LUTHERAN BROTHERHOOD
FAMILY OF FUNDS
Logo Centered Here
Box with picture of a Leaf, Tree and Acorn
Growth Income Stability
Annual Report
October 31, 1995
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Lutheran
Brotherhood
Securities Corp.
3100 Multifoods Tower
33 South Sixth Street
Minneapolis, MN 55402-3795
Price Waterhouse Logo Goes here
- ------------------------------------------------------------------
Price Waterhouse LLP
Report of Independent Accountants
To the Trustees and Shareholders of the
Lutheran Brotherhood Family of Funds
In our opinion, the accompanying statements of assets and liabilities,
including the portfolios of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Lutheran Brotherhood Opportunity Growth Fund, Lutheran Brotherhood World
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 (constituting the
Lutheran Brotherhood Family of Funds) at October 31, 1995, the results
of each of their operations for the year then ended or period indicated,
the changes in each of their net assets for the year or period ended
October 31, 1995 and the financial highlights for the periods indicated,
in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of management; our
responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made
by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation
of securities at October 31, 1995 by correspondence with the custodian
and brokers and the application of alternative auditing procedures where
confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
/s/Price Waterhouse LLP
December 11, 1995
<TABLE>
<CAPTION>
Lutheran Brotherhood Opportunity Growth Fund
Portfolio of Investments
October 31, 1995
Shares Value
- ----------- ----------------
<S> <C> <C> <C>
COMMON STOCKS - 89.7% (a)
Automotive - 1.9%
129,500 MascoTech, Inc. $ 1,327,375
136,900 Tower Automotive, Inc. 1,882,375 (b)
------------
3,209,750
------------
Computer Software - 12.7%
191,300 Cheyenne Software, Inc. 3,993,388 (b)
44,900 Cooper & Chyan
Technology, Inc. 634,213 (b)
28,500 Hyperion Software Corp. 1,403,625 (b)
164,200 Inference Corp. 1,990,925 (b)
215,600 Intersolv, Inc. 3,395,700 (b)
150,300 MySoftware Company 1,580,498 (b)
123,200 Ovid Technologies, Inc. 1,108,800 (b)
86,400 Sterling Software, Inc. 3,985,200 (b)
275,500 Viasoft, Inc. 3,581,500 (b)
------------
21,673,849
------------
Computers &
Office Equipment - 11.9%
17,100 Ade Corp. 256,500 (b)
77,500 Avid Technology, Inc. 3,390,625 (b)
20,000 DataWorks Corp. 277,500 (b)
35,700 FORE Systems, Inc. 1,892,100 (b)
81,500 In Focus Systems, Inc. 2,679,313 (b)
179,000 InaCom Corp. 1,790,000 (b)
100,400 Madge, N.V. 4,204,250 (b)
69,300 MICROS Systems, Inc. 2,581,425 (b)
16,300 Micro Warehouse, Inc. 725,350 (b)
40,800 NetStar, Inc. 418,200 (b)
41,600 Network Peripherals, Inc. 436,800 (b)
48,900 Optical Data Systems, Inc. 1,460,887 (b)
------------
20,112,950
------------
Construction &
Home Building - 2.0%
53,000 Belmont Homes, Inc. 927,500 (b)
164,000 Southern Energy Homes, Inc. 2,419,000 (b)
------------
3,346,500
------------
Drugs & Health Care - 13.3%
48,900 Agouron Pharmaceuticals, Inc. 1,271,400 (b)
20,400 Circon Corp. 464,100 (b)
57,100 Depotech Corp. 827,950 (b)
161,000 EP Technologies, Inc. 1,992,375 (b)
199,300 Maxxim Medical, Inc. 2,765,287 (b)
107,200 Mentor Corp. 2,358,400
49,700 Orthofix International N.V. 484,575 (b)
100,450 PDT, Inc. 3,867,325 (b)
85,600 SEQUUS Pharmaceuticals, Inc. 1,027,200 (b)
85,600 Speedfam International, Inc. 1,401,700 (b)
64,000 Stryker Corp. 2,888,000
73,300 Summit Technology, Inc. 3,261,850 (b)
------------
22,610,162
------------
Electronics - 7.5%
96,400 Actel Corp. 1,132,700 (b)
59,500 Adaptec, Inc. 2,647,750 (b)
115,800 C-Cor Electronics 2,663,400 (b)
84,000 Etec Systems, Inc. 924,000 (b)
60,000 Integrated Silicon Solution 1,878,750 (b)
214,500 Quality Semiconductor, Inc. 1,823,250 (b)
114,300 Smartflex Systems, Inc. 1,671,637 (b)
------------
12,741,487
------------
Healthcare Management - 1.8%
20,400 Healthsource, Inc. 1,081,200 (b)
72,400 Maxicare Health Plans, Inc. 1,257,950 (b)
70,500 Quantum Health
Resources, Inc. 749,063 (b)
------------
3,088,213
------------
Hospital Management - 2.6%
101,900 Horizon Mental Health
Management, Inc. 1,592,188 (b)
401,300 Physician Computer
Network, Inc. 2,758,938 (b)
------------
4,351,126
------------
Industrial - 0.6%
166,300 Union Switch & Signal, Inc. 997,800 (b)
------------
Leisure &
Entertainment - 6.1%
207,900 Cannondale Corp. 3,326,400 (b)
407,500 Fairfield Communities, Inc. 3,005,312 (b)
105,100 Movie Gallery, Inc. 4,046,350 (b)
------------
10,378,062
------------
Machinery &
Equipment - 0.5%
69,300 Insituform Technologies,
Inc., Class A 866,250 (b)
------------
Pollution Control - 3.7%
171,100 Memtec Limited, ADR 2,887,312 (b)
143,000 U.S. Filter Corp. 3,324,750 (b)
------------
6,212,062
------------
Restaurants - 2.2%
28,500 Outback Steakhouse, Inc. 894,187 (b)
148,300 Quality Dining, Inc. 2,891,850 (b)
------------
3,786,037
------------
Retail - 10.1%
92,300 American Eagle Outfitters 899,925 (b)
12,200 De Rigo S.p.A. 251,625 (b)
82,900 Department 56, Inc. 3,761,588 (b)
212,200 Fingerhut Cos., Inc. 2,891,225
52,000 Fossil, Inc. 565,500 (b)
77,200 General Nutrition Cos. 1,920,350 (b)
45,500 Gymboree Corp. 1,029,437 (b)
25,800 Piercing Pagoda, Inc. 377,325 (b)
90,200 Sports Authority, Inc. (The) 1,961,850 (b)
192,400 Strouds, Inc. 889,850 (b)
205,600 Trend-Lines, Inc., Class A 2,698,500 (b)
------------
17,247,175
------------
Services - 5.8%
216,300 BT Office Products
International, Inc. 2,784,863 (b)
99,200 Career Horizons, Inc. 2,653,600 (b)
54,800 Global DirectMail Corp. 1,493,300 (b)
115,900 ITI Technologies 2,926,475 (b)
------------
9,858,238
------------
Telecommunications
Equipment - 0.9%
24,500 ADC Telecommunications, Inc. 980,000 (b)
34,800 Brite Voice Systems, Inc. 578,550 (b)
------------
1,558,550
------------
Telephone &
Telecommunications - 5.7%
154,300 Metrocall, Inc. 3,857,500 (b)
8,200 Microcom, Inc. 179,375 (b)
20,400 Premisys
Communications, Inc. 1,825,800 (b)
57,700 Pronet, Inc. 1,471,350 (b)
81,500 Teltrend, Inc. 2,404,250 (b)
------------
9,738,275
------------
Textiles & Apparel - 0.4%
108,200 Cutter & Buck, Inc. 703,300 (b)
------------
Total Common Stocks
(cost $143,737,954) 152,479,786
------------
SHORT-TERM
SECURITIES - 10.3% (a)
Commercial Paper
$1,675,000 AI Credit
5.7%, due 11/7/1995 1,673,409
4,300,000 Cargill, Inc.
5.69%, due 11/3/1995 4,298,641
2,500,000 Koch Industries
5.88%, due 11/1/1995 2,500,000
4,000,000 McDonald's Corp.
5.72%, due 11/8/1995 3,995,551
5,000,000 Raytheon Co.
5.72%, due 11/1/1995 5,000,000
------------
Total Short-Term Securities
(at amortized cost) 17,467,601
------------
Total Investments
(cost $161,205,555) $169,947,387 (c)
============
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) At October 31, 1995, the aggregate cost of securities for federal
income tax purposes was $161,382,474 and the net unrealized appreciation
of investments based on that cost was $8,564,913 which is comprised of
$20,823,298 aggregate gross unrealized appreciation and $12,258,385
aggregate gross unrealized depreciation.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
Lutheran Brotherhood World Growth Fund
Portfolio of Investments
October 31, 1995
Shares Value
- ----------- --------------
<S> <C> <C> <C>
ARGENTINA - 0.6% (a)
COMMON STOCKS
470 Banco de Galicia
Buenos Aires ADR (USD) $8,989
240 Banco Frances del
Rio de la Plata ADR (USD) 5,250
130 Buenos Aires Embotelladora
ADR (USD) 2,974
150 Enron Global Power &
Pipeline (USD) 3,619
2,350 Naviera Perez "B" 10,362
1,590 Sociedad Comercial del Plata 3,211
150 Sociedad Comercial del Plata
ADR (USD) 3,038
910 Telecom Argentina 3,503
110 Telecom Argentina
ADR (USD) 4,221
1,090 Telefonica de Argentina
ADR (USD) 22,618
340 Transportadora de Gas del
Sur ADR (USD) 3,485
1,080 YPF Sociedad Anonima
ADR (USD) 18,495
-----------
Total Argentina 89,765
-----------
AUSTRALIA - 1.6% (a)
COMMON STOCKS
8,000 Australia Gas & Light 27,727
2,500 Broken Hill Proprietary 33,859
6,000 Burns Philip & Company 13,437
2,000 Coca Cola Amatil 15,478
1,200 Lend Lease Corporation 16,691
3,000 Mayne Nickless 13,574
4,000 News Corporation 20,171
3,000 Publishing & Broadcasting 9,552
14,000 TNT 19,729
2,000 Western Mining 12,828
5,000 Westpac Banking 20,529
4,500 Woodside Petroleum 21,561
-----------
225,136
-----------
MISCELLANEOUS
SECURITIES 8,638 (b)
-----------
Total Australia 233,774
-----------
AUSTRIA - 0.1% (a)
COMMON STOCKS
110 Flughafen Wien 7,066
110 Oesterreische Elektrik
Wirtsch 6,721
-----------
13,787
-----------
PREFERRED STOCKS
80 Creditanstalt Bankverein 3,991
-----------
Total Austria 17,778
-----------
BELGIUM - 0.9% (a)
COMMON STOCKS
95 Generale Banque 30,726
230 Kredietbank 57,699
40 UCB 45,646
-----------
Total Belgium 134,071
-----------
BRAZIL - 0.7% (a)
COMMON STOCKS
470 Brazil Fund (USD) 10,986
290 Cia Energetic Sao Paulo
ADR (USD) 2,919
260 Companhia Energetica Minas
Gerais ADR (USD) 5,720
1,910 Telecomunicacoes Brasilias
ADR (USD) 76,639
340 Usiminas Siderurg Miras
ADR (USD) 3,188
-----------
Total Brazil 99,452
-----------
CANADA - 0.4% (a)
COMMON STOCKS
1,050 Alcan Aluminum 33,601
590 MacMillan Bloedel (USD) 7,744
420 Royal Bank of Canada 9,444
-----------
Total Canada 50,789
-----------
CHILE - 0.6% (a)
COMMON STOCKS
100 AFP Providia ADR (USD) 2,450
750 Chile Fund (USD) 17,063
230 Chilectra ADR (USD) 9,890
340 Chilgener ADR (USD) 8,160
300 Compania Cervecerias Unidas
ADR (USD) 6,938
150 Compania Telecomunicaciones
ADR (USD) 10,800
640 Empresa Nacional De Electric
ADR (USD) 13,760
380 Enersis ADS (USD) 9,548
-----------
Total Chile 78,609
-----------
CHINA - 0.6% (a)
COMMON STOCKS
2,400 Huaneng Power ADR (USD) 39,900 (b)
26,000 Maanshan Iron &
Steel (HKD) 4,742
72,000 Shanghai Petrochemical "H"
(HKD) 20,720
58,000 Yizheng Chemical Fibre "H"
(HKD) 16,879
-----------
Total China 82,241
-----------
DENMARK - 0.3% (a)
COMMON STOCKS
260 Den Danske Bank 17,225
110 Teledanmark 5,738
300 Unidanmark 13,781
-----------
Total Denmark 36,744
-----------
FINLAND - 0.2% (a)
COMMON STOCKS
500 Nokia 28,604
-----------
FRANCE - 6.1% (a)
COMMON STOCKS
425 Accor 50,495
160 Carrefour 93,969
70 Castorama Dubois 11,352
175 Chargeurs 36,001
580 Cie de St. Gobain 69,148
140 Credit Local De France 11,082
1,210 Eaux Cie Generale 112,461
275 Ecco 42,627
200 GTM Entrepose 12,965
470 Lafarge Coppee 31,150
400 Lapeyre 20,090
180 Legrand 30,110
60 L'Oreal 14,662
100 Peugeot 13,026
220 Pinault Printemps Redoute 47,688
350 Poliet 27,484
200 Primagaz 15,533
100 Rexel 16,155
200 Sanofi 12,756
500 Societe Nationale Elf Aquitaine 34,048
70 Sodexho 18,137
720 Television Francaise 74,354
600 Total 37,079
1,000 Valeo 45,173
-----------
Total France 877,545
-----------
GERMANY - 4.2% (a)
COMMON STOCKS
10 Allianz Holdings 9,697
40 Allianz Holdings, Warrants,
Expiring 3/29/1996 74,027 (b)
30 Altana 17,445
190 Bayer 50,537
50 Bilfinger & Berger 18,400
30 Buderas 12,873
840 Deutsche Bank 37,996
162 Gehe 79,527
50 Hoechst 13,132
100 Hornbach Baumarkt 5,044
170 Mannesmann 55,954
260 Praktiker Bau und Heimwerker
Markte 8,220 (b)
350 Rhon Klinikum 32,822
350 Rhon Klinikum, Stock Rights,
Expiring 11/13/1995 6,714 (b)
642 Schering 44,789
1,210 Veba 49,677
110 Veba International Finance,
Warrants, Expiring 4/6/1998 15,669 (b)
70 Volkswagen 22,055
-----------
554,578
-----------
PREFERRED STOCKS
110 Fielmann 6,056
20 Hornbach 20,105
40 Krones 14,322
-----------
40,483
-----------
Total Germany 595,061
-----------
HONG KONG - 2.9% (a)
COMMON STOCKS
28,000 First Pacific 32,231
9,000 Guangdong Investments 5,296
128,000 Guangzhou Investment 26,323
10,000 Guoco Group 46,303
41,786 Hong Kong Land Holdings 75,215
18,000 Hutchison Whampoa 99,176
6,000 Swire Pacific "A" 45,010
26,000 Wharf Holdings 87,769
-----------
Total Hong Kong 417,323
-----------
ITALY - 1.5% (a)
COMMON STOCKS
2,200 Assicurazioni Generali 51,274
9,000 Banca Fideuram 9,598
1,000 Danieli & Company 2,760
1,000 Imi 5,464
5,000 Istituto Naz Delle
Assicurazioni 6,572
4,000 Italgas 10,640
1,000 Rinascente 5,928
1,000 Sasib 4,429
3,000 Sasib Di Risp 7,434
2,000 SME Meridonale Di 4,398
11,000 Stet 31,157
6,000 Stet Di Risp 13,080
19,000 Telecom Italia 28,846
8,000 Telecom Italia Di Risp 9,435
14,000 Telecom Italia Mobile 23,494 (b)
1,000 Unicem 6,274
-----------
Total Italy 220,783
-----------
JAPAN - 21.4% (a)
COMMON STOCKS
2,000 Alps Electric 20,529
4,000 Amada 39,885
5,000 Canon 85,537
2,000 Citizen Watch Company 13,705
4,000 Dai Nippon Screen
Manufacturing 35,740
1,000 Daifuku 11,926
4,000 Daiichi Phamaceutical 55,917
5,000 Daiwa House 74,784
12 East Japan Railway 56,660
1,000 Fanuc 43,306
7,000 Hitachi 71,851
6,000 Hitachi Zosen 29,503
2,000 Honda Motor Company 34,801
2,000 Inax 18,026
2,000 Ishihara Sangyo 5,944
2,000 Ito-Yokado 109,292
2,000 Kokuyo 43,013
5,000 Komatsu 39,103
2,000 Komori 47,314
4,000 Kumagai Gumi 15,328
4,000 Kuraray 39,494
2,000 Kyocera 163,840
3,000 Makita 46,630
4,000 Marui 69,212
4,000 Matsushita Electric Industries 56,699
3,000 Mitsubishi 33,139
12,000 Mitsubishi Heavy Industries 92,556
3,000 Mitsubishi Paper 18,241
20,000 Mitsui Fudosan 228,750
2,000 Mitsui Petrochemical Industries 15,856
1,000 Murata Manufacturing 35,095
1,000 National House 17,010
6,000 NEC 79,183
5,000 Nippon Denso 91,402
1,000 Nippon Hodo 15,543
24,000 Nippon Steel 79,535
4,000 Nomura Securities 73,122
2,000 Pioneer Electronic 30,696
1,000 Sangetsu 22,680
3,000 Sankyo 65,986
6,000 Sekisui Chemical 78,010
4,000 Sekisui House 46,141
18,000 Sharp 249,866
2,000 Shinetsu Chemical 40,862
2,000 Sony 89,936
8,000 Sumitomo 72,731
7,000 Sumitomo Electric 80,747
3,000 Sumitomo Forestry 42,231
1,000 TDK 51,518
7,000 Teijin 32,093
2,000 Tokio Marine & Fire Insurance 20,529
1,000 Tokyo Electronics 43,404
2,000 Tokyo Steel Manufacturing 37,147
2,000 Toppan Printing 26,394
1,000 Yurtec 18,183
-----------
Total Japan 3,056,625
-----------
MALAYSIA - 2.5% (a)
COMMON STOCKS
31,000 Affin Holdings 58,560
7,000 Affin Holdings, Warrants,
Expiring 11/15/1999 4,435 (b)
8,000 Aokam Perdana 13,412
5,000 Commerce Asset Holdings 13,577 (b)
18,000 MBF Capital 17,001
30,000 Multi-Purpose Holdings 40,142
29,000 Renong 44,282
27,000 Technology Resources
Industries 68,536
16,000 United Engineers 99,488
-----------
Total Malaysia 359,433
-----------
MEXICO - 1.4% (a)
COMMON STOCKS
2,850 Cemex "B" 8,800
30,610 Cifra ADR (USD) 32,906
2,080 Gruma "B" 6,131
10,129 Grupo Embotellador de Mexico 18,339
4,740 Grupo Financiero Banamex "C" 8,116
11,810 Grupo Industrial Maseca 7,359
1,000 Grupo Modelo "C" 3,804
3,650 Grupo Sidek "B" 1,732
1,200 Grupo Televisa GDS (USD) 20,550
890 Kimberly-Clark Mexico
(Class A) 11,617
500 Panamerican Beverages
ADR (USD) 13,688
1,850 Telefonos de Mexico
ADS (USD) 50,875
5,200 Tolmex "B" 19,523
-----------
Total Mexico 203,440
-----------
NETHERLANDS - 8.1% (a)
COMMON STOCKS
840 ABN Amro 35,297
660 Ahold 25,015
137 Akzo 15,603
1,300 CSM 54,215
16,870 Elsevier 218,119
560 Fortis AMEV 35,173
290 Hagemeyer 14,447
1,250 International Nederland Groep 74,550
861 Koninklijke PTT Nederland 30,286
250 Nutricia 19,410
1,540 Polygram 96,140
1,410 Royal Dutch Petroleum 175,066
600 Unilever 78,603
3,135 Wolters Kluwer 285,325
-----------
Total Netherlands 1,157,249
-----------
NEW ZEALAND - 0.6% (a)
COMMON STOCKS
6,000 Carter Holt Harvey 14,337
3,000 Fernz 8,872
4,000 Fletcher Challenge 10,588
9,000 Fletcher Challenge,
Forests Division 12,417
11,000 Telecom Corporation of
New Zealand 45,673
-----------
Total New Zealand 91,887
-----------
NORWAY - 1.3% (a)
COMMON STOCKS
370 Bergesen "A" 7,665
460 Kvaerner Industier "A" 19,354
2,040 Norsk Hydro 81,246
1,310 Orkla "A" 67,740
580 Saga Petroleum "B" 6,986
-----------
Total Norway 182,991
-----------
PORTUGAL - 0.2% (a)
COMMON STOCKS
620 Jeronimo Martins 33,008
-----------
SINGAPORE - 2.1% (a)
COMMON STOCKS
10,000 DBS Land 29,582
1,000 Development Bank of
Singapore 11,465
3,000 Far East Levingston
Shipbuilding 12,951
3,000 Jurong Shipyard 19,957
1,000 Keppel 8,209
7,000 Neptune Orient Lines 7,679
4,000 Overseas Union Bank 24,911
3,000 Overseas Union Enterprises 15,924
3,000 Sembawang 14,543
3,000 Singapore Airlines 27,813
5,000 Singapore Land 27,955
2,000 Singapore Press 31,281
13,000 United Industrial 11,592
6,000 United Overseas Bank 52,654
2,000 United Overseas Bank,
Warrants, Expiring
6/17/97 7,572 (b)
-----------
Total Singapore 304,088
-----------
SPAIN - 2.0% (a)
COMMON STOCKS
120 Banco Popular Espanol 19,063
730 Banco Santander 31,818
1,930 Centros Commerciales Pryca 41,113
1,260 Empresa Nacional de
Electridad 62,662
190 Fomento de Construcciones y
Contra 13,418
300 Gas Natural 41,145
3,130 Iberdrola 23,593
1,250 Repsol 37,329
1,910 Sevillana De Electricidad 12,613
-----------
Total Spain 282,754
-----------
SWEDEN - 1.9% (a)
COMMON STOCKS
270 Asea "A" 27,038
2,710 Astra AB "B" 97,943
1,540 Atlas Copco "B" 23,307
960 Electrolux "B" 41,056
320 Esselte "B" 4,698
340 Hennes & Mauritz "B" 22,221
320 Sandvik "A" 5,999
1,800 Sandvik "B" 33,882
430 Scribona "B" 4,241
1,110 Stora Kopparberg "B" 13,456
-----------
Total Sweden 273,841
-----------
SWITZERLAND - 4.0% (a)
COMMON STOCKS
110 BBC Brown Boveri 127,605
40 Ciba Geigy 34,634
270 CS Holding 27,587
95 Nestle 99,577
16 Roche Holdings 116,269
70 Sandoz 57,773
115 Schweizerisch Bankverein 47,203
40 Schweizerische
Bankgesellschaft 43,336
-----------
Total Switzerland 553,984
-----------
THAILAND - 0.9% (a)
COMMON STOCKS
1,200 Advanced Information Service 18,502
2,200 Bangkok Bank 22,730
2,700 Bank of Ayudhya 15,557
400 Land & House 6,453
300 Siam Cement 16,356
2,000 Siam Commercial Bank 23,366
1,500 Thai Farmers Bank 12,398
1,000 Total Access
Communication (USD) 6,050 (b)
800 United Communications 10,046
-----------
Total Thailand 131,458
-----------
UNITED KINGDOM - 12.9% (a)
COMMON STOCKS
10,000 Abbey National 84,664
7,900 Argos 63,824
UNITED KINGDOM - (continued)
COMMON STOCKS (continued)
9,000 Argyll Group 45,747
25,000 Asda Group 40,514
2,000 BAA 15,557
6,000 British Gas 22,862
4,000 British Petroleum 29,407
10,100 Cable & Wireless 65,949
8,400 Cadbury Schweppes 69,391
13,000 Caradon 40,696
5,000 Coats Viyella 14,783
4,000 Compass Group 27,194
4,600 East Midlands Electricity 63,164
5,500 Glaxo Wellcome 74,174
11,000 Grand Metropolitan 76,174
1,000 Heath 2,561
2,000 Heywood Williams Group 6,593
5,000 Hillsdown Holdings 13,241
4,000 John Laing 14,292
9,000 Kingfischer 67,660
7,000 Ladbroke Group 18,371
5,000 London Electricity 71,304
16,000 National Westminster Bank 159,747
8,000 Rank Organisation 53,249
10,000 Reed International 152,095
4,000 Rolls Royce 9,739
3,800 RTZ 52,629
4,000 Sears 6,419
8,000 Shell Transport & Trading 93,597
15,000 SmithKline Beecham,
equity units 153,676
3,000 Smith Holdings 27,320
9,000 T & N 20,419
7,000 Tesco 33,201
20,000 Tomkins 78,893
7,500 United News & Media 61,542
-----------
Total United Kingdom 1,830,648
-----------
SHORT-TERM
SECURITIES - 20.0% (a)
2,850,000 Federal Home Loan Mortgage
Discount Notes,
5.85% Due 11/1/95 2,850,000
-----------
Total Investments $14,273,945 (c,d)
===========
Notes to Portfolio of Investments:
- ----------------------------------
(a) The categories of investments are shown as a percentage of total investments of
the Lutheran Brotherhood World Growth Fund.
(b) Currently non-income producing.
(c) Security Classification:
% of Portfolio Cost Value
-------------- ------------ -----------
<S> <C> <C> <C>
Common Stocks &
Warrants 79.6% $11,501,558 $11,370,833
Preferred Stocks 0.4 56,103 53,112
Short-Term 20.0 2,850,000 2,850,000
----- ----------- -----------
Total Investments 100.0% $14,407,661 $14,273,945
===== =========== ===========
(d) At October 31, 1995, the aggregate cost of securities for federal income tax
purposes was $14,409,323 and the net unrealized
depreciation of investments based on that cost was $135,378 which is comprised of
$179,710 aggregate gross unrealized appreciation and $315,088 aggregate gross
unrealized depreciation.
(e) Miscellaneous abbreviations:
(ADR) - American Depository Receipts
(ADS) - American Depository Shares
(HKD) - Denominated in Hong Kong Dollars
(USD) - Denominated in U.S. Dollars
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
Lutheran Brotherhood Fund
Portfolio of Investments
October 31, 1995
Shares Value
- ----------- ------------
<S> <C> <C> <C>
COMMON STOCKS - 98.5% (a)
Aerospace - 1.9%
187,700 Boeing Co $ 12,317,812
------------
Airlines - 0.8%
240,000 Southwest Airlines Co 4,800,000
------------
Automotive - 1.8%
270,000 General Motors Corp 11,812,500
------------
Bank & Finance - 11.7%
153,750 American International
Group, Inc 12,972,656
355,000 Banc One Corp 11,981,250
121,900 Federal National
Mortgage Association 12,784,263
124,000 First Bank System, Inc 6,169,000
100,000 First Interstate Bancorp 12,900,000
66,000 Morgan Stanley Group, Inc 5,742,000
158,000 Morgan (J.P.) and Co., Inc 12,185,750
------------
74,734,919
Broadcasting - 2.8%
54,000 Capital Cities/ABC, Inc 6,405,750 (b)
80,000 Infinity Broadcasting
Corp., Class A 2,600,000 (c)
341,000 Tele-Communications, Inc.,
TCI Group, Series A 5,797,000
129,000 Tele-Communications, Inc.,
Liberty Media Group,
Series A 3,176,625 (c)
------------
17,979,375
Chemicals - 1.9%
235,000 Air Products &
Chemicals, Inc 12,131,875
------------
Computer Software - 5.3%
50,000 America Online, Inc 4,000,000 (c)
106,000 Autodesk, Inc 3,604,000
120,000 Computer Associates
International, Inc 6,600,000
128,000 Microsoft Corp 12,800,000 (c)
165,000 Oracle Systems Corp 7,198,125 (c)
------------
34,202,125
Computers & Office
Equipment - 5.5%
135,600 Compaq Computer Corp 7,559,700 (c)
70,000 Digital Equipment Corp 3,788,750 (c)
133,000 International Business
Machines 12,934,250
136,900 Silicon Graphics, Inc 4,551,925 (c)
49,000 Xerox Corp 6,357,750
------------
35,192,375
Drugs & Health Care - 7.2%
308,000 Abbott Laboratories 12,243,000
88,200 Amgen, Inc 4,233,600 (c)
200,000 Becton Dickinson & Co 13,000,000
222,000 Merck & Co., Inc 12,765,000
68,300 St. Jude Medical, Inc 3,636,975 (c)
------------
45,878,575
Electric Utilities - 2.1%
100,000 FPL Group, Inc 4,187,500 (b)
385,000 Southern Co 9,191,875
------------
13,379,375
Electrical Equipment - 2.0%
200,000 General Electric Co 12,650,000
------------
Electronics - 6.7%
100,000 Cypress Semiconductor Corp 3,525,000 (c)
287,000 Intel Corp 20,054,125
100,000 Lam Research Corp 6,087,500 (c)
200,000 Motorola, Inc 13,125,000
------------
42,791,625
Food & Beverage - 4.0%
176,400 Coca-Cola Co 12,678,750
44,500 Salomon, Inc.,
(Snapple, Inc., Equity-Linked
Security) 667,500
422,000 Sara Lee Corp 12,396,250 (b)
------------
25,742,500
Healthcare
Management - 2.1%
253,000 United Healthcare Corp 13,440,625
------------
Household Products - 4.1%
261,600 Gillette Co 12,654,900
165,000 Procter & Gamble 13,365,000
------------
26,019,900
Leisure & Entertainment - 1.8%
115,000 Disney (Walt) Co 6,626,875
100,000 Viacom, Inc., Class B 5,000,000 (c)
------------
11,626,875
Machinery &
Equipment - 4.0%
251,000 Caterpillar, Inc 14,087,375
333,000 Ingersoll Rand Co 11,779,875 (b)
------------
25,867,250
Mining & Metals - 2.6%
264,000 Phelps Dodge Corp 16,731,000
------------
Oil & Oil Service - 7.9%
189,000 Amoco Corp 12,072,375
260,000 Chevron Corp 12,155,000
307,000 Halliburton Co 12,740,500
133,000 Mobil Corp 13,399,750 (b)
------------
50,367,625
Paper &
Forest Products - 4.6%
333,000 International Paper Co 12,321,000
388,500 Weyerhaeuser Co 17,142,562
------------
29,463,562
Railroads - 1.9%
143,000 CSX Corp 11,976,250 (b)
------------
Restaurants - 2.0%
309,000 McDonald's Corp 12,669,000
------------
Retail - 3.8%
125,000 Federated
Department Stores 3,171,875 (c)
85,000 Gap, Inc 3,346,875
30,400 Intimate Brands, Inc 509,200 (c)
145,000 May Department Stores Co 5,691,250
530,000 Wal-Mart Stores, Inc 11,461,250
------------
24,180,450
Services - 3.2%
92,000 Automatic Data Processing, Inc 6,578,000
20,000 DST Systems, Inc 420,000 (c)
197,488 First Data Corp 13,058,894
------------
20,056,894
Telecommunications
Equipment - 0.5%
81,600 DSC Communications Corp 3,019,200 (c)
------------
Telephone &
Telecommunications - 6.3%
242,200 Ameritech Corp 13,078,800
203,000 AT&T Corp 12,992,000
52,500 NEXTEL
Communications, Inc 728,438 (c)
12,100 Paging Network, Inc 278,300 (c)
240,000 SBC Communications, Inc 13,410,000
------------
40,487,538
Total Common Stocks
(cost $543,979,616) 629,519,225
------------
U.S. Treasury - 0.3% (a)
2,000,000 U.S. Treasury Notes,
8.75%, due 10/15/1997
(cost $2,028,653) 2,115,000
------------
SHORT-TERM
SECURITIES - 1.2% (a)
Commercial Paper
4,300,000 Harvard University
5.88%, due 11/1/95 4,300,000
3,600,000 Koch Industries
5.88%, due 11/1/95 3,600,000
------------
Total Short-Term Securities
(at amortized cost) 7,900,000
------------
Total Investments
(cost $553,908,269) $639,534,225 (d)
============
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 October 31, 1995.
(c) Currently non-income producing.
(d) At October 31, 1995, the aggregate cost of securities for federal income
tax purposes was $555,097,495 and the net unrealized appreciation of
investments based on that cost was $84,436,730 which is comprised of
$91,869,020 aggregate gross unrealized appreciation and $7,432,290 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
October 31, 1995
Principal Maturity
Amount Rate Date Value
- ----------- --------- ---------- -----------
<S> <C> <C> <C> <C>
CORPORATE BONDS - 77.5% (a)
Airlines - 0.8%
$4,500,000 U.S. Air, Inc., Sr. Secured Equipment Trust, Series 1993-A-3 10.38% 3/1/13 $ 4,365,000
-----------
Automotive - 1.1%
6,000,000 Exide Corp., Sr. Notes 10.00% 4/15/05 6,465,000
-----------
Bank & Finance - 4.6%
1,800,000 American Life Holding Corp., Sr. Subordinated Notes 11.25% 9/15/04 1,881,000
1,500,000 First Nationwide Holdings, Inc., Sr. Notes 12.25% 5/15/01 1,680,000
7,950,000 GPA Delaware, Inc., Debentures 8.75% 12/15/98 7,075,500
7,000,000 Mutual Life Insurance Company of New York, Surplus Notes Zero Coupon 8/15/24 5,530,000
2,750,000 Scotsman Group, Inc., Sr. Secured Notes 9.50% 12/15/00 2,722,500
2,600,000 Terra Nova (U.K.) Holdings, plc, Sr. Notes 10.75% 7/1/05 2,814,500
5,250,000 Trizec Finance, Ltd., Sr. Notes 10.88% 10/15/05 5,302,500
-----------
27,006,000
-----------
Broadcasting - 21.4%
3,250,000 Adelphia Communications Corp., Sr. Debentures 11.88% 9/15/04 3,136,250
1,250,000 Adelphia Communications Corp., Sr. Notes 12.50% 5/15/02 1,243,750
2,650,000 Allbritton Communications Co., Sr. Subordinated Debentures 11.50% 8/15/04 2,825,562
5,075,424 American Telecasting, Inc., Sr. Discount Notes Zero Coupon 6/15/04 3,311,714
3,900,000 American Telecasting, Inc., Units Zero Coupon 8/15/05 2,213,250
7,300,000 Australis Media, Ltd., Sr. Subordinated Discount Notes Zero Coupon 5/15/03 5,292,500
5,100,000 Cablevision Industries, Debentures 9.25% 4/1/08 5,457,000
1,250,000 Comcast Corp., Convertible Subordinated Debentures 3.38% 9/9/05 1,200,000
5,250,000 Comcast Corp., Sr. Subordinated Debentures 9.13% 10/15/06 5,381,250
3,000,000 Continental Cablevision, Inc., Sr. Debentures 9.50% 8/1/13 3,165,000
5,500,000 Continental Cablevision, Inc., Sr. Subordinated Debentures 11.00% 6/1/07 6,153,125
4,750,000 Diamond Cable Co., Sr. Discount Notes Zero Coupon 9/30/04 3,253,750
5,998,839 Falcon Holdings Group, L.P., Sr. Subordinated Notes 11.00% 9/15/03 5,788,879
2,500,000 Galaxy Telecom, L.P., Sr. Subordinated Notes 12.38% 10/1/05 2,496,875
4,500,000 Granite Broadcasting Corp., Sr. Subordinated Debentures 12.75% 9/1/02 5,017,500
5,000,000 International CabelTel, Inc., Sr. Notes Zero Coupon 4/15/05 3,068,750
4,250,000 International CableTel, Inc., Convertible Subordinated Notes 7.25% 4/15/05 4,940,625
4,500,000 Jones Intercable, Inc., Sr. Notes 9.63% 3/15/02 4,753,125
8,250,000 Marcus Cable Co., Sr. Discount Notes Zero Coupon 12/15/05 4,908,750
5,200,000 NWCG Holdings Corp., Sr. Secured Discount Notes Zero Coupon 6/15/99 3,510,000
7,750,000 People's Choice T.V. Corp., Sr. Discount Notes Zero Coupon 6/1/04 4,369,062
8,250,000 Robin Media Group, Sr. Subordinated Deferred Interest Bonds 11.13% 4/1/97 8,167,500
4,500,000 Rogers Cablesystems, Inc., Sr. Secured Second Priority Notes 9.63% 8/1/02 4,601,250
6,000,000 Rogers Communications, Inc., Convertible Debentures 2.00% 11/26/05 3,067,500
900,000 Rogers Communications, Inc., Convertible Liquid Yield
Option Notes Zero Coupon 5/20/13 318,375
5,700,000 SCI Television, Inc., Sr. Second Priority Secured Notes 11.00% 6/30/05 6,056,250
5,000,000 Scott Cable Communications, Inc., Subordinated Debentures 12.25% 4/15/01 3,550,000 (c)
6,400,000 TeleWest, plc, Sr. Discount Debentures Zero Coupon 10/1/07 3,776,000
9,600,000 United International Holdings, Inc., Sr. Discount Notes Zero Coupon 11/15/99 5,832,000
3,700,000 Videotron, Ltee. (Le Groupe), Sr. Notes 10.63% 2/15/05 3,954,375
3,100,000 Wireless One, Inc., Units 13.00% 10/15/03 3,216,250
-----------
124,026,217
-----------
Building Products & Materials - 1.1%
8,500,000 Dal-Tile International, Inc., Sr. Secured Notes Zero Coupon 7/15/98 6,502,500
-----------
Computers & Office Equipment - 1.6%
4,750,000 Bell & Howell, Inc., Sr. Discount Debentures Zero Coupon 3/1/05 2,992,500
3,600,000 Dictaphone Corp., Sr. Subordinated Notes 11.75% 8/1/05 3,600,000
3,600,000 Unisys Corp., Convertible Subordinated Notes 8.25% 8/1/00 2,970,000
-----------
9,562,500
-----------
Conglomerates - 0.5%
500,000 Jordan Industries, Inc., Sr. Notes 10.38% 8/1/03 460,000
4,250,000 Jordan Industries, Inc., Sr. Subordinated Discount Debentures Zero Coupon 8/1/05 2,571,250
-----------
3,031,250
-----------
Construction & Home Building - 0.4%
2,500,000 Peters (J.M.) Co., Inc., Sr. Notes 12.75% 5/1/02 2,287,500
-----------
Containers & Packaging - 0.9%
3,300,000 Owens-Illinois, Inc., Sr. Subordinated Notes 9.75% 8/15/04 3,456,750
2,050,000 Silgan Holdings, Inc., Sr. Discount Debentures Zero Coupon 12/15/02 1,942,375
-----------
5,399,125
-----------
Drugs & Health Care - 1.7%
5,600,000 Dade International, Inc., Sr. Subordinated Notes 13.00% 2/1/05 6,132,000
3,775,800 General Medical Corp., Payment-In-Kind Debentures 12.13% 8/15/05 3,983,469
-----------
10,115,469
-----------
Electric Utilities - 1.9%
2,000,000 El Paso Electric Co. (Del Norte Funding Corp.),
Secured Lease Obligation Bonds 11.25% 1/2/14 1,267,108 (c)
1,500,000 El Paso Electric Co. (El Paso Funding Corp.),
Lease Obligation Bonds 10.75% 4/1/13 950,385 (c)
4,450,000 El Paso Electric Co. (El Paso Funding Corp.),
Lease Obligation Bonds 10.38% 1/2/11 2,819,497 (c)
1,750,000 Midland Cogen Venture Fund II, Secured Lease
Obligation Bonds, Series A 11.75% 7/23/05 1,855,473
3,600,000 Midland Cogen Venture Fund II, Subordinated
Secured Lease Obligation Bonds 13.25% 7/23/06 3,978,641
-----------
10,871,104
-----------
Electrical Equipment - 1.6%
2,650,000 ADT Operations, Inc., Liquid Yield Option Notes Zero Coupon 7/6/10 1,192,500
6,050,000 Protection One Alarm Monitoring, Inc.,
Sr. Subordinated Discount Notes Zero Coupon 6/30/05 4,310,625
3,750,000 Telex Communications, Inc., Sr. Notes 12.00% 7/15/04 3,881,250
-----------
9,384,375
-----------
Food & Beverage - 2.6%
5,000,000 Curtice-Burns Food, Inc., Sr. Subordinated Notes 12.25% 2/1/05 5,225,000
3,000,000 Dr. Pepper Bottling Holdings, Sr. Notes Zero Coupon 2/15/03 2,377,500
5,300,000 Fresh Del Monte Corp., Sr. Notes 10.00% 5/1/03 4,425,500
6,400,000 Specialty Foods Acquisition Co.,
Sr. Secured Discount Debentures, Series B Zero Coupon 8/15/05 2,880,000
-----------
14,908,000
-----------
Hospital Management - 3.5%
3,250,000 Charter Medical Corp., Sr. Subordinated Notes 11.25% 4/15/04 3,534,375
3,825,000 Integrated Health Services Inc., Sr. Subordinated Notes 9.63% 5/31/02 3,891,937
7,150,000 Regency Health Services, Inc., Sr. Subordinated Notes 9.88% 10/15/02 7,141,062
5,600,000 Tenet Healthcare Corp., Sr. Subordinated Notes 10.13% 3/1/05 6,019,999
-----------
20,587,373
-----------
Household Products - 2.0%
18,000,000 Coleman Worldwide Corp.,
Convertible Liquid Yield Option Notes Zero Coupon 5/27/13 5,445,000
3,250,000 JB Williams Holdings, Inc., Sr. Notes 12.00% 3/1/04 3,266,250
3,000,000 Pace Industries, Inc., Sr. Notes, Series B 10.63% 12/1/02 2,775,000
-----------
11,486,250
-----------
Leisure & Entertainment - 1.8%
2,700,000 Bally's Health & Tennis Corp., Sr. Subordinated Notes 13.00% 1/15/03 2,376,000
5,000,000 Host Marriott Travel Plazas, Secured Notes 9.50% 5/15/05 4,925,000
3,000,000 IMAX Corp., Sr. Notes 7.00% 3/1/01 2,902,500
-----------
10,203,500
-----------
Mining & Metals - 0.4%
2,500,000 EnviroSource, Inc., Sr. Notes 9.75% 6/15/03 2,262,500
-----------
Oil & Gas - 3.6%
4,000,000 Gulf Canada Resources, Ltd., Sr. Subordinated Notes 9.63% 7/1/05 4,158,996
6,500,000 Kelley Oil & Gas Corp., Sr. Notes 13.50% 6/15/99 5,557,500
500,000 Petroleum Heat & Power Co., Inc., Subordinated Debentures 9.38% 2/1/06 475,000
6,400,000 Petroleum Heat & Power Co., Inc., Subordinated Debentures 12.25% 2/1/05 7,072,000
3,400,000 Sherritt, Inc., Debentures 10.50% 3/31/14 3,527,500
-----------
20,790,996
-----------
Paper & Forest Products - 2.2%
2,500,000 Container Corp. of America, Sr. Notes 11.25% 5/1/04 2,643,750
3,900,000 Gaylord Container Corp., Sr. Subordinated Debentures Zero Coupon 5/15/05 3,812,250
3,850,000 Malette, Inc., Sr. Secured Notes 12.25% 7/15/04 4,292,750
2,250,000 Repap New Brunswick, Second Priority Secured Notes 10.63% 4/15/05 2,306,250
-----------
13,055,000
-----------
Publishing & Printing - 2.6%
2,500,000 K-III Communications Corp., Sr. Notes 10.25% 6/1/04 2,668,750
9,250,000 Neodata Services, Inc., Sr. Notes Zero Coupon 5/1/03 8,232,500
3,500,000 News America Holdings, Inc., Convertible Liquid Yield
Option Notes Zero Coupon 3/11/13 1,553,125
750,000 News America Holdings, Inc., Subordinated Notes Zero Coupon 3/31/02 663,750
2,000,000 Sullivan Graphics, Inc., Sr. Subordinated Notes 12.75% 8/1/05 1,970,000
-----------
15,088,125
-----------
Retail - 6.8%
4,850,000 Di Giorgio Corp., Sr. Notes 12.00% 2/15/03 3,746,625
5,400,000 Dominick's Finer Foods, Sr. Subordinated Notes 10.88% 5/1/05 5,710,500
2,250,000 F & M Distributors, Inc., Sr. Subordinated Notes 11.50% 4/15/03 78,750 (c)
4,750,000 Farm Fresh, Inc., Sr. Notes 12.25% 10/1/00 3,942,500
1,500,000 Penn Traffic Co., Sr. Subordinated Debentures 9.63% 4/15/05 1,085,625
2,200,000 Purity Supreme, Notes, Series B 11.75% 8/1/99 2,400,750
8,500,000 Ralph's Supermarkets, Inc., Sr. Subordinated Notes 11.00% 6/15/05 8,287,500
4,500,000 Smitty's SuperValu, Inc., Sr. Subordinated Notes, Series B 12.75% 6/15/04 4,387,500
8,800,000 TLC Beatrice International Holdings, Sr. Secured Notes 11.50% 10/1/05 8,756,000
5,000,000 Wherehouse Entertainment, Inc., Sr. Subordinated Notes 13.00% 8/1/02 1,025,000 (c)
-----------
39,420,750
-----------
Services - 0.5%
750,000 Flagstar Corp., Sr. Subordinated Debentures 11.38% 9/15/03 558,750
2,950,000 Flagstar Corp., Sr. Subordinated Debentures 11.25% 11/1/04 2,153,500
-----------
2,712,250
-----------
Telecommunications - 13.8%
4,600,000 A+ Communications Inc., Sr. Suboridinated Notes 11.88% 11/1/05 4,634,500
7,300,000 Call-Net Enterprises, Inc., Sr. Discount Notes Zero Coupon 12/1/04 5,164,750
3,900,000 CenCall Communications Corp.,
Sr. Redeemable Discount Notes Zero Coupon 1/15/04 2,076,750
2,100,000 Comcast Cellular, Inc., Sr.
Participation Redeemable Notes, Series B Zero Coupon 3/5/00 1,606,500
5,250,000 Comcast Cellular, Inc., Sr. Redeemable Notes Zero Coupon 3/5/00 4,016,250
1,500,000 Dial Call Communications, Inc., Sr. Discount Notes Zero Coupon 4/15/04 802,500
3,850,000 Dial Call Communications, Inc., Sr. Discount Notes Zero Coupon 12/15/05 1,896,125
3,250,000 General Instrument, Convertible Jr. Subordinated Notes 5.00% 6/15/00 3,282,500
6,100,000 Horizon Cellular Telephone Co.,
Sr. Subordinated Discount Notes Zero Coupon 10/1/00 5,215,500
6,900,000 In-Flight Phone Corp., Unit Debentures Zero Coupon 5/15/02 2,932,500
9,000,000 IntelCom Group (U.S.A.), Inc., Unit Notes Zero Coupon 9/15/05 5,085,000
7,000,000 Intermedia Communications of FL, Sr. Notes 13.50% 6/1/05 7,665,000
7,250,000 IXC Communications, Inc., Sr. Notes, Series A 13.00% 10/1/05 7,413,125
5,250,000 MobileMedia Communications, Inc., Sr. Subordinated
Deferred Coupon Notes Zero Coupon 12/1/03 3,937,500
8,500,000 PageMart Nationwide, Inc., Sr. Discount Exchange Notes Zero Coupon 2/1/05 5,312,500
5,000,000 Rogers Cantel Mobile, Inc., Sr. Subordinated Notes 11.13% 7/15/02 5,287,500
2,150,000 USA Mobile Communications, Inc., Sr. Notes 14.00% 11/1/04 2,483,250
2,250,000 USA Mobile Communications, Inc., Sr. Notes 9.50% 2/1/04 2,160,000
8,000,000 Viatel, Inc., Sr. Discount Notes Zero Coupon 1/15/05 4,200,000
3,200 WinStar Communications, Inc., Units, (each unit consists
of $2,000 principal amount of senior discount notes and
$1,000 principal amount of convertible senior subordinated
discount notes) Zero Coupon 10/15/05 5,008,000
-----------
80,179,750
-----------
Transportation - 0.1%
1,950,000 Burlington Motor Holdings, Inc., Sr. Subordinated Notes 11.50% 11/1/03 653,250 (c)
-----------
Total Corporate Bonds (cost $448,738,845) 450,363,784
-----------
FOREIGN GOVERNMENT BONDS - 0.7% (a,f)
2,200,000 Argentina, (Republic of), Par Bond 5.00% 3/31/23 1,045,000
5,730,523 Brazil, (Republic of), Emerging Markets (Brady Bonds) 8.00% 4/15/14 2,917,209
-----------
Total Foreign Government Bonds (cost $3,794,667) 3,962,209
-----------
PREFERRED STOCKS - 11.6% (a)
48,101 Berg Electronics Holding Corp., Preferred Stock 1,382,904
36,000 Cablevision Systems Corp., Redemption Exchange Preferred Stock, Series G 3,699,000
32,000 California Federal Bank, Preferred Stock 3,456,000
117,000 Chevy Chase Savings Bank, Preferred Stock 3,524,625
270 Communications & Power Industries, Inc., Preferred Units 2,889,000
945 Communications & Power Industries, Inc., Preferred Stock 94,500
5,150 Consolidated Hydro, Inc., Preferred Stock 2,627,788 (b)
23,500 EnviroSource, Inc., Jr. Convertible Preferred Stock 3,137,250 (b)
42,500 First Nationwide Bank, Noncummulative Preferred Stock 4,823,750
100,000 Flagstar Cos., Convertible Preferred Stock, Series A 1,325,000
45,500 Grand Union Holdings Corp., Preferred Stock 0 (c,d)
165,000 Granite Broadcasting Corp., Convertible Preferred Stock 8,497,500
196,465 Harvard Industries, Inc., Exchangeable Payment-In-Kind Preferred Stock 5,353,671
20,257 K-III Communications Corp., Payment-In-Kind Preferred Stock, Series B 1,944,665
93,000 K-III Communications Corp., Preferred Stock 2,522,625
110,000 MFS Communication, Inc., 8% Cummulative Convertible Preferred Stock 4,345,000
87,000 Network Imaging Corp., Convertible Preferred Stock 1,402,875
90,000 Newscorp Overseas Limited, Cummulative Guaranteed Preferred Stock 2,272,500
7,172 PanAmSat Corporation, Convertible Preferred Stock 7,799,550
74,942 Riggs National Corp., Preferred Stock 2,126,479
122,500 River Bank America, Preferred Stock 2,894,063
16,750 Storage Technology Corp., Convertible Preferred Stock 963,125
25,000 Unisys Corp., Convertible Preferred Stock, Series A 687,500
-----------
Total Preferred Stocks (cost $66,867,037) 67,769,370
-----------
COMMON STOCKS & STOCK WARRANTS - 4.8% (a)
95,000 ADT Limited, Common Stock 1,330,000 (b)
28,000 American Telecasting, Inc., Stock Warrants 91,000 (b)
32,000 AmeriSource Health Corp., Class A Common Stock 872,000 (b)
10,700 Arcadian Corp., Stock Warrants 1,177,000 (b,d)
144,360 Arch Communications Group, Common Stock 3,915,765 (b)
60,000 Bell & Howell Holdings Co., Common Stock 1,500,000 (b)
88,600 Berg Electronics Holdings Corp., Common Stock 531,600 (b,d)
109,948 Charter Medical Corp., Common Stock 1,979,064 (b)
9,270 Consolidated Hydro, Inc., Stock Warrants 37,080 (b,d)
1,500 Dial Page Communications, Inc., Stock Warrants 1,875 (b)
3,086 Dial Page Communications, Inc., Stock Warrants 3,858 (b)
75,500 Envirotest Systems Corp., Common Stock 273,688 (b)
6,000 Federated Dept. Stores, Inc., Stock Warrants 15,000 (b)
152,013 Gaylord Container Corp., Class A Common Stock 1,159,099 (b)
154,623 Gaylord Container Corp., Stock Warrants 1,111,353 (b)
27,000 General Instrument Corp., Common Stock 513,000 (b)
14,905 Grand Union Co., Stock Warrants 14,160 (c)
29,811 Grand Union Co., Stock Warrants 4,472 (c)
100,000 Harvard Industries, Inc., Class B Common Stock 2,762,500 (b)
160,000 IntelCom Group (U.S.A.), Inc., Common Stock 1,740,000 (b)
7,000 Intermedia Communications of FL, Stock Warrants 70,000 (b)
22,333 International Cabletel, Inc., Common Stock 591,825 (b)
32,180 JPS Textiles Group, Common Stock 321,800 (b)
143,834 Memorex Telex, N.V., Common Stock 125,855 (b)
3,981 Memorex Telex, N.V., Stock Warrants 40 (b)
2,153 MFS Communications Co., Inc., Common Stock 86,927 (b)
15,000 News Corp., Ltd, ADR, Ordinary Shares, Common Stock 273,750
30,000 News Corp., Ltd, ADR, Preference Shares, Common Stock 596,250
26,250 PageMart Nationwide, Inc., Common Stock 242,813 (b)
19,200 Payless Cashways, Inc., Stock Warrants 4,800 (b)
110,000 Plantronics, Inc., Common Stock 3,671,250 (b)
4,500 Terex Corp., Stock Appreciation Rights 225 (b,d,e)
20,000 Triangle Wire & Cable, Inc., Stock Warrants 0 (b,d)
18,200 United International Holdings, Inc., Stock Warrants 546,000 (b)
288,800 Viatel, Inc., Common Stock 1,155,200 (b,d)
80,000 Wireless One, Inc., Common Stock 940,000 (b)
-----------
Total Common Stocks & Stock Warrants (cost $22,883,404) 27,659,249
-----------
Principal Maturity
Amount Rate Date
- -------------- ----------- -----------
SHORT -TERM SECURITIES - 5.4% (a)
Commercial Paper - 5.4%
$14,300,000 Associates Corp. of North America 5.90% 11/1/95 14,300,000
6,809,000 Centerior Fuel Corp. 5.75% 11/6/95 6,803,562
5,000,000 Nestle Capital Corp. 5.69% 11/2/95 4,999,210
5,000,000 Sears Roebuck Acceptance Corp. 5.76% 11/8/95 4,994,400
-----------
Total Short-Term Securities (at amortized cost) 31,097,172
-----------
Total Investments (cost $573,381,125) $580,851,784 (g)
===========
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) Currently non-income producing.
(c) Currently non-income producing and in default.
(d) Denotes restricted securities. These securities have been valued from the date of acquisition through
October 31, 1995, by obtaining
quotations from brokers who are active with the issues. The following table indicates the acquisition date
and cost of restricted
securities the Fund owned as of October 31, 1995.
Aquisition
Security Date Cost
-------------------------------------------- ------------- -------------
<S> <C> <C>
Arcadian Corp., Stock Warrants 2/6/92 $ 290,000
Berg Electronics Holding Corp., Common Stock 4/21/93 82,196
Consolidated Hydro, Inc., Stock Warrants 2/8/94 202,776
Grand Union Holdings Corp., Preferred Stock 6/14/93 5,218,975
Terex Corp., Stock Appreciation Rights 7/27/92 11,250
Triangle Wire & Cable, Inc., Stock Warrants 1/3/92 1,998
Viatel, Inc., Common Stock 8/15/95 1,084,601
(e) Includes stock rights that automatically traded with the stock and had no separate value at October 31,
1995.
(f) Denominated in U.S. Dollars.
(g) At October 31, 1995, the aggregate cost of securities for federal income tax purposes was $573,479,773
and the net unrealized
appreciation of investments based on that cost was $7,372,011 which is comprised of $41,238,107 gross
unrealized appreciation and $33,866,096 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
October 31, 1995
Principal Maturity
Amount Rate Date Value
- ---------------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Corporate Bonds 29.3% (a)
Bank & Finance - 12.9%
$ 3,000,000 Associates Corp. of North America, Notes 10.75% 11/1/95 $ 3,000,000
7,500,000 Associates Corp. of North America, Notes 6.63% 5/15/98 7,612,117
13,000,000 Associates Corp. of North America, Sr. Notes 9.13% 4/1/00 14,263,275
6,000,000 Citicorp, Subordinated Debentures 7.13% 9/1/05 6,174,666
6,000,000 Dresdner Bank- New York, Subordinated Notes 7.25% 9/15/15 6,137,352
20,000,000 General Electric Capital Corp., Debentures 8.85% 4/1/05 23,268,260
9,000,000 Nationwide CSN Trust, Trust Notes 9.88% 2/15/25 10,338,750
8,000,000 New York Life Insurance Co., Surplus Notes 6.40% 12/15/03 7,847,216
4,000,000 Norwest Corp., Medium Term Notes, Series G 6.38% 9/15/02 3,995,692
6,000,000 Reliastar Financial Corp., Sr. Notes 8.63% 2/15/05 6,599,184
9,000,000 Societe-Generale, Subordinated Notes 9.88% 7/15/03 10,758,834
7,500,000 Swiss Bank Corp., Subordinated Debentures, (New York Branc 7.50% 7/15/25 7,827,923
15,000,000 The Prudential Insurance Co. of America, Surplus Notes 7.65% 7/1/07 15,357,900
8,000,000 The Prudential Insurance Co. of America, Surplus Notes 8.30% 7/1/25 8,168,240
--------------
131,349,409
--------------
Broadcasting - 0.6%
6,000,000 Cox Communications, Inc., Notes 6.38% 6/15/00 6,011,856
--------------
Chemicals - 0.8%
3,000,000 Methanex Corp., Notes 7.40% 8/15/02 3,022,500
5,500,000 Methanex Corp., Notes 7.75% 8/15/05 5,665,000
--------------
8,687,500
--------------
Computers & Office Equipment - 1.1%
11,000,000 Electronic Data Systems Corp., Notes 6.85% 5/15/00 11,151,250
--------------
Electric Utilities - 2.5%
5,000,000 Arizona Public Service Co., First Mortgage Bonds 9.50% 4/15/21 5,607,945
7,085,000 DQU Funding Corp., Collateralized Lease Obligation Bonds 7.23% 12/1/99 7,122,132
7,000,000 Texas Utilities Electric Co., First Mortgage Bonds 7.38% 10/1/25 6,821,829
5,000,000 Virginia Electric & Power Co., Debentures 8.63% 10/1/24 5,627,690
--------------
25,179,596
--------------
Food & Beverage - 0.8%
8,000,000 Nabisco, Inc., Notes 6.70% 6/15/02 7,993,880
--------------
Household Products - 1.2%
10,000,000 Procter & Gamble, Guaranteed ESOP Debentures 9.36% 1/1/21 12,642,520
--------------
Natural Gas - 1.4%
6,000,000 Coastal Corp., Sr. Debentures 9.75% 8/1/03 6,967,878
6,000,000 Coastal Corp., Sr. Notes 10.38% 10/1/00 6,911,274
--------------
13,879,152
--------------
Paper & Forest Products - 1.0%
9,000,000 Georgia Pacific Corp., Debentures 8.63% 4/30/25 9,706,581
--------------
Petroleum - 1.8%
7,628,193 Mobil Oil Corp, ESOP Sinking Fund Debentures 9.17% 2/29/00 8,158,222
10,000,000 Texaco Capital, Inc., Debentures 7.50% 3/1/43 10,350,100
--------------
18,508,322
--------------
Pollution Control - 0.5%
5,000,000 Browning-Ferris Industries, Inc., Debentures 7.40% 9/15/35 5,108,000
--------------
Retail - 1.1%
9,000,000 Dayton Hudson Corp., Debentures 8.50% 12/1/22 9,568,665
2,000,000 K-Mart Corp., Pass Through Certificates, Series 1995-K-4 9.35% 1/2/20 1,860,258
--------------
11,428,923
--------------
Telecommunications - 0.6%
6,000,000 TCI Communications, Inc., Sr. Notes 8.00% 8/1/05 6,228,240
--------------
Telephone - 3.0%
10,000,000 AT&T Corp., Debentures 8.35% 1/15/25 11,039,450
4,000,000 New York Telephone Co., Debentures 9.38% 7/15/31 4,641,236
15,000,000 U.S. West Communications, Inc., Debentures 7.13% 11/15/43 14,713,710
--------------
30,394,396
--------------
Total Corporate Bonds (cost $287,549,865) 298,269,625
--------------
FOREIGN GOVERNMENT BONDS - 10.1% (a,c)
8,000,000 African Development Bank, Subordinated Notes 6.88% 10/15/15 7,978,080
5,000,000 African Development Bank, Subordinated Notes 7.75% 12/15/01 5,368,035
20,325,000 British Columbia Hydro & Power, Debentures 15.50% 7/15/11 22,964,180
4,000,000 Inter American Development Bank, Notes 7.00% 6/15/25 4,110,956
14,000,000 International Bank for Reconstruction &
Development, Debentures 12.38% 10/15/02 18,755,842
7,500,000 Malayan Banking Berhad- New York Branch,
Subordinated Notes 7.13% 9/15/05 7,572,262
5,000,000 Ontario Province, Canada, Debentures 11.75% 4/25/13 5,840,645
10,000,000 Ontario Province, Canada, Debentures 15.13% 5/1/11 11,022,290
13,000,000 Ontario Province, Canada, Sr. Secured Notes 7.75% 6/4/02 13,949,637
5,000,000 Tenaga Nasional Berhad, Debentures 7.50% 11/1/25 4,966,660
--------------
Total Foreign Government Bonds (cost $106,622,673) 102,528,587
--------------
ASSET-BACKED SECURITIES - 12.1% (a)
6,000,000 Chemical Master Credit Card Trust 1, 6.23% Asset Backed
Certificates, Series 1995-2-A 6.23% 6/15/03 6,037,734
15,000,000 Household Affinity Master Trust, Series 1993-1-A 6.08% 9/15/00 15,057,885 (b)
10,125,205 IBM Credit Receivables Lease Trust, Series 1993-1 4.55% 11/15/00 10,010,263
25,000,000 ITT Floorplan Receivable Master Trust, Series 1994-1-A 6.08% 2/15/01 25,100,225 (b)
18,000,000 NationsBank Credit Card Master, Series 1995-A 6.45% 4/15/03 18,282,042
19,000,000 Prime Credit Card Master Trust, Series 1995-1-A 6.75% 11/15/05 19,560,671
10,000,000 Sears Credit Account Master Trust II, Master Trust Certificates,
Series 1995-4-A 6.25% 1/15/03 10,091,190
19,000,000 Standard Credit Master Trust 1, Credit Card Participation
Certificates, Series 1995-9-A 6.55% 10/7/07 19,023,161
--------------
Total Asset-Backed Securities (cost $122,157,801) 123,163,171
--------------
MORTGAGE-BACKED SECURITIES - 17.9% (a)
55,107,587 Federal National Mortgage Association,
Participation Certificates 6.50% 3/1/25 53,701,186
83,000,000 Federal National Mortgage Association,
Participation Certificates 6.5 - 7.0% 2025 81,750,313 (d)
46,947,855 Government National Mortgage Association,
Modified Pass Through Certificates 7.00% 2024 - 2025 46,711,132
--------------
Total Mortgage-Backed Securities (cost $177,826,509) 182,162,631
--------------
U.S. GOVERNMENT AGENCIES - 0.6% (a)
6,000,000 Tennessee Valley Authority, Power Bonds, Series 1994-A
(cost $5,924,780) 7.85% 6/15/44 6,135,000
--------------
U.S. GOVERNMENT - 19.5% (a)
82,500,000 U.S. Treasury Bonds 7.625 - 12.0% 2003 - 2025 111,088,726
81,500,000 U.S. Treasury Notes 6.5 - 9.25% 1998 - 2005 87,272,549
--------------
Total U.S. Government (cost $194,356,501) 198,361,275
--------------
Shares
- --------------
COMMON STOCKS - 0.2% (a)
30,000 Texaco, Inc., with stock rights attached (cost $1,900,225) 2,043,750
--------------
OPTIONS ON U.S. TREASURY BOND FUTURES - .001% (a)
U.S. Treasury Bond Futures, 50 call option contracts,
exercise price of $119, expires
November 18, 1995 (cost $27,873) 14,844
--------------
Principal
Amount
- --------------
SHORT-TERM SECURITIES - 10.3% (a)
Commercial Paper - 7.9%
20,000,000 Cargill, Inc 5.68% 11/8/95 19,977,911
3,100,000 Koch Industries 5.88% 11/1/95 3,100,000
13,600,000 Metlife Funding, Inc 5.72% 11/10/95 13,580,552
5,000,000 Metlife Funding, Inc 5.70% 11/10/95 4,992,875
20,000,000 Nestle Capital Corp 5.71% 11/9/95 19,974,622
14,000,000 UBS Finance (Delaware), Inc 5.90% 11/1/95 14,000,000
5,000,000 Wal-Mart Stores, Inc 5.72% 11/2/95 4,999,206
--------------
80,625,166
--------------
U.S. Government Agencies - 2.4%
9,000,000 Federal Home Loan Mortgage Corp., Discount Notes 5.60% 11/13/95 8,983,200
15,703,000 Federal Home Loan Mortgage Corp., Discount Notes 5.61% 11/13/95 15,673,635
--------------
24,656,835
--------------
Total Short-Term Securities (at amortized cost) 105,282,001
--------------
Total Investments (cost $1,001,648,228) $1,017,960,884 (e)
==============
Notes to Protfolio of Investments:
- ----------------------------------
(a) The categories of investments are shown as a percentage of total investments of the Lutheran Brotherhood
Income Fund.
(b) Denotes variable rate obligations for which current yield is shown.
(c) Denominated in U.S. dollars.
(d) Denotes investments purchased on a when-issued basis.
(e) At October 31, 1995, the aggregate cost of securities for federal income tax purposes was $1,001,785,669
and the net unrealized appreciation of investments based on that cost was $16,175,215 which is comprised of
$24,909,061 aggregate gross unrealized appreciation and $8,733,846 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
October 31, 1995
Principal Maturity
Amount Rate Date Value
- ------------ --------- ---------- ------------
LONG-TERM MUNICIPAL SECURITIES - 99.8% (a)
Alabama - 0.4%
<S> <C> <C> <C> <C>
$2,000,000 Huntsville, Alabama, General Obligation Warrants, Series B 7.875% 8/1/2012 $ 2,164,700
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 2,219,724(b)
1,500,000 Tucson, Arizona, Unlimited Tax
General Obligation Refunding Bonds 6.1% 7/1/2012 1,564,365(e)
------------
3,784,089
------------
Arkansas - 0.6%
1,340,000 Arkansas Development Finance Authority, Correctional
Facilities Construction Revenue Bonds 7.125% 11/15/2010 1,454,959(b)
1,000,000 Arkansas Housing Development Agency,
Single Family Mortgage Bonds, Series A 8.375% 7/1/2010 1,259,840(c)
875,000 Pope County, Arkansas, Pollution Control Revenue Refunding Bonds,
Series 1994, (Arkansas Power and Light Co. Project) 6.3% 12/1/2016 924,053(g)
------------
3,638,852
------------
California - 9.7%
2,500,000 Alameda, California, Unified School District, Alameda County,
Crossover Refunding Bonds, Series A 6.1% 7/1/2013 2,560,500(d)
2,000,000 Alameda County, California, Certificates of Participation,
Revenue Refunding Bonds, Santa Rita Jail Project 5.375% 6/1/2009 2,016,220(b)
1,000,000 California Educational Facilities Authority (Stanford University),
Revenue Bonds 5.0% 1/1/2015 920,040
4,400,000 California State Department of Water Resources (Central Valley
Project),Water System Revenue Bonds, Series H 6.9% 12/1/2025 4,915,152(c)
3,000,000 California State Public Works Board, Department of Corrections,
Lease Revenue Bonds, State Prison, Series A 7.4% 9/1/2010 3,508,830
2,000,000 California State Public Works Board, Lease Revenue Refunding
Bonds (Department of Corrections, Various State Prisons),
Series 1993-A 5.25% 12/1/2008 2,011,200(d)
2,490,000 California Statewide Communities Development Authority,
Certificates of Participation,
(The Trustees of the J. Paul Getty Trust) 5.0% 10/1/2015 2,278,400
1,000,000 California State, Unlimited Tax General Obligation Bonds,
Veteran's Series AT 9.5% 2/1/2010 1,398,710
2,000,000 California State, Various Purpose General Obligation Bonds 6.3% 9/1/2010 2,184,000(d)
1,000,000 Central Valley Financing Authority, California,
Cogeneration Project Revenue Bonds, (Carson Ice-Gen Project),
Series 1993 6.0% 7/1/2009 1,004,260
1,900,000 El Cajon, California, Redevelopment Agency Tax Allocation
Refunding Bonds (El Cajon Redevelopment Project) 6.6% 10/1/2022 2,007,996(d)
2,000,000 Metropolitan Water District of Southern California,
Unlimited Tax General Obligation Bonds, Series G 6.625% 3/1/2009 2,147,080(c)
2,000,000 Rancho, California, Water District Financing Authority,
Revenue Refunding Bonds 5.9% 11/1/2015 2,036,140(e)
2,145,000 Rancho, California, Water District Financing Authority,
Revenue Refunding Bonds, Series A 4.875% 8/1/2015 1,915,657(e)
1,000,000 Rio Linda, California, Union School District, Series 1992-A 7.4% 8/1/2010 1,147,710(d)
2,815,000 Riverside County Transportation Commission, California,
Sales Tax Revenue Capital Appreciation Bonds Zero Coupon 6/1/2004 1,852,186(b)
1,000,000 Sacramento, California, Cogeneration Authority,
Cogeneration Project Revenue Bonds,
(Procter & Gamble Project), 1995 Series 6.375% 7/1/2010 1,028,490
2,000,000 Sacramento, California, Municipal Utility District,
Electric Revenue Bonds, Series Y 6.75% 9/1/2009 2,184,660(b)
1,500,000 San Francisco Bay Area Rapid Transit District, California,
Sales Tax Revenue Refunding Bonds, Series 1990 6.75% 7/1/2010 1,713,015(b)
15,000,000 San Joaquin Hills Transportation Corridor Agency,
California, Sr. Lien Convertible Toll Revenue Bonds Zero Coupon 1/1/2013 10,935,150
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 2,722,170(b)
1,500,000 State of California, General Obligation Bonds 7.0% 8/1/2006 1,734,705
2,000,000 University of California Revenue Bonds,
Multiple Purpose Projects, Series C 4.75% 9/1/2015 1,756,440(d)
2,490,000 University of California Revenue Bonds,
Multiple Purpose Projects, Series 1989-B 11.0% 9/1/1998 2,944,774(d)
1,000,000 University of California, Housing System Revenue Bonds,
Series A 5.25% 11/1/2012 957,710(b)
------------
59,881,195
------------
Colorado - 6.1%
3,000,000 Arapahoe County, Colorado, E-470 Public Highway Authority,
Capital Improvement Trust Fund, Highway Revenue Bonds,
(E-470 Project) 6.95% 8/31/2020 3,169,470
920,000 Colorado Housing & Finance Authority, Single Family Residential
Housing Revenue Bonds, Series 1987-B 9.0% 9/1/2017 959,505
3,100,000 Colorado Springs, Colorado, Utilities System Refunding Bonds,
Series 1991-B 7.0% 11/15/2021 3,543,982(c)
710,000 Colorado Springs, Colorado, Utilities System Refunding Revenue
Bonds, Series 1985-A 9.5% 11/15/2015 711,328(c)
1,945,000 Colorado State Colleges Board, Western State College, Housing &
Student Fee Revenue Bonds, Series 1992 6.625% 5/1/2015 2,187,055(c,f)
1,195,000 Colorado Water Resources Power Development Authority, Clean
Water Revenue Bonds, Series A 6.25% 9/1/2013 1,248,727(g)
2,350,000 Denver, Colorado, City & County Revenue Bonds, Sisters of
Charity of Leavenworth 5.0% 12/1/2023 2,078,998
2,680,000 Douglas County School District Number RE-1, Colorado,
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 2,770,959
2,000,000 Douglas County School District Number RE-1, Colorado,
Douglas & Elbert Counties, Colorado,
General Obligation Bonds 6.5% 12/15/2016 2,139,020(b)
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 1,074,240(e)
1,885,000 Goldsmith Metropolitan District, Colorado, Unlimited Tax
General Obligation Bonds Zero Coupon 12/1/2008 949,852(b)
1,890,000 Goldsmith Metropolitan District, Colorado, Unlimited Tax
General Obligation Bonds Zero Coupon 6/1/2008 983,669(b)
1,890,000 Goldsmith Metropolitan District, Colorado, Unlimited Tax
General Obligation Bonds Zero Coupon 6/1/2007 1,041,938(b)
3,000,000 Larimer County, Colorado, School District No. R-2,
Poudre Valley Unlimited Tax General Obligation Bonds 7.0% 12/15/2016 3,557,730(b)
2,300,000 Metropolitan Wastewater Reclamation District, Colorado,
Gross Revenue Refunding Bonds, Series B 4.75% 4/1/2012 2,101,027(b)
4,485,000 Regional Transportation District, Colorado, Sales Tax
Revenue Refunding & Improvement Bonds, Series 1992 6.25% 11/1/2012 4,706,111(e)
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 3,074,150(b)
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 1,651,825(b)
------------
37,949,586
------------
Connecticut - 1.1%
4,000,000 Connecticut Special Tax Obligation, Transportation Infrastructure
Revenue Bonds, Series B 6.5% 10/1/2010 4,429,040
1,000,000 Connecticut State Health & Education Facilities Authority,
Revenue Bonds, Hospital of St. Raphael, Series H 5.25% 7/1/2012 982,500(d)
1,515,000 Connecticut State Health & Education Facilities Authority,
Revenue Bonds, Lawrence & Memorial Hospital, Series D 5.0% 7/1/2022 1,372,317(b)
------------
6,783,857
------------
Florida - 2.7%
19,065,000 Broward County, Florida, Housing Finance Authority,
Home Mortgage Revenue Bonds, 1983 Series A Zero Coupon 4/1/2014 2,922,474
3,000,000 City of Jacksonville, Florida, Sales Tax Revenue Bonds,
Series 1995, (River City Renaissance Project) 5.375% 10/1/2018 2,864,910(e)
1,000,000 Florida State Board of Education, Public Education
Capital Outlay General Obligation Bonds, Series B-1 7.875% 6/1/2019 1,109,420(c)
1,500,000 Florida State Turnpike Authority, Turnpike Revenue
Refunding Bonds, (Department of Transportation), Series A 5.0% 7/1/2019 1,366,200(e)
3,200,000 Hillsborough County, Florida, Industrial Development
Authority (Weyerhaeuser Co., Inc.), Industrial
Revenue Bonds, Series 1983 9.25% 6/1/2008 3,276,416
1,705,000 Hillsborough County, Florida, Industrial Development Authority,
Florida, (Tampa Electric Project), Pollution Control
Revenue Bonds, Series 1991 7.875% 8/1/2021 1,992,003
3,000,000 Lee County, Florida, Transportation Facilities,
Revenue Bonds, Series 1995 5.75% 10/1/2022 3,004,950(b)
------------
16,536,373
------------
Georgia - 2.6%
1,500,000 Brunswick, Georgia, Water & Sewer Revenue Refunding &
Improvement Bonds, Series A 6.1% 10/1/2019 1,610,475(b)
2,000,000 Brunswick, Georgia, Water & Sewer Revenue Refunding &
Improvement Bonds, Series 1992 6.0% 10/1/2011 2,111,540(b)
5,000,000 Cherokee County, Georgia, Water & Sewer Revenue Refunding &
Improvement Bonds 5.5% 8/1/2018 4,904,150(b)
1,000,000 Georgia State, Unlimited Tax General Obligation Bonds,
Series B 6.3% 3/1/2009 1,106,760
1,000,000 Georgia State, Unlimited Tax General Obligation Bonds,
Series B 6.3% 3/1/2010 1,101,530
2,000,000 Georgia State, Unlimited Tax General Obligation Bonds,
Series 1994-B 5.65% 3/1/2012 2,080,120
3,500,000 Georgia State, Unlimited Tax General Obligation Bonds,
Series 1994-D 5.0% 8/1/2012 3,391,640
------------
16,306,215
------------
Hawaii - 0.3%
2,000,000 City & County of Honolulu, Hawaii, General Obligation
Refunding & Improvement Bonds, Series 1993-B 5.5% 10/1/2011 2,023,180
Idaho - 0.5%
3,115,000 Idaho Falls, Idaho, General Obligation Electric Refunding Bonds,
Series 1991 Zero Coupon 4/1/2010 1,503,299(b)
1,000,000 Idaho Falls, Idaho, General Obligation Electric Refunding Bonds,
Series 1991 Zero Coupon 4/1/2007 580,710(b)
2,000,000 Idaho Falls, Idaho, General Obligation Electric Refunding Bonds,
Series 1991 Zero Coupon 4/1/2011 903,920(b)
------------
2,987,929
------------
Illinois - 0.9%
3,940,000 Central Lake County, Illinois, Joint Action Water Agency,
Unlimited Tax General Obligation Refunding Bonds 6.0% 2/1/2019 4,009,423
1,032,000 Illinois Health Facilities Authority (Community Provider
Pooled Loan Program), Revenue Bonds, Series 1988-B 7.9% 8/15/2003 1,062,908(b,c)
165,000 Illinois Health Facilities Authority (Community Provider
Pooled Loan Program), Revenue Bonds, Series 1988-B 7.9% 8/15/2003 196,459(b,c)
------------
5,268,790
------------
Indiana - 1.2%
400,000 Indiana Housing Finance Authority, Single Family
Mortgage Program Bonds, 1985 Series A 10.2% 1/1/2016 410,292
2,450,000 Indiana Municipal Power Agency, Power Supply
System Revenue Bonds, Series A 5.5% 1/1/2023 2,346,635(b)
2,100,000 Indianapolis, Indiana, Resource Recovery Revenue Bonds,
Ogden Martin Systems, Series A 7.8% 12/1/2004 2,208,927
410,000 Indianapolis, Indiana, Resource Recovery Revenue Bonds,
1985 Series A 7.9% 12/1/2008 431,644
2,190,000 Indianapolis, Indiana, Resource Recovery Revenue Bonds,
1985 Series B 7.9% 12/1/2008 2,305,610
------------
7,703,108
------------
Iowa - 1.7%
2,000,000 Iowa Finance Authority Revenue Bonds, Series 1995-A,
(Correctional Facility Program) 5.5% 6/15/2015 2,014,700(d)
4,000,000 Iowa Finance Authority, Iowa State Revolving Fund Revenue Bonds,
Combined Series 1993 5.2% 5/1/2023 3,891,640
2,000,000 Iowa Finance Authority, Iowa State Revolving Fund Revenue Bonds,
Combined Series 1994 6.25% 5/1/2024 2,126,500
2,275,000 Woodbury County, Iowa, Hospital System Revenue Refunding Bonds,
St. Luke's Obligated Group, Series 1995-A 5.55% 9/1/2020 2,154,129(b)
------------
10,186,969
------------
Kansas - 1.6%
8,000,000 Kansas City, Kansas, Utility System Refunding and Improvement
Revenue Bonds, Series 1994 6.375% 9/1/2023 8,484,160(e)
920,000 Kansas City, Kansas, Utility System, Capital Appreciation
Refunding & Improvement Revenue Bonds Zero Coupon 3/1/2007 510,922(d)
1,255,000 Kansas City, Kansas, Utility System, Capital Appreciation
Refunding & Improvement Revenue Bonds Zero Coupon 3/1/2007 691,605(c,d)
------------
9,686,687
------------
Kentucky - 0.7%
75,000 Jefferson County, Kentucky, Home Mortgage Revenue Bonds,
Series 1983 9.625% 5/1/2014 78,629
1,000,000 Kentucky Development Finance Authority, Refunding and
Improvement Revenue Bonds, (Ashland Hospital,
Kings Daughter Project) 9.75% 8/1/2005 1,105,460
750,000 Kentucky Turnpike Authority, Economic Development Road
Revenue and Revenue Refunding Bonds, Series 1993 5.5% 7/1/2009 762,195(d)
5,345,000 Kentucky Turnpike Authority, Economic Development Road
Revenue Bonds Zero Coupon 1/1/2010 2,428,180(e)
------------
4,374,464
------------
Louisiana - 1.3%
1,740,000 Monroe, Louisiana, Special School District, Unlimited Tax General
Obligation Bonds 5.35% 3/1/2011 1,704,243(e)
6,500,000 New Orleans, Louisiana, General Obligation Bonds, Series 1991 Zero Coupon 9/1/2012 2,467,270(d)
3,000,000 Orleans Parish School Board #87, Louisiana, Escrowed to
Maturity Bonds 8.95% 2/1/2008 3,976,740(b,c)
------------
8,148,253
------------
Maine - 0.3%
1,250,000 Maine Health & Higher Education Facilities Authority,
Revenue Bonds, Series 1994 7.0% 7/1/2024 1,374,188(g)
350,000 Regional Waste Systems, Inc., Maine, Solid Waste Resource
Recovery System Revenue Bonds, Series A,B,C 7.95% 7/1/2010 386,505
------------
1,760,693
------------
Maryland - 2.6%
2,000,000 Maryland Health & Higher Education Facilities Authority,
Union Hospital of Cecil County Revenue Bonds, Series 1992 6.7% 7/1/2022 1,997,280
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 2,484,300(e)
3,000,000 Maryland Health & Higher Education Facilities Authority,
Revenue Project & Refunding Bonds,
(University of Maryland Medical System Issue), Series 1993 5.0% 7/1/2020 2,749,440(e)
3,250,000 Maryland Health & Higher Education Facilities Authority,
Revenue Refunding Bonds, (Suburban Hospital Issue),
Series 1993 5.125% 7/1/2021 2,946,645
4,500,000 Morgan State University, Maryland, Academic Fee and Auxiliary
Facilities Fees Revenue Refunding Bonds, Series 1993 6.05% 7/1/2015 4,839,885(b)
1,000,000 Prince George's County, Maryland, Dimensions Health Corp.,
Hospital Revenue Bonds, Series 1992 7.0% 7/1/2022 1,151,040(c)
------------
16,168,590
------------
Massachusetts - 5.1%
5,000,000 Commonwealth of Massachusetts, General Obligation Bonds,
Consolidated Loan of 1993, Series A 5.5% 11/1/2008 5,130,850
2,000,000 Commonwealth of Massachusetts, General Obligation Refunding
Bonds, Series B 6.5% 8/1/2008 2,241,860
1,800,000 Commonwealth of Massachusetts, Limited Tax General Obligation
Bonds, Construction Loan, Series C 7.375% 12/1/2008 1,994,976(c)
2,970,000 Massachusetts Health and Education Facilities Authority
(Harvard University), Revenue Bonds, Series J 8.75% 12/1/2007 3,025,895(c)
1,500,000 Massachusetts Health and Education Facilities Authority
Revenue Bonds, Newton- Wellesley Hospital Issue, Series C 8.0% 7/1/2018 1,675,695(c)
1,000,000 Massachusetts Health and Educational Facilities Authority
Revenue Bonds, Newton- Wellesley Hospital Issue, Series E 6.0% 7/1/2018 1,021,790(b)
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 2,568,775
1,500,000 Massachusetts Health and Education Facilities Authority,
Revenue Bonds, Series F 6.5% 7/1/2012 1,607,445
5,000,000 Massachusetts State Port Authority, Revenue Bonds, Series B 6.0% 7/1/2023 5,054,250
4,000,000 Massachusetts State Turnpike Authority,
Turnpike Revenue Bonds, Series A 5.0% 1/1/2020 3,644,560(e)
3,000,000 Plymouth County, Massachusetts, Correctional Facility
Certificates of Participation Bonds 7.0% 4/1/2012 3,267,870
------------
31,233,966
------------
Michigan - 5.5%
10,000,000 Detroit, Michigan, Sewer Disposal Revenue Bonds,
Linked Pars & Inflows 5.7% 7/1/2023 9,821,600(e)
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 2,138,140(d)
1,400,000 Kent County, Michigan, Limited Tax Guaranteed Obligation Refuse
Disposal System Refunding Bonds 8.3% 11/1/2007 1,536,948
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 716,565(e)
2,460,000 Michigan Municipal Bond Authority, Government Loan Revenue
Refunding Bonds, Series A Zero Coupon 12/1/2005 1,485,250(e)
390,000 Michigan State Hospital Finance Authority, Hospital Revenue &
Refunding Bonds, (Detroit Medical Center Obligated Group),
Series 1988-A 8.125% 8/15/2012 436,394(c)
110,000 Michigan State Hospital Finance Authority, Hospital Revenue
& Refunding Bonds, (Detroit Medical Center Obligated Group),
Series 1988-A 8.125% 8/15/2012 118,760
2,750,000 Michigan State Hospital Finance Authority, Hospital Revenue Bonds,
(Holland Community Hospital), Series 1993 5.25% 1/1/2008 2,682,268
1,100,000 Michigan State Hospital Finance Authority, Refunding
Hospital Bonds, St. John's Hospital, Series A 5.75% 5/15/2016 1,099,967(d)
3,000,000 Michigan State Hospital Finance Authority Revenue
Refunding Bonds, (Sisters of Mercy Health Corp.) 5.375% 8/15/2014 2,921,880(b)
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 3,424,148
1,000,000 Vicksburg, Michigan, Community Schools, Qualified School
General Obligation Bonds, Kalamazoo & St. Joseph Counties 7.0% 5/1/2007 1,136,160(b,c)
3,000,000 West Bloomfield School District, Oakland County, Michigan,
1994 School Building and Site Unlimited Tax General
Obligation Refunding Bonds 5.125% 5/1/2014 2,827,260(b)
3,455,000 West Ottawa, Michigan, Public School District, Unlimited
Tax General Obligation Bonds Zero Coupon 5/1/2004 2,288,212(b)
1,860,000 West Ottawa, Michigan, Public School District, Unlimited
Tax General Obligation Bonds Zero Coupon 5/1/2005 1,157,348(b)
------------
33,790,900
------------
Minnesota - 4.3%
1,850,000 City of Minneapolis, (Lifespan Inc., Abbott - Northwestern Hospital),
Hospital Facilities Revenue Bonds, 1988 Series A 7.875% 12/1/2014 2,023,604(c)
2,500,000 City of Minneapolis, (Lifespan Inc., Abbott - Northwestern Hospital),
Hospital Facilities Refunding Revenue Bonds, 1987 Series B 9.125% 12/1/2014 2,794,650(c)
1,000,000 Duluth Economic Development Authority, Minnesota, Health
Care Facility Revenue Bonds, (Duluth Clinic, LTD), Series 1992 6.3% 11/1/2022 1,043,900(d)
7,685,000 Minneapolis, Minnesota, Community Development Agency,
Tax Increment Revenue Appreciation Bonds Zero Coupon 3/1/2009 3,762,960(b)
670,000 Southern Minnesota Municipal Power Agency, Power Revenue
Refunding Bonds, Series A 5.75% 1/1/2018 686,502(b,c)
1,180,000 St. Louis Park, Minnesota, (Methodist Hospital), Hospital Revenue
Bonds, Series A 7.25% 7/1/2015 1,323,535(c,d)
1,000,000 St. Louis Park, Minnesota, (Methodist Hospital), Hospital Revenue
Bonds, Series C 7.25% 7/1/2018 1,135,170(c,d)
1,400,000 St. Louis Park, Minnesota, (Methodist Hospital), Hospital Revenue
Bonds, Series C 7.25% 7/1/2015 1,589,238(c,d)
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 4,185,230(c)
7,600,000 St. Louis Park, Minnesota, Health Care Facilities, Revenue Bonds,
(HealthSystem Minnesota Obligated Group), Series 1993 5.1% 7/1/2013 7,064,656(d)
1,000,000 St. Louis Park, Minnesota, Health Care Facilities, Revenue Bonds,
(HealthSystem Minnesota Obligated Group), Series 1993 5.2% 7/1/2016 941,970(d)
------------
26,551,415
------------
Missouri - 2.2%
2,000,000 Boone County, Missouri, Hospital Revenue Refunding Bonds,
Series 1993 5.5% 8/1/2009 1,960,160
1,500,000 Missouri State Health and Education Facilities Authority,
SSM Health Care Refunding Revenue Bonds, Series A 6.25% 6/1/2007 1,615,950(b)
2,650,000 Missouri State Health and Education Facilities Authority
(Christian Health Services), Health Facilities Refunding &
Improvement Revenue Bonds, Series 1991-A 6.875% 2/15/2021 2,991,347(c,e)
3,000,000 Missouri State Health and Education Facilities Authority,
Health Facilities Revenue Bonds, (Barnes-Jewish, Inc./
Christian Health Services), Series 1993-A 5.25% 5/15/2012 2,859,690
1,425,000 Missouri State Health and Education Facilities Authority,
Health Facilities Revenue Refunding Bonds,
Lester E. Cox Medical Center Project, Series 1993-I 5.35% 6/1/2009 1,420,839(b)
2,450,000 Missouri State Health and Education Facilities Authority,
Heartland Health System Revenue Bonds, Series 1992 6.35% 11/15/2017 2,577,033(d)
------------
13,425,019
------------
Montana - 1.0%
1,240,000 Montana State Board of Investments,
Payroll Tax Revenue Bonds 6.875% 6/1/2020 1,396,575(b,c)
3,160,000 Montana State Board of Investments,
Payroll Tax Revenue Bonds 6.875% 6/1/2020 3,438,238(b)
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 1,181,113(d)
------------
6,015,926
------------
Nebraska - 0.8%
25,000 Nebraska Mortgage Finance Fund, Single Family Mortgage
Revenue Bonds, 1983 Series A 10.125% 1/15/2014 25,596
3,455,000 Omaha Public Power District, Nebraska, Electric Revenue
Refunding Bonds, Series B 6.15% 2/1/2012 3,713,123
1,000,000 University of Nebraska, University of Nebraska Medical
Center Project, Revenue Refunding Bonds 5.25% 7/1/2011 978,000
------------
4,716,719
------------
New Hampshire - 0.2%
1,100,000 New Hampshire Turnpike System, Residual Interest Bonds,
1991 Refunding, Series C 9.577% 11/16/1995 1,340,713(e,j)
------------
New Jersey - 2.6%
1,700,000 Camden County, New Jersey, Municipal Utility Authority,
Sewer Revenue Bonds 8.25% 12/1/2017 1,861,704(e)
1,250,000 East Orange, New Jersey, Unlimited Tax General Obligation Bonds 8.4% 8/1/2006 1,589,025(g)
1,000,000 Mercer County, New Jersey, Improvement Authority,
County Guaranteed Solid Waste Revenue Bonds, Series 1988 7.9% 4/1/2013 1,071,130(c)
1,000,000 Mercer County, New Jersey, Improvement Authority,
Revenue Bonds, Series 1991 6.6% 11/1/2014 1,111,390(c)
2,585,000 New Jersey Health Care Facilities Financing Authority,
Jersey Shore Medical Center Revenue Bonds 6.1% 7/1/2010 2,729,967(d)
3,000,000 New Jersey Transit Corp., (Raymond Plaza East, Inc.),
Certificates of Participation 6.375% 10/1/2006 3,362,280(g)
1,520,000 New Jersey Turnpike Authority, Turnpike Revenue Bonds,
1984 Series 10.375% 1/1/2003 1,848,837(c)
2,595,000 West New York, New Jersey, Municipal Utility Authority, Sewer
Revenue Refunding Bonds Zero Coupon 12/15/2009 1,218,067(e)
2,195,000 West New York, New Jersey, Municipal Utility Authority, Sewer
Revenue Refunding Bonds Zero Coupon 12/15/2007 1,181,195(e)
------------
15,973,595
------------
New Mexico - 2.3%
2,000,000 City of Rio Rancho, New Mexico, Water and Wastewater
System Bonds, Series 1995-A 6.0% 5/15/2022 2,029,560(g)
4,040,000 Farmington, New Mexico, Utility Systems Revenue Bonds 9.875% 1/1/2008 5,419,175(c,d)
5,000,000 Farmington, New Mexico, Power Revenue Refunding Bonds,
Series 1983 9.875% 1/1/2013 6,760,600(c)
------------
14,209,335
------------
New York - 5.8%
5,200,000 Metropolitan Transportation Authority, New York,
Commuter Facilities Revenue Bonds, Series A 6.375% 7/1/2018 5,489,796(b)
3,000,000 Metropolitan Transportation Authority, New York,
Transit Facilities Revenue Bonds, Series B 6.25% 7/1/2014 3,149,760(b)
3,500,000 Metropolitan Transportation Authority, New York,
Transit Facilities Service Contract Bonds, Series O 5.75% 7/1/2013 3,435,040
2,000,000 New York City Municipal Water Finance Authority,
Water & Sewer System Revenue Bonds, Series A 5.875% 6/15/2012 2,100,940(d)
1,250,000 New York City Municipal Water Finance Authority,
Water & Sewer System Revenue Bonds 8.75% 6/15/2010 1,365,825(c)
2,000,000 New York State Dorm Authority (City University),
Construction Revenue Bonds, Series A 8.125% 7/1/2017 2,169,260(c)
5,000,000 New York State Dorm Authority, Revenue Refunding Bonds,
State University Educational Facilities, Series B 5.0% 5/15/2018 4,347,550
2,250,000 New York State Medical Care Facilities Finance Agency
(Ellis Hospital), Insured Mortgage Hospital Bonds, Series B 8.0% 2/15/2008 2,485,260(h)
4,000,000 New York State Medical Care Facilities Finance Agency,
Revenue Refunding Bonds, Mental Health Services Facilities 5.25% 2/15/2019 3,764,240(e)
2,860,000 New York State Thruway Authority, Highway & Bridge
Trust Fund, Revenue Bonds, Series 1994-B 6.0% 4/1/2014 2,946,858(e)
3,500,000 New York State Urban Development Corp., Revenue
Refunding Bonds, Correctional Facilities 5.375% 1/1/2012 3,431,260(b)
1,000,000 Triborough Bridge & Tunnel Authority, New York, General
Purpose Revenue Bonds, Series Q 6.75% 1/1/2009 1,112,900
------------
35,798,689
------------
North Carolina - 1.1%
2,500,000 County of Pitt, North Carolina, Pitt County Memorial
Hospital Revenue Bonds, Series 1995 5.5% 12/1/2015 2,437,600
4,000,000 North Carolina Municipal Power Agency #1, Catawba
Electric Revenue Refunding Bonds, Series 1992 6.0% 1/1/2011 4,207,720(b)
------------
6,645,320
------------
North Dakota - 0.5%
1,000,000 Mercer County, North Dakota, Pollution Control Revenue
Refunding Bonds, (Ottertail Power Co. Project) 6.9% 2/1/2019 1,077,960
2,000,000 North Dakota Municipal Bond Bank, State Revolving
Fund Program Bonds, Series 1995-A 6.3% 10/1/2015 2,110,560
------------
3,188,520
------------
Ohio - 4.4%
1,050,000 Akron, Bath & Copley Joint Township, Ohio, (Children's Hospital
Medical Center), Hospital District Revenue Bonds 7.45% 11/15/2020 1,210,030(c,d)
3,785,000 City of Cleveland, Ohio, Public Power System, First Mortgage
Revenue Bonds, Series 1994-A 7.0% 11/15/2024 4,202,523(b)
500,000 City of Dayton, Ohio, Airport Revenue Refunding Bonds,
Series 1995, (James M. Cox International Airport) 5.25% 12/1/2015 478,455(d,k)
1,000,000 Cleveland, Ohio, Waterworks Improvement First Mortgage
Refunding Revenue Bonds, Series 1993-G 5.5% 1/1/2009 1,020,600(b)
1,630,000 Cuyahoga County, Ohio, (Deaconess Hospital), Hospital
Revenue Bonds, Series C 7.45% 10/1/2018 1,882,894(c)
1,600,000 Hamilton County, Ohio, Electric System Revenue
Refunding Bonds, Series A 6.0% 10/15/2012 1,657,024(e)
1,000,000 Kings Local School District, Ohio, Unlimited Tax
General Obligation Bonds 5.5% 12/1/2021 972,960(e)
1,470,000 Lorain County, Ohio, (Humility of Mary Health System),
Hospital Revenue Bonds 7.125% 12/15/2006 1,622,512
2,000,000 Ohio Higher Educational Facility Commission (Case Western
Reserve University Project), Series B 6.5% 10/1/2020 2,251,740
1,500,000 Ohio Higher Educational Facility Commission,
Higher Educational Revenue Bonds,
Ohio Dominican College 1994 Project 6.625% 12/1/2014 1,562,640
5,000,000 Ohio State Air Quality Development Authority, Cleveland Electric,
Pollution Control Revenue Bonds 8.0% 12/1/2013 6,002,850(e)
2,250,000 Ohio State Air Quality Development Authority, Columbus &
Southern Pollution Control Revenue Bonds 6.375% 12/1/2020 2,371,005(e)
1,795,000 Trumbull County, Ohio, (Memorial Hospital), Hospital Revenue
Refunding & Improvement Bonds, Series 1991-B 6.9% 11/15/2012 1,956,101(e)
------------
27,191,334
------------
Oklahoma - 1.8%
5,220,000 Bass, Oklahoma, Memorial Baptist Hospital,
Escrowed to Maturity 8.35% 5/1/2009 6,682,226(c)
1,175,000 Grand River Dam Authority, Oklahoma, Revenue
Refunding Bonds, Series 1993 5.75% 6/1/2008 1,246,334(g)
1,500,000 Oklahoma Municipal Power Authority, Electric Revenue
Refunding Bonds, Series B 5.75% 1/1/2024 1,570,935(b)
1,500,000 Oklahoma Municipal Power Authority, Power Supply System
Revenue Bonds, Series 1992-B 5.875% 1/1/2012 1,589,370(b)
------------
11,088,865
------------
Oregon - 0.9%
2,700,000 Clackamas County, Oregon, Health Facilities Authority, Adventist
Health-West Revenue Refunding Bonds, Series 1992-A 6.35% 3/1/2009 2,901,339(b)
850,000 Clackamas County, Oregon, School District No. 12,
(North Clackamas), Unlimited Tax General Obligation
Refunding Bonds, Series 1993 5.0% 6/1/2011 795,727
2,000,000 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 2,050,240(b)
------------
5,747,306
------------
Pennsylvania - 2.0%
2,100,000 Allegheny County, Pennsylvania, Hospital Development Authority,
Hospital Revenue Bonds, Series A-1995,
(Allegheny General Hospital Project) 6.2% 9/1/2015 2,187,402(b)
2,575,000 Allegheny County, Pennsylvania, Sanitary Authority,
Sewer Revenue Bonds, Series A Zero Coupon 6/1/2008 1,309,336(e)
2,000,000 Delaware River Joint Toll Bridge Commission, Pennsylvania,
Toll Bridge Revenue Bonds 7.875% 7/1/2018 2,216,180(c)
3,170,000 Millcreek Township, Pennsylvania, School District, General
Obligation Bonds Zero Coupon 8/15/2009 1,500,615(e)
2,000,000 Monroeville, Pennsylvania, Hospital Authority, Forbes
Health System Revenue Bonds, Series 1992 7.0% 10/1/2003 2,155,660
3,000,000 Pennsylvania State, General Obligation Bonds,
Second Series of 1992 Zero Coupon 7/1/2006 1,740,930(d)
1,105,000 Shamokin Area Industrial Development Authority, Pennsylvania,
(Northumberland County), Commercial Development
First Mortgage Revenue Refunding Bonds, Series 1994-A,
(KMart Corp., Tenant & Guarantor) 6.7% 7/1/2007 1,053,385
------------
12,163,508
------------
Puerto Rico - 1.9%
4,000,000 Puerto Rico Commonwealth, Aqueduct &
Sewer Revenue Bonds, Series A 9.0% 7/1/2009 5,267,920(c)
2,000,000 Puerto Rico Commonwealth, Unlimited Tax
General Obligation Bonds 6.45% 7/1/2017 2,113,500
3,000,000 Puerto Rico Electric Power Authority,
Power Revenue Bonds, Series T 6.0% 7/1/2016 3,058,860
1,500,000 University of Puerto Rico, University System
Revenue Bonds, Series M 5.25% 6/1/2025 1,412,115(b)
------------
11,852,395
------------
South Carolina - 1.4%
2,000,000 Greenville, South Carolina, Hospital System, Hospital Facility
Revenue Bonds, Series A 7.5% 5/1/2016 2,061,540(c,e)
2,000,000 Piedmont Municipal Power Agency, South Carolina, Electric
Revenue Refunding Bonds, Series 1991 6.25% 1/1/2021 2,154,280(e)
5,000,000 Piedmont Municipal Power Agency, South Carolina, Electric
Revenue Refunding Bonds 5.0% 1/1/2022 4,452,150(e)
------------
8,667,970
------------
Tennessee - 0.3%
1,750,000 Bristol, Tennessee, Health and Educational Facilities Authority,
Bristol Memorial Hospital Revenue Bonds 7.0% 9/1/2021 1,982,663(c,e)
------------
Texas - 9.9%
2,165,000 Arlington, Texas, Independent School District, Unlimited
Tax Refunding & Improvement Bonds, Series 1992 Zero Coupon 2/15/2009 1,042,209(i)
1,000,000 Austin, Texas, Utility System Revenue Refunding Bonds 6.0% 11/15/2013 1,061,430(e)
7,000,000 Austin, Texas, Utility System Revenue Refunding Bonds,
Series A Zero Coupon 11/15/2008 3,473,260(b)
8,100,000 Austin, Texas, Utility System Revenue Refunding Bonds,
Series A Zero Coupon 11/15/2009 3,756,942(b)
1,575,000 Bexar County, Texas, Limited Tax General Obligation Bonds 5.0% 6/15/2015 1,457,962
2,500,000 Bexar Metropolitan Water District, Texas, Waterworks
System Revenue Bonds, Series 1994 5.0% 5/1/2019 2,295,600(c,d)
1,000,000 Brazos River Authority, Texas, Collateralized Revenue
Refunding Bonds, (Houston Lighting & Power Co.),
1988 Series B 8.25% 5/1/2015 1,092,020
2,000,000 Brazos River Authority, Texas, Houston Lighting & Power Co.,
Revenue Refunding Bonds 8.25% 5/1/2015 2,190,460(b)
2,000,000 Copperas Cove, Texas, Independent School District, Unlimited
Tax General Obligation Bonds 6.9% 8/15/2014 2,313,460(c,i)
1,000,000 Dallas-Fort Worth, Texas, Airport Joint Revenue
Refunding Bonds 7.375% 11/1/2008 1,157,000(e)
1,000,000 Dallas-Fort Worth, Texas, Airport Joint Revenue
Refunding Bonds 7.375% 11/1/2009 1,150,300(e)
2,000,000 Dallas-Fort Worth, Texas, Airport Joint Revenue
Refunding Bonds 7.375% 11/1/2010 2,300,600(e)
3,000,000 Dallas-Fort Worth, Texas, Airport Joint Revenue
Refunding Bonds,
Series 1985 9.125% 11/1/2015 3,075,000
4,000,000 Dallas-Fort Worth, Texas, Airport Joint Revenue Refunding Bonds,
Series 1994-A 6.0% 11/1/2012 4,134,640(b)
2,285,000 Denton, Texas, Independent School District, Unlimited
Tax General Obligation Refunding Bonds 6.25% 2/15/2009 2,492,181(i)
1,000,000 Georgetown, Texas, Higher Education Finance Corp., Higher
Education Revenue Bonds, Series 1994,
(Southwestern University Project) 6.3% 2/15/2014 1,030,420
2,250,000 Harris County, Texas, Toll Road, Sr. Lien Bonds, Series A 6.375% 8/15/2024 2,374,560(b)
1,750,000 Harris County, Texas, Toll Road, Unlimited Tax & Subordinated Lien,
Revenue Refunding Bonds, Series 1988 8.125% 8/1/2015 1,955,888(c)
1,295,000 Houston, Texas, Housing Finance Corp., Single Family
Mortgage Revenue Bonds, Series 1983 10.0% 9/15/2014 1,294,935
1,280,000 Houston, Texas, Water & Sewer Systems, Exchange Pre-Refunded
Jr. Lien Revenue Bonds 9.375% 12/1/2013 1,311,027(c,e)
220,000 Houston, Texas, Water & Sewer Systems, Exchange Pre-Refunded
Jr. Lien Revenue Bonds 9.375% 12/1/2013 225,333(c,e)
3,000,000 Leander Independent School District, Texas, (Travis and
Williamson Counties), Unlimited Tax School Building and
Refunding Bonds, Series 1994-A 6.0% 8/15/2018 3,048,750(i)
1,000,000 Lower Colorado River Authority, Priority Refunding Revenue
Bonds, Series 1985 9.5% 1/1/2011 1,028,840(c)
1,845,000 San Antonio, Texas, Airport Revenue Refunding Bonds 7.375% 7/1/2010 2,102,986(d)
1,000,000 San Antonio, Texas, Airport Revenue Refunding Bonds 7.375% 7/1/2011 1,139,830(d)
11,615,000 Southeastern Texas Housing Finance Corp., Single Family
Mortgage Revenue Bonds Zero Coupon 9/1/2017 3,095,978(c)
4,315,000 Texas State, Veterans Land Board General Obligation Bonds 0.05% 7/1/2010 1,914,091(c)
2,500,000 Travis County, Texas, Housing Finance Corporation, Single
Family Mortgage Revenue Refunding Bonds, Series 1994-A 6.75% 4/1/2014 2,629,900
3,650,000 Willis, Texas, Independent School District, Refunding Bonds 6.5% 2/15/2016 3,861,153(i)
1,175,000 Wylie, Texas, Independent School District, (Collin County),
Unlimited Tax Building & Refunding Bonds, Series 1994 6.875% 8/15/2014 1,339,829(i)
------------
61,346,584
------------
Utah - 1.4%
1,000,000 Intermountain Power Agency, Utah, Power Supply
Revenue Bonds, Series A 6.0% 7/1/2009 1,007,130(b)
2,445,000 St. George-Washington County, Utah, Water Revenue
Refunding Bonds, Series 1993 5.375% 6/1/2016 2,355,048(d)
3,750,000 Utah Associated Municipal Power Systems, San Juan Project
Revenue Bonds, Series O 6.25% 6/1/2014 3,911,925(b)
1,580,000 West Valley City, Utah, Municipal Building Authority, Lease
Refunding Bonds 6.0% 1/15/2010 1,631,966(b)
------------
8,906,069
------------
Virginia - 2.7%
3,000,000 Fairfax County, Virginia, Economic Development Authority,
Lease Revenue Bonds, (Government Center Properties),
Series 1994 5.5% 5/15/2014 2,969,010
1,200,000 Norfolk, Virginia, Water Revenue Bonds, Series 1995 5.375% 11/1/2023 1,128,228(d)
4,000,000 Upper Occoquan Sewage Authority, Virginia, Regional Sewerage
System Revenue Refunding Bonds, Series 1993 5.0% 7/1/2021 3,619,600(e)
4,300,000 Virginia Housing Development Authority, Commonwealth
Mortgage Bonds, 1994 Series H, Subseries H-2 6.5% 1/1/2014 4,461,981
2,000,000 Virginia State, Unlimited Tax General Obligation Bonds 6.5% 6/1/2015 2,176,300
2,000,000 Winchester Industrial Development Authority, Virginia
(Winchester Medical Center), Hospital Revenue Bonds 8.125% 1/1/2014 2,053,500(c)
------------
16,408,619
------------
Washington - 5.4%
1,655,000 Douglas County, Washington, Public Utility District #1, Wells
Hydroelectric Revenue Bonds, Series A 8.75% 9/1/2018 2,213,563(c)
1,395,000 Douglas County, Washington, Public Utility District #1, Wells
Hydroelectric Revenue Bonds, Series A 8.75% 9/1/2018 1,776,630
2,000,000 Grant County, Washington, Public Utility District No. 2,
Columbia River, Priest Rapids Hydro Electric Development
Project, Second Series Revenue Bonds, Series A 5.0% 1/1/2023 1,767,460(d)
5,000,000 King County, Washington, Unlimited Tax General Obligation
Bonds, Series A 6.75% 12/1/2009 5,505,350(c)
2,015,000 Tacoma, Washington, Utilities Refuse Revenue Bonds 6.625% 12/1/2011 2,140,857(b)
5,000,000 Washington State Public Power Supply System, Nuclear
Project No. 1, Revenue Refunding Bonds 7.5% 7/1/2015 5,428,050
1,000,000 Washington State Public Power Supply System, Nuclear
Project No. 3, Revenue Refunding Bonds 7.25% 7/1/2015 1,121,860(c,e)
2,500,000 Washington State Public Power Supply System, Nuclear
Project No. 3, Revenue Refunding Bonds, Series B Zero Coupon 7/1/2010 1,067,375(b)
1,500,000 Washington State, Unlimited Tax General Obligation Bonds,
Series A 6.25% 2/1/2011 1,636,065
3,000,000 Washington State, Unlimited Tax General Obligation Bonds,
Series 93-A 5.75% 10/1/2012 3,058,470
2,400,000 Washington State, Unlimited Tax General Obligation Bonds 6.7% 6/1/2016 2,651,568(c)
2,000,000 Washington State, Unlimited Tax General Obligation Bonds 6.0% 6/1/2012 2,092,180
2,500,000 Washington State, Various Purpose General Obligation Bonds 6.25% 6/1/2010 2,707,125
------------
33,166,553
------------
Wisconsin - 1.0%
4,315,000 State of Wisconsin, Clean Water Revenue Bonds, 1995 Series 1 5.8% 6/1/2015 4,365,313
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 1,926,800(b)
------------
6,292,113
------------
Wyoming - 0.4%
2,500,000 State of Wyoming Farm Loan Board, Capital Facilities Revenue
Bonds, Series 1994 6.1% 4/1/2024 2,580,250
------------
Total Long-Term Municipal Securities (cost $574,789,161) 615,637,876
------------
SHORT-TERM MUNICIPAL SECURITIES - 0.2% (a,j)
$600,000 Berkeley County, South Carolina, (Amoco Chemical Co. Project),
Pollution Control Revenue Refunding Bonds, Series 1994 3.9% 11/1/1995 600,000
500,000 Maricopa County, Arizona Pollution Control Corp., Pollution
Control Revenue Refunding Bonds, (Arizona Public Service Co.
Palo Verde Project), 1994 Series E 3.95% 11/1/1995 500,000
100,000 Maricopa County, Arizona Pollution Control Corp., Pollution
Control Revenue Refunding Bonds, (Arizona Public Service Co.
Palo Verde Project), 1994 Series B 3.9% 11/1/1995 100,000
------------
Total Short-Term Municipal Securities (at amortized cost) 1,200,000
------------
Total Investments (cost $575,989,161) $616,837,876(l)
============
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) Insured by Municipal Bond Investors Assurance Corp.
(c) 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
(d) Insured by AMBAC Indemnity Corp.
(e) Insured by Financial Guaranty Insurance Co.
(f) Insured by Connie Lee Insurance Co.
(g) Insured by Financial Security Assurance, Inc.
(h) Insured by Federal Housing Administration.
(i) Insured by Permanent School Fund Guarantee.
(j) Denotes variable rate obligations for which the current yield and next scheduled interest reset date are shown.
(k) Denotes investments purchased on a when-issued basis.
(l) At October 31, 1995, the aggregate cost of securities for federal income tax purposes was $576,019,044 and the net unrealized
appreciation of investments based on that cost was $40,818,832 which is comprised of $42,747,802 aggregate gross unrealized
appreciation and $1,928,970 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
October 31, 1995
Principal Maturity
Amount Rate Date Value
- -------------- --------- --------- -------------
<S> <C> <C> <C> <C> <C>
BANKER'S ACCEPTANCES - 5.8% (a)
$6,767,062 Banker's Trust Co., New York 5.72% 12/27/95 $ 6,706,850
5,000,000 First Bank, N.A., Minneapolis 5.60% 2/8/96 4,923,000
5,000,000 First Bank, N.A., Minneapolis 5.65% 2/13/96 4,918,389
3,126,226 Republic National Bank of New York 5.65% 12/22/95 3,101,203
------------
Total Banker's Acceptances 19,649,442
------------
COMMERCIAL PAPER - 75.3% (a)
Banking-Domestic - 2.9%
3,000,000 Norwest Corp 5.50% 12/7/95 2,983,500
4,000,000 Norwest Corp 5.67% 2/23/96 3,928,180
3,000,000 Norwest Corp 5.57% 11/8/95 2,996,751
------------
9,908,431
------------
Banking-Foreign - 17.5%
5,000,000 Accor S.A., (Banque National de Paris,
Direct Pay Letter of Credit) 5.68% 12/7/95 4,971,600
5,000,000 Accor S.A., (Banque National de Paris,
Direct Pay Letter of Credit) 5.70% 11/30/95 4,977,042
3,500,000 Accor S.A., (Banque National de Paris,
Direct Pay Letter of Credit) 5.73% 1/25/96 3,452,648
5,000,000 Finance One Funding Corp., (Credit Suisse,
Direct Pay Letter of Credit) 5.95% 11/7/95 4,995,042
5,000,000 Finance One Funding Corp., (Credit Suisse,
Direct Pay Letter of Credit) 5.80% 1/17/96 4,937,972
5,000,000 FPL Fuels, Inc., (Barclay's Bank, plc,
Direct Pay Letter of Credit) 5.73% 11/27/95 4,979,308
5,000,000 PEMEX Capital, Inc., (Swiss Bank Corp., plc,
Direct Pay Letter of Credit) 5.73% 12/4/95 4,973,738
5,000,000 Sheffield Receivables Corp., (Barclay's Bank) 5.69% 11/14/95 4,989,726
5,000,000 Sheffield Receivables Corp., (Barclay's Bank) 5.69% 11/17/95 4,987,355
16,000,000 UBS Finance (Delaware), Inc, (Union Bank of Switzerland) 5.90% 11/1/95 16,000,000
------------
59,264,431
------------
Computer & Office Equipment - 2.9%
5,000,000 Electronic Data Systems Corp 5.71% 1/25/96 4,932,590
5,000,000 Electronic Data Systems Corp 5.62% 12/15/95 4,965,656
------------
9,898,246
------------
Cosmetics & Toiletries - 2.9%
5,000,000 Unilever Capital Corp 5.77% 11/1/95 5,000,000
5,000,000 Unilever Capital Corp 5.70% 12/14/95 4,965,958
------------
9,965,958
------------
Drugs & Healthcare - 2.6%
5,000,000 Schering Corp 5.64% 2/27/96 4,907,567
4,000,000 Schering Corp 5.58% 4/11/96 3,899,560
------------
8,807,127
------------
Education - 2.4%
3,900,000 Harvard University 5.88% 11/1/95 3,900,000
4,000,000 Leland H. Stanford Jr. University 5.67% 12/20/95 3,969,130
------------
7,869,130
------------
Finance-Automotive - 1.5%
5,000,000 Ford Motor Credit Co 5.67% 12/1/95 4,976,375
------------
Finance-Commercial - 3.7%
1,500,000 CIT Group Holdings, Inc 5.70% 11/17/95 1,496,200
5,000,000 CIT Group Holdings, Inc 5.62% 12/21/95 4,960,972
2,500,000 General Electric Capital Corp 5.62% 2/2/96 2,463,704
3,700,000 PACCAR Financial Corp 5.68% 11/29/95 3,683,654
------------
12,604,530
------------
Finance-Consumer - 5.8%
5,000,000 Associates Corp. of North America 5.68% 2/9/96 4,921,111
5,000,000 Associates Corp. of North America 5.68% 11/20/95 4,985,011
5,000,000 AVCO Financial Services, Inc 5.66% 11/2/95 4,999,214
5,000,000 AVCO Financial Services, Inc 5.70% 2/1/96 4,927,167
------------
19,832,503
------------
Finance-Structured - 12.0%
5,000,000 Ciesco, L.P. 5.72% 11/28/95 4,978,550
5,000,000 CXC, Inc 5.61% 12/15/95 4,965,717
5,000,000 Delaware Funding Corp 5.68% 11/2/95 4,999,211
4,000,000 Delaware Funding Corp 5.68% 11/22/95 3,986,747
5,000,000 New Center Asset Trust 5.72% 11/21/95 4,984,111
5,000,000 New Center Asset Trust 5.77% 11/7/95 4,995,192
5,000,000 New Center Asset Trust 5.76% 11/13/95 4,990,400
1,975,000 Preferred Receivables Funding Corp 5.74% 12/13/95 1,961,774
5,000,000 Preferred Receivables Funding Corp 5.77% 11/8/95 4,994,390
------------
40,856,092
------------
Financial Services - 4.4%
5,000,000 American Express Credit Corp 5.66% 12/7/95 4,971,700
5,000,000 American Express Credit Corp 5.75% 11/9/95 4,993,611
5,000,000 American Express Credit Corp 5.70% 12/14/95 4,965,958
------------
14,931,269
------------
Food & Beverage - 3.5%
2,000,000 Coca-Cola Co 5.77% 11/6/95 1,998,397
5,000,000 CPC International, Inc 5.67% 2/13/96 4,918,100
5,000,000 CPC International, Inc 5.71% 12/5/95 4,973,036
------------
11,889,533
------------
Household Products - 1.5%
5,000,000 Colgate-Palmolive Co 5.55% 11/30/95 4,977,646
------------
Industrial - 5.9%
5,000,000 Du Pont (E.I.) de Nemours and Co 5.63% 2/16/96 4,916,332
5,000,000 Great Lakes Chemical Corp 5.73% 11/20/95 4,984,879
5,000,000 Monsanto Co 5.70% 12/12/95 4,967,542
5,000,000 Motorola Credit Corp 5.80% 11/9/95 4,993,555
------------
19,862,308
------------
Insurance - 1.5%
5,000,000 Prudential Funding Corp 5.64% 12/26/95$ 4,956,917
------------
Oil & Gas - 2.9%
5,000,000 Chevron Transport Corp., (Guaranteed by Chevron Corp.) 5.75% 12/1/95 4,976,042
5,000,000 Chevron Transport Corp., (Guaranteed by Chevron Corp.) 5.70% 12/22/95 4,959,625
------------
9,935,667
------------
Telecommunications - 1.4%
5,000,000 AT&T Corp 5.57% 2/21/96 4,913,355
------------
Total Commerical Paper 255,449,518
------------
CERTIFICATES OF DEPOSIT - 7.7% (a)
Euro Dollar - 6.5%
5,000,000 ABN AMRO Bank, N.V 5.73% 3/13/96 4,998,913
5,000,000 ABN AMRO Bank, N.V 5.77% 12/5/95 5,000,046
2,000,000 Banque Nationale de Paris 7.18% 2/7/96 2,005,862
5,000,000 Harris Trust & Savings Bank, Chicago 5.74% 11/14/95 4,999,963
5,000,000 National Westminster Bank, plc 5.63% 12/13/95 4,999,280
------------
22,004,064
------------
Yankee Dollar - 1.2%
4,000,000 National Westminster Bank, plc 5.77% 12/6/95 4,000,077
------------
Total Certificates of Deposit 26,004,141
------------
VARIABLE RATE NOTES - 10.3% (a,b)
8,000,000 Boatsmen's National Bank of St. Louis, Bank Note 5.86% 11/13/95 8,000,000
10,000,000 Illinois Student Assistance Commission, (Student Loan Market
Association, Direct Pay Letter of Credit) 5.81% 11/8/95 10,000,000
7,000,000 Leland H. Stanford Jr. University 5.78% 11/1/95 7,000,000
10,000,000 Wachovia Bank of North Carolina, N.A 5.81% 11/8/95 10,000,000
------------
Total Variable Rate Notes 35,000,000
------------
CORPORATE NOTES - 0.9% (a)
3,000,000 General Electric Capital Corp 5.25% 11/15/95 2,999,160
------------
Total Investments (at amortized cost) $339,102,261 (c)
============
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>
<TABLE>
<CAPTION>
Lutheran Brotherhood Opportunity Growth Fund
Financial Statements
Statement of Assets and Liabilities
October 31, 1995
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $161,205,555) $169,947,387
Cash 63,443
Receivable for investment securities sold 10,444,667
Dividend and interest receivable 24,371
Unamortized organization costs 21,654
------------
Total assets 180,501,522
------------
LIABILITIES:
Payable for investment securities purchased 14,710,202
Accrued expenses 108,423
------------
Total liabilities 14,818,625
------------
NET ASSETS $165,682,897
============
NET ASSETS CONSIST OF:
Trust capital (11,975,639 shares of beneficial
interest outstanding) $123,874,411
Accumulated net realized gain from sale
of investments 33,066,654
Unrealized net appreciation of investments 8,741,832
------------
NET ASSETS $165,682,897
============
Net asset value and redemption price per share
($165,682,897 (divided by) 11,975,639 shares of beneficial
interest outstanding) $13.83
======
Maximum public offering price per share
($13.83 (divided by) 0.95 for a 5% sales charge) $14.56
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended October 31, 1995
<S> <C>
INVESTMENT INCOME:
Income--
Dividend income $ 91,852
Interest income 622,114
------------
Total income 713,966
------------
Expenses--
Investment advisory fee 938,166
Transfer agent services 582,903
Custodian fee 103,883
Administrative personnel and services 33,788
Printing and postage 120,917
Trust share registration costs 34,289
Auditing fees 9,301
Legal fees 750
Trustees' fees 8,246
Amortization of organization costs 9,855
Miscellaneous 7,908
------------
Total expenses 1,850,006
------------
Net investment loss (1,136,040)
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investment transactions 38,531,937
Net change in unrealized appreciation
of investments (4,581,612)
------------
Net gain on investments 33,950,325
------------
Net increase in net assets resulting
from operations $ 32,814,285
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended October 31, 1995 and 1994
Year Year
Ended Ended
10/31/95 10/31/94
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment loss $ (1,136,040) $ (578,480)
Net realized gain (loss) on investments 38,531,937 (2,536,890)
Net change in unrealized appreciation or depreciation
of investments (4,581,612) 6,777,510
------------ ------------
Net increase in net assets resulting from operations 32,814,285 3,662,140
------------ ------------
TRUST SHARE TRANSACTIONS:
Net proceeds from sale of shares 50,139,416 60,409,075
Cost of shares redeemed (16,847,223) (5,340,158)
------------ ------------
Net increase in net assets from trust share transactions 33,292,193 55,068,917
------------ ------------
Net increase in net assets 66,106,478 58,731,057
NET ASSETS:
Beginning of period 99,576,419 40,845,362
------------ ------------
End of period $165,682,897 $ 99,576,419
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
Lutheran Brotherhood World Growth Fund
Financial Statements
Statement of Assets and Liabilities
October 31, 1995
<S> <C>
ASSETS:
Investments in securities, at value
(cost $14,407,661) $ 14,273,945
Cash (including foreign currency
holdings of $112,263) 120,924
Dividend and interest receivable 26,580
Unamortized organization costs 53,027
------------
Total assets 14,474,476
------------
LIABILITIES:
Payable for investment securities purchased 420,507
Unrealized depreciation of foreign
currency contracts held 1,353
Accrued expenses 11,055
Due to affiliates 73,530
------------
Total liabilities 506,445
------------
NET ASSETS $ 13,968,031
============
NET ASSETS CONSIST OF:
Trust capital (1,654,196 shares of beneficial
interest outstanding) $ 14,085,799
Undistributed net investment income 18,920
Accumulated net realized loss from sale of
investments and foreign currency transactions (1,661)
Unrealized net depreciation of investments and
on translation of assets and liabilities in
foreign currencies (135,027)
------------
NET ASSETS $ 13,968,031
============
Net asset value and redemption price per share
($13,968,031 (divided by) 1,654,196 shares of beneficial
interest outstanding) $ 8.44
======
Maximum public offering price per share
($8.44 (divided by) 0.95 for a 5% sales charge) $ 8.88
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
For the period from September 5, 1995 to October 31, 1995
<S> <C>
INVESTMENT INCOME:
Income--
Dividend income (net of foreign taxes of $3,271) $ 19,825
Interest income 30,743
---------
Total income 50,568
---------
Expenses--
Investment advisory fee 17,787
Transfer agent services 4,983
Custodian fee 2,846
Administrative personnel and services 356
Printing and postage 1,462
Trust share registration costs 8,534
Auditing fees 2,500
Trustees' fees 818
Amortization of organization costs 1,878
---------
Total expenses before
expense reimbursement 41,164
Expense reimbursement from
investment advisor (13,415)
---------
Net expenses 27,749
---------
Net investment income 22,819
---------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY:
Net realized loss on investment transactions (385)
Net realized loss on foreign currency transactions (5,175)
---------
Net realized loss on investments and
foreign currency transactions (5,560)
Net change in unrealized depreciation of investments (133,716)
Net change in unrealized depreciation on
translation of assets and liabilities in
foreign currencies (1,311)
---------
Net change in unrealized depreciation of investments
and on translation of assets and liabilities in
foreign currencies (135,027)
---------
Net loss on investments and foreign currency (140,587)
---------
Net change in net assets resulting
from operations $(117,768)
=========
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
For the period from September 5, 1995 to October 31, 1995
<S> <C>
OPERATIONS:
Net investment income $ 22,819
Net realized loss on investments
and foreign currency transactions (5,560)
Net change in unrealized depreciation of investments and
on translation of assets and liabilities in foreign currencies (135,027)
------------
Net change in net assets resulting from operations (117,768)
------------
TRUST SHARE TRANSACTIONS:
Net proceeds from sale of shares 14,107,250
Cost of shares redeemed (21,451)
------------
Net change in net assets from trust share transactions 14,085,799
------------
Net change in net assets 13,968,031
NET ASSETS:
Beginning of period --
------------
End of period (including undistributed net investment
income of $18,920) $ 13,968,031
============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
Lutheran Brotherhood Fund
Financial Statements
Statement of Assets and Liabilities
October 31, 1995
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $553,908,269) $639,534,225
Cash 88,287
Receivable for investment securities sold 9,803,797
Dividend and interest receivable 887,351
------------
Total assets 650,313,660
------------
LIABILITIES:
Payable for investment securities purchased 4,577,605
Accrued expenses 234,472
------------
Total liabilities 4,812,077
------------
NET ASSETS $645,501,583
============
NET ASSETS CONSIST OF:
Trust capital ( 30,463,515 shares of beneficial
interest outstanding) $516,438,302
Undistributed net investment income 487,824
Accumulated net realized gain from sale
of investments 42,949,501
Unrealized net appreciation of investments 85,625,956
------------
NET ASSETS $645,501,583
============
Net asset value and redemption price per share
($645,501,583 (divided by) 30,463,515 shares of beneficial
interest outstanding) $21.19
======
Maximum public offering price per share
($21.19 (divided by) 0.95 for a 5% sales charge) $22.31
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended October 31, 1995
<S> <C>
INVESTMENT INCOME:
Income--
Dividend income $ 10,131,860
Interest income 2,440,562
------------
Total income 12,572,422
------------
Expenses--
Investment advisory fee 3,726,938
Transfer agent services 1,478,056
Custodian fee 148,703
Administrative personnel and services 144,572
Printing and postage 297,086
Trust share registration costs 36,777
Auditing fees 26,299
Legal fees 2,550
Trustees' fees 16,246
Miscellaneous 22,007
------------
Total expenses 5,899,234
------------
Net investment income 6,673,188
------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain on investment transactions 45,978,881
Net realized gain on closed or expired
option contracts written 228,303
------------
Net realized gain on investments 46,207,184
Net change in unrealized appreciation of investments 61,523,937
------------
Net gain on investments 107,731,121
------------
Net increase in net assets resulting
from operations $114,404,309
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended October 31, 1995 and 1994
Year Year
Ended Ended
10/31/95 10/31/94
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 6,673,188 $ 5,841,017
Net realized gain on investments 46,207,184 618,391
Net change in unrealized appreciation or depreciation
of investments 61,523,937 (6,424,063)
------------ ------------
Net increase in net assets resulting from operations 114,404,309 35,345
------------ ------------
DISTRIBUTIONS PAID TO SHAREHOLDERS:
Net investment income (6,749,604) (5,815,515)
Net realized gain on investments (88,151) (27,442,253)
------------ ------------
Total distributions (6,837,755) (33,257,768)
------------ ------------
TRUST SHARE TRANSACTIONS:
Net proceeds from sale of shares 51,345,084 69,538,644
Reinvested dividend distributions 6,678,353 32,585,242
Cost of shares redeemed (68,673,955) (47,593,035)
------------ ------------
Net change in net assets from trust share transactions (10,650,518) 54,530,851
------------ ------------
Net increase in net assets 96,916,036 21,308,428
NET ASSETS:
Beginning of period 548,585,547 527,277,119
------------ ------------
End of period (including undistributed net investment
income of $487,824 and $606,949, respectively) $645,501,583 $548,585,547
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
Lutheran Brotherhood High Yield Fund
Financial Statements
Statement of Assets and Liabilities
October 31, 1995
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $573,381,125) $580,851,784
Cash 16,422
Receivable for investment securities sold 5,183,828
Interest and dividend receivable 8,533,376
------------
Total assets 594,585,410
------------
LIABILITIES:
Payable for investment securities purchased 81,556
Accrued expenses 166,944
------------
Total liabilities 248,500
------------
NET ASSETS $594,336,910
============
NET ASSETS CONSIST OF:
Trust capital (65,816,585 shares of beneficial
interest outstanding) $599,543,671
Undistributed net investment income 2,046,167
Accumulated net realized loss from sale
of investments (14,723,587)
Unrealized net appreciation of investments 7,470,659
------------
NET ASSETS $594,336,910
============
Net asset value and redemption price per share
($594,336,910 (divided by) 65,816,585 shares of beneficial
interest outstanding) $ 9.03
======
Maximum public offering price per share
($9.03 (divided by) 0.95 for a 5% sales charge) $ 9.51
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended October 31, 1995
<S> <C>
INVESTMENT INCOME:
Income--
Interest income $ 51,645,758
Dividend income 5,205,917
------------
Total income 56,851,675
------------
Expenses--
Investment advisory fee 3,509,710
Transfer agent services 944,128
Custodian fee 155,718
Administrative personnel and services 136,969
Printing and postage 219,181
Trust share registration costs 40,808
Auditing fees 21,300
Legal fees 2,325
Trustees' fees 11,745
Miscellaneous 20,561
------------
Total expenses 5,062,445
------------
Net investment income 51,789,230
------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized loss on investment transactions (14,450,136)
Net change in unrealized appreciation of investments 30,065,533
------------
Net gain on investments 15,615,397
------------
Net increase in net assets resulting
from operations $ 67,404,627
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended October 31, 1995 and 1994
Year Year
Ended Ended
10/31/95 10/31/94
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 51,789,230 $ 42,426,404
Net realized gain (loss) on investment transactions (14,450,136) 3,337,327
Net change in unrealized appreciation or depreciation
of investments 30,065,533 (48,907,187)
------------ ------------
Net change in net assets resulting from operations 67,404,627 (3,143,456)
------------ ------------
DISTRIBUTIONS PAID TO SHAREHOLDERS:
Net investment income (52,185,840) (41,113,817)
Net realized gain on investments (3,034,747) (910,565)
------------ ------------
Total distributions (55,220,587) (42,024,382)
------------ ------------
TRUST SHARE TRANSACTIONS:
Net proceeds from sale of shares 117,628,453 134,871,201
Reinvested dividend distributions 37,541,814 29,484,219
Cost of shares redeemed (72,649,892) (59,833,947)
------------ ------------
Net increase in net assets from trust share transactions 82,520,375 104,521,473
------------ ------------
Net increase in net assets 94,704,415 59,353,635
NET ASSETS:
Beginning of period 499,632,495 440,278,860
------------ ------------
End of period (including undistributed net investment
income of $2,046,167 and $2,442,777, respectively) $594,336,910 $499,632,495
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
Lutheran Brotherhood Income Fund
Financial Statements
Statement of Assets and Liabilities
October 31, 1995
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $1,001,648,228) $1,017,960,884
Cash 76,939
Receivable for investment securities sold 30,265,927
Interest receivable 15,006,607
--------------
Total assets 1,063,310,357
--------------
LIABILITIES:
Payable for investment securities purchased 120,937,879
Accrued expenses 230,787
--------------
Total liabilities 121,168,666
--------------
NET ASSETS $ 942,141,691
==============
NET ASSETS CONSIST OF:
Trust capital (108,068,307 shares of beneficial
interest outstanding) $ 961,113,681
Undistributed net investment income 4,974,121
Accumulated net realized loss from sale
of investments (40,258,767)
Unrealized net appreciation of investments 16,312,656
--------------
NET ASSETS $ 942,141,691
==============
Net asset value and redemption price per share
($942,141,691 (divided by) 108,068,307 shares of beneficial
interest outstanding) $ 8.72
======
Maximum public offering price per share
($8.72 (divided by) 0.95 for a 5% sales charge) $ 9.18
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended October 31, 1995
<S> <C>
INVESTMENT INCOME:
Income--
Interest income $ 71,877,705
Dividend income 442,165
------------
Total income 72,319,870
------------
Expenses--
Investment advisory fee 5,431,506
Transfer agent services 1,398,946
Custodian fee 184,283
Administrative personnel and services 215,922
Printing and postage 306,529
Trust share registration costs 38,568
Auditing fees 26,301
Legal fees 3,416
Trustees' fees 19,246
Miscellaneous 35,547
------------
Total expenses 7,660,264
------------
Net investment income 64,659,606
------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain on investment transactions 9,303,656
Net realized loss on closed futures contracts (46,953)
------------
Net realized gain on investments 9,256,703
Net change in unrealized appreciation of investments 66,244,804
------------
Net gain on investments 75,501,507
------------
Net increase in net assets resulting
from operations $140,161,113
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended October 31, 1995 and 1994
Year Year
Ended Ended
10/31/95 10/31/94
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 64,659,606 $ 65,920,666
Net realized gain (loss) on investment transactions 9,256,703 (49,289,869)
Net change in unrealized appreciation or depreciation
of investments 66,244,804 (85,923,538)
------------ ------------
Net change in net assets resulting from operations 140,161,113 (69,292,741)
------------ ------------
DISTRIBUTIONS PAID TO SHAREHOLDERS:
Net investment income (62,451,862) (63,237,709)
Net realized gain on investments -- (27,958,858)
------------ ------------
Total distributions (62,451,862) (91,196,567)
------------ ------------
TRUST SHARE TRANSACTIONS:
Net proceeds from sale of shares 45,763,710 95,303,536
Reinvested dividend distributions 46,818,208 67,951,565
Cost of shares redeemed (135,320,068) (137,813,949)
------------ ------------
Net change in net assets from trust share transactions (42,738,150) 25,441,152
------------ ------------
Net change in net assets 34,971,101 (135,048,156)
NET ASSETS:
Beginning of period 907,170,590 1,042,218,746
------------ ------------
End of period (including undistributed net investment
income of $4,974,121 and $2,751,910, respectively) $942,141,691 $907,170,590
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
Lutheran Brotherhood Municipal Bond Fund
Financial Statements
Statement of Assets and Liabilities
October 31, 1995
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $575,989,161) $616,837,876
Cash 71,313
Receivable for investment securities sold 1,714,780
Interest receivable 10,668,000
------------
Total assets 629,291,969
------------
LIABILITIES:
Payable for investment securities purchased 477,905
Accrued expenses 116,095
------------
Total liabilities 594,000
------------
NET ASSETS $628,697,969
============
NET ASSETS CONSIST OF:
Trust capital (73,260,821 shares of beneficial
interest outstanding) $595,352,488
Undistributed net investment income 553,971
Accumulated net realized loss from sale
of investments (8,057,205)
Unrealized net appreciation of investments 40,848,715
------------
NET ASSETS $628,697,969
============
Net asset value and redemption price per share
($628,697,969 (divided by) 73,260,821 shares of beneficial
interest outstanding) $ 8.58
======
Maximum public offering price per share
($8.58 (divided by) 0.95 for a 5% sales charge) $ 9.03
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended October 31, 1995
<S> <C>
INVESTMENT INCOME:
Income--
Interest income $ 37,743,488
------------
Expenses--
Investment advisory fee 3,504,880
Transfer agent services 517,010
Custodian fee 139,872
Administrative personnel and services 151,391
Printing and postage 122,150
Trust share registration costs 34,373
Auditing fees 26,300
Legal fees 2,414
Trustees' fees 16,246
Miscellaneous 25,679
------------
Total expenses 4,540,315
------------
Net investment income 33,203,173
------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain on investment transactions 364,962
Net realized loss on closed futures contracts (703,268)
------------
Net realized loss on investments (338,306)
Net change in unrealized appreciation of investments 52,104,109
------------
Net gain on investments 51,765,803
------------
Net increase in net assets resulting
from operations $ 84,968,976
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended October 31, 1995 and 1994
Year Year
Ended Ended
10/31/95 10/31/94
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 33,203,173 $ 33,749,852
Net realized loss on investment transactions (338,306) (5,413,232)
Net change in unrealized appreciation or depreciation
of investments 52,104,109 (65,720,253)
------------ ------------
Net change in net assets resulting from operations 84,968,976 (37,383,633)
------------ ------------
DISTRIBUTIONS PAID TO SHAREHOLDERS:
Net investment income (33,124,129) (33,607,416)
Net realized gain on investments -- (11,100,939)
------------ ------------
Total distributions (33,124,129) (44,708,355)
------------ ------------
TRUST SHARE TRANSACTIONS:
Net proceeds from sale of shares 39,483,970 76,123,051
Reinvested dividend distributions 25,171,137 33,891,528
Cost of shares redeemed (82,987,994) (62,418,135)
------------ ------------
Net change in net assets from trust share transactions (18,332,887) 47,596,444
------------ ------------
Net change in net assets 33,511,960 (34,495,544)
NET ASSETS:
Beginning of period 595,186,009 629,681,553
------------ ------------
End of period (including undistributed net investment
income of $553,971 and $449,768, respectively) $628,697,969 $595,186,009
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
Lutheran Brotherhood Money Market Fund
Financial Statements
Statement of Assets and Liabilities
October 31, 1995
<S> <C>
ASSETS:
Investments in securities, at amortized
cost and value $339,102,261
Cash 387,085
Receivable for trust shares sold 1,304,123
Interest receivable 557,227
------------
Total assets 341,350,696
------------
LIABILITIES:
Dividends payable 37,352
Accrued expenses 229,077
------------
Total liabilities 266,429
------------
NET ASSETS $341,084,267
============
NET ASSETS CONSIST OF:
Trust capital (341,084,267 shares of
beneficial interest outstanding) $341,084,267
============
Net asset value, offering price and redemption
price per share ($341,084,267 (divided by) 341,084,267
shares of beneficial interest outstanding) $ 1.00
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended October 31, 1995
<S> <C>
INVESTMENT INCOME:
Income--
Interest income $ 18,305,953
------------
Expenses--
Investment advisory fee 1,538,307
Transfer agent services 1,211,889
Custodian fee 311,850
Administrative personnel and services 85,688
Printing and postage 384,400
Trust share registration costs 68,433
Auditing fees 12,307
Legal fees 1,310
Trustees' fees 10,239
Miscellaneous 13,701
------------
Total expenses before expense reimbursement 3,638,124
Expense reimbursement from investment advisor (253,844)
------------
Net expenses 3,384,280
------------
Net investment income $ 14,921,673
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended October 31, 1995 and 1994
Year Year
Ended Ended
10/31/95 10/31/94
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 14,921,673 $ 7,835,288
------------ ------------
DISTRIBUTIONS PAID TO SHAREHOLDERS:
Net investment income (14,921,673) (7,835,288)
------------ ------------
TRUST SHARE TRANSACTIONS:
Proceeds from sale of shares 547,639,011 441,490,068
Reinvested dividend distributions 14,549,671 7,385,807
Cost of shares redeemed (497,972,433) (447,132,825)
------------ ------------
Net increase in net assets from trust share transactions 64,216,249 1,743,050
------------ ------------
Net increase in net assets 64,216,249 1,743,050
NET ASSETS:
Beginning of period 276,868,018 275,124,968
------------ ------------
End of period $341,084,267 $276,868,018
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
The Lutheran Brotherhood Family of Funds
Notes to Financial Statements
October 31, 1995
(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 seven series (the
"Fund(s)"), each with its own investment objective and policies. The seven
Funds of the Trust are: Lutheran Brotherhood Opportunity Growth Fund, Lutheran
Brotherhood World 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. The Lutheran
Brotherhood World Growth Fund's registration was declared effective by the
Securities Exchange Commission and began operations as a series of The
Lutheran Brotherhood Family of Funds on September 5, 1995. On September 5,
1995, Lutheran Brotherhood invested $6,000,000 in the World Growth Fund and
acquired 705,882 shares of beneficial interest.
(2) Significant Accounting Policies
Investment Security Valuations
Securities traded on U.S. or foreign securities exchanges or included in a
national market system 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 prices
within the range of the current bid and asked prices considered best to
represent the value in the circumstances, based on quotes that are obtained
from an independent pricing service or by dealers that make markets in the
securities. 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 Trustees.
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,
World Growth, LB Fund, High Yield and Municipal Bond Funds and the accrual of
market discount for the Opportunity Growth, World 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, Financial Futures and
Forward Foreign Currency Contracts
All Funds except the Money Market Fund may buy put and call options, write
covered call options and buy and sell futures contracts. The Funds intend to
use such derivative instruments as hedges to facilitate buying or selling
securities or to provide protection against adverse movements in security
prices or interest rates. The LB World Growth Fund may also enter into options
and futures contracts on foreign currencies and forward currency contracts to
protect against adverse foreign exchange rate fluctuation.
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 entering into a futures contract, the Fund is required to deposit initial
margin, either cash or securities in an amount equal to a certain percentage
of the contract value. Subsequent variation margin payments 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.
Foreign currency contracts are valued daily and unrealized appreciation or
depreciation is recorded daily as the difference between the contract exchange
rate and the closing forward rate applied to the face amount of the contract.
A realized gain or loss is recorded at the time a forward contract is closed.
Foreign Currency Translations
Securities and other assets and liabilities of the LB World Growth Fund that
are denominated in foreign currencies are translated into U.S. dollars at the
daily closing rate of exchange. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. Currency gains and losses are recorded
from sales of foreign currency, exchange gains or losses between the trade
date and settlement dates on securities transactions, and other translation
gains or losses on dividends, interest income and foreign withholding taxes.
The effect of changes in foreign exchange rates on realized and unrealized
security gains or losses are not segregated from gains and losses that arise
from changes in market prices of investments, and are included with the net
realized and unrealized gain or loss on investments.
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 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. The Income Fund earned $446,094 from such fees.
Organization Costs
Organization costs incurred in connection with the start up and initial
registration of the Funds are capitalized and amortized over a period of 60
months from the date of commencement. 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.
Distributions to Shareholders
Dividends from net investment income, if available, are declared and paid
annually for the Opportunity Growth and World Growth Funds, 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 for all Funds, after the close of the 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.
Reclassification of Permanent Tax Differences
It is the policy of each Fund to reclassify the net effect of permanent
differences between book and taxable income to trust capital accounts on the
statements of assets and liabilities. As a result of permanent book-to-tax
differences for the year ended October 31, 1995, accumulated net realized gain
or loss from the sale of investments was increased or decreased by
$(2,880,789), $3,899, ($1,677,618), ($14,467), and ($25,159), respectively,
for the Opportunity Growth, World Growth, LB Fund, Income and Municipal Bond
Funds; undistributed net investment income was increased or decreased by
$1,136,040, ($3,899), ($42,709), $14,467, and $25,159, respectively, for the
Opportunity Growth, World Growth, LB Fund, Income and Municipal Bond Funds;
and net increases of $1,744,749 and $1,720,327, respectively, for the
Opportunity Growth and LB Fund, were reclassified into trust capital. These
reclassifications have no effect on net assets, net asset value per share, the
change in net assets resulting from operations, or on the amount of income
available for distribution to shareholders.
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; World Growth Fund, 1.25% for the first $20
million in assets, 1.10% for the next $30 million in assets, and 1.0% of net
assets over $50 million; 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.
LBRC has entered into a sub-advisory agreement with Rowe Price Fleming
International, Inc. for the performance of various sub-advisory services for
the World Growth Fund. For these services, LBRC pays an annual sub-advisory
fee that is based on the following annual rates of average daily net assets of
the World Growth Fund: 0.75% for the first $20 million in assets; 0.60% for
the next $30 million, and 0.50% for assets over $50 million. When annual
average assets exceed $200 million, the fee will be equal to 0.50% of all of
the World Growth Fund's annual average daily net assets.
During the year ended October 31, 1995 the Money Market Fund advisory fees
totaled $1,538,307 of which $253,844 were voluntarily waived by LBRC to limit
the Money Market Fund's expense ratio to 1.10% of average daily net assets.
The advisory fees of the World Growth Fund totaled $17,787 of which $13,415
were voluntarily waived by LBRC to limit the World Growth Fund's expense ratio
to 1.95% of average daily net assets. LBRC can terminate its voluntary waiver
of expenses for these Funds at any time at its discretion.
Sales Charges and Other Fees
For the year ended October 31, 1995, Lutheran Brotherhood Securities Corp.
(LBSC), the Trust's distributor, received sales
charges paid by purchasers of Fund shares of: Opportunity Growth Fund,
$1,423,809; World Growth Fund, $153,713; LB Fund, $1,609,270; High Yield Fund,
$2,422,070; Income Fund, $1,325,519; and Municipal Bond Fund, $989,735. 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 whereby
LBSC will receive an annual fee equal to .025% of average daily net assets.
LBSC received the following compensation for the year ended October 31, 1995:
Opportunity Growth Fund, $33,788; World Growth Fund, $356; LB Fund, $144,572;
High Yield Fund, $136,969; Income Fund, $215,922; Municipal Bond Fund,
$151,391; and Money Market Fund, $85,688. In addition, LBSC provides the Funds
with transfer agent services pursuant to an agreement and received the
following compensation: Opportunity Growth Fund, $582,903; World Growth Fund,
$4,983; LB Fund, $1,478,056; High Yield Fund, $944,128; Income Fund,
$1,398,946; Municipal Bond Fund, $517,010; and Money Market Fund, $1,211,889.
Certain officers and non-independent trustees of the Fund are officers and
directors of LBRC and LBSC; however, they receive no compensation from the
Funds.
(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. There were no security loans during the year
ended October 31, 1995.
(5) Distributions From Capital Gains
During the year ended October 31, 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
During the year ended October 31, 1995, the Opportunity Growth Fund fully
utilized the remaining $2,547,602 of its capital loss carryover, and the
Income Fund utilized $8,930,297 of its capital loss carryover against net
realized capital gains. At October 31, 1995, the High Yield, Income and
Municipal Bond Funds had accumulated net realized capital loss carryovers of
$14,624,938, $40,056,911 and $6,542,389, respectively, expiring $40,056,911
and $6,407,670 in the year 2002 for the Income and Municipal Bond Funds,
respectively, and $14,624,938 and $134,719 in 2003 for the High Yield Fund and
Municipal Bond Fund, respectively. To the extent these Funds realize future
net capital gains, taxable distributions will be reduced by any unused capital
loss carryovers. Temporary timing differences of $298,419, $1,661, $1,212,921,
$98,648, $201,854, and $1,514,816 existed between net realized capital gains
or losses for financial statement and tax purposes as of October 31, 1995 for
the Opportunity Growth, World Growth, LB Fund, High Yield Fund, Income and
Municipal Bond Funds, respectively. These differences are due primarily to
deferral of wash sale losses and straddle losses for tax purposes.
(7) Shareholder Notification Of Federal
Income Tax Status
The LB Fund designates 100% of the dividends declared from net investment
income as dividends qualifying for the 70% corporate dividends received
deduction and the Municipal Bond Fund designates 100% of the dividends
declared from net investment income as exempt from federal income tax for the
year ended October 31, 1995. The Opportunity Growth Fund and the LB Fund
designate $548,525 and $806,925, respectively, as capital gain distributions
resulting from earnings and profits distributed to shareholders on redemption
of fund shares during the year.
(8) Investment Transactions
Purchases and Sales of Investment Securities
For the year ended October 31, 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 $288,153 $255,477
World Growth Fund 11,571 13
LB Fund 707,759 666,482
High Yield 426,479 352,646
Income 655,849 614,292
Municipal Bond 216,407 232,600
Purchases and sales of U.S. Government securities were:
$(thousands)
------------------------
Fund Purchases Sales
- --------------------------------------------------------
LB Fund $ 26,505 $ 26,523
Income 502,936 526,529
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 $2,901,105 at
October 31, 1995 which represented 0.5% 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
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 year were as follows:
<TABLE>
<CAPTION>
Opportunity Growth LB Fund Income Fund
-------------------------- -------------------------- --------------------------
Number of Premium Number of Premium Number of Premium
Contracts Amount Contracts Amount Contracts Amount
------------ ---------- ------------ --------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at October 31, 1994 -- -- 53 $ 43,618 -- --
Opened 135 $ 8,760 2,344 499,914 1 $ 96,250
Closed -- -- (1,481) (290,102)
Expired -- -- (536) (50,771)
Exercised (135) (8,760) (866) (202,659) (1) (96,250)
------------ ---------- ------------ --------- ------------ ----------
Balance at October 31, 1995 -- $ -- -- $ -- -- $ --
============ ========== ============ ========== =========== ==========
</TABLE>
Foreign Denominated Investments
The LB World Growth Fund invests primarily in foreign denominated stocks.
Foreign denominated assets and currency contracts may involve more risks than
domestic transactions, including: currency risk, political and economic risk,
regulatory risk, and market risk. The Fund may also invest in securities of
companies located in emerging markets. Future economic or political
developments could adversely affect the liquidity or value, or both, of such
securities.
At October 31, 1995, the World Growth Fund was a party to a forward currency
exchange contract under which it is obligated to exchange currencies at
specified future dates. Risks may arise from the possible inability of
counterparties to meet the terms of their contracts and from movements in
currency values. Outstanding contracts at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
U.S. U.S.
Currency Value Currency Value
Settlement to be as of to be as of Appreciation
Date Delivered 10/31/95 Received 10/31/95 (Depreciation)
---------- ------------ -------- ------------------- -------- --------------
<S> <C> <C> <C> <C> <C>
11/01/95 $174,131 USD $174,131 (yen)17,674,288 JPY $172,778 $(1,353)
</TABLE>
(9) 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 World High Income Municipal Money
Growth Growth LB Fund Yield Fund Bond Market
---------- ---------- ---------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C. <C> <C> <C>
Shares outstanding at
October 31, 1993 3,832,452 N/A 7,965,971 45,249,704 110,473,555 69,984,767 275,124,968
Shares sold 5,950,178 N/A 3,943,939 14,381,578 10,973,573 8,943,485 441,490,067
Shares issued on reinvestment
of dividends and distributions -- N/A 1,839,470 3,161,025 7,825,510 3,994,426 7,385,807
Shares redeemed (531,608) N/A (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 4,092,712 1,656,709 2,728,955 13,395,549 5,470,573 4,792,917 547,639,011
Shares issued on reinvestment
of dividends and distributions -- -- 354,095 4,301,940 5,624,521 3,067,030 14,549,671
Shares redeemed (1,368,095) (2,513) (3,657,566) (8,273,232) (16,216,513) (10,087,527) (497,972,433)
---------- ---------- ---------- ---------- ------------ ---------- ------------
Shares outstanding at
October 31, 1995 11,975,639 1,654,196 30,463,515 65,816,585 108,068,307 73,260,821 341,084,267
========== ========= ========== ========== =========== ========== ===========
</TABLE>
(10) Financial Highlights
"Financial highlights" showing per share data and selected information is
presented in the prospectus.
The Lutheran Brotherhood Family of Funds
Lutheran Brotherhood Opportunity Growth Fund
Lutheran Brotherhood World 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
Bruce J. Nicholson
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
Richard B. Ruckdashel
Vice President
This report is authorized for distribution to prospective
investors only when preceded or accompanied by the
current prospectuses.
Printed with soy based inks on recycled
paper containing at least 10% fibers
from paper recycled by consumers.
LUTHERAN BROTHERHOOD
FAMILY OF FUNDS
Annual Report
October 31, 1995
Portfolio Management Reviews
Economic and
Market Overview
U.S. stock and bond prices advanced strongly in the past year, as investors
became increasingly optimistic about inflation and the economy. In the 12
months ended October 31, 1995, the S&P 500 Index and the Lehman Aggregate
Bond Index had total returns of 26.39% and 15.65%, respectively. These gains
were remarkable by historical standards and delivered strong returns for
shareholders in the Lutheran Brotherhood Family of Funds.
A Sharp Decline in Interest Rates
Stock and bond prices rallied largely on a sharp decline in long-term
interest rates. When long-term rates fall, existing bonds usually become
more valuable, and corporate profits generally improve.
Worried that a rapidly growing economy would spark inflation that could
stymie further growth, the Federal Reserve Board (the "Fed") raised
short-term interest rates by 125 basis points between November 1994 and
February 1995. This helped investors believe that economic growth would be
more moderate and inflation would stay under control. Soon long-term
interest rates began to drop, causing bond prices to rise.
As bond yields declined, stocks became more attractive to investors. At the
same time, corporate earnings were stronger than most analysts expected,
which also helped push stock prices higher.
Eventually, the higher interest rates of earlier months began to have an
effect on the economy. Economic growth, measured by the gross domestic
product (GDP), slowed from an annualized rate of 5.1% in the fourth quarter
of 1994, to rates of 2.7% and 1.3% in the first and second quarters of 1995.
These surprisingly low rates of growth raised hopes that the Fed would cut
interest rates to prevent a recession, and brought additional gains for
stocks and bonds.
In July the Fed cut short-term rates by 25 basis points. During the weeks
that followed, mixed news about the direction of the economy raised new
fears about inflation and caused a temporary retreat in stock and bond
prices. By September, however, it was clear that inflation was moderate, and
the Fed had achieved a "soft landing" for the economy. By October, further
gains in bond prices dropped the yield for 30-year Treasury bonds to
6.3%--the lowest level since February 1994. Stock prices continued to break
new highs, raising the Dow Jones Industrial Average above 4800 for the first
time.
Foreign stock markets did not fare as well in the past 12 months, due to
delays in economic recoveries for many countries. This began to change in
the final months of the period, however, as falling interest rates improved
economic outlooks in Europe and Japan.
Market Outlook
Without the bottlenecks that can cause a recession, the economy should grow
enough in 1996 to raise the GDP by a moderate 2% to 2.5%. If that happens,
and inflation remains between 2% and 3%, the Fed could cut interest rates
again. Lower interest rates would probably mean additional price gains for
bonds, especially issues with shorter maturities. Such gains would likely be
smaller, however, than those of 1995.
Lower interest rates could also fuel additional gains for stocks. Stocks
could benefit further from continued growth in capital spending by
businesses hoping to enhance productivity. Improved productivity, in turn,
may continue to be an engine for the next economic expansion, potentially
creating another stock market rally in the coming year.
Further expansions in economies overseas should also boost stock prices
there. Given the attractive prices in many foreign securities markets, such
gains could well exceed those for equities in the U.S.
LB Opportunity Growth Fund
Photo goes here
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.
Investment Objective: To seek long-term growth of capital by investing in
small-company stocks.
As the stocks of small companies gathered momentum in the past year,
technology stocks were a major driving force. By investing heavily in the
technology sector and other groups that performed well, the LB Opportunity
Growth Fund delivered outstanding returns for the 12 months ended October
31, 1995.
During that time, the Fund had a total return (based on NAV) of 28.53%. That
was well ahead of the 20.90% average return for small-company growth funds
tracked by Lipper Analytical Services and far exceeded the 18.35% return of
the Russell 2000 Index.
Recognizing Sector Potential
In choosing stocks for the Fund, we look for issues with strong potential
for growth in sales and earnings that have quality management plus unique
products or services. We also look for stocks with positive technical
momentum. In the past year, these criteria led us to stocks in the
technology sector, which benefited from a wide range of new products and
strong demand for computers. With more than triple the technology weighting
of the Russell 2000 Index, the Fund enjoyed especially strong performances
by stocks such as Adaptec, Madge, SCI Systems, Sterling Software and
Softkey.
We also invested heavily in manufacturers of medical devices--such as Mentor
and Spinetech--which performed well during the period. Two other areas that
provided strong returns were specialty retailing stocks like General
Nutrition and Sunglass Hut, and restaurant stocks like Quality Dining and
Apple South.
During the period we reduced the Fund's investments in apparel, auto and
chemical stocks that offered less potential for growth. We also took profits
in issues that had earned substantial price gains. These included Fiserv,
SunGard Data, CUC International and Envoy in the business services group, as
well as Callaway Golf and Cobra Golf in the leisure group.
Going Forward
As the economy grows slowly with moderate inflation, interest rates may edge
lower. If that happens, the earnings of small companies should continue to
be strong. We believe the Fund's current mix of investments could perform
well under these conditions.
We expect, therefore, to remain overweighted in technology stocks compared
to the Russell 2000 Index, and have recently started a position in biotech
companies. We are also adding firms involved in industrial and water
filtration, such as U.S. Filter and Memtech.
The Fund's cash reserves totaled 10.3% on October 31, 1995. In coming months
we will look for new opportunities to put this cash to work that offer
strong potential for growth according to our criteria.
% of
Portfolio
Top 10 Holdings Net Assets
Madge N V 2.5%
Movie Gallery, Inc. 2.4%
Cheyenne Software, Inc. 2.4%
Sterling Software, Inc. 2.3%
PDT, Inc. 2.3%
Metrocall, Inc. 2.3%
Department 56, Inc. 2.2%
Viasoft, Inc. 2.1%
Intersolv, Inc. 2.0%
Avid Technology, Inc. 2.0%
Portfolio Composition Pie Chart
Short Term Securities 10.3%
Common Stocks 89.7%
Worm chart
Growth of $10,000 January 31, 1993 - October 31, 1995
Plot points are:
Date LBOGF Russell 2000 Lipper Average
1993 10,000 10,000 10,000
9,056 9,769 9,608
9,407 10,086 9,934
9,166 9,809 9,619
9,857 10,243 10,127
10,011 10,307 10,206
9,945 10,449 10,263
10,637 10,900 10,737
11,317 11,208 11,076
11,701 11,497 11,232
11,262 11,122 10,886
11,559 11,503 11,348
1994 11,833 11,863 11,650
11,712 11,820 11,643
10,922 11,197 11,014
10,999 11,263 11,016
10,582 11,137 10,778
9,967 10,762 10,388
10,318 10,938 10,451
11,218 11,547 11,048
11,383 11,508 11,285
11,811 11,462 11,275
11,570 10,999 10,848
11,866 11,295 11,265
1995 11,350 11,153 11,229
11,954 11,617 11,539
12,393 11,816 11,892
12,481 12,079 12,050
12,821 12,286 12,232
13,985 12,924 12,880
15,543 13,669 13,823
15,796 13,962 14,062
16,136 14,212 14,375
15,181 13,577 13,864
Legend Reads:
LB Opportunity Growth Fund
Annualized Total Returns* Period Ending 10/31/95
- ----------------------------------------------------
Since Fund
Based on Inception--1/8/93 1 Year
- ----------------------------------------------------
Net Asset Value 19.26% 28.53%
Public Offering Price 17.12% 22.06%
Vertical bar reads:
$19,000
17,000
16,000
15,000
14,000
13,000
12,000
11,000
10,000
9,000
8,000
Horizontal bar reads:
1993 1994 1995
LB Opportunity Growth Fund $15,181
Russell 2000 Index $13,577
Lipper Average Small
Company Stock Funds $13,864
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.
*See accompanying notes to Portfolio Management Reviews.
LB World Growth Fund
Photo goes here
Martin G. Wade is president of Rowe Price-Fleming, tbe investment subadvisor
for the LB World Growth Fund. He leads a team of 12 portfolio managers who
have managed the assets of the LB World Growth Fund since its inception in
September of 1995. Martin G. Wade has 27 years of experience in research and
investment management, including 16 years with Rowe Price-Fleming.
Investment Objective: To seek long-term growth of capital by investing
primarily in common stocks of established companies outside tbe U.S.
As we launched the LB World Growth Fund on September 5, 1995, we found many
attractive investment opportunities. For some time, economic hurdles abroad
had kept foreign stock prices relatively low. With foreign economies set to
improve, many stocks overseas offered outstanding value.
As we built the Fund's portfolio, we focused on the major markets of
developed nations--emphasizing areas with the strongest potential for
growth. At the end of October 1995, about a quarter of the Fund's equity
holdings were invested in stocks from Japan, and about half were invested in
stocks from countries in Europe. Japanese stocks represented a somewhat
smaller portion of the Fund than they did of its market benchmark, the
Morgan Stanley Europe, Australia, Far East (EAFE) Index, while European
stocks represented a slightly greater weighting in the Fund than they did in
the Index.
Focus on Industry Leaders
Economic recoveries abroad have been most solid in Europe--especially in the
United Kingdom, where we invested about 13% of the Fund's stock portfolio.
We placed another 8% in the Netherlands, whose stock market is dominated by
multinational companies that benefited from rising exports. French and
German stocks, which enjoyed improved corporate outlooks, accounted for 6%
and 4%, respectively. Throughout Europe, as in other regions, we focused on
large, well-managed companies with leadership positions in their industries.
After a tentative recovery, the Japanese economy retreated in the second
half of 1995. The major exception was the technology sector, which improved
as a weaker yen raised demand for Japanese computers. In choosing Japanese
stocks, we gave greatest weight to technology issues. In addition, we
targeted stocks in cyclical industries, which also benefited from a weaker
yen.
Other economies in the Far East have performed quite well, as trading within
the region improved. Those with greatest representation in the Fund were
Hong Kong, Malaysia and Singapore, which accounted for about 7.5% of the
Fund's stock investments. Economic growth has also been encouraging in Latin
America, which represented about 3% of the Fund's equity positions at the
end of October.
New Opportunities
As European economies begin to mature, we will probably take profits in
holdings that become more valued. We expect to use the proceeds to increase
investments in Japan and the emerging markets of the Far East and Latin
America. We believe stock prices there are still especially attractive and
may offer the greatest potential for growth in the coming year.
As economies abroad improve further in 1996, corporate earnings could
strengthen significantly. This, combined with low interest rates and
inflation, should make foreign stocks increasingly attractive.
Portfolio Composition Pie Chart
Common Preferred Stocks 80%
Short-Term Securities 20%
% of
Portfolio
Top 10 Holdings Net Assets
Wolters Kluwer 2.0%
Sharp Corp. 1.8%
Mitsui Fudosan Co. 1.6%
Elsevier NV 1.5%
Royal Dutch Petroleum 1.2%
Kyocera Corp. 1.1%
National Westminster 1.1%
SmithKline Beecham 1.1%
Reed International 1.1%
BBC Brown Boveri 0.9%
Geographic Composition of Portfolio
% of
Portfolio
Country Net Assets
Japan 21.4%
United Kingdom 12.9%
Netherlands 8.1%
France 6.1%
Germany 4.2%
Switzerland 4.0%
Hong Kong 2.9%
Malaysia 2.5%
Singapore 2.1%
Spain 2.0%
Sweden 1.9%
Australia 1.6%
Italy 1.5%
Mexico 1.4%
% of
Portfolio
Country Net Assets
Norway 1.3%
Belgium 0.9%
Thailand 0.9%
Brazil 0.7%
Argentina 0.6%
Chile 0.6%
China 0.6%
New Zealand 0.6%
Canada 0.4%
Denmark 0.3%
Finland 0.2%
Portugal 0.2%
Austria 0.1%
Short-Term Securities 20.0%
The LB World Growth Fund was introduced on September 5, 1995. Given its
limited performance history, the growth of a $10,000 investment in the LB
World Growth Fund is not illustrated in this report.
LB Fund
Photo goes here
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 Corp. since its inception in 1970.
Investment Objective: To seek growth of capital and income by investing in
the stocks of leading companies.
In the past year we refocused holdings in the LB Fund to emphasize stocks of
larger companies. We also increased investments in technology and financial
services firms. These groups performed especially well in the recent stock
rally, helping the Fund deliver a strong return for the 12 months ended
October 31, 1995. During this time, the Fund had a total return (based on
NAV) of 21.34%. This outdistanced the average growth and income fund tracked
by Lipper Analytical Services, which returned 20.53%. Over the same period,
the S&P 500 Index had a total return of 26.39%.
Targeting Growth and Yield
In reshaping the Fund's portfolio, we divided 80% of its assets among a core
group of 40 large-company stocks with leadership positions in their
industries. We chose companies with attractive prices and strong potential
for earnings growth--based on the quality of their products, management and
marketing strategies. We invested the remaining 20% of the Fund in other
large companies whose near-term earnings growth should be especially strong.
This led us to invest more heavily in technology and financial services
firms.
For much of the rally, investors preferred the stocks of larger companies.
In addition to attractive prices and proven earnings, these companies
offered increased opportunities for exports due to ongoing weakness in the
U.S. dollar. Investors also favored technology stocks, which benefited from
heightened demand for computers, software and communications equipment--as
well as financial stocks, which benefited from lower interest rates.
As the economic growth slowed, we reduced investments in cyclical industries
like building and mining, whose earnings tend to rise and fall with the
economy, and added investments in defensive industries--such as household
products, drugs and health care--whose earnings are generally more stable.
Many of the Fund's defensive stocks also provided attractive dividends.
A Return to Cyclical Stocks
In the months ahead, we expect to maintain an emphasis on large companies
with strong market leadership and watch for special opportunities in other
sectors that might arise. One of these sectors may be cyclical stocks, whose
prices have become quite attractive. If inflation remains moderate, and
interest rates move even lower, the economy should strengthen--benefiting
companies whose earnings rely on sustained economic growth.
We've also added investments in leading metals and paper companies, such as
Phelps Dodge and Weyerhauser. As the economy improves, there should be
further gains in capital spending by U.S. businesses that should spark
continued demand for equipment that enhances productivity. As a result, we
expect to remain heavily invested in stocks from the technology sector.
Portfolio Composition Pie Chart
U.S. Treasury 0.3%
Short-Term Securities 1.2%
Common Stocks 98.5%
% of
Portfolio
Top 10 Holdings Net Assets
Intel Corp. 3.1%
Weyerhaeuser Co. 2.7%
Phelps Dodge Corp. 2.6%
Caterpillar Inc. 2.2%
United HealthCare Corp. 2.1%
SBC Communications Inc. 2.1%
Mobil Corp. 2.1%
Procter & Gamble Co. 2.1%
Motorola, Inc. 2.1%
Ameritech Corp. 2.0%
Worm chart
Growth of $10,000 October 31, 1985 - October 31, 1995
Plot points are:
Lipper Average
Date LBF S&P 500 Growth & Income
1985 10,000 10,000 10,000
9,988 10,685 10,584
10,276 11,202 10,994
10,355 11,267 11,142
10,956 12,106 11,917
11,314 12,781 12,507
11,093 12,639 12,389
11,392 13,312 12,869
11,418 13,537 13,053
11,103 12,781 12,422
11,825 13,730 13,130
11,274 12,593 12,319
1986 11,652 13,324 12,842
11,924 13,645 13,033
11,602 13,297 12,796
12,573 15,089 14,111
13,076 15,681 14,721
13,221 16,135 14,929
13,027 15,991 14,723
13,083 16,127 14,795
13,612 16,944 15,364
14,149 17,805 15,945
14,532 18,469 16,411
14,175 18,064 16,128
1987 11,171 14,172 13,030
10,498 13,000 12,293
11,224 13,991 13,081
11,479 14,598 13,613
11,852 15,250 14,240
11,468 14,787 14,024
11,508 14,972 14,140
11,524 15,069 14,156
11,982 15,772 14,813
11,845 15,731 14,714
11,514 15,175 14,358
11,959 15,826 14,856
1988 12,228 16,285 15,108
12,041 16,026 14,892
12,262 16,309 15,147
13,116 17,519 16,018
12,820 17,055 15,795
13,162 17,462 16,119
13,789 18,391 16,778
14,268 19,098 17,344
14,143 19,004 17,255
15,463 20,739 18,423
15,986 21,123 18,812
15,937 21,039 18,726
1989 14,987 20,568 18,188
15,487 20,966 18,461
15,525 21,471 18,716
14,397 20,050 17,649
14,524 20,271 17,877
14,936 20,822 18,257
14,679 20,323 17,812
16,258 22,263 19,194
16,357 22,130 19,171
16,274 22,075 19,022
14,944 20,059 17,513
14,155 19,086 16,659
1990 14,145 19,026 16,402
14,888 20,232 17,363
15,223 20,796 17,867
15,970 21,724 18,733
16,997 23,239 19,956
17,306 23,811 20,419
17,400 23,890 20,436
18,198 24,885 21,255
17,185 23,757 20,356
18,070 24,893 21,209
18,616 25,453 21,695
18,305 25,029 21,500
1991 18,693 25,398 21,828
18,012 24,343 20,968
20,211 27,129 23,042
19,910 26,653 23,038
20,118 26,965 23,427
19,607 26,441 23,022
19,747 27,250 23,383
19,930 27,343 23,528
19,453 26,943 23,055
20,046 28,078 23,825
19,679 27,474 23,375
19,955 27,794 23,653
1992 20,345 27,924 23,802
21,212 28,834 24,680
21,383 29,195 25,053
21,794 29,465 25,336
21,865 29,834 25,524
22,497 30,466 26,182
22,117 29,764 25,703
22,669 30,511 26,304
22,743 30,611 26,386
22,546 30,521 26,362
23,211 31,648 27,327
23,173 31,404 27,311
1993 23,409 32,087 27,699
22,801 31,747 27,322
23,240 32,143 27,917
24,068 33,259 28,788
23,411 32,324 28,227
22,273 30,921 27,044
22,326 31,345 27,299
22,576 31,806 27,561
21,957 31,026 26,932
22,617 32,078 27,673
23,435 33,371 28,730
23,040 32,550 28,092
1994 23,384 33,308 28,396
22,431 32,073 27,351
22,448 32,544 27,641
22,992 33,413 28,036
23,642 34,690 29,087
24,066 35,727 29,835
24,772 36,795 30,566
25,584 38,212 31,553
26,424 39,102 32,216
27,599 40,427 33,272
27,292 40,508 33,462
28,321 42,214 34,496
1995 28,375 42,091 34,113
Legend Reads:
LB Fund
Annualized Total Returns* Period Ending 10/31/95
- ----------------------------------------------------
Based on 10 Years 5 Years 1 Year
- ----------------------------------------------------
Net Asset Value 11.55% 14.93% 21.34%
Public Offering Price 10.99% 13.76% 15.28%
Vertical bar reads:
$45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
Horizontal bar reads:
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
S & P 500 Index $42,091
Lipper Average Growth &
Income Funds $34,113
LB Fund $28,375
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.
*See accompanying notes to Portfolio Management Reviews.
LB High Yield Fund
Photo goes here
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.
Investment Objective: To seek high current income and growth of capital by
investing primarily in high-yielding ("junk") corporate bonds.
Falling interest rates caused the prices of medium- and long-term corporate
bonds to rise sharply in the past year. Because the LB High Yield Fund
invests primarily in lower-quality corporate bonds with medium- to
longer-term maturities, it enjoyed solid performance as interest rates
declined. During the 12 months ended October 31, 1995, the Fund had a total
return (based on NAV) of 12.93%. This compares with an average return of
13.45% for high-yield bond funds tracked by Lipper Analytical Services.
Many of the Fund's investments in longer-term securities were
deferred-interest bonds issued by media and telecommunications firms. These
securities were particularly hard hit late in 1994, due to the rising
interest rate environment of that year. Because of this, the Fund lagged the
Lehman Brothers High Yield Index, which had a return of 15.68% for the
period.
After interest rates began to drop, and investors grew more optimistic about
media and telecommunications companies, the price gains for these bonds were
particularly strong. There was also significant price appreciation in other
deferred-interest bonds that the Fund held. We eventually took profits in
some of these issues, reducing the Fund's position in deferred-interest
bonds from about 20% of the portfolio to about 16%. With the strong returns
from these bonds, the Fund outperformed its Lipper group for much of the
period--ranking in the 18th percentile for the first 10 months of 1995.
Preparing for a Slower Economy
During the period we increased the Fund's holdings in companies that
generally outperform the market when economic growth is slow--such as
supermarket chains and health care firms. Among the investments added were
bonds issued by Dominick's Finer Foods, Ralph's Super Markets and Tenet
Health Care. At the same time, we reduced holdings in cyclical industries,
such as paper, steel and chemicals, which tend to lag in a slowing economy.
By choosing investments carefully, we maintained a solid yield for the Fund
as interest rates fell. At the end of the period the Fund had a current SEC
yield of 8.45%.
Future Strategies
We expect to remain relatively defensive in coming months, as economic
growth continues to slow, and will probably add to investments in
noncyclical industries. As an additional defense, we're giving greater
emphasis to bonds with stronger credit quality.
The Fund should continue to benefit from holdings in deferred-interest bonds
from industries, like media and telecommunications, that can grow even in a
slower economy. These issues should also give the Fund an attractive yield
if bond yields continue to fall.
Portfolio Composition Pie Chart
Short-Term Securities 5.4%
Common Stocks &
Stock Warrants 4.9%
Preferred Stocks 11.6%
Foreign Bonds 0.7%
Corporate Bonds 77.5%
Bar Graph
Moody's Bond Quality
Rating Distribution
Baa 0.3%
Ba 11.3%
B 63.0%
Caa 18.4%
Ca 1.8%
D 0.2%
Not Rated 5.0%
0% 20% 40% 60% 80%
Worm Chart
Growth of $10,000 April 30, 1987 - October 31, 1995
Plot points are:
LB High
Date Yield Lehman Lipper
1987 10,000 10,000 10,000
9,462 10,072 9,942
9,690 10,201 10,072
9,729 10,228 10,100
9,769 10,292 10,165
9,468 9,968 9,920
9,166 9,642 9,499
9,453 9,919 9,721
9,624 10,158 9,804
1988 9,979 10,498 10,107
10,300 10,838 10,385
10,181 10,725 10,344
10,195 10,807 10,407
10,167 10,823 10,434
10,404 10,981 10,646
10,468 11,053 10,752
10,436 11,037 10,764
10,545 11,176 10,861
10,655 11,311 10,993
10,655 11,378 11,008
10,811 11,431 11,065
1989 11,029 11,633 11,256
11,088 11,658 11,304
10,998 11,567 11,265
10,924 11,616 11,258
11,168 11,841 11,421
11,449 11,988 11,611
11,409 11,972 11,627
11,478 12,013 11,634
11,241 11,811 11,452
10,777 11,531 11,113
10,712 11,508 11,058
10,522 11,527 10,979
1990 10,200 11,279 10,697
9,953 11,046 10,436
9,995 11,336 10,558
9,998 11,317 10,551
10,326 11,535 10,782
10,454 11,814 11,000
10,639 12,132 11,228
10,232 11,442 10,770
9,778 10,606 10,227
9,433 10,050 9,787
9,584 10,363 9,826
9,738 10,421 9,857
1991 9,794 10,708 9,995
10,510 11,879 10,713
11,010 12,579 11,246
11,411 13,095 11,678
11,514 13,118 11,750
11,840 13,506 11,998
12,171 13,939 12,356
12,350 14,259 12,588
12,546 14,457 12,800
12,997 14,940 13,208
13,196 15,018 13,331
13,253 15,234 13,447
1992 13,867 15,771 13,980
14,255 16,160 14,315
14,513 16,360 14,536
14,639 16,423 14,641
14,868 16,654 14,855
14,953 16,811 15,005
15,212 17,065 15,274
15,420 17,288 15,467
15,578 17,464 15,627
15,296 17,218 15,366
15,562 17,435 15,593
15,920 17,634 15,801
1993 16,573 18,147 16,230
16,774 18,466 16,544
17,097 18,705 16,871
17,165 18,867 17,005
17,456 19,092 17,273
17,994 19,493 17,674
18,138 19,682 17,849
18,282 19,847 17,981
18,275 19,899 18,037
18,848 20,301 18,441
18,918 20,398 18,559
19,241 20,651 18,833
1994 19,808 21,099 19,282
19,740 21,045 19,245
19,008 20,249 18,625
18,717 20,111 18,355
18,790 20,121 18,397
18,802 20,184 18,372
18,650 20,355 18,339
18,787 20,500 18,350
18,699 20,502 18,350
18,759 20,551 18,331
18,308 20,292 18,086
18,224 20,442 18,107
1995 18,306 20,720 18,254
19,004 21,431 18,751
19,199 21,663 18,921
19,662 22,213 19,383
20,061 22,835 19,813
20,170 22,988 19,875
20,805 23,277 20,224
20,892 23,349 20,279
21,073 23,637 20,520
21,184 23,783 20,684
Legend Reads:
LB High Yield Fund
Annualized Total Returns* Period Ending 10/31/95
- ----------------------------------------------------
Since Fund
Inception
Based on 4/3/87 5 Years 1 Year
- ----------------------------------------------------
Net Asset Value 9.54% 17.55% 12.93%
Public Offering Price 8.88% 16.36% 7.24%
Vertical bar reads:
$24,000
22,000
20,000
18,000
16,000
14,000
12,000
10,000
9,000
Horizontal bar reads
1987 1988 1989 1990 1991 1992 1993 1994 1995
Lehman High Yield Index $23,783
Lipper Average High
Yield Funds $20,684
LB High Yield Fund $21,184
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.
*See accompanying notes to Portfolio Management Reviews.
LB Income Fund
Photo goes here
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.
Investment Objective: To seek high current income while preserving principal
by investing in investment-grade bonds and other income-producing
securities.
In the past year the LB Income Fund had sizable investments in bonds with
longer maturities. These issues enjoyed especially strong gains as bond
prices rallied and provided the Fund with a superior return for the 12
months ended October 31, 1995.
During that time the Fund earned a total return (based on NAV) of 16.53%.
That outpaced the return of 15.26% for the average high-quality corporate
bond fund tracked by Lipper Analytical Services, as well as the return of
15.65% for the Lehman Aggregate Bond Index.
Adjusting Investment Maturities
Expecting long-term rates to fall, we arranged the maturities of the Fund's
investments in a "barbell" structure with a long average maturity before the
period started. By balancing large investments in asset-backed securities
maturing in one to three years with large investments in corporate and
Treasury bonds with 30-year maturities, we increased the Fund's potential
for capital gains and enhanced its yield, while buffering the value of the
Fund against a correction in bond prices.
Later, when the spread between yields on long-term and short-term issues had
narrowed, and a correction in bond prices seemed possible, we invested more
heavily in securities that matured in two to 10 years.
Corporate bonds performed especially well in the bond rally-- as strong cash
flows improved the credit quality of corporate issues, and the supply of new
corporate issues declined. In the first part of the period, we emphasized
corporate bonds from defensive industries, such as health care and food,
whose earnings do not require a growing economy to improve. Later, as it
looked like the economy would avoid a recession, we added corporate bonds
issued by companies in cyclical industries.
During the year we invested about 35% to 40% of the Fund's portfolio in
corporate bonds, and 15% to 20% in Treasuries. Mortgage-backed securities,
asset-backed securities and shorter-term issues accounted for the rest. This
mix, and a focus on bonds that could not be called by their issuers,
provided attractive returns as interest rates fell. At the end of the period
the Fund had a current SEC yield of 5.62%.
Anticipating Lower Rates
We believe the Fund is well-positioned for the months to come. If a slowing
economy brings lower interest rates, price gains for bonds maturing in two
to 10 years could be particularly strong. Falling interest rates would also
benefit the Fund's increased weighting in bonds of financial firms. Should
the markets acknowledge that they are poised for growth, the Fund's
investments in corporate bonds from cyclical sectors should also perform
quite well.
Portfolio Composition Pie Chart
Corporate Bonds 41.4%
Short-Term Securities 10.3%
Common & Preferred Stocks .2%
U.S. Government 38.0%
Foreign Government Bonds 10.1%
Moody's Bond Quality
Rating Distribution
Bar graph
U.S.
Government
Aaa
Equivalent 42.8%
Aaa 18.7%
Aa 19.5%
A 10.1%
Baa 7.9%
Ba 1.0%
0% 10% 20% 30% 40% 50%
Worm Chart
Growth of $10,000 October 31, 1985 - October 31, 1995
Plot points are:
Date LB Income Lehman Lipper
1985 10,000 10,000 10,000
9,655 10,240 10,249
9,723 10,553 10,550
9,766 10,612 10,590
9,897 11,031 11,057
10,051 11,373 11,307
10,072 11,433 11,346
10,082 11,214 11,203
10,134 11,508 11,419
10,209 11,611 11,430
10,360 11,899 11,719
10,383 11,781 11,603
1986 10,536 11,950 11,779
10,654 12,118 11,966
10,725 12,163 12,062
10,930 12,334 12,283
11,052 12,419 12,377
11,003 12,363 12,325
10,731 12,025 11,909
10,691 11,978 11,834
10,799 12,143 11,979
10,745 12,133 11,918
10,729 12,069 11,826
10,430 11,812 11,527
1987 10,633 12,232 11,869
10,799 12,330 12,011
11,019 12,498 12,164
11,425 12,938 12,585
11,568 13,092 12,750
11,457 12,969 12,610
11,412 12,899 12,542
11,340 12,812 12,465
11,679 13,121 12,741
11,634 13,052 12,699
11,713 13,085 12,723
11,990 13,383 12,990
1988 12,212 13,634 13,199
12,122 13,468 13,072
12,219 13,483 13,148
12,419 13,677 13,318
12,296 13,578 13,238
12,336 13,637 13,288
12,585 13,922 13,517
12,896 14,288 13,835
13,359 14,722 14,240
13,568 15,036 14,481
13,395 14,813 14,291
13,452 14,889 14,341
1989 13,680 15,255 14,639
13,770 15,400 14,742
13,738 15,441 14,764
13,559 15,258 14,557
13,604 15,307 14,570
13,601 15,317 14,579
13,434 15,176 14,411
13,777 15,626 14,818
13,959 15,877 15,052
14,104 16,096 15,235
13,848 15,881 14,973
13,886 16,012 15,027
1990 14,010 16,216 15,190
14,309 16,564 15,528
14,519 16,823 15,770
14,697 17,031 15,933
14,910 17,176 16,105
15,035 17,295 16,215
15,250 17,481 16,414
15,376 17,583 16,494
15,359 17,574 16,465
15,543 17,818 16,672
15,874 18,203 17,071
16,228 18,573 17,443
1991 16,340 18,779 17,598
16,472 18,952 17,753
17,023 19,515 18,388
16,825 19,249 18,102
16,896 19,374 18,192
16,887 19,266 18,101
16,955 19,404 18,195
17,278 19,771 18,563
17,558 20,044 18,834
17,978 20,453 19,329
18,141 20,660 19,484
18,385 20,905 19,725
1992 18,086 20,627 19,390
18,090 20,631 19,386
18,385 20,959 19,710
18,760 21,362 20,134
19,158 21,736 20,589
19,223 21,827 20,663
19,353 21,980 20,799
19,357 22,008 20,805
19,721 22,407 21,267
19,896 22,534 21,427
20,286 22,929 21,920
20,354 22,991 21,985
1993 20,444 23,076 22,086
20,166 22,880 21,806
20,246 23,003 21,900
20,508 23,314 22,230
20,046 22,908 21,741
19,443 22,342 21,172
19,273 22,164 20,935
19,218 22,161 20,870
19,092 22,113 20,799
19,503 22,553 21,169
19,494 22,580 21,173
19,131 22,248 20,843
1994 19,051 22,228 20,785
19,066 22,179 20,743
19,262 22,332 20,890
19,640 22,774 21,247
20,068 23,316 21,730
20,204 23,458 21,878
20,513 23,787 22,175
21,393 24,707 23,104
21,556 24,888 23,261
21,396 24,833 23,157
21,688 25,133 23,448
21,880 25,377 23,685
1995 22,200 25,707 24,019
Legend Reads:
LB Income Fund
Annualized Total Returns* Period Ending 10/31/95
- ----------------------------------------------------
Based on 10 Years 5 Years 1 Year
- ----------------------------------------------------
Net Asset Value 8.85% 9.64% 16.53%
Public Offering Price 8.30% 8.52% 10.72%
Vertical Bar reads:
$26,000
24,000
22,000
20,000
18,000
16,000
14,000
12,000
10,000
8,000
Horizontal bar reads:
1985 1986 1987 1989 1990 1991 1992 1993 1994 1995
Lehman Aggregate Bond Index $25,707
Lipper Average Corporate Bond Funds $24,019
LB Income Fund $22,220
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.
*See accompanying notes to Portfolio Management Reviews.
LB Municipal Bond Fund
Photo goes here
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.
Investment Objective: To seek high current income that is exempt from
federal income tax by investing in municipal bonds.
In the last year, the LB Municipal Bond Fund maintained sizable investments
in municipal bonds with longer-term maturities that could not be called by
their issuers. These investments performed particularly well during the
recent rally in bond prices. As a result, the Fund had an exceptional return
for the 12 months ended October 31, 1995, outdistancing other funds in its
class.
During the period, the Fund earned a total return (based on NAV) of 14.97%.
That compares to 13.72% for the average municipal bond fund tracked by
Lipper Analytical Services. Over the same time, the return for the Lehman
Municipal Bond Index was 14.84%.
Enhancing Gains
When bond prices rise, longer-maturity issues typically enjoy stronger gains
than bonds with shorter maturities, and bonds that can not be called by
their issuers tend to outperform callable bonds. In fact, as a bond's call
date draws near, its price behaves more like the price of a shorter-term
issue.
By emphasizing noncallable bonds, we made the most of price gains that
longer-term issues earned. The gains were further enhanced by the fact that
we'd bought many of these securities when prices were lower in 1994 and
early 1995. We also improved the Fund's potential for gains by investing in
deep discount zero-coupon municipals and by taking advantage of variations
in municipal bond supply.
When we sold investments, we targeted municipal bonds from high-tax states.
With a general shortage in municipal bond supply, the especially strong
demand for municipal bonds in such states tended to enhance prices there.
When we made purchases, we looked for bonds available in heavy supply--since
this made their prices and yields relatively more attractive.
In addition, we favored bonds that funded high-quality, revenue-producing
projects. At a time when state and local governments have greater
responsibilities and fewer chances to raise taxes, revenue bonds with
predictable income streams offer good value.
With substantial investments in noncallable issues, the Fund maintained a
strong yield as interest rates fell. At the end of the period the Fund had a
current SEC yield of 4.63%. This is the same as a taxable yield of 7.23% for
shareholders in the 36% federal income tax bracket.
The Months to Come
We believe these strategies will also serve the Fund well in the months to
come. If the economy slows and inflation remains moderate, as we expect,
interest rates should fall farther and municipal bond prices should continue
to improve. Such a gain could be enhanced if investors think chances for tax
reform are growing dim.
Otherwise, the tax reform debate may have less effect on the municipal
market than it had in the previous 12 months. Although tax reform may be
discussed in the next presidential election, any concrete legislative
proposals to which the market might respond will likely wait for the new
Congress in 1997.
Since chances are good that municipal prices will rise, we expect to remain
heavily invested in bonds with longer maturities. This, plus continued
emphasis on noncallable bonds, should help the Fund take full advantage of
any further rally in prices.
Portfolio Composition Pie Chart
Escrowed 19.5%
Other 12.4%
Education 3.6%
Transportation 10.2%
Housing 2.1%
Water & Sewer 10.6%
Pollution Control 2.9%
Utility 9.4%
Health Care 13.4%
General Obligation 15.9%
Moody's Bond Quality
Rating Distribution
Bar Graph
Aaa 67.9%
Aa 14.2%
A 10.7%
Baa 7.0%
B 0.2%
0% 20% 40% 60%
Worm Chart
Growth of $10,000 October 31, 1985 - October 31, 1995
Plot points are:
Date LBMBF Lehman Lipper
1985 10,000 10,000 10,000
9,722 10,359 10,281
9,962 10,450 10,528
10,539 11,066 11,008
11,106 11,505 11,443
11,175 11,508 11,544
11,188 11,518 11,495
10,982 11,330 11,321
11,038 11,438 11,450
11,191 11,507 11,504
11,626 12,023 12,056
11,584 12,053 11,994
1986 11,797 12,261 12,267
12,011 12,504 12,492
12,026 12,469 12,493
12,254 12,844 12,789
12,367 12,907 12,890
12,291 12,771 12,813
11,672 12,130 12,012
11,611 12,069 11,907
11,845 12,424 12,170
11,962 12,550 12,289
11,974 12,579 12,327
11,547 12,115 11,797
1987 11,636 12,158 11,834
11,939 12,475 12,141
12,199 12,656 12,363
12,615 13,106 12,854
12,753 13,245 12,988
12,499 13,092 12,735
12,606 13,191 12,802
12,571 13,153 12,824
12,840 13,345 13,043
12,885 13,432 13,123
12,931 13,444 13,170
13,189 13,687 13,419
1988 13,434 13,928 13,698
13,317 13,800 13,572
13,514 13,940 13,777
13,713 14,229 13,986
13,627 14,067 13,870
13,625 14,033 13,862
13,964 14,366 14,197
14,218 14,664 14,462
14,354 14,864 14,650
14,526 15,066 14,800
14,385 14,918 14,642
14,313 14,874 14,594
1989 14,505 15,055 14,770
14,751 15,319 15,002
14,874 15,444 15,104
14,675 15,372 14,943
14,781 15,508 15,091
14,797 15,513 15,084
14,631 15,401 14,891
14,977 15,737 15,279
15,161 15,876 15,424
15,397 16,109 15,678
15,075 15,875 15,338
15,125 15,885 15,359
1990 15,365 16,172 15,582
15,721 16,498 15,945
15,849 16,563 16,014
16,074 16,785 16,211
16,164 16,931 16,305
16,183 16,938 16,337
16,412 17,164 16,576
16,525 17,316 16,725
16,460 17,299 16,673
16,713 17,510 16,913
16,908 17,741 17,130
17,205 17,972 17,351
1991 17,339 18,134 17,505
17,351 18,184 17,530
17,777 18,575 17,943
17,785 18,618 17,931
17,752 18,624 17,956
17,751 18,631 17,963
17,953 18,797 18,128
18,198 19,019 18,382
18,511 19,338 18,717
19,152 19,918 19,379
18,810 19,723 19,069
18,864 19,851 19,146
1992 18,651 19,657 18,801
19,083 20,009 19,280
19,368 20,213 19,518
19,556 20,447 19,738
20,274 21,187 20,512
20,139 20,963 20,272
20,330 21,174 20,491
20,429 21,293 20,608
20,810 21,649 20,962
20,816 21,677 20,962
21,272 22,128 21,427
21,515 22,380 21,680
1993 21,654 22,422 21,724
21,409 22,225 21,496
21,880 22,694 21,923
22,123 22,953 22,175
21,497 22,358 21,586
20,493 21,448 20,642
20,588 21,631 20,717
20,785 21,819 20,903
20,627 21,686 20,767
21,003 22,083 21,135
21,075 22,160 21,188
20,788 21,834 20,844
1994 20,371 21,445 20,448
19,979 21,057 20,025
20,442 21,521 20,514
21,065 22,136 21,123
21,743 22,780 21,750
21,975 23,042 21,946
21,995 23,070 21,944
22,735 23,806 22,628
22,435 23,599 22,382
22,591 23,823 22,525
22,875 24,125 22,773
23,051 24,277 22,912
1995 23,419 24,629 23,262
Legend Reads:
LB Municipal Bond Fund
Annualized Total Returns* Period Ending 10/31/95
- ----------------------------------------------------
Based on 10 Years 5 Years 1 Year
- ----------------------------------------------------
Net Asset Value 9.44% 8.79% 14.97%
Public Offering Price 8.88% 7.67% 9.28%
Vertical bar reads:
$26,000
24,000
22,000
20,000
18,000
16,000
14,000
12,000
10,000
8,000
Horizontal bar reads:
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
Lehman Municipal Bond Index $24,629
Lipper Average
General Municipal Bond Funds $23,262
LB Municipal Bond Fund $23,419
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.
*See accompanying notes to Portfolio Management Reviews.
LB Money Market Fund
Photo goes here
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 Corp. since 1986.
Prior to her appointment as manager of the Fund, she served as associate
manager for the Fund.
Investment Objective: To seek current income with stability of principal by
investing in high-quality, short-term debt securities.**
The 12 months ended October 31, 1995, represent a transition year for
short-term interest rates and money market securities. Early in the period,
as the Federal Reserve Board's Open Market Committee raised the overnight
Fed Funds rate from 4.75% to 6%, money market yields continued the rise that
began in February 1994. Later, when the economy was slowing and the Fed
lowered the Fed Funds rate to 5.75%, money market yields declined--ending
the period slightly higher than when it began.
During this time we adjusted maturities of investments in the LB Money
Market Fund to make the most of yield changes and emphasized investments
whose yields were especially attractive. This helped the Fund achieve a
total return of 4.95%.
Maximizing Yield
Throughout the year, as the Fund's assets grew from $277 million to $341
million, we used several strategies to maximize yield. Once the Fed raised
interest rates in November 1994, we increased the Fund's commitment to
instruments whose longer maturities offered stronger yields. In January, we
reduced the focus on longer-term issues, seeking to invest rapidly in
higher-yielding securities when the Fed raised short-term rates again.
After short-term rates rose in February, we increased the Fund's emphasis on
longer-maturity issues to lock in the higher yields that were available at
that time. We did not lengthen the maturity of the Fund's investments
further during the end of the period, since the spread between yields for
short- and longer-term instruments had narrowed significantly.
During the period we added investments in commercial paper, acquiring yields
that were then particularly attractive. Many of these holdings were
irrevocable letters of credit from banks in the U.S. and Europe that offered
additional opportunities for enhanced yields.
Looking Ahead
There are some conflicting reports about the strength of the current
economy. However, investors seem reassured that the Fed has controlled
inflation. If the economy continues to slow, short-term interest rates and
money market yields should edge lower. If stronger growth seems likely, and
investors see inflation as a problem, money market yields could rise--at
least temporarily.
We do not expect to invest in longer-maturity issues until a greater yield
advantage appears. By continuing to stagger maturity dates for the Fund's
investments, however, we hope to be positioned to continually make the most
of short-term rises in yields produced by new inflation concerns. In the
meantime, we will keep significant investments in commercial paper,
maintaining a diverse mix of securities of both high credit quality and
strong liquidity.
Portfolio Composition Pie Chart
Banker's Acceptances 5.8%
Corporate Notes .9%
Variable Rate Notes 10.3%
Certificates of Deposit 7.7%
Commerical Paper 75.3%
Annualized Total Returns*
Period Ending 10/31/95
10 Years 5 Years 1 Year
5.36% 3.82% 4.95%
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 LB 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
Brotherhood Family of Funds.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE LUTHERAN BROTHERHOOD FAMILY OF FUNDS EXHIBIT 27 - FINANCIAL DATA
SCHEDULE. THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE ANNUAL REPORT TO SHAREHOLDERS DATED OCTOBER 31, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL INFORMATION.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> LUTHERAN BROTHERHOOD OPPORTUNITY GROWTH FUND
</SERIES>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 161,206
<INVESTMENTS-AT-VALUE> 169,947
<RECEIVABLES> 10,469
<ASSETS-OTHER> 86
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 180,502
<PAYABLE-FOR-SECURITIES> 14,710
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 109
<TOTAL-LIABILITIES> 14,819
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 123,874
<SHARES-COMMON-STOCK> 11,976
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 33,067
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8,742
<NET-ASSETS> 165,683
<DIVIDEND-INCOME> 92
<INTEREST-INCOME> 622
<OTHER-INCOME> 0
<EXPENSES-NET> 1,850
<NET-INVESTMENT-INCOME> (1,136)
<REALIZED-GAINS-CURRENT> 38,532
<APPREC-INCREASE-CURRENT> (4,582)
<NET-CHANGE-FROM-OPS> 32,814
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,093
<NUMBER-OF-SHARES-REDEEMED> 1,368
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 66,106
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (2,584)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 938
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,850
<AVERAGE-NET-ASSETS> 128,949
<PER-SHARE-NAV-BEGIN> 10.76
<PER-SHARE-NII> (0.09)
<PER-SHARE-GAIN-APPREC> 3.16
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.83
<EXPENSE-RATIO> 1.43
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> LUTHERAN BROTHERHOOD FUND
</SERIES>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 553,908
<INVESTMENTS-AT-VALUE> 639,534
<RECEIVABLES> 10,691
<ASSETS-OTHER> 89
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 650,314
<PAYABLE-FOR-SECURITIES> 4,578
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 234
<TOTAL-LIABILITIES> 4,812
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 516,438
<SHARES-COMMON-STOCK> 30,464
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 488
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 42,950
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 85,626
<NET-ASSETS> 645,502
<DIVIDEND-INCOME> 10,132
<INTEREST-INCOME> 2,441
<OTHER-INCOME> 0
<EXPENSES-NET> 5,899
<NET-INVESTMENT-INCOME> 6,673
<REALIZED-GAINS-CURRENT> 46,207
<APPREC-INCREASE-CURRENT> 61,524
<NET-CHANGE-FROM-OPS> 114,404
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,750
<DISTRIBUTIONS-OF-GAINS> 88
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,729
<NUMBER-OF-SHARES-REDEEMED> 3,658
<SHARES-REINVESTED> 354
<NET-CHANGE-IN-ASSETS> 96,916
<ACCUMULATED-NII-PRIOR> 607
<ACCUMULATED-GAINS-PRIOR> (1,492)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,727
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,899
<AVERAGE-NET-ASSETS> 579,490
<PER-SHARE-NAV-BEGIN> 17.67
<PER-SHARE-NII> 0.22
<PER-SHARE-GAIN-APPREC> 3.52
<PER-SHARE-DIVIDEND> 0.22
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 21.19
<EXPENSE-RATIO> 1.02
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> LUTHERAN BROTHERHOOD HIGH YIELD FUND
</SERIES>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 573,381
<INVESTMENTS-AT-VALUE> 580,852
<RECEIVABLES> 13,717
<ASSETS-OTHER> 16
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 594,585
<PAYABLE-FOR-SECURITIES> 82
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 167
<TOTAL-LIABILITIES> 249
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 599,544
<SHARES-COMMON-STOCK> 65,817
<SHARES-COMMON-PRIOR> 56,392
<ACCUMULATED-NII-CURRENT> 2,046
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (14,724)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,471
<NET-ASSETS> 594,337
<DIVIDEND-INCOME> 5,206
<INTEREST-INCOME> 51,646
<OTHER-INCOME> 0
<EXPENSES-NET> 5,062
<NET-INVESTMENT-INCOME> 51,789
<REALIZED-GAINS-CURRENT> (14,450)
<APPREC-INCREASE-CURRENT> 30,066
<NET-CHANGE-FROM-OPS> 67,405
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 52,186
<DISTRIBUTIONS-OF-GAINS> 3,035
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 13,396
<NUMBER-OF-SHARES-REDEEMED> 8,273
<SHARES-REINVESTED> 4,302
<NET-CHANGE-IN-ASSETS> 94,704
<ACCUMULATED-NII-PRIOR> 2,443
<ACCUMULATED-GAINS-PRIOR> 2,761
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,510
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,062
<AVERAGE-NET-ASSETS> 543,285
<PER-SHARE-NAV-BEGIN> 8.86
<PER-SHARE-NII> 0.83
<PER-SHARE-GAIN-APPREC> 0.24
<PER-SHARE-DIVIDEND> 0.85
<PER-SHARE-DISTRIBUTIONS> 0.05
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.03
<EXPENSE-RATIO> 0.93
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> LUTHERAN BROTHERHOOD INCOME FUND
</SERIES>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 1,001,648
<INVESTMENTS-AT-VALUE> 1,017,961
<RECEIVABLES> 45,273
<ASSETS-OTHER> 76
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,063,310
<PAYABLE-FOR-SECURITIES> 120,938
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 231
<TOTAL-LIABILITIES> 121,169
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 961,114
<SHARES-COMMON-STOCK> 108,068
<SHARES-COMMON-PRIOR> 113,190
<ACCUMULATED-NII-CURRENT> 4,974
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (40,259)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 16,313
<NET-ASSETS> 942,142
<DIVIDEND-INCOME> 442
<INTEREST-INCOME> 71,878
<OTHER-INCOME> 0
<EXPENSES-NET> 7,660
<NET-INVESTMENT-INCOME> 64,660
<REALIZED-GAINS-CURRENT> 9,257
<APPREC-INCREASE-CURRENT> 66,245
<NET-CHANGE-FROM-OPS> 140,161
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 62,452
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,471
<NUMBER-OF-SHARES-REDEEMED> 16,217
<SHARES-REINVESTED> 5,625
<NET-CHANGE-IN-ASSETS> 34,971
<ACCUMULATED-NII-PRIOR> 2,752
<ACCUMULATED-GAINS-PRIOR> (49,501)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,432
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7,660
<AVERAGE-NET-ASSETS> 922,871
<PER-SHARE-NAV-BEGIN> 8.01
<PER-SHARE-NII> 0.59
<PER-SHARE-GAIN-APPREC> 0.69
<PER-SHARE-DIVIDEND> 0.57
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.72
<EXPENSE-RATIO> 0.83
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> LUTHERAN BROTHERHOOD MUNICIPAL BOND FUND
</SERIES>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 575,989
<INVESTMENTS-AT-VALUE> 616,838
<RECEIVABLES> 12,383
<ASSETS-OTHER> 71
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 629,292
<PAYABLE-FOR-SECURITIES> 478
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 116
<TOTAL-LIABILITIES> 594
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 595,352
<SHARES-COMMON-STOCK> 73,261
<SHARES-COMMON-PRIOR> 75,488
<ACCUMULATED-NII-CURRENT> 554
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (8,057)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 40,849
<NET-ASSETS> 628,698
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 37,743
<OTHER-INCOME> 0
<EXPENSES-NET> 4,540
<NET-INVESTMENT-INCOME> 33,203
<REALIZED-GAINS-CURRENT> (338)
<APPREC-INCREASE-CURRENT> 52,104
<NET-CHANGE-FROM-OPS> 84,969
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (33,124)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,793
<NUMBER-OF-SHARES-REDEEMED> 10,088
<SHARES-REINVESTED> 3,067
<NET-CHANGE-IN-ASSETS> 33,512
<ACCUMULATED-NII-PRIOR> 450
<ACCUMULATED-GAINS-PRIOR> (7,694)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,505
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,540
<AVERAGE-NET-ASSETS> 611,979
<PER-SHARE-NAV-BEGIN> 7.88
<PER-SHARE-NII> 0.45
<PER-SHARE-GAIN-APPREC> 0.70
<PER-SHARE-DIVIDEND> 0.45
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.58
<EXPENSE-RATIO> 0.74
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> LUTHERAN BROTHERHOOD MONEY MARKET FUND
</SERIES>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 339,102
<INVESTMENTS-AT-VALUE> 339,102
<RECEIVABLES> 1,861
<ASSETS-OTHER> 388
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 341,351
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 266
<TOTAL-LIABILITIES> 266
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 341,084
<SHARES-COMMON-STOCK> 341,084
<SHARES-COMMON-PRIOR> 276,868
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 341,084
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 18,306
<OTHER-INCOME> 0
<EXPENSES-NET> 3,384
<NET-INVESTMENT-INCOME> 14,922
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 14,922
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 14,922
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 547,639
<NUMBER-OF-SHARES-REDEEMED> 497,972
<SHARES-REINVESTED> 14,550
<NET-CHANGE-IN-ASSETS> 64,216
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,538
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,638
<AVERAGE-NET-ASSETS> 307,661
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.05
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 1.10
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> LUTHERAN BROTHERHOOD WORLD GROWTH FUND
</SERIES>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> SEP-05-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 14,408
<INVESTMENTS-AT-VALUE> 14,274
<RECEIVABLES> 27
<ASSETS-OTHER> 173
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 14,474
<PAYABLE-FOR-SECURITIES> 421
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 85
<TOTAL-LIABILITIES> 506
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 14,086
<SHARES-COMMON-STOCK> 1,654
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 19
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (135)
<NET-ASSETS> 13,968
<DIVIDEND-INCOME> 20
<INTEREST-INCOME> 31
<OTHER-INCOME> 0
<EXPENSES-NET> 28
<NET-INVESTMENT-INCOME> 23
<REALIZED-GAINS-CURRENT> (6)
<APPREC-INCREASE-CURRENT> (135)
<NET-CHANGE-FROM-OPS> (118)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,657
<NUMBER-OF-SHARES-REDEEMED> 3
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 13,968
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 18
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 41
<AVERAGE-NET-ASSETS> 9,443
<PER-SHARE-NAV-BEGIN> 8.50
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> (0.07)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.44
<EXPENSE-RATIO> 1.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
