or disposing of
portfolio securities on favorable terms.

The high-yield market has in the past, and may in the future, experience market
risk due to adverse publicity and investor perceptions. In the past, Congress
has attempted restricting the advantages of high-yield bonds and similar
attempts could occur in the future.

PAST PERFORMANCE
The following table and chart reflect the Fund's annual return and long-term
performance. The bar chart and table show the risks of investing in the Fund by
demonstrating the variability in the Fund's annual total returns. As with all
investments, past performance is not a guarantee of future results.

Annual Total Returns
The following chart shows calendar year total returns for Class A shares since
the Fund started operations. Total returns assume reinvestment of all dividends
and distributions, but do not reflect any deduction for sales charges. If the
chart reflected sales loads, returns would be less than those shown.

Annual Return
Class A shares
Year Ended December 31st

[Bar chart with following data:]


12/31/98          (2.25)%
12/31/99          (3.75)%

The Fund's year-to-date return as of March 31, 2000 was (2.07)%.


                        Best and Worst Quarterly Returns

Best Quarter                 2nd Quarter of 1997                    6.03%
Worst Quarter                3rd Quarter of 1998                    (7.76)%


Average Annual Total Returns
The tables below compare the Fund's average annual total returns for Class A and
B shares with the Merrill Lynch High Yield Master Index(R).* Performance of the
Fund reflects the maximum sales load you would pay for the stated period. The
average annual return for both the Fund and the Merrill Lynch High Yield Master
Index(R) is calculated as of the close of the Fund's fiscal year, which ended
April 30, 2000.


The AAL High Yield Bond Fund                      1 Year         Since Inception
Class A Shares(1)                                 (10.70)%       0.05%
Merrill Lynch High Yield Master Index(R)*         (2.81)%        4.87%

The AAL High Yield Bond Fund                      1 Year         Since Inception
Class B Shares(2)                                 (12.38)%       (0.05)%
Merrill Lynch High Yield Master Index(R)*         (2.81)%        4.87%

(1)      Inception of the Fund on January 8, 1997
(2)      Inception of Class B Shares on January 8, 1997

* The Merrill Lynch High Yield Master Index(R) is an unmanaged index comprised
of over 900 "cash-pay" high-yield bonds representative of the high-yield market
as a whole.

PLEASE NOTE, INVESTMENT RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE. WHEN SHARES
ARE REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN THE PRICE YOU PAID.

EXPENSES
Like any investor, you directly pay certain expenses related to your
investments. We refer to these direct expenses as Shareholder Fees. Other
expenses, called Annual Fund Operating Expenses, are paid from Fund assets, so
they reduce your share price. Both types of expenses are outlined below.

Fee Table
This table describes the fees and expenses you may pay if you buy and hold the
Fund's shares:

<TABLE>
<CAPTION>
<S>                                                       <C>                           <C>
SHAREHOLDER FEES                                          CLASS A SHARES                CLASS B SHARES
(fees paid directly from your investment)

Maximum sales charge (load) imposed on purchases (as a    4.00%                         None
percentage of offering price)

Maximum deferred sales charge (load) imposed on           None                          5.00%
redemptions (as a percentage of net asset value)
</TABLE>


ANNUAL FUND OPERATING EXPENSES             CLASS A SHARES       CLASS B SHARES
(expenses deducted from Fund assets)

Management Fees                            0.55%                0.55%

Distribution and Service (12b-1) Fees      0.25%                1.00%

Other Expenses                             0.32%                0.42%

Total Fund Operating Expenses*             1.12%                1.97%

* Operating expenses are expressed as a percentage of net assets for the fiscal
year ended April 30, 2000, and do not include the adviser's voluntary
reimbursement of expenses. Actual expenses with reimbursements, "Total Fund
Operating Expenses", were 0.96% for Class A shares and 1.62% for Class B shares.


Expense Example
This example is intended to help you compare the costs of investing in the Fund
with the costs of investing in other mutual funds. It assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all your
shares at the end of those periods. It also assumes that your investment has a
5% return each year, and that the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on the foregoing
assumptions your costs would be:


<TABLE>
<CAPTION>
<S>                       <C>                         <C>                          <C>
TIME PERIOD               CLASS A SHARES              CLASS B SHARES               CLASS B SHARES NO REDEMPTIONS
1 Year                    $512                        $703                         $203
3 Year                    $748                        $928                         $628
5 Year                    $1,004                      $1,078                       $1,078
After 10 Years            $1,734                      N/A*                         N/A*

</TABLE>

* Class B shares convert into Class A shares after five years.

You should use the expense example for comparison purposes only. It does not
represent the Fund's actual expenses and returns, either past or future. Actual
expenses may be greater or less than those shown.



THE AAL MUNICIPAL BOND FUND


INVESTMENT OBJECTIVES
The AAL Municipal Bond Fund seeks a high level of current income exempt from
federal income taxes, consistent with capital preservation, by investing
primarily in a diversified portfolio of municipal bonds.

PRINCIPAL INVESTMENT STRATEGIES

Under normal circumstances, we invest at least 80% of the Fund's net assets in
municipal bonds where the income is exempt from federal income tax. However, the
Fund may invest in certain bonds that are subject to the alternative minimum tax
as discussed below. Of the 80% invested in municipal bonds, we invest at least
75% in bonds rated within the three highest rating categories assigned by at
least one nationally recognized statistical rating organization (NRSRO) at the
time of purchase.


State and local governments and municipalities issue municipal bonds to raise
money for a variety of public purposes, including general financing for state
and local governments or financing for specific projects or public facilities. A
municipality may issue municipal bonds in anticipation of future revenues from a
specific municipal project (revenue bonds), or backed by the full taxing power
of a municipality (general obligation bonds), or from the revenues of a specific
project on the credit of a private organization (industrial development bonds).

Federal law generally exempts the interest paid on municipal bonds from federal
income taxes.

We may invest 25% or more of the Fund's total assets in industrial development
bonds. The Fund tries not to invest more than 25% of its total assets in
municipal bonds that are so closely related that an economic, business or
political development affecting one bond could also affect the others.

We may purchase certain tax-exempt bonds that involve a private purpose. The
interest paid on these private activity bonds is subject to the alternative
minimum tax ("AMT paper"). We limit our purchases of AMT paper to 25% of the
Fund's total assets.

Options and Futures

We may engage in transactions in options, futures contracts and options on
futures contracts to hedge against anticipated declines in the market value of
the Fund's portfolio securities or to manage the Fund's exposure to changes in
interest rates. We generally will not use these instruments for speculation. Our
options and futures strategies may include selling futures, buying puts and
writing calls, all of which tend to hedge the Fund's investments against price
fluctuations. We may combine options and futures transactions with each other in
order to adjust their risk and return characteristics or the Fund's overall
strategy. Successful hedging strategies depend on our skill in predicting future
movements in securities prices, interest rates and other economic factors. Our
use of these strategies may not be successful, and could reduce the Fund's total
return. In order to limit the Fund's exposure to these risks, we will not:



o commit more than 25% of the Fund's net assets to such options and futures
  instruments;
o commit more than 25% of the Fund's net assets to covered options written by
  the Fund; or
o commit more than 5% of the Fund's net assets to premiums for put or call
  options purchased by the Fund.


[Sidebar:  Tax  Implications  of Options and Futures on The AAL  Municipal  Bond
Fund]

The use of options and futures for The AAL Municipal Bond Fund portfolio may
result in taxable income. You should consult your personal tax adviser to
determine the consequences of federal, state and local taxes.

When-Issued and Delayed Delivery Securities
We may purchase securities on a when-issued or delayed delivery basis (i.e.,
obligate the Fund to purchase or sell securities with delivery and payment to
occur at a later date in order to secure what we consider to be an advantageous
price and yield at the time we enter into the transaction). We will make such
commitments on behalf of the Fund only with the intention of actually acquiring
the securities, but we may sell the securities before the settlement date if we
later determine it is advisable to do so for investment reasons.

PRINCIPAL RISKS


INTEREST RATE RISK: Changes in interest rate levels affect the value of the
bonds in the Fund's portfolio and the value of the Fund as a whole. Generally,
the value of bonds moves in the opposite direction of interest rates.


CREDIT RISK: The creditworthiness of bond issuers will affect the value of their
bonds, which may decline during the Fund's holding period and reduce the value
of the Fund as a whole.

TAX RISK: Changes in federal income tax rates may affect both the net asset
value of the Fund and the taxable equivalent interest generated from its
portfolio securities.

PAST PERFORMANCE
The following table and chart reflect the Fund's annual return and long-term
performance. The bar chart and table show the risks of investing in the Fund by
demonstrating the variability in the Fund's annual total returns. As with all
investments, past performance is not a guarantee of future results.

Annual Total Returns
The following chart shows calendar year total returns for Class A for the past
ten years. Total returns assume reinvestment of all dividends and distributions,
but do not reflect any deduction for sales charges. If the chart reflected sales
loads, returns would be less than those shown.

Annual Return
Class A shares
Year Ended December 31st
[Bar chart with following data:]


12/31/90          6.46%
12/31/91          11.34%
12/31/92          8.33%
12/31/93          11.28%
12/31/94          (5.68)%
12/31/95          18.24%
12/31/96          4.39%
12/31/97          10.34%
12/31/98          5.98%
12/31/99          (5.64)%

The Fund's year-to-date return as of March 31, 2000 was 3.43%.


                        Best and Worst Quarterly Returns

Best Quarter                   1st Quarter of 1995                    6.75%
Worst Quarter                  1st Quarter of 1994                    (5.27)%


Average Annual Total Returns
The tables below compare the Fund's average annual total returns for Class A and
B shares with the Lehman Brothers Municipal Bond Index(R).* Performance of the
Fund reflects the maximum sales load you would pay for the stated period. The
average annual return is calculated as of the close of the Fund's fiscal year,
which ended April 30, 2000. Returns for Class A shares are shown for one, five
and ten-year periods. For Class B shares, returns are shown for a one-year
period and since inception of Class B shares.


The AAL Municipal Bond Fund                  1 Year         5 Year      10 Year
Class A Shares                               (7.94)%        4.53%       6.16%
Lehman Brothers Municipal Bond Index(R)*     (0.92)%        5.92%       7.17%

The AAL Municipal Bond Fund                         1 Year       Since Inception
Class B Shares(1)                                   (9.74)%      2.54%
Lehman Brothers Municipal Bond Index(R)*            (0.92)%      4.73%

(1)  Inception of Class B Shares on January 8, 1997


* Lehman Brothers Municipal Bond Index(R) is a market value-weighted index of
investment-grade municipal bonds with maturities of one year or more.

PLEASE NOTE, INVESTMENT RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE. WHEN SHARES
ARE REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN THE PRICE YOU PAID.

EXPENSES
Like any investor, you directly pay certain expenses related to your
investments. We refer to these direct expenses as Shareholder Fees. Other
expenses, called Annual Fund Operating Expenses, are paid from Fund assets, so
they reduce your share price. Both types of expenses are outlined below.

Fee Table
This table describes the fees and expenses you may pay if you buy and hold the
Fund's shares:

<TABLE>
<CAPTION>
<S>                                                    <C>                             <C>
SHAREHOLDER FEES                                       CLASS A SHARES                  CLASS B SHARES
(fees paid directly from your investment)

Maximum sales charge (load) imposed on purchases (as   4.00%                           None
a percentage of offering price)

Maximum deferred sales charge (load) imposed on        None                            5.00%
redemptions (as a percentage of net asset value)
</TABLE>


ANNUAL FUND OPERATING EXPENSES              CLASS A SHARES       CLASS B SHARES
(expenses deducted from Fund assets)

Management Fees                             0.45%                0.45%

Distribution and Service (12b-1) Fees       0.25%                1.00%

Other Expenses                              0.14%                0.19%

Total Fund Operating Expenses               0.84%                1.64%


Expense Example
This example is intended to help you compare the costs of investing in the Fund
with the costs of investing in other mutual funds. It assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all your
shares at the end of those periods. It also assumes that your investment has a
5% return each year, and that the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on the foregoing
assumptions your costs would be:


<TABLE>
<CAPTION>
<S>                       <C>                         <C>                          <C>
TIME PERIOD               CLASS A SHARES              CLASS B SHARES               CLASS B SHARES NO REDEMPTIONS
1 Year                    $484                        $670                         $170
3 Year                    $663                        $826                         $526
5 Year                    $856                        $906                         $906
After 10 Years            $1,416                      N/A*                         N/A*

</TABLE>

* Class B shares convert into Class A shares after five years.

You should use the expense example for comparison purposes only. It does not
represent the Fund's actual expenses and returns, either past or future. Actual
expenses may be greater or less than those shown.


THE AAL BOND FUND

INVESTMENT OBJECTIVE
The AAL Bond Fund seeks a high level of current income, consistent with capital
preservation by investing primarily in a diversified portfolio of
investment-grade bonds.

PRINCIPAL INVESTMENT STRATEGIES
Under normal circumstances, we invest at least 65% of the Fund's total assets
in:


o  bonds of U.S. and foreign issuers payable in U.S.  dollars rated within the
   four  highest  rating  categories  by at least  two  nationally  recognized
   statistical rating organizations (NRSROs) at the time of purchase; and
o  bonds or other securities issued or guaranteed by the U.S. government,  its
   agencies or instrumentalities,  primarily those securities supported by the
   full faith and credit of the U.S. Treasury.

We may invest the remaining 35% of the Fund's total assets in:

o   privately issued or guaranteed mortgage-related securities (such as home
    equity asset backed securities) rated within the four highest categories
    by at least two NRSROs or unrated mortgage-related securities, if we
    determine at the time of purchase that these unrated securities have
    credit quality characteristics comparable to these ratings. Securities
    rated in the fourth highest category have speculative investment
    characteristics;
o   commercial paper rated in the highest rating category by a NRSRO, or
    commercial paper issued or guaranteed by a corporation who has outstanding
    debt rated in the two highest categories by a NRSRO at the time of
    purchase;
o   bank obligations, including repurchase agreements, of banks having
    total assets in excess of $1 billion; and
o   corporate obligations, including variable rate master notes, rated in the
    two highest categories by a NRSRO, or issued by a corporation whose
    outstanding debt has an equal or better rating at the time of purchase.


Although there are no restrictions on the maturity of the debt securities we may
purchase for the Fund, generally we maintain a weighted average effective
maturity of between 5 and 10 years. Effective maturity of a debt security takes
into account projected prepayments, call dates, put dates and sinking funds, if
any, that reduce the stated maturity date of the bond.

We anticipate that during normal market conditions the average portfolio
maturity of the Fund will not exceed 20 years. We use the stated final maturity
date (rather than effective maturity) of a security to calculate average
maturity, notwithstanding earlier call dates and possible prepayments.

PRINCIPAL RISKS

INTEREST RATE RISK: Changes in interest rate levels affect the value of the
bonds in the portfolio and the value of the Fund as a whole. Generally, the
value of a bond moves in the opposite direction of interest rates. Longer-term
bond prices tend to move more in response to interest rate changes than
shorter-term bonds.

CREDIT RISK: The creditworthiness of bond issuers will affect the value of their
bonds,  which may decline during the Fund's holding periods and affect the value
of the  Fund as a  whole.  The  risk,  generally,  is less  pronounced  for U.S.
government  and U.S.  agency bonds than is the case for  municipal and privately
issued bonds.

PAST PERFORMANCE
The following table and chart reflect the Fund's annual return and long-term
performance. The bar chart and table show the risks of investing in the Fund by
demonstrating the variability in the Fund's annual total returns. As with all
investments, past performance is not a guarantee of future results.

Annual Total Returns
The following chart shows calendar year total returns for Class A shares for the
past ten years. Total returns assume reinvestment of all dividends and
distributions, but do not reflect any deduction for sales charges. If the chart
reflected sales loads, returns would be less than those shown.

Annual Return
Class A shares
Year Ended December 31st
[Bar chart with following data:]


12/31/90          8.49%
12/31/91          15.73%
12/31/92          6.70%
12/31/93          8.80%
12/31/94          (4.75)%
12/31/95          16.06%
12/31/96          2.26%
12/31/97          8.98%
12/31/98          6.63%
12/31/99          (1.65)%

The Fund's year-to-date return as of March 31, 2000 was 1.70%.

                        Best and Worst Quarterly Returns
Best Quarter                   3rd Quarter of 1994                    5.41%
Worst Quarter                  1st Quarter of 1994                    (3.42)%


Average Annual Total Returns
The tables below compare the Fund's average annual total returns for Class A and
B shares with the Lehman Brothers Aggregate Bond Index(R).* Performance of the
Fund reflects the maximum sales load you would pay for the stated period. The
average annual return is calculated as of the close of the Fund's fiscal year,
which ended April 30, 2000. Returns for Class A shares are shown for one, five
and ten-year periods. For Class B shares, returns are shown for a one-year
period and since inception of Class B shares.


The AAL Bond Fund                            1 Year         5 Year      10 Year
Class A Shares                               (4.07)%        4.49%       6.39%
Lehman Brothers Aggregate Bond Index(R)*     1.26%          6.79%       8.09%

The AAL Bond Fund                                  1 Year       Since Inception
Class B Shares(1)                                  (6.03)%      3.07%
Lehman Brothers Aggregate Bond Index(R)*           1.26%        5.79%

(1)  Inception of Class B Shares on January 8, 1997


* The  Lehman  Brothers  Aggregate  Bond  Index(R)is  an  unmanaged  index  that
encompasses four 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.

PLEASE NOTE, INVESTMENT RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE. WHEN SHARES
ARE REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN THE PRICE YOU PAID.

EXPENSES
Like any investor, you directly pay certain expenses related to your
investments. We refer to these direct expenses as Shareholder Fees. Other
expenses, called Annual Fund Operating Expenses, are paid from Fund assets, so
they reduce your share price. Both types of expenses are outlined below.

Fee Table
This table describes the fees and expenses you may pay if you buy and hold the
Fund's shares:

<TABLE>
<CAPTION>
<S>                                                     <C>                             <C>
SHAREHOLDER FEES                                        CLASS A SHARES                  CLASS B SHARES
(fees paid directly from your investment)

Maximum sales charge (load) imposed on purchases (as    4.00%                           None
a percentage of offering price)

Maximum deferred sales charge (load) imposed on         None                            5.00%
redemptions (as a percentage of net asset value)
</TABLE>


ANNUAL FUND OPERATING EXPENSES              CLASS A SHARES       CLASS B SHARES
(expenses deducted from Fund assets)

Management Fees                             0.45%                0.45%

Distribution and Service (12b-1) Fees       0.25%                1.00%

Other Expenses                              0.21%                0.43%

Total Fund Operating Expenses               0.91%                1.88%


Expense Example
This example is intended to help you compare the costs of investing in the Fund
with the costs of investing in other mutual funds. It assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all your
shares at the end of those periods. It also assumes that your investment has a
5% return each year, and that the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on the foregoing
assumptions your costs would be:


<TABLE>
<CAPTION>
<S>                       <C>                         <C>                          <C>
TIME PERIOD               CLASS A SHARES              CLASS B SHARES               CLASS B SHARES NO REDEMPTIONS
1 Year                    $491                        $694                         $194
3 Year                    $684                        $900                         $600
5 Year                    $893                        $1,032                       $1,032
After 10 Years            $1,496                      N/A*                         N/A*

</TABLE>

* Class B shares convert into Class A shares after five years.

You should use the expense example for comparison purposes only. It does not
represent the Fund's actual expenses and returns, either past or future. Actual
expenses may be greater or less than those shown.


THE AAL MONEY MARKET FUND

INVESTMENT OBJECTIVE
The AAL Money Market Fund seeks a high level of current income, while
maintaining liquidity and a constant net asset value of $1.00 per share by
investing in a diversified portfolio of high-quality, short-term money market
instruments.

[Sidebar:  Important Information Concerning The AAL Money Market Fund]


This portfolio is a mutual fund, not a savings account. It consists of a pool of
investments that are professionally managed. You should not consider an
investment in the Fund a deposit or other obligation of any bank, credit union
or any affiliated entity. Neither the Federal Deposit Insurance Company (FDIC)
nor any other government agency insures or protects your investment. We cannot
guarantee that the Fund will achieve its goal of maintaining a constant net
asset value of $1.00 per share. You could lose money investing in the Fund.


PRINCIPAL INVESTMENT STRATEGIES
We invest in short-term money market instruments for the Fund, such as:


o  obligations  issued or guaranteed by the U.S.  government,  its agencies or
   instrumentalities;
o  certificates of deposit,  bankers  acceptances  and similar  obligations of
   U.S.  banks,  savings  associations,  foreign  branches  of U.S.  banks and
   domestic branches of foreign banks, which have total assets of more than $1
   billion at the time of purchase, and who are members of the Federal Deposit
   Insurance Corporation (FDIC);
o  commercial paper that at the time of purchase is defined as First Tier or
   Second Tier by the Investment Company Act of 1940, as long as we do not
   invest more than 5% of the Fund's total assets in Second Tier commercial
   paper; and
o  corporate obligations, including variable rate master notes that at the
   time of purchase are in one of the two highest categories of a nationally
   recognized statistical rating organization (NRSRO), or, if unrated, issued
   by a corporation with outstanding debt that has an equivalent or better
   rating at the time of purchase.


We make investments for the Fund consistent with Rule 2a-7 under the Investment
Company Act of 1940. As such, we invest in securities maturing in 397 days or
less and maintain a dollar-weighted average portfolio maturity of not more than
90 days. By limiting the maturity of the Fund's investments, we seek to lessen
the changes in asset values caused by fluctuations in short-term interest rates.
Part of the Fund's objective is to maintain a constant net asset value per share
of $1.00.

We may purchase participation interests (interests in securities held by others)
in securities we are authorized to invest in for the Fund as described above.

PRINCIPAL RISKS

INTEREST RATE RISK: Changes in interest rate levels affect the yield. Increases
in short-term interest rates generally cause the Fund's assets to decline in
value. The relatively short maturity of the Fund as a whole tends to reduce this
volatility and minimizes the risk that the Fund's per share net asset value will
deviate from $1.00.

CREDIT RISK: The price of a security that the Fund holds may decline in response
to a deterioration of the creditworthiness of an issuer, or the provider of
credit support or a maturity-shortening structure for that security.

FINANCIAL SERVICES EXPOSURE: Changes in government regulations or economic
downturns can have a significant negative effect on issuers of money market
instruments in the financial services sector. The Fund frequently concentrates
its investments in this sector.

PAST PERFORMANCE
The following table and chart reflect the Fund's annual return and long-term
performance. The bar chart and table show the risks of investing in the Fund by
demonstrating the variability in the Fund's annual total returns. As with all
investments, past performance is not a guarantee of future results.

Annual Total Returns
The following chart shows calendar year total returns for Class A shares for the
past ten years. Total returns assume reinvestment of all dividends and
distributions. There is no front-end sales charge or contingent deferred sales
charge on the Fund's Class A shares.

Annual Return
Class A shares
Year Ended December 31st
[Bar chart with following data:]


12/31/90          7.54%
12/31/91          5.49%
12/31/92          2.90%
12/31/93          2.03%
12/31/94          2.93%
12/31/95          4.90%
12/31/96          5.20%
12/31/97          5.19%
12/31/98          4.88%
12/31/99          4.60%

The Fund's year-to-date return as of March 31, 2000 was 1.32%.


                        Best and Worst Quarterly Returns

Best Quarter                  2nd Quarter of 1990                    1.83%
Worst Quarter                 4th Quarter of 1993                    0.46%

The 7-day yield for the period ended 4/28/00 for The AAL Money Market Fund was
5.47%.


Average Annual Total Returns

The tables below compare the Fund's average annual total returns for Class A and
B shares with the Salomon Brothers Short-Term Index(R).* With respect to Class B
shares, we have presented performance information to reflect the effects of the
contingent deferred sales charge you would pay if you redeem your shares at the
end of the period. The average annual return is calculated as of the close of
the Fund's fiscal year, which ended April 30, 2000. Returns for Class A shares
are shown for one, five and ten-year periods. For Class B shares, returns are
shown for a one-year period and since inception of Class B shares.

The AAL Money Market Fund                1 Year           5 Year        10 Year
Class A Shares                           4.99%            4.99%         4.48%
Salomon Brothers Short-Term Index(R)*    4.80%            4.85%         4.57%

The AAL Money Market Fund                      1 Year           Since Inception
Class B Shares(1)                              (1.06)%          3.44%
Salomon Brothers Short-Term Index(R)*          4.80%            4.63%

(1)  Inception of Class B Shares on January 8, 1997


* The Salomon  Brothers  Short-Term  Index(R)is an unmanaged  index  composed of
1-month U.S. Treasury Bills.

THE FUND ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE PER SHARE OF $1.00.

EXPENSES
Like any investor, you directly pay certain expenses related to your
investments. We refer to these direct expenses as Shareholder Fees. Other
expenses, called Annual Fund Operating Expenses, are paid from Fund assets, so
they reduce your share price. Both types of expenses are outlined below.

Fee Table
This table describes the fees and expenses you may pay if you buy and hold the
Fund's shares:

<TABLE>
<CAPTION>
<S>                                                       <C>                           <C>
SHAREHOLDER FEES                                          CLASS A SHARES                CLASS B SHARES
(fees paid directly from your investment)

Maximum sales charge (load) imposed on purchases (as a    None                          None
percentage of offering price)

Maximum deferred sales charge (load) imposed on           None                          5.00%
redemptions (as a percentage of net asset value)
</TABLE>


ANNUAL FUND OPERATING EXPENSES               CLASS A SHARES       CLASS B SHARES
(expenses deducted from Fund assets)

Management Fees(1)                           0.50%                0.50%

Distribution and Service (12b-1) Fees(2)     0.125%               0.875%

Other Expenses                               0.40%                0.63%

Total Fund Operating Expenses(3)             1.02%                2.00%

(1)  AAL Capital Management Corporation ("AAL CMC"), as the adviser to the Fund,
     voluntarily waives a portion of the maximum management fee for Class A and
     Class B shares. With this waiver, the actual management fees were 0.275 of
     1% for both Class A and Class B shares.

(2)  AAL CMC, as the distributor to the Fund, voluntarily waives a portion of
     the maximum 12b-1 service fee for both Class A and Class B shares. With
     this waiver, the actual 12b-1 service fees were 0.025 of 1% for Class A
     shares and 0.775 of 1% for Class B shares.

(3)  Operating expenses are expressed as a percentage of net assets for the
     fiscal year ended April 30, 2000, and do not include the adviser's fee
     waivers. Actual expenses with fee waivers, "Total Fund Operating Expenses,"
     were 0.66% for Class A shares and 1.65% for Class B shares.


Expense Example
This example is intended to help you compare the costs of investing in the Fund
with the costs of investing in other mutual funds. It assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all your
shares at the end of those periods. It also assumes that your investment has a
5% return each year, and that the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on the foregoing
assumptions your costs would be:


<TABLE>
<CAPTION>
<S>                       <C>                         <C>                          <C>
TIME PERIOD               CLASS A SHARES              CLASS B SHARES               CLASS B SHARES NO REDEMPTIONS
1 Year                    $106                        $706                         $206
3 Year                    $331                        $937                         $637
5 Year                    $574                        $1,094                       $1,094
After 10 Years            $1,272                      N/A*                         N/A*

</TABLE>

* Class B shares convert into Class A shares after five years.

You should use the expense example for comparison purposes only. It does not
represent the Fund's actual expenses and returns, either past or future. Actual
expenses may be greater or less than those shown.


MANAGEMENT, ORGANIZATION, AND CAPITAL STRUCTURE

INVESTMENT ADVISER

AAL Capital Management Corporation ("AAL CMC") serves as investment adviser and
distributor to the Funds. AAL CMC was organized in 1986 as a Delaware
corporation. AAL Holdings Inc., a wholly owned subsidiary of Aid Association for
Lutherans ("AAL") owns all of AAL CMC's shares. AAL is a non-profit, non-stock,
membership organization licensed to do business as a fraternal benefit society
in all states. AAL has approximately 1.7 million members and is one of the
world's largest fraternal benefit societies in terms of assets and life
insurance in force. AAL ranks in the top two percent of all life insurers in the
United States in terms of ordinary life insurance (nearly $88 billion in force).
Membership is open to Lutherans, including their families and their enterprises.
Membership is also available to those who serve or are associated with Lutherans
or Lutheran organizations, but who are not Lutheran. AAL offers life, health,
and disability income insurance and fixed annuities to its members, and all
members are part of one of approximately 10,000 local AAL branches throughout
the United States. Through AAL CMC, AAL offers The AAL Mutual Funds to persons
who are eligible for membership in AAL. AAL CMC has served as adviser to The AAL
Mutual Funds since the commencement of operations. As of June 1, 2000, AAL CMC
managed over $7.7 billion for The AAL Mutual Funds.


[Sidebar: The adviser's principal address is:]

AAL Capital Management Corporation
222 West College Avenue
Appleton, WI 54919-0007

AAL's principal address is:


Aid Association for Lutherans
4321 North Ballard Road
Appleton, WI 54919-0001


Pursuant to an investment advisory agreement with the Funds, AAL CMC manages the
investment and reinvestment of the Funds' assets. AAL CMC also provides the
Funds with personnel, facilities, administrative services, and supervises the
Funds' daily business affairs. Services provided by AAL CMC to the Funds are
subject to the supervision of the Funds' Board of Trustees. AAL CMC formulates
and implements a continuous investment program for the Funds consistent with
each Fund's investment objectives, policies and restrictions.

ADVISER FEES PER FUND
The table below reflects advisory fees paid by each Fund as a percentage of
average daily net assets (effective advisory fees), for the fiscal year ended
April 30, 2000.


<TABLE>
<CAPTION>
<S>                                                          <C>
THE AAL HIGH YIELD BOND FUND                                 0.55% on the average daily net assets (total)
        Sub-Adviser Fees
        Pacific Investment Management Company                0.25% on the average daily net assets
THE AAL MUNICIPAL BOND FUND                                  0.45% on the average daily net assets
THE AAL BOND FUND                                            0.45% on the average daily net assets
THE AAL MONEY MARKET FUND                                    0.50% on the average daily net assets

</TABLE>

PORTFOLIO MANAGEMENT

THE AAL HIGH YIELD BOND FUND

At a special meeting held on June 21, 2000, the shareholders of The AAL High
Yield Bond Fund approved Pacific Investment Management Company ("PIMCO") to
serve as Sub-Adviser. PIMCO is a registered investment adviser under U.S.
securities laws. Pursuant to the subadvisory agreement, PIMCO makes the
day-to-day investment decisions for The AAL High Yield Bond Fund subject to the
direction and control of AAL CMC. PIMCO determines which securities to purchase
and sell, arranges the purchases and sales and gives other help in formulating
and implementing the investment program for the Fund.

PIMCO is located at 840 Newport Center Drive, Newport Beach, California, 92660.
Organized in 1971, PIMCO provides investment management and advisory services to
private accounts of institutional and individual clients and to mutual funds. As
of March 31, 2000, PIMCO had approximately $186 billion in assets under
management.

Benjamin L. Trosky is the individual at PIMCO who is primarily responsible for
managing the Fund. Mr. Trosky, who has managed the Fund since July 1, 2000, is a
Managing Director of PIMCO. He joined PIMCO as a Portfolio Manager in 1990, and
has managed fixed-income accounts for various institutional clients and mutual
funds since that time.



THE AAL MUNICIPAL BOND FUND
Duane A. McAllister, CFA, has managed the day-to-day Fund investments since
April 1994. Prior to joining AAL Capital Management Corporation on November 1,
1995, he managed the Fund while serving as vice president of Duff & Phelps
Investment Management Co. For the five-year period before managing the Fund, Mr.
McAllister managed portfolios for Northern Trust Company and First National Bank
and Trust in Rockford, Illinois.

THE AAL BOND FUND
Alan D. Onstad has managed the day-to-day Fund investments  since July 19, 1999.
Mr. Onstad currently  manages the AAL Variable  Product Money Market  Portfolio,
the money market portfolio of the AAL Savings Plan, and the utility portfolio of
AAL's general  account.  Mr. Onstad is also co-manager of The AAL Balanced Fund.
Mr.  Onstad has been  employed by AAL since  1973,  most  recently as  Assistant
Vice-President of Securities.

THE AAL MONEY MARKET FUND
Michael R. Hilt, CFA, has managed the day-to-day Fund investments since November
1, 1995. From April 1994 through August 1995, Mr. Hilt served as portfolio
manager and quantitative analyst for Conseco Capital Management, Inc. From
August 1992 through April 1994, he served as a portfolio manager and
quantitative analyst for PPM America, Inc.


SHAREHOLDER INFORMATION

PRICING FUNDS' SHARES

The price of a Fund's share is based on the Fund's net asset value. The Funds
determine the net asset value ("NAV") per share once daily at the close of
trading (normally 3:00 p.m. Central Time) on the New York Stock Exchange
("NYSE"). The Funds do not determine NAV on holidays observed by the NYSE or
AAL. To determine the NAV, the Funds value their securities at current market
value using readily available market quotations. The Funds value securities that
do not have readily available market quotations at fair value, as determined in
good faith under policies and guidelines approved by The AAL Mutual Funds' Board
of Trustees. The Funds may use pricing services as approved by the Board of
Trustees to determine the net asset value of their securities.


Some of the Funds hold securities that trade primarily on foreign exchanges.
These exchanges may trade on weekends or other days when the Funds do not price
their shares. Accordingly, it is possible that the value of a Fund's shares may
change at times when those shares may not be purchased or redeemed.

The price at which you purchase or redeem shares of the Funds is based on the
NAV next determined after the Funds receive your payment or your redemption
request.

INTERNET TRANSACTIONS

You may perform various AAL Mutual Fund transactions over the internet at
WWW.AAL.ORG. You may purchase (pre-authorized bank information is required prior
to purchase), redeem, and exchange shares within your Fund accounts. To protect
your Fund assets, we require a Personal Identification Number ("PIN") prior to
authorizing transactions on your Fund accounts. Please call AAL Capital
Management Corporation at (800) 553-6319 ("The AAL Mutual Funds Service Center")
to request information about obtaining a PIN. You will receive your PIN
approximately 5-7 days after your request.


HOW TO BUY SHARES
You can buy Class A and Class B shares in the Funds through a Registered
Representative, by mail or wire transfer. Sales charges and ongoing asset-based
distribution fees mark the primary differences between Class A and Class B
shares. We describe the differences between the types of shares below.

BUYING CLASS A SHARES
Class A shares have an up-front sales charge which is commonly referred to as a
front-end load. You buy Class A shares of each Fund at net asset value (NAV)
plus a maximum sales charge (front-end load) of 4.00% of the public offering
price (POP). You pay this sales charge when you buy your shares. We do not
impose any sales charge when you redeem Class A shares of a Fund. We may reduce
or waive sales charges on certain purchases. The chart below shows the sales
charge percentage for Class A shares imposed at different dollar level
purchases.

                                   BREAKPOINTS

<TABLE>
<CAPTION>
<S>                       <C>                    <C>                     <C>                    <C>
Your Investment Amount    Sales Charge as a      Sales Charge as a       50% Sales Charge as    50% Sales Charge as
                          Percent of POP*        Percent of Net Amount   a Percent of POP*      a Percent of Net
                                                 Invested*                                      Amount Invested*
Less than $25,000         4.00%                  4.17%                   2.00%                  2.04%
$25,000 but less than     3.75%                  3.90%                   1.88%                  1.91%
$50,000
$50,000 but less than     3.00%                  3.09%                   1.50%                  1.52%
$100,000
$100,000 but less than    2.00%                  2.04%                   1.00%                  1.01%
$250,000**
$250,000 but less than    1.00%                  1.01%                   0.50%                  0.50%
$500,000
$500,000 and up*          0.00%                  0.00%                   0.00%                  0.00%
</TABLE>

* Registered Representatives may receive compensation of 55% of the sales charge
on amounts purchased, plus a bonus based on total commissions. Registered
Representatives may also receive compensation of .50 of 1% on amounts invested
of $500,000 or more.

** You should purchase Class A shares at this level of investment and above.

Please note, you buy Class A shares of The AAL Money Market Fund at net asset
value without a sales charge and you do not pay a fee upon redemption.

Reducing Your Sales Charges
We may reduce your sales charges on purchases of Class A shares under certain
circumstances, described below. If you are eligible for one of these reductions,
you must tell us or your Registered Representative at the time you purchase
Class A shares in order to assure you receive the appropriate reduction.
Trustees, directors and employees of the Funds and the adviser and sub-advisers,
as well as persons licensed to receive commissions for sales of the Funds, do
not pay a sales charge on their purchases or on purchases made by family members
living with them. We reserve the right to stop or change these reductions at any
time. Prior to making any changes, we will notify shareholders with a prospectus
supplement.

50% REDUCTION: Non-profit organizations, charitable trusts, charitable remainder
unitrusts, endowments, AAL branches and congregations pay only 50% of the normal
sales charge so long as there is an affiliation with a Lutheran organization.
The reduction does not apply to 403(b)(7) retirement plan accounts.

RIGHTS OF ACCUMULATION: You can combine all your Class A, Class B and
Institutional share purchases, including the purchases of family members who
live with you, when computing your current sales charge for Class A shares.
Eligible shares for combination in computing the sales charge include those
contained in individual, joint tenant, gift/transfer to minor, trust and IRA
accounts. Employer sponsored plans can link the shares in the plan for purposes
of calculating a sales charge reduction. Rights of accumulation includes the
value of all Class A shares at the public offering price, all Class B shares,
all Institutional shares and reinvested dividends and capital gains.

LETTER OF INTENT

To reduce your sales charge on purchases over the breakpoints listed above, you
can sign a letter of intent if you intend to invest new dollars exceeding the
amount of any one breakpoint during the next 13 months. Class A or Class B share
purchases fulfill the letter of intent, but you receive a reduced sales charge
on Class A shares only. You can include purchases in accounts you have linked
for purposes of the rights of accumulation, as well as, purchases made in the
last 90 days. However, shares you purchase through employer sponsored retirement
plans will not be linked for your letter of intent. We will not recalculate the
sales charge on prior purchases.


You do not have any obligation to buy additional shares. During the letter of
intent period, we will escrow shares totaling 5% of the investment goal. If for
some reason you do not fulfill the letter of intent within the 13-month period,
we will sell escrowed shares to cover any additional sales charges due from you.
You should sign only one letter of intent for all accounts combined under rights
of accumulation.

Share purchases in The AAL Money Market Fund do not apply toward your letter of
intent, unless you originally purchased shares in another Fund and paid a sales
charge, and later exchanged those shares for your shares of The AAL Money Market
Fund.

BUYING CLASS B SHARES
Class B shares have a contingent deferred sales charge, which is commonly
referred to as a back-end load. You buy Class B shares of each Fund at net asset
value with no initial sales charge. However, you may pay a contingent deferred
sales charge (expressed as a percentage of the lesser of the current net asset
value or original cost) of up to 5% if you redeem shares within five years after
purchase. We do not impose a contingent deferred sales charge on shares you
acquire through the reinvestment of dividends and capital gains. To reduce your
cost, when you redeem shares in a Fund, you will redeem either shares that are
not subject to a contingent deferred sales charge (i.e., those bought through
reinvestment of dividends and capital gains) or shares with the lowest
contingent deferred sales charge. We waive the contingent deferred sales charge
upon redemption of shares following the death or disability of a shareholder or
for mandatory or hardship distributions from retirement plans, IRAs and 403(b)
plans or to meet certain retirement plan requirements. Also, we reduce the
amount of the contingent deferred sales charge depending on the amount of years
from the purchase of Class B shares until the sale of those shares according to
the following table:

Years After Purchase              Deferred Sales Charge on Shares Sold*
1st Year                          5.00%
2nd Year                          4.00%
3rd Year                          3.00%
4th Year                          2.00%
5th Year                          1.00%
After 5th Year                    0.00%

*Registered Representatives may receive compensation in connection with your
purchase of Class B shares in the amount of up to 1.25% of the purchase amount,
plus a bonus based on total commissions, even if such shares are not redeemed
within five years of purchase and thus not subject to a back-end load. We base
the sales charge on the lesser of the net asset value of the shares at the time
of the purchase or at the time of the sale.

You should not consider buying Class B shares if you can elect the 50% reduction
for purchases of Class A shares or you are investing $100,000 or more in the
Funds. Also, because of the higher expenses, you should not consider buying
Class B shares of The AAL Money Market Fund unless you intend to exchange them
for other Class B shares or as part of The AAL Mutual Funds Capital Builder
Plan.

Conversion to Class A shares
Your Class B shares automatically convert to Class A shares after 5 years from
the purchase date, reducing future annual expenses. Class B shares provide the
benefit of putting all of your dollars to work from the time you make your
investment. However, until your Class B shares convert to Class A shares, you
will have a higher expense ratio, receive lower dividends and may have a lower
net asset value than Class A shares due to the higher 12b-1 fees.

You should consider the amount and intended length of time of your investment
when determining which share class would benefit you the most. In general, if
you intend to make a large investment, thus qualifying for a reduced sales
charge, you might consider purchasing Class A shares. If you intend to make a
smaller investment, you might consider Class B shares because 100% of your
purchase is invested immediately.

Minimum Purchase Amounts
The following minimum amounts apply to purchases of shares of each Fund:

              MINIMUM PURCHASE AMOUNT PER ACCOUNT PER TRANSACTION*

Account                                Initial Purchase      Additional Purchase
Regular Account                        $1,000                $50
Custodial, IRA or other Retirement     $250                  $50
Plan Account
Automatic Investment Plan              $0                    $25


* Minimum amounts may be waived for qualified group retirement plans and payroll
deduction plans with prior approval or when required by law.

OPENING A NEW ACCOUNT

Your AAL Capital Management Corporation Registered Representative is ready to
help you open a new account. If you do not know the name of your Registered
Representative, please call The AAL Mutual Funds Service Center at (800)
553-6319. The Telecommunications Device for the Deaf (TDD) is (800) 684-3416.


Purchasing Shares for the First Time by Mail To open your new account, just
follow these steps:

Step One:
After reviewing this prospectus, complete an AAL Mutual Funds application and
new account form, for every different account registration. For example, you
need a separate application for an individual account in The AAL Bond Fund and a
separate application for an IRA account invested in The AAL Bond Fund. Remember
to designate whether you are purchasing Class A shares or Class B shares. If you
do not complete the application properly, your purchase may be delayed or
rejected;

Step Two:
Make your check payable to the Fund you are buying, for example, "The AAL High
Yield Bond Fund." If you are buying more than one Fund, make your check payable
to "THE AAL MUTUAL FUNDS." DO NOT MAKE YOUR CHECK PAYABLE TO AAL OR AAL CAPITAL
MANAGEMENT CORPORATION; and

Step Three:
Mail your completed application and check to:

The AAL Mutual Funds
Attn:  New Accounts
222 W. College Ave.
P.O. Box 8004
Appleton, WI 54912-8004

Please note, how you register your account with the Funds can affect your legal
interests as well as the rights and interests of your family and beneficiaries.
You should always consult with your legal and/or tax adviser to determine the
account registration that best meets your needs. You must clearly identify the
type of account you want on your AAL Mutual Funds application. Some account
registrations may require additional documents.

Purchasing  Shares for the First Time By Wire
If your bank is a member of, or has a corresponding relationship with a member
of the Federal Reserve System, you can buy shares of the Funds by wire transfer
by following these steps:

Step One:
Call AAL Capital Management Corporation at (800)-553-6319 (The AAL Mutual Funds
Service Center (Service Center)) and provide the following information:

o your account registration;
o the name of the Fund(s) in which you want to invest and whether you wish to
  buy Class A or Class B shares;
o your address;
o your Social Security or tax identification number;
o the dollar amount;
o the name of the wiring bank; and
o the name and telephone number of the person at your bank who the Funds can
  contact about your purchase.

We must receive your wire order before the closing of the NYSE (normally 3:00
p.m. Central Time) to receive that day's price.

Step Two:
Instruct your bank to use the following instructions when wiring funds:

o        Wire To:          Firstar Bank
                           Milwaukee, N.A.
                           ABA #0705000022

o        Credit:           Firstar Mutual Fund Services, LLC
                           Account 112-952-137
o        Further Credit:   Name of Fund
                           New Account FBO
                           Shareholder Registration


Please call (800) 553-6319 prior to sending the wire in order to obtain a
confirmation number and to ensure prompt and accurate handling of funds.

The Fund and its transfer agent are not responsible for the consequences of
delays resulting from the banking or Federal Reserve Wire system, or from
incomplete wiring instructions.

Step Three:
Complete The AAL Mutual Funds application and mail it immediately to:

The AAL Mutual Funds
Attn:  New Accounts
222 W. College Ave.
P.O. Box 8004
Appleton, WI 54912-8004

Additional Purchases in Existing Accounts
After you have opened an account with The AAL Mutual Funds, you may purchase
additional shares in your account by mail or wire.

Additional Purchases by Mail
Payment for additional purchases in existing Fund accounts should be sent
directly to the Funds' transfer agent at the following address:

REGULAR MAIL


The AAL Mutual Funds
c/o Firstar Mutual Fund Services, LLC
615 E. Michigan St.

P. O. Box 2981
Milwaukee, WI 53201-2981

EXPRESS MAIL/PRIVATE DELIVERY


The AAL Mutual Funds
c/o Firstar Mutual Fund Services, LLC
Mutual Fund Services, Third Floor
615 E. Michigan St.

P.O. Box 2981
Milwaukee, WI 53202

Please indicate your AAL Mutual Fund account number on the face of all
subsequent investment checks and make your check payable to the specific Fund in
which you are investing. If you have more than one account, always verify that
you are investing in the proper account. This will help to ensure the proper
handling of the transaction.

Additional Purchase by Wire
You may make additional wire purchases in an existing Fund account by following
Step (2) of the wire transfer instructions shown for "Initial Purchase by Wire,"
and in addition, by providing your existing Fund account number.


The Funds' transfer agent, Firstar Mutual Fund Services, LLC , must receive your
wire order funds in its offices prior to the close of the NYSE (normally 3:00
p.m. Central Time), to purchase shares on that day. Money received after the
close of the NYSE will go toward the purchase of shares the next day at that
day's price.


Additional Purchase by Telephone

Before you can buy additional shares by telephone, you must have selected the
Request for Telephone Purchase option on the application. Once you have selected
this option, you can call The AAL Mutual Funds Service Center and we will
withdraw money from your bank checking or savings account to make your
investment. You pay the next price computed after the Funds have received your
investment from your bank, which is usually three business days after you
authorize the transfer. If you need to invest sooner, you should consider making
a bank wire purchase.


AUTOMATIC INVESTMENT PLANS

The Funds offer several automatic investment plans to make periodic investing
more convenient. These plans are not required to meet a minimum initial
investment. Using The AAL Mutual Funds automatic investment plans, you may
implement a strategy called dollar cost averaging. Dollar cost averaging
involves investing a fixed amount of money at regular intervals. When you dollar
cost average, you purchase more shares when the price is low and fewer shares
when the price is high. Dollar cost averaging does not ensure a profit or
protect against a loss during declining markets. Because such a program involves
continuous investment regardless of changing share prices, you should consider
your ability to continue the program through times when the share prices are
high.


Please note, it takes 12 days from the time you invest for the transfer agent to
validate any electronic transfer. This will cause some delay in your ability to
write checks on an AAL Money Market Fund account or to redeem or transfer from
your account.

The Bank Draft Plan

Investors who wish to make regular additional investments in an existing Fund
account may do so through the Funds' bank draft plan. Under this plan the Funds
will draft an investor's bank checking or savings account in the amount
specified -- which may not be less than $25 per account -- on specified dates,
up to two transactions per month (at least 10 days apart), and have the proceeds
invested in shares of the specified Fund at the applicable offering price
determined on the date of the draft. To use this plan you must authorize the
plan on your application form, or subsequently in writing, and submit additional
documents. Your instructions to establish a bank draft plan or to change the
bank on an existing plan, must be received by the Funds' transfer agent at least
13 business days prior to the transaction date. Your instructions for stopping a
bank draft plan or changing the dollar amount on an existing plan must be
received by the Funds' transfer agent at least 5 business days prior to the
transaction date. For further information contact AAL Capital Management
Corporation ("The AAL Mutual Funds Service Center") at (800) 553-6319 or your
Registered Representative. Instructions for changes, additions or termination of
a bank draft plan must be in writing and signed by all bank account owners.


The Capital Builder Plan
The capital builder plan also allows investors to make regular automatic
investments in an existing account in any of The AAL Mutual Funds by redemption
of shares from their AAL Money Market Fund account. The capital builder plan
allows investors to select the transaction date. If you do not select the date,
it will automatically be drawn from your account on the 15th of the month. All
such investments will be subject to the applicable sales charge. These
transactions must meet the minimum purchase amounts described above. To start,
stop or change the plan, you must notify the Funds at least 24 hours prior to
the transaction date.

Payroll Deduction Savings and Investment Plan

The payroll deduction savings and investment plan allows employees of AAL and
employees of Lutheran-affiliated institutions to invest in the Funds through
direct deduction from their paychecks or commission checks.


The Government Allotment Plan
The Government Allotment Plan allows Lutheran Social Security recipients,
federal employees and military personnel to invest in The AAL Mutual Funds
through direct deduction from their paychecks.

Prestige Account
Investors who maintain a significant share balance will be provided with
additional benefits, including personal attention from Prestige Account
representatives, an exclusive toll-free telephone number, personalized
investment analysis, complimentary financial information, a Prestige Account
organizer and more. Your AAL CMC Registered Representative can provide more
detailed information.


Retirement and Education Plans
AAL members and their enterprises and Lutheran organizations may establish their
own individual or business retirement plans, with assets invested in The AAL
Mutual Funds. These accounts may offer you tax advantages. You should consult
with your legal and/or tax adviser before you establish a retirement plan. A
third-party maintenance fee may apply to some retirement accounts. Please review
plan documents for more information. Your AAL CMC Registered Representative will
provide you with the materials, documents and forms you need, and will work with
you in establishing your retirement and education plan from among these choices:

o    IRA (Individual Retirement Account);
o    "Rollover" IRA;
o    Roth IRA -- annual  contributions  are not tax deductible but distributions
     may not be subject to income tax;
o    Education  IRA  --  annual  contributions  are  not  tax  deductible,   but
     distributions may not be subject to income tax;
o    SEP-IRA (Simplified Employee Pension Plan);
o    SARSEP-IRA  (Salary Reduction  Simplified  Employee Pension Plan) -- No new
     plans may start after 1996, but existing plans may continue;
o    SIMPLE-IRA (Savings Incentive Match Plan for Employees);
o    403(b)(7)  Custodial Account -- for employees of public schools and certain
     non-profit organizations;
o    Money Purchase Pension Plan;
o    Profit Sharing Plan; and
o    401(k) Plan.

Please note, The AAL Municipal Bond Fund is generally not an appropriate
investment for a retirement account or Education IRA.


OTHER PURCHASE INFORMATION

Earning Income
You begin earning income, if any, on your shares on the business day following
the day our transfer agent receives your payment.

Purchases
Your purchase must be in U.S. dollars and your check must be drawn on a U.S.
bank. We do not accept cash or traveler's checks. If your check does not clear,
we will cancel your purchase and hold you liable for any losses and any
applicable fees. If you buy shares by any type of check, electronic funds
transfer (other than bank wires) or automatic investment plan, and you elect to
redeem your shares soon thereafter, we may postpone paying the redemption
proceeds for 12 days, or until your check has cleared, whichever is later. This
does not limit your right to redeem shares. Rather, it operates to make sure
that payment for the shares redeemed has been received by the transfer agent.

Confirmation
We generally mail written confirmation of your purchases, except for The AAL
Money Market Fund, within two business days following the date of your purchase.
We mail confirmation of additional purchases in The AAL Money Market Fund
monthly. We mail confirmation of your automatic investment plan purchases at
least quarterly.

Share Certificates

We issue share certificates only upon written request, and then only for full
shares. You must make a new written request for a share certificate each time
you purchase shares. We do not charge a fee to issue share certificates. If you
have asked for or have received share certificates, you cannot use certain
shareholder services, including wire, check and telephone redemption, share
exchange and any systematic withdrawal. Before you can redeem, transfer or
exchange your shares, you must deliver the share certificates to our transfer
agent in negotiable form (with a signature guarantee). We may not have share
certificates available for some retirement accounts. If you lose your share
certificate(s), you will be unable to redeem your shares until you receive a
replacement certificate. To replace your share certificates contact The AAL
Mutual Funds Service Center at (800) 553-6319 for instructions. There may be a
charge for replacement. We do not issue share certificates for The AAL Money
Market Fund.


Other Information
The U.S. Postal Service or private delivery services are not agents of the
Funds, the distributor, or the transfer agent. We do not legally receive your
purchase application or your request for redemption when you deposit them in the
mail, send them with a private delivery service or when you deposit them in our
Post Office Box. We must have physical possession of your request to consider
your request received. Current law will determine the legal effect of posting
for deadline purposes.

We reserve the right to suspend the offering of shares for a period of time and
the right to reject any specific purchase of shares.

Changes to Your Account

After opening your AAL Mutual Fund account, you may wish to make changes to your
account. Certain types of changes, such as moving to a new address or getting a
new telephone number, do not have any other effect on an account. Any feature
such as telephone exchange or participation in an automatic investment plan
would continue uninterrupted. Other changes, such as exchanging from one Fund to
another or transferring shares from a regular account to an IRA or adding a
joint owner, will affect your account options because a new account is actually
created. Account options, such as an automatic investment plan, are discontinued
unless additional action is taken. These changes may require additional
instructions and specific forms. If you are not sure whether a change affects
your account, please contact your Registered Representative or The AAL Mutual
Funds Service Center at (800) 553-6319. When making these types of changes,
please use The AAL Mutual Funds Account Change Request Form, which is available
from your Registered Representative or from the Mutual Funds Service Center.

Householding
As a shareholder of The AAL Mutual Funds, you currently receive a great deal of
information from us through the mail. To help reduce the volume of mail that you
receive, we will "household" all regulatory materials from this point. When we
household mailings, we simply identify addresses on file that have two or more
accounts and send only one copy of items such as prospectuses and
annual/semi-annual reports to that address. These "shared" addresses will be
used for mailings even if the accounts' owners of record are not exactly the
same.

For example, suppose you and your spouse each hold individual AAL IRA accounts
in The AAL Capital Growth Fund, and you both live at the same address. Instead
of sending you both separate copies of the latest shareholder reports for The
AAL Capital Growth Fund, we will send only one copy to your address.

Householding helps to save money through reduced printing and mailing costs,
which benefits all shareholders. From this point forward, we will continue to
household your regulatory materials unless you tell us otherwise. If you would
like to discontinue householding for your account(s), please call The AAL Mutual
Fund Service Center at (800) 553-6319. When we receive notice from you to stop
householding, we will begin sending you multiple copies of the same materials
free of charge within 30 days.

PLEASE NOTE, THIS POLICY APPLIES ONLY TO REGULATORY DOCUMENTS AND NOT TO
QUARTERLY ACCOUNT STATEMENTS.


HOW TO REDEEM (SELL) SHARES
You can sell your shares on any business day we price The AAL Mutual Funds'
shares. When you sell your shares, you receive the net asset value per share,
except for Class B shares for which you will receive the net asset value per
share minus the back-end load, if any, depending on how long you have held the
shares redeemed. If we receive your request in good order, which includes all
the information listed below, before the close of the NYSE (normally 3:00 p.m.
Central Time) you will receive that day's price. If we receive your redemption
request in good order on a holiday, weekend or day the NYSE is closed, we will
process your transaction request on the next business day. You can sell shares
several ways. Please note that transfers via Electronic Funds Transfer (EFT)
generally take up to three business days to reach your bank account.

Redemptions by Mail
Shareholders of any of the Funds may have their shares redeemed at any time at
the net asset value per share next determined after a written request and all
additional documents, if required, are received in good order by the Funds'
transfer agent.


The Funds determine payment for shares presented for redemption at a Fund's net
asset value next computed after a request is received in good order by the
transfer agent. Shareholders earn income and receive dividends paid on Funds
through the date of redemption. The Funds will mail payment proceeds within
seven days following receipt of all required documents. The Funds may postpone
payment or suspend the right of redemption in unusual circumstances, as
permitted by the U.S. Securities and Exchange Commission. When you purchase
shares by check, the Funds may delay payment for redemption requests for the
shares purchased for 12 days or until your check has cleared, if later.

In order for your redemption request to be in good order, you must include the
name(s) of the account owner(s), your account number and specify the dollar or
share amount you wish to redeem. You and any other persons registered as
shareholders on the account must sign your redemption request. You must sign the
request exactly as the account is registered. If you wish to redeem shares with
a value in excess of $100,000, you must have your signature(s) guaranteed. The
transfer agent will accept signature guarantees from all institutions that are
eligible to provide signature guarantees under federal or state law, provided
that the individual giving the signature guarantee is authorized to do so.
Institutions that usually are eligible to provide signature guarantees include
commercial banks, trust companies, brokers, dealers, national securities
exchanges, savings and loan institutions and credit unions. Please note that a
signature guarantee is not the same as a notarized signature. If shares are held
in the name of a corporation, trust, estate, custodianship, guardianship,
partnership or pension and profit sharing plan, or if you have requested and
received share certificates, additional documentation may be necessary. If you
wish to redeem any type of IRA account you must indicate on the redemption
request whether or not federal income tax should be withheld. Redemption
requests that fail to indicate an election not to have federal tax withheld will
be subject to withholding.


You may redeem shares of any of the Funds by mail, by sending a written request
for redemption to:

REGULAR MAIL


The AAL Mutual Funds
c/o Firstar Mutual Fund Services, LLC
615 E. Michigan St

P. O. Box 2981
Milwaukee, WI 53201-2981

EXPRESS MAIL/PRIVATE DELIVERY


The AAL Mutual Funds
c/o Firstar Mutual Fund Services, LLC
Mutual Fund Services, Third Floor
615 E. Michigan St

P.O. Box 2981
Milwaukee, WI 53202

Redemptions by Telephone

The privilege to redeem shares by telephone is automatically extended to all
accounts, unless the option is specifically declined. If you do not want the
telephone redemption option, please call The AAL Mutual Funds Service Center at
(800) 553-6319. By accepting this privilege, you assume some risks for
unauthorized transactions. Once a telephone request has been made, it cannot be
canceled or modified. AAL CMC has implemented procedures designed to reasonably
ensure that telephone instructions are genuine. These procedures include
recording telephone conversations, requesting verification of certain personal
information, restricting transmittal of redemption proceeds to pre-authorized
account owners and addresses and supplying transaction verification information.
AAL CMC will not be liable for losses from telephone redemptions if they follow
these reasonable procedures.


The following conditions apply to telephone redemptions described above:


o  telephone redemption checks will be issued to the same payee(s) as the
   account registration and sent only to the address of record;
o  there has been no change of address in the preceding 60 days;
o  the request is for $100,000 or less;
o  retirement plan accounts are generally not eligible;
o  shares to be redeemed cannot be in certificate form; and
o  only one telephone redemption is permitted within any 30 day period for
   each authorized account.

Please note: individual retirement plan accounts can be redeemed by phone only
with 10% Federal Tax withholding.


Redemptions by Bank Wire


(1)  Existing shareholders must send an Account Change Request Form with the
     appropriate section completed prior to exercising the privilege of wire
     redemption to:


REGULAR MAIL


The AAL Mutual Funds
c/o Firstar Mutual Fund Services, LLC
615 E. Michigan St

P. O. Box 2981
Milwaukee, WI 53201-2981

EXPRESS MAIL/PRIVATE DELIVERY


The AAL Mutual Funds
c/o Firstar Mutual Fund Services, LLC
Mutual Fund Services, Third Floor
615 E. Michigan St

P.O. Box 2981
Milwaukee, WI 53202


When redeeming shares by bank wire, please be aware of the following conditions:

o wire redemptions can be made for any amount;
o a $12.00 fee is assessed for redemptions by wire;
o requests received in good order before the close of the NYSE (usually
  3:00 p.m. Central Time) receive that day's price; and
o if an account has multiple owners, AAL CMC may rely on the instructions of any
  one account owner. This privilege may not be available on all retirement
  plan accounts.


Systematic Withdrawal Plan (Usually Only Appropriate for Class A Shares)

You can have money automatically withdrawn from your AAL Mutual Funds account(s)
on a regular basis by using our systematic withdrawal plan. The plan allows you
to receive funds or pay a bill at regular intervals. The following rules and/or
guidelines apply:


o you need a minimum of $5,000 in your account to start the plan;
o you can select the date(s) on which the money is withdrawn.  If you don't
  select the date(s), we will withdraw the money automatically from your
  account on the 15th of the month;
o to start the plan or change the payee(s), you must notify us in writing at
  least 13 business days prior to the first withdrawal and you must have all
  account owner(s) sign the appropriate form;
o money can be sent by check or bank wire;
o to stop or change your plan, you must notify us at least 5 business days prior
  to the next withdrawal; and
o because of sales charges, you must consider carefully the costs of frequent
  investments in and withdrawals from your account.




Please note, for minimum required distributions from IRA accounts, we will waive
the back-end load on Class B shares.

THE AAL MONEY MARKET FUND CHECKS (CLASS A SHARES ONLY)
You can write checks on your AAL Money Market Fund account, except for Class B
shares, if you complete a check writing signature card and agreement. You can
request checks on your AAL Mutual Funds application or in writing. We do not
charge a fee for supplying your first set of checks, but charge a fee for each
additional packet of checks. The following rules and/or guidelines apply:

o    The checks you write on The AAL Money  Market Fund must be for $500 or more
     (Because the Fund is not a bank, some features,  such as stop payment,  are
     not available);

o    Our  transfer  agent may  impose  reasonable  fees for each  check  that is
     returned;

o    We do not return your canceled  checks.  For a fee, our transfer agent will
     send a copy of your check to you at your request;

o    Unless you purchased  shares by bank wire,  you must wait 12 days after you
     purchase  AAL  Money  Market  Fund  shares  to write  checks  against  that
     purchase; and

You need a written request --NOT A CHECK-- to close an AAL Money Market Fund
account. Your written request will require a signature guarantee to close
accounts over $100,000.


Reinstatement Privilege (Class A Shares Only)

You have 60 days after you sell shares to reinvest the dollar amount you
redeemed without having to pay another sales charge. You will pay the net asset
value per share on the day you make your reinvestment and not on the day you
sold your investment. The following rules and/or guidelines apply:

o you may use this privilege only ONCE per account;
o you must send a written request and a check for the amount you wish to
  reinvest to the Funds' transfer agent:


REGULAR MAIL


The AAL Mutual Funds
c/o Firstar Mutual Fund Services, LLC

P. O. Box 2981
615 E. Michigan St.
Milwaukee, WI 53201-2981

EXPRESS MAIL/PRIVATE DELIVERY


The AAL Mutual Funds
c/o Firstar Mutual Fund Services, LLC
Mutual Funds Services, Third Floor
615 E. Michigan St.

Milwaukee, WI 53202;


o the dollar amount you reinvest cannot exceed the dollar amount you sold;
o the sale of your shares may be a taxable event despite the reinstatement; and
o the reinstatement privilege does not apply to qualified retirement plan
  accounts (i.e., 403(b) and 401(k) accounts).


Involuntary Redemption
Because all account owners share the high cost of maintaining accounts with low
balances, the Funds reserve the right to involuntarily redeem a shareholder's
account, other than a retirement plan account, at any time the value of the
account falls below $250 as a result of redemption. Shareholders will be
notified in writing of any planned involuntary redemption and will be allowed 30
days to increase the account balance above the stated minimum before the
redemption is processed.

Exchange Privilege
Shares of the Funds held for at least 12 days may be exchanged for shares of any
other AAL Mutual Fund with the same registration, without additional sales
charge, at the net asset value per share next computed after receipt of a
written exchange request in proper form by the transfer agent. However, if you
initially purchased Class A shares of The AAL Money Market Fund, and did not pay
an initial sales charge, you would not be able to exchange these shares for
another Fund without paying a sales charge.

Minimum investment rules may apply when you open a new account by exchanging
shares, and you may have to submit a new application (i.e., you must exchange at
least $1,000 worth of shares to another Fund and fill out a new account form, if
you have not invested shares in the other AAL Mutual Fund account before). You
can exchange for the same class of shares only (for example, Class A shares for
Class A shares and Class B shares for Class B shares).

Shareholders of a Fund may only exchange into such other Funds as are legally
available for sale in any state. If shares are held in the name of a
corporation, trust, estate, custodianship, guardianship, partnership or pension
and profit sharing plan, or if you have requested and received share
certificates, additional documentation may be necessary.

An exchange constitutes a redemption of the shares of one mutual fund and the
purchase of shares of another. Exchanges are sales for tax purposes and could
result in a gain or loss, depending on the original cost of shares exchanged.


An excessive number of exchanges may be disadvantageous to the Funds. Therefore,
the Funds reserve the right to terminate the exchange privilege of any
shareholder who makes more than twelve exchanges in a year. Further, the Funds
reserve the right to modify or terminate the exchange privilege at any time with
respect to any Fund, if the Funds' Trustees determine that continuing the
privilege may be detrimental to shareholders. The Funds will provide at least 60
days notice prior to modifying or terminating the exchange privilege. In the
event your exchange privilege is terminated for any reason, you still have the
right to redeem your shares for cash as described in this prospectus.


Exchanges by Mail
You can make an exchange by mail by sending your request to the Funds' transfer
agent:

REGULAR MAIL


The AAL Mutual Funds
c/o Firstar Mutual Fund Services, LLC

P. O. Box 2981
615 E. Michigan St.
Milwaukee, WI 53201-2981

EXPRESS MAIL/PRIVATE DELIVERY


The AAL Mutual Funds
c/o Firstar Mutual Fund Services, LLC
Mutual Funds Services, Third Floor
615 E. Michigan St.

Milwaukee, WI 53202;

Please include the following information in your exchange request:


o name(s) of the account owner(s);
o account number(s);
o amount of shares (or dollar amount) you want to exchange;
o the name of the Fund you are exchanging into; and
o signatures of all account owners.


Exchanges by Telephone
You can sell or exchange shares by phone. By doing so, you assume some risks for
unauthorized transactions. AAL CMC has implemented procedures designed to
reasonably assure that telephone instructions are genuine. These procedures
include recording telephone conversations, requesting verification of various
pieces of personal information, restricting transmittal of redemption proceeds
to pre-authorized designations, and supplying transaction/taping identification
numbers and/or symbols. Please note, however, that The AAL Mutual Funds, AAL
CMC, the custodian, the transfer agent or any of their employees will not be
liable for losses suffered by a shareholder that result from following telephone
instructions reasonably believed to be authentic after verification pursuant to
these procedures.

Telephone exchanges (transactions in which the registration does not change) are
subject to the requirements described above, and additional requirements as
follows.


You may exchange shares for which certificates have not been issued by
telephoning The AAL Mutual Funds Service Center at (800) 553-6319 or (920)
734-7633. Telephone exchange requests received prior to the close of the NYSE
(usually 3:00 p.m. Central Time) will receive that day's price.


Telephone exchanges will be permitted only if you elect the telephone exchange
option on your initial purchase application, or request the telephone exchange
privilege in a subsequent written request, signed by all registered owners, with
all signatures guaranteed.

During periods of extreme volume caused by dramatic economic or stock market
changes, shareholders may have difficulty reaching the Mutual Funds Service
Center by phone, and a telephone exchange may be difficult to implement at those
times. The Funds reserve the right to temporarily discontinue the telephone
exchange privilege during such periods of extreme volume.


DIVIDENDS

The Funds endeavor to qualify annually for, and elect tax treatment applicable
to, a regulated investment company under Subchapter M of the Internal Revenue
Code of 1986 as amended (Code). Pursuant to the requirements of the Code, we
intend to distribute substantially all of the Funds' net investment income and
net realized capital gains, if any, less any available capital loss carryover,
to shareholders annually. We do this to avoid paying income tax on the Funds'
net investment income and net realized capital gains or being subject to a
federal excise tax on undistributed net investment income and net realized
gains. Annually, we intend to comply with all of the requirements to qualify as
a regulated investment company for each Fund. We provide you with full
information on dividends and capital gains distributions for each Fund on an
annual basis.

Below, we provide you with a general description of the distribution policies
and some of the tax consequences for the Funds' shareholders. You should always
check with your tax adviser to determine whether any dividends and distributions
paid to you by a Fund are subject to any taxes, including state and local taxes.

The AAL High Yield Bond, Municipal Bond, Bond and Money Market Funds
The dividends from net investment income of each of these Funds, including net
short-term capital gains, are taxable as ordinary income to shareholders,
whether paid in additional shares or in cash. Any long-term capital gains
distributed to shareholders are taxable as capital gains to shareholders,
whether they receive them in cash or in additional shares, and regardless of the
length of time a shareholder has owned the shares.

We distribute substantially all net investment income and any net realized
capital gains, if any, for the Funds as shown in the table below.

FUND                               DIVIDENDS (IF ANY)     CAPITAL GAINS (IF ANY)
The AAL High Yield Bond Fund       Monthly                Annually
The AAL Municipal Bond Fund        Monthly                Annually
The AAL Bond Fund                  Monthly                Annually
The AAL Money Market Fund          Monthly                Annually

The AAL Bond, Municipal Bond, High Yield Bond and Money Market Funds accrue
income dividends daily.

The AAL Municipal Bond Fund
Dividends derived from the interest earned on municipal securities constitute
"exempt-interest dividends" and are generally not subject to federal income tax.
Realized capital gains on municipal securities are subject to federal income
tax. Thus, shareholders will be subject to taxation at ordinary rates on the
dividends they receive that are derived from net short-term capital gains.
Distributions of net long-term capital gains will be taxable as long-term
capital gains regardless of the length of time a shareholder holds them. We may,
for temporary defensive purposes, invest in short-term taxable securities for
the Fund. Shareholders of this Fund are subject to federal income tax at
ordinary rates on any income dividends they receive that are derived from
interest on taxable securities.

For shareholders who are receiving Social Security benefits, the federal
government requires you to add tax-exempt income, including exempt-interest
dividends from this Fund, to your taxable income in determining whether a
portion of your Social Security benefits will be subject to federal income tax.
The Internal Revenue Code provides that every person required to file a tax
return must report, solely for informational purposes, the amount of
exempt-interest dividends received from the Funds during the taxable year.

Reinvestment of Fund Distributions
You can reinvest all of your income dividends and/or capital gains distributions
into the Funds at net asset value and pay no up-front (Class A shares) or
contingent deferred (Class B shares) sales charges. You also can have your
distributions paid in cash. When you receive a distribution you may have to pay
taxes whether or not you reinvested them or had them paid out to you in cash. If
you have requested cash distributions and we cannot locate you, we will reinvest
your dividends.


TAX CONSIDERATIONS

As with all funds distributing taxable income, you as a tax-paying investor will
be subject to income taxes on all dividends and distributions, regardless of
whether you elect to take them in cash or have them reinvested.

Each Fund intends to distribute in December and, if necessary, at such other
times as the Fund may determine, its net investment income and any net realized
capital gains resulting from investment activity. Any dividend (including a
capital gains dividend) declared in October, November or December with a record
date in such a month and paid during the following January will be treated by
shareholders for federal income tax purposes as if received on December 31, of
the calendar year declared. Cumulative statements showing all activity in the
account for the prior year will be mailed annually to all shareholders.

All income and capital gains distributions are reinvested in full and fractional
shares of a Fund at net asset value, without sales charges, on a payment date
unless a shareholder has requested payment in cash on the shareholder
application or by separate written request. The shareholder returns that we
project at maturity assume the reinvestment of all income and capital gains
distributions. If a shareholder elects to receive these distributions in cash,
the return at maturity will be substantially less than our projections at the
time of purchase.

Each Fund intends to qualify as a "regulated investment company" under the
Internal Revenue Code (the Code) and to take all other action required so that
no federal income tax will be payable by the Funds themselves. Each Fund will be
treated as a separate regulated investment company under the Code. Shareholders
are provided annually with full information on income and capital gains
distributions for tax purposes. Shareholders should consult their tax advisers
regarding the applicability of state and local taxes to dividends and
distributions. The Funds are required by federal law to withhold 31% of
reportable payments (which include dividends, capital gain distributions and
redemption proceeds) paid to certain shareholders who have not properly
certified that the Social Security or other taxpayer identification number
provided by the shareholder is correct and that he or she is not otherwise
subject to backup withholding. The Funds' shareholder application includes the
required certification.

This discussion provides no information as to state and local tax consequences
of ownership of shares of the Funds. You should consult your personal tax
adviser to determine the consequences of state and local taxes, and for a more
detailed assessment of federal tax consequences for your particular
circumstances.


DISTRIBUTION ARRANGEMENTS

12B-1 FEES
In addition to the sales charge deducted at the time of purchase, each Fund is
authorized, pursuant to a Rule 12b-1 Distribution Plan it has adopted (12b-1
Distribution Plan or Plan), to use a portion of its assets to cover the costs of
certain activities relating to the distribution of its shares to investors.

The 12b-1 Distribution Plan permits each Fund to reimburse the distributor for
expenses incurred in distributing the Funds' shares to investors, which includes
expenses relating to: sales representative compensation (excluding the initial
sales charge); advertising; preparation and distribution of sales literature and
prospectuses to prospective investors; implementing and operating the Plan; and
performing other promotional or administrative activities on behalf of the
Funds.

Pursuant to the Plan, we may also reimburse the distributor for overhead
expenses incurred in distributing the Funds' shares. We may not reimburse the
distributor for expenses of past fiscal years or in contemplation of expenses
for future fiscal years. We may not use distribution fees we pay for one Fund to
finance the distribution of shares for another Fund.

Except for The AAL Money Market Fund, each Fund pays a service fee of up to 0.25
of 1% of its average daily net assets for Class A and Class B shares. The AAL
Money Market Fund pays a service fee of up to 0.125 of 1% of the average daily
net assets for Class A and Class B shares. We use the shareholder service fee to
compensate for certain shareholder services. The table below shows the maximum
12b-1 distribution and service fee paid by each Fund.

                                DISTRIBUTION FEES

<TABLE>
<CAPTION>
<S>                                      <C>                                    <C>
FUND                                     CLASS A SHARES                         CLASS B SHARES
The AAL High Yield Bond Fund             None                                   0.75%
The AAL Municipal Bond Fund              None                                   0.75%
The AAL Bond Fund                        None                                   0.75%
The AAL Money Market Fund                None                                   0.75%

                                  SERVICE FEES

FUND                                     CLASS A SHARES                         CLASS B SHARES
The AAL High Yield Bond Fund             0.25%                                  0.25%
The AAL Municipal Bond Fund              0.25%                                  0.25%
The AAL Bond Fund                        0.25%                                  0.25%
The AAL Money Market Fund                0.25%                                  0.25%
</TABLE>

SHAREHOLDER MAINTENANCE AGREEMENT

Under contracts approved by the Board of Trustees, AAL CMC provides certain
shareholder maintenance services. AAL CMC receives an annual fee for providing
these services. This fee is based upon, and limited by, the difference between
the current account fees charged and the normal full-service fee schedule
established by our transfer agent. It also includes reimbursement for
out-of-pocket costs including postage and telephone charges. This account
differential, including reimbursement for expenses, is approximately $3.75 per
account per year.



FINANCIAL HIGHLIGHTS INFORMATION

The financial highlights table is intended to help you understand the Fund's
financial performance for the past five years or, if shorter, the period of the
Fund's operations. Certain information reflects financial results for a single
Fund share. The total returns in the table represent the rate that an investor
would have earned or lost on an investment in the Fund (assuming reinvestment of
all dividends and distributions). This information has been audited by the
accounting firm of PricewaterhouseCoopers LLP, whose report, along with each
Fund's financial statements are included in the annual report, which is
available upon request.

                          THE AAL HIGH YIELD BOND FUND
<TABLE>
<CAPTION>
<S>                                                                  <C>        <C>        <C>         <C>
CLASS A SHARES                                                       YEAR       YEAR       YEAR        PERIOD:
                                                                     ENDED      ENDED      ENDED       1/8/97 TO
                                                                     4/30/00    4/30/99    4/30/98     4/30/97
PER SHARE DATA [IN $ DOLLARS]

Net Asset Value - Beginning of Period                                $8.92      $10.31     $9.88       $10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss)                                         0.87       0.91       0.92        0.27
Net Realized and Unrealized Gain (Loss) on Investments               (1.48)     (1.33)     0.53        (0.12)
Total From Investment Operations                                     (0.61)     (0.42)     1.45        0.15
DISTRIBUTIONS FROM:
Net Investment Income                                                (0.87)     (0.91)     (0.92)      (0.27)
Net Realized Capital Gains                                           -          (0.06)     (0.10)      -
Total Distributions                                                  (0.87)     (0.97)     (1.02)      (0.27)
Net Asset Value - End of Period                                      $7.44      $8.92      $10.31      $9.88
Total Return (1)                                                     (7.00)%    (3.96)%    15.12%      1.51%
SUPPLEMENTAL DATA AND RATIOS
Net Assets at End of Period (in millions)                            $134.3     $131.9     $100.8      $44.7
Ratio of Expenses to Average Net Assets (2)*                         0.96%      1.00%      0.99%       1.00%
Ratio of Investment Income (Loss) to Average Net Assets (2)*         10.54%     9.81%      8.94%       9.11%
Portfolio Turnover Rate                                              53.59%     54.67%     112.37%     36.90%
*  If the Fund had paid all of its expenses for Class A Shares,

the ratios would be as follows:

Ratio of Expenses to Average Net Assets                              1.12%      1.16%      1.18%       1.28%
Ratio of Net Investment Income (Loss) to Average Net Assets          10.38%     9.64%      8.75%       8.83%

</TABLE>

(1)  Total Return assumes reinvestment of all dividends and distributions but
     does not reflect any deduction for sales charge. The aggregate, not
     annualized total return is shown for periods less than one year.
(2)  For periods less than one year, both the ratio of net operating expenses to
     average net assets and the ratio of net investment income (loss) to average
     net assets are calculated on an annualized basis.



<PAGE>



                          THE AAL HIGH YIELD BOND FUND
<TABLE>
<CAPTION>
<S>                                                                  <C>        <C>        <C>       <C>
Class B Shares                                                       YEAR       YEAR       YEAR      PERIOD:
                                                                     ENDED      ENDED      ENDED     1/8/97 TO
                                                                     4/30/00    4/30/99    4/30/98   4/30/97
PER SHARE DATA [IN $ DOLLARS]

Net Asset Value - Beginning of Period                                $8.92      $10.31     $9.88     $10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss)                                         0.81       0.84       0.84      0.25
Net Realized and Unrealized Gain (Loss) on Investments               (1.48)     (1.33)     0.53      (0.12)
Total From Investment Operations                                     (0.67)     (0.49)     1.37      0.13
DISTRIBUTIONS FROM:
Net Investment Income                                                (0.81)     (0.84)     (0.84)    (0.25)
Net Realized Capital Gains                                           -          (0.06)     (0.10)    -
Total Distributions                                                  (0.81)     (0.90)     (0.94)    (0.25)
Net Asset Value - End of Period                                      $7.44      $8.92      $10.31    $9.88
Total Return (1)                                                     (7.65)%    (4.62)%    14.27%    1.31%
SUPPLEMENTAL DATA AND RATIOS
Net Assets at End of Period (in millions)                            $11.6      $12.4      $9.7      $2.7
Ratio of Expenses to Average Net Assets (2)*                         1.62%      1.71%      1.74%     1.75%
Ratio of Investment Income (Loss) to Average Net Assets (2)*         9.88%      9.09%      8.22%     8.66%
Portfolio Turnover Rate                                              53.59%     54.67%     112.37%   36.90%
*  If the Fund had paid all of its expenses for Class B Shares,

the ratios would be as follows:

Ratio of Expenses to Average Net Assets                              1.97%      1.98%      2.05%     2.00%
Ratio of Net Investment Income (Loss) to Average Net Assets          9.53%      8.82%      7.90%     8.41%

</TABLE>

(1)  Total Return assumes reinvestment of all dividends and distributions but
     does not reflect any deduction for sales charge. The aggregate, not
     annualized total return is shown for periods less than one year.
(2)  For periods less than one year, both the ratio of net operating expenses to
     average net assets and the ratio of net investment income (loss) to average
     net assets are calculated on an annualized basis.



<PAGE>



                           THE AAL MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
<S>                                                                <C>          <C>        <C>         <C>         <C>
CLASS A SHARES                                                     Year Ended   Year       Year Ended  Year Ended  Year Ended
                                                                   4/30/00      Ended      4/30/98     4/30/97     4/30/96
                                                                                4/30/99
PER SHARE DATA [IN $ DOLLARS]

Net Asset Value - Beginning of Period                              $11.47       $11.40     $10.92      $10.91      $10.69
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss)                                       0.53         0.52       0.52        0.52        0.52
Net Realized and Unrealized Gain (Loss) on Investments             (1.01)       0.25       0.61        0.19        0.30
Total From Investment Operations                                   (0.48)       0.77       1.13        0.71        0.82
DISTRIBUTIONS FROM:
Net Investment Income                                              (0.53)       (0.52)     (0.52)      (0.52)      (0.52)
Net Realized Capital Gains                                         (0.01)       (0.18)     (0.13)      (0.18)      (0.08)
Total Distributions                                                (0.54)       (0.70)     (0.65)      (0.70)      (0.60)
Net Asset Value - End of Period                                    $10.45       $11.47     $11.40      $10.92      $10.91
Total Return (1)                                                   (4.09)%      6.80%      10.50%      6.64%       7.74%
SUPPLEMENTAL DATA AND RATIOS
Net Assets at End of Period (in millions)                          $461.3       $523.1     $467.1      $421.7      $412.8
Ratio of Expenses to Average Net Assets (2)*                       0.78%        0.81%      0.85%       0.89%       0.95%
Ratio of Investment Income (Loss) to Average Net Assets (2)*       4.98%        4.47%      4.55%       4.69%       4.69%
Portfolio Turnover Rate                                            210.32%      94.56%     139.18%     119.79%     130.52%
*  If the Fund had paid all of its expenses for Class A Shares,

the ratios would be as follows:

Ratio of Expenses to Average Net Assets                            0.84%        0.81%      0.85%       0.89%       0.95%
Ratio of Net Investment Income (Loss) to Average Net Assets        4.93%        4.47%      4.55%       4.69%       4.69%

</TABLE>

(1)  Total Return assumes reinvestment of all dividends and distributions but
     does not reflect any deduction for sales charge. The aggregate, not
     annualized total return is shown for periods less than one year.
(2)  For periods less than one year, both the ratio of net operating expenses to
     average net assets and the ratio of net investment income (loss) to average
     net assets are calculated on an annualized basis.


<PAGE>



                           THE AAL MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
<S>                                                                <C>          <C>        <C>         <C>
CLASS B SHARES                                                     YEAR ENDED   YEAR       YEAR        PERIOD:
                                                                   4/30/00      ENDED      ENDED       1/8/97 TO
                                                                                4/30/99    4/30/98     4/30/97
PER SHARE DATA [IN $ DOLLARS]

Net Asset Value - Beginning of Period                              $11.47       $11.40     $10.92      $11.02
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss)                                       0.44         0.42       0.42        0.14
Net Realized and Unrealized Gain (Loss) on Investments             (1.02)       0.25       0.61        (0.10)
Total From Investment Operations                                   (0.58)       0.67       1.03        0.04
DISTRIBUTIONS FROM:
Net Investment Income                                              (0.44)       (0.42)     (0.42)      (0.14)
Net Realized Capital Gains                                         (0.01)       (0.18)     (0.13)      -
Total Distributions                                                (0.45)       (0.60)     (0.55)      (0.14)
Net Asset Value - End of Period                                    $10.44       $11.47     $11.40      $10.92
Total Return (1)                                                   (4.99)%      5.93%      9.58%       0.34%
SUPPLEMENTAL DATA AND RATIOS
Net Assets at End of Period (in millions)                          $7.3         $7.5       $3.6        $0.8
Ratio of Expenses to Average Net Assets (2)*                       1.59%        1.64%      1.74%       1.69%
Ratio of Investment Income (Loss) to Average Net Assets (2)*       4.19%        3.65%      3.67%       4.09%
Portfolio Turnover Rate                                            210.32%      94.56%     139.18%     119.79%
*  If the Fund had paid all of its expenses for Class B Shares,

the ratios would be as follows:

Ratio of Expenses to Average Net Assets                            1.64%        1.64%      1.74%       1.69%
Ratio of Net Investment Income (Loss) to Average Net Assets        4.14%        3.65%      3.67%       4.09%

</TABLE>

(1)  Total Return assumes reinvestment of all dividends and distributions but
     does not reflect any deduction for sales charge. The aggregate, not
     annualized total return is shown for periods less than one year.
(2)  For periods less than one year, both the ratio of net operating expenses to
     average net assets and the ratio of net investment income (loss) to average
     net assets are calculated on an annualized basis.


<PAGE>



                                                      THE AAL BOND FUND
<TABLE>
<CAPTION>
<S>                                                                <C>          <C>         <C>         <C>
CLASS A SHARES                                                     Year Ended   Year Ended  Year Ended  Year Ended  Year Ended
                                                                   4/30/00      4/30/99     4/30/98     4/30/97     4/30/96
PER SHARE DATA [IN $ DOLLARS]

Net Asset Value - Beginning of Period                              $9.92        $9.99       $9.63       $9.62       $9.61
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss)                                       0.58         0.53        0.57        0.60        0.58
Net Realized and Unrealized Gain (Loss) on Investments             (0.60)       (0.07)      0.36        0.01        0.01
Total From Investment Operations                                   (0.02)       0.46        0.93        0.61        0.59
DISTRIBUTIONS FROM:
Net Investment Income                                              (0.58)       (0.53)      (0.57)      (0.60)      (0.58)
Net Realized Capital Gains                                         -            -           -           -           -
Total Distributions                                                (0.58)       (0.53)      (0.57)      (0.60)      (0.58)
Net Asset Value - End of Period                                    $9.32        $9.92       $9.99       $9.63       $9.62
Total Return (1)                                                   (0.11)%      4.61%       9.86%       6.43%       6.18%
SUPPLEMENTAL DATA AND RATIOS
Net Assets at End of Period (in millions)                          $321.7       $367.2      $353.4      $389.3      $430.8
Ratio of Expenses to Average Net Assets (2)*                       0.83%        0.93%       0.95%       0.98%       1.01%
Ratio of Investment Income (Loss) to Average Net Assets (2)*       6.12%        5.23%       5.77%       6.10%       5.89%
Portfolio Turnover Rate                                            163.31%      572.56%     483.76%     212.49%     125.77%
*  If the Fund had paid all of its expenses for Class A Shares,

the ratios would be as follows:

Ratio of Expenses to Average Net Assets                            0.91%        0.93%       0.95%       0.98%       1.01%
Ratio of Net Investment Income (Loss) to Average Net Assets        6.04%        5.23%       5.77%       6.10%       5.89%

</TABLE>

(1)  Total Return assumes reinvestment of all dividends and distributions but
     does not reflect any deduction for sales charge. The aggregate, not
     annualized total return is shown for periods less than one year.
(2)  For periods less than one year, both the ratio of net operating expenses to
     average net assets and the ratio of net investment income (loss) to average
     net assets are calculated on an annualized basis.


<PAGE>



                                THE AAL BOND FUND
<TABLE>
<CAPTION>
<S>                                                                <C>          <C>         <C>         <C>
CLASS B SHARES                                                     YEAR ENDED   YEAR ENDED  YEAR        PERIOD:
                                                                   4/30/00      4/30/99     ENDED       1/8/97 TO
                                                                                            4/30/98     4/30/97
PER SHARE DATA [IN $ DOLLARS]

Net Asset Value - Beginning of Period                              $9.92        $9.99       $9.64       $9.71
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss)                                       0.49         0.43        0.48        0.18
Net Realized and Unrealized Gain (Loss) on Investments             (0.60)       (0.07)      0.35        (0.07)
Total From Investment Operations                                   (0.11)       0.36        0.83        0.11
DISTRIBUTIONS FROM:
Net Investment Income                                              (0.49)       (0.43)      (0.48)      (0.18)
Net Realized Capital Gains                                         -            -           -           -
Total Distributions                                                (0.49)       (0.43)      (0.48)      (0.18)
Net Asset Value - End of Period                                    $9.32        $9.92       $9.99       $9.64
Total Return (1)                                                   (1.09)%      3.60%       8.75%       0.96%
SUPPLEMENTAL DATA AND RATIOS
Net Assets at End of Period (in millions)                          $3.6         $3.1        $1.4        $0.4
Ratio of Expenses to Average Net Assets (2)*                       1.80%        1.90%       1.92%       1.86%
Ratio of Investment Income (Loss) to Average Net Assets (2)*       5.17%        4.28%       4.74%       5.51%
Portfolio Turnover Rate                                            163.31%      572.56%     483.76%     212.49%
*  If the Fund had paid all of its expenses for Class B Shares,

the ratios would be as follows:

Ratio of Expenses to Average Net Assets                            1.88%        1.90%       1.92%       1.86%
Ratio of Net Investment Income (Loss) to Average Net Assets        5.09%        4.28%       4.74%       5.51%

</TABLE>


(1)  Total Return assumes reinvestment of all dividends and distributions but
     does not reflect any deduction for sales charge. The aggregate, not
     annualized total return is shown for periods less than one year.
(2)  For periods less than one year, both the ratio of net operating expenses to
     average net assets and the ratio of net investment income (loss) to average
     net assets are calculated on an annualized basis.



<PAGE>



                                                THE AAL MONEY MARKET FUND
<TABLE>
<CAPTION>
<S>                                                                  <C>        <C>        <C>       <C>        <C>
CLASS A SHARES                                                       Year       Year       Year      Year       Year
                                                                     Ended      Ended      Ended     Ended      Ended
                                                                     4/30/00    4/30/99    4/30/98   4/30/97    4/30/96
PER SHARE DATA [IN $ DOLLARS]

Net Asset Value - Beginning of Period                                $1.00      $1.00      $1.00     $1.00      $1.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss)                                         0.05       0.05       0.05      0.05       0.05
Net Realized and Unrealized Gain (Loss) on Investments               -          -          -         -          -
Total From Investment Operations                                     0.05       0.05       0.05      0.05       0.05
DISTRIBUTIONS FROM:
Net Investment Income                                                (0.05)     (0.05)     (0.05)    (0.05)     (0.05)
Net Realized Capital Gains                                           -          -          -         -          -
Total Distributions                                                  (0.05)     (0.05)     (0.05)    (0.05)     (0.05)
Net Asset Value - End of Period                                      $1.00      $1.00      $1.00     $1.00      $1.00
Total Return (1)                                                     4.99%      4.68%      5.12%     5.21%      4.94%
SUPPLEMENTAL DATA AND RATIOS
Net Assets at End of Period (in millions)                            $348.0     $288.1     $240.7    $189.6     $116.0
Ratio of Expenses to Average Net Assets (2)*                         0.66%      0.79%      0.68%     0.55%      0.84%
Ratio of Investment Income (Loss) to Average Net Assets (2)*         4.90%      4.54%      4.98%     4.91%      4.89%
Portfolio Turnover Rate                                              N/A        N/A        N/A       N/A        N/A
*  If the Fund had paid all of its expenses for Class A Shares,

the ratios would be as follows:

Ratio of Expenses to Average Net Assets                              1.02%      1.12%      1.04%     1.10%      1.28%
Ratio of Net Investment Income (Loss) to Average Net Assets          4.54%      4.22%      4.62%     4.36%      4.46%

</TABLE>

(1)  Total Return assumes reinvestment of all dividends and distributions but
     does not reflect any deduction for sales charge. The aggregate, not
     annualized total return is shown for periods less than one year.
(2)  For periods less than one year, both the ratio of net operating expenses to
     average net assets and the ratio of net investment income (loss) to average
     net assets are calculated on an annualized basis.



<PAGE>



                            THE AAL MONEY MARKET FUND
<TABLE>
<CAPTION>
<S>                                                                  <C>        <C>        <C>       <C>
CLASS B SHARES                                                       YEAR       YEAR       YEAR      PERIOD:
                                                                     ENDED      ENDED      ENDED     1/8/97 TO
                                                                     4/30/00    4/30/99    4/30/98   4/30/97
PER SHARE DATA [IN $ DOLLARS]

Net Asset Value - Beginning of Period                                $1.00      $1.00      $1.00     $1.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss)                                         0.04       0.04       0.04      0.01
Net Realized and Unrealized Gain (Loss) on Investments               -          -          -         -
Total From Investment Operations                                     0.04       0.04       0.04      0.01
DISTRIBUTIONS FROM:
Net Investment Income                                                (0.04)     (0.04)     (0.04)    (0.01)
Net Realized Capital Gains                                           -          -          -         -
Total Distributions                                                  (0.04)     (0.04)     (0.04)    (0.01)
Net Asset Value - End of Period                                      $1.00      $1.00      $1.00     $1.00
Total Return (1)                                                     3.94%      3.67%      4.26%     1.32%
SUPPLEMENTAL DATA AND RATIOS
Net Assets at End of Period (in millions)                            $2.4       $1.6       $1.2      $0.6
Ratio of Expenses to Average Net Assets (2)*                         1.65%      2.79%      1.65%     1.78%
Ratio of Investment Income (Loss) to Average Net Assets (2)*         3.95%      2.54%      4.02%     3.81%
Portfolio Turnover Rate                                              N/A        N/A        N/A       N/A
*  If the Fund had paid all of its expenses for Class B Shares,

the ratios would be as follows:

Ratio of Expenses to Average Net Assets                              2.00%      3.11%      2.01%     3.54%
Ratio of Net Investment Income (Loss) to Average Net Assets          3.59%      2.22%      3.67%     2.05%

</TABLE>

(1)  Total Return assumes reinvestment of all dividends and distributions but
     does not reflect any deduction for sales charge. The aggregate, not
     annualized total return is shown for periods less than one year.
(2)  For periods less than one year, both the ratio of net operating expenses to
     average net assets and the ratio of net investment income (loss) to average
     net assets are calculated on an annualized basis.



<PAGE>


ADDITIONAL INFORMATION


You will find additional information in the statement of additional information
and the annual and semi-annual reports to shareholders. The Funds' statement of
additional information and annual and semi-annual reports are available, without
charge, upon request. To request this or other information about the Funds,
please call (800) 553-6319 (TTY- (800) 684-3416).



Annual and Semi-Annual Reports
In the Funds' annual report, you will find a discussion of the market conditions
and investment strategies that significantly affected the Funds' performances
during their last fiscal year.


Statement of Additional Information
The Funds' statement of additional information provides more detailed
information about the Funds.

You also may review and copy information about the Funds (including the
statement of additional information) at the Securities and Exchange Commission's
Public Reference Room in Washington, D.C. For information on the operation of
the Public Reference Room call 1-800-SEC-0330. You also may obtain reports and
other information about the Funds on the Securities and Exchange Commission's
Internet site at http://www.sec.gov. You may obtain copies of this information,
upon payment of a duplication fee, by electronic request to e-mail address:
PUBLICINFO@SEC.GOV, or by writing the Public Reference Section of the Securities
and Exchange Commission at 405 5th Street, N. W., Washington, D. C. 20549-6009.



The Funds' Investment Company Act File No. is 811-5075


                                     [Logo]
                              THE AAL MUTUAL FUNDS
                              222 West College Ave.
                             Appleton, WI 54919-0007
                            Telephone: (800) 553-6319
                                TDD: 800-684-3416
                       www.aal.org e-mail: aalcmc@aal.org


<PAGE>

                              The AAL Mutual Funds
                             222 West College Avenue
                             Appleton, WI 54919-0007
                     Telephone (920) 734-7633, 800-553-6319
                                TDD 800-684-3416

                       STATEMENT OF ADDITIONAL INFORMATION
                              Class A and B Shares
                               Dated July 1, 2000



Equity and Balanced Funds
The AAL Technology Stock Fund
The AAL Aggressive Growth Fund
The AAL Small Cap Stock Fund
The AAL Mid Cap Stock Fund
The AAL International Fund
The AAL Capital Growth Fund
The AAL Equity Income Fund
The AAL Balanced Fund


Fixed-Income Funds
The AAL High Yield Bond Fund
The AAL Municipal Bond Fund
The AAL Bond Fund
The AAL Money Market Fund


Index Funds
The AAL Large Company Index Fund II
The AAL Mid Cap Index Fund II
The AAL Small Cap Index Fund II







This Statement of Additional Information is not a prospectus. It provides
additional information on the securities offered in the prospectus. You should
read this Statement of Additional Information in conjunction with The AAL Mutual
Funds' prospectuses, Class A and B shares: Equity Prospects, Fixed Income
Prospectus, and Index Fund Prospectus dated July 1, 2000, and any supplements
thereto. You may obtain a prospectus at no charge by writing or telephoning your
AAL Capital Management Corporation ("AAL CMC") Registered Representative or The
AAL Mutual Funds ("Funds" or "Trust") at the above address and telephone number.
The financial statements of each Fund and the independent accountant's report
thereof, are incorporated by reference into this Statement of Additional
Information from the Fund's Annual Report to Shareholders (see "Financial
Statements").





TABLE OF CONTENTS                                                           PAGE
FUNDS HISTORY
INVESTMENT STRATEGIES AND RISKS
MANAGEMENT OF THE FUNDS
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
INVESTMENT ADVISORY AND OTHER SERVICES
BROKERAGE ALLOCATION AND OTHER PRACTICES
CAPITAL STOCK AND OTHER SECURITIES
PURCHASE, REDEMPTION, AND PRICING OF SHARES
TAXATION OF THE FUNDS
UNDERWRITERS
CALCULATION OF PERFORMANCE DATA
FINANCIAL STATEMENTS





<PAGE>


FUNDS HISTORY


The AAL Mutual Funds (the "Trust" or "Funds") was organized as a Massachusetts
Business Trust on March 31, 1987, and is registered as an open-end diversified
management investment company under the Investment Company Act of 1940 ("1940
Act"). The Trust commenced operations on July 16, 1987, and currently consists
of twenty series (each a "Fund" and collectively, the "Funds"): The AAL
Technology Stock, Aggressive Growth, Small Cap, Mid Cap, International, Capital
Growth, Equity Income, Balanced, High Yield Bond, Municipal Bond, Bond, Money
Market, Large Company Index, Large Company Index II, Mid Cap Index, Mid Cap
Index II, Small Cap Index II, Bond Index and U.S. Government Zero Coupon Target
Funds Series 2001 and 2006 Funds.


On January 8, 1997, the Trust redesignated its existing shares as Class A shares
and began offering Class B shares of The AAL Small Cap Stock, Mid Cap Stock,
International, Capital Growth, Equity Income, Balanced, High Yield Bond,
Municipal Bond, Bond, and Money Market Funds. On July 1, 2000, the Trust began
offering shares of five new series, each with Class A and Class B Shares; The
AAL Technology Stock Fund, The AAL Aggressive Growth Fund, The AAL Large Company
Index Fund II, The AAL Mid Cap Index Fund II and The AAL Small Cap Index Fund
II. Class A shares are subject to a maximum 4.00% sales charge of the offering
price and a 0.25% annual 12b-1 and service fee. Class B shares are offered at
net asset value and a 1.00% annual 12b-1 and service fee. In addition, Class B
shares have a contingent deferred sales charge of 5.00% declining 1.00% each
year upon redemption during the first five years.

On December 29, 1997, the Trust began issuing a third class of Fund shares
(institutional) of The AAL Small Cap, Mid Cap, International, Capital Growth,
Equity Income, Balanced, High Yield Bond, Municipal Bond, Bond, and Money Market
Funds. On December 31, 1999, the Trust began offering Institutional shares of
three additional series; The AAL Large Company Index Fund, The AAL Mid Cap Index
Fund, and The AAL Bond Index Fund. On July 1, 2000, the Trust began offering
Institutional shares of two more series; The AAL Technology Stock Fund and The
AAL Aggressive Growth Fund. The Institutional shares are offered at net asset
value and have no annual 12b-1 fees or charges.

Each class of shares has identical rights and privileges except with respect to
voting matters affecting a single class of shares and the exchange privilege of
each class of shares.

ORGANIZATION AND DESCRIPTION OF SHARES
The AAL Mutual Funds or "Trust" is a diversified open-end management investment
company registered under the Investment Company Act of 1940. Each of the Funds
is a separate series of a Massachusetts Business Trust organized under a
Declaration of Trust dated March 13, 1987. The Declaration of Trust provides
that each shareholder shall be deemed to have agreed to be bound by its terms.
The Declaration of Trust may be amended by a vote of shareholders or the Board
of Trustees. The Trust may issue an unlimited number of shares in one or more
series as the Board of Trustees may authorize. Currently, the Board has
authorized twenty series. The Equity and Balanced, Fixed-Income, and Index
Prospectuses describe Class A and Class B shares for fifteen series of the
Trust. Institutional shares are described in a separate prospectus.

Each Fund's classes of shares represent interests in the assets of the Fund and
have identical dividend, liquidation and other rights. The separate share
classes have the same terms and conditions, except each Class A and Class B
share bears its separate distribution and shareholder servicing expenses. At the
Trustees' discretion, each class may pay a different share of other expenses,
not including advisory or custodial fees or other expenses related to the
management of the Trust's assets, if each class incurs the expenses in different
amounts, or if a class receives services of a different kind or to a different
degree than the other class. The Funds allocate all other expenses to each class
on the basis of the net asset value of that class in relation to the net asset
value of the particular Fund. Class A and B shares (and Institutional shares)
have identical voting rights except that each class has exclusive voting rights
on any matter submitted to shareholders relating solely to the class. In
addition, Class A and Class B shares (and Institutional shares) have separate
voting rights on any matter submitted to shareholders where the interests of one
class differ from the interests of the other class. Class A and Class B shares
have exclusive voting rights on matters involving the 12b-1 Distribution Plan as
applied to that class. Matters submitted to shareholder vote must be approved by
each Fund separately except:

(1)  when required otherwise by the 1940 Act; or
(2)  when the  Trustees  determine  that the  matter  does not affect all Funds:
     then, only the shareholders of the affected Funds may vote.

Shares are freely transferable, entitled to dividends declared by the Trustees,
and receive the assets of their respective Fund in the event of liquidation. The
Trust generally holds annual shareholder meetings only when required by law or
at the written request of shareholders owning at least 10% of the Trust's
outstanding shares. Shareholders may remove Trustees from office by votes cast
in person or by proxy at a shareholders meeting.


At the request of shareholders holding 10% or more of the outstanding shares of
the Fund, the Fund will hold a special meeting for the purpose of considering
the removal of a trustee(s) from office, and the Fund will cooperate with and
assist shareholders of record who notify the Fund that they wish to communicate
with other shareholders for the purpose of obtaining signatures to request such
a meeting, all pursuant to and in accordance with Section 16(c) of the 1940 Act,
as amended.


Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Declaration of Trust disclaims shareholder, Trustee and/or officer
liability for acts on behalf of the Trust or for Trust obligations that are
binding only on the assets and property of the Trust. The Funds include this
disclaimer in each agreement, obligation, or contract entered into or executed
by the Trust or the Board. The Declaration of Trust provides for indemnification
out of the Trust's assets for all losses and expenses of any shareholder held
personally liable for the obligations of the Trust. The risk of a shareholder
incurring financial loss on account of shareholder liability is remote because
it is limited to circumstances where the Trust itself is unable to meets its
obligations.


INVESTMENT STRATEGIES AND RISKS

Each of the Funds is an open-end management investment company. The following
information supplements our discussion of the Funds' investment objectives,
policies and strategies described in the prospectus. In pursuing the Funds'
objectives, we invest as described below and employ the investment techniques
described in the prospectus and elsewhere in this Statement of Additional
Information.

INVESTMENT OBJECTIVES
Except for The AAL Balanced and High Yield Bond Funds, each Fund's investment
objective is a fundamental policy. As such, only a vote of a "majority of
outstanding voting securities" can change a Fund's investment objective. A
majority means the approval of the lesser of: (1) 67% or more of the voting
securities at a meeting if the holders of more than 50% of the outstanding
voting securities of a Fund are present or represented by proxy; or (2) more
than 50% of the outstanding voting securities of a Fund.

INVESTMENT RESTRICTIONS
In addition to those policies noted in the prospectus, each Fund must follow
certain investment restrictions. We operate under the following investment
restrictions. For any Fund, we may not:

(1)  invest more than 5% of its net assets (or 5% of The AAL Small Cap Stock,
     International, Balanced or High Yield Bond Funds' total assets), taken at
     the value at the time of each investment, in the securities (including
     repurchase agreements) of any one issuer (for this purpose, the issuer(s)
     of a debt security being deemed to be only the entity or entities whose
     assets or revenues are subject to the principal and interest obligations of
     the security), except that up to 25% of a Fund's net assets (or 25% of The
     AAL Small Cap Stock, International, Balanced or High Yield Bond Funds'
     total assets) may be invested without regard to this limitation and
     provided that such restrictions shall not apply to obligations issued or
     guaranteed by the U.S. government or any agency or instrumentality thereof;
(2)  purchase securities on margin, except for use of short-term credit
     necessary for clearance of purchases and sales of portfolio securities, but
     we may make margin deposits in connection with transactions in options,
     futures and options on futures for a Fund;
(3)  make short sales of securities or maintain a short position, or write,
     purchase, or sell puts, calls, straddles, spreads, or combinations thereof,
     except for the described transactions in options, futures, options on
     futures and short sales against the box;
(4)  make loans to other persons, except that we reserve freedom of action,
     consistent with a Fund's other investment policies and restrictions and as
     described in the prospectus and this Statement of Additional Information,
     to: (a) invest in debt obligations, including those that are either
     publicly offered or of a type customarily purchased by institutional
     investors, even though the purchase of such debt obligations may be deemed
     the making of loans; (b) enter into repurchase agreements; and (c) lend
     portfolio securities, provided we may not loan securities for a Fund if, as
     a result, the aggregate value of all securities loaned would exceed 33% of
     its total assets (taken at market value at the time of such loan);
(5)  issue senior securities or borrow, except that we may borrow for a Fund in
     amounts not in excess of 10% of its net assets, taken at current value, and
     then only from banks as a temporary measure for extraordinary or emergency
     purposes (we will not borrow money for the Funds to increase income, but
     only to meet redemption requests that otherwise might require untimely
     dispositions of portfolio securities; interest paid on any such borrowing
     will reduce a Fund's net income);
(6)  mortgage, pledge, hypothecate or in any manner transfer, as security for
     indebtedness, any securities owned or held by a Fund except as may be
     necessary in connection with and subject to the limits in restriction (5);
(7)  underwrite any issue of securities, except to the extent that we purchase
     securities directly from an issuer thereof, in accord with a Fund's
     investment objectives and policies which may be deemed to be underwriting
     or to the extent that in connection with the disposition of portfolio
     securities we may be deemed an underwriter for the Fund under federal
     securities laws;
(8)  purchase or sell real estate, or real estate limited partnership interests
     provided that we may invest in securities for a Fund secured by real estate
     or interests therein or issued by companies that invest in real estate or
     interests therein;

(9)  purchase or sell commodities or commodity contracts, except that we may
     purchase or sell futures and options thereon for hedging purposes and to
     enhance returns for a Fund as described in this Statement of Additional
     Information;
(10) invest 25% or more of a Fund's net assets (or 25% or more of The AAL
     Technology Stock, Aggressive Growth, Small Cap Stock, International,
     Balanced or High Yield Bond Funds' total assets), taken at current value at
     the time of each investment, in securities of non-governmental issuers
     whose principal business activities are in the same industry, except the
     U.S. government or any agency or instrumentality thereof;

(11) invest in oil, gas or mineral related programs or leases except as may be
     included in the definition of public utilities, although we may invest in
     securities of enterprises engaged in oil, gas or mineral exploration for a
     Fund;
(12) invest in repurchase agreements maturing in more than seven days or in
     other securities with legal or contractual restrictions on resale if, as a
     result thereof, more than 10% of a Fund's net assets (taken at current
     value at the time of such investment) would be invested in such securities;
(13) except for The AAL Technology Stock, Aggressive Growth and High Yield Bond
     Fund, invest in any security if, as a result, a Fund would have more than
     5% of its net assets invested in securities of companies which, together
     with any predecessors, have been in continuous operation for less than
     three years;

(14) purchase securities of other investment companies, if the purchase would
     cause more than 10% of the value of a Fund's net assets (or 10% of the
     value of The AAL Technology Stock, Aggressive Growth, Small Cap Stock,
     International, Balanced or High Yield Bond Funds' total assets), to be
     invested in investment company securities provided that: (a) no investment
     will be made in the securities of any one investment company if immediately
     after such investment more than 3% of the outstanding voting securities of
     such company would be owned by a Fund or more than 5% of the value of a
     Fund's net assets (or 5% of the value of The AAL Small Cap Stock,
     International, Balanced or High Yield Bond Funds' total assets) would be
     invested in such company; and (b) no restrictions shall apply to a purchase
     of investment company securities in connection with a merger, consolidation
     acquisition or reorganization; or

(15) purchase more than 10% of the outstanding voting securities of an issuer or
     invest for the purpose of exercising control or management.

Each of the above restrictions (1) through (15), as well as each Fund's
investment objective, except for The AAL Balanced and High Yield Bond Funds, is
a fundamental policy.

INVESTMENT TECHNIQUES
We may use the following techniques described in the prospectus and Statement of
Additional Information in pursuing the Funds' investment objectives.

Temporary Defensive Positions
Except for The AAL Large Company Index Fund II, The AAL Mid Cap Index Fund II
and The AAL Small Cap Index Fund II, we have a temporary defensive position
policy that allows us to invest up to 100% of a Fund's total assets in cash and
short-term money market obligations, including tax-exempt money market funds and
investment grade fixed-income securities when significant adverse market,
economic, political or other circumstances require immediate action to avoid
losses. Primarily, we may purchase the following types of securities for
temporary defensive purposes:

o    securities  issued or guaranteed by the U.S.  government or its agencies or
     instrumentalities;
o    commercial  paper  rated  at the time of  purchase  in the  highest  rating
     category by NRSRO's; and
o    bank obligations,  including repurchase  agreements,  of banks having total
     assets in excess of $1 billion.

For temporary defensive purposes we may invest up to 100% of The AAL
International Fund's total assets in U.S. securities or in securities primarily
traded in one or more foreign countries, or in debt securities to a greater
extent than 20%. The AAL Large Company Index Fund II, The AAL Mid Cap Index Fund
II and The AAL Small Cap Index Fund II do not engage in defensive strategies.


Temporary defensive positions are generally inconsistent with the Funds'
investment objectives and may temporarily cause a Fund not to achieve its
objectives.


Lending Portfolio Securities
Subject to the fundamental investment restriction (4) listed under "Investment
Restrictions," we may lend a Fund's portfolio securities to broker-dealers and
financial institutions, such as banks and trust companies. As the adviser, we
will monitor the creditworthiness of any firm with which a Fund engages in
securities lending transactions. We would continuously secure the loan by
collateral in cash or cash equivalents maintained (on a current basis) in an
amount equal to or greater than the market value of the securities loaned. We
would continue to receive the equivalent of the interest or dividends paid by
the issuer to the Fund on the securities loaned. We would also receive any
additional returns, such as a fixed fee or a percentage of the collateral. We
would have the right to call the loan and obtain the securities loaned at any
time on notice of not more than five business days. Generally, we would not have
the right to vote the Fund's loaned securities during the existence of the loan.
However, we would call the loan to permit voting if, in our judgment, a material
event requiring a shareholder vote would otherwise occur before the repayment
date.

In the event of the borrower's default or bankruptcy, we could experience both
delays in liquidating the loan collateral or recovering the loaned securities
and any losses sustained by the Fund. For example, during the period when we
would seek to enforce the Fund's rights to the loaned securities, the
collateral's value could decline. We might receive subnormal levels of income or
no income from the loaned securities. We also would incur the expense of
enforcing the Fund's rights to the loaned securities.

Repurchase Agreements and Borrowing
To earn income on available cash or for temporary defensive purposes, we may
invest in repurchase agreements for the Funds. We must hold an amount of cash or
government securities at least equal to the market value of the securities held
pursuant to the agreement. In the event of a bankruptcy or other default of a
seller of a repurchase agreement, we may experience delays and expenses in
liquidating the securities, declines in the securities' value and loss of
interest for a Fund. We maintain procedures for evaluating and monitoring the
creditworthiness of firms with which we enter into repurchase agreements for the
Funds. We may not invest more than 10% of a Fund's net assets in repurchase
agreements maturing in more than seven days.

We may borrow money, but only from banks and only for temporary or emergency
purposes. We may not borrow more than 10% of a Fund's net assets and we must
repay any amount we borrow for a Fund before we can buy additional securities.

When-Issued and Delayed Delivery Securities
We may purchase securities on a when-issued or delayed-delivery basis for a
Fund, as described in the prospectus. We only purchase on a when-issued or
delayed delivery basis with the intention of actually acquiring the securities,
including when-issued securities with long-term issue dates of a year or more.
However, we may sell such securities before the settlement date if we deem it
advisable for investment reasons.

At the time of purchase we identify liquid assets having a value at least as
great as the purchase price. We have the custodian hold these securities
identified throughout the period of the obligation. Purchasing on a when-issued
or delayed basis as we have described may increase the Fund's net asset value
fluctuation or volatility.

Illiquid and Restricted Securities
Except for The AAL Money Market Fund, we may hold up to 15% of a Fund's net
assets in illiquid securities. We may hold up to 10% of The AAL Money Market
Fund's net assets in restricted and other illiquid securities. Illiquid
securities are securities we believe cannot be sold within seven days in the
normal course of business at approximately the amount at which we have valued or
priced the securities for a Fund, including securities we acquired in private
placements that have restrictions on their resale ("restricted securities"). We
deem time deposits and repurchase agreements maturing in more than seven days
illiquid. Because an active market may not exist for illiquid securities, we may
experience delays and additional cost when trying to sell illiquid securities.
For more information on restricted and other illiquid securities regarding The
AAL Money Market Fund, please refer to the Statement of Additional Information,
"Privately Issued Securities: The AAL Money Market Fund." The Board of Trustees
has established procedures for determining the liquidity of Fund securities and
has delegated the day-to-day liquidity determinations to the Adviser.

Subject to the limitations for illiquid investments stated above, we may
purchase liquid restricted securities eligible for resale under Rule 144A under
the Securities Act of 1933 (the "33 Act"), without regard to the 15% or 10%
limitation. Rule 144A permits certain qualified institutional buyers, such as
the Funds, to trade in privately placed securities not registered under the 33
Act. Institutional markets for restricted securities have developed as a result
of Rule 144A, providing both readily ascertainable market values for 144A
securities and the ability to liquidate these investments to satisfy redemption
orders. However, an insufficient number of qualified institutional buyers
interested in purchasing certain Rule 144A securities held by a Fund could
adversely affect their marketability, causing us to sell the securities at
unfavorable prices.

Investment Grade and Medium Grade Bond Investments

We may purchase investment grade bonds for The AAL Aggressive Growth,
International, Equity Income, Balanced, High Yield Bond, Municipal Bond and Bond
Funds. A debt or other fixed-income security is considered investment grade if
it is rated investment grade by a NRSRO, such as BBB or better by Duff and
Phelps Credit Rating Co. ("D&P") and S&P or Baa or better by Moody's. Securities
rated in the fourth highest category, such as BBB by D&P or S&P or Baa by
Moody's, are considered medium grade bonds and have more sensitivity to economic
changes and speculative characteristics.


Rated Securities

If a NRSRO reduces or eliminates its rating of a Fund security, we do not have
to sell the security. However, in consultation with the Funds' Board of
Trustees, we consider such fact in determining whether we should continue to
hold the security for the Fund. For The AAL Money Market Fund, we sell
downgraded commercial paper to the extent required to comply with Rule 2a-7
under the 1940 Act.


At times a NRSRO changes its ratings for debt securities as a result of changes
at the organization or in its rating system. When this happens, we attempt to
use comparable NRSRO ratings in reassessing investments for a Fund in accord
with its investment policies.

Bond Ratings

Moody's Rating Scale Definitions

Aaa: Bonds that are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

AA: Bonds that are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as Aaa securities or fluctuations of protective elements may
be of greater amplitude or there may be other elements present that make
long-term risk appear somewhat larger than the Aaa securities.

A: Bonds that are rated A possess many favorable investment attributes and are
to be considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present that
suggest susceptibility to impairment some time in the future.

Baa: Bonds that are rated Baa are considered medium-grade obligations (i.e. they
are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba: Bonds that are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B: Bonds that are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over a long period of time may be small.

Caa: Bonds that are rated Caa have poor standing.  Such issues may be in default
or present elements of danger with respect to principal or interest.

Ca: Bonds that are rated Ca represent obligations that are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.

C: Bonds that are rate C are the lowest-rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.

NOTE: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa to B. The modifier 1 indicates that the company ranks in
the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the company ranks in the
lower end of its generic rating category.

S&P Rating Scale Definitions

AAA:  Debt rated  "AAA" has the  highest  rating  assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA: Debt rated "AA" has very strong capacity to pay interest and repay principal
and differs from the higher-rated issues only in small degrees.

A: Debt rated "A" has strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB: Debt rated "BBB" has an adequate capacity to pay interest and repay
principal. Whereas, it normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for debt in this category
than in higher-rated categories.

BB, B, CC, C , C: Debt rated "BB", "B", "CCC", "CC" and "C" is regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. "BB"
indicates the lowest degree of speculation and "C" the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.

BB: Debt rated "BB" has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions that could lead to inadequate
capacity to meet timely interest and principal payments. The "BBB" rating
category is also used for debt subordinated to senior debt that is assigned an
actual or implied "BBB-" rating.

B: Debt rated "B" has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial or economic conditions likely will impair capacity or willingness to
pay interest and repay principal. The "B" rating is also used for debt
subordinated to senior debt that is assigned an actual or implied "BB" or "BB-"
rating.

CCC: Debt rated "CCC" has a currently identifiable vulnerability to default and
is dependent upon favorable business, financial and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The "CCC" rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
"B" or "B-" rating.

CC: The rating "CC" is  typically  applied to debt  subordinated  to senior debt
that is assigned an actual or implied "CCC" rating.

C: The rating "C" is typically applied to debt subordinated to senior debt that
is assigned an actual or implied "CCC-" debt rating. The "C" rating may be used
to cover a situation in which a bankruptcy petition has been filed, but debt
service payments are continued.

CI: The rating "CI" is reserved for income bonds on which no interest is paid.

D: Debt rated "D" is in payment default. The "D" rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes such payments will
be made during such grace period. The "D" rating also will be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.

NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate
the particular type of obligation as a matter of policy.

Plus (+) or Minus (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
category.

Commercial Paper Ratings

Moody's Commercial Paper Ratings

Moody's commercial paper ratings are opinions of the ability to repay punctually
promissory obligations. Moody's employs the following three category
designations, all judged to be investment grade, to indicate the relative
repayment capacity of rated issuers:

PRIME 1: Highest quality;

PRIME 2: Higher quality; and

PRIME 3: High quality.

S&P Commercial Paper Ratings

An S&P commercial paper rating is a current assessment of the likelihood of
timely payment. Ratings are graded into four categories, ranging from "A" for
the highest quality obligations to "D" for the lowest.

A: Issues assigned the highest rating category, A, are regarded as having the
greatest capacity for timely payment. Issues in this category are delineated
with the numbers "1", "2" and "3" to indicate the relative degree of safety.

A-1: The designation A-1 indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. A "+" designation is applied to
those issues rated "A-1" that possess extremely strong safety characteristics.

A-2: Capacity for timely payment on issues with the designation "A-2" is strong.
However,  the relative degree of safety is not as high as for issues  designated
A-1.

A-3: Issues carrying the designation A-3 have a satisfactory capacity for timely
payment. They are, however, somewhat more vulnerable to the adverse effect of
changes in circumstances than obligations carrying the higher designations.

Other Ratings

Moody's Municipal Note Ratings

MIG 1: This designation category denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.

MIG 2: This designation category denotes high quality. Margins of protection are
ample although not so large as in the preceding group.

MIG 3: This designation category denotes favorable quality. All security
elements are accounted for but there is lacking the undeniable strength of the
preceding grades. Liquidity and cash flow protection may be narrow and market
access for refinancing is likely to be less well established.

Moody's Ratings of the Demand Features On Variable Rate Demand Securities
Moody's may assign a separate rating to the demand feature of a variable rate
demand security. Such a rating may include:

VMIG 1: This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.

VMIG 2: This designation denotes high quality. Margins of protection are ample
although not so large as in the preceding group.

VMIG 3: This designation denotes favorable quality. All security elements are
accounted for but there is lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be narrow and market access for
refinancing is likely to be less well established.

S&P Note Ratings

SP-1:  Notes rated SP-1 have very strong or strong capacity to pay principal and
interest. Those issues determined to possess overwhelming safety characteristics
are designated as SP-1+.

SP-2: Notes rated SP-2 have satisfactory capacity to pay principal and interest.
Notes due in three years or less normally receive a note rating. Notes maturing
beyond three years normally receive a bond rating, although the following
criteria are used in making that assessment: (1) the amortization schedule (the
larger the final maturity relative to other maturities, the more likely the
issue will be rated as a note); (2) and the source of payment (the more
dependent the issue is on the market for its refinancing, the more likely it
will be rated as a note).

S&P Ratings of the Demand Features on Variable Rate Demand Securities
S&P assigns dual ratings to all long-term debt issues that have as part of their
provisions a demand feature. The first rating addresses the likelihood of
repayment of principal and interest as due, and the second rating addresses only
the demand feature. The long-term debt rating symbols are used for bonds to
denote the long-term maturity and the commercial paper rating symbols are
usually used to denote the put (demand) options (i.e., AAA/A-1+). Normally
demand notes receive note rating symbols combined with commercial paper symbols
(i.e., SP-1+/A-1+).

Convertible Bonds
Except for The AAL Money Market Funds, we may invest in convertible bonds,
subject to any restrictions on the quality of bonds in which a Fund may invest.
We also may retain any stocks received upon conversion that do not fall within
the Fund's investment parameters to: (1) permit orderly disposition; (2)
establish a long-term holding basis for Federal income tax purposes; or (3) seek
capital growth.

Convertible bonds are often rated below investment grade or not rated because
they fall below debt obligations and just above equities in order of preference
or priority on the issuer's balance sheet. Hence, any issuer with investment
grade senior debt may issue convertible securities with ratings less than
investment grade debt.

Mortgage-Backed Securities

For The AAL Aggressive Growth, Balanced, High Yield Bond and Bond Funds, we may
invest in mortgage-backed securities with amortizing payments consisting of both
interest and principal and prepayment privileges (the ability to prepay the
principal or a portion thereof without penalty). Mortgaged-backed securities
represent interest in pools of mortgage loans made by lenders such as savings
and loan institutions, mortgage bankers, commercial banks and others. Various
government, government-related and private organizations combine these mortgages
for sale to investors (i.e., the Government National Mortgage Association
("GNMA")) guarantees and issues mortgage-backed securities). Mortgage-backed
securities generally provide for a "pass through" of monthly payments made by
individual borrowers on their residential mortgage loans, net of any fees paid
to the issuer or guarantor of the securities. The yield on these securities
applies only to the unpaid principal balance. We reinvest the periodic payments
of principal and interest and prepayments, if any, in securities at the
prevailing market interest rates. The prevailing rates may be higher or lower
than the rate on the original investment. During periods of declining interest
rates, prepayment of mortgages underlying mortgage-backed securities tend to
accelerate. Accordingly, any prepayments on mortgage-backed securities that we
hold for a Fund reduce our ability to maintain positions in high-yielding,
mortgage-backed securities and reinvest the principal at comparable yields for
the Fund. If we buy any mortgage-backed securities for a Fund at a premium, the
Fund receives prepayments, if any, at par or stated value, which lowers the
return on the Fund.


High Yield Bond Market

We may invest in high risk, high yield bonds for The AAL Aggressive Growth,
International, Equity Income and High Yield Bond Funds. We normally invest at
least 65% of The AAL High Yield Bond Fund's total assets in such securities. As
stated in the prospectus, investing in high yield bonds involves market risk.
The market for high yield bonds has existed for many years and has weathered
downturns. In particular during the late 1980s and early 1990s, the high yield
market experienced a significant downturn. Many corporations had dramatically
increased their use of high yield bonds to fund highly leveraged acquisitions
and restructuring. As a result, from 1989 to 1991, the percentage of
lower-quality securities that defaulted rose significantly above previous
default levels. After this period, default rates decreased.


We may invest in lower-rated asset and mortgage-backed securities for The AAL
High Yield Bond Fund. These securities include interests in pools of lower-rated
bonds, consumer loans or mortgages, or complex instruments such as
collateralized mortgage obligations ("CMOs") and stripped mortgage-backed
securities (the separate income or principal components). Changes in interest
rates, the market's perception of the issuers and the creditworthiness of the
parties involved may significantly affect the value of these bonds. Some of
these securities may have structures that makes their reaction to interest rates
and other factors difficult to predict, causing high volatility in their market
value. These bonds also carry prepayment risk. During periods of declining
interest rates, prepayment of the loans and mortgages underlying these
securities tend to accelerate. Investors tend to refinance their mortgages (pay
the old mortgage off with a new mortgage at a lower rate) to lower payments.
Accordingly, any prepayment on the existing securities we hold for the Fund
reduces our ability to maintain positions in high-yielding, mortgage-backed
securities and reinvest the principal at comparable yields.

Certain high yield bonds carry particular market risks. Zero coupon, deferred
interest and payment-in-kind ("PIK") bonds issued at deep discounts may
experience greater volatility in market value. Asset and mortgage-backed
securities, including CMOs, in addition to greater volatility, may carry
prepayment risks.

Collateralized Mortgage Obligations and Multi-Class Pass-Through Securities --

For The AAL Aggressive Growth, Balanced, High Yield Bond and Bond Funds, we may
invest in mortgage-backed securities, including CMOs and multi-class
pass-through securities. CMOs and multi-class pass-through securities are debt
instruments issued by special purpose entities secured by pools of mortgage
loans or other mortgage-backed securities. Multi-class pass-through securities
are interests in a trust composed of mortgage loans or other mortgage-backed
securities. Payments of principal and interest on the underlying collateral
provide the money to pay debt service on the CMO or make scheduled distributions
on the multi-class pass-through security. Multi-class pass-through securities,
CMOs, and classes thereof (including those discussed below) are examples of the
types of financial instruments commonly referred to as "derivatives."


A CMO contains a series of bonds or certificates issued in multiple classes.
Each CMO class (referred to as "tranche") has a specified coupon rate and stated
maturity or final distribution date. When people start prepaying the principal
on the collateral underlying a CMO (such as mortgages underlying a CMO), some
classes may retire substantially earlier than the stated maturity or final
distribution dates. The issuer structures a CMO to pay or accrue interest on all
classes on a monthly, quarterly or semi-annual basis. The issuer may allocate
the principal and interest on the underlying mortgages among the classes in many
ways. In a common structure, the issuer applies the principal payments on the
underlying mortgages to the classes according to scheduled cash flow priorities.

There are many classes of CMOs. Interest only classes ("IOs") entitle the class
shareholders to receive distributions consisting solely or primarily of all or a
portion of the interest in an underlying pool of mortgages or mortgage-backed
securities ("mortgage assets"). Principal only classes ("POs") entitle the class
shareholders to receive distributions consisting solely or primarily of all or a
portion of the underlying pool of mortgage assets. In addition, there are
"inverse floaters," which have coupon rates that move in the reverse direction
to an applicable index, and accrual (or "Z") bonds (described below).

At any one time, we may not invest more than 7.5% of a Fund's net assets in IOs,
POs, inverse floaters or accrual bonds individually or more than 15% in all such
obligations combined.

Inverse floating CMO classes are typically more volatile than fixed or
adjustable rate CMO classes. We would only invest in inverse floating CMOs to
protect against a reduction in the income earned on investments due to a
predicted decline in interest rates. In the event interest rates increased, we
would lose money on investments in inverse floating CMO classes. An interest
rate increase would cause the coupon rate on an inverse CMO class to decrease.

Cash flow and yields on IO and PO classes are extremely sensitive to principal
payment rates (including prepayments) on the underlying mortgage loans or
mortgage-backed securities. For example, rapid or slow principal payment rates
may adversely affect the yield to maturity of IO or PO bonds, respectively. If
the underlying mortgage assets experience greater than anticipated prepayments
of principal, the holder of an IO bond may incur substantial losses in value due
to the lost interest stream even if the IO bond has a AAA rating. If the
underlying mortgage assets experience slower than anticipated prepayments of
principal, the PO bond will incur substantial losses in value due to lost
prepayments. Rapid or slow principal payment rates may cause IO and PO bond
holders to incur substantially more losses in market value than if they had
invested in traditional mortgage-backed securities. On the other hand, if
interest rates rise, the value of an IO might increase and partially offset
other bond value declines in a Fund's portfolio. If interest rates fall, the
value of a PO might increase offsetting lower reinvestment rates in a Fund's
portfolio.

An accrual or Z bondholder does not receive cash payments until one or more of
the other classes have received their full payments on the mortgage loans
underlying the CMO. During the period when the Z bondholders do not receive cash
payments, interest accrues on the Z class at a stated rate. The accrued interest
is added to the amount of principal due to the Z class. After the other classes
have received their payments in full, the Z class begins receiving cash payments
until it receives its full amount of principal (including the accrued interest
added to the principal amount) and interest at the stated rate. Generally, the
date when cash payments begin on the Z class depends on the prepayment rate of
the mortgage loans underlying the CMO. A faster prepayment rate results in an
earlier commencement of cash payments on the Z class. Like a zero coupon bond,
during its accrual period the Z class has the advantage of eliminating the risk
of reinvesting interest payments at lower rates during a period of declining
interest rates. Like a zero coupon bond, the market value of a Z class bond
fluctuates more widely with changes in interest rates than would the market
value of a bond from a class that pays interest currently. Changing interest
rates influence prepayment rates. As noted above, such changes in prepayment
rates affect the date at which cash payments begin on a Z tranche, which in turn
influences its market value.

Structured Securities

We may invest in structured notes and/or preferred stocks for The AAL Aggressive
Growth, International and High Yield Bond Funds. The issuer of a structured
security links the security's coupon, dividend or redemption amount at maturity
to some sort of financial indicator. Such financial indicators can include
currencies, interest rates, commodities and indices. The coupon, dividend and/or
redemption amount at maturity may increase or decrease depending on the value of
the linked or underlying instrument.


Investments in structured securities involve certain risks. In addition to the
normal credit and interest rate risks inherent with a debt security, the
redemption amount may increase or decrease as a result of price changes in the
underlying instrument. Depending on how the issuer links the coupon and/or
dividend to the underlying instrument, the amount of the dividend may be reduced
to zero. Any further declines in the value of the underlying instrument may then
reduce the redemption amount at maturity. Structured securities may have more
volatility than the price of the underlying instrument.

Variable Rate Demand Notes

We may purchase variable rate master demand notes for The AAL Technology Stock,
Aggressive Growth, Small Cap Stock, Mid Cap Stock, International, Capital
Growth, Equity Income, Balanced, High Yield Bond, Bond and Money Market Funds.
Variable rate master demand notes are unsecured instruments that permit the
indebtedness thereunder to vary and provide for periodic adjustments in the
interest rate. The extent to which we can purchase these securities for The AAL
Money Market Fund is subject to Rule 2a-7 under the Investment Company Act of
1940. These notes normally do not trade and there is no secondary market for the
notes. However, we may demand payment of the principal for a Fund at any time.
We limit our purchases of variable rate master demand notes for The AAL Money
Market Fund to those: (1) rated in one of the two highest rating categories by a
NRSRO; or (2) that have been issued by an issuer that has received a rating from
the requisite NRSRO in the top two categories with respect to a class of
short-term debt obligations that is comparable in priority and security with the
instrument. If an issuer of a variable rate master demand note defaulted on its
payment obligation, we might not be able to dispose of the note for a Fund due
to the absence of a secondary market. We might suffer a loss to the extent of
the default for the Fund. We only invest in variable rate master demand notes
when we deem them to involve minimal credit risk.


Standard & Poor's Depositary Receipts ("SPDRs")

The Funds may invest in Standard & Poor's Depositary Receipts, commonly referred
to as SPDRs, subject to the investment restrictions concerning investment in
other mutual funds. A SPDR is a unit investment trust. In accordance with its
Declaration of Trust, a SPDR is a pooled investment designed to closely track
the price and yield performance of a specific index or group of securities; such
as the S&P 500 Index, the S&P MidCap 400 Index, the Nasdaq 100 or the S&P
SmallCap 600 Index. Each SPDR trust portfolio holds corresponding shares in all
the securities of a particular index. Each SPDR share represents an undivided
ownership interest in that SPDR's trust portfolio. SPDR shares trade on a
secondary market, the American Stock Exchange (AMEX). Any asset-based fee
charged by the sponsor of the SPDR is reimbursed by the Adviser so there is no
additional cost to the Funds.


Portfolio Turnover Rates

We expect The AAL Technology Stock, Aggressive Growth, Small Cap Stock, Mid Cap
Stock, High Yield Bond, Municipal Bond and Bond Funds to have portfolio turnover
greater than 100%, and the other Funds to have a portfolio turnover of less than
100%. Portfolio turnover rates over 100% are considered high. We do not
calculate a portfolio turnover rate for The AAL Money Market Fund because of the
short maturities of its investments. Due to the high volume of buying and
selling activity in a portfolio with turnover in excess of 100%, we may pay more
commissions for these Funds. We also may realize more taxable gains and losses
than in portfolios with less turnover. Increased expenses and tax consequences
of these trading practices may lower returns for shareholders. We may trade for
a Fund at a portfolio rate significantly exceeding 100% (i.e., 600% or more for
The AAL Bond Fund and 300% or more for The AAL Balanced Fund), when we believe
the benefits of short-term investments outweigh any increase in transactions
costs or capital gains.

For the fiscal year ended April 30, 2000, The AAL Small Cap Stock and Mid Cap
Stock Funds had portfolio turnover rates of 147.01% and 142.26%, respectively.
The rates reflected our growth investment styles for the Funds. The Funds also
purchased stocks in initial public offerings and sold them shortly thereafter.
Stock prices in initial public offerings tend to appreciate or decline
significantly after the offering and then level off in price. The rates also
reflect the volatility of small and mid cap stock prices.

The portfolio turnover rates for The AAL Municipal Bond and Bond Funds were
210.32% and 163.31%, respectively. The rate for The AAL Bond Fund reflects our
active selection of the individual bonds that we believe provide the best income
within the Fund's investment parameters at any one time. The AAL Bond Fund may
have a portfolio turnover rate for the next fiscal year in excess of 300%, and
as high as 600% or more. Our turnover rate for The AAL Municipal Bond Fund also
reflects our active selection of the individual bonds that we believe provide
the best income and chance for capital appreciation and, thus, preservation, at
any one time. We try to exploit pricing inefficiencies we believe exist in the
municipal securities market.

The portfolio turnover rate for The AAL High Yield Bond Fund was 53.59%. In
seeking to achieve its investment objectives, we buy or sell portfolio
securities whenever the portfolio manager believes it appropriate. Generally,
the length of time we have owned the security in the Fund does not influence the
portfolio manager's decision on when we will trade the security. From time to
time, we will buy securities intending to seek short-term trading profits. As a
result, The AAL High Yield Bond Fund's portfolio turnover rate may be higher
than that of other mutual funds in this category. The turnover rate is not a
limiting factor when considering a change in the Fund's portfolio.


Options and Futures

The Fund intend to comply with guidelines for eligibility for exclusion from the
definition of the term "commodity pool operator" adopted by the Commodity
Futures Trading Commission ("CFTC") and the National Futures Association, which
regulate futures markets. The Funds will use futures contracts and related
options primarily for bona fide hedging purposes within the meaning of CFTC
regulations. To the extent that the Funds hold positions in futures contracts
and related options that do not fall within the definition of bona fide hedging
transactions, the aggregate initial margin and premiums required to establish
such positions will not exceed 5% of the fair market value of a Fund's net
assets, after taking into account unrealized profits and unrealized losses on
any contracts it has entered into.

The following sections pertain to options and futures. Except for The AAL Money
Market Fund, we may engage in options, futures and options on futures
transactions for the Funds. We may engage in options and futures transactions
for bona fide hedging and to a limited extent to enhance return. We do not use
options, futures and other derivatives for speculative purposes. When entering
into these transactions, we follow the SEC and the CFTC requirements and set
aside liquid assets in a separate account to secure a Fund's potential
obligations under such contracts. We cannot sell securities held in a segregated
account while the futures or options strategy is outstanding, unless we replace
such assets with other suitable assets. As a result, there is a possibility that
segregation of a large percentage of a Fund's assets could impede portfolio
management or our ability to meet redemption requests or other obligations for a
Fund.


We may try to enhance returns or hedge against a decline in the value of a
Fund's securities by writing (selling) and purchasing options and futures
contracts. For example, during a neutral or declining market, we may gain
additional income by writing options and receiving premiums for a Fund. When we
write (sell) covered call options for a Fund, we forgo the opportunity to profit
from increases in the market value of the underlying securities above the sum of
the options' premium and the exercise price. On the other hand, we reduce the
amount of any decline in the value of the underlying securities to the extent of
the premium we receive from writing the call for a Fund. During a rising market,
we may gain incremental income by purchasing call options and futures contracts
for a Fund.

We also may use options and futures to hedge against an anticipated price
increase in a security we plan to buy for a Fund. If new types of options and
futures contracts become available, we may use them for the Funds. Prior to
their use, however, we must obtain a determination from the Funds' Board of
Trustees that their use would be consistent with the Funds' investment
objectives and policies.

Options on Securities and Indexes
An option contract on a security (or index) gives the holder, in return for a
premium, the right to buy from (call) or sell to (put) the option writer of the
underlying security (or cash value of underlying index) at a specified exercise
price at any time during the option term.

Upon exercise of a call option, the writer (seller) has the obligation to
deliver the underlying security to the holder; provided the holder pays the
exercise price. Upon exercise of a put option, the writer has the obligation to
pay the holder the exercise price upon delivery of the underlying security.

Upon the exercise of an index option, the writer must pay the difference between
the cash value of the index and the exercise price multiplied by the specified
multiplier for the index option. (An index is a statistical composite that
measures changes in the economy or financial market, usually reflecting
specified facets of a particular securities market, a specific group of
financial instruments, securities or economic indicators.).

Options and futures exist on debt, equity, indexes and other securities or
instruments. They may take the form of standardized contracts traded on national
securities exchanges, boards of trade or similar entities. They also may trade
in the over-the-counter market. Some debt instruments, such as bonds, trade with
cash put options, which generally allow the holder to sell the security back to
the issuer at a specified price for a specified amount of time.

When we write options, we may only write "covered" calls or puts for a Fund

A call option for a Fund is covered if we hold the security underlying the call
for the Fund. Also a call option for a Fund is covered if we have an absolute
and immediate right to acquire the security for the Fund without additional cash
consideration upon conversion or exchange of other securities held in the
portfolio. If additional cash consideration is required, we hold cash or cash
equivalents in such an amount in a segregated account with the Fund's custodian.
An index call option is covered if we hold cash or cash equivalents with the
Fund's custodian equal to the contract value. A written call option is covered
if we hold a call option on the same security or index under two conditions. The
first condition is where the exercise price of the call purchased is equal to or
less than the exercise price of the call written. The second conditions is where
the exercise price of the call purchased is greater than the exercise price of
the call written; provided that we maintain the difference with the Fund's
custodian in cash or cash equivalents in a segregated account.

A put option on a security or an index is covered if we maintain cash or cash
equivalents equal to the exercise price in a segregated account with the Fund's
custodian. A put option is covered if we hold a put on the same security or
index as the put written under two conditions. The first condition is where the
exercise price of the put is equal to or greater than the exercise price of the
put written. The second condition is where the exercise price of the put is less
than the exercise price of the put written; provided we maintain cash or cash
equivalents with the Fund's custodian in a segregated account.

Prior to the expiration or exercise of an option, we may close the option out by
entering into an offsetting transaction. We would affect an offsetting
transaction for a Fund by purchasing or selling an option of the same series
(type, exchange, underlying security or index, exercise price and expiration).
Due to market factors, we may not be able to affect a closing purchase or sale
at the time we would like to for a Fund.

We realize a capital gain from a closing purchase transaction if the premium for
purchasing the closing option is less than the premium received from writing the
option. If the premium for purchasing the closing option is more, we realize a
capital loss for the Fund. If the premium received from a closing sale
transaction is more than the premium paid to purchase the option, we realize a
capital gain for the Fund. If the premium is less, we realize a capital loss for
the Fund.

If an option we write for a Fund expires unexercised, we realize a capital gain
equal to the premium received. If an option we purchased for a Fund expires
unexercised, we realize a capital loss equal to the premium we paid for the
option.

The principal factors affecting the market value of a put or call option include
supply and demand, interest rates, the current market price of the underlying
security or index in relation to the exercise price of the option, the
volatility of the underlying security or index and the time remaining until the
expiration date.

We record a premium paid for an option purchased by us for a Fund as an asset.
We record the premium received for an option written by us for a Fund as a
deferred liability. We mark-to-market the value of an option purchased or
written on a daily basis at the closing price on the exchange on which it
traded. If the option was not traded on an exchange or a closing price was not
available, we would value the option at the mean between the last bid and asked
prices.

Risks Associated with Options on Securities and Indexes
Options transactions have risks. A decision as to whether, when and how we use
options involves the exercise of skill and judgment. For example, significant
differences could exist between the market for the underlying security (or
index) and the market for the overlying options. These differences, such as
differences in the way the underlying securities are trading and the way the
options on the securities are trading, could result in an imperfect correlation
between the markets. As a result, we might not be able to achieve our objectives
in an options transaction for the Fund. Market behavior and unexpected events
may hinder well-conceived options transactions we have entered into for a Fund.

We cannot assure you that a liquid market will exist when we seek to close out
an option position for a Fund. If we could not close out an option we had
purchased for a Fund, we would have to exercise the option to realize any profit
or let the option expire worthless. If we could not close out a covered call
option that we had written for a Fund, we could not sell the underlying security
unless the option had expired not exercised.

When we write a covered call option for a Fund, we forgo the opportunity to
profit from increases in the covering security's market value above the sum of
the premium and the call's exercise price.

If the exchange (or Board of Trade) suspends trading in an option we purchased
for a Fund, we cannot enter into a closing transaction during the suspension. If
the exchange imposes restrictions on the option's exercise, we might not be able
to exercise an option we have purchased for a Fund. Except to the extent that a
call option on an index written by a Fund is covered by an option on the same
index purchased by a Fund, movements in the index may result in a loss to a
Fund. Such losses may be mitigated by changes in the value of a Fund's portfolio
securities during the period the option was outstanding.

Futures Contracts and Options on Futures Contracts
In addition to foreign currency futures contracts, which we discuss below, we
may enter into interest rate and index futures contracts. An interest rate or
index futures contract provides for the future sale by one party and purchase by
another party of a specified quantity of a financial instrument or the cash
value of an index at a specified price and time. A futures contract on an index
is an agreement by which two parties agree to take or make delivery of an amount
of cash equal to the difference between the closing value of the index on the
contract's last trading day and the original price entered into for the
contract. Although the index's value may reflect the value of certain underlying
securities, the party responsible for delivery delivers cash (not the underlying
securities).

A public market exists in futures contracts covering a number of indexes as well
as other financial instruments. Such instruments include: U.S. Treasury bonds;
U.S. Treasury notes; GNMA certificates; three-month U.S. Treasury bills; 90-day
commercial paper; bank certificates of deposit; and Eurodollar certificates of
deposit. Boards of trade and other issuers may develop and trade other futures
contracts. As with options, if new types of futures contracts become available,
we may use them for the Funds. Prior to their use, however, we must obtain a
determination from the Funds' Board of Trustees that their use would be
consistent with the Fund's investment objectives and policies.

We may purchase and write call and put futures options for a Fund. Our ability
to write call and put futures, however, depends on whether the Commodity Futures
Trading Commission grants certain regulatory relief (such as an exemption from
being considered a commodities pool operator).

Options on futures possess many of the same characteristics as options on
securities and indexes. A futures option gives the holder the right, in return
for the premium paid, to assume a long position (call) or short position (put)
in a futures contract at a specified exercise price at any time during the
period of the option. Upon exercise of a call option, the holder acquires a long
position in the futures contract and the writer is assigned the opposite short
position. In the case of a put option, the opposite is true.


As long as regulatory authorities require, we limit our use of futures and
options on futures to hedging transactions and to a limited extent to enhance
returns. We might use futures contracts to hedge against anticipated interest
rate changes we believe might adversely affect either the value of a Fund's
securities or the price of securities we intend to purchase for a Fund. Our
hedging strategy may include sales of futures contracts to offset the effect of
expected interest rate increases. It also may include purchases of futures
contracts to offset the effect of expected interest rate declines. Although we
could use other techniques to reduce a Fund's exposure to interest rate
fluctuations, we may be able to hedge a Fund's exposure more effectively and
perhaps at a lower cost by using futures and options on futures.


The success of any hedging technique depends on our ability to correctly predict
changes in the level and direction of interest rates and other factors. Should
our predictions prove incorrect, the Fund's return might be lower than it would
have been had we not tried the hedging strategy. However, in the absence of the
ability to hedge, we might have to take portfolio actions in anticipation of the
same market movements with similar investment results at potentially greater
transaction costs.

We only enter into standardized futures or options on futures contracts that
trade on U.S. exchanges, boards of trade, or similar entities, or are quoted on
an automated quotation system.

When we purchase or sell a futures contract for a Fund, we deposit with the
custodian (or broker, if legally permitted) a specified amount of cash or U.S.
government securities ("initial margin"). The exchange or board of trade on
which the futures contract trades sets the margin requirement. The exchange may
modify the margin requirement during the term of a futures contract. The initial
margin is in the nature of a performance bond or good faith deposit on the
futures contract. The custodian or broker returns the margin to a Fund upon
termination of the contract, assuming we have fulfilled all contractual
obligations for the Fund. We expect to earn interest income on the initial
margin deposit for a Fund. We value a futures contract held for a Fund on a
daily basis at the official settlement price of the exchange on which it trades.
Each day we pay or receive cash for the Fund, called "variation margin," equal
to the daily change in value of the futures contract. This process is known as
"marking to market." Variation margin does not represent a borrowing or loan by
us for a Fund, but is instead a settlement between a Fund and the broker of the
amount one would owe the other if the futures contract expired. In computing
daily net asset value, we mark-to-market a Fund's open futures positions.

We are required to deposit and maintain margin on any put and call options on
futures contracts that we have written for a Fund. Such margin deposits vary
depending on the nature of the underlying futures contract (and the related
initial margin requirements), the option's current market and other futures
positions we hold for the Fund.

Some futures contracts call for making or taking delivery of the underlying
securities. Generally we would close out these obligations prior to delivery by
making offsetting purchases or sales of matching futures contracts (same
exchange, underlying security or index, and delivery month). If an offsetting
purchase price is less than the original sale price, we realize a capital gain
for the Fund. If the offsetting purchase price is more, we realize a capital
loss for the Fund. Conversely, if an offsetting sale price is more than the
original purchase price, we realize a capital gain for a Fund. If the offsetting
sale price is less, we realize a capital loss for a Fund. We must include the
transaction costs in calculating a gain or loss on the offsetting transactions.

Risks Associated with Futures

There are several risks associated with using futures contracts and options on
futures. Our purchase or sale of a futures contract may result in losses in
excess of the amount we invested in the futures contract for a Fund. We cannot
guarantee how price movements in the market for the hedging vehicle and market
for the underlying portfolio securities being hedged will correlate. Significant
differences exist between the securities and futures markets that could result
in an imperfect correlation. These differences could cause a given hedging
strategy we have entered into for a Fund to not achieve its objectives. The
degree of imperfect correlation depends on circumstances such as the variations
in the speculative market demand for the futures and/or futures options
contracts used to hedge the underlying portfolio securities. A decision as to
whether, when and how we hedge involves the exercise of skill and judgment. Our
hedges may be unsuccessful to some degree because of unexpected market behavior
or interest rate trends.


Futures exchanges may limit the amount of price fluctuation in a contract for
trading in a single day. An exchange establishes a daily limit on the amount a
contract's price may vary either up or down from the previous day's settlement
price. Once the futures contract trades above or below the daily limit, the
exchange stops trading beyond the limit. The daily limit governs price movements
during a particular trading day but does not limit potential losses for the
contract holders. The daily limit may prevent us from being able to liquidate an
unfavorable position for a Fund. For example, futures prices have occasionally
moved to the daily limit for several consecutive trading days with little or no
trading, thereby preventing prompt liquidation of positions and subjecting some
holders of futures contracts to substantial losses.

We cannot ensure a liquid market will exist at a time when we seek to close out
a futures or futures options position for a Fund. If a liquid market did not
exist, we would have to continue meeting margin requirements until we could
close the position. We also cannot ensure that an active secondary market will
develop or continue to exist for the futures and futures options discussed
above.

Limitations on Options and Futures
We do not enter into an open futures contract position or purchase an option:
the initial margin deposit plus the premiums paid less the amount by which any
such position is "in the money" exceeds 5% of a Fund's net assets. A call option
is "in the money" if the value of the futures contract that is the subject of
the option exceeds the exercise price. A put option is "in the money" if the
exercise price exceeds the value of the futures contract that is the subject of
the option.

When purchasing a futures contract or writing a put on a futures contract, we
must maintain with the Fund's custodian (or broker, if legally permitted) cash
or cash equivalents (including any margin) equal to the market value of such
contract. When writing a call option on a futures contract, we maintain with the
Fund's custodian cash or cash equivalents (including any margin) equal to the
amount such option is in the money until the option expires or we have entered
into an offsetting transaction closing out the option for the Fund.

We may not maintain open short positions in futures contracts, call options
written on futures contracts or call options written on indexes for a Fund, if,
in the aggregate, the market value of all such open positions exceeds the
current value of the Fund's portfolio. In valuing the portfolio, we have to take
into account unrealized gains and losses on the open positions and adjust for
the historical relative volatility of the relationship between the portfolio and
the positions. To the extent we have written call options on specific securities
in a Fund's portfolio, we deduct the value of those securities from the
portfolio's current market value.

Taxation of Options and Futures
If we exercise a call option for a Fund, we add the premium paid for the call
option to the cost of the security purchased. If we exercise a put option, we
deduct the premium paid for the put option from the proceeds of the security
sold. For index options and futures, which are settled in cash, the difference
between the cash received at exercise and the premium paid is a capital gain or
loss.

Our entry into closing purchase transactions for a Fund results in a capital
gain or loss. If an option was "in the money" when we wrote it and we held the
security covering the option for more than one year before writing it for a
Fund, any loss realized in a closing purchase transaction would be long-term for
federal tax purposes. The holding period of the securities covering an "in the
money" option does not include the time period the option was outstanding.

When we hold a futures contract for a Fund until delivery, we will realize a
capital gain or loss on the futures contract. The capital gain or loss is equal
to the difference between the price at the time we entered into the futures
contract for the Fund and the settlement price on the earlier of the delivery
notice date or expiration date. If we deliver securities for a Fund under a
futures contract, we realize a capital gain or loss for the Fund on those
securities.

For Federal income tax purposes, we generally recognize as income a Fund's
yearly net unrealized gains and losses on its options, futures and options on
futures positions ("year-end mark to market"). Generally, any gain or loss
recognized with respect to such positions (either by year-end mark to market or
by actual closing of the positions) is considered to be 60% long term and 40%
short term, without regard to the holding periods of the contracts. However, in
the case of positions classified as part of a "mixed straddle," we may defer the
recognition of losses on certain positions (including options, futures and
options on futures positions, the related securities and certain successor
positions thereto) to a later taxable year for a Fund. Selling futures contracts
or writing call options (or call options on futures) or buying put options (or
put options on futures) for the purposes of hedging against an anticipated
change in the value of a Fund's securities may affect the securities' holding
period.

We distribute any recognized net capital gains for a Fund, including any
recognized net capital gains (including year-end mark-to-market gains) on
options and futures transactions for federal income tax purposes. We combine and
distribute a Fund's capital gains on its options and futures transactions and
its capital gains on other investments. We also advise shareholders on the
nature of these distributions for a Fund.

Federal Tax Treatment of Forward Foreign Exchange Contracts
We may enter into certain forward foreign exchange contracts for a Fund that the
Internal Revenue Service will treat as Section 1256 contracts or straddles under
the Internal Revenue Code.

We must consider these Section 1256 contracts as having been closed at the end
of a Fund's fiscal year and we must recognize any gains or losses on these
contracts for tax purposes at that time. The IRS characterizes such gains or
losses from the normal closing or settlement of such transactions as ordinary
gain or loss. We are required to distribute any net gains on such transactions
to the Fund's shareholders even if we have not actually closed the transaction
and received cash to pay for the distribution.

We may consider forward foreign exchange contracts that offset a foreign dollar
denominated bond or currency position as straddles for tax purposes. Considering
these contracts as straddles allows us to defer a loss on any position in a
straddle to the extent of unrealized gain in an offsetting position.

For a Fund to continue qualifying for federal income tax treatment as a
regulated investment company, it must derive at least 90% of its gross income
from qualifying income (i.e., dividends, interest, income derived from loans of
securities and gains from the sale of securities or currencies). Pending tax
regulations could limit the extent that net gains realized from options, futures
or foreign forward exchange contracts on currencies are qualifying income for
purposes of 90% requirement.

FOREIGN SECURITIES
We also may invest assets of the Fund in foreign securities trading domestically
through depository receipts or on a U.S. national securities exchange or Nasdaq
National Market for The AAL Small Cap Stock, Mid Cap Stock and Capital Growth
Funds. We do not intend to invest more than 10% of their net assets in such
foreign securities. We may invest up to 20% of The AAL Bond Fund's net assets in
debt securities of foreign issuers payable in U.S. dollars. We may invest in
foreign securities for The AAL Balanced Fund to the extent The AAL Capital
Growth and Bond Funds allow investments in foreign securities for the common
stock and fixed-income sectors of the Fund, respectively. Foreign securities may
present a greater degree of risk (including risks relating to tax provisions or
expropriation of assets) than do securities of domestic issuers.

Foreign Securities - The AAL Technology Stock, Aggressive Growth, International,
Equity Income and High Yield Bond

Funds We normally invest at least 65% of The
AAL International Fund's total assets in foreign securities primarily trading in
at least 3 different countries, not including the U.S.


We may invest up to 25% of The AAL Aggressive Growth Fund's net assets in
foreign securities. We may also invest up to 15% of The AAL Technology Stock and
Equity Income Funds' net assets in foreign securities. We also may invest in
foreign securities trading domestically through depository receipts and
securities of foreign issuers traded on a U.S. national securities exchange or
Nasdaq National Market without regard to the 15% limitation. For purposes of
diversification for a Fund, we consider depository receipts as investments in
the underlying stocks.


We may invest up to 15% of The AAL High Yield Bond Fund's net assets in foreign
bonds. At this time, we intend to limit our foreign bond purchases for the Fund
to those trading in the U.S.

Foreign investing involves risks in addition to the risks inherent in U.S.
investing. Foreign countries tend to disseminate less public information about
their issuers. Many foreign countries do not subject their companies to uniform
accounting, auditing and financial reporting standards. The value of foreign
investments may rise or fall because of changes in currency exchange rates. As a
result, we may incur costs in converting securities denominated in foreign
currencies into U.S. dollars for a Fund. Dividends and interest on foreign
securities may be subject to foreign withholding taxes, which would reduce a
Fund's income without providing a tax credit to shareholders. When necessary, we
may have more difficulty obtaining and enforcing judgments in foreign countries.
We also would incur more expense. Even though we mainly intend to invest in
securities trading in stable and developed countries, we still face the
possibility of expropriation, confiscatory taxation, nationalization, currency
blockage or political or social instability that could affect investments in
such countries.

American Depository Receipts
We may invest in American Depository Receipts ("ADRs") for The AAL Technology
Stock, Aggressive Growth, International and Equity Income Funds without limit.
ADR facilities may be either "sponsored" or "un-sponsored." While sponsored and
un-sponsored ADR facilities are similar, distinctions exist between the rights
and duties of ADR holders and market practices. Sponsored facilities have the
backing or participation of the underlying foreign issuers. Un-sponsored
facilities do not have the participation by or consent of the issuer of the
deposited shares. Un-sponsored facilities usually request a letter of
non-objection from the issuer.

Holders of un-sponsored ADRs generally bear all the costs of such facility. The
costs of the facility can include deposit and withdrawal fees, currency
conversion and other service fees. The depository of an un-sponsored facility
may not have a duty to distribute shareholder communications from the issuer or
to pass through voting rights. Issuers of un-sponsored ADRs do not have an
obligation to disclose material information about the foreign issuers in the
U.S. As a result, the value of the un-sponsored ADR may not correlate with the
value of the underlying security trading abroad or any material information
about the security or the issuer disseminated abroad.

Sponsored facilities enter into an agreement with the issuer that sets out
rights and duties of the issuer, the depository and the ADR holder. The
sponsored agreement also allocates fees among the parties. Most sponsored
agreements provide that the depository will distribute shareholder notices,
voting instructions and other communications. The AAL Technology Stock,
Aggressive Growth, International and Equity Income Funds may invest in sponsored
and un-sponsored ADRs.

Other Foreign Investments

For The AAL Aggressive Growth and International Fund, we also may hold foreign
securities in the form of American Depository Shares ("ADSs"), Global Depository
Receipts ("GDRs") and European Depository Receipts ("EDRs"), or other securities
convertible into foreign securities. These receipts may not be denominated in
the same currency as the underlying securities. Generally, American banks or
trust companies issue ADRs and ADSs, which evidence ownership of underlying
foreign securities. GDRs represent global offerings where an issuer issues two
securities simultaneously in two markets, usually publicly in a non-U.S. market
and privately in the U.S. market. EDRs (sometimes called Continental Depository
Receipts ("CDRs")) are similar to ADRs, but usually issued in Europe. Typically
issued by foreign banks or trust companies, EDRs and CDRs evidence ownership of
foreign securities. Generally, ADRs and ADSs in registered form trade in the
U.S. securities markets, GDRs in the U.S. and European markets, and EDRs and
CDRs (in bearer form) in European markets. For diversification purposes, we
consider investments in ADRs, ADSs, GDRs, EDRs and CDRs as investments in the
underlying stocks for the Fund.


FOREIGN CURRENCY TRANSACTIONS

Foreign Currency Spot Transactions and Forward Contracts

To manage the currency risk accompanying investments in foreign securities and
to facilitate the purchase and sale of foreign securities, we may engage in
foreign currency transactions on a spot (cash) basis for all Funds, unless there
are investment restrictions to the contrary. We invest at the spot rate
prevailing in the foreign currency exchange market. We also may enter into
contracts to purchase or sell foreign currencies at a future date ("forward
foreign currency" contracts or "forward" contracts), subject to the segregation
of assets as required under the 1940 Act.


A forward contract involves an obligation to purchase or sell a specific foreign
currency at a future date at a set price. Forward contracts principally trade in
the inter-bank market and are conducted directly between currency traders
(usually large commercial banks) and their customers. A forward contract
generally has no deposit requirement and no commissions are charged at any stage
for trades.


Whenever we intend to purchase or sell a security denominated or exposed to a
foreign currency for a Fund, we may want to "lock in" the U.S. dollar price of
the security. We can protect a Fund by entering into a forward contract for the
purchase or sale of a fixed amount of U.S. dollars equal to the amount of
foreign currency involved in the underlying security transaction. With a forward
contract, we can protect the Fund against a possible loss resulting from an
adverse change in the relationship between the U.S. dollar and the subject
foreign currency between the date the security is purchased or sold and the date
on which the payment is made or received.

We may use forward contracts for a Fund when we believe that a particular
foreign currency may suffer a substantial decline against the U.S. dollar. In
this situation, we would enter into a forward contract to sell a fixed amount of
the foreign currency approximating the value of some or all of the Fund's
portfolio securities denominated or exposed to such foreign currency. We,
however, cannot precisely match the forward contract amounts and the value of
the securities involved. The securities' values change as a consequence of
market movements between the date we entered into the forward contract for the
underlying currency and the date it matures.


Due to the fact that movement in the short-term currency market is extremely
difficult to predict, successful execution of a short-term hedging strategy is
highly uncertain. Therefore, we do not enter into forward contracts or maintain
a net exposure to such contracts where completion would obligate us to deliver
foreign currency in excess of the value of the Fund's securities or other assets
denominated in that currency. Under normal circumstances, we consider the
long-term prospects for a particular currency. We incorporate the prospects into
our overall long-term diversification strategies. However, we believe that it is
important to have the flexibility to enter into such forward contracts when we
determine that it is in the Fund's best interest.

At the maturity of a forward contract for a Fund, we may either: (1) sell the
portfolio securities and make delivery of the foreign currency; or (2) retain
the securities and terminate our contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract obligating us to purchase, on
the same maturity date, the same amount of foreign currency.

If we retain the portfolio securities and engage in an offsetting transaction
for the Fund, we will incur a gain or a loss to the extent that there has been
movement in forward contract prices. If we enter into an offsetting transaction,
we may subsequently enter into a forward contract to sell the foreign currency.
Should forward prices decline during the period when we entered into a forward
contract to sell a foreign currency and the date we entered into an offsetting
contract to buy a foreign currency, we will realize a gain to the extent the
price of the currency we agreed to sell exceeds the price of the currency we
agreed to buy. Should forward prices increase, we will suffer a loss to the
extent that the price of the currency we agreed to buy exceeds the price of the
currency we agreed to sell for a Fund. We may not be able to hedge against a
currency devaluation at a price above the level where the market itself has
anticipated the currency's devaluation.

A foreign currency hedge transactions does not protect against or eliminate
fluctuations in the prices of particular portfolio securities. For example, a
foreign currency hedge transaction does not prevent a security's price decline
due to an issuer's deteriorating credit situation. We also cannot forecast with
precision the market value of securities at the expiration of a forward
contract. Accordingly, we may have to purchase additional foreign currency on
the spot market (and bear the expense of such purchase) if: (1) the market value
of the Fund's securities are less than the amount of the foreign currency we are
obligated to deliver for the Fund; and (2) we made a decision to sell the
foreign securities and make delivery of the foreign currency upon expiration of
the contract for the Fund. Conversely, we may have to sell some of a Fund's
foreign currency received upon the sale of a portfolio security if the market
value of the Fund's securities exceed the amount of foreign currency we are
obligated to deliver for the Fund. We limit our dealings in forward foreign
currency exchange contracts for a Fund to the transactions described above.

Although we value the Funds' assets daily in terms of U.S. dollars, we do not
intend to convert their holdings of foreign currencies into U.S. dollars on a
daily basis. From time to time, however, we will convert a Fund's foreign
currency holdings into U.S. dollars. There are costs associated with converting
foreign currencies into U.S. dollars and you should be award of these costs.
Although foreign exchange dealers do not charge a fee for conversion, they
realize a profit based on the difference (the "spread") between the prices at
which they are buying and selling various currencies. Thus, a dealer may offer
to sell a foreign currency to us for a Fund at one rate, while offering a lesser
rate of exchange should we desire to resell that currency to the dealer for the
Fund.

Options and Futures Relating to Foreign Currencies
We may purchase and sell currency futures and purchase and write currency
options to increase or decrease a Fund's exposure to different foreign
currencies. We also may purchase and write currency options in conjunction with
the currency futures or forward contracts of the Fund's other series. The uses
and risks of currency options and futures are similar to options and futures on
securities or indices, as discussed above.

Currency futures contracts are similar to forward foreign currency contracts,
except that they are traded on exchanges (and have margin requirements) and are
standardized as to contract size and delivery date. Most currency futures
contracts call for payment or delivery in U.S. dollars.

The underlying instrument of a currency option generally is either a foreign
currency or a currency futures contract. The purchaser of a currency call option
obtains the right to purchase the underlying currency. The purchaser of a
currency put option obtains the right to sell the underlying currency.


Currency futures and options values correlate with exchange rates. However, the
futures and options values do not reflect other factors affecting a Fund's
investment value. A currency hedge, for example, should protect a Japanese
Yen-denominated security from a decline in the Yen. The currency hedge, however,
will not protect the particular Fund's Yen denominated investments against a
price decline in the Yen denominated security resulting from deterioration in
the issuers' creditworthiness. Because the value of a Fund's investments
denominated in or exposed to a foreign currency change in response to many
factors other than exchange rates, we have difficulty matching the exact value
of any hedge in currency options and futures to the value of our foreign
investments for a Fund over time.


FOREIGN INVESTING EXPENSES
Investing in foreign securities costs more than investing in U.S. securities due
generally to higher transaction costs, such as the commissions paid per share.
As a result, Funds that invest in foreign securities tend to have higher
expenses, particularly funds that invest primarily in foreign securities (i.e.,
The AAL International Fund). In addition to higher commissions, they generally
have higher advisory and custodial fees. However, you may find investing in a
fund that purchases foreign securities a more efficient way to invest in foreign
securities than investing in individual foreign securities. Higher expenses
attributable to a Fund that invests in foreign securities does not mean that the
Fund has higher expenses than other funds with similar investment policies and
percentages of assets invested in foreign securities.

PRIVATELY ISSUED SECURITIES:  THE AAL MONEY MARKET FUND

We may invest in securities issued by major corporations without registration
under the Securities Act of 1933 for The AAL Aggressive Growth and Money Market
Fund in reliance on certain exemptions, including the "private placement"
exemption afforded by Section 4(2) of that Act. Section 4(2) paper is restricted
as to disposition under the federal securities laws in that any resale must be
made in an exempt transaction. This paper normally is resold to other
institutional investors through or with the assistance of investment dealers who
make a market in it, thus providing liquidity. In our opinion (as the Adviser),
Section 4(2) paper is no less liquid or salable than commercial paper issued
without legal restrictions on disposition. The secondary market for Section 4(2)
paper could become illiquid if institutional participants lost interest in these
investments. However, should we deem that section 4(2) paper issue is illiquid,
we would purchase such security for a Fund only in accordance with our
limitations on illiquid securities.


INVESTMENTS IN OTHER INVESTMENT COMPANIES

Due to the administration and distribution expenses of managing a mutual fund,
our investments in other investment companies (mutual funds, which are limited
by fundamental investment restriction 14 above) may cause the Funds to pay fees
and expenses which are duplicative of current Fund expenses.


OTHER INVESTMENT RISKS
Each of the previously described investment techniques contains an element of
risk. You should also be aware of the following risks associated with an
investment in the Funds.

Interest Rate Risk
For The AAL Balanced, High Yield Bond, Municipal Bond, Bond and Money Market
Funds and, to some extent, The AAL Equity Income Fund, you can expect that
interest rate changes will significantly impact upon the value of your Fund
investments. Interest rates are influenced by supply and demand as well as
economic monetary policies. In general, a decline in prevailing interest rate
levels generally will increase the value of the securities, particularly the
bonds, held in a Fund's portfolio and vice versa. As a result, interest rate
fluctuations will affect a Fund's net asset values but not the income received
from its existing portfolio. However, changes in the prevailing interest rate
level will affect the yield on subsequently purchased securities. Because yields
on the securities available for purchase by the Funds will vary over time, we
cannot assure a specific yield on a Fund's shares.

Longer-term bonds are more sensitive to interest rate changes than shorter-term
bonds, reflecting the greater risk of holding these bonds for a longer period of
time. Longer-term bond prices increase more dramatically when interest rates
fall and decrease more dramatically when interest rates rise. Prices of
short-term debt, such as money market instruments, are less price sensitive to
interest rate changes because of their short duration. Securities that pay high
dividends, like bonds, are more sensitive to interest rate levels than other
equity securities that pay low dividends.

Investing in a Bond Versus Investing in a Mutual Fund

Investing in a mutual fund that owns bonds is not the same as buying an
individual bond. Both bonds and funds owning bonds offer regular income. While
individual bonds can offer a fixed amount of regular income until maturity, a
mutual fund portfolio may include a constantly changing pool of bonds with
differing interest rates, maturities and prices. Both share prices and dividends
may fluctuate in a mutual fund owning bonds.

Initial Public Offerings
From time to time the Funds may invest in an initial public offering ("IPO") of
a security. Investments in an IPO are made consistent with the individual Fund's
investment objective and investment strategies. On occasion the Funds will
participate in an oversubscribed IPO ("Hot IPO"). Because the IPO is
oversubscribed, this presents the Funds with the opportunity to "flip" or trade
the security at higher prices. Proceeds from the Hot IPO are distributed among
the Funds consistent with the Funds' "Initial Public Offerings Policies and
Procedures." Investments in IPO's and Hot IPO's may have a magnified performance
impact on a Fund with a small asset base. A Fund may not experience similar
performance as its assets grow.


MANAGEMENT OF THE FUNDS

BOARD OF TRUSTEES AND EXECUTIVE OFFICERS
The Trustees and Executive Officers of the Funds and their principal occupations
during the past five years are described below. Unless otherwise specified, the
business address of all Trustees and Officers is 222 West College Avenue,
Appleton, WI 54919-0007:

<TABLE>
<CAPTION>
<S>                                   <C>                            <C>
Name, Address and Age                 Position with the Funds        Principal Occupation

F. Gregory Campbell                   Trustee                        President, Carthage College
d/o/b  2/16/39
2001 Alford Park Drive
Kenosha, WI 53140

Woodrow E. Eno*                       Trustee                        Senior Vice-President
d/o/b  4/5/46                         Vice-President                 Secretary and General Counsel
                                                                     Aid Association for Lutherans

Richard L. Gady                       Trustee                        Vice-President of Public Affairs
d/o/b  2/28/43                                                       and Chief Economist, ConAgra,
One ConAgra Drive                                                    Inc. (agribusiness)
Omaha, NE 68102-5001

John O. Gilbert*                      Trustee                        President and Chief Executive Officer,
d/o/b  8/30/42                                                       Aid Association for Lutherans

John H. Pender                        Trustee                        Retired; formerly Senior Vice-President
d/o/b  5/25/30                                                       And Chief Investment Officer,
1056 S. Manzanita Ave.                                               Aid Association for Lutherans
Palm Springs, CA 92264

Edward W. Smeds                       Trustee                        Retired; President, Customer Service
d/o/b  2/15/36                                                       and Operations, Kraft Foods
10 Regent Wood Road                                                  (food and agriculture)
Northfield, IL 60093

Lawrence M. Woods                     Trustee                        Retired; formerly Executive
d/o/b  4/14/32                                                       Vice-President and Director Mobil Oil
524 Sunset Drive                                                     Corporation (oil producer)
Worland, WY 82401

Robert G. Same                        President                      Vice-President, Chief Compliance
d/o/b  7/28/45                                                       Officer and Deputy General Counsel,
                                                                     Aid Association for Lutherans;
                                                                     President, AAL Capital Management
                                                                     Corporation

James H. Abitz                        Vice-President                 Vice-President, Investments, Aid
d/o/b  5/27/45                                                       Association for Lutherans

Charles D. Gariboldi                  Treasurer                      Assistant Vice-President, Fund
d/o/b  12/31/59                                                      Accounting, Aid Association for
                                                                     Lutherans

Joseph R. Mauel                       Assistant Treasurer            Director, Fund Accounting
d/o/b  11/26/59

Todd J. Kelly                         Assistant Treasurer            Manager of Mutual Fund Accounting, Aid
d/o/b  8/15/69                                                       Association for Lutherans

Frederick D. Kelsven                  Secretary                      Assistant General Counsel, Aid
d/o/b  2/9/47                                                        Association for Lutherans;
                                                                     Vice-President and Chief Compliance
                                                                     Officer, Aetna Retirement Services
                                                                     (financial services); Director of
                                                                     Compliance, Nationwide Financial
                                                                     Services (financial services)

Steven Fredricks                      Assistant Secretary            Assistant General Counsel, Securities
d/o/b  7/25/70                                                       and Investment Law, Aid Association
                                                                     for Lutherans; Attorney, Azaria
                                                                     Financial Services, LLP (financial
                                                                     services)
</TABLE>


* Denotes Trustees who are "interested persons" of the Funds, as defined in the
Investment Company Act of 1940.

COMPENSATION TABLE

The Funds do not make payments to any of the officers for services to the Trust.
The Funds, however, pay the independent Trustees (those who are not officers or
employees of AAL CMC or Aid Association for Lutherans) an annual fee of $27,500.
The Funds assess these fees ratably to each series of the AAL Mutual Funds. The
Funds reimburse the Trustees for any expenses they may incur by reason of
attending such meetings or in connection with services they may perform for The
AAL Mutual Funds. For the fiscal year ended April 30, 2000, the Funds paid an
aggregate of $66,065 in Trustees' fees and expenses. In addition, each Trustee
of the Funds or Trust who is not affiliated with the AAL or the Adviser is
eligible to participate in a deferred compensation plan with respect to these
fees. Participants in the plan may designate their deferred Trustee's fees as if
invested in any one of the Funds. The value of each Trustee's deferred
compensation account will increase or decrease as if it were invested in shares
of the selected Funds. The Funds maintain their proportionate share of AAL's
liability for the deferred fees. Fees paid to the Trustees for the fiscal year
ended April 30, 2000 are set forth below.


<TABLE>
<CAPTION>
<S>                             <C>                                     <C>
Name, Postion                   Aggregate Compensation from Funds       Total Compensation from Funds and Fund
                                                                        Complex Paid to Trustees (1)

F. Gregory Campbell             $25,625                                 $31,875
Woodrow E. Eno                  $0                                      $0
Richard L. Gady(2)              $12,500                                 $18,750
John O. Gilbert                 $0                                      $0
John H. Pender                  $0                                      $0
Edward W. Smeds(2)              $12,500                                 $18,750
Lawrence M. Woods(2)            $12,500                                 $18,750

</TABLE>

(1)  Includes compensation received for serving as a Director of the AAL
     Variable Product Series Fund, Inc., a family of mutual funds that has the
     same Board as The AAL Mutual Funds and is also managed by AAL CMC.

(2)  Payment reflects Trustee  compensation  that was deferred and invested into
     the Funds for the year ended April 30, 2000.



CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As of April 30, 2000, the Trust's officers and Trustees owned less than 1% of
the shares of any Funds. As of April 30, 2000, no account holders held in excess
of 5% of any Fund's shares:


INVESTMENT ADVISORY AND OTHER SERVICES

INVESTMENT ADVISER

Please refer to our description of the adviser, advisory agreement and fees
under "Management, Organization, and Capital Structure" in the prospectuses. We
have incorporated the prospectuses herein by reference.

SUB-ADVISERS
The following supplements our discussion of the sub-advisers as contained in the
prospectuses.

The AAL International Fund - Oechsle International Advisors, LLC
Oechsle International Advisors, LLC ("Oechsle LLC") is the sub-adviser to the
International Stock Portfolio. Oechsle LLC is a Delaware limited liability
company and a registered investment adviser. It has served as sub-adviser to the
Fund since November 1, 1998. Oechsle LLC makes the day-to-day investment
decisions for the Fund under the Board of Trustees and AAL CMC's direction and
control. Oechsle LLC determines which securities to purchase and sell, arranges
the purchases and sales and gives other help in formulating and implementing the
investment program for the Fund. Oechsle, LLC has principal offices at One
International Place, Boston, Massachusetts 02110.

The AAL Aggressive Growth Fund - Janus Capital Corporation
Janus Capital Corporation ("Janus") makes the day-to-day investment decisions
for The AAL Aggressive Growth Fund under the Board of Trustees and AAL CMC's
direction and control. Janus determines which securities to purchase and sell,
arranges the purchases and sales and gives other help in formulating and
implementing the investment program for the Fund's portfolio. Janus has its
principal offices at 100 Fillmore Street, Denver, Colorado 80206-4928.

Kansas City Southern Industries, Inc. ("KCSI"), indirectly through its wholly
owned subsidiary, Stilwell Financial Inc., owns approximately 81% of the
outstanding voting stock of Janus. KCSI is a publicly traded holding company
whose primary subsidiaries are engaged in transportation, information processing
and financial services. Thomas H. Bailey, President and Chairman of the Board of
Janus owns approximately 12% of Janus voting stock, and, by agreement with KCSI,
selects at least a majority of the Janus Board, subject to the approval of
Stilwell Financial, which cannot be unreasonably withheld.

KCSI has announced its intention to separate its transportation and financial
services businesses. KCSI anticipates the separation to be completed in July,
2000.

The AAL High Yield Bond Fund - Pacific Investment Management Company
Pacific Investment Management Company ("PIMCO") is a Delaware general
partnership and is a wholly-owned subsidiary of PIMCO Advisors, L.P. ("PIMCO
Advisors"). PIMCO is located at 800 Newport Center Drive, Newport Beach,
California 92660. PIMCO is a money management firm and is registered as an
investment adviser with the Securities and Exchange Commission

Allianz of America, Inc. ("Allianz of America") owns approximately 70% of the
outstanding partnership interests in PIMCO Advisors. The remainder of the
partnership interests in PIMCO Advisors are owned by Pacific Life Insurance
Company ("Pacific Life"). Allianz of America is a subsidiary of Allianz AG.
Allianz AG is a leading provider of financial services, particularly in Europe,
and is represented in 68 countries world-wide through subsidiaries, branch and
representative offices, and other affiliated entities.

Significant institutional shareholders of Allianz AG currently include, among
others, Dresdner Bank AG, Deutsche Bank AG, Munich Reinsurance and Hypo
Vereinsbank. Credit Lyonnais, Dresdner Bank AG and Deutsche Bank AG, as well as
certain broker-dealers that might be deemed to be affiliated with these
entities, such as DB Alex Brown LLC, Deutsche Bank Securities, Inc. and Dresdner
Kleinwort Benson North America LLC (collectively, the "Affiliated Brokers"), may
be considered to be affiliated persons of PIMCO. Absent an SEC exemption or
other relief, the Fund generally will be precluded from effecting principal
transactions with the Affiliated Brokers, and its ability to purchase securities
being underwritten by an Affiliated Broker or to utilize the Affiliated Brokers
for agency transactions is subject to restrictions. PIMCO does not believe that
the applicable restrictions on transactions with the Affiliated Brokers
described above will materially adversely affect its ability to provide services
to the Fund, the Fund's ability to take advantage of market opportunities, or
the Fund's overall performance.


AFFILIATED PERSONS
There are currently no affiliated persons of the Fund or AAL CMC, the Funds'
adviser.

ADVISER FEES
The adviser, AAL CMC, furnishes and pays for all office space and facilities,
equipment and clerical personnel necessary for carrying out the adviser's duties
under the advisory agreement. The adviser also pays all compensation of
Trustees, officers and employees of the Trust who are the adviser's affiliated
persons. All costs and expenses not expressly assumed by the adviser under the
advisory agreement are paid by the Funds, including, but not limited to: (a)
interest and taxes; (b) brokerage commissions; (c) insurance premiums; (d)
compensation and expenses of the Funds' Trustees other than those affiliated
with the adviser; (e) legal and audit expenses; (f) fees and expenses of the
Trust's custodian and transfer agent; (g) expenses incident to the issuance of
the Trust's shares, including stock certificates and issuance of shares on the
payment of, or reinvestment of, dividends; (h) fees and expenses incident to the
registration under Federal or state securities laws of the Trust or its shares;
(i) expenses of preparing, printing and mailing reports and notices and proxy
material to the Trust's shareholders; (j) all other expenses incidental to
holding meetings of the Trust's shareholders; (k) dues or assessments of or
contributions to the Investment Company Institute or its successor, or other
industry organizations; (l) such non-recurring expenses as may arise, including
litigation affecting the Trust and the legal obligations that the Trust may have
to indemnify its officers and Trustees with respect thereto; and (m) all
expenses that the Trust agrees to bear in any distribution agreement or in any
plan adopted by the Trust pursuant to Rule 12b-1 under the Act.

                              ADVISER FEES PER FUND

<TABLE>
<CAPTION>
<S>                                                    <C>
THE AAL TECHNOLOGY STOCK FUND                          0.75% on the average daily net assets
THE AAL AGGRESSIVE GROWTH FUND                         0.25% on average daily net assets above the sub-adviser's fee
      Sub-Adviser Fees                                       0.55% on the first $100 million
      Janus                                                  0.50% on the next $400 million
                                                             0.45% on the average daily net assets over $500 million

THE AAL SMALL CAP STOCK FUND                           0.70% on the first $200 million
                                                       0.65% on the average daily net assets over $200 million
THE AAL MID CAP STOCK FUND                             0.70% on the first $200 million
                                                       0.65% on the average daily net assets over $200 million
THE  AAL INTERNATIONAL FUND                            0.25% on average daily net assets above the sub-adviser's fee
     Sub-Adviser Fees                                        0.40% on the first $50 million
     Oechsle International Advisers                          0.35% on the average daily net assets over $50 million
THE AAL CAPITAL GROWTH FUND                            0.65% on the first $500 million
                                                       0.575% on the next $500 million
                                                       0.50% on the average daily net assets over $1 billion

THE AAL EQUITY INCOME FUND                             0.45% on the average daily net assets
THE AAL LARGE COMPANY INDEX FUND II                    0.25% on the average daily net assets
THE AAL MID CAP INDEX FUND II                          0.25% on the average daily net assets
THE AAL SMALL CAP INDEX FUND II                        0.25% on the average daily net assets
THE AAL BALANCED FUND                                  0.55% onaverage daily net assets above the sub-adviser's fee
THE AAL HIGH YIELD BOND FUND                           0.55% on the average daily net assets
       Sub-Adviser Fees                                      0.25% on the average daily net assets
       PIMCO

THE AAL MUNICIPAL BOND FUND                            0.45% on the average daily net assets
THE AAL BOND FUND                                      0.45% on the average daily net assets
THE AAL MONEY MARKET FUND                              0.50% on the first $500 million
                                                       0.45% on the average daily net assets over $500 million
</TABLE>

The adviser may waive its advisory fees for, assume or reimburse the expenses
of, any Fund at any time. As of September 1, 1997, the adviser is waiving .225
of 1% of its .50 of 1% maximum advisory fee for The AAL Money Market Fund.
Effectively, the adviser is charging only a 0.275 of 1% advisory fee for the
Fund. The adviser is reimbursing The AAL High Yield Bond Fund expenses in excess
of 1.00% and 1.75% for Class A and Class B shares, respectively. Any fee waivers
or expense assumptions the adviser makes are voluntary. The adviser may
discontinue any fee waivers or expense reimbursements at any time. The following
table shows the advisory fees for the past three fiscal years ended April 30,
2000, paid by each of the Funds respectively.


<TABLE>
<CAPTION>
<S>                                               <C>                    <C>                    <C>
FUND                                              APRIL 30, 2000         APRIL 30, 1999         APRIL 30, 1998

THE AAL TECHNOLOGY STOCK FUND                     N/A                    N/A                    N/A
THE AAL AGGRESSIVE GROWTH FUND                    N/A                    N/A                    N/A
THE AAL SMALL CAP STOCK FUND                      $1,139,125             $913,406               $690,590
THE AAL MID CAP STOCK FUND                        $4,562,263             $4,027,980             $4,070,582
THE AAL INTERNATIONAL FUND                        $1,200,110             $1,050,033             $1,280,101
THE AAL CAPITAL GROWTH FUND                       $21,248,554            $16,628,122            $12,742,588
THE AAL EQUITY INCOME FUND                        $1,323,521             $1,091,335             $809,233
THE AAL LARGE COMPANY INDEX FUND II               N/A                    N/A                    N/A
THE AAL MID CAP INDEX FUND II                     N/A                    N/A                    N/A
THE AAL SMALL CAP INDEX FUND II                   N/A                    N/A                    N/A
THE AAL BALANCED FUND                             $1,280,721             $478,088               $27,618
THE AAL HIGH YIELD BOND FUND                      $816,005               $736,426               $522,217
THE AAL MUNICIPAL BOND FUND                       $2,247,970             $2,272,553             $2,163,729
THE AAL BOND FUND                                 $1,785,045             $1,858,562             $1,921,733
THE AAL MONEY MARKET FUND                         $1,685,613             $1,360,362             $1,088,957
</TABLE>

During the fiscal year ended April 30, 2000, AAL CMC, as the adviser,
voluntarily reimbursed advisory fees for the Funds. Actual advisory fees, net of
reimbursements were as follows:



FUND                                                    APRIL 30, 2000

THE AAL TECHNOLOGY STOCK FUND                           N/A

THE AAL AGGRESSIVE GROWTH FUND                          N/A

THE AAL SMALL CAP STOCK FUND                            $945,778

THE AAL MID CAP STOCK FUND                              $3,924,741

THE AAL INTERNATIONAL FUND                              $1,084,827

THE AAL CAPITAL GROWTH FUND                             $20,550,870

THE AAL EQUITY INCOME FUND                              $1,149,058

THE AAL LARGE COMPANY INDEX FUND II                     N/A

THE AAL MID CAP INDEX FUND II                           N/A

THE AAL SMALL CAP INDEX FUND II                         N/A

THE AAL BALANCED FUND                                   $1,176,958

THE AAL HIGH YIELD BOND FUND                            $552,650

THE AAL MUNICIPAL BOND FUND                             $1,986,615

THE AAL BOND FUND                                       $1,484,341

THE AAL MONEY MARKET FUND                               $826,238




The sub-advisory fee for The AAL Aggressive Growth Fund is payable from the
maximum 0.80% annual advisory fee paid to the adviser. The sub-advisory fee for
The AAL International Fund is payable from the maximum 0.65% annual advisory fee
paid to the adviser. The sub-advisory fee for The AAL High Yield Bond Fund is
payable from the maximum 0.55% annual advisory fee paid to the adviser. The
advisory agreement and sub-advisory agreements for The AAL Aggressive Growth,
International, and High Yield Bond Funds provide that subject to Section 36 of
the Act, neither the adviser nor sub-Adviser shall be liable to the Trust for
any error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the management of the Trust and the
performance of their duties under the advisory agreement except for willful
misfeasance, bad faith or gross negligence in the performance of their duties or
by reason of reckless disregard of their obligations and duties under the
agreements.


The Trust has agreed to use its best efforts to change its name if the adviser
ceases to act as such with respect to the Funds and the continued use of the
Trust's present name (The AAL Mutual Funds) would create confusion in the
context of the adviser or AAL's business.


The investment advisory agreement, as amended, was approved by the Board of
Trustees, including a majority of the Trustees who were not interested persons
(as defined in the Act) of any party to the agreement on June 2, 2000.

The advisory agreement and sub-advisory agreements will continue in effect from
year to year only so long as such continuances are specifically approved at
least annually by the Board of Trustees. The vote for approval must include the
approval of a majority of the Trustees who are not interested persons (as
defined in the Act). The advisory and sub-advisory agreements are terminable
upon assignment. The advisory agreement is also terminable at any time without
penalty by the Board of Trustees or by vote of the holders of a majority of the
outstanding voting securities of the Trust. With respect to a particular Fund,
the advisory or sub-advisory agreement, if any, is terminable by the vote of a
majority of the outstanding shares of such Fund. The adviser may terminate the
agreement on 60 days written notice to the Trust.


CODE OF ETHICS
Rule 17j-1 promulgated under Section 17(j) of the Investment Company Act of 1940
makes it illegal for persons associated with the Fund, the adviser or
sub-adviser, who have knowledge of portfolio securities trades that the Fund
makes or intends to make, to use that information in a manner that benefits that
person and/or harms the Fund. To protect the Fund against such conduct, the
Fund, the adviser and sub-adviser have adopted codes of ethics in accordance
with requirements established under Rule 17j-1. The code of ethics do not
prohibit persons who have knowledge of the Fund's portfolio securities trades
from investing in the same securities; however, the codes of ethics establish
time frames, prior approval procedures and reporting requirements designed to
assure that persons who have knowledge of the Funds' portfolio securities trades
cannot use that information in a manner which is detrimental to the Fund and/or
which benefits them.

12B-1 DISTRIBUTION PLAN
The Funds have adopted a distribution plan for Class A and Class B shares (the
"Distribution Plan" or "Plan") pursuant to Rule 12b-1 (the "Rule") under the
Act.

The Distribution Plan authorizes the distributor, AAL CMC, to make certain
payments (either as a "12b-1 distribution fee" or a "service fee") to any
qualified recipient. As defined in the Plan, the qualified recipient must have
rendered assistance in the distribution of the Funds' shares (such as selling or
placing the Funds' shares, or providing administrative assistance, such as
maintaining sub-accounting or other records). The Plan authorizes the
distributor to purchase advertising for the Funds' shares, to pay for sales
literature and other promotional material, and to make payments to the sales
personnel. The Distribution Plan does not cover Institutional shares. As a
result, the Funds may not make any payments pursuant to the Plan in connection
with Institutional shares.

The Funds reimburse any payments made or expenses incurred under the Plan to
qualified recipients for Class A and Class B shares as follows:

Class A Shares - All Funds
In a given fiscal year, the Funds, pursuant to the Plan, pay up to a limit of
0.25 of 1% of the average net assets (0.125 of 1% for The AAL Money Market Fund)
as a service fee for Class A shares. The Funds do not reimburse or pay for
expenses of past fiscal years or in contemplation of expenses for future fiscal
years. Since September 1, 1997, the distributor has waived 0.100 of 1% of the
0.125 of 1% maximum 12b-1 service fee for Class A shares under the Plan for The
AAL Money Market Fund (prior to January 8, 1997, 12b-1 service fees for Class A
shares were described as 12b-1 distribution fees), effectively charging a 0.025
of 1%, 12b-1 service fee. This continuing reimbursement (waiver) is voluntary.
The distributor may modify or discontinue its reimbursements at any time.

Class B Shares - All Funds
In a given fiscal year, the Funds pay up to a limit of 0.75 of 1% of the average
daily net assets as a 12b-1 distribution fee and up to a limit of 0.25 of 1% of
the average daily net assets (0.125 of 1% for The AAL Money Market Fund) as a
service fee for Class B shares. Pursuant to the Plan, the Funds do not reimburse
or pay for expenses of past fiscal years or in contemplation of expenses for
future fiscal years. Since September 1, 1997, the distributor has waived 0.100
of 1% of the 0.125 of 1% maximum 12b-1 service fee for Class B shares under the
Plan for The AAL Money Market Fund, effectively charging a 0.025 of 1%, 12b-1
service fee. This continuing reimbursement (waiver) is voluntary. The
distributor may modify or discontinue its reimbursements at any time.

The Plan authorizes without limit any payments by a Fund for Class A and Class B
shares that are "primarily intended to result in the sale of shares" issued by a
Fund within the meaning of the Rule under the Plan. Such payments shall not be
included in the limitations contained in the Plan, including: (a) the costs of
the preparation, printing and mailing of all required reports and notices to
shareholders, irrespective of whether such reports or notices contain or are
accompanied by material intended to result in the sale of shares of the Fund or
other funds or other investments; (b) the costs of preparing, printing and
mailing of all prospectuses to shareholders; (c) the costs of preparing,
printing and mailing of any proxy statements and proxies, irrespective of
whether any such proxy statement includes any item relating to, or directed
toward, the sale of the Fund's shares; (d) all legal and accounting fees
relating to the preparation of any such reports, prospectuses, proxies and proxy
statements; (e) all fees and expenses relating to the qualification of the Funds
and or their shares under the securities or "Blue Sky" laws of any jurisdiction;
(f) all fees under the Act and the Securities Act of 1933, including fees in
connection with any application for exemption relating to or directed toward the
sale of the Fund's shares; (g) all fees and assessments of the Investment
Company Institute or any successor organization or industry association
irrespective of whether some of its activities are designed to provide sales
assistance, (h) all costs of preparing and mailing confirmations of shares sold
or redeemed or share certificates and reports of share balances; and (i) all
costs of responding to telephone or mail inquiries of shareholders.

The Plan also states that the distribution costs of the Trust's Class A and
Class B shares are expected to exceed the sum of permitted payments, permitted
expenses, and the portion of the sales charge retained by the distributor. The
adviser's profits, if any, are primarily dependent on the advisory fees paid by
the Funds to the adviser. If and to the extent that any investment advisory fees
paid by the Funds might, in view of any excess distribution costs and the common
ownership of the adviser and distributor, be considered as indirectly financing
any activity primarily intended to result in the sale of shares issued by the
Funds, the payment of such fees is authorized under the Plan. The Plan states
that in taking any action contemplated by Section 15 of the Act as to any
investment advisory contract to which the Trust is a party, the Board of
Trustees, including its Trustees who are not "interested persons" as defined in
the Act, and who have no direct or indirect financial interest in the operation
of the Plan or any agreements related to the Plan ("Qualified Trustees"), shall,
in acting on the terms of any such contract, apply the "fiduciary duty" standard
contained in Sections 36(a) and (b) of the Act.

The Plan requires that while it is in effect, the distributor, shall report in
writing at least quarterly to the Trustees, and the Trustees shall review, the
following: (a) the amounts of all payments, the identity of recipients of each
such payment, the basis on which each such recipient was chosen and the basis on
which the amount of the payments were made; (b) the amounts of expenses and the
purpose of each such expense; and (c) all costs of the other payments specified
in the Plan (making estimates of such costs where necessary or desirable) in
each case during the preceding calendar or fiscal quarter. The aggregate amount
paid by the Funds to the distributor under the Plan for Class A shares for the
fiscal year ended April 30, 2000, and the manner in which this amount was spent
is as follows:

                                 CLASS A SHARES

Gross 12b-1 Fees Paid by the Funds for Class A Shares       $15,551,182

EXPENDITURES

Compensation to Registered Representatives                  $15,479,264

Other                                                       $71,918


The aggregate amount paid by the Funds to the distributor under the Plan for
Class B shares for the fiscal year ended April 30, 2000 and the manner in which
this amount was spent is as follows:

                                 CLASS B SHARES

Gross 12b-1 Fees Paid by the Funds for Class B Shares       $1,830,338

EXPENDITURES

Compensation to Registered Representatives                  $1,032,995

Other                                                       $797,343


Management and the Board of Trustees believe that the Distribution Plan and the
service and 12b-1 fees have a positive impact on the Funds' sales and the Funds'
retention of assets, both of which are beneficial to the Funds and the Funds'
shareholders.

The Trust's shareholders approved the Plan at the Trust's first meeting of
shareholders held on September 13, 1988. The Plan at that time and up until
January 8, 1997, included only the shares now referred to as Class A shares. As
of January 8, 1997, the Plan includes Class B shares. The Plan as Amended and
Restated was approved by the sole shareholder of the Trust's Class B shares on
January 8, 1997. The Plan will continue in effect from year-to-year only so long
as such continuance is specifically approved at least annually by the Board of
Trustees and the Qualified Trustees (as defined in the Plan) cast in person at a
meeting called for the purpose of voting on such continuance. The Plan may be
terminated at any time without penalty by a vote of a majority of the Qualified
Trustees. The Plan also may be terminated by the vote of the holders of a
majority of the outstanding voting securities for each class of shares of the
Trust. The Plan may be terminated with respect to any Fund by the vote of a
majority of the outstanding shares for each class of such Fund. The Plan may not
be amended to increase materially the amount of payments to be made for the
separate class shares without shareholder approval of the class. While the Plan
is in effect, the selection and nomination of those Trustees who are not
interested persons of the Trust is committed to the discretion of such
disinterested Trustees. Nothing in the Plan will prevent the involvement of
others in such selection and nomination if the final decision on any such
selection and nomination is approved by a majority of such disinterested
Trustees.

ADDITIONAL INFORMATION

Custodian
The custodian for the Funds is Citibank, N.A.. The custodian is responsible for
holding the Funds' assets.

Administrative Services Agreement
Pursuant to an Administrative Services Agreement ("Agreement") between the Funds
and AAL, effective January 1, 1999, AAL provides certain administrative,
accounting and pricing services to the Funds. These administrative services
include calculating the daily net asset value per class share; maintaining
original entry documents and books of record and general ledgers; posting cash
receipts and disbursements; reconciling bank account balances monthly; recording
purchases and sales based on sub-adviser communications (Oechsle's
communications regarding The AAL International Fund); and preparing monthly and
annual summaries to assist in the preparation of financial statements of, and
regulatory reports for, the Funds.

The principal reason for having AAL provide these services is cost. AAL has
agreed to provide these services at rates that would not exceed the rates
charged by unaffiliated vendors for similar services. The annual rates of
payment approved by the Trustees presently are:


o    The AAL Technology Stock Fund $40,000
o    The AAL Aggressive Growth Fund $40,000
o    The AAL Small Cap Stock Fund - $40,000
o    The AAL Mid Cap Stock Fund - $40,000
o    The AAL International  Fund - $45,000
o    The AAL Capital Growth Fund - $40,000
o    The AAL Equity  Income Fund - $40,000
o    The AAL Large Company Index Fund II $35,000
o    The AAL Mid Cap Index Fund II $35,000
o    The AAL Small Cap Index Fund II $35,000
o    The AAL  Balanced  Fund - $40,000
o    The AAL High Yield Bond Fund - $40,000
o    The AAL  Municipal  Bond Fund - $40,000
o    The AAL Bond Fund - $40,000
o    The AAL Money Market Fund - $40,000

o    The AAL U. S. Government Zero Coupon Target Fund Series 2001 - $2,500
o    The AAL U. S. Government Zero Coupon Target Fund Series 2006 - $2,500

The Agreement continues in effect from year to year, as long as it is approved
at least annually by the Funds' Board of Trustees or by a vote of the
outstanding voting securities of the Funds. In either case, the Agreement must
also be approved at least annually by a majority of the Trustees who are not
parties to the Agreement or interested persons of any such party. The Agreement
terminates automatically if either party assigns the Agreement. The Agreement
also terminates without penalty by either party on 60-days' notice. The
Agreement provides that neither AAL nor its personnel shall be liable for any
error of judgment or mistake of law or for any loss arising out of any act or
omission in the execution and the discharge of its obligations under the
Agreement, except for willful misfeasance, bad faith or gross negligence in the
performance of their duties or by reason of reckless disregard of their
obligations and duties under the Agreement.

Shareholder Maintenance Agreement
The Board of Trustees authorized the Funds to contract with AAL CMC for certain
shareholder maintenance services, effective April 1, 1995. These shareholder
services include answering customer inquiries regarding account status,
explaining and assisting customers with the exercise of their account options
and facilitating shareholder telephone transaction requests.


The annual fee payable to AAL CMC for providing such shareholder services is
based upon, and limited by, the difference between the current account fees
actually charged by Firstar Bank, N.A., as transfer and dividend disbursing
agent, and the normal full-service fee schedule published by Firstar Bank, N.A..
The annual fee is also based on reimbursement for certain actual out-of-pocket
costs including postage and telephone charges. This account differential,
including reimbursement for expenses, is at an annualized rate of $3.75 per
account, effective April 30, 2000. The shareholder maintenance agreement
continues in effect from year to year, as long as it is approved at least
annually by the Funds' Board of Trustees or by a vote of the outstanding voting
securities of the Funds. In either case, the agreement must be approved annually
by a majority of the Trustees who are not parties to the agreement or interested
persons of any such party. The agreement terminates automatically if either
party assigns the agreement. The agreement also terminates without penalty by
either party on 60-days notice. The Agreement provides that neither the Adviser
nor its personnel shall be liable for any error of judgment or mistake of law or
for any loss arising out of any act or omission in the execution and the
discharge of its obligations under the Agreement, except for willful
misfeasance, bad faith or gross negligence in the performance of their duties or
by reason of reckless disregard of their obligations and duties under the
Agreement. These fees are not currently assessed against the Funds but may be in
the future.


Independent Accountants
The Trust's independent accountants, PricewaterhouseCoopers LLP
("PricewaterhouseCoopers"), examine the Funds' annual financial statements.
PricewaterhouseCoopers also assists in the preparation of certain reports to the
SEC and reviews the Trust's state and federal tax returns.

BROKERAGE ALLOCATION AND OTHER PRACTICES


AAL CMC, as the adviser, and Oechsle as the sub-adviser for The AAL
International Fund, Janus as the sub-adviser for The AAL Aggressive Growth Fund,
and PIMCO as the sub-adviser for The AAL High Yield Bond Fund direct the
placement of orders for the purchase and sale of the Funds' portfolio
securities.


The securities transaction costs for each Fund consist primarily of brokerage
commissions or dealer or underwriter spreads. Bonds and money market instruments
generally trade on a net basis and do not involve either brokerage commissions
or transfer taxes.

Occasionally, we may purchase securities directly from the issuer for a Fund.
For securities traded primarily in the over-the-counter market, we deal with the
sellers who make a market in the securities directly unless we can find better
prices and execution available elsewhere. Such dealers usually act as principals
for their own account. In placing portfolio transactions, we seek the best
combination of price and execution.

In determining which brokers provide best execution, AAL CMC looks primarily at
the prices quoted by the brokers. Normally, we place orders with the broker who
has the most favorable prices. Ordinarily, we expect to execute securities
transactions in the primary markets. In assessing the best net price, we
consider all relevant factors. The relevant factors include the security
market's breadth, the security's price, the broker or dealer's financial
condition and execution capability and the reasonableness of the commission, if
any (for the specific transaction and on a continuing basis). Although we are
the sole distributors for the Funds' shares, we (as the adviser) may in the
future consider the willingness of particular brokers to sell the Funds' shares
as a factor in the selection of brokers for the Funds' portfolio transactions.
However our selection would still be subject to the overall best price and
execution standard.


Assuming equal execution capabilities, we may take into consideration other
factors in selecting brokers or dealers. We may consider "brokerage and research
services" (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934), statistical quotations (specifically the quotations
necessary to determine the Funds' net asset values, and other information
provided to us or the sub-advisers for The AAL Aggressive Growth Fund, The AAL
International Fund, and The AAL High Yield Bond Fund (or their affiliates). We
may also cause a Fund to pay to a broker or dealer who provides such brokerage
and research services a commission for executing a portfolio transaction which
is in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction. We must determine, in good faith,
however, that such commission was reasonable in relation to the value of the
brokerage and research services provided. The commission must be reasonable in
terms of that particular transaction or in terms of all the accounts over which
we, as an adviser, exercise investment discretion. It is possible that certain
of the services received by us attributable to a particular transaction benefit
one or more other accounts for which we exercise investment discretion. The
Funds paid the following in brokerage commissions in each of the past three
fiscal years ended April 30, 2000.


                        April 30, 2000    April 30, 1999     April 30, 1998

The AAL Mutual Funds    $3,736,355        $3,693,873         $3,143,251



CAPITAL STOCK AND OTHER SECURITIES

The AAL Mutual Funds' Declaration of Trust permits the Trustees to issue an
unlimited number of full and fractional shares of beneficial interest. The
Declaration also permits the Trustees to divide or combine the shares into a
greater or lesser number of shares without thereby changing the proportionate
beneficial interest in a Fund. Pursuant to this authority, the Trustees have
issued Class A, Class B and Institutional shares for the Funds, except for The
AAL U.S. Government Zero Coupon Target Funds, Series 2001 and 2006. Each class
share represents an interest in a Fund proportionately equal to the interest of
each other share in its class. If the Trust liquidated the Funds' shares, all
shareholders of a Fund would share pro rata in its net assets for the class
available for distribution to shareholders. If the Board deems it advisable and
in the best interests of shareholders, it may create additional share classes.
These share classes may differ from each other only as to dividends or, as is
the case with the Funds, as to assets and liabilities. Where share classes
differ in regards to assets and liabilities, the different classes are referred
to as the different series of the Funds (e.g., The AAL Bond Fund is a series of
The AAL Mutual Funds). Within each series, the different classes of shares are
referred to as different share classes, such as Class A, Class B and
Institutional shares. Shares of each series are entitled to vote as a series
only to the extent required by the '40 Act or as permitted by the Trustees. The
Trustees allocate income and operating expenses among the different Funds'
series and classes of shares fairly.

Except for the election of Trustees and ratification of the selection of
independent accountants, any matter that the Funds are required to submit to the
shareholders for a vote is not deemed to be effective unless approved by the
holders of a "majority" (as defined in the Rule) of the voting securities of
each Series affected by the matter.

Except for The AAL Small Cap Stock, Mid Cap Stock, Balanced, and High Yield Bond
Funds, each Fund's investment objective is a fundamental policy. As such, only a
vote of a "majority of outstanding voting securities" can change a Fund's
investment objective. A majority means the approval of the lesser of: (1) 67% or
more of the voting securities at a meeting if the holders of more than 50% of
the outstanding voting securities of a Fund are present or represented by proxy;
or (2) more than 50% of the outstanding voting securities of a Fund.


PURCHASE, REDEMPTION, AND PRICING OF SHARES

Purchases and redemptions are discussed in the Prospectus under the headings;
"Purchasing Shares" and "How to Redeem Shares," and that information is
incorporated herein by reference.

We generally determine the Funds' net asset value only on the days when the New
York Stock Exchange ("NYSE") is open for trading. We will not determine the net
asset value on days when the NYSE is closed or AAL is closed. The NYSE is
regularly closed on Saturdays and Sundays and on New Years' Day, the third
Monday in February, Good Friday, the last Monday in May, Independence Day, Labor
Day, Thanksgiving and Christmas. If one of these holidays falls on a Saturday or
Sunday, the NYSE closes on the preceding Friday or the following Monday,
respectively.

We determine the net asset value for a Fund by adding the value of a Fund's
assets, subtracting the Fund's liabilities, and dividing the balance by the
total number of shares outstanding. In determining the current market value for
securities traded or listed on an exchange, we use the last sale price on the
exchange where the securities primarily trade. For securities that have readily
available market quotations, we use an over-the-counter or exchange bid
quotation. When a Fund holds securities or other assets that either do not have
readily available market quotations or are restricted, we value them at fair
market value, as we determine in good faith under the direction of our Board of
Trustees. We may use pricing services in determining the current or fair market
value of securities held in the Funds' portfolios. We value money market
instruments with a remaining maturity of 60 days or less on an amortized costs
basis. We comply with the SEC's requirements for using an amortized cost
valuation method.

Many long-term corporate bonds and notes, certain preferred stocks, tax-exempt
securities and foreign securities do not have reliable market quotations and are
not considered to be readily available for purchase or sale.

To determine the current or fair market value for debt securities, we may, and
generally will, use a pricing service or services approved by the Board of
Trustees. A pricing service generally will determine valuations based upon
normal, institutional-size trading units of such securities using market
transactions for comparable securities and various relationships between
securities generally recognized by institutional traders.

We generally price foreign securities in terms of U.S. dollars at the official
exchange rate. Alternatively, we may price these securities at the average of
the current bid and asked price of such currencies against the dollar last
quoted by a major bank. The bank must be a regular participant in the foreign
exchange market. We also may price foreign securities on the basis of a pricing
service that takes into account the quotes provided by a number of such major
banks. If management does not have any of these alternatives available or the
alternatives do not provide a suitable method for converting a foreign currency
into U.S. dollars, the Board of Trustees in good faith will establish a
conversion rate for such currency.

Foreign securities may not be traded on all days when the NYSE is open. Also,
foreign securities may trade on Saturdays and other days when the NYSE is not
open and when we do not calculate the Funds' net asset values. We value foreign
securities primarily listed and/or traded in foreign markets at the price as of
the close on its primary market. Unless we determine (under the supervision of
the Board of Trustees) that material events have occurred affecting the value of
a Fund's foreign securities between the time the foreign securities' primary
market closed and the close of the NYSE, we will not reflect the change in the
Fund's net asset value. As a result, trading on days when a Fund is not
accepting purchases or redemptions may significantly affect a Fund's net asset
value.

Generally, U.S. government securities and other fixed income securities complete
trading at various times prior to the close of the NYSE. For purposes of
computing net asset value, we use the market value of any such securities as of
the time their trading day ends. Occasionally, events affecting the value of
such securities may occur between the times these markets close and the time the
NYSE closes. We generally will not reflect these events in the computation of a
Fund's net asset value, unless they are material. If there is a material event,
we will value such securities at their fair value as determined in good faith by
the Board of Trustees.

We intend to pay all redemptions in cash. We are obligated to redeem shares
solely in cash up to the lesser of $250,000 or one percent of the net assets of
a Fund during any 90-day period for any one shareholder. However, we may pay
redemptions in excess of such limit in whole or part by a distribution in kind
of securities. If and to the extent we redeem shares in kind, you, as a
redeeming shareholder might incur brokerage fees in selling the securities
received.

We reserve the right for each Fund to suspend or postpone redemptions during any
period when: (a) trading on the NYSE is restricted, as determined by the SEC, or
the NYSE is closed for other than customary weekend and holiday closings; (b)
the SEC has by order permitted such suspension; or (c) an emergency, as
determined by the SEC, exists, making disposal of a Fund's portfolio securities
or valuation of its net assets not reasonably practicable.

THE AAL MONEY MARKET FUND-AMORTIZED COST VALUATION
We value The AAL Money Market Fund's portfolio securities on the basis of their
amortized cost. Amortized cost is an approximation of market value, whereby the
difference between acquisition cost and value at maturity is amortized on a
straight-line basis over the remaining life of the instrument. The effect of
changes in the market value of a security as a result of fluctuating interest
rates is not taken into account. The amortized cost method of valuation may
result in the value of a security being higher or lower than its actual market
value. In addition, if a large number of redemptions take place at a time when
interest rates have increased, we may have to sell portfolio securities for a
Fund prior to maturity and at a less desirable price.

Although we cannot assure you that we will be able to do so, we will use our
best efforts to maintain a net asset value of $1.00 per share for purchases and
redemptions of The AAL Money Market Fund. The Board of Trustees has established
procedures for this purpose. These procedures require us to review the extent of
any deviation in the Fund's net asset value per share, based on available market
quotations, from the $1.00 amortized cost per share. Should the deviation exceed
1/2 of 1% for the Fund, the Board of Trustees will promptly consider whether we
should initiate efforts to eliminate or reduce material dilution or other unfair
results to shareholders. Such action may include redemption of shares in kind,
selling portfolio securities prior to maturity, reducing or withholding
dividends, and utilizing a net asset value per share as determined by using
available market quotations. We maintain a dollar-weighted average portfolio
maturity of 90 days or less for the Fund. We also do not purchase any instrument
deemed to have a remaining maturity greater than 397 days. We limit portfolio
investments, including repurchase agreements, to those dollar denominated
instruments that the Board of Trustees determines present minimal credit risks
pursuant to our advise as the Adviser. We also comply with the SEC requirements
on the quality of certain portfolio securities for money market funds using the
amortized cost method of valuation. We also comply with the SEC reporting and
record keeping procedures regarding money market funds. We cannot assure you
that we can maintain a constant net asset value at all times. In the event
amortized cost ceases to represent fair value, the Board of Trustees will take
appropriate action.

LETTER OF INTENT
Under a Letter of Intent, as described in the prospectus, shares totaling 5% of
the dollar amount indicated in the letter will be held in escrow by the transfer
agent in the name of the purchaser. A Letter of Intent neither obligates you to
purchase nor requires us to sell the indicated amount. If you do not invest the
amount indicated within the 13-month period, you, as the purchaser, are required
to pay the difference between the sales commission otherwise applicable to the
purchases made during this period and sales charges actually paid. When the
Letter of Intent expires, we liquidate sufficient shares in escrow to obtain the
difference.

CLOSING SMALL ACCOUNTS
All AAL Mutual Funds account owners share the high cost of maintaining accounts
with low balances. To reduce this cost, we reserve the right, subject to legal
restrictions, if any, to close an account when, due to a redemption, its value
is less than $250. This does not apply to retirement plan accounts. We will
notify you in writing before closing any account, and you will have 30 days to
add money to bring the balance up to $250.


TAXATION OF THE FUNDS

The following is only a summary of certain tax considerations generally
affecting the Funds and shareholders. We urge you to consult your tax advisors
with specific reference to your own tax situations, including state and local
tax liability.

DIVIDENDS, DISTRIBUTIONS AND TAXES
Except for The AAL Municipal Bond Fund, any dividends from net investment income
and short-term capital gains (collectively "income dividends") that we
distribute to you from The AAL Technology Stock, Aggressive Growth, Small Cap
Stock, Mid Cap Stock, International, Capital Growth, Equity Income, Large
Company Index II, Mid Cap Index II, Small Cap Index II, Balanced, High Yield
Bond, Bond and Money Market Funds are taxable to you as ordinary income whether
we have paid these distributions in cash or additional shares. Any long-term
capital gains ("capital gains distributions") that we distribute to you from the
Funds are taxable to you as long-term capital gains, whether we have paid these
distributions in cash or additional shares. Long-term capital gains are treated
as long-term capital gains regardless of the length of time you have owned the
shares. We distribute substantially all of the Funds' net investment income and
net realized long-term capital gains to avoid the imposition of federal income
and excise tax liability. We pay any dividends for The AAL Technology Stock,
Aggressive Growth, Small Cap Stock, Mid Cap Stock, International, Large Company
Index II, Mid Cap Index II and Small Index II Funds annually. We pay any
dividends for The AAL Capital Growth Fund semi-annually and we pay any dividends
for the AAL Equity Income and Balanced Funds quarterly. We accrue income
dividends daily and pay any dividends monthly for The AAL High Yield Bond, Bond
and Money Market Funds. We expect to distribute any capital gains annually for
these Funds.

THE AAL MUNICIPAL BOND FUND DIVIDENDS, DISTRIBUTIONS AND TAXES
This Fund expects to accrue any income dividends daily and distribute any net
investment income in monthly dividends. We distribute any net realized capital
gains at least annually. Dividends derived from the interest earned on municipal
securities constitute "exempt-interest dividends." Generally, exempt-interest
dividends are not subject to federal income tax. Distributions of net realized
capital gains (whether from tax-exempt or taxable securities) are taxable to
shareholders. We report the federal income tax status of all distributions to
shareholders annually. In the report, we allocate income dividends between
tax-exempt and taxable income (if any) in approximately the same proportions as
the Fund's total income during the year. Accordingly, income derived from each
of these sources by the Fund may vary substantially in any particular
distribution period from the allocation reported to shareholders annually.

You may not be able to deduct any interest expense you incur on money borrowed
to purchase or carry shares of the Fund for federal income tax purposes. You
also may be subject to state and local taxes on dividends from this Fund,
including those which are exempt from federal income tax.

If you or your entity are "substantial users" (or persons who are related to
"substantial users") of facilities financed by industrial revenue bonds, you or
your entity should consult your tax advisers before purchasing shares of The AAL
Municipal Bond Fund. The term "substantial user" is defined generally to include
a "nonexempt person" who regularly uses in trade or business a part of a
facility financed from the proceeds of industrial development revenue bonds.

The 1986 Tax Reform Act subjects tax-exempt interest attributable to certain
"private activity bonds" to the individual and corporate alternative minimum
tax. Such tax-exempt interest includes, in the case of a regulated investment
company receiving interest on such bonds, a proportionate part of the
exempt-interest dividends paid by that company. We limit our investment in
private activity bonds to no more than 20% of the Fund's assets. Certain
corporate shareholders may be subject to a federal "environmental" tax with
respect to their receipt of dividends and distributions.

The use of options and futures for The AAL Municipal Bond Fund portfolio may
result in taxable income. You should consult your personal tax adviser to
determine the consequences of federal, state and local taxes.

THE AAL INTERNATIONAL FUND -- FOREIGN WITHHOLDING TAX
We may be subject to income and withholding taxes on income and gains derived
from The AAL International Fund's investments outside the U.S. Our payment of
such foreign taxes reduces the yield on investments for the Fund. Tax treaties
between certain countries and the U.S. may reduce or eliminate these foreign
withholding taxes. If more than 50% of the Fund's total asset value at the close
of any taxable year consists of foreign corporate stocks or other securities, we
may elect (for U.S. federal income tax purposes) to treat any foreign country
income or withholding taxes we have paid on behalf of the Fund as paid by the
Fund's shareholders. The foreign income or withholding taxes must be those that
could be treated as income taxes under U.S. income tax principles. For any year
we make such an election for the Fund, the shareholder must include as income
(in addition to taxable dividends received) his pro rata share of such foreign
income and withholding taxes. The shareholder is entitled, subject to certain
limitations, to credit his portion of these foreign taxes against his U.S.
federal income tax due or deduct it (as an itemized deduction) from his U.S.
taxable income. Generally, this foreign tax credit is subject to the limitation
that it may not exceed the shareholder's U.S. tax attributable to his foreign
source taxable income.

If we make the pass through election described above, the Fund's foreign income
flows through to the shareholders. The Internal Revenue Service will not treat
certain gains from the sale of securities and currency fluctuations as foreign
source taxable income. In addition, this foreign tax credit limitation must be
applied separately to certain categories of foreign source income, one of which
is foreign source "passive income." For this purpose, foreign "passive income"
includes dividends, interest, capital gains and certain foreign currency gains.
As a consequence, certain shareholders may not be able to claim a foreign tax
credit for the full amount of their proportionate share of the foreign tax paid
by the Fund.

Corporations and individuals can use the foreign tax credit to offset only 90%
of any alternative minimum tax (as computed under the Code for purposes of this
limitation) imposed upon them. If we do not make the pass through election, the
foreign taxes we pay for the Fund will reduce the Fund's income. Any
distributions we make for the Fund will be treated as U.S. source income.

We will notify each shareholder within 60 days after the close of the Fund's
taxable year whether, pursuant to the election described above, we will make the
pass through election and treat any foreign taxes paid by the Fund as paid by
its shareholders for that year. If we make the pass through election, we will
designate the shareholder's portion of the foreign taxes paid to such country.
We also will designate the portion of the Fund's dividends and distributions
that represent income derived from sources within such country.

Our investments in certain foreign corporations that generate largely passive
investment type income, or that hold a significant percentage of assets which
generate passive income ("passive foreign investment companies" or "PFICs") are
subject to special tax rules. These special tax rules are designed to prevent
deferral of U.S. taxation on the Fund's share of the PFICs earnings. In the
absence of certain elections to report these earnings on a current basis, we
would have to report certain "excess distributions" and any gain from the
disposition of PFICs stock as ordinary income. We would have to report these
excess distributions and gains as ordinary income regardless of whether we
actually received any distributions from the PFIC. We would have to allocate
this ordinary income ratably throughout the holding period for the stocks. We
would have to pay taxes for the Fund on any amounts allocable to a prior taxable
year at the highest applicable tax rate from that year. We also would have to
increase this rate by an interest charge determined as though the amounts were
an underpayment of the tax for that year. We would have to include the amounts
allocated to the year of the distribution or disposition in the Fund's net
investment income for that year. To the extent the amounts allocated were
distributed as a dividend to shareholders such amounts would not be taxable to
the Fund.


UNDERWRITERS

The distributor, AAL CMC, is the exclusive underwriter for the Funds. The
distributor has a written distribution agreement with the Funds, dated June 15,
1987, as amended. The distributor offers the Funds' shares for sale on a
continuous basis through its field sales force.

CLASS A SHARES
The public offering price of a Fund's Class A share is the net asset value next
computed plus a sales charge that varies based on the quantity purchased. The
public offering price of a Fund's Class A share is calculated by dividing the
net asset value of the Class A share being purchased by the difference
(expressed as a decimal) between 100% and the sales charge percentage of the
offering price applicable to the purchase (see "Purchasing Shares" in the
Prospectus). The sales charge scale set forth in the prospectus applies to
purchases of Class A shares of a particular Fund alone or in combination with
shares of all classes of the other Funds (as noted under "Right of
Accumulation") by any person, including family members who live with the
purchaser (i.e., husband, wife and minor children) and bona fide trustees. The
sales charge scale also applies to purchases made under the right of
accumulation or letter of intent as set forth in the prospectus. The distributor
offers a reduction in the sales charges for a Fund for non-profit organizations,
charitable trusts, charitable remainder unitrusts, endowments, AAL branches and
congregations (See "50% Reduction" in the Prospectus).

The distributor does not receive compensation in connection with redemptions and
repurchases or brokerage commissions for Class A shares. The amount of
underwriting commissions received and retained by the distributor for the past
three years ended April 30, 1999 for Class A Shares were as follows:

                                 CLASS A SHARES

For the Fiscal Year Ended       Aggregate Commissions       Retained Commissions
April 30, 2000                  $19,149,039                 $13,962,423
April 30, 1999                  $18,088,340                 $7,783,221
April 30, 1998                  $18,026,973                 $7,289,125


CLASS B SHARES
The public offering price of a Fund's Class B shares is the net asset value (see
"Purchasing Shares" in the prospectus). The aggregate redemption fees
(underwriting commissions) received and retained by the distributor were as
follows:

                                 CLASS B SHARES

For the Fiscal Year Ended       Aggregate Commissions       Retained Commissions
April 30, 2000                  $245,818                    $245,818
April 30, 1999                  $169,047                    $169,047
April 30, 1998                  $36,668                     $36,668


INSTITUTIONAL SHARES
The public offering price of a Fund's Institutional shares is the net asset
value. The distributor began offering the Institutional shares for the Funds on
December 29, 1997. For information on Institutional shares, please see the
separate prospectus and statement of additional information.

CALCULATION OF PERFORMANCE DATA

From time to time we advertise the yields and total returns for the Funds' Class
A and Class B shares for various investment periods. We always include uniform
performance calculations based on standardized methods established by the SEC.
These calculations reflect the front-end sales charge on a Class A share and the
contingent deferred sales charge ("CDSC") on a Class B share. We also may
include other total return information without giving effect to sales charges.
Yields and total returns are calculated based on historical earnings and
appreciation. We do not intend any yield or total return calculations to
indicate future performance. You should consider performance information in
light of: the particular Fund's investment objectives and policies;
characteristics and quality of the Fund's portfolio securities; and the market
conditions during the applicable period. You should not consider the performance
information as a representation of what may be achieved in the future. When
comparing any such performance information to published performance data for
alternative investments, you should consider the differences in the methods used
in calculating performance information, and the impact of taxes on alternative
investments in addition to the factors listed.

STANDARDIZED PERFORMANCE INFORMATION

Average Annual Total Return
For each of the Funds, except The AAL Money Market Fund, we compute the
standardized average annual total return by finding the average annual
compounded rates of return for Class A and Class B shares over the 1, 5 and 10
year periods (or the portion thereof during which the Fund has been in
existence) that would equate the initial amount invested in each class to the
ending redeemable value according to the following formula:

P(1+T)^n = ERV

Where:

P = A hypothetical $1,000 initial payment;

T = Average annual total return for the class;

n =  Number of years;

ERV = Ending redeemable value for the class (of the hypothetical $1,000 payment)
at the end of the 1, 5 and 10 year periods (or fractional portion thereof),
after deduction of all non-recurring charges for the class (CDSC for Class B
shares), assuming redemption at the end of the period;

^ = raised to the power of.



ANNUAL RETURNS FOR THE 1 AND 5-YEAR,  10-YEAR AND SINCE INCEPTION  PERIODS ENDED
APRIL 30, 2000, FOR CLASS A SHARES BASED ON GROSS AMOUNT INVESTED



<TABLE>
<CAPTION>
<S>                       <C>                    <C>                     <C>                    <C>
The AAL Mutual Fund and   Total Return for the   Average Annual Return   Average Annual         Average Annual
Inception Date            1-Year Period          for the 5-Year Period   Return for the         Return for the
                                                                         10-Year Period         Period Since
                                                                                                Inception for Funds
                                                                                                in Existence for
                                                                                                less than 10 Years
Technology Stock          N/A                    N/A                     N/A                    N/A
7/1/00

Aggressive Growth         N/A                    N/A                     N/A                    N/A
7/1/00

Small Cap Stock           28.75%                 N/A                     N/A                    12.20%
7/1/96

Mid Cap Stock             22.19%                 16.85%                  N/A                    13.51%
6/30/93

International             18.98%                 N/A                     N/A                    10.55%
8/1/95

Capital Growth            4.92%                  23.15%                  16.97%                 N/A
7/16/87

Equity Income             (4.76)%                12.44%                  N/A                    9.67%
3/18/94

Large Company Index II    N/A                    N/A                     N/A                    N/A
7/1/00

Mid Cap Index II          N/A                    N/A                     N/A                    N/A
7/1/00

Small Cap Index II        N/A                    N/A                     N/A                    N/A
7/1/00

Balanced                  0.56%                  N/A                     N/A                    9.91%
12/29/97

High Yield Bond           (10.70)%               N/A                     N/A                    0.05%
1/8/97

Municipal Bond            (7.94)%                4.53%                   6.16%                  N/A
7/16/87

Bond                      (4.07)%                4.49%                   6.39%                  N/A
7/16/87
</TABLE>

Annual Returns for the 1-Year and Since Inception  Periods Ended April 30, 2000,
for Class B Shares Based on Gross Amount Invested*

<TABLE>
<CAPTION>
<S>                                      <C>                                    <C>
The AAL Mutual Fund and Inception Date   Total Return for the 1-Year Period     Average Annual Return for the Period
                                                                                Since Inception
Technology Stock                         N/A                                    N/A
7/1/00

Aggressive Growth                        N/A                                    N/A
7/1/00

Small Cap Stock                          27.71%                                 9.54%
1/8/97

Mid Cap Stock                            20.71%                                 11.70%
1/8/97

International                            17.44%                                 10.73%
1/8/97

Capital Growth                           3.09%                                  22.18%
1/8/97

Equity Income                            (6.71)%                                10.62%
1/8/97

Large Company Index II                   N/A                                    N/A
7/1/00

Mid Cap Index II                         N/A                                    N/A
7/1/00

Small Cap Index II                       N/A                                    N/A
7/1/00

Balanced                                 (1.26)%                                9.74%
12/29/97

High Yield Bond                          (12.38)%                               (0.00)%
1/8/97

Municipal Bond                           (9.79)%                                2.54%
1/8/97

Bond                                     (6.03)%                                3.07%
1/8/97

</TABLE>

* There is no standardized average annual return information for the five-year
and 10-year periods, which is based on gross amount invested, available for
Class B shares. Class B shares first became available to investors on January 8,
1997.

Current Yield
We base current yield quotations for the Funds, except The AAL Money Market
Fund, on a 30-day (or one-month) period. We compute the current yield by
dividing the net investment income per share for each class earned during the
period by the maximum offering price per share for each class on the last day of
the period, according to the following formula:

Yield 2[((a - b)/(cd) + 1)^6 - 1]

Where:

a = Dividends and interest earned by the Class during the period;

b = Expenses accrued by the Class for the period (net of reimbursements);

c = The average daily number of shares outstanding for the Class during the
    period that were entitled to receive dividends; and

d = the maximum offering price per share for the Class on the last day of the
    period.

^ = to the power of.

For purposes of this calculation, we determine the income earned on debt
obligations by applying a calculated yield-to-maturity percentage to the
obligations held during the period. We calculate the Interest earned on
mortgage-backed securities by using the coupon rate and principal amount after
adjustment for a monthly pay down. We determine the income earned on stocks by
using the stated annual dividend rate applied over the performance period. The
current yields for The AAL Small Cap Stock, Mid Cap Stock, International,
Capital Growth, Equity Income, Balanced, High Yield Bond, Municipal Bond and
Bond Funds for the 30-day period ended April 30, 2000, for Class A shares were:


The AAL Technology Stock                                     N/A
The AAL Aggressive Growth                                    N/A
The AAL Small Cap Stock Fund                                 (0.50)%
The AAL Mid Cap Stock Fund                                   0.06%
The AAL International Fund                                   (0.09)%
The AAL Capital Growth Fund                                  0.34%
The AAL Equity Income Fund                                   1.34%
The AAL Large Company Index II                               N/A
The AAL Mid Cap Index II                                     N/A
The AAL Small Cap Index II                                   N/A
The AAL Balanced Fund                                        3.02%
The AAL High Yield Bond Fund                                 10.84%
The AAL Municipal Bond Fund                                  4.73%
The AAL Bond Fund                                            6.53%


The current yields for the AAL Small Cap Stock, Mid Cap Stock, International,
Equity Income, Balanced, High Yield Bond, Municipal Bond and Bond Funds for the
30-day period ended April 30, 200, for Class B shares were:


The AAL Technology Stock                                     N/A
The AAL Aggressive Growth                                    N/A
The AAL Small Cap Stock Fund                                 (1.57)%
The AAL Mid Cap Stock Fund                                   (1.02)%
The AAL International Fund                                   (1.08)%
The AAL Capital Growth Fund                                  (0.82)%
The AAL Equity Income Fund                                   0.35%
The AAL Large Company Index II                               N/A
The AAL Mid Cap Index II                                     N/A
The AAL Small Cap Index II                                   N/A
The AAL Balanced Fund                                        2.21%
The AAL High Yield Bond Fund                                 10.66%
The AAL Municipal Bond Fund                                  4.05%
The AAL Bond Fund                                            5.82%


When we are advertising yield for a Fund, we will not advertise a one-month or a
30-day period that ends more than 45 days before the date on which the
advertisement is published.

Tax Equivalent Yield - The AAL Municipal Bond Fund
We calculate a tax equivalent yield for The AAL Municipal Bond Fund based on a
30-day (or one-month) period for Class A and Class B shares. We compute the tax
equivalent yield by dividing the portion of the Fund's yield for the share class
(computed as described above) that is tax-exempt by one minus a stated income
tax rate and adding the quotient to the portion of the yield that is not tax
exempt. The formula for computation of the tax equivalent yield is:

X = ( N/1-F) + T

Where:

N = % of yield for the class derived from tax-exempt income;

F = federal income tax rate; and

T = % of yield for the class derived from taxable income.


The tax equivalent yield at 31% tax rate for the 30-day period ended April 30,
2000, for a Class A share and a Class B share for The AAL Municipal Bond Fund
were 6.86% and 5.87%, respectively.


Current and Effective Yield - The AAL Money Market Fund
We may quote a current or effective yield for The AAL Money Market Fund's Class
A and Class B shares from time-to-time. The current yield is an annualized yield
based on the net change in account value for each class for a seven-day period.
The effective yield is an annualized yield based on a daily compounding of the
current yield for each share class. We compute these yields by first determining
the "Net Change in Account Value" for each share class for a hypothetical
account having a share balance of one share at the beginning of a seven-day
period ("Beginning Account Value"), excluding capital changes. The Net Change in
Account Value always equals the total dividends declared with respect to the
account. We compute the yields for each share class as follows:

Current Yield = (Net Change in Account Value per Class/Beginning Account Value
                 per Class) x (365/7)

Effective Yield = [(Net Change in Account Value per Class/Beginning Account
                    Value per Class)]^(365/7) + 1] - 1


For the seven-day period ended April 30, 2000, the current and effective yields
of The AAL Money Market Fund for Class A shares were 5.47% and 5.62%,
respectively, and for Class B shares 4.39% and 4.48%, respectively.


Normal changes in the income earned and expenses affect the Fund's yield. Also,
any efforts we undertake to restrict or supplement the Fund's dividends to
maintain its net asset value at $1.00 will affect the Fund's yield. (See "Net
Asset Value" in the prospectus and in this statement of additional
information.). Any portfolio changes we make due to net purchases or redemptions
will affect the Fund's yield. Accordingly, the Fund's yield may vary from day to
day. The yield stated for a particular past period is not a representation as to
its future yield. We do not guarantee the Fund's yield and the Fund's principal
is not insured. Although there is no assurance that we will be able to do so, we
use our best efforts to maintain a net asset value of $1.00 per share for the
Fund.

Other Performance Information
We may from time to time, include in the Funds' sales literature and
advertisements: (1) total return quotations computed for different time periods
or by a method that differs from the computations described in the section above
for Class A and B shares; (2) calculations of the growth of an investment (or
series of investments), at various assumed interest rates and compounding, to
show the effect of the length of time, interest rate and/or tax deferral on an
investment for Class A and B shares; (3) illustrate the concepts of asset
allocation by use of hypothetical case studies using various risk levels and
life cycles, as well as illustrating the effect of various tax brackets and tax
deferrals on hypothetical systematic investing for Class A and Class B shares;
and (4) performance relative to the performance of other investments such as
stocks, bonds, closed end funds, certificates of deposit, as well as various
indices such as the Consumer Price Index and indices generated by lbbotson &
Associates and Chase Global Data and Research Products for Class A and B shares.

Average Annual Total Return on Net Amount Invested
Except for The AAL Money Market Fund, we may advertise an average annual total
return calculation for Class A and Class B shares for any appropriate time
period, based upon the value of a net investment in the Fund for the class. We
deduct the maximum sales charge for Class A shares and deduct the CDSC for Class
B shares. We advertise average annual total return for net amount invested
according to the following formula:

P(1+T)^n = ERV

Where:

P = A hypothetical $1,000 initial payment (the hypothetical initial net
investment after deduction of the sales load);

T = Average annual total return for the class;

n = Number of years;

ERV = Ending redeemable value for the class (of the hypothetical $1,000 payment)
at the end of the 1, 5 and 10 year periods (or fractional portion thereof),
after deduction of all non-recurring charges for the class (CDSC for Class B
shares), assuming redemption at the end of the period;

^ = raised to the power of.


Annual Returns for the 1-Year, 5-Year, 10-Year and Since Inception Periods Ended
April 30, 2000, for Class A Shares Based on Net Amount Invested



<TABLE>
<CAPTION>
<S>                       <C>                    <C>                     <C>                    <C>
The AAL Mutual Fund and   Total Return for the   Average Annual Return   Average Annual         Average Annual
Inception Date            1-Year Period          for the 5-Year Period   Return for the         Return for the
                                                                         10-Year Period         Period Since
                                                                                                Inception for Funds
                                                                                                in Existence for
                                                                                                less than 10 Years

Technology Stock          N/A                    N/A                     N/A                    N/A
7/1/00

Aggressive Growth         N/A                    N/A                     N/A                    N/A
7/1/00

Small Cap Stock           34.07%                 N/A                     N/A                    13.41%
7/1/96

Mid Cap Stock             27.29%                 17.82%                  N/A                    14.20%
6/30/93

International             23.91%                 N/A                     N/A                    11.51%
8/1/95

Capital Growth            9.28%                  24.16%                  17.45%                 N/A
7/16/87

Equity Income             (0.80)%                13.35%                  N/A                    10.41%
3/18/94

Large Company Index II    N/A                    N/A                     N/A                    N/A
7/1/00

Mid Cap Index II          N/A                    N/A                     N/A                    N/A
7/1/00

Small Cap Index II        N/A                    N/A                     N/A                    N/A
7/1/00

Balanced                  4.78%                  N/A                     N/A                    11.87%
12/29/97

High Yield Bond           (7.00)%                N/A                     N/A                    1.30%
1/8/97

Municipal Bond            (4.09)%                5.39%                   6.59%                  N/A
7/16/87

Bond                      (0.11)%                5.34%                   6.83%                  N/A
7/16/87
</TABLE>

Annual Returns for the 1-Year and Since Inception  Periods Ended April 30, 2000,
for Class B Shares Based on Net Amount Invested*

<TABLE>
<CAPTION>
<S>                                      <C>                                    <C>
The AAL Mutual Fund and Inception Date   Total Return for the 1-Year Period     Average Annual Return for the Period
                                                                                Since Inception

Technology Stock                         N/A                                    N/A
7/1/00

Aggressive Growth                        N/A                                    N/A
7/1/00

Small Cap Stock                          32.71%                                 10.02%
1/8/97

Mid Cap Stock                            25.71%                                 12.16%
1/8/97

International                            22.44%                                 11.20%
1/8/97

Capital Growth                           8.09%                                  22.55%
1/8/97

Equity Income                            (1.80)%                                11.09%
1/8/97

Large Company Index II                   N/A                                    N/A
7/1/00

Mid Cap Index II                         N/A                                    N/A
7/1/00

Small Cap Index II                       N/A                                    N/A
7/1/00

Balanced                                 3.74%                                  10.86%
12/29/97

High Yield Bond                          (7.65)%                                0.60%
1/8/97

Municipal Bond                           (4.99)%                                3.11%
1/8/97

Bond                                     (1.09)%                                3.63%
1/8/97

</TABLE>

* There is no standardized average annual return information for the five-year
and 10-year periods, which is based on gross amount invested, available for
Class B shares. Class B shares first became available to investors on January 8,
1997.

INDEX INFORMATION

The S&P 500 Index
The S&P 500 Index is a broad index of larger capitalization stocks. It is
composed of 500 common stocks representing more than 70% of the total market
value of all publicly traded common stocks. The index is constructed by Standard
& Poor's, which chooses stocks on the basis of market values and industry
diversification. Most of the largest 500 companies listed on the U.S. stock
exchanges are included in the index. Most stocks in the index are listed on the
New York Stock Exchange. A much smaller number come from the American Stock
Exchange and the over-the-counter market. The index is capitalization-weighted,
--that is, stocks with a larger capitalization (shares outstanding times current
price) have a greater weight in the index. Market capitalizations of stocks in
the index as of December 1998, range from $487 million to $345.8 billion. The
median capitalization was $7.75 billion. S&P periodically makes additions and
deletions to the index. Selection of a stock for inclusion in the S&P 500 Index
in no way implies an opinion by Standard & Poor's as to its attractiveness as an
investment.

The S&P MidCap 400 Index
The S&P MidCap 400 Index is a capitalization weighted index of 400 domestic
stocks chosen for market size, liquidity and industry representation. The
component stocks are weighted according to the total market value of their
outstanding shares. The impact of a component's price change is proportional to
the issue's total market share value, which is share price times the number of
shares outstanding. These are summed up for all 400 stocks and divided by a
predetermined base value. The base value for the Standard & Poor's MidCap 400
Index is adjusted to reflect changes in capitalization resulting from mergers,
acquisitions, stock rights and substitutions, as well as other activities.

The S&P SmallCap 600 Index
The S&P SmallCap 600 Index is a capitalization weighted index of 600 domestic
stocks chosen for market size, liquidity and industry representation. The
component stocks are weighted according to the total market value of their
outstanding shares. The impact of a component's price change is proportional to
the issue's total market share value, which is share price times the number of
shares outstanding. These are summed up for all 600 stocks and divided by a
predetermined base value. The base value for the Standard & Poor's SmallCap 600
Index is adjusted to reflect changes in capitalization resulting from mergers,
acquisitions, stock rights and substitutions, as well as other activities.

Disclaimers and Limitations of Liabilities of Standard & Poor's
The disclaimers and limitations set forth below are set forth in a contract
between Standard & Poor's and AAL CMC. The Product refers to the Large Company
Index Fund and the Mid Cap Index Fund, and the Licensee refers to AAL CMC.
Standard & Poor's requires that such disclaimers be disclosed in this
Registration Statement.

The Product is not sponsored , endorsed, sold or promoted by Standard & Poor's,
a division of The McGraw-Hill Companies, Inc. ("S&P"). S&P makes no
representation or warranty, express or implied, to the owners of the Product or
any member of the public regarding the advisability of investing in securities
generally or in the Product particularly or the ability of the S&P 500 Index or
the S&P MidCap 400 Index to track general stock market performance. S&P's only
relationship to the Licensee is the licensing of certain trademarks and trade
names of S&P, the S&P 500 Index, the S&P MidCap 400 Index and the S&P SmallCap
600 Index which is determined, composed and calculated by S&P without regard to
Licensee or the Product. S&P has no obligation to take the needs of the Licensee
or the owners of the Product into consideration in determining, composing or
calculating the S&P 500 Index, the S&P MidCap 400 Index and the S&P SmallCap 600
Index. S&P is not responsible for, and has not participated in the determination
of the prices and amount of the Product or timing of the issuance or sale of the
Product or in the determination or calculation of the equation by which the
Product is to be converted into cash. S&P has no obligation or liability in
connection with the administration, marketing or trading of the Product.

S&P does not guarantee the accuracy and/or the completeness of the the S&P 500
Index, the S&P MidCap 400 Index and the S&P SmallCap 600 Index, or any data
included therein, and S&P shall have no liability for any errors, omissions or
interruptions therein. S&P makes no warranty, express or implied, as to the
results obtained by Licensee, owners of the Product or any other person or
entity from the use of the S&P 500 Index, the S&P MidCap 400 Index and the S&P
SmallCap 600 Index, or any data included therein. S&P makes no express or
implied warranties and expressly disclaims all warranties of merchantability or
fitness for a particular purpose or use with respect to the S&P 500 Index, the
S&P MidCap 400 Index and the S&P SmallCap 600 Index, or any data included
therein. Without limiting any of the foregoing, in no event shall S&P have any
liability for any special, punitive, indirect or consequential damages
(including lost profits), even if notified of the possibility of such damages.

OTHER PERFORMANCE INFORMATION
Performance information for Class A and B shares for the Funds may be compared
to various unmanaged indexes, such as Morgan Stanley's EAFE and World, Dow Jones
Industrial and Averages, the S&P 500, S&P MidCap 400, S&P Small Cap or Lehman
Brothers High Yield Index, Lehman Brothers Aggregate or other Lehman Bond
Indexes, as well as indices of similar mutual funds, and various foreign country
and currency indices. The Funds may include in their advertising rankings
published by recognized statistical services or publishers such as Morningstar,
Lipper Analytical Services, Inc., Weisenberger Investment Companies Services or
rankings shares published by other comparable national services that rank mutual
funds. They also may use information from publications such as Barron's,
Business Week, The Economist, Financial World, Forbes, Fortune, Kiplinger's
Personal Finance, Money, Smart Money, the Star, The Wall Street Journal or
Worth, and from videotapes of television shows and interviews involving
investment experts, including employees of the adviser and/or sub-adviser for
The AAL International Fund. Advertisements may depict performance graphically.


FINANCIAL STATEMENTS



The AAL Mutual Funds (Trust) has filed audited financial statements, notes to
financial statements and report of independent accountants for the Trust for the
fiscal year ended April 30, 2000, which are incorporated by reference from the
Annual Report to Shareholders dated April 30, 2000, into this Statement of
Additional Information. These include the audited financial statements below:


1. Schedules of Investments as of April 30, 2000.
2. Statement of Assets and Liabilities as of April 30, 2000.
3. Statement of Operations for fiscal year ended April 30, 2000.
4. Statement of Changes in Net Assets for fiscal year ended April 30, 2000.
5. Notes to Financial Statements

<PAGE>


PART C: OTHER INFORMATION
CLASS A AND B SHARES

ITEM 23.          EXHIBITS

In response to this item, the Registrant incorporates by reference the Exhibit
Index following the Signature Page to this amendment. Except as noted below, all
required exhibits have been previously filed and are incorporated by reference
from the Funds' Registration Statement on Form N-1(A) (File No. 33-12911), as
amended:

<TABLE>
<CAPTION>
<S>                                               <C>                                     <C>
Name of Exhibit                                   Incorporated by Reference               Filed Herewith

(a)  Articles of Incorporation for The AAL        Filed June 25, 1998, Post-Effective
     Mutual Funds, as amended                     Amendment No. 26

(b)  By-Laws of the Fund, as amended              Filed June 25, 1998, Post-Effective
                                                  Amendment No. 26

(c)  Instruments Defining Rights of               N/A
     Security Holders

(d)(i)    Investment Advisory Agreement with AAL                                          X
          CMC, as amended

(d)(ii)   Sub Advisory Agreement with Oechsle     Filed April 6, 1999, Post-Effective
          International Advisors, LLC             Amendment No.30

(d)(iii)  Sub-Advisory Agreement with Pacific                                             X
          Investment Management Company

(d)(iv)   Sub-Advisory Agreement with Janus                                               X
          Capital Corporation

(e   Distribution Agreement with AAL CMC,                                                 X
     as amended

(f)  Bonus or Profit Sharing Contracts            N/A

(g)  Global Custodial Services Agreements         Filed April 6, 1999, Post-Effective
     between the Funds and Citibank, N.A., as     Amendment No.30
     amended

(h)(i)    Administrative Services Agreement                                               X
          between the Funds and AAL, as amended

(h)(ii)   Shareholder Maintenance Agreement, as                                           X
          amended

(h)(iii)  Transfer and Dividend Disbursing                                                X
          Agent Agreement, as amended

(i)  Legal Consent                                                                        X

(j)  Consent of Independent Auditors                                                      X

(k)  Omitted Financial Statements                 N/A

(l)  Initial Capital Agreements                   N/A

(m)  Rule 12b-1 Plan                                                                      X

(n)  Financial Data Schedule                      N/A

(o)  Rule 18f-3 Plan                              Filed June 25, 1998, Post-Effective
                                                  Amendment No. 26

p(i)      Code of Ethics for AAL Capital          Filed April 14, 2000, Post-Effective
          ManagementCorporation                   Amendment No. 37

(p)(ii)   Code of Ethics for Sub-Adviser,         Filed April 14, 2000, Post-Effective
          Oechsle International Advisors LLC      Amendment No. 37

(p)(iii)  Code of Ethics for Pacific Investment                                           X
          Management Company

(p)(iv)   Code of Ethics for Janus Capital                                                X
          Corporation

(q)  Powers of Attorney for all Trustees          Filed December 29, 1999,
                                                  Post-Effective Amendment No.36
(r)  Transmittal Letter                                                                   X
</TABLE>


ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND

AAL is a fraternal benefit society organized under the laws of the State of
Wisconsin and is owned by and operated for its members. It has no stockholders
and is not subject to the control of any affiliated persons. AAL controls the
following wholly-owned, direct and indirect subsidiaries: (a) AAL Holdings,
Inc., a Delaware corporation that is a holding company that has no independent
operations; (b) AAL Capital Management Corporation, a Delaware corporation that
is a registered investment adviser and broker-dealer; (c) North Meadows
Investment Ltd., a Wisconsin corporation organized for the purpose of holding
and investing in real estate; and (d) AAL Trust Company, FSB, a federally
chartered thrift institution. Financial statements of AAL are filed on a
consolidated basis with regard to each of the foregoing entities.

<TABLE>
<CAPTION>
<S>                        <C>                            <C>                           <C>
Parent Company                                            AAL
                                                          (Wisconsin corp.)
Holding Company                                           AAL Holdings, Inc.
                                                          (Delaware corp.)
Wholly-owned               AAL Capital Management Corp.   AAL Trust Co., FSB            North Meadows Investment
subsidiaries of            (Delaware corp.)               (Federal charter)             Ltd.
AAL Holdings, Inc.                                                                      (Wisconsin corp.)
</TABLE>

ITEM 25. INDEMNIFICATION

Under Section 12 of Article Seven of the Funds' Declaration of Trust, the Funds
may not indemnify any trustee, officer or employee for expenses (e.g.,
attorney's fees, judgments, fines and settlement amounts) incurred in any
threatened, pending or completed action, if there has been an adjudication of
liability against such person based on a finding of willful misfeasance, bad
faith, gross negligence or reckless disregard of such person's duties of office
("disabling conduct").

The Funds shall indemnify their trustees, officers or employees for such
expenses whether or not there is an adjudication of liability, if, pursuant to
Investment Company Act Release 11330, a determination is made that such person
was not liable by reason of disabling conduct by: (i) final decision of the
court before which the proceeding was brought; or (ii) in the absence of such a
decision, a reasonable determination, based on factual review, that the person
was not liable for reasons of such conduct is made by: (a) a majority vote of
disinterested, independent trustees; or (b) independent legal counsel in a
written opinion.

Advancement of expenses incurred in defending such actions may be made pursuant
to Release 11330, provided that the person undertakes to repay the advance
unless it is ultimately determined that such person is entitled to
indemnification and one or more of the following conditions is met: (1) the
person provides security for the undertaking; (2) the Funds are insured against
losses arising by reason of any lawful advances; or (3) a majority of
disinterested non-party trustees or independent legal counsel in a written
opinion determines, based on review of readily available facts, that there is
reason to believe the person ultimately will be found entitled to
indemnification.

Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to trustees, officers and controlling persons of the Funds
pursuant to the foregoing provision, or otherwise, the Funds have been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in that Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Funds of expenses incurred or
paid by a trustee, officer or controlling person of the Funds in the successful
defense of any action, suit or proceeding) is asserted by such trustees, officer
or controlling person in connection with the securities being registered, the
Funds will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER

AAL Capital Management Corporation is the investment adviser ("Adviser") of the
Funds. Janus Capital Corporation is the sub-adviser to The AAL Aggressive Growth
Fund. Oechsle International Advisers LLC is the sub-adviser for The AAL
International Fund. Pacific Investment Management Company is the sub-adviser for
The AAL High Yield Bond Fund. For information as to the business, profession,
vocation or employment of a substantial nature of the Adviser, reference is made
to Parts A and B of this Registration Statement and to Form ADV filed under the
Investment Advisers Act of 1940 by the Adviser. AAL CMC also serves as Adviser
to the AAL Variable Product Series Fund, Inc..

ITEM 27. PRINCIPAL UNDERWRITERS

(a)  Not Applicable

(b)  AAL    Capital     Management     Corporation     serves    as    principal
     underwriter/distributor for shares of each of the Funds.

<TABLE>
<CAPTION>
<S>                                <C>                                    <C>
Name and Principal                 Position and Offices                   Position and Offices
Business Address                   with AAL CMC                           with the Funds

Robert G. Same                     President and Director                 President
222 W. College Ave.
Appleton, WI 54919

Charles D. Gariboldi, Jr.          Vice President                         Treasurer
222 W. College Ave.
Appleton, WI 54919


Woodrow E. Eno                     Director and Chairman                  Trustee and Vice-President
222 W. College Ave.
Appleton, WI 54919


James H. Abitz                     Sr. Vice President and Director        Vice-President
222 W. College Avenue
Appleton, WI 54919

Frederick D. Kelsven               Vice President and Secretary           Secretary
222 W. College Avenue
Appleton, WI 54919

James H. Krueger                   Vice President and Director            None
222 W. College Avenue
Appleton, WI 54919

Marnie L. Loomans-Thuecks          Vice President                         None
222 W. College Avenue
Appleton, WI 54919

Michael J. Mevis                   Vice President                         None
222 W. College Avenue
Appleton, WI 54919

Russell A. Evenson                 Director                               None
4321 N. Ballard Road
Appleton, WI 54919

Paul M. Stadler                    Vice President                         None
222 W. College Avenue
Appleton, WI 54919

Lori T. Richardson                 Vice President                         None
222 W. College Avenue
Appleton, WI 54919

Jeffrey L. Verhagen                Vice President                         None
222 W. College Avenue
Appleton, WI 54919

Charles A. Friedman                Vice President                         None
222 W. College Avenue
Appleton, WI 54919

Wendy S. Schmidt                   Assistant Vice President               None
4321 N. Ballard Road
Appleton, WI 54919

Carl J. Rudolph                    Director                               None
222 W. College Avenue
Appleton, WI 54919

Thomas R. Mischka                  Vice President                         None
4321 N. Ballard Road
Appleton, WI 54919

Jon M. Stellmacher                 Vice President and Director            None
4321 N. Ballard Road
Appleton, WI 54919

Gordon Beckler                     Vice President                         None
4321 N. Ballard Road
Appleton, WI 54919

Jeffrey R. Kargus                  Treasurer                              None
4321 N. Ballard Road
Appleton, WI 54919

Steven R. Wendt                    Vice-President and Chief Financial     None
4321 N. Ballard Road               Officer
Appleton, WI 54919

Steven J. Fredricks                Assistant Secretary                    Assistant Secretary
222 W. College Avenue
Appleton, WI 54919
</TABLE>


ITEM 28. LOCATION OF ACCOUNTS AND RECORDS

The accounts, books and other documents required to be maintained by the Funds
pursuant to Section 31(a) of the Investment Company Act of 1940 and the rules
promulgated thereunder are in the possession of the Funds and the Funds'
Custodian as follows: all documents required to be maintained by Rule 31a-1(b)
will be maintained by the Funds, (222 W. College Avenue, Appleton, WI
54919-0007) except that records required to be maintained by paragraph (2)(iv)
of Rule 31a-1(b) will be maintained by the Custodian (Citibank, N.A., 111 Wall
Street, New York, NY 10043)

ITEM 29. MANAGEMENT SERVICES

Not Applicable

ITEM 30. UNDERTAKINGS

Not Applicable

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended, the Registrant certifies that it meets all the
requirements for effectiveness of this amended registration statement under rule
485(b) of the Securities Act of 1933 and has duly caused this amended
registration statement to be duly signed on its behalf by the undersigned, duly
authorized, in the City of Appleton and State of Wisconsin on this day of June
29, 2000.

                                       THE AAL MUTUAL FUNDS

                                       By:   /s/ Robert G. Same
                                             ------------------
                                             Robert G. Same
                                             President

       Pursuant to the requirements of the Securities Act of 1933, this amended
registration statement has been signed below by the following persons in the
capacities and on the dates indicated:

/s/ Robert G. Same                 President                   June 29, 2000
---------------------------
Robert G. Same

/s/ Charles D. Gariboldi           Treasurer                   June 29, 2000
---------------------------
Charles D. Gariboldi               (Principal Accounting
                                    Financial Officer)






All of the Board of Trustees:

       F. Gregory Campbell           Richard L. Gady
       John H. Pender                Edward W. Smeds
       Lawrence M. Woods             John O. Gilbert
       Woodrow E. Eno

       Robert G. Same, by signing his name hereto, does hereby sign this
document on behalf of himself and each of the other above-named Trustees of The
AAL Mutual Funds pursuant to the powers of attorney duly executed by such
persons.

/s/ Robert G. Same                                          June 29, 2000
-------------------------------------
Robert G. Same
Attorney-in-Fact



<PAGE>



The AAL Mutual Funds
Index to Exhibits

Exhibit Number          Name of Exhibit

(d)(i)                  Amendment No. 13 to Investment Advisory Agreement
                        with AAL CMC

(d)(iii)                Sub-Advisory Agreement with Pacific Investment
                        Management Company

(d)(iv)                 Sub-Advisory Agreement with Janus Capital
                        Corporation

(e)                     Amendment No. 10 to Distribution Agreement with AAL
                        CMC

(h)(i)                  Amendment No. 2 to Administrative Services
                        Agreement between the Funds and AAL

(h)(ii)                 Amendment No. 8 to Shareholder Maintenance
                        Agreement

(h)(iii)                Amendment No. 16 to Transfer and Dividend
                        Disbursing Agent Agreement

(i)                     Legal Consent

(j)                     Consent of Independent Auditors

(m)                     Amendment No. 2 to the Amended and Restated Rule
                        12b-1 Distribution Plan

(p)(iii)                Code of Ethics for Pacific Investment Management
                        Company

(p)(iv)                 Code of Ethics for Janus Capital Corporation

(r)                     Transmittal Letter