[7 SOLID SQUARE BULLETS]
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LB SERIES FUND, INC.
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[COMPASS READS: CHOICE [BULLET] PROTECTION [BULLET] ACCUMULATION ]
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Semiannual Report
for Variable Products
June 30, 1996
[LUTHERAN BROTHERHOOD LOGO HERE]
[PHOTO OF MR. BJELLAND]
Our Message To You
June 30, 1996
Dear Contract Owner:
Enclosed is the Semiannual Report for the LB Series Fund, Inc., (the
Fund), which is the underlying investment vehicle for all variable
annuity and variable life contracts issued by Lutheran Brotherhood
and Lutheran Brotherhood Variable Insurance Products Company. In
this report, which covers the six months ended June 30, 1996, you'll
find a review of the economic and market conditions affecting
investment performance in the first half of 1996. You'll also find
reviews of individual investment portfolios and management
strategies.
The investment environment has changed substantially during the last
six months. After falling sharply for most of 1995, interest rates
rose steeply in the first half of 1996. This, in turn, depressed
bond prices and made the stock market a bit more volatile. Although
market liquidity and continued strength in corporate earnings pushed
stock prices higher during the period, uncertainty about the economy
and interest rates may keep stock prices uneven in the coming
months. Similar concerns may bring some additional fluctuations in
bond prices as well.
While Lutheran Brotherhood always responds to prevailing market
conditions, we also emphasize investments that offer strong
potential over the long term. By focusing on a well-diversified
selection of high-quality securities that represent good value, we
strive to build portfolios that can maintain strong relative
performance even in times of market uncertainty.
Individual contract owners can benefit further by taking this
approach with their own investments. Even sizable market changes
tend to smooth out as time advances. By taking a long-term view of
these corrections, you can use periods of market weakness as
opportunities to add investments at more attractive prices, which
will make the most of future market upturns. And by keeping your
investments well-diversified, you improve the chance of always
owning some investments that are performing well -- even when the
markets are in flux.
To support such diversification, we've added two new portfolios to
the LB Series Fund, Inc. The Opportunity Growth Portfolio seeks
long-term capital growth by investing in the stocks of small,
growing U.S. companies. The World Growth Portfolio seeks long-term
capital growth through investments in stocks of established
companies outside of the U.S.* This report covers the initial
performance of these new Portfolios since their inception date on
January 18, 1996.
If you would like more information on these new portfolios, or any
of the other material in this report, please contact your LB
representative, or call us toll-free at 1-800-423-7056.
Sincerely,
/S/Rolf F. Bjelland
Rolf F. Bjelland
President and Chairman of the Board
LB Series Fund, Inc.
*International investing has special risks, including currency
fluctuation and political volatility.
[GRAPHIC OMITTED: COMPASS INFO TO COME FROM CLIENT]
Economic and Market Overview June 30, 1996
In the six months ended June 30, 1996, investors were surprised by
signs of rapid growth in the economy. Having believed interest rates
would continue to fall, investors soon worried that the Federal
Reserve would raise rates to control inflation. Bond prices fell
sharply in response, causing a decline of 1.21% in the Lehman
Aggregate Bond Index. While stock prices continued to rise, earning
a 10.04% return for the Standard & Poor's 500 Index, the stock
market was showing more volatility than in 1995.
The LB Series Fund bond portfolios held up relatively well in this
environment by adjusting the maturities of their investments for
changes in bond yields. The LB Series Fund equity portfolios also
earned competitive returns for shareholders by investing in stocks
that made the most of market gains.
Unexpected Growth
At the start of 1996, economic growth remained slow, and Congress
was working to balance the federal budget. This gave the Federal
Reserve room to reduce short-term interest rates from 5.5% to 5.25%
at the end of January. Soon, however, there were signs that the
economy was accelerating much faster than analysts had expected.
News of an improving economy, plus solid gains in corporate
earnings, helped stock prices to advance. Stocks also benefited from
heavy flows of new cash into equity mutual funds. Both technology
stocks and stocks of small companies rebounded strongly -- until
rising bond yields began drawing investors away from the market in
mid-June.
Bond prices fell and their yields rose as investors grew concerned
that stronger economic growth might result in higher inflation,
which could erode the purchasing power of bond interest and
principal. Although inflation remained largely unchanged, falling
bond prices drove the yield on 30-year Treasury bonds from 5.94% at
the start of the year to 6.98% by the end of June. Because longer-
term bonds are more sensitive to inflation concerns, their prices
and yields changed much more than those for shorter-term securities.
A More Moderate Pace
Now that interest rates have moved higher, we believe economic
growth should become more moderate. Although interest rates may
continue to move higher in coming months, they should start to
stabilize by year's end. In six to 12 months, we could see long-term
rates 25 to 50 basis points lower than they are today.
Both bonds and stocks should perform well in this environment. If
bond yields decline and cause bonds to become less attractive to
investors, bond prices should level out and may even rise by year's
end. This could cause a shift in investor focus that could help
stock prices gain. However, we anticipate returns from stocks to be
close to their historical averages. Already there are signs that a
more moderate pace of economic growth is slowing growth in corporate
earnings. Since stock prices have moved higher relative to earnings
in the current cycle, any earnings disappointments could make stock
prices more volatile. However, stock prices should strengthen as
investors see that the economy remains intact. As a result, we
expect any near-term volatility to bring many new investment
opportunities.
[7 SOLID SQUARE BULLETS]
Opportunity Growth Portfolio Review LB Series Fund, Inc.
[PHOTO OF MICHAEL A. BINGER OMITTED]
Michael A. Binger is a Chartered Financial Analyst and portfolio
manager for the Opportunity Growth Portfolio. He has been with
Lutheran Brotherhood since 1987.
Investment Objective: To seek long-term growth of capital by
investing in small-company stocks.
As the economy strengthened in the first half of 1996, stocks of
small companies rallied strongly. After committing sizable amounts
of cash to large-company stocks, many mutual fund managers began
favoring the better values offered by small-company issues. Because
small-company stocks had underperformed at the end of 1995, managers
found their prices especially appealing as the economy picked up
steam in 1996.
As we launched the Opportunity Growth Portfolio in mid-January, we
emphasized issues that did quite well in the market rally --
including stocks of technology, health care and bio-tech firms. This
helped the Portfolio earn a total return of 25.17% from its
inception on January 18, 1996 to June 30, 1996. Over the same time,
the Russell 2000 Index had a return of 14.8%.
Top Performers
During the period, we kept about 25% of the Portfolio's assets in
technology stocks -- believing that this sector continues to offer
significant opportunity for long-term growth. Many of the stocks we
bought were computer software and service firms, which enjoyed
especially strong gains. Among the top performers in these groups
were Systemsoft, which produces software for laptop computers, and
ACT Networks, which manufactures communications switching devices.
There were also solid returns from industrial manufacturing firms --
including Memtec, which produces water filtration systems, and
Northwest Pipe, which provides water transmission pipe. Other top
performers included Fairfield Communities, which specializes in
vacation time share sales, and BAB Holdings, which franchises the
Big Apple Bagels restaurants. Returns from these and many other
positions helped offset more disappointing performances from
holdings in retail and medical device stocks.
Extra Attention to Earnings
Although the rally in small-company issues put their prices more in
line with prices for large-company stocks, a retreat by small-
company stocks in recent weeks has made their prices particularly
attractive. As in the past, uneasiness about the economy and
corporate earnings may make small-company issues more vulnerable to
price fluctuation. However, if the economy continues to improve, as
we expect, any corrections should be short-lived.
[FIGURES BELOW USED TO CREATE OMITTED PIE CHART]
Portfolio Composition
Short-term Securities 6.6%
Common Stocks 93.4%
[END PIE CHART]
In such periods of market weakness, we look for new opportunities to
purchase shares at attractive prices. We will put additional focus
on choosing stocks of companies with good management whose sales and
earnings can grow regardless of current economic conditions. We
expect, therefore, to maintain sizable positions in technology and
health care stocks. We'll also look for opportunities in stocks of
specialty retail firms -- which could rebound sharply as the economy
strengthens.
% of
Top 10 Holdings Portfolio
United States Satellite
Broadcasting Corp. 2.6%
Memtec Ltd., ADR 2.5%
Systemsoft Corp. 2.2%
Nuevo Energy Co. 2.0%
Lipsome Co., Inc. 1.9%
Horizon Mental Health
Management, Inc. 1.8%
ACT Networks, Inc. 1.7%
Sterling Software, Inc. 1.7%
Hummingbird
Communications Ltd. 1.7%
AXENT Technologies, Inc. 1.7%
These holdings represent 20%
of the total investment portfolio.
The Opportunity Growth Portfolio was introduced on January 18, 1996.
Given its limited performance history, the growth of a $10,000
investment in the Opportunity Growth Portfolio is not illustrated in
this report.
World Growth Portfolio Review LB Series Fund, Inc.
[PHOTO OF MARTIN G. WADE OMITTED]
Martin G. Wade is president of Rowe Price-Fleming, the investment
subadvisor for the World Growth Portfolio. He leads a team of 12
portfolio managers who have managed the assets of the World Growth
Portfolio since its inception. Mr. Wade has 28 years of experience
in research and investment management, including 17 years with Rowe
Price-Fleming.
Investment Objective: To seek long-term growth of capital by
investing primarily in common stocks of established companies
outside of the United States.**
Stock prices of foreign companies continued to advance in the first
half of 1996, due to ongoing improvement in overseas economies.
During this time, gains in Japan, Europe and Latin America were
strong enough to outpace the further strengthening of the U.S.
dollar.
Between its inception on January 18, 1996, and June 30, 1996, the
World Growth Portfolio had a total return of 4.83%. That compares to
a return of 4.22% for the Morgan Stanley Capital International
Europe, Australia, Far East (EAFE) Index.*
Portfolio Strategy
Even though Japan represents the largest portion of foreign equities
in the Portfolio, we underweighted Japanese stocks somewhat compared
to the EAFE Index. This allowed us to invest in some emerging
markets not included in the Index. This strategy proved to be
especially useful with respect to Latin America, where countries
like Brazil, Argentina and Mexico enjoyed impressive gains. In
Japan, the Portfolio benefited from a focus on stocks that are
particularly sensitive to the expanding economy there.
While the Portfolio was evenly weighted to the EAFE Index in Europe
as a whole, there were overweightings in the Netherlands, France
and Norway -- where stocks performed particularly well. The Portfolio
also benefited from an underweighting in Switzerland, where stock
prices lagged.
In the second quarter of 1996, we sold some positions to take
profits in the Netherlands and Switzerland and also slightly reduced
the Portfolio's exposure to Mexico and Singapore. We used the
proceeds from these sales to add to existing positions in Japan and
purchase new positions in Hong Kong and Brazil.
[FIGURES BELOW TO CREATE PIE CHART]
Portfolio Composition
Short-term Securities 10.7%
Foreign Stocks 89.3%
[END OF PIE CHART]
Additional Opportunities Ahead
We expect further advances in foreign stocks in the second half of
1996. While overseas markets may be somewhat quieter during the
summer, we expect prices to be higher by the end of the year. There
are now many positive economic factors in place that should sustain
the upward momentum of recent months. Foreign stocks should also
benefit from healthy growth in corporate earnings and continued
stability in inflation and interest rates.
In addition, foreign stocks are quite reasonably valued compared to
equities in the United States. As the advance of U.S. stocks slows
in coming months, we believe investors may increasingly venture
abroad. After lagging U.S. stocks for nearly three years, we believe
foreign equities may now outperform.
Geographic Composition of Portfolio
% of
Country Portfolio
Japan 23.5%
United Kingdom 13.2%
Netherlands 9.2%
France 7.3%
Hong Kong 4.6%
Switzerland 4.0%
Germany 3.9%
Malaysia 2.7%
Spain 2.4%
Sweden 2.4%
Singapore 2.1%
Brazil 2.0%
Italy 2.0%
Mexico 1.7%
Australia 1.4%
Norway 1.3%
Belgium 1.0%
Thailand 1.0%
Argentina 0.7%
China 0.5%
New Zealand 0.5%
Portugal 0.5%
Chile 0.4%
Canada 0.3%
Denmark 0.2%
Finland 0.2%
Korea 0.2%
Austria 0.1%
% of
Top 10 Holdings Portfolio
Wolters Kluwer NV 2.1%
Royal Dutch Petroleum 1.7%
Elsevier NV 1.6%
National Westminster 1.2%
Telecomunicacoes
Brasilias ADR (USD) 1.2%
SmithKline Beecham 1.1%
Reed International 1.1%
Eaux Cie Generale 1.0%
Astra AB 'B' 1.0%
Roche Holdings 0.9%
These holdings represent 13%
of the total investment portfolio.
The World Growth Portfolio was introduced on January 18, 1996. Given
its limited performance history, the growth of a $10,000 investment
in the World Growth Portfolio is not illustrated in this report.
Growth Portfolio Review LB Series Fund, Inc.
[PHOTO OF SCOTT A. VERGIN OMITTED]
Scott A. Vergin is a Chartered Financial Analyst and portfolio
manager for the Growth Portfolio. He began managing the
Portfolio in November 1994, and has been with Lutheran Brotherhood
since 1984.
Investment Objective: To seek long-term growth of capital by
investing primarily in common stocks of established corporations.
As investors became more unsure about the economy in the first half
of 1996, individual stock market sectors quickly moved in and out of
favor. By taking advantage of this sector "rotation," the Growth
Portfolio produced solid returns for the six months ended June 30,
1996. During the period, the Portfolio earned a total return of
9.65%. Over the same time, the S&P 500 Index produced a return of
10.04%.
A Fickle Market
At the start of the period, when investors thought the economy would
grow slowly, the Portfolio benefited from its holdings in
"defensive" sectors, where earnings tend to be more consistent.
These sectors included household products stocks like Colgate and
Gillette, as well as drug stocks and health care issues.
When it looked like the economy was accelerating, and investors
turned to "cyclical" sectors, the Portfolio enjoyed strong returns
from retail stocks like Federated Department Stores and Albertson's.
Eventually, however, investors realized that this economic
improvement would probably be short-lived, and began to favor
defensive sectors once again.
During the period, the Portfolio also benefited from holdings in
selected technology issues, such as Intel, Microsoft, BMC Software
and Tellabs. Gains from these sectors -- and from retail, drug and
home products shares -- helped offset disappointing returns from
Portfolio positions in cable, biotech and HMO stocks.
Throughout the period, we remained overweighted in technology issues
and continued to emphasize shares of computer service and networking
firms. We also remained slightly overweighted in health care stocks,
adding new positions in Johnson & Johnson and Bristol-Myers. Other
new holdings included shares of Fort Howard Corporation, and utility
stocks like American Electric Power and BellSouth Corp.
[FIGURES BELOW USED TO CREATE OMITTED PIE CHART]
Portfolio Composition
Corporate Bonds 0.7%
Short-term Securities 8.0%
Common Stocks 91.3%
[END PIE CHART]
Continued Focus on Earnings
We believe the stock market's recent sector rotation will likely
continue in coming months. If economic growth is more moderate, as
we expect, there will likely be a greater number of corporations
reporting disappointing earnings. This may lead some investors to
lock in current gains and move to other stocks with greater earnings
potential. Because many stocks became overvalued in the first half
of 1996, lower corporate earnings may also make prices a bit more
volatile in the second half of the year.
In a choppy market such as this, we will continue to focus on stocks
that can provide either consistent earnings growth or near-term
earnings that are higher than expected. And because we believe that
interest rates will become more stable or even decline, we are
increasing the Portfolio's holdings in financial stocks. Also,
because we believe the technology sector remains one of the
strongest growth areas of the American economy, we'll continue our
long-term strategy of emphasizing technology investments.
[FIGURES BELOW USED TO CREATE OMITTED WORM CHART]
Growth of $10,000 Investment January 31, 1987 - June 30, 1996]
LB SERIES FUND - GROWTH PORTFOLIO
Annualized Total Returns*** Period Ending 6/30/96
- ----------------------------------------------------------------
Since Inception
(1/9/87) 5 Years 1 Year
11.92% 15.51% 24.41%
- ----------------------------------------------------------------
Initial Investment: $10,000
Date of Investment: 1/31/87
- ----------------------------------------------------------------
S & P 500
Growth w/ reinvest
Month End Total TOTAL
Date Value VALUE
01/31/87 $10,000 $10,000
02/28/87 11,121 10,392
03/31/87 10,813 10,693
04/30/87 10,673 10,598
05/31/87 10,477 10,688
06/30/87 10,949 11,229
07/31/87 11,426 11,800
08/31/87 11,894 12,240
09/30/87 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
01/31/88 8,684 9,675
02/29/88 9,211 10,107
03/31/88 9,241 9,800
04/30/88 9,126 9,922
05/31/88 9,020 9,987
06/30/88 9,382 10,453
07/31/88 9,218 10,426
08/31/88 8,927 10,057
09/30/88 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
01/31/89 9,838 11,611
02/28/89 9,652 11,303
03/31/89 9,899 11,573
04/30/89 10,392 12,188
05/31/89 10,796 12,657
06/30/89 10,610 12,595
07/31/89 11,512 13,745
08/31/89 11,967 13,999
09/30/89 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
01/31/90 10,797 13,288
02/28/90 11,047 13,435
03/31/90 11,410 13,800
04/30/90 11,242 13,469
05/31/90 12,439 14,754
06/30/90 12,531 14,666
07/31/90 12,277 14,630
08/31/90 11,263 13,294
09/30/90 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
01/31/91 12,216 14,397
02/28/91 13,115 15,401
03/31/91 13,461 15,780
04/30/91 13,461 15,833
05/31/91 14,182 16,492
06/30/91 13,463 15,745
07/31/91 14,198 16,498
08/31/91 14,707 16,869
09/30/91 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
01/31/92 16,190 17,664
02/28/92 16,344 17,871
03/31/92 15,941 17,524
04/30/92 16,002 18,060
05/31/92 16,136 18,122
06/30/92 15,775 17,856
07/31/92 16,300 18,609
08/31/92 15,959 18,208
09/30/92 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
01/31/93 17,845 19,528
02/28/93 17,797 19,773
03/31/93 18,292 20,191
04/30/93 17,957 19,726
05/31/93 18,421 20,221
06/30/93 18,438 20,287
07/31/93 18,386 20,227
08/31/93 19,061 20,975
09/30/93 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
01/31/94 19,921 22,042
02/28/94 19,382 21,423
03/31/94 18,441 20,493
04/30/94 18,417 20,774
05/31/94 18,440 21,079
06/30/94 17,812 20,563
07/31/94 18,236 21,260
08/31/94 19,066 22,116
09/30/94 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
01/31/95 18,819 22,144
02/28/95 19,560 22,990
03/31/95 20,117 23,678
04/30/95 20,700 24,386
05/31/95 21,339 25,324
06/30/95 22,273 25,914
07/31/95 23,467 26,793
08/31/95 23,539 26,847
09/30/95 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
01/31/96 25,888 30,689
02/28/96 26,428 30,953
03/31/96 26,520 31,256
04/30/96 27,469 31,731
05/31/96 28,074 32,515
06/30/96 27,708 32,642
***See accompanying notes to Portfolio Management Reviews.
[END WORM CHART]
% of
Top 10 Holdings Portfolio
Mobil Corp. 2.0%
American International
Group, Inc. 1.6%
Intel Corp. 1.6%
First Data Corp. 1.6%
Microsoft Corp. 1.6%
Boeing Co. 1.5%
Wells Fargo & Co. 1.5%
Federal National Mortgage
Association 1.5%
Merck & Co., Inc. 1.4%
Gilette Co. 1.4%
These holdings represent 16%
of the total investment portfolio
High Yield Portfolio Review LB Series Fund, Inc.
[PHOTO OF THOMAS N. HAAG OMITTED]
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, and has been with Lutheran
Brotherhood since 1986.
Investment Objective: To seek high current income and growth of
capital by investing primarily in high-yielding ("junk") corporate
bonds.
As interest rates rose in recent months, investors sought the
stronger income of high-yield securities to help offset the bond
price declines caused by those higher interest rates. This helped
the prices of high-yield instruments hold up better than bond prices
in the broader market. Higher-coupon bonds with "B" credit ratings
performed especially well. With sizable positions in such
instruments, the High Yield Portfolio outpaced its market benchmark
for the six months ended June 30, 1996. The Portfolio earned a total
return of 4.94% for the period. That compares to a return of 3.46%
for the Lehman Brothers High-Yield Index.
Protecting Against Falling Prices
Several other factors enhanced the Portfolio's return. As 1996
began, the Portfolio continued to hold significant positions in
zero-coupon bonds and other deferred-interest securities issued by
media and telecommunications firms. Although deferred-interest
instruments were hit hard when bond prices fell, deregulation in the
telecommunications industry helped to mitigate the price declines
for these particular investments. Later in the period, when rates
continued to rise, we sold some of these issues to help stabilize
the value of the Portfolio's shares.
Although we added investments from the home-building sector, we
focused largely on securities with solid credit quality from sectors
that are less sensitive to economic changes. These issues tended to
perform well in an environment where investors remained unsure about
the economy.
Anticipating Slower Growth
We believe many of these strategies will help the Portfolio in the
coming months. As long as investors remain nervous about inflation,
higher-coupon issues should continue to outperform the broader
market. As inflation worries ease and bond prices stabilize, these
securities should provide the Portfolio with strong income. In fact,
we expect to make additional investments in higher-coupon issues as
we find attractive opportunities to do so.
[FIGURES BELOW USED TO CREATE OMITTED PIE CHART]
Portfolio Composition
Short-term Securities 3%
Common Stocks & Stock Warrants 4%
Preferred Stocks 11.1%
Corporate Bonds 81.3%
[END PIE CHART]
We will also look for the opportunity to add investments in the
media and telecommunications sector, since we expect further
restructuring in this industry to produce abundant supplies of new
issues at attractive prices and yields. Such investments should
perform well over time as industry deregulation continues.
As always, we will keep the Portfolio well-diversified and invest in
a wide range of industries -- though we will probably remain focused
on securities from non-cyclical sectors until we see that the
economy is strengthening.
[FIGURES BELOW USED TO CREATE OMITTED WORM CHART]
Growth of $10,000 Investment November 30, 1987 - June 30, 1996
LB SERIES FUND - HIGH YIELD PORTFOLIO
Annualized Total Returns***
Period Ending 6/30/96
- ----------------------------------------------------------------
Since Inception
(11/2/87) 5 Years 1 Year
12.76% 14.69% 13.32%
- ----------------------------------------------------------------
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
01/31/88 10,612 10,583
02/29/88 11,036 10,926
03/31/88 10,885 10,812
04/30/88 10,885 10,894
05/31/88 10,869 10,911
06/30/88 11,120 11,070
07/31/88 11,177 11,143
08/31/88 11,172 11,126
09/30/88 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
01/31/89 11,823 11,727
02/28/89 11,903 11,753
03/31/89 11,822 11,661
04/30/89 11,762 11,710
05/31/89 12,079 11,937
06/30/89 12,403 12,085
07/31/89 12,379 12,070
08/31/89 12,489 12,111
09/30/89 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
01/31/90 11,685 11,370
02/28/90 11,473 11,136
03/31/90 11,567 11,428
04/30/90 11,577 11,409
05/31/90 11,941 11,629
06/30/90 12,116 11,910
07/31/90 12,325 12,231
08/31/90 11,935 11,535
09/30/90 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
01/31/91 11,589 10,795
02/28/91 12,354 11,976
03/31/91 12,893 12,681
04/30/91 13,331 13,201
05/31/91 13,479 13,225
06/30/91 13,842 13,616
07/31/91 14,209 14,052
08/31/91 14,438 14,375
09/30/91 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
01/31/92 16,162 15,899
02/28/92 16,614 16,291
03/31/92 16,903 16,493
04/30/92 17,055 16,556
05/31/92 17,346 16,789
06/30/92 17,448 16,947
07/31/92 17,804 17,203
08/31/92 18,063 17,429
09/30/92 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
01/31/93 19,391 18,295
02/28/93 19,706 18,616
03/31/93 20,132 18,857
04/30/93 20,253 19,021
05/31/93 20,613 19,247
06/30/93 21,312 19,651
07/31/93 21,523 19,842
08/31/93 21,696 20,009
09/30/93 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
01/31/94 23,619 21,271
02/28/94 23,534 21,215
03/31/94 22,641 20,414
04/29/94 22,349 20,275
05/31/94 22,463 20,285
06/30/94 22,558 20,348
07/31/94 22,393 20,521
08/31/94 22,567 20,666
09/30/94 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
01/31/95 21,975 20,889
02/28/95 22,833 21,605
03/31/95 23,060 21,838
04/30/95 23,627 22,393
05/31/95 24,131 23,020
06/30/95 24,248 23,174
07/31/95 25,017 23,466
08/31/95 25,124 23,539
09/30/95 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
01/31/96 26,807 25,000
02/29/96 27,485 25,020
03/31/96 27,225 25,002
04/30/96 27,408 25,057
05/31/96 27,715 25,207
06/30/96 27,492 25,417
***See accompanying notes to Portfolio Management Reviews.
[END WORM CHART]
[FIGURES BELOW USED TO CREATE OMITTED HORIZONTAL BAR CHART]
Moody's Bond Quality
Rating Distribution
Baa 0.3%
Ba 7.0%
B 58.4%
Caa 14.5%
Ca 0.2%
D 0.1%
Not Rated 19.5%
[END BAR CHART]
Income Portfolio Review LB Series Fund, Inc.
[PHOTO OF CHARLES E. HEEREN OMITTED]
Charles E. Heeren, a 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, and has
been with Lutheran Brotherhood since 1976.
Investment Objective: To seek a high level of income while
preserving principal by investing primarily in intermediate- and
long-term bonds.
During the first six months of 1996, we took action to defend the
Portfolio against falling prices in the bond market while making the
most of rising yields.
For the six months ended June 30, 1996, the Income Portfolio had a
total return of -1.99%. Over the same time, the Lehman Aggregate
Bond Index returned -1.21%.
Shorter Maturities, Stronger Yields
When interest rates rise and bond prices fall, prices for shorter-
term securities generally fall less than prices for longer-term
issues. After focusing on bonds with longer maturities when interest
rates were still falling at the start of 1996, we gave greater
attention to issues with shorter maturities to prepare the portfolio
for rising rates. This helped to soften the impact of falling prices
on the Portfolio's total return.
Because investors favor bonds with stronger yields when prices ebb,
we traded longer-term Treasury issues for shorter-term corporate
bonds and mortgage-backed securities. Many of the corporate bonds we
bought were redeemable by their issuers, offering extra yield
without added risk as interest rates rose.
We also purchased dollar-denominated "Yankee" bonds, which are
issued in the United States by foreign banks. Like corporate bonds
and mortgage-backed securities, we believed the yields for Yankees
were quite attractive compared to the yields for Treasury issues.
Where we could, we sold the longer-term investments during times of
market strength and bought the shorter-term investments when markets
were weaker. At times, this strategy increased the Portfolio's cash
reserves, which also contributed positively to performance.
[FIGURES BELOW USED TO CREATE OMITTED PIE CHART]
Portfolio Composition
Short-term Securities 14.7%
Corporate Bonds 35.5%
U.S. Government 17.6%
Asset-Backed Securities 12.7%
Foreign Government Bonds 4.7%
Mortgage-Backed Securities 14.8%
[END OF PIE CHART]
As always, we kept the Portfolio's investments well diversified,
using a broad range of government and corporate issues.
An Eye on the Economy
In the second half of 1996, the direction of bond prices will hinge
largely on the direction of the economy.
If economic growth moderates, as we believe it will, inflation fears
should ease and bond prices should stabilize or even start to rise.
In that event, we would probably add longer-term securities to the
Portfolio to increase the potential for appreciation and higher
long-term yields.
If economic growth continues to strengthen, and inflation becomes a
worry, we would continue the more defensive strategies of recent
months -- giving greater attention to corporate bonds, mortgage-
backed securities and Yankee bonds with shorter maturities.
[FIGURES BELOW USED TO CREATE OMITTED WORM CHART]
Growth of $10,000 Investment January 31, 1987 - June 30, 1996
LB SERIES FUND - INCOME PORTFOLIO
Annualized Total Returns***
Period Ending 6/30/96
- --------------------------------------------------------------------
Since Inception
(1/9/87) 5 Years 1 Year
8.17% 8.60% 4.46%
- --------------------------------------------------------------------
Initial Investment: $10,000
Date of Investment: 1/31/87
- --------------------------------------------------------------------
Series Lehman Aggregate
Income Bond Index
Month End Total Total
Date Value Value
--------- ----------- ----------------
01/31/87 $10,000 $10,000
02/28/87 10,130 10,069
03/31/87 10,064 10,024
04/30/87 9,618 9,749
05/31/87 9,535 9,711
06/30/87 9,679 9,845
07/31/87 9,623 9,837
08/31/87 9,575 9,785
09/30/87 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
01/31/88 10,193 10,489
02/29/88 10,320 10,614
03/31/88 10,153 10,515
04/30/88 10,068 10,458
05/31/88 9,973 10,388
06/30/88 10,207 10,638
07/31/88 10,152 10,582
08/31/88 10,173 10,609
09/30/88 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
01/31/89 10,782 11,089
02/28/89 10,628 11,009
03/31/89 10,689 11,056
04/30/89 10,897 11,287
05/31/89 11,133 11,584
06/30/89 11,485 11,936
07/31/89 11,683 12,190
08/31/89 11,577 12,010
09/30/89 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
01/31/90 11,796 12,370
02/28/90 11,835 12,410
03/31/90 11,874 12,419
04/30/90 11,721 12,304
05/31/90 12,079 12,669
06/30/90 12,265 12,873
07/31/90 12,415 13,050
08/31/90 12,214 12,875
09/30/90 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
01/31/91 12,912 13,808
02/28/91 13,205 13,926
03/31/91 13,365 14,022
04/30/91 13,556 14,173
05/31/91 13,713 14,255
06/30/91 13,734 14,248
07/31/91 13,914 14,446
08/31/91 14,234 14,758
09/30/91 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
01/31/92 15,206 15,606
02/28/92 15,306 15,708
03/31/92 15,316 15,620
04/30/92 15,368 15,732
05/31/92 15,663 16,030
06/30/92 15,880 16,251
07/31/92 16,249 16,582
08/31/92 16,410 16,750
09/30/92 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
01/31/93 17,016 17,319
02/28/93 17,374 17,622
03/31/93 17,476 17,696
04/30/93 17,605 17,820
05/31/93 17,637 17,844
06/30/93 18,000 18,167
07/31/93 18,161 18,270
08/31/93 18,488 18,590
09/30/93 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
01/31/94 18,889 18,902
02/28/94 18,480 18,573
03/31/94 17,872 18,114
04/29/94 17,681 17,969
05/31/94 17,714 17,968
06/30/94 17,584 17,928
07/31/94 17,964 18,285
08/31/94 18,009 18,307
09/30/94 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
01/31/95 18,064 18,464
02/28/95 18,478 18,904
03/31/95 18,582 19,019
04/30/95 18,900 19,285
05/31/95 19,719 20,032
06/30/95 19,881 20,178
07/31/95 19,766 20,133
08/31/95 20,015 20,377
09/30/95 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
01/31/96 21,298 21,593
02/29/96 20,849 21,217
03/31/96 20,644 21,068
04/30/96 20,516 20,950
05/31/96 20,503 20,908
06/30/96 20,758 21,189
***See accompanying notes to Portfolio Management Reviews.
[END WORM CHART]
[FIGURES BELOW USED TO CREATE HORIZONTAL BAR CHART]
Moody's Bond Quality
Rating Distribution
Aaa 54.8%
Aa 12.2%
A 17.0%
Baa 6.6%
Ba 6.1%
B 3.3%
[END BAR CHART]
Money Market Portfolio Review LB Series Fund, Inc.
[PHOTO OF GAIL R. ONAN OMITTED]
Gail R. Onan was named portfolio manager for the Money Market
Portfolio in January 1994. She has been with Lutheran Brotherhood
since 1986. Prior to her appointment as manager of the Portfolio,
she served as associate manager for the Portfolio.
Investment Objective: To seek current income with stability of
principal by investing in high quality, short-term debt
securities.****
The investment climate for money market securities changed
substantially in the first half of 1996. Once the economy picked up
steam, and because Congress failed to balance the federal budget,
money market yields turned sharply higher. After hitting a low of
4.88% in February, the annualized yield for three-month Treasury
bills rose to a high of 5.29% during June. By carefully adjusting
the maturity of investments in the Money Market Portfolio to make
the most of rising yields, the Portfolio earned a total return of
2.55% for the six months ended June 30, 1996.
Anticipating Higher Yields
Expecting yields to head higher, we began 1996 with a relatively
short average maturity of 43 days for the Portfolio's investments.
Once yields began to rise, this allowed us to purchase higher-
yielding instruments more quickly.
After yields had increased for some time, we added longer-maturity
instruments to the Portfolio. We used a modified "barbell" maturity
structure that balanced issues maturing in six-to-nine months with
issues that matured overnight. With this strategy, we locked in
higher yields for longer periods, while maintaining liquidity to
take advantage of further increases in market yields. With the
addition of these longer-term issues, the Portfolio had an average
maturity of 50 days at the end of June.
During this time, we left the Portfolio's investment mix largely
unchanged. We continued to invest primarily in commercial paper,
while looking for opportunities to invest in other short-term
corporate securities and letters of credit with attractive yields.
To give the Portfolio added flexibility, we included floating-rate
securities, whose yields reset to reflect current money market
yields as a whole.
A Neutral Position
Currently, the Portfolio's average maturity is comparable to the
average maturities of its market benchmarks. We expect to continue
this strategy in the months ahead -- due to the uncertainty of U.S.
economic growth rates and short-term interest rates. By maintaining
a barbelled investment structure, we can also retain cash to take
advantage of higher-yielding instruments that may become available.
As always, we will keep the Portfolio well diversified,
concentrating only on instruments with strong credit quality and
good liquidity.
[FIGURES BELOW USED TO CREATE PIE CHART]
Portfolio Composition
Banker's Acceptances 6.5%
Variable Rate Notes 2.6%
Certificates of Deposit 2.5%
Commercial Paper 88.4%
[END OF PIE CHART]
Money Market Portfolio
Annualized Total Returns*
Period Ending 6/30/96
Since Inception
(1/9/87) 5 Years 1 Year
5.80% 4.27% 5.40%
Footnotes
* Total returns for the EAFE Index are for 1/31/96-6/30/96,
beginning the index's first full month of data following
inception of the Portfolio.
** International investing has special risks, including currency
fluctuation and political volatility.
*** The 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.
<TABLE>
<CAPTION>
LB Series Fund, Inc.
Opportunity Growth Portfolio
Portfolio of Investments
June 30, 1996
(unaudited)
Shares Value
- ------------ ------------
<S> <C> <C>
COMMON STOCKS - 93.1% (a)
Automotive - 1.2%
70,200 Tower Automotive, Inc. $1,719,900 (b)
------------
Bank & Finance - 2.1%
189,700 ACC Consumer Finance Corp. 1,422,750(b)
111,350 NAL Financial Group, Inc. 1,558,900(b)
------------
2,981,650
------------
Broadcasting - 3.7%
29,300 Emmis Broadcasting Corp.,
Class A 1,465,000(b)
98,400 United States Satellite
Broadcasting Corp., Class A 3,714,600(b)
------------
5,179,600
------------
Building Products &
Materials - 2.3%
134,900 Cameron Ashley Building
Products 1,551,350(b)
131,700 Dayton Superior Corp.,
Class A 1,728,562(b)
------------
3,279,912
------------
Chemicals - 0.2%
15,000 Airgas, Inc. 285,000(b,c)
------------
Computer Software - 15.5%
104,000 ANSYS, Inc. 1,365,000(b)
50,450 Avant! Corp. 1,172,962(b)
141,400 AXENT Technologies, Inc. 2,333,100(b)
85,300 DataWorks Corp. 1,514,075(b)
176,800 Glasgal Communications, Inc. 1,635,400(b)
26,000 HNC Software, Inc. 1,202,500(b)
78,000 Hummingbird
Communications Ltd. 2,379,000(b)
75,900 Inference Corp., Class A 1,821,600(b)
31,700 MDL Information
Systems, Inc. 943,075(b)
115,550 Open Text Corp. 1,198,831(b)
131,700 Softquad International, Inc. 730,523(b)
31,000 Sterling Software, Inc. 2,387,000(b)
10,000 Sunquest Information
Systems, Inc. 150,000(b)
65,100 Systemsoft Corp. 3,059,700(b)
------------
21,892,766
------------
Computers & Office
Equipment - 2.8%
83,000 Alphanet Solutions, Inc. 736,625(b)
95,600 InaCom Corp. 1,792,500(b)
17,900 Madge Networks N.V. $259,550 (b)
88,000 Multiple Zones
International, Inc. 1,166,000(b)
------------
3,954,675
------------
Drugs & Health Care - 14.4%
123,450 Alpha-Beta Technology, Inc. 1,095,618(b)
103,200 Amrion, Inc. 1,599,600(b)
147,400 Atrix Laboratories, Inc. 1,474,000(b)
23,200 Cardiovascular Dynamics, Inc. 284,200(b)
57,000 DepoTech Corp. 1,439,250(b)
57,900 Eclipse Surgical
Technologies, Inc. 796,125(b)
125,000 GalaGen, Inc. 890,625(b)
143,000 Integra LifeSciences Corp. 1,394,250(b)
139,200 Lipsome Co., Inc. 2,610,000(b)
47,200 Medicis Pharmaceutical Corp.,
Class A 1,947,000(b)
45,000 Meridian Diagnostics, Inc. 689,063(b)
70,000 Orphan Medical, Inc. 630,000(b)
57,000 PDT, Inc. 1,881,000(b)
78,400 SEQUUS Pharmaceuticals, Inc. 1,559,425(b)
54,350 US Bioscience, Inc. 740,519(b)
37,600 Vertex Pharmaceuticals, Inc. 1,142,100(b)
------------
20,172,775
------------
Electronics - 5.0%
146,300 Chips & Technologies, Inc. 1,426,425(b,c)
131,200 ElectroStar, Inc. 1,443,200(b)
93,850 Etec Systems, Inc. 2,088,162(b)
97,450 S3, Inc. 1,199,853(b)
63,400 Smartflex Systems, Inc. 951,000(b)
------------
7,108,640
------------
Healthcare
Management - 7.0%
171,950 Complete Management, Inc. 2,213,856(b)
110,250 Home Health Corp. of
America, Inc. 1,495,265(b)
88,300 Horizon Mental Health
Management, Inc. 2,516,550(b)
122,000 Mariner Health Group, Inc. 2,241,750(b)
70,000 Neuromedical Systems, Inc. 1,050,000(b)
25,300 UroCor, Inc. 309,925(b)
------------
9,827,346
------------
Leisure &
Entertainment - 4.2%
92,750 Cannondale Corp. 1,878,187(b)
135,000 Fairfield Communities, Inc. 1,873,125(b)
118,800 Iwerks Entertainment, Inc. 1,173,150(b)
100,000 Travis Boats & Motors, Inc. 912,500(b)
------------
5,836,962
------------
Machinery &
Equipment - 3.0%
66,000 Adept Technology, Inc. $924,000 (b)
78,300 Northwest Pipe Co. 1,331,100(b)
109,000 Stratasys, Inc. 1,989,250(b)
------------
4,244,350
------------
Manufacturing - 2.0%
72,000 BMC Industries, Inc. 2,070,000
114,800 Zomax Optical Media, Inc. 774,900(b)
------------
2,844,900
------------
Oil & Oil Service - 2.0%
87,900 Nuevo Energy Co. 2,834,775(b)
------------
Pollution Control - 4.2%
235,000 IDM Environmental Corp. 1,747,813(b)
95,450 Memtec Ltd. ADR 3,507,787(b)
20,000 U.S. Filter Corp. 695,000(b)
------------
5,950,600
------------
Railroads - 0.1%
10,100 Genesse & Wyoming, Inc.,
Class A 207,050(b)
------------
Restaurants - 3.0%
203,500 BAB Holdings, Inc. 2,238,500(b)
17,500 Landry's Seafood
Restaurant, Inc. 433,125(b)
114,400 New World Coffee 457,600(b)
126,000 Sagebrush, Inc. 1,134,000(b)
------------
4,263,225
------------
Retail - 5.3%
93,650 American Eagle Outfitters 1,673,994(b)
52,100 Best Buy Co., Inc. 1,191,787(b)
52,150 Movie Gallery, Inc. 1,095,150(b)
58,250 Sports Authority, Inc. (The) 1,907,688(b)
147,600 Strouds, Inc. 581,175(b)
109,300 West Coast Entertainment
Corp. 1,079,338(b)
------------
7,529,132
------------
Services - 3.7%
111,700 BT Office Products
International, Inc. 1,996,638(b)
104,100 Cotelligent Group, Inc. 1,795,725(b)
57,350 Personal Group of
America, Inc. 1,412,244(b)
------------
5,204,607
------------
Telecommunications
Equipment - 4.2%
75,200 ACT Networks, Inc. $2,444,000
102,900 ANTEC Corp. 1,633,538
48,300 Teltrend, Inc. 1,871,625
------------
5,949,163
------------
Telephone &
Telecommunications - 5.1%
120,000 American Portable
Telecom, Inc. 1,290,000(b)
56,000 IntelCom Group (USA), Inc. 1,400,000(b)
46,900 InterCel, Inc. 938,000(b)
51,750 Intermedia Communications
of Florida, Inc. 1,668,938(b)
89,150 Metrocall, Inc. 991,794(b)
69,250 ProNet, Inc. 848,313(b)
------------
7,137,045
------------
Textiles & Apparel - 2.1%
429,600 Chaus (Bernard), Inc. 1,396,200(b)
126,374 Cutter & Buck, Inc. 1,532,285(b)
------------
2,928,485
------------
Total Common Stock
(cost $125,056,095) 131,332,558
------------
PURCHASED PUT
OPTIONS - 0.3% (a)
Russell 2000 Index,
218 contracts, strike price
of $350, expires 8/1/1996 197,508
Russell 2000 Index,
191 contracts, strike price
of $350, expires 7/20/1996 136,088
Russell 2000 Index,
38 contracts, strike price
of $349, expires 8/2/1996 31,540
------------
Total Purchased Put Options
(cost $472,289) 365,136
------------
Principal
Amount
SHORT-TERM
SECURITIES - 6.6% (a)
U.S. Government Agency
$9,370,000 Federal Home Loan Mortgage
Corp., Discount Notes,
5.3%, due 7/1/1996
(at amortized cost) 9,370,000
------------
Total Investments
(cost $134,898,384) $141,067,694 (e)
============
Notes to Portfolio of Investments:
(a) The categories of investments are shown as a percentage of total investments of the Opportunity
Growth Portfolio.
(b) Currently non-income producing.
(c) Includes stock rights that automatically traded with the stock and had no separate value at
June 30, 1996.
(d) At June 30, 1996, cash in the amount of $2,000 was held in escrow to cover open put options
written as follows:
<CAPTION>
Number of Exercise Expiration
Issue Contracts Price Date Value
---------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Russell 2000 Index 38 $314 8/2/1996 $4,142
Russell 2000 Index 191 $315 7/20/1996 4,775
Russell 2000 Index 218 $315 8/1/1996 25,288
-------- --------
Total 447 $34,205
======== ========
(e) At June 30, 1996, the aggregate cost of securities for federal income tax purposes was $134,898,384
and the net unrealized appreciation of investments based on that cost was $6,169,310 which is comprised
of $15,814,319 aggregate gross unrealized appreciation and $9,645,009 gross unrealized depreciation.
See accompanying notes to portfolio of investments.
</TABLE>
<TABLE>
<CAPTION>
LB Series Fund, Inc.
World Growth Portfolio
Portfolio of Investments
June 30, 1996
(unaudited)
Shares Value
- -------------- ------------
<S> <C> <C>
ARGENTINA - 0.7% (a)
COMMON STOCKS
3,570 Banco de Galicia Buenos
Aires "B" ADR (USD) $92,373
1,800 Banco Frances del Rio de la
Plata ADR (USD) 51,750
1,000 Buenos Aires Embotelladora
ADR (USD) 13,250
100 Enron Global Power &
Pipeline (USD) 2,425
15,820 Naviera Perez "B" 103,662
560 Sociedad Comercial del Plata
ADR (USD) 17,853 (b)
630 Telecom Argentina Stet
ADR (USD) 29,531
2,820 Telecom Argentina Stet "B" 13,259
7,040 Telefonica de Argentina
ADR (USD) 208,560
1,370 Transportadora de Gas del Sur
ADR (USD) 16,783
6,430 YPF Sociedad Anonima
ADR (USD) 144,675
------------
Total Argentina 694,121
------------
AUSTRALIA - 1.4% (a)
COMMON STOCKS
14,000 Amcor Ltd. 95,167
37,528 Australia Gas & Light 156,010
16,000 Broken Hill Proprietary 220,919
15,000 Burns Philip & Co. 28,290
8,000 Coca Cola Amatil 88,833
5,300 Lend Lease Corp. 81,218
8,000 National Australia Bank Ltd. 73,870
18,700 News Corp. 105,954
18,000 Publishing & Broadcasting 79,214
13,783 Smith (Howard) Ltd. 85,568
36,000 TNT 40,456 (b)
17,700 Western Mining 126,578
22,000 Westpac Banking 97,336
20,000 Woodside Petroleum 120,079
------------
Total Australia 1,399,492
------------
AUSTRIA - 0.1% (a)
COMMON STOCKS
120 Energie-Versorgung
Niederoesterreich AG 16,591
610 Flughafen Wien 41,913
------------
58,504
------------
PREFERRED STOCKS
410 Creditanstalt Bankverein 20,779
------------
Total Austria 79,283
------------
BELGIUM - 1.0% (a)
COMMON STOCKS
690 Generale Banque 243,031
1,680 Kredietbank 503,976
111 UCB 207,982
------------
Total Belgium 954,989
------------
BRAZIL - 2.0% (a)
COMMON STOCKS
1,030 Brazil Fund (USD) 24,591
9,050 Centrais Eletricas Brasileiras
S.A. ADR (USD) 125,569
1,190 Companhia Brasileira de
Distribuicao Grupo Pao de
Acucar GDR (USD) 20,081 (b)
320 Companhia Energetica
Brasilia (USD) 9,120
7,900 Companhia Energetica Minas
Gerais ADR (USD) 225,150
16,550 Telecomunicacoes Brasilias
ADR (USD) 1,152,293
39,020 Usinas Siderurgicas de Minas
Gerais ADR (USD) 422,001
------------
Total Brazil 1,978,805
------------
CANADA - 0.3% (a)
COMMON STOCKS
7,070 Alcan Aluminum 215,160
2,810 Royal Bank of Canada (USD) 67,791
------------
Total Canada 282,951
------------
CHILE - 0.4% (a)
COMMON STOCKS
1,635 Chile Fund (USD) 40,057
1,315 Chilectra ADR (USD) 73,640
2,000 Chilgener ADR (USD) 48,000
760 Compania Telecomunicaciones
ADR (USD) 74,575
4,820 Empresa Nacional De Electric
ADR (USD) 103,630
2,795 Enersis ADR (USD) 86,645
------------
Total Chile 426,547
------------
CHINA - 0.5% (a)
COMMON STOCKS
15,360 Huaneng Power International
N ADR (USD) 274,560 (b)
537,000 Shanghai Petrochemical "H"
(HKD) 152,620
334,000 Yizheng Chemical Fibre "H"
(HKD) 73,783
------------
Total China 500,963
------------
DENMARK - 0.2% (a)
COMMON STOCKS
1,484 Den Danske Bank 99,550
347 Tele Danmark "B" 17,473
1,580 Unidanmark "A" 73,357
------------
Total Denmark 190,380
------------
FINLAND - 0.2% (a)
COMMON STOCKS
4,000 Nokia Oy "A" 147,681
------------
FRANCE - 7.3% (a)
COMMON STOCKS
1,285 Accor 179,874
860 Alcatel Alsthom 75,072
2,550 Assurances Generales de
France 69,109
600 AXA 32,848
730 Canal Plus 178,682
1,332 Carrefour 746,848
440 Castorama Dubois 86,741
757 Chargeurs International S.A. 33,865 (b)
3,140 Cie de St. Gobain 420,612
1,563 Credit Local De France 127,323
8,947 Eaux Cie Generale 1,000,180
1,443 Ecco 363,303
1,160 GTM Entrepose 75,325
1,090 Guilbert S.A. 158,935
930 Havas S.A. 76,120
120 Hermes International 31,729
2,610 Lapeyre 152,989
160 Legrand 28,618
340 L'Oreal 112,968
757 Pathe S.A. 177,785 (b)
2,070 Pinault Printemps Redoute 724,798
1,620 Primagaz 179,839
290 Promodes 83,669
600 Rexel 165,876
1,220 Sanofi 91,507
4,240 Schneider S.A. 222,568 (b)
620 Societe Generale 68,225
3,785 Societe Nationale Elf Aquitaine 278,599
810 Sodexho 359,678
5,030 Television Francaise 575,014
5,295 Total "B" 393,038
------------
Total France 7,271,737
------------
GERMANY - 3.9% (a)
COMMON STOCKS
189 Allianz Holdings 327,534
70 Altana 54,117
17,090 Bayer 604,135
280 Bilfinger & Berger 118,224
180 Buderas 76,392
4,560 Deutsche Bank 215,929
1,265 Gehe 850,266
2,900 Hoechst AG 98,415
520 Hornbach Baumarkt 23,597
506 Mannesmann 175,045
1,370 Praktiker Bau und Heimwerker
Markte 35,545
2,096 Rhoen Klinikum 275,699
700 SAP AG 103,815
1,790 Schering 130,321
3,650 Siemens AG 195,163
8,865 Veba 471,498
203 Volkswagen 75,499
------------
3,831,194
PREFERRED STOCKS
1,200 Fielmann 57,613
1,300 Hornbach Holdings AG 112,003
160 Krones 61,033
------------
230,649
------------
Total Germany 4,061,843
------------
HONG KONG - 4.6% (a)
COMMON STOCKS
98,000 Cathay Pacific Airways 179,775
62,000 Doa Heng Bank Ltd. 239,484
336,000 First Pacific 516,536
279,000 Guangdong Investments 176,610
899,000 Guangzhou Investment
Co. Ltd. 226,469
74,000 Guoco Group 352,754
312,141 Hong Kong Land Holdings
(USD) 702,317
748,000 Hopewell Holdings 405,849
80,000 Hutchison Whampoa 503,307
101,000 New World Development
Co. Ltd. 468,414
46,000 Swire Pacific "A" 393,693
126,000 Wharf Holdings 450,884
------------
Total Hong Kong 4,616,092
------------
ITALY - 2.0% (a)
COMMON STOCKS
14,770 Assicurazioni Generali 340,976
100,780 Banca Fideuram 218,507
20,000 Ente Nazionale Idrocarburi 99,853
2,000 Finanziaria Autogrill SpA 2,295 (b)
9,000 IMI SpA 75,233
1,540 Industrie Natuzzi SpA ADR
(USD) 78,925
28,000 Istituto Naz Delle
Assicurazioni 41,783
24,600 Italgas 91,974
8,600 La Rinascente SpA 61,639
280 La Rinascente SpA., Warrants 228 (b)
10,520 Mediolanum SpA 104,771 (b)
1,000 Riunione Adriatica di
Securita SpA 10,348
5,959 Sasib Di Risp 11,869
76,000 Stet 257,097
32,800 Stet Di Risp 86,217
73,827 Telecom Italia 158,863
125,400 Telecom Italia Mobile 280,487 (b)
37,000 Telecom Italia Mobile DRNC 50,501
3,000 Unicem 21,943 (b)
------------
1,993,509
------------
JAPAN-23.5% (a)
COMMON STOCKS
2,100 Advantest Corp. 83,528
15,000 Alps Electric 182,417
32,000 Amada 345,266
38,000 Canon 792,210
22,000 Citizen Watch Co. 183,660
28,000 Dai Nippon Screen
Manufacturing Co. Ltd. 249,879 (b)
6,000 Daifuku 92,168
29,000 Daiichi Pharmaceutical 448,132
37,000 Daiwa House 575,138
56 DDI Corp. 489,517
99 East Japan Railway 520,505
8,000 Fanuc 318,932
49,000 Hitachi 457,002
43,000 Hitachi Zosen 244,164
3,000 Honda Motor Co. 77,904
15,000 Inax 149,499
21,000 Ishihara Sangyo Kaisha 83,719 (b)
10,000 Ito-Yokado 604,398
7,000 Kao Corp. 94,729
3,000 Kawada Industries 26,855
15,000 Kokuyo 415,581
38,000 Komatsu 375,257
12,000 Komori 307,228
33,000 Kumagai Gumi 132,766
31,000 Kuraray 348,649
12,000 Kyocera 850,363
21,000 Makita 341,791
23,000 Marui 511,041
34,000 Matsushita Electric Industrial 634,207
20,000 Mitsubishi 263,338
106,000 Mitsubishi Heavy Industries 923,678
23,000 Mitsubishi Paper Mills 144,059
52,000 Mitsui Fudosan 703,699
16,000 Mitsui Petrochemical Industries 128,743
13,000 Murata Manufacturing 493,302
9,000 National House Industrial 140,721
65,000 NEC 707,265
33,000 Nippon Denso 718,146
7,000 Nippon Hodo 119,051
162,000 Nippon Steel 556,961
45 Nippon Telegraph &
Telephone Corp. 334,111
33,000 Nomura Securities 645,728
16,000 Pioneer Electronic 381,841
4,000 Sangetsu Co. Ltd. 107,164
28,000 Sankyo 727,106
5,000 Sega Enterprises 234,079
38,000 Sekisui Chemical 465,597
28,000 Sekisui House 320,029
4,000 Seven-Eleven Japan 255,658
36,000 Sharp 632,012
21,300 Shin-Etsu Chemical 408,997
8,500 Sony 560,371
50,000 Sumitomo 445,298
47,000 Sumitomo Electric 674,713
21,000 Sumitomo Forestry 312,989
10,000 TDK 597,998
62,000 Teijin 337,311
16,000 Tokio Marine & Fire Insurance 213,597
6,000 Tokyo Electronics 175,010
14,000 Tokyo Steel Manufacturing 275,225
27,000 Toppan Printing 395,008
6,000 Yurtec 105,884
------------
Total Japan 23,441,194
------------
KOREA - 0.2% (a)
COMMON STOCKS
1,000 Korea Electric Power Corp. 24,250
(USD)
6,100 Korea Equity Fund (USD) 128,863
500 Pohang Iron & Steel ADR
Bonus (USD) 12,188
270 Samsung Electronics GDR
Bonus (USD) 11,285 (b)
900 Samsung Electronics GDR 46,350 (b)
------------
Total Korea 222,936
------------
MALAYSIA - 2.7% (a)
COMMON STOCKS
228,000 Affin Holdings 534,696
23,000 Affin Holdings, Warrants 22,221 (b)
25,000 Commerce Asset Holding
BHD 152,335
134,000 MBF Capital 184,790
188,000 Multi-Purpose Holdings 302,971
163,000 Renong BHD 260,068
7,400 Renong BHD - 4% ICULS
Rights 2,789 (b)
4,625 Renong BHD, Warrants 2,095 (b)
215,000 Technology Resources
Industries 749,850 (b)
70,000 United Engineers 485,468
------------
Total Malaysia 2,697,283
------------
MEXICO - 1.7% (a)
COMMON STOCKS
58,000 Cementos de Mexico
ADR (USD) 413,250
17,850 Cemex "B" 69,306
182,380 Cifra "B" ADR (USD) 256,244 (b)
24,617 Gruma "B" 113,917 (b)
7,260 Grupo Embotellador de Mexico 12,730 (b)
700 Grupo Financiero Banamex
Accival "L" 1,329
37,680 Grupo Financiero Banamex "C" 78,291
68,062 Grupo Industrial Maseca "B" 71,068
3,160 Grupo Televisa GDR (USD) 97,170 (b)
5,110 Kimberly-Clark Mexico "A"
(Class A) 92,970
4,210 Panamerican Beverages "A"
ADR (USD) 188,397
10,715 Telefonos de Mexico "L"
ADR (USD) 358,953
------------
Total Mexico 1,753,625
------------
NETHERLANDS - 9.2% (a)
COMMON STOCKS
8,000 ABN Amro Holdings 429,669
4,950 Ahold 268,470
10,560 CSM 506,484
106,675 Elsevier 1,619,984
9,725 Fortis Amev N.V. 278,835
2,320 Hagemeyer 165,413
22,632 ING Groep N.V. 675,443 (b)
3,290 Koninklijke PTT Nederland 124,617
1,640 Nutricia 173,568
1,940 Otra N.V. 44,703
11,145 Polygram 658,702
10,932 Royal Dutch Petroleum 1,689,637
3,520 Unilever 509,786
18,193 Wolters Kluwer 2,068,380
------------
Total Netherlands 9,213,691
------------
NEW ZEALAND - 0.5% (a)
COMMON STOCKS
34,000 Carter Holt Harvey 77,895
17,000 Fernz 50,877
3,000 Fletcher Challenge Building 5,882 (b)
3,000 Fletcher Challenge Energy 6,646 (b)
51,000 Fletcher Challenge Forests
Division 63,509
6,000 Fletcher Challenge Paper 11,641
58,000 Telecom Corporation of
New Zealand 244,210
------------
Total New Zealand 460,660
------------
NORWAY - 1.3% (a)
COMMON STOCKS
2,120 Bergesen "A" 44,105
15,104 Norsk Hydro 740,175
9,695 Orkla "A" 510,963
3,350 Saga Petroleum "B" 45,430
------------
Total Norway 1,340,673
------------
PORTUGAL - 0.5% (a)
COMMON STOCKS
5,815 Jeronimo Martins 523,907
------------
SINGAPORE - 2.1% (a)
COMMON STOCKS
48,000 DBS Land 164,649
13,000 Development Bank of
Singapore 162,155
14,000 Far East Levingston
Shipbuilding 77,392
6,400 Fraser & Neave Ltd. 66,222
14,000 Jurong Shipyard 70,943
9,000 Keppel 75,266
25,000 Neptune Orient Lines 26,223
52,000 Overseas Union Bank 357,477
7,000 Sembawang 34,727
4,000 Singapore Airlines 42,240
52,000 Singapore Land 351,949
9,000 Singapore Press 176,683
78,000 United Industrial 79,603
42,000 United Overseas Bank 401,843
7,000 United Overseas Bank,
Warrants 27,782 (b)
------------
Total Singapore 2,115,154
------------
SPAIN - 2.4% (a)
COMMON STOCKS
1,445 Banco Popular Espanol 257,832
5,470 Banco Santander 255,542
1,390 Centros Comerciales
Continente S.A. 33,011 (b)
3,920 Centros Comerciales Pryca 97,996
2,842 Corporacion Bancaria de
Espana S.A. 124,111
10,025 Empresa Nacional de
Electridad 625,755
1,525 Gas Natural 320,476
1,032 General de Aguas de
Barcelona S.A. 38,376
23,110 Iberdrola 237,410
11,650 Repsol S.A. 405,459
40 Repsol S.A. ADR (USD) 1,390
670 Sevillana De Electricidad 6,176
------------
Total Spain 2,403,534
------------
SWEDEN - 2.4% (a)
COMMON STOCKS
1,790 Asea "A" 190,083
21,760 Astra AB "B" 949,931
10,270 Atlas Copco "B" 191,590
6,375 Electrolux "B" 321,152
2,000 Esselte "B" 40,936
2,810 Hennes & Mauritz "B" 261,046
1,720 Sandvik "A" 39,492
11,600 Sandvik "B" 268,093
2,720 Scribona "B" 28,555
6,660 Stora Kopparberg "B" 88,027
------------
Total Sweden 2,378,905
------------
SWITZERLAND - 4.0% (a)
COMMON STOCKS
550 BBC Brown Boveri & Cie 681,011
364 Ciba-Geigy 444,009
1,820 CS Holding 173,236
735 Nestle 840,118
124 Roche Holdings 946,713
490 Sandoz 560,862
1,516 Schwizerischer Bankverein 299,514
------------
Total Switzerland 3,945,463
------------
THAILAND - 1.0% (a)
COMMON STOCKS
4,900 Advanced Information
Service plc 76,825
3,050 Advanced Information Service
plc (Foreign Registered) 47,819
21,670 Bangkok Bank 293,657
14,000 Bank of Ayudhya 77,211
2,370 Land & House Public Co. Ltd. 29,876
1,130 Siam Cement 55,465
11,950 Siam Commercial Bank 173,236
12,310 Thai Farmers Bank 134,811
3,600 Total Access Communication
Public Co. Ltd. (USD) 30,600
------------
Total Thailand 919,500
------------
UNITED KINGDOM - 13.2% (a)
COMMON STOCKS
73,000 Abbey National 613,341
41,066 Argos plc 475,776
64,000 Argyll Group 344,898
177,000 Asda Group 321,618
9,000 BAA 65,204
35,000 British Gas 97,298
29,000 British Petroleum 254,465
69,000 Cable & Wireless 455,964
52,225 Cadbury Schweppes 412,836
94,000 Caradon 314,598
29,000 Coats Viyella 77,240
29,000 Compass Group 265,724
50,000 David S. Smith 212,378
3,000 East Midlands Electricity 24,414
14,000 Electrocomponents 82,948
6,000 GKN 92,064
45,500 Glaxo Wellcome 612,649
82,000 Grand Metropolitan 543,780
11,000 Heywood Williams Group 40,317
27,000 Hillsdown Holdings 72,726
24,000 John Laing "A" 107,532
67,000 Kingfischer 672,705
27,000 London Electricity 262,285
22,000 National Grid Group 58,254
123,000 National Westminster Bank 1,172,884
55,000 Rank Organisation 424,950
64,000 Reed International 1,069,980
22,000 Rolls Royce 76,534
33,000 RTZ 488,414
26,000 Sears 39,975
57,000 Shell Transport & Trading 835,658
106,000 SmithKline Beecham 1,133,421
55,000 T & N 119,584
56,000 Tesco 255,692
140,700 Tomkins 528,799
57,000 United News & Media 616,121
------------
Total United Kingdom 13,243,026
------------
Principal
Amount
- -------------
SHORT-TERM SECURITIES - 10.7% (a)
U.S. Government Agency
$10,700,000 Federal Home Loan Mortgage
Discount Notes, 5.3%,
due 7/1/1996 10,700,000
------------
Total Investments $99,957,944 (c,d)
============
Notes to Portfolio of Investments:
(a) The categories of investments are shown as a percentage of total investments of the World Growth
Portfolio.
(b) Currently non-income producing.
(c) Security Classification:
Cost Value % of Portfolio
------------ ------------ ------------
Common Stocks &
Warrants $86,594,797 $89,006,517 89.0%
Preferred Stock 233,322 251,427 0.3%
Short-Term 10,700,000 10,700,000 10.7%
------------ ------------ ------------
Total Investments $97,528,119 $99,957,944 100.0%
============ ============ ============
(d) At June 30, 1996, the aggregate cost of securities for federal income tax purposes was $97,528,119
and the net unrealized appreciation of investments based on that cost was $2,429,825 which is comprised
of $3,904,184 aggregate gross unrealized appreciation and $1,474,359 gross unrealized depreciation.
Miscellaneous Abbreviations:
(ADR) -- American Depository Receipts
(GDR) -- Global Depository Receipts
(HKD) -- Denominated in Hong Kong Dollars
(USD) -- Denominated in U.S. Dollars
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB Series Fund, Inc.
Growth Portfolio
Portfolio of Investments
June 30, 1996
(unaudited)
Shares Value
- ------------- --------------
<S> <C> <C>
COMMON STOCKS - 91.3% (a)
Aerospace - 1.8%
240,000 Boeing Co. $20,910,000
77,400 McDonnell Douglas 3,753,900
--------------
24,663,900
--------------
Airlines - 1.3%
125,000 Federal Express Corp. 10,250,000 (b)
280,400 Southwest Airlines Co. 8,166,650
--------------
18,416,650
--------------
Automotive - 1.5%
159,100 Chrysler Corp. 9,864,200
80,600 Ford Motor Co. 2,609,425
148,100 General Motors Corp. 7,756,737
--------------
20,230,362
--------------
Bank & Finance - 13.5%
157,600 Allstate Corp. 7,190,500
313,000 American Express Co. 13,967,625
225,000 American International
Group, Inc. 22,190,625
206,400 Barnett Banks, Inc. 12,590,400
226,000 Chase Manhattan Corp. 15,961,250
100,000 Crestar Financial Corp. 5,337,500 (c)
68,600 Donaldson, Lufkin &
Jenrette, Inc. 2,126,600 (b)
600,900 Federal National Mortgage
Association 20,130,150
54,700 First Chicago NBD Corp. 2,140,137
220,000 Green Tree Financial Corp. 6,875,000
183,900 MBNA Corp. 5,241,150
286,600 Mellon Bank Corp. 16,336,200
137,000 Morgan Stanley Group, Inc. 6,730,125
200,000 Morgan (J.P.) and Co., Inc. 16,925,000
185,600 Olympic Financial Ltd. 4,268,800 (b)
138,000 Southern National Corp. 4,381,500
125,000 Summit Bancorp 4,390,625
84,499 Wells Fargo & Co. 20,184,699
--------------
186,967,886
--------------
Broadcasting - 2.1%
Infinity Broadcasting Corp., 300,000
Class A 9,000,000 (b)
107,800 NYNEX CableComms
Group ADR 1,751,750 (b)
221,200 Tele-Communications, Inc.,
Liberty Media Group,
Series A 5,861,800 (b)
400,000 Tele-Communications, Inc.,
TCI Group, Series A 7,250,000
150,000 United States Satellite
Broadcasting Corp., Class A 5,662,500
--------------
29,526,050
--------------
Chemicals - 2.4%
283,100 Air Products &
Chemicals, Inc. 16,349,025
183,900 IMC Global, Inc. 6,919,237 (c)
246,200 Morton International, Inc. 9,170,950
--------------
32,439,212
--------------
Computer Software - 4.6%
61,100 America Online, Inc. 2,673,125 (b)
125,600 BMC Software, Inc. 7,504,600 (b)
123,200 Electronic Arts, Inc. 3,295,600 (b)
50,000 FactSet Research Systems, Inc. 1,000,000 (b)
165,700 Hummingbird
Communications Ltd. 5,053,850 (b)
68,000 Macromedia, Inc. 1,487,500 (b)
180,000 Microsoft Corp. 21,622,500 (b,d)
95,400 Network General Corp. 2,051,100 (b)
370,700 Oracle Corp. 14,619,481 (b)
30,000 Structural Dynamics
Research Corp. 660,000 (b,c)
122,500 Sybase, Inc. 2,894,062 (b)
--------------
62,861,818
--------------
Computers & Office
Equipment - 4.3%
224,200 3Com Corp. 10,257,150 (b)
273,700 Cisco Systems, Inc. 15,498,262 (b)
150,000 Digital Equipment Corp. 6,750,000 (b)
134,200 International Business
Machines 13,285,800
152,900 Storage Technology Corp. 5,848,425 (b)
113,300 StrataCom, Inc. 6,373,125 (b)
31,600 Xylan Corp. 1,469,400 (b)
--------------
59,482,162
--------------
Conglomerates - 1.5%
144,600 AlliedSignal, Inc. 8,260,275
150,000 ITT Corp. 9,937,500 (b,d)
98,500 U.S. Industries, Inc. 2,376,312 (b)
--------------
20,574,087
--------------
Cosmetics & Toiletries - 0.2%
58,900 Estee Lauder Companies, Inc.,
Class A 2,488,525
--------------
Drugs & Health Care - 10.7%
189,800 Abbott Laboratories 8,256,300
164,700 Alpha-Beta Technology, Inc. 1,461,712 (b)
255,000 American Home Products
Corp. 15,331,875
192,500 Amgen, Inc. 10,395,000 (b)
282,800 Baxter International, Inc. 13,362,300
198,700 Becton Dickinson & Co. 15,945,675
159,300 Biochem Pharma, Inc. 5,973,750 (b)
170,000 Biogen, Inc. 9,328,750 (b,c)
115,500 Bristol-Myers Squibb Co. 10,395,000
320,000 Johnson & Johnson 15,840,000
307,800 Merck & Co., Inc. 19,891,575
85,000 PDT, Inc. 2,805,000
54,400 Scherer (R.P.) Corp. 2,468,400 (b)
120,000 STERIS Corp. 3,840,000 (b)
235,100 Warner-Lambert Co. 12,930,500
--------------
148,225,837
--------------
Electric Utilities - 1.7%
132,000 American Electric Power Co. 5,626,500
312,700 Entergy Corp. 8,872,862
352,900 Southern Co. 8,690,163
--------------
23,189,525
--------------
Electrical Equipment - 0.1%
24,000 Wolverine Tube, Inc. 840,000 (b)
--------------
Electronics - 2.9%
77,000 Harman International
Industries, Inc. 3,792,250
300,000 Intel Corp. 22,031,250
40,800 Lattice Semiconductor Corp. 984,300 (b)
218,000 Motorola, Inc. 13,706,750
--------------
40,514,550
--------------
Food & Beverage - 3.1%
111,900 Coca-Cola Enterprises, Inc. 3,874,537
141,400 ConAgra, Inc. 6,416,025
390,000 PepsiCo, Inc. 13,796,250
80,000 Salomon, Inc., (Snapple, Inc.,
Equity-Linked Security) 1,180,000
535,900 Sara Lee Corp. 17,349,763
--------------
42,616,575
--------------
Healthcare
Management - 0.9%
72,400 Columbia/HCA Healthcare
Corp. 3,864,350
204,200 Coventry Corp. 3,216,150 (b)
81,700 PacifiCare Health Systems,
Inc., Class B 5,535,175 (b)
--------------
12,615,675
--------------
Household Products - 4.0%
80,000 Clorox Co. 7,090,000
200,000 Colgate Palmolive Co. 16,950,000
300,800 Gillette Co. 18,762,400
132,000 Procter & Gamble Co. 11,962,500
--------------
54,764,900
--------------
Leisure &
Entertainment - 2.2%
272,800 Disney (Walt) Co. 17,152,300
108,700 Hospitality Franchise
Systems, Inc. 7,609,000 (b)
150,000 Time Warner, Inc. 5,887,500
--------------
30,648,800
--------------
Machinery &
Equipment - 2.7%
158,400 Case Corp. 7,603,200
251,800 Caterpillar, Inc. 17,059,450
183,200 Fluor Corp. 11,976,700
--------------
36,639,350
--------------
Mining & Metals - 0.6%
129,500 Phelps Dodge Corp. 8,077,562
--------------
Oil & Oil Service - 6.8%
24,100 Amoco Corp. 1,744,238
129,900 Anadarko Petroleum Corp. 7,534,200
200,900 Chevron Corp. 11,853,100
183,400 Enron Oil & Gas Co. 5,112,275
259,100 Halliburton Co. 14,380,050
243,300 McDermott International, Inc. 5,078,888
240,700 Mobil Corp. 26,988,487
81,700 Royal Dutch Petroleum Co. 12,561,375
172,200 Sonat Offshore Drilling Co. 8,696,100
18,100 Weatherford Enterra, Inc. 543,000 (b)
--------------
94,491,713
--------------
Paper & Forest
Products - 1.3%
191,000 Champion International Corp. 7,974,250
273,700 Fort Howard Corp. 5,439,787 (b)
54,600 Georgia-Pacific Corp. 3,876,600
--------------
17,290,637
--------------
Photography - 1.0%
173,100 Eastman Kodak Co. 13,458,525
--------------
Railroads - 1.0%
68,300 Conrail, Inc. 4,533,412
181,900 CSX Corp. 8,776,675
--------------
13,310,087
--------------
Restaurants - 1.4%
250,000 Lone Star Steakhouse &
Saloon 9,437,500 (b)
204,200 McDonald's Corp. 9,546,350
--------------
18,983,850
--------------
Retail - 5.1%
122,900 Albertson's, Inc. 5,084,988
273,500 Federated Department Stores 9,333,188 (b)
322,700 Kroger Co. 12,746,650 (b)
251,700 Lowe's Companies 9,092,663
54,200 Movie Gallery, Inc. 1,138,200 (b)
212,100 OfficeMax, Inc. 5,063,887 (b)
227,200 Penney (J.C.) Co. 11,928,000
209,600 Walgreen Co. 7,021,600
393,600 Wal-Mart Stores, Inc. 9,987,600
--------------
71,396,776
--------------
Services - 3.5%
102,700 AccuStaff, Inc. 2,798,575 (b)
180,000 Automatic Data
Processing, Inc. 6,952,500
91,100 Ceridian Corp. 4,600,550 (b)
140,900 Checkfree Corp. 2,800,388 (b)
138,900 DST Systems, Inc. 4,444,800 (b)
97,800 Electronic Data Systems Corp. 5,256,750
272,995 First Data Corp. 21,737,227
--------------
48,590,790
--------------
Telecommunications
Equipment - 2.9%
158,700 ADC Telecommunications,
Inc. 7,141,500 (b)
174,800 DSC Communications Corp. 5,265,850 (b)
368,200 Ericsson (L.M.)
Telecommunications,
Class B ADR 7,916,300
165,100 Lucent Technologies, Inc. 6,253,163 (b)
190,000 Tellabs, Inc. 12,706,250 (b)
--------------
39,283,063
--------------
Telephone &
Telecommunications - 5.9%
200,700 AirTouch Communications,
Inc. 5,669,775 (b)
321,100 American Portable Telecom,
Inc. 3,451,825 (b)
237,800 Ameritech Corp. 14,119,375
300,000 AT&T Corp. 18,600,000
149,300 BellSouth Corp. 6,326,588
97,600 MCI Communications Corp. 2,501,000
185,500 Metrocall, Inc. 2,063,688 (b)
322,600 MobileMedia Corp., Class A 3,911,525 (b)
246,000 SBC Communications, Inc. 12,115,500
90,700 Telecomunicacoes Brasileiras
S.A. Telebras ADR 6,314,988
99,100 WorldCom, Inc. 5,487,663 (b)
--------------
80,561,927
--------------
Textiles & Apparel - 0.3%
88,200 Tommy Hilfiger Corp. 4,729,725 (b)
--------------
Total Common Stock
(cost $1,151,898,759) 1,257,880,519
--------------
CORPORATE
BONDS - 0.6% (a)
$5,750,000 Broadband Technologies,
Inc., Convertible
Subordinated Notes,
5.0%, due 5/15/2001 5,520,000
3,000,000 Intergrated Device
Technology, Inc.,
Convertible Subordinated
Notes, 5.5%, due 6/1/2002 2,437,500
--------------
Total Corporate Bonds
(cost $8,775,200) 7,957,500
--------------
U.S. TREASURY - 0.1% (a)
1,000,000 U.S. Treasury Notes, 6.875%,
due 3/31/1997 1,008,750
300,000 U.S. Treasury Notes, 8.75%,
due 10/15/1997 310,313
--------------
Total U.S. Treasury
(cost $1,318,318) 1,319,063
--------------
SHORT-TERM
SECURITIES - 8.0% (a)
Commercial Paper
17,500,000 Associates Corp. of
North America,
5.54%, due 7/1/1996 17,500,000
10,000,000 Associates Corp. of
North America,
5.37%, due 7/2/1996 9,998,508
10,000,000 Centerior Fuel Corp.,
5.37%, due 7/15/1996 9,979,117
11,500,000 Walt Disney Co.,
5.3%, due 7/3/1996 11,496,614
5,000,000 Electronic Data Systems Corp.,
5.38%, due 7/25/1996 4,982,067
10,000,000 General Electric Capital Corp.,
5.37%, due 7/17/1996 9,976,133
10,000,000 Pfizer Co.,
5.36%, due 7/24/1996 9,965,756
8,675,000 Preferred Receivables
Funding Corp., 5.32%,
due 7/11/1996 8,662,180
9,174,000 Sheffield Receivables Corp.,
5.3%, due 7/1/1996 9,174,000
8,200,000 UBS Finance (DE), Inc.,
5.55%, due 7/1/1996 8,200,000
10,000,000 United Parcel Service of
America, Inc., 5.3%,
due 7/9/1996 9,988,222
--------------
Total Short-Term Securities
(at amortized cost) 109,922,597
--------------
Total Investments
(cost $1,271,914,874) $1,377,079,679 (e)
==============
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 June 30, 1996.
(d) At June 30, 1996, securities valued at $1,797,125 were held in escrow to cover
open call options written as follows:
Number of Exercise Expiration
Issue Contracts Price Date Value
- ------------ -------- ------------ ---------- --------
Microsoft Corp. 20 $125 7/20/1996 $3,000
ITT Corp. 235 $70 7/20/1996 14,688
-------- --------
Total 255 $17,688
======== ========
(e) At June 30, 1996, the aggregate cost of securities for federal income tax purposes
was $1,271,914,874 and the net unrealized appreciation of investments based on that
cost was $105,164,805 which is comprised of $134,579,788 aggregate gross unrealized
appreciation and $29,414,983 aggregate gross unrealized depreciation.
</TABLE>
<TABLE>
<CAPTION>
LB Series Fund, Inc.
High Yield Portfolio
Portfolio of Investments
June 30, 1996
(unaudited)
Principal Maturity
Amount Rate Date Value
- ------------ ----------- ---------- ------------
<S> <C> <C> <C> <C>
CORPORATE BONDS - 81.3% (a)
Airlines - 0.5%
$4,500,000 U.S. Air, Inc., Sr. Secured Equipment Trust, Series 1993-A-3 10.375% 3/1/2013 $4,511,250
------------
Automotive - 0.5%
7,650,000 Exide Corp., Convertible Sr. Subordinated Notes 2.9% 12/15/2005 4,255,313
------------
Bank & Finance - 3.5%
2,700,000 American Life Holding Corp., Sr. Subordinated Notes 11.25% 9/15/2004 2,828,250
2,500,000 First Nationwide Holdings, Inc., Sr. Notes 12.25% 5/15/2001 2,731,250
5,300,000 First Nationwide Holdings, Inc., Sr. Notes 12.5% 4/15/2003 5,551,750
7,750,000 HomeSide, Inc., Sr. Secured Second Priority Notes 11.25% 5/15/2003 8,060,000
8,000,334 Scotsman Holdings, Sr. Notes, Payment-In-Kind, Series B 11.0% 3/1/2004 7,660,320
4,500,000 Trizec Finance Ltd., Sr. Notes 10.875% 10/15/2005 4,635,000
------------
31,466,570
------------
Broadcasting - 21.7%
9,661,426 American Telecasting, Inc., Sr. Discount Notes Zero Coupon 6/15/2004 6,762,998
5,100,000 American Telecasting, Inc., Sr. Discount Notes Zero Coupon 8/15/2005 3,047,250
16,150,000 Australis Media Ltd., Sr. Subordinated Discount Notes Zero Coupon 5/15/2003 9,690,000
14,050,000 Benedek Communications Corp., Sr. Discount Notes 10.0% 5/15/2006 7,130,375
6,900,000 Cablevision Industries, Debentures, Series B 9.25% 4/1/2008 6,986,250
6,500,000 Charter Communications Southeast Holdings L.P., Sr.
Discount Notes Zero Coupon 3/15/2007 3,656,250
8,150,000 Comcast UK Cable Partners Ltd., Sr. Discount Debentures Zero Coupon 11/15/2007 4,747,375
17,572,000 CS Wireless Systems, Inc., Sr. Discount Notes Zero Coupon 3/1/2006 9,137,440
11,600,000 Diamond Cable Communications plc, Sr. Discount Notes Zero Coupon 12/15/2005 6,887,500
12,350,000 EchoStar Satellite Broadcast Corp., Sr. Secured Discount Notes Zero Coupon 3/15/2004 7,718,750
8,832,101 Falcon Holdings Group L.P., Sr. Subordinated Notes, Series B 11.0% 9/15/2003 8,401,536
10,000,000 Groupo Televisa S.A., Sr. Discount Debentures Zero Coupon 5/15/2008 5,425,000(e)
3,000,000 Groupo Televisa S.A., Sr. Discount Notes Zero Coupon 5/15/2008 1,612,500(e)
1,200,000 Groupo Televisa S.A., Sr. Notes, Series B 11.875% 5/15/2006 1,221,000(e)
7,200,000 Groupo Televisa S.A., Sr. Notes, Series B 11.875% 5/15/2006 7,362,000(e)
4,650,000 International CableTel, Inc., Convertible Subordinated Notes 7.25% 4/15/2005 5,603,250
5,900,000 International CableTel, Inc., Convertible Subordinated Notes 7.0% 6/15/2008 5,841,000
2,800,000 International CableTel, Inc., Sr. Deferred Notes, Series A Zero Coupon 2/1/2006 1,582,000
4,650,000 International CableTel, Inc., Sr. Notes, Series A Zero Coupon 4/15/2005 2,999,250
8,450,000 Jacor Communications, Inc., Convertible Liquid Yield
Option Notes Zero Coupon 6/12/2011 3,939,812
4,300,000 Le Groupe Videotron Ltee., Sr. Notes 10.625% 2/15/2005 4,525,750
9,350,000 Marcus Cable Co., Sr. Discount Notes Zero Coupon 12/15/2005 5,773,625
6,800,000 NWCG Holdings Corp., Sr. Secured Discount Notes, Series B Zero Coupon 6/15/1999 4,972,500
13,350,000 People's Choice TV Corp., Sr. Discount Notes Zero Coupon 6/1/2004 7,676,250
10,750,000 Robin Media Group, Sr. Subordinated Deferred Interest Bonds 11.125% 4/1/1997 10,723,125
7,050,000 Rogers Cablesystems Ltd., Sr. Secured Second Priority Notes 9.625% 8/1/2002 6,997,125
7,000,000 Rogers Communications, Inc., Convertible Debentures 2.0% 11/26/2005 3,657,500
600,000 Rogers Communications, Inc., Convertible Liquid Yield
Option Notes Zero Coupon 5/20/2013 216,750
3,750,000 Rogers Communications, Inc., Sr. Notes 9.125% 1/15/2006 3,478,125
5,500,000 SCI Television, Inc., Sr. Second Priority Secured Notes 11.0% 6/30/2005 5,747,500
6,025,000 Scott Cable Communications, Inc., Subordinated Debentures 12.25% 4/15/2001 3,645,125(c)
2,925,000 Tele-Communications International, Inc., Convertible
Subordinated Debentures 4.5% 2/15/2006 2,526,469
4,600,000 Telemundo Group, Inc., Sr. Notes 7.0% 2/15/2006 4,163,000
6,650,000 UIH Australia/Pacific, Inc., Sr. Discount Notes Zero Coupon 5/15/2006 3,507,875
12,400,000 United International Holdings, Inc., Sr. Discount Notes Zero Coupon 11/15/1999 8,184,000
6,400,000 Wireless One, Inc., Sr. Notes 13.00% 10/15/2003 6,816,000
------------
192,362,255
------------
Building Products & Materials - 0.9%
9,500,000 Dal-Tile International, Inc., Sr. Secured Notes Zero Coupon 7/15/1998 8,027,500
------------
Computers & Office Equipment - 2.1%
4,600,000 Apple Computer, Inc., Convertible Subordinated Notes 6.0% 6/1/2001 4,525,250
9,975,000 Dictaphone Corp., Sr. Subordinated Notes 11.75% 8/1/2005 9,476,250
4,600,000 Unisys Corp., Sr. Notes 12.0% 4/15/2003 4,726,500
------------
18,728,000
------------
Construction & Home Building - 1.9%
9,800,000 Peters (J.M.) Co., Inc., Sr. Notes 12.75% 5/1/2002 9,163,000
7,750,000 The Fortress Group, Inc., Senior Notes 13.75% 5/15/2003 7,992,187
------------
17,155,187
------------
Containers & Packaging - 0.4%
3,200,000 Owens-Illinois, Inc., Sr. Subordinated Notes 9.75% 8/15/2004 3,224,000
------------
Drugs & Health Care - 1.7%
4,003,800 General Medical Corp., Payment-In-Kind Debentures 12.125% 8/15/2005 4,224,009
3,550,000 Owens & Minor, Inc., Sr. Subordinated Notes 10.875% 6/1/2006 3,621,000
8,150,000 Unilab Corp., Sr. Notes 11.0% 4/1/2006 7,701,750
------------
15,546,759
------------
Electric Utilities - 0.7%
3,250,000 Midland Cogen Venture Fund II, Secured Lease Obligation
Bonds, Series A 11.75% 7/23/2005 3,436,875
2,400,000 Midland Cogen Venture Fund II, Subordinated Secured Lease
Obligation Bonds 13.125% 7/23/2006 2,682,000
------------
6,118,875
------------
Electrical Equipment - 1.3%
7,450,000 Protection One Alarm Monitoring, Sr. Subordinated
Discount Notes Zero Coupon 6/30/2005 6,369,750
4,750,000 Telex Communications, Inc., Sr. Notes 12.0% 7/15/2004 5,076,562
------------
11,446,312
------------
Food & Beverage - 2.2%
5,600,000 Curtice-Burns Food, Inc., Sr. Subordinated Notes 12.25% 2/1/2005 5,460,000
4,000,000 Dr. Pepper Bottling Holdings, Sr. Notes Zero Coupon 2/15/2003 3,340,000
7,865,000 Fresh Del Monte Corp., Sr. Notes, Series B 10.0% 5/1/2003 7,314,450
3,850,000 Specialty Foods Acquisition, Sr. Subordinated Notes 11.25% 8/15/2003 3,339,875
------------
19,454,325
------------
Hospital Management - 3.5%
5,850,000 Integrated Health Services, Sr. Subordinated Notes 10.25% 4/30/2006 5,791,500
7,250,000 Merit Behavioral Care Corp., Sr. Subordinated Notes 11.5% 11/15/2005 7,612,500
2,900,000 PhyMatrix Corp., Convertible Subordinated Debentures 6.75% 6/15/2003 2,842,000
5,850,000 Regency Health Services, Inc., Sr. Subordinated Notes 9.875% 10/15/2002 5,630,625
4,400,000 Regency Health Services, Inc., Subordinated Notes 12.25% 7/15/2003 4,466,000
5,650,000 Rotech Medical Corp., Convertible Subordinated Debentures 5.25% 6/1/2003 5,226,250
------------
31,568,875
------------
Household Products - 2.2%
6,850,000 BPC Holding Corp., Sr. Secured Notes 12.5% 6/15/2006 6,918,500
20,000,000 Coleman Worldwide Corp., Convertible Liquid Yield
Option Notes Zero Coupon 5/27/2013 6,750,000
6,250,000 Simmons Co., Sr. Subordinated Notes 10.75% 4/15/2006 6,218,750
------------
19,887,250
------------
Leisure & Entertainment - 2.0%
14,400,000 AMF Group, Inc., Sr. Subordinated Discount Notes Zero Coupon 3/15/2006 7,812,000
6,000,000 Host Marriott Travel Plazas, Sr. Secured Notes, Series B 9.5% 5/15/2005 5,767,500
4,000,000 IMAX Corp., Sr. Notes 7.0% 3/1/2001 3,920,000
------------
17,499,500
------------
Oil & Gas - 2.8%
5,500,000 Gulf Canada Resources Ltd., Sr. Subordinated Debentures 9.625% 7/1/2005 5,646,734
12,000,000 Kelley Oil & Gas Corp., Sr. Notes 13.5% 6/15/1999 12,750,000
5,704,000 Petroleum Heat & Power Co., Inc., Subordinated Debentures 12.25% 2/1/2005 6,302,920
------------
24,699,654
------------
Pollution Control - 0.5%
4,000,000 Norcal Waste Systems, Inc., Sr. Notes 12.50% 11/15/2005 4,240,000
------------
Publishing & Printing - 4.8%
2,500,000 K-III Communications Corp., Sr. Notes 10.25% 6/1/2004 2,537,500
10,550,000 National Fiberstok Corp., Sr. Notes 11.625% 6/15/2002 10,602,750
11,500,000 Neodata Services, Inc., Sr. Notes, Series B Zero Coupon 5/1/2003 11,557,500
4,000,000 News America Holdings, Inc., Convertible Liquid Yield
Option Notes Zero Coupon 3/11/2013 1,945,000
750,000 News America Holdings, Inc., Subordinated Notes Zero Coupon 3/31/2002 744,375
9,800,000 Park Newspapers, Inc., Sr. Notes 11.875% 5/15/2004 9,898,000
5,850,000 Sullivan Graphics, Inc., Sr. Subordinated Notes 12.75% 8/1/2005 5,645,250
------------
42,930,375
------------
Retail - 0.1%
2,750,000 F & M Distributors, Inc., Sr. Subordinated Notes 11.5% 4/15/2003 85,938(c)
7,000,000 Wherehouse Entertainment, Inc., Sr. Subordinated Notes 13.0% 8/1/2002 455,000(c)
------------
540,938
------------
Retail: Food - 4.6%
6,600,000 Dominick's Finer Foods, Sr. Subordinated Notes 10.875% 5/1/2005 7,012,500
5,000,000 Farm Fresh, Inc., Sr. Notes 12.25% 10/1/2000 4,325,000
7,450,000 Jitnay-Jungle Stores of America, Sr. Notes 12.0% 3/1/2006 7,636,250
3,900,000 Pueblo Xtra International, Inc., Sr. Notes 9.50% 8/1/2003 3,461,250
11,250,000 Ralph's Supermarkets, Inc., Sr. Subordinated Notes 11.0% 6/15/2005 10,406,250
2,950,000 Smith's Food & Drug Centers, Inc., Sr. Subordinated Notes 11.25% 5/15/2007 3,001,625
5,025,000 TLC Beatrice International Holdings, Sr. Secured Notes 11.5% 10/1/2005 5,112,938
------------
40,955,813
------------
Telecommunications - 22.3%
12,250,000 American Communications Services, Sr. Discount Notes Zero Coupon 11/1/2005 6,860,000
4,100,000 American Communications Services, Sr. Discount Notes Zero Coupon 4/1/2006 2,152,500
5,700,000 Arch Communications Group, Inc., Sr. Discount Notes Zero Coupon 3/15/2008 2,964,000
8,400,000 A+ Network, Inc., Sr. Subordinated Notes 11.875% 11/1/2005 8,736,000
10,000,000 Call-Net Enterprises, Inc., Sr. Discount Notes Zero Coupon 12/1/2004 7,425,000
11,450,000 Clearnet Communications, Inc., Sr. Discount Notes Zero Coupon 12/15/2005 7,099,000
8,700,000 Comcast Cellular, Inc., Sr. Participation Redeemable Notes,
Series B Zero Coupon 3/5/2000 6,003,000
9,250,000 Comcast Cellular, Inc., Sr. Redeemable Notes Zero Coupon 3/5/2000 6,382,500
1,445,000 GST Telecommunications, Inc., Sr. Subordinated Notes Zero Coupon 12/15/2005 1,434,163
11,560,000 GST USA, Inc., Sr. Discount Notes Zero Coupon 12/15/2005 6,704,800
7,423,000 Horizon Cellular Telephone Co., Sr. Subordinated Discount
Notes, Series B Zero Coupon 10/1/2000 6,996,177
14,350,000 Hyperion Telecommunications, Sr. Discount Notes Zero Coupon 4/15/2003 8,107,750
4,650,000 In-Flight Phone Corp., Sr. Discount Notes, Series B Zero Coupon 5/15/2002 1,662,375
7,900,000 IntelCom Group (U.S.A.), Inc., Sr. Discount Notes Zero Coupon 9/15/2005 4,759,750
6,000,000 IntelCom Group (U.S.A.), Inc., Sr. Discount Notes Zero Coupon 5/1/2006 3,285,000
8,200,000 InterCel, Inc., Sr. Discount Notes Zero Coupon 5/1/2006 4,510,000
5,850,000 Intermedia Communications of Florida, Sr. Discount Notes Zero Coupon 5/15/2006 3,246,750
4,700,000 Intermedia Communications of Florida, Sr. Notes, Series B 13.5% 6/1/2005 5,264,000
17,250,000 IXC Communications, Inc., Sr. Notes, Series A 13.0% 10/1/2005 18,112,500
14,650,000 Microcell Telecommunications, Inc., Units Zero Coupon 6/1/2006 7,178,500
20,000,000 Millicom International Cellular S.A., Sr. Discount Notes 10.0% 6/1/2006 10,750,000(e)
8,800,000 MobileMedia Communications, Inc., Sr. Subordinated Deferred
Coupon Notes Zero Coupon 12/1/2003 6,292,000
13,400,000 NEXTEL Communications, Inc., Sr. Discount Notes Zero Coupon 8/15/2005 7,973,000
9,850,000 Nextlink Communications LLC, Sr. Notes 12.50% 4/15/2006 9,850,000
2,900,000 Pagemart, Inc., Sr. Discount Notes Zero Coupon 11/1/2003 2,247,500
19,600,000 PageMart Nationwide, Inc., Sr. Discount Exchange Notes Zero Coupon 2/1/2005 13,132,000
10,600,000 Teleport Communications Group, Sr. Discount Notes Zero Coupon 7/1/2007 6,227,500
2,850,000 USA Mobile Communications, Inc., Sr. Notes 14.0% 11/1/2004 3,291,750
2,750,000 USA Mobile Communications, Inc., Sr. Notes 9.5% 2/1/2004 2,557,500
10,000,000 Viatel, Inc., Sr. Discount Notes Zero Coupon 1/15/2005 5,650,000
14,000,000 WinStar Communications, Inc., Sr. Discount Notes Zero Coupon 10/15/2005 7,770,000
5,500,000 WinStar Communications, Inc., Convertible Sr. Subordinated
Discount Notes Zero Coupon 10/15/2005 3,657,500
------------
198,282,515
------------
Transportation - 1.1%
9,550,000 Alamo Rent-A-Car, Inc., Sr. Notes 11.75% 1/31/2006 9,884,250
------------
Total Corporate Bonds (cost $725,313,442 ) 722,785,516
PREFERRED STOCKS - 11.1% (a)
49,201 Cablevision Systems Corp., Preferred Stock 4,612,594
47,175 Cablevision Systems Corp., Red. Exch., Preferred Stock, Series G 4,564,181
48,000 California Federal Bank, Preferred Stock, Series B 5,256,000
156,300 Chevy Chase Savings Bank, Preferred Stock 4,728,075
36,448 Communications & Power Industries, Inc., Convertible Preferred
Stock, Series B 3,743,465
4,350 Consolidated Hydro, Inc., Preferred Stock 436,088
45,000 First Nationwide Bank, Noncumulative Preferred Stock 4,927,500
17,000 Flagstar Cos., Convertible Preferred Stock, Series A 217,813
49,500 Grand Union Holdings Corp., Cumulative Preferred Stock, Series A 0(b,d)
200,000 Granite Broadcasting Corp., Convertible Preferred Stock 13,371,875
219,606 Harvard Industries, Inc., Exchangeable Payment-In-Kind Preferred Stock 5,833,284
37,000 K-III Communications Corp., Exchangeable Preferred Stock 975,875
46,520 K-III Communications Corp., Exchangeable Preferred Stock, Series B 4,686,889
52,000 K-III Communications Corp., Preferred Stock, Series C 4,849,000
33,000 Merrill Lynch & Co., Inc., 6.0% Structure Yield Product
Exchangeable for Common Stock, (Cox Communications), 6/1/99 730,125
143,000 MFS Communication, Inc., 8% Cumulative Convertible Preferred Stock 9,080,500
73,000 Mobile Telecommunications Technologies Corp., Convertible Preferred Stock 1,815,875
113,000 Network Imaging Corp., Convertible Preferred Stock, Series A 1,751,500
110,000 Newscorp Overseas Ltd., Cumulative Guaranteed Preferred Stock, Series A 2,695,000
9,333 PanAmSat Corp., Convertible Preferred Stock 10,592,955
144,942 Riggs National Corp., Preferred Stock 4,094,611
147,500 River Bank America, Preferred Stock 3,705,938
83,000 SFX Broadcasting, Inc., 6.5% Convertible Preferred Stock, Series D 4,316,000
1,771 Time Warner, Inc., Series K Exchangeable Preferred Stock 1,735,580
Total Preferred Stocks (cost $93,008,044) 98,720,723
COMMON STOCKS & STOCK WARRANTS - 4.6% (a,b)
15,900 American Communications Services, Stock Warrants 1,669,500
37,000 American Telecasting, Inc., Stock Warrants 185,000
4,100 American Telecasting, Inc., Stock Warrants 123,000
202,940 Arch Communications Group, Common Stock 3,779,757
55,000 Bell & Howell Co., Common Stock 1,794,375
2,310 Communications & Power Industries, Inc., Common Stock 231,000
7,830 Consolidated Hydro, Inc., Stock Warrants 0(d)
79,500 Envirotest Systems Corp., Class A Common Stock 218,625
101,377 Gaylord Container Corp., Class A Common Stock 792,008
127,902 Gaylord Container Corp., Stock Warrants 999,234
36,251 Grand Union Co., Stock Warrants 1,813
18,126 Grand Union Co., Stock Warrants 5,800
65,000 Harvard Industries, Inc., Class B Common Stock 796,250
10,100 In-Flight Phone Corp., Warrants 0
215,000 IntelCom Group (U.S.A.), Inc., Common Stock 5,375,000
68,300 IntelCom Group (U.S.A.), Inc., Stock Warrants 1,161,100
209,000 InterCel, Inc., Common Stock 4,180,000
5,900 Intermedia Communications of Florida, Stock Warrants 236,000
38,000 JPS Textiles Group, Common Stock, Class A 380
139,371 Magellan Health Services, Common Stock 2,996,476
50,379 Memorex Telex N.V. ADR, Common Stock 62,974
1,728 Memorex Telex N.V. ADR, Stock Warrants 0
297,000 MobileMedia Corp., Class A Common Stock 3,601,125
3,750 NEXTEL Communications, Stock Warrants 38
3,086 NEXTEL Communications, Stock Warrants 31
33,250 PageMart Nationwide, Inc., Common Stock 349,125
202,500 Pagemart Wireless, Inc., Class A Common Stock 2,025,000
5,750 Payless Cashways, Inc., Stock Warrants 575
13,350 People's Choice TV Corp., Stock Warrants 13,350
106,200 Plantronics, Inc., Common Stock 3,902,850
23,840 Protection One Alarm Monitoring, Common Stock 250,320
1,500 Terex Corp., Stock Appreciation Rights 75(d)
5,000 Triangle Wire & Cable, Inc., Stock Warrants 0(d)
118,000 United International Holdings, Inc., Class A Common Stock 1,622,500
27,000 United International Holdings, Inc., Stock Warrants 783,000
361,000 Viatel, Inc., Common Stock 1,444,000(d)
138,000 Wireless One, Inc., Common Stock 2,484,000
19,200 Wireless One, Inc., Stock Warrants 153,600
------------
Total Common Stocks & Stock Warrants (cost $34,983,493) 41,237,881
------------
Principal Maturity
Amount Rate Date
- ------------ ----------- ----------
SHORT-TERM SECURITIES - 3.0% (a)
Commercial Paper
$19,300,000 Gillette Co. 5.55% 7/1/1996 19,300,000
7,800,000 Warner-Lambert Co. 5.30% 7/3/1996 7,797,703
------------
Total Short-Term Securities (at amortized cost) 27,097,703
Total Investments (cost $880,402,682) $889,841,823(f)
============
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 June 30, 1996,
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 June 30, 1996.
<CAPTION>
Acquisition
Security Date Cost
-------------------------------------------------------------------------- ------------ ------------
<S> <C> <C>
Consolidated Hydro, Inc., Stock Warrants 2/8/1994 171,277
Grand Union Holdings Corp., Cumulative Preferred Stock, Series A 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) Denominated in U.S. dollars.
(f) At June 30, 1996, the aggregate cost of securities for federal tax purposes was $880,402,682 and the net unrealized
appreciation of investments based on that cost was $9,439,141 which is comprised of $48,868,223 aggregate gross unrealized
appreciation and $39,429,082 aggregate gross unrealized depreciation.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB Series Fund, Inc.
Income Portfolio
Portfolio of Investments
June 30, 1996
(unaudited)
Principal Maturity
Amount Rate Date Value
- ---------------- ------ ----------- -------------
<S> <C> <C> <C> <C>
CORPORATE BONDS - 35.3% (a)
Aerospace - 1.2%
$5,000,000 Lockheed Martin Corp., Notes 7.45% 6/15/2004 $5,072,430
5,000,000 Lockheed Martin Corp., Notes 7.7% 6/15/2008 5,097,995
--------------
10,170,425
--------------
Automotive - 1.3%
5,000,000 Ford Motor Credit Co., Notes 6.375% 10/6/2000 4,904,930
6,000,000 General Motors Corp., Debentures 8.1% 6/12/2024 5,992,446
--------------
10,897,376
--------------
Bank & Finance - 13.5%
12,500,000 Associates Corp. of North America, Notes 6.625% 5/15/1998 12,560,563
5,000,000 Associates Corp. of North America, Sr. Notes 9.125% 4/1/2000 5,388,225
2,000,000 Chase Manhattan Corp., Subordinated Notes 9.375% 7/1/2001 2,204,592
5,000,000 Chemical New York Corp., Debentures 9.75% 6/15/1999 5,404,260
8,000,000 Equitable Life Assurance Society of the United States,
Surplus Notes 6.95% 12/1/2005 7,672,464
5,500,000 First Bank National Association, Subordinated Notes 6.875% 4/1/2006 5,330,671
6,500,000 General Electric Capital Corp., Debentures 8.85% 4/1/2005 7,225,946
6,000,000 Metropolitan Life Insurance Co., Surplus Notes 7.7% 11/1/2015 5,852,112
8,500,000 Midland Bank plc, Subordinated Notes 7.625% 6/15/2006 8,603,130
13,000,000 Nationwide CSN Trust, Trust Notes 9.875% 2/15/2025 14,332,916
5,000,000 New York Life Insurance Co., Surplus Notes 6.4% 12/15/2003 4,781,775
3,500,000 Norwest Financial, Inc., Sr. Notes 6.25% 11/1/2002 3,388,515
5,000,000 Prudential Insurance Co., Surplus Notes 8.3% 7/1/2025 5,010,875
2,500,000 Reliastar Financial Corp., Sr. Notes 8.625% 2/15/2005 2,682,500
6,000,000 Societe-Generale- New York, Subordinated Notes 9.875% 7/15/2003 6,867,888
3,000,000 Societe-Generale- New York, Subordinated Notes,
Series 1995, Class A 7.4% 6/1/2006 2,999,808
4,000,000 Swiss Bank Corp.- New York, Subordinated Debentures 7.5% 7/15/2025 3,923,656
10,000,000 Wells Fargo & Co., Subordinated Notes 6.875% 4/1/2006 9,651,750
--------------
113,881,646
--------------
Broadcasting - 3.1%
4,000,000 Continental Cablevision, Inc., Sr. Notes 8.3% 5/15/2006 4,145,964
1,500,000 Groupo Televisa S.A., Sr. Notes, Series A 11.375% 5/15/2003 1,524,375
4,000,000 Rogers Cablesystems, Inc., Sr. Secured Second Priority Notes 9.625% 8/1/2002 3,970,000
3,000,000 Rogers Communications Inc., Sr. Notes 9.125% 1/15/2006 2,782,500
3,000,000 TCI Communications, Inc., Sr. Notes 8.0% 8/1/2005 2,947,014
5,000,000 Time Warner, Inc., Notes 9.625% 5/1/2002 5,503,155
3,000,000 Viacom, Inc., Sr. Notes 7.75% 6/1/2005 2,920,518
3,000,000 Viacom, Inc., Subordinated Debentures 8.0% 7/7/2006 2,775,000
--------------
26,568,526
--------------
Chemicals - 0.9%
3,500,000 Methanex Corp., Notes 7.75% 8/15/2005 3,465,276
4,000,000 Uniroyal Chemical Co., Sr. Notes 9.0% 9/1/2000 4,070,000
--------------
7,535,276
--------------
Electric Utilities - 0.6%
2,000,000 El Paso Electric Co., First Mortgage Bonds, Series E 9.4% 5/1/2011 1,995,000
3,500,000 Empresa Electrica Pehuienche S.A., Notes 7.3% 5/1/2003 3,457,097
--------------
5,452,097
--------------
Electrical Equipment - 0.6%
5,000,000 Litton Industries, Inc., Debentures 7.75% 3/15/2026 4,883,015
--------------
Food & Beverage - 0.3%
3,000,000 Nabisco, Inc., Notes 6.7% 6/15/2002 2,935,380
--------------
Hospital Management - 1.2%
6,000,000 Integrated Health Services, Inc., Sr. Subordinated Notes 9.625% 5/31/2002 5,970,000
4,000,000 Tenet Healthcare Corp. 9.625% 9/1/2002 4,250,000
--------------
10,220,000
--------------
Household Products - 0.7%
5,000,000 Procter & Gamble, Guaranteed ESOP Debentures 9.36% 1/1/2021 5,985,485
--------------
Leisure & Entertainment - 0.5%
4,000,000 Disney (Walt) Co., Sr. Bonds, Series A 6.38% 3/30/2001 3,927,856
--------------
Natural Gas - 1.3%
4,000,000 Coastal Corp., Sr. Debentures 9.75% 8/1/2003 4,514,308
4,000,000 Coastal Corp., Sr. Notes 10.375% 10/1/2000 4,474,848
2,000,000 Columbia Gas Systems, Inc., Series A Notes 6.39% 11/28/2000 1,960,128
--------------
10,949,284
--------------
Petroleum - 2.9%
2,500,000 CITGO Petroleum Corp., Sr. Notes 7.875% 5/15/2006 2,502,750
6,872,501 Mobil Oil Corp., ESOP Sinking Fund Debentures 9.17% 2/29/2000 7,232,619
3,000,000 Oryx Energy Co., Notes 8.125% 10/15/2005 2,980,761
9,000,000 Texaco Capital, Inc., Debentures 7.5% 3/1/2043 8,713,332
3,000,000 United Meridian Corp., Sr. Subordinated Notes 10.375% 10/15/2005 3,086,250
--------------
24,515,712
--------------
Retail - 4.3%
7,000,000 Dayton Hudson Corp., Debentures 8.5% 12/1/2022 7,075,635
6,000,000 Dayton Hudson Corp., Notes 6.4% 2/15/2003 5,732,718
6,000,000 Federated Department Stores, Sr. Notes 10.0% 2/15/2001 6,397,500
2,000,000 K-Mart Corp., Pass Through Certificates, Series 1995-K-4 9.35% 1/2/2020 1,665,000
5,250,000 Revco D.S., Inc., Sr. Notes 9.125% 1/15/2000 5,460,000
10,000,000 Sears, Roebuck Acceptance Corp., Medium Term Notes, Series I 6.87% 7/3/2000 10,000,000
--------------
36,330,853
--------------
Services - 1.3%
4,675,000 ARA Group, Inc., Subordinated Notes 8.5% 6/1/2003 4,663,313
6,000,000 Electronic Data Systems Corp., Notes 6.85% 5/15/2000 6,023,580
--------------
10,686,893
--------------
Telecommunications - 0.6%
5,000,000 Teleport Communications Group, Inc., Sr. Notes 9.875% 7/1/2006 5,025,000
--------------
Telephone - 0.8%
6,000,000 New York Telephone Co., Debentures 9.375% 7/15/2031 6,642,312
--------------
Transportation - 0.2%
2,000,000 Teekay Shipping Corp., First Preferred Ship Mortgage Notes 8.32% 2/1/2008 1,875,000
--------------
Total Corporate Bonds (cost $298,948,399) 298,482,136
--------------
FOREIGN GOVERNMENT BONDS - 4.7% (a,c)
5,000,000 British Columbia Hydro & Power, Debentures 12.5% 9/1/2013 5,773,145
5,000,000 British Columbia Hydro & Power, Debentures 15.5% 7/15/2011 5,346,375
5,000,000 Inter American Development Bank, Notes 7.0% 6/15/2025 4,739,135
3,000,000 Korea Electric Power Corp., Debentures 7.75% 4/1/2013 2,968,998
3,000,000 Korean Development Bank, Sr. Notes 6.5% 11/15/2002 2,882,106
6,000,000 Ontario Province, Canada, Debentures 11.75% 4/25/2013 6,797,280
6,000,000 Ontario Province, Canada, Sr. Bonds 7.375% 1/27/2003 6,162,954
5,000,000 Tenaga Nasional Berhad, Debentures 7.5% 11/1/2025 4,734,110
--------------
Total Foreign Government Bonds (cost $42,377,410) 39,404,103
--------------
ASSET-BACKED SECURITIES - 12.7% (a)
12,000,000 AT&T Universal Card Master Trust, Class A, Series 1995-2 5.95% 10/17/2002 11,715,468
7,500,000 Chase Manhattan Credit Card, Series 1996-3, Class A 7.04% 2/15/2004 7,616,543
16,000,000 Chase Manhattan Credit Card, Series 1996-4, Class A 6.73% 2/15/2002 16,148,624
25,000,000 Deutsche Floorplan Receivables Master Trust, Series 1994-1-A 5.696% 2/15/2001 25,072,725(b)
10,000,000 Discover Card Master Trust I, Series 1996-3-A 6.05% 8/18/2008 9,222,490
3,959,266 IBM Credit Receivables Lease Trust, Series 1993-1 4.55% 11/15/2000 3,919,562
7,500,000 NationsBank Credit Card Master, Series 1995-A 6.45% 4/15/2003 7,469,092
12,000,000 Standard Credit Master Trust 1, Credit Card Participation
Certificates, Series 1995-9-A 6.55% 10/7/2007 11,515,428
15,000,000 World Financial Network Credit Card Master Trust, Series 1996-B 9.9% 2/15/2004 15,067,485
--------------
Total Asset-Backed Securities (cost $108,812,730) 107,747,417
--------------
MORTGAGE-BACKED SECURITIES - 14.8% (a)
15,165,296 Federal Home Loan Mortgage Corp., Participation Certificates 6.0% 4/1/2011 14,373,804
21,000,000 Federal National Mortgage Association, Participation Certificates 7.0% 7/19/1909 20,205,938(d)
64,000,000 Government National Mortgage Association, Modified
Pass Through Certificates 6.5% 7/19/1909 59,620,000(d)
32,223,980 Government National Mortgage Association, Modified
Pass Through Certificates 7.0% 1999 - 2025 30,956,175
------------
Total Mortgage-Backed Securities (cost $124,934,418) 125,155,917
------------
U.S. GOVERNMENT - 17.6% (a)
65,500,000 U.S. Treasury Bonds 6.875 - 12.0% 2003 - 2025 72,425,117(e,f)
75,000,000 U.S. Treasury Notes 6.0 - 7.875% 1997 - 2006 77,372,236
------------
Total U.S. Government (cost $148,815,917) 149,797,353
------------
PREFERRED STOCK - 0.2% (a)
20,000 K-III Communications Corp., Series C Exchangeable
Preferred Stock (cost $2,000,000) 1,865,000
------------
Principal Maturity
Amount Rate Date
- ---------------- ------ --------------
SHORT-TERM SECURITIES - 14.7% (a)
Commercial Paper
10,000,000 Avco Financial Services, Inc. 5.33% 7/18/1996 9,974,831
10,000,000 Corporate Asset Funding Co., Inc. 5.37% 7/17/1996 9,976,133
10,000,000 Electronic Data Systems Corp. 5.32% 7/15/1996 9,979,311
7,000,000 Ford Motor Credit Co. 5.31% 7/2/1996 6,998,967
2,075,000 General Electric Capital Corp. 5.32% 7/11/1996 2,071,934
9,325,000 General Electric Capital Corp. 5.30% 7/11/1996 9,311,272
20,000,000 Great Lakes Chemical Corp. 5.55% 7/1/1996 20,000,000
17,600,000 Harvard University 5.55% 7/1/1996 17,600,000
10,000,000 Pepsico, Inc. 5.32% 7/12/1996 9,983,744
4,398,000 TMI 1 Fuel Corp. 5.42% 7/8/1996 4,393,365
10,000,000 Unilever Capital Corp. 5.33% 7/19/1996 9,973,350
10,000,000 USAA Capital Corp. 5.3% 7/22/1996 9,968,908
5,000,000 Warner-Lambert Co. 5.4% 7/3/1996 4,998,500
------------
Total Short-Term Securities (at amortized cost) 125,230,315
Total Investments (cost $851,119,189) $847,682,241(g)
============
Notes to Portfolio of Investments:
(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 June 30, 1996, U.S. Treasury Bonds valued at $204,937 were held in escrow to cover open call options written as follows:
<CAPTION>
Number of Exercise Expiration
Contracts Price Date Value
------------ -------- ------------ ----------
<S> <C> <C> <C> <C>
U.S. Treasury 50 $109 7/20/1996 $70,313
Futures
(f) At June 30, 1996, U.S. Treasury Bonds valued at $256,172 were pledged as initial margin deposit on the following financial
futures contract:
<CAPTION>
Notional
Number of Market Principal Unrealized
Type Contracts Expiration Position Value Amount Loss
- ------------- ------------ -------------- ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C>> <C>
U.S. Treasury 75 Sept., 1996 Short $8,214,844 $8,210,156 $4,688
Bond
(g) At June 30, 1996 the aggregate cost of securities for federal income tax purposes
was $851,119,189 and the net unrealized depreciation of investments based on that cost was
$3,436,948 which is comprised of $7,647,377 aggregate gross unrealized appreciation and
$11,084,325 aggregate gross unrealized depreciation.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB Series Fund, Inc.
Money Market Portfolio
Portfolio of Investments
June 30, 1996
(unaudited)
Principal Maturity
Amount Rate Date Value
- ---------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
BANKER'S ACCEPTANCES - 6.5% (a)
$1,300,000 Bankers Trust Co., N.A. - New York 5.39% 10/29/1996 $1,276,643
2,000,000 Bankers Trust Co., N.A. - New York 5.33% 10/30/1996 1,964,171
2,000,000 Nationsbank, N.A. (South) 5.38% 11/1/1996 1,963,237
-----------
Total Banker's Acceptances 5,204,051
-----------
COMMERCIAL PAPER - 88.4% (a)
Agriculture - 3.2%
1,573,000 Canadian Wheat Board (Guaranteed Government of Canada) 5.37% 8/9/1996 1,563,849
1,000,000 Canadian Wheat Board (Guaranteed Government of Canada) 5.35% 8/22/1996 992,272
-----------
2,556,121
-----------
Banking-Foreign - 3.0%
956,000 Finance One Funding Corp., (Credit Suisse, Direct Pay
Letter of Credit) 5.53% 12/6/1996 1,470,858
1,500,000 Finance One Funding Corp., (Credit Suisse, Direct Pay
Letter of Credit) 5.38% 11/8/1996 932,798
-----------
2,403,656
-----------
Computer & Office Equipment - 5.0%
2,000,000 Hewlett-Packard Co. 5.37% 8/29/1996 1,982,398
2,000,000 International Business Machines Corp. 5.32% 7/1/1996 2,000,000
-----------
3,982,398
-----------
Cosmetics & Toiletries - 0.7%
600,000 Unilever Capital Corp. 5.45% 10/18/1996 590,099
-----------
Drugs & Healthcare - 4.9%
950,000 Lilly (Eli) & Co. 5.38% 8/20/1996 942,901
2,000,000 Lilly (Eli) & Co. 5.31% 10/2/1996 1,972,565
1,000,000 Warner-Lambert Co. 5.08% 7/26/1996 996,472
-----------
3,911,938
-----------
Education - 4.2%
1,000,000 Leland H. Stanford Junior University 5.35% 10/7/1996 985,436
1,000,000 Leland H. Stanford Junior University 5.26% 9/25/1996 987,434
1,400,000 Yale University 5.30% 8/26/1996 1,388,458
-----------
3,361,328
-----------
Finance-Automotive - 8.0%
2,000,000 Ford Motor Credit Co. 5.28% 7/15/1996 1,995,894
1,500,000 Ford Motor Credit Co. 5.36% 8/5/1996 1,492,183
1,000,000 General Motors Acceptance Corp. 5.38% 9/16/1996 988,493
2,000,000 General Motors Acceptance Corp. 5.34% 7/16/1996 1,995,550
-----------
6,472,120
-----------
Finance-Commercial - 8.8%
2,000,000 C.I.T. Group Holdings, Inc. 5.36% 8/7/1996 1,988,982
145,000 General Electric Capital Corp. 5.30% 7/26/1996 144,466
1,000,000 General Electric Capital Corp. 5.27% 8/5/1996 994,876
2,000,000 General Electric Capital Corp. 5.26% 9/3/1996 1,981,298
2,000,000 Norwest Financial, Inc. 5.27% 9/23/1996 1,975,407
-----------
7,085,029
-----------
Finance-Consumer - 7.4%
2,000,000 Beneficial Corp. 5.36% 8/12/1996 1,987,493
2,000,000 Commercial Credit Co. 5.38% 8/12/1996 1,987,447
2,000,000 Penney (J.C.) Funding Corp. 5.28% 7/22/1996 1,993,840
-----------
5,968,780
-----------
Finance-Retail - 2.4%
2,000,000 Sears Roebuck Acceptance Corp. 5.32% 8/19/1996 1,985,518
-----------
Finance-Structured - 5.0%
2,000,000 Corporate Asset Funding Co., Inc. 5.32% 7/8/1996 1,997,931
2,000,000 New Center Asset Trust 5.26% 8/16/1996 1,986,558
-----------
3,984,489
-----------
Financial Services - 5.6%
1,000,000 American Express Credit Corp. 5.27% 7/1/1996 995,502
1,000,000 American Express Credit Corp. 5.06% 8/2/1996 1,000,000
2,500,000 USAA Capital Corp. 5.27% 7/26/1996 2,490,851
-----------
4,486,353
-----------
Food & Beverage - 2.1%
1,705,000 CPC International, Inc. 5.29% 7/18/1996 1,700,741
-----------
Household Products - 2.5%
2,000,000 Colgate-Palmolive Co. 5.27% 7/25/1996 1,992,973
-----------
Industrial - 9.4%
2,000,000 Chevron Transport Corp., (Guaranteed Chevron Corp.) 5.39% 8/20/1996 1,985,028
2,000,000 Great Lakes Chemical Corp. 5.32% 7/11/1996 1,997,056
1,600,000 Monsanto Co. 5.39% 10/1/1996 1,577,961
2,000,000 Monsanto Co. 5.25% 7/9/1996 1,997,667
-----------
7,557,712
-----------
Insurance - 7.8%
2,000,000 A.I. Credit Corp. 5.28% 7/18/1996 1,995,013
1,800,000 A.I.G. Funding Corp. 5.38% 9/13/1996 1,780,094
511,000 Metlife Funding, Inc. 5.38% 8/7/1996 508,174
2,000,000 Prudential Funding Corp. 5.27% 7/25/1996 1,992,973
-----------
6,276,254
-----------
Leisure & Entertainment - 2.5%
2,000,000 Walt Disney Co. 5.26% 7/2/1996 1,999,708
-----------
Petroleum - 4.1%
3,290,000 Koch Industries, Inc. 5.55% 7/1/1996 3,290,000
-----------
Transportation - 1.8%
1,485,000 United Parcel Service of America, Inc. 5.35% 7/12/1996 1,482,572
-----------
Total Commercial Paper 71,087,789
-----------
CERTIFICATES OF DEPOSIT - 2.5% (a)
Euro Dollar
$2,000,000 ABN AMRO Bank, N.V. 5.45% 10/29/1996 2,000,125
-----------
VARIABLE RATE NOTES - 2.5% (a,b)
2,000,000 Federal Home Loan Bank, Variable Rate Notes 5.30% 7/23/1996 1,998,607
-----------
OTHER - 0.1% (a,b)
80,000 Federated Master Trust 5.08% 7/1/1996 80,000
-----------
Total Investments (at amortized cost) $80,370,572(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.
See accompanying notes to portfolio of investments.
</TABLE>
<TABLE>
<CAPTION>
LB Series Fund, Inc.
Opportunity Growth Portfolio
Financial Statements
Statement of Assets and Liabilities
June 30, 1996
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $134,898,384) $141,067,694
Cash 466,883
Receivable for investment securities sold 655,438
Dividend and interest receivable 900
Initial margin deposit on open options written 2,000
------------
Total assets 142,192,915
------------
LIABILITIES:
Open options written, at value
(premium received $86,329) 34,205
Payable for investment securities purchased 4,094,637
Accrued expenses 3,018
------------
Total liabilities 4,131,860
------------
NET ASSETS $138,061,055
============
NET ASSETS CONSIST OF:
Paid-in capital (11,030,517 shares of capital
stock outstanding) $130,208,025
Undistributed net investment income 100,271
Accumulated net realized gain from sale
of investments 1,531,325
Unrealized net appreciation of investments 6,221,434
------------
NET ASSETS $138,061,055
============
Net asset value and public offering price per share
($138,061,055 (divided by) 11,030,517 shares of capital
stock outstanding) $12.52
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
For the period from January 18, 1996 to June 30, 1996
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Dividend income $2,084
Interest income 217,762
----------
Total income 219,846
----------
Expenses --
Investment advisory fee 119,575
----------
Net investment income 100,271
----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investment transactions 1,540,701
Net realized loss on closed or expired
option contracts written (9,376)
----------
Net realized gain on investments 1,531,325
Net change in unrealized appreciation of investments 6,221,434
----------
Net gain on investments 7,752,759
----------
Net increase in net assets resulting
from operations $7,853,030
==========
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
For the period from
January 18, 1996
(effective date) to
June 30, 1996
(unaudited)
------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $100,271
Net realized gain on investments 1,531,325
Net change in unrealized appreciation of investments 6,221,434
------------
Net increase in net assets resulting from operations 7,853,030
------------
CAPITAL STOCK TRANSACTIONS --
Proceeds from sale of shares 131,665,066
Cost of shares redeemed (1,457,041)
------------
Net increase in net assets from capital stock transactions 130,208,025
------------
Net increase in net assets 138,061,055
NET ASSETS:
Beginning of period --
------------
End of period (including undistributed net investment
income of $100,271) $138,061,055
============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB Series Fund, Inc.
World Growth Portfolio
Financial Statements
Statement of Assets and Liabilities
June 30, 1996
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $97,528,119) $99,957,944
Cash (including foreign currency holdings
of $342,003) 346,430
Receivable for investment securities sold 123,492
Dividend and interest receivable 215,783
--------------
Total assets 100,643,649
--------------
LIABILITIES:
Payable for investment securities purchased 2,097,420
Unrealized depreciation of foreign
currency contracts held 541
Accrued expenses 43,911
--------------
Total liabilities 2,141,872
--------------
NET ASSETS $98,501,777
==============
NET ASSETS CONSIST OF:
Paid-in capital (9,396,632 shares of
capital stock outstanding) $95,370,520
Undistributed net investment income 682,191
Accumulated net realized gain from sale of
investments and foreign currency transactions 27,666
Unrealized net appreciation of investments and
on translation of assets and liabilities
in foreign currencies 2,421,400
--------------
NET ASSETS $98,501,777
==============
Net asset value and public offering price per share
($98,501,777 (divided by) 9,396,632 shares of capital
stock outstanding) $10.48
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
For the period from January 18, 1996 to June 30, 1996
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Dividend income (net of foreign taxes of $92,436) $629,584
Interest income 241,838
----------
Total income 871,422
----------
Expenses --
Investment advisory fee 189,231
----------
Net investment income 682,191
----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain on investment transactions 22,354
Net realized gain on foreign currency transactions 5,312
----------
Net realized gain on investments and foreign
currency transactions 27,666
----------
Net change in unrealized appreciation
of investments 2,429,825
Net change in unrealized depreciation on translation
of assets and liabilities in foreign currencies (8,425)
----------
Net change in unrealized appreciation of
investments and on translation of assets
and liabilities in foreign currencies 2,421,400
----------
Net gain on investments and foreign currency 2,449,066
----------
Net increase in net assets resulting
from operations $3,131,257
==========
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
For the period
January 18, 1996
(effective date) to
June 30, 1996
(unaudited)
-----------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $682,191
Net realized gain on investments
and foreign currency transactions 27,666
Net change in unrealized appreciation of investments
and on translation of assets and liabilities
in foreign currencies 2,421,400
-----------
Net increase in net assets resulting from operations 3,131,257
-----------
CAPITAL STOCK TRANSACTIONS --
Proceeds from sale of shares 96,628,624
Cost of shares redeemed (1,258,104)
----------
Net increase in net assets from capital stock transactions 95,370,520
-----------
Net increase in net assets 98,501,777
NET ASSETS:
Beginning of period --
-----------
End of period (including undistributed net investment
income of $682,191) $98,501,777
===========
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB Series Fund, Inc.
Growth Portfolio
Financial Statements
Statement of Assets and Liabilities
June 30, 1996
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value $1,377,079,679
(cost, $1,271,914,874) 41,342
Cash 39,987,194
Receivable for investment securities sold 1,733,828
Dividend and interest receivable --------------
1,418,842,043
Total assets --------------
LIABILITIES:
Open options written, at value 17,688
(premium received $26,234) 24,738,414
Payable for investment securities purchased 31,491
Accrued expenses --------------
24,787,593
Total liabilities --------------
$1,394,054,450
NET ASSETS ==============
NET ASSETS CONSIST OF:
Paid-in capital ($79,996,653 shares of $1,186,485,985
capital stock outstanding)
Accumulated net realized gain from 102,395,114
sale of investments 105,173,351
Unrealized net appreciation of investments --------------
$1,394,054,450
NET ASSETS ==============
Net asset value and public offering price per share
($1,394,054,450 (divided by) 79,996,653 shares of $17.43
capital stock outstanding) ======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended June 30, 1996
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income -- $8,766,063
Dividend income 2,862,112
Interest income ------------
11,628,175
Total income ------------
Expenses -- 2,576,270
Investment advisory fee ------------
9,051,905
Net investment income ------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS: 103,691,080
Net realized gain on investment transactions
Net realized gain on closed or expired 355,679
option contracts written ------------
104,046,759
Net realized gain on investments
Net change in unrealized appreciation 4,562,720
of investments ------------
108,609,479
Net gain on investments ------------
Net increase in net assets resulting $117,661,384
from operations ============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
6/30/96 Year Ended
(unaudited) 12/31/95
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $9,051,905 $14,366,663
Net realized gain on investments 104,046,759 178,314,745
Net change in unrealized appreciation or
depreciation of investments 4,562,720 93,851,521
-------------- --------------
Net increase in net assets resulting from operations 117,661,384 286,532,929
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS --
Net investment income (9,051,905) (14,366,663)
Net realized gain on investments (156,587,523) --
-------------- --------------
Total distributions (165,639,428) (14,366,663)
-------------- --------------
CAPITAL STOCK TRANSACTIONS --
Proceeds from sale of shares 118,224,406 176,315,838
Reinvested dividend distributions 165,639,428 14,366,662
Cost of shares redeemed (14,975,493) (11,526,193)
-------------- --------------
Net increase in net assets from capital stock transactions 268,888,341 179,156,307
-------------- --------------
Net increase in net assets 220,910,297 451,322,573
NET ASSETS:
Beginning of period 1,173,144,153 721,821,580
-------------- --------------
End of period $1,394,054,450 $1,173,144,153
============== ==============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB Series Fund, Inc.
High Yield Portfolio
Financial Statements
<S> <C>
Statement of Assets and Liabilities
June 30, 1996
(unaudited)
ASSETS:
Investments in securities, at value
(cost, $880,402,682) $889,841,823
Cash 727,969
Receivable for investment securities sold 7,031,329
Interest and dividend receivable 10,329,220
------------
Total assets 907,930,341
------------
LIABILITIES:
Payable for investment securities purchased 7,441,013
Accrued expenses 19,677
Dividends payable 434,571
------------
Total liabilities 7,895,261
------------
NET ASSETS $900,035,080
============
NET ASSETS CONSIST OF:
Paid-in capital (90,431,384 shares of
capital stock outstanding) $907,388,681
Accumulated net realized loss from sale
of investments (16,792,742)
Unrealized net appreciation of investments 9,439,141
------------
NET ASSETS $900,035,080
============
Net asset value and public offering price per share
($900,035,080 (divided by) 90,431,384 shares of
capital stock outstanding) $9.95
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended June 30, 1996
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Interest income $38,872,513
Dividend income 3,635,880
-----------
Total income 42,508,393
-----------
Expenses --
Investment advisory fee 1,702,017
-----------
Net investment income 40,806,376
-----------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain on investment transactions 9,908,461
Net change in unrealized depreciation of investments (10,131,341)
-----------
Net loss on investments (222,880)
-----------
Net increase in net assets resulting
from operations $40,583,496
===========
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
6/30/96 Year Ended
(unaudited) 12/31/95
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $40,806,376 $68,300,887
Net realized gain (loss) on investment transactions 9,908,461 (17,634,503)
Net change in unrealized appreciation or depreciation
of investments (10,131,341) 70,247,942
------------ ------------
Net increase in net assets resulting from operations 40,583,496 120,914,326
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS --
Net investment income (40,806,376) (68,300,887)
------------ ------------
CAPITAL STOCK TRANSACTIONS --
Proceeds from sale of shares 78,710,024 95,025,930
Reinvested dividend distributions 40,718,494 68,106,629
Cost of shares redeemed (11,660,364) (18,896,967)
------------ ------------
Net increase in net assets from capital stock transactions 107,768,154 144,235,592
------------ ------------
Net increase in net assets 107,545,274 196,849,031
NET ASSETS:
Beginning of period 792,489,806 595,640,775
------------ ------------
End of period $900,035,080 $792,489,806
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB Series Fund, Inc.
Income Portfolio
Financial Statements
Statement of Assets and Liabilities
June 30, 1996
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $851,119,189) $847,682,241
Cash 53,862
Receivable for investment securities sold 8,816,505
Interest receivable 10,679,433
------------
Total assets 867,232,041
------------
LIABILITIES:
Open options written, at value
(premium received $30,722) 70,313
Payable for investment securities purchased 94,185,970
Accrued expenses 16,887
Payable for variation margin on open
futures contracts 4,688
Dividends payable 275,200
------------
Total liabilities 94,553,058
------------
NET ASSETS $772,678,983
============
NET ASSETS CONSIST OF:
Paid-in capital (80,720,346 shares of
capital stock outstanding) 805,804,536
Accumulated net realized loss from sale
of investments (29,644,327)
Unrealized net depreciation of investments (3,481,226)
------------
NET ASSETS $772,678,983
============
Net asset value and public offering price per share
($772,678,893 (divided by) 80,720,346 shares of
capital stock outstanding) $9.57
=====
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended June 30, 1996
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Interest income $26,246,114
Dividend income 54,444
------------
Total income 26,300,558
------------
Expenses --
Investment advisory fee 1,524,130
------------
Net investment income 24,776,428
------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized loss on investment transactions (7,641,830)
Net realized gain on closed or expired option
contracts written 86,412
Net realized gain on closed futures contracts 38,474
------------
Net realized loss on investments (7,516,944)
Net change in unrealized depreciation of investments (31,944,307)
------------
Net loss on investments (39,461,251)
------------
Net change in net assets resulting
from operations ($14,684,823)
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
6/30/96 Year Ended
(unaudited) 12/31/95
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $24,776,428 $45,596,598
Net realized gain (loss) on investment transactions (7,516,944) 14,948,726
Net change in unrealized appreciation or depreciation
of investments (31,944,307) 57,100,261
------------- -------------
Net change in net assets resulting from operations (14,684,823) 117,645,585
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS --
Net investment income (24,776,428) (45,596,598)
------------- -------------
CAPITAL STOCK TRANSACTIONS --
Proceeds from sale of shares 53,550,641 72,115,092
Reinvested dividend distributions 24,755,926 45,455,976
Cost of shares redeemed (28,223,060) (35,776,663)
------------- -------------
Net increase in net assets from capital stock transactions 50,083,507 81,794,405
------------- -------------
Net increase in net assets 10,622,256 153,843,392
NET ASSETS:
Beginning of period 762,056,727 608,213,335
------------- -------------
End of period $772,678,983 $762,056,727
============= =============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB Series Fund, Inc.
Money Market Portfolio
Financial Statements
Statement of Assets and Liabilities
June 30, 1996
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at amortized
cost and value $80,370,572
Cash 10,127
Interest receivable 12,674
-----------
Total assets 80,393,373
-----------
LIABILITIES:
Dividends payable 22,200
Accrued expenses 1,757
-----------
Total liabilities 23,957
-----------
NET ASSETS $80,369,416
===========
NET ASSETS CONSIST OF:
Paid-in capital (80,369,416 shares of
capital stock outstanding) $80,369,416
===========
Net asset value and public offering price per share
($80,369,416 (divided by) 80,369,416 shares of
capital stock outstanding) $1.00
=====
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended June 30, 1996
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Interest income $2,014,242
----------
Expenses --
Investment advisory fee 147,498
----------
Net investment income $1,866,744
==========
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
6/30/96 Year Ended
(unaudited) 12/31/95
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $1,866,744 $2,658,387
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS --
Net investment income (1,866,744) (2,658,387)
----------- -----------
CAPITAL STOCK TRANSACTIONS --
Proceeds from sale of shares 31,929,881 52,883,017
Reinvested dividend distributions 1,864,120 2,645,101
Cost of shares redeemed (19,574,552) (31,260,652)
----------- -----------
Net increase in net assets from capital stock transactions 14,219,449 24,267,466
----------- -----------
Net increase in net assets 14,219,449 24,267,466
NET ASSETS:
Beginning of period 66,149,967 41,882,501
----------- -----------
End of period $80,369,416 $66,149,967
=========== ===========
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB Series Fund, Inc.
Financial Highlights
For a share outstanding throughout each period (a)
For the period from
January 16, 1966
(effective date) to
June 30, 1996
Opportunity Growth portfolio (unaudited)
-------------------
<S> <C>
Net asset value, beginning of period $10.00
------
Income From Investment Operations --
Net investment income 0.01
Net realized and unrealized gain
(loss) on investments 2.51
------
Total from investment operations 2.52
------
Net asset value, end of period $12.52
======
Total investment return at net asset value (b) 25.17%
Net assets, end of period ($ millions) $138.1
Ratio of expenses to average net assets 0.40%(c)
Ratio of net investment income to
average net assets 0.33%(c)
Portfolio turnover rate 49%
Average Commission Rate (d) $0.0623
For the period from
January 16, 1966
(effective date) to
June 30, 1996
World Growth portfolio (unaudited)
-------------------
Net asset value, beginning of period $10.00
------
Income From Investment Operations --
Net investment income 0.07
Net realized and unrealized gain
(loss) on investments 0.41
------
Total from investment operations 0.48
------
Net asset value, end of period $10.48
======
Total investment return at net asset value (b) 4.83%
Net assets, end of period ($ millions) $98.50
Ratio of expenses to average net assets 0.85%(c)
Ratio of net investment income to
average net assets 3.06%(c)
Portfolio turnover rate 3%
Average Commission Rate (d) $0.0255
See accompanying notes to the financial highlights.
</TABLE>
<TABLE>
<CAPTION>
LB Series Fund, Inc.
Financial Highlights
For a share outstanding throughout each period (a)
Six Months
Ended
6/30/96
Growth portfolio (unaudited) 1995 1994 1993 1992 1991
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $18.27 $13.51 $14.76 $13.89 $14.85 $10.72
------ ------ ------ ------ ------ ------
Income From Investment Operations --
Net investment income 0.12 0.24 0.20 0.29 0.23 0.27
Net realized and unrealized gain
(loss) on investments 1.54 4.76 (0.87) 1.08 0.85 4.13
------ ------ ------ ------ ------ ------
Total from investment operations 1.66 5.00 (0.67) 1.37 1.08 4.40
------ ------ ------ ------ ------ ------
Less Distributions --
Dividends from net investment income (0.12) (0.24) (0.20) (0.29) (0.23) (0.27)
Distributions from net realized
gain on investments (2.38) -- (0.38) (0.21) (1.81) --
------ ------ ------ ------ ------ ------
Total distributions (2.50) (0.24) (0.58) (0.50) (2.04) (0.27)
------ ------ ------ ------ ------ ------
Net asset value, end of period $17.43 $18.27 $13.51 $14.76 $13.89 $14.85
====== ====== ====== ====== ====== ======
Total investment return at net asset value (b) 9.65% 37.25% -4.66% 10.10% 8.13% 41.35%
Net assets, end of period ($ millions) $1,394.1 $1,173.1 $721.8 $534.5 $231.0 $96.2
Ratio of expenses to average net assets 0.40%(c) 0.40% 0.40% 0.40% 0.40% 0.40%
Ratio of net investment income to
average net assets 1.41%(c) 1.53% 1.52% 2.17% 1.90% 2.24%
Portfolio turnover rate 111% 184% 135% 243% 230% 247%
Average Commission Rate (d) $0.0661 n/a n/a n/a n/a n/a
Six Months
Ended
6/30/96
High Yield portfolio (unaudited) 1995 1994 1993 1992 1991
------ ------ ------ ------ ------ ------
Net asset value, beginning of period $9.94 $9.18 $10.76 $9.62 $9.07 $7.62
------ ------ ------ ------ ------ ------
Income From Investment Operations --
Net investment income 0.47 0.96 0.97 0.96 1.02 1.08
Net realized and unrealized gain
(loss) on investments 0.01 0.76 (1.40) 1.16 0.71 1.45
------ ------ ------ ------ ------ ------
Total from investment operations 0.48 1.72 (0.43) 2.12 1.73 2.53
------ ------ ------ ------ ------ ------
Less Distributions --
Dividends from net investment income (0.47) (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 (0.47) (0.96) (1.15) (0.98) (1.18) (1.08)
------ ------ ------ ------ ------ ------
Net asset value, end of period $9.95 $9.94 $9.18 $10.76 $9.62 $9.07
====== ====== ====== ====== ====== ======
Total investment return at net asset value (b) 4.94% 19.62% -4.38% 22.91% 20.08% 35.32%
Net assets, end of period ($ millions) $900.0 $792.5 $595.6 $444.5 $154.3 $56.7
Ratio of expenses to average net assets 0.40%(c) 0.40% 0.40% 0.40% 0.40% 0.40%
Ratio of net investment income to
average net assets 9.60%(c) 9.94% 9.75% 9.29% 10.69% 12.62%
Portfolio turnover rate 51% 67% 44% 68% 80% 145%
Six Months
Ended
6/30/96
Income portfolio (unaudited) 1995 1994 1993 1992 1991
------ ------ ------ ------ ------ ------
Net asset value, beginning of period $10.08 $9.04 $10.36 $9.87 $10.01 $9.10
------ ------ ------ ------ ------ ------
Income From Investment Operations --
Net investment income 0.31 0.65 0.64 0.63 0.73 0.81
Net realized and unrealized gain
(loss) on investments (0.51) 1.04 (1.11) 0.49 0.15 0.91
------ ------ ------ ------ ------ ------
Total from investment operations (0.20) 1.69 (0.47) 1.12 0.88 1.72
------ ------ ------ ------ ------ ------
Less Distributions --
Dividends from net investment income (0.31) (0.65) (0.64) (0.63) (0.73) (0.81)
Distributions from net realized
gain on investments -- -- (0.21) -- (0.29) --
------ ------ ------ ------ ------ ------
Total distributions (0.31) (0.65) (0.85) (0.63) (1.02) (0.81)
------ ------ ------ ------ ------ ------
Net asset value, end of period $9.57 $10.08 $9.04 $10.36 $9.87 $10.01
====== ====== ====== ====== ====== ======
Total investment return at net asset value (b) -1.99% 19.36% -4.68% 11.66% 9.23% 19.76%
Net assets, end of period ($ millions) $772.7 $762.1 $608.2 $566.9 $254.7 $100.0
Ratio of expenses to average net assets 0.40%(c) 0.40% 0.40% 0.40% 0.40% 0.40%
Ratio of net investment income to
average net assets 6.50%(c) 6.81% 6.78% 6.23% 7.29% 8.43%
Portfolio turnover rate 75% 132% 139% 153% 115% 137%
Six Months
Ended
6/30/96
Money market portfolio (unaudited) 1995 1994 1993 1992 1991
------ ------ ------ ------ ------ ------
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------ ------
Net investment income from investment
operations 0.03 0.06 0.04 0.03 0.03 0.06
Less: Dividends from net investment income (0.03) (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 $1.00
====== ====== ====== ====== ====== ======
Total investment return at net asset value (b) 2.55% 5.71% 4.00% 2.87% 3.53% 5.89%
Net assets, end of period ($ millions) $80.4 $66.1 $41.9 $24.9 $26.6 $23.0
Ratio of expenses to average net assets 0.40%(c) 0.40% 0.40% 0.40% 0.40% 0.40%
Ratio of net investment income to
average net assets 5.05%(c) 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 return is based on the change in net asset value during the period and assumes reinvestment
of all distributions.
(c) Computed on an annualized basis.
(d) Average commission rate is based on total broker commissions incurred in connection with execution of
portfolio transactions during the period divided by the sum of all portfolio shares purchased and sold
during the period that were subject to a commission. Broker commissions are treated as capital items
that increase the cost of securities purchased or reduce the proceeds of securities sold.
The accompanying notes are an integral part of the financial statements.
See accompanying notes to the financial highlights.
</TABLE>
LB Series Fund, Inc.
Notes to Financial Statements
June 30, 1996
(unaudited)
(1) ORGANIZATION
The LB Series Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as a diversified, open-end
investment company. The Fund is divided into six separate series
(the "Portfolio(s)"), each with its own investment objective and
policies. The six Portfolios of the Fund are: Opportunity Growth
Portfolio, World Growth Portfolio, Growth Portfolio, High Yield
Portfolio, Income Portfolio and Money Market Portfolio. 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. The Opportunity Growth and World
Growth Portfolio's registration was declared effective by the
Securities Exchange Commission and began operations as separate
series of the LB Series Fund, Inc. on January 18, 1996. On January
18, 1996, Lutheran Brotherhood invested $2,000,000 each in the
Opportunity Growth and World Growth Portfolios and acquired 200,000
shares of capital stock in each portfolio.
(2) SIGNIFICANT ACCOUNTING POLICIES
Investment Security Valuations
Securities traded on U.S. or foreign securities exchanges or
included in a national market system are valued at the last quoted
sales price at the close of each business day. 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, Financial Futures and
Forward Foreign Currency Contracts
The Fund, with the exception of the Money Market Portfolio, may buy
put and call options, write covered call options and buy and sell
futures 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. The World Growth Portfolio may also enter into
options and futures contracts on foreign currencies and forward
foreign currency contracts to protect against adverse foreign
exchange rate fluctuation.
Option contracts are valued daily and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon
expiration or closing of the option transaction. When an option is
exercised, the proceeds on sale for a written call option or the
cost of a security for purchased put and call options is adjusted by
the amount of premium received or paid.
Upon entering into a futures contract, the Fund is required to
deposit initial margin, either cash or securities in an amount equal
to a certain percentage of the contract value. Subsequent variation
margin payments are made or received by the Fund each day. The
variation margin payments are equal to the daily changes in the
contract value and are recorded as unrealized gains and losses. The
Fund realizes a gain or loss when the contract is closed or expires.
Forward foreign currency contracts are valued daily and unrealized
appreciation or depreciation is recorded daily as the difference
between the contract exchange rate and the closing forward rate
applied to the face amount of the contract. A realized gain or loss
is recorded at the time a forward contract is closed.
(2) SIGNIFICANT ACCOUNTING POLICIES (continued)
Foreign Currency Translations
Securities and other assets and liabilities of the World Growth
Portfolio that are denominated in foreign currencies are translated
into U.S. dollars at the daily closing rate of exchange. Foreign
currency amounts related to the purchase or sale of securities and
income and expenses are translated at the exchange rate on the
transaction date. Currency gains and losses are recorded from sales
of foreign currency, exchange gains or losses between the trade date
and settlement dates on securities transactions, and other
translation gains or losses on dividends, interest income and
foreign withholding taxes. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses are not
segregated from gains and losses that arise from changes in market
prices of investments, and are included with the net realized and
unrealized gain or loss on investments.
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 $301,758 from such fees.
Distributions to Shareholders
Dividends from net investment income, if available, are declared and
reinvested daily for the High Yield, Income and Money Market
Portfolios, quarterly for the Growth Portfolio, and annually for the
Opportunity Growth and World Growth Portfolios. With the exception
of the Money Market Portfolio, net realized gains from securities
transactions, if any, are distributed at least annually after the
close of the Fund's fiscal year. Short-term gains and 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.
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
Investment Advisory Fees
Each Portfolio pays Lutheran Brotherhood, the Fund's investment
advisor, a fee for its advisory services. The fees are accrued daily
and paid monthly. The fees are based on the following annual rates
of average daily net assets: Opportunity Growth, Growth, High Yield,
Income and Money Market Portfolios, 0.40%; World Growth Portfolio,
0.85%.
Lutheran Brotherhood has entered into a sub-advisory agreement with
Rowe Price - Fleming International, Inc. for the performance of
various sub-advisory services for the World Growth Portfolio. For
these services, Lutheran Brotherhood pays a portion of an annual
sub-advisory fee that is based on the following annual rates of
combined average daily net assets of the Lutheran Brotherhood World
Growth Fund and the World Growth Portfolio: 0.75% for the first $20
million in assets; 0.60% for the next $30 million, and 0.50% for
assets over $50 million. When combined annual average assets exceed
$200 million, the fee will be equal to 0.50% of all of the World
Growth Portfolio's annual average daily net assets.
Other Expenses
All other operating expenses of the Fund are absorbed by either
Lutheran Brotherhood or LBVIP.
(3) INVESTMENT ADVISORY FEES AND OTHER EXPENSES (continued)
Other Expenses (continued)
The Fund has a deferred compensation plan which covers the
independent directors of the Fund. Participation in the plan is
voluntary and each independent director can elect to defer all or a
portion of fee income. Amounts that are deferred are invested in the
Lutheran Brotherhood Family of Funds.
Certain officers and non-independent directors of the Fund are
officers of Lutheran Brotherhood and officers or directors of LBVIP;
however, they receive no compensation from the Fund.
(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 six months ended June 30, 1996.
(5) DISTRIBUTIONS FROM CAPITAL GAINS
During the six months ended June 30, 1996, a distribution from net
realized capital gains of $156,587,523 was paid by the Growth
Portfolio. This distribution relates to net capital gains realized
during the year ended December 31, 1995.
(6) CAPITAL LOSS CARRYOVER
At December 31, 1995, the High Yield and Income Portfolios had
accumulated net realized capital loss carryovers of $25,438,084 and
$21,655,720 respectively, expiring $1,662,110 and $21,655,720 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.
(7) INVESTMENT TRANSACTIONS
Purchases and Sales of Investment Securities
For the six months ended June 30, 1996, the cost of purchases and
the proceeds from sales of investment securities other than U.S.
Government and short term securities were as follows:
In thousands
----------------------------
Portfolio Purchases Sales
- ------------ ----------- -----------
Opportunity Growth $ 151,097 $ 27,565
World Growth 88,089 1,283
Growth 1,427,592 1,335,998
High Yield 525,675 416,181
Income 297,654 323,645
Purchases and sales of U.S. Government securities were:
In thousands
----------------------------
Portfolio Purchases Sales
- ------------ ----------- -----------
Growth $ 7,343 $ 12,552
Income 255,685 327,678
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
$1,444,075 at June 30, 1996 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.
(7) INVESTMENT TRANSACTIONS (continued)
Investments in Options and Futures Contracts
The movement in the price of the instrument underlying an option or
futures contract may not correlate perfectly with the movement in
the prices of the portfolio securities being hedged. A lack of
correlation could render the Fund's hedging strategy unsuccessful
and could result in a loss to the Fund. In the event that a liquid
secondary market would not exist, the Fund could be prevented from
entering into a closing transaction which could result in additional
losses to the Fund.
Open Option Contracts
The number of contracts and premium amounts associated with call
option contracts written during the six months ended June 30, 1996
were as follows:
<TABLE>
<CAPTION>
Opportunity Growth Portfolio Growth Portfolio Income Portfolio
------------------------------ -------------------------- ------------------------
Number of Premium Number of Premium Number of Premium
Contracts Amount Contracts Amount Contracts Amount
----------- ------------- ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1995 -- $ -- -- $ -- -- $ --
Opened 532 100,924 4,620 864,413 476 213,730
Closed (85) (14,595) (2,439) (565,672) (426) (183,008)
Expired -- -- (1,294) (149,345) -- --
Exercised -- -- (632) (123,162) -- --
---------- ---------- ---------- ---------- ---------- ----------
Balance at
June 30, 1996 447 $ 86,329 255 $ 26,234 50 $ 30,722
========== ========== ========== ========== ========== ==========
</TABLE>
Foreign Denominated Investments
The World Growth Portfolio invests primarily in foreign denominated stocks.
Foreign denominated assets and currency contracts may involve more risks
than domestic transactions, including: currency risk, political and economic
risk, regulatory risk, and market risk. The Portfolio may also invest in
securities of companies located in emerging markets. Future economic or
political developments could adversely affect the liquidity or value, or
both, of such securities.
At June 30, 1996, the World Growth Portfolio was a party to foreign
currency exchange contracts under which it is obligated to
exchange currencies at specified future dates. Risks may arise from
the possible inability of counterparties to meet the terms
of their contracts and from movements in currency values.
Outstanding contracts at June 30, 1996, were as follows:
<TABLE>
<CAPTION>
U.S. U.S.
Currency Value Currency Value
Settlement to be as of to be as of Appreciation
Date Delivered 06/30/96 Received 06/30/96 (Depreciation)
------------ -------------- ------------ ---------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
07/01/96 $ 20,689 USD $ 20,689 26,204 AUD $ 20,593 $( 96)
07/01/96 87,854 USD 87,854 11,245,366 ESP 87,851 (3)
07/01/96 369,799 USD 369,799 40,396,858 JPY 369,376 (423)
07/01/96 54,589 USD 54,589 76,998 SGD 54,570 (19)
-----
$(541)
=====
AUD -- Australian Dollar
ESP -- Spanish Peseta
JPY -- Japanese Yen
SGD -- Singapore Dollar
USD -- United States Dollar
</TABLE>
(8) CAPITAL STOCK
Authorized capital stock consists of two billion shares as follows:
Shares Par
Portfolio Authorized Value
-------------- -------------- -----------
Opportunity Growth 200,000,000 $0.01
World Growth 200,000,000 $0.01
Growth 600,000,000 $0.01
High Yield 200,000,000 $0.01
Income 400,000,000 $0.01
Money Market 400,000,000 $0.01
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.
<TABLE>
<CAPTION>
Transactions in capital stock were as follows:
Opportunity World High Money
Growth Growth Growth Yield Income Market
------------- ------------ -------------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Shares outstanding at
December 31, 1994 N/A N/A 53,435,175 64,885,392 67,282,998 41,882,501
Shares sold N/A N/A 10,639,507 9,776,871 7,399,297 52,883,017
Shares issued on reinvestment
of dividends and distributions N/A N/A 860,983 7,060,502 4,735,997 2,645,101
Shares redeemed N/A N/A (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
Shares sold 11,141,005 9,518,744 6,740,079 7,803,909 5,485,711 31,929,881
Shares issued on reinvestment
of dividends and distributions -- -- 9,888,878 4,036,592 2,544,027 1,864,120
Shares redeemed (110,488) (122,112) (829,931) (1,151,475) (2,923,584) (19,574,552)
---------- --------- ---------- ---------- ---------- ----------
Shares outstanding at
June 30, 1996 11,030,517 9,396,632 79,996,653 90,431,384 80,720,346 80,369,416
========== ========= ========== ========== ========== ==========
</TABLE>
LB SERIES FUND, INC.
OPPORTUNITY GROWTH PORTFOLIO
WORLD GROWTH PORTFOLIO
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.
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LUTHERAN BROTHERHOOD
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