Our Message to You
June 30, 2000
Dear Member:
Six months ago, in the LB Series Fund, Inc., Annual Report, we described an
economic climate that was generally positive throughout the world. Yet, we
were also wary of investment markets that had become increasingly
unpredictable--reacting strongly to even the slightest sign of added
strength or weakness in the underlying economic and corporate fundamentals.
Six months later, little has happened to change that climate. In the pages
that follow, we review a market where performance has become increasingly
concentrated in a few industries or sectors. You will read of continuing
economic strength in the United States and in many countries around the
world. And you'll also read of the Federal Reserve's persistence in
attempting to slow the U.S. economy to a more sustainable pace.
These are still very rewarding times for investors in financial assets. We
are particularly blessed in the United States to have a robust economy,
stable political systems and efficient, accessible markets. Outside of the
United States, tremendous growth potential awaits as Europe continues its
move toward economic solidarity, and new economic freedoms begin to blossom
in Russia and the former states of the Soviet Union. Countries of the
Pacific Rim also continue to heal their economic wounds and move toward
much-needed reforms while, closer to home, reforms in Latin America have
added stability to parts of that region.
[PHOTO OMITTED: ROLF F. BJELLAND]
This seemingly unstoppable bull market, which has been largely
uninterrupted since it began in October of 1990, has held no shortage of
unpredictability. Indeed, there have been times in the last 10 years when
the only predictable feature of the market was its ability to keep growing.
Beyond that, the leading sectors, industries and companies of this bull run
have been as unpredictable as ever. Add to this the sudden nature of its
upturns and downturns, and you have a market that keeps investors' hearts
pounding.
Yet, some investors show signs of becoming complacent, building strategies
around the false assumption that the markets will always behave in the
future the same way they do today. For some, there is also a mounting
overconfidence brought about by "on-paper wealth" built over the last
decade. This confidence leads some individuals to overspend, overborrow or
make unwise investment "bets."
However, there is also a growing contingent of investors who are becoming
more educated and informed about the markets and investments strategies.
These folks endeavor not to find the one "hot" investment that will make
them rich, but instead focus their attention on proven, consistent
strategies that weather all market conditions. They don't avoid risk.
Rather they take prudent risks, and take steps to make sure their
investments compensate them for the risks they take, all while staying
diversified and focusing on long-term performance and disciplined
investing. I believe these are the investors who will help keep our markets
growing, our economy strong, and who will personally benefit from these
exciting times.
As we wrap up these final months of the second millennium and move into the
next century, I'm excited by the opportunities ahead, and humbled by the
trust you have placed in us. Thank you for being a part of the Lutheran
Brotherhood family.
Sincerely,
/S/ ROLF F. BJELLAND
Rolf F. Bjelland
Chairman and President
LB Series Fund, Inc.
Economic Overview
[PHOTO OMITTED: RANDALL L. BOUSHEK]
Randall L. Boushek
Senior Vice President and Chief Investment Officer
Economic growth showed signs of slowing in response to the Federal
Reserve's ongoing efforts at monetary tightening during the six-month
period ended June 30, 2000. After months of skyrocketing performance,
technology stocks returned to earth in the spring. Indications of higher
inflation and concerns over the extent of the Fed's interest rate increases
added to volatility, muting performance in both the equity and fixed-income
markets.
U.S. Economy
Early in the period, the "wealth effect" (a strong correlation between
rising stock prices and consumer spending) showed that it can also work in
reverse. As stock prices fell in March and April, and borrowing costs
increased, consumer spending slowed, reflecting consumer impressions that
their on-paper wealth is tenuous. However, as markets again trend upward,
increased confidence could lead to accelerated consumer spending. Overall,
we've seen some slowing in industrial production, though production within
the technology industry is still very strong. Because growth in
technological production now accounts for two-thirds of all industrial
production growth, economic growth is quite sensitive to changes in this
one industry.
The wild card regarding growth is fiscal stimulus. Continued projections of
the Federal government's budget surplus increase the likelihood of
additional government spending or tax cuts, which could stimulate the
economy. This scenario is made even more likely in an election year, when
promises of new programs and tax cuts are commonplace.
Working to restrain economic growth is a stronger dollar, which tends to
reduce global demand for U.S. exports, and tighter lending by banks, which
produces higher interest rates and slower movement of money throughout the
economy.
Inflation & Monetary Policy
There are some early indications that the Federal Reserve's rate tightening
is succeeding in slowing the economy, but it remains to be seen whether
they have pre-empted inflation, particularly on the labor front. In all,
six interest rate hikes in 14 months have increased the Federal Funds rate
by 1.75%. However, long-term Treasury interest rates are down significantly
year-to-date.
One of the principal sources of consumer price inflation has been oil
prices, which have risen 180% in 18 months. Apart from energy, other
commodity prices are now starting to trend down after rising for most of
the past year. Nevertheless, there are indications that more manufacturers
and retailers are pushing price increases through to consumers.
There are inconsistent signs in the labor market. Although unemployment
claims are rising and employment numbers are declining, actual layoffs are
at five-year lows. Some wage settlements have been significant, while
others are very modest. There is still considerable labor market tightness.
But upward pressure on wages has been offset by productivity gains, which
have helped to stabilize unit costs.
Equity Performance
The Fed's interest rate increases have had significant repercussions in the
stock market, and waning corporate profits have also become an issue. The
market now recognizes that profits are necessary--even for technology
companies. And with high stock valuations, investors are very sensitive to
companies missing analysts' earnings projections by even the slightest
amount.
Volatility, primarily within technology stocks, has dominated the market.
The NASDAQ Composite Index had a 24.1% total return from January 1 to March
10, 2000. From March 10 to May 23, the NASDAQ then fell 37.3%, its largest
ever peak-to-trough decline. Then, from May 23 to June 30, it gained 25.4%.
Overall, for the six months ended June 30, 2000, the NASDAQ lost 2.5%.
Throughout this period, the NASDAQ has experienced record volatility,
registering daily gains or losses of 2% or more on 60% of its trading days.
This underscores the risk of trying to time the market.
Among other indexes, the Dow Jones Industrial Average lost 8.5% through
June 30, the S&P 500 lost 0.4%, the Wilshire 5000 is down 1.4%, and the
Russell 2000 gained 3.1%. While these indexes have not been as volatile as
the NASDAQ, they have also experienced significant fluctuations.
The flow of new money into the Nation's mutual funds indicates the impact
of these major market shifts on investor expectations. In the first four
months of 2000, almost $170 billion flowed into equity mutual funds, with
$40 billion into tech funds alone. Fund flows slowed considerably in May
amid the NASDAQ market meltdown.
Fixed Income Performance
Interest rates on 10- and 30-year Treasurys have fallen substantially,
largely due to the reduction of debt at the U.S. Treasury. This has created
a major change in the slope of the yield curve, with short-term rates up
and long-term rates down significantly. While three-month Treasury Bill
yields rose from 5.31% to 5.86% for the six months ending June 30, the
yield on the 30-year Treasury bond declined from 6.48% to 5.90%. This
represents a 1.13% inversion of the yield curve in just six months.
The U.S. Treasury Department's plan to buy back Treasury debt has created
some market turmoil, as the bond market searches for new benchmarks. That
and other factors have contributed to bond market illiquidity. The
high-yield market has had some emerging credit concerns. Yields on new
high-yield bonds are now at their highest levels since 1991. While equity
funds throughout the U.S. have had large inflows, bond funds have seen net
outflows, which has created further liquidity problems in the bond market.
In this climate, the Lehman Brothers Aggregate Index of high-quality bonds
gained 4.0% during the period, while the Lehman Brothers High Yield Index
lost 1.2%.
Outlook
The Federal Reserve's Open Market Committee, which sets monetary policy,
meets in August and October. It's rare for the Fed to raise interest rates
in October of an election year, so attention is focused on the Fed's August
meeting. Although there is increasing evidence that the economy is slowing
and inflationary pressures are minimal, there remains a chance of an
interest rate increase in August. This increase would address concerns
regarding labor market tightness, heavy consumer spending and oil price
increases working their way through the economy. After the Fed's meeting in
August, concerns about Fed action will likely subside for the remainder of
the year.
Political forecasts will also be factored into market prices both before
and after the election. Issues with potential market ramifications include
the social security debate and the potential tax cuts or government
spending increases associated with the current Federal government budget
surplus. Certain sectors of the market could fare quite differently under
different election outcomes, though, in general terms, both major political
parties have a vested interest in maintaining U.S. economic strength.
The bond markets will continue to be roiled by volatility as the Federal
government's debt buy-back leaves them searching for benchmarks to replace
the 30-year U.S. Treasury bond. Until then, prices and yields will be
heavily influenced by the imbalance of supply and demand. On the whole, we
see continued market volatility, but at lower levels than early in 2000.
[LOGO OMITTED: COMPASS WITH THE WORDS CHOICE, PROTECTION AND ACCUMULATION]
Opportunity Growth Portfolio Review
[PHOTO OMITTED: BRIAN L. THORKELSON]
Brian L. Thorkelson, an assistant vice president of Lutheran Brotherhood,
is portfolio manager of the Opportunity Growth Portfolio and the Mid Cap
Growth Portfolio. He has been with Lutheran Brotherhood since 1987.
The first half of 2000 marked a homecoming of sorts for the LB Series Fund,
Inc., Opportunity Growth Portfolio. After 18 months under a subadvisory
arrangement with T. Rowe Price Associates, Lutheran Brotherhood once again
assumed management of the Portfolio, commencing on March 1, 2000. Overall,
the Portfolio finished the six-month period with a 4.99% total return,
outpacing its market benchmark, the small-company Russell 2000 Index, which
returned 3.05%.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)
Short-Term Securities 2.9%
Common Stocks 97.1%
Market Rotation Affects Performance
After experiencing impressive gains in 1999, small-capitalization stock
performance varied widely during the first six months of 2000. As
Y2K-related concerns subsided early in the year, technology growth stocks
thrived, particularly in areas such as software, communication equipment
and semiconductors. During this time, the Portfolio's holdings in
biotechnology and pharmaceutical industries also experienced healthy
growth, helping to fuel the Portfolio's 19.13% advance in February.
[GRAPHIC OMITTED: TOP 10 HOLDINGS % OF PORTFOLIO]
Top 10 Holdings % of Portfolio
----------------------------------------------------------------------
Tollgrade Communications, Inc. 1.1%
RSA Security, Inc. 1.0%
Techne Corp. 0.9%
JDS Uniphase Corp. 0.8%
Priority Healthcare Corp., Class B 0.8%
Advent Software, Inc. 0.8%
Forward Air Corp. 0.8%
Documentum, Inc. 0.8%
Abgenix, Inc. 0.7%
Polycom, Inc. 0.7%
These holdings represent 8.4% of the total investment portfolio.
In early March, however, many of the same growth stocks that set the pace
earlier came under heavy selling pressure, which lasted through late May.
Taking their cues from a series of short-term interest rate hikes,
investors rotated out of growth stocks and into stocks of larger companies
with better name recognition and more-established earnings histories.
Although the Portfolio did experience declines during this time, it was
able to gain competitive ground versus its peers, nonetheless--largely on
the strength of our decision to systematically trim higher-risk positions
earlier in the year.
Following the March 1 management transition, we made modest changes to the
Portfolio's structure by selling some thinly traded issues, which had less
liquidity than we desired. The increased cash resulting from these sales
provided the Portfolio with added cushion when technology stocks began to
falter. During the ensuing months, we made further adjustments by
incrementally purchasing stocks whose prices had been beaten down, but
whose fundamentals we still judged to be sound. Many of these holdings
rebounded strongly in June, as confidence in small-company issues returned.
During June, the Portfolio's holdings in technology and health care
performed particularly well.
[GRAPHIC OMITTED: TOP 10 INDUSTRIES]
Top 10 Industries
Computers - Software & Services 16.0%
Electronics 14.3%
Communications Equipment 6.3%
Services - Cyclical 5.9%
Oil & Gas 5.1%
Health Care - Drugs & Pharmaceuticals 4.8%
Biotechnology 3.9%
Electrical Equipment 3.6%
Equipment - Semiconductors 3.4%
Retail 3.0%
These industries represent 66.3% of the total investment portfolio.
Shift in Investor Focus
Recent months have brought about a marked change in the way investors
approach stock selection. Momentum investing has been diminishing in
importance, while more emphasis has been placed on the growth prospects of
individual companies. Over the near-term, we do not expect this trend to
change significantly. As investors sift through appropriate valuations in
an uncertain monetary climate, continued volatility in the equity markets
could result. This possibility underscores the need for investors to
diversify their investments across a broad array of asset classes,
including small-capitalization stocks.
Opportunity Growth Portfolio seeks long-term growth of capital by investing
primarily in common stocks of small companies.
[GRAPHIC OMITTED: PORTFOLIO FACTS]
Portfolio Facts
Inception Date: 1/18/96
Total Net Assets
(in millions): $492.2
Following the Portfolio's return to in-house management, we may continue to
fine-tune its structure over the coming months, but we do not anticipate
making any major changes in investment strategy. Many of the most critical
changes to the Portfolio have already been made, including the
implementation of a revised investment strategy, which we will continue to
pursue. With a diverse and exciting foundation of assets to build upon, we
believe the future of the Portfolio remains bright.
[GRAPHIC WORM CHART OMITTED:]
Performance Through June 30, 2000
Growth of $10,000 Invested Since 1/31/96
Opportunity
Month End Growth Russell 2000 Consumer
Date Portfolio Index Price Index
------------------------------------------------------------------------
1/31/96 10,000 10,000 10,000
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
1/31/00 13,482 16,620 10,926
2/29/00 16,061 19,367 10,991
3/31/00 15,285 18,093 11,082
4/30/00 13,959 17,004 11,088
5/31/00 13,037 16,011 11,095
6/30/00 $14,818 $17,410 $11,101
INSET LEGEND READS:
Russell 2000
Index
$17,410
Opportunity
Growth
Portfolio
$14,818
Consumer
Price Index
$11,101
*See accompanying notes to Portfolio Management Reviews.
INSET BOX ON CHART READS:
Opportunity Growth
Portfolio
Annualized Total Returns*
-------------------------------
Since Inception
1/18/96 10.54%
1 Year 30.54%
Mid Cap Growth Portfolio Review
[PHOTO OMITTED: BRIAN L. THORKELSON]
Brian L. Thorkelson, an assistant vice president of Lutheran Brotherhood,
is portfolio manager of the Mid Cap Growth Portfolio and the Opportunity
Growth Portfolio. He has been with Lutheran Brotherhood since 1987.
Despite several months of volatile market conditions, medium-company stocks
provided investors with the best returns of any asset class during the
six-months ended June 30, 2000. Over this time, the LB Series Fund, Inc.,
Mid Cap Growth Portfolio returned 13.79%, outperforming its market
benchmark, the S&P MidCap 400 Index, which finished with an 8.98% total
return.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)
Short-Term Securities 8.1%
Common Stocks 91.9%
Technology Stocks Volatile
On the heels of 1999's record gains, we began the period with sizable
exposure to companies in the software, biotechnology, communications
equipment and semiconductor industries. After stagnating in January, these
holdings performed admirably in February, helping the Portfolio advance in
excess of 24% during that month alone. Investor sentiment underwent a rapid
transition in March, however, resulting in a pullback in mid-capitalization
stock valuations, and a widespread rotation into larger value stocks more
closely tied to economic cycles.
We reacted swiftly by taking profits in many higher-risk technology
holdings that had seen a significant run-up in values over the preceding
year. By doing so, we were able to neutralize the Portfolio's weighting in
this sector relative to its peer group and stave off potential losses. At
the same time, we maintained our exposure to technology stocks that we
believed were poised for a rebound, as well as positions in health care and
capital goods stocks, which provided the Portfolio with a much-needed
cushion against market turbulence.
[GRAPHIC OMITTED: TOP 10 HOLDINGS % OF PORTFOLIO]
Top 10 Holdings % of Portfolio
----------------------------------------------------------------------
ADC Telecommunications, Inc. 1.5%
Veritas Software Corp. 1.1%
Siebel Systems, Inc. 0.9%
Altera Corp. 0.9%
Convergys Corp. 0.7%
Jabil Circuit, Inc. 0.7%
American Tower Corp., Class A 0.7%
EOG Resources, Inc. 0.7%
Rational Software Corp. 0.7%
BEA Systems, Inc. 0.7%
These holdings represent 8.6% of the total investment portfolio.
June ushered in resurgence in stock valuations, as investors cheered the
Federal Reserve's decision to leave short-term interest rates unchanged.
Many of the Portfolio's holdings that had outperformed earlier in the year
once again regained their momentum during this time. Strong performers
included biotechnology companies such as Human Genome Sciences and Maxim
Pharmaceuticals, semiconductor manufacturers PMC-Sierra, Lattice
Semiconductor and Microchip Technology, as well as JDS Uniphase, a major
producer of optical network equipment.
[GRAPHIC OMITTED: TOP 10 INDUSTRIES]
Top 10 Industries
Electronics 12.3%
Computers - Software & Services 11.6%
Communications Equipment 6.9%
Oil & Gas 6.6%
Health Care - Drugs & Pharmaceuticals 4.8%
Services - Cyclical 4.5%
Biotechnology 3.7%
Services - Technology 3.3%
Electrical Equipment 3.2%
Retail 3.0%
These industries represent 59.9% of the of the total investment portfolio.
Further Volatility Possible
Although the potential exists for the U.S. economy to slow from its current
pace once Federal Reserve's interest rate hikes are fully absorbed, we
believe that conditions will nonetheless remain ripe for medium-company
stock gains--particularly if the Federal Reserve proves successful in
warding off inflation. Volatility could remain a factor, however, as
investors await a clear direction on monetary policy, and the speculative
excesses of 1999 wear off. Moreover, many companies need more time for
earnings to catch up with stock valuations that remain high by historical
standards.
Mid Cap Growth Portfolio seeks long-term growth of capital by investing
primarily in common stocks of medium-sized companies.
[GRAPHIC OMITTED: PORTFOLIO FACTS]
Portfolio Facts
Inception Date: 1/30/98
Total Net Assets
(in millions): $474.9
Regardless of market conditions, we will continue to focus on companies
with strong revenue and earnings growth, market leadership positions, and
seasoned management teams. As always, we believe that the excellent growth
potential and attractive risk/reward characteristics of mid-capitalization
stocks make them an important component of a diversified portfolio.
[GRAPHIC WORM CHART OMITTED:]
Performance Through June 30, 2000
Growth of $10,000 Invested Since 1/31/98
Month End Mid Cap S&P MidCap Consumer
Date Growth 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
1/31/00 16,493 13,572 10,439
2/29/00 20,549 14,522 10,501
3/31/00 20,047 15,737 10,588
4/30/00 18,689 15,186 10,594
5/31/00 17,859 14,998 10,600
6/30/00 $19,007 $15,218 $10,606
INSET LEGEND READS:
Mid Cap Growth
Portfolio
$19,007
S&P MidCap
400 Index
$15,218
Consumer
Price Index
$10,606
*See accompanying notes to Portfolio Management Reviews.
INSET BOX ON CHART READS:
Mid Cap Growth
Portfolio
Annualized Total Returns*
-------------------------------
Since Inception
1/30/98 30.44%
1 Year 47.99%
World Growth Portfolio Review
[PHOTO OMITTED: DAVID J. L. WARREN]
David J.L. Warren is president of Rowe Price-Fleming International,
investment subadviser of the World Growth Portfolio. He leads a team of 12
portfolio managers that has managed the Portfolio's assets since its
inception in January 1996. David has worked in investment research and
management for over 20 years, and has managed international portfolios with
Rowe Price-Fleming since 1984.
Volatile conditions in several key regions of the world, coupled with
concerns about the direction of U.S. interest rates, weighed down
international returns during the six-month period ended June 30, 2000.
During this time, the LB Series Fund, Inc., World Growth Portfolio returned
-4.49%, slightly lower than the -3.95% total return of its market
benchmark, Morgan Stanley Capital International's Europe, Australasia and
Far East (EAFE) Index.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)
Short-Term Securities 3.8%
Preferred Stocks 1.8%
Common Stocks &
Warrants 94.4%
Sensitivity to U.S. Monetary Policy
Throughout the first half of 2000, international market trends generally
mirrored developments in the United States. Worldwide, indiscriminate
demand for technology growth stocks gave way to renewed interest in
defensive, value-oriented issues. As the period progressed, the disparity
in performance between growth and value stocks diminished significantly,
and investors increasingly focused their attention on company fundamentals,
irrespective of market sector.
The U.S. Federal Reserve's strategy of hiking short-term interest rates did
not go unnoticed by international market participants, particularly in
Latin America, where sensitivity to U.S. monetary policy was especially
acute. Although stocks across this region generally trended lower,
encouraging economic reports out of Brazil and Argentina triggered a late
rally in June, while an upgrade in Mexico's credit rating buoyed prospects
for investors in that region. We believe Latin American markets hold
significant potential and, as such, we continue to slightly overweight this
region relative to our market benchmark.
[GRAPHIC OMITTED: TOP 10 COUNTRIES % OF PORTFOLIO]
Top 10 Countries % Of Portfolio
------------------------------------------------------------------------
Japan 19.9%
United Kingdom 18.3%
France 12.4%
Netherlands 6.6%
Italy 5.8%
Germany 4.8%
Switzerland 4.4%
Hong Kong 3.6%
Sweden 3.1%
Spain 3.1%
These countries represent 82.0% of the total investment portfolio.
The Japanese economy remained weak in the wake of 1999's disappointing
fourth quarter, and stocks there finished lower, justifying our decision to
underweight the country relative to the EAFE Index. Across other parts of
the Pacific Rim, economic recovery was well underway, though financial
markets remained volatile. While the mid-period downturn in technology
stocks generally hurt the Portfolio's holdings in Asia, we were able to
offset these price declines somewhat by minimizing our exposure to weak
financial stocks in this region.
[GRAPHIC OMITTED: TOP 10 HOLDINGS % OF PORTFOLIO]
% of
Top 10 Holdings Country Portfolio
----------------------------------------------------------------------------
Nokia Oyj Finland 2.9%
Vodafone AirTouch plc United Kingdom 2.7%
Glaxo Wellcome United Kingdom 1.9%
Total 'B' France 1.6%
Vivendi France 1.5%
Shell Transport & Trading Co. United Kingdom 1.5%
Royal Bank of Scotland Group plc United Kingdom 1.5%
Nippon Telegraph & Telecom Corp. Japan 1.5%
Canon Japan 1.5%
Societe Television Francaise 1 France 1.4%
These holdings represent 18.0% of the total investment portfolio.
Market volatility also accelerated across Europe during the period, as
investors began to reassess growth stock valuations, leading to a
widespread sell-off in technology issues. Equity returns were also hurt by
continued weakness in the common European currency, the euro. The euro
reached new lows relative to the U.S. dollar midway through May before
rising six percent in June. The Portfolio's strongest returns in Europe
came from Sweden, Finland and France, largely on the enduring strength of
several key telecommunications stocks, including Ericsson, Nokia and France
Telecom.
World Growth Portfolio seeks long-term capital growth by investing primarily
in common stocks issued by established non-U.S. companies.**
[GRAPHIC OMITTED: PORTFOLIO FACTS]
Portfolio Facts
Inception Date: 1/18/96
Total Net Assets
(in millions): $599.5
Technology Remains Important
Over the coming months, we expect the renewed focus on company fundamentals
that developed late in the period to continue playing an important role in
stock selection. Against an uncertain monetary backdrop, however, further
market volatility cannot be ruled out. In Europe, we expect accelerating
deregulation, consolidation and restructuring to be catalysts for corporate
earnings growth, while in Latin America and Asia, returns will be closely
tied to continued political and economic reforms, along with a willingness
to alter traditional methods of conducting business.
Regardless of location, the extent to which businesses succeed will, in
many cases, depend on their ability to integrate new technologies into
their daily operations. Firms that cannot make this critical transition run
the risk of being rendered uncompetitive. As such, we will continue to
invest in a diverse mix of companies with leading industry positions, solid
fundamentals and the ability to effectively leverage technology.
[GRAPHIC WORM CHART OMITTED:]
Performance Through June 30, 2000
Growth of $10,000 Invested Since 1/31/96
Morgan Stanley
Capital
Month End World Growth International Consumer Price
Date Portfolio EAFE Index 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
1/31/00 16,652 15,505 10,926
2/29/00 17,555 15,925 10,991
3/31/00 17,741 16,546 11,082
4/30/00 16,752 15,679 11,088
5/31/00 16,153 15,299 11,095
6/30/00 $16,952 $15,901 $11,101
INSET LEGEND READS:
World Growth
Portfolio
$16,952
Morgan Stanley
Capital
International
EAFE Index
$15,901
Consumer Price
Index
$11,101
*See accompanying notes to Portfolio Management Reviews.
INSET BOX ON CHART READS:
World
Growth Portfolio
Annualized Total Returns*
-------------------------------
Since inception
1/18/96 12.61%
1 Year 23.18%
Growth Portfolio Review
[PHOTO OMITTED: 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.
Strong stock selection was key to the performance of the LB Series Fund,
Inc., Growth Portfolio during the six-month period ending June 30,
2000--particularly in the wake of a sector rotation which significantly
heightened volatility. Overall, the Portfolio finished the reporting period
with a 5.91% total return, outpacing its market benchmark, the
large-company S&P 500 Index, which returned -0.42% during this time.
Stock Selection Key
Investor sentiment fluctuated widely during the first half of the year,
creating a particularly difficult environment for growth stocks. Portfolio
gains were largely generated in the months of February and June, flanking a
three-month time span during which many growth stocks languished. Although
many companies' balance sheets were little changed during these three
months, stock prices came under pressure, nonetheless, largely on fears
that valuations had pulled ahead of corporate earnings.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)]
Short-Term Securities 6.1%
Common Stocks 93.9%
Throughout the entire six-month period, we maintained the Portfolio's
overweighting in technology stocks relative to our peer group. As
technology issues began falling out of favor in March, however, we
fine-tuned this approach by reducing our exposure to content- and
consumer-driven Internet holdings such as NBC Internet, Inc. and
Amazon.com, which had seen their values peak. Concurrently, we increased
positions in more conservative technology stocks tied to data networking
and the manufacture of communications equipment. Many of these
more-established holdings outperformed as investors became increasingly
selective later in the period.
[GRAPHIC OMITTED: TOP 10 HOLDINGS % OF PORTFOLIO]
Top 10 Holdings % of Portfolio
------------------------------------------------------------------
Cisco Systems, Inc. 2.8%
Intel Corp. 2.5%
Pfizer, Inc. 2.0%
General Electric Co. 2.0%
Microsoft Corp. 2.0%
EMC Corp. 1.8%
Citigroup, Inc. 1.6%
Sun Microsystems, Inc. 1.3%
Oracle Corp. 1.3%
JDS Uniphase Corp. 1.2%
These holdings represent 18.5% of the total investment portfolio.
While our primary focus remained centered on technology issues, we also
added value by keeping the Portfolio's assets diversified across a wide
spectrum of industries. As a result, strong performances came not only from
telecommunications companies such as Cienna, ADC Telecommunications and
Scientific Atlanta, but also from health care providers like Oxford Health
Plans and United HealthCare, and pharmaceutical manufacturers like
Pharmacia Corp. and Eli Lilly. We were able to further bolster returns by
consistently underweighting retail stocks, which generally underperformed
during the period.
[GRAPHIC OMITTED: TOP 10 INDUSTRIES]
Top 10 Industries
----------------------------------------------------------------------
Electronics 10.3%
Computers - Software & Services 9.6%
Communications Equipment 7.4%
Health Care - Drugs & Pharmaceuticals 5.6%
Telephone & Telecommunications 4.8%
Computers - Hardware 4.3%
Electrical Equipment 4.0%
Oil & Gas 3.9%
Retail 3.8%
Financial - Diversified 3.7%
These industries represent 57.4% of the total investment portfolio.
Looking for a Soft Landing
We believe the Federal Reserve is nearing the end of its current tightening
cycle, given the moderating tone of recent labor reports. An end to
short-term rate hikes could, in turn, help curb volatility in the equity
markets and position investors for further gains. To what extent growth
stocks can generate healthy returns over the coming year will likely depend
on the Federal Reserve's ability to orchestrate a "soft landing," whereby
economic growth decelerates and inflation is averted, without throwing the
economy into a tailspin.
Growth Portfolio seeks long-term growth of capital by investing primarily
in common stocks of established companies.
[GRAPHIC OMITTED: PORTFOLIO FACTS]
Portfolio Facts
Inception Date: 1/9/87
Total Net Assets
(in millions): $5,240.4
In light of recent conditions, we expect investors to become increasingly
prudent in their investment decisions over the coming months, which should
intensify the focus on both company fundamentals and earnings growth
potential. Despite the recent pullback in stock valuations, we believe
there is still growth ahead for innovative companies with technical
prowess, strong management teams and sound business plans. As a result, we
will continue to focus our investments in high-growth areas of the economy
that offer the best potential for long-term gains.
[GRAPHIC WORM CHART OMITTED:]
Performance Through June 30, 2000
Growth of $10,000 Invested Since 6/30/90
Month End S&P 500 Consumer
Date Growth Portfolio Index Price Index
---------------------------------------------------------------------------
6/30/90 10,000 10,000 10,000
7/31/90 9,798 9,975 10,038
8/31/90 8,988 9,064 10,131
9/30/90 8,419 8,625 10,216
10/31/90 8,402 8,597 10,277
11/30/90 8,920 9,142 10,300
12/31/90 9,159 9,398 10,300
1/31/91 9,749 9,817 10,362
2/28/91 10,466 10,501 10,377
3/31/91 10,742 10,760 10,393
4/30/91 10,742 10,795 10,408
5/31/91 11,318 11,245 10,439
6/30/91 10,744 10,735 10,470
7/31/91 11,331 11,249 10,485
8/31/91 11,737 11,502 10,516
9/30/91 11,634 11,310 10,562
10/31/91 11,895 11,477 10,577
11/30/91 11,495 11,000 10,608
12/31/91 12,946 12,259 10,616
1/31/92 12,920 12,044 10,631
2/29/92 13,044 12,185 10,670
3/31/92 12,722 11,948 10,724
4/30/92 12,770 12,314 10,739
5/31/92 12,877 12,356 10,754
6/30/92 12,589 12,175 10,793
7/31/92 13,008 12,688 10,816
8/31/92 12,736 12,415 10,847
9/30/92 12,911 12,560 10,878
10/31/92 13,244 12,618 10,916
11/30/92 13,910 13,029 10,932
12/31/92 13,999 13,193 10,924
1/31/93 14,241 13,315 10,978
2/28/93 14,203 13,482 11,016
3/31/93 14,598 13,767 11,055
4/30/93 14,331 13,450 11,085
5/31/93 14,700 13,787 11,101
6/30/93 14,714 13,833 11,116
7/31/93 14,673 13,792 11,116
8/31/93 15,212 14,301 11,147
9/30/93 15,352 14,191 11,170
10/31/93 15,487 14,499 11,216
11/30/93 15,071 14,346 11,224
12/31/93 15,413 14,525 11,224
1/31/94 15,898 15,029 11,255
2/28/94 15,468 14,607 11,293
3/31/94 14,717 13,973 11,332
4/30/94 14,697 14,164 11,347
5/31/94 14,716 14,372 11,355
6/30/94 14,214 14,020 11,393
7/31/94 14,553 14,496 11,424
8/31/94 15,215 15,080 11,470
9/30/94 14,969 14,709 11,501
10/31/94 15,180 15,052 11,509
11/30/94 14,583 14,493 11,524
12/31/94 14,695 14,706 11,524
1/31/95 15,018 15,099 11,570
2/28/95 15,610 15,676 11,617
3/31/95 16,054 16,144 11,655
4/30/95 16,519 16,627 11,694
5/31/95 17,030 17,267 11,717
6/30/95 17,775 17,670 11,740
7/31/95 18,727 18,269 11,740
8/31/95 18,785 18,305 11,771
9/30/95 19,372 19,076 11,794
10/31/95 19,426 19,020 11,832
11/30/95 20,137 19,840 11,825
12/31/95 20,171 20,223 11,817
1/31/96 20,660 20,925 11,886
2/29/96 21,091 21,105 11,925
3/31/96 21,164 21,312 11,986
4/30/96 21,921 21,636 12,032
5/31/96 22,404 22,170 12,055
6/30/96 22,112 22,256 12,063
7/31/96 21,160 21,282 12,086
8/31/96 21,992 21,724 12,109
9/30/96 23,329 22,943 12,148
10/31/96 23,728 23,590 12,186
11/30/96 25,236 25,364 12,209
12/31/96 24,692 24,862 12,209
1/31/97 26,324 26,430 12,248
2/28/97 25,993 26,623 12,286
3/31/97 24,769 25,527 12,317
4/30/97 25,921 27,061 12,333
5/31/97 27,758 28,687 12,325
6/30/97 28,939 29,975 12,340
7/31/97 31,501 32,361 12,356
8/31/97 30,249 30,542 12,379
9/30/97 31,923 32,225 12,410
10/31/97 30,861 31,162 12,440
11/30/97 31,696 32,592 12,433
12/31/97 32,143 33,153 12,417
1/31/98 32,368 33,534 12,440
2/28/98 34,651 35,938 12,463
3/31/98 36,399 37,782 12,487
4/30/98 37,025 38,167 12,510
5/31/98 36,129 37,488 12,533
6/30/98 37,513 39,014 12,548
7/31/98 37,103 38,608 12,564
8/31/98 30,833 33,021 12,579
9/30/98 33,167 35,128 12,594
10/31/98 35,758 38,005 12,625
11/30/98 38,087 40,301 12,625
12/31/98 41,264 42,626 12,617
1/31/99 43,860 44,408 12,648
2/28/99 42,033 43,027 12,664
3/31/99 44,697 44,748 12,702
4/30/99 46,217 46,493 12,795
5/31/99 45,280 45,396 12,795
6/30/99 48,546 47,915 12,795
7/31/99 47,107 46,421 12,833
8/31/99 47,028 46,190 12,864
9/30/99 47,208 44,925 12,925
10/31/99 50,509 47,769 12,948
11/30/99 53,677 48,743 12,956
12/31/99 59,259 51,614 12,956
1/31/00 57,201 49,023 12,987
2/29/00 61,698 48,096 13,064
3/31/00 65,147 52,800 13,172
4/30/00 61,752 51,211 13,179
5/31/00 58,770 50,161 13,187
6/30/00 $62,762 $51,400 $13,195
INSET LEGEND READS:
Growth
Portfolio
$62,762
S&P 500
Index
$51,400
Consumer
Price Index
$13,195
*See accompanying notes to Portfolio Management Reviews.
INSET BOX ON CHART READS:
Growth Portfolio
Annualized Total Returns*
-------------------------------
10 Years 20.14%
5 Years 28.66%
1 Year 29.28%
High Yield Portfolio Review
[PHOTO OMITTED: 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.
High-yield bond prices were heavily influenced by trends in the neighboring
equity markets during the six months ended June 30, 2000, with generally
weak performance preceding a recovery late in the period. Overall, the LB
Series Fund, Inc., High Yield Portfolio finished the six-month period with
a -2.42% total return, while its market benchmark, the Lehman Brothers High
Yield Index, returned -1.21% during this time.
High-Yield Bonds Track Equities
Throughout the first half of the year, corporate bond investors looked to
developments in the U.S. stock markets for guidance. In particular,
high-yield bond prices shadowed movements in the technology-heavy NASDAQ
Index, which fell well off last year's record pace. After flying high in
1999 and early 2000, technology growth stocks quickly fell out of favor in
early March, leading to a subsequent decline in the prices of corporate
bonds, as well-particularly those issued by high-growth companies. Because
the Portfolio is heavily invested in the rapidly growing media and
telecommunications industries, it generally underperformed during this
time. Industrywide, a slight uptick in the number of distressed high-yield
bonds, coupled with a robust market for U.S. Treasury bonds, further
dampened demand and returns in the high-yield market.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)]
Short-Term Securities 4.5%
Preferred Stocks-Convertible 1.8%
Corporate Bonds 80.2%
Preferred Stocks-Non-Convertible 9.0%
Common Stocks & Stock Warrants 4.5%
As we have done successfully in the past, we responded by adding positions
in higher-rated corporate bonds to shore up the Portfolio's credit quality,
while simultaneously maintaining our overweighting in media and
telecommunications issues. In doing so, we sought to cushion the Portfolio
without sacrificing yield potential in the process. This strategy proved
beneficial in June, when high-yield bonds rallied in response to the
Federal Reserve's decision to leave short-term interest rates unchanged. We
expect the Portfolio's media and telecommunications holdings to provide
further momentum when equity markets eventually stabilize.
[GRAPHIC OMITTED: TOP 10 HOLDINGS BY ISSUER % OF PORTFOLIO]
Top 10 Holdings by Issuer % of Portfolio
----------------------------------------------------------------------
Intermedia Communications, Inc. 1.5%
Nextel Communications, Inc. 1.3%
CSC Holdings, Inc. 1.0%
IntelCom Group (U.S.A.), Inc. 1.0%
Dobson Communications Corp. 0.9%
TNP Enterprises, Inc. 0.9%
Wam!Net, Inc. 0.9%
Callahan Nordrhein-Westfalen 0.9%
WinStar Communications, Inc. 0.9%
Charter Communication Holdings, Inc. 0.9%
These holdings represent 10.2% of the fund's total investment portfolio.
Current Yields Important
Like other fixed-income investments, high-yield bonds have been
overshadowed by the immense popularity of equity investments in recent
years, contributing to steady downward pressure on prices. It is worth
noting, however, that the Portfolio's performance is reinforced by the fact
that a vast majority of its total return comes in the form of reinvested
interest income, not simply capital appreciation. In addition, because
current yields still remain high from a historical perspective, we
anticipate those yields will help offset weaker market prices for the
foreseeable future. While we expect performance to be driven more by yields
than price appreciation for the foreseeable future, we also know overall
conditions in the fixed-income and equity markets play a key role.
[GRAPHIC OMITTED: TOP 10 INDUSTRIES]
Top 10 Industries
Telecommunications - Wireline 17.0%
Broadcasting & Media 11.8%
Telecommunications - Wireless 11.2%
Telecommunications - Data/Internet 6.3%
Utilities 3.8%
Packaging & Containers 2.6%
Machinery & Equipment 2.5%
Technology - Hardware 1.8%
Food & Beverage 1.7%
Health Care Services 1.6%
These industries represent 60.3% of the total investment portfolio.
[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 1.7%
Ba 13.6%
B 56.9%
Caa 19.2%
Ca 0.8%
C 0.0%
D 0.4%
NR 7.0%
High Yield Portfolio seeks high current income and, secondarily, growth of
capital by investing primarily in high-yielding ("junk") corporate bonds.***
[GRAPHIC OMITTED: PORTFOLIO FACTS]
Portfolio Facts
Inception Date: 11/2/87
Total Net Assets
(in millions): $1,462.8
As growth in the media and telecommunications sectors continues, we will
maintain our strategy of emphasizing these types of credits in the
Portfolio, though we will modify this approach as conditions warrant.
Although media and telecommunications bonds can result in short-run
volatility, they also provide an excellent source of long-term growth
potential. Over the near-term, we expect the current spread in yields
between high-yield bonds and U.S. Treasury bonds to remain wide, affording
investors a unique opportunity to capture high levels of current income.
[GRAPHIC WORM CHART OMITTED:]
Performance Through June 30, 2000
Growth of $10,000 Invested Since 6/30/90
Lehman Brothers
Month End High Yield High Yield Consumer Price
Date Portfolio Index Index
--------------------------------------------------------------------------
6/30/90 10,000 10,000 10,000
7/31/90 10,173 10,269 10,038
8/31/90 9,850 9,685 10,131
9/30/90 9,462 8,978 10,216
10/31/90 9,170 8,506 10,277
11/30/90 9,327 8,772 10,300
12/31/90 9,468 8,821 10,300
1/31/91 9,565 9,063 10,362
2/28/91 10,197 10,055 10,377
3/31/91 10,641 10,647 10,393
4/30/91 11,003 11,084 10,408
5/31/91 11,125 11,104 10,439
6/30/91 11,424 11,432 10,470
7/31/91 11,727 11,798 10,485
8/31/91 11,916 12,070 10,516
9/30/91 12,114 12,237 10,562
10/31/91 12,546 12,646 10,577
11/30/91 12,737 12,712 10,608
12/31/91 12,812 12,895 10,616
1/31/92 13,339 13,349 10,631
2/29/92 13,712 13,679 10,670
3/31/92 13,951 13,848 10,724
4/30/92 14,077 13,901 10,739
5/31/92 14,316 14,097 10,754
6/30/92 14,401 14,229 10,793
7/31/92 14,694 14,444 10,816
8/31/92 14,909 14,633 10,847
9/30/92 15,083 14,783 10,878
10/31/92 14,786 14,574 10,916
11/30/92 15,060 14,758 10,932
12/31/92 15,385 14,926 10,924
1/31/93 16,004 15,360 10,978
2/28/93 16,264 15,631 11,016
3/31/93 16,616 15,832 11,055
4/30/93 16,716 15,970 11,085
5/31/93 17,013 16,160 11,101
6/30/93 17,590 16,500 11,116
7/31/93 17,764 16,660 11,116
8/31/93 17,907 16,800 11,147
9/30/93 17,907 16,843 11,170
10/31/93 18,516 17,183 11,216
11/30/93 18,591 17,266 11,224
12/31/93 18,909 17,480 11,224
1/31/94 19,494 17,859 11,255
2/28/94 19,424 17,813 11,293
3/31/94 18,686 17,140 11,332
4/30/94 18,446 17,023 11,347
5/31/94 18,540 17,032 11,355
6/30/94 18,618 17,084 11,393
7/31/94 18,482 17,230 11,424
8/31/94 18,625 17,352 11,470
9/30/94 18,529 17,354 11,501
10/31/94 18,583 17,395 11,509
11/30/94 18,185 17,176 11,524
12/31/94 18,078 17,303 11,524
1/31/95 18,137 17,539 11,570
2/28/95 18,845 18,140 11,617
3/31/95 19,033 18,336 11,655
4/30/95 19,501 18,802 11,694
5/31/95 19,917 19,328 11,717
6/30/95 20,013 19,458 11,740
7/31/95 20,648 19,703 11,740
8/31/95 20,736 19,764 11,771
9/30/95 20,932 20,007 11,794
10/31/95 21,031 20,131 11,832
11/30/95 21,276 20,308 11,825
12/31/95 21,621 20,627 11,817
1/31/96 22,125 20,990 11,886
2/29/96 22,684 21,007 11,925
3/31/96 22,470 20,992 11,986
4/30/96 22,621 21,038 12,032
5/31/96 22,874 21,165 12,055
6/30/96 22,691 21,340 12,063
7/31/96 22,530 21,438 12,086
8/31/96 22,892 21,670 12,109
9/30/96 23,675 22,192 12,148
10/31/96 23,609 22,363 12,186
11/30/96 23,854 22,804 12,209
12/31/96 24,118 22,968 12,209
1/31/97 24,408 23,193 12,248
2/28/97 24,765 23,557 12,286
3/31/97 23,975 23,206 12,317
4/30/97 23,979 23,450 12,333
5/31/97 24,898 23,952 12,325
6/30/97 25,612 24,284 12,340
7/31/97 26,492 24,952 12,356
8/31/97 26,579 24,895 12,379
9/30/97 27,406 25,388 12,410
10/31/97 27,163 25,411 12,440
11/30/97 27,250 25,655 12,433
12/31/97 27,518 25,880 12,417
1/31/98 28,099 26,346 12,440
2/28/98 28,492 26,502 12,463
3/31/98 28,866 26,751 12,487
4/30/98 28,755 26,855 12,510
5/31/98 28,654 26,949 12,533
6/30/98 28,795 27,046 12,548
7/31/98 28,971 27,200 12,564
8/31/98 26,633 25,699 12,579
9/30/98 26,238 25,814 12,594
10/31/98 25,688 25,285 12,625
11/30/98 26,963 26,335 12,625
12/31/98 27,105 26,364 12,617
1/31/99 27,700 26,754 12,648
2/28/99 27,486 26,596 12,664
3/31/99 27,992 26,849 12,702
4/30/99 29,108 27,369 12,795
5/31/99 28,652 27,000 12,795
6/30/99 28,954 26,943 12,795
7/31/99 29,034 27,051 12,833
8/31/99 28,754 26,751 12,864
9/30/99 28,541 26,558 12,925
10/31/99 28,465 26,383 12,948
11/30/99 29,107 26,694 12,956
12/31/99 29,956 26,993 12,956
1/31/00 30,123 26,877 12,987
2/29/00 30,908 26,928 13,064
3/31/00 30,302 26,363 13,172
4/30/00 29,625 26,405 13,179
5/31/00 28,822 26,133 13,187
6/30/00 $29,229 $26,666 $13,195
INSET LEGEND READS:
High Yield
Portfolio
$29,229
Lehman Brothers
High Yield
Index
$26,666
Consumer Price
Index
$13,195
*See accompanying notes to Portfolio Management Reviews.
INSET BOX ON CHART READS:
High Yield Portfolio,
Annualized Total Returns*
------------------------------
10 Years 11.31%
5 Years 7.86%
1 Year 0.95%
Income Portfolio Review
[PHOTO OMITTED: 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.
The six-month period ended June 30, 2000, was marked by two distinct
intervals, during which U.S. Treasury bonds and investment-grade corporate
bonds flourished independently of each other. During this time, the LB
Series Fund, Inc. Income Portfolio generated a 3.43% total return, while
its market benchmark, the Lehman Brothers Aggregate Index, returned 3.99%.
Treasuries Outperform Early
Due to ballooning Federal budget surpluses and the resulting effort by the
U.S. Treasury to buy back its longer-dated debt, Treasury bonds rallied
sharply in the first quarter of 2000, while demand for bonds issued by
corporations generally lagged. Rather than trim our exposure to corporate
issues, however, we continued to add them to the Portfolio as their
valuations became more attractive. This strategy proved beneficial during
the second quarter, as corporate bonds bounced back in response to a broad
recovery in the equity markets. At the same time, Treasury bonds failed to
provide the same level of returns that they had earlier in the year. By
focusing our buying attention on Treasury bonds at the shorter end of the
maturity curve and high-quality corporate bonds at the longer end of the
curve, we took advantage of the positive bounce in corporate issues.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)]
Preferred Stocks 0.6%
Common Stocks 0.3%
Corporate Bonds 43.5%
Short-Term Securities 15.7%
U.S. Government 12.9%
Mortgage-Backed Securities 12.7%
Asset-Backed Securities 8.0%
Foreign Government Bonds 3.2%
U.S. Government Agency 3.1%
<TABLE>
<CAPTION>
[GRAPHIC OMITTED: TOP 10 HOLDINGS SECURITY TYPE % OF PORTFOLIO]
% of
Top 10 Holdings Security Type Portfolio
-------------------------------------------------------------------------------------
<S> <C> <C>
Federal National Mortgage Association (June 2030) Mortgage-Backed 5.6%
Government National Mortgage Association
(July 2030) Mortgage-Backed 5.6%
U.S. Treasury Bonds (November 2022) U.S. Government 3.9%
U.S. Treasury Bonds (August 2023) U.S. Government 3.2%
Federal National Mortgage Association
(January 2010) U.S. Government Agency 2.1%
U.S. Treasury Bonds (November 2016) U.S. Government 2.0%
U.S. Treasury Notes (August 2009) U.S. Government 1.8%
Morgan Stanley Dean Witter Capital I Trust Mortgage-Backed 1.6%
World Financial Network Credit Card Master Trust Asset-Backed 1.3%
Heller Financial Commercial Mortgage Corp. Asset-Backed 1.1%
These bond holdings represent 28.2% of the total investment portfolio.
</TABLE>
Investment-grade bond prices were further influenced by a unique phenomenon
known as the "inverted yield curve." An inverted yield curve is an
infrequent event whereby longer-maturity bonds offer lower yields than
those with shorter maturities; under most circumstances, exactly the
opposite is true. Due to the inverse correlation between yields and prices,
longer-dated bonds had much greater price performance than shorter-term
bonds in this environment.
[GRAPHIC BAR CHART OMITTED: MOODY'S BOND QUALITY RATING DISTRIBUTION]
Moody's Bond Quality
Rating Distribution
Aaa 44.2%
Aa 9.0%
A 14.9%
Baa 21.0%
Ba 6.5%
B 3.7%
Caa 0.2%
Ca 0.0%
C 0.0%
D 0.0%
NR 0.5%
Consequently, we maintained the Portfolio's moderate-to-long duration
throughout the reporting period, which helped offset the effects of
volatility in the corporate bond markets.
Budget Surpluses Remain Key
We expect the Federal government's response to large budget surpluses to
continue playing a major role in the performance of investment-grade bonds,
particularly Treasury bonds, over the coming months. If the government
continues to buy back large blocks of outstanding debt, Treasury prices
should trend upward as their supply diminishes. Meanwhile, the direction of
corporate bond prices will likely hinge on Federal Reserve policy. A modest
slowdown in economic growth rates would be welcomed by most market
participants, as it would lessen the chances of further hikes in short-term
interest rates.
Income Portfolio seeks a high level of income while preserving principal
by investing primarily in intermediate- and long-term bonds.
[GRAPHIC OMITTED: PORTFOLIO FACTS]
Portfolio Facts
Inception Date: 1/9/87
Total Net Assets
(in millions): $1,040.7
Over the second half of the year, we anticipate adding slightly lower-rated
corporate bonds to our current mix of investments, due not only to the
higher yields they typically generate, but also to their excellent
long-term return potential. Additionally, we intend to keep the Portfolio's
duration moderately long until the present yield environment begins to
normalize. We believe this approach will keep investors in the Portfolio
well-positioned through the second half of the year.
[GRAPHIC WORM CHART OMITTED:]
Performance Through June 30, 2000
Growth of $10,000 Invested Since 6/30/90
Lehman Brothers
Month End Income Aggregate Consumer
Date Portfolio Bond Index Price Index
---------------------------------------------------------------------------
6/30/90 10,000 10,000 10,000
7/31/90 10,122 10,138 10,038
8/31/90 9,958 10,002 10,131
9/30/90 9,895 10,085 10,216
10/31/90 9,989 10,213 10,277
11/30/90 10,223 10,433 10,300
12/31/90 10,390 10,596 10,300
1/31/91 10,527 10,727 10,362
2/28/91 10,766 10,818 10,377
3/31/91 10,896 10,893 10,393
4/30/91 11,052 11,010 10,408
5/31/91 11,181 11,074 10,439
6/30/91 11,197 11,069 10,470
7/31/91 11,344 11,223 10,485
8/31/91 11,605 11,465 10,516
9/30/91 11,856 11,698 10,562
10/31/91 11,985 11,828 10,577
11/30/91 12,068 11,936 10,608
12/31/91 12,443 12,291 10,616
1/31/92 12,397 12,124 10,631
2/29/92 12,479 12,203 10,670
3/31/92 12,487 12,134 10,724
4/30/92 12,530 12,222 10,739
5/31/92 12,770 12,453 10,754
6/30/92 12,947 12,624 10,793
7/31/92 13,248 12,882 10,816
8/31/92 13,379 13,012 10,847
9/30/92 13,538 13,167 10,878
10/31/92 13,320 12,992 10,916
11/30/92 13,372 12,994 10,932
12/31/92 13,591 13,201 10,924
1/31/93 13,874 13,454 10,978
2/28/93 14,165 13,690 11,016
3/31/93 14,248 13,747 11,055
4/30/93 14,354 13,844 11,085
5/31/93 14,379 13,862 11,101
6/30/93 14,676 14,113 11,116
7/31/93 14,807 14,193 11,116
8/31/93 15,074 14,441 11,147
9/30/93 15,120 14,480 11,170
10/31/93 15,255 14,534 11,216
11/30/93 15,091 14,410 11,224
12/31/93 15,176 14,488 11,224
1/31/94 15,401 14,684 11,255
2/28/94 15,067 14,428 11,293
3/31/94 14,571 14,072 11,332
4/30/94 14,415 13,959 11,347
5/31/94 14,442 13,958 11,355
6/30/94 14,336 13,927 11,393
7/31/94 14,646 14,204 11,424
8/31/94 14,683 14,221 11,470
9/30/94 14,425 14,012 11,501
10/31/94 14,372 14,000 11,509
11/30/94 14,375 13,969 11,524
12/31/94 14,466 14,065 11,524
1/31/95 14,728 14,344 11,570
2/28/95 15,065 14,685 11,617
3/31/95 15,150 14,775 11,655
4/30/95 15,409 14,982 11,694
5/31/95 16,077 15,561 11,717
6/30/95 16,209 15,675 11,740
7/31/95 16,116 15,641 11,740
8/31/95 16,318 15,830 11,771
9/30/95 16,475 15,983 11,794
10/31/95 16,729 16,191 11,832
11/30/95 16,989 16,434 11,825
12/31/95 17,265 16,664 11,817
1/31/96 17,364 16,774 11,886
2/29/96 16,999 16,482 11,925
3/31/96 16,831 16,367 11,986
4/30/96 16,727 16,275 12,032
5/31/96 16,716 16,243 12,055
6/30/96 16,924 16,460 12,063
7/31/96 16,959 16,505 12,086
8/31/96 16,896 16,477 12,109
9/30/96 17,226 16,763 12,148
10/31/96 17,626 17,136 12,186
11/30/96 17,990 17,429 12,209
12/31/96 17,825 17,266 12,209
1/31/97 17,881 17,320 12,248
2/28/97 17,966 17,363 12,286
3/31/97 17,701 17,171 12,317
4/30/97 17,909 17,428 12,333
5/31/97 18,097 17,594 12,325
6/30/97 18,358 17,803 12,340
7/31/97 18,901 18,284 12,356
8/31/97 18,701 18,128 12,379
9/30/97 19,002 18,397 12,410
10/31/97 19,154 18,663 12,440
11/30/97 19,240 18,749 12,433
12/31/97 19,385 18,939 12,417
1/31/98 19,646 19,181 12,440
2/28/98 19,678 19,166 12,463
3/31/98 19,792 19,231 12,487
4/30/98 19,902 19,331 12,510
5/31/98 20,075 19,514 12,533
6/30/98 20,264 19,680 12,548
7/31/98 20,295 19,722 12,564
8/31/98 20,433 20,043 12,579
9/30/98 21,003 20,512 12,594
10/31/98 20,881 20,403 12,625
11/30/98 21,127 20,520 12,625
12/31/98 21,204 20,581 12,617
1/31/99 21,407 20,727 12,648
2/28/99 20,915 20,365 12,664
3/31/99 21,042 20,477 12,702
4/30/99 21,094 20,542 12,795
5/31/99 20,787 20,361 12,795
6/30/99 20,680 20,296 12,795
7/31/99 20,603 20,211 12,833
8/31/99 20,554 20,201 12,864
9/30/99 20,766 20,435 12,925
10/31/99 20,790 20,511 12,948
11/30/99 20,836 20,509 12,956
12/31/99 20,776 20,410 12,956
1/31/00 20,701 20,343 12,987
2/29/00 20,949 20,589 13,064
3/31/00 21,181 20,861 13,172
4/30/00 21,045 20,800 13,179
5/31/00 20,954 20,790 13,187
6/30/00 $21,491 $21,222 $13,,195
INSET LEGEND READS:
Income
Portfolio
$21,491
Lehman Brothers
Aggregate
Bond Index
$21,222
Consumer
Price Index
$13,195
*See accompanying notes to Portfolio Management Reviews.
INSET BOX ON CHART READS:
Income Portfolio
Annualized Total Returns*
------------------------------
10 Years 7.95%
5 Years 5.80%
1 Year 3.92%
Money Market Portfolio Review
[PHOTO OMITTED: 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.
After beginning the period relatively flat, money market yields advanced
steadily during the remainder of the six-month reporting period ended June
30, 2000, driven higher by the effects of the Federal Reserve's tightening
monetary policy. Overall, the LB Series Fund, Inc., Money Market Portfolio
earned a total return of 2.92% during this time.
Y2K Concerns Affect Yields Early
The Portfolio's performance early in the period was largely determined by
Federal monetary policy formulated during the previous year. In an attempt
to head off potential Y2K-related market disruptions, the Federal Reserve
decided late in 1999 to shore up liquidity in the financial markets by
swelling the nation's money supply. Once the expected global rash of
computer glitches failed to materialize, however, lenders were left with an
enormous supply of cash on hand. Because there was little incentive to
boost interest rates in this environment, money market yields were
subsequently confined to a narrow range through early March. During this
time, the Portfolio's yields consistently hovered near the five-percent
level.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO COMPOSITION (% OF PORTFOLIO)]
Portfolio Composition (% of Portfolio)
Bank Notes 1.1%
Commercial Paper 83.1%
Certificates of Deposit 8.4%
Variable Rate Notes 3.0%
Medium Term Notes 2.6%
U.S. Government Agency 1.8%
[GRAPHIC OMITTED: TOP 10 HOLDINGS BY CREDITOR % OF PORTFOLIO]
% of
Top 10 Holdings by Creditor Portfolio
------------------------------------------------------------------
Household Finance Corp. 4.6%
CIT Group Holdings, Inc. 4.6%
Electronic Data Systems Corp. 4.6%
CXC, Inc. 4.5%
Union Bank of Switzerland 4.2%
American Family Mutual Insurance Co. 4.1%
American Express Credit Corp. 3.7%
Morgan Guaranty Trust Co. of New York 3.5%
General Electric Capital Corp. 3.5%
Schering Plough Corp. 3.4%
These holdings represent 40.7% of the total investment portfolio.
As U.S. economic growth continued to surge forward, the Federal Reserve
responded by initiating a series of increases in the overnight Federal
Funds rate. These moves quickly ratcheted up money market yields and
provided incentive to invest in longer-dated securities. We responded to
these changes by adopting a "modified barbell" strategy, whereby we
increased our weighting in issues with longer maturities to add yield,
while, concurrently, maintaining sizable holdings of shorter-dated
securities to ensure adequate liquidity. Utilizing this balanced approach,
we steadily extended the Portfolio's duration relative to our benchmark
index during the last three months of the reporting period.
Yields Dependent on Monetary Policy
In recent months, investors have received mixed messages regarding the
strength of the U.S. economy. While economic growth appears to be expanding
at a rapid rate based on GDP growth, several key economic indicators,
including employment growth, housing starts and retail sales, have softened
somewhat, pointing to a potential deceleration in economic growth. However,
it is too early to declare victory in the pre-emptive war against
inflation. We believe another 0.25% boost in short-term interest rates is
likely before year-end.
[GRAPHIC OMITTED: MONEY MARKET PORTFOLIO]
Money Market Portfolio
Annualized Total Returns*
Period Ending 6/30/00
------------------------------
10 Years 4.97%
5 Years 5.33%
1 Year 5.56%
Seven-Day Yields
as of 6/30/00+
------------------------------
Current 6.22%
Effective 6.42%
Money Market Portfolio seeks current income with stability of principal by
investing in high-quality, short-term debt securities.****
[GRAPHIC OMITTED: PORTFOLIO FACTS]
Portfolio Facts
Inception Date: 1/9/87
Total Net Assets
(in millions): $264.2
Given current conditions, we will move forward with a strategy of investing
in shorter-term securities for liquidity purposes, balancing them with
select longer-term yield opportunities as they arise. As always, we will
also rely on credit research and sector analysis to make informed
investment decisions, while focusing exclusively on issues with the highest
credit quality. We believe this approach will benefit investors seeking
current income, along with preservation of principle in a low-risk
environment.
Notes to Portfolio Management Reviews
* The annualized total returns for each of the Portfolios 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.
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
Opportunity Growth Portfolio
Portfolio of Investments
June 30, 2000
(unaudited)
Shares Value
------------- --------------
<S> <C> <C>
COMMON STOCKS - 97.1% (a)
Aerospace & Defense - 0.2%
41,700 Triumph Group, Inc. $ 1,162,352(b)
--------------
Airlines - 0.1%
11,900 SkyWest, Inc. 441,044
--------------
Automotive - 0.4%
80,400 Gentex Corp. 2,020,050(b)
--------------
Banks - 1.5%
42,500 City National Corp. 1,476,875
90,800 Community First
Bank Shares, Inc. 1,481,175
57,100 Cullen/Frost Bankers, Inc. 1,502,444
19,600 Investors Financial
Services Corp. 777,875
47,900 Silicon Valley Bancshares 2,041,738(b)
--------------
7,280,107
--------------
Biotechnology - 3.9%
28,600 Abgenix, Inc. 3,427,978
64,600 Biomatrix, Inc. 1,461,575(b)
14,700 Cephalon, Inc. 880,163(b)
25,300 Genset SA, ADR 585,063(b)
38,100 Genzyme Transgenics Corp. 1,033,463(b)
7,800 IDEC Pharmaceuticals Corp. 915,038(b)
26,100 Invitrogen Corp. 1,962,802(b)
57,800 NPS Pharmaceuticals, Inc. 1,546,150(b)
9,000 Protein Design Labs, Inc. 1,484,578(b)
46,200 SangStat Medical Corp. 1,334,025(b)
32,700 Techne Corp. 4,251,000(b)
15,500 Ventana Medical Systems, Inc. 364,250(b)
--------------
19,246,085
--------------
Broadcasting - 1.7%
22,700 Citadel Communications Corp. 793,081(b)
89,400 Cox Radio, Inc., Class A 2,503,200
47,300 Emmis Communications Corp.,
Class A 1,957,038
10,200 Pegasus Communications Corp. 500,438(b)
32,300 Radio One, Inc. 954,869(b)
64,600 Radio One, Inc., Class D 1,425,238(b)
--------------
8,133,864
--------------
Chemicals - 0.6%
67,500 ATMI, Inc. 3,138,750(b)
--------------
Communications
Equipment - 6.3%
750 Accelerated Networks, Inc. 31,641(b)
22,500 Advanced Fibre
Communications 1,019,531(b)
9,900 American Tower Corp., Class A 412,706(b)
77,400 Andrew Corp. 2,597,738(b)
35,850 ANTEC Corp. 1,490,016(b)
62,000 Cable Design
Technologies Corp. 2,077,000(b)
28,200 Carrier Access Corp. 1,491,075(b)
49,700 CommScope, Inc. 2,037,700(b)
1,500 Comverse Technology, Inc. 139,500
35,300 Digital Microwave Corp. 1,345,813(b)
7,100 Ditech Communications Corp. 671,394(b)
5,700 Gilat Satellite Networks, Ltd. 395,438(b)
37,500 Inter-Tel, Inc. 602,344
47,800 Level 3 Communications
Holdings Corp. 2,727,588(b)
15,500 Natural Microsystems Corp. 1,742,781(b)
31,300 Netro Corp. 1,795,838(b)
21,840 Nortel Networks Corp. 1,490,580
34,700 Polycom, Inc. 3,265,053(b)
17,600 Proxim, Inc. 1,741,850(b)
42,900 Sawtek, Inc. 2,469,431(b)
29,200 Tekelec 1,407,075(b)
--------------
30,952,092
--------------
Computers - Hardware - 1.4%
15,000 Extreme Networks, Inc. 1,582,500(b)
3,850 Handspring, Inc. 103,950(b)
36,200 MMC Networks, Inc. 1,934,438(b)
43,200 National Instruments Corp. 1,884,600(b)
27,900 Netopia, Inc. 1,122,975(b)
--------------
6,628,463
--------------
Computers -
Peripherals - 0.6%
57,000 Advanced Digital
Information Corp. 908,438
49,700 Cybex Computer Products Corp. 2,137,100
--------------
3,045,538
--------------
Computers - Software &
Services - 16.0%
30,100 Actuate Corp. 1,606,588
57,600 Advent Software, Inc. 3,715,200
5,182 Akami Technologies, Inc. 615,282(b)
42,500 American Management
Systems, Inc. 1,395,195(b)
54,300 Apex, Inc. 2,375,625(b)
11,300 Ariba, Inc. 1,107,930
9,700 Art Technology Group, Inc. 979,094
14,600 Aspen Technology, Inc. 562,100(b)
34,500 Aware, Inc. 1,763,813(b)
70,900 Broadbase Software, Inc. 2,171,313
35,000 BroadVision, Inc. 1,778,438
18,400 Business Objects S.A., ADR 1,621,500
43,000 Cognizant Technology
Solutions Corp., Class A 1,427,063
45,200 Cognos, Inc. 1,870,150
32,600 Concord Communications, Inc. 1,299,925(b)
28,700 Cysive, Inc. 685,213(b)
30,550 Dendrite International, Inc. 1,017,697(b)
11,300 Digex, Inc. 767,694(b)
41,100 Documentum, Inc. 3,673,313(b)
35,600 Exchange Applications, Inc. 947,850
8,800 Exodus Communications, Inc. 405,350
31,400 Great Plains Software, Inc. 616,225(b)
48,200 Henry (Jack) & Associates, Inc. 2,416,025
45,455 Hyperion Solutions Corp. 1,474,447(b)
26,510 I-2 Technologies, Inc. 2,764,082
45,500 iGate Capital Corp. 625,625(b)
19,100 Interwoven, Inc. 2,100,702
54,000 IntraNet Solutions, Inc. 2,072,250(b)
11,100 ISS Group, Inc. 1,095,952(b)
11,500 Kronos, Inc. 299,000(b)
8,000 Macromedia, Inc. 773,500(b)
16,200 Manugistics Group, Inc. 757,350(b)
16,800 Mercator Software, Inc. 1,155,000(b)
32,300 Mercury Interactive Corp. 3,125,025
13,000 Micromuse, Inc. 2,151,297
11,400 NVIDIA Corp. 724,613(b)
54,900 ONYX Software Corp. 1,629,844(b)
29,100 Peregrine Systems, Inc. 1,009,406
13,000 Pharmacopeia, Inc. 602,875(b)
7,500 Primus Knowledge
Solutions, Inc. 337,500(b)
57,950 QRS Corp. 1,423,397(b)
32,900 RadiSyst Corp. 1,867,075(b)
7,400 Rational Software Corp. 687,738(b)
42,300 Remedy Corp. 2,358,225(b)
68,400 RSA Security, Inc. 4,736,700(b)
27,000 SmartForce Public
Limited Co., ADR 1,296,000(b)
9,100 Symantec Corp. 490,831(b)
4,800 VeriSign, Inc. 847,200
3,600 Veritas Software Corp. 406,856
63,500 Verity, Inc. 2,413,000
16,000 VerticalNet, Inc. 591,000
45,400 Visual Networks, Inc. 1,293,900(b)
36,200 WebTrends Corp. 1,400,488
25,272 Wind River Systems, Inc. 957,177(b)
--------------
78,286,638
--------------
Construction - 0.2%
20,600 Southdown, Inc. 1,189,650
--------------
Consumer Finance - 0.8%
84,100 AmeriCredit Corp. 1,429,700(b)
41,250 Metris Companies, Inc. 1,036,406
26,500 PMI Group 1,258,750
--------------
3,724,856
--------------
Containers - Metal &
Glass - 0.2%
11,300 DuPont Photomasks, Inc. 774,050(b)
--------------
Distributors - Food &
Health - 1.3%
24,800 Allscripts, Inc. 570,400(b)
68,000 AmeriSource Health Corp. 2,108,000(b)
52,300 Priority Healthcare Corp.,
Class B 3,886,544(b)
--------------
6,564,944
--------------
Electrical Equipment - 3.6%
12,600 Advanced Energy
Industries, Inc. 742,613(b)
30,600 Amphenol Corp., Class A 2,025,338
9,750 Anaren Microwave, Inc. 1,279,535(b)
71,100 Artesyn Technologies, Inc. 1,977,469(b)
42,100 Benchmark Electronics, Inc. 1,539,281(b)
24,100 Black Box Corp. 1,908,042(b)
14,100 C-Cor Electronics, Inc. 380,700(b)
38,000 Cohu, Inc. 1,024,813
11,300 Electro Scientific Industries, Inc. 497,553
16,317 Flextronics International, Ltd. 1,120,774
28,800 KEMET Corp. 721,800(b)
21,150 Power-One, Inc. 2,409,778(b)
28,800 Three-Five Systems, Inc. 1,699,200
--------------
17,326,896
--------------
Electronics - 14.3%
54,400 Actel Corp. 2,482,000(b)
13,500 Aeroflex, Inc. 670,781(b)
45,600 Alpha Industries, Inc. 2,009,250
32,100 American Xtal
Technology, Inc. 1,388,325(b)
9,400 Anadigics, Inc. 320,188(b)
23,600 Applied Micro Circuits Corp. 2,330,500
37,000 AstroPower, Inc. 1,003,625(b)
14,900 Aurora Biosciences Corp. 1,015,994(b)
36,625 Burr-Brown Corp. 3,174,930
13,200 Coherent, Inc. 1,107,150(b)
29,800 Credence Systems Corp. 1,644,588(b)
10,200 Cree, Inc. 1,361,700(b)
45,600 Cytyc Corp. 2,433,900
45,800 Dallas Semiconductor Corp. 1,866,350
22,000 Elantec Semiconductor, Inc. 1,531,750(b)
18,900 EXAR Corp. 1,647,844(b)
12,200 Fairchild Semiconductor
International Corp., Class A 494,100(b)
10,900 GlobeSpan, Inc. 1,330,652
32,900 JDS Uniphase Corp. 3,943,888
31,200 Kopin Corp. 2,160,600
7,600 Lattice Semiconductor Corp. 525,350(b)
20,300 LTX Corp. 709,231(b)
2,650 Marvell Technology
Group, Ltd. 151,050(b)
24,200 Meade Instruments Corp. 608,025(b)
65,500 Mercury Computer
Systems, Inc. 2,116,469
37,600 Micrel, Inc. 1,633,250(b)
33,650 Microchip Technology, Inc. 1,960,638
12,500 MKS Instruments, Inc. 489,063(b)
15,100 Molecular Devices Corp. 1,044,731(b)
31,200 Pericom Semiconductor Corp. 2,121,600(b)
40,100 Photon Dynamics, Inc. 2,994,969(b)
7,400 PMC-Sierra, Inc. 1,314,888
16,400 QLogic Corp. 1,083,425
42,600 REMEC, Inc. 1,783,875(b)
18,250 SCG Holding Corp. 399,219(b)
22,100 Semtech Corp. 1,690,305(b)
13,450 Silicon Storage
Technology, Inc. 1,187,803(b)
19,800 Stanford Microdevices, Inc. 860,063(b)
6,900 Stratos Lightwave, Inc. 192,338(b)
41,600 Therma-Wave, Inc. 928,200(b)
39,100 Tollgrade Communications, Inc. 5,180,750(b)
22,500 TranSwitch Corp. 1,736,719
11,900 TriQuint Semiconductor, Inc. 1,138,681
18,700 Varian, Inc. 862,538(b)
42,600 Virata Corp. 2,540,025(b)
11,900 Zoran Corp. 784,656(b)
--------------
69,955,976
--------------
Engineering &
Construction - 0.8%
50,950 Dycom Industries, Inc. 2,343,700
15,600 Quanta Services, Inc. 858,000
14,500 SBA Communications Corp. 753,094(b)
--------------
3,954,794
--------------
Entertainment - 0.2%
36,900 Internet Pictures Corp. 558,113(b)
10,400 SFX Entertainment, Inc.,
Class A 471,250(b)
--------------
1,029,363
--------------
Equipment - Semiconductors - 3.4%
10,903 Applied Materials, Inc. 988,084
23,500 Applied Science & Technology 608,063(b)
36,600 Asyst Technologies, Inc. 1,253,550
16,600 Brooks Automation, Inc. 1,061,363(b)
46,300 Cymer, Inc. 2,210,825(b)
23,000 EMCORE Corp. 2,760,000(b)
11,000 Helix Technology Corp. 429,000
27,500 Kulicke & Soffa Industries, Inc. 1,632,813(b)
68,500 Photronic, Inc. 1,943,688(b)
21,900 PRI Automation, Inc. 1,432,055(b)
18,100 Varian Semiconductor
Equipment, Inc. 1,136,906(b)
14,900 Veeco Instruments, Inc. 1,091,425(b)
--------------
16,547,772
--------------
Financial - Diversified - 0.7%
25,600 AMBAC Financial Group, Inc. 1,403,200
37,000 Pinnacle Holdings, Inc. 1,998,000(b)
--------------
3,401,200
--------------
Food & Beverage - 0.4%
49,900 Hain Celestial Group, Inc. 1,830,706(b)
--------------
Freight & Shipping - 2.5%
18,800 Atlas Air, Inc. 674,450(b)
45,000 C.H. Robinson Worldwide, Inc. 2,227,500
46,000 EGL, Inc. 1,414,500(b)
35,300 Expeditors International of
Washington, Inc. 1,676,750
92,700 Forward Air Corp. 3,708,000(b)
67,700 Iron Mountain, Inc. 2,301,800(b)
--------------
12,003,000
--------------
Health Care - Drugs &
Pharmaceuticals - 4.8%
60,400 Accredo Health, Inc. 2,087,575(b)
37,600 Alkermes, Inc. 1,771,900(b)
21,700 Celgene Corp. 1,277,588(b)
34,100 Cubist Pharmaceuticals, Inc. 1,679,425(b)
95,550 Dendreon Corp. 1,582,547(b)
4,600 Emisphere Technologies, Inc. 196,003(b)
33,400 Jones Pharma, Inc. 1,333,913
68,616 King Pharmaceuticals, Inc. 3,010,527(b)
22,900 K-V Pharmaceutical Co.,
Class A 606,850(b)
40,600 Medicis Pharmaceutical Corp.,
Class A 2,314,200(b)
7,300 QLT Photo Therapeutics, Inc. 564,381(b)
41,669 Shire Pharmaceuticals
Group, ADR 2,161,579(b)
70,000 Titan Pharmaceuticals, Inc. 3,010,000(b)
3,700 United Therapeutics Corp. 400,988(b)
28,800 Watson Pharmaceuticals, Inc. 1,548,000(b)
--------------
23,545,476
--------------
Health Care - Medical
Products & Supplies - 1.3%
52,300 Aradigm Corp. 915,250(b)
15,900 AthroCare Corp. 846,675(b)
41,000 Novoste Corp. 2,501,000(b)
23,300 ResMed, Inc. 623,275
33,800 Zoll Medical Corp. 1,656,200(b)
--------------
6,542,400
--------------
Health Care
Management - 2.0%
127,100 Lifepoint Hospitals, Inc. 2,827,975(b)
25,500 Province Healthcare Co. 921,188(b)
62,000 Trigon Healthcare, Inc. 3,196,875(b)
44,600 Universal Health Services, Inc.,
Class B 2,921,300(b)
--------------
9,867,338
--------------
Health Care Services - 2.3%
91,000 Advance Paradigm, Inc. 1,865,500
32,800 Albany Molecular Research, Inc. 1,785,550(b)
35,400 CuraGen Corp. 1,347,413(b)
69,400 Hooper Holmes, Inc. 555,200
43,200 IMPATH, Inc. 2,343,600(b)
22,900 MAXIMUS, Inc. 506,663(b)
70,800 Pharmaceutical Product
Development, Inc. 1,486,800(b)
11,100 Quest Diagnostics, Inc. 794,344(b)
26,600 Renal Care Group, Inc. 650,453(b)
--------------
11,335,523
--------------
Homebuilding - 0.3%
83,900 Lennar Corp. 1,698,975
--------------
Household Furnishings &
Appliances - 0.2%
74,100 Furniture Brands
International, Inc. 1,120,763(b)
--------------
Housewares & Household
Products - 0.1%
11,600 Salton, Inc. 427,750(b)
--------------
Investment Banking &
Brokerage - 0.4%
64,800 Waddell & Reed Financial, Inc.,
Class A 2,126,250
--------------
Investment
Management - 0.5%
55,000 Affiliated Managers Group, Inc. 2,502,500(b)
--------------
Leisure Products - 0.1%
27,900 JAKKS Pacific, Inc. 411,525(b)
--------------
Machinery -
Diversified - 0.1%
13,200 Mettler-Toledo International, Inc. 528,000(b)
--------------
Manufacturing - 0.8%
14,300 Cognex Corp. 740,025(b)
10,200 CTS Corp. 459,000
46,100 Diebold, Inc. 1,285,038
46,000 Insituform Technologies, Inc.,
Class A 1,247,750(b)
--------------
3,731,813
--------------
Office Equipment &
Supplies - 0.2%
19,500 Optimal Robitics Corp. 748,313(b)
--------------
Oil & Gas - 5.1%
39,200 Barrett Resources Corp. 1,193,150(b)
37,600 BJ Services Co. 2,350,000(b)
55,900 Cal Dive International, Inc. 3,029,081(b)
64,300 Core Laboratories N.V. (USD) 1,864,700(b)
33,200 Diamond Offshore Drilling, Inc. 1,166,150
21,800 Louis Dreyfus Natural
Gas Corp. 682,613(b)
57,200 Marine Drilling
Companies, Inc. 1,601,600(b)
80,500 Newfield Exploration Co. 3,149,563(b)
40,300 Noble Affiliates, Inc. 1,501,175
84,700 Oceaneering International, Inc. 1,609,300(b)
20,100 Patterson Energy, Inc. 572,850(b)
59,500 Precision Drilling Corp. 2,298,188(b)
39,000 Tidewater, Inc. 1,404,000
61,000 UTI Energy Corp. 2,447,625(b)
--------------
24,869,995
--------------
Photography &
Imaging - 0.9%
58,200 Infocus Corp. 1,873,313(b)
77,200 Pinnacle Systems, Inc. 1,735,794
12,070 Zebra Technologies Corp.,
Class B 534,852(b)
--------------
4,143,959
--------------
Restaurants - 1.5%
66,600 Applebee's International, Inc. 2,018,813
71,700 Jack in the Box, Inc. 1,765,613(b)
48,700 Outback Steakhouse, Inc. 1,424,475(b)
58,400 PR Chang's China Bistro, Inc. 1,865,150(b)
--------------
7,074,051
--------------
Retail - 3.0%
29,400 CDW Computer Centers, Inc. 1,837,500(b)
19,900 Cost Plus, Inc. 570,881(b)
22,825 Insight Enterprise, Inc. 1,353,808(b)
64,200 Kenneth Cole Productions, Inc.,
Class A 2,568,000
21,600 Linens 'N Things, Inc. 585,900(b)
98,000 Men's Wearhouse, Inc. 2,186,625(b)
37,925 Pacific Sunwear of California 711,094(b)
16,500 PolyMedica Corp. 713,625(b)
33,900 Ross Stores, Inc. 578,419
59,900 Too, Inc. 1,523,706(b)
41,000 Tweeter Home Entertainment
Group, Inc. 1,245,375
19,500 Ultimate Electronics, Inc. 522,539(b)
--------------
14,397,472
--------------
Retail - Food & Drug - 0.4%
42,500 Whole Foods Market, Inc. 1,755,781(b)
--------------
Services - 1.0%
37,500 Manpower, Inc. 1,200,000
100,500 Modis Professional Services, Inc. 891,938(b)
28,100 On Assignment, Inc. 857,050(b)
30,900 Professional Staff plc, ADR 139,050(b)
88,793 Tetra Tech, Inc. 2,031,140(b)
--------------
5,119,178
--------------
Services - Cyclical - 5.9%
71,300 Acxiom Corp. 1,942,925(b)
84,715 Apollo Group, Inc., Class A 2,372,020(b)
10,600 Bright Horizons Family
Solutions, Inc. 226,575(b)
5,800 Catalina Marketing Corp. 591,600(b)
176,500 Copart, Inc. 2,824,000(b)
40,800 Corporate Executive Board Co. 2,442,900(b)
26,300 DeVry, Inc. 695,306(b)
35,500 Diamond Technology
Partners, Inc. 3,124,000(b)
16,400 Forrester Research, Inc. 1,194,125(b)
52,800 F.Y.I., Inc. 1,778,700(b)
19,800 Getty Images, Inc. 733,838(b)
33,300 Learning Tree International, Inc. 2,039,625(b)
48,700 Macrovision Corp. 3,112,995
15,800 MemberWorks, Inc. 531,275(b)
49,100 META Group, Inc. 945,175(b)
30,700 Pegasus Communications Corp.,
Class A 333,863
28,700 Pre-Paid Legal Services, Inc. 857,413(b)
30,300 TeleTech Holdings, Inc. 941,194(b)
44,500 True North
Communications, Inc. 1,958,000
--------------
28,645,529
--------------
Services - Technology - 2.8%
28,900 Bisys Group, Inc. 1,777,350(b)
43,600 CSG Systems International, Inc. 2,444,325(b)
66,000 FactSet Research Systems, Inc. 1,864,500
42,600 Investment Technology Group 1,682,700(b)
64,900 MedQuist, Inc. 2,206,600(b)
35,930 National Computer Systems, Inc. 1,769,553
72,438 NOVA Corp. 2,023,737(b)
--------------
13,768,765
--------------
Steel - 0.3%
42,700 Maverick Tube Corp. 1,243,638(b)
--------------
Telephone &
Telecommunications - 1.7%
34,700 CapRock Communications Corp. 676,650(b)
47,900 ITC DeltaCom, Inc. 1,068,769(b)
14,798 NEXTLINK
Communications, Inc. 561,399(b)
20,300 NorthEast Optic Network, Inc. 1,250,988(b)
35,400 Powerwave Technologies, Inc. 1,557,600(b)
55,900 Primus Telecomm Group, Inc. 1,390,513(b)
24,900 Rural Cellular Corp., Class A 1,906,406(b)
--------------
8,412,325
--------------
Utilities - 0.3%
20,000 Calpine Corp. 1,315,000(b)
--------------
Total Common Stocks (cost $405,489,534) 473,970,509
--------------
Principal
Amount
--------------
SHORT-TERM SECURITIES - 2.9% (a)
Commercial Paper
$ 2,000,000 Associates Corp. of
North America, 6.85%
Due 7/3/2000 1,999,239
12,300,000 Associates Corp. of
North America, 6.65%
Due 7/5/2000 12,290,912
--------------
Total Commercial Paper
(at amortized cost) 14,290,151
--------------
Total Investments
(cost $419,779,685) $ 488,260,660(c)
==============
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) At June 30, 2000, the aggregate cost of securities for federal income tax
purposes was $419,779,685 and the net unrealized appreciation of investments
based on that cost was $68,480,975 which is comprised of $106,281,886
aggregate gross unrealized appreciation and $37,800,911 aggregate gross
unrealized depreciation.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
Mid Cap Growth Portfolio
Portfolio of Investments
June 30, 2000
(unaudited)
Shares Value
------------- --------------
<S> <C> <C>
COMMON STOCKS - 91.9% (a)
Airlines - 0.1%
12,300 Delta Air Lines, Inc. $ 621,888
--------------
Automotive - 0.2%
34,900 Gentex Corp. 876,863(b)
--------------
Banks - 2.9%
18,260 Associated Banc-Corp. 398,296
113,100 Banknorth Group, Inc. 1,731,844
54,250 City National Corp. 1,885,188
36,000 Golden West Financial Corp. 1,469,250
32,900 Marshall & Ilsley Corp. 1,365,350
50,900 North Fork Bancorporation, Inc. 769,863
28,460 Northern Trust Corp. 1,851,679
26,000 Pacific Century Financial Corp. 380,250
28,400 Roslyn Bancorp, Inc. 471,706
17,300 SouthTrust Corp. 391,413
15,400 State Street Corp. 1,633,363
22,930 TCF Financial Corp. 589,014
15,700 Zions Bancorporation 720,483
--------------
13,657,699
--------------
Biotechnology - 3.7%
20,900 Biogen, Inc. 1,348,050(b)
28,300 Cephalon, Inc. 1,694,463(b)
13,700 Chiron Corp. 650,750(b)
35,800 Genzyme Corp. 2,127,863(b)
36,600 Genzyme Transgenics Corp. 992,775(b)
14,600 Gilead Sciences, Inc. 1,038,425(b)
7,100 Human Genome Sciences, Inc. 946,963
22,150 IDEC Pharmaceuticals Corp. 2,598,472(b)
20,600 Medarex, Inc. 1,740,700(b)
41,400 MedImmune, Inc. 3,063,600(b)
10,200 Millennium
Pharmaceuticals, Inc. 1,141,125
--------------
17,343,186
--------------
Broadcasting - 2.5%
8,000 Adelphia Communications
Corp., Class A 375,000(b)
8,100 AMFM, Inc. 558,900(b)
46,200 Cox Radio, Inc., Class A 1,293,600
19,900 Echostar Communications Corp.,
Class A 658,877
40,800 Emmis Communications Corp.,
Class A 1,688,100
33,200 Hispanic Broadcasting Corp. 1,099,750(b)
17,900 Infinity Broadcasting Corp.,
Class A 652,231(b)
23,000 Radio One, Inc. 679,938(b)
46,000 Radio One, Inc., Class D 1,014,875(b)
13,300 Sirius Satellite Radio, Inc. 589,356(b)
20,800 Univision Communications,
Inc., Class A 2,152,800(b)
26,000 USA Networks, Inc. 562,250
20,200 Westwood One, Inc. 689,325
--------------
12,015,002
--------------
Chemicals - 0.1%
24,900 Cytec Industries, Inc. 614,719
--------------
Communications
Equipment - 6.9%
500 Accelerated Networks, Inc. 21,094(b)
85,989 ADC Telecommunications, Inc. 7,212,327
32,000 Advanced Fibre
Communications 1,450,000(b)
78,800 American Tower Corp., Class A 3,284,975(b)
39,200 ANTEC Corp. 1,629,250(b)
48,100 Cable Design
Technologies Corp. 1,611,350(b)
11,400 CIENA Corp. 1,900,238(b)
12,600 CommScope, Inc. 516,600(b)
28,000 Comverse Technology, Inc. 2,604,000
44,450 Digital Microwave Corp. 1,694,656(b)
33,900 Harris Corp. 1,110,225
45,800 Motient Corp. 718,488(b)
18,600 Netro Corp. 1,067,175(b)
13,800 Polycom, Inc. 1,298,494(b)
14,900 Research in Motion, Ltd. 674,225(b)
36,300 Sawtek, Inc. 2,089,519(b)
24,000 Scientific-Atlanta, Inc. 1,788,000
16,500 Sycamore Networks, Inc. 1,821,188(b)
--------------
32,491,804
--------------
Computers - Hardware - 1.6%
21,900 Copper Mountain
Networks, Inc. 1,929,938(b)
27,400 Electronics for Imaging, Inc. 693,563(b)
16,200 Extreme Networks, Inc. 1,709,100(b)
10,600 Gateway, Inc. 601,550(b)
2,450 Handspring, Inc. 66,150(b)
26,000 National Instruments Corp. 1,134,250(b)
30,600 Paradyne Networks, Inc. 996,413(b)
6,020 Sun Microsystems, Inc. 547,444
--------------
7,678,408
--------------
Computers -
Networking - 0.2%
14,000 Network Appliance, Inc. 1,127,000
--------------
Computers -
Peripherals - 0.4%
9,100 CacheFlow, Inc. 560,219(b)
12,400 EMC Corp. 954,025(b)
6,700 SanDisk Corp. 409,956(b)
--------------
1,924,200
--------------
Computers - Software &
Services - 11.6%
5,700 Adobe Systems, Inc. 741,000
30,900 Advent Software, Inc. 1,993,050
11,600 Affiliated Computer
Services, Inc., Class A 383,525(b)
10,900 Amdocs, Ltd. 836,575(b)
29,300 Aware, Inc. 1,497,963(b)
64,000 BEA Systems, Inc. 3,164,000
14,700 BroadVision, Inc. 746,944
8,400 Check Point Software
Technologies Ltd. 1,778,700(b)
41,620 Citrix Systems, Inc. 788,179
36,000 Cognos, Inc. 1,489,500
14,900 Critical Path, Inc. 868,856(b)
6,500 Electronic Arts, Inc. 474,094(b)
30,900 Entrust Technologies, Inc. 2,556,975(b)
29,600 Exchange Applications, Inc. 788,100
19,600 Exodus Communications, Inc. 902,825
6,800 HNC Software, Inc. 419,900(b)
16,900 I-2 Technologies, Inc. 1,762,089
19,300 Interwoven, Inc. 2,122,698
13,100 Intuit, Inc. 542,013(b)
35,500 J.D. Edwards & Co. 534,719(b)
26,700 Kana Communications, Inc. 1,652,063(b)
11,900 Lycos, Inc. 642,600(b)
14,200 Mercury Interactive Corp. 1,373,850
11,600 Micromuse, Inc. 1,919,619
36,400 Portal Software, Inc. 2,325,050(b)
59,000 Progress Software Corp. 1,058,313
34,700 Rational Software Corp. 3,224,931(b)
32,800 Remedy Corp. 1,828,600(b)
33,700 RSA Security, Inc. 2,333,725(b)
25,420 Siebel Systems, Inc. 4,157,759
10,600 SmartForce Public
Limited Co., ADR 508,800(b)
17,500 Symantec Corp. 943,906(b)
28,900 TenFold Corp. 475,044(b)
13,600 VeriSign, Inc. 2,400,400
46,600 Veritas Software Corp. 5,266,528
12,000 Vignette Corp. 624,188
--------------
55,127,081
--------------
Construction - 0.6%
36,300 Martin Marietta Materials 1,467,881
24,500 Southdown, Inc. 1,414,875
--------------
2,882,756
--------------
Consumer Finance - 1.1%
54,150 Metris Companies, Inc. 1,360,519
40,800 PMI Group 1,938,000
20,000 Providian Financial Corp. 1,800,000
--------------
5,098,519
--------------
Distributors - Food &
Health - 0.3%
18,400 Andrx Corp. 1,176,163
--------------
Electrical Equipment - 3.2%
31,360 American Power
Conversion Corp. 1,279,880(b)
9,800 Amphenol Corp., Class A 648,638
6,000 Black Box Corp. 475,031(b)
5,200 Electro Scientific Industries, Inc. 228,963
32,259 Flextronics International, Ltd. 2,215,790
13,400 KEMET Corp. 335,838(b)
19,100 Sanmina Corp. 1,633,050
38,600 SCI Systems, Inc. 1,512,638
26,500 Solectron Corp. 1,109,688
16,400 SPX Corp. 1,983,375(b)
37,552 Symbol Technologies, Inc. 2,027,808
46,200 Vishay Intertechnology, Inc. 1,752,713(b)
--------------
15,203,412
--------------
Electronics - 12.3%
40,100 Altera Corp. 4,087,694(b)
39,100 Amkor Technologies, Inc. 1,380,719(b)
40,400 Analog Devices, Inc. 3,070,400
12,600 Applied Micro Circuits Corp. 1,244,250
40,200 Arrow Electronics, Inc. 1,246,200(b)
13,800 Atmel Corp. 508,875
19,700 Avnet, Inc. 1,167,225
12,200 Broadcom Corp., Class A 2,671,038
12,250 Burr-Brown Corp. 1,061,922
21,200 Conexant Systems, Inc. 1,030,850
14,700 Credence Systems Corp. 811,256(b)
25,800 Cypress Semiconductor Corp. 1,090,050(b)
12,400 Cytyc Corp. 661,850
1,100 E-TEK Dynamics, Inc. 290,194(b)
30,600 Fairchild Semiconductor
International Corp., Class A 1,239,300(b)
30,400 Integrated Device
Technology, Inc. 1,820,200(b)
20,560 JDS Uniphase Corp. 2,464,630
16,200 Lattice Semiconductor Corp. 1,119,825(b)
25,720 Linear Technology Corp. 1,644,473
20,400 LSI Logic Corp. 1,104,150
1,750 Marvell Technology Group, Ltd. 99,750(b)
35,940 Maxim Integrated Products, Inc. 2,441,674
15,800 Micrel, Inc. 686,313(b)
33,385 Microchip Technology, Inc. 1,945,198
26,700 National Semiconductor Corp. 1,515,225(b)
12,300 PMC-Sierra, Inc. 2,185,556
16,600 QLogic Corp. 1,096,638
10,100 RF Micro Devices, Inc. 885,013(b)
14,700 Rudolph Technologies, Inc. 569,625(b)
11,450 SCG Holding Corp. 250,469(b)
7,700 SDL, Inc. 2,195,944
13,300 Stanford Microdevices, Inc. 577,719(b)
4,550 Stratos Lightwave, Inc. 126,831(b)
34,700 Tektronix, Inc. 2,567,800
29,700 Therma-Wave, Inc. 662,681(b)
11,600 TriQuint Semiconductor, Inc. 1,109,975
30,200 Virata Corp. 1,800,675(b)
34,700 Vitesse Semiconductor Corp. 2,552,619
22,920 Waters Corp. 2,860,703(b)
30,120 Xilinx, Inc. 2,486,783
--------------
58,332,292
--------------
Engineering &
Construction - 0.9%
55,850 Dycom Industries, Inc. 2,569,100
14,550 MasTec, Inc. 555,628(b)
21,000 Quanta Services, Inc. 1,155,000
--------------
4,279,728
--------------
Equipment -
Semiconductors - 1.9%
21,940 KLA Instruments Corp. 1,284,861
28,400 Kulicke & Soffa Industries, Inc. 1,686,250(b)
49,600 LAM Research Corp. 1,860,000
25,570 Novellus Systems, Inc. 1,446,303
52,700 Photronic, Inc. 1,495,363(b)
18,400 Teradyne, Inc. 1,352,400(b)
--------------
9,125,177
--------------
Financial - Diversified - 1.2%
75,500 Ace, Ltd. 2,114,000
41,300 AMBAC Financial Group, Inc. 2,263,756
55,300 InterCept Group, Inc. 940,100(b)
13,000 SLM Holding Corp. 486,688
--------------
5,804,544
--------------
Food & Beverage - 1.1%
30,300 American Italian Pasta Co.,
Class A 626,831(b)
27,400 International Home Foods, Inc. 573,688(b)
60,200 Keebler Foods Co. 2,234,925
32,300 Suiza Foods Corp. 1,578,663(b)
--------------
5,014,107
--------------
Freight & Shipping - 0.8%
41,380 Expeditors International of
Washington, Inc. 1,965,550
20,100 Iron Mountain, Inc. 683,400(b)
10,700 Kansas City Southern
Industries, Inc. 948,956
--------------
3,597,906
--------------
Gold & Precious Metals
Mining - 0.1%
13,800 Stillwater Mining Co. 384,675(b)
--------------
Health Care -
Diversified - 0.9%
33,000 Allergan, Inc. 2,458,500
48,300 IVAX Corp. 2,004,450
--------------
4,462,950
--------------
Health Care - Drugs &
Pharmaceuticals - 4.8%
36,600 Alpharma, Inc., Class A 2,278,350
32,500 Alza Corp. 1,921,563(b)
35,300 Biovail Corp. 1,956,944(b)
25,400 Catalyca, Inc. 279,400(b)
38,300 Elan Corp. plc, ADR 1,855,156(b)
23,740 Forest Laboratories, Inc. 2,397,740(b)
15,500 ICN Pharmaceuticals, Inc. 431,094
34,100 Jones Pharma, Inc. 1,361,869
47,400 King Pharmaceuticals, Inc. 2,079,675(b)
29,750 Mylan Laboratories, Inc. 542,938
5,500 QLT Photo Therapeutics, Inc. 425,219(b)
10,200 Sepracor, Inc. 1,230,375(b)
49,900 Teva Pharmaceutical Industries,
Ltd., ADR 2,766,331
18,500 Titan Pharmaceuticals, Inc. 795,500(b)
42,180 Watson Pharmaceuticals, Inc. 2,267,175(b)
--------------
22,589,329
--------------
Health Care - Medical
Products & Supplies - 1.7%
54,000 Aradigm Corp. 945,000(b)
44,000 Becton, Dickinson & Co. 1,262,250
52,630 Biomet, Inc. 2,022,966
9,900 MiniMed, Inc. 1,168,200(b)
13,900 PE Corp./PE Biosystems Group 915,663
14,400 Stryker Corp. 630,000
46,100 Sybron Corp. 913,356(b)
--------------
7,857,435
--------------
Health Care
Management - 1.6%
115,675 Health Management
Associates, Inc., Class A 1,511,005(b)
64,900 Tenet Healthcare Corp. 1,752,300
56,970 Trigon Healthcare, Inc. 2,937,516(b)
21,700 Wellpoint Health Networks,
Inc., Class A 1,571,894(b)
--------------
7,772,715
--------------
Health Care Services - 0.4%
35,600 CuraGen Corp. 1,355,025(b)
22,600 Renal Care Group, Inc. 552,641(b)
--------------
1,907,666
--------------
Household Furnishings &
Appliances - 0.1%
26,460 Leggett & Platt, Inc. 436,590
--------------
Insurance - 0.6%
26,400 Protective Life Corp.,
Capital Trust II 702,900
37,300 Radian Group, Inc. 1,930,275
--------------
2,633,175
--------------
Investment Banking &
Brokerage - 1.0%
48,800 A.G. Edwards, Inc. 1,903,200
40,100 Legg Mason, Inc. 2,005,000
30,450 Waddell & Reed Financial, Inc.,
Class A 999,141
--------------
4,907,341
--------------
Leisure Products - 0.3%
30,820 Harley Davidson, Inc. 1,186,570
--------------
Machinery -
Diversified - 0.3%
34,130 Mettler-Toledo International, Inc. 1,365,200(b)
--------------
Manufacturing - 1.8%
10,600 Danaher Corp. 524,038
45,800 Diebold, Inc. 1,276,675
67,400 Jabil Circuit, Inc. 3,344,725
39,200 Millipore Corp. 2,954,700
16,900 Pentair, Inc. 599,950
--------------
8,700,088
--------------
Oil & Gas - 6.6%
51,500 Apache Corp. 3,028,844
36,460 BJ Services Co. 2,278,750(b)
16,300 Cooper Cameron Corp. 1,075,800(b)
26,600 Core Laboratories N.V. (USD) 771,400(b)
39,800 Devon Energy Corp. 2,236,263
46,300 Diamond Offshore Drilling, Inc. 1,626,288
71,920 ENSCO International, Inc. 2,575,635
96,400 EOG Resources, Inc. 3,229,400
41,500 Nabors Industries, Inc. 1,724,844(b)
13,000 Newfield Exploration Co. 508,625(b)
33,300 Noble Drilling Corp. 1,371,544(b)
17,700 Occidental Petroleum Corp. 372,806
16,800 Precision Drilling Corp. 648,900(b)
56,900 Rowan Companies, Inc. 1,728,338(b)
14,000 Santa Fe International Corp. 489,125
10,790 Smith International, Inc. 785,647(b)
57,300 Tidewater, Inc. 2,062,800
45,150 Tosco Corp. 1,278,309
31,200 Transocean Sedco Forex, Inc. 1,667,250
47,140 Weatherford International, Inc. 1,876,761(b)
--------------
31,337,329
--------------
Paper & Forest
Products - 0.3%
30,890 Bowater, Inc. 1,363,021
--------------
Publishing - 0.3%
12,700 Reader's Digest Association, Inc.,
Class A 504,825
13,300 Scholastic Corp. 812,963(b)
--------------
1,317,788
--------------
Restaurants - 0.7%
70,740 Darden Restaurants, Inc. 1,149,525
55,000 Outback Steakhouse, Inc. 1,608,750(b)
12,800 Starbucks Corp. 488,800(b)
--------------
3,247,075
--------------
Retail - 3.0%
24,900 Bed, Bath & Beyond, Inc. 902,625(b)
49,780 BJ's Wholesale Club, Inc. 1,642,740(b)
9,500 Circuit City Stores, Inc. 315,281
60,900 Dollar Tree Stores, Inc. 2,409,356(b)
40,800 Family Dollar Stores, Inc. 798,150
40,700 Insight Enterprise, Inc. 2,414,019(b)
82,400 Intimate Brands, Inc. 1,627,400
39,100 Men's Wearhouse, Inc. 872,419(b)
41,850 Ross Stores, Inc. 714,066
26,100 Tiffany & Co. 1,761,750
22,600 Zale Corp. 824,900(b)
--------------
14,282,706
--------------
Retail - Food & Drug - 0.3%
36,100 Whole Foods Market, Inc. 1,491,381(b)
--------------
Services - 0.7%
51,400 Manpower, Inc. 1,644,800
59,400 Modis Professional Services, Inc. 527,175(b)
33,400 Robert Half International, Inc. 951,900(b)
--------------
3,123,875
--------------
Services - Cyclical - 4.5%
62,400 Acxiom Corp. 1,700,400(b)
56,600 Cerner Corp. 1,542,350(b)
42,900 Cintas Corp. 1,573,894
66,600 Convergys Corp. 3,454,875(b)
63,800 Crown Castle International Corp. 2,328,700(b)
19,750 Diamond Technology
Partners, Inc. 1,738,000(b)
22,100 Forrester Research, Inc. 1,609,156(b)
20,500 Gemstar International
Group, Ltd. 1,259,789(b)
18,600 Lamar Advertising Co. 805,613(b)
25,150 St Assembly Test Services,
Ltd., ADR 647,613(b)
26,000 TMP Worldwide, Inc. 1,919,125
38,100 True North
Communications, Inc. 1,676,400
19,300 Viad Corp. 525,925
10,020 Young & Rubicam, Inc. 573,019
--------------
21,354,859
--------------
Services - Technology - 3.3%
15,200 Bisys Group, Inc. 934,800(b)
21,400 Comdisco, Inc. 477,488
53,925 Concord EFS, Inc. 1,402,050(b)
41,000 CSG Systems International, Inc. 2,298,563(b)
23,300 DST Systems, Inc. 1,773,713(b)
60,410 Fiserv, Inc. 2,612,733(b)
38,300 MedQuist, Inc. 1,302,200(b)
34,500 NOVA Corp. 963,844(b)
47,755 Paychex, Inc. 2,005,710
66,130 SunGard Data Systems, Inc. 2,050,030(b)
--------------
15,821,131
--------------
Telephone &
Telecommunications - 2.6%
29,600 Broadwing, Inc. 767,750(b)
27,010 CenturyTel, Inc. 776,538
42,900 FLAG Telecom Holdings, Ltd. 638,138(b)
23,800 ICG Communications, Inc. 525,088(b)
34,100 Intermedia Communications of
Florida, Inc. 1,014,475(b)
35,000 ITC DeltaCom, Inc. 780,938(b)
43,200 McLeodUSA, Inc. 893,700
11,800 NEXTLINK
Communications, Inc. 447,663(b)
42,200 Primus Telecomm Group, Inc. 1,049,725(b)
18,300 Telephone and Data
Systems, Inc. 1,834,575
8,870 VoiceStream Wireless Corp. 1,031,553(b)
16,270 Western Wireless Corp.,
Class A 886,715(b)
43,350 WinStar Communications, Inc. 1,468,481
--------------
12,115,339
--------------
Textiles - 0.6%
72,380 Jones Apparel Group, Inc. 1,700,930(b)
31,200 Liz Claiborne 1,099,800
--------------
2,800,730
--------------
Utilities - 1.7%
30,360 AES Corp. 1,385,175(b)
17,600 Calpine Corp. 1,157,200(b)
20,500 CMS Energy Corp. 453,563
33,000 DQE, Inc. 1,303,500
31,700 Dynegy, Inc. 2,165,506
6,400 Florida Progress Corp. 300,000
42,000 Montana Power Co. 1,483,125
--------------
8,248,069
--------------
Waste Management - 0.1%
43,300 Republic Services, Inc.,
Class A 692,800(b)
--------------
Total Common Stocks
(cost $363,631,154) 435,392,291
--------------
Principal
Amount
------------
SHORT-TERM
SECURITIES - 8.1% (a)
Commercial Paper
$ 2,300,000 Alcoa, Inc., 6.55%
Due 7/5/2000 2,298,326
575,000 Bestfoods Corp., 6.58%
Due 7/14/2000 573,634
22,700,000 General Electric
Capital Corp., 6.95%
Due 7/5/2000 22,682,471
4,000,000 Merck & Co., Inc., 6.7%
Due 7/7/2000 3,995,533
5,000,000 New Center Asset Trust, 7.04%
Due 7/3/2000 4,998,044
1,500,000 Pfizer, Inc., 6.75%
Due 7/5/2000 1,498,875
2,500,000 Preferred Receivables
Funding Corp., 6.58%
Due 7/6/2000 2,497,715
Total Commercial Paper
(at amortized cost) 38,544,598
--------------
Total Investments
(cost $402,175,752) $ 473,936,889(c)
==============
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) At June 30, 2000, the aggregate cost of securities for federal income tax
purposes was $402,175,752 and the net unrealized appreciation of investments
based on that cost was $71,761,137 which is comprised of $97,974,993 aggregate
gross unrealized appreciation and $26,213,856 aggregate gross unrealized
depreciation.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
World Growth Portfolio
Portfolio of Investments
June 30, 2000
(unaudited)
Shares Value
------------- --------------
<S> <C> <C>
ARGENTINA - 0.1% (a)
COMMON STOCKS
16,470 Telefonica de Argentina
ADR (USD) $ 522,913
--------------
AUSTRALIA - 2.4% (a)
COMMON STOCKS
55,000 Brambles Industries Ltd. 1,688,582
100,084 Commonwealth Bank
of Australia 1,657,391
62,708 Lend Lease Corp. 799,104
230,831 News Corp. Ltd. 3,175,115
66,000 Telstra Corp. 149,991
372,398 Telstra Corp. Ltd. 1,509,992
--------------
8,980,175
--------------
PREFERRED STOCKS
456,696 News Corp. Ltd. 5,507,607
--------------
Total Australia 14,487,782
--------------
BELGIUM - 0.6% (a)
COMMON STOCKS
9,478 Credit Communal
Holding/Dexia 1,398,017
70,249 Fortis 'B' 2,044,195
6,420 UCB SA 235,851
--------------
Total Belgium 3,678,063
--------------
BRAZIL - 2.4% (a)
COMMON STOCKS
24,000 Embratel Participacoes SA 567,000
12,602 Tele Sudeste Celular
Participacoes S.A. 384,361
66,011 Telecomunicacues Brasilieras
SA ADR (USD) 6,411,318
63,011 Telesp - Telecomunicacoes
de Sao Paulo S.A. 1,165,704
19,000 Unibanco - Uniao de Bancos
Brasileiros SA GDR (USD) 546,250
--------------
9,074,633
--------------
PREFERRED STOCKS
5,931,000 Banco Itau SA 521,244
128,490 Petroleo Brasileiro
SA - Petrobras 3,882,842
23,702,000 Telesp Celular
Participacoes S.A. 428,436(b)
--------------
Total Brazil 13,907,155
--------------
CANADA - 1.2% (a)
COMMON STOCKS
19,880 Alcan Aluminum 617,892
69,062 Celestica Inc. 3,427,202(b)
34,560 Nortel Networks Corp. 2,398,184
9,330 Royal Bank of Canada 477,532
--------------
Total Canada 6,920,810
--------------
DENMARK - 0.1% (a)
COMMON STOCKS
12,254 Teledanmark 824,700
--------------
FINLAND - 2.9% (a)
COMMON STOCKS
334,100 Nokia Oyj 17,048,701
--------------
FRANCE - 12.4% (a)
COMMON STOCKS
114,585 Alcatel 7,515,392
4,500 Altran Technologies SA 881,141
9,182 Aventis SA 658,331
74,447 Aventis SA 5,433,652
45,529 AXA 7,171,982
58,540 Banque Nationale De Paris 5,633,527
3,030 Canal Plus 509,123
10,160 Cap Gemini SA 1,789,605
8,132 Carrefour 555,875
11,810 Cie de St. Gobain 1,596,542
3,200 Group Danone 424,651
6,670 Hermes International 901,051
3,101 Lafarge Coppee 240,987
10,109 Legrand 2,268,001
804 L'Oreal 696,194
88,606 Sanofi-Synthelabo 4,221,150
9,350 Schneider SA 651,631
16,516 Societe Generale 993,373
120,600 Societe Television Francaise 1 8,404,992
4,041 Sodexho 733,009
54,324 STMicroeletronics NV 3,422,968
62,357 Total 'B' 9,560,880
101,113 Vivendi 8,924,441
--------------
Total France 73,188,498
--------------
GERMANY - 4.8% (a)
COMMON STOCKS
9,700 Allianz AG 3,484,762
16,722 Bayer AG 652,629
63,356 Bayerische Vereinsbank AG 4,092,483
47,516 Deutsche Bank AG 3,910,338
55,185 Deutsche Telekom AG 3,150,572
24,877 Gehe AG 819,378
40,278 Infineon Technologies AG 3,174,330(b)
9,148 Rhoen Klinikum AG 362,444
34,320 SAP AG 5,127,772
6,183 Siemens AG 932,660
41,465 Veba AG 1,999,126
--------------
27,706,494
--------------
PREFERRED STOCKS
2,130 SAP AG 393,891
--------------
Total Germany 28,100,385
--------------
HONG KONG - 3.6% (a)
COMMON STOCKS
274,000 Cheung Kong Holdings Ltd. 3,013,982
624,000 China Telecom Ltd. 5,503,175
856,000 China Unicom Limited 1,806,324
273,000 Doa Heng Bank Ltd. 1,208,197
252,000 Henderson Land
Development Ltd. 1,108,794
480,800 Hong Kong
Telecommunications Ltd. 1,060,838
393,200 Hutchison Whampoa 4,943,057
979,000 Pacific Century Cyberworks Ltd. 1,934,013(b)
69,000 Sun Hung Kai Properties Ltd. 495,671
--------------
Total Hong Kong 21,074,051
--------------
INDIA - 0.2% (a)
COMMON STOCKS
80,291 ICICI Limited 1,505,456
--------------
IRELAND - 0.2% (a)
COMMON STOCKS
28,507 SmartForce plc 1,368,336(b)
--------------
ITALY - 5.8% (a)
COMMON STOCKS
157,000 Alleanza Assicurazioni 2,090,937
594,177 Credito Italiano SpA 2,841,978
515,491 Ente Nazionale Idrocarburi 2,977,444
22,477 Instituto Bancario San
Paolo di Torino 398,919
72,000 Mediaset SpA 1,099,815
146,645 Mediolanum SpA 2,385,635
254,200 Tecnost 958,605
753,400 Telecom Italia Mobile SpA 7,696,203
382,903 Telecom Italia SpA 5,264,030
1,237,105 Banca Intesa SpA 5,539,193
360,000 Bipop-Carire SpA 2,832,023
--------------
Total Italy 34,084,782
--------------
JAPAN - 19.9% (a)
COMMON STOCKS
33,000 Bridgestone Corp. 698,223
173,000 Canon 8,608,831
93 DDI Corp. 894,020
124 East Japan Railway 719,891
22,300 Fanuc Co. 2,267,725
505,000 Fuji Bank Ltd. 3,836,106
218 Fuji Television Network Inc. 3,410,584
112,000 Fujitsu Ltd. 3,873,899
68,000 Hitachi 980,538
18,000 Ito-Yokado Co. 1,082,324
33,000 Kao Corp. 1,007,681
44,000 Kokuyo Co. Ltd. 721,135
44,000 Kyocera 7,460,158
56,000 Makita Corp. 533,585
99,000 Marui Co. Ltd. 1,894,067
203,000 Matsushita Electric
Industrial Co. 5,261,298
285,000 Mitsui Fudosan 3,088,921
52,000 Murata Manufacturing 7,459,027
249,000 NEC Corp. 7,814,618
664 Nippon Telegraph &
Telecom Corp. 8,823,713
221,000 Nomura Securities Co. Ltd. 5,404,976
223 NTT Mobile Communication
Network Inc. 6,031,855
63,000 Sankyo Co. 1,422,035
37,000 Seven-Eleven Japan Co. Ltd. 3,093,068
38,300 Shin-Etsu Chemical Co. Ltd. 1,941,982
82,000 Shiseido Co. Ltd. 1,267,424
9,500 Softbank Corp. 1,289,289
76,400 Sony Corp. 7,128,411
303,000 Sumitomo Bank Ltd. 3,712,361
143,000 Sumitomo Corp. 1,607,832
45,000 Sumitomo Electric
Industries Ltd. 771,029
19,000 TDK Corp. 2,728,995
565,000 Toshiba Corp. 6,373,922
77,000 Yamanouchi Pharmaceutical
Co. Ltd. 4,201,781
--------------
Total Japan 117,411,304
--------------
LUXEMBOURG - 0.1% (a)
COMMON STOCKS
2,714 Societe Europeenne
des Satellites 456,026
--------------
MEXICO - 2.1% (a)
COMMON STOCKS
84,500 Grupo Televisa GDR (USD) 5,825,219(b)
111,870 Telefonos de Mexico 'L'
ADS (USD) 6,390,575
42,000 Grupo Iusacell SA de CV 656,250(b)
--------------
Total Mexico 12,872,044
--------------
NETHERLANDS - 6.6% (a)
COMMON STOCKS
26,056 ABN Amro Holdings NV 638,310
5,460 Akzo Nobel NV 231,964
28,918 CSM NV 568,725
19,303 Equant NV 784,320(b)
97,590 Fortis (NL) NV 2,840,729
104,472 ING Groep NV 7,061,554
35,260 KPN NV 1,577,099
64,518 Royal Dutch Petroleum Co. 4,009,858
8,490 TNT Post Groep NV 228,978
44,892 United Pan-Europe
Communications NV 1,173,892(b)
121,420 VNU NV 6,271,257
67,810 Wolters Kluwer 1,806,197
102,790 ASM Lithography
Holdings NV 4,417,977(b)
155,340 Philips Electronics NV 7,326,176
--------------
Total Netherlands 38,937,036
--------------
NEW ZEALAND - 0.2% (a)
COMMON STOCKS
273,000 Telecom Corp. of
New Zealand 954,079
--------------
NORWAY - 0.2% (a)
COMMON STOCKS
63,980 Orkla 'A' ASA 1,215,400
--------------
PORTUGAL - 0.1% (a)
COMMON STOCKS
36,663 Jeronimo Martins 604,138
--------------
SINGAPORE - 0.4% (a)
COMMON STOCKS
342,112 United Overseas Bank 2,238,486
--------------
SOUTH KOREA - 0.6% (a)
COMMON STOCKS
53,991 Korea Equity Fund (USD) 759,248
46,400 Korea Telecom 2,244,600
14,389 Pohang Iron & Steel
ADR (USD) 345,336
--------------
Total South Korea 3,349,184
--------------
SPAIN - 3.1% (a)
COMMON STOCKS
281,234 Banco Bilboa Vizcaya SA 4,201,935
332,057 Banco Santander
Central Hispano 3,503,015
149,964 Endesa SA 2,904,933
82,990 Repsol SA 1,651,958
286,241 Telefonica SA 6,148,674
--------------
Total Spain 18,410,515
--------------
SWEDEN - 3.1% (a)
COMMON STOCKS
14,370 Atlas Copco AB 'B' 268,827
58,825 Electrolux AB 'B' 910,387
90,600 Hennes & Mauritz AB 1,890,068
404,501 Nordbanken Holding AB 3,049,809
216,408 Securitas AB 4,588,242
57,295 Nordic Baltic Holding
(NBH) AB 417,853(b)
17,120 Sandvik AB 359,093
385,360 Telefonaktiebolaget LM
Ericsson AB 7,624,186
--------------
Total Sweden 19,108,465
--------------
SWITZERLAND - 4.4% (a)
COMMON STOCKS
21,397 ABB AG 2,561,003
12,848 ABB Ltd. 1,488,737
7,927 Adecco SA 6,735,010
12,950 Credit Suisse Group 2,576,028
3,015 Nestle SA 6,034,436
169 Roche Holdings AG 1,645,142
1,832 Swisscom AG 634,512
28,556 UBS AG 4,183,709
--------------
Total Switzerland 25,858,577
--------------
TAIWAN - 0.4% (a)
COMMON STOCKS
39,937 Hon Hai Precision Industry
Co. Ltd. GDR (USD) 992,434
266,000 Taiwan Semiconductor
Manufacturing Company Ltd. 1,263,987(b)
--------------
Total Taiwan 2,256,421
--------------
UNITED KINGDOM - 18.3% (a)
COMMON STOCKS
66,000 Abbey National plc 788,930
98,179 AstraZeneca Group plc 4,582,910
176,000 Baltimore Technologies plc 1,331,528(b)
63,012 BG Group plc 407,116
282,000 BP Amoco plc (USD) 2,705,241
469,100 Cable & Wireless 7,942,607
250,650 Cadbury Schweppes 1,645,982
77,000 Celltech Group plc 1,491,311(b)
112,800 Centrica 376,344
439,000 Compass Group plc 5,782,303
97,000 David S. Smith 235,303
79,000 Electrocomponents 806,860
18,000 GKN plc 229,598
391,200 Glaxo Wellcome 11,406,387
43,000 Hays 239,758
151,200 HSBC Holdings plc 1,731,076
240,000 Kingfisher 2,184,311
169,600 Marconi plc 2,206,947
783,000 Reed International plc 6,812,353
530,400 Royal Bank of
Scotland Group plc 8,876,182
164,000 RTZ 2,680,002
1,066,000 Shell Transport & Trading Co. 8,895,498
478,800 SmithKline Beecham plc 6,266,684
153,000 Standard Chartered plc 1,905,280
329,800 Tesco 1,025,487
560,008 Tomkins 1,819,680
243,642 Unilever 1,474,619
84,300 United News & Media 1,211,766
3,893,365 Vodafone AirTouch plc 15,729,102
382,000 WPP Group plc 5,577,739
--------------
Total United Kingdom 108,368,904
--------------
Principal
Amount
------------
SHORT-TERM
SECURITIES - 3.8% (a)
Commercial Paper
$ 2,000,000 Associates Corp. of
North America, 6.85%
Due 7/3/2000 1,999,239
13,700,000 Electronic Data Systems Corp.,
6.92% Due 7/5/2000 13,689,466
7,000,000 Merck and Co. Inc., 6.7%
Due 7/7/2000 6,992,183
--------------
Total Short-Term Securities
(at amortized cost) 22,680,888
--------------
Total Investments
(cost $464,999,229) $ 591,433,096(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:
% of
Cost Value Portfolio
------------ ------------ ---------
Common Stocks
& Warrants $433,216,549 $558,018,188 94.4%
Preferred Stocks 9,101,792 10,734,020 1.8%
Short-Term 22,680,888 22,680,888 3.8%
------------ ------------ --------
Total Investments $464,999,229 $591,433,096 100.0%
============ ============ ========
(d) At June 30, 2000, the aggregate cost of securities for federal income tax
purposes was $464,999,229 and the net unrealized appreciation of investments
based on that cost was $126,433,867 which is comprised of $142,996,027
aggregate gross unrealized appreciation and $16,562,160 aggregate gross
unrealized depreciation.
(e) Miscellaneous Footnotes:
(ADR) - American Depository Receipts
(GDR) - Global Depository Receipts
(USD) - Denominated in U.S. Dollars
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
Growth Portfolio
Portfolio of Investments
June 30, 2000
(unaudited)
Shares Value
------------- --------------
<S> <C> <C>
COMMON STOCKS - 93.9% (a)
Aerospace & Defense - 0.2%
275,000 Boeing Co. 11,498,411
--------------
Airlines - 0.2%
48,800 Alaska Air Group, Inc. 1,323,700(b)
80,000 Delta Air Lines, Inc. 4,045,000
111,900 Northwest Airlines Corp.,
Class A 3,405,956(b)
--------------
8,774,656
--------------
Automotive - 0.4%
228,200 Ford Motor Co. 9,812,600
163,400 Lear Corp. 3,268,000(b)
400,000 Tower Automotive, Inc. 5,000,000(b)
29,879 Visteon Corp. 362,282
--------------
18,442,882
--------------
Banks - 2.6%
250,000 Bank of America Corp. 10,750,000
550,000 Bank of New York Co., Inc. 25,575,000
270,000 Bank United Corp., Class A 9,500,625
500,000 Chase Manhattan Corp. 23,031,250
215,300 Compass Bancshares, Inc. 3,673,556
469,591 FleetBoston Financial Corp. 15,966,094
112,700 State Street Corp. 11,953,244
100,000 TCF Financial Corp. 2,570,313
171,500 UnionBanCal Corp. 3,183,469
569,700 U.S. Bancorporation 10,966,725
477,300 Wells Fargo & Co. 18,495,375
--------------
135,665,651
--------------
Biotechnology - 1.8%
328,500 Amgen, Inc. 23,077,125
289,900 Biogen, Inc. 18,698,550(b)
195,300 Genzyme Corp. 11,608,144(b)
50,000 Human Genome Sciences, Inc. 6,668,750
220,100 Immunex Corp. 10,881,194
54,400 Invitrogen Corp. 4,091,050(b)
270,000 MedImmune, Inc. 19,980,000(b)
--------------
95,004,813
--------------
Broadcasting - 3.0%
245,000 AMFM, Inc. 16,905,000(b)
1,648,216 AT&T Corp./Liberty Media
Group, Class A 39,969,238
230,000 Cablevision Systems Corp.,
Class A 15,611,250(b)
366,000 Charter Communications, Inc.,
Class A 6,016,125(b)
325,000 Clear Channel
Communications, Inc. 24,375,000(b)
550,000 Comcast Corp., Class A 22,275,000(b)
181,300 Echostar Communications
Corp., Class A 6,002,730
435,050 Infinity Broadcasting Corp.,
Class A 15,852,134(b)
600,000 USA Networks, Inc. 12,975,000
--------------
159,981,477
--------------
Chemicals - 0.3%
210,000 Dow Chemical Co. 6,339,375
260,000 Praxair, Inc. 9,733,750
--------------
16,073,125
--------------
Communications
Equipment - 7.4%
550,000 ADC Telecommunications, Inc. 46,131,250
200,000 American Tower Corp., Class A 8,337,500(b)
220,000 CIENA Corp. 36,671,250(b)
280,000 Comverse Technology, Inc. 26,040,000
155,000 Corning, Inc. 41,830,625
190,000 Digital Microwave Corp. 7,243,750(b)
180,100 Ericsson (L.M.)
Telecommunications,
Class B, ADR 3,602,000
170,000 General Motors Corp., Class H 14,917,500(b)
28,600 Gilat Satellite Networks, Ltd. 1,984,125(b)
565,000 Lucent Technologies, Inc. 33,476,250
320,000 Motient Corp. 5,020,000(b)
800,000 Motorola, Inc. 23,250,000
855,000 Nokia Corp., ADR 42,696,563
601,000 Nortel Networks Corp. 41,018,250
225,000 QUALCOMM, Inc. 13,500,000
240,000 Scientific-Atlanta, Inc. 17,880,000
80,000 Sycamore Networks, Inc. 8,830,000(b)
268,200 Tellabs, Inc. 18,354,938(b)
--------------
390,784,001
--------------
Computers - Hardware - 4.3%
85,000 Alteon WebSystems, Inc. 8,505,313(b)
117,400 Apple Computer 6,148,825(b)
272,000 Compaq Computer Corp. 6,953,000
880,000 Dell Computer Corp. 43,395,000(b)
120,000 Electronics for Imaging, Inc. 3,037,500(b)
82,600 Extreme Networks, Inc. 8,714,300(b)
193,800 Gateway, Inc. 10,998,150(b)
28,950 Handspring, Inc. 781,650(b)
228,700 Hewlett Packard Co. 28,558,913
385,000 International Business
Machines Corp. 42,181,563
750,000 Sun Microsystems, Inc. 68,203,125
--------------
227,477,339
--------------
Computers - Networking - 3.6%
220,000 3Com Corp. 12,677,500(b)
204,500 Cabletron Systems, Inc. 5,163,625(b)
2,350,000 Cisco Systems, Inc. 149,371,875
186,700 Genuity, Inc. 1,709,472(b)
235,000 Network Appliance, Inc. 18,917,500
--------------
187,839,972
--------------
Computers -
Peripherals - 2.0%
1,245,0000 EMC Corp. 95,787,188(b)
107,500 Lexmark International
Group, Inc., Class A 7,229,375(b)
--------------
103,016,563
--------------
Computers - Software &
Services - 9.6%
71,400 Active Software, Inc. 5,546,888(b)
120,000 Adobe Systems, Inc. 15,600,000
475,000 America Online, Inc. 25,056,250
50,000 Ariba, Inc. 4,902,344
252,900 At Home Corp., Series A 5,247,675(b)
263,300 BEA Systems, Inc. 13,016,894
159,900 BroadVision, Inc. 8,124,919
100,000 Citrix Systems, Inc. 1,893,750
179,900 Computer Associates
International, Inc. 9,208,631
69,500 EBay, Inc. 3,774,719(b)
130,000 Entrust Technologies, Inc. 10,757,500(b)
68,150 Equant N.V. (USD) 2,930,450(b)
163,500 Etinuum, Inc. 919,688(b)
230,000 Exodus Communications, Inc. 10,594,375
93,200 FirePond, Inc. 3,355,200(b)
85,000 I-2 Technologies, Inc. 8,862,578
409,000 Informix Corp. 3,041,938(b)
90,000 InterWorld Corp. 1,845,000(b)
331,000 Intuit, Inc. 13,695,125(b)
29,800 ISS Group, Inc. 2,942,284(b)
121,500 Jacada, Ltd. 1,541,531(b)
76,000 Macromedia, Inc. 7,348,250(b)
76,350 Mercury Interactive Corp. 7,386,863
1,300,000 Microsoft Corp. 104,000,000(b)
161,500 Network Associates, Inc. 3,290,563(b)
43,750 Opus360 Corp. 161,328(b)
800,000 Oracle Corp. 67,250,000
296,700 Parametric Technology Corp. 3,263,700(b)
546,400 PeopleSoft, Inc. 9,152,200(b)
235,075 Peregrine Systems, Inc. 8,154,164
75,000 Phone.com, Inc. 4,884,375(b)
65,400 Portal Software, Inc. 4,177,425(b)
350,000 Rational Software Corp. 32,528,125(b)
121,200 SciQuest.com, Inc. 1,386,225(b)
122,500 Siebel Systems, Inc. 20,036,406
89,100 Symantec Corp. 4,805,831(b)
125,000 VeriSign, Inc. 22,062,500
315,000 Veritas Software Corp. 35,599,922
125,000 Vignette Corp. 6,501,953
70,000 Yahoo!, Inc. 8,671,250
--------------
503,518,819
--------------
Consumer Finance - 1.0%
300,000 Household International, Inc. 12,468,750
778,000 MBNA Corp. 21,103,250
225,000 Providian Financial Corp. 20,250,000
--------------
53,822,000
--------------
Electrical Equipment - 4.0%
180,000 AVX Corp. 4,128,750
485,000 Flextronics International, Ltd. 33,313,438
2,000,000 General Electric Co. 106,000,000
278,200 Koninklijke (Royal) Philips
Electronics N.V., ADR 13,214,500
116,700 Manufacturers' Services, Ltd. 2,399,644(b)
250,000 Sanmina Corp. 21,375,000(c)
126,600 SCI Systems, Inc. 4,961,138
346,600 Solectron Corp. 14,513,875
75,000 SPX Corp. 9,070,313(b)
--------------
208,976,658
--------------
Electronics - 10.3%
225,000 Agilent Technologies, Inc. 16,593,750(b)
285,000 Altera Corp. 29,052,188(b)
440,000 Analog Devices, Inc. 33,440,000
80,800 Arrow Electronics, Inc. 2,504,800(b)
245,300 Credence Systems Corp. 13,537,494(b)
1,000,000 Intel Corp. 133,687,500
545,000 JDS Uniphase Corp. 65,331,875
150,700 Lattice Semiconductor Corp. 10,417,138(b)
125,000 Linear Technology Corp. 7,992,188
360,500 LSI Logic Corp. 19,512,063
325,000 Maxim Integrated
Products, Inc. 22,079,688
245,000 Microchip Technology, Inc. 14,275,078
225,000 Micron Technology, Inc. 19,814,063
347,000 National Semiconductor Corp. 19,692,250(b)
140,000 PMC-Sierra, Inc. 24,876,250
70,700 RF Micro Devices, Inc. 6,195,088(b)
50,000 Semtech Corp. 3,824,219(b)
33,900 Sequenom Industrial
Genomics, Inc. 1,538,213(b)
75,000 STMicroelectronics N.V., ADR 4,814,063
30,550 Stratos Lightwave, Inc. 851,581(b)
150,000 Tektronix, Inc. 11,100,000
730,000 Texas Instruments, Inc. 50,141,875
338,000 Xilinx, Inc. 27,906,125
--------------
539,177,489
--------------
Entertainment - 2.2%
12,186 Acclaim Entertainment, Inc.,
Stock Warrants 0(b)
366,600 Disney (Walt) Co. 14,228,663
378,100 Fox Entertainment Group, Inc.,
Class A 11,484,788(b)
110,400 Premier Parks, Inc. 2,511,600(b)
445,000 Time Warner, Inc. 33,820,000
800,000 Viacom, Inc., Class B 54,550,000(b)
--------------
116,595,051
--------------
Equipment -
Semiconductors - 1.8%
355,000 Applied Materials, Inc. 32,171,875
109,800 Applied Science & Technology 2,841,075(b)
90,000 ASM Lithography
Holding N.V. (USD) 3,971,250(b)
460,000 KLA Instruments Corp. 26,938,750
546,400 LAM Research Corp. 20,490,000
144,100 SpeedFam-IPEC, Inc. 2,620,819(b)
195,100 Taiwan Semiconductor
Manufacturing Co. 7,572,319(b)
--------------
96,606,088
--------------
Financial - Diversified - 3.7%
437,400 Ace, Ltd. 12,247,200
640,000 American Express Co. 33,360,000
1,360,000 Citigroup, Inc. 81,940,000
350,000 Federal Home Loan
Mortgage Corp. 14,175,000
360,000 Federal National
Mortgage Association 18,787,500
157,000 Glimcher Realty Trust 2,256,875
365,000 Morgan Stanley Dean
Witter & Co. 30,386,250
--------------
193,152,825
--------------
Food & Beverage - 1.0%
346,800 Coca-Cola Co. 19,919,325
350,000 ConAgra, Inc. 6,671,875
599,400 PepsiCo, Inc. 26,635,838
--------------
53,227,038
--------------
Freight & Shipping - 0.2%
139,100 Kansas City Southern
Industries, Inc. 12,336,431
--------------
Health Care -
Diversified - 1.7%
435,000 American Home
Products Corp. 25,556,250
392,400 Bristol-Myers Squibb Co. 22,857,300
400,000 Johnson & Johnson 40,750,000
--------------
89,163,550
--------------
Health Care - Drugs &
Pharmaceuticals - 5.6%
160,600 Biovail Corp. 8,903,263(b)
300,000 Eli Lilly & Co. 29,962,500
140,000 Genentech, Inc. 24,080,000
400,000 Merck & Co., Inc. 30,650,000
2,232,950 Pfizer, Inc. 107,181,600
675,000 Pharmacia Corp. 34,889,063
450,000 Schering-Plough Corp. 22,725,000
78,000 Sepracor, Inc. 9,408,750(b)
381,300 Teva Pharmaceutical Industries,
Ltd., ADR 21,138,319
100,000 Watson Pharmaceuticals, Inc. 5,375,000(b)
--------------
294,313,495
--------------
Health Care - Medical
Products & Supplies - 1.4%
221,700 Baxter International, Inc. 15,588,281
169,700 Becton, Dickinson & Co. 4,868,269
265,000 Biomet, Inc. 10,185,938
200,000 Guidant Corp. 9,900,000(b)
480,000 Medtronic, Inc. 23,910,000
145,000 PE Corp./PE Biosystems Group 9,551,875
--------------
74,004,363
--------------
Health Care
Management - 0.9%
250,000 Healthcare (The) Corp. 7,593,750
653,700 Oxford Health Plans, Inc. 15,566,231(b)
350,200 Tenet Healthcare Corp. 9,455,400
146,500 UnitedHealth Group, Inc. 12,562,375
--------------
45,177,756
--------------
Homebuilding - 0.1%
150,900 Kaufman & Broad Home Corp. 2,989,706
--------------
Housewares & Household
Products - 0.3%
255,000 Procter & Gamble Co. 14,598,750
--------------
Insurance - 2.4%
170,900 Allstate Corp. 3,802,525
215,000 American General Corp. 13,115,000
500,000 American International
Group, Inc. 58,750,000
160,000 CIGNA Corp. 14,960,000
136,000 Lincoln National Corp. 4,913,000
170,000 Marsh & McLennan
Companies, Inc. 17,754,375
233,350 MetLife Capital Trust I 4,914,934(b)
106,500 The Hartford Financial
Services Group, Inc. 5,957,344
--------------
124,167,178
--------------
Investment Banking &
Brokerage - 1.1%
224,000 AXA Financial, Inc. 7,616,000
160,000 Donaldson, Lufkin &
Jenrette, Inc. 6,790,000
120,000 Lehman Brothers Holdings, Inc. 11,347,500
143,000 Merrill Lynch & Co., Inc. 16,445,000
100,000 PaineWebber Group, Inc. 4,550,000
379,500 Schwab, Charles Corp. 12,760,688
--------------
59,509,188
--------------
Investment
Management - 0.3%
120,000 Standard & Poor's Depositary
Receipts Trust 17,433,750
--------------
Leisure Products - 0.3%
280,000 Harley Davidson, Inc. 10,780,000
341,400 Mattel, Inc. 4,502,213
--------------
15,282,213
--------------
Lodging & Hotels - 0.3%
95,000 Carnival Corp., Inc. 1,852,500
176,700 Marriott International, Inc. 6,372,244
198,000 Starwood Hotels & Resorts 6,447,375
--------------
14,672,119
--------------
Machinery -
Diversified - 0.2%
666,200 AGCO Corp. 8,160,950
--------------
Manufacturing - 2.3%
275,000 Honeywell International, Inc. 9,264,063
150,000 Illinois Tool Works, Inc. 8,550,000
160,000 Jabil Circuit, Inc. 7,940,000
179,550 Millipore Corp. 13,533,581
100,000 Minnesota Mining &
Manufacturing Co. 8,250,000
1,193,200 Tyco International, Ltd. 56,527,850
275,000 United Technologies Corp. 16,190,625
--------------
120,256,119
--------------
Metals Mining - 0.03%
170,000 Freeport McMoRan
Copper & Gold, Class B 1,572,500(b)
--------------
Oil & Gas - 3.9%
200,000 Apache Corp. 11,762,500
93,200 Baker Hughes, Inc. 2,982,400
200,000 Diamond Offshore
Drilling, Inc. 7,025,000
246,700 ENSCO International, Inc. 8,834,944
430,000 Exxon Mobil Corp. 33,755,000
185,000 Kerr McGee Corp. 10,903,438
421,200 Marine Drilling Companies, Inc. 11,793,600(b)
198,600 Nabors Industries, Inc. 8,254,313(b)
360,000 Rowan Companies, Inc. 10,935,000(b)
195,000 Royal Dutch Petroleum Co. 12,004,688
360,000 Schlumberger, Ltd. 26,865,000
200,000 Smith International, Inc. 14,562,500(b)
150,000 Texaco, Inc. 7,987,500
324,400 Transocean Sedco Forex, Inc. 17,335,125
255,900 Unocal Corp. 8,476,688
328,700 Weatherford International, Inc. 13,086,369(b)
--------------
206,564,065
--------------
Paper & Forest
Products - 0.2%
165,000 Boise Cascade Corp. 4,269,375
150,000 Bowater, Inc. 6,618,750
--------------
10,888,125
--------------
Personal Care - 0.1%
100,000 Gillette Co. 3,493,750
--------------
Restaurants - 0.3%
260,000 McDonald's Corp. 8,563,750
245,500 Outback Steakhouse, Inc. 7,180,875(b)
--------------
15,744,625
--------------
Retail - 3.8%
400,000 Abercrombie & Fitch Co.,
Class A 4,875,000(b)
137,000 Best Buy Co., Inc. 8,665,250(b)
236,900 Circuit City Stores, Inc. 7,862,119
156,900 Family Dollar Stores, Inc. 3,069,356
262,800 Gap, Inc. 8,212,500
1,090,000 Home Depot, Inc. 54,431,875
313,200 Kohl's Corp. 17,421,750
190,000 Limited (The), Inc. 4,108,750
300,000 Lowe's Companies 12,318,750
1,000,100 Office Depot, Inc. 6,250,625(b)
647,900 PetsMart, Inc. 2,186,663(b)
102,700 Radioshack Corp. 4,865,413
137,550 Ross Stores, Inc. 2,346,947
262,700 Target Corp. 15,236,600
860,000 Wal-Mart Stores, Inc. 49,557,500
--------------
201,409,098
--------------
Retail - Food & Drug - 1.1%
400,000 CVS Corp. 16,000,000
600,000 Kroger Co. 13,237,500(b)
600,000 Safeway, Inc. 27,075,000(b)
--------------
56,312,500
--------------
Services - Cyclical - 1.4%
987,200 Cendant Corp. 13,820,800(b)
76,700 CMGI, Inc. 3,513,819
160,000 Gemstar International
Group, Ltd. 9,832,500(b)
134,300 Harris Interactive, Inc. 650,516(b)
415,000 Interpublic Group of
Companies., Inc. 17,845,000
340,000 Omnicom Group, Inc. 30,281,250
--------------
75,943,885
--------------
Services - Technology - 1.3%
235,000 Automatic Data Processing, Inc. 12,587,188
100,000 Computer Sciences Corp. 7,468,750(b)
413,300 Concord EFS, Inc. 10,745,800(b)
153,400 Electronic Data Systems Corp. 6,327,750
323,700 Equifax, Inc. 8,497,125
340,000 First Data Corp. 16,872,500
217,134 MarchFirst, Inc. 3,962,696(b)
--------------
66,461,809
--------------
Telephone &
Telecommunications - 4.8%
579,900 AT&T Corp. 18,339,338
251,000 Bell Atlantic Corp. 12,753,938
130,000 BellSouth Corp. 5,541,250
100,000 Broadwing, Inc. 2,593,750(b)
135,000 Cable & Wireless plc, ADR 6,758,438
143,600 Covad Communications
Group, Inc. 2,315,550(b)
30,000 Deutsche Telecom AG, ADR 1,702,500
84,600 FLAG Telecom Holdings, Ltd. 1,258,425(b)
100,000 Intermedia Communications of
Florida, Inc. 2,975,000(b)
120,000 ITXC Corp. 4,248,750(b)
327,500 MobileMedia Corp., Class A 655(b)
325,000 NEXTEL Communications,
Inc., Class A 19,885,938(b)
187,000 NEXTLINK
Communications, Inc. 7,094,313(b)
302,700 Primus Telecomm Group, Inc. 7,529,663(b)
325,000 Qwest Communications
International, Inc. 16,148,438(b)
471,800 SBC Communications, Inc. 20,405,350
250,000 Sprint Corp. (FON Group) 12,750,000
305,000 Sprint Corp. (PCS Group) 18,147,500
101,600 Telecomunicacoes Brasileiras
S.A., ADR 9,867,900
410,100 Vodafone AirTouch plc, ADR 16,993,519
120,000 VoiceStream Wireless Corp. 13,955,625(b)
153,400 WinStar Communications, Inc. 5,196,425
932,300 WorldCom, Inc. 42,769,263(b)
--------------
249,231,528
--------------
Utilities - 0.4%
215,000 AES Corp. 9,809,375(b)
253,300 Williams Companies., Inc. 10,559,444
--------------
20,368,819
--------------
Waste Management - 0.1%
486,500 Republic Services, Inc.,
Class A 7,784,000(b)
--------------
Total Common Stocks
(cost $3,868,456,529) 4,927,475,130
--------------
Principal
Amount
--------------
SHORT-TERM
SECURITIES - 6.1% (a)
Commercial Paper
$ 6,600,000 American Express
Credit Corp., 6.6%
Due 7/10/2000 6,589,110
12,000,000 Associates Corp. of
North America, 6.85%
Due 7/3/2000 11,995,433
10,000,000 Bestfoods Corp., 6.58%
Due 7/28/2000 9,950,650
10,500,000 Cargill, Inc., 6.92%
Due 7/5/2000 10,491,927
10,000,000 Centerior Fuel Corp., 6.75%
Due 7/17/2000 9,970,000
19,000,000 CIT Group Holdings, Inc., 7.0%
Due 7/5/2000 18,985,222
4,400,000 CXC, Inc., 6.9%,
Due 7/3/2000 4,398,313
10,000,000 Delaware Funding
Corp., 6.58%
Due 7/24/2000 9,957,961
25,000,000 ExxonMobil Australia,
Ltd., 6.72%
Due 7/7/2000 24,972,000
13,190,000 Ford Motor Credit Co., 6.54%
Due 7/10/2000 13,168,435
5,800,000 General Electric
Capital Corp., 6.54%
Due 7/13/2000 5,787,356
4,000,000 General Electric
Capital Corp., 6.6%
Due 7/5/2000 3,997,067
7,500,000 General Electric Capital
Corp., 6.95%
Due 7/5/2000 7,494,208
8,000,000 General Electric Capital
Corp., 6.9%
Due 7/3/2000 7,996,933
4,300,000 General Motors Acceptance
Corp., 6.6%
Due 7/10/2000 4,292,905
20,000,000 Heinz, H.J. Co., 6.5%
Due 7/27/2000 19,906,111
25,000,000 Merck & Co., Inc., 6.8%
Due 7/7/2000 24,971,667
3,940,000 Preferred Receivables
Funding Corp., 6.58%
Due 7/28/2000 3,920,556
13,052,000 River Fuel Funding Co., 6.6%
Due 7/14/2000 13,020,893
33,000,000 Sheffield Receivables
Corp., 7.0% Due 7/5/2000 32,974,333
20,000,000 UBS Finance (Delaware), Inc.,
6.75% Due 7/5/2000 19,985,000
50,000,000 Ventures Business Trust, 6.95%
Due 7/5/2000 49,961,389
3,338,000 Wal-Mart Stores, Inc., 6.53%
Due 7/5/2000 3,335,578
--------------
Total Short-Term Securities
(at amortized cost) 318,123,047
--------------
Total Investments
(cost $4,186,579,576) $5,245,598,177(d)
==============
Notes to Portfolio of Investments:
----------------------------------
(a) The categories of investments are shown as a percentage of total
investments of the Growth Portfolio.
(b) Currently non-income producing.
(c) At June 30, 2000, common stocks valued at $2,137,500 were held in
escrow to cover call options written as follows:
Number of Excercise Expiration
Type Contracts Price Date Value
------------ ------------ ------------ ------------ ------------
Sanmina Co 250 $90 07/22/00 $81,250
(d) At June 30, 2000, the aggregate cost of securities for federal income tax
purposes was $4,186,579,576 and the net unrealized appreciation of
investments based on that cost was $1,059,018,601 which is comprised of
$1,288,056,431 aggregate gross unrealized appreciation and $229,037,830
aggregate gross unrealized depreciation.
(e) 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
June 30, 2000
(unaudited)
Principal Maturity
Amount Rate Date Value
---------- ------ ------------ --------------
<S> <C> <C> <C>
CORPORATE BONDS - 80.2% (a)
Aerospace & Defense - 0.3%
$ 4,800,000 Condor Systems, Inc., Notes 11.875% 5/1/2009 $ 2,339,991
4,000,000 Pentacon, Inc., Sr. Subordinated
Notes, Series B 12.25% 4/1/2009 2,220,000
--------------
4,559,991
--------------
Airlines - 0.7%
4,000,000 Northwest Airlines, Corp., Notes 8.375% 3/15/2004 3,773,576
4,500,000 Northwest Airlines, Corp., Notes 7.625% 3/15/2005 3,982,500
3,000,000 U.S. Air, Inc., Sr. Secured
Equipment Trust, Series 1993-A-3 10.375% 3/1/2013 2,733,774
--------------
10,489,850
--------------
Automotive - 0.6%
3,000,000 Dura Operating Corp., Sr.
Subordinated Notes, Series B 9.0% 5/1/2009 2,625,000
4,000,000 Federal-Mogul Corp., Notes 7.5% 1/15/2009 2,747,228
6,500,000 Venture Holdings Trust, Sr.
Subordinated Notes 12.0% 6/1/2009 3,932,500
--------------
9,304,728
--------------
Banks - 1.3%
3,550,000 Chevy Chase Savings Bank,
Subordinated Debentures 9.25% 12/1/2005 3,363,625
8,000,000 GS Escrow Corp., Sr. Notes 7.125% 8/1/2005 7,147,240
4,800,000 Riggs Capital Trust II, Trust
Preferred Securities, Series C 8.875% 3/15/2027 3,919,056
5,000,000 Soverign Bancorp, Inc., Sr. Notes 10.5% 11/15/2006 4,962,500
--------------
19,392,421
--------------
Broadcasting & Media - 11.8%
4,900,000 Alliance Atlantis Communications,
Inc., Sr. Subordinated Notes 13.0% 12/15/2009 5,047,000
1,200,000 Alliance Atlantis Communications,
Inc., Sr. Subordinated Notes 13.0% 12/15/2009 1,236,000
2,682,400 AMFM Operating, Inc.,
Payment-In-Kind Debentures 12.625% 10/31/2006 3,145,114
3,600,000 Australis Holdings Pty., Ltd.,
Sr. Discount Notes Zero Coupon 11/1/2002 360(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 8,482,500
4,350,000 Cable Satisfaction International,
Inc., Sr. Notes 12.75% 3/1/2010 4,252,125
12,500,000 Callahan Nordrhein-Westfalen, Sr.
Notes 14.0% 7/15/2010 12,562,500
2,000,000 Chancellor Media Corp., Sr. Notes 8.0% 11/1/2008 2,017,500
2,100,000 Chancellor Media Corp., Sr.
Subordinated Notes, Series B 8.75% 6/15/2007 2,115,750
3,600,000 Chancellor Media Corp., Sr.
Subordinated Notes, Series B 8.125% 12/15/2007 3,640,500
2,800,000 Charter Communication Holdings,
Sr. Notes 8.25% 4/1/2007 2,485,000
7,200,000 Charter Communications, Inc., Sr.
Notes 10.0% 4/1/2009 6,984,000
5,250,000 Charter Communications, Inc., Sr.
Discount Notes Zero Coupon 1/15/2010 3,012,188
3,000,000 CSC Holdings, Inc., Sr. Notes 7.875% 12/15/2007 2,909,649
2,400,000 Diamond Cable Communications plc,
Sr. Discount Notes (USD) Zero Coupon 2/15/2007 1,842,000
6,500,000 Diamond Cable Communications plc,
Sr. Discount Notes (USD) Zero Coupon 12/15/2005 6,199,375
16,000,000 DIVA Systems Corp., Sr. Discount
Notes, Series B Zero Coupon 3/1/2008 8,560,000
4,250,000 EchoStar Communications Corp.,
Convertible Notes 4.875% 1/1/2007 4,037,500
7,400,000 EchoStar DBS Corp., Sr. Notes 9.375% 2/1/2009 7,141,000
6,000,000 NTL Communications Corp., Sr.
Notes, Series B 11.5% 10/1/2008 6,000,000
3,500,000 NTL, Inc., Convertible Subordinated
Notes 5.75% 12/15/2009 2,765,000
1,500,000 NTL, Inc., Convertible Subordinated
Notes 7.0% 12/15/2008 2,407,500
1,800,000 NTL, Inc., Sr. Notes, Series B 10.0% 2/15/2007 1,710,000
6,000,000 Olympus Communications, LP, Sr.
Notes 10.625% 11/15/2006 5,970,000
4,000,000 OnePoint Communications Corp.,
Sr. Notes, Series B 14.5% 6/1/2008 2,020,000
4,200,000 ONO Finance plc, Notes (USD) 13.0% 5/1/2009 3,990,000
2,750,000 Optel, Inc., Sr. Notes, Series B 11.5% 7/1/2008 2,048,750(c)
8,000,000 Optel, Inc., Sr. Notes, Series B 13.0% 2/15/2005 6,040,000(c)
7,400,000 RCN Corp., Sr. Discount Notes Zero Coupon 10/15/2007 4,662,000
4,200,000 Rogers Cablesystems, Ltd., Sr.
Secured Second Priority Notes 9.625% 8/1/2002 4,242,000
886,310 Scott Cable Communications, Inc.,
Payment-In-Kind Jr. Subordinated
Notes 16.0% 7/18/2002 271,432
5,000,000 Sinclair Broadcast Group, Inc.,
Sr. Subordinated Notes 9.0% 7/15/2007 4,512,500
6,500,000 Supercanal Holding S.A., Sr.
Notes (USD) 11.5% 5/15/2005 2,827,500(c)
5,600,000 Telewest Communications plc, Sr.
Discount Notes (USD) Zero Coupon 2/1/2010 3,010,000
4,200,000 Telewest Communications plc, Sr.
Discount Notes (USD) Zero Coupon 4/15/2009 2,278,500
6,500,000 UIH Australia/Pacific, Inc., Sr.
Discount Notes, Series B Zero Coupon 5/15/2006 6,012,500
9,000,000 United International Holdings,
Inc., Sr. Notes, Series B Zero Coupon 2/15/2008 6,345,000
7,850,000 United Pan-Europe Communications
N.V., Sr. Discount Notes (USD) Zero Coupon 11/1/2009 3,846,500
4,900,000 United Pan-Europe Communications
N.V., Sr. Discount Notes (USD) Zero Coupon 2/1/2010 2,327,500
5,000,000 XM Satellite Radio, Inc., Unit
Security 14.0% 3/15/2010 4,425,000
7,850,000 Young Broadcasting, Inc., Sr.
Subordinated Notes 11.75% 11/15/2004 8,026,625
--------------
171,777,281
--------------
Building Materials - 0.7%
6,000,000 CEMEX S.A. de C.V., Notes (USD) 12.75% 7/15/2006 6,675,000
4,500,000 Formica Corp., Sr. Subordinated
Notes, Series B 10.875% 3/1/2009 3,532,500
--------------
10,207,500
--------------
Chemicals - 1.1%
4,800,000 Avecia Group plc, Sr. Notes (USD) 11.0% 7/1/2009 4,728,000
6,683,000 Huntsman Polymers Corp., Sr. Notes 11.75% 12/1/2004 6,816,660
5,000,000 Sovereign Specialty Chemicals,
Inc., Sr. Subordinated Notes 11.875% 3/15/2010 5,168,750
--------------
16,713,410
--------------
Consumer Products - 0.9%
7,500,000 AMM Holdings, Inc., Sr. Discount
Notes Zero Coupon 7/1/2009 787,500
3,600,000 Holmes Products Corp., Sr.
Subordinated Notes, Series D 9.875% 11/15/2007 2,538,000
5,500,000 Jostens, Inc., Unit Security 12.75% 5/1/2010 5,445,000
3,000,000 Moll Industries, Inc., Sr.
Subordinated Notes 10.5% 7/1/2008 540,000
4,300,000 Winsloew Furniture, Inc., Sr.
Subordinated Notes, Series B 12.75% 8/15/2007 3,977,500
--------------
13,288,000
--------------
Engineering & Construction - 0.5%
6,900,000 Morrison Knudsen Corp., Bonds 11.0% 7/1/2010 6,900,000
--------------
Environmental - 0.7%
1,800,000 Allied Waste, North America, Sr.
Notes, Series B 7.625% 1/1/2006 1,584,000
2,700,000 IT Group, Inc., Sr. Subordinated
Notes, Series B 11.25% 4/1/2009 2,430,000
5,500,000 Norcal Waste Systems, Inc., Sr.
Notes, Series B 13.5% 11/15/2005 5,747,500
--------------
9,761,500
--------------
Finance - Consumer - 0.8%
8,400,000 Altiva Financial Corp.,
Subordinated Notes 12.5% 12/1/2001 1,302,000(c)
6,000,000 Dollar Financial Group, Inc., Sr.
Notes, Series A 10.875% 11/15/2006 5,850,000
3,896,000 HomeSide, Inc., Sr. Notes,
Series B 11.25% 5/15/2003 4,236,900
10,060,000 United Companies Financial Corp.,
Subordinated Notes 8.375% 7/1/2005 201,200(c)
--------------
11,590,100
--------------
Finance - Other - 0.7%
4,200,000 FC CBO II, Ltd., Subordinated
Debentures, Series 1A, Class C 11.05% 9/9/2010 3,512,250
7,500,000 Williams Scotsman, Inc., Sr. Notes 9.875% 6/1/2007 6,862,500
--------------
10,374,750
--------------
Food & Beverage - 1.7%
6,400,000 Ameriserve Food Distribution, Inc.,
Sr. Notes 8.875% 10/15/2006 336,000(c)
4,800,000 Fleming Companies, Inc., Sr.
Subordinated Notes, Series B 10.625% 7/31/2007 4,032,000
8,700,000 Grupo Azucarero Mexico, Sr. Notes
(USD) 11.5% 1/15/2005 1,761,750(c)
13,500,000 Imperial Holly Corp., Sr.
Subordinated Notes 8.75% 12/15/2007 2,649,375
13,000,000 Nash Finch Co., Sr. Subordinated
Notes, Series B 8.5% 5/1/2008 8,515,000
3,750,000 Packaged Ice, Inc., Sr. Notes,
Series B 9.75% 2/1/2005 3,131,250
5,000,000 Sun World International, First
Mortgage Notes, Series B 11.25% 4/15/2004 4,781,250
--------------
25,206,625
--------------
Health Care - Drugs &
Pharmaceuticals - 0.2%
2,500,000 Bio-Rad Laboratories, Inc., Sr.
Subordinated Notes 11.625% 2/15/2009 2,587,500
--------------
Health Care - Medical Products &
Supplies - 0.7%
12,000,000 Dade International, Inc., Sr.
Subordinated Notes, Series B 11.125% 5/1/2006 5,700,000
5,000,000 Fisher Scientific International,
Inc., Sr. Subordinated Notes 9.0% 2/1/2008 4,600,000
--------------
10,300,000
--------------
Health Care Management - 1.6%
8,200,000 Concentra Operating Corp., Sr.
Subordinated Notes 13.0% 8/15/2009 6,601,000
8,000,000 Health Insurance Plan of Greater
New York, Bonds, Series C 11.25% 7/1/2010 7,224,800
5,100,000 Healthsouth Rehab Corp., Sr.
Subordinated Notes 9.5% 4/1/2001 5,125,500
2,650,000 Integrated Health Services, Inc.,
Convertible Sr. Subordinated
Debentures 5.75% 1/1/2001 0(c)
3,750,000 Integrated Health Services, Inc.,
Sr. Subordinated Notes, Series A 9.25% 1/15/2008 93,750(c)
4,000,000 Quorum Health Group, Inc., Sr.
Subordinated Notes 8.75% 11/1/2005 3,820,000
--------------
22,865,050
--------------
Health Care Services - 1.6%
4,200,000 Dynacare, Inc., Sr. Notes 10.75% 1/15/2006 3,885,000
7,000,000 Hanger Orthopedic Group, Inc., Sr.
Secured Notes 11.25% 6/15/2009 6,125,000
7,000,000 MedPartners, Inc., Sr. Notes 7.375% 10/1/2006 5,880,000
4,200,000 MedPartners, Inc., Sr. Subordinated
Notes 6.875% 9/1/2000 4,179,000
2,000,000 PhyMatrix Corp., Convertible
Subordinated Debentures 6.75% 6/15/2003 650,000(c)
3,000,000 Unilab Corp, Sr. Subordinated Notes 12.75% 10/1/2009 3,105,000
--------------
23,824,000
--------------
Homebuilding - 1.1%
5,400,000 Fortress (The) Group, Inc., Sr.
Notes 13.75% 5/15/2003 3,098,250
4,000,000 Lennar Corp., Sr. Notes 9.95% 5/1/2010 3,960,000
6,000,000 M.D.C. Holdings, Inc., Sr. Notes 8.375% 2/1/2008 5,340,000
4,000,000 Peters (J.M.) Co., Inc., Sr. Notes 12.75% 5/1/2002 3,580,000
--------------
15,978,250
--------------
Insurance - 0.5%
12,000,000 Symons International Group Capital
Trust I, Bond 9.5% 8/15/2027 1,500,000
5,975,000 Veritas Capital Trust, Trust
Preferred Securities 10.0% 1/1/2028 2,151,000
4,000,000 Willis Corroon Corp., Sr.
Subordinated Notes 9.0% 2/1/2009 3,380,000
--------------
7,031,000
--------------
Leisure & Entertainment - 0.4%
5,071,000 AMF Bowling Worldwide, Inc., Sr.
Subordinated Discount Notes,
Series B Zero Coupon 3/15/2006 1,052,233
500,000 AMF Bowling Worldwide, Inc., Sr.
Subordinated Notes, Series B 10.875% 3/15/2006 138,750
8,000,000 Premier Cruise, Ltd., Sr. Notes 11.00% 3/15/2008 1,920,000(c)
10,250,000 Production Resource Group, LLC,
Sr. Subordinated Notes 11.5% 1/15/2008 2,152,500
--------------
5,263,483
--------------
Lodging & Hotels - 0.4%
5,300,000 CapStar Hotel Company, Convertible
Subordinated Notes (Meristar
Hospitality Corp.) 4.75% 10/15/2004 4,127,375
3,300,000 Silverleaf Resorts, Inc., Sr.
Subordinated Notes 10.5% 4/1/2008 1,439,625
--------------
5,567,000
--------------
Machinery & Equipment - 2.5%
6,000,000 Anthony Crane Rentals, LP, Sr.
Discount Debentures, Series B Zero Coupon 8/1/2009 2,565,000
4,200,000 Blount, Inc., Sr. Subordininated
Notes 13.0% 8/15/2009 4,305,000
6,900,000 Budget Group, Inc., Sr. Notes 9.125% 4/1/2006 4,450,500
3,000,000 Eagle-Picher, Inc., Sr.
Subordinated Notes 9.375% 3/1/2008 2,565,000
6,250,000 Motor Coach Industries
International, Inc., Sr.
Subordinated Notes 11.25% 5/1/2009 5,351,563
7,200,000 Navistar Financial Corp., Sr.
Subordinated Notes, Series B 9.0% 6/1/2002 7,200,000
3,000,000 Navistar International Corp., Sr.
Notes, Series B 7.0% 2/1/2003 2,880,000
2,400,000 Navistar International Corp., Sr.
Subordinated Notes, Series B 8.0% 2/1/2008 2,214,000
6,000,000 United Rentals, Inc., Sr.
Subordinated Notes, Series B 9.25% 1/15/2009 5,445,000
--------------
36,976,063
--------------
Metals & Mining - 0.4%
2,400,000 Altos Hornos de Mexico, Bonds,
Series B (USD) 11.875% 4/30/2004 966,000(c)
6,000,000 Echo Bay Mines, Bonds Zero Coupon 4/1/2027 3,615,000
4,000,000 Republic Technologies
International, Inc./RTI Capital,
Sr. Notes 13.75% 7/15/2009 725,000
--------------
5,306,000
--------------
Oil & Gas - 1.0%
6,250,000 Belden & Blake Corp., Sr.
Subordinated Notes, Series B 9.875% 6/15/2007 4,578,125
9,000,000 National Energy Group, Inc., Sr.
Notes, Series D 10.75% 11/1/2006 4,815,000(c)
4,500,000 RAM Energy, Inc., Sr. Notes 11.5% 2/15/2008 2,233,125
2,000,000 RBF Finance Co., Sr. Notes 11.375% 3/15/2009 2,180,000
--------------
13,806,250
--------------
Packaging & Containers - 2.6%
8,867,726 BPC Holding Corp., Sr. Secured
Notes, Series B 12.50% 6/15/2006 7,149,604
3,600,000 Consolidated Container Co., LLC,
Sr. Subordinated Notes 10.125% 7/15/2009 3,582,000
6,700,000 Fonda Group, Inc., Sr.
Subordinated Notes, Series B 9.5% 3/1/2007 5,360,000
5,600,000 Huntsman Packaging Corp., Unit
Security 13.0% 6/1/2010 5,796,000
4,800,000 Radnor Holdings Corp., Sr. Notes 10.0% 12/1/2003 4,320,000
11,000,000 SF Holdings Group, Inc., Sr.
Discount Notes, Series B Zero Coupon 3/15/2008 5,555,000
2,866,000 Silgan Holdings, Inc.,
Subordinated Debentures 13.25% 7/15/2006 3,073,785
3,200,000 Vicap, S.A. de C.V., Guaranteed
Sr. Notes (USD) 11.375% 5/15/2007 2,832,000
--------------
37,668,389
--------------
Paper & Forest Products - 0.4%
3,600,000 APP Finance (II) Mauritius, Ltd.,
Guaranteed Preferred Securities,
Series B (USD) 12.0% 2/15/2004 1,809,000
3,000,000 FSW International Finance Co.
B.V., Guaranteed Secured Notes
(USD) 12.50% 11/1/2006 877,500(c)
1,800,000 Indah Kiat Finance Mauritius,
Guaranteed Sr. Notes (USD) 10.0% 7/1/2007 1,102,500
3,600,000 Pindo Deli Finance Mauritius, Sr.
Notes (USD) 10.25% 10/1/2002 2,601,000
--------------
6,390,000
--------------
Publishing - 1.2%
4,560,000 Dimac Corp., Sr. Subordinated
Notes 12.5% 10/1/2008 68,400(c)
7,800,000 MDC Communications Corp., Sr.
Subordinated Notes 10.5% 12/1/2006 7,527,000
4,500,000 PRIMEDIA, Inc., Sr. Notes 10.25% 6/1/2004 4,522,500
5,850,000 Sullivan Graphics, Inc., Sr.
Subordinated Notes 12.75% 8/1/2005 5,967,000
--------------
18,084,900
--------------
Retail - 1.1%
3,000,000 County Seat Stores, Inc., Units 12.75% 11/1/2004 45,000(c)
2,750,000 F & M Distributors, Inc., Sr.
Subordinated Notes 11.50% 4/15/2003 34,375(c)
5,000,000 Group1 Automotive, Inc., Sr.
Subordinated Notes 10.875% 3/1/2009 4,475,000
6,000,000 Hollywood Entertainment Corp.,
Sr. Subordinated Notes, Series B 10.625% 8/15/2004 5,175,000
3,000,000 J. Crew Group, Sr. Discount
Debentures, Series B Zero Coupon 10/15/2008 1,642,500
4,350,000 Rite Aid Corp., Notes 6.0% 12/15/2000 4,230,375
--------------
15,602,250
--------------
Retail - Food - 0.8%
7,850,000 Jitney-Jungle Stores of America,
Sr. Notes 12.0% 3/1/2006 1,216,750(c)
12,000,000 Jitney-Jungle Stores of America,
Sr. Subordinated Notes 10.375% 9/15/2007 240,000(c)
6,996,636 Smith's Food & Drug Centers, Pass
Through Certificates 8.64% 7/2/2012 7,300,255
3,000,000 Stater Brothers Holdings, Sr. Notes 10.75% 8/15/2006 2,655,000
--------------
11,412,005
--------------
Services - 0.3%
4,200,000 Building One Services Corp., Sr.
Subordinated Notes 10.5% 5/1/2009 3,591,000
7,500,000 Discovery Zone, Inc., Sr. Notes 13.5% 8/1/2002 46,875(c)
1,875,000 Discovery Zone, Inc., Sr. Notes 13.5% 5/1/2002 28,125(c)
--------------
3,666,000
--------------
Technology - Hardware - 1.8%
5,000,000 Aavid Thermal Technologies, Inc.,
Sr. Subordinated Notes 12.75% 2/1/2007 4,725,000
4,250,000 ASAT Finance, LLC, Sr. Notes 12.5% 11/1/2006 4,611,250
4,300,000 Dictaphone Corp., Sr. Subordinated
Notes 11.75% 8/1/2005 4,386,000
2,795,000 Intersil Corp., Sr. Subordinated
Notes 13.25% 8/15/2009 3,207,263
3,400,000 MCMS, Inc., Sr. Subordinated Notes,
Series B 9.75% 3/1/2008 2,057,000
4,200,000 MCMS, Inc., Subordinated Notes,
Series B (Variable rate) 10.948% 3/1/2008 2,541,000
4,800,000 Unisys Corp., Sr. Notes 11.75% 10/15/2004 5,136,000
--------------
26,663,513
--------------
Telecommunications - Data/
Internet - 6.3%
7,000,000 Advanced Radio Telecom Corp., Sr.
Notes 14.00% 2/15/2007 6,195,000
8,500,000 Convergent Communications, Inc.,
Sr. B Notes 13.0% 4/1/2008 6,003,125
7,100,000 Covad Communications Group, Inc.,
Sr. Discount Notes, Series B Zero Coupon 3/15/2008 3,514,500
11,000,000 Cybernet Internet Services
International, Sr. Notes 14.0% 7/1/2009 5,555,000
1,400,000 Exodus Communications, Inc.,
Convertible Notes 4.75% 7/15/2008 2,002,000
5,000,000 Exodus Communications, Inc., Sr.
Notes 11.25% 7/1/2008 4,975,000
5,050,000 Exodus Communications, Inc., Sr.
Notes 11.625% 7/15/2010 5,087,875
12,000,000 FirstWorld Communications, Inc.,
Sr. Discount Notes Zero Coupon 4/15/2008 5,460,000
6,500,000 Globix Corp., Sr. Notes 12.5% 2/1/2010 5,362,500
6,000,000 Metricom, Inc., Sr. Unsecured
Notes 13.0% 2/15/2010 4,140,000
10,000,000 NorthPoint Communications Group,
Notes 12.875% 2/15/2010 7,250,000
2,400,000 PSINet, Inc., Sr. Notes 10.5% 12/1/2006 2,220,000
7,400,000 PSINet, Inc., Sr. Notes, Series B 10.0% 2/15/2005 6,845,000
8,700,000 Rhythms NetConnections, Inc., Sr.
Discount Notes, Series B Zero Coupon 5/15/2008 3,480,000
5,400,000 Rhythms NetConnections, Inc.,
Sr. Notes 12.75% 4/15/2009 3,834,000
3,000,000 Verio, Inc., Sr. Notes 11.25% 12/1/2008 3,382,500
3,000,000 Verio, Inc., Sr. Notes 10.625% 11/15/2009 3,341,250
22,600,000 Wam!Net, Inc., Sr. Discount Notes,
Series B 13.25% 3/1/2005 12,797,250
--------------
91,445,000
--------------
Telecommunications - Wireless - 11.2%
11,250,000 Alamosa PCS Holdings, Inc., Sr.
Discount Notes Zero Coupon 2/15/2010 5,906,250
7,500,000 American Mobile Satellite Corp.,
Sr. Notes, Series B 12.25% 4/1/2008 5,887,500
1,800,000 Arch Communications Group, Inc.,
Sr. Notes 13.75% 4/15/2008 1,458,000
4,000,000 At Track Communications, Inc.,
Sr. Notes, Series B 13.75% 9/15/2005 1,940,000
5,400,000 Centennial Cellular Operating Co.,
Sr. Subordinated Notes 10.75% 12/15/2008 5,271,750
6,000,000 Clearnet Communications, Inc.,
Sr. Discount Notes Zero Coupon 12/15/2005 6,225,000
5,400,000 Crown Castle International Corp.,
Sr. Discount Notes Zero Coupon 5/15/2011 3,327,750
3,000,000 Crown Castle International Corp.,
Sr. Notes 9.5% 8/1/2011 2,865,000
4,200,000 ICO Global Communications, Units 15.0% 8/1/2005 2,457,000(c)
4,700,000 IPCS, Inc., Sr. Discount Notes Zero Coupon 7/15/2010 2,444,000
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)
13,600,000 McCaw International, Ltd., Sr.
Discount Notes Zero Coupon 4/15/2007 10,404,000
2,700,000 Metrocall, Inc., Sr. Subordinated
Notes 11.0% 9/15/2008 1,903,500
1,985,000 Metrocall, Inc., Sr. Subordinated
Notes 9.75% 11/1/2007 1,369,650
7,200,000 Microcell Telecommunications, Inc.,
Sr. Discount Notes Zero Coupon 6/1/2006 6,678,000
12,000,000 Millicom International Cellular,
Sr. Discount Notes Zero Coupon 6/1/2006 10,260,000
12,000,000 Nextel Communications, Inc.,
Sr. Notes 9.375% 11/15/2009 11,520,000
2,275,000 Nextel Partners, Inc., Sr. Discount
Notes Zero Coupon 2/1/2009 1,581,125
3,700,000 Nextel Partners, Inc., Sr. Notes 11.0% 3/15/2010 3,700,000
13,300,000 Orion Network Systems, Inc., Sr.
Discount Notes Zero Coupon 1/15/2007 5,519,500
9,300,000 Orion Network Systems, Inc., Sr.
Notes 11.25% 1/15/2007 5,673,000
9,000,000 PageMart Nationwide, Inc., Sr.
Discount Exchange Notes 15% 2/1/2005 8,662,500
3,600,000 Pinnacle Holdings, Inc., Sr.
Discount Notes Zero Coupon 3/15/2008 2,502,000
3,050,000 Price Communications Wireless,
Inc., Sr. Subordinated Notes 11.75% 7/15/2007 3,294,000
5,600,000 PTC International Finance B.V.,
Sr. Secured Notes (USD) Zero Coupon 7/1/2007 3,990,000
6,900,000 SpectraSite Holdings, Inc., Sr.
Discount Notes Zero Coupon 3/15/2010 3,795,000
10,400,000 SpectraSite Holdings, Inc., Sr.
Discount Notes Zero Coupon 4/15/2009 6,136,000
7,200,000 Telesystem International Wireless,
Inc., Sr. Discount Notes,
Series B Zero Coupon 6/30/2007 5,040,000
4,000,000 Telesystem International Wireless,
Inc., Sr. Discount Notes,
Series C Zero Coupon 11/1/2007 2,420,000
1,320,324 Teletrac, Inc., Notes 9.0% 1/1/2004 864,812
79,219 Teletrac, Inc., Payment-In-Kind
Notes 12.0% 10/1/2004 51,888
6,000,000 Tritel PCS, Inc., Sr. Subordinated
Notes Zero Coupon 5/15/2009 4,005,000
6,300,000 Ubqitel Operating Co., Unit
Security Zero Coupon 4/15/2010 3,677,625
9,000,000 UNIFI Communications, Inc., Sr.
Notes 14.0% 3/1/2004 54,000(c)
9,300,000 US Unwired, Inc., Sr. Discount
Notes, Series B Zero Coupon 11/1/2009 5,091,750
4,900,000 USA Mobile Communications, Inc.,
Sr. Notes 14.0% 11/1/2004 4,116,000
4,000,000 VIALOG Corp., Sr. Notes, Series B 12.75% 11/15/2001 3,490,000
4,200,000 Voicestream Wireless Corp., Sr.
Notes 10.375% 11/15/2009 4,368,000
9,000,000 Weblink Wireless, Inc., Sr.
Subordinated Discount Notes Zero Coupon 2/1/2008 3,915,000
--------------
162,325,850
--------------
Telecommunications - Wireline - 17.0%
5,000,000 360Networks, Inc., Sr. Notes 13.0% 5/1/2008 5,025,000
3,000,000 Alestra S. de R.L. de C.V., Sr.
Notes (USD) 12.625% 5/15/2009 2,718,750
3,000,000 Alestra S. de R.L. de C.V., Sr.
Notes (USD) 12.125% 5/15/2006 2,820,000
4,800,000 Allegiance Telecom, Inc., Sr.
Discount Notes, Series B Zero Coupon 2/15/2008 3,504,000
6,000,000 Bayan Telecommunications, Sr.
Notes 13.5% 7/15/2006 3,937,500
3,000,000 Birch Telecom, Inc., Sr. Notes 14.0% 6/15/2008 3,022,500
9,000,000 Call-Net Enterprises, Inc., Sr.
Notes 9.375% 5/15/2009 5,580,000
3,000,000 CapRock Communications Corp., Sr.
Notes 11.5% 5/1/2009 2,715,000
1,800,000 CapRock Communications Corp., Sr.
Notes, Series B 12.0% 7/15/2008 1,660,500
3,250,000 Colo.com, Unit Security 13.875% 3/15/2010 3,510,000
6,900,000 Completel Europe N.V., Sr. Discount
Notes, Series B (USD) Zero Coupon 2/15/2009 3,484,500
15,500,000 DTI Holdings, Inc., Sr. Discount
Notes, Series B Zero Coupon 3/1/2008 6,587,500
4,200,000 Energis plc, Sr. Unsubordinated
Notes (USD) 9.75% 6/15/2009 4,137,000
7,850,000 Esprit Telecom Group plc, Sr.
Notes (USD) 11.5% 12/15/2007 5,612,750
6,000,000 E. Spire Communications, Inc.,
Sr. Notes 13.75% 7/15/2007 3,330,000
5,000,000 Fairpoint Communications, Sr.
Subordinated Notes 12.5% 5/1/2010 5,075,000
4,600,000 Focal Communications Corp., Sr.
Notes 11.875% 1/15/2010 4,646,000
1,800,000 Global TeleSystems Group, Inc.,
Sr. Notes 9.875% 2/15/2005 1,287,000
9,000,000 GST Equipment Funding, Inc., Sr.
Secured Notes 13.25% 5/1/2007 4,950,000(c)
2,500,000 GST Telecommunications, Inc., Sr.
Discount Notes Zero Coupon 12/15/2005 884,375(c)
13,500,000 GT Group Telecom, Inc., Unit
Security Zero Coupon 2/1/2010 7,560,000
1,800,000 Hyperion Telecommunications, Inc.,
Sr. Discount Notes, Series B Zero Coupon 4/15/2003 1,683,000
1,200,000 Hyperion Telecommunications, Inc.,
Sr. Notes, Series B 12.25% 9/1/2004 1,218,000
3,100,000 IMPSAT Fiber Networks, Inc., Sr.
Notes 13.75% 2/15/2005 2,774,500
5,600,000 IntelCom Group (U.S.A.), Inc., Sr.
Discount Notes Zero Coupon 5/1/2006 4,662,000
6,750,000 Intermedia Communications, Inc.,
Sr. Discount Notes, Series B Zero Coupon 3/1/2009 4,100,625
1,800,000 Intermedia Communications, Inc.,
Sr. Notes 8.6% 6/1/2008 1,674,000
4,300,000 Intermedia Communications, Inc.,
Sr. Notes, Series B 8.5% 1/15/2008 3,977,500
4,200,000 Ionica plc, Sr. Notes (USD) 13.5% 8/15/2006 105,000(c)
5,100,000 Jazztel plc, Sr. Notes (USD) 14.0% 4/1/2009 4,666,500
9,375,000 Level 3 Communications, Inc., Sr.
Notes 11.0% 3/15/2008 9,328,125
12,000,000 Logix Communications Enterprises,
Inc., Sr. Notes 12.25% 6/15/2008 4,800,000
6,200,000 Madison River Capital, Sr. Notes 13.25% 3/1/2010 5,611,000
2,400,000 Metromedia Fiber Network, Inc., Sr.
Notes 10.0% 12/15/2009 2,376,000
4,200,000 Metromedia Fiber Network, Inc., Sr.
Notes, Series B 10.0% 11/15/2008 4,158,000
7,500,000 MGC Communications, Inc., Sr. Notes 13.0% 4/1/2010 7,087,500
5,000,000 Netia Holdings B.V., Sr. Discount
Notes, Series B (USD) Zero Coupon 11/1/2007 3,350,000
2,400,000 NEXTLINK Communications, Inc.,
Sr. Notes 9.625% 10/1/2007 2,274,000
4,800,000 NEXTLINK Communications, LLC,
Sr. Notes 12.5% 4/15/2006 5,040,000
12,500,000 Northeast Optic Network, Inc.,
Sr. Notes 12.75% 8/15/2008 12,000,000
15,000,000 Pathnet, Inc., Sr. Notes 12.25% 4/15/2008 8,475,000
4,000,000 PF.Net Communications, Inc., Unit
Security 13.75% 5/15/2010 4,070,000
8,000,000 Poland Telecom Finance B.V., Sr.
Notes, Series B (USD) 14.0% 12/1/2007 840,000(c)
6,000,000 Primus Telecommunications Group,
Inc., Sr. Notes 11.25% 1/15/2009 4,710,000
2,750,000 Primus Telecommunications Group,
Inc., Sr. Notes 12.75% 10/15/2009 2,213,750
6,000,000 Primus Telecommunications Group,
Inc., Sr. Notes 11.75% 8/1/2004 4,830,000
9,300,000 RSL Communiations plc, Sr. Notes
(USD) 12.875% 3/1/2010 7,021,500
1,800,000 RSL Communications plc, Notes
(USD) 9.875% 11/15/2009 1,176,750
3,000,000 Startec Global Communications, Inc.,
Sr. Notes 12.0% 5/15/2008 2,415,000
3,100,000 Telegroup, Inc., Sr. Discount
Notes Zero Coupon 11/1/2004 1,697,250(c)
6,900,000 Teligent, Inc., Sr. Discount
Notes, Series B Zero Coupon 3/1/2008 3,243,000
4,800,000 Teligent, Inc., Sr. Notes 11.5% 12/1/2007 3,744,000
10,527,000 USN Communications, Inc., Sr.
Discount Notes, Series B Zero Coupon 8/15/2004 842,160(c)
4,200,000 VersaTel Telecom B.V., Sr. Notes
(USD) 13.25% 5/15/2008 4,294,500
1,800,000 Versatel Telecom International
N.V., Sr. Notes (USD) 11.875% 7/15/2009 1,782,000
14,500,000 Viatel, Inc., Sr. Discount
Notes Zero Coupon 4/15/2008 6,597,500
6,100,000 Williams Communications Group,
Sr. Notes 10.875% 10/1/2009 5,993,250
12,113,000 Winstar Communications, Inc.,
Sr. Discount Notes Zero Coupon 4/15/2010 5,693,110
4,141,000 Winstar Communications, Inc.,
Sr. Notes 12.75% 4/15/2010 3,882,188
3,000,000 WinStar Communications, Inc.,
Sr. Notes 12.5% 4/15/2008 2,955,000
4,000,000 Worldwide Fiber, Inc., Sr. Notes 12.5% 12/15/2005 4,060,000
2,900,000 Worldwide Fiber, Inc., Sr. Notes 12.0% 8/1/2009 2,755,000
--------------
246,224,083
--------------
Textiles & Apparel - 0.7%
4,850,000 CMI Industries, Inc., Sr.
Subordinated Notes 9.5% 10/1/2003 2,352,250
4,800,000 Dan River, Inc., Sr. Subordinated
Notes 10.125% 12/15/2003 4,680,000
3,600,000 Perry Ellis International, Inc.,
Sr. Subordinated Notes, Series B 12.25% 4/1/2006 3,438,000
--------------
10,470,250
--------------
Transportation - 0.8%
3,800,000 Allied Holdings, Inc., Sr. Notes,
Series B 8.625% 10/1/2007 3,386,750
5,400,000 Equimar Shipholdings, Ltd., First
Priority Mtg 9.875% 7/1/2007 1,539,000
7,500,000 Windsor Petroleum, Notes 7.84% 1/15/2021 6,337,500
--------------
11,263,250
--------------
Utilities - 3.8%
5,250,000 Azurix Corp., Sr. Notes 10.75% 2/15/2010 5,079,375
3,000,000 CMS Energy Corp., Sr. Notes 7.625% 11/15/2004 2,836,935
3,000,000 CMS Energy Corp., Sr. Notes 7.5% 1/15/2009 2,687,661
1,200,000 CMS Energy Corp., Sr. Unsecured Notes 7.0% 1/15/2005 1,105,958
3,000,000 CMS EnergyCorp./Atlantic Methanol
Capital Co., Sr. Secured Notes,
Series A-1 10.875% 12/15/2004 2,977,500
4,800,000 ESI Tractebel Acquisition Corp.,
Bonds 7.99% 12/30/2011 4,258,675
3,550,000 Midland Cogen Venture Fund II,
Secured Lease Obligation Bonds,
Series A 11.75% 7/23/2005 3,785,961
4,450,000 Midland Cogen Venture Fund II,
Subordinated Secured Lease
Obligation Bonds 13.25% 7/23/2006 5,301,953
4,500,000 Niagara Mohawk Power Corp., Sr.
Discount Notes, Series H Zero Coupon 7/1/2010 3,462,723
9,350,000 Orion Power Holdings, Inc., Sr.
Notes 12.0% 5/1/2010 9,724,000
13,100,000 TNP Enterprises, Inc., Sr.
Subordinated Notes 10.25% 4/1/2010 13,525,750
--------------
54,746,491
--------------
Total Corporate Bonds (cost $1,413,258,445) 1,165,032,733
--------------
<CAPTION>
Shares Value
------------- --------------
PREFERRED STOCKS - 10.8% (a)
<S> <C>
Convertible - 1.8%
18,000 Adelphia Communications Corp., Convertible Preferred Stock, Series D $ 2,578,500
60,000 CalEnergy Capital Trust III, Convertible Preferred Stock 2,250,000
3,300 EchoStar Communications Corp., Convertible Preferred Stock, Series C 2,245,650
14,700 Global Crossing Holdings, Ltd., Convertible Preferred Stock 2,671,725
11,000 Global Crossing Holdings, Ltd., Convertible Preferred Stock 2,448,875
50,000 Intermedia Communications, Inc., Convertible Preferred Stock 1,293,750
45,000 Pegasus Communications Corp., Convertible Preferred Stock, Series C 3,943,125
36,000 PSINet, Inc., Convertible Preferred Stock, Series C 1,759,500
45,500 Sinclair Broadcast Group, Inc., Convertible Preferred Stock 1,410,500
83,800 Treev, Inc., Convertible Preferred Stock, Series A 1,257,000
60,000 UnitedGlobalCom, Inc., Convertible Preferred Stock (United International
Holdings, Inc.) 3,622,500
--------------
25,481,125
--------------
Non-Convertible - 9.0%
86,400 Avecia Group plc, Payment-In-Kind Preferred Stock (USD) 2,419,200
29,022 Century Maintenance Supply, Inc., Payment-In-Kind Preferred Stock 2,129,489
105,000 Chevy Chase Capital Corp., Noncumulative Exchangeable Preferred Stock, 5,355,000
62,182 Cluett American Corp., Preferred Stock 1,134,822
63,196 Communications & Power Industries, Inc., Preferred Stock, Series B 4,281,529
74,751 CSC Holdings, Inc., Payment-In-Kind Preferred Stock 8,054,420
37,381 CSC Holdings, Inc., Preferred Stock 3,943,696
3,527 Cumulus Media, Inc., Preferred Stock, Series A 2,874,505
8,870 Dobson Communications Corp., Payment-In-Kind Preferred Stock 9,202,625
4,604 Dobson Communications Corp., Payment-In-Kind Preferred Stock 4,454,370
16,904 E. Spire Communications Services, Inc., Payment-In-Kind Preferred Stock 3,317,410
3,729 E. Spire Communications, Inc., Payment-In-Kind Preferred Stock 792,413
60,000 Global Crossing Holdings, Ltd., Payment-In-Kind Preferred Stock 5,805,000
4,375 Granite Broadcasting Corp., Payment-in-Kind Preferred Stock 3,773,438
10,672 ICG Holdings, Inc., Preferred Stock 9,284,640
10,005 Intermedia Communications, Inc., Preferred Stock 9,679,838
5,306 IXC Communications, Inc., Preferred Stock 5,372,325
1,800 J Crew Group, Preferred Stock 1,620,000(b)
24,000 Jitney-Jungle Stores of America, Sr. Exchangeable Preferred Stock, Clas 3,000(b)
247,092 Nebco Evans Holdings Co., Payment-In-Kind, Preferred Stock 92,660(c)
7,886 Nextel Communications, Inc., Payment-In-Kind Preferred Stock, Series E 7,669,135
151,759 NEXTLINK Communications, Inc., Payment-In-Kind Preferred Stock 7,853,528
9,670 Paxson Communications Corp., Payment-In-Kind Preferred Stock 9,694,175
42,500 PRIMEDIA, Inc., Exchangeable Preferred Stock, Series H 3,665,625
46,000 PRIMEDIA, Inc., Preferred Stock, Series D 4,427,500
33,000 PRIMEDIA, Inc., Preferred Stock, Series F 2,994,750
147,500 River Bank Asset, Inc., Preferred Stock, Series A 2,249,375(b)
4,829 R&B Falcon Corp., Payment-In-Kind Preferred Stock 5,468,843
5,994 World Access, Inc., Preferred Stock 3,326,670(b)
--------------
130,939,981
--------------
Total Preferred Stocks (cost $190,035,736) 156,421,106
--------------
COMMON STOCKS & STOCK WARRANTS - 4.5% (a,b)
5,000 Aavid Thermal Technologies, Inc., Stock Warrants 52,500
83,624 Adelphia Business Solutions, Stock Warrants 1,939,032
6,000 Airgate PCS, Inc., Stock Warrants 756,000
15,000 Allegiance Telecom, Inc., Common Stock 960,000
55,000 Arch Communications Group, Inc., Common Stock 357,500
300,000 Arch Communications Group, Inc., Stock Warrants 281,250
4,250 ASAT Finance, LLC, Stock Warrants 858,500
4,000 At Track Communications, Inc., Stock Warrants 40,500
3,600 Australis Holdings Pty., Ltd., Stock Warrants 36(d)
17,150 Australis Media, Ltd., Stock Warrants 172(d)
3,000 Birch Telecom, Inc., Stock Warrants 166,875
4,350 Cable Satisfaction International, Inc., Stock Warrants 121,800
18,000 Classic Communications, Inc., Common Stock 300,060
35,475 Clearnet Communications, Inc., Stock Warrants 661,399
2,310 Communications & Power Industries, Inc., Common Stock 347,655(d)
345,000 Completel Europe N.V., Common Stock (USD) 4,140,000
10,989 Consolidated Hydro, Inc., Stock Warrants, Class B 8,242
7,133 Consolidated Hydro, Inc., Stock Warrants, Class C 1,783
35,505 Convergent Communications Corp., Common Stock 284,040
150,000 Covad Communications Group, Inc., Common Stock 2,418,750
3,267 CS Wireless Systems, Inc., Common Stock 448(d)
11,000 Cybernet Internet Services International, Stock Warrants 335,500
71,250 Discovery Zone, Inc., Stock Warrants 9,619(d)
48,000 DIVA Systems Corp., Stock Warrants 870,000
71,300 DTI Holdings, Inc., Stock Warrants 8,556
7,500 FirstWorld Communications, Stock Warrants 608,438
101,377 Gaylord Container Corp., Common Stock, Class A 272,451
127,902 Gaylord Container Corp., Stock Warrants 383,706
500,000 Granite Broadcasting Corp., Common Stock 3,687,500
36,180 Harvard Industries, Inc., Stock Warrants 750(d)
95,000 IntelCom Group Communications, Inc., Common Stock 2,095,938
68,300 IntelCom Group (U.S.A.), Inc., Stock Warrants 963,324
22,645 Intermedia Communications, Inc., Common Stock 673,689
4,300 Intersil Corp., Stock Warrants 3,463,650
14,800 Ionica plc, Stock Warrants (USD) 148
3,000 Iridium World Communications, Stock Warrants 405(d)
25,500 Jazztel plc, Stock Warrants (USD) 2,355,563
80,000 Magellan Health Services, Inc., Common Stock 100,000
10,900 McCaw International, Ltd., Stock Warrants 445,698
43,872 McLeodUSA, Inc., Common Stock 907,602
6,000 Metricom, Inc., Stock Warrants 123,000
70,000 Microcell Telecommunications, Inc., Common Stock 2,528,750
7,500 Motient Corp., Stock Warrants 300,938
4,000 OnePoint Communications Corp., Stock Warrants 120,500
4,200 ONO Finance, plc., Cash Rights (USD) 629,475
33,250 PageMart Nationwide, Inc., Common Stock 270,156
15,000 Pathnet, Inc., Stock Warrants 151,875
1,356 Pegasus Communications, Corp., Common Stock 66,529
319,200 PhoneTel Technologies, Inc., Common Stock 129,675
8,000 Poland Telecom Finance B.V., Stock Warrants (USD) 1,000
130,000 Price Communications Corp., Common Stock 3,063,125
4,800 Primus Telecommunications Group, Inc., Stock Warrants 148,200
23,840 Protection One Alarm Monitoring, Stock Warrants 8,940
4,000 Republic Technologies International, Inc., Stock Warrants 40
9,000 RSL Communications, Ltd., Stock Warrants 412,875
4,200 R&B Falcon Corp., Stock Warrants 2,095,800
2,200 SF Holdings Group, Inc., Common Stock, Class C 22
3,000 Startec Global Communications, Inc., Stock Warrants 10,875
848,787 Teletrac, Inc., Common Stock 551,712
312,535 Teletrac, Inc., Stock Warrants 3,125
2,894 TREEV, Inc., Common Stock 18,811
7,400 UIH Australia/Pacific, Inc., Stock Warrants 222,925
50,000 UnitedGlobalCom, Inc., Common Stock, Class A 2,337,500
66,000 USN Communications, Inc., Stock Warrants 8,910(d)
55,041 VersaTel Telecom B.V., Common Stock (USD) 2,373,643
1,900 Vialog Corp., Stock Warrants 133,238
90,000 Viatel, Inc., Common Stock 2,570,625
57,000 Wam!Net, Inc., Stock Warrants 634,125
120,000 WebLink Wireless, Inc., Common Stock 1,590,000
36,654 Wherehouse Entertainment, Inc., Stock Warrants, Class A 279,487
6,363 Wherehouse Entertainment, Inc., Stock Warrants, Class B 24,657
6,363 Wherehouse Entertainment, Inc., Stock Warrants, Class C 10,340
1,039,922 Wilshire Financial Services Group, Inc., Common Stock 1,559,883
4,300 Winsloew Furniture, Inc., Stock Warrants 52,138
255,000 WorldCom, Inc., Common Stock 11,698,125
80,000 ZXC Specialty Chemicals plc, Stock Warrants (USD) 130,000
80,000 ZXC Specialty Chemicals plc, Stock Warrants (USD) 50,000
--------------
Total Common Stocks & Stock Warrants (cost $55,292,222) 65,190,098
--------------
<CAPTION>
Principal Maturity
Amount Rate Date
---------- ------ ------------
<S> <C> <C> <C>
SHORT-TERM SECURITIES - 4.5% (a)
Commercial Paper
$ 5,000,000 Henkel Corp. 6.63% 7/24/2000 4,978,821
10,000,000 McDonald's Corp. 6.75% 7/5/2000 9,992,500
10,000,000 Merck & Co. Inc. 6.7% 7/7/2000 9,988,833
5,000,000 New Center Asset Trust 7.04% 7/3/2000 4,998,044
35,700,000 Prudential Funding Corp. 6.875% 7/5/2000 35,672,729
--------------
Total Short-Term Securities (at amortized cost) 65,630,927
--------------
Total Investments (cost $1,724,217,330) 1,452,274,864(e)
==============
Notes to Portfolio of Investments:
----------------------------------
(a) The categories of investments are shown as a percentage of total investments of the High Yield
Portfolio.
(b) Currently non-income producing.
(c) Currently non-income producing and in default.
(d) Denotes restricted securities. These securities have been valued from the date of acquisition
through June 30, 2000, by obtaining quotations from brokers who are active with the issues.
The following table indicates the acquisition date and cost of restricted securities the
Portfolio owned as of June 30, 2000.
<CAPTION>
Acquisition
Security Date Cost
-------------------------------------------------------- -------------- --------------
<S> <C> <C>
Australis Holdings Pty., Ltd., Stock Warrants 3/27/1997 $ --
Australis Media, Ltd., Stock Warrants 1/2/1997 --
Communications & Power Industries, Inc., Common Stock 8/2/1995 211,287
CS Wireless Systems, Inc., Common Stock 12/11/199 22,110
Discovery Zone, Inc., Stock Warrants 7/15/1997 839,158
Harvard Industries, Inc., Stock Warrants 5/14/1992 9,468,416
Iridium World Communications, Stock Warrants 7/11/1997 31,941
USN Communications, Inc., Stock Warrants 8/13/1997 560
(e) At June 30, 2000, the aggregate cost of securities for federal tax purposes was $1,724,217,330
and the net unrealized depreciation of investments based on that cost was $271,942,466 which is
comprised of $70,895,445 aggregate gross unrealized appreciation and $342,837,911 aggregate
gross unrealized depreciation.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
Income Portfolio
Portfolio of Investments
June 30, 2000
(unaudited)
Principal Maturity
Amount Rate Date Value
---------- ------ ------------ --------------
<S> <C> <C> <C>
CORPORATE BONDS - 43.5% (a)
Aerospace & Defense - 2.0%
6,000,000 Lockheed Martin Corp., Notes 7.7% 6/15/2008 $ 5,897,656
10,000,000 Lockheed Martin Corp., Unsecured Debentures 7.65% 5/1/2016 9,480,470
4,000,000 Raytheon Co., Notes 6.75% 8/15/2007 3,721,016
4,000,000 Raytheon Co., Notes 6.45% 8/15/2002 3,908,484
--------------
23,007,626
--------------
Airlines - 1.3%
6,500,000 American Airlines, Inc., Pass Through Certificates,
Series 1999-1-A2, Class B 7.324% 10/15/2009 6,184,328
9,000,000 Continental Airlines, Inc., Series 2000-1-A1
Pass Through Certificates 8.048% 11/1/2020 8,989,425
--------------
15,173,753
--------------
Automotive - 0.3%
3,000,000 Toyota Motor Credit Corp., Notes (USD) 5.5% 9/17/2001 2,947,080
--------------
Banks - 3.0%
5,000,000 Abbey National Capital Trust I Preferred Securities 8.963% 12/29/2049 4,981,710
8,000,000 Abbey National plc, Subordinated Debentures (USD) 7.95% 10/26/2029 7,921,408
6,000,000 HSBC Capital Funding, LP, Notes 10.176% 12/31/2049 6,440,706
6,000,000 PNC Funding Corp., Subordinated Notes 7.5% 11/1/2009 5,797,746
4,500,000 Wachovia Corp., Subordinated Notes 5.625% 12/15/2008 3,887,726
6,000,000 Wells Fargo Capital, Capital Trust Preferred Securities 7.73% 12/1/2026 5,253,714
--------------
34,283,010
--------------
Broadcasting & Media - 0.9%
5,000,000 Charter Communications, Inc., Sr. Notes 10.0% 4/1/2009 4,850,000
1,800,000 Clear Channel Communications, Convertible Notes 1.5% 12/1/2002 1,761,750
4,000,000 CSC Holdings, Inc., Sr. Notes 7.25% 7/15/2008 3,716,848
--------------
10,328,598
--------------
Conglomerates - 0.8%
10,000,000 Tyco International Group S.A., Notes (USD) 5.875% 11/1/2004 9,354,970
--------------
Environmental - 0.6%
3,000,000 USA Waste Services, Inc., Sr. Notes 7.0% 10/1/2004 2,784,921
5,000,000 USA Waste Services, Inc., Sr. Notes 6.5% 12/15/2002 4,708,850
--------------
7,493,771
--------------
Finance - Automotive - 0.6%
7,500,000 Ford Motor Credit Co., Notes 7.375% 10/28/2009 7,275,150
--------------
Finance - Commercial - 0.4%
5,500,000 FINOVA Capital Corp., Notes 7.25% 7/12/2006 4,547,378
--------------
Finance - Consumer - 1.1%
5,000,000 Associates Corp. of North America, Bonds 5.8% 4/20/2004 4,689,780
3,000,000 Associates Corp. of North America, Sr. Notes 6.5% 8/15/2002 2,938,278
6,000,000 CIT (The) Group, Inc., Notes 5.5% 2/15/2004 5,557,932
--------------
13,185,990
--------------
Finance - Other - 0.6%
7,000,000 Comdisco, Inc., Sr. Notes 6.0% 1/30/2002 6,706,154
--------------
Finance - Structured - 0.4%
2,100,000 Credit Suisse First Boston NY, Convertible Medium Term Note
(Cisco Systems, Inc.) 2.0% 1/11/2010 2,415,000
1,800,000 Credit Suisse First Boston, Convertible Medium Term Notes
(General Electric Co.) 2.0% 5/1/2010 1,707,750
--------------
4,122,750
--------------
Food & Beverage - 0.8%
22,000,000 Coca-Cola Enterprises, Inc., Notes Zero Coupon 6/20/2020 4,262,214
5,500,000 ConAgra, Inc., Sr. Notes 5.5% 10/15/2002 5,279,060
--------------
9,541,274
--------------
Health Care - Medical Products & Supplies - 0.6%
8,000,000 Becton, Dickinson, & Co., Debentures 6.7% 8/1/2028 7,026,224
--------------
Health Care Management - 0.3%
3,500,000 Tenet Healthcare Corp., Sr. Notes 9.25% 9/1/2010 3,543,750
--------------
Insurance - 6.4%
9,000,000 Allstate Corp., Debentures 6.75% 5/15/2018 7,777,152
6,000,000 American General Capital Corp. II, Bonds 8.5% 7/1/2030 6,028,476
9,000,000 AON Corp., Notes 8.65% 5/15/2000 9,250,056
11,000,000 Equitable Life Assurance Society of the United States,
Surplus Notes 6.95% 12/1/2005 10,638,837
12,000,000 Everest Reinsurance Holdings, Sr. Notes 8.5% 3/15/2005 12,109,032
6,000,000 GE Global Insurance, Notes 7.5% 6/15/2005 5,959,152
6,000,000 Hartford Financial Services Group, Inc., Notes 7.9% 6/15/2010 6,002,352
8,000,000 New York Life Insurance Co., Surplus Notes 6.4% 12/15/2003 7,754,824
9,000,000 Prudential Insurance Co. of America, Capital Notes 6.875% 4/15/2003 8,796,528
--------------
74,316,409
--------------
Investment Banking & Brokerage - 1.3%
7,000,000 Fidelity Invesments, Debentures 7.49% 6/15/2019 6,711,264
8,500,000 Morgan Stanley Dean Witter, Notes 7.75% 6/15/2005 8,552,964
--------------
15,264,228
--------------
Oil & Gas - 5.3%
6,000,000 Amerada Hess Corp., Bonds 7.875% 10/1/2029 5,904,558
10,000,000 Coastal Corp., Notes 7.75% 6/15/2010 9,949,690
6,000,000 Dynegy, Inc., Notes 8.125% 3/15/2005 6,077,304
4,000,000 Dynegy, Inc., Sr. Notes 7.45% 7/15/2006 3,897,004
4,000,000 Newfield Exploration Co., Sr. Notes, Series B 7.45% 10/15/2007 3,710,428
2,500,000 Nuevo Energy Company, Sr. Subordinated Notes, Series B 9.5% 6/1/2008 2,481,250
2,750,000 Pemex Finance, Ltd., Notes 8.45% 2/15/2007 2,705,271
3,500,000 Pemex Finance, Ltd., Notes, Series 1999-2-A5 9.14% 8/15/2004 3,570,683
6,000,000 Phillips Petroleum Co., Notes 8.75% 5/25/2010 6,363,714
3,000,000 Tosco Corp., Notes 8.125% 2/15/2030 3,033,183
3,000,000 Triton Energy, Ltd., Sr. Notes 8.75% 4/15/2002 2,977,500
3,500,000 Union Pacific Resources Group, Notes 7.3% 4/15/2009 3,383,156
2,000,000 Valero Energy Corp., Notes 8.375% 6/15/2005 2,033,244
6,000,000 Williams Companies, Inc., Notes 7.625% 7/15/2019 5,783,640
--------------
61,870,625
--------------
Retail - 2.2%
450,000 Costco Companies, Inc., Convertible Subordinated Notes Zero Coupon 8/19/2017 372,938
1,050,000 Costco Companies, Inc., Convertible Subordinated Notes Zero Coupon 8/19/2017 870,188
7,000,000 Federated Department Stores, Inc., Notes 8.5% 6/1/2010 7,140,147
3,500,000 Kohls Corp., Convertible Subordinated Bond Zero Coupon 6/15/2020 2,012,500
4,000,000 Rite Aid Corp., Notes 6.125% 12/15/2008 1,880,000
6,000,000 Saks, Inc., Sr. Notes 8.25% 11/15/2008 5,325,384
8,000,000 TJX Companies., Inc., Notes 7.45% 12/15/2009 7,685,056
--------------
25,286,213
--------------
Retail - Food - 2.1%
12,000,000 Kroger Company, Sr. Notes 8.05% 2/1/2010 11,944,464
12,000,000 Safeway, Inc., Notes 7.25% 9/15/2004 11,871,852
--------------
23,816,316
--------------
Services - 0.4%
4,500,000 ARAMARK Services, Inc., Notes 7.0% 7/15/2006 4,199,976
--------------
Technology - Hardware - 0.7%
4,000,000 Solectron Corp., Convertible Note Zero Coupon 5/8/2020 2,540,000
6,000,000 Texas Instruments, Inc., Sr. Notes 7.0% 8/15/2004 5,981,514
--------------
8,521,514
--------------
Telecommunications - Data/Internet - 0.4%
5,000,000 Exodus Communications, Inc., Sr. Notes 11.625% 7/15/2010 5,037,500
--------------
Telecommunications - Wireless - 0.4%
4,500,000 Nextel Communications, Inc., Sr. Notes 9.375% 11/15/2009 4,320,000
--------------
Telecommunications - Wireline - 2.0%
3,500,000 LCI International, Inc., Sr. Notes 7.25% 6/15/2007 3,369,482
5,000,000 Level 3 Communications, Inc., Sr. Notes 11.0% 3/15/2008 4,975,000
5,000,000 NEXTLINK Communications, Inc., Sr. Notes 10.5% 12/1/2009 4,900,000
3,500,000 Qwest Communications International, Inc., Sr. Notes, Series B 7.5% 11/1/2008 3,402,179
6,000,000 U.S. West Capital Funding, Inc., Notes 6.25% 7/15/2005 5,671,914
--------------
22,318,575
--------------
Textiles & Apparel - 0.3%
4,000,000 Levi Strauss & Co., Notes 6.8% 11/1/2003 3,280,000
--------------
Transportation - 1.1%
8,000,000 CNF Transportation, Inc., Notes 8.875% 5/1/2010 7,927,112
4,902,148 Federal Express Corp., Series 1998-1-A, Class B 6.72% 1/15/2022 4,475,440
--------------
12,402,552
--------------
Utilities - 7.2%
4,500,000 AES (The) Corp., Sr. Notes 9.5% 6/1/2009 4,432,500
3,000,000 CalEnergy Company, Inc., Sr. Notes 6.96% 9/15/2003 2,940,210
4,000,000 CalEnergy Company, Inc., Sr. Notes 7.63% 10/15/2007 3,915,144
3,500,000 Calpine Corp., Sr. Notes 7.875% 4/1/2008 3,355,625
2,000,000 Calpine Corp., Sr. Notes 7.75% 4/15/2009 1,895,000
7,500,000 Cleveland Electric Illuminate, Sr. Notes, Series D 7.88% 11/1/2017 7,182,030
4,000,000 CMS Energy Corp., Sr. Notes 8.0% 7/1/2001 3,939,964
7,000,000 CMS Energy Corp., Sr. Unsecured Notes 8.125% 5/15/2002 6,852,104
4,500,000 Commonwealth Edison Co., Notes 7.625% 1/15/2007 4,478,297
4,000,000 Connecticut Light & Power Co., First Refunding Mortgage Bonds,
Series 97C 7.75% 6/1/2002 4,016,124
5,000,000 Consolidated Edison Co. NY, Inc., Debentures 6.45% 12/1/2007 4,674,150
8,500,000 Dominion Resources, Inc., Sr. Notes 8.125% 6/15/2010 8,592,829
9,000,000 East Coast Power, LLC, Sr. Secured Notes, Series B 7.066% 3/31/2012 8,297,172
6,000,000 National Rural Utilities, Medium Term Notes 5.75% 12/1/2008 5,304,426
5,000,000 NRG Energy, Inc., Sr. Notes 7.5% 6/15/2007 4,773,670
5,000,000 PSEG Capital Corp., Medium Term Notes 6.25% 5/15/2003 4,807,115
4,500,000 TNP Enterprises, Inc., Sr. Subordinated Notes 10.25% 4/1/2010 4,646,250
--------------
84,102,610
--------------
Total Corporate Bonds (cost $517,284,878) 503,273,996
--------------
ASSET-BACKED SECURITIES - 8.0% (a)
12,000,000 AESOP Funding II, LLC, Rental Car Notes, Series 1997-1,
Class A-2 6.4% 10/20/2003 11,816,460
968,987 Chase Manhattan Grantor Trust, Series 1996-B-A 6.61% 9/15/2002 968,207
6,000,000 Com-Ed Transitional Funding Trust, Series 1998-1-A6 5.63% 6/25/2009 5,534,310
1,997,392 CS First Boston Mortgage Security Corp., Series 1996-2,
Class A4 6.62% 9/25/2009 1,981,483
10,000,000 Discover Card Master Trust I, Series 1996-3A 6.05% 8/18/2008 9,464,950
5,000,000 Discover Card Master Trust I, Series 1998-7A 5.6% 5/15/2006 4,751,125
12,000,000 Heller Financial Commercial Mortgage Corp.,
Series 2000-PH1-A2 7.75% 11/15/2009 12,189,174
10,000,000 Proffitt's Credit Card Master Trust, Series 1997-2, Class A 6.5% 12/15/2005 9,889,950
12,000,000 Standard Credit Master Trust 1, Credit Card Participation
Certificates, Series 1995-9-A 6.55% 10/7/2007 11,651,940
15,000,000 World Financial Network Credit Card Master Trust,
Series 1996-B, Class A 6.95% 4/15/2006 14,963,025
10,168,724 World Omni Auto Lease Trust, Series 1997-A, Class A4 6.9% 6/25/2003 10,175,079
--------------
Total Asset-Backed Securities (cost $94,945,121) 93,385,703
--------------
FOREIGN GOVERNMENT BONDS - 3.2% (a,b)
6,000,000 Brazil (Federative Republic), Unsubordinated Notes (USD) 14.5% 10/15/2009 6,420,000
12,000,000 Israel (State of), Notes 7.75% 3/15/2010 11,871,972
6,000,000 Mexican United States, Notes 9.875% 2/1/2010 6,225,000
8,000,000 Ontario (Province of) Canada, Sr. Notes 5.5% 10/1/2008 7,184,768
6,000,000 Philippines (Republic of), Bonds 9.5% 10/21/2024 5,595,000
--------------
Total Foreign Government Bonds (cost $38,784,975) 37,296,740
--------------
MORTGAGE-BACKED SECURITIES - 12.7% (a)
65,000,000 Federal National Mortgage Association, Participation
Certificates 8.0% 7/1/2030 65,263,900(c)
65,000,000 Government National Mortgage Association, Modified
Pass Through Certificates 7.5% 6/15/2030 64,532,650(c)
18,000,000 Morgan Stanley Dean Witter Capital I Trust, Pass Through
Certificates, Series 2000-Life-A2 7.57% 12/15/2009 18,070,132
--------------
Total Mortgage-Backed Securities (cost $147,856,716) 147,866,682
--------------
U.S. GOVERNMENT AGENCY - 3.1% (a)
2,000,000 Federal Home Loan Mortgage Corp., Notes 5.125% 10/15/2008 1,744,336
7,000,000 Federal National Mortgage Association, Notes 5.75% 4/15/2003 6,787,228
24,500,000 Federal National Mortgage Association, Notes 7.25% 1/15/2010 24,742,134
8,300,000 Resolution Funding Corp., Principal Strips Zero Coupon 10/15/2019 2,352,203
--------------
Total U.S. Government Agency (cost $35,599,384) 35,625,901
--------------
U.S. GOVERNMENT - 12.9% (a)
96,500,000 U.S. Treasury Bonds 6.25%-7.625% 2016-2023 105,894,248(d)
32,400,000 U.S. Treasury Notes 5.875%-6.5% 2004-2010 32,313,139
20,000,000 U.S. Treasury Principal Strips Zero Coupon 11/15/2021 5,414,200
20,000,000 U.S. Treasury Coupon Strips Zero Coupon 8/15/2021 5,463,560
--------------
Total U.S. Government (cost $151,984,972) 149,085,147
--------------
Shares
--------------
COMMON STOCKS - 0.3% (a)
10,000 Cendant Corp., Stock Rights 84,375(e)
35,000 Lucent Technologies, Inc., Common Stock 2,073,750
30,000 TXU Corp., Common Stock 885,000
--------------
Total Common Stocks (cost $3,277,779) 3,043,125
--------------
PREFERRED STOCKS - 0.6% (a)
15,500 Georgia-Pacific Corp., Convertible Unit Security 496,000
4,800 Global Crossing Holdings, Ltd., Convertible Preferred Stock 1,068,600
35,000 MediaOne Group, Inc., Convertible Preferred Stock (Vodafone Airtouch plc, ADR) 1,417,500
72,000 MetLife Capital Trust I, Convertible Preferred Stock 4,981,500
--------------
Total Preferred Stocks (cost $7,095,312) 7,963,600
--------------
Principal Maturity
Amount Rate Date
---------- ------ ------------
SHORT-TERM SECURITIES - 15.7% (a)
Commercial Paper
$ 11,390,000 Abbott Laboratories 6.65% 7/11/2000 11,368,960
4,962,000 American Express Credit Corp. 6.55% 7/10/2000 4,953,875
5,000,000 Enterprise Funding Corp. 6.56% 7/11/2000 4,990,889
6,137,000 Enterprise Funding Corp. 6.57% 7/24/2000 6,111,240
10,000,000 Ford Motor Credit Co. of Puerto Rico, Inc. 6.55% 7/21/2000 9,963,611
1,280,000 General Electric Capital Corp. 6.55% 7/24/2000 1,274,644
12,000,000 General Mills, Inc. 6.52% 7/20/2000 11,958,707
10,000,000 International Business Machines, Inc. 6.52% 7/13/2000 9,978,267
15,000,000 Merck & Co. Inc. 6.7% 7/7/2000 14,983,250
10,000,000 Metlife Funding, Inc. 6.51% 7/14/2000 9,976,492
5,000,000 New Center Asset Trust 7.04% 7/3/2000 4,998,044
5,000,000 Preferred Receivables Funding Corp. 6.6% 7/21/2000 4,981,667
5,000,000 Preferred Receivables Funding Corp. 6.6% 7/20/2000 4,982,583
1,610,000 Preferred Receivables Funding Corp. 6.58% 7/13/2000 1,606,469
21,100,000 Prudential Funding Corp. 6.875% 7/5/2000 21,083,882
10,000,000 Sears Roebuck Acceptance Corp. 6.7% 7/14/2000 9,979,528
5,000,000 Sheffield Receivables Corp. 7.0% 7/5/2000 4,985,422
5,000,000 St. Paul Companies, Inc. 6.51% 7/12/2000 4,990,054
8,488,000 Transamerica Finance Corp. 6.6% 7/17/2000 8,463,102
5,713,000 Triple-A One Funding, Inc. 6.57% 7/7/2000 5,706,744
19,572,000 USA Group Secondary Market Services 6.48% 7/19/2000 19,515,193
5,000,000 Wal-Mart Stores, Inc. 6.5% 7/11/2000 4,990,972
--------------
Total Short-Term Securities (at amortized cost) 181,843,595
--------------
Total Investments (cost $1,178,672,732) 1,159,384,489(f)
==============
Notes to Portfolio of Investments:
----------------------------------
(a) The categories of investments are shown as a percentage of total investments of the Income Portfolio.
(b) Denominated in U.S. dollars.
(c) Denotes investments purchased on a when-issued basis.
(d) At June 30, 2000, U.S. Treasury Notes valued at $1,512,657 were held in escrow or pledged as initial margin
deposit to cover open financial futures contracts as follows:
<CAPTION>
Notional
Number of Market Principal Unrealized
Type Contracts Expiration Position Value Amount Gain (Loss)
-------------------------- --------- ---------- -------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury Note Futures 250 Sept. 2000 Short $24,621,094 $24,442,344 $ (178,750)
S&P 500 Futures 30 Sept. 2000 Short 11,010,750 11,151,750 141,000
--------------
$ (37,750)
==============
(e) Currently non-income producing.
(f) At June 30, 2000, the aggregate cost of securities for federal income tax purposes was $1,178,672,732 and the
net unrealized depreciation of investments based on that cost was $19,288,243 which is comprised of $5,935,536
aggregate gross unrealized appreciation and $25,223,779 aggregate gross unrealized depreciation.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
Money Market Portfolio
Portfolio of Investments
June 30, 2000
(unaudited)
Principal Maturity
Amount Yield Date Value
---------- ------ ------------ --------------
<S> <C> <C> <C>
BANK NOTES - 1.1% (a)
Banking - Domestic
$ 3,000,000 First National Bank of Chicago, N.A. 6.05% 8/11/2000 $ 2,999,831
--------------
CERTIFICATES OF DEPOSIT - 8.4% (a)
Banking - Domestic - 2.3%
3,000,000 Michigan National Bank 6.80% 4/6/2001 3,001,544
3,000,000 Morgan Guaranty Trust Co. of New York 5.75% 7/19/2000 2,999,924
--------------
6,001,468
--------------
Banking - Foreign - 6.1%
2,000,000 Canadian Imperial Bank of Commerce 6.72% 2/12/2001 1,999,413
3,000,000 Svenska Handelsbanken NY 6.10% 7/27/2000 2,998,954
1,000,000 UBS Ag Stamford (Union Bank of Switzerland) 7.02% 12/6/2000 995,781
1,000,000 UBS Ag Stamford (Union Bank of Switzerland) 6.44% 12/11/2000 998,916
3,000,000 UBS Ag Stamford (Union Bank of Switzerland) 6.90% 4/30/2001 2,999,527
3,000,000 UBS Ag Stamford (Union Bank of Switzerland) 7.23% 5/8/2001 2,999,276
3,000,000 UBS Ag Stamford (Union Bank of Switzerland) 7.15% 6/22/2001 2,997,828
--------------
15,989,695
--------------
Total Certificates of Deposit 21,991,163
--------------
COMMERCIAL PAPER - 83.1% (a)
Banking - Domestic - 2.6%
950,000 Metrocrest Hospital Authority, Series 1989
(Bank of New York Direct Pay Letter of Credit) 6.64% 7/5/2000 949,305
3,000,000 Ventures Business Trust (Guaranteed J.P. Morgan & Co.) 6.66% 8/18/2000 2,973,640
3,000,000 Ventures Business Trust (Guaranteed J.P. Morgan & Co.) 6.75% 9/6/2000 2,962,927
--------------
6,885,872
--------------
Banking - Foreign - 7.5%
3,000,000 Abbey National North America (Guaranteed Abbey National plc) 6.26% 8/30/2000 2,969,650
3,000,000 Abbey National North America (Guaranteed Abbey National plc) 6.46% 11/3/2000 2,935,833
3,000,000 Abbey National North America (Guaranteed Abbey National plc) 7.03% 11/20/2000 2,919,533
5,000,000 Centerior Fuel Corp. (Direct Pay Letter of Credit,
Barclays Bank plc) 6.77% 7/17/2000 4,985,000
3,000,000 Deutsche Bank Financial Corp. (Guaranteed Deutsche Bank A.G.) 6.28% 10/13/2000 2,948,000
3,000,000 Svenska Handelsbank, Inc. 6.93% 12/11/2000 2,909,128
--------------
19,667,144
--------------
Consumer Products - 0.6%
1,700,000 Procter & Gamble Co. 6.62% 7/6/2000 1,698,442
--------------
Drugs & Health Care - 3.4%
3,000,000 Schering Corp. (Guaranteed Schering Plough Corp.) 6.16% 7/26/2000 2,987,479
3,000,000 Schering Corp. (Guaranteed Schering Plough Corp.) 6.33% 8/29/2000 2,969,664
3,000,000 Schering Corp. (Guaranteed Schering Plough Corp.) 6.67% 9/26/2000 2,952,948
--------------
8,910,091
--------------
Finance - Automotive - 4.8%
325,000 DaimlerChrysler North America Holdings 6.37% 10/31/2000 318,260
3,600,000 Ford Motor Credit Co. 6.62% 7/6/2000 3,596,700
3,000,000 Ford Motor Credit Co. 6.61% 10/6/2000 2,998,203
300,000 General Motors Acceptance Corp. (General Motors Corp.) 6.68% 7/12/2000 299,395
3,000,000 General Motors Acceptance Corp. (General Motors Corp.) 6.59% 7/18/2000 2,990,792
1,000,000 General Motors Acceptance Corp. (General Motors Corp.) 6.68% 7/18/2000 996,874
1,500,000 Toyota Motor Credit Corp. 6.24% 8/28/2000 1,485,452
--------------
12,685,676
--------------
Finance - Commercial - 8.1%
12,000,000 CIT Group Holdings, Inc. 7.01% 7/5/2000 11,990,667
2,000,000 General Electric Capital Corp. 6.90% 7/3/2000 1,999,233
3,000,000 General Electric Capital Corp. 6.96% 7/5/2000 2,997,683
570,000 General Electric Capital Corp. 6.81% 9/20/2000 561,471
700,000 General Electric Capital Corp. 6.85% 11/28/2000 680,633
3,000,000 General Electric Credit Capital Services of Puerto Rico, Inc.
(Guaranteed General Electric Capital Corp.) 6.25% 8/25/2000 2,972,179
--------------
21,201,866
--------------
Finance - Consumer - 11.3%
4,300,000 American Express Credit Corp. 6.81% 7/10/2000 4,292,690
5,500,000 American Express Credit Corp. 6.58% 7/11/2000 5,489,993
3,000,000 Associates Financial Services Company of Puerto Rico, Inc.
(Guaranteed Associates Corp. of North America) 6.24% 7/10/2000 2,995,388
2,000,000 Associates Financial Services Company of Puerto Rico, Inc.
(Guaranteed Associates Corp. of North America) 6.54% 7/31/2000 1,989,283
3,000,000 Associates Financial Services Company of Puerto Rico, Inc.
(Guaranteed Associates Corp. of North America) 6.77% 8/23/2000 2,970,541
12,000,000 Household Finance Corp. 6.90% 7/3/2000 11,995,387
--------------
29,733,282
--------------
Finance - Structured - 13.4%
3,000,000 Corporate Asset Funding Co. 6.66% 8/1/2000 2,982,898
3,000,000 Corporate Receivables Corp. 6.64% 8/23/2000 2,971,027
6,900,000 CXC, Inc. 6.92% 7/3/2000 6,897,355
2,100,000 CXC, Inc. 6.64% 7/7/2000 2,097,694
3,000,000 CXC, Inc. 6.70% 8/25/2000 2,969,613
3,000,000 Delaware Funding Corp. 6.62% 7/24/2000 2,987,388
3,000,000 Edison Asset Securitization, L.L.C. 6.65% 8/11/2000 2,977,518
3,000,000 Preferred Receivables Funding 6.65% 8/8/2000 2,979,163
1,014,000 Triple-A One Funding Corp. 6.90% 7/6/2000 1,013,030
2,000,000 Triple-A One Funding Corp. 6.90% 7/6/2000 1,998,086
3,000,000 Triple-A One Funding Corp. 6.66% 7/28/2000 2,985,173
2,500,000 Triple-A One Funding Corp. 6.81% 10/2/2000 2,456,988
--------------
35,315,933
--------------
Food & Beverage - 3.8%
2,587,000 BestFoods 6.27% 7/10/2000 2,583,016
3,500,000 Cargill, Inc. 6.93% 7/5/2000 3,497,309
4,000,000 General Mills, Inc. 6.86% 7/5/2000 3,996,956
--------------
10,077,281
--------------
Insurance - 9.5%
3,000,000 Aegon Funding Corp. (Guaranteed Aegon N.V.) 6.34% 9/6/2000 2,965,663
3,000,000 Aegon Funding Corp. (Guaranteed Aegon N.V.) 6.50% 12/6/2000 2,918,367
5,000,000 American Family Financial Services (Guaranteed American
Family Mutual Insurance Co.) 6.06% 7/17/2000 4,986,933
3,000,000 American Family Financial Services (Guaranteed American
Family Mutual Insurance Co.) 6.28% 9/11/2000 2,963,640
3,000,000 American Family Financial Services (Guaranteed American
Family Mutual Insurance Co.) 6.44% 10/16/2000 2,944,360
3,000,000 American General Finance Corp. 6.96% 10/10/2000 2,942,851
3,000,000 Prudential Funding Corp. 6.99% 11/20/2000 2,920,125
2,250,000 USAA Capital Corp. 6.70% 8/7/2000 2,234,738
--------------
24,876,677
--------------
Metals & Mining - 2.3%
3,000,000 Alcoa, Inc. 6.74% 8/2/2000 2,982,267
3,000,000 Alcoa, Inc. 6.70% 9/12/2000 2,959,972
--------------
5,942,239
--------------
Oil & Gas - 3.5%
1,000,000 Chevron Transport Corp. (Guaranteed Chevron Corp.) 6.22% 8/14/2000 992,618
3,000,000 Chevron Transport Corp. (Guaranteed Chevron Corp.) 6.63% 8/16/2000 2,974,853
3,000,000 Chevron Transport Corp. (Guaranteed Chevron Corp.) 6.36% 9/18/2000 2,959,447
2,238,000 Mobil Corp. 6.58% 2/12/2001 2,261,485
--------------
9,188,403
--------------
Services - 0.7%
2,000,000 Leland H. Stanford Junior University 6.84% 12/12/2000 1,939,684
--------------
Technology - Hardware - 1.1%
3,000,000 Motorola, Inc. 6.82% 11/9/2000 2,927,623
--------------
Technology - Services - 4.6%
12,000,000 Electronic Data Systems Corp. 7.01% 7/5/2000 11,990,667
--------------
Telecommunications - Wireline - 2.2%
3,000,000 AT&T Corp. 6.94% 11/30/2000 2,915,007
3,000,000 AT&T Corp. 6.67% 3/8/2001 3,000,000
--------------
5,915,007
--------------
U.S. Municipal - 3.7%
3,000,000 California Pollution Control Finance Authority; Environmental
Improvement Revenue Bonds; Series 1996 (Guaranteed
Shell Oil Co.) 6.66% 8/15/2000 3,000,000
6,728,000 Nebhelp, Inc. (Student Loan Marketing Assoc.,
Direct Pay Letter of Credit) 6.52% 7/10/2000 6,717,101
--------------
9,717,101
--------------
Total Commercial Paper 218,672,988
--------------
MEDIUM TERM NOTES - 2.6% (a)
Finance - Automotive - 1.5%
2,000,000 General Motors Acceptance Corp. (General Motors Corp.) 6.25% 7/5/2000 2,000,138
1,000,000 General Motors Acceptance Corp. (General Motors Corp.) 6.59% 10/20/2000 996,333
1,000,000 General Motors Acceptance Corp. (General Motors Corp.) 6.81% 4/9/2001 992,580
--------------
3,989,051
--------------
Finance - Commercial - 1.1%
3,000,000 General Electric Capital Corp. 7.42% 5/23/2001 3,000,000
--------------
Total Medium Term Notes 6,989,051
--------------
VARIABLE RATE NOTES - 3.0% (a,b)
Banking - Domestic - 2.1%
2,586,000 River Fuel Co., Inc. (Bank of New York, Direct Pay Letter
of Credit) 6.57% 7/14/2000 2,579,902
3,000,000 River Fuel Co., Inc. (Bank of New York, Direct Pay Letter
of Credit) 6.69% 7/31/2000 2,983,375
--------------
5,563,277
--------------
U.S. Municipal - 0.9%
2,300,000 Illinois Student Assistance Commission (Bank of America,
Illinois, Direct Pay Letter of Credit) 6.68% 7/5/2000 2,300,000
--------------
Total Variable Rate Notes 7,863,277
--------------
U.S. GOVERNMENT AGENCY - 1.8% (a)
1,708,000 Federal Home Loan Bank 6.29% 11/10/2000 1,670,487
3,000,000 Federal National Mortgage Association 6.09% 7/6/2000 2,997,571
--------------
Total U.S. Government Agency 4,668,058
--------------
Total Investments (at amortized cost) $ 263,184,368(c)
===============
Notes to Portfolio of Investments:
----------------------------------
(a) The categories of investments are shown as a percentage of total investments of the Money Market Portfolio.
(b) Denotes variable rate obligations for which the current yield and the next scheduled interest reset date are shown.
(c) Also represents cost for federal income tax purposes.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
OPPORTUNITY GROWTH PORTFOLIO
Financial Statements
Statement of Assets and Liabilities
June 30, 2000
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $419,779,685) $488,260,660
Cash 19,827
Receivable for investment securities sold 5,284,795
Dividend and interest receivable 21,452
------------
Total assets 493,586,734
------------
LIABILITIES:
Payable for investment securities purchased 1,357,813
------------
NET ASSETS $492,228,921
============
NET ASSETS CONSIST OF:
Paid-in capital (33,246,446 shares of capital
stock outstanding) $397,047,257
Undistributed net investment income 422,412
Accumulated net realized gain from sale
of investments 26,278,277
Unrealized net appreciation of investments 68,480,975
------------
NET ASSETS $492,228,921
============
Net asset value and public offering price per share
($492,228,921 divided by 33,246,446 shares of
capital stock outstanding) $14.81
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended June 30, 2000
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Dividend income $ 217,897
Interest income 1,123,315
------------
Total income 1,341,212
------------
Expenses --
Investment advisory fee 918,800
------------
Net investment income 422,412
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investment transactions 67,082,675
Net change in unrealized appreciation of investments (44,920,946)
------------
Net gain on investments 22,161,729
------------
Net increase in net assets resulting
from operations $ 22,584,141
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
June 30, 2000 Year Ended
(unaudited) December 31, 1999
-------------- -----------------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS--
Net investment income (loss) $ 422,412 $ (320,726)
Net realized gain on investments 67,082,675 7,106,355
Net change in unrealized appreciation or depreciation
of investments (44,920,946) 86,027,696
-------------- --------------
Net increase in net assets resulting from operations 22,584,141 92,813,325
-------------- --------------
CAPITAL STOCK TRANSACTIONS--
Proceeds from sale of shares 38,002,029 13,460,359
Cost of shares redeemed (5,263,053) (41,563,313)
-------------- --------------
Net change in net assets from capital stock transactions 32,738,976 (28,102,954)
-------------- --------------
Net increase in net assets 55,323,117 64,710,371
NET ASSETS:
Beginning of period 436,905,804 372,195,433
-------------- --------------
End of period (including undistributed net
investment income of $422,412 and $0, respectively) $ 492,228,921 $ 436,905,804
============== ==============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
MID CAP GROWTH PORTFOLIO
Financial Statements
Statement of Assets and Liabilities
June 30, 2000
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $402,175,752) $473,936,889
Cash 94,008
Receivable for investment securities sold 1,904,401
Dividend and interest receivable 94,900
------------
Total assets 476,030,198
------------
LIABILITIES:
Payable for investment securities purchased 1,121,441
------------
NET ASSETS $474,908,757
============
NET ASSETS CONSIST OF:
Paid-in capital (26,859,131 shares of capital
stock outstanding) $378,053,428
Undistributed net investment income 688,303
Accumulated net realized gain from sale
of investments 24,405,889
Unrealized net appreciation of investments 71,761,137
------------
NET ASSETS $474,908,757
============
Net asset value and public offering price per share
($474,908,757 divided by 26,859,131 shares of
capital stock outstanding) $17.68
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended June 30, 2000
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Dividend income $ 474,798
Interest income 989,021
--------------
Total income 1,463,819
--------------
Expenses --
Investment advisory fee 775,516
--------------
Net investment income 688,303
--------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investment transactions 25,102,730
Net change in unrealized appreciation
of investments 15,367,438
--------------
Net gain on investments 40,470,168
--------------
Net increase in net assets resulting
from operations $ 41,158,471
==============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
June 30, 2000 Year Ended
(unaudited) December 31, 1999
-------------- -----------------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS--
Net investment income $ 688,303 $ 393,588
Net realized gain on investments 25,102,730 30,759,442
Net change in unrealized appreciation or depreciation
of investments 15,367,438 46,480,552
-------------- --------------
Net increase in net assets resulting from operations 41,158,471 77,633,582
-------------- --------------
DISTRIBUTIONS PAID TO SHAREHOLDERS--
Net investment income -- (393,588)
Net realized gain on investments (26,139,698) --
-------------- --------------
Total distributions (26,139,698) (393,588)
-------------- --------------
CAPITAL STOCK TRANSACTIONS--
Proceeds from sale of shares 163,839,614 101,676,490
Reinvested dividend distributions 26,139,698 393,588
Cost of shares redeemed (1,759,792) (3,309,584)
-------------- --------------
Net increase in net assets from capital stock transactions 188,219,520 98,760,494
-------------- --------------
Net increase in net assets 203,238,293 176,000,488
NET ASSETS:
Beginning of period 271,670,464 95,669,976
-------------- --------------
End of period (including undistributed net investment
income of $688,303 and $0, respectively) $ 474,908,757 $ 271,670,464
============== ==============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
WORLD GROWTH PORTFOLIO
Financial Statements
Statement of Assets and Liabilities
June 30, 2000
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $464,999,229) $591,433,096
Cash (including foreign currency holdings
of $7,188,155) 7,273,309
Receivable for investment securities sold 943,148
Dividend and interest receivable 766,440
------------
Total assets 600,415,993
------------
LIABILITIES:
Payable for investment securities purchased 932,695
------------
NET ASSETS $599,483,298
============
NET ASSETS CONSIST OF:
Paid-in capital (38,056,714 shares of capital
stock outstanding) $453,608,814
Undistributed net investment income 2,296,702
Accumulated net realized gain from sale of
investments and foreign currency transactions 17,148,412
Unrealized net appreciation of investments and
on translation of assets and liabilities in
foreign currencies 126,429,370
------------
NET ASSETS $599,483,298
============
Net asset value and public offering price per share
($599,483,298 divided by 38,056,714 shares of
capital stock outstanding) $15.75
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended June 30, 2000
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Dividend income (net of foreign taxes of $636,716) $ 3,891,903
Interest income 803,562
--------------
Total income 4,695,465
--------------
Expenses --
Investment advisory fee 2,398,763
--------------
Net investment income 2,296,702
--------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain on investment transactions 19,220,078
Net realized loss on foreign currency transactions (54,479)
--------------
Net realized gain on investments and foreign
currency transactions 19,165,599
--------------
Net change in unrealized appreciation of investments (46,737,606)
Net change in unrealized appreciation on translation
of assets and liabilities in foreign currencies 12,632
--------------
Net change in unrealized depreciation of investments
and on translation of assets and liabilities in
foreign currencies (46,724,974)
--------------
Net loss on investments and foreign currency (27,559,375)
--------------
Net change in net assets resulting
from operations $ (25,262,673)
==============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
June 30, 2000 Year Ended
(unaudited) December 31, 1999
-------------- -----------------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS--
Net investment income $ 2,296,702 $ 3,710,893
Net realized gain on investments
and foreign currency transactions 19,165,599 18,272,156
Net change in unrealized appreciation or depreciation
of investments and on translation of assets and liabilities
in foreign currencies (46,724,974) 115,182,706
-------------- --------------
Net change in net assets resulting from operations (25,262,673) 137,165,755
-------------- --------------
DISTRIBUTIONS PAID TO SHAREHOLDERS--
Net investment income -- (1,914,960)
Net realized gain on investments (14,798,386) --
-------------- --------------
Total distributions (14,798,386) (1,914,960)
-------------- --------------
CAPITAL STOCK TRANSACTIONS--
Proceeds from sale of shares 78,232,182 58,781,646
Reinvested dividend distributions 14,798,386 1,914,960
Cost of shares redeemed (3,626,525) (15,551,417)
-------------- --------------
Net increase in net assets from capital stock transactions 89,404,043 45,145,189
-------------- --------------
Net increase in net assets 49,342,984 180,395,984
NET ASSETS:
Beginning of period 550,140,314 369,744,330
-------------- --------------
End of period (including undistributed net
investment income of $2,296,702 and $0, respectively) $ 599,483,298 $ 550,140,314
============== ==============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
GROWTH PORTFOLIO
Financial Statements
Statement of Assets and Liabilities
June 30, 2000
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $4,186,579,576) $5,245,598,177
Cash 62,635
Receivable for investment securities sold 59,280,032
Dividend and interest receivable 1,987,773
--------------
Total assets 5,306,928,617
--------------
LIABILITIES:
Open options written, at value
(premium received $121,121) 81,250
Payable for investment securities purchased 66,487,004
--------------
Total liabilities 66,568,254
--------------
NET ASSETS $5,240,360,363
==============
NET ASSETS CONSIST OF:
Paid-in capital (195,197,490 shares of capital
stock outstanding) $3,716,788,172
Accumulated net realized gain from sale
of investments 464,513,719
Unrealized net appreciation of investments 1,059,058,472
--------------
NET ASSETS $5,240,360,363
==============
Net asset value and public offering price per share
($5,240,360,363 divided by 195,197,490 shares
of capital stock interest outstanding) $26.85
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended June 30, 2000
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Dividend income $ 12,285,616
Interest income 6,699,075
--------------
Total income 18,984,691
--------------
Expenses --
Investment advisory fee 10,079,367
--------------
Net investment income 8,905,324
--------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investment transactions 486,093,440
Net realized gain on closed or expired option
contracts written 951,175
--------------
Net realized gain on investments 487,044,615
Net change in unrealized appreciation of investments (202,581,101)
--------------
Net gain on investments 284,463,514
--------------
Net increase in net assets resulting
from operations $ 293,368,838
==============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
June 30, 2000 Year Ended
(unaudited) December 31, 1999
-------------- -----------------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS--
Net investment income $ 8,905,324 $ 17,389,444
Net realized gain on investments 487,044,615 824,884,835
Net change in unrealized appreciation or depreciation
of investments (202,581,101) 640,787,120
-------------- --------------
Net increase in net assets resulting from operations 293,368,838 1,483,061,399
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--
Net investment income (8,905,324) (16,925,590)
Net realized gain on investments (823,110,265) (341,902,994)
-------------- --------------
Total distributions (832,015,589) (358,828,584)
-------------- --------------
CAPITAL STOCK TRANSACTIONS--
Proceeds from sale of shares 129,967,473 237,383,037
Reinvested dividend distributions 832,015,589 358,828,584
Cost of shares redeemed (96,265,491) (127,166,866)
-------------- --------------
Net increase in net assets from capital stock transactions 865,717,571 469,044,755
-------------- --------------
Net increase in net assets 327,070,820 1,593,277,570
NET ASSETS:
Beginning of period 4,913,289,543 3,320,011,973
-------------- --------------
End of period $5,240,360,363 $4,913,289,543
============== ==============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
HIGH YIELD PORTFOLIO
Financial Statements
Statement of Assets and Liabilities
June 30, 2000
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $1,724,217,330) $1,452,274,864
Cash 3,725,916
Receivable for investment securities sold 4,148,948
Interest and dividends receivable 35,636,015
--------------
Total assets 1,495,785,743
--------------
LIABILITIES:
Payable for investment securities purchased 33,010,982
--------------
NET ASSETS $1,462,774,761
==============
NET ASSETS CONSIST OF:
Paid-in capital (174,412,309 shares of capital
stock outstanding) $1,739,014,213
Accumulated net realized loss from sale
of investments (4,296,986)
Unrealized net depreciation of investments (271,942,466)
--------------
NET ASSETS $1,462,774,761
==============
Net asset value and public offering price per share
($1,462,774,761 divided by 174,412,309 shares of
capital stock outstanding) $ 8.39
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended June 30, 2000
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Interest income $ 79,741,997
Dividend income 7,730,875
--------------
Total income 87,472,872
--------------
Expenses --
Investment advisory fee 2,999,533
--------------
Net investment income 84,473,339
--------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investment transactions 11,241,990
Net change in unrealized depreciation of investments (131,788,229)
--------------
Net loss on investments (120,546,239)
--------------
Net change in net assets resulting
from operations $ (36,072,900)
==============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
June 30, 2000 Year Ended
(unaudited) December 31, 1999
-------------- -----------------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS--
Net investment income $ 84,473,339 $ 158,571,046
Net realized gain (loss) on investment transactions 11,241,990 (5,593,466)
Net change in unrealized appreciation or depreciation
of investments (131,788,229) (5,689,722)
-------------- --------------
Net change in net assets resulting from operations (36,072,900) 147,287,858
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--
Net investment income (84,473,339) (158,571,046)
-------------- --------------
CAPITAL STOCK TRANSACTIONS--
Proceeds from sale of shares 24,558,826 51,444,588
Reinvested dividend distributions 84,473,339 158,571,046
Cost of shares redeemed (51,447,548) (100,312,665)
-------------- --------------
Net increase in net assets from capital stock transactions 57,584,617 109,702,969
-------------- --------------
Net change in net assets (62,961,622) 98,419,781
NET ASSETS:
Beginning of period 1,525,736,383 1,427,316,602
-------------- --------------
End of period $1,462,774,761 $1,525,736,383
============== ==============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
INCOME PORTFOLIO
Financial Statements
Statement of Assets and Liabilities
June 30, 2000
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at value
(cost, $1,178,672,732) $1,159,384,489
Cash 28,315
Receivable for investment securities sold 5,033,031
Interest and dividends receivable 12,004,245
--------------
Total assets 1,176,450,080
--------------
LIABILITIES:
Payable for investment securities purchased 135,671,113
Payable for variation margin on open
futures contracts 103,094
--------------
Total liabilities 135,774,207
--------------
NET ASSETS $1,040,675,873
==============
NET ASSETS CONSIST OF:
Paid-in capital (110,522,841 shares of capital
stock outstanding) $1,104,658,331
Accumulated net realized loss from sale
of investments (44,656,465)
Unrealized net depreciation of investments (19,325,993)
--------------
NET ASSETS $1,040,675,873
==============
Net asset value and public offering price per share
($1,040,675,873 divided by 110,522,841 shares of
capital stock outstanding) $ 9.42
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended June 30, 2000
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Interest income $ 36,774,728
Dividend income 129,042
--------------
Total income 36,903,770
--------------
Expenses --
Investment advisory fee 2,063,968
--------------
Net investment income 34,839,802
--------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized loss on investment transactions (16,103,989)
Net realized gain on closed or expired option
contracts written 331,877
Net realized loss on closed futures contracts (209,462)
--------------
Net realized loss on investments (15,981,574)
Net change in unrealized appreciation of investments 16,153,701
--------------
Net gain on investments 172,127
--------------
Net increase in net assets resulting
from operations $ 35,011,929
==============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
June 30, 2000 Year Ended
(unaudited) December 31, 1999
-------------- -----------------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS--
Net investment income $ 34,839,802 $ 65,995,338
Net realized loss on investment transactions (15,981,574) (23,584,100)
Net change in unrealized appreciation or depreciation
of investments 16,153,701 (64,784,927)
-------------- --------------
Net change in net assets resulting from operations 35,011,929 (22,373,689)
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--
Net investment income (34,839,802) (65,979,140)
-------------- --------------
CAPITAL STOCK TRANSACTIONS--
Proceeds from sale of shares 10,105,616 78,018,164
Reinvested dividend distributions 34,839,802 65,979,140
Cost of shares redeemed (70,446,234) (63,960,526)
-------------- --------------
Net change in net assets from capital stock transactions (25,500,816) 80,036,778
-------------- --------------
Net change in net assets (25,328,689) (8,316,051)
NET ASSETS:
Beginning of period 1,066,004,562 1,074,320,613
-------------- --------------
End of period $1,040,675,873 $1,066,004,562
============== ==============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
MONEY MARKET PORTFOLIO
Financial Statements
Statement of Assets and Liabilities
June 30, 2000
(unaudited)
<S> <C>
ASSETS:
Investments in securities, at amortized cost
and value $263,184,368
Cash 17,639
Interest receivable 1,032,440
------------
Total assets 264,234,447
------------
NET ASSETS $264,234,447
============
NET ASSETS CONSIST OF:
Paid-in capital (264,234,447 shares of capital
stock outstanding) $264,234,447
============
Net asset value and public offering price per share
($264,234,447 divided by 264,234,447 shares of
capital stock outstanding) $ 1.00
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended June 30, 2000
(unaudited)
<S> <C>
INVESTMENT INCOME:
Income --
Interest income $ 8,276,036
--------------
Expenses --
Investment advisory fee 536,430
--------------
Net investment income $ 7,739,606
==============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months
Ended
June 30, 2000 Year Ended
(unaudited) December 31, 1999
-------------- -----------------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS--
Net investment income $ 7,739,606 $ 11,631,462
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--
Net investment income (7,739,606) (11,631,462)
-------------- --------------
CAPITAL STOCK TRANSACTIONS--
Proceeds from sale of shares 49,974,357 159,600,774
Reinvested dividend distributions 7,739,606 11,631,462
Cost of shares redeemed (88,362,443) (70,158,014)
-------------- --------------
Net change in net assets from capital stock transactions (30,648,480) 101,074,222
-------------- --------------
Net change in net assets (30,648,480) 101,074,222
NET ASSETS:
Beginning of period 294,882,927 193,808,705
-------------- --------------
End of period $ 264,234,447 $ 294,882,927
============== ==============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB SERIES FUND, INC.
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period (a)
Six Months For the period from
Ended January 18, 1996
June 30, 2000 (effective date) to
OPPORTUNITY GROWTH PORTFOLIO (unaudited) 1999 1998 1997 December 31, 1996
------------- -------- -------- -------- ------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $14.10 $11.06 $11.55 $11.50 $10.00
-------- -------- -------- -------- ---------
Income From Investment Operations --
Net investment income 0.01 (0.01) 0.03 0.06 0.02
Net realized and unrealized gain (loss)
on investments (b) 0.70 3.05 (0.37) 0.05 1.90
-------- -------- -------- -------- ---------
Total from investment operations 0.71 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 $14.81 $14.10 $11.06 $11.55 $11.50
======== ======== ======== ======== ========
Total investment return at net asset
value (c) 4.99% 27.55% (2.99%) 0.93% 19.17%
Net assets, end of period ($ millions) $492.2 $436.9 $372.2 $391.5 $246.6
Ratio of expenses to average net assets 0.40%(d) 0.40% 0.40% 0.40% 0.40%(d)
Ratio of net investment income to average
net assets 0.18%(d) (0.09%) 0.30% 0.65% 0.27%(d)
Portfolio turnover rate 87% 60% 134% 147% 155%
<CAPTION>
For the
period
from
January 30,
Six Months 1998 (effective
Ended date) to
June 30, 2000 December 31,
MID CAP GROWTH PORTFOLIO (unaudited) 1999 1998
------------- -------- ---------------
<S> <C> <C> <C>
Net asset value, beginning of period $16.62 $11.13 $10.00
-------- -------- --------------
Income From Investment Operations --
Net investment income 0.03 0.02 0.04
Net realized and unrealized gain (loss)
on investments (b) 2.37 5.49 1.13
-------- -------- --------------
Total from investment operations 2.40 5.51 1.17
-------- -------- --------------
Less Distributions --
Dividends from net investment income -- (0.02) (0.04)
Distributions from net realized gain
on investments (1.34) -- --
-------- -------- --------------
Total distributions (1.34) (0.02) (0.04)
-------- -------- --------------
Net asset value, end of period $17.68 $16.62 $11.13
======== ======== ==============
Total investment return at net asset value (c) 13.79% 49.64% 11.62%
Net assets, end of period ($ millions) $474.9 $271.7 $95.7
Ratio of expenses to average net assets 0.40%(d) 0.40% 0.40%(d)
Ratio of net investment income to average
net assets 0.36%(d) 0.26% 0.64%(d)
Portfolio turnover rate 56% 148% 125%
See accompanying notes to the Financial Highlights.
</TABLE>
<TABLE>
<CAPTION>
For the
period
from
January 18,
Six Months 1996(effective
Ended date) to
WORLD GROWTH PORTFOLIO June 30, 2000 December 31,
(unaudited) 1999 1998 1997 1996
------------- -------- -------- -------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $16.93 $12.67 $11.12 $10.95 $10.00
-------- -------- -------- -------- ---------
Income From Investment Operations --
Net investment income 0.06 0.11 0.12 0.10 0.08
Net realized and unrealized gain (loss)
on investments (b) (0.81) 4.21 1.74 0.21 0.96
-------- -------- -------- -------- ---------
Total from investment operations (0.75) 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 (0.43) -- (0.10) (0.01) --
-------- -------- -------- -------- ---------
Total distributions (0.43) (0.06) (0.31) (0.14) (0.09)
-------- -------- -------- -------- ---------
Net asset value, end of period $15.75 $16.93 $12.67 $11.12 10.95
======== ======== ======== ======== =========
Total investment return at net asset value (c) (4.49%) 34.13% 16.75% 2.81% 10.41%
Net assets, end of period ($ millions) $599.5 $550.1 $369.7 $287.2 $174.1
Ratio of expenses to average net assets 0.85%(d) 0.85% 0.85% 0.85% 0.85%(d)
Ratio of net investment income to average
net assets 0.81%(d) 0.89% 1.04% 1.08% 1.34%(d)
Portfolio turnover rate 23% 23% 19% 19% 9%
<CAPTION>
Six Months
Ended
June 30, 2000
GROWTH PORTFOLIO (unaudited) 1999 1998 1997 1996 1995
------------- -------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $30.24 $23.51 $21.58 $19.32 $18.27 $13.51
-------- -------- -------- -------- --------- --------
Income From Investment Operations --
Net investment income 0.05 0.11 0.19 0.21 0.24 0.24
Net realized and unrealized gain (loss)
on investments (b) 1.66 9.14 5.28 4.97 3.43 4.76
-------- -------- -------- -------- --------- --------
Total from investment operations 1.71 9.25 5.47 5.18 3.67 5.00
-------- -------- -------- -------- --------- --------
Less Distributions --
Dividends from net investment income (0.05) (0.11) (0.19) (0.21) (0.24) (0.24)
Distributions from net realized gain
on investments (5.05) (2.41) (3.35) (2.71) (2.38) --
-------- -------- -------- -------- --------- --------
Total distributions (5.10) (2.52) (3.54) (2.92) (2.62) (0.24)
-------- -------- -------- -------- --------- --------
Net asset value, end of period $26.85 $30.24 $23.51 $21.58 $19.32 $18.27
======== ======== ======== ======== ======= ========
Total investment return at net asset value (c) 5.91% 43.61% 28.38% 30.18% 22.44% 37.25%
Net assets, end of period ($ millions) $5,240.4 $4,913.3 $3,320.0 $2,426.1 $1,658.6 $1,173.1
Ratio of expenses to average net assets 0.40%(d) 0.40% 0.40% 0.40% 0.40% 0.40%
Ratio of net investment income to average
net assets 0.35%(d) 0.45% 0.94% 1.11% 1.41% 1.53%
Portfolio turnover rate 55% 124% 152% 193% 223% 184%
See accompanying notes to the Financial Highlights.
</TABLE>
<TABLE>
<CAPTION>
Six Months
Ended
June 30, 2000
HIGH YIELD PORTFOLIO (unaudited) 1999 1998 1997 1996 1995
------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.09 $9.16 $10.44 $10.06 $9.94 $9.18
-------- -------- -------- -------- -------- --------
Income From Investment Operations --
Net investment income 0.50 0.99 0.99 0.98 0.98 0.96
Net realized and unrealized gain
(loss) on investments (b) (0.70) (0.07) (1.12) 0.37 0.12 0.76
-------- -------- -------- -------- -------- --------
Total from investment operations (0.20) 0.92 (0.13) 1.35 1.10 1.72
-------- -------- -------- -------- -------- --------
Less Distributions --
Dividends from net investment income (0.50) (0.99) (1.00) (0.97) (0.98) (0.96)
Distributions from net realized gain
on investments -- -- (0.15) -- -- --
-------- -------- -------- -------- -------- --------
Total distributions (0.50) (0.99) (1.15) (0.97) (0.98) (0.96)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $8.39 $9.09 $9.16 $10.44 $10.06 $9.94
======== ======== ======== ======== ======== ========
Total investment return at net asset value (c) (2.42%) 10.52% (1.50%) 14.10% 11.55% 19.62%
Net assets, end of period ($ millions) $1,462.8 $1,525.7 $1,427.3 $1,344.6 $1,026.7 $792.5
Ratio of expenses to average net assets 0.40%(d) 0.40% 0.40% 0.40% 0.40% 0.40%
Ratio of net investment income to average
net assets 11.26%(d) 10.71% 10.04% 9.58% 9.83% 9.94%
Portfolio turnover rate 27% 59% 71% 105% 107% 67%
<CAPTION>
Six Months
Ended
June 30, 2000
INCOME PORTFOLIO (unaudited) 1999 1998 1997 1996 1995
------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.41 $10.21 $9.92 $9.75 $10.08 $9.04
-------- -------- -------- -------- -------- --------
Income From Investment Operations --
Net investment income 0.31 0.59 0.61 0.65 0.63 0.65
Net realized and unrealized gain
(loss) on investments (b) 0.01 (0.80) 0.29 0.17 (0.33) 1.04
-------- -------- -------- -------- -------- --------
Total from investment operations 0.32 (0.21) 0.90 0.82 0.30 1.69
-------- -------- -------- -------- -------- --------
Less Distributions--
Dividends from net investment income (0.31) (0.59) (0.61) (0.65) (0.63) (0.65)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $9.42 $9.41 $10.21 $9.92 $9.75 $10.08
======== ======== ======== ======== ======== ========
Total investment return at net asset value (c) 3.43% (2.01%) 9.37% 8.75% 3.21% 19.36%
Net assets, end of period ($ millions) $1,040.7 $1,066.0 $1,074.3 $880.4 $801.2 $762.1
Ratio of expenses to average net assets 0.40%(d) 0.40% 0.40% 0.40% 0.40% 0.40%
Ratio of net investment income to average
net assets. 6.75%(d) 6.09% 6.06% 6.68% 6.54% 6.81%
Portfolio turnover rate 67% 91% 86% 117% 150% 132%
See accompanying notes to the Financial Highlights.
</TABLE>
<TABLE>
<CAPTION>
Six Months
Ended
June 30, 2000
MONEY MARKET PORTFOLIO (unaudited) 1999 1998 1997 1996 1995
------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
-------- -------- -------- -------- -------- --------
Net investment income from investment operations 0.03 0.05 0.05 0.05 0.05 0.06
Less: Dividends from net investment income (0.03) (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 $1.00
======== ======== ======== ======== ======== ========
Total return (c) 2.92% 4.94% 5.32% 5.43% 5.20% 5.71%
Net assets, end of period ($ millions) $264.2 $294.9 $193.8 $121.2 $103.9 $66.1
Ratio of expenses to average net assets 0.40%(d) 0.40% 0.40% 0.40% 0.40% 0.40%
Ratio of net investment income to average
net assets 5.76%(d) 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
June 30, 2000
(unaudited)
(1) ORGANIZATION
The LB Series Fund, Inc. (the "Fund") is registered under the Investment
Company Act of 1940, as a diversified, open-end investment company. The
Fund is divided into seven separate series (the "Portfolio(s)"), each with
its own investment objective and policies. The seven Portfolios of the Fund
are: Opportunity Growth Portfolio, Mid Cap Growth Portfolio, World Growth
Portfolio, Growth Portfolio, High Yield Portfolio, Income Portfolio and
Money Market Portfolio. The assets of each portfolio are segregated and
each has a separate class of capital stock. The Fund serves as the
investment vehicle to fund benefits for variable life insurance and
variable annuity contracts issued by Lutheran Brotherhood (LB) and
Lutheran Brotherhood Variable Insurance Products Company (LBVIP), an
indirect wholly owned subsidiary of Lutheran Brotherhood.
(2) SIGNIFICANT ACCOUNTING POLICIES
Investment Security Valuations
Securities traded on U.S. or foreign securities exchanges or included in a
national market system are valued at the last quoted sales price at the
close of each business day. Over-the-counter securities and listed securities
for which no price is readily available are valued at prices within the
range of the current bid and asked prices considered best to represent the
value in the circumstances, based on quotes that are obtained from an
independent pricing service approved by the Board of Directors. The pricing
service, in determining values of securities, takes into consideration such
factors as current quotations by broker/dealers, coupon, maturity, quality,
type of issue, trading characteristics, and other yield and risk factors it
deems relevant in determining valuations. Securities which cannot be valued
by the approved pricing service are valued using valuations obtained from
dealers that make markets in the securities. Exchange listed options and
futures contracts are valued at the last quoted sales price. For all
Portfolios other than the Money Market Portfolio, short-term securities
with maturities of 60 days or less are valued at amortized cost; those with
maturities greater than 60 days are valued at the mean between bid and
asked price. Short-term securities held by the Money Market Portfolio are
valued on the basis of amortized cost (which approximates market value),
whereby a security is valued at its cost initially, and thereafter valued
to reflect a constant amortization to maturity of any discount or premium.
The Money Market Portfolio follows procedures necessary to maintain a
constant net asset value of $1.00 per share. All other securities for which
market values are not readily available are appraised at fair value as
determined in good faith by or under the direction of the Board of Directors.
Foreign Currency Translations
The accounting records of the Fund are maintained in U.S. dollars. Securities
and other assets and liabilities of the World Growth Portfolio that are
denominated in foreign currencies are translated into U.S. dollars at the
daily closing rate of exchange. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at
the exchange rate on the transaction date. Currency gains and losses are
recorded from sales of foreign currency, exchange gains or losses between
the trade date and settlement dates on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes. The Fund does not separately report the effect of changes
in foreign exchange rates from changes in market prices on securities held.
Such changes are included in net realized and unrealized gain or loss from
investments.
Federal Income Taxes
No provision has been made for income taxes because the Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code
and to distribute substantially all of its taxable income on a timely basis.
It is also the intention of the Funds to distribute an amount sufficient to
avoid imposition of any federal excise tax. Each Fund is treated as a
separate taxable entity for federal income tax purposes.
Securities Transactions and Investment Income
Securities transactions are accounted for on trade date. Realized gains and
losses on investments and unrealized appreciation and depreciation are
determined on an identified cost basis, which is the same basis used for
federal income tax purposes.
Interest income is determined on the basis of interest or discount earned on
any short-term securities and interest earned on all other debt securities,
including amortization of discount or premium. Dividend income is recorded
on the ex-dividend date. For payment-in-kind securities, income is recorded
on the ex-dividend date in the amount of the value received.
Distributions to Shareholders
Dividends from net investment income, if available, are declared and
reinvested daily for the High Yield, Income and Money Market Portfolios,
quarterly for the Growth Portfolio, and annually for the Opportunity Growth,
Mid Cap Growth and World Growth Portfolios. With the exception of the Money
Market Portfolio, net realized gains from securities transactions, if any,
are distributed at least annually after the close of the Fund's fiscal year.
Short-term gains and losses of the Money Market Portfolio are included in
interest income and distributed daily. Dividends and capital gains are
recorded on the ex-dividend date.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of distributions made
during the year from net investment income or net realized gains may differ
from their ultimate characterization for federal income tax purposes. Also,
due to timing of distributions, the year in which amounts are distributed
may differ from the year that the income or net realized gains were recorded
by the Fund.
Options, Financial Futures and Forward Foreign
Currency Contracts
The Fund, with the exception of the Money Market Portfolio, may buy put and
call options, write covered call options and buy and sell futures contracts.
The Fund intends to use such derivative instruments as hedges to facilitate
buying or selling securities or to provide protection against adverse
movements in security prices or interest rates. The World Growth Portfolio
may also enter into options and futures contracts on foreign currencies and
forward foreign currency contracts to protect against adverse foreign
exchange rate fluctuation.
Option contracts are valued daily and unrealized appreciation or depreciation
is recorded. The Fund will realize a gain or loss upon expiration or closing
of the option transaction. When an option is exercised, the proceeds on sale
for a written call option or the cost of a security for purchased put and
call options is adjusted by the amount of premium received or paid.
Upon entering into a futures contract, the Fund is required to deposit initial
margin, either cash or securities in an amount equal to a certain percentage
of the contract value. Subsequent variation margin payments are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund realizes a gain or loss when the contract is closed or
expires.
Forward foreign currency contracts are valued daily and unrealized appreciation
or depreciation is recorded daily as the difference between the contract
exchange rate and the closing forward rate applied to the face amount of the
contract. A realized gain or loss is recorded at the time a forward contract
is closed.
Dollar Roll Transactions
The Income Portfolio enters into dollar roll transactions, with respect to
mortgage securities issued by GNMA, FNMA and FHLMC, in which the Portfolio
sells mortgage securities and simultaneously agrees to repurchase similar
(same type, coupon and maturity) securities at a later date at an agreed upon
price. During the period between the sale and repurchase, the Portfolio
forgoes principal and interest paid on the mortgage securities sold. The
Portfolio is compensated by the interest earned on the cash proceeds of the
initial sale and from negotiated fees paid by brokers offered as an inducement
to the Portfolio to "roll over" its purchase commitments. The Income Portfolio
earned $892,578 from such fees for the six-month period ended June 30, 2000.
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 an annual
sub-advisory fee for the performance of sub-advisory services for the World
Growth Portfolio. The fee payable is equal to 0.45% of the Portfolio's
average daily net assets. The total amount paid by Lutheran Brotherhood to
Rowe Price-Fleming International under the investment sub-advisory contract
for the six-month period ended June 30, 2000 was $1,269,934.
Effective February 29, 2000, Lutheran Brotherhood terminated the sub-advisory
contract for the Opportunity Growth Portfolio with T. Rowe Price Associates.
On March 1, 2000, Lutheran Brotherhood assumed the daily management of the
Portfolio. Prior to March 1, 2000, Lutheran Brotherhood paid T. Rowe Price
Associates an annual sub-advisory fee for the performance of sub-advisory
services for the Opportunity Growth Portfolio. The fee payable was equal to
0.30% of that Portfolio's average daily net assets. The total dollar amount
paid by Lutheran Brotherhood to T. Rowe Price Associates under the investment
sub-advisory contract for the Opportunity Growth Portfolio during the period
ended March 1, 2000 was $221,076.
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 that allows the independent
directors of the Fund to defer the receipt of all or a portion of their
director fees. Amounts that are deferred are invested in the Lutheran
Brotherhood Family of Funds until distribution in accordance with the plan.
Certain officers and non-independent directors of the Fund are officers of
Lutheran Brotherhood and officers or directors of LBVIP; however, they receive
no compensation from the Fund.
(4) DISTRIBUTIONS FROM CAPITAL GAINS
During the six-month period ended June 30, 2000, distributions from net
realized capital gains of $26,139,698, $14,798,386 and $823,110,265, were
paid by the Mid Cap Growth, World Growth and Growth Portfolios, respectively.
These distributions related to net capital gains realized during the year
ended December 31, 1999.
(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:
Opportunity
Year Growth High Yield Income
---------- ----------- ------------ ------------
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 six-month period ended June 30, 2000, 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 $ 405,374 $ 375,327
Mid Cap Growth 345,962 204,674
World Growth 195,561 121,995
Growth 2,651,482 2,699,398
High Yield 427,230 384,513
Income 421,857 465,625
Purchases and sales of U.S. Government securities were:
In thousands
Portfolio Purchases Sales
---------------------------- ---------------- --------------
Growth $ 9,212 $ 13,537
Income 233,348 221,355
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 $367,994 at June 30, 2000, which represented
0.025% 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 also invest in high-yielding
securities. These securities will typically be in the lower rating
categories or will be non-rated and generally will involve more risk
than securities in the higher rating categories. Lower rated or unrated
securities are more likely to react to developments affecting market
risk and credit risk than are more highly rated securities, which react
primarily to movements in the general level of interest rates.
Investments in Options and Futures Contracts
The movement in the price of the instrument underlying an option or
futures contract may not correlate perfectly with the movement in the
prices of the portfolio securities being hedged. A lack of correlation
could render the Fund's hedging strategy unsuccessful and could result
in a loss to the Fund. In the event that a liquid secondary market would
not exist, the Fund could be prevented from entering into a closing
transaction which could result in additional losses to the Fund.
Foreign Denominated Investments
The World Growth Portfolio invests primarily in foreign denominated stocks.
Foreign denominated assets and currency contracts may involve more risks
than domestic transactions, including: currency risk, political and
economic risk, regulatory risk, and market risk. The Portfolio may also
invest in securities of companies located in emerging markets. Future
economic or political developments could adversely affect the liquidity or
value, or both, of such securities.
Open Option Contracts
The number of contracts and premium amounts associated with call option
contracts written during the six-month period ended June 30, 2000 were as
follows:
<TABLE>
<CAPTION>
Growth Portfolio Income Portfolio
---------------------------- ----------------------------
Number of Premium Number of Premium
Contracts Amount Contracts Amount
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Balance at December 31, 1999 -- $ -- -- $ --
Opened 10,359 4,086,511 850 386,088
Closed (8,560) (3,572,835) (250) (102,823)
Expired (976) (165,005) (450) (221,572)
Exercised (573) (227,550) (150) (61,693)
--------- ------------ --------- ---------
Balance at June 30, 2000 250 $ 121,121 -- $ --
========= ============ ========= =========
</TABLE>
(7) CAPITAL STOCK
Authorized capital stock consists of two billion shares as follows:
Shares Par
Portfolio Authorized Value
------------------ ----------- -----
Opportunity Growth 200,000,000 $0.01
Mid Cap Growth 200,000,000 $0.01
World Growth 200,000,000 $0.01
Growth 400,000,000 $0.01
High Yield 200,000,000 $0.01
Income 400,000,000 $0.01
Money Market 400,000,000 $0.01
The shares of each portfolio have equal rights and privileges with all
shares of that portfolio. Shares in the Fund are currently sold only
to separate accounts of Lutheran Brotherhood and LBVIP.
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
Opportunity Mid Cap World High Money
Growth Growth Growth Growth Yield Income Market
----------- --------- ---------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Shares outstanding at
December 31, 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
Shares sold 2,636,414 9,250,739 4,887,498 4,746,662 2,797,233 1,084,029 49,974,357
Shares issued on
reinvestment of dividends
and distributions -- 1,367,430 907,149 31,463,012 9,569,369 3,726,451 7,739,606
Shares redeemed (367,145) (100,716) (228,692) (3,490,610) (5,769,843) (7,526,960) (88,362,443)
---------- ---------- ----------- ----------- ----------- ------------ ------------
Shares outstanding at
June 30, 2000 33,246,446 26,859,131 38,056,714 195,197,490 174,412,309 110,522,841 264,234,447
========== ========== =========== =========== =========== ============ ============
</TABLE>
8) BANK LOANS
The Fund, along with the Lutheran Brotherhood Family of Funds, are parties to
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 six-month period ended June 30, 2000.
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
Marlene J. Nogle
Assistant Secretary
This report is authorized for distribution to prospective
investors only when preceded or accompanied by the
current prospectuses.
