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LB SERIES FUND, INC.
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Curved copy within art reads:
CHOICE [BULLET] PROTECTION [BULLET] ACCUMULATION
Semiannual Report for
Variable Products
June 30, 1999
[GRAPHIC OMITTED: LUTHERAN BROTHERHOOD LOGO]
Our Message to You
June 30, 1999
[PHOTO OF MR. BJELLAND OMITTED]
Dear Member,
In the investment world things can change dramatically in a matter of weeks
or months. The last six months have been just such a time. After nearly two
years of lopsided market returns that favored large company stocks, the
markets have begun to shift, taking on a more dynamic investment
environment. This is welcome news for advocates of asset diversification and
long-term investing.
In the first half of 1999, both smaller-company stocks and high-yield bonds
improved on their weak 1998 performances to take a greater share of the
longest-running bull market in the history of the United States. At the same
time, large-company growth stock valuations have come down somewhat, though
hardly in the manner of a bursting bubble, as many had predicted.
These changes in the market come during a period of changing attitudes
stemming from Year 2000 ("Y2K") issues. The "Y2K" problem refers to the
ability of computers to accurately distinguish dates in their program codes
for the year 2000 and beyond. Late last year and early this year, Y2K
doomsayers dominated the news media, with predictions of large-scale
disruptions in business and public services. Though these doom and gloom
fears seem to have diminished, occasionally investors have approached me
with Y2K concerns; specifically, many question whether they should
reconsider their investment strategies as the new millennium approaches. I
often tell them to use history as their guide.
The past 50 years have put the financial markets through nearly every
imaginable test, including war, recession, oil crises, assassinations and
major political upheaval. Though these events sometimes bring short-term
volatility, the securities markets have not only withstood these tests but,
over time, have thrived in spite of them. The Y2K issue is unprecedented, to
be sure, but probably no more than other watershed events of history, each
with its own array of momentous challenges.
Realistically, no investment professional can, in good faith, foretell the
effects of Y2K, or offer a single financial solution for navigating these
uncharted waters. Ultimately, the answers to Year 2000 investment concerns
lie in each investor's risk tolerance. Lutheran Brotherhood members
uncomfortable with market fluctuation, regardless of its source, should
consult their LBSC registered representative.
If you would like more information about Lutheran Brotherhood's Y2K
readiness efforts, check our Web site at www.luthbro.com. Or call 1-800-328-
4552 to hear a prerecorded summary of our preparation efforts and leave your
specific questions in our Y2K voice mailbox. If you have a specific Y2K
question or concern, you can call our voice mailbox directly at (612) 340-
6453, and you will be sent a response to your question in writing.
At Lutheran Brotherhood, we are firm in the belief that all investment
decisions should be made in the context of risk diversification and a long-
term investment strategy. Using these principles, we've built a family of
investment products that remains an excellent means of achieving your
financial goals. Thank you for choosing Lutheran Brotherhood to serve your
financial needs.
Sincerely,
[/S/ROLF F. BJELLAND]
Rolf F. Bjelland
Chairman and President
LB Series Fund, Inc.
Economic Overview June 30, 1999
Randall L. Boushek
Senior Vice President and Chief Investment Officer
[PHOTO OF MR. RANDALL L. BOUSHEK OMITTED]
A robust economy and growing technology sector fueled the U.S. stock market,
but pressured the bond markets for the six-month period ending June 30,
1999. Countering predictions for slower growth, the U.S. economy continued
the second-longest expansion in its history, providing ample rewards to
investors who stayed the course through last summer's market tremors.
Equity Performance
Despite widening market breadth, investors once again favored large-company
stocks over smaller issues throughout much of the period. The Dow Jones
Industrial Average (DJIA) soared to new heights, gaining more in the first
six months of 1999 than in all of 1998. After closing above the 10,000-point
level for the first time on March 29, the DJIA closed the six-month
reporting period with a 20.45% total return. The large-company Standard &
Poor's 500 Index advanced 12.38%, aided by frenetic bidding for technology
stocks.
April ushered in a significant shift in market sentiment, however.
Increasingly, investors began trading out of large-company growth stocks in
favor of smaller, value-oriented issues and economically sensitive
"cyclical" stocks. This rotation in market leadership provided a much-needed
boost to small- and medium-company stock prices.
Fixed Income Performance
A sharp worldwide rise in crude oil prices, coupled with stronger-than-
expected U.S. economic growth, fostered inflation concerns among many bond
investors, suppressing investment-grade bond prices. Following a global
"flight to quality" in mid-1998, demand for U.S. Treasury bonds weakened
significantly in the early part of 1999, driving U.S. Treasury yields
upward.
In a turn of fortune from last year's subpar performance, however, high-
yield bonds flourished late in the period, as investors showed renewed
interest in higher-risk corporate issues. The Lehman Brothers High Yield
Index returned a meager 2.20% for the six-month reporting period, slowing to
a crawl in May and June after a four-month "catch up" sprint in the
beginning of the year.
Continued Economic Growth
Strong consumer spending and technology-driven productivity gains drove the
U.S. economy during the six-month period. Annualized U.S. gross domestic
product (GDP) grew an impressive 6% during the fourth quarter of 1998,
followed by a first quarter 1999 growth rate of 4.3%, and a second quarter
rate of 2.3%. Though inflation inched slightly higher than 1998 levels, the
Consumer Price Index was remarkably restrained, staying well below its 10-
and 20-year historical averages. During the period, the U.S. unemployment
rate remained at just over 4%, as tight labor markets fueled worries about
future increases in wage costs.
Long-term interest rates rose significantly during the period, a consequence
of continued strength in the U.S. economy and improving economic conditions
elsewhere around the world. After briefly dipping below 5% late in 1998, the
30-year Treasury bond yield climbed to a peak of 6.16% in late June, and
closed the second quarter at 5.97% on June 30.
Year 2000 Readiness Disclosure Statement
The Year 2000 issue ("Y2K") continues to be an area of focus for
corporations and units of government worldwide. Y2K centers on the ability
of computers and date-sensitive components to accurately distinguish dates
in their program codes for the year 2000 and beyond. At Lutheran
Brotherhood, we remain committed to minimizing the impact of Y2K on our
investment portfolios. In keeping with our commitment, we have allocated
significant resources to update and test our critical computer systems.
Additionally, we have incorporated the Y2K issue into our investment
research, reviewing the Y2K compliance efforts of securities issuers as part
of our overall assessment of an investment's worth.
Outlook
The U.S. Federal Reserve set a new course for monetary policy by raising its
targeted Fed Funds rate by 0.25% in May. The Federal Reserve's more hawkish
posture, together with higher crude oil prices and higher Treasury bond
yields, will likely slow economic activity in the coming months. While this
could put some near-term pressure on stock market valuations, ultimately it
could lead to longer, more sustainable gains in the securities markets.
Additionally, several key regions of the world are showing signs of emerging
from recessionary conditions, which could help U.S. exports and temper the
impact of rising long-term interest rates. The Japanese government has taken
steps to stimulate its flagging economy, while other Asian nations like
Korea and Malaysia are beginning to see modest economic growth after being
in recessions last year. In Latin America, Mexico continues to serve as a
foundation for economic recovery.
All in all, in spite of periodic hiccups, the U.S. economy remains the envy
of the world. Its remarkable health and staying power should continue to
reward investors in financial assets over the long haul.
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Curved copy within art reads:
CHOICE [BULLET] PROTECTION [BULLET] ACCUMULATION
Opportunity Growth Portfolio Review
[PHOTO OF MR. RICHARD T. WHITNEY]
Richard T. Whitney is portfolio manager of the Opportunity Growth Portfolio
and a managing director of T. Rowe Price Associates, the investment
subadvisor for the Portfolio. Rich has been with T. Rowe Price since 1985
and heads the firm's investment advisory committee. Rich is a Chartered
Financial Analyst.
Following a rebound at the end of 1998, prices for small-company stocks
improved further in the first half of 1999. Initially the gains were limited
to a few small companies with exceptionally high growth rates, particularly
Internet firms, and stocks of small companies with greater market
capitalizations. (Market capitalization is calculated by multiplying the
number of stock shares outstanding by the price for those shares.)
Eventually, however, continued evidence of strong economic growth triggered
a shift in demand from growth stocks into economically sensitive "cyclical"
issues and value-oriented shares, which boosted prices for a wider range of
small-company stocks.
[GRAPHIC PIE CHART OMITTED: Portfolio Composition (% of Portfolio)]
Short-Term
Securities 1.6%
Common
Stocks 98.4%
We cautiously added investments in firms with higher growth rates, while
remaining wary of the exhuberance some investors show for such stocks, and
kept our primary focus on stocks with more reasonable valuations. This
strategy, which included a low exposure to speculative Internet shares,
caused the Opportunity Growth Portfolio to underperform its market benchmark
for the current reporting period. During the six months ended June 30, 1999,
the Portfolio had a total return (based on NAV) of 2.59%, versus 9.24% for
the Russell 2000 Index.
[GRAPHIC OMITTED: Top 10 Holdings]
Top 10 Holdings % of Portfolio
Proxim, Inc. 0.9%
Sanmina Corp. 0.8%
QLogic Corp. 0.8%
VISX, Inc. 0.8%
QRS Corp. 0.8%
Comverse Technology, Inc. 0.7%
Symbol Technologies, Inc. 0.7%
Lattice Semiconductor Corp. 0.7%
Veritas Software Corp. 0.7%
Level One Communications, Inc. 0.7%
Footnote reads:
These holdings represent 7.6% of the total investment portfolio.
Focus on Growth at a Reasonable Price
As investors shifted into higher-growth stocks in the first months of 1999,
strong performances by holdings in the media, financial services, and
natural resources sectors helped offset disappointing returns from stocks of
health care, business services, and consumer cyclical firms. At this point,
we found attractive opportunities in reasonably priced stocks with stronger
growth rates--especially in the technology, business services, health care,
and media sectors. Though they were experiencing a near-term rally, we
continued to de-emphasize stocks in the economically sensitive natural
resource and basic materials groups due to their slower rates of growth.
Strong performances by holdings in the telecommunications and technology
sectors bolstered the Portfolio's return in the second quarter, along with
energy shares that benefited from rising oil prices. Shares of health care
companies continued to lag, particularly pharmaceutical firms, amid concern
about new drug price regulation. Holdings in the financial sector also
underperformed, due to rising interest rates.
[GRAPHIC OMITTED: Top 10 Industries]
Top 10 Industries
Computer Service & Software 17.8%
Media & Communications 8.6%
Business Services 8.1%
Electronic Components 7.8%
Retail 7.2%
Bank & Finance 6.1%
Hospital Supplies & Management 5.2%
Pharmaceuticals 3.9%
Electronic Systems 2.9%
Telecommunications Equipment 2.8%
Footnote reads:
These holdings represent 70.3% of the total investment portfolio.
During the second quarter we sold shares of Clear Channel Communications,
(an operator of television stations), Kroger Co. (a supermarket chain)--two
stocks we obtained via acquisitions of original investments--and Sawtek,
Inc., (a producer of electric components). We added shares of Macromedia (a
maker of software for the Internet), Duane Reade (a drugstore chain), and
MacDermid (a chemical manufacturer).
As of June 30, 1999, stocks in the Portfolio had a median projected growth
rate of 23%, versus a rate of 16% for the Russell 2000 Index. The Portfolio
remained widely diversified, with the top 25 holdings representing only 17%
of total assets.
LB Series Fund, Inc.
Opportunity Growth Portfolio seeks long-term growth of capital by
investing primarily in common stocks of small companies.
Portfolio Facts
Inception Date: 1/18/96
Total Net Assets
(in millions): $355.8
Small-Cap Sector Still Offers Value
Although some small-cap shares have now become expensive, far more still
offer good value. Share prices for the sector remain significantly lower
compared to company earnings than for the stock market as a whole.
Having emphasized stocks of firms that can improve their earnings even if
the economy slows, we believe the Portfolio is well positioned for changes
in economic conditions. As always, we plan to make the most of investment
opportunities that future market fluctuations might bring.
[GRAPHIC WORM CHART OMITTED: Growth of $10,000 Invested Since 1/31/96]
Performance Through June 30, 1999
Growth of $10,000 Invested Since 1/31/96
Opportunity Russell Consumer
Growth 2000 Price
Date Portfolio Index Index
- ---- ----------- ------- --------
1996 $10,000 $10,000 $10,000
1996 10,416 10,312 10,032
1996 10,722 10,525 10,084
1996 11,944 11,089 10,123
1996 12,716 11,525 10,142
1996 11,871 11,052 10,149
1996 10,855 10,087 10,168
1996 11,499 10,673 10,188
1996 12,342 11,090 10,220
1996 11,364 10,920 10,253
1996 10,954 11,369 10,272
1996 11,302 11,667 10,272
1997 11,528 11,901 10,304
1997 10,533 11,613 10,337
1997 9,415 11,065 10,363
1997 9,009 11,095 10,376
1997 10,338 12,329 10,369
1997 10,887 12,858 10,382
1997 11,454 13,456 10,395
1997 11,721 13,764 10,415
1997 13,018 14,772 10,440
1997 12,246 14,123 10,466
1997 11,776 14,032 10,460
1997 11,407 14,277 10,447
1998 11,063 14,052 10,466
1998 11,739 15,090 10,486
1998 12,175 15,712 10,505
1998 12,216 15,798 10,525
1998 11,219 14,947 10,544
1998 11,305 14,978 10,557
1998 10,451 13,765 10,570
1998 8,200 11,094 10,583
1998 8,812 11,963 10,596
1998 9,345 12,451 10,622
1998 9,990 13,104 10,622
1998 11,066 13,915 10,615
1999 10,904 14,096 10,641
1999 9,855 12,959 10,654
1999 10,027 13,162 10,687
1999 10,242 14,341 10,764
1999 10,645 14,553 10,764
1999 11,352 15,207 10,764
*See accompanying notes to Portfolio Management Reviews.
[INSET BOX ON CHART READS:]
Opportunity Growth
Portfolio
Annualized Total Returns*
- -------------------------
Since Inception
1/18/96 5.35%
1 Year 0.41%
Mid Cap Growth Portfolio Review
[GRAPHIC OMITTED: PHOTO OF Brian L. Thorkelson]
Brian L. Thorkelson is portfolio manager for the Mid Cap Growth Portfolio.
He joined Lutheran Brotherhood in 1987, working for five years as a bond
trader and another five years as an equity analyst for several Lutheran
Brotherhood portfolios.
After lagging large-company stocks for most of 1998, stocks of medium-sized
companies gained on large-capitalization shares in the first six months of
1999. (Market capitalization is calculated by multiplying the number of
stock shares outstanding by the price for those shares.) The better
performance by medium-capitalization stocks came as investors became more
confident in the economy and recognized the attractive values available in
the mid-cap sector.
A general emphasis on stocks in high-growth sectors like technology and
telecommunications, as well as strong returns from many individual holdings,
helped the Mid Cap Growth Portfolio outperform its market benchmark during
this time. For the six months ended June 30, 1999, the Portfolio had a total
return (based on NAV) of 15.06%. Over the same time, the Standard & Poor's
400 Mid-Cap Index had a return of 6.87%.
[GRAPHIC PIE CHART OMITTED: Portfolio Composition (% of Portfolio)]
Portfolio Composition
(% of Portfolio)
Short-Term Securities 2.0%
Common Stocks 98.0%
Strong Returns from Technology Shares
For some time the Portfolio has been overweighted in technology, energy,
health care, and biotechnology stocks compared to its benchmark and
underweighted in basic materials and capital goods shares. Technology
stocks, particularly those of communications services and Internet firms,
gained strongly during the period. Top performers included Western Wireless
Corp., Uniphase Corp., Xilinx, Inc., and Teradyne, Inc. The Portfolio also
enjoyed strong returns from its selection of financial stocks. Of further
benefit was an underweighting in shares of utility firms, which lagged due
to rising interest rates. These factors more than offset disappointing
returns from health care companies like Total Renal Care Holdings, Inc.,
Quintiles Transnational Corp., and Health Management Associates, Inc., which
suffered under government health care regulations and new Medicare payment
policies.
[GRAPHIC OMITTED: Top 10 Holdings]
Top 10 Holdings % of Portfolio
Comverse Technology, Inc. 0.9%
Finova Group, Inc. 0.9%
Biogen, Inc. 0.8%
Xilinx, Inc. 0.8%
Vitesse Semiconductor Corp. 0.8%
Circuit City Stores, Inc. 0.8%
ADC Telecommunications, Inc. 0.8%
Novell, Inc. 0.8%
Linear Technology Corp. 0.8%
Tyco International, Ltd. 0.7%
Footnote reads:
These holdings represent 8.1% of the total investment portfolio.
[GRAPHIC OMITTED: Top 10 Industries]
Top 10 Industries
Electronic Equipment 13.3%
Computer Software 10.8%
Retail 9.3%
Bank & Finance 8.0%
Services 7.5%
Drugs & Health Care 6.8%
Telecommunications Equipment 5.3%
Oil & Oil Service 4.9%
Telephone & Telecommunications 3.9%
Media & Communications 2.8%
Footnote reads:
These holdings represent 72.6% of the total investment portfolio.
LB Series Fund, Inc.
Mid Cap Growth Portfolio seeks long-term growth of capital by investing
primarily in common stocks of medium-sized companies.
Portfolio Facts
Inception Date: 1/30/98
Total Net Assets
(in millions): $150.3
After increasing the Portfolio's technology weighting through April, we
began to take profits in certain companies that we felt had become
overpriced--particularly Internet-related firms. We also took profits in
some capital goods firms that had performed well as greater confidence
attracted investors to economically sensitive sectors. At the same time, we
increased shares of semi-conductor manufacturers, communications services,
and energy firms that we believe have greater potential for earnings growth.
At the end of the period, we were overweighted in technology, health care,
and consumer services shares versus the benchmark and slightly underweighted
in consumer cyclical shares.
Mid-Sized Companies Remain Attractive
If investor confidence in the economy continues, shares of mid-sized firms
should enjoy further gains. Although the prices for many of these stocks
have risen sharply, mid-caps still offer good value given the strong growth
potential for medium-sized firms and the increasingly expensive prices for
stocks of larger companies. We plan to remain overweighted in technology
stocks for the foreseeable future, because of the strong growth
opportunities in that sector. We also expect to maintain an overweighting in
health care issues, whose prices have become especially attractive in recent
months.
[GRAPHIC WORM CHART OMITTED: Growth of $10,000 Invested Since 1/30/98]
Performance Through June 30, 1999
Growth of $10,000 Invested Since 1/30/98
Mid Cap
Growth S&P Mid Cap Consumer
Date Portfolio 400 Index Price Index
- ---- ------------ --------- -----------
1998 $10,000 $10,000 $10,000
1998 10,732 10,828 10,019
1998 11,132 11,316 10,037
1998 11,224 11,523 10,056
1998 10,650 11,005 10,074
1998 10,968 11,074 10,087
1998 10,457 10,645 10,099
1998 8,344 8,665 10,111
1998 8,868 9,498 10,124
1998 9,393 10,347 10,149
1998 10,084 10,864 10,149
1998 11,162 12,176 10,142
1999 11,588 11,702 10,167
1999 10,939 11,089 10,179
1999 11,624 11,400 10,210
1999 12,050 12,298 10,285
1999 11,920 12,352 10,285
1999 12,843 13,014 10,285
*See accompanying notes to Portfolio Management Reviews.
[INSET BOX ON CHART READS:]
Mid Cap Growth Portfolio
Annualized Total Returns*
- --------------------------
Since Inception
1/30/98 19.36%
1 Year 17.09%
World Growth Portfolio Review
[GRAPHIC OMITTED: PHOTO OF Martin G. Wade]
Martin G. Wade is chief executive officer and vice chairman of Rowe Price-
Fleming International, the investment subadvisor for the World Growth
Portfolio. He heads the Portfolio's investment management team and has done
so since the Portfolio's inception in January 1996. Martin has been working
in research and investment management since 1968 and has been with Rowe
Price-Fleming since 1979.
With greater economic stability overseas in the first half of 1999, foreign
stock prices generally strengthened. Stocks in Latin America, Japan, and
other parts of Asia led the rally, while issues of European companies fell
slightly in value. Having been underweighted in Japanese stocks compared to
the Morgan Stanley Capital International Europe, Australasia, Far East
(EAFE) Index for some time, the World Growth Portfolio received slightly
less benefit from the economic rebound in Japan. At the same time, the
Portfolio held a greater weighting of European stocks than the Index.
The Portfolio enjoyed strong returns from many individual securities,
however, especially its specific investments in Japan. This, plus robust
gains from holdings in Latin America, a region not represented in the EAFE
Index, helped the Portfolio earn a return comparable to that of its
benchmark. For the six months ended June 30, 1999, the Portfolio earned a
total return (based on NAV) of 4.00%, versus 4.11% for the EAFE Index.
[GRAPHIC PIE CHART OMITTED: Portfolio Composition (% of Portfolio)]
Portfolio Composition
(% of Portfolio)
Short-Term Securities 5.5%
Preferred Stocks 0.5%
Common Stocks & Warrants 94.0%
[GRAPHIC OMITTED: Top 10 Countries]
Top 10 % of
Countries Portfolio
Japan 18.3%
United Kingdom 17.1%
France 10.7%
Netherlands 9.7%
Switzerland 6.9%
Germany 6.3%
Italy 4.8%
Sweden 3.5%
Spain 3.2%
Hong Kong 2.5%
Footnote reads:
These countries represent 83.0% of the total investment portfolio.
New Opportunities
As continued economic stabilization drew investors back to Asia, stock
prices rose in that region. Despite a brief currency crisis in January,
prices for stocks in Latin America also improved, mostly due to falling
interest rates, stronger oil prices, and greater investor confidence. Stock
prices edged lower in Europe, however, on disappointing economic news and
weaker values for the "Euro," the new currency of the European Economic
Union.
During the period, we took profits in European stocks that had performed
well and bought shares in the region with greater growth potential. Given
the rapid rise in savings among European consumers, we added investments in
several insurance firms. We also bought shares of European
telecommunications, business services, media, and retail firms. We also
added telecommunications shares in Asia, bank shares in Singapore, and
retail and electronics firms in Japan. In Latin America we sold shares of an
energy company in Argentina.
[GRAPHIC OMITTED: Top 10 Holdings]
% of
Top 10 Holdings Country Portfolio
National Westminster Bank U.K. 2.3%
SmithKline Beecham plc U.K. 1.9%
Shell Transport & Trading Co. U.K. 1.8%
Wolters Kluwer Netherlands 1.7%
Nestle SA Switzerland 1.6%
Vivendi France 1.4%
ING Groep NV Netherlands 1.4%
Kingfisher U.K. 1.3%
Glaxo Wellcome U.K. 1.3%
Novartis AG Switzerland 1.2%
Footnote reads:
These holdings represent 15.9% of the total investment portfolio.
World Growth Portfolio seeks long-term capital growth by investing
primarily in common stocks issued by established non-U.S. companies.
Portfolio Facts
Inception Date: 1/18/96
Total Net Assets
(in millions): $404.4
Positive Economic Trends
International economies and markets are poised for further improvement and
should withstand a decline in U.S. consumer demand if growth slows here. An
economic recovery, along with a hectic pace for corporate merger and
acquisition activity, should help European markets strengthen. Strong
currencies in Latin America, along with falling interest rates and business
reforms in Brazil and Mexico, have put that region on more solid economic
footing.
Stocks in many Asian markets could benefit from further economic improvement
if recent corporate restructuring in the region continues. Corporate
restructuring will be particularly important in Japan, if unemployment and
consumption are to improve. Because Japanese stock prices already reflect
much of the country's good economic news, however, further gains for
Japanese stocks may be limited in the near term.
[GRAPHIC WORM CHART OMITTED: Growth of $10,000 Invested Since 1/31/96]
Performance Through June 30, 1999
Growth of $10,000 Invested Since 1/31/96
World MSCI
Growth Consumer EAFE
Date Portfolio Price Index Index
- ---- --------------- ---------- -----------
1996 $10,000 $10,000 $10,000
1996 9,974 10,036 10,032
1996 10,098 10,252 10,084
1996 10,355 10,552 10,123
1996 10,336 10,360 10,142
1996 10,468 10,421 10,149
1996 10,137 10,119 10,168
1996 10,290 10,143 10,188
1996 10,534 10,415 10,220
1996 10,481 10,311 10,253
1996 10,965 10,723 10,272
1996 11,025 10,588 10,272
1997 10,871 10,220 10,304
1997 10,983 10,389 10,337
1997 10,967 10,430 10,363
1997 11,035 10,487 10,376
1997 11,738 11,172 10,369
1997 12,239 11,791 10,382
1997 12,568 11,985 10,395
1997 11,433 11,092 10,415
1997 12,195 11,715 10,440
1997 11,306 10,816 10,466
1997 11,276 10,708 10,460
1997 11,335 10,805 10,447
1998 11,737 11,302 10,466
1998 12,423 12,030 10,486
1998 12,851 12,402 10,505
1998 12,952 12,503 10,525
1998 12,928 12,445 10,544
1998 12,924 12,542 10,557
1998 13,082 12,673 10,570
1998 11,483 11,105 10,583
1998 11,226 10,768 10,596
1998 12,223 11,893 10,622
1998 12,781 12,505 10,622
1998 13,233 13,002 10,615
1999 13,102 12,967 10,641
1999 12,870 12,661 10,654
1999 13,391 13,192 10,687
1999 13,887 13,731 10,764
1999 13,256 13,026 10,764
1999 13,762 13,537 10,764
*See accompanying notes to Portfolio Management Reviews.
[INSET BOX ON CHART READS:]
World
Growth Portfolio
Annualized Total Returns*
- --------------------------
Since inception
1/18/96 9.74%
1 Year 6.48%
Growth Portfolio Review
[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 1984.
As greater economic confidence encouraged investors to move from stocks of
large, high-growth companies into shares of small- and medium-sized firms,
the Growth Portfolio benefited from a continued overweighting in the
strongly performing technology sector compared to its benchmark index. This,
plus exceptional returns from many individual holdings, helped the Portfolio
outperform its market benchmark for the six months ended June 30, 1999.
During that time, the Portfolio earned a total return (based on NAV) of
17.64%, versus a return of 12.38% for the Standard & Poor's 500 Index.
Technology Shares Boost Returns
In the first quarter of 1999, when investors continued to favor large, high-
quality growth stocks, the Portfolio benefited from its focus on such
issues. An overweighting in the sharply rising technology sector compared to
the S&P 500 Index also bolstered returns at this time, and in the second
quarter, as many investors shifted into stocks of firms with lesser market
capitalizations. (Market capitalization is calculated by multiplying the
number of stock shares outstanding by the price for those shares.) Returns
were particularly strong for telecommunications companies like Motorola,
Inc., Lucent Technologies, Inc., and Tellabs, Inc.; software firms like
Novell, Inc.; and semiconductor firms like Texas Instruments, Inc., and
Xilinx, Inc.
[GRAPHIC PIE CHART OMITTED: Portfolio Composition (% of Portfolio)]
Portfolio Composition
(% of Portfolio)
Short-Term Securities 2.0%
Common Stocks 98.0%
[GRAPHIC OMITTED: Top 10 Holdings]
Top 10 Holdings % of Portfolio
Cisco Systems, Inc. 2.6%
Microsoft Corp. 2.3%
Tyco International, Ltd. 1.7%
General Electric Co. 1.6%
MCI Worldcom, Inc. 1.6%
American International Group, Inc. 1.2%
America Online, Inc. 1.2%
International Business Machines Corp. 1.2%
Intel Corp. 1.2%
AT&T Corp. 1.2%
Footnote reads:
These holdings represent 15.8% of the total investment portfolio.
Returns were also robust during the period for stocks in the media group,
another area where the Portfolio was overweighted. Biotechnology stocks like
Biogen, Inc., Amgen, Inc., and MedImmune, Inc., performed well, too. De-
emphasizing financial stocks further benefited the Portfolio's returns, as
rising interest rates caused that sector to lag. These factors more than
compensated for disappointing returns from shares of drug, food, and
beverage firms.
During the period we traded some investments in large growth stocks for
shares of smaller firms with greater economic sensitivity. In doing so we
reduced investments in health care, food, and beverage firms and increased
shares in the biotech and media sectors. We also added shares of oil firms,
which benefited from rising oil prices. At the same time, large gains from
holdings in technology firms increased the weighting for that sector.
[GRAPHIC OMITTED: Top 10 Industries]
Top 10 Industries
Bank & Finance 13.0%
Retail 10.2%
Drugs & Health Care 9.8%
Computer & Office Equipment 8.8%
Telephone & Telecommunications 7.7%
Computer Software 7.1%
Electronic Equipment 6.9%
Telecommunications Equipment 5.5%
Oil & Oil Service 4.1%
Conglomerates 3.8%
Footnote reads:
These holdings represent 76.9% of the total investment portfolio.
Growth Portfolio seeks long-term growth of capital by investing primarily in
common stocks of established companies.
Portfolio Facts
Inception Date: 1/9/87
Total Net Assets
(in millions): $3,991.5
Stock Selection Remains Key
If concerns about inflation cause the Federal Reserve to raise interest
rates further, increasing the likelihood of slower economic growth,
investors may again prefer the greater earnings reliability of large, high-
growth companies. As in previous periods of economic uncertainty, prices for
stocks of companies with earnings disappointments could be severely
punished, giving stock selection a key role in investment returns.
In addition to emphasizing individual stocks with strong earnings potential,
we plan to keep a sizable portion of the Portfolio in the high-growth
technology sector. Because rising interest rates have driven down prices of
financial firms, some of these shares have become especially attractive. As
a result, we may add to our holdings from that group.
[GRAPHIC WORM CHART OMITTED: Growth of $10,000 Invested Since 12/31/88]
Performance Through June 30, 1999
Growth of $10,000 Invested Since 6/30/89
Growth S & P 500 Consumer
Date Portfolio Index Price Index
- ---- --------- --------- -----------
1989 $10,000 $10,000 $10,000
1989 10,850 10,913 10,024
1989 11,279 11,115 10,040
1989 11,339 11,071 10,073
1989 10,767 10,823 10,121
1989 11,001 11,032 10,145
1989 11,034 11,298 10,161
1990 10,176 10,550 10,266
1990 10,412 10,667 10,314
1990 10,754 10,956 10,371
1990 10,596 10,694 10,387
1990 11,724 11,714 10,411
1990 11,810 11,645 10,467
1990 11,571 11,616 10,508
1990 10,615 10,555 10,604
1990 9,943 10,043 10,693
1990 9,923 10,011 10,757
1990 10,534 10,646 10,782
1990 10,817 10,943 10,782
1991 11,513 11,431 10,846
1991 12,361 12,228 10,862
1991 12,687 12,529 10,878
1991 12,687 12,571 10,894
1991 13,366 13,094 10,927
1991 12,688 12,501 10,959
1991 13,382 13,099 10,975
1991 13,861 13,393 11,007
1991 13,740 13,170 11,056
1991 14,048 13,364 11,072
1991 13,576 12,809 11,104
1991 15,290 14,275 11,112
1992 15,259 14,025 11,128
1992 15,405 14,189 11,168
1992 15,025 13,913 11,225
1992 15,082 14,339 11,241
1992 15,208 14,388 11,257
1992 14,868 14,177 11,297
1992 15,363 14,775 11,322
1992 15,041 14,457 11,354
1992 15,248 14,625 11,386
1992 15,642 14,693 11,426
1992 16,428 15,172 11,442
1992 16,533 15,363 11,434
1993 16,819 15,504 11,491
1993 16,774 15,699 11,531
1993 17,240 16,031 11,571
1993 16,925 15,662 11,604
1993 17,361 16,055 11,620
1993 17,378 16,108 11,636
1993 17,329 16,060 11,636
1993 17,965 16,653 11,668
1993 18,131 16,525 11,692
1993 18,291 16,884 11,741
1993 17,799 16,705 11,749
1993 18,203 16,914 11,749
1994 18,775 17,501 11,781
1994 18,268 17,009 11,821
1994 17,381 16,271 11,861
1994 17,358 16,494 11,878
1994 17,380 16,736 11,886
1994 16,787 16,326 11,926
1994 17,188 16,879 11,958
1994 17,970 17,560 12,006
1994 17,678 17,128 12,039
1994 17,928 17,527 12,047
1994 17,223 16,877 12,063
1994 17,355 17,125 12,063
1995 17,737 17,582 12,111
1995 18,435 18,254 12,160
1995 18,960 18,799 12,200
1995 19,509 19,361 12,240
1995 20,112 20,107 12,264
1995 20,992 20,575 12,289
1995 22,117 21,273 12,289
1995 22,185 21,315 12,321
1995 22,879 22,213 12,345
1995 22,942 22,148 12,385
1995 23,782 23,103 12,377
1995 23,822 23,549 12,369
1996 24,400 24,366 12,442
1996 24,909 24,575 12,482
1996 24,995 24,816 12,546
1996 25,889 25,194 12,595
1996 26,459 25,816 12,619
1996 26,115 25,916 12,627
1996 24,990 24,781 12,651
1996 25,973 25,297 12,675
1996 27,552 26,716 12,716
1996 28,023 27,469 12,756
1996 29,804 29,535 12,780
1996 29,161 28,950 12,780
1997 31,090 30,777 12,820
1997 30,698 31,002 12,861
1997 29,253 29,724 12,893
1997 30,613 31,511 12,909
1997 32,783 33,405 12,901
1997 34,178 34,905 12,917
1997 37,203 37,683 12,933
1997 35,724 35,565 12,957
1997 37,702 37,525 12,990
1997 36,448 36,286 13,022
1997 37,434 37,952 13,014
1997 37,962 38,605 12,998
1998 38,227 39,049 13,022
1998 40,923 41,849 13,046
1998 42,988 43,995 13,070
1998 43,727 44,444 13,094
1998 42,668 43,653 13,119
1998 44,304 45,430 13,135
1998 43,819 44,957 13,151
1998 36,414 38,452 13,167
1998 39,171 40,905 13,183
1998 42,231 44,255 13,215
1998 44,981 46,928 13,215
1998 48,734 49,636 13,207
1999 51,800 51,711 13,239
1999 49,642 50,103 13,255
1999 52,788 52,107 13,296
1999 54,583 54,139 13,392
1999 53,476 52,861 13,392
1999 57,334 55,795 13,392
*See accompanying notes to Portfolio Management Reviews.
[INSET BOX ON CHART READS:]
Growth Portfolio
Annualized Total Returns*
- -------------------------
10 Years 19.07%
5 Years 27.83%
1 Year 29.41%
High Yield Portfolio Review
[GRAPHIC OMITTED: PHOTO OF Thomas N. Haag]
Thomas N. Haag is a Chartered Financial Analyst and portfolio manager for the
High Yield Portfolio. He is an assistant vice president of Lutheran Brotherhood
and has managed the Portfolio since January 1992. Tom has been with Lutheran
Brotherhood since 1986.
In the first half of 1999 high-yield corporate bonds continued the rebound
they began at the end of 1998. Although further economic strength pushed
interest rates higher and reduced returns for Treasury bonds and investment-
grade issues, an improving outlook for corporate earnings and an emphasis on
value boosted returns for high-yield securities. The returns were
particularly strong for debt of media and telecommunications firms, which
represent a large portion of the High Yield Portfolio. The added emphasis on
these issues helped the Portfolio earn a total return (based on NAV) of
6.83% for the six months ending June 30, 1999, and outpace its
market benchmark, the Lehman Brothers High Yield Index, which earned a
return of 2.20%.
[GRAPHIC PIE CHART OMITTED: Portfolio Composition (% of Portfolio)]
Portfolio Composition
(% of Portfolio)
Non-Convertible Preferred Stocks 8.5%
Common Stocks & Stock Warrants 5.1%
Convertible Preferred Stocks 2.7%
Short-Term Securities 2.6%
Corporate Bonds 81.1%
Maximizing the High-Yield Rebound
The prices for high-yield bonds from the fast-growing
media/telecommunications group tend to fluctuate more than prices for high-
yield bonds as a whole. When prices for high-yield issues fell sharply in
the third quarter of 1998, the media/telecommunications group was hit
particularly hard. The group was thus especially attractive to investors
looking for value in the high-yield sector during the quarters that
followed. Because we had added media/telecommunications issues when their
prices were low, we were able to maximize returns when the group rebounded.
The Portfolio also benefited from holdings in high-yield issues with lower
credit ratings, which also outperformed during the period.
[GRAPHIC OMITTED: Top 10 Holdings]
Top 10 Holdings % of Portfolio
Intermedia Capital Partners 1.1%
MCI Worldcom, Inc. 1.0%
Covad Communications Group, Inc. 0.8%
Wam!Net, Inc. 0.7%
Orion Network Systems, Inc. 0.7%
Viatel, Inc. 0.7%
ICG Holdings, Inc. 0.6%
Dan River, Inc. 0.6%
Dade International, Inc. 0.6%
Millicom International Cellular 0.6%
Footnote reads:
These holdings represent 7.4% of the total investment portfolio.
After a significant advance by the media/telecommunications group in 1999's
first quarter, we took profits in some of the Portfolio's holdings there. As
confidence in the economy improved, we traded some investments in issues
with higher credit ratings for middle-quality debt. We also increased
investments tied to economically sensitive sectors, such as chemicals and
capital goods, which benefited from rising economic confidence. After rising
oil prices boosted returns for energy issues that we'd bought early in the
period, we took profits in some of those investments, as well.
[GRAPHIC OMITTED: Top 10 Industries]
Top 10 Industries
Telecommunications - Wireline 13.0%
Broadcasting 12.1%
Telecommunications - Wireless 9.6%
Bank & Finance 4.8%
Machinery & Equipment 3.2%
Telecommunications - Data/Internet 2.7%
Food & Beverage 2.7%
Drugs & Health Care 2.6%
Hospital Management 2.4%
Leisure & Entertainment 2.2%
Footnote reads:
These bond holdings represent 55.3% of the total investment portfolio.
High Yield Portfolio seeks high current income and, secondarily, growth of
capital by investing primarily in high-yielding ("junk") corporate bonds.***
Portfolio Facts
Inception Date: 11/2/87
Total Net Assets
(in millions): $1,503.5
High-Yield Sector Still Has Value
Although prices for high-yield bonds are now more in line with the prices
for Treasuries and investment-grade issues, there is still plenty of value
in the high-yield sector. While high-yield issues could underperform if
investors fear higher inflation and slower growth, the sector could
outperform if economic growth remains moderate and inflation stays in check.
If uncertainty about economic growth or bond supplies brings a sustained
period of market choppiness, we may increase holdings in issues with higher
credit quality. This, and the Portfolio's overweighting in shorter
maturities, would help to stabilize the Portfolio's returns. As long as the
economic signs are positive, however, we will look for new investment
opportunities that may arise in economically sensitive sectors.
[GRAPHIC WORM CHART OMITTED: Growth of $10,000 Invested Since 6/30/89]
Performance Through June 30, 1999
Growth of $10,000 Invested Since 6/30/89
Lehman
High Yield High Yield Consumer
Date Portfolio Index Price Index
- ---- ---------- ---------- -----------
1989 $10,000 $10,000 $10,000
1989 9,981 9,987 10,024
1989 10,070 10,021 10,040
1989 9,890 9,853 10,073
1989 9,625 9,619 10,121
1989 9,652 9,600 10,145
1989 9,606 9,615 10,161
1990 9,421 9,408 10,266
1990 9,250 9,215 10,314
1990 9,326 9,456 10,371
1990 9,335 9,440 10,387
1990 9,628 9,622 10,411
1990 9,769 9,855 10,467
1990 9,938 10,120 10,508
1990 9,623 9,544 10,604
1990 9,243 8,848 10,693
1990 8,958 8,383 10,757
1990 9,112 8,645 10,782
1990 9,249 8,693 10,782
1991 9,344 8,932 10,846
1991 9,961 9,909 10,862
1991 10,395 10,493 10,878
1991 10,749 10,923 10,894
1991 10,868 10,943 10,927
1991 11,161 11,267 10,959
1991 11,456 11,627 10,975
1991 11,641 11,895 11,007
1991 11,834 12,060 11,056
1991 12,256 12,463 11,072
1991 12,442 12,528 11,104
1991 12,516 12,708 11,112
1992 13,031 13,155 11,128
1992 13,395 13,480 11,168
1992 13,629 13,647 11,225
1992 13,751 13,699 11,241
1992 13,985 13,892 11,257
1992 14,068 14,023 11,297
1992 14,355 14,235 11,322
1992 14,564 14,421 11,354
1992 14,734 14,568 11,386
1992 14,445 14,363 11,426
1992 14,712 14,544 11,442
1992 15,029 14,710 11,434
1993 15,634 15,138 11,491
1993 15,888 15,404 11,531
1993 16,232 15,603 11,571
1993 16,330 15,739 11,604
1993 16,620 15,926 11,620
1993 17,183 16,260 11,636
1993 17,353 16,418 11,636
1993 17,493 16,556 11,668
1993 17,493 16,599 11,692
1993 18,088 16,934 11,741
1993 18,161 17,016 11,749
1993 18,472 17,227 11,749
1994 19,043 17,601 11,781
1994 18,975 17,555 11,821
1994 18,254 16,891 11,861
1994 18,020 16,776 11,878
1994 18,111 16,785 11,886
1994 18,188 16,837 11,926
1994 18,055 16,980 11,958
1994 18,195 17,100 12,006
1994 18,101 17,102 12,039
1994 18,154 17,143 12,047
1994 17,765 16,927 12,063
1994 17,661 17,052 12,063
1995 17,718 17,284 12,111
1995 18,410 17,877 12,160
1995 18,593 18,070 12,200
1995 19,050 18,529 12,240
1995 19,456 19,048 12,264
1995 19,551 19,176 12,289
1995 20,171 19,417 12,289
1995 20,257 19,478 12,321
1995 20,449 19,717 12,345
1995 20,545 19,839 12,385
1995 20,784 20,014 12,377
1995 21,122 20,328 12,369
1996 21,614 20,686 12,442
1996 22,160 20,702 12,482
1996 21,951 20,688 12,546
1996 22,099 20,733 12,595
1996 22,346 20,858 12,619
1996 22,166 21,031 12,627
1996 22,009 21,128 12,651
1996 22,363 21,356 12,675
1996 23,128 21,871 12,716
1996 23,064 22,039 12,756
1996 23,303 22,473 12,780
1996 23,561 22,635 12,780
1997 23,844 22,857 12,820
1997 24,192 23,216 12,861
1997 23,421 22,870 12,893
1997 23,425 23,110 12,909
1997 24,323 23,604 12,901
1997 25,020 23,933 12,917
1997 25,880 24,591 12,933
1997 25,965 24,534 12,957
1997 26,773 25,020 12,990
1997 26,535 25,042 13,022
1997 26,621 25,283 13,014
1997 26,883 25,505 12,998
1998 27,450 25,964 13,022
1998 27,833 26,118 13,046
1998 28,199 26,363 13,070
1998 28,090 26,466 13,094
1998 27,993 26,559 13,119
1998 28,130 26,654 13,135
1998 28,302 26,806 13,151
1998 26,018 25,326 13,167
1998 25,632 25,440 13,183
1998 25,095 24,919 13,215
1998 26,340 25,953 13,215
1998 26,479 25,981 13,207
1999 27,060 26,366 13,239
1999 26,851 26,210 13,255
1999 27,345 26,459 13,296
1999 28,436 26,973 13,392
1999 27,990 26,609 13,392
1999 28,286 26,553 13,392
*See accompanying notes to Portfolio Management Reviews.
[INSET BOX ON CHART READS:]
High Yield Portfolio
Annualized Total Returns*
- -------------------------
10 Years 10.95%
5 Years 9.23%
1 Year 0.56%
[GRAPHIC OMITTED: BAR CHART MOODY'S BOND QUALITY RATING DISTRIBUTION]
MOODY'S BOND QUALITY RATING DISTRIBUTION
Aaa 0.0%
Aa 0.0%
A 0.4%
Baa 0.4%
Ba 19.3%
B 55.3%
Caa 14.8%
Ca 1.7%
C 0.0%
D 0.2%
Not Rated 7.9%
Income Portfolio Review
[GRAPHIC OMITTED: PHOTO OF Charles E. Heeren]
Charles E. Heeren is a Chartered Financial Analyst and portfolio manager for
the Income Portfolio. He is a vice president of Lutheran Brotherhood and has
managed the Portfolio since its inception in January 1987. Chuck has been
with Lutheran Brotherhood since 1976.
Early in the year, as greater economic confidence reversed the "flight to
quality" that had favored Treasury bonds over corporate issues for most of
1998, corporate bonds outperformed Treasuries. Then, in May of 1999, as
interest rates rose and supplies of corporate issues grew faster than
demand, corporate bonds began to underperform.
By anticipating many of these changes, we helped to reduce the effect of
falling bond prices on returns for the Income Portfolio. However, an added
emphasis on longer-term issues, which tend to be more sensitive to price
changes, caused the Portfolio to slightly underperform its benchmark for the
current reporting period. For the six months ended June 30, 1999, the
Portfolio earned a total return (based on NAV) of -2.46%, versus -1.37% for
the Lehman Aggregate Bond Index.
[GRAPHIC PIE CHART OMITTED: Portfolio Composition (% of Portfolio)]
Portfolio Composition
(% of Portfolio)
Corporate Bonds 54.4%
Common Stocks 0.1%
Preferred Stocks 0.7%
Foreign Government Bonds 3.2%
U.S. Government Agency 3.5%
Short-Term Securities 5.7%
Asset-Backed Securities 8.8%
Mortgage-Backed Securities 9.2%
U.S. Government 14.4%
Anticipating Market Changes
In the fourth quarter of 1998, when prices for high-quality corporate bonds
and issues of U.S. government agencies had become quite attractive, we
traded some of the Portfolio's Treasury holdings for agencies and corporates
with high credit quality. Besides giving the Portfolio added income, these
issues performed well as investors moved out of Treasuries during the first
quarter of 1999. With continued brightening of the U.S. economic outlook, we
further reduced investments in government issues and selectively added
corporate debt with slightly higher yields and somewhat lower credit
ratings. Among these additions were corporates from economically sensitive
"cyclical" sectors, which investors favored as their confidence in the
economy grew. Of particular benefit were new investments from the energy
sector, which performed well as oil prices rose.
[GRAPHIC OMITTED: Top 10 Holdings]
% of
Top 10 Holdings Security Type Portfolio
- ----------------------------------------------------------------------------
U.S. Treasury Bonds (Nov. 2022) U.S. Government 5.9%
U.S. Treasury Bonds (Aug. 2023) U.S. Government 2.9%
Federal Home Loan Mortgage Corp.
(Jul. 2029) Mortgage-backed 2.9%
Government National Mortgage
Association (Apr. 2029) Mortgage-backed 2.1%
Federal National Mortgage Association
(Feb. 2008) U.S. Government Agency 2.1%
U.S. Treasury Bonds (Nov. 2016) U.S. Government Agency 1.9%
Federal Home Loan Mortgage Corp.
(Jul. 2013) Mortgage-backed 1.8%
World Omni Auto Lease Trust Asset-backed 1.6%
World Financial Network Credit Card
Master Trust Asset-backed 1.4%
U.S. Treasury Notes (Nov. 2004) U.S. Government 1.2%
Footnote reads:
These holdings represent 23.8% of the total investment portfolio.
[GRAPHIC HORIZONTAL BAR CHART OMITTED: Moody's Bond Quality Rating
Distribution]
Moody's Bond Quality
Rating Distribution
Aaa 40.9%
Aa 9.5%
A 16.8%
Baa 22.3%
Ba 9.1%
B 1.4%
Caa 0.0%
Ca 0.0%
C 0.0%
D 0.0%
Not Rated 0.0%
Income Portfolio seeks a high level of income while preserving principal by
investing primarily in intermediate- and long-term bonds.
Portfolio Facts
Inception Date: 1/9/87
Total Net Assets
(in millions): $1,087.3
Corporate performance then lagged in May and June, as supplies of new
corporate issues outstripped demand, and investors worried that potential
hikes in interest rates by the Federal Reserve would dampen future economic
growth. Although we had already started to emphasize issues with shorter
maturities, the generally longer maturity structure for the Portfolio tended
to exacerbate the loss in asset value from falling bond prices. The loss in
price was offset somewhat by a slight reduction in corporate holdings and
increased attention to high credit quality and strong liquidity within the
corporate sector. The Portfolio also benefited from strong performances by
"Yankee" bonds issued in the United States by Asian governments and
businesses, which rallied as economic conditions in Asia improved.
Positioned for a Rebound
With bond prices now strengthening, we have selectively added some longer-
maturity investments. If higher interest rates slow economic growth, these
investments could outperform once bond yields begin to fall and prices rise.
While economic growth probably won't slow enough for investors to worry
about corporate earnings, the corporate bond sector still could struggle
under a heavy supply of new issues. In this environment, we expect to
maintain our emphasis on higher-quality corporates with strong liquidity
while looking for new investment opportunities that may arise from market
fluctuations.
[GRAPHIC WORM CHART OMITTED: Growth of $10,000 Invested Since 6/30/89]
Performance Through June 30, 1999
Growth of $10,000 Invested Since 6/30/89
Lehman Brothers
Income Aggregate Consumer
Date Portfolio Bond Index Price Index
- ----- --------- --------------- -----------
1989 $10,000 $10,000 $10,000
1989 10,172 10,213 10,024
1989 10,080 10,062 10,040
1989 10,092 10,113 10,073
1989 10,241 10,362 10,121
1989 10,352 10,460 10,145
1989 10,379 10,489 10,161
1990 10,271 10,364 10,266
1990 10,305 10,397 10,314
1990 10,339 10,404 10,371
1990 10,205 10,309 10,387
1990 10,518 10,614 10,411
1990 10,680 10,785 10,467
1990 10,810 10,933 10,508
1990 10,634 10,787 10,604
1990 10,568 10,876 10,693
1990 10,668 11,015 10,757
1990 10,918 11,251 10,782
1990 11,097 11,427 10,782
1991 11,243 11,569 10,846
1991 11,498 11,667 10,862
1991 11,637 11,747 10,878
1991 11,804 11,874 10,894
1991 11,941 11,943 10,927
1991 11,958 11,937 10,959
1991 12,115 12,103 10,975
1991 12,394 12,365 11,007
1991 12,662 12,616 11,056
1991 12,799 12,756 11,072
1991 12,888 12,873 11,104
1991 13,289 13,255 11,112
1992 13,240 13,075 11,128
1992 13,328 13,160 11,168
1992 13,336 13,086 11,225
1992 13,381 13,180 11,241
1992 13,638 13,430 11,257
1992 13,827 13,615 11,297
1992 14,149 13,893 11,322
1992 14,288 14,033 11,354
1992 14,458 14,200 11,386
1992 14,225 14,011 11,426
1992 14,280 14,014 11,442
1992 14,514 14,237 11,434
1993 14,817 14,510 11,491
1993 15,127 14,764 11,531
1993 15,217 14,826 11,571
1993 15,329 14,930 11,604
1993 15,356 14,949 11,620
1993 15,673 15,220 11,636
1993 15,814 15,307 11,636
1993 16,098 15,574 11,668
1993 16,147 15,616 11,692
1993 16,292 15,674 11,741
1993 16,117 15,541 11,749
1993 16,208 15,625 11,749
1994 16,447 15,836 11,781
1994 16,091 15,560 11,821
1994 15,562 15,176 11,861
1994 15,395 15,055 11,878
1994 15,424 15,053 11,886
1994 15,311 15,020 11,926
1994 15,641 15,319 11,958
1994 15,681 15,337 12,006
1994 15,406 15,112 12,039
1994 15,348 15,098 12,047
1994 15,352 15,065 12,063
1994 15,449 15,169 12,063
1995 15,729 15,469 12,111
1995 16,089 15,837 12,160
1995 16,179 15,934 12,200
1995 16,457 16,157 12,240
1995 17,170 16,782 12,264
1995 17,311 16,905 12,289
1995 17,211 16,868 12,289
1995 17,427 17,072 12,321
1995 17,595 17,237 12,345
1995 17,866 17,461 12,385
1995 18,144 17,723 12,377
1995 18,439 17,972 12,369
1996 18,545 18,090 12,442
1996 18,154 17,775 12,482
1996 17,975 17,651 12,546
1996 17,864 17,552 12,595
1996 17,852 17,517 12,619
1996 18,075 17,752 12,627
1996 18,111 17,800 12,651
1996 18,045 17,769 12,675
1996 18,397 18,079 12,716
1996 18,824 18,480 12,756
1996 19,212 18,796 12,780
1996 19,036 18,621 12,780
1997 19,096 18,679 12,820
1997 19,186 18,726 12,861
1997 18,904 18,518 12,893
1997 19,126 18,795 12,909
1997 19,326 18,974 12,901
1997 19,606 19,200 12,917
1997 20,186 19,718 12,933
1997 19,972 19,551 12,957
1997 20,293 19,840 12,990
1997 20,456 20,128 13,022
1997 20,547 20,220 13,014
1997 20,702 20,424 12,998
1998 20,981 20,686 13,022
1998 21,016 20,669 13,046
1998 21,137 20,740 13,070
1998 21,254 20,847 13,094
1998 21,439 21,045 13,119
1998 21,641 21,224 13,135
1998 21,675 21,269 13,151
1998 21,821 21,616 13,167
1998 22,431 22,121 13,183
1998 22,300 22,004 13,215
1998 22,563 22,130 13,215
1998 22,645 22,196 13,207
1999 22,862 22,354 13,239
1999 22,337 21,962 13,255
1999 22,472 22,083 13,296
1999 22,528 22,154 13,392
1999 22,200 21,959 13,392
1999 22,086 21,889 13,392
Footnote reads:
*See accompanying notes to Portfolio Management Reviews.
INSET BOX ON CHART READS:
Income Portfolio
Annualized Total Returns*
- --------------------------
10 Years 8.24%
5 Years 7.60%
1 Year 2.06%
Money Market Portfolio Review
[GRAPHIC OMITTED: PHOTO OF GAIL R. ONAN]
Gail R. Onan is portfolio manager for the Money Market Portfolio. She has
managed the Portfolio since January 1994 and has been with Lutheran
Brotherhood since 1969.
Short-term yields, as measured by two-year U.S. Treasury notes, rose 0.93%
during the first half of 1999. With stronger economic growth, investors
believed the Federal Reserve would have to boost short-term interest rates
as a "pre-emptive strike" against inflation. On June 30, the Fed met these
expectations by raising its targeted Fed Funds rate by 0.25%. During this
time we added investments with longer maturities to maximize the higher
yields that were available. We also increased investments in issues with
very short maturities so that we could make the most of new yield
opportunities that arose. This "modified barbell" strategy helped the
Portfolio earn a total return of 2.31% for the six months ended June 30,
1999.
[GRAPHIC PIE CHART OMITTED: Portfolio Composition (% of Portfolio)]
Portfolio Composition (% of Portfolio)
Certificates of Deposit 4.6%
Variable Rate Notes 3.1%
Bank Notes 2.7%
U.S. Government Agency 2.1%
Medium-Term Notes 2.1%
Commercial Paper 85.4%
Adapting to Rising Yields
On December 31, 1998, as the reporting period began, investments in the
Portfolio had a weighted average maturity of 52 days. To maintain a strong
yield for the Portfolio as large amounts of new cash came in, we continued
the purchase of longer maturities that we'd started at the end of 1998. We
further increased investments in longer maturities when strong economic data
improved the chance that the Fed would raise short-term rates and put upward
pressure on money market yields. After rising to a high of 62 days in May,
the Portfolio's weighted average maturity stood at 55 days as the reporting
period ended on June 30.
[GRAPHIC OMITTED: Top 10 Holdings by Creditor]
% of
Top 10 Holdings by Creditor Portfolio
Union Bank of Switzerland 4.8%
DaimlerChrysler AG 4.6%
Chevron Corp. 4.6%
Ford Motor Credit Co. 4.3%
General Electric Capital Corp. 4.3%
Barclays Bank plc 3.8%
Preferred Receivables Funding Corp. 3.8%
Wells Fargo & Co. 3.7%
Warner-Lambert Co. 3.7%
Morgan Guaranty Trust Co. 3.6%
Footnote reads:
These holdings represent 41.2% of the total investment portfolio.
During the period we balanced holdings of longer maturities with holdings of
very short maturities. This "barbelled" maturity structure let us enjoy the
higher yields that were available for more time, while giving us the
liquidity to make the most of special yield opportunities created by
temporary market fluctuations. We found such opportunities in debt issued by
industrial firms, as well as in asset-backed commercial paper, taxable
municipal paper issued by state and local governments, and U.S. dollar-
denominated securities issued by top-quality foreign banks and businesses.
LB Series Fund, Inc.
Money Market Portfolio seeks current income with stability of principal by
investing in high-quality, short-term debt securities.****
Portfolio Facts
Inception Date: 1/9/87
Total Net Assets
(in millions): $237.5
Further Rate Hikes Possible
If economic growth remains strong, further Fed hikes in short-term rates
would be likely. As investors anticipate these rate hikes, creating upward
pressure on money market yields, we will look for further opportunities to
lock in attractive yields with longer maturities.
In the meantime, we are preparing for market changes that may occur at the
end of the year. In May and June, we focused on issues that mature after
January 2000 to minimize the effect of any market disruptions that may occur
from unexpected supply and demand imbalances. We are also focusing on
issuers that meet our standards for "Y2K" technology readiness. As we move
closer to the end of the year, we expect to increase the Portfolio's cash
position so that we might make the most of any yield opportunities that
year-end market fluctuations might bring.
[GRAPHIC OMITTED: MONEY MARKET PORTFOLIO]
Money Market Portfolio
Annualized Total Returns*
Period Ending 6/30/99
- ---------------------------------
10 Years 5.25%
5 Years 5.27%
1 Year 4.96%
Seven-Day Yields
as of 6/30/99+
- ---------------------------------
Current 4.63%
Effective 4.74%
Notes to Portfolio Management Reviews
*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. 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
LBSC registered 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.
***High-yield bonds carry greater volatility and risk than investment-grade
bonds.
****An investment in the Money Market Portfolio is not insured or guaranteed
by the FDIC or any other government agency. Although the Portfolio seeks
to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the Portfolio.
+Seven-day yields of the Money Market Portfolio refer to the income
generated by an investment in the Portfolio over a specified seven-day
period. Effective yields reflect the reinvestment of income. Yields are
subject to daily fluctuation and should not be considered an indication of
future results.
This report must be preceded or accompanied by a current prospectus.
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
OPPORTUNITY GROWTH PORTFOLIO
Portfolio of Investments
June 30, 1999
(unaudited)
Shares Value
------------ ------------
<S> <C> <C>
COMMON STOCKS - 98.4% (a)
Aerospace & Defense - 0.8%
36,600 AAR Corp. $ 830,331
8,400 Avondale Industries, Inc. 327,600 (b)
42,200 Orbital Sciences Corp. 996,975 (b)
33,000 Triumph Group, Inc. 841,500 (b)
--------------
2,996,406
--------------
Airlines - 0.9%
16,100 Alaska Air Group, Inc. 672,175 (b)
76,350 COMAIR Holdings, Inc. 1,589,034
55,500 Mesaba Holdings, Inc. 707,625 (b)
--------------
2,968,834
--------------
Automotive - 1.8%
80,200 Gentex Corp. 2,245,600 (b)
38,900 Group 1 Automotive, Inc. 821,763 (b)
45,900 O'Reilly Automotive, Inc. 2,312,213 (b)
35,200 Tower Automotive, Inc. 895,400 (b)
--------------
6,274,976
--------------
Bank & Finance - 6.1%
58,300 Affiliated Managers Group, Inc. 1,759,931 (b)
95,400 AmeriCredit Corp. 1,526,400 (b)
45,300 City National Corp. 1,695,919
33,075 Commerce Bancorp, Inc. 1,413,956
68,100 Community First
Bankshares, Inc. 1,625,888
14,500 E.W. Blanch Holdings, Inc. 988,719
29,800 HealthCare Financial
Partners, Inc. 1,020,650 (b)
17,300 Inspire Insurance Solutions, Inc. 250,850 (b)
41,800 Legg Mason, Inc. 1,609,300
21,200 Metris Companies, Inc. 863,900
67,000 North Fork Bancorporation, Inc. 1,427,938
46,400 Protective Life Corp. 1,531,200
31,758 Radian Group, Inc. 1,550,187
25,200 Telebanc Financial Corp. 976,500 (b)
77,200 Waddell & Reed Financial, Inc.,
Class A 2,118,175
18,300 Zions Bancorporation 1,162,050
--------------
21,521,563
--------------
Biotechnology - 1.6%
52,400 Covance, Inc. 1,254,325 (b)
54,100 Cytyc Corp. 1,054,950 (b)
50,000 Inhale Therapeutic Systems, Inc. 1,190,625 (b)
56,600 Medco Research, Inc. 1,485,750 (b)
104,020 Serologicals Corp. 845,163 (b)
--------------
5,830,813
--------------
Building &
Construction - 1.2%
38,500 Dycom Industries, Inc. 2,156,000 (b)
50,000 NCI Building Systems, Inc. 1,068,750 (b)
20,200 Simpson Manufacturing Co., Inc. 959,500 (b)
--------------
4,184,250
--------------
Business Services - 8.1%
44,400 Carriage Services, Inc., Class A 832,500 (b)
45,050 Concord EFS, Inc. 1,906,178 (b)
31,600 Consolidated Graphics, Inc. 1,580,000 (b)
27,400 Cort Business Services Corp. 655,888 (b)
82,600 First Consulting Group, Inc. 877,625 (b)
29,500 G & K Services, Inc., Class A 1,545,063
20,000 Gartner Group, Inc., Class A 410,000 (b)
43,000 Insituform Technologies, Inc.,
Class A 929,875 (b)
36,300 Lason, Inc. 1,801,388 (b)
66,900 META Group, Inc. 1,028,588 (b)
67,600 Metamor Worldwide, Inc. 1,626,625 (b)
37,500 Metzler Group, Inc. 1,035,938 (b)
113,100 Modis Professional Services, Inc. 1,555,125 (b)
44,330 National Computer Systems, Inc. 1,496,138
53,000 NCO Group, Inc. 2,014,000 (b)
80,938 NOVA Corp. 2,023,450 (b)
33,300 Pre-Paid Legal Services, Inc. 905,344 (b)
111,300 Professional Staff plc, ADR 723,450 (b)
65,300 Rent-Way, Inc. 1,608,013 (b)
76,600 Romac International, Inc. 679,825 (b)
30,900 StaffMark, Inc. 309,966 (b)
21,500 Strayer Education, Inc. 659,781
34,700 Superior Services, Inc. 926,056 (b)
94,094 Tetra Tech, Inc. 1,552,547 (b)
--------------
28,683,363
--------------
Chemicals - 0.7%
16,100 MacDermid, Inc. 748,650
67,200 Sybron Corp. 1,852,200 (b)
--------------
2,600,850
--------------
Computer Equipment - 1.9%
69,400 Pinnacle Systems, Inc. 2,333,575 (b)
78,600 Security Dynamics
Technologies, Inc. 1,670,250 (b)
69,900 Symbol Technologies, Inc. 2,577,563
--------------
6,581,388
--------------
Computer Service &
Software - 17.8%
38,400 Affiliated Computer
Services, Inc., Class A 1,944,000 (b)
18,100 American Management
Systems, Inc. 580,331 (b)
30,000 AVT Corp. 1,136,250 (b)
33,300 Bisys (The) Group, Inc. 1,948,050 (b)
51,800 Cadence Design Systems, Inc. 660,450 (b)
57,800 CIBER, Inc. 1,105,425 (b)
38,700 Citrix Systems, Inc. 2,186,550 (b)
26,000 Clarify, Inc. 1,072,500 (b)
43,400 Cognos, Inc. 943,950 (b)
39,800 Cotelligent Group, Inc. 310,938 (b)
24,700 DST Systems, Inc. 1,553,013 (b)
18,500 EarthLink Network, Inc. 1,136,594 (b)
36,100 Electronic Arts, Inc. 1,958,425 (b)
25,000 Engineering Animation, Inc. 529,688 (b)
19,500 FactSet Research Systems, Inc. 1,104,188
20,900 Great Plains Software, Inc. 986,219 (b)
58,155 Hyperion Solutions Corp. 1,035,886 (b)
46,000 IMR Global Corp. 885,500 (b)
42,650 International Network
Services Co. 1,721,994 (b)
18,900 Intuit, Inc. 1,703,363 (b)
33,900 Keane, Inc. 766,988 (b)
30,800 Legato Systems, Inc. 1,778,700 (b)
13,400 Lexmark International
Group, Inc., Class A 885,238 (b)
21,300 Macromedia, Inc. 750,825 (b)
30,000 MAPICS, Inc. 316,875 (b)
67,100 Mastech Corp. 1,249,738 (b)
28,300 Mercury Interactive Corp. 1,001,113 (b)
48,800 National Data Corp. 2,086,200
45,000 National Instruments Corp. 1,816,875 (b)
34,100 NetGravity, Inc. 775,775 (b)
27,750 Network Associates, Inc. 407,578 (b)
19,100 Pegasus Systems, Inc. 715,056 (b)
31,800 Peregrine Systems, Inc. 816,863 (b)
43,800 Preview Travel, Inc. 960,863 (b)
14,900 PSINet, Inc. 651,875 (b)
34,900 QRS Corp. 2,722,200 (b)
59,300 Saville Systems Ireland plc, ADR 859,850 (b)
26,633 Sterling Commerce, Inc. 972,105 (b)
131,200 Summit Design, Inc. 393,600 (b)
43,800 SunGard Data Systems, Inc. 1,511,100 (b)
54,200 Sykes Enterprises, Inc. 1,808,925 (b)
40,500 Symantec Corp. 1,032,750 (b)
43,000 Synopsys, Inc. 2,373,063 (b)
42,500 Transaction Systems
Architects, Inc., Class A 1,657,500 (b)
25,800 USinternetworking, Inc. 1,083,600 (b)
68,750 USWeb Corp. 1,525,391 (b)
26,000 Veritas Software Corp. 2,468,375 (b)
37,000 Visio Corp. 1,408,313 (b)
30,800 WebTrends Corp. 1,420,650 (b)
57,200 Wind River Systems, Inc. 918,775 (b)
46,170 Zebra Technologies Corp.,
Class B 1,774,659 (b)
--------------
63,414,732
--------------
Cosmetics - 0.2%
25,000 Chattem, Inc. 795,313 (b)
--------------
Distribution Services - 2.4%
56,200 AmeriSource Health Corp.,
Class A 1,433,100 (b)
17,300 Aviation Sales Co. 683,350 (b)
24,800 Henry (Jack) & Associates, Inc. 973,400
49,800 MSC Industrial Direct Co., Inc.,
Class A 510,450 (b)
47,400 Richfood Holdings, Inc. 835,425
39,200 Tech Data Corp. 1,499,400 (b)
34,100 U.S. Foodservice Co. 1,453,513 (b)
76,100 Watsco, Inc. 1,246,138
--------------
8,634,776
--------------
Education - 1.3%
54,715 Apollo Group, Inc., Class A 1,453,367 (b)
37,400 ITT Educational Services, Inc. 974,738 (b)
56,500 Learning Tree International, Inc. 617,969 (b)
52,850 Sylvan Learning Systems, Inc. 1,436,859 (b)
--------------
4,482,933
--------------
Electrical Equipment - 0.2%
41,800 American Power
Conversion Corp. 841,225 (b)
--------------
Electronic Components - 7.8%
22,300 Analog Devices, Inc. 1,119,181 (b)
53,550 Burr-Brown Corp. 1,961,269 (b)
57,600 Cybex Computer Products Corp. 1,605,600 (b)
37,700 Dallas Semiconductor Corp. 1,903,850
22,400 Electronics for Imaging, Inc. 1,150,800 (b)
21,600 Etec Systems, Inc. 718,200 (b)
40,000 Lattice Semiconductor Corp. 2,490,000 (b)
27,600 Maxim Integrated Products, Inc. 1,835,400 (b)
31,600 Micrel, Inc. 2,338,400 (b)
38,900 Microchip Technology, Inc. 1,842,888 (b)
40,800 Plexus Corp. 1,229,100 (b)
24,600 PMC-Sierra, Inc. 1,449,863 (b)
21,900 QLogic Corp. 2,890,800 (b)
39,400 Sanmina Corp. 2,989,475 (b)
30,000 Vitesse Semiconductor Corp. 2,023,125 (b)
--------------
27,547,951
--------------
Electronic Systems - 2.9%
31,500 Black Box Corp. 1,578,938 (b)
27,700 Dionex Corp. 1,121,850 (b)
27,300 Novellus Systems, Inc. 1,863,225 (b)
27,500 Polycom, Inc. 1,072,500 (b)
30,100 Teradyne, Inc. 2,159,675 (b,c)
14,600 Uniphase Corp. 2,423,600 (b)
--------------
10,219,788
--------------
Energy Services - 0.8%
45,800 BJ Services Co. 1,348,238 (b)
67,400 Oceaneering International, Inc. 1,086,825 (b)
11,500 Smith International, Inc. 499,531 (b)
--------------
2,934,594
--------------
Exploration &
Production - 0.3%
39,400 Noble Affiliates, Inc. 1,110,588
--------------
Food Processing - 0.5%
56,670 Smithfield Foods, Inc. 1,894,903 (b)
--------------
Healthcare Services - 1.7%
54,800 Concentra Managed Care, Inc. 811,725 (b)
29,800 Henry Schein, Inc. 944,288 (b)
43,700 Novoste Corp. 917,700 (b)
93,200 Orthodontic Centers of
America, Inc. 1,316,450 (b)
19,200 PacifiCare Health Systems, Inc.,
Class B 1,381,200 (b)
46,600 US Oncology, Inc. 559,200 (b)
--------------
5,930,563
--------------
Hospital Supplies &
Management - 5.2%
34,300 DENTSPLY International, Inc. 960,400
49,200 First Health Group Corp. 1,060,875 (b)
75,500 Lincare Holdings, Inc. 1,887,500 (b)
39,600 MedQuist, Inc. 1,732,500 (b)
80,000 Mentor Corp. 1,490,000
70,600 Omnicare, Inc. 891,325
29,000 Patterson Dental Co. 1,007,750 (b)
48,600 Priority Healthcare Corp.,
Class B 1,676,700 (b)
83,400 PSS World Medical, Inc. 933,038 (b)
38,400 Renal Care Group, Inc. 993,600 (b)
38,500 STERIS Corp. 745,938 (b)
34,200 Universal Health Services, Inc.,
Class B 1,633,050 (b)
19,000 Ventana Medical Systems, Inc. 363,375 (b)
20,600 Veterinary Centers of
America, Inc. 279,388 (b)
34,600 VISX, Inc. 2,739,888 (b)
--------------
18,395,327
--------------
Information
Processing - 1.0%
51,300 Data Processing Resources Corp. 1,211,963 (b)
23,000 Paymentech, Inc. 583,625 (b)
39,100 SCI Systems, Inc. 1,857,250 (b)
--------------
3,652,838
--------------
Leisure &
Entertainment - 2.4%
38,200 Brinker International, Inc. 1,038,563 (b)
107,700 Imax Corp. 2,423,250 (b)
29,800 SFX Entertainment, Inc. 1,907,200 (b)
19,100 Sonic Corp. 623,138 (b)
43,000 Steinway Musical
Instruments, Inc. 1,139,500 (b)
99,000 Sunterra Corp. 1,379,813 (b)
--------------
8,511,464
--------------
Machinery - 0.3%
37,700 Terex Corp. 1,147,494 (b)
--------------
Media &
Communications - 8.6%
43,800 ACNielsen Corp. 1,324,950 (b)
59,100 American Tower Corp. 1,418,400 (b)
15,000 AT&T Canada, Inc. 960,938 (b)
21,400 Catalina Marketing Corp. 1,968,800 (b)
35,700 Century Communications Corp.,
Class A 1,642,200 (b)
41,800 Chancellor Media Corp. 2,304,225 (b)
28,600 Cox Radio, Inc., Class A 1,551,550 (b)
53,400 Crown Castle International Corp. 1,111,388 (b)
41,500 Emmis Communications Corp.,
Class A 2,049,063 (b)
35,900 Harte-Hanks, Inc. 973,788
22,500 Hispanic Broadcasting Corp. 1,707,188 (b)
49,700 Level One Communications, Inc. 2,432,194 (b)
14,200 Media General, Inc., Class A 724,200
61,805 Outdoor Systems, Inc. 2,255,883 (b)
28,800 TCA Cable TV, Inc. 1,598,400
47,000 TV Guide, Inc., Class A 1,721,375 (b)
28,800 Univision Communications, Inc.,
Class A 1,900,800 (b)
33,300 Valassis Communications, Inc. 1,219,613 (b)
22,200 World Color Press, Inc. 610,500 (b)
27,000 Young Broadcasting, Inc.,
Class A 1,149,188 (b)
--------------
30,624,643
--------------
Miscellaneous Consumer
Products - 2.3%
48,600 Blyth Industries, Inc. 1,670,625 (b)
32,700 Fossil, Inc. 1,581,863 (b)
63,750 HA LO Industries, Inc. 629,531 (b)
50,800 Jones Apparel Group, Inc. 1,743,075 (b)
17,100 Mohawk Industries, Inc. 519,413 (b)
42,900 Quiksilver, Inc. 1,118,081 (b)
30,800 Wesley Jessen VisionCare, Inc. 997,150 (b)
--------------
8,259,738
--------------
Pharmaceuticals - 3.9%
26,800 Barr Laboratories, Inc. 1,068,650 (b)
25,600 Biogen, Inc. 1,646,400 (b)
41,800 Duane Reade, Inc. 1,280,125 (b)
28,200 Express Scripts, Inc., Class A 1,697,288 (b)
22,400 Forest Laboratories, Inc. 1,036,000 (b)
38,000 Jones Pharma, Inc. 1,496,250
18,900 K-V Pharmaceutical Co.,
Class A 292,950 (b)
48,300 Liposome Company, Inc. 923,738 (b)
69,300 Roberts Pharmaceutical Corp. 1,680,525 (b)
27,800 Shire Pharmaceuticals
Group plc, ADR 722,800 (b)
92,340 Theragenics Corp. 640,609 (b)
41,200 Watson Pharmaceuticals, Inc. 1,444,575 (b)
--------------
13,929,910
--------------
Pollution Control - 0.6%
53,200 Casella Waste Systems, Inc.,
Class A 1,383,200 (b)
43,300 Catalytica, Inc. 606,200 (b)
--------------
1,989,400
--------------
Real Estate Investment
Trust - 0.5%
42,700 Apartment Investment &
Management Co., Class A 1,825,425
--------------
Restaurants - 1.4%
42,700 Applebee's International, Inc. 1,286,338
54,700 Dave & Busters, Inc. 1,586,300 (b)
56,100 Outback Steakhouse, Inc. 2,205,431 (b)
--------------
5,078,069
--------------
Retail - 7.2%
33,000 Barnes and Noble, Inc. 903,375 (b)
22,200 Bed, Bath & Beyond, Inc. 854,700 (b)
34,200 Borders Group, Inc. 540,788 (b)
31,600 Buckle (The), Inc. 908,500 (b)
47,000 CDW Computer Centers, Inc. 2,068,000 (b)
53,000 Dollar Tree Stores, Inc. 2,332,000 (b)
42,800 Family Dollar Stores, Inc. 1,027,200
83,325 Insight Enterprise, Inc. 2,062,294 (b)
24,800 Kenneth Cole Productions, Inc.,
Class A 691,300 (b)
27,800 Linens 'N Things, Inc. 1,216,250 (b)
49,900 Men's (The) Wearhouse, Inc. 1,272,450 (b)
48,500 Neiman Marcus Group, Inc. 1,245,844 (b)
74,250 Office Depot, Inc. 1,638,141 (b)
54,225 Pacific Sunwear of California 1,321,734 (b)
63,000 Rent-A-Center, Inc. 1,512,000 (b)
21,300 Ross Stores, Inc. 1,072,988
47,100 Select Comfort Corp. 420,956 (b)
48,900 SLI, Inc. 1,320,300 (b)
27,900 Whole Foods Market, Inc. 1,340,944 (b)
49,900 Williams-Sonoma, Inc. 1,737,144 (b)
--------------
25,486,908
--------------
Telecommunications
Equipment - 2.8%
40,300 Gilat Satellite Networks, Ltd. 2,115,750 (b)
30,400 Inter-Tel, Inc. 554,800
38,500 ITC DeltaCom, Inc. 1,078,000 (b)
30,700 Pacific Gateway Exchange, Inc. 894,138 (b)
42,900 Premisys Communications, Inc. 313,706 (b)
57,400 Proxim, Inc. 3,329,200 (b)
44,400 USA Networks, Inc. 1,781,550 (b)
--------------
10,067,144
--------------
Telephone Services - 1.6%
34,400 Comverse Technology, Inc. 2,597,200 (b)
51,200 ICG Communications, Inc. 1,094,400 (b)
62,000 InterVoice, Inc. 895,125 (b)
20,300 United States Cellular Corp. 1,086,050 (b)
--------------
5,672,775
--------------
Transportation
Services - 1.6%
30,500 Avis Rent A Car, Inc. 888,313 (b)
49,000 Coach USA, Inc. 2,054,938 (b)
69,600 Swift Transportation Co., Inc. 1,531,200 (b)
25,800 USFreightways Corp. 1,194,863
--------------
5,669,314
--------------
Total Common Stocks
(cost $302,818,276) 349,760,258
--------------
Principal
Amount Value
-------------- ------------
SHORT-TERM
SECURITIES - 1.6% (a)
Commercial Paper
$ 5,600,000 New Center Asset Trust, 5.5%,
Due 7/1/1999
(at amortized cost) $ 5,600,000
--------------
Total Invesments
(cost $308,418,276) $355,360,258 (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, 1999.
(d) At June 30, 1999, the aggregate cost of securities for federal
income tax purposes was $308,418,276 and the net unrealized
appreciation of investments based on that cost was $46,941,982
which is comprised of $79,926,578 aggregate gross unrealized
appreciation and $32,984,596 aggregate gross unrealized depreciation.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
MID CAP GROWTH PORTFOLIO
Portfolio of Investments
June 30, 1999
(unaudited)
Shares Value
------------ ------------
<S> <C> <C>
COMMON STOCKS - 98.0% (a)
Aerospace - 0.6%
8,200 Gulfstream Aerospace Corp. $ 553,990 (b)
8,300 Precision Castparts Corp. 352,750 (c)
--------------
906,740
--------------
Airlines - 0.7%
21,390 Comair Holdings, Inc. 445,179
4,300 Delta Air Lines, Inc. 247,788
9,575 Southwest Airlines Co. 298,022
--------------
990,989
--------------
Appliances &
Furnishings - 0.7%
9,080 Maytag Corp. 632,763
6,300 Whirlpool Corp. 466,200
--------------
1,098,963
--------------
Automotive - 1.3%
9,480 Borg-Warner Automotive, Inc. 521,400
7,400 Dana Corp. 340,863
5,500 Federal-Mogul Corp. 286,000
5,530 General Motors Corp., Class H 311,063 (b)
18,570 Tower Automotive, Inc. 472,374 (b)
--------------
1,931,700
--------------
Bank & Finance - 8.0%
5,400 AMBAC Financial Group, Inc. 308,475
7,600 Associates First Capital Corp.,
Class A 336,775
4,410 Bear Stearns Cos., Inc. 206,168
11,690 Charter One Financial, Inc. 325,128
12,750 City National Corp. 477,328
12,000 Dime Bancorp, Inc. 241,500
2,920 Donaldson, Lufkin &
Jenrette, Inc. 175,930
25,960 Finova Group, Inc. 1,366,146
8,200 First Tennessee National Corp. 314,163
15,300 Firstar Corp. 428,400
11,500 Legg Mason, Inc. 442,750
5,200 Marshall & Ilsley Corp. 334,750
22,200 Metris Companies, Inc. 904,650
13,390 Mutual Risk Management, Ltd. 446,891
15,600 North Fork Bancorporation, Inc. 332,475
6,030 Northern Trust Corp. 584,910
8,300 PaineWebber Group, Inc. 388,025
13,700 Profit Recovery Group
International, Inc. 648,181 (b)
14,330 Provident Companies, Inc. 573,200
2,680 Providian Financial Corp. 250,580
1,500 Schwab, Charles Corp. 164,813
13,300 SouthTrust Corp. 510,388
4,520 State Street Corp. 385,895
12,010 Summit Bancorp 502,168
18,430 TCF Financial Corp. 513,736
8,400 The CIT Group, Inc., Class A 242,550
7,400 Washington Mutual, Inc. 261,775
7,300 Zions Bancorporation 463,550
--------------
12,131,300
--------------
Broadcasting - 1.8%
4,800 Chancellor Media Corp. 264,600 (b)
11,970 Clear Channel
Communications, Inc. 825,182 (b)
6,000 Infinity Broadcasting Corp.,
Class A 178,500 (b)
11,100 Univision Communications, Inc.,
Class A 732,600 (b)
16,700 USA Networks, Inc. 670,088 (b)
--------------
2,670,970
--------------
Building Products &
Materials - 0.7%
26,460 Leggett & Platt, Inc. 735,919
5,400 Southdown, Inc. 346,950
--------------
1,082,869
--------------
Chemicals - 1.3%
21,550 Crompton & Knowles Corp. 421,572
13,000 Cytec Industries, Inc. 414,375 (b)
9,500 IMC Global, Inc. 167,438
20,800 Lyondell Petrochemical Co. 429,000
13,000 Millipore Corp. 527,313
--------------
1,959,698
--------------
Computer Software - 10.8%
32,460 American Power
Conversion Corp. 653,258 (b)
7,200 Aware, Inc. 332,100 (b)
24,100 BEA Systems, Inc. 688,356 (b)
16,680 BMC Software, Inc. 900,720 (b)
8,500 BroadVision, Inc. 626,875 (b)
14,500 Business Objects S.A., ADR 529,250 (b)
16,760 Citrix Systems, Inc. 946,940 (b)
31,150 Compuware Corp. 990,959 (b)
18,300 Comverse Technology, Inc. 1,381,650 (b)
2,600 Intuit, Inc. 234,325 (b)
7,690 Keane, Inc. 173,986 (b)
13,900 Legato Systems, Inc. 802,725 (b)
6,270 Macromedia, Inc. 221,018 (b)
16,000 Mentor Graphics Corp. 205,000 (b)
43,160 Novell, Inc. 1,143,740 (b)
19,100 Peregrine Systems, Inc. 490,631 (b)
26,300 Rational Software Corp. 866,256 (b)
17,300 Security Dynamics
Technologies, Inc. 367,625 (b)
12,110 Siebel Systems, Inc. 803,801 (b)
12,650 Sterling Commerce, Inc. 461,725 (b)
18,030 SunGard Data Systems, Inc. 622,035 (b)
18,740 Synopsys, Inc. 1,034,214 (b)
19,600 Unisys Corp. 763,175 (b)
3,950 Veritas Software Corp. 375,003 (b)
4,600 Vignette Corp. 345,000 (b)
5,200 VISX, Inc. 411,775 (b)
--------------
16,372,142
--------------
Computers &
Office Equipment - 2.8%
15,100 EMC Corp. 830,500 (b)
3,400 Gateway, Inc. 200,600 (b)
6,760 Herman Miller, Inc. 141,960
7,280 Hon Industries, Inc. 212,485
9,440 Lexmark International
Group, Inc., Class A 623,630 (b)
6,300 Plantronics, Inc. 410,288 (b)
11,160 Sun Microsystems, Inc. 768,645 (b)
14,400 Teradyne, Inc. 1,033,200 (b)
--------------
4,221,308
--------------
Conglomerates - 1.0%
11,230 ITT Industries, Inc. 428,144
11,948 Tyco International, Ltd. 1,132,073
--------------
1,560,217
--------------
Construction &
Home Building - 0.2%
6,300 Jacobs Engineering Group, Inc. 239,400 (b)
--------------
Drugs & Health Care - 6.8%
5,700 Amgen, Inc. 346,988
19,920 Biogen, Inc. 1,281,105 (b)
9,930 Biomet, Inc. 394,718
5,198 Cardinal Health, Inc. 333,322
13,980 Centocor, Inc. 651,818 (b)
4,440 Forest Laboratories, Inc. 205,350 (b)
16,000 Genzyme Corp. 776,000 (b)
9,880 Gilead Sciences, Inc. 516,230 (b)
6,780 Guidant Corp. 348,746
8,900 HCR Manor Care, Inc. 215,269 (b)
10,680 IDEXX Laboratories, Inc. 248,978 (b)
5,400 IMS Health, Inc. 168,750
7,600 MedImmune, Inc. 514,900 (b)
7,491 Medtronic, Inc. 583,362
6,900 MiniMed, Inc. 530,869 (b)
15,950 Mylan Laboratories, Inc. 422,675
13,000 Ocular Sciences, Inc. 225,875 (b)
11,160 STERIS Corp. 216,225 (b)
11,200 Stryker Corp. 673,400
12,900 St. Jude Medical, Inc. 459,563 (b)
10,600 Sybron Corp. 292,163 (b)
9,400 Teva Pharmaceutical
Industries, Ltd., ADR 460,600
13,180 Watson Pharmaceuticals, Inc. 462,124 (b)
--------------
10,329,030
--------------
Electric Utilities - 0.3%
6,680 AES (The) Corp. 388,275 (b)
--------------
Electronic Equipment - 13.3%
24,230 Adaptec, Inc. 855,622 (b)
13,100 Adtran, Inc. 476,513 (b)
10,100 Altera Corp. 371,806 (b)
12,500 Analog Devices, Inc. 627,344 (b)
2,590 Applied Materials, Inc. 191,336 (b)
21,600 Atmel Corp. 565,650 (b)
16,600 C-Cube Microsystems, Inc. 526,013 (b)
16,300 Excel Switching Corp. 487,981 (b)
13,900 Galileo Technology, Ltd. 629,844 (b)
4,200 Jabil Circuit, Inc. 189,525 (b)
9,870 KLA Instruments Corp. 640,316 (b)
13,100 LAM Research Corp. 611,606 (b)
16,860 Linear Technology Corp. 1,133,835
8,300 LSI Logic Corp. 382,838 (b)
16,370 Maxim Integrated Products, Inc. 1,088,605 (b)
18,890 Microchip Technology, Inc. 894,914 (b)
13,200 National Semiconductor Corp. 334,125 (b)
10,390 Novellus Systems, Inc. 709,118 (b)
11,800 Oak Industries, Inc. 515,513 (b)
13,200 Plexus Corp. 397,650 (b)
11,340 PMC-Sierra, Inc. 668,351 (b)
18,900 PRI Automation, Inc. 685,125 (b)
14,200 RF Micro Devices, Inc. 1,059,675 (b)
8,300 Sanmina Corp. 629,763 (b)
11,000 SCI Systems, Inc. 522,500 (b)
6,540 Solectron Corp. 436,136 (b)
20,535 Symbol Technologies, Inc. 757,228
4,170 Uniphase Corp. 692,220 (b)
17,770 Vitesse Semiconductor Corp. 1,198,364 (b)
10,320 Waters Corp. 548,250 (b)
22,060 Xilinx, Inc. 1,262,935 (b)
--------------
20,090,701
--------------
Food & Beverage - 1.6%
16,900 American Italian Pasta Co.,
Class A 513,338 (b)
21,380 Flowers Industries, Inc. 463,679
6,500 Nabisco Holdings, Inc., Class A 281,125
10,600 Suiza Foods Corp. 443,875 (b)
17,280 U.S. Foodservice 736,560 (b)
--------------
2,438,577
--------------
Healthcare
Management - 1.8%
25,800 Columbia/HCA
Healthcare Corp. 588,563
5,290 Express Scripts, Inc., Class A 318,392 (b)
30,170 HEALTHSOUTH
Rehabilitation Corp. 450,664 (b)
7,170 Henry Schein, Inc. 227,199 (b)
22,300 Oxford Health Plans, Inc. 347,044 (b)
6,800 Quintiles Transnational Corp. 285,600 (b)
14,070 Trigon Healthcare, Inc. 511,796 (b)
--------------
2,729,258
--------------
Hospital Management - 0.7%
20,775 Health Management
Associates, Inc., Class A 233,719 (b)
9,000 Universal Health Services, Inc.,
Class B 429,750 (b)
4,990 Wellpoint Health
Networks, Inc., Class A 423,526 (b)
--------------
1,086,995
--------------
Household Products - 0.6%
22,940 Dial Corp. 853,081
--------------
Insurance - 0.9%
6,460 AFLAC, Inc. 309,273
6,350 Allmerica Financial Corp. 386,159
9,350 Nationwide Financial
Services, Inc., Class A 423,088
9,400 Protective Life Corp.,
Capital Trust II 310,200
--------------
1,428,720
--------------
Internet Service - 0.9%
7,020 America Online, Inc. 775,710
2,400 Ask Jeeves, Inc. 33,600 (b)
4,146 At Home Corporation, Series A 223,625 (b)
2,200 CNet, Inc. 126,775 (b)
6,600 SportsLine USA, Inc. 236,775 (b)
--------------
1,396,485
--------------
Leisure &
Entertainment - 1.5%
5,710 Harley Davidson, Inc. 310,481 (c)
14,100 Premier Parks, Inc. 518,175 (b)
10,300 Promus Hotel Corp. 319,300 (b)
13,400 Royal Caribbean Cruises, Ltd. 586,250
8,500 SFX Entertainment, Inc. 544,000 (b)
--------------
2,278,206
--------------
Machinery &
Equipment - 0.8%
7,860 Black & Decker Corp. 496,163
14,745 Crane Co. 463,546
4,900 Danaher Corp. 284,813
--------------
1,244,522
--------------
Media &
Communications - 2.8%
11,200 Comcast Corp., Class A 430,500
10,820 Cox Communications, Inc.,
Class A 398,311 (b)
14,900 Lamar Advertising Co. 609,969 (b)
7,960 Omnicom Group, Inc. 636,800
22,810 Outdoor Systems, Inc. 832,565 (b)
4,060 Time Warner, Inc. 298,410
10,050 Valassis Communications, Inc. 368,081 (b)
14,320 Young & Rubicam, Inc. 650,665
--------------
4,225,301
--------------
Mining & Metals - 0.7%
28,400 Bethlehem Steel Corp. 218,325 (b)
12,300 British Steel plc, ADR 320,569
20,200 Steel Dynamics, Inc. 312,469 (b)
10,200 USX-U.S. Steel Group, Inc. 275,400
--------------
1,126,763
--------------
Natural Gas - 0.2%
5,000 Consolidated Natural Gas Co. 303,750
--------------
Oil & Oil Service - 4.9%
10,400 Apache Corp. 405,600
18,400 Baker Hughes, Inc. 616,400
21,460 BJ Services Co. 631,729 (b)
8,400 Burlington Resources, Inc. 363,300
9,920 Devon Energy Corp. 354,640
7,700 Diamond Offshore Drilling, Inc. 218,488
39,220 ENSCO International, Inc. 781,949
47,020 Global Marine, Inc. 725,871 (b)
32,900 Nabors Industries, Inc. 803,994 (b)
8,850 Schlumberger, Ltd. 563,634
11,890 Smith International, Inc. 516,472 (b)
12,650 Tosco Corp. 328,109
14,770 USX-Marathon Group 480,948
14,840 Weatherford International, Inc. 543,515 (b)
--------------
7,334,649
--------------
Paper &
Forest Products - 0.3%
9,190 Bowwater, Inc. 434,228
--------------
Pollution Control - 0.9%
21,100 Allied Waste Industries, Inc. 416,725 (b)
18,400 Catalyca, Inc. 257,600 (b)
12,790 Waste Management, Inc. 687,463
--------------
1,361,788
--------------
Railroads - 0.3%
6,600 Kansas City Southern
Industries, Inc. 421,163
--------------
Restaurants - 0.9%
24,840 Darden Restaurants, Inc. 541,823
11,780 Outback Steakhouse, Inc. 463,101 (b)
6,750 Papa John's International, Inc. 301,641 (b)
--------------
1,306,565
--------------
Retail - 9.3%
17,040 Abercrombie & Fitch Co.,
Class A 817,920 (b)
1,600 Amazon.com, Inc. 200,200 (b)
6,500 AnnTaylor Stores, Inc. 292,500 (b)
15,400 Bed, Bath & Beyond, Inc. 592,900 (b)
12,800 Best Buy Co., Inc. 864,000 (b)
13,980 BJ's Wholesale Club, Inc. 420,274 (b)
12,880 Circuit City Stores, Inc. 1,197,840
8,000 Consolidated Stores Corp. 216,000 (b)
10,400 CVS Corp. 527,800
11,500 Dollar General Corp. 333,500
6,400 Dollar Tree Stores, Inc. 281,600 (b)
13,785 Ethan Allen Interiors, Inc. 520,384
43,100 Family Dollar Stores, Inc. 1,034,400
23,700 Furniture Brands
International, Inc. 660,638 (b)
6,150 Gap, Inc. 309,806
9,500 Great Atlantic & Pacific Tea, Inc. 321,219
5,640 Kohl's Corp. 435,338 (b)
20,780 Kroger Co. 580,541 (b)
7,118 Limited (The), Inc. 322,979
11,000 Linens 'N Things, Inc. 481,250 (b)
10,255 Men's (The) Wearhouse, Inc. 261,503 (b)
38,850 Office Depot, Inc. 857,128 (b)
12,950 Rent-A-Center, Inc. 310,800 (b)
9,890 Safeway, Inc. 489,555 (b)
5,650 Saks, Inc. 163,144 (b)
26,605 Staples, Inc. 823,092 (b)
21,070 TJX Companies, Inc. 701,894
--------------
14,018,205
--------------
Services - 7.5%
13,400 ACNielsen Corp. 405,350 (b)
21,490 Acxiom Corp. 535,907 (b)
21,600 Affiliated Computer
Services, Inc., Class A 1,093,500 (b)
7,200 Bisys (The) Group, Inc. 421,200 (b)
14,500 Ceridian Corp. 473,969 (b)
5,500 CheckFree Holdings Corp. 151,594 (b)
7,800 Cintas Corp. 524,063
14,300 Comdisco, Inc. 366,438
25,750 Concord EFS, Inc. 1,089,547 (b)
8,400 CSG System International, Inc. 219,975 (b)
2,500 DoubleClick, Inc. 229,375 (b)
9,000 DST Systems, Inc. 565,875 (b)
9,230 Equifax, Inc. 329,396
4,400 E*TRADE Group, Inc. 175,725 (b)
7,460 First Data Corp. 365,074
14,710 Fiserv, Inc. 460,607 (b)
12,400 Galileo International, Inc. 662,625
9,800 Gemstar International
Group, Ltd. 639,450 (b)
10,430 Getty Images, Inc. 196,866 (b)
5,600 Hertz Corp. 347,200
6,770 Interpublic Group of Cos., Inc. 586,451
10,980 ITT Educational Services, Inc. 286,166 (b)
18,930 Mettler-Toledo International, Inc. 469,701 (b)
13,100 Metzler Group, Inc. 361,888 (b)
12,870 Paychex, Inc. 410,231
--------------
11,368,173
--------------
Telecommunications
Equipment - 5.3%
25,860 ADC Telecommunications, Inc. 1,178,246 (b)
38,700 American Tower Corp. 928,800 (b)
14,600 CIENA Corp. 440,738 (b)
7,400 ECI Telecom, Ltd. 245,588
23,000 General Instrument Corp. 977,500 (b)
8,900 Global TeleSystems Group, Inc. 720,900 (b)
7,000 Level 3 Communications
Holdings Corp. 338,188 (b)
10,395 Lucent Technologies, Inc. 701,013
5,870 Motorola, Inc. 556,183
8,900 Newbridge Networks Corp. 255,875 (b)
14,400 Orckit Communications, Ltd. 356,400 (b)
12,600 Teleglobe, Inc. 374,850
7,460 Tellabs, Inc. 504,016 (b)
7,100 Terayon Communication
Systems, Inc. 396,713 (b)
--------------
7,975,010
--------------
Telephone &
Telecommunications - 3.9%
21,880 AT&T Corp./Liberty
Media Group, Class A 804,090 (b)
17,510 CenturyTel, Inc. 696,023
9,110 Cincinnati Bell, Inc. 227,181
7,000 Frontier Corp. 413,000
18,000 Intermedia Communications of
Florida, Inc. 540,000 (b)
3,300 MCI Worldcom, Inc. 284,006 (b)
10,100 McLeodUSA, Inc. 555,500 (b)
9,430 NEXTEL Communications, Inc.,
Class A 473,268 (b)
14,800 Qwest Communications
International, Inc. 489,325 (b)
9,300 RSL Communications, Ltd.,
Class A 179,606 (b)
655 TALK.com, Inc.,
Common Rights 0 (b)
13,100 US LEC Corp., Class A 294,750 (b)
17,270 VoiceStream Wireless Corp. 491,116 (b)
17,270 Western Wireless Corp., Class A 466,290 (b)
--------------
5,914,155
--------------
Textiles & Apparel - 1.0%
14,680 Jones Apparel Group, Inc. 503,708 (b)
10,200 Shaw Industries, Inc. 168,300
3,850 Tommy Hilfiger Corp. 282,975 (b)
8,320 Warnaco Group, Inc., Class A 222,560
11,500 WestPoint Stevens, Inc. 342,844
--------------
1,520,387
--------------
Transportation - 0.5%
7,200 CNF Transportation, Inc. 276,300
16,780 Expeditors International of
Washington, Inc. 457,255
--------------
733,555
--------------
Trucking - 0.4%
13,500 USFreightways Corp. 625,219
--------------
Total Common Stocks
(cost $129,145,525) 148,099,057
--------------
Principal
Amount Value
-------------- ------------
SHORT-TERM
SECURITIES - 2.0% (a)
U.S. Government Agency
$ 3,060,000 Federal Home Loan Bank
Discount Note, 4.49%,
Due 7/1/1999
(at amortized cost) 3,060,000
--------------
Total Investments
(cost $132,205,525) $151,159,057 (d)
==============
Notes to Portfolio of Investments:
(a) The categories of investments are shown as a percentage of total
investments of the Mid Cap 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, 1999.
(d) At June 30, 1999, the aggregate cost of securities for federal
income tax purposes was $132,205,525 and the net unrealized
appreciation of investments based on that cost was $18,953,532
which is comprised of $23,123,850 aggregate gross unrealized
appreciation and $4,170,318 aggregate gross unrealized depreciation.
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, 1999
(unaudited)
Shares Value
------------ ------------
<S> <C> <C>
ARGENTINA - 0.3% (a)
COMMON STOCKS
$ 13,592 Banco de Galicia Buenos
Aires 'B' ADR (USD) $ 275,238
10,799 Banco Frances del Rio de la
Plata ADR (USD) 205,181
22,830 Telefonica de Argentina
ADR (USD) 716,291
--------------
Total Argentina 1,196,710
--------------
AUSTRALIA - 2.1% (a)
COMMON STOCKS
70,109 Australia Gas & Light 425,916
25,000 Brambles Industries Ltd. 657,745
49,769 Broken Hill Proprietary Co. 575,746
262,549 Colonial Ltd. 928,535
73,084 Commonwealth
Bank of Australia 1,161,908
42,558 Lend Lease Corp. 583,562
106,531 News Corp. Ltd. 907,744
240,398 Telstra Corporation Ltd. 1,375,728
186,544 Westpac Banking 1,208,486
--------------
7,825,370
--------------
PREFERRED STOCKS
90,696 News Corp. Ltd 690,077
--------------
Total Australia 8,515,447
--------------
BELGIUM - 1.5% (a)
COMMON STOCKS
2,693 Credit Communal
Holding/Dexia 400,866
54,579 Fortis 'B' 1,713,202
55,020 Kredietbank 3,261,249
13,920 UCB SA 595,502 (b)
--------------
Total Belgium 5,970,819
--------------
BRAZIL - 1.6% (a)
COMMON STOCKS
1,030 Brazil Fund (USD) 15,193
23,490 Companhia Brasileira de
Distribuicao Grupo Pao de
Acucar ADS (USD) 438,969
391 Companhia Energetica Brasilia
ADR (USD) 8,211
25,513 Companhia Energetica Minas
Gerais ADR (USD) 535,773
51,011 Telecomunicacoes Brasilias
ADR (USD) 3,188
55,011 Telecomunicacues Brasilieras
SA ADR (USD) 4,961,305
15,000 Unibanco - Uniao de Bancos
Brasileiros SA GDR (USD) 360,938
--------------
Total Brazil 6,323,577
--------------
CANADA - 0.2% (a)
COMMON STOCKS
16,090 Alcan Aluminum 510,837
5,900 Royal Bank of Canada 260,441
--------------
Total Canada 771,278
--------------
CHILE (c)
COMMON STOCKS
8,522 Chilectra ADR (USD) 181,093
--------------
CHINA - 0.2% (a)
COMMON STOCKS
41,360 Huaneng Power International
'N' ADR (USD) 708,290
--------------
DENMARK - 0.3% (a)
COMMON STOCKS
5,244 Den Danske Bank 567,139
10,654 Teledanmark 522,936
4,510 Unidanmark 'A' 300,158
--------------
Total Denmark 1,390,233
--------------
FINLAND - 1.0% (a)
COMMON STOCKS
45,620 Nokia (AB) OY 3,997,328
--------------
FRANCE - 10.7% (a)
COMMON STOCKS
13,729 Alcatel Alsthom 1,931,822
23,970 AXA 2,923,132
11,550 Banque Nationale De Paris 962,031
20,766 Carrefour 3,050,446
10,250 Cie de St. Gobain 1,632,480
11,024 Credit Commercial de France 1,190,957
2,379 Credit Local de France 318,321
2,513 Dexia France 336,250
5,320 Groupe Danone 1,371,031
4,983 Lafarge Coppee 473,606
4,479 Legrand 911,431
1,334 L'Oreal 901,414
21,925 Pinault Printemps Redoute SA 3,760,872
67,636 Sanofi-Synthelabo 2,869,084
37,030 Schneider SA 2,078,486
7,823 Societe Generale 1,378,196
10,605 Societe Nationale Elf Aquitaine 1,555,647
15,738 Sodexho 2,709,328
22,250 ST Microelectronics 1,481,693
8,010 Television Francaise 1,866,107
31,089 Total 'B' 4,009,218
71,433 Vivendi 5,784,165
--------------
Total France 43,495,717
--------------
GERMANY - 6.3% (a)
COMMON STOCKS
6,530 Allianz AG 1,810,761
32,372 Bayer AG 1,348,176
44,856 Bayerische Vereinsbank AG 2,913,109
34,356 Deutsche Bank AG 2,094,850
42,095 Deutsche Telekom AG 1,766,121
44,617 Dresdner Bank AG 1,743,152
46,007 Gehe AG 2,115,214
12,240 Hoechst AG 553,913
28,540 Mannesmann AG 4,257,141
6,466 Rhoen Klinikum AG 643,219
5,210 SAP AG 1,761,599
12,653 Siemens AG 975,642
30,605 Veba AG 1,798,303
6,490 Volkswagon AG 415,463
--------------
24,196,663
--------------
PREFERRED STOCKS
1,200 Fielmann AG 44,409
1,450 Fresenius AG 256,347
2,684 SAP AG 1,072,136
--------------
1,372,892
--------------
Total Germany 25,569,555
--------------
HONG KONG - 2.5% (a)
COMMON STOCKS
110,000 Cheung Kong Holdings Ltd. 978,269
438,000 China Telecom Ltd. 1,216,573
49,000 Doa Heng Bank Ltd. 219,782
174,000 Henderson Land
Development Ltd. 1,000,232
42,400 Hong Kong Shanghai
Bank Holdings 1,546,568
241,200 Hong Kong
Telecommunications Ltd. 626,425
315,000 Hutchison Whampoa 2,852,158
220,000 New World Development
Co. Ltd. 659,268
93,000 Sun Hung Kai Properties Ltd. 848,059
--------------
Total Hong Kong 9,947,334
--------------
INDIA - 0.1% (a)
COMMON STOCKS
27,000 Mahanager Telephone
Nigam Ltd. GDR (USD) 274,050
--------------
IRELAND - 0.1% (a)
COMMON STOCKS
28,507 CBT Group plc ADR (USD) 470,366 (b)
--------------
ITALY - 4.8% (a)
COMMON STOCKS
46,560 Assicurazioni Generali Spa 1,612,679
233,000 Banca di Roma 335,062
47,000 Banca Popolare di Brescia 2,013,096
413,177 Credito Italiano Spa 1,814,435
388,491 Ente Nazionale Idrocarburi 2,318,756
123,477 Instituto Bancario
San Paolo di Torino 1,680,179
707,000 Istituto Nazionale
Delle Assicurazioni 1,639,825
71,600 Italgas Spa 300,402
121,645 Mediolanum Spa 934,213
217,200 Tecnost 535,123
557,400 Telecom Italia Mobile Spa 3,326,910
265,903 Telecom Italia Spa 2,762,990
--------------
Total Italy 19,273,670
--------------
JAPAN - 18.3% (a)
COMMON STOCKS
141,000 Canon 4,056,212
45,000 Citizen Watch Co. 390,593
77,000 Daiichi Pharmaceutical 1,195,387
98,000 Daiwa House Industry Co. 1,031,280
207 DDI Corp. 1,288,510
186 East Japan Railway 999,421
20,700 Fanuc Co. 1,112,259
71,000 Fujitsu Ltd. 1,429,156
170,000 Hitachi 1,595,024
12,000 Honda Motor Co. 508,886
22,000 Ito-Yokado Co. 1,473,092
84,000 Kao Corp. 2,360,916
44,000 Kokuyo Co. Ltd. 709,267
43,000 Komori Corp. 774,903
106,000 Kuraray Co. 1,275,820
37,000 Kyocera 2,171,613
56,000 Makita Corp. 633,744
115,000 Marui Co. Ltd. 1,901,298
157,000 Matsushita Electric Industrial Co. 3,049,930
92,000 Mitsubishi Corp. 623,626
490,000 Mitsubishi Heavy Industries Ltd. 1,988,840
246,000 Mitsui Fudosan 1,992,891
55,000 Murata Manufacturing 3,619,079
269,000 NEC Corp. 3,346,656
142,000 Nippon Denso Corp. 2,887,658
320 Nippon Telegraph &
Telecom Corp. 3,729,850
167,000 Nomura Securities Co. Ltd. 1,956,179
36 NTT Mobile Communication
Network, Inc. 488,055
144 NTT Mobile Communications 1,928,412
116,000 Sankyo Co. 2,924,692
147,000 Sekisui Chemical Co. Ltd. 853,054
90,000 Sekisui House 971,646
11,000 Seven-Eleven Japan Co. Ltd. 1,078,449
56,300 Shin-Etsu Chemical Co. Ltd. 1,884,889
62,000 Shiseido Co. Ltd. 929,718
39,700 Sony Corp. 4,282,756
199,000 Sumitomo Corp. 1,455,857
209,000 Sumitomo Electric
Industries Ltd. 2,377,317
35,000 TDK Corp. 3,202,860
47,000 Tokio Marine & Fire
Insurance Co. 510,912
14,900 Tokyo Electronics 1,011,234
87,000 Toppan Printing 971,621
60,000 Toshiba Corp 428,040
47,000 Uny Co. 707,117
--------------
Total Japan 74,108,719
--------------
LUXEMBOURG - 0.1%
COMMON STOCKS
1,800 Societe Europeenne
des Satellites 266,269
--------------
MEXICO - 1.5% (a)
COMMON STOCKS
75,000 Cementos de Mexico
ADS (USD) 735,938
47,850 Cemex 'B' 236,941
75,904 Gruma 'B' 127,164 (b)
21,039 Gruma SA ADR (USD) 142,013
240,062 Grupo Industrial Maseca 'B' 142,546
17,500 Grupo Televisa GDR (USD) 784,219 (b)
110,408 Kimberly-Clark Mexico 'A' 454,229
41,435 Telefonos de Mexico 'L'
ADS (USD) 3,348,466
20,700 TV Azteca SA ADS (USD) 107,381
--------------
Total Mexico 6,078,897
--------------
NETHERLANDS - 9.7% (a)
COMMON STOCKS
85,636 ABN Amro Holdings NV 1,853,836
9,160 Akzo Nobel NV 385,258
43,390 ASM Lithography Holdings NV 2,509,274 (b)
197,000 CLP Holdings Ltd. 957,247
33,699 CSM 1,683,086
145,629 Elsevier 1,688,869
6,960 Equant NV 641,420 (b)
78,850 Fortis (NL) NV 2,434,412
18,040 Gucci Group NV (USD) 1,262,800
104,432 ING Groep NV 5,651,822
70,794 Koninklijke Ahold NV 2,437,466
11,730 Koninklijke KPN NV 550,180
23,320 Koninklijke Numico NV 825,754
30,680 Philips Electronics NV 3,025,073
53,928 Royal Dutch Petroleum Co. 3,157,608
8,490 TNT Post Groep NV 202,607
26,662 Unilever NV 1,796,114
30,490 VNU NV 1,217,937
170,788 Wolters Kluwer 6,795,795
--------------
Total Netherlands 39,076,558
--------------
NEW ZEALAND - 0.2% (a)
COMMON STOCKS
209,000 Telecom Corp. of New Zealand 896,306
--------------
NORWAY - 0.9% (a)
COMMON STOCKS
5,570 Bergesen 'A' 81,990
33,904 Norsk Hydro 1,277,773
134,010 Orkla 'A' ASA 2,083,145
--------------
Total Norway 3,442,908
--------------
PORTUGAL - 0.5% (a)
COMMON STOCKS
63,553 Jeronimo Martins 2,098,401
--------------
RUSSIA (c)
COMMON STOCKS
13,070 Gazprom ADS (USD) 147,038
--------------
SINGAPORE - 0.5% (a)
COMMON STOCKS
35,416 Singapore Press Holdings Ltd. 603,445
177,000 United Overseas Bank 1,237,544
--------------
Total Singapore 1,840,989
--------------
SOUTH KOREA - 0.4% (a)
COMMON STOCKS
53,991 Korea Equity Fund (USD) 803,116
25,000 Korea Telecom 1,000,000 (b)
--------------
Total South Korea 1,803,116
--------------
SPAIN - 3.2% (a)
COMMON STOCKS
44,990 Banco Bilboa Vizcaya SA 649,755
6,820 Banco Popular ESpanol SA 490,370
190,262 Banco Santander
Central Hispano 1,980,929
40,178 Corporacion Bancaria de
Espana SA 913,256
66,404 Endesa SA 1,415,599
11,276 Gas Natural SDG SA 819,483
94,880 Iberdrola 1,443,632
44,965 Repsol SA 924,726
87,128 Telefonica de Espana 4,206,080
--------------
Total Spain 12,843,830
--------------
SWEDEN - 3.5% (a)
COMMON STOCKS
94,179 Astrazeneca 3,672,193
40,060 Atlas Copco AB 'B' 1,075,943
115,145 Electrolux AB 'B' 2,414,396
7,770 Esselte 'B' 80,547
6,582 Granges AB 111,651
155,720 Hennes & Mauritz AB 3,852,185
7,770 Meto AG 38,534 (b)
325,121 Nordbanken Holding AB 1,903,465
35,380 Sandvik AB 'B' 783,536
28,418 Securitas AB 425,149
--------------
Total Sweden 14,357,599
--------------
SWITZERLAND - 6.9% (a)
COMMON STOCKS
11,509 ABB Ltd. 1,077,789
21,397 ABB AG 2,015,748
5,447 Adecco SA 2,917,723
10,720 Credit Suisse Group 1,854,337
3,565 Nestle SA 6,421,172
3,448 Novartis AG 5,033,091
364 Roche Holdings AG 3,740,415
1,542 Swisscom AG 580,072
14,688 UBS AG 4,382,504
--------------
Total Switzerland 28,022,851
--------------
UNITED KINGDOM - 17.1% (a)
COMMON STOCKS
120,000 Abbey National 2,253,723
421,000 ASDA Group 1,443,333
132,764 BG plc 809,872
111,000 BP Amoco (USD) 1,987,589
274,000 Cable & Wireless 3,494,011
457,450 Cadbury Schweppes 2,919,482
320,800 Caradon plc 755,963
55,800 Centrica 131,053
294,000 Compass Group plc 2,917,214
114,000 David S. Smith 266,843
103,000 Electrocomponents 758,192
38,000 GKN plc 648,690
191,500 Glaxo Wellcome 5,321,650
34,000 Hays 358,534
58,000 John Laing 'A' 287,295
468,000 Kingfisher 5,461,157
435,000 National Westminster Bank 9,222,247
90,000 Rank Group plc 358,203
508,000 Reed International plc 3,379,102
84,000 Rolls Royce 354,845
140,000 RTZ 2,345,776
240,000 Safeway plc 957,099
992,000 Shell Transport & Trading Co. 7,442,928
591,400 SmithKline Beecham plc 7,690,604
723,000 Tesco 1,874,690
508,008 Tomkins 2,202,056
207,642 Unilever 1,842,675
202,000 United News & Media 1,942,255
--------------
Total United Kingdom 69,427,081
--------------
Principal
Amount Value
- -------------- ------------
SHORT TERM
SECURITIES - 5.5% (a)
Commercial Paper
$ 1,900,000 Edison Asset Securitization,
5.03%, Due 7/1/1999 $ 1,900,000
1,458,000 Enterprise Funding Corp.,
5.08%, Due 7/12/1999 1,455,737
2,000,000 General Electric Capital Corp.,
5.25%, Due 7/6/1999 1,998,542
17,000,000 New Center Asset Trust,
5.50%, Due 7/1/1999 17,000,000
--------------
Total Short-Term Securities
(at amortized cost) 22,354,279
--------------
Total Investments $404,850,308 (e)
==============
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) The market value of the denoted categories on investments represents
less than 0.1% of the total investments of the World Growth Portfolio.
(d) Security Classification:
% of
Cost Value Portfolio
---------------- --------------- ------------
Common Stocks
& Warrants $ 319,402,427 $380,433,060 94.0%
Preferred Stocks 1,938,148 2,062,969 0.5%
Short-Term 22,354,279 22,354,279 5.5%
-------------- ---------------- --------
Total Investments $ 343,694,854 $404,850,308 100.0%
============== ================ ========
(e) At June 30, 1999, the aggregate cost of securities for federal income
tax purposes was $343,694,854 and the net unrealized appreciation of
investments based on that cost was $61,155,454 which is comprised of
$77,832,663 aggregate gross unrealized appreciation and $16,677,209
aggregate gross unrealized depreciation.
(f) Miscellaneous Footnotes:
(ADR) - American Depository Receipts
(ADS) - American Depository Shares
(GDR) - Global Depository Receipts
(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, 1999
(unaudited)
Shares Value
------------ ------------
<S> <C> <C>
COMMON STOCKS - 98.0% (a)
Aerospace - 0.2%
200,000 Boeing Co. $ 8,837,475
--------------
Airlines - 0.4%
135,000 Delta Air Lines, Inc. 7,779,375
204,900 Southwest Airlines Co. 6,377,513
--------------
14,156,888
--------------
Automotive - 1.3%
225,000 Ford Motor Co. 12,698,438
155,500 General Motors Corp. 10,263,000
195,000 General Motors Corp., Class H 10,968,750 (b)
100,000 SPX Corp. 8,350,000 (b)
350,000 Tower Automotive, Inc. 8,903,125 (b)
--------------
51,183,313
--------------
Bank & Finance - 13.0%
216,300 Ace, Ltd. 6,110,475
215,000 American Express Co. 27,976,875
425,000 American International
Group, Inc. 49,751,563
313,700 Associates First Capital Corp.,
Class A 13,900,831
425,000 Bank of America Corp. 31,157,813
523,300 Bank of New York Co., Inc. 19,198,569
105,900 Bank United Corp. 4,255,856
307,300 BankBoston Corp. 15,710,713
2,500 Berkshire Hathaway, Inc.,
Class B 5,600,000 (b)
365,000 Chase Manhattan Corp. 31,618,125
638,600 Citigroup, Inc. 30,333,500
200,000 Compass Bancshares, Inc. 5,450,000
105,000 Donaldson, Lufkin &
Jenrette, Inc. 6,326,250
332,523 Equity Office Properties Trust 8,520,902
463,000 Federal Home Loan
Mortgage Corp. 26,854,000
289,900 Federal National
Mortgage Association 19,821,913
204,500 Golden State Bancorp, Inc. 4,499,000 (b)
105,900 Hambrecht & Quist Group 3,931,538 (b)
425,000 Hibernia Corp., Class A 6,667,188
230,000 Knight/Trimark Group, Inc.,
Class A 13,871,875 (b)
200,000 Lehman Brothers Holdings, Inc. 12,450,000
889,900 MBNA Corp. 27,253,188
480,000 Mellon Bank Corp. 17,460,000
273,000 Mercantile Bancorporation, Inc. 15,595,125
215,000 Merrill Lynch & Co., Inc. 17,186,563
100,000 Morgan Stanley
Dean Witter & Co. 10,250,000
148,743 Provident Bankshares
Corporation 3,458,275
165,000 Providian Financial Corp. 15,427,500
135,000 Schwab, Charles Corp. 14,833,125
85,000 Standard & Poor's
Depositary Receipts Trust 11,645,000
169,600 State Street Corp. 14,479,600
225,400 Summit Bancorp 9,424,538
140,000 UNUM Corp. 7,665,000
250,000 U.S. Bancorp 8,500,000
--------------
517,184,900
--------------
Broadcasting - 2.0%
300,000 CBS Corp. 13,031,250
235,000 Chancellor Media Corp. 12,954,375 (b)
465,900 Clear Channel
Communications, Inc. 32,117,981 (b)
372,100 Fox Entertainment Group, Inc. 10,023,444 (b)
292,000 TV Azteca, S.A. de C.V., ADR 1,514,750
273,200 USA Networks, Inc. 10,962,150 (b)
--------------
80,603,950
--------------
Building Materials - 0.2%
237,700 Masco Corp. 6,863,588
--------------
Chemicals - 1.0%
243,300 Air Products & Chemicals, Inc. 9,792,825
215,000 E.I. du Pont de
Nemours and Co. 14,687,188
375,000 Lyondell Petrochemical Co. 7,734,375
180,000 Monsanto Co. 7,098,750
--------------
39,313,138
--------------
Computer Software - 7.1%
190,600 AboveNet
Communications, Inc. 7,695,475 (b)
144,200 AppliedTheory Corp. 1,838,550 (b)
65,300 Aware, Inc. 3,011,963 (b)
220,000 BMC Software, Inc. 11,880,000 (b)
289,000 Citrix Systems, Inc. 16,328,500 (b)
126,800 Computer Associates
International, Inc. 6,974,000
600,100 Compuware Corp. 19,090,681 (b)
160,000 Concentric Network Corp. 6,360,000 (b)
186,800 Electronic Arts, Inc. 10,133,900 (b)
37,000 Extreme Networks, Inc. 2,148,313 (b)
600,600 Informix Corp. 5,123,869 (b)
110,000 Infoseek Corp. 5,273,125 (b)
133,300 Intuit, Inc. 12,013,663 (b)
133,400 Macromedia, Inc. 4,702,350 (b)
57,800 MarketWatch.com, Inc. 3,402,975 (b)
1,000,000 Microsoft Corp. 90,187,500 (b)
130,000 MindSpring Enterprises, Inc. 5,760,625 (b)
50,000 Net Perceptions, Inc. 1,090,625 (b)
570,000 Network Associates, Inc. 8,371,875 (b)
682,200 Novell, Inc. 18,078,300 (b)
300,000 Oracle Corp. 11,137,500 (b)
575,000 Parametric Technology Corp. 7,978,125 (b)
256,400 Peregrine Systems, Inc. 6,586,275 (b)
18,000 Sagent Technology, Inc. 155,250 (b)
66,700 Siebel Systems, Inc. 4,427,213 (b)
129,900 Verity, Inc. 7,038,956 (b)
261,300 Viasoft, Inc. 914,550 (b)
30,000 Yahoo!, Inc. 5,167,500 (b)
--------------
282,871,658
--------------
Computers & Office
Equipment - 8.8%
153,700 3Com Corp. 4,101,869 (b)
252,000 Cabletron Systems, Inc. 3,276,000 (b)
1,600,000 Cisco Systems, Inc. 103,200,000 (b)
153,300 Compaq Computer Corp. 3,631,294
375,000 Dell Computer Corp. 13,875,000 (b)
510,000 EMC Corp. 28,050,000 (b)
110,000 Gateway, Inc. 6,490,000 (b)
100,000 Hewlett Packard Co. 10,050,000
370,000 International Business
Machines Corp. 47,822,500
185,000 Lexmark International Group,
Inc., Class A 12,221,563 (b)
103,400 Lycos, Inc. 9,499,875 (b)
203,300 Pitney Bowes, Inc. 13,062,025
130,000 Seagate Technology, Inc. 3,331,250 (b)
303,000 Storage Technology Corp. 6,893,250 (b)
535,000 Sun Microsystems, Inc. 36,848,125 (b)
165,000 Texas Instruments, Inc. 23,925,000
91,500 Verio, Inc. 6,359,250 (b)
332,200 Xerox Corp. 19,620,563
--------------
352,257,564
--------------
Conglomerates - 3.8%
240,000 AlliedSignal, Inc. 15,120,000
553,700 General Electric Co. 62,568,100
722,400 Tyco International, Ltd. 68,447,400
300,000 U.S. Industries, Inc. 5,100,000
--------------
151,235,500
--------------
Construction &
Home Building - 0.3%
250,000 Kaufman & Broad Home Corp. 6,218,750
260,800 Pulte Corp. 6,014,700
--------------
12,233,450
--------------
Drugs & Health
Care - 9.8%
250,000 Abbott Laboratories 11,375,000
380,000 American Home Products Corp. 21,850,000
323,400 Amgen, Inc. 19,686,975
188,000 Baxter International, Inc. 11,397,500
355,400 Becton, Dickinson & Co. 10,662,000
280,000 Biogen, Inc. 18,007,500 (b)
211,400 Biomet, Inc. 8,403,150
565,000 Bristol-Myers Squibb Co. 39,797,188
70,000 Cardinal Health, Inc. 4,488,750
200,000 Centocor, Inc. 9,325,000 (b)
238,800 Eli Lilly & Co. 17,104,050
150,000 Forest Laboratories, Inc. 6,937,500 (b)
116,700 Genzyme Corp. 5,659,950 (b)
20,890 Genzyme Surgical Products Co. 92,049 (b)
190,000 Guidant Corp. 9,773,125
230,400 Johnson & Johnson 22,579,200
185,800 Mallinckrodt, Inc. 6,758,475
148,300 MedImmune, Inc. 10,047,325 (b)
333,900 Medtronic, Inc. 26,002,463
525,200 Merck & Co., Inc. 38,864,800
62,500 Miravant Medical Technologies 445,313 (b)
329,500 Pfizer, Inc. 36,162,625
175,000 Rite Aid Corp. 4,309,375
420,000 Schering-Plough Corp. 22,260,000
140,000 Smithkline Beecham plc, ADR 9,248,750
190,800 Teva Pharmaceutical
Industries, Ltd., ADR 9,349,200
175,000 Warner-Lambert Co. 12,140,625
--------------
392,727,888
--------------
Electronic Equipment - 6.9%
201,200 Altera Corp. 7,406,675 (b)
280,200 Analog Devices, Inc. 14,062,538 (b)
258,200 Applied Materials, Inc. 19,074,525 (b)
135,000 Celestica, Inc. 5,847,188 (b)
200,000 Excel Switching Corp. 5,987,500 (b)
150,000 Honeywell, Inc. 17,381,250
785,000 Intel Corp. 46,707,500
143,300 Jabil Circuit, Inc. 6,466,413 (b)
50,000 KLA Instruments Corp. 3,243,750 (b)
88,664 Koninklijke (Royal) Philips
Electronics NV, ADR 8,943,981
175,000 LAM Research Corp. 8,170,313 (b)
230,600 Linear Technology Corp. 15,507,850
161,700 Microchip Technology, Inc. 7,660,538 (b)
180,000 National Semiconductor Corp. 4,556,250 (b)
243,300 Novellus Systems, Inc. 16,605,225 (b)
200,000 Sanmina Corp. 15,175,000 (b)
193,300 SCI Systems, Inc. 9,181,750 (b)
246,700 Symbol Technologies, Inc. 9,097,063
380,000 Unisys Corp. 14,796,250 (b)
164,300 Vishay Intertechnology, Inc. 3,450,300 (b)
200,000 Whirlpool Corp. 14,800,000
347,600 Xilinx, Inc. 19,900,100 (b)
--------------
274,021,959
--------------
Food & Beverage - 1.2%
210,000 Coca-Cola Co. 13,125,000
395,400 International Home Foods, Inc. 7,290,188 (b)
127,800 Nabisco Holdings, Inc.,
Class A 5,527,350
264,400 PepsiCo, Inc. 10,228,975
214,000 Suiza Foods Corp. 8,961,250 (b)
83,800 U.S. Foodservice 3,571,975 (b)
--------------
48,704,738
--------------
Healthcare Management - 0.6%
127,600 Capital Senior Living Corp. 1,276,000 (b)
465,000 Oxford Health Plans, Inc. 7,236,563 (b)
40,000 PacifiCare Health
Systems, Inc., Class A 2,877,500 (b)
60,000 PacifiCare Health
Systems, Inc., Class B 4,316,250 (b)
592,200 Total Renal Care Holdings, Inc. 9,216,113 (b)
--------------
24,922,426
--------------
Hospital Management - 0.1%
50,000 Wellpoint Health Networks, Inc.,
Class A 4,243,750
--------------
Household Products - 0.9%
150,000 Colgate Palmolive Co. 14,812,500
205,500 Dial Corp. 7,642,031
150,000 Procter & Gamble Co. 13,387,500
--------------
35,842,031
--------------
Internet Service - 1.8%
450,000 America Online, Inc. 49,725,000
395,186 At Home Corp., Series A 21,315,345 (b)
--------------
71,040,345
--------------
Leisure &
Entertainment - 1.5%
103,700 American Skiing Co. 421,281 (b)
325,000 Carnival Corp., Inc. 15,762,500
353,700 Disney (Walt) Co. 10,898,381
444,000 Mattel, Inc. 11,738,250
306,500 Premier Parks, Inc. 11,263,875 (b)
50,000 Royal Caribbean Cruises, Ltd. 2,187,500
215,000 Viacom, Inc., Class B 9,460,000 (b)
--------------
61,731,787
--------------
Machinery &
Equipment - 0.7%
500,000 AGCO Corp. 5,656,250
301,700 Black & Decker Corp. 19,044,813
44,000 PACCAR, Inc. 2,348,500
--------------
27,049,563
--------------
Media - 3.0%
160,000 Cablevision Systems Corp.,
Class A 11,200,000 (b)
325,000 MediaOne Group, Inc. 24,171,875 (b)
255,200 MediaOne Group, Inc.
(Airtouch Communications,
Premium Income
Exchangeable Security) 23,095,600
372,800 Outdoor Systems, Inc. 13,607,200 (b)
500,000 Time Warner, Inc. 36,750,000
240,800 Young & Rubicam, Inc. 10,941,350
--------------
119,766,025
--------------
Mining & Metals - 0.1%
153,300 USX-U.S. Steel Group, Inc. 4,139,100
--------------
Oil & Oil Service - 4.1%
225,000 Burlington Resources, Inc. 9,731,250
153,400 Chevron Corp. 14,601,763
175,000 Coastal Corp. 7,000,000
525,000 Halliburton Co. 23,756,250
317,800 McDermott International, Inc. 8,977,850
215,000 Mobil Corp. 21,285,000
296,300 Royal Dutch Petroleum Co. 17,852,075
568,900 R&B Falcon Corp. 5,333,438 (b)
475,100 Santa Fe Snyder Corp. 3,622,638 (b)
210,000 Schlumberger, Ltd. 13,374,375
175,000 Smith International, Inc. 7,601,563 (b)
165,000 Texaco, Inc. 10,312,500
245,000 Transocean Offshore, Inc. 6,431,250
259,200 USX-Marathon Group 8,440,200
185,100 Weatherford International, Inc. 6,779,288 (b)
--------------
165,099,440
--------------
Paper & Forest
Products - 0.4%
524,600 Asia Pulp & Paper Co.,
Ltd., ADR 5,049,275 (b)
70,300 Temple Inland, Inc. 4,797,975
130,600 Willamette Industries, Inc. 6,015,763
--------------
15,863,013
--------------
Pollution Control - 0.8%
420,000 Republic Services, Inc., Class A 10,395,000 (b)
383,000 Waste Management, Inc. 20,586,250
--------------
30,981,250
--------------
Real Estate Investment
Trust - 0.1%
157,000 Glimcher Realty Trust 2,551,250
--------------
Restaurants - 0.8%
443,900 Buffets, Inc. 5,104,850 (b)
687,200 McDonald's Corp. 28,389,950
--------------
33,494,800
--------------
Retail - 10.2%
400,000 Abercrombie & Fitch Co.,
Class A 19,200,000 (b)
171,100 American Eagle Outfitters, Inc. 7,785,050 (b)
100,000 AnnTaylor Stores, Inc. 4,500,000 (b)
165,000 Best Buy Co., Inc. 11,137,500 (b)
260,000 Circuit City Stores, Inc. 24,180,000
225,000 Costco Companies, Inc. 18,014,063 (b)
485,000 CVS Corp. 24,613,750
257,400 Dayton Hudson Corp. 16,731,000
287,250 Dollar General Corp. 8,330,250
331,500 Family Dollar Stores, Inc. 7,956,000
23,800 GoTo.com, Inc. 666,400 (b)
140,000 Great Atlantic &
Pacific Tea, Inc. 4,733,750
216,900 Hasbro, Inc. 6,059,644
650,000 Home Depot, Inc. 41,884,375
138,390 Intimate Brands, Inc. 6,556,226
618,000 Kmart Corp. 10,158,375 (b)
205,000 Kohl's Corp. 15,823,438 (b)
1,120,000 Kroger Co. 31,290,000 (b)
325,000 Lowe's Companies 18,423,438
163,000 Men's (The) Wearhouse, Inc. 4,156,500 (b)
152,400 Office Depot, Inc. 3,362,325 (b)
800,000 PetsMart, Inc. 8,200,000 (b)
146,800 Ross Stores, Inc. 7,395,050
470,000 Safeway, Inc. 23,265,000 (b)
330,200 Staples, Inc. 10,215,563 (b)
186,500 Streamline.com, Inc. 1,503,656 (b)
103,600 Tandy Corp. 5,063,450
110,000 Ticketmaster Online-City
Search, Class B 3,327,500 (b)
443,700 TJX Companies, Inc. 14,780,756
725,000 Wal-Mart Stores, Inc. 34,981,250
200,000 Williams-Sonoma, Inc. 6,962,500 (b)
150,000 Zale Corp. 6,000,000 (b)
88,500 Zany Brainy, Inc. 857,344 (b)
--------------
408,114,153
--------------
Services - 3.3%
139,700 Block (H & R), Inc. 6,985,000
927,800 Cendant Corp. 19,019,900 (b)
97,100 Ceridian Corp. 3,173,956 (b)
150,000 Computer Sciences Corp. 10,378,125
301,700 Concord EFS, Inc. 12,765,681 (b)
150,000 Electronic Data Systems Corp. 8,484,375
271,800 Fiserv, Inc. 8,510,738 (b)
343,000 Galileo International, Inc. 18,329,063
185,000 Interpublic Group of Cos., Inc. 16,025,625
175,000 NCO Group, Inc. 6,650,000 (b)
213,900 NetGravity, Inc. 4,866,225 (b)
100,000 Omnicom Group, Inc. 8,000,000
46,300 US Web Corp. 1,027,281 (b)
281,100 WESCO International, Inc. 5,762,550 (b)
--------------
129,978,519
--------------
Telecommunications
Equipment - 5.5%
200,000 ADC Telecommunications, Inc. 9,112,500 (b)
299,000 American Tower Corp. 7,176,000 (b)
196,600 ANTEC Corp. 6,303,488 (b)
425,000 General Instrument Corp. 18,062,500 (b)
175,200 Level 3 Communications
Holdings Corp. 8,464,350 (b)
680,000 Lucent Technologies, Inc. 45,857,500
450,000 Motorola, Inc. 42,637,500
248,300 Newbridge Networks Corp. 7,138,625 (b)
250,000 Nokia Corp., ADR 22,890,625
140,000 Nortel Networks Corp. 12,153,750
560,000 Tellabs, Inc. 37,835,000 (b)
--------------
217,631,838
--------------
Telephone &
Telecommunications - 7.7%
92,400 Adelphia Communications Corp. 5,878,950 (b)
125,000 ALLTEL Corp. 8,937,500
275,000 Ameritech Corp. 20,212,500
822,500 AT&T Corp. 45,905,781
922,008 AT&T Corp./Liberty
Media Group, Class A 33,883,794 (b)
295,000 Bell Atlantic Corp. 19,285,625
158,900 Cable & Wireless plc, ADR 6,296,413
317,700 Intermedia Communications of
Florida, Inc. 9,531,000 (b)
725,000 MCI Worldcom, Inc. 62,395,313 (b)
327,500 MobileMedia Corp., Class A 33 (b)
358,300 NEXTEL Communications, Inc.,
Class A 17,982,181 (b)
330,000 Qwest Communications
International, Inc. 10,910,625 (b)
298,700 SBC Communications, Inc. 17,324,600
200,000 Sprint Corp. (FON Group) 10,562,500
180,000 Sprint Corp. (PCS Group) 10,282,500 (b)
145,000 Telecomunicacoes
Brasileiras S.A., ADR 13,077,188
145,000 Telecomunicacoes
Brasileiras S.A.
Telebras, ADR 9,063 (b)
93,100 Time Warner Telecom, Inc. 2,699,900 (b)
41,350 Vodafone Group plc 8,145,950
197,000 Ziff-Davis, Inc. 3,041,188 (b)
--------------
306,362,604
--------------
Textiles & Apparel - 0.4%
110,000 NIKE, Inc., Class B 6,964,375
146,000 Tommy Hilfiger Corp. 10,731,000 (b)
--------------
17,695,375
--------------
Total Common Stocks
(cost $3,089,605,734) 3,908,703,278
--------------
Principal
Amount Value
- -------------- ------------
SHORT-TERM
SECURITIES - 2.0% (a)
Commercial Paper
$ 250,000 Abbott Laboratories, Inc.,
4.86%, Due 7/9/1999 $ 249,730
24,200,000 Block Financial Corp., 5.55%,
Due 7/1/1999 24,200,000
8,500,000 Cargill, Inc., 5.7%
Due 7/1/1999 8,500,000
10,000,000 Colgate-Palmolive Co., 4.94%,
Due 7/7/1999 9,991,767
10,000,000 Commercial Credit Co.,
4.98%, Due 7/14/1999 9,982,017
10,000,000 Ford Motor Credit Corp.,
5.65%, Due 7/1/1999 10,000,000
16,300,000 Warner-Lambert Co., 5.7%,
Due 7/1/1999 16,300,000
--------------
Total Commercial Paper
(at amortized cost) 79,223,514
--------------
Total Common Stocks
(cost $3,168,829,248) $3,987,926,792 (c)
==============
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) At June 30, 1999, the aggregate cost of securities for federal
income tax purposes was $3,168,829,248 and the net unrealized
appreciation of investments based on that cost was $819,097,544
which is comprised of $879,256,530 aggregate gross unrealized
appreciation and $60,158,986 aggregate gross unrealized depreciation.
(d) Miscellaneous Footnotes:
(ADR) - American Depository Receipts
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB Series Fund, Inc.
High Yield Portfolio
Portfolio of Investments
June 30, 1999
(unaudited)
Principal Maturity
Amount Rate Date Value
------------- ---------- --------- -------------
<S> <C> <C> <C> <C>
CORPORATE BONDS - 81.1% (a)
Aerospace - 0.7%
$ 4,800,000 Condor Systems, Inc., Notes 11.875% 5/1/2009 $ 4,655,995
2,400,000 Sabreliner Corp., Sr. Notes 11.0% 6/15/2008 2,088,000
3,600,000 Sequa Corp., Sr. Subordinated Notes 9.375% 12/15/2003 3,636,000
--------------
10,379,995
--------------
Airlines - 0.8%
4,000,000 Northwest Airlines, Corp., Notes 8.375% 3/15/2004 3,960,728
4,500,000 Northwest Airlines, Corp., Sr. Notes 7.625% 3/15/2005 4,140,000
3,000,000 U.S. Air, Inc., Sr. Secured Equipment Trust, Series 1993-A-3 10.375% 3/1/2013 3,269,556
--------------
11,370,284
--------------
Automotive - 1.1%
3,000,000 Dura Operating Corp., Sr. Subordinated Notes 9.0% 5/1/2009 2,880,000
4,000,000 Group1 Automotive, Inc., Sr. Subordinated Notes 10.875% 3/1/2009 3,920,000
2,500,000 JL French Automotive Casting, Sr. Subordinated Notes 11.5% 6/1/2009 2,562,500
3,250,000 Venture Holdings Trust, Sr. Notes 11.0% 6/1/2007 3,298,750
3,250,000 Venture Holdings Trust, Sr. Subordinated Notes 12.0% 6/1/2009 3,290,625
--------------
15,951,875
--------------
Bank & Finance - 4.8%
8,400,000 Altiva Financial Corp., Subordinated Notes 12.5% 12/1/2001 4,494,000
3,550,000 Chevy Chase Savings Bank, Subordinated Debentures 9.25% 12/1/2005 3,603,250
6,000,000 Dollar Financial Group, Inc., Sr. Notes, Series A 10.875% 11/15/2006 5,970,000
4,200,000 FC CBO II, Ltd., Subordinated Debentures, Series 1A, Class C 11.05% 9/9/2010 3,906,000
8,000,000 GS Escrow Corp., Sr. Notes 7.125% 8/1/2005 7,714,352
3,896,000 HomeSide, Inc., Sr. Notes, Series B 11.25% 5/15/2003 4,451,180
4,250,000 Metris Companies, Inc., Sr. Notes 10.0% 11/1/2004 4,186,250
4,800,000 Riggs Capital Trust II, Trust Preferred Securities 8.875% 3/15/2027 4,730,822
9,000,000 SIG Capital Trust I, Bond 9.5% 8/15/2027 6,750,000
3,000,000 United Companies Financial Corp., Sr. Notes 9.35% 11/1/1999 975,000 (c)
10,060,000 United Companies Financial Corp., Subordinated Notes 8.375% 7/1/2005 955,700 (c)
3,000,000 Veritas Capital Trust, Trust Preferred Securities 10.0% 1/1/2028 2,400,000
5,070,000 Veritas Holdings GMBH, Sr. Notes 9.625% 12/15/2003 4,993,950
7,500,000 Williams Scotsman, Inc., Sr. Notes 9.875% 6/1/2007 7,462,500
5,000,000 Willis Corroon Corp., Sr. Subordinated Notes 9.0% 2/1/2009 4,843,750
6,500,000 Wilshire Financial Services Group, Inc., Notes 13.0% 1/1/2004 1,982,500 (c)
3,500,000 Wilshire Financial Services Group, Inc., Notes, Series B 13.0% 8/15/2004 1,067,500 (c)
--------------
70,486,754
--------------
Broadcasting - 12.1%
6,300,000 Adelphia Communications Corp., Sr. Debentures 11.875% 9/15/2004 6,654,375
1,772,380 American Telecasting, Inc., Sr. Discount Notes Zero Coupon 6/15/2004 1,869,861
2,542,728 American Telecasting, Inc., Sr. Discount Notes, Series B Zero Coupon 8/15/2005 2,428,305
3,600,000 Australis Holdings Pty., Ltd., Sr. Discount Notes Zero Coupon 11/1/2002 36,000 (c)
24,594,230 Australis Media, Ltd., Payment-In-Kind Sr. Discount Notes Zero Coupon 5/15/2003 368,913 (c)
13,000,000 Avalon Cable Holdings, LLP, Sr. Discount Notes Zero Coupon 12/1/2008 8,677,500
6,600,000 Bresnan Communications Group, Sr. Discount Notes Zero Coupon 2/1/2009 4,323,000
2,000,000 Chancellor Media Corp., Sr. Notes 8.0% 11/1/2008 1,970,000
3,600,000 Chancellor Media Corp., Sr. Subordinated Notes 8.125% 12/15/2007 3,492,000
2,100,000 Chancellor Media Corp., Sr. Subordinated Notes, Series B 8.75% 6/15/2007 2,102,625
6,200,000 Charter Communications Holdings, Inc., Sr. Notes 9.625% 4/1/2009 5,983,000
2,600,000 Classic Cable, Inc., Sr. Subordinated Notes 9.875% 8/1/2008 2,697,500
6,000,000 Classic Communications, Inc., Sr. Discount Notes Zero Coupon 8/1/2009 4,080,000
3,000,000 CSC Holdings, Inc., Sr. Notes 7.875% 12/15/2007 3,022,500
6,500,000 Diamond Cable Communications plc, Sr. Discount Notes (USD) Zero Coupon 12/15/2005 5,882,500
2,400,000 Diamond Cable Communications plc, Sr. Discount Notes (USD) Zero Coupon 2/15/2007 1,860,000
12,000,000 DIVA Systems Corp., Sr. Discount Notes, Series B Zero Coupon 3/1/2008 3,525,000
7,400,000 EchoStar DBS Corp., Sr. Notes 9.375% 2/1/2009 7,566,500
2,400,000 Emmis Communications Corp., Sr. Subordinated Notes 8.125% 3/15/2009 2,295,000
8,000,000 Grupo Televisa S.A., Sr. Notes (USD) 11.875% 5/15/2006 8,240,000
3,000,000 Grupo Televisa S.A., Sr. Notes, Series A (USD) 11.375% 5/15/2003 3,075,000
15,105,000 Intermedia Capital Partners, Sr. Notes 11.25% 8/1/2006 16,879,838
5,400,000 Jacor Communications, Inc., Convertible Zero Coupon 2/9/2018 3,030,750
3,240,000 Jones Intercable, Inc., Sr. Notes 9.625% 3/15/2002 3,434,400
5,400,000 NTL Communications Corp., Sr. Notes, Series B 11.5% 10/1/2008 5,973,750
7,200,000 NTL Communications Corp., Sr. Notes, Series B Zero Coupon 10/1/2008 4,950,000
3,000,000 NTL, Inc., Convertible Subordinated Notes 7.0% 12/15/2008 4,912,500
6,000,000 Olympus Communications, LP, Sr. Notes 10.625% 11/15/2006 6,510,000
4,800,000 OnePoint Communications Corp., Sr. Notes 14.5% 6/1/2008 2,664,000
4,200,000 ONO Finance plc, Units (USD) 13.0% 5/1/2009 4,336,500
7,000,000 Rogers Cablesystems, Ltd., Sr. Secured Second Priority Notes 9.625% 8/1/2002 7,350,000
886,310 Scott Cable Communications, Inc., Payment-In-Kind Jr.
Subordinated Notes 16.0% 7/18/2002 217,146
5,525,000 SFX Broadcasting, Inc., Sr. Subordinated Notes, Series B 10.75% 5/15/2006 6,022,250
5,000,000 Sinclair Broadcast Group, Inc., Sr. Subordinated Notes 9.0% 7/15/2007 4,962,500
6,500,000 Supercanal Holding S.A., Sr. Notes (USD) 11.5% 5/15/2005 3,493,750 (c)
2,400,000 Susquehanna Media Co., Sr. Subordinated Notes 8.5% 5/15/2009 2,376,000
4,200,000 Telewest Communications plc, Sr. Discount Notes Zero Coupon 4/15/2009 2,819,250
6,000,000 UIH Australia/Pacific, Inc., Sr. Discount Notes, Series B Zero Coupon 5/15/2006 4,290,000
9,000,000 United International Holdings, Inc., Sr. Notes, Series B Zero Coupon 2/15/2008 5,962,500
7,850,000 Young Broadcasting, Inc., Sr. Subordinated Notes 11.75% 11/15/2004 8,360,250
--------------
178,694,963
--------------
Building Products & Materials - 0.8%
6,000,000 CEMEX S.A. de C.V., Notes (USD) 12.75% 7/15/2006 6,795,000
5,500,000 Formica Corp., Sr. Subordinated Notes 10.875% 3/1/2009 5,362,500
--------------
12,157,500
--------------
Chemicals - 1.6%
6,450,000 Huntsman Polymers Corp., Sr. Notes 11.75% 12/1/2004 6,869,250
3,000,000 Lyondell Chemical Co., Secured Notes, Series A 9.625% 5/1/2007 3,097,500
7,200,000 Lyondell Chemical Co., Sr. Secured Notes, Series B 9.875% 5/1/2007 7,398,000
6,000,000 ZSC Specialty Chemical plc, Sr. Notes (USD) 11.0% 7/1/2009 6,082,500
--------------
23,447,250
--------------
Computers & Office Equipment - 1.5%
2,400,000 Anteon Corp., Sr. Subordinated Notes 12.00% 5/15/2009 2,388,000
5,200,000 Dictaphone Corp., Sr. Subordinated Notes 11.75% 8/1/2005 2,990,000
3,900,000 Integrated Circuit Systems, Sr. Subordinated Notes 11.5% 5/15/2009 3,909,750
1,200,000 MCMS, Inc., Sr. Subordinated Notes, Series B 9.75% 3/1/2008 666,000
4,200,000 MCMS, Inc., Subordinated Notes, Series B (Variable rate) 9.75% 3/1/2008 2,336,250
6,000,000 Unisys Corp., Sr. Notes 11.75% 10/15/2004 6,690,000
3,600,000 Unisys Corp., Sr. Notes 12.0% 4/15/2003 3,942,000
--------------
22,922,000
--------------
Conglomerates - 0.3%
4,250,000 Eagle-Picher, Inc., Sr. Subordinated Notes 9.375% 3/1/2008 4,058,750
--------------
Construction & Home Building - 1.2%
5,400,000 Fortress (The) Group, Inc., Sr. Notes 13.75% 5/15/2003 3,807,000
6,000,000 M.D.C. Holdings, Inc., Sr. Notes 8.375% 2/1/2008 5,745,000
9,600,000 Peters (J.M.) Co., Inc., Sr. Notes 12.75% 5/1/2002 8,556,000
--------------
18,108,000
--------------
Containers & Packaging - 1.5%
3,600,000 Consolidated Container Co., LLC, Sr. Subordinated Notes 10.125% 7/15/2009 3,654,000
4,560,000 Dimac Corp., Sr. Subordinated Notes 12.5% 10/1/2008 2,758,800
2,000,000 Fonda Group, Inc., Sr. Subordinated Notes, Series B 9.5% 3/1/2007 1,750,000
4,750,000 Radnor Holdings Corp., Sr. Notes 10.0% 12/1/2003 4,773,750
6,250,000 SF Holdings Group, Inc., Sr. Discount Notes, Series B Zero Coupon 3/15/2008 2,250,000
2,866,000 Silgan Holdings, Inc., Subordinated Debentures 13.25% 7/15/2006 3,181,260
4,500,000 Vicap, S.A. de C.V., Guaranteed Sr. Notes (USD) 11.375% 5/15/2007 4,196,250
--------------
22,564,060
--------------
Cosmetics & Toiletries - 0.4%
1,800,000 Revlon Consumer Products Corp., Sr. Notes 8.125% 2/1/2006 1,746,000
4,000,000 Revlon Consumer Products Corp., Sr. Subordinated Notes 8.625% 2/1/2008 3,760,000
--------------
5,506,000
--------------
Drugs & Health Care - 2.6%
8,400,000 Dade International, Inc., Sr. Subordinated Notes, Series B 11.125% 5/1/2006 8,883,000
6,000,000 DJ Orthopedics, LLC, Sr. Subordinated Notes 12.625% 6/15/2009 5,925,000
4,400,000 Dynacare, Inc., Sr. Notes 10.75% 1/15/2006 4,466,000
5,000,000 Fisher Scientific International, Inc., Sr. Subordinated Notes 9.0% 2/1/2008 4,775,000
4,800,000 ICN Pharmaceuticals, Inc., Sr. Notes 8.75% 11/15/2008 4,740,000
4,800,000 Team Health, Inc., Sr. Subordinated Notes 12.0% 3/15/2009 4,944,000
5,700,000 Total Renal Care Holdings, Inc., Convertible Subordinated Notes 7.0% 5/15/2009 4,681,125
--------------
38,414,125
--------------
Electric Utilities - 2.1%
3,600,000 AES (The) Corp., Sr. Notes 9.5% 6/1/2009 3,717,000
3,000,000 CMS Energy Corp., Sr. Notes 7.625% 11/15/2004 2,905,959
3,000,000 CMS Energy Corp., Sr. Notes 7.5% 1/15/2009 2,797,284
4,200,000 CMS Energy Corp., Sr. Unsecured Notes 7.0% 1/15/2005 3,998,282
4,800,000 ESI Tractebel Acquisition Corp., Bonds 7.99% 12/30/2011 4,579,075
3,550,000 Midland Cogen Venture Fund II, Secured Lease Obligation Bonds,
Series A 11.75% 7/23/2005 3,969,173
4,450,000 Midland Cogen Venture Fund II, Subordinated Secured Lease
Obligation Bonds 13.25% 7/23/2006 5,379,512
4,500,000 Niagara Mohawk Power Corp., Sr. Discount Notes, Series H Zero Coupon 7/1/2010 3,393,698
--------------
30,739,983
--------------
Electrical Equipment - 1.2%
3,000,000 Amkor Technology, Inc., Sr. Subordinated Notes 10.5% 5/1/2009 2,902,500
4,800,000 Protection One Alarm Monitoring, Inc., Convertible
Sr. Subordinated Notes 6.75% 9/15/2003 4,374,000
3,120,000 Protection One Alarm Monitoring, Inc., Sr. Subordinated
Discount Notes 13.625% 6/30/2005 3,506,100
7,000,000 Verio, Inc., Sr. Notes 11.25% 12/1/2008 7,367,500
--------------
18,150,100
--------------
Food & Beverage - 2.7%
4,000,000 Ameriserve Food Distribution, Inc., Sr. Notes 8.875% 10/15/2006 3,700,000
8,700,000 Grupo Azucarero Mexico S.A. de C, Sr. Notes (USD) 11.5% 1/15/2005 3,936,750
7,300,000 Imperial Holly Corp., Sr. Subordinated Notes 8.75% 12/15/2007 7,154,000
4,800,000 Packaged Ice, Inc., Sr. Notes, Series B 9.75% 2/1/2005 4,728,000
6,000,000 Smithfield Foods, Inc., Sr. Subordinated Notes 7.625% 2/15/2008 5,460,000
3,000,000 Southern Foods Group, LP, Sr. Subordinated Notes 9.875% 9/1/2007 3,075,000
5,000,000 Sun World International, First Mortgage Notes, Series B 11.25% 4/15/2004 5,275,000
6,100,000 Vlasic Foods International, Inc., Sr. Subordinated Notes 10.25% 7/1/2009 6,039,000
--------------
39,367,750
--------------
Hospital Management - 2.4%
6,500,000 Health Insurance Plan of Greater New York, Bonds, Series C 11.25% 7/1/2010 6,547,275
5,100,000 Healthsouth Rehab Corp., Sr. Subordinated Notes 9.5% 4/1/2001 5,227,500
6,400,000 Integrated Health Services, Inc., Convertible Sr.
Subordinated Debentures 5.75% 1/1/2001 4,608,000
7,000,000 MedPartners, Inc., Sr. Notes 7.375% 10/1/2006 6,002,500
4,500,000 MedPartners, Inc., Sr. Subordinated Notes 6.875% 9/1/2000 4,263,750
3,600,000 PhyMatrix Corp., Convertible Subordinated Debentures 6.75% 6/15/2003 1,651,500
3,000,000 Tenet Healthcare Corp., Sr. Notes, Series B 7.625% 6/1/2008 2,820,000
4,800,000 Triad Hospital Holdings, Inc., Sr. Subordinated Notes 11.0% 5/15/2005 4,908,000
--------------
36,028,525
--------------
Household Products - 1.1%
5,000,000 AMM Holdings, Inc., Sr. Discount Notes Zero Coupon 7/1/2009 1,606,250
7,800,000 BPC Holding Corp., Sr. Secured Notes, Series B 12.50% 6/15/2006 7,761,000
4,500,000 Holmes Products Corp., Sr. Subordinated Notes 9.75% 11/15/2007 4,376,250
3,000,000 Moll Industries, Inc., Sr. Subordinated Notes 10.5% 7/1/2008 2,655,000
--------------
16,398,500
--------------
Leisure & Entertainment - 2.2%
4,471,000 AMF Bowling Worldwide, Inc., Sr. Subordinated Discount Notes,
Series B Zero Coupon 3/15/2006 2,749,665
5,300,000 CapStar Hotel Company, Convertible Subordinated Notes 4.75% 10/15/2004 4,081,000
6,000,000 Florida Panthers Holdings, Inc., Sr. Subordinated Notes 9.875% 4/15/2009 5,640,000
3,000,000 HMH Properties, Inc., Sr. Notes, Series B 7.875% 8/1/2008 2,782,500
8,000,000 Premier Cruise, Ltd., Sr. Notes 11.0% 3/15/2008 2,040,000 (c)
6,000,000 Production Resource Group, LLC, Sr. Subordinated Notes 11.5% 1/15/2008 6,150,000
3,600,000 SFX Entertainment, Inc., Sr. Subordinated Notes 9.125% 12/1/2008 3,510,000
1,800,000 Signature Resorts, Inc., Sr. Subordinated Notes 9.75% 10/1/2007 1,638,000
3,900,000 Silverleaf Resorts, Inc., Sr. Subordinated Notes 10.5% 4/1/2008 3,256,500
--------------
31,847,665
--------------
Machinery & Equipment - 3.2%
6,000,000 Anthony Crane Rentals, LP, Debentures, Series B Zero Coupon 8/1/2009 2,977,500
1,950,000 Applied Power, Inc., Sr. Subordinated Notes 8.75% 4/1/2009 1,901,250
8,200,000 Budget Group, Inc., Sr. Notes 9.125% 4/1/2006 7,544,000
2,400,000 Motors & Gears, Inc., Sr. Notes, Series D 10.75% 11/15/2006 2,439,000
7,200,000 Navistar Financial Corp., Sr. Subordinated Notes, Series B 9.0% 6/1/2002 7,452,000
3,000,000 Navistar International Corp., Sr. Notes, Series B 7.0% 2/1/2003 2,940,000
2,400,000 Navistar International Corp., Sr. Subordinated Notes, Series B 8.0% 2/1/2008 2,364,000
4,000,000 Pentacon, Inc., Sr. Subordinated Notes, Series B 12.25% 4/1/2009 3,960,000
3,000,000 Scotsman Group, Inc., Sr. Subordinated Notes 8.625% 12/15/2007 3,045,000
6,250,000 Transportation Manufacturing Operations, Sr. Subordinated Notes 11.25% 5/1/2009 6,265,625
6,000,000 United Rentals, Inc., Sr. Subordinated Notes, Series B 9.25% 1/15/2009 5,940,000
--------------
46,828,375
--------------
Mining & Metals - 0.6%
2,400,000 Altos Hornos de Mexico, Bonds, Series B (USD) 11.875% 4/30/2004 1,146,000 (c)
1,000,000 Metals Management, Inc., Sr. Secured Notes 12.75% 6/15/2004 955,000
6,000,000 UCAR Global Enterprises, Inc., Sr. Subordinated Notes, Series B 12.0% 1/15/2005 6,397,500
--------------
8,498,500
--------------
Oil & Gas - 1.8%
5,600,000 Belden & Blake Corp., Sr. Subordinated Notes, Series B 9.875% 6/15/2007 4,242,000
3,600,000 Conproca S.A. de C.V., Sr. Secured Bonds (USD) 12.0% 6/16/2010 3,393,000
4,050,000 Dailey International, Inc., Sr. Notes, Series B 9.5% 2/15/2008 2,571,750 (c)
3,000,000 Gulf Canada Resources Corp., Sr. Notes 8.375% 11/15/2005 2,962,500
2,100,000 Leviathan Gas, Sr. Subordinated Notes 10.375% 6/1/2009 2,152,500
9,000,000 National Energy Group, Inc., Sr. Notes, Series D 10.75% 11/1/2006 3,555,000 (c)
5,500,000 Northern Offshore ASA, Sr. Notes, Series B (USD) 10.0% 5/15/2005 3,052,500
4,500,000 RAM Energy, Inc., Sr. Notes 11.5% 2/15/2008 2,430,000
2,000,000 RBF Finance Co., Sr. Notes 11.375% 3/15/2009 2,080,000
--------------
26,439,250
--------------
Paper & Forest Products - 0.9%
3,600,000 APP Finance (II) Mauritius, Ltd., Guaranteed Preferred Securities,
Series B (USD) 12.0% 2/15/2004 2,295,000
3,000,000 FSW International Finance Co. B.V., Guaranteed
Secured Notes (USD) 12.50% 11/1/2006 517,500 (c)
1,800,000 Indah Kiat Finance Mauritius, Guaranteed Sr. Notes (USD) 10.0% 7/1/2007 1,246,500
3,600,000 Pindo Deli Finance Mauritius, Sr. Notes (USD) 10.25% 10/1/2002 2,637,000
6,600,000 S.D. Warren Co., Sr. Subordinated Notes 12.0% 12/15/2004 7,095,000
--------------
13,791,000
--------------
Pollution Control - 1.1%
5,000,000 Allied Waste North America, Sr. Notes, Series B 7.625% 1/1/2006 4,681,250
2,700,000 IT Group, Inc., Sr. Subordinated Notes 11.25% 4/1/2009 2,605,500
5,500,000 Norcal Waste Systems, Inc., Sr. Notes, Series B 13.5% 11/15/2005 6,105,000
3,600,000 Safety-Kleen Corp., Sr. Notes 9.25% 5/15/2009 3,636,000
--------------
17,027,750
--------------
Publishing & Printing - 1.3%
4,500,000 K-III Communications Corp., Sr. Notes PRIMEDIA, Inc. 10.25% 6/1/2004 4,736,250
7,500,000 MDC Communications Corp., Sr. Subordinated Notes 10.5% 12/1/2006 7,837,500
5,850,000 Sullivan Graphics, Inc., Sr. Subordinated Notes 12.75% 8/1/2005 6,054,750
--------------
18,628,500
--------------
Retail - 0.9%
4,000,000 Corporate Express, Inc., Convertible Notes 4.5% 7/1/2000 3,730,000
3,000,000 County Seat Stores, Inc., Units 12.75% 11/1/2004 258,750 (c)
2,750,000 F & M Distributors, Inc., Sr. Subordinated Notes 11.50% 4/15/2003 34,375 (c)
5,400,000 Hollywood Entertainment Corp., Sr. Subordinated Notes,
Series B 10.625% 8/15/2004 5,332,500
3,000,000 J. Crew Group, Debentures, Series B Zero Coupon 10/15/2008 1,725,000
3,000,000 TravelCenters of America, Inc., Sr. Subordinated Notes 10.25% 4/1/2007 3,000,000
--------------
14,080,625
--------------
Retail - Food - 1.3%
4,800,000 Fleming Companies, Inc., Sr. Subordinated Notes, Series B 10.625% 7/31/2007 4,476,000
8,500,000 Jitney-Jungle Stores of America, Sr. Notes 12.0% 3/1/2006 6,842,500
7,600,000 Smith's Food & Drug Centers, Pass Through Certificates 8.64% 7/2/2012 7,894,994
--------------
19,213,494
--------------
Services - 1.1%
7,800,000 Building One Services Corp., Sr. Subordinated Notes 10.5% 5/1/2009 7,488,000
1,875,000 Discovery Zone, Inc., Sr. Notes 13.5% 5/1/2002 403,125 (c)
7,500,000 Discovery Zone, Inc., Sr. Notes 13.5% 8/1/2002 487,500 (c)
8,000,000 KinderCare Learning Centers, Inc., Sr. Subordinated Notes 9.5% 2/15/2009 7,640,000
--------------
16,018,625
--------------
Telecommunications - Data/Internet - 2.7%
7,000,000 Advanced Radio Telecom Corp., Sr. Notes 14.0% 2/17/2007 6,370,000
11,000,000 Covad Communications Group, Inc., Sr. Discount Notes,
Series B Zero Coupon 3/15/2008 6,105,000
4,350,000 Exodus Communications, Inc., Sr. Notes 11.25% 7/1/2008 4,589,250
2,650,000 Exodus Communications, Inc., Sr. Notes 11.25% 7/1/2008 2,795,750
6,000,000 Rhythms NetConnections, Inc., Sr. Notes 12.75% 4/15/2009 5,640,000
3,500,000 Splitrock Services, Inc., Notes, Series B 11.75% 7/15/2008 3,290,000
17,600,000 Wam!Net, Inc., Sr. Discount Notes, Series B Zero Coupon 3/1/2005 10,736,000
--------------
39,526,000
--------------
Telecommunications - Wireless - 9.6%
6,000,000 American Mobile Satellite Corp., Sr. Notes, Series B 12.25% 4/1/2008 4,620,000
1,800,000 Arch Escrow Corp., Sr. Notes 13.75% 4/15/2008 1,611,000
4,900,000 CenCall Communications Corp., Sr. Redeemable Discount Notes Zero Coupon 1/15/2004 5,010,250
5,400,000 Centennial Cellular Operating Co., Sr. Subordinated Notes 10.75% 12/15/2008 5,602,500
6,000,000 Clearnet Communications, Inc., Sr. Discount Notes Zero Coupon 12/15/2005 5,520,000
4,275,000 Convergent Communications, Inc., Sr. B Notes 13.0% 4/1/2008 3,745,969
3,600,000 Crown Castle International Corp., Sr. Discount Notes Zero Coupon 5/15/2011 2,106,000
4,200,000 Dobson/Sygnet Communications Corp., Sr. Notes 12.25% 12/15/2008 4,389,000
4,000,000 HighwayMaster Communications, Inc., Sr. Notes, Series B 13.75% 9/15/2005 1,660,000
4,200,000 ICO Global Communications, Units 15.0% 8/1/2005 1,743,000
4,200,000 Iridium LLC/Capital Corp., Sr. Notes, Series A 13.0% 7/15/2005 903,000 (c)
4,850,000 Iridium LLC/Capital Corp., Sr. Notes, Series B 14.0% 7/15/2005 1,042,750 (c)
1,200,000 Iridium LLC/Capital Corp., Sr. Notes, Series C 11.25% 7/15/2005 258,000 (c)
6,200,000 Logix Communications Ent., Inc., Sr. Notes 12.25% 6/15/2008 5,611,000
9,000,000 McCaw International, Ltd., Sr. Discount Notes Zero Coupon 4/15/2007 5,760,000
4,700,000 Metrocall, Inc., Sr. Subordinated Notes 11.0% 9/15/2008 3,642,500
7,200,000 Microcell Telecommunications, Inc., Sr. Discount Notes Zero Coupon 6/1/2006 5,850,000
12,000,000 Millicom International Cellular, Sr. Discount Notes Zero Coupon 6/1/2006 8,880,000
6,000,000 Mobile Telecommunications Technology, Sr. Notes 13.5% 2/15/2002 6,810,000
2,450,000 Nextel Communications, Inc., Sr. Discount Notes 9.95% 2/15/2008 1,690,500
3,100,000 Nextel Communications, Inc., Sr. Discount Notes Zero Coupon 9/15/2007 2,270,750
3,000,000 Nextel Communications, Inc., Sr. Discount Notes 9.75% 8/15/2004 3,067,500
3,500,000 Nextel Partners, Inc., Sr. Discount Notes Zero Coupon 2/1/2009 2,065,000
10,800,000 Orion Network Systems, Inc., Sr. Discount Notes Zero Coupon 1/15/2007 5,994,000
11,800,000 Orion Network Systems, Inc., Sr. Notes 11.25% 1/15/2007 10,620,000
8,200,000 PageMart Nationwide, Inc., Sr. Discount Exchange Notes Zero Coupon 2/1/2005 7,257,000
7,200,000 PageMart Wireless, Inc., Sr. Discount Notes 10.0% 2/1/2008 2,916,000
3,600,000 Pinnacle Holdings, Inc., Sr. Discount Notes Zero Coupon 3/15/2008 2,079,000
3,050,000 Price Communications Wireless, Inc., Sr. Subordinated Notes 11.75% 7/15/2007 3,431,250
3,000,000 Rogers Cantel, Inc., Debentures 9.375% 6/1/2008 3,123,750
6,000,000 SpectraSite Holdings, Inc., Sr. Discount Notes Zero Coupon 4/15/2009 3,390,000
8,000,000 Telesystem International Wireless Corp., Sr. Discount Notes,
Series B Zero Coupon 6/30/2007 4,360,000
11,000,000 Teletrac, Inc., Sr. Notes, Series B 14.0% 8/1/2007 3,795,000 (c)
6,000,000 Tritel PCS, Inc., Sr. Subordinated Discount Notes Zero Coupon 5/15/2009 3,285,000
9,000,000 UNIFI Communications, Inc., Sr. Notes 14.0% 3/1/2004 135,000 (c)
4,900,000 USA Mobile Communications, Inc., Sr. Notes 14.0% 11/1/2004 4,557,000
4,000,000 VIALOG Corp., Sr. Notes 12.75% 11/15/2001 3,350,000
--------------
142,151,719
--------------
Telecommunications - Wireline - 13.0%
6,000,000 Alestra S. De R. L. de C. V., Notes (USD) 12.625% 5/15/2009 5,737,500
9,000,000 Allegiance Telecom, Inc., Sr. Discount Notes, Series B Zero Coupon 2/15/2008 5,670,000
3,000,000 Birch Telecom, Inc., Sr. Notes 14.0% 6/15/2008 2,880,000
4,500,000 CapRock Communications Corp., Sr. Notes 11.50% 5/1/2009 4,567,500
6,900,000 Completel Europe N.V., Units (USD) Zero Coupon 2/15/2009 3,691,500
12,000,000 DTI Holdings, Inc., Sr. Discount Notes, Series B Zero Coupon 3/1/2008 4,500,000
4,800,000 Energis plc, Sr. Unsubordinated Notes (USD) 9.75% 6/15/2009 4,884,000
4,800,000 Esprit Telecom Group plc, Sr. Notes (USD) 11.5% 12/15/2007 5,124,000
4,000,000 E. Spire Communications, Inc., Sr. Notes 13.75% 7/15/2007 3,140,000
7,500,000 FirstWorld Communications, Inc., Sr. Discount Notes Zero Coupon 4/15/2008 3,937,500
6,700,000 GST Equipment Funding, Inc., Sr. Secured Notes 13.25% 5/1/2007 7,177,375
3,000,000 GST Telecommunications, Inc., Sr. Discount Notes Zero Coupon 12/15/2005 4,076,250
4,250,000 Hermes Europe Railtel B.V., Sr. Notes (USD) 11.5% 8/15/2007 4,494,375
1,800,000 Hyperion Telecommunications, Inc., Sr. Discount Notes,
Series B Zero Coupon 4/15/2003 1,512,000
1,200,000 Hyperion Telecommunications, Inc., Sr. Notes, Series B 12.25% 9/1/2004 1,272,000
4,800,000 IntelCom Group Holdings (U.S.A.), Inc., Sr. Discount Notes Zero Coupon 9/15/2005 4,146,000
6,750,000 Intermedia Communications, Inc., Sr. Discount Notes,
Series B Zero Coupon 3/1/2009 3,780,000
1,800,000 Intermedia Communications, Inc., Sr. Notes 8.6% 6/1/2008 1,665,000
4,900,000 Intermedia Communications, Inc., Sr. Notes, Series B 8.5% 1/15/2008 4,508,000
4,200,000 Ionica plc, Sr. Notes 13.5% 8/15/2006 1,590,750 (c)
5,100,000 Jazztel plc, Sr. Notes 14.0% 4/1/2009 5,036,250
13,200,000 Level 3 Communications, Inc., Sr. Discount Notes Zero Coupon 12/1/2008 8,184,000
6,000,000 Long Distance International, Inc., Sr. Notes 12.25% 4/15/2008 3,630,000
3,000,000 McLeodUSA, Inc., Sr. Notes 8.125% 2/15/2009 2,790,000
4,200,000 Metromedia Fiber Network, Inc., Sr. Notes, Series B 10.0% 11/15/2008 4,336,500
6,000,000 MGC Communications, Inc., Sr. Notes, Series B 13.0% 10/1/2004 5,610,000
6,000,000 MJD Communications, Inc., Notes, Series B (Variable Rate) 9.248% 5/1/2008 6,022,500
5,000,000 Netia Holdings B.V., Sr. Discount Notes, Series B Zero Coupon 11/1/2007 3,137,500
4,800,000 NEXTLINK Communications, LLC, Sr. Discount Notes 12.5% 4/15/2006 5,136,000
1,200,000 NEXTLINK Communications, Inc., Sr. Notes 10.75% 11/15/2008 1,233,000
1,200,000 NEXTLINK Communications, Inc., Sr. Notes 9.625% 10/1/2007 1,173,000
6,000,000 Pathnet, Inc., Sr. Notes 12.25% 4/15/2000 3,390,000
4,200,000 Phonetel Technologies, Inc., Sr. Notes 12.0% 12/15/2006 1,449,000 (c)
5,000,000 Poland Telecom Finance B.V., Sr. Notes, Series B (USD) 14.0% 12/1/2007 4,518,750
6,000,000 Primus Telecommunications Group, Inc., Sr. Notes 11.25% 1/15/2009 6,120,000
5,400,000 Primus Telecommunications Group, Inc., Sr. Notes 11.75% 8/1/2004 5,508,000
1,800,000 RSL Communications plc, Bonds (USD) 12.0% 11/1/2008 1,903,500
6,750,000 RSL Communications, Ltd., Units 12.25% 11/15/2006 7,053,750
3,000,000 Startec Global Communications, Inc., Sr. Notes 12.0% 5/15/2008 2,700,000
2,100,000 Telegroup, Inc., Sr. Discount Notes Zero Coupon 11/1/2004 808,500 (c)
3,500,000 Teligent, Inc., Sr. Discount Notes, Series B Zero Coupon 3/1/2008 2,082,500
4,800,000 Teligent, Inc., Sr. Notes 11.5% 12/1/2007 4,776,000
10,527,000 USN Communications, Inc., Sr. Discount Notes, Series B Zero Coupon 8/15/2004 1,486,939 (c)
4,200,000 VersaTel Telecom B.V., Sr. Notes (USD) 13.25% 5/15/2008 4,368,000
9,500,000 Viatel, Inc., Sr. Discount Notes Zero Coupon 4/15/2008 6,127,500
2,500,000 Viatel, Inc., Sr. Notes 11.5% 3/15/2009 2,587,500
3,300,000 WinStar Communications, Inc., Sr. Discount Notes Zero Coupon 10/15/2005 2,904,000
3,000,000 WinStar Communications, Inc., Sr. Subordinated Notes 15.0% 3/1/2007 3,465,000
1,500,000 WinStar Communications, Inc., Sr. Unsecured Notes Zero Coupon 10/15/2005 2,130,000
4,000,000 Worldwide Fiber, Inc., Sr. Notes 12.5% 12/15/2005 4,100,000
--------------
192,121,439
--------------
Textiles & Apparel - 1.2%
6,050,000 CMI Industries, Inc., Sr. Subordinated Notes 9.5% 10/1/2003 5,656,750
8,700,000 Dan River, Inc., Sr. Subordinated Notes 10.125% 12/15/2003 8,917,500
3,600,000 Supreme International Corp., Sr. Subordinated Notes 12.25% 4/1/2006 3,654,000
--------------
18,228,250
--------------
Transportation - 1.3%
5,500,000 Allied Holdings, Inc., Sr. Notes, Series B 8.625% 10/1/2007 5,197,500
5,000,000 Alpha Shipping plc, Sr. Notes, Series A (USD) 9.50% 2/15/2008 1,587,500 (c)
3,000,000 Cenargo International plc, Senior Notes 9.75% 6/15/2008 2,782,500
5,400,000 Equimar Shipholdings, Ltd., First Priority Mtg 9.875% 7/1/2007 3,618,000
7,500,000 Windsor Petroleum, Notes 7.84% 1/15/2021 5,887,500
--------------
19,073,000
--------------
Total Corporate Bonds (cost $1,329,248,950) 1,198,220,606
--------------
Shares
- ------------
PREFERRED STOCKS - 11.2% (a)
Convertible - 2.7%
15,000 Adelphia Communications Corp., Convertible Preferred Stock, Series D 3,015,000
60,000 CalEnergy Capital Trust III, Convertible Preferred Stock 2,872,500
69,000 Chesapeake Energy Corp., Convertible Preferred Stock 1,699,125
20,000 EchoStar Communications Corp., Convertible Preferred Stock, Series C 6,200,000
140,000 Granite Broadcasting Corp., Convertible Preferred Stock 5,285,000
80,000 Host Marriott Financial Trust, Convertible Preferred Stock 3,350,000
50,000 Intermedia Communications, Inc., Convertible Preferred Stock 1,425,000
60,000 Owens - Illinois, Inc., Convertible Preferred Stock 2,625,000
90,000 PSINet, Inc., Convertible Preferred Stock, Series C 4,342,500
45,500 Sinclair Broadcast Group, Inc., Convertible Preferred Stock 1,967,875
54,000 TIMET Capital Trust I, Convertible Preferred Stock 1,370,250
83,800 Treev, Inc., Convertible Preferred Stock, Series A 827,525
60,000 UnitedGlobalCom, Convertible Preferred Stock 3,000,000
90,000 USX Corp. (Marathon Group), Convertible Preferred Stock 1,361,250
--------------
39,341,025
--------------
Non-Convertible - 8.5%
26,824 CapStar Communications, Inc., Exchangeable Payment-In-Kind Preferred Stock, Series E 3,118,290
27,153 Century Maintenance Supply, Inc., Payment-In-Kind Preferred Stock 2,803,547
105,000 Chevy Chase Capital Corp., Noncumulative Exchangeable Preferred Stock, Series A 5,630,625
55,083 Cluett American Corp., Preferred Stock 3,594,166
57,000 Communications & Power Industries, Inc., Preferred Stock, Series B 5,828,250
66,576 CSC Holdings, Inc., Payment-In-Kind Preferred Stock 7,240,140
33,498 CSC Holdings, Inc., Preferred Stock 3,659,657
4,430 Cumulus Media, Inc., Preferred Stock, Series A 4,884,075
7,800 Dobson Communications Corp., Payment-In-Kind Preferred Stock 7,663,500
6,254 E. Spire Communications Services, Inc., Payment-In-Kind Preferred Stock 2,204,535
60,000 Global Crossing Holdings, Ltd., Payment-In-Kind Preferred Stock 6,375,000
9,279 ICG Holdings, Inc., Preferred Stock 9,255,803
7,480 Intermedia Communications, Inc., Preferred Stock 7,349,100
4,991 IXC Communications, Inc., Preferred Stock 4,803,838
1,800 J Crew Group, Preferred Stock 1,620,000
24,000 Jitney-Jungle Stores of America, Sr. Exchangeable Preferred Stock, Class A 840,000
162,807 Nebco Evans Holdings Co., Payment-In-Kind, Preferred Stock 6,471,578
1,239 Nextel Communications, Inc., Payment-In-Kind Preferred Stock, Series D 1,307,145
5,223 Nextel Communications, Inc., Payment-In-Kind Preferred Stock, Series E 5,236,058
126,651 NEXTLINK Communications, Inc., Payment-In-Kind Preferred Stock 6,427,538
6,965 Paxson Communications Corp., Payment-In-Kind Preferred Stock 6,372,975
42,500 PRIMEDIA, Inc., Exchangeable Preferred Stock, Series H 4,053,438
46,000 PRIMEDIA, Inc., Preferred Stock, Series D 4,651,750
33,000 PRIMEDIA, Inc., Preferred Stock, Series F 3,238,125
147,500 River Bank Asset, Inc., Preferred Stock, Series A 2,360,000
4,200 R&B Falcon Corp., Preferred Stock Units 4,326,000
3,500 WinStar Communications, Inc., Payment-In-Kind Preferred Stock, Series C 2,878,750
80,000 ZSC Specialty Chemical plc, Payment-In-Kind Preferred Stock (USD) 2,020,000
--------------
126,213,883
--------------
Total Preferred Stocks (cost $176,629,434) 165,554,908
--------------
COMMON STOCKS & STOCK WARRANTS - 5.1% (a,b)
10,200 Allegiance Telecom, Inc., Stock Warrants 582,675
6,000 American Mobile Satellite Corp., Stock Warrants 240,750
3,600 American Telecasting, Inc., Stock Warrants 36
58,333 Arch Communications Group, Inc., Common Stock 495,833
302,479 Arch Communications Group, Inc., Stock Warrants 181,487
3,600 Australis Holdings Pty., Ltd., Stock Warrants 36 (d)
17,150 Australis Media, Ltd., Stock Warrants 172 (d)
70,000 Bell & Howell Co., Common Stock 2,646,875
3,000 Birch Telecom, Inc., Stock Warrants 15,000
18,000 Classic Communications, Inc., Common Stock 300,060
35,475 Clearnet Communications, Inc., Stock Warrants 298,802
2,310 Communications & Power Industries, Inc., Common Stock 347,655 (d)
10,989 Consolidated Hydro, Inc., Stock Warrants, Class B 8,242
7,133 Consolidated Hydro, Inc., Stock Warrants, Class C 1,783
17,100 Convergent Communications, Inc., Stock Warrants 130,388
218,663 Covad Communications Group, Inc., Common Stock 11,657,471
3,267 CS Wireless Systems, Inc., Common Stock 448 (d)
71,250 Discovery Zone, Inc., Stock Warrants 9,619 (d)
36,000 DIVA Systems Corp., Common Stock 432,000
60,000 DTI Holdings, Inc., Stock Warrants 7,200
16,800 E. Spire Communications, Inc., Stock Warrants 966,986
7,500 FirstWorld Communications, Stock Warrants 375,938
101,377 Gaylord Container Corp., Common Stock, Class A 804,680
127,902 Gaylord Container Corp., Stock Warrants 1,023,216
36,180 Harvard Industries, Inc., Stock Warrants 12,622 (d)
4,000 HighwayMaster Communications, Inc., Stock Warrants 1,500
13,800 Hyperion Telecommunications, Inc., Stock Warrants 1,059,150
140,000 IntelCom Group Communications, Inc., Common Stock 2,992,500
68,300 IntelCom Group (U.S.A.), Inc., Stock Warrants 985,125
5,900 Intermedia Communications of Florida, Stock Warrants 383,500
6,026 Intermedia Communications, Inc., Common Stock 180,780
14,800 Ionica plc, Stock Warrants (USD) 148 (d)
3,000 Iridium World Communications, Stock Warrants 1,875 (c)
25,500 Jazztel plc, Stock Warrants (USD) 459,000
6,000 Long Distance International, Inc., Stock Warrants 60
95,000 Magellan Health Services, Inc., Common Stock 950,000
10,900 McCaw International, Ltd., Stock Warrants 28,613
180,000 MCI Worldcom, Inc., Common Stock 15,491,250
4,850 MGC Communications, Inc., Stock Warrants 563,206
40,800 Microcell Telecommunications, Inc., Stock Warrants 622,200
8,853 Nextel Communications, Inc., Class A 444,310
4,800 OnePoint Communications Corp., Stock Warrants 4,800
33,250 PageMart Nationwide, Inc., Common Stock 249,375
168,000 PageMart Wireless, Inc., Common Stock, Class A 1,270,500
6,000 Pathnet, Inc., Stock Warrants 60,750
5,000 Poland Telecom Finance B.V., Stock Warrants (USD) 200,000
85,000 Powertel, Inc., Common Stock 2,539,375
155,208 Price Communications Corp., Common Stock 2,328,120
4,800 Primus Telecommunications Group, Inc., Stock Warrants 96,600
23,840 Protection One Alarm Monitoring, Stock Warrants 98,340
9,000 RSL Communications, Ltd., Stock Warrants 838,125
12500 SF Holdings Group, Inc., Common Stock 26,563
4,800 Splitrock Services, Inc., Stock Warrants 240,600
192,996 Star Gas Partners, LP, Common Stock 3,317,119
3,000 Startec Global Communications, Inc., Stock Warrants 2,250
8,000 Teletrac Holdings, Inc., Stock Warrants 80 (c)
4,469 TREEV, Inc., Common Stock 15,502
7,400 UIH Australia/Pacific, Inc., Stock Warrants 8,325
9,000 UNIFI Communications, Inc., Stock Warrants 1,215 (d)
30,000 United International Holdings, Inc., Common Stock, Class A 2,028,750
27,000 United International Holdings, Inc., Stock Warrants 6,213,375
66,000 USN Communications, Inc., Stock Warrants 37,950 (d)
4,200 VersaTel Telecom B.V., Stock Warrants (USD) 210,525
1,900 Vialog Corp., Stock Warrants 95,000
173,000 Viatel, Inc., Common Stock 9,709,625
55,200 Wam!Net, Inc., Stock Warrants 1,255,800
36,654 Wherehouse Entertainment, Inc., Stock Warrants, Class A 279,487
6,363 Wherehouse Entertainment, Inc., Stock Warrants, Class B 24,657
6,363 Wherehouse Entertainment, Inc., Stock Warrants, Class C 10,340
19,200 Wireless One, Inc., Stock Warrants 192 (c)
--------------
Total Common Stocks & Stock Warrants (cost $44,091,255) 75,866,531
--------------
Principal
Amount
- -----------
SHORT-TERM SECURITIES - 2.6% (a)
Commercial Paper
$ 1,000,000 Enterprise Funding Corp. 5.08% 7/12/1999 $ 998,448
37,900,000 General Electric Co. 5.63% 7/1/1999 37,900,000
--------------
Total Commercial Paper (at amortized cost) 38,898,448
--------------
Total Investments (cost $1,588,868,087) $1,478,540,493 (e)
==============
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, 1999, 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, 1999.
Acquisition
Security Date Cost
----------------------------------------------------- ------------ ------------------
Australis Holdings Pty., Ltd., Stock Warrants 3/27/1997 $ --
Australis Media, Ltd., Stock Warrants 1/2/1997 --
Communications & Power Industries, Inc., Common Stock 8/2/1995 211,287
CS Wireless Systems, Inc., Common Stock 12/11/1996 22,110
Discovery Zone, Inc., Stock Warrants 7/15/1997 839,158
Harvard Industries, Inc., Stock Warrants 5/14/1992 9,468,416
Ionica plc, Stock Warrants 8/1/1996 964,748
UNIFI Communications, Inc., Stock Warrants 2/14/1997 185,173
USN Communications, Inc., Stock Warrants 8/13/1997 560
(e) At June 30, 1999, the aggregate cost of securities for federal tax
purposes was $1,588,868,087 and the net unrealized depreciation of
investments based on that cost was $110,327,594 which is comprised
of $90,760,651 aggregate gross unrealized appreciation and
$201,088,245 aggregate gross unrealized depreciation.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB Series Fund, Inc.
Income Portfolio
Portfolio of Investments
June 30, 1999
(unaudited)
Principal Maturity
Amount Rate Date Value
------------- ---------- --------- -------------
<S> <C> <C> <C> <C>
CORPORATE BONDS - 54.4% (a)
Aerospace - 1.4%
$ 6,000,000 Lockheed Martin Corp., Notes 7.45% 6/15/2004 $ 6,138,778
3,500,000 Raytheon Co., Notes 6.45% 8/15/2002 3,503,395
4,000,000 Raytheon Co., Notes 6.75% 8/15/2007 3,972,300
1,500,000 United Defense Industries, Inc., Sr. Subordinated Notes 8.75% 11/15/2007 1,466,250
--------------
15,080,723
--------------
Automotive - 2.8%
6,000,000 Ford Motor Credit Co., Notes 6.125% 4/25/2003 5,917,320
5,000,000 Ford Motor Credit Co., Notes 6.375% 10/6/2000 5,018,380
8,000,000 General Motors Acceptance Corp., Notes 6.85% 6/17/2004 8,066,992
3,000,000 Toyota Motor Credit Corp., Notes (USD) 5.5% 9/17/2001 2,956,692
9,000,000 Toyota Motor Credit Corp., Notes (USD) 5.625% 11/13/2003 8,737,200
--------------
30,696,584
--------------
Bank & Finance - 9.0%
3,000,000 Associates Corp. of North America, Sr. Notes 6.5% 8/15/2002 3,016,443
5,000,000 Associates Corp. of North America, Bonds 5.8% 4/20/2004 4,832,165
6,000,000 Bank One Corp., Medium Term Notes 6.0% 2/17/2009 5,538,342
5,000,000 BankAmerica Corp., Sr. Notes 5.875% 2/15/2009 4,594,600
6,000,000 Chase Manhattan Corp., Subordinated Notes 9.375% 7/1/2001 6,336,384
6,000,000 CIT (The) Group, Inc., Notes 5.5% 2/15/2004 5,728,710
11,000,000 Equitable Life Assurance Society of the United States,
Surplus Notes 6.95% 12/1/2005 11,018,634
6,000,000 Fidelity Invesments, Debentures 7.49% 6/15/2019 5,977,740
4,500,000 First Union Corp., Subordinated Notes 6.875% 9/15/2005 4,501,040
1,500,000 GS Escrow Corp., Sr. Notes 6.75% 8/1/2001 1,482,348
8,000,000 Metropolitan Life Insurance Co., Surplus Notes 7.7% 11/1/2015 8,250,856
4,000,000 Morgan Stanley Dean Witter, Notes 5.625% 1/20/2004 3,844,844
4,000,000 NationsBank Corp., Sr. Notes 6.125% 7/15/2004 3,936,508
8,000,000 New York Life Insurance Co., Surplus Notes 6.4% 12/15/2003 7,912,336
2,500,000 PNC Funding Corp., Subordinated Notes 6.125% 2/15/2009 2,324,243
9,000,000 Prudential Insurance Co. of America, Capital Notes 6.875% 4/15/2003 9,014,670
6,000,000 Wachovia Corp., Subordinated Notes 5.625% 12/15/2008 5,489,820
6,000,000 Wells Fargo Capital, Capital Trust Preferred Securities 7.73% 12/1/2026 5,908,764
--------------
99,708,447
--------------
Broadcasting & Media - 2.3%
5,000,000 CBS Corp., Notes 8.875% 6/1/2001 5,196,580
3,000,000 Chancellor Media Corp., Sr. Notes 8.0% 11/1/2008 2,955,000
750,000 Clear Channel Communications, Convertible Sr. Notes 2.625% 4/1/2003 952,500
4,000,000 CSC Holdings, Inc., Sr. Notes 7.25% 7/15/2008 3,820,000
1,500,000 EchoStar DBS Corp., Sr. Notes 9.375% 2/1/2009 1,533,750
6,000,000 Rogers Cablesystems, Inc., Sr. Secured Second Priority Notes 9.625% 8/1/2002 6,300,000
4,000,000 Time Warner, Inc., Debentures 9.125% 1/15/2013 4,568,484
--------------
25,326,314
--------------
Chemicals - 1.2%
3,500,000 Lyondell Chemical Co., Secured Notes, Series A 9.625% 5/1/2007 3,613,750
6,000,000 Monsanto Company, Bonds 6.5% 12/1/2018 5,426,592
4,000,000 Union Carbide Corp., Notes 6.7% 4/1/2009 3,832,560
--------------
12,872,902
--------------
Computers & Office Equipment - 0.7%
1,500,000 Credit Suisse First Boston, Convertible Medium Term Notes
(Cisco Systems, Inc.) 1.0% 4/21/2009 1,640,625
5,000,000 International Business Machines, Inc., Notes 5.375% 2/1/2009 4,572,850
650,000 Xerox Corp., Convertible Subordinated Debentures 0.57% 4/21/2018 414,375
850,000 Xerox Corp., Convertible Subordinated Notes 0.57% 4/21/2018 541,875
--------------
7,169,725
--------------
Conglomerates - 2.4%
1,100,000 Credit Suisse First Boston, Convertible Medium Term Notes
(General Electric) 2.25% 5/5/2003 1,216,875
5,500,000 Dover Corp., Debentures 6.65% 6/1/2028 5,061,672
6,500,000 General Electric Capital Corp., Debentures 8.85% 4/1/2005 7,170,046
7,000,000 General Electric Capital Corp., Debentures 8.75% 5/21/2007 7,857,255
5,000,000 Tyco International Group SA, Notes (USD) 5.875% 11/1/2004 4,831,590
--------------
26,137,438
--------------
Construction & Home Building - 0.3%
3,000,000 American Standard Co., Inc., Notes 7.375% 4/15/2005 2,880,000
--------------
Containers & Packaging - 0.4%
4,000,000 Owens-Illinois, Inc., Sr. Notes 7.85% 5/15/2004 3,994,488
--------------
Drugs & Health Care - 1.8%
1,250,000 Athena Neurosciences, Inc., Convertible Notes 4.75% 11/15/2004 1,318,750
8,000,000 Becton, Dickinson, & Co., Debentures 6.7% 8/1/2028 7,246,016
5,750,000 Bristol Myers Squibb Co., Debentures 7.15% 6/15/2023 5,794,407
5,000,000 Merck & Co., Inc., Debentures 6.3% 1/1/2026 4,614,475
1,000,000 Roche Holdings, Inc., Convertible Notes Zero Coupon 4/20/2010 573,750
750,000 Swiss Life Finance, Ltd., Convertible Notes
(Glaxo Wellcome plc) 2.0% 5/20/2003 739,688
--------------
20,287,086
--------------
Electric Utilities - 8.2%
2,000,000 AES (The) Corp., Sr. Subordinated Notes 10.25% 7/15/2006 2,055,000
1,250,000 AES (The) Corp., Sr. Notes 9.5% 6/1/2009 1,290,625
3,000,000 CalEnergy Company, Inc., Sr. Notes 6.96% 9/15/2003 2,982,027
6,000,000 CalEnergy Company, Inc., Sr. Notes 7.63% 10/15/2007 6,046,392
2,000,000 Calpine Corp., Sr. Notes 7.75% 4/15/2009 1,885,000
2,000,000 Calpine Corp., Sr. Notes 7.875% 4/1/2008 1,900,000
6,000,000 Cleveland Electric Illumination Co., First Mortgage Bonds 7.625% 8/1/2002 6,104,100
4,000,000 CMS Energy Corp., Sr. Notes 8.0% 7/1/2001 3,992,572
7,000,000 CMS Energy Corp., Sr. Unsecured Notes 8.125% 5/15/2002 7,070,476
4,500,000 Commonwealth Edison Co., Notes 7.625% 1/15/2007 4,658,040
4,000,000 Connecticut Light & Power Co., First Refunding Mortgage Bonds,
Series 97C 7.75% 6/1/2002 4,087,252
5,000,000 Consolidated Edison Co. NY, Inc., Debentures 6.45% 12/1/2007 4,910,065
6,000,000 East Coast Power, LLC, Sr. Notes, Series B 7.066% 3/31/2012 5,504,694
2,000,000 East Coast Power, LLC, Sr. Notes, Series C 6.737% 3/31/2008 1,927,980
5,000,000 Empresa Electrica Pehuienche S.A., Notes (USD) 7.3% 5/1/2003 4,744,615
6,000,000 National Rural Utilities, Medium Term Notes 5.75% 12/1/2008 5,587,020
7,000,000 Niagara Mohawk Power Corp., Sr. Notes, Series C 7.125% 7/1/2001 7,041,314
5,000,000 NRG Energy, Inc., Sr. Notes 7.5% 6/15/2007 4,959,640
5,000,000 PSEG Capital Corp., Medium Term Notes 6.25% 5/15/2003 4,850,445
9,000,000 Texas Utilities Electric Co., Debentures 7.17% 8/1/2007 9,134,307
--------------
90,731,564
--------------
Electronics - 0.3%
4,000,000 Corning, Inc., Notes 6.3% 3/1/2009 3,805,236
--------------
Food & Beverage - 2.8%
5,500,000 Archer Daniels Midland Co., Bonds 6.75% 12/15/2027 5,155,909
5,500,000 ConAgra, Inc., Sr. Notes 5.5% 10/15/2002 5,346,545
4,500,000 Fred Meyer, Inc., Notes 7.375% 3/1/2005 4,565,637
5,000,000 Kroger (The) Co., Sr. Notes 8.15% 7/15/2006 5,238,080
7,500,000 Pepsi Bottling Group, Inc., Sr. Notes 7.0% 3/1/2029 7,031,843
4,000,000 Safeway, Inc., Notes 5.875% 11/15/2001 3,940,992
--------------
31,279,006
--------------
Hospital Management - 0.4%
2,000,000 Tenet Healthcare Corp., Sr. Notes 7.875% 1/15/2003 1,952,500
2,500,000 Tenet Healthcare Corp., Sr. Notes 8.625% 12/1/2003 2,524,003
--------------
4,476,503
--------------
Household Products - 0.9%
4,000,000 Playtex Products, Inc., Unsecured Sr. Notes, Series B 8.875% 7/15/2004 4,070,000
5,000,000 Procter & Gamble, Guaranteed ESOP Debentures 9.36% 1/1/2021 6,089,840
--------------
10,159,840
--------------
Leisure & Entertainment - 0.2%
2,500,000 Premier Parks, Inc., Sr. Notes 9.75% 6/15/2007 2,537,500
--------------
Oil & Gas - 4.6%
5,000,000 Coastal Corp., Sr. Debentures 6.375% 2/1/2009 4,706,520
4,000,000 Conoco, Inc., Notes 5.9% 4/15/2004 3,901,652
5,000,000 Conoco, Inc., Notes 6.95% 4/15/2029 4,684,190
700,000 Diamond Offshore Drilling, Inc., Convertible Subordinated Notes 3.75% 2/15/2007 691,250
5,000,000 El Paso Natural Gas Co., Sr. Notes 6.75% 5/15/2009 4,792,445
3,000,000 Enron Corp., Notes 7.125% 5/15/2007 2,988,498
4,000,000 Gulf Canada Resources, Ltd., Sr. Notes 8.375% 11/15/2005 3,950,000
1,971,424 Mobil Oil Corp., ESOP Sinking Fund Debentures 9.17% 2/29/2000 1,981,928
4,000,000 Newfield Exploration Co., Sr. Notes, Series B 7.45% 10/15/2007 3,823,856
4,000,000 Noble Drilling Corp., Sr. Notes 6.95% 3/15/2009 3,885,148
4,000,000 Oryx Energy Co., Notes 8.375% 7/15/2004 4,232,132
2,000,000 Oryx Energy Co., Notes 8.125% 10/15/2005 2,085,900
2,750,000 Pamex Finance, Ltd., Notes 8.45% 2/15/2007 2,758,759
650,000 Swiss Life Finance, Ltd., Convertible Bonds
(Royal Dutch Petroleum Co.) 2.0% 5/20/2005 645,938
2,500,000 Triton Energy, Ltd., Sr. Notes 8.75% 4/15/2002 2,450,000
3,500,000 Union Pacific Resources Group, Notes 7.3% 4/15/2009 3,387,167
--------------
50,965,383
--------------
Paper & Forest Products - 0.7%
5,000,000 Weyerhaeuser Co., Debentures 6.95% 10/1/2027 4,713,665
3,500,000 Willamette Industries, Inc. 6.45% 2/1/2005 3,435,327
--------------
8,148,992
--------------
Pollution Control - 1.1%
3,000,000 Allied Waste North America, Inc., Sr. Notes, Series B 7.625% 1/1/2006 2,808,750
5,000,000 USA Waste Services, Inc., Notes 6.5% 12/15/2002 4,962,015
3,000,000 USA Waste Services, Inc., Sr. Notes 7.0% 10/1/2004 3,031,254
1,000,000 Waste Management, Inc., Convertible Subordinated Notes 4.0% 2/1/2002 1,300,000
--------------
12,102,019
--------------
Publishing & Printing - 0.2%
2,000,000 PRIMEDIA, Inc., Sr. Notes 7.625% 4/1/2008 1,920,000
--------------
Retail - 4.5%
450,000 Costco Companies, Inc., Convertible Subordinated Notes Zero Coupon 8/19/2017 422,438
1,050,000 Costco Companies, Inc., Subordinated Notes Zero Coupon 8/19/2007 985,688
9,000,000 Dayton Hudson Corp., Notes 6.4% 2/15/2003 8,933,004
4,000,000 Dillards, Inc., Notes 6.43% 8/1/2004 3,890,848
4,000,000 Federated Department Stores, Inc., Debentures 6.9% 4/1/2029 3,682,112
6,000,000 Federated Department Stores, Sr. Notes 8.5% 6/15/2003 6,361,416
300,000 Home Depot, Inc., Convertible Subordinated Notes 3.25% 10/1/2001 830,250
8,000,000 Penney (J.C.) Co., Inc., Notes 6.95% 4/1/2000 8,019,680
1,000,000 Rite Aid Corp., Convertible Subordinated Notes 5.25% 9/15/2002 1,003,750
6,500,000 Rite Aid Corp., Notes 6.125% 12/15/2008 5,897,554
10,000,000 Sears Roebuck Acceptance Corp., Medium Term Notes, Series II 6.86% 7/3/2001 10,061,490
--------------
50,088,230
--------------
Services - 1.2%
2,000,000 ARAMARK Services, Inc., Notes 7.0% 7/15/2006 1,941,570
4,500,000 Cendant Corp., Notes 7.75% 12/1/2003 4,549,280
6,000,000 Ceridian Corp., Sr. Notes 7.25% 6/4/2004 5,985,120
1,250,000 CUC International, Inc., Convertible Subordinated Notes 3.0% 2/15/2002 1,192,188
--------------
13,668,158
--------------
Telecommunications - 4.3%
2,000,000 Alestra S. de R. L. de C. V., Notes (USD) 12.125% 5/15/2006 1,912,500
6,000,000 AT&T Corp.-Liberty Media Group, Notes 6.0% 3/15/2009 5,580,000
4,000,000 AT&T Corp.-Liberty Media Group, Notes 6.5% 3/15/2029 3,610,000
1,000,000 Bell Atlantic Financial Services Corp., Sr. Exchange Notes 5.75% 4/1/2003 1,007,500
4,000,000 Cable & Wireless Communications Corp., Notes (USD) 6.625% 3/6/2005 3,907,804
5,000,000 Comcast Cable Communications, Notes 8.125% 5/1/2004 5,256,210
5,000,000 GTE Corp., Debentures 6.36% 4/15/2006 4,880,140
3,500,000 LCI International, Inc., Sr. Notes 7.25% 6/15/2007 3,451,686
3,500,000 Qwest Communications International, Inc., Sr. Notes, Series B 7.5% 11/1/2008 3,408,125
6,000,000 U.S. West Capital Funding, Inc., Notes 6.25% 7/15/2005 5,725,938
3,000,000 WorldCom, Inc., Sr. Notes 6.4% 8/15/2005 2,947,557
6,000,000 WorldCom, Inc., Sr. Notes 7.75% 4/1/2007 6,279,432
--------------
47,966,892
--------------
Textiles & Apparel - 0.3%
4,000,000 Levi Strauss & Co., Notes 6.8% 11/1/2003 3,742,220
--------------
Transportation - 2.4%
6,000,000 Burlington Northern Santa Fe, Inc., Notes 6.125% 3/15/2009 5,628,150
4,998,563 Federal Express Corp., Series 1998-1-A, Class B 6.75% 1/15/2022 4,757,807
5,000,000 Norfolk Southern Corp., Notes 6.95% 5/1/2002 5,048,090
6,000,000 Norfolk Southern Corp., Notes 6.2% 4/15/2009 5,652,264
5,000,000 Union Pacific Corp., Medium Term Notes, Series E 6.790% 11/9/2007 4,871,160
--------------
25,957,471
--------------
Total Corporate Bonds (cost $616,433,871) 601,702,721
--------------
ASSET-BACKED SECURITIES - 8.8% (a)
12,000,000 AESOP Funding II L.L.C., Rental Car Notes, Series 1997-1,
Class A-2 6.4% 10/20/2003 12,007,500
2,752,174 Chase Manhattan Grantor Trust, Series 1996-B-A 6.61% 9/15/2002 2,773,049
6,000,000 Com-Ed Transitional Funding Trust, Series 1998-1-A6 5.63% 6/25/2009 5,678,490
5,000,000 CS First Boston Mortgage Security Corp., Series 1996-2, Class A4 6.62% 9/25/2009 5,012,875
2,368,797 CS First Boston Mortgage Security Corp., Series 1997-1, Class A3 6.91% 5/25/2007 2,363,361
10,000,000 Discover Card Master Trust I, Series 1996-3-A 6.05% 8/18/2008 9,735,450
5,000,000 Discover Card Master Trust I, Series 1998-7A 5.6% 5/15/2006 4,845,325
10,000,000 Proffitt's Credit Card Master Trust 6.5% 12/15/2005 10,049,450
12,000,000 Standard Credit Master Trust 1, Credit Card
Participation Certificates, Series 1995-9-A 6.55% 10/7/2007 12,007,020
15,000,000 World Financial Network Credit Card Master Trust, Series 1996-B 6.95% 4/15/2006 15,335,175
17,821,735 World Omni Auto Lease Trust 6.9% 6/25/2003 17,985,605
--------------
Total Asset-Backed Securities (cost $97,746,392) 97,793,300
--------------
FOREIGN GOVERNMENT BONDS - 3.2% (a,b)
7,000,000 British Columbia (Providence of), Unsubordinated Notes 5.375% 10/29/2008 6,313,020
4,500,000 Korea Development Bank, Bonds 7.375% 9/17/2004 4,424,378
5,000,000 Korea Development Bank, Unsecured Bonds 6.625% 11/21/2003 4,806,410
2,500,000 Korea (Republic of), Bonds 8.875% 4/15/2008 2,630,728
7,000,000 Ontario (Province of) Canada, Sr. Bonds 7.375% 1/27/2003 7,209,643
8,000,000 Ontario (Province of) Canada, Sr. Notes 5.5% 10/1/2008 7,287,280
2,500,000 Philippines (Republic of), Bonds 8.875% 4/15/2008 2,446,875
--------------
Total Foreign Government Bonds (cost $34,908,802) 35,118,334
--------------
MORTGAGE-BACKED SECURITIES - 9.2% (a)
21,014,615 Federal Home Loan Mortgage Corp., Participation Certificates 6.0% 7/1/2013 20,348,242
5,275,162 Federal Home Loan Mortgage Corp., Participation Certificates 6.0% 3/1/2011 5,133,840
10,139,478 Federal Home Loan Mortgage Corp., Participation Certificates 6.0% 4/1/2011 9,867,842
33,000,000 Federal Home Loan Mortgage Corp., Participation Certificates 6.5% 7/1/2029 31,937,796 (c)
6,993,308 Government National Mortgage Association, Modified
Pass Through Certificates 6.0% 2/15/2029 6,563,429
24,891,593 Government National Mortgage Association, Modified
Pass Through Certificates 6.0% 4/15/2029 23,361,506
5,000,000 Government National Mortgage Association, Modified
Pass Through Certificates 6.0% 7/15/2029 4,690,625 (c)
--------------
Total Mortgage-Backed Securities (cost $103,180,745) 101,903,280
--------------
U.S. GOVERNMENT AGENCY - 3.5% (a)
7,000,000 Federal Home Loan Mortgage Corp., Notes 5.125% 10/15/2008 6,362,734
24,000,000 Federal National Mortgage Association, Notes 5.75% 2/15/2008 22,943,448
10,000,000 Federal National Mortgage Association, Notes 5.75% 4/15/2003 9,894,030
--------------
Total U.S. Government Agency (cost $41,114,204) 39,200,212
--------------
U.S. GOVERNMENT - 14.4% (a)
11,500,000 U.S. Treasury Bonds 5.25% 11/15/2028 10,181,100
56,500,000 U.S. Treasury Bonds 7.625% 11/15/2022 65,734,247
19,000,000 U.S. Treasury Bonds 7.5% 11/15/2016 21,363,125
32,000,000 U.S. Treasury Bonds 6.25% 8/15/2023 32,040,000
10,000,000 U.S. Treasury Notes 6.125% 8/15/2007 10,112,500
6,000,000 U.S. Treasury Notes 7.0% 7/15/2006 6,358,128
12,000,000 U.S. Treasury Notes 7.875% 11/15/2004 13,106,256 (d)
--------------
Total U.S. Government (cost $168,434,880) 158,895,356
--------------
Shares Value
- ------------ ------------
COMMON STOCKS - 0.1% (a)
15,000 Federal National Mortgage Association, Common Stock
(cost $963,712) 1,025,625
--------------
PREFERRED STOCKS - 0.7% (a)
12,500 CVS Corp., Convertible Preferred Stock 1,139,063
13,500 El Paso Energy Capital Trust I, Convertible Preferred Stock 668,250
9,500 Estee Lauder Co., Convertible Preferred Stock 895,375
10,000 Houston Industries, Inc., Convertible Preferred Stock 1,192,500
12,500 Lincoln National Corp., Convertible Preferred Stock 339,844
12,000 McKesson Financing Trust, Convertible Preferred Stock 630,000
13,000 Monsanto Company, Convertible Preferred Stock 521,625
18,000 Newell Financial Trust I, Convertible Preferred Stock 1,008,000
35,000 Philadelphia Consolidated Holding, Convertible Preferred Stock 365,313
11,500 Unocal Capital Trust, Convertible Preferred Stock 644,000
--------------
Total Preferred Stocks (cost $6,928,390) 7,403,970
--------------
Principal Maturity
Amount Rate Date
------------- ---------- ---------
SHORT-TERM SECURITIES - 5.7% (a)
Commercial Paper
10,000,000 Commerical Credit Co. 4.98% 7/14/1999 9,982,017
15,000,000 Enterprise Funding Corp. 5.875% 7/1/1999 15,000,000
4,797,000 Great Lakes Chemical Corp. 5.0% 7/8/1999 4,792,336
10,000,000 Pfizer, Inc. 4.95% 7/12/1999 9,984,875
13,100,000 Sheffield Receivables Corp. 5.87% 7/1/1999 13,100,000
10,000,000 Toyota Motor Credit Corp. 4.95% 7/13/1999 9,983,500
--------------
Total Commerical Paper (at amortized cost) 62,842,728
--------------
Total Investments (cost $1,132,553,724) $1,105,885,526 (e)
==============
Notes to Portfolio of Investments:
(a) The categories of investments are shown as a percentage of total
investments of the Income Portfolio.
(b) Denominated in U.S. dollars.
(c) Denotes investments purchased on a when-issued basis.
(d) At June 30, 1999, U.S. Treasury Notes valued at $1,583,673 were
held in escrow or pledged as initial margin deposit to cover open
financial futures contracts and call options written as follows:
Notional
Number of Market Principal Unrealized
Type Contracts Expiration Position Value Amount Loss
-------------------------- --------- ---------- -------- ----------- ----------- ----------
U.S. Treasury Bond Futures 210 Sept. 1999 Long $24,340,313 $24,439,688 ($99,375)
(e) At June 30, 1999, the aggregate cost of securities for federal
income tax purposes was $1,132,553,724 and the net unrealized
depreciation of investments based on that cost was $26,668,198
which is comprised of $33,435,215 aggregate gross unrealized
depreciation and $6,767,017 aggregate gross unrealized appreciation.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB MONEY MARKET PORTFOLIO
Portfolio of Investments
June 30, 1999
(unaudited)
Principal Maturity
Amount Yield Date Value
------------- ---------- --------- -------------
<S> <C> <C> <C> <C>
BANK NOTES - 2.7% (a)
$3,500,000 Morgan Guaranty Trust Co. New York 5.04% 10/8/1999 $3,506,536
3,000,000 Wachovia Bank, N.A. 5.03% 11/22/1999 3,000,000
-------------
Total Bank Notes 6,506,536
-------------
COMMERCIAL PAPER - 85.4% (a)
Banking-Domestic - 3.8%
3,000,000 AES Shady Point, Inc. (Direct Pay Letter of Credit,
Nationsbank N.A.) 4.89% 7/21/1999 2,992,050
3,000,000 Wells Fargo & Co. 4.93% 8/20/1999 2,979,708
3,000,000 US Bancorp 5.19% 9/22/1999 2,964,587
-------------
8,936,345
-------------
Banking-Foreign - 6.1%
3,000,000 Centerior Fuel Corp. (Direct Pay Letter of Credit,
Barclays Bank plc) 5.31% 7/2/1999 2,999,558
3,000,000 River Fuel Funding Co., Inc., (Union Bank of Switzerland,
Direct Pay Letter of Credit) 5.07% 7/19/1999 2,992,425
3,500,000 UBS Finance (Delaware), Inc. 4.91% 7/12/1999 3,494,856
1,000,000 UBS Finance (Delaware), Inc. 4.96% 8/9/1999 994,724
3,000,000 UBS Finance (Delaware), Inc. 5.00% 12/13/1999 2,933,313
1,000,000 UBS Finance (Delaware), Inc. 5.04% 12/13/1999 977,542
-------------
14,392,418
-------------
Computer & Office Equipment - 1.3%
2,000,000 Motorola, Inc. 4.85% 7/2/1999 1,999,733
1,000,000 Motorola, Inc. 5.75% 7/1/1999 1,000,000
-------------
2,999,733
-------------
Drugs & Health Care - 3.7%
8,700,000 Warner-Lambert Co. 5.70% 7/1/1999 8,700,000
-------------
Education - 7.3%
2,000,000 Duke University 4.95% 10/26/1999 1,968,605
1,000,000 Duke University 5.03% 9/13/1999 989,804
3,000,000 Duke University 5.18% 11/29/1999 2,936,454
1,000,000 Duke University 5.14% 9/27/1999 987,607
2,000,000 Leland H. Stanford Junior University 4.94% 8/17/1999 1,987,414
3,000,000 Yale University 4.84% 7/14/1999 2,994,800
4,000,000 Yale University 4.92% 7/22/1999 3,988,683
1,500,000 Yale University 5.23% 8/9/1999 1,491,550
-------------
17,344,917
-------------
Energy - 2.9%
4,000,000 American Petrofina Holding Co. (Guaranteed Petrofina S.A.) 5.81% 7/1/1999 4,000,000
3,000,000 American Petrofina Holding Co. (Guaranteed Petrofina S.A.) 4.86% 7/12/1999 2,995,591
-------------
6,995,591
-------------
Finance-Automotive - 12.2%
3,000,000 DaimlerChrysler NA Holdings 4.93% 8/23/1999 2,978,668
3,000,000 DaimlerChrysler NA Holdings 4.92% 7/26/1999 2,989,917
5,000,000 DaimlerChrysler NA Holdings 4.90% 8/3/1999 4,977,908
705,000 Ford Motor Credit Co. 4.96% 7/19/1999 703,262
1,000,000 Ford Motor Credit Co. 5.07% 8/18/1999 993,307
300,000 Ford Motor Credit Co. 4.95% 7/26/1999 298,979
250,000 Ford Motor Credit Co. 5.03% 9/27/1999 246,975
3,000,000 Ford Motor Credit Co. 4.85% 7/8/1999 2,997,194
3,000,000 Ford Motor Credit Co. 5.11% 9/7/1999 2,971,383
3,000,000 General Motors Acceptance Corp. 4.86% 7/9/1999 2,996,787
3,000,000 General Motors Acceptance Corp. 5.15% 10/1/1999 2,961,130
3,758,000 Toyota Motor Credit Corp. 4.85% 7/1/1999 3,758,000
-------------
28,873,510
-------------
Finance-Commercial - 8.4%
3,000,000 CIT Group, Inc. 4.88% 8/31/1999 2,975,549
1,100,000 CIT Group, Inc. 5.75% 7/1/1999 1,100,000
2,000,000 GE Capital International Funding, Inc. 5.22% 10/29/1999 1,965,867
2,500,000 General Electric Capital Corp. 4.90% 8/10/1999 2,486,611
320,000 General Electric Capital Corp. 4.94% 7/1/1999 320,000
128,000 General Electric Capital Corp. 5.02% 9/1/1999 126,920
244,000 General Electric Capital Corp. 4.92% 7/12/1999 243,639
3,000,000 General Electric Credit Capital Services of Puerto Rico, Inc.
(Guaranteed General Electric Capital Corp.) 4.95% 8/30/1999 2,975,800
2,000,000 General Electric Credit Capital Services of Puerto Rico, Inc.
(Guaranteed GeneralElectric Capital Corp.) 4.96% 9/20/1999 1,978,220
3,000,000 Wells Fargo & Co. 4.86% 7/30/1999 2,988,400
3,000,000 Wells Fargo & Co. 5.60% 3/21/2000 2,881,860
-------------
20,042,866
-------------
Finance-Consumer - 7.2%
3,000,000 American General Corp. 4.89% 8/9/1999 2,984,368
3,000,000 Associates Corp of North America 4.98% 8/12/1999 2,982,745
3,000,000 Associates Financial Services Company of Puerto Rico, Inc.
(Guaranteed Associates Corp. of North America) 4.87% 8/4/1999 2,986,343
2,050,000 Associates Financial Services Company of Puerto Rico, Inc.
(Guaranteed Associates Corp. of North America) 4.94% 7/28/1999 2,042,451
1,022,000 Transamerica Finance Corp. 4.91% 7/8/1999 1,021,036
5,000,000 Transamerica Finance Corp. 4.92% 10/8/1999 4,934,000
-------------
16,950,943
-------------
Finance-Structured - 11.9%
3,000,000 CXC, Inc. 4.86% 7/26/1999 2,989,979
3,000,000 Ciesco, L.P. 5.08% 8/10/1999 2,983,200
3,000,000 Delaware Funding Corp. 4.90% 7/23/1999 2,991,090
2,000,000 Edison Asset Securitization, L.L.C. 4.99% 7/9/1999 1,997,836
3,000,000 Preferred Receivables Funding 4.86% 7/6/1999 2,997,992
3,000,000 Preferred Receivables Funding 5.29% 8/18/1999 2,979,000
3,000,000 Preferred Receivables Funding 4.95% 7/27/1999 2,989,362
1,436,000 Triple-A One Funding Corp. 5.07% 7/29/1999 1,430,371
3,000,000 Triple-A One Funding Corp. 5.37% 7/13/1999 2,994,640
910,000 Triple-A One Funding Corp. 4.88% 7/9/1999 909,023
3,000,000 Triple-A One Funding Corp. 4.99% 9/9/1999 2,971,300
-------------
28,233,793
-------------
Financial Services - 1.7%
3,000,000 American Express Credit Corp. 4.86% 8/27/1999 2,977,295
1,000,000 American Express Credit Corp. 4.85% 7/27/1999 996,533
-------------
3,973,828
-------------
Food & Beverage - 0.8%
2,000,000 Cargill Global Fund plc 5.25% 2/11/2000 1,936,875
-------------
Insurance - 5.0%
850,000 AIG Funding, Inc. 5.60% 3/24/2000 816,084
4,950,000 St. Paul Companies, Inc. 5.75% 7/1/1999 4,950,000
3,000,000 USAA Capital Corp. 5.07% 8/26/1999 2,976,573
3,000,000 USAA Capital Corp. 4.83% 7/16/1999 2,994,025
-------------
11,736,682
-------------
Leisure & Entertainment - 1.2%
3,000,000 Disney (Walt) Co. 5.02% 9/15/1999 2,969,030
-------------
Petroleum - 4.6%
2,000,000 Chevron Transport Corp. (Guaranteed Chevron Corp.) 4.93% 8/25/1999 1,985,119
3,000,000 Chevron Transport Corp. (Guaranteed Chevron Corp.) 4.97% 8/24/1999 2,977,905
3,000,000 Chevron Transport Corp. (Guaranteed Chevron Corp.) 4.92% 8/2/1999 2,987,120
3,000,000 Chevron Transport Corp. (Guaranteed Chevron Corp.) 4.98% 9/27/1999 2,964,140
-------------
10,914,284
-------------
Transportation - 0.2%
387,000 United Parcel Service of America, Inc. 4.90% 7/15/1999 386,270
-------------
U.S. Municipal - 7.1%
3,000,000 California Pollution Control Finance Authority;
Environmental Improvement Revenue Bonds; Series 1996
(Guaranteed Shell Oil Co.) 4.92% 7/16/1999 3,000,000
2,500,000 Gulf Coast Waste Disposal Authority; Pollution
Control Revenue Bonds; Series 1995
(Guaranteed Amoco Oil Co.) 4.94% 7/8/1999 2,500,000
2,200,000 Metrocrest Hospital Authority, Series 1989 (Bank of New York
Direct Pay Letter of Credit) 5.04% 8/2/1999 2,190,225
3,100,000 City of New York GO Bonds, Fiscal 1995, Series B
(Guaranteed FGIC, SPI) 5.08% 8/5/1999 3,100,000
3,000,000 City of Whiting, Indiana; Industrial Sewage & Solid
Waste Disposal; Series 1995 (Guaranteed Amoco Oil Co.) 5.08% 8/18/1999 3,000,000
3,000,000 City of Whiting, Indiana; Industrial Sewage & Solid
Waste Disposal; Series 1995 (Guaranteed Amoco Oil Co.) 4.84% 7/15/1999 3,000,000
-------------
16,790,225
-------------
Total Commercial Paper 202,177,310
-------------
CERTIFICATES OF DEPOSIT - 4.6% (a)
Domestic - 2.1%
3,000,000 Morgan Guaranty Trust Co. New York 5.05% 10/15/1999 2,998,470
2,000,000 Morgan Guaranty Trust Co. New York 4.95% 12/10/1999 2,000,253
-------------
4,998,723
-------------
Euro Dollar-Foreign - 2.5%
3,000,000 Barclays Bank plc 5.01% 11/15/1999 2,998,713
3,000,000 Barclays Bank plc 5.03% 9/7/1999 3,000,040
-------------
5,998,753
-------------
Total Certificates of Deposit 10,997,476
-------------
MEDIUM TERM NOTES - 2.1% (a)
3,000,000 Abbey National Treasury Service plc 5.25% 12/14/1999 3,000,135
2,000,000 Ford Motor Credit Co. 5.10% 10/1/1999 2,012,792
-------------
Total Medium Term Notes 5,012,927
-------------
VARIABLE RATE NOTES - 3.1% (a,b)
3,000,000 Abbey National Treasury Service plc 4.90% 7/20/1999 2,999,876
2,000,000 Deutsche Bank, New York 4.88% 7/15/1999 1,999,826
2,300,000 Illinois Student Assistance Commission (Bank of America,
Illinois Direct Pay Letter of Credit) 5.23% 7/7/1999 2,300,000
-------------
Total Variable Rate Notes 7,299,702
-------------
U.S. GOVERNMENT AGENCY - 2.1% (a)
805,000 Federal Home Loan Bank 5.14% 11/10/1999 790,389
825,000 Federal Home Loan Bank 5.14% 11/22/1999 808,665
107,000 Federal Home Loan Mortgage Corp. 5.17% 10/14/1999 105,440
118,000 Federal Home Loan Mortgage Corp. 5.19% 11/12/1999 115,804
3,000,000 Federal Home Loan Mortgage Corp. 5.29% 12/21/1999 2,926,662
200,000 Federal Home Loan Mortgage Corp. 5.18% 11/2/1999 196,556
-------------
Total U.S. Government Agency 4,943,516
-------------
Total Investments (at amortized cost) $236,937,467 (c)
=============
Notes to Portfolio of Investments:
(a) The categories of investments are shown as a percentage of total investments of the Money Market Portfolio.
(b) Denotes variable rate obligations for which the current yield and the next scheduled interest reset date are shown.
(c) Also represents cost for federal income tax purposes.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
OPPORTUNITY GROWTH PORTFOLIO
Financial Statements
Statement of Assets and Liabilities
June 30, 1999
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $308,418,276) $355,360,258
Cash 8,542
Receivable for investment securities sold 3,119,862
Dividend and interest receivable 21,824
------------
Total assets 358,510,486
------------
LIABILITIES:
Payable for investment securities purchased 2,668,343
------------
NET ASSETS $355,842,143
============
NET ASSETS CONSIST OF:
Paid-in capital (31,368,313 shares of capital
stock outstanding) $369,269,080
Accumulated net investment loss (188,993)
Accumulated net realized loss from sale
of investments (60,179,926)
Unrealized net appreciation of investments 46,941,982
------------
NET ASSETS $355,842,143
============
Net asset value and public offering price per share
($355,842,143 divided by 31,368,313 shares of
capital stock outstanding) $11.34
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended June 30, 1999
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Dividend income $ 256,072
Interest income 223,639
------------
Total income 479,711
------------
Expenses --
Investment advisory fee 668,704
------------
Net investment loss (188,993)
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized loss on investment transactions (12,163,028)
Net change in unrealized appreciation of investments 19,567,757
------------
Net gain on investments 7,404,729
------------
Net increase in net assets resulting
from operations $ 7,215,736
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
June 30, 1999 Year Ended
(unaudited) December 31, 1998
------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income (loss) $ (188,993) $ 1,094,931
Net realized loss on investments (12,163,028) (45,123,705)
Net change in unrealized appreciation or depreciation
of investments 19,567,757 30,584,366
------------ ------------
Net change in net assets resulting from operations 7,215,736 (13,444,408)
------------ ------------
DISTRIBUTIONS PAID TO SHAREHOLDERS--
Net investment income -- (1,020,790)
Net realized gain on investments -- (4,105,350)
------------ ------------
Total distributions -- (5,126,140)
------------ ------------
CAPITAL STOCK TRANSACTIONS--
Proceeds from sale of shares 5,015,071 29,992,364
Reinvested dividend distributions -- 5,126,140
Cost of shares redeemed (28,584,097) (35,816,306)
------------ ------------
Net change in net assets from capital stock transactions (23,569,026) (697,802)
------------ ------------
Net change in net assets (16,353,290) (19,268,350)
NET ASSETS:
Beginning of period 372,195,433 391,463,783
------------ ------------
End of period $355,842,143 $372,195,433
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
MID CAP GROWTH PORTFOLIO
Financial Statements
Statement of Assets and Liabilities
June 30, 1999
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $132,205,525) $151,159,057
Cash 73,291
Receivable for investment securities sold 1,308,486
Dividend and interest receivable 51,536
------------
Total assets 152,592,370
------------
LIABILITIES:
Payable for investment securities purchased 2,299,274
------------
NET ASSETS $150,293,096
============
NET ASSETS CONSIST OF:
Paid-in capital (11,741,083 shares of capital
stock outstanding) $127,706,852
Undistributed net investment income 143,038
Accumulated net realized gain from sale
of investments 3,489,674
Unrealized net appreciation of investments 18,953,532
------------
NET ASSETS $150,293,096
============
Net asset value and public offering price per share
($150,293,096 divided by 11,741,083 shares of
capital stock outstanding) $12.80
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended June 30, 1999
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Dividend income $ 232,285
Interest income 146,488
------------
Total income 378,773
------------
Expenses --
Investment advisory fee 235,735
------------
Net investment income 143,038
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investment transactions 8,798,039
Net realized gain on closed or expired option
contracts written 8,220
------------
Net realized gain on investments 8,806,259
Net change in unrealized appreciation of investments 9,040,385
------------
Net gain on investments 17,846,644
------------
Net increase in net assets resulting
from operations $ 17,989,682
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months For the period from
Ended January 30, 1998
June 30, 1999 (effective date) to
(unaudited) December 31, 1998
------------- -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 143,038 $ 316,277
Net realized gain (loss) on investments 8,806,259 (5,316,585)
Net change in unrealized appreciation or depreciation
of investments 9,040,385 9,913,147
------------ ------------
Net increase in net assets resulting from operations 17,989,682 4,912,839
------------ ------------
DISTRIBUTIONS PAID TO SHAREHOLDERS--
Net investment income -- (316,277)
------------ ------------
CAPITAL STOCK TRANSACTIONS--
Proceeds from sale of shares 38,310,198 95,921,660
Reinvested dividend distributions -- 316,277
Cost of shares redeemed (1,676,760) (5,164,523)
------------ ------------
Net increase in net assets from capital stock transactions 36,633,438 91,073,414
------------ ------------
Net increase in net assets 54,623,120 95,669,976
------------ ------------
NET ASSETS:
Beginning of period 95,669,976 --
------------ ------------
End of period $150,293,096 $ 95,669,976
============ ============
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, 1999
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $343,694,854) $404,850,308
Cash (including foreign currency holdings
of $6,542,125) 6,603,201
Receivable for investment securities sold 556,846
Dividend and interest receivable 976,240
------------
Total assets 412,986,595
------------
LIABILITIES:
Payable for investment securities purchased 8,582,151
Unrealized depreciation of foreign currency
contracts held 7,667
------------
Total liabilities 8,589,818
------------
NET ASSETS $404,396,776
============
NET ASSETS CONSIST OF:
Paid-in capital (30,695,580 shares of capital
stock outstanding) $338,355,930
Undistributed net investment income 3,262,361
Accumulated net realized loss from sale of
investments and foreign currency transactions 1,706,663
Unrealized net appreciation of investments and
on translation of assets and liabilities in
foreign currencies 61,071,822
------------
NET ASSETS $404,396,776
============
Net asset value and public offering price per share
($404,396,776 divided by 30,695,580 shares of
capital stock outstanding) $13.17
=======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended June 30, 1999
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Dividend income (net of foreign taxes of $599,454) $ 4,476,493
Interest income 404,452
------------
Total income 4,880,945
------------
Expenses --
Investment advisory fee 1,618,584
------------
Net investment income 3,262,361
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain on investment transactions 9,185,303
Net realized loss on foreign currency transactions (191,750)
------------
Net realized gain on investments and foreign
currency transactions 8,993,553
------------
Net change in unrealized appreciation of investments 3,201,995
Net change in unrealized appreciation on translation
of assets and liabilities in foreign currencies (101,811)
Net change in unrealized appreciation of investments
and on translation of assets and liabilities in
foreign currencies 3,100,184
------------
Net gain on investments and foreign currency 12,093,737
------------
Net increase in net assets resulting
from operations $ 15,356,098
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
June 30, 1999 Year Ended
(unaudited) December 31, 1998
------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 3,262,361 $ 3,451,445
Net realized gain (loss) on investments
and foreign currency transactions 8,993,553 (2,051,138)
Net change in unrealized appreciation or depreciation
of investments and on translation of assets and liabilities
in foreign currencies 3,100,184 47,582,219
------------ ------------
Net increase in net assets resulting from operations 15,356,098 48,982,526
------------ ------------
DISTRIBUTIONS PAID TO SHAREHOLDERS--
Net investment income -- (6,100,889)
Net realized gain on investments -- (2,480,808)
------------ ------------
Total distributions -- (8,581,697)
------------ ------------
CAPITAL STOCK TRANSACTIONS--
Proceeds from sale of shares 27,657,583 48,521,478
Reinvested dividend distributions -- 8,581,697
Cost of shares redeemed (8,361,235) (14,963,421)
------------ ------------
Net increase in net assets from capital stock transactions 19,296,348 42,139,754
------------ ------------
Net increase in net assets 34,652,446 82,540,583
NET ASSETS:
Beginning of period 369,744,330 287,203,747
------------ ------------
End of period $404,396,776 $369,744,330
============ ============
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, 1999
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $3,168,829,248) $3,987,926,792
Receivable for investment securities sold 47,431,615
Dividend and interest receivable 2,110,153
--------------
Total assets 4,037,468,560
--------------
LIABILITIES:
Payable for investment securities purchased 45,992,697
--------------
NET ASSETS $3,991,475,863
==============
NET ASSETS CONSIST OF:
Paid-in capital (160,847,734 shares of capital
stock outstanding) $2,811,938,596
Accumulated net realized gain from sale
of investments 360,439,723
Unrealized net appreciation of investments 819,097,544
--------------
NET ASSETS $3,991,475,863
==============
Net asset value and public offering price per share
($3,991,475,863 divided by 160,847,734 shares of
capital stock interest outstanding) $24.82
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended June 30, 1999
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Dividend income $ 13,599,911
Interest income 3,536,133
------------
Total income 17,136,044
------------
Expenses --
Investment advisory fee 7,255,106
------------
Net investment income 9,880,938
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investment transactions 382,440,975
Net realized gain on closed or expired option
contracts written 2,768,069
------------
Net realized gain on investments 385,209,044
Net change in unrealized appreciation of investments 198,245,091
------------
Net gain on investments 583,454,135
------------
Net increase in net assets resulting
from operations $593,335,073
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
June 30, 1999 Year Ended
(unaudited) December 31, 1998
------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 9,880,938 $ 26,484,086
Net realized gain on investments 385,209,044 325,324,813
Net change in unrealized appreciation or depreciation
of investments 198,245,091 361,224,415
-------------- --------------
Net increase in net assets resulting from operations 593,335,073 713,033,314
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--
Net investment income (9,880,938) (26,297,317)
Net realized gain on investments (341,902,994) (382,615,151)
-------------- --------------
Total distributions (351,783,932) (408,912,468)
-------------- --------------
CAPITAL STOCK TRANSACTIONS--
Proceeds from sale of shares 132,001,555 271,027,313
Reinvested dividend distributions 351,783,932 408,912,468
Cost of shares redeemed (53,872,738) (90,186,334)
-------------- --------------
Net increase in net assets from capital stock transactions 429,912,749 589,753,447
-------------- --------------
Net increase in net assets 671,463,890 893,874,293
NET ASSETS:
Beginning of period 3,320,011,973 2,426,137,680
-------------- --------------
End of period $3,991,475,863 $3,320,011,973
============== ==============
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, 1999
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $1,588,868,087) $1,478,540,493
Cash 95,359
Receivable for investment securities sold 2,420,523
Interest and dividends receivable 30,387,311
--------------
Total assets 1,511,443,686
--------------
LIABILITIES:
Payable for investment securities purchased 7,954,500
--------------
NET ASSETS $1,503,489,186
==============
NET ASSETS CONSIST OF:
Paid-in capital (162,085,797 shares of capital
stock outstanding) $1,629,514,219
Accumulated net realized loss from sale
of investments (15,697,439)
Unrealized net depreciation of investments (110,327,594)
--------------
NET ASSETS $1,503,489,186
==============
Net asset value and public offering price per share
($1,503,489,186 divided by 162,085,797 shares of
capital stock outstanding) $ 9.28
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended June 30, 1999
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Interest income $ 73,572,076
Dividend income 7,312,274
------------
Total income 80,884,350
------------
Expenses --
Investment advisory fee 2,911,468
------------
Net investment income 77,972,882
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized loss on investment transactions (5,751,930)
Net change in unrealized appreciation of investments 24,136,921
------------
Net gain on investments 18,384,991
------------
Net increase in net assets resulting
from operations $ 96,357,873
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
June 30, 1999 Year Ended
(unaudited) December 31, 1998
------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 77,972,882 $ 144,302,561
Net realized loss on investment transactions (5,751,930) (9,085,193)
Net change in unrealized appreciation or depreciation
of investments 24,136,921 (162,813,026)
-------------- --------------
Net change in net assets resulting from operations 96,357,873 (27,595,658)
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--
Net investment income (77,972,882) (145,155,458)
Net realized gain on investments -- (19,837,525)
-------------- --------------
Total distributions (77,972,882) (164,992,983)
-------------- --------------
CAPITAL STOCK TRANSACTIONS--
Proceeds from sale of shares 29,778,968 161,947,132
Reinvested dividend distributions 77,972,882 164,992,983
Cost of shares redeemed (49,964,257) (51,597,568)
-------------- --------------
Net increase in net assets from capital stock transactions 57,787,593 275,342,547
-------------- --------------
Net increase in net assets 76,172,584 82,753,906
NET ASSETS:
Beginning of period 1,427,316,602 1,344,562,696
-------------- --------------
End of period $1,503,489,186 $1,427,316,602
============== ==============
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, 1999
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $1,132,553,724) $1,105,885,526
Cash 25,066
Receivable for investment securities sold 3,442,262
Receivable for variation margin on open
futures contracts 183,750
Interest and dividends receivable 14,493,111
--------------
Total assets 1,124,029,715
--------------
LIABILITIES:
Payable for investment securities purchased 36,722,927
--------------
NET ASSETS $1,087,306,788
==============
NET ASSETS CONSIST OF:
Paid-in capital (112,442,170 shares of capital
stock outstanding) $1,122,570,607
Accumulated net realized loss from sale
of investments (8,496,245)
Unrealized net depreciation of investments (26,767,574)
--------------
NET ASSETS $1,087,306,788
==============
Net asset value and public offering price per share
($1,087,306,788 divided by 112,442,170 shares of
capital stock outstanding) $ 9.67
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended June 30, 1999
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Interest income $ 34,032,862
Dividend income 208,437
------------
Total income 34,241,299
------------
Expenses --
Investment advisory fee 2,163,721
------------
Net investment income 32,077,578
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized loss on investment transactions (3,089,046)
Net realized gain on closed or expired option
contracts written 699,024
Net realized loss on closed futures contracts (999,235)
------------
Net realized loss on investments (3,389,257)
Net change in unrealized depreciation of investments (56,072,807)
------------
Net loss on investments (59,462,064)
------------
Net change in net assets resulting
from operations $(27,384,486)
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
June 30, 1999 Year Ended
(unaudited) December 31, 1998
------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 32,077,578 $ 58,537,622
Net realized gain (loss) on investment transactions (3,389,257) 13,372,952
Net change in unrealized appreciation or depreciation
of investments (56,072,807) 14,894,893
-------------- --------------
Net change in net assets resulting from operations (27,384,486) 86,805,467
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--
Net investment income (32,077,578) (58,495,759)
-------------- --------------
CAPITAL STOCK TRANSACTIONS--
Proceeds from sale of shares 58,367,967 134,532,247
Reinvested dividend distributions 32,077,578 58,495,759
Cost of shares redeemed (17,997,306) (27,456,669)
-------------- --------------
Net increase in net assets from capital stock transactions 72,448,239 165,571,337
-------------- --------------
Net increase in net assets 12,986,175 193,881,045
NET ASSETS:
Beginning of period 1,074,320,613 880,439,568
-------------- --------------
End of period $1,087,306,788 $1,074,320,613
============== ==============
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, 1999
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at amortized cost
and value $236,937,467
Cash 25,404
Interest receivable 516,647
------------
Total assets 237,479,518
------------
NET ASSETS $237,479,518
============
NET ASSETS CONSIST OF:
Paid-in capital (237,479,518 shares of capital
stock outstanding) $237,479,518
============
Net asset value and public offering price per share
($237,479,518 divided by 237,479,518 shares of
capital stock outstanding) $ 1.00
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended June 30, 1999
(unaudited)
INVESTMENT INCOME:
<S> <C>
Income --
Interest income $ 5,426,991
------------
Expenses --
Investment advisory fee 433,633
------------
Net investment income $ 4,993,358
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
June 30, 1999 Year Ended
(unaudited) December 31, 1998
------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 4,993,358 $ 7,416,439
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS--
Net investment income (4,993,358) (7,416,439)
------------ ------------
CAPITAL STOCK TRANSACTIONS--
Proceeds from sale of shares 75,811,600 130,085,700
Reinvested dividend distributions 4,993,358 7,416,439
Cost of shares redeemed (37,134,145) (64,860,589)
------------ ------------
Net increase in net assets from capital stock transactions 43,670,813 72,641,550
------------ ------------
Net increase in net assets 43,670,813 72,641,550
NET ASSETS:
Beginning of period 193,808,705 121,167,155
------------ ------------
End of period $237,479,518 $193,808,705
============ ============
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
June 30, 1999 (effective date) to
OPPORTUNITY GROWTH PORTFOLIO (unaudited) 1998 1997 December 31, 1996
------------- -------- -------- -------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $11.06 $11.55 $11.50 $10.00
-------- -------- -------- --------
Income From Investment Operations --
Net investment income (0.01) 0.03 0.06 0.02
Net realized and unrealized gain
(loss) on investments (b) 0.29 (0.37) 0.05 1.90
-------- -------- -------- --------
Total from investment operations 0.28 (0.34) 0.11 1.92
-------- -------- -------- --------
Less Distributions --
Dividends from net investment income -- (0.03) (0.06) (0.02)
Distributions from net realized
gain on investments -- (0.12) -- (0.40)
-------- -------- -------- --------
Total distributions -- (0.15) (0.06) (0.42)
-------- -------- -------- --------
Net asset value, end of period $11.34 $11.06 $11.55 $11.50
======== ======== ======== ========
Total investment return at
net asset value (c) 2.59% (2.99%) 0.93% 19.17%
Net assets, end of period ($ millions) $355.8 $372.2 $391.5 $246.6
Ratio of expenses to average net assets 0.40%(d) 0.40% 0.40% 0.40%(d)
Ratio of net investment income to
average net assets (0.11%)(d) 0.30% 0.65% 0.27%(d)
Portfolio turnover rate 21% 134% 147% 155%
<CAPTION>
Six Months For the period from
Ended January 18, 1996
June 30, 1999 (effective date) to
MID CAP GROWTH PORTFOLIO (unaudited) December 31, 1996
------------- -------------------
<S> <C> <C>
Net asset value, beginning of period $11.13 $10.00
-------- --------
Income From Investment Operations --
Net investment income 0.01 0.04
Net realized and unrealized gain
on investments (b) 1.66 1.13
-------- --------
Total from investment operations 1.67 1.17
-------- --------
Less Distributions --
Dividends from net investment income -- (0.04)
-------- --------
Net asset value, end of period $12.80 $11.13
======== ========
Total investment return at
net asset value (c) 15.06% 11.62%
Net assets, end of period ($ millions) $150.3 $95.7
Ratio of expenses to average net assets 0.40%(d) 0.40%(d)
Ratio of net investment income to
average net assets 0.24%(d) 0.64%(d)
Portfolio turnover rate 65% 125%
See accompanying notes to the Financial Highlights.
</TABLE>
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
Financial Highlights (continued)
Six Months For the period from
Ended January 18, 1996
June 30, 1999 (effective date) to
WORLD GROWTH PORTFOLIO (unaudited) 1998 1997 December 31, 1996
------------- -------- -------- -------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $12.67 $11.12 $10.95 $10.00
-------- -------- -------- --------
Income From Investment Operations --
Net investment income 0.11 0.12 0.10 0.08
Net realized and unrealized gain
on investments (b) 0.39 1.74 0.21 0.96
-------- -------- -------- --------
Total from investment operations 0.50 1.86 0.31 1.04
-------- -------- -------- --------
Less Distributions --
Dividends from net investment income -- (0.21) (0.13) (0.09)
Distributions from net realized
gain on investments -- (0.10) (0.01) --
-------- -------- -------- --------
Total distributions -- (0.31) (0.14) (0.09)
-------- -------- -------- --------
Net asset value, end of period $13.17 $12.67 $11.12 $10.95
======== ======== ======== ========
Total investment return at
net asset value (c) 4.00% 16.75% 2.81% 10.41%
Net assets, end of period ($ millions) $404.4 $369.7 $287.2 $174.1
Ratio of expenses to average net assets 0.85%(d) 0.85% 0.85% 0.85%(d)
Ratio of net investment income to
average net assets 1.71%(d) 1.04% 1.08% 1.34%(d)
Portfolio turnover rate 10% 19% 19% 9%
<CAPTION>
Six Months
Ended
June 30, 1999
GROWTH PORTFOLIO (unaudited) 1998 1997 1996 1995 1994
------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $23.51 $21.58 $19.32 $18.27 $13.51 $14.76
-------- -------- -------- -------- -------- --------
Income From Investment Operations --
Net investment income 0.06 0.19 0.21 0.24 0.24 0.20
Net realized and unrealized gain
(loss) on investments (b) 3.72 5.28 4.97 3.43 4.76 (0.87)
-------- -------- -------- -------- -------- --------
Total from investment operations 3.78 5.47 5.18 3.67 5.00 (0.67)
-------- -------- -------- -------- -------- --------
Less Distributions --
Dividends from net investment income (0.06) (0.19) (0.21) (0.24) (0.24) (0.20)
Distributions from net realized
gain on investments (2.41) (3.35) (2.71) (2.38) -- (0.38)
-------- -------- -------- -------- -------- --------
Total distributions (2.47) (3.54) (2.92) (2.62) (0.24) (0.58)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $24.82 $23.51 $21.58 $19.32 $18.27 $13.51
======== ======== ======== ======== ======== ========
Total investment return at net asset value (c) 17.64% 28.38% 30.18% 22.44% 37.25% (4.66%)
Net assets, end of period ($ millions) $3,991.5 $3,320.0 $2,426.1 $1,658.6 $1,173.1 $721.8
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 0.55%(d) 0.94% 1.11% 1.41% 1.53% 1.52%
Portfolio turnover rate 65% 152% 193% 223% 184% 135%
See accompanying notes to the Financial Highlights.
</TABLE>
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
Financial Highlights (continued)
Six Months
Ended
June 30, 1999
HIGH YIELD PORTFOLIO (unaudited) 1998 1997 1996 1995 1994
------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.16 $10.44 $10.06 $9.94 $9.18 $10.76
-------- -------- -------- -------- -------- --------
Income From Investment Operations --
Net investment income 0.49 0.99 0.98 0.98 0.96 0.97
Net realized and unrealized gain
(loss) on investments (b) 0.12 (1.12) 0.37 0.12 0.76 (1.40)
-------- -------- -------- -------- -------- --------
Total from investment operations 0.61 (0.13) 1.35 1.10 1.72 (0.43)
-------- -------- -------- -------- -------- --------
Less Distributions --
Dividends from net investment income (0.49) (1.00) (0.97) (0.98) (0.96) (0.97)
Distributions from net realized
gain on investments -- (0.15) -- -- -- (0.18)
-------- -------- -------- -------- -------- --------
Total distributions (0.49) (1.15) (0.97) (0.98) (0.96) (1.15)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $9.28 $ 9.16 $10.44 $10.06 $ 9.94 $ 9.18
======== ======== ======== ======== ======== ========
Total investment return at net asset value (c) 6.83% (1.50%) 14.10% 11.55% 19.62% (4.38%)
Net assets, end of period ($ millions) $1,503.5 $1,427.3 $1,344.6 $1,026.7 $792.5 $595.6
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 10.71%(d) 10.04% 9.58% 9.83% 9.94% 9.75%
Portfolio turnover rate 31% 71% 105% 107% 67% 44%
<CAPTION>
Six Months
Ended
June 30, 1999
INCOME PORTFOLIO (unaudited) 1998 1997 1996 1995 1994
------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.21 $9.92 $9.75 $10.08 $9.04 $10.36
-------- -------- -------- -------- -------- --------
Income From Investment Operations --
Net investment income 0.29 0.61 0.65 0.63 0.65 0.64
Net realized and unrealized gain
(loss) on investments (b) (0.54) 0.29 0.17 (0.33) 1.04 (1.11)
-------- -------- -------- -------- -------- --------
Total from investment operations (0.25) 0.90 0.82 0.30 1.69 (0.47)
-------- -------- -------- -------- -------- --------
Less Distributions --
Dividends from net investment income (0.29) (0.61) (0.65) (0.63) (0.65) (0.64)
Distributions from net realized
gain on investments -- -- -- -- -- (0.21)
-------- -------- -------- -------- -------- --------
Total distributions (0.29) (0.61) (0.65) (0.63) (0.65) (0.85)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $9.67 $10.21 $ 9.92 $ 9.75 $10.08 $9.04
======== ======== ======== ======== ======== ========
Total investment return at net asset value (c) (2.46%) 9.37% 8.75% 3.21% 19.36% (4.68%)
Net assets, end of period ($ millions) $1,087.3 $1,074.3 $880.4 $801.2 $762.1 $608.2
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 5.93%(d) 6.06% 6.68% 6.54% 6.81% 6.78%
Portfolio turnover rate 44% 86% 117% 150% 132% 139%
See accompanying notes to the Financial Highlights.
</TABLE>
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
Financial Highlights (continued)
Six Months
Ended
June 30, 1999
MONEY MARKET PORTFOLIO (unaudited) 1998 1997 1996 1995 1994
------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
-------- -------- -------- -------- -------- --------
Net investment income from investment operations 0.02 0.05 0.05 0.05 0.06 0.04
Less: Dividends from net investment income (0.02) (0.05) (0.05) (0.05) (0.06) (0.04)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======== ======== ======== ======== ======== ========
Total return (c) 2.31% 5.32% 5.43% 5.20% 5.71% 4.00%
Net assets, end of period ($ millions) $237.5 $193.8 $121.2 $103.9 $66.1 $41.9
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 4.61%(d) 5.16% 5.27% 5.07% 5.55% 4.03%
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 investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(d) Computed on an annualized basis.
The accompanying notes are an integral part of the financial statements.
</TABLE>
LB SERIES FUND, INC.
Notes to Financial Statements
June 30, 1999
(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 seven separate series (the
"Portfolio(s)"), each with its own investment objective and policies.
The seven Portfolios of the Fund are: Opportunity Growth Portfolio,
Mid Cap 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.
(2) SIGNIFICANT ACCOUNTING POLICIES
Investment Security Valuations
Securities traded on U.S. or foreign securities exchanges or included
in a national market system are valued at the last quoted sales price
at the close of each business day. Over-the-counter securities and
listed securities for which no price is readily available are valued
at prices within the range of the current bid and asked prices
considered best to represent the value in the circumstances, based on
quotes that are obtained from an independent pricing service approved
by the Board of Directors. The pricing service, in determining values
of securities, takes into consideration such factors as current
quotations by broker/dealers, coupon, maturity, quality, type of
issue, trading characteristics, and other yield and risk factors it
deems relevant in determining valuations. Securities which cannot be
valued by the approved pricing service are valued using valuations
obtained from dealers that make markets in the securities. Exchange
listed options and futures contracts are valued at the last quoted
sales price. For all 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 Fund does not separately report the effect of
changes in foreign exchange rates from changes in market prices on
securities held. Such changes are included in net realized and
unrealized gain or loss from investments.
Federal Income Taxes
No provision has been made for income taxes because the Fund's policy
is to qualify as a regulated investment company under the Internal
Revenue Code and to distribute substantially all of its taxable
income on a timely basis. It is also the intention of the Funds to
distribute an amount sufficient to avoid imposition of any federal
excise tax. Each Fund is treated as a separate taxable entity for
federal income tax purposes.
Securities Transactions and Investment Income
Securities transactions are accounted for on trade date. Realized
gains and losses on investments and unrealized appreciation and
depreciation are determined on an identified cost basis, which is the
same basis used for federal income tax purposes.
Interest income is 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.
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, Mid Cap 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.
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.
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 $141,797 from such fees for the six month
period ended June 30, 1999.
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.
Accounting Estimates
The preparation of financial statements in conformity with generally
accepted accounting principals requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
income and expenses during the reporting period. Actual results could
differ from those estimates.
(3) 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, Mid Cap Growth, Growth,
High Yield, Income and Money Market Portfolios, 0.40%; World Growth
Portfolio, 0.85%.
Lutheran Brotherhood pays Rowe Price-Fleming International, Inc. an
annual sub-advisory fee for the performance of sub-advisory services
for the World Growth Portfolio. For these services, Lutheran
Brotherhood pays a portion of an annual sub-advisory fee equal to
0.50% of combined average daily net assets of the World Growth
Portfolio and Lutheran Brotherhood World Growth Fund. Rowe Price-
Fleming voluntarily agreed to reduce its sub-advisory fee to 0.45% of
average daily net assets when combined average daily net assets
exceed $500 million. Rowe Price-Fleming has also agreed to a
transitional fee waiver which will gradually reduce sub-advisory fees
from 0.50% to 0.45% of combined average daily net assets. The
transitional fee waiver is in effect when combined average daily net
assets are between $450 and $500 million. The total dollar amount
paid by Lutheran Brotherhood to Rowe Price-Fleming under the
investment sub-advisory contract for World Growth Portfolio for the
six months ended June 30, 1999 was $891,941.
Lutheran Brotherhood pays T. Rowe Price Associates an annual sub-
advisory fee for the performance of sub-advisory services for the
Opportunity Growth Portfolio. For these services, Lutheran
Brotherhood pays an annual sub-advisory fee equal to 0.30% of all the
Opportunity Growth Portfolio's annual average daily net assets. The
total dollar amount paid by Lutheran Brotherhood to T. Rowe Price
Associates under the investment sub-advisory contract for Opportunity
Growth Portfolio for the six months ended June 30, 1999 was $501,528.
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) DISTRIBUTIONS FROM CAPITAL GAINS
During the six months ended June 30, 1999, a distribution from net
realized capital gains of $341,902,994 was paid by the Growth
Portfolio. This distribution related to net capital gains realized
during the year ended December 31, 1998.
(5) CAPITAL LOSS CARRYOVER
At December 31, 1998, the Opportunity Growth, Mid Cap Growth, World
Growth, High Yield, and Income Portfolios had accumulated net
realized capital loss carryovers expiring as follows:
Expiration Opportunity Mid Cap World
Year Growth Growth Growth
---------- -------------- -------------- --------------
2006 $38,177,716 $4,231,061 $3,750,242
=========== ========== ==========
Expiration High Yield Income
Year Portfolio Portfolio
---------- -------------- --------------
2002 -- $1,019,053
2004 -- 3,667,020
2006 $4,536,501 --
---------- ----------
$4,536,501 $4,686,073
========== ==========
To the extent these Portfolios realize future net capital gains,
taxable distributions will be reduced by any unused capital loss
carryovers.
(6) INVESTMENT TRANSACTIONS
Purchases and Sales of Investment Securities
For the six months ended June 30, 1999, 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 $ 70,928 $ 89,668
Mid Cap Growth 112,952 74,497
World Growth 50,801 37,096
Growth 2,456,688 2,255,340
High Yield 464,209 428,264
Income 272,977 213,758
Purchases and sales of U.S. Government securities were:
In thousands
---------------------------
Portfolio Purchases Sales
- ---------- ---------------------------
Growth $ 9,423 $ 17,807
Income 216,548 253,879
Investments in Restricted Securities
The High Yield Portfolio owns restricted securities that were
purchased in private placement transactions without registration
under the Securities Act of 1933. Unless such securities
subsequently become registered, they generally may be resold only in
privately negotiated transactions with a limited number of
purchasers. The aggregate value of restricted securities was
$409,864 at June 30, 1999, which represented 0.03% of the net assets
of the High Yield Portfolio.
Investments in High Yielding Securities
The High Yield Portfolio invests primarily in high yielding fixed
income securities. The Income Portfolio may from time to time invest
up to 25% of its total assets in high-yielding securities. These
securities will typically be in the lower rating categories or will
be non-rated and generally will involve more risk than securities in
the higher rating categories. Lower rated or unrated securities are
more likely to react to developments affecting market risk and
credit risk than are more highly rated securities, which react
primarily to movements in the general level of interest rates.
Investments in Options and Futures Contracts
The movement in the price of the instrument 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, 1999
were as follows:
<TABLE>
<CAPTION>
Mid Cap 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, 1998 81 $ 24,658 333 $ 134,098 400 $ 245,760
Opened 24,108 7,612,744 1,600 652,958
Closed (50) (16,807) (18,632) (6,496,007) (1,350) (707,450)
Expired (31) (7,851) (5,030) (961,304) (650) (191,268)
Exercised (779) (289,531)
------------ ------------ ------------ ------------ ------------ ------------
Balance at June 30, 1999 -- $ -- -- $ -- -- $ --
============ ============ ============ ============ ============ ============
</TABLE>
(7) CAPITAL STOCK
Authorized capital stock consists of two billion shares as follows:
Shares Par
Portfolio Authorized Value
- ------------------- ----------- ----------
Opportunity Growth 200,000,000 $ 0.01
Mid Cap Growth 200,000,000 $ 0.01
World Growth 200,000,000 $ 0.01
Growth 400,000,000 $ 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 Mid Cap World High Money
Growth Growth Growth Growth Yield Income Market
------------ ---------- ---------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Shares outstanding at
December 31, 1997 33,897,420 -- 25,826,988 112,406,211 128,831,291 88,782,557 121,167,155
Shares sold 2,767,211 9,154,232 3,959,733 12,852,681 15,926,615 13,351,834 130,085,700
Shares issued on
reinvestment of dividends
and distributions 441,302 28,428 686,747 20,455,417 16,628,892 5,817,896 7,416,439
Shares redeemed (3,446,650) (585,678) (1,286,464) (4,476,400) (5,514,257) (2,734,184) (64,860,589)
------------ ---------- ---------- ----------- ----------- ----------- -------------
Shares outstanding at
December 31, 1998 33,659,283 8,596,982 29,187,004 141,237,909 155,872,541 105,218,103 193,808,705
Shares sold 474,745 3,287,716 2,163,159 5,605,501 3,203,629 5,818,341 75,811,600
Shares issued on
reinvestment of dividends
and distributions -- -- -- 16,290,073 8,410,438 3,219,845 4,993,358
Shares redeemed (2,765,715) (143,615) (654,583) (2,285,749) (5,400,811) (1,814,119) (37,134,145)
------------ ---------- ---------- ----------- ----------- ----------- -------------
Shares outstanding at
June 30, 1999 31,368,313 11,741,083 30,695,580 160,847,734 162,085,797 112,442,170 237,479,518
============ ========= ========== =========== =========== =========== =============
</TABLE>
LB SERIES FUND, INC.
OPPORTUNITY GROWTH PORTFOLIO
MID CAP GROWTH PORTFOLIO
WORLD GROWTH PORTFOLIO
GROWTH PORTFOLIO
HIGH YIELD PORTFOLIO
INCOME PORTFOLIO
MONEY MARKET PORTFOLIO
DIRECTORS
Rolf F. Bjelland
Herbert F. Eggerding, Jr.
Noel K. Estenson
Jodi L. Harpstead
Richard A. Hauser
Connie M. Levi
Bruce J. Nicholson
OFFICERS
Rolf F. Bjelland Brenda J. Pederson
Chairman and President Vice President
Wade M. Voigt Richard B. Ruckdashel
Treasurer Vice President
Otis F. Hilbert James R. Olson
Secretary and Vice President Vice President
Randall L. Boushek John C. Bjork
Vice President Assistant Secretary
Frederick P. Johnson Rand E. Mattsson
Vice President Assistant Treasurer
This report is authorized for distribution to prospective
investors only when preceded or accompanied by the
current prospectuses.
Back Cover:
GRAPHIC OMITTED: LUTHERAN BROTHERHOOD LOGO
Bulk Rate
U.S. Postage
PAID
Minneapolis, MN
Permit No. 1202
We're Listening to You!
In response to contract owner concerns regarding multiple mailings,
we are sending one LB Series Fund, Inc., Semiannual Report to each
household. This consolidation helps reduce printing and postage
costs, thereby saving contract owners' money. If you wish to receive
an additional copy of this Semiannual Report, call us toll free at
1-800-990-6290.
VP 54 (6/99)
[GRAPHIC OMITTED: PRINTED WITH SOY INK]
