SCHEDULE 14A INFORMATION

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


Filed by the Registrant [X]

Filed by a Party other than the Registrant [  ]

Check the appropriate box:

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


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

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

Payment of Filing Fee (Check the appropriate box):

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

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


         2)  Aggregate number of securities to which transaction applies:


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


         4)   Proposed maximum aggregate value of transaction:


         5)   Total fee paid:


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

         1)       Amount Previously Paid:


         2)       Form, Schedule or Registration Statement No.:


         3)       Filing Party:


         4)       Date Filed:

<PAGE>

                                   [AAL Logo]

                              THE AAL MUTUAL FUNDS
                             222 West College Avenue
                         Appleton, Wisconsin 54919-0007
                          800-553-6319 or 920-734-7633

   
                               September 14, 1998
    

Dear Shareholder:

         Re:      Special Meeting of Shareholders

         Enclosed  is a notice  of a Special  Meeting  of  Shareholders  of each
series of The AAL Mutual Funds (together the "Funds"), to be held on October 30,
1998, together with a Proxy Statement and Form of Proxy relating to the business
to be transacted at the meeting.  This Special  Meeting of Shareholders is being
called for the reasons listed below.

Election of Trustees; Selection of Accountants

     Mr. D. W. Russler,  who has served as a Trustee  since 1992,  has announced
his retirement  effective  December 31, 1998. I am sure all of our  shareholders
join me and the other  Trustees  and  management  of the Funds as we extend  our
gratitude to Mr.  Russler for his  dedicated  service and wise guidance over the
years.

   
     The Board of  Trustees  is asking the  shareholders  of all of the Funds to
vote on the election of seven  nominees  for the Board of  Trustees.  Six of the
nominees are currently  serving as Trustees.  The seventh,  Mr. Edward W. Smeds,
has been  nominated to fill the vacancy that will be created with the retirement
of Mr. Russler on December 31, 1998. Mr. Russler will not stand for election.
    

     Shareholders  of all of the  Funds  also  are  being  asked to  ratify  the
selection of  PriceWaterhouseCoopers  LLP as independent  public accountants for
the fiscal year ending April 30, 1999. All  shareholders of The AAL Mutual Funds
will vote together on the election of Trustees and the selection of accountants.

New Sub-Advisory Agreement for International Fund

   
     The  Board  of  Trustees  is  recommending   that  Societe  Generale  Asset
Management  Corp.  ("SoGen") be replaced as The AAL  International  Stock Fund's
Sub-Adviser by Oechsle  International  Advisers  ("Oechsle").  Therefore,  it is
necessary for the Shareholders of the International Fund to vote on the approval
of a new Sub-Advisory  Agreement with Oechsle.  The change from SoGen to Oechsle
is being proposed primarily for the following reasons:

     1.   The  investment  philosophy of the  International  Fund is to be fully
          invested,  except for cash  needed  for  transactional  purposes.  The
          investment  style of SoGen has  concentrated  on smaller,  less liquid
          securities than many other mutual funds with similar  objectives.  The
          supply of securities  matching  SoGen's  focus has been limited.  As a
          result,  the International  Fund has maintained a larger proportion of
          its assets in commercial  paper and other short-term instruments than
          the Trustees believe is in the shareholders' best interests.

     2.   SoGen's investment  performance as Sub-Adviser has consistently lagged
          both the unmanaged Morgan Stanley Europe Australasia Far East ("EAFE")
          Index as well as mutual funds with similar investment objectives.
    

     3.   Oechsle has proposed a sub-advisory  fee which is  significantly  less
          than the  sub-advisory  fee paid to SoGen.  The  International  Fund's
          investment  adviser,  AAL Capital Management  Corporation,  has agreed
          that it will reduce its  advisory fee under the  International  Fund's
          investment  advisory  agreement  in an  amount  corresponding  to  the
          reduction in the sub-advisory fee proposed by Oechsle.  Based upon the
          International  Fund's  $151,578,627 in net assets as of July 31, 1998,
          this  reduction  would  save  shareholders  $278,157  annually,  or an
          overall reduction in sub-advisory fees of approximately one-third.

     Oechsle is an independently owned money management  organization  primarily
focused on the management of investments in  international  securities.  Oechsle
was organized in 1986 by a group of  investment  professionals,  who  previously
worked as a team at Putnam  International  Advisors.  The  founding  partners of
Oechsle have worked  together for an average of 15 years.  The Board of Trustees
became  familiar  with  Oechsle  in  Oechsle's  role as  Sub-Adviser  to the AAL
Variable Product International Stock Portfolio, a series of AAL Variable Product
Series Fund, Inc. for which each of the Trustees, except for Mr. John H. Pender,
serves as a member of the Board of  Directors.  The Board of  Trustees  believes
that Oechsle's  management style and philosophies are better suited to achieving
the International  Fund's investment objective than are those of SoGen. Based on
the Board of Trustees'  familiarity  with and assessment of Oechsle's  executive
personnel and portfolio managers,  its administrative and investment operations,
its systems  and  procedures,  its  investment  performance,  the quality of its
services,  and its financial condition,  the Board of Trustees has a high degree
of confidence in Oechsle.

Amend Investment Objectives of Small Cap Stock and Mid Cap Stock Funds

   
     The  Board  of  Trustees  is  recommending  a  change  to  the  fundamental
investment  objectives of The AAL Small Cap Stock Fund and The AAL Mid Cap Stock
Fund.  The proposed  changes would  eliminate  from the  fundamental  investment
objective of each of these Funds the market  capitalization  thresholds  used to
define small companies and mid-sized companies,  respectively.  These thresholds
would instead be introduced as non fundamental investment policies, meaning they
could be  changed  in the future by the Board of  Trustees  without  shareholder
approval.  Only  shareholders  of these two Funds will vote,  and they will vote
separately on this matter.

         Since the  inception of these Funds,  the stock market has  appreciated
greatly.  Consequently,  companies that are  characterized  as small or mid-size
have also grown. The threshold amounts  contained in the fundamental  investment
objectives of these Funds no longer accurately  reflect the market perception of
what constitutes a small-cap, versus a mid-cap, or a large-cap company.

         The Board  therefore  is  proposing  to make the market  capitalization
thresholds  used to define small and mid-sized  cap  companies  non fundamental,
thereby  permitting  the Board of Trustees,  without  shareholder  approval,  to
adjust those  thresholds from time to time in the future as necessary to reflect
market trends.  At the same time, the Board of Trustees is proposing to increase
the market  capitalization  thresholds  presently used to define small companies
and mid-cap companies to increase the threshold amount for both Funds. The Board
believes  future  flexibility  associated with this proposed change will enhance
the  ability  of the  Funds  to  achieve  their  objectives  in  varying  market
environments.
    

         If you have any  questions  or concerns  that you would like to discuss
about  the  meeting  and  the  matters  to be  acted  upon,  please  call  us at
800-553-6319.

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

                                                   Very truly yours,

                                                   THE AAL MUTUAL FUNDS



                                                   Ronald G. Anderson, President


<PAGE>



                              THE AAL MUTUAL FUNDS
                         Appleton, Wisconsin 54919-0007
                          800-553-6319 or 920-734-7633
                       -----------------------------------

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


                         To Be Held on October 30, 1998


         A Special  Meeting of the  Shareholders  of The AAL Mutual  Funds ("AAL
Trust"), including 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, The AAL High Yield Bond Fund, The AAL Bond Fund, The AAL
Municipal Bond Fund, The AAL Money Market Fund and The AAL U.S.  Government Zero
Coupon Target Funds, Series 2001 and Series 2006 (together the "Funds"), will be
held at 222 West College Avenue, Appleton, Wisconsin 54919, on October 30, 1998,
beginning at 10:00 a.m. local time for the following purposes:

     1.   To vote on the election of seven nominees for the Board of Trustees;

     2.   To ratify the Board of Trustees'  selection of  PriceWaterhouseCoopers
          LLP as  independent  public  accountants  for all of the Funds for the
          fiscal year ending April 30, 1999;

   
     3.   To  approve,  with  respect  to  The  AAL  International  Fund,  a new
          Sub-Advisory Agreement (the "Proposed Sub-Advisory  Agreement") by and
          among AAL  Trust,  AAL  Capital  Management  Corporation  and  Oechsle
          International  Advisers LLC  ("Oechsle  LLC").  A copy of the Proposed
          Sub-Advisory  Agreement is attached as Appendix A to the  accompanying
          Proxy Statement;

     4.   To approve,  with respect to The AAL Small Cap Stock Fund, a change to
          the Fund's fundamental investment objective;

     5.   To approve,  with  respect to The AAL Mid Cap Stock Fund,  a change to
          the Fund's fundamental investment objective; and

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

     The Board of Trustees  has fixed the close of business on August 31,  1998,
as the record date for  determining  shareholders  entitled to notice of, and to
vote at, the Special Meeting and any adjournment  thereof.  Only shareholders of
record at the close of  business  on that date will be  entitled  to vote.  Your
attention is invited to the Proxy Statement  accompanying this Notice for a more
complete  statement  regarding  the  matters  to be  acted  upon at the  Special
Meeting.
    

                                            By Order of the Board of Trustees of
                                            The AAL Mutual Funds



                                            Robert G. Same, Secretary




   
Appleton, Wisconsin
September 14, 1998
    

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

<PAGE>

                                PROXY STATEMENT

   
                              THE AAL MUTUAL FUNDS
                          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
                          The AAL High Yield Bond Fund
                           The AAL Municipal Bond Fund
                                The AAL Bond Fund
                            The AAL Money Market Fund
          The AAL U.S. Government Zero Coupon Target Fund, Series 2001
          The AAL U.S. Government Zero Coupon Target Fund, Series 2006
    

                             222 West College Avenue
                         Appleton, Wisconsin 54919-0007
                         1-800-553-6319 or 920-734-7633



   
                    This Proxy Statement was first mailed to
                  Shareholders on or about September 15, 1998
    


                             SOLICITATION AND VOTING

Solicitation

   
     The enclosed  Proxy is being  solicited by the Board of Trustees of The AAL
Mutual  Funds ("AAL  Trust") in  connection  with the joint  Special  Meeting of
Shareholders of each of the Funds listed above (each a "Fund" and, collectively,
the "Funds") to be held on the day and at the time and location specified in the
Notice of Special  Meeting of Shareholders  (the "Special  Meeting") and Form of
Proxy that accompany this Proxy  Statement . This joint Proxy Statement is being
used in order to reduce the  preparation,  printing  and postage  expenses  that
would  result  from the use of a  separate  Proxy  Statement  for each Fund and,
because many  shareholders  own shares of more than one Fund, to avoid burdening
shareholders  with  more  than one  Proxy  Statement.  Although  some  proposals
described  herein  relate to several or all of the Funds,  shareholders  of each
Fund will vote  separately on each proposal on which  shareholders  of that Fund
are  entitled to vote,  and  separate  proxy cards are enclosed for each Fund in
respect of which a shareholder  is a record owner of shares.  You are encouraged
to read  carefully the Proxy  Statement and mark and return the proxy or proxies
accompanying  it. The table below summarizes the proposals and how they apply to
the Funds.
    

--- ----------------------------------------------- ----------------------------
    PROPOSAL                                        FUNDS AFFECTED
--- ----------------------------------------------- ----------------------------
--- ----------------------------------------------- ----------------------------
1.  Election of Trustees                            All Funds
--- ----------------------------------------------- ----------------------------
--- ----------------------------------------------- ----------------------------
2.  Ratification of Independent Accountants         All Funds
--- ----------------------------------------------- ----------------------------
--- ----------------------------------------------- ----------------------------
3.  Proposed Sub-Advisory Agreement                 The AAL International Fund
--- ----------------------------------------------- ----------------------------
--- ----------------------------------------------- ----------------------------
4.  Investment Objective Change                     The AAL Small Cap Stock Fund
--- ----------------------------------------------- ----------------------------
--- ----------------------------------------------- ----------------------------
5.  Investment Objective Change                     The AAL Mid Cap Stock Fund
--- ----------------------------------------------- ----------------------------


Quorum and Voting

   
         The  presence  at the  Special  Meeting,  in  person  or by  proxy,  of
shareholders  representing  one-third of all shares  outstanding and entitled to
vote  on a  matter  constitutes  a  quorum  for  the  transaction  of  business.
Abstentions will be counted as present for purposes of determining a quorum, but
will  not be  counted  as votes  cast  with  respect  to any  proposal.  "Broker
non-votes" (i.e., proxies received from brokers or nominees indicating that such
persons  have  not  received  instructions  from the  beneficial  owner or other
persons entitled to vote the shares on a particular matter with respect to which
the broker or the nominees do not have discretionary power)  will be treated the
same as abstentions.

         Shares  represented by properly  executed proxies received by AAL Trust
will be voted at the Special Meeting and any  adjournment  thereof in accordance
with the terms of such  proxies.  However,  if no  instructions  are  specified,
shares will be voted "FOR"  Proposals 1, 2, 3, 4 and 5 and in the  discretion of
the  persons  named in the  proxy on  Proposal  6. If a Form of Proxy  withholds
authority to vote on Proposal 1 for any of the Trustees,  the shares represented
thereby will be counted as votes cast against such Trustee(s). A shareholder may
revoke  his or her proxy at any time  prior to the  voting  thereof  by filing a
written  notice of  revocation  with the  Secretary  of AAL  Trust  prior to the
Special Meeting or by delivering a duly executed proxy bearing a later date.
    

         The election of Trustees pursuant to Proposal 1 requires a plurality of
the votes cast by the holders of AAL Trust's outstanding shares, with all series
voting together.  "Plurality" means that the individuals who receive the largest
number  of votes  cast are  elected  as  Trustees  up to the  maximum  number of
Trustees to be chosen at the Special Meeting. Consequently, any shares not voted
(for example, abstentions) have no impact on the election of Trustees, except to
the  extent  that the  failure  to vote for an  individual  results  in  another
individual receiving a larger number of votes.

         Ratification  of  PriceWaterhouseCoopers  LLP to serve  as  independent
public  accountants to AAL Trust pursuant to Proposal 2 requires that the number
of votes cast in favor of  ratification  must exceed the number of votes cast in
opposition to  ratification.  Accordingly,  shares  represented  in person or by
proxy at the Special Meeting which are not voted (for example, abstentions) will
not affect the outcome of this proposal.

         Approval  of all other  matters in this Proxy  Statement  requires  the
affirmative vote of "a majority of the outstanding voting securities" of a Fund,
defined under the 1940 Act to mean at least a majority of the outstanding voting
shares of the affected Fund or, if less, 67% of the voting shares represented at
a meeting at which the holders of 50% or more of the  outstanding  voting shares
of that Fund are present or represented by proxy.  Accordingly,  abstentions and
broker  non-votes  will have the same effect as votes cast  against  approval of
these matters.

   
     Shareholders  of record of each of the  Funds at the close of  business  on
August 31, 1998, will be entitled to one vote on each matter  presented for each
share so held. At that date, the Funds had outstanding the following  numbers of
shares:

<TABLE>
<CAPTION>
<S>                                                           <C>    
------------------------------------------------------------ -------------------------------------------
Fund                                                         Number of Outstanding Shares
------------------------------------------------------------ -------------------------------------------
------------------------------------------------------------ -------------------------------------------
The AAL Small Cap Stock Fund                                 10,915,780.922 
------------------------------------------------------------ -------------------------------------------
------------------------------------------------------------ -------------------------------------------
The AAL Mid Cap Stock Fund                                   43,153,380.979
------------------------------------------------------------ -------------------------------------------
------------------------------------------------------------ -------------------------------------------
The AAL International Fund                                   13,717,261.590
------------------------------------------------------------ -------------------------------------------
------------------------------------------------------------ -------------------------------------------
The AAL Capital Growth Fund                                  97,757,791.639
------------------------------------------------------------ -------------------------------------------
------------------------------------------------------------ -------------------------------------------
The AAL Equity Income Fund                                   16,185,948.519
------------------------------------------------------------ -------------------------------------------
------------------------------------------------------------ -------------------------------------------
The AAL Balanced Fund                                        5,752,654.687
------------------------------------------------------------ -------------------------------------------
------------------------------------------------------------ -------------------------------------------
The AAL High Yield Bond Fund                                 13,157,934.256
------------------------------------------------------------ -------------------------------------------
------------------------------------------------------------ -------------------------------------------
The AAL Municipal Bond Fund                                  42,404,074.119
------------------------------------------------------------ -------------------------------------------
------------------------------------------------------------ -------------------------------------------
The AAL Bond Fund                                            39,210,162.322
------------------------------------------------------------ -------------------------------------------
------------------------------------------------------------ -------------------------------------------
The AAL Money Market Fund                                    262,219,203.240
------------------------------------------------------------ -------------------------------------------
------------------------------------------------------------ -------------------------------------------
The AAL U.S.  Government  Zero Coupon Target  Fund,  
Series 2001                                                  140,450.440                     
------------------------------------------------------------ -------------------------------------------
------------------------------------------------------------ -------------------------------------------
The AAL U.S.  Government  Zero Coupon Target  Fund,  
Series 2006                                                  124,615.249                                                        
------------------------------------------------------------ -------------------------------------------
------------------------------------------------------------ -------------------------------------------
         TOTAL                                               544,739,257.962
------------------------------------------------------------ -------------------------------------------
</TABLE>
    


         The  Board  of  Trustees  of  AAL  Trust  knows  of no  business  to be
considered at the Special Meeting other than the matters mentioned in the Notice
of Special  Meeting.  If any other  matters are  properly  presented,  it is the
intention  of the  persons  named  on the  enclosed  proxy  to vote  proxies  in
accordance with their best judgment.

         In the event a quorum is not  present at the Special  Meeting,  or if a
quorum is present but  sufficient  votes to approve any of the proposals are not
received,  the persons named as proxies may propose one or more  adjournments of
such Special Meeting to permit further  solicitation  of proxies,  provided they
determine such an adjournment  and additional  solicitation is reasonable and in
the best  interests of  shareholders  based on a  consideration  of all relevant
factors,  including the nature of the relevant proposal, the percentage of votes
then cast,  the  percentage  of  negative  votes  then  cast,  the nature of the
proposed solicitation  activities and the nature of the reasons for such further
solicitation.  Adjournment  with  respect  to any  proposal  would  require  the
affirmative vote of a majority of the votes cast on the question in person or by
proxy at the session of the Special  Meeting to be adjourned.  The persons named
as proxy would vote in favor of such  adjournment  those  proxies which they are
entitled  to vote in favor of such  proposal.  They would vote  against any such
adjournment those proxies required to be voted against any such proposal.

         A shareholder  vote may be taken for one or more of the Funds on one or
more of the  proposals  in this  Proxy  Statement  prior to any  adjournment  if
sufficient votes have been received for approval.

UPON REQUEST AND AT NO COST TO A REQUESTING SHAREHOLDER, AAL TRUST WILL MAIL, BY
FIRST CLASS MAIL,  COPIES OF ITS ANNUAL  REPORT DATED APRIL 30,  1998.  REQUESTS
SHOULD BE DIRECTED TO THE  ATTENTION  OF ROBERT G. SAME,  SECRETARY,  AT THE AAL
MUTUAL  FUNDS,  222  WEST  COLLEGE  AVENUE,   APPLETON,   WISCONSIN  54919-0007,
TELEPHONE: 1-800-553-6319.

PROPOSAL 1 - ELECTION OF TRUSTEES

     Six of the seven  presently  serving  members of the Board of Trustees  are
standing for election as Trustees at the Special Meeting. Mr. D. W. Russler, who
is retiring effective December 31, 1998, will not stand for election.  The Board
has  nominated Mr. Edward W. Smeds to fill the vacancy that will be created with
the  retirement  of Mr.  Russler.  If  elected,  Mr.  Smeds' term of office as a
Trustee would begin on January 1, 1999. It is the intention of the persons named
in the enclosed proxy to vote the shares represented thereby for the election of
these seven  individuals  unless  otherwise  specified by a  shareholder  on the
proxy.  Should any of them become  unable or unwilling to accept  nomination  or
election,  the persons  named in the proxy will  exercise  their voting power in
favor of such other  person or persons as the Board of Trustees  may  recommend.
The following  table sets forth  information  concerning the nominee Trustee and
the six Trustees standing for election.

<TABLE>
   
<CAPTION>
<S>                                     <C>                  <C>                                         <C>   
                                                             Principal Occupation and                    Trustee
Name of Trustee                         Age                     Business Experience                       Since

Nominee Trustee:                        62     Retired; President,  Customer Service and Operations,       N/A

Edward W. Smeds                                Kraft Foods from 1991 to 1994;  President Kraft Foods
10 Regent Road                                 Canada  from  1989  to  1990;   Chairman,   Board  of
Northfield, IL  60093                          Trustees, Carthage College

Trustees Standing for Election:

F. Gregory Campbell                     58     President,  Carthage  College,  Kenosha,  Wisconsin;       1992
2001 Alford Parks Drive                        Vice Chairman,  Kenosha  Hospital and Medical Center;
Kenosha, WI  53140                             Director,  Evangelical  lutheran  Church  in  America
                                               Risk   Management/University   and  College   Health;
                                               Director,  Johnson  Mutual  Funds;  Director  Kenosha
                                               Area Development Association

John H. Pender*                         68     Chairman  of the  Board of  Trustees  and  from  1987      1987
P.O. Box 259                                   through 1996,  President,  AAL Trust;  prior to 1996,
Dunbar, WV  25064                              Senior Vice President and Chief  Investment  Officer,
                                               prior to 1992, Treasurer,  Aid Association
                                               for Lutherans (fraternal  benefits society);  Trustee,
                                               Carthage College;  Director, Marjorie Merriweather 
                                               Post Foundation

Richard L. Gady                         55     Vice President,  Public Affairs and Chief  Economist,      1987
One Central Park Plaza                         ConAgra, Inc. (agribusiness)
Omaha, NE  68102

Lawrence M. Woods                       66     Former  Executive Vice President and Director,  Mobil      1987
P.O. Box 1860                                  Oil Corp.; Director,  Mobil Corp.  (international oil
Worland, WY  82401                             company and holding company) from 1976 through 1985

John O. Gilbert*                        56     President   and   Chief   Executive   Officer,    Aid      1998
4321 North Ballard Road                        Association  for Lutherans;  Regent,  Luther College;
Appleton, WI  54919                            Director, Life Office Management Association, Inc.

Ronald G. Anderson*                     49     President,  AAL Trust; Senior Vice President and CFO,      1996
4321 North Ballard Road                        Aid Association for Lutherans;  President, AAL Capital
Appleton, WI  54919                            Management  Corporation;  Director,  General  Re-CKAG
                                               Reinsurance   and  Investment   S.ar.L.   (Luxembourg
                                               Reinsurance  Corporation);   from  1991  through
                                               1996,  Chairman,  General Re  Financial  Products;
                                               from 1995  through  1996,  Vice  President,  Corporate
                                               Development, General Re (both reinsurance)
</TABLE>


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

*    Messrs.  Anderson, Gilbert and Pender are "interested persons" of AAL Trust
     as defined in the 1940 Act.
    

         The Board of Trustees held four regular meetings and no special meeting
during the fiscal year ended April 30, 1998.  Each  Trustee  attended all of the
meetings of the Board of Trustees,  and of each committee thereof of which he is
a member.  The Board of Trustees has a standing Audit  Committee,  none of whose
members is an  "interested  person" of AAL Trust as defined in the 1940 Act. The
Audit Committee reviews the internal and external  accounting  procedures of AAL
Trust and,  among other things,  considers the selection of  independent  public
accountants  for each  Fund of AAL  Trust,  approves  all  significant  services
proposed to be performed by the  independent  certified  public  accountants and
considers the possible effect of such services on the accountant's independence.
The Audit  Committee met once during the fiscal year ended April 30, 1998.  Each
member of the Committee attended 100% of the meetings. The Board of Trustees has
established no other standing  committees nor any policy or procedure  regarding
the  recommendation of Trustee nominees by shareholders,  except that nomination
of the Trustees who are not "interested  persons" of AAL Trust is required to be
made  and  approved  by a  majority  of the  Trustees  who  are  themselves  not
"interested persons" of AAL Trust.

         AAL  Trust  makes no  payments  to any of its  officers  for  services.
However,  any of the  Trustees  who are not officers or employees of AAL Capital
Management  Corporation ("AAL CMC") or of any of its affiliates are paid, by AAL
Trust, an annual fee of $25,000.  These fees are assessed ratably to each series
of AAL Trust,  including each of the Funds. Trustees are reimbursed by AAL Trust
for any  expenses  they may incur by reason of  attending  such  meetings  or in
connection  with services they may perform for AAL Trust.  The table below shows
compensation  paid to any  Trustee or  officer of AAL Trust for the fiscal  year
ended April 30, 1998.

<TABLE>
<CAPTION>
   
                                                                 Pension or
                                                                 Retirement                             Total
                                                                  Benefits      Estimated Annual  Compensation from
                          Capacities in                        Accrued during    Benefits Upon      AAL Trust and
                              which                              AAL Trust's       Retirement     Fund Complex Paid
                           Remuneration         Aggregate        Last Fiscal                        to Trustee(1)
Name                         Received         Remuneration          Year
    

<S>                                              <C>                 <C>              <C>              <C>    
Richard L. Gady              Trustee             $19,500             -0-              -0-              $25,000
F. Gregory                   Trustee             $19,500             -0-              -0-              $25,000
Campbell
D. W. Russler                Trustee             $19,500             -0-              -0-              $25,000
Lawrence M. Woods            Trustee             $19,500             -0-              -0-              $25,000
</TABLE>


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

   
(1)  The Fund  Complex  includes,  in  addition to AAL Trust,  AAL  Variable
     Product Series Fund, Inc.
    

         Information  regarding each Trustee's beneficial ownership of shares of
each  series of AAL Trust is  provided  in the table  included in the section of
this Proxy Statement captioned "Additional  Information  Principal  Shareholders
and Certain Beneficial Owners."

         The Board of Trustees of AAL Trust unanimously  recommends a vote "FOR"
the election of the seven nominee Trustees named above.

PROPOSAL 2 - RATIFICATION OF INDEPENDENT ACCOUNTANTS

   
         AAL Trust's  Board of  Trustees  unanimously  selected  PriceWaterhouse
Coopers LLP,  independent public accountants,  to audit the books and records of
AAL Trust,  including the books and records of each of the Funds, for the fiscal
year  ending  April 30,  1999.  This firm has  served  AAL Trust as  independent
auditors  since its  inception in 1987,  and has served as auditors of each Fund
since    their    respective    dates    of    commencement    of    operations.
PriceWaterhouseCoopers  LLP has no direct or indirect  financial interest in AAL
Trust except as auditors and independent public accountants.  No representative
of PriceWaterhouseCoopers LLP is expected to be present at the Special Meeting.
    

         The Board of Trustees recommends that shareholders ratify the selection
of PriceWaterhouseCoopers LLP as independent accountants for AAL Trust.

PROPOSAL 3 - APPROVAL OF NEW SUB-ADVISORY AGREEMENT FOR THE INTERNATIONAL FUND

Background

   
     The Board of Trustees has determined that it is in the best interest of the
Shareholders  of the  International  Fund  to  replace  Societe  Generale  Asset
Management  Corp.("SoGen"),   the  Fund's  current  Sub-Adviser,   with  Oechsle
International  Advisers,  LLC, a Delaware limited  liability  company  ("Oechsle
LLC"). Oechsle LLC is the proposed successor to Oechsle International  Advisors,
L.P. ("Oechsle L.P.") in the pending reorganization  transaction described below
(the "Oechsle Reorganization").  Accordingly, the Board is recommending that the
Shareholders of the International Fund approve a new Sub-Advisory Agreement (the
"Proposed   Sub-Advisory   Agreement")   among  AAL  Trust  (on  behalf  of  the
International  Fund),  AAL CMC and Oechsle LLC. The change is being made for the
reasons detailed below.

         The  investment  philosophy  of the  International  Fund is to be fully
invested,  except for cash needed for  transactional  purposes.  The  investment
style of SoGen has  concentrated on smaller issuers will less liquid  securities
than many other mutual funds with similar  objectives.  The supply of securities
matching SoGen's focus has been limited. As a result, The AAL International Fund
has maintained a larger  proportion of its assets in commercial  paper and other
short-term instruments than the Trustees  believe is in the  shareholders'  best
interests.

     SoGen's investment  performance as Sub-Adviser has consistently lagged both
the unmanaged Morgan Stanley Europe  Australasia Far East ("EAFE") Index as well
as mutual funds with similar investment objectives.
    

         SoGen receives 0.55 of 1% of the International Fund's average daily net
assets as its sub-advisory fee. Oechsle's  proposed  sub-advisory fee is 0.40 of
1% of the Fund's first $50 million in average  daily net assets,  and 0.35 of 1%
of the  Fund's  average  daily net assets in excess of $50  million.  The Fund's
investment adviser, AAL Capital Management Corporation,  has agreed that it will
reduce its  advisory  fee under the  International  Fund's  investment  advisory
agreement in an amount  corresponding  to the reduction in the  subadvisory  fee
proposed by Oechsle.  Based upon the  International  Fund's  $151,578,627 in net
assets as of July 31, 1998, this would save shareholders  $278,157 annually,  or
an overall reduction in sub-advisory fees of approximately one-third.

   
     Oechsle  L.P.  is an  independently  owned  money  management  organization
primarily focused on the management of investments in international  securities.
The organization is a partnership formed and registered as an investment adviser
with the  Securities  and Exchange  Commission  in 1986 by a group of investment
professionals, who previously worked as a team at Putnam International Advisors.
The founding  partners of Oechsle L.P. have worked together for an average of 15
years. As of August 31, 1998, Oechsle L.P. had under management in excess of $12
billion in assets.  Oechsle L.P.  serves as adviser or  sub-adviser to seven (7)
other international mutual funds,  including AAL Variable Product  International
Stock  Portfolio,  a series of AAL Variable  Product  Series Funds,  Inc.  which
commenced operations on March 2, 1998.
    

         In  their  capacities  as  members  of the  Board of  Directors  of AAL
Variable Product Series Funds,  Inc., the members for the Board of Trustees have
thoroughly  familiarized  themselves with Oechsle L.P.'s investment  strategies,
style,  philosophy  and  overall  performance.  They also have had a first  hand
opportunity to assess and work with Oechsle L.P.'s investment personnel,  and to
observe  the  quality  of their  services,  systems,  procedures  and  financial
condition, as well as their performance.  Based on this experience, the Board of
Trustees has concluded that the  management  style and  philosophies  of Oechsle
L.P.  are more  consistent  with the  investment  objective  and  program of the
International  Fund than  those of SoGen,  and has  developed  a high  degree of
confidence in Oechsle L.P.

   
     If approved,  the Proposed  Sub-Advisory  Agreement would become  effective
November   1,  1998,   or,  if  later,   immediately   following   the   Oechsle
Reorganization.
    

Description of Present Sub-Advisory Agreement

         AAL Capital Management Corporation,  222 West College Avenue, Appleton,
Wisconsin  54919,  has served as investment  adviser  ("Adviser")  for AAL Trust
since its inception in 1987,  and as the Adviser for each of the Funds since the
respective dates of their commencement of operations. The Adviser provides these
services pursuant to the terms of an investment  advisory  agreement between the
Adviser  and  AAL  Trust,   dated  November  28,  1990  (the  "Present  Advisory
Agreement").  It is contemplated  that the change in the Sub-Adviser will result
in a fee reduction under the Advisory Agreement.

         The Present  Sub-Advisory  Agreement  was entered into by and among AAL
Trust,  the Adviser and SoGen on May 23, 1995. Both the Advisory and the Present
Sub-Advisory  Agreements  were approved by the sole  shareholder  of the Fund on
July 31, 1995. The Advisory Agreement and Present Sub-Advisory Agreement for the
Fund provide that subject to Section 36 of the  Investment  Company Act of 1940,
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 Agreement,  except for willful misfeasance,  bad faith or
negligence in the performance of their duties or by reason of reckless disregard
of their obligations and duties under the Agreements.

         Under the Present Sub-Advisory Agreement,  the Sub-Adviser,  subject to
the  direction  and  control  of the  Adviser  and the  Trustees  of AAL  Trust,
determines the securities  that will be purchased or sold by the Fund,  arranges
for their  purchase  and sale and  renders  other  assistance  to the Adviser in
formulating and implementing the investment program of the Fund. The Sub-Adviser
furnishes or pays for all facilities,  equipment and supplies required for it to
carry out its duties under the Present Sub-Advisory Agreement including, but not
limited to, office space, office equipment, furnishings and personnel.

   
         For its services the  Sub-Adviser  receives a fee from the fees paid to
the Adviser.  The annual rate of the Sub-Advisory fee for the International Fund
is 0.55 of 1% of average  daily net assets.  For the fiscal year ended April 30,
1998, the  Sub-Adviser  received fees under the Present  Sub-Advisory  Agreement
with respect to the Fund in the amount of $930,467.
    

         Unless earlier terminated as described below, the Present  Sub-Advisory
Agreement  provides that it will remain in effect from year to year only so long
as such  continuance  is  specifically  approved at least annually in the manner
required  under the 1940 Act. The 1940 Act provides that the requisite  approval
shall be deemed to have been obtained only if the Present Sub-Advisory Agreement
is specifically approved at least annually: (i) by the vote of a majority of the
Trustees  who  are  not  parties  to  the  Present  Sub-Advisory   Agreement  or
"interested  persons"  (as  defined  in the 1940 Act) of any such  party cast in
person at a meeting called for the purpose of voting on such approval;  and (ii)
either by the vote of a majority of the entire  Board of Trustees or by the vote
of the holders of a "majority"  (as defined in the 1940 Act) of the  outstanding
voting securities of the International Fund.

   
         The  Present   Sub-Advisory   Agreement   may  be   terminated  by  the
Sub-Adviser,  at any time without  penalty upon giving AAL Trust and the Adviser
60-days' written notice,  and may be terminated by AAL Trust or the Adviser,  at
any time without  penalty upon giving the  Sub-Adviser 60-days' written  notice,
provided that such  termination by AAL Trust must be directed or approved by the
vote of a majority  of all of its  Trustees in office at the time or by the vote
of the  holders  of a  "majority"  (as  defined  in the 1940 Act) of the  voting
securities  of the  International  Fund. In addition,  the Present  Sub-Advisory
Agreement automatically  terminates in the event of its "assignment" (as defined
in the 1940 Act) and in the event that the Advisory Agreement is terminated.  In
the event of termination of the Present  Sub-Advisory  Agreement for any reason,
the approval of the shareholders of the International  Fund is required to enter
into a new agreement with respect to the provision of  sub-advisory  services to
the International Fund.

On August 27, 1997, pursuant to the direction of the Board of Trustees,  AAL CMC
delivered a written notice of termination of the Present Sub-Advisory  Agreement
to SoGen.  The termination is effective  October 31, 1998, or such later date as
the  shareholders   approve  the  Proposed   Sub-Advisory   Agreement  or  other
arrangements are in place to assure continuous  investment  management  services
legally  can be  provided  on  behalf of the  International  Fund.  During  this
pre-termination period SoGen and AAL CMC anticipate commencing the transition of
the  International  Fund's  investment  portfolio as  described  below under the
subheading "Adjustment to Investment Portfolio."
    

Description of Proposed Sub-Advisory Agreement

         Under the Proposed Sub-Advisory Agreement, Oechsle LLC (as successor to
Oechsle  L.P. in the Oechsle  Reorganization  described  below),  subject to the
direction and control of the Adviser and the Board of Trustees,  would determine
the securities that would be purchased or sold by the International  Fund, would
arrange for their  purchase and sale and would render  other  assistance  to the
Adviser  in  formulating  and  implementing   the  investment   program  of  the
International  Fund.  Oechsle  LLC  would  furnish  or pay for  all  facilities,
equipment  and  supplies  required  for it to carry  out its  duties  under  the
Proposed Sub-Advisory  Agreement,  including,  but not limited to, office space,
office  equipment,  furnishings and personnel.  Under the Proposed  Sub-Advisory
Agreement,  Oechsle LLC would receive a fee, calculated daily and paid quarterly
out of the fee paid to the Adviser  under the Advisory  Agreement,  at an annual
rate of 0.40 of 1% of the  International  Fund's average daily net assets of $50
million or less,  and 0.35 of 1% of the  International  Fund's average daily net
assets  over $50  million.  The  Advisor has agreed to reduce the fees under the
Advisory  Agreement  in  an  amount   corresponding  to  the  reduction  in  the
sub-advisory  fee  established  under the  Proposed  Sub-Advisory  Agreement  as
compared to the sub-advisory fee presently  charged by SoGen.  Accordingly,  the
cost  savings  associated  with the fee proposed by Oechsle LLC would reduce the
overall advisory fees paid by the  International  Fund, and thereby would result
in a cost savings to the Fund and its shareholders.

         Unless earlier terminated as described below, the Proposed Sub-Advisory
Agreement provides that it would remain in effect from year to year only so long
as such  continuance  is  specifically  approved at least annually in the manner
required under the 1940 Act.  Approval of advisory and  sub-advisory  agreements
under the 1940 Act  require the  affirmative  vote at least  annually:  (i) of a
majority  of the  Trustees  who are not  parties  to the  Proposed  Sub-Advisory
Agreement or "interested persons" (as defined in the 1940 Act) of any such party
cast in person at a meeting  called for the purpose of voting on such  approval;
and (ii) either of a majority of the entire  Board of Trustees or of the holders
of a  "majority"  (as  defined  in  the  1940  Act)  of the  outstanding  voting
securities of the International Fund.

   
     The Proposed Sub-Advisory  Agreement could be terminated by the Sub-Adviser
at any time  without  penalty  upon giving the  Adviser  and AAL Trust  60-days'
written notice,  and by the AAL Trust or the Adviser at any time without penalty
upon  giving  the  Sub-Adviser  60-days'  written  notice,  provided  that  such
termination  by AAL Trust must be directed or approved by the vote of a majority
of all of its  Trustees in office at the time or by the vote of the holders of a
"majority"  (as  defined  in the  1940  Act)  of the  voting  securities  of the
International Fund.
    

Adjustment to Investment Portfolio

   
     As noted above,  Oechsle LLC's management  style and philosophy  focuses on
larger international  companies than do the management style and philosophies of
SoGen. As a result, most of the equity and fixed income securities  currently in
the International  Fund ultimately will be sold with the proceeds  reinvested in
securities of foreign  companies that are larger and more liquid.  Trading costs
associated  with this  process are  estimated  at 0.30% to 0.50% of the value of
securities  traded,  or $300,000 to  $500,000 in the  aggregate,  based upon the
approximately $100 million in long-term  investments in the International  Fund.
Because some of the securities  presently held in the International  Fund do not
have an active  trading  market  (i.e.,  they are not  bought  and sold in large
numbers or at frequent times), we will attempt to sell them over a longer period
of time, from six months to 1 year. This will help minimize potential losses and
costs. As opportunities to liquidate some of these positions present  themselves
over the next two months prior to the  effectiveness  of the  termination of the
Present Sub-Advisory  Agreement,  SoGen and AAL CMC plan to commence the process
of restructuring  the portfolio.  Because the  International  Fund currently has
unrealized  losses  exceeding its unrealized  gains, no adverse tax consequences
are  anticipated  for  shareholders  as a  result  of the  sale  of  most of the
portfolio securities.
    

Approval Required

   
     In order to be approved,  the Proposed Sub-Advisory  Agreement must receive
the  affirmative  vote of at least a majority of the  outstanding  shares of the
International  Fund, or if less,  67% of the shares  represented at a meeting of
shareholders  at which the holders of 50% or more of the  outstanding  shares of
the  International  Fund are present or  represented  by proxy.  If the Proposed
Sub-Advisory  Agreement is approved,  it will become  effective  and replace the
Present Sub-Advisory  Agreement on November 1, 1998, (or, if later,  immediately
following the Oechsle  Reorganization)  and will continue in effect for a period
of two  years,  and  thereafter  from  year to  year,  but  only so long as such
continuance is specifically  approved at least annually in the manner  described
above  for  annual  continuance  of  the  Present  Sub-Advisory  Agreement.  See
"Description of Present Sub-Advisory Agreement" above.
    

         If  the  Proposed  Sub-Advisory   Agreement  is  not  approved  by  the
shareholders of the International Fund, the Present Sub-Advisory  Agreement will
continue,  on a temporary  basis,  while the  Trustees  consider  what course of
action to pursue with respect to the  International  Fund. Such course of action
could  involve  seeking  to engage  Oechsle  to  provide  investment  management
services on an interim basis (subject to any required  regulatory action) during
the  period  required  to  obtain  approval  by  shareholders  of  the  Proposed
Sub-Advisory  Agreement or another sub-advisory  agreement with Oechsle,  having
AAL  CMC  assume  responsibilities  for  the  management  of the  assets  of the
International Fund pursuant to the Advisory Agreement,  or seeking to make other
arrangements  for obtaining such services from another  source,  as the Trustees
consider appropriate.

Information About Oechsle L.P.

     Oechsle L.P. is a Delaware limited  partnership,  which is registered as an
investment adviser with the Securities and Exchange Commission. Its sole general
partner is Oechsle Group L.P., a Delaware  limited  partnership  ("Oechsle Group
L.P.").  Walter Oechsle,  as Managing  General Partner of Oechsle Group L.P., is
the chief executive officer of Oechsle,  L.P. and Oechsle Group L.P. In addition
to Mr.  Oechsle,  the  following  persons are general  partners of Oechsle Group
L.P.:  S. Dewey  Keesler,  Jr.,  L. Sean  Roche,  Stephen P.  Langer,  Steven H.
Schaefer, Warren Walker and Andrew S. Parlin. The principal occupation of all of
the general partners of Oechsle Group L.P. is as a partner of Oechsle Group L.P.
and officer of Oechsle,  L.P. The address of Oechsle,  L.P.,  Oechsle Group L.P.
and each  general  partner of Oechsle  Group L.P.  is One  International  Place,
Boston, Massachusetts 02110.

         Dresdner Asset Management (U.S.A.) Corporation ("DAMCO") currently owns
a majority limited partnership interest in Oechsle L.P. DAMCO is a wholly owned
subsidiary of Dresdner Bank AG. DAMCO's address is 75 Wall Street, New York, New
York  10005.  The  address of Dresdner  Bank AG is  Jurgen-Ponto-Plarz  1 60301,
Frankfurt am Main, Germany.

         Fund Managers

                   Kathleen  Harris is a Partner and Portfolio  Manager/Research
Analyst.  She is a co-manager of the AAL Variable  Product  International  Stock
Portfolio.  Prior to joining  Oechsle in January 1995,  Ms. Harris was Portfolio
Manager and  Investment  Director for the State of Wisconsin  Investment  Board,
where she managed the fund's international equity assets.  Previously, she was a
Fund Manager and Equity Analyst for the Northern Trust Company.

     Ms.  Harris  received a M.B.A.  in Finance from the  University  of Chicago
Graduate  School of Business and a B.S.  (Honors) in Finance from the University
of Illinois. She is a Chartered Financial Analyst.

   
     L. Sean Roche is a Partner and Portfolio  Manager/Research Analyst. Sean is
a co-manager of the AAL Variable Product  International Stock Portfolio.  He has
over 21 years of international investment experience.  Prior to forming Oechsle,
Mr. Roche was a Vice  President and Portfolio  Manager for Putnam  International
Advisors. Previously, he was associated with Rowe Rudd & Company and James Capel
& Company in London, where he worked as a technology analyst.

     Mr. Roche holds a B.Sc.  Econ.  (Hons) from the London School of Economics.
He studied  investment  analysis and management at the City University  Business
School and the City of London Polytechnic.

Sub-Advisory Services

     Oechsle L.P.  acts as  Sub-Adviser  to several other mutual funds that have
investment  objectives  similar to the Fund's.  Appendix B attached  hereto sets
forth  the name and  asset  size of these  other  mutual  funds  and the rate of
Oechsle L.P.'s compensation as Sub-Adviser to each of them.

Services to be rendered by Oechsle LLC to the Fund  

Oechsle LLC, will:

     o    Obtain and evaluate pertinent economic,  statistical,  financial and
          other information which may affect national economies,  industries, or
          individual  corporations,  as well as the underlying securities in, or
          under consideration for, inclusion in the International Fund.
    

     o    Formulate  and  implement  a  continuous  investment  program  for the
          International  Fund  consistent  with its  investment  objectives  and
          relevant investment policies as described in the prospectus;

     o    Take actions to implement the International  Fund's investment program
          by the  purchase  and sale of  securities,  including  the  placing of
          orders for such purchases and sales; and

     o    Regularly   report  with   respect  to  the   implementation   of  the
          International Fund's investment program.

   
         Beyond the performance of these contractual services, Oechsle LLC is to
provide  assistance  in  the  marketing  and  client  servicing  of  the  Fund's
portfolio.  In  general,  this  assistance  will take the form of  meetings  and
conference  calls  between  one or  more  of  Oechsle's  investment  staff  with
wholesalers, brokers/dealers and/or the clients of brokers/ dealers.
    

Oechsle Reorganization

   
     Oechsle L.P. is currently changing its business  structure.  As part of the
change,  Oechsle L.P. will be reorganized  into Oechsle LLC, a Delaware  limited
liability company,  which will continue the business that Oechsle L.P. conducted
prior to that time. Oechsle L.P. expects this reorganization transaction will be
completed  around  October  1,  1998,  subject  to the  satisfaction  of several
conditions.   If  the  Oechsle   Reorganization   is  delayed  for  any  reason,
effectiveness of the Proposed Sub-Advisory Agreement will be postponed until the
Oechsle Reorganization is completed. If the Oechsle Reorganization is terminated
or abandoned for any reason (and assuming the shareholders  approve the Proposed
Sub-Advisory  Agreement at the Special Meeting),  the International Fund and AAL
CMC will enter into the Proposed Sub-Advisory Agreement with Oechsle L.P. in its
current business structure.
    

         As part of the Oechsle  Reorganization,  (1) the seven general partners
of  Oechsle  Group L.P.  will  approximately  double  their  current  collective
ownership interest in the Sub-Adviser,  (2) Dresdner Bank AG, indirectly Oechsle
L.P.'s largest  limited  partner,  will divest of all of its interest in Oechsle
L.P., and (3) Fleet Financial Group, Inc. ("Fleet") will acquire approximately a
35% interest (on a fully diluted basis) in Oechsle LLC. Fleet's interest will be
nonvoting.

         Oechsle LLC will be a Delaware limited  liability  company.  Its Member
Manager  will be  Oechsle  Group,  LLC,  a Delaware  limited  liability  company
("Oechsle  Group LLC") which will own  approximately  a 44% interest (on a fully
diluted  basis) in Oechsle LLC. The seven  current  general  partners of Oechsle
Group L.P.  will  collectively  own  approximately  an 89%  interest (on a fully
diluted  basis) in Oechsle  Group LLC. The  management,  policies and control of
Oechsle  LLC will,  subject to certain  limitations,  be vested  exclusively  in
Oechsle Group LLC. Day-to-day management of Oechsle LLC will be exercised by the
Management  Committee  of  Oechsle  Group  LLC,  which  will  consist of Messrs.
Keesler,  Roche,  Langer,  Walker  and  Parlin.  Mr.  Keesler  will be the Chief
Investment Officer of Oechsle LLC and a Portfolio  Manager/Research Analyst with
responsibility for coordinating Oechsle LLC's investment activities.  Mr. Langer
is a Member  Manager and Director of  Marketing.  Messrs.  Schaefer,  Walker and
Parlin will be Portfolio Managers for Oechsle LLC.

   
     The address of each of Oechsle L.P.,  Oechsle  Group L.P.,  Oechsle LLC and
Oechsle Group LLC is One International Place,  Boston,  Massachusetts 02110. The
address of Fleet is One Federal Street, Boston, Massachusetts 02110.
    

Trustees' Considerations and Recommendation

   
     In considering the Proposed Sub-Advisory  Agreement,  the Board of Trustees
carefully  evaluated  a  number  of  relevant  factors.  The  principal  factors
considered by the Board, which are discussed in detail above (see "Background"),
include (1) the stronger  correlation  between the investment  philosophy of the
International  Fund and the  investment  style and philosophy of Oechsle LLC, as
compared to the investment style and philosophy of SoGen; (2) the  International
Fund's inability to reach performance  levels comparable to the unmanaged Morgan
Stanley Europe Australasia Far East Index and the levels of performance of other
mutual funds with similar  investment  objectives,  as compared to the long-term
historical  performance of Oechsle L.P.'s management style and philosophies with
respect to international  stocks; and (3) the lower sub-advisory fee proposed by
Oechsle LLC as compared to the sub-advisory fee charged by SoGen. In addition to
these factors of relative consideration between Oechsle LLC and SoGen, the Board
also considered the following as factors of secondary importance: (a) the nature
and quality of the services that the Board of Trustees has observed Oechsle L.P.
providing to the AAL Variable Product  International  Stock  Portfolio;  (b) the
history,  reputation,  qualification  and background of Oechsle L.P., as well as
the qualification of its personnel and its financial condition; (c) a comparison
of the  sub-advisory  fees  proposed  by Oechsle LLC as compared to fees paid by
other  international  stock mutual  funds for  investment  management  services;
(d)the investment  performance  record of the portfolio  managers of Oechsle LLC
who will be responsible for managing the  International  Fund's assets;  and (e)
the continuity  provided with the continuation of AAL CMC as investment adviser.
Less  significant  factors  considered  by the Board of  Trustees  included  the
absence of any  special or  inappropriate  benefits  that would be  obtained  by
Oechsle LLC and its affiliates from the relationship,  including a consideration
of soft dollar  arrangements  and an assessment that the Oechsle  Reorganization
will have no material  effect on the  management,  operations  or  personnel  of
Oechsle  L.P.  or  its  investment  style  and  philosophies   with  respect  to
international  stocks,  as well as other factors deemed relevant by the Board of
Trustees.
    

         Based upon these considerations, the Board has determined that it would
be in the  best  interests  of the  International  Fund's  shareholders  to have
Oechsle   LLC  serve  as  the   Fund's   Sub-Adviser   following   the   Oechsle
Reorganization.  The Board of Trustees has further  determined that the terms of
the Proposed  Sub-Advisory  Agreement are fair to, and in the best interests of,
the International Fund and its shareholders.

Accordingly,  the Board of Trustees,  none of whom is an "interested  person" of
the  Oechsle  LLC  or  any  of  its  affiliates,   unanimously  recommends  that
shareholders  of the  International  Fund vote "FOR"  approval  of the  Proposed
Sub-Advisory Agreement.

PROPOSAL 4 - CHANGE IN INVESTMENT OBJECTIVE OF SMALL CAP STOCK FUND

         The AAL Small Cap Stock Fund's ("Small Cap Fund's") current fundamental
investment  objective seeks long-term capital growth by investing primarily in a
diversified  portfolio of common stocks, and securities  convertible into common
stocks, of small companies. For purposes of this objective,  small companies are
defined as those with market capitalizations of less than $1.0 billion.

         In recent  years,  stock  prices have  appreciated  significantly  and,
consequently,  the size of smaller  companies  has  increased as well.  However,
because  the  market  capitalization  threshold  that the Small Cap Fund uses to
define  small  companies  is  fundamentally  fixed,  the Fund has been unable to
increase the average size of the companies in which it invests. As a result, the
average  size of the  companies in which the Small Cap Fund invests has declined
relative to the overall  market,  and has  exposed the Fund to  increased  price
volatility as compared to the market  generally.  This  development has affected
the Small Cap Fund's performance relative to its peers, which have increased the
level of market  capitalizations of companies in which they invest to correspond
to the market appreciation of stocks generally.

         In order to provide more  flexibility for the Small Cap Fund to respond
to such market  changes in the future,  the Board of  Trustees is  proposing  to
eliminate the market  capitalization  threshold from the fundamental  investment
objective  of the Fund.  At the same time,  the Board of  Trustees  proposes  to
establish a nonfundamental  investment  policy for the Small Cap Fund which will
define small  companies to mean those with market  capitalizations  of less than
$1.5 billion, as compared to the current threshold of $1.0 billion.  Because the
policy  would  be  nonfundamental,  the  Board of  Trustees  could  adjust  this
threshold  in the future as it deems  necessary  in response  to market  trends,
without  shareholder  approval.  The Board of Trustees  believes the flexibility
associated  with this proposed change will enhance the ability of the investment
manager to achieve the Small Cap Fund's investment objective.

         Accordingly,   the  Board  of  Trustees  unanimously   recommends  that
shareholders  of The AAL Small Cap Stock Fund vote "FOR"  approval of the change
in the investment objective of the Fund.

PROPOSAL 5 - CHANGE IN INVESTMENT OBJECTIVE OF MID CAP STOCK FUND

         The AAL Mid Cap Stock  Fund's ("Mid Cap  Fund's")  current  fundamental
investment  objective seeks long-term capital growth by investing primarily in a
diversified  portfolio of common stocks, and securities  convertible into common
stocks,  of  mid-sized  companies.  For  purposes of this  objective,  mid-sized
companies  are defined as those with market  capitalizations  ranging  from $100
million to $5.0 billion.

   
     In  recent  years,   stock  prices  have  appreciated   significantly  and,
consequently,  the size of  mid-sized  companies  increased  as  well.  However,
because the market capitalization threshold that the Mid Cap Fund uses to define
mid-sized companies is fundamentally fixed, the Fund has been unable to increase
the average size of the companies in which it invests.  As a result, the average
size of the  companies in which the Fund  invests has  declined  relative to the
overall market.  This  development  has affected the Mid Cap Fund's  performance
relative to its peers, which have increased the level of market  capitalizations
of  companies  in which they invest  correspond  to the market  appreciation  of
stocks generally.
    

         In order to provide more flexibility for the Mid Cap Fund to respond to
such  market  changes in the  future,  the Board of  Trustees  is  proposing  to
eliminate the market  capitalization  threshold from the fundamental  investment
objective  of the Fund.  At the same time,  the Board of  Trustees  proposes  to
establish  a  nonfundamental  investment  policy for the Mid Cap Fund which will
define  mid-sized  companies to mean those with market  capitalizations  ranging
from $1.5  billion to $6 billion,  as compared  to the current  threshold  which
ranges from  companies with $100 million in market  capitalization  to companies
with $5.0  billion.  Because the policy  would be  nonfundamental,  the Board of
Trustees  could  adjust this  threshold  in the future as it deems  necessary in
response to market trends,  without shareholder approval.  The Board of Trustees
believes the  flexibility  associated with this proposed change will enhance the
ability  of the  investment  manager to  achieve  the Mid Cap Fund's  investment
objective.

         Accordingly,   the  Board  of  Trustees  unanimously   recommends  that
shareholders  of The AAL Mid Cap Stock Fund vote "FOR" approval of the change in
the investment objective of the Fund.


                                 OTHER BUSINESS

         Management  of AAL Trust is not aware of any  other  matters  that will
come before the Special  Meeting.  However,  if any other  business  should come
before the  Special  Meeting,  your  proxy,  if signed and  returned,  will give
discretionary  authority to the persons  designated  in it to vote  according to
their best judgment on such matters.


                             ADDITIONAL INFORMATION


Officers of The AAL Mutual Funds

         The following table sets forth information with respect to each officer
of AAL Trust who is not a Trustee.  Officers are appointed annually by the Board
of Trustees, and serve one-year terms.

<TABLE>
<CAPTION>
<S>                            <C>               <C>                                <C>   
                                                      Position and Offices
Name                           Age               with The AAL Mutual Funds          Principal Occupation


   
Robert G. Same                 53                        Secretary                  Deputy General Counsel, Aid
222 West College Ave.                                                               Association  for Lutherans since      
Appleton, WI  54919                                                                 1998; Executive Vice President        
                                                                                    since 1997, Director and Secretary 
                                                                                    since 1987, AAL Capital Management           
                                                                                    Corporation.                          
                                                                                    

Charles D. Gariboldi, Jr.      38                        Treasurer                  Assistant Vice President since 1995, prior
222 West College Ave.                                                               to 1995, Director, Fund Accounting, AAL 
Appleton WI  54919                                                                  Capital Management Corporation
    
                                                                                    
                                                                                    
</TABLE>


Administrator and Distributor

   
     In  addition  to serving as Adviser to the Funds,  AAL  Capital  Management
Corporation also provides necessary administrative services to each of the Funds
pursuant to its July 1, 1990,  Administrative Services Agreement with AAL Trust,
and  serves  as the  distributor  of the  shares of each  Fund  pursuant  to its
Distribution  Agreement  with AAL Trust,  dated June 15, 1987,  as amended.  AAL
Capital Management  Corporation's principal executive offices are located at 222
West College Avenue, Appleton, Wisconsin 54919.

         The Adviser was  organized in 1986 as a Delaware  corporation.  It is a
wholly owned  subsidiary of AAL Holdings  Inc.,  which in turn is a wholly owned
subsidiary  of Aid  Association  for  Lutherans  ("AAL").  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 the
world's largest  fraternal benefit society in terms of assets and life insurance
in force.  AAL ranks in the top 2% of all life  insurers in the United States in
terms of ordinary life insurance (nearly $78 billion in force). AAL offers life,
health and disability  income insurance and fixed and variable  annuities to its
members. All members are part of one of over 9,800 local AAL branches throughout
the United States.  AAL's principal  executive offices are located at 4321 North
Ballard Road, Appleton, Wisconsin 54919.
    

Portfolio Transaction and Brokerage

         The  Sub-Adviser and the Adviser direct the placement of orders for the
purchase and sale of each Fund's portfolio  securities.  The costs of securities
transactions for each Fund consist primarily of brokerage  commissions or dealer
or underwriter spreads.  Bonds and money market instruments are generally traded
on a net basis and do not  normally  involve  either  brokerage  commissions  or
transfer taxes.

         Occasionally, securities may be purchased directly from the issuer. For
securities traded primarily in the over-the-counter market, the sellers who make
a market in the  securities  are dealt with  directly  unless  better prices and
execution are available  elsewhere.  Such dealers  usually act as principals for
their own account.  In placing portfolio  transactions,  the Sub-Adviser and the
Adviser seek the best combination of price and execution.

   
         For the year ended April 30, 1998, the Funds paid brokerage commissions
in  an  aggregate  amount  of  $3,143,251,  none  of  which  were  paid  to  any
broker\dealer  affiliated with the Adviser.  Brokerage commissions in the amount
of $10,165 were paid to affiliates of the Sub-Adviser.
    


Principal Shareholders and Certain Beneficial Owners

     As of August 31,  1998,  the  officers and Trustees of AAL Trust owned less
than 1% of the shares of each Fund. As of that date, the following  persons were
the only individuals known to own of record or beneficially five percent (5%) or
more of the outstanding shares of any of the Funds or of AAL Trust:

<TABLE>
<CAPTION>
<S>                                    <C>                                 <C>                  <C>
   
Name/Address                           Fund                                Number of Shares     Outstanding

S.W. Heriot                            The AAL U.S. Government Zero 
Guardian                               Coupon Target Fund, Series 2001     9,467.541            6.740%
9118 Little Sweden Road
Cook, MN  55723


Norma J. May                           The AAL U.S. Government  Zero       7,381.901            5.923%
745 Pleasant View Road                 Coupon Target Fund, Series 2006
Chanhassen, Minnesota 55317
    

</TABLE>


         The table  presented  in  Appendix C attached  to this Proxy  Statement
shows  shares of each Fund of AAL Trust as to which each  Trustee,  the  nominee
Trustee  and the group  consisting  of all  Trustees,  the  nominee  Trustee and
executive  officers of AAL Trust, had or shared power over voting or disposition
as of August 31, 1998.

Cost of Solicitation

   
         In  addition  to this  solicitation  of  proxies  by use of the  mails,
proxies may be solicited by officers of AAL Trust and by officers and  employees
of the Adviser or the  Sub-Adviser,  personally  or by telephone  or  telegraph,
without  special  compensation.  Proxies may also be solicited by a professional
proxy  solicitation  service  should  management  of AAL  Trust  determine  that
solicitation by such means is advisable. The cost of preparing and mailing proxy
materials  of  the Special Meeting,  and of soliciting  proxies will be borne by
the Funds.
    

Shareholder Meetings

         AAL Trust is organized as a Massachusetts  business trust,  and as such
is  subject  to  Massachusetts  law.  Pursuant  to  Massachusetts  law  and  the
Declaration  of  Trust  of AAL  Trust,  AAL  Trust  is not  required  to  hold a
shareholder  meeting in any year in which the election of Trustees,  approval of
the  investment   advisory   agreement  (or  any   sub-advisory   agreement)  or
ratification of the selection of independent  public accountants is not required
to be acted upon by  shareholders  of AAL Trust under the 1940 Act.  Meetings of
the  shareholders of AAL Trust will be held when and as determined  necessary by
the Board of Trustees of AAL Trust and in  accordance  with the 1940 Act.  Other
than the  Special  Meeting  to which  this Proxy  Statement  relates,  AAL Trust
currently does not anticipate that it will hold a meeting of shareholders of any
of the Funds in 1998.

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

                                               By Order of the Board of Trustees



                                               Robert G. Same, Secretary



   
Appleton, Wisconsin
September 14, 1998


<PAGE>


                              THE AAL MUTUAL FUNDS
                         Special Meeting of Shareholders
           THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES

[Fund Name Will Print Here]

The undersigned  hereby appoints James H. Abitz,  Ronald G. Anderson,  Robert G.
Same  and  Joseph  F.  Wreschnig,  or any of them,  proxy,  with  full  power of
substitution,  to represent and vote, as designated  below,  all shares of stock
the  undersigned is entitled to vote at the Special  Meeting of  Shareholders of
The Mutual  Funds to be held at 222 West  College  Avenue,  Appleton,  Wisconsin
54919  beginning  at 10:00 a.m.  local time,  on October  30,  1998,  or at any
adjournment thereof,  with respect to the matters set forth and described in the
accompanying Notice of Special Meeting and Proxy Statement,  receipt of which is
hereby acknowledged.


DATED:__________________________________________, 1998


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

(Please sign exactly as name appears at left.)


                                    * * * * *

Please place an "X" on the desired box for each item.  Shares  represented  by
this proxy will be voted as directed by the shareholder.

IF NO DIRECTION IS  SUPPLIED,  THE PROXY WILL BE VOTED FOR  PROPOSALS 1, 2, 3, 4
and 5.

Please vote by filling in the appropriate boxes below.

<TABLE>
<CAPTION>
<S>                                                                                <C>      <C>                    <C>              
1.    Proposal  to elect  seven  candidates  to serve on the Board of Trustees of  __ FOR  all nominees listed      __ WITHHOLD 
The AAL Mutual  Funds,  six of whom  presently  are serving as Trustees,  John H.          (except as noted in         authority to
Pender, Richard L. Gady, Lawrence M. Woods,  F. Gregory Campbell, John O. Gilbert           space provided)            vote for all
and  Ronald G.  Anderson,  and the  seventh of whom is a new  nominee,  Edward W.                                      nominees
Smeds.                                                                                                                 listed

INSTRUCTION: To withhold authority to vote for any individual nominee, write the
nominee's name in the space provided below.

                                             ___________________________________

2.    Proposal  to ratify the Board of  Trustees'  selection  of  PriceWaterhouse  __ FOR   __ AGAINST             __ ABSTAIN
Coopers LLP as independent  accountants  for all of the Funds for the fiscal year
ending April 30,1999.

3.    Proposal  to approve  the  Proposed  Sub-Advisory  Agreement                 __ FOR   __ AGAINST             __ ABSTAIN
(International Fund Only).



4.    Proposal  to  approve  a  change  to the  Fund's  fundamental investment     __ FOR   __ AGAINST             __ ABSTAIN
objective (Small Cap Stock Fund Only).

5.    Proposal to approve a change to the  Fund's  fundamental investment          __ FOR   __ AGAINST             __ ABSTAIN
objective (Mid Cap Stock Fund Only).

6. In their  discretion  on such other  matters as may properly  come before the
meeting or any adjournment thereof.
</TABLE>
    



                                   APPENDIX A

                       Form of New Sub-Advisory Agreement



                              THE AAL MUTUAL FUNDS
                         SUB-ADVISORY AGREEMENT FOR THE
                             AAL INTERNATIONAL FUND
                                      WITH
                      OECHSLE INTERNATIONAL ADVISORS, LLC


   
AGREEMENT made this 30th day of October, 1998, by and among THE AAL MUTUAL FUNDS
(the "Fund"), a Massachusetts business trust, AAL CAPITAL MANAGEMENT CORPORATION
(the "Adviser"),  a Delaware corporation and OECHSLE INTERNATIONAL ADVISORS, LLC
(the "Sub-Adviser"), a Delaware limited liability corporation.
    

WITNESSETH:

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

1. In General

   
The Sub-Adviser agrees, as more fully set forth herein, to act as Sub-Adviser to
the Fund with respect to the  investment and  reinvestment  of the assets of the
Fund's  series  of  shares  described  as  The  AAL  International  Fund.  It is
understood that the Fund may create one or more additional Fund series from time
to time and that this Agreement may be amended by the mutual  written  agreement
of the  parties  to  include  such  additional  funds  under  the  terms to this
Agreement.
    

2. Duties and  Obligations  of the  Sub-Adviser  with Respect to  Investment  of
Assets of the International Fund

(a)  Subject to the  succeeding  provisions  of this  section and subject to the
oversight  and review of the Adviser and the  direction and control of the Board
of  Trustees   ("Trustees")  of  the  Fund,  the   Sub-Adviser,   as  agent  and
attorney-in-fact with respect to the Fund, is authorized,  in its discretion and
with prior consultation with the Fund to:

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

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

(iii) Enter into and execute  agreements on behalf of the Fund,  relating to the
acquisition or  disposition of investment  assets and the execution of portfolio
transactions,  including  foreign  exchange  contracts  and other  transactional
agreements.  Nothing contained herein, however, shall be deemed to authorize the
Sub-Adviser  to take or receive  physical  possession  of any cash or securities
held for the Fund, it being intended that sole  responsibility  for  safekeeping
thereof and the  consummation  of all such  purchases,  sales,  deliveries,  and
investments  made pursuant to the  Sub-Adviser's  direction  shall rest upon the
Fund's Custodian.

(iv) Provide the Adviser and the Trustees with such reports as may reasonably be
requested in connection with the discharge of the foregoing responsibilities and
the discharge of the Adviser's  responsibilities  under the Investment  Advisory
Agreement with the Fund and those of AAL Capital  Management  Corporation  under
the Primary Underwriting Agreement with the Fund.

Written procedures with respect to (i), (ii) and (iii) above may be set forth as
agreed to among the Fund, the Adviser and Sub-Adviser.

(b) Any investment purchases or sales made by the Sub-Adviser under this section
shall at all times  conform  to, and be in  accordance  with,  any  requirements
imposed by: (1) the provisions of the Investment Company Act of 1940 (the "Act")
and of any rules or regulations in force  thereunder;  (2) any other  applicable
provisions  of law;  (3) the  provisions  of the Articles of  Incorporation  and
By-Laws  of the  Fund as  amended  from  time to  time;  (4)  any  policies  and
determinations  of the Board of  Trustees of the Fund;  and (5) the  fundamental
policies of the Fund, as reflected in its Registration  Statement under the Act,
or as amended by the shareholders of the Fund; provided that copies of the items
referred  to in  clauses  (3),  (4) and (5)  shall  have been  furnished  to the
Sub-Adviser.

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

(d) Nothing in this Agreement  shall prevent the  Sub-Adviser or any "affiliated
person" (as  defined in the Act) of the  Sub-Adviser  from acting as  investment
adviser or manager for any other person,  firm or  corporation  and shall not in
any way limit or restrict the  Sub-Adviser  or any such  affiliated  person from
buying,  selling or trading any  securities for its or their own accounts or for
the  accounts  of others for whom it or they may be acting,  provided,  however,
that the Sub-Adviser  expressly  represents that it will undertake no activities
which, in its judgment, will adversely affect the performance of its obligations
to the Fund under this Agreement.  It is agreed that the Sub-Adviser  shall have
no  responsibility  or liability for the accuracy or  completeness of the Fund's
Registration  Statement  under the Act and the Securities Act of 1933 except for
information  supplied by the Sub-Adviser for inclusion therein.  The Sub-Adviser
shall be deemed to be an independent  contractor and, unless otherwise expressly
provided or  authorized,  have no authority to act or represent  the Fund in any
way or otherwise be deemed an agent of the Fund.

(e) In  connection  with its duties to arrange for the  purchase and sale of the
International  Fund's securities and other assets,  the Sub-Adviser shall follow
the  principles set forth in any  investment  advisory  agreement in effect from
time to time between the Fund and the Adviser,  provided that a copy of any such
agreement  shall have been provided to the  Sub-Adviser.  The  Sub-Adviser  will
promptly  communicate to the Adviser and to the officers and the Trustees of the
Fund such information relating to portfolio  transactions as they may reasonably
request.

(f) The  Sub-Adviser  may place orders both as to sales and  purchases of assets
directly  through  any broker or dealer it  chooses.  Brokers or dealers  may be
selected who provide brokerage and/or research services to the Fund and/or other
accounts  over  which the  Sub-Adviser  or its  affiliates  exercise  investment
discretion.  Brokers or dealers who execute portfolio  transactions on behalf of
the  Fund  may  receive  commissions  which  are  in  excess  of the  amount  of
commissions which other brokers or dealers would have charged for effecting such
transactions.  In order to cause the Fund to pay such  higher  commissions,  the
Sub-Adviser must determine in good faith that such commissions are reasonable in
relation to the value of the brokerage and/or research services provided by such
executing brokers or dealers viewed in terms of a particular  transaction or the
Sub-Adviser's  overall  responsibilities  to the Fund or its other discretionary
client accounts.

(g) On occasions when the  Sub-Adviser  deems the purchase or sale of a security
to be in  the  best  interest  of  the  Fund  as  well  as  other  clients,  the
Sub-Adviser,  to the extent  permitted by applicable laws and  regulations,  may
aggregate  the  securities  to be sold or  purchased in order to obtain the best
execution and lower brokerage commissions,  if any. In such event, allocation of
the  securities  so purchased or sold,  as well as the expenses  incurred in the
transaction,  will be made by the  Sub-Adviser  in the manner it considers to be
most equitable and consistent with its fiduciary  obligations to the Fund and to
such clients.

The Sub-Adviser  may purchase or sell for the Fund,  pursuant to the Fund's Rule
10f-3 Procedures,  any security (including securities of the same class as those
underwritten  or other  securities of the same or related  issuer) for which any
affiliate  of the  Sub-Adviser  acts  as  (1) an  underwriter  (either  as  lead
underwriter or syndicate  member),  both during the pendency of any underwriting
or selling syndicate and thereafter,  or (2) a market maker,  provided that such
security is purchased from a non-affiliated party.

(h) The  Sub-Adviser  shall be responsible  for 13F reporting for the securities
held by the International Fund.

3. Allocation of Expenses

During  the  term of this  Agreement,  the  Sub-Adviser  will  pay all  expenses
incurred by it in connection with its activities under this Agreement other than
the cost of securities,  commodities, and other investments (including brokerage
commissions and other transaction  charges,  if any) purchased for the Fund. The
Sub-Adviser agrees that it will furnish the Fund, at the Sub-Adviser's  expense,
with all office space,  facilities,  equipment, and clerical personnel necessary
for carrying out its duties under this Agreement.

4. Certain Records

Any records  required to be maintained and preserved  pursuant to the provisions
of Rule 31a-1 and Rule 31a-2 under the Act that are  prepared or  maintained  by
the  Sub-Adviser  on behalf of the Fund are the property of the Fund and will be
surrendered promptly to the Fund or Adviser on request.

5. Reference to the Sub-Adviser

Neither  the Fund,  the Adviser or any  affiliate  or agent  thereof  shall make
reference to or use the name of the  Sub-Adviser or any of its affiliates in any
advertising  or  promotional   materials  without  the  prior  approval  of  the
Sub-Adviser, which approval shall not be unreasonably withheld.

6. Compensation of the Sub-Adviser

The Adviser agrees to pay the Sub-Adviser  and the Sub-Adviser  agrees to accept
as full  compensation  for all services  rendered by the  Sub-Adviser as such, a
management fee,  payable  quarterly in arrears and computed on the average daily
net  asset  value of The AAL  International  Fund at rates  shown on  Exhibit  A
attached hereto.

7. Duration and Termination

   
(a) This Agreement shall go into effect for the  International  Fund on November
1, 1998, or as soon thereafter as it receives shareholder  approval,  and shall,
unless  terminated as hereinafter  provided,  continue in effect thereafter from
year to year, but only so long as such  continuance is specifically  approved at
least annually by a majority of the Fund's Board of Trustees,  or by the vote of
the holders of a "majority"  (as defined in the Act) of the  outstanding  voting
securities of the Fund, with respect to the  International  Fund, and, in either
case,  a majority  of the  Trustees  who are not  parties to this  Agreement  or
"interested persons" (as defined in the Act) of any such party cast in person at
a meeting called for the purpose of voting on such approval.

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

8. Agreement Binding Only On Fund Property

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

9. Action By An Individual Fund

The  provisions of this  Agreement and any  amendments  hereto with respect to a
Series may be approved by the  shareholders of that Series and become  effective
with  respect to the assets of that  Series  without the  necessity  of approval
thereof by  shareholders  of any other Series.  The Adviser  represents that the
holders of a majority (as defined in the "Act") of The AAL  International  Fund,
will vote on approval of the entry into this Agreement on behalf of said fund.

10. Notices

The  Sub-Adviser  agrees to promptly notify the Adviser of the occurrence of any
of the following events:

(a) any change in any of the Sub-Adviser's members or portfolio
 managers;

(b) the  Sub-Adviser  fails to be registered as an investment  adviser under the
Advisers Act or under the laws of any  jurisdiction  in which the Sub-Adviser is
required  to be  registered  as an  investment  adviser in order to perform  its
obligations under this Agreement;

   
(c) the Sub-Adviser is the subject of any action, suit,  proceeding,  inquiry or
investigation  at law or in  equity,  before any  court,  public  board or body,
involving the affairs of The AAL International Fund, or
    

(d) any change in ownership or control, or membership of the Sub-Adviser.

11. Manner of Notice

Any notice given  hereunder  shall be in writing and may be served by being sent
by telex, facsimile or other electronic transmission, or sent by registered mail
or by  courier  to the  address  set  forth  below for the party for which it is
intended.  A notice  served by mail  shall be deemed  served  seven  days  after
mailing and in the case of telex,  facsimile or other  electronic  transmission,
twelve  hours  after  confirmed  receipt  thereof.  Addresses  for notice may be
changed by written notice to the other party.


The Adviser


   
Ronald G. Anderson, President and Chief Executive Officer
AAL Capital Management Corporation
222 West College Ave.
 Appleton, WI 54919-0007
 Fax (920)730-3783
    


The Sub-Adviser

 Stephen Langer
 Oechsle International Advisors, LLC
 One International Place
 Boston, MA 02110
 Fax (617) 330-8620


No provisions of this Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by both parties.

The Adviser acknowledges receipt of the Sub-Adviser's Part II, Form ADV at least
48 hours in advance of signing this Agreement.

The captions in this  Agreement are included for  convenience  of reference only
and in no way define or delimit any of the provisions hereof or otherwise affect
their  construction or effect.  If any provision of this Agreement shall be held
or made invalid by a court decision,  statute, rule, or otherwise, the remainder
of this Agreement shall not be affected thereby.

This Agreement shall be governed by the laws of the State of Wisconsin.

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

THE AAL MUTUAL FUNDS


-----------------------------------
Ronald G. Anderson, President


ATTEST:


-----------------------------------
Robert G. Same, Secretary


AAL CAPITAL MANAGEMENT CORPORATION

-----------------------------------
Ronald G. Anderson, President


ATTEST:


-----------------------------------
Robert G. Same, Secretary

OECHSLE INTERNATIONAL
 ADVISORS, LLC by its Managing
 Member, OECHSLE GROUP, LLC


-----------------------------------
 L. Sean Roche, Member Manager


ATTEST


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


                                   EXHIBIT A
                                       TO
                              THE AAL MUTUAL FUNDS
                             SUB-ADVISORY AGREEMENT
                            (Dated October 30, 1998)


1. The AAL International Fund

   
The management fee for The AAL International Fund, payable to the Sub-Adviser by
the Adviser,  calculated in accordance  with paragraph 6 of The AAL Mutual Funds
Sub-Advisory Agreement, shall be at the annual rate of:
    


0.40 of 1% of the average daily net assets of $50 million or less;

0.35 of 1% of the average daily net assets over $50 million.


<PAGE>




                                   APPENDIX B

                      Oechsle International Advisors, L.P.
                    Mutual Fund Contract Renewal Information



Management Fee Schedules for Sub-Advisory Relationships:

AAL  Variable  Product  International  Stock  Portfolio,  a Portfolio of the AAL
Variable Product Series Fund, Inc.

                                    Approximate                  
                                    Assets Under                  Oechsle L.P.
                                  Management as of               Management Fee
                                      3/31/98                         from
Fee Schedule                         (millions)                 1/1/98 - 3/31/98

1st $20 million.54%                    $11                          $4,268
Next $30 million.45%
Over $50 million.36%


The International Equity Fund, a portfolio of the Galaxy Fund (Fleet Bank)

1st $50 million.40%                  $384                              $304,264
Over $50 million.35%


The Jamestown International Equity Fund, a series of the Williamsburg Investment
Trust

All Assets.50%                       $42                                $46,873


The MMA Praxis  International  Fund, a series portfolio of the MMA Praxis Mutual
Fund

All Assets.50%                       $22                                $23,845



International Fund, a portfolio of Frank Russell Investment Company

   1st $50 million.40%               $209                              $173,956
 Next $600 million.35%
 Over $650 million.30%


International Securities Fund, a portfolio of Frank Russell Investment Company

   1st $50 million.40%               $178                              $148,409
 Next $600 million.35%
 Over $650 million.30%


International  Equity  Investments,  a portfolio  of  Consulting  Group  Capital
Markets Funds, Ltd. (a Smith Barney managed fund)

All Assets.40%                       $626                              $550,846


                                   APPENDIX C


        The table below shows  shares of each Fund of AAL Trust as to which each
Trustee,  the nominee  Trustee and the group  consisting  of all  Trustees,  the
nominee  Trustee and  executive  officers of AAL Trust had or shared  power over
voting or disposition as of August 31, 1998.

   
Name and Series                                 Number of Shares of the Fund(1)
John H. Pender:
        Small Cap Stock Fund                              6,847.271
        Mid Cap Stock Fund                                5,830.125
        International Fund                               14,582.141
        Capital Growth Fund                              60,082.575
        Equity Income Fund                                    0.000
        Balanced Fund                                         0.000
        High Yield Bond Fund                                  0.000
        Municipal Bond Fund                                   0.000
        Bond Fund                                             0.000
        Money Market Fund                                     0.000
        Target Fund, Series 2001                              0.000
        Target Fund, Series 2006                              0.000
                     
F. Gregory Campbell:                                     
        Small Cap Stock Fund                                598.659 
        Mid Cap Stock Fund                                2,296.572 
        International Fund                                3,002.269 
        Capital Growth Fund                               1,185.977 
        Equity Income Fund                                   86.836 
        Balanced Fund                                         0.000 
        High Yield Bond Fund                                  0.000 
        Municipal Bond Fund                                   0.000 
        Bond Fund                                             0.000 
        Money Market Fund                                     0.000 
        Target Fund, Series 2001                              0.000 
        Target Fund, Series 2006                              0.000      
                                                         
Richard L. Gady:                                         
        Small Cap Stock Fund                                566.491
        Mid Cap Stock Fund                                    0.000
        International Fund                                  593.266
        Capital Growth Fund                                   0.000
        Equity Income Fund                                    0.000
        Balanced Fund                                         0.000
        High Yield Bond Fund                                  0.000
        Municipal Bond Fund                                   0.000
        Bond Fund                                             0.000
        Money Market Fund                                12,871.710
        Target Fund, Series 2001                              0.000
        Target Fund, Series 2006                              0.000
                                                         
Lawrence M. Woods:                                       
        Small Cap Stock Fund                                  0.000
        Mid Cap Stock Fund                                  811.005
        International Fund                                4,599.816
        Capital Growth Fund                                   0.000
        Equity Income Fund                                    0.000
        Balanced Fund                                         0.000
        High Yield Bond Fund                                  0.000
        Municipal Bond Fund                                   0.000
        Bond Fund                                             0.000
        Money Market Fund                                     0.000
        Target Fund, Series 2001                              0.000
        Target Fund, Series 2006                              0.000
                                                         
D. W. Russler:                                      
         Small Cap Stock Fund                             3,389.080 
         Mid Cap Stock Fund                              11,997.917 
         International Fund                               1,639.347 
         Capital Growth Fund                             15,204.351 
         Equity Income Fund                                 812.411 
         Balanced Fund                                        0.000 
         High Yield Bond Fund                                 0.000 
         Municipal Bond Fund                              6,956.171 
         Bond Fund                                        1,029.280 
         Money Market Fund                                    0.000 
         Target Fund, Series 2001                             0.000 
         Target Fund, Series 2006                             0.000 

Ronald G. Anderson:              
         Small Cap Stock Fund                            17,408.830
         Mid Cap Stock Fund                               9,402.195
         International Fund                               9,410.737
         Capital Growth Fund                              1,433.497
         Equity Income Fund                               2,539.564
         Balanced Fund                                        0.000
         High Yield Bond Fund                            14,295.194
         Municipal Bond Fund                              6,840.052
         Bond Fund                                        7,877.273
         Money Market Fund                              192,197.710
         Target Fund, Series 2001                             0.000
         Target Fund, Series 2006                             0.000
                                                
John O. Gilbert:                                                          
         Small Cap Stock Fund                                 0.000
         Mid Cap Stock Fund                                   0.000
         International Fund                               4,886.082
         Capital Growth Fund                                  0.000
         Equity Income Fund                                   0.000
         Balanced Fund                                        0.000
         High Yield Bond Fund                                 0.000
         Municipal Bond Fund                              8,688.482
         Bond Fund                                            0.000
         Money Market Fund                              153,576.910
         Target Fund, Series 2001                             0.000
         Target Fund, Series 2006                             0.000
                                   
Robert G. Same:                  
         Small Cap Stock Fund                                 0.000
         Mid Cap Stock Fund                                 235.562
         International Fund                                   0.000
         Capital Growth Fund                                 75.006
         Equity Income Fund                                   0.000
         Balanced Fund                                        0.000
         High Yield Bond Fund                                 0.000
         Municipal Bond Fund                                  0.000
         Bond Fund                                            0.000
         Money Market Fund                               45,536.320
         Target Fund, Series 2001                             0.000
         Target Fund, Series 2006                             0.000
                                                   
Charles D. Gariboldi:             
         Small Cap Stock Fund                                 0.000
         Mid Cap Stock Fund                                   0.000
         International Fund                                 420.201
         Capital Growth Fund                                  0.000
         Equity Income Fund                                   0.000
         Balanced Fund                                        0.000
         High Yield Bond Fund                                 0.000
         Municipal Bond Fund                                  0.000
         Bond Fund                                            0.000
         Money Market Fund                                    0.000
         Target Fund, Series 2001                             0.000
         Target Fund, Series 2006                             0.000
                                                 
All Trustees and Executive Officers
as a Group (a total of 9 persons)  
Small Cap Stock Fund                                     28,810.331
Mid Cap Stock Fund                                       30,573.376
International Fund                                       39,133.859
Capital Growth Fund                                      77,981.406
Equity Income Fund                                        3,438.811
Balanced Fund                                                 0.000
High Yield Bond Fund                                     14,295.194
Municipal  Bond Fund                                     22,484.705
Bond Fund                                                 8,906.553
Money  Market Fund                                      404,182.650
Target Fund, Series 2001                                      0.000
Target Fund, Series 2006                                      0.000
    


     (1) These  figures are based on  information  furnished  by the  respective
individuals  and by Firstar Trust Company,  AAL Trust's  Transfer  Agent,  as of
August 31, 1998.  Certain of the individuals  listed share voting and investment
power with his spouse with respect to some or all of the shares listed  opposite
his name. Each individual  Trustee or executive  officer  beneficially owns less
than 1% of the shares of the Fund.