LUTHERAN BROTHERHOOD FAMILY OF FUNDS, 485BPOS, 1999-12-17

LUTHERAN BROTHERHOOD FAMILY OF FUNDS
485BPOS, 1999-12-17

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As Filed with the Securities and Exchange
Commission on December 17, 1999
1933 Act File No. 2-25984
1940 Act File No. 811-1467
============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]

Pre-Effective Amendment No. [ ]

Post-Effective Amendment No. 69 [X]
and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]

Amendment No. 48 [X]
(Check appropriate box or boxes.)

THE LUTHERAN BROTHERHOOD FAMILY OF FUNDS
----------------------------------------
(Exact Name of Registrant)

625 Fourth Avenue South, Minneapolis, Minnesota 55415
-----------------------------------------------------
(Address of Principal Executive Offices)

(612) 340-7215
------------------------------
(Registrant's Telephone Number)

Otis F. Hilbert, Secretary
The Lutheran Brotherhood Family of Funds
625 Fourth Avenue South
Minneapolis, Minnesota 55415
--------------------------------------------------
(Name and Address of Agent for Service of Process)

Approximate date of proposed public offering:

It is proposed that this filing will become effective under Rule 485 (check
appropriate box):

[ ] Immediately upon filing pursuant to paragraph (b)

[X] On December 20, 1999 pursuant to paragraph (b)

[ ] 60 days after filing pursuant to paragraph (a)(1)

[ ] On (date) pursuant to paragraph (a)(1)

[ ] 75 days after filing pursuant to paragraph (a)(2)

[ ] On (date) pursuant to paragraph (a)(2).

If appropriate check the following box:

[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

<PAGE>
THE LUTHERAN BROTHERHOOD FAMILY OF FUNDS

PROSPECTUS December 20, 1999

LUTHERAN BROTHERHOOD OPPORTUNITY GROWTH FUND
LUTHERAN BROTHERHOOD MID CAP GROWTH FUND
LUTHERAN BROTHERHOOD WORLD GROWTH FUND
LUTHERAN BROTHERHOOD GROWTH FUND
LUTHERAN BROTHERHOOD FUND
LUTHERAN BROTHERHOOD VALUE FUND
LUTHERAN BROTHERHOOD HIGH YIELD FUND
LUTHERAN BROTHERHOOD INCOME FUND
LUTHERAN BROTHERHOOD MUNICIPAL BOND FUND
LUTHERAN BROTHERHOOD LIMITED MATURITY BOND FUND
LUTHERAN BROTHERHOOD MONEY MARKET FUND

CLASS A AND CLASS B SHARES

The Securities and Exchange Commission has not approved or disapproved
these securities or determined if this prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.

<PAGE>

TABLE OF CONTENTS

PAGE

The Funds

Investment Objectives, Principal Strategies and Risks,
Volatility and Performance, Fees and Expenses

Lutheran Brotherhood Opportunity Growth Fund
Lutheran Brotherhood Mid Cap Growth Fund
Lutheran Brotherhood World Growth Fund
Lutheran Brotherhood Growth Fund
Lutheran Brotherhood Fund
Lutheran Brotherhood Value Fund
Lutheran Brotherhood High Yield Fund
Lutheran Brotherhood Income Fund
Lutheran Brotherhood Municipal Bond Fund
Lutheran Brotherhood Limited Maturity Bond Fund
Lutheran Brotherhood Money Market Fund

Management

Your Investment
Choosing a Class of Shares
Class A Shares
Class B Shares
Buying Shares
Net Asset Value of Your Shares
Exchanging Between Funds
Redeeming Shares

Distributions

Taxes

Other Securities and Investment Practices

Optimum(R) Account

Financial Highlights

The Lutheran Brotherhood Family of Funds are offered to members of
Lutheran Brotherhood and to Lutheran institutions, Lutheran church
organizations, trusts, and employee benefit plans. Lutheran Brotherhood
membership is open to any person who (1) is 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, sibling,
or grandchild of a member or qualified proposed member.

<PAGE>
LUTHERAN BROTHERHOOD OPPORTUNITY GROWTH FUND

INVESTMENT OBJECTIVE. The investment objective of the Lutheran
Brotherhood Opportunity Growth Fund ("LB Opportunity Growth Fund") is to
achieve long-term growth of capital.

PRINCIPAL STRATEGIES. The LB Opportunity Growth Fund seeks to achieve
its objective by investing at least 65% of its assets in common stocks of
small-cap growth companies under normal market conditions. T. Rowe Price
Associates, Inc. ("T. Rowe Price"), the Fund's sub-adviser, defines small-
cap growth companies as companies whose market capitalization is smaller
than 80% of those in the Standard & Poor's 500 Index, which was
approximately $3.1 billion as of September 30, 1999. The upper size limit
will vary with market fluctuations. The LB Opportunity Growth Fund may, on
occasion, purchase a stock whose market cap exceeds the range, and it will
not automatically sell a stock just because the company's market cap has
grown beyond the upper end of the company's size. (Market capitalization of
stocks gives you a snapshot view of a company's size. A stock's "market
cap" is calculated by multiplying the number of the company's shares
outstanding by the stock's per-share price. Companies are categorized into
small, medium and large based on their capitalization, e.g., "small-cap,"
"mid-cap," or "large-cap.")

T. Rowe Price designed and uses a number of quantitative models to
identify key characteristics of small-cap growth stocks. Based on these
models, T. Rowe Price selects stocks in a "top down" manner so that the Fund
reflects characteristics T. Rowe Price considers important, such as
valuations (price/earnings or price/book value ratios, for example) and
projected earnings growth. In addition, the models may reflect the degree
of institutional ownership of stocks in this sector. The Fund will be
broadly diversified, which should minimize the effects of individual
security selection on Fund performance.

The price-to-earnings (P/E) ratio represents the price of a stock
divided by its earnings per share. In general, the higher the P/E, the
greater the expectations are for earnings growth.

Price-to-book ratio represents the price of a stock divided by its net
asset value (book value). The price/book ratio can be a guide in
determining the value of a stock.

PRINCIPAL RISKS. The LB Opportunity Growth Fund's principal risks are
the risks generally of stock investing. They include the risk of sudden and
unpredictable drops in the value of the market as a whole and periods of
lackluster performance.

In addition, LB Opportunity Growth Fund will be invested in smaller
companies with shorter histories and less seasoned operations. Smaller,
less seasoned companies often have greater price volatility, lower trading
volume, and less liquidity than larger, more established companies. These
companies tend to be more dependent on the success of limited product lines
and have less experienced management and financial resources. Growth stocks
can have greater price volatility than other stocks in a declining market or
when a company's earnings are less than expected.

For these and other reasons, the LB Opportunity Growth Fund may
underperform other stock funds (such as large company stock funds) when
stocks of small or growth companies are out of favor.

The success of the LB Opportunity Growth Fund's investment strategy
depends significantly on T. Rowe Price's skill in assessing the potential of
the securities in which the Fund invests. Shares of the LB Opportunity
Growth Fund will rise and fall in value and there is a risk that you could
lose money by investing in the Fund. The LB Opportunity Growth Fund cannot
be certain that it will achieve its objective.

VOLATILITY AND PERFORMANCE

The bar chart and table shown below provide an indication of the risks
of investing in the LB Opportunity Growth Fund by showing changes in the
Fund's performance from year to year and by showing how the Fund's average
annual returns for a one-year period and since inception compared to a
broad-based securities market index. The bar chart includes the effects of
Fund expenses, but not sales charges. If sales charges were included,
returns would be lower than those shown. The table includes the effects of
Fund expenses and maximum sales charges for each class, and assumes that you
sold your shares at the end of the period. In both the bar chart and the
table, the returns shown for the Fund include performance from before the
creation of share classes on October 31, 1997. Prior to October 31, 1997,
the shares of the Fund had no specific class designation. As of that date,
all of the outstanding were redesignated as Class A shares. If the returns
for Class A shares reflected their current shareholder servicing fee of
0.25% per year and the returns for the Class B shares reflected their
current 12b-1 distribution fee of 0.75% per year and shareholder servicing
fee of 0.25% per year, the returns would be lower than those shown. How a
Fund has performed in the past is not necessarily an indication of how it
will perform in the future.

[GRAPHIC BAR CHART OMITTED: YEAR-BY-YEAR TOTAL RETURN (CLASS A)]

Annual
Year Return

1994 2.66%
1995 37.71%
1996 12.16%
1997 -0.41%
1998 -4.26%

Best Quarter: Q4 '98 +24.55%
Worst Quarter: Q3 '98 -22.46%

Footnote reads:
The Fund's year-to-date return as of 9/30/99 (not annualized) was 0.64%.

Average Annual Total Returns
(periods ending
December 31, 1998)
-----------------------------
Since
Inception
1-Year 5-Year (1/8/93)

LB Opportunity Growth Fund (Class A) -8.10% 7.73% 10.46%

LB Opportunity Growth Fund (Class B) -9.71% 8.29% 11.07%

Russell 2000 -2.55% 11.90% 13.25%

The Russell 2000 is an unmanaged index which measures the performance
of the 2,000 smallest companies in the Russell 3000 Index (an index of the
3,000 largest companies based on market capitalization).

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and
hold shares of the LB Opportunity Growth Fund.(1)

SHAREHOLDER FEES (fees paid directly from your investment)

CLASS A SHARES CLASS B SHARES
-------------- --------------
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) 4% None
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value at time of
purchase or redemption, whichever is lower) None 5%

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund
assets)

CLASS A CLASS B
------- -------
Management Fees 0.44% 0.44%
Distribution (12b-1) Fees -- 0.75%
Other Expenses (including a 0.25% 1.06% 1.06%
shareholder servicing fee)
Total Annual Fund Operating Expenses 1.50% 2.25%

(1) The maximum sales charges for the Fund depends upon the amount of your
investment and whether you buy Class A shares or Class B shares. For a
complete description of the sales charges, see "Choosing a Class of Shares."

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN THE FUND FOR THE TIME PERIODS
INDICATED AND THEN REDEEM ALL OF YOUR SHARES AT THE END OF THOSE PERIODS.
THE EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND
THAT THE FUND'S OPERATING EXPENSES REMAIN THE SAME. FOR CLASS B SHARES, IT
ALSO ASSUMES THE AUTOMATIC CONVERSION TO CLASS A SHARES AFTER FIVE YEARS.
ALTHOUGH YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER, BASED ON THESE
ASSUMPTIONS YOUR COSTS WOULD BE:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A shares $547 $ 855 $1,186 $2,119
Class B shares $728 $1,003 $1,305 $2,142

YOU WOULD PAY THE FOLLOWING EXPENSES IF YOU DID NOT REDEEM YOUR SHARES:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A shares $547 $855 $1,186 $2,119
Class B shares $228 $703 $1,205 $2,142

LUTHERAN BROTHERHOOD MID CAP GROWTH FUND

INVESTMENT OBJECTIVE. The investment objective of the Lutheran
Brotherhood Mid Cap Growth Fund ("LB Mid Cap Growth Fund") is to achieve
long-term growth of capital.

PRINCIPAL STRATEGIES. The principal strategy for achieving this
objective is to invest in common stocks of companies with medium market
capitalizations. Under normal market conditions, the LB Mid Cap Growth Fund
invests at least 65% of its assets in companies that fall within the range
of companies included in the Standard & Poor's MidCap 400 Index at the time
of the Fund's investment. As of September 30, 1999, the S&P MidCap 400
included companies with capitalizations between $236 million and $12.9
billion. Lutheran Brotherhood Research Corp. ("LB Research"), the Fund's
investment adviser, uses both fundamental and technical investment research
techniques to determine what stocks to buy and sell. (Fundamental
investment analysis generally involves assessing a company's or security's
value based on factors such as sales, assets, markets, management, products
and services, earnings, and financial structure. Technical analysis
generally involves studying trends and movements in a security's price,
trading volume, and other market-related factors in an attempt to discern
patterns.) LB Research focuses on companies that have a strong record of
earnings growth or show good prospects for growth in sales and earnings and
also considers the trends in the market as a whole.

PRINCIPAL RISKS. The LB Mid Cap Growth Fund's principal risks are the
risks generally of stock investing. They include the risk of sudden and
unpredictable drops in the value of the market as a whole and periods of
lackluster performance.

In addition, medium-sized companies often have greater price
volatility, lower trading volume, and less liquidity than larger, more-
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. For these and other reasons,
the LB Mid Cap Growth Fund may underperform other stock funds (such as large
company stock funds) when stocks of medium-sized companies are out of favor.

The success of the Fund's investment strategy depends significantly on
LB Research's skill in assessing the potential of the securities in which
the Fund invests. Shares of the LB Mid Cap Growth Fund will rise and fall
in value and there is a risk that you could lose money by investing in the
Fund. The LB Mid Cap Growth Fund cannot be certain that it will achieve its
objective.

VOLATILITY AND PERFORMANCE

The bar chart and table shown below provide an indication of the risks
of investing in the LB Mid Cap Growth Fund by showing changes in the Fund's
performance during its first complete calendar year and by showing how the
Fund's average annual returns for a one-year period and since inception
compared to a broad-based securities market index. The bar chart includes
the effects of Fund expenses, but not sales charges. If sales charges were
included, returns would be lower than those shown. The table includes the
effects of Fund expenses and maximum sales charges for each class, and
assumes that you sold your shares at the end of the period. The returns in
the table shown for the Fund include performance from before the creation of
share classes on October 31, 1997. Prior to October 31, 1997, the shares of
the Fund had no specific class designation. As of that date, all of the
outstanding were redesignated as Class A shares. If the returns for Class A
shares reflected their current shareholder servicing fee of 0.25% per year
and the returns for the Class B shares reflected their current 12b-1
distribution fee of 0.75% per year and shareholder servicing fee of 0.25%
per year, the returns would be lower than those shown. How a Fund has
performed in the past is not necessarily an indication of how it will
perform in the future.

[GRAPHIC BAR CHART OMITTED: YEAR-BY-YEAR TOTAL RETURN (CLASS A)]

Annual
Year Return

1998 11.55%

Best Quarter: Q4 '98 +25,84%
Worst Quarter: Q3 '98 -19.27%

Footnote reads:
The Fund's year-to-date return as of 9/30/99 (not annualized) was 10.45%.

Average Annual Total Returns
(periods ending
December 31, 1998)
-----------------------------
Since
Inception
1-Year (5/30/97)

LB Mid Cap Growth Fund (Class A) 7.07% 12.45%

LB Mid Cap Growth Fund (Class B) 5.76% 12.41%

S&P MidCap 400 Index 18.25% 26.73%

The S&P MidCap 400 Index is an unmanaged index which measures the
performance of 400 widely held common stocks of mid-cap companies.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and
hold shares of the LB Mid Cap Growth Fund.(1)

SHAREHOLDER FEES (fees paid directly from your investment)

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund
assets)

CLASS A CLASS B
------- -------
Management Fees 0.45% 0.45%
Distribution (12b-1) Fees -- 0.75%
Other Expenses (including a 0.25% 1.62% 1.62%
shareholder servicing fee)
Total Annual Fund Operating Expenses (2) 2.07% 2.82%

(2) LB Research has voluntarily agreed to temporarily waive a portion of
its advisory fee and, if necessary, to bear certain expenses associated with
operating LB Mid Cap Growth Fund in order to limit the Total Annual Fund
Operating Expenses for the Class A shares and Class B shares to an annual
rate of 1.95% and 2.70%, respectively, of the average net assets at the
relevant class. This temporary waiver and expense provision may be
discontinued at any time.

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A shares $602 $1,023 $1,469 $2,704
Class B shares $785 $1,174 $1,589 $2,729

YOU WOULD PAY THE FOLLOWING EXPENSES IF YOU DID NOT REDEEM YOUR SHARES:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A shares $602 $1,023 $1,469 $2,704
Class B shares $285 $ 874 $1,489 $2,729

LUTHERAN BROTHERHOOD WORLD GROWTH FUND

INVESTMENT OJBECTIVE. The investment objective of the Lutheran
Brotherhood World Growth Fund ("LB World Growth Fund") is to seek total
return from long-term growth of capital.

PRINCIPAL STRATEGIES. The LB World Growth Fund seeks to achieve its
objective by investing primarily (at least 65%) in common stocks of
established non-U.S. companies. The Fund may invest in companies located
anywhere in the world (including the United States) and expects to diversify
broadly among developed and emerging countries.

Stock selection reflects a growth style. While stocks may be purchased
without regard to a company's market capitalization, the focus typically
will be on large and, to a lesser extent, medium-sized, companies. In
determining the appropriate distribution of investments among various
countries and geographic regions, Rowe Price-Fleming International, Inc.
("Price-Fleming"), the Fund's sub-adviser, employs in-depth fundamental
research in an effort to identify companies capable of achieving and
sustaining above-average, long-term earnings growth. (Fundamental
investment analysis is defined on Page __.) Price-Fleming seeks to purchase
such stocks at reasonable prices in relation to present or anticipated
earnings, cash flow, or book value, and valuation factors often influence
its allocations among large-, mid-, or small-cap shares.

While Price-Fleming invests with an awareness of the global economic
backdrop and its outlook for individual countries, bottom-up stock selection
is the focus of its decision-making. Country allocation is driven largely
by stock selection, though the sub-adviser may limit investments in markets
that appear to have poor overall prospects.

In selecting stocks, Price-Fleming generally favors companies with one
or more of the following characteristics:

o Leading market position
o Attractive business niche
o Strong franchise or natural monopoly
o Technological leadership or proprietary advantages
o Seasoned management
o Earnings growth and cash flow sufficient to support growing
dividends
o Healthy balance sheet with relatively low debt

PRINCIPAL RISKS. LB World Growth Fund's principal risks are the risks
generally of stock investing. They include the risk of sudden and
unpredictable drops in the value of the market as a whole and periods of
lackluster performance.

Stocks of non-U.S. companies in which LB World Growth Fund invests
generally carry more risk than stocks of U.S. companies. One of the most
important is currency risk. This refers to a decline in the value of a
foreign currency versus the U.S. dollar, which reduces the dollar value of
securities denominated in that currency. The overall impact on LB World
Growth Fund's holdings can be significant and long-lasting, depending on the
currencies represented in the portfolio and how each one appreciates or
depreciates in relation to the U.S. dollar. The introduction of the new
european common currency on January 1, 1999, may cause unanticipated adverse
effects. Other risks result from the varying stages of economic and
political development of foreign countries, the differing regulatory
environments and accounting standards of non-U.S. markets, and higher
transaction costs. LB World Growth Fund's investment in any country could
be subject to actions such as capital or currency controls, nationalizing a
company or industry, expropriating assets, or imposing punitive taxes which
would have a severe effect on security prices and impair LB World Growth
Fund's ability to repatriate capital or income. These risks are usually
greater in emerging markets. For these and other reasons, the LB World
Growth Fund may underperform other stock funds (such as U.S. stock funds)
when international stocks are out of favor.

The success of the Fund's investment strategy depends significantly on
Price-Fleming's skill in assessing the potential of the securities in which
the Fund invests. Shares of the LB World Growth Fund will rise and fall in
value and there is a risk that you could lose money by investing in the
Fund. The LB World Growth Fund cannot be certain that it will achieve its
objective.

VOLATILITY AND PERFORMANCE

The bar chart and table shown below provide an indication of the risks
of investing in the LB World Growth Fund by showing changes in the Fund's
performance from year to year and by showing how the Fund's average annual
returns for a one-year period and since inception compared to a broad-based
securities market index. The bar chart includes the effects of Fund
expenses, but not sales charges. If sales charges were included, returns
would be lower than those shown. The table includes the effects of Fund
expenses and maximum sales charges for each class, and assumes that you sold
your shares at the end of the period. In both the bar chart and the table,
the returns shown for the Fund include performance from before the creation
of share classes on October 31, 1997. Prior to October 31, 1997, the shares
of the Fund had no specific class designation. As of that date, all of the
outstanding were redesignated as Class A shares. If the returns for Class A
shares reflected their current shareholder servicing fee of 0.25% per year
and the returns for the Class B shares reflected their current 12b-1
distribution fee of 0.75% per year and shareholder servicing fee of 0.25%
per year, the returns would be lower than those shown. How a Fund has
performed in the past is not necessarily an indication of how it will
perform in the future.

[GRAPHIC BAR CHART OMITTED: YEAR-BY-YEAR TOTAL RETURN (CLASS A)]

Annual
Year Return

1996 13.43%
1997 2.17%
1998 15.72%

Best Quarter: Q4 '98 +17.63%
Worst Quarter: Q3 '98 -13.51%

Footnote reads:
The Fund's year-to-date return as of 9/30/99 (not annualized) was 6.86%.

Average Annual Total Returns
(periods ending
December 31, 1998)
-----------------------------
Since
Inception
1-Year (9/5/95)

LB World Growth Fund (Class A) 11.12% 8.99%

LB World Growth Fund (Class B) 9.94% 9.58%

Morgan Stanley EAFE Index 20.33% 9.92%

The Morgan Stanley EAFE (Europe and Australasia, Far East Equity) is an
unmanaged index which measures the performance of international companies
screened for liquidity, cross-ownership, and industry representation.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and
hold shares of the LB World Growth Fund.(1)

SHAREHOLDER FEES (fees paid directly from your investment)

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund
assets)

CLASS A CLASS B
------- -------
Management Fees 0.75% 0.75%
Distribution (12b-1) Fees -- 0.75%
Other Expenses (including a 0.25% 1.13% 1.13%
shareholder servicing fee)

Total Annual Fund Operating Expenses 1.88% 2.63%

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A shares $583 $ 967 $1,375 $2,513
Class B shares $766 $1,117 $1,495 $2,538

YOU WOULD PAY THE FOLLOWING EXPENSES IF YOU DID NOT REDEEM YOUR SHARES:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A shares $583 $967 $1,375 $2,513
Class B shares $266 $817 $1,395 $2,538

LUTHERAN BROTHERHOOD GROWTH FUND

INVESTMENT OBJECTIVE. The investment objective of the Lutheran
Brotherhood Growth Fund ("LB Growth Fund") is to achieve long-term growth of
capital.

PRINCIPAL STRATEGIES. The principal strategy for achieving this
objective is to invest primarily (at least 65%) in the common stocks of
growth companies with large market capitalizations. The Fund invests
primarily in stocks of companies that Lutheran Brotherhood Research Corp.
("LB Research"), the Fund's investment adviser, believes have demonstrated
and will sustain above-average earnings growth over time, or which are
expected to develop rapid sales and earnings growth in the future when
compared to the economy and stock market as a whole. LB Research defines
companies with large market capitalizations according to the market
capitalization classifications published by Lipper, Inc. Based on Lipper's
guidelines as of September 30, 1999, companies with large market
capitalizations are those with market capitalizations of at least $7.8
billion. The Fund will invest primarily in U.S. companies, although it may
also invest in foreign companies.

LB Research uses both fundamental and technical investment research
techniques to determine what stocks to buy and sell. (Fundamental investment
analysis and technical investment analysis are defined on Page _.)

PRINCIPAL RISKS. The LB Growth Fund's principal risks are the risks
generally of stock investing. They include the risk of sudden and
unpredictable drops in the value of the market as a whole and periods of
lackluster performance.

Growth stocks can have greater price volatility than other stocks in a
declining market or when a company's earnings are less than expected. In
addition, the prices of larger company stocks may not rise as quickly or as
significantly as prices of stocks of well-managed smaller companies when
stocks of larger companies are out of favor. For these and other reasons,
the LB Growth Fund may underperform other stock funds.

The success of the Fund's investment strategy depends significantly on
LB Research's skill in assessing the potential of the securities in which
the Fund invests. Shares of the LB Growth Fund will rise and fall in value
and there is a risk that you could lose money by investing in the Fund. The
LB Growth Fund cannot be certain that it will achieve its objective.

The LB Growth Fund commenced operations on October 29, 1999. No bar
chart or performance table has been included for the LB Growth Fund.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and
hold shares of the LB Growth Fund.(1)

SHAREHOLDER FEES (fees paid directly from your investment)

CLASS A SHARES CLASS B SHARES
-------------- --------------
Maximum Sales Charge (Load) Imposed On Purchases
(as a percentage of offering price) 4% None
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value at time of
purchase or redemption, whichever is lower) None 5%

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund
assets)

CLASS A CLASS B
------- -------
Management Fees 0.43% 0.43%
Distribution (12b-1) Fees -- 0.75%
Other Expenses (including a 0.25% 1.39% 1.39%
shareholder servicing fee) (2)
Total Annual Fund Operating Expenses (3) 1.82% 2.57%

(2) Because the LB Growth Fund has been newly organized, the percentage
expense levels shown in the table as "Other Expenses" are based on
estimates.

(3) LB Research has voluntarily agreed to temporarily waive a portion of
its advisory fee and, if necessary, to bear certain expenses associated with
operating LB Growth Fund in order to limit the Total Annual Fund Operating
Expenses for the Class A shares and Class B shares to an annual rate of
1.30% and 2.05%, respectively, of the average net assets at the relevant
class. This temporary waiver and expense provision may be discontinued at
any time.

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN THE FUND FOR THE TIME PERIODS
INDICATED AND THEN REDEEM ALL OF YOUR SHARES AT THE END OF THOSE PERIODS.
THE EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND
THAT THE FUND'S OPERATING EXPENSES REMAIN THE SAME. ALTHOUGH YOUR ACTUAL
COSTS MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS YOUR COSTS WOULD
BE:

1 Year 3 Years
------ -------
Class A shares $577 $ 950
Class B shares $760 $1,099

YOU WOULD PAY THE FOLLOWING EXPENSES IF YOU DID NOT REDEEM YOUR SHARES:

1 Year 3 Years
------ -------
Class A shares $577 $950
Class B shares $260 $799

LUTHERAN BROTHERHOOD FUND

INVESTMENT OBJECTIVE. The investment objective of the Lutheran
Brotherhood Fund ("LB Fund") is to seek growth of capital and income.

PRINCIPAL STRATEGIES. The principal strategy for achieving this
objective is to invest in the common stocks of leading U.S. domestic and
multi-national companies. LB Research, the Fund's investment adviser, uses
fundamental and technical investment research techniques to identify stocks
of companies that it believes have a leading position and successful
business strategy within their industry. (Fundamental investment analysis
and technical investment analysis are defined on Page _.) The Fund invests
primarily (at least 65%) in stocks of companies with large market
capitalizations, which LB Research believes have balance sheet strength and
profitability. LB Research seeks to invest in companies with a strong
management team that will develop business strategies which lead to sales
and earnings growth and improving relative stock value.

PRINCIPAL RISKS. LB Fund's principal risks are the risks generally of
stock investing. They include the risk of sudden and unpredictable drops in
the value of the market as a whole and periods of lackluster performance.

In addition, the prices of larger company stocks may not rise as
quickly or as significantly as prices of stocks of well-managed smaller
companies. For these and other reasons, the LB Fund may underperform other
stock funds (such as small company or medium company stock funds) when
larger company stocks are out of favor.

The success of the Fund's investment strategy depends significantly on
LB Research's skill in assessing the potential of the securities in which
the Fund invests. Shares of LB Fund will rise and fall in value and there
is a risk that you could lose money by investing in the Fund. The LB Fund
cannot be certain that it will achieve its objective.

VOLATILITY AND PERFORMANCE

The bar chart and table shown below provide an indication of the risks
of investing in the LB Fund by showing changes in the Fund's performance
from year to year and by showing how the Fund's average annual returns for
one, five, and ten years compared to a broad-based securities market index.
The bar chart includes the effects of Fund expenses, but not sales charges.
If sales charges were included, returns would be lower than those shown.
The table includes the effects of Fund expenses and maximum sales charges
for each class, and assumes that you sold your shares at the end of the
period. In both the bar chart and the table, the returns shown for the Fund
include performance from before the creation of share classes on October 31,
1997. The LB Fund commenced operations on June 2, 1970. Prior to October
31, 1997, the shares of the Fund had no specific class designation. As of
that date, all of the outstanding were redesignated as Class A shares. If
the returns for Class A shares reflected their current shareholder servicing
fee of 0.25% per year and the returns for the Class B shares reflected their
current 12b-1 distribution fee of 0.75% per year and shareholder servicing
fee of 0.25% per year, the returns would be lower than those shown. How a
Fund has performed in the past is not necessarily an indication of how it
will perform in the future.

[GRAPHIC BAR CHART OMITTED: YEAR-BY-YEAR TOTAL RETURN (CLASS A)]

Annual
Year Return

1989 26.61%
1990 -1.95%
1991 32.77%
1992 5.80%
1993 8.69%
1994 -3.41%
1995 32.04%
1996 17.22%
1997 27.90%
1998 23.30%

Best Quarter: Q4 '98 +22.54%
Worst Quarter: Q3 '98 -13.63%

Footnote reads:
The Fund's year-to-date return as of 9/30/99 (not annualized) was 5.01%.

Average Annual Total Returns
(periods ending
December 31, 1998)
-----------------------------
1-Year 5-Years 10-Years

LB Fund (Class A) 18.39% 17.73% 15.67%

LB Fund (Class B) 17.45% 18.41% 16.05%

S&P 500 Index 28.59% 24.03% 19.19%

The S&P 500 Index is an unmanaged index which measures the performance
of 500 widely held common stocks of large-cap companies.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and
hold shares of the LB Fund.(1)

SHAREHOLDER FEES (fees paid directly from your investment)

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund
assets)

CLASS A CLASS B
------- -------
Management Fees 0.35% 0.35%
Distribution (12b-1) Fees -- 0.75%
Other Expenses (including a 0.25% 0.55% 0.55%
shareholder servicing fee)

Total Annual Fund Operating Expenses (2) 0.90% 1.65%

(2) LB Research has voluntarily agreed to temporarily waive a portion of
its advisory fees equal to 0.05% of the average daily net assets of the LB
Fund. With this waiver, the Total Annual Fund Operating Expenses would be
0.86% for the Class A shares and 1.61% for the Class B shares. The
temporary waiver may be discontinued at any time.

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A shares $488 $676 $879 $1,464
Class B shares $668 $820 $997 $1,485

YOU WOULD PAY THE FOLLOWING EXPENSES IF YOU DID NOT REDEEM YOUR SHARES:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A shares $488 $676 $879 $1,464
Class B shares $168 $520 $897 $1,485

LUTHERAN BROTHERHOOD VALUE FUND

INVESTMENT OBJECTIVE. The investment objective of the Lutheran
Brotherhood Value Fund ("LB Value Fund") is to achieve long-term growth of
capital.

PRINCIPAL STRATEGIES. The principal strategy for achieving this
objective is to invest primarily (at least 65%) in the common stocks of
undervalued companies with large market capitalizations. LB Research, the
Fund's investment adviser, uses both fundamental and technical investment
research techniques to identify stocks of companies that it believes are
undervalued in relation to their long-term earnings power or asset value.
These stocks typically, but not always, have below average price-to-earnings
and price-to-book value ratios. (Fundamental investment analysis and
technical investment analysis are defined on Page _.)

The Fund will invest primarily in U.S. companies, although it may also
invest in foreign companies.

PRINCIPAL RISKS. The LB Value Fund's principal risks are the risks
generally of stock investing. They include the risk of sudden and
unpredictable drops in the value of the market as a whole and periods of
lackluster performance.

There is also a risk that stocks of undervalued companies may not rise
as quickly as anticipated if the market doesn't recognize their intrinsic
value or if value stocks are out of favor. In addition, the prices of
larger company stocks may not rise as quickly or as significantly as prices
of stocks of well-managed smaller companies. For these and other reasons,
the LB Value Fund may underperform other stock funds.

The success of the Fund's investment strategy depends significantly on
LB Research's skill in assessing the potential of the securities in which
the Fund invests. Shares of the LB Value Fund will rise and fall in value
and there is a risk that you could lose money by investing in the Fund. The
LB Value Fund cannot be certain that it will achieve its objective.

The LB Value Fund commenced operations on October 29, 1999. No bar
chart or performance table has been included for the LB Value Fund.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and
hold shares of the LB Value Fund.(1)

SHAREHOLDER FEES (fees paid directly from your investment)

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund
assets)

CLASS A CLASS B
------- -------
Management Fees 0.40% 0.40%
Distribution (12b-1) Fees -- 0.75%
Other Expenses (including a 0.25% 1.39% 1.39%
shareholder servicing fee) (2)
Total Annual Fund Operating Expenses (3) 1.79% 2.54%

(2) Because the LB Value Fund has been newly organized, the percentage
expense levels shown in the table as "Other Expenses" are based on
estimates.

(3) LB Research has voluntarily agreed to temporarily waive a portion of
its advisory fee and, if necessary, to bear certain expenses associated with
operating LB Value Fund in order to limit the Total Annual Fund Operating
Expenses for the Class A shares and Class B shares to an annual rate of
1.30% and 2.05%, respectively, of the average net assets at the relevant
class. This temporary waiver and expense provision may be discontinued at
any time.

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN THE FUND FOR THE TIME PERIODS
INDICATED AND THEN REDEEM ALL OF YOUR SHARES AT THE END OF THOSE PERIODS.
THE EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND
THAT THE FUND'S OPERATING EXPENSES REMAIN THE SAME. ALTHOUGH YOUR ACTUAL
COSTS MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS YOUR COSTS WOULD
BE:

1 Year 3 Years
------ -------
Class A shares $575 $ 941
Class B shares $757 $1,091

YOU WOULD PAY THE FOLLOWING EXPENSES IF YOU DID NOT REDEEM YOUR SHARES:

1 Year 3 Years
------ -------
Class A shares $575 $941
Class B shares $257 $791

LUTHERAN BROTHERHOOD HIGH YIELD FUND

INVESTMENT OBJECTIVE. The investment objective of the Lutheran
Brotherhood High Yield Fund ("LB High Yield Fund") is to obtain high current
income, and, secondarily, growth of capital.

PRINCIPAL STRATEGIES. Under normal market conditions, the LB High
Yield Fund invests at least 65% of its total assets in high-yield, high risk
bonds, notes, debentures and other debt obligations or preferred stocks.
These securities are commonly known as "junk bonds." At the time of
purchase these securities are rated within or below the BB major rating
category by Standard & Poor's Corporation or the Ba major rating category by
Moody's Investor Services, Inc. or are unrated but considered to be of
comparable quality by LB Research, the Fund's investment adviser. LB
Research uses fundamental investment research techniques to determine what
securities to buy and sell. (Fundamental investment analysis is defined on
Page _.) LB Research focuses on companies which it believes have or are
expected to achieve adequate cash flows or access to capital markets for the
payment of principal and interest obligations. LB Research generally
purchases bonds with a 10-year maturity, although it may purchase bonds with
a shorter or longer maturity.

PRINCIPAL RISKS. The principal risks of LB High Yield Fund include the
tendency of high-yield bond prices to fall when the economy is sluggish or
overall corporate earnings are weak. During those times, it may become
difficult for issuers of high-yield bonds to generate sufficient cash flow
or to obtain adequate access to capital markets to pay principal or
interest. For all bonds, there is a risk that an issuer will default.
High-yield bonds, however, are more susceptible to the risk of default and
their prices usually fall if a number of issuers, or a high profile issuer,
default or go bankrupt or if the market anticipates either of those events.

The price of LB High Yield Fund shares also may be affected by weak
equity markets, when issuers of high-yield bonds generally find it difficult
to improve their financial condition by replacing debt with equity. In
addition, many high yield securities are traded only among institutional
investors, and it may be difficult for LB Research to sell the Fund's
portfolio investments at fair prices when high-yield bonds fall out of favor
with those investors.

Generally, when interest rates rise, bond prices fall, which may cause
the price of shares of the LB High Yield Fund to fall as well. Bonds with
longer durations and maturities tend to be more sensitive to changes in
interest rates than bonds with shorter durations or maturities. (Maturity is
a measure of the remaining time before the bond must be repaid. Duration is
a measure of the effective, as opposed to the actual, maturity of a fixed-
income security. Duration considers the bond's cash flows and the time
value of money.) In general, the prices at which lower quality bonds are
traded before they mature may be more affected by the financial health of
the issuer and the economy and less by changes in interest rates.

The success of the Fund's investment strategy depends significantly on
LB Research's skill in assessing the potential of the securities in which
the Fund invests. Shares of the LB High Yield Fund will rise and fall in
value and there is a risk that you could lose money by investing in the
Fund. The LB High Yield Fund cannot be certain that it will achieve its
objective.

VOLATILITY AND PERFORMANCE

The bar chart and table shown below provide an indication of the risks
of investing in the LB High Yield Fund by showing changes in the Fund's
performance from year to year and by showing how the Fund's average annual
returns for one, five, and ten years compared to a broad-based securities
market index. The bar chart includes the effects of Fund expenses, but not
sales charges. If sales charges were included, returns would be lower than
those shown. The table includes the effects of Fund expenses and maximum
sales charges for each class, and assumes that you sold your shares at the
end of the period. In both the bar chart and the table, the returns shown
for the Fund include performance from before the creation of share classes
on October 31, 1997. The LB High Yield Fund commenced operations on April
3, 1987. Prior to October 31, 1997, the shares of the Fund had no specific
class designation. As of that date, all of the outstanding were
redesignated as Class A shares. If the returns for Class A shares reflected
their current shareholder servicing fee of 0.25% per year and the returns
for the Class B shares reflected their current 12b-1 distribution fee of
0.75% per year and shareholder servicing fee of 0.25% per year, the returns
would be lower than those shown. How a Fund has performed in the past is
not necessarily an indication of how it will perform in the future.

[GRAPHIC BAR CHART OMITTED: YEAR-BY-YEAR TOTAL RETURN (CLASS A)]

Annual
Year Return

1989 -2.68%
1990 -7.44%
1991 36.09%
1992 20.12%
1993 20.86%
1994 -5.29%
1995 19.38%
1996 10.96%
1997 13.47%
1998 -1.94%

Best Quarter: Q1 '91 +13.06%
Worst Quarter: Q3 '98 -8.68%

Footnote reads:
The Fund's year-to-date return as of 9/30/99 (not annualized) was 2.92%.

Average Annual Total Returns
(periods ending
December 31, 1998)
-----------------------------
1-Year 5-Years 10-Years

LB High Yield Fund (Class A) -5.86% 6.02% 9.08%

LB High Yield Fund (Class B) -7.48% 6.56% 9.43%

Lehman High Yield Index 1.87% 8.57% 10.54%

The Lehman High Yield Index is an unmanaged index which measures the
performance of fixed-rate non-investment grade bonds.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and
hold shares of the LB High Yield Fund.(1)

SHAREHOLDER FEES (fees paid directly from your investment)

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund
assets)

CLASS A CLASS B
------- -------
Management Fees 0.38% 0.38%
Distribution (12b-1) Fees -- 0.75%
Other Expenses (including a 0.25% 0.53% 0.53%
shareholder servicing fee)

Total Annual Fund Operating Expenses (2) 0.91% 1.66%

(2) LB Research has voluntarily agreed to temporarily waive a portion of
its advisory fees equal to 0.05% of the average daily net assets of the LB
High Yield Fund. With this waiver, the Total Annual Fund Operating Expenses
would be 0.84% for the Class A shares and 1.59% for the Class B shares. The
temporary waiver may be discontinued at any time.

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A shares $489 $679 $ 884 $1,475
Class B shares $669 $823 $1,002 $1,496

YOU WOULD PAY THE FOLLOWING EXPENSES IF YOU DID NOT REDEEM YOUR SHARES:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A shares $489 $679 $884 $1,475
Class B shares $169 $523 $902 $1,496

LUTHERAN BROTHERHOOD INCOME FUND

INVESTMENT OBJECTIVE. The investment objective of the Lutheran
Brotherhood Income Fund ("LB Income Fund") is to seek high current income
while preserving principal. The Fund's secondary investment objective is to
obtain long-term growth of capital in order to maintain investors'
purchasing power.

PRINCIPAL STRATEGIES. The LB Income Fund invests primarily in
investment-grade corporate bonds, government bonds, and mortgage-backed
securities. Under normal conditions, at least 65% of the Fund's assets will
be invested in debt securities or preferred stock at least in the "Baa"
major rating category by Moody's or at least in the "BBB" major rating
category by S&P or unrated securities considered to be of comparable quality
by LB Research, the Fund's investment adviser. The Fund may also invest in
high-yield, high risk bonds, notes, debentures and other debt obligations or
preferred stock commonly known as "junk bonds." At the time of purchase
these securities are rated within or below the BB major rating category by
S&P or the Ba major rating category by Moody's or are unrated but considered
to be of comparable quality by LB Research. LB Research uses fundamental
investment research techniques to determine what debt obligations to buy and
sell. (Fundamental investment analysis is defined on Page _.) LB Research
focuses on companies which it believes are financially sound and have strong
cash flow, asset values, and interest or dividend earnings.

PRINCIPAL RISKS. The LB Income Fund's principal risks are those of
debt investing, including increases in interest rates and loss of principal.
Generally, when interest rates rise, bond prices fall, which may cause the
price of shares of LB Income Fund to fall as well. Bond prices fall because
bonds issued after rates rise will offer higher yields, making older bonds
with lower rates less attractive. To raise the effective yield on older
bonds, holders of the older bonds must discount their prices. (Effective
yield on a bond is determined by the purchase price, the stated rate of
interest on the bond, the time between interest payments, and the time until
maturity.) Bonds with longer durations and maturities tend to be more
sensitive to changes in interest rates than bonds with shorter durations or
maturities. (Duration and maturity are defined on Page __.)

In addition, mortgage-backed securities are sensitive to changes in the
redemption patterns of the underlying securities. If the principal payment
on the underlying asset is repaid faster or slower than the holder of the
mortgage-backed security anticipates, the price of the security may fall,
especially if the holder must reinvest the repaid principal at lower rates
or must continue to hold the securities when interest rates rise.

For all bonds there is a risk that an issuer will default. High-yield
bonds generally are more susceptible to risk of default than higher rated
bonds, and to the LB Income Fund, this risk increases as LB Research
increases the percentage of the Fund's portfolio in high-yield bonds.

The success of the Fund's investment strategy depends significantly on
LB Research's skill in assessing the potential of the securities in which
the Fund invests. Shares of the LB Income Fund will rise and fall in value
and there is a risk that you could lose money by investing in the Fund. The
LB Income Fund cannot be certain that it will achieve its goal.

VOLATILITY AND PERFORMANCE

The bar chart and table shown below provide an indication of the risks
of investing in the LB Income Fund by showing changes in the Fund's
performance from year to year and by showing how the Fund's average annual
returns for one, five, and ten years compared to a broad-based securities
market index. The bar chart includes the effects of Fund expenses, but not
sales charges. If sales charges were included, returns would be lower than
those shown. The table includes the effects of Fund expenses and maximum
sales charges for each class, and assumes that you sold your shares at the
end of the period. In both the bar chart and the table, the returns shown
for the Fund include performance from before the creation of share classes
on October 31, 1997. The LB Income Fund commenced operations on June 1,
1972. Prior to October 31, 1997, the shares of the Fund had no specific
class designation. As of that date, all of the outstanding were
redesignated as Class A shares. If the returns for Class A shares reflected
their current shareholder servicing fee of 0.25% per year and the returns
for the Class B shares reflected their current 12b-1 distribution fee of
0.75% per year and shareholder servicing fee of 0.25% per year, the returns
would be lower than those shown. How a Fund has performed in the past is
not necessarily an indication of how it will perform in the future.

[GRAPHIC BAR CHART OMITTED: YEAR-BY-YEAR TOTAL RETURN (CLASS A)]

Annual
Year Return

1989 12.44%
1990 5.68%
1991 17.24%
1992 8.00%
1993 10.12%
1994 -4.86%
1995 18.82%
1996 2.21%
1997 8.36%
1998 8.90%

Best Quarter: Q2 '89 +8.30%
Worst Quarter: Q1 '94 -3.97%
Footnote reads:
The Fund's year-to-date return as of 9/30/99 (not annualized) was -2.19%.

Average Annual Total Returns
(periods ending
December 31, 1998)
-----------------------------
1-Year 5-Years 10-Years

LB Income Fund (Class A) 4.53% 5.54% 8.05%

LB Income Fund (Class B) 3.07% 6.04% 8.39%

Lehman Aggregate Bond Index 8.69% 7.27% 9.26%

The Lehman Aggregate Bond Index is an unmanaged index which measures
the performance of U.S. investment grade bonds.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and
hold shares of the LB Income Fund.(1)

SHAREHOLDER FEES (fees paid directly from your investment)

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund
assets)

CLASS A CLASS B
------- -------
Management Fees 0.34% 0.34%
Distribution (12b-1) Fees -- 0.75%
Other Expenses (including a 0.25% 0.53% 0.53%
shareholder servicing fee)

Total Annual Fund Operating Expenses (2) 0.87% 1.62%

(2) LB Research has voluntarily agreed to temporarily waive a portion of
its advisory fees equal to 0.05% of the average daily net assets of the LB
Income Fund. With this waiver, the Total Annual Fund Operating Expenses
would be 0.80% for the Class A shares and 1.55% for the Class B shares. The
temporary waiver may be discontinued at any time.

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A shares $485 $666 $863 $1,430
Class B shares $665 $811 $981 $1,451

YOU WOULD PAY THE FOLLOWING EXPENSES IF YOU DID NOT REDEEM YOUR SHARES:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A shares $485 $666 $863 $1,430
Class B shares $165 $511 $881 $1,451

LUTHERAN BROTHERHOOD MUNICIPAL BOND FUND

INVESTMENT OBJECTIVE. The investment objective of the Lutheran
Brotherhood Municipal Bond Fund ("LB Municipal Bond Fund") is to provide its
shareholders with a high level of current income which is exempt from
federal income tax.

PRINCIPAL STRATEGIES. The LB Municipal Bond Fund tries to provide you
with high current income which is exempt from federal income taxation by
investing in municipal bonds, which are debt obligations issued by states,
territories, and possessions of the United States and their political
subdivisions or agencies. Under normal market conditions, the LB Municipal
Bond Fund invests at least 80% of its total assets in municipal bonds. LB
Research, the Fund's investment adviser, uses fundamental investment
research techniques to determine what municipal bonds to buy and sell.
(Fundamental investment analysis is defined on Page _.) LB Research focuses
on investment-grade municipal bonds of issuers that it believes are
financially sound and have healthy balance sheets, strong operating income,
and good economic prospects.

PRINCIPAL RISKS. The LB Municipal Bond Fund's principal risks are
those of debt investing, including increases in interest rates and loss of
principal. Generally, when interest rates rise, bond prices fall, which may
cause the price of shares of LB Municipal Bond Fund to fall as well. Bond
prices fall because bonds issued after rates rise will offer higher yields,
making older bonds with lower rates less attractive. To raise the effective
yield on older bonds, holders of the older bonds must discount their prices.
Bonds with longer durations and maturities tend to be more sensitive to
changes in interest rates than bonds with shorter durations or maturities.
(Effective yield is definied on Page __, and duration and maturity are
defined on Page __.) The Fund's performance may be affected by political
and economic conditions at the state, regional or federal level. These may
include budgetary problems, declines in the tax base and other factors that
may cause rating agencies to downgrade the credit ratings on certain issues.
Actual or proposed changes in tax rates, regulations or federal programs
could also affect your net return on investment.

The success of the LB Municipal Bond Fund's investment strategy depends
significantly on LB Research's skill in assessing the potential of the
securities in which the Fund invests. Shares of LB Municipal Bond Fund will
rise and fall in value and there is a risk that you could lose money by
investing in the Fund. The LB Municipal Bond Fund cannot be certain that it
will achieve its objective.

VOLATILITY AND PERFORMANCE

The bar chart and table shown below provide an indication of the risks
of investing in the LB Municipal Bond Fund by showing changes in the Fund's
performance from year to year and by showing how the Fund's average annual
returns for one, five, and ten years compared to a broad-based securities
market index. The bar chart includes the effects of Fund expenses, but not
sales charges. If sales charges were included, returns would be lower than
those shown. The table includes the effects of Fund expenses and maximum
sales charges for each class, and assumes that you sold your shares at the
end of the period. In both the bar chart and the table, the returns shown
for the Fund include performance from before the creation of share classes
on October 31, 1997. The LB Municipal Bond Fund commenced operations on
December 3, 1976. Prior to October 31, 1997, the shares of the Fund had no
specific class designation. As of that date, all of the outstanding were
redesignated as Class A shares. If the returns for Class A shares reflected
their current shareholder servicing fee of 0.25% per year and the returns
for the Class B shares reflected their current 12b-1 distribution fee of
0.75% per year and shareholder servicing fee of 0.25% per year, the returns
would be lower than those shown. How a Fund has performed in the past is
not necessarily an indication of how it will perform in the future.

[GRAPHIC BAR CHART OMITTED: YEAR-BY-YEAR TOTAL RETURN (CLASS A)]

Annual
Year Return

1989 10.06%
1990 6.55%
1991 12.17%
1992 8.95%
1993 12.97%
1994 -6.57%
1995 18.18%
1996 3.44%
1997 9.34%
1998 6.19%

Best Quarter: Q1 '95 +7.50%
Worst Quarter: Q1 '94 -6.34%
Footnote reads:
The Fund's year-to-date return as of 9/30/99 (not annualized) was -2.00%.

Average Annual Total Returns
(periods ending
December 31, 1998)
-----------------------------
1-Year 5-Years 10-Years

LB Municipal Bond Fund (Class A) 1.98% 4.94% 7.49%

LB Municipal Bond Fund (Class B) 0.26% 5.42% 7.82%

Lehman Municipal Bond Index 6.48% 6.23% 8.21%

The Lehman Municipal Bond Index is an unmanaged index which measures
the performance of investment grade tax-exempt bonds.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and
hold shares of the LB Municipal Bond Fund.(1)

SHAREHOLDER FEES (fees paid directly from your investment)

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund
assets)

CLASS A CLASS B
------- -------
Management Fees 0.32% 0.32%
Distribution (12b-1) Fees -- 0.75%
Other Expenses (including a 0.25% 0.43% 0.43%
shareholder servicing fee)

Total Annual Fund Operating Expenses (2) 0.75% 1.50%

(2) LB Research has voluntarily agreed to temporarily waive a portion of
its advisory fees equal to 0.05% of the average daily net assets of the LB
Municipal Bond Fund. With this waiver, the Total Annual Fund Operating
Expenses would be 0.69% for the Class A shares and 1.44% for the Class B
shares. The temporary waiver may be discontinued at any time.

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A shares $474 $630 $800 $1,293
Class B shares $653 $774 $918 $1,314

YOU WOULD PAY THE FOLLOWING EXPENSES IF YOU DID NOT REDEEM YOUR SHARES:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A shares $474 $630 $800 $1,293
Class B shares $153 $474 $818 $1,314

LUTHERAN BROTHERHOOD LIMITED MATURITY BOND FUND

INVESTMENT OBJECTIVE. The investment objective of the Lutheran
Brotherhood Limited Maturity Bond Fund ("LB Limited Maturity Bond Fund") is
to seek a high level of current income consistent with stability of
principal.

PRINCIPAL STRATEGIES. The LB Limited Maturity Bond Fund invests
primarily in investment-grade corporate bonds, government bonds, municipal
bonds, asset-backed securities, and mortgage-backed securities. The average
dollar-weighted portfolio maturity for the LB Limited Maturity Bond Fund is
expected to be between one and five years. Under normal market conditions,
the LB Limited Maturity Bond Fund invests at least 65% of its assets in debt
securities or preferred stock in at least the "Baa" major rating category by
Moody's or at least in the "BBB" major rating category by Standard & Poor's
Corporation or unrated securities considered to be of comparable quality by
LB Research, the Fund's investment adviser. The Fund may also invest in
high-yield, high risk bonds, notes, debentures and other debt obligations or
preferred stock commonly known as "junk bonds." At the time of purchase
these securities are rated within or below the BB major rating category by
S&P or the Ba major rating category by Moody's or are unrated but considered
to be of comparable quality by LB Research.

LB Research uses both fundamental and technical investment research
techniques to determine what debt obligations to buy and sell. (Fundamental
investment analysis and technical investment analysis are defined on Page
_.) LB Research focuses on companies that it believes are financially sound
and have strong cash flow, asset values and interest or dividend earnings.

PRINCIPAL RISKS. The LB Limited Maturity Bond Fund's principal risks
are those of debt investing, including increases in interest rates and loss
of principal. Generally, when interest rates rise, bond prices fall, which
may cause the price of shares of the LB Limited Maturity Bond Fund to fall
as well. Bond prices fall because bonds issued after rates rise will offer
higher yields, making older bonds with lower rates less attractive. To
raise the effective yield on older bonds, holders of the older bonds must
discount their prices. Bonds with longer durations and maturities tend to
be more sensitive to changes in interest rates than bonds with shorter
durations or maturities. (Effective yield is defined on Page __, and
duration and maturity are defined on Page __.)

In addition, both mortgage-backed and asset-backed securities are
sensitive to changes in the redemption patterns of the underlying
securities. If the principal payment on the underlying asset is repaid
faster or slower than the holder of the asset-backed or mortgage-backed
security anticipates, the price of the security may fall, especially if the
holder must reinvest the repaid principal at lower rates or must continue to
hold the securities when interest rates rise.

For all bonds there is a risk that an issuer will default. Lower rated
bonds generally are more susceptible to risk of default than higher rated
bonds, and to the LB Limited Maturity Bond Fund, this risk increases as LB
Research increases the percentage of the Fund's portfolio in lower rated
investment-grade bonds or in high-yield bonds.

The success of the Fund's investment strategy depends significantly on
LB Research's skill in assessing the potential of the securities in which
the Fund invests. Shares of the LB Limited Maturity Bond Fund will rise and
fall in value and there is a risk that you could lose money by investing in
the Fund. The LB Limited Maturity Bond Fund cannot be certain that it will
achieve its objective.

The LB Limited Maturity Bond Fund commenced operations on October 29,
1999. No bar chart or performance table has been included for the LB
Limited Maturity Bond Fund.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and
hold shares of LB Limited Maturity Bond Fund.(1)

SHAREHOLDER FEES (fees paid directly from your investment)

CLASS A SHARES CLASS B SHARES
-------------- --------------
Maximum Sales Charge (Load) Imposed On Purchases
(as a percentage of offering price) None None
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value at time of
purchase or redemption, whichever is lower) None None(1)

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund
assets)

CLASS A CLASS B
------- -------
Management Fees 0.30% 0.30%
Distribution (12b-1) Fees -- --
Other Expenses (including a 0.25% 1.09% 1.09%
shareholder servicing fee)(2)

Total Annual Fund Operating Expenses (3) 1.39% 1.39%

(1) Class B shares of the LB Limited Maturity Bond Fund are offered solely
in exchange for Class B shares of other Funds of the Lutheran Brotherhood
Family of Funds. Class B shareholders of the LB Limited Maturity Bond Fund
will be responsible for any Contingent Deferred Sales Charge that may be
payable at the time of redemption as a result of an investment in another
Fund.

(2) Because the LB Limited Maturity Bond Fund has been newly organized, the
percentage expense levels shown in the table as "Other Expenses" are based
on estimates.

(3) LB Research has voluntarily agreed to temporarily waive a portion of
its advisory fee and, if necessary, to bear certain expenses associated with
operating LB Limited Maturity Bond Fund in order to limit the Total Annual
Fund Operating Expenses for the Class A shares and Class B shares to an
annual rate of 0.95% of the average net assets of each class. This
temporary waiver and expense provision may be discontinued at any time.

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN THE FUND FOR THE TIME PERIODS
INDICATED AND THEN REDEEM ALL OF YOUR SHARES AT THE END OF THOSE PERIODS.
THE EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND
THAT THE FUND'S OPERATING EXPENSES REMAIN THE SAME. ALTHOUGH YOUR ACTUAL
COSTS MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS YOUR COSTS WOULD
BE:

1 Year 3 Years
------ -------
Class A shares $142 $440
Class B shares $142 $440

YOU WOULD PAY THE FOLLOWING EXPENSES IF YOU DID NOT REDEEM YOUR SHARES:

1 Year 3 Years
------ -------
Class A shares $142 $440
Class B shares $142 $440

LUTHERAN BROTHERHOOD MONEY MARKET FUND

INVESTMENT OBJECTIVE. The investment objective of the Lutheran
Brotherhood Money Market Fund ("LB Money Market Fund") is current income
consistent with stability of principal.

PRINCIPAL STRATEGIES. The LB Money Market Fund tries to produce
current income while preserving the value of your shares by investing in
high quality, short-term money market instruments that mature in 397 days or
less, including U.S. dollar-denominated commercial paper, bank instruments
such as certificates of deposit, U.S. government discount notes, and U.S.
Treasury Bills. LB Research, the Fund's investment adviser, uses
fundamental investment research techniques to determine what money market
instruments to buy and sell. (Fundamental investment analysis is defined on
Page _.) Under normal market conditions, the Fund invests primarily in
prime commercial paper. LB Research looks for prime commercial paper issued
by corporations which it believes are financially sound, have strong cash
flows, and solid capital levels, are leaders in their industry and have
experienced management.

LB Research manages LB Money Market Fund subject to strict rules
established by the Securities and Exchange Commission that are designed so
that LB Money Market Fund may maintain a stable $1.00 share price. Those
guidelines generally require LB Money Market Fund to, among other things,
invest only in high quality securities that generally are diversified with
respect to issuers, are denominated in U.S. dollars and have short remaining
maturities. In addition, the guidelines require LB Money Market Fund to
maintain a dollar-weighted average portfolio maturity of not more than 90
days.

Under the guidelines, at least 95% of LB Money Market Fund's total
assets must be invested in "first tier" securities. First-tier securities
must be rated by at least two rating agencies in their highest short-term
major rating categories (or one, if only one rating agency has rated the
security, or if they have not received a short-term rating, determined by LB
Research to be of comparable quality). First-tier securities generally
include U.S. Government securities, such as U.S. Treasury bills and
securities issued or sponsored by U.S. government agencies. They also may
include corporate debt securities, finance company commercial paper and
certain obligations of U.S. and foreign banks.

The remainder of LB Money Market Fund's assets will be invested in
securities rated within the two highest rating categories by any two rating
agencies (or one, if only one rating agency has rated the security or, if
unrated, determined by LB Research to be of comparable quality), or kept in
cash.

PRINCIPAL RISKS. The LB Money Market Fund's principal risks are those
that could affect the yield of its shares. They include those factors that
could cause short-term interest rates to decline, such as a weak economy,
strong equity markets and changes by the Federal Reserve in its monetary
policies. The success of the Fund's investment strategy depends
significantly on LB Research's skill in assessing the potential of the
securities in which the Fund invests.

An investment in the LB Money Market Fund is not a bank deposit and is
not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency. Although the Fund seeks to preserve the value
of your investment at $1.00 per share, it is possible to lose money by
investing in the Fund.

VOLATILITY AND PERFORMANCE

The bar chart and table shown below provide an indication of the risks
of investing in the LB Money Market Fund by showing changes in the Fund's
performance from year to year and by showing the Fund's average annual
returns for one, five, and ten years. The bar chart and table include the
effects of Fund expenses and assume that you sold your shares at the end of
the period. In both the bar chart and the table, the returns shown for the
Fund include performance from before the creation of share classes on
October 31, 1997. The LB Money Market Fund commenced operations on February
1, 1979. Prior to October 31, 1997, the shares of the Fund had no specific
class designation. As of that date, all of the outstanding were
redesignated as Class A shares. If the returns for Class A and Class B
shares reflected their current shareholder servicing fee of 0.25% per year,
the returns would be lower than those shown. How a Fund has performed in
the past is not necessarily an indication of how it will perform in the
future.

[GRAPHIC BAR CHART OMITTED: YEAR-BY-YEAR TOTAL RETURN (CLASS A)]

Annual
Year Return

1989 8.50%
1990 7.49%
1991 5.35%
1992 2.89%
1993 2.20%
1994 3.28%
1995 5.00%
1996 4.60%
1997 4.81%
1998 4.73%

Best Quarter: Q2 '89 +2.21%
Worst Quarter: Q3 '93 +0.54%

Footnote reads:
The Fund's year-to-date return as of 9/30/99 (not annualized) was 3.12%.

Average Annual Total Returns
(periods ending
December 31, 1998)
-----------------------------
1-Year 5-Years 10-Years

LB Money Market Fund (Class A) 4.73% 4.48% 4.87%

LB Money Market Fund (Class B) 4.73% 4.48% 4.87%

You may call 1-800-328-4552 to obtain the Fund's current 7-day yield.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and
hold shares of the LB Money Market Fund.(1)

SHAREHOLDER FEES (fees paid directly from your investment)

CLASS A SHARES CLASS B SHARES
-------------- --------------
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price None None
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value at time of
purchase or redemption, whichever is lower) None None(1)

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund
assets)

CLASS A CLASS B
------- -------
Management Fees 0.25% 0.25%
Distribution (12b-1) Fees -- --
Other Expenses (including a 0.25% 0.75% 0.75%
shareholder servicing fee)

Total Annual Fund Operating Expenses (2) 1.00% 1.00%

(1) Class B shares of the LB Money Market Fund are offered solely in
exchange for Class B shares of other Funds of the Lutheran Brotherhood
Family of Funds. Class B shareholders of the LB Money Market Fund will be
responsible for any Contingent Deferred Sales Charge that may be payable at
the time of redemption as a result of an investment in another Fund.

(2) LB Research has voluntarily agreed to temporarily waive a portion of
its advisory fee and, if necessary, to bear certain expenses associated with
operating LB Money Market Fund in order to limit the Total Annual Fund
Operating Expenses for the Class A shares and Class B shares to an annual
rate of 0.95% of the average net assets of each class. This temporary
waiver and expense provision may be discontinued at any time.

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A shares $102 $318 $552 $1,225
Class B shares $102 $318 $552 $1,225

YOU WOULD PAY THE FOLLOWING EXPENSES IF YOU DID NOT REDEEM YOUR SHARES:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A shares $102 $318 $552 $1,225
Class B shares $102 $318 $552 $1,225

MANAGEMENT

LB Research, 625 Fourth Avenue South, Minneapolis, Minnesota 55415,
serves as investment adviser for each of the Funds. LB Research is owned by
Lutheran Brotherhood Financial Corporation, which in turn is owned by
Lutheran Brotherhood. Lutheran Brotherhood and LB Research have been in
the investment advisory business since 1970 and managed over $24.2 billion
in assets as of September 30, 1999, including $12.4 billion in mutual fund
assets. LB Research provides investment research and supervision of the
Funds' investments. The following individuals are responsible for the day-
to-day management of the Funds.

LB MID CAP GROWTH FUND

Brian L. Thorkelson, assistant vice president of LB Research, has been
the portfolio manager of LB Mid Cap Growth Fund since the Fund's inception
in 1997. Mr. Thorkelson has been with Lutheran Brotherhood and LB Research
since 1987, and served as an equities analyst from 1992 until 1997.

LB GROWTH FUND

James M. Walline, vice president of LB Research, serves as the
portfolio manager of LB Growth Fund. Mr. Walline has been with Lutheran
Brotherhood and LB Research since 1968, and has served as the portfolio
manager of Lutheran Brotherhood Fund since 1994.

LB FUND

James M. Walline, vice president of LB Research, has been the
portfolio manager of LB Fund since 1994. Mr. Walline has been with Lutheran
Brotherhood and LB Research since 1968.

LB VALUE FUND

Harold R. Goldstein, assistant vice president of LB Research, serves as
the portfolio manager of LB Value Fund. Mr. Goldstein has been with
Lutheran Brotherhood and LB Research since 1993, and has previously served
as the associate portfolio manager of Lutheran Brotherhood Fund and the
portfolio manager of the equities portfolio for Lutheran Brotherhood.

LB HIGH YIELD FUND

Paul J. Ocenasek, assistant vice president of LB Research, has been the
portfolio manager of LB High Yield Fund since 1997. Mr. Ocenasek has been
with Lutheran Brotherhood and LB Research since 1987, and served as a
fixed-income analyst from 1987 to 1993 and a bond portfolio manager for
Lutheran Brotherhood from 1993 until 1997.

LB INCOME FUND

Michael G. Landreville, assistant vice president of LB Research, serves
as portfolio manager of LB Income Fund. Mr. Landreville has served as
portfolio manager of the Fund since September 1, 1999. He was portfolio co-
manager of the Fund from January 1, 1998, through August 31, 1999, and
associate portfolio manager from 1987 through 1997. Mr. Landreville has
been with Lutheran Brotherhood and LB Research since 1983.

LB MUNICIPAL BOND FUND

Johan A. Akesson, portfolio manager of LB Research, serves as the
portfolio manager of LB Municipal Bond Fund. Mr. Akesson has been with
Lutheran Brotherhood and LB Research since 1993, and has previously served
as a fixed-income analyst and associate portfolio manager.

LB LIMITED MATURITY BOND FUND

Michael G. Landreville, assistant vice president of LB Research, serves
as portfolio manager of LB Limited Maturity Bond Fund. Mr. Landreville also
has served as portfolio manager of Lutheran Brotherhood Income Fund since
September 1, 1999. He was portfolio co-manager of Lutheran Brotherhood
Income Fund from January 1, 1998, through August 31, 1999, and associate
portfolio manager from 1987 through 1997. Mr. Landreville has been with
Lutheran Brotherhood and LB Research since 1983.

LB MONEY MARKET FUND

Gail R. Onan, assistant vice president of LB Research, has been the
portfolio manager of LB Money Market Fund since 1994. Ms. Onan has been with
Lutheran Brotherhood and LB Research since1969.

LB OPPORTUNITY GROWTH FUND

LB Research has engaged T. Rowe Price as investment sub-adviser for LB
Opportunity Growth Fund effective May 15, 1998. T. Rowe Price was founded in
1937 and has its principal office at 100 East Pratt Street, Baltimore,
Maryland 21202. As of September 30, 1999, T. Rowe Price and its affiliates
managed over $155 billion. Richard T. Whitney, Managing Director of T. Rowe
Price, is primarily responsible for day-to-day management of the Lutheran
Brotherhood Opportunity Growth Fund and for developing and executing the
Fund's investment program.

LB WORLD GROWTH FUND

LB Research has engaged Price-Fleming, 100 East Pratt Street,
Baltimore, Maryland 21202, as investment sub-adviser for LB World Growth
Fund. Price-Fleming is one of the world's largest international mutual fund
asset managers with the U.S. equivalent of over $33 billion under management
as of June 30, 199 in its offices in Baltimore, London, Tokyo, Singapore,
Paris, Hong Kong, and Buenos Aires. Price-Fleming has an investment advisory
group that has day-to-day responsibility for managing the Fund and
developing and executing the Fund's investment program.

LB Research, T. Rowe Price, and Price-Fleming 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.

Each Fund pays an annual investment advisory fee to LB Research. The
advisory contract between LB Research and The Lutheran Brotherhood Family of
Funds provides for the following advisory fees:

During the fiscal year ended October 31, 1999, LB Research received
the following advisory fees, expressed as a percentage of the Fund's net
assets:

LB Opportunity Growth Fund 0.44%
LB Mid Cap Growth Fund* 0.33%
LB World Growth Fund 0.75%
LB Fund** 0.30%
LB High Yield Fund** 0.33%
LB Income Fund** 0.29%
LB Municipal Bond Fund** 0.27%
LB Money Market Fund*** 0.20%
- ------------
* After giving effect to a fee waiver of 0.12%.
** After giving effect to a fee waiver of 0.05%.
*** After giving effect to a fee waiver of 0.05%.

The advisory contract between LB Research and The Lutheran Brotherhood
Family of Funds provides that LB Growth Fund, LB Value Fund, and LB Limited
Maturity Bond Fund pay the following advisory fees:

Limited
Growth Value Maturity
Fund Fund Bond Fund

$500 million or less 0.425% 0.40% 0.30%

Over $500 million but not over
$1 billion 0.375% 0.35% 0.275%

Over $1 billion 0.325% 0.30% 0.25%

LB Research has voluntarily agreed to temporarily waive a portion of
its advisory fee for the LB Growth Fund, LB Value Fund, and the LB Limited
Maturity Bond Fund and, if necessary, to bear certain expenses associated
with operating each Fund in order to limit the Total Fund Operating Expenses
of the Class A and Class B shares of each Fund. (See the footnotes to the
Fees and Expenses Table for each Fund.)

YOUR INVESTMENT

CHOOSING A CLASS OF SHARES

This Prospectus offers two classes of shares, each with its own sales
charges and fees. You should choose the class of shares that you believe is
the most appropriate for you, given the amount of your purchase, the length
of time you anticipate holding the shares, and other factors.

<TABLE>
<CAPTION>
Class A Shares Class B Shares
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Sales Charges Initial sales charge at time of investment Contingent Deferred Sales Charge ("CDSC")
of up to 4% depending on amount of of 5% to 1%, depending on how
investment long you hold your shares before you
redeem them. There is no CDSC after
five years
- --------------------------------------------------------------------------------------------------------------------
Rule 12b-1 Distribution Fee None 0.75%. Class B shares convert
automatically to Class A shares after
five years
- --------------------------------------------------------------------------------------------------------------------
Shareholder Servicing Fee 0.25% each year of average daily net 0.25% each year of average daily net
assets assets
- --------------------------------------------------------------------------------------------------------------------

Class B shares (other than those of LB Limited Maturity Bond Fund and LB Money Market Fund) have an annual
distribution fee. This is also called a 12b-1 fee, based on the SEC rule that permits this type of fee. Under
its 12b-1 plan, the Funds other than LB Limited Maturity Bond Fund and LB Money Market Fund pay Lutheran
Brotherhood Securities Corp. ("LBSC") distribution fees for the sale and distribution of Class B shares.
Those fees are paid out of a Fund's assets attributable to the Class B shares on an ongoing basis, and as a
result, these fees will increase the cost of your investment and may cost you more than paying other types of
sales charges.

</TABLE>

CLASS A SHARES

The table below shows the sales charges you will pay if you purchase
Class A shares of the Funds (except LB Limited Maturity Bond Fund and LB
Money Market Fund, which have no Class A sales charge).

WHEN YOU THIS % IS WHICH EQUALS THIS
INVEST THIS DEDUCTED FOR % OF YOUR
AMOUNT SALES CHARGES INVESTMENT
- ----------------- -------------- ---------------
$500,000 or more 0% 0%
$250,000 and above but less than $500,000 1% 1.01%
$100,000 and above but less than $250,000 2% 2.04%
$50,000 and above but less than $100,000 3% 3.09%
$25,000 and above but less than $50,000 3.75% 3.90%
Less than $25,000 4% 4.17%

Ways to Eliminate or Reduce the Initial Sales Charges

o Cumulative Discount: All of your current holdings of Class A and Class B
shares of all Funds in the Lutheran Brotherhood Family of Funds, except
LB Limited Maturity Bond Fund and LB Money Market Fund, will be
aggregated to permit you to enjoy any initial sales charge reduction
allowed for larger sales of Class A shares. The Funds will combine
purchases (including the value of existing investments) made by you, your
spouse and your children under age 21 of both Class A and Class B shares
when it calculates your initial sales charge. You must inform us that you
qualify for this discount.

o Automatic Reinvestments: Class A shares that you purchase by
automatically reinvesting dividends or capital gains distributions
will not be subject to any initial sales charge.

o Thirteen-month Letter of Intent: If you intend to accumulate $25,000 or
more, including the value of existing investments, in Class A or Class B
shares of one or more of the Funds (except LB Limited Maturity Bond Fund
or LB Money Market Fund) within the next 13 months, you may sign a Letter
of Intent and receive a reduced sales charge on purchases of any Class A
shares.

o Reinvestment upon Redemption: If you redeem any or all of your Class A or
Class B shares of the LB Opportunity Growth Fund, LB Mid Cap Growth Fund,
LB World Growth Fund, LB Growth Fund, LB Fund, LB Value Fund, LB High
Yield Fund, LB Income Fund, or LB Municipal Bond Fund, or redeem any or
all of your Class B shares of the LB Limited Maturity Bond Fund or LB
Money Market Fund, or receive cash dividends from one of these Funds,
you may reinvest the amount in Class A shares of any of the Funds without
paying a sales charge on the purchase of Class A shares. You must make
your reinvestment within 90 days after redeeming your Class A shares or
Class B shares and inform us that you qualify for this discount.

o Loan, Surrender, or Dividend Withdrawal: If you request a loan,
surrender, or dividend withdrawal from a life insurance or annuity
contract issued by Lutheran Brotherhood or Lutheran Brotherhood Variable
Insurance Products Company and direct that the money should be used to
purchase Class A shares of a Fund, the sales charge will be waived.

o Purchases by Tax-exempt Organizations: Class A shares of any Fund are
available at one-half of the regular sales charge, if any, if purchased
by organizations qualifying for tax-exemption under Sections 501(c)(3)
and 501(c)(13) of the Internal Revenue Code.

CLASS B SHARES

If you buy Class B shares, you will not be charged an initial sales
charge. The entire purchase amount is immediately invested, but a CDSC of up
to 5% will apply to shares redeemed within five years of purchase.

When you sell shares in This % of net asset value
this year after you at the time of purchase
bought them (or of sale, if lower) is
deducted from your proceeds
- ------------------------ -----------------------------
1st Year . . . . . . . . . . . . . . . . . . . . . 5%
2nd Year . . . . . . . . . . . . . . . . . . . . . 4
3rd Year . . . . . . . . . . . . . . . . . . . . . 3
4th Year . . . . . . . . . . . . . . . . . . . . . 2
5th Year . . . . . . . . . . . . . . . . . . . . . 1

In order to ensure that you pay the lowest CDSC possible, the Fund will
first redeem Class B shares that are not subject to the CDSC and then Class
B shares held for the longest period of time. There is no CDSC on exchanges
into the other Funds. The date of your initial investment will continue to
be used as the basis for CDSC calculations when you exchange. However, if
you exchange Class A shares of LB Limited Maturity Bond Fund or LB Money
Market Fund for Class B shares of any other Fund, the date of the exchange
will be used for purposes of calculating the CDSC. If you exchange Class B
shares of any other Fund for Class B shares of LB Limited Maturity Bond Fund
or LB Money Market Fund, the CDSC will stop declining during the period your
investment is in the LB Limited Maturity Bond Fund or LB Money Market Fund
Class B shares. The amount of any CDSC will be paid to LBSC, the broker-
dealer for the Funds.

Contingent Deferred Sales Charge Waivers

No CDSC will apply on:

o increases in the net asset value of Class B shares above the purchase
price

o Class B shares purchased through reinvestment of dividends and
distributions

o Class B shares purchased more than five years prior to redemption

o shares redeemed due to the death or disability (caused by injury or
the sudden onset of a life threatening illness) of a sole individual
shareholder (but not for shares held in joint accounts or "family,"
"living" or other trusts) and for mandatory retirement distributions
from an IRA or a tax-sheltered custodial account (403(b) plan).

Conversion of Class B Shares to Class A Shares

Your Class B shares will automatically convert into Class A shares of
the same Fund after five years and consequently will no longer be subject to
the higher expenses borne by Class B shares. The Fund will not include the
period that you held Class B shares of LB Limited Maturity Bond Fund or LB
Money Market Fund in calculating the five-year period.

BUYING SHARES

INITIAL PURCHASES

To make your first purchase of Class A or Class B shares of the Funds:

o complete and sign the application
o enclose a check made payable to the Lutheran Brotherhood Family of
Funds
o mail your application and check to Lutheran Brotherhood Securities
Corp., P.O. Box 310, Minneapolis, MN 55440-0310

Initial investments in Class B shares of $100,000 or more per purchase
will not be accepted. Because of the reduced sales charges available on such
purchases, Class A shares (or Institutional Class shares if the investor is
eligible) must be purchased instead. Class B shares of LB Limited Maturity
Bond Fund and LB Money Market Fund are offered solely in exchange for Class
B shares of other Funds of The Lutheran Brotherhood Family of Funds.

REQUIRED MINIMUM INVESTMENTS

First Additional
Regular Account Purchase Purchases
--------------- --------- -----------

All Funds except LB Money Market Fund
and LB Limited Maturity Bond Fund $500 $50

LB Money Market Fund $1,500 $100

LB Limited Maturity Bond Fund $2,500 $100

IRA or Tax-Deferred Plan
------------------------

All Funds except LB Municipal Bond Fund,
LB Limited Maturity Bond Fund, and LB
Money Market Fund $50 $50

LB Money Market Fund and $100 $100
LB Limited Maturity Bond Fund

Minimum Monthly
Systematic Investment Plan Amount
-------------------------- ---------------

All Funds except LB Money Market Fund
and LB Limited Maturity Bond Fund $50

LB Money Market Fund and $100
LB Limited Maturity Bond Fund

Shares of the Funds are issued on days on which the New York Stock
Exchange ("NYSE") is open, which generally are weekdays other than national
holidays. Your order will be considered received when your check or other
payment is received in good order by LBSC. Orders that are received before
the close of regular trading on the NYSE (generally 4:00 p.m. Eastern time)
will be processed at the net asset value calculated that day. Orders
received after the close of regular trading on the NYSE will be processed at
the net asset value calculated on the following business day. The Funds
reserve the right to reject any purchase request.

CERTIFICATES AND STATEMENTS

LBSC 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,
will be confirmed on the quarterly consolidated statement. All other
transactions will be confirmed as they occur. For more information on any
of our investment plans, talk with your LBSC registered representative or
call 1-800-990-6290.

ADDITIONAL PURCHASES

You may purchase additional shares of any of the Funds by sending a
check payable to "The Lutheran Brotherhood Family of Funds" together with a
completed investment ticket to:

Lutheran Brotherhood Securities Corp.
PO Box 59025
Minneapolis, MN 55459-0025

You may also buy additional shares through:

o your LBSC registered representative
o the Systematic Investment Plan
o the automatic Payroll Deduction Plan
o Invest-by-Phone
o the Internet
o Federal Reserve or bank wire

NET ASSET VALUE

Each Fund determines its net asset value (NAV) for a particular class
by adding the value of Fund assets attributable to such class, subtracting
the Fund's liabilities attributable to such class, and dividing the result
by the number of outstanding shares of that class. LB Money Market Fund
seeks to maintain a stable $1.00 NAV pursuant to procedures established by
the Board of Trustees for the Funds in connection with the amortized cost
method of portfolio valuation. The NAV for the other Funds varies with the
value of their investments. The other Funds value their securities using
market quotations, other than short-term debt securities maturing in less
than 60 days, which are valued using amortized costs, and securities for
which market quotations are not readily available, which are valued at fair
value.

The Funds determine their NAVs on each day the NYSE is open for
business, or any other day as required under the rules of the Securities and
Exchange Commission. The NYSE is currently closed on New Year's Day, Martin
Luther King, Jr. Day, Presidents Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The
calculation is made as of the close of regular trading on the NYSE
(currently 4:00 p.m. Eastern time) after the Fund has declared any
applicable dividends. Because foreign securities markets are open on
different days from U.S. markets, there may be instances when the value of a
Fund's portfolio that invests in foreign securities changes on days when you
are not able to buy or sell the Fund's shares.

INVEST-BY-PHONE

When you sign up for our Invest-by-Phone service, you can purchase
additional shares by telephone. We will draw your funds directly from your
preauthorized bank or credit union account. Your bank or credit union must
be a member of the Automated Clearing House system. To use this service,
call 1-800-328-4552 for the Automated Service Line or 1-800-990-6290 to
speak with a customer service associate. You may also redeem shares by
telephone. See "Redeeming Shares."

INVESTOR ACCESS ONLINE

You may buy or sell shares of your Lutheran Brotherhood Family of Funds
by using Investor Access OnLine at www.luthbro.com.

FEDERAL RESERVE OR BANK WIRE

You may purchase shares by a 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 LBSC of a pending wire, call: 1-800-990-6290

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 number and account number, and LBSC
registered representative name and number.

IRAS AND OTHER TAX-DEFERRED PLANS

Shares of any Fund other than the LB Municipal Bond Fund may be
selected as investments for Individual Retirement Accounts, qualified
Lutheran Brotherhood prototype plans for the self-employed, qualified
pension and profit-sharing plans and tax-sheltered custodial accounts. There
are additional fees and procedural requirements for such plans. See your
LBSC registered representative for more details.

EXCHANGING SHARES BETWEEN FUNDS

o You may exchange some or all of your shares of one Fund for shares of
the same class of any of the other Funds. If you exchange Class A
shares of a Fund for which you have previously paid an initial sales
charge for Class A shares of another Fund, you will not be charged an
initial sales charge for the exchange. If you exchange Class B shares
of one Fund for Class B shares of another Fund, you will not be
charged a CDSC at the time of the exchange.

o If you own Class A shares of LB Limited Maturity Bond Fund or LB Money
Market Fund which you did not obtain through an exchange, you may
exchange any or all of those shares for Class B shares of another Fund.
The Class B shares which you acquire from the exchange will be subject to
a CDSC from the date of the exchange.

o Shareholders who are eligible to purchase Institutional Class shares may
exchange some or all of their Class A or Class B shares for Institutional
Class shares.

All exchanges will be based on the NAV of the shares you are exchanging
and acquiring and will be subject to the minimum investment requirements.
Except as described above, shares of one class may not be exchanged for
shares of another class.

You may obtain an exchange form or receive more information about
making exchanges between Funds by contacting your LBSC registered
representative. We may modify or terminate our policies on exchanges in the
future. If the exchange policies are materially modified or terminated, we
will give you 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 Fund accounts, and all accounts involved in telephone exchanges
must have the same ownership registration. You may request a telephone
exchange by calling toll-free 1-800-328-4552 (using the Automated Service
Line) or 1-800-990-6290 to speak with a customer service associate.

The Funds reserve 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 Funds. When requesting a redemption or
exchange by telephone, you must 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 the address of record. Neither the Funds nor LBSC
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 Funds and LBSC will employ reasonable procedures
to confirm that instructions communicated by telephone are genuine. The
Funds and/or LBSC may be liable for any losses due to unauthorized or
fraudulent instructions in the absence of following these procedures.

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 we
receive your request for redemption, we will redeem your shares at the next
NAV on any day on which the NYSE is open for business, or any other day as
required under the rules of the Securities and Exchange Commission.

WAYS TO REDEEM

You may redeem your shares:

o in writing

o through Redeem-by-Phone

o on the Internet

o through the Systematic Withdrawal Plan

The LB Money Market Fund also allows you to redeem Class A shares by
writing a check or by using your VISA CheckCard.

WRITTEN REQUESTS

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

Lutheran Brotherhood Securities Corp.
P.O. Box 9491
Minneapolis, Minnesota 55440-9491

We may require your signature to be guaranteed if you are redeeming
your shares in an amount of $50,000 or more, if you are requesting the
payment to be made to another party or sent to another address, or if you
are a beneficiary of an account. Your signature may be guaranteed by:

o a trust company or commercial bank

o a savings association

o a credit union

o a securities broker, dealer, exchange, association, or clearing
agency

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

Once your redemption request is received in good order, the Fund
normally will send the proceeds of such redemption within one business day.
However, if making payment could adversely affect a Fund, the Fund may defer
payment for up to seven days or a longer period if permitted. Please note
that a Fund will hold payment of redemption proceeds until your purchase
check clears, which may take up to 15 days.

REDEEM-BY-PHONE

If you completed an Account Features Request, you may redeem any amount
of at least $1,000 by calling 1-800-328-4552 to use our Automated Service
Line or 1-800-990-6290 to speak with a customer service associate. Based on
your instructions, we will send you a check or send the funds electronically
to your commercial bank, savings bank or credit union by the third business
day after your redemption request. This feature is NOT available on IRA or
other tax-deferred plans.

INVESTOR ACCESS ONLINE

You may redeem some or all of your shares by using Investor Access
OnLine at www.luthbro.com.

SYSTEMATIC WITHDRAWAL PLAN

If you own shares with a value of at least $5,000, you may request
automatic monthly, quarterly, semiannual or annual redemptions in any
amount. The proceeds will be sent to you, your designated payee, or your
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 the automatic payments you requested.

WRITING A CHECK

Redeeming by check allows you to earn daily income dividends until your
check clears. This service is offered for Class A shares of LB Money Market
Fund only.

o Establishing check writing privilege: Upon purchasing Class A shares of
LB Money Market Fund, State Street Bank will automatically establish an
LB Money Market Fund checking account for you.

o Using your LB Money Market Fund checking account: With a LB Money
Market Fund checking account, you may redeem your shares simply by
writing a check in any amount of $250 or more. However, you may not
write a check for the entire balance of your account. If you redeem
shares by check before State Street Bank has collected your payment for
shares purchased by check, State Street Bank will return your check
marked "insufficient funds."

Your money market check may be cashed or deposited like any other
check. When it is received by State Street Bank for payment, the bank will
present the check to the Fund and redeem enough of your shares to cover the
amount. The shares will be redeemed at the NAV next determined after State
Street Bank presents the check. Your canceled checks or a copy of your
checks and a statement will be sent to you each month.

When you open a LB Money Market Fund checking account, you will be
subject to State Street Bank's checking account rules and regulations. State
Street Bank and the LB Money Market Fund have the right to modify or
terminate checking account privileges or to charge for establishing or
maintaining a checking account. There are no current charges for
establishing or maintaining a checking account.

VISA CHECKCARD

Class A shareholders of LB Money Market Fund are offered the
opportunity to apply for a VISA CheckCard. With a VISA CheckCard, you
authorize the redemption of your shares by using the card. The VISA
CheckCard may be used to purchase merchandise or services from merchants
honoring VISA or to obtain cash advances (which a bank may limit to $5,000
per account per day for merchandise and services, $600 per account for cash
advances) from any bank honoring VISA. You will earn daily income dividends
on Fund shares up to the date they are redeemed.

When you receive a LB Money Market Fund VISA CheckCard, you will be
subject to the VISA account regulations of the issuing bank, including an
annual VISA fee of $25 to cover its fees and administrative costs. The
issuing bank may also charge a fee each time an Automated Teller Machine
(ATM) is used. In addition to that fee, the bank that owns the ATM machine
may also charge a fee for each transaction. Enough shares will be redeemed
automatically from your account to pay the fee. Lost or stolen cards should
be reported immediately by calling toll-free (800) 543-6325. LB Money
Market Fund and the issuing bank have the right to modify or terminate the
VISA CheckCard privilege or to impose additional charges for establishing or
maintaining a VISA account upon 30 days prior written notice.

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.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, the
Funds may redeem shares in any account if the value of shares in the account
falls below a certain minimum. The required minimum amount for Class A and
Class B share accounts is $500 for all Funds except LB Limited Maturity Bond
Fund and LB Money Market Fund. The required minimum amount for Class A and
B share accounts of LB Limited Maturity Bond Fund is $2,500, and the
required minimum amount for Class A and B share accounts of LB Money Market
Fund is $1,000.

Before shares are redeemed to close an account, you will be 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.

DISTRIBUTIONS

Dividends. Dividends are declared and paid as follows:

- declared daily and paid monthly LB Limited Maturity Bond Fund
LB Money Market Fund

- declared monthly and paid monthly LB High Yield Fund
LB Income Fund
LB Municipal Bond Fund

- declared and paid quarterly LB Fund

- declared and paid annually LB Opportunity Growth Fund
LB Mid Cap Growth Fund
LB World Growth Fund
LB Growth Fund
LB Value Fund

Income dividends are derived from investment income, including
dividends, interest, and certain foreign currency gains received by a Fund.

Capital Gains. Capital gains distributions, if any, usually will be
declared in December.

Distribution Options. When completing your application, you must select
one of the following four options for dividends and capital gains
distributions:

o Full Reinvestment. Both dividends and capital gains distributions
from a Fund will be reinvested in additional shares of the same
class of that Fund. This option will be selected automatically
unless one of the other options is specified.

o Full Reinvestment in a Different Fund. You may also choose to have
your dividends reinvested into an existing account in another Fund
within The Lutheran Brotherhood Family of Funds.

o All Cash. Dividends and capital gains distributions will be paid in
cash. Your request to receive all or a portion of your dividends
and other distributions in cash must be received by LBSC at least
10 days before the record date of the dividend or other
distribution.

o Part Cash and Part Reinvestment. You may request to have part of
your dividends paid in cash and part of your dividends reinvested
in additional shares of the same class of that Fund.

Distributions paid in shares will be credited to your account at the
next determined NAV per share.

TAXES

In general, any dividends and short-term capital gains distributions
you receive from a Fund are taxable as ordinary income. Distributions of
other net capital gains by a Fund are generally taxable as capital gains -
in most cases, at different rates from those that apply to ordinary income.
We expect that dividends from LB Opportunity Growth Fund, LB Mid Cap Growth
Fund, LB World Growth Fund, LB Growth Fund, LB Fund and LB Value Fund will
consist primarily of capital gains and that dividends from LB High Yield
Fund, LB Income Fund, LB Limited Maturity Bond Fund and LB Money Market Fund
will consist primarily of ordinary income.

The tax you pay on a given capital gains distribution generally depends
on how long a Fund has held the portfolio securities it sold. It does not
depend on how long you have owned your Fund shares or whether you reinvest
your distributions or take them in cash.

Every year, the Funds will send you information detailing the amount of
ordinary income and capital gains distributed to you for the previous year.
The sale of shares in your account may produce a gain or loss, and is a
taxable event. For tax purposes, an exchange between Funds is the same as a
sale. You will not be required to pay federal income tax on (i) the
automatic conversion of Class B shares to Class A shares or (ii) exchanges
of Class A or Class B shares of a Fund for Institutional Class Shares of the
same fund.

Your investment in the Funds could have additional tax consequences.
Please consult your tax professional for assistance.

By law, the Funds must withhold 31% of your distributions and proceeds
if you have not provided complete, correct taxpayer information.

LB MUNICIPAL BOND FUND. You will not be required to pay federal income
tax on dividends of LB Municipal Bond Fund that represent interest that the
Fund earns on tax-exempt securities. The Fund may, however, invest a
portion of its assets in securities that generate income that is not exempt
from federal income tax. In addition, income of the Fund that is exempt
from federal income tax may be subject to state and local income tax. Any
capital gains distributed by LB Municipal Bond Fund may be taxable.

LB WORLD GROWTH FUND. Foreign investments pose special tax issues for
the LB World Growth Fund and its shareholders. For example, certain gains
and losses from currency fluctuations may be taxable as ordinary income.
Also, certain foreign countries withhold some interest and dividends that
otherwise would be payable to the LB World Growth Fund. If the amount
withheld is material, shareholders may be able to claim a foreign tax
credit.

OTHER SECURITIES AND INVESTMENT PRACTICES

The principal investment strategies and risk factors of each Fund are
outlined beginning on Page __. The Funds may also invest in other
securities and engage in other practices. This section provides additional
information about some of the securities and other practices in which
certain Funds offered by this Prospectus may engage, along with their
associated risks.

REPURCHASE AGREEMENTS. Each of the Funds may buy securities with the
understanding that the seller will buy them back with interest at a later
date. If the seller is unable to honor its commitment to repurchase the
securities, the Fund could lose money.

WHEN-ISSUED SECURITIES. Each Fund may invest in securities prior to
their date of issue. These securities could fall in value by the time they
are actually issued, which may be any time from a few days to over a year.
In addition, no income will be earned on these securities until they are
actually delivered.

MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. LB High Yield Fund, LB
Income Fund, LB Limited Maturity Bond Fund and LB Money Market Fund may
invest in mortgage-backed and asset-backed securities. Mortgage-backed
securities are securities that are backed by pools of mortgages and which
pay income based on the payments of principal and income they receive from
the underlying mortgages. Asset-backed securities are similar but are
backed by other assets, such as pools of consumer loans. Both are sensitive
to interest rate changes as well as to changes in the redemption patterns of
the underlying securities. If the principal payment on the underlying asset
is repaid faster or slower than the holder of the mortgage-backed or asset-
backed security anticipates, the price of the security may fall, especially
if the holder must reinvest the repaid principal at lower rates or must
continue to hold the securities when interest rates rise.

GOVERNMENT BONDS AND MUNICIPAL BONDS. LB Limited Maturity Bond Fund
may also invest in government bonds and municipal bonds. As a result, the
Fund's performance may be affected by political and economic conditions at
the state, regional or Federal level. These may include budgetary problems,
declines in the tax base and other factors that may cause rating agencies to
downgrade the credit ratings on certain issues.

ZERO COUPONS. Each of the Funds may invest in zero coupon securities.
A zero coupon security is a debt security that is purchased and traded at
discount to its face value because it pays no interest for some or all of
its life. Interest, however, is reported as income to the Fund that has
purchased the security and the Fund is required to distribute to
shareholders an amount equal to the amount reported. Those distributions
may require the Fund to liquidate portfolio securities at a disadvantageous
time.

FOREIGN SECURITIES. Each of the Funds may invest in foreign
securities. Foreign securities are generally more volatile than their
domestic counterparts, in part because of higher political and economic
risks, lack of reliable information and fluctuations in currency exchange
rates. These risks are usually higher in less developed countries. Each of
these Funds except the LB Money Market Fund may use foreign currencies and
related instruments to hedge its foreign investments.

In addition, foreign securities may be more difficult to resell than
comparable U.S. securities because the markets for foreign securities are
less efficient. Even where a foreign security increases in price in its
local currency, the appreciation may be diluted by the negative effect of
exchange rates when the security's value is converted to U.S. dollars.
Foreign withholding taxes also may apply and errors and delays may occur in
the settlement process for foreign securities.

RESTRICTED AND ILLIQUID SECURITIES. Each of the Funds may invest to a
limited extent in restricted or illiquid securities. Any securities that
are thinly traded or whose resale is restricted can be difficult to sell at
a desired time and price. Some of these securities are new and complex, and
trade only among institutions. The markets for these securities are still
developing and may not function as efficiently as established markets.
Owning a large percentage of restricted or illiquid securities could hamper
a Fund's ability to raise cash to meet redemptions. Also, because there may
not be an established market price for these securities, the Fund may have
to estimate their value, which means that their valuation (and, to a much
smaller extent, the valuation of the Fund) may have a subjective element.

SECURIITES LENDING. Each of the Funds except the LB Money Market Fund
may seek additional income by lending portfolio securities to qualified
institutions. By reinvesting any cash collateral it receives in these
transactions, a Fund could realize additional gains or losses. If the
borrower fails to return the securities and the invested collateral has
declined in value, the Fund could lose money.

DERIVATIVES. Each of the Funds except the LB Money Market Fund may
invest in derivatives. Derivatives, a category that includes options and
futures, are financial instruments whose value derives from another
security, an index or a currency. Each Fund may use derivatives for hedging
(attempting to offset a potential loss in one position by establishing an
interest in an opposite position). This includes the use of currency-based
derivatives for hedging its positions in foreign securities. Each Fund may
also use derivatives for speculation (investing for potential income or
capital gain).

While hedging can guard against potential risks, it adds to the Fund's
expenses and can eliminate some opportunities for gains. There is also a
risk that a derivative intended as a hedge may not perform as expected.

The main risk with derivatives is that some types can amplify a gain or
loss, potentially earning or losing substantially more money than the actual
cost of the derivative.

With some derivatives, whether used for hedging or speculation, there
is also the risk that the counterpart may fail to honor its contract terms,
causing a loss for the Fund. In addition, suitable derivative investments
for hedging or speculation may not be available.

HIGH-YIELD BONDS. Each of the Funds except LB Municipal Bond Fund and
LB Money Market Fund may invest in high-yield bonds. High-yield bonds are
debt securities rated below BBB by S&P or Baa by Moody's. To the extent
that a Fund invests in high-yield bonds, it takes on certain risks:

o The risk of a bond's issuer defaulting on principal or interest
payments is greater than on higher quality bonds.
o Issuers of high-yield bonds are less secure financially and are more
likely to be hurt by interest rate increases and declines in the
health of the issuer or the economy.

SHORT-TERM TRADING. The investment strategy for each Fund except LB
Money Market Fund at times may include short-term trading. While a Fund
ordinarily does not trade securities for short-term profits, it will sell
any security at any time it believes best, which may result in short-term
trading. Short-term trading can increase a Fund's transaction costs and may
increase your tax liability.

INTERNATIONAL EXPOSURE. Each of the Funds except LB Municipal Bond
Fund and LB Money Market Fund may have some international exposure in their
investments. Many U.S. companies in which these Funds may invest generate
significant revenues and earnings from abroad. As a result, these companies
and the prices of their securities may be affected by weaknesses in global
and regional economies and the relative value of foreign currencies to the
U.S. dollar. These factors, taken as a whole, could adversely affect the
price of Fund shares.

BONDS. The value of any bonds held by a Fund is likely to decline when
interest rates rise; this risk is greater for bonds with longer maturities.
A less significant risk is that a bond issuer could default on principal or
interest payments, possibly causing a loss for the Fund.

COMPUTER RISKS. LB Research does not currently anticipate that
computer problems related to the year 2000 or to the conversion of various
European currencies into a single currency, the Euro, will have a material
effect on any Fund. However, there can be no assurances in this area,
including the possibility that year 2000 computer problems could negatively
affect communications systems, the investment markets or the economy in
general. Additionally, we have incorporated the Year 2000 issue into
investment research, reviewing the Year 2000 compliance efforts of
securities issuers and weighing the risks on non-compliance with the other
risks of investing.

SECURITIES RATINGS. When fixed-income securities are rated by one or
more independent rating agencies, a Fund uses these ratings to determine
bond quality. Investment grade bonds are those that are rated within or
above the BBB major rating category by S&P or the Baa major rating category
by Moody's, or unrated but considered of equivalent quality by the Fund's
adviser. High-yield bonds are below investment grade bonds in terms of
quality.

In cases where a bond is rated in conflicting categories by different
rating agencies, a Fund (other than LB Money Market Fund) may choose to
follow the higher rating. If a bond is unrated, the Fund may assign it to a
given category based on its own credit research. If a rating agency
downgrades a security, the Fund will determine whether to hold or sell the
security, depending on all of the facts and circumstances at that time.

DEFENSIVE INVESTING During unusual market conditions, each Fund except
LB Money Market Fund may temporarily place up to 100% of its total assets in
cash or quality short-term debt securities. To the extent that the Fund
does this, it is not pursuing its investment objective.

OPTIMUM(R) ACCOUNT

LBSC offers the OPTIMUM Account to all LB Money Market Fund Class A
shareholders. OPTIMUM Account features include:

o VISA CheckCard Privilege. You can use the VISA card to purchase
merchandise or obtain cash advances. There is no annual fee,
although you will be subject to other VISA account regulations
of the issuing bank, as discussed on page ___.

o Checkwriting Privileges. You can write as many checks as you want
with no minimum and at no charge per check. Checks or copies of
checks will be returned to you for recordkeeping. State Street
Bank will redeem enough shares from your LB Money Market Fund
account to cover the checks you write on the date the check
reaches the Bank.

o Tax-free Money Market Fund. You have access to Tax-Free
Instruments Trust, a money market fund with dividends exempt from
federal income tax.

o Discount Brokerage. You can use OPTIMUM Account Discount
Brokerage Services for direct purchases of general securities.

o Automatic Settlement. Purchase and sell transactions for general
securities placed through OPTIMUM Account Discount Brokerage
Services will clear automatically through your LB Money Market
Fund account.

o Monthly Consolidated Statement. In lieu of an immediate
confirmation of LB Money Market Fund financial transactions, you
will receive your monthly Optimum Account statement. The monthly
statement will report all activity in your accounts held in The
Lutheran Brotherhood Family of Funds, Tax-Free Instruments Trust,
OPTIMUM Account Discount Brokerage Account, and VISA CheckCards.

o Newsletter. Money management tips and information about OPTIMUM
Account will be sent to you on a regular basis through the
quarterly newsletter offered to OPTIMUM Account holders.

In the future, LBSC may offer additional features to shareholders in
OPTIMUM Account.

There is a one-time new account fee of $25 for the OPTIMUM Account
package. This fee is waived for LB Money Market Fund Class A shareholders
who already have the LB Money Market Fund VISA CheckCard when they add the
features of OPTIMUM Account. A monthly administrative fee of $5.00 is
charged. These fees will be automatically redeemed from your LB Money Market
Fund account each month.

FINANCIAL HIGHLIGHTS

Shares of the Funds had no class designations until October 31, 1997,
when designations were assigned based on the sales charges, Rule 12b-1 fees
and shareholder servicing fees applicable to shares sold after that date.
The tables below cover periods prior to the adoption of class designations
and therefore do not reflect the Rule 12b-1 fees of 0.75% per year
applicable to the Class B shares (except Class B shares of the LB Money
Market Fund) and the shareholder servicing fees of 0.25% per year applicable
to the Class A and Class B shares, which will adversely affect performance
results for periods after October 31, 1997. The tables also do not show the
effect of a sales charge. There are no tables for LB Growth Fund, LB Value
Fund and LB Limited Maturity Bond Fund since they commenced operation on
October 29, 1999.

<PAGE>
<TABLE>
<CAPTION>
LB OPPORTUNITY GROWTH FUND CLASS A SHARES

Year Ended Year Ended Year Ended Year Ended Year Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..... $9.33 $12.97 $13.62 $13.83 $10.76
------- ------ ------ ------ -------
Investment Operations:
Net Investment Income.................. (0.13) (0.06) (0.07) (0.11) (0.09)
Net Realized and Unrealized Gain
(Loss) on Investment................. 1.96 (3.14) .91 2.63 3.16
------- ------- ------ ------ --------
Total from Investment Operations......... 1.83 (3.20) .84 2.52 3.07
------- ------- ------ ------ --------
Less Distributions:
Distributions from Net Realized
Gain on Investments.................. -- (0.44) (1.49) (2.73) --
------- ------- ------ ------ --------
Net Asset Value, End of Period........... $11.16 $9.33 $12.97 $13.62 $13.83
======= ======= ====== ====== ========
Total Investment Return at Net Asset
Value(%) 19.61% (25.18)% 7.52% 21.27% 28.53%
Net Assets, End of Period (in millions).. $206.0 $205.7 $311.4 $265.8 $165.7
Ratio of Expenses to Average Net
Assets (%) 1.50% 1.40% 1.29% 1.28% 1.43%
Ratio of Net Investment Income to
Average Net Assets (%)................. (1.19%) (0.51%) (0.60%) (0.92%) (0.88%)
Portfolio Turnover Rate (%)............... 49% 155% 136% 176% 213%
</TABLE>

<TABLE>
<CAPTION>
LB OPPORTUNITY GROWTH FUND CLASS B SHARES

Year Ended Year Ended
10/31/99 10/31/98
----------- -----------
<S> <C> <C>
Net Asset Value, Beginning of Period..... $ 9.27 $12.97
------ -------
Investment Operations:
Net Investment Income.................. (0.20) (0.08)
Net Realized and Unrealized Gain
(Loss) on Investment................. 1.93 (3.18)
------ -------
Total from Investment Operations......... 1.73 (3.26)
------ -------
Less Distributions:
Distributions from Net Realized
Gain on Investments.................. -- (0.44)
------ -------
Net Asset Value, End of Period........... $11.00 $ 9.27
====== =======
Total Investment Return at Net Asset
Value(%) 18.66% (25.66%)
Net Assets, End of Period (in millions).. $8.5 $4.2
Ratio of Expenses to Average Net
Assets (%) 2.25% 2.15%
Ratio of Net Investment Income to
Average Net Assets (%)................. (1.94%) (1.26%)
Portfolio Turnover Rate (%).............. 49% 155%
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
LB MID CAP GROWTH FUND CLASS A SHARES

For the period from
May 30, 1997
Year Ended Year Ended (effective date)
10/31/99 10/31/98 to October 31, 1997
----------- ----------- -------------------
<S> <C> <C> <C>

Net Asset Value, Beginning of Period ...................... $ 9.19 $10.33 $ 9.25
-------- ------ --------
Investment Operations:
Net Investment Income...................................... (0.13) 0.36 (0.02)
Net Realized and Unrealized Gain
(Loss) on Investments ................................... 3.87 (0.89) 1.10
-------- ------ --------
Total from Investment Operations .......................... 3.74 (0.53) 1.08
-------- ------ --------
Less Distributions from:
Net Investment Income......................... -- (0.37) --
Net Realized Gains on Investments............. -- (0.24) --
-------- ------ --------
Total Distributions................................ -- (0.61) --
-------- ------ --------
Net Asset Value, End of Period .................... $12.93 $ 9.19 $ 10.33
======== ====== ========
Total Investment Return at
Net Asset Value % ...................................... 40.70% (5.28%) 11.68%
Net Assets, End of Period ($ in millions) ................. $59.2 $31.9 $ 14.6
Ratio of Expenses to Average
Net Assets (1) ........................................... 1.95% 1.95% 1.95%
Ratio of Net Investment Income to
Average Net Assets (1).................................... (1.34%) 1.93% (0.84%)
Portfolio Turnover Rate ................................... 145% 436% 94%
- -----------------
(1) Effective May 30, 1997, LB Research voluntarily lowered the expense limit prospectively to 1.95% for
Class A shares. Had LB Research not undertaken such action, for Class A shares, the ratio of expenses
to average net assets would have been 2.07%, 2.22%, and 2.19%, and the ratio of net investment income to
average net assets would have been (1.46%), 1.66%, and (1.08%), respectively, for the years ended
October 31, 1999 and 1998 and for the period from May 30, 1997 to October 31, 1997.

</TABLE>

<TABLE>
<CAPTION>
LB MID CAP GROWTH FUND CLASS B SHARES

Year Ended Year Ended
10/31/99 10/31/98
----------- -----------
<S> <C> <C>

Net Asset Value, Beginning of Period ...................... $ 9.12 $10.33
-------- ------
Investment Operations:
Net Investment Income...................................... (0.19) 0.30
Net Realized and Unrealized Gain
(Loss) on Investments ................................... 3.81 (0.90)
-------- ------
Total from Investment Operations .......................... 3.62 (0.60)
-------- ------
Less Distributions from:
Net Investment Income......................... -- (0.37)
Net Realized Gains on Investments............. -- (0.24)
-------- ------
Total Distributions................................ -- (0.61)
-------- ------
Net Asset Value, End of Period .................... $12.74 $ 9.12
======== ======
Total Investment Return at
Net Asset Value % ...................................... 39.69% (6.00%)
Net Assets, End of Period ($ in millions) ................. $15.8 $ 6.4
Ratio of Expenses to Average
Net Assets (1) ........................................... 2.70% 2.70%
Ratio of Net Investment Income to
Average Net Assets (1).................................... (2.09%) 1.18%
Portfolio Turnover Rate ................................... 145% 436%
- -----------------
(1) Effective October 31, 1997, LB Research voluntarily lowered the expense limit to 2.70%
for Class B shares. Had LB Research not undertaken such action, for Class B shares,
the ratio of expenses to average net assets would have been 2.82% and 2.97% and the
ratio of net investment income to average net assets would have been (2.21%) and 0.91%,
respectively, for the years ended October 31, 1999 and 1998.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
LB WORLD GROWTH FUND CLASS A SHARES

For the Period From
September 5, 1995
Year Ended Year Ended Year Ended Year Ended (effective date) to
10/31/99 10/31/98 10/31/97 10/31/96 October 31, 1995
----------- ------------ ----------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............... $10.58 $10.09 $9.48 $8.44 $8.50
------ ------ ----- ----- -----
Income From Investment Operations:
Net Investment Income......................... (0.01) -- 0.02 0.04 0.01
Net Realized and Unrealized Gain (Loss)
on Investments............................. 2.05 0.67 0.67 1.02 (0.07)
------ ------ ----- ----- -----
Total from Investment Operations................... 2.04 0.67 0.69 1.06 (0.06)
------ ------ ----- ----- -----
Less Distributions from:
Net Investment Income......................... (0.07) (0.04) (0.04) (0.02) --
Net Realized Gains on Investments............. -- (0.14) (0.04) -- --
------ ------ ----- ----- -----
Total Distributions................................ (0.07) (0.18) (0.08) (0.02) --
------ ------ ----- ----- -----
Net Asset Value, End of Period..................... $12.55 $10.58 $10.09 $9.48 $8.44
====== ======= ===== ===== =====
Total Investment Return at Net Asset Value (%) 19.21% 6.80% 7.38% 12.53% (0.71%)
Net Assets, End of Period (in millions)............ $87.6 $73.1 $75.1 $52.9 $14.0
Ratio of Expenses to Average Net Assets............ 1.88% 1.86% 1.82% 1.95%(1) 1.95%(1)
Ratio of Net Investment Income to Average Net Assets.. (0.08%) 0.06% 0.17% 0.67%(1) 1.60%(1)
Portfolio Turnover Rate............................... 18% 20% 17% 11% 0%
- ------------------
(1) Effective September 5, 1995 through October 31, 1996, LB Research Corp. voluntarily limited the Fund's
expense ratio to 1.95%. Had LB Research not undertaken such action, the ratio of expenses to average net
assets would have been 2.13% and 2.89%, and the ratio of net investment income to average net assets would
have been 0.49% and 0.66%, respectively, for the year ended October 31, 1996 and for the period from
September 5, 1995 to October 31, 1995.
</TABLE>

<TABLE>
<CAPTION>
LB WORLD GROWTH FUND CLASS B SHARES

Year Ended Year Ended
10/31/99 10/31/98
------------ ------------
<S> <C> <C>
Net Asset Value, Beginning of Period............... $10.51 $10.09
------ -------
Income From Investment Operations:
Net Investment Income......................... (0.03) 0.01
Net Realized and Unrealized Gain (Loss)
on Investments............................. 1.97 0.59
------ ------
Total from Investment Operations................... 1.94 0.60
------ ------
Less Distributions from:
Net Investment Income......................... (0.06) (0.04)
Net Realized Gains on Investments............. -- (0.14)
------ -------
Total Distributions................................ (0.06) (0.18)
------ -------
Net Asset Value, End of Period..................... $12.39 $10.51
====== =======
Total Investment Return at Net Asset Value (%) 18.28% 6.10%
Net Assets, End of Period (in millions)............ $8.1 $3.5
Ratio of Expenses to Average Net Assets............ 2.63% 2.61%
Ratio of Net Investment Income to Average Net Assets.. (0.83%) (0.69%)
Portfolio Turnover Rate............................... 18% 20%
- ------------------
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
LB FUND CLASS A SHARES

Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
-------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period..... $27.94 $26.98 $ 23.07 $ 21.19 $17.67
------ ------ ------- ------- ------
Investment Operations:
Net Investment Income...... 0.07 0.13 0.19 0.20 0.22
Net Realized and Unrealized
Gain (Loss) on Investments. 6.42 3.57 5.68 3.33 3.52
------ ------ ------- ------- ------
Total from Investment
Operations 6.49 3.70 5.87 3.53 3.74
------ ------ ------- ------- ------
Less Distributions from:
Net Investment Income... (0.08) (0.12) (0.20) (0.20) (0.22)
Net Realized Gain on
Investments............. (3.13) (2.62) (1.76) (1.45) --
------ ------ ------- ------- ------
Total Distributions........ (3.21) (2.74) (1.96) (1.65) (0.22)
------ ------ ------- ------- ------
Net Asset Value End of
Period.................. $31.22 $27.94 $ 26.98 $ 23.07 $21.19
====== ====== ======= ======= ======
Total Investment Return a
Net Asset Value(%)... 25.60% 15.07% 26.99% 17.61% 21.34%
Net Assets, End of Period
(in millions)........... $1,424.4 $1,120.5 $ 989.8 $ 768.8 $645.5
Ratio of Expenses to
Average Net Assets (%)(1) 0.85% 0.86% 0.88% 0.97% 1.02%
Ratio of Net Investment
Income to Average Net
Assets (%)(1)........... 0.24% 0.47% 0.76% 0.94% 1.15%
Portfolio Turnover Rate (%).... 57% 57% 54% 91% 127%
- -----------------------
(1) Effective January 1, 1997, LB Research voluntarily agreed to waive five basis points (0.05%)
from the advisory fees payable by the LB Fund. Had LB Research not undertaken such action, for
Class A shares, the ratio of expenses to average net assets would have been 0.90%, 0.91%, and
0.92%, and the ratio of net investment income to average net assets would have been 0.19%,
0.42%, and 0.72%, respectively, for the years ended October 31, 1999, 1998 and 1997.
</TABLE>

<TABLE>
<CAPTION>
LB FUND CLASS B SHARES

Year Year
Ended Ended
10/31/99 10/31/98
------- ---------
<S> <C> <C>
Net Asset Value,
Beginning of Period..... $27.83 $26.98
------ -------
Investment Operations:
Net Investment Income...... (0.10) (0.01)
Net Realized and Unrealized
Gain (Loss) on Investments. 6.33 3.51
------- -------
Total from Investment
Operations 6.23 3.50
------ -------
Less Distributions from:
Net Investment Income... -- (0.03)
Net Realized Gain on
Investments............. (3.13) (2.62)
------ -------
Total Distributions........ (3.13) (2.65)
------- -------
Net Asset Value End of
Period.................. $30.93 $27.83
====== =======
Total Investment Return a
Net Asset Value(%)... 24.66% 14.26%
Net Assets, End of Period
(in millions)........... $63.3 $25.0
Ratio of Expenses to
Average Net Assets (%)(1) 1.60% 1.61%
Ratio of Net Investment
Income to Average Net
Assets (%)(1)........... (0.51%) (0.28%)
Portfolio Turnover Rate (%).... 57% 57%
- -----------------------
(1) Effective January 1, 1997, LB Research voluntarily agreed
to waive five basis points (0.05%) from the advisory fees payable
by the LB Fund. Had LB Research not undertaken such action, for
Class B shares, the ratio of expenses to average net assets would
have been 1.65% and 1.66% and the ratio of net investment income
would have been (0.56%) and (0.33%), respectively, for the years
ended October 31, 1999 and 1998.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
LB HIGH YIELD FUND CLASS A SHARES

Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
--------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period... $ 8.09 $ 9.58 $ 9.21 $ 9.03 $ 8.86
------ ------ ------ ------ ------
Investment Operations:
Net Investment Income . 0.82 0.86 0.85 0.84 0.83
Net Realized and
Unrealized Gain (Loss)
on Investments........ (0.20) (1.32) 0.41 0.17 0.24
------ ------ ------ ------ ------
Total from Investment
Operations............ 0.62 (0.46) 1.26 1.01 1.07
------ ------ ------ ------ ------
Less Distributions from:
Net Investment Income. (0.84) (0.85) (0.86) (0.83) (0.85)
Net Realized Gain
on Investments........ -- (0.18) (0.03) -- (0.05)
------ ------ ------ ------ ------
Total Distributions.... (0.84) (1.03) (0.89) (0.83) (0.90)
------ ------ ------ ------ ------
Net Asset Value End
of Period............. $ 7.87 $ 8.09 $ 9.58 $ 9.21 $ 9.03
====== ====== ====== ====== ======
Total Investment
Return at Net
Asset Value(%) 7.69% (5.55%) 14.43% 11.64% 12.93%
Net Assets, End of
Period (in millions).. $823.2 $784.8 $862.9 $703.1 $594.3
Ratio of Expenses to
Average Net Assets (%)(1). 0.86% 0.84% 0.84% 0.91% 0.93%
Ratio of Net Investment
Income to Average
Net Assets (%)(1)..... 9.96% 9.32% 9.14% 9.23% 9.53%
Portfolio Turnover Rate 55% 73% 113% 104% 71%
- -------------------
(1) Effective January 1, 1997, LB Research voluntarily agreed to waive five basis points
(0.05%) from the advisory fees payable by the LB High Yield Fund. Had LB Research not
undertaken such action, for Class A Shares, the ratio of expenses to average net assets
would have been 0.91%, 0.89%, and 0.88%, and the ratio of net investment income to
average net assets would have been 9.91%, 9.27%, and 9.10%, respectively, for the years
ended October 31, 1999, 1998 and 1997.
</TABLE>

<TABLE>
<CAPTION>
LB HIGH YIELD FUND CLASS B SHARES

Year Year
Ended Ended
10/31/99 10/31/98
------- ---------
<S> <C> <C>
Net Asset Value,
Beginning of Period... $8.08 $9.58
----- ------
Investment Operations:
Net Investment Income . 0.77 0.79
Net Realized and
Unrealized Gain (Loss)
on Investments........ (0.21) (1.31)
------ ------
Total from Investment
Operations............ 0.56 (0.52)
------ ------
Less Distributions from:
Net Investment Income. (0.78) (0.80)
Net Realized Gain
on Investments........ -- (0.18)
------ ------
Total Distributions.... (0.78) (0.98)
------ ------
Net Asset Value End
of Period............. $7.86 $8.08
====== ======
Total Investment
Return at Net
Asset Value(%) 6.92% (6.24%)
Net Assets, End of
Period (in millions).. $34.4 $19.3
Ratio of Expenses to
Average Net Assets (%)(1). 1.61% 1.59%
Ratio of Net Investment
Income to Average
Net Assets (%)(1)..... 9.21% 8.57%
Portfolio Turnover Rate 55% 73%
- -------------------
(1) Effective January 1, 1997, LB Research voluntarily agreed to waive five
basis points (0.05%) from the advisory fees payable by the LB High Yield
Fund. Had LB Research not undertaken such action, for Class B shares, the
ratio of expenses to average net assets would have been 1.66% and 1.64% and
the ratio of net investment income would have been 9.16% and 8.52%, respectively,
for the years ended October 31, 1999 and 1998.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
LB INCOME FUND CLASS A SHARES

Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period....... $ 8.78 $ 8.61 $ 8.50 $ 8.72 $ 8.01
------ ------ ------ ------ ------
Investment Operations:
Net Investment Income...... 0.51 0.54 0.55 0.57 0.59
Net Realized and
Unrealized Gain (Loss)
on Investments............ (0.58) 0.17 0.11 (0.19) 0.69
------ ------ ------ ------ ------
Total from Investment
Operations................ (0.07) 0.71 0.66 0.38 1.28
------ ------ ------ ------ ------
Less Distributions from:
Net Investment Income..... (0.49) (0.54) (0.55) (0.60) (0.57)
Net Realized Gain on
Investments............... -- -- -- -- --
------ ------ ------ ------ ------
Total Distributions........ (0.49) (0.54) (0.55) (0.60) (0.57)
------ ------ ------ ------ ------
Net Asset Value End of
Period.................... $ 8.22 $ 8.78 $ 8.61 $ 8.50 $ 8.72
====== ====== ====== ====== ======
Total Investment Return
at Net Asset
Value(%) .... (0.69%) 8.42% 8.05% 4.56% 16.53%
Net Assets, End of
Period (in millions)..... $679.5 $739.1 $778.0 $871.0 $942.1
Ratio of Expenses to
Average Net Assets (%)(1). 0.82% 0.80% 0.80% 0.83% 0.83%
Ratio of Net Investment
Income to Average
Net Assets (%)(1)........ 5.93% 6.16% 6.44% 6.61% 7.01%
Portfolio Turnover Rate (%).. 72% 98% 97% 142% 131%
- ------------------------
(e) Effective January 1, 1997, LB Research voluntarily agreed to waive five basis points
(0.05%) from the advisory fees payable by the LB Income Fund. Had LB Research not
undertaken such action, for Class A Shares, the ratio of expenses to average net assets
would have been 0.87%, 0.85%, and 0.84%, and the ratio of net investment income to
average net assets would have been 5.88%, 6.11%, and 6.40%, respectively, for the years
ended October 31, 1999, 1998 and 1997.
</TABLE>

<TABLE>
<CAPTION>
LB INCOME FUND CLASS B SHARES

Year Year
Ended Ended
10/31/99 10/31/98
-------- ---------
<S> <C> <C>
Net Asset Value,
Beginning of Period....... $ 8.76 $ 8.61
------ -------
Investment Operations:
Net Investment Income...... 0.45 0.48
Net Realized and
Unrealized Gain (Loss)
on Investments............ (0.58) 0.16
------ -------
Total from Investment
Operations................ (0.13) 0.64
------ -------
Less Distributions from:
Net Investment Income..... (0.43) (0.49)
Net Realized Gain on
Investments............... -- --
------ -------
Total Distributions........ (0.43) (0.49)
------ -------
Net Asset Value End of
Period.................... $ 8.20 $ 8.76
====== =======
Total Investment Return
at Net Asset
Value(%) .... (1.52%) 7.65%
Net Assets, End of
Period (in millions)..... $14.7 $6.9
Ratio of Expenses to
Average Net Assets (%)(1). 1.57% 1.55%
Ratio of Net Investment
Income to Average
Net Assets (%)(1)........ 5.18% 5.41%
Portfolio Turnover Rate (%) 72% 98%
- ------------------------
(e) Effective January 1, 1997, LB Research voluntarily agreed to waive five basis points
(0.05%) from the advisory fees payable by the LB Income Fund. Had LB Research not
undertaken such action, for Class B shares, the ratio of expenses to average net assets
would have been 1.62% and 1.60% and the ratio of net investment income would have been
5.13% and 5.36%, respectively, for the year ended October 31, 1999 and 1998.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
LB MUNICIPAL BOND FUND CLASS A SHARES

Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period......... $ 9.11 $ 8.85 $ 8.60 $ 8.58 $ 7.88
------ ------ ------ ------ ------
Investment Operations:
Net Investment Income.......... 0.43 0.41 0.45 0.44 0.45
Net Realized and Unrealized Gain
(Loss) on Investments....... (0.66) 0.29 0.24 0.01 0.70
------ ------ ------ ------ ------
Total from Investment Operations. (0.23) 0.70 0.69 0.45 1.15
------ ------ ------ ------ ------
Less Distributions from:
Net Investment Income....... (0.44) (0.44) (0.44) (0.43) (0.45)
Net Realized Gain on
Investments............... -- -- -- -- --
------ ------ ------ ------ ------
Total Distributions............ (0.44) (0.44) (0.44) (0.43) (0.45)
------ ------ ------ ------ ------
Net Asset Value End of Period.. $ 8.44 $ 9.11 $ 8.85 $ 8.60 $ 8.58
====== ====== ====== ====== ======
Total Investment Return at
Net Asset Value(%) (2.62%) 8.12% 8.28% 5.33% 14.97%
Net Assets, End of
Period (in millions)........ $570.6 $605.0 $591.9 $609.5 $628.7
Ratio of Expenses to Average
Net Assets (%)(1)........... 0.70% 0.69% 0.70% 0.74% 0.74%
Ratio of Net Investment Income
to Average Net Assets (%)(1). 4.88% 4.88% 5.13% 5.14% 5.43%
Portfolio Turnover Rate (%).... 20% 14% 18% 33% 36%
- ------------------------
(1) Effective January 1, 1997, LB Research voluntarily agreed to waive five basis points (0.05%)
from the advisory fees payable by the LB Municipal Bond Fund. Had LB Research not undertaken
such action, for Class A shares, the ratio of expenses to average net assets would have been
0.75%, 0.74%, and 0.74%, and the ratio of net investment income to average net assets would
have been 4.83%, 4.83%, and 5.09%, respectively, for the years ended October 31, 1999, 1998
and 1997.
</TABLE>

<TABLE>
<CAPTION>
LB MUNICIPAL BOND FUND CLASS B SHARES

Year Year
Ended Ended
10/31/99 10/31/98
-------- ---------
<S> <C> <C>
Net Asset Value,
Beginning of Period......... $ 9.09 $ 8.85
------ -------
Investment Operations:
Net Investment Income.......... 0.37 0.39
Net Realized and Unrealized Gain
(Loss) on Investments....... (0.67) 0.24
------ -------
Total from Investment Operations. (0.30) 0.63
------ -------
Less Distributions from:
Net Investment Income....... (0.38) (0.39)
Net Realized Gain on
Investments............... -- --
------ -------
Total Distributions............ (0.38) (0.39)
------ -------
Net Asset Value End of Period.. $ 8.41 $ 9.09
====== =======
Total Investment Return at
Net Asset Value(%) (3.44%) 7.23%
Net Assets, End of
Period (in millions)........ $ 8.4 $4.0
Ratio of Expenses to Average
Net Assets (%)(1)........... 1.45% 1.44%
Ratio of Net Investment Income
to Average Net Assets (%)(1). 4.13% 4.13%
Portfolio Turnover Rate (%).... 20% 14%
- ------------------------
(1) Effective January 1, 1997, LB Research voluntarily agreed to waive five basis points
(0.05%) from the advisory fees payable by the LB Municipal Bond Fund. Had LB Research
not undertaken such action, for Class B shares, the ratio of expenses to average net
assets would have been 1.50% and 1.49% and the ratio of net investment income would have
been 4.08% and 4.08%, respectively, for the years ended October 31, 1999 and 1998.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
LB MONEY MARKET FUND CLASS A SHARES

Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset Value,
Beginning of Period... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------
Investment Operations:
Net Investment Income.... 0.04 0.04 0.05 0.05 0.05
------ ------ ------ ------ ------
Less Distributions from:
Net Investment Income.... (0.04) (0.04) (0.05) (0.05) (0.05)
------ ------ ------ ------ ------
Net Asset Value,
End of Period. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======
Total Investment Return
at Net Asset Value (%) 4.27% 4.82% 4.74% 4.63% 4.95%
Net Assets, End of
Period (in millions).. $580.1 $493.2 $469.2 $417.6 $341.1
Ratio of Expenses to
Average Net Assets (%)(1). 0.95% 0.95% 0.95% 1.01% 1.10%
Ratio of Net Investment
Income to Average Net
Assets (%)(1). 4.19% 4.72% 4.64% 4.53% 4.85%
- ----------------------
(1) Effective February 1, 1992 through March 31, 1996, LB Research voluntarily limited the
Fund's expense ratio to 1.10% of annual average daily net assets. Effective April 1,
1996, LB Research voluntarily lowered the expense limit prospectively to 0.95% of
average daily net assets. Had LB Research not undertaken such action to limit expenses,
for Class A shares, the ratio of expenses to average net assets would have been 1.00%, 1.04%,
1.05%, 1.07%, and 1.18%, and the ratio of net investment income to average net assets would
have been 4.14%, 4.63%, 4.35%, 4.47%, and 4.77%, respectively, for the years ended
October 31, 1999, 1998, 1997, 1996, and 1995.
</TABLE>

<TABLE>
<CAPTION>
LB MONEY MARKET FUND CLASS B SHARES

Year Year
Ended Ended
10/31/99 10/31/98
-------- ---------
<S> <C> <C>
Net asset Value,
Beginning of Period... $1.00 $1.00
------ ------
Investment Operations:
Net Investment Income.... 0.04 0.04
------ ------
Less Distributions from:
Net Investment Income.... (0.04) (0.04)
------ ------
Net Asset Value,
End of Period. $1.00 $1.00
====== ======
Total Investment Return
at Net Asset Value (%) 4.27% 4.82%
Net Assets, End of
Period (in millions).. $0.3 $0.1
Ratio of Expenses to
Average Net Assets (%)(1). 0.95% 0.95%
Ratio of Net Investment
Income to Average Net
Assets (%)(1). 4.19% 4.72%
- ----------------------
(1) Effective October 31, 1997, LB Research voluntarily lowered the expense
limit to 0.95% for Class B shares. Had LB Research not undertaken such
action to limit expenses, for Class B shares, the ratio of expenses to
average net assets would have been 1.00% and 1.04% and the ratio of net
investment income would have been 4.14% and 4.63%, respectively, for
the years ended October 31, 1999 and 1998.
</TABLE>

<PAGE>
- ----------------------------------------------------------------------------

[Back cover page]

THE LUTHERAN BROTHERHOOD FAMILY OF FUNDS

1-800-328-4552 Automated Service Line

1-800-990-6290 to speak with a customer service associate

www.luthbro.com

o Lutheran Brotherhood Securities Corp.
P.O. Box 9491
Minneapolis, Minnesota 55440-9491

The Statement of Additional Information which is incorporated by
reference into this Prospectus contains additional information about the
Funds. Additional information about the Funds' investments is available in
the Funds' annual and semi-annual reports to shareholders. In the Funds'
annual report, you will find a discussion of the market conditions and
investment strategies that significantly affected the performance of each of
the Funds during their last fiscal year. You may request a free copy of the
Statement of Additional Information, the annual report, or the semi-annual
report, or you may make additional requests or inquiries by calling 1-800-
990-6290. You also may review and copy information about the Funds
(including the Statement of Additional Information) at the Public Reference
Room of the Securities and Exchange Commission in Washington, DC. You may
get more information about the Public Reference Room by calling 1-202-942-
8090. You also may get information about the Funds on the EDGAR data base at
the SEC Web site (www.sec.gov), and copies of the information may be
obtained upon payment of a duplicating fee, by writing the Public Reference
Section of the SEC, Washington, DC 20549-6009, or by sending an email to:
[email protected].

1940 Act File No. 811-1467

<PAGE>
THE LUTHERAN BROTHERHOOD FAMILY OF FUNDS

PROSPECTUS December 20, 1999

NO LOAD
INSTITUTIONAL CLASS SHARES

The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.

<PAGE>

TABLE OF CONTENTS

PAGE

The Funds

Investment Objectives, Principal Strategies and Risks,
Volatility and Performance, Fees and Expenses

Management

Your Investment
Buying Shares of The Lutheran Brotherhood Family of Funds
Additional Purchases
Net Asset Value of Your Shares
Exchanging Between Funds
Redeeming Shares

Distributions

Taxes

Other Securities and Investment Practices

Financial Highlights

The Lutheran Brotherhood Family of Funds are offered to members of
Lutheran Brotherhood and to qualifying Lutheran institutional investors.
This is the Prospectus for the Institutional Class Shares which are only
offered to Lutheran institutions, Lutheran church organizations, retirement
plans sponsored by Lutheran institutions, and Lutheran participants in the
Allocation Advantage(sm) mutual fund asset allocation program offered by
Lutheran Brotherhood Securities Corp.

<PAGE>
LUTHERAN BROTHERHOOD OPPORTUNITY GROWTH FUND

INVESTMENT OBJECTIVE. The investment objective of the Lutheran
Brotherhood Opportunity Growth Fund ("LB Opportunity Growth Fund") is to
achieve long-term growth of capital.

The price-to-earnings (P/E) ratio represents the price of a stock
divided by its earnings per share. In general, the higher the P/E, the
greater the expectations are for earnings growth.

Price-to-book ratio represents the price of a stock divided by its net
asset value (book value). The price/book ratio can be a guide in
determining the value of a stock.

For these and other reasons, the LB Opportunity Growth Fund may
underperform other stock funds (such as large company stock funds) when
stocks of small or growth companies are out of favor.

VOLATILITY AND PERFORMANCE

The bar chart and the table include the effects of Fund expenses and
assume that you sold your shares at the end of the period. The returns
shown for the Fund include performance from before the creation of the
Institutional Class shares on October 31, 1997. Prior to October 31, 1997,
the shares of the Fund had no specific class designation. As of that date,
all of the outstanding shares were redesignated as Class A shares and,
immediately thereafter, shares held by Lutheran institutions and church
organizations with accounts of at least $100,000 were converted to
Institutional Class shares. If the returns reflected the current
shareholder servicing fee of 0.15% per year, the returns would be lower than
those shown. How a Fund has performed in the past is not necessarily an
indication of how it will perform in the future.

[GRAPHIC BAR CHART OMITTED: YEAR-BY-YEAR TOTAL RETURN]

Annual
Year Return

1994 2.66%
1995 37.71%
1996 12.16%
1997 -0.32%
1998 -4.08%

Best Quarter: Q4 '98 +24.60%
Worst Quarter: Q3 '98 -22.42%

Footnote reads:
The Fund's year-to-date return (Institutional Class) as of 9/30/99 (not
annualized) was 0.82%

Average Annual Total Returns
(periods ending
December 31, 1998)
-----------------------------
Since
Inception
1-Year 5-Year (1/8/93)

LB Opportunity Growth Fund -4.08% 8.67% 11.27%
(Institutional Class)

Russell 2000 -2.55% 11.90% 13.25%

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and
hold shares of a Fund. The Institutional Class shares of the Fund have no
sales charge (load) and no 12b-1 distribution fees.

SHAREHOLDER FEES (fees paid directly from
your investment)
Maximum Sales Charge (Load) None
Maximum Deferred Sales Charge (Load) None

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund
assets)
Management Fees 0.44%
Other Expenses (including a 0.15% shareholder
servicing fee) 0.40%
Total Annual Fund Operating Expenses 0.84%

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN THE FUND FOR THE TIME PERIODS
INDICATED AND THEN REDEEM ALL OF YOUR SHARES AT THE END OF THOSE PERIODS.
THE EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND
THAT THE FUND'S OPERATING EXPENSES REMAIN THE SAME. ALTHOUGH YOUR ACTUAL
COSTS MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS YOUR COSTS WOULD
BE:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
LB Opportunity Growth Fund $86 $268 $466 $1,037

YOU WOULD PAY THE FOLLOWING EXPENSES IF YOU DID NOT REDEEM YOUR SHARES:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
LB Opportunity Growth Fund $86 $268 $466 $1,037

LUTHERAN BROTHERHOOD MID CAP GROWTH FUND

INVESTMENT OBJECTIVE. The investment objective of the Lutheran
Brotherhood Mid Cap Growth Fund ("LB Mid Cap Growth Fund") is to achieve
long-term growth of capital.

PRINCIPAL STRATEGIES. The principal strategy for achieving this
objective is to invest in common stocks of companies with medium market
capitalizations. Under normal market conditions, the LB Mid Cap Growth Fund
invests at least 65% of its assets in companies that fall within the range
of companies included in the Standard & Poor's MidCap 400 Index at the time
of the Fund's investment. As of September 30, 1999, the S&P MidCap 400
included companies with capitalizations between $236 million and $12.9
billion. Lutheran Brotherhood Research Corp. ("LB Research"), the Fund's
investment adviser uses both fundamental and technical investment research
techniques to determine what stocks to buy and sell. (Fundamental
investment analysis generally involves assessing a company's or security's
value based on factors such as sales, assets, markets, management, products
and services, earnings, and financial structure. Technical analysis
generally involves studying trends and movements in a security's price,
trading volume, and other market-related factors in an attempt to discern
patterns.) LB Research focuses on companies that have a strong record of
earnings growth or show good prospects for growth in sales and earnings and
also considers the trends in the market as a whole.

VOLATILITY AND PERFORMANCE

The bar chart and the table include the effects of Fund expenses and
assume that you sold your shares at the end of the period. The returns in
the table shown for the Fund include performance from before the creation of
the Institutional Class shares on October 31, 1997. Prior to October 31,
1997, the shares of the Fund had no specific class designation. As of that
date, all of the outstanding shares were redesignated as Class A shares and,
immediately thereafter, shares held by Lutheran institutions and church
organizations with accounts of at least $100,000 were converted to
Institutional Class shares. If the returns reflected the current
shareholder servicing fee of 0.15% per year, the returns would be lower than
those shown. How a Fund has performed in the past is not necessarily an
indication of how it will perform in the future.

[GRAPHIC BAR CHART OMITTED: YEAR-BY-YEAR TOTAL RETURN]

Annual
Year Return

1998 11.87%

Best Quarter: Q4 '98 +25.78%
Worst Quarter: Q3 '98 -19.16%

Footnote reads:
The Fund's year-to-date return (Institutional Class) as of 9/30/99 (not
annualized) was 10.70%

Average Annual Total Returns
(periods ending
December 31, 1998)
-----------------------------
Since
Inception
1-Year (5/30/97)

LB Mid Cap Growth Fund (Institutional Class) 11.87% 15.56%

S&P MidCap 400 Index 18.25% 26.73%

The S&P MidCap 400 Index is an unmanaged index which measures the
performance of 400 widely held common stocks of mid-cap companies.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy
and hold shares of the LB Mid Cap Growth Fund. The Institutional Class
shares of the Fund have no sales charge (load) and no 12b-1 distribution
fees.

SHAREHOLDER FEES (fees paid directly from
your investment)
Maximum Sales Charge (Load) None
Maximum Deferred Sales Charge (Load) None

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund
assets)
Management Fees 0.45%
Other Expenses (including a 0.15% shareholder
servicing fee) 0.67%
Total Annual Fund Operating Expenses (1) 1.12%

(1) LB Research has voluntarily agreed to temporarily waive a portion of
its advisory fee and, if necessary, to bear certain expenses associated with
operating LB Mid Cap Growth Fund in order to limit the Total Annual Fund
Operating Expenses for Class A shares to 1.95% of the average net assets and
to waive the same percentage for Institutional Class shares. For the year
ended October 31, 1999, the amount of the waiver was 0.12% of average net
assets. This temporary waiver and expense provision may be discontinued at
any time.

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN THE FUND FOR THE TIME PERIODS
INDICATED AND THEN REDEEM ALL OF YOUR SHARES AT THE END OF THOSE PERIODS.
THE EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND
THAT THE FUND'S OPERATING EXPENSES REMAIN THE SAME. ALTHOUGH YOUR ACTUAL
COSTS MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS YOUR COSTS WOULD
BE:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
LB Mid Cap Growth Fund $114 $356 $617 $1,363

YOU WOULD PAY THE FOLLOWING EXPENSES IF YOU DID NOT REDEEM YOUR SHARES:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
LB Mid Cap Growth Fund $114 $356 $617 $1,363

LUTHERAN BROTHERHOOD WORLD GROWTH FUND

INVESTMENT OJBECTIVE. The investment objective of the Lutheran
Brotherhood World Growth Fund ("LB World Growth Fund") is to seek total
return from long-term growth of capital.

In selecting stocks, Price-Fleming generally favors companies with one
or more of the following characteristics:

VOLATILITY AND PERFORMANCE

[GRAPHIC BAR CHART OMITTED: YEAR-BY-YEAR TOTAL RETURN]

Annual
Year Return

1996 13.43%
1997 2.27%
1998 15.98%

Best Quarter: Q4 '98 +17.64%
Worst Quarter: Q3 '98 -13.40%

Footnote reads:
The Fund's year-to-date return (Institutional Class) as of 9/30/99 (not
annualized) was 7.03%

Average Annual Total Returns
(periods ending
December 31, 1998)
-----------------------------
Since
Inception
1-Year (9/5/95)

LB World Growth Fund (Institutional Class) 15.98% 10.14%

Morgan Stanley EAFE Index 20.33% 9.92%

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy
and hold shares of the LB World Growth Fund. The Institutional Class shares
of the Fund have no sales charge (load) and no 12b-1 distribution fees.

SHAREHOLDER FEES (fees paid directly from
your investment)
Maximum Sales Charge (Load) None
Maximum Deferred Sales Charge (Load) None

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund
assets)
Management Fees 0.75%
Other Expenses (including a 0.15% shareholder
servicing fee) 0.48%
Total Annual Fund Operating Expenses 1.23%

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN THE FUND FOR THE TIME PERIODS
INDICATED AND THEN REDEEM ALL OF YOUR SHARES AT THE END OF THOSE PERIODS.
THE EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND
THAT THE FUND'S OPERATING EXPENSES REMAIN THE SAME. ALTHOUGH YOUR ACTUAL
COSTS MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS YOUR COSTS WOULD
BE:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
LB World Growth Fund $125 $390 $676 $1,489

YOU WOULD PAY THE FOLLOWING EXPENSES IF YOU DID NOT REDEEM YOUR SHARES:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
LB World Growth Fund $125 $390 $676 $1,489

LUTHERAN BROTHERHOOD GROWTH FUND

INVESTMENT OBJECTIVE. The investment objective of the Lutheran
Brotherhood Growth Fund ("LB Growth Fund") is to achieve long-term growth of
capital.

The success of the Fund's investment strategy depends significantly on
LB Research's skill in assessing the potential of the securities in which
the Fund invests. Shares of the LB Growth Fund will rise and fall in value
and there is a risk that you could lose money by investing in the Fund. The
LB Growth Fund cannot be certain that it will achieve its objective.

The LB Growth Fund commenced operations on October 29, 1999. No bar
chart or performance table has been included for the LB Growth Fund.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy
and hold shares of the LB Growth Fund. The Institutional Class shares of
the Fund have no sales charge (load) and no 12b-1 distribution fees.

SHAREHOLDER FEES (fees paid directly from
your investment)
Maximum Sales Charge (Load) None
Maximum Deferred Sales Charge (Load) None

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund
assets)
Management Fees 0.43%
Other Expenses(including a 0.15% shareholder servicing fee)(1) 0.72%
Total Annual Fund Operating Expenses(2) 1.15%

(1) Because the LB Growth Fund has been newly organized, the percentage
expense levels shown in the table as "Other Expenses" are based on
estimates.

(2) LB Research has voluntarily agreed to temporarily waive a portion of
its advisory fee and, if necessary, to bear certain expenses associated with
operating LB Growth Fund in order to limit the Total Annual Fund Operating
Expenses for the Institutional Class to an annual rate of 1.05% of the
average net assets. This temporary waiver and expense provision may be
discontinued at any time.

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN THE FUND FOR THE TIME PERIODS
INDICATED AND THEN REDEEM ALL OF YOUR SHARES AT THE END OF THOSE PERIODS.
THE EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND
THAT THE FUND'S OPERATING EXPENSES REMAIN THE SAME. ALTHOUGH YOUR ACTUAL
COSTS MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS YOUR COSTS WOULD
BE:

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

LB Growth Fund $117 $365

YOU WOULD PAY THE FOLLOWING EXPENSES IF YOU DID NOT REDEEM YOUR SHARES:

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

LB Growth Fund $117 $365

LUTHERAN BROTHERHOOD FUND

INVESTMENT OBJECTIVE. The investment objective of the Lutheran
Brotherhood Fund ("LB Fund") is to seek growth of capital and income.

PRINCIPAL STRATEGIES. The principal strategy for achieving this objective
is to invest in the common stocks of leading U.S. domestic and multi-
national companies. LB Research, the Fund's investment adviser, uses
fundamental and technical investment research techniques to identify stocks
of companies that it believes have a leading position and successful
business strategy within their industry. (Fundamental investment analysis
and technical investment analysis are defined on Page _.) The Fund invests
primarily (at least 65%) in stocks of companies with large market
capitalizations, which LB Research believes have balance sheet strength and
profitability. LB Research seeks to invest in companies with a strong
management team that will develop business strategies which lead to sales
and earnings growth and improving relative stock value.

VOLATILITY AND PERFORMANCE

The bar chart and the table include the effects of Fund expenses and
assume that you sold your shares at the end of the period. The returns
shown for the Fund include performance from before the creation of the
Institutional Class shares on October 31, 1997. The LB Fund commenced
operations on June 2, 1970. Prior to October 31, 1997, the shares of the
Fund had no specific class designation. As of that date, all of the
outstanding shares were redesignated as Class A shares and, immediately
thereafter, shares held by Lutheran institutions and church organizations
with accounts of at least $100,000 were converted to Institutional Class
shares. If the returns reflected the current shareholder servicing fee of
0.15% per year, the returns would be lower than those shown. How a Fund has
performed in the past is not necessarily an indication of how it will
perform in the future.

[GRAPHIC BAR CHART OMITTED: YEAR-BY-YEAR TOTAL RETURN]

Annual
Year Return

1989 26.61%
1990 -1.95%
1991 32.77%
1992 5.80%
1993 8.69%
1994 -3.41%
1995 32.04%
1996 17.22%
1997 27.95%
1998 23.64%

Best Quarter: Q4 '98 +22.65%
Worst Quarter: Q3 '98 -13.60%

Footnote reads:
The Fund's year-to-date return (Institutional Class) as of 9/30/99 (not
annualized) was 5.21%

Average Annual Total Returns
(periods ending
December 31, 1998)
-----------------------------
1-Year 5-Years 10-Years

LB Fund (Institutional Class) 23.64% 18.77% 16.18%

S&P 500 Index 28.59% 24.03% 19.19%

The S&P 500 Index is an unmanaged index which measures the performance
of 500 widely held common stocks of large-cap companies.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy
and hold shares of the LB Fund. The Institutional Class shares of the Fund
have no sales charge (load) and no 12b-1 distribution fees.

SHAREHOLDER FEES (fees paid directly from
your investment)
Maximum Sales Charge (Load) None
Maximum Deferred Sales Charge (Load) None

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund
assets)
Management Fees 0.35%
Other Expenses (including a 0.15% shareholder
servicing fee) 0.25%
Total Annual Fund Operating Expenses (1) 0.60%

(1) LB Research voluntarily agreed to temporarily waive a portion of its
advisory fees equal to 0.05% of the average daily net assets of the LB Fund.
With this waiver, the Total Annual Fund Operating Expenses would be 0.55%
for the Institutional Class. The temporary waiver may be discontinued at
any time.

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN THE FUND FOR THE TIME PERIODS
INDICATED AND THEN REDEEM ALL OF YOUR SHARES AT THE END OF THOSE PERIODS.
THE EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND
THAT THE FUND'S OPERATING EXPENSES REMAIN THE SAME. ALTHOUGH YOUR ACTUAL
COSTS MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS YOUR COSTS WOULD
BE:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
LB Fund $61 $192 $335 $750

YOU WOULD PAY THE FOLLOWING EXPENSES IF YOU DID NOT REDEEM YOUR SHARES:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
LB Fund $61 $192 $335 $750

LUTHERAN BROTHERHOOD VALUE FUND

INVESTMENT OBJECTIVE. The investment objective of the Lutheran
Brotherhood Value Fund ("LB Value Fund") is to achieve long-term growth of
capital.

The Fund will invest primarily in U.S. companies, although it may also
invest in foreign companies.

The success of the Fund's investment strategy depends significantly on
LB Research's skill in assessing the potential of the securities in which
the Fund invests. Shares of the LB Value Fund will rise and fall in value
and there is a risk that you could lose money by investing in the Fund. The
LB Value Fund cannot be certain that it will achieve its objective.

The LB Value Fund commenced operations on October 29, 1999. No bar
chart or performance table has been included for the LB Value Fund.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy
and hold shares of the LB Value Fund. The Institutional Class shares of the
Fund have no sales charge (load) and no 12b-1 distribution fees.

SHAREHOLDER FEES (fees paid directly from
your investment)
Maximum Sales Charge (Load) None
Maximum Deferred Sales Charge (Load) None

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund
assets)
Management Fees 0.40%
Other Expenses(including a 0.15% shareholder servicing fee)(1) 0.72%
Total Annual Fund Operating Expenses(2) 1.12%

(1) Because the LB Value Fund has been newly organized, the percentage
expense levels shown in the table as "Other Expenses" are based on
estimates.

(2) LB Research has voluntarily agreed to temporarily waive a portion of
its advisory fee and, if necessary, to bear certain expenses associated with
operating LB Value Fund in order to limit the Total Annual Fund Operating
Expenses for the Institutional Class to an annual rate of 1.05% of the
average net assets. This temporary waiver and expense provision may be
discontinued at any time.

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN THE FUND FOR THE TIME PERIODS
INDICATED AND THEN REDEEM ALL OF YOUR SHARES AT THE END OF THOSE PERIODS.
THE EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND
THAT THE FUND'S OPERATING EXPENSES REMAIN THE SAME. ALTHOUGH YOUR ACTUAL
COSTS MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS YOUR COSTS WOULD
BE:

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

LB Value Fund $114 $356

YOU WOULD PAY THE FOLLOWING EXPENSES IF YOU DID NOT REDEEM YOUR SHARES:

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

LB Value Fund $114 $356

LUTHERAN BROTHERHOOD HIGH YIELD FUND

INVESTMENT OBJECTIVE. The investment objective of the Lutheran
Brotherhood High Yield Fund ("LB High Yield Fund") is to obtain high current
income, and, secondarily, growth of capital.

Generally, when interest rates rise, bond prices fall, which may cause
the price of shares of the LB High Yield Fund to fall as well. Bonds with
longer durations and maturities tend to be more sensitive to changes in
interest rates than bonds with shorter durations or maturities. (Maturity
is a measure of the remaining time before the bond must be repaid. Duration
is a measure of the effective, as opposed to the actual, maturity of a
fixed-income security. Duration considers the bond's cash flows and the
time value of money.) In general, the prices at which lower quality bonds
are traded before they mature may be more affected by the financial health
of the issuer and the economy and less by changes in interest rates.

The success of the Fund's investment strategy depends significantly on
LB Research's skill in assessing the potential of the securities in which
the Fund invests. Shares of the LB High Yield Fund will rise and fall in
value and there is a risk that you could lose money by investing in the
Fund. The LB High Yield Fund cannot be certain that it will achieve its
objective.

VOLATILITY AND PERFORMANCE

The bar chart and the table include the effects of Fund expenses and
assume that you sold your shares at the end of the period. The returns
shown for the Fund include performance from before the creation of the
Institutional Class shares on October 31, 1997. The LB High Yield Fund
commenced operations on April 13, 1987. Prior to October 31, 1997, the
shares of the Fund had no specific class designation. As of that date, all
of the outstanding shares were redesignated as Class A shares and,
immediately thereafter, shares held by Lutheran institutions and church
organizations with accounts of at least $100,000 were converted to
Institutional Class shares. If the returns reflected the current
shareholder servicing fee of 0.15% per year, the returns would be lower than
those shown. How a Fund has performed in the past is not necessarily an
indication of how it will perform in the future.

[GRAPHIC BAR CHART OMITTED: YEAR-BY-YEAR TOTAL RETURN]

Annual
Year Return

1989 -2.68%
1990 -7.44%
1991 36.09%
1992 20.12%
1993 20.86%
1994 -5.29%
1995 19.38%
1996 10.96%
1997 13.51%
1998 -1.70%

Best Quarter: Q1 '91 +13.06%
Worst Quarter: Q3 '98 -8.61%

Footnote reads:
The Fund's year-to-date return (Institutional Class) as of 9/30/99 (not
annualized)was 3.11%

Average Annual Total Returns
(periods ending
December 31, 1998)
-----------------------------
1-Year 5-Years 10-Years

LB High Yield Fund (Institutional Class) -1.70% 6.96% 9.55%

Lehman High Yield Index 1.87% 8.57% 10.54%

The Lehman High Yield Index is an unmanaged index which measures the
performance of fixed-rate non-investment grade bonds.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy
and hold shares of the LB High Yield Fund. The Institutional Class shares of
the Fund have no sales charge (load) and no 12b-1 distribution fees.

SHAREHOLDER FEES (fees paid directly from
your investment)
Maximum Sales Charge (Load) None
Maximum Deferred Sales Charge (Load) None

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund
assets)
Management Fees 0.38%
Other Expenses (including a 0.15% shareholder
servicing fee) 0.25%
Total Annual Fund Operating Expenses (1) 0.63%

(1) LB Research has voluntarily agreed to temporarily waive a portion of
its advisory fees equal to 0.05% of the average daily net assets of the LB
High Yield Fund. With this waiver, the Total Annual Fund Operating Expenses
would be 0.58% for the Institutional Class shares. The temporary waiver may
be discontinued at any time.

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN THE FUND FOR THE TIME PERIODS
INDICATED AND THEN REDEEM ALL OF YOUR SHARES AT THE END OF THOSE PERIODS.
THE EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND
THAT THE FUND'S OPERATING EXPENSES REMAIN THE SAME. ALTHOUGH YOUR ACTUAL
COSTS MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS YOUR COSTS WOULD
BE:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
LB High Yield Fund $64 $202 $351 $786

YOU WOULD PAY THE FOLLOWING EXPENSES IF YOU DID NOT REDEEM YOUR SHARES:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
LB High Yield Fund $64 $202 $351 $786

LUTHERAN BROTHERHOOD INCOME FUND

The success of the Fund's investment strategy depends significantly on
LB Research's skill in assessing the potential of the securities in which
the Fund invests. Shares of the LB Income Fund will rise and fall in value
and there is a risk that you could lose money by investing in the Fund. The
LB Income Fund cannot be certain that it will achieve its goal.

VOLATILITY AND PERFORMANCE

The bar chart and the table include the effects of Fund expenses and
assume that you sold your shares at the end of the period. The returns
shown for the Fund include performance from before the creation of the
Institutional Class shares on October 31, 1997. The LB Income Fund
commenced operations on June 1, 1972. Prior to October 31, 1997, the shares
of the Fund had no specific class designation. As of that date, all of the
outstanding shares were redesignated as Class A shares and, immediately
thereafter, shares held by Lutheran institutions and church organizations
with accounts of at least $100,000 were converted to Institutional Class
shares. If the returns reflected the current shareholder servicing fee of
0.15% per year, the returns would be lower than those shown. How a Fund has
performed in the past is not necessarily an indication of how it will
perform in the future.

[GRAPHIC BAR CHART OMITTED: YEAR-BY-YEAR TOTAL RETURN]

Annual
Year Return

1989 12.44%
1990 5.68%
1991 17.24%
1992 8.00%
1993 10.12%
1994 -4.86%
1995 18.82%
1996 2.21%
1997 8.40%
1998 9.18%

Best Quarter: Q2 '89 +8.30%
Worst Quarter: Q1 '94 -3.97%

Footnote reads:
The Fund's year-to-date return (Institutional Class) as of 9/30/99 (not
annualized) was -1.19%

Average Annual Total Returns
(periods ending
December 31, 1998)
-----------------------------
1-Year 5-Years 10-Years

LB Income Fund (Institutional Class) 9.18% 6.46% 8.52%

Lehman Aggregate Bond Index 8.69% 7.27% 9.26%

The Lehman Aggregate Bond Index is an unmanaged index which measures
the performance of U.S. investment grade bonds.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy
and hold shares of the LB Income Fund. The Institutional Class shares of the
Fund have no sales charge (load) and no 12b-1 distribution fees.

SHAREHOLDER FEES (fees paid directly from
your investment)
Maximum Sales Charge (Load) None
Maximum Deferred Sales Charge (Load) None

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund
assets)
Management Fees 0.34%
Other Expenses (including a 0.15% shareholder
servicing fee) 0.25%
Total Annual Fund Operating Expenses (1) 0.59%

(1) LB Research has voluntarily agreed to temporarily waive a portion of
its advisory fees equal to .05% of the average daily net assets of the LB
Income Fund. With this waiver, the Total Annual Fund Operating Expenses
would be 0.54% for the Institutional Class shares. The temporary waiver may
be discontinued at any time.

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN THE FUND FOR THE TIME PERIODS
INDICATED AND THEN REDEEM ALL OF YOUR SHARES AT THE END OF THOSE PERIODS.
THE EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND
THAT THE FUND'S OPERATING EXPENSES REMAIN THE SAME. ALTHOUGH YOUR ACTUAL
COSTS MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS YOUR COSTS WOULD
BE:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
LB Income Fund $60 $189 $329 $738

YOU WOULD PAY THE FOLLOWING EXPENSES IF YOU DID NOT REDEEM YOUR SHARES:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
LB Income Fund $60 $189 $329 $738

LUTHERAN BROTHERHOOD MUNICIPAL BOND FUND

PRINCIPAL RISKS. The LB Municipal Bond Fund's principal risks are
those of debt investing, including increases in interest rates and loss of
principal. Generally, when interest rates rise, bond prices fall, which may
cause the price of shares of LB Municipal Bond Fund to fall as well. Bond
prices fall because bonds issued after rates rise will offer higher yields,
making older bonds with lower rates less attractive. To raise the effective
yield on older bonds, holders of the older bonds must discount their prices.
Bonds with longer durations and maturities tend to be more sensitive to
changes in interest rates than bonds with shorter durations or maturities.
(Effective yield is defined on Page __, and duration and maturity are
defined on Page __.) The Fund's performance may be affected by political
and economic conditions at the state, regional or federal level. These may
include budgetary problems, declines in the tax base and other factors that
may cause rating agencies to downgrade the credit ratings on certain issues.
Actual or proposed changes in tax rates, regulations or federal programs
could also affect your net return on investment.

VOLATILITY AND PERFORMANCE

The bar chart and the table include the effects of Fund expenses and
assume that you sold your shares at the end of the period. The returns
shown for the Fund include performance from before the creation of the
Institutional Class shares on October 31, 1997. The LB Municipal Bond Fund
commenced operations on December 3, 1976. Prior to October 31, 1997, the
shares of the Fund had no specific class designation. As of that date, all
of the outstanding shares were redesignated as Class A shares and,
immediately thereafter, shares held by Lutheran institutions and church
organizations with accounts of at least $100,000 were converted to
Institutional Class shares. If the returns reflected the current
shareholder servicing fee of 0.15% per year, the returns would be lower than
those shown. How a Fund has performed in the past is not necessarily an
indication of how it will perform in the future.

[GRAPHIC BAR CHART OMITTED: YEAR-BY-YEAR TOTAL RETURN]

Annual
Year Return

1989 10.06%
1990 6.55%
1991 12.17%
1992 8.95%
1993 12.97%
1994 -6.57%
1995 18.18%
1996 3.44%
1997 9.38%
1998 6.34%

Best Quarter: Q1 '95 +7.50%
Worst Quarter: Q1 '94 -6.34%

Footnote reads:
The Fund's year-to-date return (Institutional Class) as of 9/30/99 (not
annualized) was -1.70%

Average Annual Total Returns
(periods ending
December 31, 1998)
-----------------------------
1-Year 5-Years 10-Years

LB Municipal Bond Fund (Institutional Class) 6.34% 5.84% 7.95%

Lehman Municipal Bond Index 6.48% 6.23% 8.21%

The Lehman Municipal Bond Index is an unmanaged index which measures
the performance of investment grade tax-exempt bonds.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy
and hold shares of the LB Municipal Bond Fund. The Institutional Class
shares of the Fund have no sales charge (load) and no 12b-1 distribution
fees.

SHAREHOLDER FEES (fees paid directly from
your investment)
Maximum Sales Charge (Load) Imposed on Purchases None
Maximum Deferred Sales Charge (Load) None

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund
assets)
Management Fees 0.32%
Other Expenses (including a 0.15% shareholder
servicing fee) 0.24%
Total Annual Fund Operating Expenses (1) 0.56%

(1) LB Research has voluntarily agreed to temporarily waive a portion of
its advisory fees equal to 0.05% of the average daily net assets of the LB
Municipal Bond Fund. With this waiver, the Total Annual Fund Operating
Expenses would be 0.51% for the Institutional Class shares. The temporary
waiver may be discontinued at any time.

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN THE FUND FOR THE TIME PERIODS
INDICATED AND THEN REDEEM ALL OF YOUR SHARES AT THE END OF THOSE PERIODS.
THE EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND
THAT THE FUND'S OPERATING EXPENSES REMAIN THE SAME. ALTHOUGH YOUR ACTUAL
COSTS MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS YOUR COSTS WOULD
BE:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
LB Municipal Bond Fund $57 $179 $313 $701

YOU WOULD PAY THE FOLLOWING EXPENSES IF YOU DID NOT REDEEM YOUR SHARES:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
LB Municipal Bond Fund $57 $179 $313 $701

LUTHERAN BROTHERHOOD LIMITED MATURITY BOND FUND

The success of the Fund's investment strategy depends significantly on
LB Research's skill in assessing the potential of the securities in which
the Fund invests. Shares of the LB Limited Maturity Bond Fund will rise and
fall in value and there is a risk that you could lose money by investing in
the Fund. The LB Limited Maturity Bond Fund cannot be certain that it will
achieve its objective.

The LB Limited Maturity Bond Fund commenced operations on October 29,
1999. No bar chart or performance table has been included for the LB
Limited Maturity Bond Fund.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and
hold shares of the LB Limited Maturity Bond Fund. The Institutional Class
shares of the Fund have no sales charge (load) and no 12b-1 distribution
fees.

SHAREHOLDER FEES (fees paid directly from
your investment)
Maximum Sales Charge (Load) None
Maximum Deferred Sales Charge (Load) None

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund
assets)
Management Fees 0.30%
Other Expenses(including a 0.15% shareholder servicing fee)(1) 0.72%
Total Annual Fund Operating Expenses(2) 1.02%

(1) Because the LB Limited Maturity Bond Fund has been newly organized, the
percentage expense levels shown in the table as "Other Expenses" are based
on estimates.

(2) LB Research has voluntarily agreed to temporarily waive a portion of
its advisory fee and, if necessary, to bear certain expenses associated with
operating LB Limited Maturity Bond Fund in order to limit the Total Annual
Fund Operating Expenses for the Institutional Class to an annual rate of
0.70% of the average net assets. This temporary waiver and expense
provision may be discontinued at any time.

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN THE FUND FOR THE TIME PERIODS
INDICATED AND THEN REDEEM ALL OF YOUR SHARES AT THE END OF THOSE PERIODS.
THE EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND
THAT THE FUND'S OPERATING EXPENSES REMAIN THE SAME. ALTHOUGH YOUR ACTUAL
COSTS MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS YOUR COSTS WOULD
BE:

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

LB Limited Maturity Bond Fund $104 $325

YOU WOULD PAY THE FOLLOWING EXPENSES IF YOU DID NOT REDEEM YOUR SHARES:

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

LB Limited Maturity Bond Fund $104 $325

LUTHERAN BROTHERHOOD MONEY MARKET FUND

INVESTMENT OBJECTIVE. The investment objective of the Lutheran
Brotherhood Money Market Fund ("LB Money Market Fund") is current income
consistent with stability of principal.

PRINCIPAL STRATEGIES. The LB Money Market Fund tries to produce
current income while preserving the value of your shares by investing in
high quality, short term money market instruments that mature in 397 days or
less, including U.S. dollar-denominated commercial paper, bank instruments
such as certificates of deposit, U.S. government discount notes, and U.S.
Treasury Bills. LB Research, the Fund's investment adviser, uses
fundamental investment research techniques to determine what money market
instruments to buy and sell. (Fundamental investment analysis is defined on
Page _.) Under normal market conditions, the Fund invests primarily in
prime commercial paper. LB Research looks for prime commercial paper issued
by corporations which it believes are financially sound, have strong cash
flows, and solid capital levels, are leaders in their industry and have
experienced management.

VOLATILITY AND PERFORMANCE

The bar chart and the table include the effects of Fund expenses and
assume that you sold your shares at the end of the period. The returns
shown for the Fund include performance from before the creation of the
Institutional Class shares on October 31, 1997. The LB Money Market Fund
commenced operations on February 1, 1979. Prior to October 31, 1997, the
shares of the Fund had no specific class designation. As of that date, all
of the outstanding shares were redesignated as Class A shares and,
immediately thereafter, shares held by Lutheran institutions and church
organizations with accounts of at least $100,000 were converted to
Institutional Class shares. If the returns reflected the current
shareholder servicing fee of 0.15% per year, the returns would be lower than
those shown. How a Fund has performed in the past is not necessarily an
indication of how it will perform in the future.

[GRAPHIC BAR CHART OMITTED: YEAR-BY-YEAR TOTAL RETURN]

Annual
Year Return

1989 8.50%
1990 7.49%
1991 5.35%
1992 2.89%
1993 2.20%
1994 3.28%
1995 5.00%
1996 4.60%
1997 4.85%
1998 4.99%

Best Quarter: Q2 '89 +2.21%
Worst Quarter: Q3 '93 +0.54%

Footnote reads:
The Fund's year-to-date return (Institutional Class) as of 9/30/99 (not
annualized) was 3.32%

Average Annual Total Returns
(periods ending
December 31, 1998)
-----------------------------
1-Year 5-Years 10-Years

LB Money Market Fund (Institutional Class) 4.99% 4.54% 4.90%

You may call 1-800-328-4552 to obtain the Fund's current 7-day yield.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy
and hold shares of the LB Money Market Fund. The Institutional Class shares
of the Fund have no sales charge (load) and no 12b-1 distribution fees.

SHAREHOLDER FEES (fees paid directly from
your investment)
Maximum Sales Charge (Load) None
Maximum Deferred Sales Charge (Load) None

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund
assets)
Management Fees 0.25%
Other Expenses (including a 0.15% shareholder
servicing fee) 0.35%
Total Fund Operating Expenses (1) 0.60%

(1) LB Research has voluntarily agreed to temporarily waive a portion of
its advisory fees, and, if necessary, to bear certain expenses associated
with operating LB Money Market Fund in order to limit the Total Annual Fund
Operating Expenses for Class A shares to 0.95% of the average net assets and
to waive the same percentage for Institutional Class shares. For the year
ended October 31, 1999, the amount of the waiver was 0.05% of average net
assets. This temporary waiver and expense provision may be discontinued at
any time.

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN THE FUND FOR THE TIME PERIODS
INDICATED AND THEN REDEEM ALL OF YOUR SHARES AT THE END OF THOSE PERIODS.
THE EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND
THAT THE FUND'S OPERATING EXPENSES REMAIN THE SAME. ALTHOUGH YOUR ACTUAL
COSTS MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS YOUR COSTS WOULD
BE:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
LB Money Market Fund $61 $192 $335 $750

YOU WOULD PAY THE FOLLOWING EXPENSES IF YOU DID NOT REDEEM YOUR SHARES:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
LB Money Market Fund $61 $192 $335 $750

MANAGEMENT

LB Research, 625 Fourth Avenue South, Minneapolis, Minnesota 55415,
serves as investment adviser for each of the Funds. LB Research is owned by
Lutheran Brotherhood Financial Corporation, which in turn is owned by
Lutheran Brotherhood. Lutheran Brotherhood and LB Research have been in the
investment advisory business since 1970 and managed over $24.2 billion in
assets as of September 30, 1999, including $12.4 billion in mutual fund
assets. LB Research provides investment research and supervision of the
Funds' investments. The following individuals are responsible for the day-
to-day management of the Funds.

LB MID CAP GROWTH FUND

LB GROWTH FUND

LB FUND

James M. Walline, vice president of LB Research, has been the
portfolio manager of LB Fund since 1994. Mr. Walline has been with Lutheran
Brotherhood and LB Research since 1968.

LB VALUE FUND

LB HIGH YIELD FUND

LB INCOME FUND

LB MUNICIPAL BOND FUND

LB LIMITED MATURITY BOND FUND

LB MONEY MARKET FUND

Gail R. Onan, assistant vice president of LB Research, has been the
portfolio manager of LB Money Market Fund since 1994. Ms. Onan has been
with Lutheran Brotherhood and LB Research since 1969.

LB OPPORTUNITY GROWTH FUND

LB WORLD GROWTH FUND

LB Research has engaged Price-Fleming, 100 East Pratt Street,
Baltimore, Maryland 21202, as investment sub-advisor for LB World Growth
Fund. Price-Fleming is one of the world's largest international mutual fund
asset managers with the U.S. equivalent of over $33 billion under management
as of June 30, 1999 in its offices in Baltimore, London, Tokyo, Singapore,
Paris, Hong Kong, and Buenos Aires. Price-Fleming has an investment advisory
group that has day-to-day responsibility for managing the Fund and
developing and executing the Fund's investment program.

Each Fund pays an investment advisory fee to LB Research. During the
fiscal year ended October 31, 1999, LB Research received the following
advisory fees, expressed as a percentage of the Fund's net assets:

The advisory contract between LB Research and The Lutheran Brotherhood
Family of Funds provides that LB Growth Fund, LB Value Fund, and LB Limited
Maturity Bond Fund pay the following advisory fees:

Limited
Growth Value Maturity
Fund Fund Bond Fund

$500 million or less 0.425% 0.40% 0.30%

Over $500 million but not over
$1 billion 0.375% 0.35% 0.275%

Over $1 billion 0.325% 0.30% 0.25%

LB Research has voluntarily agreed to temporarily waive a portion of
its advisory fee for the LB Growth Fund, LB Value Fund, and the LB Limited
Maturity Bond Fund and, if necessary, to bear certain expenses associated
with operating each Fund in order to limit the Total Fund Operating Expenses
of each Fund. See the footnotes to the Fees and Expenses Table for each
Fund.

YOUR INVESTMENT

INSTITUTIONAL CLASS SHARES

The Lutheran Brotherhood Family of Funds has adopted a system of
multiple classes of shares for each of the Funds. There is no sales load
imposed in connection with the purchase of Institutional Class shares and
such shares are not subject to any Rule 12b-1 fee. There is a shareholder
servicing fee of 0.15% each year on the average daily net assets of
Institutional Class shares. Institutional Class shares are offered to
Lutheran institutions, Lutheran church organizations, retirement plans
sponsored by Lutheran institutions and Lutheran participants in the
Allocation Advantage(sm) mutual fund asset allocation program offered by
Lutheran Brotherhood Securities Corp. ("LBSC") Because the sales charges and
expenses vary between the Class A shares, Class B shares and Institutional
Class shares, performance will vary with respect to each class. A copy of
the Class A and Class B prospectus may be obtained by writing us, calling
toll free 1-800-990-6290, or downloading it from our Web site
(www.luthbro.com).

BUYING SHARES

INITIAL PURCHASES

To make your first purchase of Institutional Class shares of the Funds:

REQUIRED MINIMUM INVESTMENTS

The minimum aggregate investment in The Lutheran Brotherhood Family of
Funds for retirement plans sponsored by Lutheran institutions is $100,000,
which can be allocated among any number of the Funds. The minimum investment
in a Fund for other Lutheran institutions is $100,000.

The Allocation Advantage program is a fee-based investment advisory
service which LBSC offers to persons who make an initial investment of
$100,000. Lutheran participants in the Allocation Advantage program may
purchase Institutional Class shares of any Fund by making an initial minimum
investment of $5,000 for a non-IRA account and $1,000 for an IRA account.
LBSC will charge participants in the Allocation Advantage program a fee of
$50.00 for any redemption of shares of a mutual fund that have been held in
the participant's account for less than six months. However, if the
redemption of shares is made through our Systematic Withdrawal Plan, LBSC
will charge the participant a fee of $5.00 for each such redemption. In
addition, LBSC will also charge a fee of $15.00 for any redemption from a
participant's account of shares of a mutual fund that is not available
through the Allocation Advantage program.

The minimum investment required for additional purchases is $100 for
Allocation Advantage clients and $1,000 for other investors.

CERTIFICATES AND STATEMENTS

ADDITIONAL PURCHASES

You may purchase additional shares of any of the Funds by sending a
check payable to "The Lutheran Brotherhood Family of Funds" together with a
completed investment ticket to:

Lutheran Brotherhood Securities Corp.
PO Box 59025
Minneapolis, MN 55459-0025

You may also buy additional shares through:

o your LBSC registered representative
o the Systematic Investment Plan
o Invest-by-Phone
o the Internet
o Federal Reserve or bank wire

NET ASSET VALUE

INVEST-BY-PHONE

When you sign up for our Invest-by-Phone service, you can purchase
additional shares by telephone. We will draw your funds directly from your
preauthorized bank or credit union account. Your bank or credit union must
be a member of the Automated Clearing House system. To use this service,
call 1-800-328-4552 for the Automated Service Line or 1-800-990-6290 to
speak witha customer service associate. You may also redeem shares by
telephone. See "Redeeming Shares."

INVESTOR ACCESS ONLINE

You may buy or sell shares of your Lutheran Brotherhood Family of Funds
by using Investor Access OnLine at www.luthbro.com.

FEDERAL RESERVE OR BANK WIRE

You may purchase shares by a 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 LBSC of a pending wire, call: 1-800-990-6290

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 number and account number, and LBSC
registered representative name and number.

EXCHANGING SHARES BETWEEN FUNDS

You may exchange some or all of your shares of one Fund for shares of
the same class of any of the other Funds. In addition, shareholders who are
eligible to purchase Institutional Class shares may exchange some or all of
their Class A or Class B shares for Institutional Class shares. All
exchanges will be based on the NAV of the shares you are exchanging and the
shares you are acquiring and will be subject to the minimum investment
requirements. You may obtain an exchange form or receive more information
about making exchanges between Funds by contacting your LBSC registered
representative. We may modify or terminate our policies on exchanges in the
future. If the exchange policies are materially modified or terminated, we
will give you 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 $1,000. Telephone exchanges may be made into new or
existing Fund accounts, and all accounts involved in telephone exchanges
must have the same ownership registration. You may request a telephone
exchange by calling toll-free 1-800-328-4552 (using the Automated Service
Line) or 1-800-990-6290 to speak with a customer service associate.

REDEEMING SHARES

WAYS TO REDEEM

You may redeem your shares:

o in writing

o through Redeem-by-Phone

o on the Internet

o through the Systematic Withdrawal Plan

WRITTEN REQUESTS

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

Lutheran Brotherhood Securities Corp.
P.O. Box 9491
Minneapolis, Minnesota 55440-9491

The signature of an authorized representative of your institution must
be guaranteed by:

o a trust company or commercial bank

o a savings association

o a credit union

o a securities broker, dealer, exchange, association, or clearing
agency

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

REDEEM-BY-PHONE

If you complete an Account Features Request, you may redeem any amount
of at least $1,000 by calling 1-800-328-4552 to use our Automated Service
Line or 1-800-990-6290 to speak with a customer service associate. Based on
your instructions, we will send you a check or send the funds electronically
to your commercial bank, savings bank or credit union by the third business
day after your redemption request. This feature is NOT available on IRA or
other tax-deferred plans.

INVESTOR ACCESS ONLINE

You may redeem some or all of your shares by using Investor Access
OnLine at www.luthbro.com.

SYSTEMATIC WITHDRAWAL PLAN

If you own shares with a value of at least $150,000, you may order
automatic monthly, quarterly, semiannual or annual redemptions in any
amount. The proceeds will be sent to you, your designated payee, or your
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 the automatic payments you requested.

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.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, the
Funds may redeem shares in any account if the value of Institutional Class
shares in the account falls below the required minimum amount for your type
of account.

DISTRIBUTIONS

Dividends. Dividends are declared and paid as follows:

- declared daily and paid monthly LB Limited Maturity Bond Fund
LB Money Market Fund

- declared monthly and paid monthly LB High Yield Fund
LB Income Fund
LB Municipal Bond Fund

- declared and paid quarterly LB Fund

- declared and paid annually LB Opportunity Growth Fund
LB Mid Cap Growth Fund
LB World Growth Fund
LB Growth Fund
LB Value Fund

Income dividends are derived from investment income, including
dividends, interest, and certain foreign currency gains received by a Fund.

Capital Gains. Capital gains distributions, if any, usually will be
declared in December.

Distribution Options. When completing your application, you must select
one of the following three options for dividends and capital gains
distributions:

o Full Reinvestment in a Different Fund. You may also choose to have
your dividends reinvested into an existing account in another Fund
within The Lutheran Brotherhood Family of Funds.

o Part Cash and Part Reinvestment. You may request to have part of
your dividends part in cash and part of your dividends reinvested in
additional shares of the same class of that Fund.

Distributions paid in shares will be credited to your account at the
next determined NAV per share.

TAXES

In general, any dividends and short-term capital gains distributions
you receive from a Fund are taxable as ordinary income. Distributions of
other net capital gains by a Fund are generally taxable as capital gains -
in most cases, at different rates from those that apply to ordinary income.
We expect that dividends from LB Opportunity Growth Fund, LB Mid Cap Growth
Fund, LB World Growth Fund, LB Growth Fund, LB Fund, and LB Value Fund will
consist primarily of capital gains and that dividends from LB High Yield
Fund, LB Income Fund, LB Limited Maturity Bond Fund and LB Money Market Fund
will consist primarily of ordinary income.

Every year, the Funds will send you information detailing the amount of
ordinary income and capital gains distributed to you for the previous year.
The sale of shares in your account may produce a gain or loss, and is a
taxable event. For tax purposes, an exchange between Funds is the same as a
sale. You will not be required to pay federal income tax on exchanges of
Class A or Class B shares of a Fund for Institutional Class Shares of the
same Fund.

Your investment in the Funds could have additional tax consequences.
Please consult your tax professional for assistance.

By law, the Funds must withhold 31% of your distributions and proceeds
if you have not provided complete, correct taxpayer information.

OTHER SECURITIES AND INVESTMENT PRACTICES

The principal investment strategies and risk factors of each Fund are
outlined beginning on page __. The Funds may also invest in other
securities and engage in other practices. This section provides additional
information about some of the securities and other practices in which
certain Funds may engage, along with their associated risks.

While hedging can guard against potential risks, it adds to the fund's
expenses and can eliminate some opportunities for gains. There is also a
risk that a derivative intended as a hedge may not perform as expected.

The main risk with derivatives is that some types can amplify a gain or
loss, potentially earning or losing substantially more money than the actual
cost of the derivative.

DEFENSIVE INVESTING. During unusual market conditions, each Fund
except LB Money Market Fund may temporarily place up to 100% of its total
assets in cash or quality short-term debt securities. To the extent that
the Fund does this, it is not pursuing its investment objective.

FINANCIAL HIGHLIGHTS

The financial highlights tables for each of the Funds are intended to
help you understand the Funds' financial performance for the past 5 years
or, if shorter, the period of the Funds' operations. The total returns in
the table represent the rate that an investor would have earned or lost on
an investment in a Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by PricewaterhouseCoopers
LLP, independent accounts, whose report, along with the Funds' financial
statements, are included in the Annual Report to Shareholders for the fiscal
year ended October 31, 1999, which is available upon request. Shares of the
Funds had no class designations until October 31, 1997, when designations
were assigned based on the sales charges, Rule 12b-1 fees and shareholder
servicing fees applicable to shares sold after that date. There are no
tables for LB Growth Fund, LB Value Fund, and LB Limited Maturity Bond Fund
since they commenced operations on October 29, 1999.

<PAGE>
<TABLE>
<CAPTION>
LB OPPORTUNITY GROWTH FUND

LB MID CAP GROWTH FUND

INSTITUTIONAL CLASS SHARES CLASS A SHARES
------------------------------ ----------------------
For the period from
May 30, 1997
Year Ended Year Ended (effective date)
10/31/99 10/31/98 to October 31, 1997
---------- ---------- ---------------------
<S> <C> <C> <C>

Net Asset Value, Beginning of Period ...................... $ 9.21 $10.33 $ 9.25
------ ------ ------
Investment Operations:
Net Investment Income...................................... (0.14) 0.39 (0.02)
Net Realized and Unrealized Gain
(Loss) on Investments ................................... 3.92 (0.90) 1.10
------ ------ ------
Total from Investment Operations .......................... 3.78 (0.51) 1.08
------ ------ ------
Less Distributions from:
Net Investment Income......................... -- (0.37) --
Net Realized Gains on Investments............. -- (0.24) --
------ ------ ------
Total Distributions................................ -- (0.61) --
------ ------ ------
Net Asset Value, End of Period .................... $12.99 $ 9.21 $10.33
====== ====== ======
Total Investment Return at
Net Asset Value % ...................................... 41.04% (5.06%) 11.68%
Net Assets, End of Period ($ in millions) ................. $1.2 $0.7 $14.6
Ratio of Expenses to Average
Net Assets (1)............................................ 1.70% 1.70% 1.95%
Ratio of Net Investment Income to
Average Net Assets (1).................................... (1.09%) 2.18% (0.84%)
Portfolio Turnover Rate ................................... 145% 436% 94%
- -----------------
(1) Effective May 30, 1997, LB Research voluntarily agreed to limit the expenses prospectively to 1.95% for
Class A shares, and effective October 31, 1997, LB Research voluntarily agreed to waive the same percentage
amount for Institutional class shares. Had LB Research not undertaken such action, for Class A shares, the
ratio of expenses to average net assets would have been 2.19%, and the ratio of net investment income to
average net assets would have been (1.08%), for the period from May 30, 1997 to October 31, 1997; for
Institutional Class shares, the ratio of expenses to average net assets would have been 1.82% and 1.97%
and the ratio of net investment income to average net assets would have been (1.21%) and 1.91%, respectively,
for the years ended October 31, 1999 and 1998.
</TABLE>

LB WORLD GROWTH FUND

INSTITUTIONAL CLASS SHARES CLASS A SHARES
------------------------- ------------------------------------------------
For the Period From
September 5, 1995
Year Ended Year Ended Year Ended Year Ended (effective date) to
10/31/99 10/31/98 10/31/97 10/31/96 October 31, 1995
----------- ---------- ---------- ---------- -------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............... $10.61 $10.09 $ 9.48 $ 8.44 $ 8.50
------ ------ ------ ------ ------
Income From Investment Operations:
Net Investment Income......................... 0.03 0.04 0.02 0.04 0.01
Net Realized and Unrealized Gain (Loss)
on Investments............................. 2.05 0.66 0.67 1.02 (0.07)
------ ------ ------ ------ ------
Total from Investment Operations................... 2.08 0.70 0.69 1.06 (0.06)
------ ------ ------ ------ ------
Less Distributions from:
Net Investment Income......................... (0.10) (0.04) (0.04) (0.02) --
Net Realized Gains on Investments............. -- (0.14) (0.04) -- --
------ ------ ------ ------ ------
Total Distributions................................ (0.10) (0.18) (0.08) (0.02) --
------ ------ ------ ------ ------
Net Asset Value, End of Period..................... $12.59 $10.61 $10.09 $ 9.48 $ 8.44
====== ====== ====== ====== ======
Total Investment Return at Net Asset Value (%) 19.42% 7.20% 7.38% 12.53% (0.71%)
Net Assets, End of Period (in millions)............ $14.1 $10.4 $75.1 $52.9 $14.0
Ratio of Expenses to Average Net Assets............ 1.63% 1.61% 1.82% 1.95%(1) 1.95%(1)
Ratio of Net Investment Income to Average Net Assets 0.17% 0.31% 0.17% 0.67%(1) 1.60%(1)
Portfolio Turnover Rate............................... 18% 20% 17% 11% 0%
- ------------------
(1) Effective September 5, 1995, LB Research Corp. voluntarily limited the Fund's expense ratio to 1.95%. Had LB
Research not undertaken such action, the ratio of expenses to average net assets would have been 2.13% and 2.89%,
and the ratio of net investment income to average net assets would have been 0.49% and 0.66%, respectively, for
the year ended October 31, 1996 and for the period from September 5, 1995 to October 31, 1995.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
LB FUND

INSTITUTIONAL CLASS SHARES CLASS A SHARES
-------------------------- -----------------------------------------
Year Ended Year ended Year Ended Year Ended Year Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period..... $ 27.95 $ 26.98 $ 23.07 $ 21.19 $ 17.67
------- ------- ------- ------- -------
Investment Operations:
Net Investment Income...... 0.14 0.20 0.19 0.20 0.22
Net Realized and Unrealized
Gain (Loss) on Investments. 6.43 3.57 5.68 3.33 3.52
------- ------- ------- ------- -------
Total from Investment
Operations 6.57 3.77 5.87 3.53 3.74
------- ------- ------- ------- -------
Less Distributions from:
Net Investment Income... (0.15) (0.18) (0.20) (0.20) (0.22)
Net Realized Gain on
Investments............. (3.13) (2.62) (1.76) (1.45) --
------- ------- ------- ------- -------
Total Distributions........ (3.28) (2.80) (1.96) (1.65) (0.22)
------- ------- ------- ------- -------
Net Asset Value End of
Period.................. $ 31.24 $ 27.95 $ 26.98 $ 23.07 $ 21.19
======= ======= ======= ======= =======
Total Investment Return a
Net Asset Value(%)... 25.89% 15.41% 26.99% 17.61% 21.34%
Net Assets, End of Period
(in millions)........... $43.2 $ 28.7 $989.8 $768.8 $645.5
Ratio of Expenses to
Average Net Assets (%)(1) 0.60% 0.61% 0.88% 0.97% 1.02%
Ratio of Net Investment
Income to Average Net
Assets (%) (1).......... 0.49% 0.72% 0.76% 0.94% 1.15%
Portfolio Turnover Rate (%).... 57% 57% 54% 91% 127%
- -----------------------
(1) Effective January 1, 1997, LB Research voluntarily agreed to waive five basis points (0.05%) from the advisory
fees payable by the LB Fund. Had LB Research not undertaken such action, for Class A shares, the ratio of
expenses to average net assets would have been 0.92%, and the ratio of net investment income to average net
assets would have been 0.72%, for the year ended October 31, 1997; for Institutional Class shares, the ratio
of expenses to average net assets would have been 0.65% and 0.66% and the ratio of net investment income would
have been 0.44% and 0.67%, respectively, for the years ended October 31, 1999 and 1998.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
LB HIGH YIELD FUND

INSTITUTIONAL CLASS SHARES CLASS A SHARES
-------------------------- -----------------------------------------
Year Ended Year ended Year Ended Year Ended Year Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period...... $ 8.09 $ 9.58 $ 9.21 $ 9.03 $ 8.86
------ ------ ------ ------ ------
Investment Operations:
Net Investment Income..... 0.85 0.88 0.85 0.84 0.83
Net Realized and
Unrealized Gain (Loss)
on Investments........... (0.21) (1.31) 0.41 0.17 0.24
------ ------ ------ ------ ------
Total from Investment
Operations............... 0.64 (0.43) 1.26 1.01 1.07
------ ------ ------ ------ ------
Less Distributions from:
Net Investment Income.... (0.86) (0.88) (0.86) (0.83) (0.85)
Net Realized Gain
on Investments........... -- (0.18) (0.03) -- (0.05)
------ ------ ------ ------ ------
Total Distributions....... (0.86) (1.06) (0.89) (0.83) (0.90)
------ ------ ------ ------ ------
Net Asset Value End
of Period................ $ 7.87 $ 8.09 $ 9.58 $ 9.21 $ 9.03
====== ====== ====== ====== ======
Total Investment
Return at Net
Asset Value(%)........... 7.96% (5.33%) 14.43% 11.64% 12.93%
Net Assets, End of
Period (in millions)..... $53.0 $52.3 $862.9 $703.1 $594.3
Ratio of Expenses to
Average Net Assets (%)(1) 0.61% 0.59% 0.84% 0.91% 0.93%
Ratio of Net Investment
Income to Average
Net Assets (%)(1)........ 10.21% 9.57% 9.14% 9.23% 9.53%
Portfolio Turnover Rate... 55% 73% 113% 104% 71%
- -------------------
(1) Effective January 1, 1997, LB Research voluntarily agreed to waive five basis points (0.05%) from the advisory
fees payable by the LB High Yield Fund. Had LB Research not undertaken such action, for Class A Shares, the
ratio of expenses to average net assets would have been 0.88%, and the ratio of net investment income to average
net assets would have been 9.10%, for the year ended October 31, 1997; for Institutional Class shares, the ratio
of expenses to average net assets would have been 0.66% and 0.64% and the ratio of net investment income would
have been 10.16% and 9.52%, respectively, for the years ended October 31, 1999 and 1998.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
LB INCOME FUND

INSTITUTIONAL CLASS SHARES CLASS A SHARES
-------------------------- -----------------------------------------
Year Ended Year ended Year Ended Year Ended Year Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period....... $ 8.77 $ 8.61 $ 8.50 $ 8.72 $ 8.01
------ ------ ------ ------ ------
Investment Operations:
Net Investment Income...... 0.53 0.56 0.55 0.57 0.59
Net Realized and
Unrealized Gain (Loss)
on Investments............ (0.57) 0.16 0.11 (0.19) 0.69
------ ------ ------ ------ ------
Total from Investment
Operations................ (0.04) 0.72 0.66 0.38 1.28
------ ------ ------ ------ ------
Less Distributions from:
Net Investment Income..... (0.51) (0.56) (0.55) (0.60) (0.57)
Net Realized Gain on
Investments............... -- -- -- -- --
------ ------ ------ ------ ------
Total Distributions........ (0.51) (0.56) (0.55) (0.60) (0.57)
------ ------ ------ ------ ------
Net Asset Value End of
Period.................... $ 8.22 $ 8.77 $ 8.61 $ 8.50 $ 8.72
====== ====== ====== ====== ======
Total Investment Return
at Net Asset
Value(%) .... (0.44%) 8.69% 8.05% 4.56% 16.53%
Net Assets, End of
Period (in millions)..... $31.8 $26.6 $778.0 $871.0 $942.1
Ratio of Expenses to
Average Net Assets (%)(1). 0.57% 0.55% 0.80% 0.83% 0.83%
Ratio of Net Investment
Income to Average
Net Assets (%)(1)........ 6.18% 6.41% 6.44% 6.61% 7.01%
Portfolio Turnover Rate (%).. 72% 98% 97% 142% 131%
- ------------------------
(e) Effective January 1, 1997, LB Research voluntarily agreed to waive five basis points (0.05%) from the advisory
fees payable by the LB Income Fund. Had LB Research not undertaken such action, for Class A Shares, the ratio
of expenses to average net assets would have been 0.84%, and the ratio of net investment income to average net
assets would have been 6.40%, for the year ended October 31, 1997; for Institutional Class shares, the ratio
of expenses to average net assets would have been 0.62% and 0.60% and the ratio of net investment income would
have been 6.13% and 6.36%, respectively, for the years ended October 31, 1999 and 1998.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
LB MUNICIPAL BOND FUND

INSTITUTIONAL CLASS SHARES CLASS A SHARES
-------------------------- -----------------------------------------
Year Ended Year ended Year Ended Year Ended Year Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period......... $ 9.11 $ 8.85 $ 8.60 $ 8.58 $ 7.88
------ ------ ------ ------ ------
Investment Operations:
Net Investment Income.......... 0.46 0.46 0.45 0.44 0.45
Net Realized and Unrealized Gain
(Loss) on Investments....... (0.68) 0.26 0.24 0.01 0.70
------ ------ ------ ------ ------
Total from Investment Operations. (0.22) 0.72 0.69 0.45 1.15
------ ------ ------ ------ ------
Less Distributions from:
Net Investment Income....... (0.46) (0.46) (0.44) (0.43) (0.45)
Net Realized Gain on
Investments............... -- -- -- -- --
------ ------ ------ ------ ------
Total Distributions............ (0.46) (0.46) (0.44) (0.43) (0.45)
------ ------ ------ ------ ------
Net Asset Value End of Period.. $ 8.43 $ 9.11 $ 8.85 $ 8.60 $ 8.58
====== ====== ====== ====== ======
Total Investment Return at
Net Asset Value(%) (2.49%) 8.39% 8.28% 5.33% 14.97%
Net Assets, End of
Period (in millions)........ $4.3 $4.0 $591.9 $609.5 $628.7
Ratio of Expenses to Average
Net Assets (%)(1)........... 0.45% 0.44% 0.70% 0.74% 0.74%
Ratio of Net Investment Income
to Average Net Assets (%)(1). 5.13% 5.13% 5.13% 5.14% 5.43%
Portfolio Turnover Rate (%).... 20% 14% 18% 33% 36%
- ------------------------
(1) Effective January 1, 1997, LB Research voluntarily agreed to waive five basis points (0.05%) from the advisory
fees payable by the LB Municipal Bond Fund. Had LB Research not undertaken such action, for Class A shares, the
ratio of expenses to average net assets would have been 0.74%, and the ratio of net investment income to average
net assets would have been 5.09%, for the year ended October 31, 1997; for Institutional Class shares, the ratio
of expenses to average net assets would have been 0.50% and 0.49% and the ratio of net investment income would
have been 5.08% and 5.08%, respectively, for the years ended October 31, 1999 and 1998.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
LB MONEY MARKET FUND

INSTITUTIONAL CLASS SHARES CLASS A SHARES
-------------------------- -----------------------------------------
Year Ended Year ended Year Ended Year Ended Year Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Net asset Value,
Beginning of Period... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------
Investment Operations:
Net Investment Income.... 0.04 0.05 0.05 0.05 0.05
------ ------ ------ ------ ------
Less Distributions from:
Net Investment Income.... (0.04) (0.05) (0.05) (0.05) (0.05)
------ ------ ------ ------ ------
Net Asset Value,
End of Period. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======
Total Investment Return
at Net Asset Value (%) 4.53% 5.08% 4.74% 4.63% 4.95%
Net Assets, End of
Period (in millions).. $51.1 $47.3 $469.2 $417.6 $341.1
Ratio of Expenses to
Average Net Assets (%)(1). 0.70% 0.70% 0.95% 1.01% 1.10%
Ratio of Net Investment
Income to Average Net
Assets (%)(1). 4.44% 4.97% 4.64% 4.53% 4.85%
- ----------------------
(1) Effective February 1, 1992 through March 31, 1996, LB Research voluntarily limited LB Money Market Fund's
expense ratio to 1.10% of annual average daily net assets. Effective April 1, 1996, LB Research voluntarily
lowered the expense limit prospectively to 0.95% of average daily net assets, and effective October 31, 1997,
LB Research voluntarily agreed to waive the same percentage amount for Institutional Class shares. Had
LB Research not undertaken such action to limit expenses, for Class A shares, the ratio of expenses to average
net assets would have been 1.05%, 1.07%, and 1.18%, and the ratio of net investment income to average net
assets would have been 4.35%, 4.47%, and 4.77%, respectively, for the years ended October 31, 1997, 1996,
and 1995; for Institutional Class shares, the ratio of expenses to average net assets would have been 0.75%
and 0.79%, and the ratio of net investment income would have been 4.39% and 4.88%, respectively, for the
years ended October 31, 1999 and 1998.
</TABLE>

<PAGE>
- ------------------------------------------------------------------------

[Back cover page]

THE LUTHERAN BROTHERHOOD FAMILY OF FUNDS

1-800-328-4552 Automated Service Line

1-800-990-6290 to speak with a customer service associate

www.luthbro.com

o Lutheran Brotherhood Securities Corp.
P.O. Box 9491
Minneapolis, Minnesota 55440-9491

The Statement of Additional Information which is incorporated by
reference into this Prospectus) contains additional information about the
Funds. Additional information about the Funds' investments is available in
the Funds' annual and semi-annual reports to shareholders. In the Funds'
annual report, you will find a discussion of the market conditions and
investment strategies that significantly affected the performance of each of
the Funds during their last fiscal year. You may request a free copy of the
Statement of Additional Information, the annual report, or the semi-annual
report, or you may make additional requests or inquiries by calling 1-800-
990-6290. You also may review and copy information about the Funds
(including the Statement of Additional Information) at the Public Reference
Room of the Securities and Exchange Commission in Washington, DC. You may
get more information about the Public Reference Room by calling 1-800-SEC-
0330. You also may get information about the Funds on the EDGAR data base at
the SEC Web site (www.sec.gov), and copies of the information may be
obtained, upon payment of a duplicating fee, by writing the Public Reference
Section of the SEC, Washington, DC 20549-6009, or by sending an email to:
[email protected].

1940 Act File No. 811-1467

<PAGE>

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

December 20, 1999

The Lutheran Brotherhood Family of Funds offers eight Funds, each of
which offer three classes of shares: Class A, Class B and Institutional
Class shares. Class A and B shares are offered through a combined prospectus
and Institutional Class shares are offered through a separate prospectus.
Each such prospectus is referred to hereinafter as a "prospectus". This
Statement of Additional Information should be read in conjunction with the
prospectus dated December 20, 1999 for the applicable class of the Lutheran
Brotherhood Opportunity Growth Fund ("LB Opportunity Growth Fund"), Lutheran
Brotherhood Mid Cap Growth Fund ("LB Mid Cap Growth Fund"), Lutheran
Brotherhood World Growth Fund ("LB World Growth Fund"), Lutheran Brotherhood
Growth Fund ("LB Growth Fund"), Lutheran Brotherhood Fund ("LB Fund"),
Lutheran Brotherhood Value Fund ("LB Value Fund"), Lutheran Brotherhood High
Yield Fund ("LB High Yield Fund"), Lutheran Brotherhood Income Fund ("LB
Income Fund"), Lutheran Brotherhood Municipal Bond Fund ("LB Municipal Bond
Fund"), Lutheran Brotherhood Limited Maturity Bond Fund ("LB Limited
Maturity Bond Fund") and Lutheran Brotherhood Money Market Fund ("LB Money
Market Fund"), each a series of The Lutheran Brotherhood Family of Funds
(the "Trust"). This Statement of Additional Information is not a prospectus
itself. The Report of Independent Accountants and financial statements in
the Annual Report to Shareholders for the fiscal year ended October 31, 1999
of the Funds are a separate report furnished with this Statement of
Additional Information and are incorporated herein by reference. To receive
a copy of either prospectus or the Annual Report, write to Lutheran
Brotherhood Securities Corp., 625 Fourth Avenue South, Minneapolis,
Minnesota 55415 or call toll-free 1-800-328-4552 for Automated Service Line
or 1-800-990-6290 to speak with a customer service associate.

<PAGE>

TABLE OF CONTENTS

Page

History of the Lutheran Brotherhood Family of Funds......................
Investment Policies and Restrictions.....................................
Fund Management..........................................................
Investment Advisory Services.............................................
Administrative Services..................................................
Distribution and Shareholder Services....................................
Brokerage Transactions...................................................
Code of Ethics...........................................................
Purchasing Shares........................................................
Sales Charges............................................................
Net Asset Value..........................................................
Redeeming Shares.........................................................
Tax Status...............................................................
General Information......................................................
Calculation of Performance Data..........................................
Description of Debt Ratings..............................................
Report of Independent Public Accountants and Financial Statements........

HISTORY OF THE LUTHERAN BROTHERHOOD FAMILY OF FUNDS

Each Fund in The Lutheran Brotherhood Family of Funds is a diversified
series of The Lutheran Brotherhood Family of Funds (the "Trust"), an open-
end management investment company. All the Funds, except LB World Growth
Fund and LB Mid Cap Growth Fund, were organized in 1993 as series of The
Lutheran Brotherhood Family of Funds, a Delaware business trust. Each of
those Funds 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. LB World Growth Fund and LB Mid
Cap Growth Fund began operating as a series of the LB Family of Funds on
September 5, 1995 and May 30, 1997, respectively. LB Growth Fund, LB Value
Fund, and LB Limited Maturity Bond Fund began operating as a series of the
LB Family of Funds on October 29, 1999. The fiscal year end of the Trust
and each Fund is October 31. Prior to October 31, 1997, the shares of the
Funds had no specific class designations. As of that date, Class A, Class B
and Institutional Class shares were authorized by the Board of Trustees of
the Trust. The Trust has reserved the right to create other classes of
shares in the future.

INVESTMENT POLICIES AND RESTRICTIONS

ADDITIONAL INVESTMENT PRACTICES

In addition to those practices stated in the Prospectus, various of the
Funds may purchase the following securities or may engage in the following
transactions.

OTHER SECURITIES

LB Opportunity Growth Fund, LB Mid Cap Growth Fund, LB World Growth
Fund, LB Growth Fund, LB Fund, and LB Value Fund may each invest in other
types of securities, including bonds, preferred stocks, convertible bonds,
convertible preferred stocks, warrants, American Depository Receipts
(ADR's), and other debt or equity securities. In addition, each of these
Funds may invest in U.S. Government securities or cash, and LB World Growth
Fund may also invest in European Depository Receipts (EDR's) and the
securities of foreign investment trusts and or trusts.

LB Opportunity Growth Fund, LB Mid Cap Growth Fund, LB World Growth
Fund, LB Growth Fund, LB Fund, and LB Value Fund will not use any minimum
level of credit quality. 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.

LB High Yield Fund, LB Income Fund, and LB Limited Maturity Bond Fund
may also invest in common stocks, warrants to purchase stocks, bonds or
preferred stocks convertible into common stock, and other equity securities.

LB Municipal Bond Fund does not generally intend to purchase any
securities which would cause 25% or more of the value of its total assets to
be invested in the securities of governmental subdivisions located in any
one state, territory or possession of the United States. The Fund may invest
25% or more of the value of its total assets in industrial development
bonds. The Fund also may invest up to 25% of its total assets in securities
issued in connection with the financing of projects with similar
characteristics, such as toll road revenue bonds, housing revenue bonds or
electric power project revenue bonds, or in industrial development revenue
bonds which are based, directly or indirectly, on the credit of private
entities in any one industry.

BANK INSTRUMENTS

LB Money Market Fund may invest in bank instruments including, but not
limited to, certificates of deposit, bankers' acceptances and time deposits.
Certificates of deposit are generally short-term (i.e., less than one year),
interest-bearing negotiable certificates issued by commercial banks or
savings and loan associations against funds deposited in the issuing
institution. A banker's acceptance is a time draft drawn on a commercial
bank by a borrower, usually in connection with an international commercial
transaction (to finance the import, export, transfer or storage of goods).
A banker's acceptance may be obtained from a domestic or foreign bank
including a U.S. branch or agency of a foreign bank. The borrower is liable
for payment as well as the bank, which unconditionally guarantees to pay the
draft at its face amount on the maturity date. Most acceptances have
maturities of six months or less and are traded in secondary markets prior
to maturity. Time deposits are non-negotiable deposits for a fixed period
of time at a stated interest rate.

U.S. branches of foreign banks are offices of foreign banks and are not
separately incorporated entities. They are chartered and regulated either
federally or under state law. U.S. federal branches of foreign banks are
chartered and regulated by the Comptroller of the Currency, while state
branches and agencies are chartered and regulated by authorities of the
respective state or the District of Columbia. U.S. branches of foreign
banks may accept deposits and thus are eligible for FDIC insurance; however,
not all such branches elect FDIC insurance. U.S. branches of foreign banks
can maintain credit balances, which are funds received by the office
incidental to or arising out of the exercise of their banking powers and can
exercise other commercial functions, such as lending activities.

Investing in foreign branches of U.S. banks and U.S. branches of
foreign banks may involve risks. These risks may include future unfavorable
political and economic developments, possible withholding or confiscatory
taxes, seizure of foreign deposits, currency controls, interest limitations
and other governmental restrictions that might affect payment of principal
or interest, and possible difficulties pursuing or enforcing claims against
banks located outside the U.S. Additionally, foreign issuers are not
generally subject to uniform accounting, auditing and financial reporting
standards or other regulatory requirements and practices comparable to U.S.
issuers, and there may be less public information available about foreign
banks and their branches and agencies.

REPURCHASE AGREEMENTS

Each of the Funds 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 at an
agreed upon price and rate of interest U.S. Government obligations. 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 (or a sub-adviser) to be creditworthy.

RESTRICTED SECURITIES

The Funds may buy or sell restricted securities, including securities
that meet the requirements of 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. Restricted securities that are not
resalable under Rule 144A may be subject to risks of illiquidity and
subjective valuations to a greater degree than Rule 144A securities.

REVERSE REPURCHASE AGREEMENTS

Each of the Funds 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. 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. When
effecting reverse repurchase agreements, assets of the Fund in a dollar
amount sufficient to make payment of the obligations to be purchased are
segregated on the Fund's records at the trade date and maintained until the
transaction is settled.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

Each of the Funds 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 a 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 (ALL FUNDS EXCEPT LB MONEY MARKET FUND)

Consistent with applicable regulatory requirements, each of the Funds
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, irrevocable standby letters of credit or other liquid securities
in an amount at all times equal to at least the market value of the loaned
securities plus the accrued interest and dividends. In electing to engage in
securities lending for a Fund, the Adviser will take into account the
investment objective and principal strategies of the Fund. For the period
during which the securities are on loan, the lending 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 lending 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.

No Fund will lend securities to broker-dealers affiliated with LB
Research or a sub-adviser. LB Research believes that this will not affect
the Fund's ability to maximize its securities lending opportunities. No Fund
may 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 (ALL FUNDS EXCEPT LB MONEY MARKET FUND)

Selling ("Writing") Covered Call Options: The Funds may from time to
time sell ("write") covered call options on any portion of their portfolios
as a hedge to provide partial protection against adverse movements in prices
of securities in those Funds 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, a Fund assumes the obligation to deliver the
underlying security to the holder of the option on demand at the strike
price. This obligation is held by the Fund until either the option expires
or a closing transaction is made.

If the price of a security hedged by a call option falls below or
remains below the strike price of the option, a Fund will generally not be
called upon to deliver the security. A 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, a
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 Funds may also from time to time purchase call
options on securities in which those Funds may invest. As the holder of a
call option, a Fund has the right (but not the obligation) 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). A 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, a 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. A 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.

Selling Put Options: The Funds may from time to time sell ("write")
covered put options if the put option is part of a combined position (see
"Combined Position Option" below). As the writer of a put option, the Fund
assumes the obligation to pay a predetermined ("strike") price for the
option's underlying security if the holder of the option chooses to exercise
it. Until the option expires of a closing transaction is made, the Fund
must continue to be prepared to pay the strike price, regardless of price
movements in the underlying security.

If the price of the underlying security remains the same or rises above
the strike price, the Fund generally will not be called upon to purchase the
security. The Fund will, however, retain the premium received for the
option as additional income. If the price of the underlying security falls
below the strike price, the Fund may be called upon to purchase the security
at the strike price.

Buying Put Options: The Funds may from time to time purchase put
options on any portion of their portfolios. A put option gives the buyer of
the option, upon payment of a premium, the right (but not the obligation) 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. A 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, a 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. A 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.

Options on Foreign Currencies: The Funds may also write covered call
options and purchase put and call options on foreign currencies as a hedge
against changes in prevailing levels of currency exchange rates.

Index Options: As part of its options transactions, certain of the
Funds may also purchase and sell call options and 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.

Combined Position Options. The Funds may purchase and sell options in
combination with each other or in combination with futures or forward
contracts, to adjust the risk and return characteristics of the overall
position. For example, the Funds may engage in "straddle" and "spread"
transactions. 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 a Fund will depend on LB
Research's or the Sub-adviser's perception of anticipated market movements.

Negotiated Transactions: The Funds will generally purchase and sell
options traded on a national securities or options exchange. Where options
are not readily available on such exchanges, a Fund may purchase and sell
options in negotiated transactions. A Fund effects negotiated transactions
only with investment dealers and other financial institutions deemed
creditworthy by its investment adviser. Despite the investment adviser's or
sub-adviser'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 Statement of Additional Information entitled, "Risks of
Transactions in Options and Futures". Options written or purchased by a Fund
in negotiated transactions are illiquid and there is no assurance that a
Fund will be able to effect a closing purchase or closing sale transaction
at a time when its investment adviser or sub-adviser 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.

Closing Transactions: The Funds may dispose of options which they have
written by entering into "closing purchase transactions". Those Funds 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.

A 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.

A 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. A Fund realizes a loss if the premium received is less than the
premium paid.

FINANCIAL FUTURES AND OPTIONS ON FUTURES (ALL FUNDS EXCEPT LB MONEY MARKET
FUND)

Selling Futures Contracts: The Funds may sell financial futures
contracts ("futures contracts") as a hedge against adverse movements in the
prices of securities in those Funds. 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 a 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 a Fund and its broker, but rather is a "good
faith deposit" by a Fund to secure its obligations under a futures contract
or an option. Each day during the term of certain futures transactions, a
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 Funds may purchase financial futures
contracts as a hedge against adverse movements in the prices of securities
which they intend to purchase. The Funds may buy and sell futures contracts
for a number of reasons, including to manage their exposure to changes in
securities prices and foreign currencies as an efficient means of adjusting
their overall exposure to certain markets in an effort to enhance income;
and to protect the value of portfolio securities. A futures contract
purchase creates an obligation by a 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, a 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 a Fund
intends to purchase. A 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 a Fund intends to purchase.

Options on Futures Contracts: The Funds may also sell ("write") and
purchase covered call and put options on futures contracts in connection
with the above strategies. 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 a Fund intends to purchase.

Currency Futures Contracts and Options: The Funds may also sell and
purchase currency futures contracts (or options thereon) as a hedge against
changes in prevailing levels of currency exchange rates. Such contracts may
be traded on U.S. or foreign exchanges. The Fund will not use such contracts
or options for leveraging purposes.

Limitations: The Funds may engage in futures transactions, and
transactions involving options on futures, only on regulated commodity
exchanges or boards of trade. A Fund will not enter into a futures contract
or purchase or sell related options if immediately thereafter 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'. In addition, in instances involving the purchase
of futures contracts or call options thereon, a 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 (ALL FUNDS EXCEPT LB MONEY MARKET FUND)

As part of their investment program and to maintain greater
flexibility, the Funds 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. 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 a Fund and the seller of the hybrid
instrument, the creditworthiness of the counterparty to the transaction
would be a risk factor which a 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. None of the Funds expect to hold more than 5% of its
total assets in hybrid instruments.

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 a Fund's hedging strategy
unsuccessful and could result in losses. The loss from investing in futures
transactions is potentially unlimited.

There is a risk that LB Research or a sub-adviser could be incorrect in
their expectations about the direction or extent of market factors such as
interest rate movements. In such a case a 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 a 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 or a Fund's sub-adviser's accuracy in predicting the
future changes in interest rate levels and securities price movements.

A Fund will generally purchase and sell options traded on a national
securities or options exchange. Where options are not readily available on
such exchanges a Fund may purchase and sell options in negotiated
transactions. When a 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, a 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 a 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 a
Fund to continue to hold a position until delivery or expiration regardless
of changes in its value. As a result, a 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, a Fund could lose all or part of the
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.

Finally, if a broker or clearing member of an options or futures
clearing corporation were to become insolvent, a 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, a 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.

FOREIGN FUTURES AND OPTIONS

Participation in foreign futures and foreign options transactions
involves the execution and clearing of trades on or subject to the rules of
a foreign board of trade. Neither the National Futures Association nor any
domestic exchange regulates activities of any foreign boards of trade,
including the execution, delivery and clearing of transactions, or has the
power to compel enforcement of the rules of a foreign board of trade or any
applicable foreign law. This is true even if the exchange is formally linked
to a domestic market so that a position taken on the market may be
liquidated by a transaction on another market. Moreover, such laws or
regulations will vary depending on the foreign country in which the foreign
futures or foreign options transaction occurs. For these reasons, customers
who trade foreign futures or foreign options contracts may not be afforded
certain of the protective measures provided by the Commodity Exchange Act,
the CFTC's regulations and the rules of the National Futures Association and
any domestic exchange, including the right to use reparations proceedings
before the Commission and arbitration proceedings provided by the National
Futures Association or any domestic futures exchange. In particular, funds
received from customers for foreign futures or foreign options transactions
may not be provided the same protections as funds received in respect of
transactions on United States futures exchanges. In addition, the price of
any foreign futures or foreign options contract and, therefore, the
potential profit and loss thereon may be affected by any variance in the
foreign exchange rate between the time an order is placed and the time it is
liquidated, offset or exercised.

SHORT SALES AGAINST THE BOX

The Funds 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 a 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 a 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.

FOREIGN CURRENCY EXCHANGE-RELATED SECURITIES

Foreign Currency Warrants. Foreign currency warrants are warrants which
entitle the holder to receive from their issuer an amount of cash
(generally, for warrants issued in the United States, in U.S. dollars) which
is calculated pursuant to a predetermined formula and based on the exchange
rate between a specified foreign currency and the U.S. dollar as of the
exercise date of the warrant. Foreign currency warrants generally are
exercisable upon their issuance and expire as of a specified date and time.
Foreign currency warrants have been issued in connection with U.S. dollar-
denominated debt offerings by major corporate issuers in an attempt to
reduce the foreign currency exchange risk which, from the point of view of
prospective purchasers of the securities, is inherent in the international
fixed-income marketplace. Foreign currency warrants may attempt to reduce
the foreign exchange risk assumed by purchasers of a security by, for
example, providing for a supplemental payment in the event that the U.S.
dollar depreciates against the value of a major foreign currency such as the
Japanese Yen or German Deutschmark. The formula used to determine the amount
payable upon exercise of a foreign currency warrant may make the warrant
worthless unless the applicable foreign currency exchange rate moves in a
particular direction (e.g., unless the U.S. dollar appreciates or
depreciates against the particular foreign currency to which the warrant is
linked or indexed). Foreign currency warrants are severable from the debt
obligations with which they may be offered, and may be listed on exchanges.
Foreign currency warrants may be exercisable only in certain minimum
amounts, and an investor wishing to exercise warrants who possesses less
than the minimum number required for exercise may be required either to sell
the warrants or to purchase additional warrants, thereby incurring
additional transaction costs. In the case of any exercise of warrants, there
may be a time delay between the time a holder of warrants gives instructions
to exercise and the time the exchange rate relating to exercise is
determined, during which time the exchange rate could change significantly,
thereby affecting both the market and cash settlement values of the warrants
being exercised. The expiration date of the warrants may be accelerated if
the warrants should be delisted from an exchange or if their trading should
be suspended permanently, which would result in the loss of any remaining
"time value" of the warrants (i.e., the difference between the current
market value and the exercise value of the warrants), and, in the case the
warrants were "out-of-the-money," in a total loss of the purchase price of
the warrants. Warrants are generally unsecured obligations of their issuers
and are not standardized foreign currency options issued by the Options
Clearing Corporation ("OCC"). Unlike foreign currency options issued by OCC,
the terms of foreign exchange warrants generally will not be amended in the
event of governmental or regulatory actions affecting exchange rates or in
the event of the imposition of other regulatory controls affecting the
international currency markets. The initial public offering price of foreign
currency warrants is generally considerably in excess of the price that a
commercial user of foreign currencies might pay in the interbank market for
a comparable option involving significantly larger amounts of foreign
currencies. Foreign currency warrants are subject to significant foreign
exchange risk, including risks arising from complex political or economic
factors.

Principal Exchange Rate Linked Securities. Principal exchange rate
linked securities are debt obligations the principal on which is payable at
maturity in an amount that may vary based on the exchange rate between the
U.S. dollar and a particular foreign currency at or about that time. The
return on "standard" principal exchange rate linked securities is enhanced
if the foreign currency to which the security is linked appreciates against
the U.S. dollar, and is adversely affected by increases in the foreign
exchange value of the U.S. dollar; "reverse" principal exchange rate linked
securities are like the "standard" securities, except that their return is
enhanced by increases in the value of the U.S. dollar and adversely impacted
by increases in the value of foreign currency. Interest payments on the
securities are generally made in U.S. dollars at rates that reflect the
degree of foreign currency risk assumed or given up by the purchaser of the
notes (i.e., at relatively higher interest rates if the purchaser has
assumed some of the foreign exchange risk, or relatively lower interest
rates if the issuer has assumed some of the foreign exchange risk, based on
the expectations of the current market). Principal exchange rate linked
securities may in limited cases be subject to acceleration of maturity
(generally, not without the consent of the holders of the securities), which
may have an adverse impact on the value of the principal payment to be made
at maturity.

Performance Indexed Paper. Performance indexed paper is U.S. dollar-
denominated commercial paper the yield of which is linked to certain foreign
exchange rate movements. The yield to the investor on performance indexed
paper is established at maturity as a function of spot exchange rates
between the U.S. dollar and a designated currency as of or about that time
(generally, the index maturity two days prior to maturity). The yield to the
investor will be within a range stipulated at the time of purchase of the
obligation, generally with a guaranteed minimum rate of return that is
below, and a potential maximum rate of return that is above, market yields
on U.S. dollar-denominated commercial paper, with both the minimum and
maximum rates of return on the investment corresponding to the minimum and
maximum values of the spot exchange rate two business days prior to
maturity.

TEMPORARY DEFENSIVE INVESTMENTS (ALL FUNDS EXCEPT LB MONEY MARKET FUND)

The Funds 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 or a Fund's sub-adviser such a position is more likely to provide
protection against unfavorable market conditions than adherence to the
Funds' other investment policies. The types of short-term instruments in
which the Funds 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, a 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 or the sub-adviser to be of a comparable level of quality. When
a Fund adopts a temporary defensive position its investment objective may
not be achieved.

COMPUTER RELATED RISKS

Many mutual funds and other companies that issue securities, as well as
government entities upon whom those mutual funds and companies depend, may
be adversely affected by computer systems (whether their own systems or
systems of their service providers) that do not properly process dates
beginning with January 1, 2000 and information related to those dates.

The Investment Manager currently is in the process of reviewing its
internal computer systems as they relate to the Funds, as well as the
computer systems of those service providers upon which the Funds rely, in
order to obtain reasonable assurances that the Funds will not experience a
material adverse impact related to this problem. The Funds do not currently
anticipate that this problem will have a material adverse impact on their
portfolio investments, taken as a whole. There can be no assurances in this
area, however, including the possibility that this problem could negatively
affect the investment markets or the economy generally.

INVESTMENT LIMITATIONS

The fundamental investment restrictions for the Funds are set forth
below. These fundamental investment restrictions may not be changed by a
Fund except by the affirmative vote of a majority of the outstanding voting
securities of that 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 (a "1940 Act Majority
Vote").) Under these restrictions, with respect to each 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. With respect to Lutheran
Brotherhood Money Market Fund, this restriction does not apply
to Government Securities (as such term is defined in the
Investment Company Act of 1940) or instruments issued by
domestic banks. This restriction does not apply to LB
Municipal Bond Fund.

The following nonfundamental investment restriction may be changed
without shareholder approval. Under this restriction with respect to each
Fund:

(1) 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.

Section 18(g) of the 1940 Act defines a "senior security" as any bond,
debenture, note, or similar obligation constituting a security and
evidencing indebtedness. Section 18(F)(1) of the 1940 Act prohibits an
open-end investment company from issuing senior securities but permits
borrowings from a bank if immediately after the borrowing there is asset
coverage of at least 300%. The SEC staff has taken the position that a fund
may engage in certain leveraged transactions, such as short sales and
financial futures contracts, without violating Section 18(F)(1) if it
segregates fund assets.

FUND MANAGEMENT

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

The officers and Trustees of the Trust and their addresses, positions
with the Trust, and principal occupations are set forth below. As of
November 30, 1999 the officers and Trustees own less than 1% of any Fund's
outstanding shares.

NAME AND ADDRESS POSITION WITH THE TRUST PRINCIPAL OCCUPATION DURING THE
PAST 5 YEARS
<S> <C> <C>
Rolf F. Bjelland* Chairman, Trustee and Executive Vice President, Lutheran
625 Fourth Avenue South President Brotherhood; Director, Lutheran
Minneapolis, MN Brotherhood Research Corp.; Director
Age 61 and Executive Vice President, Lutheran
Brotherhood Financial Corporation;
Director, Lutheran Brotherhood Securities
Corp.; Director and Vice President,
Lutheran Brotherhood Variable Insurance
Products Company; Director, Lutheran
Brotherhood Real Estate Products Company;
Director, Chairman and President of LB
Series Fund, Inc.

Herbert F. Eggerding, Jr. Trustee Management consultant to several privately
12587 Glencroft Drive owned companies; formerly Executive Vice
St. Louis, MO President and Chief Financial Officer,
Age 62 Petrolite Corporation; Director, Lutheran
Charities Foundation of St. Louis, MO;
Director of LB Series Fund, Inc.

Noel K. Estenson Trustee President and Chief Executive Officer,
CENEX, Inc. CENEX, Inc.; Vice Chairman, CF
P.O. Box 64089 Industries; Board member, National
St. Paul, MN Cooperative Refinery Association;
Age 60 Board member, Farm Credit Leasing;
Board member, National Council of
Farmer Cooperatives; Director, LB Series
Fund, Inc.

Jodi L. Harpstead Trustee Vice President, U.S. Cardiac Rhythm
Medtronic Management for Medtronic, Inc.; Previously,
7000 Central Avenue NE Manager and Vice President, U.S. Pacing
Minneapolis, MN Marketing, Medtronic, Inc.; Board member
Age 42 of Delta Dental Plan of Minnesota;
Director, LB Series Fund, Inc.

Richard A. Hauser Trustee Partner, Baker & Hostetler, LLP; Previously,
1050 Connecticut Avenue NW Chairman of the Pennsylvania Avenue
Suite 1100 Development Corporation, Washington, DC;
Washington, DC Director, The Luther Institute; Director,
Age 56 LB Series Fund, Inc.

Connie M. Levi Trustee Retired President of the Greater
P.O. Box 675325 Minneapolis Chamber of Commerce;
Rancho Santa Fe, CA served in the Minnesota House of
Age 60 Representatives from 1978 to 1986,
including in the capacity as majority
leader; former Director or member of
numerous governmental, public service
and non-profit boards and organizations;
Director, Norstan, Inc.; Director of
LB Series Fund, Inc.

Bruce J. Nicholson* Trustee President and Chief Operating Officer,
625 Fourth Avenue South Lutheran Brotherhood; Director,
Minneapolis, MN President and Chief Operating Officer,
Age 53 Lutheran Brotherhood Financial
Corporation; Director and Chief
Operating Officer, Lutheran Brotherhood
Variable Insurance Products Company;
Director, Lutheran Brotherhood Research
Corp; Director, Lutheran Brotherhood
Securities Corp.; Director, Lutheran
Brotherhood Real Estate Products Company;
Director, LB Series Fund, Inc.

Randall L. Boushek Senior Vice President Senior Vice President and Chief Investment
625 Fourth Avenue South Officer, Lutheran Brotherhood; Director
Minneapolis, MN and President, Lutheran Brotherhood
Age 42 Research Corp; Director, Vice President
and Chief Investment Officer, Lutheran
Brotherhood Variable Insurance Products
Company; Director, Lutheran Brotherhood
Securities Corp.; Director, Lutheran
Brotherhood Real Estate Products Company;
Vice President of LB Series Fund, Inc.

Otis F. Hilbert Secretary and Vice President Vice President, Lutheran Brotherhood;
625 Fourth Avenue South Vice President and Secretary,
Minneapolis, MN Lutheran Brotherhood Securities Corp.;
Age 62 Secretary, Lutheran Brotherhood
Research Corp.; Vice President and
Secretary, Lutheran Brotherhood
Real Estate Products Company; Vice
President and Assistant Secretary,
Lutheran Brotherhood Variable
Insurance Products Company; Vice President
and Secretary of LB Series Fund, Inc.

Frederick P. Johnson Vice President Assistant Vice President, Lutheran
625 Fourth Avenue South Brotherhood; Assistant Vice President,
Minneapolis, MN Lutheran Brotherhood Variable Insurance
Age 37 Products Company; Assistant Vice President,
Lutheran Brotherhood Securities Corp.;
Vice President of LB Series Fund, Inc.

James R. Olson Vice President Senior Vice President, Lutheran Brotherhood;
625 Fourth Avenue South Director and Vice President, Lutheran
Minneapolis, MN Brotherhood Variable Insurance Products
Age 57 Company; Director and Vice President,
Lutheran Brotherhood Research Corp.;
Director and Vice President, Lutheran
Brotherhood Securities Corp.; Director and
Vice President, Lutheran Brotherhood Real
Estate Products Company; Vice President of
LB Series Fund, Inc.

Brenda J. Pederson Vice President Assistant Vice President, Lutheran
625 Fourth Avenue South Brotherhood; Assistant Vice President,
Minneapolis, MN Lutheran Brotherhood Securities Corp.;
Age 38 Vice President of LB Series Fund, Inc.

Richard B. Ruckdashel Vice President Vice President, Lutheran Brotherhood;
625 Fourth Avenue South Vice President, Lutheran Brotherhood
Minneapolis, MN Variable Insurance Products Company; Vice
Age 44 President, Lutheran Brotherhood
Securities Corp.; Vice President of LB
Series Fund, Inc.

Wade M. Voigt Treasurer Assistant Vice President, Mutual Fund
625 Fourth Avenue South Accounting, Lutheran Brotherhood;
Minneapolis, MN Treasurer of LB Series Fund, Inc.
Age 43
- -----------------------
(*) "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.
</TABLE>

PRINCIPAL HOLDERS

The following shareholders were record owners of 5% or more of a Class
of a Fund's outstanding securities as of December 1, 1999:

Owner % Ownership

Lutheran Brotherhood (including its
wholly-owned subsidiary companies)
625 Fourth Avenue South
Minneapolis, Minnesota 55415-1624 9.04% Class B LB Money Market Fund
7.17% Institutional Class LB Fund
7.23% Institutional Class LB
Opportunity Growth Fund
62.53% Institutional Class LB World
Growth Fund
71.44% Institutional Class LB Money
Market Fund
5.12% Institutional Class LB High
Yield Fund
57.14% Class A LB Growth Fund
65.44% Class A LB Value Fund
85.42% Class A LB Limited Maturity
Bond Fund
83.25% Class B LB Growth Fund
86.70% Class B LB Value Fund
99.80% Class B LB Limited Maturity
Bond Fund
100% Institutional Class LB Growth
Fund
100% Institutional Class LB Value
Fund
57.65% Institutional Class LB Mid
Cap Growth Fund
100% Institutional Class LB
Limited Maturity Bond Fund

Roger W. Allen 7.37% Class B LB Money Market Fund
139 W. Hickory Street
E. Rochester, NY 14445-1811

Berkey Land Company 8.35% Institutional Class LB
524 Berkey Road Municipal Bond Fund
Boswell, PA 15531-2315

Calahan Family Partnership 12.93% Institutional Class LB
6314 Hillview Way Municipal Bond Fund
Missoula, MT 59803-3373

California Lutheran University 6.70% Institutional Class LB Fund
60 West Olsen Road
Thousand Oaks, CA 91360-2700

Christ the King Lutheran Church 5.05% Institutional Class LB Money
5918 Spalding Drive Market Fund
Norcross, GA 30092-1906

FFB Financial Partnership 5.51% Institutional Class LB
Fred Bashore - G.P. Municipal Bond Fund
12435 E. Doubletree Road
Scottsdale, AZ 85259

Alfred H. Gaucker 14.51% Class B LB Money Market Fund
2110 Old Route 100
Bechtelsville, PA 19505-9003

Koppy's Propane, Inc. 14.52% Institutional Class LB
Rural Route 209, Box 36 Municipal Bond Fund
Williamstown, PA 17098

K V Management 17.15% Institutional Class LB
25 Gateway Drive Municipal Bond Fund
Reedsville, PA 17084-9641

Peter G. Lee 5.50% Class B LB Money Market Fund
1110 Fiske Street
Pacific Palisades, CA 90272-3845

Lichtenberg Brothers, Inc. 19.93% Institutional Class LB Mid
W1918 McArthur Road Cap Growth Fund
Mayville, WI 53050-2333

Lutheran Charities Foundation 11.07% Institutional Class LB High
Church Street Station Yield Fund
PO Box 9014
New York, NY 10087-9014

Lutheran Church Missouri 52.78% Institutional Class LB High
Synod Foundation Yield Fund
1333 S. Kirkwood Road
St. Louis, MO 63122-7295

Lutheran Community Foundation 42.72% Institutional Class LB Fund
625 Fourth Avenue South 36.22% Institutional Class LB Income
Suite 1415 Fund
Minneapolis, MN 55415-1624 83.11% Institutional Class LB
Opportunity Growth Fund
33.45% Institutional Class LB World
Growth Fund

Donald Frank Mann 5.86% Class B LB Money Market Fund
23 Barberry Hill Road
Woodstock, VT 05091-1268

Jon A. Olson 5.74% Class B LB Money Market Fund
Jean C. Olson
2919 Vernon Avenue South
St. Louis Park, MN 55416-1841

Roxie D. Overcash 12.37% Class B LB Money Market Fund
1885 Daugherty Road
China Grove, NC 28023-7680

St. Andrews By the Sea ELCA 19.87% Institutional Class LB Mid
PO Box 1567 Cap Growth Fund
Atlantic City, NJ 08404-1567

Norris Dean Thorson 7.14% Class B LB Money Market Fund
RR 3, Box 26
Luverne, MN 56156-9415

Joyce S. Winiarski 15.86% Class B LB Money Market Fund
103 Eden Glen Court
Black Mountain, NC 28711-8802

COMPENSATION OF TRUSTEES AND OFFICERS

The Funds make 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 $23,500 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, 1999, 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:

PENSION OR
RETIREMENT
AGGREGATE BENEFITS ACCRUED ESTIMATED ANNUAL TOTAL COMPENSATION
NAME AND POSITION COMPENSATION AS PART OF FUND BENEFITS UPON PAID BY FUND
OF PERSON FROM TRUST EXPENSES RETIREMENT AND FUND COMPLEX (1)
<S> <C> <C> <C> <C>
Rolf F. Bjelland(2) $ 0 $ 0 $ 0 $ 0
Chairman and Trustee

Herbert F. Eggerding, Jr. 19,875 0 0 36,750
Trustee

Noel K. Estenson 19,208 0 0 35,500
Trustee

Jodi L. Harpstead 19,208 0 0 35,500
Trustee

Richard K. Hauser 19,208 0 0 35,500
Trustee

Connie M. Levi 19,542 0 0 36,125
Trustee

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

(1) The "Fund Complex" includes the eleven series of The Lutheran Brotherhood Family of
Funds and the seven portfolios of LB Series Fund, Inc.
(2) "Interested person" of the Fund as defined in the Investment Company Act of 1940.

</TABLE>

INVESTMENT ADVISORY SERVICES

The Funds' 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 each of the Funds, except LB Opportunity
Growth Fund and LB World Growth Fund, are made by LB Research, subject to
the overall direction of the Board of Trustees. LB Research provides overall
investment supervision of LB Opportunity Growth Fund's and LB World Growth
Fund's investments, with investment decisions for those Funds being made by
investment sub-advisers. Except for LB Opportunity Growth Fund and LB World
Growth Fund, LB Research provides investment research and supervision of
each Fund's investments and conducts a continuous program of investment
evaluation and appropriate disposition and reinvestment of each Fund's
assets. LB Research assumes the expense of providing the personnel to
perform its advisory functions. The Master Advisory Contract (the "Advisory
Contract") for the 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.

Investment decisions for LB Opportunity Growth Fund are made by T. Rowe
Price Associates, Inc. ("T. Rowe Price"), which LB Research has engaged as
the sub-adviser for that Fund. T. Rowe Price manages LB Opportunity Growth
Fund on a daily basis, subject to the overall direction of LB Research and
the Funds' Board of Trustees.

T. Rowe Price was founded in 1937 and has its principal offices in
Baltimore, Maryland. As of June 30, 1999, T. Rowe Price and its affiliates
managed over $159 billion.

Investment decisions for LB World Growth Fund are made by Rowe Price-
Fleming International, Inc. ("Price-Fleming"), which LB Research has engaged
as the sub-adviser for that Fund. Price-Fleming manages that Fund on a daily
basis, subject to the overall direction of LB Research and the Funds' Board
of Trustees.

Price-Fleming was founded in 1979 as a joint venture between T. Rowe
Price Associates, Inc. and Robert Fleming Holdings Limited. Price-Fleming
is one of the world's largest international mutual fund asset managers with
the U.S. equivalent of over $33 billion under management as of June 30, 1999
in its offices in Baltimore, London, Tokyo, Singapore, Paris, Hong Kong, and
Buenos Aires.

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.

The Sub-advisory Contract between the Trust and T. Rowe Price provides
that it shall continue in effect with respect to LB Opportunity Growth 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
Sub-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
Sub-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.

The Sub-advisory Contract between the Trust and Price-Fleming provides
that it shall continue in effect with respect to LB World Growth 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 Sub-
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
Sub-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 each Fund.
The advisory contract between LB Research and the Trust provides for the
following advisory fees: LB Opportunity Growth Fund pays an advisory fee
equal to .50% of average daily net assets up to $100 million, .40% of
average daily net assets over $100 million but not over $250 million, .35%
of average daily net assets over $250 million but not over $500 million,
.30% of average daily net assets over $500 million but not over $1 billion,
and .25% of average daily net assets over $1 billion. LB Mid Cap Growth Fund
pays an advisory fee equal to .45% of average daily net assets up to $100
million, .40% of average daily net assets over $100 million but not over
$250 million, .35 % of average daily net assets over $250 million but not
over $500 million, .30% of average daily net assets over $500 million but
not over $1 billion and .25% of average daily net assets over $1 billion. LB
World Growth Fund pays an advisory fee equal to 1.00% of average daily net
assets up to $20 million, .85% of average daily net assets over $20 million
but not over $50 million, and .75% of average daily net assets over $50
million. LB Growth Fund pays an advisory fee equal to .425% of average daily
net assets up to $500 million, .375% of average daily net assets over $500
million but not over $1 billion and .325% of average daily net assets over
$1 billion. LB Fund pay an advisory fee equal to .40% of average daily net
assets of $500 million or less, .35% of average daily net assets over $500
million but not over $1 billion, and .30% of average daily net assets over
$1 billion. LB Value Fund pays an advisory fee equal to .40% of average
daily net assets up to $500 million, .35% of average daily net assets over
$500 million but not over $1 billion and .30% of average daily net assets
over $1 billion. LB High Yield Fund pay an advisory fee equal to .40% of
average daily net assets of $500 million or less, .35% of average daily net
assets over $500 million but not over $1 billion, and .30% of average daily
assets over $1 billion. LB Income Fund pays an advisory fee equal to .35% of
average daily net assets of $500 million or less, .325% of average daily net
assets over $500 million but not over $1 billion, and .30% of average daily
net assets over $1 billion. LB Municipal Bond Fund pays an advisory fee
equal to .325% of average daily net assets of $500 million or less, .3125%
of average daily net assets over $500 million but not over $1 billion, and
.30% of average daily net assets over $1 billion. LB Limited Maturity Bond
Fund pays an advisory fee equal to .30% of average daily net assets up to
$500 million, .275% of average daily net assets over $500 million but not
over $1 billion and .25% of average daily net assets over $1 billion. LB
Money Market Fund pay an advisory fee equal to .25% of average daily net
assets of $500 million or less, .225% of average daily net assets on the
next $500 million of average daily net assets, .20% of average daily net
assets on the next $500 million of average daily net assets, .175% of
average daily net assets on the next $500 million of average daily net
assets, and .15% of average daily net assets over $2 billion.

Effective January 1, 1997, LB Research voluntarily agreed to waive 5
basis points (0.05%) from the advisory fees payable by LB Fund, LB High
Yield Fund, LB Income Fund, and LB Municipal Bond Fund. These voluntary
partial waivers of advisory fees may be discontinued at any time.

LB Research has voluntarily agreed to temporarily waive a portion of
the advisory fee for LB Mid Cap Growth Fund and, if necessary, to bear
certain expenses associated with operating the Fund in order to limit the
Fund's total operating expenses for the Class A shares, Class B shares and
Institutional Class shares to an annual rate of 1.95%, 2.70%, and 1.70%,
respectively, of the average daily net assets of the relevant class. LB
Research has voluntarily agreed to temporarily waive a portion of its
advisory fee for the LB Growth Fund and, if necessary, to bear certain
expenses associated with operating the Fund in order to limit the Fund's
total operating expenses for the Class A shares, Class B shares and
Institutional Class shares to an annual rate of 1.30%, 2.05%, and 1.05%,
respectively, of the average daily net assets of the relevant class. LB
Research has voluntarily agreed to temporarily waive a portion of its
advisory fee for the LB Value Fund and, if necessary, to bear certain
expenses associated with operating the Fund in order to limit the Fund's
total operating expenses for the Class A shares, Class B shares and
Institutional Class shares to an annual rate of 1.30%, 2.05%, and 1.05%,
respectively, of the average daily net assets of the relevant class. LB
Research has voluntarily agreed to temporarily waive a portion of its
advisory fee for the LB Limited Maturity Bond Fund and, if necessary, to
bear certain expenses associated with operating the Fund in order to limit
the Fund's total operating expenses for the Class A shares, Class B shares
and Institutional Class shares to an annual rate of 0.95%, 0.95%, and 0.70%,
respectively, of the average daily net assets of the relevant class. LB
Research has voluntarily agreed to temporarily waive a portion of the
advisory fees in order to limit LB Money Market Fund's total operating
expenses for the Class A, Class B shares and Institutional Class shares to
0.95%, 0.95%, and 0.70%, respectively of the average net assets of the
relevant class.

The total dollar amounts paid to LB Research under the investment
advisory contract then in effect for the last three fiscal years are as
follows:

10/31/99 10/31/98 10/31/97
LB Opportunity Growth Fund $1,049,677 $1,819,274 $1,868,475
LB Mid Cap Growth Fund 267,092 203,949 21,586
LB World Growth Fund 753,081 834,624 682,203
LB Fund 5,257,761 6,971,792 5,686,741
LB High Yield Fund 3,660,910 5,720,730 4,911,490
LB Income Fund 2,754,808 4,538,239 4,799,245
LB Municipal Bond Fund 2,096,878 3,439,413 3,424,258
LB Money Market Fund 1,579,481 2,530,134 2,210,254

LB Research waived fees with respect to LB World Growth Fund totaling
$18,844, $208,656, and $66,807 for the fiscal years ended October 31, 1999,
1998, and 1997, respectively. LB Research waived fees with respect to LB
Fund totaling $967,463, $3,393,704, and $385,904 for the fiscal years ended
October 31, 1999, 1998 and 1997, respectively. LB Research waived fees with
respect to LB High Yield Fund totaling $647,959, $2,735,365, and $328,810
for the fiscal years ended October 31, 1999, 1998 and 1997, respectively. LB
Research waived fees with respect to LB Income Fund totaling $543,063,
$2,302,559, and $333,931 for the fiscal years ended October 31, 1999, 1998
and 1997, respectively. LB Research waived fees with respect to LB Municipal
Bond Fund totaling $434,545, $1,801,021, and $247,844 for the fiscal years
ended October 31, 1999, 1998 and 1997, respectively. LB Research waived fees
with respect to the Mid Cap Growth Fund totaling $77,128, $152,651, and
$7,357 for the fiscal years ended October 31, 1999, 1998 and 1997,
respectively. LB Research waived fees with respect to the Money Market Fund
totaling $404,526, $1,712,946, and $435,799 for the fiscal years ended
October 31, 1999, 1998 and 1997, respectively. LB Research waived fees with
respect to the Opportunity Growth Fund totaling $47,854 and $664,301 for the
fiscal years ended October 31, 1999 and 1998.

LB Research pays T. Rowe Price an annual sub-advisory fee for the
performance of sub-advisory services for LB Opportunity Growth Fund. The fee
payable is equal to .30% of that Fund's average daily net assets up to $500
million, .25% of that Fund's average daily net assets over $500 million but
not over $1 billion, and .20% of that Fund's average daily net assets over
$1 billion.

LB Research pays Price-Fleming an annual sub-advisory fee for the
performance of sub-advisory services for LB World Growth Fund. The fee
payable is equal to a percentage of that Fund's average daily net assets.
The percentage decreases as the Fund's assets increase. For purposes of
determining the percentage level of the sub-advisory fee for the Fund, the
assets of the Fund are combined with the assets of the World Growth
Portfolio of LB Series Fund, Inc., another fund with investment objectives
and policies that are similar to LB World Growth Fund and for which Price-
Fleming also provides sub-advisory services. The sub-advisory fee LB
Research pays Price-Fleming is equal to the World Growth Fund's pro rata
share of the combined assets of the Fund and the World Growth Portfolio of
LB Series Fund, Inc. and is equal to .75% of combined average daily net
assets up to $20 million, .60% of combined average daily net assets over $20
million but not over $50 million, and .50% of combined average daily net
assets over $50 million. When the combined assets of LB World Growth Fund
and the World Growth Portfolio of LB Series Fund, Inc. exceed $200 million,
the sub-advisory fee for LB World Growth Fund is equal to .50% of all of the
Fund's average daily net assets. Price-Fleming has agreed to waive its fees
so that when the combined assets of LB World Growth Fund and LB Series Fund,
Inc. World Growth Portfolio exceed $500 million, the sub-advisory fee for LB
World Growth Fund is equal to .45% of all the Fund's average daily net
assets. At October 31, 1999, the combined assets of LB World Growth Fund and
World Growth Portfolio totaled $556.7 million.

The total dollar amount paid by LB Research to T. Rowe Price under the
investment sub-advisory contract for LB Opportunity Growth Fund for the
fiscal year ended October 31, 1999 is $674,465. The total dollar amount paid
by LB Research to Price-Fleming under the investment sub-advisory contract
for LB World Growth Fund for the fiscal year ended October 31, 1999 is
$449,259.

ADMINISTRATIVE SERVICES

Lutheran Brotherhood Securities Corp. ("LB Securities") provides
administrative personnel and services necessary to operate the Funds on a
daily basis for a fee equal to 0.02 percent of the Funds' average daily net
assets. Prior to January 1, 1997, the fee equaled 0.0225 percent of the
Fund's average daily net assets. The total dollar amounts paid to LB
Securities for administrative services for the last three fiscal years are
as follows:

10/31/99 10/31/98 10/31/97
LB Opportunity Growth Fund $ 45,091 $ 53,144 $ 55,875
LB Mid Cap Growth Fund 11,478 5,827 617
LB World Growth Fund 19,579 16,693 13,826
LB Fund 283,224 226,247 184,583
LB High Yield Fund 184,197 182,358 158,365
LB Income Fund 151,763 153,504 166,209
LB Municipal Bond Fund 121,892 120,068 122,078
LB Money Market Fund 118,971 101,269 90,172

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 Funds' cash and securities, handling the receipt and
delivery of securities and collecting interest and dividends on the Funds'
investments.

TRANSFER AGENT

LB Securities provides transfer agency services necessary to the Funds
on a daily basis for a fee that is based on the number of shareholder
accounts. The total dollar amounts paid to LB Securities for transfer agency
services for the last three fiscal years are as follows:

10/31/99 10/31/98 10/31/97
LB Opportunity Growth Fund $ 1,262,313 $ 1,282,211 $ 1,147,649
LB Mid Cap Growth Fund 453,747 238,905 21,145
LB World Growth Fund 510,661 421,984 311,027
LB Fund 2,645,215 2,173,882 1,791,020
LB High Yield Fund 1,605,493 1,425,789 1,205,817
LB Income Fund 1,280,447 1,223,151 1,275,325
LB Municipal Bond Fund 483,542 480,276 492,743
LB Money Market Fund 1,718,928 1,549,977 1,383,639

INDEPENDENT ACCOUNTANTS

PricewaterhouseCoopers LLP, 650 Third Avenue South, Park Building,
Suite 1300, Minneapolis, Minnesota 55402, serves as the Trust's independent
accountants, providing professional services including audits of the Funds'
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 Funds.

DISTRIBUTION AND SHAREHOLDER SERVICES

PLAN OF DISTRIBUTION AND DISTRIBUTION CONTRACT

The Trust has adopted a Plan of Distribution pursuant to Rule 12b-1
under the 1940 Act (the "12b-1 Plan") with respect to the Class B shares of
each Fund except LB Limited Maturity Bond Fund and LB Money Market Fund. The
12b-1 Plan permits, among other things, payment by each such Fund for the
purpose of (1) making payments to underwriters, securities dealers and
others engaged in the sale of Class B shares, including payments to LB
Securities to be used to compensate or reimburse LB Securities and others
(including affiliates of LB Securities) engaged in the distribution and
marketing of Class B shares or furnishing assistance to investors on an
ongoing basis, and (2) providing reimbursement of direct out-of-pocket
expenditures incurred by LB Securities in connection with the distribution
and marketing of Class B shares, (3) providing reimbursements of payments of
commissions to LB Securities's field force and others involved in the
distribution of the Class B shares at the time of purchase, plus interest at
a rate not to exceed prime plus 1% on the amount of unreimbursed commissions
and (4) providing payment of expenses relating to the formulation and
implementation of marketing strategies and promotional activities such as
direct mail promotions and television, radio, newspaper, magazine and other
mass media advertising, the preparation, printing and distribution of sales
literature, the preparation, printing and distribution of prospectuses of
the Trust and reports for recipients other than existing shareholders of the
Trust, and obtaining such information, analyses and reports with respect to
marketing and promotional activities and investor accounts as the Trust may,
from time to time, deem advisable. The Trust and the Funds are authorized to
engage in the activities listed above, and in other activities primarily
intended to result in the sale of Class B shares, either directly or through
other persons with which the Trust has entered into agreements pursuant to
the 12b-1 Plan.

The 12b-1 Plan provides that it may not be amended to increase
materially the costs which a Fund may bear pursuant to the 12b-1 Plan
without approval by a 1940 Act Majority Vote of the Class B shareholders and
that other material amendments of the 12b-1 Plan must be approved by the
Trustees, and by the Trustees who are neither "interested persons" (as
defined in the 1940 Act) of the Trust nor have any direct or indirect
financial interest in the operation of the 12b-1 Plan or in any related
agreement (the "Qualified Trustees"), by vote cast in person at a meeting
called for the purpose of considering such amendments. While the 12b-1 Plan
is in effect, the selection and nomination of the Trustees of the Trust who
are not "interested persons" of the Trust has been committed to the
discretion of the Trustees who are not "interested persons" of the Trust.
The 12b-1 Plan was initially approved by the Board of Trustees, including a
majority of the Qualified Trustees, on September 9, 1997, and is subject to
annual approval, by the Board of Trustees and by the Qualified Trustees by
vote cast in person at a meeting called for the purpose of voting on the
12b-1 Plan. The 12b-1 Plan is terminable with respect to the Class B shares
of any Fund at any time by a vote of a majority of the Qualified Trustees or
by 1940 Act Majority Vote of the Class B shareholders of such Fund. A
quarterly report of the amounts expended under the 12b-1 Plan and the
purposes for which such expenditures were incurred must be made to the
Trustees for their review.

The Funds' 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". Under a First Amended and Restated Distribution Contract dated
October 31, 1997, as supplemented by letter dated October 29, 1999, (the
"Distribution Contract"), LB Securities is granted the right to sell Class
A, Class B and Institutional Class shares of the Funds as agent for the
Trust. LB Securities agrees to use its best efforts to secure purchasers for
the shares of the Funds. In connection with the services to be provided by
LB Securities under the Distribution Contract, LB Securities receives from
each Fund other than LB Limited Maturity Bond Fund and LB Money Market Fund
an amount with respect to Class B shares determined at an annual rate of
.75% of the average daily net asset value represented by such shares, such
amount to be paid in arrears at the end of each calendar month. The
Distribution Contract was initially approved by the Board of Trustees
including a majority of the Qualified Trustees, on September 9, 1997, and
will continue in effect from year to year so long as its continuance is
approved at least annually by the Board of Trustees and the Qualified
Trustees.

For the fiscal year ended October 31, 1999 each Fund paid LB Securities
fees under the Distribution Plan and the distributor used all of such
payments for compensation to sales personnel on behalf of the Class B shares
of the Funds as follows:

LB Opportunity Growth Fund 49,948

LB Mid Cap Growth Fund 83,511

LB World Growth Fund 43,727

LB Fund 346,361

LB High Yield Fund 215,750

LB Income Fund 87,611

LB Municipal Bond Fund 49,369

SHAREHOLDER SERVICING PLANS

The Trust has adopted shareholder servicing plans (each a "Shareholder
Servicing Plan") for each Fund (including LB Money Market Fund). The
Shareholder Servicing Plans for the Class A and Class B shares provide that
the relevant class may spend annually, directly or indirectly, up to .25% of
the average daily value of the net assets attributable to the relevant class
for shareholder servicing activities. The Shareholder Servicing Plan for the
Institutional Class shares provides that the Institutional Class may spend
annually, directly or indirectly, up to .15% of the average daily value of
the net assets attributable to the relevant class for shareholder servicing
activities. Under the Distribution Contract, LB Securities has agreed to
undertake certain shareholder servicing activities on behalf of the Funds in
exchange for a fee of .25% of the average daily value of the net assets
represented by Class A and Class B shares and .15% of the average daily
value of the net assets represented by Institutional Class shares. A
quarterly report of the amounts expended under the Shareholder Servicing
Plans, and the purposes for which such expenditures were incurred, must be
made to the Trustees for their review. Each Shareholder Servicing Plans may
be amended by a majority of the Qualified Trustees or by a 1940 Act Majority
Vote by shareholders of the respective class. The Shareholder Servicing
Plans have been approved, and are subject to annual approval, by the Board
of Trustees and the Qualified Trustees.

UNDERWRITING COMMISSIONS

The total dollar amounts of (i) initial sales charges reserved by LB
Securities for the last three fiscal years and (ii) contingent deferred
sales charge upon redemptions of Class B shares for the fiscal year ended
October 31, 1999 are as follows:

10/31/99 10/31/98
10/31/99 10/31/98 10/31/97 Contingent Contingent
Initial Initial Initial Deferred Deferred
Sales Sales Sales Sales Sales
Charges Charges Charges Charges Charges
<S> <C> <C> <C> <C> <C>
LB Opportunity Growth Fund $ 460,081 $ 778,363 $1,724,236 $ 9,798 $ 1,307
LB Mid Cap Growth Fund 358,047 427,170 278,924 12,738 2,314
LB World Growth Fund 264,109 310,483 637,128 8,846 675
LB Fund 2,710,727 2,551,224 2,613,029 58,914 12,268
LB High Yield Fund 2,699,426 3,625,091 3,716,291 45,912 15,247
LB Income Fund 1,295,358 1,114,000 905,599 24,214 4,381
LB Municipal Bond Fund 961,589 843,903 689,914 7,587 5,242
</TABLE>

BROKERAGE TRANSACTIONS

PORTFOLIO TRANSACTIONS

In connection with the management of the investment and reinvestment of
the assets of the Funds, the Advisory Contract authorizes LB Research,
acting by its own officers, directors or employees or by a duly authorized
subcontractor, including T. Rowe Price and Price-Fleming (each a "sub-
adviser"), to select the brokers or dealers that will execute purchase and
sale transactions for the Funds. In executing portfolio transactions and
selecting brokers or dealers, if any, LB Research and the sub-advisers will
use reasonable efforts to seek on behalf of the Funds the best overall terms
available. In assessing the best overall terms available for any
transaction, LB Research and the sub-advisers 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 and the sub-advisers 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 the sub-advisers or an affiliate of LB Research or
the sub-advisers exercises investment discretion. LB Research and the sub-
advisers 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 or the
sub-advisers 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 or the sub-advisers might otherwise
have paid, it would, of course, tend to reduce the expenses of LB Research
or the sub-advisers.

The investment decisions for a Fund are and will continue to be made
independently from those of other investment companies and accounts managed
by LB Research, a sub-adviser, or their affiliates. Such other investment
companies and accounts may also invest in the same securities as a 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 a Fund or the size of the position obtainable or sold by a
Fund.

AFFILIATED TRANSACTIONS OF THE SUB-ADVISERS

Subject to applicable SEC rules, as well as other regulatory
requirements, the sub-advisers of LB Opportunity Growth Fund and LB World
Growth Fund may allocate orders to brokers or dealers affiliated with such
sub-advisers. Such allocation shall be in such amounts and proportions as
the sub-adviser shall determine and the Fund's sub-adviser will report such
allocations either to LB Research, which will report such allocations to the
Board of Trustees, or, if requested, directly to the Board of Trustees.

BROKERAGE COMMISSIONS

During the last three fiscal years, the Funds paid the following
brokerage fees:

10/31/99 10/31/98 10/31/97
LB Opportunity Growth Fund $ 173,174 $ 748,871 $ 520,660
LB Mid Cap Growth Fund 152,039 362,449 29,180
LB World Growth Fund* 55,680 87,386 102,408
LB Growth Fund 3,538 -- --
LB Fund 1,552,905 1,282,269 941,481
LB Value Fund 5,043 -- --
LB High Yield Fund 0 11,048 15,071
LB Income 80,602 94,514 162,275
LB Municipal Bond Fund 0 0 7,399
LB Limited Maturity Bond Fund 0 -- --
LB Money Market Fund 0 0 0
- --------------------
* Amount paid to affiliated broker-dealer is $1,486 for the fiscal year
ended October 31, 1999, $4,586 for the fiscal year ended October 31, 1998,
$2,608 for the fiscal year ended October 31, 1997.

Of the brokerage fee amounts stated above and underwriting concessions
of dealers from whom the Funds purchased newly issued debt securities, the
following percentages were paid to firms which provided research,
statistical, or other services to LB Research or the sub-adviser in
connection with the management of the Funds:

10/31/99 10/31/98 10/31/97
LB Opportunity Growth Fund 0.06% 5.63% 6.68%
LB Mid Cap Growth Fund 16.83 25.69 68.99
LB World Growth Fund 2.87 3.55 1.30
LB Growth Fund 100.00 0.00 0.00
LB Fund 25.50 30.50 10.01
LB Value Fund 100.00 0.00 0.00
LB High Yield Fund 0.00 0.00 0.00
LB Income Fund 3.14 3.35 5.12
LB Municipal Bond Fund 0.00 0.00 0.00
LB Limited Maturity Bond Fund 0.00 0.00 0.00
LB Money Market Fund 0.00 0.00 0.00

PORTFOLIO TURNOVER RATE

The rate of portfolio turnover in the Funds will not be a limiting
factor when LB Research or the sub-adviser deems changes in a Fund's
portfolio appropriate in view of its investment objectives. As a result,
while a Fund will not purchase or sell securities solely to achieve short
term trading profits, a 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 a 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. LB Growth Fund, LB Value Fund,
and LB Limited Maturity Bond Fund do not expect their portfolio turnover
rate to exceed 100% during their first year of operation.

For the last three fiscal years, the portfolio turnover rates of LB
Opportunity Growth Fund, LB Mid Cap Growth Fund, LB World Growth Fund, LB
Fund, LB High Yield Fund, LB Income Fund, and LB Municipal Bond Fund were as
follows:

10/31/99 10/31/98 10/31/97
LB Opportunity Growth Fund 49% 155% 136%
LB Mid Cap Growth Fund 145% 436% 94%
LB World Growth Fund 18% 20% 17%
LB Fund 57% 57% 54%
LB High Yield Fund 55% 73% 113%
LB Income Fund 72% 98% 97%
LB Municipal Bond Fund 20% 14% 18%

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 one of the Funds has a purchase or
sale order pending, or any security currently under active consideration for
purchase or sale by a Fund. Additionally, portfolio managers of the Funds
may not purchase or sell any security within seven days before or after any
transaction in such security by the 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 Lutheran Brotherhood Family of Funds".

SYSTEMATIC INVESTMENT PLAN

Under the Systematic Investment Plan program, funds may be withdrawn
monthly from the shareholder's checking account and invested in the Funds.
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 a Fund and
invested in a 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

Purchases of Fund shares other than LB Limited Maturity Bond Fund and
LB Money Market Fund and the Institutional Class shares carry either an
initial sales charges (Class A) or contingent deferred sales charge (Class
B) as explained in the section of the Funds' prospectus relating to such
shares entitled, "Choosing Your Class of Shares", 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 a Fund.

NET ASSET VALUE

LB OPPORTUNITY GROWTH FUND, LB MID CAP GROWTH FUND, LB WORLD GROWTH FUND,
LB GROWTH FUND LB FUND, LB VALUE FUND, LB HIGH YIELD FUND, LB INCOME FUND,
LB MUNICIPAL BOND FUND AND LB LIMITED MATURITY BOND FUND

The net asset value per share is determined at the close of each day
the New York Stock Exchange is open, or any other 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 attributable to each class of shares;
subtracting liabilities attributable to such class; and dividing the result
by the number of shares of such class outstanding.

The market value of each Fund's portfolio securities is determined at
the close of regular trading of the New York Stock Exchange (the "Exchange")
on each day the Exchange is open. 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 or if the security is unlisted, 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 nationwide automated quotation system approved by the NASDAQ
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.

For all Funds other than the Money Market Fund, short-term securities
with maturities of 60 days or less are valued at amortized cost; those with
maturities greater than 60 days are valued at the mean between bid and asked
price.

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 foreign securities, as well as 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. Foreign currency
exchange rates are also generally determined prior to the close of the
Exchange. Occasionally, events affecting the value of such securities and
exchange rates 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 market value as determined in good faith by the Trustees of the Fund.

For purposes of determining the net asset value of shares of a Fund all
assets and liabilities initially expressed in foreign currencies will be
converted into U.S. dollars quoted by a major bank that is a regular
participant in the foreign exchange market or on the basis of a pricing
service that takes into account the quotes provided by a number of such
major banks.

LB MONEY MARKET FUND

Securities held by LB Money Market Fund are valued on the basis of
amortized cost, which involves a constant amortization of premium or
accretion of discount to maturity regardless of the impact of fluctuating
interest rates on the market value of the security. While this method
provides certainty in valuation, it may result in periods in which the value
as determined by amortized cost is higher or lower than the price LB Money
Market Fund would receive if it sold the security.

LB Money Market Fund anticipates that under ordinary and usual
circumstances it will be able to maintain a constant net asset value of
$1.00 per share and LB Money Market Fund will use its best efforts to do so.
However, such maintenance at $1.00 might not be possible if (1) there are
changes in short-term interest rates or other factors such as unfavorable
changes in the credit of issuers affecting the values of the securities held
by LB Money Market Fund and LB Money Market Fund is compelled to sell such
securities at a time when the prices which it is able to realize vary
significantly from the values determined on the amortized cost basis or (2)
LB Money Market Fund should have negative net income. It is expected that LB
Money Market Fund will have positive net income at the time of each
determination thereof.

The utilization of the amortized cost method of valuation requires
compliance with the requirements of Rule 2a-7 under the 1940 Act. Such
compliance requires, among other things, the following:

(1) The Trustees must adopt procedures whereby the extent of
deviation, if any, of the current net asset value per share
calculated using available market quotations (or an appropriate
substitute which reflects current market conditions) from LB
Money Market Fund's net asset value per share under the amortized
cost valuation method will be determined at such intervals as the
Trustees deem appropriate and reasonable in light of current
market conditions, and the Trustees must review periodically the
amount of the deviation as well as the methods used to calculate
the deviation;

(2) In the event such deviation from LB Money Market Fund's net
asset value under the amortized cost valuation method exceeds
1/2 of 1%, the Trustees must promptly consider what action should
be initiated by them, and when the Trustees believe the extent of
any deviation from LB Money Market Fund's net asset value per
share under the amortized cost valuation method may result in
material dilution or any other unfair results to investors or
existing shareholders, they must take such action as they deem
appropriate to eliminate or reduce to the extent reasonably
practicable such dilution or unfair results (shareholders will be
notified in the event any such corrective action is taken by the
Trustees);

(3) LB Money Market Fund may not purchase any instrument with a
remaining maturity greater than 397 calendar days or maintain a
dollar-weighted average portfolio maturity which exceeds 90 days;

(4) LB Money Market Fund must limit its portfolio investments,
including repurchase agreements, to those United States dollar-
denominated instruments which the Trustees determine present
minimal credit risks and which are "eligible securities" as
defined in Rule 2a-7; and

(5) LB Money Market Fund must record, maintain and preserve
certain records and observe certain reporting obligations in
accordance with Rule 2a-7.

Securities in which LB Money Market Fund invests must be U.S. dollar-
denominated Eligible Securities (as defined in Rule 2a-7 under the 1940 Act)
that are determined to present minimal credit risks. In general, the term
"Eligible Security" is limited to any security that:

(i) (a) either (1) has received a short-term rating from a nationally
recognized statistical rating organization (NRSRO") or has been
issued by an issuer that has received a short-term rating from an
NRSRO with respect to a class of debt obligations (or any debt
obligation within that class) that is comparable in priority and
security with the security or (2) is subject to a guarantee that
has received a short-term rating from an NRSRO, or a guarantee
issued by a guarantor that has received a short-term rating from
an NRSRO with respect to a class of debt obligations (or any debt
obligation within that class) that is comparable in priority and
security with the guarantee, (b) has a remaining maturity of 397
calendar days or less and (c) has received a rating from the
requisite number of NRSROs (i.e.. two, if two organizations have
issued ratings and one if only one has issued a rating) in one of
the two highest short-term major rating categories; or

(ii) is unrated but is of comparable quality to a rated security as
described in (i), above, and which at the time of issuance (a)
had a remaining maturity of more than 397 calendar days and now
has a remaining maturity of 397 calendar days or less, and (b)
has not received a long-term rating from an NRSRO in any NRSRO
major rating category outside of the NRSRO's three highest major
rating categories, unless the security has received a long-term
rating from the requisite number of NRSROs (i.e., two, if two
organizations have issued ratings and one if only one has issued
a rating) in one of the three highest long-term major rating
categories.

As indicated in the Prospectus, at least 95% of LB Money Market Fund's
total assets will consist of government securities and "first tier" eligible
securities as defined in Rule 2a-7 under the 1940 Act, with the balance of
LB Money Market Fund's assets invested in "second tier" eligible securities
as defined in Rule 2a-7. For this purpose, "second tier" eligible
securities generally are those which have been (i) rated by at least two
nationally recognized statistical rating organizations in one of the two
highest rating categories for short-term obligations (or so rated by one
such organization if it alone has rated the security), (ii) issued by an
issuer with comparable short-term obligations that are rated in one of the
two highest rating categories, or (iii) if unrated, determined to be
comparable to such securities. LB Money Market Fund may not invest more
than the greater of 1% of its total assets or $1 million in "second tier"
eligible securities of any single issuer.

CONVERSION TO FEDERAL FUNDS

It is LB Money Market Fund's policy to be as fully invested as possible
so that maximum interest may be earned on money market instruments in the
Fund's portfolio. To that end, all payments from investors must be in
federal funds or be converted into federal funds when deposited to State
Street Bank' account at the Boston Federal Reserve Bank. This conversion
must be made before shares are purchased. State Street Bank will act as the
investor's agent in depositing checks and converting them to federal funds.
State Street will convert the funds and enter the investor's order for
shares within two days of receipt of the check.

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 Funds' prospectus under
"Redeeming Shares".

TAX STATUS

THE FUNDS' TAX STATUS

The Funds expect to pay no federal income tax because they intend to
meet requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment
afforded to such companies. To qualify for this treatment, each Fund must,
among other requirements:

- derive at least 90% of its gross income from dividends,
interest, gains from the sale of securities, and certain
other investments;

- invest in securities within certain statutory limits; and

- distribute at least 90% of its ordinary income to
shareholders.

It is each 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, each Fund is also generally
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

Information on a shareholder's tax status is described in the Fund's
prospectus under "Taxes."

CAPITAL GAINS

While the Funds do not intend to engage in short-term trading, they 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. Each 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. Currently, eight
series of the Trust exist and each series is authorized to issue three
classes of shares: Class A, Class B and Institutional Class shares.
Effective October 31, 1997, all of the outstanding shares of the Funds were
redesignated as Class A shares and, immediately thereafter, shares held by
Lutheran institutions and church organizations with accounts of at least
$100,000 were automatically converted to Institutional Class shares. The
attributes of the various classes of shares are more fully described in
their respective prospectus. The interests of investors in the various
series of the Trust will be separate and distinct.

The assets received by the Trust from the issue and sale of shares of a
Fund and all income, earnings, profits and proceeds thereof, subject only to
the rights of creditors, are specially allocated to each class of such Fund
and constitute the underlying assets of such Fund. The underlying assets of
such Fund are required to be segregated on the books of account, and are
charged with the expenses in respect of each class of the Fund and with a
share of the general expenses of the Trust. Under the Trust's Multiple Class
Expense Allocation Plan adopted under Rule 18f-3 of the 1940 Act, (i)
advisory fees, custodial fees and other expenses relating to the management
of the Fund's assets ("Management-Related Expenses") are allocated to each
class on the basis of the net asset value of that class in relation to the
net asset value of the Series, (ii) expenses of the Institutional Class
shares of each Series (other than Management-Related Expenses) and
shareholder servicing fees with respect to Institutional Class shares are
specially allocated to the Institutional Class and (iii) expenses of the
Class A and Class B shares of each series, other than Management-Related
Expenses and Rule 12b-1 and shareholder servicing fees with respect to Class
A and Class B shares, are allocated to each such class based on the net
asset value of such class in relation to the aggregate net asset value of
the Class A and Class B shares. Upon any liquidation of a Fund,
shareholders thereof are entitled to share pro rata in the net assets of
each class available for distribution.

CALCULATION OF PERFORMANCE DATA

The total return and yield of the Class A, Class B and Institutional
Class shares will be calculated as set forth below. Total return and yield
are computed separately for each class of shares of the Funds. The
performance data listed below covers periods prior to the adoption of the
current class designations. Shares of the Funds had no class designations
until October 31, 1997, when designations were assigned based upon the sales
charges, Rule 12b-1 fees and shareholder servicing fees applicable to shares
sold thereafter. The Shareholder Servicing Plans became effective on October
31, 1997, for Class A and Class B shares, and on October 31, 1999, for
Institutional Class shares. Total return and yield performance data for
periods prior to October 31, 1997 have been restated to reflect the revised
initial sales charge schedule for the Class A shares and the CDSC for the
Class B shares that became effective on that date. However, the total return
and yield performance data have not been restated to reflect Rule 12b-1 fees
for the Class B shares and shareholder servicing fees, which will adversely
affect performance after October 31, 1997, for the Class A and B shares and
after October 31, 1999, for the Institutional Class shares.

Performance data after October 31, 1997 reflects Rule 12b-1 fees,
shareholder servicing fees and sales charges, where applicable, as follows:

Class Rule 12b-1 Shareholder Sales Charge
Servicing Fee
---------- ------------- -------------

A None .25% of average Maximum 4.0% initial
daily net assets sales charge
reflected(1)

B .75% of .25% of average 1- and 5- year
average daily daily net assets periods reflect a
net assets(1) 5% and 1% CDSD,
respectively(1)

Institutional(2) None .15% None
- -----------------

(1) Except for LB Limited Maturity Bond Fund and LB Money Market Fund,
which are not subject to initial sales charges, CDSC or Rule 12b-1
fees.
(2) The Institutional Class shareholder servicing fee became effective
October 31, 1999.

Calculations of performance data for all Funds in this section reflect
the subsidization by Fund affiliates of fees and expenses relating to the
Fund during the subject period. In the absence of such subsidization actual
performance would be lower.

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.

YIELD

Yield is computed by dividing the net investment income per share
earned during a recent month or other specified 30-day period by the
applicable maximum offering price per share on the last day of the period
and annualizing the result, according to the following formula:

[A formula is expressed here that is as follows:

Yield is equal to 2 times the difference between the sixth power of a
number and 1, where that number is equal to the sum of the quotient of a
divided by b and 1.]

Where:

a = dividends and interest earned during the period
minus expenses accrued for the period (net of
voluntary expense reductions by the Investment
Manager)

b = the average daily number of shares outstanding
during the period that were entitled to receive
dividends multiplied by the maximum offering
price per share on the last day of the period

To calculate interest earned (for the purpose of "a" above) on debt
obligations, a Fund computes the yield to maturity of each obligation held
by a Fund based on the market value of the obligation (including actual
accrued interest) at the close of the last business day of the preceding
period, or, with respect to obligations purchased during the period, the
purchase price (plus actual accrued interest). The yield to maturity is then
divided by 360 and the quotient is multiplied by the market value of the
obligation (including actual accrued interest) to determine the interest
income on the obligation for each day of the period that the obligation is
in the portfolio. Dividend income is recognized daily based on published
rates.

In the case of a tax-exempt obligation issued without original issue
discount and having a current market discount, the coupon rate of interest
is used in lieu of the yield to maturity. Where, in the case of a tax-exempt
obligation with original issue discount, the discount based on the current
market value exceeds the then-remaining portion of original issue discount
(market discount), the yield to maturity is the imputed rate based on the
original issue discount calculation. Where, in the case of a tax-exempt
obligation with original issue discount, the discount based on the current
market value is less than the then-remaining portion of original issue
discount (market premium), the yield to maturity is based on the market
value. Dividend income is recognized daily based on published rates.

With respect to the treatment of discount and premium on mortgage or
other receivables-backed obligations which are expected to be subject to
monthly payments of principal and interest ("paydowns"), a Fund accounts for
gain or loss attributable to actual monthly paydowns as a realized capital
gain or loss during the period. Each Fund has elected not to amortize
discount or premium on such securities.

Undeclared earned income, computed in accordance with generally
accepted accounting principles, may be subtracted from the maximum offering
price. Undeclared earned income is the net investment income which, at the
end of the base period, has not been declared as a dividend, but is
reasonably expected to be declared as a dividend shortly thereafter. The
maximum offering price includes, as applicable, a maximum sales charge of
4.0%.

All accrued expenses are taken into account as described later herein.

Yield information is useful in reviewing a Fund's performance, but
because yields fluctuate, such information cannot necessarily be used to
compare an investment in a Fund's shares with bank deposits, savings
accounts and similar investment alternatives which are insured and/or often
provide an agreed or guaranteed fixed yield for a stated period of time.
Shareholders should remember that yield is a function of the kind and
quality of the instruments in the Fund's portfolio, portfolio maturity and
operating expenses and market conditions.

TAX EQUIVALENT YIELD

LB Municipal Bond Fund may quote its tax equivalent yield. LB Municipal
Bond Fund's tax equivalent yield is computed by dividing that portion of
such Fund's yield (computed as described under "Yield" above) which is tax-
exempt, by the complement of the combined federal and state maximum
effective marginal rate and adding the result to that portion, if any, of
the yield of such Fund that is not tax-exempt. The complement, for example,
of a tax rate of 31% is 69%, that is 1.00 - 0.31 = 0.69.

The tables below present the average annual returns for all Funds
except LB Money Market Fund, the yields for LB High Yield Fund, LB Income
Fund, and LB Municipal Bond Fund, and the tax-equivalent yield for LB
Municipal Bond Fund of the Class A, Class B, and Institutional Class shares
for the indicated periods ended October 31, 1999. The tables reflect the
revised initial sales charge schedule for the Class A shares and the CDSC
for Class B shares effective October 31, 1997,and they do not reflect the
shareholder servicing fee applicable to the Class A and Class B shares for
periods prior to October 31, 1997 and applicable to the Institutional Class
shares for periods prior to October 31, 1999.

<TABLE>
<CAPTION>
CLASS A PERFORMANCE
Current
SEC Average Annual Total Returns as of 10/31/99 Date
Yield --------------------------------------------- of
Fund 10/31/99 1-Year 5-Years 10-Years Inception Inception
- -------------------------- -------- ------ ------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
LB Opportunity Growth Fund n/a 14.82% 7.56% n/a 9.34% 01/08/93
LB Mid Cap Growth Fund n/a 35.11% n/a n/a 15.85% 05/30/97
LB World Growth Fund n/a 14.45% n/a n/a 9.66% 09/05/95
LB Fund n/a 20.59% 20.23% 14.64% n/a --
LB High Yield Fund 10.72% 3.35% 7.09% 9.38% n/a --
LB Income Fund 6.09% -4.71% 6.36% 6.60% n/a --
LB Municipal Bond Fund 4.47%(a) -6.52% 5.79% 6.41% n/a --

--------------------------------------------------
(a) Tax Equivalent Yields
--------------------------------------------------
Tax Bracket 39.6% 36% 31% 28% 15%
------ ------ ------ ------ ------
LB Municipal Bond Fund 7.40% 6.98% 6.48% 6.21% 5.26%
</TABLE>

<TABLE>
<CAPTION>
CLASS B PERFORMANCE

Current Total Returns as of 10/31/99
SEC ---------------------------- Date
Yield Inception Inception of
Fund 10/31/99 (If Held) (If Redeemed) Inception
- -------------------------- -------- --------- ------------- ---------
<S> <C> <C> <C> <C>
LB Opportunity Growth Fund n/a 18.66% 13.66% 10/31/97
LB Mid Cap Growth Fund n/a 39.69% 34.69% 10/31/97
LB World Growth Fund n/a 18.28% 13.28% 10/31/97
LB Fund n/a 24.66% 19.66% 10/31/97
LB High Yield Fund 10.40% 6.92% 1.92% 10/31/97
LB Income Fund 5.59% -1.52% -6.45% 10/31/97
LB Municipal Bond Fund 3.91%(a) -3.44% -8.27% 10/31/97

<TABLE>
<CAPTION>
INSTITUTIONAL CLASS PERFORMANCE

Current
SEC Total Returns as of 10/31/99 Date
Yield ---------------------------- of
Fund 10/31/99 Inception Inception
- -------------------------- -------- --------- ---------
<S> <C> <C> <C>
LB Opportunity Growth Fund n/a -5.19% 10/31/97
LB Mid Cap Growth Fund n/a 15.72% 10/31/97
LB World Growth Fund n/a 13.15% 10/31/97
LB Fund n/a 20.54% 10/31/97
LB High Yield Fund 11.45% 1.10% 10/31/97
LB Income Fund 6.59% 4.03% 10/31/97
LB Municipal Bond Fund 4.92%(a) 2.80% 10/31/97

YIELD - MONEY MARKET FUND

When LB Money Market Fund quotes a "current annualized" yield, it is
based on a specified recent seven calendar-day period. It is computed by (1)
determining the net change, exclusive of capital changes, in the value of a
hypothetical preexisting account having a balance of one share at the
beginning of the period, (2) dividing the net change in account value by the
value of the account at the beginning of the base period to obtain the base
return, then (3) multiplying the base period by 52.14 (365 divided by 7).
The resulting yield figure is carried to the nearest hundredth of one
percent.

The calculation includes (1) the value of additional shares purchased
with dividends on the original share, and dividends declared on both the
original share and any such additional shares, and (2) all fees charge to
all shareholder accounts, in proportion to the length of the base period and
the Trust's average account size.

The capital changes excluded from the calculation are realized capital
gains and losses from the sale of securities and unrealized appreciation and
depreciation. The Fund's effective (compounded) yield will be computed by
dividing the seven-day annualized yield as defined above by 365, adding 1 to
the quotient, raising the sum to the 365th power, and subtracting 1 from the
result.

Current and effective yields fluctuate daily and will vary with factors
such as interest rates and the quality, length of maturities, and type of
investments in the portfolio.

Class Institutional
A & B Class
----- -----
Yield For 7-day Period Ended 10/31/99 4.59% 4.84%

Effective Yield For 7-day Period Ended 10/31/99 4.69% 4.96%

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 include the subsidization by Fund affiliates of fees
or expenses relating to a Fund, during the subject period.

NONSTANDARDIZED TOTAL RETURN

A 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 one, five and ten years before such quarter end
and at the commencement of such Fund's operations. In addition, a 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.

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 edged". 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.

COMMERCIAL PAPER:

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

o Leading market positions in well-established industries.

o High rates of return of funds employed.

o Conservative capitalization structures with moderate reliance
on debt and ample asset protection.

o Broad margins in earnings coverage of fixed financial charges
and high internal cash generation.

o 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 senior 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 Debt rated AAA has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.

AA Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from AAA issues only in small degree.

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

BBB Debt rated BBB exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to
lead to a weakened capacity of the obligor to meet its financial
commitments on the obligation in this category than in higher rated
categories.

BB Debt 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 inadequate capacity of the obligor to meet its
financial commitments on the obligation. The BB rating category is
also used for debt subordinated to senior debt that is assigned an
actual or implied BBB-rating.

B Debt rated B is more vulnerable to nonpayment but currently has the
capacity to meet its financial commitments on the obligation.
Adverse business, financial, or economic conditions will likely
impair the obligor's capacity or willingness to meet its financial
commitments on the obligation.

The B rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied BB or BB- rating.

CCC Debt rated CCC is vulnerable to nonpayment, and is dependent upon
favorable business, financial, and economic conditions for the
obligor to meet its financial commitments 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
commitments on the obligation.

The CCC rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied B or B- rating.

CC The rating CC typically is currently highly vulnerable to
nonpayment.

C The rating C typically is applied to debt subordinated to senior
debt which is assigned an actual or implied CCC- debt rating. 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 the
obligation are being continued.

D Debt rated D is in payment default. The D rating category is used
when payments are not made on the date due even if the applicable
grace period has not expired, unless S&P 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 similar action if payments on the obligation are jeopardized.

Provisional Ratings: The letter "p" indicates that the rating is
provisional. A provisional rating assumes the successful completion of the
project financed by the debt being rated and indicates that payment of debt
service requirements is largely or entirely dependent upon the successful
and timely completion of the project. This rating, however, while addressing
credit quality subsequent to completion of the project, makes no comment on
the likelihood of, or the risk of default upon failure of, such completion.
The investor should exercise judgment with respect to such likelihood and
risk.

Commercial Paper: Commercial paper rated A by Standard & Poor's
Corporation has the following characteristics: liquidity ratios are better
than the industry average; long-term senior debt rating is "A" or better
(however, in some cases a "BBB" long-term rating may be acceptable); the
issuer has access to at least two additional channels of borrowing; basic
earnings and cash flow have an upward trend with allowances made for unusual
circumstances. Also, the issuer's industry typically is well established,
the issuer has a strong position within its industry and the reliability and
quality of management is unquestioned. Issuers rated A are further referred
to by use of numbers 1, 2 and 3 to denote relative strength within this
classification.

REPORT OF INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS

The Report of Independent Accountants and financial statements in the
Annual Report to Shareholders for the fiscal year ended October 31, 1999 of
the Funds are a separate report furnished with this Statement of Additional
Information and are incorporated herein by reference.

<PAGE>
PART C

THE LUTHERAN BROTHERHOOD FAMILY OF FUNDS

PART C
OTHER INFORMATION
-----------------

Item 23. Exhibits
- -------------------------------------------

(a)(1) First Amended and Restated Master Trust Agreement of the
Registrant (4)

(a)(2) Form of Amendment No. 1 to First Amended and Restated Master
Trust Agreement (1)

(a)(3) Form of Amendment No. 2 to First Amended and Restated Master
Trust Agreement (2)

(a)(4) Form of Amendment No. 3 to First Amended and Restated Master
Trust Agreement (3)

(a)(5) Amendment No. 4 to First Amended and Restated Master Trust
Agreement (7)

(a)(6) Amendment No. 5 to First Amended and Restated Master Trust
Agreement (8)

(b) By-Laws of the Registrant (4)

(d)(1) Form of Master Advisory Contract between the Registrant and
Lutheran Brotherhood Research Corp. (4)

(d)(2) Form of Letter Amendment to Master Advisory Contract (1)(2)(8)

(d)(3) Form of Sub-Advisory Agreement between Lutheran Brotherhood
Research Corp. and Rowe Price-Fleming International, Inc. (1)

(d)(4) Form of Sub-Advisory Agreement between Lutheran Brotherhood
Research Corp., the Registrant and T. Rowe Price Associates,
Inc. (5)

(d)(5) Amendment No. 1 to Master Advisory Contract (7)

(d)(6) Amendment No. 2 to Master Advisory Contract (7)

(e)(1) Form of Amended and Restated Distribution Contract (3)

(e)(2) Form of Letter Amendement to Amended and Restated Distribution
Contract (8)

(e)(3) Form of Amendment No. 1 to Amended and Restated Distribution
Contract (9)

(f) Not applicable

(g)(1) Form of Custodian Contract between the Registrant and State
Street Bank and Trust Company (4)

(g)(2) Form of Amendment to Custodian Contract (1)(2)(8)

(g)(3) Form of Amended and Restated Transfer Agency Agreement between
the Registrant and Lutheran Brotherhood Securities Corp. (3)

(g)(4) Form of Letter Amendment to Amended and Restated Transfer Agency
Agreement (8)

(g)(5) Administration Contract Between The Lutheran Brotherhood Family
of Funds and Lutheran Brotherhood Securities Corp. (1)

(g)(6) Form of Amendment to Administration Contract (1)(2)(8)

(h) Form of Letter Agreement for Line of Credit (10)

(i) Opinion and consent of counsel (4)(9)

(j) Not applicable

(k) Not Applicable

(l)(1) Subscription and Investment Letter with respect to each of
Lutheran Brotherhood Opportunity Growth Fund, Lutheran
Brotherhood Fund, Lutheran Brotherhood High Yield Fund, Lutheran
Brotherhood Income Fund, Lutheran Brotherhood Municipal Bond Fund
and Lutheran Brotherhood Money Market Fund (4)

(l)(2) Form of Subscription and Investment Letter with respect to
Lutheran Brotherhood World Growth Fund (1)

(l)(3) Form of Subscription and Investment Letter with respect to
Lutheran Brotherhood Mid Cap Growth Fund (2)

(l)(4) Form of Subscription and Investment Letter with respect to
Lutheran Brotherhood Growth Fund, Lutheran Brotherhood Value
Fund, and Lutheran Brotherhood Limited Maturity Bond Fund (8)

(m)(1) Plan of Distribution Pursuant to Rule 12b-1 with respect to the
Class B Shares (3)

(m)(2) Form of Letter Amendment to Plan of Distribution Pursuant to Rule
12b-1 with respect to the Class B Shares (8)

(m)(3) Shareholder Servicing Plan with respect to the Class A Shares (3)

(m)(4) Form of Letter Amendment to Shareholder Servicing Plan with
respect to the Class A Shares (8)

(m)(5) Shareholder Servicing Plan with respect to the Class B Shares (3)

(m)(6) Form of Letter Amendment to Shareholder Servicing Plan with
respect to the Class B Shares (8)

(m)(7) Shareholder Servicing Plan with respect to the Institutional
Class Shares (9)

(n) Form of Amended and Restated Multiple Class Expense Allocation
Plan Adopted Pursuant to Rule 18f-3 (10)

(p) Powers of Attorney for:
Rolf F. Bjelland, Wade M. Voigt, Herbert F. Eggerding, Jr.,
Noel K. Estenson, Jodi L. Harpstead, Richard A. Hauser, Connie
M. Levi, and Bruce J. Nicholson (7)

- --------------------
Filed as part of the Registration Statement as noted below and incorporated
herein by reference:

Footnote
Reference Securities Act of 1933 Amendment Date Filed
--------- -------------------------------- ----------
(1) Post-Effective Amendment No. 55 June 19, 1995
(2) Post-Effective Amendment No. 58 March 10, 1997
(3) Post-Effective Amendment No. 60 October 28, 1997
(4) Post-Effective Amendment No. 61 December 31, 1997
(5) Post-Effective Amendment No. 62 March 16, 1998
(6) Post-Effective Amendment No. 64 October 23, 1998
(7) Post-Effective Amendment No. 65 December 21, 1998
(8) Post-Effective Amendment No. 66 August 5, 1999
(9) Post-Effective Amendment No. 67 October 14, 1999
(10) Filed herewith

Item 24. Persons Controlled by or under Common Control with Registrant

None.

Item 25. Indemnification

Under Article VI of the Registrant's Master Trust Agreement each
of its Trustees and officers or persons serving in such capacity with
another entity at the request of the Registrant ("Covered Person") shall be
indemnified against all liabilities, including, but not limited to, amounts
paid in satisfaction of judgments, in compromises or as fines or penalties,
and expenses, including reasonable legal and accounting fees, in connection
with the defense or disposition of any action, suit or other proceeding,
whether civil or criminal, before any court or administrative or legislative
body, in which such Covered Person may be or may have been involved as a
party or otherwise or with which such Covered Person may be or may have been
threatened, while in office or thereafter, by reason of being or having been
such a Trustee or officer, director or trustee, except with respect to any
matter as to which it has been determined that such Covered Person had acted
with willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such Covered Person's office (such
conduct referred to hereafter as "Disabling Conduct"). A determination that
the Covered Person is entitled to indemnification may be made by (i) a final
decision on the merits by a court or other body before which the proceeding
was brought that the person to be indemnified was not liable by reason of
Disabling Conduct, (ii) dismissal of a court action or an administrative
proceeding against a Covered Person for insufficiency of evidence of
Disabling Conduct, or (iii) a reasonable determination, based upon a review
of the facts, that the indemnitee was not liable by reason of Disabling
Conduct by (a) a vote of a majority of a quorum of Trustees who are neither
"interested persons" of the Registrant as defined in section 2(a)(19) of the
1940 Act nor parties to the proceeding, or (b) an independent legal counsel
in a written opinion.

Under the Distribution Agreement between the Registrant and
Lutheran Brotherhood Securities Corp., the Registrant's distributor, the
Registrant has agreed to indemnify, defend and hold Lutheran Brotherhood
Securities Corp., its officers, directors, employees and agents and any
person who controls Lutheran Brotherhood Securities Corp. free and harmless
from and against any loss, claim, damage, liability and expense incurred by
any of them arising out of or based upon any untrue or alleged untrue
statement of material fact, or the omission or alleged omission to state a
material fact necessary to make the statements made not misleading, in a
Registration Statement, the Prospectus or Statement of Additional
Information of the Registrant, or any amendment or supplement thereto,
unless such statement or omission was made in reliance upon written
information furnished by Lutheran Brotherhood Securities Corp.

Under the Amended and Restated Transfer Agent and Service
Agreement between the Registrant and Lutheran Brotherhood Securities Corp.,
the Registrant has agreed, provided that Lutheran Brotherhood Securities
Corp. has at all relevant times acted in good faith and without negligence
or willful misconduct, to indemnify and hold Lutheran Brotherhood Securities
Corp. harmless from and against any and all losses, damages, costs, charges,
attorneys fees, payments, expenses and liability arising out of or
attributable to (a) all actions of Lutheran Brotherhood Securities Corp. or
its agents or subcontractors required to be taken under the Transfer Agency
and Service Agreement or which arise out of the Registrant's lack of good
faith, negligence, or willful misconduct or the breach of any representation
or warranty of the Registrant under the Transfer Agency and Service
Agreement, (c) the reliance on or use by Lutheran Brotherhood Securities
Corp. or its agents or subcontractors of information, records or documents
which are furnished by or on behalf of Registrant, (d) the reliance on or
the carrying out by Lutheran Brotherhood Securities Corp. or its agents or
subcontractors of any instructions or requests by Registrant, or (e) the
offer or sale of shares of the Registrant unknown by Lutheran Brotherhood
Securities Corp. to be in violation of law.

Insofar as indemnification by the Registrant for liabilities
arising under the Securities Act of 1933 may be permitted to trustees,
officers, underwriters and controlling persons of the Registrant, pursuant
to Article VI of the Registrant's Master Trust Agreement, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a trustee, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted against the Registrant by such
trustee, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it
is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.

Item 26. Business and Other Connections of Investment Adviser.

Lutheran Brotherhood Research Corp. has been engaged in the investment
advisory business since 1970. Lutheran Brotherhood, the indirect parent
company of LB Research, also acts as investment adviser to LB Series Fund,
Inc.

The directors and officers of Lutheran Brotherhood Research Corp. are
listed below, together with their principal occupations during the past two
years. (Their titles may have varied during that period.)

Directors:

Bruce J. Nicholson (President and Chief Operating Officer of Lutheran
Brotherhood)
David W. Angstadt (Executive Vice President and Chief Marketing Officer
of Lutheran Brotherhood)
Rolf F. Bjelland (Executive Vice President of Lutheran Brotherhood)
Randall L. Boushek (Senior Vice President and Chief Investment
Officer of Lutheran Brotherhood)
Michael E. Loken (Senior Vice President of Lutheran Brotherhood)
Jennifer H. Martin (Senior Vice President of Lutheran Brotherhood)
James R. Olson (Senior Vice President of Lutheran Brotherhood)
Jerald E. Sourdiff (Senior Vice President and Chief Financial Officer
of Lutheran Brotherhood)
Daniel G. Walseth (Senior Vice President of Lutheran Brotherhood)

Officers:

Randall L. Boushek, President (Senior Vice President and Chief
Investment Officer of Lutheran Brotherhood)
David K. Stewart, Treasurer (Vice President and Treasurer of Lutheran
Brotherhood)
Otis F. Hilbert, Secretary (Vice President of Lutheran Brotherhood)
Jerald E. Sourdiff, Chief Financial Officer (Chief Financial Officer
and Senior Vice President of Lutheran Brotherhood)
Charles E. Heeren, Vice President (Vice President of Lutheran
Brotherhood)
James R. Olson, Vice President (Senior Vice President of Lutheran
Brotherhood)
Mark L. Simenstad, Vice President (Vice President of Lutheran
Brotherhood)
James M. Walline, Vice President (Vice President of Lutheran
Brotherhood)
Michael A. Binger, Assistant Vice President (Associate Portfolio
Manager of Lutheran Brotherhood)
Harold J. Goldstein, Assistant Vice President (Portfolio Manager of
Lutheran Brotherhood)
Janet I. Grangaard, Assistant Vice President (Assistant Vice President
of Lutheran Brotherhood)
Thomas N. Haag, Assistant Vice President (Assistant Vice President of
Lutheran Brotherhood)
Fred P. Johnson, Assistant Vice President (Assistant Vice President of
Lutheran Brotherhood)
Michael G. Landreville, Assistant Vice President (Assistant Vice
President of Lutheran Brotherhood)
Paul J. Ocenasek, Assistant Vice President (Assistant Vice President of
Lutheran Brotherhood)
Gail R. Onan, Assistant Vice President (Portfolio Manager of Lutheran
Brotherhood)
Brian L. Thorkelson, Assistant Vice President (Portfolio Manager of
Lutheran Brotherhood)
Scott A. Vergin, Assistant Vice President (Portfolio Manager of
Lutheran Brotherhood)
Marie A. Sorensen, Assistant Vice President (Assistant Vice President
of Lutheran Brotherhood)
John C. Bjork, Assistant Secretary (Counsel of Lutheran Brotherhood)
Marlene J. Nogle, Assistant Secretary (Assistant Vice President of
Lutheran Brotherhood)

The business address of each of the above directors and officers
employed by Lutheran Brotherhood is 625 Fourth Avenue South, Minneapolis,
Minnesota 55415.

The business and other connections of the officers and directors of
Rowe Price-Fleming International, Inc. ("Sub-advisor") are set forth in the
Form ADV of Sub-advisor currently on file with the Securities and Exchange
Commission (File No. 801-14713)

Item 27. Principal Underwriters

(a) Lutheran Brotherhood Securities Corp. also serves as principal
underwriter for LB Series Fund, Inc.

(b) Directors and officers of Lutheran Brotherhood Securities Corp.
are as follows:

(1) (2) (3)
Positions
Name and Principal and Offices Positions and Offices
Business Address with Underwriter with Registrant
------------------ ---------------- --------------------
David W. Angstadt Director and President --
625 Fourth Avenue South
Minneapolis, MN 55415

Rolf F. Bjelland Director Trustee
625 Fourth Avenue South
Minneapolis, MN 55415

Bruce J. Nicholson Director Trustee
625 Fourth Avenue South
Minneapolis, MN 55415

Randall L. Boushek Director --
625 Fourth Avenue South
Minneapolis, MN 55415

Michael E. Loken Director --
625 Fourth Avenue South
Minneapolis, MN 55415

Jennifer H. Martin Director --
625 Fourth Avenue South
Minneapolis, MN 55415

James R. Olson Director and Vice President --
625 Fourth Avenue South
Minneapolis, MN 55415

Jerald E. Sourdiff Director and Chief --
625 Fourth Avenue South Financial Officer
Minneapolis, MN 55415

Daniel G. Walseth Director --
625 Fourth Avenue South
Minneapolis, MN 55415

Colleen Both Vice President and Chief --
625 Fourth Avenue South Compliance Officer
Minneapolis, MN 55415

Otis F. Hilbert Vice President Vice President
625 Fourth Avenue South and Secretary and Secretary
Minneapolis, MN 55415

David K. Stewart Treasurer --
625 Fourth Avenue South
Minneapolis, MN 55415

Larry A. Borlaug Vice President --
625 Fourth Avenue South
Minneapolis, MN 55415

J. Keith Both Vice President --
625 Fourth Avenue South
Minneapolis, MN 55415

Mitchell F. Felchle Vice President --
625 Fourth Avenue South
Minneapolis, MN 55415

Wayne A. Hellbusch Vice President --
625 Fourth Avenue South
Minneapolis, MN 55415

Douglas B. Miller Vice President --
625 Fourth Avenue South
Minneapolis, MN 55415

Richard B. Ruckdashel Vice President Vice President
625 Fourth Avenue South
Minneapolis, MN 55415

Item 28. Location of Accounts and Records

The Registrant maintains the records required to be maintained by it
under Rules 31a-1(a), 31a-1(b), and 31a-2(a) under the Investment Company
Act of 1940 at its principal executive offices at 625 Fourth Avenue South,
Minneapolis, Minnesota 55415. Certain records, including records relating to
Registrant's shareholders and the physical possession of its securities, may
be maintained pursuant to Rule 31a-3 under the Investment Company Act of
1940 by the Registrant's transfer agent or custodian at the following
locations:

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

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

State Street Bank and Trust Company 225 Franklin Street
Boston, Massachusetts 02110

Item 29. Management Services

Not Applicable.

Item 30. Undertakings

Not Applicable.

<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to its Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this amendment to its Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized, in the City of
Minneapolis and State of Minnesota, on the 17th day of December, 1999.

THE LUTHERAN BROTHERHOOD
FAMILY OF FUNDS

By: /s/ John C. Bjork
-------------------------------
John C. Bjork,
Assistant Secretary

Pursuant to the requirements of the Securities Act of 1933, this
amendment to this registration statement has been signed below by the
following persons in the capacities and on the date indicated.

Signature Title Date

* Trustee and President December 17, 1999
- ------------------------ (Principal Executive Officer)
Rolf F. Bjelland

* Treasurer December 17, 1999
- ------------------------ (Principal Financial and
Wade M. Voigt Accounting Officer)

* Trustee December 17, 1999
- -------------------------
Herbert F. Eggerding, Jr.

* Trustee December 17, 1999
- -------------------------
Noel K. Estenson

* Trustee December 17, 1999
- -------------------------
Jodi L. Harpstead

* Trustee December 17, 1999
- -------------------------
Richard A. Hauser

* Trustee December 17, 1999
- ------------------------
Connie M. Levi

* Trustee December 17, 1999
- ------------------------
Bruce J. Nicholson

By: /s/ John C. Bjork
----------------------------
John C. Bjork,
Attorney-in-Fact Under Powers
of Attorney dated December 3,
1998, filed with Post-Effective
Amendment No. 65.

INDEX TO EXHIBITS

Exhibit No. Item
- ----------- -----------------------------------------------------

(e)(3) Form of Amendment No. 1 to Amended and Restated
Distribution Contract

(i) Opinion and consent of counsel

(m)(7) Shareholder Servicing Plan with respect to the
Institutional Class Shares

(o) Form of Amended and Restated Multiple Class Expense
Allocation Plan Adopted Pursuant to Rule 18f-3

<PAGE>
Exhibit (i)
The Lutheran Brotherhood Family of Funds
625 Fourth Avenue South
Minneapolis, Minnesota 55415

December 17, 1999

The Lutheran Brotherhood Family of Funds
625 Fourth Avenue South
Minneapolis, Minnesota 55415

Ladies and Gentlemen:

As counsel to the Lutheran Brotherhood Family of Funds, a business trust
organized under the laws of the State of Delaware (the "Trust"), I have been
asked to render an opinion in connection with Post-Effective Amendment No.
69 under the Securities Act of 1933 to the Registration Statement on Form N-
1A (Securities Act File No. 2-25984) to be filed by the Trust with the
Securities and Exchange Commission (as amended, the "Registration
Statement").

I wish to advise you that I have examined such documents and questions of
law as I have deemed necessary for purposes of this opinion. Based upon the
foregoing, I am of the opinion that:

1. The Trust has been duly organized and is validly existing pursuant to
the laws of the State of Delaware;

2. In its pre-effective Registration Statement, the Trust elected to
register an indefinite number of shares pursuant to the provision of Rule
24f-2; and

3. The shares of beneficial interest of the Funds which are described in
the foregoing Registration Statement will, when sold in accordance with the
terms of the Prospectus and Statement of Additional Information in effect at
the time of the sale, be legally issued, fully paid and non-assessable by
the Trust.

I consent to this opinion being filed as an exhibit to the foregoing
Registration Statement.

Sincerely,

/s/ John C. Bjork
John C. Bjork
Counsel and Assistant Secretary

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-
Effective Amendment No. 69 to the registration statement on Form N-1A (the
"Registration Statement") of our report dated December 10, 1999 relating to
the financial statements and financial highlights appearing in the October
31, 1999 Annual Report to Shareholders of the Lutheran Brotherhood Family of
Funds which is also incorporated by reference into the Registration
Statement. We also consent to the references to us under the headings
"Financial Highlights" in the Prospectus and under the heading "Independent
Accountants" in the Statement of Additional Information.

/s/ PricewaterhouseCoopers LLP
Minneapolis, Minnesota
December 17, 1999

#27335

<PAGE>
EXHIBIT O

THE LUTHERAN BROTHERHOOD FAMILY OF FUNDS

Multiple Class Expense Allocation Plan
Adopted Pursuant to Rule 18f-3
(As Amended and Restated on December 1, 1999)

WHEREAS, The Lutheran Brotherhood Family of Funds, an unincorporated
association of the type commonly known as a business trust organized under
the laws of the state of Delaware (the "Trust"), engages in business as an
open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act");

WHEREAS, the Trust is authorized to (i) issues shares of beneficial
interest (the "Shares") in separate series, with the Shares of each such
series representing the interests in a separate portfolio of securities and
other assets, and (ii) divide the Shares within each such series into two or
more classes;

WHEREAS, the Trust has established the following portfolio series:
Lutheran Brotherhood Opportunity Growth Fund, Lutheran Brotherhood Mid Cap
Growth Fund, Lutheran Brotherhood World Growth Fund, Lutheran Brotherhood
Growth Fund, Lutheran Brotherhood Fund, Lutheran Brotherhood Value Fund,
Lutheran Brotherhood High Yield Fund, Lutheran Brotherhood Income Fund,
Lutheran Brotherhood Municipal Bond Fund, Lutheran Brotherhood Limited
Maturity Bond Fund, and Lutheran Brotherhood Money Market Fund (each series
being referred to herein individually and collectively as the "Initial
Series" and each such series, together with all other series subsequently
established by the Trust and made subject to this Plan, being referred to
herein individually and collectively as a "Series"), and each Initial Series
has established (and future Series may establish) three classes of Shares
thereof designated as the "Class A" Shares, the "Class B" Shares and the
"Institutional Class" Shares; and

WHEREAS, the Board of Trustees has previously approved a Multiple Class
Expense Allocation Plan Adopted Pursuant to Rule 18f-3, as amended and
supplemented September 16, 1998, June 9, 1999, and September 8, 1999 (the
"Existing Plan"); and

WHEREAS, the Board of Trustees desires to amend and restate the
Existing Plan to reflect such prior amendments and supplements and to effect
certain other changes thereto; and

WHEREAS, the Board of Trustees as a whole, and the Trustees who are not
interested persons of the Trust (as defined in the Act) (the "Qualified
Trustees"), having determined in the exercise of their reasonable business
judgment that this Plan is in the best interest of each class of each
Initial Series and of each Initial Series and the Trust as a whole, have
accordingly approved this Plan.

NOW, THEREFORE, the Trust hereby adopts this Plan in accordance with
Rule 18f-3 under the Act, on the following terms and conditions:

1. CLASS DIFFERENCES. Each class of Shares of each Initial Series
shall represent interests in the same portfolio of investments of such
Initial Series and shall be identical in all respects, except that each
class shall differ with respect to: (i) distribution, shareholder and other
charges and expenses, as provided for in Sections 2 and 3 of this Plan; (ii)
the exclusive right of the Class B Shares to vote on certain matters
relating to the Plan of Distribution pursuant to Rule 12b-1 (the "Rule 12b-1
Plan") adopted by the Trust with respect to the Class B Shares; (iii) the
conversion features of the Class A and Class B Shares provided for in
Section 4 of this Plan; (iv) such other differences relating to eligible
investors as may be set forth in the prospectus and statement of additional
information of the Initial Series, as the same may be amended or
supplemented from time to time (respectively, the "Prospectus" and "SAI");
and (v) the designation of each class of Shares.

2. DIFFERENCES IN SALES LOAD, DISTRIBUTION AND SHAREHOLDER SERVICES.
Class A Shares, Class B Shares and Institutional Class Shares of each
Initial Series shall differ in the manner in which such Shares are
distributed and in the services provided to shareholders of each such class
as follows:

(a) Sales Load and Distribution Fee.

(i) Class A Shares. The Class A Shares (other than Class A
Shares of the Lutheran Brotherhood Limited Maturity Bond Fund and
the Lutheran Brotherhood Money Market Fund) shall be subject to a
front-end sales charge as set forth in the Prospectus and SAI. The
Class A Shares shall not be subject to any distribution fees under
Rule 12b-1.

(ii) Class B Shares. The Class B Shares shall be sold
subject to a contingent deferred sales charge ("CDSC") as set forth
in the Prospectus and SAI. Class B Shares (other than Class B
Shares of the Lutheran Brotherhood Limited Maturity Bond Fund and
the Lutheran Brotherhood Money Market Fund) shall also be subject
to an annual fee pursuant to Rule 12b-1 under the Act of up to .75
of 1% of the average daily value of the net assets of the Series
allocable to the Class B Shares. Such fee may be used to finance
distribution activities in accordance with Rule 12b-1 under the Act
and the Rule 12b-1 Plan.

(iii) Institutional Class Shares. The Institutional Class
Shares shall be sold without a sales charge and shall not be
subject to any distribution fees under Rule 12b-1.

(b) Shareholder Services. The Class A Shares shall be subject to
an annual fee pursuant to a Shareholder Servicing Plan with respect to the
Class A Shares of up to 0.25 of 1% of the average daily value of the net
assets of the Initial Series allocable to the Class A Shares. The Class B
Shares shall be subject to an annual fee pursuant to a Shareholder Servicing
Plan with respect to the Class B Shares of up to 0.25 of 1% of the average
daily value of the net assets of the Initial Series allocable to the Class B
Shares. The Institutional Class Shares shall be subject to an annual fee
pursuant to a Shareholder Servicing Plan with respect to the Institutional
Class Shares of up to 0.15 of 1% of the average daily value of the net
assets of each Series allocable to the Institutional Class Shares. Such
fees may be used to finance shareholder servicing activities for the
applicable class of Shares in accordance with the Shareholder Servicing Plan
with respect to such class of Shares adopted by the Trust.

3. ALLOCATION OF EXPENSES.

(a) Class Expenses. Expenses of the Series, other than the fees
set forth in Section 2 of this Plan, shall be allocated to each class on the
basis of the net asset value of that class in relation to the net asset
value of the Series. Notwithstanding the foregoing, (i) advisory fees,
custodial fees and other expenses relating to the management of the Fund's
assets ("Management-Related Expenses") shall be allocated to each class on
the basis of the net asset value of that class in relation to the net asset
value of the Series, (ii) expenses of the Institutional Class shares of each
Series (other than Management-Related Expenses) and fees set forth in
Section 2 of this Plan with respect to Institutional Class shares, if any,
shall be specially allocated to such class and (iii) the expenses of the
Class A and Class B shares of each series, other than Management-Related
Expenses and the fees set forth in Section 2 of this Plan with respect to
Class A and Class B shares, shall be allocated to each such class based on
the net asset value of such class in relation to the aggregate net asset
value of the Class A and Class B shares. The underwriter, adviser, or other
provider of services to a Series may waive or reimburse the expenses of a
specific class or classes to the extent permitted under Rule 18f-3 under the
Act.

(b) Certain Prohibited Allocations. Notwithstanding the
foregoing, no expense shall be allocated to any particular class of a Series
and no waiver or reimbursement of the expenses of a specific class or
classes shall be permitted if such allocation, waiver or reimbursement would
cause such Series to fail to qualify as a regulated investment company under
the Internal Revenue Code of 1986, as amended, or adversely affect its right
to claim a dividend paid deduction thereunder.

4. CONVERSION PRIVILEGES.

Class B Shares of each Series shall automatically convert to Class
A Shares of the same Series at the end of five years following the issuance
of such Class B Shares except that the holding period of Class B Shares of
the Lutheran Brotherhood Limited Maturity Bond Fund and the Lutheran
Brotherhood Money Market Fund shall not be counted in calculating such five-
year period. All Class B Shares of such Series held by the shareholder at
the end of such period that represent the reinvestment of dividends and
capital gains distributions shall also be automatically converted at such
time. Class B shares of each Series shall convert into Class A shares of
the same Series on the basis of the relative net asset value of the two
classes, without the imposition of any sales load, fee or other charge. In
the event the holders of the Class A Shares approve any increase in expenses
allocated to the Class A Shares under paragraph (a)(i) or (ii) of Rule 18f-3
without the approval of the holders of the Class B Shares, the Trust shall
establish a new class of shares into which the Class B Shares will convert
in accordance with the provisions of Rule 18f-3 under the Act.

5. EXCHANGE PRIVILEGE. Shares of a class of a Series may be exchanged
in the manner described in the Prospectus and SAI.

6. LIMITATION OF LIABILITY OF THE SHAREHOLDERS AND TRUSTEES. It is
expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the Trustees, shareholders, nominees, officers, agents
or employees of the Trust personally, but shall bind only the trust property
of the Trust. The adoption of this Plan by the Trustees shall not be deemed
to have been made by any of them individually or to impose any liability on
any of the personally, but shall bind only the trust property of the Trust
as provided in the Trust's Master Trust Agreement.

7. TERM AND TERMINATION.

(a) Initial Series. This Plan shall become effective with respect
to each Initial Series as of October 31, 1997, and shall continue in effect
with respect to each class of Shares of such Initial Series (subject to
Section 7(c) hereof) until terminated in accordance with the provisions of
Section 7(c) hereof.

(b) Additional Series or Classes. This Plan shall become
effective with respect to any class of each Initial Series other than the
Class A Shares, Class B Shares and Institutional Class shares and with
respect to each additional Series or class thereof established by the Trust
after the effective date hereof and made subject to this Plan upon
commencement of the initial public offering thereof (provided that the Plan
has previously been approved with respect to such additional series or class
by votes of a majority of both (i) the Board of Trustees of the Trust and
(ii) the Qualified Trustees, cast at a meeting held before the initial
public offering of such additional Series or classes thereof), and shall
continue in effect with respect to each such additional Series or class
(subject to Section 7(c) hereof) until terminated in accordance with the
provisions of Section 7(c) hereof. An addendum hereto setting forth such
specific and different terms of such additional series of classes shall be
attached to this Plan.

(c) Termination. This Plan may be terminated at any time with
respect to the Trust or any Series or class thereof, as the case may be, by
vote of a majority of both the Trustees of the Trust and the Qualified
Trustees. The Plan may remain in effect with respect to a Series or class
thereof even if this Plan has been terminated in accordance with this
Section 7(c) with respect to another class of such Series or one or more
other Series of the Trust.

8. AMENDMENTS. Any material amendment to this Plan shall require the
affirmative vote of a majority of both the Trustees of the Trust and the
Qualified Trustees.

Dated as of: December 1, 1999

<PAGE>

As of September 18, 1999

Lutheran Brotherhood Family of Funds
LB Series Fund, Inc.
625 Fourth Avenue South
Minneapolis, MN 55415

RE: LOAN FACILITY

Ladies and Gentlemen:

State Street Bank and Trust Company (the "Bank") is pleased to make
available a $50,000,000 unsecured committed revolving line of credit (the
"Committed Line") to the Lutheran Brotherhood Family of Funds a Delaware
business trust (the "Trust"), on behalf of its fund series as described on
Appendix I hereto (each such series, a "Brotherhood Fund") and to LB Series
Fund, Inc., a Minnesota corporation (the "Corporation"), on behalf of its
fund series as described on Appendix I hereto (each such series, an "LB
Fund"; each Brotherhood Fund and LB Fund, a "Fund"; and each of the Trust
and the Corporation, a "Borrower") on the following terms and conditions:

I. COMMITTED LINE

1. TERM. The Committed Line shall commence on the date hereof and
expire June 30, 2000 (the "Expiration Date"), unless extended in the
discretion of the Bank or terminated by the Borrowers as provided herein.
The Borrowers may terminate the Committed Line upon five days prior written
notice and payment of all outstanding principal, interest, fees, costs and
expenses on the effective date of termination.

2. NOTICE AND MANNER OF BORROWINGS. Subject to the terms and
conditions hereof the Bank will make revolving loans to a Borrower on behalf
of one or more of its Funds under the Committed Line (each such loan, a
"Loan") not to exceed in the aggregate outstanding hereunder at any time the
lesser of (i) 15% of the value of the total assets of the Fund for which a
Loan is extended (after giving effect to the requested Loan) based upon the
current market value of such Fund's assets determined with reference to
daily prices provided by independent pricing sources at the time the Loan is
to be made or (ii) the maximum amount which the Borrower or Fund for which a
Loan is made is permitted to borrow at any time or in the aggregate pursuant
to the Prospectus, the Investment Company Act or any registration made
thereunder, any vote of the shareholders of the Borrower or such Fund, any
agreement of the Borrower or any Fund with any foreign, federal, state or
local securities division to which the Borrower is subject, any other
applicable agreement or document to which the Borrower or such Fund is a
party or any law, rule or regulation applicable to the Borrower or such Fund
(the lesser of (i) and (ii), the "Maximum Amount"); provided that the
aggregate amount of all outstanding Loans hereunder shall not exceed
$50,000,000 (the "Maximum Facility Amount") at any time. Each request for a
Loan hereunder, shall be made in writing by a Borrower by delivering a
completed loan request in the form of Exhibit B attached hereto and such
other information or documentation as the Bank may reasonably request. Each
such Loan request shall be made by the Borrower and received by the Bank not
later than 4:00 p.m. Boston time on the business day on which such Loan is
to be made. Each Loan request hereunder shall be deemed to be a confirmation
by the Borrower that no Default has occurred and is continuing hereunder
with respect to such Borrower, that the representations and warranties of
the Borrower and the Fund for which a Loan is made described below remain
true and correct and that no borrowing limitations applicable to the
Borrower or such Fund will be exceeded after giving effect to the requested
Loan, each of which shall be a precondition to the making of any Loan
hereunder.

3. EVIDENCE OF INDEBTEDNESS. All Loans will be evidenced by a
promissory note in the form attached hereto as Exhibit A (as amended, the
"Note"). Each Borrower hereby authorizes the Bank to record each Loan and
the corresponding information on the schedule forming part of the Note, and,
absent manifest error, this record shall govern and control. The failure by
the Bank to record, or any error in so recording, any such amount on the
Bank's books and records, such schedule, or any other record maintained by
the Bank, shall not limit or otherwise affect the obligation of the
Borrowers to make payments of principal of and interest on each Loan as
provided herein and in the Note.

4. INTEREST RATE. Principal on each outstanding Loan shall bear
interest at a variable rate per annum equal to the Bank's overnight federal
funds rate as determined by the Bank as of 11:00 a.m. Boston time plus 0.50%
per annum which rate shall change when such federal funds rate changes.
Interest on each Loan shall be calculated on the basis of a 360-day year for
the actual number of days elapsed. Following the occurrence of a Default
hereunder, unpaid principal on any Loan, and to the extent permitted by
applicable law, unpaid interest on any Loan, shall thereafter bear interest,
compounded monthly and be payable on demand, until paid in full (after as
well as before judgment) at a rate per annum equal to two percent (2%) above
the rate otherwise applicable to such Loan hereunder.

5. PAYMENTS AND PREPAYMENT/RECOURSE. Each Loan, together with
accrued and unpaid interest thereon, shall be due and payable upon the
earliest of (a) 60 days following the date on which such Loan is made, (b)
the date on which such Loan becomes due pursuant to Section II, Paragraph 4
below following the occurrence of a Default or (c) the Expiration Date,
provided that a Borrower may not have Loans outstanding hereunder with
respect to any Fund for a period in excess of 60 consecutive calendar days.
Interest on all Loans shall be payable monthly in arrears on the fifteenth
day of each month with all accrued and unpaid interest due and payable on
the same day when principal is due and payable. Each Borrower covenants and
agrees to immediately repay any amount by which the then outstanding
aggregate principal amount of the Loans exceeds the Maximum Facility Amount
upon the earlier to occur of the Borrower first becoming aware of such
excess or demand by the Bank (except that no Borrower shall be required to
make any such repayment if such repayment is required solely because the
Maximum Amount applicable to any other Borrower or any Fund of such other
Borrower has been exceeded). Loans may be prepaid without penalty and any
amounts prepaid may be reborrowed subject to the terms hereof. All payments
of principal and interest with respect to any Loan shall be made not later
than 2:00 p.m. Boston time on the date due without set off or deduction in
immediately available United States dollars at the Bank's office at 225
Franklin Street, Boston, Massachusetts or as otherwise directed in writing
by the Bank.

The Bank and each Borrower acknowledge and agree that all persons
dealing with such Borrower shall look solely to the trust or corporate (as
appropriate) property of such Borrower for the enforcement of any claim
against such Borrower. None of the directors, trustees, officers, agents or
shareholders of a Borrower assumes any personal liability for the
obligations entered into on behalf of the Borrower or Fund with respect to
the Committed Line. In addition, the principal amount of the Loans and
accrued interest thereon, any fees or additional amounts payable in
connection with or relating to such Loans pursuant to this Agreement, and
all other obligations of a Borrower, shall be paid or repaid solely from the
assets of the Fund, constituting a series of such Borrower, for which a Loan
is made and the Bank shall have no right of recourse or offset against the
assets of any other series of either Borrower or any other Borrower or Fund.

The Trust agrees that if Lutheran Brotherhood Research Corp. ceases to
be the investment adviser to any Brotherhood Fund without the consent of the
Bank (such consent not to be unreasonably withheld), then, at the Bank's
option, the Agreement shall terminate and any Loans with respect to such
Brotherhood Funds, together with any accrued interest and other Obligations
with respect to such Brotherhood Funds, shall immediately be due and
payable. The Corporation agrees that if Lutheran Brotherhood ceases to be
the investment adviser to any LB Fund without the consent of the Bank (such
consent not to be unreasonably withheld), then, at the Bank's option, the
Agreement shall terminate and any Loans with respect to such LB Funds,
together with any accrued interest and other Obligations with respect to
such LB Funds, shall immediately be due and payable.

6. FEES. The Borrowers agree to pay to the Bank a commitment fee
equal to 0.08% per annum on the daily unused portion of the Committed Line
Amount which shall be payable quarterly in arrears on or before the 15th day
following the end of each March, June, September and December of each year
and on the Expiration Date or, if earlier, on the date when the commitment
hereunder is terminated, provided that the Borrowers may consult among
themselves and determine, in their sole discretion, how such commitment fee
shall be allocated among the Borrowers, provided further that
contemporaneous with the payment of such fee to the Bank, the Borrowers
shall provide the details of such allocation to the Bank in writing. The
commitment fee described herein shall be calculated on the basis of a 360-
day year for the actual number of days elapsed.

7. USE OF FUNDS. Proceeds of Loans may be used only (i) to
temporarily finance the purchase or sale of securities for prompt delivery
if the Loan is to be repaid promptly in the ordinary course of business upon
completion of such purchase or sale transaction or (ii) to finance the
redemption of the shares of an investor of the Fund for which a Loan is
made. No portion of any proceeds of any Loan shall be used directly or
indirectly in violation of any provision of any statute, regulation, order
or restriction applicable to the Borrower or in violation of Federal
Reserve Regulation U.

8. SECURITY. All obligations of the Borrowers with respect to the
Committed Line shall remain unsecured, however State Street Bank and Trust
Company will remain as custodian of the assets of each Borrower.

II. GENERAL LOAN TERMS

1. Covenants. Until all obligations of the Borrowers with respect to
the Committed Line have been paid in full and the Committed Line has been
terminated, unless otherwise consented to in writing by the Bank, each
Borrower, severally and not jointly, covenants and agrees as follows both as
to itself and as to each of its Funds:

a) not to issue any preferred stock or create, incur, assume or
guarantee any Indebtedness other than, to the extent permitted by the
Prospectus (i) Indebtedness to the Bank, and Indebtedness to any custodian
of assets of the Borrower incurred in connection with such custody
relationship, other than Indebtedness for borrowed money, (ii) Indebtedness
and guarantees existing as of the date of this letter agreement and
disclosed on Exhibit C, (iii) reverse repurchase agreements aggregating not
in excess of 5% of the Fund's total assets, (iv) preferred stock or other
Indebtedness and guarantees with the prior consent of the Bank and (v) other
Indebtedness incurred in the course of the Borrower's business as described
in the then current Prospectus and Statement of Additional Information,
other than Indebtedness for borrowed money;

b) not to create, incur, assume or suffer to exist any mortgage,
pledge, security interest, lien or other charge or encumbrance upon any of
its assets or properties, or enter into any agreement preventing it from
encumbering any such assets or properties other than, to the extent
permitted by the Prospectus (i) those in favor of the Bank or its affiliates
or subsidiaries, (ii) those shown on Exhibit D, (iii) those in favor of any
custodian of assets of the Borrower, (iv) those for which the Bank has given
its prior written approval, and (v) liens for taxes, fees, assessments and
other governmental charges not yet due and payable.

c) to (i) duly observe and comply in all material respects with
all applicable laws, including, without limitation, the Investment Company
Act and any asset coverage and borrowing restrictions and restrictions on
indebtedness and extensions of credit contained therein and applicable to
the Borrower or any Fund and applicable securities laws and regulations, and
pay all taxes and governmental charges prior to the time they become
delinquent, (ii) maintain in full force and effect all licenses and permits
necessary in any material respect for the proper conduct of its business,
(iii) maintain its status as an open-end diversified management investment
company registered under the Investment Company Act and the status of each
of its Funds as a regulated investment company under Subchapter M of the
Internal Revenue Code, (iv) operate in compliance with its organizational
documents, the Prospectus and any other applicable investment policies and
restrictions and agreements relating thereto, (v) make no change in the
investment objectives or fundamental investment restrictions of any Fund
without the Bank's prior consent, not to be unreasonably withheld, (vi) not
merge or consolidate with or into any entity or purchase all or
substantially all of the assets or stock of any entity or sell or otherwise
transfer all or any substantial portion of the Borrower's or any Fund's
assets, (vii) not permit there to occur a change in the custodian of the
Borrower's assets from the Custodian or in the investment objectives of the
Borrower or in the investment restrictions as described in the Prospectus,
without the prior written consent of the Bank in each instance not to be
unreasonably withheld, (viii) comply with all terms and provisions of all
documents evidencing or securing any Indebtedness to the Bank and to or with
any party other than the Bank ("Other Indebtedness"), (ix) immediately
notify the Bank of any default or event of default with respect to Other
Indebtedness and of any default under or termination of any agreement with
the Custodian or with the Investment Adviser and to provide to the Bank a
copy of any notice received by the Borrower or any Fund relating thereto and
any notice or claim of any such default or termination and (x) immediately
notify the Bank of any Default hereunder and of any litigation or
governmental proceeding inspection or investigation commenced or threatened
in writing against the Borrower;

d) to permit the Bank or its representatives and agents to visit
and inspect the properties of the Borrower and make copies or abstracts from
the Borrower's and each Fund's books and records at all such reasonable
times and as often as may be reasonably desired;

e) to pay all reasonable fees, costs and expenses incurred or
paid by the Bank, including the Bank's attorney's fees and expenses, in
connection with the administration, enforcement, amendment or termination of
the Loan Documents;

f) to submit to the Bank: (i) within 65 days after the end of
each semi-annual period in each fiscal year, the Borrower's and each Fund's
semi-annual or annual, as the case may be, financial statements including a
statement of assets, liabilities and investments as of the end of each such
period in the form received by shareholders and, in the case of annual
statements, audited by a certified public accountant, (ii) all proxy
materials, reports to shareholders and other information delivered to
shareholders of the Borrower and each Fund or to the United States
Securities and Exchange Commission including, in any event, copies of any
material change to the Prospectus or registration statement, and (iii) such
other financial statements and information as to the Borrower, any Fund or
Investment Adviser as the Bank may reasonably request from time to time.
All financial statements required hereunder shall be prepared in accordance
with generally accepted accounting principles consistently applied; and

g) execute and deliver such additional instruments and take such
further action as the Bank may reasonably request solely to effect the
purpose of the Loan Documents and the Loans.

2. REPRESENTATIONS AND WARRANTIES. Each Borrower severally
represents and warrants to the Bank both as to itself and as to each of its
Funds (but not as to the other Borrower or any of its Funds) that:

a) it is duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, and it is registered as
an open-end management investment company under the Investment Company Act,
and each of its Funds is qualified as a regulated investment company within
the meaning of the United States Internal Revenue Code of 1986, has all
requisite power and authority to own its property and conduct its business
as is now conducted, is duly authorized to do business in each jurisdiction
where the nature of its properties or business requires such qualification
and is in compliance with its organizational documents and applicable law,
including, without limitation, the Investment Company Act and Federal
Reserve Regulations U and X. The Borrower has filed all income tax returns
and paid all taxes due pursuant to such returns and the charges, accruals
and reserves on the books and records of the Borrower with respect to such
taxes and charges are, in the opinion the Borrower, adequate;

b) the execution, delivery and performance of each of the Loan
Documents and the making of any Loan by the Bank to the Borrower and any
Fund hereunder (i) are, and will be, within the Borrower's and such Fund's
power and authority, (ii) have been authorized by all necessary proceedings,
(iii) do not, and will not, require the consent of any shareholders of the
Borrower or any Fund or approvals of any governmental authority other than
those which have been received, (iv) will not contravene any provision of,
or exceed any limitation contained in, the declaration of trust or by-laws
or other organizational documents of the Borrower or any Fund or the
Prospectus or any law, rule or regulation applicable to the Borrower or any
Fund, including, without limitation, the Investment Company Act, and the
same will be in compliance with Federal Reserve Regulations T, U and X, upon
the execution of a Federal Reserve Form U-1, and the Investment Company Act,
(v) does not constitute a default under any other agreement, order or
undertaking binding on the Borrower or any Fund, and (vi) does not require
the consent or approval of any obligee or holder of any instrument relating
to the Other Indebtedness or any other party other than for those consents
and approvals which have been received;

c) each of the Loan Documents constitutes the legal, valid,
binding and enforceable obligation of the Borrower, except as the same may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
laws affecting the enforcement of creditors' rights generally and by general
equitable principles;

d) all financial statements previously furnished to the Bank by
the Borrower were prepared in accordance with generally accepted accounting
principles and present fairly and completely the financial position of the
Borrower and the Funds. Since the date of such statements, there has been
no material adverse change in the assets, liabilities, financial condition
or business of the Borrower or any Fund other than in the ordinary course of
business. The Borrower has disclosed to the Bank in writing any and all
facts which, to the best of the Borrower's knowledge after due inquiry,
materially and adversely affect or may affect the business, operations or
financial condition of the Borrower or any Fund or the ability of the
Borrower to perform its obligations under the Loan Documents;

e) the Borrower and each Fund has good and marketable title to
all its material properties, assets and rights of every name and nature
purportedly owned by it, except for encumbrances shown on Exhibit D;

f) there is no litigation, arbitration, proceeding or
investigation pending, or to the best of the Borrower's knowledge
threatened, against the Borrower, any Fund or the Investment Adviser except
those previously disclosed by the Borrower to the Bank in writing and except
as described on Exhibit E attached hereto;

g) the shares of the Borrower and each Fund have been registered
under the Securities Act of 1933 and are eligible for sale under applicable
state and federal securities laws and regulations;

h) with regard to the Employee Retirement Income Security Act of
1974, and the rules and regulations thereunder, collectively, as amended and
in effect from time to time ("ERISA") neither the Borrower nor any Fund is
treated as a single employer with any other person under ERISA, and each has
no liability with respect to any benefit arrangement, plan or multi-employer
plan subject to ERISA;

i) to the best of the Borrower's knowledge, the Borrower and each
Fund is not an "Affiliated Person", as defined in the Investment Company
Act, with the Bank;

j) the Investment Adviser serves as investment adviser to the
Borrower and the Custodian serves as custodian for assets of the Borrower;
and

k) the Borrower and each Fund has complied with, and is in
compliance in all material respects with, the investment policies and
restrictions set forth in the Prospectus.

The making of each Loan hereunder shall be deemed to be a
reaffirmation by the Borrower as to the representations and warranties
contained in this paragraph and confirmation that no Default has occurred
hereunder or will occur after giving effect to the making of such Loan.

3. DEFAULT. It will be a Default hereunder with respect to a Fund if
any of the following events occurs, as appropriate, with respect to such
Fund or to the Borrower of which such Fund is a series:

a) the Borrower fails to pay within five days when due any amount
of principal of any Loan, or any amount of interest thereon or any fees or
expenses payable hereunder or under the Note; or

b) the Borrower fails to perform any term, covenant or agreement
contained in any of the Loan Documents or a default or event of default
occurs thereunder; or

c) any material representation or warranty of the Borrower made
in any of the Loan Documents or as an inducement for the Bank to make any
Loan shall prove to have been false in any material respect upon the date
when made or deemed to have been made; or

d) the Borrower fails to pay or perform any Obligation whether
now existing or hereafter arising, except as otherwise provided in this
Section II, Paragraph 3, when due or the Borrower or such Fund fails to pay
at maturity, or within any applicable period of grace, any obligations for
Other Indebtedness, or for the use of real or personal property, or fails to
observe or perform any term, covenant or agreement evidencing or securing
such Other Indebtedness or relating to such use of real or personal
property; or

e) the Borrower, such Fund or the Investment Adviser (i) applies
for or consents to the appointment of, or the taking of possession by, a
receiver, custodian, trustee, liquidator or similar official of itself or of
all or a substantial part of its property, (ii) is generally not paying its
debts as such debts become due, (iii) makes a general assignment for the
benefit of its creditors, (iv) commences any case or proceeding relating to
the business affairs of the Borrower or such Fund under any law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or
adjustment of debts, or any other law providing for the relief of debtors,
(v) fails to contest in a timely or appropriate manner, or acquiesces in
writing to, any petition filed against it in an involuntary case under the
Federal Bankruptcy Code or other law, (vi) takes any action under the laws
of its jurisdiction of incorporation or organization similar to any of the
foregoing or (vii) discontinues its business; or

f) a proceeding or case shall be commenced against the Borrower,
such Fund or the Investment Adviser without the application or consent of
such party, in any court of competent jurisdiction, seeking (i) the
liquidation, reorganization, dissolution, winding-up, or composition or
readjustment of its debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of it or of all or any substantial part of
its assets, or (iii) similar relief in respect of it, under any law relating
to bankruptcy, insolvency, reorganization, winding-up, or composition or
adjustment of debts or any other law providing for the relief of debtors,
and such proceeding or case shall continue undismissed, or unstayed and in
effect, for a period of 60 days; or an order for relief shall be entered in
an involuntary case under the Federal Bankruptcy Code, against the Borrower,
such Fund or the Investment Adviser or action under the laws of the
jurisdiction of incorporation or organization of the Borrower, such Fund or
the Investment Adviser similar to any of the foregoing shall be taken with
respect to the Borrower, such Fund or the Investment Adviser and shall
continue unstayed and in effect for any period of 60 days; or

g) a final judgment or final order for the payment of money is
entered against the Borrower or such Fund by any court, or an execution or
similar process is issued or levied against property of the Borrower or such
Fund, that in the aggregate exceeds $500,000 in value and such judgment,
order, warrant or process is not within 45 days after entry thereof
discharged or stayed pending appeal or is not discharged within 45 days
after the expiration of such stay; or

h) there occurs a material adverse change in the business,
assets, financial condition or prospects of the Borrower or such Fund (which
shall not include a decline in the net assets of the Borrower resulting from
redemptions by shareholders of the Borrower or a decline in market value of
securities held by the Borrower); or

i) the Custodian ceases to serve as the custodian for the
Borrower's assets without the prior written consent of the Bank, which
consent shall not be unreasonably withheld; or

j) the Borrower or such Fund shall violate, or take any action
that would result in a material violation of, any of its fundamental
investment policies or fundamental restrictions applicable to the Borrower
or such Fund as in effect from time to time, including those as set forth in
the Prospectus.

Notwithstanding any provision of this Agreement to the contrary, if
there occurs any Default solely with respect to a particular Fund that is a
series of a Borrower, such Default shall not constitute a Default with
respect to any other Fund of such Borrower, or any other Borrower or Fund of
such other Borrower and shall not permit the Bank to terminate the Committed
Line or exercise any of its other remedies as to such other Fund or other
Borrower.

4. REMEDIES. Upon the occurrence of a Default described in
subsections 3 (e) and (f) to the extent the same relates to such Fund or to
the Borrower of which such Fund is a series, immediately and automatically,
and upon the occurrence of any other Default, at any time thereafter while
such Default is continuing, at the Bank's option and upon the Bank's
declaration:

(a) the Committed Line established hereunder shall terminate with
respect to the subject Fund;

(b) the unpaid principal amount of the Loans to the Borrower on
behalf of such Fund, together with accrued interest and all other
Obligations with respect to such Fund, shall become immediately due and
payable without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived; and

(c) the Bank may exercise any and all rights it has under any of
the Loan Documents and proceed to protect and enforce the Bank's rights by
any action at law, in equity or other appropriate proceeding as it relates
to such Fund.

Each Borrower and each Fund authorizes the Bank and the Custodian to
charge and setoff against any deposit account or other account maintained
with either the Bank or the Custodian on behalf of such Fund and apply the
proceeds thereof against repayment of any unpaid Obligations of such
Borrower with respect to such Fund, as appropriate. In addition, the
Custodian is hereby directed by each Borrower to dispose of the applicable
Fund's assets as selected by the Borrower's investment adviser to the extent
necessary to repay all amounts due to the Bank from the Borrower with
respect to such Fund to the extent that the Obligations of the Borrower with
respect to such Fund have not been paid when due or if a default has
occurred with respect to the Fund. If the Borrower's investment adviser
does not select a sufficient amount of assets of the Fund to repay all
amounts due to the Bank from the Borrower with respect to such Fund within a
reasonable time, the Custodian is hereby directed by the Borrower, upon one
day's prior written notice to the Borrower and its investment adviser, to
dispose of the Fund's assets to the extent necessary to repay all amounts
due to the Bank from the Borrower with respect to such Fund. The foregoing
shall be deemed to be continuing and irrevocable "proper instructions" to
the Custodian for all purposes under the custody agreement between the
Borrower and the Custodian. The foregoing shall be in addition to any other
rights or remedies the Bank and the Custodian may have against a Borrower
following the occurrence of a default hereunder.

No right of the Bank shall be exclusive of any other right of the Bank
now or hereafter available under the Loan Documents, at law, in equity or
otherwise, and no course of dealing or delay by the Bank in exercising any
right shall operate as a waiver thereof or otherwise affect any rights or
remedies of the Bank.

5. NOTICES. All notices hereunder shall be in writing and shall be
deemed to have been given one business day after delivery to overnight
courier or when delivered by hand to the address given below and in each
case such delivery is confirmed to have been made. Notices to the Bank
shall be given to State Street Bank and Trust Company, Lafayette Corporate
Center, 2 Avenue de Lafayette - 2nd Floor, Boston, Massachusetts 02111 Attn:
F. Omar Hazoury, Vice President, or Mutual Fund Lending Department Head
Executive and notices to a Borrower shall be deemed to have been given if
given at the address stated at the beginning of this letter agreement,
Attention: Wade M. Voigt, Treasurer.

6. MISCELLANEOUS. No waivers shall be effective unless in writing.
All amendments hereto must be in writing signed by all parties hereto.
Regardless of the adequacy of any collateral, any amounts owing from the
Bank to a Borrower, including deposits, may be set off and applied against
obligations of such Borrower to the Bank. The Borrowers may not assign or
transfer or participate any of its rights under any of the Loan Documents
without the prior written consent of the Bank. The Bank may assign or
transfer its rights hereunder to any Federal Reserve Bank. With the prior
written consent of each Borrower (not to be unreasonably withheld) the Bank
may assign or transfer its rights hereunder to any other entity. The Bank
may participate its rights hereunder to any entity provided however that no
such entity, without the consent of the Borrower, shall have any rights with
respect to any participation other than for the right to vote on changes in
interest, fees, commitment amount and principal payments.

7. WAIVER OF JURY TRIAL. Except as prohibited by law, neither of the
Borrowers nor the Bank, nor any assignee or successor of a Borrower or the
Bank, shall seek a jury trial in any lawsuit, proceeding, counterclaim or
any other litigation procedure based upon or arising out of any of the Loan
Documents. Neither of the Borrowers nor the Bank will seek to consolidate
any such action, in which a jury trial has been waived, with any other
action in which a jury trial has not been waived. THE PROVISIONS OF THIS
SECTION HAVE BEEN FULLY DISCUSSED BY THE PARTIES HERETO, AND THE PROVISIONS
HEREOF SHALL BE SUBJECT TO NO EXCEPTIONS. NO PARTY HERETO HAS IN ANY WAY
AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS
SECTION WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.

8. JURISDICTION. EACH OF THE LOAN DOCUMENTS SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW).
EACH BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF ANY OF THE LOAN
DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS
OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING
MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED ABOVE. EACH
BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN
AN INCONVENIENT COURT.

9. DEFINITIONS. Except as otherwise defined herein, all financial
terms shall be defined in accordance with generally accepted accounting
principles. The following defined terms as used herein shall have the
following meanings:

"Custodian" shall mean State Street Bank and Trust Company.

"Indebtedness" of a Borrower shall mean all obligations for
borrowed money and other extensions of credit to the Borrower and all
amounts payable in connection therewith as permitted to be incurred by a
registered open-end management investment company pursuant to the Investment
Company Act.

"Investment Adviser" means as to the Trust and its Funds, Lutheran
Brotherhood Research Corp., and as to the Corporation and its Funds,
Lutheran Brotherhood.

"Investment Company Act" means the Investment Company Act of 1940,
as amended, together with all related rules and regulations promulgated by
the United States Securities and Exchange Commission relating thereto.

"Loan Documents" means this letter agreement, the Note and any
other documents executed in connection herewith, as the same may be amended,
superseded or replaced.

"Maximum Amount" is defined in Part I, Paragraph 2.

"Obligations" of a Borrower means any and all obligations of the
Borrower to the Bank of every kind and description, direct or indirect,
absolute or contingent, primary or secondary, due or to become due, now
existing or hereafter arising, regardless of how they arise or by what
agreement or instrument, if any, and including obligations to perform acts
and refrain from taking action as well as obligations to pay money.

"Prospectus" means the currently effective Prospectus and
Statement of Additional Information delivered to purchasers of shares of a
Fund.

If the foregoing satisfactorily sets forth the terms and conditions of
the Committed Line, please execute and return to the undersigned each of the
Loan Documents and such other documents and agreements as the Bank may
request. We are pleased to provide the Committed Line to the Borrowers and
look forward to the ongoing development of our relationship.

Sincerely,

STATE STREET BANK AND
TRUST COMPANY, as Bank

By: /s/ F. Omar Hazoury
------------------------
Title: Vice President

Acknowledged and accepted:

LUTHERAN BROTHERHOOD FAMILY OF FUNDS, on behalf of its fund series as
described on Appendix I

By: /s/ Rolf F. Bjelland
-----------------------------
Title: President

LB SERIES FUND, INC., on behalf of its fund series as described on Appendix
I

By: /s/ Rolf F. Bjelland
-----------------------------
Title: President

STATE STREET BANK AND TRUST COMPANY
as Custodian

By: /s/ William M. Marvin
-----------------------------
Title: Vice President

<PAGE>
EXHIBIT A

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

NOTE

$____________ As of September 18, 1999
Boston, Massachusetts

For value received, the undersigned, on behalf of the fund series as
described on Appendix I, hereby promises to pay to State Street Bank and
Trust Company (the "Bank"), or order, at the head office of the Bank at 225
Franklin Street, Boston, Massachusetts 02110 in immediately available United
States dollars, the principal amount of FIFTY MILLION DOLLARS ($50,000,000),
or such lesser amount as shall not have been prepaid as provided herein.
Each Loan shall be payable upon the earliest to occur of 60 days after the
date on which such Loan is made, the date on which the Loan becomes due
whether following the occurrence of a Default or otherwise as described in
the Agreement, as hereinafter defined, or the Expiration Date as defined in
the Agreement. Interest on the unpaid principal amount outstanding
hereunder shall be payable at the variable rate per annum equal to the
Bank's overnight federal funds rate as determined by the Bank as of 11 a.m.
Boston time plus 0.50% per annum. Interest on principal outstanding
hereunder shall be payable monthly in arrears on the first business day of
each month beginning on the first such date following the date hereof, with
all accrued and unpaid interest due and payable upon the Expiration Date or
when principal outstanding hereunder is otherwise due and payable. Each
change in such interest rate shall take effect simultaneously with the
corresponding change in such federal funds rate. Interest shall be computed
on the basis of a 360-day year for the actual number of days elapsed,
including holidays or other days on which the Bank is not open for the
conduct of banking business.

All loans hereunder and all payments on account of principal and
interest hereof shall be recorded by the Bank. The entries on the records
of the Bank (including any appearing on this Note), absent manifest error,
shall govern and control as to amounts outstanding hereunder. The Bank shall
provide the undersigned with written confirmation of any advance or
repayment hereunder, provided however that the failure by the Bank to
provide any such written confirmation or make any entry on the records of
the Bank as described above, shall not affect the obligation of the
undersigned to make payments of principal and interest on all Loans as
provided herein and in the Letter Agreement.

Overdue principal, and, to the extent permitted by law, overdue
interest, shall bear interest, compounded monthly and payable on demand in
immediately available funds, at a rate per annum equal to two percent (2%)
above the rate otherwise applicable to such principal.

This Note is issued pursuant to, and entitled to the benefits of, and
is subject to, the provisions of a certain letter agreement dated as of
September 18, 1999 by and between the undersigned and the Bank (herein, as
the same may from time to time be amended or extended, referred to as the
"Agreement"), but neither this reference to the Agreement nor any provision
thereof shall affect or impair the absolute and unconditional obligation of
the undersigned maker of this Note to pay the principal of and interest on
this Note as herein provided. All terms not otherwise defined herein shall
be used as defined in the Agreement.

The undersigned may at its option prepay all or any part of the
principal of this Note without penalty. Amounts prepaid may be reborrowed
subject to the terms of the Agreement.

Any deposits or other sums at any time credited by or due from the Bank
to the undersigned and any securities or other property of the undersigned
at any time in the possession of the Bank may at all times be held and
treated as collateral for the payment of this Note.

The undersigned maker and every endorser and guarantor hereof hereby
waives presentment, demand, notice, protest and all other demands and
notices in connection with the delivery, acceptance, performance, default or
enforcement hereof and consents that this Note may be extended from time to
time and that no such extension or other indulgence, and no substitution,
release or surrender of collateral and no discharge or release of any other
party primarily or secondarily liable hereon, shall discharge or otherwise
affect the liability of the undersigned, endorser or guarantor. No delay or
omission on the part of the Bank in exercising any right hereunder shall
operate as a waiver of such right or of any other right hereunder, and a
waiver of any such right on any one occasion shall not be construed as a bar
to or waiver of any such right on any future occasion.

The Bank and the undersigned acknowledge and agree that all persons
dealing with the undersigned shall look solely to the trust or corporate (as
appropriate) property of such Borrower constituting assets of the Funds for
the enforcement of any claim against such Borrower. None of the directors,
trustees, officers, agents or shareholders of a Borrower assumes any
personal liability for the obligations entered into on behalf of the
Borrower or Fund with respect to this Note. In addition, the principal
amount of the Note and accrued interest thereon, any fees or additional
amounts payable in connection with or relating to such Note and all other
obligations of the undersigned shall be paid or repaid solely from the
assets of the Fund constituting a series of the undersigned for which a Loan
is made and the Bank shall have no right of recourse or offset against the
assets of any other series of the undersigned or any other Borrower or Fund.

This instrument shall have the effect of an instrument executed under
seal and shall be governed by and construed in accordance with the laws of
The Commonwealth of Massachusetts (without giving effect to any conflicts of
laws provisions contained therein).

WITNESS: LUTHERAN BROTHERHOOD FAMILY OF FUNDS,
on behalf of its fund series as
described on Appendix I
________________________________
By: _____________________

Title: __________________

LB SERIES FUND, INC., on behalf of its
fund series as described on Appendix I
_______________________________
By: _____________________

Title: __________________

<PAGE>

SCHEDULE I TO NOTE DATED AS OF SEPTEMBER 18, 1999
FROM LUTHERAN BROTHERHOOD FAMILY OF FUNDS, on behalf of its fund series as
described on Appendix I;
LB SERIES FUND, INC., on behalf of its fund series as
described on Appendix I
TO THE BANK

Date of Loan Amount of Amount of Outstanding Notation
Principal Principal Paid Balance Made By

<PAGE>

EXHIBIT B

ADVANCE/PAYDOWN
REQUEST FORM

DATE: --------------------------------------------------------------

TO: STATE STREET BANK AND TRUST COMPANY
--------------------------------------------------------------

ATTN: --------------------------------------------------------------

FROM: --------------------------------------------------------------
Borrower

SUBJECT: ("Fund")

In connection with the letter agreement and related documents currently
in effect with State Street Bank and Trust Company (collectively, the
"Agreement"), please increase or reduce the outstanding balance on behalf of
the above-indicated Fund as indicated below. The Loan should be recorded on
the books of the Borrower with the Bank and interest payable to the Bank
should be recorded at the agreed upon rate.

Increase/ Cumulative
(Decrease) Balance
Date the Loan by Outstanding Total Assets
- ---- ----------- ----------- ------------

- ------------ $----------- $------------- $-----------

Further, the Borrower hereby represents and warrants that:

1. the proceeds of the Advance shall be used in conformance with the usage
specified in the Agreement,

2. the Borrower is in compliance with all the terms and conditions in the
Agreement and will remain in compliance therewith after giving effect to
the making of the requested Loan; and

3. the undersigned is a duly authorized officer of the Borrower with
authority to execute and deliver this document to the Bank and request
the Loan described herein on behalf of the Borrower.

By: -----------------------------
Name: -----------------------------
Title: -----------------------------
Date: -----------------------------

<PAGE>

EXHIBIT C

INDEBTEDNESS

NONE

<PAGE>

EXHIBIT D

ENCUMBRANCES

NONE

<PAGE>

EXHIBIT E

LITIGATION

To be submitted by the Borrower

<PAGE>

APPENDIX I

I. Lutheran Brotherhood Family of Funds on behalf of its Fund Series:

1. Lutheran Brotherhood Opportunity Growth Fund;

2. Lutheran Brotherhood Mid Cap Growth Fund;

3. Lutheran Brotherhood World Growth Fund;

4. Lutheran Brotherhood Fund;

5. Lutheran Brotherhood High Yield Fund;

6. Lutheran Brotherhood Income Fund;

7. Lutheran Brotherhood Municipal Bond Fund; and

8. Lutheran Brotherhood Money Market Fund.

II. LB Series Fund, Inc. on behalf of its Fund Series:

1. Opportunity Growth Portfolio;

2. Mid Cap Growth Portfolio;

3. World Growth Portfolio;

4. Growth Portfolio;

5. High Yield Portfolio;

6. Income Portfolio; and

7. Money Market Portfolio.

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