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LUTHERAN BROTHERHOOD
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FAMILY OF FUNDS
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offering
GROWTH
INCOME
STABILITY
LOGO GOES HERE
Semi-Annual Report
April 30, 1995
25 YEARS & GROWING
LOGO GOES HERE
LUTHERAN BROTHERHOOD SECURITIES CORP.
LOGO GOES HERE
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Our Message To You
Dear Shareholder:
The following report discusses the performance of the Lutheran
Brotherhood Family of Funds for the six months ended April 30, 1995. In
addition to reviewing the investment strategies for each mutual fund,
the report covers recent market and economic conditions that may have
affected your returns and summarizes each manager's outlook for the
months to come.
In the past six months, investors have experienced the positive side of
market volatility. After struggling for most of 1994, stocks and bonds
recently enjoyed strong rebounds in prices. While these market changes
have been somewhat unusual, investors can generally expect some
fluctuation in their returns. Even professionals don't know exactly when
the markets will switch gears, so it helps to have a long-term plan you
can follow regardless of market conditions.
Of course, you still want to invest at attractive prices. The Lutheran
Brotherhood Family of Funds makes this easier through our Systematic
Investment Plan. Through this plan, you can transfer a specific amount
from your bank account to your Lutheran Brotherhood mutual fund account
on a regular basis. This lets you use a principle called dollar-cost
averaging. By investing the same amount at regular intervals, you'll buy
more shares when prices are low and fewer shares when prices are high.
Over time, this can reduce the average price you pay for each share.
The Systematic Investment Plan is one of the many services introduced by
Lutheran Brotherhood since it became the first fraternal benefit society
in the U.S. to offer mutual funds 25 years ago. As we celebrate our
silver anniversary, we have renewed our commitment to outstanding
service and competitive returns. If you'd like more information on the
Systematic Investment Plan or other services of the Lutheran Brotherhood
Family of Funds, please call us toll free at 800-328-4552, or locally at
612-339-8091.
Sincerely,
/s/ Goes Here
Rolf F. Bjelland
President and Chairman
Lutheran Brotherhood Family of Funds
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25 YEARS & GROWING
LOGO GOES HERE
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Economic and Market Overview April 30, 1995
In the last six months, stock and bond prices rose dramatically. This
was due largely to signs of a slowing economy, which eased investors'
worries about inflation and prompted a sharp decline in long-term
interest rates. During the period, bond prices recovered much of the
ground they lost last year, while stock prices hit new highs. This
significantly improved returns for shareholders in the Lutheran
Brotherhood Family of Funds.
New Optimism About Inflation
As the period began last November, the Federal Reserve Board boosted
short-term interest rates by 75 basis points. This increase, the largest
of six in 1994, raised investors' hopes that the Fed would curb
inflation and keep the economy growing. As investor optimism improved,
bond prices started to rise -- providing strong gains for bond fund
investors.
As bond prices rose, bond yields fell. This made stocks more appealing
to investors and enhanced the prospective profits of many companies.
With further strength in corporate earnings, stock prices also began to
rally.
The pace of these rallies accelerated in the first part of 1995. In
February, the Fed raised short-term rates another 50 basis points. At
the same time, it became increasingly clear that the economy was
slowing. Although short-term interest rates rose through the beginning
of April, long-term rates continued to fall. This pushed stock and bond
prices significantly higher.
By the end of April, the Dow Jones Industrial Average stood at 4316, up
10.6% from six months before. Meanwhile, rising bond prices pushed the
yields on 30-year Treasury bonds down to 7%, from a high of 8.2% in
October of 1994.
The Road Ahead
While inflation may rise briefly in the short term, we expect the annual
rate of inflation to average about 3.5% for the rest of this year. There
are now many signs of moderation in economic growth. During the first
quarter of 1995, the gross domestic product (GDP) increased at an annual
rate of 2.7%, compared to 5.1% in the last quarter of 1994.
While economic growth may slow significantly, it does not seem headed
for recession. Consumers still have money to spend, which should provide
further stimulation and continued growth.
Although stock and bond prices are unlikely to continue rising as
sharply as in recent months, they should continue to improve. Further
restraint in the economy and inflation could push long-term interest
rates lower and bond prices higher during the year. While corporate
earnings may be less robust, they should continue to grow for some time.
This could help stock prices reach new highs in the months to come.
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Lutheran Brotherhood Opportunity Growth Fund
Portfolio Manager's Review
Michael A. Binger is a Chartered Financial Analyst and was named
portfolio manager for the LB Opportunity Growth Fund in October 1994. He
has been with Lutheran Brotherhood since 1987. Prior to his current
appointment, he served as portfolio manager for LB's Convertible
Securities Portfolio.
Fund Objective: To seek long-term growth of capital by investing in
small-company stocks.
In the recent stock rally, technology stocks enjoyed the biggest gains -
- - - especially computer and electronics-related issues. By investing
heavily in the technology sector, and choosing top performers, the LB
Opportunity Growth Fund delivered strong returns that outpaced other
funds in its class.
For the six months ended April 30, 1995, the Fund had a total return
(based on NAV) of 5.67%. That compares to a return of 5.32% for the
average small-company growth funds tracked by Lipper Analytical
Services, and 5.38% for the Russell 2000 Index.
Focus on Technology
During the period, we introduced computer software and networking stocks
to the portfolio. This included stocks such as Sierra Online,
Macromedia, Alantec and Madge, N.V. A few of these stocks doubled their
prices during the period, raising the combined weighting of the Fund's
computer software and office equipment sectors to 19%.
In addition, we increased the Fund's commitment to drug and health care
stocks from 7% to 11%. Although this group had rebounded significantly
from the losses of 1994, we found many medical products and health
services firms whose exceptional earnings potential made them attractive
investments for the Fund. Among the stocks we added were Health South
Rehabilitation, Puritan Bennett, EP Technologies, and Tecnol Medical
Products. This group also performed well, with the exception of Cima
Labs, a manufacturer of drug delivery systems.
To make these new purchases, we took profits in holdings that had
experienced significant price gains. These included Callaway Golf and
Cobra Golf in the leisure sector and CUC International, Envoy, Sun Guard
Data and Fiserv in the business services group. We also eliminated most
holdings in the restaurant group, as well as several auto and chemical
stocks. We felt there were better opportunities in sectors whose
earnings were not as closely tied to the economy.
Small Company Outlook is Bright
For most of the period, large-company stocks gained more in price than
small-company issues. Still concerned about the economy, investors
appeared to prefer the higher liquidity of large-company stocks. As a
result, the prices of small company stocks are still quite attractive --
especially given the higher earnings potential for small companies as a
whole.
We believe the earnings potential is strong for stocks in the LB
Opportunity Growth Fund. Given the positive outlook for technology,
business services and health care issues, we expect to maintain
substantial investments in those groups. In addition, we will look for
new opportunities in select retail firms that offer specialty or niche
products. As the economy slows and businesses look forward to the next
expansion, we may also increase the Fund's investments in capital goods
stocks and other industrial issues.
Chart Goes Here
Growth of $10,000 January 31, 1993 - April 30, 1995
LB Opportunity Growth Fund
Annualized Total Returns* Period Ending 4/30/95
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Since Fund
Based on Inception -- 1/8/93 1 Year
- - ---------------------------------------------------------------------
Net Asset Value 13.85% 13.47%
Public Offering Price 11.36% 7.77%
$14,000
13,000
12,000
11,000
10,000
9,000
Russell 2000 LB Opportunity Lipper Average
$12,079 Growth Fund Small Company
$12,481 Stock Funds
$12,050
1993 1994 1995
A Note About Performance
As you compare performance, please note that the LB Opportunity Growth
Fund's performance reflects the maximum 5% sales charge. The performance
of the index does not reflect any such charges. If you were to purchase
any of the individual stocks represented in this index, any sales
charges you would pay would reduce your total return as well.
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Lutheran Brotherhood Fund
Portfolio Manager's Review
James M. Walline is a Chartered Financial Analyst and portfolio manager
for the LB Fund. He is a vice president of Lutheran Brotherhood and has
been with Lutheran Brotherhood Research since its inception in 1970.
Fund Objective: To seek growth of capital and income by investing in the
stocks of leading companies.
As stock prices rose in recent months, we made significant new
investments in technology stocks -- the undisputed leaders of the market
rally. Strong gains by top-performing stocks in this sector helped the
LB Fund produce a total return (based on NAV) of 5.93% for the six
months ended April 30, 1995.
During the period, an unexpectedly sharp decline in long-term interest
rates boosted returns for interest-sensitive stocks in the financial
services and utilities sectors. At the same time, lower interest rates
and oil prices improved the gains for energy stocks. Because we placed
less emphasis on these groups, the Fund lagged the S&P 500 Index, which
returned 10.41% for the period, as well as the average growth and income
funds tracked by Lipper Analytical Services, which returned 7.66%.
Highlighting Industry Leaders
In choosing technology stocks, we focused on high-quality communication
and computer companies like Motorola, Intel and Microsoft that are the
leaders in their industry. Because the earnings growth of industry
leaders tends to be more reliable, this strategy can help stabilize the
Fund's returns as we take advantage of special market opportunities.
We used the same approach in adding consumer staples stocks to the
portfolio. Among our most significant purchases in this sector was Sara
Lee. Like other consumer staples stocks, whose earnings can continue to
grow in a weaker economy, we expect Sara Lee to perform well as the
economy slows. In addition, Sara Lee enjoys a strong market position
overseas.
During the period we increased the Fund's technology holdings from 13%
of the portfolio to 24% and boosted the representation of consumer
staples stocks from 8% to 12%. Within the consumer staples group, we
increased the Fund's allocation to health care stocks from 5% of the
portfolio to 11% -- with purchases of drug stocks like Abbott
Laboratories, Merck and Schering-Plough.
At the same time, we reduced the Fund's investments in industries where
company earnings tend to depend more on a growing economy, or where
company earnings were not otherwise reliable. This eliminated the Fund's
positions in building, mining, paper, publishing and railroad stocks.
Future Opportunities
We believe the Fund remains well-positioned for the months ahead. As the
economy slows, investors will become increasingly interested in
companies with dependable earnings growth. This should be of special
benefit to the Fund's holdings in the consumer staples and technology
sectors.
In the months to come, we will start to look for opportunities to invest
in consumer cyclical issues -- such as retailing, housing, banking and
auto stocks. The prices of many of these issues have become quite
attractive and could rebound strongly once investors become less worried
about the economy. We will also keep an eye on financial stocks, which
should benefit from a period of lower interest rates. In selecting
investments from these areas, we will continue to emphasize industry
leaders that can help stabilize the Fund's returns.
Chart Goes Here
Growth of $10,000 April 30, 1985 - April 30, 1995
LB Fund
Annualized Total Returns* Period Ending 4/30/95
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Based on 10 Years 5 Years 1 Year
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Net Asset Value 10.84% 11.03% 10.95%
Public Offering Price 10.27% 9.90% 5.42%
$40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
Lipper Average LB Fund $26,591 S & P 500 $39,676
Growth & Income
Funds $32,949
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
A Note About Performance
As you compare performance, please note that the LB Fund's performance
reflects the maximum 5% sales charge. The performance of the index does
not reflect any such charges. If you were to purchase any of the
individual stocks represented in this index, any sales charges you would
pay would reduce your total return as well.
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Lutheran Brotherhood High Yield Fund
Portfolio Manager's Review
Thomas N. Haag is a Chartered Financial Analyst and portfolio manager
for the LB High Yield Fund. He has managed the Fund since January 1992.
Fund Objective: To seek high current income and growth of capital by
investing primarily in high-yielding ("junk") corporate bonds.
During the recent rally in bond prices, the LB High Yield Fund had
significant investments in longer-term issues. These issues outperformed
other bonds in the first part of 1995. Earlier in the period, however,
longer-term issues had underperformed the market. This caused the Fund
to lag its market benchmark, and other funds in its class, for the six
months ended April 30, 1995. For the period, the Fund had a total return
(based on NAV) of 4.82%. That compares to returns of 8.08% and 5.73%,
respectively, for the Lehman Brothers High-Yield Index and the average
high-yield bond funds tracked by Lipper Analytical Services.
Maximizing Income and Growth
As the period started, about 20% of the Fund was invested in deferred-
interest issues such as zero-coupon bonds. Many of these bonds have been
issued by broadcasting and telecommunications firms, whose potential for
growth has been strong. Because zero-coupon bonds behave like longer-
maturity issues, they can provide the Fund with attractive yields and
capital growth over time.
As interest rates and bond prices stabilized at the end of last year,
the prices of deferred interest investments continued to fall. Once
interest rates started to decline, and bond prices rebounded, these
investments outdistanced the market and delivered healthy price gains
for the Fund.
During the period we made minor changes to industry groups in the
portfolio that could make the Fund more defensive in a slowing economy.
We sold some of the Fund's investments in "cyclical" industries, such as
paper and chemicals, whose earnings tend to track the economy, and
bought issues in the supermarket and health care sectors, whose earnings
can grow even when the economy is weak. We continued to hold sizable
investments in the broadcasting and telecommunications groups, whose
earnings growth also depends less on the economy.
Making the Fund More Defensive
We may become even more defensive in the months ahead. Although a
slowing economy should mean additional declines in interest rates, we
think most of the drop in rates is probably behind us. Given the speed
with which rates have come down, we could even see a temporary rise in
rates sometime this year.
Besides stressing bonds in defensive industries, we've reduced the
Fund's holdings in zero-coupon issues and may take other measures to
shorten the average maturity of the Fund's investments. We also expect
to focus more on issues with higher credit ratings. These steps should
help stabilize the Fund's returns if rates rise and bond prices weaken.
Chart Goes Here
Growth of $10,000 April 30, 1987 - April 30, 1995
LB High Yield Fund
Annualized Total Returns* Period Ending 4/30/95
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Since Fund
Inception
Based on 4/3/87 5 Years 1 Year
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Net Asset Value 9.15% 14.48% 5.05%
Public Offering Price 8.46% 13.30% -0.24%
$23,000
21,000
19,000
17,000
15,000
13,000
11,000
9,000
Lehman High Yield LB High Yield Fund Lipper Average
Index $22,213 $19,662 High Yield
Funds $19,383
1987 1988 1989 1990 1991 1992 1993 1994 1995
A Note About Performance
As you compare performance, please note that the LB High Yield Fund's
performance reflects the maximum 5% sales charge. The performance of the
index does not reflect any such charges. If you were to purchase any of
the individual bonds represented in this index, any sales charges you
would pay would reduce your total return as well.
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Lutheran Brotherhood Income Fund
Portfolio Manager's Review
Charles E. Heeren, a vice president of Lutheran Brotherhood , is a
Chartered Financial Analyst and portfolio manager for
the LB Income Fund. He has managed the Fund since January 1986.
Fund Objective: To seek high current income while preserving principal
by investing in investment-grade bonds and other income-producing
securities.
In the last six months the LB Income Fund enjoyed strong gains from its
investments in longer-maturity bonds. As bond prices rallied, the prices
of longer-term issues generally rose more than the prices of shorter-
term issues. By investing more heavily in longer-term securities, the
Fund outperformed other funds in its class, as well as the bond market
as a whole.
For the six months ended April 30, 1995, the Fund had a total return
(based on NAV) of 7.67%. That compares with a return of 6.70% for the
average high-quality corporate bond funds tracked by Lipper Analytical
Services and 7.01% for the Lehman Aggregate Bond Index.
A Barbelled Maturity Structure
Expecting the Treasury yield curve to flatten, we'd arranged the
maturities of the Fund's investments in a "barbell" type of structure
before the period began. Using this structure, we made sizable
investments in asset-backed securities that matured in one to three
years and balanced those with large investments in 30-year corporate and
Treasury bonds. At the same time, we reduced the Fund's holdings in
bonds with maturities of five to 10 years. This helped us protect the
value of the Fund while increasing the potential for income and capital
gains. We extended this potential by raising the average maturity of the
Fund's investments from 161+4 years to 18 years.
The Fund also benefited from heavier investments in corporate bonds.
During the period stronger earnings and cash flow improved the credit
quality of corporate issues. At the same time, the supply of new
corporate issues declined. As the market rallied, these factors helped
corporate bond prices rise more quickly than the prices of Treasury
bonds.
We further diversified the Fund's corporate holdings by adding bonds
issued by chemical, health care, food, natural gas, retail and business
services firms. For the most part we shifted into groups that tend to be
less affected by a slowing economy. In addition, we reduced the Fund's
investments in areas where we felt bonds might become overvalued, such
as financial services and computer sectors.
Making the Most of Lower Interest Rates
Although a slowing economy may prompt further interest rate declines, we
do not expect rates to fall as sharply as they have in recent months. We
may, in fact, start to see rates stabilize or hit bottom. As a result,
we expect to use a more defensive investment strategy in the months
ahead.
Since an upturn in rates would be especially harmful to the prices of
longer-term issues, we have started to shorten the average maturity of
the Fund's investments by taking profits in top-performing bonds and
putting the proceeds in cash. In the meantime, lower interest rates
should prompt homeowners to refinance their mortgages. In anticipation
of this, we're selling some of the Fund's mortgage-backed securities to
protect its yield. We believe the Fund's corporate holdings are now
well-positioned for slower economic growth, but will continue to watch
for new investment opportunities that might arise.
Chart Goes Here
Growth of $10,000 April 30, 1985 - April 30, 1995
LB Income Fund
Annualized Total Returns* Period Ending 4/30/95
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Based on 10 Years 5 Years 1 Year
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Net Asset Value 8.98% 8.83% 6.43%
Public Offering Price 8.42% 7.72% 1.12%
$30,000
27,000
24,000
21,000
18,000
15,000
12,000
9,000
Lehman Aggregate LB Income Fund Lipper Average
Bond Index $26,378 $22,453 Corporate Bond
Funds $24,485
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
A Note About Performance
As you compare performance, please note that the LB Income Fund's
performance reflects the maximum 5% sales charge. The performance of the
index does not reflect any such charges. If you were to purchase any of
the individual bonds represented in this index, any sales charges you
would pay would reduce your total return as well.
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Lutheran Brotherhood Municipal Bond Fund
Portfolio Manager's Review
Janet I. Grangaard is a Chartered Financial Analyst and was named
portfolio manager for the LB Municipal Bond Fund in January 1994. She
has been with Lutheran Brotherhood since 1988. Prior to her appointment
as portfolio manager, she served as associate portfolio manager for the
Fund.
Fund Objective: To seek high current income that is exempt from federal
income tax by investing in municipal bonds.
When bond prices rise, as they have, the price gains tend to be greatest
for longer-maturity issues. The municipal bond market is no exception.
By investing heavily in longer-term securities, the LB Municipal Bond
Fund delivered superior returns that outdistanced municipal bonds as a
whole, as well as other funds in its class.
For the six months ended April 30, 1995, the Fund had a total return
(based on NAV) of 7.97%. That compares with returns of 7.57% for the
Lehman Municipal Bond Index and 7.31% for an average of the municipal
bond funds tracked by Lipper Analytical Services.
Adjusting to Smaller Supplies
In January of 1995, we had many bonds that were called in by issuers who
had refinanced at lower interest rates. We reinvested the proceeds in
issues with maturities of 15 to 30 years. To minimize the extra price
risk that comes with longer-term bonds, we emphasized issues with
exceptional credit quality.
During most of the period, the supply of new municipal bonds continued
to shrink. Where demand remained strong, there was extra upward pressure
on bond prices and extra downward pressure on yields. To maximize the
Fund's yield as interest rates fell, we sold bonds in states where new
issues declined sharply against strong demand and bought bonds in states
with larger supplies.
We also changed the types of bonds in the Fund's portfolio. With the
federal government giving state and local authorities more
responsibility and fewer resources, we have favored bonds funding high-
quality, revenue-producing projects that can stand on their own. Because
of this, we increased the Fund's investments in bonds that fund water
and sewer projects and surface transportation, while decreasing
investments in bonds that fund health care facilities.
Managing Uncertainty
It's not clear where municipal bond prices are headed. A slowing economy
could result in additional declines in interest rates and higher bond
prices. These lower interest rates could stimulate the economy, causing
rates to stabilize or even rise.
There are two powerful yet opposing forces that affect the municipal
bond market in this environment -- the shrinkage of the outstanding
supply of municipal bonds and talk of changes to the federal tax code.
If municipal bonds remain popular with investors, the shrinkage of the
market would benefit existing bond investors in the form of higher
prices. While tax reform is more of an issue for the 1997 Congress,
we'll track which proposals gain favor in Washington and be prepared to
respond accordingly.
With its focus on high-quality issues and revenue bonds, we believe the
LB Municipal Bond Fund is well-positioned to cope with these
uncertainties. If municipal bond prices appear to be weakening, we may
reduce the Fund's emphasis on longer-maturity investments to mitigate
the risks associated with higher interest rates.
Chart Goes Here
Growth of $10,000 April 30, 1985 - April 30, 1995
LB Municipal Bond Fund
Annualized Total Returns* Period Ending 4/30/95
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Based on 10 Years 5 Years 1 Year
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Net Asset Value 9.47% 8.49% 6.83%
Public Offering Price 8.91% 7.38% 1.50%
$25,000
23,000
21,000
19,000
17,000
15,000
13,000
11,000
9,000
Lehman Municipal LB Municipal Bond Lipper Average
Bond Index $24,575 Fund $23,486 General Municipal
Bond Funds
$23,505
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
A Note About Performance
As you compare performance, please note that the LB Municipal Bond
Fund's performance reflects the maximum 5% sales charge. The performance
of the index does not reflect any such charges. If you were to purchase
any of the individual bonds represented in this index, any sales charges
you would pay would reduce your total return as well.
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Lutheran Brotherhood Money Market Fund
Portfolio Manager's Review
Gail R. Onan, assistant vice president of Lutheran Brotherhood Research
Corp., was named portfolio manager for the LB Money Market Fund in
January 1994. She has been with Lutheran Brotherhood Research since
1986. Prior to her appointment as manager of the Fund, she served as
associate manager for the Fund.
Fund Objective: To seek current income with stability of principal by
investing in high-quality, short-term debt.**
The money market experienced dramatic changes in recent months. After
rising sharply for most of 1994, yields weathered two more hikes in
interest rates by the Federal Reserve Board's Open Market Committee (the
Fed), plateaued and then began to decline. By the end of April 1995, the
overnight Fed fund rate was about half a percent higher than it was six
months before.
Throughout this time, we adjusted the maturities of investments in the
LB Money Market Fund to make the most of these changes. This helped the
Fund earn a total return of 2.40% for the six months ended April 30,
1995.
Portfolio Strategy
As the period started, the Fund's investments had an average maturity of
40 days. After the Fed raised short-term rates in November, we extended
the average to 44 days. This was longer than the average maturity for
other money market funds and provided the Fund with stronger yields.
In January, as it appeared the Fed would boost rates again, we shortened
the average maturity to be able to invest more quickly at the higher
rates. As rates stabilized at higher levels, we lengthened the average
maturity once again and picked up greater yields. These adjustments were
made easier by staggering the Fund's investments among different
maturity dates.
During the period we looked for securities that were available in strong
supply and offered attractive yields. Because of its greater
availability, we increased investments in commercial paper from 73% of
the Fund's assets to 84%. In doing so, we further diversified the Fund's
investments in this sector by adding securities from a broader range of
issuers.
Looking Ahead
While there are signs that the economy is slowing, inflation remains a
concern. If the economy does not weaken as expected, short-term rates
may start to climb again. Historically, a larger supply of new issues
has often put upward pressure on rates in last few months of the year.
While we expect to keep the Fund's average maturity near 40 to 45 days,
we're focusing on maturities of four to six months. This should give us
money to invest at better yields in the fall, if interest rates do rise
at that time.
If the economy continues to slow, interest rates should fall to lower
levels. In that case, we would want to lengthen the Fund's average
maturity and lock in higher yields. At this point it's not clear which
way rates will go. By continuing to stagger the Fund's maturity dates,
we hope to respond quickly to any change in rate direction.
Annualized Total Returns**
Period Ending 4/30/95
10 Years 5 Years 1 Year
5.49% 4.06% 4.20%
Footnotes
*The annualized total return reflects the change in share price, the
reinvestment of all dividends and capital gains, and the effect of
compounding. Since performance varies, the annualized total return,
which assumes a steady rate of growth, differs from the Fund's actual
total return for the years indicated. POP returns have been adjusted for
the maximum 5% sales charge. NAV returns do not include a sales charge.
All returns represent past performance. The value of an investment
fluctuates so that shares, when redeemed, may be worth more or less than
the original investment.
**Investments in the Money Market Fund are neither guaranteed nor
insured by the U.S. Government and there is no assurance that the Fund
will maintain a stable net asset value.
This report must be preceded or accompanied by a prospectus of the
Lutheran Botherhood Family of Funds.
7 Boxes Center Here
<TABLE>
<CAPTION>
Lutheran Brotherhood Opportunity Growth Fund
Portfolio of Investments
April 30, 1995
(Unaudited)
Shares Value
- - ------ -------------
<S> <C> <C>
Common
Stocks - 90.9% (a)
Bank & Finance - 0.7%
27,250 Mutual Risk Management, Ltd. $837,938
-------------
Broadcasting - 1.8%
29,600 Broadcasting Partners, Inc. 599,400 (b)
80,000 Granite Broadcasting Corp. 560,000 (b)
38,400 Heftel Broadcasting Corp. 432,000 (b)
32,000 Saga Communications, Inc. 568,000 (b)
-------------
2,159,400
-------------
Building Products &
Materials - 1.0%
46,400 Fastenal Co. 1,229,600
-------------
Computer Software - 9.1%
6,500 CBT Group, PLC ADS 172,250 (b)
4,100 Expert Software, Inc. 60,475 (b)
38,700 Hummingbird Communications 909,450 (b)
45,000 Hyperion Software Corp. 1,935,000 (b)
52,400 Macromedia, Inc. 1,755,400 (b)
8,100 Open Environment Corp. 141,750 (b)
59,200 Sierra On-Line, Inc. 1,117,400 (b)
197,000 Spectrum Holobyte, Inc. 3,004,250 (b)
206,600 Viasoft, Inc. 2,027,262 (b)
-------------
11,123,237
-------------
Computers &
Office Equipment - 10.2%
77,500 Avid Technology, Inc. 3,124,219 (b)
200,000 Computer Network
Technology Corp. 1,775,000 (b)
63,400 Exabyte Corp. 800,425 (b)
100,200 Madge, N.V. 2,755,500
78,200 Micro Warehouse, Inc. 2,737,000 (b)
20,200 PSC, Inc. 262,600 (b)
54,600 Xylogics, Inc. 1,105,650 (b,c)
-------------
12,560,394
-------------
Drugs & Health Care - 11.0%
99,000 Centocor, Inc. 1,398,375 (b)
100,000 Cima Labs, Inc. 487,500 (b)
88,000 EP Technologies, Inc. 825,000 (b)
95,500 Maxxim Medical, Inc. 1,325,062 (b)
90,000 Puritan-Bennett Corp. 2,216,250
49,000 Stryker Corp. 2,211,125
50,000 Sybron Corp. 1,856,250 (b)
99,600 Tecnol Medical Products, Inc. 1,855,050 (b)
41,200 Watson Pharmaceuticals, Inc. 1,282,350 (b)
-------------
13,456,962
-------------
Electronics - 8.8%
21,700 Adaptec, Inc. 694,400 (b)
89,200 Aetrium, Inc. 1,427,200 (b)
1,600 Anadigics, Inc. 21,400 (b)
20,000 Diamond Multimedia
Systems, Inc. 400,000 (b)
18,200 GaSonics International Corp. 418,600 (b)
56,500 LAM Research Corp. 2,853,250 (b)
80,000 Quality Semiconductor, Inc. 900,000 (b)
103,800 Read-Rite Corp. 2,205,750 (b)
89,100 Unitrode Corp. 1,848,825 (b)
-------------
10,769,425
-------------
Healthcare Management - 10.0%
60,200 Abbey Healthcare Group, Inc. 2,392,950 (b)
80,100 Coventry Corp. 1,882,350 (b)
41,000 Healthcare Compare Corp. 1,232,562 (b)
150,000 HEALTHSOUTH
Rehabilitation Corp. 2,962,500 (b)
78,300 Integrated Health Services, Inc. 2,711,138
70,500 Quantum Health Resources, Inc. 1,145,625 (b)
-------------
12,327,125
-------------
Hospital Management - 0.6%
158,000 Physician Computer
Network, Inc. 711,000 (b)
-------------
Industrial - 2.1%
170,300 Union Switch & Signal, Inc. 2,618,362 (b)
-------------
Leisure & Entertainment - 3.5%
80,000 First Team Sports 1,610,000 (b)
85,000 Movie Gallery, Inc. 2,656,250 (b)
-------------
4,266,250
-------------
Pollution Control - 2.7%
90,400 IMCO Recycling, Inc. 1,423,800
121,500 U.S. Filter Corp. 1,928,813 (b)
-------------
3,352,613
-------------
Restaurants - 1.1%
104,000 Quality Dining, Inc. 1,391,000 (b)
-------------
Retail - 10.4%
84,300 American Eagle Outfitters 1,812,450 (b)
52,500 Department 56, Inc. 1,942,500 (b)
92,200 General Nutrition Companies 2,293,475 (b)
86,300 Gymboree Corp. 2,028,050 (b)
90,200 Sports Authority, Inc. 1,601,050 (b)
112,000 Strouds, Inc. 952,000 (b)
75,000 Sunglass Hut International 2,151,563 (b)
-------------
12,781,088
-------------
Services - 8.6%
90,000 Acxiom Corp. 1,563,750 (b)
16,200 Cadmus Communications, Inc. 294,638 (c)
44,000 Cambridge Technology
Partners, Inc. 1,512,500 (b)
20,400 Career Horizons, Inc. 479,400 (b)
39,100 Catalina Marketing Corp. 1,837,700 (b)
40,300 Gartner Group, Inc 1,667,412 (b)
76,000 Norrell Corp. 1,824,000
28,300 Paychex, Inc. 1,347,788
-------------
10,527,188
-------------
Telephone &
Telecommunications - 9.3%
88,800 Gilat Satellite Networks, Ltd. 1,431,900
34,350 Glenayre Technologies, Inc. 2,112,525 (b)
96,300 Metrocall, Inc. 1,709,325 (b)
122,500 Netmanage, Inc. 2,235,625 (b)
133,300 Network Peripherals, Inc. 2,549,362 (b)
60,000 Summa Four, Inc. 1,395,000 (b)
-------------
11,433,737
-------------
Total Common Stocks
(cost $99,794,206) 111,545,319
-------------
Short-Term
Securities - 9.1% (a)
Commerical Paper
Principal
Amount
- - ------------
$5,600,000 Cargill, Inc., 5.92%,
due 5/1/1995 5,600,000
2,523,000 Delaware Funding Corp.,
5.98%, due 5/8/1995 2,520,066
1,082,000 Hewlett Packard Corp., 6.0%,
due 5/16/1995 1,079,295
2,000,000 Spiegel Funding Corp., 5.98%,
due 5/18/1995 1,994,352
-------------
Total Short-Term Securities
(at amortized cost) 11,193,713
-------------
Total Investments
(cost $110,987,919) $122,739,032 (d)
=============
See accompanying notes to portfolio of investments.
Notes to Portfolio of Investments:
(a) The categories of investments are shown as a percentage of total
investments of the Lutheran Brotherhood Opportunity Growth Fund.
(b) Currently non-income producing.
(c) Includes stock rights that automatically traded with the stock and had
no separate value at April 30, 1995.
(d) At April 30, 1995, the aggregate cost of securities for federal income
tax purposes was $110,987,919 and the net unrealized appreciation of
investments based on that cost was $11,751,113 which is comprised of
$16,567,487 aggregregate gross unrealized depreciation.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
Lutheran Brotherhood Fund
Portfolio of Investments
April 30, 1995
(Unaudited)
Shares Value
- - ------ -------------
<S> <C> <C>
COMMON
STOCKS - 90.4% (a)
Automotive - 1.1%
150,000 General Motors Corp. $6,768,750
-------------
Bank & Finance - 10.8%
100,000 American International
Group, Inc. 10,675,000
70,400 Bear Stearns Cos., Inc. 1,452,000
136,400 Equitable Companies, Inc. 3,239,500
96,900 Federal National Mortgage
Association 8,551,425
122,100 First Bank System, Inc. 4,945,050
126,200 First Interstate Bancorp. 9,701,625 (b)
30,500 Green Tree Financial Corp. 1,246,688
152,300 MBNA Corp. 4,607,075
160,000 Morgan Stanley Group, Inc. 11,120,000
78,600 Morgan (J.P.) and Co., Inc. 5,158,125
26,500 PMI Group, Inc. 987,125
150,000 Providian Corp. 5,118,750
-------------
66,802,363
-------------
Broadcasting - 2.5%
54,000 CBS, Inc. 3,462,750
618,700 Tele-Communications, Inc. 11,832,637 (c)
-------------
15,295,387
-------------
Chemicals - 2.9%
220,000 Air Products & Chemicals, Inc. 11,082,500
100,000 Dow Chemical Co. 6,950,000
-------------
18,032,500
-------------
Computer Software - 6.6%
159,900 Adobe Systems, Inc. 9,314,175
201,400 Autodesk, Inc. 6,860,188
70,800 Electronic Arts, Inc. 1,628,400 (c)
175,000 Microsoft Corp. 14,328,125 (c)
283,900 Oracle Systems Corp. 8,658,950 (c)
-------------
40,789,838
-------------
Computers &
Office Equipment - 7.6%
80,000 Cabletron Systems, Inc. 3,800,000 (c)
73,600 General Motors Group, Class E 3,183,200
200,000 International Business Machines 18,950,000
140,000 Novell, Inc. 3,045,000 (c)
144,400 Silicon Graphics, Inc. 5,415,000 (c)
100,000 Xerox Corp. 12,312,500
-------------
46,705,700
-------------
Conglomerates - 0.1%
15,000 Allied Signal, Inc. 594,375
-------------
Containers & Packaging - 1.8%
256,900 Crown Cork and Seal Co., Inc. 10,982,475 (c)
-------------
Drugs & Health Care - 11.0%
457,000 Abbott Laboratories 17,994,375
171,300 Amgen, Inc. 12,451,369
390,000 Merck & Co., Inc. 16,721,250
142,000 Schering-Plough Corp. 10,703,250 (b)
150,000 Smithkline Beecham, PLC 5,831,250
95,600 St. Jude Medical, Inc. 4,110,800
-------------
67,812,294
-------------
Electical Equipment - 1.8%
200,000 General Electric Co. 11,200,000
-------------
Electric Utilities - 1.0%
294,600 Southern Co. 6,076,125
-------------
Electronics - 6.8%
150,000 Advanced Micro Devices, Inc. 5,400,000
200,000 Intel Corp. 20,475,000
285,000 Motorola, Inc. 16,209,375
-------------
42,084,375
-------------
Food & Beverage - 6.3%
300,000 ConAgra, Inc. 9,975,000
100,000 General Mills, Inc. 6,100,000
174,500 Nabisco Holdings, Inc. 4,864,187
44,500 Salomon, Inc.,
(Snapple, Inc., ELKS) 673,063
610,000 Sara Lee Corp. 17,003,750 (b)
-------------
38,616,000
-------------
Hospital Management - 0.4%
85,400 Manor Care, Inc. 2,508,625
-------------
Household Products - 6.4%
175,000 Colgate Palmolive Co. 12,293,750
140,800 Gillette Co. 11,545,600
227,700 Procter & Gamble 15,910,537
-------------
39,749,887
-------------
Machinery &
Equipment - 0.6%
100,000 Ingersoll Rand Co. 3,575,000 (b)
-------------
Medical Services - 0.6%
106,400 United Healthcare Corp. 3,857,000
-------------
Oil & Oil Service - 7.3%
236,300 Amoco Corp. 15,507,187
225,000 Chevron Corp. 10,659,375 (b)
150,000 Halliburton Co. 5,756,250
75,000 Mobil Corp. 7,115,625 (b)
50,000 Royal Dutch Petroleum Co. 6,200,000
-------------
45,238,437
-------------
Restaurants - 0.9%
150,000 McDonald's Corp. 5,250,000
-------------
Retail - 4.0%
166,400 Home Depot, Inc. 6,947,200
77,300 Office Depot, Inc. 1,758,575 (c)
660,000 Wal-Mart Stores, Inc. 15,675,000
-------------
24,380,775
-------------
Services - 3.6%
175,000 Automatic Data
Processing, Inc. 11,243,750
193,700 First Data Corp. 10,895,625
-------------
22,139,375
-------------
Telephone &
Telecommunications - 6.3%
142,200 Ameritech Corp. 6,399,000
235,000 AT&T Corp. 11,926,250
75,200 DSC Communications Corp. 2,782,400 (b,c)
125,000 GTE Corp. 4,265,625
155,000 Paging Network, Inc. 4,262,500 (c)
213,200 Southwestern Bell Corp. 9,407,450
-------------
39,043,225
-------------
Total Common Stocks
(cost $509,137,143) 557,502,506
-------------
Principal
Amount
- - ------------
U.S. TREASURY - 0.3% (a)
$2,000,000 U.S. Treasury Notes,
8.75%, Due 10/15/1997
(cost $2,035,342) 2,092,500
-------------
SHORT-TERM
SECURITIES - 9.3% (a)
Commercial Paper - 7.7%
2,100,000 Associates Corp. of
North America, 5.95%,
due 5/1/1995 2,100,000
5,000,000 Ciesco, Inc., 5.95%,
due 5/18/1995 4,985,951
5,000,000 Ciesco, Inc., 5.97%,
due 5/18/1995 4,985,904
5,000,000 Enterprise Capital Funding,
5.97%, due 5/9/1995 4,993,367
5,000,000 Great Lakes Chemical Corp.,
5.96%, due 5/24/1995 4,980,961
9,800,000 Toys "R" Us, Inc., 5.92%,
due 5/15/1995 9,777,438
5,800,000 United Parcel Service of
America, Inc., 5.92%,
due 5/3/1995 5,798,092
10,000,000 USAA Capital Corp., 5.92%
due 5/2/1995 9,998,356
-------------
47,620,069
-------------
Government Agency - 1.6%
5,050,000 Federal Home Loan Bank,
5.85%, due 5/4/1995 5,047,538
4,450,000 Federal Home Loan Bank,
5.85%, due 5/5/1995 4,447,108
-------------
9,494,646
-------------
Total Short-Term Securities
(at amortized cost) 57,114,715
-------------
Total Investments
(cost $568,287,200) $616,709,721
=============
See accompanying notes to portfolio of investments.
Notes to Portfolio of Investments:
(a) The categories of investments are shown as a percentage of total
investments of the Lutheran Brotherhood Fund.
(b) Includes stock rights that automatically traded with the stock and had
no separate value at April 30, 1995.
(c) Currently non-income producing.
(d) At April 30, 1995, the aggregate cost of securities for federal income
tax purposes was $568,287,200 and the net unrealized appreciation of
investments based on that cost was $48,422,521 which is comprised of
$55,954,638 aggregate gross unrealized appreciation and $7,532,117
aggregate gross unrealized depreciation.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
Lutheran Brotherhood High Yield Fund
Portfolio of Investments
April 30, 1995
(Unaudited)
Principal Maturity
Amount Rate Date Value
- - ------------ -------------------------------------
<S> <C> <C> <C> <C>
CORPORATE BONDS - 76.5% (a)
Aerospace - 0.4%
$2,100,000 Rohr, Inc., Sr. Notes 11.625% 5/15/2003 $2,194,500
-------------
Airlines - 0.8%
4,500,000 U.S. Air, Inc., Sr. Secured Equipment Trust, Series 1993-A3 10.375% 3/1/2013 4,128,219
Automotive - 2.0% -------------
3,000,000 Doehler-Jarvis, Inc., Sr. Notes 11.875% 6/1/2002 3,135,000
6,250,000 Exide Corp., Sr. Notes 10.0% 4/15/2005 6,328,125
1,500,000 JPS Automotive Products, Sr. Notes 11.125% 6/15/2001 1,492,500
-------------
10,955,625
-------------
Bank & Finance - 4.3%
1,800,000 American Life Holding Corp., Sr. Subordinated Notes 11.25% 9/15/2004 1,845,000
1,850,000 First Nationwide Holdings, Inc., Sr. Notes 12.25% 5/15/2001 1,942,500
7,950,000 GPA Delaware, Inc., Debentures 8.75% 12/15/1998 6,300,375
2,250,000 Leucadia National Corp., Convertible Subordinated Debentures 5.25% 2/1/2003 2,160,000
7,000,000 Mutual Life Insurance Company of New York, Surplus Notes Zero Coupon 8/15/2024 4,523,750 (b)
3,500,000 Primeco, Inc., Sr. Subordinated Notes 12.75% 3/1/2005 3,640,000
2,750,000 Scotsman Group, Inc., Sr. Secured Notes 9.5% 12/15/2000 2,640,000
-------------
23,051,625
-------------
Broadcasting - 18.5%
3,250,000 Adelphia Communications Corp., Sr. Debentures 11.875% 9/15/2004 3,071,250
4,500,000 Adelphia Communications Corp., Sr. Notes 12.5% 5/15/2002 4,410,000
3,050,000 Allbritton Communications Co., Sr. Subordinated Debentures 11.5% 8/15/2004 3,133,875
4,500,000 Bell Cablemedia, PLC, Sr. Discount Notes Zero Coupon 7/15/2004 2,880,000
6,400,000 Cablevision Industries, Debentures 9.25% 4/1/2008 6,408,000
2,650,000 Comcast Corp., Convertible Subordinated Debentures 3.375% 9/9/2005 2,212,750
3,750,000 Continental Cablevision, Inc., Sr. Debentures 9.5% 8/1/2013 3,740,625
5,500,000 Continental Cablevision, Inc., Sr. Subordinated Debentures 11.0% 6/1/2007 5,995,000
6,000,000 Diamond Cable Co., Sr. Discount Notes Zero Coupon 9/30/2004 3,645,000
6,665,250 Falcon Holdings Group, L.P., Sr. Subordinated Notes 11.0% 9/15/2003 5,898,746
4,500,000 Granite Broadcasting Co., Sr. Subordinated Debentures 12.75% 9/1/2002 4,758,750
5,750,000 International CableTel, Inc., Convertible Subordinated Notes 7.25% 4/15/2005 5,728,438
6,200,000 International CableTel, Inc., Sr. Deferred Coupon Notes Zero Coupon 4/15/2005 3,441,000
4,500,000 Jones Intercable, Inc., Sr. Notes 9.625% 3/15/2002 4,556,250
6,750,000 Marcus Cable Operating Co., Sr. Subordinated Guaranteed
Discount Notes Zero Coupon 8/1/2004 4,050,000
4,500,000 NWCG Holdings Corp., Sr. Secured Discount Notes Zero Coupon 6/15/1999 2,655,000
4,000,000 Robin Media Group, Sr. Subordinated Deferred Interest Bonds 11.125% 4/1/1997 3,960,000
4,500,000 Rogers Cablesystems, Inc., Sr. Secured Second Priority Notes 9.625% 8/1/2002 4,516,875
6,000,000 Rogers Communications, Inc., Convertible Debentures 2.0% 11/26/2005 3,157,500
900,000 Rogers Communications, Inc., Convertible Liquid Yield
Option Notes Zero Coupon 5/20/2013 295,875
6,250,000 SCI Television, Inc., Sr. Second Priority Secured Notes 11.0% 6/30/2005 6,531,250
5,000,000 Scott Cable Communications, Inc., Subordinated Debentures 12.25% 4/15/2001 3,525,000
2,900,000 Storer Communications, Inc., Subordinated Debentures 10.0% 5/15/2003 2,863,750
8,500,000 United International Holdings, Inc., Sr. Discount Notes Zero Coupon 11/15/1999 4,590,000
300,000 United International Holdings, Inc., Units Zero Coupon 11/15/1999 174,000
3,700,000 Videotron Ltee. (Le Groupe), Sr. Notes 10.625% 2/1/2005 3,866,500
-------------
100,065,434
-------------
Building Products & Materials - 2.4%
4,300,000 American Standard, Inc., Sr. Subordinated Discount Debentures Zero Coupon 6/1/2005 3,182,000
10,500,000 Dal-Tile International, Inc., Sr. Secured Notes Zero Coupon 7/15/1998 7,061,250
2,700,000 Tarkett International, Sr. Subordinated Notes 9.0% 3/1/2002 2,578,500
-------------
12,821,750
-------------
Chemicals - 1.4%
6,500,000 G-I Holdings, Inc., Sr. Discount Notes Zero Coupon 10/1/1998 4,436,250
4,750,000 NL Industries, Inc., Sr. Secured Discount Notes Zero Coupon 10/15/2005 3,325,000
-------------
7,761,250
-------------
Computers & Office Equipment - 2.0%
7,000,000 Bell & Howell, Inc., Sr. Discount Debentures Zero Coupon 3/1/2005 3,902,500
2,600,000 Corporate Express, Inc., Sr. Subordinated Notes 9.125% 3/15/2004 2,496,000
4,000,000 Unisys Corp., Convertible Subordinated Notes 8.25% 8/1/2000 4,400,000
-------------
10,798,500
-------------
Conglomerates - 1.9%
3,000,000 IMO Industries, Inc., Sr. Subordinated Debentures 12.0% 11/1/2001 3,097,500
1,320,000 IMO Industries, Inc., Sr. Subordinated Debentures 12.25% 8/15/1997 1,331,550
3,250,000 Jordan Industries, Inc., Sr. Notes 10.375% 8/1/2003 3,038,750
4,750,000 Jordan Industries, Inc., Sr. Subordinated Discount Debentures Zero Coupon 8/1/2005 2,683,750
-------------
10,151,550
-------------
Containers & Packaging - 1.6%
3,300,000 Owens-Illinois, Inc., Sr. Subordinated Notes 9.75% 8/15/2004 3,316,500
6,000,000 Silgan Holdings, Inc., Sr. Discount Debentures Zero Coupon 12/15/2002 5,370,000
-------------
8,686,500
-------------
Drugs & Health Care - 1.7%
5,600,000 Dade International, Inc., Sr. Subordinated Notes 13.0% 2/1/2005 5,754,000
3,560,800 General Medical Corp., Payment-In-Kind Debentures 12.125% 8/15/2005 3,547,447
-------------
9,301,447
-------------
Electric Utilities - 1.9%
2,000,000 El Paso Electric Co. (Del Norte Funding Corp.), Secured Lease
Obligation Bonds 11.25% 1/2/2014 1,219,850 (c)
4,450,000 El Paso Electric Co. (El Paso Funding Corp.), Lease Obligation
Bonds 10.375% 1/2/2011 2,746,585 (c)
1,500,000 El Paso Electric Co. (El Paso Funding Corp.), Lease Obligation
Bonds 10.75% 4/1/2013 926,036 (c)
1,750,000 Midland Cogen Venture Fund II, Secured Lease Obligation Bonds,
Series A 11.75% 7/23/2005 1,743,135
3,600,000 Midland Cogen Venture Fund II, Subordinated Secured Lease
Obligation Bonds 13.25% 7/23/2006 3,656,891
-------------
10,292,497
-------------
Electrical Equipment - 0.7%
3,750,000 Telex Communications, Inc., Sr. Notes 12.0% 7/15/2004 3,825,000
-------------
Food & Beverage - 3.7%
1,000,000 Beatrice Foods, Inc., Sr. Subordinated Notes 12.0% 12/1/2001 960,000
3,000,000 Curtice-Burns Food, Inc., Sr. Subordinated Notes 12.25% 2/1/2005 3,195,000
2,500,000 Di Giorgio Corp., Sr. Notes 12.0% 2/15/2003 2,162,500
3,000,000 Dr. Pepper Bottling Holdings, Sr. Notes Zero Coupon 2/15/2003 2,205,000
3,350,000 Fresh Del Monte Corp., Sr. Notes 10.0% 5/1/2003 2,830,750
10,000,000 Specialty Foods Acquisition Co., Sr. Secured Discount
Debentures, Series B Zero Coupon 8/15/2005 5,250,000
9,000,000 White Rose Foods, Inc., Sr. Discount Debentures Zero Coupon 11/1/1998 3,645,000
-------------
20,248,250
-------------
Hospital Management - 1.5%
3,250,000 Charter Medical Corp., Sr. Subordinated Notes 11.25% 4/15/2004 3,412,500
4,750,000 National Medical Enterprises, Sr. Subordinated Notes 10.125% 3/1/2005 4,963,750
-------------
8,376,250
-------------
Household Products - 1.9%
14,000,000 Coleman Worldwide Corp., Convertible Liquid Yield
Option Notes Zero Coupon 5/27/2013 4,025,000
3,250,000 JB Williams Holdings, Inc., Sr. Notes 12.0% 3/1/2004 3,120,000
3,500,000 Pace Industries, Inc., Sr. Notes, Series B 10.625% 12/1/2002 3,290,000
-------------
10,435,000
-------------
Leisure & Entertainment - 1.2%
4,750,000 Bally's Health & Tennis Corp., Sr. Subordinated Notes 13.0% 1/15/2003 3,948,437
3,000,000 IMAX Corp., Sr. Notes 7.0% 3/1/2001 2,700,000
-------------
6,648,437
-------------
Machinery & Equipment - 0.5%
3,000,000 Great Dane Holdings, Inc., Sr. Subordinated Debentures 12.75% 8/1/2001 2,955,000
-------------
Mining & Metals - 0.4%
2,500,000 EnviroSource, Inc., Sr. Notes 9.75% 6/15/2003 2,243,750
-------------
Natural Gas - 1.0%
3,500,000 Columbia Gas Systems, Debentures 10.25% 8/1/2011 5,131,875 (c)
-------------
Oil & Gas - 2.4%
4,400,000 DeepTech International, Inc., Sr. Secured Notes 12.0% 12/15/2000 3,850,000
500,000 Petroleum Heat & Power Co., Inc., Subordinated Debentures 9.375% 2/1/2006 445,000
5,200,000 Petroleum Heat & Power Co., Inc., Subordinated Debentures 12.25% 2/1/2005 5,512,000
3,300,000 Sherritt, Inc., Debentures 10.5% 3/31/2014 3,333,000
-------------
13,140,000
-------------
Paper & Forest Products - 4.5%
2,500,000 Container Corp. of America, Sr. Notes 11.25% 5/1/2004 2,668,750
4,000,000 Fort Howard Corp., Sr. Subordinated Notes 9.0% 2/1/2006 3,630,000
4,500,000 Gaylord Container Corp., Sr. Subordinated Debentures Zero Coupon 5/15/2005 4,342,500
6,100,000 Malette, Inc., Sr. Secured Notes 12.25% 7/15/2004 6,374,500
2,250,000 Repap New Brunswick, 2nd Priority Secured Notes 10.625% 4/15/2005 2,295,000
3,550,000 Repap Wisconsin, Inc., 1st Priority Sr. Secured Notes 9.25% 2/1/2002 3,479,000
1,250,000 SD Warren Co., Sr. Subordinated Notes 12.0% 12/15/2004 1,350,000
-------------
24,139,750
-------------
Publishing & Printing - 3.4%
2,500,000 Heritage Media Services, Sr. Secured Notes 11.0% 6/15/2002 2,653,125
5,250,000 MobileMedia Communications, Inc., Sr. Subordinated Deferred
Coupon Notes Zero Coupon 12/1/2003 3,045,000
10,250,000 Neodata Services, Inc., Sr. Notes Zero Coupon 5/1/2003 7,943,750
3,500,000 News America Holdings, Inc., Convertible Liquid Yield
Option Notes Zero Coupon 3/11/2013 1,531,250
750,000 News America Holdings, Inc., Subordinated Notes Zero Coupon 3/31/2002 629,062
2,500,000 Sullivan Graphics, Inc., Sr. Subordinated Notes 15.0% 2/1/2000 2,656,250
-------------
18,458,437
-------------
Retail - 5.2%
3,850,000 Color Tile, Inc., Sr. Notes 10.75% 12/15/2001 2,675,750
5,000,000 Dominick's Finer Foods, Sr. Subordinated Notes 10.875% 5/1/2005 5,050,000
3,200,000 F & M Distributors, Inc., Sr. Subordinated Notes 11.5% 4/15/2003 512,000 (c)
4,750,000 Farm Fresh, Inc., Sr. Notes 12.25% 10/1/2000 4,536,250
19,000,000 Grand Union Capital, Sr. Notes Zero Coupon 7/15/2004 308,750 (c)
20,000,000 Grand Union Capital, Sr. Subordinated Notes, Series A Zero Coupon 1/15/2007 200,000 (c)
2,900,000 Loehmann's Holdings, Inc., Sr. Subordinated Notes 13.75% 2/15/1999 2,827,500
1,500,000 Penn Traffic Co., Sr. Subordinated Debentures 9.625% 4/15/2005 1,425,000
3,300,000 Purity Supreme, Notes, Series B 11.75% 8/1/1999 3,547,500
2,300,000 Smitty's SuperValu, Inc., Sr. Subordinated Notes, Series B 12.75% 6/15/2004 2,196,500
3,745,912 Town & Country Corp., Sr. Secured Discount Notes
(Payment-In-Kind) 13.0% 5/31/1998 1,854,227
6,200,000 Wherehouse Entertainment, Inc., Sr. Subordinated Notes 13.0% 8/1/2002 3,069,000
-------------
28,202,477
-------------
Services - 1.0%
750,000 Flagstar Corp., Sr. Subordinated Debentures 11.375% 9/15/2003 622,500
6,000,000 Flagstar Corp., Sr. Subordinated Debentures 11.25% 11/1/2004 4,905,000
-------------
5,527,500
-------------
Telecommunications - 8.9%
9,000,000 Call-Net Enterprises, Inc., Sr. Discount Notes Zero Coupon 12/1/2004 5,017,500
5,750,000 CenCall Communications Corp., Sr. Redeemable Discount Notes Zero Coupon 1/15/2004 2,817,500
500,000 Comcast Cellular, Inc., Sr. Participation Redeemable Notes,
Series B Zero Coupon 3/5/2000 356,250
5,150,000 Comcast Cellular, Inc., Sr. Redeemable Notes Zero Coupon 3/5/2000 3,669,375
2,000,000 Dial Call Communications, Inc., Sr. Discount Notes Zero Coupon 12/15/2005 945,000
1,500,000 Dial Call Communications, Inc., Sr. Discount Notes Zero Coupon 4/15/2004 753,750
3,250,000 General Instrument, Convertible Jr. Subordinated Notes 5.0% 6/15/2000 4,797,812
7,000,000 Horizon Cellular Telephone Co., Sr. Subordinated
Discount Notes Zero Coupon 10/1/2000 5,355,000
4,500,000 In-Flight Phone Corp., Unit Debentures Zero Coupon 5/15/2002 2,725,844
2,500,000 K-III Communications Corp., Sr. Notes 10.25% 6/1/2004 2,581,250
2,500,000 NEXTEL Communications, Inc., Sr. Discount Notes Zero Coupon 9/1/2003 1,406,250
7,500,000 Pagemart Nationwide, Inc., Sr. Discount Notes Zero Coupon 2/1/2005 4,237,500
2,000,000 Rogers Cantel Mobile, Inc., Sr. Subordinated Notes 11.125% 7/15/2002 2,105,000
3,500,000 USA Mobile Communications, Inc., Sr. Notes 14.0% 11/1/2004 3,780,000
2,250,000 USA Mobile Communications, Inc., Sr. Notes 9.5% 2/1/2004 1,991,250
8,000,000 Viatel, Inc., Sr. Discount Notes Zero Coupon 1/15/2005 5,160,000
-------------
47,699,281
-------------
Textiles & Apparel - 0.1%
1,500,000 Plaid Clothing Group, Sr. Subordinated Notes 11.0% 8/1/2003 412,500
-------------
Transportation - 1.2%
5,500,000 Burlington Motor Holdings, Inc., Sr. Subordinated Notes 11.5% 11/1/2003 4,922,500
1,400,000 TNT Transport, Sr. Notes 11.5% 4/15/2004 1,424,500
-------------
6,347,000
-------------
Total Corporate Bonds (cost $431,732,794) 413,999,404
-------------
FOREIGN BONDS - 0.9% (a,e)
$10,750,000 Argentina, (Republic of), Par Bond (cost $4,027,896) 5.0% 3/1/2023 4,730,000
-------------
</TABLE>
<TABLE>
<CAPTION>
Shares
- - ------------
<S> <C> <C>
PREFERRED STOCKS - 11.5% (a)
6,500 Armco, Inc., Convertible Preferred Stock 352,625
45,039 Berg Electronics Holding Corp., Preferred Stock 1,176,644
90,000 Boise Cascade Corp., Convertible Preferred Stock 2,486,250
32,000 California Federal Bank, Preferred Stock 3,328,000
97,500 Chevy Chase Savings Bank, Preferred Stock 2,656,875
5,150 Consolidated Hydro, Inc., Preferred Stock 2,631,650
23,500 EnviroSource, Inc., Jr. Convertible Preferred Stock 2,940,438
55,000 First Nationwide Bank, Noncummulative Preferred Stock 5,775,000
105,000 Flagstar Cos., Convertible Preferred Stock, Series A 1,968,750
45,500 Grand Union Holdings Corp., Preferred Stock 228 (b,c)
160,000 Granite Broadcasting Corp. Convertible Preferred Stock 6,240,000
221,432 Harvard Industries, Inc., Exchangeable Payment-In-Kind Preferred Stock 6,103,219
150,000 Kaiser Aluminum Corp., Preferred Stock 1,650,000
9,412 K-III Communications Corp., Payment-In-Kind Preferred Stock, Series B 895,279
133,000 K-III Communications Corp., Preferred Stock 3,441,375
87,000 Network Imaging Corp., Convertible Preferred Stock 935,250
90,000 Newscorp Overseas Limited, Cummulative Guaranteed Preferred Stock 2,070,000
7,300 PanAmSat Corporation, Convertible Preferred Stock 7,391,250
74,942 Riggs National Corp., Preferred Stock 1,920,389
122,500 River Bank America, Preferred Stock 2,894,063
30,750 Storage Technology Corp., Convertible Preferred Stock 1,579,781
26,000 Transco Energy Co., Convertible Preferred Stock 1,449,500
25,000 Unisys Corp., Convertible Preferred Stock, Series A 1,000,000
31,250 WHX Corp., Preferred Stock 1,328,125
-------------
Total Preferred Stocks (cost $65,886,252) 62,214,691
-------------
COMMON STOCKS & STOCK WARRANTS - 3.7% (a)
115,000 ADT Limited, Common Stock 1,365,625 (d)
12,000 AmeriSource Health Corp., Class A Common Stock 265,500 (d)
10,700 Arcadian Corp., Stock Warrants 192,600 (b,d)
88,600 Berg Electronics Holdings Corp., Common Stock 443,000 (b,d)
134,948 Charter Medical Corp., Common Stock 2,395,327 (d)
9,270 Consolidated Hydro, Inc., Stock Warrants 92,700 (b,d)
3,086 Dial Call Communications, Inc., Stock Warrants 4,938 (d)
1,500 Dial Call Communications, Inc., Stock Warrants 1,950 (d)
75,500 Envirotest Systems Corp., Common Stock 453,000 (d)
6,000 Federated Dept. Stores, Inc., Stock Warrants 5,250 (d)
31,751 Gaylord Container Corp., Class A Common Stock 357,199 (d)
274,885 Gaylord Container Corp., Stock Warrants 2,491,145 (d)
100,000 Harvard Industries, Inc., Class B Common Stock 1,962,500 (d)
25,000 International Cabletel, Inc., Common Stock 737,500 (d)
32,180 JPS Textiles Group, Common Stock 482,700 (d)
143,834 Memorex Telex, N.V., Common Stock 197,772 (d)
3,981 Memorex Telex, N.V., Warrants 119 (d)
15,000 News Corp., Ltd, ADR, Ordinary Shares, Common Stock 270,000
30,000 News Corp., Ltd, ADR, Preference Shares, Common Stock 585,000
19,200 Payless Cashways, Inc., Stock Warrants 38,400 (d)
125,000 Plantronics, Inc., Common Stock 3,406,250 (d)
4,500 Terex Corp., Stock Appreciation Rights 1,125 (b,d)
20,000 Triangle Wire & Cable, Inc., Stock Warrants 0 (b,d)
11,500 United International Holdings, Inc., Stock Warrants 368,000 (d)
180,000 USA Mobile Communications, Common Stock 2,700,000 (d)
23,700 Viacom, Inc., Class B Common Stock 1,087,237 (d)
-------------
Total Common Stocks & Stock Warrants (cost $17,696,597) 19,904,837
-------------
</TABLE>
<TABLE>
<CAPTION>
Principal Maturity
Amount Rate Date
- - ------------ ------------------------
<S> <C> <C> <C> <C>
SHORT-TERM SECURITIES - 7.4% (a)
Commercial Paper
$5,000,000 Cargill, Inc. 5.959% 5/3/1995 4,998,347
17,900,000 General Electric Co. 5.9% 5/1/1995 17,900,000
5,000,000 General Motors Acceptance Corp. 6.03% 5/31/1995 4,974,875
5,000,000 General Motors Acceptance Corp. 6.04% 5/31/1995 4,974,833
7,000,000 Pepsico, Inc. 5.96% 5/12/1995 6,987,252
-------------
Total Short-Term Securities (at amortized cost) 39,835,307
-------------
Total Investments (cost $559,178,846) $540,684,239 (f)
-------------
See accompanying notes to portfolio of investments.
Notes to Portfolio of Investments:
(a) The categories of investments are shown as a percentage of total
investments of the Lutheran Brotherhood High Yield Fund.
(b) Denotes restricted securities. These securities have been valued from
the date of acquisition through April 30, 1995 by obtaining quotations
from brokers who are active with the issues. The following table
indicates the aquisition date and cost of restricted securities the Fund
owned as of April 30, 1995:
</TABLE>
<TABLE>
<CAPTION>
Acquisition
Security Date Cost
----------------------------------------------------------------------------------------------
<S> <C> <C>
Arcadian Corp., Stock Warrants 2/6/92 290,000
Berg Electronics Holdings Corp., Common Stock 4/21/93 82,210
Consolidated Hydro, Inc., Stock Warrants 2/8/94 202,776
Grand Union Holdings Corp., Preferred Stock 6/14/93 5,218,975
Mutual Life Insurance Company of New York, Surplus
Notes, 0%, 8/15/2024 8/8/94 4,049,780
Terex Corp., Stock Appreciation Rights 7/27/92 11,250
Triangle Wire & Cable, Inc., Stock Warrants 1/3/92 1,998
(c) Currently non-income producing and in default.
(d) Currently non-income producing.
(e) Denominated in U.S. Dollars.
(f) At April 30, 1995, the aggregate cost of securities for federal income
tax purposes was $559,178,846 and the net unrealized depreciation of
investments based on that cost was $18,494,607 which is comprised of
$27,863,628 gross unrealized appreciation and $46,358,235 aggregate
gross unrealized depreciation.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
Lutheran Brotherhood Income Fund
Portfolio of Investments
April 30, 1995
(Unaudited)
Principal Maturity
Amount Rate Date Value
- - -------------- -------------------------------------
<S> <C> <C> <C> <C>
CORPORATE BONDS - 24.2% (a)
Bank & Finance - 9.5%
$10,000,000 Aegon, N.V., Yankee Notes 8.0% 8/15/2006 $10,144,840
3,000,000 Associates Corp. of North America, Notes 10.75% 11/1/1995 3,060,912
5,000,000 Associates Corp. of North America, Sr. Debentures 12.4% 10/1/1995 5,116,645
13,000,000 Associates Corp. of North America, Sr. Notes 9.125% 4/1/2000 13,797,654
9,000,000 Geico Corp., Debentures 9.15% 9/15/2021 9,562,590
10,000,000 General Electric Capital Corp., Debentures 8.85% 4/1/2005 10,945,380
3,000,000 Hancock (John) Mutual Life Insurance Co., Surplus Notes 7.375% 2/15/2024 2,697,000
5,000,000 Liberty Mutual Insurance Co., Surplus Notes 8.2% 5/4/2007 4,983,400
10,000,000 Nationwide CSN Trust, Trust Notes 9.875% 2/15/2025 10,700,000
6,000,000 New York Life Insurance Co., Surplus Notes 6.4% 12/15/2003 5,459,598
9,000,000 PNC Bank, NA, Subordinated Notes 7.875% 4/15/2005 9,019,899
6,000,000 Reliastar Financial Corp., Sr. Notes 8.625% 2/15/2005 6,180,294
-------------
91,668,212
-------------
Chemicals - 0.3%
3,000,000 Monsanto Co., Debentures 8.2% 4/15/2025 3,019,122
-------------
Drugs & Health Care - 1.7%
9,000,000 American Home Products Corp., Notes 7.9% 2/15/2005 9,232,128
7,000,000 Bectin Dickinson & Co., Debentures 8.7% 1/15/2025 7,285,236
-------------
16,517,364
-------------
Electric Utilities - 3.4%
5,000,000 Arizona Public Service Co., First Mortgage Bonds 9.5% 4/15/2021 5,394,475
7,085,000 DQU Funding Corp., Collateralized Lease Obligation Bonds 7.23% 12/1/1999 7,030,821
13,000,000 Texas Utilities Electric Co., First Mortgage Bonds 7.375% 10/1/2025 11,577,982
9,000,000 Virginia Electric & Power Co., First Refunding Mortgage Bonds 8.25% 3/1/2025 8,991,189
-------------
32,994,467
-------------
Electrical Equipment - 0.5%
5,000,000 Philips Electronics, N.V., Notes 8.375% 9/15/2006 5,226,865
-------------
Food & Beverage - 0.7%
6,000,000 Coca Cola Enterprises, Inc., Debentures 8.5% 2/1/2022 6,232,212
-------------
Hospital Management - 1.0%
5,000,000 Columbia/HCA Healthcare Corp., Medium Term Notes 9.0% 12/15/2014 5,236,275
4,000,000 Columbia/HCA Healthcare Corp., Medium Term Notes 8.85% 1/1/2007 4,225,992
-------------
9,462,267
-------------
Household Products - 1.7%
14,000,000 Procter & Gamble, Guaranteed ESOP Debentures 9.36% 1/1/2021 16,062,816
-------------
Natural Gas - 0.7%
6,000,000 Coastal Corp., Sr. Notes 10.375% 10/1/2000 6,659,478
-------------
Paper & Forest Products - 0.5%
5,000,000 Georgia Pacific Corp., Debentures 8.625% 4/30/2025 5,049,335
-------------
Petroleum - 1.9%
8,272,765 Mobil Oil Corp, ESOP Sinking Fund Debentures 9.17% 2/29/2000 8,765,284
10,000,000 Texaco Capital, Inc., Debentures 7.5% 3/1/2043 9,164,100
-------------
17,929,384
-------------
Retail - 1.2%
6,000,000 K-Mart Corp., Debentures 7.95% 2/1/2023 5,515,266
6,000,000 K-Mart Corp., Global Notes 8.125% 12/1/2006 5,958,288
-------------
11,473,554
-------------
Services - 0.5%
5,000,000 ARAMARK Services, Inc., Guaranteed Notes 8.15% 5/1/2005 4,986,400
-------------
Telephone - 0.6%
7,000,000 U.S. West Communications, Inc., Debentures 7.125% 11/15/2043 6,106,198
-------------
Total Corporate Bonds (cost $229,847,002) 233,387,674
-------------
FOREIGN BONDS - 12.0% (a,b)
11,500,000 Bell Telephone Co., Canada, Debentures, Series DJ 13.375% 10/15/2010 12,431,684
20,325,000 British Columbia Hydro & Power, Debentures 15.5% 7/15/2011 23,592,020
15,000,000 Inter American Development Bank, Debentures 7.125% 3/15/2023 13,575,735
7,000,000 International Bank for Reconstruction &
Development, Debentures 12.375% 10/15/2002 8,990,478
7,000,000 KFW International Finance, Notes 7.2% 3/15/2014 6,627,264
5,500,000 Landeskreditbank Baden - Wurttemberg, Subordinated Notes 7.625% 2/1/2023 5,305,944
10,000,000 Ontario Province, Canada, Debentures 15.125% 5/1/2011 11,337,890
5,000,000 Ontario Province, Canada, Debentures 11.75% 4/25/2013 5,780,495
13,000,000 Ontario Province, Canada, Sr. Secured Notes 7.75% 6/4/2002 13,225,927
5,000,000 Scotland International Finance No. 2,
Subordinated Guaranteed Notes 8.85% 11/1/2006 5,315,500
9,000,000 Societe-Generale, Subordinated Notes 9.875% 7/15/2003 10,175,211
-------------
Total Foreign Bonds (cost $122,547,667) 116,358,148
-------------
ASSET-BACKED SECURITIES - 10.3% (a)
25,000,000 Household Affinity Master Trust, Series 1993-1-A 3.325% 9/15/2000 25,100,225 (c)
12,000,000 Household Affinity Master Trust, Series 1993-2-A 5.6% 5/15/2002 11,203,908
13,949,240 IBM Credit Receivables Lease Trust, Series 1993-1 4.55% 11/15/2000 13,811,114
25,000,000 ITT Floorplan Receivable Master Trust, Series 1994-1-A 3.7725% 2/15/2001 25,100,725 (c)
20,000,000 Sears Credit Account Master Trust, Series 1994-1-A 7.0% 1/15/2004 19,948,380
4,000,000 Standard Credit Card Master Trust, Series 1995-1 8.25% 1/7/2005 4,170,036
-------------
Total Asset-Backed Securities (cost $98,524,648) 99,334,388
-------------
MORTGAGE-BACKED SECURITIES - 19.3% (a)
44,500,000 Federal National Mortgage Association, Participation Certificates 8.0% 11/25/2024 44,388,750 (d,e)
81,608,211 Federal National Mortgage Association, Participation Certificates 6.5% 11/1/2024 75,385,585
69,860,149 Government National Mortgage Association,
Modified Pass Through Certificates 7.0 - 7.5% 2022 - 2024 66,956,730
-------------
Total Mortgage-Backed Securities (cost $185,937,491) 186,731,065
-------------
U.S. GOVERNMENT AGENCIES - 1.6% (a)
65,000,000 Resolution Funding Corp., STRIPS Zero Coupon 2018 - 2019 10,559,035
5,000,000 Tennessee Valley Authority, Power Bonds, 1994 Series A 7.85% 6/15/2044 4,750,120
-------------
Total U.S. Government Agencies (cost $14,640,747) 15,309,155
-------------
U.S. GOVERNMENT - 18.5% (a)
110,000,000 U.S. Treasury Bonds 7.5 - 14.0% 2001 - 2024 143,505,188
35,000,000 U.S. Treasury Notes 7.5 - 10.5% 1995 - 2001 35,736,220
-------------
Total U.S. Government (cost $178,699,141) 179,241,408
-------------
</TABLE>
<TABLE>
<CAPTION>
Shares
- - --------------
<S> <C> <C>
COMMON & PREFERRED STOCKS - 0.9% (a)
350,000 Citicorp, Preferred Stock 7,000,000
30,000 Texaco, Inc., Common Stock 2,051,250
-------------
Total Common & Preferred Stocks (cost $9,008,725) 9,051,250
-------------
</TABLE>
<TABLE>
<CAPTION>
Principal Maturity
Amount Rate Date
- - -------------- ------------------------
<S> <C> <C> <C> <C>
SHORT-TERM SECURITIES - 13.2% (a)
Commercial Paper - 12.3%
$5,400,000 AVCO Financial Services, Inc. 5.97% 5/17/1995 5,385,672
10,000,000 Cargill, Inc. 5.9% 5/9/1995 9,986,889
5,000,000 Centurion Fuel Corp. 6.0% 5/1/1995 5,000,000
7,800,000 Ciesco, L.P. 5.97% 5/18/1995 7,778,011
5,000,000 Commercial Credit Co. 6.02% 5/3/1995 4,998,328
5,000,000 Commercial Credit Co. 5.98% 5/3/1995 4,998,339
10,000,000 Du Pont (E.I.) de Nemours and Co. 5.95% 5/11/1995 9,983,472
775,000 General Electric Capital Corp. 5.7% 5/1/1995 775,000
10,000,000 International Business Machines Credit Co. 5.96% 5/31/1995 9,950,333
10,000,000 Metlife Funding, Inc. 5.96% 5/4/1995 9,995,033
6,200,000 Pitney Bowes, Inc. 5.96% 5/10/1995 6,190,762
23,000,000 Harvard University 5.92% 5/1/1995 23,000,000
4,600,000 Toys R Us, Inc. 5.94% 5/24/1995 4,582,543
3,100,000 Toys R Us, Inc. 5.92% 5/15/1995 3,092,863
10,000,000 United Parcel Service of America, Inc. 5.95% 5/8/1995 9,988,431
3,000,000 USAA Capital Corp. 5.96% 5/10/1995 2,995,530
-------------
118,701,206
-------------
Government Agency - 0.9%
9,000,000Federal Home Loan Mortgage Corp. 5.88% 5/15/1995 8,979,420
-------------
Total Short-Term Securities (at amortized cost) 127,680,626
-------------
Total Investments (cost $966,886,047) $967,093,714 (f)
=============
</TABLE>
<TABLE>
<CAPTION>
Notes to Portfolio of Investments:
(a) The categories of investments are shown as a percentage of total
investments of the Lutheran Brotherhood Income Fund.
(b) Denominated in U.S. dollars.
(c) Denotes variable rate obligations for which current yield is shown.
(d) Denotes investments purchased on a when-issued basis.
(e) At April 30, 1995, securities valued at $21,945,000 were held in
escrow to cover open call options written as follows:
Number of Exercise Expiration
Type Contracts Price Date Value
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federal Nation 1 99.59375 5/4/1995 $68,750
Mortgage Association
$22,000,000 principal
amount, 8.0%, maturing
2024
(f) At April 30, 1995, the aggregate cost of securites for federal income
tax purposes was $966,886,047 and the net unrealized appreciation of
investments based on that cost was $207,667 which is comprised of
$14,705,734 aggregate gross unrealized appreciation and $14,498,067
aggregate gross unrealized depreciation.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
Lutheran Brotherhood Municipal Bond Fund
Portfolio of Investments
April 30, 1995
(Unaudited)
Principal Maturity
Amount Rate Date Value
- - ------------ -------------------------------------
<S> <C> <C> <C> <C>
LONG-TERM MUNICIPAL SECURITIES - 99.1% (a)
Alabama - 0.4%
$2,000,000 Huntsville, Alabama, General Obligation Warrants, Series B 7.875% 8/1/2012 $2,171,500 (b)
Arizona - 0.6%
1,700,000 Pima County, Arizona (Catalina Foothills Unified School District
#16), Unlimited Tax General Obligation Bonds, Series A 8.9% 7/1/2005 2,126,819 (c)
1,500,000 Tucson, Arizona, Unlimited Tax General Obligation
Refunding Bonds 6.1% 7/1/2012 1,516,605 (d)
-------------
3,643,424
-------------
Arkansas - 0.7%
1,000,000 Arkansas Housing Development Agency, Single Family
Mortgage Bonds, Series A 8.375% 7/1/2010 1,219,200 (b)
1,340,000 Arkansas Development Finance Authority, Correctional Facilities
Construction Revenue Bonds 7.125% 11/15/2010 1,431,281 (c)
875,000 Pope County, Arkansas, Pollution Control Revenue Refunding
Bonds, Series 1994 (Arkansas Power and Light
Company Project) 6.3% 12/1/2016 893,830 (e)
750,000 Pope County, Arkansas, Pollution Control Revenue
Refunding Bonds, Series 1994 (Arkansas Power and
Light Company Project) 6.1% 12/1/2016 766,140 (e)
-------------
4,310,451
-------------
California - 9.2%
5,000,000 Alameda County, California, Certificates of Participation,
Revenue Refunding Bonds, Santa Rita Jail Project 5.375% 6/1/2009 4,741,950 (c)
1,750,000 Anaheim, California, Public Financing Authority,
Electric Utilities Project, Refunding Revenue Bonds 5.5% 10/1/2011 1,655,850 (c)
1,000,000 California Educational Facilities Authority (Stanford University),
Revenue Bonds 5.0% 1/1/2015 880,140
1,500,000 State of California, General Obligation Bonds 7.0% 8/1/2006 1,653,450
1,000,000 California State, Unlimited Tax General Obligation Bonds,
Veteran's Series AT 9.5% 2/1/2010 1,351,020
2,000,000 California State, Various Purpose General Obligation Bonds 6.3% 9/1/2010 2,079,740 (f)
4,400,000 California State Department of Water Resources
(Central Valley Project), Water System Revenue
Bonds, Series H 6.9% 12/1/2025 4,842,376 (b)
3,000,000 California State Public Works Board, Department of Corrections,
Lease Revenue Bonds, State Prison, Series A 7.4% 9/1/2010 3,374,700
2,000,000 California State Public Works Board, Lease Revenue Refunding
Bonds (Department of Corrections, Various State Prisons),
Series 1993A 5.25% 12/1/2008 1,899,340 (f)
2,490,000 California Statewide Communities Development Authority,
Certificates of Participation (The Trustees of the
J. Paul Getty Trust) 5.0% 10/1/2015 2,159,502
1,000,000 Central Valley Financing Authority, California, Cogeneration
Project Revenue Bonds, (Carson Ice-Gen Project), Series 1993 6.0% 7/1/2009 951,410
1,900,000 El Cajon, California, Redevelopment Agency Tax Allocation
Refunding Bonds (El Cajon Redevelopment Project) 6.6% 10/1/2022 1,969,274 (f)
1,000,000 Los Angeles County, California, Transportation Commission,
Revenue Bonds, Series A 8.0% 7/1/2016 1,087,480 (b)
2,000,000 Metropolitan Water District of Southern California, Unlimited
Tax General Obligation Bonds, Series G 6.625% 3/1/2009 2,128,180 (b)
2,145,000 Rancho, California, Water District Financing Authority,
Revenue Refunding Bonds, Series A 4.875% 8/1/2015 1,815,228 (d)
2,000,000 Rancho, California, Water District Financing Authority,
Revenue Refunding Bonds 5.9% 11/1/2015 1,904,200 (d)
1,000,000 Rio Linda, California, Union School District, Series 1992-A 7.4% 8/1/2010 1,119,200 (f)
2,815,000 Riverside County Transportation Commission, California,
Sales Tax Revenue Capital Appreciation Bonds Zero Coupon 6/1/2004 1,699,556 (c)
1,500,000 San Francisco Bay Area Rapid Transit District, California,
Sales Tax Revenue Refunding Bonds, Series 1990 6.75% 7/1/2010 1,631,145 (f)
15,000,000 San Joaquin Hills Transportation Corridor Agency,
California, Sr. Lien Convertible Toll Revenue Bonds Zero Coupon 1/1/2013 9,514,200
3,000,000 San Mateo County, California, Joint Powers Financing Authority,
Lease Revenue Refunding Bonds, Capital Projects Program,
1993 Series 5.0% 7/1/2021 2,546,940 (c)
2,490,000 University of California Revenue Bonds, Multiple Purpose
Projects, Series 1989 B 11.0% 9/1/1998 2,946,766 (f)
1,000,000 University of California, Housing System Revenue Bonds,
Series A 5.25% 11/1/2012 917,410 (c)
2,000,000 University of California Revenue Bonds, Multiple Purpose
Projects, Series C 4.75% 9/1/2015 1,663,280 (f)
-------------
56,532,337
-------------
Colorado - 5.2%
2,500,000 St. Vrain Valley School District, Boulder, Larimer & Weld
Counties Colorado, General Obligation Refunding &
Improvement Bonds, Series 1990-A Zero Coupon 12/15/2003 1,492,625 (c)
5,000,000 St. Vrain Valley School District, Boulder, Larimer & Weld
Counties Colorado, General Obligation Refunding &
Improvement Bonds, Series 1990-A Zero Coupon 12/15/2004 2,937,450 (c)
970,000 Colorado Housing & Finance Authority, Single Family Residential
Housing Revenue Bonds, Series 1987-B 9.0% 9/1/2017 1,011,419
710,000 Colorado Springs, Colorado, Utilities System Refunding Revenue
Bonds, Series 1985-A 9.5% 11/15/2015 729,418 (b)
3,100,000 Colorado Springs, Colorado, Utilities System Refunding Bonds
Series 1991-B 7.0% 11/15/2021 3,468,125 (b)
1,945,000 Colorado State Colleges Board, Western State College,
Housing & Student Fee Revenue Bonds, Series 1992 6.625% 5/1/2015 2,138,858 (b,g)
1,195,000 Colorado Water Resources Power Development Authority,
Clean Water Revenue Bonds, Series A 6.25% 9/1/2013 1,232,308 (e)
2,850,000 Denver, Colorado, City & County Revenue Bonds, Sisters of
Charity of Leavenworth 5.0% 12/1/2023 2,339,052
2,000,000 Douglas County School District Number RE-1, Douglas & Elbert
Counties, Colorado, General Obligation Bonds 6.5% 12/15/2016 2,075,900 (c)
2,680,000 Douglas County School District Number RE-1, Douglas & Elbert
Counties, Colorado, Project Fixed Rate Certificates of
Participation, (Colorado Association of School Board Leases
Purchase Finance Program) Series 1991-D 7.25% 12/1/1996 2,783,502
1,000,000 Eagle, Garfield, and Routt Counties, Colorado, Eagle County
School District No. RE50J, General Obligation Bonds,
Series 1994 6.3% 12/1/2012 1,027,230 (d)
1,890,000 Goldsmith Metropolitan District, Colorado, Unlimited Tax
General Obligation Bonds Zero Coupon 6/1/2007 948,874 (c)
1,890,000 Goldsmith Metropolitan District, Colorado, Unlimited Tax
General Obligation Bonds Zero Coupon 6/1/2008 890,549 (c)
1,885,000 Goldsmith Metropolitan District, Colorado, Unlimited Tax
General Obligation Bonds Zero Coupon 12/1/2008 862,991 (c)
3,000,000 Larimer County, Colorado, School District No. R-2, Poudre Valley
Unlimited Tax General Obligation Bonds 7.0% 12/15/2016 3,391,890
2,300,000 Metropolitan Wastewater Reclamation District, Colorado,
Gross Revenue Refunding Bonds, Series B 4.75% 4/1/2012 2,010,384 (c)
2,485,000 Regional Transportation District, Colorado, Sales Tax Revenue
Refunding & Improvement Bonds, Series 1992 6.25% 11/1/2012 2,545,659 (d)
-------------
31,886,234
-------------
Connecticut - 1.2%
1,850,000 Connecticut State Health & Education Facilities Authority, Revenue
Bonds, Lawrence & Memorial Hospital, Series D 5.0% 7/1/2022 1,574,997 (c)
1,000,000 Connecticut State Health & Education Facilities Authority,
Revenue Bonds, Hospital of St. Raphael, Series H 5.25% 7/1/2012 933,440 (f)
750,000 Connecticut State Health & Education Facilities Authority,
Revenue Bonds, New Britain General Hospital, Series B 6.0% 7/1/2024 736,755 (f)
4,000,000 Connecticut Special Tax Obligation, Transportation Infrastructure
Revenue Bonds, Series B 6.5% 10/1/2010 4,278,160
-------------
7,523,352
-------------
Florida - 2.8%
20,120,000 Broward County, Florida, Housing Finance Authority, Home
Mortgage Revenue Bonds, 1983 Series A Zero Coupon 4/1/2014 2,932,691
1,000,000 Florida State Board of Education, Public Education Capital
Outlay General Obligation Bonds, Series B1 7.875% 6/1/2019 1,105,610 (b)
1,000,000 Florida State Municipal Power Agency, All Requirements
Power Supply Project Revenue Refunding Bonds 5.1% 10/1/2025 873,540 (f)
1,500,000 Florida State Turnpike Authority, Turnpike Revenue Refunding
Bonds, (Department of Transportation) Series A 5.0% 7/1/2019 1,302,945 (d)
1,705,000 Hillsborough Industrial Development Authority, Florida
(Tampa Electric Project), Pollution Control Revenue
Bonds, Series 1991 7.875% 8/1/2021 1,964,433
3,200,000 Hillsborough County, Florida, Industrial Development Authority
(Weyerhaueser Company, Inc.), Industrial Development
Revenue Bonds, Series 1983 9.25% 6/1/2008 3,273,952
2,000,000 Reedy Creek Improvement District, Florida, Special Tax
Revenue Bonds, Series A 5.75% 6/1/2019 1,917,160 (c)
2,000,000 St. Johns County, Florida, Water & Sewer Revenue Bonds 5.0% 6/1/2009 1,893,440 (d)
1,465,000 Tampa, Florida, Utility Tax & Special Revenue Bonds, 1985 Series 8.875% 10/1/2013 1,520,113 (b,c)
-------------
16,783,884
-------------
Georgia - 2.5%
2,000,000 Brunswick, Georgia, Water & Sewer Revenue Refunding &
Improvement Bonds, Series 1992 6.0% 10/1/2011 2,024,900 (c)
1,500,000 Brunswick, Georgia, Water & Sewer Revenue Refunding &
Improvement Bonds, Series A 6.1% 10/1/2019 1,522,845 (c)
5,000,000 Cherokee County, Georgia, Water & Sewer Revenue Refunding
& Improvement Bonds 5.5% 8/1/2018 4,670,500 (c)
3,500,000 Georgia State, Unlimited Tax General Obligation Bonds,
Series 1994D 5.0% 8/1/2012 3,214,960
1,000,000 Georgia State, Unlimited Tax General Obligation Bonds, Series B 6.3% 3/1/2009 1,066,640
1,000,000 Georgia State, Unlimited Tax General Obligation Bonds, Series B 6.3% 3/1/2010 1,069,770
2,000,000 Georgia State, Unlimited Tax General Obligation Bonds, Series B 5.65% 3/1/2012 1,967,860
-------------
15,537,475
-------------
Hawaii - 0.3%
2,000,000 City & County of Honolulu, Hawaii, General Obligation
Refunding & Improvement Bonds, Series 1993B 5.5% 10/1/2011 1,932,800
-------------
Idaho - 0.4%
1,000,000 Idaho Falls, Idaho, General Obligation Electric Refunding Bonds,
Series 1991 Zero Coupon 4/1/2007 515,720 (d)
3,115,000 Idaho Falls, Idaho, General Obligation Electric Refunding Bonds,
Series 1991 Zero Coupon 4/1/2010 1,318,829 (d)
2,000,000 Idaho Falls, Idaho, General Obligation Electric Refunding Bonds,
Series 1991 Zero Coupon 4/1/2011 799,320 (d)
-------------
2,633,869
-------------
Illinois - 0.8%
3,940,000 Central Lake County, Illinois, Joint Action Water Agency,
Refunding Unlimited Tax General Obligation Bonds 6.0% 2/1/2019 3,790,241
16,000 Illinois Health Facilities Authority (Community Provider Pooled
Loan Program), Revenue Bonds, Series 1988 B 7.9% 8/15/2003 16,473 (b,c)
162,000 Illinois Health Facilities Authority (Community Provider Pooled
Loan Program), Revenue Bonds, Series 1988 B 7.9% 8/15/2003 189,080 (b,c)
1,035,000 Illinois Health Facilities Authority (Community Provider Pooled
Loan Program), Revenue Bonds, Series 1988 B 7.9% 8/15/2003 1,062,231 (c)
-------------
5,058,025
-------------
Indiana - 1.2%
2,450,000 Indiana Municipal Power Agency, Power Supply System
Revenue Bonds, Series A 5.5% 1/1/2023 2,209,361 (c)
400,000 Indiana Housing Finance Authority, Single Family Mortgage
Program Bonds, 1985 Series A 10.2% 1/1/2016 411,384
2,100,000 Indianapolis, Indiana, Resource Recovery Revenue Bonds,
Ogden Martin Systems, Series A 7.8% 12/1/2004 2,207,646
410,000 Indianapolis, Indiana, Resource Recovery Revenue Bonds,
1985 Series A 7.9% 12/1/2008 431,304
2,190,000 Indianapolis, Indiana, Resource Recovery Revenue Bonds,
1985 Series B 7.9% 12/1/2008 2,303,792
-------------
7,563,487
-------------
Iowa - 0.9%
4,000,000 Iowa Finance Authority, Iowa State Revolving Fund Revenue
Bonds, Combined Series 1993 5.2% 5/1/2023 3,558,680
2,000,000 Iowa Finance Authority, Iowa State Revolving Fund Revenue
Bonds, Combined Series 1994 6.25% 5/1/2024 2,044,660
-------------
5,603,340
-------------
Kansas - 1.5%
8,000,000 Kansas City, Kansas, Utility System Refunding and
Improvement Revenue Bonds 6.375% 9/1/2023 8,203,440 (d)
1,255,000 Kansas City, Kansas, Utility System, Capital Appreciation
Refunding & Improvement Revenue Bonds Zero Coupon 3/1/2007 643,539 (b,f)
920,000 Kansas City, Kansas, Utility System, Capital Appreciation
Refunding & Improvement Revenue Bonds Zero Coupon 3/1/2007 469,596 (f)
-------------
9,316,575
-------------
Kentucky - 0.7%
115,000 Jefferson County, Kentucky, Home Mortgage Revenue Bonds,
Series 1983 9.625% 5/1/2014 118,717
1,000,000 Kentucky Development Finance Authority, Refunding and
Improvement Revenue Bonds (Ashland Hospital, Kings
Daughter Project) 9.75% 8/1/2005 1,106,240
5,345,000 Kentucky Turnpike Authority, Economic Development
Road Revenue Bonds Zero Coupon 1/1/2010 2,240,945 (d)
750,000 Kentucky Turnpike Authority, Economic Development
Road Revenue and Revenue Refunding Bonds, Series 1993 5.5% 7/1/2009 737,640 (f)
-------------
4,203,542
-------------
Louisiana - 1.3%
1,005,000 Alexandria, Louisiana, Utilities Revenue Bonds, Series B 5.0% 5/1/2009 912,520 (d)
1,065,000 Alexandria, Louisiana, Utilities Revenue Bonds, Series B 5.0% 5/1/2010 957,744 (d)
6,500,000 New Orleans, Louisiana, General Obligation Bonds, Series 1991 Zero Coupon 9/1/2012 2,238,340 (f)
3,000,000 Orleans Parish School Board #87, Louisiana, Escrowed to
Maturity Bonds 8.95% 2/1/2008 3,874,080 (b,c)
-------------
7,982,684
-------------
Maine - 0.3%
1,250,000 Maine Health & Higher Educational Facilities Authority, Revenue
Bonds, Series 1994 7.0% 7/1/2024 1,335,762 (e)
350,000 Regional Waste Systems, Inc., Maine, Solid Waste Resource
Recovery System Revenue Bonds, Series A,B,C 7.95% 7/1/2010 384,408
-------------
1,720,170
-------------
Maryland - 3.1%
600,000 City of Baltimore, Maryland (Mayor and City Council of
Baltimore), Convention Center Revenue Bonds, Series 1994 6.15% 9/1/2019 605,436 (d)
1,250,000 Maryland Environmental Services, Revenue Bonds,
(Garrett County Landfill Project), Series 1993 5.5% 9/1/2013 1,184,962 (f)
2,000,000 Maryland Health & Higher Education Authority,
Union Hospital of Cecil County Revenue Bonds, Series 1992 6.7% 7/1/2022 1,867,700
2,500,000 Maryland Health & Higher Education Facilities Authority,
Project & Refunding Revenue Bonds (University of
Maryland Medical System Issue), Series 1993 5.375% 7/1/2013 2,328,375 (f)
3,000,000 Maryland Health & Higher Education Facilities Authority,
Revenue Project & Refunding Bonds, (University of Maryland) 5.0% 7/1/2020 2,561,010 (d)
3,250,000 Maryland Health & Higher Education Facilities Authority,
Revenue Refunding Bonds, (Suburban Hospital Issue),
Series 1993 5.125% 7/1/2021 2,770,593
4,500,000 Morgan State University, Maryland, Academic Fee and Auxiliary
Facilities Fees Revenue Refunding Bonds, Series 1993 6.05% 7/1/2015 4,562,550 (c)
1,000,000 Prince George's County, Maryland, Dimensions Health Corp.,
Hospital Revenue Bonds, Series 1992 7.0% 7/1/2022 1,126,570 (b)
2,000,000 Prince George's County, Maryland, Project & Refunding
Revenue Bonds, (Dimensions Health Corporation Issue)
Series 1994 5.3% 7/1/2024 1,654,080
-------------
18,661,276
-------------
Massachusetts - 5.6%
2,850,000 Commonwealth of Massachusetts, General Obligation Bonds,
Series B 9.0% 10/1/2004 2,971,439 (b)
2,000,000 Commonwealth of Massachusetts, General Obligation Refunding
Bonds, Series B 6.5% 8/1/2008 2,147,080
1,800,000 Commonwealth of Massachusetts, Limited Tax General
Obligation Bonds, Construction Loan, Series C 7.375% 12/1/2008 1,980,792 (b)
5,000,000 Commonwealth of Massachusetts, General Obligation Bonds,
Consolidated Loan of 1993, Series A 5.5% 11/1/2008 4,865,450
1,160,000 Massachusetts State, Consolidated Loan Bonds, Series A 5.75% 2/1/2010 1,145,140 (c)
2,970,000 Massachusetts Health and Education Facilities Authority
(Harvard University), Revenue Bonds, Series J 8.75% 12/1/2007 3,086,691 (b)
1,500,000 Massachusetts Health and Education Facilities Authority
(Newton - Wellesley Hospital) Revenue Bonds, Series C 8.0% 7/1/2018 1,638,780
2,500,000 Massachusetts Health and Education Facilities Authority,
Revenue Bonds, Daughters of Charity National Health System,
The Carney Hospital, Series D 6.1% 7/1/2014 2,447,275
1,500,000 Massachusetts Health and Education Facilities Authority,
Revenue Bonds, Series F 6.5% 7/1/2012 1,575,795
1,000,000 Massachusetts Health and Education Facilities Authority
(Lahey Clinic Medical Center), Series B 5.625% 7/1/2015 951,900 (c)
5,000,000 Massachusetts State Port Authority, Revenue Bonds, Series B 6.0% 7/1/2023 4,886,600
4,000,000 Massachussetts State Turnpike Authority, Turnpike
Revenue Bonds, Series A 5.0% 1/1/2020 3,446,840 (d)
3,000,000 Plymouth County, Massachusetts, Correctional Facility
Certificates of Participation Bonds 7.0% 4/1/2012 3,182,010
-------------
34,325,792
-------------
Michigan - 5.3%
1,000,000 Anchor Bay School District, Counties of Macomb and St. Clair,
Michigan, 1993 School Building and Site Bonds, Unlimited
Tax General Obligation Bonds 5.25% 5/1/2014 897,910 (d)
500,000 Breckenridge, Michigan, Community Schools Unlimited
Tax General Obligation Bonds 5.5% 5/1/2013 466,465 (f)
10,000,000 Detroit, Michigan, Sewer Disposal Revenue Bonds, Linked
Pars & Inflows 5.7% 7/1/2023 9,413,000 (d)
1,500,000 Gibraltar, Michigan, School District, Refunding Unlimited Tax
General Obligation Bonds 5.5% 5/1/2014 1,396,395 (f)
1,400,000 Kent County, Michigan, Limited Tax Guaranteed Obligations,
Refuse Disposal System Refunding Bonds 8.3% 11/1/2007 1,542,660
1,500,000 Livonia Public Schools, County of Wayne, Michigan,
1992 School Building and Site Bonds, Series II (Unlimited Tax
General Obligation) Zero Coupon 5/1/2009 656,925 (b,d)
2,460,000 Michigan Municipal Bond Authority, Government Loan Revenue
Refunding Bonds, Series A Zero Coupon 12/1/2005 1,367,735 (d)
2,750,000 Michigan State Hospital Finance Authority, Hospital Revenue
Bonds, (Holland Community Hospital), Series 1993 5.25% 1/1/2008 2,534,290
390,000 Michigan State Hospital Finance Authority, Hospital Revenue
and Refunding Bonds, (Detroit Medical Center Obligated Group),
Hospital Revenue & Refunding Bonds, Series 1988-A 8.125% 8/15/2012 434,518
110,000 Michigan State Hospital Finance Authority, Hospital Revenue
and Refunding Bonds, (Detroit Medical Center Obligated Group),
Hospital Revenue & Refunding Bonds, Series 1988-A 8.125% 8/15/2012 117,809 (b)
1,100,000 Michigan State Hospital Finance Authority, Refunding Hospital
Bonds, St. Johns Hospital, Series A 5.75% 5/15/2016 1,043,482 (f)
2,000,000 Economic Development Corporation of the County of St. Clair,
Michigan, Pollution Control Revenue Refunding Bonds
(Detroit Edison Company Project), Series 1993 AA 6.4% 8/1/2024 2,050,740 (f)
3,320,000 Sault St. Marie Chippewa Indians Housing Authority,
Health Facilities Revenue Bonds (Tribal Health & Human
Services Center Project), Series 1992 7.75% 9/1/2012 3,363,326
1,000,000 Vicksburg, Michigan, Community Schools, Qualified School
General Obligation Bonds, Kalamazoo & St. Joseph Counties 7.0% 5/1/2007 1,114,520 (b,c)
3,000,000 West Bloomfield School District, Oakland County, Michigan,
1994 School Building and Site Refunding Unlimited Tax
General Obligation Bonds 5.125% 5/1/2014 2,658,240 (c)
3,455,000 West Ottawa, Michigan, Public School District, Unlimited Tax
General Obligation Bonds Zero Coupon 5/1/2004 2,123,305 (c)
1,860,000 West Ottawa, Michigan, Public School District, Unlimited Tax
General Obligation Bonds Zero Coupon 5/1/2005 1,072,346 (c)
-------------
32,253,666
-------------
Minnesota - 4.6%
3,260,000 Duluth Economic Development Authority, Minnesota, Health
Care Facility Revenue Bonds (Duluth Clinic, LTD) Series 1992 6.3% 11/1/2022 3,308,737
2,500,000 City of Minneapolis (Lifespan Inc., Abbott - Northwestern
Hospital), Hospital Facilities Refunding Revenue Bonds,
1987 Series B 9.125% 12/1/2014 2,810,600 (b)
1,850,000 City of Minneapolis (Lifespan Inc., Abbott - Northwestern
Hospital), Hospital Facilities Revenue Bonds, 1988 Series A 7.875% 12/1/2014 2,025,842 (b)
7,685,000 Minneapolis, Minnesota, Community Development Agency, Tax
Increment Revenue Appreciation Bonds Zero Coupon 3/1/2009 3,472,775 (c)
3,500,000 St. Louis Park, Minnesota, Health Care Facilities (Park Nicollet
Medical Center Project), Revenue Bonds, Series 1990-A 9.25% 1/1/2020 4,153,380 (b)
7,600,000 St. Louis Park, Minnesota, Health Care Facilities, Revenue Bonds
(HealthSystem Minnesota Obligated Group), Series 1993 5.1% 7/1/2013 6,779,352 (f)
1,000,000 St. Louis Park, Minnesota, Health Care Facilities, Revenue Bonds
(HealthSystem Minnesota Obligated Group), Series 1993 5.2% 7/1/2016 895,940 (f)
1,400,000 St. Louis Park, Minnesota (Methodist Hospital), Hospital Revenue
Bonds, Series C 7.25% 7/1/2015 1,566,572 (b,f)
1,180,000 St. Louis Park, Minnesota (Methodist Hospital), Hospital Revenue
Bonds, Series A 7.25% 7/1/2015 1,306,166 (b,f)
1,000,000 St. Louis Park, Minnesota (Methodist Hospital), Hospital Revenue
Bonds, Series C 7.25% 7/1/2018 1,118,980 (b,f)
670,000 Southern Minnesota Municipal Power Agency, Power Revenue
Refunding Bonds, Series A 5.75% 1/1/2018 669,940 (b,c)
-------------
28,108,284
-------------
Missouri - 2.4%
2,000,000 Boone County, Missouri, Hospital Revenue Refunding Bonds,
Series 1993 5.5% 8/1/2009 1,841,980
1,500,000 Missouri Health and Educational Facilities Authority, SSM
Health Care Refunding Revenue Bonds, Series A 6.25% 6/1/2007 1,560,960 (c)
2,450,000 Missouri Health and Educational Facilities Authority, Heartland
Health System Revenue Bonds, Series 1992 6.35% 11/15/2017 2,506,130 (f)
1,425,000 Missouri Health and Educational Facilities Authority, Health
Facilities Revenue Refunding Bonds, Lester E. Cox Medical
Center Project, Series 1993-I 5.35% 6/1/2009 1,342,906 (c)
3,000,000 Missouri Health and Educational Facilities Authority, Health
Facilities Revenue Bonds, (Barnes-Jewish, Inc./Christian
Health Services), Series 1993-A 5.25% 5/15/2012 2,741,040
2,650,000 Missouri Health and Educational Facilities Authority
(Christian Health Services), Health Facilities Refunding &
Improvement Revenue Bonds, Series 1991 A 6.875% 2/15/2021 2,929,204 (b,d)
2,000,000 St. Louis County, Missouri, Industrial Development Authority,
Revenue Refunding Bonds (K-Mart Corp. Project) 5.7% 10/1/2008 1,774,500
-------------
14,696,720
-------------
Montana - 1.0%
1,250,000 Montana Health Facility Authority, Hospital Revenue Bonds
for the Deaconess-Billings Clinic Health System Project,
Series 1994 5.25% 2/15/2020 1,134,212 (d)
4,400,000 Montana State Board of Investments, Payroll Tax Revenue Bonds,
Series 1991 6.875% 6/1/2020 4,686,616 (c)
-------------
5,820,828
-------------
Nebraska - 0.7%
60,000 Nebraska Mortgage Finance Fund, Single Family Mortgage
Revenue Bonds, 1983 Series A 10.125% 1/15/2014 61,403
3,455,000 Omaha Public Power District, Nebraska, Electric Revenue
Refunding Bonds, Series B 6.15% 2/1/2012 3,549,391
1,000,000 University of Nebraska, University of Nebraska Medical
Center Project, Revenue Refunding Bonds 5.25% 7/1/2011 922,040
-------------
4,532,834
-------------
New Hampshire - 0.2%
1,100,000 New Hampshire Turnpike System, Residual Interest Bonds,
1991 Refunding, Series C 9.12% 11/1/2017 1,219,570 (d,h)
-------------
New Jersey - 2.5%
1,700,000 Camden County, New Jersey, Municipal Utility Authority,
Sewer Revenue Bonds 8.25% 12/1/2017 1,858,627 (d)
1,250,000 East Orange, New Jersey, Unlimited Tax General Obligation
Bonds 8.4% 8/1/2006 1,554,300 (e)
1,000,000 Mercer County, New Jersey, Improvement Authority, County
Guaranteed Solid Waste Revenue Bonds, Series 1988 7.9% 4/1/2013 1,075,910 (b)
1,000,000 Mercer County, New Jersey, Improvement Authority,
Revenue Bonds, Series 1991 6.6% 11/1/2014 1,088,700 (b)
2,585,000 New Jersey Health Care Facilities Financing Authority,
Jersey Shore Medical Center Revenue Bonds 6.1% 7/1/2010 2,624,447 (f)
3,000,000 New Jersey Transit Corp. (Raymond Plaza East, Inc.),
Certificates of Participation 6.375% 10/1/2006 3,227,910 (e)
1,520,000 New Jersey Turnpike Authority, Turnpike Revenue Bonds,
1984 Series 10.375% 1/1/2003 1,854,126 (b)
2,195,000 West New York, New Jersey, Municipal Utility Authority,
Sewer Revenue Refunding Bonds Zero Coupon 12/15/2007 1,077,811 (d)
2,595,000 West New York, New Jersey, Municipal Utility Authority,
Sewer Revenue Refunding Bonds Zero Coupon 12/15/2009 1,111,153 (d)
-------------
15,472,984
-------------
New Mexico - 1.3%
1,325,000 Albuquerque, New Mexico (Southwest Community Health
Services), Hospital Revenue Bonds, Series A 9.5% 8/1/2006 1,380,465 (b)
5,000,000 Farmington, New Mexico, Power Revenue Refunding Bonds,
Series 1983 9.875% 1/1/2013 6,754,400 (b)
-------------
8,134,865
-------------
New York - 4.9%
5,200,000 Metropolitan Transportation Authority, New York, Commuter
Facilities Revenue Bonds, Series A 6.375% 7/1/2018 5,322,408 (c)
7,000,000 Metropolitan Transportation Authority, New York, Service
Contract Commuter Facilities Revenue Bonds, Series P 5.75% 7/1/2015 6,414,100
3,000,000 Metropolitan Transportation Authority, New York, Transit
Facilities Revenue Bonds, Series B 6.25% 7/1/2014 3,052,710 (c)
1,250,000 New York City Municipal Water Finance Authority,
Water & Sewer System Revenue Bonds 8.75% 6/15/2010 1,376,375 (b)
2,000,000 New York City Municipal Water Finance Authority,
Water & Sewer System Revenue Bonds, Series A 5.875% 6/15/2012 1,986,000 (f)
2,000,000 New York State Dorm Authority (City University),
Construction Revenue Bonds, Series A 8.125% 7/1/2017 2,180,040 (b)
2,250,000 New York State Med Care Facilities Finance Agency
(Ellis Hospital), Insured Mortgage Hospital Bonds, Series B 8.0% 2/15/2008 2,471,062 (i)
2,860,000 New York State Thruway Authority, Highway & Bridge
Trust Fund, Revenue Bonds, Series 1994B 6.0% 4/1/2014 2,834,289 (d)
2,000,000 New York State Development Corp., Correctional Facilities
Refunding Bonds, Series A 5.5% 1/1/2016 1,765,940
1,000,000 Triborough Bridge & Tunnel Authority, New York, General
Purpose Revenue Bonds, Series Q 6.75% 1/1/2009 1,082,750
1,900,000 Triborough Bridge & Tunnel Authority, New York, General
Purpose Revenue Refunding Bonds, Series A 5.0% 1/1/2015 1,664,362
-------------
30,150,036
-------------
North Carolina - 0.7%
500,000 Dare County, North Carolina, Utility System Revenue Bonds,
Series 1994 5.75% 6/1/2014 494,270 (c)
4,000,000 North Carolina Municipal Power Agency Number 1, Catawba
Electric Revenue Refunding Bonds, Series 1992 6.0% 1/1/2011 4,044,200 (c)
-------------
4,538,470
-------------
North Dakota - 0.4%
2,530,000 North Dakota Municipal Bond Bank, State Revolving Fund
Program Bonds, Series 1995-A 6.3% 10/1/2015 2,568,987
-------------
Ohio - 4.7%
1,050,000 Akron, Bath & Copley Joint Township, Ohio (Children's
Hospital Medical Center), Hospital District Revenue Bonds 7.45% 11/15/2020 1,191,593 (b,f)
3,785,000 Cleveland, Ohio, Public Power System, First Mortgage
Revenue Bonds, Series 1994A 7.0% 11/15/2024 4,083,523 (c)
1,000,000 Cleveland, Ohio, Waterworks Improvement First Mortgage
Refunding Revenue Bonds, Series 1993G 5.5% 1/1/2009 977,410 (c)
1,945,000 Columbus, Ohio, Unlimited Tax General Obligation Bonds,
Series 1 5.25% 9/15/2011 1,813,323
1,630,000 Cuyahoga County, Ohio (Deaconess Hospital), Hospital
Revenue Bonds, Series C 7.45% 10/1/2018 1,850,278 (b)
1,470,000 Lorain County, Ohio (Humility of Mary Health System), Hospital
Revenue Bonds 7.125% 12/15/2006 1,578,074
2,250,000 Ohio State Air Quality Development Authority, Columbus &
Southern Pollution Control Revenue Bonds 6.375% 12/1/2020 2,297,497 (d)
5,000,000 Ohio State Air Quality Development Authority, Cleveland Electric,
Pollution Control Revenue Bonds 8.0% 12/1/2013 5,790,850 (d)
1,500,000 Ohio Higher Educational Facility Commission, Higher
Educational Revenue Bonds, (Ohio Dominican College
1994 Project 6.625% 12/1/2014 1,502,895
2,000,000 Ohio Higher Educational Facility Commission (Case Western
Reserve University Project), Series B 6.5% 10/1/2020 2,140,300
4,100,000 Ohio State Water Development Authority, Revenue Refunding &
Improvement Bonds 5.5% 12/1/2018 3,833,131 (f)
1,795,000 Trumbull County, Ohio (Memorial Hospital), Hospital Revenue
Refunding & Improvement Bonds, Series 1991-B 6.9% 11/15/2012 1,918,837 (d)
-------------
28,977,711
-------------
Oklahoma - 1.7%
5,220,000 Bass, Oklahoma, Memorial Baptist Hospital, Escrowed to Maturity 8.35% 5/1/2009 6,512,263 (b)
1,175,000 Grand River Dam Authority, Oklahoma, Revenue Refunding Bonds,
Series 1993 5.75% 6/1/2008 1,192,214 (e)
1,500,000 Oklahoma Municipal Power Authority, Power Supply System
Revenue Bonds, Series 1992-B 5.875% 1/1/2012 1,518,180 (c)
1,500,000 Oklahoma Municipal Power Authority, Electric Revenue Refunding
Bonds, Series B 5.75% 1/1/2024 1,477,080 (c)
-------------
10,699,737
-------------
Oregon - 1.8%
2,700,000 Clackamas County, Oregon, Health Facilities Authority, Adventist
Health-West Revenue Refunding Bonds, Series 1992-A 6.35% 3/1/2009 2,833,434 (c)
850,000 Clackamas County, Oregon, North Clackamas School District
No. 12, Unlimited Tax General Obligation Refunding Bonds,
Series 1993 5.0% 6/1/2011 752,641
1,000,000 Emerald Peoples Utility District, Oregon, Electric System Revenue
Refunding Bonds 5.75% 11/1/2016 986,640
1,750,000 Washington & Multnomah Counties, Oregon, Beaverton School
District No. 48J, Unlimited Tax General Obligation Bonds 5.0% 9/1/2012 1,575,122
1,275,000 Washington & Multnomah Counties, Oregon, Beaverton School
District No. 48J, General Obligation Bonds, Series 1994C 5.8% 6/1/2014 1,263,321
3,500,000 Hospital Facility Authority of the Western Lane Hospital District,
Oregon, Revenue Refunding Bonds, Series 1994
(Sisters of St. Joseph of Peace, Health & Hospital Services) 5.875% 8/1/2012 3,467,835 (c)
-------------
10,878,993
-------------
Pennsylvania - 2.7%
2,100,000 Allegheny County, Pennsylvania, Hospital Development Authority,
Hospital Revenue Bonds, Series A-1995, (Allegheny General
Hospital Project) 6.2% 9/1/2015 2,101,554 (c)
2,575,000 Allegheny County, Pennsylvania, Sanitary Authority,
Sewer Revenue Bonds, Series A Zero Coupon 6/1/2008 1,193,461 (d)
2,000,000 Delaware River Joint Toll Bridge Commission, Pennsylvania,
Toll Bridge Revenue Bonds 7.875% 7/1/2018 2,209,240 (b)
3,170,000 Millcreek Township, Pennsylvania, School District, General
Obligation Bonds Zero Coupon 8/15/2009 1,374,322 (d)
2,000,000 Monroeville, Pennsylvania, Hospital Authority, Forbes Health
System Revenue Bonds, Series 1992 7.0% 10/1/2003 2,043,040
2,500,000 Pennsylvania Housing Finance Agency, Rental Housing
Refunding Bonds, Issue 1993 5.75% 7/1/2014 2,374,650
3,000,000 Pennsylvania State, General Obligation Bonds, 2nd Series of 1992 Zero Coupon 7/1/2006 1,597,410 (f)
1,000,000 Pennsylvania State Higher Education Facilites Authority,
State System Revenue Bonds, Series K 5.5% 6/15/2011 950,720 (f)
1,105,000 Shamokin Area Industrial Development Authority, Pennsylvania
(Northumberland County), Commercial Development First
Mortgage Revenue Refunding Bonds, Series 1994A,
(K-Mart Corporation, Tenant and Guarantor) 6.7% 7/1/2007 1,102,138
1,300,000 Southeastern Pennsylvania Transportation Authority, Special
Revenue Bonds, Series A 5.75% 3/1/2020 1,261,455 (d)
-------------
16,207,990
-------------
Puerto Rico - 1.7%
2,000,000 Puerto Rico Commonwealth, Unlimited Tax General
Obligation Bonds 6.45% 7/1/2017 2,034,780
4,000,000 Puerto Rico Commonwealth Aqueduct & Sewer, Revenue Bonds,
Series A 9.0% 7/1/2009 5,150,320 (b)
3,000,000 Puerto Rico Electric Power Authority, Power Revenue Bonds,
Series T 6.0% 7/1/2016 2,912,340
-------------
10,097,440
-------------
South Carolina - 1.8%
2,000,000 Greenville, South Carolina, Hospital System, Hospital Facility
Revenue Bonds, Series A 7.5% 5/1/2016 2,073,900 (b,d)
2,000,000 Piedmont Municipal Power Agency, South Carolina, Electric
Revenue Refunding Bonds, Series 1991 6.25% 1/1/2021 2,067,500 (d)
5,000,000 Piedmont Municipal Power Agency, South Carolina, Electric
Revenue Refunding Bonds 5.0% 1/1/2022 4,221,900 (d)
2,500,000 South Carolina Public Service Authority, Electric System Revenue
Bonds, 1985 Refunding Series 9.5% 7/1/2022 2,596,625 (b)
-------------
10,959,925
-------------
Tennessee - 0.7%
1,750,000 Bristol, Tennessee, Health and Educational Facilities Authority,
Bristol Memorial Hospital Revenue Bonds 7.0% 9/1/2021 1,946,298 (b,d)
1,125,000 Knox-Chapman Utility District, Tennessee, Knox County
Water and Sewer Revenue Refunding Bonds 6.0% 1/1/2014 1,113,694 (c)
1,000,000 Sullivan County, Tennessee, Health & Education Revenue Bonds,
(Holston Valley Health) 5.75% 2/15/2013 964,330 (c)
-------------
4,024,322
-------------
Texas - 9.7%
2,165,000 Arlington, Texas, Independent School District, Unlimited Tax
Refunding & Improvement Bonds, Series 1992 Zero Coupon 2/15/2009 947,296 (j)
7,000,000 Austin, Texas, Utility System Refunding Revenue Bonds,
Series A Zero Coupon 11/15/2008 3,113,250 (c)
8,100,000 Austin, Texas, Utility System Refunding Revenue Bonds,
Series A Zero Coupon 11/15/2009 3,355,020 (c)
2,500,000 Bexar Metropolitan Water District, Texas, Waterworks System
Revenue Bonds, Series 1994 5.0% 5/1/2019 2,136,250 (f)
1,000,000 Brazos River Authority, Texas, Collateralized Revenue Refunding
Bonds (Houston Lighting & Power Company), 1988 Series B 8.25% 5/1/2015 1,068,690
2,000,000 Brazos River Authority, Texas, Houston Light and Power
Refunding Bonds 8.25% 5/1/2015 2,196,460 (c)
2,000,000 Copperas Cove, Texas, Independent School District,
Unlimited Tax General Obligation Bonds 6.9% 8/15/2014 2,123,460 (j)
1,500,000 Crowley, Texas, Independent School District Unlimited Tax
General Obligation Bonds 5.4% 8/1/2009 1,432,440 (j)
3,000,000 Dallas-Fort Worth, Texas, Airport Joint Revenue Refunding Bonds,
Series 1985 9.125% 11/1/2015 3,139,980
1,000,000 Dallas-Fort Worth, Texas, Airport Joint Revenue Refunding Bonds 7.375% 11/1/2008 1,124,080 (d)
1,000,000 Dallas-Fort Worth, Texas, Airport Joint Revenue Refunding Bonds 7.375% 11/1/2009 1,117,330 (d)
2,000,000 Dallas-Fort Worth, Texas, Airport Joint Revenue Refunding Bonds 7.375% 11/1/2010 2,234,660 (d)
4,000,000 Dallas and Fort Worth, Texas, Dallas-Fort Worth International
Airport Joint Revenue Refunding Bonds, Series 1994A 6.0% 11/1/2012 3,970,040 (c)
2,285,000 Denton, Texas, Independent School District Unlimited Tax
General Obligation Refunding Bonds 6.25% 2/15/2009 2,376,971 (j)
1,000,000 Georgetown, Texas, Higher Education Finance Corp., Higher
Education Revenue Bonds, Series 1994 (Southwestern
University Project) 6.3% 2/15/2014 985,810
1,750,000 Harris County, Texas, Toll Road, Unlimited Tax & Subordinated
Lien, Revenue Refunding Bonds, Series 1988 8.125% 8/1/2015 1,950,760 (b)
2,250,000 Harris County, Texas, Toll Road Sr. Lien Bonds, Series A 6.375% 8/15/2024 2,290,455 (c)
1,360,000 Houston, Texas, Housing Finance Corp., Single Family Mortgage
Revenue Bonds, Series 1983 10.0% 9/15/2014 1,382,685
1,280,000 Houston, Texas, Water & Sewer Systems, Exchange Pre-Refunded
Jr. Lien Revenue Bonds 9.375% 12/1/2013 1,340,634 (b,d)
220,000 Houston, Texas, Water & Sewer Systems, Exchange Pre-Refunded
Jr. Lien Revenue Bonds 9.375% 12/1/2013 230,421 (b,d)
3,000,000 Leander Independent School District, Texas (Travis and
Williamson Counties), Unlimited Tax School Building and
Refunding Bonds, Series 1994A 6.0% 8/15/2018 2,969,970 (j)
1,000,000 Lower Colorado River Authority, Priority Refunding Revenue
Bonds, Series 1985 9.5% 1/1/2011 1,051,720 (b)
1,845,000 San Antonio, Texas, Airport Revenue Refunding Bonds 7.375% 7/1/2010 2,062,323 (f)
1,000,000 San Antonio, Texas, Airport Revenue Refunding Bonds 7.375% 7/1/2011 1,117,790 (f)
11,615,000 Southeastern Texas Housing Finance Corp., Single Family
Mortgage Revenue Bonds Zero Coupon 9/1/2017 2,667,617 (b)
900,000 Texas Municipal Power Agency, Revenue Refunding Bonds 5.75% 9/1/2012 929,745 (b.c)
600,000 Texas Municipal Power Agency, Revenue Refunding Bonds 5.75% 9/1/2012 619,830 (b.c)
4,315,000 Texas State, Veterans Land Board General Obligation Bonds 0.05% 7/1/2010 1,769,711 (b)
2,500,000 Travis County, Texas, Housing Finance Corporation, Single
Family Mortgage Revenue Refunding Bonds, Series 1994-A 6.75% 4/1/2014 2,576,125
3,650,000 Willis, Texas, Independent School District, Refunding Bonds 6.5% 2/15/2016 3,725,555 (j)
1,175,000 Wylie, Texas, Independent School District, (Collin County),
Unlimited Tax School Building and Refunding Bonds,
Series 1994 6.875% 8/15/2014 1,287,177 (j)
-------------
59,294,255
-------------
Utah - 3.0%
6,000,000 Intermountain Power Agency, Utah, Power Supply Revenue Bonds,
1985 Series A 10.375% 7/1/2016 6,195,960 (b)
2,000,000 Intermountain Power Agency, Utah, Power Supply Revenue Bonds,
1985 Series B 9.375% 7/1/2001 2,057,280 (b)
1,400,000 Intermountain Power Agency, Utah, Power Supply Revenue Bonds,
1985 Series 1 9.0% 7/1/2019 1,429,134 (b)
1,000,000 Intermountain Power Agency, Utah, Power Supply Revenue Bonds,
Series A 6.0% 7/1/2009 1,002,700 (c)
2,445,000 St. George-Washington County, Utah, Water Revenue Refunding
Bonds, Series 1993 5.375% 6/1/2016 2,247,053 (f)
3,750,000 Utah Associated Municipal Power Systems, San Juan Project
Revenue Bonds, Series O 6.25% 6/1/2014 3,785,550 (c)
1,580,000 West Valley City, Utah, Municipal Building Authority, Lease
Refunding Bonds 6.0% 1/15/2010 1,578,294 (c)
-------------
18,295,971
-------------
Virginia - 2.6%
3,000,000 Fairfax County, Virginia, Economic Development Authority,
Lease Revenue Bonds, (Government Center Properties)
Series 1994 5.5% 5/15/2014 2,844,120
1,000,000 University of Virginia, General University Revenue Bonds,
Series B 5.375% 6/1/2010 965,410
4,000,000 Upper Occoquan Sewage Authority, Virginia, Regional Sewerage
System Revenue Refunding Bonds, Series 1993 5.0% 7/1/2021 3,423,520 (d)
2,000,000 Virginia State, Unlimited Tax General Obligation Bonds 6.5% 6/1/2015 2,102,440
4,300,000 Virginia Housing Development Authority, Commonwealth
Mortgage Bonds, 1994 Series H, Subseries H-2 6.5% 1/1/2014 4,352,073
2,000,000 Winchester Industrial Development Authority, Virginia
(Winchester Medical Center), Hospital Revenue Bonds 8.125% 1/1/2014 2,086,560 (b)
-------------
15,774,123
-------------
Washington - 5.3%
1,655,000 Douglas County, Washington, Public Utility District #1,
Wells Hydroelectric Revenue Bonds, Series A 8.75% 9/1/2018 2,169,109 (b)
1,395,000 Douglas County, Washington, Public Utility District #1,
Wells Hydroelectric Revenue Bonds, Series A 8.75% 9/1/2018 1,732,297
2,000,000 Grant County, Washington, Public Utility District #2,
Columbia River, Second Revenue Bonds, Series A 5.0% 1/1/2023 1,668,180 (f)
5,000,000 King County, Washington, Unlimited Tax General Obligation
Bonds, Series A 6.75% 12/1/2009 5,395,550
2,015,000 Tacoma, Washington, Utilities Refuse Revenue Bonds 6.625% 12/1/2011 2,106,138 (c)
2,400,000 Washington State, Unlimited Tax General Obligation Bonds 6.7% 6/1/2016 2,598,240 (b)
1,500,000 Washington State, Unlimited Tax General Obligation Bonds,
Series A 6.25% 2/1/2011 1,548,495
2,500,000 Washington State, Various Purpose General Obligation Bonds 6.25% 6/1/2010 2,591,475
2,000,000 Washington State, Unlimited Tax General Obligation Bonds 6.0% 6/1/2012 2,004,120
3,000,000 Washington State, Unlimited Tax General Obligation Bonds,
Series 1993-A 5.75% 10/1/2012 2,910,030
5,000,000 Washington State Public Power Supply System
(Nuclear Project No. 1), Revenue Refunding Bonds 7.5% 7/1/2015 5,365,150
1,000,000 Washington State Public Power Supply System
(Nuclear Project No. 3), Revenue Refunding Bonds 7.25% 7/1/2015 1,103,820 (b,d)
2,500,000 Washington State Public Power Supply System
(Nuclear Project No. 3), Revenue Refunding Bonds Series B Zero Coupon 7/1/2010 992,400 (c)
-------------
32,185,004
-------------
Wisconsin - 0.3%
2,000,000 Wisconsin Health and Education Facilities Authority, Revenue
Bonds, (Sisters of the Sorrowful Mother-Ministry Corporation),
Series 1993-D 5.4% 8/15/2013 1,826,260 (c)
-------------
Wyoming - 0.4%
2,500,000 State of Wyoming Farm Loan Board, Capital Facilities Revenue
Bonds, Series 1994 6.1% 4/1/2024 2,473,025
-------------
Total Long-Term Municipal Securities (cost $587,132,169) 606,582,217
----------------
SHORT-TERM MUNICIPAL SECURITIES - 0.9% (a,k)
100,000 Berkeley County, South Carolina, (Amoco Chemical
Company Project) 4.9% 5/1/1995 100,000
100,000 Hammond, Indiana, Pollution Control Revenue Refunding Bonds,
(Amoco Oil Company Project), Series 1994 4.9% 5/1/1995 100,000
1,200,000 Lake Charles Harbor & Terminal District, Louisiana
(Conoco, Inc.) 5.0% 5/1/1995 1,200,000
900,000 Maricopa County, Arizona, Pollution Control Corporation,
Pollution Control Revenue Refunding Bonds (Arizona Public
Service Company Palo Verde Project), Series 1994 B 4.9% 5/1/1995 900,000
1,900,000 Maricopa County, Arizona, Pollution Control Corporation,
Pollution Control Revenue Refunding Bonds (Arizona Public
Service Company Palo Verde Project), Series 1994 E 5.0% 5/1/1995 1,900,000
840,000 Peninsula Ports Authority, Virginia 5.0% 5/1/1995 840,000
300,000 Sublette County, Wyoming (Exxon Project, Series 1985) 4.9% 5/1/1995 300,000
-------------
Total Short-Term Municipal Securities (at amortized cost) 5,340,000
-------------
Total Investments (cost $592,472,169) $611,922,217 (l)
=============
See accompanying notes to portfolio of investments.
Notes to Portfolio of Investments:
(a) The categories of investments are shown as a percentage of total
investments of the Lutheran Brotherhood Municipal Bond Fund.
(b) Denotes securities that have been pre-refunded or escrowed to maturity.
Under such an arrangement, money is deposited into an irrevocable escrow
account and is used to purchase U.S. Treasury securities or Government
Agency securities with maturing principal and interest earnings sufficient
to pay all debt service requirements of the pre-refunded bonds. Because the
original bonds assume a quality rating equivalent to the escrowed U.S.
Government securities, they are considered to be U.S. Government securities
for purposes of portfolio diversification requirements.
(c) Insured by Municipal Bond Investors Assurance Corp.
(d) Insured by Financial Guaranty Insurance Co.
(e) Insured by Financial Security Assurance, Inc.
(f) Insured by AMBAC Indemnity Corp.
(g) Insured by Connie Lee Insurance Co.
(h) Denotes variable rate obligations for which the interest rate varies
inversly with movements in short-term tax-exempt yields.
(i) Insured by Federal Housing Administration.
(j) Insured by Permanent School Fund Guarantee.
(k) Denotes variable rate obligations for which the current yield and the
next scheduled interest reset date are shown.
(l) At April 30, 1995, the aggregate cost of securities for federal income
tax purposes was $592,472,169 and the net unrealized appreciation of
investments based on that cost was $19,450,048 which is comprised of
$26,570,086 aggregate gross unrealized appreciation and $7,120,038
aggregate gross unrealized depreciation.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
Lutheran Brotherhood Money Market Fund
Portfolio of Investments
April 30, 1995
(Unaudited)
Principal Maturity
Amount Rate Date Value
- - ------------ -------------------------------------
<S> <C> <C> <C> <C>
BANKER'S ACCEPTANCES - 4.1% (a)
$4,522,749 Banker's Trust Co., Canada 6.11% 10/10/1995 $4,398,396
5,000,000 First Bank, N.A., Minneapolis 6.52% 6/13/1995 4,961,061
3,000,000 First Bank, N.A., Minneapolis 6.02% 5/9/1995 2,995,987
-------------
Total Banker's Acceptances 12,355,444
-------------
COMMERCIAL PAPER - 84.1% (a)
Banking-Domestic - 4.9%
5,000,000 AES Barbers Point, Inc., Bank of America, Direct Pay
Letter of Credit 6.02% 5/12/1995 4,990,803
5,000,000 Norwest Corp. 6.02% 5/23/1995 4,981,606
5,000,000 Norwest Corp. 6.02% 6/9/1995 4,967,392
-------------
14,939,801
-------------
Banking-Foreign - 14.0%
5,000,000 Accor S.A. (Banque National de Paris, Direct Pay
Letter of Credit) 6.08% 6/7/1995 4,968,756
5,000,000 Accor S.A. (Banque National de Paris, Direct Pay
Letter of Credit) 6.06% 6/1/1995 4,973,908
1,000,000 Accor S.A. (Banque National de Paris, Direct Pay
Letter of Credit) 6.05% 5/23/1995 996,303
6,000,000 Centerior Fuel Corp., (Barclay's Bank, PLC, Direct Pay
Letter of Credit) 6.05% 5/3/1995 5,997,983
5,000,000 Finance One Funding Corp., (Credit Suisse, Direct Pay
Letter of Credit) 6.07% 5/19/1995 4,984,825
3,000,000 Finance One Funding Corp., (Credit Suisse, Direct Pay
Letter of Credit) 6.08% 6/30/1995 2,969,600
5,000,000 PEMEX Capital, Inc., (Credit Suisse, Direct Pay Letter of Credit 5.96% 5/24/1995 4,980,961
5,000,000 U.S. Prime Property, Inc., (ABN AMRO Bank, N.V.,
Direct Pay Letter of Credit) 6.07% 7/7/1995 4,943,515
4,000,000 U.S. Prime Property, Inc., (ABN AMRO Bank, N.V.,
Direct Pay Letter of Credit) 6.07% 6/19/1995 3,966,952
4,000,000 U.S. Prime Property, Inc., (ABN AMRO Bank, N.V.,
Direct Pay Letter of Credit) 6.06% 6/26/1995 3,962,293
-------------
42,745,096
Computer & Office Equipment - 3.3% -------------
5,000,000 IBM Credit Corp. 6.05% 7/5/1995 4,945,382
5,000,000 IBM Credit Corp. 6.05% 7/7/1995 4,943,701
-------------
9,889,083
-------------
Cosmetics & Toiletries - 2.7%
3,500,000 Unilever Capital Corp. 6.4% 7/24/1995 3,447,733
5,000,000 Unilever Capital Corp. 6.1% 10/5/1995 4,866,986
-------------
8,314,719
-------------
Education - 3.9%
12,000,000 Harvard University 5.92% 5/1/1995 12,000,000
-------------
Finance-Automotive - 4.0%
4,300,000 Ford Motor Credit Co 6.07% 5/8/1995 4,294,925
3,000,000 Ford Motor Credit Co 6.04% 6/14/1995 2,977,853
5,000,000 Ford Motor Credit Co 6.04% 5/5/1995 4,996,644
-------------
12,269,422
-------------
Finance-Commercial - 4.2%
5,000,000 CIT Group Holdings, Inc. 6.04% 9/15/1995 4,885,072
3,000,000 General Electric Capital Corp. 6.27% 5/2/1995 2,999,477
5,000,000 General Electric Capital Corp. 6.0% 5/22/1995 4,982,500
-------------
12,867,049
-------------
Finance-Consumer - 7.2%
5,000,000 American General Finance Corp. 5.98% 6/12/1995 4,965,117
5,000,000 American General Finance Corp. 6.06% 6/2/1995 4,973,067
5,000,000 Associates Corp. of North America 6.1% 7/12/1995 4,939,000
5,000,000 Associates Corp. of North America 6.03% 5/1/1995 5,000,000
2,000,000 AVCO Financial Services, Inc. 5.99% 6/13/1995 1,985,691
-------------
21,862,875
-------------
Finance-Structured - 14.4%
5,000,000 Ciesco, L.P. 6.1% 5/15/1995 4,988,139
5,000,000 Corporate Asset Funding Co. 5.97% 5/25/1995 4,980,100
5,000,000 CXC, Inc. 5.98% 5/9/1995 4,993,356
5,000,000 CXC, Inc. 6.02% 5/17/1995 4,986,622
4,005,000 Delaware Funding Corp. 5.96% 5/22/1995 3,991,076
5,010,000 Delaware Funding Corp. 6.0% 7/5/1995 4,955,725
5,000,000 New Center Asset Trust 6.27% 7/17/1995 4,932,946
5,000,000 New Center Asset Trust 6.14% 5/16/1995 4,987,208
5,000,000 Preferred Receivables Funding Corp. 6.02% 6/26/1995 4,953,178
-------------
43,768,350
-------------
Financial Services - 6.5%
1,000,000 American Express Credit Corp. 6.0% 6/20/1995 991,667
4,000,000 American Express Credit Corp. 6.04% 6/20/1995 3,966,444
5,000,000 American Express Credit Corp. 6.08% 6/6/1995 4,969,600
5,000,000 USAA Capital Corp. 5.98% 6/1/1995 4,974,253
5,000,000 U.S. Central Credit Union 6.04% 6/15/1995 4,962,250
-------------
19,864,214
-------------
Food & Beverage - 0.3%
1,000,000 Heinz, H.J. Co. 6.0% 5/5/1995 999,333
-------------
Household Products - 3.3%
10,000,000 Colgate Palmolive Co. 6.02% 5/19/1995 9,969,900
-------------
Industrial - 8.1%
5,000,000 Du Pont (E.I.) de Nemours and Co. 6.01% 7/25/1995 4,929,049
5,000,000 Du Pont (E.I.) de Nemours and Co. 6.02% 8/16/1995 4,910,536
5,000,000 Great Lakes Chemical Corp. 6.03% 5/2/1995 4,999,162
5,000,000 Monsanto Co. 6.15% 7/24/1995 4,928,250
5,000,000 Monsanto Co. 6.05% 8/3/1995 4,921,014
-------------
24,688,011
-------------
Insurance - 3.3%
5,000,000 Metlife Funding, Inc. 6.05% 6/27/1995 4,952,104
5,000,000 Metlife Funding, Inc. 6.1% 5/12/1995 4,990,681
-------------
9,942,785
-------------
Petroleum - 4.0%
12,200,000 Koch Industries, Inc. 5.93% 5/1/1995 12,200,000
-------------
Total Commericial Paper 256,320,638
-------------
VARIABLE RATE NOTES - 11.8% (a,b)
9,000,000 Federal Home Loan Bank, Float Rate Notes 6.03% 7/3/1995 8,997,393
10,000,000 Illinois Student Assistance Commission (Student Loan
Marketing Association, Direct Pay Letter of Credit) 6.07% 5/5/1995 10,000,000
7,000,000 Leland H. Stanford Jr. University 6.05% 5/1/1995 7,000,000
10,000,000 PNC Bank, Pittsburgh, N.A., Medium Term Bank Notes 5.97% 5/2/1995 9,998,486
-------------
Total Variable Rate Notes 35,995,879
-------------
Total Investments (at amortized cost) $304,671,961 (c)
=============
See accompanying notes to portfolio of investments.
Notes to Portfolio of Investments:
(a) The categories of investments are shown as a percentage of total
investments of the Lutheran Brotherhood Money Market Fund.
(b) Denotes variable rate obligations for which the current yield and
the next scheduled interest reset date are shown.
(c) Also represents cost for federal income tax purposes.
The accompanying notes are an integral part of the financial statements.
</TABLE>
Lutheran Brotherhood Opportunity Growth Fund
Financial Statements
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
April 30, 1995
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $110,987,919) $122,739,032
Cash 384,030
Receivable for investment securities sold 3,931,792
Dividend and interest receivable 2,547
Unamortized organization costs 26,622
------------
Total assets 127,084,023
------------
LIABILITIES:
Payable for investment securities purchased 6,498,433
Accrued expenses 95,557
------------
Total liabilities 6,593,990
------------
NET ASSETS $120,490,033
============
NET ASSETS CONSIST OF:
Trust capital (10,602,271 shares of beneficial
interest outstanding) $103,465,593
Undistributed net investment income (406,201)
Accumulated net realized gain from ------------
sale of investments 5,679,528
Unrealized net appreciation of investments 11,751,113
------------
NET ASSETS $120,490,033
============
Net asset value and redemption price per share
($120,490,033 (divided by) 10,602,271 shares of
beneficial interest outstanding). $11.36
======
Maximum public offering price per share
($11.36 (divided by) 0.95 for a 5% sales charge) $11.96
======
--------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended April 30, 1995
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income--
Dividend income $ 32,520
Interest income 372,757
-----------
Total income 405,277
-----------
Expenses--
Investment advisory fee 392,963
Transfer agent services 262,160
Custodian fee 46,876
Administrative personnel and services 14,758
Printing and postage 53,817
Trust share registration costs 24,687
Auditing fees 3,920
Legal fees 333
Trustees' fees 4,252
Amortization of organization costs 4,887
Miscellaneous 2,825
-----------
Total expenses 811,478
-----------
Net investment loss (406,201)
-----------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain on investment transactions 8,264,022
Net change in unrealized appreciation of investments (1,572,331)
-----------
Net gain on investments 6,691,691
-----------
Net increase in net assets resulting
from operations $ 6,285,490
===========
--------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
4/30/95 Year Ended
(unaudited) 10/31/94
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment loss $ (406,201) $ (578,480)
Net realized gain (loss) on investments 8,264,022 (2,536,890)
Net change in unrealized appreciation or depreciation
of investments (1,572,331) 6,777,510
------------ -----------
Net increase in net assets resulting from operations 6,285,490 3,662,140
------------ -----------
TRUST SHARE TRANSACTIONS--
Net proceeds from sale of shares 20,996,604 60,409,075
Cost of shares redeemed (6,368,480) (5,340,158)
------------ -----------
Net increase in net assets from trust share transactions 14,628,124 55,068,917
------------ -----------
Net increase in net assets 20,913,614 58,731,057
NET ASSETS:
Beginning of period 99,576,419 40,845,362
------------ -----------
End of period $120,490,033 $99,576,419
============ ===========
The accompanying notes are an integral part of the financial statements.
</TABLE>
Lutheran Brotherhood Fund
Financial Statements
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
April 30, 1995
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $568,287,200) $616,709,721
Cash 14,027
Receivable for investment securities sold 6,789,530
Receivable for capital stock sold 207,649
Dividend and interest receivable 839,476
------------
Total assets 624,560,403
------------
LIABILITIES:
Payable for investment securities purchased 52,047,319
Accrued expenses 265,723
------------
Total liabilities 52,313,042
------------
NET ASSETS $572,247,361
============
NET ASSETS CONSIST OF:
Trust capital (30,758,983 shares of beneficial
interest outstanding) $520,534,377
Undistributed net investment income 949,232
Accumulated net realized gain from
sale of investments 2,341,231
Unrealized net appreciation of investments 48,422,521
------------
NET ASSETS $572,247,361
============
Net asset value and redemption price per share
($572,247,361 (divided by) 30,758,983 shares of
beneficial interest outstanding) $18.60
======
Maximum public offering price per share
($18.60 (divided by) 0.95 for a 5% sales charge) $19.58
======
-----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended April 30, 1995
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income--
Dividend income $ 4,527,851
Interest income 2,028,204
-----------
Total income 6,556,055
-----------
Expenses--
Investment advisory fee 1,732,980
Transfer agent services 722,947
Custodian fee 84,882
Administrative personnel and services 66,742
Printing and postage 152,268
Trust share registration costs 21,371
Auditing fees 13,575
Legal fees 2,267
Trustees' fees 8,203
Miscellaneous 12,622
-----------
Total expenses 2,817,857
-----------
Net investment income 3,738,198
-----------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain on investment transactions 3,895,676
Net realized gain on closed or expired option
contracts written 25,620
-----------
Net realized gain on investments 3,921,296
Net change in unrealized appreciation of investments 24,320,502
-----------
Net gain on investments 28,241,798
-----------
Net increase in net assets resulting
from operations $31,979,996
===========
-----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
4/30/95 Year Ended
(unaudited) 10/31/94
-------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 3,738,198 $ 5,841,017
Net realized gain on investments 3,921,296 618,391
Net change in unrealized appreciation or depreciation
of investments 24,320,502 (6,424,063)
------------ ------------
Net increase in net assets resulting from operations 31,979,996 35,345
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS--
Net investment income (3,395,915) (5,815,515)
Net realized gain on investments (88,151) (27,442,253)
------------ ------------
Total distributions (3,484,066) (33,257,768)
------------ ------------
TRUST SHARE TRANSACTIONS--
Net proceeds from sale of shares 26,312,871 69,538,644
Reinvested dividend distributions 3,403,869 32,585,242
Cost of shares redeemed (34,550,856) (47,593,035)
------------ ------------
Net change in net assets from trust share transactions (4,834,116) 54,530,851
------------ ------------
Net increase in net assets 23,661,814 21,308,428
------------ ------------
NET ASSETS:
Beginning of period 548,585,547 527,277,119
------------ ------------
End of period (including undistributed net investment
income of $949,232 and $606,949, respectively) $572,247,361 $548,585,547
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
Lutheran Brotherhood High Yield Fund
Financial Statements
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
April 30, 1995
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $559,178,846) $540,684,239
Cash 102,296
Receivable for investment securities sold 16,227,827
Interest and dividend receivable 8,147,299
------------
Total assets 565,161,661
------------
LIABILITIES:
Payable for investment securities purchased 21,398,337
Accrued expenses 171,006
------------
Total liabilities 21,569,343
------------
NET ASSETS $543,592,318
============
NET ASSETS CONSIST OF:
Trust capital (62,006,376 shares of beneficial
interest outstanding) $565,327,379
Undistributed net investment income 958,643
Accumulated net realized loss from
sale of investments (4,199,097)
Unrealized net depreciation of investments (18,494,607)
------------
NET ASSETS $543,592,318
============
Net asset value and redemption price per share
($543,592,318 (divided by) 62,006,376 shares of
beneficial interest outstanding) $8.77
=====
Maximum public offering price per share
($8.77 (divided by) 0.95 for a 5% sales charge) $9.23
=====
-------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended April 30, 1995
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income--
Interest income $25,028,113
Dividend income 2,022,205
-----------
Total income 27,050,318
-----------
Expenses--
Investment advisory fee 1,646,436
Transfer agent services 456,881
Custodian fee 74,467
Administrative personnel and services 64,584
Printing and postage 103,770
Trust share registration costs 31,162
Auditing fees 11,041
Legal fees 1,965
Trustees' fees 5,973
Miscellaneous 11,493
-----------
Total expenses 2,407,772
-----------
Net investment income 24,642,546
-----------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized loss on investment transactions (3,925,646)
Net change in unrealized depreciation of investments 4,100,267
-----------
Net gain on investments 174,621
-----------
Net increase in net assets resulting
from operations $24,817,167
===========
-------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
4/30/95 Year Ended
(unaudited) 10/31/94
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 24,642,546 $ 42,426,404
Net realized gain (loss) on investment transactions (3,925,646) 3,337,327
Net change in unrealized appreciation or depreciation
of investments 4,100,267 (48,907,187)
------------ ------------
Net change in net assets resulting from operations 24,817,167 (3,143,456)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS--
Net investment income (26,126,680) (41,113,817)
Net realized gain on investments (3,034,747) (910,565)
------------ ------------
Total distributions (29,161,427) (42,024,382)
------------ ------------
TRUST SHARE TRANSACTIONS--
Net proceeds from sale of shares 64,317,221 134,871,201
Reinvested dividend distributions 19,829,800 29,484,219
Cost of shares redeemed (35,842,938) (59,833,947)
------------ ------------
Net increase in net assets from trust share transactions 48,304,083 104,521,473
------------ ------------
Net increase in net assets 43,959,823 59,353,635
NET ASSETS:
Beginning of period 499,632,495 440,278,860
------------ ------------
End of period (including undistributed net investment
income of $958,643 and $2,332,777, respectively) $543,592,318 $499,632,495
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
Lutheran Brotherhood Income Fund
Financial Statements
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
April 30, 1995
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $966,886,047) $967,093,714
Cash 44,747
Receivable for investment securities sold 8,506,567
Interest receivable 14,146,151
------------
Total assets 989,791,179
------------
LIABILITIES:
Open options written, at value
(premium received $96,250) 68,750
Payable for investment securities purchased 73,468,061
Accrued expenses 278,523
------------
Total liabilities 73,815,334
------------
NET ASSETS $915,975,845
============
NET ASSETS CONSIST OF:
Trust capital (110,059,381 shares of beneficial
interest outstanding) $978,374,795
Undistributed net investment income 2,678,214
Accumulated net realized loss from
sale of investments (65,312,332)
Unrealized net appreciation of investments 235,168
------------
NET ASSETS $915,975,845
============
Net asset value and redemption price per share
($915,975,845 (divided by) 110,059,381 shares of
beneficial interest outstanding) $8.32
=====
Maximum public offering price per share
($832 (divided by) 0.95 for a 5% sales charge) $8.76
=====
----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended April 30, 1995
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income--
Interest income $ 35,892,995
Dividend income 281,675
------------
Total income 36,174,670
------------
Expenses--
Investment advisory fee 2,644,668
Transfer agent services 700,027
Custodian fee 101,422
Administrative personnel and services 97,495
Printing and postage 168,974
Trust share registration costs 23,293
Auditing fees 13,575
Legal fees 4,145
Trustees' fees 10,167
Miscellaneous 22,603
------------
Total expenses 3,786,369
------------
Net investment income 32,388,301
------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized loss on investment transactions (15,764,376)
Net realized loss on closed futures contracts (46,953)
------------
Net realized loss on investments (15,811,329)
Net change in unrealized appreciation of investments 50,167,316
------------
Net gain on investments 34,355,987
------------
Net increase in net assets resulting
from operations $ 66,744,288
============
----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
4/30/95 Year Ended
(unaudited) 10/31/94
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 32,388,301 $ 65,920,666
Net realized loss on investment transactions (15,811,329) (49,289,869)
Net change in unrealized appreciation or depreciation
of investments 50,167,316 (85,923,538)
------------ --------------
Net change in net assets resulting from operations 66,744,288 (69,292,741)
------------ --------------
DISTRIBUTIONS TO SHAREHOLDERS--
Net investment income (32,461,997) (63,237,709)
Net realized gain on investments -- (27,958,858)
------------ --------------
Total distributions (32,461,997) (91,196,567)
------------ --------------
TRUST SHARE TRANSACTIONS--
Net proceeds from sale of shares 22,383,057 95,303,536
Reinvested dividend distributions 24,320,375 67,951,565
Cost of shares redeemed (72,180,468) (137,813,949)
------------ --------------
Net change in net assets from trust share transactions (25,477,036) 25,441,152
------------ --------------
Net change in net assets 8,805,255 (135,048,156)
NET ASSETS:
Beginning of period 907,170,590 1,042,218,746
------------ --------------
End of period (including undistributed net investment
income of $2,678,214 and $2,751,910, respectively) $915,975,845 $ 907,170,590
============ ==============
The accompanying notes are an integral part of the financial statements.
</TABLE>
Lutheran Brotherhood Municipal Bond Fund
Financial Statements
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
April 30, 1995
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $592,472,169) $611,922,217
Cash 16,895
Receivable for investment securities sold 1,310,656
Interest receivable 11,229,357
------------
Total assets 624,479,125
------------
LIABILITIES:
Payable for investment securities purchased 9,353,263
Accrued expenses 143,239
------------
Total liabilities 9,496,502
------------
NET ASSETS 614,982,623
============
NET ASSETS CONSIST OF:
Trust capital (74,372,638 shares of beneficial
interest outstanding) 604,829,389
Undistributed net investment income 265,412
Accumulated net realized loss from
sale of investments (9,562,226)
Unrealized net appreciation of investments 19,450,048
------------
NET ASSETS $614,982,623
============
Net asset value and redemption price per share
($614,982,623 (divided by) 74,372,638 shares of
beneficial interest outstanding) $8.27
=====
Maximum public offering price per share
($8.27 (divided by) 0.95 for a 5% sales charge) $8.71
=====
-----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended April 30, 1995
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income--
Interest income $19,045,785
-----------
Expenses--
Investment advisory fee 1,703,425
Transfer agent services 257,016
Custodian fee 75,759
Administrative personnel and services 72,726
Printing and postage 65,305
Trust share registration costs 21,617
Auditing fees 13,575
Legal fees 2,629
Trustees' fees 8,203
Miscellaneous 15,253
-----------
Total expenses 2,235,508
-----------
Net investment income 16,810,277
-----------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized loss on investment transactions (1,165,218)
Net realized loss on closed futures contracts (703,268)
-----------
Net realized loss on investments (1,868,486)
Net change in unrealized appreciation of investments 30,705,442
-----------
Net gain on investments 28,836,956
-----------
Net increase in net assets resulting
from operations $45,647,233
===========
-----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
4/30/95 Year Ended
(unaudited) 10/31/94
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 16,810,277 $ 33,749,852
Net realized loss on investment transactions (1,868,486) (5,413,232)
Net change in unrealized appreciation or depreciation
of investments 30,705,442 (65,720,253)
------------ ------------
Net change in net assets resulting from operations 45,647,233 (37,383,633)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS--
Net investment income (16,994,633) (33,607,416)
Net realized gain on investments -- (11,100,939)
------------ ------------
Total distributions (16,994,633) (44,708,355)
------------ ------------
TRUST SHARE TRANSACTIONS--
Net proceeds from sale of shares 18,552,662 76,123,051
Reinvested dividend distributions 12,863,979 33,891,528
Cost of shares redeemed (40,272,627) (62,418,135)
------------ ------------
Net change in net assets from trust share transactions (8,855,986) 47,596,444
------------ ------------
Net change in net assets 19,796,614 (34,495,544)
NET ASSETS:
Beginning of period 595,186,009 629,681,553
------------ ------------
End of period (including undistributed net investment
income of $265,412 and $449,768, respectively) $614,982,623 $595,186,009
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
Lutheran Brotherhood Money Market Fund
Financial Statements
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
April 30, 1995
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at amortized
cost and value $304,671,961
Cash 203,436
Interest receivable 136,992
------------
Total assets 305,012,389
------------
LIABILITIES:
Dividends payable 116,888
Accrued expenses 246,480
------------
Total liabilities 363,368
------------
NET ASSETS $304,649,021
============
NET ASSETS CONSIST OF:
Trust capital (304,649,021 shares of
beneficial interest outstanding) $304,649,021
============
Net asset value, offering price and
redemption price per share
($304,649,021 (divided by) 304,649,021 shares of
beneficial interest outstanding) $1.00
=====
--------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended April 30, 1995
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income--
Interest income $8,482,659
----------
Expenses--
Investment advisory fee 717,452
Transfer agent services 606,520
Custodian fee 162,815
Administrative personnel and services 44,645
Printing and postage 197,675
Trust share registration costs 29,926
Auditing fees 5,969
Legal fees 1,190
Trustees' fees 5,237
Miscellaneous 7,175
----------
Total expenses before expense reimbursement 1,778,604
Expense reimbursement from investment advisor (200,210)
----------
Net expenses 1,578,394
----------
Net investment income $6,904,265
==========
--------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
4/30/95 Year Ended
(unaudited) 10/31/94
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 6,904,265 $ 7,835,288
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS--
Net investment income (6,904,265) (7,835,288)
------------ ------------
TRUST SHARE TRANSACTIONS--
Proceeds from sale of shares 265,136,620 441,490,068
Reinvested dividend distributions 6,635,632 7,385,807
Cost of shares redeemed (243,991,249) (447,132,825)
------------ ------------
Net increase in net assets from trust share transactions 27,781,003 1,743,050
------------ ------------
Net increase in net assets 27,781,003 1,743,050
NET ASSETS:
Beginning of period 276,868,018 275,124,968
------------ ------------
End of period $304,649,021 $276,868,018
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
The Lutheran Brotherhood Family of Funds
Financial Highlights
For a share outstanding throughtout each period
Six Months For the Period
Ended Year January 8, 1993
Lutheran Brotherhood 4/30/95 Ended (effective date) to
Opportunity Growth Fund (a) (unaudited) 10/31/94 October 31, 1993
-------------- -------------- --------------------
<S> <C> <C> <C>
Net asset value, beginning of period $10.76 $10.66 $ 8.43
------- ------ ------
Income From Investment Operations--
Net investment income (0.04) (0.06) (0.07)
Net realized and unrealized gain (loss)
on investments 0.64 0.16 2.30
------- ------ ------
Total from investment operations 0.60 0.10 2.23
------- ------ ------
Net asset value, end of period $11.36 $10.76 $10.66
======= ====== ======
Total investment return at net asset value (b) 5.67% 0.94% 26.45%
Net assets, end of period ($ millions) $120.5 $99.6 $40.8
Ratio of expenses to average net assets 1.54%(c) 1.66% 2.33%(c)
Ratio of net investment income to
average net assets -0.77% -0.83% -1.76%
Portfolio turnover rate 84% 64% 97%
</TABLE>
<TABLE>
<CAPTION>
Six Months
Ended Year Nine Months Years Ended January 31,
4/30/95 Ended Ended ------------------------------
Lutheran Brotherhood Fund (a) (unaudited) 10/31/94 10/31/93 1993 1992 1991
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $17.67 $18.85 $18.53 $19.14 $17.10 $15.83
------ ------ ------ ------ ------ ------
Income From Investment Operations--
Net investment income 0.12 0.19 0.29 0.27 0.32 0.37
Net realized and unrealized gain
(loss) on investments 0.92 (0.20) 1.04 1.42 3.90 1.34
------ ------ ------ ------ ------ ------
Total from investment operations 1.04 (0.01) 1.33 1.69 4.22 1.71
------ ------ ------ ------ ------ ------
Less Distributions--
Dividends from net investment income (0.11) (0.20) (0.28) (0.27) (0.31) (0.38)
Distributions from net realized gain
on investments -- (0.97) (0.73) (2.03) (1.87) (0.06)
------ ------ ------ ------ ------ ------
Total distributions (0.11) (1.17) (1.01) (2.30) (2.18) (0.44)
------ ------ ------ ------ ------ ------
Net asset value, end of period $18.60 $17.67 $18.85 $18.53 $19.14 $17.10
====== ====== ====== ====== ====== ======
Total investment return at net asset value (b) 5.93% -0.11% 7.41% 9.47% 24.67% 10.92%
Net assets, end of period ($ millions) $572.2 $548.6 $527.3 $460.9 $380.3 $303.4
Ratio of expenses to average net assets 1.05%(c) 1.04% 1.01%(c) 0.97% 1.00% 1.05%
Ratio of net investment income to
average net assets 1.39%(c) 1.10% 2.15%(c) 1.44% 1.69% 2.21%
Portfolio turnover rate 76% 234% 237% 249% 175% 148%
See accompanying notes to the financial highlights.
</TABLE>
<TABLE>
<CAPTION>
The Lutheran Brotherhood Family of Funds
Financial Highlights
For a share outstanding throughtout each period
(continued)
Six Months
Ended Year Nine Months Years Ended January 31,
Lutheran Brotherhood 4/30/95 Ended Ended ------------------------------
High Yield Fund (a) (unaudited) 10/31/94 10/31/93 1993 1992 1991
----------- -------- -------- ------ ------ -----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $8.86 $9.73 $9.12 $8.45 $6.72 $7.93
------ ------ ------ ------ ------ -----
Income From Investment Operations--
Net investment income 0.41 0.83 0.61 0.88 0.93 0.92
Net realized and unrealized gain
(loss) on investments (0.01) (0.86) 0.60 0.68 1.72 (1.21)
------ ------ ------ ------ ------ -----
Total from investment operations 0.40 (0.03) 1.21 1.56 2.65 (0.29)
------ ------ ------ ------ ------ -----
Less Distributions--
Dividends from net investment income (0.44) (0.82) (0.60) (0.89) (0.92) (0.92)
Distributions from net realized
gain on investments (0.05) (0.02) -- -- -- --
------ ------ ------ ------ ------ -----
Total distributions (0.49) (0.84) (0.60) (0.89) (0.92) (0.92)
------ ------ ------ ------ ------ -----
Net asset value, end of period $8.77 $8.86 $9.73 $9.12 $8.45 $6.72
====== ====== ====== ====== ====== =====
Total investment return at net asset value (b) 4.82% -0.47% 13.72% 19.51% 41.59% -3.98%
Net assets, end of period ($ millions) $543.6 $499.6 $440.3 $330.2 $217.0 $137.0
Ratio of expenses to average net assets 0.95%(c) 0.95% 0.94%(c) 0.99% 1.16% 1.23%
Ratio of net investment income to
average net assets 9.72%(c) 8.92% 8.72%(c) 10.04% 11.95% 12.51%
Portfolio turnover rate 37% 50% 66% 86% 145% 120%
</TABLE>
<TABLE>
<CAPTION>
Six Months
Ended Year Nine Months Years Ended January 31,
Lutheran Brotherhood 4/30/95 Ended Ended ------------------------------
Income Fund (a) (unaudited) 10/31/94 10/31/93 1993 1992 1991
----------- -------- -------- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $8.01 $9.43 $9.10 $8.79 $8.35 $8.47
----- ----- ----- ----- ----- -----
Income From Investment Operations--
Net investment income 0.29 0.58 0.47 0.66 0.72 0.78
Net realized and unrealized gain
(loss) on investments 0.31 (1.19) 0.33 0.31 0.44 (0.11)
----- ----- ----- ----- ----- -----
Total from investment operations 0.60 (0.61) 0.80 0.97 1.16 0.67
----- ----- ----- ----- ----- -----
Less Distributions--
Dividends from net investment income (0.29) (0.56) (0.47) (0.66) (0.72) (0.79)
Distributions from net realized
gain on investments -- (0.25) -- -- -- --
----- ----- ----- ----- ----- -----
Total distributions (0.29) (0.81) (0.47) (0.66) (0.72) (0.79)
----- ----- ----- ----- ----- -----
Net assets, end of period $8.32 $8.01 $9.43 $9.10 $8.79 $8.35
===== ===== ===== ===== ===== =====
Total investment return at net asset value (b) 7.67% -6.81% 8.97% 11.50% 14.48% 8.39%
Net assets, end of period ($ millions) $916.0 $907.2 $1,042.2 $944.6 $819.5 $736.5
Ratio of expenses to average net assets 0.84%(c) 0.82% 0.80%(c,d) 0.90% 0.97% 1.02%
Ratio of net investment income to
average net assets 7.21%(c) 6.77% 6.87%(c,d) 7.40% 8.38% 9.35%
Portfolio turnover rate 60% 155% 84% 104% 117% 118%
See accompanying notes to financial highlights.
</TABLE>
<TABLE>
<CAPTION>
The Lutheran Brotherhood Family of Funds
Financial Highlights
For a share outstanding throughtout each period
(continued)
Six Months
Ended Year Nine Months Years Ended January 31,
Lutheran Brotherhood 4/30/95 Ended Ended ---------------------------------
Municipal Bond Fund (a) (unaudited) 10/31/94 10/31/93 1993 1992 1991
----------- -------- -------- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $7.88 $9.00 $8.52 $8.45 $8.32 $8.15
----- ----- ----- ----- ----- -----
Income From Investment Operations--
Net investment income 0.23 0.46 0.37 0.53 0.56 0.58
Net realized and unrealized gain
(loss) on investments 0.39 (0.96) 0.51 0.28 0.29 0.16
----- ----- ----- ----- ----- -----
Total from investment operations 0.62 (0.50) 0.88 0.81 0.85 0.74
----- ----- ----- ----- ----- -----
Less Distributions--
Dividends from net investment income (0.23) (0.46) (0.37) (0.52) (0.56) (0.57)
Distributions from net realized
gain on investments -- (0.16) (0.03) (0.22) (0.16) --
----- ----- ----- ----- ----- -----
Total distributions (0.23) (0.62) (0.40) (0.74) (0.72) (0.57)
----- ----- ----- ----- ----- -----
Net asset value, end of period $8.27 $7.88 $9.00 $8.52 $8.45 $8.32
===== ===== ===== ===== ===== =====
Total investment return at net asset value (b) 7.97% -5.93% 10.73% 9.96% 10.64% 9.54%
Net assets, end of period ($ millions) $615.0 $595.2 $629.7 $532.6 $448.4 $382.5
Ratio of expenses to average net assets 0.75%(c) 0.75% 0.74%(c,e) 0.80% 0.83% 0.86%
Ratio of net investment income to
average net assets 5.66%(c) 5.44% 5.69%(c,e) 6.22% 6.65% 7.06%
Portfolio turnover rate 21% 38% 46% 77% 78% 68%
</TABLE>
<TABLE>
<CAPTION>
Six Months
Ended Year Nine Months Years Ended January 31,
Lutheran Brotherhood 4/30/95 Ended Ended ------------------------------
Money Market Fund (a) (unaudited) 10/31/94 10/31/93 1993 1992 1991
----------- -------- -------- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- -----
Net investment income from investment operations 0.02 0.03 0.02 0.03 0.05 0.07
Less: Dividends from net investment income (0.02) (0.03) (0.02) (0.03) (0.05) (0.07)
----- ----- ----- ----- ----- -----
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- -----
Total investment return at net asset value (b) 2.40% 2.89% 1.63% 2.77% 5.10% 7.40%
Net assets, end of period ($ millions) $304.6 $276.9 $275.1 $317.0 $412.3 $473.4
Ratio of expenses to average net assets 1.10%(c,f) 1.10%(f) 1.10%(c,f) 1.10%(f) 1.08% 1.07%
Ratio of net investment income to
average net assets 4.81%(c,f) 2.85%(f) 2.16%(c,f) 2.76%(f) 5.01% 7.16%
Notes to Financial Highlights:
- - ------------------------------
(a) All per share amounts have been rounded to the nearest cent.
(b) Total investment return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(c) Computed on an annualized basis.
(d) During the nine month period ended October 31, 1993, Lutheran
Brotherhood Research Corp. (LBRC) undertook a voluntary reduction of the
Income Fund's investment advisory fee equal to 0.10% of average daily
net assets. Had LBRC not undertaken such action, the ratio of expenses
to average net assets would have been 0.90% and the ratio of net
investment income to average net assets would have been 6.77%.
(e) During the nine month period ended October 31, 1993, LBRC undertook
a voluntary reduction of the Municipal Bond Fund's investment advisory
fee equal to 0.05% of average daily net assets. Had LBRC not undertaken
such action, the ratio of expenses to average net assets would have been
0.79% and the ratio of net investment income to average net assets would
have been 5.64%.
(f) Effective February 1, 1992, LBRC has voluntarily undertaken to
limit the Money Market Fund's expense ratio to 1.10%. Had LBRC not
undertaken such action, the ratio of expenses to average net assets
would have been 1.24%, 1.36%, 1.44% and 1.23% and the ratio of net
investment income to average net assets would have been 4.67%, 2.59%,
1.82% and 2.63%, respectively, for the six months ended April 30, 1995,
the year ended October 31, 1994, the nine month period ended October 31,
1993 and the year ended January 31, 1993.
The accompanying notes are an integral part of the financial statements.
</TABLE>
The Lutheran Brotherhood Family of Funds
Notes to Financial Statements
April 30, 1995
(Unaudited)
(1) Organization
The Lutheran Brotherhood Family of Funds (the "Trust") is a Delaware
business trust and a diversified, open-end investment company registered
under the Investment Company Act of 1940. The Trust is divided into six
series (the "Fund(s)"), each with its own investment objective and
policies. The six Funds of the Trust are: Lutheran Brotherhood
Opportunity Growth Fund, Lutheran Brotherhood Fund, Lutheran Brotherhood
High Yield Fund, Lutheran Brotherhood Income Fund, Lutheran Brotherhood
Municipal Bond Fund and Lutheran Brotherhood Money Market Fund.
(2) Significant Accounting Policies
Investment Security Valuations
Securities traded on national securities exchanges are valued at the
last quoted sales price at the close of each business day; securities
traded on the over-the-counter market and listed securities for which no
price is readily available are valued at the mean between bid and asked
price as determined by an independent pricing service. The pricing
service, in determining values of securities, takes into consideration
such factors as current quotations by broker/dealers, coupon, maturity,
quality, type of issue, trading characteristics, and other yield and
risk factors it deems relevant in determining valuations. Exchange
listed options and futures contracts are valued at the last quoted sales
price. For all Funds other than the Money Market Fund, short-term
securities with maturities of 60 days or less are valued at amortized
cost; those with maturities greater than 60 days are valued at the mean
between bid and asked price. Short-term securities held by the Money
Market Fund are valued on the basis of amortized cost (which
approximates market value), whereby a portfolio security is valued at
its cost initially, and thereafter valued to reflect a constant
amortization to maturity of any discount or premium. The Money Market
Fund follows procedures necessary to maintain a constant net asset value
of $1.00 per share. All other securities for which market values are not
readily available are appraised at fair value as determined in good
faith by or under the direction of the Board of Directors.
Repurchase Agreements
The Funds may engage in repurchase agreement transactions in pursuit of
their investment objectives. When a fund engages in such transactions,
it is policy to require the custodian bank to take possession of all
securities held as collateral in support of repurchase agreement
investments. In addition, the Fund monitors the market value of the
underlying collateral on a daily basis. If the seller defaults or if
bankruptcy proceedings are initiated with respect to the seller, the
realization or retention of the collateral may be subject to legal
proceedings.
Investment Income
Interest income is determined on the basis of interest or discount
earned on any short-term investments and interest earned on all other
debt securities, including accrual of original issue discount. Interest
earned on debt securities also includes amortization of premium for the
Opportunity Growth, LB Fund, High Yield and Municipal Bond Funds and the
accrual of market discount for the Opportunity Growth, LB Fund and High
Yield Funds. Market discount, if any, is recognized for tax purposes
when bonds are sold for the Income and Municipal Bond Funds. Dividend
income is recorded on the ex- dividend date. For payment-in-kind
securities, income is recorded on the ex-dividend date in the amount of
the value received.
Options and Financial Futures Transactions
All Funds except the Money Market Fund may utilize futures and options
contracts. Option contracts are valued daily and unrealized appreciation
or depreciation is recorded. The Fund will realize a gain or loss upon
expiration or closing of the option transaction. When an option is
exercised, the proceeds on sale for a written call option or the cost of
a security for purchased put and call options is adjusted by the amount
of premium received or paid.
Upon buying or selling a futures contract, the Fund is required to
deposit either cash or securities in an amount (initial margin) equal to
a certain percentage of the contract value. Subsequent payments
(variation margin) are made or received by the Fund each day. The
variation margin payments are equal to the daily changes in the contract
value and are recorded as unrealized gains and losses. The Fund realizes
a gain or loss when the contract is closed or expires.
Federal Income Taxes
It is the policy of each Fund to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and
to distribute to shareholders each year substantially all of their
taxable income on a timely basis, including any net realized gain on
investments each year. It is also the intention of the Funds to
distribute an amount sufficient to avoid imposition of any federal
excise tax. Accordingly, no provision for federal income tax is
necessary. Each Fund is treated as a separate taxable entity for federal
income tax purposes.
When-Issued and Delayed Delivery Transactions
The Funds may engage in when-issued or delayed delivery transactions. To
the extent that a Fund engages in such transactions, it will do so for
the purpose of acquiring securities consistent with its investment
objectives and policies and not for the purpose of investment leverage
or to speculate on interest rate changes. On the trade date, assets of
the Fund are segregated on the Fund's records in a dollar amount
sufficient to make payment for the securities to be purchased. Income is
not accrued until settlement date.
Dollar Roll Transactions
The Income Fund enters into dollar roll transactions, with respect to
mortgage securities issued by GNMA, FNMA and FHLMC, in which the Fund
sells mortgage securities and simultaneously agrees to repurchase
substantially similar (same type, coupon and maturity) securities at a
later date at an agreed upon price. During the period between the sale
and repurchase, the Fund forgoes principal and interest paid on the
mortgage securities sold. The Fund is compensated by the interest earned
on the cash proceeds of the initial sale and from negotiated fees paid
by brokers offered as an inducement to the Fund to "roll over" its
purchase commitments. For the six months ended April 30, 1995, the
Income Fund earned $327,852 from such fees.
Organization Costs
Organization costs incurred by the Opportunity Growth Fund to prepare
its initial registration statement and register shares are capitalized
and will be amortized over a period of 60 months from its commencement
date. If any initial shares are redeemed during the amortization period,
the redemption proceeds will be reduced by a pro-rata portion of the
unamortized balance at the time of redemption, in the same proportion
that the number of initial shares being redeemed bears to the number of
initial shares outstanding at the time of redemption.
Distribution to Shareholders
Dividends from net investment income, if available, are declared and
paid annually for the Opportunity Growth Fund, declared and paid
quarterly for the LB Fund, declared and paid monthly for the High Yield,
Income and Municipal Bond Funds, and declared daily (including short-
term net realized gains and losses) and paid monthly for the Money
Market Fund. Net realized gains from securities transactions, if any,
are distributed at least annually, after the close of the Fund's fiscal
year. Dividends and capital gain distributions to shareholders are
recorded on the ex-dividend date.
The character of distributions made during the year from net investment
income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to timing of
dividend distributions, the fiscal year in which amounts are distributed
may differ from the year that the income or net realized gains were
recorded by the Fund.
Other
Security transactions are accounted for on the date the securities are
purchased or sold. Realized gains and losses are determined on the
identified cost basis. Each Fund is charged for the operating expenses
that are directly attributable to it. Fund operating expenses that
cannot be directly attributable to a Fund are either shared equally or
allocated among them based on the relative net assets of each Fund or
via other methodologies.
(3) Fees and Compensation Paid to Affiliates
Investment Advisory Fees
Each Fund pays Lutheran Brotherhood Research Corp. (LBRC), the Trust's
investment advisor, a fee for its advisory services. The fees are
accrued daily and paid monthly. The fees are based on the following
annual rates of average daily net assets: Opportunity Growth Fund, 0.75%
for the first $100 million in assets, 0.65% for the next $150 million in
assets, 0.60% for the next $250 million in assets, 0.55% for the next
$500 million in assets, and 0.50% for assets over $1 billion; LB Fund
and High Yield Fund, 0.65% for the first $500 million in assets, 0.60%
for the next $500 million, and 0.55% for assets over $1 billion; Income
Fund, 0.60% for the first $500 million in assets, 0.575% for the next
$500 million in assets, and 0.55% for assets over $1 billion; Municipal
Bond Fund, 0.575% for the first $500 million in assets, 0.5625% for the
next $500 million, and 0.55% for assets over $1 billion; Money Market
Fund, 0.50% for the first $500 million in assets, 0.475% for the next
$500 million, 0.45% for the next $500 million, 0.425% for the next $500
million, and 0.40% for assets over $2 billion. During the six months
ended April 30, 1995 the Money Market Fund advisory fees totaled
$717,452 of which $200,210 were voluntarily waived by LBRC to limit the
Money Market Fund's expense ratio to 1.10% of average daily net assets.
LBRC can terminate its voluntary waiver of expenses at any time at its
discretion.
Sales Charges and Other Fees
For the six months ended April 30, 1995, Lutheran Brotherhood Securities
Corp. (LBSC), the Trust's distributor, received sales charges paid by
purchasers of Fund shares of: Opportunity Growth Fund, $1,271,918; LB
Fund, $837,093; High Yield Fund, $651,502; Income Fund, $678,530; and
Municipal Bond Fund, $491,953. Sales charges are not an expense of the
Trust and are not reflected in the financial statements of any of the
Funds. LBSC also received fees pursuant to an agreement to provide
certain administrative personnel and services to the Funds. Effective
January 1, 1995, a new agreement went into effect where by LBSC will
receive an annual fee equal to 0.025% of average daily net assets. LBSC
received the following compensation for the six months ended April 30,
1995: Opportunity Growth Fund, $14,758; LB Fund, $66,742; High Yield
Fund, $64,584; Income Fund, $97,495; Municipal Bond Fund, $72,726; and
Money Market Fund, $44,645. In addition, LBSC provides the Funds with
transfer agent services pursuant to an agreement and received the
following compensation: Opportunity Growth Fund, $262,160; LB Fund,
$722,947; High Yield Fund, $456,881; Income Fund, $700,027; Municipal
Bond Fund, $257,016; and Money Market Fund, $606,520. Certain officers
and non-independent trustees of the Fund are officers and directors of
LBRC and LBSC.
(4) Securities Lending
To generate additional income, the Funds may participate in a securities
lending program administered by the Fund's custodian bank. Securities
are periodically loaned to brokers, banks or other institutional
borrowers of securities, for which collateral in the form of cash, U.S.
government securities, or letter of credit is received by the custodian
in an amount at least equal to the market value of securities loaned.
Collateral received in the form of cash is invested in short-term
investments by the custodian from which earnings are shared between the
borrower, the custodian and the Fund at negotiated rates. The risks to
the Fund are that it may experience delays in recovery or even loss of
rights in the collateral should the borrower of securities fail
financially. At April 30, 1995, there were no security loans
outstanding.
(5) Distributions From Capital Gains
During the six months ended April 30, 1995, distributions from net
realized capital gains of $88,151, and $3,034,747, were paid by the LB
Fund and LB High Yield Fund, respectively. These distributions related
to net capital gains realized during the prior fiscal year ended October
31, 1994.
(6) Capital Loss Carryover
At October 31, 1994 the Opportunity Growth Fund, Income Fund and
Municipal Bond Fund had accumulated net realized capital loss carryovers
of $2,547,602, $48,987,208 and $6,406,278 respectively (expiring in
2002). To the extent these Funds realize future net capital gains,
taxable distributions will be reduced by any unused capital loss
carryovers.
(7) Investment Transactions
Purchases and Sales of Investment Securities
For the six months ended April 30, 1995, the cost of purchases and the
proceeds from sales of investment securities other than U.S. Government
and short term securities were as follows:
($thousands)
-----------------------------------
Fund Purchases Sales
- - ------------------ -------------- --------------
Opportunity Growth $ 99,698 $ 80,577
LB Fund 420,653 370,263
High Yield 222,218 173,199
Income 249,888 254,113
Municipal Bond 125,378 126,508
LB Fund $ -- $ 1,890
Income 448,304 260,314
Investments in Restricted Securities
The High Yield Fund owns restricted securities that were purchased in
private placement transactions without registration under the Securities
Act of 1933. Unless such securities subsequently become registered, they
generally may be resold only in privately negotiated transactions with a
limited number of purchasers. The aggregate value of restricted
securities was $5,253,403 at April 30, 1995 which represented 1.0% of
net assets of the High Yield Fund.
Investments in High Yielding Securities
The High Yield Fund invests primarily in high yielding fixed income
securities. These securities will typically be in the lower rating
categories or will be non-rated and generally will involve more risk
than securities in the higher rating categories. Lower rated or unrated
securities are more likely to react to developments affecting market
risk and credit risk than are more highly rated securities, which react
primarily to movements in the general level of interest rates.
Investments in Options and Futures Contracts
All Funds except the Money Market Fund may buy put and call options,
write covered call options and buy and sell futures contracts as hedges
to provide protection against adverse movements in prices of securities
in the portfolio or to facilitate buying and selling securities.
The movement in the price of the instrument underlying an option or
futures contract may not correlate perfectly with the movement in the
prices of the portfolio securities being hedged. A lack of correlation
could render the Fund's hedging strategy unsuccessful and could result
in a loss to the Fund. In the event that a liquid secondary market would
not exist, the Fund could be prevented from entering into a closing
transaction which could result in additional losses to the Fund.
Open Option Contracts
The number of contracts and premium amounts associated with call option
contracts written during the six month period ended April 30, 1995 were
as follows:
<TABLE>
<CAPTION>
LB Fund Income Fund
--------------------------- ---------------------------
Number of Premium Number of Premium
Contracts Amount Contracts Amount
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Balance at October 31, 1994 539 $ 43,618 -- --
Opened 450 27,564 1 $ 96,250
Closed (196) (19,577) -- --
Expired (482) (36,669) -- --
Exercised (311) (14,937) -- --
--------- --------- --------- ---------
Balance at April 30, 1995 -- -- 1 $ 96,250
========= ========= ========= =========
</TABLE>
(8) Shares of Beneficial Interest
The Master Trust Agreement permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest ($0.001 par
value) of all of the Funds. Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Opportunity High Income Municipal Money
Growth LB Fund Yield Fund Bond Market
---------- ----------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shares outstanding at
October 31, 1993 3,832,452 27,965,971 45,249,704 110,473,555 69,984,767 275,124,968
Shares sold 5,950,178 3,943,939 14,381,578 10,973,573 8,943,485 441,490,067
Shares issued on reinvestment
of dividends and distributions -- 1,839,470 3,161,025 7,825,510 3,994,426 7,385,807
Shares redeemed (531,608) (2,711,349) (6,399,979) (16,082,912) (7,434,277) (447,132,824)
---------- ----------- ----------- ----------- ---------- ------------
Shares outstanding at
October 31, 1994 9,251,022 31,038,031 56,392,328 113,189,726 75,488,401 276,868,018
Shares sold 1,939,610 1,494,832 7,471,334 2,757,351 2,315,620 265,136,620
Shares issued on reinvestment
of dividends and distributions -- 192,323 2,325,983 3,005,146 1,606,889 6,635,632
Shares redeemed (588,361) (1,966,203) (4,183,269) (8,892,842) (5,038,272) (243,991,249)
---------- ----------- ----------- ----------- ---------- ------------
Shares outstanding at
April 30, 1995 10,602,271 30,758,983 62,006,376 110,059,381 74,372,638 304,649,021
========== =========== =========== =========== ========== ============
</TABLE>
The Lutheran Brotherhood Family of Funds
Lutheran Brotherhood Opportunity Growth Fund
Lutheran Brotherhood Fund
Lutheran Brotherhood High Yield Fund
Lutheran Brotherhood Income Fund
Lutheran Brotherhood Municipal Bond Fund
Lutheran Brotherhood Money Market Fund
Trustees
Rolf F. Bjelland
Charles W. Arnason
Herbert F. Eggerding, Jr.
Connie M. Levi
Ruth E. Randall
Officers
Rolf F. Bjelland Wade M. Voigt
Chairman and President Treasurer
James R. Olson Rand E. Mattsson
Vice President Assistant Treasurer
James M. Walline James M. Odland
Vice President Assistant Secretary
Otis F. Hilbert Randall L. Wetherille
Secretary and Vice President Assistant Secretary
This report is authorized for distribution to prospective
investors only when preceded or accompanied by the
current prospectuses.
Lutheran Brotherhood Family of Funds
25 Years & Growing Logo Goes Here
58
