LUTHERAN BROTHERHOOD FAMILY OF FUNDS, 497, 1997-06-03

LUTHERAN BROTHERHOOD FAMILY OF FUNDS
497, 1997-06-03

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LUTHERAN BROTHERHOOD MID CAP GROWTH FUND

PROSPECTUS

May 30, 1997

LUTHERAN BROTHERHOOD MID CAP GROWTH FUND ("LB Mid Cap Growth Fund" or the
"Fund") seeks to achieve long term growth of capital by investing primarily
in a professionally managed diversified portfolio of common stocks of
companies with medium market capitalizations. See page 4.

Lutheran Brotherhood Research Corp. ("LB Research"), an indirect wholly-
owned subsidiary of Lutheran Brotherhood, serves as investment adviser for
the Fund. Lutheran Brotherhood and LB Research personnel have developed
skills in the investment advisory business over the past 26 years, and
Lutheran Brotherhood personnel have extensive skill in managing over $11.3
billion of Lutheran Brotherhood assets and had over $8.3 billion in mutual
fund assets under management as of May 15, 1997. Lutheran Brotherhood
Securities Corp. ("LB Securities") serves as distributor for The Lutheran
Brotherhood Family of Funds (or the "LB Family of Funds").

The Fund is a diversified series of The Lutheran Brotherhood Family of Funds
(the "Trust"), an open-end management investment company.

This Prospectus sets forth concisely the information a prospective investor
ought to know about the Funds before investing. It should be retained for
future reference. A Statement of Additional Information about the Funds
dated May 30, 1997 has been filed with the Securities and Exchange
Commission and is incorporated by reference in this Prospectus. It is
available, at no charge, upon request by writing LB Securities or by calling
toll free (800) 328-4552.

The Securities and Exchange Commission maintains a Web site
(http://www.sec.gov) that contains the Statement of Additional Information,
material incorporated by reference, and other information regarding the
Trust.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

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TABLE OF CONTENTS
PAGE

Summary of Fund Expenses
Investment Objectives and Policies
Investment Limitations
Investment Risks
Buying Shares of the Fund
Net Asset Value of Your Shares
Sales Charges
Receiving Your Order
Certificates and Statements
Redeeming Shares
Dividends and Capital Gains
Taxes
IRAs and Other Tax-Deferred Plans
Fund Performance
The Fund and Its Shares
Fund Management
Fund Administration
Description of Debt Ratings
How to Invest
Addresses

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SUMMARY OF FUND EXPENSES

SHAREHOLDER TRANSACTION EXPENSES

Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 5%
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price) None
Maximum Deferred Sales Charge
(as a percentage of original purchase price
or redemption proceeds, as applicable) None
Redemption Fees (as a percentage of
amount redeemed, if applicable) None
Exchange Fees None

Exchanges of shares of the Lutheran Brotherhood Money Market Fund (the "LB
Money Market Fund"), a separate series of the Trust, for shares of the LB
Mid Cap Growth Fund incur the normal sales charge for shares of the LB Mid
Cap Growth Fund, unless the LB Money Market Fund shares were previously
acquired through an exchange of shares from the LB Mid Cap Growth Fund or
another fund in The Lutheran Brotherhood Family of Funds for which a sales
charge was previously paid. Sales charges vary from 0% to 5% of the public
offering price, depending upon the amount of your investment. For a complete
description of sales charges, see "Sales Charges".

ANNUAL FUND OPERATING EXPENSES*
(as a percentage of average net assets)

Management Fees 0.70%
12b-1 Fees None
Other Expenses (after fee waiver) 1.25% **
-----
Total Fund Operating Expenses (after fee waiver) 1.95%
======

* Based on estimates of average net assets and other
expenses for the fiscal period ending October 31, 1997.

** Following waiver of other expenses, as described below.

EXAMPLE:
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and
(2) redemption at the end of
each time period:

1 Year 3 Years
------- -------

LB Mid Cap Growth Fund $69 $108

THE EXAMPLE SHOULD NOT BE CONSIDERED AS A REPRESENTATION OF PAST OR FUTURE
RETURN OR EXPENSES. ACTUAL RETURN OR EXPENSES MAY BE GREATER OR LESS THAN
SHOWN. THE EXAMPLE ASSUMES THAT THE CURRENT WAIVER OF ADVISORY FEES WILL
REMAIN IN EFFECT.

The purpose of the table above is to assist the investor in understanding
the various costs and expenses that an investor will bear directly or
indirectly. [BEGIN BOLDFACE] ACTUAL EXPENSE LEVELS FOR THE CURRENT AND
FUTURE YEARS MAY VARY FROM THE AMOUNTS SHOWN. [END BOLDFACE] The table does
not reflect charges for optional services elected by certain shareholders.
For more complete information and descriptions of various costs and
expenses, see "Sales Charges" and "Fund Administration".

LB Research has agreed to limit the LB Mid Gap Growth Fund's other expenses
to an annual rate of 1.95% of its average net assets by means of a voluntary
waiver of other expenses. Other Expenses and Total Fund Operating Expenses
for LB Mid Gap Growth Fund for the fiscal period ending October 31, 1997
would be 2.54% and 3.24%, respectively, of average net assets of the Fund
without the partial waiver of other expenses, which is estimated to amount
to 1.29% of average net assets of the Fund. This partial waiver of other
expenses is voluntary and may be discontinued at any time after the
conclusion of the Fund's first full fiscal year.

INVESTMENT OBJECTIVES AND POLICIES

The LB Mid Cap Growth Fund has a separate investment objective and
investment policies for the pursuit of that objective. The investment
objective of the Fund is fundamental and may not be changed without the
approval of shareholders of the Fund. Except as otherwise indicated in this
Prospectus, the investment policies of the Fund may be changed from time to
time by the Board of Trustees of the Trust. There is no assurance that the
Fund will achieve its investment objective, but it will strive to do so by
following the policies set forth below.

The investment objective of the LB Mid Cap Growth Fund is to achieve long
term growth of capital.

The Fund will pursue its objective by investing primarily in a
professionally managed diversified portfolio of common stocks of companies
with medium market capitalizations. LB Research defines companies with
medium market capitalizations ("mid cap companies") as companies with
capitalizations ranging from $1 billion to $5 billion at the time of the
Fund's investment. The Fund will seek to invest in companies that have a
track record of earnings growth or the potential for continued above average
growth. The Fund will normally invest at least 65% of its total assets in
common stocks of mid cap companies. LB Research will use both fundamental
and technical investment research techniques to seek out these companies.

The stocks that the Fund invests in may be traded on national exchanges or
in the over-the-counter market ("OTC"). There will be no limit on the
proportion of the Fund's investment portfolio that may consist of OTC
stocks.

Many mid cap companies have lower daily trading volume in their stocks and
less overall liquidity than larger, more well established companies. The
common stocks of such companies may have greater price volatility than the
stocks of other larger companies. For a description of these and other risks
associated with investments in such companies, see "Investment Risks _ LB
Mid Cap Growth Fund Investment Risks".

The Fund may also invest in other types of securities, including bonds,
preferred stocks, convertible bonds, convertible preferred stocks, warrants,
American Depository Receipts (ADR's), common stocks of companies falling
outside the medium market capitalization range, and other debt or equity
securities. In addition, the Fund may invest in U.S. Government securities
or cash. The Fund will not use any minimum level of credit quality. At no
time will the Fund invest more than 5% of its net assets in debt
obligations. Debt obligations may be rated less than investment grade, which
is defined as having a quality rating below "Baa", as rated by Moody's
Investors Service, Inc. ("Moody's), or below "BBB", as rated by Standard &
Poor's Corporation ("S&P"). For a description of Moody's and S&P's ratings,
see "Description of Debt Ratings". Securities rated below investment grade
(sometimes referred to as "high yield" or "junk bonds") are considered to be
speculative and involve certain risks, including a higher risk of default
and greater sensitivity to interest rate and economic changes.

The Fund may dispose of securities held for a short period if the Fund's
investment adviser believes such disposition to be advisable. While LB
Research does not intend to select portfolio securities for the specific
purpose of trading them within a short period of time, LB Research does
intend to use an active method of management which will result in the sale
of some securities after a relatively brief holding period. This method of
management necessarily results in higher cost to the Fund due to the fees
associated with portfolio securities transactions. A higher portfolio
turnover rate may also result in taxes on realized capital gains to be borne
by shareholders. However, it is LB Research's belief that this method of
management can produce added value to the Fund and its shareholders that
exceeds the additional costs of such transactions. The annual portfolio
turnover rate of the Fund is generally expected not to exceed 100%. See
"Taxes". For more information on other investment policies of the Fund, see
"Additional Investment Practices" below.

ADDITIONAL INVESTMENT PRACTICES

The Fund may purchase the following securities or may engage in the
following transactions.

REPURCHASE AGREEMENTS

The Fund may engage in repurchase agreement transactions in pursuit of its
investment objective. A repurchase agreement consists of a purchase and a
simultaneous agreement to resell for later delivery U.S. Government
obligations at an agreed upon price and rate of interest. The Fund or its
custodian will take possession of the obligations subject to a repurchase
agreement. If the original seller of a security subject to a repurchase
agreement fails to repurchase the security at the agreed upon time, the Fund
could incur a loss due to a drop in the market value of the security during
the time it takes the Fund to either sell the security or take action to
enforce the original seller's agreement to repurchase the security. Also, if
a defaulting original seller filed for bankruptcy or became insolvent,
disposition of such security might be delayed by pending court action. The
Fund may only enter into repurchase agreements with banks and other
recognized financial institutions such as broker/dealers which are found by
LB Research to be creditworthy.

REVERSE REPURCHASE AGREEMENTS

The Fund also may enter into reverse repurchase agreements, which are
similar to borrowing cash. A reverse repurchase agreement is a transaction
in which the Fund transfers possession of a portfolio instrument to another
person, such as a financial institution, broker or dealer, in return for a
percentage of the instrument's market value in cash, with an agreement that
at a stipulated date in the future the Fund will repurchase the portfolio
instrument by remitting the original consideration plus interest at an
agreed upon rate. The use of reverse repurchase agreements may enable the
Fund to avoid selling portfolio instruments at a time when a sale may be
deemed to be disadvantageous, but the ability to enter into reverse
repurchase agreements does not assure that the Fund will be able to avoid
selling portfolio instruments at a disadvantageous time. Reverse repurchase
agreements entail additional risks such as the incurring of interest
expenses and fluctuations in the Fund's net asset value.

The Fund will engage in reverse repurchase agreements which are not in
excess of 60 days to maturity and will do so to avoid borrowing cash and not
for the purpose of investment leverage or to speculate on interest rate
changes. The Fund will not engage in reverse repurchase agreements if, as a
result, more than one-third of its assets would be engaged in such
transactions or other forms of borrowing. The Fund will not purchase
portfolio securities if the total of reverse repurchase agreements and other
forms of borrowing exceeds 5% of the Fund's total assets.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

The Fund may purchase securities on a when-issued and delayed delivery
basis. When-issued and delayed delivery transactions arise when U.S.
Government obligations and other types of securities are bought by the Fund
with payment and delivery taking place in the future. The settlement dates
of these transactions, which may be a month or more after entering into the
transaction, are determined by mutual agreement of the parties. There are no
fees or other expenses associated with these types of transactions other
than normal transaction costs. To the extent the Fund engages in when-issued
and delayed delivery transactions, it will do so for the purpose of
acquiring portfolio instruments consistent with its investment objective and
policies and not for the purpose of investment leverage or to speculate on
interest rate changes. On the settlement date, the value of such instruments
may be less than the cost thereof. When effecting when-issued and delayed
delivery transactions, cash, cash equivalents or high grade debt obligations
of a dollar amount sufficient to make payment for the obligations to be
purchased will be segregated at the trade date and maintained until the
transaction has been settled.

LENDING SECURITIES

Consistent with applicable regulatory requirements, the Fund may from time
to time lend the securities it holds to broker-dealers, provided that such
loans are made pursuant to written agreements and are continuously secured
by collateral in the form of cash, U.S. Government securities, or
irrevocable standby letters of credit in an amount at all times equal to at
least the market value, determined daily, of the loaned securities plus the
accrued interest and dividends. For the period during which the securities
are on loan, the Fund will be entitled to receive the interest and
dividends, or amounts equivalent thereto, on the loaned securities and a fee
from the borrower or interest on the investment of the cash collateral. The
right to terminate the loan will be given to either party subject to
appropriate notice. Upon termination of the loan, the borrower will return
to the Fund securities identical to the loaned securities.

The primary risk in lending securities is that the borrower may become
insolvent on a day on which the loaned security is rapidly increasing in
value. In such event, if the borrower fails to return the loaned security,
the existing collateral might be insufficient to purchase back the full
amount of the security loaned, and the borrower would be unable to furnish
additional collateral. The borrower would be liable for any shortage, but
the Fund would be an unsecured creditor with respect to such shortage and
might not be able to recover all or any thereof. However, this risk may be
minimized by a careful selection of borrowers and securities to be lent and
by monitoring collateral.

The Fund will not lend securities to broker-dealers affiliated with LB
Research or any sub-advisor to any of the funds in The Lutheran Brotherhood
Family of Funds. LB Research believes that this limitation will not affect
the Fund's ability to maximize its securities lending opportunities. The
Fund may not lend any security or make any other loan if, as a result, more
than one-third of its total assets would be lent to other parties.

PUT AND CALL OPTIONS

SELLING ("WRITING") COVERED CALL OPTIONS: The Fund may from time to time
sell ("WRITE") covered call options on any portion of its portfolio as a
hedge to provide partial protection against adverse movements in prices of
securities in the Fund and, subject to the limitations described below, for
the non-hedging purpose of attempting to create additional income. A call
option gives the buyer of the option, upon payment of a premium, the right
to call upon the writer to deliver a specified amount of a security on or
before a fixed date at a predetermined ("strike") price. As the writer of a
call option, the Fund assumes the obligation to deliver the underlying
security to the holder of the option on demand at the strike price. The Fund
will only write "covered" call options, meaning that the Fund will own the
security subject to the option in its portfolio.

If the price of a security hedged by a call option falls below or remains
below the strike price of the option, the Fund will generally not be called
upon to deliver the security. The Fund will, however, retain the premium
received for the option as additional income, offsetting all or part of any
decline in the value of the security. If the price of a hedged security
rises above or remains above the strike price of the option, the Fund will
generally be called upon to deliver the security. In this event, the Fund
limits its potential gain by limiting the value it can receive from the
security to the strike price of the option plus the option premium.

BUYING CALL OPTIONS: The Fund may also from time to time purchase call
options on securities in which the Fund may invest. As the holder of a call
option, the Fund has the right to purchase the underlying security or
currency at the exercise price at any time during the option period
(American style) or at the expiration of the option (European style). The
Fund generally will purchase such options as a hedge to provide protection
against adverse movements in the prices of securities which the Fund intends
to purchase. In purchasing a call option, the Fund would realize a gain if,
during the option period, the price of the underlying security increased by
more than the amount of the premium paid. The Fund would realize a loss
equal to all or a portion of the premium paid if the price of the underlying
security decreased, remained the same, or did not increase by more than the
premium paid.

BUYING PUT OPTIONS: The Fund may from time to time purchase put options on
any portion of its portfolio. A put option gives the buyer of the option,
upon payment of a premium, the right to deliver a specified amount of a
security to the writer of the option on or before a fixed date at a
predetermined ("strike") price. The Fund generally will purchase such
options as a hedge to provide protection against adverse movements in the
prices of securities in the Fund. In purchasing a put option, the Fund would
realize a gain if, during the option period, the price of the security
declined by an amount in excess of the premium paid. The Fund would realize
a loss equal to all or a portion of the premium paid if the price of the
security increased, remained the same, or did not decrease by more than the
premium paid.

SELLING PUT OPTIONS: The Fund may not sell put options.

INDEX OPTIONS: As part of its options transactions, The Fund may also
purchase and sell call options and purchase put options on stock and bond
indices. Options on securities indices are similar to options on a security
except that, upon the exercise of an option on a securities index,
settlement is made in cash rather than in specific securities.

CLOSING TRANSACTIONS: The Fund may dispose of options which they have
written by entering into "closing purchase transactions". The Fund may
dispose of options which they have purchased by entering into "closing sale
transactions". A closing transaction terminates the rights of a holder, or
the obligation of a writer, of an option and does not result in the
ownership of an option.

The Fund realizes a profit from a closing purchase transaction if the
premium paid to close the option is less than the premium received by the
Fund from writing the option. The Fund realizes a loss if the premium paid
is more than the premium received. The Fund may not enter into a closing
purchase transaction with respect to an option it has written after it has
been notified of the exercise of such option.

The Fund realizes a profit from a closing sale transaction if the premium
received to close out the option is more than the premium paid for the
option. The Fund realizes a loss if the premium received is less than the
premium paid.

SPREADS AND STRADDLES: The Fund may also engage in "straddle" and "spread"
transactions in order to enhance return, which is a speculative, non-hedging
purpose. A straddle is established by buying both a call and a put option on
the same underlying security, each with the same exercise price and
expiration date. A spread is a combination of two or more call options or
put options on the same security with differing exercise prices or times to
maturity. The particular strategies employed by the Fund will depend on LB
Research's perception of anticipated market movements.

NEGOTIATED TRANSACTIONS: The Fund will generally purchase and sell options
traded on a national securities or options exchange. Where options are not
readily available on such exchanges, the Fund may purchase and sell options
in negotiated transactions. The Fund effects negotiated transactions only
with investment dealers and other financial institutions deemed creditworthy
by LB Research. Despite LB Research's best efforts to enter into negotiated
options transactions with only creditworthy parties, there is always a risk
that the opposite party to the transaction may default in its obligation to
either purchase or sell the underlying security at the agreed upon time and
price, resulting in a possible loss by the Fund. This risk is described more
completely in the section of this Prospectus entitled, "Risks of
Transactions in Options and Futures". Options written or purchased by the
Fund in negotiated transactions are illiquid and there is no assurance that
the Fund will be able to effect a closing purchase or closing sale
transaction at a time when LB Research believes it would be advantageous to
do so. In the event the Fund is unable to effect a closing transaction with
the holder of a call option written by the Fund, the Fund may not sell the
security underlying the option until the call written by the Fund expires or
is exercised. The underlying securities on such transactions will also be
considered illiquid and are subject to the Fund's 15% illiquid securities
limitations.

LIMITATIONS: The Fund will not purchase any option if, immediately
thereafter, the aggregate cost of all outstanding options purchased and held
by the Fund would exceed 5% of the market value of the Fund's total assets.
The Fund will not write any option if, immediately thereafter, the aggregate
value of the Fund's securities subject to outstanding options would exceed
30% of the market value of the Fund's total assets.

FINANCIAL FUTURES AND OPTIONS ON FUTURES

SELLING FUTURES CONTRACTS: The Fund may sell financial futures contracts
("futures contracts") as a hedge against adverse movements in the prices of
securities in the Fund. Such contracts may involve futures on items such as
U.S. Government Treasury bonds, notes and bills, government mortgage-backed
securities; corporate and municipal bond indices; and stock indices. A
futures contract sale creates an obligation for the Fund, as seller, to
deliver the specific type of instrument called for in the contract at a
specified future time for a specified price. In selling a futures contract,
the Fund would realize a gain on the contract if, during the contract
period, the price of the securities underlying the futures contract
decreased. Such a gain would be expected to approximately offset the
decrease in value of the same or similar securities in the Fund. The Fund
would realize a loss if the price of the securities underlying the contract
increased. Such a loss would be expected to approximately offset the
increase in value of the same or similar securities in the Fund. Futures
contracts have been designed by and are traded on boards of trade which have
been designated "contract markets" by the Commodity Futures Trading
Commission ("CFTC"). These boards of trade, through their clearing
corporations, guarantee performance of the contracts. Although the terms of
some financial futures contracts specify actual delivery or receipt of
securities, in most instances these contracts are closed out before the
settlement due date without the making or taking of delivery of the
securities. Other financial futures contracts, such as futures contracts on
a securities index, by their terms call for cash settlements. The closing
out of a futures contract is effected by entering into an offsetting
purchase or sale transaction.

When the Fund sells a futures contract, or a call option on a futures
contract, it is required to make payments to the commodities broker which
are called "margin" by commodities exchanges and brokers.

The payment of "margin" in these transactions is different than purchasing
securities "on margin". In purchasing securities "on margin" an investor
pays part of the purchase price in cash and receives an extension of credit
from the broker, in the form of a loan secured by the securities, for the
unpaid balance. There are two categories of "margin" involved in these
transactions: initial margin and variation margin. Initial margin does not
represent a loan between the Fund and its broker, but rather is a "good
faith deposit" by the Fund to secure its obligations under a futures
contract or an option. Each day during the term of certain futures
transactions, the Fund will receive or pay "variation margin" equal to the
daily change in the value of the position held by the Fund.

BUYING FUTURES CONTRACTS: The Fund may also purchase financial futures
contracts as a hedge against adverse movements in the prices of securities
which they intend to purchase. A futures contract purchase creates an
obligation by the Fund, as buyer, to take delivery of the specific type of
instrument called for in the contract at a specified future time for a
specified price. In purchasing a futures contract, the Fund would realize a
gain if, during the contract period, the price of the securities underlying
the futures contract increased. Such a gain would approximately offset the
increase in cost of the same or similar securities which the Fund intends to
purchase. the Fund would realize a loss if the price of the securities
underlying the contract decreased. Such a loss would approximately offset
the decrease in cost of the same or similar securities which the Fund
intends to purchase.

OPTIONS ON FUTURES CONTRACTS: The Fund may also sell ("write") covered call
options on futures contracts and purchase put and call options on futures
contracts in connection with hedging strategies. The Fund may not sell put
options on futures contracts. An option on a futures contract gives the
buyer of the option, in return for the premium paid for the option, the
right to assume a position in the underlying futures contract (a long
position if the option is a call and a short position if the option is a
put). The writing of a call option on a futures contract constitutes a
partial hedge against declining prices of securities underlying the futures
contract to the extent of the premium received for the option. The purchase
of a put option on a futures contract constitutes a hedge against price
declines below the exercise price of the option and net of the premium paid
for the option. The purchase of a call option constitutes a hedge, net of
the premium, against an increase in cost of securities which the Fund
intends to purchase.

LIMITATIONS: The Fund may engage in futures transactions, and transactions
involving options on futures, only on regulated commodity exchanges or
boards of trade. The Fund will not enter into a futures contract or purchase
or sell related options if immediately thereafter (a) the sum of the amount
of initial margin deposits on the Fund's existing futures and related
options positions and premiums paid for options with respect to futures and
options used for non-hedging purposes would exceed 5% of the market value of
the Fund's total assets or (b) the sum of the then aggregate value of open
futures contracts sales, the aggregate purchase prices under open futures
contract purchases, and the aggregate value of futures contracts subject to
outstanding options would exceed 30% of the market value of the Fund's total
assets. In addition, in instances involving the purchase of futures
contracts or call options thereon, the Fund will maintain cash or cash
equivalents, less any related margin deposits, in an amount equal to the
market value of such contracts. "Cash and cash equivalents" may include
cash, government securities, or liquid high quality debt obligations.

HYBRID INVESTMENTS

As part of its investment program and to maintain greater flexibility, the
Fund may invest in hybrid instruments (a potentially high risk derivative)
which have the characteristics of futures, options and securities. Such
instruments may take a variety of forms, such as debt instruments with
interest or principal payments determined by reference to the value of a
currency, security index or commodity at a future point in time. The risks
of such investments would reflect both the risks of investing in futures,
options, currencies and securities, including volatility and illiquidity.
Under certain conditions, the redemption value of a hybrid instrument could
be zero. The Fund does not expect to hold more than 5% of its total assets
in hybrid instruments. For a discussion of hybrid investments and the risks
involved therein, see the Fund's Statement of Additional Information under
"Additional Information Concerning Certain Investment Techniques".

RISKS OF TRANSACTIONS IN OPTIONS AND FUTURES

There are certain risks involved in the use of futures contracts, options on
securities and securities index options, and options on futures contracts,
as hedging devices. There is a risk that the movement in the prices of the
index or instrument underlying an option or futures contract may not
correlate perfectly with the movement in the prices of the assets being
hedged. The lack of correlation could render the Fund's hedging strategy
unsuccessful and could result in losses. The loss from investing in certain
futures transactions is potentially unlimited.

There is a risk that LB Research could be incorrect in their expectations
about the direction or extent of market factors such as interest rate
movements. In such a case the Fund would have been better off without the
hedge. In addition, while the principal purpose of hedging is to limit the
effects of adverse market movements, the attendant expense may cause the
Fund's return to be less than if hedging had not taken place. The overall
effectiveness of hedging therefore depends on the expense of hedging and LB
Research's accuracy in predicting the future changes in interest rate levels
and securities price movements.

The Fund will generally purchase and sell options traded on a national
securities or options exchange. Where options are not readily available on
such exchanges the Fund may purchase and sell options in negotiated
transactions. When the Fund uses negotiated options transactions it will
seek to enter into such transactions involving only those options and
futures contracts for which there appears to be an active secondary market.
There is nonetheless no assurance that a liquid secondary market such as an
exchange or board of trade will exist for any particular option or futures
contract at any particular time. If a futures market were to become
unavailable, in the event of an adverse movement, the Fund would be required
to continue to make daily cash payments of maintenance margin if it could
not close a futures position. If an options market were to become
unavailable and a closing transaction could not be entered into, an option
holder would be able to realize profits or limit losses only by exercising
an option, and an option writer would remain obligated until exercise or
expiration. In addition, exchanges may establish daily price fluctuation
limits for options and futures contracts, and may halt trading if a
contract's price moves upward or downward more than the limit in a given
day. On volatile trading days when the price fluctuation limit is reached or
a trading halt is imposed, it may be impossible for the Fund to enter into
new positions or close out existing positions. If the secondary market for a
contract is not liquid because of price fluctuation limits or otherwise, it
could prevent prompt liquidation of unfavorable positions, and potentially
could require the Fund to continue to hold a position until delivery or
expiration regardless of changes in its value. As a result, the Fund's
access to other assets held to cover its options or futures positions could
also be impaired.

When conducting negotiated options transactions there is a risk that the
opposite party to the transaction may default in its obligation to either
purchase or sell the underlying security at the agreed upon time and price.
In the event of such a default, the Fund could lose all or part of benefit
it would otherwise have realized from the transaction, including the ability
to sell securities it holds at a price above the current market price or to
purchase a security from another party at a price below the current market
price.

The Fund intends to continue to meet the requirements of federal law to be
treated as a regulated investment company. One of these requirements is that
the Fund realize less than 30% of its annual gross income from the sale of
securities held for less than three months. Accordingly, the extent to which
the Fund may engage in futures contracts and related options may be
materially limited by this 30% test. Options activities of the Fund may
increase the amount of gains from the sale of securities held for less than
three months, because gains from the expiration of, or from closing
transactions with respect to, call options written by the Fund will be
treated as short-term gains and because the exercise of call options written
by the Fund would cause it to sell the underlying securities before it
otherwise might.

Finally, if a broker or clearing member of an options or futures clearing
corporation were to become insolvent, the Fund could experience delays and
might not be able to trade or exercise options or futures purchased through
that broker or clearing member. In addition, the Fund could have some or all
of its positions closed out without its consent. If substantial and
widespread, these insolvencies could ultimately impair the ability of the
clearing corporations themselves.

TEMPORARY DEFENSIVE INVESTMENTS

The Fund may hold up to 100% of their assets in cash or short-term debt
securities for temporary defensive position when, in the opinion of LB
Research such a position is more likely to provide protection against
unfavorable market conditions than adherence to the Fund's other investment
policies. The types of short-term instruments in which the Fund may invest
for such purposes include short-term money market securities such as
repurchase agreements and securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities, certificates of deposit,
Eurodollar certificates of deposit, commercial paper and banker's
acceptances issued by domestic and foreign corporations and banks. When
investing in short-term money market obligations for temporary defensive
purposes, the Fund will invest only in securities rated at the time of
purchase Prime-1 or Prime-2 by Moody's, A-1 or A-2 by S&P, F-1 or F-2 by
Fitch Investors Service, Inc., or unrated instruments that are determined by
LB Research to be of a comparable level of quality. When the Fund adopts a
temporary defensive position its investment objective may not be achieved.

INVESTMENT LIMITATIONS

In seeking to lessen investment risk, the Fund operates under certain
investment restrictions. The restrictions in the following paragraphs may
not be changed with respect to the Fund except by a vote of a majority of
the outstanding voting securities of the Fund.

The Fund may not, with respect to 75% of its total assets, purchase the
securities of any issuer (except Government Securities, as such term is
defined in the Investment Company Act of 1940) if, as a result, the Fund
would own more than 10% of the outstanding voting securities of such issuer
or the Fund would have more than 5% of its total assets invested in the
securities of such issuer. The Fund may not invest in a security if the
transaction would result in 25% or more of the Fund's total assets being
invested in any one industry.

The Fund may borrow (through reverse repurchase agreements or otherwise) up
to one-third of its total assets. If the Fund borrows money its share price
may be subject to greater fluctuation until the borrowing is paid off. If
the Fund makes additional investments while borrowings are outstanding, this
may be considered a form of leverage. If borrowings, including reverse
repurchase agreements, exceed 5% of the Fund's total assets, it will not
purchase portfolio securities.

For further information on these and other investment restrictions,
including nonfundamental investment restrictions which may be changed
without a shareholder vote, see the Statement of Additional Information.

INVESTMENT RISKS

Special risks are associated with investments in the Fund, beyond the
standard level of risks identified elsewhere in this prospectus. These risks
are described below. An investor should take into account his or her
investment objectives and ability to absorb a loss or decline in his or her
investment when considering an investment in the Fund. Investors in the Fund
assume a risk of loss that is greater than that of certain other types of
funds, and should not consider an investment in the Fund to be a complete
investment program.

Stocks in mid cap companies entail greater risk than the stocks of larger,
well-established companies. These companies tend to have smaller revenues,
narrower product lines, less management depth and experience, smaller shares
of their product or service markets, fewer financial resources, and less
competitive strength than larger companies. Also, mid cap companies usually
reinvest a high portion of their earnings in their own businesses and
therefore lack a predictable dividend yield. Since investors frequently buy
these stocks because of their expected above average earnings growth,
earnings levels that fail to meet expectations often result in sharp price
declines of such stocks.

In addition, in many instances, the frequency and volume of trading of mid
cap companies is substantially less than is typical of larger companies.
Therefore, the securities of such companies may be subject to wider price
fluctuations. The spreads between the bid and asked prices of the securities
of these companies in the over-the-counter market typically are larger than
the spreads for more actively-traded companies. As a result, the Fund could
incur a loss if it determined to sell such a security shortly after its
acquisition. When making large sales, the Fund may have to sell portfolio
holdings at discounts from quoted prices or may have to make a series of
small sales over an extended period of time due to the trading volume of
such securities. Investors should be aware that, based on the foregoing
factors, an investment in the Fund may be subject to greater price
fluctuations than an investment in a fund that invests primarily in larger
more established companies.

BUYING SHARES OF THE FUND

INITIAL PURCHASES

The Fund is one of a family of mutual funds offering investment
opportunities to members of Lutheran Brotherhood and to Lutheran church
organizations, trusts, and employee benefit plans. Lutheran Brotherhood
membership is open to any person who is (1) baptized in the Christian faith
or affiliated with a Lutheran church organization and (2) professes to be a
Lutheran, or to any non-Lutheran who is a spouse, dependent child, or
grandchild of a member or qualified proposed member.

To make your first purchase of shares of the Fund:

* complete and sign an application included in this booklet;
* enclose a check made payable to the Fund; and
* mail your application and check to Lutheran Brotherhood Securities Corp.,
625 Fourth Avenue S., Minneapolis, MN 55415.

SUBSEQUENT PURCHASES

To purchase additional shares of the Fund, send a check payable to the Fund
to LB Securities together with a completed To Invest By Mail form. You may
also buy additional Fund shares through:

* your LB Securities representative;
* the Systematic Investment Plan (SIP), under which you authorize automatic
monthly payments to the Fund from your checking account;
* the automatic Payroll Deduction Plan;
* Invest-by-Phone; or
* Federal Reserve or bank wire.

INVEST-BY-PHONE

The Fund's Invest-by-Phone service allows you to telephone LB Securities to
request the purchase of Fund shares. You must first complete an Account
Features Request permitting LB Securities to accept your telephoned
requests. When LB Securities receives your telephoned request, it will draw
funds directly from your preauthorized bank account at a commercial or
savings bank or credit union. The bank or credit union must be a member of
the Automated Clearing House system. To use this service, you may call 800-
328-4552 before 4:00 p.m. (Eastern time). Funds will be withdrawn from your
bank or credit union account and shares will be purchased for you at the
price next calculated by the Fund after receipt of funds from your bank.
This service may also be used to redeem shares. See "Redeeming Shares."

FEDERAL RESERVE OR BANK WIRE

You may purchase shares by Federal Reserve or bank wire directly to Norwest
Bank Minnesota, N.A. This method will result in a more rapid investment in
Fund shares. To wire Funds:

Notify LB Securities of a pending wire, call: (800) 328-4552

Wire to: Norwest Bank of Minneapolis, NA
Norwest Bank
6th Street and Marquette Avenue
Minneapolis, MN 55479
ABA Routing #: 091000019
Account #: 00-003-156
Account Name: Lutheran Brotherhood Securities Corp.
Use text message to indicate:
Transfer for - shareholder name(s), fund and account number, LB
Representative name and number.

Your LB Securities representative can explain any of these investment plans.

MINIMUM INVESTMENTS REQUIRED

Minimum investments required for the Fund are $500 for an initial purchase
and $50 for additional purchases. An initial purchase of $50 is permitted
for tax-deferred retirement plans, Systematic Investment plans, and payroll
deduction plans.

EXCHANGING SHARES BETWEEN FUNDS

You may exchange at relative net asset value shares of the Fund for any of
the other funds in the Lutheran Brotherhood Family of Funds (the "Funds" or
"LB Funds"), including LB Opportunity Growth Fund, LB World Growth Fund, LB
Fund, LB High Yield Fund, LB Income Fund, LB Municipal Bond Fund, and LB
Money Market Fund.

Shares of the LB Money Market Fund acquired in exchanges for shares of other
Funds for which a sales charge was previously paid, including shares of that
Fund acquired by reinvestment of dividends and held in the LB Money Market
Fund may be re-exchanged at relative net asset value for shares of the Fund
or any of the other LB Funds. Shares of the LB Money Market Fund not
acquired in such an exchange may be exchanged at relative net asset value
plus the applicable sales charge for shares of the Fund. Each exchange
constitutes a sale of shares requiring the calculation of a capital gain or
loss for tax reporting purposes. To obtain an exchange form or to receive
more information about making exchanges between Funds, contact your LB
Securities representative. This exchange offer may be modified or terminated
in the future. If the exchange offer is materially modified or terminated,
you will receive at least 60 days prior notice.

TELEPHONE EXCHANGES

You may make the type of exchanges between Funds described above by
telephone unless otherwise indicated on the account application. You may
make an unlimited number of telephone exchanges. Telephone exchanges must be
for a minimum amount of $500. Telephone exchanges may be made into new or
existing accounts of the Funds, including the LB Money Market Fund, and all
accounts involved in telephone exchanges must have the same ownership
registration. To request a telephone exchange, call toll-free (800) 328-
4552. The Fund reserves the right to refuse a wire or telephone redemption
or exchange if it is reasonably believed to be unauthorized. Procedures for
redeeming or exchanging Fund shares by wire or telephone may be modified or
terminated at any time by the Fund. When requesting a redemption or exchange
by telephone, shareholders should have available the correct account
registration and account number or tax identification number. All telephone
redemptions and exchanges are recorded and written confirmations are
subsequently mailed to an address of record. Neither the Fund nor LB
Securities will be liable for following redemption or exchange instructions
received by telephone, which are reasonably believed to be genuine, and the
shareholder will bear the risk of loss in the event of unauthorized or
fraudulent telephone instructions. The Fund and LB Securities will employ
reasonable procedures to confirm that instructions communicated by telephone
are genuine. The Fund and/or LB Securities may be liable for any losses due
to unauthorized or fraudulent instructions in the absence of following these
procedures.

WHAT YOUR SHARES WILL COST

The offering price of the Fund is the next determined net asset value (which
will fluctuate) plus any applicable sales charge.

NET ASSET VALUE OF YOUR SHARES

The net asset value for the Fund varies with the value of its investments.
The Fund determines its net asset value by adding the value of its portfolio
securities to all other Fund assets, subtracting the Fund's liabilities, and
dividing the result by the number of shares outstanding. The Fund
determines its net asset value on each day the New York Stock Exchange is
open for business, or any other day as required under the rules of the
Securities and Exchange Commission. The calculation is made as of the close
of regular trading of the New York Stock Exchange (currently 4:00 p.m.
Eastern time) after the Fund has declared any applicable dividends.

SALES CHARGES

Sales charges apply to purchases of the Fund. These sales charges vary from
0% to 5% of the offering price, depending upon the amount purchased,
including the value of existing investments. The larger your purchase, the
smaller the sales charge. Offering prices in this table apply to purchases
by an individual or by an individual together with spouse and children under
the age of 21.

SALES CHARGE SALES CHARGE
AS A AS A
PERCENTAGE OF PERCENTAGE OF
AMOUNT INVESTED OFFERING PRICE AMOUNT INVESTED
- -----------------------------------------------------------------------------------
<S> <C> <C>
$500,000 or more 0% 0%
$250,000 and above but less than $500,000 1% 1%
$100,000 and above but less than $250,000 2% 2%
$50,000 and above but less than $100,000 3% 3.1%
$25,000 and above but less than $50,000 4% 4.2%
$15,000 and above but less than $25,000 4.5% 4.7%
Less than $15,000 5% 5.3%
</TABLE>

EXCHANGING SHARES

If you already paid a sales charge on your shares, you may exchange shares
between Funds without paying additional sales charges.

REDUCTION IN SALES CHARGES

Ways to reduce the sales charge include:

CUMULATIVE DISCOUNT: All current holdings of shares of LB Mid Cap Fund, LB
Opportunity Growth Fund, LB World Growth Fund, LB Fund, LB High Yield Fund,
LB Income Fund, LB Municipal Bond Fund, or LB Money Market Fund will be
aggregated to permit you to enjoy any sales charge reduction allowed for
larger sales. The Funds will combine purchases, including the value of
existing investments, made by you, your spouse and your children under age
21 when it calculates your sales charge. In addition, reduced sales charges
are available for purchases made at one time by a trustee or fiduciary for a
single trust estate or a single fiduciary account. You must inform LB
Securities that you qualify for this discount.

REINVESTMENT OF DIVIDENDS: Shares purchased by automatic reinvestment of
dividends will not be subject to any sales charges.

THIRTEEN-MONTH LETTER OF INTENT: If you intend to accumulate $15,000 or
more, including the value of existing investments, in one or more of the
Funds within the next 13 months, you may sign a letter of intent and receive
a reduced sales charge on your share purchases.

REINVESTMENT UPON REDEMPTION: If you redeem any or all of your LB Mid Cap
Growth Fund, LB Opportunity Growth Fund, LB World Growth Fund, LB Fund, LB
High Yield Fund, LB Income Fund, or LB Municipal Bond Fund shares or
received cash dividends from one of the Funds, you may reinvest the amount
in any of these seven Funds without paying a sales charge. You must make
your reinvestment within 30 days after redeeming your shares.

FUNDS FROM LUTHERAN BROTHERHOOD AND OTHER LIFE INSURANCE AND ANNUITIES: If
Fund shares are purchased with lump sum proceeds (does not apply to period
payments) that are payable in the form of death benefits from any life
insurance or annuity contract, insured endowment benefits, or matured
annuity benefits issued by Lutheran Brotherhood, and are purchased within 90
days of the issuance of such benefits, the sales charge for such shares will
be reduced to one-half of the usual charge for such a purchase. If
additional shares are also purchased with benefits payable under similar
contracts or policies of other insurance companies, and such benefits have
become payable as a result of the same occurrence for which the Lutheran
Brotherhood benefits became payable, the sales charge for such additional
purchase will also be reduced to one-half of the usual charge for such a
purchase. To qualify for the reduction in sales charge, either such purchase
must be made within 90 days of the date that such benefits were issued.

PURCHASES BY TAX-EXEMPT ORGANIZATIONS: Fund shares are available at one-
half of the regular sales charge if purchased by organizations qualifying
for tax-exemption under Sections 501(c)(3) and 501(c)(13) of the Internal
Revenue Code. Section 501(c)(3) generally would include organizations such
as community chests, churches, universities and colleges, libraries and
other foundations or organizations operated exclusively for charitable
purposes. Section 501(c)(13) would generally include companies such as
cemetery companies and other companies owned and operated exclusively for
the benefit of their members and also includes not-for-profit companies.

RECEIVING YOUR ORDER

Shares of the Fund are issued on days on which the New York Stock Exchange
is open. The net asset value of the shares you are buying will be determined
at the close of the regular trading session of the New York Stock Exchange
after your order is received.

Your order will be considered received when your check or other payment is
received in good order by the home office of LB Securities. The Funds
reserve the right to reject any purchase request.

CERTIFICATES AND STATEMENTS

As transfer agent for the Fund, LB Securities will maintain a share account
for you. Share certificates will not be issued. Systematic Investment Plan,
Systematic Withdrawal Plan and Systematic Exchange Plan transactions, as
well as dividend transactions (including dividends reinvested to other
Funds) will be confirmed on the quarterly consolidated statement. All
transactions will be reported as they occur.

REDEEMING SHARES

One of the advantages of owning shares in The Lutheran Brotherhood Family of
Funds is the rapid access you have to your investment. Once your request for
redemption has been received at the home office of LB Securities, your
shares will be redeemed at the next computed net asset value on any day on
which the New York Stock Exchange is open for business, or any other day as
required under the rules of the Securities and Exchange Commission. That net
asset value may be more or less than the net asset value at the time you
bought the shares. You may redeem your shares at any time you choose. The
redemption method you choose will determine exactly when you will receive
your funds.

All eight Lutheran Brotherhood Funds allow you to redeem your shares:

* in writing;
* through Redeem-by-Phone; or
* through the Fund's Systematic Withdrawal Plan.

WRITTEN REQUESTS

To redeem all or some of your shares, send a written request to:

Lutheran Brotherhood Securities Corp.
625 Fourth Avenue South
Minneapolis, Minnesota 55415

YOUR SIGNATURE: Your signature on the redemption request must be guaranteed
by:

* a trust company or commercial bank;
* a savings association;
* a credit union; or
* a securities broker, dealer, exchange, association, or clearing agency.

The Fund will not accept signatures that are notarized by a notary public.

RECEIVING YOUR CHECK: Normally, the Fund will mail you a check within one
business day after it receives a proper redemption request, but in no event
more than three days, unless the Fund has not received payment for the
shares to be redeemed. (See "Redemption before Purchase Instruments Clear.")

REDEEM BY PHONE

If you have completed an Account Features Request, you may redeem shares
with a net asset value of at least $1,000 and have them transmitted
electronically to your commercial bank by the second business day after your
redemption request. This feature is NOT available on IRA or other Tax
Deferred Plans.

SYSTEMATIC WITHDRAWAL

Shareholders owning or buying shares with a net asset value of at least
$5,000 may order automatic monthly, quarterly, semiannual or annual
redemptions in any amount. The proceeds will be sent to the shareholder or
other designated payee, or may be deposited in the shareholder's commercial
bank, savings bank or credit union.

Income dividends and capital gains distributions will continue to be
reinvested in additional Fund shares. Shares will be redeemed as necessary
to make automatic payments to the shareholder.

You may, at any time, elect to have Federal income taxes withheld from your
IRA or TSCA distributions, or change the amount currently being withheld. To
make the election, please complete and return a Redemption form, or the
Systematic Withdrawal section or the IRA/TSCA Distributions section of the
Account Features Application which includes the IRS required Substitute W4P.

Shareholders who are making automatic withdrawals ordinarily should not
purchase Fund shares, but rather should terminate withdrawals in order to
avoid sales charges.

DIVIDENDS ON REDEMPTION

If you redeem all your shares, the redemption proceeds will include all
dividends to which you have become entitled since they were last paid.

REDEMPTION BEFORE PURCHASE INSTRUMENTS CLEAR

If you redeem shares purchased by check before State Street Bank has
collected your payment for such shares, State Street Bank reserves the right
to hold payment on such redemption until it is reasonably satisfied that the
investment has been collected (which could take up to 15 days from the
purchase date).

UNDELIVERABLE MAIL

If mail from LB Securities to a shareholder is returned as undeliverable on
two or more consecutive occasions, LB Securities will not send any future
mail to the shareholder unless it receives notification of a correct mailing
address for the shareholder. Any dividends that would be payable by check to
such shareholders will be held in escrow by LB Securities until LB
Securities receives notification of the shareholder's correct mailing
address or until it becomes escheatable under the applicable state law.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account if the net asset value of shares in the account
falls below a certain minimum. The required minimum net asset value for
share accounts is $500.

Before shares are redeemed to close an account, the shareholder is notified
in writing and allowed 60 days to purchase additional shares. Shares will
not be redeemed if the account's value drops below the minimum only because
of market fluctuations.

BACKUP WITHHOLDING

When you sign your account application you will be asked to certify that
your social security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failure to report income
to the IRS. If you violate IRS regulations, the IRS can generally require
the Funds to withhold 31% of your taxable distributions and redemptions.

FOR MORE INFORMATION

For more information about the Fund or your shares, see your LB Securities
representative or call toll-free:

* (800) 328-4552

DIVIDENDS AND CAPITAL GAINS

DIVIDENDS

The Fund declares and pays dividends from net income annually. The Fund
declares and pays dividends annually in years that it has accumulated enough
net income to require the payment of a dividend. Unless you ask to receive
all or a portion of your dividends in cash, they will automatically be
reinvested in shares of the Fund. You may also choose to have your dividends
reinvested into an existing account in another Fund within The Lutheran
Brotherhood Family of Funds. On the dividend payable date, your dividend
will be invested in the designated Fund account at net asset value. In order
to receive your dividends in cash, you must notify LB Securities in writing
or indicate this choice in the appropriate place on your account
application. Your request to receive all or a portion of your dividends and
other distributions in cash must be received by LB Securities at least ten
days before the record date of the dividend or other distribution.

CAPITAL GAINS

The Fund distributes its realized gains in accordance with federal tax
regulations. Distributions from any net realized capital gains will usually
be declared in December.

STATEMENTS

You will receive quarterly statements of dividends and capital gains paid
the previous quarter.

TAXES

FUND'S TAX STATUS

The Fund expects to pay no federal income tax because it intends to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to receive the special tax treatment afforded to such
companies.

SHAREHOLDERS' TAX POSITION

You will be required to pay federal income tax on any dividends and other
distribution that you receive. This applies whether you receive dividends or
distributions in cash or as additional shares. To the extent the Fund earns
interest from U.S. Government obligations, a number of states may allow
pass-through treatment and permit a shareholder to exclude a portion of
their dividends from state income tax. For corporate shareholders, dividends
paid to shareholders may qualify for the 70% dividends received deduction to
the extent the Fund earns dividend income from domestic corporations. The
Fund will mail annually to each shareholder advice as to the tax status of
each year's dividends and distributions.

Under current tax law, distributions by the Fund representing short-term and
long-term capital gains are included in shareholders' gross income for tax
purposes. Distributions representing net long-term capital gains realized by
the Fund will be taxable to a shareholder as long-term capital gains no
matter how long the shareholder may have held the shares.

IRAs AND OTHER TAX-DEFERRED PLANS

Shares of the Fund may be selected as investments for Individual Retirement
Accounts ("IRA"), the qualified Lutheran Brotherhood prototype plans for the
self-employed, qualified pension and profit-sharing plans and tax-sheltered
custodial accounts (403(b) plans or "TSCA"). There are additional fees and
procedural requirements for such plans. See your LB Securities registered
representative for more details.

FUND PERFORMANCE

From time to time, quotations of the Fund's performance in terms of yield or
total return may be included in advertisements, sales literature, or
shareholder reports. All performance figures are based on historical results
and are not intended to indicate future performance. "Total returns" are
based on the change in value of an investment in the Fund for a specified
period. "Average annual total return" is the average annual compounded rate
of return of an investment in the Fund at the maximum public offering price,
if applicable, assuming the investment has been held for one year, five
years and ten years as of a stated ending date. (If the Fund has not been in
operation for at least ten years, the life of the Fund will be used where
applicable.) Average annual return quotations assume a constant rate of
growth. Actual performance fluctuates and will vary from the quoted results
for periods of time within the quoted periods. "Cumulative total return"
represents the cumulative change in value of an investment in a Fund over a
stated period. Average annual total return may be accompanied with
nonstandard total return information computed in the same manner, but for
differing periods and with or without annualizing the total return or taking
sales charges into account. These calculations assume that all dividends and
capital gains distributions during the period were reinvested in shares of
the Fund.

The average annual total return and yield results take sales charges into
account, if applicable, but do not take into account recurring and
nonrecurring charges for optional services which only certain shareholders
elect and which involve nominal fees. Where sale charges are not applicable
and therefore not taken into account in the calculation of average annual
total return and yield, the results will be increased. Any voluntary waiver
of fees or assumption of expenses will also increase performance results.

The Fund's performance reported from time to time in advertisements and
sales literature may be compared to generally accepted indices or analyses
such as those provided by Lipper Analytical Service, Inc., Standard & Poor's
and Dow Jones. Performance ratings reported periodically in financial
publications such as "Money Magazine", "Forbes", "Business Week", "Fortune",
"Financial Planning" and the "Wall Street" Journal will be used.

THE FUND AND ITS SHARES

All the Funds in the Lutheran Brotherhood Family of Funds, except the LB Mid
Cap Growth Fund and the LB World Growth Fund, were organized in 1993 as
series of The Lutheran Brotherhood Family of Funds, a Delaware business
trust. Each of the Funds except the LB Mid Cap Growth Fund and the LB World
Growth Fund is the successor to a fund of the same name that previously
operated as a separate corporation or trust pursuant to a reorganization
that was effective as of November 1, 1993. The LB Mid Cap Growth Fund and
the LB World Growth Fund began operating as series of the Lutheran
Brotherhood Family of Funds on May 30, 1997, and September 5, 1995,
respectively. The fiscal year end of the Trust and each Fund is October 31.

The rights of holders of shares may be modified by the Trustees at any time,
so long as such modifications do not have a material, adverse effect on the
rights of any shareholder. On any matter submitted to the shareholders, the
holder of each Fund share is entitled to one vote per share (with
proportionate voting for fractional shares) regardless of the relative net
asset value thereof.

Shares of a Fund have equal dividend, redemption and liquidation rights and
when issued are fully paid and nonassessable by the Trust. Each share has
one vote (with proportionate voting for fractional shares) irrespective of
net asset value. On matters affecting any particular Fund shares of that
Fund vote separately from shares of other series of the Trust, except as
otherwise required by law.

Under the Trust's Master Trust Agreement, no annual or regular meeting of
shareholders is required. Thus, there will ordinarily be no shareholder
meetings unless required by the Investment Company Act of 1940. The Trustees
may fill vacancies on the Board or appoint new Trustees provided that
immediately after such action at least two-thirds of the Trustees have been
elected by shareholders. Under the Master Trust Agreement, any Trustee may
be removed by vote of two-thirds of the outstanding Trust shares or by
three-fourths of the Trustees; holders of 10% or more of the outstanding
shares of the Trust can require that the Trustees call a meeting of
shareholders for purposes of voting on the removal of one or more Trustees.
In connection with such meetings called by shareholders, the relevant Fund
or Funds will assist shareholders in shareholder communications.

FUND MANAGEMENT

BOARD OF TRUSTEES

The Board of Trustees of the Trust is responsible for the management and
supervision of the Fund's business affairs and for exercising all powers
except those reserved to the shareholders.

INVESTMENT ADVISER

Brian Thorkelson, Assistant Vice President of LB Research, serves as the
portfolio manager of LB Mid Cap Growth Fund. Mr. Thorkelson has been with
LB Research since 1989, previously serving as a securities analyst for LB
Research and Lutheran Brotherhood.

LB Research personnel may invest in securities for their own account
pursuant to a code of ethics that establishes procedures for personal
investing and restricts certain transactions.

LB Research receives an annual investment advisory fee from the Fund. The
Fund pays an advisory fee equal to .70% of average daily net assets up to
$100 million, .65% of average daily net assets over $100 million but not
over $250 million, .60% of average daily net assets over $250 million but
not over $500 million, .55% of average daily net assets over $500 million
but not over $1 billion, and .50% of average daily net assets over $1
billion.

LB Research has voluntarily agreed to waive a portion of the advisory fees
payable by the LB Mid Cap Growth Fund so that total expenses for the Fund
does not exceed 1.95% of the Fund's average daily net assets. These
voluntary partial waiver of advisory fees may be discontinued at any time.

FUND ADMINISTRATION

ADMINISTRATIVE SERVICES

LB Securities, the Fund's distributor, provides administrative personnel and
services necessary to operate the Fund on a daily basis at for a fee equal
to 0.02 percent of the Fund's average daily net assets.

CUSTODIAN

State Street Bank and Trust Company ("State Street Bank") is custodian of
the Fund's cash and securities.

TRANSFER AGENT

LB Securities serves as transfer agent for the Fund.

INDEPENDENT ACCOUNTANTS

Price Waterhouse LLP is the independent accountants for the Fund.

DESCRIPTION OF DEBT RATINGS

Moody's Investors Service, Inc. describes grades of corporate debt
securities and "Prime-1" and "Prime-2" commercial paper as follows:

BONDS:

Aaa Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge". Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.

Aa Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long term risks appear somewhat
larger than in Aaa securities.

A Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may
be present which suggest a susceptibility to impairment sometime in the
future.

Baa Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.

Ba Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.

B Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.

Caa Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to
principal or interest.

Ca Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.

C Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic rating
classification from Aa through B. The modifier 1 indicates that the
obligation ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a
ranking in the lower end of that generic rating category.

COMMERCIAL PAPER:

Issuers rated Prime-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following
characteristics:

* Leading market positions in well-established industries.
* High rates of return of funds employed.
* Conservative capitalization structures with moderate reliance on debt and
ample asset protection.
* Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
* Well established access to a range of financial markets and assured
sources of alternate liquidity.

Issuers rated Prime-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earning trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.

Standard & Poor's Corporation describes grades of corporate debt securities
and "A" commercial paper as follows:

BONDS:

AAA An obligation rated 'AAA' has the highest rating assigned by Standard
& Poor's. The obligor's capacity to meet its financial commitment on the
obligation is EXTREMELY STRONG.

AA An obligation rated 'AA' differs from the highest rated obligations
only in small degree. The obligor's capacity to meet its financial
commitment on the obligation is VERY STRONG.

A An obligation rated 'A' is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations
in higher rated categories. However, the obligor's capacity to meet its
financial commitment on the obligation is still STRONG.

BBB An obligation rated 'BBB' exhibits ADEQUATE protection parameters.
However, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity of the obligor to meet its financial
commitment on the obligation.

Obligations rated 'BB', 'B', 'CCC', 'CC', and 'C' are regarded as having
significant speculative characteristics. 'BB' indicates the least degree of
speculation and 'C' the highest. While such obligations will likely have
some quality and protective characteristics, these may be outweighed by
large uncertainties or major exposures to adverse conditions.

BB An obligation rated 'BB' is LESS VULNERABLE to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to the obligor's inadequate capacity to meet its financial commitment
on the obligation.

B An obligation rated 'B' is MORE VULNERABLE to nonpayment than
obligations rated 'BB', but the obligor currently has the capacity to meet
its financial commitment on the obligation. Adverse business, financial, or
economic conditions will likely impair the obligor's capacity or willingness
to meet its financial commitment on the obligation.

CCC An obligation rated 'CCC' is CURRENTLY VULNERABLE to nonpayment, and
is dependent upon favorable business, financial, and economic conditions for
the obligor to meet its financial commitment on the obligation. In the event
of adverse business, financial, or economic conditions, the obligor is not
likely to have the capacity to meet its financial commitment on the
obligation.

CC An obligation rated 'CC' is currently highly vulnerable to nonpayment.

C The 'C' rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but payments on
this obligation are being continued.

D An obligation rated 'D' is in payment default. The 'D' rating category
is used when payments on an obligation are not made on the date due even if
the applicable grace period has not expired, unless Standard & Poor's
believes that such payments will be made during such grace period. The 'D'
rating also will be used upon the filing of a bankruptcy petition or the
taking of a similar action if payments on an obligation are jeopardized.

Plus (+) or minus(-): The ratings from 'AA' to 'CCC' may be modified by
the addition of a plus or minus sign to show relative standing within the
major rating categories.

This symbol is attached to the ratings of instruments with significant
noncredit risks. It highlights risks to principal or volatility of expected
returns which are not addressed in the credit rating. Examples include:
obligations linked or indexed to equities, currencies, or commodities;
obligations exposed to severe prepayment risk such as interest-only or
principal-only mortgage securities; and obligations with unusually risky
interest terms, such as inverse floaters.

Short-Term Issue Credit Ratings

A-1 A short-term obligation rated 'A-1' is rated in the highest category
by Standard & Poor's. The obligor's capacity to meet its financial
commitment on the obligation is strong. Within this category, certain
obligations are designated with a plus sign (+). This indicates that the
obligor's capacity to meet its financial commitment on these obligations is
extremely strong.

A-2 A short-term obligation rated 'A-2' is somewhat more susceptible to
the adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to
meet its financial commitment on the obligation is satisfactory.

A-3 A short-term obligation rated 'A-3' exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.

B A short-term obligation rated 'B' is regarded as having significant
speculative characteristics. The obligor currently has the capacity to meet
its financial commitment on the obligation; however, it faces major ongoing
uncertainties which could lead to the obligor's inadequate capacity to meet
its financial commitment on the obligation.

C A short-term obligation rated 'C' is currently vulnerable to nonpayment
and is dependent upon favorable business, financial, and economic conditions
for the obligor to meet its financial commitment on the obligation.

D A short-term obligation rated 'D' is in payment default. The 'D' rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless Standard &
Poor's believes that such payments will be made during such grace period.
The 'D' rating also will be used upon the filing of a bankruptcy petition or
the taking of a similar action if payments on an obligation are jeopardized.

HOW TO INVEST

* Complete and sign the General Application
* Enclose a check made payable to the Lutheran Brotherhood Mid Cap Growth
Fund
* Mail your application and check to:
Lutheran Brotherhood Securities Corp.
625 Fourth Avenue South
Minneapolis, Minnesota 55415

ADDRESSES

Lutheran Brotherhood
Lutheran Brotherhood Research Corp.
Lutheran Brotherhood Securities Corp.
The Lutheran Brotherhood Family of Funds
625 Fourth Avenue South
Minneapolis, Minnesota 55415

State Street Bank and Trust Company
P.O. Box 1591
Boston, Massachusetts 02104

Norwest Bank Minnesota, N.A.
Sixth & Marquette Avenue
Minneapolis, Minnesota 55402

Price Waterhouse LLP
3100 Multifoods Tower
33 South Sixth Street
Minneapolis, Minnesota 55402

SC 558

<PAGE>

LUTHERAN BROTHERHOOD MID CAP GROWTH FUND

SERIES OF
THE LUTHERAN BROTHERHOOD FAMILY OF FUNDS
STATEMENT OF ADDITIONAL INFORMATION

MAY 30, 1997

__________________________

TABLE OF CONTENTS
PAGE

Investment Policies and Restrictions
Additional Information Concerning Certain Investment Techniques
Fund Management
Investment Advisory Services
Administrative Services
Distributor
Brokerage Transactions
Code of Ethics
Purchasing Shares
Sales Charges
Net Asset Value
Redeeming Shares
Tax Status
General Information
Calculation of Performance Data

This Statement of Additional Information should be read in conjunction with
the prospectus dated May 30, 1997 of the Lutheran Brotherhood Mid Cap Growth
Fund ("LB Mid Cap Growth Fund") series of The Lutheran Brotherhood Family of
Funds (the "Trust"). This Statement is not a prospectus itself. To receive a
copy of the prospectus, write to Lutheran Brotherhood Securities Corp., 625
Fourth Avenue South, Minneapolis, Minnesota 55415 or call toll-free (800)
328-4552.

___________________________

FOR MORE INFORMATION, CALL TOLL-FREE (800) 328-4552

<PAGE>
INVESTMENT POLICIES AND RESTRICTIONS

As set forth in part under "Investment Limitations" in the Fund's
Prospectus, the Fund has adopted certain fundamental and nonfundamental
investment policies.

The fundamental investment restrictions for the Fund are set forth below.
These fundamental investment restrictions may not be changed by the Fund
except by the affirmative vote of a majority of the outstanding voting
securities of the Fund as defined in the Investment Company Act of 1940.
(Under the Investment Company Act of 1940, a "vote of the majority of the
outstanding voting securities" means the vote, at a meeting of security
holders duly called, (i) of 67% or more of the voting securities present at
a meeting if the holders of more than 50% of the outstanding voting
securities are present or represented by proxy or (ii) of more than 50% of
the outstanding voting securities, whichever is less.) Under these
restrictions, with respect to the Fund:

(1) The Fund may not borrow money, except that the Fund may borrow money
(through the issuance of debt securities or otherwise) in an amount not
exceeding one-third of the Fund's total assets immediately after the time of
such borrowing.

(2) The Fund may not purchase or sell commodities or commodity contracts,
except that the Fund may invest in financial futures contracts, options
thereon and similar instruments.

(3) The Fund may not purchase or sell real estate unless acquired as a
result of ownership of securities or other instruments, except that the Fund
may invest in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business or that invest
or deal in real estate.

(4) The Fund may not engage in underwriting or agency distribution of
securities issued by others; provided, however, that this restriction shall
not be construed to prevent or limit in any manner the power of the Fund to
purchase and resell restricted securities or securities for investment.

(5) The Fund may not lend any of its assets except portfolio securities.
The purchase of corporate or U.S. or foreign governmental bonds, debentures,
notes, certificates of indebtedness, repurchase agreements or other debt
securities of an issuer permitted by the Fund's investment objective and
policies will not be considered a loan for purposes of this limitation.

(6) The Fund may not with respect to 75% of its total assets, purchase the
securities of any issuer (except Government Securities, as such term is
defined in the Investment Company Act of 1940) if, as a result, the Fund
would own more than 10% of the outstanding voting securities of such issuer
or the Fund would have more than 5% of its total assets invested in the
securities of such issuer.

(7) The Fund may not issue senior securities, except as permitted under the
Investment Company Act of 1940 or any exemptive order or rule issued by the
Securities and Exchange Commission.

(8) The Fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single open-
end management investment company with substantially the same fundamental
investment objectives, policies, and limitations as the Fund.

(9) The Fund may not invest in a security if the transaction would result
in 25% or more of the Fund's total assets being invested in any one
industry.

The following nonfundamental investment restrictions may be changed without
shareholder approval. Under these restrictions, with respect to the Fund:

(1) The Fund may not purchase securities on margin or sell securities
short, except that the Fund may obtain short-term credits necessary for the
clearance of securities transactions and make short sales against the box.
The deposit or repayment of initial or variation margin in connection with
financial futures contracts or related options will not be deemed to be a
purchase of securities on margin.

(2) The Fund may not purchase or sell interests in oil, gas and other
mineral exploration or development programs or leases, although it may
invest in securities of companies that do.

(3) The Fund may not purchase the securities of any issuer (other than
securities issued or guaranteed by domestic or foreign governments or
political subdivisions thereof) if, as a result, more than 5% of the value
of its total assets would be invested in the securities of business
enterprises (which does not include issuers of asset-backed securities)
that, including predecessors, have a record of less than three years of
continuous operations.

(4) The Fund may not purchase or retain the securities of any issuer if the
officers and Trustees of the Fund or its investment adviser owning
individually more than 1/2 of 1% of the issuer's securities together own
more than 5% of the issuer's securities.

(5) The Fund may not invest in securities of other investment companies,
except to the extent permitted under the Investment Company Act of 1940 or
except by purchases in the open market involving only customary brokers'
commissions, or securities acquired as dividends or distributions or in
connection with a merger, consolidation or similar transaction or other
exchange.

(6) The Fund may not invest in warrants, if at the time of such investment
(a) more than 5% of the value of the Fund's total assets would be invested
in warrants or (b) more than 2% of the value of the Fund's total assets
would be invested in warrants that are not listed on the New York Stock
Exchange or the American Stock Exchange (and for this purpose, warrants
attached to securities will be deemed to have no value).

(7) The Fund may not write put options but may write covered call options
and purchase call and put options.

(8) The Fund may not invest more than 15% of its net assets in illiquid
securities, including repurchase agreements maturing in more than seven
days.

(9) The Fund will not purchase any security while borrowings, including
reverse repurchase agreements, representing more than 5% of the Fund's total
assets are outstanding.

ADDITIONAL INFORMATION CONCERNING
CERTAIN INVESTMENT TECHNIQUES

Some of the investment instruments, techniques and methods which may be used
by the Fund to aid in achieving its investment objective, and the risks
attendant thereto, are described below. Other risk factors and investment
methods may be described in the "Investment Objectives and Policies" and
"Investment Risks" sections of the Fund's Prospectus.

SHORT SALES AGAINST THE BOX

The Fund may effect short sales, but only if such transactions are short
sale transactions known as short sales "against the box". A short sale is a
transaction in which the Fund sells a security it does not own by borrowing
it from a broker, and consequently becomes obligated to replace that
security. A short sale against the box is a short sale where the Fund owns
the security sold short or has an immediate and unconditional right to
acquire that security without additional cash consideration upon conversion,
exercise or exchange of options with respect to securities held in its
portfolio. The effect of selling a security short against the box is to
insulate that security against any future gain or loss.

RESTRICTED SECURITIES

Subject to the limitations on illiquid securities noted above, the Fund may
buy or sell restricted securities in accordance with Rule 144A under the
Securities Act of 1933 ("Rule 144A Securities"). Securities may be resold
pursuant to Rule 144A under certain circumstances only to qualified
institutional buyers as defined in the rule, and the markets and trading
practices for such securities are relatively new and still developing;
depending on the development of such markets, such Rule 144A Securities may
be deemed to be liquid as determined by or in accordance with methods
adopted by the Trustees. Under such methods the following factors are
considered, among others: the frequency of trades and quotes for the
security, the number of dealers and potential purchasers in the market,
marketmaking activity, and the nature of the security and marketplace
trades. Investments in Rule 144A Securities could have the effect of
increasing the level of the Fund's illiquidity to the extent that qualified
institutional buyers become, for a time, uninterested in purchasing such
securities. Also, the Fund may be adversely impacted by the subjective
valuation of such securities in the absence of an active market for them.
The Fund does not expect to hold more than 10% of its total assets in
restricted securities.

HYBRID INSTRUMENTS

Hybrid instruments (a type of potentially high risk derivative) have
recently been developed and combine the elements of futures contracts or
options with those of debt, preferred equity or a depository instrument
(hereinafter "hybrid instruments"). Often these hybrid instruments are
indexed to the price of a commodity, particular currency, or a domestic
foreign debt or equity securities index. Hybrid instruments may take a
variety of forms, including, but not limited to, debt instruments with
interest or principal payments or redemption terms determined by reference
to the value of a currency or commodity or securities index at a future
point in time, preferred stock with dividend rates determined by reference
to the value of a currency, or convertible securities with the conversion
terms related to a particular commodity.

The risks of investing in hybrid instruments reflect a combination of the
risks from investing in securities, options, futures and currencies,
including volatility and lack of liquidity. Reference is made to the
discussion of futures, options, and options on futures herein for a
discussion of these risks. Further, the prices of the hybrid instrument and
the related commodity or currency may not move in the same direction or at
the same time. Hybrid instruments may bear interest or pay preferred
dividends at below market (or even relatively nominal) rates.
Alternatively, hybrid instruments may bear interest at above market rates
but bear an increased risk of principal loss (or gain). In addition,
because the purchase and sale of hybrid instruments could take place in an
over-the-counter market or in a private transaction between the Fund and the
seller of the hybrid instrument, the creditworthiness of the contra party to
the transaction would be a risk factor which the Fund would have to
consider. Hybrid instruments also may not be subject to regulation of the
Commodities Futures Trading Commission ("CFTC"), which generally regulates
the trading of commodity futures by U.S. persons, the SEC, which regulates
the offer and sale of securities by and to U.S. persons, or any other
governmental regulatory authority. The Fund does not expect to hold more
than 5% of its assets in hybrid instruments.

INVESTMENT RISKS OF HIGH YIELD SECURITIES

The Fund may invest a portion of its assets in high yield securities.
Investment in high yield, high risk securities (sometimes referred to as
"junk bonds") involves a greater degree of risk than investment in higher
quality securities. Investment in high yield, high risk securities involves
increased financial risk due to the higher risk of default by the issuers of
bonds and other debt securities having quality rating of "Ba" or lower by
Moody's or "BB" or lower by Standard & Poor's. The higher risk of default
may be due to higher debt leverage ratios, a history of low profitability or
losses, or other fundamental factors that weaken the ability of the issuer
to service its debt obligations. In addition to the factors of issuer
creditworthiness described above, high yield, high risk securities generally
involve a number of additional market risks. These risks include:

Youth and Growth of High Yield, High Risk Market: The high yield, high risk
bond market is relatively new. While many of the high yield issues currently
outstanding have endured an economic recession, there can be no assurance
that this will be true in the event of increased interest rates or
widespread defaults brought about by a more severe and sustained economic
downturn.

Sensitivity to Interest Rate and Economic Changes: The market value of high
yield, high risk securities have been found to be less sensitive to interest
rate changes on a short-term basis than higher-rated investments, but more
sensitive to adverse economic developments or individual corporate
developments. During an economic downturn or substantial period of rising
interest rates, highly leveraged issuers may be more likely to experience
financial stress which would impair their ability to service their principal
and interest payment obligations or obtain additional financing. In the
event the issuer of a bond defaults on payments, the Fund may incur
additional expenses in seeking recovery. In periods of economic change and
uncertainty, market values of high yield, high risk securities and the
Fund's assets value may become more volatile. Furthermore, in the case of
zero coupon or payment-in-kind high yield, high risk securities, market
values tend to be more greatly affected by interest rate changes than
securities which pay interest periodically and in cash. Changes in the
market value of securities owned by the Fund will not affect cash income but
will affect the net asset value of the Fund's shares.

Payment Expectations: High yield, high risk securities, like higher quality
securities, may contain redemption or call provisions, which allow the
issuer to redeem a security in the event interest rates drop. In this event,
the Fund would have to replace the issue with a lower yielding security,
resulting in a decreased yield for investors.

Liquidity and Valuation: High yield, high risk securities at times tend to
be more thinly traded and are less likely to have an estimated retail
secondary market than investment grade securities. This may adversely impact
the Fund's ability to dispose of particular issues and to accurately value
securities in the Fund's portfolios. Also, adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease
market values and liquidity, especially on thinly traded issues.

Taxation: High yield, high risk securities structured as zero coupon or
payment-in-kind issues may require the Fund to report interest on such
securities as income even though the Fund receives no cash interest on such
securities until the maturity or payment date. The Fund may be required to
sell other securities to generate cash to make any required dividend
distribution.

FUND MANAGEMENT

The officers and Trustees of the Trust and their addresses, positions with
the Trust, and principal occupations are set forth below. As of May 30,
1997, the officers and Trustees owned less than 1% in the aggregate of the
Fund's outstanding shares.

POSITION WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS THE TRUST DURING THE PAST 5 YEARS
- ---------------- ------------- -----------------------

<S> <C> <C>
Rolf F. Bjelland* Chairman, Trustee Executive Vice President and Chief Investment
625 Fourth Avenue South and President Officer, Lutheran Brotherhood; President
Minneapolis, MN and Director Lutheran Brotherhood Research Corp.; Director
Age 58 and Vice President-Investments, Lutheran
Brotherhood Variable Insurance Products Company;
Director and Executive Vice President, Lutheran
Brotherhood Financial Corporation; Director,
Lutheran Brotherhood Securities Corp.; Director,
Lutheran Brotherhood Real Estate Products Company;
Director, Chairman and President of LB Series Fund,
Inc.

Charles W. Arnason Trustee Lawyer in private practice; formerly member of
101 Judd Street, Suite 1 Head, Hempel, Seifert & Vander Weide;
P. O. Box 150 formerly Executive Director of Minnesota
Marine-On-St. Croix, MN Technology Corridor; formerly Senior Vice President,
Age 68 Secretary and General Counsel of Cowles Media
Company; Officer, Director or Trustee of various
community non-profit boards and organizations;
Director of LB Series Fund, Inc.

Herbert F. Eggerding, Jr. Trustee Retired Executive Vice President and Chief
12587 Glencroft Dr. Financial Officer, Petrolite Corporation;
St. Louis, MO Director, Wheat Ridge Foundation; Director, Lutheran
Age 59 Charities Association of St. Louis, MO; Director of
LB Series Fund, Inc.

Connie M. Levi Trustee Retired President of the Greater Minneapolis
12290 Avenida Consentido Chamber of Commerce; Director or member of
San Diego, CA numerous governmental, public service and non-profit
Age 57 boards and organizations; Director of LB Series Fund,
Inc.

Bruce J. Nicholson* Trustee Executive Vice President and Chief Financial Officer,
625 Fourth Avenue South Lutheran Brotherhood; Director, Executive Vice
Minneapolis, MN President and Chief Financial Officer, Lutheran
Age 49 Brotherhood Financial Corporation; Director, Lutheran
Brotherhood Research Corp.; Director, Lutheran
Brotherhood Securities Corp.; Director and Chief
Financial Officer, Lutheran Brotherhood Variable
Insurance Products Company; Director, Lutheran
Brotherhood Real Estate Products Company; Director, LB
Series Fund, Inc.

Ruth E. Randall Trustee Retired Interim Dean, Division of Continuing Studies,
25 Stanley, #A2 University of Nebraska-Lincoln; formerly
West Hartford, CT Associate Dean, Teachers College, and Professor,
Age 67 Department of Educational Administration, Teachers
College, University of Nebraska-Lincoln;
Commissioner of Education for the State of Minnesota;
Director or member of numerous governmental, public
service and non-profit boards and organizations;
Director of LB Series Fund, Inc.

James R. Olson Vice President Vice President, Lutheran Brotherhood; Vice President,
625 Fourth Avenue South Lutheran Brotherhood Variable Insurance Products
Minneapolis, MN Company; Vice President, Lutheran Brotherhood Research
Age 54 Corp.; Vice President, Lutheran Brotherhood Securities
Corp.; Vice President, Lutheran Brotherhood Real
Estate Products Company; Vice President of LB Series
Fund, Inc.

Richard B. Ruckdashel Vice President Assistant Vice President, Lutheran Brotherhood;
625 Fourth Avenue South Vice President of LB Series Fund, Inc.
Minneapolis, MN
Age 41

James M. Walline Vice President Vice President, Lutheran Brotherhood; Vice President,
625 Fourth Avenue South Lutheran Brotherhood Research Corp.; Vice President,
Minneapolis, MN Lutheran Brotherhood Variable Insurance Products
Age 51 Company; Vice President of LB Series Fund, Inc.

Wade M. Voigt Treasurer Assistant Vice President, Mutual Fund Accounting,
625 Fourth Avenue South Lutheran Brotherhood; Treasurer of LB Series Fund,
Minneapolis, MN Inc.
Age 40

Otis F. Hilbert Secretary and Vice President, Lutheran Brotherhood; Counsel,
625 Fourth Avenue South Vice President Vice President and Secretary, Lutheran Brotherhood
Minneapolis, MN Securities Corp.; Counsel and Secretary of Lutheran
Age 59 Brotherhood Research Corp.; Vice President and
Secretary, Lutheran Brotherhood Real Estate Products
Company; Vice President and Assistant Secretary,
Lutheran Brotherhood Variable Insurance Products
Company; Secretary and Vice President of LB Series
Fund, Inc.
</TABLE>

_____________________

(*) "Interested person" of the Fund as defined in the Investment Company
Act of 1940 by virtue of his positions with affiliated entities referred to
elsewhere herein.

COMPENSATION OF TRUSTEES AND OFFICERS

The Fund makes no payments to any of its officers for services performed for
the Fund. Trustees of the Trust who are not interested persons of the Trust
are paid an annual retainer fee by the Trust of $21,500 and an annual fee of
$9,000 per year to attend meetings of Board of Trustees.

Trustees who are not interested persons of the Trust are reimbursed by the
Trust for any expenses they may incur by reason of attending Board meetings
or in connection with other services they may perform in connection with
their duties as Trustees of the Trust. The Trustees receive no pension or
retirement benefits in connection with their service to the Fund. For the
fiscal year ended October 31, 1996, the Trustees of the Trust received the
following amounts of compensation either directly or in the form of payments
made into a deferred compensation plan:

Total
Aggregate Compensation
Name and Position Compensation Paid by Fund and
of Person From Trust Fund Complex(1)
- ----------------- ------------ -----------------

Rolf F. Bjelland(2) $0 $0
Chairman
and Trustee

Charles W. Arnason $19,783 $29,000
Trustee

Herbert F. Eggerding, Jr. $19,783 $29,000
Trustee

Connie M. Levi $19,783 $29,000
Trustee

Bruce J. Nicholson(2) $0 $0
Trustee

Ruth E. Randall $19,783 $29,000
Trustee

(1) The "Fund Complex" includes The Lutheran Brotherhood Family of Funds
and LB Series Fund, Inc.

(2) "Interested person" of the Fund as defined in the Investment Company
Act of 1940.

INVESTMENT ADVISORY SERVICES

The Fund's investment adviser, LB Research, was organized as a Pennsylvania
corporation in 1969 and was reincorporated as a Minnesota corporation in
1987. It has been in the investment advisory business since 1970. LB
Research is a wholly-owned subsidiary of Lutheran Brotherhood Financial
Corporation which, in turn, is a wholly-owned subsidiary of Lutheran
Brotherhood, a fraternal benefit society. The officers and directors of LB
Research who are affiliated with the Trust are set forth under "Fund
Management".

Investment decisions for the Fund are made by LB Research, subject to the
overall direction of the Board of Trustees. LB Research provides investment
research and supervision of the Fund's investments and conducts a continuous
program of investment evaluation and appropriate disposition and
reinvestment of the Fund's assets. LB Research assumes the expense of
providing the personnel to perform its advisory functions. LB Research also
serves as investment adviser to the other seven funds in The Lutheran
Brotherhood Family of Funds. Lutheran Brotherhood, the indirect parent
company of LB Research, also serves as the investment adviser for LB Series
Fund, Inc. The Master Advisory Contract (the "Advisory Contract") for The
Lutheran Brotherhood Family of Funds provides that Lutheran Brotherhood has
reserved the right to grant the non-exclusive use of the name "Lutheran
Brotherhood" or any derivative thereof to any other investment company,
investment adviser, distributor or other business enterprise, and to
withdraw from each Fund the use of the name "Lutheran Brotherhood". The
name "Lutheran Brotherhood" will continue to be used by each Fund as long as
such use is mutually agreeable to Lutheran Brotherhood and the Funds.

The Advisory Contract provides that it shall continue in effect with respect
to each Fund from year to year as long as it is approved at least annually
both (i) by a vote of a majority of the outstanding voting securities of
such Fund (as defined in the 1940 Act) or by the Trustees of the Trust, and
(ii) in either event by a vote of a majority of the Trustees who are not
parties to the Advisory Contract or "interested persons" of any party
thereto, cast in person at a meeting called for the purpose of voting on
such approval. The Advisory Contract may be terminated on 60 days' written
notice by either party and will terminate automatically in the event of its
assignment, as defined under the 1940 Act and regulations thereunder. Such
regulations provide that a transaction which does not result in a change of
actual control or management of an adviser is not deemed an assignment.

LB Research receives an annual investment advisory fee from the Fund. LB Mid
Cap Growth Fund pays LB Research an advisory fee equal to .70% of average
daily net assets up to $100 million, .65% of average daily net assets over
$100 million but not over $250 million, .60% of average daily net assets
over $250 million but not over $500 million, .55% of average daily net
assets over $500 million but not over $1 billion, and .50% of average daily
net assets over $1 billion.

Effective May 30, 1997, LB Research has undertaken to limit the LB Mid Cap
Growth Fund's total expenses to 1.95 % of its average net assets by means of
a voluntary waiver of advisory fees. This waiver of fees is voluntary and
may be discontinued any time after the Fund's first full fiscal year.

ADMINISTRATIVE SERVICES

Lutheran Brotherhood Securities Corp. ("LB Securities") provides
administrative personnel and services necessary to operate the Fund on a
daily basis . The services provided by LB Securities include the
preparation, filing and distribution of material required by regulatory
authorities, the preparation and filing of all tax returns, internal
auditing services, internal legal services, and accounting services,
including the preparation of financial statements. For these services, LB
Securities receives a fixed fee from the Fund equal to 0.02 percent of the
Fund's average daily net assets.

CUSTODIAN

State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, is the Trust's custodian. As custodian, State Street
Bank and Trust Company is responsible for, among other things, safeguarding
and controlling the Fund's cash and securities, handling the receipt and
delivery of securities and collecting interest and dividends on the Fund's
investments.

TRANSFER AGENT

LB Securities serves as transfer agent for the shares of the Fund. As
transfer agent, LB Securities' responsibilities include maintaining
shareholder accounts, processing account registration changes, handling
purchase and redemption transaction, mailing prospectuses and reports,
distribute dividends and capital gain distributions, and maintaining
shareholder records and lists. For these services, LB Securities receives a
fixed fee from the Fund for each shareholder account.

INDEPENDENT ACCOUNTANTS

Price Waterhouse LLP, 3100 Multifoods Tower, 33 South Sixth Street,
Minneapolis, Minnesota 55402, serves as the Trust's independent accountants,
providing professional services including audits of the Fund's annual
financial statements, assistance and consultation in connection with
Securities and Exchange Commission filings, and review of the annual income
tax returns filed on behalf of the Fund.

DISTRIBUTOR

The Fund's distributor, LB Securities, is a Pennsylvania corporation
organized in 1969. LB Securities is a wholly-owned subsidiary of LB Research
and is located in Minneapolis, Minnesota. The officers and directors of LB
Securities who are affiliated with the Trust are set forth under "Fund
Management". LB Securities makes a continuous offering of the Fund's shares
on a best efforts basis.

BROKERAGE TRANSACTIONS

PORTFOLIO TRANSACTIONS

In connection with the management of the investment and reinvestment of the
assets of the Fund, the Advisory Contract authorizes LB Research, acting by
its own officers, directors or employees or by a duly authorized
subcontractor, to select the brokers or dealers that will execute purchase
and sale transactions for the Fund. In executing portfolio transactions and
selecting brokers or dealers, if any, LB Research will use reasonable
efforts to seek on behalf of the Fund the best overall terms available. In
assessing the best overall terms available for any transaction, LB Research
will consider all factors it deems relevant, including the breadth of the
market in and the price of the security, the financial condition and
execution capability of the broker or dealer, and the reasonableness of the
commission, if any (for the specific transaction and on a continuing basis).
In evaluating the best overall terms available, and in selecting the broker
or dealer, if any, to execute a particular transaction, LB Research may also
consider the brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) provided to any other
accounts over which LB Research or an affiliate of LB Research exercises
investment discretion. These research services may include not only a wide
variety of reports on such matters as economic and political developments,
industries, companies, securities, portfolio strategy, account performance,
daily prices of securities, stock and bond market conditions and
projections, asset allocation, and portfolio structure, but also meetings
with management representatives of issuers and with other analysts and
specialists. LB Research may pay to a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if, but only if, LB
Research determines in good faith that such commission was reasonable in
relation to the value of the brokerage and research services provided.

To the extent that the receipt of the above-described services may supplant
services for which LB Research might otherwise have paid, it would, of
course, tend to reduce the expenses of LB Research.

The investment decisions for the Fund are and will continue to be made
independently from those of other investment companies and accounts managed
by LB Research its affiliates. Such other investment companies and accounts
may also invest in the same securities as the Fund. When purchases and sales
of the same security are made at substantially the same time on behalf of
such other investment companies and accounts, transactions may be averaged
as to the price and available investments allocated as to the amount in a
manner which LB Research and its affiliates believe to be equitable to each
investment company or account, including the Fund. In some instances, this
investment procedure may affect the price paid or received by the Fund or
the size of the position obtainable or sold by the Fund.

PORTFOLIO TURNOVER RATE

The rate of portfolio turnover in the Fund will not be a limiting factor
when LB Research deems changes in the Fund's portfolio appropriate in view
of its investment objectives. As a result, while the Fund will not purchase
or sell securities solely to achieve short term trading profits, the Fund
may sell portfolio securities without regard to the length of time held if
consistent with the Fund's investment objective. A higher degree of equity
portfolio activity will increase brokerage costs to the Fund.

The portfolio turnover rate is computed by dividing the dollar amount of
securities purchased or sold (whichever is smaller) by the average value of
securities owned during the year. Short-term investments such as commercial
paper and short-term U.S. Government securities are not considered when
computing the turnover rate.

CODE OF ETHICS

The Trust has adopted a code of ethics that imposes certain limitations and
restrictions on personal securities transactions by persons having access to
Fund investment information, including portfolio managers. Such access
persons may not purchase any security being offered under an initial public
offering, any security for which the Fund has a purchase or sale order
pending, or any security currently under active consideration for purchase
or sale by the Fund. Additionally, the portfolio manager of the Fund may not
purchase or sell any security within seven days before or after any
transaction in such security by any Fund that he or she manages. In order
for the Trust to monitor the personal investment transactions, all access
persons must obtain the approval of an officer of the Trust designated by
the Trustees before they may purchase or sell any security and they must
have all such transactions reported to such officer by the broker-dealer
through which the transaction was accomplished.

PURCHASING SHARES

Initial purchases of Fund shares must be made by check and accompanied by an
application. Subsequent purchases may be made by:

* check;

* Federal Reserve or bank wire;

* Invest-by-Phone;

* Systematic Investment Plan (SIP); and

* automatic payroll deduction.

Use of checks, Federal Reserve or bank wire and Invest-by-Phone is explained
in the General Information section of the Fund's prospectus under "Buying
Shares of the Fund".

SYSTEMATIC INVESTMENT PLAN

Under the Systematic Investment Plan program, funds may be withdrawn monthly
from the shareholder's checking account and invested in the Fund. LB
Securities representatives will provide shareholders with the necessary
authorization forms.

AUTOMATIC PAYROLL DEDUCTION

Under the Automatic Payroll Deduction program, funds may be withdrawn
monthly from the payroll account of any eligible shareholder of the Fund and
invested in the Fund. To be eligible for this program, the shareholder's
employer must permit and be qualified to conduct automatic payroll
deductions. LB Securities representatives will provide shareholders with the
necessary authorization forms.

SALES CHARGES

Initial purchases of Fund shares carry sales charges as explained in the
section of the Fund's prospectus entitled, "Sales Charges", which also lists
ways to reduce or avoid sales charges on subsequent purchases

In addition to the situations described in the prospectus, sales charges are
waived when shares are purchased by:

* directors and regular full-time and regular part-time employees of
Lutheran Brotherhood and its subsidiaries;

* registered representatives of LB Securities; and

* any trust, pension, profit-sharing or other benefit plan for such persons.

FULL-TIME EMPLOYEES

Regular full-time and regular part-time employees of Lutheran Brotherhood
are persons who are defined as such by the Lutheran Brotherhood Human
Resources Policy Manual.

RESTRICTION ON SALE OF SHARES PURCHASED

Sales to any of the persons or groups mentioned in this section are made
only with the purchaser's written promise that the shares will not be
resold, except through redemption or repurchase by or on behalf of the Fund.

NET ASSET VALUE

The net asset value per share is determined at the close of each day the New
York Stock Exchange (the "Exchange") is open, except any day as provided by
Rule 22c-1 under the Investment Company Act of 1940. Determination of net
asset value may be suspended when the Exchange is closed or if certain
emergencies have been determined to exist by the Securities and Exchange
Commission, as allowed by the Investment Company Act of 1940.

Net asset value is determined by adding the market or appraised value of all
securities and other assets; subtracting liabilities; and dividing the
result by the number of shares outstanding.

The market value of the Fund's portfolio securities is determined at the
close of regular trading of the Exchange on each day the Exchange is open,
except the day after Thanksgiving. The value of portfolio securities is
determined in the following manner:

* Equity securities traded on the Exchange or any other national securities
exchange are valued at the last sale price. If there has been no sale on
that day, it is valued at prices within the range of the current bid and
asked prices considered best to represent value in the circumstances.

* Equity securities not traded on a national securities exchange are valued
at prices within the range of the current bid and asked prices considered
best to represent the value in the circumstances, except that securities
for which quotations are furnished through the NASDAQ National Market
System will be valued at their last sales prices so furnished on the date
of valuation, if such quotations are available for sales occurring on that
day.

* Bonds and other income securities traded on a national securities exchange
will be valued at the last sale price on such national securities
exchange that day. LB Research may value such securities on the basis of
prices provided by an independent pricing service or within the range of
the current bid and asked prices considered best to represent the value in
the circumstances, if those prices are believed to better reflect the fair
market value of such exchange listed securities.

* Bonds and other income securities not traded on a national securities
exchange will be valued within the range of the current bid and asked
prices considered best to represent the value in the circumstances. Such
securities may also be valued on the basis of prices provided by an
independent pricing service if those prices are believed to reflect the
fair market value of such securities.

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.

Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider institutional trading
in similar groups of securities, yield, quality, coupon rate, maturity, type
of issue, trading characteristics and other market data employed in
determining valuation for such securities.

All other securities and assets will be appraised at fair value as
determined by the Board of Trustees.

Generally, trading in U.S. Government securities, money market instruments
and repurchase agreements, is substantially completed each day at various
times prior to the close of the Exchange. The values of such securities used
in computing the net asset value of shares of a Fund are determined as of
such times. Occasionally, events affecting the value of such securities may
occur between the times at which they are determined and the close of the
Exchange, which will not be reflected in the computation of net asset
values. If during such periods events occur which materially affect the
value of such securities, the securities will be valued at their fair value
as determined in good faith by the Trustees of the Fund.

REDEEMING SHARES

Shares may be redeemed with requests made:

* in writing;

* through Redeem-by-Phone; or

* through the Lutheran Brotherhood systematic withdrawal plan.

All methods of redemption are described in the Fund's prospectus under
"Redeeming Shares".

TAX STATUS

THE FUNDS' TAX STATUS

The Fund expects to pay no federal income tax because it intends to meet
requirements of Subchapter M of the Internal Revenue Code of 1986, as
amended, applicable to regulated investment companies and to receive the
special tax treatment afforded to such companies. To qualify for this
treatment, the Fund must, among other requirements:

* derive at least 90% of its gross income from dividends, interest and gains
from the sale of securities;

* derive less than 30% of its gross income from the sale of securities held
less than three months;

* invest in securities within certain statutory limits; and

* distribute at least 90% of its ordinary income to shareholders. It is the
Fund's policy to distribute substantially all of its income on a timely
basis, including any net realized gains on investments each year.

To avoid payment of a 4% excise tax, the Fund is also required to distribute
to shareholders at least 98% of its ordinary income earned during the
calendar year and 98% of its net capital gains realized during the 12-month
period ending October 31.

SHAREHOLDERS' TAX STATUS

Shareholders of the Fund will be subject to federal income tax on dividends
and distributions received as cash or additional shares. To the extent the
Fund earns interest from U.S. government obligations, a number of states may
allow pass-through treatment and permit a shareholder to exclude a portion
of their dividends from state income tax.

The Fund will mail annually to each shareholder advice as to the tax status
of each year's dividends and distributions.

CAPITAL GAINS

Distributions by the Fund representing net long-term capital gains realized
by the Fund will be taxable to shareholders as long-term capital gains no
matter how long the shareholder may have held the shares. While the Fund
does not intend to engage in short-term trading, it may dispose of
securities held for only a short time if LB Research believes it to be
advisable. Such changes may result in the realization of capital gains. The
Fund distributes its realized gains in accordance with federal tax
regulations. Distributions from any net realized capital gains will usually
be declared in December.

GENERAL INFORMATION

The Lutheran Brotherhood Family of Funds, a business trust organized under
the laws of the State of Delaware, was established pursuant to a Master
Trust Agreement dated July 15, 1993. The Trust is authorized to issue shares
of beneficial interest, par value $.001 per share, divisible into an
indefinite number of different series and classes and operates as a "series
company" as provided by Rule 18f-2 under the 1940 Act. The interests of
investors in the various series of the Trust will be separate and distinct.
All consideration received for the sales of shares of a particular series of
the Trust, all assets in which such consideration is invested, and all
income earnings and profits derived from such investments, will be allocated
to that series.

Except for the LB Mid Cap Growth Fund and the LB World Growth Fund, each
Fund is the successor to a fund of the same name that previously operated as
a separate corporation or trust. At a Special Meeting of Shareholders of
each such fund held on October 28, 1993, the shareholders of each fund
approved a reorganization of the respective funds as separate series of the
Trust, which reorganization became effective on November 1, 1993. The LB Mid
Cap Growth Fund and the LB World Growth Fund commenced operations as series
of The Lutheran Brotherhood Family of Funds on May 30, 1997 and September 5,
1995, respectively.

CALCULATION OF PERFORMANCE DATA

TOTAL RETURN

Average annual total return is computed by determining the average annual
compounded rates of return over the designated periods that, if applied to
the initial amount invested would produce the ending redeemable value,
according to the following formula:

P(1+T)n = ERV [In the above formula "n" is an exponent.]
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the
designated period assuming a hypothetical
$1,000 payment made at the beginning of the
designated period

The calculation is based on the further assumptions that the maximum initial
sales charge applicable to the investment is deducted, and that all
dividends and distributions by the Fund are reinvested at net asset value on
the reinvestment dates during the periods. All accrued expenses are also
taken into account as described later herein.

ACCRUED EXPENSES

Accrued expenses include all recurring expenses that are charged to all
shareholder accounts in proportion to the length of the base period. The
average annual total return and yield results take sales charges, if
applicable, into account, although the results do not take into account
recurring and nonrecurring charges for optional services which only certain
shareholders elect and which involve nominal fees.

Accrued expenses do not include the portion of operating expenses that are
waived. If that portion of such expenses were included, the Fund's average
annual total return would be lower.

NONSTANDARDIZED TOTAL RETURN

The Fund may provide the above described average annual total return results
for periods which end no earlier than the most recent calendar quarter end
and which begin twelve months before and at the time of commencement of the
Fund's operations. In addition, the Fund may provide nonstandardized total
return results for differing periods, such as for the most recent six
months, and/or without taking sales charges into account. Such
nonstandardized total return is computed as otherwise described under "Total
Return" except that the result may or may not be annualized, and as noted
any applicable sales charge may not be taken into account and therefore not
deducted from the hypothetical initial payment of $1,000.

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