[GRAPHIC OMITTED: SEVEN SOLID SQUARES]
- ------------------------------
VARIABLE
- ------------------------------
UNIVERSAL LIFE
- ------------------------------
[GRAPHIC OMITTED: LINE ART DRAWING OF COMPASS]
Annual Report for
LB Series Fund, Inc. &
LBVIP Variable Insurance Account
December 31, 1995
[GRAPHIC OMITTED: LOGO FOR LUTHERAN BROTHERHOOD VARIABLE INSURANCE
PRODUCTS COMPANY]
[GRAPHIC OMITTED: PHOTO OF ROLF F. BJELLAND]
Our Message to You
Dear Contract Owner:
We are pleased to provide you with the annual report for the LB Series
Fund, Inc. (the Fund) and the LBVIP Variable Insurance Account, covering
the year ended December 31, 1995. Assets of the LBVIP Variable Insurance
Account are invested in the Fund. In this report you'll find a review of
the economic and market conditions that contributed to strong investment
performance in 1995, as well as the individual portfolio strategies used
to make the most of these conditions.
By any measure, the past year was an excellent one for investors.
Falling interest rates, moderate inflation and strong corporate earnings
delivered superior returns for stocks and bonds. Stocks produced an
exceptional return in 1995 -- their highest return in 35 years. In only
two of the last 35 years did bonds perform more strongly. The returns of
1995 compensated investors for the disappointing markets of 1994, and
were especially attractive because they were accompanied by low
inflation.
The last two years show why a long-term investment strategy makes sense.
The prices of stocks and bonds move up and down as part of normal market
cycles that generally smooth out over the years. Thus, investors who
maintained their investment programs when the markets ebbed temporarily
in 1994, enjoyed the full benefit of the stock and bond market rallies
in 1995. Those who moved to the sidelines, however, may have sacrificed
some of these gains.
Although both stocks and bonds performed well in 1995, they often move
in different cycles and frequently rally at different times. It's
important, therefore, to have both types of investments, as well as
money market securities, in your portfolio. Because foreign markets
often move in cycles that are different from U.S. markets, a well-
diversified portfolio may also include international securities.
Recognizing the diversification needs of Variable Universal Life
contract owners, LB introduced two new investment options beginning
January 17, 1996. The Opportunity Growth Portfolio seeks long-term
capital growth by investing primarily in the stocks of small U.S.
companies. The World Growth Portfolio seeks long-term capital growth by
investing primarily in stocks of established companies that are based
outside the U.S. It is organized to manage the risks of international
investing, while taking advantage of special opportunities overseas.*
If you would like more information about these new Portfolios, or about
the material contained in this report, please contact your LB
representative or call us toll free at 800-423-7056. Locally, call 612-
340-7210.
Sincerely,
Rolf F. Bjelland
President and Chairman of the Board
LB Series Fund, Inc.
*International investing has special risks, including currency
fluctuation and political volatility.
Variable Universal Life is issued by Lutheran Brotherhood Variable
Insurance Products Company.
[GRAPHIC OMITTED: LINE ART DRAWING OF COMPASS]
Economic and Market Overview December 31, 1995
Slower economic growth, moderate inflation and steep declines in interest
rates helped bond prices rally strongly in the year ended December 31, 1995.
This, combined with an unexpected tenacity in corporate earnings, sparked an
even stronger rally in stocks. With price gains among the largest in several
decades, the Lehman Aggregate Bond Index had a total return of 18.47%, and
the S&P 500 Index returned 37.54%.
An Economic Soft Landing
When 1995 began, the economy was growing rapidly, and the Federal Reserve
Board (the "Fed") was boosting interest rates to control inflation. In
February, the Fed raised short-term rates by 0.5%. This rate increase, plus
signs that the economy was starting to slow, convinced investors that
inflation would stay in check. After rising for most of 1994, long-term
interest rates began to fall -- making existing bonds much more valuable to
investors.
As interest rates and bond yields tumbled, stocks became more attractive,
too. Stocks were further enhanced by unexpectedly strong gains in corporate
earnings and by the belief that moderate inflation would mean a "soft
landing" for the economy.
Soon, economic growth was slowing enough to convince many investors that the
Fed would have to lower short-term rates to prevent a recession. This pushed
stock and bond prices even higher. In July, the Fed cut short-term rates for
the first time in three years -- reducing its Fed Funds rate by 0.25%.
Mixed signals about the economy rekindled inflation fears in the weeks that
followed, causing slight retractions in the market rallies. However, further
evidence of a slower, more sustainable economic growth rate and increased
hope for a balanced federal budget soon had prices back on track. By
December, with further slowing in the economy, the Fed cut short-term
interest rates another 0.25%.
As 1995 ended, rising bond prices had reduced yields for 30-year Treasury
bonds to their lowest level in more than two years. In the stock market,
higher prices had driven major benchmarks through a series of record highs.
Looking Ahead
While it's unlikely the markets will advance as strongly in 1996, there are
factors that could bring further price gains.
The economy should continue to grow, but at a slower, less-inflationary pace.
After growing at an annual rate that will likely be below 2% in the first
half of 1996, growth in the gross domestic product (GDP) could accelerate to
3% in the second. If this keeps the rate of inflation between 2% and 3%, as
we expect, yields on long-term bonds could continue to fall even farther --
which would have a positive influence on bond prices. If inflation is lower,
or there are additional cuts in interest rates overseas, yields could even
decline below these levels.
In addition to boosting the prices of bonds, lower yields should help fuel
additional price gains for stocks, though not likely to the magnitude of the
gains experienced in 1995. Continued economic growth should also help raise
stock prices -- particularly in cyclical sectors, where earnings tend to be
strongest when the economy expands.
[7 SOLID SQUARES OMMITTED}
Growth Portfolio Review LB Series Fund, Inc.
[PHOTO SCOTT A. VERGIN]
Scott A. Vergin is a Chartered Financial Analyst and portfolio manager for
the Growth Portfolio. He began managing the Portfolio in November 1994.
Investment Objective: To seek long-term growth of capital by investing
primarily in common stocks of established corporations.
Heavy investments in sectors that performed especially well as stock prices
rallied helped the Growth Portfolio deliver exceptional returns for the year
ended December 31, 1995. During the period the Portfolio earned a total
return of 37.25%, which compares favorably with the return of 37.54% produced
by the S&P 500 Index.
Winning Sectors
In the first half of the year, the Portfolio benefited from sizable holdings
in the technology sector, which far outdistanced the market as a whole.
Technology firms represented about 30% of the Portfolio's stock investments,
versus a weighting of 15% in the S&P 500. As the year progressed, we took
profits in selected technology issues that had performed especially well,
reducing the sector's weighting to 24% by the end of December. During this
time we decreased holdings in semiconductor stocks like Intel and Texas
Instruments. We then gave greater attention to networking and computer
service firms -- such as Bay Networks, Cisco Systems, and DST Systems --
believing these groups offered stronger potential for growth.
The Portfolio also invested heavily in financial companies, which benefited
from falling interest rates, as well as health care firms, which enjoyed
increased investor interest in stocks whose earnings could grow in a slowing
economy. Once it was clear the economy was slowing substantially, we reduced
holdings in cyclical stocks, which typically thrive when the economy is
expanding, and increased positions in other consumer staples issues. Although
the slow economy hampered returns of retail stocks, these stocks represented
smaller positions in the Portfolio and therefore had little effect on total
return.
[PIE CHART OMMITTED AS FOLLOWS]
Portfolio Composition
Short-Term Securities 9.3%
Bonds 0.4%
Common Stocks 90.3%
[END PIE CHART]
Diversification Now Key
Although stock returns for 1996 will likely lag the dramatic returns of 1995,
we believe ongoing economic improvements and further interest rate declines
will mean solid gains for many issues. It seems the market may be in
transition, with little leadership from specific sectors. We expect,
therefore, to remain well-diversified in coming months -- giving special
attention to individual stock selection.
As long as the economy remains slow, without stimulus from the Federal
Reserve, we will probably continue emphasizing consumer staples stocks and
other "defensive" investments. Once the economy begins to strengthen, we
expect to add positions in cyclical stocks and other growth-oriented issues.
Throughout the year, we will likely maintain strong weightings in technology
stocks, due to their outstanding potential for long-term growth.
% of
Top 10 Holdings Net Assets
Mobil Corp. 1.60%
Merck and Co. Inc. 1.59%
Federal National Mtg. Assoc. 1.46%
Boeing Co. 1.44%
AT&T Corp. 1.42%
First Interstate Bancorp 1.42%
Chrysler Corp. 1.42%
International Bus. Machines 1.39%
Microsoft Corp. 1.35%
American Int'l Group Inc. 1.34%
Growth of $10,000 Investment January 31, 1987 - December 31, 1995
[FIGURES BELOW USED TO CREATE OMMITTED WORM CHART]
LB SERIES FUND - GROWTH PORTFOLIO
Initial Investment: $10,000
Date of Investment: 1/31/87
S & P 500
Growth w/ reinvest
Month End Total TOTAL
Date Value VALUE
1/31/87 $10,000 $10,000
2/28/87 11,121 10,392
3/31/87 10,813 10,693
4/30/87 10,673 10,598
5/31/87 10,477 10,688
6/30/87 10,949 11,229
7/31/87 11,426 11,800
8/31/87 11,894 12,240
9/30/87 11,606 11,972
10/31/87 8,576 9,393
11/30/87 7,956 8,615
12/31/87 8,540 9,273
1/31/88 8,684 9,675
2/29/88 9,211 10,107
3/31/88 9,241 9,800
4/30/88 9,126 9,922
5/31/88 9,020 9,987
6/30/88 9,382 10,453
7/31/88 9,218 10,426
8/31/88 8,927 10,057
9/30/88 9,167 10,489
10/31/88 9,216 10,793
11/30/88 9,040 10,621
12/31/88 9,250 10,809
1/31/89 9,838 11,611
2/28/89 9,652 11,303
3/31/89 9,899 11,573
4/30/89 10,392 12,188
5/31/89 10,796 12,657
6/30/89 10,610 12,595
7/31/89 11,512 13,745
8/31/89 11,967 13,999
9/30/89 12,031 13,943
10/31/89 11,424 13,631
11/30/89 11,673 13,895
12/31/89 11,708 14,229
1/31/90 10,797 13,288
2/28/90 11,047 13,435
3/31/90 11,410 13,800
4/30/90 11,242 13,469
5/31/90 12,439 14,754
6/30/90 12,531 14,666
7/31/90 12,277 14,630
8/31/90 11,263 13,294
9/30/90 10,550 12,649
10/31/90 10,528 12,609
11/30/90 11,177 13,409
12/31/90 11,477 13,783
1/31/91 12,216 14,397
2/28/91 13,115 15,401
3/31/91 13,461 15,780
4/30/91 13,461 15,833
5/31/91 14,182 16,492
6/30/91 13,463 15,745
7/31/91 14,198 16,498
8/31/91 14,707 16,869
9/30/91 14,578 16,588
10/31/91 14,905 16,832
11/30/91 14,404 16,133
12/31/91 16,222 17,979
1/31/92 16,190 17,664
2/28/92 16,344 17,871
3/31/92 15,941 17,524
4/30/92 16,002 18,060
5/31/92 16,136 18,122
6/30/92 15,775 17,856
7/31/92 16,300 18,609
8/31/92 15,959 18,208
9/30/92 16,179 18,420
10/31/92 16,596 18,506
11/30/92 17,430 19,109
12/31/92 17,542 19,349
1/31/93 17,845 19,528
2/28/93 17,797 19,773
3/31/93 18,292 20,191
4/30/93 17,957 19,726
5/31/93 18,421 20,221
6/30/93 18,438 20,287
7/31/93 18,386 20,227
8/31/93 19,061 20,975
9/30/93 19,237 20,813
10/31/93 19,407 21,265
11/30/93 18,885 21,040
12/31/93 19,314 21,303
1/31/94 19,921 22,042
2/28/94 19,382 21,423
3/31/94 18,441 20,493
4/30/94 18,417 20,774
5/31/94 18,440 21,079
6/30/94 17,812 20,563
7/31/94 18,236 21,260
8/31/94 19,066 22,116
9/30/94 18,757 21,572
10/31/94 19,022 22,075
11/30/94 18,274 21,256
12/31/94 18,413 21,568
1/31/95 18,819 22,144
2/28/95 19,560 22,990
3/31/95 20,117 23,678
4/30/95 20,700 24,386
5/31/95 21,339 25,324
6/30/95 22,273 25,914
7/31/95 23,467 26,793
8/31/95 23,539 26,847
9/30/95 24,275 27,977
10/31/95 24,342 27,896
11/30/95 25,233 29,098
12/31/95 25,276 29,660
Value on 12/31/95
S & P 500
$29,660
Growth Portolio
$25,276
Growth Portfolio
Annualized Total Returns* Period Ending 12/31/95
- ----------------------------------------------------
Since
Inception (1/9/87) 5 Years 1 Year
- ----------------------------------------------------
11.48% 17.09% 37.25%
- ----------------------------------------------------
[END WORM CHART]
High Yield Portfolio Review LB Series Fund, Inc.
[PHOTO THOMJAS N HAAG]
Thomas N. Haag, assistant vice president, is a Chartered Financial Analyst
and portfolio manager for the High Yield Portfolio. He has managed the
Portfolio since January 1992.
Investment Objective: To seek high current income and growth of capital by
investing primarily in high-yielding ("junk") corporate bonds.
As is often the case, price gains for intermediate- and long-term maturity
high-yield issues were particularly strong during the recent rally in bond
prices. By emphasizing these securities, as well as issues from corporate
sectors that performed well in a slowing economy, the High Yield Portfolio
produced superior returns during the past year.
For the year ended December 31, 1995, the Portfolio earned a total return of
19.62%, exceeding the Portfolio's market benchmark, the Lehman Brothers High
Yield Index. The Lehman Brothers High Yield Index had a total return of
19.17% over the same time.
Investment Strategies
Throughout the year the Portfolio had sizable investments in zero-coupon
bonds issued by broadcasting and telecommunications firms, which suffered
large losses when interest rates rose in 1994. Once interest rates fell, and
broadcasting and telecommunications firms gained greater favor with
investors, the prices of these issues rebounded sharply.
We also emphasized bonds issued by companies in "defensive" sectors --
including food and health care firms -- whose earnings depend less on a
growing economy. Among issues added in these groups were Ralph's Super
Markets, Dominicks' Finer Foods, and Tenet Health Care. We decreased
positions in cyclical sectors -- such as paper, steel and chemicals -- whose
earnings could be hurt as the economy slowed.
These choices, plus added attention to higher-quality bonds, helped the
Portfolio enjoy greater price appreciation during the bond rally. By
selecting bonds with strong yields, we helped the Portfolio provide solid
yields for contract owners as interest rates fell.
[PIE CHART OMMITTED AS FOLLOWS]
Portfolio Composition
Short-Term Securities 5.6%
Common Stocks & Stock Warrants 4.4%
Bonds 79.4%
Preferred Stocks 10.6%
[END PIE CHART]
Adjusting to a Slower Economy
We expect to use a similar investment approach in the months ahead, as the
economic growth continues to slow. We may even increase positions in high-
yield bonds with stronger credit quality, as well as bonds from firms in
"defensive" sectors. While we don't expect a recession, we believe investors
may still be concerned about the earnings of companies in cyclical groups.
We've now taken profits in some deferred-interest bonds, cutting the
Portfolio's weighting from 20% to 16%. We believe, however, the Portfolio can
still benefit from their strong yields. We believe the prices of these and
other high-yield issues should respond particularly well to any further
declines in interest rates as investors look for additional ways to enhance
their returns.
Moody's Bond Quality Rating Distribution
Baa 0.29%
Ba 12.99%
B 59.62%
Below B 18.29%
Not Rated 8.90
0% 20% 40% 60%
[END BAR CHART]
[FIGURES BELOW USED TO CREATE OMMITTED WORM CHART]
LB SERIES FUND - HIGH YIELD PORTFOLIO
Initial Investment: $10,000
Date of Investment: 11/30/87
Lehman High
Series HYLD Yield Index
Month End Total TOTAL
Date Value VALUE
11/30/87 $10,000 $10,000
12/31/87 10,194 10,241
1/31/88 10,612 10,583
2/29/88 11,036 10,926
3/31/88 10,885 10,812
4/30/88 10,885 10,894
5/31/88 10,869 10,911
6/30/88 11,120 11,070
7/31/88 11,177 11,143
8/31/88 11,172 11,126
9/30/88 11,283 11,267
10/31/88 11,407 11,403
11/30/88 11,395 11,470
12/31/88 11,553 11,524
1/31/89 11,823 11,727
2/28/89 11,903 11,753
3/31/89 11,822 11,661
4/30/89 11,762 11,710
5/31/89 12,079 11,937
6/30/89 12,403 12,085
7/31/89 12,379 12,070
8/31/89 12,489 12,111
9/30/89 12,266 11,907
10/31/89 11,937 11,625
11/30/89 11,971 11,602
12/31/89 11,914 11,620
1/31/90 11,685 11,370
2/28/90 11,473 11,136
3/31/90 11,567 11,428
4/30/90 11,577 11,409
5/31/90 11,941 11,629
6/30/90 12,116 11,910
7/31/90 12,325 12,231
8/31/90 11,935 11,535
9/30/90 11,464 10,693
10/31/90 11,111 10,131
11/30/90 11,301 10,447
12/31/90 11,471 10,506
1/31/91 11,589 10,795
2/28/91 12,354 11,976
3/31/91 12,893 12,681
4/30/91 13,331 13,201
5/31/91 13,479 13,225
6/30/91 13,842 13,616
7/31/91 14,209 14,052
8/31/91 14,438 14,375
9/30/91 14,677 14,575
10/31/91 15,200 15,062
11/30/91 15,432 15,140
12/31/91 15,523 15,358
1/31/92 16,162 15,899
2/28/92 16,614 16,291
3/31/92 16,903 16,493
4/30/92 17,055 16,556
5/31/92 17,346 16,789
6/30/92 17,448 16,947
7/31/92 17,804 17,203
8/31/92 18,063 17,429
9/30/92 18,275 17,606
10/31/92 17,915 17,358
11/30/92 18,247 17,577
12/31/92 18,640 17,777
1/31/93 19,391 18,295
2/28/93 19,706 18,616
3/31/93 20,132 18,857
4/30/93 20,253 19,021
5/31/93 20,613 19,247
6/30/93 21,312 19,651
7/31/93 21,523 19,842
8/31/93 21,696 20,009
9/30/93 21,696 20,061
10/31/93 22,434 20,466
11/30/93 22,525 20,564
12/31/93 22,911 20,819
1/31/94 23,619 21,271
2/28/94 23,534 21,215
3/31/94 22,641 20,414
4/29/94 22,349 20,275
5/31/94 22,463 20,285
6/30/94 22,558 20,348
7/31/94 22,393 20,521
8/31/94 22,567 20,666
9/30/94 22,450 20,668
10/31/94 22,515 20,718
11/30/94 22,033 20,457
12/31/94 21,904 20,608
1/31/95 21,975 20,889
2/28/95 22,833 21,605
3/31/95 23,060 21,838
4/30/95 23,627 22,393
5/31/95 24,131 23,020
6/30/95 24,248 23,174
7/31/95 25,017 23,466
8/31/95 25,124 23,539
9/30/95 25,362 23,829
10/31/95 25,481 23,976
11/30/95 25,778 24,187
12/31/95 26,197 24,567
Value on 12/31/95
High Yield Portfolio
$26,197
Lehman High Yield
Indes $24,567
Growth of $10,000 Investment November 30, 1987 - December 31, 1995
High Yield Portfolio
Annualized Total Returns* Period Ending 12/31/95
- -----------------------------------------------------
Since
Inception (11/2/87) 5 Years 1 Year
- -----------------------------------------------------
12.92% 17.95% 19.62%
- -----------------------------------------------------
[END WORM CHART]
Income Portfolio Review LB Series Fund, Inc.
[PHOTO CHARLES E. HEEREN]
Charles E. Heeren, vice president, is a Chartered Financial Analyst and
portfolio manager for the Income Portfolio. He has managed the Portfolio
since its inception in January 1987.
Investment Objective: To seek a high level of income while preserving
principal by investing primarily in intermediate- and long-term bonds.
As bond prices rose in the past year, the prices of longer-term issues and
corporate bonds did especially well. With large investments in these
securities, the Income Portfolio earned a strong return for contract owners -
- - a return that outpaced its market benchmark. For the year ended December
31, 1995, the Portfolio had a total return of 19.36%. Over the same time, the
Lehman Aggregate Bond Index returned 18.47%.
Boosting Price Gains and Yield
As the year began, we were using a "barbelled" maturity structure that
balanced asset-backed securities maturing in one to three years on one end of
the barbell, with corporate and government bonds maturing in 30 years at the
other end. This raised the Portfolio's potential for income and capital
gains, without increasing the price volatility of its shares. After yield
spreads for long- and short-term issues narrowed, we added issues with
intermediate-term maturities. These investments provided the Portfolio with
increased income and capital gains as interest rates fell.
As falling rates caused homeowners to prepay their mortgages, we traded
mortgage-backed securities for additional holdings in corporate and
government bonds. Most of the bonds we bought could not be redeemed early by
their issuers -- making them especially attractive to investors as interest
rates declined. Besides producing stronger price gains, these issues also
enhanced the yield portion of the Portfolio's total return.
We started the year focusing on corporate bonds from "defensive" industries -
- - such as food, health care and utilities -- whose earnings are generally
more stable when the economy slows. As the economy seemed headed for a "soft
landing," we added issues from cyclical sectors that could benefit from a
strengthening economy.
[PIE CHART OMMITTED AS FOLLOWS]
Portfolio Composition
Short-term Securities 3.9%
Corporate Bonds 49.5%
U.S. Government 39.3%
Foreign Government Bonds 7.3%
[END PIE CHART]
Adding Diversification
We remain underweighted in bonds from cyclical industries and have
diversified into sectors such as energy, defense, insurance and telephone
utilities. Although we don't expect a recession, we believe the economy is
too slow to add investments in cyclical firms. Once the economy improves, and
stronger supplies of corporate bonds improve their yields, we would likely
increase the Portfolio's weighting in corporate issues.
Because interest rates should remain low, inviting further mortgage
prepayments, we've again reduced holdings in mortgage-backed securities.
Believing most of the rally in bond prices is probably behind us, we've also
shortened the average maturity of the Portfolio's investments. This should
buffer the Portfolio against any temporary reversal in rates and prices,
since shorter-term maturities tend to be less sensitive to interest rate
changes. If prices do correct, we would likely lengthen the average maturity
once again in order to maximize the Portfolio's yield.
[BAR CHART OMMITTED AS FOLLOWS]
Moody's Bond Quality Rating Distribution
US Govt
& Agency 41.59%
Aaa 14.77%
A 11.84
Baa 6.55%
Ba 6.26%
B 2.16%
0% 20% 40% 60%
[END BAR CHART]
[FIGURES BELOW USED TO CREATE OMMITTED WORM CHART]
LB SERIES FUND - INCOME PORTFOLIO
Initial Investment: $10,000
Date of Investment: 1/31/87
Lehman Aggregate
Series Income Bond Index
Month End Total TOTAL
Date Value VALUE
1/31/87 $10,000 $10,000
2/28/87 10,130 10,069
3/31/87 10,064 10,024
4/30/87 9,618 9,749
5/31/87 9,535 9,711
6/30/87 9,679 9,845
7/31/87 9,623 9,837
8/31/87 9,575 9,785
9/30/87 9,322 9,577
10/31/87 9,542 9,918
11/30/87 9,673 9,997
12/31/87 9,828 10,133
1/31/88 10,193 10,489
2/29/88 10,320 10,614
3/31/88 10,153 10,515
4/30/88 10,068 10,458
5/31/88 9,973 10,388
6/30/88 10,207 10,638
7/31/88 10,152 10,582
8/31/88 10,173 10,609
9/30/88 10,449 10,850
10/31/88 10,683 11,054
11/30/88 10,554 10,919
12/31/88 10,621 10,931
1/31/89 10,782 11,089
2/28/89 10,628 11,009
3/31/89 10,689 11,056
4/30/89 10,897 11,287
5/31/89 11,133 11,584
6/30/89 11,485 11,936
7/31/89 11,683 12,190
8/31/89 11,577 12,010
9/30/89 11,590 12,071
10/31/89 11,761 12,368
11/30/89 11,890 12,486
12/31/89 11,920 12,519
1/31/90 11,796 12,370
2/28/90 11,835 12,410
3/31/90 11,874 12,419
4/30/90 11,721 12,304
5/31/90 12,079 12,669
6/30/90 12,265 12,873
7/31/90 12,415 13,050
8/31/90 12,214 12,875
9/30/90 12,137 12,982
10/31/90 12,252 13,147
11/30/90 12,539 13,430
12/31/90 12,744 13,639
1/31/91 12,912 13,808
2/28/91 13,205 13,926
3/31/91 13,365 14,022
4/30/91 13,556 14,173
5/31/91 13,713 14,255
6/30/91 13,734 14,248
7/31/91 13,914 14,446
8/31/91 14,234 14,758
9/30/91 14,542 15,058
10/31/91 14,700 15,225
11/30/91 14,802 15,365
12/31/91 15,262 15,822
1/31/92 15,206 15,606
2/28/92 15,306 15,708
3/31/92 15,316 15,620
4/30/92 15,368 15,732
5/31/92 15,663 16,030
6/30/92 15,880 16,251
7/31/92 16,249 16,582
8/31/92 16,410 16,750
9/30/92 16,605 16,949
10/31/92 16,337 16,724
11/30/92 16,401 16,727
12/31/92 16,670 16,993
1/31/93 17,016 17,319
2/28/93 17,374 17,622
3/31/93 17,476 17,696
4/30/93 17,605 17,820
5/31/93 17,637 17,844
6/30/93 18,000 18,167
7/31/93 18,161 18,270
8/31/93 18,488 18,590
9/30/93 18,545 18,640
10/31/93 18,710 18,709
11/30/93 18,510 18,550
12/31/93 18,614 18,650
1/31/94 18,889 18,902
2/28/94 18,480 18,573
3/31/94 17,872 18,114
4/29/94 17,681 17,969
5/31/94 17,714 17,968
6/30/94 17,584 17,928
7/31/94 17,964 18,285
8/31/94 18,009 18,307
9/30/94 17,693 18,038
10/31/94 17,627 18,021
11/30/94 17,632 17,982
12/31/94 17,743 18,106
1/31/95 18,064 18,464
2/28/95 18,478 18,904
3/31/95 18,582 19,019
4/30/95 18,900 19,285
5/31/95 19,719 20,032
6/30/95 19,881 20,178
7/31/95 19,766 20,133
8/31/95 20,015 20,377
9/30/95 20,207 20,575
10/31/95 20,519 20,842
11/30/95 20,838 21,155
12/31/95 21,176 21,451
Value on 12/31/95
Lehman Aggregate
Bond Index
$21,451
Income Portfolio
$21,176
Growth of $10,000 Investment January 31, 1987 - December 31, 1995
Income Portfolio
Annualized Total Returns* Period Ending 12/31/95
- ------------------------------------------------------------
Since
Inception (1/9/87) 5 Years 1 Year
- ------------------------------------------------------------
8.88% 10.68% 19.36%
- ------------------------------------------------------------
[END WORM CHART]
Money Market Portfolio Review LB Series Fund, Inc.
[PHOTO GAIL R. ONAN]
Gail R. Onan is portfolio manager for the Money Market Portfolio. She has
managed the Portfolio since January 1994.
Investment Objective: To seek current income with stability of principal by
investing in high-quality, short-term debt securities.**
The money market experienced a year of transition in the year ended December
31, 1995. During that time the Federal Reserve Board's Open Market Committee
raised the overnight Fed Funds rate by 0.5% to slow the economy, and then
lowered the rate by the same amount to get the economy moving again.
As these changes occurred, we adapted the maturities and investment mix of
the Money Market Portfolio to make the most of available yields. This helped
the Portfolio earn a total return of 5.71% for the year.
Addressing Changes in Interest Rates
As the Portfolio's assets grew from $42 million to $66 million, we maximized
income for contract owners in several ways. While short-term rates rose early
in 1995, we focused on instruments with shorter maturities so we could invest
more quickly in the advancing yields. After the Fed raised short-term rates
in February, and it looked like the economy would be slowing, we added
investments in longer-term instruments so we could lock up the stronger
yields that were then available.
As the economy slowed, investors began to look for the Fed to cut short-term
rates to prevent a recession. This caused a narrowing in the spread between
yields for short- and long-term instruments -- which discouraged us from
further lengthening of the Portfolio's investments. Except for adding longer
maturities in November and December, when short-term rates ticked upward
briefly, we kept the Portfolio's average maturity near 40 to 45 days for the
balance of the year. As always, we staggered the dates on which investments
matured to have more flexibility in addressing new directions for short-term
rates.
[PIE CHART OMMITTED AS FOLLOWS]
Portfolio Composition
Variable Rate Notes 3.7%
Banker's Acceptances 5.8%
Commercial Paper 90.5%
[END PIE CHART]
We further enhanced the Portfolio's income by selecting investments that were
available in strong supply with attractive yields. This drew us largely to
investments in commercial paper -- especially irrevocable letters of credit
issued by banks.
Future Strategies
If the economy slows further in the first part of 1996, there may be
additional declines in short-term rates. To keep the Portfolio's yield as
strong as possible, we will probably add investments with longer maturities
where we see strong supplies and attractive yields. We do not expect to
lengthen maturities substantially, however, believing the money market has
already accounted for additional declines in rates. As the economy improves
later in the year, short-term rates should stabilize and start to rise. At
that point, we would probably shorten maturities again, to make the most of
any increases in yields.
Annualized Total Returns*
Period Ending 12/31/95
Since
Inception
(1/9/87) 5 Years 1 Year
5.83% 4.39% 5.71%
Footnotes
*Annualized total returns for the Portfolio reflect changes in share
prices, the reinvestment of all dividends and capital gains, and the effects
of compounding for the periods indicated. These returns have not been
adjusted for charges associated with the variable life insurance and variable
annuity contracts that invest in the portfolios. (For additional information
on the charges, costs and benefits associated with the contracts, refer to
the contract prospectus or contact your LB representative.) Since performance
varies, the annualized total returns, which assume a steady rate of growth,
differ from the Portfolios' actual total returns for the years indicated. All
returns represent past performance. The value of an investment fluctuates so
that shares, when redeemed, may be worth more or less than the original
investment.
**Investments in the Money Market Portfolio are neither guaranteed nor
insured by the U.S. Government and there is no assurance that the Portfolio
will maintain a stable net asset value.
This report must be preceded or accompanied by a prospectus.
3100 Multifoods Tower
33 South Sixth Street
Minneapolis, MN 55402-3795
- -------------------------------------------------------------------
Price Waterhouse LLP
Report of Independent Accountants
To Lutheran Brotherhood Variable Insurance Products Company and
Contract Owners of LBVIP Variable Insurance Account
In our opinion, the accompanying statement of assets and liabilities and
the related statements of operations and of changes in net assets
present fairly, in all material respects, the financial position of
LBVIP Variable Insurance Account and the Growth, High Yield, Income and
Money Market subaccounts thereof at December 31, 1995, the results of
each of their operations for the year then ended and the changes in each
of their net assets for each of the two years in the period then ended,
in conformity with generally accepted accounting principles. These
financial statements are the responsibility of Lutheran Brotherhood
Variable Insurance Products Company's management; our responsibility is
to express an opinion on these financial statements based on our audits.
We conducted our audits of these financial statements in accordance with
generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
[GRAPHIC OMITTED: LOGO OF PRICE WATERHOUSE SIGNATURE]
February 5, 1996
<TABLE>
<CAPTION>
LBVIP Variable Insurance Account
Statement of Assets and Liabilities
December 31, 1995
Subaccounts
------------------------------------------------------------
High Money
Growth Yield Income Market
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in LB Series Fund, Inc. --
Growth Portfolio, 3,105,994 shares at net asset value
of $18.27 per share (cost $43,536,056) $56,758,762
High Yield Portfolio, 2,701,973 shares at net asset value
of $9.94 per share (cost $27,023,392) $26,852,551
Income Portfolio, 1,567,172 shares at net asset value
of $10.08 per share (cost $15,435,906) $15,794,305
Money Market Portfolio, 1,790,765 shares at net asset value
of $1.00 per share (cost $1,790,765) $1,790,765
------------ ------------ ------------ ------------
56,758,762 26,852,551 15,794,305 1,790,765
Receivable from LBVIP for units issued 135,683 103,746 19,342 3,347
Dividends receivable from LB Series Fund, Inc. -- 11,747 5,279 530
------------ ------------ ------------ ------------
Total assets 56,894,445 26,968,044 15,818,926 1,794,642
------------ ------------ ------------ ------------
LIABILITIES:
Payable to LBVIP for mortality and expense risk charge 28,500 13,514 7,924 956
NET ASSETS $56,865,945 $26,954,530 $15,811,002 $1,793,686
============ ============ ============ ============
Number of units outstanding 2,200,589 1,076,934 765,457 1,129,845
============ ============ ============ ============
Unit value (net assets divided by units outstanding) $25.84 $25.03 $20.66 $1.59
======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended December 31, 1995
Subaccounts
------------------------------------------------------------
High Money
Growth Yield Income Market
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend income $706,613 $2,358,032 $966,741 $95,232
Mortality and expense risk charge (277,885) (142,451) (85,150) (10,290)
------------ ------------ ------------ ------------
Net investment income 428,728 2,215,581 881,591 84,942
------------ ------------ ------------ ------------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments 194,507 (35,895) (28,562) --
Net change in unrealized appreciation or depreciation
of investments 13,265,262 1,855,415 1,556,511 --
------------ ------------ ------------ ------------
Net gain on investments 13,459,769 1,819,520 1,527,949 --
------------ ------------ ------------ ------------
Net increase in net assets resulting from operations $13,888,497 $4,035,101 $2,409,540 $84,942
============ ============ ============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LBVIP Variable Insurance Account
Statement of Changes in Net Assets
Years Ended December 31, 1995 and 1994
Growth High Yield
Subaccount Subaccount
------------------------------------------------------------
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $428,728 $290,991 $2,215,581 $1,647,456
Net realized gain (loss) on investments 194,507 745,295 (35,895) 262,414
Net change in unrealized appreciation or depreciation
of investments 13,265,262 (2,657,265) 1,855,415 (2,896,305)
------------ ------------ ------------ ------------
Net change in net assets resulting
from operations 13,888,497 (1,620,979) 4,035,101 (986,435)
------------ ------------ ------------ ------------
UNIT TRANSACTIONS -
Proceeds from units issued 12,883,198 15,634,665 5,870,513 9,313,296
Net asset value of units redeemed (5,939,936) (4,272,923) (3,001,072) (2,266,396)
Transfers from other subaccounts 2,029,943 1,637,267 961,670 1,366,428
Transfers to other subaccounts (1,653,365) (1,428,818) (1,121,153) (1,087,148)
------------ ------------ ------------ ------------
Net increase in net assets from unit transactions 7,319,840 11,570,191 2,709,958 7,326,180
------------ ------------ ------------ ------------
Net increase in net assets 21,208,337 9,949,212 6,745,059 6,339,745
NET ASSETS:
Beginning of period 35,657,608 25,708,396 20,209,471 13,869,726
------------ ------------ ------------ ------------
End of period $56,865,945 $35,657,608 $26,954,530 $20,209,471
============ ============ ============ ============
Income Money Market
Subaccount Subaccount
----------------------------------------------------------
1995 1994 1995 1994
------------ ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $881,591 $732,036 $84,942 $43,905
Net realized gain (loss) on investments (28,562) 193,140 -- --
Net change in unrealized appreciation or depreciation
of investments 1,556,511 (1,539,057) -- --
------------ ------------ ------------ ------------
Net change in net assets resulting
from operations 2,409,540 (613,881) 84,942 43,905
------------ ------------ ------------ ------------
UNIT TRANSACTIONS --
Proceeds from units issued 2,965,163 5,157,608 771,778 756,910
Net asset value of units redeemed (1,859,848) (1,491,607) (710,056) (566,912)
Transfers from other subaccounts 340,287 235,045 1,112,971 803,402
Transfers to other subaccounts (746,287) (771,155) (924,066) (755,021)
------------ ------------ ------------ ------------
Net increase in net assets from unit transactions 699,315 3,129,891 250,627 238,379
------------ ------------ ------------ ------------
Net increase in net assets 3,108,855 2,516,010 335,569 282,284
NET ASSETS:
Beginning of period 12,702,147 10,186,137 1,458,117 1,175,833
------------ ------------ ------------ ------------
End of period $15,811,002 $12,702,147 $1,793,686 $1,458,117
============ ============ ============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
LBVIP Variable Insurance Account
Notes to Financial Statements
December 31, 1995
(1) ORGANIZATION
The LBVIP Variable Insurance Account (the Variable Account), a unit
investment trust registered under the Investment Company Act of 1940,
was established as a separate account of Lutheran Brotherhood Variable
Insurance Products Company (LBVIP) in 1984, pursuant to the laws of the
State of Minnesota. LBVIP offers financial services to Lutherans and
through its parent, Lutheran Brotherhood Financial Corporation, is a
wholly owned subsidiary of Lutheran Brotherhood, a fraternal benefit
society. The Variable Account contains four subaccounts -- Growth, High
Yield, Income and Money Market -- each of which invests only in a
corresponding portfolio of the LB Series Fund, Inc. (the Fund). The Fund
is registered under the Investment Company Act of 1940 as a diversified
open-end investment company.
The Variable Account is used to support only flexible premium variable
life ("Variable Universal Life") insurance contracts issued by LBVIP.
Under applicable insurance law, the assets and liabilities of the
Variable Account are clearly identified and distinguished from the other
assets and liabilities of LBVIP. The assets of the Variable Account will
not be charged with any liabilities arising out of any other business
conducted by LBVIP.
(2) SIGNIFICANT ACCOUNTING POLICIES
Investments
The investments in shares of the Fund are stated at the net asset value
of the Fund. The cost of shares sold and redeemed is determined on the
average cost method. Dividend distributions received from the Fund are
reinvested in additional shares of the Fund and recorded as income by
the Variable Account on the ex-dividend date
.
Federal Income Taxes
LBVIP is taxed as a life insurance company and includes its flexible
premium variable life insurance operations in its tax return. Currently,
no tax liability is charged to the operations of the Variable Account by
LBVIP. Consequently, no provision for income taxes has been made against
the Variable Account.
(3) RELATED PARTY TRANSACTIONS
Proceeds received by the Variable Account from units issued represent
gross contract premiums received by LBVIP less deductions for sales
distribution expenses of 3% and premium taxes of 2% of the gross
contract premium. Total deductions from gross contract premiums received
were $1,242,875 and $1,675,014 in 1995 and 1994, respectively.
A monthly charge is deducted from the cash value of the contract by
LBVIP for the cost of insurance, insurance administration of the
contract and the cost of any optional benefits added by riders. This
charge is deducted by redeeming units of the subaccounts of the Variable
Account. Total monthly charges were $6,896,396 and $6,008,058 in 1995
and 1994, respectively.
A daily charge is deducted from the value of the net assets of the
Variable Account to compensate LBVIP for mortality and expense risks
assumed in connection with the contract and is equivalent to an annual
rate of 0.6% of the average daily net assets of the Variable Account.
Mortality and expense risk charges of $515,776 and $374,752 were
deducted in 1995 and 1994, respectively.
A deferred charge is deducted from the cash value of the contract to
compensate LBVIP for certain selling and administrative expenses if: (1)
within the first ten years a contract is in force, it is surrendered or
lapses, or (2) a contract owner requests a decrease in the face amount
either within the first ten years a contract is in force, or within ten
years after a requested increase in face amount. The deferred charge
remains at a level amount during the first five years of the applicable
ten year period, and then is reduced on a monthly basis by equal amounts
until the deferred charge is zero after ten years. This charge is
deducted by redeeming units of the subaccounts of the Variable Account.
Deferred charges of $409,685 and $276,601 were deducted in 1995 and
1994, respectively.
(4) UNIT ACTIVITY
Transactions in units (including transfers among subaccounts) were as
follows:
Subaccounts
-------------------------------------------------
High Money
Growth Yield Income Market
---------- ---------- ---------- ----------
Units outstanding at
December 31, 1993 1,286,738 626,420 554,422 804,589
Units issued 968,809 525,000 333,635 981,816
Units redeemed (372,470) (191,311) (158,305) (821,232)
---------- ---------- ---------- ----------
Units outstanding at
December 31, 1994 1,883,077 960,109 729,752 965,173
Units issued 710,227 323,486 189,825 1,133,300
Units redeemed (392,715) (206,661) (154,120) (968,628)
---------- ---------- ---------- ----------
Units outstanding at
December 31, 1995 2,200,589 1,076,934 765,457 1,129,845
========== ========== ========== ==========
(5) PURCHASES AND SALES OF INVESTMENTS
The aggregate costs of purchases and proceeds from sales of investments
in the LB Series Fund, Inc. were as follows:
Subaccounts
-------------------------------------------------
High Money
Growth Yield Income Market
---------- ---------- ---------- ----------
For the year ended
December 31, 1994
Purchases $13,087,199 $9,740,798 $4,746,985 $1,067,569
Sales 368,248 455,646 613,314 783,017
For the year ended
December 31, 1995
Purchases 8,994,515 5,805,846 2,474,794 1,357,387
Sales 1,343,120 974,314 899,536 1,024,921
3100 Multifoods Tower
33 South Sixth Street
Minneapolis, MN 55402-3795
[LOGO OMMITTED]
Price Waterhouse LLP
Report of Independent Accountants
To the Shareholders and
Board of Directors of
LB Series Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities,
including the portfolios of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of each of
the Portfolios (Growth, High Yield, Income, and Money Market) comprising
the LB Series Fund, Inc. (hereafter referred to as the "Fund") at December
31, 1995, the results of each of their operations for the year then ended,
the changes in each of their net assets for each of the two years in the
period then ended and the financial highlights for each of the five years
in the period then ended, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at December 31,
1995 by correspondence with the custodian and brokers and the application
of alternative auditing procedures where confirmations from brokers were
not received, provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
February 2, 1996
LB Series Fund, Inc.
Growth Portfolio
Portfolio of Investments
December 31, 1995
Shares Value
---------- -----------
COMMON STOCKS - 90.3% (a)
Aerospace - 2.1%
215,400 Boeing Co. $16,881,975
71,600 Litton Industries, Inc. 3,186,200 (b)
46,000 McDonnell Douglas Corp. 4,232,000
--------------
24,300,175
--------------
Airlines - 1.0%
30,000 AMR Corp. 2,227,500 (b)
14,300 Continental Airlines
Holding, Inc., Class B 622,050 (b)
120,000 Delta Air Lines, Inc. 8,865,000
--------------
11,714,550
--------------
Automotive - 2.9%
300,000 Chrysler Corp. 16,612,500
273,400 General Motors Corp. 14,456,025
130,400 Lear Seating Corp. 3,781,600 (b)
--------------
34,850,125
--------------
Bank & Finance - 11.9%
169,750 American International
Group, Inc. 15,701,875
51,400 Amerin Corp. 1,374,950 (b)
216,300 Banc One Corp. 8,165,325
76,600 Bankers Trust NY Corp. 5,093,900
61,200 Crestar Financial Corp. 3,618,450 (c)
52,800 Donaldson, Lufkin &
Jenrette, Inc. 1,650,000 (b)
80,000 Federal Home Loan
Mortgage Corp. 6,680,000
137,600 Federal National
Mortgage Association 17,079,600
122,000 First Interstate Bancorp. 16,653,000
63,500 General Re Corp. 9,842,500
196,700 Great Western
Financial Corp. 5,015,850 (c)
151,800 ITT Hartford Group, Inc. 7,343,325 (b)
116,700 Mellon Bank Corp. 6,272,625
116,700 Morgan Stanley Group, Inc. 9,408,937
173,800 Morgan (J.P.) and Co., Inc. 13,947,450
113,500 PNC Bank Corp. 3,660,375
95,600 Southern National Corp. 2,509,500
90,000 UJB Financial Corp. 3,217,500
17,800 Wells Fargo & Co. 3,844,800
--------------
141,079,962
--------------
Broadcasting - 3.6%
90,000 Capital Cities/ABC, Inc. 11,103,750 (c)
156,100 Infinity Broadcasting
Corp., Class A 5,814,725
98,200 News Corp. Ltd. 2,099,025
121,600 NYNEX CableComms
Group 2,112,800 (b)
518,000 Tele-Communications, Inc.,
TCI Group, Series A 10,295,250
175,000 Tele-Communications, Inc.,
Liberty Media Group,
Series A 4,703,125
143,100 Viacom, Inc., Class B 6,779,363 (b)
--------------
42,908,038
--------------
Chemicals - 1.3%
223,300 Air Products & Chemicals, Inc. 11,779,075
98,800 Praxair, Inc. 3,322,150
--------------
15,101,225
--------------
Computer Software - 6.3%
86,600 Acclaim Entertainment, Inc. 1,071,675 (b)
116,800 Adobe Systems, Inc. 7,241,600
100,600 Autodesk, Inc. 3,445,550
91,400 BBN Corp. 3,758,825 (b)
93,200 BMC Software, Inc. 3,984,300 (b)
136,300 Cadence Design Systems, Inc. 5,724,600 (b,c)
76,000 Cheyenne Software, Inc. 1,985,500 (b)
110,400 Computer Associates
International, Inc. 6,279,000
58,700 FTP Software, Inc. 1,702,300 (b)
118,200 Intersolv, Inc. 1,521,825 (b)
180,000 Microsoft Corp. 15,795,000 (b)
288,400 Oracle Systems Corp. 12,220,950 (b)
74,200 Softkey International, Inc. 1,715,875 (b)
90,000 Spectrum HoloByte, Inc. 585,000 (b)
120,300 Sybase, Inc. 4,330,800 (b)
144,500 Symantec Corp. 3,359,625 (b)
--------------
74,722,425
--------------
Computers & Office
Equipment - 6.9%
24,700 Apple Computer 787,312
164,850 Bay Networks, Inc. 6,779,456 (b)
68,300 Cabletron Systems, Inc. 5,532,300 (b)
123,600 Cisco Systems, Inc. 9,223,650 (b)
202,400 Compaq Computer Corp. 9,715,200 (b)
26,000 DataWorks Corp. 328,250 (b)
97,400 Digital Equipment Corp. 6,245,775 (b)
33,100 FORE Systems, Inc. 1,969,450 (b)
93,800 Hewlett Packard Co. 7,855,750
177,600 International Business
Machines 16,294,800
126,600 Silicon Graphics, Inc. 3,481,500 (b)
100,000 Xerox Corp. 13,700,000
--------------
81,913,443
--------------
Conglomerates - 1.6%
117,800 Allied Signal, Inc. 5,595,500
120,000 ITT Corp. 6,360,000 (b)
120,000 ITT Industries, Inc. 2,880,000 (b)
201,100 U.S. Industries, Inc. 3,695,212 (b)
--------------
18,530,712
--------------
Construction &
Home Building - 0.8%
49,800 Centex Corp. 1,730,550
58,400 Fleetwood Enterprises, Inc. 1,503,800
160,300 Foster Wheeler Corp. 6,812,750 (c)
--------------
10,047,100
--------------
Drugs & Health Care - 7.9%
190,000 Abbott Laboratories 7,932,500
168,000 Amgen, Inc. 9,975,000 (b)
168,000 Becton Dickinson & Co. 12,600,000
73,600 Biogen, Inc. 4,526,400 (b,c)
83,700 Circon Corp. 1,694,925 (b)
90,000 Elan Corp., PLC ADS 4,376,250 (b)
73,200 Eli Lilly & Co. 4,117,500
127,000 Genzyme Corp. 7,921,625 (b)
283,000 Merck & Co., Inc. 18,607,250
200,000 Smithkline Beecham plc 11,100,000
83,300 St. Jude Medical, Inc. 3,581,900 (b)
63,200 Ventritex, Inc. 1,098,100 (b)
63,500 Warner-Lambert Co. 6,167,437 (c)
--------------
93,698,887
--------------
Electric Utilities - 1.2%
80,000 Central & South West Corp. 2,230,000
200,000 Houston Industries, Inc. 4,850,000
307,500 Southern Co. 7,572,187
--------------
14,652,187
--------------
Electrical Equipment - 1.5%
165,800 General Electric Co. 11,937,600
98,500 Whirlpool Corp. 5,245,125
--------------
17,182,725
--------------
Electronics - 4.8%
150,000 Adaptec, Inc. 6,150,000 (b)
143,700 Analog Devices, Inc. 5,083,388 (b)
113,500 AVX Corp. 3,007,750
8,100 Integrated Device
Technology, Inc. 104,287 (b,c)
100,000 Integrated Silicon Solution 1,673,438 (b)
250,000 Intel Corp. 14,187,500
147,900 KLA Instruments Corp. 3,854,644 (b,c)
162,900 Motorola, Inc. 9,285,300
59,000 Novellus Systems, Inc. 3,186,000 (b)
49,200 S3, Inc. 867,150 (b)
10,000 SDL, Inc. 240,000 (b)
101,500 SGS-Thomson
Microelectronics N.V. 4,085,375 (b)
64,600 Silicon Valley Group, Inc. 1,631,150 (b)
75,800 Texas Instruments, Inc. 3,922,650
--------------
57,278,632
--------------
Food & Beverage - 3.1%
81,000 ConAgra, Inc. 3,341,250
100,000 CPC International, Inc. 6,862,500
144,700 Heinz (H.J.) Co. 4,793,188
34,400 Panamerican Beverages, Inc.,
Class A 1,100,800
126,900 PepsiCo, Inc. 7,090,538
80,000 Salomon, Inc., (Snapple, Inc.,
Equity-Linked Security) 1,210,000
375,000 Sara Lee Corp. 11,953,125 (b,c)
--------------
36,351,401
--------------
Healthcare
Management - 1.6%
66,500 Coventry Corp. 1,371,563 (b)
119,000 OrNda Health Corp. 2,766,750 (b)
222,900 United Healthcare Corp. 14,599,950
--------------
18,738,263
--------------
Household Products - 3.1%
115,400 Colgate Palmolive Co. 8,106,850
282,500 Gillette Co. 14,725,312
163,500 Procter & Gamble 13,570,500
--------------
36,402,662
--------------
Leisure &
Entertainment - 1.9%
148,400 Disney (Walt) Co. 8,755,600
21,600 Hollywood
Entertainment Corp. 180,900 (b)
208,700 La Quinta Inns, Inc. 5,713,162
27,400 Movie Gallery, Inc. 835,700 (b)
145,400 Time Warner, Inc. 5,507,025
--------------
20,992,387
--------------
Machinery &
Equipment - 2.3%
161,800 Case Corp. 7,402,350
202,900 Deere & Co. 7,152,225
174,600 Harnischfeger Industries, Inc. 5,805,450
207,500 Ingersoll-Rand Co. 7,288,437 (c)
--------------
27,648,462
--------------
Mining & Metals - 1.9%
45,200 Cronos Group 531,100 (b)
115,100 Inland Steel Industries, Inc. 2,891,888 (c)
237,600 Phelps Dodge Corp. 14,790,600
81,200 Reynolds Metals Co. 4,597,950
--------------
22,811,538
--------------
Oil & Oil Service - 5.8%
212,000 Amoco Corp. 15,237,500
137,600 Baker Hughes, Inc. 3,354,000
142,000 Burlington Resources, Inc. 5,573,500 (c)
138,300 Chevron Corp. 7,260,750
122,400 Enron Corp. 4,666,500
115,600 Enron Oil & Gas Co. 2,774,400
146,700 Halliburton Co. 7,426,687
167,900 Mobil Corp. 18,804,800 (c)
64,000 Western Atlas, Inc. 3,232,000 (b)
--------------
68,330,137
--------------
Paper & Forest
Products - 1.7%
76,400 Boise Cascade Corp. 2,645,350
253,000 International Paper Co. 9,582,375
182,100 Weyerhaeuser Co. 7,875,825
--------------
20,103,550
--------------
Pollution Control - 0.4%
175,400 WMX Technologies, Inc. 5,240,075 (b)
--------------
Railroads - 1.4%
60,000 Canadian National
Railway Corp. 900,000 (b)
339,800 CSX Corp. 15,503,375 (c)
--------------
16,403,375
--------------
Restaurants - 1.0%
77,500 Boston Chicken, Inc. 2,489,688 (b)
208,100 McDonald's Corp. 9,390,513
--------------
11,880,201
--------------
Retail - 3.3%
83,700 Corporate Express, Inc. 2,521,463 (b)
182,300 Federated Department Stores 5,013,250 (b)
72,900 Kohl's Corp. 3,827,250 (b)
158,200 Lowe's Companies 5,299,700
25,000 MSC Industrial Direct
Co., Inc., Class A 687,500 (b)
68,800 Office Depot, Inc. 1,358,800 (b)
93,800 OfficeMax, Inc. 2,098,775 (b)
159,900 Safeway, Inc. 8,234,850 (b)
424,000 Wal-Mart Stores, Inc. 9,487,000
--------------
38,528,588
--------------
Services - 3.1%
66,500 Automatic Data
Processing, Inc. 4,937,625
125,400 Block (H & R) 5,078,700
121,000 DST Systems, Inc. 3,448,500 (b)
227,795 First Data Corp. 15,233,791
161,900 General Motors Group,
Class E 8,418,800
--------------
37,117,416
--------------
Telecommunications
Equipment - 1.2%
114,000 ADC Telecommunications,
Inc. 4,161,000 (b)
121,400 Ericsson (L.M.)
Telecommunications,
Class B, ADR 2,367,300
193,400 Tellabs, Inc. 7,155,800 (b)
--------------
13,684,100
--------------
Telephone &
Telecommunications - 4.7%
136,800 Ameritech Corp. 8,071,200
258,100 AT&T Corp. 16,711,975
143,600 Metrocall, Inc. 2,746,350 (b)
200,000 MobileMedia Corp., Class A 4,450,000 (b)
184,800 NEXTEL Communications,
Inc., Class A 2,725,800 (b)
227,000 SBC Communications, Inc. 13,052,500
73,300 Telefonos de Mexico S.A. 2,336,437
151,700 WorldCom, Inc. 5,347,425 (b)
--------------
55,441,687
--------------
Total Common Stocks
(cost, $966,566,681) 1,067,654,028
--------------
Principal
Amount
-----------
CORPORATE BONDS - 0.3% (a)
$3,000,000 Intergrated Device Technology,
Inc., Convertible
Subordinated Notes, 5.5%,
due 6/1/2002 2,467,500
1,000,000 International CableTel, Inc.,
Convertible Subordinated
Notes, 7.25%,
due 4/15/2005 1,080,000
--------------
Total Corporate Bonds
(cost, $4,033,037) 3,547,500
--------------
U.S. TREASURY - 0.1% (a)
$1,000,000 U.S. Treasury Notes,
6.875%, due 3/31/1997 1,020,311
300,000 U.S. Treasury Notes,
8.75%, due 10/15/1997 317,906
--------------
Total U.S. Treasury
(cost, $1,329,396) 1,338,217
--------------
SHORT-TERM
SECURITIES - 9.3% (a)
Commercial Paper
12,800,000 Associates Corp. of
North America, 5.98%,
due 1/2/1996 12,797,874
5,000,000 Cargill, Inc., 5.67%,
due 1/17/1996 4,987,400
5,000,000 Cargill, Inc., 5.57%,
due 1/17/1996 4,987,622
10,000,000 Chevron Oil Finance Co.,
5.7%, due 1/19/1996 9,971,500
8,300,000 Coca-Cola 5.82%,
due 1/5/1996 8,294,633
10,000,000 Commercial Credit Co.,
5.81%, due 1/16/1996 9,975,792
10,000,000 CXC, Inc., 5.83%,
due 1/12/1996 9,982,186
5,000,000 Enterprise Capital Funding,
5.62%, 1/24/1996 4,982,047
5,000,000 Koch Industries, 5.65%,
due 1/5/1996 4,996,861
10,000,000 Norwest Corp., 5.7%,
due 1/25/1996 9,962,000
10,000,000 Norwest Financial, Inc.,
5.8%, due 1/10/1996 9,985,500
4,770,000 Spiegel Funding Corp.,
5.8%, due 1/8/1996 4,764,621
10,000,000 UBS Finance (Delaware), Inc.,
6.0%, due 1/2/1996 9,998,333
4,500,000 USAA Capital Corp.,
5.8%, due 1/4/1996 4,497,825
--------------
Total Short-Term Securities
(at amortized cost) 110,184,194
--------------
Total Investments
(cost, $1,082,113,308) $1,182,723,939 (d)
--------------
Notes to Portfolio of Investments:
- ----------------------------------
(a) The categories of investments are shown as a percentage of total
investments of the Growth Portfolio.
(b) Currently non-income producing.
(c) Includes stock rights that automatically traded with the stock and
had no separate value at December 31, 1995.
(d) At December 31, 1995, the aggregate cost of securities for federal
income tax purposes was $1,083,675,009 and the net unrealized
appreciation of investments based on that cost was $99,048,930 which
is comprised of $125,883,083 aggregate gross unrealized appreciation
and $26,834,153 aggregate gross unrealized depreciation.
See accompanying notes to portfolio of investments.
<TABLE>
LB Series Fund, Inc.
High Yield Portfolio
Portfolio of Investments
December 31, 1995
<CAPTION>
Principal
Amount Rate Date Value
----------- --------- --------- -------------
CORPORATE BONDS - 78.9% (a)
Airlines - 0.5%
<S> <C> <C> <C> <C>
$4,500,000 U.S. Air, Inc., Sr. Secured Equipment Trust, Series 1993-A3 10.375% 3/1/2013 $4,227,840
------------
Automotive - 1.6%
5,200,000 Exide Corp., Convertible Sr. Subordinated Notes 2.9% 12/15/2005 3,763,500
8,000,000 Exide Corp., Sr. Notes 10.0% 4/15/2005 8,700,000
------------
12,463,500
------------
Bank & Finance - 4.8%
2,700,000 American Life Holding Corp., Sr. Subordinated Notes 11.25% 9/15/2004 2,821,500
2,500,000 First Nationwide Holdings, Inc., Sr. Notes 12.25% 5/15/2001 2,812,500
10,050,000 GPA Delaware, Inc., Debentures 8.75% 12/15/1998 9,371,625
10,500,000 Mutual Life Insurance Co. of New York, Surplus Notes Zero Coupon 8/15/2024 8,820,000
5,250,000 Scotsman Group, Inc., Sr. Secured Notes 9.5% 12/15/2000 5,276,250
3,400,000 Terra Nova (U.K.) Holdings plc, Sr. Notes 10.75% 7/1/2005 3,723,000
4,500,000 Trizec Finance Ltd., Sr. Notes 10.875% 10/15/2005 4,691,250
------------
37,516,125
------------
Broadcasting - 22.9%
3,750,000 Adelphia Communications Corp., Sr. Debentures 11.875% 9/15/2004 3,562,500
1,750,000 Adelphia Communications Corp., Sr. Notes 12.5% 5/15/2002 1,715,000
7,061,426 American Telecasting, Inc., Sr. Discount Notes Zero Coupon 6/15/2004 4,890,037
4,100,000 American Telecasting, Inc., Units Zero Coupon 8/15/2005 2,567,625
9,700,000 Australis Media Ltd., Sr. Subordinated Discount Notes Zero Coupon 5/15/2003 7,081,000
6,900,000 Cablevision Industries, Debentures 9.25% 4/1/2008 7,486,500
1,750,000 Comcast Corp., Convertible Subordinated Debentures 3.375% 9/9/2005 1,642,813
3,500,000 Comcast Corp., Sr. Subordinated Debentures 9.125% 10/15/2006 3,657,500
8,150,000 Comcast UK Cable Partners Ltd., Sr. Discount Debentures Zero Coupon 11/15/2007 4,808,500
3,500,000 Continental Cablevision, Inc., Sr. Debentures 9.5% 8/1/2013 3,727,500
5,500,000 Continental Cablevision, Inc., Sr. Notes 8.3% 5/15/2006 5,527,500
5,800,000 Continental Cablevision, Inc., Sr. Subordinated Debentures 11.0% 6/1/2007 6,496,000
11,600,000 Diamond Cable Communications plc, Sr. Discount Notes Zero Coupon 12/15/2005 6,902,000
10,091,802 Falcon Holdings Group L.P., Sr. Subordinated Notes 11.0% 9/15/2003 9,738,589
3,500,000 Galaxy Telecom L.P., Sr. Subordinated Notes 12.375% 10/1/2005 3,482,500
5,500,000 Granite Broadcasting Corp., Sr. Subordinated Debentures 12.75% 9/1/2002 6,132,500
5,150,000 International CabelTel, Inc., Sr. Notes Zero Coupon 4/15/2005 3,283,125
5,750,000 International CableTel, Inc., Convertible Subordinated Notes 7.25% 4/15/2005 6,210,000
5,500,000 Jones Intercable, Inc., Sr. Notes 9.625% 3/15/2002 5,933,125
4,300,000 Le Groupe Videotron Ltee., Sr. Notes 10.625% 2/15/2005 4,606,375
7,000,000 Lenfest Communications, Inc., Sr. Notes 8.375% 11/1/2005 7,035,000
9,850,000 Marcus Cable Co., Sr. Discount Notes Zero Coupon 12/15/2005 6,747,250
6,800,000 NWCG Holdings Corp., Sr. Secured Discount Notes Zero Coupon 6/15/1999 4,675,000
9,250,000 People's Choice T.V. Corp., Sr. Discount Notes Zero Coupon 6/1/2004 5,341,875
10,750,000 Robin Media Group, Sr. Subordinated Deferred Interest Bonds 11.125% 4/1/1997 10,776,875
5,750,000 Rogers Cablesystems Ltd., Sr. Secured Second Priority Notes 9.625% 8/1/2002 6,066,250
1,200,000 Rogers Cablesystems Ltd., Sr. Subordinated
Guaranteed Debentures 11.0% 12/1/2015 1,296,000
7,000,000 Rogers Communications, Inc., Convertible Debentures 2.0% 11/26/2005 3,762,500
600,000 Rogers Communications, Inc., Convertible Liquid
Yield Option Notes Zero Coupon 5/20/2013 210,750
6,300,000 SCI Television, Inc., Sr. Second Priority Secured Notes 11.0% 6/30/2005 6,646,500
6,025,000 Scott Cable Communications, Inc., Subordinated Debentures 12.25% 4/15/2001 3,976,500(c)
3,000,000 TeleWest plc, Sr. Debentures 9.625% 10/1/2006 3,063,750
8,350,000 TeleWest plc, Sr. Discount Debentures Zero Coupon 10/1/2007 5,062,187
12,400,000 United International Holdings, Inc., Sr. Discount Notes Zero Coupon 11/15/1999 7,750,000
4,600,000 United International Holdings, Inc., Sr. Secured
Discount Notes, Series B Zero Coupon 11/15/1999 2,875,000
3,900,000 Wireless One, Inc., Units 13.0% 10/15/2003 4,075,500
------------
178,811,626
------------
Building Products & Materials - 0.9%
9,500,000 Dal-Tile International, Inc., Sr. Secured Notes Zero Coupon 7/15/1998 7,267,500
------------
Computers & Office Equipment - 1.4%
6,000,000 Bell & Howell, Inc., Sr. Discount Debentures Zero Coupon 3/1/2005 3,810,000
4,400,000 Dictaphone Corp., Sr. Subordinated Notes 11.75% 8/1/2005 4,312,000
3,000,000 Unisys Corp., Credit Sensitive Notes 13.5% 7/1/1997 2,932,500
------------
11,054,500
------------
Conglomerates - 0.1%
500,000 Jordan Industries, Inc., Sr. Notes 10.375% 8/1/2003 427,500
------------
Construction & Home Building - 0.4%
3,500,000 Peters (J.M.) Co., Inc., Sr. Notes 12.75% 5/1/2002 3,237,500
------------
Containers & Packaging - 0.4%
3,200,000 Owens-Illinois, Inc., Sr. Subordinated Notes 9.75% 8/15/2004 3,372,000
------------
Drugs & Health Care - 1.9%
7,205,000 Dade International, Inc., Sr. Subordinated Notes 13.0% 2/1/2005 8,069,600
3,775,800 General Medical Corp., Payment-In-Kind Debentures 12.125% 8/15/2005 3,832,437
2,900,000 IVAC Corp., Sr. Notes 9.25% 12/1/2002 2,987,000
------------
14,889,037
------------
Electric Utilities - 1.5%
250,000 El Paso Electric Co. (Del Norte Funding Corp.), Secured Lease
Obligation Bonds 11.25% 1/2/2014 169,985(c)
2,000,000 El Paso Electric Co. (El Paso Funding Corp.),
Lease Obligation Bonds 10.75% 4/1/2013 1,357,460(c)
6,300,000 El Paso Electric Co. (El Paso Funding Corp.),
Lease Obligation Bonds 10.375% 1/2/2011 4,275,961(c)
3,250,000 Midland Cogen Venture Fund II, Secured Lease Obligation
Bonds, Series A 11.75% 7/23/2005 3,420,849
2,400,000 Midland Cogen Venture Fund II, Subordinated Secured
Lease Obligation Bonds 13.25% 7/23/2006 2,652,564
------------
11,876,819
------------
Electrical Equipment - 1.6%
3,350,000 ADT Operations, Inc., Liquid Yield Option Notes Zero Coupon 7/6/2010 1,591,250
7,450,000 Protection One Alarm Monitoring, Sr. Subordinated
Discount Notes Zero Coupon 6/30/2005 6,034,500
4,750,000 Telex Communications, Inc., Sr. Notes 12.0% 7/15/2004 4,880,625
------------
12,506,375
------------
Food & Beverage - 2.7%
6,500,000 Curtice-Burns Food, Inc., Sr. Subordinated Notes 12.25% 2/1/2005 6,662,500
4,000,000 Dr. Pepper Bottling Holdings, Sr. Notes Zero Coupon 2/15/2003 3,200,000
7,800,000 Fresh Del Monte Corp., Sr. Notes 10.0% 5/1/2003 6,961,500
8,600,000 Specialty Foods Acquisition Co., Sr. Secured Discount
Debentures, Series B Zero Coupon 8/15/2005 4,085,000
------------
20,909,000
------------
Hospital Management - 4.1%
4,675,000 Integrated Health Services Inc., Sr. Subordinated Notes 9.625% 5/31/2002 4,768,500
3,750,000 Magellan Health Services, Sr. Subordinated Notes 11.25% 4/15/2004 4,115,625
4,350,000 Merit Behavioral Care Corp., Sr. Subordinated Notes 11.5% 11/15/2005 4,502,250
10,350,000 Regency Health Services, Inc., Sr. Subordinated Notes 9.875% 10/15/2002 10,324,125
7,400,000 Tenet Healthcare Corp., Sr. Subordinated Notes 10.125% 3/1/2005 8,232,500
------------
31,943,000
------------
Household Products - 1.3%
22,000,000 Coleman Worldwide Corp., Convertible Liquid Yield
Option Notes Zero Coupon 5/27/2013 6,600,000
2,650,000 JB Williams Holdings, Inc., Sr. Notes 12.0% 3/1/2004 2,650,000
1,300,000 Pace Industries, Inc., Sr. Notes, Series B 10.625% 12/1/2002 1,150,500
------------
10,400,500
------------
Leisure & Entertainment - 1.3%
6,000,000 Host Marriott Travel Plazas, Sr. Secured Notes 9.50% 5/15/2005 5,962,500
4,000,000 IMAX Corp., Sr. Notes 7.0% 3/1/2001 3,940,000
------------
9,902,500
------------
Mining & Metals - 0.3%
2,100,000 EnviroSource, Inc., Sr. Notes 9.75% 6/15/2003 1,869,000
------------
Oil & Gas - 3.7%
5,500,000 Gulf Canada Resources Ltd., Sr. Subordinated Debentures 9.625% 7/1/2005 5,866,074
9,200,000 Kelley Oil & Gas Corp., Sr. Notes 13.5% 6/15/1999 7,498,000
8,775,000 Petroleum Heat & Power Co., Inc., Subordinated Debentures 12.25% 2/1/2005 9,828,000
500,000 Petroleum Heat & Power Co., Inc., Subordinated Debentures 9.375% 2/1/2006 492,500
4,650,000 Sherritt, Inc., Debentures 10.5% 3/31/2014 5,045,250
------------
28,729,824
------------
Paper & Forest Products - 1.8%
3,500,000 Container Corp. of America, Sr. Notes 11.25% 5/1/2004 3,587,500
5,100,000 Gaylord Container Corp., Sr. Subordinated Debentures Zero Coupon 5/15/2005 5,023,500
5,150,000 Malette, Inc., Sr. Secured Notes 12.25% 7/15/2004 5,768,000
------------
14,379,000
------------
Pollution Control - 0.5%
4,000,000 Norcal Waste Systems, Inc., Sr. Notes 12.5% 11/15/2005 4,060,000
------------
Publishing & Printing - 2.5%
2,500,000 K-III Communications Corp., Sr. Notes 10.25% 6/1/2004 2,687,500
12,500,000 Neodata Services, Inc., Sr. Notes Zero Coupon 5/1/2003 11,281,250
4,000,000 News America Holdings, Inc., Convertible Liquid
Yield Option Notes Zero Coupon 3/11/2013 1,820,000
750,000 News America Holdings, Inc., Subordinated Notes Zero Coupon 3/31/2002 702,187
3,000,000 Sullivan Graphics, Inc., Sr. Subordinated Notes 12.75% 8/1/2005 2,940,000
------------
19,430,937
------------
Retail - 6.0%
3,750,000 Big V Supermarkets, Sr. Subordinated Notes 11.0% 2/15/2004 3,056,250
6,400,000 Di Giorgio Corp., Sr. Notes 12.0% 2/15/2003 4,896,000
6,600,000 Dominick's Finer Foods, Sr. Subordinated Notes 10.875% 5/1/2005 6,996,000
2,750,000 F & M Distributors, Inc., Sr. Subordinated Notes 11.5% 4/15/2003 85,937(c)
5,250,000 Farm Fresh, Inc., Sr. Notes 12.25% 10/1/2000 4,331,250
10,350,000 Ralph's Supermarkets, Inc., Sr. Subordinated Notes 11.0% 6/15/2005 10,143,000
5,500,000 Smitty's SuperValu, Inc., Sr. Subordinated Notes, Series B 12.75% 6/15/2004 5,307,500
11,200,000 TLC Beatrice International Holdings, Sr. Secured Notes 11.5% 10/1/2005 11,116,000
7,000,000 Wherehouse Entertainment, Inc., Sr. Subordinated Notes 13.0% 8/1/2002 980,000(c)
------------
46,911,937
------------
Services - 0.4%
1,550,000 Flagstar Corp., Sr. Subordinated Debentures 11.25% 11/1/2004 1,108,250
3,150,000 Flagstar Corp., Sr. Subordinated Debentures 11.375% 9/15/2003 2,291,625
------------
3,399,875
------------
Telecommunications - 16.2%
14,500,000 American Communications Services, Inc., Units Zero Coupon 11/1/2005 8,083,750
5,900,000 A+ Network, Inc., Sr. Subordinated Notes 11.875% 11/1/2005 5,988,500
9,700,000 Call-Net Enterprises, Inc., Sr. Discount Notes Zero Coupon 12/1/2004 6,984,000
8,200,000 Clearnet Communications, Inc., Units Zero Coupon 12/15/2005 4,243,500
6,500,000 Comcast Cellular, Inc., Sr. Participation
Redeemable Notes, Series B Zero Coupon 3/5/2000 5,021,250
6,650,000 Comcast Cellular, Inc., Sr. Redeemable Notes Zero Coupon 3/5/2000 5,137,125
6,150,000 Dial Call Communications, Inc., Sr. Discount Notes Zero Coupon 12/15/2005 3,297,937
3,750,000 Dial Call Communications, Inc., Sr. Discount Notes Zero Coupon 4/15/2004 2,156,250
3,750,000 General Instrument, Convertible Jr. Subordinated Notes 5.0% 6/15/2000 4,125,000
1,500 GST Telecommunications, Inc., Units (each unit consists of
$8,000 principal amount of senior discount notes and $1,000
principal amount of convertible senior subordinated
discount notes) Zero Coupon 12/15/2005 7,200,000
8,023,000 Horizon Cellular Telephone Co., Sr. Subordinated
Discount Notes Zero Coupon 10/1/2000 6,859,665
10,100,000 In-Flight Phone Corp., Sr. Discount Notes, Series B Zero Coupon 5/15/2002 3,383,500
11,000,000 IntelCom Group (USA), Inc., Sr. Discount Notes Zero Coupon 9/15/2005 6,352,500
7,000,000 Intermedia Communications of Florida, Sr. Notes 13.5% 6/1/2005 7,875,000
11,000,000 IXC Communications, Inc., Sr. Notes, Series A 13.0% 10/1/2005 11,715,000
6,000,000 MobileMedia Communications, Inc., Sr. Subordinated
Deferred Coupon Notes Zero Coupon 12/1/2003 4,687,500
3,000,000 NEXTEL Communications, Inc., Sr. Discount Notes Zero Coupon 8/15/2005 1,612,500
13,300,000 PageMart Nationwide, Inc., Sr. Discount Exchange Notes Zero Coupon 2/1/2005 8,877,750
4,750,000 Rogers Cantel Mobile, Inc., Sr. Subordinated Notes 11.125% 7/15/2002 5,112,188
2,750,000 USA Mobile Communications, Inc., Sr. Notes 9.5% 2/1/2004 2,736,250
2,850,000 USA Mobile Communications, Inc., Sr. Notes 14.0% 11/1/2004 3,348,750
10,000,000 Viatel, Inc., Sr. Discount Notes Zero Coupon 1/15/2005 5,100,000
4,600 Winstar Communications, Inc., Units (each unit consists of
$2,000 principal amount of senior discount notes and
$1,000 principal amount of convertible senior subordinated
discount notes) Zero Coupon 10/15/2005 7,348,500
------------
127,246,415
------------
Transportation - 0.1%
2,550,000 Burlington Motor Holdings, Inc., Sr. Subordinated Notes 11.5% 11/1/2003 $446,250(c)
------------
Total Corporate Bonds (cost, $609,429,536) 617,278,560
------------
FOREIGN GOVERNMENT BONDS - 0.5% (a)
7,003,973 Brazil, (Republic of), Emerging Markets (Brady Bonds)
(cost, $3,563,898) 8.0% 4/15/2014 4,025,096(f)
------------
<CAPTION>
Shares
- --------------
PREFERRED STOCKS - 10.6% (a)
<S> <C> <C>
35,550 Berg Electronics Holding Corp., Preferred Stock 1,004,288
50,439 Cablevision Systems Corp., Red. Exch., Preferred Stock, Series G 5,308,705
48,000 California Federal Bank, Preferred Stock 5,253,000
156,300 Chevy Chase Savings Bank, Preferred Stock 4,845,300
34,052 Communications & Power Industries, Inc., Preferred Stock 3,495,778
4,350 Consolidated Hydro, Inc., Preferred Stock 2,219,588(b)
27,900 EnviroSource, Inc., Jr. Convertible Preferred Stock 3,811,837(b)
47,500 First Nationwide Bank, Noncumulative Preferred Stock 5,331,875
100,000 Flagstar Cos., Convertible Preferred Stock, Series A 1,037,500
49,500 Grand Union Holdings Corp., Preferred Stock 0(c,d)
200,000 Granite Broadcasting Corp., Convertible Preferred Stock 10,800,000
219,606 Harvard Industries, Inc., Exchangeable Payment-In-Kind Preferred Stock 5,833,284
37,128 K-III Communications Corp., Payment-In-Kind Preferred Stock, Series B 3,703,548
37,000 K-III Communications Corp., Preferred Stock 1,008,250
140,000 MFS Communication, Inc., 8% Cumulative Convertible Preferred Stock 6,816,250
113,000 Network Imaging Corp., Convertible Preferred Stock 1,779,750
110,000 Newscorp Overseas Limited, Cumulative Guaranteed Preferred Stock 2,805,000
8,765 PanAmSat Corp., Convertible Preferred Stock 9,794,888
144,942 Riggs National Corp., Preferred Stock 4,094,612
147,500 River Bank America, Preferred Stock 3,687,500
------------
Total Preferred Stocks (cost, $79,080,117) 82,630,953
------------
COMMON STOCKS & STOCK WARRANTS - 4.4% (a)
60,000 ADT Ltd., Common Stock 900,000(b)
37,000 American Telecasting, Inc., Stock Warrants 111,000(b)
3,300 Arcadian Corp., Stock Warrants 334,538(b,d)
201,940 Arch Communications Group, Common Stock 4,846,560(b)
65,000 Bell & Howell Holdings Co., Common Stock 1,820,000(b)
2,310 Communications & Power Industries, Inc., Common Stock 231,000(b)
7,830 Consolidated Hydro, Inc., Stock Warrants 31,320(b,d)
3,750 Dial Page Communications, Inc., Stock Warrants 38(b)
3,086 Dial Page Communications, Inc., Stock Warrants 31(b)
79,500 Envirotest Systems Corp., Class A Common Stock 208,687(b)
750 Federated Dept. Stores, Inc., Stock Warrants 3,000(b)
111,377 Gaylord Container Corp., Class A Common Stock 897,977(b)
127,902 Gaylord Container Corp., Stock Warrants 959,265(b)
18,126 Grand Union Co., Stock Warrants 8,157(b)
36,251 Grand Union Co., Stock Warrants 2,900(b)
65,000 Harvard Industries, Inc., Class B Common Stock 1,657,500(b)
10,100 In-Flight Phone Corp., Stock Warrants 0(b)
248,000 IntelCom Group (USA), Inc., Common Stock 3,069,000(b)
36,300 IntelCom Group (USA), Inc., Stock Warrants 163,350(b)
7,000 Intermedia Communications of Florida, Stock Warrants 70,000(b)
38,000 JPS Textiles Group, Common Stock 380,000(b)
139,371 Magellan Health Services, Common Stock 3,344,904(b)
50,379 Memorex Telex, N.V., Common Stock 37,784(b)
1,728 Memorex Telex, N.V., Stock Warrants 17(b)
5,319 MFS Communications Co., Inc., Common Stock 283,237(b)
115,000 MobileMedia Corp., Class A Common Stock 2,558,750(b)
15,000 News Corp. Ltd., ADR, Ordinary Shares, Common Stock 288,750
30,000 News Corp. Ltd., ADR, Preference Shares, Common Stock 641,250
33,250 PageMart Nationwide, Inc., Common Stock 311,719(b)
5,750 Payless Cashways, Inc., Stock Warrants 719(b)
140,000 Plantronics, Inc., Common Stock 5,057,500(b)
23,840 Protection One Alarm Monitoring, Common Stock 214,560(b)
1,500 Terex Corp., Stock Appreciation Rights 75(b,d,e)
5,000 Triangle Wire & Cable, Inc., Stock Warrants 0(b,d)
118,000 United International Holdings, Inc., Class A Common Stock 1,740,500(b)
27,000 United International Holdings, Inc., Stock Warrants 729,000(b)
361,000 Viatel, Inc., Common Stock 1,444,000(b,d)
110,000 Wireless One, Inc., Common Stock 1,815,000(b)
------------
Total Common Stocks & Stock Warrants (cost, $26,452,665) 34,162,088
------------
<CAPTION>
Principal Maturity
Amount Rate Date Value
----------- ------ --------- ------------
SHORT-TERM SECURITIES - 5.6% (a)
Commercial Paper
<S> <C> <C> <C> <C>
$19,000,000 General Electric Capital Corp. 5.82% 1/2/1996 18,996,928
5,000,000 General Motors Acceptance Corp. 5.8% 1/17/1996 4,987,111
5,000,000 General Motors Acceptance Corp. 5.77% 1/9/1996 4,993,589
5,000,000 IBM Credit Corp. 5.77% 1/12/1996 4,991,185
5,000,000 Prudential Funding Corp. 5.77% 1/4/1996 4,997,596
5,000,000 Sears Roebuck Acceptance Corp. 5.88% 1/22/1996 4,982,850
------------
Total Short-Term Securities (at amortized cost) 43,949,259
------------
Total Investments (cost, $762,475,475) $782,045,956(g)
============
<CAPTION>
Notes to Portfolio of Investments:
- ----------------------------------
(a) The categories of investments are shown as a percentage of total investments of the High Yield Portfolio.
(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 December 31,1995, 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 December 31, 1995.
Acquisition
Security Date Cost
------------------------------------------------ ---------- ----------
<S> <C> <C>
Arcadian Corp., Stock Warrants 2/6/1992 $90,000
Consolidated Hydro, Inc, Warrants 6/15/1993 171,276
Grand Union Holdings Corp., Preferred Stock 6/14/1993 5,703,525
Terex Corp., Stock Appreciation Rights 7/27/1992 3,750
Triangle Wire & Cable, Inc., Stock Warrants 1/3/1992 500
Viatel, Inc., Common Stock 8/15/1995 1,358,844
(e) Includes stock rights that automatically traded with the stock and had no separate value at December 31, 1995.
(f) Denominated in U.S. Dollars.
(g) At December 31, 1995, the aggregate cost of securities for federal income tax purposes was $762,579,659 and the
net unrealized appreciation of investments based on that cost was $19,466,297 which is comprised of $54,735,473
aggregate gross unrealized appreciation and $35,269,176 aggregate gross unrealized depreciation.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
LB Series Fund, Inc.
Income Portfolio
Portfolio of Investments
December 31, 1995
<CAPTION>
Principal Maturity
Amount Rate Date Value
----------- ------ -------- -----------
CORPORATE BONDS - 36.6% (a)
Automotive - 1.4%
<S> <C> <C> <C> <C>
$ 4,000,000 Exide Corp., Sr. Notes 10.0% 4/15/2005 $ 4,350,000
2,000,000 Ford Motor Credit Co., Notes 6.25% 12/8/2005 2,002,826
4,000,000 Ford Motor Credit Co., Notes 6.375% 10/6/2000 4,075,708
------------
10,428,534
------------
Bank & Finance - 13.3%
12,500,000 Associates Corp. of North America, Notes 6.625% 5/15/1998 12,802,700
5,000,000 Associates Corp. of North America, Sr. Notes 9.125% 4/1/2000 5,643,345
6,000,000 Citicorp, Subordinated Debentures 7.125% 9/1/2005 6,390,234
3,500,000 Commercial Credit Co., Notes 6.125% 12/1/2005 3,472,756
4,000,000 Dresdner Bank - New York, Subordinated Notes 7.25% 9/15/2015 4,269,804
8,000,000 General Electric Capital Corp., Debentures 8.85% 4/1/2005 9,554,232
6,000,000 Metropolitan Life Insurance Co., Surplus Notes 7.7% 11/1/2015 6,222,840
8,000,000 Nationwide CSN Trust, Trust Notes 9.875% 2/15/2025 9,374,400
5,000,000 New York Life Insurance Co., Surplus Notes 6.4% 12/15/2003 5,050,250
8,000,000 Norwest Financial, Inc., Sr. Notes 6.25% 11/1/2002 8,124,408
6,000,000 Prudential Insurance Co., Surplus Notes 7.65% 7/1/2007 6,343,248
6,000,000 Prudential Insurance Co., Surplus Notes 8.3% 7/1/2025 6,476,352
5,000,000 Reliastar Financial Corp., Sr. Notes 8.625% 2/15/2005 5,704,615
6,000,000 Societe-Generale, Subordinated Notes 9.875% 7/15/2003 7,310,844
6,000,000 Swiss Bank Corp., Subordinated Debentures, (New York Branch) 7.5% 7/15/2025 6,535,398
------------
103,275,426
------------
Broadcasting - 2.4%
3,000,000 Continental Cablevision, Inc., Sr. Notes 8.3% 5/15/2006 3,015,000
4,000,000 Rogers Cablesystems, Inc., Sr. Secured Second Priority Notes 9.625% 8/1/2002 4,220,000
5,000,000 TCI Communications, Inc., Sr. Notes 8.0% 8/1/2005 5,345,750
6,000,000 Viacom, Inc., Sr. Notes 7.75% 6/1/2005 6,372,534
------------
18,953,284
------------
Chemicals - 0.8%
3,500,000 Methanex Corp., Notes 7.75% 8/15/2005 3,713,728
2,000,000 Methanex Corp., Notes 7.4% 8/15/2002 2,081,174
------------
5,794,902
------------
Computers & Office Equipment - 0.8%
6,000,000 Electronic Data Systems Corp., Notes 6.85% 5/15/2000 6,262,500
------------
Conglomerates - 0.7%
5,000,000 Dover Corp., Notes 6.45% 11/15/2005 5,137,710
------------
Food & Beverage - 1.7%
9,000,000 Nabisco, Inc., Notes 6.7% 6/15/2002 9,195,471
4,000,000 TLC Beatrice International Holdings, Sr. Secured Notes 11.5% 10/1/2005 3,970,000
------------
13,165,471
------------
Hospital Management - 0.9%
2,500,000 Integrated Health Services, Inc., Sr. Subordinated Notes 9.625% 5/31/2002 2,550,000
4,000,000 Tenet Healthcare Corp. 9.625% 9/1/2002 4,440,000
------------
6,990,000
------------
Household Products - 0.9%
5,000,000 Procter & Gamble, Guaranteed ESOP Debentures 9.36% 1/1/2021 6,573,915
------------
Natural Gas - 2.0%
4,000,000 Coastal Corp., Sr. Debentures 9.75% 8/1/2003 4,779,004
4,000,000 Coastal Corp., Sr. Notes 10.375% 10/1/2000 4,681,724
2,500,000 Tenneco, Inc., Notes 7.875% 10/1/2002 2,729,868
4,000,000 Tenneco, Inc., Notes 6.5% 12/15/2005 4,019,008
------------
16,209,604
------------
Paper & Forest Products - 1.4%
5,000,000 Georgia Pacific Corp., Debentures 8.625% 4/30/2025 5,526,380
5,000,000 Smurfit Capital Funding plc, Guaranteed Notes 6.75% 11/20/2005 5,137,230
------------
10,663,610
------------
Petroleum - 3.2%
7,043,068 Mobil Oil Corp, ESOP Sinking Fund Debentures 9.17% 2/29/2000 7,563,805
5,000,000 Oryx Energy Co., Notes 8.125% 10/15/2005 5,140,660
9,000,000 Texaco Capital, Inc., Debentures 7.5% 3/1/2043 9,750,690
2,000,000 United Meridian Corp., Sr. Subordinated Notes 10.375% 10/15/2005 2,125,000
------------
24,580,155
------------
Pollution Control - 0.6%
4,000,000 Browning-Ferris Industries, Inc., Debentures 7.4% 9/15/2035 4,330,452
------------
Retail - 3.2%
7,000,000 Dayton Hudson Corp., Debentures 8.5% 12/1/2022 7,610,351
6,000,000 Federated Department Stores, Sr. Notes 10.0% 2/15/2001 6,502,500
2,000,000 K-Mart Corp., Pass Through Certificates, Series 1995-K-4 9.35% 1/2/2020 1,543,994
3,000,000 Ralph's Grocery Company, Sr. Notes 10.45% 6/15/2004 3,052,500
5,250,000 Revco D.S., Inc., Sr. Notes 9.125% 1/15/2000 5,696,250
------------
24,405,595
------------
Services - 0.7%
5,000,000 ARA Group, Inc., Subordinated Notes 8.5% 6/1/2003 5,262,500
------------
Telephone - 2.6%
6,000,000 AT&T Corp., Debentures 8.35% 1/15/2025 6,865,584
6,000,000 New York Telephone Co., Debentures 9.375% 7/15/2031 7,143,708
6,000,000 U.S. West Communications, Inc., Debentures 7.125% 11/15/2043 6,180,522
------------
20,189,814
------------
Total Corporate Bonds (cost, $267,749,456) 282,223,472
------------
FOREIGN GOVERNMENT BONDS - 7.3% (a,c)
6,000,000 African Development Bank, Subordinated Notes 6.875% 10/15/2015 6,193,422
5,000,000 African Development Bank, Subordinated Notes 7.75% 12/15/2001 5,473,790
5,000,000 British Columbia Hydro & Power, Debentures 15.5% 7/15/2011 5,592,745
5,000,000 British Columbia Hydro & Power, Debentures 12.5% 9/1/2013 6,016,295
5,000,000 Inter American Development Bank, Notes 7.0% 6/15/2025 5,335,530
7,000,000 Korean Development Bank, Sr. Notes 6.5% 11/15/2002 7,111,363
4,000,000 Ontario Province, Canada, Debentures 11.75% 4/25/2013 4,683,636
10,000,000 Ontario Province, Canada, Sr. Secured Notes 7.75% 6/4/2002 10,998,190
5,000,000 Tenaga Nasional Berhad, Debentures 7.5% 11/1/2025 5,239,375
------------
Total Foreign Government Bonds (cost, $55,637,257) 56,644,346
------------
ASSET-BACKED SECURITIES - 12.9% (a)
17,000,000 AT&T Universal Card Master Trust, Class A, Series 1995-2 5.95% 10/17/2002 17,211,973
6,000,000 Chemical Master Credit Card Trust I, Class A Asset Backed
Certificates, Series 1995-3 6.23% 4/15/2005 6,136,194
5,965,346 IBM Credit Receivables Lease Trust, Series 1993-1 4.55% 11/15/2000 5,926,810
25,000,000 ITT Floorplan Receivable Master Trust, Series 1994-1-A 6.138% 1/15/1996 25,065,225 (b)
7,500,000 NationsBank Credit Card Master, Series 1995-A 6.45% 4/15/2003 7,740,068
15,000,000 Sears Credit Account Master Trust II, Master Trust Certificates,
Series 1995-4-A 6.25% 1/15/2003 15,311,835
22,000,000 Standard Credit Master Trust 1, Credit Card Participation
Certificates, Series 1995-9-A 6.55% 10/7/2007 22,715,638
------------
Total Asset-Backed Securities (cost, $98,497,672) 100,107,743
------------
MORTGAGE-BACKED SECURITIES - 15.4% (a)
21,000,000 Federal National Mortgage Association,
Participation Certificates 7.0% 2025 21,170,625 (d)
64,444,650 Federal National Mortgage Association,
Participation Certificates 6.5% 2025 63,878,687
33,357,923 Government National Mortgage Association,
Modified Pass Through Certificates 7.0% 2023 - 2025 33,810,647
------------
Total Mortgage-Backed Securities (cost, $113,530,245) 118,859,959
------------
U.S. GOVERNMENT - 23.9% (a)
31,500,000 U.S. Treasury Bonds 7.625-12.0% 2003 - 2025 42,147,792
132,500,000 U.S. Treasury Notes 6.0-9.25% 1997 - 2005 142,435,799
------------
Total U.S. Government (cost, $178,541,399) 184,583,591
------------
SHORT-TERM SECURITIES - 3.9% (a)
Commercial Paper
5,300,000 Associates Corp. of North America 5.98% 1/2/1996 5,299,120
24,700,000 Koch Industries 5.97% 1/2/1996 24,695,904
------------
Total Short-Term Securities (at amortized cost) 29,995,024
------------
Total Investments (cost, $743,951,053) $772,414,135 (e)
============
Notes to Portfolio of Investments:
- ----------------------------------c
(a) The categories of investments are shown as a percentage of total investments of the Income Portfolio.
(b) Denotes variable rate obligations for which current yield is shown.
(c) Denominated in U.S. Dollars.
(d) Denotes investments purchased on a when-issued basis.
(e) At December 31, 1995, the aggregate cost of securities for federal income tax purposes was $744,297,783 and the net
unrealized appreciation of investments based on that cost was $28,116,352 which is comprised of $30,006,216 aggregate
gross unrealized appreciation and $1,889,864 aggregate gross unrealized depreciation.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
LB Series Fund, Inc.
Money Market Portfolio
Portfolio of Investments
December 31, 1995
<CAPTION>
Principal Maturity
Amount Rate Date Value
- ------------ ------ --------- -----------
BANKER'S ACCEPTANCES - 5.8% (a)
<S> <C> <C> <C> <C>
$2,000,000 First Bank, N.A., Minneapolis 5.6% 3/5/1996 $ 1,980,089
1,857,143 Morgan Guaranty Trust Co. of New York 5.55% 4/24/1996 1,824,504
-----------
Total Banker's Acceptances 3,804,593
-----------
COMMERCIAL PAPER - 90.5% (a)
Banking-Domestic - 3.0%
2,000,000 AES Barbers Point, Inc., (Bank of America,
Direct Pay Letter of Credit) 5.7% 1/12/1996 1,996,517
-----------
Banking-Foreign - 8.2%
1,000,000 Accor S.A., (Banque National de Paris,
Direct Pay Letter of Credit) 5.73% 1/25/1996 996,180
1,500,000 Finance One Funding Corp., (Credit Suisse,
Direct Pay Letter of Credit) 5.56% 5/7/1996 1,470,578
1,000,000 PEMEX Capital, Inc., (Credit Suisse,
Direct Pay Letter of Credit) 5.53% 2/15/1996 993,088
2,000,000 Petroleos De Venezuela, S.A., (Westdeutsche Landesbank
Girozentrale, Direct Pay Letter of Credit) 5.62% 3/8/1996 1,979,081
-----------
5,438,927
-----------
Computer & Office Equipment - 7.5%
2,000,000 Electronic Data Systems Corp. 5.48% 3/19/1996 1,976,253
1,000,000 Hewlett-Packard Co. 5.75% 1/18/1996 997,285
1,000,000 IBM Credit Corp. 5.75% 1/10/1996 998,563
1,000,000 IBM Credit Corp. 5.76% 1/10/1996 998,560
-----------
4,970,661
-----------
Drugs & Healthcare - 3.0%
2,000,000 Schering Corp. 5.64% 2/27/1996 1,982,140
-----------
Education - 6.9%
2,300,000 Harvard University 6.05% 1/2/1996 2,299,613
1,800,000 Leland H. Stanford Jr. University 5.58% 3/18/1996 1,778,517
500,000 Leland H. Stanford Jr. University 5.5% 3/14/1996 494,424
-----------
4,572,554
-----------
Finance-Automotive - 6.6%
2,000,000 Ford Motor Credit Co 5.7% 2/9/1996 1,987,650
400,000 Ford Motor Credit Co 5.8% 2/1/1996 398,002
1,000,000 General Motors Acceptance Corp 5.87% 1/3/1996 999,674
1,000,000 General Motors Acceptance Corp 5.85% 1/3/1996 999,675
-----------
4,385,001
-----------
Finance-Commercial - 6.0%
1,000,000 General Electric Capital Corp 5.62% 3/1/1996 990,633
1,000,000 General Electric Capital Corp 5.58% 4/3/1996 985,585
2,000,000 Norwest Financial, Inc 5.68% 2/8/1996 1,988,009
-----------
3,964,227
-----------
Finance-Consumer - 15.0%
2,000,000 Associates Corp. of North America 5.75% 1/16/1996 1,995,208
1,000,000 AVCO Financial Services, Inc 5.6% 3/11/1996 989,111
1,000,000 AVCO Financial Services, Inc 5.82% 1/19/1996 997,090
2,000,000 Beneficial Corp 5.77% 1/26/1996 1,991,986
2,000,000 Commercial Credit Co 5.76% 1/5/1996 1,998,720
2,000,000 Penney (J.C.) Funding Corp 5.65% 2/6/1996 1,988,700
-----------
9,960,815
-----------
Finance-Structured - 16.0%
2,000,000 Ciesco, L.P 5.67% 2/8/1996 1,988,030
2,000,000 CXC, Inc 5.7% 1/29/1996 1,991,133
1,000,000 Delaware Funding Corp 5.73% 1/22/1996 996,658
1,600,000 New Center Asset Trust 5.74% 1/26/1996 1,593,622
2,000,000 Preferred Receivables Funding Corp 5.73% 1/24/1996 1,992,678
2,000,000 Sheffield Receivables Corp., (Barclay's Bank) 5.72% 1/18/1996 1,994,598
-----------
10,556,719
-----------
Financial Services - 0.8%
500,000 American Express Credit Corp 5.7% 1/31/1996 497,625
-----------
Food & Beverage - 5.9%
2,450,000 Cargill, Inc 5.57% 2/16/1996 2,432,563
1,500,000 CPC International, Inc. 5.44% 5/13/1996 1,469,853
-----------
3,902,416
-----------
Household Products - 1.1%
700,000 Colgate-Palmolive Co. 5.9% 1/8/1996 699,197
-----------
Industrial - 6.0%
1,000,000 Du Pont (E.I.) de Nemours and Co 5.63% 2/16/1996 992,806
1,000,000 Du Pont (E.I.) de Nemours and Co 5.58% 3/28/1996 986,515
2,000,000 Great Lakes Chemical Corp 5.8% 1/29/1996 1,990,978
-----------
3,970,299
-----------
Insurance - 3.0%
2,000,000 Lincoln National Corp. 5.57% 2/22/1996 1,983,909
-----------
Telecommunications - 1.5%
1,000,000 AT&T Corp 5.57% 2/21/1996 992,109
-----------
Total Commercial Paper 59,873,116
-----------
VARIABLE RATE NOTES - 3.0% (a,b)
2,000,000 Boatsmen's National Bank of St. Louis (Bank Note) 5.914% 1/12/1996 2,000,000
-----------
OTHER - 0.7% (a,b)
480,000 Federated Master Trust 5.383% 1/2/1996 480,000
-----------
Total Investments (at amortized cost) $66,157,709 (c)
===========
Notes to Portfolio of Investments:
- ----------------------------------
(a) The categories of investments are shown as a percentage of total investments of the Money Market Portfolio.
(b) Denotes variable rate obligations for which the current yield and 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>
LB Series Fund, Inc.
Statement of Assets and Liabilities
December 31, 1995
<CAPTION>
Portfolios
--------------------------------------------------------------
High Money
Growth Yield Income Market
-------------- ------------ ------------ ------------
ASSETS:
<S> <C> <C> <C> <C>
Investments in securities, at value (cost of $1,082,113,308,
$762,475,475, $743,951,053 and $66,157,709, respectively) $1,182,723,939 $782,045,956 $772,414,135 $66,157,709
Cash 127,500 68,762 115,544 4,256
Receivable for investment securities sold 1,946,865 1,751,500 -- --
Dividends and interest receivable 1,599,351 10,948,900 10,885,637 9,029
-------------- ------------ ------------ -----------
Total assets 1,186,397,655 794,815,118 783,415,316 66,170,994
-------------- ------------ ------------ -----------
LIABILITIES:
Payable for investment securities purchased 13,227,789 1,961,250 21,087,188 --
Dividends payable -- 346,689 254,699 19,576
Accrued expenses 25,713 17,373 16,702 1,451
-------------- ------------ ------------ -----------
Total liabilities 13,253,502 2,325,312 21,358,589 21,027
-------------- ------------ ------------ -----------
NET ASSETS $1,173,144,153 $792,489,806 $762,056,727 $66,149,967
============== ============ ============ ===========
NET ASSETS CONSIST OF:
Paid-in capital $917,597,644 $799,620,527 $755,721,028 $66,149,967
Accumulated net realized gain (loss) from sale of investments 154,935,878 (26,701,203) (22,127,382) --
Unrealized net appreciation of investments 100,610,631 19,570,482 28,463,081 --
-------------- ------------ ------------ -----------
NET ASSETS $1,173,144,153 $792,489,806 $762,056,727 $66,149,967
============== ============ ============ ===========
Outstanding shares of capital stock 64,197,627 79,742,358 75,614,192 66,149,967
Net asset value and public offering price per share
(net assets divided by outstanding shares) $18.27 $9.94 $10.08 $1.00
====== ====== ====== ======
</TABLE>
<TABLE>
Statement of Operations
Year Ended December 31, 1995
<CAPTION>
Portfolios
--------------------------------------------------------------
High Money
Growth Yield Income Market
-------------- ------------ ------------ ------------
INVESTMENT INCOME:
Income-
<S> <C> <C> <C> <C>
Interest income $4,780,867 $64,895,862 $48,094,035 $2,849,976
Dividend income 13,340,902 6,154,206 179,522 --
------------ ------------ ------------ ----------
Total income 18,121,769 71,050,068 48,273,557 2,849,976
Expenses-
Investment advisory fee 3,755,106 2,749,181 2,676,959 191,589
------------ ------------ ------------ ----------
Net investment income 14,366,663 68,300,887 45,596,598 2,658,387
------------ ------------ ------------ ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on investment transactions 177,817,436 (17,634,503) 14,948,726 --
Net realized gain on closed or expired option contracts written 497,309 -- -- --
------------ ------------ ------------ ----------
Net realized gain (loss) on investments 178,314,745 (17,634,503) 14,948,726 --
Net change in unrealized appreciation of investments 93,851,521 70,247,942 57,100,261 --
------------ ------------ ------------ ----------
Net gain on investments 272,166,266 52,613,439 72,048,987 --
------------ ------------ ------------ ----------
Net increase in net assets resulting from operations $286,532,929 $120,914,326 $117,645,585 $2,658,387
============ ============ ============ ==========
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
LB Series Fund, Inc.
Statement of Changes in Net Assets
Years Ended December 31, 1995 and 1994
<CAPTION>
Growth High Yield
Portfolio Portfolio
------------------------------ ------------------------------
1995 1994 1995 1994
------------ ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
<S> <C> <C> <C> <C>
Net investment income $14,366,663 $9,902,273 $68,300,887 $54,770,889
Net realized gain (loss) on investments 178,314,745 (22,140,074) (17,634,503) (9,003,809)
Net change in unrealized appreciation or
depreciation of investments 93,851,521 (17,508,695) 70,247,942 (73,154,741)
-------------- ------------ ------------ ------------
Net change in net assets resulting from operations 286,532,929 (29,746,496) 120,914,326 (27,387,661)
-------------- ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS --
Net investment income (14,366,663) (9,902,273) (68,300,887) (54,772,664)
Net realized gain on investments -- (15,253,955) -- (8,655,183)
-------------- ------------ ------------ ------------
Total distributions (14,366,663) (25,156,228) (68,300,887) (63,427,847)
-------------- ------------ ------------ ------------
CAPITAL STOCK TRANSACTIONS --
Proceeds from sale of shares 176,315,837 222,812,960 95,025,930 191,477,158
Reinvested dividend distributions 14,366,663 25,156,228 68,106,629 63,275,415
Cost of shares redeemed (11,526,193) (5,752,814) (18,896,967) (12,779,325)
-------------- ------------ ------------ ------------
Net increase in net assets from capital
stock transactions 179,156,307 242,216,374 144,235,592 241,973,248
-------------- ------------ ------------ ------------
Net increase in net assets 451,322,573 187,313,650 196,849,031 151,157,740
NET ASSETS:
Beginning of year 721,821,580 534,507,930 595,640,775 444,483,035
-------------- ------------ ------------ ------------
End of year $1,173,144,153 $721,821,580 $792,489,806 $595,640,775
============== ============ ============ ============
<CAPTION>
Income Money Market
Portfolio Portfolio
------------------------------ ------------------------------
1995 1994 1995 1994
------------ ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
<S> <C> <C> <C> <C>
Net investment income $45,596,598 $41,746,172 $2,658,387 $1,381,753
Net realized gain (loss) on investments 14,948,726 (36,852,960) -- --
Net change in unrealized appreciation or
depreciation of investments 57,100,261 (34,234,350) -- --
------------ ------------ ----------- -----------
Net change in net assets resulting from operations 117,645,585 (29,341,138) 2,658,387 1,381,753
------------ ------------ ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS --
Net investment income (45,596,598) (41,746,172) (2,658,387) (1,381,753)
Net realized gain on investments -- (12,433,934) -- --
------------ ------------ ----------- -----------
Total distributions (45,596,598) (54,180,106) (2,658,387) (1,381,753)
------------ ------------ ----------- -----------
CAPITAL STOCK TRANSACTIONS --
Proceeds from sale of shares 72,115,092 114,530,628 52,883,017 52,739,421
Reinvested dividend distributions 45,455,976 54,066,029 2,645,101 1,375,462
Cost of shares redeemed (35,776,663) (43,751,484) (31,260,652) (37,143,126)
------------ ------------ ----------- -----------
Net increase in net assets from capital
stock transactions 81,794,405 124,845,173 24,267,466 16,971,757
------------ ------------ ----------- -----------
Net increase in net assets 153,843,392 41,323,929 24,267,466 16,971,757
NET ASSETS:
Beginning of year 608,213,335 566,889,406 41,882,501 24,910,744
------------ ------------ ----------- -----------
End of year $762,056,727 $608,213,335 $66,149,967 $41,882,501
============ ============ =========== ===========
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
LB Series Fund, Inc.
Financial Highlights
(For a share outstanding throughout each period)
<CAPTION>
GROWTH PORTFOLIO (a) 1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.51 $14.76 $13.89 $14.85 $10.72
------ ------ ------ ------ ------
Income From Investment Operations --
Net investment income 0.24 0.20 0.29 0.23 0.27
Net realized and unrealized gain (loss) on investments 4.76 (0.87) 1.08 0.85 4.13
------ ------ ------ ------ ------
Total from investment operations 5.00 (0.67) 1.37 1.08 4.40
------ ------ ------ ------ ------
Less Distributions --
Dividends from net investment income (0.24) (0.20) (0.29) (0.23) (0.27)
Distributions from net realized gain on investments -- (0.38) (0.21) (1.81) --
------ ------ ------ ------ ------
Total distributions (0.24) (0.58) (0.50) (2.04) (0.27)
------ ------ ------ ------ ------
Net asset value, end of period $18.27 $13.51 $14.76 $13.89 $14.85
====== ====== ====== ====== ======
Total investment return at net asset value (b) 37.25% -4.66% 10.10% 8.13% 41.35%
Net assets, end of period ($millions) $1,173.1 $721.8 $534.5 $231.0 $96.2
Ratio of expenses to average net assets 0.40% 0.40% 0.40% 0.40% 0.40%
Ratio of net investment income to average net assets 1.53% 1.52% 2.17% 1.90% 2.24%
Portfolio turnover rate 184% 135% 243% 230% 247%
<CAPTION>
HIGH YIELD PORTFOLIO (a) 1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.18 $10.76 $9.62 $9.07 $7.62
------ ------ ------ ------ ------
Income From Investment Operations --
Net investment income 0.96 0.97 0.96 1.02 1.08
Net realized and unrealized gain (loss) on investments 0.76 (1.40) 1.16 0.71 1.45
------ ------ ------ ------ ------
Total from investment operations 1.72 (0.43) 2.12 1.73 2.53
------ ------ ------ ------ ------
Less Distributions --
Dividends from net investment income (0.96) (0.97) (0.96) (1.02) (1.08)
Distributions from net realized gain on investments -- (0.18) (0.02) (0.16) --
------ ------ ------ ------ ------
Total distributions (0.96) (1.15) (0.98) (1.18) (1.08)
------ ------ ------ ------ ------
Net asset value, end of period $9.94 $9.18 $10.76 $9.62 $9.07
====== ====== ====== ====== ======
Total investment return at net asset value (b) 19.62% -4.38% 22.91% 20.08% 35.32%
Net assets, end of period ($millions) $792.5 $595.6 $444.5 $154.3 $56.7
Ratio of expenses to average net assets 0.40% 0.40% 0.40% 0.40% 0.40%
Ratio of net investment income to average net assets 9.94% 9.75% 9.29% 10.69% 12.62%
Portfolio turnover rate 67% 44% 68% 80% 145%
<CAPTION>
INCOME PORTFOLIO (a) 1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.04 $10.36 $9.87 $10.01 $9.10
------ ----- ------ ----- ------
Income From Investment Operations --
Net investment income 0.65 0.64 0.63 0.73 0.81
Net realized and unrealized gain (loss) on investments 1.04 (1.11) 0.49 0.15 0.91
------ ----- ------ ----- ------
Total from investment operations 1.69 (0.47) 1.12 0.88 1.72
------ ----- ------ ----- ------
Less Distributions --
Dividends from net investment income (0.65) (0.64) (0.63) (0.73) (0.81)
Distributions from net realized gain on investments -- (0.21) -- (0.29) --
------ ----- ------ ----- ------
Total distributions (0.65) (0.85) (0.63) (1.02) (0.81)
------ ----- ------ ----- ------
Net asset value, end of period $10.08 $9.04 $10.36 $9.87 $10.01
====== ===== ====== ===== ======
Total investment return at net asset value (b) 19.36% -4.68% 11.66% 9.23% 19.76%
Net assets, end of period ($millions) $762.1 $608.2 $566.9 $254.7 $100.0
Ratio of expenses to average net assets 0.40% 0.40% 0.40% 0.40% 0.40%
Ratio of net investment income to average net assets 6.81% 6.78% 6.23% 7.29% 8.43%
Portfolio turnover rate 132% 139% 153% 115% 137%
<CAPTION>
MONEY MARKET PORTFOLIO (a) 1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
Net investment income from operations 0.06 0.04 0.03 0.03 0.06
Less: Dividends from net investment income (0.06) (0.04) (0.03) (0.03) (0.06)
----- ----- ----- ----- -----
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total investment return at net asset value (b) 5.71% 4.00% 2.87% 3.53% 5.89%
Net assets, end of period ($millions) $66.1 $41.9 $24.9 $26.6 $23.0
Ratio of expenses to average net assets 0.40% 0.40% 0.40% 0.40% 0.40%
Ratio of net investment income to average net assets 5.55% 4.03% 2.83% 3.45% 5.72%
Notes to Financial Highlights:
- ------------------------------
(a) All per share amounts have been rounded to the nearest cent.
(b) Total investment return is based on the change in net asset value during the year and assumes reinvestment of all
distributions and does not reflect any charges that would normally occur at the separate account level.
The accompanying notes are an integral part of the financial statements.
</TABLE>
LB Series Fund, Inc.
Notes to Financial Statements
December 31, 1995
(1) Organization
The Fund is registered under the Investment Company Act of 1940, as a
diversified, open-end investment company. The Fund is comprised of four
separate portfolios: Growth Portfolio, High Yield Portfolio, Income Portfolio
and Money Market Portfolio. Each portfolio is, in effect, a separate
investment fund with its own investment objectives and policies. The assets
of each portfolio are segregated and each has a separate class of capital
stock. The Fund serves as the investment vehicle to fund benefits for
variable life insurance and variable annuity contracts issued by Lutheran
Brotherhood and Lutheran Brotherhood Variable Insurance Products Company
(LBVIP), an indirect wholly owned subsidiary of Lutheran Brotherhood.
(2) Significant Accounting Policies
Investment Security Valuations
Securities traded on national securities exchanges or included in a national
market system are valued at the last quoted sales price at the close of each
business day. Securities traded on the over-the-counter market 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 or by dealers that make markets in the
securities. 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. Exchange
listed options and futures contracts are valued at the last quoted sales
price. For all Portfolios other than the Money Market Portfolio, short-term
securities with maturities of 60 days or less are valued at amortized cost;
those with maturities greater than 60 days are valued at the mean between bid
and asked price. Short-term securities held by the Money Market Portfolio are
valued on the basis of amortized cost (which approximates market value),
whereby a 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 Portfolio 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 Directors.
Repurchase Agreements
The Fund may engage in repurchase agreement transactions in pursuit of its
investment objectives. When the Fund engages in such transactions, it is
policy to require the custodian bank to take possession of all securities
held as collateral in support of repurchase agreement investments. In
addition, the Fund monitors the market value of the underlying collateral on
a daily basis. If the seller defaults or if bankruptcy proceedings are
initiated with respect to the seller, the realization or retention of the
collateral may be subject to legal proceedings.
Investment Income
Interest income is determined on the basis of interest or discount earned on
any short-term securities and interest earned on all other debt securities,
including amortization of discount or premium. 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.
Options and Financial Futures Transactions
The Fund, with the exception of the Money Market Portfolio, may utilize
futures and options contracts. The Fund intends 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.
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.
Federal Income Taxes
It is the Fund's policy to comply with the provisions of the Internal Revenue
Code applicable to regulated investment companies and to distribute
substantially all of its taxable income on a timely basis, including any net
realized gain on investments each year. It is also the intention of the Fund
to distribute an amount sufficient to avoid imposition of any federal excise
tax. Accordingly, no provision for federal income tax is necessary. Each
portfolio is treated as a separate taxable entity for federal income tax
purposes.
When-Issued and Delayed Delivery Transactions
The Fund may engage in when-issued or delayed delivery transactions. To the
extent the 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.
Dollar Roll Transactions
The Income Portfolio enters into dollar roll transactions, with respect to
mortgage securities issued by GNMA, FNMA and FHLMC, in which the Portfolio
sells mortgage securities and simultaneously agrees 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 Portfolio
forgoes principal and interest paid on the mortgage securities sold. The
Portfolio is 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 Portfolio to "roll over" its purchase commitments. The
Income Portfolio earned $389,180 from such fees.
Distributions to Shareholders
Dividends from net investment income, if available, are declared and
reinvested daily for the High Yield Portfolio, Income Portfolio and Money
Market Portfolio, and quarterly for the Growth Portfolio. Net realized gains
from securities transactions, if any, are distributed at least annually after
the close of the Fund's fiscal year end for the Growth Portfolio, High Yield
Portfolio and Income Portfolio. Short-term gains (losses) of the Money Market
Portfolio are included in interest income and distributed daily. Dividends
and capital gains are recorded on the ex-dividend date.
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 distributions, the
year in which amounts are distributed may differ from the year that the
income or net realized gains were recorded by the Fund.
Reclassification of Permanent Tax Differences
It is the policy of the Fund to reclassify the net effect of permanent
differences between book and taxable income to paid-in capital on the
statement of assets and liabilities. During the year ended December 31, 1995,
there were no reclassifications to paid-in capital.
Other
Security transactions are accounted for on the date the securities are
purchased or sold. Realized gains and losses are determined on the identified
cost basis, which is the same basis used for federal income tax purposes.
(3) Investment Advisory Fees And Other expenses
The Fund pays Lutheran Brotherhood, the Fund's investment advisor, an
investment advisory fee equal to 0.40% of the annual average daily net assets
of each portfolio. The fees are accrued daily and paid monthly. All other
operating expenses of the Fund are absorbed by either Lutheran Brotherhood or
LBVIP.
(4) SECURITIES LENDING
To generate additional income, the Fund may participate in a securities
lending program administered by the Fund's custodian bank. Securities are
periodically loaned to brokers, banks or other institutional borrowers of
securities, for which collateral in the form of cash, U.S. government
securities, or letter of credit is received by the custodian in an amount at
least equal to the market value of securities loaned. Collateral received in
the form of cash is invested in short-term investments by the custodian from
which earnings are shared between the borrower, the custodian and the Fund at
negotiated rates. The risks to the Fund are that it may experience delays in
recovery or even loss of rights in the collateral should the borrower of
securities fail financially. There were no security loans during the year
ended December 31, 1995.
(5) CAPITAL LOSS CARRYOVER
During the year ended December 31, 1995, the Growth Portfolio fully utilized
the remaining $19,103,448 of its capital loss carryover, and the Income
Portfolio utilized $6,883,130 of its capital loss carryover against net
realized capital gains. At December 31, 1995, the High Yield and Income
Portfolios had accumulated net realized capital loss carryovers of
$25,438,084 and $21,666,184 respectively, expiring $1,662,110 and $21,666,184
in the year 2002 respectively, and $23,775,974 in 2003 for the High Yield
Portfolio. To the extent these Portfolios realize future net capital gains,
taxable distributions will be reduced by any unused capital loss carryovers.
Temporary timing differences of $1,651,645, $1,263,119, and $461,198 existed
between accumulated net realized capital gains or losses for financial
statement and tax purposes as of December 31, 1995 for the Growth, High Yield
and Income Portfolios, 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 year ended December 31, 1995, 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)
----------------------------
Portfolio Purchases Sales
- ---------- ---------- ----------
Growth $1,714,514 $1,572,276
High Yield 553,626 425,253
Income 618,045 512,673
Purchases and sales of U.S. Government securities were:
$(thousands)
----------------------------
Portfolio Purchases Sales
- ---------- ---------- ----------
Growth $ 17,715 $ 13,772
Income 350,200 322,454
Investments in Restricted Securities
The High Yield Portfolio 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 $1,809,933 at December 31, 1995 which represented 0.2% of net assets of
the High Yield Portfolio.
Investments in High Yielding Securities
The High Yield Portfolio invests primarily in high yielding fixed income
securities. The Income Portfolio 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 uderlying an option or futures
contract may not correlate perfectly with the movement in the prices of the
portfolio securities being hedged. A lack of correlation could render the
Fund's hedging strategy unsuccessful and could result in a loss to the Fund.
In the event that a liquid secondary market would not exist, the Fund could
be prevented from entering into a closing transaction which could result in
additional losses to the Fund.
Open Option Contracts
The number of contracts and premium amounts associated with call option
contracts written during the year ended December 31, 1995 were as follows:
Growth Portfolio Income Porfolio
------------------------ ----------------------
Number of Premium Number of Premium
Contracts Amount Contracts Amount
------- ---------- --------- --------
Balance at
December 31, 1994 420 $ 45,627 -- --
Opened 13,574 2,295,077 1 $ 56,875
Closed (7,690) (1,555,750) -- --
Expired (3,369) (260,188) -- --
Exercised (2,935) (524,766) (1) (56,875)
------- ---------- --------- --------
Balance at
December 31, 1995 -- $ -- -- $ --
======= ========== ========= ========
(7) CAPITAL STOCK
Authorized capital stock consists of two billion shares as follows:
Shares Par
Portfolio Authorized Value
- ------------ ----------- ------
Growth 600,000,000 $ 0.01
High Yield 200,000,000 $ 0.01
Income 400,000,000 $ 0.01
Money Market 600,000,000 $ 0.01
The balance of the Fund's authorized capital (200 million shares) may be
issued in the above portfolios or in any new portfolio as may be determined
by the Board of Directors. The shares of each portfolio have equal rights and
privileges with all shares of that portfolio. Shares in the Fund are
currently sold only to separate accounts of Lutheran Brotherhood and LBVIP.
Transactions in capital stock were as follows:
<TABLE>
Portfolios
---------------------------------------------------
<CAPTION>
High Money
Growth Yield Income Market
---------- ----------- ---------- ----------
Shares outstanding at
<S> <C> <C> <C> <C>
December 31, 1993 36,213,732 41,317,018 54,703,967 24,910,744
Shares sold 15,858,169 18,598,536 11,711,971 52,739,421
Shares issued on
reinvestment of
dividends and
distributions 1,788,745 6,316,397 5,656,598 1,375,462
Shares redeemed (425,471) (1,346,559) (4,789,538) (37,143,126)
---------- ---------- ---------- ----------
Shares outstanding at
December 31, 1994 53,435,175 64,885,392 67,282,998 41,882,501
Shares sold 10,639,507 9,776,871 7,399,297 52,883,017
Shares issued on
reinvestment of
dividends aand
distributions 860,983 7,060,502 4,735,997 2,645,101
Shares redeemed (738,038) (1,980,407) (3,804,100) (31,260,652)
---------- ---------- ---------- ----------
Shares outstanding at
December 31, 1995 64,197,627 79,742,358 75,614,192 66,149,967
========== ========== ========== ==========
</TABLE>
LB Series Fund, Inc.
Growth Portfolio
High Yield Portfolio
Income Portfolio
Money Market Portfolio
Directors
Rolf F. Bjelland
Charles W. Arnason
Herbert F. Eggerding, Jr.
Connie M. Levi
Bruce J. Nicholson
Ruth E. Randall
Officers
Rolf F. Bjelland James M. Odland
Chairman and President Assistant Secretary
Otis F. Hilbert Randall L. Wetherille
Secretary and Vice President Assistant Secretary
James R. Olson Wade M. Voigt
Vice President Treasurer
James M. Walline Rand E. Mattsson
Vice President Assistant Treasurer
Richard B. Ruckdashel
Vice President
This report is authorized for distribution to prospective
investors only when preceded or accompanied by the
current prospectuses.
{PAGE|62}
