[7 SOLID SQUARE BULLETS]
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LB SERIES FUND, INC.
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[ART OF COMPASS WITH LETTER "N" IN TOP RIGHT CORNER:
THE WORDS "CHOICE", "PROTECTION" AND "ACCUMULATION" ARE
PRINTED ON THE CIRCLE OF THE COMPASS]
Semiannual Report
for Variable Products
June 30, 1997
[LUTHERAN BROTHERHOOD LOGO OMITTED]
[PHOTO OF MR. BJELLAND OMITTED]
Our Message to You
June 30, 1997
Dear Shareholder,
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 insurance contracts issued by Lutheran
Brotherhood and Lutheran Brotherhood Variable Insurance Products
Company. This report covers the six months ended June 30, 1997, and
provides a summary of the economic and market trends that influenced
the returns from stocks, bonds and money market instruments during the
period. The report also includes reviews of recent investment
strategies that the individual portfolio managers used to benefit from
these trends -- as well as financial statements for each portfolio.
The last six months may have resembled a roller-coaster ride for many
investors. After a strengthening economy helped major stock market
indexes break new records, fears of higher inflation and interest
rates caused stocks to tumble. Once investors realized that inflation
was under control, however, stock prices rebounded sharply to deliver
exceptional gains for the first half of the year. Bond prices also
dipped early in the year and then recovered later in the period.
Such market fluctuations demonstrate the importance of taking a long-
term approach toward investing. Individual markets and sectors often
experience temporary weakness, only to emerge with greater strength
and potential for gains. Investors who stuck with their long-term
strategies during the recent market downturns kept themselves
positioned to benefit from the market rallies that followed.
The behavior of financial markets over the last six months also
underscores the value of allocating your investments over different
asset classes. Although the stock and bond markets weakened this
spring, their weaknesses occurred for different lengths of time and
varied in intensity. This is because the bond market often views
economic conditions differently from the stock market, and vice versa.
Likewise, individual sectors within the stock and bond markets can
respond differently to the same economic climate. By investing in many
asset classes and market sectors, you have a better chance that some
portion of your investments is performing well. Over time, this can
smooth out your investment returns and make it easier to reach your
financial goals.
These are remarkable times for investors in the securities markets. As
you'll read in our Economic and Market Overview that follows, the U.S.
economy is thriving and attracting investors from around the globe.
Meanwhile, new and exciting growth stories are emerging in countries
outside of the United States from Europe to the Pacific Rim to Latin
America -- creating plentiful opportunities for investors in foreign
securities.
Yet, we caution investors to not get overly excited when the market
sets new highs or overly concerned as it stumbles through its
inevitable corrections. These events, though exciting from a
historical standpoint, are merely shorter legs of a much longer
journey. Staying focused on a longer-term investment horizon and
remaining disciplined in your investing strategy will provide the
surest route to your destination.
We hope this Semiannual Report will be useful as you review your
financial program. If you have questions or would like additional
information, please contact your Lutheran Brotherhood representative,
or call us toll-free at 1-800-423-7056.
Sincerely,
/S/ROLF F. BJELLAND
Rolf F. Bjelland
President and Chairman
LB Series Fund, Inc.
Economic and Market Overview June 30, 1997
Continued strong economic expansion, with relatively low inflation and
interest rates, helped stocks and bonds earn solid returns in the
first half of 1997.
Although nervousness about higher future inflation caused the stock
market to weaken from February to April, it quickly recovered and set
new highs. During the period the Standard & Poor's 500 Index earned a
total return of 20.55%, a six-month return that nearly doubled the
average 12-month return that stocks have enjoyed in recent decades.
Stocks rallied on unexpected strength in corporate earnings and a
positive balance of supply and demand. Demand increased in large part
as a result of continued strong cash flow into equity mutual funds and
variable insurance and annuities. Meanwhile, new mergers, acquisitions
and corporate stock buyback programs acted to reduce stock supplies.
Moderate economic growth with low inflation also benefited stocks
overseas. As Japanese stocks rebounded sharply from earlier weakness
and stocks in Europe and Latin America continued to gain, Morgan
Stanley Capital International's Europe, Australia and Far East (EAFE)
Index returned 11.36% during the period.
Hit hard by inflation concerns, U.S. bonds earned more modest returns.
Although the Federal Reserve raised interest rates just 0.25%, strong
growth and low unemployment caused investors to fear additional rate
hikes for much of the period. Eventually, however, greater optimism
took hold in May and June, and bond prices recovered the ground they'd
lost. This left the Lehman Brothers Aggregate Bond Index with a six-
month total return of 3.09%.
Low Inflation Calms Interest Rate Fears
The year started with strong economic growth and unexpected gains in
corporate earnings. And, though investors feared the Fed might enact a
series of rate hikes to thwart inflation, inflation remained moderate
without them. Confident that the seven-year-old economic expansion
would continue, investors continued to add cash to equity mutual
funds.
Meanwhile, bond yields were rising on expectations of higher
inflation. Eventually, this put downward pressure on stock prices --
which gave back most of their earlier gains by the middle of April.
Soon, however, signs of slower growth and lower inflation had
investors convinced that the Fed would suspend any additional interest
rate increases. After the yield for 30-year Treasury bonds reached a
nine-month high of 7.17%, bond yields began to fall. By the end of
June, long-term Treasury yields were back to February levels, with
bond prices rebounding sharply and stock prices once again setting new
highs.
Though they have lagged large-company issues since the middle of 1996,
prices for small-company stocks responded well during the spring
rally. However, stocks of large companies continued to dominate, with
drug stocks and other consumer staples remaining the top performers,
along with stocks of large technology and financial firms. In the
fixed-income market, prices for corporate bonds outperformed U.S.
Treasury bonds when rates were falling, but lagged Treasuries when
rates rose.
A Bright Outlook
Stock prices have risen strongly for two and a half years, supported
in large part by rapid growth in corporate earnings. If the economy
continues to grow moderately, inflation remains modest, and earnings
remain healthy, stock prices could have further room to advance. Of
course, with prices at historic highs, the occasional market
correction is also to be expected.
Because the current economic expansion has been less robust than many
before it, and is less inclined toward inflation, we believe this
expansion may have greater durability. Although consumer debt is
relatively high, low unemployment and solid wages have sustained
consumer demand for goods. Ample supplies of goods, without excess
inventories, argues for continued low levels of inflation and further
production gains.
Although inflation fears may temporarily drive bond yields higher, we
believe the very positive economic climate could encourage lower
yields and higher prices in the second half of the year. We are also
encouraged by recent legislative progress in reducing federal budget
deficits. Finally, we will continue to monitor the value of the U.S.
dollar versus other world currencies. Should the dollar remain strong,
we believe U.S. stocks and bonds will continue to attract foreign
investors.
Opportunity Growth Portfolio Review LB Series Fund, Inc.
[GRAPHIC OMITTED: PHOTO OF MICHAEL A. BINGER]
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.
For several years, the rally in stock prices was led by small
companies and industries with above-average potential for long-term
growth -- such as technology and health care. This benefited the
Opportunity Growth Portfolio, which invests heavily in these sectors.
However, from the middle of 1996 through the first quarter of 1997,
investors favored stocks of larger companies and industries with
closer ties to the economy. Stocks of companies with market
capitalizations below $250 million, where the Portfolio also invests
heavily, suffered most in this shift.
Eventually, investors realized that declines in the prices of smaller-
cap issues had been exaggerated. During 1997's second quarter,
investors were reawakening to the growth potential of small stocks,
and this end of the market rebounded strongly. This, plus minor
adjustments in the mix of its investments, helped the Portfolio regain
most of the ground it lost in the first quarter. Weak performances by
stocks of very small companies, however, caused the Portfolio to
underperform. For the six months ended June 30, 1997, the Fund had a
total return (based on NAV) of -3.67%, versus 10.20% for the Russell
2000 Index.
Increasing Diversification
As stocks of small companies rebounded, the Portfolio enjoyed strong
returns from technology companies such as Avant and health care
companies such as PDT, Inc. There were also solid gains from
individual issues -- such as Fairfield Communities, a vacation
timeshare firm. Software companies like Project Software and Unison
Software continued to underperform.
[GRAPHIC WORM CHART OMITTED: GROWTH OF $10,000 INVESTED SINCE 1/31/96]
Performance Through June 30,1997
Growth of $10,000 Invested Since 1/31/96
INSET BOX ON CHART READS:
Opportunity Growth Portfolio
Annualized Total Returns*
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Since Inception
1/18/96 9.97%
- -------------------------------
1 Year -8.29%
Initial Investment: $10,000
Date of Investment: 1/31/96
Russell 2000
Opp. Growth W/ Reinvest CPI Valued
Month End Total Total Total
Date Value Value Value
1/31/96 $10,000 $10,000 $10,000
2/29/96 10,416 10,312 10,032
3/31/96 10,722 10,525 10,084
4/30/96 11,944 11,089 10,123
5/31/96 12,716 11,525 10,142
6/30/96 11,871 11,052 10,149
7/31/96 10,855 10,087 10,168
8/31/96 11,499 10,673 10,188
9/30/96 12,342 11,090 10,220
10/31/96 11,364 10,920 10,253
11/30/96 10,954 11,369 10,272
12/31/96 11,302 11,667 10,272
1/31/97 11,528 11,901 10,304
2/28/97 10,533 11,613 10,337
3/31/97 9,415 11,065 10,363
4/30/97 9,009 11,095 10,376
5/31/97 10,338 12,329 10,369
6/30/97 10,887 12,858 10,382
Footnote reads:
*See accompanying notes to Portfolio Management Reviews.
Throughout the period we emphasized companies with unique products,
strong earnings growth and quality management. With investors nervous
about earnings, we carefully re-examined every holding to identify any
companies with potential earnings problems. We continued to believe
that technology and health care firms enjoy the greatest opportunities
for growth among American businesses today and remained heavily
invested in those areas. We sold some technology shares during the
period, however, to buy shares of energy and financial companies and
increase the Portfolio's diversification.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)
Short-Term
Securities 14.0%
Common Stocks 85.6%
Bonds 0.4%
We also added firms with market capitalizations greater than $500
million -- a natural evolution for small-company stock funds with
growing assets. By adding slightly larger firms, we hope to reduce
future price volatility without adversely affecting the Portfolio's
potential for growth. We will continue to invest in the smaller end of
the market, though the weighted average market capitalization of
stocks in the Portfolio has climbed slightly to about $300 million.
Attractive Valuations
While small-cap stocks tend to be more volatile than large-cap stocks,
they typically offer stronger potential for growth over time. Because
small-cap stocks still have better valuations than large-cap issues,
the small-cap sector may outperform in coming months as the economy
expands and investors look for greater growth opportunities.
In this environment, we will continue to exchange stocks that have
already met our growth expectations for shares with better growth
potential. As we look for attractive investments and the Portfolio's
assets grow, we expect to continue adding firms with slightly larger
market capitalizations.
[GRAPHIC OMITTED: TOP TEN HOLDINGS]
Top 10 Holdings
% of
Company Portfolio
BMC Industries, Inc. 2.7%
Signature Resorts 2.3%
DataWorks Corp. 2.2%
Complete Management, Inc. 2.1%
Xpedite Systems, Inc. 2.0%
Horizon Mental Health
Management, Inc. 1.9%
Cameron Ashley
Building Products 1.9%
AXENT Technologies, Inc. 1.9%
Steiner Leisure Ltd. 1.8%
PDT, Inc. 1.8%
Footnote reads:
These holdings represent 20.6% of the total investment portfolio.
World Growth Portfolio Review LB Series Fund, Inc.
[GRAPHIC OMITTED: PHOTO OF MARTIN G. WADE]
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 29 years of experience in
research and investment management, including 17 years with Rowe
Price-Fleming.
Investment Objective: To seek long-term capital growth by investing
primarily in common stocks issued by established companies outside the
United States.**
Continued economic growth with low inflation pushed foreign stock
prices higher in the six months ended June 30, 1997. During that time
Latin American markets advanced sharply and European markets made
steady gains. After weakening in the first quarter of 1997, Japanese
stocks rose strongly in the second -- earning positive returns for the
six-month period.
The Japanese market rally had a positive influence on Morgan Stanley
Capital International's Europe, Australia, Far East (EAFE) Index,
which has a greater weight in Japan stocks than the Portfolio. During
the period, the Portfolio earned a total return (based on NAV) of
11.01% compared to the EAFE Index return of 11.36%.
Country Selection is Key
Many of the Portfolio's individual investments performed well over the
period. It was the Portfolio's country weightings that contributed
most to performance, however. The Portfolio continued to benefit from
overweighted positions in Brazil and other Latin American markets,
which have no representation in the EAFE Index. An overweighting in
the Netherlands also helped Portfolio returns. Although the
Portfolio's underweighted position in Japan reduced returns as Japan
rallied in the second quarter, it served the Portfolio well in the
first quarter.
[GRAPHIC WORM CHART OMITTED: GROWTH OF $10,000 INVESTED SINCE 1/31/96]
Performance Through June 30, 1997
Growth Of $10,000 Invested Since 1/31/96
INSET BOX ON CHART READS:
World Growth Portfolio
Annualized Total Returns*
- -------------------------------
Since Inception
1/18/96 15.04%
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1 Year 16.92%
Initial Investment: $10,000
Date of Investment: 1/31/96
MSCI EAFE
World Growth W/ Reinvest CPI Valued
Month End Total Total Total
Date Value Value Value
1/31/96 $10,000 $10,000 $10,000
2/29/96 9,974 10,036 10,032
3/31/96 10,098 10,252 10,084
4/30/96 10,355 10,552 10,123
5/31/96 10,336 10,360 10,142
6/30/96 10,468 10,421 10,149
7/31/96 10,137 10,119 10,168
8/31/96 10,290 10,143 10,188
9/30/96 10,534 10,415 10,220
10/31/96 10,481 10,311 10,253
11/30/96 10,965 10,723 10,272
12/31/96 11,025 10,588 10,272
1/31/97 10,871 10,220 10,304
2/28/97 10,983 10,389 10,337
3/31/97 10,967 10,430 10,363
4/30/97 11,035 10,487 10,376
5/31/97 11,738 11,172 10,369
6/30/97 12,239 11,791 10,382
Footnote reads:
*See accompanying notes to Portfolio Management Reviews.
During the period we took profits in stocks that had performed well --
which reduced the Portfolio's weightings in Brazil, France, Hong Kong,
the United Kingdom, and the Netherlands. Concerned about high stock
prices and economic problems in Southeast Asia, we also trimmed
holdings there. We used the proceeds from these sales to add
investments in Switzerland, where prices had lagged early in the year,
as well as in Argentina and Mexico. When Japanese stock prices
weakened in the first quarter, we added to existing positions there --
continuing to focus on large exporters and domestic cyclical firms.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)
Short-Term
Securities 3.3%
Common and Preferred
Stocks 96.7%
Further Growth Likely
Although recent market strength has pushed stock prices to expensive
levels in some regions, we believe a generally healthy world economic
outlook should sustain these levels in months to come. Economic growth
seems to be accelerating in Continental Europe and has been better
than expected in Japan. If the recent pattern of stronger growth with
moderate inflation remains in place, as we think it will, foreign
stock prices should have further room to advance.
With corporate earnings somewhat vulnerable in the U.K. and Japan, we
expect to remain underweighted in those countries. Because Japan's
economic prospects are better than they've been for some time,
however, we plan to add modestly to holdings there when prices are
attractive. Although we believe the Portfolio is well-positioned with
its current weighting in Latin America, we expect to adjust the mix of
investments in that region --trading positions in Brazil for
investments in other markets with better growth potential.
[GRAPHIC OMITTED: TOP TEN HOLDINGS]
Top 10 Holdings
% of
Company Portfolio
Royal Dutch Petroleum 2.5%
Telecomunicacoes
Brasileiras 2.4%
SmithKline Beecham 2.1%
Novartis AG 2.0%
National Westminster 1.8%
Wolters Kluwer NV 1.8%
Reed International 1.3%
Eaux (Cie Generale) 1.3%
Elsevier NV 1.3%
Shell Transport & Trading 1.3%
Footnote reads:
These holdings represent 17.8% of the total investment portfolio.
Growth Portfolio Review LB Series Fund, Inc.
[GRAPHIC OMITTED: PHOTO OF SCOTT A. VERGIN]
Scott A. Vergin is a Chartered Financial Analyst and portfolio manager
for the Growth Portfolio. He began managing the Portfolio in November
1994, and has managed securities at Lutheran Brotherhood since 1983.
Investment Objective: Investment Objective: To seek long-term growth
of capital by investing primarily in common stocks of established
corporations.
With large-company stock prices rising to record levels in the six
months ended June 30, 1997, investors continued to favor blue-chip
stocks of issuers with good growth potential. In this environment the
Growth Portfolio enjoyed strong performances by holding individual
issues that matched this profile. During the period the Portfolio
earned a total return (based on NAV) of 17.20%. Over the same time the
S&P 500 Index had a return of 20.55%.
Catalysts for Growth
In selecting investments for the Growth Portfolio, we look for
companies with the opportunity to benefit from near-term catalysts for
growth. These catalysts might be new products or improving market and
industry conditions that can cause an acceleration in company
earnings.
Throughout 1996, we found many growth opportunities in large
technology and health care stocks. This continued in the first half of
1997. During that time, the Growth Portfolio enjoyed strong gains from
shares of technology stocks such as Microsoft, Tellabs, Motorola, IBM,
Oracle and Cisco Systems -- as well as from health care stocks such as
Warner-Lambert and Eli Lilly. Oil services stocks such as Halliburton,
Baker Hughes and Falcon Drilling also provided good returns. These
performances far outweighed disappointments from retail stocks such as
Federated Department Stores and certain other consumer issues like
Eastman Kodak and Walt Disney.
[GRAPHIC WORM CHART OMITTED: GROWTH OF $10,000 INVESTED SINCE 6/30/87]
Performance Through June 30, 1997
Growth Of $10,000 Invested Since 6/30/87
INSET BOX ON CHART READS:
Growth Portfolio
Annualized Total Returns*
- ------------------------------------------------------------
10 Years 12.72%
- ------------------------------------------------------------
5 Years 18.11%
- ------------------------------------------------------------
1 Year 30.87%
Initial Investment: $10,000
Date of Investment: 6/30/87
S & P 500
Growth W/ Reinvest CPI Valued
Month End Total Total Total
Date Value Value Value
6/30/87 $10,000 $10,000 $10,000
7/31/87 10,436 10,508 10,021
8/31/87 10,863 10,900 10,076
9/30/87 10,601 10,661 10,126
10/31/87 7,833 8,364 10,153
11/30/87 7,267 7,672 10,168
12/31/87 7,800 8,257 10,165
1/31/88 7,932 8,616 10,191
2/29/88 8,413 9,001 10,218
3/31/88 8,441 8,727 10,262
4/30/88 8,335 8,836 10,314
5/31/88 8,238 8,893 10,350
6/30/88 8,569 9,308 10,394
7/31/88 8,419 9,285 10,438
8/31/88 8,153 8,956 10,482
9/30/88 8,373 9,340 10,552
10/31/88 8,417 9,611 10,587
11/30/88 8,257 9,458 10,596
12/31/88 8,448 9,625 10,614
1/31/89 8,986 10,340 10,667
2/28/89 8,816 10,066 10,711
3/31/89 9,041 10,306 10,772
4/30/89 9,491 10,854 10,843
5/31/89 9,860 11,271 10,905
6/30/89 9,691 11,216 10,931
7/31/89 10,514 12,240 10,957
8/31/89 10,930 12,467 10,975
9/30/89 10,988 12,417 11,010
10/31/89 10,434 12,139 11,063
11/30/89 10,661 12,374 11,090
12/31/89 10,693 12,672 11,107
1/31/90 9,861 11,833 11,222
2/28/90 10,090 11,964 11,274
3/31/90 10,421 12,289 11,336
4/30/90 10,268 11,994 11,354
5/31/90 11,361 13,139 11,380
6/30/90 11,445 13,061 11,442
7/31/90 11,213 13,028 11,486
8/31/90 10,287 11,838 11,592
9/30/90 9,635 11,264 11,688
10/31/90 9,616 11,229 11,759
11/30/90 10,209 11,941 11,785
12/31/90 10,483 12,274 11,785
1/31/91 11,157 12,821 11,856
2/28/91 11,979 13,715 11,873
3/31/91 12,295 14,053 11,891
4/30/91 12,295 14,099 11,909
5/31/91 12,953 14,687 11,944
6/30/91 12,296 14,021 11,979
7/31/91 12,968 14,691 11,997
8/31/91 13,433 15,022 12,032
9/30/91 13,315 14,772 12,085
10/31/91 13,613 14,990 12,102
11/30/91 13,156 14,367 12,138
12/31/91 14,817 16,011 12,147
1/31/92 14,787 15,730 12,164
2/28/92 14,928 15,914 12,208
3/31/92 14,560 15,605 12,270
4/30/92 14,615 16,083 12,287
5/31/92 14,737 16,138 12,305
6/30/92 14,409 15,901 12,349
7/31/92 14,888 16,571 12,376
8/31/92 14,576 16,215 12,411
9/30/92 14,777 16,404 12,446
10/31/92 15,158 16,480 12,490
11/30/92 15,920 17,017 12,508
12/31/92 16,022 17,231 12,499
1/31/93 16,299 17,390 12,560
2/28/93 16,255 17,608 12,605
3/31/93 16,707 17,980 12,649
4/30/93 16,401 17,566 12,684
5/31/93 16,825 18,007 12,701
6/30/93 16,840 18,066 12,719
7/31/93 16,793 18,013 12,719
8/31/93 17,410 18,679 12,754
9/30/93 17,570 18,535 12,781
10/31/93 17,725 18,937 12,834
11/30/93 17,249 18,736 12,842
12/31/93 17,640 18,971 12,842
1/31/94 18,195 19,629 12,878
2/28/94 17,703 19,077 12,922
3/31/94 16,843 18,249 12,966
4/30/94 16,821 18,499 12,983
5/31/94 16,842 18,771 12,992
6/30/94 16,268 18,311 13,036
7/31/94 16,656 18,932 13,071
8/31/94 17,414 19,695 13,124
9/30/94 17,132 19,211 13,159
10/31/94 17,373 19,658 13,168
11/30/94 16,690 18,929 13,186
12/31/94 16,818 19,207 13,186
1/31/95 17,188 19,720 13,239
2/28/95 17,865 20,473 13,292
3/31/95 18,374 21,085 13,336
4/30/95 18,906 21,716 13,380
5/31/95 19,490 22,552 13,406
6/30/95 20,343 23,077 13,433
7/31/95 21,433 23,860 13,433
8/31/95 21,499 23,907 13,468
9/30/95 22,171 24,914 13,494
10/31/95 22,233 24,842 13,538
11/30/95 23,047 25,912 13,529
12/31/95 23,086 26,412 13,521
1/31/96 23,645 27,329 13,600
2/28/96 24,138 27,564 13,644
3/31/96 24,222 27,834 13,714
4/30/96 25,089 28,257 13,767
5/31/96 25,641 28,955 13,794
6/30/96 25,307 29,068 13,802
7/31/96 24,217 27,795 13,829
8/31/96 25,169 28,373 13,855
9/30/96 26,700 29,965 13,899
10/31/96 27,156 30,810 13,943
11/30/96 28,883 33,127 13,970
12/31/96 28,259 32,471 13,970
1/31/97 30,128 34,520 14,014
2/28/97 29,748 34,772 14,058
3/31/97 28,348 33,339 14,093
4/30/97 29,666 35,343 14,111
5/31/97 31,769 37,467 14,102
6/30/97 33,121 39,149 14,120
Footnote reads:
*See accompanying notes to Portfolio Management Reviews.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)
Short-Term
Securities 7.8%
Common Stocks 92.0%
Bonds 0.2%
As in the past, we also emphasized financial stocks in the Portfolio.
At the same time, we maintained a broadly diversified mix of
investments that cut across industry sectors. During the period we
enhanced this diversification by adding shares of real estate
investment trusts. We believe the attractive prices of these issues
and a strong real estate market can help them outperform in the second
half of the year. We also trimmed some positions in utilities and
automobile firms in order to add shares of paper and chemical
companies.
Stock Selection Remains Key
Although a positive outlook for growth in the economy and corporate
earnings could extend the current bull market, stock valuations remain
quite overextended. In this environment we think individual stock
selection will remain key to the Portfolio's returns. Keeping the
Portfolio invested across many industry sectors and focusing on
companies with strong opportunities to outperform will allow it to
participate fully in future market growth while helping to limit its
vulnerability during market corrections.
[GRAPHIC OMITTED: TOP TEN HOLDINGS]
Top 10 Holdings
% of
Company Portfolio
Merck and Co., Inc. 1.7%
General Electric Co. 1.6%
American International
Group, Inc. 1.6%
International Business
Machines 1.5%
Federal National
Mortgage Assoc. 1.4%
Procter & Gamble Co. 1.4%
Pfizer Inc. 1.3%
Cisco Systems, Inc. 1.3%
Warner-Lambert Co. 1.3%
Eli Lilly & Co. 1.3%
Footnote reads:
These holdings represent 14.4% of the total investment portfolio.
High Yield Portfolio Review LB Series Fund, Inc.
[GRAPHIC OMITTED: PHOTO OF THOMAS N. HAAG]
Thomas N. Haag, assistant vice president, is a Chartered Financial
Analyst and portfolio manager for the High Yield Portfolio. He has
managed the Portfolio since January 1992.
Investment Objective: Investment Objective: To seek high current
income and growth of capital by investing primarily in high-yielding
("junk") corporate bonds.
High-yield corporate bonds continued to outpace other fixed-income
securities in the first half of 1997. Although prices for higher-
yielding issues declined between February and April just like prices
for high-quality issues, they rebounded strongly in the months that
followed. This was especially true for zero-coupon bonds and issues of
media and telecommunications companies, which represent a large
portion of the High Yield Portfolio. Good performances by these and
other holdings from April to June helped the Portfolio enjoy a healthy
return for the six months ended June 30, 1997. During that time the
High Yield Portfolio earned a total return (based on NAV) of 6.19%.
That compares with a return of 5.82% for the Lehman Brothers High-
Yield Index.
Lowering Volatility
For several years the Portfolio has held a greater percentage of zero-
coupon and media/telecommunications issues than would be found in its
market benchmark. We believe industry deregulation, among other
factors, gives these investments great potential for long-term
performance. Because they have somewhat lower credit quality and
longer maturities, however, these issues tend to be more volatile when
the outlook for interest rates is unclear. Although they lagged other
sectors of the high-yield market when interest rates were rising in
the middle of the period, they outperformed when interest rates were
falling at the beginning and end of the period.
[GRAPHIC WORM CHART OMITTED: GROWTH OF $10,000 INVESTED
SINCE 11/30/87]
Performance Through June 30, 1997
Growth Of $10,000 Invested Since 11/30/87
INSET BOX ON CHART READS:
High Yield Portfolio
Annualized Total Returns*
- ------------------------------------------------------------
Since inception
11/2/87 12.77%
- ------------------------------------------------------------
5 Years 12.20%
- ------------------------------------------------------------
1 Year 12.88%
Initial Investment: $10,000
Date of Investment: 11/30/87
Lehman High
Series HYLD Yield Index CPI Valued
Month End Total Total Total
Date Value Value Value
11/30/87 $10,000 $10,000 $10,000
12/31/87 10,194 10,241 9,997
1/31/88 10,612 10,583 10,023
2/29/88 11,036 10,926 10,049
3/31/88 10,885 10,812 10,092
4/30/88 10,885 10,894 10,144
5/31/88 10,869 10,911 10,179
6/30/88 11,120 11,070 10,222
7/31/88 11,177 11,143 10,266
8/31/88 11,172 11,126 10,309
9/30/88 11,283 11,267 10,378
10/31/88 11,407 11,403 10,413
11/30/88 11,395 11,470 10,422
12/31/88 11,553 11,524 10,439
1/31/89 11,823 11,727 10,491
2/28/89 11,903 11,753 10,534
3/31/89 11,822 11,661 10,595
4/30/89 11,762 11,710 10,664
5/31/89 12,079 11,937 10,725
6/30/89 12,403 12,085 10,751
7/31/89 12,379 12,070 10,777
8/31/89 12,489 12,111 10,794
9/30/89 12,266 11,907 10,829
10/31/89 11,937 11,625 10,881
11/30/89 11,971 11,602 10,907
12/31/89 11,914 11,620 10,924
1/31/90 11,685 11,370 11,037
2/28/90 11,473 11,136 11,089
3/31/90 11,567 11,428 11,149
4/30/90 11,577 11,409 11,167
5/31/90 11,941 11,629 11,193
6/30/90 12,116 11,910 11,253
7/31/90 12,325 12,231 11,297
8/31/90 11,935 11,535 11,401
9/30/90 11,464 10,693 11,496
10/31/90 11,111 10,131 11,565
11/30/90 11,301 10,447 11,591
12/31/90 11,471 10,506 11,591
1/31/91 11,589 10,795 11,660
2/28/91 12,354 11,976 11,678
3/31/91 12,893 12,681 11,695
4/30/91 13,331 13,201 11,712
5/31/91 13,479 13,225 11,747
6/30/91 13,842 13,616 11,782
7/31/91 14,209 14,052 11,799
8/31/91 14,438 14,375 11,834
9/30/91 14,677 14,575 11,886
10/31/91 15,200 15,062 11,903
11/30/91 15,432 15,140 11,938
12/31/91 15,523 15,358 11,946
1/31/92 16,162 15,899 11,964
2/28/92 16,614 16,291 12,007
3/31/92 16,903 16,493 12,068
4/30/92 17,055 16,556 12,085
5/31/92 17,346 16,789 12,102
6/30/92 17,448 16,947 12,146
7/31/92 17,804 17,203 12,172
8/31/92 18,063 17,429 12,206
9/30/92 18,275 17,606 12,241
10/31/92 17,915 17,358 12,284
11/30/92 18,247 17,577 12,301
12/31/92 18,640 17,777 12,293
1/31/93 19,391 18,295 12,353
2/28/93 19,706 18,616 12,397
3/31/93 20,132 18,857 12,440
4/30/93 20,253 19,021 12,475
5/31/93 20,613 19,247 12,492
6/30/93 21,312 19,651 12,509
7/31/93 21,523 19,842 12,509
8/31/93 21,696 20,009 12,544
9/30/93 21,696 20,061 12,570
10/31/93 22,434 20,466 12,622
11/30/93 22,525 20,564 12,631
12/31/93 22,911 20,819 12,631
1/31/94 23,619 21,271 12,665
2/28/94 23,534 21,215 12,709
3/31/94 22,641 20,414 12,752
4/29/94 22,349 20,275 12,769
5/31/94 22,463 20,285 12,778
6/30/94 22,558 20,348 12,821
7/31/94 22,393 20,521 12,856
8/31/94 22,567 20,666 12,908
9/30/94 22,450 20,668 12,943
10/31/94 22,515 20,718 12,951
11/30/94 22,033 20,457 12,969
12/31/94 21,904 20,608 12,969
1/31/95 21,975 20,889 13,021
2/28/95 22,833 21,605 13,072
3/31/95 23,060 21,838 13,116
4/30/95 23,627 22,393 13,159
5/31/95 24,131 23,020 13,185
6/30/95 24,248 23,174 13,211
7/31/95 25,017 23,466 13,211
8/31/95 25,124 23,539 13,246
9/30/95 25,362 23,829 13,272
10/31/95 25,481 23,976 13,315
11/30/95 25,778 24,187 13,306
12/31/95 26,197 24,567 13,298
1/31/96 26,807 25,000 13,376
2/29/96 27,485 25,020 13,419
3/31/96 27,225 25,002 13,488
4/30/96 27,408 25,057 13,540
5/31/96 27,715 25,207 13,566
6/30/96 27,492 25,417 13,575
7/31/96 27,297 25,534 13,601
8/31/96 27,736 25,809 13,627
9/30/96 28,685 26,431 13,670
10/31/96 28,605 26,635 13,714
11/30/96 28,902 27,160 13,740
12/31/96 29,222 27,355 13,740
1/31/97 29,573 27,623 13,783
2/28/97 30,005 28,057 13,826
3/31/97 29,049 27,639 13,861
4/30/97 29,054 27,929 13,878
5/31/97 30,167 28,527 13,869
6/30/97 31,031 28,923 13,887
Footnote reads:
*See accompanying notes to Portfolio Management Reviews.
Throughout the period we remained committed to sizable investments in
the media/telecommunications sector, though we trimmed those positions
modestly once their prices had rebounded. We felt this would reduce
the Portfolio's share price volatility if investors remained worried
about market interest rates.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)
Short-Term
Securities 6.0%
Corporate Bonds 79.6%
Common and Preferred
Stocks 14.4%
We further reduced volatility by giving more attention to securities
with higher credit ratings and slightly shorter maturities. When
interest rates change course, these issues tend to have less price
movement than issues with lower ratings and longer maturities. The
Portfolio's new positions included investments in financial and energy
companies -- as well as a number of firms whose performance is closely
linked to the economy.
Greater Stability Ahead
We believe investments in "cyclical" sectors should perform well in
coming months if economic growth and inflation remain moderate and
interest rates are relatively stable. If further uncertainty about
inflation causes rates to fluctuate from time to time, the Portfolio
should continue to benefit from the greater emphasis on shorter
maturities and higher credit ratings.
We continue to like the added return potential of
media/telecommunications issues and have mostly completed the sales
we'd planned in that sector. We may take further profits there,
however, if prices continue to rise. As we find attractive prices for
higher-quality issues we may also make additional purchases in that
sector. We believe this strategy, combined with our continued focus on
strong yields, can help the Portfolio earn solid returns with less
volatility in the second half of the year.
[GRAPHIC HORIZONTAL BAR CHART OMITTED: MOODY'S BOND QUALITY
RATING DISTRIBUTION]
Moody's Bond Quality
Rating Distribution
Baa 0.8%
Ba 12.8%
B 61.7%
Caa 8.4%
Ca 0.0%
C 0.0%
D 0.0%
Not
Rated 16.3%
Income Portfolio Review LB Series Fund, Inc.
[GRAPHIC OMITTED: PHOTO OF CHARLES E. HEEREN]
Charles E. Heeren, vice president, is a Chartered Financial Analyst
and portfolio manager for the Income Portfolio. He has managed the
Portfolio since its inception in January 1987.
Investment Objective: To seek a high level of income while preserving
principal by investing primarily in intermediate and long-term bonds.
Changing expectations for the economy, inflation and interest rates in
the last six months changed the spreads between yields for different
types of bonds. By adjusting the mix of investments in the Income
Portfolio to take advantage of attractive yield opportunities, we
helped the Portfolio earn a competitive return over this time.
For the six months ended June 30, 1997, the Income Portfolio earned a
total return (based on NAV) of 3.00%. That compares with a return of
3.09% for the Lehman Aggregate Bond Index.
Special Opportunities in Corporates
When 1997 began, corporate bonds represented about 45% of the
Portfolio's investments. As stronger economic growth raised concerns
about inflation, making bond prices more attractive, we sold U.S.
Treasury bonds and increased the Portfolio's position in longer-term
corporates. Many of the corporates we bought were issued by banks and
insurance firms, as well as electric utilities, gas and telephone
companies. Purchased at attractive prices and yields, these additions
performed well in the months that followed.
[GRAPHIC WORM CHART OMITTED: GROWTH OF $10,000 INVESTED SINCE 6/30/87]
Performance Through June 30, 1997
Growth Of $10,000 Invested Since 6/30/87
INSET BOX ON CHART READS:
Income Portfolio
Annualized Total Returns*
- ------------------------------------------------------------
10 Years 8.81%
- ------------------------------------------------------------
5 Years 7.23%
- ------------------------------------------------------------
1 Year 8.48%
Initial Investment: $10,000
Date of Investment: 6/30/87
Lehman Aggregate
Series Income Bond Index CPI Valued
Month End Total Total Total
Date Value Value Value
6/30/87 $10,000 $10,000 $10,000
7/31/87 9,943 9,992 10,021
8/31/87 9,892 9,939 10,076
9/30/87 9,631 9,727 10,126
10/31/87 9,859 10,074 10,153
11/30/87 9,994 10,154 10,168
12/31/87 10,154 10,292 10,165
1/31/88 10,531 10,655 10,191
2/29/88 10,662 10,781 10,218
3/31/88 10,490 10,680 10,262
4/30/88 10,401 10,622 10,314
5/31/88 10,303 10,551 10,350
6/30/88 10,545 10,805 10,394
7/31/88 10,489 10,748 10,438
8/31/88 10,511 10,776 10,482
9/30/88 10,796 11,021 10,552
10/31/88 11,038 11,228 10,587
11/30/88 10,904 11,091 10,596
12/31/88 10,973 11,103 10,614
1/31/89 11,139 11,263 10,667
2/28/89 10,980 11,182 10,711
3/31/89 11,043 11,230 10,772
4/30/89 11,258 11,465 10,843
5/31/89 11,502 11,766 10,905
6/30/89 11,866 12,124 10,931
7/31/89 12,070 12,382 10,957
8/31/89 11,961 12,199 10,975
9/30/89 11,974 12,261 11,010
10/31/89 12,151 12,563 11,063
11/30/89 12,284 12,682 11,090
12/31/89 12,315 12,716 11,107
1/31/90 12,187 12,565 11,222
2/28/90 12,227 12,605 11,274
3/31/90 12,268 12,614 11,336
4/30/90 12,109 12,498 11,354
5/31/90 12,480 12,868 11,380
6/30/90 12,672 13,075 11,442
7/31/90 12,826 13,256 11,486
8/31/90 12,618 13,078 11,592
9/30/90 12,539 13,187 11,688
10/31/90 12,658 13,354 11,759
11/30/90 12,955 13,641 11,785
12/31/90 13,167 13,854 11,785
1/31/91 13,340 14,026 11,856
2/28/91 13,643 14,145 11,873
3/31/91 13,808 14,243 11,891
4/30/91 14,006 14,396 11,909
5/31/91 14,168 14,480 11,944
6/30/91 14,189 14,473 11,979
7/31/91 14,375 14,674 11,997
8/31/91 14,706 14,991 12,032
9/30/91 15,024 15,295 12,085
10/31/91 15,187 15,465 12,102
11/30/91 15,293 15,607 12,138
12/31/91 15,768 16,071 12,147
1/31/92 15,710 15,852 12,164
2/28/92 15,814 15,955 12,208
3/31/92 15,824 15,866 12,270
4/30/92 15,878 15,980 12,287
5/31/92 16,182 16,282 12,305
6/30/92 16,406 16,507 12,349
7/31/92 16,788 16,843 12,376
8/31/92 16,954 17,014 12,411
9/30/92 17,155 17,216 12,446
10/31/92 16,879 16,987 12,490
11/30/92 16,944 16,990 12,508
12/31/92 17,222 17,261 12,499
1/31/93 17,581 17,592 12,560
2/28/93 17,950 17,900 12,605
3/31/93 18,055 17,975 12,649
4/30/93 18,189 18,101 12,684
5/31/93 18,221 18,124 12,701
6/30/93 18,597 18,452 12,719
7/31/93 18,764 18,558 12,719
8/31/93 19,101 18,882 12,754
9/30/93 19,160 18,933 12,781
10/31/93 19,199 19,003 12,834
11/30/93 19,331 18,842 12,842
12/31/93 19,124 18,944 12,842
1/31/94 19,232 19,199 12,878
2/28/94 19,093 18,865 12,922
3/31/94 18,465 18,399 12,966
4/29/94 18,267 18,252 12,983
5/31/94 18,301 18,250 12,992
6/30/94 18,167 18,210 13,036
7/31/94 18,559 18,573 13,071
8/31/94 18,606 18,595 13,124
9/30/94 18,280 18,321 13,159
10/31/94 18,212 18,305 13,168
11/30/94 18,216 18,265 13,186
12/31/94 18,331 18,391 13,186
1/31/95 18,663 18,755 13,239
2/28/95 19,090 19,201 13,292
3/31/95 19,198 19,318 13,336
4/30/95 19,527 19,589 13,380
5/31/95 20,373 20,347 13,406
6/30/95 20,540 20,495 13,433
7/31/95 20,422 20,450 13,433
8/31/95 20,679 20,698 13,468
9/30/95 20,877 20,899 13,494
10/31/95 21,199 21,170 13,538
11/30/95 21,529 21,488 13,529
12/31/95 21,879 21,789 13,521
1/31/96 22,004 21,932 13,600
2/29/96 21,541 21,551 13,644
3/31/96 21,328 21,400 13,714
4/30/96 21,196 21,280 13,767
5/31/96 21,183 21,238 13,794
6/30/96 21,447 21,522 13,802
7/31/96 21,490 21,580 13,829
8/31/96 21,411 21,544 13,855
9/30/96 21,829 21,918 13,899
10/31/96 22,335 22,405 13,943
11/30/96 22,797 22,788 13,970
12/31/96 22,588 22,576 13,970
1/31/97 22,659 22,646 14,014
2/28/97 22,766 22,703 14,058
3/31/97 22,431 22,451 14,093
4/30/97 22,694 22,788 14,111
5/31/97 22,932 23,004 14,102
6/30/97 23,264 23,278 14,120
Footnote reads:
*See accompanying notes to Portfolio Management Reviews.
As worries about higher interest rates persisted in March and April,
driving bond prices lower, we deemphasized investments in corporate
securities. Having outperformed earlier in the period, we expected
corporates to underperform government securities as higher interest
rates threatened to slow the economy. By the end of April, it was clear
that economic growth and inflation were moderate enough to forestall
further increases in interest rates. With the prices for long-term
corporates more attractive again, we increased the Portfolio's
investments in that sector. We continued to favor debt of financial
firms, while adding select bonds of utility companies that provided
good investment opportunities.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)
Short-Term
Securities 17.8%
Corporate Bonds 43.8%
Common and Preferred
Stocks 0.8%
Mortgage-Backed
Securities 14.4%
U.S. Government
Bonds 6.7%
Foreign Bonds 3.7%
Asset-Backed
Securities 12.8%
Some of the most attractive prices occurred among corporate securities
with lower credit ratings. With the economy showing promise for
sustained growth, and many corporate issues enjoying rating upgrades,
we added positions in issues rated Baa and Ba by Moody's, believing
they offered special value for the Portfolio. As always, we kept the
Portfolio well-diversified with respect to the credit quality, asset
mix and blend of bond maturities.
Preparing for New Price Gains
Added attention to corporates and longer-term issues served the
Portfolio well when bond prices rallied in May and June and should
continue to enhance returns in coming months. If a healthy combination
of moderate growth and benign inflation pushes bond prices higher, we
believe corporates and longer-term issues can outperform, since
longer-term issues tend to be more responsive to falling interest
rates than shorter-term issues, and corporate bonds tend to thrive in
a positive economic climate.
Because declining interest rates usually increase home-loan
prepayments, we've reduced the Portfolio's investments in mortgage-
backed securities slightly. The Portfolio should continue to enjoy
strong income from its remaining mortgage-backed issues, as well as
its large commitment to corporate bonds and asset-backed securities.
[GRAPHIC HORIZONTAL BAR CHART OMITTED: MOODY'S BOND QUALITY
RATING DISTRIBUTION]
Moody's Bond Quality
Rating Distribution
Government/
AAA 42.2%
Aa 5.2%
A 19.5%
Baa 18.6%
Ba 11.6%
B 2.9%
Money Market Portfolio Review LB Series Fund, Inc.
[GRAPHIC OMITTED: PHOTO OF GAIL R. ONAN]
Gail R. Onan was named portfolio manager for the Money Market
Portfolio in January 1994. She has been with Lutheran Brotherhood
since 1969. 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.***
Although they fluctuated significantly during the period, short-term
yields ended the six-month period nearly unchanged from where they
began. When the year started, the annualized yield for three-month
U.S. Treasury securities stood at 5.21%. As a strengthening economy
prompted the Federal Reserve to preempt inflation with a 0.25% hike in
short-term interest rates, three-month Treasury yields hit 5.44% in
late March. By the end of June, when slower growth had eased fears of
another Fed rate hike, three-month Treasuries were yielding 5.25%.
By adjusting the mix of investments and maturities in the Money Market
Portfolio to make the most of these changes, we helped the Portfolio
earn a total return of 2.59% for the six months ended June 30, 1997.
Keeping the Portfolio Flexible
Because short-term yields continued to fluctuate, we kept the average
maturity of the Portfolio's investments slightly shorter than that for
its benchmark in the first months of the year. We believed this
positioned us to invest more quickly in higher-yielding instruments
when interest rates rose. To achieve this flexibility while
maintaining the Portfolio's yield, we balanced money market
instruments that matured in 30 days or less with instruments that
matured in six to 12 months. Many of the Portfolio's shortest-term
investments were floating-rate securities, whose coupons reset
frequently.
When it was clear that short-term yields were peaking, we focused more
attention on longer-term issues to lock in the higher yields for
longer periods. As the spread narrowed between yields for shorter- and
longer-maturity issues in May and June, we then gave more attention to
intermediate-term securities. Where possible, however, we maintained
the slightly longer average maturity for the Portfolio that we'd
adopted in April.
We also enhanced the Portfolio's yield by adding investments in
taxable municipal paper. These high-quality securities are issued by
state and local governments to fund commercial projects. Because they
represent a relatively small segment of the money market that few
analysts follow, there is a lower demand for these issues. As a
result, their prices and yields can be quite attractive.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)
Certificates
of Deposit 6.1%
Adjustable Rate
Notes 3.4%
Other 0.7%
Commercial
Paper 89.8%
More Diversification
Throughout the period, we increased the diversity of the Portfolio's
investments while maintaining its high quality. We believe such a
strategy will be important in coming months, as investors try to
predict the direction of the economy and interest rate trends.
With yields lower and the economy growing, we believe money market
yields could rise. As a result, we do not plan a further increase in
the Portfolio's longer-term holdings. Because money market supplies
have been somewhat tight relative to demand, the Portfolio should also
benefit from our continued emphasis on issues with good liquidity.
This, plus a diverse mix of investments, should help us respond
quickly to changing market conditions.
Money Market Portfolio
Annualized Total Returns*
Period Ending 6/30/97
- ------------------------------------------------------------
10 Years 5.74%
- ------------------------------------------------------------
5 Years 4.39%
- ------------------------------------------------------------
1 Year 5.24%
Footnote reads:
*See accompanying notes to Portfolio Management Reviews.
Footnotes
*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.
**International investing has special risks, including currency
fluctuation and political volatility.
***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 current prospectus.
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
Opportunity Growth Portfolio
Portfolio of Investments
June 30, 1996
(unaudited)
Shares Value
- -------------- -------------
<S> <C> <C>
COMMON STOCKS - 85.6% (a)
Bank & Finance - 9.4%
83,200 Aames Financial Corp. $1,539,200
352,000 ACC Consumer Finance Corp. 3,915,999 (b)
56,600 American General Hospitality Corp. 1,400,849
52,700 AMRESCO, Inc. 1,133,049 (b)
50,000 Apartment Investment & Management Co. 1,412,499
15,000 ARM Financial Group, Inc. 299,999
17,000 Boston Properties, Inc. 467,499
37,500 Cali Realty Corp. 1,274,999
9,700 Charter One Financial, Inc. 522,587
85,000 Cityscape Financial Corp. 1,694,687
50,000 Delta Financial Corp. 956,250
57,800 Dime Bancorp, Inc. 1,011,499
65,600 First Republic Bancorp, Inc. 1,525,199
7,800 FirstFed Financial Corp. 242,287
79,200 Great Lakes REIT, Inc. 1,301,850
32,000 HealthCare Financial Partners, Inc. 652,000
56,300 Hibernia Corp., Class A 784,681
35,200 Highwoods Properties, Inc. 1,126,400
28,100 Imperial Bancorp 811,388
102,500 New Century Financial Corp. 1,486,250
80,000 Patriot American Hospitality, Inc. 2,040,000
72,000 Resource Bancshares Mortgage Group, Inc 1,422,000
80,100 Southern Pacific Funding Corp. 1,331,663
29,100 Sterling Financial Corp. 541,988
70,100 Sunstone Hotel Investors, Inc. 1,016,450
15,000 TCF Financial Corp. 740,625
----------------
30,651,897
----------------
Broadcasting - 0.3%
21,800 Emmis Broadcasting Corp., Class A 951,025
----------------
Building Products & Materials - 2.6%
380,600 Cameron Ashley Building Products 5,280,825 (b)
240,000 Dayton Superior Corp., Class A 3,060,000 (b)
----------------
8,340,825
----------------
Computer Software - 9.1%
118,550 Avant! Corp. 3,830,647 (b)
343,700 AXENT Technologies, Inc. 5,241,425 (b)
289,050 DataWorks Corp. 6,322,969 (b)
69,600 Infinity Financial Technology, Inc. 1,135,350 (b)
238,300 Pure Atria Corp. 3,365,988 (b)
223,200 Softquad International, Inc. 195,300 (b)
121,500 Summit Design, Inc. 987,188 (b)
273,900 Sunquest Information Systems, Inc. 4,108,500
45,000 Technology Modeling Associates, Inc. 613,125
296,150 Unison Software, Inc. 2,073,050 (b)
72,600 Wall Data, Inc. 1,914,825 (b)
----------------
29,788,367
----------------
Computers & Office Equipment - 0.7%
15,000 Pierce Leahy Corp 270,000
80,000 Premiere Technologies, Inc. 2,080,000
----------------
2,350,000
----------------
Drugs & Health Care - 13.9%
93,100 ADAC Labs, Inc. 2,199,488
7,300 Advance Paradigm, Inc. 135,050
378,050 Alpha-Beta Technology, Inc. 3,449,706 (b)
121,000 Amrion, Inc. 3,388,000 (b)
232,800 Amylin Pharmaceuticals, Inc. 3,201,000 (b)
281,500 Atrix Laboratories, Inc. 3,448,375 (b)
121,300 Bio-Technology General Corp. 1,637,550
121,200 Capstone Pharmacy Services, Inc. 1,318,050
91,100 Cephalon, Inc. 1,047,650 (b)
137,400 Cytyc Corp. 3,726,975 (b)
291,200 DepoTech Corp. 3,967,600 (b)
288,400 Eclipse Surgical Technologies, Inc. 2,307,200 (b)
120,500 Hologic, Inc. 3,208,313
108,100 Isis Pharmaceuticals, Inc. 1,574,206 (b)
336,300 Matritech, Inc. 2,333,081 (b)
141,600 PDT, Inc. 5,168,400 (b)
60,600 Sepracor, Inc. 1,564,238 (b)
47,600 STERIS Corp. 1,779,050 (b)
----------------
45,453,932
----------------
Electronics - 3.9%
123,700 Cypress Semiconductor Corp. 1,793,650 (b)
132,300 ESS Technology, Inc. 1,777,781 (b)
55,200 FSI International, Inc. 883,200 (b)
176,000 Integrated Silicon Solution 1,336,500 (b)
158,000 Intevac, Inc. 1,896,000 (b)
42,300 Reptron Electronics, Inc. 1,015,200
88,400 S3, Inc. 972,400 (b)
91,500 Silicon Valley Group, Inc. 2,413,313 (b)
58,900 Trident Microsystems, Inc. 662,625 (b)
----------------
12,750,669
----------------
Healthcare Management - 8.9%
159,000 American Oncology Resources, Inc. 2,683,125 (b)
35,700 CN Biosciences, Inc. 678,300
424,850 Complete Management, Inc. 6,054,113 (b)
182,700 FPA Medical Management, Inc. 4,327,706 (b)
485,450 Home Health Corp. of America, Inc. 4,611,775 (b)
243,450 Horizon Mental Health Management, Inc. 5,477,625 (b)
140,000 IRIDEX Corp. 1,277,500
84,800 UroCor, Inc. 795,000 (b)
435,000 U.S. Diagnostic Labs, Inc. 2,990,625 (b)
----------------
28,895,769
----------------
Leisure &
Entertainment - 6.6%
241,750 Cannondale Corp. 4,291,063 (b)
74,200 Fairfield Communities, Inc. 2,494,975 (b)
191,400 Signature Resorts, Inc. 6,615,263 (b)
195,600 Silverleaf Resorts, Inc. 3,007,350
186,300 Steiner Leisure Ltd. 5,193,113
----------------
21,601,764
----------------
Machinery & Equipment - 1.6%
207,800 Northwest Pipe Co. 3,818,325
49,100 Triumph Group, Inc. 1,522,100 (b)
----------------
5,340,425
----------------
Manufacturing - 2.8%
225,000 BMC Industries, Inc. 7,706,250
181,500 Zomax Optical Media, Inc. 1,338,563 (b)
----------------
9,044,813
----------------
Oil & Oil Service - 4.7%
48,100 American Exploration Co. 703,463
140,000 Domain Energy Corp. 1,890,000
48,500 Forcenergy, Inc. 1,473,188
13,000 Hanover Compressor Co. 253,500
89,500 Hugoton Energy Corp. 1,241,813
55,200 Lomak Petroleum, Inc. 983,250
57,700 Marine Drilling Companies, Inc. 1,132,363
9,000 Nuevo Energy Co. 369,000
24,000 Ocean Energy, Inc. 1,110,000
36,100 Petroleum Geo-Services ASA 1,764,388
135,000 Pool Energy Services Co. 2,446,875 (b)
39,500 Pride Petroleum Services, Inc. 948,000 (b)
38,400 Swift Energy Co. 916,800
----------------
15,232,640
----------------
Paper & Forest Products - 0.3%
72,200 Stone Container Corp. 1,033,363 (c)
----------------
Pollution Control - 2.3%
361,300 IDM Environmental Corp. 700,019 (b)
190,350 Memtec Ltd., ADR 5,139,450
652,300 Recycling Industries, Inc. 1,263,831 (b)
28,500 Waterlink, Inc. 370,500
----------------
7,473,800
----------------
Restaurants - 0.9%
120,700 Apple South, Inc. 1,840,675
72,000 Boston Chicken, Inc. 1,008,000
191,500 New World Coffee 233,391 (b)
----------------
3,082,066
----------------
Retail - 4.0%
249,900 Lithia Motors, Inc. 2,748,900 (b)
214,450 Movie Gallery, Inc. 1,367,119 (b)
71,300 Proffitt's, Inc. 3,128,288 (b)
103,700 The North Face, Inc. 1,892,525
216,900 Travis Boats & Motors, Inc. 2,846,813
232,600 West Coast Entertainment Corp. 1,221,150 (b)
----------------
13,204,795
----------------
Services - 5.2%
96,000 CORESTAFF, Inc. 2,592,000
145,500 Corporate Express, Inc. 2,100,656
189,800 Cotelligent Group, Inc. 2,609,750 (b)
99,900 F.Y.I., Inc. 2,397,600 (b)
30,000 Intelligroup, Inc. 288,750
53,400 MAXIMUS, Inc. 954,525
68,950 Personal Group of America, Inc. 1,986,622 (b)
59,000 PMT Services, Inc. 899,750
16,800 SOS Staffing Services, Inc. 260,400
40,000 Staff Leasing, Inc. 750,000
72,000 U.S. Office Products Company 2,200,500
----------------
17,040,553
----------------
Telecommunications Equipment - 4.1%
154,300 ACE*COMM Corp. 3,028,138 (b)
333,900 ACT Networks, Inc. 4,257,225 (b)
254,500 Larscom, Inc. 2,735,875 (b)
237,700 Orckit Communications Ltd. 3,446,650 (b)
----------------
13,467,888
----------------
Telephone & Telecommunications - 3.3%
31,200 Aerial Communications, Inc. 265,200
19,200 American Communications 139,200
186,700 LCC International, Inc., Class A 2,940,525 (b)
120,000 STAR Telecommunications, Inc. 1,590,000
335,600 Xpedite Systems, Inc. 5,789,100 (b)
----------------
10,724,025
----------------
Textiles & Apparel - 1.0%
770,300 Chaus (Bernard), Inc. 818,444 (b)
156,074 Cutter & Buck, Inc. 2,536,203 (b)
----------------
3,354,647
----------------
Total Common Stocks
(cost $288,201,936) 279,783,263
----------------
Principal
Amount Value
- -------------- -------------
CORPORATE BONDS - 0.4% (a)
$500,000 Complete Management, Inc., Convertible
Subordinated Debentures, 8.0%, due
8/15/2003 538,125
1,000,000 Kushner-Locke Co., Convertible
Subordinated Debentures, 8.0%,
due 12/15/2000 623,750
----------------
Total Corporate Bonds
(cost $1,394,348) 1,161,875
----------------
SHORT-TERM
SECURITIES - 14.0% (a)
Commercial Paper - 13.7%
5,000,000 AVCO Financial Services, Inc., 5.52%,
due 7/2/1997 4,999,233
5,000,000 CXC, Inc., 5.53%, due 7/16/1997 4,988,479
2,300,000 Dupont (E.I.) de Nemours, & Co. 5.55%,
due 7/9/1997 2,297,163
11,400,000 General Electric Capital Corp., 6.18%,
due 7/1/1997 11,400,000
1,000,000 Heinz (H.J.) Co., 5.58%, due 7/23/1997 996,590
6,700,000 Oyster Creek Co., 5.6%, due 7/8/1997 6,692,704
3,175,000 Preferred Receivables Funding Corp.,
5.56%, due 7/9/1997 3,171,077
5,000,000 Sheffield Receivable Corp., 5.5%,
due 7/10/1997 4,993,063
5,200,000 Toys R Us, Inc., 5.5%, Due 7/17/1997 5,187,289
----------------
44,725,598
----------------
U.S. Government
Agency - 0.3%
500,000 Federal National Mortgage Association
Discount Notes, 5.4%, due 7/7/1997 499,550
----------------
Total Short-Term Securities
(at amortized cost) 45,225,148
----------------
Total Investments
(cost $334,821,432) $326,170,286 (d)
================
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, 1997
(d) At June 30, 1997, the aggregate cost of securities for federal income
tax purposes was $334,821,432 and the net unrealized depreciation of
investments based on that cost was $8,651,146 which is comprised of
$25,735,952 aggregate gross unrealized appreciation and $34,387,098
aggregate gross unrealized depreciation.
Abbreviations:
- --------------
(ADR) -- American Depository Receipts
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
World Growth Portfolio
Portfolio of Investments
June 30, 1997
(unaudited)
Shares Value
- -------------- -------------
<S> <C> <C>
ARGENTINA - 0.8% (a)
COMMON STOCKS
8,273 Banco de Galicia Buenos Aires
"B" ADR (USD) $218,201
8,389 Banco Frances del Rio de la
Plata ADR (USD) 272,642
72,535 Naviera Perez "B" 582,546
560 Sociedad Comercial del Plata ADR (USD) 20,720 (b)
2,820 Telecom Argentina Stet "B" 14,723
630 Telecom Argentina Stet "B" ADR (USD) 33,075
16,490 Telefonica de Argentina ADR (USD) 570,966
1,370 Transportadora de Gas del Sur ADR (USD) 17,125
15,430 YPF Sociedad Anonima ADR (USD) 474,473
----------------
Total Argentina 2,204,471
----------------
AUSTRALIA - 1.7% (a)
COMMON STOCKS
84,528 Australia Gas & Light 498,280
24,000 Australia & New Zealand Banking Group Ltd. 179,566
34,000 Boral Ltd. 107,150
59,800 Broken Hill Proprietary 880,512
35,500 Commonwealth Instalment Receipt Trustee Ltd. 312,425
43,000 John Fairfax Holdings Ltd. 102,041
11,300 Lend Lease Corp. 239,119
16,303 National Australia Bank Ltd. 233,729
53,000 National Mutual Holdings Ltd. 85,717
72,159 News Corp. 346,292
37,000 Publishing & Broadcasting 213,356
31,027 St. George Bank Ltd. 206,583
50,700 Western Mining 319,943
30,000 Westpac Banking 180,700
44,000 Woodside Petroleum 379,084
----------------
Total Australia 4,284,497
----------------
AUSTRIA - 0.05% (a)
COMMON STOCKS
120 EVN Energie-Versorgung
Niederoesterreich AG 15,460
610 Flughafen Wien 25,766
----------------
Total Austria 41,226
----------------
BELGIUM - 1.2% (a)
COMMON STOCKS
1,973 Credit Communal Holding/Dexia 211,941
1,711 Generale de Banque S.A. 658,626
81 Generale de Banque S.A., VVPR
(reduced tax) Strips 36
4,750 Kredietbank 1,914,258
104 UCB 329,516
----------------
Total Belgium 3,114,377
----------------
BRAZIL - 3.4% (a)
COMMON STOCKS
1,030 Brazil Fund (USD) 31,672
23,712 Centrais Eletricas Brasileiras
S.A. ADR (USD) 679,112
6,360 Companhia Brasileira de
Distribuicao Grupo Pao
de Acucar GDR (USD) 130,380
320 Companhia Energetica Brasilia (USD) 16,960
18,848 Companhia Energetica
Minas Gerais ADR (USD) 958,892
4,000 Companhia Siderurgica Nacional (ADR) 130,500
40,500 Telecomunicacoes Brasilias ADR (USD) 6,145,875
56,020 Usinas Siderurgicas de
Minas Gerais ADR (USD) 616,220
----------------
Total Brazil 8,709,611
----------------
CANADA - 0.3% (a)
COMMON STOCKS
13,740 Alcan Aluminum 471,615
4,670 Royal Bank of Canada 211,865
----------------
Total Canada 683,480
----------------
CHILE - 0.5% (a)
COMMON STOCKS
1,635 Chile Fund (USD) 42,714
8,522 Chilectra ADR (USD) 253,529
4,467 Chilgener ADR (USD) 125,076
1,473 Chilgener ADR (USD),
Rights expiring 7/7/97 3,300 (b)
7,144 Compania de Telecomunicaciones de
Chile (ADR) 235,752
10,755 Empresa Nacional de Electric ADR (USD) 242,660
5,721 Enersis S.A. ADR (USD) 203,453
3,474 Santa Isabel (ADR) 112,037
----------------
Total Chile 1,218,521
----------------
CHINA - 0.3% (a)
COMMON STOCKS
15,360 Huaneng Power International
"N" ADR (USD) 391,680 (b)
821,000 Shanghai Petrochemical
"H" (HKD) 197,109
874,000 Yizheng Chemical Fibre "H" (HKD) 155,682
----------------
Total China 744,471
----------------
CZECH REPUBLIC - 0.05% (a)
COMMON STOCKS
700 SPT Telecom a.s. 73,409 (b)
----------------
DENMARK - 0.2% (a)
COMMON STOCKS
3,314 Den Danske Bank 322,421
807 Tele Danmark "B" 41,931
3,230 Unidanmark "A" 181,447
----------------
Total Denmark 545,799
----------------
FINLAND - 0.3% (a)
COMMON STOCKS
8,960 Oy Nokia "A" 669,315
----------------
FRANCE - 7.9% (a)
COMMON STOCKS
1,455 Accor 217,877
9,809 Alcatel Alsthom 1,228,483
5,740 Assurances Generales
de France 183,432
2,893 AXA 179,930
2,570 Canal Plus 500,294
2,772 Carrefour 2,013,187
757 Chargeurs International S.A. 43,616 (b)
6,510 Cie de St. Gobain 949,354
1,539 Credit Local de France 149,796
2,513 Credit Local de France -
Dexia France 244,599
25,247 Eaux Cie Generale 3,234,977
1,580 GTM Entrepose 79,071
2,880 Guilbert S.A. 407,739
1,260 Havas S.A. 90,801
4,350 Lapeyre 288,683
1,899 Legrand 334,451
824 L'Oreal 347,172
1,337 Pathe S.A. 265,275
3,621 Pinault Printemps Redoute 1,740,042
587 Primagaz 51,941
562 Rexel 172,520
9,849 Sanofi 965,342
20,490 Schneider S.A. 1,090,624
3,613 Societe Generale 403,309
9,715 Societe Nationale
Elf Aquitaine 1,048,090
2,340 Sodexho 1,198,132
9,320 Television Francaise 832,610
21,799 Total "B" 2,203,380
----------------
Total France 20,464,727
----------------
GERMANY - 4.5% (a)
COMMON STOCKS
4,890 Allianz AG 1,023,365
30,783 Bayer 1,182,889
18,262 Bayerische Hypotheken - und
Wechse - Bank 546,049
4,890 Bilfinger & Berger Bau AG 199,065
400 Buderas 220,171
7,940 Commerzbank AG 224,893
15,866 Deutsche Bank 926,980
22,618 Deutsche Telekom 544,668
25,767 Gehe AG 1,758,083
6,440 Hoechst AG 273,167
520 Hornbach Baumarkt 21,914
896 Mannesmann 399,170
1,370 Praktiker Bau und Heimwerker Markte 24,351
4,716 Rhoen Klinikum 621,914
3,090 SAP AG 620,091
1,443 Schering 154,179
4,397 Siemens AG 261,057
29,315 Veba 1,647,193
484 Veba International, Finance
Warrants Expiring 4/6/98 169,557 (b)
423 Volkswagen 324,265
----------------
11,143,021
----------------
PREFERRED STOCKS
1,200 Fielmann 35,984
2,490 Hornbach Holdings AG 211,295
160 Krones 65,317
1,117 SAP AG 231,841
----------------
544,437
----------------
Total Germany 11,687,458
----------------
HONG KONG - 4.0% (a)
COMMON STOCKS
247,000 Cathay Pacific Airways 511,707
49,000 China Light & Power Co. Ltd. 277,658
139,000 Doa Heng Bank Ltd. 760,729
492,188 First Pacific 628,950
167,000 Guoco Group 879,481
387,142 Hong Kong Land Holdings (USD) 1,029,798
207,000 Hutchison Whampoa 1,790,172
312,039 New World Development Co. Ltd. 1,860,803
117,000 Swire Pacific "A" 1,053,367
329,000 Wharf Holdings 1,426,871
----------------
Total Hong Kong 10,219,536
----------------
ITALY - 2.4% (a)
COMMON STOCKS
52,000 Banca Commerciale Italiana 107,698
74,580 Banca Fideuram 243,763
330,177 Credito Italiano 604,182
187,827 Ente Nazionale Idrocarburi 1,063,701
38,160 IMI SpA 343,527
9,074 Industrie Natuzzi SpA ADR (USD) 232,521
47,600 Italgas 154,039
28,729 Mediolanum SpA 324,044
17,600 Rinascente 97,808
135,000 Seat SpA 43,529 (b)
43,800 Seat SpA, RNC 9,149 (b)
167,000 Societa' Finaziaria Telefonica SpA 972,775
143,827 Telecom Italia 430,744
430,400 Telecom Italia Mobile 1,392,823
72,000 Telecom Italia Mobile RNC 128,785
----------------
Total Italy 6,149,088
----------------
JAPAN - 23.8% (a)
COMMON STOCKS
3,740 Advantest Corp. 287,140
23,000 Alps Electric 321,061
73,000 Amada 643,256
114,000 Canon 3,103,123
45,000 Citizen Watch Co. 347,060
54,000 Dai Nippon Screen
Manufacturing Co. Ltd. 508,812
8,000 Daifuku 105,392
74,000 Daiichi Pharmaceutical 1,304,135
91,000 Daiwa House 1,111,499
140 DDI Corp. 1,033,327
217 East Japan Railway 1,113,209
15,100 Fanuc 579,654
118,000 Hitachi 1,317,746
95,000 Hitachi Zosen 377,944
6,000 Honda Motor Co. 180,597
25,000 Inax 187,140
21,000 Ishihara Sangyo Kaisha 62,110 (b)
29,000 Ito-Yokado 1,682,516
49,000 Kao Corp. 679,724
3,000 Kawada Industries 13,453
33,000 Kokuyo 892,514
90,000 Komatsu 730,239
25,000 Komori 593,265
33,000 Kumagai Gumi 54,990
77,000 Kuraray 765,835
36,000 Kyocera 2,858,140
48,000 Makita 703,542
73,000 Marui 1,356,570
103,000 Matsushita Electric Industrial 2,075,816
55,000 Mitsubishi 686,180
307,000 Mitsubishi Heavy Industries 2,354,327
23,000 Mitsubishi Paper Mills 89,897
156,000 Mitsui Fudosan 2,150,410
16,000 Mitsui Petrochemical Industries 77,055
35,000 Murata Manufacturing 1,392,427
13,000 National House Industrial 171,262
203,000 NEC 2,833,712
96,000 Nippon Denso 2,294,888
9,000 Nippon Hodo 77,814
436,000 Nippon Steel 1,392,218
95 Nippon Telegraph & Telecom 911,708
107,000 Nomura Securities 1,474,961
36,000 Pioneer Electronic 873,146
4,000 Sangetsu Co. Ltd. 85,151
70,000 Sankyo 2,351,248
7,500 Sega Enterprises 248,648
107,000 Sekisui Chemical 1,082,883
65,000 Sekisui House 657,826
9,000 Seven-Eleven Japan 679,986
100,000 Sharp 1,378,468
58,300 Shin-Etsu Chemical 1,546,257
12,000 Shiseido Co. Ltd. 197,871
25,500 Sony 2,222,518
131,000 Sumitomo 1,245,769
148,000 Sumitomo Electric 2,479,149
36,000 Sumitomo Forestry 395,742
25,000 TDK 1,834,322
150,000 Teijin 706,683
23,000 Tokio Marine & Fire Insurance 300,995
13,900 Tokyo Electronics 664,561
22,300 Tokyo Steel Manufacturing 249,032
49,000 Toppan Printing 769,499
34,000 Uny Co. 664,456
8,400 Yurtec 97,470
----------------
Total Japan 61,628,348
----------------
MALAYSIA - 1.3% (a)
COMMON STOCKS
113,000 Affin Holdings BHD 268,621
156,000 Commerce Asset Holdings BHD 411,014
19,500 Commerce Asset Holdings BHD,
Rights expiring 7/23/1997 3,013 (b)
31,200 Commerce Asset Holdings
BHD, Rights expiring 7/23/1997 1,113 (b)
284,000 Multi-Purpose Holdings BHD,
Rights expiring 1/13/2002 95,642 (b)
429,000 Renong BHD 560,895
7,400 Renong BHD - 4% ICULS Rights 2,345 (b)
133,000 Technology Resources Industries BHD 228,693 (b)
128,000 Time Engineering BHD 193,724
216,000 United Engineers 1,557,528
----------------
Total Malaysia 3,322,588
----------------
MEXICO - 1.6% (a)
COMMON STOCKS
75,000 Cementos de Mexico ADR (USD) 656,250
17,850 Cemex "B" 86,920
262,783 Cifra "B" ADR (USD) 471,695
55,436 Gruma "B" 258,085 (b)
11,260 Gruma S.A. GDR (USD) 222,385 (b)
7,260 Grupo Embotellador de Mexico 15,036
700 Grupo Financiero Banamex Accival "L" 1,656
84,680 Grupo Financiero Banamex "B" 217,360
140,062 Grupo Industrial Maseca "B" 153,324
1,600 Grupo Televisa GDR (USD) 48,600 (b)
74,408 Kimberly-Clark Mexico "A" 299,598
19,020 Panamerican Beverages "A" ADR (USD) 625,283
23,435 Telefonos de Mexico "L" ADR (USD) 1,119,021
----------------
Total Mexico 4,175,213
----------------
NETHERLANDS - 10.4% (a)
COMMON STOCKS
63,096 ABN Amro Holdings N.V. 1,176,481
14,016 Ahold 1,182,459
1,640 Akzo Nobel 224,749
4,520 Baan Co. NV 311,315 (b)
21,779 CSM 1,091,779
193,419 Elsevier 3,232,026
19,815 Fortis Amev N.V. 882,282
5,642 Gucci Group N.V. (USD) 363,204
4,514 Hagemeyer N.V. 233,185
64,562 ING Groep N.V. 2,976,647
14,975 ING Groep N.V., Stock Warrants 172,492 (b)
8,490 Koninklijke PTT Nederland 333,043
3,140 Nutricia 495,899
1,940 Otra N.V. 31,133
32,005 Polygram 1,679,411
122,168 Royal Dutch Petroleum 6,354,553
9,310 Unilever 1,959,800
37,157 Wolters Kluwer 4,524,185
----------------
Total Netherlands 27,224,643
----------------
NEW ZEALAND - 0.5% (a)
COMMON STOCKS
74,000 Air New Zealand Ltd. 226,190
33,100 Carter Holt Harvey 85,661
72,000 Fletcher Challenge Building 216,654
3,000 Fletcher Challenge Energy 9,068
156,889 Fletcher Challenge Forests Division 228,053
3,000 Fletcher Challenge
Forests Division, New Shares 4,279 (b)
38,000 Fletcher Challenge Paper 92,147
54,000 Telecom Corp. of New Zealand 275,096
14,000 Tranz Rail Holdings Ltd. 79,880
----------------
Total New Zealand 1,217,028
----------------
NORWAY - 1.7% (a)
COMMON STOCKS
2,120 Bergesen "A" 50,185
41,834 Norsk Hydro 2,277,434
27,035 Orkla "A" 1,995,570
6,910 Saga Petroleum "B" 120,679
----------------
Total Norway 4,443,868
----------------
PANAMA - 0.05% (a)
COMMON STOCKS
1,676 Banco Latinoamericano de
Exportaciones S.A. "E" 72,278
----------------
PERU - 0.1% (a)
COMMON STOCKS
4,080 Credicorp Ltd. 89,760
6,361 Telefonica del Peru S.A. ADR (USD) 166,579
----------------
Total Peru 256,339
----------------
PHILIPPINES - 0.3% (a)
COMMON STOCKS
13,600 Philippine Long Distance
Telephone Company 440,856
52,250 Philippine National Bank 354,593
----------------
Total Philippines 795,449
----------------
PORTUGAL - 0.4% (a)
COMMON STOCKS
13,650 Jeronimo Martins 953,507
----------------
RUSSIA - 0.05% (a)
COMMON STOCKS
2,280 Gazprom ADR (USD) 39,216
----------------
SINGAPORE - 1.9% (a)
COMMON STOCKS
35,000 City Developments Ltd. 342,729
93,000 DBS Land 294,020
22,000 Development Bank of Singapore 276,981
34,400 Fraser & Neave Ltd. 245,422
1,500 Keppel "A" 6,505 (b)
6,000 Keppel 26,649
15,600 Oversea - Chinese Banking Corp. Ltd. 161,489
111,000 Overseas Union Bank 690,984
22,200 Overseas Union Bank Rights expiring 7/2/97 30,900 (b)
92,000 Singapore Land 418,270
47,000 Singapore Press 946,772
162,000 United Industrial 122,375
111,000 United Overseas Bank 1,141,288
67,000 Wing Tai Holdings Ltd. - Preference Shares 193,076
----------------
Total Singapore 4,897,460
----------------
SOUTH KOREA - 0.5% (a)
COMMON STOCKS
20,300 Korea Electric Power Corp. ADR (USD) 379,356
53,991 Korea Equity Fund (USD) 796,368
1,188 Samsung Electronics GDR (USD) 68,904 (b)
----------------
Total South Korea 1,244,628
----------------
SPAIN - 2.3% (a)
COMMON STOCKS
3,380 Banco Bilbao Vizcaya, S.A. 274,575
2,945 Banco Popular Espanol 721,510
37,050 Banco Santander SA 1,141,547
8,790 Centros Comerciales Pryca 190,296
6,362 Corporacion Bancaria de Espana S.A. 356,203
8,331 Empresa Nacional de Electridad 699,386
2,656 Gas Natural 580,228
52,270 Iberdrola 659,804
10,395 Repsol S.A. 439,503
41 Sociedade General de Aguas de Barcelona 1,656 (b)
33,677 Telefonica de Espana 973,628
----------------
Total Spain 6,038,336
----------------
SWEDEN - 2.9% (a)
COMMON STOCKS
34,800 ABB AB 488,113
149,600 Astra AB 2,639,829
18,290 Atlas Copco "B" 477,614
15,175 Electrolux "B" 1,094,648
2,000 Esselte "B" 47,056
6,582 Granges AB 87,215 (b)
36,500 Hennes & Mauritz AB 1,283,434
10,500 Nordbanken AB 354,276
4,860 Sandvik "A" 137,906
26,010 Sandvik "B" 738,051
2,720 Scribona "B" 31,646
----------------
Total Sweden 7,379,788
----------------
SWITZERLAND - 6.2% (a)
COMMON STOCKS
1,640 ABB AG 2,482,466
3,877 Adecco S.A. 1,487,068
2,988 Ciba Specialty Chemicals AG 276,288 (b)
2,900 Credit Suisse Group 372,431
2,055 Nestle 2,710,911
3,128 Novartis AG 5,000,515
334 Roche Holdings 3,020,870
3,096 Schwizerischer Bankverein 828,074
----------------
Total Switzerland 16,178,623
----------------
THAILAND - 0.1% (a)
COMMON STOCKS
7,950 Advanced Information Service
plc (Foreign Registered) 69,357
17,470 Bangkok Bank 120,041
6,830 Siam Cement 118,118
----------------
Total Thailand 307,516
----------------
UNITED KINGDOM - 14.9% (a)
COMMON STOCKS
80,000 Abbey National 1,092,437
105,066 Argos plc 953,568
287,000 Asda Group 592,647
62,000 BG plc 227,147
81,000 British Petroleum 1,007,624
195,000 Cable & Wireless 1,786,035
126,225 Cadbury Schweppes 1,126,686
190,800 Caradon plc 638,656
62,000 Centrica plc 75,371 (b)
39,000 Coats Viyella 81,833
68,000 Compass Group 760,976
114,000 David S. Smith 356,907
57,000 Electrocomponents 424,302
8,000 GKN 137,221
133,500 Glaxo Wellcome 2,762,297
11,000 Heywood Williams Group 37,553
37,000 Hillsdown Holdings 104,439
24,000 John Laing "A" 148,878
186,000 Kingfisher 2,112,468
341,000 National Westminster Bank 4,585,532
125,000 Rank Group plc 792,059
347,000 Reed International plc 3,351,585
57,000 Rolls Royce 217,372
88,000 RTZ 1,533,609
167,000 Safeway plc 966,416
471,000 Shell Transport & Trading 3,215,863
289,700 SmithKline Beecham 5,333,349
96,000 T & N 228,613
118,000 Tesco 729,036
367,700 Tomkins 1,592,061
149,000 United News & Media 1,728,225
----------------
Total United Kingdom 38,700,765
----------------
VENEZUELA - 0.1% (a)
COMMON STOCKS
4,200 Compania Anonima Nacional Telefonos de
Venezuela ADR (USD) 181,125
----------------
Principal
Amount
- --------------
SHORT-TERM
SECURITIES - 3.3% (a)
Commercial Paper - 2.0%
$ 150,000 Hyundai Motor Finance Co., 5.6%,
due 7/7/1997 (USD) 149,860
5,000,000 Triple A One Funding Corp., 5.6%,
due 7/9/1997 (USD) 4,993,778
----------------
5,143,638
----------------
Government Agency - 1.3%
3,300,000 Federal National Mortgage Association
Discount Notes, 5.6%,
due 7/1/1997 (USD) 3,300,000
----------------
Total Short-Term Securities 8,443,638
----------------
Total Investments $258,310,342 (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:
Percentage of
Cost Value Portfolio
------------ ------------ -------------
Common Stocks &
Warrants $218,504,815 $249,322,267 96.5%
Preferred Stocks 467,665 544,437 0.2%
Short-Term 8,443,638 8,443,638 3.3%
------------ ------------ ------
Total Investments $227,416,118 $258,310,342 100.0%
============ ============ ======
(d) At June 30, 1997, the aggregate cost of securities for federal income tax
purposes was $227,416,118 and the net unrealized appreciation of investments
based on that cost was $30,894,224 which is comprised of $35,871,521
aggregate gross unrealized appreciation and $4,977,297 aggregate gross
unrealized depreciation.
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, 1997
(unaudited)
Shares Value
- -------------- -------------
<S> <C> <C>
COMMON STOCKS - 92.0% (a)
Aerospace - 1.5%
300,000 Boeing Co. $15,918,749
174,200 United Technologies Corp. 14,458,599
----------------
30,377,348
----------------
Airlines - 0.3%
238,200 Southwest Airlines Co. 6,163,424
----------------
Automotive - 0.7%
273,200 General Motors Corp. 15,213,824
----------------
Bank & Finance - 15.0%
83,000 Ace Ltd. 6,131,624
242,000 American Express Co. 18,028,999
200,000 American International Group, Inc. 29,874,999
297,500 Bank of New York Co., Inc. 12,941,249
263,400 BankAmerica Corp. 17,005,762
224,600 Barnett Banks, Inc. 11,791,499
96,900 BB&T Corp. 4,360,499
223,000 Chase Manhattan Corp. 21,644,937
205,100 Citicorp 24,727,368
183,400 Crestar Financial Corp. 7,129,674 (c)
625,000 Federal National Mortgage Association 27,265,624
215,400 First Bank System, Inc. 18,389,774
219,600 First Chicago NBD Corp. 13,285,799
133,500 Fleet Financial Group, Inc. 8,443,874
173,800 Great Lakes REIT, Inc. 2,856,837
193,200 Great Western Financial Corp. 10,384,499
394,700 Hibernia Corp., Class A 5,501,130
138,100 Household International, Inc. 16,218,119
278,300 Lehman Brothers Holdings, Inc. 11,271,150
115,000 Provident Companies, Inc. 6,152,500
176,000 Salomon, Inc. 9,790,000
181,900 Stewart Enterprises, Inc. 7,639,800
127,500 Summit Bancorp 6,390,938
60,100 The Hartford Financial Services Group, Inc. 4,973,275
160,300 Washington Mutual, Inc. 9,577,925
----------------
311,777,854
----------------
Broadcasting - 0.7%
131,300 Cox Radio, Inc., Class A 3,364,563 (b)
119,500 Grupo Televisia S.A. 3,629,813 (b)
333,000 Tele-Communications, Inc.,
Liberty Media Group, Series A 7,908,750 (b)
----------------
14,903,126
----------------
Chemicals - 3.7%
163,900 Air Products & Chemicals, Inc. 13,316,875
315,000 E.I. du Pont de Nemours and Co. 19,805,625
118,300 Great Lakes Chemical Corp. 6,195,963
287,900 Monsanto Co. 12,397,694
295,600 Praxair, Inc. 16,553,600
146,300 W.R. Grace & Company 8,064,788
----------------
76,334,545
----------------
Computer Software - 5.2%
91,700 America Online, Inc. 5,100,813 (b)
210,900 Autodesk, Inc. 8,080,106
250,000 BMC Software, Inc. 13,843,750 (b)
73,500 Check Point Software Technologies Ltd. 1,718,063 (b)
197,300 Computer Associates
International, Inc. 10,987,144
237,300 DataWorks Corp. 5,190,938 (b)
175,000 Microsoft Corp. 22,115,625 (b)
422,000 Oracle Corp. 21,258,250 (b)
193,500 PeopleSoft, Inc. 10,207,125 (b)
150,000 Pure Atria Corp. 2,118,750 (b)
201,800 Sterling Commerce, Inc. 6,634,175 (b)
----------------
107,254,739
----------------
Computers & Office
Equipment - 5.5%
191,200 Avery Dennison Corp. 7,671,900
91,900 Bay Networks, Inc. 2,441,094 (b)
376,000 Cisco Systems, Inc. 25,239,000
100,000 Electronics for Imaging, Inc. 4,725,000 (b)
201,400 General Instrument Corp. 5,035,000 (b)
203,100 Hewlett Packard Co. 11,373,600
309,000 International Business Machines 27,867,938
165,500 Iomega Corp. 3,289,313 (b)
154,600 Premiere Technologies, Inc. 4,019,600
271,200 Sun Microsystems, Inc. 10,093,725 (b)
170,100 Xerox Corp. 13,416,638
----------------
115,172,808
----------------
Conglomerates - 3.7%
265,100 AlliedSignal, Inc. 22,268,400
147,200 Dover Corp. 9,052,800
239,200 Honeywell, Inc. 18,149,300
155,000 Minnesota Mining & Manufacturing Co. 15,810,000
200,000 Tyco International Ltd. 13,912,500
----------------
79,193,000
----------------
Drugs & Health Care - 10.2%
315,000 Abbott Laboratories 21,026,250
175,000 Alpha-Beta Technology, Inc. 1,596,875 (b)
20,000 Amgen, Inc. 1,162,500 (b)
139,300 Baxter International, Inc. 7,278,425
300,500 Becton, Dickinson & Co. 15,212,813
486,500 Biochem Pharma, Inc. 10,824,625 (b)
205,600 Biogen, Inc. 6,964,700 (b)
236,800 Centocor, Inc. 7,355,600 (b)
161,700 Cephalon, Inc. 1,859,550 (b)
226,900 Eli Lilly & Co. 24,803,006
261,100 Johnson & Johnson 16,808,313
316,900 Merck & Co., Inc. 32,799,150
97,200 PDT, Inc. 3,547,800 (b)
213,300 Pfizer, Inc. 25,489,350
145,800 Schering-Plough Corp. 6,980,175
103,600 STERIS Corp. 3,872,050 (b)
200,000 Warner-Lambert Co. 24,850,000
----------------
212,431,182
----------------
Electrical Equipment - 1.5%
466,500 General Electric Co. 30,497,438
----------------
Electronics - 4.4%
82,800 ASE Test Ltd. 3,498,300 (b)
277,700 Cypress Semiconductor Corp. 4,026,650 (b)
147,000 Intel Corp. 20,846,438
101,000 Linear Technology Corp. 5,226,750
68,800 Maxim Integrated Products, Inc. 3,913,000 (b)
266,100 Motorola, Inc. 20,223,600
215,400 National Semiconductor Corp. 6,596,625 (b)
170,100 Nokia Corp., ADR 12,544,875
106,300 Silicon Valley Group, Inc. 2,803,663 (b)
128,200 Synopsys, Inc. 4,711,350
124,100 Xilinx, Inc. 6,088,656 (b)
----------------
90,479,907
----------------
Food & Beverage - 2.8%
249,600 Coca-Cola Co. 16,848,000
500,000 PepsiCo, Inc. 18,781,250
62,500 Ralston-Ralston Purina Group 5,136,719
431,700 Sara Lee Corp. 17,969,513
----------------
58,735,482
----------------
Healthcare
Management - 1.7%
222,600 Beverly Enterprises, Inc. 3,617,250 (b)
205,900 FPA Medical Management, Inc. 4,877,256 (b)
185,000 Oxford Health Plans, Inc. 13,273,750 (b)
249,400 United Healthcare Corp. 12,968,800
----------------
34,737,056
----------------
Household Products - 4.6%
163,000 Avon Products, Inc. 11,501,688
104,400 Clorox Co. 13,780,800
140,000 Colgate Palmolive Co. 9,135,000
322,500 Dial Corp. 5,039,063
240,000 Gillette Co. 22,740,000
182,600 Procter & Gamble Co. 25,792,250
35,000 Unilever N.V., ADR 7,630,000
----------------
95,618,801
----------------
Leisure &
Entertainment - 3.0%
256,600 Disney (Walt) Co. 20,592,150
282,900 HFS, Inc. 16,408,200 (b)
505,900 Host Marriott Corp. 9,011,344 (b)
131,800 Signature Resorts, Inc. 4,555,338 (b)
236,600 Time Warner, Inc. 11,415,950
----------------
61,982,982
----------------
Machinery &
Equipment - 2.5%
178,800 AGCO Corp. 6,425,625
115,200 Case Corp. 7,934,400
160,000 Cummins Engine Co., Inc. 11,290,000
295,000 Deere & Co. 16,188,125
175,100 Lear Corp. 7,770,063 (b)
50,900 Magna International, Inc. 3,063,544
----------------
52,671,757
----------------
Manufacturing - 0.4%
134,000 BMC Industries, Inc. 4,589,500
119,500 Speedfam International, Inc. 4,287,063 (b)
----------------
8,876,563
----------------
Mining & Metals - 0.7%
200,000 Aluminum Co. of America 15,075,000
----------------
Oil & Oil Service - 6.9%
178,500 Apache Corp. 5,801,250
350,900 Baker Hughes, Inc. 13,575,444
250,500 British Petroleum Co., plc 18,756,188
178,300 Chevron Corp. 13,183,056
97,400 Falcon Drilling Co., Inc. 5,612,675 (b)
260,500 Halliburton Co. 20,644,625
209,200 Mobil Corp. 14,617,850
101,400 Noble Drilling Corp. 2,287,838 (b)
193,700 Santa Fe International Corp. 6,585,800 (b)
187,600 Sun Company, Inc. 5,815,600
205,300 Texaco, Inc. 22,326,375
82,600 Total SA 4,181,625
135,600 Triton Energy Ltd., Class A 6,212,175 (b)
138,000 Ultramar Diamond Shamrock Corp. 4,502,250
----------------
144,102,751
----------------
Paper & Forest Products - 0.9%
155,100 Champion International Corp. 8,569,275
328,200 Stone Container Corp. 4,697,363 (c)
78,300 Willamette Industries, Inc. 5,481,000 (c)
----------------
18,747,638
----------------
Photography - 0.5%
122,500 Eastman Kodak Co. 9,401,875
----------------
Pollution Control - 0.6%
321,900 USA Waste Services, Inc. 12,433,388 (b)
----------------
Restaurants - 0.3%
221,000 Applebee's International, Inc. 5,911,750
----------------
Retail - 5.7%
238,100 American Stores Co. 11,756,188
350,000 Borders Group, Inc. 8,443,750 (b)
270,600 CompUSA, Inc. 5,817,900 (b)
293,500 CVS Corp. 15,041,875
123,300 Dole Food, Inc. 5,271,075
131,100 Eagle Hardware & Garden, Inc. 2,998,913 (b)
348,300 Federated Department Stores 12,103,425 (b)
201,500 General Nutrition Companies 5,642,000 (b)
119,500 Kmart Corp. 1,463,875
426,500 Kroger Co. 12,368,500 (b)
174,500 Movie Gallery, Inc. 1,112,438 (b)
69,800 Proffitt's, Inc. 3,062,475 (b)
299,500 Safeway, Inc. 13,814,438 (b)
58,400 Talbots, Inc. 1,985,600
500,000 Wal-Mart Stores, Inc. 16,906,250
----------------
117,788,702
----------------
Services - 2.2%
332,892 AccuStaff, Inc. 7,885,379 (b)
175,000 Computer Sciences Corp. 12,621,875 (b)
545,440 First Data Corp. 23,965,270
----------------
44,472,524
----------------
Telecommunications
Equipment - 2.3%
169,200 ACT Networks, Inc. 2,157,300 (b)
349,500 ADC Telecommunications, Inc. 11,664,563 (b)
93,000 Ascend Communications, Inc. 3,661,875 (b)
205,442 Lucent Technologies, Inc. 14,804,664 (b)
277,000 Tellabs, Inc. 15,477,375 (b)
----------------
47,765,777
----------------
Telephone &
Telecommunications - 4.5%
206,400 AirTouch Communications, Inc. 5,650,200 (b)
301,300 Ameritech Corp. 20,469,569
129,000 AT&T Corp. 4,523,063
372,500 BellSouth Corp. 17,274,688
66,700 Cincinnati Bell, Inc. 2,101,050
252,000 LCI International, Inc. 5,512,500 (b)
327,500 MobileMedia Corp., Class A 61,406 (b)
357,900 SBC Communications, Inc. 22,145,063
466,800 WorldCom, Inc. 14,937,600 (b)
----------------
92,675,139
----------------
Total Common Stock
(cost $1,633,351,145) 1,910,796,380
----------------
Principal
Amount
- --------------
CORPORATE
BONDS - 0.2% (a)
$6,250,000 Broadband Technologies, Inc.,
Convertible Subordinated Notes,
5.0% due 5/15/2001 (cost $6,249,273) 4,664,063
----------------
U.S. GOVERNMENT - 0.001% (a)
300,000 U.S. Treasury Notes, 8.75%,
due 10/15/1997 (cost $300,673) 302,813
----------------
SHORT-TERM
SECURITIES - 7.8% (a)
Commercial Paper - 7.5%
20,000,000 American Express Credit Corp., 5.52%,
due 7/10/1997 19,972,400
4,800,000 Assets Securitization Corp., 5.6%,
due 7/28/1997 4,779,840
17,600,000 Ciesco L P, 5.5%, due 7/18/1997 17,554,289
2,400,000 Ciesco L P, 5.52%, due 7/18/1997 2,393,744
900,000 General Electric Capital Corp., 5.53%,
due 7/23/1997 896,959
4,550,000 General Electric Capital Corp., 5.54%,
due 7/23/1997 4,534,596
16,400,000 General Electric Capital Corp., 5.55%,
due 7/23/1997 16,344,377
10,000,000 Great Lakes Chemical Corp., 5.52%,
due 7/14/1997 9,980,067
40,000,000 Koch Industries, Inc. 6.08%,
due 7/1/1997 40,000,000
20,000,000 Sheffield Receivables Corp., 5.57%,
due 7/3/1997 19,993,811
10,000,000 Unilever Capital Corp., 5.65%,
due 7/8/1997 9,989,014
10,000,000 USAA Capital Corp., 5.5%, due 7/16/1997 9,977,083
----------------
156,416,180
----------------
U.S. Government
Agency - 0.3%
5,600,000 Federal Home Loan Bank Discount Notes,
5.415%, due 7/25/1997 5,579,784
----------------
Total Short-Term Securities
(at amortized cost) 161,995,964
----------------
Total Investments
(cost $1,801,897,055) 2,077,759,220 (d)
================
Notes to Portfolio of Investments:
- ---------------------------------
(a) The categories of investments are shown as a percentage of total
investments of the Growth Portfolio.
(b) Currently non-income producing.
(c) Includes stock rights that automatically traded with the stock and had no
separate value at June 30, 1997.
(d) At June 30, 1997, the aggregate cost of securities for federal income tax
purposes was $1,801,897,055 and the net unrealized appreciation of
investments based on that cost was $275,862,165 which is comprised of
$301,988,519 aggregate gross unrealized appreciation and $26,126,354
aggregate gross unrealized depreciation.
Abbreviations:
- --------------
(ADR) -- American Depository Receipts
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
High Yield Portfolio
Portfolio of Investments
June 30, 1997
(unaudited)
Principal Maturity
Amount Rate Date Value
- ---------------- ------ -------------- ------------
<S> <C> <C> <C> <C>
CORPORATE BONDS - 79.6% (a)
Airlines - 1.0%
$ 4,200,000 Northwest Airlines, Inc., Notes 8.7% 3/15/2007 $4,326,692
3,000,000 Northwest Airlines, Inc., Notes 8.375% 3/15/2004 3,045,905
4,500,000 U.S. Air, Inc., Sr. Secured Equipment Trust, Series 1993-A-3 10.375% 3/1/2013 4,938,749
-------------
12,311,346
-------------
Automotive - 1.0%
7,200,000 Chief Auto Parts, Inc., Sr. Notes 10.5% 5/15/2005 7,253,999
7,050,000 Exide Corp., Convertible Sr. Subordinated Notes 2.9% 12/15/2005 4,379,812
-------------
11,633,811
-------------
Bank & Finance - 7.7%
7,250,000 AmeriCredit Corp., Sr. Notes 9.25% 2/1/2004 7,141,249
4,750,000 Chevy Chase Savings Bank, Subordinated Debentures 9.25% 12/1/2005 4,749,999
7,800,000 Dollar Financial Group, Inc., Sr. Notes, Series A 10.875% 11/15/2003 8,384,999
11,850,000 First Nationwide Holdings, Inc., Sr. Notes 12.5% 4/15/2003 13,360,875
3,896,000 HomeSide, Inc., Sr. Secured Second Priority Bonds, Series B 11.25% 5/15/2003 4,548,580
8,400,000 Integon Capital I, Capital Securities 10.75% 2/15/2027 10,248,000
7,300,000 Mego Mortgage Corp., Sr. Subordinated Notes 12.5% 12/1/2001 7,281,750
4,800,000 Residential Reinsurance Ltd., Notes 11.4475% 12/15/2008 4,824,000 (e)
5,400,000 Riggs Capital Trust II, Trust Preferred Securities, Series C 8.875% 3/15/2027 5,441,213
2,010,000 Trizec Finance Ltd., Sr. Notes 10.875% 10/15/2005 2,271,300
6,950,000 Veritas Holdings GMBH, Sr. Notes 9.625% 12/15/2003 7,193,250
7,500,000 Williams Scotsman, Inc., Sr. Notes 9.875% 6/1/2007 7,537,500
8,400,000 Wilshire Financial Services Group, Inc., Notes 13.0% 1/1/2004 8,526,000
-------------
91,508,715
-------------
Broadcasting - 11.8%
4,936,850 American Telecasting, Inc., Sr. Discount Notes Zero Coupon 6/15/2004 1,555,108
5,100,000 American Telecasting, Inc., Sr. Discount Notes Zero Coupon 8/15/2005 1,402,500
3,600,000 Australis Holdings Pty Ltd., Sr. Discount Notes Zero Coupon 11/1/2002 2,646,000
12,724,290 Australis Media Ltd., Sr. Discount Notes Zero Coupon 5/15/2003 9,352,353
6,600,000 Benedek Communications Corp., Sr. Discount Notes Zero Coupon 5/15/2006 4,042,500
6,900,000 Cablevision Industries, Debentures, Series B 9.25% 4/1/2008 7,445,017
9,000,000 CS Wireless Systems, Inc., Sr. Discount Notes, Series B Zero Coupon 3/1/2006 2,115,000
2,400,000 Echostar DBS Corp., Sr. Secured Notes 12.5% 7/1/2002 2,388,000
9,000,000 EchoStar Satellite Broadcasting Corp., Sr. Secured
Discount Notes Zero Coupon 3/15/2004 6,457,500
9,695,885 Falcon Holdings Group L.P., Sr. Subordinated Notes, Series B 11.0% 9/15/2003 9,744,364
11,900,000 Grupo Televisa S.A., Sr. Notes 11.875% 5/15/2006 13,476,750
9,000,000 Intermedia Capital Partners, Sr. Notes 11.25% 8/1/2006 9,855,000
1,800,000 International CableTel, Inc., Convertible Subordinated Notes 7.25% 4/15/2005 1,948,500
5,900,000 International CableTel, Inc., Convertible Subordinated Notes 7.0% 6/15/2008 5,597,625
4,200,000 International CableTel, Inc., Sr. Notes 10.0% 2/15/2007 4,294,500
6,300,000 International CableTel, Inc., Sr. Notes, Series A Zero Coupon 4/15/2005 4,851,000
6,000,000 Jacor Communications, Inc., Convertible Liquid
Yield Option Notes Zero Coupon 6/12/2011 3,367,500
7,050,000 Rogers Cablesystems Ltd., Sr. Secured Second Priority Notes 9.625% 8/1/2002 7,455,375
7,000,000 Rogers Communications, Inc., Convertible Debentures 2.0% 11/26/2005 3,841,250
3,750,000 Rogers Communications, Inc., Sr. Notes 9.125% 1/15/2006 3,806,250
4,964,750 Scott Cable Communications, Debentures 15.0% 4/15/2001 4,294,509
703,583 Scott Cable Communications, Jr. Subordinated Notes,
Payment-In-Kind 16.0% 7/18/2002 $ 84,430
9,800,000 Sinclair Broadcast Group, Sr. Subordinated Notes 9.0% 7/15/2007 9,530,500
5,400,000 TKR Cable I, Inc., Sr. Debentures 10.5% 10/30/2007 5,943,704
6,600,000 UIH Australia/Pacific, Inc., Sr. Discount Notes, Series B Zero Coupon 5/15/2006 4,191,000
7,200,000 United International Holdings, Inc., Sr. Discount Notes Zero Coupon 11/15/1999 5,598,000
6,000,000 Wireless One, Inc., Sr. Notes 13.0% 10/15/2003 3,750,000
-------------
139,034,235
-------------
Building Products & Materials - 1.6%
6,100,000 Atrium Companies, Inc., Sr. Subordinated Notes 10.5% 11/15/2006 6,374,500
7,200,000 CEMEX S.A. de C.V., Notes 12.75% 7/15/2006 8,370,000
4,200,000 Nortek, Inc., Sr. Notes 9.25% 3/15/2007 4,305,000
-------------
19,049,500
-------------
Computers & Office Equipment - 2.1%
9,000,000 Dictaphone Corp., Sr. Subordinated Notes 11.75% 8/1/2005 8,325,000
3,100,000 Pierce Leahy Corp., Sr. Subordinated Notes 9.125% 7/15/2007 3,100,000
8,200,000 Unisys Corp., Sr. Notes 11.75% 10/15/2004 8,897,000
4,600,000 Unisys Corp., Sr. Notes 12.0% 4/15/2003 5,002,500
-------------
25,324,500
-------------
Construction & Home Building - 1.4%
9,600,000 Peters (J.M.) Co., Inc., Sr. Notes 12.75% 5/1/2002 9,840,000
6,600,000 The Fortress Group, Inc., Sr. Notes 13.75% 5/15/2003 6,996,000
-------------
16,836,000
-------------
Containers & Packaging - 1.1%
2,866,000 Silgan Holdings, Inc., Subordinated Debentures, Payment-In-Kind 13.25% 7/15/2006 3,224,250
3,000,000 Vicap, S.A. de C.V., Sr. Guaranteed Notes 11.375% 5/15/2007 3,157,500
6,000,000 Vicap, S.A. de C.V., Sr. Guaranteed Notes 10.25% 5/15/2002 6,202,500
-------------
12,584,250
-------------
Drugs & Health Care - 0.7%
3,550,000 Owens & Minor, Inc., Sr. Subordinated Notes 10.875% 6/1/2006 3,896,125
4,100,000 UROHEALTH Systems, Inc., Units 12.5% 4/1/2004 3,997,500
-------------
7,893,625
-------------
Electric Utilities - 1.5%
7,200,000 CMS Energy Corp., Sr. Unsecured Notes 8.125% 5/15/2002 7,254,670
3,250,000 Midland Cogen Venture Fund II, Secured Lease Obligation Bonds, Series A 11.75% 7/23/2005 3,794,375
2,000,000 Midland Cogen Venture Fund II, Subordinated
Secured Lease Obligation Bonds 13.25% 7/23/2006 2,460,000
4,200,000 Panda Global Energy Co., Sr. Secured Notes 12.5% 4/15/2004 4,116,000
-------------
17,625,045
-------------
Electrical Equipment - 1.7%
3,600,000 EV International, Inc., Sr. Subordinated Notes 11.0% 3/15/2007 3,834,000
6,000,000 Protection One Alarm Monitoring, Convertible Sr. Subordinated Notes 6.75% 9/15/2003 6,112,500
3,000,000 Protection One Alarm Monitoring, Sr. Subordinated Discount Notes Zero Coupon 6/30/2005 3,120,000
7,200,000 Telex Communications, Inc., Sr. Notes 10.5% 5/1/2007 7,542,000
-------------
20,608,500
-------------
Food & Beverage - 2.2%
4,500,000 Cott Corp., Sr. Notes 8.5% 5/1/2007 4,500,000
9,000,000 Fresh Del Monte Corp., Sr. Notes, Series B 10.0% 5/1/2003 9,270,000
8,400,000 Gorges/Quik-to-Fix Foods, Sr. Subordinated Notes, Series B 11.5% 12/1/2006 8,694,000
3,000,000 International Home Foods, Inc., Sr. Subordinated Notes 10.375% 11/1/2006 3,105,000
-------------
25,569,000
-------------
Hospital Management - 4.2%
6,600,000 Integrated Health Services, Inc., Sr. Subordinated Notes 9.5% 9/15/2007 6,781,500
6,600,000 Merit Behavioral Care Corp., Sr. Subordinated Notes 11.5% 11/15/2005 7,293,000
4,200,000 PhyMatrix Corp., Convertible Subordinated Debentures 6.75% 6/15/2003 3,753,750
4,200,000 Regency Health Services, Inc., Sr. Subordinated Notes 9.875% 10/15/2002 4,305,000
4,850,000 Regency Health Services, Inc., Subordinated Notes 12.25% 7/15/2003 5,262,250
4,500,000 Rotech Medical Corp., Convertible Subordinated Debentures 5.25% 6/1/2003 4,370,625
7,800,000 Tenet Healthcare Corp., Sr. Subordinated Notes 8.625% 1/15/2007 7,995,000
11,400,000 Unison HealthCare Corp., Sr. Notes 12.25% 11/1/2006 9,405,000
-------------
49,166,125
-------------
Household Products - 2.1%
6,850,000 BPC Holding Corp., Sr. Secured Notes, Series B 12.5% 6/15/2006 7,500,750
9,000,000 Coleman Escrow Corp., Sr. Discount Notes Zero Coupon 5/15/2001 5,737,500
4,750,000 Radnor Holdings Corp., Sr. Notes 10.0% 12/1/2003 4,892,500
6,000,000 Simmons Co., Sr. Subordinated Notes 10.75% 4/15/2006 6,345,000
-------------
24,475,750
-------------
Leisure & Entertainment - 1.7%
12,600,000 AMF Group, Inc., Sr. Subordinated Discount Notes, Series B Zero Coupon 3/15/2006 9,024,750
3,000,000 IMAX Corp., Sr. Notes 7.0% 3/1/2001 3,157,500
7,200,000 Lodgenet Entertainment, Sr. Notes 10.25% 12/15/2006 7,380,000
-------------
19,562,250
-------------
Machinery & Equipment - .4%
4,200,000 Navistar Financial Corp., Sr. Subordinated Notes 9.0% 6/1/2002 4,341,750
-------------
Mining & Metals - 1.9%
4,850,000 Altos Hornos de Mexico, Bonds 11.875% 4/30/2004 5,231,938
7,500,000 CSN Iron Panama, Guaranteed Notes 9.125% 6/1/2007 7,368,750
3,000,000 Wells Aluminum Corp., Sr. Notes 10.125% 6/1/2005 3,097,500
6,600,000 Westmin Resources Ltd., Sr. Notes 11.0% 3/15/2007 6,930,000
-------------
22,628,188
-------------
Oil & Gas - 3.9%
10,200,000 Abraxas Petroleum Corp., Sr. Notes, Series B 11.5% 11/1/2004 11,067,000
9,200,000 Belden & Blake Corp., Sr. Subordinated Notes 9.875% 6/15/2007 9,177,000
3,000,000 Bellwether Exploration Co., Sr. Subordinated Notes 10.875% 4/1/2007 3,232,500
6,400,000 Forcenergy, Inc., Sr. Subordinated Notes, Series B 8.5% 2/15/2007 6,288,000
4,800,000 National Energy Group, Inc., Sr. Notes 10.75% 11/1/2006 4,968,000
6,167,000 Petroleum Heat & Power Co., Inc., Subordinated Debentures 12.25% 2/1/2005 6,506,185
5,100,000 Pride Petroleum Services, Inc., Sr. Notes 9.375% 5/1/2007 5,329,500
-------------
46,568,185
-------------
Paper & Forest Products - 3.6%
3,600,000 APP International Finance, Guaranteed Secured Notes 11.75% 10/1/2005 3,973,500
9,000,000 Doman Industries Ltd., Sr. Notes 8.75% 3/15/2004 8,775,000
7,800,000 Fonda Group, Inc., Sr. Subordinated Notes 9.5% 3/1/2007 7,488,000
7,250,000 FSW International Finance Co. B.V., Guaranteed Secured Notes 12.5% 11/1/2006 7,503,750
8,100,000 National Fiberstock Corp., Sr. Notes Series B 11.625% 6/15/2002 8,363,250
5,900,000 Tembec Finance Corp., Sr. Notes 9.875% 9/30/2005 6,113,875
-------------
42,217,375
-------------
Pollution Control - 0.4%
4,000,000 Norcal Waste Systems, Inc., Sr. Notes, Series B 12.75% 11/15/2005 4,500,000
-------------
Publishing & Printing - 2.9%
2,500,000 K-III Communications Corp., Sr. Notes 10.25% 6/1/2004 2,700,000
7,500,000 MDC Communications Corp., Sr. Subordinated Notes 10.5% 12/1/2006 8,006,250
13,800,000 Neodata Services, Inc., Sr. Notes, Series B 12.0% 5/1/2003 14,904,000
4,000,000 News America Holdings, Inc.,
Convertible Liquid Yield Option Notes Zero Coupon 3/11/2013 1,785,000
750,000 News America Holdings, Inc., Subordinated Notes Zero Coupon 3/31/2002 564,375
5,850,000 Sullivan Graphics, Inc., Sr. Subordinated Notes 12.75% 8/1/2005 5,996,250
-------------
33,955,875
-------------
Restaurants - .7%
7,800,000 AFC Enterprises, Sr. Subordinated Notes 10.25% 5/15/2007 7,839,000
-------------
Retail - 2.6%
4,300,000 Brazos Sportswear, Inc., Sr. Notes 10.5% 7/1/2007 4,246,250
6,300,000 Di Giorgio Corp., Sr. Notes 12.0% 2/15/2003 6,158,250
2,750,000 F & M Distributors, Inc., Sr. Subordinated Notes 11.5% 4/15/2003 10,313(c)
2,400,000 Leslie's Poolmart, Sr. Notes 10.375% 7/15/2004 2,460,000
6,000,000 Lifestyle Furnishings International Ltd., Sr. Subordinated Notes 10.875% 8/1/2006 6,660,000
2,700,000 Riddell Sports, Inc., Sr. Notes 10.5% 7/15/2007 2,774,250
2,100,000 Specialty Retailers, Inc., Sr. Notes 8.5% 7/15/2005 2,126,250
1,800,000 Specialty Retailers, Inc., Sr. Subordinated Notes 9.0% 7/15/2007 1,818,000
4,800,000 TravelCenters Of America, Inc., Sr. Subordinated Notes 10.25% 4/1/2007 4,944,000
-------------
31,197,313
-------------
Retail: Food - 2.3%
4,800,000 Jitney-Jungle Stores of America, Sr. Notes 12.0% 3/1/2006 5,370,000
6,300,000 Pueblo Xtra International, Inc., Sr. Notes 9.5% 8/1/2003 6,079,500
600,000 Pueblo Xtra International, Inc., Sr. Notes, Series B 9.5% 8/1/2003 579,000
7,250,000 Ralphs Grocery Co., Sr. Notes 10.45% 6/15/2004 7,820,938
7,600,000 Smith's Food & Drug Centers, Pass Through Certificates 8.64% 7/2/2012 7,790,000
-------------
27,639,438
-------------
Services - 1.0%
4,200,000 Intertek Finance plc, Sr. Subordinated Notes 10.25% 11/1/2006 4,399,500
7,200,000 KinderCare Learning Centers, Inc., Sr. Subordinated Notes 9.5% 2/15/2009 7,056,000
-------------
11,455,500
-------------
Telecommunications - 15.9%
12,000,000 American Communications Services, Sr. Discount Notes Zero Coupon 11/1/2005 7,080,000
9,600,000 Clearnet Communications, Inc., Sr. Discount Notes Zero Coupon 12/15/2005 6,432,000
6,600,000 Comcast Cellular Holdings, Inc., Sr. Notes 9.5% 5/1/2007 6,649,500
7,800,000 Dobson Communications Corp., Sr. Notes 11.75% 4/15/2007 7,605,000
7,800,000 Globalstar, L.P., Sr. Notes 11.25% 6/15/2004 7,351,500
3,000,000 GST Equipment Funding, Inc., Sr. Secured Notes 13.25% 5/1/2007 3,240,000
1,445,000 GST Telecommunications, Inc., Sr. Subordinated Notes Zero Coupon 12/15/2005 953,700
6,750,000 GST USA, Inc., Sr. Discount Notes Zero Coupon 12/15/2005 4,201,875
13,200,000 Hyperion Telecommunications, Sr. Discount Notes, Series B Zero Coupon 4/15/2003 6,699,000
6,050,000 IntelCom Group (U.S.A.), Inc., Sr. Discount Notes Zero Coupon 5/1/2003 3,993,000
4,800,000 InterCel, Inc., Sr. Notes 11.125% 6/1/2007 4,848,000
4,700,000 Intermedia Communications of Florida, Sr. Notes, Series B 13.5% 6/1/2005 5,757,500
12,600,000 Ionica plc, Sr. Notes 13.5% 8/15/2006 13,482,000
6,000,000 IXC Communications, Inc., Sr. Notes, Series B 12.5% 10/1/2005 6,840,000
8,400,000 McCaw International Ltd., Units Zero Coupon 4/15/2007 4,074,000
10,200,000 Microcell Telecommunications, Inc., Sr. Discount Notes Zero Coupon 6/1/2006 5,712,000
13,200,000 Millicom International Cellular, Sr. Discount Notes Zero Coupon 6/1/2006 9,570,000
5,400,000 NEXTLINK Communications LLC, Sr. Discount Notes 12.5% 4/15/2006 5,805,000
6,000,000 Olympus Communications, L.P., Sr. Notes 10.625% 11/15/2006 6,330,000
8,400,000 ORBCOMM Global, L.P., Sr. Notes 14.0% 8/15/2004 8,526,000
9,000,000 PageMart Nationwide, Inc., Sr. Discount Exchange Notes Zero Coupon 2/1/2005 6,840,000
8,650,000 Phonetel Technologies, Inc., Sr. Notes 12.0% 12/15/2006 8,779,750
9,000,000 RSL Communications Ltd., Units 12.25% 11/15/2006 9,270,000
13,500,000 UNIFI Communications, Inc., Units 14.0% 3/1/2004 13,432,500
4,900,000 USA Mobile Communications, Inc., Sr. Notes 14.0% 11/1/2004 5,439,000
12,000,000 Viatel, Inc., Sr. Discount Notes Zero Coupon 1/15/2005 8,220,000
6,750,000 WinStar Communications, Inc., Convertible Sr. Subordinated
Discount Notes Zero Coupon 10/15/2005 4,050,000
12,000,000 WinStar Communications, Inc., Sr. Discount Notes Zero Coupon 10/15/2005 6,780,000
-------------
187,961,325
-------------
Textiles & Apparel - 1.1%
7,200,000 Anvil Knitwear, Inc., Sr. Notes 10.875% 3/15/2007 7,308,000
6,000,000 CMI Industries, Inc., Sr. Subordinated Notes 9.5% 10/1/2003 6,075,000
-------------
13,383,000
-------------
Transportation - 1.1%
9,850,000 Equimar Shipholdings Ltd., First Priority Mortgage Notes 9.875% 7/1/2007 9,751,500
4,500,000 TFM, S.A. de C.V., Sr. Discount Debentures Zero Coupon 6/15/2009 2,621,250
900,000 TFM, S.A. de C.V., Sr. Notes 10.25% 6/15/2007 915,750
-------------
13,288,500
-------------
Total Corporate Bonds (cost $920,159,864) 940,158,101
-------------
<CAPTION>
Shares
- ----------------
<S> <C> <C>
PREFERRED STOCKS - 11.4% (a)
6,000,000 APP Finance II Mauritus Ltd., Preferred Stock 6,195,000
38,738 Cablevision Systems Corp., Preferred Stock 3,902,854
52,986 Cablevision Systems Corp., Redeemable Exchangeable Preferred Stock, Series H 5,497,298
42,000 California Federal Bank, Noncumulative Preferred Stock 4,725,000
42,000 Chancellor Radio Broadcasting, Exchangeable Preferred Stock 4,798,500
90,000 Chevy Chase Capital Corp., Noncumulative Exchangeable Preferred Stock, Series A 4,770,000
4,900 Citadel Broadcasting Co., Payment-In-Kind Preferred Stock 490,000
43,288 Communications & Power Industries, Inc., Convertible Preferred Stock, Series B 4,696,748
4,350 Consolidated Hydro, Inc., Preferred Stock 437,175(b)
60,000 Evergreen Media Corp., Convertible Preferred Stock 3,270,000
49,500 Grand Union Holdings Corp., Cumulative Preferred Stock, Series A 0(b,d)
194,000 Granite Broadcasting Corp., Convertible Preferred Stock 9,991,000
3,704 Granite Broadcasting Corp., Cumulative Exchangeable Preferred Stock 3,606,770
396,146 Harvard Industries, Inc., Exchangeable Payment-In-Kind Preferred Stock 495,183(c)
90,000 Host Marriott Financial Trust, Convertible Preferred Stock 5,265,000
3,728 ICG Communications, Inc., Preferred Stock 3,970,320
3,653 Intermedia Communications, Inc., Preferred Stock 3,789,988
15,000 Jitney-Jungle Stores of America, Sr. Exchangeable Preferred Stock, Class A 2,137,500
37,000 K-III Communications Corp., Exchangeable Preferred Stock 994,375
50,696 K-III Communications Corp., Exchangeable Preferred Stock, Series B 5,487,854
52,000 K-III Communications Corp., Preferred Stock, Series D 5,304,000
83,800 Network Imaging Corp., Convertible Preferred Stock, Series A 879,900
125,520 NEXTLINK Communications, Inc., Payment-In-Kind Preferred Stock 6,621,180
4,900 Paxson Communications Corp., Payment-In-Kind Preferred Stock 5,108,250
240,000 Petroleum Heat & Power, Preferred Stock 5,700,000
147,500 River Bank America, Preferred Stock 3,466,250
50,895 SFX Broadcasting, Inc., Payment-In-Kind Preferred Stock 5,509,384
5,400 Spanish Broadcasting Systems, Payment-In-Kind Preferred Stock 5,022,000
60,000 TIMET Capital Trust I, Convertible Preferred Stock 3,255,000
150,000 USX Corp. (Marathon Group), Convertible Preferred Stock 3,806,250
135,000 WorldCom, Inc., Convertible Preferred Stock 15,221,250
-------------
Total Preferred Stocks (cost $131,313,531) 134,414,029
-------------
COMMON STOCKS & STOCK WARRANTS - 3.0% (a,b)
16,800 American Communications Services, Stock Warrants 798,000
34,000 American Telecasting, Inc., Stock Warrants 34,000
3,600 American Telecasting, Inc., Stock Warrants 3,600
175,000 Arch Communications Group, Common Stock 1,334,375
3,400 Australis Holdings Pty Ltd., Stock Warrants 102
16,400 Australis Media Ltd., Stock Warrants 164
162,000 Bell & Howell Co., Common Stock 4,991,625
35,475 Clearnet Communications, Inc., Stock Warrants 297,103
2,310 Communications & Power Industries, Inc., Common Stock 346,500
7,830 Consolidated Hydro, Inc., Stock Warrants 0(d)
3,597 CS Wireless Systems, Inc., Common Stock 4
79,500 Envirotest Systems Corp., Class A Common Stock 198,750
101,377 Gaylord Container Corp., Class A Common Stock 779,336
127,902 Gaylord Container Corp., Stock Warrants 1,015,222
18,126 Grand Union Co., Stock Warrants 906
36,251 Grand Union Co., Stock Warrants 363
65,000 Harvard Industries, Inc., Class B Common Stock 36,563
12,600 Hyperion Telecommunications, Stock Warrants 378,000
198,000 IntelCom Group Communications, Inc., Common Stock 3,811,500
68,300 IntelCom Group (U.S.A.), Inc., Stock Warrants 887,900
179,000 InterCel, Inc., Common Stock 2,461,250
5,900 Intermedia Communications of Florida, Stock Warrants 236,000
14,800 Ionica plc, Stock Warrants 3,256,000
38,000 JPS Textiles Group, Common Stock, Class A 380
129,371 Magellan Health Services, Common Stock 3,816,445
50,379 Memorex Telex N.V., ADR, Common Stock 693
1,728 Memorex Telex N.V., ADR, Stock Warrants 0
40,800 Microcell Telecommunications, Inc., Stock Warrants 510,000
40,800 Microcell Telecommunications, Inc., Stock Warrants 25,500
384,500 MobileMedia Corp., Class A Common Stock 72,094
3,750 NEXTEL Communications, Stock Warrants 38
3,086 NEXTEL Communications, Stock Warrants 31
120,000 NEXTLINK Communications, Inc., Stock Warrants 1,200
33,250 PageMart Nationwide, Inc., Common Stock 249,375
179,000 Pagemart Wireless, Inc., Class A Common Stock 1,521,500
46,600 Plantronics, Inc., Common Stock 2,335,825
23,840 Protection One Alarm Monitoring, Stock Warrants 226,480
9,000 RSL Communications Ltd., Stock Warrants 270,000
5,000 Triangle Wire & Cable, Inc., Stock Warrants 0(d)
118,000 United International Holdings, Inc., Class A Common Stock 1,224,250
27,000 United International Holdings, Inc., Stock Warrants 337,500
240,666 Viatel, Inc., Common Stock 1,624,496
6,363 Wherehouse Entertainment, Inc., Class B Stock Warrants 6,363
6,363 Wherehouse Entertainment, Inc., Class C Stock Warrants 64
36,654 Wherehouse Entertainment, Inc., Class A Stock Warrants 279,303
138,000 Wireless One, Inc., Common Stock 353,625
19,200 Wireless One, Inc., Stock Warrants 192
-------------
Total Common Stocks & Stock Warrants (cost $35,784,410) 33,722,617
-------------
<CAPTION>
Principal Maturity
Amount Rate Date Value
- ---------------- ------ -------------- ------------
<S> <C> <C> <C> <C>
SHORT-TERM SECURITIES - 6.0% (a)
Commercial Paper - 5.2 %
$ 2,000,000 AVCO Financial Services, Inc. 5.57% 7/17/1997 1,995,049
2,300,000 CPC International, Inc. 5.65% 7/2/1997 2,299,639
5,000,000 CXC, Inc. 5.6% 7/24/1997 4,982,111
4,400,000 Dupont E.I. de Nemours & Co. 5.5% 7/8/1997 4,395,294
11,400,000 General Electric Capital Corp. 6.18% 7/1/1997 11,400,000
3,000,000 General Electric Capital Corp. 5.6% 7/21/1997 2,990,667
5,000,000 Household Finance Corp. 5.47% 7/1/1997 5,000,000
495,000 Oyster Creek Co. 5.6% 7/8/1997 494,461
2,281,000 Preferred Receivables Funding Corp. 5.56% 7/9/1997 2,278,182
10,449,000 President & Fellows Harvard Co. 6.06% 7/1/1997 10,449,000
2,000,000 Sheffield Receivables Corp. 5.55% 7/10/1997 1,997,225
5,000,000 Sheffield Receivables Corp. 5.6% 7/15/1997 4,989,111
1,128,000 St. Paul Cos., Inc. 5.5% 7/7/1997 1,126,966
7,400,000 Unilever Capital Corp. 5.53% 7/7/1997 7,393,180
1,850,000 Yale University 5.56% 7/14/1997 1,846,286
-------------
63,637,171
-------------
U.S. Government Agency - 0.8%
9,800,000 Federal National Mortgage Association, Discount Notes 5.6% 7/1/1997 9,800,000
-------------
Total Short-Term Securities (at amortized cost) 73,437,171
-------------
Total Investments (cost $1,160,694,976) $1,181,731,918(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, 1997,
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, 1997.
<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
Triangle Wire & Cable, Inc., Stock Warrants 1/3/1992 500
(e) Denotes variable rate obligations for which the current yield and the next scheduled interest reset date are shown.
(f) At June 30, 1997, the aggregate cost of securities for federal tax purposes was $1,160,694,976 and the net unrealized
appreciation of investments based on that cost was $21,036,942 which is comprised of $75,087,311 aggregate gross
unrealized appreciation and $54,050,369 aggregate gross unrealized depreciation.
Abbreviations:
- --------------
(ADR) -- American Depository Receipts
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, 1997
(unaudited)
Principal Maturity
Amount Rate Date Value
- ---------------- ------ -------------- ------------
<S> <C> <C> <C> <C>
CORPORATE BONDS - 43.8% (a)
Automotive - 0.5%
$ 5,000,000 Ford Motor Credit Co., Notes 6.375% 10/6/2000 $4,958,054
-------------
Bank & Finance - 13.4%
3,500,000 Aon Capital A, Capital Securities 8.205% 1/1/2027 3,588,833
5,000,000 Associates Corp. of North America, Sr. Notes 9.125% 4/1/2000 5,317,249
4,000,000 Banc One Corp., Subordinated Debentures 8.0% 4/29/2027 4,141,988
6,000,000 Chase Manhattan Corp., Subordinated Notes 9.375% 7/1/2001 6,545,796
2,000,000 Chase Manhattan Corp., Subordinated Notes 10.375% 3/15/1999 2,127,722
5,000,000 Chemical New York Corp., Debentures 9.75% 6/15/1999 5,302,060
3,000,000 Delphi Funding, LLC, Capital Securities, Series A 9.31% 3/25/2027 3,091,851
12,000,000 Equitable Life Assurance Society of the United States, Surplus Notes 6.95% 12/1/2005 11,808,204
8,000,000 GenAmerica Capital I, Capital Securities 8.525% 6/30/2027 8,073,696
6,500,000 General Electric Capital Corp., Debentures 8.85% 4/1/2005 7,271,303
10,000,000 Mellon Capital I, Capital Trust Preferred Securities 7.72% 12/1/2026 9,716,710
10,000,000 Metropolitan Life Insurance Co., Surplus Notes 7.7% 11/1/2015 9,949,840
5,000,000 New York Life Insurance Co., Surplus Notes 6.4% 12/15/2003 4,856,500
8,000,000 Prudential Insurance Co., Surplus Notes 8.3% 7/1/2025 8,230,152
5,500,000 Riggs Capital Trust II, Trust Preferred Securities, Series C 8.875% 3/15/2027 5,541,976
5,000,000 Riggs Capital Trust, Capital Trust Preferred Securities, Series A 8.625% 12/31/2026 4,908,330
4,000,000 Salomon, Inc., Notes 6.7% 7/5/2000 3,991,108
6,000,000 Societe-Generale- New York, Subordinated Notes 9.875% 7/15/2003 6,821,106
5,000,000 Societe-Generale- New York, Subordinated Notes 7.4% 6/1/2006 5,045,775
7,000,000 Wells Fargo Capital, Capital Trust Preferred Securities 7.73% 12/1/2026 6,725,509
-------------
123,055,708
-------------
Broadcasting - 2.4%
3,500,000 Grupo Televisa S.A., Sr. Notes, Series A 11.375% 5/15/2003 3,836,875
3,000,000 Rogers Cablesystems, Inc., Sr. Secured Second Priority Notes 9.625% 8/1/2002 3,172,500
2,500,000 TCI Communications, Inc., Sr. Notes 8.65% 9/15/2004 2,651,010
8,000,000 TKR Cable I, Inc., Sr. Debentures 10.5% 10/30/2007 8,805,488
4,000,000 Viacom, Inc., Subordinated Debentures 8.0% 7/7/2006 3,880,000
-------------
22,345,873
-------------
Chemicals - 0.5%
4,000,000 Uniroyal Chemical Co., Sr. Notes 9.0% 9/1/2000 4,170,000
-------------
Computers & Office Equipment - 0.6%
6,000,000 International Business Machines Corp., Debentures 7.125% 12/1/2096 5,727,150
-------------
Containers & Packaging - 0.8%
7,000,000 Owens-Illinois, Inc., Sr. Notes 7.85% 5/15/2004 7,139,902
-------------
Electric Utilities - 4.3%
2,000,000 AES Corp., Sr. Subordinated Notes 10.25% 7/15/2006 2,195,000
4,000,000 Cleveland Electric Illumination Co., Secured Notes, Series A 7.19% 7/1/2000 4,047,996
4,000,000 CMS Energy Corp., Sr. Unsecured Notes 8.125% 5/15/2002 4,030,372
5,000,000 ComEd Financing II Capital Securities 8.5% 1/15/2027 5,037,615
4,000,000 Commonwealth Edison Co., Notes 7.625% 1/15/2007 4,023,872
5,000,000 Connecticut Light & Power Co., First Mortgage Notes 7.75% 6/1/2002 4,985,405
4,000,000 El Paso Electric Co., First Mortgage Bonds, Series D 8.9% 2/1/2006 4,280,000
6,500,000 Empresa Electrica Pehuienche S.A., Notes 7.3% 5/1/2003 6,538,734
4,000,000 NRG Energy, Inc., Sr. Notes 7.5% 6/15/2007 4,019,356
-------------
39,158,350
-------------
Electrical Equipment - 0.6%
5,000,000 Westinghouse Electric Corp., Notes 8.375% 6/15/2002 5,179,965
-------------
Electronics - 0.1%
500,000 Motorola, Inc., Convertible Liquid Yield Option Notes Zero Coupon 9/27/2013 449,375
-------------
Hospital Management - 2.3%
5,000,000 Allegiance Corp., Debentures 7.8% 10/15/2016 5,058,980
2,000,000 Columbia/HCA Healthcare Corp., Medium Term Notes 6.87% 9/15/2003 1,990,330
5,000,000 Columbia/HCA Healthcare Corp., Notes 6.41% 6/15/2000 4,975,570
4,000,000 Quorum Health Group, Inc., Sr. Subordinated Notes 8.75% 11/1/2005 4,130,000
2,500,000 Tenet Healthcare Corp., Sr. Notes 7.875% 1/15/2003 2,506,250
2,500,000 Tenet Healthcare Corp., Sr. Subordinated Notes 8.625% 1/15/2007 2,562,500
-------------
21,223,630
-------------
Household Products - 0.7%
5,000,000 Procter & Gamble, Guaranteed ESOP Debentures 9.36% 1/1/2021 6,062,045
-------------
Leisure & Entertainment - 1.0%
5,000,000 Time Warner, Inc., Debentures 9.125% 1/15/2013 5,557,215
4,000,000 Time Warner, Inc., Notes 7.75% 6/15/2005 4,065,232
-------------
9,622,447
-------------
Natural Gas - 0.9%
5,000,000 Columbia Gas Systems, Inc., Series A Notes 6.39% 11/28/2000 4,953,775
3,000,000 Columbia Gas Systems, Inc., Series B Notes 6.61% 11/28/2002 2,976,315
-------------
7,930,090
-------------
Paper & Forest Products - 0.4%
3,750,000 Indah Kiat Finance Mauritius, Sr. Guaranteed Notes 10.0% 7/1/2007 3,745,313
-------------
Petroleum - 2.9%
2,000,000 Flores & Rucks, Inc., Sr. Subordinated Notes 9.75% 10/1/2006 2,120,000
5,437,388 Mobil Oil Corp., ESOP Sinking Fund Debentures 9.17% 2/29/2000 5,671,646
1,500,000 Oryx Energy Co., Notes 8.125% 10/15/2005 1,546,767
4,000,000 Oryx Energy Co., Notes 8.375% 7/15/2004 4,176,484
5,000,000 Petroliam Nasional BHD, Notes 7.75% 8/15/2015 5,102,200
5,000,000 Phillips 66 Capital Trust II 8.0% 1/15/2037 4,999,750
3,000,000 United Meridian Corp., Sr. Subordinated Notes 10.375% 10/15/2005 3,270,000
-------------
26,886,847
-------------
Publishing & Printing - 0.9%
3,000,000 Belo (A.H.) Corp., Sr. Notes 7.125% 6/1/2007 2,995,200
5,000,000 Belo (A.H.) Corp., Sr. Notes 6.875% 6/1/2002 5,010,090
500,000 Omnicom Group, Inc., Convertible Subordinated Debentures 4.25% 1/3/2007 592,500
-------------
8,597,790
-------------
Retail - 6.0%
1,500,000 Boston Chicken, Inc., Subordinated Debentures 7.75% 5/1/2004 1,353,750
8,500,000 Dayton Hudson Corp., Notes 6.4% 2/15/2003 8,317,097
4,500,000 Eagle Food Centers, Inc., Sr. Notes 8.625% 4/15/2000 4,477,500
6,000,000 Federated Department Stores, Sr. Notes 10.0% 2/15/2001 6,585,054
4,000,000 Federated Department Stores, Sr. Notes 8.5% 6/15/2003 4,261,800
1,300,000 Kroger Co. (The), Sr. Notes 8.15% 7/15/2006 1,378,820
8,000,000 Penney (J.C.) Co., Inc., Notes 6.95% 4/1/2000 8,094,600
4,000,000 Safeway, Inc., Sr. Subordinated Debentures 9.875% 3/15/2007 4,741,876
6,000,000 Sears Roebuck Acceptance Corp., Medium Term Notes, Series III 7.03% 6/4/2003 6,034,530
10,000,000 Sears Roebuck Acceptance Corp., Medium Term Notes, Series II 6.86% 7/3/2001 10,022,310
-------------
55,267,337
-------------
Services - 0.7%
6,000,000 Electronic Data Systems Corp., Notes 6.85% 5/15/2000 6,050,916
-------------
Telecommunications - 0.2%
2,000,000 Comcast Cellular Holdings, Inc., Sr. Notes 9.5% 5/1/2007 2,015,000
-------------
Telephone - 2.2%
4,000,000 New York Telephone Co., Debentures 9.375% 7/15/2031 4,455,748
6,000,000 Philippine Long Distance Telephone, Notes 7.85% 3/6/2007 5,760,000
10,000,000 U.S. West Capital Funding, Inc., Notes 6.85% 1/15/2002 10,002,090
-------------
20,217,838
-------------
Textiles & Apparel - 0.8%
7,000,000 Levi Strauss & Co., Notes 6.8% 11/1/2003 6,959,589
-------------
Transportation - 1.6%
3,000,000 CSX Corp., Debentures 7.25% 5/1/2027 3,069,546
4,000,000 Norfolk Southern Corp., Notes 6.95% 5/1/2002 4,043,684
8,000,000 Norfolk Southern Corp., Notes 6.875% 5/1/2001 8,080,936
-------------
15,194,166
-------------
Total Corporate Bonds (cost $397,916,219) 401,957,385
-------------
FOREIGN GOVERNMENT BONDS - 3.7% (a,c)
2,500,000 African Development Bank, Subordinated Notes 6.875% 10/15/2015 2,417,740
5,000,000 British Columbia Hydro & Power, Debentures 12.5% 9/1/2013 5,540,350
8,000,000 Korea Development Bank (The), Bonds 7.25% 5/15/2006 7,973,200
8,000,000 Korea Electric Power Corp., Debentures 6.38% 12/1/2003 7,692,824
6,000,000 Ontario Province, Canada, Debentures 11.75% 4/25/2013 6,546,360
2,500,000 Ontario Province, Canada, Sr. Bonds 7.375% 1/27/2003 2,573,973
2,000,000 Republic of Poland, Unsecured Bonds 4.0% 10/27/2014 1,712,500
-------------
Total Foreign Government Bonds (cost $35,144,302) 34,456,947
-------------
ASSET-BACKED SECURITIES - 12.8% (a)
8,000,000 Bridgestone/Firestone Master Trust, Series 96-1-A 6.17% 7/1/2003 7,946,320
11,000,000 Chase Manhattan Credit Card, Series 1996-4, Class A 6.73% 2/15/2002 11,118,580
9,031,285 Chase Manhattan Grantor Trust, Series 1996-B-A 6.61% 9/15/2002 9,112,115
5,000,000 CS First Boston Mortgage Security Corp., 1996-2 Class A4 6.62% 9/25/2009 4,969,800
5,000,000 CS First Boston Mortgage Security Corp., Series 1997-1-A3 6.91% 5/25/2007 5,029,300
5,000,000 CS First Boston Mortgage Security Corp., Series 1997-1-A4 7.15% 5/25/2010 5,045,200
20,000,000 Deutsche Floorplan Receivables Master Trust, Series 1994-1-A 5.58% 2/15/2001 20,062,400(b)
10,000,000 Discover Card Master Trust I, Series 1996-3-A 6.05% 8/18/2008 9,465,800
12,000,000 Standard Credit Master Trust 1, Credit Card Participation
Certificates, Series 1995-9-A 6.55% 10/7/2007 11,759,280
15,000,000 World Financial Network Credit Card Master Trust, Series 1996-B 6.95% 4/15/2006 15,217,650
18,000,000 World Omni Auto Lease Trust Certificates 6.9% 6/25/2003 18,246,600
-------------
Total Asset-Backed Securities (cost $117,787,848) 117,973,045
-------------
MORTGAGE-BACKED SECURITIES - 14.4% (a)
14,122,711 Federal Home Loan Mortgage Corp., Participation Certificates 6.0% 4/1/2011 13,654,529
7,440,288 Federal Home Loan Mortgage Corp., Participation Certificates 6.0% 3/1/2011 7,193,635
12,000,000 Federal Home Loan Mortgage Corp., Participation Certificates 6.0% 4/1/2027 11,587,500(d)
63,000,000 Federal National Mortgage Association, Modified
Pass Through Certificates 7.0% 2/1/2027 61,759,688(d)
40,000,000 Government National Mortgage Association, Modified
Pass Through Certificates 6.5% 12/15/2026 38,287,500(d)
-------------
Total Mortgage-Backed Securities (cost $131,947,316) 132,482,852
-------------
U.S. GOVERNMENT - 6.7% (a)
47,500,000 U.S. Treasury Bonds 6.5-12.0% 2005-2026 54,156,394
8,000,000 U.S. Treasury Notes 6.25-7.875% 2002-2007 8,075,623
-------------
Total U.S. Government (cost $60,480,770) 62,232,017
-------------
<CAPTION>
Shares
- ----------------
<S> <C> <C>
COMMON STOCKS - 0.2% (a)
10,000 CarrAmerica Realty Corp., Common Stock 287,500
1,000 Crescent Operating, Inc., Common Stock 12,000
10,000 Cresent Real Estate Equities, Common Stock 317,500
10,000 First Industrial Realty Trust, Common Stock 292,500
5,000 Highwoods Properties, Inc., Common Stock 160,000
10,000 Simon Debartolo Group, Inc., Common Stock 320,000
10,000 Spieker Properties, Inc., Common Stock 351,875
-------------
Total Common Stocks (cost $1,654,900) 1,741,375
-------------
PREFERRED STOCKS - 0.6% (a)
20,000 K-III Communications Corp., Preferred Stock, Series D 2,040,000
17,500 Security Capital Industrial Trust, Preferred Stock 487,813
17,500 Security Capital Pacific, Preferred Stock 533,750
100,000 TransCanada Pipelines Ltd., Preferred Stock 2,575,000
-------------
Total Preferred Stocks (cost $5,508,496) 5,636,563
-------------
<CAPTION>
Principal Maturity
Amount Rate Date Value
- ---------------- ------ -------------- ------------
<S> <C> <C> <C> <C>
SHORT-TERM SECURITIES - 17.8% (a)
Commercial Paper - 15.5%
$2,200,000 AES Barbers Points, Inc. 5.57% 7/24/1997 2,192,171
12,000,000 Beneficial Corp. 5.53% 7/16/1997 11,972,350
15,000,000 Corporate Asset Funding Co., Inc. 5.54% 7/21/1997 14,953,833
15,000,000 Delaware Funding Corp. 5.55% 7/18/1997 14,960,688
10,000,000 Nestle Capital Corp. 5.55% 7/25/1997 9,963,000
2,400,000 New Center Asset Trust 5.67% 7/7/1997 2,397,732
3,500,000 New Center Asset Trust 5.65% 7/9/1997 3,495,606
6,033,000 Oyster Creek Co. 5.55% 7/17/1997 6,018,119
15,000,000 Penney (J.C.) Funding Corp. 5.53% 7/11/1997 14,976,958
200,000 President & Fellows Harvard Co. 6.06% 7/1/1997 200,000
12,947,000 Security Market Savings 5.52% 7/14/1997 12,921,192
20,500,000 Shell Oil Co. 6.15% 7/1/1997 20,500,000
10,000,000 St. Paul Cos., Inc. 6.2% 7/1/1997 10,000,000
20,000,000 UBS Finance Delaware, Inc. 6.2% 7/1/1997 20,000,000
-------------
144,551,649
-------------
U.S. Government Agency - 2.3%
20,000,000 Federal National Mortgage Association, Discount Notes 5.43% 7/8/1997 19,978,883
-------------
Total Short-Term Securities (at amortized cost) 164,530,532
-------------
Total Investments (cost $914,970,383) $921,010,716(e)
=============
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, 1997, the aggregate cost of securities for federal income tax purposes was $914,970,383 and the net unrealized
appreciation of investments based on that cost was $6,040,333 which is comprised of $9,460,091 aggregate gross unrealized
appreciation and $3,419,758 aggregate gross unrealized depreciation.
The accompanying notes are an integral part of these Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
Money Market Portfolio
Portfolio of Investments
June 30, 1997
(unaudited)
Principal Yield to Maturity
Amount Maturity Date Value
- ---------------- ------ -------------- ------------
<S> <C> <C> <C> <C>
COMMERCIAL PAPER - 89.8% (a,c)
Banking-Domestic - 4.0%
$2,000,000 Allegheny University Hospitals, (PNC Bank, N.A.,
Direct Pay Letter of Credit) 5.61% 7/21/97 $1,993,822
500,000 Enterprise Funding Corp. 5.75% 7/31/97 497,629
429,000 Enterprise Funding Corp. 5.65% 7/31/97 427,002
1,716,000 Enterprise Funding Corp. 5.60% 8/15/97 1,704,095
-------------
4,622,548
-------------
Banking-Foreign - 11.1%
5,000,000 Banco Real S.A., Grand Cayman (Barclays Bank plc,
Direct Pay Letter of Credit) 5.59% 7/7/97 4,995,358
2,000,000 Finance One Funding Corp., (Credit Suisse, Direct
Pay Letter of Credit) 5.82% 9/24/97 1,973,319
2,000,000 Formosa Plastics Corp., U.S.A. Series A (ABN AMRO
Bank N.V., Direct Pay Letter of Credit) 5.69% 9/4/97 1,979,742
2,000,000 Glencore Finance Bermuda Ltd., (Union Bank of Switzerland,
Direct Pay Letter of Credit) 5.61% 8/28/97 1,982,375
2,000,000 PEMEX Capital, Inc., (Credit Suisse,
Direct Pay Letter of Credit) 5.67% 10/10/97 1,968,690
-------------
12,899,484
-------------
Computer & Office Equipment - 2.9%
2,000,000 Electronic Data Systems Corp. 5.57% 7/9/97 1,997,542
1,000,000 IBM Credit Corp. 5.59% 7/16/97 997,688
415,000 IBM Credit Corp. 5.59% 7/21/97 413,716
-------------
3,408,946
-------------
Drugs & Healthcare - 0.3%
350,000 Schering Corp. 5.87% 10/16/97 344,070
-------------
Education - 4.3%
2,000,000 Duke University 5.61% 7/31/97 1,990,733
2,000,000 Leland H. Stanford Junior University 5.55% 7/17/97 1,995,200
1,000,000 Leland H. Stanford Junior University 5.89% 10/9/97 984,111
-------------
4,970,044
-------------
Finance-Automotive - 5.7%
150,000 Ford Motor Credit Co. 5.64% 9/2/97 148,535
1,000,000 Ford Motor Credit Co. 5.63% 7/3/97 999,690
2,000,000 Ford Motor Credit Co. - Puerto Rico 5.84% 12/1/97 1,951,805
2,000,000 General Motors Acceptance Corp. 5.96% 11/10/97 1,957,540
1,500,000 General Motors Acceptance Corp. 5.58% 8/25/97 1,487,556
-------------
6,545,126
-------------
Finance-Commercial - 6.7%
1,487,000 C.I.T. Group Holdings, Inc. 5.60% 8/13/97 1,477,142
2,000,000 C.I.T. Group Holdings, Inc. 5.67% 8/19/97 1,984,783
2,000,000 C.I.T. Group Holdings, Inc. 5.64% 8/11/97 1,987,244
300,000 General Electric Capital Corp. 5.77% 8/28/97 297,260
2,000,000 General Electric Credit Services - Puerto Rico 5.52% 7/8/97 1,997,912
-------------
7,744,341
-------------
Finance-Consumer - 10.9%
500,000 Associates Corp. of North America 5.64% 8/5/97 497,278
1,149,000 Associates Corp. of North America 5.62% 7/29/97 1,144,022
2,000,000 Associates Corp. of North America 5.62% 8/5/97 1,989,170
2,000,000 AVCO Financial Services, Inc. 5.63% 9/3/97 1,980,231
2,000,000 Commercial Credit Co. 5.61% 8/25/97 1,983,011
2,000,000 Household Finance Corp. 5.57% 7/11/97 1,996,928
1,000,000 Household Finance Corp. 5.74% 7/21/97 996,900
2,000,000 Household Finance Corp. 5.63% 7/21/97 1,993,722
-------------
12,581,262
-------------
Finance-Retail - 3.5%
2,000,000 Sears Roebuck Acceptance Corp. 5.66% 9/10/97 1,977,990
2,000,000 Sears Roebuck Acceptance Corp. 5.70% 7/22/97 1,993,432
-------------
3,971,422
-------------
Finance-Structured - 16.7%
2,000,000 Asset Securitization Corp. 5.75% 8/7/97 1,988,324
2,000,000 Asset Securitization Corp. 5.61% 7/16/97 1,995,358
5,500,000 CXC, Inc. 6.25% 7/1/97 5,500,000
412,000 Delaware Funding Corp 5.64% 8/25/97 408,488
2,000,000 Delaware Funding Corp 5.64% 8/18/97 1,985,120
704,000 Delaware Funding Corp 5.73% 7/18/97 702,122
230,199 Norwest Automobile Trust, Series 1996-A-1 5.59% 12/5/97 230,199
1,500,000 Preferred Receivables Funding Corp. 5.71% 8/12/97 1,490,148
2,000,000 Preferred Receivables Funding Corp. 5.71% 7/1/97 2,000,000
2,000,000 Preferred Receivables Funding Corp. 5.73% 7/14/97 1,995,919
1,015,000 Triple-A One Funding Corp. (Guaranteed CapMAC) 5.66% 9/16/97 1,002,864
-------------
19,298,542
-------------
Financial Services - 4.3%
2,000,000 American Express Credit Corp. 5.58% 7/15/97 1,995,785
1,000,000 USAA Capital Corp. 5.74% 9/9/97 989,033
2,000,000 USAA Capital Corp. 5.79% 8/21/97 1,983,878
-------------
4,968,696
-------------
Industrial - 8.2%
2,000,000 Chevron Transport Corp. 5.68% 9/19/97 1,975,156
2,500,000 Du Pont (E.I.) de Nemours and Co. 5.67% 8/26/97 2,478,261
785,000 Du Pont (E.I.) de Nemours and Co. 5.59% 7/8/97 784,161
900,000 Monsanto Co. 5.74% 8/25/97 892,231
2,000,000 Monsanto Co. 5.67% 10/21/97 1,965,342
1,410,000 Monsanto Co. 5.67% 7/7/97 1,408,679
-------------
9,503,830
-------------
Insurance - 4.4%
1,500,000 A.I. Credit Corp. 5.73% 9/2/97 1,485,221
730,000 A.I.G. Funding, Inc. 5.57% 7/21/97 727,831
943,000 MetLife Funding, Inc. 5.59% 8/12/97 936,894
2,000,000 MetLife Funding, Inc. 5.59% 8/7/97 1,988,612
-------------
5,138,558
-------------
Sovereign/Foreign Government - 1.5%
1,000,000 Kingdom of Sweden 5.77% 8/8/97 994,004
800,000 Kingdom of Sweden 5.61% 8/28/97 792,847
-------------
1,786,851
-------------
U.S. Municipal - 5.3%
1,000,000 California Pollution Control Finance Authority
(Guaranteed Shell Oil Co.) 5.73% 7/23/97 1,000,000
3,100,000 New York City, New York, Series 95-B (Guaranteed
General Electric Capital Corp.) 5.86% 8/21/97 3,100,000
2,000,000 Whiting, IN. Sewage & Waste Disposal
(Guaranteed Amoco Oil) 5.72% 7/28/97 2,000,000
-------------
6,100,000
-------------
Total Commercial Paper 103,883,720
-------------
CERTIFICATES OF DEPOSIT - 6.1% (a,c)
Domestic - 4.3%
2,000,000 Bankers Trust Co., N.A.- New York 5.75% 9/17/97 2,000,000
1,000,000 Morgan Guaranty Bank, New York 5.63% 8/12/97 1,000,055
2,000,000 Wachovia Bank of Georgia, N.A. 6.20% 4/6/98 1,998,544
-------------
4,998,599
-------------
Euro Dollar - 1.8%
2,000,000 Westdeutcshe Landesbank, New York 5.83% 11/24/97 2,000,009
-------------
Total Certificates of Deposit 6,998,608
-------------
VARIABLE RATE NOTES - 3.4% (a,b)
2,000,000 First Bank, N.A., Minneapolis, Bank Note 5.59% 8/20/97 1,999,634
2,000,000 PNC Bank, N.A., Pittsburgh, Medium Term Bank Note 5.77% 7/2/97 1,999,995
-------------
Total Variable Rate Notes 3,999,629
-------------
OTHER - 0.7% (a,b)
800,000 Federated Master Trust 5.23% 7/1/97 800,000
-------------
Total Investments (at amortized cost) $115,681,957(d)
=============
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 the next scheduled interest reset date are shown.
(c) Yield to maturity is calculated at date of purchase.
(d) Also represents cost for federal income tax purposes.
The accompanying notes are an integral part of these Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
OPPORTUNITY GROWTH PORTFOLIO
Financial Statements
Statement of Assets and Liabilities
June 30, 1997
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $334,821,432) $326,170,286
Cash 51,830
Receivable for investment securities sold 6,884,597
Dividend and interest receivable 53,266
------------
Total assets 333,159,979
------------
LIABILITIES:
Payable for investment securities purchased 11,469,500
------------
NET ASSETS $321,690,479
============
NET ASSETS CONSIST OF:
Paid-in capital (29,041,385 shares of capital
stock outstanding) $334,616,504
Undistributed net investment income 521,626
Accumulated net realized loss from sale
of investments (4,796,505)
Unrealized net depreciation of investments (8,651,146)
------------
NET ASSETS $321,690,479
============
Net asset value and public offering price per share
($321,690,479 (divided by) 29,041,385 shares of capital
stock outstanding) $11.08
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended June 30, 1997
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Dividend income $ 58,622
Interest income 993,455
------------
Total income 1,052,077
------------
Expenses --
Investment advisory fee 530,451
------------
Net investment income 521,626
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized loss on investment transactions (1,157,365)
Net realized gain on closed or expired option
contracts written 58,729
------------
Net realized loss on investments (1,098,636)
Net change in unrealized depreciation of investments (4,310,235)
------------
Net loss on investments (5,408,871)
------------
Net change in net assets resulting
from operations $ (4,887,245)
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months For the period from
Ended January 18, 1996
6/30/97 (effective date) to
(unaudited) December 31, 1996
------------ ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $ 521,626 $ 344,855
Net realized gain (loss) on investments (1,098,636) 4,492,663
Net change in unrealized appreciation or depreciation
of investments (4,310,235) (4,340,911)
------------ ------------
Net change in net assets resulting from operations (4,887,245) 496,607
------------ ------------
DISTRIBUTIONS PAID TO SHAREHOLDERS --
Net investment income -- (344,855)
Net realized gain on investments -- (8,190,532)
------------ ------------
Total distributions -- (8,535,387)
------------ ------------
CAPITAL STOCK TRANSACTIONS --
Proceeds from sale of shares 82,103,630 247,867,947
Reinvested dividend distributions -- 8,535,387
Cost of shares redeemed (2,077,205) (1,813,255)
------------ ------------
Net increase in net assets from capital stock transactions 80,026,425 254,590,079
------------ ------------
Net increase in net assets 75,139,180 246,551,299
NET ASSETS:
Beginning of period 246,551,299 --
------------ ------------
End of period (including undistributed net investment
income of $521,626 and $0, respectively $321,690,479 $246,551,299
============ ============
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, 1997
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $227,416,118) $258,310,342
Cash (including foreign currency holdings
of $2,917,109) 2,958,127
Receivable for investment securities sold 4,400
Dividend and interest receivable 678,645
------------
Total assets 261,951,514
------------
LIABILITIES:
Payable for investment securities purchased 2,196,495
Unrealized depreciation of foreign currency
contracts held 1,797
------------
Total liabilities 2,198,292
------------
NET ASSETS $259,753,221
============
NET ASSETS CONSIST OF:
Paid-in capital (21,387,297 shares of capital
stock outstanding) $224,511,362
Undistributed net investment income 1,948,485
Accumulated net realized gain from sale of
investments and foreign currency transactions 2,404,528
Unrealized net appreciation of investments and
on translation of assets and liabilities in
foreign currencies 30,888,846
------------
NET ASSETS $259,753,221
============
Net asset value and public offering price per share
($259,753,221 (divided by) 21,387,297 shares of capital
stock outstanding) $12.15
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended June 30, 1997
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Dividend income (net of foreign taxes of $352,926) $ 2,489,735
Interest income 348,080
------------
Total income 2,837,815
------------
Expenses --
Investment advisory fee 889,330
------------
Net investment income 1,948,485
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
AND FOREIGN CURRENCY:
Net realized gain on investment transactions 2,605,797
Net realized gain on foreign currency transactions 63,228
------------
Net realized gain on investments and foreign
currency transactions 2,669,025
------------
Net change in unrealized appreciation
of investments 20,561,333
Net change in unrealized appreciation on translation
of assets and liabilities in foreign currencies (14,264)
------------
Net change in unrealized appreciation of investments
and on translation of assets and liabilities in
foreign currencies 20,547,069
------------
Net gain on investments and foreign currency 23,216,094
------------
Net increase in net assets resulting
from operations $ 25,164,579
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months For the period from
Ended January 18, 1996
6/30/97 (effective date) to
(unaudited) December 31, 1996
------------ ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $ 1,948,485 $ 1,200,906
Net realized gain on investments
and foreign currency transactions 2,669,025 128,544
Net change in unrealized appreciation or depreciation
of investments and on translation of assets and liabilities
in foreign currencies 20,547,069 10,341,777
------------ ------------
Net increase in net assets resulting from operations 25,164,579 11,671,227
------------ ------------
DISTRIBUTIONS PAID TO SHAREHOLDERS --
Net investment income -- (1,432,845)
Net realized gain on investments (161,102) --
------------ ------------
Total distributions (161,102) (1,432,845)
------------ ------------
CAPITAL STOCK TRANSACTIONS --
Proceeds from sale of shares 61,276,077 163,860,587
Reinvested dividend distributions 161,102 1,432,845
Cost of shares redeemed (779,983) (1,439,266)
------------ ------------
Net increase in net assets from capital stock transactions 60,657,196 163,854,166
------------ ------------
Net increase in net assets 85,660,673 174,092,548
NET ASSETS:
Beginning of period 174,092,548 --
------------ ------------
End of period (including undistributed net investment
income of $1,948,485 and $0, respectively) $259,753,221 $174,092,548
============ ============
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, 1997
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $1,801,897,055.) $2,077,759,220
Cash 83,382
Receivable for investment securities sold 20,804,610
Dividend and interest receivable 1,370,643
--------------
Total assets 2,100,017,855
--------------
LIABILITIES:
Payable for investment securities purchased 19,374,772
--------------
NET ASSETS $2,080,643,083
==============
NET ASSETS CONSIST OF:
Paid-in capital (106,109,365 shares of capital
stock outstanding) $1,658,908,741
Accumulated net realized gain from sale
of investments 145,872,177
Unrealized net appreciation of investments 275,862,165
--------------
NET ASSETS $2,080,643,083
==============
Net asset value and public offering price per share
($2,080,643,083 (divided by) 106,109,365 shares of capital
stock interest outstanding $19.61
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended June 30, 1997
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Dividend income $ 10,513,195
Interest income 4,140,416
------------
Total income 14,653,611
------------
Expenses --
Investment advisory fee 3,649,462
------------
Net investment income 11,004,149
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investment transactions 151,774,981
Net realized gain on closed or expired option
contracts written 722,209
------------
Net realized gain on investments 152,497,190
Net change in unrealized appreciation
of investments 134,524,571
------------
Net gain on investments 287,021,761
------------
Net increase in net assets resulting
from operations $298,025,910
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
6/30/97 Year Ended
(unaudited) 12/31/96
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $ 11,004,149 $ 19,859,156
Net realized gain on investments 152,497,190 226,017,880
Net change in unrealized appreciation or depreciation
of investments 134,524,571 40,726,963
-------------- --------------
Net increase in net assets resulting from operations 298,025,910 286,603,999
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS --
Net investment income (11,004,149) (19,859,156)
Net realized gain on investments (230,991,248) (156,587,523)
-------------- --------------
Total distributions (241,995,397) (176,446,679)
-------------- --------------
CAPITAL STOCK TRANSACTIONS --
Proceeds from sale of shares 136,638,417 226,899,132
Reinvested dividend distributions 241,995,397 176,446,679
Cost of shares redeemed (12,602,181) (28,066,347)
-------------- --------------
Net increase in net assets from capital stock transactions 366,031,633 375,279,464
-------------- --------------
Net increase in net assets 422,062,146 485,436,784
NET ASSETS:
Beginning of period 1,658,580,937 1,173,144,153
-------------- --------------
End of period $2,080,643,083 $1,658,580,937
============== ==============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
HIGH YIELD PORTFOLIO
Financial Statements
Statement of Assets and Liabilities
June 30, 1997
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $1,160,694,976) $1,181,731,918
Cash 738,118
Receivable for investment securities sold 4,223,634
Interest and dividend receivable 16,983,347
--------------
Total assets 1,203,677,017
--------------
LIABILITIES:
Payable for investment securities purchased 25,278,326
--------------
NET ASSETS $1,178,398,691
==============
NET ASSETS CONSIST OF:
Paid-in capital (115,979,339 shares of capital
stock outstanding) $1,162,049,679
Accumulated net realized loss from sale
of investments (4,687,930)
Unrealized net appreciation of investments 21,036,942
--------------
NET ASSETS $1,178,398,691
===============
Net asset value and public offering price per share
($1,178,398,691 (divided by) 115,979,339 shares of capital
stock outstanding) $10.16
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended June 30, 1997
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Interest income $ 50,925,815
Dividend income 5,447,318
------------
Total income 56,373,133
------------
Expenses --
Investment advisory fee 2,162,094
------------
Net investment income 54,211,039
------------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investment transactions 2,482,563
Net change in unrealized appreciation
of investments 10,824,722
------------
Net gain on investments 13,307,285
------------
Net increase in net assets resulting
from operations $ 67,518,324
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
6/30/97 Year Ended
(unaudited) 12/31/96
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $ 54,211,039 $ 89,021,168
Net realized gain on investment transactions 2,482,563 19,530,710
Net change in unrealized appreciation or depreciation
of investments 10,824,722 (9,358,262)
-------------- --------------
Net increase in net assets resulting from operations 67,518,324 99,193,616
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS --
Net investment income (54,211,039) (89,021,168)
-------------- --------------
CAPITAL STOCK TRANSACTIONS --
Proceeds from sale of shares 92,370,895 156,539,510
Reinvested dividend distributions 54,211,039 89,367,857
Cost of shares redeemed (8,227,044) (21,833,105)
-------------- --------------
Net increase in net assets from capital stock transactions 138,354,890 224,074,262
-------------- --------------
Net increase in net assets 151,662,175 234,246,710
NET ASSETS:
Beginning of period 1,026,736,516 792,489,806
-------------- --------------
End of period $1,178,398,691 $1,026,736,516
============== ==============
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, 1997
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $914,970,383) $921,010,716
Receivable for investment securities sold 5,720,857
Interest and dividend receivable 10,046,557
------------
Total assets 936,778,130
------------
LIABILITIES:
Payable for investment securities purchased 120,511,306
------------
NET ASSETS $816,266,824
============
NET ASSETS CONSIST OF:
Paid-in capital (84,086,388 shares of capital
stock outstanding) $838,187,965
Accumulated net realized loss from sale
of investments (27,961,474)
Unrealized net appreciation of investments 6,040,333
------------
NET ASSETS $816,266,824
============
Net asset value and public offering price per share
($816,266,824 (divided by) 84,086,388 shares of capital
stock outstanding) $ 9.71
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended June 30, 1997
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Interest income $ 28,089,411
Dividend income 608,556
------------
Total income 28,697,967
------------
Expenses --
Investment advisory fee 1,587,581
------------
Net investment income 27,110,386
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized loss on investment transactions (1,994,746)
Net realized gain on closed or expired option
contracts written 122,889
Net realized loss on closed futures contracts (223,578)
------------
Net realized loss on investments (2,095,435)
Net change in unrealized appreciation
of investments (1,186,442)
------------
Net loss on investments (3,281,877)
------------
Net increase in net assets resulting
from operations $ 23,828,509
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
6/30/97 Year Ended
(unaudited) 12/31/96
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $ 27,110,386 $ 50,838,355
Net realized loss on investment transactions (2,095,435) (3,738,656)
Net change in unrealized appreciation or depreciation
of investments (1,186,442) (21,236,306)
------------ ------------
Net increase in net assets resulting from operations 23,828,509 25,863,393
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS --
Net investment income (27,110,386) (50,838,355)
------------ ------------
CAPITAL STOCK TRANSACTIONS --
Proceeds from sale of shares 27,112,676 80,241,834
Reinvested dividend distributions 27,110,386 51,093,053
Cost of shares redeemed (35,834,345) (67,256,668)
------------ ------------
Net increase in net assets from capital stock transactions 18,388,717 64,078,219
------------ ------------
Net increase in net assets 15,106,840 39,103,257
NET ASSETS:
Beginning of period 801,159,984 762,056,727
------------ ------------
End of period $816,266,824 $801,159,984
============ ============
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, 1997
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at amortized
cost and value $115,681,957
Cash 24,331
Interest receivable 194,680
------------
Total assets 115,900,968
------------
NET ASSETS $115,900,968
============
NET ASSETS CONSIST OF:
Paid-in capital (115,900,968 shares of capital
stock outstanding) $115,900,968
============
Net asset value and public offering price per share
($115,900,968 (divided by) 115,900,968 shares of capital
stock outstanding) $ 1.00
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended June 30, 1997
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Interest income $ 3,032,848
------------
Expenses --
Investment advisory fee 217,993
------------
Net investment income $ 2,814,855
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
6/30/97 Year Ended
(unaudited) 12/31/96
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $ 2,814,855 $ 4,132,461
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS --
Net investment income (2,814,855) (4,132,461)
------------ ------------
CAPITAL STOCK TRANSACTIONS --
Proceeds from sale of shares 39,351,310 75,776,304
Reinvested dividend distributions 2,814,855 4,152,037
Cost of shares redeemed (30,185,823) (42,157,682)
------------ ------------
Net increase in net assets from capital stock transactions 11,980,342 37,770,659
------------ ------------
Net increase in net assets 11,980,342 37,770,659
NET ASSETS:
Beginning of period 103,920,626 66,149,967
------------ ------------
End of period $115,900,968 $103,920,626
============ ============
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)
Six Months For the period from
Ended January 18, 1996
6/30/97 (effective date) to
OPPORTUNITY GROWTH PORTFOLIO (unaudited) December 31, 1996
------------ ------------------
<S> <C> <C>
Net asset value, beginning of period $11.50 $10.00
------ ------
Income From Investment Operations --
Net investment income 0.02 0.02
Net realized and unrealized gain
(loss) on investments (b) (0.44) 1.90
------ ------
Total from investment operations (0.42) 1.92
------ ------
Less Distributions --
Dividends from net investment income -- (0.02)
Distributions from net realized
gain on investments -- (0.40)
------ ------
Total distributions -- (0.42)
------ ------
Net asset value, end of period $11.08 $11.50
====== ======
Total investment return at net asset value (c) -3.67% 19.17%
Net assets, end of period ($ millions) $321.7 $246.6
Ratio of expenses to average net assets 0.40%(d) 0.40%(d)
Ratio of net investment income to
average net assets 0.39%(d) 0.27%(d)
Portfolio turnover rate 53% 155%
Average Commission Rate (e) $0.0554 $0.0342
Six Months For the period from
Ended January 18, 1996
6/30/97 (effective date) to
WORLD GROWTH PORTFOLIO (unaudited) December 31, 1996
------------ ------------------
Net asset value, beginning of period $10.95 $10.00
------ ------
Income From Investment Operations --
Net investment income 0.09 0.08
Net realized and unrealized gain on investments (b) 1.12 0.96
------ ------
Total from investment operations 1.21 1.04
------ ------
Less Distributions --
Dividends from net investment income -- (0.09)
Distributions from net realized gain on investments (0.01) --
------ ------
Total distributions (0.01) (0.09)
------ ------
Net asset value, end of period $12.15 $10.95
====== ======
Total investment return at net asset value (c) 11.01% 10.41%
Net assets, end of period ($ millions) $259.8 $174.1
Ratio of expenses to average net assets 0.85%(d) 0.85%(d)
Ratio of net investment income to
average net assets 1.86%(d) 1.34%(d)
Portfolio turnover rate 9% 9%
Average Commission Rate (e) $0.0264 $0.0265
See accompanying notes to the financial highlights.
</TABLE>
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
Financial Highlights (continued)
Six Months
Ended
6/30/97
GROWTH PORTFOLIO (unaudited) 1996 1995 1994 1993 1992
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $19.32 $18.27 $13.51 $14.76 $13.89 $14.85
-------- -------- -------- -------- -------- --------
Income From Investment Operations --
Net investment income 0.11 0.24 0.24 0.20 0.29 0.23
Net realized and unrealized gain
(loss) on investments (b) 2.92 3.43 4.76 (0.87) 1.08 0.85
-------- -------- -------- -------- -------- --------
Total from investment operations 3.03 3.67 5.00 (0.67) 1.37 1.08
-------- -------- -------- -------- -------- --------
Less Distributions --
Dividends from net investment income (0.11) (0.24) (0.24) (0.20) (0.29) (0.23)
Distributions from net realized
gain on investments (2.63) (2.38) -- (0.38) (0.21) (1.81)
-------- -------- -------- -------- -------- --------
Total distributions (2.74) (2.62) (0.24) (0.58) (0.50) (2.04)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $19.61 $19.32 $18.27 $13.51 $14.76 $13.89
======== ======== ======== ======== ======== ========
Total investment return at net asset value (c) 17.20% 22.44% 37.25% -4.66% 10.10% 8.13%
Net assets, end of period ($ millions) $2,080.6 $1,658.6 $1,173.1 $721.8 $534.5 $231.0
Ratio of expenses to average net assets 0.40%(d) 0.40% 0.40% 0.40% 0.40% 0.40%
Ratio of net investment income to
average net assets 1.21%(d) 1.41% 1.53% 1.52% 2.17% 1.90%
Portfolio turnover rate 113% 223% 184% 135% 243% 230%
Average Commission Rate (e) $0.0601 $0.0629 n/a n/a n/a n/a
Six Months
Ended
6/30/97
HIGH YIELD PORTFOLIO (unaudited) 1996 1995 1994 1993 1992
----------- -------- -------- -------- -------- --------
Net asset value, beginning of period $10.06 $ 9.94 $ 9.18 $10.76 $ 9.62 $ 9.07
-------- -------- -------- -------- -------- --------
Income From Investment Operations --
Net investment income 0.50 0.98 0.96 0.97 0.96 1.02
Net realized and unrealized gain
(loss) on investments (b) 0.10 0.12 0.76 (1.40) 1.16 0.71
-------- -------- -------- -------- -------- --------
Total from investment operations 0.60 1.10 1.72 (0.43) 2.12 1.73
-------- -------- -------- -------- -------- --------
Less Distributions --
Dividends from net investment income (0.50) (0.98) (0.96) (0.97) (0.96) (1.02)
Distributions from net realized
gain on investments -- -- -- (0.18) (0.02) (0.16)
-------- -------- -------- -------- -------- --------
Total distributions (0.50) (0.98) (0.96) (1.15) (0.98) (1.18)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $10.16 $10.06 $ 9.94 $ 9.18 $10.76 $ 9.62
======== ======== ======== ======== ======== ========
Total investment return at net asset value (c) 6.19% 11.55% 19.62% -4.38% 22.91% 20.08%
Net assets, end of period ($ millions) $1,178.4 $1,026.7 $792.5 $595.6 $444.5 $154.3
Ratio of expenses to average net assets 0.40%(d) 0.40% 0.40% 0.40% 0.40% 0.40%
Ratio of net investment income to
average net assets 10.06%(d) 9.83% 9.94% 9.75% 9.29% 10.69%
Portfolio turnover rate 62% 107% 67% 44% 68% 80%
See accompanying notes to the financial highlights.
</TABLE>
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
Financial Highlights (continued)
Six Months
Ended
6/30/97
INCOME PORTFOLIO (unaudited) 1996 1995 1994 1993 1992
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.75 $10.08 $ 9.04 $10.36 $ 9.87 $10.01
-------- -------- -------- -------- -------- --------
Income From Investment Operations --
Net investment income 0.33 0.63 0.65 0.64 0.63 0.73
Net realized and unrealized gain
(loss) on investments (b) (0.04) (0.33) 1.04 (1.11) 0.49 0.15
-------- -------- -------- -------- -------- --------
Total from investment operations 0.29 0.30 1.69 (0.47) 1.12 0.88
-------- -------- -------- -------- -------- --------
Less Distributions --
Dividends from net investment income (0.33) (0.63) (0.65) (0.64) (0.63) (0.73)
Distributions from net realized
gain on investments -- -- -- (0.21) -- (0.29)
-------- -------- -------- -------- -------- --------
Total distributions (0.33) (0.63) (0.65) (0.85) (0.63) (1.02)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 9.71 $ 9.75 $10.08 $ 9.04 $10.36 $ 9.87
======== ======== ======== ======== ======== ========
Total investment return at net asset value (c) 3.00% 3.21% 19.36% -4.68% 11.66% 9.23%
Net assets, end of period ($ millions) $816.3 $801.2 $762.1 $608.2 $566.9 $254.7
Ratio of expenses to average net assets 0.40%(d) 0.40% 0.40% 0.40% 0.40% 0.40%
Ratio of net investment income to
average net assets 6.83%(d) 6.54% 6.81% 6.78% 6.23% 7.29%
Portfolio turnover rate 67% 150% 132% 139% 153% 115%
Six Months
Ended
6/30/97
MONEY MARKET PORTFOLIO (unaudited) 1996 1995 1994 1993 1992
----------- -------- -------- -------- -------- --------
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 0.05 0.06 0.04 0.03 0.03
Less: Dividends from net investment income (0.03) (0.05) (0.06) (0.04) (0.03) (0.03)
-------- -------- -------- -------- -------- --------
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 (c) 2.59% 5.20% 5.71% 4.00% 2.87% 3.53%
Net assets, end of period ($ millions) $115.9 $103.9 $66.1 $41.9 $24.9 $26.6
Ratio of expenses to average net assets 0.40%(d) 0.40% 0.40% 0.40% 0.40% 0.40%
Ratio of net investment income to
average net assets 5.17%(d) 5.07% 5.55% 4.03% 2.83% 3.45%
Notes to Financial Highlights:
(a) All per share amounts have been rounded to the nearest cent.
(b) The amount shown is a balancing figure and may not accord with the change in aggregate gains and losses of portfolio
securities due to the timing of sales and redemption of fund shares.
(c) Total return is based on the change in net asset value during the period and assumes reinvestment of all
distributions.
(d) Computed on an annualized basis.
(e) 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 basis of
securities purchased, or reduce the proceeds of securities sold.
The accompanying notes are an integral part of the financial statements.
</TABLE>
LB SERIES FUND, INC.
Notes to Financial Statements
June 30, 1997
(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 (LB) 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.
Foreign Currency Translations
The accounting records of the Fund are maintained in U.S. dollars.
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.
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.
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 $736,172 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.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of distributions made
during the year from net investment income or net realized gains may differ
from their ultimate characterization for federal income tax purposes.
Also, due to timing of 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
Investment transactions are accounted for on the date the investments 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.
The preparation of financial statements in conformity with generally
accepted accounting principals requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of income
and expenses during the reporting period. Actual results could differ
from those estimates.
(3) 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 LB World Growth Fund and the LB Series Fund, Inc. - World
Growth Portfolio at the following rates: 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 convert to a flat fee of 0.50% of the annual average daily net
assets.
Other Expenses
All other expenses associated with operating the Fund are paid or
reimbursed to the Fund by LB and LBVIP pursuant to an Expense
Reimbursement Agreement. The Expense Reimbursement Agreement can be
terminated at any time by the mutual agreement of the Fund, LB and
LBVIP, but the Fund, LB and LBVIP currently contemplate that the Expense
Reimbursement Agreement will continue so long as the Fund remains in
existence.
The Fund has adopted a director fee deferral plan which allows the
independent directors of the Fund to defer the receipt of all or a
portion of their director fees. Amounts that are deferred are invested
in the Lutheran Brotherhood Family of Funds until distribution in
accordance with the plan.
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 period.
(5) DISTRIBUTIONS FROM CAPITAL GAINS
During the six months ended June 30, 1997, a distribution from net
realized capital gains of $161,102 and $230,991,248 were paid by the
World Growth Portfolio and the Growth Portfolio, respectively. This
distribution relates to net capital gains realized during the year ended
December 31, 1996.
(6) CAPITAL LOSS CARRYOVER
During the year ended December 31, 1996, the High Yield Portfolio
utilized $20,382,802 of its capital loss carryover against net realized
capital gains. At December 31, 1996, the High Yield and Income
Portfolios had accumulated net realized capital loss carryovers expiring
as follows:
High Yield Income
Year Portfolio Portfolio
-------- ------------ --------------
2002 -- $21,666,184
2003 $5,055,282 --
2004 -- 3,667,020
------------ ------------
$5,055,282 $25,333,204
------------ ------------
To the extent these Portfolios realize future net capital gains, taxable
distributions will be reduced by any unused capital loss carryovers.
Temporary timing differences of $3,697,869, $264,497, $6,625,013,
$2,115,211 and $532,835 existed between accumulated net realized capital
gains or losses for financial statement and tax purposes as of December
31, 1996 for the Opportunity Growth, World Growth, Growth, High Yield
and Income Portfolios, respectively. These differences are due primarily
to deferral of capital losses for tax purposes.
(7) INVESTMENT TRANSACTIONS
Purchases and Sales of Investment Securities
For the six months ended June 30, 1997, 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 $ 179,142 $ 126,356
World Growth 84,431 18,504
Growth 1,973,208 1,909,219
High Yield 726,291 632,651
Income 363,707 377,504
Purchases and sales of U.S. Government securities were:
In thousands
----------------------------------
Portfolio Purchases Sales
- ---------------------------------------------------------------------
Growth $ 1,017 $ 1,000
Income 136,867 191,384
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. At June 30, 1997, the
restricted securities held by the High Yield Portfolio had no market
value.
Investments in High Yielding Securities
The High Yield Portfolio invests primarily in high yielding fixed income
securities. The Income Portfolio may from time to time invest up to 25%
of its total assets in high-yielding securities. These securities will
typically be in the lower rating categories or will be non-rated and
generally will involve more risk than securities in the higher rating
categories. Lower rated or unrated securities are more likely to react
to developments affecting market risk and credit risk than are more
highly rated securities, which react primarily to movements in the
general level of interest rates.
Investments in Options and Futures Contracts
The movement in the price of the instrument 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.
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.
Open Option Contracts
The number of contracts and premium amounts associated with call option
contracts written during the six months ended June 30, 1997 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, 1996 -- -- 998 $ 334,242 150 $ 99,197
Opened 528 $ 63,389 14,619 2,050,698 1,500 385,696
Closed (403) (58,826) (10,036) (1,677,550) (1,150) (357,575)
Expired (125) (4,562) (3,080) (325,242) (500) (127,318)
Exercised -- -- (2,501) (382,148) -- --
--------- ------------ --------- ------------ --------- ------------
Balance at June 30, 1997 -- $ -- -- $ -- -- $ --
========= ============ ========= ============ ========= ============
</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.
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
Opportunity World High Money
Growth Growth Growth Yield Income Market
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares outstanding at
December 31, 1995 -- -- 64,197,627 79,742,358 75,614,192 66,149,967
Shares sold 20,829,994 15,909,365 12,716,616 15,616,822 8,257,064 75,776,304
Shares issued on reinvestment
of dividends and distributions 741,927 130,856 10,462,909 8,924,334 5,273,056 4,152,037
Shares redeemed (141,181) (139,490) (1,544,344) (2,175,610) (6,968,350) (42,157,682)
----------- ----------- ----------- ----------- ----------- -----------
Shares outstanding at
December 31, 1996 21,430,740 15,900,731 85,832,808 102,107,904 82,175,962 103,920,626
Shares sold 7,632,064 5,484,510 6,876,726 8,711,696 1,129,276 39,351,310
Shares issued on reinvestment
of dividends and distributions -- 14,781 13,646,320 5,437,216 2,808,486 2,814,855
Shares redeemed (21,419) (12,725) (246,489) (277,477) (2,027,336) (30,185,823)
----------- ----------- ----------- ----------- ----------- -----------
Shares outstanding at
June 30, 1997 29,041,385 21,387,297 106,109,365 115,979,339 84,086,388 115,900,968
=========== =========== =========== =========== =========== ===========
</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.
Noel K. Estenson
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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