- -------------------------------------------
LB SERIES FUND, INC.
- -------------------------------------------
[GRAPHIC OMITTED: SOLID RULE LINE]
[GRAPHIC OMITTED: 7 SOLID SQUARE BULLETS]
- -------------------------------------------
LB SERIES FUND, INC.
- -------------------------------------------
[GRAPHIC OMITTED: COMPASS WITH WORDS CHOICE PROTECTION ACCUMULATION]
December 31, 1999
Annual Report for Variable Products
[LUTHERAN BROTHERHOOD LOGO OMITTED]
[GRAPHIC OMITTED: PHOTO OF ROLF F. BJELLAND]
Our Message To You
December 31, 1999
Dear Member:
The 12 months ended December 31, 1999 had no shortage of excitement for
investors in the securities markets. From the powerful emergence of Internet
stocks and online trading to the worries over the millennium ("Y2K") bug,
there seemed to be new, uncharted waters to navigate at every turn.
Yet, the more things change, the more they stay the same. Most of these new
challenges were best managed using old strategies. Investors who made radical
changes to their portfolios in an attempt to time the market's sharp rallies
in technology stocks, for example, probably met with disappointing results --
the ups and downs of that sector were simply too sharp and unpredictable to
accurately time. However, patient investors using a buy-and-hold approach more
than likely benefited from gains in the technology sector.
The fervor surrounding technology stocks, however, belies a fundamental truth.
In reality, many of the technology issues that are white hot today will not
remain so over the long-run. Like companies in other sectors of the market, the
technology companies that survive will require competitive advantages within
their industries, accompanied by solid business plans, sound management teams,
and strong earnings growth. The key, of course, is knowing which companies to
pick. That's why professional money management is more important than ever.
At Lutheran Brotherhood, we maintain expert teams of portfolio managers,
securities analysts, quantitative analysts and securities traders to execute
each fund's investment objectives. Recently, we have expanded our capabilities
even further to assure that we remain on the leading edge of investment
research. Our equity and fixed-income analysts specialize in covering specific
industries, and all have the latest technology at their disposal. Research is
just one part of our efforts to provide you with competitive variable life and
annuity products that meet your needs in today's complex investment world.
Your LBSC registered representative is also committed to your financial
well-being. LBSC representatives are trained specialists who understand the
importance of a personalized investment program that reflects your individual
financial goals, time horizon, and risk tolerance. We've developed exclusive
tools like LB's AssetMatchSM investment allocation program, and Retirement
PlannerSM and What-If?SM tax cal-culation program, to help you determine if
you're on-track to meet your goals. But nothing we can offer is more valuable
than the knowledge and experience of your LBSC Corp. registered representative,
who can use these tools and others to help you develop a personalized
investment program that is tailored to your goals.
Lutheran Brotherhood enters this landmark new year stronger than ever, with
over $26 billion in assets under management of Lutheran Brotherhood and its
affiliated companies, more than $76 million in fraternal outreach in 1999 and,
most importantly, more than one million members who put their trust in us. All
of us at Lutheran Brotherhood take pride in serving our members and we wish
you continued success in the years to come.
Sincerely,
/S/ ROLF F. BJELLAND
Rolf F. Bjelland
Chairman and President
LB Series Fund, Inc.
Economic Overview
[GRAPHIC OMITTED: PHOTO OF RANDALL L. BOUSHEK]
Randall L. Boushek
Senior Vice President and Chief Investment Officer
Y2K-related concerns failed to dampen investor enthusiasm during the 12-month
period ending December 31, 1999, as the world's economies experienced a
seamless transition into the year 2000. In the United States, technology
issues led the stock market's upward advance, while rising interest rates
depressed overall bond performance.
U.S. Economy
1999 was among the strongest years yet in a nine-year economic expansion that
has created over 20 million new jobs, produced record low unemployment rates
and placed the United States on the leading edge of the new information age.
The decade closed with the U.S. economy expanding at a brisk pace. With
increasing numbers of Americans benefiting from investments in the securities
markets, the resulting "wealth effect" was a major contributor to strong
consumer spending. During the last two quarters of the year, gross domestic
product grew by just under six percent from the previous year, while merchants
saw one of the strongest holiday sales periods in a decade.
The U.S. unemployment rate hit a 30-year low in October, and remained unchanged
at 4.1% for the duration of the year. At the same time, advances in technology
and rising productivity levels kept wage inflation contained.
Inflation & Monetary Policy
Although energy costs continued to rise, Americans benefited from otherwise
minimal consumer price inflation in 1999. Strong competition limited companies'
ability to boost prices, and the continued growth of Internet commerce added an
extra element of price competition. The core consumer price index, which
excludes food and energy costs, hovered at a modest 2% throughout the year.
Nonetheless, concern about the accelerating economy's potential impact on
prices played a critical role in guiding U.S. monetary policy. In an attempt
to slow U.S. economic growth rates and head off potential inflation, the
Federal Reserve Board raised the overnight federal funds rate by 0.75% in
1999, reversing 1998's three rate cuts.
Equity Performance
Although investor sentiment heavily favored technology issues throughout much
of the year, economically sensitive cyclical stocks received a temporary boost
in April and May. This market rotation allowed value stocks to briefly
outperform growth stocks before technology issues regained their market
dominance. Strong demand for technology stocks was reflected in the remarkable
growth of the technology-heavy NASDAQ Composite Index, which gained an
unprecedented 86.13% during the year, with much of that increase occurring in
the fourth quarter.
After an extended period of underperformance, small-company stocks reversed
course in 1999. With a trailing 12-month total return of 21.35%, the
small-company Russell 2000 Index outperformed the large-company Standard &
Poor's 500 Index, as well as the medium-company Standard & Poor's 400 MidCap
Index, which returned 21.04% and 14.70%, respectively.
In another sharp reversal, nearly every major foreign stock market index
outperformed the S&P 500 in 1999, as the world's economies recovered strongly
from 1998's international currency crises. Several major Latin American stock
markets reached new highs, including those of Mexico and Brazil, while in
Japan, Korea and much of Southeast Asia, equity investments produced stellar
returns. In Europe, the rapid pace of corporate merger and acquisition activity
set the pace for generally strong equity performance.
Fixed Income Performance
Investment-grade bond performance was hampered by steadily rising interest
rates and declining bond prices over the course of the 12-month period, as the
yield on the bellwether 30-year U.S. Treasury bond rose by 1.39%. Overall, the
high-quality Lehman Brothers Aggregate Index fell by -0.82%, while the Lehman
Brothers Municipal Index dropped by -2.06%.
High-yield bonds, on the other hand, benefited from strong equity performance
and healthy demand for yield-spread securities. Overall, the Lehman Brothers
High Yield Index returned 2.39% in 1999. Portfolios with sizable media and
telecommunications holdings did particularly well, as firms in those industries
flourished.
Outlook
Choppy trading in the first two days of 2000 underscored widespread
expectations that the Federal Reserve will raise short-term interest rates
several times in the coming year. Despite overall price stability, the Federal
Reserve remains concerned about the potential for inflation given high economic
growth rates and tight labor markets. Higher interest rates have the potential
to cool off economic growth, but could also exert considerable pressure on
stock and bond prices, leading to increased market volatility.
Fortunately, consumer confidence remains high and the U.S. economy is just
short of reaching the longest expansion in its history. While economic growth
rates could decelerate this year, recent trends have shown that traditional
boom and bust cycles may be on the wane. Innovations in technology have spurred
remarkable growth in productivity, which, in turn, has weakened traditional
inhibitors to sustained economic expansion, particularly inflation.
Additionally, the firming of foreign economies should improve the earnings
growth of U.S. exporters, barring any major disturbances in world markets.
Market breadth, too, could improve given the attractive valuations of many
smaller-company stocks and recent shifts in investor sentiment. A widening
market would provide a more solid base for investment gains, and reward
investors who remain diversified in a variety of asset classes.
[GRAPHIC OMITTED: COMPASS WITH WORDS CHOICE PROTECTION ACCUMULATION]
Opportunity Growth Portfolio Review
[GRAPHIC OMITTED: PHOTO OF RICHARD T. WHITNEY]
Richard T. Whitney is portfolio manager for 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.
In a significant turnaround from 1998, renewed investor demand helped
small-capitalization stocks perform well in 1999. (Market capitalization is
calculated by multiplying the number of stock shares outstanding by the price
of those shares.) Like the stock market as a whole, small-cap stocks
experienced significant volatility, but earned sizable gains for the year,
with technology stocks powering most of the advance.
[GRAPHIC PIE CHART OMITTED: Portfolio Composition (% of Portfolio)]
Portfolio Composition (% of Portfolio)
Short-Term Securities 3.4%
Common Stocks 96.6%
By increasing investments in technology firms, as well as other companies whose
earnings outlooks were especially robust, the LB Series Fund, Inc. Opportunity
Growth Portfolio earned a total return (based on NAV) of 27.55% for the 12
months ended December 31, 1999. The Russell 2000 Index of small-company stocks,
which is less oriented toward growth, earned 21.35% over the same time.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
Top 10 Holdings % of Portfolio
- ----------------------------------------------------------------------
RSA Security, Inc. 1.1%
Proxim, Inc. 1.1%
Emmis Broadcasting Corp., Class A 1.0%
QRS Corp. 1.0%
QLogic Corp. 1.0%
Liberate Technologies, Inc. 1.0%
USinternetworking, Inc. 0.9%
Cox Radio, Inc., Class A 0.8%
Novellus Systems, Inc. 0.8%
Hyperion Solutions Corp. 0.8%
Footnote reads:
These holdings represent 9.5% of the total investment portfolio.
Increased Attention to Growth
When 1999 began, gains in the small-cap sector were limited primarily to
Internet firms and other companies with exceptionally high earnings growth
rates. In April and May, investors broadened their interest into economically
sensitive "cyclical" issues and stocks whose prices were more attractive
relative to issuers' earnings. In the third quarter, rising interest rates
created uncertainty and the small-cap sector gave up a large portion of its
earlier gain. Renewed investor confidence in the fourth quarter, however, drove
small-cap stocks sharply higher and helped the sector earn a strong return for
1999 as a whole.
Although the price fluctuations of technology stocks increased volatility in
the small-cap sector during the year, the strong returns for technology shares
drove most of the small-cap advance. While technology stocks became
increasingly expensive by traditional measures, the earnings growth rates of
technology firms were very high. For this reason, gains in this sector
increased the portion of technology stocks in the Portfolio to nearly 50% at
the end of the year. Among the holdings that were especially beneficial to the
Fund's performance were QLogic, Proxim and Emmis Broadcasting.
[GRAPHIC OMITTED: TOP 10 INDUSTRIES]
Top 10 Industries
Computers - Software & Services 19.7%
Electronics 9.9%
Services - Cyclical 6.3%
Retail 5.9%
Services - Technology 4.9%
Communications Equipment 4.8%
Electrical Equipment 4.5%
Health Care - Drugs & Pharmaceuticals 3.1%
Broadcasting 2.9%
Equipment - Semiconductors 2.6%
Footnote reads:
These holdings represent 64.6% of the total investment portfolio.
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): $436.9
To give the Portfolio proper diversification, we selectively increased
investments in companies with lower valuations. We paid for these and other
additions by trimming shares in other sectors, such as technology services,
broadcasting and media, retail and health care services firms.
Continued Focus on Growth and Diversification
The strong interest in growth stocks during 1999 produced the largest spread
on record between returns for growth and returns for value-oriented issues.
Eventually, however, we expect stock prices to track earnings and other company
fundamentals more closely. Although small-cap valuations vary widely, with
prices for technology shares above their historical relationship to company
fundamentals, the small-cap sector as a whole remains at the low end of its
valuation range.
If a more equitable base of market leadership develops, as we expect, the
Portfolio's diversified investment approach should serve shareholders well. A
diversified mix of investments should also help dampen volatility as the stock
market experiences occasional price corrections.
[GRAPHIC OMITTED: WORM CHART GROWTH OF $10,000 INVESTED SINCE 1/31/96]
Performance Through December 31, 1999
Growth of $10,000 Invested Since 1/31/96
Opportunity
Growth Russell 2000 Consumer
Date Portfolio Index Price Index
- ----------------------------------------------------------------------
1/31/96 10,000 10,000 10,000
2/29/96 10,416 10,312 10,032
3/31/96 10,722 10,525 10,084
4/30/96 11,944 11,089 10,123
5/31/96 12,716 11,525 10,142
6/30/96 11,871 11,052 10,149
7/31/96 10,855 10,087 10,168
8/31/96 11,499 10,673 10,188
9/30/96 12,342 11,090 10,220
10/31/96 11,364 10,920 10,253
11/30/96 10,954 11,369 10,272
12/31/96 11,302 11,667 10,272
1/31/97 11,528 11,901 10,304
2/28/97 10,533 11,613 10,337
3/31/97 9,415 11,065 10,363
4/30/97 9,009 11,095 10,376
5/31/97 10,338 12,329 10,369
6/30/97 10,887 12,858 10,382
7/31/97 11,454 13,456 10,395
8/31/97 11,721 13,764 10,415
9/30/97 13,018 14,772 10,440
10/31/97 12,246 14,123 10,466
11/30/97 11,776 14,032 10,460
12/31/97 11,407 14,277 10,447
1/31/98 11,063 14,052 10,466
2/28/98 11,739 15,090 10,486
3/31/98 12,175 15,712 10,505
4/30/98 12,216 15,798 10,525
5/31/98 11,219 14,947 10,544
6/30/98 11,305 14,978 10,557
7/31/98 10,451 13,765 10,570
8/31/98 8,200 11,094 10,583
9/30/98 8,812 11,963 10,596
10/31/98 9,345 12,451 10,622
11/30/98 9,990 13,104 10,622
12/31/98 11,066 13,915 10,615
1/31/99 10,904 14,096 10,641
2/28/99 9,855 12,959 10,654
3/31/99 10,027 13,162 10,687
4/30/99 10,242 14,341 10,764
5/31/99 10,645 14,553 10,764
6/30/99 11,352 15,207 10,764
7/31/99 11,343 14,788 10,797
8/31/99 10,861 14,243 10,823
9/30/99 11,168 14,243 10,874
10/31/99 11,244 14,304 10,894
11/30/99 12,273 15,176 10,900
12/31/99 $14,114 $16,893 $10,900
INSET LEGEND READS:
Russell 2000
Index
$16,893
Opportunity Growth
Portfolio
$14,114
Consumer
Price Index
$10,900
INSET BOX ON CHART READS:
Opportunity Growth
Portfolio
Annualized Total Returns*
- -------------------------
Since Inception
1/18/96 10.57%
1 Year 27.55%
Footnote reads:
*See accompanying notes to Portfolio Management Reviews.
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.
In a market that favored technology issues, medium-capitalization Internet and
telecommunications stocks were among the strongest performers of 1999. (Market
capitalization is calculated by multiplying the number of stock shares
outstanding by the price of those shares.) These kinds of stocks, along with
continued economic strength, boosted overall returns for the mid-cap growth
market during the period.
[GRAPHIC PIE CHART OMITTED: Portfolio Composition (% of Portfolio)]
Portfolio Composition (% of Portfolio)
Short-Term Securities 9.3%
Common Stocks 90.7%
With a significant overweighting in high-growth areas like technology and
telecommunications, the LB Series Fund, Inc. Mid Cap Growth Portfolio far
outpaced its market benchmark, the Standard & Poor's MidCap 400 Index, for the
reporting period. Over the 12 months ended December 31, 1999, the Portfolio had
a total return (based on NAV) of 49.64%, versus 14.70% for the Index.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
Top 10 Holdings % of Portfolio
- ----------------------------------------------------------------------
Veritas Software Corp. 1.0%
Citrix Systems, Inc. 1.0%
Comverse Technology, Inc. 1.0%
QUALCOMM, Inc. 0.8%
Analog Devices, Inc. 0.7%
Xilinx, Inc. 0.7%
Vitesse Semiconductor Corp. 0.7%
PMC-Sierra, Inc. 0.6%
JDS Uniphase Corp. 0.6%
Forest Laboratories, Inc. 0.6%
Footnote reads:
These holdings represent 7.7% of the total investment portfolio.
Heavier Weighting in Technology
Investors favored technology stocks and other high-growth issues throughout
much of 1999. As economic optimism improved, interest in other mid-cap growth
shares improved, as well.
Because of purchases we made during the third quarter of 1998, the Portfolio
was substantially overweighted in technology stocks when the reporting period
began. In addition, we also overweighted shares of energy and health care
firms. During the year, we increased our weighting in technology in order to
take advantage of strong momentum in the sector, particularly in the area of
software, semiconductor and communications equipment firms. Strong performers
in these groups included BroadVision Inc., Rational Software, and LAM Research.
Careful stock selection was also key in the area of health care, where the
Portfolio was overweighted in shares of biotechnology and pharmaceutical firms.
[GRAPHIC OMITTED: TOP 10 INDUSTRIES]
Top 10 Industries
Computers - Software & Services 17.1%
Electronics 9.3%
Communications Equipment 6.0%
Telephone & Telecommunications 5.0%
Banks 3.8%
Retail 3.8%
Broadcasting 3.7%
Oil & Gas 3.6%
Health Care - Drugs & Pharmaceuticals 3.2%
Biotechnology 2.9%
Footnote reads:
These holdings represent 58.4% of the 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): $271.7
Of further benefit were underweightings in the poorer performing financial and
consumer cyclical groups. As we increased the Portfolio's weighting in
technology shares, we reduced positions in these sectors accordingly. Following
strong performances by capital goods and energy stocks in the first half of the
year, we also trimmed holdings in those issues.
Technology to Remain Large Position
We believe that the direction of interest rates will play a large role in the
future performance of mid-cap shares. If rates stabilize or decline, mid-cap
stocks could become more attractive. Conversely, if interest rates continue to
rise, the profits of many mid-cap firms could suffer.
As investors wait to see what happens with interest rates, the prices for
stocks of all market capitalizations could remain choppy. Technology shares
could be particularly volatile, due to historically high price/earnings ratios,
as well as other company fundamentals. While we like the long-term outlook for
technology issues and plan to keep a sizable position in the sector, we may
trim that sector to a more market-neutral position in coming months. This
strategy would let us take advantage of opportunities in financial stocks, as
well as other sectors whose prices have become particularly attractive.
[GRAPHIC OMITTED: WORM CHART GROWTH OF $10,000 INVESTED SINCE 1/31/98]
Performance Through December 31, 1999
Growth of $10,000 Invested Since 1/31/98
Mid
Cap
Growth S&P MidCap Consumer
Date Portfolio 400 Index Price Index
- ----------------------------------------------------------------------
1/31/98 10,000 10,000 10,000
2/28/98 10,732 10,828 10,019
3/31/98 11,132 11,316 10,037
4/30/98 11,224 11,523 10,056
5/31/98 10,650 11,005 10,074
6/30/98 10,968 11,074 10,087
7/31/98 10,457 10,645 10,099
8/31/98 8,344 8,665 10,111
9/30/98 8,868 9,498 10,124
10/31/98 9,393 10,347 10,149
11/30/98 10,084 10,864 10,149
12/31/98 11,162 12,176 10,142
1/31/99 11,588 11,702 10,167
2/28/99 10,939 11,089 10,179
3/31/99 11,624 11,400 10,210
4/30/99 12,050 12,298 10,285
5/31/99 11,920 12,352 10,285
6/30/99 12,843 13,014 10,285
7/31/99 12,704 12,737 10,316
8/31/99 12,487 12,301 10,340
9/30/99 12,453 11,920 10,390
10/31/99 13,387 12,528 10,408
11/30/99 14,357 13,182 10,415
12/31/99 $16,704 $13,965 $10,415
INSET LEGEND READS:
Mid Cap
Growth
Portfolio
$16,704
S&P MidCap
400 Index
$13,965
Consumer
Price Index
$10,415
INSET BOX ON CHART READS:
Mid Cap Growth
Portfolio
Annualized Total Returns*
- -------------------------
Since Inception
1/30/98 30.67%
1 Year 49.64%
Footnote reads:
*See accompanying notes to Portfolio Management Reviews.
World Growth Portfolio Review
[GRAPHIC OMITTED: PHOTO OF DAVID J.L. WARREN]
David J.L. Warren is president of Rowe Price-Fleming International, investment
subadvisor of the LB World Growth Fund. He leads a team of 12 portfolio
managers that has managed the Fund's assets since its inception in September,
1995. David has worked in investment research and management for over 20 years,
and has managed international portfolios with Rowe Price-Fleming since 1984.
Stocks in most foreign nations rallied during 1999, as economies abroad
rebounded from the economic turmoil of the previous year. Interest rate cuts,
mergers and company restructurings also helped fuel the advance. In this
environment, the LB Series Fund, Inc. World Growth Portfolio earned a total
return of 34.13% (based on NAV) for the 12 months ended December 31, 1999.
With exceptional returns from many individual investments, the Portfolio
outpaced its market benchmark, Morgan Stanley Capital International's Europe,
Australasia, and Far East (EAFE) Index, which returned 27.30% for the
reporting period. The Portfolio also benefited from its holdings in the
strongly performing markets of Latin America, which are not represented in the
Index.
[GRAPHIC PIE CHART OMITTED: Portfolio Composition (% of Portfolio)]
Portfolio Composition (% of Portfolio)
Short-term Securities 4.9%
Preferred Stocks 0.2%
Common Stocks &
Warrants 94.9%
Economic Recovery Lifts Foreign Markets
During the year, gains for stocks in East Asia and Latin America were
particularly strong. Major financial reforms by the Japanese government, along
with positive economic signals, drew many outside investors to Japanese stocks.
A favorable macroeconomic backdrop helped spur an unexpectedly fast recovery
in other East Asian markets, as well. Structural changes were also beneficial
to the economies and stocks of Europe, during the region's first year of
economic union. In Latin America, stock investors benefited from lower interest
rates and increased consumer spending.
[GRAPHIC OMITTED: TOP 10 COUNTRIES]
Top 10 % of
Countries Portfolio
- -----------------------------------------------------------
Japan 23.0%
United Kingdom 15.4%
France 11.2%
Netherlands 7.9%
Germany 6.5%
Italy 5.2%
Switzerland 4.9%
Sweden 3.0%
Spain 3.0%
Hong Kong 2.7%
Footnote reads:
These countries represent 82.8% of the total investment portfolio.
During the year, a combination of price gains and new investments increased the
portion of Japanese stocks in the Portfolio from 17% to 23% of assets. With
foreign markets focused on stocks from the telecommunications and electronic
component groups, we emphasized Japanese stocks in these sectors. The
portfolio's holdings in other Asian markets also rose during 1999. At the end
of the year, stocks from Hong Kong accounted for the largest portion of these
issues, followed by stocks from Australia. Here, too, we added shares of
technology and telecommunications firms, along with several banking issues.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
% of
Top 10 Holdings Country Portfolio
- ------------------------------------------------------------------------------
Sony Corp. Japan 2.1%
Nokia (AB) OY Finland 2.0%
Mannesmann AG Germany 2.0%
Kyocera Japan 2.0%
Murata Manufacturing Japan 1.8%
National Westminster Bank United Kingdom 1.7%
Nippon Telegraph & Telecom Corp. Japan 1.7%
Telecom Italia Mobile SpA Italy 1.7%
Shell Transport & Trading Co. United Kingdom 1.5%
Telecomunicacues Brasilieras SA ADR (USD) Brazil 1.3%
Footnote reads:
These holdings represent 17.8% of the total investment portfolio.
LB Series Fund, Inc.
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): $550.1
As we increased investments in Asia, we trimmed some of the Portfolio's
European holdings. This, coupled with the underperformance of European shares,
reduced our position in Europe from 72.40% to 61.60% of assets during the year,
and left the Portfolio slightly underweighted in Europe versus its market
benchmark. The Portfolio was also underweighted versus its market benchmark in
the weaker markets of Germany and the United Kingdom, which helped its
performance. Within Europe, we traded shares of retail, food manufacturing and
pharmaceutical companies for shares of telecommunications, electronic
components and business service firms.
International Outlook
We believe that international economies are poised for continued economic
growth with moderate inflation. Stocks in Europe and Japan should also benefit
from continued merger and acquisition activity. Stock returns may be strongest
in Europe, where economic improvements may outpace those of other regions.
Japan may experience only moderate economic growth, as government stimulus
wanes and corporate restructuring plans are implemented. As in the past, we
will focus on individual companies within each market whose potential for
growth is especially strong.
[GRAPHIC OMITTED: WORM CHART GROWTH OF $10,000 INVESTED SINCE 1/31/96]
Performance Through December 31, 1999
Growth of $10,000 Invested Since 1/31/96
World Morgan Stanley
Growth Capital International Consumer
Date Portfolio EAFE Index Price Index
- --------------------------------------------------------------------
1/31/96 10,000 10,000 10,000
2/29/96 9,974 10,036 10,032
3/31/96 10,098 10,252 10,084
4/30/96 10,355 10,552 10,123
5/31/96 10,336 10,360 10,142
6/30/96 10,468 10,421 10,149
7/31/96 10,137 10,119 10,168
8/31/96 10,290 10,143 10,188
9/30/96 10,534 10,415 10,220
10/31/96 10,481 10,311 10,253
11/30/96 10,965 10,723 10,272
12/31/96 11,025 10,588 10,272
1/31/97 10,871 10,220 10,304
2/28/97 10,983 10,389 10,337
3/31/97 10,967 10,430 10,363
4/30/97 11,035 10,487 10,376
5/31/97 11,738 11,172 10,369
6/30/97 12,239 11,791 10,382
7/31/97 12,568 11,985 10,395
8/31/97 11,433 11,092 10,415
9/30/97 12,195 11,715 10,440
10/31/97 11,306 10,816 10,466
11/30/97 11,276 10,708 10,460
12/31/97 11,335 10,805 10,447
1/31/98 11,737 11,302 10,466
2/28/98 12,423 12,030 10,486
3/31/98 12,851 12,402 10,505
4/30/98 12,952 12,503 10,525
5/31/98 12,928 12,445 10,544
6/30/98 12,924 12,542 10,557
7/31/98 13,082 12,673 10,570
8/31/98 11,483 11,105 10,583
9/30/98 11,226 10,768 10,596
10/31/98 12,223 11,893 10,622
11/30/98 12,781 12,505 10,622
12/31/98 13,233 13,002 10,615
1/31/99 13,102 12,967 10,641
2/28/99 12,870 12,661 10,654
3/31/99 13,391 13,192 10,687
4/30/99 13,887 13,731 10,764
5/31/99 13,256 13,026 10,764
6/30/99 13,762 13,537 10,764
7/31/99 14,022 13,942 10,797
8/31/99 14,177 13,996 10,823
9/30/99 14,259 14,141 10,874
10/31/99 14,729 14,674 10,894
11/30/99 15,758 15,187 10,900
12/31/99 $17,749 $16,554 $10,900
INSET LEGEND READS:
World
Growth
Portfolio
$17,749
Morgan Stanley
Capital International
EAFE Index
$16,554
Consumer
Price Index
$10,900
INSET BOX ON CHART READS:
World
Growth Portfolio
Annualized Total Returns*
- -------------------------
Since inception
1/18/96 15.65%
1 Year 34.13%
Footnote reads:
*See accompanying notes to Portfolio Management Reviews.
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.
The LB Series Fund, Inc. Growth Portfolio enjoyed exceptional performance for
the 12 months ended December 31, 1999, earning a total return (based on NAV)
of 43.61%. This was more than double the return for its market benchmark, the
Standard & Poor's 500 Index, which earned 21.04% over the same time.
During the year, an explosion in business spending on new telecommunications
and technology systems sparked an unprecedented growth in earnings for
companies that provide this equipment. With the stock market focused on
high-growth investments, returns from these sectors far outpaced those for
other industry groups. The Growth Portfolio benefited in this environment by
maintaining overweighted positions in technology and telecommunications stocks
versus its market benchmark and by emphasizing segments within those sectors
where performance was especially outstanding.
[GRAPHIC PIE CHART OMITTED: Portfolio Composition (% of Portfolio)]
Portfolio Composition (% of Portfolio)
Short-Term Securities 4.3%
Preferred Stocks 0.3%
Common Stocks 95.4%
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
Top 10 Holdings % of Portfolio
- -------------------------------------------------------
Microsoft Corp. 3.3%
Cisco Systems, Inc. 3.1%
General Electric Co. 1.5%
Sun Microsystems, Inc. 1.4%
Intel Corp. 1.4%
Home Depot, Inc. 1.4%
Oracle Corp. 1.3%
Citigroup, Inc. 1.3%
EMC Corp. 1.3%
Motorola, Inc. 1.3%
Footnote reads:
These holdings represent 17.3% of the total investment portfolio.
Stock Selection Boosts Returns
The Portfolio remained overweighted in technology stocks throughout 1999. By
giving extra attention to shares of Internet, telecommunications equipment and
semiconductor equipment firms, we further enhanced returns. Of particular
benefit were performances by DoubleClick, CMGI and Yahoo! in the Internet
group; KLA-Tencor, National Semiconductor and Texas Instruments in the
semiconductor group; and Motorola, Nokia, JDS Uniphase and Ciena in the
telecommunications equipment group.
Also beneficial were overweightings in strongly performing biotechnology stocks
such as Biogen, Inc., Amgen and MedImmune, and media stocks like CBS and Clear
Channel Communications. Biotechnology stocks benefited from strong earnings
growth and increased interest in human "genomics," while media stocks benefited
from industry mergers and an expanding customer base. An increased position in
oil services shares boosted returns, too, as oil prices rose during the year.
These positives offset disappointing returns from the Portfolio's holdings in
retail firms, which were hurt by concern that higher interest rates would curb
consumer spending. Underweightings in financial, health care, food and beverage
stocks helped offset weak performances in those groups.
[GRAPHIC OMITTED: TOP 10 INDUSTRIES]
Top 10 Industries
Computers - Software & Services 13.6%
Communications Equipment 7.2%
Retail 6.5%
Electronics 6.2%
Telephone & Telecommunications 5.9%
Broadcasting 5.2%
Financial - Diversified 3.9%
Computers - Hardware 3.7%
Computers - Networking 3.6%
Oil & Gas 3.3%
Footnote reads:
These holdings represent 59.1% of the total investment portfolio.
LB Series Fund, Inc.
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): $4,913.3
In the first half of the year, we traded some investments in large
growth-oriented companies for shares of firms with medium capitalizations.
(Market capitalization is calculated by multiplying the number of stock shares
outstanding by the price of those shares.) This served the Portfolio well
throughout the year as increased economic optimism helped investors recognize
the attractive value in the mid-cap sector.
Market May Become More Selective
Prices for growth stocks, particularly shares of technology firms, may become
more volatile in the months to come. While the long-term prospects for
technology issues remain bright, the sector may be due for a breather after its
sharp run-up in 1999. At the very least, market participants will likely become
more selective in the technology stocks that they favor.
Our selective approach toward technology stocks should continue to benefit the
Portfolio in months to come. As before, we will keep a close watch on company
fundamentals and investor sentiment, and look for new opportunities both inside
and outside of the technology sector. If economic growth slows and interest
rates decline, some of these opportunities may appear in stocks of financial
companies. Additionally, because we think that mid-cap issues still offer good
value, we plan to continue including that asset class as part of our holdings.
[GRAPHIC OMITTED: WORM CHART GROWTH OF $10,000 INVESTED SINCE 12/31/89]
Performance Through December 31, 1999
Growth of $10,000 Invested Since 12/31/89
Growth S&P 500 Consumer
Date Portfolio Index Price Index
- -----------------------------------------------------------------------
12/31/89 10,000 10,000 10,000
1/31/90 9,222 9,338 10,103
2/28/90 9,436 9,441 10,151
3/31/90 9,746 9,698 10,206
4/30/90 9,602 9,465 10,222
5/31/90 10,625 10,369 10,246
6/30/90 10,703 10,307 10,301
7/31/90 10,486 10,281 10,341
8/31/90 9,620 9,342 10,436
9/30/90 9,011 8,889 10,523
10/31/90 8,993 8,861 10,587
11/30/90 9,547 9,423 10,611
12/31/90 9,803 9,686 10,611
1/31/91 10,434 10,118 10,674
2/28/91 11,202 10,824 10,690
3/31/91 11,498 11,090 10,706
4/30/91 11,498 11,127 10,722
5/31/91 12,113 11,590 10,753
6/30/91 11,499 11,065 10,785
7/31/91 12,128 11,594 10,801
8/31/91 12,562 11,855 10,833
9/30/91 12,452 11,657 10,880
10/31/91 12,731 11,829 10,896
11/30/91 12,303 11,338 10,928
12/31/91 13,856 12,635 10,936
1/31/92 13,828 12,414 10,952
2/29/92 13,961 12,559 10,991
3/31/92 13,616 12,315 11,047
4/30/92 13,668 12,692 11,063
5/31/92 13,782 12,735 11,079
6/30/92 13,475 12,549 11,118
7/31/92 13,923 13,078 11,142
8/31/92 13,631 12,796 11,174
9/30/92 13,819 12,945 11,205
10/31/92 14,175 13,006 11,245
11/30/92 14,888 13,429 11,261
12/31/92 14,983 13,598 11,253
1/31/93 15,242 13,723 11,309
2/28/93 15,201 13,895 11,348
3/31/93 15,624 14,190 11,388
4/30/93 15,338 13,863 11,420
5/31/93 15,734 14,211 11,435
6/30/93 15,749 14,257 11,451
7/31/93 15,704 14,215 11,451
8/31/93 16,281 14,740 11,483
9/30/93 16,431 14,627 11,507
10/31/93 16,576 14,944 11,554
11/30/93 16,130 14,786 11,562
12/31/93 16,497 14,971 11,562
1/31/94 17,015 15,490 11,594
2/28/94 16,555 15,055 11,634
3/31/94 15,751 14,402 11,673
4/30/94 15,731 14,599 11,689
5/31/94 15,750 14,814 11,697
6/30/94 15,214 14,451 11,737
7/31/94 15,576 14,941 11,768
8/31/94 16,285 15,543 11,816
9/30/94 16,021 15,160 11,848
10/31/94 16,247 15,514 11,856
11/30/94 15,608 14,938 11,872
12/31/94 15,728 15,158 11,872
1/31/95 16,074 15,562 11,919
2/28/95 16,707 16,157 11,967
3/31/95 17,183 16,640 12,006
4/30/95 17,680 17,137 12,046
5/31/95 18,227 17,797 12,070
6/30/95 19,024 18,212 12,094
7/31/95 20,044 18,829 12,094
8/31/95 20,105 18,867 12,125
9/30/95 20,734 19,661 12,149
10/31/95 20,791 19,604 12,189
11/30/95 21,553 20,449 12,181
12/31/95 21,589 20,844 12,173
1/31/96 22,112 21,567 12,244
2/29/96 22,574 21,752 12,284
3/31/96 22,652 21,966 12,347
4/30/96 23,462 22,300 12,395
5/31/96 23,979 22,850 12,419
6/30/96 23,667 22,939 12,427
7/31/96 22,648 21,935 12,450
8/31/96 23,538 22,391 12,474
9/30/96 24,969 23,647 12,514
10/31/96 25,396 24,314 12,554
11/30/96 27,010 26,142 12,577
12/31/96 26,428 25,625 12,577
1/31/97 28,175 27,242 12,617
2/28/97 27,820 27,441 12,657
3/31/97 26,510 26,310 12,688
4/30/97 27,743 27,891 12,704
5/31/97 29,710 29,567 12,696
6/30/97 30,974 30,895 12,712
7/31/97 33,716 33,354 12,728
8/31/97 32,375 31,480 12,752
9/30/97 34,168 33,214 12,784
10/31/97 33,031 32,118 12,815
11/30/97 33,924 33,592 12,807
12/31/97 34,403 34,170 12,791
1/31/98 34,643 34,563 12,815
2/28/98 37,087 37,041 12,839
3/31/98 38,958 38,942 12,863
4/30/98 39,628 39,339 12,887
5/31/98 38,669 38,639 12,910
6/30/98 40,150 40,211 12,926
7/31/98 39,712 39,793 12,942
8/31/98 33,000 34,035 12,958
9/30/98 35,499 36,206 12,974
10/31/98 38,272 39,172 13,006
11/30/98 40,764 41,538 13,006
12/31/98 44,166 43,934 12,998
1/31/99 46,944 45,771 13,029
2/28/99 44,988 44,347 13,045
3/31/99 47,840 46,121 13,085
4/30/99 49,466 47,920 13,180
5/31/99 48,463 46,789 13,180
6/30/99 51,959 49,386 13,180
7/31/99 50,419 47,846 13,220
8/31/99 50,335 47,608 13,251
9/30/99 50,527 46,304 13,315
10/31/99 54,060 49,235 13,339
11/30/99 57,451 50,239 13,347
12/31/99 $63,426 $53,198 $13,347
INSET LEGEND READS:
Growth
Portfolio
$63,426
S&P 500
Index
$53,198
Consumer
Price Index
$13,347
INSET BOX ON CHART READS:
Growth Portfolio
Annualized Total Returns*
- -------------------------
10 Years 20.28%
5 Years 32.15%
1 Year 43.61%
Footnote reads:
*See accompanying notes to Portfolio Management Reviews.
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.
After underperforming during the global economic uncertainty of 1998, corporate
bonds outperformed as international markets stabilized in 1999. High-yield
bonds were among the best-performing fixed-income asset classes, particularly
issues of lower credit quality. With above-average investments in lower-rated
issues relative to our peer group, the LB Series Fund, Inc. High Yield
Portfolio made the most of this environment and far outpaced its market
benchmark, the Lehman Brothers High Yield Index.
[GRAPHIC PIE CHART OMITTED: Portfolio Composition (% of Portfolio)]
Portfolio Composition (% of Portfolio)
Non-Convertible
Preferred Stocks 8.5%
Common Stocks
& Stock Warrants 6.1%
Short-Term Securities 3.5%
Convertible
Preferred Stocks 2.8%
Corporate
Bonds 79.1%
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
% of
Top 10 Holdings by Issuers Portfolio
- -------------------------------------------------------
Nextel Communications, Inc. 1.6%
Intermedia Communications, Inc. 1.5%
UnitedGlobalCom, Inc. 1.0%
CSC Holdings, Inc. 1.0%
Viatel, Inc. 1.0%
Covad Communications Group, Inc. 0.9%
MCI Worldcom, Inc. 0.9%
Dobson Communications Corp. 0.9%
Primus Telecomm Group, Inc. 0.9%
Wam!Net, Inc. 0.9%
Footnote reads:
These holdings represent 10.6% of the total investment portfolio.
For the 12 months ended December 31, 1999, the Portfolio had a total return
(based on NAV) of 10.52%. Over the same time, the Lehman Brothers High-Yield
Index had a return of 2.39%.
Media/Telecommunications Debt Outperforms
The returns for high-yield bonds tend to be more closely tied to economic
conditions and stock market sentiment than the returns for other fixed-income
issues. Owing to a strong U.S. economy, the outlook for corporate earnings
improved in 1999, and investors recognized the significant value available in
the high-yield sector. The value was especially great for issues with lower
credit ratings, whose prices had been hit harder during the market volatility
of 1998. Additionally, rising interest rates resulted in higher coupons for
newly issued bonds, which also had a positive effect on high-yield bond
performance.
Relative to our peers, an above-average percentage of the High Yield
Portfolio's holdings were in lower-rated bonds in 1999, particularly in the
area of media and telecommunications firms. During this period, the
media/telecommunications sector of the high-yield market benefited from strong
investor demand. We further enhanced returns from these holdings by increasing
positions when prices were low at the end of 1998 and during the fall of 1999,
and taking profits after prices strengthened.
Of further benefit was an underweighting in bonds issued by companies from
highly cyclical industries, which generally lagged other sectors, as well as a
sizable weighting in "cushion bonds." Cushion bonds, which are bonds considered
likely to be called before their maturity dates, tend to be less vulnerable to
rising interest rates; this provides added price stability to a portfolio. In
light of the surging stock market, a small weighting in equity-sensitive
instruments like preferred stock and convertible bonds helped performance, as
well.
[GRAPHIC OMITTED: TOP 10 INDUSTRIES]
Top 10 Industries
Telecommunications - Wireline 15.8%
Broadcasting & Media 11.4%
Telecommunications - Wireless 9.1%
Telecommunications - Data/Internet 6.1%
Machinery & Equipment 3.0%
Food & Beverage 2.2%
Utilities 2.1%
Technology - Hardware 1.9%
Packaging & Containers 1.9%
Health Care Management 1.8%
Footnote reads:
These bond holdings represent 55.3% of the total investment portfolio.
LB Series Fund, Inc.
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): $1,525.7
[GRAPHIC BAR CHART OMITTED: MOODY'S BOND QUALITY RATING DISTRIBUTION]
Moody's Bond Quality
Rating Distribution
AAA 0.0%
AA 0.0%
A 0.4%
Baa 1.6%
Ba 15.8%
B 56.4%
Caa 18.1%
Ca 0.8%
C 0.0%
D 0.4%
Not Rated 6.5%
A Positive Climate in 2000
We believe that the high-yield market could perform well again in 2000. Despite
the possibility of higher interest rates, continued economic strength should
keep investors optimistic about corporate earnings growth. Lower-rated bonds
and issues from the media/technology sector should continue to do well in such
a climate. As a result, we plan to remain overweighted in those investments.
If higher interest rates start to slow economic growth, we may take steps to
trim media/telecommunications investments and upgrade the credit quality of the
Portfolio. Under such a scenario, we would probably maintain positions in
cushion bonds, however, for continued price stability.
[GRAPHIC OMITTED: WORM CHART GROWTH OF $10,000 INVESTED SINCE 12/31/89]
Performance Through December 31, 1999
Growth of $10,000 Invested Since 12/31/89
Lehman Brothers
High Yield High Yield Consumer Price
Date Portfolio Index Index
- -----------------------------------------------------------------------
12/31/89 10,000 10,000 10,000
1/31/90 9,807 9,785 10,103
2/28/90 9,629 9,583 10,151
3/31/90 9,709 9,835 10,206
4/30/90 9,717 9,818 10,222
5/31/90 10,023 10,007 10,246
6/30/90 10,169 10,249 10,301
7/31/90 10,345 10,525 10,341
8/31/90 10,017 9,926 10,436
9/30/90 9,622 9,202 10,523
10/31/90 9,326 8,719 10,587
11/30/90 9,485 8,991 10,611
12/31/90 9,628 9,041 10,611
1/31/91 9,727 9,290 10,674
2/28/91 10,369 10,306 10,690
3/31/91 10,822 10,913 10,706
4/30/91 11,189 11,360 10,722
5/31/91 11,313 11,381 10,753
6/30/91 11,618 11,718 10,785
7/31/91 11,926 12,093 10,801
8/31/91 12,118 12,371 10,833
9/30/91 12,319 12,543 10,880
10/31/91 12,758 12,962 10,896
11/30/91 12,952 13,029 10,928
12/31/91 13,029 13,217 10,936
1/31/92 13,565 13,682 10,952
2/29/92 13,944 14,020 10,991
3/31/92 14,187 14,194 11,047
4/30/92 14,315 14,248 11,063
5/31/92 14,559 14,448 11,079
6/30/92 14,645 14,584 11,118
7/31/92 14,943 14,804 11,142
8/31/92 15,161 14,998 11,174
9/30/92 15,338 15,151 11,205
10/31/92 15,037 14,938 11,245
11/30/92 15,315 15,126 11,261
12/31/92 15,645 15,298 11,253
1/31/93 16,275 15,744 11,309
2/28/93 16,540 16,021 11,348
3/31/93 16,898 16,227 11,388
4/30/93 16,999 16,369 11,420
5/31/93 17,301 16,563 11,435
6/30/93 17,887 16,911 11,451
7/31/93 18,065 17,075 11,451
8/31/93 18,210 17,219 11,483
9/30/93 18,210 17,263 11,507
10/31/93 18,829 17,612 11,554
11/30/93 18,906 17,697 11,562
12/31/93 19,230 17,916 11,562
1/31/94 19,824 18,305 11,594
2/28/94 19,753 18,257 11,634
3/31/94 19,003 17,567 11,673
4/30/94 18,758 17,448 11,689
5/31/94 18,854 17,456 11,697
6/30/94 18,933 17,511 11,737
7/31/94 18,795 17,659 11,768
8/31/94 18,941 17,785 11,816
9/30/94 18,843 17,787 11,848
10/31/94 18,898 17,829 11,856
11/30/94 18,493 17,605 11,872
12/31/94 18,385 17,735 11,872
1/31/95 18,444 17,976 11,919
2/28/95 19,164 18,593 11,967
3/31/95 19,355 18,793 12,006
4/30/95 19,831 19,271 12,046
5/31/95 20,254 19,810 12,070
6/30/95 20,352 19,943 12,094
7/31/95 20,998 20,194 12,094
8/31/95 21,087 20,257 12,125
9/30/95 21,287 20,506 12,149
10/31/95 21,387 20,633 12,189
11/30/95 21,636 20,815 12,181
12/31/95 21,988 21,142 12,173
1/31/96 22,500 21,514 12,244
2/29/96 23,069 21,531 12,284
3/31/96 22,851 21,516 12,347
4/30/96 23,005 21,563 12,395
5/31/96 23,262 21,693 12,419
6/30/96 23,075 21,873 12,427
7/31/96 22,912 21,973 12,450
8/31/96 23,280 22,211 12,474
9/30/96 24,076 22,746 12,514
10/31/96 24,009 22,921 12,554
11/30/96 24,259 23,372 12,577
12/31/96 24,527 23,541 12,577
1/31/97 24,822 23,771 12,617
2/28/97 25,184 24,145 12,657
3/31/97 24,382 23,785 12,688
4/30/97 24,386 24,035 12,704
5/31/97 25,320 24,549 12,696
6/30/97 26,046 24,890 12,712
7/31/97 26,941 25,575 12,728
8/31/97 27,030 25,516 12,752
9/30/97 27,870 26,021 12,784
10/31/97 27,623 26,045 12,815
11/30/97 27,712 26,295 12,807
12/31/97 27,985 26,526 12,791
1/31/98 28,575 27,003 12,815
2/28/98 28,975 27,163 12,839
3/31/98 29,355 27,418 12,863
4/30/98 29,242 27,525 12,887
5/31/98 29,140 27,621 12,910
6/30/98 29,283 27,721 12,926
7/31/98 29,462 27,879 12,942
8/31/98 27,084 26,340 12,958
9/30/98 26,683 26,458 12,974
10/31/98 26,123 25,916 13,006
11/30/98 27,420 26,992 13,006
12/31/98 27,565 27,021 12,998
1/31/99 28,170 27,421 13,029
2/28/99 27,952 27,259 13,045
3/31/99 28,466 27,518 13,085
4/30/99 29,602 28,052 13,180
5/31/99 29,138 27,673 13,180
6/30/99 29,445 27,615 13,180
7/31/99 29,526 27,726 13,220
8/31/99 29,242 27,418 13,251
9/30/99 29,025 27,221 13,315
10/31/99 28,948 27,041 13,339
11/30/99 29,600 27,360 13,347
12/31/99 $30,464 $27,667 $13,347
INSET LEGEND READS:
High Yield
Portfolio
$30,464
Lehman Brothers
High Yield
Index
$27,667
Consumer Price
Index
$13,347
INSET BOX ON CHART READS:
High Yield Portfolio
Annualized Total Returns*
- -------------------------
10 Years 11.78%
5 Years 10.62%
1 Year 10.52%
Footnote reads:
*See accompanying notes to Portfolio Management Reviews.
Income Portfolio Review
[GRAPHIC OMITTED: PHOTO OF MARK L. SIMENSTAD]
Mark L. Simenstad is a Chartered Financial Analyst and portfolio manager for
the Income Portfolio. He is a vice president of Lutheran Brotherhood and also
serves as head of fixed-income fund management. Mark joined Lutheran
Brotherhood in 1983.
A strong economy drove interest rates higher in 1999 and, consequently, bond
prices suffered their second largest decline in 15 years. In this environment,
investment-grade corporate bonds outperformed U.S. Treasury bonds, though both
sectors failed to attract significant investor interest. Within the corporate
sector, improving credit conditions helped high-yield issues with lower credit
ratings outpace investment-grade bonds.
[GRAPHIC PIE CHART OMITTED: Portfolio Composition (% of Portfolio)]
Portfolio Composition (% of Portfolio)
Short-Term
Securities 15.0%
U.S.
Government 11.1%
Mortgage-
Backed
Securities 8.7%
Asset-Backed
Securities 7.9%
U.S. Government
Agency 2.6%
Foreign Government Bonds 2.6%
Preferred Stocks 0.6%
Common Stocks 0.2%
Corporate
Bonds 51.3%
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
% of
Top 10 Holdings Security Type Portfolio
- ------------------------------------------------------------------------------
U.S. Treasury Bonds (Nov. 2022) U.S. Government 4.3%
Government National Mortgage Assn. (Jan. 2029) Mortgage-Backed 3.1%
U.S. Treasury Notes (Aug. 2009) U.S. Government 3.1%
Federal National Mortgage Assn. (Jan. 2014) Mortgage-Backed 2.9%
Federal National Mortgage Assn. (Jan. 2029) Mortgage-Backed 2.7%
U.S. Treasury Bonds (Aug. 2023) U.S. Government 1.7%
World Omni Auto Lease Trust Asset-Backed 1.5%
World Financial Network Credit Card Master Trust Asset-Backed 1.3%
Westvaco Corp. Corporate 1.3%
Safeway, Inc. Corporate 1.0%
Footnote reads:
These bond holdings represent 22.9% of the total investment portfolio.
Because bonds with longer maturities are generally more sensitive to changes
in interest rates, they lost more in price than shorter-term issues during
the year. This trend adversely affected the performance of the LB Series Fund,
Inc. Income Portfolio, which had a larger weighting in longer-maturity bonds
than its market benchmark, the Lehman Brothers Aggregate Index. During the 12
months ended December 31, 1999, the Portfolio earned a total return (based on
NAV) of -2.01%, while the Index returned -0.82%.
Increasing Investments in Corporate Bonds
When the reporting period began, we had recently added attractively priced
corporate bonds following the market fallout of 1998. We continued to increase
investments in corporates during 1999. The Portfolio also benefited from adding
corporates in sectors that performed especially well for the year.
Besides adding corporate bonds with lower credit ratings, we bought bonds
issued by telecommunications firms. The prices for these investments held up
better during the year than those from other industries, benefiting from a
strong interest by investors in telecommunications stocks. An overweighting in
bonds of energy firms further enhanced returns, due to an increase in oil
prices. Investments in "Yankee" bonds issued in the United States by
governments in Korea, Mexico and the Philippines also contributed positively to
performance.
[GRAPHIC BAR CHART OMITTED: MOODY'S BOND QUALITY RATING DISTRIBUTION]
Moody's Bond Quality
Rating Distribution
AAA 38.1%
AA 10.5%
A 16.1%
Baa 23.9%
Ba 8.4%
B 3.0%
Caa 0.0%
Ca 0.0%
C 0.0%
D 0.0%
NR 0.0%
At the same time, the Portfolio benefited from underweightings in groups that
were out of favor with investors. One such example were bonds issued by utility
firms, which were especially vulnerable to rising interest rates. A modest
overweighting in convertible bonds further enhanced performance, as a rising
stock market helped to minimize the price slide for convertible issues. This
helped offset disappointing returns from an overweighted position in bonds
issued by financial firms.
In May, when it looked like interest rates might be peaking, we added issues
with longer maturities, which tend to outperform when bonds rally. When
interest rates continued to rise, we traded some of these longer-term issues
for shorter maturities. We kept the Portfolio's overall maturity structure on
the long side, however, in the belief that when higher rates eventually
slowed economic growth and bonds rallied, issues with longer maturities would
outperform shorter-term securities.
LB Series Fund, Inc.
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): $1,066.0
New Opportunities
In the coming months, the rise in long-term interest rates may reach its peak,
accompanied by a potential slowing in economic growth. If that happens, bond
prices could rise and the Portfolio could benefit from its longer-maturity
investments.
In the meantime, we have started to reduce the Portfolio's corporate exposure,
particularly in the financial and retail sectors. Although a generally positive
economic outlook should benefit corporate bond prices over time, the sector
could experience additional near-term volatility as the economy slows. In
addition, the distortion of bond yields as the federal budget surplus reduces
the supply of Treasury issues could cause further price fluctuations. As we
take advantage of new investment opportunities that such fluctuations may
bring, we will continue to emphasize a diversified portfolio of quality
investments with attractive yields and income for shareholders.
[GRAPHIC OMITTED: WORM CHART GROWTH OF $10,000 INVESTED SINCE 12/31/89]
Performance Through December 31, 1999
Growth of $10,000 Invested Since 12/31/89
Lehman
Brothers
Income Aggregate Consumer Price
Date Portfolio Bond Index Index
- ------------------------------------------------------------------------
12/31/89 10,000 10,000 10,000
1/31/90 9,896 9,881 10,103
2/28/90 9,929 9,913 10,151
3/31/90 9,962 9,920 10,206
4/30/90 9,833 9,828 10,222
5/31/90 10,134 10,119 10,246
6/30/90 10,290 10,282 10,301
7/31/90 10,415 10,424 10,341
8/31/90 10,246 10,284 10,436
9/30/90 10,182 10,370 10,523
10/31/90 10,278 10,501 10,587
11/30/90 10,519 10,727 10,611
12/31/90 10,692 10,895 10,611
1/31/91 10,832 11,030 10,674
2/28/91 11,078 11,123 10,690
3/31/91 11,212 11,200 10,706
4/30/91 11,373 11,321 10,722
5/31/91 11,505 11,387 10,753
6/30/91 11,522 11,381 10,785
7/31/91 11,673 11,539 10,801
8/31/91 11,941 11,788 10,833
9/30/91 12,200 12,028 10,880
10/31/91 12,332 12,161 10,896
11/30/91 12,418 12,273 10,928
12/31/91 12,804 12,638 10,936
1/31/92 12,757 12,466 10,952
2/29/92 12,841 12,547 10,991
3/31/92 12,849 12,477 11,047
4/30/92 12,893 12,566 11,063
5/31/92 13,140 12,804 11,079
6/30/92 13,322 12,981 11,118
7/31/92 13,632 13,245 11,142
8/31/92 13,767 13,379 11,174
9/30/92 13,930 13,538 11,205
10/31/92 13,706 13,358 11,245
11/30/92 13,759 13,361 11,261
12/31/92 13,985 13,573 11,253
1/31/93 14,276 13,834 11,309
2/28/93 14,575 14,076 11,348
3/31/93 14,661 14,135 11,388
4/30/93 14,770 14,234 11,420
5/31/93 14,796 14,253 11,435
6/30/93 15,101 14,511 11,451
7/31/93 15,236 14,593 11,451
8/31/93 15,510 14,849 11,483
9/30/93 15,558 14,889 11,507
10/31/93 15,697 14,944 11,554
11/30/93 15,529 14,817 11,562
12/31/93 15,616 14,897 11,562
1/31/94 15,847 15,098 11,594
2/28/94 15,504 14,835 11,634
3/31/94 14,994 14,469 11,673
4/30/94 14,833 14,353 11,689
5/31/94 14,861 14,352 11,697
6/30/94 14,752 14,320 11,737
7/31/94 15,070 14,605 11,768
8/31/94 15,108 14,623 11,816
9/30/94 14,843 14,408 11,848
10/31/94 14,788 14,395 11,856
11/30/94 14,792 14,363 11,872
12/31/94 14,885 14,462 11,872
1/31/95 15,155 14,749 11,919
2/28/95 15,502 15,100 11,967
3/31/95 15,589 15,192 12,006
4/30/95 15,856 15,404 12,046
5/31/95 16,543 16,001 12,070
6/30/95 16,679 16,117 12,094
7/31/95 16,583 16,082 12,094
8/31/95 16,791 16,276 12,125
9/30/95 16,952 16,434 12,149
10/31/95 17,214 16,648 12,189
11/30/95 17,482 16,898 12,181
12/31/95 17,766 17,134 12,173
1/31/96 17,868 17,247 12,244
2/29/96 17,491 16,947 12,284
3/31/96 17,319 16,829 12,347
4/30/96 17,212 16,734 12,395
5/31/96 17,201 16,701 12,419
6/30/96 17,415 16,925 12,427
7/31/96 17,450 16,970 12,450
8/31/96 17,386 16,942 12,474
9/30/96 17,725 17,236 12,514
10/31/96 18,137 17,619 12,554
11/30/96 18,511 17,920 12,577
12/31/96 18,342 17,754 12,577
1/31/97 18,399 17,809 12,617
2/28/97 18,486 17,853 12,657
3/31/97 18,214 17,655 12,688
4/30/97 18,428 17,920 12,704
5/31/97 18,621 18,090 12,696
6/30/97 18,890 18,305 12,712
7/31/97 19,449 18,800 12,728
8/31/97 19,243 18,640 12,752
9/30/97 19,552 18,916 12,784
10/31/97 19,709 19,190 12,815
11/30/97 19,797 19,278 12,807
12/31/97 19,946 19,473 12,791
1/31/98 20,215 19,722 12,815
2/28/98 20,249 19,706 12,839
3/31/98 20,365 19,773 12,863
4/30/98 20,478 19,876 12,887
5/31/98 20,657 20,065 12,910
6/30/98 20,851 20,236 12,926
7/31/98 20,883 20,278 12,942
8/31/98 21,025 20,609 12,958
9/30/98 21,612 21,091 12,974
10/31/98 21,486 20,979 13,006
11/30/98 21,740 21,099 13,006
12/31/98 21,818 21,162 12,998
1/31/99 22,028 21,312 13,029
2/28/99 21,521 20,939 13,045
3/31/99 21,652 21,054 13,085
4/30/99 21,705 21,122 13,180
5/31/99 21,389 20,936 13,180
6/30/99 21,280 20,869 13,180
7/31/99 21,200 20,781 13,220
8/31/99 21,149 20,771 13,251
9/30/99 21,368 21,012 13,315
10/31/99 21,392 21,090 13,339
11/30/99 21,440 21,087 13,347
12/31/99 $21,378 $20,986 $13,347
INSET LEGEND READS:
Income
Portfolio
$21,378
Lehman
Brothers
Aggregate
Bond Index
$20,986
Consumer Price
Index
$13,347
INSET BOX ON CHART READS:
Income Portfolio
Annualized Total Returns*
- -------------------------
10 Years 7.89%
5 Years 7.50%
1 Year -2.01%
Footnote reads:
*See accompanying notes to Portfolio Management Reviews.
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 by 1.70
percentage points in 1999. This increase, which is relatively sharp by historic
standards, occurred as the Federal Reserve raised short-term interest rates to
slow the economy and curb inflation. By adjusting the maturity structure and
mix of investments in the LB Series Fund, Inc. Money Market Portfolio to make
the most of rising yields, we helped the Portfolio earn a total return of 4.94%
for the 12 months ended December 31, 1999.
[GRAPHIC PIE CHART OMITTED: Portfolio Composition (% of Portfolio)]
Portfolio Composition (% of Portfolio)
Certificates
of Deposit 4.7%
Medium
Term Notes 3.4%
U.S. Government
Agency 3.1%
Bank
Notes 1.0%
Variable
Rate Notes 0.8%
Commercial
Paper 87.0%
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
% of
Top 10 Holdings by Creditor Portfolio
- ------------------------------------------------------------------
General Electric Capital Corp. 4.4%
CIT Group Holdings, Inc. 4.4%
USAA Capital Corp. 4.4%
Associates Corp. of North America 4.4%
DaimlerChrysler AG 4.3%
Delaware Funding Corp. 4.2%
Wells Fargo & Co. 3.9%
Met-Life Funding Inc. 3.8%
Chevron Corp. 3.7%
General Motors Acceptance Corp. 3.7%
Footnote reads:
These holdings represent 41.2% of the total investment portfolio.
A "Barbelled" Maturity Structure
In a climate of rising interest rates, the higher yields of longer-maturities
issues help to enhance returns. For most of 1999 we used a "barbelled" maturity
structure, meaning that we held these longer-maturity issues, which typically
provide greater yields, alongside short-term issues, which help maintain
liquidity. This strategy allowed us to take advantage of new yield
opportunities as they arose.
We began to add longer-term issues at the start of the year. Although interest
rates were falling at that time, the longer maturities helped maintain a strong
yield as large amounts of new cash came in to the Portfolio. We continued to
add investments in longer maturities through the summer, as strong economic
data forced the Federal Reserve Board to raise interest rates.
In the final months of the year, Y2K computer concerns caused the Federal
Reserve to postpone further rate hikes until 2000. At the same time, increased
desire for liquidity on the part of issuers created an abundant supply of
shorter-term instruments. To take advantage of investment opportunities in this
environment and also assure adequate liquidity for our shareholders, we
increased investments in shorter-term issues during this period. In making
these investments we chose issuers that seemed the best prepared for Y2K.
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): $294.9
With sizable holdings in shorter maturities throughout the year, we were able
to take advantage of many yield opportunities that arose from near-term market
fluctuations. These opportunities came in different forms, including debt
issued by industrial firms, 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.
Looking Ahead
Shorter maturities have now become relatively expensive. As a result, we have
recently focused on opportunities in longer-term issues. If economic growth
slows, causing stock prices to correct and money market securities to rally, we
may significantly increase positions in longer maturities. As long as it looks
like interest rates will continue to rise, we would balance such purchases with
shorter maturities to maintain the Portfolio's barbelled maturity structure. In
the meantime, we will continue to look for special yield opportunities that
near-term market changes might bring, with an emphasis on issues of the highest
credit quality.
Money Market Portfolio
Annualized Total Returns*
Period Ending 12/31/99
- -------------------------
10 Years 5.08%
5 Years 5.32%
1 Year 4.94%
Seven-Day Yields
as of 12/31/99+
- -------------------------
Current 5.51%
Effective 5.66%
Notes to Portfolio Management Reviews
*The annualized total returns for the Portfolio represent past performance
and 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. 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 a bank deposit and 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.
PricewaterhouseCoopers LLP
650 Third Avenue South
Park Building
Suite 1300
Minneapolis MN 55402-4333
Telephone (612) 596 6000
Facsimile (612) 373 7160
PricewaterhouseCoopers
[GRAPHIC OMITTED: PRINTER STRIP IN LOGO]
Report of Independent Accountants
To the Shareholders and Board of Directors of
LB Series Fund, Inc.
In our opinion, the accompanying statements of assets and liabilities,
including the portfolio of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of each of
the Portfolios (Opportunity Growth, Mid Cap Growth, World Growth, Growth,
High Yield, Income, and Money Market) comprising the LB Series Fund, Inc.
(hereafter referred to as the "Fund") at December 31, 1999, the results of
each of their operations for the year then ended, the changes in each of
their net assets for each of the two years in the period then ended and the
financial highlights for each of the five years in the period then ended,
in conformity with accounting principles generally accepted in the United
States. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1999 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
/s/ PricewaterhouseCoopers LLP
February 9, 2000
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
Opportunity Growth Portfolio
Portfolio of Investments
December 31, 1999
Shares Value
- -------------- ----------------
<S> <C>
COMMON STOCKS - 96.6% (a)
Aerospace & Defense - 0.3%
42,200 Orbital Sciences Corp. $ 783,303 (b)
29,400 Triumph Group, Inc. 711,113 (b)
----------------
1,494,416
----------------
Agriculture - 0.1%
35,600 Veterinary Centers of America, Inc. 458,350 (b)
----------------
Airlines - 0.4%
21,500 Alaska Air Group, Inc. 755,188 (b)
79,900 Mesaba Holdings, Inc. 913,856 (b)
----------------
1,669,044
----------------
Automotive - 0.4%
66,500 Gentex Corp. 1,845,375 (b)
----------------
Banks - 1.2%
45,300 City National Corp. 1,492,069
42,575 Commerce Bancorp, Inc. 1,721,627
79,500 Community First Bank Shares, Inc. 1,252,125
25,200 TeleBanc Financial Corp. 655,200 (b)
----------------
5,121,021
----------------
Biotechnology - 0.8%
6,000 Biogen, Inc. 507,000 (b)
48,300 Lipsome Co., Inc. 589,411 (b)
104,020 Serologicals Corp. 624,120 (b)
27,100 Techne Corp. 1,492,194 (b)
15,500 Ventana Medical Systems, Inc. 385,563 (b)
----------------
3,598,288
----------------
Broadcasting - 2.9%
35,600 Cox Radio, Inc., Class A 3,551,100 (b)
36,100 Emmis Communications Corp.,
Class A 4,499,527 (b)
11,800 Hispanic Broadcasting Corp. 1,088,181 (b)
12,900 Pegasus Communications Corp.,
Class A 1,260,975 (b)
4,000 Univision Communications, Inc.,
Class A 408,750 (b)
12,200 USA Networks, Inc. 674,050 (b)
27,000 Young Broadcasting Corp.,
Class A 1,377,000 (b)
----------------
12,859,583
----------------
Building Materials - 0.3%
25,100 NCI Building Systems, Inc. 464,350 (b)
23,200 Simpson Manufacturing
Co., Inc. 1,015,000 (b)
----------------
1,479,350
----------------
Chemicals - 0.7%
40,000 ATMI, Inc. 1,322,500 (b)
37,200 MacDermid, Inc. 1,527,525
----------------
2,850,025
----------------
Communications
Equipment - 4.8%
69,100 American Tower Corp.,
Class A 2,111,869 (b)
41,200 Andrew Corp. 780,225 (b)
20,300 Carrier Access Corp. 1,366,444 (b)
18,300 C-Cube Microsystems, Inc. 1,139,175 (b)
25,800 CommScope, Inc. 1,040,063 (b)
7,900 Comverse Technology, Inc. 1,143,525 (b)
22,600 Gilat Satellite Networks Ltd. 2,683,750 (b)
76,300 Inter-Tel, Inc. 1,907,500
40,500 Polycom, Inc. 2,579,344 (b)
42,700 Proxim, Inc. 4,697,000 (b)
54,900 Spectrian Corp. 1,550,925 (b)
----------------
20,999,820
----------------
Computers - Hardware - 1.2%
18,400 Electronics for Imaging, Inc. 1,069,500 (b)
75,900 National Instruments Corp. 2,903,175 (b)
21,400 Netopia, Inc. 1,162,288 (b)
----------------
5,134,963
----------------
Computers - Peripherals - 0.9%
63,200 Cybex Computer
Products Corp. 2,559,600 (b)
16,100 Xircom, Inc. 1,207,500 (b)
----------------
3,767,100
----------------
Computers - Software &
Services - 19.7%
61,600 Activision, Inc. 943,250 (b)
44,800 Actuate Corp. 1,920,800
34,000 Affiliated Computer
Services, Inc., Class A 1,564,000 (b)
34,300 American Management
Systems, Inc. 1,076,163 (b)
7,000 Apex, Inc. 225,750 (b)
44,300 Ardent Software, Inc. 1,727,700 (b)
44,900 AVT Corp. 2,110,300 (b)
15,200 Citrix Systems, Inc. 1,869,600 (b)
15,500 Clarify, Inc. 1,953,000 (b)
4,700 Cognizant Technology
Solutions Corp., Class A 513,769 (b)
43,400 Cognos, Inc. 2,001,825 (b)
32,600 Concord Communications, Inc. 1,446,625 (b)
8,800 CoStar Group, Inc. 315,700 (b)
30,550 Dendrite International, Inc. 1,034,881 (b)
9,500 Electronic Arts, Inc. 798,000 (b)
37,000 First Consulting Group, Inc. 573,500 (b)
25,900 Great Plains Software, Inc. 1,936,025 (b)
35,600 Henry (Jack) & Associates, Inc. 1,911,275
75,955 Hyperion Solutions Corp. 3,304,043 (b)
42,700 InfoCure Corp. 1,331,706 (b)
2,100 InterVU, Inc. 220,500 (b)
40,800 Intuit, Inc. 2,445,450 (b)
35,900 ISS Group, Inc. 2,553,388 (b)
29,700 Legato Systems, Inc. 2,043,731 (b)
16,400 Liberate Technologies, Inc. 4,214,800 (b)
34,300 Macromedia, Inc. 2,508,188 (b)
45,500 Mastech Corp. 1,126,125 (b)
51,600 Mercury Computer
Systems, Inc. 1,806,000
23,700 Mercury Interactive Corp. 2,558,119 (b)
8,400 Micromuse, Inc. 1,428,000 (b)
700 MicroStrategy, Inc., Class A 147,000 (b)
40,750 Network Associates, Inc. 1,087,516 (b)
31,600 Pegasus Systems, Inc. 1,905,875
37,800 Peregrine Systems, Inc. 3,182,288 (b)
6,100 Preview Travel, Inc. 317,963 (b)
14,900 PSINet, Inc. 920,075 (b)
41,350 QRS Corp. 4,341,750 (b)
4,000 Radiant Systems, Inc. 160,750 (b)
32,700 Remedy Corp. 1,549,163 (b)
60,800 RSA Security, Inc. 4,712,000 (b)
14,633 Sterling Commerce, Inc. 498,437 (b)
40,500 Symantec Corp. 2,374,313 (b)
19,700 Synopsys, Inc. 1,314,975 (b)
3,800 TSI International Software, Ltd. 215,175 (b)
63,550 US Web Corp. 2,824,003 (b)
54,300 USinternetworking, Inc. 3,794,213
7,300 Verity, Inc. 310,706
22,900 Visual Networks, Inc. 1,814,825 (b)
39,200 WebTrends Corp. 3,175,200 (b)
48,600 Wind River Systems, Inc. 1,779,975 (b)
----------------
85,888,415
----------------
Consumer Finance - 0.5%
72,400 AmeriCredit Corp. 1,339,400 (b)
27,500 Metris Companies, Inc. 981,406
----------------
2,320,806
----------------
Distributors - Food &
Health - 1.3%
27,300 Andrx Corp. 1,155,131 (b)
29,000 Patterson Dental Co. 1,236,125 (b)
45,100 Priority Healthcare Corp.,
Class B 1,305,081 (b)
83,400 PSS World Medical, Inc. 787,088 (b)
68,200 U.S. Foodservice 1,142,350 (b)
----------------
5,625,775
----------------
Electrical Equipment - 4.5%
31,300 Advanced Energy
Industries, Inc. 1,541,525 (b)
30,400 American Power
Conversion Corp. 801,800 (b)
9,600 Amphenol Corp., Class A 639,000 (b)
35,200 Artesyn Technologies, Inc. 739,200 (b)
21,500 Benchmark Electronics, Inc. 493,156 (b)
34,500 Black Box Corp. 2,311,500 (b)
11,600 DII Group, Inc. 823,238 (b)
37,400 KEMET Corp. 1,685,338 (b)
46,500 Plexus Corp. 2,046,000 (b)
36,000 Rayovac Corp. 679,500 (b)
15,400 Sanmina Corp. 1,538,075 (b)
14,600 SCI Systems, Inc. 1,199,938 (b)
33,600 Symbol Technologies, Inc. 2,135,700
106,800 Watsco, Inc. 1,234,875
38,300 Zomax Optical Media, Inc. 1,733,075 (b)
----------------
19,601,920
----------------
Electronics - 9.9%
18,500 Alpha Industries, Inc. 1,060,281 (b)
51,100 American Xtal Technology, Inc. 891,056 (b)
89,325 Burr-Brown Corp. 3,226,866
59,900 Cohu, Inc. 1,856,900
32,500 Cytyc Corp. 1,984,531 (b)
42,800 Dallas Semiconductor Corp. 2,757,925
16,400 GlobeSpan, Inc. 1,068,050 (b)
11,000 JDS Uniphase Corp. 1,774,438
70,600 Kopin Corp. 2,965,200
65,300 Lattice Semiconductor Corp. 3,077,263 (b)
29,200 Maxim Integrated
Products, Inc. 1,377,875
57,000 Micrel, Inc. 3,245,438 (b)
38,900 Microchip Technology, Inc. 2,662,219 (b)
12,700 Molecular Devices Corp. 660,400 (b)
9,500 PMC-Sierra, Inc. 1,522,969 (b)
28,700 Power Integrations, Inc. 1,375,806
26,800 QLogic Corp. 4,284,650 (b)
91,100 S3, Inc. 1,053,344 (b)
51,200 Semtech Corp 2,668,800 (b)
32,400 TranSwitch Corp. 2,351,025 (b)
30,400 Vitesse Semiconductor Corp. 1,594,100
----------------
43,459,136
----------------
Engineering &
Construction - 0.7%
42,500 Dycom Industries, Inc. 1,872,656 (b)
48,200 Quanta Services, Inc. 1,361,650 (b)
----------------
3,234,306
----------------
Entertainment - 0.3%
34,800 SFX Entertainment, Inc.,
Class A 1,259,325 (b)
----------------
Equipment -
Semiconductors - 2.6%
56,800 Applied Science & Technology 1,887,713 (b)
30,700 Asyst Technologies, Inc. 2,012,769 (b)
31,300 Cymer, Inc. 1,439,800 (b)
32,700 Etec Systems, Inc. 1,467,413 (b)
27,300 Novellus Systems, Inc. 3,345,103 (b)
21,400 Teradyne, Inc. 1,412,400 (b)
----------------
11,565,198
----------------
Financial - Diversified - 0.9%
54,100 Apartment Investment &
Management Co., Class A 2,153,856
23,200 First Sierra Financial, Inc. 397,300 (b)
5,450 Heller Financial, Inc., Class A 109,341
26,100 Pinnacle Holdings, Inc. 1,105,988 (b)
----------------
3,766,485
----------------
Food & Beverage - 0.6%
18,900 Ben & Jerry's Homemade, Inc. 470,138 (b)
49,900 Hain Food Group (The), Inc. 1,116,513 (b)
35,170 Smithfield Foods, Inc. 844,080 (b)
----------------
2,430,731
----------------
Freight & Shipping - 0.7%
5,000 C.H. Robinson Worldwide, Inc. 198,750
5,000 Eagle USA Airfreight, Inc. 215,625 (b)
71,600 Swift Transportation Co., Inc. 1,261,950 (b)
27,300 USFreightways Corp. 1,306,988
----------------
2,983,313
----------------
Health Care - Drugs &
Pharmaceuticals - 3.1%
78,800 Catalyca, Inc. 1,068,725 (b)
31,900 Chattem, Inc. 606,100 (b)
22,400 Forest Laboratories, Inc. 1,376,200 (b)
50,000 Inhale Therapeutic Systems 2,128,125 (b)
57,000 Jones Pharma, Inc. 2,475,938
22,900 K-V Pharmaceutical Co.,
Class A 502,369 (b)
56,600 Medco Research, Inc. 1,701,538 (b)
83,269 Shire Pharmaceuticals
Group, ADR 2,425,210 (b)
38,500 Watson Pharmaceuticals, Inc. 1,378,781 (b)
----------------
13,662,986
----------------
Health Care - Medical
Products & Supplies - 1.9%
42,300 DENTSPLY International, Inc. 999,338
88,400 Mentor Corp. 2,281,825
21,800 ResMed, Inc. 910,150 (b)
38,600 Sybron Corp. 952,938 (b)
113,340 Theragenics Corp. 1,027,144 (b)
17,600 VISX, Inc. 910,800 (b)
36,000 Wesley Jessen VisionCare, Inc. 1,363,500 (b)
----------------
8,445,695
----------------
Health Care
Management - 0.8%
14,800 Express Scripts, Inc., Class A 947,200 (b)
31,900 First Health Group Corp. 857,313 (b)
44,600 Universal Health Services, Inc.,
Class B 1,605,600 (b)
----------------
3,410,113
----------------
Health Care Services - 1.5%
46,300 Advance Paradigm, Inc. 998,344
37,000 Hanger Orthopedic Group, Inc. 370,000 (b)
53,700 Lincare Holdings, Inc. 1,862,719 (b)
135,300 Omnicare, Inc. 1,623,600
53,600 Renal Care Group, Inc. 1,252,900 (b)
26,200 TLC Laser Eye Centers, Inc. 342,238 (b)
----------------
6,449,801
----------------
Homebuilding - 0.5%
65,500 Catellus Development Corp. 839,219 (b)
99,000 Sunterra Corp. 1,138,500 (b)
----------------
1,977,719
----------------
Insurance - 1.1%
18,100 E.W. Blanch Holdings, Inc. 1,108,625
94,900 Inspire Insurance
Solutions, Inc. 435,947 (b)
22,600 Nationwide Financial
Services, Inc., Class A 631,388
22,500 Protective Life Corp.,
Capital Trust II 715,781
37,358 Radian Group, Inc. 1,783,845
----------------
4,675,586
----------------
Investment Banking &
Brokerage - 0.7%
8,800 Donaldson, Lufkin &
Jenrette, Inc. 119,350 (b)
23,300 Legg Mason, Inc. 844,625
84,500 Waddell & Reed Financial, Inc.,
Class A 2,292,063
----------------
3,256,038
----------------
Investment Management - 0.7%
72,700 Affiliated Managers
Group, Inc. 2,939,806 (b)
----------------
Leisure Products - 0.8%
49,050 Fossil, Inc. 1,134,281 (b)
42,100 JAKKS Pacific, Inc. 786,744 (b)
15,700 SCP Pool Corp. 407,219 (b)
50,300 Steinway Musical
Instruments, Inc. 1,018,575 (b)
----------------
3,346,819
----------------
Machinery - Diversified - 0.4%
49,800 MSC Industrial Direct Co., Inc.,
Class A 659,850 (b)
45,000 Terex Corp. 1,248,750 (b)
----------------
1,908,600
----------------
Manufacturing - 1.4%
37,900 Cognex Corp. 1,478,100 (b)
17,100 CTS Corp. 1,288,913
27,700 Dionex Corp. 1,140,894 (b)
41,200 Global Imaging Systems, Inc. 504,700 (b)
46,000 Insituform Technologies, Inc.,
Class A 1,299,500 (b)
15,900 Pentair, Inc. 612,150
----------------
6,324,257
----------------
Oil & Gas - 1.5%
24,200 Barrett Resources Corp. 712,388 (b)
37,600 BJ Services Co. 1,572,150 (b)
28,200 Cal Dive International, Inc. 934,125 (b)
41,400 Noble Affiliates, Inc. 887,513
54,700 Oceaneering International, Inc. 817,081 (b)
11,500 Smith International, Inc. 571,406 (b)
50,200 UTI Energy Corp. 1,157,738 (b)
----------------
6,652,401
----------------
Photography &
Imaging - 1.8%
107,700 Imax Corp. 2,948,288 (b)
21,800 Lason, Inc. 239,800 (b)
51,400 Pinnacle Systems, Inc. 2,091,338 (b)
46,170 Zebra Technologies Corp.,
Class B 2,700,945 (b)
----------------
7,980,371
----------------
Restaurants - 1.5%
49,900 Applebee's International, Inc. 1,472,050
39,700 Brinker International, Inc. 952,800 (b)
6,400 CEC Entertainment, Inc. 181,600 (b)
33,200 Outback Steakhouse, Inc. 861,125 (b)
31,200 Papa John's International, Inc. 813,150 (b)
25,100 PR Chang's China Bistro, Inc. 624,363 (b)
26,700 RARE Hospitality
International, Inc. 577,805 (b)
34,000 Sonic Corp. 969,000 (b)
----------------
6,451,893
----------------
Retail - 5.9%
49,300 1-800-FLOWERS.COM, Inc.,
Class A 526,894 (b)
33,000 Barnes and Noble, Inc. 680,625 (b)
29,000 Bed, Bath & Beyond, Inc. 1,007,750 (b)
75,500 Beyond.com Corp. 589,844 (b)
9,100 Buckle (The), Inc. 134,794 (b)
41,200 CDW Computer Centers, Inc. 3,239,350 (b)
39,700 Cost Plus, Inc. 1,414,313 (b)
60,900 Dollar Tree Stores, Inc. 2,949,844 (b)
42,800 Family Dollar Stores, Inc. 698,175
50,500 Group 1 Automotive, Inc. 703,844 (b)
14,225 Insight Enterprise, Inc. 577,891 (b)
34,400 Kenneth Cole Productions, Inc.,
Class A 1,573,800 (b)
31,400 Linens 'N Things, Inc. 930,225 (b)
57,800 Men's (The) Wearhouse, Inc. 1,697,875 (b)
48,500 Nieman Marcus Group, Inc.,
Class A 1,354,969 (b)
91,800 O'Reilly Automotive, Inc. 1,973,700
54,225 Pacific Sunwear of California 1,728,422 (b)
42,600 Ross Stores, Inc. 764,138
39,200 Tech Data Corp. 1,063,300 (b)
41,000 Tweeter Home Entertainment
Group, Inc. 1,455,500
14,300 Williams-Sonoma, Inc. 657,800 (b)
----------------
25,723,053
----------------
Retail - Food & Drug - 0.8%
64,500 Duane Reade, Inc. 1,777,781 (b)
22,000 Whole Foods Market, Inc. 1,020,250 (b)
30,600 Wild Oats Markets, Inc. 678,938
----------------
3,476,969
----------------
Services - 1.3%
36,000 Metamor Worldwide, Inc. 1,048,500 (b)
135,100 Modis Professional
Services, Inc. 1,925,175 (b)
111,300 Professional Staff plc, ADR 612,150 (b)
25,600 Romac International, Inc. 344,000 (b)
101,493 Tetra Tech, Inc. 1,560,455 (b)
----------------
5,490,280
----------------
Services - Cyclical - 6.3%
43,800 ACNielsen Corp. 1,078,575 (b)
10,400 Acxiom Corp. 249,600 (b)
63,715 Apollo Group, Inc., Class A 1,278,282 (b)
30,500 Avis Rent A Car, Inc. 779,656 (b)
53,100 Bright Horizons Family
Solutions, Inc. 995,625 (b)
21,400 Catalina Marketing Corp. 2,477,050 (b)
27,400 Cort Business Services Corp. 477,788 (b)
71,400 Crown Castle
International Corp. 2,293,725 (b)
36,500 DeVry, Inc. 679,813 (b)
26,200 F.Y.I., Inc. 890,800 (b)
19,000 G & K Services, Inc., Class A 615,125
19,800 Getty Images, Inc. 967,725 (b)
52,800 Harte-Hanks, Inc. 1,148,400
59,000 ITT Educational Services, Inc. 910,813 (b)
11,000 Lamar Advertising Co.,
Class A 666,188 (b)
71,500 Learning Tree
International, Inc. 2,002,000 (b)
21,000 Macrovision Corp. 1,554,000 (b)
66,900 META Group, Inc. 1,271,100 (b)
26,700 MIPS Technologies, Inc. 1,388,400 (b)
18,100 Navigant Consulting, Inc. 196,838 (b)
61,100 NCO Group, Inc. 1,840,638 (b)
7,000 Network Event Theater, Inc. 208,250 (b)
34,800 Pre-Paid Legal Services, Inc. 835,200 (b)
12,800 Profit Recovery Group
International, Inc. 340,000 (b)
38,400 Rent-Way, Inc. 717,600 (b)
9,600 TMP Worldwide, Inc. 1,363,200 (b)
9,700 Xceed, Inc. 402,550 (b)
----------------
27,628,941
----------------
Services - Technology - 4.9%
39,800 Bisys (The) Group, Inc. 2,596,950 (b)
32,400 CIBER, Inc. 891,000 (b)
31,800 Digital River, Inc. 1,059,338 (b)
28,300 FactSet Research Systems, Inc. 2,253,388
118,500 InterVoice, Inc. 2,755,125 (b)
16,900 Investment Technology Group 485,875 (b)
23,200 Keane, Inc. 736,600 (b)
49,100 MedQuist, Inc. 1,267,394 (b)
44,330 National Computer
Systems, Inc. 1,667,916
27,500 National Data Corp. 933,281
80,938 NOVA Corp. 2,554,606 (b)
31,200 SunGard Data Systems, Inc. 741,000 (b)
61,400 Sykes Enterprises, Inc. 2,693,925 (b)
16,100 Whittman-Hart, Inc. 863,363 (b)
----------------
21,499,761
----------------
Specialty Printing - 0.4%
47,000 Consolidated Graphics, Inc. 702,063 (b)
82,700 Topps (The) Co., Inc. 858,013 (b,c)
----------------
1,560,076
----------------
Steel - 0.1%
15,300 Maverick Tube Corp. 377,719 (b)
----------------
Telephone &
Telecommunications - 2.4%
30,000 AT&T Canada, Inc., Class B 1,207,500
11,300 CapRock
Communications Corp. 366,544 (b)
51,200 ICG Communications, Inc. 960,000 (b)
57,700 ITC DeltaCom, Inc. 1,593,963 (b)
3,000 NorthEast Optic Network, Inc. 187,688 (b)
22,600 Powerwave Technologies, Inc. 1,319,275 (b)
7,900 Price Communications Corp. 219,719 (b)
43,100 Time Warner Telecom, Inc.,
Class A 2,152,306 (b)
23,500 United States Cellular Corp. 2,372,031 (b)
----------------
10,379,026
----------------
Textiles - 0.7%
76,400 Mohawk Industries, Inc. 2,015,050 (b)
69,600 Quiksilver, Inc. 1,078,800 (b)
----------------
3,093,850
----------------
Waste Management - 0.4%
88,000 Casella Waste Systems, Inc.,
Class A 1,661,000 (b)
----------------
Total Common Stocks
(cost $308,383,584) 421,785,505
----------------
Principal
Amount
- --------------
SHORT-TERM
SECURITIES - 3.4% (a)
Commerical Paper - 3.2%
$5,000,000 Associates Corp. of
North America, 4.0%
Due 1/3/2000 4,998,889
6,900,000 Merck & Co. Inc., 4.0%
Due 1/6/2000 6,896,167
2,100,000 New Center Asset Trust, 4.9%
Due 1/3/2000 2,099,428
----------------
13,994,484
----------------
U.S. Government Agency - 0.2%
1,000,000 Federal National Mortgage
Association Discount Notes,
4.0% Due 1/5/2000 999,556
----------------
Total Short-Term Securities
(at amortized cost) 14,994,040
----------------
Total Investments
(cost $323,377,624) $436,779,545 (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 December 31, 1999.
(d) At December 31, 1999, the aggregate cost of securities for federal
income tax purposes was $324,427,519 and the net unrealized appreciation of
investments based on that cost was $112,352,026 which is comprised of
$139,993,849 aggregate gross unrealized appreciation and $27,641,823
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
December 31, 1999
Shares Value
- -------------- ----------------
<S> <C>
COMMON STOCKS - 90.7% (a)
Automotive - 0.3%
34,900 Gentex Corp. $ 968,444 (b)
----------------
Banks - 3.8%
16,600 Associated Banc-Corp. 568,550
12,274 Charter One Financial, Inc. 234,740
20,250 City National Corp. 666,984
12,000 Dime Bancorp, Inc. 181,500
32,100 Firstar Corp. 678,113
12,400 Marshall & Ilsley Corp. 778,875
50,900 North Fork Bancorporation, Inc. 890,750
20,860 Northern Trust Corp. 1,105,580
26,000 Pacific Century Financial Corp. 485,875
42,600 Peoples Heritage Financial
Group, Inc. 641,663
28,400 Roslyn Bancorp, Inc. 525,400
17,300 SouthTrust Corp. 654,156
12,010 Summit Bancorp 367,806
22,930 TCF Financial Corp. 570,384
30,600 UnionBanCal Corp. 1,206,788
15,700 Zions Bancorporation 929,244
----------------
10,486,408
----------------
Biotechnology - 2.9%
10,100 Biogen, Inc. 853,450 (b)
33,700 Cephalon, Inc. 1,164,756 (b)
13,100 Chiron Corp. 555,113 (b)
8,700 Genzyme Corp. 391,500 (b)
7,500 Gilead Sciences, Inc. 405,938 (b)
7,900 Human Genome Sciences, Inc. 1,205,738 (b)
37,100 ILEX Oncology, Inc. 895,038 (b)
4,800 Immunex Corp. 525,600 (b)
6,600 MedImmune, Inc. 1,094,775 (b)
3,600 Millennium Pharmaceuticals, Inc. 439,200 (b)
8,800 Protein Design Labs, Inc. 616,000 (b)
----------------
8,147,108
----------------
Broadcasting - 3.7%
8,000 Adelphia Communications
Corp., Class A 525,000 (b)
13,300 AMFM, Inc. 1,040,725 (b)
16,480 AT&T Corp./Liberty Media
Group, Class A 935,240 (b)
7,970 Clear Channel
Communications, Inc. 711,323 (b)
20,800 Comcast Corp., Class A 1,051,700
20,020 Cox Communications, Inc.,
Class A 1,031,030 (b)
6,800 Cox Radio, Inc., Class A 678,300 (b)
13,400 Echostar Communications
Corp., Class A 1,306,500
7,200 Hispanic Broadcasting Corp. 663,975 (b)
12,000 Univision Communications,
Inc., Class A 1,226,250 (b)
20,200 USA Networks, Inc. 1,116,050 (b)
----------------
10,286,093
----------------
Chemicals - 0.2%
13,000 Cytec Industries, Inc. 300,625 (b)
25,700 Lyondell Petrochemical Co. 327,675
----------------
628,300
----------------
Communications
Equipment - 6.0%
18,760 ADC Telecommunications, Inc. 1,361,273 (b)
13,000 Adtran, Inc. 668,688 (b)
27,700 Advanced Fibre
Communications 1,237,844 (b)
21,000 C-Cube Microsystems, Inc. 1,307,250 (b)
17,900 CIENA Corp. 1,029,250 (b)
18,800 Comverse Technology, Inc. 2,721,300 (b)
29,250 Digital Microwave Corp. 685,547 (b)
7,400 ECI Telecom, Ltd. 234,025
8,300 General Instrument Corp. 705,500 (b)
10,030 General Motors Corp., Class H 962,880 (b)
5,800 Gilat Satellite Networks Ltd. 688,750 (b)
5,100 Harmonic, Inc. 484,181 (b)
5,550 Orckit Communications, Ltd. 190,434 (b)
19,800 Pairgain Technologies, Inc. 280,913 (b)
14,300 PanAmSat Corp. 849,063 (b)
12,000 QUALCOMM, Inc. 2,113,500
12,100 Sawtek, Inc. 805,406 (b)
7,100 Terayon Communication
Systems, Inc. 445,969 (b)
----------------
16,771,773
----------------
Computers - Hardware - 1.4%
18,600 Copper Mountain
Networks, Inc. 906,750 (b)
9,400 Electronics for Imaging, Inc. 546,375 (b)
10,600 Gateway, Inc. 763,863 (b)
33,900 National Instruments Corp. 1,296,675 (b)
6,020 Sun Microsystems, Inc. 466,174
----------------
3,979,837
----------------
Computers -
Networking - 1.0%
20,900 3Com Corp. 982,300 (b)
34,100 Cabletron Systems, Inc. 886,600 (b)
1,600 Finisar Corp. 143,800 (b)
2,150 Korea Thrunet Co, Ltd.,
Class A (USD) 145,931 (b)
7,000 Network Appliance, Inc. 581,438
900 Retek, Inc. 67,725 (b)
----------------
2,807,794
----------------
Computers -
Peripherals - 0.6%
9,800 EMC Corp. 1,070,650 (b)
7,600 Lexmark International Group,
Inc., Class A 687,800 (b)
----------------
1,758,450
----------------
Computers - Software &
Services - 17.1%
6,900 Adobe Systems, Inc. 464,025
11,600 Affiliated Computer Services,
Inc., Class A 533,600 (b)
600 Akami Technologies, Inc. 196,575 (b)
7,840 America Online, Inc. 591,430
8,800 BEA Systems, Inc. 615,450
7,080 BMC Software, Inc. 565,958 (b)
6,700 Broadbase Software, Inc. 753,750 (b)
2,800 BroadVision, Inc. 476,175
8,100 Business Objects S.A., ADR 1,082,363 (b)
18,700 Cadence Design Systems, Inc. 448,800 (b)
23,560 Citrix Systems, Inc. 2,897,880 (b)
30,000 Cognos, Inc. 1,383,750 (b)
3,000 Commerce One, Inc. 589,500
17,550 Compuware Corp. 653,738 (b)
12,200 Concord Communications, Inc. 541,375 (b)
28,500 DSL.net, Inc. 411,469 (b)
6,700 Electronic Arts, Inc. 562,800 (b)
12,000 Exodus Communications, Inc. 1,065,750
3,150 I-2 Technologies, Inc. 614,250 (b)
6,800 Inktomi Corp. 603,500
13,100 Intuit, Inc. 785,181 (b)
26,700 J.D. Edwards & Company 797,663 (b)
16,000 Legato Systems, Inc. 1,101,000 (b)
15,000 Lernout & Hauspie Speech
Products N.V. (USD) 693,750 (b)
11,900 Lycos, Inc. 946,794 (b)
12,000 Macromedia, Inc. 877,500 (b)
22,300 Marimba, Inc. 1,027,194 (b)
8,800 Micromuse, Inc. 1,496,000 (b)
10,200 NBC Internet, Inc., Class A 787,950 (b)
35,000 Parametric Technology Corp. 947,188 (b)
13,500 Peregrine Systems, Inc. 1,136,531 (b)
20,200 Progress Software Corp. 1,146,350
11,200 Proxicom, Inc. 1,392,300 (b)
29,000 Rational Software Corp. 1,424,625 (b)
9,400 Razorfish, Inc., Class A 894,175 (b)
16,600 Remedy Corp. 786,425 (b)
16,400 RSA Security, Inc. 1,271,000 (b)
5,350 Sapient Corp. 754,016 (b)
15,920 Siebel Systems, Inc. 1,337,280
12,200 Symantec Corp. 715,225 (b)
22,340 Synopsys, Inc. 1,491,195 (b)
36,600 Talk City Communities
Online, Inc. 956,175 (b)
23,500 TenFold Corp. 938,531 (b)
1,800 TIBCO Software, Inc. 275,400 (b)
21,000 US Web Corp. 933,188 (b)
14,500 Verio, Inc. 669,719 (b)
3,600 VeriSign, Inc. 687,375
20,400 Veritas Software Corp. 2,919,750
7,500 Viant Corp. 742,500 (b)
8,200 Vignette Corp. 1,336,600
17,900 Visual Networks, Inc. 1,418,575 (b)
----------------
47,739,293
----------------
Construction - 0.1%
5,400 Southdown, Inc. 278,775
----------------
Consumer Finance - 0.7%
26,600 Metris Companies, Inc. 949,288
13,900 PMI Group 678,494
2,680 Providian Financial Corp. 244,048
----------------
1,871,830
----------------
Containers & Packaging -
Paper - 0.1%
4,400 Temple Inland, Inc. 290,125
----------------
Distributors - Food &
Health - 0.2%
34,560 U.S. Foodservice 578,880 (b)
----------------
Electrical Equipment - 2.7%
40,260 American Power
Conversion Corp. 1,061,858 (b)
35,400 Artesyn Technologies, Inc. 743,400 (b)
11,300 Electro Scientific
Industries, Inc. 824,900 (b)
21,600 Flextronics International, Ltd. 993,600
14,300 Sanmina Corp. 1,428,213 (b)
5,500 SCI Systems, Inc. 452,031 (b)
5,740 Solectron Corp. 546,018 (b)
25,035 Symbol Technologies, Inc. 1,591,287
----------------
7,641,307
----------------
Electronics -- 9.3%
24,230 Adaptec, Inc. 1,208,471 (b)
24,200 Altera Corp. 1,199,413 (b)
21,100 Analog Devices, Inc. 1,962,300 (b)
5,600 Applied Micro Circuits Corp. 712,600 (b)
13,800 Atmel Corp. 407,963
1,800 Broadcom Corp., Class A 490,275 (b)
18,450 Burr-Brown Corp. 666,506
16,800 Conexant Systems, Inc. 1,115,100
12,500 Cypress Semiconductor Corp. 404,688 (b)
23,400 Galileo Technology, Ltd. 564,525 (b)
10,280 JDS Uniphase Corp. 1,658,293
12,860 Linear Technology Corp. 920,294
10,200 LSI Logic Corp. 688,500 (b)
29,140 Maxim Integrated
Products, Inc. 1,375,044
7,900 Micrel, Inc. 449,806 (b)
17,190 Microchip Technology, Inc. 1,176,441 (b)
18,100 National Semiconductor Corp. 774,906 (b)
13,900 PerkinElmer, Inc. 579,456
11,300 PMC-Sierra, Inc. 1,811,531 (b)
4,200 QLogic Corp. 671,475 (b)
15,300 RF Micro Devices, Inc. 1,047,094 (b)
7,200 SDL, Inc. 1,569,600 (b)
8,600 Semtech Corp 448,275 (b)
34,700 Vitesse Semiconductor Corp. 1,819,581
7,520 Waters Corp. 398,560 (b)
41,020 Xilinx, Inc. 1,865,128
----------------
25,985,825
----------------
Entertainment - 0.2%
11,500 SFX Entertainment, Inc.,
Class A 416,156 (b)
----------------
Equipment -
Semiconductors - 2.6%
16,700 Asyst Technologies, Inc. 1,094,894 (b)
5,470 KLA Instruments Corp. 609,221 (b)
28,400 Kulicke & Soffa Industries, Inc. 1,208,775 (b)
10,800 LAM Research Corp. 1,204,875 (b)
4,090 Novellus Systems, Inc. 501,153 (b)
16,600 PRI Automation, Inc. 1,114,275 (b)
21,900 Teradyne, Inc. 1,445,400 (b)
----------------
7,178,593
----------------
Financial - Diversified - 0.5%
5,400 AMBAC Financial Group, Inc. 281,813
15,160 Finova Group, Inc. 538,180
13,000 SLM Holding Corp. 549,250
----------------
1,369,243
----------------
Food & Beverage - 1.0%
30,300 American Italian Pasta Co.,
Class A 931,725 (b)
28,400 IBP, Inc. 511,200
27,400 International Home Foods, Inc. 476,075 (b)
22,900 Suiza Foods Corp. 907,413 (b)
----------------
2,826,413
----------------
Freight & Shipping - 1.2%
15,300 CNF Transportation, Inc. 527,850
16,780 Expeditors International of
Washington, Inc. 735,174
20,100 Iron Mountain, Inc. 790,181 (b)
10,700 Kansas City Southern
Industries, Inc. 798,488
9,700 Royal Caribbean Cruises, Ltd. 478,331
----------------
3,330,024
----------------
Hardware & Tools - 0.2%
10,360 Black & Decker Corp. 541,310
----------------
Health Care - Diversified - 0.4%
8,800 Allergan, Inc. 437,800
22,200 IVAX Corp. 571,650 (b)
----------------
1,009,450
----------------
Health Care - Drugs &
Pharmaceuticals - 3.2%
22,300 Alkermes, Inc. 1,095,488 (b)
13,700 Alpharma, Inc., Class A 421,275
25,400 Catalyca, Inc. 344,488 (b)
26,440 Forest Laboratories, Inc. 1,624,408 (b)
14,200 Jones Pharma, Inc. 616,813
54,950 Mylan Laboratories, Inc. 1,384,053
20,800 Teva Pharmaceutical Industries,
Ltd., ADR 1,491,100
24,900 ViroPharma, Inc. 921,300 (b)
31,080 Watson Pharmaceuticals, Inc. 1,113,053 (b)
----------------
9,011,978
----------------
Health Care - Medical
Products & Supplies - 2.4%
3,900 Affymetrix, Inc. 661,781 (b)
5,900 Bard (C.R.), Inc. 312,700
13,300 Bausch & Lomb, Inc. 910,219
33,830 Biomet, Inc. 1,353,200
8,682 Medtronic, Inc. 316,350
3,000 MiniMed, Inc. 219,750 (b)
2,200 SciQuest.com, Inc. 174,900 (b)
21,000 Stryker Corp. 1,462,125
32,700 Sybron Corp. 807,281 (b)
7,800 VISX, Inc. 403,650 (b)
----------------
6,621,956
----------------
Health Care
Management - 1.0%
12,400 Columbia/HCA
Healthcare Corp. 363,475
91,975 Health Management
Associates, Inc., Class A 1,230,166 (b)
35,800 Tenet Healthcare Corporation 841,300 (b)
9,470 Trigon Healthcare, Inc. 279,365 (b)
----------------
2,714,306
----------------
Health Care Services - 0.2%
16,400 Lincare Holdings, Inc. 568,875 (b)
----------------
Household Furnishings &
Appliances - 0.5%
25,385 Ethan Allen Interiors, Inc. 813,907
26,460 Leggett & Platt, Inc. 567,236
----------------
1,381,143
----------------
Housewares & Household
Products - 0.8%
22,940 Dial Corp. 557,729
22,200 Fort James Corp. 607,725
11,700 Medical Manager Corp. 985,725 (b)
----------------
2,151,179
----------------
Insurance - 0.8%
22,260 AFLAC, Inc. 1,050,394
3,650 Allmerica Financial Corp. 203,031
11,100 Protective Life Corp.,
Capital Trust II 353,119
14,700 Radian Group, Inc. 701,925
----------------
2,308,469
----------------
Investment Banking &
Brokerage - 0.9%
14,710 Bear Stearns Cos., Inc. 628,853
2,920 Donaldson, Lufkin &
Jenrette, Inc. 141,255
15,800 Knight/Trimark Group, Inc.,
Class A 726,800 (b)
23,000 Legg Mason, Inc. 833,750
11,100 Waddell & Reed Financial, Inc.,
Class A 301,088
----------------
2,631,746
----------------
Leisure Products - 0.4%
15,410 Harley Davidson, Inc. 987,203 (c)
8,800 Premier Parks, Inc. 254,100 (b)
----------------
1,241,303
----------------
Machinery - Diversified - 0.3%
25,130 Mettler-Toledo
International, Inc. 959,652 (b)
----------------
Manufacturing - 0.9%
5,200 Danaher Corp. 250,900
21,800 Jabil Circuit, Inc. 1,591,400 (b)
18,600 Millipore Corp. 718,425
----------------
2,560,725
----------------
Office Equipment & Supplies - 0.3%
34,160 Herman Miller, Inc. 785,680
----------------
Oil & Gas - 3.6%
6,300 Anadarko Petroleum Corp. 214,988
10,400 Apache Corp. 384,150
11,460 BJ Services Co. 479,171 (b)
14,200 Burlington Resources, Inc. 469,488
15,800 Cooper Cameron Corp. 773,213 (b)
37,820 ENSCO International, Inc. 865,133
17,500 EOG Resources, Inc. 307,344
31,000 Nabors Industries, Inc. 959,063 (b)
22,900 Noble Drilling Corp. 749,975 (b)
17,700 Occidental Petroleum Corp. 382,763
19,690 Smith International, Inc. 978,347 (b)
26,250 Tosco Corp. 713,672
35,300 Transocean Sedco Forex, Inc. 1,189,169
14,770 USX-Marathon Group 364,634
31,940 Weatherford International, Inc. 1,275,604 (b)
----------------
10,106,714
----------------
Paper & Forest Products - 0.4%
11,890 Bowater, Inc. 645,776
16,600 Westvaco Corp. 541,575
----------------
1,187,351
----------------
Publishing - 0.6%
19,300 Meredith Corp. 804,569
13,300 Scholastic Corp. 827,094 (b)
----------------
1,631,663
----------------
Restaurants - 0.3%
24,840 Darden Restaurants, Inc. 450,225
7,680 Outback Steakhouse, Inc. 199,200 (b)
6,750 Papa John's International, Inc. 175,922 (b)
----------------
825,347
----------------
Retail - 3.8%
12,640 Abercrombie & Fitch Co.,
Class A 337,330 (b)
22,200 Bed, Bath & Beyond, Inc. 771,450 (b)
7,900 Best Buy Co., Inc. 396,481 (b)
36,380 BJ's Wholesale Club, Inc. 1,327,870 (b)
9,500 Circuit City Stores, Inc. 428,094
16,000 Dollar General Corp. 364,000
16,800 Dollar Tree Stores, Inc. 813,750 (b)
68,800 Family Dollar Stores, Inc. 1,122,300
7,300 Intimate Brands, Inc., Class A 314,813
4,540 Kohl's Corp. 327,731 (b)
7,118 Limited (The), Inc. 308,298
39,100 Men's (The) Wearhouse, Inc. 1,148,563 (b)
37,000 Ross Stores, Inc. 663,688
13,705 Staples, Inc. 284,379 (b)
5,400 Tandy Corp. 265,613
7,300 Tiffany & Co. 651,525
8,170 TJX Companies, Inc. 166,974
16,300 Zale Corp. 788,513 (b)
----------------
10,481,372
----------------
Retail - Food & Drug - 0.1%
13,700 Great Atlantic & Pacific Tea, Inc. 381,888
----------------
Services - 0.4%
18,600 Manpower, Inc. 699,825
38,200 Modis Professional Services, Inc. 544,350 (b)
----------------
1,244,175
----------------
Services - Cyclical - 2.5%
11,700 ACNielsen Corp. 288,113 (b)
38,800 Cerner Corp. 763,875 (b)
52,600 Convergys Corp. 1,617,450 (b)
2,800 DoubleClick, Inc. 708,575 (b)
12,930 Getty Images, Inc. 631,954 (b)
18,600 Lamar Advertising Co., Class A 1,126,463 (b)
2,200 Mediaplex, Inc. 138,050 (b)
2,860 Omnicom Group, Inc. 286,000
21,320 Young & Rubicam, Inc. 1,508,390
----------------
7,068,870
----------------
Services - Technology - 2.8%
15,200 Bisys (The) Group, Inc. 991,800 (b)
14,500 Ceridian Corp. 312,656 (b)
21,400 Comdisco, Inc. 797,150
36,625 Concord EFS, Inc. 943,094 (b)
32,300 CSG System International, Inc. 1,287,963 (b)
9,000 DST Systems, Inc. 686,813 (b)
38,710 Fiserv, Inc. 1,483,077 (b)
17,900 NOVA Corp. 564,969 (b)
7,170 Paychex, Inc. 286,800
18,030 SunGard Data Systems, Inc. 428,213 (b)
----------------
7,782,535
----------------
Specialty Printing - 0.4%
7,850 Valassis Communications, Inc. 1,176,663 (b)
----------------
Steel - 0.5%
12,300 Corus Group plc, ADR 318,263
43,100 Steel Dynamics, Inc. 686,906 (b)
10,200 USX-U.S. Steel Group, Inc. 336,600
----------------
1,341,769
----------------
Telephone &
Telecommunications - 5.0%
27,010 CenturyTel, Inc. 1,279,599
13,600 Covad Communications
Group, Inc. 760,750 (b)
31,500 Globalstar
Telecommunications, Ltd. 1,386,000 (b)
14,300 ICG Communications, Inc. 268,125 (b)
41,500 Intermedia Communications of
Florida, Inc. 1,610,719 (b)
4,950 MCI Worldcom, Inc. 262,659
25,600 McLeodUSA, Inc. 1,507,200 (b)
13,500 Net2Phone, Inc. 620,156 (b)
40,800 Network Plus Corp. 856,800 (b)
9,600 NTL, Inc. 1,197,600 (b)
13,100 US LEC Corp., Class A 422,475 (b)
6,370 VoiceStream Wireless Corp. 906,531 (b)
21,270 Western Wireless Corp.,
Class A 1,419,773 (b)
18,400 WinStar Communications, Inc. 1,384,600 (b)
----------------
13,882,987
----------------
Textiles - 0.7%
44,880 Jones Apparel Group, Inc. 1,217,370 (b)
21,300 Shaw Industries, Inc. 328,819
12,700 Tommy Hilfiger Corp. 296,069 (b)
----------------
1,842,258
----------------
Utilities - 1.7%
6,680 AES (The) Corp. 499,330 (b)
20,500 CMS Energy Corp. 639,344
7,500 Consolidated Natural Gas Co. 487,031
15,700 El Paso Natural Gas Co. 609,356
9,900 Energy East Corp. 206,044
6,400 Florida Progress Corp. 270,800
26,000 Illinova Corp. 903,500
34,300 Montana Power Co. 1,236,944
----------------
4,852,349
----------------
Total Common Stocks
(cost $197,240,685) 253,634,384
----------------
Principal
Amount
- --------------
SHORT-TERM
SECURITIES - 9.3% (a)
Commercial Paper - 3.9%
$8,400,000 IBM Credit Corp., 4.5%
Due 1/4/2000 8,396,850
2,500,000 Merck & Co. Inc., 4.0%
Due 1/6/2000 2,498,611
----------------
10,895,461
----------------
U.S. Government
Agency - 5.4%
10,000,000 Federal Home Loan Bank
Discount Notes, 1.5%
Due 1/3/2000 9,999,167
5,000,000 Federal National Mortgage
Association Discount
Notes, 4.0%
Due 1/5/2000 4,997,778
----------------
14,996,945
----------------
Total Short-Term Securities
(at amortized cost) 25,892,406
----------------
Total Investments
(cost $223,133,091) $279,526,790 (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 December 31, 1999.
(d) At December 31, 1999, the aggregate cost of securities for federal
income tax purposes was $223,829,932 and the net unrealized appreciation of
investments based on that cost was $55,696,858 which is comprised of
$63,475,233 aggregate gross unrealized appreciation and $7,778,375
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
December 31, 1999
Shares Value
- -------------- ----------------
<S> <C>
ARGENTINA - 0.2% (a)
COMMON STOCKS
15,712 Banco de Galicia Buenos
Aires 'B' ADR (USD) $ 311,287
10,799 Banco Frances del Rio de la
Plata ADR (USD) 255,801
16,470 Telefonica de Argentina
ADR (USD) 508,511
----------------
Total Argentina 1,075,599
----------------
AUSTRALIA - 1.9% (a)
COMMON STOCKS
31,000 Brambles Industries Ltd. 857,266
49,769 Broken Hill Proprietary Co. 653,500
262,549 Colonial Ltd. 1,173,795
81,084 Commonwealth
Bank of Australia 1,396,266
56,708 Lend Lease Corp. 794,463
159,831 News Corp. Ltd. 1,551,901
366,398 Telstra Corp. Ltd. 1,865,587
186,544 Westpac Banking 1,286,752
----------------
9,579,530
----------------
PREFERRED STOCKS
114,696 News Corp. Ltd. 982,638
----------------
Total Australia 10,562,168
----------------
BELGIUM - 1.1% (a)
COMMON STOCKS
2,693 Credit Communal
Holding/Dexia 431,605
5,150 Dexia Belgium 426,053
58,819 Fortis 'B' 2,122,381
48,600 Kredietbank 2,619,210
6,420 UCB SA 278,412
----------------
Total Belgium 5,877,661
----------------
BRAZIL - 1.5% (a)
COMMON STOCKS
23,490 Companhia Brasileira de
Distribuicao Grupo Pao de
Acucar ADS (USD) 759,021
25,513 Companhia Energetica Minas
Gerais ADR (USD) 570,853
55,011 Telecomunicacues Brasilieras
SA ADR (USD) 7,068,914
----------------
Total Brazil 8,398,788
----------------
CANADA - 0.8% (a)
COMMON STOCKS
16,090 Alcan Aluminum 662,103
40,746 Celestica Inc. 2,261,403 (b)
8,510 Nortel Networks Corp. 841,567
9,330 Royal Bank of Canada 411,722
----------------
Total Canada 4,176,795
----------------
CHINA - 0.1% (a)
COMMON STOCKS
41,360 Huaneng Power International
'N' ADR (USD) 436,865
----------------
DENMARK - 0.3% (a)
COMMON STOCKS
5,244 Den Danske Bank 574,868
10,654 Teledanmark 791,599
4,510 Unidanmark 'A' 317,395
----------------
Total Denmark 1,683,862
----------------
FINLAND - 2.0% (a)
COMMON STOCKS
61,640 Nokia (AB) OY 11,176,746
----------------
FRANCE - 11.2% (a)
COMMON STOCKS
15,629 Alcatel Alsthom 3,589,602
24,102 Aventis SA 1,399,981
25,520 AXA 3,557,927
27,790 Banque Nationale De Paris 2,564,273
8,840 Cap Gemini SA 2,244,053
29,396 Carrefour 5,421,966
10,250 Cie de St. Gobain 1,927,740
1,600 Groupe Danone 377,152
8,060 Hermes International 1,216,262
4,983 Lafarge Coppee 580,268
9,399 Legrand 2,237,307
704 L'Oreal 564,857
6,645 Pinault Printemps Redoute SA 1,753,786
70,946 Sanofi-Synthelabo 2,954,463
37,030 Schneider SA 2,907,703
8,439 Societe Generale 1,963,736
15,738 Sodexho 2,785,490
34,658 ST Microelectronics 5,334,664
9,940 Television Francaise 5,206,789
50,717 Total 'B' 6,769,392
70,043 Vivendi 6,325,506
----------------
Total France 61,682,917
----------------
GERMANY - 6.5% (a)
COMMON STOCKS
7,230 Allianz AG 2,428,926
39,682 Bayer AG 1,878,761
53,146 Bayerische Vereinsbank AG 3,629,782
37,076 Deutsche Bank AG 3,131,671
46,295 Deutsche Telekom AG 3,297,112
44,617 Dresdner Bank AG 2,427,026
36,577 Gehe AG 1,418,564
45,330 Mannesmann AG 10,936,326
19,398 Rhoen Klinikum AG 713,231
5,210 SAP AG 2,566,415
12,653 Siemens AG 1,609,819
33,335 Veba AG 1,620,235
----------------
35,657,868
----------------
PREFERRED STOCKS
1,200 Fielmann AG 35,902
1,450 Fresenius AG 265,840
----------------
301,742
----------------
Total Germany 35,959,610
----------------
HONG KONG - 2.7% (a)
COMMON STOCKS
129,000 Cheung Kong Holdings Ltd. 1,634,592
690,000 China Telecom Ltd. 4,305,011
95,000 Doa Heng Bank Ltd. 490,062
198,000 Henderson Land
Development Ltd. 1,273,558
292,800 Hong Kong
Telecommunications Ltd. 845,611
264,000 Hutchison Whampoa 3,837,654
165,000 New World Development
Co. Ltd. 371,454
580,000 Pacific Century
Cyberworks Ltd. 1,346,755 (b)
69,000 Sun Hung Kai Properties Ltd. 718,981
----------------
Total Hong Kong 14,823,678
----------------
INDIA - 0.2% (a)
COMMON STOCKS
57,291 ICICI Ltd. 794,913 (b)
27,000 Mahanager Telephone
Nigam Ltd. GDR (USD) 306,450
----------------
Total India 1,101,363
----------------
IRELAND - 0.2% (a)
COMMON STOCKS
28,507 CBT Group plc ADR (USD) 954,985 (b)
----------------
ITALY - 5.2% (a)
COMMON STOCKS
46,560 Assicurazioni Generali SpA 1,538,392
47,000 Banca Popolare di Brescia 4,159,296
325,177 Credito Italiano SpA 1,598,527
416,491 Ente Nazionale Idrocarburi 2,290,754
123,477 Instituto Bancario
San Paolo di Torino 1,677,947
121,000 Istituto Nazionale
Delle Assicurazioni 320,569
71,600 Italgas SpA 271,195
121,645 Mediolanum SpA 1,593,008
256,000 Seat-Pagine Gialle SpA 840,694
217,200 Tecnost 820,486
820,400 Telecom Italia Mobile SpA 9,165,105
311,903 Telecom Italia SpA 4,398,735
----------------
Total Italy 28,674,708
----------------
JAPAN - 23.0% (a)
COMMON STOCKS
30,000 Bridgestone Corp. 660,664
141,000 Canon 5,603,015
45,000 Citizen Watch Co. 286,288
26,000 Daiichi Pharmaceutical 338,201
98,000 Daiwa House Industry Co. 728,981
207 DDI Corp. 2,836,449
223 East Japan Railway 1,202,633
20,700 Fanuc Co. 2,635,872
65 Fuji Television Network Inc. 890,672
100,000 Fujitsu Ltd. 4,561,026
104,000 Hitachi 1,669,375
12,000 Honda Motor Co. 446,315
16,000 Ito-Yokado Co. 1,738,279
67,000 Kao Corp. 1,911,569
44,000 Kokuyo Co. Ltd. 585,691
43,000 Komori Corp. 820,270
118,000 Kuraray Co. 1,195,361
42,000 Kyocera 10,893,609
56,000 Makita Corp. 504,258
90,000 Marui Co. Ltd. 1,344,230
166,000 Matsushita Electric
Industrial Co. 4,598,023
92,000 Mitsubishi Corp. 710,463
490,000 Mitsubishi Heavy
Industries Ltd. 1,635,412
246,000 Mitsui Fudosan 1,666,164
43,000 Murata Manufacturing 10,100,813
272,000 NEC Corp. 6,482,529
114,000 Nippon Denso Corp. 2,722,521
557 Nippon Telegraph &
Telecom Corp. 9,540,472
179,000 Nomura Securities Co. Ltd. 3,232,407
171 NTT Mobile Communication
Network, Inc. 6,577,567
94,000 Sankyo Co. 1,932,074
147,000 Sekisui Chemical Co. Ltd. 651,767
101,000 Sekisui House 894,636
10,000 Seven-Eleven Japan Co. Ltd. 1,585,593
47,300 Shin-Etsu Chemical Co. Ltd. 2,036,997
62,000 Shiseido Co. Ltd. 904,179
800 Softbank Corporation 765,783
39,700 Sony Corp. 11,773,613
128,000 Sumitomo Bank Ltd. 1,752,687
199,000 Sumitomo Corp. 1,930,205
188,000 Sumitomo Electric
Industries Ltd. 2,173,123
35,000 TDK Corp. 4,833,611
47,000 Tokio Marine &
Fire Insurance Co. 549,721
4,900 Tokyo Electronics 671,430
87,000 Toppan Printing 868,552
361,000 Toshiba Corp 2,755,995
47,000 Uny Co. 459,558
51,000 Yamanouchi Pharmaceutical
Co. Ltd. 1,782,030
----------------
Total Japan 126,440,683
----------------
LUXEMBOURG - 0.1% (a)
COMMON STOCKS
2,714 Societe Europeenne
des Satellites 385,487
----------------
MEXICO - 1.4% (a)
COMMON STOCKS
47,850 Cemex SA de CV 267,657 (b)
30,000 Cemex SA 836,250 (b)
17,500 Grupo Televisa GDR (USD) 1,194,375 (b)
155,408 Kimberly-Clark Mexico 'A' 606,870
41,435 Telefonos de Mexico 'L'
ADS (USD) 4,661,438
----------------
Total Mexico 7,566,590
----------------
NETHERLANDS - 7.9% (a)
COMMON STOCKS
85,636 ABN Amro Holdings NV 2,139,382
9,160 Akzo Nobel NV 459,521
53,560 ASM Lithography
Holdings NV 5,951,087 (b)
197,000 CLP Holdings Ltd. 907,262
67,398 CSM NV 1,439,339
111,179 Elsevier 1,328,274
17,063 Equant NV 1,937,133 (b)
82,910 Fortis (NL) NV 2,985,817
14,310 Gucci Group NV (USD) 1,638,495
113,832 ING Groep NV 6,873,237
11,730 Koninklijke KPN NV 1,144,991
36,390 Philips Electronics NV 4,948,756
53,928 Royal Dutch Petroleum Co. 3,305,637
8,490 TNT Post Groep NV 243,316
6,354 United Pan-Europe
Communications NV 812,889 (b)
30,490 VNU NV 1,602,661
176,368 Wolters Kluwer 5,969,518
----------------
Total Netherlands 43,687,315
----------------
NEW ZEALAND - 0.2% (a)
COMMON STOCKS
246,000 Telecom Corp. of New Zealand 1,156,815
----------------
NORWAY - 0.5% (a)
COMMON STOCKS
12,804 Norsk Hydro 537,264
134,010 Orkla 'A' ASA 2,309,507
----------------
Total Norway 2,846,771
----------------
PORTUGAL - 0.3% (a)
COMMON STOCKS
69,373 Jeronimo Martins 1,775,025
----------------
SINGAPORE - 0.7% (a)
COMMON STOCKS
36,416 Singapore Press Holdings Ltd. 789,323
244,000 Singapore
Telecommunications Ltd. 503,969
266,112 United Overseas Bank 2,348,752
----------------
Total Singapore 3,642,044
----------------
SOUTH KOREA - 0.6% (a)
COMMON STOCKS
53,991 Korea Equity Fund (USD) 917,847
25,000 Korea Telecom 1,868,750
14,389 Pohang Iron & Steel
ADR (USD) 503,615
----------------
Total South Korea 3,290,212
----------------
SPAIN - 3.0% (a)
COMMON STOCKS
44,990 Banco Bilboa Vizcaya SA 640,834
6,820 Banco Popular Espanol SA 444,841
239,322 Banco Santander
Central Hispano 2,709,750
40,178 Corporacion Bancaria de
Espana SA 944,242
66,404 Endesa SA 1,318,442
33,828 Gas Natural SDG SA 779,332
106,590 Iberdrola 1,477,458
62,840 Repsol SA 1,457,209
266,611 Telefonica SA 6,660,548
----------------
Total Spain 16,432,656
----------------
SWEDEN - 3.0% (a)
COMMON STOCKS
24,720 Atlas Copco AB 'B' 703,049
125,185 Electrolux AB 'B' 3,148,383
7,770 Esselte 'B' 58,898
172,410 Hennes & Mauritz AB 5,774,692
325,121 Nordbanken Holding AB 1,910,454
35,380 Sandvik AB 'B' 1,126,805
88,608 Securitas AB 1,603,670
35,270 Telefonaktiebolaget LM
Ericsson (Ericsson AB) 2,267,328
----------------
Total Sweden 16,593,279
----------------
SWITZERLAND - 4.9% (a)
COMMON STOCKS
21,397 ABB AG 2,617,010
11,508 ABB Ltd. 1,402,491
8,677 Adecco SA 6,757,194
10,720 Credit Suisse Group 2,130,804
3,225 Nestle SA 5,908,010
364 Roche Holdings AG 4,320,543
1,542 Swisscom AG 623,656
11,198 UBS AG 3,024,016
----------------
Total Switzerland 26,783,724
----------------
TAIWAN - 0.2% (a)
COMMON STOCKS
47,937 Hon Hai Precision Industry Co.
Ltd. GDR (USD) 926,383 (b)
----------------
UNITED KINGDOM - 15.4% (a)
COMMON STOCKS
128,000 Abbey National 2,052,077
94,179 AstraZeneca Group plc 3,912,715
118,012 BG Group plc 762,023
237,000 BP Amoco plc (USD) 2,392,357
367,100 Cable & Wireless 6,297,412
380,650 Cadbury Schweppes 2,293,443
320,800 Caradon plc 803,192
112,800 Centrica 327,515
358,000 Compass Group plc 4,915,358
151,000 David S. Smith 482,942
103,000 Electrocomponents 1,139,675
38,000 GKN plc 622,407
199,500 Glaxo Wellcome 5,652,307
21,500 Hays 343,122
142,000 HSBC Holdings plc 1,991,124
58,000 John Laing 'A' 262,793
506,000 Kingfisher 5,615,139
150,600 Marconi plc 2,656,445
445,000 National Westminster Bank 9,560,154
50,230 Rank Group plc 162,273
564,000 Reed International plc 4,236,286
140,000 RTZ 3,360,470
126,000 Safeway plc 437,076
992,000 Shell Transport & Trading Co. 8,244,233
469,500 SmithKline Beecham plc 5,953,310
502,800 Tesco 1,526,885
405,008 Tomkins 1,321,503
421,642 Unilever 3,098,907
120,300 United News & Media 1,516,672
532,000 Vodafone AirTouch plc 2,651,836
----------------
Total United Kingdom 84,591,651
----------------
Principal
Amount
- --------------
SHORT-TERM
SECURITIES - 4.9% (a)
Commercial Paper - 4.6%
$7,500,000 Associates Corp. of
North America, 4.0%
Due 1/3/2000 7,498,333
6,600,000 IBM Credit Corp., 4.5%
Due 1/4/2000 6,597,525
8,500,000 Merck & Co. Inc., 4.0%
Due 1/6/2000 8,495,278
2,700,000 New Center Asset Trust, 4.9%
Due 1/3/2000 2,699,265
----------------
25,290,401
----------------
U.S. Government Agency - 0.3%
1,600,000 Federal National Mortgage
Association Discount Notes,
4.0% Due 1/5/2000 1,599,289
----------------
Total Short-Term Securities
(at amortized cost) 26,889,690
----------------
Total Investments
(cost $376,422,597) $549,594,070 (d)
================
Notes to Portfolio of Investments:
- ---------------------------------
(a) The categories of investments are shown as a percentage of total
investments of the World Growth Portfolio.
(b) Currently non-income producing.
(c) Security Classification:
<CAPTION>
% of
Cost Value Portfolio
---------------- ---------------- ------------
<S> <C> <C> <C>
Common Stocks
& Warrants $ 348,512,952 $ 521,420,000 94.9%
Preferred Stocks 1,019,955 1,284,380 0.2%
Short-Term 26,889,690 26,889,690 4.9%
---------------- ---------------- ------------
Total Investments $ 376,422,597 $ 549,594,070 100.0%
================ ================ ============
(d) At December 31, 1999, the aggregate cost of securities for federal
income tax purposes was $378,439,784 and the net unrealized appreciation of
investments based on that cost was $171,154,285 which is comprised of
$186,322,880 aggregate gross unrealized appreciation and $15,168,595
aggregate gross unrealized depreciation.
(e) 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
December 31, 1999
Shares Value
- -------------- ----------------
<S> <C>
COMMON STOCKS - 95.4% (a)
Aerospace & Defense - 0.3%
300,000 Boeing Co. $ 12,468,723
----------------
Airlines - 0.2%
170,000 Alaska Air Group, Inc. 5,971,250 (b)
113,400 Continental Airlines
Holding, Inc., Class B 5,032,125 (b)
----------------
11,003,375
----------------
Automotive - 0.7%
275,000 Ford Motor Co. 14,695,313
180,000 General Motors Corp. 13,083,750
400,000 Tower Automotive, Inc. 6,175,000 (b)
----------------
33,954,063
----------------
Banks - 2.9%
233,100 AmSouth Bancorporation 4,501,744
140,100 Astoria Financial Corp. 4,264,294
250,000 Bank of America Corp. 12,546,875
550,000 Bank of New York Co., Inc. 22,000,000
125,000 Bank United Corp., Class A 3,406,250
320,000 Chase Manhattan Corp. 24,860,000
262,000 Compass Bancshares, Inc. 5,845,875
436,891 FleetBoston Financial Corp. 15,209,268
69,700 Hibernia Corp., Class A 740,563
404,800 Mellon Financial Corp. 13,788,500
78,343 Provident Bankshares Corp. 1,356,313
150,900 State Street Corp. 11,025,131
375,000 U.S. Bancorporation 8,929,688
370,000 Wells Fargo & Co. 14,961,875
----------------
143,436,376
----------------
Biotechnology - 1.7%
475,000 Amgen, Inc. 28,529,688
130,000 Biogen, Inc. 10,985,000 (b)
195,000 Cephalon, Inc. 6,739,688 (b)
90,300 Genzyme Corp. 4,063,500 (b)
85,300 Gilead Sciences, Inc. 4,616,863 (b)
39,600 IDEC Pharmaceuticals Corp. 3,890,700 (b)
151,700 MedImmune, Inc. 25,163,238 (b)
----------------
83,988,677
----------------
Broadcasting - 5.2%
166,400 Adelphia Communications
Corp., Class A 10,920,000 (b)
328,500 AMFM, Inc. 25,705,125 (b)
824,108 AT&T Corp./Liberty Media
Group, Class A 46,768,129 (b)
203,300 Cablevision Systems Corp.,
Class A 15,349,150 (b)
276,700 CBS Corp. 17,691,506 (b)
170,000 Charter Communications, Inc.,
Class A 3,718,750 (b)
450,000 Clear Channel
Communications, Inc. 40,162,500 (b)
160,000 Comcast Corp., Class A 8,090,000
275,000 Cox Communications, Inc.,
Class A 14,162,500 (b)
104,500 Echostar Communications
Corp., Class A 10,188,750
556,250 Infinity Broadcasting Corp.,
Class A 20,129,297 (b)
140,100 Insight Communications, Inc.,
Class A 4,150,463 (b)
225,000 MediaOne Group, Inc. 17,282,813 (b)
198,500 TV Azteca, S.A. de C.V., ADR 1,786,500
350,000 USA Networks, Inc. 19,337,500 (b)
----------------
255,442,983
----------------
Chemicals - 0.5%
170,000 E.I. du Pont de
Nemours and Co. 11,198,750
69,900 Hercules, Inc. 1,948,463
341,400 Lyondell Petrochemical Co. 4,352,850
260,000 Monsanto Co. 9,262,500
----------------
26,762,563
----------------
Communications
Equipment - 7.2%
375,000 ADC Telecommunications, Inc. 27,210,938 (b)
266,600 CIENA Corp. 15,329,500 (b)
140,000 Com21, Inc. 3,141,250 (b)
124,000 Comverse Technology, Inc. 17,949,000 (b)
236,900 Digital Microwave Corp. 5,552,344 (b)
190,000 General Instrument Corp. 16,150,000 (b)
200,000 General Motors Corp., Class H 19,200,000 (b)
720,000 Lucent Technologies, Inc. 53,865,000
420,000 Motorola, Inc. 61,845,000
325,000 Nokia Corp., ADR 61,750,000
220,000 Nortel Networks Corp. 22,220,000
180,000 Scientific-Atlanta, Inc. 10,012,500
232,700 Tekelec 5,235,750 (b)
562,300 Tellabs, Inc. 36,092,631 (b)
----------------
355,553,913
----------------
Computers - Hardware - 3.7%
443,600 Compaq Computer Corp. 12,004,925
453,300 Dell Computer Corp. 23,118,300 (b)
155,000 Gateway, Inc. 11,169,688 (b)
210,000 Hewlett Packard Co. 23,926,875
384,800 International Business
Machines Corp. 41,558,400
906,800 Sun Microsystems, Inc. 70,220,325
----------------
181,998,513
----------------
Computers - Networking - 3.6%
446,600 Cabletron Systems, Inc. 11,611,600 (b)
1,430,000 Cisco Systems, Inc. 153,188,750 (b)
60,000 Finisar Corp. 5,392,500 (b)
40,900 JNI Corp. 2,699,400 (b)
148,050 Xpedior, Inc. 4,256,438 (b)
----------------
177,148,688
----------------
Computers - Peripherals - 1.6%
570,000 EMC Corp. 62,272,500 (b)
180,000 Lexmark International
Group, Inc., Class A 16,290,000 (b)
----------------
78,562,500
----------------
Computers - Software &
Services - 13.6%
97,200 24/7 Media, Inc. 5,467,500 (b)
175,000 Adobe Systems, Inc. 11,768,750
800,000 America Online, Inc. 60,350,000
143,900 AppliedTheory Corp. 3,993,225 (b)
166,600 At Home Corp., Series A 7,142,975 (b)
420,100 Baan Co. N.V. 5,933,913 (b)
235,000 BMC Software, Inc. 18,785,313 (b)
225,000 Citrix Systems, Inc. 27,675,000 (b)
82,500 Clarent Corp. 6,414,375 (b)
250,000 Computer Associates
International, Inc. 17,484,375
416,700 Compuware Corp. 15,522,075 (b)
26,300 Electronic Arts, Inc. 2,209,200 (b)
163,200 Equant N.V. (USD) 18,278,400 (b)
200,000 Harbinger Corp. 6,362,500 (b)
945,700 Informix Corp. 10,816,444 (b)
44,800 InterWorld Corp. 3,824,800 (b)
345,000 Intuit, Inc. 20,678,438 (b)
60,000 ISS Group, Inc. 4,267,500 (b)
75,000 IVillage, Inc. 1,518,750 (b)
114,000 Jacada, Ltd. 3,177,750 (b)
145,100 Legato Systems, Inc. 9,984,694 (b)
210,000 Level 3 Communications, Inc. 17,193,750 (b)
240,000 Lycos, Inc. 19,095,000 (b)
160,000 Macromedia, Inc. 11,700,000 (b)
35,600 McAfee.com Corp., Class A 1,602,000 (b)
1,375,000 Microsoft Corp. 160,531,250 (b)
66,800 NBC Internet, Inc., Class A 5,160,300 (b)
580,000 Network Associates, Inc. 15,478,750 (b)
570,000 Oracle Corp. 63,875,625 (b)
104,500 Parametric Technology Corp. 2,828,031 (b)
300,000 PeopleSoft, Inc. 6,393,750 (b)
111,900 Peregrine Systems, Inc. 9,420,581 (b)
380,000 Rational Software Corp. 18,667,500 (b)
40,100 RealNetworks, Inc. 4,824,531 (b)
140,000 SAP Aktiengesellschaft, ADR 7,288,750
200,000 Symantec Corp. 11,725,000 (b)
59,400 TenFold Corp. 2,372,288 (b)
284,200 Unisys Corp. 9,076,638 (b)
380,600 US Web Corp. 16,912,913 (b)
75,500 Viant Corp. 7,474,500 (b)
28,000 Yahoo!, Inc. 12,115,250 (b)
----------------
665,392,384
----------------
Consumer Finance - 0.8%
720,000 MBNA Corp. 19,620,000
213,500 Providian Financial Corp. 19,441,844
----------------
39,061,844
----------------
Containers & Packaging -
Paper - 0.2%
156,700 Temple Inland, Inc. 10,332,406
----------------
Electrical Equipment - 3.0%
580,800 Flextronics International, Ltd. 26,716,800
476,400 General Electric Co. 73,722,900
98,700 Koninklijke (Royal) Philips
Electronics N.V., ADR 13,324,500
245,000 Sanmina Corp. 24,469,375 (b)
133,100 SPX Corp. 10,756,144 (b)
----------------
148,989,719
----------------
Electronics - 6.2%
92,500 Agilent Technologies, Inc. 7,151,406 (b)
340,000 Altera Corp. 16,851,250 (b)
225,000 Analog Devices, Inc. 20,925,000 (b)
279,900 Arrow Electronics, Inc. 7,102,463 (b)
85,300 Conexant Systems, Inc. 5,661,788
72,000 E-TEK Dynamics, Inc. 9,693,000 (b)
114,900 Galileo Technology, Ltd. 2,771,963 (b)
825,100 Intel Corp. 67,916,044
280,000 JDS Uniphase Corp. 45,167,500
220,000 Lattice Semiconductor Corp. 10,367,500 (b)
275,000 Linear Technology Corp. 19,679,688
130,000 Microchip Technology, Inc. 8,896,875 (b)
386,700 National Semiconductor Corp. 16,555,594 (b)
85,000 PMC-Sierra, Inc. 13,626,563 (b)
335,000 Texas Instruments, Inc. 32,453,125
380,000 Xilinx, Inc. 17,278,125
----------------
302,097,884
----------------
Entertainment - 1.2%
296,600 Disney (Walt) Co. 8,675,550
303,300 Fox Entertainment Group, Inc.,
Class A 7,563,544 (b)
350,000 Time Warner, Inc. 25,353,125
260,800 Viacom, Inc., Class B 15,762,100 (b)
----------------
57,354,319
----------------
Equipment -
Semiconductors - 1.6%
223,300 Applied Materials, Inc. 28,289,319 (b)
200,000 KLA Instruments Corp. 22,275,000 (b)
190,000 LAM Research Corp. 21,196,875 (b)
93,300 Silicon Valley Group, Inc. 1,656,075 (b)
389,700 SpeedFam-IPEC, Inc. 5,041,744 (b)
----------------
78,459,013
----------------
Financial - Diversified - 3.9%
400,000 Ace, Ltd. 6,675,000
225,000 American Express Co. 37,406,250
340,000 Associates First Capital Corp.,
Class A 9,328,750
1,140,900 Citigroup, Inc. 63,391,256
470,000 Federal Home Loan
Mortgage Corp. 22,119,375
350,000 Federal National
Mortgage Association 21,853,125
157,000 Glimcher Realty Trust 2,021,375
200,000 Morgan Stanley
Dean Witter & Co. 28,550,000
----------------
191,345,131
----------------
Food & Beverage - 0.8%
245,700 Coca-Cola Co. 14,312,025
429,000 International Home Foods, Inc. 7,453,875 (b)
163,400 Nabisco Holdings, Inc., Class A 5,167,525
299,900 PepsiCo, Inc. 10,571,475
----------------
37,504,900
----------------
Freight & Shipping - 0.3%
129,600 Kansas City Southern
Industries, Inc. 9,671,400
89,400 United Parcel Service, Inc.,
Class B 6,168,600
----------------
15,840,000
----------------
Hardware & Tools - 0.3%
301,700 Black & Decker Corp. 15,763,825
----------------
Health Care -
Diversified - 2.2%
400,000 American Home Products Corp. 15,775,000
520,000 Bristol-Myers Squibb Co. 33,377,500
257,700 Johnson & Johnson 23,998,313
440,000 Warner-Lambert Co. 36,052,500
----------------
109,203,313
----------------
Health Care - Drugs &
Pharmaceuticals - 2.6%
159,800 Eli Lilly & Co. 10,626,700
197,300 Forest Laboratories, Inc. 12,121,619 (b)
430,000 Merck & Co., Inc. 28,836,875
62,500 Miravant Medical Technologies 582,031 (b)
880,000 Pfizer, Inc. 28,545,000
200,000 Pharmacia & Upjohn, Inc. 9,000,000
285,000 Schering-Plough Corp. 12,023,438
270,000 Teva Pharmaceutical
Industries, Ltd., ADR 19,355,625
200,000 Watson Pharmaceuticals, Inc. 7,162,500 (b)
----------------
128,253,788
----------------
Health Care - Medical
Products & Supplies - 1.3%
100,000 Bard (C.R.), Inc. 5,300,000
98,800 Baxter International, Inc. 6,205,875
248,200 Becton, Dickinson & Co. 6,639,350
200,000 Guidant Corp. 9,400,000 (b)
600,000 Medtronic, Inc. 21,862,500
158,100 SciQuest.com, Inc. 12,568,950 (b)
75,000 VISX, Inc. 3,881,250 (b)
----------------
65,857,925
----------------
Health Care
Management - 0.4%
561,000 Oxford Health Plans, Inc. 7,117,688 (b)
431,600 Tenet Healthcare Corporation 10,142,600 (b)
----------------
17,260,288
----------------
Health Care Services - 0.1%
755,600 Total Renal Care Holdings, Inc. 5,053,075 (b)
----------------
Homebuilding - 0.1%
250,000 Pulte Corp. 5,625,000
----------------
Housewares &
Household Products - 1.3%
270,000 Colgate Palmolive Co. 17,550,000
330,700 Dial Corp. 8,040,144
186,500 Fort James Corp. 5,105,438
125,000 Kimberly-Clark Corp. 8,156,250
240,700 Procter & Gamble Co. 26,371,694
----------------
65,223,526
----------------
Insurance - 1.7%
140,000 American General Corp. 10,622,500
500,000 American International
Group, Inc. 54,062,500
105,000 Marsh & McLennan Cos., Inc. 10,047,188
199,900 The Hartford Financial
Services Group, Inc. 9,470,263
----------------
84,202,451
----------------
Investment Banking &
Brokerage - 1.2%
225,000 Donaldson, Lufkin &
Jenrette, Inc. 10,884,375
325,000 Knight/Trimark Group, Inc.,
Class A 14,950,000 (b)
218,700 Lehman Brothers Holdings, Inc. 18,521,156
200,000 Merrill Lynch & Co., Inc. 16,700,000
----------------
61,055,531
----------------
Investment Management - 0.4%
120,000 Standard & Poor's Depositary
Receipts Trust 17,625,000
----------------
Leisure Products - 0.3%
411,500 Mattel, Inc. 5,400,938
307,000 Premier Parks, Inc. 8,864,625 (b)
----------------
14,265,563
----------------
Lodging & Hotels - 0.3%
350,000 Carnival Corp., Inc. 16,734,375
----------------
Machinery - Diversified - 0.4%
395,000 AGCO Corp. 5,307,813
351,200 Dover Corp. 15,935,700
----------------
21,243,513
----------------
Manufacturing - 1.8%
411,250 Honeywell International, Inc. 23,723,984
181,400 Jabil Circuit, Inc. 13,242,200 (b)
1,270,000 Tyco International, Ltd. 49,371,250
----------------
86,337,434
----------------
Metals Mining - 0.1%
120,000 Freeport McMoRan
Copper & Gold, Class B 2,535,000 (b)
----------------
Oil & Gas - 3.3%
370,000 Burlington Resources, Inc. 12,233,125
325,000 ENSCO International, Inc. 7,434,375
320,000 Exxon Mobil Corp. 25,780,000
480,000 Halliburton Co. 19,320,000
141,300 Marine Drilling Companies, Inc. 3,170,419 (b)
215,400 Nabors Industries, Inc. 6,663,938 (b)
195,000 Royal Dutch Petroleum Co. 11,785,313
250,000 Schlumberger, Ltd. 14,062,500
218,700 Smith International, Inc. 10,866,656 (b)
175,000 Texaco, Inc. 9,504,688
198,400 Transocean Sedco Forex, Inc. 6,683,600
427,700 Unocal Corp. 14,354,681
350,000 USX-Marathon Group 8,640,625
275,000 Weatherford International, Inc. 10,982,813 (b)
----------------
161,482,733
----------------
Paper & Forest Products - 0.1%
115,000 Willamette Industries, Inc. 5,340,313
----------------
Publishing - 0.4%
20,500 Dow Jones & Co., Inc. 1,394,000
108,600 Gannett Co., Inc. 8,857,688
256,600 Reader's Digest Association,
Inc., Class A 7,505,550
150,300 Ziff-Davis, Inc. 2,376,619 (b)
----------------
20,133,857
----------------
Restaurants - 0.4%
443,900 Buffets, Inc. 4,439,000 (b)
340,000 McDonald's Corp. 13,706,250
----------------
18,145,250
----------------
Retail - 6.5%
105,000 Abercrombie & Fitch Co.,
Class A 2,802,188 (b)
288,400 Best Buy Co., Inc. 14,474,075 (b)
228,000 Circuit City Stores, Inc. 10,274,250
246,600 Costco Wholesale Corp. 22,502,250 (b)
285,000 Dayton Hudson Corp. 20,929,688
70,000 Electronics Boutique
Holdings Corp. 1,260,000 (b)
170,700 Family Dollar Stores, Inc. 2,784,544
104,800 Fatbrain.com, Inc. 2,626,550 (b)
300,000 Federated Department Stores 15,168,750 (b)
300,000 Gap, Inc. 13,800,000
975,000 Home Depot, Inc. 66,848,438
138,390 Intimate Brands, Inc., Class A 5,968,069
563,300 Kmart Corp. 5,668,206 (b)
150,000 Kohl's Corp. 10,828,125 (b)
191,000 Limited (The), Inc. 8,272,688
225,000 Lowe's Companies 13,443,750
22,300 MotherNature.com, Inc. 163,069 (b)
200,000 NIKE, Inc., Class B 9,912,500
800,000 PetsMart, Inc. 4,600,000 (b)
270,300 Ross Stores, Inc. 4,848,506
106,700 Staples, Inc. 2,214,025 (b)
100,000 Tandy Corp. 4,918,750
126,400 Ticketmaster Online-City
Search, Class B 4,858,500 (b)
55,300 TJX Companies, Inc. 1,130,194
830,000 Wal-Mart Stores, Inc. 57,373,750
130,200 Williams-Sonoma, Inc. 5,989,200 (b)
147,000 Zale Corp. 7,111,125 (b)
----------------
320,771,190
----------------
Retail - Food & Drug - 0.9%
350,000 CVS Corp. 13,978,125
163,800 Great Atlantic & Pacific Tea, Inc. 4,565,925
600,000 Kroger Co. 11,325,000 (b)
383,400 Safeway, Inc. 13,634,663 (b)
----------------
43,503,713
----------------
Services - 0.1%
273,900 Modis Professional
Services, Inc. 3,903,075 (b)
----------------
Services - Cyclical - 2.9%
84,900 Block (H & R), Inc. 3,714,375
646,000 Cendant Corp. 17,159,375 (b)
44,000 Charles River Associates, Inc. 1,474,000 (b)
80,000 CMGI, Inc. 22,150,000 (b)
97,524 DoubleClick, Inc. 24,679,667 (b)
134,300 Harris Interactive, Inc. 1,754,294 (b)
169,300 Interpublic Group of Cos., Inc. 9,766,494
140,300 NCO Group, Inc. 4,226,538 (b)
130,700 NFO Worldwide, Inc. 2,924,413 (b)
323,400 Omnicom Group, Inc. 32,340,000
51,300 True North
Communications, Inc. 2,292,469
265,200 Young & Rubicam, Inc. 18,762,900
----------------
141,244,525
----------------
Services - Technology - 0.9%
413,400 Concord EFS, Inc. 10,645,050 (b)
130,000 Electronic Data Systems Corp. 8,701,875
250,000 First Data Corp. 12,328,125
285,000 Fiserv, Inc. 10,919,063 (b)
----------------
42,594,113
----------------
Steel - 0.2%
159,500 Nucor Corp. 8,742,594
----------------
Telephone &
Telecommunications - 5.9%
278,600 ALLTEL Corp. 23,036,738
540,000 AT&T Corp. 27,405,000
325,000 Bell Atlantic Corp. 20,007,813
158,900 Cable & Wireless plc, ADR 8,411,769
220,000 Covad Communications
Group, Inc. 12,306,250 (b)
98,300 DeltaThree.com, Inc., Class A 2,531,225 (b)
374,700 Intermedia Communications of
Florida, Inc. 14,543,044 (b)
1,065,150 MCI Worldcom, Inc. 56,519,522
327,500 MobileMedia Corp., Class A 655 (b)
225,000 NEXTEL Communications, Inc.,
Class A 23,203,125 (b)
300,000 Primus Telecomm Group, Inc. 11,475,000 (b)
442,000 Qwest Communications
International, Inc. 19,006,000 (b)
500,000 SBC Communications, Inc. 24,375,000
226,700 Sprint Corp. (FON Group) 15,259,744
36,300 Sprint Corp. (PCS Group) 3,720,750 (b)
145,000 Telecomunicacoes Brasileiras
S.A., ADR 18,632,500
165,000 Vodafone AirTouch plc, ADR 8,167,500
----------------
288,601,635
----------------
Waste Management - 0.1%
416,600 Republic Services, Inc.,
Class A 5,988,625 (b)
----------------
Total Common Stocks
(cost $3,426,850,231) 4,683,389,204
----------------
PREFERRED
STOCKS - 0.3% (a)
116,700 MediaOne Group, Inc.,
Convertible Preferred Stock
(cost $7,503,000) 12,603,600
----------------
Principal
Amount
- --------------
SHORT-TERM
SECURITIES - 4.3% (a)
Commercial Paper - 2.8%
$5,000,000 AES Hawaii, Inc., 6.55%
Due 1/21/2000 4,981,806
20,000,000 AT&T Corp., 5.96%
Due 1/10/2000 19,970,200
25,000,000 CIT Group Holdings, Inc., 4.5%
Due 1/3/2000 24,993,750
5,000,000 Coca-Cola Co., 6.2%
Due 1/6/2000 4,995,694
20,000,000 Corporate Asset Funding Co.,
6.35% Due 1/14/2000 19,954,139
20,000,000 Harvard University, 3.0%
Due 1/3/2000 19,996,667
12,900,000 Household Finance Corp., 4.0%
Due 1/3/2000 12,897,133
20,000,000 Sears Roebuck Acceptance Corp.,
5.45%, Due 1/13/2000 19,963,667
10,800,000 UBS Finance (Delaware), Inc.,
5.0% Due 1/3/2000 10,797,000
----------------
138,550,056
----------------
U.S. Government Agency - 1.5%
50,000,000 Federal Home Loan Mortgage
Corp. Discount Notes, 1.5%
Due 1/3/2000 49,995,833
25,000,000 Federal Home Loan Mortgage
Corp. Discount Notes, 4.7%
Due 1/10/2000 24,970,625
----------------
74,966,458
----------------
Total Short-Term Securities
(at amortized cost) 213,516,514
----------------
Total Investments
(cost $3,647,869,745) $ 4,909,509,318 (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 December 31, 1999, the aggregate cost of securities for federal
income tax purposes was $3,669,183,668 and the net unrealized appreciation
of investments based on that cost was $1,240,325,650 which is comprised of
$1,374,871,582 aggregate gross unrealized appreciation and $134,545,932
aggregate gross unrealized depreciation.
(d) Miscellaneous Footnotes:
(ADS) - American Depository Shares
(ADR) - American 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
High Yield Portfolio
Portfolio of Investments
December 31, 1999
Principal Maturity
Amount Rate Date Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CORPORATE BONDS - 79.1% (a)
Aerospace & Defense - 0.2%
$4,800,000 Condor Systems, Inc., Notes 11.875% 5/1/2009 $3,630,000
-------------
Airlines - 0.7%
4,000,000 Northwest Airlines, Corp., Notes 8.375% 3/15/2004 3,755,300
4,500,000 Northwest Airlines, Corp., Notes 7.625% 3/15/2005 4,072,500
3,000,000 U.S. Air, Inc., Sr. Secured Equipment Trust, Series 1993-A-3 10.375% 3/1/2013 2,927,691
-------------
10,755,491
-------------
Automotive - 0.6%
3,000,000 Dura Operating Corp., Sr. Subordinated Notes, Series B 9.0% 5/1/2009 2,842,500
6,500,000 Venture Holdings Trust, Sr. Subordinated Notes 12.0% 6/1/2009 5,915,000
-------------
8,757,500
-------------
Banks - 1.7%
3,550,000 Chevy Chase Savings Bank, Subordinated Debentures 9.25% 12/1/2005 3,390,250
8,000,000 GS Escrow Corp., Sr. Notes 7.125% 8/1/2005 7,150,968
4,800,000 Riggs Capital Trust II, Trust Preferred Securities, Series C 8.875% 3/15/2027 4,378,478
9,800,000 Soverign Bancorp, Inc., Sr. Notes 10.5% 11/15/2006 10,045,000
-------------
24,964,696
-------------
Broadcasting & Media - 11.4%
4,900,000 Alliance Atlantis Communications, Inc., Sr. Subordinated Notes 13.0% 12/15/2009 4,930,625
2,682,400 AMFM Operating, Inc., Payment-In-Kind Debentures 12.625% 10/31/2006 3,057,936
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, Sr. Discount Notes Zero Coupon 12/1/2008 8,547,500
6,600,000 Bresnan Communications, Sr. Discount Notes, Series B Zero Coupon 2/1/2009 4,587,000
2,000,000 Chancellor Media Corp., Sr. Notes 8.0% 11/1/2008 2,010,000
3,600,000 Chancellor Media Corp., Sr. Subordinated Notes, Series B 8.125% 12/15/2007 3,600,000
2,100,000 Chancellor Media Corp., Sr. Subordinated Notes, Series B 8.75% 6/15/2007 2,126,250
2,600,000 Charter Communication Holdings, Sr. Notes 8.25% 4/1/2007 2,411,500
3,600,000 Charter Communication Holdings, Sr. Notes 8.625% 4/1/2009 3,343,500
2,100,000 Classic Cable, Inc., Sr. Subordinated Notes, Series B 9.375% 8/1/2009 2,073,750
6,000,000 Classic Communications, Inc., Sr. Disc. Notes Zero Coupon 8/1/2009 4,177,500
3,600,000 Clear Channel Communications Corp., Convertible Sr. Notes 1.5% 12/1/2002 3,699,000
3,000,000 CSC Holdings, Inc., Sr. Notes 7.875% 12/15/2007 2,970,000
6,500,000 Diamond Cable Communications plc, Sr. Discount Notes (USD) Zero Coupon 12/15/2005 6,175,000
2,400,000 Diamond Cable Communications plc, Sr. Discount Notes (USD) Zero Coupon 2/15/2007 1,980,000
12,000,000 DIVA Systems Corp., Sr. Discount Notes, Series B Zero Coupon 3/1/2008 4,740,000
4,250,000 EchoStar Communications Corp., Convertible Notes 4.875% 1/1/2007 5,232,813
7,400,000 EchoStar DBS Corp., Sr. Notes 9.375% 2/1/2009 7,474,000
9,200,000 Grupo Televisa S.A., Sr. Notes (USD) 11.875% 5/15/2006 9,867,000
1,000,000 Insight Midwest, Sr. Notes 9.75% 10/1/2009 1,037,500
1,800,000 Jacor Communications, Inc., Convertible Zero Coupon 2/9/2018 1,210,500
5,400,000 NTL Communications Corp., Sr. Notes, Series B 11.5% 10/1/2008 5,886,000
3,500,000 NTL, Inc., Convertible Subordinated Notes 5.75% 12/15/2009 3,780,000
1,500,000 NTL, Inc., Convertible Subordinated Notes 7.0% 12/15/2008 3,967,500
4,200,000 NTL, Inc., Sr. Notes, Series B Zero Coupon 4/1/2008 2,919,000
1,800,000 NTL, Inc., Sr. Notes, Series B 10.0% 2/15/2007 1,858,500
6,000,000 Olympus Communications, LP, Sr. Notes 10.625% 11/15/2006 6,360,000
4,200,000 OnePoint Communications Corp., Sr. Notes, Series B 14.5% 6/1/2008 2,782,500
4,200,000 ONO Finance plc, Notes (USD) 13.0% 5/1/2009 4,305,000
2,750,000 Optel, Inc., Sr. Notes, Series B 11.5% 7/1/2008 1,966,250 (c)
9,250,000 Optel, Inc., Sr. Notes, Series B 13.0% 2/15/2005 6,891,250 (c)
4,800,000 RCN Corp., Sr. Notes 10.125% 1/15/2010 4,800,000
4,200,000 Rogers Cablesystems, Ltd., Sr. Secured Second Priority Notes 9.625% 8/1/2002 4,305,000
886,310 Scott Cable Communications, Inc., Payment-In-Kind
Jr. Subordinated Notes 16.0% 7/18/2002 248,167
5,000,000 Sinclair Broadcast Group, Inc., Sr. Subordinated Notes 9.0% 7/15/2007 4,712,500
6,500,000 Supercanal Holding S.A., Sr. Notes (USD) 11.5% 5/15/2005 3,558,750 (c)
4,200,000 Telewest Communications plc, Sr. Discount Notes (USD) Zero Coupon 4/15/2009 2,667,000
6,000,000 UIH Australia/Pacific, Inc., Sr. Discount Notes, Series B Zero Coupon 5/15/2006 5,220,000
9,000,000 United International Holdings, Inc., Sr. Notes, Series B Zero Coupon 2/15/2008 5,805,000
7,850,000 United Pan-Europe Comm. N.V., Sr. Disc. Notes (USD) Zero Coupon 11/1/2009 4,435,250
7,850,000 Young Broadcasting, Inc., Sr. Subordinated Notes 11.75% 11/15/2004 8,232,687
-------------
170,356,641
-------------
Building Materials - 0.7%
6,000,000 CEMEX S.A. de C.V., Notes (USD) 12.75% 7/15/2006 6,750,000
4,500,000 Formica Corp., Sr. Subordinated Notes, Series B 10.875% 3/1/2009 4,162,500
-------------
10,912,500
-------------
Chemicals - 1.5%
6,450,000 Huntsman Polymers Corp., Sr. Notes 11.75% 12/1/2004 6,772,500
1,000,000 Lyondell Chemical Co., Secured Notes, Series A 9.625% 5/1/2007 1,027,500
5,500,000 Lyondell Chemical Co., Sr. Secured Notes, Series B 9.875% 5/1/2007 5,637,500
3,000,000 Sterling Chemicals, Inc., Sr. Secured Notes, Series B 12.375% 7/15/2006 3,120,000
6,000,000 ZSC Specialty Chemical plc, Sr. Notes (USD) 11.0% 7/1/2009 6,255,000
-------------
22,812,500
-------------
Consumer Products - 0.6%
7,500,000 AMM Holdings, Inc., Sr. Discount Notes Zero Coupon 7/1/2009 787,500
800,000 Holmes Products Corp., Sr. Subordinated Notes, Series B 9.875% 11/15/2007 588,000
4,200,000 Holmes Products Corp., Sr. Subordinated Notes, Series D 9.875% 11/15/2007 3,087,000
3,000,000 Moll Industries, Inc., Sr. Subordinated Notes 10.5% 7/1/2008 1,215,000
4,300,000 Winsloew Furniture, Inc., Sr. Subordinated Notes 12.75% 8/15/2007 3,891,500
-------------
9,569,000
-------------
Environmental - 0.9%
1,800,000 Allied Waste, North America, Sr. Notes, Series B 7.625% 1/1/2006 1,633,500
2,700,000 IT Group, Inc., Sr. Subordinated Notes, Series B 11.25% 4/1/2009 2,632,500
5,500,000 Norcal Waste Systems, Inc., Sr. Notes, Series B 13.5% 11/15/2005 5,857,500
4,300,000 WMX Technologies, Inc., Cvt Subordinated Notes 2.0% 1/24/2005 3,579,750
-------------
13,703,250
-------------
Finance - Consumer - 1.0%
8,400,000 Altiva Financial Corp., Subordinated Notes 12.5% 12/1/2001 2,562,000 (c)
6,000,000 Dollar Financial Group, Inc., Sr. Notes, Series A 10.875% 1/15/2006 6,030,000
3,896,000 HomeSide, Inc., Sr. Notes, Series B 11.25% 5/15/2003 4,309,950
3,000,000 United Companies Financial Corp., Sr. Notes 9.35% 11/1/1999 1,035,000 (c)
10,060,000 United Companies Financial Corp., Subordinated Notes 8.375% 7/1/2005 301,800 (c)
-------------
14,238,750
-------------
Finance - Other - 0.7%
4,200,000 FC CBO II, Ltd., Subordinated Debentures, Series 1A, Class C 11.05% 9/9/2010 3,549,000
7,500,000 Williams Scotsman, Inc., Sr. Notes 9.875% 6/1/2007 7,237,500
-------------
10,786,500
-------------
Food & Beverage - 2.2%
6,400,000 Ameriserve Food Distribution, Inc., Sr. Notes 8.875% 10/15/2006 3,552,000 (c)
4,800,000 Fleming Companies, Inc., Sr. Subordinated Notes, Series B 10.625% 7/31/2007 4,356,000
8,700,000 Grupo Azucarero Mexico S.A. de C, Sr. Notes (USD) 11.5% 1/15/2005 3,610,500
7,300,000 Imperial Holly Corp., Sr. Subordinated Notes 8.75% 12/15/2007 5,365,500
3,000,000 Packaged Ice, Inc., Sr. Notes, Series B 9.75% 2/1/2005 2,760,000
6,000,000 Smithfield Foods, Inc., Sr. Subordinated Notes 7.625% 2/15/2008 5,430,000
3,000,000 Southern Foods Group, LP, Sr. Subordinated Notes 9.875% 9/1/2007 3,037,500
5,000,000 Sun World International, First Mortgage Notes, Series B 11.25% 4/15/2004 5,125,000
-------------
33,236,500
-------------
Health Care - Medical Products & Supplies - 1.1%
6,000,000 Dade International, Inc., Sr. Subordinated Notes, Series B 11.125% 5/1/2006 5,880,000
6,000,000 D.J. Orthopedics, LLC, Sr. Subordinated Notes 12.625% 6/15/2009 5,910,000
5,000,000 Fisher Scientific International, Inc., Sr. Subordinated Notes 9.0% 2/1/2008 4,818,750
-------------
16,608,750
-------------
Health Care Management - 1.8%
7,000,000 Concentra Operating Corp., Sr. Subordinated Notes, Series A 13.0% 8/15/2009 6,405,000
8,000,000 Health Insurance Plan of Greater New York, Bonds, Series C 11.25% 7/1/2010 7,856,080
5,100,000 Healthsouth Rehab Corp., Sr. Subordinated Notes 9.5% 4/1/2001 5,080,875
2,650,000 Integrated Health Services, Inc., Convertible
Sr. Subordinated Debentures 5.75% 1/1/2001 29,813 (c)
3,750,000 Integrated Health Services, Inc., Sr. Subordinated Notes, Series A 9.25% 1/15/2008 300,000 (c)
3,000,000 Tenet Healthcare Corp., Sr. Notes, Series B 7.625% 6/1/2008 2,767,500
4,800,000 Triad Hospital Holdings, Inc., Sr. Subordinated Notes, Series B 11.0% 5/15/2009 4,992,000
-------------
27,431,268
-------------
Health Care Services - 1.5%
4,200,000 Dynacare, Inc., Sr. Notes 10.75% 1/15/2006 4,095,000
7,000,000 MedPartners, Inc., Sr. Notes 7.375% 10/1/2006 5,845,000
4,200,000 MedPartners, Inc., Sr. Subordinated Notes 6.875% 9/1/2000 4,053,000
2,000,000 PhyMatrix Corp., Convertible Subordinated Debentures 6.75% 6/15/2003 540,000
1,800,000 Team Health, Inc., Sr. Subordinated Notes 12.0% 3/15/2009 1,782,000
4,000,000 Total Renal Care Holdings, Inc., Convertible Subordinated Notes 7.0% 5/15/2009 2,520,000
3,000,000 Unilab Finance Corp., Sr. Subordinated Notes 12.75% 10/1/2009 3,120,000
-------------
21,955,000
-------------
Homebuilding - 1.1%
6,400,000 Fortress (The) Group, Inc., Sr. Notes 13.75% 5/15/2003 3,872,000
6,000,000 M.D.C. Holdings, Inc., Sr. Notes 8.375% 2/1/2008 5,550,000
8,400,000 Peters (J.M.) Co., Inc., Sr. Notes 12.75% 5/1/2002 7,014,000
-------------
16,436,000
-------------
Insurance - 0.8%
9,000,000 SIG Capital Trust I, Bond 9.5% 8/15/2027 2,250,000
4,500,000 Veritas Capital Trust, Trust Preferred Securities 10.0% 1/1/2028 3,375,000
3,570,000 Veritas Holdings GMBH, Sr. Notes 9.625% 12/15/2003 3,480,750
4,000,000 Willis Corroon Corp., Sr. Subordinated Notes 9.0% 2/1/2009 3,350,000
-------------
12,455,750
-------------
Leisure & Entertainment - 0.8%
4,471,000 AMF Bowling Worldwide, Inc., Sr. Subordinated
Discount Notes, Series B Zero Coupon 3/15/2006 1,503,374
1,000,000 AMF Bowling Worldwide, Inc., Sr. Subordinated Notes, Series B 10.875% 3/15/2006 426,250
8,000,000 Premier Cruise, Ltd., Sr. Notes 11.00% 3/15/2008 1,920,000 (c)
6,000,000 Production Resource Group, LLC, Sr. Subordinated Notes 11.5% 1/15/2008 5,370,000
3,000,000 SFX Entertainment, Inc., Sr. Subordinated Notes 9.125% 12/1/2008 2,865,000
-------------
12,084,624
-------------
Lodging & Hotels - 0.5%
5,300,000 CapStar Hotel Company, Convertible Subordinated Notes
(Meristar Hospitality Corp.) 4.75% 10/15/2004 4,140,625
5,100,000 Silverleaf Resorts, Inc., Sr. Subordinated Notes 10.5% 4/1/2008 3,468,000
-------------
7,608,625
-------------
Machinery & Equipment - 3.0%
6,000,000 Anthony Crane Rentals, LP, Sr. Discount Debentures, Series B Zero Coupon 8/1/2009 2,670,000
4,200,000 Blount, Inc., Sr. Subordinated Notes 13.0% 8/1/2009 4,452,000
6,900,000 Budget Group, Inc., Sr. Notes 9.125% 4/1/2006 6,451,500
3,000,000 Eagle-Picher, Inc., Sr. Subordinated Notes 9.375% 3/1/2008 2,625,000
6,250,000 Motor Coach Industries International, Inc.,
Sr. Subordinated Notes 11.25% 5/1/2009 6,429,688
7,200,000 Navistar Financial Corp., Sr. Subordinated Notes, Series B 9.0% 6/1/2002 7,254,000
3,000,000 Navistar International Corp., Sr. Notes, Series B 7.0% 2/1/2003 2,887,500
2,400,000 Navistar International Corp., Sr. Subordinated Notes, Series B 8.0% 2/1/2008 2,292,000
4,000,000 Pentacon, Inc., Sr. Subordinated Notes, Series B 12.25% 4/1/2009 3,620,000
6,000,000 United Rentals, Inc., Sr. Subordinated Notes, Series B 9.25% 1/15/2009 5,790,000
-------------
44,471,688
-------------
Metals & Mining - 1.3%
2,400,000 Altos Hornos de Mexico, Bonds, Series B (USD) 11.875% 4/30/2004 990,000 (c)
6,000,000 Echo Bay Mines, Bonds Zero Coupon 4/1/2027 3,630,000
4,900,000 LTV Corp., Sr. Notes 11.75% 11/15/2009 5,120,500
4,000,000 Republic Technologies/RTI Capital, Unit Security 13.75% 7/15/2009 2,660,000
6,000,000 UCAR Global Enterprises, Inc., Sr. Subordinated Notes, Series B 12.0% 1/15/2005 6,270,000
-------------
18,670,500
-------------
Oil & Gas - 1.2%
9,000,000 Belden & Blake Corp., Sr. Subordinated Notes, Series B 9.875% 6/15/2007 5,175,000
3,600,000 Conproca S.A. de C.V., Sr. Secured Bonds (USD) 12.0% 6/16/2010 3,627,000
9,000,000 National Energy Group, Inc., Sr. Notes, Series D 10.75% 11/1/2006 4,725,000 (c)
4,500,000 RAM Energy, Inc., Sr. Notes 11.5% 2/15/2008 2,092,500
2,000,000 RBF Finance Co., Sr. Notes 11.375% 3/15/2009 2,150,000
-------------
17,769,500
-------------
Packaging & Containers - 1.9%
8,317,000 BPC Holding Corp., Sr. Secured Notes, Series B 12.50% 6/15/2006 8,025,905
3,600,000 Consolidated Container Co., LLC, Sr. Subordinated Notes 10.125% 7/15/2009 3,681,000
2,000,000 Fonda Group, Inc., Sr. Subordinated Notes, Series B 9.5% 3/1/2007 1,680,000
4,750,000 Radnor Holdings Corp., Sr. Notes 10.0% 12/1/2003 4,773,750
6,000,000 SF Holdings Group, Inc., Sr. Discount Notes, Series B Zero Coupon 3/15/2008 3,525,000
2,866,000 Silgan Holdings, Inc., Subordinated Debentures 13.25% 7/15/2006 3,138,270
4,500,000 Vicap, S.A. de C.V., Guaranteed Sr. Notes (USD) 11.375% 5/15/2007 4,162,500
-------------
28,986,425
-------------
Paper & Forest Products - 1.0%
3,600,000 APP Finance (II) Mauritius, Ltd.,
Guaranteed Preferred Securities, Series B (USD) 12.0% 2/15/2004 2,385,000
3,000,000 FSW International Finance Co. B.V.,
Guaranteed Secured Notes (USD) 12.50% 11/1/2006 772,500 (c)
1,800,000 Indah Kiat Finance Mauritius, Guaranteed Sr. Notes (USD) 10.0% 7/1/2007 1,336,500
3,600,000 Pindo Deli Finance Mauritius, Sr. Notes (USD) 10.25% 10/1/2002 2,853,000
6,600,000 S.D. Warren Co., Sr. Subordinated Notes 12.0% 12/15/2004 6,913,500
-------------
14,260,500
-------------
Publishing - 1.4%
4,560,000 Dimac Corp., Sr. Subordinated Notes 12.5% 10/1/2008 1,710,000
7,500,000 MDC Communications Corp., Sr. Subordinated Notes 10.5% 12/1/2006 7,443,750
4,500,000 PRIMEDIA, Inc., Sr. Notes 10.25% 6/1/2004 4,702,500
5,850,000 Sullivan Graphics, Inc., Sr. Subordinated Notes 12.75% 8/1/2005 6,186,375
-------------
20,042,625
-------------
Retail - 0.7%
3,000,000 County Seat Stores, Inc., Units 12.75% 11/1/2004 48,750 (c)
2,750,000 F & M Distributors, Inc., Sr. Subordinated Notes 11.50% 4/15/2003 34,375 (c)
4,000,000 Group1 Automotive, Inc., Sr. Subordinated Notes 10.875% 3/1/2009 3,980,000
4,500,000 Hollywood Entertainment Corp., Sr. Subordinated Notes, Series B 10.625% 8/15/2004 4,185,000
3,000,000 J. Crew Group, Sr. Discount Debentures, Series B Zero Coupon 10/15/2008 1,515,000
-------------
9,763,125
-------------
Retail - Food - 0.9%
7,850,000 Jitney-Jungle Stores of America, Sr. Notes 12.0% 3/1/2006 1,844,750 (c)
12,000,000 Jitney-Jungle Stores of America, Sr. Subordinated Notes 10.375% 9/15/2007 120,000 (c)
7,600,000 Smith's Food & Drug Centers, Pass Through Certificates 8.64% 7/2/2012 7,795,586
3,000,000 Stater Brothers Holdings, Sr. Notes 10.75% 8/15/2006 3,052,500
-------------
12,812,836
-------------
Services - 0.3%
4,200,000 Building One Services Corp., Sr. Subordinated Notes 10.5% 5/1/2009 4,053,000
7,500,000 Discovery Zone, Inc., Sr. Notes 13.5% 8/1/2002 75,000 (c)
1,875,000 Discovery Zone, Inc., Sr. Notes 13.5% 5/1/2002 28,125 (c)
-------------
4,156,125
-------------
Technology - Hardware - 1.9%
4,250,000 ASAT Finance, LLC, Unit Security 12.5% 11/1/2006 4,590,000
4,300,000 Dictaphone Corp., Sr. Subordinated Notes 11.75% 8/1/2005 3,203,500
4,500,000 Integrated Circuit Systems, Inc., Sr. Subordinated Notes 11.5% 5/15/2009 4,488,750
4,300,000 Intersil Corp., Sr. Subordinated Notes 13.25% 8/15/2009 4,687,000
1,800,000 MCMS, Inc., Sr. Subordinated Notes, Series B 9.75% 3/1/2008 909,000
4,200,000 MCMS, Inc., Subordinated Notes, Series B (Variable rate) 10.52% 3/1/2008 2,110,500
3,600,000 Unisys Corp., Sr. Notes, Series B 12.0% 4/15/2003 3,861,000
4,800,000 Unisys Corp., Sr. Notes 11.75% 10/15/2004 5,268,000
-------------
29,117,750
-------------
Technology - Services - 0.3%
4,800,000 Protection One Alarm Monitoring, Inc., Convertible
Sr. Subordinated Notes 6.75% 9/15/2003 2,304,000
4,000,000 Protection One Alarm Monitoring, Inc.,
Sr. Subordinated Discount Notes 13.625% 6/30/2005 2,540,000
-------------
4,844,000
-------------
Telecommunications - Data/Internet - 6.1%
7,000,000 Advanced Radio Telecom Corp., Sr. Notes 14.00% 2/15/2007 6,527,500
8,175,000 Convergent Communications, Inc., Sr. B Notes 13.0% 4/1/2008 5,783,813
7,100,000 Covad Communications Group, Inc., Sr. Discount Notes,
Series B Zero Coupon 3/15/2008 4,508,500
5,250,000 Cybernet Internet Services International, Sr. Notes 14.0% 7/1/2009 4,600,313
2,800,000 Exodus Communications, Inc., Convertible Notes 4.75% 7/15/2008 3,881,500
7,000,000 Exodus Communications, Inc., Sr. Notes 11.25% 7/1/2008 7,262,500
7,500,000 FirstWorld Communications, Inc., Sr. Discount Notes Zero Coupon 4/15/2008 4,162,500
4,800,000 Metromedia Fiber Network, Inc., Sr. Notes 10.0% 12/15/2009 4,944,000
4,200,000 Metromedia Fiber Network, Inc., Sr. Notes, Series B 10.0% 11/15/2008 4,315,500
2,400,000 PSINet, Inc., Sr. Notes 10.5% 12/1/2006 2,430,000
6,000,000 PSINet, Inc., Sr. Notes 11.0% 8/1/2009 6,210,000
7,500,000 Rhythms NetConnections, Inc., Sr. Discount Notes, Series B Zero Coupon 5/15/2008 4,068,750
4,500,000 Rhythms NetConnections, Inc., Sr. Notes 12.75% 4/15/2009 4,376,250
10,000,000 Splitrock Services, Inc., Notes, Series B 11.75% 7/15/2008 9,400,000
3,000,000 Verio, Inc., Sr. Notes 11.25% 12/1/2008 3,165,000
3,000,000 Verio, Inc., Sr. Notes 10.625% 11/15/2009 3,090,000
20,600,000 Wam!Net, Inc., Sr. Discount Notes, Series B Zero Coupon 3/1/2005 12,051,000
-------------
90,777,126
-------------
Telecommunications - Wireless - 9.1%
7,200,000 Airgate PCS, Inc., Sr. Subordinated Notes Zero Coupon 10/1/2009 4,032,000
6,000,000 American Mobile Satellite Corp., Sr. Notes, Series B 12.25% 4/1/2008 4,717,500
1,800,000 Arch Communications Group, Inc., Sr. Notes 13.75% 4/15/2008 1,469,250
5,400,000 Centennial Cellular Operating Co., Sr. Subordinated Notes 10.75% 12/15/2008 5,805,000
6,000,000 Clearnet Communications, Inc., Sr. Discount Notes Zero Coupon 12/15/2005 5,917,500
5,400,000 Crown Castle International Corp., Sr. Discount Notes Zero Coupon 5/15/2011 3,402,000
3,000,000 Crown Castle International Corp., Sr. Notes 9.5% 8/1/2011 3,015,000
4,000,000 HighwayMaster Communications, Inc., Sr. Notes, Series B 13.75% 9/15/2005 1,820,000
4,200,000 ICO Global Communications, Units 15.0% 8/1/2005 1,953,000 (c)
4,200,000 Iridium LLC/Capital Corp., Sr. Notes, Series A 13.0% 7/15/2005 189,000 (c)
4,850,000 Iridium LLC/Capital Corp., Sr. Notes, Series B 14.0% 7/15/2005 218,250 (c)
1,200,000 Iridium LLC/Capital Corp., Sr. Notes, Series C 11.25% 7/15/2005 54,000 (c)
9,000,000 McCaw International, Ltd., Sr. Discount Notes Zero Coupon 4/15/2007 6,255,000
1,985,000 Metrocall, Inc., Sr. Subordinated Notes 9.75% 11/1/2007 1,181,075
2,700,000 Metrocall, Inc., Sr. Subordinated Notes 11.0% 9/15/2008 1,633,500
7,200,000 Microcell Telecommunications, Inc., Sr. Discount Notes Zero Coupon 6/1/2006 6,390,000
12,000,000 Millicom International Cellular, Sr. Discount Notes Zero Coupon 6/1/2006 9,660,000
1,900,000 Nextel Communications, Inc., Sr. Discount Notes Zero Coupon 9/15/2007 1,425,000
1,250,000 Nextel Communications, Inc., Sr. Discount Notes 9.95% 2/15/2008 881,250
15,000,000 Nextel Communications, Inc., Sr. Serial Redeem Notes 9.375% 11/15/2009 14,775,000
3,500,000 Nextel Partners, Inc., Sr. Discount Notes Zero Coupon 2/1/2009 2,362,500
13,300,000 Orion Network Systems, Inc., Sr. Discount Notes Zero Coupon 1/15/2007 6,184,500
9,300,000 Orion Network Systems, Inc., Sr. Notes 11.25% 1/15/2007 7,021,500
8,200,000 PageMart Nationwide, Inc., Sr. Discount Exchange Notes Zero Coupon 2/1/2005 7,339,000
3,600,000 Pinnacle Holdings, Inc., Sr. Discount Notes Zero Coupon 3/15/2008 2,376,000
3,050,000 Price Communications Wireless, Inc., Sr. Subordinated Notes 11.75% 7/15/2007 3,339,750
3,600,000 PTC International Finance II S.A., Sr. Subordinated Notes (USD) 11.25% 12/1/2009 3,546,000
7,800,000 SpectraSite Holdings, Inc., Sr. Disc. Notes Zero Coupon 4/15/2009 4,192,500
4,000,000 Telesystem International Wireless, Inc., Sr. Discount Notes,
Series B Zero Coupon 6/30/2007 2,500,000
4,000,000 Telesystem International Wireless, Inc., Sr. Discount Notes,
Series C Zero Coupon 11/1/2007 2,200,000
1,320,324 Teletrac, Inc., Notes 9.0% 1/1/2004 752,585
312,535 Teletrac, Inc., Sr. Secured Notes 10.0% 9/29/2000 323,474
6,000,000 Tritel PCS, Inc., Sr. Subordinated Discount Notes Zero Coupon 5/15/2009 3,825,000
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 4,508,000
4,000,000 VIALOG Corp., Sr. Notes, Series B 12.75% 11/15/2001 2,820,000
5,615,000 Voicestream Wireless Corp., Sr. Notes 10.375% 11/15/2009 5,811,525
7,200,000 Weblink Wireless, Inc., Sr. Subordinated Discount Notes Zero Coupon 2/1/2008 2,484,000
-------------
136,514,659
-------------
Telecommunications - Wireline - 15.8%
3,000,000 Alestra S. de R.L. de C.V., Notes (USD) 12.625% 5/15/2009 3,030,000
3,000,000 Alestra S. de R.L. de C.V., Notes (USD) 12.125% 5/15/2006 3,022,500
9,000,000 Allegiance Telecom, Inc., Sr. Discount Notes, Series B Zero Coupon 2/15/2008 6,480,000
5,000,000 Bayan Telecommunications, Sr. Notes 13.5% 7/15/2006 4,375,000
3,000,000 Birch Telecom, Inc., Sr. Notes 14.0% 6/15/2008 3,045,000
8,000,000 Call-Net Enterprises, Inc., Sr. Notes 9.375% 5/15/2009 6,620,000
4,500,000 CapRock Communications Corp., Sr. Notes 11.5% 5/1/2009 4,618,125
6,900,000 Completel Europe N.V., Sr. Discount Notes, Series B (USD) Zero Coupon 2/15/2009 4,105,500
18,200,000 DTI Holdings, Inc., Sr. Discount Notes, Series B Zero Coupon 3/1/2008 6,529,250
4,200,000 Energis plc, Sr. Unsubordinated Notes (USD) 9.75% 6/15/2009 4,368,000
7,850,000 Esprit Telecom Group plc, Sr. Notes (USD) 11.5% 12/15/2007 7,908,875
6,000,000 E. Spire Communications, Inc., Sr. Notes 13.75% 7/15/2007 4,290,000
1,800,000 Global TeleSystems Group, Inc., Sr. Notes 9.875% 2/15/2005 1,674,000
6,700,000 GST Equipment Funding, Inc., Sr. Secured Notes 13.25% 5/1/2007 6,683,250
2,500,000 GST Telecommunications, Inc., Sr. Discount Notes Zero Coupon 12/15/2005 2,800,000
1,800,000 Hyperion Telecommunications, Inc., Sr. Discount Notes, Series B Zero Coupon 4/15/2003 1,606,500
1,200,000 Hyperion Telecommunications, Inc., Sr. Notes, Series B 12.25% 9/1/2004 1,299,000
4,800,000 IntelCom Group Holdings (U.S.A.), Inc., Sr. Discount Notes Zero Coupon 9/15/2005 4,200,000
6,750,000 Intermedia Communications, Inc., Sr. Discount Notes, Series B Zero Coupon 3/1/2009 4,058,438
1,800,000 Intermedia Communications, Inc., Sr. Notes 8.6% 6/1/2008 1,656,000
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 (USD) 13.5% 8/15/2006 57,750 (c)
5,100,000 Jazztel plc, Sr. Notes (USD) 14.0% 4/1/2009 5,265,750
13,200,000 Level 3 Communications, Inc., Sr. Discount Notes Zero Coupon 12/1/2008 8,052,000
8,200,000 Logix Communications Ent., Inc., Sr. Notes 12.25% 6/15/2008 5,945,000
9,000,000 Long Distance International, Inc., Sr. Notes 12.25% 4/15/2008 4,995,000 (c)
3,000,000 McLeodUSA, Inc., Sr. Notes 8.125% 2/15/2009 2,812,500
6,000,000 MGC Communications, Inc., Sr. Notes, Series B 13.0% 10/1/2004 6,052,500
6,000,000 MJD Communications, Inc., Notes, Series B (Variable Rate) 10.321% 5/1/2008 5,619,000
5,000,000 Netia Holdings B.V., Sr. Discount Notes, Series B Zero Coupon 11/1/2007 3,262,500
2,400,000 NEXTLINK Communications, Inc., Sr. Notes 9.625% 10/1/2007 2,352,000
4,800,000 NEXTLINK Communications, LLC, Sr. Notes 12.5% 4/15/2006 5,196,000
7,500,000 Northeast Optic Network, Inc., Sr. Notes 12.75% 8/15/2008 8,062,500
12,000,000 Pathnet, Inc., Sr. Notes 12.25% 4/15/2008 7,620,000
8,000,000 Poland Telecom Finance B.V., Sr. Notes, Series B (USD) 14.0% 12/1/2007 5,350,000
2,000,000 Primus Telecomm Group, Inc., Sr. Notes 12.75% 10/15/2009 2,085,000
5,400,000 Primus Telecommunications Group, Inc., Sr. Notes 11.75% 8/1/2004 5,427,000
6,000,000 Primus Telecommunications Group, Sr. Notes 11.25% 1/15/2009 5,760,000
1,800,000 RSL Communications plc, Notes (USD) 9.875% 11/15/2009 1,647,000
6,750,000 RSL Communications, Ltd., Units 12.25% 11/15/2006 6,834,375
3,000,000 Startec Global Communications, Inc., Sr. Notes 12.0% 5/15/2008 2,640,000
4,100,000 Telegroup, Inc., Sr. Discount Notes Zero Coupon 11/1/2004 1,763,000 (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 4,656,000
6,150,000 US Unwired, Inc., Sr. Disc. Notes Zero Coupon 11/1/2009 3,628,500
10,527,000 USN Communications, Inc., Sr. Discount Notes, Series B Zero Coupon 8/15/2004 1,329,034 (c)
4,200,000 VersaTel Telecom B.V., Sr. Notes (USD) 13.25% 5/15/2008 4,494,000
1,800,000 Versatel Telecom International N.V., Sr. Notes (USD) 11.875% 7/15/2009 1,836,000
11,000,000 Viatel, Inc., Sr. Discount Notes Zero Coupon 4/15/2008 7,040,000
9,200,000 Williams Communications Group, Sr. Notes 10.875% 10/1/2009 9,660,000
3,000,000 WinStar Communications, Inc., Sr. Discount Notes Zero Coupon 10/15/2005 2,925,000
3,000,000 WinStar Communications, Inc., Sr. Subordinated Notes 15.0% 3/1/2007 4,305,000
1,500,000 WinStar Communications, Inc., Sr. Unsecured Notes Zero Coupon 10/15/2005 2,362,500
4,000,000 Worldwide Fiber, Inc., Sr. Notes 12.5% 12/15/2005 4,180,000
4,000,000 Worldwide Fiber, Inc., Sr. Notes 12.0% 8/1/2009 4,140,000
-------------
236,314,847
-------------
Textiles & Apparel - 1.1%
4,850,000 CMI Industries, Inc., Sr. Subordinated Notes 9.5% 10/1/2003 3,376,813
8,700,000 Dan River, Inc., Sr. Subordinated Notes 10.125% 12/15/2003 8,743,500
3,600,000 Perry Ellis International, Inc., Sr. Subordinated Notes, Series B 12.25% 4/1/2006 3,595,500
-------------
15,715,813
-------------
Transportation - 1.2%
7,000,000 Allied Holdings, Inc., Sr. Notes, Series B 8.625% 10/1/2007 6,195,000
3,000,000 Cenargo International plc, Senior Notes (USD) 9.75% 6/15/2008 2,497,500
5,400,000 Equimar Shipholdings, Ltd., First Priority Mtg 9.875% 7/1/2007 3,429,000
7,500,000 Windsor Petroleum, Notes 7.84% 1/15/2021 5,925,000
-------------
18,046,500
-------------
Utilities - 2.1%
5,000,000 AES (The) Corp., Sr. Notes 9.5% 6/1/2009 5,068,750
3,000,000 CMS Energy Corp., Sr. Notes 7.625% 11/15/2004 2,842,764
3,000,000 CMS Energy Corp., Sr. Notes 7.5% 1/15/2009 2,712,456
1,200,000 CMS Energy Corp., Sr. Unsecured Notes 7.0% 1/15/2005 1,124,656
3,000,000 CMS Energy/Atlantic Methanol Capital Co., Sr. Secured Notes,
Series A-1 10.875% 12/15/2004 3,015,000
4,800,000 ESI Tractebel Acquisition Corp., Bonds 7.99% 12/30/2011 4,294,531
3,550,000 Midland Cogen Venture Fund II, Secured Lease
Obligation Bonds, Series A 11.75% 7/23/2005 3,875,475
4,450,000 Midland Cogen Venture Fund II, Subordinated
Secured Lease Obligation Bonds 13.25% 7/23/2006 5,078,692
4,500,000 Niagara Mohawk Power Corp., Sr. Discount Notes, Series H Zero Coupon 7/1/2010 3,402,473
-------------
31,414,797
-------------
Total Corporate Bonds (cost $1,334,808,081) 1,181,982,161
-------------
<CAPTION>
Shares
----------
PREFERRED STOCKS - 11.3% (a)
Convertible - 2.8%
20,000 Adelphia Communications Corp., Convertible Preferred Stock, Series D 3,767,500
60,000 CalEnergy Capital Trust III, Convertible Preferred Stock 2,302,500
69,000 Chesapeake Energy Corp., Convertible Preferred Stock 1,750,875 (b)
8,500 EchoStar Communications Corp., Convertible Preferred Stock, Series C 7,054,734
12,000 Global Crossing Holdings, Ltd., Convertible Preferred Stock 1,519,500 (b)
14,700 Global Crossing, Convertible Preferred Stock 4,141,725 (b)
80,000 Host Marriott Financial Trust, Convertible Preferred Stock 2,510,000
50,000 Intermedia Communications, Inc., Convertible Preferred Stock 1,700,000 (b)
60,000 Owens-Illinois, Inc., Convertible Preferred Stock 1,875,000
51,000 PSINet, Inc., Convertible Preferred Stock, Series C 2,977,125
45,500 Sinclair Broadcast Group, Inc., Convertible Preferred Stock 1,595,344
54,000 TIMET Capital Trust I, Convertible Preferred Stock (Titanium Metals Corp.) 634,500
83,800 Treev, Inc., Convertible Preferred Stock, Series A 775,150
60,000 UnitedGlobalCom, Inc., Convertible Preferred Stock (United International Holdings, Inc.) 5,460,000
90,000 USX Corp. (Marathon Group), Convertible Preferred Stock (RTI International Metals, Inc.) 708,750
60,000 Verio, Inc., Convertible Preferred Stock 3,390,000 (b)
-------------
42,162,703
-------------
Non-Convertible - 8.5%
29,022 Century Maintenance Supply, Inc., Payment-In-Kind Preferred Stock 2,746,207 (b)
105,000 Chevy Chase Capital Corp., Noncumulative Exchangeable Preferred Stock, Series A 5,131,875
58,525 Cluett American Corp., Preferred Stock 2,765,306 (b)
61,059 Communications & Power Industries, Inc., Preferred Stock, Series B 4,899,985 (b)
70,544 CSC Holdings, Inc., Payment-In-Kind Preferred Stock 7,777,476 (b)
35,386 CSC Holdings, Inc., Preferred Stock 3,874,767 (b)
3,290 Cumulus Media, Inc., Preferred Stock, Series A 3,693,025 (b)
8,314 Dobson Communications Corp., Payment-In-Kind Preferred Stock 9,083,045 (b)
4,331 Dobson Communications Corp., Payment-In-Kind Preferred Stock 4,363,483 (b)
6,657 E. Spire Communications Services, Inc., Payment-In-Kind Preferred Stock 1,348,043 (b)
60,000 Global Crossing Holdings, Ltd., Payment-In-Kind Preferred Stock 6,045,000
9,951 ICG Holdings, Inc., Preferred Stock 9,080,288
9,363 Intermedia Communications, Inc., Preferred Stock 9,199,148 (b)
5,306 IXC Communications, Inc., Preferred Stock 5,849,865 (b)
1,800 J Crew Group, Preferred Stock 1,530,000 (b)
24,000 Jitney-Jungle Stores of America, Sr. Exchangeable Preferred Stock, Class A 3,000 (b)
172,092 Nebco Evans Holdings Co., Payment-In-Kind, Preferred Stock 1,936,035 (b)
1,898 Nextel Communications, Inc., Payment-In-Kind Preferred Stock, Series D 2,035,605 (b)
5,517 Nextel Communications, Inc., Payment-In-Kind Preferred Stock, Series E 5,530,793 (b)
141,670 NEXTLINK Communications, Inc., Payment-In-Kind Preferred Stock 7,614,763 (b)
8,500 Paxson Communications Corp., Payment-In-Kind Preferred Stock 8,691,250 (b)
42,500 PRIMEDIA, Inc., Exchangeable Preferred Stock, Series H 3,708,125
46,000 PRIMEDIA, Inc., Preferred Stock, Series D 4,473,500
33,000 PRIMEDIA, Inc., Preferred Stock, Series F 3,027,750
147,500 River Bank Asset, Inc., Preferred Stock, Series A 2,249,375 (b)
4,511 R&B Falcon Corp., Payment-In-Kind Preferred Stock 4,770,383 (b)
3,500 WinStar Communications, Inc., Payment-In-Kind Preferred Stock, Series C 3,683,750 (b)
86,400 ZSC Specialty Chemical plc, Payment-In-Kind Preferred Stock (USD) 2,613,600 (b)
-------------
127,725,442
-------------
Total Preferred Stocks (cost $186,959,730) 169,888,145
-------------
COMMON STOCKS & STOCK WARRANTS - 6.1% (a)
13,800 Adelphia Business Solutions, Stock Warrants 2,415,000 (b)
5,000 Adelphia Communications Corp., Common Stock, Class A 328,125 (b)
6,000 Airgate PCS, Inc., Stock Warrants 540,000 (b)
10,200 Allegiance Telecom, Inc., Stock Warrants 970,275 (b)
6,000 American Mobile Satellite Corp., Stock Warrants 240,750 (b)
58,333 Arch Communications Group, Inc., Common Stock 384,633
302,479 Arch Communications Group, Inc., Stock Warrants 166,363 (b)
3,600 Australis Holdings Pty., Ltd., Stock Warrants 36 (b,d)
17,150 Australis Media, Ltd., Stock Warrants 172 (b,d)
60,000 Bell & Howell Co., Common Stock 1,908,750
3,000 Birch Telecom, Inc., Stock Warrants 165,375 (b)
18,000 Classic Communications, Inc., Common Stock 300,060
35,475 Clearnet Communications, Inc., Stock Warrants 796,779 (b)
2,310 Communications & Power Industries, Inc., Common Stock 347,655 (b,d)
69,000 Completel Holdings, LLC, Common Stock, Class B 69,000 (b)
10,989 Consolidated Hydro, Inc., Stock Warrants, Class B 8,242 (b)
7,133 Consolidated Hydro, Inc., Stock Warrants, Class C 1,783 (b)
35,505 Convergent Communications Corp., Common Stock 563,642 (b)
170,000 Covad Communications Group, Inc., Common Stock 9,509,375 (b)
3,267 CS Wireless Systems, Inc., Common Stock 448 (b,d)
5,250 Cybernet Internet Services International, Stock Warrants 498,750 (b)
71,250 Discovery Zone, Inc., Stock Warrants 9,619 (b,d)
36,000 DIVA Systems Corp., Stock Warrants 288,000 (b)
84,800 DTI Holdings, Inc., Stock Warrants 10,176 (b)
5,000 Eumenides, Ltd., Common Stock 5,000 (b,d)
16,800 E. Spire Communications, Inc., Stock Warrants 91,358 (b)
7,500 FirstWorld Communications, Stock Warrants 1,125,938 (b)
101,377 Gaylord Container Corp., Common Stock, Class A 690,631 (b)
127,902 Gaylord Container Corp., Stock Warrants 895,314 (b)
600,000 Granite Broadcasting Corp., Common Stock 6,075,000 (b)
36,180 Harvard Industries, Inc., Stock Warrants 6,669 (b,d)
4,000 HighwayMaster Communications, Inc., Stock Warrants 10,500 (b)
125,000 IntelCom Group Communications, Inc., Common Stock 2,343,750 (b)
68,300 IntelCom Group (U.S.A.), Inc., Stock Warrants 842,822 (b)
5,900 Intermedia Communications of Florida, Stock Warrants 660,800 (b)
7,752 Intermedia Communications, Inc., Common Stock 300,875 (b)
4,300 Intersil Corp., Stock Warrants 645,000 (b)
14,800 Ionica plc, Stock Warrants (USD) 148 (b,d)
3,000 Iridium World Communications, Stock Warrants 405 (b,d)
25,500 Jazztel plc, Stock Warrants (USD) 4,781,250 (b)
9,000 Long Distance International, Inc., Stock Warrants 180 (b)
80,000 Magellan Health Services, Inc., Common Stock 505,000 (b)
10,900 McCaw International, Ltd., Stock Warrants 88,563 (b)
255,000 MCI Worldcom, Inc., Common Stock 13,530,938 (b)
78,541 Microcell Telecommunications, Inc., Common Stock 2,582,035 (b)
4,200 OnePoint Communications Corp., Stock Warrants 42,525 (b)
4,200 ONO Finance, plc., Cash Rights (USD) 522,900 (b)
33,250 PageMart Nationwide, Inc., Common Stock 523,688 (b)
12,000 Pathnet, Inc., Stock Warrants 121,500 (b)
319,200 PhoneTel Technologies, Inc., Common Stock 758,100 (b)
8,000 Poland Telecom Finance B.V., Stock Warrants (USD) 244,000 (b)
150,968 Price Communications Corp., Common Stock 4,198,798 (b)
4,800 Primus Telecommunications Group, Inc., Stock Warrants 120,600 (b)
23,840 Protection One Alarm Monitoring, Stock Warrants 8,940 (b)
9,000 RSL Communications, Ltd., Stock Warrants 842,625 (b)
4,200 R&B Falcon Corp., Stock Warrants 1,178,100 (b)
1,200 SF Holdings Group, Inc., Common Stock, Class C 12 (b)
4,800 Splitrock Services, Inc., Stock Warrants 533,400 (b)
128,596 Star Gas Partners, LP, Common Stock 1,703,897
3,000 Startec Global Communications, Inc., Stock Warrants 45,000 (b)
848,787 Teletrac, Inc., Common Stock 212,197 (b)
312,535 Teletrac, Inc., Stock Warrants 62,507 (b)
11,592 TREEV, Inc., Common Stock 36,587 (b)
7,400 UIH Australia/Pacific, Inc., Stock Warrants 222,000 (b)
134,000 UnitedGlobalCom, Inc., Common Stock, Class A 9,463,750 (b)
66,000 USN Communications, Inc., Stock Warrants 8,910 (b,d)
4,200 VersaTel Telecom B.V., Stock Warrants (USD) 1,913,625 (b)
1,900 Vialog Corp., Stock Warrants 70,538 (b)
140,000 Viatel, Inc., Common Stock 7,507,500 (b)
55,200 Wam!Net, Inc., Stock Warrants 1,255,800 (b)
156,000 WebLink Wireless, Inc., Common Stock 2,418,000 (b)
36,654 Wherehouse Entertainment, Inc., Stock Warrants, Class A 279,487 (b)
6,363 Wherehouse Entertainment, Inc., Stock Warrants, Class B 24,657 (b)
6,363 Wherehouse Entertainment, Inc., Stock Warrants, Class C 10,340 (b)
1,039,922 Wilshire Financial Services Group, Inc., Common Stock 1,429,893 (b)
4,300 Winsloew Furniture, Inc., Stock Warrants 225,750 (b)
19,200 Wireless One, Inc., Stock Warrants 192 (b)
-------------
Total Common Stock & Stock Warrants (cost $60,947,734) 90,691,002
-------------
<CAPTION>
Principal Maturity
Amount Rate Date Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
SHORT-TERM SECURITIES - 3.5% (a)
Commercial Paper - 3.0%
$11,700,000 Associates Corp. of North America 4.0% 1/3/2000 11,697,400
5,000,000 IBM Credit Corp. 4.5% 1/4/2000 4,998,125
20,982,000 Merck & Co., Inc. 4.0% 1/6/2000 20,970,343
7,500,000 New Center Asset Trust 4.9% 1/3/2000 7,497,958
-------------
45,163,826
-------------
U.S. Government Agency - 0.5%
7,000,000 Federal National Mortgage Association Discount Notes 4.0% 1/5/2000 6,996,889
-------------
Total Short-Term Securities (at amortized cost) 52,160,715
-------------
Total Investments (cost $1,634,876,260) $1,494,722,023 (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 December 31, 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 December 31, 1999.
<CAPTION>
Aquisition
Security Date Cost
------------ ------------ ------------
<S> <C> <C>
Australis Holdings Pty., Ltd., Stock Warrants 10/29/1996 $ --
Australis Media, Ltd., Stock Warrants 5/16/1995 --
Communications & Power Industries, Inc., Common Stock 8/2/1995 211,287
CS Wireless Systems, Inc., Common Stock 2/16/1996 22,110
Discovery Zone, Inc., Stock Warrants 7/15/1997 839,158
Eumenides, Ltd., Common Stock 9/21/1999 5,000
Harvard Industries, Inc., Stock Warrants 9/17/1992 9,468,416
Iridium World Communications, Stock Warrants 7/11/1997 31,941
Ionica plc, Stock Warrants 8/1/1996 964,748
USN Communications, Inc., Stock Warrants 8/13/1997 560
(e) At December 31, 1999, the aggregate cost of securities for federal tax
purposes was $1,645,281,138 and the net unrealized depreciation of
investments based on that cost was $150,559,115 which is comprised of
$112,858,192 aggregate gross unrealized appreciation and $263,417,307
aggregate gross unrealized depreciation.
(f) Miscellaneous Footnotes:
(USD) - Denominated in U.S. Dollars
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB Series Fund, Inc.
Income Portfolio
Portfolio of Investments
December 31, 1999
Principal Maturity
Amount Rate Date Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CORPORATE BONDS - 51.3% (a)
Aerospace & Defense - 2.5%
$6,000,000 Lockheed Martin Corp., Bonds 8.5% 12/1/2029 $ 6,015,894
5,000,000 Lockheed Martin Corp., Notes 7.95% 12/1/2005 4,968,545
6,000,000 Lockheed Martin Corp., Notes 7.7% 6/15/2008 5,817,366
4,000,000 Raytheon Co., Notes 6.75% 8/15/2007 3,728,276
4,000,000 Raytheon Co., Notes 6.45% 8/15/2002 3,911,824
5,000,000 United Defense Industries, Inc., Sr. Subordinated Notes 8.75% 11/15/2007 4,800,000
-------------
29,241,905
-------------
Airlines - 1.6%
6,500,000 American Airlines, Inc., Pass Through Certificates,
Series 1999-1-A2, Class B 7.324% 10/15/2009 6,306,008
7,827,846 Continental Airlines, Series 1998-1-APT Certificates 6.648% 9/15/2017 7,085,493
5,000,000 Delta Air Lines, Notes 7.9% 12/15/2009 4,903,615
-------------
18,295,116
-------------
Automotive - 2.3%
4,500,000 DaimlerChrysler North America Holdings, Notes 7.2% 9/1/2009 4,425,692
5,000,000 Ford Motor Credit Co., Notes 6.375% 10/6/2000 4,992,065
6,000,000 Ford Motor Credit Co., Notes 6.125% 4/28/2003 5,823,444
8,000,000 General Motors Acceptance Corp., Notes 6.85% 6/17/2004 7,874,552
3,000,000 Toyota Motor Credit Corp., Notes (USD) 5.5% 9/17/2001 2,937,525
-------------
26,053,278
-------------
Banks - 5.2%
8,000,000 Abbey National plc, Subordinated Debentures (USD) 7.95% 10/26/2029 8,014,912
6,000,000 Bank One Corp., Notes 6.875% 8/1/2006 5,819,328
9,000,000 Chase Manhattan Corp., Medium Term Note, Series C 6.75% 12/1/2004 8,725,536
4,000,000 NationsBank Corp., Sr. Notes 6.125% 7/15/2004 3,841,132
4,000,000 Norwest Financial, Inc., Notes 6.375% 7/16/2002 3,928,472
6,000,000 PNC Funding Corp., Subordinated Notes 7.5% 11/1/2009 5,918,700
2,000,000 Sovereign Bancorp, Inc., Sr. Notes 10.25% 5/15/2004 2,030,000
2,000,000 Sovereign Bancorp, Inc., Sr. Notes 10.5% 11/15/2006 2,050,000
10,000,000 US Bancorp, Medium Term Note, Series J 6.875% 12/1/2004 9,867,050
4,500,000 Wachovia Corp., Subordinated Notes 5.625% 12/15/2008 3,928,545
6,000,000 Wells Fargo Capital, Capital Trust Preferred Securities 7.73% 12/1/2026 5,626,128
-------------
59,749,803
-------------
Broadcasting & Media - 1.8%
5,000,000 Adelphia Communications Corp., Sr. Notes 9.375% 11/15/2009 4,925,000
3,000,000 Chancellor Media Corp., Sr. Notes 8.0% 11/1/2008 3,015,000
2,400,000 Clear Channel Communications, Convertible Notes 1.5% 12/1/2002 2,466,000
4,000,000 CSC Holdings, Inc., Sr. Notes 7.25% 7/15/2008 3,810,000
1,900,000 Liberty Media/PCS Convertible Bonds (Sprint Corp.) 4.0% 11/15/2029 2,394,000
4,000,000 Time Warner, Inc., Debentures 9.125% 1/15/2013 4,320,000
-------------
20,930,000
-------------
Building Materials - 0.2%
3,000,000 American Standard Co., Inc., Sr. Notes 7.375% 4/15/2005 2,853,750
-------------
Chemicals - 0.7%
4,500,000 Dow Chemical Co., Debentures 7.375% 11/1/2029 4,318,011
4,000,000 Union Carbide Corp., Notes 6.7% 4/1/2009 3,773,664
-------------
8,091,675
-------------
Conglomerates - 1.6%
5,500,000 Dover Corp., Debentures 6.65% 6/1/2028 4,856,363
4,750,000 Pentair, Inc., Sr. Notes 7.85% 10/15/2009 4,604,365
10,000,000 Tyco International Group S.A., Notes (USD) 5.875% 11/1/2004 9,266,560
-------------
18,727,288
-------------
Consumer Products - 0.3%
4,000,000 Playtex Products, Inc., Unsecured Sr. Notes, Series B 8.875% 7/15/2004 4,030,000
-------------
Environmental - 0.6%
5,000,000 USA Waste Services, Inc., Sr. Notes 6.5% 12/15/2002 4,623,920
3,000,000 USA Waste Services, Inc., Sr. Notes 7.0% 10/1/2004 2,707,092
-------------
7,331,012
-------------
Finance - Commercial - 2.2%
5,500,000 FINOVA Capital Corp., Notes 7.25% 11/8/2004 5,445,171
5,500,000 FINOVA Capital Corp., Notes 7.25% 7/12/2006 5,378,681
7,000,000 General Electric Capital Corp., Debentures 8.75% 5/21/2007 7,540,400
6,500,000 General Electric Capital Corp., Debentures 8.85% 4/1/2005 6,920,271
-------------
25,284,523
-------------
Finance - Consumer - 1.2%
5,000,000 Associates Corp. of North America, Bonds 5.8% 4/20/2004 4,740,530
3,000,000 Associates Corp. of North America, Sr. Notes 6.5% 8/15/2002 2,965,974
6,000,000 CIT (The) Group, Inc., Notes 5.5% 2/15/2004 5,622,480
-------------
13,328,984
-------------
Food & Beverage - 1.3%
5,500,000 Archer Daniels Midland Co., Bonds 6.75% 12/15/2027 4,822,406
5,500,000 ConAgra, Inc., Sr. Notes 5.5% 10/15/2002 5,289,394
5,500,000 Pepsi Bottling Group, Inc., Sr. Notes, Series B 7.0% 3/1/2029 4,979,079
-------------
15,090,879
-------------
Health Care - Drugs & Pharmaceuticals - 0.5%
5,750,000 Bristol Myers Squibb Co., Debentures 7.15% 6/15/2023 5,605,698
1,250,000 Roche Holdings, Inc., Convertible Notes (Rogers Corp.) Zero Coupon 4/20/2010 755,475
-------------
6,361,173
-------------
Health Care - Medical Products & Supplies - 0.6%
8,000,000 Becton, Dickinson, & Co., Debentures 6.7% 8/1/2028 6,967,272
-------------
Health Care Management - 0.4%
2,500,000 Tenet Healthcare Corp., Sr. Notes 8.625% 12/1/2003 2,456,250
2,000,000 Tenet Healthcare Corp., Sr. Notes 7.875% 1/15/2003 1,947,500
-------------
4,403,750
-------------
Insurance - 3.3%
2,500,000 Conseco, Inc., Notes 8.5% 10/15/2002 2,530,630
11,000,000 Equitable Life Assurance Society of the United States,
Surplus Notes 6.95% 12/1/2005 10,681,583
8,000,000 Metropolitan Life Insurance Co., Surplus Notes 7.7% 11/1/2015 7,882,456
8,000,000 New York Life Insurance Co., Surplus Notes 6.4% 12/15/2003 7,765,168
9,000,000 Prudential Insurance Co. of America, Capital Notes 6.875% 4/15/2003 8,836,254
-------------
37,696,091
-------------
Investment Banking & Brokerage - 0.9%
1,500,000 Credit Suisse First Boston, Convertible Medium Term Notes
(Cisco Systems, Inc.) 1.0% 4/21/2009 2,394,375
1,250,000 Credit Suisse First Boston, Convertible Medium Term Notes
(General Electric Co.) 2.25% 5/5/2003 1,817,188
7,000,000 Fidelity Invesments, Debentures 7.49% 6/15/2019 6,774,509
-------------
10,986,072
-------------
Oil & Gas - 3.9%
5,000,000 Coastal Corp., Sr. Debentures 6.375% 2/1/2009 4,562,105
700,000 Diamond Offshore Drilling, Inc., Convertible
Subordinated Notes 3.75% 2/15/2007 710,500
4,000,000 Dynegy, Inc., Sr. Notes 7.45% 7/15/2006 3,918,040
5,000,000 El Paso Natural Gas Co., Sr. Notes 6.75% 5/15/2009 4,679,685
3,000,000 Enron Corp., Notes 7.125% 5/15/2007 2,901,390
4,000,000 Gulf Canada Resources, Ltd., Sr. Notes 8.375% 11/15/2005 3,900,000
900,289 Mobil Oil Corp., ESOP Sinking Fund Debentures 9.17% 2/29/2000 904,102
4,000,000 Newfield Exploration Co., Sr. Notes, Series B 7.45% 10/15/2007 3,667,388
2,750,000 Pemex Finance, Ltd., Notes 8.45% 2/15/2007 2,724,219
3,500,000 Pemex Finance, Ltd., Notes, Series 1999-2-A5 9.14% 8/15/2004 3,539,778
650,000 Swiss Life Finance, Ltd., Convertible Bonds
(Royal Dutch Petroleum Co.) 2.0% 5/20/2005 646,750
1,000,000 Swiss Life Finance, Ltd., Convertible Notes
(Glaxo Wellcome plc) 2.0% 5/20/2003 982,500
3,000,000 Triton Energy, Ltd., Sr. Notes 8.75% 4/15/2002 3,022,500
3,500,000 Union Pacific Resources Group, Notes 7.3% 4/15/2009 3,351,625
6,000,000 Williams Companies, Inc., Notes 7.625% 7/15/2019 5,773,890
-------------
45,284,472
-------------
Packaging & Containers - 0.7%
4,000,000 Owens-Illinois, Inc., Sr. Notes 7.85% 5/15/2004 3,874,584
4,000,000 Sonoco Products Co., Notes 7.0% 11/15/2004 3,931,160
-------------
7,805,744
-------------
Paper & Forest Products - 2.1%
9,500,000 Georgia-Pacific Corp., Bonds 7.75% 11/15/2029 9,078,894
15,000,000 Westvaco Corp., Notes 6.85% 11/15/2004 14,669,475
-------------
23,748,369
-------------
Retail - 2.3%
450,000 Costco Companies, Inc., Convertible Subordinated Notes Zero Coupon 8/19/2017 479,250
1,050,000 Costco Companies, Inc., Convertible Subordinated Notes Zero Coupon 8/19/2017 1,118,250
9,000,000 Dayton Hudson Corp., Notes 6.4% 2/15/2003 8,851,734
4,000,000 Rite Aid Corp., Notes 6.125% 12/15/2008 2,740,000
6,000,000 Saks, Inc., Sr. Notes 8.25% 11/15/2008 5,841,996
8,000,000 TJX Cos., Inc., Notes 7.45% 12/15/2009 7,827,016
-------------
26,858,246
-------------
Retail - Food - 1.5%
5,000,000 Kroger (The) Co., Sr. Notes 8.15% 7/15/2006 5,113,420
12,000,000 Safeway, Inc., Notes 7.25% 9/15/2004 11,941,056
-------------
17,054,476
-------------
Services - 1.0%
4,500,000 ARAMARK Services, Inc., Notes 7.0% 7/15/2006 4,250,601
7,000,000 Cendant Corp., Notes 7.75% 12/1/2003 6,995,492
-------------
11,246,093
-------------
Technology - Hardware - 0.9%
4,000,000 Corning, Inc., Notes 6.3% 3/1/2009 3,677,228
1,300,000 Hewlett-Packard Co., Convertible Subordinated Notes Zero Coupon 10/14/2017 895,375
6,000,000 Texas Instruments, Inc., Sr. Notes 7.0% 8/15/2004 5,899,752
-------------
10,472,355
-------------
Telecommunications - Wireless - 0.6%
4,500,000 Nextel Communications, Inc., Sr. Serial Redeem Notes 9.375% 11/15/2009 4,432,500
2,095,000 Voicestream Wireless Corp., Sr. Notes 10.375% 11/15/2009 2,168,325
-------------
6,600,825
-------------
Telecommunications - Wireline - 2.0%
4,000,000 AT&T Corp.-Liberty Media Group, Notes 6.5% 3/15/2029 3,434,792
4,000,000 Cable & Wireless Communications Corp., Notes (USD) 6.625% 3/6/2005 3,965,444
3,500,000 LCI International, Inc., Sr. Notes 7.25% 6/15/2007 3,363,525
3,500,000 Qwest Communications International, Inc., Sr. Notes, Series B 7.5% 11/1/2008 3,447,500
6,000,000 U.S. West Capital Funding, Inc., Notes 6.25% 7/15/2005 5,678,430
3,000,000 Williams Communications Group, Sr. Notes 10.875% 10/1/2009 3,150,000
-------------
23,039,691
-------------
Textiles & Apparel - 0.3%
4,000,000 Levi Strauss & Co., Notes 6.8% 11/1/2003 3,263,588
-------------
Transportation - 1.7%
6,000,000 Burlington Northern Santa Fe, Inc., Notes 6.125% 3/15/2009 5,417,502
4,987,512 Federal Express Corp., Series 1998-1-A, Class B 6.72% 1/15/2022 4,547,988
5,000,000 Union Pacific Corp., Medium Term Notes, Series E 6.790% 11/9/2007 4,725,795
5,000,000 Union Pacific Corp., Notes 7.375% 9/15/2009 4,884,620
-------------
19,575,905
-------------
Utilities - 7.1%
4,500,000 AES (The) Corp., Sr. Notes 9.5% 6/1/2009 4,561,875
4,000,000 CalEnergy Company, Inc., Sr. Notes 7.63% 10/15/2007 3,924,328
3,000,000 CalEnergy Company, Inc., Sr. Notes 6.96% 9/15/2003 2,940,513
2,000,000 Calpine Corp., Sr. Notes 7.75% 4/15/2009 1,900,000
2,000,000 Calpine Corp., Sr. Notes 7.875% 4/1/2008 1,925,000
7,500,000 Cleveland Electric Illuminate, Sr. Notes, Series D 7.88% 11/1/2017 7,077,488
4,000,000 CMS Energy Corp., Sr. Notes 8.0% 7/1/2001 3,954,808
7,000,000 CMS Energy Corp., Sr. Unsecured Notes 8.125% 5/15/2002 6,967,177
4,500,000 Commonwealth Edison Co., Notes 7.625% 1/15/2007 4,459,001
4,000,000 Connecticut Light & Power Co., First Refunding
Mortgage Bonds, Series 97C 7.75% 6/1/2002 4,011,384
5,000,000 Consolidated Edison Co. NY, Inc., Debentures 6.45% 12/1/2007 4,709,475
9,000,000 East Coast Power, LLC, Sr. Notes, Series B 7.066% 3/31/2012 8,107,092
6,000,000 National Rural Utilities, Medium Term Notes 5.75% 12/1/2008 5,329,224
6,000,000 Niagara Mohawk Power Corp., Sr. Discount Notes, Series H Zero Coupon 7/1/2010 4,536,630
1,323,173 Niagara Mohawk Power Corp., Sr. Notes, Series C 7.125% 7/1/2001 1,320,401
5,000,000 NRG Energy, Inc., Sr. Notes 7.5% 6/15/2007 4,700,150
5,000,000 PSEG Capital Corp., Medium Term Notes 6.25% 5/15/2003 4,805,880
6,500,000 Texas Utilities Electric Co., Debentures 7.17% 8/1/2007 6,353,575
-------------
81,584,001
-------------
Total Corporate Bonds (cost $612,924,725) 591,956,336
-------------
ASSET-BACKED SECURITIES - 7.9% (a)
12,000,000 AESOP Funding II L.L.C., Rental Car Notes,
Series 1997-1, Class A-2 6.4% 10/20/2003 11,808,780
1,743,054 Chase Manhattan Grantor Trust, Series 1996-B-A 6.61% 9/15/2002 1,746,514
6,000,000 Com-Ed Transitional Funding Trust, Series 1998-1-A6 5.63% 6/25/2009 5,562,690
3,487,430 CS First Boston Mortgage Security Corp., Series 1996-2, Class A4 6.62% 9/25/2009 3,472,661
10,000,000 Discover Card Master Trust I, Series 1996-3A 6.05% 8/18/2008 9,495,650
5,000,000 Discover Card Master Trust I, Series 1998-7A 5.6% 5/15/2006 4,765,625
10,000,000 Proffitt's Credit Card Master Trust, Series 1997-2, Class A 6.5% 12/15/2005 9,901,850
12,000,000 Standard Credit Master Trust 1, Credit Card
Participation Certificates, Series 1995-9-A 6.55% 10/7/2007 11,703,180
15,000,000 World Financial Network Credit Card Master Trust,
Series 1996-B, Class A 6.95% 4/15/2006 15,042,075
17,383,017 World Omni Auto Lease Trust, Series 1997-A, Class A4 6.9% 6/25/2003 17,430,907
-------------
Total Asset-Backed Securities (cost $92,448,566) 90,929,932
-------------
FOREIGN GOVERNMENT BONDS - 2.6% (a,b)
4,500,000 Korea Development Bank, Bonds 7.375% 9/17/2004 4,423,446
5,000,000 Korea Development Bank, Unsecured Bonds 6.625% 11/21/2003 4,804,425
7,000,000 Ontario (Province of) Canada, Sr. Bonds 7.375% 1/27/2003 7,092,050
8,000,000 Ontario (Province of) Canada, Sr. Notes 5.5% 10/1/2008 7,129,120
6,000,000 Philippines (Republic of), Bonds 9.5% 10/21/2024 6,075,000
-------------
Total Foreign Government Bonds (cost $29,538,774) 29,524,041
-------------
MORTGAGE-BACKED SECURITIES - 8.7% (a)
33,000,000 Federal National Mortgage Association,
Participation Certificates 6.5% 1/15/2030 31,112,730 (c)
34,000,000 Federal National Mortgage Association,
Participation Certificates 7.0% 1/1/2014 33,628,040 (c)
36,000,000 Government National Mortgage Association,
Modified Pass Through Certificates 7.5% 1/15/2029 35,617,392 (c)
-------------
Total Mortgage-Backed Securities (cost $101,189,219) 100,358,162
-------------
U.S. GOVERNMENT AGENCY - 2.6% (a)
9,300,000 Federal Home Loan Mortgage Corp., Notes 6.625% 9/15/2009 9,025,222
7,000,000 Federal Home Loan Mortgage Corp., Notes 5.125% 10/15/2008 6,128,836
9,000,000 Federal National Mortgage Association, Notes 5.75% 2/15/2008 8,299,746
7,000,000 Federal National Mortgage Association, Notes 5.75% 4/15/2003 6,801,319
-------------
Total U.S. Government Agency (cost $32,182,107) 30,255,123
-------------
U.S. GOVERNMENT - 11.1% (a)
45,000,000 U.S. Treasury Bonds 7.625% 11/15/2022 49,373,460
6,000,000 U.S. Treasury Bonds 7.5% 11/15/2016 6,420,000
9,500,000 U.S. Treasury Bonds 5.25% 11/15/2028 7,831,563
21,000,000 U.S. Treasury Bonds 6.25% 8/15/2023 19,812,198
9,000,000 U.S. Treasury Notes 5.875% 11/15/2004 8,828,442
36,500,000 U.S. Treasury Notes 6.0% 8/15/2009 35,370,800 (d)
-------------
Total U.S. Government (cost $138,350,564) 127,636,463
-------------
<CAPTION>
Shares
-----------
COMMON STOCKS - 0.2% (a)
15,000 Federal National Mortgage Association, Common Stock 936,563
25,000 Texas Utilities Co., Common Stock 889,063
-------------
Total Common Stocks (cost $1,899,588) 1,825,626
-------------
PREFERRED STOCKS - 0.6% (a)
12,500 CVS Corp., Convertible Preferred Stock 890,625
13,500 El Paso Energy Capital Trust I, Convertible Preferred Stock (El Paso Natural Gas Co.) 680,063
15,500 Georgia-Pacific Corp., Convertible Unit Security 792,438
4,800 Global Crossings, Convertible Preferred Stock 1,352,400
10,000 Houston Industries, Inc., Convertible Preferred Stock (Time Warner, Inc.) 1,205,000
35,000 MediaOne Group, Inc., Convertible Preferred Stock (Vodafone Airtouch plc, ADR) 1,680,000
3,000 Newell Financial Trust I, Convertible Preferred Stock (Newell Rubbermaid, Inc.) 114,375
12,000 Newell Financial Trust I, Convertible Preferred Stock (Newell Rubbermaid, Inc.) 457,500
-------------
Total Preferred Stocks (cost $6,540,785) 7,172,401
-------------
<CAPTION>
Principal Maturity
Amount Rate Date Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
SHORT-TERM SECURITIES - 15.0% (a)
Commerical Paper - 12.4%
6,792,000 Abbott Laboratories 4.65% 1/13/2000 6,781,472
10,000,000 Ciesco L.P. 6.0% 1/25/2000 9,960,000
25,000,000 CIT Group Holdings, Inc. 4.5% 1/3/2000 24,993,750
10,000,000 Corporacion Andina de Formento (USD) 6.3% 1/24/2000 9,959,750
20,000,000 Harvard University 3.0% 1/3/2000 19,996,667
11,000,000 Heinz (H.J.) Co. 5.94% 1/18/2000 10,969,145
16,500,000 Koch Industries, Inc. 4.6% 1/5/2000 16,491,567
10,000,000 Northern Illinois Gas Co. 5.95% 1/20/2000 9,968,597
10,000,000 Triple-A One Funding Corp. 6.29% 1/13/2000 9,979,033
23,800,000 UBS Finance (Delaware), Inc. 5.0% 1/3/2000 23,793,389
-------------
142,893,370
-------------
U.S. Government Agency - 2.6%
15,000,000 Federal Home Loan Bank 4.75% 1/14/2000 14,974,271
15,000,000 Federal Home Loan Bank 4.7% 1/14/2000 14,974,542
-------------
29,948,813
-------------
Total Short-Term Securities (at amortized cost) 172,842,183
-------------
Total Investments (cost $1,187,766,511) $1,152,500,267 (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 December 31, 1999, U.S. Treasury Notes valued at $1,453,595 were
pledged as initial margin deposit to cover open financial futures contracts
as follows:
Notional
Number of Market Principal Unrealized
Financial Futures Contracts Contracts Expiration Position Value Amount Loss
- --------------------------- ------------- ------------- ---------- ---------- ---------- ---------
U.S. Treasury Bond Futures 60 March 2000 Long $5,456,250 $5,520,000 $ (63,750)
Standard & Poors 500 12 March 2000 Short 4,452,600 4,302,900 (149,700)
(e) At December 31, 1999, the aggregate cost of securities for federal
income tax purposes was $1,188,415,012 and the net unrealized depreciation
of investments based on that cost was $35,914,745 which is comprised of
$5,361,290 aggregate gross unrealized appreciation and $41,276,035
aggregate gross unrealized depreciation.
(f) Miscellaneous Footnotes:
(USD) - Denominated in U.S. Dollars
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB Series Fund, Inc.
Money Market Portfolio
Portfolio of Investments
December 31, 1999
Principal Yield to Maturity
Amount Maturity Date Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
BANK NOTES - 1.0% (a)
Banking - Domestic - 1.0%
$3,000,000 First National Bank of Chicago, N.A. 6.05% 8/11/2000 $ 2,999,117
-------------
Total Bank Notes 2,999,117
-------------
CERTIFICATES OF DEPOSIT - 4.7% (a)
Banking - Domestic - 3.0%
3,000,000 Morgan Guaranty Trust Co. of New York 6.08% 3/20/2000 3,000,000
3,000,000 Morgan Guaranty Trust Co. of New York 5.75% 7/19/2000 2,999,155
3,000,000 U.S. Bank Corp. 6.00% 6/21/2000 2,992,344
-------------
8,991,499
-------------
Banking - Foreign - 1.7%
3,000,000 Svenska Handelsbanken NY 6.10% 7/27/2000 2,991,633
2,000,000 UBS Ag Stamford 6.12% 5/22/2000 1,992,140
-------------
4,983,773
-------------
Total Certificates of Deposit 13,975,272
-------------
COMMERCIAL PAPER - 87.0% (a)
Banking - Domestic - 3.9%
3,000,000 Norwest Financial, Inc. 5.40% 3/21/2000 2,964,200
2,500,000 Norwest Financial, Inc. 5.65% 4/7/2000 2,463,490
3,000,000 Wells Fargo & Co. 5.92% 3/3/2000 2,970,240
3,000,000 Wells Fargo & Co. 6.11% 3/21/2000 2,959,867
-------------
11,357,797
-------------
Banking - Foreign - 2.8%
3,000,000 Abbey National North America (Guaranteed Abbey
National plc) 5.99% 3/9/2000 2,966,567
5,400,000 UBS Finance (Delaware) Inc. (Guaranteed Union
Bank of Switzerland) 5.00% 1/3/2000 5,398,500
-------------
8,365,067
-------------
Drugs & Health Care - 0.5%
1,500,000 Pfizer, Inc. 6.01% 4/3/2000 1,477,331
-------------
Finance - Automotive - 8.4%
3,000,000 DaimlerChrysler North America Holdings 6.06% 2/16/2000 2,977,038
3,000,000 DaimlerChrysler North America Holdings 6.10% 2/25/2000 2,972,638
3,000,000 DaimlerChrysler North America Holdings 5.91% 3/16/2000 2,963,750
3,000,000 DaimlerChrysler North America Holdings 6.12% 4/17/2000 2,947,035
915,000 DaimlerChrysler North America Holdings 6.02% 5/23/2000 893,847
150,000 Ford Motor Credit Co. 6.03% 1/6/2000 149,875
3,000,000 Ford Motor Credit Co. of Puerto Rico, Inc.
(Guaranteed Ford Motor Credit Co.) 6.14% 1/4/2000 2,998,470
3,000,000 Ford Motor Credit Co. of Puerto Rico, Inc.
(Guaranteed Ford Motor Credit Co.) 6.39% 1/5/2000 2,997,877
3,000,000 General Motors Acceptance Corp. 6.14% 3/8/2000 2,966,165
2,000,000 General Motors Acceptance Corp. 5.92% 3/13/2000 1,976,960
800,000 General Motors Acceptance Corp. 6.11% 4/11/2000 786,533
-------------
24,630,188
-------------
Finance - Commercial - 7.5%
3,000,000 CIT Group Holdings, Inc. 6.08% 1/21/2000 2,990,000
3,000,000 CIT Group Holdings, Inc. 5.95% 2/10/2000 2,980,433
3,000,000 CIT Group Holdings, Inc. 5.98% 2/28/2000 2,971,483
1,250,000 General Electric Capital Corp. 5.85% 3/7/2000 1,237,052
3,000,000 General Electric Capital Corp. 6.10% 3/20/2000 2,960,829
3,000,000 General Electric Capital International Funding, Inc.
(Guaranteed General Electric Capital Corp.) 5.90% 2/28/2000 2,972,353
3,000,000 General Electric Capital International Funding, Inc.
(Guaranteed General Electric Capital Corp.) 6.10% 3/20/2000 2,960,500
3,000,000 General Electric Capital International Funding, Inc.
(Guaranteed General Electric Capital Corp.) 5.98% 5/5/2000 2,939,271
-------------
22,011,921
-------------
Finance - Consumer - 10.7%
3,000,000 American Express Credit Corp. 6.52% 1/4/2000 2,998,375
3,000,000 American Express Credit Corp. 5.97% 1/7/2000 2,997,030
775,000 American Express Credit Corp. 5.95% 1/27/2000 771,754
3,000,000 American General Finance Corp. 5.59% 2/18/2000 2,978,400
6,000,000 Associates Corp of North America 4.00% 1/3/2000 5,998,667
1,000,000 Associates Financial Services Company of Puerto Rico, Inc.
(Guaranteed Associates Corp. of North America) 6.11% 1/26/2000 995,819
3,000,000 Associates Financial Services Company of Puerto Rico, Inc.
(Guaranteed Associates Corp. of North America) 6.01% 2/16/2000 2,977,345
2,885,000 Associates Financial Services Company of Puerto Rico, Inc.
(Guaranteed Associates Corp. of North America) 6.11% 2/28/2000 2,857,205
6,000,000 Household Finance Corp. 4.00% 1/3/2000 5,998,667
3,000,000 Household Finance Corp. 6.06% 2/7/2000 2,981,623
-------------
31,554,885
-------------
Finance - Retail - 1.0%
3,000,000 Wal-Mart Stores, Inc. 6.56% 1/5/2000 2,997,817
-------------
Finance - Structured - 17.4%
3,000,000 Ciesco L.P. 5.81% 1/14/2000 2,993,717
850,000 Ciesco L.P. 6.83% 1/18/2000 847,271
2,127,000 Ciesco L.P. 6.05% 1/21/2000 2,119,945
3,000,000 Corporate Asset Funding Co. 6.64% 1/19/2000 2,990,100
3,000,000 Corporate Asset Funding Co. 5.97% 1/31/2000 2,985,375
3,000,000 Corporate Asset Funding Co. 6.10% 2/8/2000 2,981,000
3,000,000 CXC, Inc. 6.44% 1/14/2000 2,993,067
3,000,000 CXC, Inc. 6.13% 1/31/2000 2,984,950
1,500,000 CXC, Inc. 5.92% 5/15/2000 1,467,656
3,000,000 Delaware Funding Corp. 6.03% 1/14/2000 2,993,533
3,000,000 Delaware Funding Corp. 6.24% 1/18/2000 2,991,217
2,000,000 Delaware Funding Corp. 6.22% 1/20/2000 1,993,540
3,000,000 Delaware Funding Corp. 6.12% 2/4/2000 2,983,000
1,471,000 Delaware Funding Corp. 6.08% 2/23/2000 1,458,114
2,435,000 Preferred Receivables Funding 6.00% 1/10/2000 2,431,378
3,000,000 Preferred Receivables Funding 5.99% 2/7/2000 2,981,963
5,000,000 Preferred Receivables Funding 6.03% 2/24/2000 4,955,375
3,000,000 Triple-A One Funding Corp. 6.06% 1/11/2000 2,994,992
3,000,000 Triple-A One Funding Corp. 6.31% 1/13/2000 2,993,730
-------------
51,139,923
-------------
Food & Beverage - 3.7%
3,000,000 Cargill Global Fund plc (Guaranteed Cargill, Inc.) 6.48% 1/13/2000 2,993,550
425,000 Cargill Global Fund plc (Guaranteed Cargill, Inc.) 5.97% 1/21/2000 423,607
2,000,000 Cargill Global Fund plc (Guaranteed Cargill, Inc.) 5.25% 2/11/2000 1,988,497
3,000,000 Cargill Global Fund plc (Guaranteed Cargill, Inc.) 6.17% 3/3/2000 2,968,483
2,500,000 Coca-Cola Co. 5.01% 1/10/2000 2,496,875
-------------
10,871,012
-------------
Insurance - 13.6%
850,000 AIG Funding, Inc. 5.60% 3/24/2000 839,457
3,000,000 American General Corp. 5.93% 2/24/2000 2,973,765
3,000,000 American General Corp. 5.94% 3/7/2000 2,967,880
3,000,000 Met-Life Funding Inc. 6.08% 1/26/2000 2,987,771
3,000,000 Met-Life Funding Inc. 5.94% 1/26/2000 2,987,521
2,353,000 Met-Life Funding Inc. 6.00% 1/28/2000 2,342,553
3,000,000 Met-Life Funding Inc. 5.95% 2/3/2000 2,983,858
3,000,000 Prudential Funding Corp. 6.04% 1/21/2000 2,990,017
3,000,000 Prudential Funding Corp. 5.76% 1/28/2000 2,987,400
3,000,000 Prudential Funding Corp. 6.02% 1/31/2000 2,985,250
3,000,000 USAA Capital Corp. 5.92% 1/31/2000 2,985,375
3,000,000 USAA Capital Corp. 5.89% 2/17/2000 2,977,558
3,000,000 USAA Capital Corp. 6.17% 2/25/2000 2,972,042
2,000,000 USAA Capital Corp. 6.08% 3/3/2000 1,979,333
2,000,000 USAA Capital Corp. 6.13% 3/13/2000 1,975,800
-------------
39,935,580
-------------
Leisure & Entertainment - 1.0%
3,000,000 Disney (Walt) Co. 5.85% 3/6/2000 2,968,908
-------------
Metals & Mining - 1.9%
3,000,000 Alcoa, Inc. 4.00% 1/5/2000 2,998,667
1,342,000 Alcoa, Inc. 5.89% 2/7/2000 1,334,000
1,200,000 Alcoa, Inc. 6.19% 2/9/2000 1,192,031
-------------
5,524,698
-------------
Petroleum - 6.0%
3,000,000 Chevron Transport Corp. (Guaranteed Chevron Corp.) 5.91% 2/22/2000 2,974,997
2,000,000 Chevron Transport Corp. (Guaranteed Chevron Corp.) 6.02% 3/7/2000 1,978,367
3,000,000 Chevron Transport Corp. (Guaranteed Chevron Corp.) 6.01% 4/24/2000 2,944,140
3,000,000 Chevron Transport Corp. (Guaranteed Chevron Corp.) 5.99% 5/8/2000 2,937,707
4,000,000 Mobil Australia Finance Co., Inc. (Guaranteed Mobil Oil Corp.) 5.97% 2/14/2000 3,971,156
3,020,000 Northern Illinois Gas Co. 7.03% 1/21/2000 3,008,256
-------------
17,814,623
-------------
Services - 2.9%
1,000,000 Leland H. Stanford Junior University 5.57% 2/8/2000 994,300
3,000,000 Leland H. Stanford Junior University 5.98% 3/17/2000 2,963,140
3,000,000 Yale University 5.99% 2/14/2000 2,978,367
1,500,000 Yale University 6.00% 2/15/2000 1,488,900
-------------
8,424,707
-------------
Technology - Hardware - 4.4%
3,000,000 IBM Credit Corp. 4.50% 1/4/2000 2,998,875
3,000,000 IBM Credit Corp. 5.91% 1/27/2000 2,987,477
3,000,000 IBM Credit Corp. 6.04% 2/23/2000 2,973,898
4,000,000 Motorola Inc. 6.15% 3/30/2000 3,940,172
-------------
12,900,422
-------------
U.S. Municipal - 1.3%
3,000,000 City of Whiting, Indiana; Industrial Sewage & Solid Waste
Disposal; Series 1995 (Guaranteed BP Amoco plc) 6.00% 3/10/2000 3,000,000
950,000 Metrocrest Hospital Authority, Series 1989 (Bank of New York
Direct Pay Letter of Credit) 5.88% 3/7/2000 940,107
-------------
3,940,107
-------------
Total Commercial Paper 255,914,986
-------------
VARIABLE RATE NOTES - 0.8% (a,b)
U.S. Municipal - 0.8%
300,000 Illinois Student Assistance Commission (Bank of America,
Illinois Direct Pay Letter of Credit) 6.50% 1/5/2000 300,000
2,000,000 Illinois Student Assistance Commission (Bank of America,
Illinois Direct Pay Letter of Credit) 6.50% 1/5/2000 2,000,000
-------------
Total Variable Rate Notes 2,300,000
-------------
MEDIUM TERM NOTES - 3.4% (a)
Finance - Automotive - 1.7%
1,000,000 General Motors Acceptance Corp. 6.31% 3/17/2000 1,002,655
2,000,000 General Motors Acceptance Corp. 6.34% 6/6/2000 2,004,682
2,000,000 General Motors Acceptance Corp. 6.25% 7/5/2000 2,006,422
-------------
5,013,759
-------------
Finance - Commercial - 1.4%
1,000,000 CIT Group, Inc. 5.70% 5/2/2000 1,003,181
3,000,000 CIT Group, Inc. 6.18% 6/2/2000 3,006,202
-------------
4,009,383
-------------
Finance - Consumer - 0.3%
1,000,000 American General Finance Corp. (Guaranteed American
General Corp.) 6.19% 6/9/2000 1,000,390
-------------
Total Medium Term Notes 10,023,532
-------------
U.S. GOVERNMENT AGENCY - 3.1% (a)
6,000,000 Federal Home Loan Bank 1.52% 1/3/2000 5,999,500
3,000,000 Federal National Mortgage Association 4.06% 1/5/2000 2,998,667
-------------
Total U.S. Government Agency 8,998,167
-------------
Total Investments (at amortized cost) $294,211,074 (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.
</TABLE>
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
OPPORTUNITY GROWTH PORTFOLIO
Financial Statements
Statement of Assets and Liabilities
December 31, 1999
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $323,377,624) $436,779,545
Cash 98,055
Dividend and interest receivable 28,204
-------------
Total assets 436,905,804
-------------
NET ASSETS $436,905,804
=============
NET ASSETS CONSIST OF:
Paid-in capital (30,977,177 shares of capital
stock outstanding) $364,308,281
Accumulated net realized loss from sale
of investments (40,804,398)
Unrealized net appreciation of investments 113,401,921
-------------
NET ASSETS $436,905,804
=============
Net asset value and public offering price per share
($436,905,804 divided by 30,977,177 shares of
capital stock outstanding) $14.10
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended December 31, 1999
<S> <C>
INVESTMENT INCOME:
Income --
Dividend income $ 534,326
Interest income 544,407
------------
Total income 1,078,733
------------
Expenses --
Investment advisory fee 1,399,459
------------
Net investment loss (320,726)
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investment transactions 7,106,355
Net change in unrealized appreciation of investments 86,027,696
------------
Net gain on investments 93,134,051
------------
Net increase in net assets resulting
from operations $ 92,813,325
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended December 31, 1999 and 1998
1999 1998
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income (loss) $ (320,726) $ 1,094,931
Net realized gain (loss) on investments 7,106,355 (45,123,705)
Net change in unrealized appreciation or depreciation
of investments 86,027,696 30,584,366
------------ ------------
Net change in net assets resulting from operations 92,813,325 (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 13,460,359 29,992,364
Reinvested dividend distributions -- 5,126,140
Cost of shares redeemed (41,563,313) (35,816,306)
------------ ------------
Net change in net assets from capital stock transactions (28,102,954) (697,802)
------------ ------------
Net change in net assets 64,710,371 (19,268,350)
NET ASSETS:
Beginning of period 372,195,433 391,463,783
------------ ------------
End of period $436,905,804 $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
December 31, 1999
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $223,133,091) $279,526,790
Cash 58,342
Receivable for investment securities sold 2,328,314
Dividend and interest receivable 65,225
-------------
Total assets 281,978,671
-------------
LIABILITIES:
Payable for investment securities purchased 10,308,207
-------------
NET ASSETS $271,670,464
=============
NET ASSETS CONSIST OF:
Paid-in capital (16,341,678 shares of capital
stock outstanding) $189,833,908
Accumulated net realized gain from sale
of investments 25,442,857
Unrealized net appreciation of investments 56,393,699
-------------
NET ASSETS $271,670,464
=============
Net asset value and public offering price per share
($271,670,464 divided by 16,341,678 shares of
capital stock outstanding) $16.62
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended December 31, 1999
<S> <C>
INVESTMENT INCOME:
Income --
Dividend income $ 547,131
Interest income 459,049
------------
Total income 1,006,180
------------
Expenses --
Investment advisory fee 612,592
------------
Net investment income 393,588
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investment transactions 30,751,222
Net realized gain on closed or expired option
contracts written 8,220
------------
Net realized gain on investments 30,759,442
Net change in unrealized appreciation of investments 46,480,552
------------
Net gain on investments 77,239,994
------------
Net increase in net assets resulting
from operations $ 77,633,582
=============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended December 31, 1999 and 1998
For the period from
January 30, 1998
(effective date) to
1999 December 31, 1998
------------ -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 393,588 $ 316,277
Net realized gain (loss) on investments 30,759,442 (5,316,585)
Net change in unrealized appreciation or depreciation
of investments 46,480,552 9,913,147
------------ -------------
Net increase in net assets resulting from operations 77,633,582 4,912,839
------------ -------------
DISTRIBUTIONS PAID TO SHAREHOLDERS--
Net investment income (393,588) (316,277)
------------ -------------
CAPITAL STOCK TRANSACTIONS--
Proceeds from sale of shares 101,676,490 95,921,660
Reinvested dividend distributions 393,588 316,277
Cost of shares redeemed (3,309,584) (5,164,523)
------------ -------------
Net increase in net assets from capital stock transactions 98,760,494 91,073,414
------------ -------------
Net increase in net assets 176,000,488 95,669,976
NET ASSETS:
Beginning of period 95,669,976 --
------------ -------------
End of period $271,670,464 $ 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
December 31, 1999
<S> <C>
ASSETS:
Investments in securities, at value
(cost,$376,422,597) $549,594,070
Cash (including foreign currency holdings
of $6,166) 19,942
Dividend and interest receivable 526,302
------------
Total assets 550,140,314
------------
NET ASSETS $550,140,314
============
NET ASSETS CONSIST OF:
Paid-in capital (32,490,759 shares of capital
stock outstanding) $364,204,771
Accumulated net realized gain from sale of
investments and foreign currency transactions 12,781,199
Unrealized net appreciation of investments and
on translation of assets and liabilities in
foreign currencies 173,154,344
------------
NET ASSETS $550,140,314
============
Net asset value and public offering price per share
($550,140,314 divided by 32,490,759 shares of
capital stock outstanding) $16.93
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended December 31, 1999
<S> <C>
INVESTMENT INCOME:
Income --
Dividend income (net of foreign taxes of $837,371) $ 6,327,290
Interest income 908,616
------------
Total income 7,235,906
------------
Expenses --
Investment advisory fee 3,525,013
------------
Net investment income 3,710,893
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain on investment transactions 18,678,469
Net realized loss on foreign currency transactions (406,313)
------------
Net realized gain on investments and foreign
currency transactions 18,272,156
------------
Net change in unrealized appreciation of investments 115,218,015
Net change in unrealized appreciation on translation
of assets and liabilities in foreign currencies (35,309)
------------
Net change in unrealized appreciation of investments
and on translation of assets and liabilities in
foreign currencies 115,182,706
------------
Net gain on investments and foreign currency 133,454,862
------------
Net increase in net assets resulting
from operations $137,165,755
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended December 31, 1999 and 1998
1999 1998
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 3,710,893 $ 3,451,445
Net realized gain (loss) on investments
and foreign currency transactions 18,272,156 (2,051,138)
Net change in unrealized appreciation or depreciation
of investments and on translation of assets and liabilities
in foreign currencies 115,182,706 47,582,219
------------ ------------
Net increase in net assets resulting from operations 137,165,755 48,982,526
------------ ------------
DISTRIBUTIONS PAID TO SHAREHOLDERS--
Net investment income (1,914,960) (6,100,889)
Net realized gain on investments -- (2,480,808)
------------ ------------
Total distributions (1,914,960) (8,581,697)
------------ ------------
CAPITAL STOCK TRANSACTIONS--
Proceeds from sale of shares 58,781,646 48,521,478
Reinvested dividend distributions 1,914,960 8,581,697
Cost of shares (15,551,417) (14,963,421)
------------ ------------
Net increase in net assets from capital stock transactions 45,145,189 42,139,754
------------ ------------
Net increase in net assets 180,395,984 82,540,583
NET ASSETS:
Beginning of period 369,744,330 287,203,747
------------ ------------
End of period $550,140,314 $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
December 31, 1999
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $3,647,869,745) $4,909,509,318
Cash 74,697
Receivable for investment securities sold 37,198,559
Dividend and interest receivable 2,010,634
--------------
Total assets 4,948,793,208
--------------
LIABILITIES:
Payable for investment securities purchased 35,503,665
--------------
NET ASSETS $4,913,289,543
==============
NET ASSETS CONSIST OF:
Paid-in capital (162,478,426 shares of capital
stock outstanding) $2,851,070,602
Accumulated net realized gain from sale
of investments 800,579,368
Unrealized net appreciation of investments 1,261,639,573
--------------
NET ASSETS $4,913,289,543
==============
Net asset value and public offering price per share
($4,913,289,543 divided by 162,478,426 shares
of capital stock interest outstanding) $30.24
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended December 31, 1999
<S> <C>
INVESTMENT INCOME:
Income --
Dividend income $ 25,157,449
Interest income 7,803,159
---------------
Total income 32,960,608
---------------
Expenses --
Investment advisory fee 15,571,164
---------------
Net investment income 17,389,444
---------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investment transactions 821,069,093
Net realized gain on closed or expired option
contracts written 3,815,742
---------------
Net realized gain on investments 824,884,835
Net change in unrealized appreciation of investments 640,787,120
---------------
Net gain on investments 1,465,671,955
---------------
Net increase in net assets resulting
from operations $1,483,061,399
===============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended December 31, 1999 and 1998
1999 1998
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 17,389,444 $ 26,484,086
Net realized gain on investments 824,884,835 325,324,813
Net change in unrealized appreciation or depreciation
of investments 640,787,120 361,224,415
-------------- --------------
Net increase in net assets resulting from operations 1,483,061,399 713,033,314
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--
Net investment income (16,925,590) (26,297,317)
Net realized gain on investments (341,902,994) (382,615,151)
-------------- --------------
Total distributions (358,828,584) (408,912,468)
-------------- --------------
CAPITAL STOCK TRANSACTIONS--
Proceeds from sale of shares 237,383,037 271,027,313
Reinvested dividend distributions 358,828,584 408,912,468
Cost of shares redeemed (127,166,866) (90,186,334)
-------------- --------------
Net increase in net assets from capital stock transactions 469,044,755 589,753,447
-------------- --------------
Net increase in net assets 1,593,277,570 893,874,293
NET ASSETS:
Beginning of period 3,320,011,973 2,426,137,680
-------------- --------------
End of period $4,913,289,543 $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
December 31, 1999
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $1,634,876,260) $1,494,722,023
Cash 2,027,937
Receivable for investment securities sold 86,744
Interest and dividends receivable 31,165,036
--------------
Total assets 1,528,001,740
--------------
LIABILITIES:
Payable for investment securities purchased 2,265,357
--------------
NET ASSETS $1,525,736,383
==============
NET ASSETS CONSIST OF:
Paid-in capital (167,815,550 shares of capital
stock outstanding) $1,681,429,595
Accumulated net realized loss from sale
of investments (15,538,975)
Unrealized net depreciation of investments (140,154,237)
--------------
NET ASSETS $1,525,736,383
==============
Net asset value and public offering price per share
($1,525,736,383 divided by 167,815,550 shares of
capital stock outstanding) $9.09
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended December 31, 1999
<S> <C>
INVESTMENT INCOME:
Income --
Interest income $148,619,187
Dividend income 15,872,500
------------
Total income 164,491,687
------------
Expenses --
Investment advisory fee 5,920,641
------------
Net investment income 158,571,046
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized loss on investment transactions (5,593,466)
Net change in unrealized depreciation of investments (5,689,722)
------------
Net loss on investments (11,283,188)
------------
Net increase in net assets resulting
from operations $147,287,858
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended December 31, 1999 and 1998
1999 1998
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 158,571,046 $ 144,302,561
Net realized loss on investment transactions (5,593,466) (9,085,193)
Net change in unrealized appreciation or depreciation
of investments (5,689,722) (162,813,026)
-------------- --------------
Net change in net assets resulting from operations 147,287,858 (27,595,658)
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--
Net investment income (158,571,046) (145,155,458)
Net realized gain on investments -- (19,837,525)
-------------- --------------
Total distributions (158,571,046) (164,992,983)
-------------- --------------
CAPITAL STOCK TRANSACTIONS--
Proceeds from sale of shares 51,444,588 161,947,132
Reinvested dividend distributions 158,571,046 164,992,983
Cost of shares redeemed (100,312,665) (51,597,568)
-------------- --------------
Net increase in net assets from capital stock transactions 109,702,969 275,342,547
-------------- --------------
Net increase in net assets 98,419,781 82,753,906
NET ASSETS:
Beginning of period 1,427,316,602 1,344,562,696
-------------- --------------
End of period $1,525,736,383 $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
December 31, 1999
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $1,187,766,511) $1,152,500,267
Cash 32,474
Receivable for investment securities sold 1,994,819
Interest and dividends receivable 13,145,726
--------------
Total assets 1,167,673,286
--------------
LIABILITIES:
Payable for investment securities purchased 101,628,524
Payable for variation margin on open
futures contracts 40,200
--------------
Total liabilities 101,668,724
--------------
NET ASSETS $1,066,004,562
==============
NET ASSETS CONSIST OF:
Paid-in capital (113,239,321 shares of capital
stock outstanding) $1,130,159,146
Accumulated net realized loss from sale
of investments (28,674,890)
Unrealized net depreciation of investments (35,479,694)
--------------
NET ASSETS $1,066,004,562
==============
Net asset value and public offering price per share
($1,066,004,562 divided by 113,239,321 shares of
capital stock outstanding) $ 9.41
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended December 31, 1999
<S> <C>
INVESTMENT INCOME:
Income --
Interest income $ 69,958,789
Dividend income 374,095
------------
Total income 70,332,884
------------
Expenses --
Investment advisory fee 4,337,546
------------
Net investment income 65,995,338
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized loss on investment transactions (22,679,663)
Net realized gain on closed or expired option
contracts written 1,051,085
Net realized loss on closed futures contracts (1,955,522)
------------
Net realized loss on investments (23,584,100)
Net change in unrealized depreciation of investments (64,784,927)
------------
Net loss on investments (88,369,027)
------------
Net change in net assets resulting
from operations $(22,373,689)
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended December 31, 1999 and 1998
1999 1998
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 65,995,338 $ 58,537,622
Net realized gain (loss) on investment transactions (23,584,100) 13,372,952
Net change in unrealized appreciation or depreciation
of investments (64,784,927) 14,894,893
-------------- --------------
Net change in net assets resulting from operations (22,373,689) 86,805,467
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--
Net investment income (65,979,140) (58,495,759)
-------------- --------------
CAPITAL STOCK TRANSACTIONS--
Proceeds from sale of shares 78,018,164 134,532,247
Reinvested dividend distributions 65,979,140 58,495,759
Cost of shares redeemed (63,960,526) (27,456,669)
-------------- --------------
Net increase in net assets from capital stock transactions 80,036,778 165,571,337
-------------- --------------
Net change in net assets (8,316,051) 193,881,045
NET ASSETS:
Beginning of period 1,074,320,613 880,439,568
-------------- --------------
End of period $1,066,004,562 $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
December 31, 1999
<S> <C>
ASSETS:
Investments in securities, at amortized cost
and value $294,211,074
Cash 83,313
Interest receivable 588,540
------------
Total assets 294,882,927
------------
NET ASSETS $294,882,927
============
NET ASSETS CONSIST OF:
Paid-in capital (294,882,927 shares of capital
stock outstanding) $294,882,927
============
Net asset value and public offering price per share
($294,882,927 divided by 294,882,927 shares of
capital stock outstanding) $ 1.00
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended December 31, 1999
<S> <C>
INVESTMENT INCOME:
Income --
Interest income $ 12,589,070
------------
Expenses --
Investment advisory fee 957,608
------------
Net investment income $ 11,631,462
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended December 31, 1999 and 1998
1999 1998
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 11,631,462 $ 7,416,439
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--
Net investment income (11,631,462) (7,416,439)
-------------- --------------
CAPITAL STOCK TRANSACTIONS--
Proceeds from sale of shares 159,600,774 130,085,700
Reinvested dividend distributions 11,631,462 7,416,439
Cost of shares redeemed (70,158,014) (64,860,589)
-------------- --------------
Net increase in net assets from capital stock transactions 101,074,222 72,641,550
-------------- --------------
Net increase in net assets 101,074,222 72,641,550
NET ASSETS:
Beginning of period 193,808,705 121,167,155
-------------- --------------
End of period $294,882,927 $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)
For the period from
January 18, 1996
(effective date) to
OPPORTUNITY GROWTH PORTFOLIO 1999 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 (loss) (0.01) 0.03 0.06 0.02
Net realized and unrealized gain
(loss) on investments (b) 3.05 (0.37) 0.05 1.90
-------- -------- -------- --------
Total from investment operations 3.04 (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 $14.10 $11.06 $11.55 $11.50
======== ======== ======== ========
Total investment return at net asset value (c) 27.55% (2.99%) 0.93% 19.17%
Net assets, end of period ($millions) $436.9 $372.2 $391.5 $246.6
Ratio of expenses to average net assets 0.40% 0.40% 0.40% 0.40%(d)
Ratio of net investment income (loss) to
average net assets (0.09%) 0.30% 0.65% 0.27%(d)
Portfolio turnover rate 60% 134% 147% 155%
</TABLE>
<TABLE>
<CAPTION>
For the period from
January 30, 1998
(effective date) to
MID CAP GROWTH PORTFOLIO 1999 December 31, 1998
-------- --------------------
<S> <C> <C>
Net asset value, beginning of period $11.13 $10.00
-------- --------
Income From Investment Operations --
Net investment income 0.02 0.04
Net realized and unrealized gain
(loss) on investments (b) 5.49 1.13
-------- --------
Total from investment operations 5.51 1.17
-------- --------
Less Distributions --
Dividends from net investment income (0.02) (0.04)
-------- --------
Net asset value, end of period $16.62 $11.13
======== ========
Total investment return at net asset value (c) 49.64% 11.62%
Net assets, end of period ($millions) $271.7 $95.7
Ratio of expenses to average net assets 0.40% 0.40%(d)
Ratio of net investment income to
average net assets 0.26% 0.64%(d)
Portfolio turnover rate 148% 125%
See accompanying notes to the Financial Highlights.
</TABLE>
<TABLE>
<CAPTION>
For the period from
January 18, 1996
(effective date) to
WORLD GROWTH PORTFOLIO 1999 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
(loss) on investments (b) 4.21 1.74 0.21 0.96
-------- -------- -------- --------
Total from investment operations 4.32 1.86 0.31 1.04
-------- -------- -------- --------
Less Distributions --
Dividends from net investment income (0.06) (0.21) (0.13) (0.09)
Distributions from net realized
gain on investments -- (0.10) (0.01) --
-------- -------- -------- --------
Total distributions (0.06) (0.31) (0.14) (0.09)
-------- -------- -------- --------
Net asset value, end of period $16.93 $12.67 $11.12 $10.95
======== ======== ======== ========
Total investment return at net asset value (c) 34.13% 16.75% 2.81% 10.41%
Net assets, end of period ($millions) $550.1 $369.7 $287.2 $174.1
Ratio of expenses to average net assets 0.85% 0.85% 0.85% 0.85%(d)
Ratio of net investment income to
average net assets 0.89% 1.04% 1.08% 1.34%(d)
Portfolio turnover rate 23% 19% 19% 9%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
GROWTH PORTFOLIO 1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
Net asset value, beginning of period $23.51 $21.58 $19.32 $18.27 $13.51
-------- -------- -------- -------- --------
Income From Investment Operations --
Net investment income 0.11 0.19 0.21 0.24 0.24
Net realized and unrealized gain
(loss) on investments (b) 9.14 5.28 4.97 3.43 4.76
-------- -------- -------- -------- --------
Total from investment operations 9.25 5.47 5.18 3.67 5.00
-------- -------- -------- -------- --------
Less Distributions --
Dividends from net investment income (0.11) (0.19) (0.21) (0.24) (0.24)
Distributions from net realized
gain on investments (2.41) (3.35) (2.71) (2.38) --
-------- -------- -------- -------- --------
Total distributions (2.52) (3.54) (2.92) (2.62) (0.24)
-------- -------- -------- -------- --------
Net asset value, end of period $30.24 $23.51 $21.58 $19.32 $18.27
======== ======== ======== ======== ========
Total investment return at net asset value (c) 43.61% 28.38% 30.18% 22.44% 37.25%
Net assets, end of period ($millions) $4,913.3 $3,320.0 $2,426.1 $1,658.6 $1,173.1
Ratio of expenses to average net assets 0.40% 0.40% 0.40% 0.40% 0.40%
Ratio of net investment income to
average net assets 0.45% 0.94% 1.11% 1.41% 1.53%
Portfolio turnover rate 124% 152% 193% 223% 184%
See accompanying notes to the Financial Highlights.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
HIGH YIELD PORTFOLIO 1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
Net asset value, beginning of period $9.16 $10.44 $10.06 $ 9.94 $ 9.18
-------- -------- -------- -------- --------
Income From Investment Operations --
Net investment income 0.99 0.99 0.98 0.98 0.96
Net realized and unrealized gain
(loss) on investments (b) (0.07) (1.12) 0.37 0.12 0.76
-------- -------- -------- -------- --------
Total from investment operations 0.92 (0.13) 1.35 1.10 1.72
-------- -------- -------- -------- --------
Less Distributions --
Dividends from net investment income (0.99) (1.00) (0.97) (0.98) (0.96)
Distributions from net realized
gain on investments -- (0.15) -- -- --
-------- -------- -------- -------- --------
Total distributions (0.99) (1.15) (0.97) (0.98) (0.96)
-------- -------- -------- -------- --------
Net asset value, end of period $9.09 $ 9.16 $10.44 $10.06 $ 9.94
======== ======== ======== ======== ========
Total investment return at net asset value (c) 10.52% (1.50%) 14.10% 11.55% 19.62%
Net assets, end of period ($millions) $1,525.7 $1,427.3 $1,344.6 $1,026.7 $792.5
Ratio of expenses to average net assets 0.40% 0.40% 0.40% 0.40% 0.40%
Ratio of net investment income to
average net assets 10.71% 10.04% 9.58% 9.83% 9.94%
Portfolio turnover rate 59% 71% 105% 107% 67%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
INCOME PORTFOLIO 1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
Net asset value, beginning of period $10.21 $ 9.92 $ 9.75 $10.08 $ 9.04
-------- -------- -------- -------- --------
Income From Investment Operations --
Net investment income 0.59 0.61 0.65 0.63 0.65
Net realized and unrealized gain
(loss) on investments (b) (0.80) 0.29 0.17 (0.33) 1.04
-------- -------- -------- -------- --------
Total from investment operations (0.21) 0.90 0.82 0.30 1.69
-------- -------- -------- -------- --------
Less Distributions --
Dividends from net investment income (0.59) (0.61) (0.65) (0.63) (0.65)
-------- -------- -------- -------- --------
Net asset value, end of period $9.41 $10.21 $9.92 $9.75 $10.08
======== ======== ======== ======== ========
Total investment return at net asset value (c) (2.01%) 9.37% 8.75% 3.21% 19.36%
Net assets, end of period ($millions) $1,066.0 $1,074.3 $880.4 $801.2 $762.1
Ratio of expenses to average net assets 0.40% 0.40% 0.40% 0.40% 0.40%
Ratio of net investment income to
average net assets 6.09% 6.06% 6.68% 6.54% 6.81%
Portfolio turnover rate 91% 86% 117% 150% 132%
See accompanying notes to the Financial Highlights.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MONEY MARKET PORTFOLIO 1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Net investment income from investment operations 0.05 0.05 0.05 0.05 0.06
Less: Dividends from net investment income (0.05) (0.05) (0.05) (0.05) (0.06)
-------- -------- -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total return (c) 4.94% 5.32% 5.43% 5.20% 5.71%
Net assets, end of period ($millions) $294.9 $193.8 $121.2 $103.9 $66.1
Ratio of expenses to average net assets 0.40% 0.40% 0.40% 0.40% 0.40%
Ratio of net investment income to
average net assets 4.86% 5.16% 5.27% 5.07% 5.55%
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
December 31, 1999
(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.
It is the policy of the Fund to reclassify the net effect of permanent
differences between book and taxable income to trust capital accounts on
the statements of assets and liabilities. As a result of permanent
book-to-tax differences for the year ended December 31, 1999, accumulated
net realized gain or loss from the sale of investments was increased by
$106,145, $1,795,933, $463,854, and $16,198, respectively, for the
Opportunity Growth, World Growth, Growth, and Income Portfolios;
undistributed net investment income was increased (decreased) by $320,726,
($1,795,933), ($463,854), and ($16,198), respectively, for the Opportunity
Growth, World Growth, Growth, and Income Portfolios; and paid in capital
was decreased by $426,871 for the Opportunity Growth Portfolio. These
reclassifications have no effect on net assets, net asset value per share,
the change in net assets resulting from operations, or on the amount of
income available for distribution to shareholders.
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 $604,805 from such fees for the
year ended December 31, 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 year ended December 31, 1999 was $1,866,184.
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 year ended December 31,
1999 was $1,049,596.
The sub-advisory contract for the Opportunity Growth Portfolio with T. Rowe
Price Associates will be terminated at the close of business on February
29, 2000. Advisory services will be performed by Lutheran Brotherhood
beginning March 1, 2000.
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 year ended December 31, 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, 1999, the Opportunity Growth, High Yield, and Income
Portfolios had accumulated net realized capital loss carryovers expiring as
follows:
Expiration Opportunity High Yield Income
Year Growth Portfolio Portfolio
- ---------- ----------- ---------- -----------
2002 -- -- $ 1,019,053
2004 -- -- 3,667,020
2006 $34,700,279 $4,536,501 --
2007 -- 597,597 13,947,561
----------- ---------- -----------
Total $34,700,279 $5,134,098 $18,633,634
=========== ========== ===========
To the extent these Portfolios realize future net capital gains, taxable
distributions will be reduced by any unused capital loss carryovers.
Temporary timing differences of $6,104,119, $696,840, $2,017,187,
$22,530,895, $10,404,877, and $10,041,256 existed between accumulated net
realized capital gains or losses for financial statement and tax purposes
as of December 31, 1999 for the Opportunity Growth, Mid Cap Growth, World
Growth, Growth, High Yield, and Income Portfolios, respectively. These
differences are due primarily to deferral of capital losses for tax
purposes.
(6) INVESTMENT TRANSACTIONS
Purchases and Sales of Investment Securities
For the year ended December 31, 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 $ 204,652 $ 237,096
Mid Cap Growth 301,924 217,327
World Growth 121,867 89,462
Growth 4,740,454 4,637,661
High Yield 878,570 829,292
Income 607,225 548,368
Purchases and sales of U.S. Government securities were:
In thousands
Portfolio Purchases Sales
- ------------------------ ---------------- ----------
Growth $ 18,676 $ 22,261
Income 331,837 469,180
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 $378,657 at December 31, 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 year ended December 31, 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 -- -- 39,107 12,303,495 2,600 1,024,881
Closed (50) (16,807) (28,916) (9,848,759) (1,750) (925,089)
Expired (31) (7,851) (6,485) (1,119,619) (1,250) (345,552)
Exercised -- -- (4,039) (1,469,215) -- --
-------------- -------------- -------------- -------------- -------------- --------------
Balance at December 31, 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.
<TABLE>
<CAPTION>
Transactions in capital stock were as follows:
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 1,198,337 7,988,054 4,355,082 9,781,523 5,592,802 7,874,282 159,600,774
Shares issued on
reinvestment of
dividends
and distributions -- 23,675 113,096 16,555,123 17,339,992 6,772,530 11,631,462
Shares redeemed (3,880,443) (267,033) (1,164,423) (5,096,129) (10,989,785) (6,625,594) (70,158,014)
-------------- -------------- -------------- -------------- -------------- -------------- --------------
Shares outstanding at
December 31, 1999 30,977,177 16,341,678 32,490,759 162,478,426 167,815,550 113,239,321 294,882,927
============== ============== ============== ============== ============== ============== ==============
</TABLE>
(8) BANK LOANS
Effective September 18, 1999, the Portfolios, along with the Lutheran
Brotherhood Family of Funds, entered into an unsecured $50 million bank
line of credit agreement with State Street Bank and Trust Company.
Borrowings under the agreement bear interest at the Federal Funds rate plus
0.50%. The Portfolios may borrow money for temporary or emergency purposes
to fund shareholder redemptions. The Portfolios did not borrow against the
line during the period September 18, 1999, through December 31, 1999.
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.
[LUTHERAN BROTHERHOOD LOGO]
Bulk Rate
U.S. Postage
PAID
Minneapolis, MN
Permit No. 1202
Important Notice About Delivery of Investor Documents
In response to concerns from households that received multiple copies of the
same mailings, we generally send a single copy of prospectuses, financial
reports and proxy statements to investors who live at the same address. New SEC
regulations require us to offer additional copies to households that would like
a separate copy for each investor. In order to use resources wisely and control
expenses, we will continue to send one copy of these documents per household
unless you instruct us to send a copy for each investor. To request additional
copies, please call us toll-free at 1-800-990-6290. We will begin sending the
additional copies within 30 days after we receive your request, and will
continue to do so in future mailings unless you request otherwise.
VP 54 (12/99)
[GRAPHIC OF PRINTED WITH SOY INK LOGO OMITTED]
