Effective April 1, 1991, AAL  Distributors  Inc. changed its name to AAL Capital
Management Corporation.  All references to AAL Distributors Inc. ("Distributor")
are now to AAL Capital Management Corporation.


                              THE AAL MUTUAL FUNDS
                             DISTRIBUTION AGREEMENT

This Agreement, made as of the 15TH day of JUNE, 1987, between THE AAL MUTUAL
FUNDS, a Massachusetts business trust (the "Trust"), and AAL DISTRIBUTORS INC.,
a Delaware corporation (the "Distributor").

                                   WITNESSETH:

WHEREAS, the Trust proposes to engage in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "1940 Act") and it is in the interest of the Trust to
offer its classes of shares entitled the Capital Growth Series ("Capital Growth
Fund"), the Income Series ("Income Fund") and the Municipal Bond Series
("Municipal Bond Fund") (individually a "Fund" and collectively the "Funds") for
sale continuously; and

WHEREAS, the Distributor is registered as a broker-deal under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and is a member in good
standing of the National Association of Securities Dealers, Inc. (the "NASD");
and

WHEREAS, the Trust and the Distributor wish to enter into an agreement with each
other with respect to the continuous offering of the shares of beneficial
interest of all series of shares of the Trust (the "Shares"), to commence after
the effectiveness of its initial registration statement filed pursuant to the
Securities Act of 1933, as amended (the "1933 Act"), and the 1940 Act.

         NOW, THEREFORE, the parties agree as follows:

1.   Appointment of Distributor

     The Trust hereby  appoints the  Distributor as its exclusive  agent to sell
     and to arrange for the sale of the Shares,  on the terms and for the period
     set  forth in this  Agreement,  and the  Distributor  hereby  accepts  such
     appointment and agrees to act hereunder directly and/or through the Trust's
     transfer  agent in the  manner  set  forth in the  prospectus  (as  defined
     below).  It is understood  and agreed that the services of the  Distributor
     hereunder  are not  exclusive,  and the  Distributor  may act as  principal
     underwriter for the shares of any other registered  investment  company. It
     is also  understood  that purchases of shares may be made directly  through
     the Funds' Transfer Agent in the manner set forth in the prospectus.


<PAGE>


2.   Services and Duties of the Distributor

     (a)  The  Distributor  agrees to sell the  Shares,  as agent for the Trust,
          from time to time  during  the term of this  Agreement  upon the terms
          described in the Trust's  prospectus.  As used in this Agreement,  the
          term   "prospectus"   shall  mean  the  prospectus  and  statement  of
          additional  information  included as part of the Trust's  Registration
          Statement,  as such prospectus and statement of additional information
          may be  amended  or  supplemented  from  time to  time,  and the  term
          "Registration  Statement" shall mean the  Registration  Statement most
          recently  filed from time to time by the Trust with the Securities and
          Exchange Commission and effective under the 1933 Act and the 1940 Act,
          as such Registration Statement is amended by any amendments thereto at
          the time in effect. The Distributor shall not be obligated to sell any
          certain number of Shares.

     (b)  Upon commencement of the Trust's operations, the Distributor will hold
          itself  available to receive orders,  satisfactory to the Distributor,
          for the  purchase  of the Shares and will  accept such orders and will
          transmit  such  orders and funds  received  by it in payment  for such
          Shares as are so accepted to the Trust's  transfer agent or custodian,
          as appropriate,  as promptly as practicable.  Purchase orders shall be
          deemed  effective  at the  time  and in the  manner  set  forth in the
          prospectus. The distributor shall not make any short sales of shares.

     (c)  The  offering  price of the  Shares  shall be the net asset  value per
          share of the Shares (as  defined in the  Declaration  of Trust) and as
          determined  as set  forth in the  prospectus,  plus the  sales  charge
          (determined as set forth in the  prospectus).  The Trust shall furnish
          the  Distributor,  with all  possible  promptness,  an  advice of each
          computation of net asset value and offering price.

     (d)  The   above-mentioned   sales  charge  shall   constitute  the  entire
          compensation of the Distributor,  except that the Distributor may also
          be compensated  through payments under the  Distribution  Plan adopted
          pursuant to Rule 12b-1 under the 1940 Act.

3.   Duties of the Trust



<PAGE>


     (a)  Maintenance of Federal Registration.  The Trust shall, as its expense,
          take,  from  time to  time,  all  necessary  action  and  such  steps,
          including  payment of the related  filing fees, as may be necessary to
          register and maintain  registration  of a sufficient  number of Shares
          under  the 1933 Act.  The Trust  agrees to file from time to time such
          amendments,  reports and other  documents as may be necessary in order
          that  there  may  be no  untrue  statement  of a  material  fact  in a
          registration statement or prospectus, or necessary in order that there
          may be no  omission  to  state a  material  fact  in the  registration
          statement  or  prospectus  which  omission  would make the  statements
          therein misleading.

     (b)  Maintenance  of "Blue Sky"  Qualifications.  The Trust  shall,  at its
          expense,   use  its  best   efforts  to  qualify  and   maintain   the
          qualifications  of an appropriate  number of Shares for sale under the
          securities  laws of such states as the  Distributor  and the Trust may
          approve, and, if necessary or appropriate in connection therewith,  to
          qualify and  maintain  the  qualification  of the Trust as a broker or
          dealer in such states;  provided  that the Trust shall not be required
          to amend its  Declaration  of Trust or By-Laws to comply with the laws
          of any state,  to maintain an office in any state, to change the terms
          of the offering of the Shares in any state, to change the terms of the
          offering  of the  Shares in any state  from the terms set forth in its
          prospectus,  to  qualify as a foreign  corporation  in any state or to
          consent to service of process in any state other than with  respect to
          claims  arising  out of the  offering  and  sale  of the  Shares.  The
          Distributor shall furnish such information and other material relating
          to its  affairs  and  activities  as may be  required  by the Trust in
          connection with such qualifications.

     (c)  Copies of Reports and  Prospectus.  The Trust  shall,  at its expense,
          keep the Distributor  fully informed with regard to its affairs and in
          connection  therewith shall furnish to the  Distributor  copies of all
          information,   financial   statements   and  other  papers  which  the
          Distributor  may  reasonably  request for use in  connection  with the
          distribution of Shares,  including such reasonable number of copies of
          its prospectus and annual and interim  reports as the  Distributor may
          request and shall cooperate fully in the efforts of the Distributor to
          sell and arrange for the sale of the Shares and in the  performance of
          the Distributor under this Agreement.

4.   Conformity with Applicable Law and Rules


     The Distributor agrees that in selling Shares hereunder it shall conform in
     all respects  with the laws of the United  States and of any state in which
     Shares may be offered,  and with  applicable  rules and  regulations of the
     NASD.



<PAGE>


5.   Expenses

     (a)  The Trust shall bear all costs and expenses of the continuous offering
          of its Shares in connection  with: (i) fees and  disbursements  of its
          counsel and independent accountants, (ii) the preparations, filing and
          printing of any registration  statements and/or prospectus required by
          and under the  federal  securities  laws,  (iii) the  preparation  and
          mailing of annual and interim reports,  prospectus and proxy materials
          to shareholders and (iv) the qualifications of Shares of the Trust for
          sale under the securities  laws of such states or other  jurisdictions
          as shall be selected by the Trust and the Distributor and the cost and
          expenses  payable  to each  such  state for  continuing  qualification
          therein.

     (b)  The  Distributor  shall bear (i) the costs and expenses of  preparing,
          printing and  distributing any materials not prepared by the Trust and
          other  materials  used by the  Distributor  in  connection  with  this
          offering of Shares for sale to the public,  including  the  additional
          cost of printing  copies of the  prospectus  and of annual and interim
          reports  to  shareholders  other  than  copies  thereof  required  for
          distribution to shareholders or for filing with any federal securities
          authorities,   (ii)  any  expenses  of  advertising  incurred  by  the
          Distributor in connection with such offering and (iii) the expenses of
          registration or qualification of the Distributor as a dealer or broker
          under  federal  or state  laws and the  expenses  of  continuing  such
          registration or qualification.

6.   Independent Contractor

     In performing its duties hereunder, the Distributor shall be an independent
     contractor and neither the Distributor, nor any of its officers, directors,
     employees,  or  representatives  is or shall be an employee of the Trust in
     the  performance of the  Distributor's  duties  hereunder.  The Distributor
     shall be responsible for its own conduct and the employment,  control,  and
     conduct  of its  agents  and  employees  and for  injury to such  agents or
     employees or to others  through its agents or  employees.  The  Distributor
     assumes full  responsibility  for its agents and employees under applicable
     statutes and agrees to pay all employee taxes thereunder.

7.   Indemnification



<PAGE>


     (a)  Indemnification of Trust. The Distributor agrees to indemnify and hold
          harmless  the  Trust  and  each of its  present  or  former  trustees,
          officers,  employees,  representatives  and each  person,  if any, who
          controls  or  previously  controlled  the Trust  within the meaning of
          Section 15 of the 1933 Act against  any and all  losses,  liabilities,
          damages,  claims  or  expenses  (including  the  reasonable  costs  of
          investigating or defending any alleged loss, liability, damage, claims
          or expense and  reasonable  legal  counsel fees incurred in connection
          therewith)  to which the Trust or any such  person may become  subject
          under  the 1933  Act,  under any other  statute,  at  common  law,  or
          otherwise,  arising out o the  acquisition of any Shares by any person
          which (i) may be based upon any wrongful act by the Distributor or any
          of   the    Distributor's    directors,    officers,    employees   or
          representatives,  or (ii) may be based  upon any untrue  statement  or
          alleged   untrue   statement  of  a  material  fact   contained  in  a
          registration  statement,  prospectus,   shareholder  report  or  other
          information  covering  Shares filed or made public by the Trust or any
          amendment  thereof or supplement  thereto,  or the omission or alleged
          omission  to state  therein  a  material  fact  required  to be stated
          therein or necessary to make the statements  therein not misleading if
          such  statement  or  omission  was made in reliance  upon  information
          furnished  to the  Trust  by the  Distributor.  In no case  (i) is the
          Distributor's   indemnity  in  favor  of  the  Trust,  or  any  person
          indemnified  to be deemed  to  protect  the Trust or such  indemnified
          person  against any  liability to which the Trust or such person would
          otherwise be subject by reason of willful  misfeasance,  bad faith, or
          gross  negligence in the performance of his duties or by reason of his
          reckless  disregard of his obligations and duties under this Agreement
          or (ii) is the Distributor to be liable under its indemnity  agreement
          contained in this Paragraph with respect to any claim made against the
          Trust or any person  indemnified  unless the Trust or such person,  as
          the case may be, shall have notified the Distributor in writing of the
          claim  within a  reasonable  time  after the  summons  or other  first
          written  notification  giving  information  of the nature of the claim
          shall have been  served  upon the Trust or upon such  person (or after
          the Trust or such person shall have received notice to such service on
          any designated  agent.) However,  failure to notify the Distributor of
          any such claim shall not relieve the  Distributor  from any  liability
          which the Distributor may have to the Trust or any person against whom
          such action is brought  otherwise than on account of the Distributor's
          indemnity agreement contained in this Paragraph.



<PAGE>


          The Distributor shall be entitled to participate,  at its own expense,
          in the  defense,  or, if the  Distributor  so  elects,  to assume  the
          defense of any suit  brought to endorse  any such  claim,  but, if the
          Distributor  elects to  assume  the  defense,  such  defense  shall be
          conducted by legal counsel chosen by the Distributor and  satisfactory
          to the Trust and to the  defendant or  defendants  who are entitled to
          such  indemnification.  In the event  that the  Distributor  elects to
          assume the defense of any suit and retain legal counsel, the Trust and
          the defendant or defendants who are entitled to such  indemnification,
          shall  bear the fees and  expenses  of any  additional  legal  counsel
          retained  by them.  If the  Distributor  does not elect to assume  the
          defense of any such suit, the Distributor will reimburse the Trust and
          the defendant or defendants  entitled to such  indemnification for the
          reasonable  fees and expenses of any legal  counsel  retained by them.
          The   Distributor   agrees  to  promptly   notify  the  Trust  of  the
          commencement of any litigation of proceedings against it or any of its
          officers, employees or representatives in connection with the issue or
          sale of any Shares.

     (b)  Indemnification of the Distributor.  The Trust agrees to indemnify and
          hold  harmless  the  Distributor  and each of its  present  or  former
          directors,  officers,  employees,  representatives and each person, if
          any, who controls or previously  controlled the Distributor within the
          meaning  of Section 15 of the 1933 Act,  under any other  statute,  at
          common law, or otherwise, arising out of the acquisition of any Shares
          by any  person  which (i) may be based  upon any  wrongful  act by the
          Trust  or  any  of  the  Trust's  trustees,   officers,  employees  or
          representatives  (other  than the  Distributor),  or (ii) may be based
          upon any untrue  statement or alleged  untrue  statement or a material
          fact contained in a registration  statement,  prospectus,  shareholder
          report or other  information  covering  Shares filed or made public by
          the Trust or any  amendment  thereof  or  supplement  thereto,  or the
          omission or alleged omission to state therein a material fact required
          to be stated therein or necessary to made the  statements  therein not
          misleading unless such statement or omission was made in reliance upon
          information furnished to the Trust by the Distributor.  In no case (i)
          is the Trust's  indemnity in favor of the  Distributor,  or any person
          indemnified   to  be  deemed  to  protect  the   Distributor  or  such
          indemnified  person against any liability to which the  Distributor or
          such  person   would   otherwise  be  subject  by  reason  of  willful
          misfeasance,  bad faith, or gross negligence in the performance of his
          duties or by reason of his reckless  disregard of his  obligations and
          duties under this  Agreement,  or (ii) is the Trust to be liable under
          its indemnity  agreement  contained in this  Paragraph with respect to
          any claim made against  Distributor or person  indemnified  unless the
          Distributor,  or such person,  as the case may be, shall have notified
          the Trust in writing of the claim within a  reasonable  time after the
          summons or other first written  notification giving information of the
          nature of the claim  shall have been served  upon the  Distributor  or
          upon such person (or after the  Distributor  or such person shall have
          received  notice of such service on any  designated  agent.)  However,
          failure to notify the Trust of any such claim  shall not  relieve  the
          Trust from any liability  which the Trust may have to the  Distributor
          or any person  against whom such action is brought  otherwise  than on
          account  of  the  Trust's  indemnity   agreement   contained  in  this
          Paragraph.



<PAGE>


          The Trust shall be entitled to participate, at its own expense, in the
          defense, or, if the Trust so elects, to assume the defense of any suit
          brought to enforce any such claim,  but if the Trust  elects to assume
          the defense,  such defense shall be conducted by legal counsel  chosen
          by the Trust and  satisfactory to the Distributor and to the defendant
          or defendants entitled to such  indemnification.  In the vent that the
          Trust  elects to  assume  the  defense  of any suit and  retain  legal
          counsel,  the Distributor and the defendant or defendants  entitled to
          such  indemnification,  shall  bear  the  fees  and  expenses  of  any
          additional legal counsel retained by them. If the Trust does not elect
          to assume the defense of any such suit,  the Trust will  reimburse the
          Distributor   and  the  defendant  or  defendants   entitled  to  such
          indemnification  for the  reasonable  fees and  expenses  of any legal
          counsel  retained by them.  The Trust  agrees to  promptly  notify the
          Distributor  of the  commencement  of any  litigation  or  proceedings
          against  it  or  any  of  its  trustees,   officers,   employees,   or
          representatives in connection with the issue or sale of any Shares.

8.   Authorized Representatives

     The  Distributor  is not  authorized  by the Trust to give on behalf of the
     Trust any information or to make any representations in connection with the
     sale of Shares other than the information and representations  contained in
     a  registration  statement  or  prospectus  filed with the  Securities  and
     Exchange  Commission  ("SEC")  under  the 1933  Act  and/or  the 1940  Act,
     covering  Shares,  as such  registration  statement and  prospectus  may be
     amended or  supplemented  from time to time,  or contained  in  shareholder
     reports or other material that may be prepared by or on behalf of the Trust
     for the  Distributor's  use.  This shall not be  construed  to prevent  the
     Distributor  from  preparing  and  distributing  tombstone  ads  and  sales
     literature or other  material as it may deem  appropriate.  No person other
     than the Distributor is authorized to act as principal underwriter (as such
     term is defined in the 1940 Act) for the Trust.

9.   Term of Agreement

     The term of this Agreement shall begin on the date first above written, and
     unless sooner  terminated as hereinafter  provided,  this  Agreement  shall
     remain in effect through JUNE 15, 1989.  Thereafter,  this Agreement  shall
     continue in effect from year to year, subject to the termination provisions
     and all other terms and conditions  thereof,  so long as such  continuation
     shall be  specifically  approved at least annually by the Board of Trustees
     or by vote of a majority of the outstanding  voting securities of the Trust
     and,  concurrently  with such approval by the Board of Trustees or prior to
     such approval by the holders of the  outstanding  voting  securities of the
     Trust,  as the case may be, by the vote, cast in person at a meeting called
     for the purpose of voting on such  approval,  of a majority of the trustees
     of the Trust who are not parties to this Agreement or interested persons of
     any such party. The Distributor  shall furnish to the Trust,  promptly upon
     its



<PAGE>


     request,  such  information  as may reasonably be necessary to evaluate the
     terms of this Agreement or any extension, renewal or amendment hereof.

10.  Amendment or Assignment of Agreement

     This  Agreement  may not be amended or assigned  except as permitted by the
     1940 Act, and this Agreement shall automatically and immediately  terminate
     in the event of its assignment.

11.  Termination of Agreement

     This  Agreement  may be  terminated  by either  party  hereto,  without the
     payment  of any  penalty,  on not more  than upon 60 days' nor less than 30
     days' prior  notice in writing to the other  party;  provided,  that in the
     case of termination by the Trust such action shall have been  authorized by
     resolution  of a majority of the  trustees of the Trust who are not parties
     to this Agreement or interested  persons of any such party, or by vote of a
     majority of the outstanding voting securities of the Trust.

12.  Miscellaneous

     The captions in this  Agreement are included for  convenience  of reference
     only and in no way  define or  delineate  any of the  provisions  hereof or
     otherwise affect their construction or effect.

     This Agreement may be executed  simultaneously in two or more counterparts,
     each of which shall be deemed an original,  but all of which together shall
     constitute one and the same instrument.

     Nothing herein  contained  shall be deemed to require the Trust to take any
     action contrary to its  Declaration of Trust or By-Laws,  or any applicable
     statutory or regulatory  requirement  to which it is subject or by which it
     is bound,  or to relieve or deprive  the Board of  Trustees of the Trust of
     responsibility for and control of the conduct of the affairs of the Trust.

13.  Definition of Terms



<PAGE>


     Any questions of  interpretation of any term or provision of this Agreement
     having a  counterpart  in or otherwise  derived from a term or provision of
     the 1940 Act shall be resolved by  reference  to such term or  provision of
     the 1940 Act and to  interpretation  thereof,  if any, by the United States
     courts or, in the absence of any controlling decision of any such court, by
     rules,  regulations  or orders of the  Securities  and Exchange  Commission
     validly issued pursuant to the 1940 Act. Specifically, the terms "vote of a
     majority of the  outstanding  voting  securities",  " interested  persons",
     "assignment"  and  "affiliated  person",  as used in Paragraphs 8, 9 and 10
     hereof,  shall have the  meanings  assigned to them by Section  2(a) of the
     1940 Act. In addition,  where the effect of a  requirement  of the 1940 Act
     reflected  in any  provision  of  this  Agreement  is  relaxed  by a  rule,
     regulation or order of the Securities and Exchange  Commission,  whether of
     special  or of  general  application,  such  provision  shall be  deemed to
     incorporate the effect of such rule, regulation or order.

14.  Compliance with Securities Laws

     The  Trust  represents  that it is  registered  as an  open-end  management
     investment  company under the 1940 Act, and agrees that it will comply with
     all the  provisions  of the  1940  Act  and of the  rules  and  regulations
     thereunder.  The Trust and the Distributor each agree to comply with all of
     the  applicable  terms and  provisions  of the 1940 Act,  the 1933 Act and,
     subject to the provisions of Section 4(d), all applicable  "Blue Sky" laws.
     The  Distributor  agrees to  comply  with all of the  applicable  terms and
     provisions of the Securities Exchange Act of 1934.

15.  Notices

     Any notice  required to be given pursuant to this Agreement shall be deemed
     duly given if delivered or mailed by registered mail,  postage prepaid,  to
     the  Distributor  or to the  Trust at 222 West  College  Avenue,  Appleton,
     Wisconsin, 54919-0007.

16.  Governing Law

     This Agreement  shall be governed and construed in accordance with the laws
     of the State of Wisconsin.

17.  No Shareholder Liability

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


<PAGE>



     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
signed by their duly authorized  representatives and their respective  corporate
seals to be hereunto affixed, as of the day and year first above written.


ATTEST:                                      THE AAL MUTUAL FUNDS


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



ATTEST:                                      AAL DISTRIBUTORS INC.


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


<PAGE>





                                 AMENDMENT NO. 9
                                       TO
                             DISTRIBUTION AGREEMENT

Effective December 31, 1999, The AAL Mutual Funds Distribution Agreement (the
"Agreement") dated June 15, 1987, as amended, between The AAL Mutual Funds and
AAL Capital Management Corporation (f/k/a AAL Distributors, Inc.), is further
amended as follows:

1.   Exhibit A to the  Agreement is amended to add The AAL Large  Company  Index
     Fund, The AAL Mid Cap Index Fund, and The AAL Bond Index Fund.

A revised Exhibit A, effective as of the date of this Amendment No. 9 is
attached an incorporated herein.

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


ATTEST:                                      THE AAL MUTUAL FUNDS


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



ATTEST:                                      AAL CAPITAL MANAGEMENT CORPORATION


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




                                    EXHIBIT A
                                       TO
                   THE AAL MUTUAL FUNDS DISTRIBUTION AGREEMENT
                          (EFFECTIVE DECEMBER 31, 1999)


1.       The AAL Capital Growth Fund

2.       The AAL Bond Fund

3.       The AAL Municipal Bond Fund

4.       The AAL Money Market Fund

5.       The AAL U.S Government Zero Coupon Target Fund, Series 2001

6.       The AAL U.S Government Zero Coupon Target Fund, Series 2006

7.       The AAL Mid Cap Stock Fund (f/k/a The AAL Smaller Company Stock Fund)

8.       The AAL Equity Income Fund (f/k/a The AAL Utilities Fund)

9.       The AAL International Fund

10.      The AAL Small Cap Stock Fund

11.      The AAL High Yield Bond Fund

12.      The AAL Balanced Fund

13.      The AAL Large Company Index Fund

14.      The AAL Mid Cap Index Fund

15.      The AAL Bond Index Fund