UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-5075
Thrivent Mutual Funds
(Exact name of registrant as specified in charter)
625 Fourth Avenue South
Minneapolis, Minnesota 55415
(Address of principal executive offices) (Zip code)
John C. Bjork, Assistant Secretary
625 Fourth Avenue South
Minneapolis, Minnesota 55415
(Name and address of agent for service)
Registrant's telephone number, including area code: (612) 340-7005
Date of fiscal year end: December 31
Date of reporting period: June 30, 2005
Item 1. Report to Stockholders
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[PHOTO OMMITTED: PAMELA J. MORET]
Dear Members:
We are pleased to provide you with the Thrivent Real Estate Securities Fund
Semiannual Report for the period ended June 30, 2005. In this report, you
will find detailed information about your investment in the Thrivent Real
Estate Securities Fund.
You are receiving this abbreviated report as the Thrivent Real Estate
Securities Fund was introduced with one day remaining in the reporting
period. As always, thank you for continuing to turn to us for your financial
solutions. We very much value your business.
Yours sincerely,
/S/ PAMELA J. MORET
Pamela J. Moret
President and Trustee
Thrivent Mutual Funds
Shareholder Expense Example
(Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, including sales charges (loads) on purchase payments,
reinvested dividends, or other distributions; redemption fees; and
exchange fees; and (2) ongoing costs, including management fees;
distributions (12b-1) fees; and other Fund expenses. This Example is
intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with the ongoing costs of
investing in other mutual funds. The Example is based on an investment of
$1,000 invested on June 30, 2005, and held for one day.
Actual Expenses
The first line of the table below provides information about actual
account values and actual expenses. You may use the information in this
line, together with the amount you invested, to estimate the expenses that
you paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply
the result by the number in the first line under the heading entitled
"Expenses Paid During Period" to estimate the expenses you paid. A small
account fee of $12 is charged to Class A shareholder accounts if the value
falls below the stated account minimum of $1000. This fee is not included
in the table below. If it were, the expenses you paid during the period
would have been higher and the ending account values would have been
lower.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Fund's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expenses you paid for the period. You may use this information
to compare the ongoing costs of investing in the Fund and other funds. To
do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds. A
small account fee of $12 is charged to Class A shareholder accounts if the
value falls below the stated account minimum of $1000. This fee is not
included in the table below. If it were, the expenses you paid during the
period would have been higher and the ending account values would have
been lower.
Please note that the expenses shown in the table are meant to highlight
your ongoing costs only and do not reflect any transactional costs, such
as sales charges (loads), redemption fees, or exchange fees. Therefore,
the second line of the table is useful in comparing ongoing costs only,
and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included,
your costs would have been higher.
Expenses
Beginning Ending Paid During
Account Account Period * Annualized
Value Value 6/30/2005 - Expense
6/30/2005 6/30/2005 6/30/2005 Ratio***
Thrivent Real Estate Securities Fund
Actual
Class A $ 1,000 $ 1,000 $ 0.00 0.00%
Institutional Class $ 1,000 $ 1,000 $ 0.00 0.00%
Hypothetical **
Class A $ 1,000 $ 1,000 $ 0.00 0.00%
Institutional Class $ 1,000 $ 1,000 $ 0.00 0.00%
* Expenses are equal to the Fund's annualized expense ratio, multiplied
by the average account value over the period, multiplied by 1/365 to
reflect the one day period.
** Assuming 5% total return before expenses.
*** The Fund did not incur any expenses during the one day it was in
operation. The estimated annualized expense ratio for the Fund is 1.50%
for Class A Shares and 0.98% for Institutional Class shares, which would
be equal to actual expenses of $7.44 for Class A shares and $4.86 for
Institutional Class shares on a $1,000 investment in the Fund. With a
hypothetical assumed rate of return of 5% before expenses, the estimated
expenses would be equal to $7.50 for Class A shares and $4.91 for
Institutional Class shares on a $1,000 investment in the Fund.
SCHEDULE OF INVESTMENTS
AS OF JUNE 30, 2005 (UNAUDITED)
Thrivent Real Estate Securities Fund (a)
Market
Shares Common Stock (100.0%) Value
- ------------------------------------------------------------------------------
Consumer Discretionary - (4.6%)
100 D.R. Horton, Inc. $3,761
100 Fairmont Hotels & Resorts, Inc. 3,483
100 Gaylord Entertainment Company (b) 4,649
300 Great Wolf Resorts, Inc. (b) 6,132
2,300 Hilton Hotels Corporation 54,855
800 Jameson Inns, Inc. (b) 1,856
100 KB Home 7,623
1,000 La Quinta Corporation (b) 9,330
300 Lodgian, Inc. (b) 3,084
200 Marriott International, Inc. 13,644
100 Orient Express Hotels, Ltd. 3,167
1,900 Starwood Hotels & Resorts Worldwide, Inc. 111,283
100 Vail Resorts, Inc. (b) 2,810
100 WCI Communities, Inc. (b) 203
- ------------------------------------------------------------------------------
Total Consumer Discretionary 228,880
==============================================================================
Financials - (95.3%)
100 Aames Investment Corporation 972
800 Acadia Realty Trust 14,920
200 Affordable Residential Communities 2,670
100 Agree Realty Corporation 3,025
800 Alexandria Real Estate Equities, Inc. 58,760
1,700 AMB Property Corporation 73,831
400 American Campus Communities, Inc. 9,072
700 American Financial Realty Trust 10,766
200 Amli Residential Properties Trust 6,252
1,000 Apartment Investment & Management Company 40,920
3,200 Archstone-Smith Trust 123,584
1,700 Arden Realty Group, Inc. 61,166
600 Ashford Hospitality Trust 6,480
300 Associated Estates Realty Corporation 2,769
1,500 Avalonbay Communities, Inc. 121,200
200 Bedford Property Investors, Inc. 4,604
600 BioMed Realty Trust, Inc. 14,310
2,100 Boston Properties, Inc. 147,000
1,500 Brandywine Realty Trust 45,975
100 Brascan Corporation (b) 3,816
600 BRE Properties, Inc. 25,110
2,200 Brookfield Properties Corporation 63,360
1,200 Camden Property Trust 64,500
900 Capital Automotive REIT 34,353
100 Capital Trust, Inc. 3,342
1,400 CarrAmerica Realty Corporation 50,652
1,500 Catellus Development Corporation 49,200
200 CB Richard Ellis Group, Inc. (b) 8,772
1,000 CBL & Associates Properties, Inc. 43,070
200 Cedar Shopping Centers, Inc. 2,950
900 CenterPoint Properties Trust 38,070
500 Colonial Properties Trust 22,000
400 Commercial Net Lease Realty, Inc. 8,188
1,300 Corporate Office Properties Trust 38,285
100 Correctional Properties Trust 2,830
100 Countrywide Financial Corporation 3,861
800 Cousins Properties, Inc. 23,664
800 Crescent Real Estate Equities Company 15,000
300 CRT Properties, Inc. 8,190
2,100 Developers Diversified Realty Corporation 96,516
200 DiamondRock Hospitality Company 2,260
300 Digital Realty Trust, Inc. 5,214
2,100 Duke Realty Corporation 66,486
900 Eagle Hospitality Properties Trust, Inc. 8,199
500 EastGroup Properties, Inc. 21,055
500 ECC Capital Corporation 3,330
700 Education Realty Trust, Inc. 12,810
200 Entertainment Properties Trust 9,200
900 Equity Inns, Inc. 11,970
400 Equity Lifestyle Properties, Inc. 15,904
4,200 Equity Office Properties Trust 139,020
600 Equity One, Inc. 13,620
3,400 Equity Residential REIT 125,188
600 Essex Property Trust, Inc. 49,836
900 Extra Space Storage, Inc. 12,897
1,000 Federal Realty Investment Trust 59,000
400 FelCor Lodging Trust, Inc. (b) 5,792
500 Feldman Mall Properties, Inc. 6,975
100 Fidelity National Financial, Inc. 3,569
200 Fieldstone Investment Corporation 2,882
200 First American Corporation 8,028
400 First Industrial Realty Trust, Inc. 15,960
500 First Potomac Realty Trust 12,400
300 Forest City Enterprises 21,300
200 Friedman, Billings, Ramsey Group, Inc. 2,860
400 Gables Residential Trust 17,292
4,100 General Growth Properties, Inc. 168,469
100 Getty Realty Corporation 2,770
400 Glenborough Realty Trust, Inc. 8,236
500 Glimcher Realty Trust 13,875
300 Global Signal, Inc. 11,295
400 GMH Communities Trust 5,540
300 Gramercy Capital Corporation 7,338
900 Health Care Property Investors, Inc. 24,336
500 Health Care REIT, Inc. 18,845
600 Healthcare Realty Trust, Inc. 23,166
800 Heritage Property Investment Trust 28,016
700 Hersha Hospitality Trust 6,678
700 Highwoods Properties, Inc. 20,832
700 Home Properties, Inc. 30,114
600 Hospitality Properties Trust 26,442
6,900 Host Marriott Corporation 120,750
1,100 HRPT Properties Trust 13,673
200 Inland Real Estate Corporation 3,216
800 Innkeepers USA Trust 11,952
1,000 iStar Financial, Inc. 41,590
700 Kilroy Realty Corporation 33,243
1,800 Kimco Realty Corporation 106,038
600 Kite Realty Group Trust 9,000
100 KKR Financial Corporation (b) 2,500
800 LaSalle Hotel Properties 26,248
600 Lexington Corporate Properties Trust 14,586
1,400 Liberty Property Trust 62,034
300 LTC Properties, Inc. 6,210
1,200 Macerich Company 80,460
1,000 Mack-Cali Realty Corporation 45,300
800 Maguire Properties, Inc. 22,672
500 MeriStar Hospitality Corporation (b) 4,300
100 MFA Mortgage Investments, Inc. 745
500 Mid-America Apartment Communities, Inc. 22,710
1,100 Mills Corporation 66,869
100 MortgageIT Holdings, Inc. 1,825
100 National Health Investors, Inc. 2,807
800 Nationwide Health Properties, Inc. 18,888
100 New Century Financial Corporation 5,145
900 New Plan Excel Realty Trust, Inc. 24,453
500 Newcastle Investment Corporation 15,075
700 NorthStar Realty Finance Corporation 7,343
400 Omega Healthcare Investors, Inc. 5,144
800 Pan Pacific Retail Properties, Inc. 53,104
200 Parkway Properties, Inc. 10,002
600 Penn Real Estate Investment Trust 28,500
500 Plum Creek Timber Company, Inc. 18,150
600 Post Properties, Inc. 21,666
1,300 Prentiss Properties Trust 47,372
4,300 ProLogis Trust 173,032
400 PS Business Parks, Inc. 17,780
1,600 Public Storage, Inc. 101,200
100 RAIT Investment Trust 2,996
400 Ramco-Gershenson Properties Trust 11,712
100 Rayonier, Inc. REIT 5,303
400 Realty Income Corporation 10,016
1,500 Reckson Associates Realty Corporation 50,325
1,800 Regency Centers Corporation 102,960
100 Saul Centers, Inc. 3,635
200 Saxon Capital, Inc. 3,414
500 Senior Housing Property Trust 9,455
500 Shurgard Storage Centers, Inc. 22,980
4,200 Simon Property Group, Inc. 304,458
300 Sizeler Property Investors, Inc. 3,960
1,200 SL Green Realty Corporation 77,400
300 Sovran Self Storage, Inc. 13,638
1,100 Spirit Finance Corporation 12,925
200 St. Joe Company 16,308
600 Strategic Hotel Capital, Inc. 10,800
300 Sun Communities, Inc. 11,157
400 Sunstone Hotel Investors, Inc. 9,704
300 Tanger Factory Outlet Centers, Inc. 8,079
800 Taubman Centers, Inc. 27,272
100 Thornburg Mortgage Inc. 2,913
500 Town & Country Trust 14,255
2,200 Trizec Properties, Inc. 45,254
300 Trustreet Properties, Inc. 4,983
600 U-Store-It Trust 11,430
2,800 United Dominion Realty Trust, Inc. 67,340
100 Universal Health Realty Income Trust 3,811
200 Urstadt Biddle Properties 3,464
1,100 Ventas, Inc. 33,220
2,100 Vornado Realty Trust 168,840
200 Washington Real Estate Investment Trust 6,240
600 Weingarten Realty Investors 23,532
100 Windrose Medical Properties Trust 1,403
200 Winston Hotels, Inc. 2,252
- ------------------------------------------------------------------------------
Total Financials 4,756,020
==============================================================================
Industrials - (0.1%)
100 Alexander & Baldwin, Inc. 4,635
100 Cendant Corporation 2,237
- ------------------------------------------------------------------------------
Total Industrials 6,872
- ------------------------------------------------------------------------------
Total Investments (cost $4,993,118) $4,991,772
==============================================================================
(a) The categories of investments are shown as a percentage of total
investments.
(b) Non-income producing security.
STATEMENT OF ASSETS AND LIABILITIES
AS OF JUNE 30, 2005 (UNAUDITED)
Thrivent Real Estate Securities Fund
- -------------------------------------------------------------------
Assets
Investments at cost $4,993,118
Investments at value 4,991,772
Cash 5,000,000
Receivable for fund shares sold 207,128
- -------------------------------------------------------------------
Total Assets 10,198,900
===================================================================
Liabilities
Payable for investments purchased 4,993,118
- -------------------------------------------------------------------
Total Liabilities 4,993,118
===================================================================
Net Assets
Capital Stock (beneficial interest) 5,207,128
Net unrealized depreciation on investments (1,346)
- -------------------------------------------------------------------
Total Net Assets $5,205,782
===================================================================
Class A Share Capital $4,504,798
Shares of beneficial interest outstanding (class A) 450,601
Net asset value per share $10.00
Maximum public offering price $10.58
Class I Share Capital $700,984
Shares of beneficial interest outstanding (class I) 70,112
Net asset value per share $10.00
The accompanying notes to the financial statements are an integral part of
this statement.
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JUNE 30, 2005 (INCEPTION) TO JUNE 30, 2005 (UNAUDITED)
- -------------------------------------------------------------------
Investment Income $0
Expenses 0
- -------------------------------------------------------------------
Net Investment Income 0
===================================================================
Unrealized Losses on Investments
Change in net unrealized depreciation on investments (1,346)
- -------------------------------------------------------------------
Net Unrealized Losses on Investments (1,346)
===================================================================
Net Decrease in Net Assets Resulting From Operations $(1,346)
===================================================================
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM JUNE 30, 2005 (INCEPTION) TO JUNE 30, 2005 (UNAUDITED)
Operations
Change in net unrealized depreciation on investments $(1,346)
- -------------------------------------------------------------------
Net Change in Net Assets Resulting
From Operations (1,346)
===================================================================
- -------------------------------------------------------------------
Total Distributions to Shareholders 0
===================================================================
- -------------------------------------------------------------------
Capital Stock Transactions 5,207,128
===================================================================
Net Increase in Net Assets 5,205,782
===================================================================
Net Assets Beginning of Period 0
===================================================================
Net Assets End of Period $5,205,782
===================================================================
The accompanying notes to the financial statements are an integral part of
this statement.
NOTES TO FINANCIAL STATEMENTS
AS OF JUNE 30, 2005 (UNAUDITED)
Thrivent Real Estate Securities Fund
A. Organization
Thrivent Mutual Funds (the "Trust") was organized as a Massachusetts
Business Trust on March 10, 1987 and is registered as an open-end
management investment company under the Investment Company Act of 1940.
The Trust is divided into thirty-one separate series (the "Funds"), each
with its own investment objective and policies. The Trust currently
consists of four allocation funds, eighteen equity funds, eight
fixed-income funds, and one money market fund. The Trust commenced
operations on July 16, 1987.
The Thrivent Real Estate Securities Fund (the "Fund") commenced operations
on June 30, 2005. The other Funds of the Trust are presented under
separate reports.
The Fund offers two classes of shares: Class A and Institutional Class.
The two classes of shares differ principally in their respective
distribution expenses and arrangements. Class A shares have a 0.25%
annual 12b-1 fee and a maximum front-end sales load of 5.50%.
Institutional Class shares are offered at net asset value and have no
annual 12b-1 fees. The two 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.
Under the Trust's organizational documents, its officers and trustees are
indemnified against certain liabilities arising out of the performance of
their duties to the Trust. In addition, in the normal course of business,
the Trust enters into contracts with vendors and others that provide
general damage clauses. The Trust's maximum exposure under these contracts
is unknown, as this would involve future claims that may be made against
the Trust. However, based on experience, the Trust expects the risk of
loss to be remote.
B. Significant Accounting Policies
Valuation - Securities traded on U.S. or foreign securities exchanges or
included in a national market system are valued at the official closing
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
the current bid price considered best to represent the value at that time.
Security prices are based on quotes that are obtained from an independent
pricing service approved by the Board of Trustees. The pricing service, in
determining values of fixed-income 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. Short-term securities with maturities of 60 days or
less are valued at amortized cost.
All securities for which market values are not readily available are
appraised at fair value as determined in good faith under the direction of
the Board of Trustees.
Federal Income Taxes - No provision has been made for income taxes
because the Funds' policy is to qualify as regulated investment companies
under the Internal Revenue Code and distribute substantially all taxable
income on a timely basis. It is also the intention of the Fund to
distribute an amount sufficient to avoid imposition of any federal excise
tax. The Fund, accordingly, anticipates paying no federal taxes, and
therefore, no federal tax provision is required. The Fund is treated as a
separate taxable entity for federal income tax purposes. The Fund may
utilize earnings and profits distributed to shareholders on the redemption
of shares as part of the dividend paid deduction.
Income and Expenses - Estimated expenses are accrued daily. The Fund is
charged for those expenses that are directly attributable to it. Expenses
that are not directly attributable to the Fund are allocated among all
appropriate Funds in proportion to their respective net assets, number of
shareholder accounts; or other reasonable basis. Net investment income,
expenses which are not class-specific and realized and unrealized gains
and losses are allocated directly to each class based upon the relative
net asset value of outstanding shares, or the value of dividend eligible
shares, as appropriate for each class of shares.
Interest income is accrued daily and is determined on the basis of
interest or discount earned on all debt securities, including accretion of
market discount and original issue discount and amortization of premium.
Dividend income is recorded on the ex-dividend date. For preferred stock
payment-in-kind securities, income is recorded on the ex-dividend date in
the amount of the value received.
Custody Earnings Credit - The Fund has 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.
Distributions to Shareholders - Net investment income is distributed to
each shareholder as a dividend. Dividends from the Fund are declared and
distributed quarterly. Net realized gains from securities transactions,
if any, are distributed at least annually.
Options - The Fund may buy put and call options and write covered call
options. The Fund may 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 Fund may also
enter into options contracts to protect against adverse foreign exchange
rate fluctuations. 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 upon 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. During the period ended June 30, 2005, the
Fund did not participate in this type of investment.
Financial Futures Contracts - The Fund may use futures contracts to
manage the exposure to interest rate and market fluctuations. Gains or
losses on futures contracts can offset changes in the yield of securities.
When a futures contract is opened, cash or other investments equal to the
required "initial margin deposit" are pledged to the broker. Additional
securities held by the Fund may be earmarked as collateral for open
futures contracts. The futures contract's daily change in value
("variation margin") is either paid to or received from the broker, and is
recorded as an unrealized gain or loss. When the contract is closed,
realized gain or loss is recorded equal to the difference between the
value of the contract when opened and the value of the contract when
closed. During the period ended June 30, 2005, the Fund did not
participate in this type of investment.
Investments in Options and Futures Contracts - The movement in the price
of the security 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.
Credit Risk - The Fund may be susceptible to credit risk to the extent an
issuer defaults on its payment obligation. The Fund's policy is to
monitor the creditworthiness of issuers. Interest receivables on
defaulted securities are monitored for ability to collect payments in
default and are adjusted accordingly.
Accounting Estimates - The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America require 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 these estimates.
Other - For financial statement purposes, investment security
transactions are accounted for on the trade date. Interest income is
recognized on an accrual basis. Bond discount is amortized over the life
of the respective bonds on the interest method. Realized gains or losses
on sales are determined on a specific cost identification basis, which is
the same basis used for federal income tax purposes.
C. Fees and Compensation paid to Affiliates
Investment Advisory Fees - The Trust has entered into an Investment
Advisory Agreement with Thrivent Investment Management Inc. (Thrivent
Investment Mgt.),("the Adviser"). Thrivent Investment Mgt. is a wholly
owned subsidiary of Thrivent Financial for Lutherans (Thrivent Financial).
Under the Advisory Agreement, the Fund pays a fee for investment advisory
services. The annual rate of fees under the Investment Advisory Agreement
are calculated at 0.80% of the average daily net assets of the Fund.
The Adviser has agreed, through at least June 30, 2006, to reimburse
certain expenses associated with operating the Fund equal in the aggregate
to 0.80% of the average daily net assets of the Fund. The Fund may invest
cash in the Thrivent Money Market Fund, subject to certain limitations.
These related-party transactions are subject to the same terms as
non-related party transactions except that, to avoid duplicate investment
advisory fees, Thrivent Investment Mgt. reimburses an amount equal to the
smaller of the amount of the advisory fee for the Fund or the amount of
the advisory fee, which is charged to the Fund for its investment in the
Thrivent Money Market Fund. During the period ended June 30, 2005, the
Fund did not invest in the Thrivent Money Market Fund.
Distribution Plan - Thrivent Investment Mgt. is also the Trust's
distributor. The Trust has adopted a Distribution Plan ("the Plan")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Class A
shares have a Rule 12b-1 fee of 0.25% of average net assets.
Sales Charges and Other Fees - For the period ended June 30, 2005,
Thrivent Investment Mgt. did not receive underwriting concessions from the
Fund.
The Trust has entered into an accounting services agreement with Thrivent
Financial pursuant to which Thrivent Financial provides certain accounting
personnel and services. For the period ended June 30, 2005, Thrivent
Financial did not receive accounting service fees from the Fund.
The Trust has entered into an agreement with Thrivent Investment Mgt. to
provide certain administrative personnel and services to the Funds. For
the period ended June 30, 2005, Thrivent Investment Mgt. did not receive
administrative service fees from the Fund.
The Trust has entered into an agreement with Thrivent Financial Investor
Services Inc. (Thrivent Investor Services) to provide the Funds with
transfer agent services. For the period ended June 30, 2005, Thrivent
Investor Services did not receive transfer agent service fees from the
Fund.
D. Security Transactions
Purchases and Sales of Investment Securities - During the period ended
June 30, 2005, there were $4,993,118 in purchases and $0 sales. All
purchases were in non U.S. Government obligations.
Investments in High-Yielding Securities - The Fund may invest in
high-yielding securities. These securities will typically be in the lower
rating categories or will be non-rated and generally will involve more
risk than securities in the higher rating categories. Lower rated or
unrated securities are more likely to react to developments affecting
market risk and credit risk than are more highly rated securities, which
react primarily to movements in the general level of interest rates.
E. Federal Income Tax Information
The cost basis of the investments is the same for financial reporting
purposes and Federal income tax purposes. The gross unrealized
depreciation on investments at June 30, 2005 was $1,346.
F. SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trust to issue an unlimited number of
full and fractional shares of beneficial interest of all of the Funds.
During the period, transactions in Fund shares were as follows:
Real Estate Securities Fund 1
----------------------------------------
Class A Institutional Class
----------------------------------------
Period Ended June 30, 2005 Shares Amount Shares Amount
- --------------------------- ------- ---------- ------ --------
Sold 450,601 $4,506,010 70,112 $701,118
Dividends and distributions
reinvested -- -- -- --
Redeemed -- -- -- --
------- ---------- ------ --------
Net change 450,601 $4,506,010 70,112 $701,118
1 Fund's inception was June 30, 2005. Activity for the period ended June
30, 2005 reflects one day of operations.
<CAPTON>
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period (a)
-----------------------------------------------------------------------------------------------------------
Income from Investment Operations Less Distributions from
--------------------------------- -----------------------
Net Realized and
Net Asset Value, Net Investment Unrealized Total Investment Net Net Realized
Beginning of Income Gain/(Loss) on Operations Investment Gain on Total
Period Investments (b) Income Investments Distributions
- ---------------------------------------------------------------------------------------------------------------------------------
Class A Shares
- --------------
Period Ended 6/30/2005
(unaudited)(e) $10.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Class I Shares
- --------------
Period Ended 6/30/2005
(unaudited)(e) 10.00 0.00 0.00 0.00 0.00 0.00 0.00
(a) All per share amounts have been rounded to the nearest cent.
(b) The amount shown may not correlate 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 any deduction for sales charges.
(d) Computed on an annualized basis for periods less then one year.
(e) Since Fund inception, June 30, 2005.
The accompanying notes to the financial statements are an integral part of this schedule.
<CAPTON>
FINANCIAL HIGHLIGHTS - CONTINUED
Ratios / Supplemental Data
- --------------- -----------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets
Before Expenses Waived,
Ratios to Average Net Assets (d) Credited or Paid Indirectly (d)
--------------------------------- -------------------------------
Net Asset Net Assets End Net Investment Net Investment Portfolio
Value, End Total of Period Income/(Loss) Income/(Loss) Turnover
of Period Return (c) (in millions) Expenses Expenses Rate
- --------------- -----------------------------------------------------------------------------------------------------------
$10.00 0.00% $4.5 0.00% 0.00% 0.00% 0.00% 0.00%
10.00 0.00% 0.7 0.00% 0.00% 0.00% 0.00% 0.00%
The accompanying notes to the financial statements are an integral part of this schedule.
ADDITIONAL INFORMATION
(unaudited)
PROXY VOTING
The policies and procedures that the Trust uses to determine how to vote
proxies relating to portfolio securities are attached to the Trust's
Statement of Additional Information. You may request a free copy of the
Statement of Additional Information or the report of how the Trust voted
proxies relating to portfolio securities during the most recent 12-month
period ended June 30 by calling 800-947-4836. You also may review the
Statement of Additional Information or the report of how the Trust voted
proxies relating to portfolio securities during the most recent 12-month
period ended June 30 at the Thrivent Financial web site (www.thrivent.com)
or the SEC web site (www.sec.gov).
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS
The Trust files its Schedule of Portfolio Holdings on Form N-Q with the SEC
for the first and third quarters of each fiscal year. You may request a
free copy of the Trust's Forms N-Q by calling 1-800-947-4836. The Trust's
Forms N-Q also are available on the Thrivent Financial web site
(www.thrivent.com) or the SEC web site (www.sec.gov). You also may review
and copy the Forms N-Q for the Trust at the SEC's Public Reference Room in
Washington, DC. You may get information about the operation of the Public
Reference Room by calling 1-800-SEC-0330.
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
At its meeting on February 8, 2005, the Board of Trustees of Thrivent Mutual
Funds (the "Trust"), including the Independent Trustees, unanimously voted
to approve the new investment advisory agreement ("Advisory Agreement")
between the Trust and Thrivent Investment Management, Inc. (the "Adviser")
with respect to a new mutual fund series of the Trust, the Thrivent Real
Estate Securities Fund (the "Fund"). The Fund was newly organized and had
no performance history. However, the Board had the benefit of experience
with the Adviser's management of other mutual fund series of the Trust
(collectively referred to as the "Funds") and the investment performance of
the Thrivent Real Estate Securities Portfolio (the "Real Estate Securities
Portfolio"), a Portfolio of the Thrivent Series Fund, Inc., which has
similar investment objectives and strategies as the Fund and which is
managed by the same personnel as the Fund. In connection with its approval
of the Advisory Agreement, the Board considered the following factors:
1. The nature, extent, and quality of the services provided by the Adviser.
2. The investment performance of the Real Estate Securities Portfolio and
the other Funds of the Trust advised by the Adviser.
3. The costs of the services to be provided and profits anticipated to be
realized by the Adviser.
4. The extent to which economies of scale may be realized as the Fund grows.
5. Whether fee breakpoint levels reflect these economies of scale for the
benefit of the Fund's shareholders.
In connection with its recommendation of the Advisory Agreement, the
Contracts Committee of the Board (consisting of each of the Independent
Trustees of the Board) reviewed information presented by Trust management
addressing the factors listed above. This information included a pro forma
expense report that compared the advisory fees and the total operating
expenses of the Fund to a peer group of comparable mutual funds; information
regarding the types of services furnished to the current Funds of the Trust;
and information regarding personnel providing the services. In addition,
the Contracts Committee reviewed the Adviser's Statement of Operations for
the Twelve Months ended December 31, 2004, and it considered other reports
provided to the Contracts Committee and the Board during 2004 with respect
to the profit realized by the Adviser for the services it provides to the
other Funds of the Trust, staff additions, systems improvements, the
Adviser's plans for further staff additions, and performance information
prepared by management.
The Contracts Committee was represented by independent counsel throughout
these meetings and during a private session of the Independent Trustees to
consider approval of the Advisory Agreement. The Contracts Committee also
considered a memorandum it previously received from independent counsel,
which summarized the responsibilities of the Trustees under the Investment
Company Act in reviewing advisory contracts. The Contracts Committee's and
the Board's consideration of the factors listed above and information
provided to it is discussed below.
Nature, Extent, and Quality of Services
At each of the quarterly meetings of the Trust during 2004, management
presented information describing the services furnished by the Adviser to
the other Funds of the Trust under the current Advisory, Administration, and
Accounting Services Agreements, which also will apply to the new Fund.
During these meetings, management reported on the investment management,
trading, and compliance functions provided to the Trust under the current
Advisory Agreement. The Contracts Committee considered information
relating to the investment experience and educational backgrounds of the
portfolio managers, research analysts, and trading desk personnel.
During the preceding year, the Board had also received information
describing the compliance functions performed by the Adviser. The Board
considered the importance of the compliance and oversight functions to the
successful operation of the Fund, and expressed satisfaction with the
quality of service provided by the Adviser.
During meetings in 2004, management had reviewed with the Contracts
Committee and the Board the administrative and accounting services provided
to the Trust under the Advisory, Administration, and Accounting Services
Agreements. These services include, among others, accounting, financial
reporting, legal, compliance, record keeping, and internal audit. The Board
considered the necessity of these services for the continued successful
operation of the new Fund and evaluated the quality of the services. As part
of this review, the Board also generally considered the experience and skill
levels of personnel providing these services. The Board concluded that the
Adviser has provided a consistent, high level of quality service for these
essential functions to the existing Funds of the Trust, which also was a
significant factor in the Board's approval of the Advisory Agreement.
Investment Performance
The Fund was newly organized and had no performance history. However, the
Board reviewed the performance of the Real Estate Securities Portfolio, a
fund with similar investment objectives and strategies as the Fund and which
is managed by the same personnel as the Fund. This information is
critically reviewed with management at each quarterly Board meeting. At the
February 2005 meeting, the Board reviewed data for the Real Estate
Securities Portfolio for the period ended December 31, 2004, which compared
favorably with its benchmarks. Management also discussed with the Board its
initiative to build competitive long-term performance track records,
focusing on 3, 5, and 10 year performance.
Cost of Services and Profitability to Adviser
The Contracts Committee reviewed the Adviser's Statement of Operations for
the Twelve Months ended December 31, 2004. The Board reviewed the
comparative income, expense, and profit margins for each of the other Funds
of the Trust and noted the Adviser's commitment to provide additional
resources to enhance its investment management capabilities. It also
reviewed revenues and expenses of the Adviser relating to the accounting and
administration services it provides to the Trust under separate agreements.
From its review of the pro forma expense report for the new Fund and the
expense and profit information provided by the Adviser with respect to the
other Funds of the Trust, the Contracts Committee concluded that the
anticipated profit to be earned by the Adviser for investment management was
reasonable in light of the fees charged. The Contracts Committee relied
primarily on the competitive level of the advisory fee compared to other
comparable funds and the level of services provided by the Adviser. The
Contracts Committee concluded that the advisory fee to be charged to the
Fund was reasonable.
Economies of Scale and Breakpoints
The Contracts Committees also reviewed information provided by the Adviser
related to the proposed breakpoints in the Advisory Agreement. The
Contracts Committee noted it is difficult to anticipate the effect of
economies of scale based on breakpoints since the Fund is new.
Based on the factors discussed above, the Contracts Committee recommended
approval of the Advisory Agreement, and the Board, including all of the
Independent Trustees, approved the Advisory Agreement with the Adviser.
Item 2. Code of Ethics
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Not applicable to semiannual report
Item 3. Audit Committee Financial Expert
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Not applicable to semiannual report
Item 4. Principal Accountant Fees and Services
- ------------------------------------------------------------------------
Not applicable to semiannual report
Item 5. Audit Committee of Listed Registrants
- ------------------------------------------------------------------------
Not applicable.
Item 6. Schedule of Investments
- ------------------------------------------------------------------------
Registrant's Schedule of Investments is included in the report to
shareholders filed under Item 1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
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Management Investment Companies
- -------------------------------
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
- ------------------------------------------------------------------------
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
- ------------------------------------------------------------------------
Company and Affiliated Purchasers.
- ----------------------------------
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------------------
There have been no material changes to the procedures by which shareholders
may recommend nominees to registrant's board of trustees.
Item 11. Controls and Procedures
- ------------------------------------------------------------------------
(a)(i) Registrant's President and Treasurer have concluded that registrant's
disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act) are effective, based on their evaluation of these
controls and procedures as of a date within 90 days of the filing date of
this report.
(a)(ii) There has been no change in registrant's internal controls over
financial reporting (as defined in Rule 30a-3(d) under the Investment
Company Act) that occurred during registrant's most recent fiscal quarter
that has materially affected, or is reasonably likely to materially affect,
registrant's internal control over financial reporting.
Item 12. Exhibits
- ------------------------------------------------------------------------
(a) Certifications pursuant to Rules 30a-2(a) and 30a-2(b) under the
Investment Company Act of 1940 are attached hereto.
SIGNATURES
- ------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: August 22, 2005 THRIVENT MUTUAL FUNDS
By: /s/ Pamela J. Moret
-----------------------
Pamela J. Moret
President
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on
the dates indicated.
Date: August 22, 2005 By: /s/ Pamela J. Moret
-----------------------
Pamela J. Moret
President
Date: August 22, 2005 By: /s/ Gerard V. Vaillancourt
------------------------------
Gerard V. Vaillancourt
Treasurer