Our Message to You
October 31, 2000
Dear Member:
Six months ago, in our semi-annual report, we told you of increased
volatility in the securities markets combined with cautious optimism about
the U.S. economy. Six months later, as the reporting period came to an end
on October 31, 2000, the story is essentially unchanged. While some sectors
of the market grew even more volatile in the last half of our fiscal year,
others staged modest rallies. Overall, unpredictability reigned.
[PHOTO OMITTED: ROLF F. BJELLAND]
Early indications are that the Federal Reserve seems to be achieving its
goal of slower, less-inflationary economic growth. Yet, in the midst of
that slower growth, productivity remains high, core consumer inflation
remains low, and unemployment still hovers around the historically low 4%
mark.
The stock and bond markets continued to react dramatically to both good and
bad economic news. The Fed seems to have called at least a temporary halt
to its campaign to raise interest rates, providing the markets with a
breath of good news in the face of widespread corporate earnings
disappointments.
In the "Economic and Market Overview" that follows, Randy Boushek, Senior
Vice President and Chief Investment Officer, has prepared a summary of the
forces influencing the performance of your investments during the 12-month
period. Following the Overview, each portfolio manager of the Lutheran
Brotherhood Family of Funds reviews their Fund, describing performance,
market conditions and fund management strategies.
You may get tired of hearing it, (and I sometimes get tired of saying it),
but it's truer than ever that securities investors must be diversified and
focused on the long-term. In years past, these were simply good strategies.
More recently, they've become critical to investment success.
This year's markets provide ample evidence of the importance of a long-
term, diversified investment strategy. Market swings, especially in the
NASDAQ stock index, were too fast, too extreme and too unpredictable to try
to turn a short-term profit in securities. At the same time, sector and
asset class rotation is becoming more relentless, which can sometimes leave
undiversified investment portfolios twisting in the wind.
High or low, bull or bear, I believe the securities markets are still the
place to be for the long-term, diversified investor. The U.S. economy
remains the envy of the world, with new technology and productivity gains
adding even greater potential every day. Like all free-market economies,
the United States experiences its share of ups and downs in the growth
cycle, with accompanying swings in the investment markets. We believe a
sound investment strategy should focus on weathering these market swings,
rather than attempting to avoid them. This allows investors to be present
in the markets when buying opportunities are strong - adding potential to
reinvestment programs or dollar-cost averaging strategies.
The volatility scattered throughout many segments of the market during the
last 12 months should not deter you from making long-term decisions with
long-term money. We look forward to working with you on your investment
goals, and we're honored to count you among the hundreds of thousands of
investors who are part of the Lutheran Brotherhood family.
Thank you for turning to us for your financial solutions.
Sincerely,
/S/ ROLF F. BJELLAND
Rolf F. Bjelland
Chairman and President
Lutheran Brotherhood Family of Funds
Economic and Market Overview October 31, 2000
Randall L. Boushek
[PHOTO OMITTED: RANDALL L. BOUSHEK]
Senior Vice President and Chief Investment Officer
Investors witnessed a broad-scale market rotation during the 12-month
fiscal year ended October 31, 2000, that significantly transformed the
investment landscape. During the first half of the period, growth stocks
and high-yield bonds thrived on the strength of surging economic growth,
minimal inflation and boundless investor optimism. Market sentiment
reversed course during the period's second half, however, rewarding
investors in value stocks and investment-grade bonds.
U.S. Economy
In the ninth year of a record-setting expansion, the U.S. economy grew
rapidly through the first half of 2000, fueled by strong levels of
consumer spending. Pockets of economic weakness began to develop in July
and August, however, including a setback in housing starts and a
considerable decline in payroll growth. As a result, annualized gross
domestic product retracted to an estimated 2.4% during the third quarter
of 2000, after growing by a successive 4.8% and 5.6% during the first two
quarters of the year.
Despite the slowdown in economic growth, remarkably low unemployment rates
highlighted the U.S. economy's solid underpinnings. Joblessness reached a
30-year low of 3.9% in April, and finished the reporting period at this
same rate. In addition, third quarter manufacturing activity, personal
income growth and household spending all remained at levels consistent
with the Federal Reserve's goal of slower, sustainable economic growth.
Inflation & Monetary Policy
In its continuing effort to ward off inflation, the Federal Reserve raised
the targeted federal funds rate four times during the period to 6.50%.
Short-term market interest rates closely followed suit, rising steadily
through the first five months of 2000, before trending lower in June. As
economic indicators softened over the balance of the period, the Federal
Reserve left interest rates unchanged, allowing market participants to
refocus their attention away from monetary policy.
Higher energy prices remained the "Achilles heel" of the U.S. economy
throughout the period. Coinciding with escalating crude oil prices,
natural gas prices more than doubled from January through October. Energy
costs notwithstanding, most inflation indicators remained relatively
benign. Changes in the core consumer price index, which excludes food and
energy prices, remained confined to a 0.5% range through much of 2000,
while rising productivity helped offset wage pressures.
Equity Performance
Early in the period, growth stock valuations rose sharply as a result of
frenzied bidding for technology issues. Prevailing market psychology was
reflected in the rapid growth of the technology-heavy NASDAQ Index, which
shot up by over 70% from November through mid-March. Small- and medium-
company stocks reaped a disproportionate share of the gains generated
during this time, particularly those issued by biotechnology,
communications equipment and semiconductor firms.
Renewed inflation concerns roiled the equity markets in late March and
April, sending growth stock valuations lower. During the ensuing months,
growth stocks continued to lose momentum, slowed by inflation jitters and
mounting valuation concerns. A number of high-profile corporate earnings
disappointments led to further volatility during the third quarter.
Despite growing market uncertainty, medium-company stocks-as measured by
the S&P MidCap 400 Index-finished the 12-month reporting period with a
robust 31.65% gain. Small-company stocks also posted solid returns,
reflected in the 17.60% advance of the Russell 2000 Index. The large-
company S&P 500 Index posted a 6.09% return over this same time.
As growth stocks fell out of favor, value-oriented issues steadily gained
ground in July, August and September. In total, value stocks-represented
by the S&P/BARRA Value Index-finished the 12-month period with a 9.67%
gain. Among the best-performing value shares were those issued by firms in
the financial, energy and utility sectors. International market trends
generally mirrored those in the United States, although regional
differences also had an impact.
Fixed Income Performance
Fixed-income returns varied by asset class, with investment-grade bonds
outperforming high-yield bonds by a wide margin during the second half of
the reporting period. High-yield bond performance was hampered by a
slowdown in the telecommunications industry, which represents nearly one-
third of the total U.S. high-yield bond market. A weakening stock market,
coupled with tightening lender credit standards, further crimped the flow
of capital to high-yield issuers. Consequently, high-yield bonds gave back
all of their earlier gains and finished the period sharply lower. Over the
12-month period, the Lehman Brothers High Yield Index produced a -1.61%
total return.
Investment-grade bonds faired better, as evidenced by the 7.30% gain in
the Lehman Brothers Aggregate Index, and the 6.26% increase in the Lehman
Brothers Government/Corporate 1-5 Year Index. Owing to a confluence of
actions by federal policymakers, investors were faced with an unusual
inversion in bond yields throughout much of the period; from January
through mid-September, yields on 10-year Treasury bonds exceeded yields on
30-year Treasury bonds. While these conditions provided an advantage to
long-term bond investors, investors in short- and intermediate-term, high-
quality bonds benefited from falling short-term interest rates during the
third quarter, and from volatility in the equity markets.
Outlook
With economic expansion slowing, there are early indications that the
Federal Reserve may be achieving its goal of a soft landing for the U.S.
economy. If so, we expect economic growth rates to remain at modest levels
over the coming months. To some degree, slowing economic growth could bode
well for investors-many of whom have endured significant market volatility
as an indirect result of the surging economy. There are downside risks to
this scenario, however, including the potential for weakening corporate
profits, which could have negative implications for the future growth of
both equity and fixed-income investments. In addition, high energy costs
could put a squeeze on both corporate and consumer spending.
Clearly, further volatility in the securities markets cannot be ruled out-
particularly if corporate earnings fail to meet expectations. Fortunately,
Americans are currently blessed with record low unemployment, a healthy
economy and rising personal incomes. In addition, the past 12 months have
rid the financial markets of many speculative excesses-leading to more
realistic securities valuations and greater balance in performance. Given
these conditions, there is reason for optimism in the months ahead.
LB Opportunity Growth Fund
[PHOTO OMITTED: BRIAN L. THORKELSON]
Brian L. Thorkelson, an assistant vice president of Lutheran Brotherhood,
is portfolio manager of the LB Opportunity Growth Fund and the LB Mid Cap
Growth Fund. He joined Lutheran Brotherhood in 1987, working for five years
as a bond trader and another five years as an equity analyst for
several Lutheran Brotherhood portfolios.
Small-company stock returns were unevenly spread over the 12-month fiscal year
ended October 31, 2000, with a disproportionate share of the period's gains
coming during the closing months of 1999. The Lutheran Brotherhood Opportunity
Growth Fund finished the reporting period with a 28.32% total return (based on
Class A share NAV). The Fund's Lipper, Inc., peer group of small-capitalization
stock funds posted an average total return of 38.47% during this time, while
its market benchmark, the Russell 2000 Index of small-company stocks, returned
17.60%.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)
Common Stocks 94.3%
Short-Term Securities 5.7%
The Fund's portfolio composition and top holdings represent all share
classes.
[GRAPHIC OMITTED: TOP 10 HOLDINGS % OF PORTFOLIO]
Top 10 Holdings % of Portfolio
----------------------------------------------------------------------
IMPATH, Inc. 1.4%
Advance Paradigm, Inc. 1.0%
Lifepoint Hospitals, Inc. 0.9%
NetIQ Corp. 0.9%
RSA Security, Inc. 0.9%
Corporate Executive Board Co. 0.8%
Cytyc Corp. 0.8%
Albany Molecular Research, Inc. 0.8%
Documentum, Inc. 0.8%
Avocent Corp. 0.7%
These holdings represent 9.0% of the total investment portfolio.
Growth Stocks Outperform Early
During the first four months of the period, the Fund remained under the
management of T. Rowe Price Associates as part of a 22-month rebuilding
process. Over much of this time, market sentiment tilted toward fast-growing
technology companies, while shares in economically sensitive sectors such as
capital goods and basic materials languished. Through February, the Fund's
strongest performances came from firms in the software and communications
equipment industries, as well as from healthcare and specialty pharmaceutical
companies.
On March 1, 2000, Lutheran Brotherhood Research Corp. once again assumed
management of the Fund. Shortly thereafter, we undertook a modest restructuring
of the Fund to bring it closer in line with its small-capitalization peer
group. As part of this process, we traded out of stocks that possessed less
liquidity than we desired, while taking a more market-neutral position in
technology and communication services stocks. Both of these strategies helped
the Fund weather volatile equity conditions during subsequent months.
The second half of the period saw many stocks with high valuations come under
heavy selling pressure. As investors assumed an increasingly defensive posture,
many rotated out of growth stocks and into value stocks with lower valuations
and less volatility. While the Fund's technology holdings generally fared
poorly over this time, we were able to bolster returns by overweighting other
sectors such as energy, financial and healthcare, all of which performed
particularly well during the second half of the period.
[GRAPHIC OMITTED: TOP 10 INDUSTRIES]
TOP 10 INDUSTRIES
Electronics 11.6%
Computers - Software & Services 11.0%
Health Care - Drugs & Pharmaceuticals 6.2%
Services - Cyclical 6.1%
Oil & Gas 5.9%
Health Care Services 5.8%
Electrical Equipment 5.2%
Communications Equipment 4.3%
Health Care - Medical Products & Supplies 3.6%
Biotechnology 3.6%
These holdings represent 63.3% of the Fund's total investment portfolio.
LB Opportunity Growth Fund seeks long-term growth of capital by investing
primarily in common stocks of small companies.
[GRAPHIC OMITTED: FUND FACTS]
Fund Facts
Inception Date: 1/8/93
Shareholder
Accounts: 57,815
Total Net Assets
(in millions): $280.0
[GRAPHIC WORM CHART OMITTED:]
Performance Through October 31, 2000
Growth of a $10,000 Investment
Class A shares (since 1/31/93)
Russell Lipper Median
Month End LB Opportunity 2000 Small Company Consumer
Date Growth Fund Index Growth Funds Price Index
------------------------------------------------------------------------
1/31/93 10,000 10,000 10,000 10,000
2/28/93 9,156 9,769 9,608 10,035
3/31/93 9,512 10,086 9,934 10,070
4/30/93 9,267 9,809 9,619 10,098
5/31/93 9,967 10,243 10,127 10,112
6/30/93 10,122 10,307 10,206 10,126
7/31/93 10,055 10,449 10,263 10,126
8/31/93 10,755 10,900 10,737 10,154
9/30/93 11,443 11,208 11,076 10,175
10/31/93 11,831 11,497 11,232 10,217
11/30/93 11,387 11,122 10,886 10,224
12/31/93 11,687 11,503 11,348 10,224
1/31/94 11,964 11,863 11,650 10,252
2/28/94 11,842 11,820 11,643 10,288
3/31/94 11,043 11,197 11,014 10,323
4/30/94 11,121 11,263 11,016 10,337
5/31/94 10,699 11,137 10,778 10,344
6/30/94 10,078 10,762 10,388 10,379
7/31/94 10,433 10,938 10,451 10,407
8/31/94 11,343 11,547 11,048 10,449
9/30/94 11,509 11,508 11,285 10,477
10/31/94 11,942 11,462 11,275 10,484
11/30/94 11,698 10,999 10,848 10,498
12/31/94 11,998 11,295 11,265 10,498
1/31/95 11,476 11,153 11,229 10,540
2/28/95 12,087 11,617 11,539 10,582
3/31/95 12,531 11,816 11,892 10,617
4/30/95 12,619 12,079 12,050 10,652
5/31/95 12,963 12,286 12,232 10,673
6/30/95 14,140 12,924 12,880 10,694
7/31/95 15,716 13,669 13,823 10,694
8/31/95 15,971 13,962 14,062 10,722
9/30/95 16,315 14,212 14,375 10,743
10/31/95 15,350 13,577 13,864 10,778
11/30/95 16,049 14,147 14,366 10,771
12/31/95 16,523 14,521 14,592 10,764
1/31/96 16,249 14,505 14,520 10,827
2/29/96 17,315 14,957 15,088 10,863
3/31/96 17,698 15,267 15,450 10,919
4/30/96 19,393 16,084 16,600 10,961
5/31/96 20,759 16,717 17,262 10,982
6/30/96 19,338 16,030 16,594 10,989
7/31/96 17,630 14,631 15,222 11,010
8/31/96 18,682 15,481 16,109 11,031
9/30/96 20,158 16,086 16,919 11,066
10/31/96 18,614 15,839 16,601 11,101
11/30/96 17,944 16,491 17,108 11,122
12/31/96 18,532 16,923 17,381 11,122
1/31/97 18,887 17,262 17,769 11,157
2/28/97 17,174 16,844 17,149 11,192
3/31/97 15,261 16,049 16,291 11,220
4/30/97 14,535 16,094 16,238 11,234
5/31/97 16,757 17,883 18,111 11,227
6/30/97 17,683 18,651 19,098 11,241
7/31/97 18,686 19,518 20,250 11,255
8/31/97 19,134 19,965 20,663 11,276
9/30/97 21,340 21,426 22,205 11,304
10/31/97 20,013 20,486 21,239 11,332
11/30/97 19,165 20,352 20,994 11,325
12/31/97 18,457 20,709 21,221 11,311
1/31/98 17,911 20,381 20,843 11,332
2/28/98 19,002 21,888 22,436 11,353
3/31/98 19,725 22,789 23,457 11,374
4/30/98 19,773 22,915 23,616 11,396
5/31/98 18,168 21,680 22,339 11,417
6/30/98 18,296 21,725 22,394 11,431
7/31/98 16,868 19,965 20,789 11,445
8/31/98 13,177 16,092 16,585 11,459
9/30/98 14,188 17,352 17,514 11,473
10/31/98 14,974 18,060 18,227 11,501
11/30/98 15,985 19,006 19,353 11,501
12/31/98 17,670 20,183 20,646 11,494
1/31/99 17,430 20,445 20,972 11,522
2/28/99 15,760 18,797 19,106 11,536
3/31/99 16,049 19,091 19,702 11,571
4/30/99 16,370 20,801 20,561 11,655
5/31/99 17,028 21,109 20,651 11,655
6/30/99 18,120 22,057 22,516 11,655
7/31/99 18,088 21,448 22,458 11,690
8/31/99 17,301 20,659 22,092 11,718
9/30/99 17,783 20,659 22,692 11,774
10/31/99 17,911 20,748 23,925 11,795
11/30/99 19,532 22,011 26,920 11,802
12/31/99 22,453 24,503 31,889 11,802
1/31/00 21,458 24,106 31,500 11,830
2/28/00 25,615 28,091 39,706 11,900
3/31/00 24,347 26,242 36,951 11,999
4/30/00 22,164 24,662 32,502 12,006
5/31/00 20,656 23,222 29,694 12,013
6/30/00 23,512 25,252 34,462 12,083
7/31/00 21,843 24,461 32,095 12,104
8/31/00 24,812 26,318 35,885 12,118
9/30/00 24,026 25,539 34,446 12,181
10/31/00 $22,983 $24,400 $32,197 $12,220
As you compare performance, please note that the LB Opportunity Growth Fund's
performance reflects the maximum 4% sales charge. The performances of the
Russell 2000 Index and the Lipper Median do not reflect any such charges. If
you were to purchase any of the individual stocks or funds represented in these
indexes, any charges you would pay would reduce your total return as well.
INSET LEGEND READS:
Lipper Median
Small Company
Growth Funds
$32,197
Russell 2000
Index
$24,400
LB Opportunity
Growth Fund
$22,983
Consumer
Price Index
$12,220
Outlook
In light of slowing economic growth, we would not be surprised to see
additional, near-term volatility in the equity markets, as investors have
recently shown a penchant for punishing even the smallest of corporate earnings
disappointments. Nonetheless, we are optimistic about the growth potential of
small-company stocks. Historically, small-company stocks have provided
investors with an excellent source of capital accumulation, and we believe
small, growth-oriented companies with strong fundamentals will continue to
provide solid investment opportunities.
With a well-diversified portfolio of small-company growth stocks in place, we
believe the future of the Lutheran Brotherhood Opportunity Growth Fund is
bright. Over the coming months, we will continue to capitalize on developing
growth trends in the economy by seeking out attractively valued stocks with
significant growth potential. We look forward to guiding the Fund in this new
and brighter chapter in its history.
LB Opportunity Growth Fund
Annualized Total Returns*
---------------------------------------------------------------------
Since
Inception
Class A shares 1-Year 5-Year 1/8/93
Net Asset Value 28.32% 8.40% 12.18%
Public Offering Price 23.13% 7.51% 11.60%
Since
Inception
Class B shares 1-Year 10/31/97
If Held (NAV) 27.36% 3.96%
If Redeemed (CDSC) 22.36% 3.02%
Institutional shares
Net Asset Value 29.08% 5.08%
*See accompanying notes to Portfolio Management Reviews.
LB Mid Cap Growth Fund
[PHOTO OMITTED: BRIAN L. THORKELSON]
Brian L. Thorkelson, an assistant vice president of Lutheran Brotherhood,
is portfolio manager of the LB Opportunity Growth Fund and the LB Mid Cap
Growth Fund. He joined Lutheran Brotherhood in 1987, working for five years
as a bond trader and another five years as an equity analyst for
several Lutheran Brotherhood portfolios.
Increasing volatility in the equity markets failed to dampen the excellent
overall performance of medium-company stocks during the 12-month fiscal year
ended October 31, 2000. For the period, the Lutheran Brotherhood Mid Cap Growth
Fund produced a 46.26% total return (based on Class A share NAV), outperforming
its Lipper, Inc., peer group of mid-cap core stock funds, which averaged a
34.34% total return. The Fund's market benchmark, the S&P MidCap 400 Index,
returned 31.65% over this time.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)
Common Stocks 92.6%
Short-Term Securities 7.4%
The Fund's portfolio composition and top holdings represent all share
classes.
Technology Strong Early in Period
Technology stocks fueled the Fund's exceptional returns early in the reporting
period-particularly in industries such as biotechnology, software,
semiconductors and telecommunications-all of which we overweighted through
February. Despite the Fund's steady relative performance throughout the fiscal
year, gains generated during these four months contributed significantly to
overall performance.
[GRAPHIC OMITTED: TOP 10 HOLDINGS % OF PORTFOLIO]
Top 10 Holdings % Of Portfolio
------------------------------------------------------------------------
Concord EFS, Inc. 0.9%
SunGard Data Systems, Inc. 0.9%
Jabil Circuit, Inc. 0.7%
King Pharmaceuticals, Inc. 0.7%
Veritas Software Corp. 0.7%
PMI Group 0.7%
Trigon Healthcare, Inc. 0.7%
Rational Software Corp. 0.7%
EOG Resources, Inc. 0.6%
Donaldson, Lufkin & Jenrette, Inc. 0.6%
These holdings represent 7.2% of the total investment portfolio.
Investor sentiment shifted rapidly in mid-March, and many of the growth
stocks that had produced spectacular returns during the preceding 12 months
came under heavy selling pressure. Anticipating a further falloff in growth
stock valuations, we trimmed positions in technology issues with
excessively high price-to-earnings multiples during this time. In March, we
reduced the Fund's overall technology allocation by roughly eight percent,
which proved timely. Growth stocks rallied in June and early July, but this
resurgence was short-lived. Jarred by a mounting number of corporate
earnings disappointments, investors began selling technology shares in
large volumes over the following months. Semiconductor and
telecommunications stocks fared particularly poorly, owing to reports of
slowing consumer demand and lower projected earnings within these
industries.
Despite heightened market volatility, many medium-company stocks generated
consistently strong returns throughout the period, particularly in areas
such as biotechnology and healthcare. Companies that contributed to the
Fund's performance included pharmaceutical manufacturers Forest Labs,
Watson Pharmaceuticals, and Celgene Corp., and healthcare providers Health
Management Associates and Tenant Healthcare, and biotechnology firm Human
Genome Sciences.
[GRAPHIC OMITTED: TOP 10 INDUSTRIES]
Top 10 Industries
Electronics 9.6%
Oil & Gas 9.1%
Computers - Software & Services 7.8%
Health Care - Drugs & Pharmaceuticals 6.2%
Services - Technology 4.6%
Banks 3.8%
Services - Cyclical 3.4%
Electrical Equipment 3.1%
Utilities 3.1%
Biotechnology 3.1%
These holdings represent 53.8% of the Fund's total investment portfolio.
LB Mid Cap Growth Fund seeks long-term growth of capital by investing
primarily in common stocks of medium-sized companies.
[GRAPHIC OMITTED: FUND FACTS]
Fund Facts
Inception Date: 5/30/97
Shareholder
Accounts: 42,425
Total Net Assets
(in millions): $181.5
Outlook
Recent economic data indicate that the Federal Reserve is well on its way
to slowing the economy from its torrid earlier pace. As a result, it is
unlikely that further hikes in short-term interest rates will be necessary
anytime soon. On the contrary, the Federal Reserve's next move may well be
an easing in monetary policy, which could bring a respite from recent stock
market volatility. Regardless, any significant deterioration in corporate
earnings growth would likely drive stock prices lower.
Over the near-term, we expect to keep the Fund overweighted in healthcare,
energy and financial stocks, and slightly underweighted in consumer
cyclical and technology holdings. However, we will keep a close eye on
long-term trends, and make periodic adjustments as needed. As we have
successfully done over the past 12 months, we will make continued efforts
to structure the Fund in a manner that captures prevailing market momentum.
With a diversified portfolio of assets to build upon, we believe this
strategy will ultimately position the Fund for further gains.
[GRAPHIC WORM CHART OMITTED:]
Performance Through October 31, 2000
Growth of a $10,000 Investment
Class A shares (since 5/31/97)
Lipper Median
Month End LB Mid Cap S&P MidCap MidCap Consumer
Date Growth Fund 400 Index Core Funds Price Index
----------------------------------------------------------------------
5/31/97 10,000 10,000 10,000 10,000
6/30/97 9,979 10,285 10,395 10,012
7/31/97 10,622 11,303 11,225 10,025
8/31/97 10,519 11,290 11,193 10,044
9/30/97 11,079 11,939 11,924 10,069
10/31/97 10,716 11,419 11,380 10,094
11/30/97 10,560 11,588 11,378 10,087
12/31/97 10,802 12,038 11,571 10,075
1/31/98 10,647 12,038 11,368 10,094
2/28/98 11,608 13,035 12,382 10,112
3/31/98 12,083 13,623 12,962 10,131
4/30/98 12,171 13,872 13,084 10,150
5/31/98 11,520 13,248 12,484 10,169
6/30/98 11,862 13,331 12,760 10,181
7/31/98 11,299 12,814 12,113 10,194
8/31/98 8,979 10,431 9,763 10,206
9/30/98 9,576 11,434 10,439 10,219
10/31/98 10,150 12,456 11,064 10,244
11/30/98 10,890 13,078 11,720 10,244
12/31/98 12,050 14,658 12,915 10,237
1/31/99 12,502 14,087 13,068 10,262
2/28/99 11,774 13,349 12,204 10,275
3/31/99 12,502 13,723 12,721 10,306
4/30/99 12,944 14,804 13,402 10,381
5/31/99 12,790 14,870 13,457 10,381
6/30/99 13,762 15,667 14,276 10,381
7/31/99 13,596 15,333 14,021 10,412
8/31/99 13,342 14,807 13,718 10,437
9/30/99 13,309 14,349 13,588 10,487
10/31/99 14,281 15,081 14,310 10,506
11/30/99 15,319 15,868 15,367 10,512
12/31/99 17,861 16,811 17,286 10,512
1/31/00 17,586 15,967 17,016 10,537
2/29/00 21,903 17,085 19,703 10,600
3/31/00 21,366 18,515 20,111 10,687
4/30/00 19,905 17,867 18,854 10,693
5/31/00 19,014 17,645 18,021 10,700
6/30/00 20,236 17,905 19,248 10,762
7/31/00 19,756 18,188 18,874 10,781
8/31/00 22,177 20,219 20,968 10,793
9/30/00 21,880 20,082 20,599 10,850
10/31/00 $20,887 $19,401 $19,822 $10,884
As you compare performance, please note that the LB Mid Cap Growth Fund's
performance reflects the maximum 4% sales charge. The performances of the S&P
MidCap 400 Index and the Lipper Median do not reflect any such charges. If you
were to purchase any of the individual stocks or funds represented in these
indexes, any charges you would pay would reduce your total return as well.
INSET LEGEND READS:
LB Mid Cap
Growth Fund
$20,877
Lipper Median
MidCap
Core Funds
$19,822
S&P MidCap
400 Index
$19,401
Consumer
Price Index
$10,884
INSET BOX ON CHART READS:
LB Mid Cap Growth Fund
Annualized Total Returns*
---------------------------------------------------------------------
Since
Inception
Class A shares 1 Year 5/30/97
Net Asset Value 46.26% 25.50%
Public Offering Price 40.40% 23.99%
Since
Inception
Class B shares 1 Year 10/31/97
If Held (NAV) 45.11% 23.95%
If Redeemed (CDSC) 40.11% 23.30%
Institutional shares
Net Asset Value 47.15% 25.34%
*See accompanying notes to Portfolio Management Reviews.
LB World Growth Fund
[PHOTO OMITTED: DAVID J. L. WARREN]
David J.L. Warren is president of T. Rowe Price International, Inc.
investment subadvisor of the LB World Growth Fund. He leads a team of 12
portfolio managers that has managed the Fund's assets since its inception
in September 1995. David has worked in investment research and management
for over 20 years, and has managed international portfolios with T. Rowe
Price International, Inc. since 1984.
Growing economic and market uncertainty held back international stock
returns during the 12-month period ended October 31, 2000. During this
time, the Lutheran Brotherhood World Growth Fund gained 1.78% (based on
Class A share NAV), while the Fund's Lipper, Inc., peer group of
international equity funds finished with an average total return of 2.70%.
The Fund's market benchmark, Morgan Stanley Capital International's Europe,
Australasia and Far East (EAFE) Index, returned -2.66% over this time.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)
Common Stocks & Warrants 95.7%
Short-Term Securities 2.9%
Preferred Stocks 1.4%
The Fund's portfolio composition and top holdings represent all share
classes.
Central Banks Active
Reflecting prevailing trends in the United States, growth stocks dominated
most international markets during the first part of the reporting period.
Investors largely ignored valuations in pursuing stocks with the highest
perceived growth prospects, most notably those in the software,
semiconductor and telecommunications industries. However, long-ignored
value stocks gained momentum later in the period, reducing the gap in
performance between growth stocks and more traditional cyclical issues.
Tightening monetary policy also remained a common theme across global
markets. Through the first and second quarters of 2000, central banks
around the world followed the U.S. Federal Reserve's lead in raising
interest rates to reign in rapidly accelerating economic growth.
Sensitivity to rising interest rates was particularly acute in Latin
America, where stock performance generally disappointed investors, despite
the reinvigorated economies of Mexico and Brazil.
[GRAPHIC OMITTED: TOP 10 HOLDINGS COUNTRY % OF PORTFOLIO]
% of
Top 10 Holdings Country Portfolio
----------------------------------------------------------------------
Vodafone AirTouch plc United Kingdom 3.1%
Royal Bank of Scotland
Group plc United Kingdom 2.5%
Nokia Oyj Finland 2.3%
Glaxo Wellcome United Kingdom 2.1%
Total 'B' France 1.9%
Shell Transport &
Trading Co. United Kingdom 1.7%
Sony Corp. Japan 1.6%
Vivendi France 1.6%
Reed International plc United Kingdom 1.5%
ING Groep NV Netherlands 1.5%
These holdings represent 19.8% of the total investment portfolio.
A relatively healthy economic climate in Europe supported market
performance across much of that region. Volatility escalated later in the
period, however, as a result of higher oil prices and continued weakness in
the euro, prompting a joint effort among several large central banks to
support the European currency in September. Returns in Europe were heavily
influenced by the direction of telecommunications share prices, which
fluctuated widely throughout the period and differed by region. In total,
European stocks accounted for 64% of the Fund's holdings at period end.
Japanese stock prices trended lower, as economic recovery in that country
remained sluggish. Although we added to our Japanese holdings as valuations
became more attractive, we continued to underweight Japan relative to the
EAFE Index. Other countries in East Asia recorded stronger returns,
although volatility from other world markets had a ripple effect across the
region late in the period.
[GRAPHIC OMITTED: TOP 10 COUNTRIES % OF PORTFOLIO]
Top 10 Countries % of Portfolio
----------------------------------------------------------------------
United Kingdom 23.1%
Japan 19.2%
France 12.5%
Netherlands 6.8%
Italy 5.8%
Germany 4.1%
Sweden 4.0%
Switzerland 4.0%
Spain 2.8%
Hong Kong 2.5%
These holdings represent 84.8% of the total investment portfolio.
Outlook
Looking ahead, we believe international markets will continue to witness
periods of volatility, as investors place a renewed emphasis on company
fundamentals, and equity valuations recede toward historic norms. In
Europe, we are concerned about the euro's continued slide in value relative
to other world currencies, but remain confident about prospects for growth
in that region. Latin American markets, too, hold significant promise,
particularly in Brazil and Mexico, where we continue to concentrate our
Latin American holdings. Growth in Asia will likely hinge on exports to
global trading partners, as well as continued economic recovery in Japan
and Korea.
LB World Growth Fund
seeks long-term growth of capital
by investing primarily in common
stocks issued by established
non-U.S. companies.**
[GRAPHIC OMITTED: FUND FACTS]
Fund Facts
Inception Date: 9/5/95
Shareholder
Accounts: 30,934
Total Net Assets
(in millions): $130.8
Overall, we are heartened by the pace of economic reforms taking place
across many parts of the world, and welcome the widening breadth of
performance across regions and market sectors. While investors will likely
need more time to adjust for slowing rates of economic growth and reduced
earnings expectations, we remain optimistic about the long-term growth
potential of international markets. As always, we believe exposure to a
diversified portfolio of international equity holdings will continue to
bring rewards to long-term investors.
[GRAPHIC WORM CHART OMITTED:]
Performance Through October 31, 2000
Growth of a $10,000 Investment
Class A shares (since 9/30/95)
Morgan Stanley Lipper
LB World Capital Median Consumer
Month End Growth International International Price
Date Fund EAFE Index Fund Stocks Index
------------------------------------------------------------------------
9/30/95 10,000 10,000 10,000 10,000
10/31/95 9,430 9,734 9,790 10,033
11/30/95 9,508 10,008 9,893 10,026
12/31/95 9,817 10,413 10,203 10,020
1/31/96 10,041 10,458 10,413 10,078
2/29/96 10,108 10,495 10,443 10,111
3/31/96 10,265 10,721 10,625 10,163
4/30/96 10,567 11,035 10,957 10,202
5/31/96 10,522 10,834 10,899 10,222
6/30/96 10,634 10,898 10,975 10,228
7/31/96 10,298 10,582 10,581 10,248
8/31/96 10,444 10,607 10,691 10,268
9/30/96 10,679 10,892 10,919 10,300
10/31/96 10,612 10,783 10,829 10,333
11/30/96 11,093 11,214 11,290 10,352
12/31/96 11,135 11,073 11,320 10,352
1/31/97 10,977 10,688 11,247 10,385
2/28/97 11,090 10,865 11,394 10,418
3/31/97 11,068 10,907 11,421 10,444
4/30/97 11,135 10,967 11,449 10,457
5/31/97 11,869 11,683 12,144 10,450
6/30/97 12,378 12,331 12,702 10,463
7/31/97 12,705 12,533 13,039 10,477
8/31/97 11,531 11,599 12,078 10,496
9/30/97 12,299 12,251 12,839 10,522
10/31/97 11,395 11,311 11,862 10,548
11/30/97 11,350 11,198 11,763 10,542
12/31/97 11,377 11,299 11,862 10,529
1/31/98 11,779 11,819 12,158 10,548
2/28/98 12,458 12,580 12,944 10,568
3/31/98 12,883 12,970 13,584 10,587
4/30/98 12,975 13,075 13,772 10,607
5/31/98 12,941 13,015 13,786 10,627
6/30/98 12,941 13,116 13,703 10,640
7/31/98 13,102 13,253 13,891 10,653
8/31/98 11,469 11,613 11,937 10,666
9/30/98 11,192 11,260 11,520 10,679
10/31/98 12,170 12,437 12,411 10,705
11/30/98 12,734 13,078 13,058 10,705
12/31/98 13,165 13,597 13,467 10,698
1/31/99 13,038 13,560 13,512 10,725
2/28/99 12,783 13,240 13,164 10,738
3/31/99 13,293 13,796 13,628 10,770
4/30/99 13,767 14,359 14,206 10,849
5/31/99 13,131 13,622 13,602 10,849
6/30/99 13,628 14,156 14,289 10,849
7/31/99 13,860 14,581 14,667 10,881
8/31/99 13,999 14,638 14,799 10,907
9/30/99 14,068 14,789 14,864 10,960
10/31/99 14,508 15,346 15,432 10,979
11/30/99 15,516 15,883 16,438 10,986
12/31/99 17,462 17,313 18,360 10,986
1/31/00 16,377 16,215 17,260 11,012
2/28/00 17,248 16,655 18,118 11,077
3/31/00 17,403 17,304 18,403 11,168
4/30/00 16,413 16,398 17,293 11,175
5/31/00 15,816 16,001 16,760 11,181
6/30/00 16,580 16,630 17,463 11,247
7/31/00 16,019 15,936 16,839 11,266
8/31/00 16,389 16,078 17,063 11,279
9/30/00 15,351 15,298 16,113 11,338
10/31/00 $14,767 $14,940 $15,560 $11,374
As you compare performance, please note that the LB World Growth Fund's
performance reflects the maximum 4% sales charge. The performances of the
MSCI EAFE Index and the Lipper Median do not reflect any such charges. If
you were to purchase any of the individual stocks or funds represented in
these indexes, any charges you would pay would reduce your total return as
well.
INSET LEGEND READS:
Lipper Median
International
Fund Stocks
$15,560
Morgan Stanley
Capital International
EAFE Index
$14,940
LB World
Growth Fund
$14,767
Consumer
Price Index
$11,374
INSET BOX ON CHART READS:
LB World Growth Fund
Annualized Total Returns*
---------------------------------------------------------------------
Since
Inception
Class A shares 1-Year 5-Year 9/5/95
Net Asset Value 1.78% 9.37% 8.93%
Public Offering Price -2.27% 8.49% 8.08%
Since
Inception
Class B shares 1-Year 10/31/97
If Held (NAV) 0.97% 8.20%
If Redeemed (CDSC) -4.03% 7.34%
Institutional shares
Net Asset Value 2.43% 9.45%
*See accompanying notes to Portfolio Management Reviews.
LB Growth Fund
[PHOTO OMITTED: JAMES M. WALLINE]
James M. Walline, a vice president of Lutheran Brotherhood, is a
Chartered Financial Analyst and portfolio manager of the LB Growth Fund and
the LB Fund. He has been with Lutheran Brotherhood Research Corp. since its
inception in 1970.
Large-company growth stocks posted healthy gains early in the 12-month period
ended October 31, 2000, but later fell victim to a market rotation that
depressed valuations. The Lutheran Brotherhood Growth Fund finished its debut
year with a 12.79% total return (based on Class A share NAV), moderately
underperforming its Lipper, Inc., peer group of large-capitalization growth
funds, which averaged a 15.36% total return. The Fund's market benchmark, the
S&P/BARRA Growth Index, gained 2.08% during this time.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)
Common Stocks 95.2%
Short-Term Securities 4.8%
The Fund's portfolio composition and top holdings represent all share
classes.
Investor Sentiment Shifts
Early in the reporting period, investors focused their attention on stocks with
the very highest growth prospects. This sentiment heavily favored shares issued
by rapidly growing technology companies. As increasing numbers of market
participants were drawn to this sector, growth stock valuations spiraled upward
during the closing months of 1999. Although stocks retreated broadly during
January, growth issues quickly regained momentum in February, and continued to
flourish through mid-March.
[GRAPHIC OMITTED: TOP 10 HOLDINGS % OF PORTFOLIO]
Top 10 Holdings % of Portfolio
------------------------------------------------------------------------
Cisco Systems, Inc. 3.7%
EMC Corp. 3.3%
General Electric Co. 3.2%
Pfizer, Inc. 3.0%
Sun Microsystems, Inc. 2.6%
Intel Corp. 2.3%
Microsoft Corp. 2.0%
Citigroup, Inc. 1.8%
Corning, Inc. 1.6%
Nokia Corp. 1.6%
These holdings represent 25.1% of the total investment portfolio.
The second quarter of 2000 was marked by increasing volatility in the equity
markets. Much of this instability stemmed from the Federal Reserve's decision
to raise short-term interest rates, but the rapid run-up in stock valuations
also gave investors reason for concern. Although many large growth companies
still possessed solid business fundamentals, stock valuations had, in many
cases, begun to outpace earnings prospects. As a result, growth stocks
continued their turbulent trading patterns through October.
Despite several shifts in market sentiment during the period, we chose to
maintain sector allocations that were largely neutral to the Fund's peer group.
However, we did increase positions in many of the Fund's core holdings as
valuations became more attractive. Particularly noteworthy was the solid
performance of the Fund's utility holdings, which are not traditionally
regarded as growth issues. Nonetheless, this sector has witnessed explosive
growth in recent years, resulting from the build-out of infrastructure for the
Internet, and technology companies' increasing dependence on high-quality,
uninterrupted power sources.
[GRAPHIC OMITTED: TOP 10 INDUSTRIES]
TOP 10 INDUSTRIES
------------------------------------------------------------------------
Computers - Software & Services 9.3%
Communications Equipment 8.7%
Electronics 6.9%
Health Care - Drugs & Pharmaceuticals 6.6%
Computers - Hardware 5.4%
Retail 4.8%
Financial - Diversified 4.6%
Computers - Networking 4.3%
Electrical Equipment 4.1%
Computers - Peripherals 3.3%
These holdings represent 58.0% of the Fund's total investment portfolio.
Outlook
While recent market uncertainty has led to disappointing results for equity
growth investors, it is important to bear in mind that much of this fallout was
a natural outcome of tighter monetary policy and unsustainable valuations. As
investors gradually adjust to lower earnings expectations, we believe the
market for large-company growth stocks will once again stabilize-provided the
economy is able to maintain a steady rate of growth. In the meantime, there are
still pockets within the stock market vulnerable to further price adjustments,
which could lead to further near-term volatility.
LB Growth Fund seeks long-term growth of capital by investing primarily in
common stocks of large companies that show above average potential for
growth in earnings.
[GRAPHIC OMITTED: FUND FACTS]
Fund Facts
Inception Date: 10/29/99
Shareholder
Accounts: 10,379
Total Net Assets
(in millions): $39.4
Regardless of market conditions, we will continue to invest in high-quality,
leading-edge companies within each major growth sector of the U.S. economy. In
addition, we will seek to minimize the effects of market rotation by using a
sector weighting that is neutral to the Fund's peer group, and by investing in
a wide range of large-company stocks. We believe this strategy will ultimately
translate into solid, long-term performance for our shareholders.
[GRAPHIC WORM CHART OMITTED:]
Performance Through October 31, 2000
Growth of a $10,000 Investment
Class A shares (since 10/29/99)
S&P Lipper
LB BARRA Median Consumer
Month End Growth Growth Large Cap Price
Date Fund Index Growth Funds Index
------------------------------------------------------------------------
10/29/99 10,000 10,000 10,000 10,000
11/30/99 10,064 10,428 10,504 10,006
12/31/99 11,140 11,200 11,652 10,006
1/31/00 10,686 10,454 11,160 10,030
2/28/00 11,076 10,673 11,798 10,089
3/31/00 12,054 11,661 12,504 10,172
4/30/00 11,385 11,083 11,855 10,178
5/31/00 10,774 10,631 11,186 10,184
6/30/00 11,518 11,489 12,009 10,244
7/31/00 11,309 10,978 11,772 10,262
8/31/00 12,269 11,613 12,816 10,273
9/30/00 11,379 10,480 11,917 10,327
10/31/00 $10,826 $10,208 $11,270 $10,360
As you compare performance, please note that the LB Growth Fund's
performance reflects the maximum 4% sales charge. The performances of the
S&P/BARRA Growth Index and the Lipper Median do not reflect any such
charges. If you were to purchase any of the individual stocks or funds
represented in these indexes, any charges you would pay would reduce your
total return as well.
INSET LEGEND READS:
Lipper Median
Large Cap
Growth Funds
$11,270
LB Growth
Fund
$10,826
Consumer
Price Index
$10,360
S&P BARRA
Growth Index
$10,208
LB Growth Fund
Annualized Total Returns*
-----------------------------------------------------------
Since
Inception
Class A shares 1-Year 10/29/99
Net Asset Value 12.79% 12.79%
Public Offering Price 8.26% 8.26%
Since
Inception
Class B shares 1-Year 10/29/99
If Held (NAV) 11.94% 11.94%
If Redeemed (CDSC) 6.94% 6.94%
Institutional shares
Net Asset Value 13.64% 13.64%
*See accompanying notes to Portfolio Management Reviews.
LB Fund
[PHOTO OMITTED: JAMES M. WALLINE]
James M. Walline, a vice president of Lutheran Brotherhood, is a Chartered
Financial Analyst and portfolio manager of the LB Fund and the LB Growth Fund.
He has been with Lutheran Brotherhood Research Corp. since its inception in
1970.
Large-company stocks generally underperformed small- and medium-company issues
during the 12-month period ended October 31, 2000, while growth and value
stocks flourished independently of each other. For the period, the Lutheran
Brotherhood Fund posted a 5.07% total return (based on Class A share NAV),
while its Lipper, Inc., peer group of large-capitalization core stock funds
averaged a returned 9.64%. The Fund's market benchmark, the S&P 500 Index,
gained 6.09% during this time.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)
Common Stocks 95.5%
Short-Term Securities 4.5%
Growth Gives Way to Value
The 12-month fiscal year was marked by several sharp reversals in market
sentiment. Early in the period, small- and medium-capitalization growth stocks
performed particularly well, led by a remarkable advance in technology issues.
While a number of strategically positioned, large growth companies also shared
in these gains, market breadth was much narrower among large companies than
among smaller ones, resulting in lower overall returns for large-company
stocks.
[GRAPHIC OMITTED: TOP 10 HOLDINGS % OF PORTFOLIO]
Top 10 Holdings % of Portfolio
------------------------------------------------------------------------
General Electric Co. 4.0%
Cisco Systems, Inc. 3.2%
Intel Corp. 2.7%
Pfizer, Inc. 2.5%
Microsoft Corp. 2.5%
American International Group, Inc. 2.4%
EMC Corp. 2.4%
Citigroup, Inc. 2.4%
ExxonMobil Corp. 2.2%
Sun Microsystems, Inc. 1.8%
These holdings represent 26.1% of the total investment portfolio.
March ushered in significant market upheaval, as reports of economic strength
rekindled fears of higher short-term interest rates. Equity markets continued
to struggle over the following months, as investors anticipated further
monetary tightening. These expectations were realized in mid-May, when the
Federal Reserve ratcheted up the targeted federal funds rate to 6.50%, the
sixth consecutive rate hike since June 1999.
Growth stocks rallied again in June, but remained volatile throughout the
remainder of the period, while value stocks experienced healthy gains. We
selectively added to the Fund's nucleus of high-quality stocks as opportunities
arose. Over the course of the period, strong performances came from a wide
range of companies and industries-including best-of-breed technology firms such
as Oracle, EMC Corp. and Cisco Systems, as well as leaders in the healthcare
industry, such as Abbott Laboratories and Medtronic. As a result of rising
energy prices, stocks in the energy sector also performed well, led by Anadarko
Petroleum, Schlumberger and ExxonMobil.
[GRAPHIC OMITTED: TOP 10 INDUSTRIES]
TOP 10 INDUSTRIES
------------------------------------------------------------------------
Health Care - Drugs & Pharmaceuticals 6.9%
Oil & Gas 6.6%
Computers - Software & Services 6.2%
Financial - Diversified 6.2%
Electrical Equipment 5.2%
Electronics 5.1%
Communications Equipment 5.0%
Retail 4.5%
Computers - Hardware 4.4%
Banks 3.7%
These holdings represent 53.8% of the Fund's total investment portfolio.
Outlook
Over the coming year, investors will likely be more concerned with the
direction of corporate earnings than with other issues that preoccupied the
markets in 2000, such as monetary policy and inflation. While most companies'
earnings are still growing, they are doing so at a slower rate than investors
have become accustomed to in recent years. As a result, it will take time for
market participants to adjust their expectations, which could lead to further
choppiness in the equity markets.
LB Fund seeks long-term growth of capital and income by investing primarily
in common stocks of leading U.S. companies.
[GRAPHIC OMITTED: FUND FACTS]
Fund Facts
Inception Date: 6/2/70
Shareholder
Accounts: 140,833
Total Net Assets
(in millions): $1,586.4
Fortunately, overall market breadth has improved dramatically, and value-
oriented investors are finally being rewarded for their patience. This trend
should benefit investors in the Fund, due to its blended investment approach,
and provide exposure to both growth and value shares. As the disparity in
performance between growth and value stocks narrows, we expect the recent
emphasis on company fundamentals to continue, making stock selection critical.
As always, we will focus on large companies with strong management teams,
leading positions within their industries and high returns on invested capital.
Over the long run, we believe companies with these characteristics will
outperform their peers, and provide the best performance for our shareholders.
[GRAPHIC WORM CHART OMITTED:]
Performance Through October 31, 2000
Growth of a $10,000 Investment
Class A shares (since 10/31/90)
Standard & Poor's Lipper Consumer
Month End 500 Stock Median Large-Cap Price
Date LB Fund Index Core Funds Index
-----------------------------------------------------------------------
10/31/90 10,000 10,000 10,000 10,000
11/30/90 10,107 10,634 10,586 10,022
12/31/90 10,334 10,931 10,893 10,022
1/31/91 10,841 11,418 11,421 10,082
2/28/91 11,539 12,215 12,167 10,097
3/31/91 11,749 12,515 12,449 10,112
4/30/91 11,812 12,557 12,459 10,127
5/31/91 12,354 13,080 12,959 10,157
6/30/91 11,666 12,487 12,411 10,187
7/31/91 12,267 13,084 12,931 10,202
8/31/91 12,638 13,378 13,227 10,232
9/30/91 12,427 13,156 13,108 10,277
10/31/91 12,690 13,349 13,308 10,292
11/30/91 12,228 12,795 12,784 10,322
12/31/91 13,721 14,259 14,048 10,330
1/31/92 13,516 14,009 14,046 10,345
2/28/92 13,657 14,173 14,283 10,382
3/31/92 13,311 13,898 14,036 10,434
4/30/92 13,406 14,323 14,256 10,449
5/31/92 13,530 14,372 14,345 10,464
6/30/92 13,206 14,161 14,056 10,502
7/31/92 13,609 14,758 14,526 10,524
8/31/92 13,360 14,441 14,251 10,554
9/30/92 13,547 14,609 14,421 10,584
10/31/92 13,812 14,677 14,512 10,622
11/30/92 14,400 15,155 15,047 10,637
12/31/92 14,516 15,345 15,274 10,629
1/31/93 14,795 15,487 15,447 10,682
2/28/93 14,843 15,681 15,561 10,719
3/31/93 15,272 16,013 15,963 10,757
4/30/93 15,014 15,644 15,671 10,787
5/31/93 15,389 16,037 16,037 10,802
6/30/93 15,440 16,090 16,087 10,817
7/31/93 15,306 16,042 16,073 10,817
8/31/93 15,757 16,635 16,661 10,846
9/30/93 15,731 16,507 16,651 10,869
10/31/93 15,892 16,865 16,887 10,914
11/30/93 15,479 16,686 16,658 10,921
12/31/93 15,777 16,895 17,021 10,921
1/31/94 16,339 17,481 17,552 10,951
2/28/94 15,893 16,990 17,210 10,989
3/31/94 15,121 16,253 16,488 11,026
4/30/94 15,156 16,475 16,643 11,041
5/31/94 15,326 16,717 16,803 11,049
6/30/94 14,906 16,308 16,420 11,086
7/31/94 15,354 16,861 16,872 11,116
8/31/94 15,909 17,540 17,516 11,161
9/30/94 15,641 17,109 17,127 11,191
10/31/94 15,874 17,507 17,312 11,199
11/30/94 15,228 16,858 16,675 11,214
12/31/94 15,239 17,106 16,852 11,214
1/31/95 15,608 17,562 17,093 11,258
2/28/95 16,050 18,233 17,734 11,303
3/31/95 16,337 18,778 18,190 11,341
4/30/95 16,817 19,340 18,635 11,378
5/31/95 17,368 20,084 19,237 11,401
6/30/95 17,938 20,552 19,641 11,423
7/31/95 18,736 21,249 20,285 11,423
8/31/95 18,528 21,292 20,401 11,453
9/30/95 19,226 22,188 21,032 11,476
10/31/95 19,262 22,124 20,798 11,513
11/30/95 20,153 23,077 21,713 11,506
12/31/95 20,121 23,523 22,093 11,498
1/31/96 20,687 24,339 22,694 11,566
2/28/96 20,941 24,548 22,996 11,603
3/31/96 21,047 24,789 23,290 11,663
4/30/96 21,458 25,165 23,630 11,708
5/31/96 21,829 25,787 24,075 11,730
6/30/96 21,703 25,888 24,041 11,738
7/31/96 20,654 24,754 23,012 11,760
8/31/96 21,213 25,269 23,640 11,783
9/30/96 22,320 26,686 24,728 11,820
10/31/96 22,654 27,439 25,227 11,858
11/30/96 24,304 29,502 26,915 11,880
12/31/96 23,587 28,918 26,581 11,880
1/31/97 25,071 30,743 27,711 11,918
2/28/97 25,028 30,967 27,874 11,955
3/31/97 24,051 29,691 26,865 11,985
4/30/97 25,517 31,476 27,859 12,000
5/31/97 26,792 33,367 29,567 11,993
6/30/97 27,929 34,866 30,717 12,008
7/31/97 29,993 37,641 33,024 12,023
8/31/97 28,312 35,525 31,845 12,045
9/30/97 29,643 37,483 33,453 12,075
10/31/97 28,768 36,246 32,262 12,105
11/30/97 29,739 37,910 33,178 12,097
12/31/97 30,168 38,562 33,743 12,082
1/31/98 30,487 39,005 33,830 12,105
2/28/98 32,626 41,802 36,168 12,127
3/31/98 34,440 43,946 37,806 12,150
4/30/98 34,783 44,395 38,090 12,172
5/31/98 33,860 43,604 37,328 12,195
6/30/98 35,144 45,379 37,914 12,210
7/31/98 34,398 44,907 37,000 12,225
8/31/98 28,693 38,409 31,517 12,240
9/30/98 30,355 40,860 33,238 12,255
10/31/98 33,104 44,206 35,717 12,285
11/30/98 34,973 46,876 37,578 12,285
12/31/98 37,198 49,581 39,205 12,277
1/31/99 39,073 51,653 40,628 12,307
2/28/99 38,249 50,047 39,267 12,322
3/31/99 40,250 52,049 40,877 12,360
4/30/99 41,088 54,079 42,083 12,449
5/31/99 39,624 52,802 41,048 12,449
6/30/99 42,145 55,733 43,433 12,449
7/31/99 40,560 53,994 42,195 12,487
8/31/99 40,241 53,724 41,862 12,517
9/30/99 39,061 52,252 40,844 12,577
10/31/99 41,578 55,559 43,332 12,599
11/30/99 42,737 56,693 44,381 12,607
12/31/99 44,823 60,032 47,376 12,607
1/31/00 42,895 57,018 45,178 12,637
2/28/00 42,740 55,941 44,939 12,712
3/31/00 46,416 61,412 49,005 12,817
4/30/00 44,873 59,563 47,442 12,824
5/31/00 43,454 58,342 46,161 12,831
6/30/00 45,097 59,783 47,592 12,906
7/31/00 44,572 58,851 46,883 12,929
8/31/00 47,366 62,505 49,987 12,944
9/30/00 44,688 59,205 47,243 13,011
10/31/00 $43,685 $58,956 $46,529 $13,053
As you compare performance, please note that the LB Fund's performance
reflects the maximum 4% sales charge. The performances of the S&P 500 Index
and the Lipper Median do not reflect any such charges. If you were to
purchase any of the individual stocks or funds represented in these
indexes, any charges you would pay would reduce your total return as well.
INSET LEGEND READS:
Standard & Poor's
500 Stock Index
$59,956
Lipper Median
Large-Cap
Core Funds
$46,529
LB Fund
$43,685
Consumer
Price Index
$13,053
INSET BOX ON CHART READS:
LB Fund
Annualized Total Returns*
Class A shares 1-Year 5-Year 10-Year
Net Asset Value 5.07% 17.77% 16.34%
Public Offering Price 0.87% 16.82% 15.87%
Since
Inception
Class B shares 1-Year 10/31/97
If Held (NAV) 4.32% 14.10%
If Redeemed (CDSC) -0.68% 13.33%
Institutional shares
Net Asset Value 5.36% 15.23%
*See accompanying notes to Portfolio Management Reviews.
LB Value Fund
[PHOTO OMITTED: HAROLD R. GOLDSTEIN]
Harold R. Goldstein is a Chartered Financial Analyst and portfolio manager
of the LB Value Fund. He has worked in investment sales and management
since 1982 and has been with Lutheran Brotherhood since 1993.
Bolstered by strong stock selection, the Lutheran Brotherhood Value Fund
generated solid returns for its shareholders over the course of its debut year.
For the 12-month period ended October 31, 2000, the Fund posted an 8.76% total
return (based on Class A share NAV), outperforming its Lipper, Inc., peer group
of large-capitalization value stock funds, which averaged a 6.93% total return.
The Fund's market benchmark, the S&P/BARRA Value Index, returned 9.67% during
the period.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)]
Common Stocks 92.3%
Short-Term Securities 7.7%
The Fund's portfolio composition and top holdings represent all share
classes.
Careful Stock Selection Key
The Fund was introduced during the waning months of a period in which growth
stocks soundly outperformed value stocks. By investing in several key growth
companies, however, while avoiding highly cyclical issues, we were able to
weather initial investor indifference toward value stocks and generate positive
returns early in the period. As was the case throughout the 12-month period,
careful stock selection was pivotal to the Fund's early performance.
[GRAPHIC OMITTED: TOP 10 HOLDINGS % OF PORTFOLIO]
Top 10 Holdings % of Portfolio
----------------------------------------------------------------------
ExxonMobil Corp. 2.8%
Citigroup, Inc. 2.5%
General Electric Co. 2.3%
American International Group, Inc. 2.2%
Verizon Communications 1.7%
Federal National Mortgage Association 1.6%
SBC Communications, Inc. 1.5%
Intel Corp. 1.5%
International Business Machines Corp. 1.3%
Microsoft Corp. 1.2%
These holdings represent 18.6% of the total investment portfolio.
March ushered in a rapid market rotation, as investors began reassessing lofty
growth stock valuations and placing greater emphasis on company fundamentals.
Consequently, many growth stocks that had witnessed meteoric rises in price-to-
earnings multiples fell quickly out of favor. Although value stocks briefly
flourished in this environment, it was not until July that they were able to
consistently outperform growth issues.
While stocks in several key sectors such as energy, financial and utilities
generated the best overall returns during the reporting period, we did not make
changes to the Fund's sector weightings in response to those trends. Strong
performances came from holdings across a wide range of sectors, including Tenet
Healthcare and Warner Lambert (healthcare), Dynegy, Enron and Weatherford
(energy), MBNA and Bank of New York (financial), and Harley-Davidson (leisure).
Outlook
Over the past 16 months, central banks around the world have made a concerted
effort to reign in economic growth rates by tightening monetary policy. These
actions, coupled with sharply rising energy prices, provide strong evidence
that the coming year will bring a global slowdown in economic activity. More
sustainable economic growth rates could stabilize U.S. financial markets by
reducing the risk of inflation, but might also hurt corporate earnings growth
in the process. A spate of earnings disappointments in September and October
already provided investors with reason for concern.
[GRAPHIC OMITTED: TOP 10 INDUSTRIES]
Top 10 Industries
----------------------------------------------------------------------
Financial - Diversified 7.6%
Oil & Gas 6.6%
Insurance 5.9%
Telephone & Telecommunications 5.8%
Banks 5.7%
Utilities 5.3%
Health Care - Drugs & Pharmaceuticals 4.6%
Health Care - Diversified 3.7%
Electrical Equipment 3.7%
Manufacturing 3.7%
These holdings represent 52.6% of the Fund's total investment portfolio.
LB Value Fund seeks long-term growth of capital by investing primarily in
common stocks of large companies that are considered undervalued.
[GRAPHIC OMITTED: FUND FACTS]
Fund Facts
Inception Date: 10/29/99
Shareholder
Accounts: 4,573
Total Net Assets
(in millions): $22.6
Fortunately, value stocks have continued to thrive in the midst of this
uncertainty. After an extended period of neglect, the attractive valuations and
appealing risk/reward characteristics of value stocks have attracted renewed
investor interest. Looking ahead, we believe this momentum will likely carry
into the coming year. Nonetheless, we remain concerned about the potential for
slowing corporate earnings growth. In light of these fragile conditions, we
plan to invest only in stocks issued by well-run organizations with
competitive, leading-edge market positions and sustainable earnings growth
potential. We believe this continued commitment to prudent stock selection, in
conjunction with our current sector-neutral approach, will position the Fund
well for its second year.
[GRAPHIC WORM CHART OMITTED:]
Performance Through October 31, 2000
Growth of a $10,000 Investment
Class A shares (since 10/29/99)
S&P Lipper
LB BARRA Median Consumer
Month End Value Value Large Cap Price
Date Fund Index Value Funds Index
------------------------------------------------------------------------
10/31/99 10,000 10,000 10,000 10,000
11/30/99 9,662 9,941 10,062 10,006
12/31/99 10,013 10,315 10,380 10,006
1/31/00 9,662 9,987 9,963 10,030
2/28/00 9,364 9,363 9,575 10,089
3/31/00 10,298 10,339 10,501 10,172
4/30/00 10,166 10,270 10,392 10,178
5/31/00 10,060 10,302 10,362 10,184
6/30/00 10,033 9,895 10,280 10,244
7/31/00 10,013 10,093 10,217 10,262
8/31/00 10,636 10,770 10,847 10,273
9/30/00 10,325 10,768 10,584 10,327
10/31/00 $10,444 $10,969 $10,754 $10,360
As you compare performance, please note that the LB Value Fund's performance
reflects the maximum 4% sales charge. The performances of the S&P/BARRA
Value Index and the Lipper Median do not reflect any such charges. If you
were to purchase any of the individual stocks or funds represented in these
indexes, any charges you would pay would reduce your total return as well.
INSET LEGEND READS:
S&P BARRA
Value Index
$10,969
Lipper Median
Large Cap
Value Funds
$10,754
LB Value
Fund
$10,444
Consumer
Price Index
$10,360
LB Value Fund
Annualized Total Returns*
-----------------------------------------------------------
Since
Inception
Class A shares 1-Year 10/29/99
Net Asset Value 8.76% 8.76%
Public Offering Price 4.44% 4.44%
Since
Inception
Class B shares 1-Year 10/29/99
If Held (NAV) 7.93% 7.93%
If Redeemed (CDSC) 2.93% 2.93%
Institutional shares
Net Asset Value 9.45% 9.45%
*See accompanying notes to Portfolio Management Reviews.
LB High Yield Fund
[PHOTO OMITTED: PAUL J. OCENASEK]
Paul J. Ocenasek, an assistant vice president of Lutheran Brotherhood,
is a Chartered Financial Analyst and portfolio manager of the LB High Yield
Fund. Paul has managed the Fund since 1998 and has been with Lutheran
Brotherhood since 1987.
Amid heightened market turmoil, high-yield bonds gave back their earlier
gains and finished the 12-month period ended October 31, 2000, sharply
lower. Overall, the Lutheran Brotherhood High Yield Fund produced a -5.21%
total return for the reporting period (based on Class A share NAV), while
its Lipper, Inc., peer group of high-yield funds averaged a total return of
-2.77%. The Fund's market benchmark, the Lehman Brothers High Yield Index,
returned -1.61% over this same time.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)]
Corporate Bonds 80.9%
Preferred Stocks--Non-Convertible 9.6%
Short-Term Securities 4.8%
Common Stocks & Stock Warrants 2.3%
Preferred Stocks--Convertible 2.1%
Foreign Government Bonds 0.3%
The Fund's portfolio composition and top holdings represent all share
classes.
Tale of Two Markets
The 12-month fiscal period was marked by sharply divergent trends in the
high-yield bond market, leading to fluctuations in high-yield share prices
industry wide. Early on, rapidly expanding growth stock valuations --
typically a barometer for high-yield bond performance -- triggered a
subsequent rise in high-yield share prices. Due primarily to our
overweighting of media and telecommunications issues, the Fund outperformed
its peer group by a healthy margin during much of this time.
[GRAPHIC OMITTED: TOP 10 INDUSTRIES % OF PORTFOLIO]
Top 10 Industries % of Portfolio
----------------------------------------------------------------------
Broadcasting & Media 14.2%
Telecommunications -- Wireline 13.3%
Telecommunications -- Wireless 12.7%
Utilities 4.8%
Telecommunications -- Data/Internet 3.9%
Packaging & Containers 3.2%
Health Care Services 3.1%
Technology -- Hardware 2.1%
Machinery & Equipment 2.0%
Health Care Management 1.9%
These bond holdings represent 61.2% of the total investment portfolio.
High-yield market conditions began to deteriorate in March, however, in
response to both volatility in the equity markets, as well as renewed
inflation concerns. As the Federal Reserve continued its efforts to tighten
monetary policy through May, we systematically reduced our exposure to
cyclical industries adversely affected by rising interest rates --
including machinery and equipment, chemicals and paper. In addition, we
strengthened the Fund's cash position by taking profits from equity warrant
holdings as opportunities arose. Both of these structural adjustments
provided the Fund with a cushion during the ensuing months.
Tightening Credit Standards
High-yield bond prices remained stable throughout the early summer, but
dropped precipitously in August, September and October. This downdraft was
fueled largely by a wave of corporate earnings disappointments across the
telecommunications industry, as well as a tightening of lenders' credit
standards. Access to capital is particularly critical to high-yield
issuers, as many firms are in the early stages of growth and require a
steady inflow of cash to finance their operations. Accordingly, as sources
of funding dried up during the period's final months, the number of high-
yield companies in distress steadily increased, compounding an already-
disappointing earnings picture. Although high-yield funds as a whole
sustained losses during this time, our significant exposure to the
telecommunications industry hurt the Fund's relative performance.
[GRAPHIC BAR CHART OMITTED: MOODY'S BOND QUALITY RATING DISTRIBUTION]
Moody's Bond Quality
Rating Distribution
Aaa 0.0%
Aa 0.0%
A 0.4%
Baa 3.4%
Ba 19.9%
B 57.2%
Caa 14.2%
Ca 0.4%
C 0.0%
D 0.3%
NR 4.2%
[GRAPHIC OMITTED: TOP 10 HOLDINGS BY ISSUER % OF PORTFOLIO]
Top 10 Holdings by Issuer % of Portfolio
----------------------------------------------------------------------
Nextel Communications, Inc. 1.7%
CSC Holdings, Inc. 1.4%
HEALTHSOUTH Corp. 1.4%
Intermedia Communications, Inc. 1.4%
Dobson Communications Corp. 1.1%
TNP Enterprises, Inc. 1.0%
PRIMEDIA, Inc. 1.0%
Paxson Communications Corp. 0.9%
Millicom International Cellular 0.9%
Callahan Nordrhein-Westfalen, Sr. Notes 0.8%
These holdings represent 11.6% of the Fund's total investment portfolio.
LB High Yield Fund seeks high current income and, secondarily, growth of
capital by investing primarily in high-yielding ("junk") corporate bonds.***
[GRAPHIC OMITTED: FUND FACTS]
Fund Facts
Inception Date: 4/3/87
Shareholder
Accounts: 69,747
Total Net Assets
(in millions): $789.7
Outlook
While late earnings disappointments in the telecommunications industry
dampened high-yield performance for the period, lower overall prices have
translated into attractive valuations for many financially sound companies.
Going forward, we plan to make the most of these conditions by selectively
trimming our exposure to higher-risk issues, while gradually increasing our
positions in undervalued issues that we believe possess significant long-
term yield potential.
While high-yield share prices have recently trended downward across the
industry, it is important to note that a major portion of the Lutheran
Brotherhood High Yield Fund's total return comes in the form of dividend
income. Although investing in high-yield bonds involves a fair degree of
inherent risk, investors are currently being compensated for this risk in
the form of current yields that are among the highest ever recorded. In
light of these conditions, we believe that high-yield bonds remain a
compelling component of a diversified investment portfolio.
[GRAPHIC WORM CHART OMITTED:]
Performance Through October 31, 2000
Growth of a $10,000 Investment
Class A shares (since 10/31/90)
Lehman Lipper
LB High High Median
Month End Yield Yield High Consumer
Date Fund Index Current Price Index
---------------------------------------------------------------------
10/31/90 10,000 10,000 10,000 10,000
11/30/90 9,752 10,312 10,040 10,022
12/31/90 9,909 10,370 10,071 10,022
1/31/91 9,965 10,655 10,212 10,082
2/28/91 10,693 11,821 10,945 10,097
3/31/91 11,203 12,517 11,490 10,112
4/30/91 11,611 13,030 11,932 10,127
5/31/91 11,715 13,053 12,006 10,157
6/30/91 12,047 13,440 12,259 10,187
7/31/91 12,384 13,870 12,624 10,202
8/31/91 12,566 14,189 12,862 10,232
9/30/91 12,765 14,386 13,078 10,277
10/31/91 13,224 14,867 13,495 10,292
11/30/91 13,427 14,944 13,620 10,322
12/31/91 13,485 15,159 13,739 10,330
1/31/92 14,109 15,693 14,284 10,345
2/28/92 14,504 16,080 14,626 10,382
3/31/92 14,767 16,280 14,852 10,434
4/30/92 14,895 16,342 14,959 10,449
5/31/92 15,128 16,572 15,178 10,464
6/30/92 15,215 16,728 15,331 10,502
7/31/92 15,478 16,980 15,605 10,524
8/31/92 15,690 17,203 15,804 10,554
9/30/92 15,850 17,378 15,966 10,584
10/31/92 15,563 17,133 15,700 10,622
11/30/92 15,834 17,349 15,932 10,637
12/31/92 16,198 17,547 16,144 10,629
1/31/93 16,863 18,058 16,583 10,682
2/28/93 17,067 18,375 16,903 10,719
3/31/93 17,396 18,612 17,238 10,757
4/30/93 17,465 18,774 17,374 10,787
5/31/93 17,761 18,998 17,649 10,802
6/30/93 18,309 19,397 18,058 10,817
7/31/93 18,455 19,585 18,237 10,817
8/31/93 18,602 19,749 18,372 10,846
9/30/93 18,594 19,801 18,429 10,869
10/31/93 19,177 20,201 18,842 10,914
11/30/93 19,249 20,298 18,962 10,921
12/31/93 19,578 20,549 19,243 10,921
1/31/94 20,154 20,995 19,701 10,951
2/28/94 20,085 20,941 19,663 10,989
3/31/94 19,340 20,149 19,030 11,026
4/30/94 19,044 20,012 18,754 11,041
5/31/94 19,119 20,022 18,797 11,049
6/30/94 19,130 20,084 18,771 11,086
7/31/94 18,976 20,255 18,737 11,116
8/31/94 19,115 20,399 18,748 11,161
9/30/94 19,025 20,401 18,748 11,191
10/31/94 19,087 20,450 18,730 11,199
11/30/94 18,628 20,192 18,479 11,214
12/31/94 18,542 20,341 18,501 11,214
1/31/95 18,626 20,618 18,651 11,258
2/28/95 19,336 21,325 19,158 11,303
3/31/95 19,534 21,556 19,332 11,341
4/30/95 20,006 22,103 19,804 11,378
5/31/95 20,412 22,722 20,244 11,401
6/30/95 20,523 22,874 20,307 11,423
7/31/95 21,169 23,162 20,664 11,423
8/31/95 21,258 23,234 20,720 11,453
9/30/95 21,441 23,520 20,966 11,476
10/31/95 21,555 23,666 21,134 11,513
11/30/95 21,813 23,874 21,276 11,506
12/31/95 22,136 24,249 21,599 11,498
1/31/96 22,667 24,676 22,048 11,566
2/29/96 23,249 24,695 22,236 11,603
3/31/96 23,022 24,678 22,153 11,663
4/30/96 23,142 24,732 22,328 11,708
5/31/96 23,362 24,881 22,503 11,730
6/30/96 23,181 25,087 22,532 11,738
7/31/96 22,999 25,203 22,653 11,760
8/31/96 23,378 25,475 23,014 11,783
9/30/96 24,147 26,089 23,617 11,820
10/31/96 24,064 26,290 23,744 11,858
11/30/96 24,295 26,808 24,183 11,880
12/31/96 24,562 27,001 24,471 11,880
1/31/97 24,854 27,265 24,716 11,918
2/28/97 25,173 27,715 25,158 11,955
3/31/97 24,382 27,302 24,658 11,985
4/30/97 24,380 27,589 24,857 12,000
5/31/97 25,314 28,179 25,496 11,993
6/30/97 26,005 28,571 25,909 12,008
7/31/97 26,898 29,357 26,583 12,023
8/31/97 26,980 29,289 26,636 12,045
9/30/97 27,801 29,869 27,259 12,075
10/31/97 27,537 29,896 27,153 12,105
11/30/97 27,592 30,183 27,370 12,097
12/31/97 27,872 30,449 27,677 12,082
1/31/98 28,439 30,997 28,208 12,105
2/28/98 28,829 31,180 28,420 12,127
3/31/98 29,192 31,473 28,781 12,150
4/30/98 29,039 31,595 28,861 12,172
5/31/98 28,946 31,706 28,867 12,195
6/30/98 29,071 31,820 28,893 12,210
7/31/98 29,226 32,001 29,095 12,225
8/31/98 26,927 30,235 27,126 12,240
9/30/98 26,548 30,371 26,944 12,255
10/31/98 26,008 29,748 26,359 12,285
11/30/98 27,264 30,983 27,819 12,285
12/31/98 27,331 31,017 27,719 12,277
1/31/99 27,758 31,476 28,135 12,307
2/28/99 27,658 31,290 28,039 12,322
3/31/99 27,959 31,588 28,446 12,360
4/30/99 28,855 32,201 29,058 12,449
5/31/99 28,331 31,766 28,520 12,449
6/30/99 28,523 31,699 28,500 12,449
7/31/99 28,680 31,826 28,526 12,487
8/31/99 28,283 31,473 28,249 12,517
9/30/99 28,129 31,246 28,085 12,577
10/31/99 28,009 31,040 28,021 12,599
11/30/99 28,635 31,406 28,491 12,607
12/31/99 29,258 31,758 28,828 12,607
1/31/00 29,315 31,621 28,655 12,637
2/28/00 29,885 31,681 28,835 12,712
3/31/00 29,315 31,016 28,371 12,817
4/30/00 28,855 31,066 28,345 12,824
5/31/00 28,279 30,746 27,895 12,831
6/30/00 28,755 31,373 28,411 12,906
7/31/00 28,547 31,611 28,516 12,929
8/31/00 28,457 31,826 28,690 12,944
9/30/00 27,858 31,549 28,294 13,011
10/31/00 $26,548 $30,540 $27,391 $13,053
As you compare performance, please note that the LB High Yield Fund's
performance reflects the maximum 4% sales charge. The performances of the
Lehman High Yield Index and the Lipper Median do not reflect any such
charges. If you were to purchase any of the individual bonds or funds
represented in these indexes, any charges you would pay would reduce your
total return as well.
INSET LEGEND READS:
Lehman High
Yield Index
$30,540
Lipper Median
High Current
$27,391
LB High Yield
Fund
$26,548
Consumer
Price Index
$13,053
INSET BOX ON CHART READS:
LB High Yield Fund
Annualized Total Returns*
-----------------------------------------------------------
Class A shares 1-Year 5-Year 10-Year
Net Asset Value -5.21% 4.25% 10.70%
Public Offering Price -9.03% 3.40% 10.25%
Since
Inception
Class B shares 1-Year 10/31/97
If Held (NAV) -5.79% -1.89%
If Redeemed (CDSC) -10.50% -2.88%
Institutional shares
Net Asset Value -4.81% -0.91%
*See accompanying notes to Portfolio Management Reviews.
LB Income Fund
[PHOTO OMITTED: MICHAEL G. LANDREVILLE]
Michael G. Landreville, an assistant vice president of Lutheran Brotherhood,
is a Chartered Financial Analyst and portfolio manager of the LB Income Fund
and the LB Limited Maturity Bond Fund. He has been with Lutheran Brotherhood
since 1983 and is also a Certified Public Accountant.
Investment-grade bonds flourished during the second half of the 12-month
fiscal year ended October 31, 2000, overcoming investor uncertainty
earlier in the period. The Lutheran Brotherhood Income Fund generated a
6.02% total return (based on Class A share NAV), outpacing its Lipper,
Inc., peer group of corporate debt A-rated funds, which averaged an
annual total return of 5.48% during this time. The Fund's market
benchmark, the Lehman Brothers Aggregate Bond Index, posted a 7.30% total
return for the period.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)
Corporate Bonds 41.2%
Short-Term Securities 18.5%
U.S. Government 14.9%
Asset-Backed Securities 11.1%
Mortagage-Backed--Securities 6.3%
Foreign Government Bonds 4.1%
U.S. Government Agency 3.1%
Preferred Stocks 0.7%
Common Stocks 0.1%
The Fund's portfolio composition and top holdings represent all share
classes.
Public Policy Key
Early in the reporting period, public policy played a critical role in
the performance of investment-grade bonds. The U.S. Treasury Department's
decision to repurchase its longer-dated debt, combined with the Federal
Reserve's campaign to raise short-term interest rates, led to unusual
conditions under which short-term bond yields exceeded longer-term bond
yields. Our strategy of maintaining the Fund's moderately long duration
proved judicious in this environment, as longer-maturity bonds generally
outperformed during the first quarter of 2000. Over this same time,
however, the Fund's exposure to corporate bonds dampened returns
somewhat, as strong demand for Treasury securities resulted in waning
investor interest in corporate issues.
[GRAPHIC OMITTED: TOP 10 HOLDINGS SECURITY % OF PORTFOLIO]
% Of
Top 10 Holdings Security Portfolio
----------------------------------------------------------------------
U.S. Treasury Bonds (Nov. 2022) U.S. Government 5.9%
Federal National
Mortgage Association (Nov. 2030) Mortgage-Backed 4.5%
U.S. Treasury Bonds (Nov. 2016) U.S. Government 2.8%
U.S. Treasury Bonds (Aug. 2023) U.S. Government 2.5%
World Financial Network Credit
Card Master Trust Asset-Backed 2.2%
Standard Credit Master Trust 1 Asset-Backed 1.9%
Morgan Stanley Dean Witter
Capital I Trust Mortgage-Backed 1.8%
U.S. Treasury Bonds (Apr. 2029) U.S. Government 1.5%
U.S. Treasury Notes (Feb. 2010) U.S. Government 1.4%
Federal National Mortgage
Association (Apr. 2003) U.S. Government Agency 1.4%
These holdings represent 25.9% of the the total investment portfolio.
In spite of some volatility during April and May, the performance of
longer-maturity corporate bonds at the end of May was relatively flat.
During this time, we selectively added to our position in corporates,
representing a broad range of industries, while reducing our Treasury
holdings and further lengthening the Fund's weighted average maturity.
This strategy paid off during the summer months, when longer-dated
corporate bonds rallied in response to the Federal Reserve's decision to
leave interest rates unchanged. This momentum stalled in October,
however, due to slowing growth in the U.S. economy and escalating
volatility in the equity markets.
[GRAPHIC BAR CHART OMITTED: MOODY'S BOND QUALITY RATING DISTRIBUTION]
Moody's Bond Quality
Rating Distribution
Aaa 42.3%
Aa 11.2%
A 13.0%
Baa 22.5%
Ba 5.7%
B 4.9%
Caa 0.1%
Ca 0.0%
C 0.0%
D 0.0%
NR 0.3%
Outlook
Since May, economic data have pointed to a gradual slowdown in the U.S.
economy, possible evidence that Federal Reserve efforts to curb potential
inflation are finally having their desired effect. While decelerating
economic growth could ultimately benefit fixed-income investors by
putting downward pressure on interest rates, corporate profitability
could suffer from a slowing economy. A deteriorating corporate earnings
picture could adversely affect performance of the Fund's higher-yielding
securities, such as corporate and mortgage-backed bonds.
LB Income Fund seeks high current income while preserving principal and,
secondarily, long-term growth of capital by investing primarily in
investment-grade bonds and other income-producing securities.
[GRAPHIC OMITTED: FUND FACTS]
Fund Facts
Inception Date: 6/1/72
Shareholder
Accounts: 51,226
Total Net Assets
(in millions): $666.0
With the Federal Reserve taking a neutral-to-easing posture for the time
being, there is reason to believe that interest rates could trend lower
during the coming months. Over the near-term, we believe a downward
movement in rates could benefit many of the Fund's holdings, as longer-
maturity bonds typically thrive in a falling interest rate environment.
The direction of Treasury bond prices will also hinge largely on how
aggressively the federal government pursues its debt buy-back program
with budget surplus. Given these conditions, we will continue to shore up
the Fund's credit quality with a diversified blend of high-quality
issues, while maintaining our modest overweight in high-yield bonds. We
believe this approach will keep the Fund well positioned for the coming
year.
[GRAPHIC WORM CHART OMITTED:]
Performance Through October 31, 2000
Growth of a $10,000 Investment
Class A shares (since 10/31/90)
Lehman Lipper
Aggregate Median
Month End LB Income Bond Corp. Consumer
Date Fund Index Debt A Price Index
---------------------------------------------------------------------------
10/31/90 10,000 10,000 10,000 10,000
11/30/90 9,804 10,215 10,223 10,022
12/31/90 9,948 10,374 10,382 10,022
1/31/91 10,070 10,503 10,489 10,082
2/28/91 10,216 10,592 10,603 10,097
3/31/91 10,301 10,665 10,675 10,112
4/30/91 10,448 10,781 10,806 10,127
5/31/91 10,535 10,843 10,859 10,157
6/30/91 10,523 10,838 10,840 10,187
7/31/91 10,649 10,988 10,976 10,202
8/31/91 10,876 11,226 11,238 10,232
9/30/91 11,119 11,454 11,483 10,277
10/31/91 11,196 11,581 11,586 10,292
11/30/91 11,286 11,687 11,688 10,322
12/31/91 11,663 12,034 12,106 10,330
1/31/92 11,528 11,871 11,917 10,345
2/28/92 11,577 11,948 11,977 10,382
3/31/92 11,570 11,881 11,917 10,434
4/30/92 11,617 11,966 11,979 10,449
5/31/92 11,838 12,193 12,221 10,464
6/30/92 12,030 12,361 12,399 10,502
7/31/92 12,318 12,613 12,725 10,524
8/31/92 12,429 12,740 12,827 10,554
9/30/92 12,596 12,892 12,986 10,584
10/31/92 12,392 12,721 12,765 10,622
11/30/92 12,395 12,723 12,763 10,637
12/31/92 12,597 12,925 12,976 10,629
1/31/93 12,854 13,174 13,255 10,682
2/28/93 13,126 13,404 13,555 10,719
3/31/93 13,171 13,460 13,603 10,757
4/30/93 13,260 13,555 13,693 10,787
5/31/93 13,263 13,572 13,697 10,802
6/30/93 13,512 13,818 14,001 10,817
7/31/93 13,632 13,897 14,106 10,817
8/31/93 13,899 14,140 14,431 10,846
9/30/93 13,946 14,178 14,474 10,869
10/31/93 14,007 14,230 14,541 10,914
11/30/93 13,817 14,110 14,356 10,921
12/31/93 13,872 14,186 14,418 10,921
1/31/94 14,051 14,377 14,635 10,951
2/28/94 13,735 14,127 14,313 10,989
3/31/94 13,322 13,778 13,938 11,026
4/30/94 13,205 13,668 13,782 11,041
5/31/94 13,168 13,667 13,740 11,049
6/30/94 13,081 13,636 13,693 11,086
7/31/94 13,362 13,908 13,937 11,116
8/31/94 13,356 13,925 13,939 11,161
9/30/94 13,108 13,720 13,722 11,191
10/31/94 13,053 13,707 13,683 11,199
11/30/94 13,063 13,677 13,656 11,214
12/31/94 13,198 13,772 13,753 11,214
1/31/95 13,457 14,044 13,988 11,258
2/28/95 13,750 14,379 14,306 11,303
3/31/95 13,843 14,466 14,403 11,341
4/30/95 14,055 14,669 14,599 11,378
5/31/95 14,657 15,237 15,211 11,401
6/30/95 14,769 15,348 15,314 11,423
7/31/95 14,660 15,314 15,245 11,423
8/31/95 14,860 15,499 15,437 11,453
9/30/95 14,992 15,650 15,593 11,476
10/31/95 15,210 15,853 15,813 11,513
11/30/95 15,448 16,091 16,058 11,506
12/31/95 15,682 16,316 16,297 11,498
1/31/96 15,764 16,424 16,374 11,566
2/29/96 15,399 16,138 16,035 11,603
3/31/96 15,231 16,025 15,904 11,663
4/30/96 15,133 15,935 15,784 11,708
5/31/96 15,107 15,904 15,753 11,730
6/30/96 15,301 16,117 15,937 11,738
7/31/96 15,331 16,160 15,969 11,760
8/31/96 15,249 16,133 15,931 11,783
9/30/96 15,538 16,413 16,213 11,820
10/31/96 15,904 16,778 16,568 11,858
11/30/96 16,215 17,065 16,874 11,880
12/31/96 16,028 16,906 16,694 11,880
1/31/97 16,078 16,958 16,724 11,918
2/28/97 16,127 17,001 16,772 11,955
3/31/97 15,889 16,812 16,566 11,985
4/30/97 16,094 17,064 16,793 12,000
5/31/97 16,241 17,226 16,935 11,993
6/30/97 16,482 17,431 17,142 12,008
7/31/97 16,960 17,902 17,644 12,023
8/31/97 16,772 17,750 17,447 12,045
9/30/97 17,036 18,013 17,710 12,075
10/31/97 17,184 18,274 17,939 12,105
11/30/97 17,252 18,358 18,010 12,097
12/31/97 17,368 18,543 18,189 12,082
1/31/98 17,620 18,781 18,423 12,105
2/28/98 17,627 18,765 18,390 12,127
3/31/98 17,717 18,829 18,445 12,150
4/30/98 17,807 18,927 18,528 12,172
5/31/98 17,960 19,107 18,712 12,195
6/30/98 18,134 19,269 18,867 12,210
7/31/98 18,143 19,310 18,875 12,225
8/31/98 18,235 19,625 19,133 12,240
9/30/98 18,749 20,084 19,560 12,255
10/31/98 18,631 19,977 19,362 12,285
11/30/98 18,853 20,091 19,502 12,285
12/31/98 18,915 20,152 19,570 12,277
1/31/99 19,087 20,295 19,715 12,307
2/28/99 18,655 19,939 19,283 12,322
3/31/99 18,763 20,049 19,401 12,360
4/30/99 18,806 20,113 19,438 12,449
5/31/99 18,521 19,936 19,214 12,449
6/30/99 18,434 19,873 19,114 12,449
7/31/99 18,368 19,789 19,034 12,487
8/31/99 18,323 19,779 18,986 12,517
9/30/99 18,501 20,009 19,170 12,577
10/31/99 18,502 20,083 19,188 12,599
11/30/99 18,524 20,081 19,188 12,607
12/31/99 18,445 19,984 19,084 12,607
1/31/00 18,377 19,918 19,033 12,637
2/29/00 18,606 20,159 19,227 12,712
3/31/00 18,836 20,425 19,473 12,817
4/30/00 18,720 20,366 19,325 12,824
5/31/00 18,628 20,356 19,247 12,831
6/30/00 19,096 20,779 19,640 12,906
7/31/00 19,261 20,968 19,805 12,929
8/31/00 19,521 21,273 20,069 12,944
9/30/00 19,569 21,407 20,173 13,011
10/31/00 $19,616 $21,548 $20,254 $13,053
INSET LEGEND READS:
Lehman Aggregate
Bond Index
$21,548
Lipper Median
Corp. Debt A
$20,254
LB Income Fund
$19,616
Consumer
Price Index
$13,053
As you compare performance, please note that the LB Income Fund's
performance reflects the maximum 4% sales charge. The
performances of the Lehman Aggregate Bond Index and the Lipper
Median do not reflect any such charges. If you were to
purchase any of the individual bonds or funds represented in
these indexes, any charges you would pay would reduce your
total return as well.
LB Income Fund
Annualized Total Returns*
-----------------------------------------------------------
Class A shares 1-Year 5-Year 10-Year
Net Asset Value 6.02% 5.21% 7.40%
Public Offering Price 1.81% 4.37% 6.96%
Since
Inception
Class B shares 1-Year 10/31/97
If Held (NAV) 5.24% 3.71%
If Redeemed (CDSC) 0.24% 2.78%
Institutional shares
Net Asset Value 6.33% 4.78%
*See accompanying notes to Portfolio Management Reviews.
LB Municipal Bond Fund
[PHOTO OMITTED: JOHAN A. AKESSON]
Johan A. Akesson is a Certified Financial Analyst and portfolio manager of
the LB Municipal Bond Fund. Previously, he served as associate portfolio
manager of the Fund. Johan has worked with municipal bond investments
since joining Lutheran Brotherhood in 1993.
Stable investor demand, coupled with low levels of new bond issuance,
boosted the performance of municipal bonds during the 12-month period
ended October 31, 2000. The Lutheran Brotherhood Municipal Bond Fund
finished the reporting period with a healthy 8.09% total return (based on
Class A share NAV), outpacing its Lipper, Inc., general municipal debt
funds peer group, which averaged a 7.36% total return. The Fund's market
benchmark, the Lehman Brothers Municipal Bond Index, returned 8.51% during
this time.
[GRAPHIC OMITTED: pie chart PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)
Escrowed/Pre-refunded 19.9%
General Obligation 16.8%
Health Care 11.9%
Electric Revenue 10.7%
Water & Sewer 10.3%
Special Tax Revenue 5.7%
Education Revenue 5.6%
Lease Revenue 5.2%
Airport Revenue 5.1%
Surface Transportation 3.1%
Pollution Control - Electric 2.8%
Housing Finance 1.5%
Miscellaneous Municipals 0.8%
Industrial Revenue 0.6%
[GRAPHIC OMITTED: TOP 10 STATES % OF PORTFOLIO]
Top 10 States % of Portfolio
----------------------------------------------------------------------
Texas 9.2%
California 7.6%
Colorado 6.0%
Washington 5.4%
Ohio 5.3%
New York 4.7%
Georgia 4.6%
Minnesota 4.6%
Michigan 4.5%
Illinois 4.4%
These holdings represent 56.3% of the total investment portfolio.
New Issuance Low
Despite a brief flurry of activity during the closing months of 1999,
municipal bond issuance remained low throughout the 12-month reporting
period. Early in the period, municipal yields closely shadowed rising
interest rates in the broader fixed-income markets, discouraging issuers
from refunding older debt, and contributing to low levels of new issuance.
Meanwhile, the strong per-formance of stocks during this time had a
dampening effect on demand for municipal bonds.
The municipal market rallied strongly in June in response to economic
reports pointing to slowing economic growth. As fears of further monetary
tightening diminished, demand for municipal bonds increased, and municipal
yields subsequently trended lower. By the end of the period, long-term
municipal bond market yields stood below the previous year's levels. Lower
yields failed to stimulate any measurable increases in refunding activity,
however -- keeping new issuance to a minimum. Demand for municipal bonds
remained robust over the balance of the period, as investors increasingly
sought refuge from stock market volatility. Unfortunately, the imbalance
between supply and demand made it difficult for many buyers to obtain
sizeable allocations of the most popular deals.
Throughout the period, we selectively trimmed positions in the Fund's pre-
refunded holdings -- municipal bonds backed by U.S. Treasury securities.
Having largely extracted their return potential, we sold these issues as
their values were peaking, and reinvested the proceeds in attractively
valued bonds with strong return characteristics. When interest rates began
to level off in June, we sought to increase yield by purchasing slightly
lower-rated, investment-grade bonds with higher total return potential.
Additionally, the Fund benefited from its low exposure to healthcare
bonds, many of which performed poorly during the period.
[GRAPHIC BAR CHART OMITTED: MOODY'S BOND QUALITY RATING DISTRIBUTION]
Moody's Bond Quality
Rating Distribution
Aaa 71.7%
Aa 13.2%
A 7.3%
Baa 7.2%
Ba 0.0%
B 0.2%
Caa 0.0%
Ca 0.0%
C 0.0%
D 0.0%
NR 0.4%
Outlook
While inflation concerns still pose a threat to bond prices, we believe
the Federal Reserve will remain interest rate neutral in the year ahead.
If recent trends are any indication, near-term economic growth should
remain slower, providing a stable backdrop for municipal issuers. If the
economy can continue to advance at a sustainable pace over the coming
year, we believe new issuance will eventually pick up as voters approve
new bond levies, and lower interest rates may stimulate refunding
activity.
LB Municipal Bond Fund seeks high current income which is exempt from
federal income tax by investing in investment-grade municipal bonds.****
[GRAPHIC OMITTED: FUND FACTS]
Fund Facts
Inception Date: 12/3/76
Shareholder
Accounts: 18,974
Total Net Assets
(in millions): $572.4
As always, we will manage the Fund in the most tax-efficient manner
possible, while seeking a healthy balance between income and total return.
In addition, we will continue to maintain a geographically diverse
portfolio of securities with desirable structural components and
attractive risk/reward characteristics. Over the long-term, we believe
this strategy will bring continued rewards to the Fund's investors.
[GRAPHIC WORM CHART OMITTED:]
Performance Through October 31, 2000
Growth of a $10,000 Investment
Class A shares (since 10/31/90)
Lipper
Median
General
Lehman Municipal
Month End LB Municipal Municipal Debt Consumer Price
Date Bond Fund Bond Index Funds Index
--------------------------------------------------------------------------
10/31/90 10,000 10,000 10,000 10,000
11/30/90 9,819 10,201 10,233 10,022
12/31/90 9,899 10,242 10,277 10,022
1/31/91 10,039 10,379 10,403 10,082
2/28/91 10,096 10,469 10,464 10,097
3/31/91 10,107 10,474 10,485 10,112
4/30/91 10,251 10,613 10,638 10,127
5/31/91 10,321 10,707 10,733 10,157
6/30/91 10,280 10,697 10,700 10,187
7/31/91 10,439 10,827 10,854 10,202
8/31/91 10,560 10,970 10,993 10,232
9/30/91 10,746 11,113 11,135 10,277
10/31/91 10,829 11,213 11,234 10,292
11/30/91 10,837 11,244 11,250 10,322
12/31/91 11,103 11,486 11,515 10,330
1/31/92 11,108 11,512 11,507 10,345
2/28/92 11,087 11,516 11,523 10,382
3/31/92 11,087 11,520 11,528 10,434
4/30/92 11,213 11,623 11,634 10,449
5/31/92 11,366 11,760 11,797 10,464
6/30/92 11,561 11,957 12,012 10,502
7/31/92 11,962 12,316 12,437 10,524
8/31/92 11,748 12,196 12,238 10,554
9/30/92 11,782 12,275 12,287 10,584
10/31/92 11,649 12,154 12,066 10,622
11/30/92 11,918 12,372 12,373 10,637
12/31/92 12,097 12,498 12,526 10,629
1/31/93 12,214 12,643 12,667 10,682
2/28/93 12,662 13,101 13,164 10,719
3/31/93 12,578 12,962 13,010 10,757
4/30/93 12,698 13,093 13,150 10,787
5/31/93 12,759 13,166 13,225 10,802
6/30/93 12,997 13,386 13,453 10,817
7/31/93 13,001 13,404 13,453 10,817
8/31/93 13,286 13,682 13,751 10,846
9/30/93 13,438 13,838 13,913 10,869
10/31/93 13,524 13,865 13,941 10,914
11/30/93 13,371 13,743 13,795 10,921
12/31/93 13,666 14,033 14,069 10,921
1/31/94 13,817 14,193 14,231 10,951
2/28/94 13,426 13,825 13,853 10,989
3/31/94 12,799 13,262 13,247 11,026
4/30/94 12,859 13,375 13,295 11,041
5/31/94 12,981 13,491 13,415 11,049
6/30/94 12,883 13,409 13,327 11,086
7/31/94 13,118 13,654 13,563 11,116
8/31/94 13,163 13,702 13,597 11,161
9/30/94 12,984 13,501 13,377 11,191
10/31/94 12,723 13,261 13,123 11,199
11/30/94 12,478 13,021 12,851 11,214
12/31/94 12,768 13,307 13,165 11,214
1/31/95 13,157 13,688 13,556 11,258
2/28/95 13,580 14,086 13,958 11,303
3/31/95 13,725 14,248 14,084 11,341
4/30/95 13,737 14,265 14,083 11,378
5/31/95 14,200 14,720 14,522 11,401
6/30/95 14,012 14,592 14,364 11,423
7/31/95 14,109 14,731 14,456 11,423
8/31/95 14,287 14,918 14,615 11,453
9/30/95 14,397 15,012 14,704 11,476
10/31/95 14,626 15,229 14,929 11,513
11/30/95 14,925 15,482 15,215 11,506
12/31/95 15,089 15,631 15,384 11,498
1/31/96 15,201 15,749 15,457 11,566
2/29/96 15,071 15,642 15,334 11,603
3/31/96 14,820 15,442 15,091 11,663
4/30/96 14,741 15,399 15,023 11,708
5/31/96 14,732 15,393 15,026 11,730
6/30/96 14,884 15,561 15,167 11,738
7/31/96 15,018 15,702 15,303 11,760
8/31/96 15,010 15,699 15,291 11,783
9/30/96 15,235 15,919 15,510 11,820
10/31/96 15,406 16,099 15,677 11,858
11/30/96 15,704 16,393 15,953 11,880
12/31/96 15,607 16,324 15,883 11,880
1/31/97 15,637 16,355 15,885 11,918
2/28/97 15,775 16,506 16,023 11,955
3/31/97 15,566 16,286 15,815 11,985
4/30/97 15,669 16,423 15,944 12,000
5/31/97 15,901 16,670 16,172 11,993
6/30/97 16,060 16,848 16,347 12,008
7/31/97 16,535 17,315 16,839 12,023
8/31/97 16,341 17,152 16,639 12,045
9/30/97 16,596 17,356 16,840 12,075
10/31/97 16,683 17,467 16,943 12,105
11/30/97 16,788 17,570 17,038 12,097
12/31/97 17,065 17,827 17,307 12,082
1/31/98 17,248 18,010 17,468 12,105
2/28/98 17,240 18,016 17,457 12,127
3/31/98 17,232 18,032 17,461 12,150
4/30/98 17,147 17,951 17,349 12,172
5/31/98 17,430 18,234 17,635 12,195
6/30/98 17,500 18,305 17,693 12,210
7/31/98 17,531 18,351 17,718 12,225
8/31/98 17,817 18,636 17,993 12,240
9/30/98 18,065 18,869 18,209 12,255
10/31/98 18,038 18,869 18,140 12,285
11/30/98 18,089 18,935 18,194 12,285
12/31/98 18,121 18,982 18,227 12,277
1/31/99 18,333 19,208 18,429 12,307
2/28/99 18,205 19,123 18,307 12,322
3/31/99 18,217 19,150 18,309 12,360
4/30/99 18,249 19,198 18,353 12,449
5/31/99 18,119 19,048 18,247 12,449
6/30/99 17,846 18,726 17,984 12,449
7/31/99 17,919 18,760 18,049 12,487
8/31/99 17,747 18,610 17,834 12,517
9/30/99 17,759 18,617 17,791 12,577
10/31/99 17,565 18,416 17,531 12,599
11/30/99 17,744 18,612 17,703 12,607
12/31/99 17,568 18,472 17,533 12,607
1/31/00 17,476 18,393 17,398 12,637
2/29/00 17,679 18,606 17,628 12,712
3/31/00 18,073 19,013 18,017 12,817
4/30/00 17,957 18,901 17,897 12,824
5/31/00 17,864 18,803 17,763 12,831
6/30/00 18,328 19,301 18,214 12,906
7/31/00 18,600 19,569 18,458 12,929
8/31/00 18,895 19,871 18,744 12,944
9/30/00 18,755 19,767 18,629 13,011
10/31/00 $18,987 $19,983 $18,821 $13,053
INSET LEGEND READS:
Lehman
Municipal
Bond Index
$19,983
LB Municipal
Bond Fund
$18,987
Lipper Median
General Municipal
Debt Funds
$18,821
Consumer
Price Index
$13,053
As you compare performance, please note that the LB Municipal Bond Fund's
performance reflects the maximum 4% sales charge. The performances of the
Lehman Municipal Bond Index and the Lipper Median do not reflect any such
charges. If you were to purchase any of the individual bonds or funds
represented in these indexes, any charges you would pay would reduce your
total return as well.
INSET BOX ON CHART READS:
LB Municipal Bond Fund
Annualized Total Returns*
-----------------------------------------------------------
Class A shares 1-Year 5-Year 10-Year
Net Asset Value 8.09% 5.35% 7.06%
Public Offering Price 3.79% 4.49% 6.62%
Since
Inception
Class B shares 1-Year 10/31/97
If Held (NAV) 7.44% 3.61%
If Redeemed (CDSC 2.44% 2.67%
Institutional shares
Net Asset Value 8.42% 4.64%
*See accompanying notes to Portfolio Management Reviews.
LB Limited Maturity Bond Fund
[PHOTO OMITTED: MICHAEL G. LANDREVILLE]
Michael G. Landreville, an assistant vice president of Lutheran
Brotherhood, is a Chartered Financial Analyst and portfolio manager of the
LB Income Fund and the LB Limited Maturity Bond Fund. He has been with
Lutheran Brotherhood since 1983 and is also a Certified Public Accountant.
Despite a challenging environment for short- and intermediate-term bonds,
the Lutheran Brotherhood Limited Maturity Bond Fund delivered solid
performance during its introductory year. The Fund finished the 12-month
period ended October 31, 2000, with a 5.20% total return (based on Class A
share NAV), while its Lipper, Inc., peer group of short- and intermediate-
term bond funds averaged a 5.69% total return. The Fund's market benchmark,
the Lehman Brothers Government/Corporate 1-5 Year Index, gained 6.26% for
the period.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)
U.S. Government Agency 36.0%
Corporate Bonds 21.3%
Mortgage-Backed Securities 19.9%
Asset-Backed Securities 12.2%
U.S. Government 8.6%
Foreign Government Bonds 1.9%
Common Stocks 0.1%
The Fund's portfolio composition and top holdings represent all share
classes.
[GRAPHIC OMITTED: TOP 10 HOLDINGS BY SECURITY % OF PORTFOLIO]
% of
Top 10 Holdings Security Portfolio
--------------------------------------------------------------------
Government National Mortgage
Association (Nov. 2015) Mortgage-Backed 10.0%
Federal National Mortgage
Association (Nov. 2030) Mortgage-Backed 10.0%
U.S. Treasury Notes (Nov. 2002) U.S. Government 4.9%
U.S. Treasury Notes (Aug. 2004) U.S. Government 3.7%
Federal National Mortgage
Association (May 2004) U.S. Government Agency 2.4%
AON Corp. Corporate 1.3%
Everest Reinsurance Holdings Corporate 1.3%
Dynegy, Inc. Corporate 1.3%
Hartford Financial Services
Group, Inc. Corporate 1.3%
Reliant Energy Mid Atlantic Asset-Backed 1.3%
These holdings represent 37.5% of the the total investment portfolio.
Rare Inversion in Yields
Public policy largely dictated bond market conditions early in the
reporting period. Through May, the Federal Reserve's efforts to tighten
monetary policy led to rising short-term interest rates, which, in turn,
boosted short-term bond yields. Concurrently, the U.S. Treasury Department
began buying back large blocks of outstanding long-term government debt
with budget surplus funds, which pushed long-term bond yields lower. The
result was a rare phenomenon known as an "inverted yield curve," whereby
yields on shorter-dated bonds exceeded yields on bonds with longer
maturities.
Given these unique conditions, Treasury bonds and longer-dated, high-
quality bonds generally outperformed through May. In response, we made
modest adjustments to the Fund by reducing our exposure to corporate
issues, while selectively adding to our position in high-quality assets. We
also sought to reduce the Fund's sensitivity to higher interest rates by
shortening its duration somewhat.
Shorter-maturity bond prices finally recovered in June, spurred by
escalating volatility in the equity markets, as well as falling two- and
10-year Treasury bond yields. This momentum continued largely uninterrupted
through the remaining four months of the period and was even spurred on a
bit by escalating volatility in the equity markets. As the risk of further
Federal Reserve tightening diminished, risk-premium securities, such as
corporate and mortgage-backed bonds, flourished. Despite our overweight
position in such holdings, however, the Fund's relatively short duration
hurt its relative performance.
[GRAPHIC BAR CHART OMITTED: MOODY'S BOND QUALITY RATING DISTRIBUTION]
Moody's Bond Quality
Rating Distribution
Aaa 61.5%
Aa 1.8%
A 10.9%
Baa 19.6%
Ba 2.2%
B 4.0%
Caa 0.0%
Ca 0.0%
C 0.0%
D 0.0%
NR 0.0%
Outlook
The past few months have underscored the benefit of investing in short- and
intermediate-term fixed-income securities. Frequently, when stock market
volatility escalates, demand for high-quality, shorter-maturity bonds, such
as those held in the Lutheran Brotherhood Limited Maturity Bond Fund,
increases proportionately. This will generally have a stimulative effect on
shorter-maturity bond prices, and provide greater balance to an investor's
portfolio.
LB Limited Maturity Bond Fund seeks a high level of current income with
stability of principal by investing primarily in high-quality intermediate-
and shorter-term bonds.
[GRAPHIC OMITTED: FUND FACTS]
Fund Facts
Inception Date: 10/29/99
Shareholder
Accounts: 1,425
Total Net Assets
(in millions): $32.1
With the exception of energy prices, inflation has remained under control
during the past year, and the Federal Reserve now appears satisfied with
the moderating pace of U.S. economic growth. With short-term interest rates
trending downward, we plan to extend the Fund's weighted average maturity
over the coming months, as bonds with longer maturities typically perform
well in a falling interest rate environment. We will also maintain the
Fund's overweighting in corporate issues and mortgage-backed bonds, as we
feel these types of credits provide a long-term yield advantage to our
shareholders.
[GRAPHIC WORM CHART OMITTED:]
Performance Through October 31, 2000
Growth of a $10,000 Investment
Class A shares (since 10/29/99)
LB Lehman Lipper Median
Limited Government Short/Interm. Consumer
Month End Maturity Corporate Investment Grade Price
Date Bond Fund 1-5 Year Index Debt Funds Index
---------------------------------------------------------------------------
10/29/99 10,000 10,000 10,000 10,000
11/30/99 10,036 10,017 10,017 10,006
12/31/99 9,993 10,009 10,003 10,006
1/31/00 9,941 9,989 9,969 10,030
2/28/00 10,035 10,065 10,043 10,089
3/31/00 10,115 10,139 10,134 10,172
4/30/00 10,105 10,141 10,116 10,178
5/31/00 10,114 10,172 10,125 10,184
6/30/00 10,292 10,312 10,289 10,244
7/31/00 10,344 10,385 10,354 10,262
8/31/00 10,447 10,484 10,458 10,273
9/30/00 10,500 10,582 10,554 10,327
10/31/00 $10,520 $10,627 $10,588 $10,360
INSET LEGEND READS:
Lehman Government
Corporate
1-5 Year Index
$10,627
Lipper Median
Short/Interm Investment
Grade Debt Funds
$10,588
LB Limited Maturity
Bond Fund
$10,520
Consumer
Price Index
$10,360
LB Limited Maturity Fund
Annualized Total Returns*
-----------------------------------------------------------
Since
Inception
Class A shares 1-Year 10/29/99
Net Asset Value 5.20% 5.20%
Since
Inception
Class B shares 1-Year 10/29/99
If Held (NAV) 5.20% 5.20%
Institutional shares
Net Asset Value 5.43% 5.43%
*See accompanying notes to Portfolio Management Reviews.
LB Money Market Fund
[PHOTO OMITTED: GAIL R. ONAN]
Gail R. Onan, assistant vice president of Lutheran Brotherhood Research Corp.,
is portfolio manager of the LB Money Market Fund. She has managed the Fund
since January 1994 and has been with Lutheran Brotherhood since 1969.
Money market yields leveled off late in the 12-month period ended October 31,
2000, reversing their earlier upward trend. Overall for the reporting period,
the Lutheran Brotherhood Money Market Fund generated a 5.44% total return
(based on Class A share NAV). The average total return of money market funds
tracked by Lipper, Inc., over this same period was 5.53%.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)
Commercial Paper 83.2%
Certificates of Deposit 9.1%
Variable Rate Notes 2.7%
U.S. Government Agency 2.1%
Medium Term Notes 1.9%
Bank Notes 1.0%
The Fund's portfolio composition and top holdings represent all share
classes.
Changing Yield Environment
The first few months of the period were anything but ordinary for the world's
financial markets. As the dawn of 2000 approached, market participants grew
increasingly apprehensive about the potential effects of Y2K-related computer
problems. To shore up liquidity and ease investor trepidation, the Federal
Reserve pumped a significant volume of reserves into the banking system during
the weeks leading up to the new year, swelling the nation's money supply. As a
result, issuers were able to obtain short-term financing at relatively low
interest rates during the first two months of 2000, which restricted money
market yields to a very narrow range. Because there was little yield advantage
to extending maturities in this environment, we kept the Fund's weighted
average maturity relatively short during this time.
These conditions proved temporary. From February through May, the Federal
Reserve boosted the targeted federal funds rate three times to 6.50% in an
attempt to slow the economy and ward off the risk of inflation. These moves had
an immediate impact on short-term interest rates, and money markets yields
subsequently resumed their earlier upward advance. We responded by taking a
larger position in longer-dated securities to capture yield opportunities,
while still keeping a portion of the Fund allocated in shorter-term assets to
provide sufficient liquidity.
This balanced structure proved beneficial until market conditions once again
shifted later in the period. Convinced that the U.S. economy was finally
slowing, the Federal Reserve took a less aggressive stance toward monetary
policy through the duration of the period, leaving short-term interest rates
unchanged. As a result, money market yields began to level off in August,
eliminating the yield advantage of holding longer-maturity issues. Anticipating
continued flattening in the yield curve, as well as increased seasonal demand
for short-term financing, we redeployed the Fund's assets over the ensuing
months, trimming positions in longer-dated instruments, while purchasing more
issues with 60- to 90-day maturities.
Outlook
Over the balance of 2000, we expect the need for short-term corporate financing
to remain strong. As issuers increase the supply of short-term assets available
to investors, money market yields could edge upward once again. Additionally,
any degree of Federal Reserve activity could also play a key role in
determining yield levels. Barring any major political or economic disruptions,
we do not anticipate any substantial near-term shift in the direction of
monetary policy.
[GRAPHIC OMITTED: TOP 10 HOLDINGS BY CREDITOR % OF PORTFOLIO]
Top 10 Holdings % of
by Creditor Portfolio
--------------------------------------------------------------------
General Electric Capital Corp. 4.8%
Household Finance Corp. 4.8%
Koch Industries, Inc. 4.8%
Electronic Data Systems Corp. 4.8%
Motorola, Inc. 4.4%
Associates Corp. of North America 4.2%
AT&T Corp. 4.1%
Delaware Funding Corp. 3.9%
General Motors Corp. 3.8%
Union Bank of Switzerland 3.5%
These holdings represent 43.1% of the total investment portfolio.
LB Money Market Fund seeks current income with stability of principal by
investing in high-quality, short-term debt securities.*****
[GRAPHIC OMITTED: FUND FACTS]
Fund Facts
Inception Date: 2/1/79
Shareholder
Accounts: 65,543
Total Net Assets
(in millions): $677.1
Regardless of market conditions, we will continue to seek a balance between
short-term liquidity needs and longer-term yield potential for the Fund's
shareholders. As always, we will rely on careful credit research to make
informed investment decisions, while keeping the Fund's assets invested in a
diversified portfolio of high-quality money market securities.
Performance as of October 31, 2000
LB Money Market Fund
Annualized Total Returns* Seven-Day Yields ******
------------------------------------------------------------------------
Class A shares 1-Year 5-Year 10-Year Effective Annualized
Net Asset Value 5.44% 4.77% 4.29% 5.88% 5.72%
Since
Inception
Class B shares 1-Year 10/31/97
If Held (NAV) 5.44% 4.84% 5.88% 5.72%
Institutional shares
If Held (NAV) 5.86% 5.15% 6.29% 6.10%
Footnotes
* Annualized total returns represent past performance and reflect
changes in share prices, the reinvestment of all dividends and
capital gains, and the effects of compounding. Since performance
varies, annualized total returns, which assume a steady rate of
growth, differ from the Fund's actual total return for the years
indicated. Class A POP (public offering price) returns have been
adjusted for the maximum 4% sales charge. NAV (net asset value)
returns do not include sales charges. Class B maximum CDSC returns
have been adjusted for the maximum 5% contingent deferred sales
charge. NAV (net asset value) returns do not include sales charges.
Except for the LB Limited Maturity Bond Fund and LB Money Market
Fund, there is an asset based sales charge of 0.75% annually for
Class B shares. Institutional (no-load) shares, which are available
to qualifying Lutheran institutions, Lutheran church organizations,
and certain other institutional investors, do not impose a sales
charge. The value of an investment fluctuates so that shares, when
redeemed, may be worth more or less than the original investment.
Each fund, except the LB Opportunity Growth Fund and LB World Growth
Fund is subject to a partial voluntary waiver of advisory fees by
the funds' investment advisor, which has the effect of improving
the funds' performances. The waiver of fees may be discontinued at
any time.
** International investing has special risks, including currency
fluctuation and political volatility.
*** High-yield bonds carry greater volatility and risk than
investment-grade bonds.
**** Investors may be subject to state taxes and
federal alternative minimum tax.
***** An investment in the LB Money Market Fund is not insured
or guaranteed by the FDIC or any other government
agency. Although the Fund seeks to preserve the value of your
investment at $1 per share, it is possible to lose money by
investing in the Fund.
****** Seven-day yields of the LB Money Market Fund refer to
the income generated by an investment in the Fund over a
specified seven-day period. Effective yields reflect the
reinvestment of income. Yields are subject to daily fluctuation and
should not be considered an indication of future results.
This report must be preceded or accompanied by a prospectus of the Lutheran
Brotherhood Family of Funds.
AssetMatchSM -- A program for personalized investment strategies
Your financial goals are as unique as you are. And because of this, it's
essential to design investment strategies that are specific to your
individual circumstances.
Whether you're developing a new strategy or revisiting an existing one,
proper planning is key.
--------------------------------------------------------------------
That's where Lutheran Brotherhood's AssetMatch program comes in.
--------------------------------------------------------------------
Your LBSC registered representative is trained in portfolio strategy and
guides you through the program:
* Collecting information on your investment profile
* Exploring various asset mixes and their historical risk and return
characteristics
* Identifying an optimal mix of investments for your circumstances
You can rely on the knowledge and experience of your LBSC
registered representative. He or she can provide solid
footing for your personalized investment strategy.
Based on Proven Principles
AssetMatch is based on the same proven principles that have
guided successful investors for decades: diversification and
asset allocation.
Diversification is the spreading of risk by including a variety of
securities (e.g., small-cap stocks, international stocks, high-yield bonds,
etc.) in your portfolio.
Why Asset Allocation?
Asset allocation is the process of choosing how much to invest among
different asset classes (e.g., stocks, bonds and money market instruments).
Studies have shown that portfolio performance depends largely on
how you allocate your assets.
According to a study titled "Determinants of Portfolio Performance II: An
Update" by Gary Brinson,* 92% of an investment portfolio's performance is
due to asset-class selection, while individual security selection and
timing of purchase account for only about 6%.
With such a large part of performance hinging on asset-class selection,
it's critical to have help from your LBSC registered representative, who is
trained in asset allocation strategies.
Jumpstart Your Strategy
The first step in the AssetMatch
program is to assess your needs. Completing an AssetMatch
questionnaire helps your LBSC registered representative
gauge the following:
* Your risk tolerance
* Your investment preferences
* Your time horizon
* Your liquidity needs
The questionnaire is short, yet comprehensive, and you can
complete it on your own or with the help of your LBSC
registered representative.
Once completed, forward your confidential questionnaire to
your LBSC registered representative for analysis. He or she enters your
answers into the AssetMatch computer program and determines an optimal mix
for your situation. Your LBSC registered representative can then review your
AssetMatch results and discuss whether further analysis or adjustments to
your strategy are necessary.
[GRAPHIC OMMITED: ASSETMATCH QUESTIONNAIRE]
--------------------------------------------------------------------------
Get started today
To obtain an AssetMatch questionnaire, call your LBSC registered
representative, or call our customer service associates at 1-800-990-6290.
--------------------------------------------------------------------------
* Source: Financial Analysts Journal, May/June 1991. Copyright 1991.
Association for Investment Management & Research, Charlottesville,
Virginia. All rights reserved.
This page does not constitute part of the report.
Lutheran Brotherhood Retirement Planner --
A program to help you meet your retirement goals
The Lutheran Brotherhood Retirement Planner just may be the easiest way yet
to assess your current retirement situation. This easy-to-use, interactive
software allows you to learn more about your personal financial picture and
how certain factors can influence your retirement savings. After all, how
you spend your retirement years depends a lot on the plans you make today.
Effective retirement planning requires asking the right questions:
* How much will I need to retire?
* How much can I expect from my current retirement plan?
* What about Social Security?
* Where will my retirement income come from?
* How do investment performance, inflation and other factors affect my
future retirement income?
The LB Retirement Planner* can help you take the first step toward
answering these questions. You provide the personal financial data -- the
program does the rest. It analyzes the data and provides you with a better
idea of how close you are to reaching your retirement goals. You can also
explore how changing certain variables affects your retirement savings.
You'll find that even minor changes can make a big difference!
--------------------------------------------------------------------------
Start planning today
To obtain the "LB Retirement Planner" tax calculation program, call your
LBSC registered representative, or call our customer service associates at
1-800-990-6290.
--------------------------------------------------------------------------
[GRAPHIC OMITTED: RETIREMENT PLANNER]
*Requires a computer running MS-DOS (version 5.0 or later),
Microsoft(registered trademark) Windows(registered trademark) (version 3.1
or later), or Microsoft Windows 95(registered trademark). Microsoft Windows
and Microsoft Windows 95 are registered trademarks of Microsoft
Corporation.
This page does not constitute part of the report.
"What-If" Tax Program -- Keep more of your hard-earned money
Want to lower your taxes?
There's a good chance we can help you do just that!
Strategies to help you keep more of your hard-earned money
As a taxpayer, you know all too well how taxes can affect your take-home pay
and year-end financial status. And whether you're still working or in
retirement, you're probably looking for ways to reduce your tax liability
and keep more of your income.
Wouldn't it be nice to lower your tax liability -- now and in the future?
You probably answered that question with a resounding "Yes." And that's
exactly why Lutheran Brotherhood created the "What-if" tax calculation
program. Your LBSC registered representative can walk you through the
program and help you answer questions such as:
Are you paying tax on interest income that you are not currently using?
Are you paying income tax on any of your Social Security benefits?
Would your family be able to maintain the same standard of living if you
died?
Would a change in filing status lower your taxes?
Identifying potential solutions
With the guidance of your LBSC registered representative, the "What-if" tax
calculation program can help you understand how changes in your financial
situation might impact you and your family's well being.
[GRAPHIC OMITTED: "WHAT-IF" TAX CALCULATION PROGRAM]
The program is especially beneficial if you recently experienced a major
life change such as marriage, death of a spouse, new additions to your
family or retirement.
Together, you and your LBSC registered representative examine potential
solutions that make sense based on your goals. After completing the
"What-if" program, strategies for reducing your tax liability may arise.
Please note that neither Lutheran Brotherhood nor any of its
representatives give legal or tax advice. Consult with your tax advisor
regarding your individual circumstances.
What makes "What-if" unique?
* It provides strategies based on real numbers from your previous year's
tax forms.
* It allows your LBSC registered representative to provide a side-by-side
visual comparison of the impact of financial changes.
* It allows you to change variables and identify potential solutions
immediately.
* It provides you with customized printouts of Form 1040 and corresponding
tax schedules.
Four reasons to request a "What-if" tax analysis today:
1. It costs you nothing to find out more.
Uncovering potential tax strategies is a complimentary service offered by
your LBSC registered representative.
2. It's a painless process.
There's no extra effort on your part. By using your previous years' tax
forms, your LBSC registered representative can help eliminate the guesswork
and cover appropriate strategies.
3. You're better positioned to lower your taxes.
Working through this program, you're likely to keep more of your
hard-earned dollars.
4. It helps you take control of your financial picture.
A few minor changes today could mean major advantages in your future.
--------------------------------------------------------------------------
Discover potential tax savings today
Call your LBSC registered representative for a complimentary "What-if" tax
calculation overview.
--------------------------------------------------------------------------
This page does not constitute part of the report.
[LOGO OMITTED: PRICEWATERHOUSECOOPERS]
PricewaterhouseCoopers LLP
650 Third Avenue South, Suite 1300
Minneapolis MN 55402-4333
Telephone (612) 596 6000
Facsimile (612) 373 7160
Report of Independent Accountants
To the Trustees and Shareholders of the
Lutheran Brotherhood Family of Funds
In our opinion, the accompanying statement of assets and liabilities,
including the portfolios of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Lutheran Brotherhood Opportunity Growth Fund, Lutheran Brotherhood 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 a series in the Lutheran Brotherhood Family of Funds)
at October 31, 2000, the results of their operations for the year then
ended, the changes in each of their net assets and the financial
highlights for the periods indicated, in conformity with accounting
principles generally accepted in the United States of America. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of management; our
responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these financial
statements in accordance with auditing standards generally accepted in
the United States of America, which require that we plan and perform our
audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at October 31,
2000 by correspondence with the custodian and brokers, provide a
reasonable basis for our opinion.
/S/PRICEWATERHOUSECOOPERS LLP
December 7, 2000
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD OPPORTUNITY GROWTH FUND
Portfolio of Investments
October 31, 2000
Shares Value
------------- ------------
<S> <C> <C>
COMMON STOCKS - 94.3% (a)
Aerospace & Defense - 0.7%
42,600 Teledyne Technologies, Inc. 1,067,641(b)
26,100 Triumph Group, Inc. 887,400(b)
--------------
1,955,041
--------------
Airlines - 0.4%
24,600 Atlantic Coast
Airlines Holdings 879,450(b)
7,100 SkyWest, Inc. 358,550
--------------
1,238,000
--------------
Automotive - 0.1%
16,200 Gentex Corp. 400,950(b)
--------------
Banks - 2.1%
25,100 City National Corp. 862,813
53,200 Community First Bank
Shares, Inc. 824,600
33,700 Cullen/Frost Bankers, Inc. 1,122,631
11,600 Investors Financial
Services Corp. 831,575
41,000 Roslyn Bancorp, Inc. 889,188
28,100 Silicon Valley Bancshares 1,299,625(b)
--------------
5,830,432
--------------
Biotechnology - 3.6%
9,700 Abgenix, Inc. 765,088
34,800 Alliance Pharmaceuticals Corp. 491,550(b)
40,000 Biomatrix, Inc. 765,000(b)
8,700 Cephalon, Inc. 466,538(b)
24,800 Corixa Corp. 1,103,600(b)
6,200 CV Therapeutics, Inc. 488,250(b)
5,050 Genencor International, Inc. 138,875(b)
35,700 IDEXX Laboratories, Inc. 856,800(b)
10,400 Incyte Pharmacueticals, Inc. 380,900
18,300 Invitrogen Corp. 1,391,944(b)
21,500 NPS Pharmaceuticals, Inc. 921,813(b)
6,500 Protein Design Labs, Inc. 878,008
11,400 Techne Corp. 1,285,350(b)
--------------
9,933,716
--------------
Broadcasting - 0.7%
11,400 Entercom Communications Corp. 446,738(b)
7,200 Pegasus Communications Corp. 256,050
22,400 Sirius Satellite Radio, Inc. 1,125,600(b)
--------------
1,828,388
--------------
Chemicals(c)
1,000 Potash Corp. of
Saskatchewan, Inc. 59,375
--------------
Communications
Equipment - 4.3%
40,000 Andrew Corp. 1,052,500(b)
1,250 Avici Systems, Inc. 54,219(b)
56,100 Cable Design
Technologies Corp. 1,293,806
15,600 CommScope, Inc. 394,875(b)
20,700 Digital Microwave Corp. 478,688(b)
24,500 Level 3 Communications
Holdings Corp. 1,615,469(b)
29,800 MasTec, Inc. 862,338
19,000 Natural Microsystems Corp. 858,563
31,400 Polycom, Inc. 2,041,000
25,200 Proxim, Inc. 1,527,750
7,000 Sawtek, Inc. 356,125(b)
17,100 Tekelec 629,494(b)
32,650 Vyyo, Inc. 722,381(b)
--------------
11,887,208
--------------
Computers -
Hardware - 0.9%
35,300 Computer Network
Technology Corp. 1,072,789(b)
5,000 Digital Lightwave, Inc. 253,438(b)
26,100 National Instruments Corp. 1,218,544(b)
--------------
2,544,771
--------------
Computers -
Networking (c)
2,100 Inrange Technologies Corp. 76,913(b)
--------------
Computers -
Peripherals - 1.3%
39,700 Hutchinson Technology, Inc. 870,919(b)
35,600 Infocus Corp. 1,573,075(b)
8,400 M-Systems Flash Disk
Pioneers, Ltd. 208,950(b)
40,100 Rainbow Technologies, Inc. 997,488(b)
--------------
3,650,432
--------------
Computers - Software &
Services - 11.0%
45,400 Actuate Corp. 1,279,713
29,600 Advent Software, Inc. 1,770,450
30,200 AremisSoft Corp. 1,291,050(b)
8,700 Aspen Technology, Inc. 359,419(b)
20,900 Aware, Inc. 646,594(b)
4,700 Clarent Corp. 145,994(b)
19,800 Cobalt Networks, Inc. 1,091,475(b)
25,800 Cognizant Technology
Solutions Corp., Class A 1,057,800
40,700 Dendrite International, Inc. 885,225(b)
33,350 Docent, Inc. 858,763(b)
24,500 Documentum, Inc. 2,082,500(b)
55,500 Eclipsys Corp. 1,370,156(b)
29,300 Henry (Jack) & Associates, Inc. 1,611,500
6,385 I-2 Technologies, Inc. 1,085,450
6,100 Inet Technologies, Inc. 250,100(b)
33,500 IntraNet Solutions, Inc. 1,557,750(b)
6,600 Manhattan Associates, Inc. 422,503(b)
9,600 Manugistics Group, Inc. 1,093,800(b)
7,300 Mercury Interactive Corp. 810,300
5,200 Micromuse, Inc. 882,375
28,400 NetIQ Corp. 2,445,950(b)
25,600 Network Engines, Inc. 800,000(b)
18,400 ONYX Software Corp. 292,100(b)
17,800 Peregrine Systems, Inc. 427,200
7,900 Pharmacopeia, Inc. 144,175(b)
53,100 Remedy Corp. 909,338(b)
40,800 RSA Security, Inc. 2,366,400(b)
8,500 SERENA Software, Inc. 432,438(b)
15,800 SmartForce plc, ADR 795,184(b)
16,900 ValiCert, Inc. 292,581(b)
43,400 Vastera, Inc. 770,350(b)
9,900 WebTrends Corp. 318,192
--------------
30,546,825
--------------
Construction - 0.3%
12,200 Southdown, Inc. 864,675
--------------
Consumer Finance - 0.8%
49,300 AmeriCredit Corp. 1,324,938(b)
26,700 Metris Companies, Inc. 864,413
--------------
2,189,351
--------------
Distributors - Food &
Health - 1.4%
40,100 AmeriSource Health Corp. 1,741,844(b)
12,300 Patterson Dental Co. 385,144(b)
31,650 Priority Healthcare Corp.,
Class B 1,701,188(b)
--------------
3,828,176
--------------
Electrical Equipment - 5.2%
35,200 Act Manufacturing, Inc. 1,157,200(b)
18,200 Amphenol Corp., Class A 1,169,350
13,025 Anaren Microwave, Inc. 1,354,600
42,000 Artesyn Technologies, Inc. 1,706,250(b)
26,000 Benchmark Electronics, Inc. 1,046,500(b)
10,000 C&D Technologies, Inc. 591,250
39,500 Electro Scientific Industries, Inc. 1,380,031
17,000 KEMET Corp. 473,875
17,100 Merix Corp. 798,623(b)
17,900 Power-One, Inc. 1,269,781
67,600 Sensormatic Electronics Corp. 1,216,800(b)
14,000 Technitrol, Inc. 1,552,250
17,100 Three-Five Systems, Inc. 589,950
--------------
14,306,460
--------------
Electronics - 11.6%
33,600 Actel Corp. 1,230,600(b)
21,050 Aeroflex, Inc. 1,252,475
23,400 Alpha Industries, Inc. 933,075
6,674 Applied Micro Circuits Corp. 510,144
22,700 AstroPower, Inc. 1,322,275(b)
9,200 Aurora Biosciences Corp. 560,625(b)
31,700 AXT, Inc. 1,220,450(b)
16,500 Caliper Technologies Corp. 930,188(b)
7,800 Coherent, Inc. 271,538(b)
36,700 Cytyc Corp. 2,178,489
27,200 Dallas Semiconductor Corp. 1,077,800
7,900 DSP Group, Inc. 224,163(b)
13,000 Elantec Semiconductor, Inc. 1,446,250(b)
22,400 EXAR Corp. 1,001,000(b)
4,200 H Power Corp. 89,513(b)
1,700 Ixia Corp. 39,844(b)
12,200 Kent Electronics Corp. 227,225(b)
31,200 Kopin Corp. 440,700
9,000 Lattice Semiconductor Corp. 262,688
59,400 LTX Corp. 831,600(b)
32,000 Methode Electronics, Inc.,
Class A 1,204,000
15,200 Micrel, Inc. 687,800
16,200 Molecular Devices Corp. 1,107,675(b)
19,950 Orbotech, Ltd. 1,056,103
38,200 Pericom Semiconductor Corp. 1,012,300
34,800 Photon Dynamics, Inc. 1,252,800(b)
60,600 REMEC, Inc. 1,806,638
22,800 Rudolph Technologies, Inc. 889,200(b)
26,200 Semtech Corp. 844,950
24,000 Silicon Storage
Technology, Inc. 546,000
12,700 SIPEX Corp. 500,063(b)
12,150 Stanford Microdevices, Inc. 304,509(b)
36,100 Therma-Wave, Inc. 740,050(b)
10,800 Tollgrade Communications, Inc. 1,034,100(b)
22,900 TranSwitch Corp. 1,322,475
14,800 Tvia, Inc. 242,350(b)
38,000 Varian, Inc. 1,170,875(b)
7,100 Zoran Corp. 355,888(b)
--------------
32,128,418
--------------
Engineering &
Construction - 0.9%
30,250 Dycom Industries, Inc. 1,138,156
9,250 Quanta Services, Inc. 287,328
18,800 SBA Communications Corp. 942,350(b)
--------------
2,367,834
--------------
Equipment -
Semiconductors - 2.0%
69,400 Asyst Technologies, Inc. 1,041,000
9,700 Brooks Automation, Inc. 257,050(b)
6,600 DuPont Photomasks, Inc. 370,425(b)
26,800 EMCORE Corp. 1,098,800
31,300 Silicon Valley Group, Inc. 1,030,944(b)
44,400 Ultrateck Stepper, Inc. 1,043,400(b)
10,600 Varian Semiconductor
Equipment, Inc. 243,800(b)
8,900 Veeco Instruments, Inc. 589,208(b)
--------------
5,674,627
--------------
Financial -
Diversified - 0.1%
22,700 Pinnacle Holdings, Inc. 357,525(b)
--------------
Food & Beverage - 0.5%
32,100 Hain Celestial Group, Inc. 1,273,969(b)
--------------
Freight & Shipping - 2.4%
11,200 Atlas Air, Inc. 406,000(b)
27,600 C.H. Robinson Worldwide, Inc. 1,509,375
29,000 EGL, Inc. 826,500(b)
21,600 Expeditors International of
Washington, Inc. 1,120,500
30,900 Forward Air Corp. 1,270,763(b)
41,000 Iron Mountain, Inc. 1,386,313(b)
--------------
6,519,451
--------------
Gold & Precious
Metals Mining - 0.1%
11,500 Stillwater Mining Co. 333,500(b)
--------------
Health Care - Drugs &
Pharmaceuticals - 6.2%
41,500 Accredo Health, Inc. 1,794,875(b)
22,100 Alkermes, Inc. 819,081(b)
7,900 Alpharma, Inc., Class A 306,619
20,400 Celgene Corp. 1,313,250(b)
21,550 Cell Therapeutics, Inc. 1,441,493(b)
20,900 Cubist Pharmaceuticals, Inc. 898,047(b)
8,800 Inhale Therapeutic Systems 437,800
23,543 King Pharmaceuticals, Inc. 1,055,021
57,700 Large Scale Biology Corp. 1,071,056(b)
53,150 Medicines (The) Co. 1,601,144(b)
24,800 Medicis Pharmaceutical Corp.,
Class A 1,825,900(b)
7,700 Noven Pharmaceuticals, Inc. 343,131(b)
20,750 Onyx Pharmaceuticals, Inc. 311,250(b)
37,300 Pain Therapeutics, Inc. 799,619(b)
53,250 POZEN, Inc. 852,000(b)
6,201 Shire Pharmaceuticals
Group, ADR 389,888(b)
28,550 Titan Pharmaceuticals, Inc. 1,201,384(b)
26,600 Tularik, Inc. 844,550(b)
--------------
17,306,108
--------------
Health Care - Medical
Products & Supplies - 3.6%
46,800 Aradigm Corp. 1,035,450(b)
9,400 Beckman Coulter, Inc. 658,588
49,900 Cyberonics, Inc. 1,160,175(b)
35,300 Edwards Lifesciences Corp. 474,344(b)
39,600 Novoste Corp. 999,900(b)
33,500 PolyMedica Corp. 1,926,250(b)
43,200 ResMed, Inc. 1,101,600
28,000 Varian Medical Systems, Inc. 1,368,500(b)
24,500 Zoll Medical Corp. 1,214,281(b)
--------------
9,939,088
--------------
Health Care
Management - 2.4%
66,200 Lifepoint Hospitals, Inc. 2,565,250(b)
40,200 Province Healthcare Co. 1,693,425
17,400 Trigon Healthcare, Inc. 1,247,363(b)
12,200 Universal Health Services, Inc.,
Class B 1,023,275(b)
--------------
6,529,313
--------------
Health Care Services - 5.8%
55,700 Advance Paradigm, Inc. 2,722,338
36,400 Albany Molecular
Research, Inc. 2,115,750
5,300 American Superconductor Corp. 253,075(b)
26,000 CuraGen Corp. 1,680,250(b)
49,850 Genaissance Pharmaceuticals 1,190,169(b)
42,600 Hooper Holmes, Inc. 404,274
51,000 IMPATH, Inc. 3,856,875
14,100 MAXIMUS, Inc. 346,331(b)
90,800 Medichem Life Sciences, Inc. 834,225(b)
16,100 Orthodontic Centers of
America, Inc. 537,338(b)
43,300 Pharmaceutical Product
Development, Inc. 1,355,831(b)
17,600 Symyx Technologies, Inc. 830,500(b)
--------------
16,126,956
--------------
Homebuilding - 0.6%
49,200 Lennar Corp. 1,580,550
--------------
Housewares &
Household Products - 0.1%
6,900 Salton, Inc. 157,838(b)
--------------
Insurance - 0.3%
34,400 Protective Life Corp.,
Capital Trust II 795,500
--------------
Investment Banking &
Brokerage - 0.4%
38,400 Waddell & Reed Financial, Inc.,
Class A 1,224,000
--------------
Investment
Management - 0.7%
33,200 Affiliated Managers Group, Inc. 1,996,150(b)
--------------
Leisure Products - 0.1%
14,400 Meade Instruments Corp. 263,700
--------------
Machinery - Diversified - 0.1%
7,800 Mettler-Toledo International, Inc. 364,163(b)
--------------
Manufacturing - 0.8%
8,500 Cognex Corp. 284,750(b)
27,300 Diebold, Inc. 709,800
30,500 Insituform Technologies, Inc.,
Class A 1,088,469(b)
--------------
2,083,019
--------------
Metal Fabricators - 0.2%
8,200 Shaw Group, Inc. 668,300(b)
--------------
Office Equipment &
Supplies - 0.1%
11,600 Optimal Robotics Corp. 390,050(b)
--------------
Oil & Gas - 5.9%
28,900 Cal Dive International, Inc. 1,437,775(b)
25,050 Core Laboratories N.V. (USD) 540,141(b)
24,100 Cross Timbers Oil Co. 453,381
27,700 Global Industries Ltd. 290,850(b)
12,900 Louis Dreyfus Natural Gas Corp. 413,606(b)
18,400 Marine Drilling Companies, Inc. 439,300(b)
22,800 National-Oilwell, Inc. 666,900(b)
42,800 Newfield Exploration Co. 1,615,700(b)
23,900 Noble Affiliates, Inc. 876,831
58,100 Oceaneering International, Inc. 817,031(b)
11,900 Patterson Energy, Inc. 334,688(b)
35,500 Pogo Producing Co. 887,500
30,400 Precision Drilling Corp. 870,200(b)
23,800 Stone Energy Corp. 1,218,560(b)
25,900 Tidewater, Inc. 1,196,256
63,400 UTI Energy Corp. 1,271,963
62,400 Veritas DGC, Inc. 1,872,000(b)
55,800 Vintage Petroleum, Inc. 1,178,775
--------------
16,381,457
--------------
Photography & Imaging - 0.2%
14,600 Concord Camera Corp. 451,688(b)
--------------
Restaurants - 2.2%
42,400 Applebee's International, Inc. 1,280,613
13,200 CEC Entertainment, Inc. 420,750(b)
9,200 Cheesecake (The) Factory 407,675(b)
30,600 Jack in the Box, Inc. 749,700(b)
42,200 PR Chang's China Bistro, Inc. 1,730,200(b)
37,600 Sonic Corp. 1,372,400(b)
--------------
5,961,338
--------------
Retail - 3.0%
21,700 Chicos Fas, Inc. 702,538(b)
11,800 Cost Plus, Inc. 330,400(b)
32,700 Insight Enterprise, Inc. 1,062,750
32,550 Kenneth Cole Productions, Inc.,
Class A 1,478,991
41,300 Linens 'N Things, Inc. 1,269,975(b)
42,700 Men's Wearhouse, Inc. 1,248,975(b)
23,225 Pacific Sunwear of California 476,113(b)
14,700 Payless ShoeSource, Inc. 851,681(b)
23,300 Tweeter Home Entertainment
Group, Inc. 560,656
11,600 Ultimate Electronics, Inc. 419,050(b)
--------------
8,401,129
--------------
Retail - Food & Drug - 0.8%
39,200 Duane Reade, Inc. 1,144,150(b)
25,400 Whole Foods Market, Inc. 1,174,750(b)
--------------
2,318,900
--------------
Services - 0.8%
10,800 Korn/Ferry International 378,000(b)
16,800 On Assignment, Inc. 423,150(b)
42,175 Tetra Tech, Inc. 1,465,581(b)
--------------
2,266,731
--------------
Services - Cyclical - 6.1%
19,700 Acxiom Corp. 792,925(b)
13,360 Apollo Group, Inc., Class A 522,710(b)
16,900 Catalina Marketing Corp. 663,325
11,500 ChoicePoint, Inc. 588,656(b)
32,500 Copart, Inc. 489,531(b)
48,400 Corporate Executive Board Co. 2,232,450
48,000 DeVry, Inc. 1,773,000(b)
8,850 Diamond Technology
Partners, Inc. 394,931(b)
39,800 Dollar Thrifty Auto Group, Inc. 611,925(b)
9,700 Forrester Research, Inc. 398,306(b)
15,900 FreeMarkets, Inc. 786,056(b)
31,200 F.Y.I., Inc. 1,251,900(b)
21,200 Getty Images, Inc. 673,100(b)
19,800 Learning Tree International, Inc. 895,950(b)
10,500 MemberWorks, Inc. 360,938(b)
30,800 MIPS Technologies, Inc. 1,235,850(b)
29,600 Pre-Paid Legal Services, Inc. 1,298,700(b)
60,200 Sylvan Learning Systems, Inc. 929,338(b)
18,000 TeleTech Holdings, Inc. 499,500(b)
32,700 Watson Wyatt & Co. Holdings 566,119(b)
--------------
16,965,210
--------------
Services - Technology - 1.8%
39,000 Bisys Group, Inc. 1,837,875(b)
31,100 FactSet Research Systems, Inc. 1,177,757
26,100 Investment Technology Group 939,600(b)
26,700 National Data Corp. 1,017,938
--------------
4,973,170
--------------
Telephone &
Telecommunications - 1.7%
29,013 Avocent Corp. 2,058,110(b)
27,900 Microcell Telecommuniations
Corp. 777,277(b)
21,000 Powerwave Technologies, Inc. 1,010,625
14,700 Rural Cellular Corp., Class A 790,125(b)
--------------
4,636,137
--------------
Textiles (c)
1,700 Coach, Inc. 39,738(b)
--------------
Total Common Stocks
(cost $219,245,216) 261,616,270
--------------
Principal
Amount
------------
SHORT-TERM
SECURITIES - 5.7% (a)
Commercial Paper - 3.9%
$3,000,000 Gillette Co.,
6.6% Due 11/1/2000 3,000,000
4,345,000 IBM Credit Corp.,
6.47% Due 11/3/2000 4,343,438
3,600,000 Sheffield Receivables Corp.,
6.63% Due 11/1/2000 3,600,000
--------------
10,943,438
--------------
U.S. Government
Agency - 1.8%
5,000,000 Federal Home Loan Bank
Discount Note,
6.4% Due 11/1/2000 5,000,000
--------------
Total Short-Term Securities
(at amortized cost) 15,943,438
--------------
Total Investments
(cost $235,188,654) $ 277,559,708(d)
==============
Notes to Portfolio of Investments:
----------------------------------
(a) The categories of investments are shown as a percentage of total
investments of the Lutheran Brotherhood Opportunity Growth Fund.
(b) Currently non-income producing.
(c) The market value of the denoted categories of investments
represents less than 0.1% of the total investments of the
Lutheran Brotherhood Opportunity Growth Fund.
(d) At October 31, 2000, the aggregate cost of securities for federal
tax purposes was $235,379,351 and the net unrealized appreciation of
investments based on that cost was $42,180,357 which is comprised of
$61,798,267 aggregate gross unrealized appreciation and $19,617,910
aggregate gross unrealized depreciation.
(e) Miscellaneous Footnotes:
(ADR) - American Depository Receipts
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD MID CAP GROWTH FUND
Portfolio of Investments
October 31, 2000
Shares Value
------------- ------------
<S> <C> <C>
COMMON STOCKS - 92.6%(a)
Airlines - 0.4%
9,000 Atlantic Coast
Airlines Holdings $ 321,725(b)
10,000 Delta Air Lines, Inc. 472,500
--------------
794,225
--------------
Banks - 3.8%
5,700 Bank United Corp., Class A 323,119
39,600 Banknorth Group, Inc. 717,750
18,950 City National Corp. 651,406
11,500 Dime Bancorp, Inc. 281,031
12,200 Golden West Financial Corp. 683,963
14,900 Marshall & Ilsley Corp. 675,156
16,600 North Fork Bancorporation, Inc. 335,113
9,900 Northern Trust Corp. 845,213
27,700 Roslyn Bancorp, Inc. 600,744
19,900 SouthTrust Corp. 644,263
8,940 TCF Financial Corp. 361,511
14,190 Zions Bancorporation 815,038
--------------
6,934,307
--------------
Biotechnology - 3.1%
10,100 Cephalon, Inc. 541,613(b)
4,700 Chiron Corp. 203,569(b)
1,950 Genencor International, Inc. 53,625(b)
12,200 Genzyme Corp. 866,200(b)
13,100 Genzyme Transgenics Corp. 280,831(b)
5,000 Gilead Sciences, Inc. 430,000(b)
5,000 Human Genome Sciences, Inc. 441,953
4,750 IDEC Pharmaceuticals Corp. 931,594(b)
13,800 Medarex, Inc. 843,525
8,300 MedImmune, Inc. 542,613
5,600 Millennium Pharmaceuticals, Inc. 406,350
--------------
5,541,873
--------------
Broadcasting - 1.1%
35,800 Charter Communications, Inc.,
Class A 698,100(b)
5,500 Pegasus Communications Corp. 195,594
10,300 Sirius Satellite Radio, Inc. 517,575(b)
10,600 Univision Communications,
Inc., Class A 405,450
9,400 USA Networks, Inc. 190,350
--------------
2,007,069
--------------
Chemicals - 1.3%
9,000 Cytec Industries, Inc. 311,625(b)
13,100 Ecolab, Inc. 513,356
36,100 Monsanto Co. 920,550(b)
9,600 Potash Corp. of
Saskatchewan, Inc. 570,000
--------------
2,315,531
--------------
Communications
Equipment - 3.0%
18,328 ADC Telecommunications, Inc. 391,761
14,800 American Tower Corp., Class A 605,875(b)
450 Avici Systems, Inc. 19,519(b)
25,200 Cable Design
Technologies Corp. 581,175
4,800 CIENA Corp. 504,600
6,400 Comverse Technology, Inc. 715,200
15,000 Polycom, Inc. 975,000
5,300 Research in Motion, Ltd. 530,000(b)
4,900 Sawtek, Inc. 249,288(b)
8,600 Scientific-Atlanta, Inc. 588,563
13,250 Vyyo, Inc. 293,156(b)
--------------
5,454,137
--------------
Computers -
Hardware - 1.3%
6,100 Extreme Networks, Inc. 505,919
3,560 Gateway, Inc. 183,732(b)
20,500 National Instruments Corp. 957,094(b)
12,600 NCR Corp. 543,375(b)
2,000 Sun Microsystems, Inc. 221,750
--------------
2,411,870
--------------
Computers -
Networking - 0.3%
6,800 Cabletron Systems, Inc. 184,450(b)
800 Inrange Technologies Corp. 29,300(b)
3,200 Network Appliance, Inc. 380,800
--------------
594,550
--------------
Computers -
Peripherals - 0.5%
4,200 EMC Corp. 374,063
7,700 Infocus Corp. 340,244(b)
2,300 SanDisk Corp. 123,589(b)
--------------
837,896
--------------
Computers - Software &
Services - 7.8%
4,000 Adobe Systems, Inc. 304,250
10,600 Advent Software, Inc. 634,013
17,100 Affiliated Computer
Services, Inc., Class A 952,256(b)
3,800 Amdocs, Ltd. 246,288(b)
2,300 Art Technology Group, Inc. 144,325
6,800 BEA Systems, Inc. 487,900
35,900 Cadence Design Systems, Inc. 922,181(b)
1,900 Check Point Software
Technologies Ltd. 300,913
12,800 Cognos, Inc. 531,200
22,200 Dendrite International, Inc. 482,850(b)
4,850 Docent, Inc. 124,888(b)
13,700 Electronic Arts, Inc. 685,000
4,700 Henry (Jack) & Associates, Inc. 258,500
2,400 HNC Software, Inc. 48,750(b)
2,200 I-2 Technologies, Inc. 374,000
8,400 Internet Security Systems, Inc. 741,300(b)
4,700 Intuit, Inc. 288,756(b)
3,800 Mercury Interactive Corp. 421,800
3,900 Micromuse, Inc. 661,781
5,400 Phone.com, Inc. 499,838(b)
3,500 Portal Software, Inc. 123,156(b)
20,800 Rational Software Corp. 1,241,500
2,983 Retek, Inc. 117,642(b)
11,600 RSA Security, Inc. 672,800(b)
4,700 Siebel Systems, Inc. 493,206
3,500 SmartForce plc, ADR 176,148(b)
5,100 Symantec Corp. 199,219(b)
6,450 ValiCert, Inc. 111,666(b)
1,600 Vastera, Inc. 28,400(b)
2,700 VeriSign, Inc. 356,400
9,200 Veritas Software Corp. 1,297,344
4,200 Vignette Corp. 125,213
--------------
14,053,483
--------------
Construction - 0.6%
12,600 Martin Marietta Materials 483,840
8,400 Southdown, Inc. 595,350
--------------
1,079,190
--------------
Consumer Finance - 1.1%
3,400 Capital One Financial Corp. 214,625
16,200 Metris Companies, Inc. 524,475
17,500 PMI Group 1,292,813
--------------
2,031,913
--------------
Distributors - Food &
Health - 0.6%
7,400 AmeriSource Health Corp. 321,438(b)
6,200 Andrx Corp. (Andrx Group) 446,400(b)
4,200 Cardinal Health, Inc. 397,950
--------------
1,165,788
--------------
Electrical Equipment - 3.1%
10,660 American Power
Conversion Corp. 137,914(b)
3,400 Amphenol Corp., Class A 218,450
8,100 Artesyn Technologies, Inc. 329,063(b)
1,800 Electro Scientific Industries, Inc. 62,888
21,402 Flextronics International, Ltd. 813,276
4,600 KEMET Corp. 128,225
8,350 Sanmina Corp. 954,509
13,500 SCI Systems, Inc. 580,500
36,400 Sensormatic Electronics Corp. 655,200(b)
5,600 SPX Corp. 692,300(b)
13,050 Symbol Technologies, Inc. 592,959
15,300 Vishay Intertechnology, Inc. 459,000
--------------
5,624,284
--------------
Electronics - 9.6%
11,400 Altera Corp. 466,688
5,700 Amkor Technologies, Inc. 128,250(b)
13,800 Analog Devices, Inc. 897,000
8,600 Applied Micro Circuits Corp. 657,363
19,600 Arrow Electronics, Inc. 627,200(b)
32,800 Atmel Corp. 489,950
13,600 Avnet, Inc. 365,500
8,900 Cypress Semiconductor Corp. 333,194(b)
17,500 Cytyc Corp. 1,038,789
3,600 GlobeSpan, Inc. 276,975
1,600 H Power Corp. 34,100(b)
15,400 Integrated Device
Technology, Inc. 867,213(b)
1,000 Ixia Corp. 23,438(b)
11,000 Lattice Semiconductor Corp. 321,063
9,280 Linear Technology Corp. 599,140
11,500 Litton Industries, Inc. 597,281(b)
10,560 Maxim Integrated Products, Inc. 700,260
6,200 Micrel, Inc. 280,550
18,240 Microchip Technology, Inc. 576,840
3,300 National Semiconductor Corp. 85,800(b)
8,850 Orbotech, Ltd. 468,497
6,300 PerkinElmer, Inc. 752,850
1,600 PMC-Sierra, Inc. 271,200
7,700 QLogic Corp. 744,975
5,300 Rudolph Technologies, Inc. 206,700(b)
2,000 SDL, Inc. 518,500
8,800 Semtech Corp. 283,800
4,750 Stanford Microdevices, Inc. 119,047(b)
11,600 Tektronix, Inc. 826,500
5,395 Texas Instruments, Inc. 264,692
18,750 Therma-Wave, Inc. 384,375(b)
9,900 TranSwitch Corp. 571,725
7,800 TriQuint Semiconductor, Inc. 298,838
5,650 Tvia, Inc. 92,519(b)
9,800 Vitesse Semiconductor Corp. 685,388(b)
15,600 Waters Corp. 1,131,975
5,940 Xilinx, Inc. 430,279
--------------
17,418,454
--------------
Engineering &
Construction - 0.5%
16,800 Dycom Industries, Inc. 632,100
7,100 Quanta Services, Inc. 220,544
--------------
852,644
--------------
Equipment -
Semiconductors - 0.6%
7,680 KLA Instruments Corp. 259,680
16,600 LAM Research Corp. 321,625
8,730 Novellus Systems, Inc. 357,384
6,300 Teradyne, Inc. 196,875(b)
--------------
1,135,564
--------------
Financial - Diversified - 1.3%
14,000 AMBAC Financial Group, Inc. 1,117,375
19,700 InterCept Group, Inc. 533,131(b)
13,800 USA Educational, Inc. 771,075
--------------
2,421,581
--------------
Food & Beverage - 1.5%
15,900 Hain Celestial Group, Inc. 631,031(b)
9,900 Hershey Foods Corp. 537,694
6,100 Keebler Foods Co. 247,050
23,300 Pepsi Bottling Group, Inc. 806,763
8,900 Suiza Foods Corp. 412,181(b)
--------------
2,634,719
--------------
Freight & Shipping - 0.7%
14,060 Expeditors International of
Washington, Inc. 729,363
18,400 Iron Mountain, Inc. 622,150(b)
--------------
1,351,513
--------------
Gold & Precious
Metals Mining - 0.1%
4,900 Stillwater Mining Co. 142,100(b)
--------------
Health Care -
Diversified - 0.3%
13,800 IVAX Corp. 600,300
--------------
Health Care - Drugs &
Pharmaceuticals - 6.2%
11,400 Allergan, Inc. 958,313
10,100 Alpharma, Inc., Class A 392,006
11,200 Alza Corp. 906,500
16,800 Biovail Corp. 706,650(b)
10,700 Catalyca, Inc. 143,781(b)
13,000 Celgene Corp. 836,875(b)
2,450 Cell Therapeutics, Inc. 163,882(b)
8,120 Forest Laboratories, Inc. 1,075,900(b)
20,600 ICN Pharmaceuticals, Inc. 784,088
29,793 King Pharmaceuticals, Inc. 1,335,099
25,440 Mylan Laboratories, Inc. 712,320
3,300 POZEN, Inc. 52,800(b)
3,500 Sepracor, Inc. 238,438(b)
12,800 Shire Pharmaceuticals
Group, ADR 804,800(b)
15,000 Teva Pharmaceutical
Industries, Ltd., ADR 886,875
6,500 Titan Pharmaceuticals, Inc. 273,520(b)
14,620 Watson Pharmaceuticals, Inc. 914,664(b)
--------------
11,186,511
--------------
Health Care - Medical
Products & Supplies - 2.6%
6,550 Beckman Coulter, Inc. 458,909
26,805 Biomet, Inc. 970,006
30,200 Edwards Lifesciences Corp. 405,813(b)
6,000 MiniMed, Inc. 437,625
4,800 PE Corp./PE Biosystems Group 561,600
5,000 Stryker Corp. 235,625
13,500 St. Jude Medical, Inc. 742,500(b)
13,100 Sybron Corp. 324,225(b)
11,500 Varian Medical Systems, Inc. 562,063(b)
--------------
4,698,366
--------------
Health Care
Management - 3.0%
56,450 Health Management
Associates, Inc., Class A 1,118,416(b)
37,100 Manor Care, Inc. 619,106(b)
17,700 Tenet Healthcare Corp. 695,831
17,400 Trigon Healthcare, Inc. 1,247,363(b)
8,300 Universal Health Services, Inc.,
Class B 696,163(b)
8,600 Wellpoint Health Networks, Inc.,
Class A 1,005,663(b)
--------------
5,382,542
--------------
Health Care Services - 1.0%
13,000 CuraGen Corp. 840,125(b)
3,250 Genaissance Pharmaceuticals 77,594(b)
11,900 Lincare Holdings, Inc. 500,544(b)
3,500 Quest Diagnostics, Inc. 336,875(b)
--------------
1,755,138
--------------
Insurance - 1.1%
25,700 Ace, Ltd. 1,008,725
12,700 Radian Group, Inc. 900,113
--------------
1,908,838
--------------
Investment Banking &
Brokerage - 2.5%
20,500 A.G. Edwards, Inc. 1,040,375
10,800 Bear Stearns Companies, Inc. 654,750
12,700 Donaldson, Lufkin &
Jenrette, Inc. 1,140,619
18,300 Knight Trading Group, Inc. 547,856(b)
14,000 Legg Mason, Inc. 727,125
10,400 Waddell & Reed Financial, Inc.,
Class A 331,500
--------------
4,442,225
--------------
Investment
Management - 0.4%
13,100 Federated Investors, Inc.,
Class B 381,538
6,400 Stilwell Financial, Inc. 286,800
--------------
668,338
--------------
Leisure Products - 0.6%
9,540 Harley Davidson, Inc. 459,709
44,500 Mattel, Inc. 575,719
--------------
1,035,428
--------------
Machinery - Diversified - 0.4%
17,100 Mettler-Toledo International, Inc. 798,356(b)
--------------
Manufacturing - 2.2%
15,800 Danaher Corp. 997,375
15,600 Diebold, Inc. 405,600
23,600 Jabil Circuit, Inc. 1,346,675
9,800 Johnson Controls, Inc. 584,325
11,800 Millipore Corp. 619,500
--------------
3,953,475
--------------
Office Equipment &
Supplies - 0.4%
26,000 Herman Miller, Inc. 679,250
--------------
Oil & Gas - 9.1%
16,900 Anadarko Petroleum Corp. 1,082,445
15,500 Apache Corp. 857,344
13,060 BJ Services Co. 684,834(b)
5,500 Cooper Cameron Corp. 299,750(b)
20,500 Devon Energy Corp. 1,033,200
32,160 ENSCO International, Inc. 1,069,320
29,000 EOG Resources, Inc. 1,141,875
17,800 Global Marine, Inc. 471,700(b)
7,700 Helmerich & Payne, Inc. 242,069
6,000 Murphy Oil Corp. 347,625
11,800 Nabors Industries, Inc. 600,620(b)
4,500 Newfield Exploration Co. 169,875(b)
16,000 Noble Drilling Corp. 665,000(b)
25,000 Ocean Energy, Inc. 346,875(b)
23,400 Precision Drilling Corp. 669,825(b)
7,800 Rowan Companies, Inc. 196,463(b)
13,400 R&B Falcon Corp. 335,000(b)
22,600 Santa Fe International Corp. 824,900
11,110 Smith International, Inc. 783,255(b)
23,800 Tidewater, Inc. 1,099,263
21,030 Tosco Corp. 601,984
10,500 Transocean Sedco Forex, Inc. 556,500
26,700 Ultramar Diamond
Shamrock Corp. 700,875
23,500 Valero Energy Corp. 776,969
22,500 Weatherford International, Inc. 821,250(b)
--------------
16,378,816
--------------
Paper & Forest
Products - 0.3%
10,500 Bowater, Inc. 568,313
--------------
Publishing - 0.5%
4,400 Reader's Digest Association, Inc.,
Class A 161,425
9,800 Scholastic Corp. 784,000(b)
--------------
945,425
--------------
Restaurants - 1.7%
24,000 Brinker International, Inc. 942,000(b)
24,000 Darden Restaurants, Inc. 540,000
10,000 Outback Steakhouse, Inc. 285,000(b)
17,400 Starbucks Corp. 777,563(b)
26,300 Wendy's International, Inc. 572,025
--------------
3,116,588
--------------
Retail - 2.8%
16,560 Bed, Bath & Beyond, Inc. 427,455
14,100 BJ's Wholesale Club, Inc. 464,419(b)
20,880 Dollar Tree Stores, Inc. 816,930
13,600 Family Dollar Stores, Inc. 264,350
28,000 Intimate Brands, Inc. 668,500
12,300 Men's Wearhouse, Inc. 359,775(b)
23,600 Tiffany & Co. 1,007,425
30,900 TJX Companies, Inc. 842,025
8,500 Zale Corp. 287,938(b)
--------------
5,138,817
--------------
Retail - Food & Drug - 0.9%
85,600 Caremark Rx, Inc. 1,070,000(b)
12,500 Whole Foods Market, Inc. 578,125(b)
--------------
1,648,125
--------------
Services - 0.6%
11,800 Manpower, Inc. 410,788
23,400 Robert Half International, Inc. 713,700
--------------
1,124,488
--------------
Services - Cyclical - 3.4%
7,200 Acxiom Corp. 289,800(b)
8,300 Catalina Marketing Corp. 325,775
14,800 Cerner Corp. 916,675(b)
21,400 Cintas Corp. 992,425
20,900 Convergys Corp. 910,456(b)
7,900 Forrester Research, Inc. 324,394(b)
9,200 FreeMarkets, Inc. 454,825(b)
32,600 IMS Health, Inc. 770,175
6,500 Lamar Advertising Co. 312,000(b)
8,600 TMP Worldwide, Inc. 598,641
6,600 Viad Corp. 141,075
3,006 WPP Group plc, ADR 201,026
--------------
6,237,267
--------------
Services - Technology - 4.6%
19,400 Bisys Group, Inc. 914,225(b)
12,300 Ceridian Corp. 307,500(b)
6,500 Comdisco, Inc. 80,031
40,800 Concord EFS, Inc. 1,685,550(b)
16,000 DST Systems, Inc. 986,000(b)
23,300 Equifax, Inc. 803,850
20,000 Fiserv, Inc. 1,048,750(b)
16,080 Paychex, Inc. 911,535
30,080 SunGard Data Systems, Inc. 1,537,840(b)
--------------
8,275,281
--------------
Telephone &
Telecommunications - 1.6%
19,400 Broadwing, Inc. 548,050(b)
15,000 McLeodUSA, Inc. 288,750
5,900 Powerwave Technologies, Inc. 283,938
8,500 Telephone and Data
Systems, Inc. 896,750
2,540 VoiceStream Wireless Corp. 334,010(b)
9,540 Western Wireless Corp. 453,150(b)
--------------
2,804,648
--------------
Textiles - 0.9%
650 Coach, Inc. 15,194(b)
32,500 Jones Apparel Group, Inc. 903,906(b)
16,000 Liz Claiborne 680,000
--------------
1,599,100
--------------
Utilities - 3.1%
10,360 AES Corp. 585,340
19,800 Allegheny Energy, Inc. 810,563
6,200 Calpine Corp. 489,413
8,200 CMS Energy Corp. 221,400
14,400 Constellation Energy Group 600,300
11,200 DQE, Inc. 391,300
19,400 Dynegy, Inc. 898,463
7,300 KeySpan Corp. 256,869
8,700 Kinder Morgan, Inc. 335,494
13,500 Montana Power Co. 381,375
23,300 UtiliCorp United, Inc. 618,906
--------------
5,589,423
--------------
Waste Management - 0.1%
14,900 Republic Services, Inc., Class A 200,219(b)
--------------
Total Common Stocks
(cost $132,992,221) 167,537,968
--------------
Principal
Amount Value
------------ ------------
SHORT-TERM
SECURITIES - 7.4%(a)
U.S. Government Agency
$13,300,000 Federal Agricultural
Mortgage Corp.,
Discount Note,
6.45% Due 11/1/2000
(at amortized cost) 13,300,000
--------------
Total Investments
(cost $146,292,221) $ 180,837,968(c)
==============
Notes to Portfolio of Investments:
----------------------------------
(a) The categories of investments are shown as a percentage of total
investments of the Lutheran Brotherhood Mid Cap Growth Fund.
(b) Currently non-income producing.
(c) At October 31, 2000, the aggregate cost of securities for federal
income tax purposes was $146,353,640 and the net unrealized
appreciation of investments based on that cost was $34,484,328
which is comprised of $39,958,569 aggregate gross unrealized
appreciation and $5,474,241 aggregate gross unrealized depreciation.
(d) Miscellaneous Footnotes:
(ADR) - American Depository Receipts
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD WORLD GROWTH FUND
Portfolio of Investments
October 31, 2000
Shares Value
------------- ------------
<S> <C> <C>
AUSTRALIA - 1.3%(a)
COMMON STOCKS
13,000 Brambles Industries Ltd. $ 337,056
13,256 Commonwealth
Bank of Australia 197,267
102,086 Telstra Corp. Ltd. 333,323(b)
--------------
867,646
--------------
PREFERRED STOCK
94,890 News Corp. Ltd. 850,922
--------------
1,718,568
--------------
BELGIUM - 0.7%(a)
COMMON STOCKS
2,273 Credit Communal
Holding/Dexia 341,603
17,510 Fortis 'B' 536,410
1,580 UCB SA 56,313
--------------
934,326
--------------
BRAZIL - 1.6%(a)
COMMON STOCKS
8,900 Petroleo Brasileiro SA -
Petrobras 258,656(b)
9,710 Telecomunicacues Brasilieras
SA ADR (USD) 711,258
5,000 Unibanco - Uniao de Bancos
Brasileiros SA GDR (USD) 126,250
--------------
1,096,164
--------------
PREFERRED STOCK
31,790 Petroleo Brasileiro SA -
Petrobras 842,793
5,657,000 Telesp Celular
Participacoes SA 66,912(b)
--------------
909,705
--------------
2,005,869
--------------
CANADA - 1.5%(a)
COMMON STOCKS
10,360 Alcan Aluminum 325,891
14,360 Celestica Inc. 1,032,125(b)
7,440 Nortel Networks Corp. 337,196
6,240 Royal Bank of Canada 197,311
--------------
1,892,523
--------------
DENMARK - 0.1%(a)
COMMON STOCKS
1,690 Teledanmark 79,976
--------------
FINLAND - 2.3%(a)
COMMON STOCKS
71,305 Nokia Oyj 2,934,103
--------------
FRANCE - 12.5%(a)
COMMON STOCKS
20,280 Alcatel 1,237,371
1,010 Altran Technologies SA 206,472
23,366 Aventis SA 1,682,196
11,872 AXA 1,571,635
15,920 Banque Nationale De Paris 1,372,587
4,840 Bouygues SA 246,434
720 Canal Plus 104,174
2,270 Cap Gemini SA 362,149
3,630 Cie de St. Gobain 480,237
1,040 Group Danone 145,443
1,770 Hermes International 238,822
752 Lafarge Coppee 55,519
3,049 Legrand 491,603
2,230 L'Oreal SA 170,314
18,382 Sanofi-Synthelabo 967,136
2,812 Schneider SA 183,146
4,004 Societe Generale 227,313
20,320 Societe Television Francaise 1 1,108,761
982 Sodexho 153,749
12,963 STMicroeletronics NV 653,974
17,230 Total Fina Elf 'B' 2,465,165
28,931 Vivendi 2,079,458
--------------
16,203,658
--------------
GERMANY - 4.1%(a)
COMMON STOCKS
2,380 Allianz AG 806,959
5,108 Bayer AG 221,717
15,123 Bayerische Vereinsbank AG 830,962
14,937 Deutsche Bank AG 1,222,936
3,183 Deutsche Telekom AG 119,523
7,602 Gehe AG 276,750
2,220 Rhoen Klinikum AG 121,040
6,360 SAP AG 1,041,100
1,491 Siemens AG 189,853
10,360 E. ON AG 526,435
--------------
5,357,275
--------------
HONG KONG - 2.5%(a)
COMMON STOCKS
71,000 Cheung Kong Holdings Ltd. 785,197
151,000 China Mobile Ltd. 968,073
62,000 China Unicom Ltd. 124,413
24,000 Doa Heng Bank Ltd. 121,246
23,000 Henderson Land
Development Ltd. 99,090
70,200 Hutchison Whampoa 873,112
295,294 Pacific Century Cyberworks Ltd. 227,178(b)
--------------
3,198,309
--------------
INDIA - 0.1%(a)
COMMON STOCKS
19,097 ICICI Ltd. 180,228
--------------
IRELAND - 0.3%(a)
COMMON STOCKS
7,307 SmartForce plc 367,748(b)
--------------
ITALY - 5.8%(a)
COMMON STOCKS
44,000 Alleanza Assicurazioni 583,599
5,000 Assicurazioni Generali SpA 164,416
381,294 Banca Intesa SpA 1,582,239
68,000 Bipop-Carire SpA 537,809
183,302 Credito Italiano SpA 933,301
123,458 Ente Nazionale Idrocarburi 668,410
5,360 Instituto Bancario
San Paolo di Torino 86,876
11,000 Mediaset SpA 159,155
33,945 Mediolanum SpA 497,475
202,023 Olivetti SpA 612,029
77,600 Tecnost 261,430
122,896 Telecom Italia Mobile SpA 1,044,982
33,538 Telecom Italia SpA 388,484
--------------
7,520,205
--------------
JAPAN - 19.2%(a)
COMMON STOCKS
44,000 Canon 1,746,048
23 DDI Corp. 107,923
27 East Japan Railway 155,148
6,300 Fanuc Co. 565,825
53 Fuji Television Network Inc. 582,871
29,000 Fujitsu Ltd. 516,666
10,000 Furukawa Electric Co. Ltd. 263,025
16,000 Hitachi 171,562
5,000 Ito-Yokado Co. 225,908
8,000 Kao Corp. 239,747
10,000 Kokuyo Co. Ltd. 153,966
10,300 Kyocera 1,340,421
17,000 Makita Corp. 123,860
35,000 Marui Co. Ltd. 516,428
1,700 Matsushita Communication
Industrial Co. Ltd. 222,792
49,000 Matsushita Electric
Industrial Co. 1,423,544
88,000 Mitsui Fudosan 1,066,178
160 Mizuho Holdings Inc. 1,230,262
11,500 Murata Manufacturing 1,376,438
59,000 NEC Corp. 1,124,685
154 Nippon Telegraph &
Telecom Corp. 1,401,476
53,000 Nomura Securities Co. Ltd. 1,124,456
40 NTT DoCoMo Inc. 986,116
20,000 Sankyo Co. 440,819
9,100 Seven-Eleven Japan Co. Ltd. 592,128
10,350 Shin-Etsu Chemical Co. Ltd. 424,946
20,000 Shiseido Co. Ltd. 258,443
3,700 Softbank Corp. 222,105
26,600 Sony Corp. 2,125,757
81,000 Sumitomo Bank Ltd. 983,595
35,000 Sumitomo Corp. 307,932
4,000 TDK Corp. 403,244
6,700 Tokyo Electronics 524,383
135,000 Toshiba Corp. 965,037
20,000 Yamanouchi Pharmaceutical
Co. Ltd. 905,467
--------------
24,819,201
--------------
LUXEMBOURG - 0.1%(a)
COMMON STOCKS
698 Societe Europeenne des Satellites 92,995
--------------
MEXICO - 1.9%(a)
COMMON STOCKS
10,000 Grupo Iusacell SA de CV 130,000(b)
23,040 Grupo Televisa GDR (USD) 1,247,040(b)
19,670 Telefonos de Mexico
'L' ADS (USD) 1,060,951
--------------
2,437,991
--------------
NETHERLANDS - 6.8%(a)
COMMON STOCKS
6,316 ABN Amro Holdings NV 146,321
1,328 Akzo Nobel NV 60,460
26,080 ASM Lithography Holdings NV 712,856(b)
6,878 CSM NV 157,007
2,103 Equant NV 70,403(b)
23,400 Fortis (NL) NV 714,861
27,995 ING Groep NV 1,922,381
47,549 Koninklijke (Royal) Philips
Electronics NV 1,868,613
8,261 KPN NV 167,336
17,180 Royal Dutch Petroleum Co. 1,018,923
2,712 United Pan-Europe
Communications NV 47,524(b)
31,890 VNU NV 1,501,934
18,134 Wolters Kluwer 408,104
--------------
8,796,723
--------------
NEW ZEALAND - 0.1%(a)
COMMON STOCKS
66,000 Telecom Corp. of New Zealand 146,060
--------------
NORWAY - 0.2%(a)
COMMON STOCKS
17,000 Orkla 'A' ASA 306,876
--------------
PORTUGAL - 0.1%(a)
COMMON STOCKS
8,888 Jeronimo Martins 85,681
--------------
SINGAPORE - 0.9%(a)
COMMON STOCKS
12,000 DBS Group Holdings Ltd. 141,434
7,500 Flextronics International Ltd. 285,000
92,000 Singapore Telecommunications
Ltd. 152,434
87,472 United Overseas Bank 647,461
--------------
1,226,329
--------------
SOUTH KOREA - 0.5%(a)
COMMON STOCKS
15,643 Korea Equity Fund (USD) 172,229
11,500 Korea Telecom 424,063
3,598 Pohang Iron & Steel
ADR (USD) 56,893
--------------
653,185
--------------
SPAIN - 2.8%(a)
COMMON STOCKS
67,117 Banco Bilboa Vizcaya SA 894,202
79,618 Banco Santander
Central Hispano 771,579
35,950 Endesa SA 585,738
22,456 Repsol SA 356,731
41,264 Telefonica SA 991,977
--------------
3,600,227
--------------
SWEDEN - 4.0%(a)
COMMON STOCKS
3,480 Atlas Copco AB 'B' 71,917
14,240 Electrolux AB 'B' 179,562
25,440 Hennes & Mauritz AB 476,095
133,215 Nordic Baltic Holding AB 999,882
4,140 Sandvik AB 91,357
68,289 Securitas AB 1,455,677
143,100 Telefonaktiebolaget LM
Ericsson AB 1,904,697
--------------
5,179,187
--------------
SWITZERLAND - 4.0%(a)
COMMON STOCKS
6,945 ABB AG 617,192
924 Adecco SA 638,925
2,920 Credit Suisse Group 547,419
775 Nestle SA 1,605,961
62 Roche Holdings AG 566,333
8,200 UBS AG 1,135,848
--------------
5,111,678
--------------
TAIWAN - 0.6%(a)
COMMON STOCKS
47,749 Hon Hai Precision
Industry Co. Ltd. 329,422
167,000 Taiwan Semiconductor
Manufacturing Co. Ltd. 506,687(b)
--------------
836,109
--------------
UNITED KINGDOM - 23.1%(a)
COMMON STOCKS
18,000 Abbey National plc 248,373
26,195 AstraZeneca Group plc 1,226,886
2,500 Autonomy Corp. plc 128,409
14,000 Baltimore Technologies plc 107,762(b)
18,881 BG Group plc 75,611
71,000 BP Amoco plc (USD) 602,137
44,000 British Telecommunications plc 515,841
115,200 Cable & Wireless 1,629,706
67,100 Cadbury Schweppes 414,748
19,000 Celltech Group plc 377,682(b)
32,900 Centrica 113,135
24,000 David S. Smith 52,757
13,000 Diminish Data Holdings plc 113,929(b)
21,000 Electrocomponents 209,633
4,000 GKN plc 45,850
94,700 Glaxo Wellcome 2,726,113
178,150 Granada Compass plc 1,535,410(b)
10,971 Granada Media plc 63,833(b)
96,512 Hays 526,878
31,600 HSBC Holdings plc 439,620
61,000 Kingfisher 364,653
18,881 Lattice Group plc 40,271(b)
61,700 Marconi plc 778,855
12,000 Reckitt Benckiser plc 157,747
212,000 Reed International plc 1,959,420
145,960 Royal Bank of Scotland
Group plc 3,276,245
50,800 Rio Tinto 821,847
279,000 Shell Transport & Trading Co. 2,244,698
124,800 SmithKline Beecham plc 1,611,598
46,000 Standard Chartered plc 663,432
133,800 Tesco 510,095
137,612 Tomkins 327,456
61,107 Unilever 413,392
20,500 United News & Media 256,546
954,148 Vodafone AirTouch plc 3,969,825
100,000 WPP Group plc 1,342,128
--------------
29,892,521
--------------
Principal
Amount
------------
SHORT-TERM
SECURITIES - 2.9%(a)
U.S. Government Agency - 1.1%
$1,500,000 Federal Agricultural Mortgage
Corp., Discount Notes,
6.45%, Due 11/1/2000 1,500,000
--------------
Time Deposits - 1.8%
+2,700,000 State Street Bank (Grand
Cayman), 4.75%,
Due 11/1/2000 2,291,221
--------------
Total Short-Term Securities
(at amortized cost) 3,791,221
--------------
Total Investments in Securities
(cost $116,675,623) $ 129,368,768(d)
==============
Notes to Portfolio of Investments:
----------------------------------
(a) The categories of investments are shown as a percentage of
total investments of the Lutheran Brotherhood World Growth Fund.
(b) Currently non-income producing.
(c) Security Classification:
Cost Value % of Portfolio
------------ ------------- --------------
Common Stocks &
Warrants $110,991,340 $123,816,920 95.7%
Preferred Stocks 1,893,062 1,760,627 1.4%
Short-Term 3,791,221 3,791,221 2.9%
------------ ------------ -------
Total Investments $116,675,623 $129,368,768 100.0%
============ ============ =======
(d) At October 31, 2000, the aggregate cost of securities for federal income
tax purposes was $116,913,785 and the net unrealized appreciation of
investments based on that cost was 12,454,983 which is comprised of
$20,613,802 aggregate gross unrealized appreciation and $8,158,819
aggregate gross unrealized depreciation.
(e) Miscellaneous Footnotes:
(ADR) - American Depository Receipts
(ADS) - American Depository Shares
(GDR) - Global Depository Receipts
(USD) - Denominated in U.S. Dollars
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD GROWTH FUND
Portfolio of Investments
October 31, 2000
Shares Value
------------- ------------
<S> <C> <C>
COMMON STOCKS - 95.2%(a)
Airlines - 0.2%
2,560 Southwest Airlines Co. $ 72,944
--------------
Banks - 2.6%
2,470 Bank of New York Co., Inc. 142,179
2,495 Chase Manhattan Corp. 113,523
2,700 Fifth Third BanCorp 138,713
4,000 Firstar Corp. 78,750
1,600 Northern Trust Corp. 136,600
1,490 State Street Corp. 185,863
4,830 U.S. Bancorporation 116,826
2,770 Wells Fargo & Co. 128,286
--------------
1,040,740
--------------
Biotechnology - 1.8%
6,120 Amgen, Inc. 354,578
1,040 Human Genome Sciences, Inc. 91,926
3,190 Immunex Corp. 135,774
2,310 MedImmune, Inc. 151,016
--------------
733,294
--------------
Broadcasting - 2.0%
8,550 AT&T Corp./Liberty Media
Group, Class A 153,900
4,130 Clear Channel
Communications, Inc. 248,058(b)
6,180 Comcast Corp., Class A 251,835
4,230 General Motors Corp., Class H 137,052
--------------
790,845
--------------
Chemicals - 0.1%
1,400 Praxair, Inc. 52,150
--------------
Communications
Equipment - 8.7%
5,810 ADC Telecommunications, Inc. 124,189
1,980 CIENA Corp. 208,148
1,710 Comverse Technology, Inc. 191,093
8,550 Corning, Inc. 654,075
6,070 JDS Uniphase Corp. 494,326
4,770 Lucent Technologies, Inc. 111,201
8,810 Motorola, Inc. 219,699
14,470 Nokia Corp., ADR 618,593
9,770 Nortel Networks Corp. 444,535
3,090 QUALCOMM, Inc. 201,188
990 Sycamore Networks, Inc. 62,618(b)
2,730 Tellabs, Inc. 136,329(b)
--------------
3,465,994
--------------
Computers - Hardware - 5.4%
3,050 Apple Computer 59,666
610 Brocade Communication
Systems, Inc. 138,699(b)
8,320 Dell Computer Corp. 245,440(b)
3,300 Hewlett Packard Co. 153,244
2,790 International Business
Machines Corp. 274,815
1,340 Juniper Networks, Inc. 261,300
9,190 Sun Microsystems, Inc. 1,018,941
--------------
2,152,105
--------------
Computers -
Networking - 4.3%
397 Avaya Inc. 5,335(b)
27,540 Cisco Systems, Inc. 1,483,718
1,780 Network Appliance, Inc. 211,820
--------------
1,700,873
--------------
Computers -
Peripherals - 3.3%
14,680 EMC Corp. 1,307,438
--------------
Computers - Software &
Services - 9.3%
1,260 Adobe Systems, Inc. 95,839
7,020 America Online, Inc. 354,019
1,010 Ariba, Inc. 127,639
3,550 BEA Systems, Inc. 254,713
1,000 Commerce One, Inc. 64,188
250 Docent, Inc. 6,438(b)
3,240 Exodus Communications, Inc. 108,743
950 I-2 Technologies, Inc. 161,500
990 Inktomi Corp. 62,803
11,790 Microsoft Corp. 812,036(b)
17,020 Oracle Corp. 561,660
1,050 Phone.com, Inc. 97,191(b)
2,860 Siebel Systems, Inc. 300,121
1,200 VeriSign, Inc. 158,400
3,145 Veritas Software Corp. 443,494
1,570 Yahoo!, Inc. 92,041
--------------
3,700,825
--------------
Consumer Finance - 0.8%
6,120 MBNA Corp. 229,883
730 Providian Financial Corp. 75,920
--------------
305,803
--------------
Distributors - Food &
Health - 0.2%
1,010 Cardinal Health, Inc. 95,698
--------------
Electrical Equipment - 4.1%
3,000 Flextronics International, Ltd. 114,000
23,290 General Electric Co. 1,276,583
500 Power-One, Inc. 35,469
4,200 Solectron Corp. 184,800
--------------
1,610,852
--------------
Electronics - 6.9%
1,201 Agilent Technologies, Inc. 55,621(b)
2,400 Altera Corp. 98,250
2,920 Analog Devices, Inc. 189,800
1,640 Applied Micro Circuits Corp. 125,358
800 C-MAC Industries, Inc. 44,400(b)
20,190 Intel Corp. 908,550
1,800 Linear Technology Corp. 116,213
2,000 Maxim Integrated Products, Inc. 132,625
1,290 PMC-Sierra, Inc. 218,655
510 SDL, Inc. 132,218
7,810 Texas Instruments, Inc. 383,178
1,900 Waters Corp. 137,869
2,720 Xilinx, Inc. 197,030
--------------
2,739,767
--------------
Entertainment - 1.8%
3,240 Disney (Walt) Co. 116,033
4,580 Time Warner, Inc. 347,668
4,363 Viacom, Inc., Class B 248,146(b)
--------------
711,847
--------------
Equipment -
Semiconductors - 1.3%
5,150 Applied Materials, Inc. 273,594
1,110 Broadcom Corp., Class A 246,836
--------------
520,430
--------------
Financial - Diversified - 4.6%
5,410 American Express Co. 324,600
13,396 Citigroup, Inc. 704,965
2,450 Federal Home Loan
Mortgage Corp. 147,000
2,770 Federal National
Mortgage Association 213,290
5,500 Morgan Stanley Dean
Witter & Co. 441,719
--------------
1,831,574
--------------
Food & Beverage - 1.0%
3,630 Coca-Cola Co. 219,161
3,690 PepsiCo, Inc. 178,734
--------------
397,895
--------------
Health Care -
Diversified - 2.3%
2,410 Abbott Laboratories 127,278
2,950 American Home Products Corp. 187,325
4,360 Bristol-Myers Squibb Co. 265,688
3,430 Johnson & Johnson 315,989
--------------
896,280
--------------
Health Care - Drugs &
Pharmaceuticals - 6.6%
2,240 Biovail Corp. 94,220(b)
1,920 Eli Lilly & Co. 171,600
4,080 Genentech, Inc. 336,600
3,590 Merck & Co., Inc. 322,876
27,120 Pfizer, Inc. 1,171,245
5,090 Pharmacia Corp. 279,950
4,490 Schering-Plough Corp. 232,077
--------------
2,608,568
--------------
Health Care - Medical
Products & Supplies - 2.2%
940 Baxter International, Inc. 77,256
3,190 Guidant Corp. 168,871(b)
7,340 Medtronic, Inc. 398,654
1,880 PE Corp./PE Biosystems Group 219,960
--------------
864,741
--------------
Health Care
Management - 0.3%
920 UnitedHealth Group, Inc. 100,625
--------------
Housewares &
Household Products - 1.2%
3,310 Colgate Palmolive Co. 194,496
3,760 Procter & Gamble Co. 268,605
--------------
463,101
--------------
Insurance - 2.1%
5,845 American International
Group, Inc. 572,810
500 CIGNA Corp. 60,975
1,480 Marsh & McLennan
Companies, Inc. 193,510
--------------
827,295
--------------
Investment Banking &
Brokerage - 1.9%
2,010 Goldman Sachs Group, Inc. 200,623
1,480 Lehman Brothers Holdings, Inc. 95,460
2,950 Merrill Lynch & Co., Inc. 206,500
7,570 Schwab, Charles Corp. 265,896
--------------
768,479
--------------
Leisure Products - 0.5%
3,900 Harley Davidson, Inc. 187,931
--------------
Manufacturing - 2.6%
1,420 Danaher Corp. 89,638
2,290 Honeywell International, Inc. 123,231
1,450 Illinois Tool Works, Inc. 80,566
10,240 Tyco International, Ltd. 580,480
2,190 United Technologies Corp. 152,889
--------------
1,026,804
--------------
Oil & Gas - 2.6%
1,770 Anadarko Petroleum Corp. 113,369
2,150 Baker Hughes, Inc. 73,906
4,930 Conoco, Inc., Class A 127,256
2,000 Exxon Mobil Corp. 178,375
4,740 Halliburton Co. 175,676
3,100 Schlumberger, Ltd. 235,988
2,750 Transocean Sedco Forex, Inc. 145,750
--------------
1,050,320
--------------
Personal Care - 0.5%
1,620 Estee Lauder Companies, Inc.,
Class A 75,229
3,040 Gillette Co. 106,020
--------------
181,249
--------------
Restaurants - 0.6%
3,500 McDonald's Corp. 108,500
2,670 Starbucks Corp. 119,316(b)
--------------
227,816
--------------
Retail - 4.8%
790 Best Buy Co., Inc. 39,648(b)
2,200 Circuit City Stores, Inc. 29,150
4,340 Costco Wholesale Corp. 158,953
5,610 Gap, Inc. 144,808
11,905 Home Depot, Inc. 511,915
3,800 Intimate Brands, Inc. 90,725
4,540 Kohl's Corp. 246,011
2,160 Lowe's Companies 98,685
4,680 Target Corp. 129,285
10,400 Wal-Mart Stores, Inc. 471,900
--------------
1,921,080
--------------
Retail - Food & Drug - 1.9%
3,540 CVS Corp. 187,399
4,080 Kroger Co. 92,055(b)
4,780 Safeway, Inc. 261,406(b)
4,590 Walgreen Co. 209,419
--------------
750,279
--------------
Services - Cyclical - 1.0%
3,500 IMS Health, Inc. 82,688
1,000 Macrovision Corp. 72,875
2,450 Omnicom Group, Inc. 226,013
--------------
381,576
--------------
Services - Technology - 0.5%
3,060 Automatic Data Processing, Inc. 199,856
--------------
Telephone &
Telecommunications - 2.8%
1,830 AT&T Corp. 42,433
1,470 Level 3 Communications, Inc. 70,101(b)
4,990 NEXTEL Communications, Inc.,
Class A 191,803(b)
4,260 Qwest Communications
International, Inc. 207,143(b)
1,730 SBC Communications, Inc. 99,799
3,520 Sprint Corp. (PCS Group) 134,200
1,980 Verizon Communications 114,469
790 VoiceStream Wireless Corp. 103,885(b)
6,600 WorldCom, Inc. 156,750(b)
--------------
1,120,583
--------------
Utilities - 2.4%
4,080 AES Corp. 230,520
2,100 Constellation Energy Group 87,544
3,300 Dynegy, Inc., Class A 152,831
4,720 Enron Corp. 387,335
1,950 Williams Companies, Inc. 81,534
--------------
939,764
--------------
Total Common Stock
(cost $37,933,614) 37,747,421
--------------
Principal
Amount
------------
SHORT-TERM
SECURITIES - 4.8%(a)
U.S. Government Agency
$1,900,000 Federal Agricultural Mortgage
Corp., Discount Note,
6.45% Due 11/1/2000
(at amortized cost) 1,900,000
--------------
Total Investments
(cost $39,833,614) $ 39,647,421(c)
==============
Notes to Portfolio of Investments:
----------------------------------
(a) The categories of investments are shown as a percentage of
total investments of the Lutheran Brotherhood Growth Fund.
(b) Currently non-income producing.
(c) At October 31, 2000, the aggregate cost of securities for
federal income tax purposes was $39,964,881 and the net
unrealized depreciation of investments based on that cost was
$317,460 which is comprised of $3,714,277 aggregate gross unrealized
appreciation and $4,031,737 aggregate gross unrealized depreciation.
(d) Miscellaneous Footnotes:
(ADR) -- American Depository Receipts
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD FUND
Portfolio of Investments
October 31, 2000
Shares Value
------------- --------------
<S> <C> <C>
COMMON STOCKS - 95.5%(a)
Airlines - 0.2%
135,862 Southwest Airlines Co. $ 3,872,056
--------------
Aluminum - 0.2%
108,000 Alcoa, Inc. 3,098,250
--------------
Banks - 3.7%
102,791 Bank of America Corp. 4,940,392
180,000 Bank of New York Co., Inc. 10,361,250
201,000 Chase Manhattan Corp. 9,145,500
100,000 Fifth Third BanCorp 5,137,500
58,000 State Street Corp. 7,234,920
244,500 U.S. Bancorporation 5,913,844
341,000 Wells Fargo & Co. 15,792,563
--------------
58,525,969
--------------
Biotechnology - 1.0%
275,000 Amgen, Inc. 15,932,813
--------------
Broadcasting - 1.3%
92,900 Clear Channel
Communications, Inc. 5,579,806(b)
192,000 Comcast Corp., Class A 7,824,000(b)
28,700 Cox Communications, Inc.,
Class A 1,264,594(b)
217,500 General Motors Corp., Class H 7,047,000
--------------
21,715,400
--------------
Chemicals - 1.1%
171,300 Air Products & Chemicals, Inc. 6,391,631
119,635 du Pont (E.I.) de
Nemours and Co. 5,428,438
163,100 Praxair, Inc. 6,075,475
--------------
17,895,544
--------------
Communications
Equipment - 5.0%
238,600 ADC Telecommunications, Inc. 5,100,075
15,000 CIENA Corp. 1,576,875
247,600 Corning, Inc. 18,941,400
90,000 JDS Uniphase Corp. 7,329,375
179,600 Lucent Technologies, Inc. 4,186,925
289,900 Motorola, Inc. 7,229,381
236,000 Nokia Corp., ADR 10,089,000
302,000 Nortel Networks Corp. 13,741,000
100,000 QUALCOMM, Inc. 6,510,938
30,500 Sycamore Networks, Inc. 1,929,125(b)
70,000 Tellabs, Inc. 3,495,625(b)
--------------
80,129,719
--------------
Computers - Hardware - 4.4%
250,000 Dell Computer Corp. 7,375,000(b)
296,000 Hewlett Packard Co. 13,745,500
187,500 International Business
Machines Corp. 18,468,750
8,500 Juniper Networks, Inc. 1,657,500
262,000 Sun Microsystems, Inc. 29,049,250
--------------
70,296,000
--------------
Computers -
Networking - 3.4%
27,500 Avaya Inc. 369,531(b)
958,100 Cisco Systems, Inc. 51,617,638
19,000 Network Appliance, Inc. 2,261,000
--------------
54,248,169
--------------
Computers -
Peripherals - 2.4%
427,800 EMC Corp. 38,100,938
--------------
Computers - Software &
Services - 6.2%
191,000 America Online, Inc. 9,632,130
15,000 Ariba, Inc. 1,895,625
34,000 BEA Systems, Inc. 2,439,500
35,000 Commerce One, Inc. 2,246,563
48,000 Exodus Communications, Inc. 1,611,000
578,000 Microsoft Corp. 39,809,750(b)
640,000 Oracle Corp. 21,120,000
54,300 Siebel Systems, Inc. 5,698,106
24,600 VeriSign, Inc. 3,247,200
65,750 Veritas Software Corp. 9,271,777
40,000 Yahoo!, Inc. 2,345,000
--------------
99,316,651
--------------
Consumer Finance - 0.5%
202,000 MBNA Corp. 7,587,625
--------------
Electrical Equipment - 5.2%
53,000 Emerson Electric Co. 3,892,188
140,000 Flextronics International, Ltd. 5,320,000
1,174,500 General Electric Co. 64,377,281
210,000 Solectron Corp. 9,240,000
--------------
82,829,469
--------------
Electronics - 5.1%
82,834 Agilent Technologies, Inc. 3,836,250(b)
98,000 Altera Corp. 4,011,875
64,000 Analog Devices, Inc. 4,160,000
30,100 C-MAC Industries, Inc. 1,670,550(b)
955,200 Intel Corp. 42,984,000
50,000 Linear Technology Corp. 3,228,125
43,000 Maxim Integrated Products, Inc. 2,851,438
6,100 SDL, Inc. 1,581,425
205,800 Texas Instruments, Inc. 10,097,063
61,200 Waters Corp. 4,440,825
50,000 Xilinx, Inc. 3,621,875
--------------
82,483,426
--------------
Entertainment - 1.8%
100,000 Disney (Walt) Co. 3,581,250
168,000 Time Warner, Inc. 12,752,880
223,835 Viacom, Inc., Class B 12,730,616(b)
--------------
29,064,746
--------------
Equipment -
Semiconductors - 0.7%
162,000 Applied Materials, Inc. 8,606,250
13,000 Broadcom Corp., Class A 2,890,875
--------------
11,497,125
--------------
Financial - Diversified - 6.2%
250,400 American Express Co. 15,024,000
724,000 Citigroup, Inc. 38,100,500
148,000 Federal Home Loan
Mortgage Corp. 8,880,000
205,200 Federal National
Mortgage Association 15,800,400
195,300 Morgan Stanley Dean
Witter & Co. 15,685,031
35,000 Morgan (J.P.) and Co., Inc. 5,792,500
--------------
99,282,431
--------------
Food & Beverage - 2.0%
234,340 Coca-Cola Co. 14,148,278
38,000 Hershey Foods Corp. 2,063,875
343,700 PepsiCo, Inc. 16,647,969
--------------
32,860,122
--------------
Health Care -
Diversified - 3.5%
212,000 Abbott Laboratories 11,196,250
147,600 American Home Products Corp. 9,372,600
274,100 Bristol-Myers Squibb Co. 16,702,969
196,400 Johnson & Johnson 18,093,350
--------------
55,365,169
--------------
Health Care - Drugs &
Pharmaceuticals - 6.9%
140,000 Eli Lilly & Co. 12,512,500
110,000 Genentech, Inc. 9,075,000
294,000 Merck & Co., Inc. 26,441,625
922,175 Pfizer, Inc. 39,826,433
186,300 Pharmacia Corp. 10,246,500
237,700 Schering-Plough Corp. 12,286,119
--------------
110,388,177
--------------
Health Care - Medical
Products & Supplies - 2.1%
76,000 Baxter International, Inc. 6,246,250
117,000 Guidant Corp. 6,193,688(b)
300,000 Medtronic, Inc. 16,293,750
43,700 PE Corp./PE Biosystems Group 5,112,900
--------------
33,846,588
--------------
Health Care
Management - 0.5%
67,000 UnitedHealth Group, Inc. 7,328,125
--------------
Housewares & Household
Products - 1.3%
150,000 Colgate Palmolive Co. 8,814,000
174,700 Procter & Gamble Co. 12,480,131
--------------
21,294,131
--------------
Insurance - 3.4%
396,750 American International
Group, Inc. 38,881,500
49,300 CIGNA Corp. 6,012,135
73,000 Marsh & McLennan
Companies, Inc. 9,544,750
--------------
54,438,385
--------------
Investment Banking &
Brokerage - 1.4%
57,000 Goldman Sachs Group, Inc. 5,689,313
124,600 Merrill Lynch & Co., Inc. 8,722,000
217,500 Schwab, Charles Corp. 7,639,688
--------------
22,051,001
--------------
Leisure Products - 0.6%
159,800 Harley Davidson, Inc. 7,700,363
137,000 Mattel, Inc. 1,772,438
--------------
9,472,801
--------------
Lodging & Hotels - 0.2%
120,700 Carnival Corp., Inc. 2,994,869
--------------
Machinery - Diversified - 0.3%
100,000 Dover Corp. 4,243,750
--------------
Manufacturing - 3.3%
180,000 Honeywell International, Inc. 9,686,250
98,300 Illinois Tool Works, Inc. 5,461,794
495,000 Tyco International, Ltd. 28,060,313
135,000 United Technologies Corp. 9,424,688
--------------
52,633,045
--------------
Oil & Gas - 6.6%
68,000 Anadarko Petroleum Corp. 4,355,400
201,000 Baker Hughes, Inc. 6,909,375
125,900 Chevron Corp. 10,339,538
340,826 Conoco, Inc., Class B 9,266,207
400,023 Exxon Mobil Corp. 35,677,051
196,800 Halliburton Co. 7,293,900
253,100 Royal Dutch Petroleum Co. 15,027,813
147,000 Schlumberger, Ltd. 11,190,375
119,777 Transocean Sedco Forex, Inc. 6,348,181
--------------
106,407,840
--------------
Personal Care - 0.5%
220,200 Gillette Co. 7,679,475
--------------
Restaurants - 0.7%
234,600 McDonald's Corp. 7,272,600
78,000 Starbucks Corp. 3,485,625(b)
--------------
10,758,225
--------------
Retail - 4.5%
38,200 Best Buy Co., Inc. 1,917,163(b)
50,000 Circuit City Stores, Inc. 662,500
181,000 Costco Wholesale Corp. 6,629,125
258,000 Gap, Inc. 6,659,625
383,000 Home Depot, Inc. 16,469,000
80,000 Kohl's Corp. 4,335,000
150,000 Lowe's Companies 6,853,125
235,400 Target Corp. 6,502,925
482,000 Wal-Mart Stores, Inc. 21,870,750
--------------
71,899,213
--------------
Retail - Food & Drug - 2.4%
145,000 CVS Corp. 7,675,938
351,300 Kroger Co. 7,926,206(b)
175,000 Safeway, Inc. 9,570,313(b)
277,000 Walgreen Co. 12,638,125
--------------
37,810,582
--------------
Services - Cyclical - 0.2%
31,500 Omnicom Group, Inc. 2,905,875
--------------
Services - Technology - 0.6%
160,000 Automatic Data Processing, Inc. 10,450,000
--------------
Telephone &
Telecommunications - 3.4%
194,435 AT&T Corp. 4,508,462
90,000 NEXTEL Communications,
Inc., Class A 3,459,375(b)
158,000 Qwest Communications
International, Inc. 7,682,750(b)
334,392 SBC Communications, Inc. 19,290,239
66,800 Sprint Corp. (PCS Group) 2,546,750
135,000 Verizon Communications 7,804,688
380,000 WorldCom, Inc. 9,025,000(b)
--------------
54,317,264
--------------
Utilities - 2.7%
159,700 AES Corp. 9,023,050
88,000 Constellation Energy Group 3,668,500
121,500 Duke Energy Corp. 10,502,156
154,800 Enron Corp. 12,703,275
255,000 Southern Co. 7,490,625
--------------
43,387,606
--------------
Total Common Stock
(cost $1,209,600,445) 1,528,408,574
--------------
Principal
Amount
------------
SHORT-TERM
SECURITIES - 4.5% (a)
Commercial Paper
$10,000,000 Procter & Gamble Co.,
6.47% Due 11/27/2000 9,953,272
56,400,000 Sheffield Receivables Corp.,
6.63% Due 11/1/2000 56,400,000
6,472,000 Toyota Motor Credit Co.,
6.5% Due 11/2/2000 6,470,831
--------------
Total Short-Term Securities
(at amortized cost) 72,824,103
--------------
Total Investments
(cost $1,282,424,548) $1,601,232,677(c)
==============
Notes to Portfolio of Investments:
----------------------------------
(a) The categories of investments are shown as a percentage
of total investments of the Lutheran Brotherhood Fund.
(b) Currently non-income producing.
(c) At October 31, 2000, the aggregate cost of securities for
federal income tax purposes was $1,284,967,160 and the net
unrealized appreciation of investments based on that cost
was $316,265,517 which is comprised of $371,109,256 aggregate
gross unrealized appreciation and $54,843,739 aggregate
gross unrealized depreciation.
(d) Miscellaneous Footnotes:
(ADR) - American Depository Receipts
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD VALUE FUND
Portfolio of Investments
October 31, 2000
Shares Value
------------- ------------
<S> <C> <C>
COMMON STOCKS - 92.3%(a)
Aerospace & Defense - 1.2%
2,630 Boeing Co. $ 178,330
960 General Dynamics Corp. 68,700
960 Lockheed Martin Corp. 34,416
--------------
281,446
--------------
Airlines - 0.6%
4,820 Southwest Airlines Co. 137,370
--------------
Aluminum - 0.5%
3,940 Alcoa, Inc. 113,029
--------------
Automotive - 0.9%
1,800 Delphi Automotive
Systems Corp. 28,238
3,200 Ford Motor Co. 83,600
1,466 General Motors Corp. 91,075
316 Visteon Corp. 5,589
--------------
208,502
--------------
Banks - 5.7%
3,820 Bank of America Corp. 183,599
4,030 Bank of New York Co., Inc. 231,977
1,600 Bank One Corp. 58,400
3,835 Chase Manhattan Corp. 174,493
500 Comerica, Inc. 30,156
1,030 First Union Corp. 31,222
3,390 FleetBoston Financial Corp. 128,820
440 Golden West Financial Corp. 24,668
1,630 Mellon Financial Corp. 78,648
680 PNC Financial Corp. 45,475
1,100 U.S. Bancorporation 26,606
1,830 Washington Mutual, Inc. 80,520
5,010 Wells Fargo & Co. 232,026
--------------
1,326,610
--------------
Biotechnology - 0.2%
890 Amgen, Inc. 51,564
--------------
Broadcasting - 2.2%
1,850 AT&T Corp./Liberty Media
Group, Class A 33,300
1,325 Clear Channel
Communications, Inc. 79,583(b)
3,640 Comcast Corp., Class A 148,330
1,731 General Motors Corp., Class H 56,084
3,130 Infinity Broadcasting Corp.,
Class A 104,073(b)
4,730 USA Networks, Inc. 95,783
--------------
517,153
--------------
Building Materials - 0.1%
1,250 Masco Corp. 23,359
--------------
Chemicals - 0.9%
2,830 Dow Chemical Co. 86,669
2,200 E.I. du Pont de Nemours and Co. 99,825
460 Rohm & Haas Co. 13,829
--------------
200,323
--------------
Communications
Equipment - 1.7%
50 Avici Systems, Inc. 2,169(b)
660 Corning, Inc. 50,490
2,350 Lucent Technologies, Inc. 54,784
5,960 Motorola, Inc. 148,628
740 Nokia Corp., ADR 31,635
1,830 Nortel Networks Corp. 83,265
590 Tellabs, Inc. 29,463(b)
--------------
400,434
--------------
Computers - Hardware - 3.6%
3,650 Compaq Computer Corp. 110,997
1,810 Dell Computer Corp. 53,395(b)
4,360 Hewlett Packard Co. 202,468
3,160 International Business
Machines Corp. 311,260
430 Palm, Inc. 23,032(b)
1,300 Sun Microsystems, Inc. 144,138
--------------
845,290
--------------
Computers -
Networking - 1.2%
147 Avaya Inc. 1,975(b)
5,120 Cisco Systems, Inc. 275,840
--------------
277,815
--------------
Computers -
Peripherals - 1.0%
2,550 EMC Corp. 227,109
--------------
Computers - Software &
Services - 2.9%
1,530 America Online, Inc. 77,158
50 Blue Martini Software, Inc. 1,881(b)
1,400 Commerce One, Inc. 89,863
1,470 Computer Associates
International, Inc. 46,856
150 Docent, Inc. 3,863(b)
50 Eprise Corp. 150(b)
4,220 Microsoft Corp. 290,653(b)
5,160 Oracle Corp. 170,280
100 Saba Software, Inc. 2,344(b)
50 SINA.com 348(b)
--------------
683,396
--------------
Consumer Finance - 1.1%
450 Capital One Financial Corp. 28,406
1,780 Household International, Inc. 89,556
2,700 MBNA Corp. 101,419
410 Providian Financial Corp. 42,640
--------------
262,021
--------------
Distributors - Food &
Health - 0.7%
1,000 Cardinal Health, Inc. 94,750
1,100 Sysco Corp. 57,406
--------------
152,156
--------------
Electrical Equipment - 3.7%
1,450 Emerson Electric Co. 106,484
2,900 Flextronics International, Ltd. 110,200
9,620 General Electric Co. 527,296
1,755 Koninklijke Philips Electronic 70,090
1,150 Solectron Corp. 50,600
--------------
864,670
--------------
Electronics - 2.9%
598 Agilent Technologies, Inc. 27,695(b)
420 Analog Devices, Inc. 27,300
50 Bruker Daltonics, Inc. 1,713(b)
600 C-MAC Industries, Inc. 33,300(b)
7,580 Intel Corp. 341,100
50 Marvell Technology Group, Ltd. 2,788(b)
1,500 Maxim Integrated Products, Inc. 99,469
550 Micron Technology, Inc. 19,113
50 New Focus, Inc. 3,175(b)
50 Silicon Laboratories, Inc. 1,403(b)
2,360 Texas Instruments, Inc. 115,788
--------------
672,844
--------------
Entertainment - 1.4%
4,480 Disney (Walt) Co. 160,440
920 Time Warner, Inc. 69,837
1,644 Viacom, Inc., Class B 93,503(b)
--------------
323,780
--------------
Equipment -
Semiconductors - 0.4%
880 Applied Materials, Inc. 46,750
50 Axcelis Technologies, Inc. 538(b)
990 KLA-Tencor Corp. 33,474
--------------
80,762
--------------
Financial - Diversified - 7.6%
3,040 American Express Co. 182,400
2,500 Associates First Capital Corp.,
Class A 92,813
10,833 Citigroup, Inc. 570,087
3,380 Federal Home Loan
Mortgage Corp. 202,800
4,710 Federal National Mortgage
Association 362,670
2,320 Morgan Stanley Dean
Witter & Co. 186,325
740 Morgan (J.P.) and Co., Inc. 122,470
520 XL Capital, Ltd., Class A 39,975
--------------
1,759,540
--------------
Food & Beverage - 2.1%
1,060 Coca-Cola Co. 63,998
860 General Mills, Inc. 35,905
570 Heinz (H.J.) Co. 23,904
3,540 PepsiCo, Inc. 171,469
620 Quaker Oats Co. 50,569
2,080 Sara Lee Corp. 44,850
2,700 Tootsie Roll Industries, Inc. 103,613
--------------
494,308
--------------
Freight & Shipping - 0.3%
2,100 Burlington Northern
Santa Fe, Inc. 55,781
--------------
Health Care -
Diversified - 3.7%
3,660 Abbott Laboratories 193,294
3,790 American Home Products Corp. 240,665
3,980 Bristol-Myers Squibb Co. 242,531
2,070 Johnson & Johnson 190,699
--------------
867,189
--------------
Health Care - Drugs &
Pharmaceuticals - 4.6%
1,100 Biovail Corp. 46,269(b)
1,040 Eli Lilly & Co. 92,950
1,000 Genentech, Inc. 82,500
3,070 Merck & Co., Inc. 276,108
4,982 Pfizer, Inc. 215,160
3,141 Pharmacia Corp. 172,755
2,850 Schering-Plough Corp. 147,309
590 Watson Pharmaceuticals, Inc. 36,912(b)
--------------
1,069,963
--------------
Health Care - Medical
Products & Supplies - 0.9%
1,160 Baxter International, Inc. 95,338
780 Becton, Dickinson & Co. 26,130
630 Guidant Corp. 33,351(b)
850 Medtronic, Inc. 46,166
--------------
200,985
--------------
Health Care
Management - 0.9%
1,650 HCA - (The) Healthcare Corp. 65,897
2,250 Tenet Healthcare Corp. 88,453
530 UnitedHealth Group, Inc. 57,969
--------------
212,319
--------------
Health Care Services (c)
50 Rosetta Inpharmatics, Inc. 1,109(b)
--------------
Homebuilding - 0.4%
2,750 Centex Corp. 101,750
--------------
Housewares &
Household Products - 1.7%
2,320 Colgate Palmolive Co. 136,323
160 Energizer Holdings, Inc. 3,160(b)
2,130 Kimberly-Clark Corp. 140,580
1,480 Procter & Gamble Co. 105,728
--------------
385,791
--------------
Insurance - 5.9%
590 Ace, Ltd. 23,158
720 AFLAC, Inc. 52,605
2,010 Allstate Corp. 80,903
1,210 American General Corp. 97,405
5,140 American International
Group, Inc. 503,720
540 Aon Corp. 22,376
470 Chubb Corp. 39,686
760 CIGNA Corp. 92,682
480 Lincoln National Corp. 23,220
520 Marsh & McLennan
Companies, Inc. 67,990
5,830 MetLife Capital Trust I 161,054(b)
540 St. Paul Companies, Inc. 27,675
2,460 The Hartford Financial
Services Group, Inc. 183,116
--------------
1,375,590
--------------
Investment Banking &
Brokerage - 0.8%
860 AXA Financial, Inc. 46,494
300 Lehman Brothers Holdings, Inc. 19,350
1,500 Merrill Lynch & Co., Inc. 105,000
360 Schwab, Charles Corp. 12,645
--------------
183,489
--------------
Investment
Management - 0.2%
260 Standard & Poor's Depositary
Receipts Trust 37,168
--------------
Leisure Products - 0.4%
2,110 Harley Davidson, Inc. 101,676
--------------
Machinery - Diversified - 1.0%
870 Caterpillar, Inc. 30,504
1,310 Deere & Co. 48,224
2,540 Dover Corp. 107,791
1,250 Ingersoll-Rand Co. 47,188
--------------
233,707
--------------
Manufacturing - 3.7%
2,170 Avery Dennison Corp. 109,585
2,568 Honeywell International, Inc. 138,191
800 Illinois Tool Works, Inc. 44,450
1,270 Minnesota Mining &
Manufacturing Co. 122,714
5,050 Tyco International, Ltd. 286,272
2,180 United Technologies Corp. 152,191
--------------
853,403
--------------
Oil & Gas - 6.6%
360 Anadarko Petroleum Corp. 23,058
2,098 BP Amoco plc, ADR 106,867
1,400 Chevron Corp. 114,975
2,910 Conoco, Inc., Class B 79,116
7,406 ExxonMobil Corp. 660,523
2,020 Halliburton Co. 74,866
2,970 Royal Dutch Petroleum Co. 176,344
1,360 Schlumberger, Ltd. 103,530
2,020 Texaco, Inc. 119,306
461 Transocean Sedco Forex, Inc. 24,433
840 Unocal Corp. 28,665
1,130 USX-Marathon Group 30,722
--------------
1,542,405
--------------
Paper & Forest
Products - 0.5%
2,300 International Paper Co. 84,238
690 Weyerhaeuser Co. 32,387
--------------
116,625
--------------
Personal Care - 0.7%
620 Avon Products, Inc. 30,070
2,200 Estee Lauder Companies, Inc.,
Class A 102,163
720 Gillette Co. 25,110
--------------
157,343
--------------
Photography &
Imaging - 0.1%
650 Eastman Kodak Co. 29,169
--------------
Publishing - 0.5%
880 Gannett Co., Inc. 51,040
650 McGraw-Hill, Inc. 41,722
810 Tribune Co. 30,021
--------------
122,783
--------------
Restaurants - 0.5%
3,140 McDonald's Corp. 97,340
650 Tricon Global Restaurants, Inc. 19,500 (b)
--------------
116,840
--------------
Retail - 3.0%
180 Circuit City Stores, Inc. 2,385
1,920 Costco Wholesale Corp. 70,320
1,680 Federated Department Stores 54,705(b)
1,740 Home Depot, Inc. 74,820
850 Lowe's Companies 38,834
1,470 May Department Stores Co. 38,588
680 Sears, Roebuck & Co. 20,216
6,350 Target Corp. 175,419
3,080 Wal-Mart Stores, Inc. 139,755
2,630 Zale Corp. 89,091(b)
--------------
704,133
--------------
Retail - Food & Drug - 0.9%
1,070 CVS Corp. 56,643
2,080 Kroger Co. 46,930(b)
1,290 Safeway, Inc. 70,547(b)
680 Walgreen Co. 31,025
--------------
205,145
--------------
Services - Cyclical - 0.1%
700 Interpublic Group of
Companies, Inc. 30,056
50 Universal Access, Inc. 731(b)
--------------
30,787
--------------
Services - Technology - 1.2%
1,030 Automatic Data Processing, Inc. 67,272
640 Computer Sciences Corp. 40,320(b)
1,720 Electronic Data Systems Corp. 80,733
1,910 First Data Corp. 95,739
--------------
284,064
--------------
Telephone &
Telecommunications - 5.8%
50 AirGate PCS, Inc. 1,944(b)
830 ALLTEL Corp. 53,483
5,359 AT&T Corp. 124,262
2,730 BellSouth Corp. 131,893
1,481 Qwest Communications
International, Inc. 72,014(b)
6,180 SBC Communications, Inc. 356,509
2,070 Sprint Corp. (FON Group) 52,785
6,754 Verizon Communications 390,466
1,080 Vodafone Group plc, ADR 45,968
4,750 WorldCom, Inc. 112,813(b)
--------------
1,342,137
--------------
Utilities - 5.3%
630 AES Corp. 35,595
2,560 Coastal Corp. 193,120
2,400 Constellation Energy Group 100,050
640 Dominion Resources, Inc. 38,120
1,850 Duke Energy Corp. 159,909
2,304 Dynegy, Inc., Class A 106,704
580 El Paso Energy Corp. 36,359
2,460 Enron Corp. 201,874
720 Entergy Corp. 27,585
2,528 Exelon Corp. 151,996
670 FPL Group, Inc. 44,220
520 Reliant Energy, Inc. 21,483
590 Southern Co. 17,331
200 Southern Energy, Inc. 5,450(b)
690 TXU Corp. 25,573
1,270 Williams Companies, Inc. 53,102
--------------
1,218,471
--------------
Total Common Stock
(cost $20,170,388) 21,453,303
--------------
Principal
Amount
------------
SHORT-TERM
SECURITIES - 7.7%(a)
U.S. Government Agency
$1,800,000 Federal Agricultural Mortgage
Corp., Discount Note,
6.45% Due 11/1/2000
(at amortized cost) 1,800,000
--------------
Total Investments
(cost $21,970,388) $ 23,253,303(d)
==============
Notes to Portfolio of Investments:
----------------------------------
(a) The categories of investments are shown as a percentage
of total investments of the Lutheran Brotherhood Value Fund.
(b) Currently non-income producing.
(c) The market value of the denoted categories of investments
represents less than 0.1% of the total investments of the
Lutheran Brotherhood Value Fund.
(d) At October 31, 2000, the aggregate cost of securities for
federal income tax purposes was $21,997,422 and the net
unrealized appreciation of investments based on that cost
was $1,255,881 which is comprised of $2,599,391 aggregate
gross unrealized appreciation and $1,343,510 aggregate gross
unrealized depreciation.
(e) Miscellaneous Footnotes:
(ADR) - American Depository Receipts
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD HIGH YIELD FUND
Portfolio of Investments
October 31, 2000
Principal Maturity
Amount Rate Date Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CORPORATE BONDS - 80.9%(a)
Aerospace & Defense - 0.1%
2,000,000 Pentacon, Inc., Sr. Subordinated Notes, Series B 12.25% 4/1/2009 $ 1,089,993
-------------
Automotive - 0.9%
4,000,000 Hayes Lemmerz International, Inc., Sr. Subordinated Notes,
Series B 8.25% 12/15/2008 3,000,000
4,000,000 JL French Automotive Casting, Sr. Subordinated Notes, Series B 11.5% 6/1/2009 2,380,000
1,550,000 Venture Holdings Trust, Sr. Notes 9.5% 7/1/2005 961,000
1,650,000 Venture Holdings Trust, Sr. Subordinated Notes 12.0% 6/1/2009 804,375
-------------
7,145,375
-------------
Banks - 1.3%
2,450,000 Chevy Chase Savings Bank, Subordinated Debentures 9.25% 12/1/2005 2,321,375
5,000,000 GS Escrow Corp., Sr. Notes 7.125% 8/1/2005 4,652,990
3,000,000 Soverign Bancorp, Inc., Sr. Notes 10.5% 11/15/2006 3,060,000
-------------
10,034,365
-------------
Broadcasting & Media - 14.2%
4,500,000 Adelphia Communications Corp., Sr. Notes 10.875% 10/1/2010 4,230,000
2,550,000 Alliance Atlantis Communications, Inc., Sr. Subordinated Notes 13.0% 12/15/2009 2,645,625
1,788,100 AMFM Operating, Inc., Payment-In-Kind Debentures 12.625% 10/31/2006 2,011,613
2,400,000 Australis Holdings Pty., Ltd., Sr. Discount Notes Zero Coupon 11/1/2002 240(d)
12,155,970 Australis Media, Ltd., Payment-In-Kind Sr. Discount Notes Zero Coupon 5/15/2003 182,340(d)
8,500,000 Avalon Cable Holdings, Sr. Discount Notes Zero Coupon 12/1/2008 5,610,000
2,650,000 Cable Satisfaction International, Inc., Sr. Notes 12.75% 3/1/2010 2,133,250
3,750,000 Callahan Nordrhein-Westfalen, Sr. Discount Notes Zero Coupon 7/15/2010 1,631,250
4,850,000 Callahan Nordrhein-Westfalen, Sr. Notes 14.0% 7/15/2010 4,656,000
1,500,000 Chancellor Media Corp., Sr. Notes 8.0% 11/1/2008 1,507,500
1,400,000 Chancellor Media Corp., Sr. Subordinated Notes, Series B 8.75% 6/15/2007 1,431,500
2,400,000 Chancellor Media Corp., Sr. Subordinated Notes, Series B 8.125% 12/15/2007 2,424,000
4,800,000 Charter Communications, Inc., Sr. Notes 10.0% 4/1/2009 4,728,000
2,075,000 Classic Cable Inc., Sr. Subordinated Notes 10.5% 3/1/2010 1,722,250
1,600,000 Classic Cable, Inc., Sr. Subordinated Notes, Series B 9.375% 8/1/2009 1,224,000
2,000,000 CSC Holdings, Inc., Sr. Notes 7.875% 12/15/2007 1,939,280
4,000,000 Diamond Cable Communications plc, Sr. Discount Notes (USD) Zero Coupon 12/15/2005 3,740,000
1,600,000 Diamond Cable Communications plc, Sr. Discount Notes (USD) Zero Coupon 2/15/2007 1,160,000
8,000,000 DIVA Systems Corp., Sr. Discount Notes, Series B Zero Coupon 3/1/2008 3,580,000
3,000,000 Echostar Broadband Corp., Sr. Notes 10.375% 10/1/2007 3,022,500
3,750,000 EchoStar DBS Corp., Sr. Notes 9.375% 2/1/2009 3,703,125
2,000,000 Insight Midwest, LP, Sr. Notes 9.75% 10/1/2009 1,955,000
5,200,000 NTL Communications Corp., Sr. Notes, Series B 11.5% 10/1/2008 4,784,000
3,000,000 NTL, Inc., Convertible Subordinated Notes 5.75% 12/15/2009 1,908,750
4,000,000 Olympus Communications, LP, Sr. Notes 10.625% 11/15/2006 3,780,000
2,500,000 OnePoint Communications Corp., Sr. Notes, Series B 14.5% 6/1/2008 2,512,500
2,800,000 ONO Finance plc, Notes (USD) 13.0% 5/1/2009 2,170,000
3,500,000 Optel, Inc., Sr. Notes, Series B 11.5% 7/1/2008 2,152,500(d)
4,600,000 RCN Corp., Sr. Discount Notes Zero Coupon 10/15/2007 2,277,000
5,500,000 Renaissance Media Group, LLC, Sr. Discount Notes Zero Coupon 4/15/2008 3,877,500
2,800,000 Rogers Cablesystems, Ltd., Sr. Secured Second Priority Notes 9.625% 8/1/2002 2,884,000
735,528 Scott Cable Communications, Inc., Payment-In-Kind Jr.
Subordinated Notes 16.0% 7/18/2002 209,625
4,000,000 Sinclair Broadcast Group, Inc., Sr. Subordinated Notes 9.0% 7/15/2007 3,570,000
3,500,000 Supercanal Holding S.A., Sr. Notes (USD) 11.5% 5/15/2005 1,421,875(d)
2,800,000 Telewest Communications plc, Sr. Discount Notes (USD) Zero Coupon 4/15/2009 1,267,000
3,400,000 Telewest Communications plc, Sr. Discount Notes (USD) Zero Coupon 2/1/2010 1,487,500
3,500,000 UIH Australia/Pacific, Inc., Sr. Discount Notes, Series B Zero Coupon 5/15/2006 3,062,500
7,200,000 United International Holdings, Inc., Sr. Notes, Series B Zero Coupon 2/15/2008 4,428,000
3,100,000 United Pan-Europe Communications N.V.,
Sr. Discount Notes (USD) Zero Coupon 2/1/2010 1,162,500
5,150,000 United Pan-Europe Communications N.V.,
Sr. Discount Notes (USD) Zero Coupon 11/1/2009 2,034,250
3,000,000 XM Satellite Radio, Inc., Sr. Secured Notes 14.0% 3/15/2010 2,085,000
5,250,000 Young Broadcasting, Inc., Sr. Subordinated Notes 11.75% 11/15/2004 5,381,250
-------------
107,693,223
-------------
Building Materials - 0.7%
4,000,000 CEMEX S.A. de C.V., Notes (USD) 12.75% 7/15/2006 4,460,000
2,500,000 Formica Corp., Sr. Subordinated Notes, Series B 10.875% 3/1/2009 1,087,500
-------------
5,547,500
-------------
Chemicals - 0.4%
3,000,000 Sovereign Speciality Chemicals, Sr. Subordinated Notes 11.875% 3/15/2010 2,970,000
-------------
Consumer Products - 0.9%
2,000,000 AMM Holdings, Inc., Sr. Discount Notes Zero Coupon 7/1/2009 110,000
2,400,000 Holmes Products Corp., Sr. Subordinated Notes, Series D 9.875% 11/15/2007 1,260,000
3,000,000 Jostens, Inc., Sr. Subordinated Notes 12.75% 5/1/2010 2,910,000
2,700,000 Winsloew Furniture, Inc., Sr. Subordinated Notes, Series B 12.75% 8/15/2007 2,497,500
-------------
6,777,500
-------------
Engineering & Construction - 0.5%
4,100,000 Morrison Knudsen Corp., Bonds 11.0% 7/1/2010 3,854,000
-------------
Environmental - 1.5%
7,000,000 Allied Waste North America, Inc., Sr. Subordinated Notes, Series B 10.0% 8/1/2009 6,020,000
1,800,000 IT Group, Inc., Sr. Subordinated Notes, Series B 11.25% 4/1/2009 1,539,000
3,700,000 Norcal Waste Systems, Inc., Sr. Notes, Series B 13.5% 11/15/2005 3,903,500
-------------
11,462,500
-------------
Finance - Consumer - 1.0%
2,380,000 Altiva Financial Corp., Subordinated Notes 12.0% 6/15/2006 595,000(d)
4,000,000 Dollar Financial Group, Inc., Sr. Notes, Series A 10.875% 11/15/2006 3,900,000
2,598,000 HomeSide, Inc., Sr. Notes, Series B 11.25% 5/15/2003 2,802,593
3,650,000 United Companies Financial Corp., Subordinated Notes 8.375% 7/1/2005 54,750(d)
-------------
7,352,343
-------------
Finance - Other - 0.9%
2,800,000 FC CBO II, Ltd., Subordinated Debentures, Series 1A, Class C 11.05% 9/9/2010 2,380,000
5,000,000 Williams Scotsman, Inc., Sr. Notes 9.875% 6/1/2007 4,225,000
-------------
6,605,000
-------------
Food & Beverage - 0.6%
3,600,000 Grupo Azucarero Mexico, Sr. Notes (USD) 11.5% 1/15/2005 585,000(d)
5,500,000 Imperial Sugar Co., Sr. Subordinated Notes 9.75% 12/15/2007 962,500
3,500,000 Packaged Ice, Inc., Sr. Notes, Series B 9.75% 2/1/2005 2,922,500
-------------
4,470,000
-------------
Food & Beverage - Wholesale - 0.6%
4,600,000 Ameriserve Food Distribution, Inc., Sr. Notes 8.875% 10/15/2006 115,000(d)
3,200,000 Fleming Companies, Inc., Sr. Subordinated Notes, Series B 10.625% 7/31/2007 2,416,000
3,000,000 Nash Finch Co., Sr. Subordinated Notes, Series B 8.5% 5/1/2008 2,265,000
-------------
4,796,000
-------------
Health Care - Medical Products & Supplies - 0.7%
6,000,000 Fisher Scientific International, Inc., Sr. Subordinated Notes 9.0% 2/1/2008 5,505,000
-------------
Health Care Management - 1.9%
4,800,000 Concentra Operating Corp., Sr. Subordinated Notes 13.0% 8/15/2009 4,248,000
1,900,000 HCA Healthcare Co. (The), Notes 8.75% 9/1/2010 1,920,210
4,000,000 Health Insurance Plan of Greater New York, Bonds, Series C 11.25% 7/1/2010 3,712,000
1,900,000 Integrated Health Services, Inc., Convertible
Sr. Subordinated Debentures 5.75% 1/1/2001 0(d)
2,500,000 Integrated Health Services, Inc., Sr. Subordinated Notes, Series A 9.25% 1/15/2008 37,500(d)
2,200,000 Quorum Health Group, Inc., Sr. Subordinated Notes 8.75% 11/1/2005 2,189,000
2,000,000 Tenet Healthcare Corp., Sr. Subordinated Notes, Series B 8.125% 12/1/2008 1,937,500
-------------
14,044,210
-------------
Health Care Services - 3.1%
2,800,000 Dynacare, Inc., Sr. Notes 10.75% 1/15/2006 2,702,000
2,600,000 Hanger Orthopedic Group, Inc., Sr. Secured Notes 11.25% 6/15/2009 1,820,000
3,900,000 HEALTHSOUTH Corp., Convertible Subordinated Debentures 3.25% 4/1/2003 3,305,250
1,900,000 HEALTHSOUTH Corp., Sr. Notes 7.0% 6/15/2008 1,621,734
5,450,000 HEALTHSOUTH Corp., Sr. Subordinated Notes 10.75% 10/1/2008 5,494,810
5,000,000 Insight Health Services Corp., Sr. Subordinated Notes, Series B 9.625% 6/15/2008 4,525,000
4,000,000 MedPartners, Inc., Sr. Notes 7.375% 10/1/2006 3,620,000
-------------
23,088,794
-------------
Homebuilding - 1.0%
2,600,000 Fortress (The) Group, Inc., Sr. Notes 13.75% 5/15/2003 1,124,500
3,750,000 Hovnanian (K) Enterprises, Inc., Sr. Notes 10.5% 10/1/2007 3,534,375
3,000,000 Ryland (The) Group, Inc., Sr. Notes 9.75% 9/1/2010 2,895,000
-------------
7,553,875
-------------
Insurance - 0.1%
5,000,000 Symons International Group Capital Trust I, Bond 9.5% 8/15/2027 600,000
-------------
Leisure & Entertainment - 0.1%
2,777,000 AMF Bowling Worldwide, Inc., Sr. Subordinated
Discount Notes, Series B Zero Coupon 3/15/2006 548,458
-------------
Lodging & Hotels - 0.6%
2,700,000 CapStar Hotel Company, Convertible Subordinated Notes
(Meristar Hospitality Corp.) 4.75% 10/15/2004 2,048,625
2,500,000 Felcor Lodging, LP, Sr. Notes 9.5% 9/15/2008 2,493,750
-------------
4,542,375
-------------
Machinery & Equipment - 2.0%
4,000,000 Anthony Crane Rentals, LP, Sr. Discount Debentures, Series B Zero Coupon 8/1/2009 420,000
3,000,000 Budget Group, Inc., Sr. Notes 9.125% 4/1/2006 1,125,000
4,000,000 Flowserve Corp., Sr. Subordinated Notes 12.25% 8/15/2010 4,070,000
3,435,000 Motor Coach Industries International, Inc., Sr. Subordinated Notes 11.25% 5/1/2009 1,597,275
4,000,000 Navistar Financial Corp., Sr. Subordinated Notes, Series B 9.0% 6/1/2002 4,005,000
2,800,000 Navistar International Corp., Sr. Notes, Series B 7.0% 2/1/2003 2,695,000
1,600,000 Navistar International Corp., Sr. Subordinated Notes, Series B 8.0% 2/1/2008 1,472,000
-------------
15,384,275
-------------
Metals & Mining - 0.1%
800,000 Altos Hornos de Mexico, Bonds, Series B (USD) 11.875% 4/30/2004 298,000(d)
3,000,000 Echo Bay Mines, Bonds Zero Coupon 4/1/2027 705,000
-------------
1,003,000
-------------
Oil & Gas - 1.0%
3,750,000 Belden & Blake Corp., Sr. Subordinated Notes, Series B 9.875% 6/15/2007 3,168,750
2,000,000 Pride Petroleum Services, Inc., Sr. Notes 9.375% 5/1/2007 2,035,000
2,000,000 RBF Finance Co., Sr. Notes 11.375% 3/15/2009 2,290,000
-------------
7,493,750
-------------
Packaging & Containers - 3.2%
5,911,818 BPC Holding Corp., Sr. Secured Notes, Series B 12.5% 6/15/2006 4,226,950
1,600,000 Consolidated Container Co., LLC, Sr. Subordinated Notes 10.125% 7/15/2009 1,448,000
4,000,000 Crown Cork & Seal Finance plc, Notes 7.0% 12/15/2006 2,732,576
3,500,000 Fonda Group, Inc., Sr. Subordinated Notes, Series B 9.5% 3/1/2007 2,887,500
3,000,000 Huntsman Packaging Corp., Sr. Subordinated Notes 13.0% 6/1/2010 2,265,000
4,750,000 Owens-Illinois, Inc., Sr. Notes 7.85% 5/15/2004 3,586,250
3,200,000 Radnor Holdings Corp., Sr. Notes 10.0% 12/1/2003 2,848,000
5,500,000 SF Holdings Group, Inc., Sr. Discount Notes, Series B Zero Coupon 3/15/2008 2,860,000
1,500,000 U.S. Can Corp., Sr. Subordinated Notes 12.375% 10/1/2010 1,481,250
-------------
24,335,526
-------------
Paper & Forest Products - 0.5%
2,400,000 APP Finance (II) Mauritius, Ltd., Guaranteed Preferred
Securities, Series B (USD) 12.0% 2/15/2004 798,000
2,000,000 FSW International Finance Co. B.V., Guaranteed
Secured Notes (USD) 12.50% 11/1/2006 635,000(d)
1,200,000 Indah Kiat Finance Mauritius, Guaranteed Sr. Notes (USD) 10.0% 7/1/2007 495,000
2,400,000 Pindo Deli Finance Mauritius, Sr. Notes (USD) 10.25% 10/1/2002 1,494,000
-------------
3,422,000
-------------
Publishing - 1.5%
3,040,000 Dimac Corp., Sr. Subordinated Notes 12.5% 10/1/2008 45,600(d)
4,000,000 Mail-Well Corp., Bonds, Series B 8.75% 12/15/2008 2,980,000
5,700,000 MDC Communications Corp., Sr. Subordinated Notes 10.5% 12/1/2006 5,215,500
3,000,000 PRIMEDIA, Inc., Sr. Notes 10.25% 6/1/2004 2,985,000
-------------
11,226,100
-------------
Retail - 0.9%
2,000,000 County Seat Stores, Inc., Units 12.75% 11/1/2004 200(d)
2,250,000 F & M Distributors, Inc., Sr. Subordinated Notes 11.5% 4/15/2003 28,125(d)
2,250,000 Group1 Automotive, Inc., Sr. Subordinated Notes 10.875% 3/1/2009 1,991,250
3,000,000 J. Crew Group, Sr. Discount Debentures, Series B Zero Coupon 10/15/2008 1,755,000
4,750,000 Saks, Inc., Subordinated Notes 7.25% 12/1/2004 3,111,250
-------------
6,885,825
-------------
Retail - Food - 0.6%
5,150,000 Jitney-Jungle Stores of America, Sr. Notes 12.0% 3/1/2006 103,000(d)
4,603,050 Smith's Food & Drug Centers, Pass Through Certificates 8.64% 7/2/2012 4,711,521
-------------
4,814,521
-------------
Services - 0.7%
2,000,000 Building One Services Corp., Sr. Subordinated Notes 10.5% 5/1/2009 1,430,000
500,000 Discovery Zone, Inc., Sr. Notes 13.5% 5/1/2002 7,500(d)
2,000,000 Discovery Zone, Inc., Sr. Notes 13.5% 8/1/2002 12,500(d)
4,000,000 KinderCare Learning Centers, Inc., Sr. Subordinated Notes 9.5% 2/15/2009 3,660,000
-------------
5,110,000
-------------
Technology - Hardware - 2.1%
3,000,000 Aavid Thermal Technologies, Inc., Sr. Subordinated Notes 12.75% 2/1/2007 2,655,000
3,152,500 ASAT Finance, LLC, Sr. Notes 12.5% 11/1/2006 3,199,788
1,700,000 Dictaphone Corp., Sr. Subordinated Notes 11.75% 8/1/2005 1,598,000
1,550,000 Intersil Corp., Sr. Subordinated Notes 13.25% 8/15/2009 1,759,250
1,600,000 MCMS, Inc., Sr. Subordinated Notes, Series B 9.75% 3/1/2008 1,128,000
2,800,000 MCMS, Inc., Subordinated Notes, Series B (Variable rate) 11.455% 3/1/2008 1,974,000
3,200,000 Unisys Corp., Sr. Notes 11.75% 10/15/2004 3,368,000
-------------
15,682,038
-------------
Telecommunications - Data/Internet - 3.9%
1,500,000 Advanced Radio Telecom Corp., Sr. Notes 14.0% 2/15/2007 1,080,000
4,000,000 Convergent Communications, Inc., Sr. B Notes 13.0% 4/1/2008 1,620,000
5,500,000 Covad Communications Group, Inc., Sr. Discount Notes, Series B Zero Coupon 3/15/2008 1,567,500
3,000,000 Cybernet Internet Services International, Sr. Notes 14.0% 7/1/2009 1,245,000
3,000,000 Exodus Communications, Inc., Sr. Notes 11.25% 7/1/2008 2,805,000
2,650,000 Exodus Communications, Inc., Sr. Notes 11.625% 7/15/2010 2,464,500
8,500,000 FirstWorld Communications, Inc., Sr. Discount Notes Zero Coupon 4/15/2008 1,700,000
4,000,000 Globix Corp., Sr. Notes 12.5% 2/1/2010 2,220,000
4,200,000 NorthPoint Communications Group, Sr. Notes 12.875% 2/15/2010 3,927,000
1,500,000 PSINet, Inc., Sr. Notes 10.5% 12/1/2006 723,750
7,500,000 PSINet, Inc., Sr. Notes, Series B 10.0% 2/15/2005 3,618,750
3,200,000 Rhythms NetConnections, Inc., Sr. Discount Notes, Series B Zero Coupon 5/15/2008 912,000
4,700,000 Rhythms NetConnections, Inc., Sr. Notes 12.75% 4/15/2009 2,209,000
8,400,000 Wam!Net, Inc., Sr. Discount Notes, Series B 13.25% 3/1/2005 3,822,000
-------------
29,914,500
-------------
Telecommunications - Wireless - 12.7%
6,000,000 Alamosa PCS Holdings, Inc., Sr. Discount Notes Zero Coupon 2/15/2010 2,910,000
3,500,000 American Mobile Satellite Corp., Sr. Notes, Series B 12.25% 4/1/2008 2,520,000
1,200,000 Arch Communications Group, Inc., Sr. Notes 13.75% 4/15/2008 666,000
2,000,000 At Track Communications, Inc., Sr. Notes, Series B 13.75% 9/15/2005 770,000
3,600,000 Centennial Cellular Operating Co., Sr. Subordinated Notes 10.75% 12/15/2008 3,402,000
4,000,000 Clearnet Communications, Inc., Sr. Discount Notes Zero Coupon 12/15/2005 4,260,000
3,600,000 Crown Castle International Corp., Sr. Discount Notes Zero Coupon 5/15/2011 2,313,000
2,000,000 Crown Castle International Corp., Sr. Notes 9.5% 8/1/2011 1,920,000
3,750,000 Horizon PCS, Inc., Unit Security Zero Coupon 10/1/2010 1,800,000
1,800,000 ICO Global Communications, Units 15.0% 8/1/2005 1,089,000(d)
2,800,000 IPCS, Inc., Sr. Discount Notes Zero Coupon 7/15/2010 1,316,000
2,800,000 Iridium LLC/Capital Corp., Sr. Notes, Series A 13.0% 7/15/2005 56,000(d)
3,150,000 Iridium LLC/Capital Corp., Sr. Notes, Series B 14.0% 7/15/2005 63,000(d)
5,750,000 McCaw International, Ltd., Sr. Discount Notes Zero Coupon 4/15/2007 4,398,750
3,800,000 Metrocall, Inc., Sr. Subordinated Notes 11.0% 9/15/2008 1,691,000
4,800,000 Microcell Telecommunications, Inc., Sr. Discount Notes Zero Coupon 6/1/2006 4,644,000
8,000,000 Millicom International Cellular, Sr. Discount Notes Zero Coupon 6/1/2006 6,520,000
2,000,000 Nextel Communications, Inc., Sr. Discount Notes Zero Coupon 10/31/2007 1,535,000
7,000,000 Nextel Communications, Inc., Sr. Notes 9.375% 11/15/2009 6,772,500
3,000,000 Nextel International, Inc., Sr. Serial Notes 12.75% 8/1/2010 2,797,500
4,300,000 Nextel Partners, Inc., Sr. Notes 11.0% 3/15/2010 4,289,250
8,500,000 Orion Network Systems, Inc., Sr. Discount Notes Zero Coupon 1/15/2007 2,125,000
4,700,000 Orion Network Systems, Inc., Sr. Notes 11.25% 1/15/2007 2,326,500
5,000,000 PageMart Nationwide, Inc., Sr. Discount Exchange Notes 15.0% 2/1/2005 4,625,000
1,200,000 Pinnacle Holdings, Inc., Sr. Discount Notes Zero Coupon 3/15/2008 690,000
1,950,000 Price Communications Wireless, Inc., Sr. Subordinated Notes 11.75% 7/15/2007 2,086,500
3,400,000 PTC International Finance B.V., Sr. Secured Notes (USD) Zero Coupon 7/1/2007 2,286,500
6,500,000 SpectraSite Holdings, Inc., Sr. Discount Notes Zero Coupon 4/15/2009 3,388,125
4,000,000 SpectraSite Holdings, Inc., Sr. Discount Notes Zero Coupon 3/15/2010 1,960,000
2,000,000 Telecorp PCS, Inc., Sr. Subordinated Notes 10.625% 7/15/2010 2,005,000
1,800,000 Telesystem International Wireless, Inc., Sr. Discount Notes,
Series B Zero Coupon 6/30/2007 1,071,000
480,118 Teletrac, Inc., Notes 9.0% 1/1/2004 357,688
57,614 Teletrac, Inc., Payment-In-Kind Notes 12.0% 10/1/2004 42,922
4,000,000 Tritel PCS, Inc., Sr. Subordinated Notes Zero Coupon 5/15/2009 2,610,000
4,000,000 UbiqueTel Operating Co., Sr. Subordinated Notes Zero Coupon 4/15/2010 1,820,000
6,000,000 UNIFI Communications, Inc., Sr. Notes 14.0% 3/1/2004 36,000(d)
5,700,000 US Unwired, Inc., Sr. Discount Notes, Series B Zero Coupon 11/1/2009 2,807,250
3,100,000 USA Mobile Communications, Inc., Sr. Notes 14.0% 11/1/2004 2,619,500
2,500,000 VIALOG Corp., Sr. Notes, Series B 12.75% 11/15/2001 2,390,625
2,800,000 Voicestream Wireless Corp., Sr. Notes 10.375% 11/15/2009 3,010,000
5,000,000 Weblink Wireless, Inc., Sr. Subordinated Discount Notes Zero Coupon 2/1/2008 1,950,000
-------------
95,940,610
-------------
Telecommunications - Wireline - 13.3%
3,000,000 360networks, Inc., Sr. Notes 13.0% 5/1/2008 2,415,000
2,000,000 Alestra S. de R.L. de C.V., Sr. Notes (USD) 12.625% 5/15/2009 1,700,000
1,200,000 Alestra S. de R.L. de C.V., Sr. Notes (USD) 12.125% 5/15/2006 1,041,000
2,650,000 Asia Global Crossing, Sr. Notes 13.375% 10/15/2010 2,464,500
2,000,000 Birch Telecom, Inc., Sr. Notes 14.0% 6/15/2008 1,215,000
3,500,000 Call-Net Enterprises, Inc., Sr. Notes 9.375% 5/15/2009 1,522,500
2,500,000 CapRock Communications Corp., Sr. Notes 11.5% 5/1/2009 2,418,750
1,000,000 CapRock Communications Corp., Sr. Notes, Series B 12.0% 7/15/2008 977,500
2,500,000 Colo.com, Unit Security 13.875% 3/15/2010 1,887,500
2,900,000 Completel Europe N.V., Sr. Discount Notes, Series B (USD) Zero Coupon 2/15/2009 1,377,500
6,000,000 DTI Holdings, Inc., Sr. Discount Notes, Series B Zero Coupon 3/1/2008 1,950,000
800,000 Energis plc, Sr. Unsubordinated Notes (USD) 9.75% 6/15/2009 768,000
5,150,000 Esprit Telecom Group plc, Sr. Notes (USD) 11.5% 12/15/2007 1,055,750
3,000,000 Fairpoint Communications, Inc., Sr. Subordinated Notes 12.5% 5/1/2010 2,715,000
1,200,000 Global TeleSystems Group, Inc., Sr. Notes 9.875% 2/15/2005 351,000
1,000,000 GST Telecommunications, Inc., Sr. Discount Notes Zero Coupon 12/15/2005 353,750(d)
7,500,000 GT Group Telecom, Inc., Sr. Discount Notes Zero Coupon 2/1/2010 2,775,000
1,200,000 Hyperion Telecommunications, Inc., Sr. Discount Notes, Series B Zero Coupon 4/15/2003 966,000
2,000,000 Hyperion Telecommunications, Inc., Sr. Notes, Series B 12.25% 9/1/2004 1,750,000
1,900,000 IMPSAT Fiber Networks, Inc., Sr. Notes 13.75% 2/15/2005 1,558,000
5,000,000 IntelCom Group (U.S.A.), Inc., Sr. Discount Notes Zero Coupon 5/1/2006 850,000(d)
5,900,000 Intermedia Communications, Inc., Sr. Discount Notes, Series B Zero Coupon 3/1/2009 3,805,500
1,950,000 Intermedia Communications, Inc., Sr. Notes 8.6% 6/1/2008 1,847,625
2,800,000 Ionica plc, Sr. Notes (USD) 13.5% 8/15/2006 84,000(d)
1,900,000 Jazztel plc, Sr. Notes (USD) 14.0% 4/1/2009 1,396,500
5,625,000 Level 3 Communications, Inc., Unsecured Sr. Notes 11.0% 3/15/2008 5,090,625
5,000,000 Logix Communications Enterprises, Inc., Sr. Notes 12.25% 6/15/2008 2,125,000
4,500,000 Madison River Capital, Sr. Notes 13.25% 3/1/2010 3,262,500
1,600,000 Metromedia Fiber Network, Inc., Sr. Notes 10.0% 12/15/2009 1,428,000
2,800,000 Metromedia Fiber Network, Inc., Sr. Notes, Series B 10.0% 11/15/2008 2,492,000
5,000,000 MPower Communications, Sr. Notes 13.0% 4/1/2010 2,825,000
3,000,000 Netia Holdings B.V., Sr. Discount Notes, Series B (USD) Zero Coupon 11/1/2007 1,875,000
1,600,000 NEXTLINK Communications, Inc., Sr. Notes 9.625% 10/1/2007 1,352,000
3,200,000 NEXTLINK Communications, LLC, Sr. Notes 12.5% 4/15/2006 3,024,000
5,500,000 Northeast Optic Network, Inc., Sr. Notes 12.75% 8/15/2008 4,042,500
5,000,000 Pathnet, Inc., Sr. Notes 12.25% 4/15/2008 1,775,000
3,000,000 PF.Net Communications, Inc., Sr. Notes 13.75% 5/15/2010 2,955,000
5,000,000 Poland Telecom Finance B.V., Sr. Notes, Series B (USD) 14.0% 12/1/2007 75,000(d)
600,000 Primus Telecommunications Group, Inc., Sr. Notes 12.75% 10/15/2009 297,000
4,000,000 Primus Telecommunications Group, Inc., Sr. Notes 11.25% 1/15/2009 1,980,000
5,500,000 Primus Telecommunications Group, Inc., Sr. Notes 11.75% 8/1/2004 2,722,500
6,900,000 RSL Communications plc, Sr. Notes 12.875% 3/1/2010 1,414,500
2,000,000 Startec Global Communications, Inc., Sr. Notes 12.0% 5/15/2008 1,310,000
1,900,000 Telegroup, Inc., Sr. Discount Notes Zero Coupon 11/1/2004 106,875(d)
5,000,000 Teligent, Inc., Sr. Notes 11.5% 12/1/2007 2,175,000
6,000,000 USN Communications, Inc., Sr. Discount Notes, Series B Zero Coupon 8/15/2004 412,500(d)
2,000,000 VersaTel Telecom B.V., Sr. Notes (USD) 13.25% 5/15/2008 1,530,000
8,000,000 Viatel, Inc., Sr. Discount Notes Zero Coupon 4/15/2008 2,400,000
7,000,000 Williams Communications Group, Sr. Redeemable Notes 11.7% 8/1/2008 6,282,500
3,623,000 WinStar Communications, Inc., Sr. Discount Notes Zero Coupon 4/15/2010 1,141,245
1,240,000 WinStar Communications, Inc., Sr. Notes 12.75% 4/15/2010 880,400
4,000,000 WinStar Communications, Inc., Sr. Notes 12.5% 4/15/2008 2,910,000
2,100,000 Worldwide Fiber, Inc., Sr. Notes 12.0% 8/1/2009 1,669,500
2,000,000 Worldwide Fiber, Inc., Sr. Notes 12.5% 12/15/2005 1,730,000
-------------
100,529,020
-------------
Textiles & Apparel - 0.8%
3,150,000 CMI Industries, Inc., Sr. Subordinated Notes 9.5% 10/1/2003 1,496,250
3,200,000 Dan River, Inc., Sr. Subordinated Notes 10.125% 12/15/2003 2,688,000
2,400,000 Perry Ellis International, Inc., Sr. Subordinated Notes, Series B 12.25% 4/1/2006 1,848,000
-------------
6,032,250
-------------
Transportation - 1.7%
600,000 Allied Holdings, Inc., Sr. Notes, Series B 8.625% 10/1/2007 495,000
3,600,000 Equimar Shipholdings, Ltd., First Priority Mtg 9.875% 7/1/2007 1,152,000
2,250,000 Kansas City Southern Railway, Sr. Notes 9.5% 10/1/2008 2,295,000
3,000,000 RailAmerica Transportation Corp., Sr. Subordinated Notes 12.875% 8/15/2010 2,805,000
2,000,000 Transportacion Maritima, Sr. Notes (USD) 10.0% 11/15/2006 1,560,000
5,000,000 Windsor Petroleum, Notes 7.84% 1/15/2021 4,363,740
-------------
12,670,740
-------------
Utilities - 4.8%
1,500,000 Aes Drax Energy, Ltd., Sr. Secured Notes 11.5% 8/30/2010 1,582,500
3,500,000 AES (The) Corp., Sr. Notes 9.375% 9/15/2010 3,570,000
3,250,000 Azurix Corp., Sr. Notes, Series B 10.75% 2/15/2010 3,006,250
1,500,000 CMS Energy Corp., Sr. Notes 9.875% 10/15/2007 1,515,701
2,000,000 CMS EnergyCorp./Atlantic Methanol Capital Co.,
Sr. Secured Notes, Series A-1 10.875% 12/15/2004 2,000,000
3,200,000 ESI Tractebel Acquisition Corp., Bonds 7.99% 12/30/2011 2,892,576
1,750,000 Midland Cogen Venture Fund II, Secured Lease Obligation Bonds,
Series A 11.75% 7/23/2005 1,939,299
3,550,000 Midland Cogen Venture Fund II, Subordinated Secured Lease
Obligation Bonds 13.25% 7/23/2006 4,122,313
3,000,000 Niagara Mohawk Power Corp., Sr. Discount Notes, Series H Zero Coupon 7/1/2010 2,435,613
5,000,000 Orion Power Holdings, Inc., Sr. Notes 12.0% 5/1/2010 5,325,000
7,500,000 TNP Enterprises, Inc., Sr. Subordinated Notes, Series B 10.25% 4/1/2010 7,818,750
-------------
36,208,002
-------------
Total Corporate Bonds (cost $817,116,301) 612,332,668
-------------
FOREIGN GOVERNMENT BONDS - 0.3%(a,b)
3,000,000 Republic of Philippines, Bonds (cost $2,499,241) 9.875% 1/15/2019 2,242,500
-------------
Shares
------------
PREFERRED STOCKS - 11.7%(a,c)
Convertible - 2.1%
10,000 Adelphia Communications Corp., Convertible Preferred Stock, Series D 1,105,000
40,000 Caremark RX Capital Trust I, Convertible Preferred Stock 3,540,000
8,000 Global Crossing Holdings, Ltd., 6.75% Convertible Preferred Stock 1,635,000
9,300 Global Crossing Holdings, Ltd., 7.0% Convertible Preferred Stock 1,476,375
30,000 Intermedia Communications, Inc., Convertible Preferred Stock 585,000
20,000 Pegasus Communications Corp., Convertible Preferred Stock, Series C 1,370,000
20,000 PSINet, Inc., Convertible Preferred Stock, Series C 375,000
29,500 Sinclair Broadcast Group, Inc., Convertible Preferred Stock 851,813
2,600 Sovereign REIT, Non-Cumulative Preferred Stock, Series A 2,288,000
58,500 Treev, Inc., Convertible Preferred Stock, Series A 950,625
40,000 UnitedGlobalCom, Inc., Convertible Preferred Stock (United International
Holdings, Inc.) 1,665,000
-------------
15,841,813
-------------
Non-Convertible - 9.6%
3,534 Broadwing Communications, Preferred Stock, Series B 3,516,330
65,000 Chevy Chase Capital Corp., Noncumulative Exchangeable Preferred Stock, 3,315,000
25,462 Cluett American Corp., Preferred Stock 846,612
53,516 Communications & Power Industries, Inc., Preferred Stock, Series B 3,144,065
55,623 CSC Holdings, Inc., Payment-In-Kind Preferred Stock 6,021,190
25,613 CSC Holdings, Inc., Preferred Stock 2,734,188
2,424 Cumulus Media, Inc., Preferred Stock, Series A 1,860,420
3,164 Dobson Communications Corp., 12.25% Payment-In-Kind Preferred Stock 2,808,050
6,311 Dobson Communications Corp., 13.0% Payment-In-Kind Preferred Stock 5,758,788
3,295 E. Spire Communications Services, Inc., Payment-In-Kind Preferred Stock 572,506
40,000 Global Crossing Holdings, Ltd., Payment-In-Kind Preferred Stock 3,850,000
4,255 Granite Broadcasting Corp., Payment-in-Kind Preferred Stock 3,244,438
6,241 ICG Holdings, Inc., Preferred Stock 140,423(d)
4,668 Intermedia Communications, Inc., Preferred Stock 3,979,470
1,200 J Crew Group, Preferred Stock 1,116,000
16,000 Jitney-Jungle Stores of America, Sr. Exchangeable Preferred Stock, Clas 2,000
61,020 Nebco Evans Holdings Co., Payment-In-Kind, Preferred Stock 22,883(d)
5,257 Nextel Communications, Inc., Payment-In-Kind Preferred Stock, Series E 4,928,438
6,629 Paxson Communications Corp., Payment-In-Kind Preferred Stock 6,612,428
27,500 PRIMEDIA, Inc., Exchangeable Preferred Stock, Series H 2,316,875
36,500 PRIMEDIA, Inc., Preferred Stock, Series D 3,440,125
17,000 PRIMEDIA, Inc., Preferred Stock, Series F 1,517,250
122,500 River Bank Asset, Inc., Preferred Stock, Series A 1,868,125
3,445 R&B Falcon Corp., Payment-In-Kind Preferred Stock 4,478,500
1,435 World Access, Inc., Preferred Stock 367,258
97,291 XO Communications, Inc., Payment-In-Kind Preferred Stock 3,964,608
-------------
72,425,970
-------------
Total Preferred Stocks (cost $114,120,310) 88,267,783
-------------
COMMON STOCKS & STOCK WARRANTS - 2.3%(a,c)
3,000 Aavid Thermal Technologies, Inc., Stock Warrants 30,750
55,749 Adelphia Business Solutions, Stock Warrants 348,431
4,000 Airgate PCS, Inc., Stock Warrants 320,000
1,180,997 Altiva Financial Corp., Common Stock 20,667
40,000 Arch Communications Group, Inc., Common Stock 120,000
210,000 Arch Communications Group, Inc., Stock Warrants 52,500
2,900 ASAT Finance, LLC, Stock Warrants 233,450
2,000 At Track Communications, Inc., Stock Warrants 2,500
2,400 Australis Holdings Pty., Ltd., Stock Warrants 24(e)
2,000 Birch Telecom, Inc., Stock Warrants 110,250
2,650 Cable Satisfaction International, Inc., Stock Warrants 54,656
12,000 Classic Communications, Inc., Common Stock 200,040
23,925 Clearnet Communications, Inc., Stock Warrants 784,917
1,890 Communications & Power Industries, Inc., Common Stock 284,445(e)
145,000 Completel Europe N.V., Common Stock (USD) 1,087,500
13,009 Consolidated Hydro, Inc., Stock Warrants, Class B 9,757
8,444 Consolidated Hydro, Inc., Stock Warrants, Class C 2,111
18,900 Convergent Communications Corp., Common Stock 80,325
2,233 CS Wireless Systems, Inc., Common Stock 306(e)
3,000 Cybernet Internet Services International, Stock Warrants 16,500
24,000 DIVA Systems Corp., Stock Warrants 339,000
26,200 DTI Holdings, Inc., Stock Warrants 3,144
4,000 FirstWorld Communications, Stock Warrants 44,000
112,013 Gaylord Container Corp., Common Stock, Class A 245,028
154,623 Gaylord Container Corp., Stock Warrants 309,246
220,000 Granite Broadcasting Corp., Common Stock 687,500
7,500 GT Group Telecom, Inc., Stock Warrants 378,750
25,274 Harvard Industries, Inc., Stock Warrants 1(e)
3,000 Huntsman Packaging Corp., Stock Warrants 30,375
50,000 IntelCom Group Communications, Inc., Common Stock 21,875
50,335 IntelCom Group (U.S.A.), Inc., Stock Warrants 6,669
492 Intermedia Communications, Inc., Common Stock 10,886
1,700 Intersil Corp., Stock Warrants 1,358,513
10,200 Ionica plc, Stock Warrants (USD) 102
2,000 Iridium World Communications, Stock Warrants 270(e)
9,500 Jazztel plc, Stock Warrants (USD) 574,750
3,000 Josten's, Inc., Stock Warrants 60,000
30,000 Magellan Health Services, Inc., Common Stock 120,000
7,100 McCaw International, Ltd., Stock Warrants 167,297
29,247 McLeodUSA, Inc., Common Stock 563,005
30,000 Microcell Telecommunications, Inc., Common Stock 835,781
3,500 Motient Corp., Stock Warrants 122,938
2,500 OnePoint Communications Corp., Stock Warrants 250,313
2,800 ONO Finance, plc., Cash Rights (USD) 202,300
26,250 PageMart Nationwide, Inc., Common Stock 134,531
5,000 Pathnet, Inc., Stock Warrants 50,625
703 Pegasus Communications, Corp., Common Stock 25,000
3,000 PF.Net Communications, Inc., Stock Warrants 30
212,800 PhoneTel Technologies, Inc., Common Stock 53,200
5,000 Poland Telecom Finance B.V., Stock Warrants (USD) 625
40,000 Price Communications Corp., Common Stock 865,000
3,200 Primus Telecommunications Group, Inc., Stock Warrants 46,800
19,360 Protection One Alarm Monitoring, Stock Warrants 99,220
3,000 RailAmerica Transportation Corp., Stock Warrants 31,500
6,000 RSL Communications, Ltd., Stock Warrants 29,250
2,800 R&B Falcon Corp., Stock Warrants 1,482,950
1,100 SF Holdings Group, Inc., Common Stock, Class C 5,500
2,000 Startec Global Communications, Inc., Stock Warrants 2,250
308,649 Teletrac, Inc., Common Stock 231,487
113,649 Teletrac, Inc., Stock Warrants 1,136
3,833 TREEV, Inc., Common Stock 18,686
3,700 Ubiquitel Operating Co., Stock Warrants 185,000
4,600 UIH Australia/Pacific, Inc., Stock Warrants 115,575
1,001 UnitedGlobalCom, Inc., Common Stock, Class A 31,844
44,000 USN Communications, Inc., Stock Warrants 5,940(e)
36,694 VersaTel Telecom B.V., Common Stock (USD) 733,880
1,100 Vialog Corp., Stock Warrants 110,138
20,000 Viatel, Inc., Common Stock 192,500
19,500 Wam!Net, Inc., Stock Warrants 229,125
60,000 WebLink Wireless, Inc., Common Stock 476,250
26,181 Wherehouse Entertainment, Inc., Stock Warrants, Class A 199,630
4,545 Wherehouse Entertainment, Inc., Stock Warrants, Class B 17,612
4,545 Wherehouse Entertainment, Inc., Stock Warrants, Class C 7,386
417,436 Wilshire Financial Services Group, Inc., Common Stock 495,705
2,700 Winsloew Furniture, Inc., Stock Warrants 27,338
60,000 WorldCom, Inc., Common Stock 1,425,000
3,000 XM Satellite Radio, Inc., Stock Warrants 300,000
-------------
Total Common Stocks & Stock Warrants (cost $31,855,209) 17,721,585
-------------
SHORT-TERM SECURITIES - 4.8%(a)
Commercial Paper
1,400,000 Gillette Company 6.6% 11/1/2000 1,400,000
24,900,000 Prudential Funding Corp. 6.6% 11/1/2000 24,900,000
10,000,000 Toyota Motor Credit Corp. 6.48% 11/2/2000 9,998,200
-------------
Total Short-Term Securities (at amortized cost) 36,298,200
-------------
Total Investments (cost $1,001,889,261) 756,862,736(f)
=============
Notes to Portfolio of Investments:
----------------------------------
(a) The categories of investments are shown as a percentage of total
investments of the Lutheran Brotherhood High Yield Fund.
(b) Denominated in U.S. dollars.
(c) Currently non-income producing.
(d) Currently non-income producing and in default.
(e) Denotes restricted securities. These securities have been valued
from the date of acquisition through October 31, 2000, by obtaining
quotations from brokers who are active with the issues. The following
table indicates the acquisition date and cost of restricted securities
the Fund owned as of October 31, 2000.
<CAPTION>
Aquisition
Security Date Cost
------------ ------------ ------------
<S> <C> <C>
Australis Holdings Pty., Ltd., Stock Warrants 03/27/97 $ 0
Communications & Power Industries, Inc., Common Stock 08/02/95 172,871
CS Wireless Systems, Inc., Common Stock 12/11/96 15,070
Harvard Industries, Inc., Stock Warrants 05/14/92 6,669,341
Iridium World Communications, Stock Warrants 07/11/97 21,294
USN Communications, Inc., Stock Warrants 08/13/97 373
(f) At October 31, 2000, the aggregate cost of securities for federal
tax purposes was $1,005,667,587 and the net unrealized depreciation
of investments based on that cost was $248,804,851 which is comprised
of $20,760,065 aggregate gross unrealized appreciation and $269,564,916
aggregate gross unrealized depreciation.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD INCOME FUND
Portfolio of Investments
October 31, 2000
Principal Maturity
Amount Rate Date Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CORPORATE BONDS - 41.2%(a)
Aerospace & Defense - 1.3%
4,000,000 Lockheed Martin Corp., Notes 7.7% 6/15/2008 $ 4,061,045
2,000,000 Raytheon Co., Notes 6.75% 8/15/2007 1,922,316
3,000,000 Raytheon Co., Notes 6.45% 8/15/2002 2,961,735
-------------
8,945,096
-------------
Airlines - 1.4%
4,000,000 American Airlines, Inc., Pass Through Certificates,
Series 1999-1-A2, Class B 7.324% 10/15/2009 3,877,260
6,000,000 Continental Airlines, Inc., Series 2000-1-A1
Pass Through Certificates 8.048% 11/1/2020 6,146,790
-------------
10,024,050
-------------
Automotive - 0.2%
1,500,000 Visteon Corp., Notes 7.95% 8/1/2005 1,499,280
-------------
Banks - 3.4%
3,000,000 Abbey National plc, Subordinated Debentures (USD) 7.95% 10/26/2029 3,031,962
6,000,000 Citigroup, Inc., Subordinated Notes 7.25% 10/1/2010 5,962,560
4,000,000 HSBC Capital Funding, L.P., Notes 10.176% 12/31/2049 4,444,468
6,000,000 UBS Pfd. Funding Trust I., Noncumulative Trust Securities 8.622% 10/29/2049 6,075,192
4,500,000 Wells Fargo Capital, Capital Trust Preferred Securities 7.73% 12/1/2026 4,079,480
-------------
23,593,662
-------------
Broadcasting & Media - 2.7%
3,000,000 Adelphia Communications Corp., Sr. Notes, Series B 9.875% 3/1/2007 2,715,000
3,000,000 America Online, Inc., Convertible Bonds 0.01% 12/6/2019 1,533,750
2,100,000 Charter Communications, Inc., Sr. Notes 10.0% 4/1/2009 2,068,500
500,000 Clear Channel Communications, Sr. Notes 7.875% 6/15/2005 504,771
6,000,000 Clear Channel Communications, Sr. Notes 7.65% 9/15/2010 5,905,602
3,600,000 CSC Holdings, Inc., Sr. Notes 7.25% 7/15/2008 3,346,157
1,500,000 EchoStar Broadband Corp., Sr. Notes 10.375% 10/1/2007 1,511,250
1,050,000 Interpublic Group Companies, Inc., Convertible Notes 1.8% 9/16/2004 1,233,750
-------------
18,818,780
-------------
Finance - Consumer - 1.1%
4,500,000 American Express Co., Notes 6.875% 11/1/2005 4,472,852
3,000,000 CIT (The) Group, Inc., Notes 5.5% 2/15/2004 2,826,669
-------------
7,299,521
-------------
Finance - Structured - 0.6%
4,000,000 MBNA America Bank N.A., Notes 7.75% 9/15/2005 3,973,892
-------------
Health Care - Medical Products & Supplies - 0.5%
4,000,000 Becton, Dickinson, & Co., Debentures 6.7% 8/1/2028 3,431,848
-------------
Health Care Management - 0.3%
1,850,000 HCA Healthcare Co., Notes 8.75% 9/1/2010 1,869,678
-------------
Insurance - 10.6%
7,500,000 Allstate Financial Global Funding, Notes 7.125% 9/26/2005 7,529,415
850,000 American International Group, Inc., Convertible Notes 0.5% 5/15/2007 974,313
5,500,000 AON Corp., Notes 8.65% 5/15/2000 5,722,211
5,000,000 AXA Financial, Inc., Sr. Notes 7.75% 8/1/2010 5,078,435
8,000,000 Equitable Life Assurance Society of the United States, Surplus Notes 6.95% 12/1/2005 7,893,560
8,500,000 Everest Reinsurance Holdings, Sr. Notes 8.5% 3/15/2005 8,801,317
9,000,000 GE Global Insurance, Notes 7.5% 6/15/2010 9,094,842
2,000,000 Hartford Financial Services Group, Inc., Notes 7.9% 6/15/2010 2,057,832
3,500,000 Hartford Financial Services Group, Inc., Notes 7.75% 6/15/2005 3,583,573
7,000,000 Metropolitan Life Insurance Co., Surplus Notes 7.7% 11/1/2015 6,826,736
9,000,000 New York Life Insurance Co., Surplus Notes 6.4% 12/15/2003 8,877,978
7,000,000 Prudential Insurance Co. of America, Capital Notes 6.875% 4/15/2003 6,939,492
-------------
73,379,704
-------------
Oil & Gas - 5.0%
3,000,000 Alberta Energy Co., Ltd., Notes 7.65% 9/15/2010 3,026,208
3,000,000 Alberta Energy Co., Ltd., Notes 8.125% 9/15/2030 3,039,849
4,000,000 Amerada Hess Corp., Bonds 7.875% 10/1/2029 4,019,072
6,000,000 Coastal Corp., Notes 7.75% 6/15/2010 6,083,040
2,000,000 Duke Energy Field Services, LLC, Notes 7.875% 8/16/2010 2,040,768
3,500,000 Dynegy, Inc., Notes 8.125% 3/15/2005 3,584,746
3,000,000 Dynegy, Inc., Sr. Notes 7.45% 7/15/2006 2,994,426
2,000,000 Pemex Finance, Ltd., Notes 8.45% 2/15/2007 2,022,930
2,500,000 Pemex Finance, Ltd., Notes, Series 1999-2-A5 9.14% 8/15/2004 2,558,688
1,500,000 Pemex Project Funding Master Trust, Medium Term Notes 9.125% 10/13/2010 1,458,750
2,000,000 Triton Energy, Ltd., Sr. Notes 8.75% 4/15/2002 2,078,000
1,500,000 Triton Energy, Ltd., Sr. Notes 8.875% 10/1/2007 1,509,375
-------------
34,415,852
-------------
Retail - 0.4%
3,000,000 Rite Aid Corp., Notes 6.125% 12/15/2008 690,000
3,500,000 Saks, Inc., Sr. Notes 8.25% 11/15/2008 2,012,500
-------------
2,702,500
-------------
Retail - Food - 2.0%
6,000,000 Kroger Company, Sr. Notes 8.05% 2/1/2010 6,090,552
8,000,000 Safeway, Inc., Notes 7.25% 9/15/2004 7,969,008
-------------
14,059,560
-------------
Services - 0.4%
3,000,000 ARAMARK Services, Inc., Notes 7.0% 7/15/2006 2,854,533
-------------
Telecommunications - Data/Internet - 0.4%
2,850,000 Exodus Communications, Inc., Sr. Notes 11.625% 7/15/2010 2,650,500
-------------
Telecommunications - Wireless - 0.5%
3,350,000 Nextel Communications, Inc., Sr. Notes 9.375% 11/15/2009 3,241,125
-------------
Telecommunications - Wireline - 3.3%
1,500,000 360 Networks, Inc., Sr. Notes 13.0% 5/1/2008 1,207,500
1,500,000 Exchange Certificates Corp., Convertible Notes 0.05% 3/16/2005 1,466,250
3,500,000 Global Crossing Holdings, Ltd., Notes 9.5% 11/15/2009 3,360,000
2,850,000 Level 3 Communications, Inc., Unsecured Sr. Notes 11.0% 3/15/2008 2,579,250
2,850,000 NEXTLINK Communications, Inc., Sr. Notes 10.5% 12/1/2009 2,479,500
1,500,000 Primus Telecommunications Group, Inc., Sr. Notes 12.75% 10/15/2009 742,500
1,000,000 Primus Telecommunications Group, Inc., Sr. Notes 11.75% 8/1/2004 495,000
4,000,000 Qwest Capital Funding, Inc., Unsecured Notes 7.9% 8/15/2010 4,067,620
3,500,000 Qwest Capital Funding, Inc., Unsecured Notes 7.75% 8/15/2006 3,550,358
3,350,000 Williams Communications Group, Sr. Redeemable Notes 11.7% 8/1/2008 3,006,625
-------------
22,954,603
-------------
Transportation - 1.4%
4,500,000 CNF Transportation, Inc., Notes 8.875% 5/1/2010 4,463,672
3,905,954 Federal Express Corp., Series 1998-1-A, Class B 6.72% 1/15/2022 3,647,517
1,200,000 United Parcel Service, Inc., Convertible Notes 1.75% 9/27/2007 1,315,500
-------------
9,426,689
-------------
Utilities - 5.7%
1,500,000 AES (The) Corp., Sr. Notes 9.5% 6/1/2009 1,533,750
2,350,000 AES (The) Corp., Sr. Notes 9.375% 9/15/2010 2,397,000
3,500,000 AmerenEnergy Generating Co., Sr. Notes 7.75% 11/1/2005 3,476,417
2,000,000 CalEnergy Company, Inc., Sr. Notes 6.96% 9/15/2003 1,980,820
2,000,000 CalEnergy Company, Inc., Sr. Notes 7.63% 10/15/2007 2,004,604
4,500,000 Calpine Corp., Sr. Notes 8.625% 8/15/2010 4,451,369
5,000,000 Cleveland Electric Illuminate, Sr. Notes, Series D 7.88% 11/1/2017 4,945,600
2,350,000 CMS Energy Corp., Sr. Notes 9.875% 10/15/2007 2,374,597
4,500,000 Commonwealth Edison Co., Notes 7.625% 1/15/2007 4,533,962
1,500,000 Dominion Resources, Inc., Sr. Notes, Series B 7.625% 7/15/2005 1,515,114
6,000,000 East Coast Power, LLC, Sr. Secured Notes, Series B 7.066% 3/31/2012 5,509,320
5,000,000 NRG Energy, Inc., Sr. Notes 8.25% 9/15/2010 5,043,090
-------------
39,765,643
-------------
Total Corporate Bonds (cost $290,145,121) 284,906,516
-------------
ASSET-BACKED SECURITIES - 11.1%(a)
8,000,000 AESOP Funding II, LLC, Rental Car Notes, Series 1997-1, Class A-2 6.4% 10/20/2003 7,948,920
280,264 Chase Manhattan Grantor Trust, Series 1996-B-A 6.61% 9/15/2002 280,285
4,000,000 Citibank Credit Card Issuance Trust, Series 2000-C1-C1 7.45% 9/15/2005 3,857,387
4,000,000 Com-Ed Transitional Funding Trust, Series 1998-1-A6 5.63% 6/25/2009 3,764,100
1,194,594 CS First Boston Mortgage Security Corp., Series 1996-2, Class A4 6.62% 9/25/2009 1,187,157
10,000,000 Discover Card Master Trust I, Series 1996-3A 6.05% 8/18/2008 9,640,050
5,000,000 Discover Card Master Trust I, Series 1998-7A 5.6% 5/15/2006 4,845,656
8,000,000 Heller Financial Commercial Mortgage Corp., Series 2000-PH1-A2 7.75% 11/15/2009 8,300,540
2,500,000 Midwest Generation, LLC, Pass Through Certificates, Series A 8.3% 7/2/2009 2,487,800
1,000,000 Midwest Generation, LLC, Pass Through Certificates, Series B 8.56% 1/2/2016 1,001,320
5,500,000 Reliant Energy Mid Atlantic, Pass Through Certificates, Series B 9.237% 7/2/2017 5,599,688
13,000,000 Standard Credit Master Trust 1, Credit Card Participation
Certificates, Series 1995-9-A 6.55% 10/7/2007 12,832,235
15,000,000 World Financial Network Credit Card Master Trust,
Series 1996-B, Class A 6.95% 4/15/2006 15,114,825
-------------
Total Asset-Backed Securities (cost $77,343,805) 76,859,963
-------------
FOREIGN GOVERNMENT BONDS - 4.1% (a,b)
3,750,000 Brazil (Federative Republic), Unsubordinated Notes 14.5% 10/15/2009 3,999,375
8,000,000 Israel (State of), Notes 7.75% 3/15/2010 7,930,320
5,000,000 Ontario (Province of) Canada, Sr. Notes 5.5% 10/1/2008 4,609,565
4,000,000 Philippines (Republic of), Bonds 9.875% 1/15/2019 2,990,000
5,500,000 United Mexican States, Medium Term Notes, Series A 8.5% 2/1/2006 5,409,250
3,000,000 United Mexican States, Notes 9.875% 2/1/2010 3,127,500
-------------
Total Foreign Government Bonds (cost $29,104,099) 28,066,010
-------------
MORTGAGE-BACKED SECURITIES - 6.3%(a)
31,000,000 Federal National Mortgage Association, Participation Certificates 8.0% 11/1/2030 31,377,828(c)
12,000,000 Morgan Stanley Dean Witter Capital I Trust, Pass Through
Certificates, Series 2000-Life-A2 7.57% 12/15/2009 12,310,890
-------------
Total Mortgage-Backed Securities (cost $43,421,561) 43,688,718
-------------
U.S. GOVERNMENT AGENCY - 3.1%(a)
3,500,000 Federal Home Loan Mortgage Corp., Notes 6.875% 1/15/2005 3,544,898
10,000,000 Federal National Mortgage Association, Notes 5.75% 4/15/2003 9,851,220
8,000,000 Federal National Mortgage Association, Notes 7.25% 1/15/2010 8,303,648
-------------
Total U.S. Government Agency (cost $21,448,550) 21,699,766
-------------
U.S. GOVERNMENT - 14.9%(a)
17,000,000 U.S. Treasury Bonds 7.5% 11/15/2016 19,585,513
10,505,100 U.S. Treasury Bonds 3.875% 4/15/2029 10,551,070
34,000,000 U.S. Treasury Bonds 7.625% 11/15/2022 40,706,806
2,500,000 U.S. Treasury Bonds 6.125% 8/15/2029 2,589,845
17,000,000 U.S. Treasury Bonds 6.25% 8/15/2023 17,541,501(d)
2,000,000 U.S. Treasury Notes 6.75% 5/15/2005 2,074,064
9,500,000 U.S. Treasury Notes 6.5% 2/15/2010 9,947,555
-------------
Total U.S. Government (cost $104,991,872) 102,996,354
-------------
Shares
------------
COMMON STOCKS - 0.1%(a)
22,500 Lucent Technologies, Inc., Common Stock (cost $1,386,802) 524,531
-------------
PREFERRED STOCKS - 0.7%(a)
30,000 Georgia-Pacific Corp., Convertible Unit Security 961,875
3,200 Global Crossing Holdings, Ltd., Convertible Preferred Stock 654,000
25,000 MediaOne Group, Inc., Convertible Preferred Stock (Vodafone Airtouch plc, ADR) 1,035,938
24,000 MetLife Capital Trust I, Convertible Preferred Stock 2,103,000
-------------
Total Preferred Stocks (cost $4,240,380) 4,754,813
-------------
Principal
Amount
----------
SHORT-TERM SECURITIES - 18.5%(a)
Commercial Paper - 17.1%
10,000,000 DaimlerChrysler NA Holdings 6.49% 11/13/2000 9,978,367
10,000,000 Du Pont (E.I.) de Nemours & Co. 6.46% 11/7/2000 9,989,233
10,000,000 Ford Motor Credit Co. 6.56% 11/3/2000 9,996,356
30,000,000 New Center Asset Trust 6.65% 11/1/2000 30,000,000
17,550,000 Prudential Funding Corp. 6.6% 11/1/2000 17,550,000
20,000,000 Schering Corp. 6.46% 11/20/2000 19,931,811
12,200,000 Smithkline Beecham Corp. 6.52% 11/10/2000 12,180,114
8,581,000 Triple-A One Funding 6.53% 11/9/2000 8,568,548
-------------
118,194,429
-------------
U.S. Government - 1.4%
9,500,000 Federal Home Loan Mortgage Corp., Discount Notes 6.4% 11/1/2000 9,500,000
-------------
Total Short-Term Securities (at amortized cost) 127,694,429
-------------
Total Investments (cost $699,776,619) $ 691,191,100(e)
=============
Notes to Portfolio of Investments:
----------------------------------
(a) The categories of investments are shown as a percentage of total investments of the Lutheran Brotherhood Income Fund.
(b) Denominated in U.S. dollars.
(c) Denotes investments purchased on a when-issued basis.
(d) At October 31, 2000, U.S. Treasury Notes valued at 1,555,844 were pledged as initial margin deposit on the following
financial futures contracts:
<CAPTION>
Notional
Number of Market Principal Unrealized
Type Contracts Expiration Position Value Amount Loss
------------------- ----------- ------------ ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
S&P 500 Futures 20 December 2000 Short $7,201,000 $6,955,000 $246,000
(e) At October 31, 2000, the aggregate cost of securities for federal income tax purposes was $700,082,165 and the net
unrealized depreciation of investments based on that cost was $8,891,065 which is comprised of $6,832,996 aggregate
gross unrealized appreciation and $15,724,061 aggregate gross unrealized depreciation.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD MUNICIPAL BOND FUND
Portfolio of Investments
October 31, 2000
Principal Maturity
Amount Rate Date Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
LONG-TERM MUNICIPAL SECURITIES - 98.9%(a)
Alaska - 0.5%
3,155,000 Alaska Energy Authority Power Revenue Refunding Bonds,
(Bradley Lake), Fifth Series, FSA Insured 5.0% 7/1/2021 $ 2,928,337
-------------
Arizona - 1.2%
2,250,000 City of Phoenix, Arizona, Civic Improvement Revenue Bonds,
Series 2000, Insured by FGIC 6.0% 7/1/2020 2,348,865
1,700,000 Pima County, Arizona (Catalina Foothills Unified School
District #16), Unlimited Tax General Obligation Bonds,
Insured by MBIA 8.9% 7/1/2005 2,004,929
1,000,000 Pinal County, Arizona, Unified School District No. 43,
(Apache Junction), School Improvement Bonds, Series 1996-A,
Insured by FGIC 5.8% 7/1/2011 1,053,070
40,000 Tucson, Arizona, Prerefunded General Obligation Bonds,
Insured by FGIC 6.1% 7/1/2012 41,846(b)
1,460,000 Tucson, Arizona, General Obligation Unlimited Bonds,
Insured by FGIC 6.1% 7/1/2012 1,513,976
-------------
6,962,686
-------------
Arkansas - 0.9%
1,000,000 Arkansas Housing Development Agency, Single Family
Mortgage Bonds, Series A 8.375% 7/1/2010 1,190,750(b)
3,000,000 City of Jonesboro, Arkansas, Residential Housing and Health
Care Facilities Board, Hospital Revenue Refunding and
Construction Bonds, (St. Bernard's Regional Medical Center),
Series 1996-B, Insured by AMBAC 5.8% 7/1/2011 3,160,710
875,000 Pope County, Arkansas, Pollution Control Revenue Refunding
Bonds, Series 1994 (Arkansas Power and Light
Company Project), Insured by FSA 6.3% 12/1/2016 921,165
-------------
5,272,625
-------------
California - 7.6%
3,450,000 Anaheim, California, Public Financing Authority, Lease Revenue
Bonds, (Anaheim Public Improvements Project), 1997 Series A,
Insured by FSA 6.0% 9/1/2024 3,774,335
1,000,000 Anaheim, California, Public Financing Authority, Senior Lease
Revenue Bonds (Anaheim Public Improvement Project),
Series A, Insured by FSA 5.0% 9/1/2027 936,870
3,000,000 California State Public Works Board, Department of Corrections,
Lease Revenue Bonds, State Prison, Series A 7.4% 9/1/2010 3,618,270
1,000,000 California State, Unlimited Tax General Obligation Bonds,
Veteran's Series AT 9.5% 2/1/2010 1,359,140
300,000 California State, Unlimited Tax General Obligation,
Insured by MBIA 6.0% 8/1/2016 316,461
2,000,000 California State, Various Purpose General Obligation Bonds,
Insured by AMBAC 6.3% 9/1/2010 2,274,720
1,400,000 Central Valley Financing Authority, California, Cogeneration
Project Revenue Bonds, (Carson Ice-Gen Project), Series 1993 6.0% 7/1/2009 1,460,410
2,385,000 County of Orange, California, 1996 Recovery Certificates of
Participation, Series A, Insured by MBIA 5.8% 7/1/2016 2,501,937
2,035,000 Palmdale, California, Civic Authority Revenue, Merged
Redevelopment Project Areas, Series A 6.6% 9/1/2034 2,134,796
5,000,000 Pittsburgh, California, Redevelopment Agency (Los Medanos
Community Project), Series 1999, AMBAC Insured Zero Coupon 8/1/2024 1,307,350
2,815,000 Riverside County Transportation Commission, California, Sales
Tax Revenue Capital Appreciation Bonds, Insured by MBIA Zero Coupon 6/1/2004 2,404,883
500,000 Sacramento California Cogeneration Authority Project
Revenue Bonds 6.375% 7/1/2010 531,870
500,000 Sacramento California Cogeneration Authority Project
Revenue Bonds 6.375% 7/1/2010 554,480(b)
1,500,000 San Francisco Bay Area Rapid Transit District, California,
Sales Tax Revenue Refunding Bonds, Series 1990,
Insured by MBIA 6.75% 7/1/2010 1,755,540
15,000,000 San Joaquin Hills Transportation Corridor Agency, California,
Sr. Lien Convertible Toll Revenue Bonds Zero Coupon 1/1/2013 16,567,350(b)
1,500,000 State of California, General Obligation Bonds 7.0% 8/1/2006 1,699,995
-------------
43,198,407
-------------
Colorado - 6.0%
4,230,000 Colorado Housing Finance Authority, Single Family Program,
1998 Series D-2 Senior Revenue Bonds 6.35% 11/1/2029 4,370,267
855,000 Colorado Housing Finance Authority, Single Family Program,
Revenue Bonds 7.0% 11/1/2016 920,083
1,945,000 Colorado State Colleges Board, Western State College,
Housing & Student Fee Revenue Bonds, Series 1992,
Insured by Connie Lee 6.625% 5/1/2015 2,043,086(b)
1,195,000 Colorado Water Resources Power Development Authority, Clean
Water Revenue Bonds, Series A, Insured by FSA 6.25% 9/1/2013 1,231,603
6,000,000 Denver, Colorado, City & County Refunding Bonds, Board of
Water Commissioners 5.6% 10/1/2029 5,982,600
150,000 Douglas County, Colorado, School District No. 1, General
Obligation Bonds, Insured by MBIA 6.5% 12/15/2016 158,576
3,350,000 Douglas County, Colorado, School District No. 1, General
Obligation Bonds, Insured by MBIA 6.5% 12/15/2016 3,622,958(b)
1,000,000 Eagle, Garfield, and Routt Counties, Colorado, Eagle County
School District No. RE50J, General Obligation Bonds,
Series 1994, Insured by FGIC 6.3% 12/1/2012 1,081,850
1,890,000 Goldsmith Metropolitan District, Colorado, Unlimited Tax General
Obligation Bonds, Insured by MBIA Zero Coupon 6/1/2008 1,300,944
1,885,000 Goldsmith Metropolitan District, Colorado, Unlimited Tax General
Obligation Bonds, Insured by MBIA Zero Coupon 12/1/2008 1,265,909
1,890,000 Goldsmith Metropolitan District, Colorado, Unlimited Tax General
Obligation Bonds, Insured by MBIA Zero Coupon 6/1/2007 1,371,063
3,000,000 Larimer County, Colorado, School District No. R-1, Poudre Valley
Unlimited Tax General Obligation Bonds, Insured by MBIA 7.0% 12/15/2016 3,598,860
635,000 Regional Transportation District, Colorado, Sales Tax
Revenue Bonds 6.25% 11/1/2012 659,809
2,500,000 St. Vrain Valley School District, Boulder, Larimer & Weld Counties,
Colorado, General Obligation Refunding & Improvement Bonds,
Series 1990-A, Insured by MBIA Zero Coupon 12/15/2003 2,157,750
5,000,000 St. Vrain Valley School District, Boulder, Larimer & Weld Counties,
Colorado, General Obligation Refunding & Improvement Bonds,
Series 1990-A, Insured by MBIA Zero Coupon 12/15/2004 4,118,050
-------------
33,883,408
-------------
Connecticut - 0.8%
4,000,000 Connecticut Special Tax Obligation, Transportation Infrastructure
Revenue Bonds, Series B 6.5% 10/1/2010 4,527,760
-------------
Florida - 1.5%
2,100,000 Broward County, Florida, Housing Finance Authority, Home
Revenue Bonds, 1983 Series A Zero Coupon 4/1/2014 539,826
1,520,000 Florida State Refunding Bonds, Jacksonville Transportation
Authority (Senior Lien), Series 1997 5.0% 7/1/2019 1,431,901
3,200,000 Hillsborough County, Florida, Industrial Development Authority
(Weyerhaeuser Company, Inc.), Industrial Development Revenue
Bonds, Series 1983 9.25% 6/1/2008 3,211,200
1,705,000 Hillsborough County, Florida, Industrial Development Authority,
Florida (Tampa Electric Project), Pollution Control Revenue
Bonds, Series 1991 7.875% 8/1/2021 1,800,395
1,500,000 Jacksonville, Florida, Health Facilities, Florida Hospital Revenue
Bonds (Charity Obligated Group), Series 1999C 5.75% 8/15/2015 1,612,035
-------------
8,595,357
-------------
Georgia - 4.6%
5,000,000 Atlanta, Georgia, Water and Wastewater Revenue Bonds,
Series 1999-A 5.0% 11/1/2038 4,472,650
1,500,000 Brunswick, Georgia, Water & Sewer Revenue Refunding &
Improvement Bonds, Series A, Insured by MBIA 6.1% 10/1/2019 1,615,950
2,000,000 Brunswick, Georgia, Water & Sewer Revenue Refunding &
Improvement Bonds, Series 1992, Insured by MBIA 6.0% 10/1/2011 2,164,960
5,000,000 Cherokee County, Georgia, Water & Sewer Revenue Refunding &
Improvement Bonds, Insured by MBIA 5.5% 8/1/2018 5,107,850
2,000,000 Georgia State, Unlimited Tax General Obligation Bonds,
Series 1994-B 5.65% 3/1/2012 2,132,640
3,500,000 Georgia State, Unlimited Tax General Obligation Bonds,
Series 1994-D 5.0% 8/1/2012 3,530,695
1,000,000 Georgia State, Unlimited Tax General Obligation Bonds, Series B 6.3% 3/1/2010 1,117,230
1,000,000 Georgia State, Unlimited Tax General Obligation Bonds, Series B 6.3% 3/1/2009 1,109,130
5,000,000 Rockdale County, Georgia, Water & Sewer Authority Revenue,
Series A, MBIA Insured 5.5% 7/1/2025 4,952,950
-------------
26,204,055
-------------
Idaho - 0.7%
3,115,000 Idaho Falls, Idaho, General Obligation Electric Refunding Bonds,
Series 1991, Insured by MBIA Zero Coupon 4/1/2010 1,944,570
1,000,000 Idaho Falls, Idaho, General Obligation Electric Refunding Bonds,
Series 1991, Insured by MBIA Zero Coupon 4/1/2007 731,350
2,000,000 Idaho Falls, Idaho, General Obligation Electric Refunding Bonds,
Series 1991, Insured by MBIA Zero Coupon 4/1/2011 1,176,740
-------------
3,852,660
-------------
Illinois - 4.4%
3,000,000 Chicago, Illinois (Lakefront Millennium Project), Series 1999 Zero Coupon 1/1/2029 2,116,590
1,000,000 Chicago, Illinois, Midway Airport Revenue Bonds,
Insured by MBIA 5.0% 1/1/2031 893,080
1,000,000 City of Alton, Madison County, Illinois, Hospital Facility
Revenue Refunding Bonds, Series 1996, (Saint Anthony's
Health Center) 6.0% 9/1/2014 952,980
10,000,000 City of Chicago, Illinois, General Obligation Bonds,
(City Colleges of Chicago Capital Improvements Project),
Series 1999, Insured by FGIC Zero Coupon 1/1/2024 2,589,200
2,500,000 Cook County, Illinois, Unlimited General Obligation Bonds,
Series A, Insured by MBIA 6.25% 11/15/2011 2,766,975
2,000,000 Illinois Health Facilities Authority Revenue Refunding Bonds,
Lutheran General Health, Insured by FSA 6.0% 4/1/2018 2,083,580
170,000 Illinois Health Facilities Authority (Community Provider
Pooled Loan Program), Revenue Bonds, Series 1988-B,
Insured by MBIA 7.9% 8/15/2003 181,006 (b)
678,000 Illinois Health Facilities Authority (Community Provider
Pooled Loan Program), Revenue Bonds, Series 1988-B,
Insured by MBIA 7.9% 8/15/2003 679,248
2,000,000 Illinois Health Facilities Authority, (Swedish American Hospital),
Revenue Bonds, Series 2000 6.875% 11/15/2030 2,042,740
17,505,000 Metropolitan Pier & Exposition Authority, Illinois, Dedicated
State Tax Receipts Capital Appreciation (McCormick Place
Expansion-A), Insured by FGIC Zero Coupon 6/15/2020 5,680,723
1,410,000 Metropolitan Pier & Exposition Authority, Illinois, McCormick
Place Expansion Project Bonds, Series 1999A, FGIC Insured 5.25% 12/15/2028 1,319,647
10,000,000 Metropolitan Pier & Exposition Authority, Illinois, Dedicated State
Tax Refunding Bonds, McCormick Place Expansion Project,
Series 1993-A, Insured by FGIC Zero Coupon 6/15/2018 3,702,700
-------------
25,008,469
-------------
Indiana - 1.2%
4,000,000 Avon, Indiana, Community School Building Corp., First Mortgage
Bonds, AMBAC Insured 5.25% 1/1/2022 3,813,080
2,450,000 Indiana Municipal Power Agency, Power Supply System
Revenue Bonds, Series A, Insured by MBIA 5.5% 1/1/2023 2,487,142(b)
350,000 Indianapolis Airport Authority Refunding Revenue Bonds,
Series 1996-A, Insured by FGIC 5.6% 7/1/2015 354,974
-------------
6,655,196
-------------
Iowa - 1.2%
2,000,000 Iowa Finance Authority, Iowa State Revolving Fund Revenue
Bonds, Combined Series 1994 6.25% 5/1/2024 2,080,760
4,500,000 Iowa Finance Authority, (Genesis Medical Center), Health Care
Revenue Bonds, Series 2000 6.25% 7/1/2025 4,493,925
-------------
6,574,685
-------------
Kansas - 1.8%
2,605,000 Kansas City, Kansas, Utility System Prerefunded Revenue
Bonds, Series 1994, Insured by FGIC 6.375% 9/1/2023 2,815,849(b)
5,395,000 Kansas City, Kansas, Utility System Revenue Bonds, Series 1994,
Insured by FGIC 6.375% 9/1/2023 5,643,548
920,000 Kansas City, Kansas, Utility System, Capital Appreciation
Refunding & Improvement Revenue Bonds, Insured by AMBAC Zero Coupon 3/1/2007 677,672
1,255,000 Kansas City, Kansas, Utility System, Capital Appreciation
Refunding & Improvement Revenue Bonds, Insured by AMBAC Zero Coupon 3/1/2007 926,730(b)
-------------
10,063,799
-------------
Kentucky - 0.6%
5,345,000 Kentucky Turnpike Authority, Economic Development Road
Revenue Bonds, Insured by FGIC Zero Coupon 1/1/2010 3,378,681
-------------
Louisiana - 1.3%
6,500,000 New Orleans, Louisiana, General Obligation Bonds, Series 1991,
Insured by AMBAC Zero Coupon 9/1/2012 3,513,250
3,000,000 Orleans Parish School Board #87, Louisiana, Insured by MBIA 8.95% 2/1/2008 3,751,800(b)
-------------
7,265,050
-------------
Maine - 0.2%
1,225,000 Maine Health & Higher Education Facilities Authority Revenue
Bonds, Series 1994, Insured by FSA 7.0% 7/1/2024 1,346,716(b)
25,000 Maine Health & Higher Education Facilities Authority Revenue
Bonds, Series 1994, Insured by FSA 7.0% 7/1/2024 27,484
-------------
1,374,200
-------------
Maryland - 1.8%
2,000,000 Maryland Economic Development Corp., (Lutheran World Relief/
Immigration & Refugee Service Headquarters Facility),
Revenue Bonds, Series 2000 7.2% 4/1/2025 2,017,760
2,000,000 Maryland Health & Higher Education Authority, Union Hospital of
Cecil County Revenue Bonds, Series 1992 6.7% 7/1/2022 2,109,640(b)
4,500,000 Morgan State University, Maryland, Academic Fee and Auxiliary
Facilities Fees Revenue Refunding Bonds, Series 1993,
Insured by MBIA 6.05% 7/1/2015 4,932,360
1,000,000 Prince George's County, Maryland, Dimensions Health Corp.,
Hospital Revenue Bonds, Series 1992 7.0% 7/1/2022 1,060,400(b)
-------------
10,120,160
-------------
Massachusetts - 1.9%
2,000,000 Commonwealth of Massachusetts, General Obligation
Refunding Bonds, Series B 6.5% 8/1/2008 2,225,780
2,500,000 Massachusetts Health and Education Facilities Authority,
Revenue Bonds, Daughters of Charity National Health System,
The Carney Hospital, Series D 6.1% 7/1/2014 2,690,000(b)
1,500,000 Massachusetts Health & Education Facilities Authority,
Revenue Bonds, (New England Medical Center), Series F,
Insured by FGIC 6.5% 7/1/2012 1,568,100
1,000,000 Massachusetts Health & Education Facilities, Partners
HealthCare System, Series B 5.25% 7/1/2014 949,170
3,000,000 Plymouth County, Massachusetts, Correctional Facility Certificates
of Participation Bonds 7.0% 4/1/2012 3,198,810(b)
-------------
10,631,860
-------------
Michigan - 4.5%
2,000,000 Economic Development Corporation of the County of St. Clair,
Michigan, Pollution Control Revenue Refunding Bonds,
(Detroit Edison Company Project), Series 1993-AA,
Insured by AMBAC 6.4% 8/1/2024 2,138,840
2,355,000 John Tolfree Health System Corporation, Mortgage Revenue and
Refunding Bonds, Series 1999 5.85% 9/15/2013 2,051,605
1,500,000 Livonia Public Schools, County of Wayne, Michigan, 1992 School
Building and Site Bonds, Series II (Unlimited Tax General
Obligation), Insured by FGIC Zero Coupon 5/1/2009 986,070
2,460,000 Michigan Municipal Bond Authority, Government Loan Revenue
Refunding Bonds, Series A, Insured by FGIC Zero Coupon 12/1/2005 1,931,543
45,000 Michigan State Hospital Finance Authority, Hospital Revenue and
Refunding Bonds, (Detroit Medical Center Obligated Group),
Series 1988-A 8.125% 8/15/2012 45,050
175,000 Michigan State Hospital Finance Authority, (Sisters of
Mercy Hospital), Revenue Bonds 5.375% 8/15/2014 177,863(b)
2,825,000 Michigan State Hospital Finance Authority, (Sisters of
Mercy Hospital), Revenue Bonds 5.375% 8/15/2014 2,875,765
4,500,000 Rochester, Michigan, Community School District Unlimited Tax
General Obligation Bonds, MBIA Insured 5.0% 5/1/2019 4,306,275
3,320,000 Sault St. Marie Chippewa Indians Housing Authority, Health
Facilities Revenue Bonds, (Tribal Health & Human Services
Center Project), Series 1992 7.75% 9/1/2012 3,353,200
3,560,000 Wayne State University, Michigan, University Revenue Bonds,
FGIC Insured 5.125% 11/15/2029 3,294,744
1,860,000 West Ottawa, Michigan, Public School District, Unlimited
Tax General Obligation Bonds, Insured by MBIA Zero Coupon 5/1/2005 1,501,578
3,455,000 West Ottawa, Michigan, Public School District, Unlimited Tax
General Obligation Bonds, Insured by MBIA Zero Coupon 5/1/2004 2,931,257
-------------
25,593,790
-------------
Minnesota - 4.6%
715,000 Duluth Economic Development Authority, Minnesota, Health
Care Facilities Revenue Bonds, (The Duluth Clinic, Ltd),
Series 1992, Insured by AMBAC 6.3% 11/1/2022 753,639
285,000 Duluth Economic Development Authority, Minnesota, Health
Care Facilities Revenue Bonds, (The Duluth Clinic, Ltd),
Series 1992, Insured by AMBAC 6.3% 11/1/2022 303,243 (b)
2,250,000 Golden Valley, Minnesota, Revenue Bonds (Covenant Retirement
Communities), Series 1999-A 5.5% 12/1/2025 2,019,893
2,000,000 Minneapolis-St. Paul Metropolitan Airports Commission, Airport
Revenue Bonds, Series 1999A, FGIC Insured 5.125% 1/1/2031 1,865,020
7,685,000 Minneapolis, Minnesota, Community Development Agency, Tax
Increment Revenue Appreciation Bonds, Insured by MBIA Zero Coupon 3/1/2009 5,131,044
5,000,000 Minnesota Agricultural and Economic Development Board, Health
Care System Revenue Bonds, Series 1997-A (Fairview Hospital
and Healthcare Services), Insured by MBIA 5.75% 11/15/2026 5,010,350
3,750,000 Minnesota Higher Education Facilities Authority, (Augsburg
College), Mortgage Revenue Bonds, Series Four-F1 Bonds 6.25% 5/1/2023 3,792,375
1,000,000 Minnesota State Higher Education Facility Authority (Minneapolis
College of Art & Design) 6.625% 5/1/2020 1,012,280
1,000,000 Sauk Rapids, Minnesota, School District #047, Series B Zero Coupon 2/1/2014 479,820
3,620,000 State of Minnesota Unlimited Tax General Obligation Bonds 5.25% 8/1/2017 3,595,782
1,690,000 St. Paul, Minnesota, Housing & Redevelopment Authority, (River
Centre Parking Ramp), Parking Facility Lease Revenue Bonds 6.0% 5/1/2013 1,775,970
-------------
25,739,416
-------------
Missouri - 2.5%
1,475,000 Missouri Housing Development Commission, Single Family
Mortgage Revenue Bonds, (Home Ownership Loan Program),
Series C-1, Insured by GNMA 6.55% 9/1/2028 1,572,645
2,000,000 Missouri State Health and Education Facilities Authority (Barnes -
Jewish, Inc. /Christian Health Services), Health Facilities
Refunding & Improvement Revenue Bonds, Series 1993-A 5.25% 5/15/2014 1,948,940
2,650,000 Missouri State Health and Education Facilities Authority
(Christian Health Services), Health Facilities Refunding &
Improvement Revenue Bonds, Series 1991 A, Insured by FGIC 6.875% 2/15/2021 2,720,994(b)
2,925,000 Missouri State Health and Education Facilities Authority,
Heartland Health System Revenue Bonds, Series 1992,
Insured by AMBAC 6.35% 11/15/2017 3,034,073
1,500,000 Missouri State Health and Education Facilities Authority,
SSM Health Care Refunding Revenue Bonds, Series A,
Insured by MBIA 6.25% 6/1/2007 1,561,860
655,000 Missouri State Health & Education Facility Authority, Lake of the
Ozarks General Hospital 6.5% 2/15/2021 646,930
1,345,000 Missouri State Health & Education Facility Authority, Lake of the
Ozarks General Hospital 6.5% 2/15/2021 1,484,019(b)
1,000,000 Missouri State Health & Education Facility Authority,
(St. Anthony's Medical Center), Revenue Bonds 6.25% 12/1/2030 987,910
-------------
13,957,371
-------------
Montana - 0.8%
1,240,000 Montana State Board of Investments, Payroll Tax Revenue Bonds,
Series 1996, Insured by MBIA 6.875% 6/1/2020 1,281,441(b)
775,000 Montana State Board of Investments, Payroll Tax Revenue Bonds,
Series 1996, Insured by MBIA 6.875% 6/1/2020 800,901(b)
2,385,000 Montana State Board of Investments, Payroll Tax Revenue Bonds,
Series 1996, Insured by MBIA 6.875% 6/1/2020 2,460,533
-------------
4,542,875
-------------
Nebraska - 0.7%
3,455,000 Omaha Public Power District, Nebraska, Electric Revenue
Refunding Bonds, Series B 6.15% 2/1/2012 3,796,389
-------------
New Hampshire - 0.2%
1,100,000 New Hampshire Turnpike System, Residual Interest Bonds, 1991
Refunding, Series C, Insured by FGIC 8.968% 11/1/2017 1,304,424
-------------
New Jersey - 2.9%
1,250,000 East Orange, New Jersey, Unlimited Tax General Obligation Bonds,
Insured by FSA 8.4% 8/1/2006 1,491,438
1,000,000 Mercer County, New Jersey, Improvement Authority,
Revenue Bonds, Series 1991 6.6% 11/1/2014 1,020,000
1,110,000 New Jersey Health Care Facilities, Financing Authority Revenue,
AMBAC Insured 6.1% 7/1/2010 1,179,586
3,000,000 New Jersey Transit Corp., (Raymond Plaza East, Inc.),
Certificates of Participation, Insured by FSA 6.375% 10/1/2006 3,272,730
715,000 New Jersey Turnpike Authority, Turnpike Revenue Bonds,
1984 Series 10.375% 1/1/2003 767,817(b)
4,700,000 New Jersey Turnpike Authority, Turnpike Revenue Bonds, Series C,
Insured by AMBAC 6.5% 1/1/2016 5,335,017
2,595,000 West New York, New Jersey, Municipal Utility Authority, Sewer
Revenue Refunding Bonds, Insured by FGIC Zero Coupon 12/15/2009 1,670,531
2,195,000 West New York, New Jersey, Municipal Utility Authority,
Sewer Revenue Refunding Bonds, Insured by FGIC Zero Coupon 12/15/2007 1,563,959
-------------
16,301,078
-------------
New Mexico - 2.5%
3,315,000 City of Alamogordo, New Mexico Hospital Revenue Bonds,
(Gerald Champion Hospital Project), Series 1997 5.3% 1/1/2013 3,036,540
5,000,000 Farmington, New Mexico, Power Revenue Refunding Bonds,
Series 1983 9.875% 1/1/2013 5,997,350(b)
4,040,000 Farmington, New Mexico, Utility Systems Revenue Bonds,
Insured by AMBAC 9.875% 1/1/2008 4,947,828(b)
-------------
13,981,718
-------------
New York - 4.7%
3,000,000 Metropolitan Transportation Authority, New York, Transit Facilities
Revenue Bonds, Series O, Insured by MBIA 6.25% 7/1/2014 3,220,770(b)
4,225,000 Metropolitan Transportation Authority, New York, Transit Facilities
Service Contract Bonds, Series O 5.75% 7/1/2013 4,438,236
2,000,000 New York City, Municipal Water Finance Authority, Water &
Sewer System Revenue Bonds, Series A, Insured by AMBAC 5.875% 6/15/2012 2,174,740
10,000,000 New York State Dormitory Authority Revenue Bonds, City
University System Consecutive Third-1, Insured by FGIC 5.0% 7/1/2026 9,111,600
2,860,000 New York State Thruway Authority, Highway & Bridge Trust Fund,
Revenue Bonds, Series 1994-B, Insured by FGIC 6.0% 4/1/2014 3,049,847(b)
1,620,000 New York State Urban Development Corp., Project Revenue Bonds,
(Syracuse University Center for Science and Technology Loan),
1995 Refunding Series 6.0% 1/1/2009 1,736,316(b)
1,720,000 New York State Urban Development Corp., Project Revenue Bonds,
(Syracuse University Center for Science and Technology Loan),
1995 Refunding Series 6.0% 1/1/2010 1,850,290(b)
1,000,000 Triborough Bridge & Tunnel Authority, New York, General
Purpose Revenue Bonds, Series Q 6.75% 1/1/2009 1,115,100
-------------
26,696,899
-------------
North Carolina - 0.8%
4,000,000 North Carolina Municipal Power Agency #1, Catawba Electric
Revenue Refunding Bonds, Series 1992, Insured by MBIA 6.0% 1/1/2011 4,318,640
-------------
North Dakota - 1.6%
3,500,000 Grand Forks, North Dakota, Health Care System Revenue Bonds
(Altru Health System Obligated Group) 7.125% 8/15/2024 3,558,695
2,000,000 Mercer County, North Dakota, Pollution Control Revenue
Refunding Bonds, (Ottertail Power Co. Project) 6.9% 2/1/2019 2,050,780
2,000,000 North Dakota Municipal Bond Bank, State Revolving Fund
Program Bonds, Series 1995-A 6.3% 10/1/2015 2,123,080
1,340,000 North Dakota State Water Commission (Southwest Pipeline),
Revenue Bonds, Series A, Insured by AMBAC 5.75% 7/1/2027 1,342,814
-------------
9,075,369
-------------
Ohio - 5.3%
875,000 Akron Ohio Economic Development, Non-Tax Revenue Bonds,
Insured by MBIA 6.0% 12/1/2012 959,403
1,050,000 Akron, Bath & Copley Joint Township, Ohio, (Children's Hospital
Medical Center), Hospital District Revenue Bonds, Insured
by AMBAC 7.45% 11/15/2020 1,072,040
2,500,000 Akron, Ohio, Certificates of Participation, Series 1996, Akron
Municipal Baseball Stadium Project Zero Coupon 12/1/2016 2,513,925
3,785,000 City of Cleveland, Ohio, Public Power System, First Mortgage
Revenue Bonds, Series 1994-A, Insured by MBIA 7.0% 11/15/2024 4,196,619(b)
1,470,000 Lorain County, Ohio, (Humility of Mary Health System),
Hospital Revenue Bonds 7.125% 12/15/2006 1,533,680(b)
2,000,000 Lucas County, Ohio, Health Care, (Sunset Retirement Communities) 6.55% 8/15/2024 1,964,300
2,000,000 Ohio Higher Educational Facility Commission (Case Western
Reserve University Project), Series B 6.5% 10/1/2020 2,271,560
1,500,000 Ohio Higher Educational Facility Commission, Higher Educational
Revenue Bonds, (Ohio Dominican College 1994 Project) 6.625% 12/1/2014 1,576,620
5,000,000 Ohio State Air Quality Development Authority, Cleveland Electric,
Pollution Control Revenue Bonds, Insured by FGIC 8.0% 12/1/2013 5,400,800
2,250,000 Ohio State Air Quality Development Authority, Columbus &
Southern Pollution Control Revenue Bonds, Insured by FGIC 6.375% 12/1/2020 2,339,955
2,000,000 Ohio State Turnpike Commission, Turnpike Revenue Refunding
Bonds, Series A, FGIC Insured 5.5% 2/15/2024 2,036,820
1,795,000 Trumbull County, Ohio (Memorial Hospital), Hospital Revenue
Refunding & Improvement Bonds, Series 1991-B, Insured
by FGIC 6.9% 11/15/2012 1,872,634(b)
2,115,000 University of Akron, Ohio, General Receipt Bonds, Series 1999,
FGIC Insured 5.5% 1/1/2020 2,121,366
-------------
29,859,722
-------------
Oklahoma - 2.2%
4,865,000 Bass, Oklahoma, Memorial Baptist Hospital 8.35% 5/1/2009 5,627,735(b)
1,500,000 Oklahoma Municipal Power Authority, Power Supply System
Revenue Bonds, Series 1992-B, Insured by MBIA 5.875% 1/1/2012 1,621,785
5,000,000 Tulsa, Oklahoma, Municipal Airport Trust Revenue
(American Airlines, Inc.) 7.375% 12/1/2020 5,106,850
-------------
12,356,370
-------------
Oregon - 0.9%
2,700,000 Clackamas County, Oregon, Health Facilities Authority, Adventist
Health-West Revenue Refunding Bonds, Series 1992-A,
Insured by MBIA 6.35% 3/1/2009 2,806,596
2,000,000 Hospital Facility Authority of the Western Lane Hospital District,
Oregon, Revenue Refunding Bonds, Series 1994 (Sisters of St.
Joseph of Peace ,Health & Hospital Services), Insured by MBIA 5.875% 8/1/2012 2,103,580
-------------
4,910,176
-------------
Pennsylvania - 3.0%
6,900,000 Allegheny County, Pennsylvania, Airport Revenue Refunding
Bonds, Series 1997B, Insured by MBIA 5.0% 1/1/2019 6,513,945
1,600,000 Allegheny County, Pennsylvania, Hospital Development
Authority, Hospital Revenue Bonds, Series A-1995, (Allegheny
General Hospital Project), Insured by MBIA 6.2% 9/1/2015 1,736,720(b)
565,000 Allegheny County, Pennsylvania, Hospital Development Authority,
West Penn Allegheny Health System, Series B 8.55% 11/15/2004 565,729
860,000 Allegheny County, Pennsylvania, Hospital Development Authority,
West Penn Allegheny Health System, Series B 8.45% 11/15/2003 860,860
2,575,000 Allegheny County, Pennsylvania, Sanitary Authority, Sewer
Revenue Bonds, Series A, Insured by FGIC Zero Coupon 6/1/2008 1,779,016
3,170,000 Millcreek Township, Pennsylvania, School District,
General Obligation Bonds, Insured by FGIC Zero Coupon 8/15/2009 2,056,094
3,000,000 Pennsylvania State, General Obligation Bonds,
Second Series of 1992, Insured by AMBAC Zero Coupon 7/1/2006 2,293,530
1,000,000 York County Pennsylvania Solid Waste and Refuse Authority,
Refunding Revenue Bonds, Series 1997, County Guaranteed,
Insured by FGIC 5.5% 12/1/2012 1,045,800
-------------
16,851,694
-------------
Puerto Rico - 2.3%
4,000,000 Puerto Rico Commonwealth, Aqueduct & Sewer Revenue Bonds,
Series A 9.0% 7/1/2009 4,608,680(b)
3,000,000 Puerto Rico Commonwealth, Unlimited Tax General
Obligation Bonds 6.45% 7/1/2017 3,266,370(b)
3,000,000 Puerto Rico Electric Power Authority, Power Revenue Bonds,
Series T 6.0% 7/1/2016 3,111,690
2,000,000 Puerto Rico Industrial Tourist EDL, AES Puerto Rico Project 6.625% 6/1/2026 2,104,740
-------------
13,091,480
-------------
South Carolina - 1.6%
2,000,000 City of Spartanburg, South Carolina, Junior Lien, Water System
Revenue Bonds, Series 1998 5.25% 6/1/2028 1,883,460
2,000,000 Piedmont Municipal Power Agency, South Carolina, Electric
Revenue Refunding Bonds, Series 1991, Insured by FGIC 6.25% 1/1/2021 2,188,920
5,000,000 Piedmont Municipal Power Agency, South Carolina, Electric
Revenue Refunding Bonds, Insured by FGIC 5.0% 1/1/2022 4,578,250
300,000 Spartanburg, South Carolina, Waterworks Revenue Refunding
Bonds, Insured by FGIC 5.0% 6/1/2017 288,540
-------------
8,939,170
-------------
Tennessee - 1.1%
1,750,000 Metropolitan Government of Nashville & Davidson County TN,
Electric System Revenue Bonds, Series 1998A 5.2% 5/15/2023 1,667,418
5,000,000 Shelby County, Tennessee, Health Educational & Housing
Facility Board, (St. Jude Children's Research Hospital),
Series 1999 5.375% 7/1/2024 4,643,050
-------------
6,310,468
-------------
Texas - 9.2%
2,165,000 Arlington, Texas, Independent School District, Unlimited Tax
Refunding & Improvement Bonds, Series 1992, Permanent
School Fund Guaranteed Zero Coupon 2/15/2009 1,434,659
8,100,000 Austin, Texas, Utility System Refunding Revenue Bonds,
Series A, Insured by MBIA Zero Coupon 11/15/2009 5,171,202
7,000,000 Austin, Texas, Utility System Refunding Revenue Bonds,
Series A, Insured by MBIA Zero Coupon 11/15/2008 4,714,990
1,000,000 Austin, Texas, Utility System Revenue Refunding Bonds,
Insured by FGIC 6.0% 11/15/2013 1,091,890
1,575,000 Bexar County, Texas, Limited Tax General Obligation Bonds 5.0% 6/15/2015 1,513,323
1,000,000 Cass County, Texas, Industrial Development Corporation,
Pollution Control Revenue Refunding Bonds, International
Paper, Series 1997-B 5.35% 4/1/2012 974,960
2,000,000 Copperas Cove, Texas, Independent School District, Unlimited
Tax General Obligation Bonds, Permanent School
Fund Guaranteed 6.9% 8/15/2014 2,162,920(b)
4,000,000 Dallas-Fort Worth, Texas, Airport Joint Revenue Refunding Bonds
Series 1994-A, Insured by MBIA 6.0% 11/1/2012 4,165,200
1,000,000 Dallas-Fort Worth, Texas, Airport Joint Revenue Refunding Bonds,
Insured by FGIC, Series A 7.375% 11/1/2009 1,109,810
2,000,000 Dallas-Fort Worth, Texas, Airport Joint Revenue Refunding
Bonds, Insured by FGIC, Series A 7.375% 11/1/2010 2,212,760
1,000,000 Dallas-Fort Worth, Texas, Airport Joint Revenue Refunding Bonds,
Insured by FGIC, Series A 7.375% 11/1/2008 1,108,100
750,000 Del Valle, Texas, Independent School District, Unlimited Tax
General Obligation Refunding Bonds, Permanent School
Fund Guaranteed 5.0% 2/1/2018 706,117
2,285,000 Denton, Texas, Independent School District, Unlimited Tax
General Obligation Refunding Bonds, Permanent School
Fund Guaranteed 6.25% 2/15/2009 2,510,689
1,000,000 Georgetown, Texas, Higher Education Finance Corp., Higher
Education Revenue Bonds, Series 1994 (Southwestern
University Project) 6.3% 2/15/2014 1,036,070
5,000,000 Houston, Texas Water & Sewer System, Revenue Refunding Jr.
Lien Series A, Insured by FGIC 5.250% 12/1/2022 4,749,250
2,000,000 Houston, Texas, Airport System, Sub Lien Revenue Bonds,
Series A, FSA Insured 5.625% 7/1/2030 1,945,040
5,315,000 Lewisville, Texas, Independent School District, Capital Appreciation
Refunding Bonds, Permanent School Fund Guaranteed Zero Coupon 8/15/2019 1,829,264
1,845,000 San Antonio, Texas, Airport Revenue Refunding Bonds,
Insured by AMBAC 7.375% 7/1/2010 2,005,367
1,000,000 San Antonio, Texas, Airport Revenue Refunding Bonds,
Insured by AMBAC 7.375% 7/1/2011 1,085,870
11,615,000 Southeastern Texas Housing Finance Corp., Single Family
Mortgage Revenue Bonds Zero Coupon 9/1/2017 4,459,695(b)
4,315,000 Texas State, Veterans Land Board General Obligation Bonds 0.05% 7/1/2010 2,666,454(b)
1,000,000 Texas Water Development Board, State Revolving Fund Revenue
Bond, Senior Lien, Series A 5.25% 7/15/2017 984,630
745,000 Travis County, Texas, Housing Finance Corporation, Single
Family Mortgage Revenue Refunding Bonds, Series 1994-A 6.75% 4/1/2014 789,730
440,000 Willis, Texas, Independent School District, General Obligation
Bonds, Permanent School Fund Guaranteed 6.5% 2/15/2016 446,424
745,000 Wylie, Texas, Independent School District, General Obligation
Bonds, Permanent School Fund Guaranteed 6.875% 8/15/2014 866,361(b)
430,000 Wylie, Texas, Independent School District, General Obligation
Bonds, Permanent School Fund Guaranteed 6.875% 8/15/2014 490,746
-------------
52,231,521
-------------
Utah - 2.3%
5,000,000 Intermountain Power Agency, Utah, Power Supply Revenue Bonds,
Series B, Insured by MBIA 5.75% 7/1/2019 5,081,350
3,405,000 Timpanogos Special Service District, Utah County, Utah, Sewer
Revenue Bonds, Series 1996-A, Insured by AMBAC 6.1% 6/1/2019 3,678,285(b)
3,750,000 Utah Associated Municipal Power Systems, San Juan Project
Revenue Bonds, Series O, Insured by MBIA 6.25% 6/1/2014 4,024,575(b)
-------------
12,784,210
-------------
Virginia - 1.1%
3,625,000 Fairfax County, Virginia, Water Authority, Water Revenue
Refunding Bonds 5.0% 4/1/2021 3,404,165
3,000,000 Industrial Development Authority of Fairfax County, Virginia,
Health Care Revenue Bonds, (Inova Health System Project),
Series 1996 5.875% 8/15/2016 3,068,250
-------------
6,472,415
-------------
Washington - 5.4%
1,395,000 Douglas County, Washington, Public Utility District #1,
Wells Hydroelectric Revenue Bonds, Series A 8.75% 9/1/2018 1,693,544
1,655,000 Douglas County, Washington, Public Utility District #1, Wells
Hydroelectric Revenue Bonds, Series A 8.75% 9/1/2018 2,072,722 (b)
2,000,000 Grant County, Washington, Public Utility District No. 2, Columbia
River, Priest Rapid Hydro Electric Development Project, Second
Series Revenue Bonds, Series A, Insured by AMBAC 5.0% 1/1/2023 1,817,900
4,130,000 Seattle, Washington, Water System Revenue Bonds, FGIC Insured 5.0% 10/1/2027 3,744,878
4,040,000 State of Washington, Unlimited Tax General Obligation Bonds,
Series E 5.0% 7/1/2022 3,667,068
1,500,000 Tacoma, Washington, Conservation System Project Revenue Bonds,
Tacoma Public Utilities Light Division 6.6% 1/1/2015 1,578,675
1,000,000 Washington State Higher Education (Whitman College Project) 5.875% 10/1/2029 1,010,640
3,000,000 Washington State Public Power Supply System, Nuclear
Project No. 1, Revenue Refunding Bonds, Series 1996-A,
Insured by MBIA 5.75% 7/1/2012 3,127,950
2,000,000 Washington State Public Power Supply System, Nuclear
Project No. 1, Revenue Refunding Bonds, Series 1996-A,
Insured by MBIA 5.75% 7/1/2011 2,094,340
2,000,000 Washington State, Unlimited Tax General Obligation Bonds,
Series B 6.0% 6/1/2012 2,174,100
3,000,000 Washington State, Unlimited Tax General Obligation Bonds,
Series 93A 5.75% 10/1/2012 3,194,400
1,500,000 Washington State, Unlimited Tax General Obligation Bonds,
Series A 6.25% 2/1/2011 1,657,620
2,500,000 Washington State, Various Purpose General Obligation Bonds 6.25% 6/1/2010 2,765,500
-------------
30,599,337
-------------
Wyoming - 0.5%
2,500,000 State of Wyoming, Farm Loan Board, Capital Facilities Revenue
Bonds, Series 1994 6.1% 4/1/2024 2,558,225
-------------
Total Long-Term Municipal Securities (cost $520,926,396) 558,770,152
-------------
SHORT-TERM MUNICIPAL SECURITIES - 1.1%(a,c)
1,400,000 Illinois Development Finance Authority, (Amoco Oil
Company Project), Pollution Control Revenue Refunding
Bonds, Series 1994 3.7% 11/1/2000 1,400,000
1,400,000 Maricopa County, Arizona Pollution Control Corp., Pollution
Control Revenue Refunding Bonds, (Arizona Public Service Co.
Palo Verde Project), 1994 Series B 3.9% 11/1/2000 1,400,000
1,000,000 Maricopa County, Arizona Pollution Control Corp., Pollution
Control Revenue Refunding Bonds, (Arizona Public Service Co.
Palo Verde Project), 1994 Series E 3.95% 11/1/2000 1,000,000
400,000 Massachusetts Health & Educational Facilities Authority, Variable
Rate Demand Notes, Series B 4.25% 11/1/2000 400,000
1,200,000 Michigan Strategic Fund, Variable Rate Demand Pollution
Control Revenue Refunding Bonds, (Consumers Power
Company Project), Series 1988A 3.7% 11/1/2000 1,200,000
600,000 Peninsula Ports Authority, Virginia, Variable Rate Notes 4.45% 11/1/2000 600,000
-------------
Total Short-Term Municipal Securities (at amortized cost) 6,000,000
-------------
Total Investments (cost $526,926,396) $ 564,770,152(d)
=============
Notes to Portfolio of Investments:
----------------------------------
(a) The categories of investments are shown as a percentage of total investments of the Lutheran Brotherhood Municipal Bond Fund.
(b) Denotes securities that have been pre-refunded or escrowed to maturity. Under such an arrangement, money is deposited
into an irrevocable escrow account and is used to purchase U.S. Treasury securities or Government Agency securities with
maturing principal and interest earnings sufficient to pay all debt service requirements of the pre-refunded bonds. Because
the original bonds assume a quality rating equivalent to the escrowed U.S. Government securities, they are considered to
be U.S. Government securities for purposes of portfolio diversification requirements.
(c) Denotes variable rate obligations for which the current yield and next scheduled interest reset date are shown.
(d) At October 31, 2000, the aggregate cost of securities for federal income tax purposes was $526,956,279 and the net
unrealized appreciation of investments based on that cost was $37,813,873 which is comprised of $39,535,016 aggregate
gross unrealized appreciation and $1,721,143 aggregate gross unrealized depreciation.
(e) Miscellaneous abbreviations:
AMBAC - AMBAC Indemnity Corp.
Connie Lee - Connie Lee Insurance Co.
FGIC - Financial Guaranty Insurance Co.
FHA - Federal Housing Administration
FSA - Federal Security Assurance, Inc.
GNMA - Government National Mortgage Association
MBIA - Municipal Bond Investors Assurance Corp.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD LIMITED MATURITY BOND FUND
Portfolio of Investments
October 31, 2000
Principal Maturity
Amount Rate Date Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CORPORATE BONDS - 21.3%(a)
Automotive - 1.2%
$ 500,000 Visteon Corp., Notes 7.95% 8/1/2005 $ 499,754
-------------
Broadcasting & Media - 1.7%
500,000 Clear Channel Communications, Sr. Notes 7.875% 6/15/2005 504,771
150,000 Interpublic Group Companies, Inc., Convertible Notes 1.8% 9/16/2004 176,250
-------------
681,021
-------------
Finance - Automotive - 1.2%
500,000 Ford Motor Credit Co., Notes 6.7% 7/16/2004 488,659
-------------
Finance - Commercial - 1.2%
500,000 General Electric Capital Corp., Medium Term Notes, Series A 6.81% 11/3/2003 502,060
-------------
Finance - Consumer - 1.2%
500,000 American Express Co., Notes 6.875% 11/1/2005 496,984
-------------
Finance - Structured - 1.2%
500,000 MBNA America Bank N.A., Notes 7.75% 9/15/2005 496,737
-------------
Health Care Management - 0.4%
150,000 HCA Healthcare Co., Notes 8.75% 9/1/2010 151,596
-------------
Insurance - 5.1%
500,000 Allstate Financial Global Funding, Notes 7.125% 9/26/2005 501,961
500,000 AON Corp., Notes 8.65% 5/15/2000 520,201
500,000 Everest Reinsurance Holdings, Sr. Notes 8.5% 3/15/2005 517,725
500,000 Hartford Financial Services Group, Inc., Notes 7.75% 6/15/2005 511,939
-------------
2,051,826
-------------
Oil & Gas - 1.3%
500,000 Dynegy, Inc., Notes 8.125% 3/15/2005 512,107
-------------
Retail - 0.7%
500,000 Saks, Inc., Sr. Notes 8.25% 11/15/2008 287,500
-------------
Telecommunications - Data/Internet - 0.3%
150,000 Exodus Communications, Inc., Sr. Notes 11.625% 7/15/2010 139,500
-------------
Telecommunications - Wireless - 0.4%
150,000 Nextel Communications, Inc., Sr. Notes 9.375% 11/15/2009 145,125
-------------
Telecommunications - Wireline - 2.2%
150,000 Level 3 Communications, Inc., Unsecured Sr. Notes 11.0% 3/15/2008 135,750
150,000 NEXTLINK Communications, Inc., Sr. Notes 10.5% 12/1/2009 130,500
500,000 Qwest Capital Funding, Inc., Unsecured Notes 7.75% 8/15/2006 507,194
150,000 Williams Communications Group, Sr. Redeemable Notes 11.7% 8/1/2008 134,625
-------------
908,069
-------------
Utilities - 3.2%
150,000 AES (The) Corp., Sr. Notes 9.375% 9/15/2010 153,000
500,000 AmerenEnergy Generating Co., Sr. Notes 7.75% 11/1/2005 496,631
150,000 CMS Energy Corp., Sr. Notes 9.875% 10/15/2007 151,570
500,000 Dominion Resources, Inc., Sr. Notes, Series B 7.625% 7/15/2005 505,038
-------------
1,306,239
-------------
Total Corporate Bonds (cost $8,831,873) 8,667,177
-------------
ASSET-BACKED SECURITIES - 12.2%(a)
500,000 Citibank Credit Card Issuance Trust, Series 2000-C1-C1 7.45% 9/15/2005 482,173
500,000 Com-Ed Transitional Funding Trust, Series 1998-1-A5 5.44% 3/25/2007 476,658
500,000 Conseco Finance Securitization Corp., Series 2000-1-A3 7.3% 5/1/2031 502,888
500,000 Discover Card Master Trust I, Series 1999-6A 6.85% 7/7/2007 499,954
500,000 MBNA Master Credit Card Trust, Asset Backed Certificates,
Series 1999-M-A 6.6% 4/16/2007 498,058
500,000 Midwest Generation, LLC, Pass Through Certificates, Series A 8.3% 7/2/2009 497,560
500,000 Reliant Energy Mid Atlantic, Pass Through Certificates, Series B 9.237% 7/2/2017 509,063
500,000 Sears Credit Account Master Trust, Master Trust Certificates,
Series 1999-3-A 6.45% 11/15/2009 493,423
500,000 Toyota Auto Receivables, Asset Backed Certificates,
Series 1999-A-A3 6.15% 8/16/2004 497,158
479,499 Vornado Finance, LLC, Series 2000-VNO-A1 7.514% 3/15/2015 490,907
-------------
Total Asset-Backed Securities (cost $4,944,505) 4,947,842
-------------
FOREIGN GOVERNMENT BONDS - 1.9%(a,b)
250,000 Brazil (Federative Republic), Unsubordinated Notes 14.5% 10/15/2009 266,625
500,000 United Mexican States, Medium Term Notes, Series A 8.5% 2/1/2006 491,750
-------------
Total Foreign Government Bonds (cost $774,767) 758,375
-------------
MORTGAGE-BACKED SECURITIES - 19.9%(a)
4,000,000 Federal National Mortgage Association, Participation Certificates 8.0% 11/1/2030 4,048,752(c)
4,000,000 Government National Mortgage Association, Modified Pass
Through Certificates 7.50% 11/15/2015 4,048,752(c)
-------------
Total Mortgage-Backed Securities (cost $8,098,750) 8,097,504
-------------
U.S. GOVERNMENT AGENCY - 3.6%(a)
500,000 Federal Home Loan Mortgage Corp., Notes 6.875% 1/15/2005 506,414
1,000,000 Federal National Mortgage Association, Notes 5.625% 5/14/2004 973,160
-------------
Total U.S. Government Agency (cost $1,465,678) 1,479,574
-------------
U.S. GOVERNMENT - 8.6%(a)
3,500,000 U.S. Treasury Notes (cost $3,471,564) 5.75%-6.0% 2002-2004 3,499,099
-------------
Shares
------------
COMMON STOCKS - 0.1%(a)
2,500 Lucent Technologies, Inc., Common Stock (cost $154,089) 58,281
-------------
SHORT-TERM SECURITIES - 32.4%(a)
U.S. Government Agency
5,200,000 Federal Agricultural Mortgage Corp., Discount Notes 6.45% 11/1/2000 5,200,000
4,000,000 Federal Agricultural Mortgage Corp., Discount Notes 6.38% 11/13/2000 3,991,493
4,000,000 Federal Agricultural Mortgage Corp., Discount Notes 6.38% 11/16/2000 3,989,367
-------------
Total Short-Term Securities (at amortized cost) 13,180,860
-------------
Total Investments (cost $40,922,086) $ 40,688,712(d)
=============
Notes to Portfolio of Investments:
----------------------------------
(a) The categories of investments are shown as a percentage of total investments of the Lutheran Brotherhood Limited
Maturity Bond Fund.
(b) Denominated in U.S. dollars.
(c) Denotes investments purchased on a when-issued basis.
(d) At October 31, 2000, the aggregate cost of securities for federal income tax purposes was $40,922,086 and the net
unrealized depreciation of investments based on that cost was $233,374 which is comprised of $169,199 aggregate gross
unrealized appreciation and $402,573 aggregate gross unrealized depreciation.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD MONEY MARKET FUND
Portfolio of Investments
October 31, 2000
Principal Maturity
Amount Yield Date Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
BANK NOTES - 1.0%(a)
Banking - Domestic
$ 7,000,000 Bank America North America 6.75% 9/17/2001 $ 6,999,993
-------------
CERTIFICATES OF DEPOSIT - 9.1%(a)
Banking - Domestic - 3.1%
7,000,000 Michigan National Bank 6.80% 4/6/2001 7,002,015
14,000,000 Wachovia Bank, N.A. 6.51% 12/27/2000 14,000,000
-------------
21,002,015
-------------
Banking - Foreign - 6.0%
8,000,000 Canadian Imperial Bank of Commerce 6.72% 2/12/2001 7,998,929
1,500,000 Svenska Handelsbanken NY 6.82% 3/16/2001 1,499,461
7,000,000 Svenska Handelsbanken NY 6.90% 8/24/2001 6,998,964
1,500,000 UBS Ag Stamford (Union Bank of Switzerland) 6.55% 12/4/2000 1,499,392
1,000,000 UBS Ag Stamford (Union Bank of Switzerland) 6.56% 12/4/2000 999,569
7,000,000 UBS Ag Stamford (Union Bank of Switzerland) 6.90% 4/30/2001 6,999,344
7,000,000 UBS Ag Stamford (Union Bank of Switzerland) 7.23% 5/8/2001 6,998,978
7,000,000 UBS Ag Stamford (Union Bank of Switzerland) 7.15% 6/22/2001 6,996,683
-------------
39,991,320
-------------
Total Certificates of Deposit 60,993,335
-------------
COMMERCIAL PAPER - 83.2%(a)
Banking - Domestic - 5.2%
7,000,000 Morgan J.P. & Co., Inc. 6.56% 12/8/2000 6,953,380
7,000,000 River Fuel Co., Inc. (Bank of New York, Direct Pay Letter of Credit) 6.57% 11/20/2000 6,975,986
7,000,000 Ventures Business Trust (Guaranteed J.P. Morgan & Co.) 6.66% 1/22/2001 6,895,564
7,000,000 Wells Fargo & Co. 6.56% 11/21/2000 6,974,839
7,000,000 Wells Fargo & Co. 6.61% 1/26/2001 6,891,306
-------------
34,691,075
-------------
Banking - Foreign - 4.3%
7,000,000 Abbey National North America (Guaranteed Abbey National plc) 6.46% 11/3/2000 6,997,604
15,000,000 Centerior Fuel Corp. (Direct Pay Letter of Credit, Barclays Bank plc) 6.57% 11/9/2000 14,978,167
7,000,000 Svenska Handelsbank, Inc. 6.93% 12/11/2000 6,947,967
-------------
28,923,738
-------------
Chemicals - 0.7%
4,400,000 Dupont (E.I.) de Nemours and Co. 6.51% 12/21/2000 4,360,583
-------------
Consumer Products - 0.4%
3,000,000 Procter & Gamble Co. 6.56% 11/17/2000 2,991,373
-------------
Drugs & Health Care - 0.8%
3,500,000 Schering Corp. (Guaranteed Schering Plough Corp.) 6.61% 11/21/2000 3,487,381
2,085,000 Schering Corp. (Guaranteed Schering Plough Corp.) 6.93% 11/21/2000 2,077,239
-------------
5,564,620
-------------
Finance - Automotive - 4.0%
7,000,000 Ford Motor Credit Co. 6.54% 12/12/2000 6,948,420
7,000,000 General Motors Acceptance Corp. (General Motors Corp.) 6.58% 11/28/2000 6,965,928
6,400,000 General Motors Acceptance Corp. (General Motors Corp.) 6.56% 12/13/2000 6,351,616
7,000,000 General Motors Acceptance Corp. (General Motors Corp.) 6.71% 1/31/2001 6,884,632
-------------
27,150,596
-------------
Finance - Commercial - 5.7%
7,000,000 CIT Group Holdings, Inc. 6.67% 11/30/2000 6,963,178
7,000,000 CIT Group Holdings, Inc. 6.64% 2/5/2001 6,878,667
14,000,000 General Electric Capital Corp. 6.62% 11/1/2000 14,000,000
3,600,000 General Electric Capital Corp. 6.64% 11/22/2000 3,586,266
7,000,000 General Electric Capital Corp. 6.69% 1/25/2001 6,892,239
-------------
38,320,350
-------------
Finance - Consumer - 10.9%
2,000,000 American Express Credit Corp. 6.51% 11/15/2000 1,994,960
5,200,000 American Express Credit Corp. 6.56% 11/15/2000 5,186,856
5,000,000 American Express Credit Corp. 6.61% 11/15/2000 4,987,361
1,000,000 American Express Credit Corp. 6.66% 11/15/2000 997,461
27,900,000 Associates Corp. of North America 6.21% 11/1/2000 27,900,000
32,000,000 Household Finance Corp. 6.61% 11/1/2000 32,000,000
-------------
73,066,638
-------------
Finance - Retail - 2.1%
7,300,000 Wal-Mart Stores, Inc. 6.54% 11/7/2000 7,292,128
6,750,000 Wal-Mart Stores, Inc. 6.55% 11/21/2000 6,725,738
-------------
14,017,866
-------------
Finance - Structured - 13.1%
7,000,000 Ciesco L.P. 6.54% 11/29/2000 6,964,666
7,350,000 Corporate Asset Funding Co. 6.55% 11/3/2000 7,347,346
7,000,000 Corporate Receivables Corp. 6.67% 11/13/2000 6,984,740
8,000,000 Corporate Receivables Corp. 6.64% 12/7/2000 7,948,000
3,000,000 CXC, Inc. 6.59% 11/2/2000 2,999,458
7,000,000 CXC, Inc. 6.56% 11/27/2000 6,967,139
7,000,000 CXC, Inc. 6.64% 1/17/2001 6,901,932
7,000,000 Delaware Funding Corp. 6.58% 11/10/2000 6,988,608
5,052,000 Delaware Funding Corp. 6.54% 11/21/2000 5,033,785
7,000,000 Delaware Funding Corp. 6.54% 11/30/2000 6,963,347
7,000,000 Delaware Funding Corp. 6.59% 12/8/2000 6,953,380
2,284,000 Edison Asset Securitization, L.L.C. 6.59% 11/13/2000 2,279,028
7,000,000 Edison Asset Securitization, L.L.C. 6.60% 12/22/2000 6,935,641
7,000,000 Preferred Receivables Funding 6.68% 1/8/2001 6,912,866
-------------
88,179,936
-------------
Food & Beverage - 2.1%
7,000,000 BestFoods 6.57% 11/7/2000 6,992,417
7,000,000 Coca-Cola Co. 6.63% 11/14/2000 6,983,544
-------------
13,975,961
-------------
Insurance - 7.3%
7,000,000 Aegon Funding Corp. (Guaranteed Aegon N.V.) 6.50% 12/6/2000 6,957,806
7,000,000 American Family Financial Services (Guaranteed American
Family Mutual Insurance Co.) 6.68% 11/14/2000 6,983,494
7,000,000 American Family Financial Services (Guaranteed American
Family Mutual Insurance Co.) 6.62% 4/12/2001 6,798,085
10,000,000 A.I. Credit Corp. 6.60% 1/19/2001 9,857,361
7,000,000 Prudential Funding Corp. 6.99% 11/20/2000 6,975,063
7,000,000 USAA Capital Corp. 6.63% 1/31/2001 6,884,986
5,000,000 USAA Capital Corp. 6.62% 2/2/2001 4,915,913
-------------
49,372,708
-------------
Metals & Mining - 1.5%
3,700,000 Alcoa, Inc. 6.55% 12/6/2000 3,676,762
6,329,000 Alcoa, Inc. 6.54% 12/12/2000 6,282,364
-------------
9,959,126
-------------
Oil & Gas - 9.3%
7,000,000 Chevron Transport Corp. (Guaranteed Chevron Corp.) 6.60% 11/8/2000 6,991,153
7,000,000 Chevron Transport Corp. (Guaranteed Chevron Corp.) 6.74% 2/8/2001 6,874,490
7,000,000 Chevron Transport Corp. (Guaranteed Chevron Corp.) 6.69% 3/14/2001 6,832,420
32,000,000 Koch Industries, Inc. 6.63% 11/1/2000 32,000,000
10,000,000 Mobil Australia Finance Co., Inc. (Guaranteed Mobil Oil Corp.) 6.60% 11/17/2000 9,970,933
-------------
62,668,996
-------------
Services - 2.5%
3,000,000 Leland H. Stanford Junior University 6.84% 12/12/2000 2,977,382
3,500,000 Leland H. Stanford Junior University 6.74% 12/15/2000 3,472,023
3,500,000 Leland H. Stanford Junior University 6.73% 1/31/2001 3,442,316
7,000,000 Leland H. Stanford Junior University 6.74% 1/31/2001 6,884,632
-------------
16,776,353
-------------
Technology - Hardware - 4.4%
7,000,000 Motorola Credit Corp. (Guaranteed Motorola, Inc.) 6.57% 11/10/2000 6,988,660
7,000,000 Motorola, Inc. 6.82% 11/9/2000 6,989,687
5,000,000 Motorola, Inc. 6.83% 12/13/2000 4,961,500
7,000,000 Motorola, Inc. 6.60% 12/21/2000 6,937,097
3,450,000 Motorola, Inc. 6.60% 12/26/2000 3,415,740
-------------
29,292,684
-------------
Technology - Services - 4.8%
32,000,000 Electronic Data Systems Corp. 6.63% 11/1/2000 32,000,000
-------------
Telecommunications - Wireline - 4.1%
5,000,000 AT&T Corp. 6.63% 11/2/2000 4,999,094
1,775,000 AT&T Corp. 6.60% 11/8/2000 1,772,757
7,000,000 AT&T Corp. 6.94% 11/30/2000 6,962,163
7,000,000 AT&T Corp. 6.67% 3/8/2001 7,000,000
7,000,000 AT&T Corp. 7.09% 7/13/2001 7,000,000
-------------
27,734,014
-------------
Total Commercial Paper 559,046,617
-------------
MEDIUM TERM NOTES - 1.9%(a)
Finance - Automotive - 0.9%
1,000,000 Ford Motor Credit Co. 6.82% 2/23/2001 997,267
2,500,000 General Motors Acceptance Corp. (General Motors Corp.) 6.81% 4/9/2001 2,489,541
2,530,000 General Motors Acceptance Corp. (General Motors Corp.) 6.78% 4/17/2001 2,530,777
-------------
6,017,585
-------------
Finance - Commercial - 1.0%
7,000,000 General Electric Capital Corp. 7.38% 5/23/2001 7,000,000
-------------
Total Medium Term Notes 13,017,585
-------------
U.S. GOVERNMENT AGENCY - 2.1%(a)
7,000,000 Federal Home Loan Bank 6.29% 11/10/2000 6,989,518
7,000,000 Federal National Mortgage Association 6.93% 8/3/2001 6,997,996
-------------
Total U.S. Government Agency 13,987,514
-------------
VARIABLE RATE NOTES - 2.7%(a,b)
U.S. Municipal
8,000,000 Illinois Student Assistance Commission (Bank of America,
Illinois, Direct Pay Letter of Credit) 6.60% 11/1/2000 8,000,000
10,000,000 Illinois Student Assistance Commission (Student Loan
Marketing Assoc., Direct Pay Letter of Credit) 6.58% 11/1/2000 10,000,000
-------------
Total Variable Rate Notes 18,000,000
-------------
Total Portfolio of Investments (at amortized cost) $ 672,045,044(c)
=============
Notes to Portfolio of Investments:
----------------------------------
(a) The categories of investments are shown as a percentage of total investments of the Lutheran Brotherhood Money Market Fund.
(b) Denotes variable rate obligations for which the current yield and the next scheduled interest reset date are shown.
(c) Also represents cost for federal income tax purposes.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD OPPORTUNITY GROWTH FUND
Financial Statements
Statement of Assets and Liabilities
October 31, 2000
<S> <C>
ASSETS:
Investments in securities, at value (cost, $235,188,654) $277,559,708
Cash 394,781
Receivable for investment securities sold 10,559,042
Dividend receivable 5,167
------------
Total assets 288,518,698
------------
LIABILITIES:
Payable for investment securities purchased 8,355,400
Accrued expenses 161,617
------------
Total liabilities 8,517,017
------------
NET ASSETS $280,001,681
============
NET ASSETS CONSIST OF:
Paid-in capital $220,240,247
Accumulated net investment loss (7,192)
Accumulated net realized gain from sale of investments 17,397,572
Unrealized net appreciation of investments 42,371,054
------------
NET ASSETS $280,001,681
============
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$253,161,775 and 17,699,504 shares of beneficial interest outstanding) $14.30
======
Maximum public offering price per share (based on a net asset
value per share of $14.30 divided by 0.96 for a 4% sales charge) $14.90
======
Class B Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $14,788,570 and 1,056,749 shares of
beneficial interest outstanding) $13.99
======
Institutional Class Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $12,051,336 and 833,725 shares of
beneficial interest outstanding) $14.45
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended October 31, 2000
<S> <C>
INVESTMENT INCOME:
Income --
Dividend income $ 254,951
Interest income 1,063,047
-----------
Total income 1,317,998
-----------
Expenses --
Investment advisory fee 1,188,876
Distribution and service plan fees:
Class A 629,533
Class B 127,500
Institutional Class 16,245
Transfer agent services 1,238,645
Custodian fee 169,558
Administrative personnel and services 55,079
Printing and postage 274,467
Trust share registration costs 63,976
Auditing fees 5,334
Legal fees 5,468
Trustees' fees 8,264
Miscellaneous 6,470
-----------
Total expenses 3,789,415
Fees paid indirectly (8,591)
-----------
Net expenses 3,780,824
-----------
Net investment loss (2,462,826)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions 36,452,253
Net change in unrealized appreciation of investments 28,340,395
-----------
Net gain on investments 64,792,648
-----------
Net increase in net assets resulting from operations $62,329,822
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years ended October 31, 2000 and 1999
Year Ended Year Ended
10/31/2000 10/31/99
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss $ (2,462,826) $ (2,721,565)
Net realized gain on investments 36,452,253 3,498,799
Net change in unrealized appreciation or depreciation of investments 28,340,395 39,085,693
------------ ------------
Net increase in net assets resulting from operations 62,329,822 39,862,927
------------ ------------
NET TRUST SHARE TRANSACTIONS:
Class A (10,255,580) (37,324,818)
Class B 3,972,361 3,290,263
Institutional Class 633,440 2,182,297
------------ ------------
Net change in net assets resulting from trust share transactions (5,649,779) (31,852,258)
------------ ------------
Net increase in net assets 56,680,043 8,010,669
NET ASSETS:
Beginning of period 223,321,638 215,310,969
------------ ------------
End of period $280,001,681 $223,321,638
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD MID CAP GROWTH FUND
Financial Statements
Statement of Assets and Liabilities
October 31, 2000
<S> <C>
ASSETS:
Investments in securities, at value (cost, $146,292,221) $180,837,968
Cash 43,730
Receivable for investment securities sold 3,549,000
Dividend receivable 14,821
Unamortized organization costs 8,674
------------
Total assets 184,454,193
------------
LIABILITIES:
Payable for investment securities purchased 2,766,189
Accrued expenses 141,440
------------
Total liabilities 2,907,629
------------
NET ASSETS $181,546,564
============
NET ASSETS CONSIST OF:
Paid-in capital $132,892,672
Accumulated net investment loss (3,360)
Accumulated net realized gain from sale of investments 14,111,505
Unrealized net appreciation of investments 34,545,747
------------
NET ASSETS $181,546,564
============
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$140,703,139 and 7,692,598 shares of beneficial interest outstanding) $18.29
======
Maximum public offering price per share (based on a net asset
value per share of $18.29 divided by 0.96 for a 4% sales charge) $19.05
======
Class B Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $36,407,742 and 2,037,008 shares of
beneficial interest outstanding) $17.87
======
Institutional Class Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $4,435,683 and 239,857 shares of
beneficial interest outstanding) $18.49
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended October 31, 2000
<S> <C>
INVESTMENT INCOME:
Income --
Dividend income $ 336,544
Interest income 624,659
------------
Total income 961,203
------------
Expenses --
Investment advisory fee 608,540
Distribution and service plan fees:
Class A 271,124
Class B 282,762
Institutional Class 4,364
Transfer agent services 747,881
Custodian fee 140,130
Administrative personnel and services 27,927
Printing and postage 185,416
Trust share registration costs 87,506
Auditing fees 5,244
Legal fees 1,709
Trustees' fees 5,763
Amortization of organization costs 5,505
Miscellaneous 2,657
------------
Total expenses 2,376,528
Fees paid indirectly (5,616)
------------
Net expenses 2,370,912
------------
Net investment loss (1,409,709)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions 17,044,624
Net change in unrealized appreciation of investments 23,121,970
------------
Net gain on investments 40,166,594
------------
Net increase in net assets resulting from operations $ 38,756,885
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years ended October 31, 2000 and 1999
Year Ended Year Ended
10/31/2000 10/31/99
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss $(1,409,709) $ (851,078)
Net realized gain on investments 17,044,624 5,471,578
Net change in unrealized appreciation or depreciation of investments 23,121,970 13,367,574
------------ ------------
Net increase in net assets resulting from operations 38,756,885 17,988,074
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gains:
Class A (2,216,890) --
Class B (600,391) --
Institutional Class (44,809) --
------------ ------------
Total distributions (2,862,090) --
------------ ------------
NET TRUST SHARE TRANSACTIONS:
Class A 53,438,470 12,960,104
Class B 13,346,007 6,053,517
Institutional Class 2,615,407 273,449
------------ ------------
Net increase in net assets from trust share transactions 69,399,884 19,287,070
------------ ------------
Net increase in net assets 105,294,679 37,275,144
NET ASSETS:
Beginning of period 76,251,885 38,976,741
------------ ------------
End of period $181,546,564 $ 76,251,885
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD WORLD GROWTH FUND
Financial Statements
Statement of Assets and Liabilities
October 31, 2000
<S> <C>
ASSETS:
Investments in securities, at value (cost, $116,675,623) $129,368,768
Cash (including foreign currency holdings of $986,723) 1,035,124
Receivable for investment securities sold 511,468
Dividend and interest receivable 196,476
------------
Total assets 131,111,836
------------
LIABILITIES:
Payable for investment securities purchased 202,899
Accrued expenses 107,880
------------
Total liabilities 310,779
------------
NET ASSETS $130,801,057
============
NET ASSETS CONSIST OF:
Paid-in capital $107,437,696
Accumulated net investment loss (5,734
Accumulated net realized gain from sale of investments
and foreign currency transactions 10,706,315
Unrealized net appreciation of investments and on translation of assets
and liabilities in foreign currencies 12,662,780
------------
NET ASSETS $130,801,057
============
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $102,398,285 and 8,272,309 shares of beneficial interest outstanding) $12.38
======
Maximum public offering price per share (based on a net asset value per
share of $12.38 divided by 0.96 for a 4% sales charge) $12.90
======
Class B Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $12,603,753 and 1,039,472 shares of
beneficial interest outstanding) $12.13
======
Institutional Class Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $15,799,019 and 1,264,067 shares of
beneficial interest outstanding) $12.50
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended October 31, 2000
<S> <C>
INVESTMENT INCOME:
Income --
Dividend income (net of foreign taxes of $214,736) $ 1,404,152
Interest income 318,100
-----------
Total income 1,722,252
------------
Expenses --
Investment advisory fee 1,006,743
Distribution and service plan fees:
Class A 265,347
Class B 116,331
Institutional Class 24,691
Transfer agent services 620,092
Custodian fee 148,621
Administrative personnel and services 26,846
Printing and postage 151,162
Trust share registration costs 72,851
Auditing fees 5,428
Legal fees 1,679
Trustees' fees 5,766
Amortization of organization costs 8,476
Miscellaneous 3,418
-----------
Total expenses 2,457,451
Fees paid indirectly (2,073)
-----------
Net expenses 2,455,378
-----------
Net investment loss (733,126)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY:
Net realized gain on investment transactions 12,000,820
Net realized loss on foreign currency transactions (473,675)
-----------
Net realized gain on investments and foreign currency transactions 11,527,145
-----------
Net change in unrealized appreciation of investments (11,356,487)
Net change in unrealized depreciation on translation of assets
and liabilities in foreign currencies (28,883)
-----------
Net change in unrealized depreciation of investments and on
translation of assets and liabilities in foreign currencies (11,385,370)
-----------
Net gain on investments and foreign currency 141,775
-----------
Net change in net assets resulting from operations $ (591,351)
===========
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years ended October 31, 2000 and 1999
Year Ended Year Ended
10/31/2000 10/31/99
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss $ (733,126) $ (90,998)
Net realized gain on investments and foreign currency transactions 11,527,145 4,075,707
Net change in unrealized appreciation or depreciation of investments and
On translation of assets and liabilities in foreign currencies (11,385,370) 13,181,630
------------ ------------
Net change in net assets resulting from operations (591,351) 17,166,339
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Class A -- (509,984)
Class B -- (21,512)
Institutional Class -- (102,827)
Net realized gains:
Class A (2,747,599) --
Class B (266,194) --
Institutional Class (441,433) --
------------ ------------
Total distributions (3,455,226) (634,323)
------------ ------------
NET TRUST SHARE TRANSACTIONS:
Class A 17,759,427 1,035,539
Class B 5,244,626 3,623,615
Institutional Class 2,015,022 1,704,486
------------ ------------
Net increase in net assets from trust share transactions 25,019,075 6,363,640
------------ ------------
Net increase in net assets 20,972,498 22,895,656
NET ASSETS:
Beginning of period 109,828,559 86,932,903
------------ ------------
End of period $130,801,057 $109,828,559
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD GROWTH FUND
Financial Statements
Statement of Assets and Liabilities
October 31, 2000
<S> <C>
ASSETS:
Investments in securities, at value (cost, $39,833,614) $ 39,647,421
Cash 87,073
Receivable for investment securities sold 100,917
Dividend receivable 8,634
------------
Total assets 39,844,045
------------
LIABILITIES:
Payable for investment securities purchased 377,594
Accrued expenses 43,287
------------
Total liabilities 420,881
------------
NET ASSETS $ 39,423,164
============
NET ASSETS CONSIST OF:
Paid-in capital $ 39,916,634
Accumulated net realized loss from sale of investments (307,277)
Unrealized net depreciation of investments (186,193)
------------
NET ASSETS $ 39,423,164
============
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $27,685,788 and 1,487,789 shares of beneficial interest outstanding) $18.61
======
Maximum public offering price per share (based on a net asset
value per share of $18.61 divided by 0.96 for a 4% sales charge) $19.39
======
Class B Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $6,791,370 and 367,706 shares of
beneficial interest outstanding) $18.47
======
Institutional Class Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $4,946,006 and 263,835 shares of
beneficial interest outstanding) $18.75
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended October 31, 2000
<S> <C>
INVESTMENT INCOME:
Income --
Dividend income $ 97,001
Interest income 79,339
------------
Total income 176,340
------------
Expenses --
Investment advisory fee 99,962
Distribution and service plan fees:
Class A 37,275
Class B 41,613
Institutional Class 6,674
Transfer agent services 122,944
Custodian fee 11,760
Administrative personnel and services 4,704
Printing and postage 30,758
Trust share registration costs 84,340
Auditing fees 5,188
Legal fees 242
Trustees' fees 5,763
Miscellaneous 1,280
------------
Total expenses 452,503
Expense reimbursement from investment advisor (148,851)
------------
Net expenses 303,652
------------
Net investment loss (127,312)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investment transactions (307,277)
Net change in unrealized depreciation of investments (182,063)
------------
Net loss on investments (489,340)
------------
Net change in net assets resulting from operations $ (616,652)
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Periods ended October 31, 2000 and 1999
For the period from
October 29, 1999
Year Ended (effective date) to
10/31/2000 October 31, 1999
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss $ (127,312) $ --
Net realized loss on investments (307,277) --
Net change in unrealized appreciation or depreciation of investments (182,063) (4,130)
------------ ------------
Net change in net assets resulting from operations (616,652) (4,130)
------------ ------------
NET TRUST SHARE TRANSACTIONS:
Class A 27,552,595 1,000,000
Class B 5,896,195 1,000,000
Institutional Class 1,595,156 3,000,000
------------ ------------
Net increase in net assets from trust share transactions 35,043,946 5,000,000
------------ ------------
Net increase in net assets 34,427,294 4,995,870
NET ASSETS:
Beginning of period 4,995,870 --
------------ ------------
End of period $ 39,423,164 $ 4,995,870
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD FUND
Financial Statements
Statement of Assets and Liabilities
October 31, 2000
<S> <C>
ASSETS:
Investments in securities, at value (cost, $1,282,424,548) $1,601,232,677
Receivable for investment securities sold 4,762,182
Dividend receivable 617,335
--------------
Total assets 1,606,612,194
--------------
LIABILITIES:
Payable for investment securities purchased 19,761,378
Accrued expenses 426,961
--------------
Total liabilities 20,188,339
--------------
NET ASSETS $1,586,423,855
==============
NET ASSETS CONSIST OF:
Paid-in capital $1,213,395,155
Undistributed net investment income 417,774
Accumulated net realized gain from sale of investments 53,802,797
Unrealized net appreciation of investments 318,808,129
--------------
NET ASSETS $1,586,423,855
==============
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$1,447,718,788 and 51,147,988 shares of beneficial interest outstanding) $28.30
======
Maximum public offering price per share (based on a net asset value
per share of $28.30 divided by 0.96 for a 4% sales charge) $29.48
======
Class B Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $86,799,864 and 3,119,134 shares of
beneficial interest outstanding) $27.83
======
Institutional Class Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $51,905,203 and 1,832,341 shares of
beneficial interest outstanding) $28.33
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended October 31, 2000
<S> <C>
INVESTMENT INCOME:
Income --
Dividend income $ 12,583,619
Interest income 3,425,855
------------
Total income 16,009,474
------------
Expenses --
Investment advisory fee 5,625,095
Distribution and service plan fees:
Class A 3,742,753
Class B 795,212
Institutional Class 72,614
Transfer agent services 2,984,388
Custodian fee 271,800
Administrative personnel and services 325,006
Printing and postage 696,347
Trust share registration costs 129,561
Auditing fees 24,372
Legal fees 22,609
Trustees' fees 18,269
Miscellaneous 26,696
------------
Total expenses 14,734,722
Expense reimbursement from investment advisor (812,516)
Fees paid indirectly (4,427)
------------
Net expenses 13,917,779
------------
Net investment income 2,091,695
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions 64,049,450
Net change in unrealized appreciation of investments 12,171,018
------------
Net gain on investments 76,220,468
------------
Net increase in net assets resulting from operations $ 78,312,163
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years ended October 31, 2000 and 1999
Year Ended Year Ended
10/31/2000 10/31/99
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 2,091,695 $ 3,144,054
Net realized gain on investments 64,049,450 229,981,547
Net change in unrealized appreciation or depreciation of investments 12,171,018 69,573,130
-------------- --------------
Net increase in net assets resulting from operations 78,312,163 302,698,731
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Class A (1,927,514) (3,484,091)
Class B -- --
Institutional Class (196,360) (192,254)
Net realized gains:
Class A (202,250,802) (125,371,620)
Class B (9,392,745) (2,922,634)
Institutional Class (6,138,648) (3,222,146)
-------------- --------------
Total distributions (219,906,069) (135,192,745)
-------------- --------------
NET TRUST SHARE TRANSACTIONS:
Class A 153,680,010 145,838,693
Class B 30,411,364 33,368,795
Institutional Class 12,950,046 10,112,252
-------------- --------------
Net increase in net assets from trust share transactions 197,041,420 189,319,740
-------------- --------------
Net increase in net assets 55,447,514 356,825,726
NET ASSETS:
Beginning of period 1,530,976,341 1,174,150,615
-------------- --------------
End of period (including undistributed net investment income of $417,774
And $449,954, respectively) $1,586,423,855 $1,530,976,341
============== ==============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD VALUE FUND
Financial Statements
Statement of Assets and Liabilities
October 31, 2000
<S> <C>
ASSETS:
Investments in securities, at value (cost, $21,970,388) $ 23,253,303
Cash 15,115
Receivable for investment securities sold 19,949
Dividend receivable 16,410
------------
Total assets 23,304,777
------------
LIABILITIES:
Payable for investment securities purchased 648,350
Accrued expenses 31,100
------------
Total liabilities 679,450
------------
NET ASSETS $ 22,625,327
============
NET ASSETS CONSIST OF:
Paid-in capital $ 21,414,604
Undistributed net investment income 38,446
Accumulated net realized loss from sale of investments (110,638)
Unrealized net appreciation of investments 1,282,915
------------
NET ASSETS $ 22,625,327
============
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $15,113,098 and 958,439 shares of beneficial interest outstanding) $15.77
======
Maximum public offering price per share (based on a net asset value
per share of $15.77 divided by 0.96 for a 4% sales charge) $16.43
======
Class B Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $3,716,143 and 237,437 shares of
beneficial interest outstanding) $15.65
======
Institutional Class Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $3,796,086 and 239,118 shares of
beneficial interest outstanding) $15.88
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended October 31, 2000
<S> <C>
INVESTMENT INCOME:
Income --
Dividend income $ 161,146
Interest income 55,276
------------
Total income 216,422
------------
Expenses --
Investment advisory fee 56,340
Distribution and service plan fees:
Class A 20,647
Class B 24,305
Institutional Class 5,093
Transfer agent services 58,807
Custodian fee 7,043
Administrative personnel and services 2,817
Printing and postage 16,514
Trust share registration costs 92,165
Auditing fees 5,214
Legal fees 150
Trustees' fees 5,765
Miscellaneous 1,557
------------
Total expenses 296,417
Expense reimbursement from investment advisor (118,125)
------------
Net expenses 178,292
------------
Net investment income 38,130
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investment transactions (110,638)
Net change in unrealized appreciation of investments 1,286,577
------------
Net gain on investments 1,175,939
------------
Net increase in net assets resulting from operations $ 1,214,069
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Periods ended October 31, 2000 and 1999
For the period from
October 29, 1999
Year Ended (effective date) to
10/31/2000 October 31, 1999
-------------- --------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 38,130 $ --
Net realized loss on investments (110,638) --
Net change in unrealized appreciation or depreciation of investments 1,286,577 (3,662)
------------ ------------
Net change in net assets resulting from operations 1,214,069 (3,662)
------------ ------------
NET TRUST SHARE TRANSACTIONS:
Class A 13,393,061 1,000,000
Class B 2,529,667 1,000,000
Institutional Class 492,192 3,000,000
------------ ------------
Net increase in net assets from trust share transactions 16,414,920 5,000,000
------------ ------------
Net increase in net assets 17,628,989 4,996,338
NET ASSETS:
Beginning of period 4,996,338 --
------------ ------------
End of period (including undistributed net investment income
of $38,446 and $0, respectively) $ 22,625,327 $ 4,996,338
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD HIGH YIELD FUND
Financial Statements
Statement of Assets and Liabilities
October 31, 2000
<S> <C>
ASSETS:
Investments in securities, at value (cost, $1,001,889,261) $ 756,862,736
Cash 71,412
Receivable for investment securities sold 13,658,426
Interest and dividend receivable 20,576,351
--------------
Total assets 791,168,925
--------------
LIABILITIES:
Payable for investment securities purchased 1,286,772
Accrued expenses 222,863
--------------
Total liabilities 1,509,635
--------------
NET ASSETS $ 789,659,290
--------------
--------------
NET ASSETS CONSIST OF:
Paid-in capital $1,066,334,042
Undistributed net investment income 6,263,054
Accumulated net realized loss from sale of investments (37,911,281)
Unrealized net depreciation of investments (245,026,525)
--------------
NET ASSETS $ 789,659,290
==============
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$727,297,228 and 108,159,351 shares of beneficial interest outstanding) $ 6.72
======
Maximum public offering price per share (based on a net asset value per
share of $6.72 divided by 0.96 for a 4% sales charge) $ 7.00
======
Class B Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $39,026,625 and 5,810,405 shares of
beneficial interest outstanding) $ 6.72
======
Institutional Class Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $23,335,437 and 3,468,114 shares of
beneficial interest outstanding) $ 6.73
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended October 31, 2000
<S> <C>
INVESTMENT INCOME:
Income --
Interest income $ 94,474,901
Dividend income 10,420,269
-------------
Total income 104,895,170
-------------
Expenses --
Investment advisory fee 3,374,167
Distribution and service plan fees:
Class A 2,049,995
Class B 394,576
Institutional Class 49,745
Transfer agent services 1,623,468
Custodian fee 257,046
Administrative personnel and services 178,524
Printing and postage 363,215
Trust share registration costs 86,075
Auditing fees 15,343
Legal fees 28,652
Trustees' fees 15,770
Miscellaneous 17,495
-------------
Total expenses 8,454,071
Expense reimbursement from investment advisor (446,310)
Fees paid indirectly (35,633)
-------------
Net expenses 7,972,128
-------------
Net investment income 96,923,042
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investment transactions (16,786,966)
Net change in unrealized depreciation of investments (120,452,535)
-------------
Net loss on investments (137,239,501)
-------------
Net change in net assets resulting from operations $ (40,316,459)
=============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years ended October 31, 2000 and 1999
Year Ended Year Ended
10/31/2000 10/31/99
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 96,923,042 $ 91,612,787
Net realized loss on investment transactions (16,786,966) (20,631,347)
Net change in unrealized appreciation or depreciation of investments (120,452,535) (5,076,255)
------------ ------------
Net change in net assets resulting from operations (40,316,459) 65,905,185
------------ ------------
DISTRIBUTIONS PAID TO SHAREHOLDERS:
Net investment income:
Class A (84,905,336) (84,935,008)
Class B (3,819,737) (2,709,588)
Institutional Class (3,452,749) (5,718,827)
------------ ------------
Total distributions (92,177,822) (93,363,423)
------------ ------------
NET TRUST SHARE TRANSACTIONS:
Class A 27,110,767 62,933,005
Class B 11,037,099 16,538,897
Institutional Class (26,645,831) 2,213,497
------------ ------------
Net increase in net assets from trust share transactions 11,502,035 81,685,399
------------ ------------
Net change in net assets (120,992,246) 54,227,161
NET ASSETS:
Beginning of period 910,651,536 856,424,375
------------ ------------
End of period (including undistributed net investment income
of $6,263,054 and $1,780,225, respectively) $789,659,290 $910,651,536
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD INCOME FUND
Financial Statements
Statement of Assets and Liabilities
October 31, 2000
<S> <C>
ASSETS:
Investments in securities, at value (cost, $699,776,619) $691,191,100
Cash 45,532
Receivable for investment securities sold 6,486,406
Interest and dividend receivable 9,275,124
Receivable for variation margin on open futures contracts 17,691
------------
Total assets 707,015,853
------------
LIABILITIES:
Payable for investment securities purchased 40,665,505
Accrued expenses 160,644
Payable for variation margin on open futures contracts 145,000
------------
Total liabilities 40,971,149
------------
NET ASSETS $666,044,704
============
NET ASSETS CONSIST OF:
Paid-in capital $737,163,291
Undistributed net investment income 3,720,895
Accumulated net realized loss from sale of investments (66,007,963)
Unrealized net depreciation of investments (8,831,519)
------------
NET ASSETS $666,044,704
============
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$611,002,190 and 74,604,509 shares of beneficial interest outstanding) $ 8.19
======
Maximum public offering price per share (based on a net asset
value per share of $8.19 divided by 0.96 for a 4% sales charge) $ 8.53
======
Class B Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $16,693,054 and 2,042,343 shares of
beneficial interest outstanding) $ 8.17
======
Institutional Class Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $38,349,460 and 4,685,223 shares of
beneficial interest outstanding) $ 8.19
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended October 31, 2000
<S> <C>
INVESTMENT INCOME:
Income --
Interest income $ 49,460,530
Dividend income 248,439
------------
Total income 49,708,969
--------------
Expenses --
Investment advisory fee 2,356,825
Distribution and service plan fees:
Class A 1,588,523
Class B 156,269
Institutional Class 53,519
Transfer agent services 1,224,242
Custodian fee 180,938
Administrative personnel and services 137,343
Printing and postage 269,152
Trust share registration costs 68,523
Auditing fees 12,581
Legal fees 10,233
Trustees' fees 15,770
Miscellaneous 13,917
------------
Total expenses 6,087,835
Expense reimbursement from investment advisor (343,358)
Fees paid indirectly (9,917)
------------
Net expenses 5,734,560
------------
Net investment income 43,974,409
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investment transactions (21,647,146)
Net realized gain on closed or expired option contracts written 583,901
Net realized gain on closed futures contracts 423,879
------------
Net realized loss on investments (20,639,366)
Net change in unrealized depreciation of investments 15,964,868
------------
Net loss on investments (4,674,498)
------------
Net increase in net assets resulting from operations $ 39,299,911
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years ended October 31, 2000 and 1999
Year Ended Year Ended
10/31/2000 10/31/99
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 43,974,409 $ 44,969,852
Net realized loss on investment transactions (20,639,366) (8,553,807)
Net change in unrealized appreciation or depreciation of investments 15,964,868 (42,047,117)
------------ ------------
Net change in net assets resulting from operations 39,299,911 (5,631,072)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Class A (39,360,945) (41,348,175)
Class B (848,154) (594,911)
Institutional Class (2,312,509) (1,832,238)
------------ ------------
Total distributions (42,521,608) (43,775,324)
------------ ------------
NET TRUST SHARE TRANSACTIONS:
Class A (65,370,455) (13,065,882)
Class B 2,085,216 8,560,100
Institutional Class 6,668,539 7,178,472
------------ ------------
Net change in net assets from trust share transactions (56,616,700) 2,672,690
------------ ------------
Net change in net assets (59,838,397) (46,733,706)
NET ASSETS:
Beginning of period 725,883,101 772,616,807
------------ ------------
End of period (including undistributed net investment of $3,720,895
and $2,269,912, respectively) $666,044,704 $725,883,101
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD MUNICIPAL BOND FUND
Financial Statements
Statement of Assets and Liabilities
October 31, 2000
<S> <C>
ASSETS:
Investments in securities, at value (cost, $526,926,396) $564,770,152
Receivable for investment securities sold 1,109,711
Interest receivable 8,526,581
------------
Total assets 574,406,444
------------
LIABILITIES:
Payable for investment securities purchased 1,970,360
Accrued expenses 79,678
------------
Total liabilities 2,050,038
------------
NET ASSETS $572,356,406
============
NET ASSETS CONSIST OF:
Paid-in capital $535,221,810
Undistributed net investment income 1,286,995
Accumulated net realized loss from sale of investments (1,996,155)
Unrealized net appreciation of investments 37,843,756
------------
NET ASSETS $572,356,406
============
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$559,408,135 and 64,618,980 shares of beneficial interest outstanding) $ 8.66
======
Maximum public offering price per share (based on a net asset value
per share of $8.66 divided by 0.96 for a 4% sales charge) $ 9.02
======
Class B Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $9,711,881 and 1,124,470 shares of
beneficial interest outstanding) $ 8.64
======
Institutional Class Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $3,236,390 and 373,927 shares of
beneficial interest outstanding) $ 8.66
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended October 31, 2000
<S> <C>
INVESTMENT INCOME:
Income --
Interest income $ 33,498,981
------------
Expenses --
Investment advisory fee 1,846,378
Distribution and service plan fees:
Class A 1,395,657
Class B 90,582
Institutional Class 5,280
Transfer agent services 453,786
Custodian fee 162,735
Administrative personnel and services 114,168
Printing and postage 103,766
Trust share registration costs 65,786
Auditing fees 10,034
Legal fees 8,283
Trustees' fees 15,770
Miscellaneous 12,237
------------
Total expenses 4,284,462
Expense reimbursement from investment advisor (285,420)
Fees paid indirectly (33,429)
------------
Net expenses 3,965,613
------------
Net investment income 29,533,368
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investment transactions 1,123,834
Net change in unrealized appreciation of investments 13,574,637
------------
Net gain on investments 14,698,471
------------
Net increase in net assets resulting from operations $ 44,231,839
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years ended October 31, 2000 and 1999
Year Ended Year Ended
10/31/2000 10/31/99
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 29,533,368 $ 29,728,298
Net realized gain on investment transactions 1,123,834 516,433
Net change in unrealized appreciation or depreciation of investments 13,574,637 (46,467,806)
------------ ------------
Net change in net assets resulting from operations 44,231,839 (16,223,075)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Class A (29,045,324) (29,754,233)
Class B (402,332) (284,277)
Institutional Class (188,279) (221,032)
------------ ------------
Total distributions (29,635,935) (30,259,542)
------------ ------------
NET TRUST SHARE TRANSACTIONS:
Class A (25,505,451) 11,180,633
Class B 1,029,482 5,049,674
Institutional Class (1,153,390) 628,862
------------ ------------
Net change in net assets from trust share transactions (25,629,359) 16,859,169
------------ ------------
Net change in net assets (11,033,455) (29,623,448)
NET ASSETS:
Beginning of period 583,389,861 613,013,309
------------ ------------
End of period (including undistributed net investment income
of $2,286,995 and $1,392,820, respectively) $572,356,406 $583,389,861
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD LIMITED MATURITY BOND FUND
Financial Statements
Statement of Assets and Liabilities
October 31, 2000
<S> <C>
ASSETS:
Investments in securities, at value (cost, $40,922,086) $ 40,688,712
Cash 67,052
Receivable for investment securities sold 694,429
Interest and dividend receivable 339,612
------------
Total assets 41,789,805
------------
LIABILITIES:
Payable for investment securities purchased 9,536,917
Dividends payable 112,415
Accrued expenses 12,150
------------
Total liabilities 9,661,482
------------
NET ASSETS $ 32,128,323
============
NET ASSETS CONSIST OF:
Paid-in capital $ 32,235,846
Accumulated net realized gain from sale of investments 125,851
Unrealized net depreciation of investments (233,374)
------------
NET ASSETS $ 32,128,323
============
Class A Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $16,554,953 and 1,333,926 shares of
beneficial interest outstanding) $12.41
======
Class B Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $5,017,953 and 404,307 shares of
beneficial interest outstanding) $12.41
======
Institutional Class Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $10,555,417 and 850,467 shares of
beneficial interest outstanding) $12.41
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended October 31, 2000
<S> <C>
INVESTMENT INCOME:
Income --
Interest income $ 1,801,549
------------
Expenses --
Investment advisory fee 79,623
Service plan fees:
Class A 28,289
Class B 12,446
Institutional Class 15,371
Transfer agent services 19,570
Custodian fee 13,271
Administrative personnel and services 5,308
Printing and postage 5,700
Trust share registration costs 78,065
Auditing fees 5,220
Legal fees 333
Trustees' fees 5,763
Miscellaneous 1,561
------------
Total expenses 270,520
Expense reimbursement from investment advisor (40,991)
------------
Net expenses 229,529
------------
Net investment income 1,572,020
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions 125,851
Net change in unrealized depreciation of investments (280,171)
------------
Net loss on investments (154,320)
------------
Net increase in net assets resulting from operations $ 1,417,700
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Periods ended October 31, 2000 and 1999
For the period from
October 29, 1999
Year Ended (effective date) to
10/31/2000 October 31, 1999
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 1,572,020 $ --
Net realized gain on investment transactions 125,851 --
Net change in unrealized appreciation or depreciation of investments (280,171) 46,797
------------ ------------
Net increase in net assets resulting from operations 1,417,700 46,797
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Class A (666,878) --
Class B (288,348) --
Institutional Class (616,794) --
------------ ------------
Total distributions (1,572,020) --
------------ ------------
NET TRUST SHARE TRANSACTIONS:
Class A 11,559,254 5,000,000
Class B 53,444 5,000,000
Institutional Class 623,148 10,000,000
------------ ------------
Net increase in net assets from trust share transactions 12,235,846 20,000,000
------------ ------------
Net increase in net assets 12,081,526 20,046,797
NET ASSETS:
Beginning of period 20,046,797 --
------------ ------------
End of period $ 32,128,323 $ 20,046,797
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD MONEY MARKET FUND
Financial Statements
Statement of Assets and Liabilities
October 31, 2000
<S> <C>
ASSETS:
Investments in securities, at amortized cost and value $672,045,044
Cash 2,758,876
Receivable for trust shares sold 25,304
Interest receivable 2,678,249
------------
Total assets 677,507,473
------------
LIABILITIES:
Dividends payable 51,667
Accrued expenses 307,664
------------
Total liabilities 359,331
------------
NET ASSETS $677,148,142
============
NET ASSETS CONSIST OF:
Paid-in capital $677,148,142
============
Class A Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $634,720,692 and 634,720,692 shares of
beneficial interest outstanding) $ 1.00
======
Class B Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $308,899 and 308,899 shares of
beneficial interest outstanding) $ 1.00
======
Institutional Class Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $42,118,551 and 42,118,551 shares of
beneficial interest outstanding) $ 1.00
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended October 31, 2000
<S> <C>
INVESTMENT INCOME:
Income --
Interest income $ 41,110,705
------------
Expenses --
Investment advisory fee 1,601,499
Service plan fees:
Class A 1,520,000
Class B 787
Institutional Class 71,861
Transfer agent services 1,825,383
Custodian fee 444,139
Administrative personnel and services 131,244
Printing and postage 581,505
Trust share registration costs 115,270
Auditing fees 10,217
Legal fees 9,325
Trustees' fees 15,770
Miscellaneous 10,137
------------
Total expenses 6,337,137
Expense reimbursement from investment advisor (287,133)
Fees paid indirectly (5,841)
------------
Net expenses 6,044,163
------------
Net investment income $ 35,066,542
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years ended October 31, 2000 and 1999
Year Ended Year Ended
10/31/2000 10/31/99
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 35,066,542 $ 25,064,002
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Class A (32,324,134) (22,960,049)
Class B (16,705) (7,477)
Institutional Class (2,725,703) (2,096,476)
------------ ------------
Total distributions (35,066,542) (25,064,002)
------------ ------------
NET TRUST SHARE TRANSACTIONS:
Class A 54,582,694 86,977,741
Class B 45,820 181,681
Institutional Class (8,951,045) 3,739,307
------------ ------------
Net increase in net assets from trust share transactions 45,677,469 90,898,729
------------ ------------
Net increase in net assets 45,677,469 90,898,729
NET ASSETS:
Beginning of period 631,470,673 540,571,944
------------ ------------
End of period $677,148,142 $631,470,673
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
THE LUTHERAN BROTHERHOOD FAMILY OF FUNDS
Notes to Financial Statements
October 31, 2000
(1) ORGANIZATION
The Lutheran Brotherhood Family of Funds (the "Trust") is a Delaware
business trust and a diversified, open-end investment company registered
under the Investment Company Act of 1940. The Trust is divided into
eleven series (the "Fund(s)"), each with its own investment objective
and policies. The eleven Funds of the Trust are: 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
Fund is authorized to offer three classes of shares: Class A, Class B
and Institutional Class. The three classes of shares differ principally
in their respective shareholder servicing and distribution expenses and
arrangements. All three classes of shares have identical rights to
earnings, assets and voting privileges, except for class specific
expenses and exclusive rights to vote on matters affecting only
individual classes.
The Lutheran Brotherhood Growth Fund, Value Fund and Limited Maturity
Bond Fund's registration was declared effective by the Securities and
Exchange Commission and each began operation as a separate series of the
Lutheran Brotherhood Family of Funds on October 29, 1999.
(2) SIGNIFICANT ACCOUNTING POLICIES
Investment Security Valuations
Securities traded on U.S. or foreign securities exchanges or included in
a national market system are valued at the last quoted sales price at
the close of each business day. Over-the-counter securities and listed
securities for which no price is readily available are valued at prices
within the range of the current bid and asked prices considered best to
represent the value in the circumstances, based on quotes that are
obtained from an independent pricing service approved by the Board of
Trustees. The pricing service, in determining values of securities,
takes into consideration such factors as current quotations by
broker/dealers, coupon, maturity, quality, type of issue, trading
characteristics, and other yield and risk factors it deems relevant in
determining valuations. Securities which cannot be valued by the
approved pricing service are valued using valuations obtained from
dealers that make markets in the securities. Exchange listed options and
futures contracts are valued at the last quoted sales price. For all
Funds other than the Money Market Fund, short-term securities with
maturities of 60 days or less are valued at amortized cost; those with
maturities greater than 60 days are valued at the mean between bid and
asked prices. Short-term securities held by the Money Market Fund are
valued on the basis of amortized cost (which approximates market value),
whereby a portfolio security is valued at its cost initially, and
thereafter valued to reflect a constant amortization to maturity of any
discount or premium. The Money Market Fund follows procedures necessary
to maintain a constant net asset value of $1.00 per share. All other
securities for which market values are not readily available are
appraised at fair value as determined in good faith by or under the
direction of the Board of Trustees.
Foreign Currency Translations
The accounting records of each Fund are maintained in U.S. dollars.
Securities and other assets and liabilities of the LB World Growth Fund
that are denominated in foreign currencies are translated into U.S.
dollars at the daily closing rate of exchange. Foreign currency amounts
related to the purchase or sale of securities and income and expenses
are translated at the exchange rate on the transaction date. Currency
gains and losses are recorded from sales of foreign currency, exchange
gains or losses between the trade date and settlement dates on
securities transactions, and other translation gains or losses on
dividends, interest income and foreign withholding taxes. The World
Growth Fund does not separately report the effect of changes in foreign
exchange rates from changes in market prices on securities held. Such
changes are included in net realized and unrealized gain or loss from
investments.
Federal Income Taxes
No provision has been made for income taxes because the Fund's policy is
to qualify as a regulated investment company under the Internal Revenue
Code and distribute substantially all of its taxable income on a timely
basis. It is also the intention of the Funds to distribute an amount
sufficient to avoid imposition of any federal excise tax. Each Fund is
treated as a separate taxable entity for federal income tax purposes.
Securities Transactions, Investment Income and Expenses
Securities transactions are accounted for on trade date. Realized gains
and losses on investments and unrealized appreciation and depreciation
are determined on an identified cost basis, which is the same basis used
for federal income tax purposes.
Interest income is accrued daily and is determined on the basis of
interest or discount earned on any short-term investments and interest
earned on all other debt securities, including accrual of original issue
discount. Interest earned on debt securities also includes amortization
of premium for the Opportunity Growth, Mid Cap Growth, World Growth,
Growth, LB Fund, Value, High Yield, Municipal Bond and Limited Maturity
Bond Funds and the accrual of market discount for the Opportunity
Growth, Mid Cap Growth, World Growth, Growth, LB Fund, Value, High Yield
and Limited Maturity Bond Funds. Market discount, if any, is recognized
for tax purposes when bonds are sold for the Income and Municipal Bond
Funds. Dividend income is recorded on the ex-dividend date. For payment-
in-kind securities, income is recorded on the ex-dividend date in the
amount of the value received.
In November 2000, a revised AICPA Audit and Accounting Guide, Audits of
Investment Companies, was issued, and is effective for fiscal years
beginning after December 15, 2000. The revised Guide will require the LB
Income Fund to amortize premium and discount on all fixed-income
securities, and classify gains and losses realized on prepayments
received on mortgage-backed securities as part of interest income. None
of the other Funds are affected by these changes in accounting
principles. Upon initial adoption, the LB Income Fund will be required
to adjust the cost of its fixed-income securities by the cumulative
amount of amortization that would have been recognized had amortization
been in effect from the purchase date of each holding. Adopting these
accounting principles will not affect the LB Income Fund's net asset
value, but will change the classification of certain amounts between
interest income and realized and unrealized gain/loss in the Statement
of Operations. The LB Income Fund expects that the impact of the
adoption of these principles will not be material to the financial
statements.
Estimated expenses are accrued daily. Each Fund is charged for the
operating expenses that are directly attributable to it. Common expenses
of the Trust are either shared equally or allocated among the Funds
based on the relative net assets of each Fund to the combined net
assets, or via other allocation methodologies.
(2) SIGNIFICANT ACCOUNTING POLICIES (continued)
Realized and unrealized gains and losses and net investment income,
other than class specific expenses, are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
Operating expenses directly attributable to a specific class are charged
against the operations of that class.
Distributions to Shareholders
Dividends from net investment income, if available, are declared and
paid annually for the Opportunity Growth, Mid Cap Growth, World Growth,
Growth and Value Funds, declared and paid quarterly for the LB Fund,
declared and paid monthly for the High Yield, Income and Municipal Bond
Funds, and declared daily and paid monthly for the Limited Maturity Bond
and Money Market Funds. Daily dividends for the LB Money Market Fund
also include any short-term net realized gains or losses on the sale of
securities. Net realized gains from securities transactions, if any, are
distributed at least annually for all Funds, after the close of the
fiscal year. Dividends and capital gain distributions to shareholders
are recorded on the ex-dividend date.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of distributions
made during the year from net investment income or net realized gains
may differ from their ultimate characterization for federal income tax
purposes. Also, due to timing of dividend distributions, the fiscal year
in which amounts are distributed may differ from the year that the
income or net realized gains were recorded by the Fund.
It is the policy of the Fund to reclassify the net effect of permanent
differences between book and taxable income to trust capital accounts on
the statements of assets and liabilities. As a result of permanent book-
to-tax differences for the year ended October 31, 2000, accumulated net
realized gain or loss from the sale of investments was increased
(decreased) by $(1,395,449), ($2,609,826), $(156,790), ($7,500,000),
$262,392, $1,817, and $3,257, respectively, for the Opportunity Growth,
Mid Cap Growth, World Growth, LB Fund, High Yield, Income and Municipal
Bond Funds; undistributed net investment income was increased
(decreased) by $2,463,063, $1,409,826, $733,311, $127,312, $316,
($262,392), ($1,817), and ($3,257), respectively, for the Opportunity
Growth, Mid Cap Growth, World Growth, Growth, Value, High Yield, Income
and Municipal Bond Funds; and net increases (decreases) of ($1,067,614),
$1,200,000, ($576,520), ($127,312), $7,500,000, and ($316),
respectively, for the Opportunity Growth, Mid Cap Growth, World Growth,
Growth, LB Fund, and Value Funds were reclassified into trust capital.
These reclassifications have no effect on net assets, net asset value
per share, the change in net assets resulting from operations, or on the
amount of income available for distribution to shareholders.
Options, Financial Futures and
Forward Foreign Currency Contracts
All Funds except the Money Market Fund may buy put and call options,
write covered call options and buy and sell futures contracts. The Funds
intend to use such derivative instruments as hedges to facilitate buying
or selling securities or to provide protection against adverse movements
in security prices or interest rates. The World Growth Fund may also
enter into options and futures contracts on foreign currencies and
forward foreign currency contracts to protect against adverse foreign
exchange rate fluctuation.
Option contracts are valued daily and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon
expiration or closing of the option transaction. When an option is
exercised, the proceeds on sale for a written call option or the cost of
a security for purchased put and call options is adjusted by the amount
of premium received or paid.
Upon entering into a futures contract, the Fund is required to deposit
initial margin, either cash or securities in an amount equal to a
certain percentage of the contract value. Subsequent variation margin
payments are made or received by the Fund each day. The variation margin
payments are equal to the daily changes in the contract value and are
recorded as unrealized gains and losses. The Fund realizes a gain or
loss when the contract is closed or expires.
Foreign currency contracts are valued daily and unrealized appreciation
or depreciation is recorded daily as the difference between the contract
exchange rate and the closing forward rate applied to the face amount of
the contract. A realized gain or loss is recorded at the time a forward
contract is closed.
Dollar Roll Transactions
Certain of the Funds enter into dollar roll transactions, with respect
to mortgage securities issued by GNMA, FNMA and FHLMC, in which the
Funds sell mortgage securities and simultaneously agree to repurchase
similar (same type, coupon and maturity) securities at a later date at
an agreed upon price. During the period between the sale and repurchase,
the Funds forgo principal and interest paid on the mortgage securities
sold. The Funds are compensated by the interest earned on the cash
proceeds of the initial sale and from negotiated fees paid by brokers
offered as an inducement to the Funds to "roll over" their purchase
commitments. The Income and Limited Maturity Bond Funds earned $642,219
and $18,906, respectively, from such fees for the year ended October 31,
2000.
Organization Costs
Organization costs incurred prior to June 30, 1998, in connection with
the start up and initial registration of the Funds are capitalized and
amortized over a period of 60 months from the date of commencement. If
any initial shares are redeemed during the amortization period, the
redemption proceeds will be reduced by a pro-rata portion of the
unamortized balance at the time of redemption, in the same proportion
that the number of initial shares being redeemed bears to the number of
initial shares outstanding at the time of redemption.
When-Issued and Delayed Delivery Transactions
The Funds may engage in when-issued or delayed delivery transactions. To
the extent that a Fund engages in such transactions, it will do so for
the purpose of acquiring securities consistent with its investment
objectives and policies and not for the purpose of investment leverage
or to speculate on interest rate changes. On the trade date, assets of
the Fund are segregated on the Fund's records in a dollar amount
sufficient to make payment for the securities to be purchased. Income is
not accrued until settlement date.
Fees Paid Indirectly
Certain of the Funds have a deposit arrangement with the custodian
whereby interest earned on uninvested cash balances is used to pay a
portion of custodian fees. This deposit arrangement is an alternative to
overnight investments.
Accounting Estimates
The preparation of financial statements in conformity with accounting
principals generally accepted in the United States requires management
to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
(3) FEES AND COMPENSATION PAID TO AFFILIATES
Investment Advisory Fees
Each Fund pays Lutheran Brotherhood Research Corp. (LB Research), the
Trust's investment advisor, a fee for its advisory services. The fees
are accrued daily and paid monthly. The fees are based on the following
rates of average daily net assets.
LB Opportunity Growth Fund
-------------------------------------------------------
First $100 million 0.50%
Next $150 million 0.40%
Next $250 million 0.35%
Next $500 million 0.30%
Over $1 billion 0.25%
LB Mid Cap Growth Fund
-------------------------------------------------------
First $100 million 0.45%
Next $150 million 0.40%
Next $250 million 0.35%
Next $500 million 0.30%
Over $1 billion 0.25%
LB World Growth Fund
-------------------------------------------------------
First $20 million 1.00%
Next $30 million 0.85%
Over $50 million 0.75%
LB Growth Fund
-------------------------------------------------------
First $500 million 0.425%
Next $500 million 0.375%
Over $1 billion 0.325%
LB Fund, LB Value Fund &
LB High Yield Fund
-------------------------------------------------------
First $500 million 0.40%
Next $500 million 0.35%
Over $1 billion 0.30%
LB Income Fund
-------------------------------------------------------
First $500 million 0.35%
Next $500 million 0.325%
Over $1 billion 0.30%
LB Municipal Bond Fund
-------------------------------------------------------
First $500 million 0.325%
Next $500 million 0.3125%
Over $1 billion 0.30%
LB Limited Maturity Bond Fund
-------------------------------------------------------
First $500 million 0.30%
Next $500 million 0.275%
Over $1 billion 0.25%
LB Money Market Fund
-------------------------------------------------------
First $500 million 0.25%
Next $500 million 0.225%
Next $500 million 0.20%
Next $500 million 0.175%
Over $2 billion 0.15%
Effective January 1, 1997, LB Research has also voluntarily agreed to
waive 5 basis points (0.05%) on an annual basis from the advisory fees
payable by the 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 waive its advisory fee and, if
necessary, to bear certain expenses associated with operating the LB
Growth Fund and LB Value Fund in order to limit each Fund's total
operating expenses for Class A shares and Class B shares to an annual
rate of 1.30% and 2.05%, respectively, of the average daily net assets of
the relevant class and to waive the same percentage of advisory and
other expenses for Institutional Class shares.
LB Research has voluntarily agreed to waive its advisory fee and, if
necessary, to bear certain expenses associated with operating the LB
Limited Maturity Bond Fund and LB Money Market Fund in order to limit
each Fund's total operating expenses for Class A shares and Class B
shares to an annual rate of 0.95% of the average daily net assets
of the relevant class and to waive the same percentage of advisory and
other expenses for Institutional Class shares.
LB Research pays T. Rowe Price International an annual sub-advisory fee
for the performance of sub-advisory services for the LB World Growth
Fund. The fee payable is equal to 0.45% of the Fund's average daily net
assets. The total amount paid by LB Research to T. Rowe Price
International under the investment sub-advisory contract for the year
ended October 31, 2000 was $606,092.
Effective February 29, 2000, LB Research terminated the sub-advisory
contract for the LB Opportunity Growth Fund with T. Rowe Price Associates.
On March 1, 2000, LB Research assumed the daily investment management of
the Fund. Prior to March 1, 2000, LB Research paid T. Rowe Price Associates
an annual sub-advisory fee for the performance of sub-advisory services
for the LB Opportunity Growth Fund. The fee payable was equal to 0.30% of
that Fund's average daily net assets up to $500 million, 0.25% for the next
$500 million and 0.20% for net assets over $1 billion. The total dollar
amount paid by LB Research to T. Rowe Price Associates under the investment
sub-advisory contract for LB Opportunity Growth Fund during the period from
November 1, 1999 to February 29, 2000 was $264,379.
Distribution and Shareholder Servicing Plans
The Trust has adopted a Distribution Plan (the "12b-1 Plan") under Rule
12b-1 of the 1940 Act with respect to the Class B shares of each Fund
except for the Limited Maturity Bond and Money Market Funds. Under the
12b-1 Plan, each Fund pays Lutheran Brotherhood Securities Corp.
(LB Securities) an annual fee of 0.75% of the average daily net
assets of its Class B shares. The fees collected under the 12b-1 Plan
are used by LB Securities to finance activities primarily intended to
result in the sale of Class B shares of the Fund. For the year ended
October 31, 2000, LB Securities received aggregate 12b-1 fees of
$1,521,861 from the Trust.
In addition, the Trust has adopted shareholder-servicing plans for each
of the Funds (the Shareholder Servicing Plans"). Pursuant to the
Shareholder Servicing Plans, Class A and Class B shares pay LB
Securities an annual fee of 0.25% of the average daily net assets and
Institutional Class shares pay LB Securities an annual fee of 0.15% of
the average daily net assets. Payments under the Shareholder Servicing
Plans are used to finance various shareholder-servicing activities. For
the year ended October 31, 2000, LB Securities received aggregate
shareholder servicing fees of $12,395,122 from the Trust.
Sales Charges and Other Fees
For the year ended October 31, 2000, LB Securities, the Trust's
distributor, received $587,433 of aggregate underwriting concessions
from sales of Class A shares. LB Securities also received $295,806 of
aggregate contingent deferred sales charges from redemption of Class B
shares for year ended October 31, 2000. Sales charges are not an expense
of the Trust and are not reflected in the financial statements of any of
the Funds.
LB Securities also received fees pursuant to an agreement to provide
certain administrative personnel and services to the Funds. For the year
ended October 31, 2000, LB Securities received aggregate fees for
administrative personnel and services of $1,008,966 from the LB Family
of Funds.
In addition, LB Securities provides the Funds with transfer agent
services pursuant to an agreement. For the year ended October 31, 2000,
LB Securities received aggregate fees for transfer agent services of
$10,919,206 from the LB Family of Funds.
The Funds have adopted a trustee fee deferral plan that allows the
Trustees to defer the receipt of all or a portion of their Trustee Fees.
The deferred fees remain in the fund and are invested within the
Lutheran Brotherhood Family of Funds until distribution in accordance
with the plan.
Certain officers and non-independent trustees of the Fund are officers
and directors of LB Research and LB Securities; however, they receive no
compensation from the Funds.
(4) DISTRIBUTIONS FROM CAPITAL GAINS
During the year ended October 31, 2000, distributions from net realized
capital gains of $2,862,090, $3,455,226 and $217,782,195, were paid by
the LB Mid Cap Growth Fund, LB World Growth Fund and LB Fund,
respectively. These distributions related to net capital gains realized
during the prior fiscal year ended October 31, 1999.
(5) CAPITAL LOSS CARRYOVER
During the fiscal year ended October 31, 2000, the LB Opportunity Growth
Fund utilized $17,496,406 of its capital loss carryover, and the LB
Municipal Bond Fund utilized $610,116 of its capital loss carryover
against net realized capital gains.
At October 31, 2000, the LB Growth Fund, LB Value Fund, LB High Yield
Fund, LB Income Fund and the LB Municipal Bond Fund had accumulated net
realized capital loss carryovers expiring as follows:
High
Growth Value Yield
Year Fund Fund Fund
---------- ------------ ------------ ------------
2007 -- -- $18,998,975
2008 $176,010 $83,605 15,133,980
------------ ------------ ------------
$176,010 $83,605 $34,132,955
============ ============ ============
Municipal
Income Bond
Year Fund Fund
---------- ------------ ------------
2002 $28,292,105 $677,570
2003 -- 134,719
2004 8,472,280 --
2007 8,150,657 150,559
2008 20,967,792 --
------------ ------------
$65,882,834 $962,848
============ ============
To the extent these Funds realize future net capital gains, taxable
distributions will be reduced by any unused capital loss carryovers.
Temporary timing differences of $190,697, $61,419, $238,162, $131,267,
$2,542,612, $27,033, $3,778,326, $125,128, and $1,033,307 existed
between net realized capital gains or losses for financial statement and
tax purposes as of October 31, 2000 for the Opportunity Growth, Mid Cap
Growth, World Growth, Growth, LB Fund, Value, LB High Yield Fund, LB
Income Fund, and LB Municipal Bond Fund, respectively. These differences
are due primarily to deferral of capital losses for tax purposes.
(6) SHAREHOLDER NOTIFICATION OF
FEDERAL INCOME TAX STATUS
The LB Fund designates 100% of the dividends declared from net
investment income as dividends qualifying for the 70% corporate
dividends received deduction and the LB Municipal Bond Fund designates
100% of the dividends declared from net investment income as exempt from
federal income tax for the year ended October 31, 2000. The LB
Opportunity Growth Fund, LB Mid Cap Growth Fund, LB World Growth Fund,
and LB Fund designate $1,400,000, $400,000, $425,000, and $7,500,000,
respectively, as capital gain distributions resulting from earnings and
profits distributed to shareholders on redemption of fund shares during
the year.
(7) INVESTMENT TRANSACTIONS
Purchases and Sales of Investment Securities
For the year ended October 31, 2000, the cost of purchases and the
proceeds from sales of investment securities other than U.S.
Government and short-term securities were as follows:
$thousands
---------------------------
Fund Purchases Sales
---------------------------------------------------------------------
LB Opportunity Growth Fund $367,196 $385,637
LB Mid Cap Growth Fund 207,672 151,914
LB World Growth Fund 71,293 51,204
LB Growth Fund 37,274 3,866
LB Fund 735,247 792,816
LB Value Fund 18,501 3,438
LB High Yield Fund 497,004 505,984
LB Income Fund 511,124 591,054
LB Municipal Bond Fund 67,800 98,408
LB Limited Maturity Bond Fund 34,978 20,382
Purchases and sales of U.S. Government securities were:
$thousands
---------------------------
Fund Purchases Sales
---------------------------------------------------------------------
LB Fund $ 7,455 $ 13,409
LB Value Fund 407 51
LB Income Fund 178,103 248,612
LB Limited Maturity Bond Fund 19,041 28,277
Investments in Restricted Securities
The High Yield Fund owns restricted securities that were purchased in
private placement transactions without registration under the Securities
Act of 1933. Unless such securities subsequently become registered, they
generally may be resold only in privately negotiated transactions with a
limited number of purchasers. The aggregate value of restricted
securities was $290,986 at October 31, 2000, which represented 0.037% of
the net assets of the High Yield Fund.
Investments in High Yielding Securities
The High Yield Fund invests primarily in high yielding fixed income
securities. The Income Fund may also invest in high-yielding securities.
These securities will typically be in the lower rating categories or
will be non-rated and generally will involve more risk than securities
in the higher rating categories. Lower rated or unrated securities are
more likely to react to developments affecting market risk and credit
risk than are more highly rated securities, which react primarily to
movements in the general level of interest rates.
Investments in Options and Futures Contracts
The movement in the price of the instrument underlying an option or
futures contract may not correlate perfectly with the movement in the
prices of the portfolio securities being hedged. A lack of correlation
could render the Fund's hedging strategy unsuccessful and could result
in a loss to the Fund. In the event that a liquid secondary market would
not exist, the Fund could be prevented from entering into a closing
transaction, which could result in additional losses to the Fund.
Open Option Contracts
The number of contracts and premium amounts associated with call option
contracts written during the year ended October 31, 2000, were as
follows:
Income Fund
---------------------------
Number of Premium
Contracts Amount
------------ ------------
Balance at October 31, 1999 -- $ --
Opened 2,400 986,006
Closed (1,700) (731,218)
Expired (600) (213,659)
Exercised (100) (41,129)
------------ ------------
Balance at October 31, 2000 -- $ --
============ ============
Foreign Denominated Investments
The LB World Growth Fund invests primarily in foreign denominated
stocks. Foreign denominated assets and currency contracts may involve
more risks than domestic transactions, including currency risk,
political and economic risk, regulatory risk, and market risk. The Fund
may also invest in securities of companies located in emerging markets.
Future economic or political developments could adversely affect the
liquidity or value, or both, of such securities.
(8) BANK LOANS
The Lutheran Brotherhood Family of Funds, along with the LB Series Fund,
Inc., are parties to an unsecured $50 million bank line of credit agreement
with State Street Bank and Trust Company. Borrowings under the agreement
bear interest at the Federal Funds rate plus 0.50%. The Funds may borrow
money for temporary or emergency purposes to fund shareholder redemptions.
The Funds did not borrow against the line during the year ended
October 31, 2000.
(9) FINANCIAL HIGHLIGHTS
"Financial Highlights" showing per share data and selected information
is presented in the prospectus.
(10) SHARES OF BENEFICIAL INTEREST
The Master Trust Agreement permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest ($0.001 par
value) of all of the Funds. Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
LB Opportunity Growth Fund:
Class A Class B Institutional Class
--------------------------- --------------------------- ---------------------------
Year Ended October 31, 1999 Shares Amount Shares Amount Shares Amount
---------------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Sold 2,064,370 $21,556,635 380,619 $3,940,530 247,720 $2,628,337
Redeemed (5,646,343) (58,881,453) (63,123) (650,267) (40,804) (446,040)
------------ ------------ ------------ ------------ ------------ ------------
Net Change (3,581,973) ($37,324,818) 317,496 $3,290,263 206,916 $2,182,297
============ ============ ============ ============ ============ ============
Year Ended October 31, 2000
----------------------------------------
Sold 1,916,266 $27,083,122 351,804 $4,848,539 258,915 $3,748,986
Redeemed (2,683,426) (37,338,702) (64,100) (876,178) (211,292) (3,115,546)
------------ ------------ ------------ ------------ ------------ ------------
Net Change (767,160) ($10,255,580) 287,704 $3,972,361 47,623 $633,440
============ ============ ============ ============ ============ ============
LB Mid Cap Growth Fund:
Class A Class B Institutional Class
--------------------------- --------------------------- ---------------------------
Year Ended October 31, 1999 Shares Amount Shares Amount Shares Amount
---------------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Sold 1,781,872 $20,551,258 603,410 $6,798,004 21,427 $273,449
Redeemed (671,392) (7,591,154) (67,302) (744,487) -- --
------------ ------------ ------------ ------------ ------------ ------------
Net Change 1,110,480 $12,960,104 536,108 $6,053,517 21,427 $273,449
============ ============ ============ ============ ============ ============
Year Ended October 31, 2000
----------------------------------------
Sold 3,726,146 $64,584,387 836,561 $14,104,370 143,333 2,608,977
Dividends and distributions reinvested 159,119 2,200,690 44,018 598,634 3,142 43,669
Redeemed (772,960) (13,346,607) (81,306) (1,356,997) (1,997) (37,239)
------------ ------------ ------------ ------------ ------------ ------------
Net Change 3,112,305 $53,438,470 799,273 $13,346,007 144,478 $2,615,407
============ ============ ============ ============ ============ ============
LB World Growth Fund:
Class A Class B Institutional Class
--------------------------- --------------------------- ---------------------------
Year Ended October 31, 1999 Shares Amount Shares Amount Shares Amount
---------------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Sold 1,251,709 $14,557,340 354,371 $4,062,443 150,305 $1,757,782
Dividends and distributions reinvested 44,575 503,400 1,895 21,242 2,813 31,782
Redeemed (1,216,624) (14,025,201) (40,246) (460,070) (7,247) (85,078)
------------ ------------ ------------ ------------ ------------ ------------
Net Change 79,660 $1,035,539 316,020 $3,623,615 145,871 $1,704,486
============ ============ ============ ============ ============ ============
Year Ended October 31, 2000
----------------------------------------
Sold 2,027,897 $28,007,980 420,162 $5,692,407 156,827 $2,223,919
Dividends and distributions reinvested 209,673 2,727,848 20,554 263,705 12,587 164,386
Redeemed (947,802) (12,976,401) (52,616) (711,486) (26,914) (373,283)
------------ ------------ ------------ ------------ ------------ ------------
Net Change 1,289,768 $17,759,427 388,100 $5,244,626 142,500 $2,015,022
============ ============ ============ ============ ============ ============
LB Growth Fund:
Class A Class B Institutional Class
--------------------------- --------------------------- ---------------------------
For the period from October 29, 1999
(effective date) through
October 31, 1999 Shares Amount Shares Amount Shares Amount
---------------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Sold 60,606 $1,000,000 60,606 $1,000,000 181,818 $3,000,000
============ ============ ============ ============ ============ ============
Year Ended October 31, 2000
----------------------------------------
Sold 1,501,637 $28,997,921 314,174 $6,034,123 82,017 $1,595,156
Redeemed (74,454) (1,445,326) (7,074) (137,928) -- --
------------ ------------ ------------ ------------ ------------ ------------
Net Change 1,427,183 $27,552,595 307,100 $5,896,195 82,017 $1,595,156
============ ============ ============ ============ ============ ============
LB Fund:
Class A Class B Institutional Class
--------------------------- --------------------------- ---------------------------
Year Ended October 31, 1999 Shares Amount Shares Amount Shares Amount
---------------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Sold 5,462,843 $161,392,139 1,127,468 $33,105,623 403,008 $11,859,241
Dividends and distributions reinvested 4,892,689 126,685,832 112,817 2,898,269 100,598 2,617,183
Redeemed (4,828,700) (142,239,278) (89,802) (2,635,097) (146,279) (4,364,172)
------------ ------------ ------------ ------------ ------------ ------------
Net Change 5,526,832 $145,838,693 1,150,483 $33,368,795 357,327 $10,112,252
============ ============ ============ ============ ============ ============
Year Ended October 31, 2000
----------------------------------------
Sold 4,216,045 $122,243,123 931,239 $26,665,111 483,153 $14,062,606
Dividends and distributions reinvested 7,128,161 200,738,008 335,196 9,328,548 187,009 5,274,420
Redeemed (5,826,160) (169,301,121) (194,737) (5,582,295) (220,862) (6,386,980)
------------ ------------ ------------ ------------ ------------ ------------
Net Change 5,518,046 $153,680,010 1,071,698 $30,411,364 449,300 $12,950,046
============ ============ ============ ============ ============ ============
LB Value Fund:
Class A Class B Institutional Class
--------------------------- --------------------------- ---------------------------
For the period from October 29, 1999
(effective date) through
October 31, 1999 Shares Amount Shares Amount Shares Amount
---------------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Sold 68,966 $1,000,000 68,966 $1,000,000 206,897 $3,000,000
============ ============ ============ ============ ============ ============
Year Ended October 31, 2000
----------------------------------------
Sold 947,188 $14,281,069 171,583 $2,577,781 32,221 $492,192
Redeemed (57,715) (888,008) (3,112) (48,114) -- --
------------ ------------ ------------ ------------ ------------ ------------
Net Change 889,473 $13,393,061 168,471 $2,529,667 32,221 $492,192
============ ============ ============ ============ ============ ============
LB High Yield Fund:
Class A Class B Institutional Class
--------------------------- --------------------------- ---------------------------
Year Ended October 31, 1999 Shares Amount Shares Amount Shares Amount
---------------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Sold 15,800,062 $131,098,404 2,034,532 $16,873,840 412,630 $3,445,215
Dividends and distributions reinvested 7,295,683 60,131,985 255,525 2,100,239 238,832 1,969,088
Redeemed (15,486,630) (128,297,384) (295,500) (2,435,182) (386,604) (3,200,806)
------------ ------------ ------------ ------------ ------------ ------------
Net Change 7,609,115 $62,933,005 1,994,557 $16,538,897 264,858 $2,213,497
============ ============ ============ ============ ============ ============
Year Ended October 31, 2000
----------------------------------------
Sold 14,395,293 $111,326,891 1,619,051 $12,533,074 345,308 $2,635,953
Dividends and distributions reinvested 7,779,126 59,290,343 382,516 2,902,413 258,079 1,967,301
Redeemed (18,624,219) (143,506,467) (570,204) (4,398,388) (3,866,742) (31,249,085)
------------ ------------ ------------ ------------ ------------ ------------
Net Change 3,550,200 $27,110,767 1,431,363 $11,037,099 (3,263,355) ($26,645,831)
============ ============ ============ ============ ============ ============
LB Income Fund:
Class A Class B Institutional Class
--------------------------- --------------------------- ---------------------------
Year Ended October 31, 1999 Shares Amount Shares Amount Shares Amount
---------------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Sold 7,477,866 $64,158,371 1,068,587 $9,162,226 1,296,579 $11,117,559
Dividends and distributions reinvested 3,780,637 32,147,278 64,221 541,994 165,498 1,403,417
Redeemed (12,838,026) (109,371,531) (135,159) (1,144,120) (633,388) (5,342,504)
------------ ------------ ------------ ------------ ------------ ------------
Net Change (1,579,523) ($13,065,882) 997,649 $8,560,100 828,689 $7,178,472
============ ============ ============ ============ ============ ============
Year Ended October 31, 2000
----------------------------------------
Sold 3,494,894 $28,427,354 435,434 $3,538,563 1,237,913 $10,062,350
Dividends and distributions reinvested 3,805,908 30,854,208 95,088 769,495 231,784 1,878,432
Redeemed (15,340,751) (124,652,017) (274,345) (2,222,842) (649,962) (5,272,243)
------------ ------------ ------------ ------------ ------------ ------------
Net Change (8,039,949) ($65,370,455) 256,177 $2,085,216 819,735 $6,668,539
============ ============ ============ ============ ============ ============
LB Municipal Bond Fund:
Class A Class B Institutional Class
--------------------------- --------------------------- ---------------------------
Year Ended October 31, 1999 Shares Amount Shares Amount Shares Amount
---------------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Sold 5,569,179 $49,666,295 582,310 $5,182,413 104,046 $926,294
Dividends and distributions reinvested 2,567,321 22,717,527 28,821 253,026 24,151 213,368
Redeemed (6,907,717) (61,203,189) (44,025) (385,765) (58,094) (510,800)
------------ ------------ ------------ ------------ ------------ ------------
Net Change 1,228,783 $11,180,633 567,106 $5,049,674 70,103 $628,862
============ ============ ============ ============ ============ ============
Year Ended October 31, 2000
----------------------------------------
Sold 3,255,452 $27,608,274 238,316 $2,012,553 13,715 $116,267
Dividends and distributions reinvested 2,613,591 22,118,195 42,164 355,981 21,022 177,791
Redeemed (8,894,186) (75,231,920) (158,579) (1,339,052) (171,585) (1,447,448)
------------ ------------ ------------ ------------ ------------ ------------
Net Change (3,025,143) ($25,505,451) 121,901 $1,029,482 (136,848) ($1,153,390)
============ ============ ============ ============ ============ ============
LB Limited Maturity Bond Fund:
Class A Class B Institutional Class
--------------------------- --------------------------- ---------------------------
For the period from October 29, 1999
(effective date) through
October 31, 1999 Shares Amount Shares Amount Shares Amount
---------------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Sold 400,000 $5,000,000 400,000 $5,000,000 800,000 $10,000,000
============ ============ ============ ============ ============ ============
Year Ended October 31, 2000
----------------------------------------
Sold 1,121,470 $13,868,294 4,676 $58,053 50,169 $619,458
Dividends and distributions reinvested 29,305 362,673 137 1,691 1,560 19,299
Redeemed (216,849) (2,671,713) (506) (6,300) (1,262) (15,609)
------------ ------------ ------------ ------------ ------------ ------------
Net Change 933,926 $11,559,254 4,307 $53,444 50,467 $623,148
============ ============ ============ ============ ============ ============
LB Money Market Fund:
Class A Class B Institutional Class
--------------------------- --------------------------- ---------------------------
Year Ended October 31, 1999 Shares Amount Shares Amount Shares Amount
---------------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Sold 936,619,749 $936,619,749 332,580 $332,580 85,365,826 $85,365,826
Dividends and distributions reinvested 22,543,660 22,543,660 6,141 6,141 2,039,823 2,039,823
Redeemed (872,185,668) (872,185,668) (157,040) (157,040) (83,666,342) (83,666,342)
------------ ------------ ------------ ------------ ------------ ------------
Net Change 86,977,741 $86,977,741 181,681 $181,681 3,739,307 $3,739,307
============ ============ ============ ============ ============ ============
Year Ended October 31, 2000
----------------------------------------
Sold 1,024,447,514 $1,024,447,514 309,342 $309,342 76,446,138 $76,446,138
Dividends and distributions reinvested 32,006,256 32,006,256 15,264 15,264 2,661,113 2,661,113
Redeemed (1,001,871,076)(1,001,871,076) (278,786) (278,786) (88,058,296) (88,058,296)
------------ ------------ ------------ ------------ ------------ ------------
Net Change 54,582,694 $54,582,694 45,820 $45,820 (8,951,045) ($8,951,045)
============ ============ ============ ============ ============ ============
</TABLE>
THE LUTHERAN BROTHERHOOD FAMILY OF FUNDS
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
TRUSTEES
Rolf F. Bjelland
Herbert F. Eggerding, Jr.
Noel K. Estenson
Jodi L. Harpstead
Richard A. Hauser
Connie M. Levi
Bruce J. Nicholson
OFFICERS
Rolf F. Bjelland James R. Olson
Chairman and President Vice President
Wade M. Voigt Brenda J. Pederson
Treasurer Vice President
Randall L. Boushek Richard B. Ruckdashel
Vice President Vice President
Frederick P. Johnson John C. Bjork
Vice President Assistant Secretary
Marlene J. Nogle Rand E. Mattsson
Assistant Secretary Assistant Treasurer
This report is authorized for distribution to prospective
investors only when preceded or accompanied by the
current prospectuses.
