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THE LUTHERAN BROTHERHOOD FAMILY OF FUNDS
SUPPLEMENT TO PROSPECTUS DATED DECEMBER 30, 1996
1. The second paragraph of the section entitled "Lutheran Brotherhood
Income Fund" on page P-14 is deleted and replaced by the following two new
paragraphs:
The Fund seeks to achieve its investment objectives by investing primarily
in debt securities such as bonds, notes, debentures, mortgage-backed
securities, other income producing debt obligations, and preferred stocks
rated either "Baa" or higher by Moody's, or "BBB" or higher by S&P. If not
rated, such securities will be of comparable quality in the opinion of LB
Research. Securities rated BBB or Baa, although considered to be investment
grade or higher, have speculative characteristics. If a portfolio security's
quality rating drops below investment grade after the Fund has acquired the
security, the Fund may continue to hold the security in its portfolio. A
description of the ratings that are given to debt securities by Moody's and
S&P and the standards applied by them in assigning these ratings may be
found at the end of this Prospectus.
The Fund may from time to time invest in debt securities that are not rated
as investment grade. For a description of the risks of investing in such
securities, see the section of this Prospectus entitled "LB High Yield Fund
Investment Risks." It may also invest in common stock and bonds and
preferred stock that are convertible into common stock. No more than 10% of
the Fund's total assets will be invested in common stock and no more than
25% of the value of the total assets will be invested in all securities
described in this paragraph.
2. The following new paragraph entitled "Restricted Securities" is added to
the section of the Prospectus entitled "Additional Investment Practices" on
page P-16:
Restricted Securities
Subject to the limitations on illiquid securities noted above, the Funds 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,
market making activity, and the nature of the security and marketplace
trades. Investments in Rule 144A Securities could have the effect of
increasing the level of a Fund's illiquidity to the extent that qualified
institutional buyers become, for a time, uninterested in purchasing such
securities. Also, a Fund may be adversely impacted by the subjective
valuation of such securities in the absence of an active market for them.
September 30, 1997
PLEASE INCLUDE THIS SUPPLEMENT WITH YOUR PROSPECTUS.
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THE LUTHERAN BROTHERHOOD FAMILY OF FUNDS
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION
DATED DECEMBER 30, 1996
1. The paragraph in the SAI entitled "Restricted Securities" on page 3 is
deleted.
September 30, 1997
PLEASE INCLUDE THIS SUPPLEMENT WITH YOUR
STATEMENT OF ADDITIONAL INFORMATION.
