Our Message to You
April 30, 2000
Dear Shareholder:
The six months ended April 30, 2000, held plenty of drama for securities
investors. Economic news continued to be largely positive, but was also
peppered with cautionary tales and the occasional warning of future
economic slowdowns. The stock and bond markets reacted quickly to both good
and bad economic news, providing investors with hard-to-predict swings in
interest rates, prices and an almost constantly rotating leadership in
market industry sectors. In the "Economic and Market Overview" section 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 six-month period.
[PHOTO OMITTED: ROLF F. BJELLAND]
Though it at times sounds like a broken record, the last six months of
market gyrations are yet another potent reminder of the importance of asset
diversification. For example, NASDAQ-heavy stock investors who were
tallying their new-found wealth last fall may have been shocked to discover
the kind of volatility that was lying in wait for them this spring. In a
matter of days, many of the stocks that had carried some portfolios to
triple-digit returns in 1999 were reduced to half their value, or even
less. Yet, investors who included these stocks in a broadly diversified
portfolio with a long-term outlook probably saw a much less dramatic dip in
the value of their investments than investors who espoused the "all-or-
nothing" approach.
Despite the astounding swings of the aggressive growth sectors of the
market, securities from these sectors will continue to play an important
role in diversifying investment portfolios when used properly. Certainly,
market timing, which, for most people, has never been a successful
strategy, is even more difficult in these sectors of the market. However,
to believe in the long-term potential of small- and medium-sized companies
is to believe in the long-term potential of the American economy itself.
In this report you will also find discussions from the portfolio managers
of each of the 11 mutual funds in the Lutheran Brotherhood Family of Funds.
These discussions summarize the economic and market dynamics that each
manager faced during the reporting period and the actions taken in light of
those dynamics.
As we enter the 116th month of a largely uninterrupted bull market, we
believe there is still excellent potential on the path ahead. We look
forward to walking that path with you and the hundreds of thousands of
other 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 April 30, 2000
Randall L. Boushek
Senior Vice President and Chief Investment Officer
Strong economic growth, low unemployment and tangible signs of higher
inflation highlighted the six-month period ended April 30, 2000. Interest
rates rose as the Federal Reserve Board continued its efforts to cool the
economy and pre-empt inflation through a series of short-term interest rate
hikes. Rising rates hurt returns in the bond market, which was also thrown
into some disarray by the U.S. Treasury's announced plans to reduce
outstanding debt by buying back long-term Treasury bonds. The stock market
became increasingly volatile amid concern over both rising interest rates
and high valuations of technology stocks.
U.S. Economy
The American economy reached a milestone during this period, celebrating
its record ninth consecutive year of peacetime expansion. The national
unemployment rate, which began the period at a historically low 4.2%,
continued to decline, reaching 3.9% in April -- its lowest level since
January 1970.
The economy continued to grow steadily, driven by high levels of consumer
and business confidence. U.S. economic output, as measured by growth in
gross domestic product (GDP), grew by 7.3% in the fourth quarter of 1999,
and 5.4% in the first quarter of 2000. Despite a very tight labor supply,
increasing wage costs were largely offset by continued gains in
productivity.
An acceleration in global economic growth helped to stimulate the U.S.
economy, affecting U.S. exporters in particular. America's trading partners
in Europe, Latin America and Asia, with the exception of Japan, showed
resounding economic growth.
These factors, along with higher energy prices, led to a rise in industrial
commodity prices, and gave the Federal Reserve Board additional reason to
be concerned about a potential escalation of inflation.
Inflation & Monetary Policy
Continuing its strong course of pre-emptive actions against potential
inflation, the Federal Reserve raised its benchmark overnight federal funds
rate three times between November and April, for a total of five 0.25%
interest rate increases since it began its battle against inflationary
forces in June 1999.
However, in the early part of this reporting period, the Federal Reserve
injected money into the economy in anticipation of potential "Y2K"-related
demands for cash. As it turned out, much of that money made its way into
the stock market, fueling the explosive stock market growth in late 1999
and early 2000. By February, the Federal Reserve was again actively trying
to slow the rate of growth in the money supply.
There were early warning signs of inflation, including tightening of the
labor market and rising commodity prices, particularly fuel prices.
However, major indicators of inflation continued to show only modest gains
during the period. Countering much of the concern about inflationary
pressures, productivity continued to rise, with help from the Internet and
the efficiencies inherent in e-commerce.
Equity Performance
Equities experienced a strong run-up until mid-March, followed by a sharp
correction. This movement was exaggerated among technology stocks, small
company stocks and those companies undergoing high growth. For example, the
NASDAQ Composite index had a return of 30.3% during the reporting period.
However, it rose an unsustainable 70.3% from November 1999 to mid-March
2000, after which it fell 23.5%.
The Russell 2000 Index, made up of smaller companies, registered an 18.9%
gain during the period, which included a 42.1% gain to mid-March, followed
by a drop of 16.3%. The performance of larger companies and foreign issues
was less dramatic, but followed a similar pattern.
Stock market volatility was heightened during the period by a significant
increase in margin debt used to fund stock purchases. At the same time,
inflows into equity mutual funds and outflows from fixed-income funds
reached record levels with billions of dollars a month flowing into
technology equity funds alone between January and April 2000.
Fixed-Income Performance
As with the equity markets, fixed-income markets experienced two distinct
periods of yield levels within these six months. Rising rates across all
bond maturities through the first half of the period gave way to a sharply
inverted yield curve in the second half.
As a result, the better performing bonds over this time period were
generally those of shorter term and higher quality, with the exception of
long-term government bonds. The Lehman Brothers Aggregate Index, which
reflects the investment-grade bond market, returned just 1.42% for this
six-month period. The Lehman Brothers High Yield Index was relatively flat,
returning just 0.08% over these six months.
Trading in the corporate bond market became more difficult as a result of
widening bid-ask spreads, as brokers became more reluctant to hold large
amounts of bonds in inventory in the aftermath of the Asian and Russian
debt crisis of 1998.
Outlook
The economy shows signs of ongoing strength, with some slowdown expected in
the rate of growth. Supply and demand continue to run in good balance,
making it difficult for most companies to enact price increases, helping to
keep inflation in check. Productivity improvements continue to play an
important role in holding up profits and holding down inflation, while a
simultaneous global economic expansion also bodes well for continued U.S.
economic growth.
Given these factors, it would not be surprising to see the Federal Reserve
continue its course of tightening monetary policy unless it sees clear
signs of economic weakness. The Federal Reserve's challenge is heightened,
given that government fiscal policy could further stimulate the economy in
the U.S. and abroad. The markets will remain watchful of potential Federal
Reserve interest rate increases for the rest of the year, especially at the
June and August meetings of the Federal Reserve Open Markets Committee.
We see the substantial correction in NASDAQ technology stocks as a fairly
normal, though somewhat exaggerated, occurrence in the pattern of markets
where stock prices occasionally tend to get ahead of their companies' sales
and earnings fundamentals.
Though the markets will continue to experience bouts of uncertainty as the
year 2000 unfolds, the economic and financial underpinnings of the
investment world appear strong. Against this fundamentally sound backdrop,
we expect some continued volatility in both the bond and equity markets
until the interest rate questions are settled.
LB Opportunity Growth Fund
[PHOTO OMITTED: BRIAN L. THORKELSON]
Brian L. Thorkelson 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.
2000 has been a landmark year for the Lutheran Brotherhood Opportunity
Growth Fund, which, after an 18-month rebuilding process under the
direction of T. Rowe Price Associates, returned to in-house management by
Lutheran Brotherhood Research Corp. on March 1. Overall, the Fund finished
the six-month period ended April 30, 2000, with a 23.75% total return,
outperforming its market benchmark, the small-company Russell 2000 Index,
which generated an 18.86% total return during this time. The Fund's Lipper,
Inc., peer group of small-capitalization growth funds posted an average
total return of 37.55% during the reporting period.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)
Short-Term Securities 9.7%
Common Stocks 90.3%
The Fund's portfolio composition and top holdings represent all share
classes.
[GRAPHIC OMITTED: TOP 10 HOLDINGS % OF PORTFOLIO]
Top 10 Holdings % of Portfolio
----------------------------------------------------------------------
Warner-Lambert Co. 1.1%
RSA Security, Inc. 0.9%
Powerwave Technologies, Inc. 0.8%
National Computer Systems, Inc. 0.8%
Cytyc Corp. 0.7%
Aspect Development, Inc. 0.7%
Micromuse, Inc. 0.7%
Forward Air Corp. 0.7%
Applied Micro Circuits Corp. 0.7%
Zebra Technologies Corp. 0.6%
These holdings represent 7.7% of the total investment portfolio.
Growth Stocks Dominate Early
Continuing the remarkable turnaround from the tumult of 1998, the
small-capitalization equity market performed admirably through the latter
part of 1999 and into early 2000. Growth stocks were once again a dominant
factor in the market's advance, with the very fastest-growing companies
earning extraordinary returns, while those with slightly lower expectations
did not perform nearly as well. The Fund's holdings in technology stocks
advanced steadily in November and December, led by software and
communication equipment companies. Health care stocks also performed well
on the strength of biotechnology and specialty pharmaceutical companies.
In March, however, the same stocks that led the small-cap market's earlier
surge came under heavy selling pressure. Market participants, wary of
soaring valuations, began to assume a defensive posture by taking profits
in growth stocks, particularly those in the technology sector, and rotating
into relatively oversold "old economy" stocks, such as energy, financials
and consumer cyclicals. Shortly after the March 1 management transition, we
began the process of more closely aligning the Fund's portfolio with its
peer group, assuming a larger position in technology stocks while
simultaneously moving out of stocks that had less liquidity than we
desired. As technology stocks began to falter, our increased cash position
resulting from the liquidation of older assets provided the Fund with added
cushion.
[GRAPHIC OMITTED: TOP 10 INDUSTRIES]
TOP 10 INDUSTRIES
Computers - Software & Services 15.2%
Electronics 13.9%
Electrical Equipment 5.3%
Services - Cyclical 5.2%
Oil & Gas 4.7%
Communications Equipment 4.6%
Health Care - Drugs & Pharmaceuticals 3.3%
Equipment - Semiconductors 3.0%
Retail 2.6%
Services - Technology 2.6%
These holdings represent 60.4% of the Fund's total investment portfolio.
Charting a Course
In the near-term, market volatility will likely continue as small-company
investors sort through appropriate valuations for high-growth, new economy
technology stocks versus the stocks of the old economy. Over time, however,
we believe companies with strong fundamentals in growth areas of the
economy will continue to provide diversified investors with excellent
potential for capital appreciation.
Although we will periodically fine-tune the structure of the Fund as market
conditions warrant, we do not plan on initiating any major overhauls. One
of the most critical changes in the Fund was the comprehensive redesign of
its investment strategy, which was devised by Lutheran Brotherhood and
subsequently implemented by T. Rowe Price Associates. With that strategy
now in place, alongside an exciting, diversified portfolio of growth
assets, we believe we have a solid foundation on which to build.
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: 57,081
Total Net Assets
(in millions): $270.3
[GRAPHIC WORM CHART OMITTED:]
Performance Through April 30, 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 Stocks 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
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 Stocks
$32,502
Russell 2000
Index
$24,662
LB Opportunity
Growth Fund
$22,164
Consumer
Price Index
$12,006
LB Opportunity Growth Fund
Annualized Total Returns*
---------------------------------------------------------------------
Since
Inception
Class A shares 1-Year 5-Year 1/8/93
Net Asset Value 35.39% 11.91% 12.52%
Public Offering Price 29.92% 11.01% 11.89%
Since
Inception
Class B shares 1-Year 10/31/97
If Held (NAV) 34.39% 3.41%
If Redeemed (CDSC) 29.39% 2.26%
Institutional shares
Net Asset Value 36.07% 4.50%
*See accompanying notes to Portfolio Management Reviews.
LB Mid Cap Growth Fund
[PHOTO OMITTED: BRIAN L. THORKELSON]
Brian L. Thorkelson is portfolio manager of the LB Mid Cap Growth
Fund and the LB Opportunity 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.
Bolstered early in the period by the strong performance of its technology
holdings, the Lutheran Brotherhood Mid Cap Growth Fund posted excellent
returns for the six months ended April 30, 2000. The Fund finished the
period with a 39.38% total return, exceeding the 21.26% total return of its
market benchmark, the S&P MidCap 400 Index. The Fund's peer group, composed
of mid-cap core funds tracked by Lipper, Inc., finished the period with an
average total return of 30.88%.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)
Short-Term Securities 7.2%
Common Stocks 92.8%
The Fund's portfolio composition and top holdings represent all share
classes.
[GRAPHIC OMITTED: TOP 10 HOLDINGS % OF PORTFOLIO]
Top 10 Holdings % Of Portfolio
------------------------------------------------------------------------
Veritas Software Corp. 1.1%
Vishay Intertechnology, Inc. 0.9%
Altera Corp. 0.9%
Analog Devices, Inc. 0.9%
Forest Laboratories, Inc. 0.8%
Comverse Technology, Inc. 0.7%
Fiserv, Inc. 0.7%
Citrix Systems, Inc. 0.7%
Novellus Systems, Inc. 0.7%
Jabil Circuit, Inc. 0.7%
These holdings represent 8.1% of the total investment portfolio.
Technology Stocks Key
Throughout the first four months of the period, the Fund was overweighted
relative to its peers in technology, communication services and
biotechnology stocks, all of which played a key role in the Fund's superb
performance during this time. Top performers included Veritas Software and
Citrix Systems in the software sector and PMC-Sierra, a producer of
semiconductors. Within the biotechnology arena, companies such as Human
Genome Sciences, Protein Design Labs and Maxim Pharmaceuticals performed
particularly well, owing to revolutionary breakthroughs in the field of
genomic research.
As growth stocks came under heavy pressure in the spring, however, we took
profits in many of our technology and communication services holdings and
adopted a more sector-neutral framework in these areas. In March, we
systematically reduced our exposure to technology stocks by roughly eight
percent, but continued to maintain slightly overweight positions in energy,
health care and capital goods stocks. This strategy proved prudent,
providing the portfolio with a much-needed cushion during the market's
rapid rotation into old-line cyclical stocks.
Company Fundamentals Remain Strong
As before, technology stocks will remain an important long-term component
of the Fund, despite the potential for continued near-term volatility. We
believe that many new economy companies, particularly those in the areas of
biotechnology, semiconductors and telecommunications, will continue to
experience healthy growth in the years to come.
[GRAPHIC OMITTED: TOP 10 INDUSTRIES]
Top 10 Industries
Electronics 15.2%
Computers - Software & Services 10.7%
Oil & Gas 6.9%
Communications Equipment 5.6%
Electrical Equipment 4.7%
Health Care - Drugs & Pharmaceuticals 4.3%
Telephone & Telecommunications 4.1%
Retail 3.4%
Equipment - Semiconductors 3.3%
Banks 3.2%
These holdings represent 61.4% of the Fund's total investment portfolio.
Many mid-cap growth stocks are currently in the process of unwinding from
an extended period of speculative excess, and it may take some time for
corporate earnings in high-growth sectors to catch up with still-lofty
stock valuations. In many cases, stock prices are coming down from levels
that were too high to be sustainable, particularly in an environment of
rising interest rates. Over time, though, we believe that fundamentally
sound companies in growth areas of the economy will continue to provide
good investment opportunities. We will continue to seek out such companies
for inclusion in the Fund.
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: 34,817
Total Net Assets
(in millions): $145.6
[GRAPHIC WORM CHART OMITTED:]
Performance Through April 30, 2000
Growth of a $10,000 Investment
Class A shares (since 5/30/97)
Lipper Median
Month End LB Mid Cap S&P MidCap MidCap Consumer
Date Growth Fund 400 Index Stock 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
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
$19,905
Lipper Median
MidCap
Stock Funds
$18,854
S&P MidCap
400 Index
$17,867
Consumer
Price Index
$10,693
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 53.77% 28.38%
Public Offering Price 47.60% 26.58%
Since
Inception
Class B shares 1 Year 10/31/97
If Held (NAV) 52.64% 27.18%
If Redeemed (CDSC) 47.64% 26.33%
Institutional shares
Net Asset Value 54.45% 28.54%
*See accompanying notes to Portfolio Management Reviews.
LB World Growth Fund
[PHOTO OMITTED: DAVID J. L. WARREN]
David J.L. Warren is president of Rowe Price-Fleming International,
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 Rowe
Price-Fleming since 1984.
International stocks finished the six-month period ended April 30, 2000,
with mixed results, as many of the influences felt in the United States
also affected overseas markets. During this time, the Lutheran Brotherhood
World Growth Fund generated a total return of 13.13%, nearly double that of
its market benchmark, Morgan Stanley Capital International's Europe,
Australasia and Far East (EAFE) Index, which returned 6.84%. The Fund's
peer group, composed of international equity funds tracked by Lipper, Inc.,
finished the period with an average total return of 14.14%.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)
Preferred Stocks 0.9%
Short-Term Securities 4.3%
Common Stocks & Warrants 94.8%
The Fund's portfolio composition and top holdings represent all share
classes.
[GRAPHIC OMITTED: TOP 10 HOLDINGS COUNTRY % OF PORTFOLIO]
% of
Top 10 Holdings Country Portfolio
Nokia Oyj Finland 0.7%
Vodafone AirTouch plc United Kingdom 0.7%
Glaxo Wellcome United Kingdom 0.4%
Television Francaise France 0.4%
Murata Manufacturing Japan 0.4%
Vivendi France 0.4%
Total 'B' France 0.3%
NEC Corp. Japan 0.3%
Shell Transport & Trading Co. United Kingdom 0.3%
Philips Electronics NV Netherlands 0.3%
These holdings represent 4.2% of the total investment portfolio.
Market Leadership Changes Globally
As in the United States, the division in performance between "old economy"
and "new economy" stocks was pronounced early on in most international
markets, complete with soaring valuations in high-growth industries such as
media, telecommunications and technology. Market leadership quickly
reversed course in March, however, as long-neglected sectors such as
consumer cyclicals, pharmaceuticals and financials began to recover. With
holdings from a cross-section of regions and market segments, the Fund was
largely successful in taking advantage of this shift in investor sentiment.
Overall, the Fund's regional weightings positively impacted performance,
while stock selection produced mildly negative results.
Japan sapped much of the Pacific Rim of momentum by posting negative gross
domestic product growth during the fourth quarter of 1999. The region's
fragile economic recovery was further undermined by international concerns
originating in the West, including the downturn in technology stocks and
tightening of U.S. monetary policy later in the period. By underweighting
Japan relative to the EAFE Index, we were able to temper that country's
negative influence on Fund performance, while underweighted positions in
weak Asian financial stocks were also advantageous.
In Europe, our decision to underweight both Germany and the United Kingdom
relative to the EAFE Index proved beneficial, as these remain two of the
weaker markets in a region that is otherwise thriving. Offsetting
disappointing stock selection in the Netherlands, France and the United
Kingdom, many of the Fund's European media holdings performed particularly
well, including telecommunications firms Ericsson and Nokia. The majority
of the Fund remains invested in Europe, with nearly 60% of its assets in
that region.
[GRAPHIC OMITTED: TOP 10 COUNTRIES % OF PORTFOLIO]
Top 10 Countries % of Portfolio
----------------------------------------------------------------------
Japan 21.7%
United Kingdom 17.9%
France 11.7%
Netherlands 7.1%
Germany 5.0%
Switzerland 4.6%
Hong Kong 4.1%
Spain 3.4%
Sweden 3.2%
Finland 3.1%
These holdings represent 81.8% of the total investment portfolio.
Despite continued economic recovery in Mexico and Brazil, Latin American
markets as a whole pulled back during the period due to sensitivity to the
direction of U.S. interest rates and equity markets. As a result, our small
positions in Latin America generally hurt portfolio performance. However,
we remain confident that many businesses in Latin America hold tremendous
growth potential. As such, the Fund retained a roughly four percent stake
in Latin American stocks at the end of the period.
Increased Focus on Company Fundamentals
Following a period of indiscriminate investment in "new economy" stocks, we
expect the renewed global emphasis on company fundamentals to continue for
the foreseeable future. In addition, while economic recovery is well
established in many parts of the world, key nations such as Japan, Korea,
Germany, Mexico and Brazil must continue to advance economic reforms in
order for their respective regions' growth potential to be fully realized.
In an environment of rising global interest rates, market volatility may
continue during the coming months. We continue to believe that the outlook
for international markets is positive, however, and that investors will be
rewarded for maintaining their international exposure. With broad
geographic diversification and a mixture of assets, we believe the Fund is
well positioned for long-term future growth, regardless of short-term
market conditions.
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: 28,898
Total Net Assets
(in millions): $137.2
[GRAPHIC WORM CHART OMITTED:]
Performance Through April 30, 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 Stock Funds Index
------------------------------------------------------------------------
9/30/95 10,000 10,000 10,000 10,000
10/31/95 9,430 97,34 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
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
Stock Funds
$17,293
LB World
Growth Fund
$16,413
Morgan Stanley
Capital International
EAFE Index
$16,398
Consumer
Price Index
$11,175
INSET BOX ON CHART READS:
LB World Growth Fund
Annualized Total Returns*
-----------------------------------------------------------
Since
Inception
Class A shares 1-Year 9/5/95
Net Asset Value 19.22% 12.47%
Public Offering Price 14.40% 11.50%
Since
Inception
Class B shares 1-Year 10/31/97
If Held (NAV) 18.37% 14.89%
If Redeemed (CDSC) 13.37% 13.91%
Institutional shares
Net Asset Value 19.78% 16.13%
*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.
In the first six months since its October 29, 1999, inception, the Lutheran
Brotherhood Growth Fund opened to favorable market conditions, but was
later witness to a sector rotation that quickly brought down equity growth
valuations from all-time high levels. Overall, the Fund finished the period
with an 18.61% total return, soundly ahead of its market benchmark, the S&P
500/Barra Growth Index, which had a total return of 10.85%. The Fund's
Lipper, Inc. peer group, made up of large-cap growth funds, finished the
period with an average total return of 20.94%.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)
Short-Term Securities 6.4%
Common Stocks 93.6%
The Fund's portfolio composition and top holdings represent all share
classes.
[GRAPHIC OMITTED: TOP 10 HOLDINGS % OF PORTFOLIO]
Top 10 Holdings % of Portfolio
------------------------------------------------------------------------
Cisco Systems, Inc. 5.5%
Intel Corp. 3.3%
EMC Corp. 3.3%
General Electric Co. 3.1%
Microsoft Corp. 2.6%
Nokia Corp., ADR 2.4%
Sun Microsystems, Inc. 2.2%
Texas Instruments, Inc. 2.0%
Home Depot, Inc. 1.9%
Lucent Technologies, Inc. 1.7%
These holdings represent 28.0% of the total investment portfolio.
Two Different Market Scenarios
The six-month reporting period featured two distinctly different market
scenarios. Fueled by a powerful surge of momentum investing, technology
growth stocks flourished during the first four months of the reporting
period, but quickly fell out of favor in March and April, as investors
funneled assets into undervalued "old economy" cyclical stocks. Because of
the Fund's growth orientation, its performance was adversely affected
during those two months. Although this market rotation was catalyzed by
Federal Reserve interest rate hikes, it was largely brought about by stock
prices that had become out of sync with company earnings, necessitating a
market correction.
Due to a strategy of staying sector-neutral to our peer group throughout
the reporting period, we did not significantly alter the Fund's weightings
in response to this market shift. As stock prices fell later in the period,
however, we did increase positions in many of the core companies already
held in the portfolio, particularly information-based companies such as
PMC-Sierra, Veritas Software, EMC Corp. and Sycamore Networks. These are
companies at the leading edge of the Internet revolution that we believe
possess favorable prospects for future earnings growth. At the close of the
period, approximately 40% of the Fund's holdings were in technology stocks,
which remain at the core of our investment strategy.
Continued Focus on Leadership Companies
Over the past year, both economic and corporate earnings growth rates have
been among the fastest ever recorded in a business cycle. These trends
have, in turn, spawned inflation concerns. Although U.S. consumer prices
have not risen dramatically thus far, the Federal Reserve is likely to
continue tightening monetary policy until it is convinced that the threat
of inflation has been sufficiently mitigated. As a result, investors will
likely see further stock market volatility over the remainder of the year.
[GRAPHIC OMITTED: TOP 10 INDUSTRIES]
TOP 10 INDUSTRIES
------------------------------------------------------------------------
Electronics 8.7%
Computers - Software & Services 8.2%
Communications Equipment 7.2%
Retail 6.9%
Computers - Networking 6.4%
Computers - Hardware 5.5%
Telephone & Telecommunications 4.6%
Electrical Equipment 4.1%
Financial - Diversified 3.7%
Manufacturing 3.7%
These holdings represent 59.0% of the Fund's total investment portfolio.
Despite the potential for market turbulence, we believe the companies in
which we have invested are well positioned for future growth. Going
forward, we plan to continue with a sector-neutral emphasis on established
companies with successful business strategies, strong relative stock
returns within their sector and excellent potential for growth. In many
cases, these may be technology companies, but we also see great promise in
the area of telecommunications, biotechnology and pharmaceuticals.
Regardless of industry concentration, our goal is to find those companies
that are clear leaders in their respective fields. We believe this strategy
will ultimately reward the Fund's long-term investors.
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: 5,917
Total Net Assets
(in millions): $25.5
LB Growth Fund
Annualized Total Returns*
-----------------------------------------------------------
Since
Inception
Class A shares 10/29/99
Net Asset Value 18.61%
Public Offering Price 13.84%
Since
Inception
Class B shares 10/29/99
If Held (NAV) 18.12%
If Redeemed (CDSC) 13.12%
Institutional shares
Net Asset Value 19.03%
*See accompanying notes to Portfolio Management Reviews.
The Growth Fund was introduced on October 29, 1999. Given its
brief performance history, the growth of a $10,000 investment in the
Portfolio is not illustrated in this report.
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.
During the six months ended April 30, 2000, investors in the Lutheran
Brotherhood Fund participated in both sides of a sector rotation that
widely impacted the equity markets. The Fund concluded the six-month period
by posting a 7.93% total return, slightly above that of its market
benchmark, the large-company S&P 500 Index, which returned 7.20% during
this time. The Fund's Lipper, Inc. peer group, composed of
large-capitalization core funds, generated an average total return of
10.83% during the reporting period.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)
Short-Term Securities 2.9%
Common Stocks 97.1%
The Fund's portfolio composition and top holdings represent all share
classes.
[GRAPHIC OMITTED: TOP 10 HOLDINGS % OF PORTFOLIO]
Top 10 Holdings % of Portfolio
------------------------------------------------------------------------
Cisco Systems, Inc. 4.5%
Intel Corp. 3.7%
General Electric Co. 3.5%
Microsoft Corp. 2.5%
EMC Corp. 2.4%
Citigroup, Inc. 2.1%
Oracle Corp. 2.0%
American International Group, Inc. 1.9%
ExxonMobil Corp. 1.9%
Wal-Mart Stores, Inc. 1.8%
These holdings represent 26.3% of the total investment portfolio.
Period Marked by Market Rotation
The six-month reporting period was the story of two decidedly different
markets. Prior to the new year, and even well after "Y2K"-related concerns
had diminished, investor interest was centered squarely on "new economy"
stocks -- those issued by high-growth companies concentrated primarily in
the field of information technology. These types of issues experienced a
tremendous expansion in their valuations early in the period, triggered
largely by a wave of momentum investing.
As U.S. economic growth continued to accelerate, however, and inflation
worries drove the Federal Reserve to increase short-term interest rates,
market participants became increasingly concerned about high stock
valuations. In March, investors quickly rotated into lower-priced "old
economy" stocks representing companies with less sensitivity to changing
economic growth rates.
Due to the Fund's blended investment approach, which provides investors
with access to both value and growth stocks, the Fund was in a position to
take advantage of both market scenarios. Early on, the Fund benefited from
many of its technology holdings, including strong returns from companies
such as Oracle, Applied Materials and EMC Corp. As value stocks rallied in
March, energy firms such as Schlumberger and Halliburton, and consumer
staples companies such as PepsiCo, McDonalds and Safeway played a more
prominent role in the Fund's performance. Because of our sector-neutral
structure, we did not make major changes to portfolio weightings during
this time. Instead, as growth-company valuations declined, we chose to
selectively add names to the portfolio, thereby increasing our overall
diversification.
[GRAPHIC OMITTED: TOP 10 INDUSTRIES]
TOP 10 INDUSTRIES
------------------------------------------------------------------------
Oil & Gas 7.0%
Electronics 6.5%
Computers - Software & Services 6.0%
Computers - Networking 5.4%
Telephone & Telecommunications 5.4%
Financial - Diversified 5.4%
Retail 5.1%
Computers - Hardware 5.0%
Electrical Equipment 4.7%
Communications Equipment 4.5%
These holdings represent 55.0% of the Fund's total investment portfolio.
Growth Stocks Could Decline Further
Although equity valuations have come down significantly over the past six
months, they are still quite high by historical standards, and there is
still plenty of room for further corrections in the equity markets, which
could lead to choppy trading patterns throughout the remainder of the year.
Regardless of investor sentiment, we believe that the technology revolution
unfolding before us will provide excellent investment opportunities well
into the future, most notably in the areas of biotechnology, data transfer
and Internet networking.
Due to the Fund's sector-neutral framework, stock selection will continue
to play a major role in determining the Fund's competitive position within
its peer group. As always, we intend to remain fully invested and
concentrate on large-capitalization companies with leading market
positions, strong returns on capital and excellent relative stock
performance characteristics. Over the long-term, we expect that focusing on
these strong business fundamentals will produce rewards for the Fund's
investors.
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: 137,718
Total Net Assets
(in millions): $1,645.6
[GRAPHIC WORM CHART OMITTED:]
Performance Through April 30, 2000
Growth of a $10,000 Investment
Class A shares (since 4/30/90)
Standard & Poor's Lipper Consumer
Month End 500 Stock Median Growth & Price
Date LB Fund Index Income Fund Index
-----------------------------------------------------------------------
4/30/90 10,000 10,000 10,000 10,000
5/31/90 10,630 10,955 10,776 10,023
6/30/90 10,695 10,889 10,763 10,078
7/31/90 10,640 10,862 10,679 10,116
8/31/90 9,771 9,870 9,832 10,209
9/30/90 9,255 9,392 9,352 10,295
10/31/90 9,249 9,362 9,208 10,357
11/30/90 9,735 9,955 9,748 10,380
12/31/90 9,953 10,233 10,031 10,380
1/31/91 10,442 10,690 10,517 10,442
2/28/91 11,113 11,435 11,204 10,458
3/31/91 11,316 11,716 11,464 10,473
4/30/91 11,377 11,755 11,473 10,489
5/31/91 11,898 12,245 11,933 10,520
6/30/91 11,236 11,690 11,428 10,551
7/31/91 11,815 12,249 11,907 10,566
8/31/91 12,172 12,524 12,180 10,597
9/30/91 11,969 12,316 12,070 10,644
10/31/91 12,222 12,497 12,255 10,659
11/30/91 11,777 11,978 11,772 10,690
12/31/91 13,215 13,349 12,936 10,698
1/31/92 13,018 13,115 12,934 10,714
2/28/92 13,154 13,268 13,152 10,753
3/31/92 12,820 13,011 12,925 10,807
4/30/92 12,912 13,409 13,128 10,822
5/31/92 13,031 13,455 13,209 10,838
6/30/92 12,719 13,257 12,944 10,877
7/31/92 13,107 13,816 13,376 10,900
8/31/92 12,867 13,519 13,123 10,931
9/30/92 13,048 13,676 13,279 10,962
10/31/92 13,303 13,740 13,363 11,001
11/30/92 13,869 14,188 13,856 11,016
12/31/92 13,981 14,366 14,065 11,009
1/31/93 14,250 14,499 14,224 11,063
2/28/93 14,296 14,680 14,330 11,102
3/31/93 14,709 14,991 14,699 11,140
4/30/93 14,461 14,646 14,430 11,171
5/31/93 14,822 15,013 14,768 11,187
6/30/93 14,871 15,063 14,814 11,203
7/31/93 14,742 15,018 14,800 11,203
8/31/93 15,176 15,573 15,342 11,234
9/30/93 15,152 15,453 15,333 11,257
10/31/93 15,306 15,789 15,551 11,303
11/30/93 14,908 15,621 15,339 11,311
12/31/93 15,196 15,816 15,673 11,311
1/31/94 15,737 16,365 16,162 11,342
2/28/94 15,307 15,905 15,847 11,381
3/31/94 14,563 15,215 15,183 11,420
4/30/94 14,598 15,424 15,326 11,435
5/31/94 14,761 15,650 15,473 11,443
6/30/94 14,357 15,267 15,120 11,482
7/31/94 14,788 15,784 15,536 11,513
8/31/94 15,323 16,421 16,130 11,559
9/30/94 15,064 16,017 15,772 11,590
10/31/94 15,289 16,390 15,942 11,598
11/30/94 14,666 15,782 15,355 11,614
12/31/94 14,677 16,014 15,518 11,614
1/31/95 15,033 16,441 15,740 11,660
2/28/95 15,458 17,069 16,330 11,707
3/31/95 15,735 17,580 16,750 11,746
4/30/95 16,197 18,105 17,160 11,784
5/31/95 16,728 18,802 17,714 11,808
6/30/95 17,277 19,241 18,087 11,831
7/31/95 18,046 19,893 18,680 11,831
8/31/95 17,845 19,933 18,786 11,862
9/30/95 18,518 20,772 19,367 11,885
10/31/95 18,553 20,711 19,152 11,924
11/30/95 19,411 21,604 19,994 11,916
12/31/95 19,380 22,021 20,344 11,908
1/31/96 19,925 22,785 20,898 11,978
2/28/96 20,169 22,981 21,176 12,017
3/31/96 20,272 23,206 21,447 12,079
4/30/96 20,667 23,559 21,760 12,126
5/31/96 21,025 24,141 22,169 12,149
6/30/96 20,903 24,235 22,138 12,157
7/31/96 19,893 23,174 21,190 12,180
8/31/96 20,431 23,656 21,769 12,203
9/30/96 21,497 24,983 22,770 12,242
10/31/96 21,819 25,687 23,230 12,281
11/30/96 23,408 27,619 24,784 12,304
12/31/96 22,717 27,072 24,477 12,304
1/31/97 24,147 28,780 25,517 12,343
2/28/97 24,106 28,990 25,668 12,382
3/31/97 23,165 27,796 24,739 12,413
4/30/97 24,577 29,467 25,654 12,428
5/31/97 25,805 31,238 27,226 12,421
6/30/97 26,899 32,640 28,286 12,436
7/31/97 28,888 35,238 30,410 12,452
8/31/97 27,268 33,258 29,324 12,475
9/30/97 28,550 35,090 30,805 12,506
10/31/97 27,708 33,932 29,708 12,537
11/30/97 28,643 35,490 30,552 12,529
12/31/97 29,056 36,100 31,072 12,514
1/31/98 29,364 36,516 31,152 12,537
2/28/98 31,424 39,134 33,305 12,560
3/31/98 33,171 41,141 34,814 12,583
4/30/98 33,501 41,561 35,075 12,607
5/31/98 32,612 40,821 34,373 12,630
6/30/98 33,848 42,482 34,913 12,646
7/31/98 33,130 42,041 34,072 12,661
8/31/98 27,635 35,957 29,022 12,677
9/30/98 29,236 38,251 30,607 12,692
10/31/98 31,884 41,384 32,890 12,723
11/30/98 33,684 43,884 34,604 12,723
12/31/98 35,827 46,416 36,102 12,715
1/31/99 37,633 48,356 37,412 12,746
2/28/99 36,839 46,852 36,159 12,762
3/31/99 38,766 48,726 37,642 12,801
4/30/99 39,573 50,627 38,752 12,894
5/31/99 38,164 49,432 37,799 12,894
6/30/99 40,591 52,175 39,995 12,894
7/31/99 39,066 50,548 38,855 12,933
8/31/99 38,758 50,295 38,548 12,964
9/30/99 37,621 48,917 37,611 13,026
10/31/99 40,046 52,013 39,902 13,049
11/30/99 41,161 53,074 40,867 13,057
12/31/99 43,171 56,200 43,626 13,057
1/31/00 41,314 53,379 41,602 13,088
2/28/00 41,165 52,370 41,381 13,165
3/31/00 44,706 57,492 45,126 13,274
4/30/00 $43,220 $55,761 $43,687 $13,282
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
$55,761
Lipper Median
Growth &
Income Fund
$43,687
LB Fund
$43,220
Consumer
Price Index
$13,282
INSET BOX ON CHART READS:
LB Fund
Annualized Total Returns*
Class A shares 1-Year 5-Year 10-Year
Net Asset Value 9.21% 21.66% 16.22%
Public Offering Price 4.83% 20.67% 15.75%
Since
Inception
Class B shares 1-Year 10/31/97
If Held (NAV) 8.43% 18.61%
If Redeemed (CDSC) 3.43% 17.68%
Institutional shares
Net Asset Value 9.49% 19.79%
*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.
With stock selection playing a key role, the Lutheran Brotherhood Value
Fund finished the first half of its introductory year by posting solid
relative performance. The Fund completed the six-month period ended April
30, 2000, with a 5.86% total return, surpassing its market benchmark, the
S&P/Barra 500 Value Index, which returned 2.69%. The Fund's Lipper, Inc.
peer group, composed of large-cap value stock funds, averaged a 3.52% total
return during this same time.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)]
Common Stocks 94.8%
Short-Term Securities 5.2%
The Fund's portfolio composition and top holdings represent all share
classes.
Stock Selection Key
1999 ended much the way it began, with investors clambering for technology
growth stocks, while largely ignoring the value segment of the
market-particularly "old economy" industrial and financial stocks. Just as
it seemed technology stocks would once again dominate the financial markets
in 2000, March ushered in a change of fortunes as investors suddenly began
to shun expensive growth stocks in favor of more attractively priced value
stocks. In its continuing campaign to ward off inflation by raising
short-term interest rates, the Federal Reserve provided further stimulus to
this market rotation.
[GRAPHIC OMITTED: TOP 10 HOLDINGS % OF PORTFOLIO]
Top 10 Holdings % of Portfolio
----------------------------------------------------------------------
Citigroup, Inc. 2.5%
ExxonMobil Corp. 2.5%
General Electric Co. 2.4%
Intel Corp. 2.1%
American International Group, Inc. 1.8%
Cisco Systems, Inc. 1.7%
International Business Machines Corp. 1.6%
Hewlett Packard Co. 1.3%
Chase Manhattan Corp. 1.2%
SBC Communications, Inc. 1.2%
These holdings represent 18.3% of the total investment portfolio.
In the wake of these changing market conditions, we remained sector-neutral
to the Fund's peer group. Consequently, careful stock selection was
critical to the Fund's healthy relative performance, particularly prior to
March. Strong performers came from all economic sectors, including Oracle
and EMC Corp., (technology), Microcell Telecommunications (communications
services), Dynegy, Enron and Weatherford (energy), Harley-Davidson and
Circuit City (consumer cyclicals) and Southwest Airlines (transportation).
While these companies vary in their products and services, all are leaders
within their industries, an important hallmark of companies held in the
Fund.
Potential for a Broadening Market
Although the past three years have produced extraordinary equity returns,
many of these gains have been limited to a narrow range of market sectors.
This pattern appears to be changing, however, as recent trends are
suggestive of a broadening market. As market participants refocus their
criteria for stock selection, we expect valuations to become increasingly
dependent on company fundamentals. If market participants become more
selective, investors in the Lutheran Brotherhood Value Fund could benefit,
as the earnings growth outlook for companies held in the Fund's portfolio
remains bright.
Already in 2000, the disparity of performance between growth and value
stocks has begun to narrow, rewarding diversified investors and providing
more equitable returns across asset classes. Against an uncertain monetary
policy backdrop, we believe these developments are unlikely to change over
the near-term. Regardless of market conditions, we will continue to focus
on companies with proven track records, strong management teams and
competitive advantages within a sector-neutral framework.
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: 2,882
Total Net Assets
(in millions): $15.0
[GRAPHIC OMITTED: TOP 10 INDUSTRIES]
Top 10 Industries
----------------------------------------------------------------------
Telephone & Telecommunications 7.2%
Oil & Gas 6.6%
Financial - Diversified 6.2%
Banks 5.7%
Retail 5.1%
Manufacturing 4.9%
Computers - Hardware 4.3%
Electrical Equipment 4.2%
Health Care - Diversified 4.0%
Utilities 4.0%
These holdings represent 52.2% of the Fund's total investment portfolio.
INSET BOX
LB Value Fund
Annualized Total Returns*
-----------------------------------------------------------
Since
Inception
Class A shares 10/29/99
Net Asset Value 5.86%
Public Offering Price 1.66%
Since
Inception
Class B shares 10/29/99
If Held (NAV) 5.45%
If Redeemed (CDSC) 0.45%
Institutional shares
Net Asset Value 6.21%
*See accompanying notes to Portfolio Management Reviews.
The Value Fund was introduced on October 29, 1999. Given its
brief performance history, the growth of a $10,000 investment in the
Portfolio is not illustrated in this report.
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.
High-yield bonds were among the best performing fixed-income products for
the six months ended April 30, 2000, despite increasing volatility later in
the period. Buoyed by credit holdings in the media and telecommunications
industries, the Lutheran Brotherhood High Yield Fund finished the period
with a 3.02% total return, outpacing its market benchmark, the Lehman
Brothers High Yield Index, which returned 0.08%. The Fund's Lipper, Inc.
peer group of high-yield funds averaged a total return of 1.03% during this
time.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)]
Corporate Bonds 82.2%
Preferred Stocks--Non-Convertible 9.2%
Common Stocks & Stock Warrants 3.8%
Preferred Stocks--Convertible 2.5%
Short-Term Securities 2.3%
The Fund's portfolio composition and top holdings represent all share
classes.
Media and Telecommunications Strong
Throughout the period, we continued a strategy of overweighting media and
telecommunications issues relative to the Fund's peers. Although bonds in
this sector possess somewhat higher risk potential, they have historically
provided high-yield investors with an excellent long-term source of return.
Owing to strong investor interest in wireless and data communications
companies, the Fund's media and telecommunications holdings performed
particularly well from November through the first two months of 2000.
[GRAPHIC OMITTED: TOP 10 INDUSTRIES % OF PORTFOLIO]
Top 10 Industries % of Portfolio
----------------------------------------------------------------------
Telecommunications -- Wireline 16.2%
Broadcasting & Media 12.8%
Telecommunications -- Wireless 11.4%
Telecommunications -- Data/Internet 5.9%
Utilities 3.5%
Machinery & Equipment 3.1%
Packaging & Containers 2.2%
Technology -- Hardware 2.2%
Health Care Services 1.9%
Publishing 1.9%
These bond holdings represent 61.1% of the total investment portfolio.
March ushered in a rapid change in market sentiment. Wary of inflationary
signals and Federal Reserve interest rate increases, investors grew
increasingly risk averse, which led to choppiness in the high-yield
markets. Much of this volatility was based on market psychology, rather
than on high-yield company fundamentals, which generally remained sound.
[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 1.8%
Ba 13.7%
B 61.2%
Caa 15.5%
Ca 0.8%
C 0.0%
D 0.3%
Non Rated 6.3%
[GRAPHIC OMITTED: TOP 10 HOLDINGS BY ISSUER % OF PORTFOLIO]
Top 10 Holdings by Issuer % of Portfolio
----------------------------------------------------------------------
Nextel Communications, Inc. 1.9%
Intermedia Communications, Inc. 1.4%
CSC Holdings, Inc. 1.2%
Dobson Communications Corp. 1.0%
Charter Communication Holdings, Inc. 1.0%
IntelCom Group Holdings, Inc. 0.9%
TNP Enterprises, Inc. 0.9%
PRIMEDIA, Inc. 0.8%
Primus Telecommunications Group, Inc. 0.8%
Splitrock Services, Inc. 0.8%
These holdings represent 10.7% of the Fund's total investment portfolio.
As the U.S. economy continued its rapid expansion and Federal Reserve
tightening continued, we placed a higher emphasis on lower-rated bonds that
were less interest rate sensitive and more dependent on specific company
developments for positive total return performance. To further boost
returns, we took profits from the Fund's equity warrant holdings as
opportunities arose.
High-Yield Market Remains Attractive
Although economic growth may decelerate somewhat in the months to come, we
believe that the overall U.S. economic picture remains bright. As such, we
do not anticipate implementing any major strategic changes, though we will
make periodic adjustments as needed.
Like other fixed-income investments, high-yield bond funds continue to
battle the unpredictability of interest rates, as well as the growing
popularity of equity investments. These factors have worked together to
dampen high-yield bond prices. Over the long-term, however, we believe that
the high-yield market will be driven by company fundamentals, which should
remain strong barring a major economic meltdown.
Additionally, current yields remain very attractive from a historical
perspective. Because high-yield bonds typically derive a major share of
their total return from yield alone, we believe that high-yield investments
remain a compelling element of a diversified portfolio strategy.
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: 70,812
Total Net Assets
(in millions): $884.8
[GRAPHIC WORM CHART OMITTED:]
Performance Through April 30, 2000
Growth of a $10,000 Investment
Class A shares (since 4/30/90)
Lehman Lipper
LB High High Median
Month End Yield Yield High Consumer
Date Fund Index Current Price Index
---------------------------------------------------------------------
4/30/90 10,000 10,000 10,000 10,000
5/31/90 9,920 10,193 10,219 10,023
6/30/90 10,042 10,440 10,425 10,078
7/31/90 10,220 10,720 10,641 10,116
8/31/90 9,829 10,111 10,207 10,209
9/30/90 9,393 9,372 9,693 10,295
10/31/90 9,061 8,880 9,276 10,357
11/30/90 9,207 9,157 9,313 10,380
12/31/90 9,355 9,209 9,342 10,380
1/31/91 9,408 9,462 9,473 10,442
2/28/91 10,096 10,497 10,153 10,458
3/31/91 10,577 11,115 10,658 10,473
4/30/91 10,962 11,571 11,068 10,489
5/31/91 11,060 11,592 11,136 10,520
6/30/91 11,374 11,935 11,371 10,551
7/31/91 11,692 12,317 11,710 10,566
8/31/91 11,864 12,600 11,930 10,597
9/30/91 12,052 12,775 12,131 10,644
10/31/91 12,485 13,202 12,518 10,659
11/30/91 12,676 13,271 12,634 10,690
12/31/91 12,731 13,462 12,744 10,698
1/31/92 13,321 13,936 13,250 10,714
2/28/92 13,694 14,280 13,567 10,753
3/31/92 13,942 14,457 13,777 10,807
4/30/92 14,063 14,512 13,876 10,822
5/31/92 14,283 14,717 14,079 10,838
6/30/92 14,365 14,855 14,221 10,877
7/31/92 14,613 15,079 14,475 10,900
8/31/92 14,813 15,277 14,659 10,931
9/30/92 14,964 15,433 14,810 10,962
10/31/92 14,693 15,215 14,563 11,001
11/30/92 14,949 15,407 14,778 11,016
12/31/92 15,293 15,582 14,975 11,009
1/31/93 15,921 16,036 15,382 11,063
2/28/93 16,113 16,318 15,679 11,102
3/31/93 16,424 16,529 15,990 11,140
4/30/93 16,489 16,672 16,116 11,171
5/31/93 16,769 16,871 16,371 11,187
6/30/93 17,286 17,225 16,750 11,203
7/31/93 17,424 17,392 16,916 11,203
8/31/93 17,563 17,538 17,041 11,234
9/30/93 17,556 17,584 17,094 11,257
10/31/93 18,105 17,939 17,477 11,303
11/30/93 18,173 18,025 17,589 11,311
12/31/93 18,484 18,249 17,849 11,311
1/31/94 19,028 18,645 18,274 11,342
2/28/94 18,962 18,596 18,239 11,381
3/31/94 18,260 17,893 17,652 11,420
4/30/94 17,980 17,771 17,396 11,435
5/31/94 18,051 17,780 17,436 11,443
6/30/94 18,061 17,835 17,412 11,482
7/31/94 17,915 17,987 17,380 11,513
8/31/94 18,047 18,115 17,391 11,559
9/30/94 17,962 18,117 17,391 11,590
10/31/94 18,020 18,160 17,373 11,598
11/30/94 17,587 17,931 17,141 11,614
12/31/94 17,506 18,064 17,161 11,614
1/31/95 17,585 18,310 17,300 11,660
2/28/95 18,256 18,938 17,771 11,707
3/31/95 18,443 19,142 17,932 11,746
4/30/95 18,888 19,628 18,370 11,784
5/31/95 19,272 20,178 18,778 11,808
6/30/95 19,376 20,313 18,836 11,831
7/31/95 19,986 20,569 19,168 11,831
8/31/95 20,070 20,633 19,219 11,862
9/30/95 20,243 20,887 19,448 11,885
10/31/95 20,350 21,016 19,604 11,924
11/30/95 20,594 21,201 19,735 11,916
12/31/95 20,899 21,534 20,035 11,908
1/31/96 21,400 21,913 20,452 11,978
2/29/96 21,950 21,931 20,625 12,017
3/31/96 21,736 21,915 20,549 12,079
4/30/96 21,849 21,963 20,711 12,126
5/31/96 22,057 22,095 20,873 12,149
6/30/96 21,886 22,279 20,900 12,157
7/31/96 21,714 22,381 21,013 12,180
8/31/96 22,072 22,623 21,347 12,203
9/30/96 22,798 23,168 21,906 12,242
10/31/96 22,720 23,346 22,025 12,281
11/30/96 22,938 23,806 22,432 12,304
12/31/96 23,190 23,978 22,699 12,304
1/31/97 23,465 24,213 22,926 12,343
2/28/97 23,767 24,612 23,336 12,382
3/31/97 23,019 24,245 22,872 12,413
4/30/97 23,018 24,500 23,057 12,428
5/31/97 23,900 25,024 23,650 12,421
6/30/97 24,552 25,372 24,033 12,436
7/31/97 25,395 26,070 24,658 12,452
8/31/97 25,472 26,010 24,707 12,475
9/30/97 26,247 26,525 25,285 12,506
10/31/97 25,999 26,549 25,187 12,537
11/30/97 26,051 26,804 25,388 12,529
12/31/97 26,315 27,040 25,673 12,514
1/31/98 26,850 27,526 26,166 12,537
2/28/98 27,218 27,689 26,362 12,560
3/31/98 27,561 27,949 26,697 12,583
4/30/98 27,416 28,058 26,771 12,607
5/31/98 27,329 28,156 26,777 12,630
6/30/98 27,447 28,257 26,801 12,646
7/31/98 27,593 28,419 26,988 12,661
8/31/98 25,423 26,850 25,161 12,677
9/30/98 25,064 26,971 24,993 12,692
10/31/98 24,555 26,418 24,450 12,723
11/30/98 25,740 27,514 25,805 12,723
12/31/98 25,803 27,544 25,712 12,715
1/31/99 26,207 27,952 26,098 12,746
2/28/99 26,112 27,787 26,009 12,762
3/31/99 26,397 28,051 26,386 12,801
4/30/99 27,242 28,595 26,953 12,894
5/31/99 26,748 28,209 26,455 12,894
6/30/99 26,930 28,150 26,436 12,894
7/31/99 27,077 28,263 26,460 12,933
8/31/99 26,703 27,949 26,203 12,964
9/30/99 26,558 27,748 26,051 13,026
10/31/99 26,444 27,565 25,991 13,049
11/30/99 27,035 27,890 26,428 13,057
12/31/99 27,623 28,202 26,740 13,057
1/31/00 27,677 28,081 26,580 13,088
2/28/00 28,216 28,134 26,747 13,165
3/31/00 27,677 27,543 26,316 13,274
4/30/00 $27,243 $28,587 $26,293 $13,282
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
$28,587
LB High Yield
Fund
$27,243
Lipper Median
High Current
$26,293
Consumer
Price Index
$13,282
INSET BOX ON CHART READS:
LB High Yield Fund
Annualized Total Returns*
-----------------------------------------------------------
Class A shares 1-Year 5-Year 10-Year
Net Asset Value 0.00% 7.59% 10.98%
Public Offering Price -3.95% 6.71% 10.53%
Since
Inception
Class B shares 1-Year 10/31/97
If Held (NAV) -0.73% 1.15%
If Redeemed (CDSC) -5.70% -0.04%
Institutional shares
Net Asset Value 0.14% 2.14%
*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.
In a relatively flat market for investment-grade bonds, the Lutheran
Brotherhood Income Fund finished the six-month period ended April 30, 2000,
with modest returns. Overall, the Fund returned 1.18%, slightly
underperforming its market benchmark, the Lehman Brothers Aggregate Index,
which posted a 1.42% total return for the period. The Fund's Lipper, Inc.
peer group of corporate debt A-rated funds averaged an annual total return
of 0.73% during this time.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)
Corporate Bonds 42.5%
U.S. Government 15.2%
Short-Term Securities 15.0%
Mortagage-Backed--Securities 9.2%
Asset-Backed Securities 8.8%
Foreign Government Bonds 4.4%
U.S. Government Agency 4.1%
Preferred Stocks 0.6%
Common Stocks 0.2%
The Fund's portfolio composition and top holdings represent all share
classes.
Unique Bond Market Conditions
During the reporting period, longer-term bonds generally benefited from a
phenomenon known as the "inverted yield curve." An inverted yield curve is
an infrequent event whereby longer-maturity U.S. Treasuries offer lower
yields than shorter-maturity Treasuries; under most market conditions,
exactly the reverse is true. Accordingly, after peaking in mid-January,
long-term yields began a steady descent that lasted through early April.
Overall for the period, 30-year Treasury yields fell 0.20%, while five-year
Treasury yields rose roughly 0.60%. Due to the inverse relationship between
bond yields and prices, this trend generally helped the performance of
longer-maturity portfolios such as the Lutheran Brotherhood Income Fund.
[GRAPHIC OMITTED: TOP 10 HOLDINGS SECURITY % OF PORTFOLIO]
% Of
Top 10 Holdings Security Portfolio
----------------------------------------------------------------------
U.S. Treasury Bonds (Nov. 2022) U.S. Government 5.4%
U.S. Treasury Bonds (Nov. 2010) U.S. Government 3.5%
U.S. Treasury Bonds (Aug. 2023) U.S. Government 2.8%
U.S. Treasury Bonds (Nov. 2016) U.S. Government 2.6%
Federal National Mortgage
Association U.S. Government Agency 2.3%
Standard Credit Master
Trust 1 Asset-Backed 1.7%
Morgan Stanley Dean Witter
Capital I Trust Mortgage-Backed 1.6%
General Electric
Capital Corp. Corporate 1.6%
Federal National Mortgage
Association U.S. Government Agency 1.3%
Discover Card Master Trust I Asset-Backed 1.3%
These holdings represent 24.1% of the total investment portfolio.
This benefit was offset by weak investor demand for bonds as a whole. Our
strategy of overweighting higher-yielding "spread products," such as
mortgage-backed bonds and bonds issued by large corporations, negatively
impacted the Fund's performance versus its market benchmark. Although
spread products generally generate higher long-term returns than low-risk
U.S. Treasury bonds, they also carry greater potential for volatility. Due
to market uncertainty and Federal Reserve interest rate hikes, assets of
this kind came under pressure during the reporting period.
[GRAPHIC BAR CHART OMITTED: MOODY'S BOND QUALITY RATING DISTRIBUTION]
Moody's Bond Quality
Rating Distribution
Aaa 47.1%
Aa 9.5%
A 12.9%
Baa 18.8%
Ba 7.5%
B 4.0%
Caa 0.2%
Ca 0.0%
C 0.0%
D 0.0%
Non Rated 0.0%
Federal Reserve Vigilance Should Pay Off
Looking ahead, we expect market participants to focus on several
developments, including the continued use of federal government budget
surplus funds to buy back Treasury debt, and the potential for further
Federal Reserve rate increases. Both have had a major impact on the
investment-grade bond market thus far in 2000, particularly in creating the
inverted yield curve phenomenon. We believe the Federal Reserve will
continue to raise rates until it believes economic growth rates have come
down to sustainable levels. At that point, long-term interest rates stand a
good chance of trending down, which would benefit investors in
longer-maturity bond funds.
The Federal Reserve's continued vigilance in warding off inflation should
eventually create favorable conditions for bond investors, particularly
once the tightening cycle is complete. In the meantime, we will continue to
focus on issues with good credit quality, attractive yields and strong
liquidity. We believe this strategy will reward long-term investors and
position the Fund for future performance potential.
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: 53,140
Total Net Assets
(in millions): $676.0
[GRAPHIC WORM CHART OMITTED:]
Performance Through April 30, 2000
Growth of a $10,000 Investment
Class A shares (since 4/30/90)
Lehman Lipper
Aggregate Median
Month End LB Income Bond Corp. Consumer
Date Fund Index Debt A Price Index
---------------------------------------------------------------------------
4/30/90 10,000 10,000 10,000 10,000
5/31/90 9,847 10,296 10,282 10,023
6/30/90 9,975 10,462 10,444 10,078
7/31/90 10,080 10,606 10,572 10,116
8/31/90 9,898 10,464 10,390 10,209
9/30/90 9,925 10,551 10,427 10,295
10/31/90 10,013 10,685 10,540 10,357
11/30/90 10,227 10,915 10,775 10,380
12/31/90 10,377 11,085 10,943 10,380
1/31/91 10,504 11,222 11,056 10,442
2/28/91 10,656 11,318 11,175 10,458
3/31/91 10,746 11,396 11,251 10,473
4/30/91 10,899 11,519 11,390 10,489
5/31/91 10,990 11,586 11,446 10,520
6/30/91 10,977 11,580 11,425 10,551
7/31/91 11,109 11,741 11,569 10,566
8/31/91 11,346 11,994 11,845 10,597
9/30/91 11,599 12,238 12,104 10,644
10/31/91 11,679 12,374 12,211 10,659
11/30/91 11,773 12,488 12,319 10,690
12/31/91 12,167 12,858 12,760 10,698
1/31/92 12,025 12,684 12,561 10,714
2/28/92 12,076 12,766 12,624 10,753
3/31/92 12,070 12,695 12,560 10,807
4/30/92 12,118 12,786 12,626 10,822
5/31/92 12,349 13,028 12,881 10,838
6/30/92 12,549 13,207 13,069 10,877
7/31/92 12,849 13,477 13,413 10,900
8/31/92 12,966 13,613 13,520 10,931
9/30/92 13,140 13,775 13,687 10,962
10/31/92 12,926 13,592 13,455 11,001
11/30/92 12,930 13,594 13,452 11,016
12/31/92 13,140 13,811 13,677 11,009
1/31/93 13,409 14,076 13,971 11,063
2/28/93 13,693 14,322 14,287 11,102
3/31/93 13,740 14,382 14,338 11,140
4/30/93 13,833 14,483 14,433 11,171
5/31/93 13,835 14,502 14,437 11,187
6/30/93 14,095 14,764 14,757 11,203
7/31/93 14,220 14,848 14,868 11,203
8/31/93 14,499 15,108 15,210 11,234
9/30/93 14,548 15,149 15,256 11,257
10/31/93 14,612 15,205 15,326 11,303
11/30/93 14,414 15,076 15,131 11,311
12/31/93 14,471 15,157 15,196 11,311
1/31/94 14,658 15,362 15,426 11,342
2/28/94 14,327 15,095 15,086 11,381
3/31/94 13,897 14,722 14,691 11,420
4/30/94 13,775 14,604 14,527 11,435
5/31/94 13,736 14,603 14,482 11,443
6/30/94 13,646 14,570 14,432 11,482
7/31/94 13,939 14,860 14,689 11,513
8/31/94 13,933 14,878 14,692 11,559
9/30/94 13,674 14,659 14,463 11,590
10/31/94 13,617 14,646 14,422 11,598
11/30/94 13,627 14,614 14,394 11,614
12/31/94 13,767 14,715 14,496 11,614
1/31/95 14,038 15,006 14,744 11,660
2/28/95 14,343 15,363 15,078 11,707
3/31/95 14,441 15,457 15,181 11,746
4/30/95 14,662 15,673 15,387 11,784
5/31/95 15,290 16,280 16,032 11,808
6/30/95 15,406 16,399 16,141 11,831
7/31/95 15,293 16,363 16,068 11,831
8/31/95 15,501 16,561 16,271 11,862
9/30/95 15,639 16,721 16,435 11,885
10/31/95 15,867 16,939 16,667 11,924
11/30/95 16,115 17,193 16,925 11,916
12/31/95 16,359 17,434 17,178 11,908
1/31/96 16,444 17,549 17,258 11,978
2/29/96 16,064 17,243 16,901 12,017
3/31/96 15,888 17,123 16,762 12,079
4/30/96 15,786 17,027 16,637 12,126
5/31/96 15,759 16,993 16,603 12,149
6/30/96 15,962 17,220 16,798 12,157
7/31/96 15,993 17,267 16,831 12,180
8/31/96 15,907 17,238 16,791 12,203
9/30/96 16,209 17,537 17,088 12,242
10/31/96 16,590 17,927 17,462 12,281
11/30/96 16,915 18,233 17,785 12,304
12/31/96 16,720 18,064 17,595 12,304
1/31/97 16,772 18,120 17,627 12,343
2/28/97 16,823 18,165 17,678 12,382
3/31/97 16,575 17,963 17,460 12,413
4/30/97 16,789 18,233 17,700 12,428
5/31/97 16,942 18,406 17,850 12,421
6/30/97 17,194 18,625 18,068 12,436
7/31/97 17,692 19,128 18,597 12,452
8/31/97 17,496 18,965 18,389 12,475
9/30/97 17,772 19,246 18,667 12,506
10/31/97 17,925 19,525 18,907 12,537
11/30/97 17,996 19,615 18,983 12,529
12/31/97 18,118 19,813 19,171 12,514
1/31/98 18,380 20,067 19,418 12,537
2/28/98 18,388 20,051 19,383 12,560
3/31/98 18,482 20,119 19,442 12,583
4/30/98 18,576 20,223 19,529 12,607
5/31/98 18,735 20,416 19,722 12,630
6/30/98 18,917 20,589 19,886 12,646
7/31/98 18,926 20,632 19,894 12,661
8/31/98 19,022 20,969 20,167 12,677
9/30/98 19,558 21,459 20,616 12,692
10/31/98 19,435 21,346 20,408 12,723
11/30/98 19,666 21,467 20,555 12,723
12/31/98 19,731 21,532 20,627 12,715
1/31/99 19,911 21,685 20,780 12,746
2/28/99 19,460 21,305 20,324 12,762
3/31/99 19,573 21,422 20,448 12,801
4/30/99 19,618 21,491 20,487 12,894
5/31/99 19,321 21,302 20,252 12,894
6/30/99 19,230 21,234 20,146 12,894
7/31/99 19,160 21,144 20,062 12,933
8/31/99 19,113 21,134 20,012 12,964
9/30/99 19,299 21,379 20,206 13,026
10/31/99 19,301 21,458 20,224 13,049
11/30/99 19,324 21,456 20,224 13,057
12/31/99 19,241 21,353 20,115 13,057
1/31/00 19,170 21,282 20,060 13,088
2/29/00 19,409 21,540 20,265 13,165
3/31/00 19,649 21,824 20,524 13,274
4/30/00 $19,528 $21,761 $20,368 $13,282
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.
INSET LEGEND READS:
Lehman Aggregate
Bond Index
$21,761
Lipper Median
Corp. Debt A
$20,368
LB Income Fund
$19,528
Consumer
Price Index
$13,282
INSET BOX ON CHART READS:
LB Income Fund
Annualized Total Returns*
-----------------------------------------------------------
Class A shares 1-Year 5-Year 10-Year
Net Asset Value -0.46% 5.89% 7.35%
Public Offering Price -4.46% 5.03% 6.92%
Since
Inception
Class B shares 1-Year 10/31/97
If Held (NAV) -1.19% 2.69%
If Redeemed (CDSC) -6.13% 1.53%
Institutional shares
Net Asset Value -0.31% 3.70%
*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.
Weakening demand for municipal bonds, coupled with tightening monetary
policy, pushed municipal yields higher during the latter part of the six
months ended April 30, 2000. Overall, the Lutheran Brotherhood Municipal
Bond Fund posted a total return of 2.23% during the six-month period,
slightly underperforming its market benchmark, the Lehman Brothers
Municipal Bond Index, which finished with a total return of 2.63%. The
Fund's Lipper, Inc., peer group of general municipal debt funds averaged a
total return of 2.05% during this period.
Rising Yields Drive Municipal Market
The beginning of the period was marked by a brief spate of new bond
issuance, as issuers sought to wrap up spending projects before potential
"Y2K"-related problems could develop. This increased supply failed to spark
significant investor interest, however, and overall demand was generally
weak in the closing months of 1999. As the New Year dawned and Y2K concerns
subsided, the municipal market was increasingly affected by the Federal
Reserve's policy of raising short-term interest rates as a deterrent to
inflation. Consequently, yields began to mirror the interest rate increases
of the broader fixed-income markets.
[GRAPHIC OMITTED: TOP 10 STATES % OF PORTFOLIO]
Top 10 States % of Portfolio
----------------------------------------------------------------------
Texas 9.0%
California 7.7%
New York 6.3%
Colorado 6.0%
Washington 5.4%
Ohio 5.3%
Georgia 4.5%
Michigan 4.5%
Minnesota 4.4%
Illinois 4.2%
These holdings represent 57.3% of the total investment portfolio.
[GRAPHIC OMITTED: pie chart PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)
Escrowed/Pre-refunded 21.2%
General Obligation 17.0%
Health Care 11.3%
Electric Revenue 10.1%
Water & Sewer 9.9%
Special Tax Revenue 5.4%
Education Revenue 5.3%
Lease Revenue 4.8%
Airport Revenue 4.7%
Surface Transportation 3.5%
Pollution Control-Electric 2.8%
Housing Finance 2.6%
Miscellaneous Municipals 0.8%
Industrial Revenue 0.6%
The Fund's portfolio composition and top holdings represent all share
classes.
Concurrent with rising municipal yields, new municipal issuance declined
precipitously as issuers reluctant to finance projects at higher interest
rates delayed their spending. Demand for municipal bonds also eased
further, owing partially to strong investor interest in the stock markets.
Cash outflows from municipal bond funds industrywide put steady pressure on
municipal bond prices, dampening the stimulative effect of decreased
supply.
During the reporting period, we continued to systematically trim positions
in the Fund's pre-refunded holdings -- issues with the highest possible
credit ratings, but whose return potential had diminished. In turn, we
invested some of the proceeds in issues with higher yield potential that we
viewed as financially sound. We also incrementally increased the Fund's
duration; over time, we believe that longer-duration bonds should
outperform when interest rates begin to decline.
[GRAPHIC BAR CHART OMITTED: MOODY'S BOND QUALITY RATING DISTRIBUTION]
Moody's Bond Quality
Rating Distribution
Aaa 73.6%
Aa 13.8%
A 6.0%
Baa 6.3%
Ba 0.0%
B 0.0%
Caa 0.3%
Ca 0.0%
C 0.0%
D 0.0%
Non Rated 0.0%
Will Continue Seeking Yield Opportunities
Looking forward, we expect the U.S. economy to weaken somewhat, as higher
interest rates begin to take their toll on economic growth rates.
Nonetheless, we believe that the underpinnings of the economy remain sound,
and that higher tax revenues will lead local governments to continue
pushing forward with capital improvement projects. Due to higher interest
rate levels, however, we are not anticipating that issuers will refinance
as many outstanding bond deals as they have in the past few years. As a
result, we expect overall bond issuance to remain at low levels until
interest rates come down significantly.
We plan to continue with our present strategy of managing the Fund for
income and total return, while also striving to manage the Fund in a
tax-efficient manner. Additionally, we will continue to improve the
portfolio's return potential by seeking bond issues with desirable
structural components (such as call features and original issue discounts)
and attractive risk/reward characteristics. We believe this approach will
position the Fund well for the years ahead.
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: 19,684
Total Net Assets
(in millions): $564.0
[GRAPHIC WORM CHART OMITTED:]
Performance Through April 30, 2000
Growth of a $10,000 Investment
Class A shares (since 4/30/90)
Lipper
Median
General
Lehman Municipal
Month End LB Municipal Municipal Debt Consumer Price
Date Bond Fund Bond Index Funds Index
--------------------------------------------------------------------------
4/30/90 10,000 10,000 10,000 10,000
5/31/90 9,830 10,218 10,260 10,023
6/30/90 9,951 10,308 10,357 10,078
7/31/90 10,106 10,459 10,528 10,116
8/31/90 9,894 10,308 10,300 10,209
9/30/90 9,927 10,314 10,314 10,295
10/31/90 10,085 10,501 10,464 10,357
11/30/90 10,318 10,712 10,708 10,380
12/31/90 10,402 10,755 10,754 10,380
1/31/91 10,550 10,899 10,886 10,442
2/28/91 10,609 10,993 10,949 10,458
3/31/91 10,622 10,998 10,971 10,473
4/30/91 10,772 11,144 11,131 10,489
5/31/91 10,846 11,243 11,231 10,520
6/30/91 10,804 11,232 11,197 10,551
7/31/91 10,970 11,369 11,358 10,566
8/31/91 11,098 11,519 11,503 10,597
9/30/91 11,292 11,669 11,652 10,644
10/31/91 11,380 11,774 11,755 10,659
11/30/91 11,388 11,807 11,772 10,690
12/31/91 11,668 12,061 12,050 10,698
1/31/92 11,673 12,089 12,041 10,714
2/28/92 11,651 12,092 12,058 10,753
3/31/92 11,651 12,097 12,063 10,807
4/30/92 11,783 12,205 12,174 10,822
5/31/92 11,945 12,349 12,344 10,838
6/30/92 12,150 12,556 12,569 10,877
7/31/92 12,570 12,933 13,014 10,900
8/31/92 12,346 12,806 12,806 10,931
9/30/92 12,381 12,889 12,857 10,962
10/31/92 12,242 12,763 12,625 11,001
11/30/92 12,525 12,991 12,947 11,016
12/31/92 12,712 13,124 13,107 11,009
1/31/93 12,835 13,276 13,255 11,063
2/28/93 13,307 13,757 13,774 11,102
3/31/93 13,218 13,611 13,613 11,140
4/30/93 13,344 13,748 13,760 11,171
5/31/93 13,408 13,825 13,839 11,187
6/30/93 13,659 14,056 14,077 11,203
7/31/93 13,662 14,075 14,077 11,203
8/31/93 13,962 14,367 14,389 11,234
9/30/93 14,121 14,531 14,559 11,257
10/31/93 14,213 14,559 14,588 11,303
11/30/93 14,052 14,431 14,435 11,311
12/31/93 14,361 14,735 14,722 11,311
1/31/94 14,520 14,903 14,891 11,342
2/28/94 14,110 14,517 14,495 11,381
3/31/94 13,451 13,926 13,862 11,420
4/30/94 13,513 14,045 13,912 11,435
5/31/94 13,642 14,167 14,037 11,443
6/30/94 13,539 14,080 13,946 11,482
7/31/94 13,785 14,338 14,193 11,513
8/31/94 13,833 14,388 14,228 11,559
9/30/94 13,644 14,177 13,998 11,590
10/31/94 13,370 13,924 13,732 11,598
11/30/94 13,113 13,672 13,447 11,614
12/31/94 13,417 13,973 13,775 11,614
1/31/95 13,826 14,373 14,185 11,660
2/28/95 14,271 14,791 14,606 11,707
3/31/95 14,423 14,961 14,737 11,746
4/30/95 14,436 14,979 14,736 11,784
5/31/95 14,922 15,457 15,196 11,808
6/30/95 14,725 15,322 15,030 11,831
7/31/95 14,827 15,468 15,126 11,831
8/31/95 15,014 15,664 15,293 11,862
9/30/95 15,130 15,763 15,386 11,885
10/31/95 15,371 15,992 15,621 11,924
11/30/95 15,685 16,257 15,921 11,916
12/31/95 15,857 16,413 16,098 11,908
1/31/96 15,974 16,538 16,174 11,978
2/29/96 15,838 16,426 16,046 12,017
3/31/96 15,574 16,215 15,791 12,079
4/30/96 15,491 16,170 15,720 12,126
5/31/96 15,482 16,163 15,723 12,149
6/30/96 15,641 16,340 15,871 12,157
7/31/96 15,782 16,488 16,013 12,180
8/31/96 15,774 16,485 16,001 12,203
9/30/96 16,010 16,716 16,229 12,242
10/31/96 16,190 16,905 16,405 12,281
11/30/96 16,503 17,214 16,693 12,304
12/31/96 16,402 17,142 16,620 12,304
1/31/97 16,433 17,174 16,622 12,343
2/28/97 16,577 17,332 16,766 12,382
3/31/97 16,358 17,102 16,548 12,413
4/30/97 16,467 17,245 16,684 12,428
5/31/97 16,711 17,504 16,922 12,421
6/30/97 16,877 17,691 17,105 12,436
7/31/97 17,376 18,181 17,620 12,452
8/31/97 17,173 18,011 17,410 12,475
9/30/97 17,440 18,225 17,621 12,506
10/31/97 17,532 18,342 17,729 12,537
11/30/97 17,643 18,450 17,828 12,529
12/31/97 17,933 18,719 18,110 12,514
1/31/98 18,125 18,912 18,278 12,537
2/28/98 18,117 18,918 18,267 12,560
3/31/98 18,109 18,935 18,271 12,583
4/30/98 18,020 18,849 18,154 12,607
5/31/98 18,317 19,147 18,453 12,630
6/30/98 18,390 19,222 18,514 12,646
7/31/98 18,423 19,270 18,540 12,661
8/31/98 18,724 19,569 18,827 12,677
9/30/98 18,984 19,813 19,053 12,692
10/31/98 18,955 19,813 18,981 12,723
11/30/98 19,010 19,883 19,038 12,723
12/31/98 19,044 19,932 19,072 12,715
1/31/99 19,266 20,169 19,284 12,746
2/28/99 19,131 20,081 19,157 12,762
3/31/99 19,144 20,109 19,159 12,801
4/30/99 19,178 20,159 19,205 12,894
5/31/99 19,041 20,002 19,093 12,894
6/30/99 18,754 19,664 18,818 12,894
7/31/99 18,831 19,699 18,886 12,933
8/31/99 18,650 19,542 18,661 12,964
9/30/99 18,663 19,549 18,616 13,026
10/31/99 18,459 19,338 18,345 13,049
11/30/99 18,647 19,543 18,524 13,057
12/31/99 18,462 19,397 18,347 13,057
1/31/00 18,365 19,313 18,205 13,088
2/29/00 18,578 19,537 18,446 13,165
3/31/00 18,993 19,965 18,853 13,274
4/30/00 $18,871 $19,847 $18,727 $13,282
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 LEGEND READS:
Lehman
Municipal
Bond Index
$19,847
LB Municipal
Bond Fund
$18,871
Lipper Median
General Municipal
Debt Funds
$18,727
Consumer
Price Index
$13,282
INSET BOX ON CHART READS:
LB Municipal Bond Fund
Annualized Total Returns*
-----------------------------------------------------------
Class A shares 1-Year 5-Year 10-Year
Net Asset Value -1.60% 5.50% 6.98%
Public Offering Price -5.49% 4.65% 6.55%
Since
Inception
Class B shares 1-Year 10/31/97
If Held (NAV) -2.32% 2.20%
If Redeemed (CDSC) -7.20% 1.03%
Institutional shares
Net Asset Value -1.38% 3.24%
*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.
Unusual market conditions created a difficult environment for short- and
intermediate-term bonds during the six months ended April 30, 2000. After
opening to investors on October 29, 1999, the Lutheran Brotherhood Limited
Maturity Bond Fund finished the six-month reporting period with a 1.05%
total return, while its market benchmark, the Lehman Brothers Government/
Corporate 1-5 Year Index, generated a 1.41% total return. During this time,
the Fund's peer group, composed of short- and intermediate-term debt funds
tracked by Lipper, Inc. recorded an average total return of 1.29%.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)
U.S. Government 33.1%
U.S. Government Agency 20.8%
Commercial Paper 18.3%
Corporate Bonds 15.6%
Asset-Backed Securities 9.6%
Foreign Government Bonds 2.2%
Common Stocks 0.4%
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
--------------------------------------------------------------------
U.S. Treasury Notes (Nov. 2004) U.S. Government 22.0%
U.S. Treasury Notes (Aug. 2004) U.S. Government 5.5%
U.S. Treasury Notes (Nov. 2002) U.S. Government 5.5%
Federal National Mortgage
Association (May 2004) U.S. Government Agency 2.7%
Mexican United States Foreign Government 1.5%
Raytheon Co. Corporate 1.4%
Norwest Financial, Inc. Corporate 1.4%
Vornado Finance, LLC Asset-Backed 1.4%
Everest Reinsurance Holdings Corporate 1.4%
Dynegy, Inc. Corporate 1.4%
These holdings represent 44.2% of the the total investment portfolio.
A Unique Phenomenon
During the reporting period, the market for short- and intermediate-term
securities continued to be adversely affected by a phenomenon known as the
"inverted yield curve." Under most market conditions, yields rise as
maturities lengthen. When the yield curve is inverted, however, short-term
yields generally exceed long-term yields. Because yields are inversely
related to price, this trend generally hurt the performance of
shorter-maturity bonds during the reporting period. As these events
unfolded, we trimmed the Fund's weighted average maturity somewhat during
the period, providing the Fund with added cushion.
The inverted yield curve was the result of both steadily tightening
monetary policy, as well as a campaign by the U.S. Treasury to begin buying
back its longer-dated debt. Both of these policies resulted in higher
short-term bond yields relative to long-term bond yields. By the period's
close, five-year Treasury yields had increased 0.60%, while two-year
Treasury yields had risen approximately 0.90%.
As the Federal Reserve gradually raised the targeted federal funds rate,
market participants began seeking out higher-quality assets. In light of
these circumstances, we trimmed our positions in securities commanding risk
premiums over Treasuries, such as corporate and mortgage-backed bonds. At
the period's close, however, we remained modestly heavy in these risk
assets relative to our peer group, which somewhat dampened performance.
More Federal Reserve Tightening Possible
Going forward, we expect the Federal Reserve to raise targeted interest
rates further in its continuing effort to head off inflation. When the
current tightening cycle comes to a close, however, we expect short-term
interest rates to decrease at a greater rate than long-term rates, which
could provide a price boost to many of the Fund's shorter-term holdings.
Because we believe the Fund's overall strategy is sound, we don't
anticipate any major changes in portfolio structure during this time.
Over the coming months, the bond markets could experience continuing
volatility as market participants wait for a clear direction on future
monetary policy. If the Federal Reserve eventually proves successful in its
goal of slowing economic growth and curtailing the threat of inflation,
short- and intermediate-term bonds should have the right conditions in
which to flourish, which would subsequently reward investors in the Fund.
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: 882
Total Net Assets
(in millions): $27.3
[GRAPHIC BAR CHART OMITTED: MOODY'S BOND QUALITY RATING DISTRIBUTION]
Moody's Bond Quality
Rating Distribution
Aaa 60.1%
Aa 3.3%
A 10.0%
Baa 17.7%
Ba 2.1%
B 6.8%
Caa 0.0%
Ca 0.0%
C 0.0%
D 0.0%
Non Rated 0.0%
INSET BOX READS:
LB Limited Maturity Fund
Annualized Total Returns*
-----------------------------------------------------------
Since
Inception
Class A shares 10/29/99
Net Asset Value 1.05%
Since
Inception
Class B shares 10/29/99
If Held (NAV) 1.05%
Institutional shares
Net Asset Value 1.16%
*See accompanying notes to Portfolio Management Reviews.
The Limited Maturity Bond Fund was introduced on October 29, 1999. Given its
brief performance history, the growth of a $10,000 investment in the
Portfolio is not illustrated in this report.
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 rose sharply during the six months ended April 30,
2000, pushed higher by the effects of three Federal Reserve hikes in the
targeted Federal Funds rate. During this time, the Lutheran Brotherhood
Money Market Fund generated a total return of 2.50%. The average total
return of money market funds tracked by Lipper, Inc. during this time was
2.54%.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)
Commercial Paper 81.1%
Certificates of Deposit 7.8%
Medium-Term Notes 4.6%
Variable Rate Notes 2.8%
U.S. Government Agency 2.6%
Bank Notes 1.1%
The Fund's portfolio composition and top holdings represent all share
classes.
Y2K Fears Drive Money Markets Early
When the period began, the focus of most market participants was centered
on the much-feared Year 2000 ("Y2K") computer bug. As a cautionary measure,
we enhanced liquidity by increasing the Fund's weighting in shorter-dated
securities; in December alone, the Fund's weighted average maturity
decreased from 56 to 53 days. On a national level, the Federal Reserve
attempted to stem mounting liquidity concerns by pumping significant
amounts of money into the U.S. financial system during the weeks leading up
to the new year.
When Y2K problems failed to materialize, an enormous supply of cash left
issuers free to lend reserves without raising short-term interest rates.
Consequently, the Fund's yield stayed near the five-percent level from
January through early March. Because there was little advantage to
extending maturities in such an environment, we continued to keep the
Fund's duration short.
By mid-March, however, the effects of two 0.25% increases in the overnight
federal funds rate (the third increase came in late March) were being felt
in the U.S. money markets, and yields again began to climb. As yields rose,
we implemented a modified barbell strategy, which emphasized purchasing
shorter-term investments for liquidity purposes, while also maintaining
sizable holdings of longer-dated securities to provide added yield.
Federal Reserve Tightening Likely
Economic data continues to underscore the tremendous strength of the U.S.
economy. Consequently, the coming months will likely bring more Federal
Reserve rate increases and a further backup in money market yields. We
expect this pattern to continue through the early summer, at the very
least. Ultimately, both the cost and availability of labor will be key
factors in driving the Federal Reserve's monetary policy.
[GRAPHIC OMITTED: TOP 10 HOLDINGS BY CREDITOR % OF PORTFOLIO]
Top 10 Holdings % of
by Creditor Portfolio
--------------------------------------------------------------------
Associates Corp. of North America 4.9%
Union Bank of Switzerland 4.9%
American General Corp. 4.9%
Gillette Co. 4.9%
Great Lakes Chemical Corp. 4.9%
Koch Industries, Inc. 4.9%
CXC, Inc. 4.8%
Triple-A One Funding Corp. 4.8%
Chevron Corp. 4.2%
American Family Mutual Insurance Co. 3.7%
These holdings represent 46.9% of the total investment portfolio.
During this time, we will continue with a balanced approach of holding
shorter-dated securities to ensure liquidity while, simultaneously,
leveraging the yield opportunities offered by longer-term issues whenever
possible. As always, we believe that attractive yields, flexibility and our
emphasis on issues of the highest credit quality remain compelling reasons
to invest in the Fund.
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: 64,285
Total Net Assets
(in millions): $644.4
[GRAPHIC OMITTED: PERFORMANCE AS OF 10/31/99]
Performance as of April 30, 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 4.70% 4.70% 4.38% 5.33% 5.20%
Since
Inception
Class B shares 1-Year 10/31/97
If Held (NAV) 4.70% 4.65% 5.33% 5.20%
Institutional shares
If Held (NAV) 5.03% 4.95% 5.73% 5.58%
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.
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD OPPORTUNITY GROWTH FUND
Portfolio of Investments
April 30, 2000
(unaudited)
Shares Value
------------- ------------
<S> <C> <C>
COMMON STOCKS - 90.3%(a)
Aerospace & Defense - 0.3%
26,100 Triumph Group, Inc. $ 701,407(b)
------------
Airlines - 0.1%
7,100 SkyWest, Inc. 299,088
------------
Automotive - 0.5%
42,300 Gentex Corp. 1,364,175(b)
------------
Banks - 0.5%
53,200 Community First Bank Shares, Inc. 897,750
5,800 Investors Financial Services Corp. 473,425
------------
1,371,175
------------
Biotechnology - 2.5%
8,400 Alexion Pharmaceuticals, Inc. 374,850(b)
5,400 Allos Therapeutics, Inc. 58,050(b)
40,000 Biomatrix, Inc. 762,500(b)
15,500 Genset SA, ADR 441,750(b)
23,300 Genzyme Transgenics Corp. 385,906(b)
4,800 IDEC Pharmaceuticals Corp. 307,200(b)
4,750 Intermune Pharmaceuticals, Inc. 81,938(b)
35,300 NPS Pharmaceuticals, Inc. 458,900(b)
5,300 Protein Design Labs, Inc. 537,950(b)
28,300 SangStat Medical Corp. 813,625(b)
23,800 SuperGen, Inc. 788,375(b)
17,100 Techne Corp. 1,216,238(b)
10,400 Ventana Medical Systems, Inc. 293,150(b)
18,600 Vical, Inc. 334,800(b)
------------
6,855,232
------------
Broadcasting - 1.4%
13,900 Citadel Communications Corp. 542,969(b)
17,700 Cox Radio, Inc., Class A 1,283,250
35,000 Emmis Communications Corp., Class A 1,487,500
3,100 Pegasus Communications Corp. 338,288(b)
5,400 Radio One, Inc. 313,200(b)
------------
3,965,207
------------
Chemicals - 0.5%
34,400 ATMI, Inc. 1,324,400(b)
------------
Communications Equipment - 4.6%
5,900 American Tower Corp., Class A 274,350(b)
40,000 Andrew Corp. 1,177,500(b)
37,400 Cable Design Technologies Corp. 1,280,950(b)
17,300 Carrier Access Corp. 754,713(b)
11,800 C-Cube Microsystems, Inc. 758,150(b)
29,500 CommScope, Inc. 1,401,250(b)
7,800 Comverse Technology, Inc. 695,663
3,400 Gilat Satellite Networks, Ltd. 291,975(b)
9,600 Harmonic, Inc. 708,600(b)
22,700 Inter-Tel, Inc. 459,675
24,500 Level 3 Communications Holdings Corp. 1,304,625(b)
9,500 Natural Microsystems Corp. 618,688(b)
18,900 Netro Corp. 815,063(b)
18,200 Polycom, Inc. 1,440,075(b)
10,700 Proxim, Inc. 823,231(b)
------------
12,804,508
------------
Computers - Hardware - 1.3%
9,700 Emulex Corp. 440,138(b)
9,100 Extreme Networks, Inc. 524,388(b)
22,200 MMC Networks, Inc. 588,300(b)
26,100 National Instruments Corp. 1,272,375(b)
17,000 Netopia, Inc. 709,750(b)
------------
3,534,951
------------
Computers - Networking - 0.6%
33,300 Apex, Inc. 984,431(b)
6,630 Nortel Networks Corp. 750,848
------------
1,735,279
------------
Computers - Peripherals - 0.9%
34,500 Advanced Digital Information Corp. 847,406
30,400 Cybex Computer Products Corp. 832,200
8,400 MICROS Systems, Inc. 338,100(b)
8,750 M-Systems Flash Disk Pioneers, Ltd. 577,500(b)
------------
2,595,206
------------
Computers - Software & Services - 15.2%
18,200 Actuate Corp. 544,863
29,600 Advent Software, Inc. 1,554,000
2,562 Akami Technologies, Inc. 253,269(b)
25,700 American Management Systems, Inc. 950,900(b)
6,800 Ariba, Inc. 504,475
5,800 Art Technology Group, Inc. 352,350
28,700 Aspect Development, Inc. 1,983,888(b)
8,700 Aspen Technology, Inc. 307,763(b)
20,900 Aware, Inc. 815,100(b)
35,400 BindView Development Corp. 285,413
42,300 Broadbase Software, Inc. 668,869
21,200 BroadVision, Inc. 931,475
10,900 Business Objects S.A., ADR 1,066,838
1,800 Citrix Systems, Inc. 109,913
25,800 Cognizant Technology Solutions Corp., Class A 1,183,575
24,000 Cognos, Inc. 900,000(b)
6,900 Concentric Network Corp. 300,150(b)
21,000 Concord Communications, Inc. 588,000(b)
11,400 CoStar Group, Inc. 273,422(b)
19,300 Dendrite International, Inc. 441,488(b)
5,400 Digex, Inc. 421,200(b)
24,500 Documentum, Inc. 1,445,500(b)
30,100 Exchange Applications, Inc. 366,844
2,600 Exodus Communications, Inc. 229,938
23,400 First Consulting Group, Inc. 210,600(b)
19,200 Great Plains Software, Inc. 812,400(b)
37,900 Harbinger Corp. 715,363(b)
29,300 Henry (Jack) & Associates, Inc. 1,157,350
27,535 Hyperion Solutions Corp. 835,085(b)
29,300 iGate Capital Corp. 879,000(b)
13,300 InfoCure Corp. 121,363(b)
28,050 Informix Corp. 308,550(b)
22,400 Internet Pictures Corp. 352,800(b)
33,500 IntraNet Solutions, Inc. 745,375(b)
6,600 ISS Group, Inc. 596,888(b)
7,100 Kronos, Inc. 228,088(b)
4,900 Macromedia, Inc. 426,300(b)
19,300 Marimba, Inc. 382,381(b)
9,400 Mercator Software, Inc. 346,038(b)
19,300 Mercury Interactive Corp. 1,737,000
20,000 Micromuse, Inc. 1,962,500
3,400 NVIDIA Corp. 303,025(b)
33,600 ONYX Software Corp. 716,100(b)
17,800 Peregrine Systems, Inc. 428,313
13,400 Pharmacopeia, Inc. 551,075(b)
4,600 Primus Knowledge Solutions, Inc. 171,063(b)
16,800 Project Software & Development, Inc. 512,400
34,500 QRS Corp. 1,138,500(b)
20,400 Radiant Systems, Inc. 379,950
20,100 RadiSyst Corp. 831,638(b)
4,400 Rational Software Corp. 374,550(b)
20,600 Remedy Corp. 1,094,375(b)
40,800 RSA Security, Inc. 2,394,450(b)
5,400 Symantec Corp. 337,163(b)
21,000 Tanning Technology Corp. 385,875(b)
2,900 VeriSign, Inc. 404,188
2,250 Veritas Software Corp. 241,348
30,500 Verity, Inc. 989,344
27,000 Visual Networks, Inc. 1,053,000(b)
21,900 WebTrends Corp. 718,594
15,048 Wind River Systems, Inc. 642,362(b)
------------
41,963,627
------------
Consumer Finance - 0.2%
17,800 Metris Companies, Inc. 667,500
------------
Distributors - Food & Health - 0.8%
15,200 Allscripts, Inc. 471,200(b)
31,650 Priority Healthcare Corp., Class B 1,752,619(b)
------------
2,223,819
------------
Electrical Equipment - 5.3%
24,200 Act Manufacturing, Inc. 880,275(b)
25,800 Advanced Energy Industries, Inc. 1,780,200(b)
18,200 Amphenol Corp., Class A 1,160,250(b)
3,950 Anaren Microwave, Inc. 410,800(b)
9,000 Artesyn Technologies, Inc. 218,250(b)
26,000 Benchmark Electronics, Inc. 1,044,875(b)
15,400 Black Box Corp. 1,184,838(b)
23,600 C-Cor Electronics 923,350(b)
23,000 Cohu, Inc. 875,438
14,098 Flextronics International, Ltd. 990,385
16,500 KEMET Corp. 1,229,250(b)
16,700 Plexus Corp. 1,279,638(b)
8,400 Power-One, Inc. 573,300(b)
11,400 Three-Five Systems, Inc. 991,800(b)
24,300 Zomax Optical Media, Inc. 1,149,694(b)
------------
14,692,343
------------
Electronics - 13.9%
33,600 Actel Corp. 1,236,900(b)
8,200 Aeroflex, Inc. 305,450(b)
23,400 Alpha Industries, Inc. 1,216,800
19,500 American Xtal Technology, Inc. 475,617(b)
5,600 Anadigics, Inc. 421,400(b)
14,100 Applied Micro Circuits Corp. 1,817,138
22,700 AstroPower, Inc. 463,931(b)
9,200 Aurora Biosciences Corp. 333,500(b)
21,825 Burr-Brown Corp. 1,486,828
7,800 Coherent, Inc. 450,938(b)
4,400 Credence Systems Corp. 628,100(b)
6,200 Cree, Inc. 902,100(b)
45,400 Cytyc Corp. 2,031,650
27,200 Dallas Semiconductor Corp. 1,167,900
13,000 Elantec Semiconductor, Inc. 526,500(b)
9,500 EXAR Corp. 761,633(b)
7,300 Fairchild Semiconductor International Corp., Class A 346,750(b)
14,800 GlobeSpan, Inc. 1,406,000
17,200 JDS Uniphase Corp. 1,783,425
15,600 Kopin Corp. 1,208,025
20,400 Lattice Semiconductor Corp. 1,374,450(b)
12,100 LTX Corp. 553,575(b)
7,200 Meade Instruments Corp. 526,500(b)
32,600 Mercury Computer Systems, Inc. 1,253,063
11,500 Micrel, Inc. 994,750(b)
19,950 Microchip Technology, Inc. 1,238,147
7,500 MKS Instruments, Inc. 352,500(b)
9,600 Molecular Devices Corp. 412,650(b)
19,100 Pericom Semiconductor Corp. 839,206(b)
20,100 Photon Dynamics, Inc. 1,487,400(b)
4,400 PMC-Sierra, Inc. 844,250
12,900 QLogic Corp. 1,294,031
25,800 REMEC, Inc. 978,788(b)
53,800 S3, Inc. 756,563(b)
13,100 Semtech Corp. 893,256(b)
8,000 Silicon Storage Technology, Inc. 780,000(b)
25,400 Therma-Wave, Inc. 698,500(b)
23,400 Tollgrade Communications, Inc. 1,544,400(b)
13,750 TranSwitch Corp. 1,210,859
7,100 TriQuint Semiconductor, Inc. 729,969
11,100 Varian, Inc. 403,763(b)
7,100 Zoran Corp. 354,556(b)
------------
38,491,761
------------
Engineering & Construction - 1.2%
30,250 Dycom Industries, Inc. 1,573,000
38,550 Quanta Services, Inc. 1,790,166
------------
3,363,166
------------
Entertainment - 0.1%
6,350 SFX Entertainment, Inc., Class A 264,319(b)
------------
Equipment - Semiconductors - 3.0%
6,749 Applied Materials, Inc. 687,133
14,000 Applied Science & Technology 380,625(b)
15,300 Asyst Technologies, Inc. 818,550
28,700 Cymer, Inc. 1,121,094(b)
6,800 Helix Technology Corp. 347,225
16,300 Kulicke & Soffa Industries, Inc. 1,276,494(b)
40,900 Photronic, Inc. 1,362,481(b)
13,300 PRI Automation, Inc. 1,062,338(b)
10,700 Varian Semiconductor Equipment, Inc. 719,575(b)
8,900 Veeco Instruments, Inc. 552,913(b)
------------
8,328,428
------------
Financial - Diversified - 0.5%
22,700 Pinnacle Holdings, Inc. 1,275,456(b)
------------
Food & Beverage - 0.3%
32,100 Hain Food Group, Inc. 860,681(b)
------------
Freight & Shipping - 2.4%
11,200 Atlas Air, Inc. 391,300(b)
27,600 C.H. Robinson Worldwide, Inc. 1,380,000
29,000 EGL, Inc. 665,188(b)
21,600 Expeditors International of Washington, Inc. 923,400
55,300 Forward Air Corp. 1,900,938(b)
41,000 Iron Mountain, Inc. 1,435,000(b)
------------
6,695,826
------------
Health Care - Drugs & Pharmaceuticals - 3.3%
36,900 Accredo Health, Inc. 1,037,813(b)
12,900 Celgene Corp. 607,106(b)
20,900 Cubist Pharmaceuticals, Inc. 671,413(b)
2,900 Emisphere Technologies, Inc. 119,036(b)
20,475 Jones Pharma, Inc. 589,936
25,473 King Pharmaceuticals, Inc. 1,257,729(b)
14,900 K-V Pharmaceutical Co., Class A 376,225(b)
24,800 Medicis Pharmaceutical Corp., Class A 1,085,000(b)
24,801 Shire Pharmaceuticals Group, ADR 998,240(b)
41,700 Titan Pharmaceuticals, Inc. 1,334,400(b)
2,300 United Therapeutics Corp. 129,950(b)
17,100 Watson Pharmaceuticals, Inc. 768,431(b)
------------
8,975,279
------------
Health Care - Medical Products & Supplies - 2.5%
31,950 Aradigm Corp. 513,197(b)
15,300 AthroCare Corp. 1,558,688(b)
37,300 DENTSPLY International, Inc. 1,084,031
33,400 Novoste Corp. 1,369,400(b)
40,600 ResMed, Inc. 1,380,400
20,400 Zoll Medical Corp. 901,425(b)
------------
6,807,141
------------
Health Care Management - 1.4%
66,200 Lifepoint Hospitals, Inc. 1,133,675(b)
8,500 Province Healthcare Co. 245,438(b)
32,700 Trigon Healthcare, Inc. 1,175,156(b)
23,200 Universal Health Services, Inc., Class B 1,270,200(b)
------------
3,824,469
------------
Health Care Services - 1.8%
55,700 Advance Paradigm, Inc. 696,250
19,900 Albany Molecular Research, Inc. 873,113(b)
42,600 Hooper Holmes, Inc. 740,175
10,300 IMPATH, Inc. 473,800(b)
14,100 MAXIMUS, Inc. 332,231(b)
43,300 Pharmaceutical Product Development, Inc. 727,981(b)
20,800 Quest Diagnostics, Inc. 1,210,300(b)
------------
5,053,850
------------
Housewares & Household Products - 0.1%
6,900 Salton, Inc. 296,269(b)
------------
Investment Banking & Brokerage - 0.3%
34,700 Waddell & Reed Financial, Inc., Class A 923,888
------------
Investment Management - 0.5%
33,200 Affiliated Managers Group, Inc. 1,332,150(b)
------------
Leisure Products - 0.1%
10,300 JAKKS Pacific, Inc. 189,263(b)
------------
Manufacturing - 1.0%
24,400 Cognex Corp. 1,387,750(b)
6,200 CTS Corp. 390,988
30,500 Insituform Technologies, Inc., Class A 1,023,656(b)
------------
2,802,394
------------
Office Equipment & Supplies - 0.2%
11,600 Optimal Robitics Corp. 493,000(b)
------------
Oil & Gas - 4.7%
41,200 Barrett Resources Corp. 1,308,100(b)
22,700 BJ Services Co. 1,594,675(b)
28,900 Cal Dive International, Inc. 1,437,775(b)
14,600 Core Laboratories N.V. (USD) 414,275(b)
19,700 Diamond Offshore Drilling, Inc. 794,156
11,200 Louis Dreyfus Natural Gas Corp. 313,600(b)
34,500 Marine Drilling Companies, Inc. 897,000(b)
42,800 Newfield Exploration Co. 1,738,750(b)
23,900 Noble Affiliates, Inc. 861,894
51,900 Oceaneering International, Inc. 895,275(b)
11,900 Patterson Energy, Inc. 336,175(b)
36,000 Precision Drilling Corp. 1,152,000(b)
31,700 UTI Energy Corp. 1,101,575(b)
------------
12,845,250
------------
Photography & Imaging - 1.8%
42,800 Imax Corp. 984,400(b)
35,600 In Focus Systems, Inc. 1,065,775(b)
47,400 Pinnacle Systems, Inc. 1,137,600
31,500 Zebra Technologies Corp. 1,795,500(b)
------------
4,983,275
------------
Restaurants - 1.7%
40,700 Applebee's International, Inc. 1,483,006
42,700 Jack in the Box, Inc. 1,046,150(b)
29,500 Outback Steakhouse, Inc. 966,125(b)
35,700 PR Chang's China Bistro, Inc. 1,249,500(b)
------------
4,744,781
------------
Retail - 2.6%
8,700 CDW Computer Centers, Inc. 904,800(b)
11,800 Cost Plus, Inc. 360,638(b)
13,800 Insight Enterprise, Inc. 577,013(b)
32,550 Kenneth Cole Productions, Inc., Class A 1,330,481
13,100 Linens 'N Things, Inc. 404,463(b)
47,800 Men's Wearhouse, Inc. 1,024,713(b)
23,225 Pacific Sunwear of California 791,102(b)
5,600 PolyMedica Corp. 300,650(b)
9,700 Too, Inc. 290,394(b)
23,300 Tweeter Home Entertainment Group, Inc. 859,188
11,600 Ultimate Electronics, Inc. 343,650(b)
------------
7,187,092
------------
Retail - Food & Drug - 0.4%
16,400 Whole Foods Market, Inc. 698,025(b)
19,800 Wild Oats Markets, Inc. 262,350
------------
960,375
------------
Services - 1.0%
21,400 Manpower, Inc. 755,688
63,000 Modis Professional Services, Inc. 476,438(b)
5,600 On Assignment, Inc. 175,700(b)
30,700 Professional Staff plc, ADR 153,500(b)
54,375 Tetra Tech, Inc. 1,281,211(b)
------------
2,842,537
------------
Services - Cyclical - 5.2%
43,100 Acxiom Corp. 1,163,700(b)
44,760 Apollo Group, Inc., Class A 1,298,040(b)
6,400 Bright Horizons Family Solutions, Inc. 115,200(b)
3,500 Catalina Marketing Corp. 354,375(b)
92,800 Copart, Inc. 1,600,800(b)
24,200 Corporate Executive Board Co. 1,421,750(b)
10,000 Diamond Technology Partners, Inc. 791,250(b)
9,700 Forrester Research, Inc. 439,531(b)
24,200 F.Y.I., Inc. 648,863(b)
12,500 Getty Images, Inc. 379,688(b)
19,800 Learning Tree International, Inc. 949,163(b)
26,600 Macrovision Corp. 1,300,075
9,700 MemberWorks, Inc. 313,280(b)
30,100 META Group, Inc. 677,250(b)
20,800 MIPS Technologies, Inc. 600,600(b)
18,800 Pegasus Communications Corp., Class A 333,700
18,500 Pre-Paid Legal Services, Inc. 592,000(b)
20,200 Profit Recovery Group International, Inc. 354,763(b)
18,000 TeleTech Holdings, Inc. 587,250(b)
29,900 Xceed, Inc. 411,125(b)
------------
14,332,403
------------
Services - Technology - 2.6%
17,200 Bisys Group, Inc. 1,076,075(b)
35,600 FactSet Research Systems, Inc. 1,023,500
26,100 Investment Technology Group 978,750(b)
8,635 MarchFirst, Inc. 184,033(b)
21,900 MedQuist, Inc. 776,081(b)
43,460 National Computer Systems, Inc. 2,235,474
28,525 NOVA Corp. 902,103(b)
------------
7,176,016
------------
Steel - 0.2%
20,200 Maverick Tube Corp. 575,700(b)
------------
Telephone & Telecommunications - 2.5%
21,400 CapRock Communications Corp. 716,900(b)
34,800 ICG Communications, Inc. 1,035,300(b)
29,300 ITC DeltaCom, Inc. 963,238(b)
12,600 NorthEast Optic Network, Inc. 705,600(b)
11,200 Powerwave Technologies, Inc. 2,330,300(b)
33,800 Primus Telecomm Group, Inc. 1,109,063(b)
------------
6,860,401
------------
Utilities - 0.3%
6,100 Calpine Corp. 558,150(b)
11,200 SCG Holding Corp. 245,700(b)
------------
803,850
------------
Total Common Stocks (cost $227,140,342) 249,386,937
------------
Principal
Amount
------------
SHORT-TERM SECURITIES - 9.7%(a)
Commercial Paper
3,000,000 Aegon Funding Corp., 5.98% Due 5/2/2000 2,999,502
3,000,000 ExxonMobil Australia
PTY, Ltd., 5.98% Due 5/3/2000 (USD) 2,999,003
10,600,000 General Electric Capital Corp., 6.03% Due 5/1/2000 10,600,000
1,300,000 Honeywell International, Inc., 6.0% Due 5/3/2000 1,299,567
3,000,000 Norwest Financial, Inc., 6.0% Due 5/5/2000 2,998,000
3,000,000 USAA Capital Corp., 6.0% Due 5/4/2000 2,998,500
3,000,000 Warner-Lambert Co., 5.97% Due 5/1/2000 3,000,000
------------
Total Short-Term Securities (at amortized cost) 26,894,572
------------
Total Investments (cost $254,034,914) $ 27,281,509(c)
============
Notes to Portfolio of Investments:
----------------------------------
(a) The categories of investments are shown as a percentage of total
investments of the Lutheran Brotherhood Opportunity Growth Fund.
(b) Currently non-income producing.
(c) At April 30, 2000, the aggregate cost of securities for federal
income tax purposes was $254,034,914 and the net unrealized appreciation
of investments based on that cost was $22,246,595 which is comprised of
$57,406,366 aggregate gross unrealized appreciation and $35,159,771
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 MID CAP GROWTH FUND
Portfolio of Investments
April 30, 2000
(unaudited)
Shares Value
------------- ------------
<S> <C> <C>
COMMON STOCKS - 92.8%(a)
Airlines - 0.2%
4,300 Delta Air Lines, Inc. $ 226,788
------------
Automotive - 0.3%
13,100 Gentex Corp. 422,475(b)
------------
Banks - 3.2%
6,600 Associated Banc-Corp. 168,713
18,950 City National Corp. 697,597
11,500 Marshall & Ilsley Corp. 534,031
16,600 North Fork Bancorporation, Inc. 268,713
9,900 Northern Trust Corp. 634,838
10,300 Pacific Century Financial Corp. 211,794
39,600 Peoples Heritage Financial Group, Inc. 517,275
11,200 Roslyn Bancorp, Inc. 190,400
6,400 SouthTrust Corp. 152,800
5,400 State Street Corp. 523,125
8,940 TCF Financial Corp. 208,973
12,200 UnionBanCal Corp. 337,788
5,290 Zions Bancorporation 219,535
------------
4,665,582
------------
Biotechnology - 2.1%
1,900 Allos Therapeutics, Inc. 20,425(b)
6,700 Biogen, Inc. 394,044(b)
10,100 Cephalon, Inc. 568,125(b)
4,700 Chiron Corp. 212,675(b)
13,100 Genzyme Transgenics Corp. 216,969(b)
2,500 Human Genome Sciences, Inc. 191,406
2,950 IDEC Pharmaceuticals Corp. 188,800(b)
6,300 Immunex Corp. 248,063
2,200 Intermune Pharmaceuticals, Inc. 37,950(b)
3,400 MedImmune, Inc. 543,788(b)
2,800 Millennium Pharmaceuticals, Inc. 222,250
8,500 Vical, Inc. 153,000(b)
------------
2,997,495
------------
Broadcasting - 2.5%
3,300 Adelphia Communications Corp., Class A 163,556(b)
2,900 AMFM, Inc. 192,488(b)
2,700 Cox Radio, Inc., Class A 195,750
10,400 Echostar Communications Corp., Class A 662,350
5,800 Hispanic Broadcasting Corp. 586,163(b)
6,100 Infinity Broadcasting Corp., Class A 207,019(b)
4,700 Sirius Satellite Radio, Inc. 186,531(b)
2,800 UnitedGlobalCom, Inc., Class A 148,750(b)
7,300 Univision Communications, Inc., Class A 797,525(b)
9,400 USA Networks, Inc. 216,200
7,000 Westwood One, Inc. 247,625
------------
3,603,957
------------
Chemicals - 0.1%
5,800 Cytec Industries, Inc. 174,725(b)
------------
Communications Equipment - 5.6%
13,600 ADC Telecommunications, Inc. 826,200
3,100 Advanced Fibre Communications 141,631(b)
13,800 American Tower Corp., Class A 641,700(b)
16,800 Cable Design Technologies Corp. 575,400(b)
6,000 C-Cube Microsystems, Inc. 385,500(b)
4,000 CIENA Corp. 494,500(b)
4,300 CommScope, Inc. 204,250(b)
12,200 Comverse Technology, Inc. 1,088,088
11,250 Digital Microwave Corp. 415,547(b)
5,400 Harmonic, Inc. 398,588(b)
11,900 Harris Corp. 384,519
16,300 Motient Corp. 203,750(b)
6,400 Netro Corp. 276,000(b)
29,800 Pairgain Technologies, Inc. 741,275(b)
4,900 Polycom, Inc. 387,713(b)
5,300 Research in Motion, Ltd. 225,250(b)
3,200 Sawtek, Inc. 153,000(b)
8,600 Scientific-Atlanta, Inc. 559,538
4,000 Telaxis Communications Corp. 104,750(b)
------------
8,207,199
------------
Computers - Hardware - 1.8%
3,400 Alteon WebSystems, Inc. 231,200(b)
4,900 Copper Mountain Networks, Inc. 408,538(b)
9,700 Electronics for Imaging, Inc. 506,825(b)
5,700 Extreme Networks, Inc. 328,463(b)
3,560 Gateway, Inc. 196,690(b)
9,100 National Instruments Corp. 443,625(b)
10,800 Paradyne Networks, Inc. 304,425(b)
2,000 Sun Microsystems, Inc. 183,875
------------
2,603,641
------------
Computers - Networking - 0.3%
5,200 Network Appliance, Inc. 384,475
------------
Computers - Peripherals - 1.0%
3,200 CacheFlow, Inc. 237,600(b)
3,200 EMC Corp. 444,600(b)
3,100 Lexmark International Group, Inc., Class A 365,800(b)
3,400 M-Systems Flash Disk Pioneers, Ltd. 224,400(b)
2,300 SanDisk Corp. 210,738(b)
------------
1,483,138
------------
Computers - Software & Services - 10.7%
2,000 Adobe Systems, Inc. 241,875
8,200 Advent Software, Inc. 430,500
4,100 Affiliated Computer Services, Inc., Class A 135,813(b)
3,800 Amdocs, Ltd. 257,213(b)
10,300 Aware, Inc. 401,700(b)
13,000 BEA Systems, Inc. 627,250
3,600 BroadVision, Inc. 158,175
3,000 Check Point Software Technologies Ltd. 519,000(b)
17,400 Citrix Systems, Inc. 1,062,488
12,800 Cognos, Inc. 480,000(b)
5,300 Critical Path, Inc. 308,063(b)
2,300 Electronic Arts, Inc. 139,150(b)
5,300 Entrust Technologies, Inc. 260,363(b)
10,400 Exchange Applications, Inc. 126,750
3,300 Exodus Communications, Inc. 291,844
2,400 HNC Software, Inc. 118,800(b)
5,800 I-2 Technologies, Inc. 749,650
5,000 Inktomi Corp. 769,688
4,700 Intuit, Inc. 168,906(b)
10,700 J.D. Edwards & Co. 195,275(b)
4,400 Lycos, Inc. 204,600(b)
8,700 Marimba, Inc. 172,369(b)
4,900 Mercury Interactive Corp. 441,000
4,800 Micromuse, Inc. 471,000
5,300 Pharmacopeia, Inc. 217,963(b)
16,200 Progress Software Corp. 324,000
10,850 Radiant Systems, Inc. 202,081
10,400 Rational Software Corp. 885,300(b)
6,600 Remedy Corp. 350,625(b)
11,600 RSA Security, Inc. 680,775(b)
5,900 Siebel Systems, Inc. 724,963
5,100 Symantec Corp. 318,431(b)
9,200 TenFold Corp. 235,175(b)
7,600 TIBCO Software, Inc. 676,875
14,900 Veritas Software Corp. 1,598,258
4,200 Vignette Corp. 202,388
11,500 Visual Networks, Inc. 448,500(b)
------------
15,596,806
------------
Construction - 0.8%
12,600 Martin Marietta Materials 667,800
8,400 Southdown, Inc. 488,250
------------
1,156,050
------------
Consumer Finance - 0.5%
10,800 Metris Companies, Inc. 405,000
5,500 PMI Group 266,406
------------
671,406
------------
Distributors - Food & Health - 0.2%
6,200 Andrx Corp. 317,363
------------
Electrical Equipment - 4.7%
10,660 American Power Conversion Corp. 376,431(b)
3,400 Amphenol Corp., Class A 216,750(b)
8,600 Electro Scientific Industries, Inc. 542,338
12,301 Flextronics International, Ltd. 864,145
5,600 KEMET Corp. 417,200(b)
7,300 Plexus Corp. 559,363(b)
6,600 Sanmina Corp. 396,413
13,500 SCI Systems, Inc. 718,875
9,100 Solectron Corp. 425,994
1,800 SPX Corp. 197,775(b)
13,050 Symbol Technologies, Inc. 727,538
16,000 Vishay Intertechnology, Inc. 1,342,000(b)
------------
6,784,822
------------
Electronics - 15.2%
9,600 Adaptec, Inc. 259,200(b)
4,900 Advanced Micro Devices, Inc. 429,975(b)
12,800 Altera Corp. 1,308,800(b)
12,200 Amkor Technologies, Inc. 746,488(b)
16,600 Analog Devices, Inc. 1,275,088
4,300 Applied Micro Circuits Corp. 554,163
13,800 Arrow Electronics, Inc. 604,613(b)
5,400 Atmel Corp. 264,263
6,800 Avnet, Inc. 534,650
1,400 Broadcom Corp., Class A 241,325
4,150 Burr-Brown Corp. 282,719
8,900 Conexant Systems, Inc. 532,888
2,650 Credence Systems Corp. 378,288(b)
8,900 Cypress Semiconductor Corp. 462,244(b)
8,100 Cytyc Corp. 362,475
400 E-TEK Dynamics, Inc. 81,900(b)
10,500 Fairchild Semiconductor International Corp., Class A 498,750(b)
8,100 Integrated Device Technology, Inc. 389,306(b)
7,120 JDS Uniphase Corp. 738,255
7,600 Lattice Semiconductor Corp. 512,050(b)
9,280 Linear Technology Corp. 530,120
6,400 LSI Logic Corp. 400,000
10,560 Maxim Integrated Products, Inc. 684,420
3,100 Micrel, Inc. 268,150(b)
9,360 Microchip Technology, Inc. 580,905
9,600 National Semiconductor Corp. 583,200(b)
4,800 PE Corp./PE Biosystems Group 288,000
8,700 PerkinElmer, Inc. 476,325
4,200 PMC-Sierra, Inc. 805,875
6,500 QLogic Corp. 652,031
9,200 RF Micro Devices, Inc. 957,375(b)
5,300 Rudolph Technologies, Inc. 160,988(b)
23,100 S3, Inc. 324,844(b)
3,400 SDL, Inc. 663,000
9,300 Semtech Corp. 634,144(b)
10,650 Therma-Wave, Inc. 292,875(b)
5,300 TranSwitch Corp. 466,731
6,100 TriQuint Semiconductor, Inc. 627,156
11,800 Vitesse Semiconductor Corp. 803,138
7,900 Waters Corp. 748,525(b)
10,540 Xilinx, Inc. 772,055
------------
22,177,297
------------
Engineering & Construction - 1.4%
16,800 Dycom Industries, Inc. 873,600
3,400 MasTec, Inc. 293,675(b)
18,000 Quanta Services, Inc. 835,875
------------
2,003,150
------------
Equipment - Semiconductors - 3.3%
9,500 Asyst Technologies, Inc. 508,250
7,680 KLA Instruments Corp. 575,040
9,200 Kulicke & Soffa Industries, Inc. 720,475(b)
11,400 LAM Research Corp. 522,975
15,230 Novellus Systems, Inc. 1,015,651
18,200 Photronic, Inc. 606,288(b)
7,800 Teradyne, Inc. 858,000(b)
------------
4,806,679
------------
Financial - Diversified - 0.8%
12,800 AMBAC Financial Group, Inc. 614,400
19,700 InterCept Group, Inc. 339,825(b)
5,100 SLM Holding Corp. 159,694
------------
1,113,919
------------
Food & Beverage - 1.0%
11,000 American Italian Pasta Co., Class A 272,250(b)
11,000 International Home Foods, Inc. 160,188(b)
20,900 Keebler Foods Co. 657,044
8,900 Suiza Foods Corp. 346,544(b)
------------
1,436,026
------------
Freight & Shipping - 0.6%
5,100 CNF Transportation, Inc. 142,481
6,560 Expeditors International of Washington, Inc. 280,440
7,500 Iron Mountain, Inc. 262,500(b)
3,200 Kansas City Southern Industries, Inc. 230,000
------------
915,421
------------
Gold & Precious Metals Mining - 0.1%
4,900 Stillwater Mining Co. 137,200(b)
------------
Health Care - Diversified - 0.7%
11,400 Allergan, Inc. 671,175
13,800 IVAX Corp. 377,775
------------
1,048,950
------------
Health Care - Drugs & Pharmaceuticals - 4.3%
10,100 Alpharma, Inc., Class A 390,113
11,200 Alza Corp. 493,500(b)
10,700 Catalyca, Inc. 119,038(b)
13,700 Elan Corp. plc, ADR 587,388(b)
13,820 Forest Laboratories, Inc. 1,161,744(b)
11,950 Jones Pharma, Inc. 344,309
10,900 King Pharmaceuticals, Inc. 538,188(b)
26,140 Mylan Laboratories, Inc. 741,723
3,500 Sepracor, Inc. 322,000(b)
15,000 Teva Pharmaceutical Industries, Ltd., ADR 660,000
6,500 Titan Pharmaceuticals, Inc. 208,000(b)
14,620 Watson Pharmaceuticals, Inc. 656,986(b)
------------
6,222,989
------------
Health Care - Medical Products & Supplies - 1.6%
19,050 Aradigm Corp. 305,991(b)
15,700 Becton, Dickinson & Co. 402,313
11,270 Biomet, Inc. 402,198
5,600 MiniMed, Inc. 688,450(b)
2,500 Stryker Corp. 179,688
13,100 Sybron Corp. 407,738(b)
------------
2,386,378
------------
Health Care Management - 1.4%
36,950 Health Management Associates, Inc., Class A 588,891(b)
13,500 Tenet Healthcare Corp. 344,250
17,400 Trigon Healthcare, Inc. 625,313(b)
6,600 Wellpoint Health Networks, Inc., Class A 486,750(b)
------------
2,045,204
------------
Household Furnishings & Appliances - 0.1%
10,280 Leggett & Platt, Inc. 219,735
------------
Insurance - 0.3%
5,100 Protective Life Corp., Capital Trust II 121,444
5,800 Radian Group, Inc. 295,438
------------
416,882
------------
Investment Banking & Brokerage - 0.9%
17,100 A.G. Edwards, Inc. 643,388
14,000 Legg Mason, Inc. 529,375
6,600 Waddell & Reed Financial, Inc., Class A 175,725
------------
1,348,488
------------
Leisure Products - 0.3%
9,540 Harley Davidson, Inc. 379,811
------------
Machinery - Diversified - 0.2%
10,300 Mettler-Toledo International, Inc. 355,350(b)
------------
Manufacturing - 1.5%
3,600 Danaher Corp. 205,650
23,600 Jabil Circuit, Inc. 966,125
11,800 Millipore Corp. 845,913
5,800 Pentair, Inc. 221,850
------------
2,239,538
------------
Oil & Gas - 6.9%
15,500 Apache Corp. 750,781
12,760 BJ Services Co. 896,390(b)
10,400 Cooper Cameron Corp. 780,000(b)
13,900 Devon Energy Corp. 669,806
16,400 Diamond Offshore Drilling, Inc. 661,125
25,160 ENSCO International, Inc. 834,998
29,000 EOG Resources, Inc. 721,375
16,600 Grant Prideco, Inc. 319,550(b)
11,800 Nabors Industries, Inc. 465,363(b)
4,500 Newfield Exploration Co. 182,813(b)
8,700 Noble Drilling Corp. 347,456(b)
6,800 Occidental Petroleum Corp. 145,775
5,800 Precision Drilling Corp. 185,600(b)
17,400 Rowan Companies, Inc. 486,113(b)
4,900 Santa Fe International Corp. 168,438
3,710 Smith International, Inc. 281,960(b)
6,600 Tidewater, Inc. 196,350
10,830 Tosco Corp. 347,237
20,000 Transocean Sedco Forex, Inc. 940,000
16,600 Weatherford International, Inc. 674,375(b)
------------
10,055,505
------------
Paper & Forest Products - 0.2%
4,600 Bowater, Inc. 253,000
------------
Publishing - 0.3%
4,400 Reader's Digest Association, Inc., Class A 140,800
5,100 Scholastic Corp. 238,106(b)
------------
378,906
------------
Restaurants - 0.6%
9,600 Darden Restaurants, Inc. 177,000
19,300 Outback Steakhouse, Inc. 632,075(b)
4,400 Starbucks Corp. 133,031(b)
------------
942,106
------------
Retail - 3.4%
16,380 Bed, Bath & Beyond, Inc. 600,941(b)
14,100 BJ's Wholesale Club, Inc. 499,669(b)
3,700 Circuit City Stores, Inc. 217,606
6,000 Dollar General Corp. 137,250
13,920 Dollar Tree Stores, Inc. 805,620(b)
34,600 Family Dollar Stores, Inc. 659,563
12,400 Intimate Brands, Inc. 477,400
14,600 Men's Wearhouse, Inc. 312,988(b)
14,700 Ross Stores, Inc. 305,025
9,100 Tiffany & Co. 661,456
8,500 Zale Corp. 350,625(b)
------------
5,028,143
------------
Retail - Food & Drug - 0.2%
8,000 Whole Foods Market, Inc. 340,500(b)
------------
Services - 0.8%
17,600 Manpower, Inc. 621,500
16,300 Modis Professional Services, Inc. 123,269(b)
5,800 Robert Half International, Inc. 354,525(b)
------------
1,099,294
------------
Services - Cyclical - 2.9%
19,500 Acxiom Corp. 526,500(b)
14,800 Cerner Corp. 326,525(b)
14,800 Cintas Corp. 586,450
20,900 Convergys Corp. 919,600(b)
7,900 Forrester Research, Inc. 357,969(b)
7,400 Gemstar International Group, Ltd. 342,250(b)
4,500 Getty Images, Inc. 136,688(b)
6,500 Lamar Advertising Co. 286,406(b)
9,000 St Assembly Test Services, Ltd., ADR 375,188(b)
6,600 Viad Corp. 167,475
3,600 Young & Rubicam, Inc. 200,475
------------
4,225,526
------------
Services - Technology - 3.0%
5,500 Bisys Group, Inc. 344,094(b)
6,900 CheckFree Holdings Corp. 350,606(b)
6,500 Comdisco, Inc. 201,906
13,900 Concord EFS, Inc. 311,013(b)
11,100 CSG System International, Inc. 511,988(b)
8,000 DST Systems, Inc. 593,500(b)
23,300 Fiserv, Inc. 1,070,344(b)
7,000 NOVA Corp. 221,375(b)
3,120 Paychex, Inc. 164,190
19,080 SunGard Data Systems, Inc. 659,453(b)
------------
4,428,469
------------
Steel - 0.1%
13,300 Steel Dynamics, Inc. 151,288(b)
------------
Telephone & Telecommunications - 4.1%
10,300 Broadwing, Inc. 291,619(b)
8,735 CenturyTel, Inc. 214,008
7,950 Covad Communications Group, Inc. 220,613(b)
15,150 FLAG Telecom Holdings, Ltd. 295,425(b)
22,900 ICG Communications, Inc. 681,275(b)
12,000 Intermedia Communications of Florida, Inc. 489,000(b)
12,500 ITC DeltaCom, Inc. 410,938(b)
15,000 McLeodUSA, Inc. 375,000(b)
10,500 Network Plus Corp. 199,500(b)
2,000 NEXTLINK Communications, Inc. 168,625(b)
4,625 NTL, Inc. 353,813
9,700 Primus Telecomm Group, Inc. 318,281(b)
6,400 Telephone and Data Systems, Inc. 652,800
4,600 Teligent, Inc., Class A 172,500(b)
5,900 US LEC Corp., Class A 154,138(b)
2,540 VoiceStream Wireless Corp. 251,460(b)
5,740 Western Wireless Corp., Class A 285,206(b)
12,700 WinStar Communications, Inc. 506,413
------------
6,040,614
------------
Textiles - 0.8%
25,000 Jones Apparel Group, Inc. 742,188(b)
10,700 Liz Claiborne 495,544
------------
1,237,732
------------
Utilities - 1.7%
2,680 AES Corp. 241,033(b)
3,100 Calpine Corp. 283,650(b)
8,200 CMS Energy Corp. 155,800
8,200 DQE, Inc. 313,650
9,700 Dynegy, Inc. 634,744
2,600 Florida Progress Corp. 127,400
13,500 Montana Power Co. 594,844
4,100 SCG Holding Corp. 89,944(b)
------------
2,441,065
------------
Waste Management - 0.1%
14,900 Republic Services, Inc., Class A 203,944(b)
------------
Total Common Stocks (cost $108,773,083) 135,375,031
------------
Principal
Amount
------------
SHORT-TERM SECURITIES - 7.2%(a)
Commercial Paper - 3.8%
$ 2,500,000 USAA Capital Corp., 5.97% Due 5/2/2000 2,499,585
3,000,000 USAA Capital Corp., 6.0% Due 5/4/2000 2,998,500
------------
5,498,085
------------
U.S. Government Agency - 3.4%
4,900,000 Federal Home Loan Mortgage Corp.
Discount Notes, 5.88% Due 5/1/2000 4,900,000
------------
Total Short-Term Securities (at amortized cost) 10,398,085
------------
Total Investments (cost $119,171,168) $144,773,116(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 April 30, 2000, the aggregate cost of securities for federal
income tax purposes was $119,171,168 and the net unrealized appreciation
of investments based on that cost was $26,601,948 which is comprised of
$35,455,334 aggregate gross unrealized appreciation and $8,853,386
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
April 30, 2000
(unaudited)
Shares Value
------------- ------------
<S> <C> <C>
ARGENTINA - 0.1%(a)
COMMON STOCKS
4,050 Telefonica de Argentina ADR (USD) $ 142,253
------------
AUSTRALIA - 2.8%(a)
COMMON STOCKS
12,000 Brambles Industries Ltd. 337,786
17,267 Broken Hill Proprietary Co. 185,948
21,256 Commonwealth Bank of Australia 323,744
13,922 Lend Lease Corp. 150,869
73,109 News Corp. Ltd. 928,460
13,000 Telstra Corp. 33,253
82,086 Telstra Corp. Ltd. 351,867
57,195 Westpac Banking 365,082
------------
2,677,009
------------
PREFERRED STOCK
101,890 News Corp. Ltd. 1,096,059
------------
3,773,068
------------
BELGIUM - 0.5%(a)
COMMON STOCKS
2,273 Credit Communal Holding/Dexia 294,666
16,080 Fortis 'B' 405,951
1,580 UCB SA 53,146
------------
753,763
------------
BRAZIL - 1.5%(a)
COMMON STOCKS
6,000 Embratel Participacoes SA 135,000
14,810 Telecomunicacues Brasilieras SA ADR (USD) 1,750,357
5,000 Unibanco - Uniao de Bancos Brasileiros SA GDR (USD) 124,688
1,734 Tele Norte Leste Participacoes SA (ADR) 30,889
------------
2,040,934
------------
CANADA - 1.2%(a)
COMMON STOCKS
4,980 Alcan Aluminum 162,088
15,747 Celestica Inc. 859,196(b)
4,160 Nortel Networks Corp. 470,244
1,870 Royal Bank of Canada 88,266
------------
1,579,794
------------
DENMARK - 0.1%(a)
COMMON STOCKS
2,680 Teledanmark 196,256
------------
FINLAND - 3.2%(a)
COMMON STOCKS
76,560 Nokia Oyj 4,391,804
------------
FRANCE - 11.7%(a)
COMMON STOCKS
4,990 Alcatel Alsthom 1,156,784
1,010 Altran Technologies SA 206,409
17,836 Aventis SA 981,350
7,190 AXA 1,066,092
11,010 Banque Nationale De Paris 889,817
2,540 Canal Plus 489,532
2,460 Cap Gemini SA 483,059
1,964 Carrefour 127,840
2,930 Cie de St. Gobain 399,816
400 Groupe Danone 87,455
1,610 Hermes International 228,330
752 Lafarge Coppee 62,280
2,159 Legrand 402,363
171 L'Oreal 115,970
19,332 Sanofi-Synthelabo 721,442
2,262 Schneider SA 148,060
1,001 Societe Generale 207,300
982 Sodexho 147,123
6,091 ST Microelectronics 1,162,285
3,550 Television Francaise 2,430,161
13,950 Total 'B' 2,116,617
22,351 Vivendi 2,210,739
------------
15,840,824
------------
GERMANY - 4.7%(a)
COMMON STOCKS
2,120 Allianz AG 815,823
4,048 Bayer AG 168,656
14,443 Bayerische Vereinsbank AG 879,719
10,677 Deutsche Bank AG 717,307
12,033 Deutsche Telekom AG 780,950
6,022 Gehe AG 187,231
10,199 Infineon Technologies AG 702,347(b)
2,220 Rhoen Klinikum AG 81,838
2,610 SAP AG 1,224,340
1,491 Siemens AG 220,941
9,530 Veba AG 478,238
------------
6,257,390
------------
PREFERRED STOCK
170 SAP AG 100,224
------------
6,357,614
------------
HONG KONG - 3.1%(a)
COMMON STOCKS
62,000 Cheung Kong Holdings Ltd. 740,256
151,000 China Telecom Ltd. 1,080,759
60,000 Doa Heng Bank Ltd. 277,307
49,000 Henderson Land Development Ltd. 214,515
105,200 Hong Kong Telecommunications Ltd. 248,508
77,000 Hutchison Whampoa 1,117,060
237,000 Pacific Century Cyberworks Ltd. 441,188(b)
17,000 Sun Hung Kai Properties Ltd. 133,133
------------
4,252,726
------------
INDIA - 0.4%(a)
COMMON STOCKS
19,097 ICICI Ltd. 484,586
------------
IRELAND - 0.3%(a)
COMMON STOCKS
7,307 SmartForce plc 348,909(b)
------------
ITALY - 5.0%(a)
COMMON STOCKS
38,000 Alleanza Assicurazioni 393,131
8,000 Banca Popolare di Brescia 727,280
133,302 Credito Italiano Spa 540,484
117,458 Ente Nazionale Idrocarburi 584,092
20,360 Instituto Bancario San Paolo di Torino 285,043
28,000 Mediaset Spa 454,368
30,945 Mediolanum Spa 513,411
54,600 Tecnost 191,598
181,896 Telecom Italia Mobile Spa 1,736,297
81,983 Telecom Italia Spa 1,146,283
64,008 Banca Intesa Spa 235,668
------------
6,807,655
------------
JAPAN - 21.7%(a)
COMMON STOCKS
7,000 Bridgestone Corp. 151,970
39,000 Canon 1,783,641
23 DDI Corp. 264,037
27 East Japan Railway 159,978
4,900 Fanuc Co. 513,521
115,000 Fuji Bank Ltd. 958,200
53 Fuji Television Network Inc. 883,211
26,000 Fujitsu Ltd. 736,564
16,000 Hitachi 191,085
4,000 Ito-Yokado Co. 292,182
7,000 Kao Corp. 213,211
10,000 Kokuyo Co. Ltd. 142,110
6,000 Komori Corp. 82,266
10,300 Kyocera 1,723,103
17,000 Makita Corp. 147,628
22,000 Marui Co. Ltd. 413,461
55,000 Matsushita Electric Industrial Co. 1,456,279
65,000 Mitsui Fudosan 660,742
12,000 Murata Manufacturing 2,333,009
74,000 NEC Corp. 2,014,165
147 Nippon Telegraph & Telecom Corp. 1,823,636
50,000 Nomura Securities Co. Ltd. 1,259,084
54 NTT Mobile Communication Network Inc. 1,804,749
15,000 Sankyo Co. 330,510
8,100 Seven-Eleven Japan Co. Ltd. 997,361
9,350 Shin-Etsu Chemical Co. Ltd. 494,269
20,000 Shiseido Co. Ltd. 252,928
2,600 Softbank Corp. 641,948
21,000 Sony Corp. 2,420,803
60,000 Sumitomo Bank Ltd. 750,451
35,000 Sumitomo Corp. 392,075
11,000 Sumitomo Electric Industries Ltd. 146,544
4,000 TDK Corp. 535,852
153,000 Toshiba Corp. 1,484,461
18,000 Yamanouchi Pharmaceutical Co. Ltd. 951,535
------------
29,406,569
------------
LUXEMBOURG - 0.1%(a)
COMMON STOCKS
698 Societe Europeenne des Satellites 106,049
------------
MEXICO - 2.1%(a)
COMMON STOCKS
19,040 Grupo Televisa GDR (USD) 1,207,850(b)
25,840 Telefonos de Mexico 'L' ADS (USD) 1,519,715
8,600 Nuevo Grupo Iusacell SA de CV (ADR) 137,063
------------
2,864,628
------------
NETHERLANDS - 7.1%(a)
COMMON STOCKS
6,316 ABN Amro Holdings NV 130,053
1,328 Akzo Nobel NV 54,364
12,198 CSM NV 209,586
4,193 Equant NV 324,580(b)
22,330 Fortis (NL) NV 561,504
974 Gucci Group NV (USD) 85,347
33,685 ING Groep NV 1,837,994
4,102 Koninklijke KPN NV 413,374
14,070 Royal Dutch Petroleum Co. 810,952
1,252 TNT Post Groep NV 27,317
9,862 United Pan-Europe Communications NV 358,891(b)
27,000 VNU NV 1,444,514
16,434 Wolters Kluwer 387,846
28,770 ASM Lithography Holdings NV 1,124,657(b)
42,824 Philips Electronics NV 1,910,359
------------
9,681,338
------------
NEW ZEALAND - 0.2%(a)
COMMON STOCKS
66,000 Telecom Corp. of New Zealand 278,832
------------
NORWAY - 0.2%(a)
COMMON STOCKS
15,490 Orkla 'A' ASA 239,478
------------
PORTUGAL - 0.1%(a)
COMMON STOCKS
8,888 Jeronimo Martins 158,531
------------
SINGAPORE - 0.5%(a)
COMMON STOCKS
97,472 United Overseas Bank 679,705
------------
SOUTH KOREA - 0.5%(a)
COMMON STOCKS
15,643 Korea Equity Fund (USD) 194,560
10,500 Korea Telecom 362,250
3,598 Pohang Iron & Steel ADR (USD) 75,558
------------
632,368
------------
SPAIN - 3.0%(a)
COMMON STOCKS
35,960 Banco Bilboa Vizcaya SA 490,369
100,220 Banco Santander Central Hispano 1,045,032
33,240 Endesa SA 725,244
16,106 Repsol SA 329,444
66,536 Telefonica SA 1,480,743
------------
4,070,832
------------
SWEDEN - 3.4%(a)
COMMON STOCKS
3,480 Atlas Copco AB 'B' 79,567
14,240 Electrolux AB 'B' 240,616
21,930 Hennes & Mauritz AB 582,126
92,561 Nordbanken Holding AB 583,281
4,140 Sandvik AB 'B' 98,813
48,400 Securitas AB 1,252,376
19,340 Telefonaktiebolaget LM Ericsson (Ericsson AB) 1,719,160
11,815 Nordic Baltic Holding 73,541(b)
------------
4,629,480
------------
SWITZERLAND - 4.1%(a)
COMMON STOCKS
5,122 ABB AG 574,705
2,773 ABB Ltd. 309,280
1,974 Adecco SA 1,619,675
2,920 Credit Suisse Group 527,430
715 Nestle SA 1,260,387
39 Roche Holdings AG 407,289
393 Swisscom AG 138,554
3,110 UBS AG 761,923
------------
5,599,243
------------
TAIWAN - 0.2%(a)
COMMON STOCKS
9,807 Hon Hai Precision Industry Co. Ltd. GDR (USD) 274,596(b)
------------
UNITED KINGDOM - 17.9%(a)
COMMON STOCKS
16,000 Abbey National plc 182,599
21,195 AstraZeneca Group plc 888,679
2,600 Baltimore Technologies plc 262,396(b)
14,881 BG Group plc 89,838
65,000 BP Amoco plc (USD) 561,164
107,200 Cable & Wireless 1,779,209
57,100 Cadbury Schweppes 391,168
17,000 Celltech Group plc 280,563(b)
32,900 Centrica 117,814
96,000 Compass Group plc 1,382,572
24,000 David S. Smith 50,819
21,000 Electrocomponents 210,889
4,000 GKN plc 55,427
85,700 Glaxo Wellcome 2,648,599
10,512 Hays 72,668
31,600 HSBC Holdings plc 353,964
54,000 Kingfisher 441,396
36,700 Marconi plc 456,549
164,000 Reed International plc 1,141,370
118,960 Royal Bank of Scotland Group plc 1,855,853
37,800 RTZ 588,527
35,000 Safeway plc 117,978
234,000 Shell Transport & Trading Co. 1,917,268
106,800 SmithKline Beecham plc 1,463,285
34,000 Standard Chartered plc 458,958
72,800 Tesco 247,661
120,612 Tomkins 370,410
54,107 Unilever 325,174
20,500 United News & Media 266,511
921,148 Vodafone AirTouch plc 4,216,498
72,000 WPP Group plc 1,160,240
------------
24,356,046
------------
Principal
Amount
------------
SHORT-TERM SECURITIES - 4.3%(a)
Commercial Paper
700,000 DuPont de Nemours, 6.0% Due 5/2/2000 699,883
5,100,000 General Electric Capital Corp., 6.03% Due 5/1/2000 5,100,000
------------
Total Short-Term Securities (at amortized cost) 5,799,883
------------
Total Investments (cost $102,279,558) $135,747,764(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:
(c) Security Classification:
Cost Value % of Portfolio
---- ----- --------------
Common Stocks &
Warrants $95,312,933 $128,751,598 94.8%
Preferred Stocks 1,166,742 1,196,283 0.9%
Short-Term 5,799,883 5,799,883 4.3%
----------- ------------ ------
Total Investments $102,279,558 $135,747,764 100.0%
=========== ============ ======
(d) At April 30, 2000, the aggregate cost of securities for federal income tax purposes
was $102,279,558 and the net unrealized appreciation of investments based on that
cost was $33,468,206 which is comprised of $37,714,435 aggregate gross unrealized
appreciation and $4,246,229 aggregate gross unrealized depreciation.
(e) Miscellaneous Footnotes:
(ADR) - American Depository Receipts
(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
April 30, 2000
(unaudited)
Shares Value
------------- ------------
<S> <C> <C>
COMMON STOCKS - 93.6%(a)
Airlines - 0.4%
4,560 Southwest Airlines Co. $ 98,879
------------
Banks - 3.0%
1,810 Bank of America Corp. 88,690
2,240 Bank of New York Co., Inc. 91,980
1,630 Chase Manhattan Corp. 117,462
3,250 Firstar Corp. 80,844
970 Northern Trust Corp. 62,201
1,340 State Street Corp. 129,813
4,080 U.S. Bancorporation 82,875
2,770 Wells Fargo & Co. 113,743
------------
767,608
------------
Biotechnology - 1.0%
4,530 Amgen, Inc. 253,680
------------
Broadcasting - 2.6%
3,220 AT&T Corp./Liberty Media Group, Class A 160,799(b)
2,510 CBS Corp. 147,463(b)
700 Charter Communications, Inc., Class A 10,281(b)
2,450 Clear Channel Communications, Inc. 176,400(b)
4,320 Comcast Corp., Class A 173,070(b)
100 Mediacom Communications Corp. 1,238(b)
------------
669,251
------------
Chemicals - 0.2%
1,400 Praxair, Inc. 62,213
------------
Communications Equipment - 7.2%
890 CIENA Corp. 110,026(b)
7,070 Lucent Technologies, Inc. 439,666
2,330 Motorola, Inc. 277,416
10,740 Nokia Corp., ADR 610,838
2,790 QUALCOMM, Inc. 302,541
540 Sycamore Networks, Inc. 42,390(b)
1,700 Tellabs, Inc. 93,181(b)
------------
1,876,058
------------
Computers - Hardware - 5.5%
420 Apple Computer 52,106(b)
6,980 Dell Computer Corp. 349,873(b)
1,180 Hewlett Packard Co. 159,300
2,250 International Business Machines Corp. 251,156
250 Juniper Networks, Inc. 53,172(b)
6,240 Sun Microsystems, Inc. 573,690
------------
1,439,297
------------
Computers - Networking - 6.4%
20,420 Cisco Systems, Inc. 1,415,680
880 Network Appliance, Inc. 65,065
1,670 Nortel Networks Corp. 189,128
------------
1,669,873
------------
Computers - Peripherals - 3.3%
6,120 EMC Corp. 850,298(b)
------------
Computers - Software & Services - 8.2%
6,470 America Online, Inc. 386,987
600 BroadVision, Inc. 26,363
1,020 Citrix Systems, Inc. 62,284
1,060 Exodus Communications, Inc. 93,744
15 Infonet Services Corp., Class B 253(b)
9,790 Microsoft Corp. 682,853(b)
4,610 Oracle Corp. 368,512
700 Peregrine Systems, Inc. 16,844
300 Phone.com, Inc. 25,200(b)
360 Siebel Systems, Inc. 44,235
650 VeriSign, Inc. 90,594
1,825 Veritas Software Corp. 195,760
1,150 Yahoo!, Inc. 149,788
------------
2,143,417
------------
Consumer Finance - 0.7%
5,080 MBNA Corp. 134,938
630 Providian Financial Corp. 55,479
------------
190,417
------------
Distributors - Food & Health - 0.3%
1,330 Cardinal Health, Inc. 73,233
------------
Electrical Equipment - 4.1%
1,000 Flextronics International, Ltd. 70,250
5,160 General Electric Co. 811,410
4,200 Solectron Corp. 196,613
------------
1,078,273
------------
Electronics - 8.7%
100 Agilent Technologies, Inc. 8,863(b)
1,270 Altera Corp. 129,858(b)
950 Analog Devices, Inc. 72,972
660 Broadcom Corp., Class A 113,768
6,860 Intel Corp. 869,934
2,530 JDS Uniphase Corp. 262,329
650 LSI Logic Corp. 40,625
450 PE Corp./PE Biosystems Group 27,000
550 PMC-Sierra, Inc. 105,531
50 Sequenom Industrial Genomics, Inc. 1,213(b)
3,260 Texas Instruments, Inc. 530,973
1,360 Xilinx, Inc. 99,620
------------
2,262,686
------------
Entertainment - 1.6%
3,920 Time Warner, Inc. 352,555
1,140 Viacom, Inc., Class B 61,988(b)
------------
414,543
------------
Equipment - Semiconductors - 1.4%
3,470 Applied Materials, Inc. 353,289
------------
Financial - Diversified - 3.7%
1,010 American Express Co. 151,563
6,430 Citigroup, Inc. 382,183
2,050 Federal Home Loan Mortgage Corp. 94,172
2,360 Federal National Mortgage Association 142,338
2,530 Morgan Stanley Dean Witter & Co. 194,178
------------
964,434
------------
Food & Beverage - 0.6%
3,110 Coca-Cola Co. 146,364
------------
Health Care - Diversified - 2.6%
1,000 Abbott Laboratories 38,438
2,400 Bristol-Myers Squibb Co. 125,850
2,190 Johnson & Johnson 180,675
2,850 Warner-Lambert Co. 324,366
------------
669,329
------------
Health Care - Drugs & Pharmaceuticals - 3.4%
830 Eli Lilly & Co. 64,169
850 Genentech, Inc. 99,450
2,950 Merck & Co., Inc. 205,025
10,110 Pfizer, Inc. 425,884
2,310 Schering-Plough Corp. 93,122
------------
887,650
------------
Health Care - Medical Products & Supplies - 1.5%
1,990 Guidant Corp. 114,176(b)
5,130 Medtronic, Inc. 266,439
------------
380,615
------------
Health Care Management - 0.1%
500 UnitedHealth Group, Inc. 33,375
------------
Housewares & Household Products - 1.3%
2,850 Colgate Palmolive Co. 162,806
3,110 Procter & Gamble Co. 185,434
------------
348,240
------------
Insurance - 1.4%
3,290 American International Group, Inc. 360,872
------------
Investment Banking & Brokerage - 0.9%
710 Goldman Sachs Group, Inc. 66,208
740 Lehman Brothers Holdings, Inc. 60,726
2,650 Schwab, Charles Corp. 117,925
------------
244,859
------------
Lodging & Hotels - 0.3%
3,000 Carnival Corp., Inc. 74,625
------------
Manufacturing - 3.7%
890 Corning, Inc. 175,775
1,420 Danaher Corp. 81,118
990 Honeywell International, Inc. 55,440
1,450 Illinois Tool Works, Inc. 92,891
9,290 Tyco International, Ltd. 426,759
1,890 United Technologies Corp. 117,534
------------
949,517
------------
Oil & Gas - 2.4%
1,000 Anadarko Petroleum Corp. 43,438
2,150 Baker Hughes, Inc. 68,397
4,930 Conoco, Inc., Class A 117,396
4,740 Halliburton Co. 209,449
1,600 Schlumberger, Ltd. 122,500
1,500 Transocean Sedco Forex, Inc. 70,500
------------
631,680
------------
Personal Care - 0.7%
1,400 Estee Lauder Companies, Inc., Class A 61,775
3,040 Gillette Co. 112,480
------------
174,255
------------
Restaurants - 0.7%
3,500 McDonald's Corp. 133,438
1,720 Starbucks Corp. 52,003(b)
------------
185,441
------------
Retail - 6.9%
1,460 Amazon.com, Inc. 80,574(b)
790 Best Buy Co., Inc. 63,793(b)
850 Circuit City Stores, Inc. 49,991
2,730 Costco Wholesale Corp. 147,591
3,120 Gap, Inc. 114,660
8,825 Home Depot, Inc. 494,752
1,900 Intimate Brands, Inc. 73,150
3,820 Kohl's Corp. 183,360(b)
2,160 Lowe's Companies 106,920
1,180 Target Corp. 78,544
6,990 Wal-Mart Stores, Inc. 387,071
------------
1,780,406
------------
Retail - Food & Drug - 2.2%
4,030 CVS Corp. 175,305
7,340 Kroger Co. 136,249(b)
3,630 Safeway, Inc. 160,174(b)
3,980 Walgreen Co. 111,938
------------
583,666
------------
Services - Cyclical - 0.9%
560 CMGI, Inc. 39,900
2,030 Omnicom Group, Inc. 184,857
------------
224,757
------------
Services - Technology - 0.1%
1,106 MarchFirst, Inc. 23,572(b)
------------
Telephone & Telecommunications - 4.6%
3,860 AT&T Corp. 180,214
350 AT&T Corp./Liberty Media Group 11,134(b)
1,980 Bell Atlantic Corp. 117,315
1,230 Level 3 Communications, Inc. 109,470(b)
9,550 MCI Worldcom, Inc. 433,928
1,380 NEXTEL Communications, Inc., Class A 151,024(b)
50 NEXTEL Partners, Inc., Class A 1,097(b)
960 Qwest Communications International, Inc. 41,640(b)
2,990 SBC Communications, Inc. 130,999
250 VoiceStream Wireless Corp. 24,750(b)
------------
1,201,571
------------
Utilities - 1.0%
2,760 Enron Corp. 192,338
1,700 Williams Cos., Inc. 63,431
------------
255,769
------------
Total Common Stocks (cost $22,880,072) 24,324,012
------------
Principal
Amount
------------
SHORT-TERM SECURITIES - 6.4%(a)
U.S. Government Agency
$ 1,650,000 Federal Home Loan Mortgage
Corp. Discount Notes,
5.88% Due 5/1/2000 (at amortized cost) 1,650,000
------------
Total Investments (cost $24,530,072) $ 25,974,012(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 April 30, 2000, the aggregate cost of securities for federal
income tax purposes was $24,530,072 and the net unrealized appreciation
of investments based on that cost was $1,443,940 which is comprised of
$2,447,534 aggregate gross unrealized appreciation and $1,003,594
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
April 30, 2000
(unaudited)
Shares Value
------------- --------------
<S> <C> <C>
COMMON STOCKS - 97.1%(a)
Airlines - 0.7%
507,237 Southwest Airlines Co. $ 11,000,687
--------------
Aluminum - 0.2%
54,000 Alcoa, Inc. 3,503,250
--------------
Banks - 3.4%
163,000 Bank of America Corp. 7,987,000
310,000 Bank of New York Co., Inc. 12,729,375
203,700 Chase Manhattan Corp. 14,679,131
54,000 State Street Corp. 5,231,250
304,200 U.S. Bancorporation 6,179,063
208,000 Wells Fargo & Co. 8,541,000
------------
55,346,819
--------------
Biotechnology - 1.0%
295,000 Amgen, Inc. 16,520,000
--------------
Broadcasting - 2.9%
145,000 AT&T Corp./Liberty Media Group, Class A 7,240,938(b)
206,300 CBS Corp. 12,120,125(b)
369,900 Charter Communications, Inc., Class A 5,432,906(b)
137,000 Clear Channel Communications, Inc. 9,864,000(b)
135,000 Comcast Corp., Class A 5,408,438(b)
20,450 Mediacom Communications Corp. 253,069(b)
99,900 MediaOne Group, Inc. 7,554,938(b)
--------------
47,874,414
--------------
Chemicals - 1.1%
171,300 Air Products & Chemicals, Inc. 5,321,006
119,635 E.I. du Pont de Nemours and Co. 5,675,185
163,100 Praxair, Inc. 7,247,756
--------------
18,243,947
--------------
Communications Equipment - 4.5%
72,500 General Motors Corp., Class H 6,982,656(b)
330,000 Lucent Technologies, Inc. 20,521,875
146,600 Motorola, Inc. 17,454,563
236,000 Nokia Corp., ADR 13,422,500
91,000 QUALCOMM, Inc. 9,867,813
30,500 Sycamore Networks, Inc. 2,394,250(b)
50,000 Tellabs, Inc. 2,740,625(b)
--------------
73,384,282
--------------
Computers - Hardware - 5.0%
43,000 Apple Computer 5,334,688(b)
160,000 Dell Computer Corp. 8,020,000(b)
148,500 Hewlett Packard Co. 20,047,500
212,500 International Business Machines Corp. 23,720,313
262,000 Sun Microsystems, Inc. 24,087,625
--------------
81,210,126
--------------
Computers - Networking - 5.4%
1,055,200 Cisco Systems, Inc. 73,155,038
135,000 Nortel Networks Corp. 15,288,750
--------------
88,443,788
--------------
Computers - Peripherals - 2.7%
280,600 EMC Corp. 38,985,863(b)
43,000 Lexmark International Group, Inc., Class A 5,074,000(b)
--------------
44,059,863
--------------
Computers - Software & Services - 6.0%
191,000 America Online, Inc. 11,424,188
26,000 Exodus Communications, Inc. 2,299,375
578,000 Microsoft Corp. 40,315,500(b)
405,000 Oracle Corp. 32,374,688
12,300 VeriSign, Inc. 1,714,313
42,750 Veritas Software Corp. 4,585,605
40,000 Yahoo!, Inc. 5,210,000
--------------
97,923,669
--------------
Consumer Finance - 0.5%
275,000 MBNA Corp. 7,304,688
--------------
Electrical Equipment - 4.7%
70,000 Flextronics International, Ltd. 4,917,500
365,700 General Electric Co. 57,506,325
300,000 Solectron Corp. 14,043,750
--------------
76,467,575
--------------
Electronics - 6.5%
33,100 Agilent Technologies, Inc. 2,933,488(b)
45,000 Altera Corp. 4,601,250(b)
73,000 Analog Devices, Inc. 5,607,313
20,000 Broadcom Corp., Class A 3,447,500
477,600 Intel Corp. 60,565,650
40,000 JDS Uniphase Corp. 4,147,500
8,200 Sequenom Industrial Genomics, Inc. 198,850(b)
127,900 Texas Instruments, Inc. 20,831,713
50,000 Xilinx, Inc. 3,662,500
--------------
105,995,764
--------------
Entertainment - 0.9%
168,000 Time Warner, Inc. 15,109,500
--------------
Equipment - Semiconductors - 1.6%
259,400 Applied Materials, Inc. 26,410,163
--------------
Financial - Diversified - 5.4%
70,800 American Express Co. 10,624,425
580,000 Citigroup, Inc. 34,473,750
234,000 Federal Home Loan Mortgage Corp. 10,749,375
260,400 Federal National Mortgage Association 15,705,375
200,800 Morgan Stanley Dean Witter & Co. 15,411,400
--------------
86,964,325
--------------
Food & Beverage - 2.0%
236,800 Coca-Cola Co. 11,144,400
82,000 Hershey Foods Corp. 3,720,750
459,200 PepsiCo, Inc. 16,846,900
--------------
31,712,050
--------------
Health Care - Diversified - 3.5%
132,000 Abbott Laboratories 5,073,750
217,600 American Home Products Corp. 12,226,400
190,900 Bristol-Myers Squibb Co. 10,010,319
167,000 Johnson & Johnson 13,777,500
136,500 Warner-Lambert Co. 15,535,406
--------------
56,623,375
--------------
Health Care - Drugs & Pharmaceuticals - 3.8%
87,000 Eli Lilly & Co. 6,726,188
70,400 Genentech, Inc. 8,236,800
275,000 Merck & Co., Inc. 19,112,500
437,300 Pfizer, Inc. 18,421,263
237,700 Schering-Plough Corp. 9,582,281
--------------
62,079,032
--------------
Health Care - Medical Products & Supplies - 1.5%
259,900 Becton, Dickinson & Co. 6,659,938
76,000 Guidant Corp. 4,360,500(b)
260,000 Medtronic, Inc. 13,503,750
--------------
24,524,188
--------------
Health Care Management - 0.3%
67,000 UnitedHealth Group, Inc. 4,472,250
--------------
Housewares & Household Products - 1.2%
145,200 Colgate Palmolive Co. 8,294,550
187,100 Procter & Gamble Co. 11,155,838
--------------
19,450,388
--------------
Insurance - 2.5%
288,500 American International Group, Inc. 31,644,844
104,600 CIGNA Corp. 8,341,850
--------------
39,986,694
--------------
Investment Banking & Brokerage - 1.2%
77,200 Merrill Lynch & Co., Inc. 7,869,575
252,000 Schwab, Charles Corp. 11,214,000
--------------
19,083,575
--------------
Leisure Products - 0.9%
159,800 Harley Davidson, Inc. 6,362,038
635,200 Mattel, Inc. 7,781,200
--------------
14,143,238
--------------
Lodging & Hotels - 0.4%
230,000 Carnival Corp., Inc. 5,721,250
--------------
Machinery - Diversified - 0.3%
100,000 Dover Corp. 5,081,250
--------------
Manufacturing - 3.1%
41,200 Corning, Inc. 8,137,000
237,000 Honeywell International, Inc. 13,272,000
98,300 Illinois Tool Works, Inc. 6,297,344
495,000 Tyco International, Ltd. 22,739,063
--------------
50,445,407
--------------
Oil & Gas - 7.0%
68,000 Anadarko Petroleum Corp. 2,953,750
201,000 Baker Hughes, Inc. 6,394,313
159,900 Chevron Corp. 13,611,488
340,826 Conoco, Inc., Class B 8,478,047
400,023 Exxon Mobil Corp. 31,076,787
398,200 Halliburton Co. 17,595,463
253,100 Royal Dutch Petroleum Co. 14,521,613
187,000 Schlumberger, Ltd. 14,317,188
119,777 Transocean Sedco Forex, Inc. 5,629,519
--------------
114,578,168
--------------
Personal Care - 0.4%
195,200 Gillette Co. 7,222,400
--------------
Restaurants - 0.9%
394,600 McDonald's Corp. 15,044,125
--------------
Retail - 5.1%
38,200 Best Buy Co., Inc. 3,084,650(b)
50,000 Circuit City Stores, Inc. 2,940,625
86,000 Costco Wholesale Corp. 4,649,375
178,000 Gap, Inc. 6,541,500
430,000 Home Depot, Inc. 24,106,875
192,700 Target Corp. 12,826,594
529,000 Wal-Mart Stores, Inc. 29,293,375
--------------
83,442,994
--------------
Retail - Food & Drug - 2.2%
110,000 CVS Corp. 4,785,000
372,000 Kroger Co. 6,905,250(b)
245,000 Safeway, Inc. 10,810,625(b)
463,500 Walgreen Co. 13,035,938
--------------
35,536,813
--------------
Services - Cyclical - 0.4%
76,000 Omnicom Group, Inc. 6,920,750
--------------
Services - Technology - 1.0%
155,000 Automatic Data Processing, Inc. 8,340,938
105,000 Electronic Data Systems Corp. 7,218,750
--------------
15,559,688
--------------
Telephone & Telecommunications - 5.4%
413,927 AT&T Corp. 19,325,217
31,950 AT&T Corp./Liberty Media Group 1,016,409(b)
135,000 Bell Atlantic Corp. 7,998,750
614,250 MCI Worldcom, Inc. 27,909,984
81,000 NEXTEL Communications, Inc., Class A 8,864,438(b)
8,600 NEXTEL Partners, Inc., Class A 188,663(b)
494,492 SBC Communications, Inc. 21,664,931
--------------
86,968,392
--------------
Utilities - 1.5%
154,800 Enron Corp. 10,787,625
548,400 Southern Co. 13,675,725
--------------
24,463,350
--------------
Total Common Stocks (cost $1,246,040,525) 1,578,822,237
--------------
Principal
Amount
------------
SHORT-TERM SECURITIES - 2.9%(a)
Commercial Paper
$ 17,800,000 Cargill Global Funding, 6.03% Due 5/1/2000 17,800,000
30,000,000 New Center Asset Trust, 6.0% Due 5/1/2000 30,000,000
--------------
Total Short-Term Securities (at amortized cost) 47,800,000
--------------
Total Investments (cost $1,293,840,525) $1,626,622,237(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 April 30, 2000, the aggregate cost of securities for federal
income tax purposes was $1,293,840,525 and the net unrealized
appreciation of investments based on that cost was $332,781,712 which is
comprised of $395,418,780 aggregate gross unrealized appreciation and
$62,637,068 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
April 30, 2000
(unaudited)
Shares Value
------------- ------------
<S> <C> <C>
COMMON STOCKS - 94.8%(a)
Aerospace & Defense - 0.6%
1,380 Boeing Co. $ 54,749
690 General Dynamics Corp. 40,365
------------
95,114
------------
Airlines - 0.8%
250 Delta Air Lines, Inc. 13,188
4,790 Southwest Airlines Co. 103,883
------------
117,071
------------
Aluminum - 0.5%
1,220 Alcoa, Inc. 79,148
------------
Automotive - 1.6%
680 Delphi Automotive Systems Corp. 13,005
1,990 Ford Motor Co. 108,828
1,250 General Motors Corp. 117,031
------------
238,864
------------
Banks - 5.7%
2,380 Bank of America Corp. 116,620
3,140 Bank of New York Co., Inc. 128,936
1,030 Bank One Corp. 31,415
2,610 Chase Manhattan Corp. 188,083
320 Comerica, Inc. 13,560
830 First Union Corp. 26,456
400 Firstar Corp. 9,950
2,010 FleetBoston Financial Corp. 71,229
820 Mellon Financial Corp. 26,343
540 Morgan (J.P.) and Co., Inc. 69,323
130 State Street Corp. 12,594
1,100 U.S. Bancorporation 22,344
1,040 Washington Mutual, Inc. 26,585
3,020 Wells Fargo & Co. 124,009
------------
867,447
------------
Biotechnology - 0.2%
630 Amgen, Inc. 35,280
------------
Broadcasting - 2.5%
360 AT&T Corp./Liberty Media Group, Class A 17,978(b)
640 CBS Corp. 37,600(b)
2,260 Comcast Corp., Class A 90,541(b)
2,710 Infinity Broadcasting Corp., Class A 91,971(b)
570 MediaOne Group, Inc. 43,106(b)
4,300 USA Networks, Inc. 98,900
------------
380,096
------------
Building Materials - 0.1%
840 Masco Corp. 18,848
------------
Chemicals - 1.2%
450 Air Products & Chemicals, Inc. 13,978
420 Dow Chemical Co. 47,460
1,480 E.I. du Pont de Nemours and Co. 70,208
280 PPG Industries, Inc. 15,225
390 Praxair, Inc. 17,331
680 Rohm & Haas Co. 24,225
------------
188,427
------------
Communications Equipment - 1.8%
190 General Motors Corp., Class H 18,299(b)
1,380 Lucent Technologies, Inc. 85,819
1,090 Motorola, Inc. 129,778
360 Nokia Corp., ADR 20,475
200 QUALCOMM, Inc. 21,688
70 Tellabs, Inc. 3,837(b)
------------
279,896
------------
Computers - Hardware - 4.3%
290 Apple Computer 35,978(b)
1,690 Compaq Computer Corp. 49,433
660 Dell Computer Corp. 33,083(b)
1,420 Hewlett Packard Co. 191,700
2,160 International Business Machines Corp. 241,110
1,110 Sun Microsystems, Inc. 102,051
------------
653,355
------------
Computers - Networking - 2.3%
290 3Com Corp. 11,437(b)
3,790 Cisco Systems, Inc. 262,754
700 Nortel Networks Corp. 79,275
------------
353,466
------------
Computers - Peripherals - 1.2%
1,180 EMC Corp. 163,946(b)
190 Lexmark International Group, Inc., Class A 22,420(b)
------------
186,366
------------
Computers - Software & Services - 3.2%
1,720 America Online, Inc. 102,878
770 Computer Associates International, Inc. 42,976
50 Eprise Corp. 497(b)
2,040 Microsoft Corp. 142,290(b)
2,180 Oracle Corp. 174,264
100 Saba Software, Inc. 2,844(b)
50 SINA.com 981(b)
540 Unisys Corp. 12,521(b)
------------
479,251
------------
Consumer Finance - 1.0%
1,310 Household International, Inc. 54,693
3,230 MBNA Corp. 85,797
160 Providian Financial Corp. 14,090
------------
154,580
------------
Distributors - Food & Health - 0.4%
580 Cardinal Health, Inc. 31,936
720 Sysco Corp. 27,090
------------
59,026
------------
Electrical Equipment - 4.2%
1,360 Emerson Electric Co. 74,630
1,340 Flextronics International, Ltd. 94,135
2,360 General Electric Co. 371,110
1,280 Koninklijke (Royal) Philips Electronics N.V., ADR 57,120
240 Rockwell International Corp. 9,450
540 Solectron Corp. 25,279
------------
631,724
------------
Electronics - 3.4%
2,480 Intel Corp. 314,495
170 Micron Technology, Inc. 23,673(b)
50 Silicon Laboratories, Inc. 4,350(b)
1,090 Texas Instruments, Inc. 177,534
------------
520,052
------------
Entertainment - 1.2%
2,320 Disney (Walt) Co. 100,485
790 Time Warner, Inc. 71,051
270 Viacom, Inc., Class B 14,681(b)
------------
186,217
------------
Equipment - Semiconductors - 0.7%
660 Applied Materials, Inc. 67,196
580 KLA Instruments Corp. 43,428
------------
110,624
------------
Financial - Diversified - 6.2%
630 American Express Co. 94,539
1,700 Associates First Capital Corp., Class A 37,719
6,460 Citigroup, Inc. 383,966
3,260 Federal Home Loan Mortgage Corp. 149,756
2,800 Federal National Mortgage Association 168,875
1,470 Morgan Stanley Dean Witter & Co. 112,823
------------
947,678
------------
Food & Beverage - 1.9%
780 Bestfoods 39,195
560 Coca-Cola Co. 26,355
1,010 ConAgra, Inc. 19,064
410 General Mills, Inc. 14,914
980 Heinz (H.J.) Co. 33,320
2,490 PepsiCo, Inc. 91,352
390 Quaker Oats Co. 25,423
650 Ralston-Ralston Purina Group 11,497
1,600 Sara Lee Corp. 24,000
------------
285,120
------------
Freight & Shipping - 0.3%
1,260 Burlington Northern Santa Fe, Inc. 30,398
290 FedEx Corp. 10,929(b)
------------
41,327
------------
Health Care - Diversified - 4.0%
2,330 Abbott Laboratories 89,559
2,960 American Home Products Corp. 166,315
1,900 Bristol-Myers Squibb Co. 99,631
1,400 Johnson & Johnson 115,500
1,190 Warner-Lambert Co. 135,437
------------
606,442
------------
Health Care - Drugs & Pharmaceuticals - 2.8%
460 Eli Lilly & Co. 35,564
2,160 Merck & Co., Inc. 150,120
1,640 Pfizer, Inc. 69,085
2,221 Pharmacia Corp. 110,911
1,410 Schering-Plough Corp. 56,841
------------
422,521
------------
Health Care - Medical Products & Supplies - 0.7%
810 Baxter International, Inc. 52,751
730 Becton, Dickinson & Co. 18,706
200 Guidant Corp. 11,475(b)
490 Medtronic, Inc. 25,449
------------
108,381
------------
Health Care Management - 1.2%
1,430 Columbia/HCA Healthcare Corp. 40,666
4,060 Tenet Healthcare Corp. 103,530
450 UnitedHealth Group, Inc. 30,038
------------
174,234
------------
Housewares & Household Products - 1.9%
270 Clorox Co. 9,923
1,860 Colgate Palmolive Co. 106,253
160 Energizer Holdings, Inc. 2,730(b)
1,450 Kimberly-Clark Corp. 84,191
870 Newell Rubbermaid, Inc. 21,913
1,030 Procter & Gamble Co. 61,414
------------
286,424
------------
Insurance - 3.5%
430 AFLAC, Inc. 20,989
1,310 Allstate Corp. 30,949
670 American General Corp. 37,520
2,470 American International Group, Inc. 270,928
440 Chubb Corp. 27,995
600 CIGNA Corp. 47,850
480 Lincoln National Corp. 16,710
440 Marsh & McLennan Cos., Inc. 43,368
610 The Hartford Financial Services Group, Inc. 31,834
------------
528,143
------------
Investment Banking & Brokerage - 0.8%
180 Goldman Sachs Group, Inc. 16,785
410 Merrill Lynch & Co., Inc. 41,794
1,300 Schwab, Charles Corp. 57,850
------------
116,429
------------
Investment Management - 0.2%
260 Standard & Poor's Depositary Receipts Trust 37,724
------------
Leisure Products - 0.5%
1,840 Harley Davidson, Inc. 73,255
------------
Machinery - Diversified - 1.2%
690 Caterpillar, Inc. 27,212
740 Deere & Co. 29,878
1,590 Dover Corp. 80,792
830 Ingersoll-Rand Co. 38,958
------------
176,840
------------
Manufacturing - 4.9%
1,500 Avery Dennison Corp. 98,438
240 Corning, Inc. 47,400
20 Danaher Corp. 1,143
2,288 Honeywell International, Inc. 128,128
2,030 Illinois Tool Works, Inc. 130,047
850 Minnesota Mining & Manufacturing Co. 73,525
3,890 Tyco International, Ltd. 178,697
1,350 United Technologies Corp. 83,953
------------
741,331
------------
Office Equipment & Supplies - 0.2%
750 Pitney Bowes, Inc. 30,656
------------
Oil & Gas - 6.6%
2,179 BP Amoco plc, ADR 111,119
1,060 Chevron Corp. 90,233
440 Conoco, Inc., Class A 10,478
4,886 Exxon Mobil Corp. 379,581
1,240 Grant Prideco, Inc. 23,870(b)
1,090 Halliburton Co. 48,164
1,860 Royal Dutch Petroleum Co. 106,718
1,170 Schlumberger, Ltd. 89,578
1,360 Texaco, Inc. 67,320
81 Transocean Sedco Forex, Inc. 3,807
420 Unocal Corp. 13,571
1,420 Weatherford International, Inc. 57,688(b)
------------
1,002,127
------------
Paper & Forest Products - 0.6%
370 Georgia-Pacific Corp. 13,598
1,210 International Paper Co. 44,468
510 Weyerhaeuser Co. 27,253
------------
85,319
------------
Personal Care - 0.2%
720 Gillette Co. 26,640
------------
Photography & Imaging - 0.5%
530 Eastman Kodak Co. 29,647
1,470 Xerox Corp. 38,863
------------
68,510
------------
Publishing - 0.6%
670 Gannett Co., Inc. 42,796
510 McGraw-Hill, Inc. 26,775
890 Meredith Corp. 24,753
------------
94,324
------------
Restaurants - 0.6%
1,830 McDonald's Corp. 69,769
500 Tricon Global Restaurants, Inc. 17,063(b)
------------
86,832
------------
Retail - 5.1%
1,590 Circuit City Stores, Inc. 93,512
420 Costco Wholesale Corp. 22,706
4,730 Family Dollar Stores, Inc. 90,166
1,240 Federated Department Stores 42,160(b)
470 Gap, Inc. 17,273
1,190 Home Depot, Inc. 66,714
690 Lowe's Companies 34,155
1,020 May Department Stores Co. 28,050
680 Sears, Roebuck & Co. 24,905
2,340 Target Corp. 155,756
2,020 Wal-Mart Stores, Inc. 111,858
2,030 Zale Corp. 83,738(b)
------------
770,993
------------
Retail - Food & Drug - 0.7%
1,050 Albertson's, Inc. 34,191
540 CVS Corp. 23,490
1,260 Kroger Co. 23,389(b)
460 Safeway, Inc. 20,298(b)
360 Walgreen Co. 10,125
------------
111,493
------------
Services - Cyclical - 0.2%
470 Interpublic Group of Cos., Inc. 19,270
160 Omnicom Group, Inc. 14,570
50 Universal Access, Inc. 1,025(b)
------------
34,865
------------
Services - Technology - 1.3%
770 Automatic Data Processing, Inc. 41,436
370 Computer Sciences Corp. 30,178(b)
890 Electronic Data Systems Corp. 61,188
1,330 First Data Corp. 64,754
------------
197,556
------------
Telephone & Telecommunications - 7.2%
50 AirGate PCS, Inc. 4,288(b)
700 ALLTEL Corp. 46,638
3,850 AT&T Corp. 179,747
2,280 Bell Atlantic Corp. 135,090
1,130 BellSouth Corp. 55,017
330 CenturyTel, Inc. 8,085
1,410 Cobson Communications Corp., Class A 36,131(b)
310 Global Crossing, Ltd. 9,765(b)
1,470 GTE Corp. 99,593
2,870 MCI Worldcom, Inc. 130,406
1,210 Microcell Telecommunications Corp., Class B 42,199(b)
4,120 SBC Communications, Inc. 180,508
970 Sprint Corp. (FON Group) 59,655
240 Sprint Corp. (PCS Group) 13,200
580 US West, Inc. 41,289
320 Vodafone AirTouch plc, ADR 15,040
620 Western Wireless Corp., Class A 30,806(b)
------------
1,087,457
------------
Utilities - 4.0%
2,050 Coastal Corp. 102,884
190 Columbia Energy Group 11,923
460 Dominion Resources, Inc. 20,700
890 Duke Energy Corp. 51,175
1,547 Dynegy, Inc. 101,232
380 Edison International 7,244
300 El Paso Natural Gas Co. 12,750
1,810 Enron Corp. 126,134
430 FPL Group, Inc. 19,431
270 PECO Energy Co. 11,256
590 Southern Co. 14,713
410 Texas Utilities Co. 13,812
2,130 Unicom Corp. 84,668
620 Williams Cos., Inc. 23,134
------------
601,056
------------
Total Common Stocks (cost $13,749,277) 14,378,529
------------
Principal
Amount
------------
SHORT-TERM SECURITIES - 5.2%(a)
U.S. Government Agency
$ 790,000 Federal Home Loan Mortgage
Corp. Discount Notes,
5.88% Due 5/1/2000 (at amortized cost) 790,000
------------
Total Investments (cost $14,539,277) $ 15,168,529(c)
============
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) At April 30, 2000, the aggregate cost of securities for federal
income tax purposes was $14,539,277 and the net unrealized appreciation
of investments based on that cost was $629,252 which is comprised of
$1,201,562 aggregate gross unrealized appreciation and $572,310 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 HIGH YIELD FUND
Portfolio of Investments
April 30, 2000
(unaudited)
Principal Maturity
Amount Rate Date Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CORPORATE BONDS - 82.2%(a)
Aerospace & Defense - 0.3%
$ 3,200,000 Condor Systems, Inc., Notes 11.875% 5/1/2009 $ 1,560,000
2,000,000 Pentacon, Inc., Sr. Subordinated Notes, Series B 12.25% 4/1/2009 1,010,000
------------
2,570,000
------------
Airlines - 0.7%
3,000,000 Northwest Airlines, Corp., Notes 7.625% 3/15/2005 2,565,000
2,000,000 Northwest Airlines, Corp., Notes 8.375% 3/15/2004 1,826,976
2,000,000 U.S. Air, Inc., Sr. Secured Equipment Trust, Series 1993-A-3 10.375% 3/1/2013 1,632,528
------------
6,024,504
------------
Automotive - 1.1%
4,000,000 Dura Operating Corp., Sr. Subordinated Notes, Series B 9.0% 5/1/2009 3,580,000
4,000,000 Hayes Lemmerz International, Inc., Sr. Subordinated Notes, Series B 8.25% 12/15/2008 3,450,000
3,500,000 Venture Holdings Trust, Sr. Subordinated Notes 12.0% 6/1/2009 2,607,500
------------
9,637,500
------------
Banks - 1.4%
2,450,000 Chevy Chase Savings Bank, Subordinated Debentures 9.25% 12/1/2005 2,333,625
5,000,000 GS Escrow Corp., Sr. Notes 7.125% 8/1/2005 4,391,455
5,000,000 Sovereign Bancorp, Inc., Sr. Notes 10.5% 11/15/2006 4,962,500
------------
11,687,580
------------
Broadcasting & Media - 12.8%
3,100,000 Alliance Atlantis Communications, Inc., Sr. Subordinated Notes 13.0% 12/15/2009 3,119,375
1,788,100 AMFM Operating, Inc., Payment-In-Kind Debentures 12.625% 10/31/2006 2,056,315
2,400,000 Australis Holdings Pty., Ltd., Sr. Discount Notes Zero Coupon 11/1/2002 24,000(c)
12,155,970 Australis Media, Ltd., Payment-In-Kind Sr. Discount Notes Zero Coupon 5/15/2003 182,340(c)
8,500,000 Avalon Cable Holdings, Sr. Discount Notes Zero Coupon 12/1/2008 5,567,500
2,650,000 Cable Satisfaction International, Unit Security 12.75% 3/1/2010 2,491,000
1,500,000 Chancellor Media Corp., Sr. Notes 8.0% 11/1/2008 1,498,125
1,400,000 Chancellor Media Corp., Sr. Subordinated Notes, Series B 8.75% 6/15/2007 1,407,000
2,400,000 Chancellor Media Corp., Sr. Subordinated Notes, Series B 8.125% 12/15/2007 2,403,000
2,200,000 Charter Communication Holdings, Sr. Notes 8.25% 4/1/2007 1,969,000
3,500,000 Charter Communications, Inc., Sr. Discount Notes Zero Coupon 1/15/2010 1,933,750
4,800,000 Charter Communications, Inc., Sr. Notes 10.0% 4/1/2009 4,644,000
2,000,000 CSC Holdings, Inc., Sr. Notes 7.875% 12/15/2007 1,881,908
4,000,000 Diamond Cable Communications plc, Sr. Discount Notes (USD) Zero Coupon 12/15/2005 3,780,000
1,600,000 Diamond Cable Communications plc, Sr. Discount Notes (USD) Zero Coupon 2/15/2007 1,224,000
8,000,000 DIVA Systems Corp., Sr. Discount Notes, Series B Zero Coupon 3/1/2008 4,440,000
6,600,000 EchoStar DBS Corp., Sr. Notes 9.375% 2/1/2009 6,435,000
5,000,000 Grupo Televisa S.A., Sr. Notes (USD) 11.875% 5/15/2006 5,962,500
2,000,000 Insight Midwest, Sr. Notes 9.75% 10/1/2009 2,035,000
5,600,000 NTL Communications Corp., Sr. Notes, Series B 11.5% 10/1/2008 5,712,000
3,000,000 NTL, Inc., Convertible Subordinated Notes 5.75% 12/15/2009 2,651,250
1,200,000 NTL, Inc., Sr. Notes, Series B 10.0% 2/15/2007 1,170,000
4,000,000 Olympus Communications, LP, Sr. Notes 10.625% 11/15/2006 4,080,000
2,500,000 OnePoint Communications Corp., Sr. Notes, Series B 14.5% 6/1/2008 1,637,500
2,800,000 ONO Finance plc, Notes (USD) 13.0% 5/1/2009 2,870,000
2,000,000 Optel, Inc., Sr. Notes, Series B 11.5% 7/1/2008 1,590,000(c)
4,600,000 RCN Corp., Sr. Discount Notes Zero Coupon 10/15/2007 2,955,500
5,500,000 Renaissance Media Group, LLC, Sr. Discount Notes Zero Coupon 4/15/2008 3,740,000
2,800,000 Rogers Cablesystems, Ltd., Sr. Secured Second Priority Notes 9.625% 8/1/2002 2,842,000
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 3,600,000
3,500,000 Supercanal Holding S.A., Sr. Notes (USD) 11.5% 5/15/2005 1,767,500(c)
3,400,000 Telewest Communications plc, Sr. Discount Notes (USD) Zero Coupon 2/1/2010 1,912,500
2,800,000 Telewest Communications plc, Sr. Discount Notes (USD) Zero Coupon 4/15/2009 1,603,000
2,500,000 UIH Australia/Pacific, Inc., Sr. Discount Notes, Series B Zero Coupon 5/15/2006 2,262,500
7,200,000 United International Holdings, Inc., Sr. Notes, Series B Zero Coupon 2/15/2008 4,716,000
3,100,000 United Pan-Europe Communications N.V., Sr. Discount Notes (USD) Zero Coupon 2/1/2010 1,503,500
5,150,000 United Pan-Europe Communications N.V., Sr. Discount Notes (USD) Zero Coupon 11/1/2009 2,549,250
3,000,000 XM Satellite Radio, Inc., Unit Security 14.0% 3/15/2010 2,715,000
5,250,000 Young Broadcasting, Inc., Sr. Subordinated Notes 11.75% 11/15/2004 5,289,375
------------
110,430,313
------------
Building Materials - 0.9%
4,000,000 CEMEX S.A. de C.V., Notes (USD) 12.75% 7/15/2006 4,470,000
2,500,000 Formica Corp., Sr. Subordinated Notes, Series B 10.875% 3/1/2009 2,162,500
1,200,000 Nortek, Inc., Sr. Notes, Series B 8.875% 8/1/2008 1,089,000
------------
7,721,500
------------
Chemicals - 1.0%
3,200,000 Avecia Group plc, Sr. Notes (USD) 11.0% 7/1/2009 3,264,000
3,000,000 Sovereign Specialty Chemicals, Inc., Sr. Subordinated Notes 11.875% 3/15/2010 3,045,000
2,000,000 Sterling Chemicals, Inc., Sr. Secured Notes, Series B 12.375% 7/15/2006 2,090,000
------------
8,399,000
------------
Conglomerates - 0.2%
2,000,000 Jordan Industries, Inc., Sr. Notes, Series D 10.375% 8/1/2007 1,870,000
------------
Consumer Products - 0.6%
2,000,000 AMM Holdings, Inc., Sr. Discount Notes Zero Coupon 7/1/2009 212,500
200,000 Holmes Products Corp., Sr. Subordinated Notes, Series B 9.875% 11/15/2007 124,000
2,800,000 Holmes Products Corp., Sr. Subordinated Notes, Series D 9.875% 11/15/2007 1,736,000
2,000,000 Moll Industries, Inc., Sr. Subordinated Notes 10.5% 7/1/2008 650,000
2,700,000 Winsloew Furniture, Inc., Sr. Subordinated Notes, Series B 12.75% 8/15/2007 2,484,000
------------
5,206,500
------------
Environmental - 0.7%
1,200,000 Allied Waste, North America, Sr. Notes, Series B 7.625% 1/1/2006 894,000
1,800,000 IT Group, Inc., Sr. Subordinated Notes, Series B 11.25% 4/1/2009 1,629,000
3,700,000 Norcal Waste Systems, Inc., Sr. Notes, Series B 13.5% 11/15/2005 3,866,500
------------
6,389,500
------------
Finance - Consumer - 0.9%
5,600,000 Altiva Financial Corp., Subordinated Notes 12.5% 12/1/2001 1,148,000(c)
4,000,000 Dollar Financial Group, Inc., Sr. Notes, Series A 10.875% 11/15/2006 3,980,000
2,598,000 HomeSide, Inc., Sr. Notes, Series B 11.25% 5/15/2003 2,841,563
3,650,000 United Companies Financial Corp., Subordinated Notes 8.375% 7/1/2005 109,500(c)
------------
8,079,063
------------
Finance - Other - 0.8%
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 4,575,000
------------
6,955,000
------------
Food & Beverage - 0.9%
4,600,000 Ameriserve Food Distribution, Inc., Sr. Notes 8.875% 10/15/2006 161,000(c)
3,200,000 Fleming Companies, Inc., Sr. Subordinated Notes, Series B 10.625% 7/31/2007 2,688,000
3,600,000 Grupo Azucarero Mexico, Sr. Notes (USD) 11.5% 1/15/2005 1,485,000(c)
5,500,000 Imperial Holly Corp., Sr. Subordinated Notes 8.75% 12/15/2007 1,127,500
2,250,000 Packaged Ice, Inc., Sr. Notes, Series B 9.75% 2/1/2005 1,833,750
------------
7,295,250
------------
Health Care - Drugs & Pharmaceuticals - 0.2%
1,500,000 Bio-Rad Laboratories, Inc., Sr. Subordinated Notes 11.625% 2/15/2009 1,537,500
------------
Health Care - Medical Products & Supplies - 0.7%
3,000,000 Fisher Scientific International, Inc., Sr. Subordinated Notes 9.0% 2/1/2008 2,775,000
3,000,000 Fisher Scientific International, Inc., Sr. Subordinated Notes 9.0% 2/1/2008 2,775,000
------------
5,550,000
------------
Health Care Management - 1.6%
4,800,000 Concentra Operating Corp., Sr. Subordinated Notes 13.0% 8/15/2009 3,624,000
4,000,000 Health Insurance Plan of Greater New York, Bonds, Series C 11.25% 7/1/2010 3,611,800
1,900,000 Integrated Health Services, Inc., Convertible Sr. Subordinated Debentures 5.75% 1/1/2001 594(c)
2,500,000 Integrated Health Services, Inc., Sr. Subordinated Notes, Series A 9.25% 1/15/2008 62,500(c)
2,200,000 Quorum Health Group, Inc., Sr. Subordinated Notes 8.75% 11/1/2005 2,035,000
2,000,000 Tenet Healthcare Corp., Sr. Subordinated Notes, Series B 8.125% 12/1/2008 1,870,000
2,200,000 Triad Hospital Holdings, Inc., Sr. Subordinated Notes, Series B 11.0% 5/15/2009 2,299,000
------------
13,502,894
------------
Health Care Services - 1.9%
2,800,000 Dynacare, Inc., Sr. Notes 10.75% 1/15/2006 2,534,000
4,500,000 Hanger Orthopedic Group, Inc., Sr. Secured Notes 11.25% 6/15/2009 3,577,500
5,000,000 Insight Health Services Corp., Sr. Subordinated Notes, Series B 9.625% 6/15/2008 4,325,000
4,000,000 MedPartners, Inc., Sr. Notes 7.375% 10/1/2006 3,260,000
2,000,000 Unilab Corp, Sr. Subordinated Notes Kelso & Company previously 12.75% 10/1/2009 2,010,000
2,000,000 Universal Hospital Services, Inc., Sr. Notes 10.25% 3/1/2008 770,000
------------
16,476,500
------------
Homebuilding - 0.8%
2,600,000 Fortress (The) Group, Inc., Sr. Notes 13.75% 5/15/2003 1,521,000
2,500,000 Lennar Corp., Sr. Notes 9.95% 5/1/2010 2,307,825
4,000,000 Peters (J.M.) Co., Inc., Sr. Notes 12.75% 5/1/2002 3,420,000
------------
7,248,825
------------
Insurance - 0.5%
5,000,000 Symons International Group Capital Trust I, Bond 9.5% 8/15/2027 1,000,000
2,500,000 Veritas Capital Trust, Trust Preferred Securities 10.0% 1/1/2028 1,000,000
2,880,000 Veritas Holdings GMBH, Sr. Notes 9.625% 12/15/2003 2,700,000
------------
4,700,000
------------
Leisure & Entertainment - 0.2%
2,777,000 AMF Bowling Worldwide, Inc., Sr. Subordinated Discount Notes, Series B Zero Coupon 3/15/2006 652,595
4,000,000 Production Resource Group, LLC, Sr. Subordinated Notes 11.5% 1/15/2008 1,420,000
------------
2,072,595
------------
Lodging & Hotels - 0.4%
2,700,000 CapStar Hotel Company, Convertible Subordinated Notes
(Meristar Hospitality Corp.) 4.75% 10/15/2004 1,998,000
3,400,000 Silverleaf Resorts, Inc., Sr. Subordinated Notes 10.5% 4/1/2008 1,207,000
------------
3,205,000
------------
Machinery & Equipment - 3.1%
4,000,000 Anthony Crane Rentals, LP, Sr. Discount Debentures, Series B Zero Coupon 8/1/2009 1,700,000
2,800,000 Blount, Inc., Sr. Subordininated Notes 13.0% 8/15/2009 2,758,000
4,100,000 Budget Group, Inc., Sr. Notes 9.125% 4/1/2006 3,341,500
2,000,000 Eagle-Picher, Inc., Sr. Subordinated Notes 9.375% 3/1/2008 1,700,000
4,000,000 Motor Coach Industries International, Inc., Sr. Subordinated Notes 11.25% 5/1/2009 3,880,000
4,800,000 Navistar Financial Corp., Sr. Subordinated Notes, Series B 9.0% 6/1/2002 4,824,000
2,000,000 Navistar International Corp., Sr. Notes, Series B 7.0% 2/1/2003 1,930,000
1,600,000 Navistar International Corp., Sr. Subordinated Notes, Series B 8.0% 2/1/2008 1,512,000
2,000,000 United Rentals, Inc., Notes, Series B 9.0% 4/1/2009 1,780,000
4,000,000 United Rentals, Inc., Sr. Subordinated Notes, Series B 9.25% 1/15/2009 3,630,000
------------
27,055,500
------------
Metals & Mining - 0.4%
1,600,000 Altos Hornos de Mexico, Bonds, Series B (USD) 11.875% 4/30/2004 756,000(c)
3,000,000 Echo Bay Mines, Bonds Zero Coupon 4/1/2027 1,905,000
2,000,000 Republic Technologies International, Inc./RTI Capital, Sr. Notes 13.75% 7/15/2009 470,000(c)
------------
3,131,000
------------
Oil & Gas - 1.4%
5,000,000 Belden & Blake Corp., Sr. Subordinated Notes, Series B 9.875% 6/15/2007 2,900,000
6,000,000 National Energy Group, Inc., Sr. Notes, Series D 10.75% 11/1/2006 3,360,000(c)
2,000,000 Pride Petroleum Services, Inc., Sr. Notes 9.375% 5/1/2007 1,972,500
3,000,000 RAM Energy, Inc., Sr. Notes 11.5% 2/15/2008 1,492,500
2,000,000 RBF Finance Co., Sr. Notes 11.375% 3/15/2009 2,140,000
------------
11,865,000
------------
Packaging & Containers - 2.2%
5,544,495 BPC Holding Corp., Sr. Secured Notes, Series B 12.50% 6/15/2006 4,962,323
2,400,000 Consolidated Container Co., LLC, Sr. Subordinated Notes 10.125% 7/15/2009 2,382,000
3,600,000 Fonda Group, Inc., Sr. Subordinated Notes, Series B 9.5% 3/1/2007 2,898,000
3,600,000 Radnor Holdings Corp., Sr. Notes 10.0% 12/1/2003 3,186,000
3,000,000 SF Holdings Group, Inc., Sr. Discount Notes, Series B Zero Coupon 3/15/2008 1,612,500
2,191,000 Silgan Holdings, Inc., Subordinated Debentures 13.25% 7/15/2006 2,432,010
1,800,000 Vicap, S.A. de C.V., Guaranteed Sr. Notes (USD) 11.375% 5/15/2007 1,683,000
------------
19,155,833
------------
Paper & Forest Products - 0.5%
2,400,000 APP Finance (II) Mauritius, Ltd., Guaranteed Preferred Securities,
Series B (USD) 12.0% 2/15/2004 1,326,000
2,000,000 FSW International Finance Co. B.V., Guaranteed Secured Notes (USD) 12.50% 11/1/2006 565,000(c)
1,200,000 Indah Kiat Finance Mauritius, Guaranteed Sr. Notes (USD) 10.0% 7/1/2007 795,000
2,400,000 Pindo Deli Finance Mauritius, Sr. Notes (USD) 10.25% 10/1/2002 1,938,000
------------
4,624,000
------------
Publishing - 1.9%
3,040,000 Dimac Corp., Sr. Subordinated Notes 12.5% 10/1/2008 45,600(c)
4,000,000 Mail-Well Corp., Bonds, Series B 8.75% 12/15/2008 3,500,000
5,700,000 MDC Communications Corp., Sr. Subordinated Notes 10.5% 12/1/2006 5,386,500
3,000,000 PRIMEDIA, Inc., Sr. Notes 10.25% 6/1/2004 3,045,000
4,150,000 Sullivan Graphics, Inc., Sr. Subordinated Notes 12.75% 8/1/2005 4,233,000
------------
16,210,100
------------
Retail - 0.9%
2,000,000 County Seat Stores, Inc., Units 12.75% 11/1/2004 30,000(c)
2,250,000 F & M Distributors, Inc., Sr. Subordinated Notes 11.50% 4/15/2003 28,125(c)
3,000,000 Group1 Automotive, Inc., Sr. Subordinated Notes 10.875% 3/1/2009 2,655,000
4,000,000 Hollywood Entertainment Corp., Sr. Subordinated Notes, Series B 10.625% 8/15/2004 3,520,000
2,000,000 J. Crew Group, Sr. Discount Debentures, Series B Zero Coupon 10/15/2008 1,110,000
------------
7,343,125
------------
Retail - Food - 0.9%
5,150,000 Jitney-Jungle Stores of America, Sr. Notes 12.0% 3/1/2006 952,750(c)
4,603,050 Smith's Food & Drug Centers, Pass Through Certificates 8.64% 7/2/2012 4,736,331
2,000,000 Stater Brothers Holdings, Sr. Notes 10.75% 8/15/2006 1,995,000
------------
7,684,081
------------
Services - 0.7%
2,800,000 Building One Services Corp., Sr. Subordinated Notes 10.5% 5/1/2009 2,555,000
2,000,000 Discovery Zone, Inc., Sr. Notes 13.5% 8/1/2002 12,500(c)
500,000 Discovery Zone, Inc., Sr. Notes 13.5% 5/1/2002 7,500(c)
4,000,000 KinderCare Learning Centers, Inc., Sr. Subordinated Notes 9.5% 2/15/2009 3,630,000
------------
6,205,000
------------
Technology - Hardware - 2.2%
3,000,000 Aavid Thermal Technologies, Inc., Sr. Subordinated Notes 12.75% 2/1/2007 2,865,000
2,750,000 ASAT Finance, LLC, Sr. Notes 12.5% 11/1/2006 2,915,000
1,700,000 Dictaphone Corp., Sr. Subordinated Notes 11.75% 8/1/2005 1,717,000
3,350,000 Integrated Circuit Systems, Inc., Sr. Subordinated Notes 11.5% 5/15/2009 3,701,750
1,755,000 Intersil Corp., Sr. Subordinated Notes 13.25% 8/15/2009 1,991,925
1,600,000 MCMS, Inc., Sr. Subordinated Notes, Series B 9.75% 3/1/2008 808,000
2,800,000 MCMS, Inc., Subordinated Notes, Series B (Variable rate) 10.948% 3/1/2008 1,414,000
3,200,000 Unisys Corp., Sr. Notes 11.75% 10/15/2004 3,472,000
------------
18,884,675
------------
Technology - Services - 0.4%
2,400,000 Protection One Alarm Monitoring, Inc., Convertible
Sr. Subordinated Notes (USD) 6.75% 9/15/2003 1,266,000
2,550,000 PTC International Finance B.V., Sr. Secured Notes (USD) Zero Coupon 7/1/2007 1,816,875
------------
3,082,875
------------
Telecommunications - Data/Internet - 5.9%
1,500,000 Advanced Radio Telecom Corp., Sr. Notes 14.00% 2/15/2007 1,449,375
4,000,000 Convergent Communications, Inc., Sr. B Notes 13.0% 4/1/2008 2,820,000
4,900,000 Covad Communications Group, Inc., Sr. Discount Notes, Series B Zero Coupon 3/15/2008 3,013,500
1,500,000 Covad Communications Group, Inc., Sr. Notes 12.0% 2/15/2010 1,417,500
2,500,000 Cybernet Internet Services International, Sr. Notes 14.0% 7/1/2009 1,937,500
4,000,000 Exodus Communications, Inc., Sr. Notes 11.25% 7/1/2008 4,070,000
6,900,000 FirstWorld Communications, Inc., Sr. Discount Notes Zero Coupon 4/15/2008 3,139,500
3,500,000 Globix Corp., Sr. Notes 12.5% 2/1/2010 3,097,500
3,350,000 NorthPoint Communications Group, Notes 12.875% 2/15/2010 2,998,250
1,600,000 PSINet, Inc., Sr. Notes 10.5% 12/1/2006 1,412,000
4,000,000 PSINet, Inc., Sr. Notes, Series B 10.0% 2/15/2005 3,560,000
5,800,000 Rhythms NetConnections, Inc., Sr. Discount Notes, Series B Zero Coupon 5/15/2008 2,871,000
1,900,000 Rhythms NetConnections, Inc., Sr. Notes 14.0% 2/15/2010 1,691,000
2,600,000 Rhythms NetConnections, Inc., Sr. Notes 12.75% 4/15/2009 2,210,000
6,500,000 Splitrock Services, Inc., Notes, Series B 11.75% 7/15/2008 6,922,500
2,000,000 Verio, Inc., Sr. Notes 11.25% 12/1/2008 1,980,000
2,000,000 Verio, Inc., Sr. Notes 10.625% 11/15/2009 1,925,000
8,400,000 Wam!Net, Inc., Sr. Discount Notes, Series B 13.25% 3/1/2005 4,662,000
------------
51,176,625
------------
Telecommunications - Wireless - 11.4%
3,600,000 Airgate PCS, Inc., Sr. Subordinated Notes Zero Coupon 10/1/2009 2,115,000
7,125,000 Alamosa PCS Holdings, Inc., Sr. Discount Notes Zero Coupon 2/15/2010 3,740,625
3,500,000 American Mobile Satellite Corp., Sr. Notes, Series B 12.25% 4/1/2008 2,572,500
1,200,000 Arch Communications Group, Inc., Sr. Notes 13.75% 4/15/2008 1,008,000
2,000,000 At Track Communications, Inc., Sr. Notes, Series B 13.75% 9/15/2005 1,090,000
3,600,000 Centennial Cellular Operating Co., Sr. Subordinated Notes 10.75% 12/15/2008 3,600,000
4,000,000 Clearnet Communications, Inc., Sr. Discount Notes Zero Coupon 12/15/2005 4,080,000
3,600,000 Crown Castle International Corp., Sr. Discount Notes Zero Coupon 5/15/2011 2,178,000
2,000,000 Crown Castle International Corp., Sr. Notes 9.5% 8/1/2011 1,920,000
5,000,000 Dolphin Telecom plc, Sr. Discount Notes (USD) Zero Coupon 6/1/2008 1,625,000
1,800,000 ICO Global Communications, Units 15.0% 8/1/2005 1,053,000(c)
2,800,000 Iridium LLC/Capital Corp., Sr. Notes, Series A 13.0% 7/15/2005 91,000(c)
3,150,000 Iridium LLC/Capital Corp., Sr. Notes, Series B 14.0% 7/15/2005 102,375(c)
800,000 Iridium LLC/Capital Corp., Sr. Notes, Series C 11.25% 7/15/2005 26,000(c)
8,400,000 McCaw International, Ltd., Sr. Discount Notes Zero Coupon 4/15/2007 6,174,000
3,800,000 Metrocall, Inc., Sr. Subordinated Notes 11.0% 9/15/2008 3,154,000
4,800,000 Microcell Telecommunications, Inc., Sr. Discount Notes Zero Coupon 6/1/2006 4,356,000
8,000,000 Millicom International Cellular, Sr. Discount Notes Zero Coupon 6/1/2006 6,760,000
2,000,000 Nextel Communications, Inc., Sr. Discount Notes Zero Coupon 10/31/2007 1,445,000
10,500,000 Nextel Communications, Inc., Sr. Notes 9.375% 11/15/2009 10,080,000
2,300,000 Nextel Partners, Inc., Sr. Notes 11.0% 3/15/2010 2,265,500
8,700,000 Orion Network Systems, Inc., Sr. Discount Notes Zero Coupon 1/15/2007 3,349,500
4,700,000 Orion Network Systems, Inc., Sr. Notes 11.25% 1/15/2007 3,172,500
5,000,000 PageMart Nationwide, Inc., Sr. Discount Exchange Notes 15.0% 2/1/2005 5,025,000
2,400,000 Pinnacle Holdings, Inc., Sr. Discount Notes Zero Coupon 3/15/2008 1,596,000
1,950,000 Price Communications Wireless, Inc., Sr. Subordinated Notes 11.75% 7/15/2007 2,115,750
600,000 PTC International Finance II S.A., Sr. Subordinated Notes (USD) 11.25% 12/1/2009 627,000
6,600,000 SpectraSite Holdings, Inc., Sr. Discount Notes Zero Coupon 4/15/2009 3,663,000
4,100,000 SpectraSite Holdings, Inc., Sr. Discount Notes Zero Coupon 3/15/2010 2,142,250
2,000,000 Telesystem International Wireless, Inc., Sr. Discount Notes, Series B Zero Coupon 6/30/2007 1,270,000
480,118 Teletrac, Inc., Notes 9.0% 1/1/2004 304,875
28,807 Teletrac, Inc., Payment-In-Kind Notes 12.0% 10/1/2004 18,436
113,649 Teletrac, Inc., Sr. Secured Notes 10.0% 9/29/2000 119,900
4,000,000 Tritel PCS, Inc., Sr. Subordinated Notes Zero Coupon 5/15/2009 2,660,000
3,700,000 Ubqitel Operating Co., Unit Security Zero Coupon 4/15/2010 2,146,000
6,000,000 UNIFI Communications, Inc., Sr. Notes 14.0% 3/1/2004 36,000(c)
3,100,000 USA Mobile Communications, Inc., Sr. Notes 14.0% 11/1/2004 2,914,000
2,500,000 VIALOG Corp., Sr. Notes, Series B 12.75% 11/15/2001 2,037,500
3,200,000 Voicestream Wireless Corp., Sr. Notes 10.375% 11/15/2009 3,264,000
5,000,000 Weblink Wireless, Inc., Sr. Subordinated Discount Notes Zero Coupon 2/1/2008 2,275,000
------------
98,172,711
------------
Telecommunications - Wireline - 16.2%
3,000,000 360Networks, Inc., Sr. Notes 13.0% 5/1/2008 2,962,500
2,000,000 Alestra S. de R.L. de C.V., Sr. Notes (USD) 12.625% 5/15/2009 1,945,000
2,000,000 Alestra S. de R.L. de C.V., Sr. Notes (USD) 12.125% 5/15/2006 1,955,000
3,200,000 Allegiance Telecom, Inc., Sr. Discount Notes, Series B Zero Coupon 2/15/2008 2,272,000
2,000,000 Birch Telecom, Inc., Sr. Notes 14.0% 6/15/2008 2,012,500
3,150,000 Call-Net Enterprises, Inc., Sr. Discount Notes Zero Coupon 8/15/2007 1,496,250
3,000,000 Call-Net Enterprises, Inc., Sr. Notes 9.375% 5/15/2009 2,055,000
2,000,000 CapRock Communications Corp., Sr. Notes 11.5% 5/1/2009 1,880,000
1,000,000 CapRock Communications Corp., Sr. Notes, Series B 12.0% 7/15/2008 967,500
2,000,000 Colo.com, Unit Security 13.875% 3/15/2010 2,050,000
2,900,000 Completel Europe N.V., Sr. Discount Notes, Series B (USD) Zero Coupon 2/15/2009 1,464,500
6,500,000 DTI Holdings, Inc., Sr. Discount Notes, Series B Zero Coupon 3/1/2008 2,762,500
2,800,000 Energis plc, Sr. Unsubordinated Notes (USD) 9.75% 6/15/2009 2,786,000
5,150,000 Esprit Telecom Group plc, Sr. Notes (USD) 11.5% 12/15/2007 4,506,250
800,000 Focal Communications Corp., Sr. Discount Notes, Series B Zero Coupon 2/15/2008 524,000
2,700,000 Focal Communications Corp., Sr. Notes 11.875% 1/15/2010 2,716,875
1,200,000 Global TeleSystems Group, Inc., Sr. Notes 9.875% 2/15/2005 936,000
5,300,000 GST Equipment Funding, Inc., Sr. Secured Notes 13.25% 5/1/2007 2,941,500(c)
1,000,000 GST Telecommunications, Inc., Sr. Discount Notes Zero Coupon 12/15/2005 650,000(c)
7,500,000 GT Group Telecom, Inc., Unit Security Zero Coupon 2/1/2010 4,050,000
1,200,000 Hyperion Telecommunications, Inc., Sr. Discount Notes, Series B Zero Coupon 4/15/2003 1,119,000
2,000,000 Hyperion Telecommunications, Inc., Sr. Notes, Series B 12.25% 9/1/2004 2,085,000
1,900,000 IMPSAT Fiber Networks, Inc., Sr. Notes 13.75% 2/15/2005 1,767,000
3,400,000 IntelCom Group (U.S.A.), Inc., Sr. Discount Notes Zero Coupon 5/1/2006 2,737,000
4,750,000 Intermedia Communications, Inc., Sr. Discount Notes, Series B Zero Coupon 3/1/2009 2,873,750
1,200,000 Intermedia Communications, Inc., Sr. Notes 8.6% 6/1/2008 1,098,000
3,100,000 Intermedia Communications, Inc., Sr. Notes, Series B 8.5% 1/15/2008 2,836,500
2,800,000 Ionica plc, Sr. Notes (USD) 13.5% 8/15/2006 56,000(c)
1,900,000 Jazztel plc, Sr. Notes (USD) 14.0% 4/1/2009 1,957,000
6,000,000 Level 3 Communications, Inc., Sr. Discount Notes Zero Coupon 12/1/2008 3,450,000
1,500,000 Level 3 Communications, Inc., Sr. Discount Notes Zero Coupon 3/15/2010 783,750
5,000,000 Logix Communications Enterprises, Inc., Sr. Notes 12.25% 6/15/2008 2,225,000
3,800,000 Madison River Capital, Sr. Notes 13.25% 3/1/2010 3,591,000
1,600,000 Metromedia Fiber Network, Inc., Sr. Notes 10.0% 12/15/2009 1,532,000
2,800,000 Metromedia Fiber Network, Inc., Sr. Notes, Series B 10.0% 11/15/2008 2,674,000
4,900,000 MGC Communications, Inc., Sr. Notes 13.0% 4/1/2010 4,532,500
1,300,000 MJD Communications, Inc., Notes, Series B (Variable Rate) 10.321% 5/1/2008 1,253,408
3,000,000 Netia Holdings B.V., Sr. Discount Notes, Series B (USD) Zero Coupon 11/1/2007 2,122,500
1,600,000 NEXTLINK Communications, Inc., Sr. Notes 9.625% 10/1/2007 1,504,000
3,200,000 NEXTLINK Communications, LLC, Sr. Notes 12.5% 4/15/2006 3,360,000
5,000,000 Northeast Optic Network, Inc., Sr. Notes 12.75% 8/15/2008 4,875,000
5,000,000 Pathnet, Inc., Sr. Notes 12.25% 4/15/2008 3,325,000
5,000,000 Poland Telecom Finance B.V., Sr. Notes, Series B (USD) 14.0% 12/1/2007 1,375,000(c)
4,000,000 Primus Telecommunications Group, Inc., Sr. Notes 11.25% 1/15/2009 3,630,000
3,600,000 Primus Telecommunications Group, Inc., Sr. Notes 11.75% 8/1/2004 3,384,000
5,700,000 RSL Communications plc, Sr. Notes (USD) 12.875% 3/1/2010 5,472,000
1,200,000 RSL Communications plc, Notes (USD) 9.875% 11/15/2009 942,000
2,000,000 Startec Global Communications, Inc., Sr. Notes 12.0% 5/15/2008 1,630,000
1,900,000 Telegroup, Inc., Sr. Discount Notes Zero Coupon 11/1/2004 1,035,500(c)
4,000,000 Teligent, Inc., Sr. Discount Notes, Series B Zero Coupon 3/1/2008 2,100,000
3,200,000 Teligent, Inc., Sr. Notes 11.5% 12/1/2007 2,768,000
5,050,000 US Unwired, Inc., Sr. Discount Notes Zero Coupon 11/1/2009 2,853,250
6,000,000 USN Communications, Inc., Sr. Discount Notes, Series B Zero Coupon 8/15/2004 480,000(c)
2,800,000 VersaTel Telecom B.V., Sr. Notes (USD) 13.25% 5/15/2008 2,856,000
1,200,000 Versatel Telecom International N.V., Sr. Notes (USD) 11.875% 7/15/2009 1,182,000
6,500,000 Viatel, Inc., Sr. Discount Notes Zero Coupon 4/15/2008 3,640,000
3,900,000 Williams Communications Group, Sr. Notes 10.875% 10/1/2009 3,939,000
4,000,000 WinStar Communications, Inc., Sr. Notes 12.5% 4/15/2008 3,860,000
2,000,000 Worldwide Fiber, Inc., Sr. Notes 12.5% 12/15/2005 1,990,000
2,100,000 Worldwide Fiber, Inc., Sr. Notes 12.0% 8/1/2009 1,953,000
------------
139,780,533
------------
Textiles & Apparel - 0.9%
3,150,000 CMI Industries, Inc., Sr. Subordinated Notes 9.5% 10/1/2003 1,882,125
4,000,000 Dan River, Inc., Sr. Subordinated Notes 10.125% 12/15/2003 3,760,000
2,400,000 Perry Ellis International, Inc., Sr. Subordinated Notes, Series B 12.25% 4/1/2006 2,280,000
------------
7,922,125
------------
Transportation - 1.1%
2,200,000 Allied Holdings, Inc., Sr. Notes, Series B 8.625% 10/1/2007 1,963,500
3,600,000 Equimar Shipholdings, Ltd., First Priority Mtg 9.875% 7/1/2007 1,602,000
2,000,000 Transportacion Maritima, Sr. Notes (USD) 10.0% 11/15/2006 1,655,000
5,000,000 Windsor Petroleum, Notes 7.84% 1/15/2021 4,275,000
------------
9,495,500
------------
Utilities - 3.5%
2,900,000 Azurix Corp., Sr. Notes 10.75% 2/15/2010 2,929,000
800,000 CMS Energy Corp., Sr. Unsecured Notes 7.0% 1/15/2005 724,801
2,000,000 CMS EnergyCorp./Atlantic Methanol Capital Co., Sr. Secured Notes, Series A 10.875% 12/15/2004 1,935,000
3,200,000 ESI Tractebel Acquisition Corp., Bonds 7.99% 12/30/2011 2,721,357
1,750,000 Midland Cogen Venture Fund II, Secured Lease Obligation Bonds, Series A 11.75% 7/23/2005 1,847,057
3,550,000 Midland Cogen Venture Fund II, Subordinated Secured Lease Obligation Bonds 13.25% 7/23/2006 3,995,248
3,000,000 Niagara Mohawk Power Corp., Sr. Discount Notes, Series H Zero Coupon 7/1/2010 2,303,625
5,650,000 Orion Power Holdings, Inc., Sr. Notes 12.0% 5/1/2010 5,692,375
7,900,000 TNP Enterprises, Inc., Sr. Subordinated Notes 10.25% 4/1/2010 7,979,000
------------
30,127,463
------------
Total Corporate Bonds (cost $849,867,720) 708,475,170
------------
Shares
------------
PREFERRED STOCKS - 11.7% (a)
Convertible - 2.5%
10,000 Adelphia Communications Corp., Convertible Preferred Stock, Series D 1,546,250
40,000 CalEnergy Capital Trust III, Convertible Preferred Stock 1,500,000
60,000 Caremark RX Capital Trust I, Convertible Preferred Stock 2,865,000
46,000 Chesapeake Energy Corp., Convertible Preferred Stock 2,300,000
9,300 Global Crossing Holdings, Ltd., Convertible Preferred Stock 1,908,825
8,000 Global Crossing Holdings, Ltd., Convertible Preferred Stock 1,942,000(b)
30,000 Intermedia Communications, Inc., Convertible Preferred Stock 1,042,500(b)
20,000 Pegasus Communications Corp., Convertible Preferred Stock, Series C 2,100,000(b)
20,000 PSINet, Inc., Convertible Preferred Stock, Series C 960,000
29,500 Sinclair Broadcast Group, Inc., Convertible Preferred Stock 778,063
33,500 TIMET Capital Trust I, Convertible Preferred Stock (Titanium Metals Corp.) 381,063
58,500 Treev, Inc., Convertible Preferred Stock, Series A 833,625
40,000 UnitedGlobalCom, Inc., Convertible Preferred Stock (United International Holdings, Inc.) 2,835,000
18,000 Verio, Inc., Convertible Preferred Stock 918,000
------------
21,910,326
------------
Non-Convertible - 9.2%
19,347 Century Maintenance Supply, Inc., Payment-In-Kind Preferred Stock 1,707,373
65,000 Chevy Chase Capital Corp., Noncumulative Exchangeable Preferred Stock, Series A 3,120,000
23,965 Cluett American Corp., Preferred Stock 359,475
51,707 Communications & Power Industries, Inc., Preferred Stock, Series B 3,658,270
54,036 CSC Holdings, Inc., Payment-In-Kind Preferred Stock 5,943,960
24,246 CSC Holdings, Inc., Preferred Stock 2,618,568
2,267 Cumulus Media, Inc., Preferred Stock, Series A 1,977,958
2,976 Dobson Communications Corp., Payment-In-Kind Preferred Stock 2,953,680
5,913 Dobson Communications Corp., Payment-In-Kind Preferred Stock 6,068,216
3,096 E. Spire Communications Services, Inc., Payment-In-Kind Preferred Stock 936,540
40,000 Global Crossing Holdings, Ltd., Payment-In-Kind Preferred Stock 3,930,000
6,027 ICG Holdings, Inc., Preferred Stock 5,454,435
3,677 Intermedia Communications, Inc., Preferred Stock 3,520,728
3,644 IXC Communications, Inc., Preferred Stock 3,753,320
1,200 J Crew Group, Preferred Stock 1,104,000(b)
16,000 Jitney-Jungle Stores of America, Sr. Exchangeable Preferred Stock, Class A 2,000(b)
61,020 Nebco Evans Holdings Co., Payment-In-Kind, Preferred Stock 22,883(c)
4,977 Nextel Communications, Inc., Payment-In-Kind Preferred Stock, Series E 4,815,248
90,927 NEXTLINK Communications, Inc., Payment-In-Kind Preferred Stock 4,478,155
6,239 Paxson Communications Corp., Payment-In-Kind Preferred Stock 6,114,220
27,500 PRIMEDIA, Inc., Exchangeable Preferred Stock, Series H 2,371,875
36,500 PRIMEDIA, Inc., Preferred Stock, Series D 3,421,875
17,000 PRIMEDIA, Inc., Preferred Stock, Series F 1,534,250
122,500 River Bank Asset, Inc., Preferred Stock, Series A 1,868,125(b)
3,218 R&B Falcon Corp., Payment-In-Kind Preferred Stock 3,515,665
2,000 WinStar Communications, Inc., Payment-In-Kind Preferred Stock, Series C 2,805,000(b)
1,332 World Access, Inc., Preferred Stock 1,185,480(b)
------------
79,241,299
------------
Total Preferred Stocks (cost $116,356,032) 101,151,625
------------
COMMON STOCKS & STOCK WARRANTS - 3.8% (a,b)
3,000 Aavid Thermal Technologies, Inc., Stock Warrants 37,500
55,749 Adelphia Business Solutions, Stock Warrants 1,951,215
4,000 Airgate PCS, Inc., Stock Warrants 710,000
14,881 Allegiance Telecom, Inc., Common Stock 1,052,831
40,000 Arch Communications Group, Inc., Common Stock 297,500
210,000 Arch Communications Group, Inc., Stock Warrants 242,813
2,750 ASAT Finance, LLC, Stock Warrants 331,375
2,000 At Track Communications, Inc., Stock Warrants 41,250
2,400 Australis Holdings Pty., Ltd., Stock Warrants 24(d)
10,920 Australis Media, Ltd., Stock Warrants 109(d)
2,000 Birch Telecom, Inc., Stock Warrants 111,250
12,000 Classic Communications, Inc., Common Stock 200,040
23,925 Clearnet Communications, Inc., Stock Warrants 802,380
1,890 Communications & Power Industries, Inc., Common Stock 284,445(d)
29,000 Completel Holdings, LLC, Common Stock, Class B 1,986,500
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 145,884
2,233 CS Wireless Systems, Inc., Common Stock 306(d)
2,500 Cybernet Internet Services International, Stock Warrants 348,125
19,000 Discovery Zone, Inc., Stock Warrants 2,565(d)
24,000 DIVA Systems Corp., Stock Warrants 576,000
28,700 DTI Holdings, Inc., Stock Warrants 3,444
4,000 FirstWorld Communications, Stock Warrants 379,500
112,013 Gaylord Container Corp., Common Stock, Class A 574,067
154,623 Gaylord Container Corp., Stock Warrants 734,459
220,000 Granite Broadcasting Corp., Common Stock 1,223,750
25,274 Harvard Industries, Inc., Stock Warrants 398(d)
50,000 IntelCom Group Communications, Inc., Common Stock 1,487,500
50,335 IntelCom Group (U.S.A.), Inc., Stock Warrants 1,099,976
4,100 Intermedia Communications of Florida, Stock Warrants 656,000
2,700 Intersil Corp., Stock Warrants 1,324,350
10,200 Ionica plc, Stock Warrants (USD) 102(d)
2,000 Iridium World Communications, Stock Warrants 270(d)
9,500 Jazztel plc, Stock Warrants (USD) 1,670,813
30,000 Magellan Health Services, Inc., Common Stock 112,500
7,100 McCaw International, Ltd., Stock Warrants 128,688
60,000 MCI Worldcom, Inc., Common Stock 2,726,250
29,247 McLeodUSA, Inc., Common Stock 731,175
40,000 Microcell Telecommunications, Inc., Common Stock 1,395,000
3,500 Motient Corp., Stock Warrants 262,938
2,500 OnePoint Communications Corp., Stock Warrants 75,313
2,800 ONO Finance, plc., Cash Rights (USD) 421,400
26,250 PageMart Nationwide, Inc., Common Stock 383,906
5,000 Pathnet, Inc., Stock Warrants 50,625
212,800 PhoneTel Technologies, Inc., Common Stock 152,950
5,000 Poland Telecom Finance B.V., Stock Warrants (USD) 625
75,000 Price Communications Corp., Common Stock 1,518,750
3,200 Primus Telecommunications Group, Inc., Stock Warrants 202,000
19,360 Protection One Alarm Monitoring, Stock Warrants 7,260
2,000 Republic Technologies International, Inc., Stock Warrants 20
6,000 RSL Communications, Ltd., Stock Warrants 334,500
60,000 RTI International Metals, Inc., Common Stock 633,750
2,800 R&B Falcon Corp., Stock Warrants 1,093,400
600 SF Holdings Group, Inc., Common Stock, Class C 6
2,000 Startec Global Communications, Inc., Stock Warrants 37,000
308,649 Teletrac, Inc., Common Stock 154,325
113,649 Teletrac, Inc., Stock Warrants 1,136
8,092 TREEV, Inc., Common Stock 49,564
4,600 UIH Australia/Pacific, Inc., Stock Warrants 138,575
44,000 USN Communications, Inc., Stock Warrants 5,940(d)
36,694 VersaTel Telecom B.V., Common Stock (USD) 1,483,814
1,100 Vialog Corp., Stock Warrants 77,138
20,000 Viatel, Inc., Common Stock 765,000
19,500 Wam!Net, Inc., Stock Warrants 224,250
60,000 WebLink Wireless, Inc., Common Stock 682,500
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 469,616
2,700 Winsloew Furniture, Inc., Stock Warrants 67,500
13,800 Wireless One, Inc., Stock Warrants 139
------------
Total Common Stocks & Stock Warrants (cost $31,801,543) 32,900,790
------------
Principal Maturity
Amount Rate Date Value
---------- ---------- ---------- ----------
SHORT-TERM SECURITIES - 2.3% (a)
Commercial Paper
$ 19,900,000 Associates Corp. of North America (at amortized cost) 6.04% 5/1/2000 19,900,000
------------
Total Investments (cost $1,017,925,295) $862,427,585(e)
============
Notes to Portfolio of Investments:
----------------------------------
(a) The categories of investments are shown as a percentage of total
investments of the Lutheran Brotherhood High Yield Fund.
(b) Currently non-income producing.
(c) Currently non-income producing and in default.
(d) Denotes restricted securities. These securities have been valued
from the date of acquisition through April 30, 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 Portfolio owned as of April 30, 2000.
<CAPTION>
Aquisition
Security Date Cost
------------ ------------ ------------
<S> <C> <C>
Australis Holdings Pty., Ltd., Stock Warrants 10/29/1996 $ --
Australis Media, Ltd., Stock Warrants 5/16/1995 --
Communications & Power Industries, Inc., Common Stock 8/2/1995 172,871
CS Wireless Systems, Inc., Common Stock 2/16/1996 15,070
Discovery Zone, Inc., Stock Warrants 7/15/1997 222,829
Harvard Industries, Inc., Stock Warrants 9/17/1992 6,669,341
Iridium World Communications, Stock Warrants 7/11/1997 21,294
USN Communications, Inc., Stock Warrants 8/13/1997 373
(e) At April 30, 2000, the aggregate cost of securities for federal tax
purposes was $1,017,925,295 and the net unrealized depreciation of
investments based on that cost was $155,497,710 which is comprised of
$36,770,491 aggregate gross unrealized appreciation and $192,268,201
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
April 30, 2000
(unaudited)
Principal Maturity
Amount Rate Date Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CORPORATE BONDS - 42.5%(a)
Aerospace & Defense - 1.6%
$ 4,000,000 Lockheed Martin Corp., Notes 7.7% 6/15/2008 $ 3,810,488
3,500,000 Raytheon Co., Notes 8.2% 3/1/2006 3,496,497
3,000,000 Raytheon Co., Notes 6.45% 8/15/2002 2,908,239
2,000,000 Raytheon Co., Notes 6.75% 8/15/2007 1,818,556
------------
12,033,780
------------
Airlines - 1.3%
4,000,000 American Airlines, Inc., Pass Through Certificates, Series 1999-1-A2, Class B 7.324% 10/15/2009 3,849,900
6,000,000 Continental Airlines, Inc., Series 2000-1-A1 Pass Through Certificates 8.048% 11/1/2020 6,009,450
------------
9,859,350
------------
Banks - 4.7%
5,000,000 Abbey National Capital Trust I Preferred Securities 8.963% 12/29/2049 4,858,000
3,000,000 Abbey National plc, Subordinated Debentures (USD) 7.95% 10/26/2029 2,931,318
4,000,000 Bank One Corp., Notes 6.875% 8/1/2006 3,800,096
6,000,000 Chase Manhattan Corp., Medium Term Notes, Series C 6.75% 12/1/2004 5,781,750
5,500,000 Norwest Financial, Inc., Bonds 7.6% 5/3/2005 5,482,455
4,000,000 PNC Funding Corp., Subordinated Notes 7.5% 11/1/2009 3,863,484
3,500,000 Wachovia Corp., Subordinated Notes 5.625% 12/15/2008 3,024,385
4,500,000 Wells Fargo Capital, Capital Trust Preferred Securities 7.73% 12/1/2026 4,138,250
------------
33,879,738
------------
Broadcasting & Media - 1.2%
2,850,000 Charter Communications, Inc., Sr. Notes 10.0% 4/1/2009 2,757,375
1,050,000 Clear Channel Communications, Convertible Notes 1.5% 12/1/2002 1,006,688
3,000,000 Cox Communications, Inc., Convertible Bonds (Sprint Corp.) 0.426% 4/19/2020 1,503,750
3,600,000 CSC Holdings, Inc., Sr. Notes 7.25% 7/15/2008 3,258,868
------------
8,526,681
------------
Consumer Products - 0.2%
1,500,000 Playtex Products, Inc., Unsecured Sr. Notes, Series B 8.875% 7/15/2004 1,466,250
------------
Environmental - 0.6%
5,000,000 Waste Management, Inc., Notes 6.625% 7/15/2002 4,648,275
------------
Finance - Commercial - 2.2%
4,500,000 FINOVA Capital Corp., Notes 7.25% 7/12/2006 4,071,713
11,000,000 General Electric Capital Corp., Debentures 8.85% 4/1/2005 11,661,078
------------
15,732,791
------------
Finance - Consumer - 1.3%
7,000,000 Associates Corp. of North America, Bonds 5.8% 4/20/2004 6,545,483
3,000,000 CIT (The) Group, Inc., Notes 5.5% 2/15/2004 2,772,369
------------
9,317,852
------------
Finance - Structured - 0.4%
1,400,000 Credit Suisse First Boston NY, Convertible Medium Term Note
(Cisco Systems, Inc.) 2.0% 1/11/2010 1,695,750
1,200,000 Credit Suisse First Boston, Convertible Medium Term Notes
(General Electric Co.) 2.0% 5/1/2010 1,146,000
------------
2,841,750
------------
Food & Beverage - 1.0%
4,500,000 ConAgra, Inc., Sr. Notes 5.5% 10/15/2002 4,246,380
3,500,000 Pepsi Bottling Group, Inc., Sr. Notes, Series B 7.0% 3/1/2029 3,120,320
------------
7,366,700
------------
Health Care - Medical Products & Supplies - 0.5%
4,000,000 Becton, Dickinson, & Co., Debentures 6.7% 8/1/2028 3,463,608
------------
Insurance - 5.3%
8,000,000 Equitable Life Assurance Society of the United States, Surplus Notes 6.95% 12/1/2005 7,672,896
8,500,000 Everest Reinsurance Holdings, Sr. Notes 8.5% 3/15/2005 8,443,101
7,000,000 Metropolitan Life Insurance Co., Surplus Notes 7.7% 11/1/2015 6,872,411
9,000,000 New York Life Insurance Co., Surplus Notes 6.4% 12/15/2003 8,640,621
7,000,000 Prudential Insurance Co. of America, Capital Notes 6.875% 4/15/2003 6,800,486
------------
38,429,515
------------
Investment Banking & Brokerage - 0.4%
3,000,000 Fidelity Investments, Debentures 7.49% 6/15/2019 2,857,224
------------
Oil & Gas - 4.6%
4,000,000 Amerada Hess Corp., Bonds 7.875% 10/1/2029 3,745,876
3,000,000 Coastal Corp., Sr. Debentures 6.375% 2/1/2009 2,688,054
3,500,000 Dynegy, Inc., Notes 8.125% 3/15/2005 3,464,122
3,000,000 Dynegy, Inc., Sr. Notes 7.45% 7/15/2006 2,870,283
3,000,000 El Paso Natural Gas Co., Sr. Notes 6.75% 5/15/2009 2,735,223
2,000,000 Newfield Exploration Co., Sr. Notes, Series B 7.45% 10/15/2007 1,826,032
3,000,000 Nuevo Energy Company, Sr. Subordinated Notes, Series B 9.5% 6/1/2008 2,962,500
2,000,000 Pemex Finance, Ltd., Notes 8.45% 2/15/2007 1,998,870
2,500,000 Pemex Finance, Ltd., Notes, Series 1999-2-A5 9.14% 8/15/2004 2,516,313
3,000,000 Tosco Corp., Notes 8.125% 2/15/2030 2,888,520
2,000,000 Triton Energy, Ltd., Sr. Notes 8.75% 4/15/2002 1,990,000
4,000,000 Williams Companies, Inc., Notes 7.625% 7/15/2019 3,733,172
------------
33,418,965
------------
Packaging & Containers - 0.4%
3,000,000 Owens-Illinois, Inc., Sr. Notes 7.85% 5/15/2004 2,853,069
------------
Retail - 1.5%
300,000 Costco Companies, Inc., Convertible Subordinated Notes Zero Coupon 8/19/2017 382,125
600,000 Costco Companies, Inc., Convertible Subordinated Notes Zero Coupon 8/19/2017 764,250
3,000,000 Rite Aid Corp., Notes 6.125% 12/15/2008 1,215,000
3,500,000 Saks, Inc., Sr. Notes 8.25% 11/15/2008 3,063,281
5,500,000 TJX Cos., Inc., Notes 7.45% 12/15/2009 5,283,713
------------
10,708,369
------------
Retail - Food - 1.9%
6,000,000 Kroger Company, Sr. Notes 8.05% 2/1/2010 5,811,078
8,000,000 Safeway, Inc., Notes 7.25% 9/15/2004 7,793,448
------------
13,604,526
------------
Services - 0.4%
3,000,000 ARAMARK Services, Inc., Notes 7.0% 7/15/2006 2,791,425
------------
Technology - Hardware - 0.5%
4,000,000 Texas Instruments, Inc., Sr. Notes 7.0% 8/15/2004 3,889,700
------------
Telecommunications - Wireless - 0.4%
3,350,000 Nextel Communications, Inc., Sr. Notes 9.375% 11/15/2009 3,216,000
------------
Telecommunications - Wireline - 2.8%
2,350,000 360Networks, Inc., Sr. Notes 13.0% 5/1/2008 2,320,625
3,000,000 Cable & Wireless Communications Corp., Notes (USD) 6.625% 3/6/2005 2,935,947
3,200 Global Crossing Holdings, Ltd., Convertible Preferred Stock 776,800
3,500,000 LCI International, Inc., Sr. Notes 7.25% 6/15/2007 3,337,051
2,850,000 Level 3 Communications, Inc., Sr. Notes 11.0% 3/15/2008 2,771,625
2,850,000 NEXTLINK Communications, Inc., Sr. Notes 10.5% 12/1/2009 2,764,500
1,500,000 Qwest Communications International, Inc., Sr. Notes, Series B 7.5% 11/1/2008 1,436,711
4,500,000 U.S. West Capital Funding, Inc., Notes 6.25% 7/15/2005 4,193,640
------------
20,536,899
------------
Textiles & Apparel - 0.3%
3,000,000 Levi Strauss & Co., Notes 6.8% 11/1/2003 2,055,000
------------
Transportation - 1.8%
4,000,000 Burlington Northern Santa Fe, Inc., Notes 6.125% 3/15/2009 3,536,264
6,000,000 CNF Transportation, Inc., Notes 8.875% 5/1/2010 5,925,540
3,921,718 Federal Express Corp., Series 1998-1-A, Class B 6.72% 1/15/2022 3,586,745
------------
13,048,549
------------
Utilities - 7.2%
2,850,000 AES (The) Corp., Sr. Notes 9.5% 6/1/2009 2,807,250
2,000,000 CalEnergy Company, Inc., Sr. Notes 7.63% 10/15/2007 1,910,778
2,000,000 CalEnergy Company, Inc., Sr. Notes 6.96% 9/15/2003 1,931,550
2,500,000 Calpine Corp., Sr. Notes 7.875% 4/1/2008 2,365,625
2,000,000 Calpine Corp., Sr. Notes 7.75% 4/15/2009 1,870,000
5,000,000 Cleveland Electric Illuminate, Sr. Notes, Series D 7.88% 11/1/2017 4,643,745
3,000,000 CMS Energy Corp., Sr. Notes 8.0% 7/1/2001 2,938,260
4,000,000 CMS Energy Corp., Sr. Unsecured Notes 8.125% 5/15/2002 3,889,524
4,500,000 Commonwealth Edison Co., Notes 7.625% 1/15/2007 4,430,876
2,000,000 Connecticut Light & Power Co., First Refunding Mortgage Bonds, Series 97C 7.75% 6/1/2002 1,988,644
4,000,000 Consolidated Edison Co. NY, Inc., Debentures 6.45% 12/1/2007 3,684,352
6,000,000 East Coast Power, LLC, Sr. Secured Notes, Series B 7.066% 3/31/2012 5,271,756
4,000,000 National Rural Utilities, Medium Term Notes 5.75% 12/1/2008 3,576,656
945,123 Niagara Mohawk Power Corp., Sr. Notes, Series C 7.125% 7/1/2001 934,958
4,000,000 NRG Energy, Inc., Sr. Notes 7.5% 6/15/2007 3,711,704
3,000,000 PSEG Capital Corp., Medium Term Notes 6.25% 5/15/2003 2,865,666
3,350,000 TNP Enterprises, Inc., Sr. Subordinated Notes 10.25% 4/1/2010 3,383,500
------------
52,204,844
------------
Total Corporate Bonds (cost $323,740,298) 308,750,860
------------
ASSET-BACKED SECURITIES - 8.8%(a)
8,000,000 AESOP Funding II, LLC, Rental Car Notes, Series 1997-1, Class A-2 6.4% 10/20/2003 7,826,440
561,328 Chase Manhattan Grantor Trust, Series 1996-B-A 6.61% 9/15/2002 561,409
4,000,000 Com-Ed Transitional Funding Trust, Series 1998-1-A6 5.63% 6/25/2009 3,639,260
2,460,483 CS First Boston Mortgage Security Corp., Series 1996-2, Class A4 6.62% 9/25/2009 2,441,500
10,000,000 Discover Card Master Trust I, Series 1996-3A 6.05% 8/18/2008 9,343,850
5,000,000 Discover Card Master Trust I, Series 1998-7A 5.6% 5/15/2006 4,717,125
8,000,000 Heller Financial Commercial Mortgage Corp., Series 2000-PH1-A2 7.75% 11/15/2009 8,011,223
13,000,000 Standard Credit Master Trust 1, Credit Card Participation Certificates,
Series 1995-9-A 6.55% 10/7/2007 12,476,035
15,000,000 World Financial Network Credit Card Master Trust, Series 1996-B, Class A 6.95% 4/15/2006 14,858,625
------------
Total Asset-Backed Securities (cost $65,872,760) 63,875,467
------------
FOREIGN GOVERNMENT BONDS - 4.4% (a,b)
3,750,000 Brazil (Federative Republic), Unsubordinated Notes (USD) 14.5% 10/15/2009 3,960,000
4,000,000 HSBC Capital Funding, LP, Notes 10.176% 12/31/2049 4,161,412
8,000,000 Israel (State of), Notes 7.75% 3/15/2010 7,825,856
7,500,000 Mexican United States, Notes 9.875% 2/1/2010 7,743,750
5,000,000 Ontario (Province of) Canada, Sr. Notes 5.5% 10/1/2008 4,426,335
4,000,000 Philippines (Republic of), Bonds 9.5% 10/21/2024 3,835,000
------------
Total Foreign Government Bonds (cost $32,837,907) 31,952,353
------------
MORTGAGE-BACKED SECURITIES - 9.2%(a)
20,000,000 Federal National Mortgage Association, Participation Certificates 7.0% 5/1/2015 19,531,200(c)
16,000,000 Federal National Mortgage Association, Participation Certificates 8.0% 5/1/2030 15,974,960(c)
20,000,000 Government National Mortgage Association, Modified Pass Through Certificates 7.5% 5/15/2030 19,662,440(c)
12,000,000 Morgan Stanley Dean Witter Capital I Trust, Pass Through Certificates,
Ser 2000-Life-9 7.57% 12/15/2009 11,872,500
------------
Total Mortgage-Backed Securities (cost $67,697,186) 67,041,100
------------
U.S. GOVERNMENT AGENCY - 4.1%(a)
3,500,000 Federal Home Loan Mortgage Corp., Notes 6.875% 1/15/2005 3,448,732
10,000,000 Federal National Mortgage Association, Notes 5.75% 4/15/2003 9,614,650
17,000,000 Federal National Mortgage Association, Notes 7.25% 1/15/2010 16,956,582
------------
Total U.S. Government Agency (cost $30,561,320) 30,019,964
------------
U.S. GOVERNMENT - 15.2%(a)
95,500,000 U.S. Treasury Bonds 5.25%-12.75% 2010-2028 108,103,161(e)
2,500,000 U.S. Treasury Notes 5.875% 11/15/2004 2,435,158
------------
Total U.S. Government (cost $118,264,262) 110,538,319
------------
Shares
------------
COMMON STOCKS - 0.21(a)
10,000 Cendant Corp., Rights 90,625(d)
22,500 Lucent Technologies, Inc. 1,399,219
------------
Total Common Stocks (cost $1,571,880) 1,489,844
------------
PREFERRED STOCKS - 0.61(a)
9,500 Georgia-Pacific Corp., Convertible Unit Security 384,750
25,000 MediaOne Group, Inc., Convertible Preferred Stock (Vodafone Airtouch plc, ADR) 1,159,375
48,000 MetLife Capital Trust I, Convertible Preferred Stock 2,703,000
------------
Total Preferred Stocks (cost $3,960,937) 4,247,125
------------
Principal Maturity
Amount Rate Date
---------- ---------- ----------
SHORT-TERM SECURITIES - 15.0%(a)
Commercial Paper
$ 5,000,000 AI Credit Corp. 5.99% 5/15/2000 4,988,353
5,000,000 Alcoa, Inc. 6.0% 5/9/2000 4,993,333
5,000,000 American Express Credit Corp. 5.99% 5/18/2000 4,985,857
5,000,000 Asset Securitization Corp. 6.03% 5/19/2000 4,984,925
2,500,000 Associates Financial Services Co. of Puerto Rico (USD) 6.03% 5/22/2000 2,491,206
14,800,000 Cargill Global Funding plc (USD) 6.03% 5/1/2000 14,800,000
7,500,000 Colgate-Palmolive Co. 6.01% 5/17/2000 7,479,967
7,100,000 General Electric Capital Corp. 6.03% 5/1/2000 7,100,000
30,000,000 New Center Asset Trust 6.0% 5/1/2000 30,000,000
5,000,000 Pfizer, Inc. 5.98% 5/15/2000 4,988,372
2,150,000 Schering Corp. 5.98% 5/17/2000 2,144,286
10,000,000 Sears Roebuck Acceptance Corp. 6.08% 5/11/2000 9,983,111
5,000,000 Wal-Mart Stores, Inc. 5.99% 5/12/2000 4,982,529
5,000,000 Wal-Mart Stores, Inc. 5.99% 5/22/2000 4,990,849
------------
Total Short-Term Securities (at amortized cost) 108,912,788
------------
Total Investments (cost $753,419,338) $726,827,820(f)
============
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) Currently non-income producing.
(e) At April 30, 2000, U.S. Treasury Bonds valued at 1,500,938 were
pledged as initial margin deposit to cover open financial futures
contracts and call options written as follows:
<CAPTION>
Notional
Number of Market Principal Unrealized
Financial Futures Contracts Expiration Position Value Amount Loss
------------------- ----------- ------------ ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury Bond Futures 100 June 2000 Long $9,656,250 $9,662,500 $(6,250)
Number of Expiration Expiration
Call Options Contracts Price Date Value
------------------- ----------- ------------ ---------- ---------
U.S. Treasury Bond Futures 100 $98 05/19/00 $31,250
U.S. Treasury Bond Futures 100 97 05/19/00 65,625
(f) At April 30, 2000, the aggregate cost of securities for federal
income tax purposes was $753,419,338 and the net unrealized
depreciation of investments based on that cost was $26,591,518
which is comprised of $2,443,624 aggregate gross unrealized
appreciation and $29,035,142 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
April 30, 2000
(unaudited)
Principal Maturity
Amount Rate Date Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
LONG-TERM MUNICIPAL SECURITIES - 99.7%(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 $ 2,754,114
------------
Arizona - 0.8%
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 1,994,763
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 1,033,370
40,000 Tucson, Arizona, Prerefunded General Obligation Bonds, Insured by FGIC 6.1% 7/1/2012 41,825(b)
1,460,000 Tucson, Arizona, General Obligation Unlimited Bonds, Insured by FGIC 6.1% 7/1/2012 1,501,333
------------
4,571,291
------------
Arkansas - 0.9%
1,000,000 Arkansas Housing Development Agency, Single Family Mortgage Bonds,
Series A 8.375% 7/1/2010 1,170,280(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 3,082,110
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 910,700
------------
5,163,090
------------
California - 7.7%
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 3,575,718
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 874,850
1,550,000 California Educational Facilities Authority, Revenue Bonds, (Stanford
University), Series N 5.2% 12/1/2027 1,414,794
3,000,000 California State Public Works Board, Department of Corrections, Lease
Revenue Bonds, State Prison, Series A 7.4% 9/1/2010 3,493,230
1,000,000 California State, Unlimited Tax General Obligation Bonds, Veteran's
Series AT 9.5% 2/1/2010 1,328,970
300,000 California State, Unlimited Tax General Obligation, Insured by MBIA 6.0% 8/1/2016 307,647
2,000,000 California State, Various Purpose General Obligation Bonds, Insured by
AMBAC 6.3% 9/1/2010 2,188,980
1,400,000 Central Valley Financing Authority, California, Cogeneration Project
Revenue Bonds, (Carson Ice-Gen Project), Series 1993 6.0% 7/1/2009 1,409,114
2,385,000 County of Orange, California, 1996 Recovery Certificates of
Participation, Series A, Insured by MBIA 5.8% 7/1/2016 2,421,944
2,035,000 Palmdale, California, Civic Authority Revenue, Merged Redevelopment
Project Areas, Series A 6.6% 9/1/2034 2,091,817
5,000,000 Pittsburgh, California, Redevelopment Agency (Los Medanos Community
Project), Series 1999, AMBAC Insured Zero Coupon 8/1/2024 1,145,850
2,815,000 Riverside County Transportation Commission, California, Sales Tax
Revenue Capital Appreciation Bonds, Insured by MBIA Zero Coupon 6/1/2004 2,310,721
500,000 Sacramento California Cogeneration Authority Project Revenue Bonds 6.375% 7/1/2010 513,075
500,000 Sacramento California Cogeneration Authority Project Revenue Bonds -
prerefunded 6.375% 7/1/2010 542,935(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 1,692,975
15,000,000 San Joaquin Hills Transportation Corridor Agency, California, Sr. Lien
Convertible Toll Revenue Bonds Zero Coupon 1/1/2013 15,686,550(b)
1,500,000 State of California, General Obligation Bonds 7.0% 8/1/2006 1,667,550
------------
42,666,720
------------
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 4,233,215
1,000,000 Colorado Housing Finance Authority, Single Family Program, Revenue Bonds 7.0% 11/1/2016 1,061,510
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 2,047,521(b)
1,195,000 Colorado Water Resources Power Development Authority, Clean Water
Revenue Bonds, Series A, Insured by FSA 6.25% 9/1/2013 1,227,122
6,000,000 Denver, Colorado, City & County Refunding Bonds, Board of Water
Commissioners 5.6% 10/1/2029 5,733,660
3,350,000 Douglas County, Colorado, School District No. 1, General Obligation
Bonds, Insured by MBIA 6.5% 12/15/2016 3,582,758(b)
150,000 Douglas County, Colorado, School District No. 1, General Obligation
Bonds, Insured by MBIA 6.5% 12/15/2016 156,344
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 1,068,940
1,890,000 Goldsmith Metropolitan District, Colorado, Unlimited Tax General
Obligation Bonds, Insured by MBIA Zero Coupon 6/1/2007 1,291,758
1,885,000 Goldsmith Metropolitan District, Colorado, Unlimited Tax General
Obligation Bonds, Insured by MBIA Zero Coupon 12/1/2008 1,184,534
1,890,000 Goldsmith Metropolitan District, Colorado, Unlimited Tax General
Obligation Bonds, Insured by MBIA Zero Coupon 6/1/2008 1,220,279
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 3,439,590
635,000 Regional Transportation District, Colorado, Sales Tax Revenue Bonds 6.25% 11/1/2012 659,479
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 3,936,100
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 2,080,050
------------
32,922,860
------------
Connecticut - 0.8%
4,000,000 Connecticut Special Tax Obligation, Transportation Infrastructure
Revenue Bonds, Series B 6.5% 10/1/2010 4,413,760
------------
Florida - 1.6%
3,225,000 Broward County, Florida, Housing Finance Authority, Home Mortgage
Revenue Bonds, 1983 Series A Zero Coupon 4/1/2014 788,093
1,520,000 Florida State Refunding Bonds, Jacksonville Transportation Authority
(Senior Lien), Series 1997 5.0% 7/1/2019 1,383,595
3,200,000 Hillsborough County, Florida, Industrial Development Authority
(Weyerhaeuser Company, Inc.), Industrial Development Revenue Bonds,
Series 1983 9.25% 6/1/2008 3,210,400
1,705,000 Hillsborough County, Florida, Industrial Development Authority,
Florida (Tampa Electric Project), Pollution Control Revenue Bonds,
Series 1991 7.875% 8/1/2021 1,822,526
1,500,000 Jacksonville, Florida, Health Facilities, Florida Hospital Revenue Bonds
(Charity Obligated Group), Series 1999C 5.75% 8/15/2015 1,459,740
------------
8,664,354
------------
Georgia - 4.5%
5,000,000 Atlanta, Georgia, Water and Wastewater Revenue Bonds, Series 1999-A 5.0% 11/1/2038 4,187,850
1,500,000 Brunswick, Georgia, Water & Sewer Revenue Refunding & Improvement Bonds,
Series A, Insured by MBIA 6.1% 10/1/2019 1,550,145
2,000,000 Brunswick, Georgia, Water & Sewer Revenue Refunding & Improvement Bonds,
Series 1992, Insured by MBIA 6.0% 10/1/2011 2,097,520
5,000,000 Cherokee County, Georgia, Water & Sewer Revenue Refunding & Improvement
Bonds, Insured by MBIA 5.5% 8/1/2018 4,887,000
2,000,000 Georgia State, Unlimited Tax General Obligation Bonds, Series 1994-B 5.65% 3/1/2012 2,064,320
3,500,000 Georgia State, Unlimited Tax General Obligation Bonds, Series 1994-D 5.0% 8/1/2012 3,396,820
1,000,000 Georgia State, Unlimited Tax General Obligation Bonds, Series B 6.3% 3/1/2009 1,079,200
1,000,000 Georgia State, Unlimited Tax General Obligation Bonds, Series B 6.3% 3/1/2010 1,084,520
5,000,000 Rockdale County, Georgia, Water & Sewer Authority Revenue, Series A,
MBIA Insured 5.5% 7/1/2025 4,745,350
------------
25,092,725
------------
Idaho - 0.9%
2,000,000 Idaho Falls, Idaho, General Obligation Electric Refunding Bonds, Series
1991, Insured by MBIA Zero Coupon 4/1/2011 1,100,580
3,115,000 Idaho Falls, Idaho, General Obligation Electric Refunding Bonds, Series
1991, Insured by MBIA Zero Coupon 4/1/2010 1,817,603
1,000,000 Idaho Falls, Idaho, General Obligation Electric Refunding Bonds, Series
1991, Insured by MBIA Zero Coupon 4/1/2007 692,410
1,510,000 Idaho Housing & Finance Association, Single Family Mortgage Bonds,
Series 1998 F-2 5.35% 7/1/2018 1,390,695
------------
5,001,288
------------
Illinois - 4.2%
3,000,000 Chicago, Illinois (Lakefront Millennium Project), Series 1999 Zero Coupon 1/1/2029 1,909,230
1,000,000 Chicago, Illinois, Midway Airport Revenue Bonds, Insured by MBIA 5.0% 1/1/2031 839,360
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 928,240
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 2,363,600
2,500,000 Cook County, Illinois, Unlimited General Obligation Bonds, Series A,
Insured by MBIA 6.25% 11/15/2011 2,678,375
2,000,000 Illinois Health Facilities Authority Revenue Refunding Bonds, Lutheran
General Health, Insured by FSA 6.0% 4/1/2018 2,046,320
170,000 Illinois Health Facilities Authority (Community Provider
Pooled Loan Program), Revenue Bonds, Series 1988-B, Insured by MBIA 7.9% 8/15/2003 181,400(b)
718,000 Illinois Health Facilities Authority (Community Provider
Pooled Loan Program), Revenue Bonds, Series 1988-B, Insured by MBIA 7.9% 8/15/2003 720,154(b)
2,000,000 Illinois Health Facilities Authority, (Swedish American Hospital),
Revenue Bonds, Series 2000 6.875% 11/15/2030 1,958,720
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 5,185,681
1,410,000 Metropolitan Pier & Exposition Authority, Illinois, McCormick Place
Expansion Project Bonds, Series 1999A, FGIC Insured 5.25% 12/15/2028 1,248,626
10,000,000 Metropolitan Pier & Exposition Authority, Illinois, McCormick
Place Expansion, Refunding Bonds, Series 1993-A, Insured by FGIC Zero Coupon 6/15/2018 3,384,700
------------
23,444,406
------------
Indiana - 1.2%
4,000,000 Avon, Indiana, Community School Building Corp., First Mortgage Bonds,
AMBAC Insured 5.25% 1/1/2022 3,607,240
2,450,000 Indiana Municipal Power Agency, Power Supply System Revenue Bonds,
Series A, Insured by MBIA 5.5% 1/1/2023 2,469,061(b)
350,000 Indianapolis Airport Authority Refunding Revenue Bonds, Series 1996-A,
Insured by FGIC 5.6% 7/1/2015 348,205
------------
6,424,506
------------
Iowa - 0.4%
2,000,000 Iowa Finance Authority, Iowa State Revolving Fund Revenue Bonds,
Combined Series 1994 6.25% 5/1/2024 2,065,600
------------
Kansas - 1.8%
2,605,000 Kansas City, Kansas, Utility System Prerefunded Revenue Bonds, Series
1994, Insured by FGIC 6.375% 9/1/2023 2,785,761(b)
5,395,000 Kansas City, Kansas, Utility System Revenue Bonds, Series 1994, Insured
by FGIC 6.375% 9/1/2023 5,562,569
920,000 Kansas City, Kansas, Utility System, Capital Appreciation Refunding &
Improvement Revenue Bonds, Insured by AMBAC Zero Coupon 3/1/2007 641,976
1,255,000 Kansas City, Kansas, Utility System, Capital Appreciation Refunding &
Improvement Revenue Bonds, Insured by AMBAC Zero Coupon 3/1/2007 871,096(b)
------------
9,861,402
------------
Kentucky - 0.6%
250,000 Kentucky Turnpike Authority, Economic Development Road
Revenue and Revenue Refunding Bonds, Series 1993, Insured by AMBAC 5.5% 7/1/2009 254,118
5,345,000 Kentucky Turnpike Authority, Economic Development Road Revenue Bonds,
Insured by FGIC Zero Coupon 1/1/2010 3,161,461
------------
3,415,579
------------
Louisiana - 1.3%
6,500,000 New Orleans, Louisiana, General Obligation Bonds, Series 1991, Insured
by AMBAC Zero Coupon 9/1/2012 3,282,305
3,000,000 Orleans Parish School Board #87, Louisiana, Insured by MBIA 8.95% 2/1/2008 3,696,360(b)
------------
6,978,665
------------
Maine - 0.2%
25,000 Maine Health & Higher Education Facilities Authority Revenue Bonds,
Series 1994, Insured by FSA 7.0% 7/1/2024 27,272
1,225,000 Maine Health & Higher Education Facilities Authority Revenue Bonds,
Series 1994, Insured by FSA 7.0% 7/1/2024 1,336,340(b)
------------
1,363,612
------------
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 1,973,840
2,000,000 Maryland Health & Higher Education Authority, Union Hospital of Cecil
County Revenue Bonds, Series 1992 6.7% 7/1/2022 2,111,360(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 4,747,185
1,000,000 Prince George's County, Maryland, Dimensions Health Corp., Hospital
Revenue Bonds, Series 1992 7.0% 7/1/2022 1,062,830(b)
------------
9,895,215
------------
Massachusetts - 1.9%
2,000,000 Commonwealth of Massachusetts, General Obligation Refunding Bonds,
Series B 6.5% 8/1/2008 2,173,720
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 2,637,300
1,500,000 Massachusetts Health & Education Facilities Authority,
Revenue Bonds, (New England Medical Center), Series F, Insured by FGIC 6.5% 7/1/2012 1,571,130
1,000,000 Massachusetts Health & Education Facilities, Partners HealthCare System,
Series B 5.25% 7/1/2014 900,680
3,000,000 Plymouth County, Massachusetts, Correctional Facility Certificates of
Participation Bonds 7.0% 4/1/2012 3,201,210(b)
------------
10,484,040
------------
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 2,080,520
2,355,000 John Tolfree Health System Corporation, Mortgage Revenue and Refunding
Bonds, Series 1999 5.85% 9/15/2013 2,037,452
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 923,190
2,460,000 Michigan Municipal Bond Authority, Government Loan Revenue Refunding
Bonds, Series A, Insured by FGIC Zero Coupon 12/1/2005 1,838,456
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 45,347
3,000,000 Michigan State Hospital Finance Authority, Revenue Refunding Bonds,
(Sisters of Mercy Health Corp.), Insured by MBIA 5.375% 8/15/2014 2,968,800
4,500,000 Rochester, Michigan, Community School District Unlimited Tax General
Obligation Bonds, MBIA Insured 5.0% 5/1/2019 4,137,390
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 3,352,104
3,560,000 Wayne State University, Michigan, University Revenue Bonds, FGIC Insured 5.125% 11/15/2029 3,149,176
3,455,000 West Ottawa, Michigan, Public School District, Unlimited Tax General
Obligation Bonds, Insured by MBIA Zero Coupon 5/1/2004 2,811,161
1,860,000 West Ottawa, Michigan, Public School District, Unlimited Tax General
Obligation Bonds, Insured by MBIA Zero Coupon 5/1/2005 1,433,056
------------
24,776,652
------------
Minnesota - 4.4%
1,000,000 City of Rochester, MN Health Care Facilities Revenue Bonds (Mayo
Foundation), Series 1998A 5.5% 11/15/2027 940,680
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 299,866(b)
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 751,944
2,250,000 Golden Valley, Minnesota, Revenue Bonds (Covenant Retirement
Communities), Series 1999-A 5.5% 12/1/2025 1,889,595
2,000,000 Minneapolis-St. Paul Metropolitan Airports Commission, Airport Revenue
Bonds, Series 1999A, FGIC Insured 5.125% 1/1/2031 1,771,020
7,685,000 Minneapolis, Minnesota, Community Development Agency, Tax Increment
Revenue Appreciation Bonds, Insured by MBIA Zero Coupon 3/1/2009 4,813,730
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 4,854,300
650,000 Minnesota Agricultural and Economic Development Board,
Healthcare System Revenue Bonds, Series 97A, Fairview Hospital &
Healthcare Services, Insured by MBIA 5.5% 11/15/2017 628,011
2,500,000 Minnesota Higher Education Facilities Authority,
(Augsburg College), Mortgage Revenue Bonds, Series Four-F1 Bonds 6.25% 5/1/2023 2,458,100
4,620,000 State of Minnesota Unlimited Tax General Obligation Bonds 5.25% 8/1/2017 4,412,747
1,740,000 Stewartville, MN, Independent School District, Unlimited Tax General
Obligation Bonds, Series A 5.75% 2/1/2014 1,767,214(b)
------------
24,587,207
------------
Missouri - 2.4%
1,475,000 Missouri Housing Development Commission, Single Family
Mortgage Revenue Bonds, (Home Ownership Loan Program), Series C-1 6.55% 9/1/2028 1,529,265
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 1,865,860
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 2,751,999(b)
320,000 Missouri State Health and Education Facilities Authority,
Health Facilities Revenue Refunding Bonds, Lester E. Cox Medical Center
Project, Series 1993-I, Insured by MBIA 5.35% 6/1/2009 320,899
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 2,999,939
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 1,554,960
1,345,000 Missouri State Health & Education Facility Authority, Lake of the Ozarks
General Hospital 6.5% 2/15/2021 1,459,675(b)
655,000 Missouri State Health & Education Facility Authority, Lake of the Ozarks
General Hospital 6.5% 2/15/2021 628,302
------------
13,110,899
------------
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 1,289,141(b)
775,000 Montana State Board of Investments, Payroll Tax Revenue Bonds, Series
1996, Insured by MBIA 6.875% 6/1/2020 805,713(b)
2,385,000 Montana State Board of Investments, Payroll Tax Revenue Bonds, Series
1996, Insured by MBIA 6.875% 6/1/2020 2,479,518(b)
------------
4,574,372
------------
Nebraska - 1.1%
2,710,000 Nebraska Investment Finance Authority, Single Family Housing Revenue
Bonds, 1998 Series F, Insured by GNMA 5.6% 9/1/2020 2,586,451
3,455,000 Omaha Public Power District, Nebraska, Electric Revenue Refunding Bonds,
Series B 6.15% 2/1/2012 3,702,724
------------
6,289,175
------------
New Hampshire - 0.2%
1,100,000 New Hampshire Turnpike System, Residual Interest Bonds, 1991 Refunding,
Series C, Insured by FGIC 9.475% 11/1/2017 1,270,357(c)
------------
New Jersey - 2.9%
1,250,000 East Orange, New Jersey, Unlimited Tax General Obligation Bonds, Insured
by FSA 8.4% 8/1/2006 1,473,938
1,000,000 Mercer County, New Jersey, Improvement Authority, Revenue Bonds, Series
1991 6.6% 11/1/2014 1,030,460(b)
1,110,000 New Jersey Health Care Facilities, Financing Authority Revenue, AMBAC
Insured 6.1% 7/1/2010 1,163,780
3,000,000 New Jersey Transit Corp., (Raymond Plaza East, Inc.), Certificates of
Participation, Insured by FSA 6.375% 10/1/2006 3,215,220
715,000 New Jersey Turnpike Authority, Turnpike Revenue Bonds, 1984 Series 10.375% 1/1/2003 781,037(b)
4,700,000 New Jersey Turnpike Authority, Turnpike Revenue Bonds, Series C, Insured
by AMBAC 6.5% 1/1/2016 5,196,038
2,595,000 West New York, New Jersey, Municipal Utility Authority, Sewer Revenue
Refunding Bonds, Insured by FGIC Zero Coupon 12/15/2009 1,558,894
2,195,000 West New York, New Jersey, Municipal Utility Authority, Sewer Revenue
Refunding Bonds, Insured by FGIC Zero Coupon 12/15/2007 1,474,755
------------
15,894,122
------------
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 2,896,316
5,000,000 Farmington, New Mexico, Power Revenue Refunding Bonds, Series 1983 9.875% 1/1/2013 5,974,050(b)
4,040,000 Farmington, New Mexico, Utility Systems Revenue Bonds, Insured by AMBAC 9.875% 1/1/2008 4,881,855(b)
------------
13,752,221
------------
New York - 6.3%
5,200,000 Metropolitan Transportation Authority, New York, Commuter Facilities
Revenue Bonds, Series A, Insured by MBIA 6.375% 7/1/2018 5,540,808(b)
2,650,000 Metropolitan Transportation Authority, New York, Commuter Facilities
Revenue Bonds, Series C-1, FGIC Insured 5.125% 7/1/2014 2,532,817
3,000,000 Metropolitan Transportation Authority, New York, Transit Facilities
Revenue Bonds, Series O, Insured by MBIA 6.25% 7/1/2014 3,182,670(b)
4,225,000 Metropolitan Transportation Authority, New York, Transit Facilities
Service Contract Bonds, Series O 5.75% 7/1/2013 4,259,603
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 2,098,060
1,000,000 New York City, New York, Water Authority Revenue Bonds (Water and Sewer
Systems), Series B 5.0% 6/15/2029 855,900
10,000,000 New York State Dormitory Authority Revenue Bonds, City University System
Consecutive Third-1, Insured by FGIC 5.0% 7/1/2026 8,625,900
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 3,013,725(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 1,786,254
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 1,679,600
1,000,000 Triborough Bridge & Tunnel Authority, New York, General Purpose Revenue
Bonds, Series Q 6.75% 1/1/2009 1,091,960
------------
34,667,297
------------
North Carolina - 0.7%
4,000,000 North Carolina Municipal Power Agency #1, Catawba
Electric Revenue Refunding Bonds, Series 1992, Insured by MBIA 6.0% 1/1/2011 4,159,360
------------
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 3,485,440
2,000,000 Mercer County, North Dakota, Pollution Control Revenue Refunding Bonds,
(Ottertail Power Co. Project) 6.9% 2/1/2019 2,068,460
2,000,000 North Dakota Municipal Bond Bank, State Revolving Fund Program Bonds,
Series 1995-A 6.3% 10/1/2015 2,089,760
1,340,000 North Dakota State Water Commission (Southwest Pipeline), Revenue Bonds,
Series A, Insured by AMBAC 5.75% 7/1/2027 1,284,872
------------
8,928,532
------------
Ohio - 5.3%
875,000 Akron Ohio Economic Development, Non-Tax Revenue Bonds, Insured by MBIA 6.0% 12/1/2012 921,620
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 1,087,475(b)
2,500,000 Akron, Ohio, Certificates of Participation, Series 1996, Akron Municipal
Baseball Stadium Project Zero Coupon 12/1/2016 2,396,500
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 4,150,707(b)
1,630,000 Cuyahoga County, Ohio, (Deaconess Hospital), Hospital Revenue Bonds,
Series C 7.45% 10/1/2018 1,697,922(b)
1,470,000 Lorain County, Ohio, (Humility of Mary Health System), Hospital Revenue
Bonds 7.125% 12/15/2006 1,534,445(b)
2,000,000 Ohio Higher Educational Facility Commission (Case Western Reserve
University Project), Series B 6.5% 10/1/2020 2,186,340
1,500,000 Ohio Higher Educational Facility Commission, Higher Educational Revenue
Bonds, (Ohio Dominican College 1994 Project) 6.625% 12/1/2014 1,538,790
5,000,000 Ohio State Air Quality Development Authority, Cleveland Electric,
Pollution Control Revenue Bonds, Insured by FGIC 8.0% 12/1/2013 5,431,750
2,250,000 Ohio State Air Quality Development Authority, Columbus & Southern
Pollution Control Revenue Bonds, Insured by FGIC 6.375% 12/1/2020 2,314,868
2,000,000 Ohio State Turnpike Commission, Turnpike Revenue Refunding Bonds, Series
A, FGIC Insured 5.5% 2/15/2024 1,927,900
1,795,000 Trumbull County, Ohio (Memorial Hospital), Hospital Revenue
Refunding & Improvement Bonds, Series 1991-B, Insured by FGIC 6.9% 11/15/2012 1,888,071(b)
2,115,000 University of Akron, Ohio, General Receipt Bonds, Series 1999, FGIC
Insured 5.5% 1/1/2020 2,031,394
------------
29,107,782
------------
Oklahoma - 2.3%
5,220,000 Bass, Oklahoma, Memorial Baptist Hospital 8.35% 5/1/2009 5,988,802(b)
1,500,000 Oklahoma Municipal Power Authority, Power Supply System Revenue Bonds,
Series 1992-B, Insured by MBIA 5.875% 1/1/2012 1,559,610
5,000,000 Tulsa, Oklahoma, Municipal Airport Trust Revenue American Airlines, Inc. 7.375% 12/1/2020 5,061,850
------------
12,610,262
------------
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 2,800,575
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 2,054,920
------------
4,855,495
------------
Pennsylvania - 2.9%
6,900,000 Allegheny County, Pennsylvania, Airport Revenue Refunding Bonds, Series
1997B, Insured by MBIA 5.0% 1/1/2019 6,178,674
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 1,578,992
2,575,000 Allegheny County, Pennsylvania, Sanitary Authority, Sewer Revenue Bonds,
Series A, Insured by FGIC Zero Coupon 6/1/2008 1,673,055
3,170,000 Millcreek Township, Pennsylvania, School District, General Obligation
Bonds, Insured by FGIC Zero Coupon 8/15/2009 1,924,285
1,425,000 Monroeville, Pennsylvania, Hospital Authority, Forbes Health System
Revenue Bonds, Series 1992 7.0% 10/1/2003 1,384,687
3,000,000 Pennsylvania State, General Obligation Bonds, Second Series of 1992,
Insured by AMBAC Zero Coupon 7/1/2006 2,172,180
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 1,007,180
------------
15,919,053
------------
Puerto Rico - 2.0%
4,000,000 Puerto Rico Commonwealth, Aqueduct & Sewer Revenue Bonds, Series A 9.0% 7/1/2009 4,603,280(b)
3,000,000 Puerto Rico Commonwealth, Unlimited Tax General Obligation Bonds 6.45% 7/1/2017 3,216,690(b)
3,000,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series T 6.0% 7/1/2016 3,038,160
------------
10,858,130
------------
South Carolina - 1.7%
2,000,000 City of Spartanburg, South Carolina, Junior Lien, Water System Revenue
Bonds, Series 1998 5.25% 6/1/2028 1,778,300
2,000,000 Piedmont Municipal Power Agency, South Carolina,
Electric Revenue Refunding Bonds, Series 1991, Insured by FGIC 6.25% 1/1/2021 2,109,840
5,000,000 Piedmont Municipal Power Agency, South Carolina, Electric Revenue
Refunding Bonds, Insured by FGIC 5.0% 1/1/2022 4,370,450
1,450,000 Spartanburg, South Carolina, Waterworks Revenue Refunding Bonds, Insured
by FGIC 5.0% 6/1/2017 1,340,061
------------
9,598,651
------------
Tennessee - 1.4%
1,750,000 Bristol, Tennessee, Health and Educational Facilities Authority, Bristol
Memorial Hospital Revenue Bonds, Insured by FGIC 7.0% 9/1/2021 1,820,928(b)
1,750,000 Metropolitan Government of Nashville & Davidson County TN, Electric
System Revenue Bonds, Series 1998A 5.2% 5/15/2023 1,569,558
5,000,000 Shelby County, Tennessee, Health Educational & Housing
Facility Board, (St. Jude Children's Research Hospital), Series 1999 5.375% 7/1/2024 4,452,550
------------
7,843,036
------------
Texas - 9.0%
2,165,000 Arlington, Texas, Independent School District, Unlimited Tax
Refunding & Improvement Bonds, Series 1992, Permanent School Fund
Guaranteed Zero Coupon 2/15/2009 1,346,587
8,100,000 Austin, Texas, Utility System Refunding Revenue Bonds, Series A,
Insured by MBIA Zero Coupon 11/15/2009 4,837,806
7,000,000 Austin, Texas, Utility System Refunding Revenue Bonds, Series A,
Insured by MBIA Zero Coupon 11/15/2008 4,427,780
1,000,000 Austin, Texas, Utility System Revenue Refunding Bonds, Insured by FGIC 6.0% 11/15/2013 1,056,080
1,575,000 Bexar County, Texas, Limited Tax General Obligation Bonds 5.0% 6/15/2015 1,471,759
1,000,000 Cass County, Texas, Industrial Development Corporation, Pollution
Control Revenue Refunding Bonds, International Paper, Series 1997-B 5.35% 4/1/2012 950,980
2,000,000 Copperas Cove, Texas, Independent School District, Unlimited
Tax General Obligation Bonds, Permanent School Fund Guaranteed 6.9% 8/15/2014 2,145,480(b)
4,000,000 Dallas-Fort Worth, Texas, Airport Joint Revenue Refunding Bonds Series
1994-A, Insured by MBIA 6.0% 11/1/2012 4,107,440
2,000,000 Dallas-Fort Worth, Texas, Airport Joint Revenue Refunding Bonds, Insured
by FGIC 7.375% 11/1/2010 2,202,140
1,000,000 Dallas-Fort Worth, Texas, Airport Joint Revenue Refunding Bonds, Insured
by FGIC 7.375% 11/1/2009 1,102,980
1,000,000 Dallas-Fort Worth, Texas, Airport Joint Revenue Refunding Bonds, Insured
by FGIC 7.375% 11/1/2008 1,102,600
2,000,000 Del Valle, Texas, Independent School District, Unlimited Tax
General Obligation Refunding Bonds, Permanent School Fund Guaranteed 5.0% 2/1/2018 1,791,140
2,285,000 Denton, Texas, Independent School District, Unlimited
Tax General Obligation Refunding Bonds, Permanent School Fund Guaranteed 6.25% 2/15/2009 2,438,963
1,000,000 Georgetown, Texas, Higher Education Finance Corp., Higher
Education Revenue Bonds, Series 1994 (Southwestern University Project) 6.3% 2/15/2014 1,026,200
5,000,000 Houston, Texas Water & Sewer System, Revenue Refunding Jr. Lien Series
A, Insured by FGIC 5.250% 12/1/2022 4,499,400
5,315,000 Lewisville, Texas, Independent School District, Capital
Appreciation Refunding Bonds, Permanent School Fund Guaranteed Zero Coupon 8/15/2019 1,677,733
1,000,000 San Antonio, Texas, Airport Revenue Refunding Bonds, Insured by AMBAC 7.375% 7/1/2011 1,083,520
1,845,000 San Antonio, Texas, Airport Revenue Refunding Bonds, Insured by AMBAC 7.375% 7/1/2010 1,999,666
11,615,000 Southeastern Texas Housing Finance Corp., Single Family Mortgage
Revenue Bonds Zero Coupon 9/1/2017 4,233,668(b)
4,315,000 Texas State, Veterans Land Board General Obligation Bonds 0.05% 7/1/2010 2,480,780
1,000,000 Texas Water Development Board, State Revolving Fund Revenue Bond, Senior
Lien, Series A 5.25% 7/15/2017 942,630
780,000 Travis County, Texas, Housing Finance Corporation, Single Family
Mortgage Revenue Refunding Bonds, Series 1994-A 6.75% 4/1/2014 811,301
440,000 Willis, Texas, Independent School District, Government Obligation Bonds,
Permanent School Fund Guaranteed 6.5% 2/15/2016 448,228
430,000 Wylie, Texas, Independent School District, General Obligation Bonds,
Permanent School Fund Guaranteed 6.875% 8/15/2014 476,113
745,000 Wylie, Texas, Independent School District, General Obligation Bonds,
Permanent School Fund Guaranteed 6.875% 8/15/2014 843,616(b)
------------
49,504,590
------------
Utah - 2.3%
5,000,000 Intermountain Power Agency, Utah, Power Supply Revenue Bonds, Series B,
Insured by MBIA 5.75% 7/1/2019 4,925,400
3,405,000 Timpanogos Special Service District, Utah County, Utah, Sewer Revenue
Bonds, Series 1996-A, Insured by AMBAC 6.1% 6/1/2019 3,609,606(b)
3,750,000 Utah Associated Municipal Power Systems, San Juan Project Revenue Bonds,
Series O, Insured by MBIA 6.25% 6/1/2014 3,983,550(b)
------------
12,518,556
------------
Virginia - 1.5%
3,625,000 Fairfax County, Virginia, Water Authority, Water Revenue Refunding Bonds 5.0% 4/1/2021 3,228,679
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 2,973,330
2,035,000 Virginia State Housing Development Authority, Commonwealth Mortgage
Bonds, 1997 Subseries B-1 5.5% 1/1/2022 1,876,596
------------
8,078,605
------------
Washington - 5.4%
1,655,000 Douglas County, Washington, Public Utility District #1, Wells
Hydroelectric Revenue Bonds, Series A 8.75% 9/1/2018 2,047,119
1,395,000 Douglas County, Washington, Public Utility District #1, Wells
Hydroelectric Revenue Bonds, Series A 8.75% 9/1/2018 1,669,327
2,000,000 Grant County, Washington, Public Utility District No. 2,
Columbia River, Priest Rapids Hydro Electric Development
Project, Second Series Revenue Bonds, Series A, Insured by AMBAC 5.0% 1/1/2023 1,731,600
4,130,000 Seattle, Washington, Water System Revenue Bonds, FGIC Insured 5.0% 10/1/2027 3,520,825
4,040,000 State of Washington, Unlimited Tax General Obligation Bonds, Series E 5.0% 7/1/2022 3,527,324
1,500,000 Tacoma, Washington, Conservation System Project Revenue Bonds, Tacoma
Public Utilities Light Division 6.6% 1/1/2015 1,567,515
1,000,000 Washington State Higher Education (Whitman College Project) 5.875% 10/1/2029 983,710
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 2,028,420
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 3,024,990
2,000,000 Washington State, Unlimited Tax General Obligation Bonds 6.0% 6/1/2012 2,110,820
3,000,000 Washington State, Unlimited Tax General Obligation Bonds, Series 93A 5.75% 10/1/2012 3,096,660
1,500,000 Washington State, Unlimited Tax General Obligation Bonds, Series A 6.25% 2/1/2011 1,599,735
2,500,000 Washington State, Various Purpose General Obligation Bonds 6.25% 6/1/2010 2,693,600
------------
29,601,645
------------
Wyoming - 0.5%
2,500,000 State of Wyoming, Farm Loan Board, Capital Facilities Revenue Bonds,
Series 1994 6.1% 4/1/2024 2,524,875
------------
Total Long-Term Municipal Securities (cost $528,505,708) 550,214,101
------------
SHORT-TERM MUNICIPAL SECURITIES - 0.3% (a,c)
1,000,000 Maricopa County, Arizona Pollution Control Corp., Pollution
Control Revenue Refunding Bonds, (Arizona Public Service Co. PaloVerde
Project), 1994 Series E 6.05% 5/1/2000 1,000,000
600,000 Michigan Strategic Fund, Variable Rate Demand Pollution
Control Revenue Refunding Bonds, (Consumers Power Company Project),
Series 1988A 6.05% 5/1/2000 600,000
------------
Total Short-Term Municipal Securities (at amortized cost) 1,600,000
------------
Total Investments (cost $530,105,708) $551,814,101
============
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 April 30, 2000, the aggregate cost of securities for federal
income tax purposes was $530,105,708 and the net unrealized appreciation
of investments based on that cost was $21,708,393 which is comprised of
$27,345,576 aggregate gross unrealized appreciation and $5,637,183
aggregate gross unrealized depreciation.
(e) Miscellaneous abbreviations:
AMBAC - AMBAC Indemnity Corp.
Connie Lee - Connie Lee Insurance Co.
FGIC - Financial Guaranty Insurance Co.
FSA - Federal Security Assurance, Inc.
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
April 30, 2000
(unaudited)
Principal Maturity
Amount Rate Date Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CORPORATE BONDS - 15.6%(a)
Aerospace & Defense - 1.4%
$ 500,000 Raytheon Co., Notes 8.2% 3/1/2006 $ 499,500
------------
Automotive - 1.4%
500,000 Ford Motor Credit Co., Notes 6.7% 7/16/2004 481,525
------------
Banks - 1.4%
500,000 Norwest Financial, Inc., Bonds 7.6% 5/3/2005 498,405
------------
Broadcasting & Media - 0.8%
150,000 Charter Communications, Inc., Sr. Notes 10.0% 4/1/2009 145,125
150,000 Clear Channel Communications, Convertible Notes 1.5% 12/1/2002 143,813
------------
288,938
------------
Finance - Commercial - 1.4%
500,000 General Electric Capital Corp., Medium Term Notes, Series A 6.81% 11/3/2003 491,984
------------
Finance - Other - 1.4%
500,000 Comdisco, Inc., Sr. Notes 6.0% 1/30/2002 483,969
------------
Insurance - 1.4%
500,000 Everest Reinsurance Holdings, Sr. Notes 8.5% 3/15/2005 496,653
------------
Oil & Gas - 1.4%
500,000 Dynegy, Inc., Notes 8.125% 3/15/2005 494,875
------------
Retail - 2.6%
500,000 Saks, Inc., Sr. Notes 8.25% 11/15/2008 437,612
500,000 TJX Cos., Inc., Notes 7.45% 12/15/2009 480,338
------------
917,950
------------
Telecommunications - Wireless - 0.4%
150,000 Nextel Communications, Inc., Sr. Notes 9.375% 11/15/2009 144,000
------------
Telecommunications - Wireline - 1.2%
150,000 360Networks, Inc., Sr. Notes 13.0% 5/1/2008 148,125
150,000 Level 3 Communications, Inc., Sr. Notes 11.0% 3/15/2008 145,875
150,000 NEXTLINK Communications, Inc., Sr. Notes 10.5% 12/1/2009 145,500
------------
439,500
------------
Utilities - 0.8%
150,000 AES (The) Corp., Sr. Notes 9.5% 6/1/2009 147,750
150,000 TNP Enterprises, Inc., Sr. Subordinated Notes 10.25% 4/1/2010 151,500
------------
299,250
------------
Total Corporate Bonds (cost $5,639,956) 5,536,549
------------
ASSET-BACKED SECURITIES - 9.6%(a)
500,000 Com-Ed Transitional Funding Trust, Series 1998-1-A5 5.44% 3/25/2007 462,988
500,000 Conseco Finance Securitization Corp., Series 2000-1-A3 7.3% 5/1/2031 494,193
500,000 Discover Card Master Trust I, Series 1999-6A 6.85% 7/7/2007 488,013
500,000 MBNA Master Credit Card Trust, Asset Backed Certificates, Series 1999-M-A 6.6% 4/16/2007 485,798
500,000 Sears Credit Account Master Trust, Master Trust Certificates, Series 1999-3-A 6.45% 11/15/2009 480,628
500,000 Toyota Auto Receivables, Asset Backed Certificates, Series 1999-A-A3 6.15% 8/16/2004 493,213
497,126 Vornado Finance, LLC, Series 2000-VNO-A1 7.514% 3/15/2015 497,048
------------
Total Asset-Backed Securities (cost $3,462,991) 3,401,881
------------
FOREIGN GOVERNMENT BONDS - 2.2% (a,b)
250,000 Brazil (Republic of), Notes (USD) 14.5% 10/15/2009 264,000
500,000 Mexican United States, Notes 9.875% 2/1/2010 516,250
------------
Total Foreign Government Bonds (cost $791,583) 780,250
------------
U.S. GOVERNMENT AGENCY - 4.1%(a)
500,000 Federal Home Loan Mortgage Corp., Notes 6.875% 1/15/2005 492,676
1,000,000 Federal National Mortgage Association, Notes 5.625% 5/14/2004 943,696
------------
Total U.S. Government Agency (cost $1,465,536) 1,436,372
------------
U.S. GOVERNMENT - 33.1%(a)
12,000,000 U.S. Treasury Notes (cost $11,758,598) 5.75%-6.0% 2002-2004 11,709,375
------------
Shares
------------
COMMON STOCKS - 0.21(a)
22,500 Lucent Technologies, Inc. (cost $163,820) 155,469
------------
Principal Maturity
Amount Rate Date Value
---------- ---------- ---------- ----------
SHORT-TERM SECURITIES - 35.0%(a)
Commercial Paper - 18.3%
1,000,000 Corporate Asset Funding Co. 5.98% 5/2/2000 999,834
548,000 CXC, Inc. 6.03% 5/10/2000 547,174
1,000,000 Honeywell International, Inc. 6.0% 5/5/2000 999,333
1,000,000 McDonald's Corp. 5.95% 5/3/2000 999,669
835,000 Snap-On, Inc. 6.0% 5/4/2000 834,583
1,082,000 Triple-A One Funding Corp. 6.0% 5/1/2000 1,082,000
1,000,000 Wells Fargo Capital Co., Bonds, Series A 5.96% 5/1/2000 1,000,000
------------
6,462,593
------------
U.S. Government - 16.7%
5,920,000 Federal Home Loan Mortgage Corp., Discount Notes 5.88% 5/1/2000 5,920,000
------------
Total Short-Term Securities (at amortized cost) 12,382,593
------------
Total Investments (cost $35,665,077) $ 35,402,489(c)
============
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) At April 30, 2000, the aggregate cost of securities for federal
income tax purposes was $35,665,077 and the net unrealized depreciation
of investments based on that cost was $262,588 which is comprised of
$7,384 aggregate gross unrealized appreciation and $269,972 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
April 30, 2000
(unaudited)
Principal Maturity
Amount Yield Date Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
BANK NOTES - 1.1%(a)
Banking - Domestic
$ 7,000,000 First National Bank of Chicago, N.A. 6.05% 8/11/2000 $ 6,999,066
------------
CERTIFICATES OF DEPOSIT - 7.8%(a)
Banking - Domestic - 3.3%
7,000,000 Michigan National Bank 6.80% 4/6/2001 7,004,391
7,000,000 Morgan Guaranty Trust Co. of New York 5.75% 7/19/2000 6,999,221
7,000,000 U.S. Bank, N.A. 6.00% 6/21/2000 6,994,703
------------
20,998,315
------------
Banking - Foreign - 4.5%
8,000,000 Canadian Imperial Bank of Commerce 6.72% 2/12/2001 7,997,016
7,000,000 Svenska Handelsbanken NY 6.10% 7/27/2000 6,991,834
1,500,000 Svenska Handelsbanken NY 6.82% 3/16/2001 1,498,727
3,000,000 UBS Ag Stamford 6.12% 5/22/2000 2,998,256
2,500,000 UBS Ag Stamford 6.56% 12/4/2000 2,493,165
7,000,000 UBS Ag Stamford 6.90% 4/30/2001 6,998,674
------------
28,977,672
------------
Total Certificates of Deposit 49,975,987
------------
COMMERCIAL PAPER - 81.1%(a)
Banking - Foreign - 8.8%
7,000,000 Abbey National North America (Guaranteed Abbey National plc) 6.26% 8/30/2000 6,857,186
7,000,000 Abbey National North America (Guaranteed Abbey National plc) 6.46% 11/3/2000 6,777,213
10,000,000 Centerior Fuel Corp. (Direct Pay Letter of Credit, Barclays Bank plc) 6.09% 5/3/2000 9,996,622
7,000,000 Corporacion Adina de Fomento (Guaranteed Barclays Bank plc) 6.14% 5/31/2000 6,964,417
7,000,000 Deutsche Bank Financial Corp. (Guaranteed Deutsche Bank A.G.) 6.28% 10/13/2000 6,807,500
19,000,000 UBS Finance (Delaware) Inc. (Guaranteed Union Bank of Switzerland) 6.04% 5/1/2000 19,000,000
------------
56,402,938
------------
Chemicals - 4.9%
31,000,000 Great Lakes Chemical Corp. 6.04% 5/1/2000 31,000,000
------------
Consumer Products - 4.9%
31,100,000 Gillette Co. 6.03% 5/1/2000 31,100,000
------------
Drugs & Health Care - 2.2%
7,000,000 Schering Corp. (Guaranteed Schering Plough Corp.) 6.16% 7/26/2000 6,899,499
7,000,000 Schering Corp. (Guaranteed Schering Plough Corp.) 6.33% 8/29/2000 6,856,033
------------
13,755,532
------------
Finance - Automotive - 4.4%
7,000,000 DaimlerChrysler North America Holdings 6.06% 5/12/2000 6,987,081
7,000,000 DaimlerChrysler North America Holdings 6.06% 5/22/2000 6,975,378
7,000,000 Ford Motor Credit Co. 6.61% 10/6/2000 6,993,171
1,290,000 General Motors Acceptance Corp. (General Motors Corp.) 6.09% 5/22/2000 1,285,455
6,000,000 General Motors Acceptance Corp. (General Motors Corp.) 6.00% 6/5/2000 5,965,758
------------
28,206,843
------------
Finance - Commercial - 3.3%
7,000,000 General Electric Capital Corp. 6.09% 5/19/2000 6,978,790
7,000,000 General Electric Capital International Funding, Inc.
(Guaranteed General Electric Capital Corp.) 5.98% 5/5/2000 6,995,466
7,000,000 General Electric Credit Capital Services of Puerto Rico, Inc.
(Guaranteed General Electric Capital Corp.) 6.25% 8/25/2000 6,863,088
------------
20,837,344
------------
Finance - Consumer - 5.1%
1,160,000 American Express Credit Corp. 6.33% 8/1/2000 1,160,418
3,800,000 Associates Corp. of North America 6.04% 5/1/2000 3,800,000
7,000,000 Associates Financial Services Company of Puerto Rico, Inc.
(Guaranteed Associates Corp. of North America) 6.00% 5/18/2000 6,980,464
7,000,000 Associates Financial Services Company of Puerto Rico, Inc.
(Guaranteed Associates Corp. of North America) 6.06% 5/25/2000 6,972,140
7,000,000 Associates Financial Services Company of Puerto Rico, Inc.
(Guaranteed Associates Corp. of North America) 6.22% 6/13/2000 6,948,663
7,000,000 Associates Financial Services Company of Puerto Rico, Inc.
(Guaranteed Associates Corp. of North America) 6.24% 7/10/2000 6,916,292
------------
32,777,977
------------
Finance - Structured - 13.8%
10,000,000 CXC, Inc. 6.06% 5/1/2000 10,000,000
7,000,000 CXC, Inc. 6.13% 5/15/2000 6,983,449
7,000,000 CXC, Inc. 6.02% 5/23/2000 6,974,590
7,000,000 CXC, Inc. 6.12% 5/26/2000 6,970,493
6,000,000 Delaware Funding Corp. 6.07% 5/3/2000 5,997,987
5,106,000 Delaware Funding Corp. 6.22% 7/6/2000 5,048,617
7,000,000 Preferred Receivables Funding 6.13% 5/11/2000 6,988,178
8,902,000 Preferred Receivables Funding 6.15% 5/30/2000 8,858,328
20,000,000 Triple-A One Funding Corp. 6.04% 5/1/2000 20,000,000
3,403,000 Triple-A One Funding Corp. 6.05% 5/2/2000 3,402,430
7,000,000 Triple-A One Funding Corp. 6.09% 5/16/2000 6,982,325
------------
88,206,397
------------
Food & Beverage - 1.6%
5,000,000 BestFoods 6.27% 7/10/2000 4,940,111
5,000,000 Heinz (H.J.) Co. 6.08% 5/3/2000 4,998,319
------------
9,938,430
------------
Insurance - 12.0%
7,000,000 Aegon Funding Corp. (Guaranteed Aegon N.V.) 6.34% 9/6/2000 6,846,933
7,000,000 Aegon Funding Corp. (Guaranteed Aegon N.V.) 6.50% 12/6/2000 6,735,983
10,000,000 American Family Financial Services (Guaranteed American Family
Mutual Insurance Co.) 6.06% 7/17/2000 9,874,233
7,000,000 American Family Financial Services (Guaranteed American Family
Mutual Insurance Co.) 6.28% 9/11/2000 6,843,282
7,000,000 American Family Financial Services (Guaranteed American Family
Mutual Insurance Co.) 6.44% 10/16/2000 6,796,160
30,000,000 American General Finance Corp. 6.03% 5/1/2000 30,000,000
3,000,000 Prudential Funding Corp. 6.16% 5/31/2000 2,984,800
7,000,000 Prudential Funding Corp. 6.08% 7/10/2000 6,919,558
------------
77,000,949
------------
Metals & Mining - 2.5%
15,913,000 Alcoa, Inc. 6.06% 5/4/2000 15,904,977
------------
Oil & Gas - 9.0%
7,000,000 Chevron Transport Corp. (Guaranteed Chevron Corp.) 5.99% 5/8/2000 6,992,051
7,000,000 Chevron Transport Corp. (Guaranteed Chevron Corp.) 6.12% 6/6/2000 6,957,440
6,000,000 Chevron Transport Corp. (Guaranteed Chevron Corp.) 6.22% 8/14/2000 5,894,300
7,000,000 Chevron Transport Corp. (Guaranteed Chevron Corp.) 6.36% 9/18/2000 6,832,311
31,000,000 Koch Industries, Inc. 6.04% 5/1/2000 31,000,000
------------
57,676,102
------------
Retail - Department Stores - 0.6%
3,828,000 Wal-Mart Stores, Inc. 6.08% 5/8/2000 3,823,504
------------
Services - 0.4%
2,800,000 Leland H. Stanford Junior University 6.00% 5/24/2000 2,789,410
------------
Technology - Hardware - 0.5%
3,510,000 Honeywell International, Inc. 6.04% 5/1/2000 3,510,000
------------
Technology - Services - 0.5%
3,000,000 Electronic Data Systems Corp. 6.09% 5/15/2000 3,000,776
------------
Telecommunications - Wireline - 2.2%
7,000,000 AT&T Corp. 5.94% 5/4/2000 6,996,593
7,000,000 AT&T Corp. 6.67% 3/8/2001 7,000,000
------------
13,996,593
------------
U.S. Municipal - 4.4%
7,000,000 California Pollution Control Finance Authority; Environmental
Improvement Revenue Bonds; Series 1996 (Guaranteed Shell Oil Co.) 6.08% 5/10/2000 7,000,000
7,000,000 California Pollution Control Finance Authority; Environmental
Improvement Revenue Bonds; Series 1996 (Guaranteed Shell Oil Co.) 6.07% 6/12/2000 7,000,000
7,000,000 City of Whiting, Indiana; Industrial Sewage & Solid Waste Disposal;
Series 1995A (Guaranteed BP Amoco plc) 6.00% 5/9/2000 7,000,000
7,250,000 Metrocrest Hospital Authority, Series 1989 (Bank of New York Direct
Pay Letter of Credit 6.15% 5/17/2000 7,230,377
------------
28,230,377
------------
Total Commercial Paper 518,158,149
------------
MEDIUM TERM NOTES - 4.6%(a)
Banking - Domestic - 0.5%
3,000,000 Norwest Corp. 5.69% 5/12/2000 3,000,911
------------
Finance - Automotive - 2.5%
1,000,000 Ford Motor Credit Co. 6.82% 2/23/2001 992,856
5,000,000 General Motors Acceptance Corp. (General Motors Corp.) 6.24% 5/24/2000 5,001,263
3,000,000 General Motors Acceptance Corp. (General Motors Corp.) 6.25% 7/5/2000 3,003,366
2,000,000 General Motors Acceptance Corp. (General Motors Corp.) 6.59% 10/20/2000 1,988,635
2,500,000 General Motors Acceptance Corp. (General Motors Corp.) 6.81% 4/9/2001 2,477,437
2,530,000 General Motors Acceptance Corp. (General Motors Corp.) 6.78% 4/17/2001 2,531,632
------------
15,995,189
------------
Finance - Commercial - 1.4%
7,000,000 CIT Group, Inc. 6.18% 6/2/2000 7,003,027
2,000,000 CIT Group, Inc. 6.39% 10/6/2000 1,988,297
------------
8,991,324
------------
Finance - Consumer - 0.2%
1,120,000 American General Corp. 6.18% 5/15/2000 1,120,252
------------
Total Medium Term Notes 29,107,676
------------
VARIABLE RATE NOTES - 2.8% (a,b)
U.S. Municipal
8,000,000 Illinois Student Assistance Commission (Bank of America, Illinois,
Direct Pay Letter of Credit) 6.12% 5/3/2000 8,000,000
10,000,000 Illinois Student Assistance Commission (Student Loan Marketing Association,
Direct Pay Letter of Credit) 6.10% 5/3/2000 10,000,000
------------
Total Variable Rate Notes 18,000,000
------------
U.S. GOVERNMENT AGENCY - 2.6%(a)
3,000,000 Federal Home Loan Bank 6.08% 6/2/2000 2,998,612
7,000,000 Federal Home Loan Bank 6.29% 11/10/2000 6,775,209
7,000,000 Federal National Mortgage Association 6.09% 7/6/2000 6,925,182
------------
Total U.S. Government Agency 16,699,003
------------
Total Investments (at amortized cost) $638,939,881(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
April 30, 2000
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value (cost, $254,034,914) $276,281,509
Cash 94,294
Receivable for investment securities sold 6,291,686
Dividend receivable 8,382
------------
Total assets 282,675,871
------------
LIABILITIES:
Payable for investment securities purchased 12,185,490
Accrued expenses 195,722
------------
Total liabilities 12,381,212
------------
NET ASSETS $270,294,659
============
NET ASSETS CONSIST OF:
Paid-in capital $221,284,220
Accumulated net investment loss (1,330,745)
Accumulated net realized gain from sale of investments 28,094,589
Unrealized net appreciation of investments 22,246,595
------------
NET ASSETS $270,294,659
============
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $247,577,146 and 17,924,481 shares of beneficial interest outstanding) $13.81
======
Maximum public offering price per share (based on a net asset value per
share of $13.81 divided by 0.96 for a 4% sales charge) $14.39
======
Class B Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $12,779,837 and 942,154 shares of
beneficial interest outstanding) $13.56
======
Institutional Class Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $9,937,676 and 713,997 shares of
beneficial interest outstanding) $13.92
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended April 30, 2000
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Dividend income $ 149,513
Interest income 369,819
------------
Total income 519,332
------------
Expenses --
Investment advisory fee 585,813
Distribution and service plan fees:
Class A 311,235
Class B 57,427
Institutional Class 7,757
Transfer agent services 604,691
Custodian fee 77,691
Administrative personnel and services 27,081
Printing and postage 132,726
Trust share registration costs 32,367
Auditing fees 2,482
Legal fees 2,062
Trustees' fees 4,063
Miscellaneous 2,510
------------
Total expenses 1,847,905
Fees paid indirectly (5,257)
------------
Net expenses 1,842,648
------------
Net investment loss (1,323,316)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions 45,753,821
Net change in unrealized appreciation of investments 8,215,936
------------
Net gain on investments 53,969,757
------------
Net increase in net assets resulting from operations $ 52,646,441
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
4/30/2000 Year Ended
INCREASE (DECREASE) IN NET ASSETS: (unaudited) 10/31/99
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment loss $ (1,323,316) $ (2,721,565)
Net realized gain on investments 45,753,821 3,498,799
Net change in unrealized appreciation or depreciation of investments 8,215,936 39,085,693
------------ ------------
Net increase in net assets resulting from operations 52,646,441 39,862,927
------------ ------------
NET TRUST SHARE TRANSACTIONS:
Class A (6,940,492) (37,324,818)
Class B 2,382,330 3,290,263
Institutional Class (1,115,258) 2,182,297
------------ ------------
Net change in net assets resulting from trust share transactions (5,673,420) (31,852,258)
------------ ------------
Net increase in net assets 46,973,021 8,010,669
NET ASSETS:
Beginning of period 223,321,638 215,310,969
------------ ------------
End of period $270,294,659 $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
April 30, 2000
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value (cost, $119,171,168) $145,773,116
Cash 21,458
Receivable for investment securities sold 504,075
Dividend receivable 16,538
Unamortized organization costs 11,441
------------
Total assets 146,326,628
------------
LIABILITIES:
Payable for investment securities purchased 637,429
Accrued expenses 96,980
------------
Total liabilities 734,409
------------
NET ASSETS $145,592,219
============
NET ASSETS CONSIST OF:
Paid-in capital 103,310,092
Accumulated net investment loss (652,491)
Accumulated net realized gain from sale of investments 16,332,670
Unrealized net appreciation of investments 26,601,948
------------
NET ASSETS $145,592,219
============
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $113,160,453 and 6,490,983 shares of beneficial interest outstanding) $17.43
======
Maximum public offering price per share (based on a net asset value per
share of $17.43 divided by 0.96 for a 4% sales charge) $18.16
======
Class B Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $29,269,125 and 1,711,710 shares of
beneficial interest outstanding) $17.10
======
Institutional Class Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $3,162,641 and 179,989 shares of
beneficial interest outstanding) $17.57
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended April 30, 2000
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Dividend income $ 142,712
Interest income 188,191
------------
Total income 330,903
------------
Expenses --
Investment advisory fee 253,834
Distribution and service plan fees:
Class A 111,264
Class B 116,725
Institutional Class 1,597
Transfer agent services 307,290
Custodian fee 68,720
Administrative personnel and services 11,448
Printing and postage 63,800
Trust share registration costs 38,490
Auditing fees 2,300
Legal fees 910
Trustees' fees 2,850
Amortization of organization costs 2,737
Miscellaneous 816
------------
Total expenses 982,781
Fees paid indirectly (2,864)
------------
Net expenses 979,917
------------
Net investment loss (649,014)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions 16,655,963
Net change in unrealized appreciation of investments 15,178,171
------------
Net gain on investments 31,834,134
------------
Net increase in net assets resulting from operations $ 31,185,120
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
4/30/2000 Year Ended
INCREASE (DECREASE) IN NET ASSETS: (unaudited) 10/31/99
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment loss $ (649,014) $ (851,078)
Net realized gain on investments 16,655,963 5,471,578
Net change in unrealized appreciation or depreciation of investments 15,178,171 13,367,574
------------ ------------
Net increase in net assets resulting from operations 31,185,120 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 31,871,872 12,960,104
Class B 7,622,533 6,053,517
Institutional Class 1,522,899 273,449
------------ ------------
Net increase in net assets from trust share transactions 41,017,304 19,287,070
------------ ------------
Net increase in net assets 69,340,334 37,275,144
NET ASSETS:
Beginning of period 76,251,885 38,976,741
------------ ------------
End of period $145,592,219 $ 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
April 30, 2000
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value (cost, $102,279,558) $135,747,764
Cash (including foreign currency holdings of $918,775) 948,056
Receivable for investment securities sold 324,963
Dividend receivable 306,974
Unamortized organization costs 3,380
------------
Total assets 137,331,137
------------
LIABILITIES:
Payable for investment securities purchased 44,006
Accrued expenses 94,144
------------
Total liabilities 138,150
------------
NET ASSETS $137,192,987
============
NET ASSETS CONSIST OF:
Paid-in capital $ 99,960,852
Accumulated net investment loss (468,276)
Accumulated net realized gain from sale of investments
and foreign currency transactions 4,258,516
Unrealized net appreciation of investments and on translation of assets
and liabilities in foreign currencies 33,441,895
------------
NET ASSETS $137,192,987
============
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $108,547,844 and 7,886,714 shares of beneficial interest outstanding) $13.76
======
Maximum public offering price per share (based on a net asset value per
share of $13.76 divided by 0.96 for a 4% sales charge) $14.33
======
Class B Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $12,075,924 and 892,448 shares of beneficial interest outstanding) $13.53
======
Institutional Class Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $16,569,219 and 1,196,316 shares of beneficial interest outstanding) $13.85
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended April 30, 2000
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Dividend income (net of foreign taxes of $75,834) $ 525,569
Interest income 159,180
------------
Total income 684,749
------------
Expenses --
Investment advisory fee 487,223
Distribution and service plan fees:
Class A 129,032
Class B 52,380
Institutional Class 12,169
Transfer agent services 282,989
Custodian fee 62,988
Administrative personnel and services 12,993
Printing and postage 61,937
Trust share registration costs 34,014
Auditing fees 2,392
Legal fees 577
Trustees' fees 2,852
Amortization of organization costs 5,096
Miscellaneous 1,270
------------
Total expenses 1,147,912
Fees paid indirectly (806)
------------
Net expenses 1,147,106
------------
Net investment loss (462,357)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY:
Net realized gain on investment transactions 4,965,671
Net realized loss on foreign currency transactions (43,115)
------------
Net realized gain on investments and foreign currency transactions 4,922,556
------------
Net change in unrealized appreciation of investments 9,418,575
Net change in unrealized depreciation on translation
of assets and liabilities in foreign currencies (24,829)
------------
Net change in unrealized appreciation of investments and on translation
of assets and liabilities in foreign currencies 9,393,746
------------
Net gain on investments and foreign currency 14,316,302
------------
Net increase in net assets resulting from operations $ 13,853,945
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months Ended
4/30/2000 Year Ended
INCREASE (DECREASE) IN NET ASSETS: (unaudited) 10/31/99
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment loss $ (462,357) $ (90,998)
Net realized gain on investments and foreign currency transactions 4,922,556 4,075,707
Net change in unrealized appreciation or depreciation of investments and
on translation of assets and liabilities in foreign currencies 9,393,746 13,181,630
------------ ------------
Net increase in net assets resulting from operations 13,853,945 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 12,585,644 1,035,539
Class B 3,315,804 3,623,615
Institutional Class 1,064,261 1,704,486
------------ ------------
Net increase in net assets from trust share transactions 16,965,709 6,363,640
------------ ------------
Net increase in net assets 27,364,428 22,895,656
NET ASSETS:
Beginning of period 109,828,559 86,932,903
------------ ------------
End of period $137,192,987 $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
April 30, 2000
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value (cost, $24,530,072) $ 25,974,012
Cash 10,185
Receivable for investment securities sold 191,739
Dividend receivable 9,107
------------
Total assets 26,185,043
------------
LIABILITIES:
Payable for investment securities purchased 712,822
Accrued expenses 11,988
------------
Total liabilities 724,810
------------
NET ASSETS $ 25,460,233
============
NET ASSETS CONSIST OF:
Paid-in capital $ 24,074,106
Accumulated net investment loss (25,268)
Accumulated net realized loss from sale of investments (32,545)
Unrealized net appreciation of investments 1,443,940
------------
NET ASSETS $ 25,460,233
============
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $16,123,176 and 824,123 shares of beneficial interest outstanding) $19.56
======
Maximum public offering price per share (based on a net asset value per
Share of $19.56 divided by 0.96 for a 4% sales charge) $20.38
======
Class B Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $4,424,806 and 227,010 shares of
beneficial interest outstanding) $19.49
======
Institutional Class Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $4,912,251 and 250,167 shares of
beneficial interest outstanding) $19.64
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended April 30, 2000
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Dividend income $ 31,729
Interest income 23,815
------------
Total income 55,544
------------
Expenses --
Investment advisory fee 28,180
Distribution and service plan fees:
Class A 8,717
Class B 12,133
Institutional Class 2,896
Transfer agent services 30,300
Custodian fee 3,315
Administrative personnel and services 1,326
Printing and postage 16,100
Trust share registration costs 34,615
Auditing fees 2,030
Legal fees 577
Trustees' fees 2,850
Miscellaneous 299
------------
Total expenses 143,338
Expense reimbursement from investment advisor (62,526)
------------
Net expenses 80,812
------------
Net investment loss (25,268)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investment transactions (32,545)
Net change in unrealized appreciation of investments 1,448,070
------------
Net gain on investments 1,415,525
------------
Net increase in net assets resulting from operations $ 1,390,257
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months For the period from
Ended October 29, 1999
4/30/2000 (effective date) to
INCREASE (DECREASE) IN NET ASSETS: (unaudited) October 31, 1999
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment loss $ (25,268) $ --
Net realized loss on investments (32,545) --
Net change in unrealized appreciation or depreciation of investments 1,448,070 (4,130)
------------ ------------
Net change in net assets resulting from operations 1,390,257 (4,130)
------------ ------------
NET TRUST SHARE TRANSACTIONS:
Class A 14,586,747 1,000,000
Class B 3,166,882 1,000,000
Institutional Class 1,320,477 3,000,000
------------ ------------
Net increase in net assets from trust share transactions 19,074,106 5,000,000
------------ ------------
Net increase in net assets 20,464,363 4,995,870
NET ASSETS:
Beginning of period 4,995,870 --
------------ ------------
End of period $ 25,460,233 $ 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
April 30, 2000
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value (cost, $1,293,840,525) $ 1,626,622,237
Cash 92,494
Receivable for investment securities sold 19,306,816
Dividend receivable 1,068,892
---------------
Total assets 1,647,090,439
---------------
LIABILITIES:
Payable for investment securities purchased 957,135
Accrued expenses 544,309
---------------
Total liabilities 1,501,444
---------------
NET ASSETS $ 1,645,588,995
===============
NET ASSETS CONSIST OF:
Paid-in capital $ 1,221,418,800
Undistributed net investment income 107,522
Accumulated net realized gain from sale of investments 91,280,961
Unrealized net appreciation of investments 332,781,712
---------------
NET ASSETS $ 1,645,588,995
===============
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$1,515,397,722 and 52,112,651 shares of beneficial interest outstanding) $29.08
======
Maximum public offering price per share (based on a net asset value per
share of $29.08 divided by 0.96 for a 4% sales charge) $30.29
======
Class B Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $81,741,470 and 2,849,366 shares of
beneficial interest outstanding) $28.69
======
Institutional Class Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $48,449,803 and 1,664,764 shares of
beneficial interest outstanding) $29.10
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended April 30, 2000
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Dividend income $ 6,637,072
Interest income 1,335,592
------------
Total income 7,972,664
------------
Expenses --
Investment advisory fee 2,778,384
Distribution and service plan fees:
Class A 1,856,632
Class B 364,690
Institutional Class 34,034
Transfer agent services 1,441,264
Custodian fee 131,305
Administrative personnel and services 160,363
Printing and postage 321,692
Trust share registration costs 73,424
Auditing fees 12,136
Legal fees 13,711
Trustees' fees 9,100
Miscellaneous 10,814
------------
Total expenses 7,207,549
Expense reimbursement from investment advisor (400,906)
Fees paid indirectly (1,052)
------------
Net expenses 6,805,591
------------
Net investment income 1,167,073
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions 94,027,615
Net change in unrealized appreciation of investments 26,144,601
------------
Net gain on investments 120,172,216
------------
Net increase in net assets resulting from operations $121,339,289
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
4/30/2000 Year Ended
INCREASE (DECREASE) IN NET ASSETS: (unaudited) 10/31/99
------------ ------------
OPERATIONS:
<S> <C> <C>
Net investment income $ 1,167,073 $ 3,144,054
Net realized gain on investments 94,027,615 229,981,547
Net change in unrealized appreciation or depreciation of investments 26,144,601 69,573,130
------------ --------------
Net increase in net assets resulting from operations 121,339,289 302,698,731
------------ --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Class A (1,405,479) (3,484,091)
Institutional Class (104,025) (192,254)
Net realized gains:
Class A (202,251,143) (125,371,620)
Class B (9,392,405) (2,922,634)
Institutional Class (6,138,648) (3,222,146)
------------ --------------
Total distributions (219,291,700) (135,192,745)
------------ --------------
NET TRUST SHARE TRANSACTIONS:
Class A 181,892,605 145,838,693
Class B 22,696,737 33,368,795
Institutional Class 7,975,723 10,112,252
-------------- --------------
Net increase in net assets from trust share transactions 212,565,065 189,319,740
-------------- --------------
Net increase in net assets 114,612,654 356,825,726
NET ASSETS:
Beginning of period 1,530,976,341 1,174,150,615
-------------- --------------
End of period (including undistributed net investment income of $107,522
and $449,953, respectively) $1,645,588,995 $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
April 30, 2000
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value (cost, $14,539,277) $ 15,168,529
Cash 2,566
Receivable for investment securities sold 3,178
Dividend receivable 13,001
------------
Total assets 15,187,274
------------
LIABILITIES:
Payable for investment securities purchased 167,595
------------
NET ASSETS $ 15,019,679
============
NET ASSETS CONSIST OF:
Paid-in capital $ 14,395,093
Undistributed net investment income 20,415
Accumulated net realized loss from sale of investments (25,081)
Unrealized net appreciation of investments 629,252
------------
NET ASSETS $ 15,019,679
============
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $8,946,276 and 582,956 shares of beneficial interest outstanding) $15.35
======
Maximum public offering price per share (based on a net asset value per
share of $15.35 divided by 0.96 for a 4% sales charge) $15.99
======
Class B Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $2,625,143 and 171,698 shares of
beneficial interest outstanding) $15.29
======
Institutional Class Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $3,448,260 and 223,875 shares of
beneficial interest outstanding) $15.40
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended April 30, 2000
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Dividend income $ 55,890
Interest income 18,658
------------
Total income 74,548
------------
Expenses --
Investment advisory fee 18,266
Distribution and service plan fees:
Class A 5,370
Class B 8,442
Institutional Class 2,362
Transfer agent services 18,724
Custodian fee 2,283
Administrative personnel and services 913
Printing and postage 10,448
Trust share registration costs 33,939
Auditing fees 2,331
Legal fees 577
Trustees' fees 2,852
Miscellaneous 331
------------
Total expenses 106,838
Expense reimbursement from investment advisor (52,705)
------------
Net expenses 54,133
------------
Net investment income 20,415
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investment transactions (25,081)
Net change in unrealized appreciation of investments 632,914
------------
Net gain on investments 607,833
------------
Net increase in net assets resulting from operations $ 628,248
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months For the period from
Ended October 29, 1999
4/30/2000 (effective date) to
INCREASE (DECREASE) IN NET ASSETS: (unaudited) October 31, 1999
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 20,415 $ --
Net realized loss on investments (25,081) --
Net change in unrealized appreciation or depreciation of investments 632,914 (3,662)
------------ ------------
Net change in net assets resulting from operations 628,248 (3,662)
------------ ------------
NET TRUST SHARE TRANSACTIONS:
Class A 7,617,071 1,000,000
Class B 1,521,791 1,000,000
Institutional Class 256,231 3,000,000
------------ ------------
Net increase in net assets from trust share transactions 9,395,093 5,000,000
------------ ------------
Net increase in net assets 10,023,341 4,996,338
NET ASSETS:
Beginning of period 4,996,338 --
------------ ------------
End of period (including undistributed net investment income of $20,415
and $0, respectively) $ 15,019,679 $ 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
April 30, 2000
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value (cost $1,017,925,295) $ 862,427,585
Cash 82,736
Receivable for investment securities sold 10,521,012
Receivable for capital stock sold 14,616
Interest and dividend receivable 22,443,753
---------------
Total assets 895,489,702
---------------
LIABILITIES:
Payable for investment securities purchased 10,419,380
Accrued expenses 306,825
---------------
Total liabilities 10,726,205
---------------
NET ASSETS $ 884,763,497
===============
NET ASSETS CONSIST OF:
Paid-in capital $ 1,046,537,585
Undistributed net investment income 3,742,848
Accumulated net realized loss from sale of investments (10,019,226)
Unrealized net depreciation of investments (155,497,710)
---------------
NET ASSETS $ 884,763,497
===============
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $820,610,979 and 106,417,039 shares of beneficial interest outstanding) $7.71
======
Maximum public offering price per share (based on a net asset value
per share of $7.71 divided by 0.96 for a 4% sales charge) $8.03
======
Class B Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $39,489,788 and 5,127,114 shares
of beneficial interest outstanding) $7.70
======
Institutional Class Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $24,662,730 and 3,196,291 shares
of beneficial interest outstanding) $7.72
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended April 30, 2000
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Interest income $ 46,995,930
Dividend income 5,427,115
------------
Total income 52,423,045
------------
Expenses --
Investment advisory fee 1,737,154
Distribution and service plan fees:
Class A 1,052,874
Class B 191,014
Institutional Class 30,839
Transfer agent services 809,060
Custodian fee 126,347
Administrative personnel and services 92,162
Printing and postage 180,788
Trust share registration costs 44,311
Auditing fees 7,798
Legal fees 8,736
Trustees' fees 7,826
Miscellaneous 7,513
------------
Total expenses 4,296,422
Expense reimbursement from investment advisor (230,405)
Fees paid indirectly (10,195)
------------
Net expenses 4,055,822
------------
Net investment income 48,367,223
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions 11,367,481
Net change in unrealized depreciation of investments (30,923,720)
------------
Net loss on investments (19,556,239)
------------
Net increase in net assets resulting from operations $ 28,810,984
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
4/30/2000 Year Ended
INCREASE (DECREASE) IN NET ASSETS: (unaudited) 10/31/99
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 48,367,223 $ 91,612,787
Net realized gain (loss) on investment transactions 11,367,481 (20,631,347)
Net change in unrealized appreciation or depreciation of investments (30,923,720) (5,076,255)
------------ ------------
Net increase in net assets resulting from operations 28,810,984 65,905,185
------------ ------------
DISTRIBUTIONS PAID TO SHAREHOLDERS:
Net investment income:
Class A (42,530,580) (84,935,008)
Class B (1,797,617) (2,709,588)
Institutional Class (2,076,404) (5,718,827)
------------ ------------
Total distributions (46,404,601) (93,363,423)
------------ ------------
NET TRUST SHARE TRANSACTIONS:
Class A 14,425,667 62,933,005
Class B 5,983,678 16,538,897
Institutional Class (28,703,767) 2,213,497
------------ ------------
Net change in net assets from trust share transactions (8,294,422) 81,685,399
------------ ------------
Net change in net assets (25,888,039) 54,227,161
NET ASSETS:
Beginning of period 910,651,536 856,424,375
------------ ------------
End of period (including undistributed net investment income of
$3,742,848 and $1,780,226, respectively) $884,763,497 $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
April 30, 2000
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value (cost, $753,419,338) $726,827,820
Cash 50,765
Receivable for investment securities sold 1,190,488
Interest and dividend receivable 10,837,484
------------
Total assets 738,906,557
------------
LIABILITIES:
Open options written, at value (premium received $161,945) 96,875
Payable for investment securities purchased 62,543,723
Accrued expenses 232,676
Payable for variation margin on open futures contracts 6,250
------------
Total liabilities 62,879,524
------------
NET ASSETS $676,027,033
============
NET ASSETS CONSIST OF:
Paid-in capital $758,819,532
Undistributed net investment income 1,662,611
Accumulated net realized loss from sale of investments (57,922,412)
Unrealized net depreciation of investments (26,532,698)
------------
NET ASSETS $676,027,033
============
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $625,479,948 and 77,710,859 shares of beneficial interest outstanding) $8.05
======
Maximum public offering price per share (based on a net asset value
per share of $8.05 divided by 0.96 for a 4% sales charge) $8.39
======
Class B Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $15,521,606 and 1,932,343 shares
of beneficial interest outstanding) $8.03
======
Institutional Class Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $35,025,479 and 4,353,869 shares
of beneficial interest outstanding) $8.04
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended April 30, 2000
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Interest income $ 25,036,321
Dividend income 96,302
------------
Total income 25,132,623
------------
Expenses --
Investment advisory fee 1,197,998
Distribution and service plan fees:
Class A 812,653
Class B 75,665
Institutional Class 25,291
Transfer agent services 626,797
Custodian fee 87,818
Administrative personnel and services 69,898
Printing and postage 138,809
Trust share registration costs 38,456
Auditing fees 6,431
Legal fees 7,037
Trustees' fees 7,826
Miscellaneous 6,300
------------
Total expenses 3,100,979
Expense reimbursement from investment advisor (174,744)
Fees paid indirectly (1,498)
------------
Net expenses 2,924,737
------------
Net investment income 22,207,886
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investment transactions (12,995,413)
Net realized gain on closed or expired option contracts written 301,055
Net realized gain on closed futures contracts 142,360
------------
Net realized loss on investments (12,551,998)
Net change in unrealized depreciation of investments (1,736,311)
------------
Net loss on investments (14,288,309)
------------
Net increase in net assets resulting from operations $ 7,919,577
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
4/30/2000 Year Ended
INCREASE (DECREASE) IN NET ASSETS: (unaudited) 10/31/99
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 22,207,886 $ 44,969,852
Net realized loss on investment transactions (12,551,998) (8,553,807)
Net change in unrealized appreciation or depreciation of investments (1,736,311) (42,047,117)
------------ ------------
Net change in net assets resulting from operations 7,919,577 (5,631,072)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Class A (21,226,204) (41,348,175)
Class B (435,750) (594,911)
Institutional Class (1,153,232) (1,832,238)
------------ ------------
Total distributions (22,815,186) (43,775,324)
------------ ------------
NET TRUST SHARE TRANSACTIONS:
Class A (40,113,962) (13,065,882)
Class B 1,190,005 8,560,100
Institutional Class 3,963,498 7,178,472
------------ ------------
Net change in net assets from trust share transactions (34,960,459) 2,672,690
------------ ------------
Net change in net assets (49,856,068) (46,733,706)
NET ASSETS:
Beginning of period 725,883,101 772,616,807
------------ ------------
End of period (including undistributed net investment income of
$1,662,611 and $2,269,911, respectively) $676,027,033 $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
April 30, 2000
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value (cost, $530,105,708) $551,814,101
Cash 2,170
Receivable for investment securities sold 5,664,943
Interest receivable 8,611,254
------------
Total assets 566,092,468
------------
LIABILITIES:
Payable for investment securities purchased 2,013,383
Accrued expenses 125,885
------------
Total liabilities 2,139,268
------------
NET ASSETS $563,953,200
============
NET ASSETS CONSIST OF:
Paid-in capital $543,560,983
Undistributed net investment income 968,492
Accumulated net realized loss from sale of investments (2,284,668)
Unrealized net appreciation of investments 21,708,393
------------
NET ASSETS $563,953,200
============
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $551,477,684 and 65,611,269 shares of beneficial interest outstanding) $8.41
======
Maximum public offering price per share (based on a net asset value
per share of $8.41 divided by 0.96 for a 4% sales charge) $8.76
======
Class B Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $9,008,334 and 1,074,274 shares of
beneficial interest outstanding) $8.39
======
Institutional Class Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $3,467,182 and 412,578 shares of
beneficial interest outstanding) $8.40
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended April 30, 2000
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Interest income $ 16,937,324
------------
Expenses --
Investment advisory fee 923,673
Distribution and service plan fees:
Class A 698,552
Class B 43,651
Institutional Class 2,766
Transfer agent services 231,968
Custodian fee 91,428
Administrative personnel and services 57,126
Printing and postage 55,320
Trust share registration costs 34,732
Auditing fees 5,157
Legal fees 5,703
Trustees' fees 7,826
Miscellaneous 5,421
------------
Total expenses 2,163,323
Expense reimbursement from investment advisor (142,814)
Fees paid indirectly (15,989)
------------
Net expenses 2,004,520
------------
Net investment income 14,932,804
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions 838,578
Net change in unrealized appreciation of investments (2,560,726)
------------
Net loss on investments (1,722,148)
------------
Net increase in net assets resulting from operations $ 13,210,656
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
4/30/2000 Year Ended
INCREASE (DECREASE) IN NET ASSETS: (unaudited) 10/31/99
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 14,932,804 $ 29,728,298
Net realized gain on investment transactions 838,578 516,433
Net change in unrealized appreciation or depreciation of investments (2,560,726) (46,467,806)
------------ ------------
Net change in net assets resulting from operations 13,210,656 (16,223,075)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Class A (15,054,082) (29,754,233)
Class B (201,582) (284,277)
Institutional Class (101,467) (221,032)
------------ ------------
Total distributions (15,357,131) (30,259,542)
------------ ------------
NET TRUST SHARE TRANSACTIONS:
Class A (17,067,262) 11,180,633
Class B 601,070 5,049,674
Institutional Class (823,994) 628,862
------------ ------------
Net change in net assets from trust share transactions (17,290,186) 16,859,169
------------ ------------
Net change in net assets (19,436,661) (29,623,448)
NET ASSETS:
Beginning of period 583,389,861 613,013,309
------------ ------------
End of period (including undistributed net investment income of $968,492
and $1,392,819, respectively) $563,953,200 $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
April 30, 2000
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value (cost, $35,665,077) $ 35,402,489
Cash 8,906
Interest and dividend receivable 463,323
------------
Total assets 35,874,718
------------
LIABILITIES:
Payable for investment securities purchased 8,505,390
Dividends payable 100,700
------------
Total liabilities 8,606,090
------------
NET ASSETS $ 27,268,628
============
NET ASSETS CONSIST OF:
Paid-in capital $ 27,656,183
Accumulated net realized loss from sale of investments (124,967)
Unrealized net depreciation of investments (262,588)
------------
NET ASSETS $ 27,268,628
============
Class A Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $12,076,545 and 982,859 shares of
beneficial interest outstanding) $12.29
======
Class B Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $4,945,598 and 402,488 shares of
beneficial interest outstanding) $12.29
======
Institutional Class Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $10,246,485 and 833,886 shares of
beneficial interest outstanding) $12.29
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended April 30, 2000
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Interest income $ 758,005
Dividend income 50
------------
Total income 758,055
------------
Expenses --
Investment advisory fee 35,124
Service plan fees:
Class A 10,590
Class B 6,177
Institutional Class 7,502
Transfer agent services 8,768
Custodian fee 5,854
Administrative personnel and services 2,342
Printing and postage 5,923
Trust share registration costs 32,612
Auditing fees 2,030
Legal fees 577
Trustees' fees 2,850
Miscellaneous 212
------------
Total expenses 120,561
Expense reimbursement from investment advisor (20,936)
------------
Net expenses 99,625
------------
Net investment income 658,430
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investment transactions (124,967)
Net change in unrealized depreciation of investments (309,385)
------------
Net loss on investments (434,352)
------------
Net increase in net assets resulting from operations $ 224,078
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months For the period from
Ended October 29, 1999
4/30/2000 (effective date) to
INCREASE (DECREASE) IN NET ASSETS: (unaudited) October 31, 1999
------------ ----------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 658,430 $ --
Net realized loss on investment transactions (124,967) --
Net change in unrealized appreciation or depreciation of investments (309,385) 46,797
------------ ------------
Net increase in net assets resulting from operations 224,078 46,797
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Class A (235,694) --
Class B (135,871) --
Institutional Class (286,865) --
------------ ------------
Total distributions (658,430) --
------------ ------------
NET TRUST SHARE TRANSACTIONS:
Class A 7,207,691 5,000,000
Class B 30,831 5,000,000
Institutional Class 417,661 10,000,000
------------ ------------
Net increase in net assets from trust share transactions 7,656,183 20,000,000
------------ ------------
Net increase in net assets 7,221,831 20,046,797
NET ASSETS:
Beginning of period 20,046,797 --
------------ ------------
End of period $ 27,268,628 $ 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
April 30, 2000
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at amortized cost and value $638,939,881
Cash 3,400,277
Receivable for trust shares sold 50,000
Interest receivable 2,603,042
------------
Total assets 644,993,200
------------
LIABILITIES:
Dividends payable 224,957
Accrued expenses 336,052
------------
Total liabilities 561,009
------------
NET ASSETS $644,432,191
============
NET ASSETS CONSIST OF:
Paid-in capital $644,432,191
============
Class A Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $599,255,174 and 599,255,174 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 $281,264 and 281,264 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 $44,895,753 and 44,895,753 shares of
beneficial interest outstanding) $1.00
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended April 30, 2000
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Interest income $ 19,184,910
Expenses --
Investment advisory fee 789,897
Service plan fees:
Class A 745,902
Class B 397
Institutional Class 37,380
Transfer agent services 896,759
Custodian fee 213,624
Administrative personnel and services 64,688
Printing and postage 248,931
Trust share registration costs 67,338
Auditing fees 5,158
Legal fees 5,703
Trustees' fees 7,826
Miscellaneous 4,576
------------
Total expenses 3,088,179
Expense reimbursement from investment advisor (109,389)
Fees paid indirectly (5,113)
------------
Net expenses 2,973,677
------------
Net investment income $ 16,211,233
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
4/30/2000 Year Ended
INCREASE (DECREASE) IN NET ASSETS: (unaudited) 10/31/99
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 16,211,233 $ 25,064,002
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Class A (14,862,910) (22,960,049)
Class B (7,912) (7,477)
Institutional Class (1,340,411) (2,096,476)
------------ ------------
Total distributions (16,211,233) (25,064,002)
------------ ------------
NET TRUST SHARE TRANSACTIONS:
Class A 19,117,178 86,977,741
Class B 18,184 181,681
Institutional Class (6,173,844) 3,739,307
------------ ------------
Net increase in net assets from trust share transactions 12,961,518 90,898,729
------------ ------------
Net increase in net assets 12,961,518 90,898,729
NET ASSETS:
Beginning of period 631,470,673 540,571,944
------------ ------------
End of period $644,432,191 $631,470,673
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD OPPORTUNITY GROWTH FUND
Financial Highlights
Class A Shares
--------------------------------------------------------------------------------------
Six Months
For a share Ended Year Year Year Year Year
outstanding 4/30/2000 Ended Ended Ended Ended Ended
throughout each period (a) (unaudited) 10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $11.16 $9.33 $12.97 $13.62 $13.83 $10.76
----------- ----------- ----------- ----------- ----------- -----------
Income From Investment
Operations:
Net investment income (0.07) (0.13) (0.06) (0.07) (0.11) (0.09)
Net realized and
unrealized gain
(loss) on
investments (b) 2.72 1.96 (3.14) 0.91 2.63 3.16
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations 2.65 1.83 (3.20) 0.84 2.52 3.07
----------- ----------- ----------- ----------- ----------- -----------
Less Distributions:
Distributions from
net realized gain on
investments -- -- (0.44) (1.49) (2.73) --
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end
of period $13.81 $11.16 $9.33 $12.97 $13.62 $13.83
=========== =========== =========== =========== =========== ===========
Total investment
return at net asset
value (c) 23.75% 19.61% (25.18%) 7.52% 21.27% 28.53%
Net assets, end of
period ($ millions) $247.6 $206.0 $205.7 $311.4 $265.8 $165.7
Ratio of expenses to
average net assets 1.35%(d) 1.50% 1.40% 1.29% 1.28% 1.43%
Ratio of net
investment income to
average net assets (0.97%)(d) (1.19%) (0.51%) (0.60%) (0.92%) (0.88%)
Portfolio turnover
rate 83% 49% 155% 136% 176% 213%
Class B Shares Institutional Class Shares
----------------------------------------- -----------------------------------------
Six Six
Months Months
For a share Ended Year Year Ended Year Year
outstanding 4/30/2000 Ended Ended 4/30/2000 Ended Ended
throughout each period (a) (unaudited) 10/31/99 10/31/98 (unaudited) 10/31/99 10/31/98
----------- ---------- ------------ ----------- ------------ ----------
Net asset value,
beginning of period $11.00 $9.27 $12.97 $11.21 $9.35 $12.97
----------- ----------- ----------- ----------- ----------- -----------
Income From
Investment Operations:
Net investment income (0.06) (0.20) (0.08) (0.04) (0.14) (0.03)
Net realized and
unrealized gain
(loss) on
investments (b) 2.62 1.93 (3.18) 2.75 2.00 (3.15)
----------- ----------- ----------- ----------- ----------- -----------
Total from
investment
operations 2.56 1.73 (3.26) 2.71 1.86 (3.18)
----------- ----------- ----------- ----------- ----------- -----------
Less Distributions:
Distributions from
net realized
gain on investments -- -- (0.44) -- -- (0.44)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end
of period $13.56 $11.00 $9.27 $13.92 $11.21 $9.35
=========== =========== =========== =========== =========== ===========
Total investment
return at net asset
value (c) 23.27% 18.66% (25.66%) 24.17% 19.89% (25.02%)
Net assets, end of
period ($ millions) $12.8 $8.5 $4.2 $9.9 $8.8 $5.4
Ratio of expenses to
average net assets 2.10%(d) 2.25% 2.15% 0.79%(d) 1.25% 1.15%
Ratio of net
investment income to
average net assets (1.72%)(d) (1.94%) (1.26%) (0.41%)(d) (0.94%) (0.26%)
Portfolio turnover
rate 83% 49% 155% 83% 49% 155%
NOTES TO FINANCIAL HIGHLIGHTS:
------------------------------
(a) All per share amounts have been rounded to the nearest cent.
(b) The amount shown is a balancing figure and may not accord with the
change in aggregate gains and losses of portfolio securities due to
the timing of sales and redemptions of fund shares.
(c) Total investment return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(d) Computed on an annualized basis.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD MID CAP GROWTH FUND
Financial Highlights
Class A Shares
--------------------------------------------------------
For the
Six Period
Months 5/30/97
For a share Ended Year Year (effective
outstanding 4/30/2000 Ended Ended date) to
throughout each period (a) (unaudited) 10/31/99 10/31/98 10/31/97
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $12.93 $9.19 $10.33 $9.25
----------- ----------- ----------- -----------
Income From
Investment Operations:
Net investment income (0.09) (0.13) 0.36 (0.02
Net realized and
unrealized gain
(loss) on
investments (b) 5.06 3.87 (0.89) 1.10
----------- ----------- ----------- -----------
Total from investment
operations 4.97 3.74 (0.53) 1.08
----------- ----------- ----------- -----------
Less Distributions:
Dividends from net
investment income -- -- (0.37) --
Distributions from
net realized gain on
investments (0.47) -- (0.24) --
----------- ----------- ----------- -----------
Total distributions (0.47) -- (0.61) --
----------- ----------- ----------- -----------
Net asset value, end
of period $17.43 $12.93 $9.19 $10.33
=========== =========== =========== ===========
Total investment
return at net asset
value (c) 39.38% 40.70% (5.28%) 11.68%
Net assets, end of
period ($ millions) $113.2 $59.2 $31.9 $14.6
Ratio of expenses to
average net assets 1.58%(d) 1.95%(e) 1.95%(e) 1.95%(d,e)
Ratio of net
investment income to
average net assets (0.99%)(d) (1.34%)(e) 1.93%(e) (0.84%)(d,e)
Portfolio turnover
rate 71% 145% 436% 94%
<CAPTION>
Institutional
Class B Class
Shares Shares
----------------------------------------- -----------------------------------------
Six Six
Months Months
For a share Ended Year Year Ended Year Year
outstanding 4/30/2000 Ended Ended 4/30/2000 Ended Ended
throughout each period (a) (unaudited) 10/31/99 10/31/98 (unaudited) 10/31/99 10/31/98
----------- ---------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $12.74 $9.12 $10.33 $12.99 $9.21 $10.33
----------- ----------- ----------- ----------- ----------- -----------
Income From
Investment Operations:
Net investment income (0.06) (0.19) 0.30 0.02 (0.14) 0.39
Net realized and
unrealized gain
(loss) on
investments (b) 4.89 3.81 (0.90) 5.03 3.92 (0.90)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations 4.83 3.62 (0.60) 5.05 3.78 (0.51)
----------- ----------- ----------- ----------- ----------- -----------
Less Distributions:
Dividends from net
investment income -- -- (0.37) -- -- (0.37)
Distributions from
net realized gain on
investments (0.47) -- (0.24) (0.47) -- (0.24)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions (0.47) -- (0.61) (0.47) -- (0.61)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end
of period $17.10 $12.74 $9.12 $17.57 $12.99 $9.21
=========== =========== =========== =========== =========== ===========
Total investment
return at net asset
value (c) 38.86% 39.69% (6.00%) 39.83% 41.04% (5.06%)
Net assets, end of
period ($ millions) $29.3 $15.8 $6.4 $3.2 $1.2 $0.7
Ratio of expenses to
average net assets 2.33%(d) 2.70%(e) 2.70%(e) 0.91%(d) 1.70%(e) 1.70%(e)
Ratio of net
investment income to
average net assets (1.74%)(d) (2.09%)(e) 1.18%(e) (0.32%)(d) (1.09%)(e) 2.18%(e)
Portfolio turnover
rate 71% 145% 436% 71% 145% 436%
NOTES TO FINANCIAL HIGHLIGHTS:
------------------------------
(a) All per share amounts have been rounded to the nearest cent.
(b) The amount shown is a balancing figure and may not accord with the
change in aggregate gains and losses of portfolio securities due to
the timing of sales and redemptions of fund shares.
(c) Total investment return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(d) Computed on an annualized basis.
(e) Effective May 30, 1997, LB Research voluntarily agreed to limit the
expenses prospectively to 1.95% for Class A shares, 2.70% for Class B
shares, and 1.70% for Institutional Class shares. Had LB Research not
undertaken such action, for Class A shares, the ratio of expenses to
average net assets would have been 2.07%, 2.22%, and 2.19% and the ratio
of net investment income to average net assets would have been (1.46%),
1.66%, and (1.08%), respectively, for the years ended October 31, 1999
and 1998 and for the period from May 30, 1997 to October 31, 1997. For
Class B shares, the ratio of expenses to average net assets would have
been 2.82% and 2.97%, and the ratio of net investment income to average
net assets would have been (2.21%), and 0.91%, respectively, for the
years ended October 31, 1999 and 1998. For Institutional Class shares,
the ratio of expenses to average net assets would have been 1.82% and
1.97%, and the ratio of net investment income to average net assets
would have been (1.21%), and 1.91%, respectively, for the years ended
October 31, 1999 and 1998.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD WORLD GROWTH FUND
Financial Highlights
Class A Shares
--------------------------------------------------------------------------------------
For the
Period
Six Months Sept. 5, 1995
For a share Ended Year Year Year Year (effective
outstanding 4/30/2000 Ended Ended Ended Ended date) to
throughout each period (a) (unaudited) 10/31/99 10/31/98 10/31/97 10/31/96 Oct. 31, 1998
----------- ----------- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $12.55 $10.58 $10.09 $9.48 $8.44 $8.50
----------- ----------- ----------- ----------- ----------- -----------
Income From
Investment Operations:
Net investment income (0.05) (0.01) -- 0.02 0.04 0.01
Net realized and
unrealized gain
(loss) on
investments (b) 1.65 2.05 0.67 0.67 1.02 (0.07)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations 1.60 2.04 0.67 0.69 1.06 (0.06)
----------- ----------- ----------- ----------- ----------- -----------
Less Distributions:
Dividends from net
investment income -- (0.07) (0.04) (0.04) (0.02) --
Distributions from
net realized gain on
investments (0.39) -- (0.14) (0.04) -- --
----------- ----------- ----------- ----------- ----------- -----------
Total distributions (0.39) (0.07) (0.18) (0.08) (0.02) --
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end
of period $13.76 $12.55 $10.58 $10.09 $9.48 $8.44
=========== =========== =========== =========== =========== ===========
Total investment
return at net asset
value (c) 13.13% 19.21% 6.80% 7.38% 12.53% (0.71%)
Net assets, end of
period ($ millions) $108.5 $87.6 $73.1 $75.1 $52.9 $14.0
Ratio of expenses to
average net assets 1.78%(d) 1.88% 1.86% 1.82% 1.95%(e) 1.95%(d,e)
Ratio of net
investment income to
average net assets (0.73%)(d) (0.08%) 0.06% 0.17% 0.67%(e) 1.60%(d,e)
Portfolio turnover
rate 25% 18% 20% 17% 11% 0%
Class B Shares Institutional Class Shares
----------------------------------------- -----------------------------------------
Six Six
Months Months
For a share Ended Year Year Ended Year Year
outstanding 4/30/2000 Ended Ended 4/30/2000 Ended Ended
throughout each period (a) (unaudited) 10/31/99 10/31/98 (unaudited) 10/31/99 10/31/98
----------- ---------- ------------ ----------- ------------ ----------
Net asset value,
beginning of period $12.39 $10.51 $10.09 $12.59 $10.61 $10.09
----------- ----------- ----------- ----------- ----------- -----------
Income From
Investment Operations:
Net investment income (0.05) (0.03) 0.01 -- 0.03 0.04
Net realized and
unrealized gain
(loss) on
investments (b) 1.58 1.97 0.59 1.65 2.05 0.66
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations 1.53 1.94 0.60 1.65 2.08 0.70
----------- ----------- ----------- ----------- ----------- -----------
Less Distributions:
Dividends from net
investment income -- (0.06) (0.04) -- (0.10) (0.04)
Distributions from
net realized gain on
investments (0.39) -- (0.14) (0.39) -- (0.14)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions (0.39) (0.06) (0.18) (0.39) (0.10) (0.18)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end
of period $13.53 $12.39 $10.51 $13.85 $12.59 $10.61
=========== =========== =========== =========== =========== ===========
Total investment
return at net asset
value (c) 12.72% 18.28% 6.10% 13.49% 19.42% 7.20%
Net assets, end of
period ($ millions) $12.1 $8.1 $3.5 $16.6 $14.1 $10.4
Ratio of expenses to
average net assets 2.53%(d) 2.63% 2.61% 1.18%(d) 1.63% 1.61%
Ratio of net
investment income to
average net assets (1.48%)(d) (0.83%) (0.69%) (0.13%)(d) 0.17% 0.31%
Portfolio turnover
rate 25% 18% 20% 25% 18% 20%
NOTES TO FINANCIAL HIGHLIGHTS:
------------------------------
(a) All per share amounts have been rounded to the nearest cent.
(b) The amount shown is a balancing figure and may not accord with the
change in aggregate gains and losses of portfolio securities due to the
timing of sales and redemptions of fund shares.
(c) Total investment return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(d) Computed on an annualized basis.
(e) Effective September 5, 1995, LB Research voluntarily agreed to limit
the Fund's expense ratio to 1.95%. Had LB Research not undertaken such
action, the ratio of expenses to average net assets would have been
2.13% and 2.89% and the ratio of net investment income to average net
assets would have been 0.49% and 0.66% respectively, for the year ended
October 31, 1996 and for the period from September 5, 1995 to October
31, 1995.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD GROWTH FUND
Financial Highlights
Institutional
Class A Class B Class
Shares Shares Shares
----------- ----------- -----------
Six Six Six
Months Months Months
For a share Ended Ended Ended
outstanding 4/30/2000 4/30/2000 4/30/2000
throughout each period (a) (unaudited) (unaudited) (unaudited)
----------- ----------- -----------
<S> <C> <C> <C>
Net asset value,
beginning of period $16.50 $16.50 $16.50
----------- ----------- -----------
Income From
Investment Operations:
Net investment income (0.02) (0.06) 0.02
Net realized and
unrealized gain
(loss) on
investments (b) 3.08 3.05 3.12
----------- ----------- -----------
Total from investment
operations 3.06 2.99 3.14
----------- ----------- -----------
Net asset value, end
of period $19.56 $19.49 $19.64
=========== =========== ===========
Total investment
return at net asset
value (c) 18.61% 18.12% 19.03%
Net assets, end of
period ($ millions) $16.1 $4.4 $4.9
Ratio of expenses to
average net assets 1.30%(d,e) 2.05%(d,e) 0.56%(d,e)
Ratio of net
investment income to
average net assets (0.46%)(d,e) (1.21%)(d,e) 0.28%(d,e)
Portfolio turnover
rate 12% 12% 12%
NOTES TO FINANCIAL HIGHLIGHTS:
------------------------------
(a) All per share amounts have been rounded to the nearest cent.
(b) The amount shown is a balancing figure and may not accord with the
change in aggregate gains and losses of portfolio securities due to the
timing of sales and redemptions of fund shares.
(c) Total investment return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(d) Computed on an annualized basis.
(e) LB Research has voluntarily agreed to temporarily waive a portion of
its advisory fees and, if necessary, to bear certain expenses associated
with operating the Fund in order to limit total annual operating
expenses for Class A and Class B shares to an annual rate of 1.30% and
2.05%, respectively, of average daily nets assets of each class, and to
waive the same percentage of advisory fees and such other expenses for
Institutional Class shares. This temporary waiver may be discontinued at
any time. Had LB Research not undertaken such action to limit expenses,
the ratio of expenses to average net assets would have been 2.24%, 2.99%
and 1.50% respectively for Class A, Class B and the Institutional Class
shares, and the ratio of net investment income to average net assets
would have been (1.40%), (2.15%) and (0.66%) respectively, for Class A,
Class B and Institutional Class shares for the six month period ended
April 30, 2000.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD FUND
Financial Highlights
Class A Shares
--------------------------------------------------------------------------------------
Six Months
For a share Ended Year Year Year Year Year
outstanding 4/30/2000 Ended Ended Ended Ended Ended
throughout each period (a) (unaudited) 10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $31.22 $27.94 $26.98 $23.07 $21.19 $17.67
----------- ----------- ----------- ----------- ----------- -----------
Income From
Investment Operations:
Net investment income 0.02 0.07 0.13 0.19 0.20 0.22
Net realized and
unrealized gain
(loss) on
investments (b) 2.31 6.42 3.57 5.68 3.33 3.52
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations 2.33 6.49 3.70 5.87 3.53 3.74
----------- ----------- ----------- ----------- ----------- -----------
Less Distributions:
Dividends from net
investment income (0.03) (0.08) (0.12) (0.20) (0.20) (0.22)
Distributions from
net realized gain on
investments (4.44) (3.13) (2.62) (1.76) (1.45) --
----------- ----------- ----------- ----------- ----------- -----------
Total distributions (4.47) (3.21) (2.74) (1.96) (1.65) (0.22)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end
of period $29.08 $31.22 $27.94 $26.98 $23.07 $21.19
=========== =========== =========== =========== =========== ===========
Total investment
return at net asset
value (c) 7.93% 25.60% 15.07% 26.99% 17.61% 21.34%
Net assets, end of
period ($ millions) $1,515.4 $1,424.4 $1,120.5 $989.8 $768.8 $645.5
Ratio of expenses to
average net assets 0.82%(d,e) 0.85%(e) 0.86%(e) 0.88%(e) 0.97% 1.02%
Ratio of net
investment income to
average net assets 0.17%(d,e) 0.24%(e) 0.47%(e) 0.76%(e) 0.94% 1.15%
Portfolio turnover
rate 27% 57% 57% 54% 91% 127%
Class B Shares Institutional Class Shares
----------------------------------------- -----------------------------------------
Six Six
Months Months
For a share Ended Year Year Ended Year Year
outstanding 4/30/2000 Ended Ended 4/30/2000 Ended Ended
throughout each period (a) (unaudited) 10/31/99 10/31/98 (unaudited) 10/31/99 10/31/98
----------- ---------- ------------ ----------- ------------ ----------
Net asset value,
beginning of period $30.93 $27.83 $26.98 $31.24 $27.95 $26.98
----------- ----------- ----------- ----------- ----------- -----------
Income From
Investment Operations:
Net investment income (0.04) (0.10) (0.01) 0.06 0.14 0.20
Net realized and
unrealized gain
(loss) on
investments (b) 2.24 6.33 3.51 2.31 6.43 3.57
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations 2.20 6.23 3.50 2.37 6.57 3.77
----------- ----------- ----------- ----------- ----------- -----------
Less Distributions:
Dividends from net
investment income -- -- (0.03) (0.07) (0.15) (0.18)
Distributions from
net realized gain on
investments (4.44) (3.13) (2.62) (4.44) (3.13) (2.62)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions (4.44) (3.13) (2.65) (4.51) (3.28) (2.80)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end
of period $28.69 $30.93 $27.83 $29.10 $31.24 $27.95
=========== =========== =========== =========== =========== ===========
Total investment
return at net asset
value (c) 7.55% 24.66% 14.26% 8.06% 25.89% 15.41%
Net assets, end of
period ($ millions) $81.7 $63.3 $25.0 $48.4 $43.2 $28.7
Ratio of expenses to
average net assets (e) 1.57%(d) 1.60% 1.61% 0.54%(d) 0.60% 0.61%
Ratio of net
investment income to
average net assets (e) (0.58%)(d) (0.51%) (0.28%) 0.45%(d) 0.49% 0.72%
Portfolio turnover
rate 27% 57% 57% 27% 57% 57%
NOTES TO FINANCIAL HIGHLIGHTS:
------------------------------
(a) All per share amounts have been rounded to the nearest cent.
(b) The amount shown is a balancing figure and may not accord with the
change in aggregate gains and losses of portfolio securities due to the
timing of sales and redemptions of fund shares.
(c) Total investment return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(d) Computed on an annualized basis.
(e) Effective January 1, 1997, LB Research has voluntarily agreed to
waive a portion of its advisory fee equal to 0.05% of the average daily
net assets of the Fund. This voluntary partial waiver may be
discontinued at any time. Had LB Research not undertaken this waiver,
for Class A shares, the ratio of expenses to average net assets would
have been 0.87%, 0.90%, 0.91% and 0.92%, and the ratio of net investment
income to average net assets would have been 0.12%, 0.19%, 0.42% and
0.72%, respectively, for the six month period ended April 30, 2000, and
the years ended October 31, 1999, 1998 and 1997. For Class B shares, the
ratio of expenses to average net assets would have been 1.62%, 1.65% and
1.66%, and the ratio of net investment income to average net assets
would have been (0.63%), (0.56%) and (0.33%), respectively, for the six
month period ended April 30, 2000, and the years ended October 31, 1999
and 1998. For Institutional Class shares, the ratio of expenses to
average net assets would have been 0.59%, 0.65% and 0.66%, and the ratio
of net investment income to average net assets would have been 0.40%,
0.44% and 0.66%, respectively, for the six month period ended April 30,
2000, and the years ended October 31, 1999 and 1998.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD VALUE FUND
Financial Highlights
Institutional
Class A Class B Class
Shares Shares Shares
----------- ----------- -----------
Six Six Six
Months Months Months
For a share Ended Ended Ended
outstanding 4/30/2000 4/30/2000 4/30/2000
throughout each period (a) (unaudited) (unaudited) (unaudited)
----------- ----------- -----------
<S> <C> <C> <C>
Net asset value,
beginning of period $14.50 $14.50 $14.50
----------- ----------- -----------
Income From
Investment Operations:
Net investment income 0.01 (0.02) 0.08
Net realized and
unrealized gain
(loss) on
investments (b) 0.84 0.81 0.82
----------- ----------- -----------
Total from investment
operations 0.85 0.79 0.90
----------- ----------- -----------
Net asset value, end
of period $15.35 $15.29 $15.40
=========== =========== ===========
Total investment
return at net asset
value (c) 5.86% 5.45% 6.21%
Net assets, end of
period ($ millions) $8.9 $2.6 $3.4
Ratio of expenses to
average net assets 1.30%(d,e) 2.05%(d,e) 0.57%(d,e)
Ratio of net
investment income to
average net assets 0.34%(d,e) (0.41%)(d,e) 1.06%(d,e)
Portfolio turnover
rate 13% 13% 13%
NOTES TO FINANCIAL HIGHLIGHTS:
------------------------------
(a) All per share amounts have been rounded to the nearest cent.
(b) The amount shown is a balancing figure and may not accord with the
change in aggregate gains and losses of portfolio securities due to the
timing of sales and redemptions of fund shares.
(c) Total investment return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(d) Computed on an annualized basis.
(e) LB Research has voluntarily agreed to temporarily waive a portion of
its advisory fees and, if necessary, to bear certain expenses associated
with operating the Fund in order to limit total annual operating
expenses for Class A and Class B shares to an annual rate of 1.30% and
2.05%, respectively, of average daily nets assets of each class, and to
waive the same percentage of advisory fees and such other expenses for
Institutional Class shares. This temporary waiver may be discontinued at
any time. Had LB Research not undertaken such action to limit expenses,
the ratio of expenses to average net assets would have been 2.45%, 3.20%
and 1.72% respectively for Class A, Class B and the Institutional Class
shares, and the ratio of net investment income to average net assets
would have been (0.81%), (1.56%) and (0.09%) respectively, for Class A,
Class B and Institutional Class shares for the six month period ended
April 30, 2000.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD HIGH YIELD FUND
Financial Highlights
Class A Shares
--------------------------------------------------------------------------------------
Six Months
For a share Ended Year Year Year Year Year
outstanding 4/30/2000 Ended Ended Ended Ended Ended
throughout each period (a) (unaudited) 10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $7.87 $8.09 $9.58 $9.21 $9.03 $8.86
----------- ----------- ----------- ----------- ----------- -----------
Income From
Investment Operations:
Net investment income 0.42 0.82 0.86 0.85 0.84 0.83
Net realized and
unrealized gain
(loss) on
investments (b) (0.18) (0.20) (1.32) 0.41 0.17 0.24
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations 0.24 0.62 (0.46) 1.26 1.01 1.07
----------- ----------- ----------- ----------- ----------- -----------
Less Distributions:
Dividends from net
investment income (0.40) (0.84) (0.85) (0.86) (0.83) (0.85)
Distributions from
net realized gain on
investments -- -- (0.18) (0.03) -- (0.05)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions (0.40) (0.84) (1.03) (0.89) (0.83) (0.90)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end
of period $7.71 $7.87 $8.09 $9.58 $9.21 $9.03
=========== =========== =========== =========== =========== ===========
Total investment
return at net asset
value (c) 3.02% 7.69% (5.55%) 14.43% 11.64% 12.93%
Net assets, end of
period ($ millions) $820.6 $823.2 $784.8 $862.9 $703.1 $594.3
Ratio of expenses to
average net assets 0.86%(d,e) 0.86%(e) 0.84%(e) 0.84%(e) 0.91% 0.93%
Ratio of net
investment income to
average net assets 10.51%(d,e) 9.96%(e) 9.32%(e) 9.14%(e) 9.23% 9.53%
Portfolio turnover
rate 31% 55% 73% 113% 104% 71%
Class B Shares Institutional Class Shares
----------------------------------------- -----------------------------------------
Six Six
Months Months
For a share Ended Year Year Ended Year Year
outstanding 4/30/2000 Ended Ended 4/30/2000 Ended Ended
throughout each period (a) (unaudited) 10/31/99 10/31/98 (unaudited) 10/31/99 10/31/98
----------- ---------- ------------ ----------- ------------ ----------
Net asset value,
beginning of period $7.86 $8.08 $9.58 $7.87 $8.09 $9.58
----------- ----------- ----------- ----------- ----------- -----------
Income From
Investment Operations:
Net investment income 0.39 0.77 0.79 0.44 0.85 0.88
Net realized and
unrealized gain
(loss) on
investments (b) (0.18) (0.21) (1.31) (0.18) (0.21) (1.31)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations 0.21 0.56 (0.52) 0.26 0.64 (0.43)
----------- ----------- ----------- ----------- ----------- -----------
Less Distributions:
Dividends from net
investment income (0.37) (0.78) (0.80) (0.41) (0.86) (0.88)
Distributions from
net realized gain on
investments -- -- (0.18) -- -- (0.18)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions (0.37) (0.78) (0.98) (0.41) (0.86) (1.06)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end
of period $7.70 $7.86 $8.08 $7.72 $7.87 $8.09
=========== =========== =========== =========== =========== ===========
Total investment
return at net asset
value (c) 2.65% 6.92% (6.24%) 3.16% 7.96% (5.33%)
Net assets, end of
period ($ millions) $39.5 $34.4 $19.3 $24.7 $53.0 $52.3
Ratio of expenses to
average net assets (e) 1.61%(d) 1.61% 1.59% 0.59%(d) 0.61% 0.59%
Ratio of net
investment income to
average net assets (e) 9.76%(d) 9.21% 8.57% 10.79%(d) 10.21% 9.57%
Portfolio turnover
rate 31% 55% 73% 31% 55% 73%
NOTES TO FINANCIAL HIGHLIGHTS:
------------------------------
(a) All per share amounts have been rounded to the nearest cent.
(b) The amount shown is a balancing figure and may not accord with the
change in aggregate gains and losses of portfolio securities due to the
timing of sales and redemptions of fund shares.
(c) Total investment return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(d) Computed on an annualized basis.
(e) Effective January 1, 1997, LB Research has voluntarily agreed to
waive a portion of its advisory fee equal to 0.05% of the average daily
net assets of the Fund. This voluntary partial waiver may be
discontinued at any time. Had LB Research not undertaken this waiver,
for Class A shares, the ratio of expenses to average net assets would
have been 0.91%, 0.91%, 0.89% and 0.88%, and the ratio of net investment
income to average net assets would have been 10.46%, 9.91%, 9.27% and
9.10%, respectively, for the six month period ended April 30, 2000, and
the years ended October 31, 1999, 1998 and 1997. For Class B shares, the
ratio of expenses to average net assets would have been 1.66%, 1.66% and
1.64% and the ratio of net investment income to average net assets would
have been 9.71%, 9.16% and 8.52%, respectively, for the six month period
ended April 30, 2000, and the years ended October 31, 1999 and 1998. For
Institutional Class shares, the ratio of expenses to average net assets
would have been 0.64% ,0.66% and 0.64%, and the ratio of net investment
income to average net assets would have been 10.74%, 10.16% and 9.52%,
respectively, for the six month period ended April 30, 2000, and the
years ended October 31, 1999 and 1998.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD INCOME FUND
Financial Highlights
Class A Shares
--------------------------------------------------------------------------------------
Six Months
For a share Ended Year Year Year Year Year
outstanding 4/30/2000 Ended Ended Ended Ended Ended
throughout each period (a) (unaudited) 10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $8.22 $8.78 $8.61 $8.50 $8.72 $8.01
----------- ----------- ----------- ----------- ----------- -----------
Income From
Investment Operations:
Net investment income 0.26 0.51 0.54 0.55 0.57 0.59
Net realized and
unrealized gain
(loss) on
investments (b) (0.16) (0.58) 0.17 0.11 (0.19) 0.69
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations 0.10 (0.07) 0.71 0.66 0.38 1.28
----------- ----------- ----------- ----------- ----------- -----------
Less Distributions:
Dividends from net
investment income (0.27) (0.49) (0.54) (0.55) (0.60) (0.57)
----------- ----------- ----------- ----------- ----------- -----------
Net assets, end of
period $8.05 $8.22 $8.78 $8.61 $8.50 $8.72
=========== =========== =========== =========== =========== ===========
Total return
investment return at
net asset value (c) 1.18% (0.69%) 8.42% 8.05% 4.56% 16.53%
Net assets, end of
period ($ millions) $625.5 $679.5 $739.1 $778.0 $871.0 $942.1
Ratio of expenses to
average net assets 0.83%(d,e) 0.82%(e) 0.80%(e) 0.80%(e) 0.83% 0.83%
Ratio of net
investment income to
average net assets 6.36%(d,e) 5.93%(e) 6.16%(e) 6.44%(e) 6.61% 7.01%
Portfolio turnover
rate 59% 72% 98% 97% 142% 131%
Class B Shares Institutional Class Shares
----------------------------------------- -----------------------------------------
Six Six
Months Months
For a share Ended Year Year Ended Year Year
outstanding 4/30/2000 Ended Ended 4/30/2000 Ended Ended
throughout each period (a) (unaudited) 10/31/99 10/31/98 (unaudited) 10/31/99 10/31/98
----------- ---------- ------------ ----------- ------------ ----------
Net asset value,
beginning of period $8.20 $8.76 $8.61 $8.22 $8.77 $8.61
----------- ----------- ----------- ----------- ----------- -----------
Income From
Investment Operations:
Net investment income 0.23 0.45 0.48 0.27 0.53 0.56
Net realized and
unrealized gain
(loss) on
investments (b) (0.16) (0.58) 0.16 (0.17) (0.57) 0.16
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations 0.07 (0.13) 0.64 0.10 (0.04) 0.72
----------- ----------- ----------- ----------- ----------- -----------
Less Distributions:
Dividends from net
investment income (0.24) (0.43) (0.49) (0.28) (0.51) (0.56)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end
of period $8.03 $8.20 $8.76 $8.04 $8.22 $8.77
=========== =========== =========== =========== =========== ===========
Total investment
return at net asset
value (c) 0.81% (1.52%) 7.65% 1.20% (0.44%) 8.69%
Net assets, end of
period ($ millions) $15.5 $14.7 $6.9 $35.0 $31.8 $26.6
Ratio of expenses to
average net assets (e) 1.58%(d) 1.57% 1.55% 0.56%(d) 0.57% 0.55%
Ratio of net
investment income to
average net assets (e) 5.61%(d) 5.18% 5.41% 6.64%(d) 6.18% 6.41%
Portfolio turnover
rate 59% 72% 98% 59% 72% 98%
NOTES TO FINANCIAL HIGHLIGHTS:
------------------------------
(a) All per share amounts have been rounded to the nearest cent.
(b) The amount shown is a balancing figure and may not accord with the
change in aggregate gains and losses of portfolio securities due to the
timing of sales and redemptions of fund shares.
(c) Total investment return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(d) Computed on an annualized basis.
(e) Effective January 1, 1997, LB Research has voluntarily agreed to
waive a portion of its advisory fee equal to 0.05% of the average daily
net assets of the Fund. This voluntary partial waiver may be
discontinued at any time. Had LB Research not undertaken this waiver,
for Class A shares, the ratio of expenses to average net assets would
have been 0.88%, 0.87%, 0.85% and 0.84%, and the ratio of net investment
income to average net assets would have been 6.31%, 5.88%, 6.11% and
6.40%, respectively, for the six month period ended April 30, 2000, and
the years ended October 31, 1999, 1998 and 1997. For Class B shares, the
ratio of expenses to average net assets would have been 1.63%, 1.62%,
and 1.60%, and the ratio of net investment income to average net assets
would have been 5.56%, 5.13%, and 5.36%, respectively, for the six month
period ended April 30, 2000, and the years ended October 31, 1999 and
1998. For Institutional class shares, the ratio of expenses to average
net assets would have been 0.61%, 0.62% and 0.60%, and the ratio of net
investment income to average net assets would have been 6.59%, 6.13% and
6.36%, respectively, for the six month period ended April 30, 2000, and
the years ended October 31, 1999 and 1998.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD MUNICIPAL BOND FUND
Financial Highlights
Class A Shares
--------------------------------------------------------------------------------------
Six Months
For a share Ended Year Year Year Year Year
outstanding 4/30/2000 Ended Ended Ended Ended Ended
throughout each period (a) (unaudited) 10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $8.44 $9.11 $8.85 $8.60 $8.58 $7.88
----------- ----------- ----------- ----------- ----------- -----------
Income From
Investment Operations:
Net investment income 0.22 0.43 0.41 0.45 0.44 0.45
Net realized and
unrealized gain
(loss) on
investments (b) (0.02) (0.66) 0.29 0.24 0.01 0.70
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations 0.20 (0.23) 0.70 0.69 0.45 1.15
----------- ----------- ----------- ----------- ----------- -----------
Less Distributions:
Dividends from net
investment income (0.23) (0.44) (0.44) (0.44) (0.43) (0.45)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end
of period $8.41 $8.44 $9.11 $8.85 $8.60 $8.58
=========== =========== =========== =========== =========== ===========
Total investment
return at net asset
value (c) 2.23% (2.62%) 8.12% 8.28% 5.33% 14.97%
Net assets, end of
period ($ millions) $551.5 $570.6 $605.0 $591.9 $609.5 $628.7
Ratio of expenses to
average net assets 0.70%(d,e) 0.70%(e) 0.69%(e) 0.70%(e) 0.74% 0.74%
Ratio of net
investment income to
average net assets 5.24%(d,e) 4.88%(e) 4.88%(e) 5.13%(e) 5.14% 5.43%
Portfolio turnover
rate 8% 20% 14% 18% 33% 36%
Class B Shares Institutional Class Shares
----------------------------------------- -----------------------------------------
Six Six
Months Months
For a share Ended Year Year Ended Year Year
outstanding 4/30/2000 Ended Ended 4/30/2000 Ended Ended
throughout each period (a) (unaudited) 10/31/99 10/31/98 (unaudited) 10/31/99 10/31/98
----------- ---------- ------------ ----------- ------------ ----------
Net asset value,
beginning of period $8.41 $9.09 $8.85 $8.43 $9.11 $8.85
----------- ----------- ----------- ----------- ----------- -----------
Income From
Investment Operations:
Net investment income 0.19 0.37 0.39 0.23 0.46 0.46
Net realized and
unrealized gain
(loss) on
investments (b) (0.01) (0.67) 0.24 (0.03) (0.68) 0.26
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations 0.18 (0.30) 0.63 0.20 (0.22) 0.72
----------- ----------- ----------- ----------- ----------- -----------
Less Distributions:
Dividends from net
investment income (0.20) (0.38) (0.39) (0.23) (0.46) (0.46)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end
of period $8.39 $8.41 $9.09 $8.40 $8.43 $9.11
=========== =========== =========== =========== =========== ===========
Total investment
return at net asset
value (c) 1.99% (3.44%) 7.23% 2.45% (2.49%) 8.39%
Net assets, end of
period ($ millions) $9.0 $8.4 $4.0 $3.5 $4.3 $4.0
Ratio of expenses to
average net assets
(e) 1.45%(d) 1.45% 1.44% 0.53%(d) 0.45% 0.44%
Ratio of net
investment income to
average net assets
(e) 4.49%(d) 4.13% 4.13% 5.41%(d) 5.13% 5.13%
Portfolio turnover
rate 8% 20% 14% 8% 20% 14%
NOTES TO FINANCIAL HIGHLIGHTS:
------------------------------
(a) All per share amounts have been rounded to the nearest cent.
(b) The amount shown is a balancing figure and may not accord with the
change in aggregate gains and losses of portfolio securities due to the
timing of sales and redemptions of fund shares.
(c) Total investment return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(d) Computed on an annualized basis.
(e) Effective January 1, 1997, LB Research has voluntarily agreed to
waive a portion of its advisory fee equal to 0.05% of the average daily
net assets of the Fund. This voluntary partial waiver may be
discontinued at any time. Had LB Research not undertaken this waiver,
for Class A shares, the ratio of expenses to average net assets would
have been 0.75%, 0.75%, 0.74% and 0.74%, and the ratio of net investment
income to average net assets would have been 5.19%, 4.83%, 4.83% and
5.09%, respectively, for the six month period ended April 30, 2000, and
the years ended October 31, 1999, 1998 and 1997. For Class B shares, the
ratio of expenses to average net assets would have been 1.50%, 1.50% and
1.49%, and the ratio of net investment income to average net assets
would have been 4.44%, 4.08% and 4.08%, respectively, for the six month
period ended April 30, 2000, and the years ended October 31, 1999 and
1998. For Institutional class shares, the ratio of expenses to average
net assets would have been 0.58%, 0.50%, and 0.49%, and the ratio of net
investment income to average net assets would have been 5.36%, 5.08% and
5.08%, respectively, for the six month period ended April 30, 2000, and
the years ended October 31, 1999 and 1998.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD LIMITED MATURITY BOND FUND
Financial Highlights
Institutional
Class A Class B Class
Shares Shares Shares
----------- ----------- -----------
Six Six Six
Months Months Months
For a share Ended Ended Ended
outstanding 4/30/2000 4/30/2000 4/30/2000
throughout each period (a) (unaudited) (unaudited) (unaudited)
----------- ----------- -----------
<S> <C> <C> <C>
Net asset value,
beginning of period $12.50 $12.50 $12.50
----------- ----------- -----------
Income From
Investment Operations:
Net investment income 0.34 0.34 0.35
Net realized and
unrealized gain
(loss) on
investments (b) (0.21) (0.21) (0.21)
----------- ----------- -----------
Total from investment
operations 0.13 0.13 0.14
----------- ----------- -----------
Less Distributions:
Dividends from net
investment income (0.34) (0.34) (0.35)
----------- ----------- -----------
Net assets, end of
period $12.29 $12.29 $12.29
=========== =========== ===========
Total return
investment return at
net asset value (c) 1.05% 1.05% 1.16%
Net assets, end of
period ($ millions) $12.1 $4.9 $10.2
Ratio of expenses to
average net assets 0.95%(d,e) 0.95%(d,e) 0.72%(d,e)
Ratio of net
investment income to
average net assets 5.53%(d,e) 5.53%(d,e) 5.75%(d,e)
Portfolio turnover
rate 122% 122% 122%
NOTES TO FINANCIAL HIGHLIGHTS:
------------------------------
(a) All per share amounts have been rounded to the nearest cent.
(b) The amount shown is a balancing figure and may not accord with the
change in aggregate gains and losses of portfolio securities due to the
timing of sales and redemptions of fund shares.
(c) Total investment return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(d) Computed on an annualized basis.
(e) LB Research has voluntarily agreed to temporarily waive a portion of
its advisory fees and, if necessary, to bear certain expenses associated
with operating the Fund in order to limit total annual operating
expenses for Class A and Class B shares to an annual rate of 0.95% of
average daily nets assets of each class, and to waive the same
percentage of advisory fees and such other expenses for Institutional
Class shares. This temporary waiver may be discontinued at any time. Had
LB Research not undertaken such action to limit expenses, the ratio of
expenses to average net assets would have been 1.13%, 1.13% and 0.90%
respectively for Class A, Class B and the Institutional Class shares,
and the ratio of net investment income to average net assets would have
been 5.35% , 5.35% and 5.57% respectively, for Class A, Class B and
Institutional Class shares for the six month period ended April 30,
2,000
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD MONEY MARKET FUND
Financial Highlights
Class A Shares
--------------------------------------------------------------------------------------
Six Months
For a share Ended Year Year Year Year Year
outstanding 4/30/2000 Ended Ended Ended Ended Ended
throughout each period (a) (unaudited) 10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----------- ----------- ----------- ----------- ----------- -----------
Net investment income
from investment
operations 0.02 0.04 0.04 0.05 0.05 0.05
Less: Dividends from
net investment
income (0.02) (0.04) (0.04) (0.05) (0.05) (0.05)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end
of period. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
=========== =========== =========== =========== =========== ===========
Total investment
return at net asset
value (b) 2.50% 4.27% 4.82% 4.74% 4.63% 4.95%
Net assets, end of
period ($ millions) $599.3 $580.1 $493.2 $469.2 $417.6 $341.1
Ratio of expenses to
average net assets (d) 0.95%(c) 0.95% 0.95% 0.95% 1.01% 1.10%
Ratio of net
investment income to
average net assets (d) 4.98%(c) 4.19% 4.72% 4.64% 4.53% 4.85%
Class B Shares Institutional Class Shares
----------------------------------------- -----------------------------------------
Six Six
Months Months
For a share Ended Year Year Ended Year Year
outstanding 4/30/2000 Ended Ended 4/30/2000 Ended Ended
throughout each period (a) (unaudited) 10/31/99 10/31/98 (unaudited) 10/31/99 10/31/98
----------- ---------- ------------ ----------- ------------ ----------
Net asset value,
beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----------- ----------- ----------- ----------- ----------- -----------
Net investment income
from investment
operations 0.02 0.04 0.04 0.03 0.04 0.05
Less: Dividends from
net investment
income (0.02) (0.04) (0.04) (0.03) (0.04) (0.05)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end
of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
=========== =========== =========== =========== =========== ===========
Total investment
return at net asset
value (b) 2.50% 4.27% 4.82% 2.70% 4.53% 5.08%
Net assets, end of
period ($ millions) $0.3 $0.3 $0.1 $44.9 $51.1 $47.3
Ratio of expenses to
average net assets (d) 0.95%(c) 0.95% 0.95% 0.55%(c) 0.70% 0.70%
Ratio of net
investment income to
average net assets (d) 4.98%(c) 4.19% 4.72% 5.38%(c) 4.44% 4.97%
NOTES TO FINANCIAL HIGHLIGHTS:
------------------------------
(a) All per share amounts have been rounded to the nearest cent.
(b) Total return is based on the change in net asset value during the
period and assumes reinvestment of all distributions.
(c) Computed on an annualized basis.
(d) LB Research has voluntarily agreed to temporarily waive a portion of
its advisory fees in order to limit total annual operating expenses for
Class A and Class B shares to an annual rate of 0.95% of average daily
nets assets of each class, and to waive the same percentage of advisory
fees for Institutional Class shares. Prior to April 1, 1996, LB Research
had voluntarily agreed to temporarily waive a portion of its advisory
fees in order to limit total annual operating expenses to an annual rate
of 1.10% of average daily net assets. This voluntary partial waiver may
be discontinued at any time. Had LB Research not undertaken such action
to limit expenses, for Class A shares, the ratio of expenses to average
net assets would have been 0.98%, 1.00%, 1.04%, 1.05%, 1.07%, and 1.18%,
and the ratio of net investment income to average net assets would
have been 4.95%, 4.14%, 4.63%, 4.35%, 4.47%, and 4.77%, respectively,
for the six month period ended April 30, 2000, and the years ended
October 31, 1999, 1998, 1997, 1996, and 1995. For Class B shares, the
ratio of expenses to average net assets would have been 0.98%, 1.00% and
1.04%, and the ratio of net investment income to average net assets
would have been 4.95%, 4.14% and 4.63%, respectively for the six month
period ended April 30, 2000, and the years ended October 31, 1999 and
1998. For Institutional Class shares, the ratio of expenses to average
net assets would have been 0.58%, 0.75% and 0.79.%, and the ratio of net
investment income to average net assets would have been 5.35%, 4.39% and
4.88%, respectively for the six month period ended April 30, 2000, and
the years ended October 31, 1999 and 1998.
The accompanying notes are an integral part of the financial statements.
</TABLE>
THE LUTHERAN BROTHERHOOD FAMILY OF FUNDS
Notes to Financial Statements
April 30, 2000
(unaudited)
(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.
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.
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.
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 $411,711
and $10,313, respectively, from such fees during the six-month period
ended April 30, 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 generally
accepted accounting principals 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 Rowe Price - Fleming 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 Rowe
Price-Fleming International under the investment sub-advisory contract
for the six-month period ended April 30, 2000 was $294,379.
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 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 ended March 1, 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 six-month period ended April
30, 2000, LB Securities received aggregate 12b-1 fees of $691,595 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 six-month period ended April 30, 2000, LB Securities received
aggregate shareholder servicing fees of $6,144,519 from the Trust.
Sales Charges and Other Fees
For the six month period ended April 30, 2000, LB Securities, the
Trust's distributor, received $395,732 of aggregate underwriting
concessions from sales of Class A shares. LB Securities also received
$132,767 of aggregate contingent deferred sales charges from redemption
of Class B shares for the six month period ended April 30, 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
six-month period ended April 30, 2000, LB Securities received aggregate
fees for administrative personnel and services of $500,340 from the LB
Family of Funds.
In addition, LB Securities provides the Funds with transfer agent
services pursuant to an agreement. For the six-month period ended April
30, 2000, LB Securities received aggregate fees for transfer agent
services of $5,258,610 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 six-month period ended April 30, 2000, distributions from net
realized capital gains of $2,862,090, $3,455,226 and $217,782,196, 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
At October 31, 1999, the LB Opportunity Growth 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 Municipal
Opportunity Yield Income Bond
Year Growth Fund Fund Fund
---------- ------------ ------------ ------------ ------------
2002 -- -- $28,292,105 $1,287,686
2003 -- -- -- 134,719
2004 -- -- 8,472,280 --
2006 $17,496,406 -- -- --
2007 -- $18,998,975 8,150,657 150,559
------------ ------------ ------------ ------------
Total $17,496,406 $18,998,975 $44,915,042 $1,572,964
============ ============ ============== ============
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 $162,826, $323,293, $664,040,
$2,746,655, $2,387,732, $455,371, and $1,550,283 existed between net
realized capital gains or losses for financial statement and tax
purposes as of October 31, 1999 for the Opportunity Growth, Mid Cap
Growth, World Growth, LB Fund, LB High Yield Fund, LB Income and
Municipal Bond Funds, respectively. These differences are due primarily
to deferral of capital losses for tax purposes.
(6) INVESTMENT TRANSACTIONS
Purchases and Sales of Investment Securities
For the six-month period ended April 30, 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
---------------------------------------------------------------------
Opportunity Growth $210,774 $230,622
Mid Cap Growth 109,682 77,754
World Growth 42,380 31,661
Growth 19,644 1,564
LB Fund 427,715 484,777
Value 10,106 1,194
High Yield 278,417 270,412
Income 250,192 310,277
Municipal Bond 42,350 62,557
Limited Maturity Bond 17,235 7,124
Purchases and sales of U.S. Government securities were:
$thousands
---------------------------
Fund Purchases Sales
---------------------------------------------------------------------
Income $133,991 $184,728
Limited Maturity Bond 16,337 17,253
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 $294,057 at April 30, 2000, which represented 0.033% 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 from time to time invest up to 25% of
its total assets 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 six-month period ended April 30, 2000, were
as follows:
Income Fund
---------------------------
Number of Premium
Contracts Amount
------------ ------------
Balance at October 31, 1999 -- --
Opened 1,200 543,244
Closed (300) (126,511)
Expired (600) (213,659)
Exercised (100) (41,129)
------------ ------------
Balance at April 30, 2000 200 $161,945
============ ============
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.
(7) 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
six-month period ended April 30, 2000.
(8) SHARES OF BENEFICIAL INTEREST
<TABLE>
<CAPTION>
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:
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
============ ============ ============ ============ ============ ============
Six Months Ended April 30, 2000
----------------------------------------
Sold 1,105,785 $15,654,057 208,440 $2,862,854 126,125 $1,811,431
Redeemed (1,647,968) (22,594,549) (35,331) (480,524) (198,230) (2,926,689)
------------ ------------ ------------ ------------ ------------ ------------
Net Change (542,183) ($6,940,492) 173,109 $2,382,330 (72,105) ($1,115,258)
============ ============ ============ ============ ============ ============
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
============ ============ ============ ============ ============ ============
Six Months Ended April 30, 2000
----------------------------------------
Sold 2,098,387 $35,353,996 473,931 $7,723,233 81,468 $1,479,230
Dividends and distributions reinvested 159,005 2,199,048 44,014 598,586 3,142 43,669
Redeemed (346,702) (5,681,172) (43,970) (699,286) -- --
------------ ------------ ------------ ------------ ------------ ------------
Net Change 1,910,690 $31,871,872 473,975 $7,622,533 84,610 $1,522,899
============ ============ ============ ============ ============ ============
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
============ ============ ============ ============ ============ ============
Six Months Ended April 30, 2000
----------------------------------------
Sold 1,175,236 $16,573,640 246,718 $3,416,545 66,605 $960,038
Dividends and distributions reinvested 209,560 2,726,412 20,550 263,659 12,587 164,386
Redeemed (480,623) (6,714,408) (26,192) (364,400) (4,442) (60,163)
------------ ------------ ------------ ------------ ------------ ------------
Net Change 904,173 $12,585,644 241,076 $3,315,804 74,750 $1,064,261
============ ============ ============ ============ ============ ============
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
============ ============ ============ ============ ============ ============
Six Months Ended April 30, 2000
----------------------------------------
Sold 780,581 $14,914,110 167,051 $3,179,359 68,349 $1,320,477
Redeemed (17,064) (327,363) (647) (12,477) -- --
------------ ------------ ------------ ------------ ------------ ------------
Net Change 763,517 $14,586,747 166,404 $3,166,882 68,349 $1,320,477
============ ============ ============ ============ ============ ============
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
============ ============ ============ ============ ============ ============
Six Months Ended April 30, 2000
----------------------------------------
Sold 2,555,627 $74,123,492 569,400 $16,315,048 227,423 $6,519,125
Dividends and distributions reinvested 7,109,992 200,213,818 335,173 9,327,901 184,260 5,195,061
Redeemed (3,182,910) (92,444,705) (102,643) (2,946,212) (129,960) (3,738,463)
------------ ------------ ------------ ------------ ------------ ------------
Net Change 6,482,709 $181,892,605 801,930 $22,696,737 281,723 $7,975,723
============ ============ ============ ============ ============ ============
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
============ ============ ============ ============ ============ ============
Six Months Ended April 30, 2000
----------------------------------------
Sold 525,598 $7,791,424 103,168 $1,528,224 16,978 $256,231
Redeemed (11,608) (174,353) (436) (6,433) -- --
------------ ------------ ------------ ------------ ------------ ------------
Net Change 513,990 $7,617,071 102,732 $1,521,791 16,978 $256,231
============ ============ ============ ============ ============ ============
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
============ ============ ============ ============ ============ ============
Six Months Ended April 30, 2000
----------------------------------------
Sold 7,508,171 $60,247,090 871,733 $6,977,447 67,710 $544,517
Dividends and distributions reinvested 3,733,194 29,812,480 171,817 1,370,097 122,845 981,588
Redeemed (9,433,477) (75,633,903) (295,478) (2,363,866) (3,725,733) (30,229,872)
------------ ------------ ------------ ------------ ------------ ------------
Net Change 1,807,888 $14,425,667 748,072 $5,983,678 (3,535,178) ($28,703,767)
============ ============ ============ ============ ============ ============
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
============ ============ ============ ============ ============ ============
Six Months Ended April 30, 2000
----------------------------------------
Sold 1,905,768 $15,489,839 246,075 $1,999,498 658,537 $5,345,941
Dividends and distributions reinvested 2,050,516 16,614,211 48,941 395,726 113,469 918,626
Redeemed (8,889,883) (72,218,012) (148,839) (1,205,219) (283,625) (2,301,069)
------------ ------------ ------------ ------------ ------------ ------------
Net Change (4,933,599) ($40,113,962) 146,177 $1,190,005 488,381 $3,963,498
============ ============ ============ ============ ============ ============
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
============ ============ ============ ============ ============ ============
Six Months Ended April 30, 2000
----------------------------------------
Sold 1,604,121 $13,500,698 132,415 $1,107,818 4,148 $34,793
Dividends and distributions reinvested 1,364,388 11,459,909 21,413 179,310 11,201 94,069
Redeemed (5,001,363) (42,027,869) (82,123) (686,058) (113,546) (952,856)
------------ ------------ ------------ ------------ ------------ ------------
Net Change (2,032,854) ($17,067,262) 71,705 $601,070 (98,197) ($823,994)
============ ============ ============ ============ ============ ============
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
============ ============ ============ ============ ============ ============
Six Months Ended April 30, 2000
----------------------------------------
Sold 645,221 $7,977,341 2,450 $30,359 33,523 $413,188
Dividends and distributions reinvested 7,592 93,546 38 472 363 4,473
Redeemed (69,954) (863,196) -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Net Change 582,859 $7,207,691 2,488 $30,831 33,886 $417,661
============ ============ ============ ============ ============ ============
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
============ ============ ============ ============ ============ ============
Six Months Ended April 30, 2000
----------------------------------------
Sold 513,230,743 $513,230,744 175,329 $175,329 37,629,735 $37,629,734
Dividends and distributions reinvested 14,616,039 14,616,039 7,332 7,332 1,307,317 1,307,317
Redeemed (508,729,605) (508,729,605) (164,477) (164,477) (45,110,895) (45,110,895)
------------ ------------ ------------ ------------ ------------ ------------
Net Change 19,117,177 $19,117,178 18,184 $18,184 (6,173,843) ($6,173,844)
============ ============ ============ ============ ============ ============
</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
Otis F. Hilbert Richard B. Ruckdashel
Secretary and Vice President Vice President
Randall L. Boushek John C. Bjork
Vice President Assistant Secretary
Frederick P. Johnson Rand E. Mattsson
Vice President Assistant Treasurer
This report is authorized for distribution to prospective
investors only when preceded or accompanied by the
current prospectuses.
