<PAGE>
JEFFERSON-PILOT CAPITAL APPRECIATION FUND, INC.
A MUTUAL FUND SEEKING GROWTH OF CAPITAL
This report and accompanying financial statements are submitted for information
of the Fund shareholders and are not to be considered as an offer or
solicitation of offers to buy or sell any shares of the Fund. Such offering is
made only if preceded or accompanied by an effective prospectus.
FUND DIRECTORS AND OFFICERS
E. J. YELTON, Ph.D., DIRECTOR, PRESIDENT, AND TREASURER
JOHN C. INGRAM, CFA, DIRECTOR
J. LEE LLOYD, DIRECTOR
RICHARD W. MCENALLY, CFA, DIRECTOR
WILLIAM E. MORAN, DIRECTOR
W. HARDEE MILLS, CFA, VICE PRESIDENT
J. GREGORY POOLE, SECRETARY
GREGORY D. WALKER, CFA, PORTFOLIO MANAGER
DISTRIBUTOR
Jefferson-Pilot Investor Services, Inc.
100 North Greene Street
Greensboro, North Carolina 27401
INVESTMENT ADVISER
JP Investment Management Company
100 North Greene Street
Greensboro, North Carolina 27401
CUSTODIAN AND TRANSFER AGENT
Investors Fiduciary Trust Company
127 West Tenth Street
Kansas City, Missouri 64105
JEFFERSON-PILOT CAPITAL
APPRECIATION FUND, INC.
100 North Greene Street
P.O. Box 21008
Greensboro, North Carolina 27420
<PAGE>
INVESTMENT RESULTS
TOTAL RETURN - 1995 - DIVIDEND REINVESTMENT PLAN:
Net Asset Value June 30, 1995 $14.66
Investment Income Dividend Paid:
February 10, 1995 $ .011
Capital Gains Paid:
February 10, 1995 $ .061
June 30, 1995 Adjusted Value per Share Assuming
All Dividends Reinvested in Fund Shares $14.74
Net Asset Value December 31, 1994 $12.56
Percent Change During Six Months Ended
June 30, 1995:
Jefferson-Pilot Capital Appreciation Fund -
Assuming All Dividends Reinvested in Fund Shares 17.36%
Reinvestment Price Assuming Dividend was reinvested
in New Fund Shares on the Record Date:
$12.64 per share as of January 30, 1995
2
<PAGE>
TO SHAREHOLDERS
INVESTMENT ACTIVITY
On June 30, 1995, the net asset value of your Fund was $14.66. Dividends
totaling $.011 per share from net investment income and $.061 per share from net
capital gains have been paid year to date.
On a total return basis for the first half of the year, the Jefferson-Pilot
Capital Appreciation Fund increased 17.36% while the Growth and Income Median
Mutual Fund Manager increased 16.94%. Through June 30, 1995, Jefferson-Pilot
Capital Appreciation Fund's historical compound annual rate of total return is
shown below for the following holding periods:*
1 Year - 19.57%
3 Years - 10.81%
5 Years - 9.12%
10 Years - 11.30%
Many major stock indices have risen to all-time highs this year. Depending on
which data source utilized, only 8-12% of all US equity managers have
outperformed the S&P 500 in the first half of the year. Many indices, such as
the S&P 500, are capitalization weighted so that the larger company's stock
performance has a greater impact on the indices' return than does a smaller
stock. Not owning the top ten performing stocks in the S&P 500 would have
resulted in 1.8% relative underperformance.
A slight improvement in terms of the number of stocks and industry groups
participating in the market rally occurred in the second quarter. This wider
breadth, however, is not broad enough to be associated with prior bull market
rallies. This is a cause for concern.
The market has continued to reward larger, lower yielding and higher beta
stocks. The Federal Reserve's much anticipated Fed Funds rate cut from 6.00% to
5.75% has continued to support the market. The anticipation of a Fed easing
resulted in smaller capitalization stocks rallying with a vengeance in June as
the NASDAQ rallied 10.2% and erased its underperformance relative to the S&P
500. Much of the NASDAQ strength, however, was the result of the larger
capitalization technology stocks such as Microsoft, Oracle, and Intel.
Restrained inflation and an expected lower, but positive rate of economic growth
has combined to lower interest rates and support higher price-earnings ratios
for the stock market. Earnings, a lagging result of prior economic strength, as
well as other factors seem to be continuing to hold up well. Our single largest
concern is the impact of a lower rate of economic growth on company earnings
which is more dramatic than most expect.
3
<PAGE>
PORTFOLIO DIVERSIFICATION
SECTOR % OF TOTAL NET ASSETS
Credit Cyclicals 0.00
Financial 14.34
Consumer Growth Staples 4.83
Consumer Staples 15.20
Consumer Cyclicals 7.97
Capital Goods - Technology 14.66
Capital Goods 5.05
Energy 10.48
Basic Industries 8.77
Transportation 1.46
Utilities 12.02
Conglomerates 1.55
Cash 3.67
Your continued support and interest in the Jefferson-Pilot Capital Appreciation
Fund are appreciated, and we welcome any questions.
Jefferson-Pilot Capital Appreciation Fund, Inc.
/s/ E. J. Yelton
President
July 21, 1995
* These results do not include the sales charge. If the maximum sales charge
of 4.50% of the initial investment is included and with all subsequent
distributions of the Fund reinvested, the average annual total rate of
return of the Fund for the one, three, five, and ten-year periods ended
June 30, 1995, were +14.16%, +9.19%, +8.16% and +10.22%, respectively.
These results represent past performance and are not necessarily an
indication of future results.
4
<PAGE>
ABOUT YOUR FUND
As a shareowner of Jefferson-Pilot Capital Appreciation Fund, you have several
valuable benefits and privileges:
- - You may be able to acquire additional shares at a reduced sales charge
through either the Combined Purchases, Accumulated Purchases, or Statement of
Intention provisions of the Fund. (See those sections of your prospectus that
describe these provisions.)
- - You may exchange shares owned at any time for an equal value of shares of
Jefferson-Pilot Investment Grade Bond Fund, subject to certain minimum amounts,
without charge.
- - You may reinvest all income and capital gains distributions in additional
Fund shares at the Fund's net asset value (without a sales charge).
- - Provided you own shares or currently purchase shares having a net asset of
at least $10,000, you may elect to have monthly or quarterly payments made to
you under a Systematic Withdrawal Plan.
Additionally, the Fund provides a printed confirmation of each transaction,
quarterly reports, and other account information, making ownership of Fund
shares easy and convenient.
The cost of purchasing and owning shares is reasonable. The services provided
plus professional management plus diversification of investments would otherwise
be prohibitively expensive for most investors.
We hope that this information will encourage you to increase the level of your
future invesments in Jefferson-Pilot Capital Appreciation Fund - or you may wish
to add a Jefferson-Pilot Investment Grade Bond Fund account.
5
<PAGE>
JEFFERSON-PILOT CAPITAL APPRECIATION FUND, INC.
TEN LARGEST HOLDINGS
June 30, 1995
COMPANY MARKET VALUE PERCENT OF FUND
Atlantic Richfield Company $ 921,900 2.6
General Electric Company 732,875 2.1
Philip Morris Companies, Inc. 714,000 2.0
Capital Cities/ABC, Inc. 712,800 2.0
Royal Dutch Petroleum Company 694,688 1.9
Citicorp 677,138 1.9
Sara Lee Corporation 672,600 1.9
Schering - Plough Corporation 670,700 1.9
Texas Instruments, Inc. 669,375 1.9
Mobil Corporation 662,400 1.9
--------- ----
$7,128,476 20.1
6
<PAGE>
JEFFERSON-PILOT CAPITAL APPRECIATION FUND, INC.
STATEMENT OF INVESTMENTS
June 30, 1995 (Unaudited)
NUMBER OF SHARES MARKET
COMMON STOCKS - 97.32% OR PRINCIPAL AMOUNT VALUE
Aerospace/Defense - .67%
Loral Corporation 4,600 $ 238,050
Auto - Car - .29%
Ford Motor Company 3,500 104,125
Auto - Replacement Parts - 1.05%
Magna International, Inc. 8,400 370,650
Banks - 5.04%
Bank of New York Company, Inc. 11,000 444,125
Chase Manhattan Corporation 5,700 267,900
Citicorp 11,700 677,138
NationsBank Corporation 7,400 396,825
Biotechnology - 1.34%
Amgen, Inc. 5,900 473,475*
Broadcasting - 2.01%
Capital Cities/ABC, Inc. 6,600 712,800
Chemicals - Major - 4.01%
Dow Chemical Company 6,200 445,625
du Pont, (E.I.) de Nemours and Company 6,700 460,625
Monsanto Company 5,700 513,712
Chemicals - Miscellaneous - 1.43%
PPG Industries, Inc. 11,800 507,400
Coal - .91%
Pittston Services Group 13,400 321,600
Computer Software - 1.81%
Silicon Graphics Computer System 8,200 326,975*
Sybase, Inc. 10,900 314,738*
Computer Systems - 2.60%
EMC Corporation 13,100 317,675*
International Business Machines Corporation 6,300 604,800
Conglomerates - 1.56%
AlliedSignal, Inc. 8,000 356,000
Tenneco, Inc. 4,300 197,800
Containers - Paper - .49%
Bemis Company, Inc. 6,600 171,600
7
<PAGE>
Cosmetics & Toilet - .84%
International Flavors & Fragrances, Inc. 6,000 298,500
Drugs - 4.61%
Lilly (Eli) & Company 4,300 337,550
Merck & Company, Inc. 5,400 264,600
Mylan Laboratories, Inc. 11,700 359,775
Schering-Plough Corporation 15,200 670,700
Electric Equipment - Major - 2.07%
General Electric Company 13,000 732,875
Electronics - Instrument - 2.18%
General Instrument Corporation 8,300 318,512*
Varian Associates, Inc. 8,200 453,050
Electronics - Semi - 4.35%
LSI Logic Corporation 11,200 438,200*
Microchip Technology, Inc. 12,000 435,000*
Texas Instruments, Inc. 5,000 669,375
Entertainment - .94%
Disney, (Walt) & Company 6,000 333,750
Foods - 2.87%
Archer-Daniels-Midland Company 18,450 343,632
Sara Lee Corporation 23,600 672,600
Footwear - .85%
Nike, Inc. 3,600 302,400
Hospital - Management - 1.93%
Columbia/HCA Healthcare Corporation 9,900 428,175
Foundation Health Corporation 9,400 253,800*
Hospital - Supplies - 2.11%
Baxter International, Inc. 5,700 207,337
Johnson & Johnson 8,000 541,000
Information Processing - 1.71%
Equifax, Inc. 18,100 604,088
Insurance - Multi-Line - 4.07%
Aflac, Inc. 9,000 393,750
Allstate Corporation 12,300 364,387
American General Corporation 6,500 219,375
CIGNA Corporation 6,000 465,750
Leisure Time - .17%
Callaway Golf Company 4,000 60,000
Machinery - Agricultural - .68%
Varity Corporation 5,500 242,000*
8
<PAGE>
Machinery - Industrial Specialty - .72%
York International Corporation 5,700 256,500
Machinery & Construction - 1.63%
Caterpillar, Inc. 9,000 578,250
Merchandising - Department - .77%
Dayton Hudson Corporation 3,800 272,650
Merchandising - Drugs - .54%
Eckerd Corporation 6,000 192,000*
Merchandising - Food - .69%
Albertson's, Inc. 8,200 243,950
Merchandising - Mass - 1.02%
Penney, (JC) Company, Inc. 7,500 360,000
Merchandising - Special - 3.48%
Borders Group, Inc. 7,500 107,813*
Circuit City Stores, Inc. 17,000 537,625
Consolidated Stores Corporation 13,900 290,162*
Lowe's Companies, Inc. 9,950 297,256
Metals - Copper - 1.27%
Phelps Dodge Corporation 7,600 448,400
Metals - Steel - .27%
AK Steel Holding Corporation 3,500 95,375*
Miscellaneous Capital Goods - Technology - .50%
Minnesota Mining & Manufacturing Company 3,100 177,475
Miscellaneous Consumer Cyclical - .43%
Kelly Services, Inc. 6,000 151,500
Miscellaneous Financial - 5.37%
Countrywide Credit Industries, Inc. 30,000 630,000
Dean Witter, Discover & Company 6,300 296,100
Federal Home Loan Mortgage Corporation 4,600 316,250
First USA, Inc. 10,000 443,750
PMI Group, Inc. 5,000 216,875
Natural Gas - Diversified - .67%
Questar Corporation 8,300 238,625
Oils - Integrated Domestic - 5.18%
Amoco Corporation 9,300 619,613
Atlantic Richfield Company 8,400 921,900
Phillips Petroleum Company 8,800 293,700
Oils - Integrated International - 3.83%
Mobil Corporation 6,900 662,400
Royal Dutch Petroleum Company 5,700 694,687
9
<PAGE>
Paper & Forest Products - 1.40%
Scott Paper Company 7,600 376,200
Sonoco Products Company 4,830 119,543
Railroads - .81%
CSX Corporation 3,800 285,475
Telecommunications - .98%
DSC Communications Corporation 7,500 348,750*
Tobacco - 2.36%
Philip Morris Companies, Inc. 9,600 714,000
UST, Inc. 4,100 121,975
Transportation - Truckers - .22%
Yellow Corporation 4,300 77,937
Transportation - Miscellaneous - .45%
Federal Express Corporation 2,600 157,950*
Utilities - Communications - 9.00%
Ameritech Corporation 7,400 325,600
BCE, Inc. 9,100 292,338
Bell Atlantic Corporation 5,800 324,800
BellSouth Corporation 8,400 533,400
Century Telephone Enterprises, Inc. 8,400 238,350
SBC Communications, Inc. 8,600 409,575
Sprint Corporation 14,600 490,925
US West, Inc. 13,800 574,425
Utilities - Electric - 3.14%
American Electric Power Company, Inc. 6,600 231,825
Consolidated Edison Company of NY, Inc. 5,900 174,050
Dominion Resources, Inc. 4,600 167,900
Northeast Utilities 8,650 194,625
PECO Energy Company 4,900 135,362
Public Service Enterprise Group, Inc. 7,500 208,125
-----------
Total Common Stocks (Cost - $29,186,305+) 34,479,805
-----------
SHORT-TERM SECURITIES - 2.68%
SunTrust Banks, Inc., 7/05/95 $450,000 449,628
SunTrust Banks, Inc., 7/06/95 500,000 499,503
-----------
Total Short-Term Securities
(Cost - $949,131+) 949,131
-----------
Total Investments (Cost - $30,135,436+) $35,428,936
-----------
-----------
*Non-income producing.
+Aggregate cost for Federal income tax purposes is the same.
See Notes to Financial Statements.
10
<PAGE>
JEFFERSON-PILOT CAPITAL APPRECIATION FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1995 (Unaudited)
ASSETS
Investment in securities at value (cost $30,135,436) $ 35,428,936
Cash 848,291
Receivables:
Capital shares sold 13,399
Securities sold 570,515
Dividends 64,446
------------
Total Assets 36,925,587
------------
LIABILITIES
Payables:
Capital shares sold 7,876
Securities purchased 1,072,050
Accrued expenses 53,273
------------
Total Liabilities 1,133,199
------------
NET ASSETS
Net Assets, equivalent to $14.66 per share on
2,441,744 shares of capital stock outstanding
(Note 2) $ 35,792,388
------------
------------
Computation of public offering price:
Net asset value per share $ 14.66
----------
----------
Offering price per share (100/95.5 x $14.66)
(reduced on sales of $25,000 or more) $ 15.35
----------
----------
See Notes to Financial Statements.
11
<PAGE>
JEFFERSON-PILOT CAPITAL APPRECIATION FUND, INC.
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1995 (Unaudited)
Investment Income:
Income:
Interest $ 23,622
Dividends 430,237
-----------
Total income 453,859
-----------
Expenses:
Investment Adviser's fee (Note 3) 84,290
Custodian and Transfer agent fees 28,931
Directors' fees 1,680
Professional fees 12,000
Shareholder accounting services (Note 3) 10,800
Other 2,221
-----------
Total expenses 139,922
-----------
Investment income - net 313,937
-----------
Realized and Unrealized Gain on Investments:
Net realized gain on investments 548,266
Unrealized appreciation of investments for the period 4,588,949
-----------
Net gain on investments 5,137,215
-----------
Net increase in net assets from operations $ 5,451,152
-----------
-----------
See Notes to Financial Statements.
12
<PAGE>
JEFFERSON-PILOT CAPITAL APPRECIATION FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended June 30, 1995 and Year Ended December 31, 1994 (Unaudited)
SIX MONTHS YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
1995 1994
-------------- ------------
Increase (Decrease) in Net Assets from:
Operations:
Investment income - net $ 313,937 $ 622,612
Net realized gain on investments 548,266 7,132,162
Unrealized appreciation (depreciation)
for the period 4,588,949 (9,494,642)
----------- -----------
Net increase (decrease) in net
assets from operations 5,451,152 (1,739,868)
Dividends paid to shareholders from:
Investment income - net (28,441) (596,160)
Net realized gain on investments (158,029) (7,155,326)
Capital share transactions (Note 2) (1,855,443) 3,828,530
----------- -----------
Total increase (decrease) 3,409,239 (5,662,824)
Net Assets
Beginning of period 32,383,149 38,045,973
----------- -----------
End of period (including undistributed net
investment income (loss) of $312,976 and
$27,480, respectively) $35,792,388 $32,383,149
----------- -----------
----------- -----------
See Notes to Financial Statements.
13
<PAGE>
JEFFERSON-PILOT CAPITAL APPRECIATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES:
Jefferson-Pilot Capital Appreciation Fund, Inc. is an open-end management
investment company registered under the Investment Company Act of 1940. The
following is a summary of significant accounting policies followed in the
preparation of its financial statements:
VALUATION OF SECURITIES - Investments are stated at value based on the closing
prices reported on national securities exchanges on the last business day of the
period, or for over-the-counter securities, at the last bid price, except that
short-term securities are stated at amortized cost which approximates value.
FEDERAL INCOME TAXES - It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to "regulated investment companies" and
to distribute all of its taxable income to its shareholders. Therefore, no
provision for Federal income tax is required.
GENERAL - Securities transactions are accounted for on the trade date. Dividend
income and distributions to shareholders are recorded on the ex-dividend date.
Interest income is accrued as earned.
2. CAPITAL STOCK:
At June 30, 1995, 10,000,000 shares of capital stock ($1.00 par value) were
authorized and capital paid-in amounted to $29,637,228. Transactions in capital
stock were as follows:
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31, 1994
---------------- -----------------
Shares Amount Shares Amount
Sold 97,685 $1,302,999 178,334 $2,952,364
Issued on reinvestment
of dividends 12,253 154,872 489,064 6,160,598
Redeemed (245,466) (3,313,314) (322,174) (5,284,432)
------- ---------- ------- ----------
Net increase (decrease) (135,528) ($1,855,443) 345,224 $3,828,530
------- ---------- ------- ----------
------- ---------- ------- ----------
3. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
JP Investment Management Company received investment advisory fees of $84,290
during the six months ended June 30, 1995. This fee is computed at the annual
rate of 0.5% of the Fund's average daily net asset value. If the Fund's
expenses, excluding interest and taxes, exceed 1% of the average daily net asset
value, the Investment Adviser will pay the excess. No such reimbursement was
required during the period.
Expenses include $10,800 of fees paid to JP Investment Management Company for
shareholder accounting services.
Jefferson-Pilot Investor Services, Inc. received sales commissions of $40,241 in
its capacity as Principal Distributor for the Fund.
14
<PAGE>
4. INVESTMENT TRANSACTIONS:
Purchases and sales of investment securities, excluding short-term securities,
were $11,112,139 and $13,578,743, respectively.
Realized gains and losses are reported on an identified cost basis. Accumulated
undistributed net realized gain at June 30, 1995 was $548,684.
At June 30, 1995 the aggregate gross unrealized appreciation and (depreciation)
of portfolio securities was as follows:
Unrealized appreciation $5,900,002
Unrealized depreciation (606,502)
----------
Net unrealized appreciation $5,293,500
----------
----------
15
<PAGE>
5. FINANCIAL HIGHLIGHTS:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
-------- ------------------------------------------------------------------
1995 1994 1993 1992 1991 1990
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period $12.56 $17.05 $17.44 $18.02 $14.09 $14.81
------ ------ ------ ------ ------ ------
Income from investment operations
Net investment income .13 .29 .23 .23 .32 .36
Net realized and unrealized gain (loss)
on investments 2.04 (1.12) 1.04 .75 4.13 (.57)
------ ------ ------ ------ ------ ------
Total from investment operations 2.17 (.83) 1.27 .98 4.45 (.21)
------ ------ ------ ------ ------ ------
Less distributions
Dividends from net investment income (.01) (.28) (.22) (.27) (.33) (.35)
Distributions from net realized gains (.06) (3.38) (1.44) (1.29) (.19) (.16)
------ ------ ------ ------ ------ ------
Total distribution (.07) (3.66) (1.66) (1.56) (.52) (.51)
------ ------ ------ ------ ------ ------
Net asset value, end of period $14.66 $12.56 $17.05 $17.44 $18.02 $14.09
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
TOTAL RETURN (WITHOUT DEDUCTION
OF SALES LOAD) 17.36% (4.63%) 7.68% 5.60% 32.22% (1.42%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $35,792 $32,383 $38,045 $34,898 $33,836 $25,840
Ratios to average net assets:
Expenses .83%+ .83% .84% .87% .87% .88%
Net investment income 1.86+ 1.74 1.30 1.34 1.98 2.52
Portfolio turnover rate 33.86 143.81 26.89 53.38 36.70 30.55
</TABLE>
+Annualized
16
<PAGE>
JEFFERSON-PILOT INVESTMENT GRADE BOND FUND, INC.
A MUTUAL FUND SEEKING MAXIMUM INCOME
This report and accompanying financial statements are submitted for information
of the Fund shareholders and are not to be considered as an offer or
solicitation of offers to buy or sell any shares of the Fund. Such offering is
made only if preceded or accompanied by an effective prospectus.
FUND DIRECTORS AND OFFICERS
E. J. YELTON, Ph.D., DIRECTOR, PRESIDENT, AND TREASURER
JOHN C. INGRAM, CFA, DIRECTOR
J. LEE LLOYD, DIRECTOR
RICHARD W. MCENALLY, CFA, DIRECTOR
WILLIAM E. MORAN, DIRECTOR
W. HARDEE MILLS, CFA, VICE PRESIDENT
J. GREGORY POOLE, SECRETARY
H. LUSBY BROWN, CFA,
PORTFOLIO MANAGER
DISTRIBUTOR
Jefferson-Pilot Investor Services, Inc.
100 North Greene Street
Greensboro, North Carolina 27401
INVESTMENT ADVISER
JP Investment Management Company
100 North Greene Street
Greensboro, North Carolina 27401
CUSTODIAN AND TRANSFER AGENT
Investors Fiduciary Trust Company
127 West Tenth Street
Kansas City, Missouri 64105
JEFFERSON-PILOT INVESTMENT GRADE BOND FUND, INC.
100 North Greene Street
P.O. Box 21008
Greensboro, North Carolina 27420
17
<PAGE>
INVESTMENT RESULTS
TOTAL RETURN - 1995 - DIVIDEND REINVESTMENT PLAN:
Net Asset Value June 30, 1995 $ 9.54
Investment Income Dividend Paid:
February 10, 1995 $ .011
May 12, 1995 $ .150
June 30, 1995 Adjusted Value per Share Assuming
All Dividends Reinvested in Fund Shares $ 9.71
Net Asset Value December 31, 1994 $ 8.70
Percent Change During Six Months Ended
June 30, 1995:
Jefferson-Pilot Investment Grade Bond Fund, Inc. -
Assuming All Dividends Reinvested in Fund Shares 11.61%
Reinvestment Prices Assuming Dividends were reinvested
in New Fund Shares on the Record Date:
$8.83 per share as of January 30, 1995
$9.08 per share as of April 28, 1995
18
<PAGE>
TO SHAREHOLDERS
INVESTMENT ACTIVITY
On June 30, 1995, the net asset value of your Fund was $9.54. The Fund paid
dividends of $.161 per share from interest income during the first half of 1995.
The Fund's year-to-date returns and annual returns for one, three, five, and
ten-year periods ending June 30, 1995 are as follows:*
Year-to-Date 11.61%
1 Year - 11.60%
3 Years - 6.36%
5 Years - 7.87%
10 Years - 9.30%
The first half of 1995 witnessed one of the greatest bull markets for bonds
ever. After a record poor performance in 1994, the fixed income markets have
rallied considerably as investor fears of inflation spurred by the expectation
of further economic expansion subsided. These fears evaporated as the American
consumer retrenched from their spending spree that had been the economy's life
blood.
Interest rates fell over 100 basis points on long-term Treasuries during this
period and nearly 200 basis points on shorter term securities. This yield curve
steepening reflected growing expectations that the Federal Reserve Board would
abandon its efforts to slow the economy, letting rates fall instead to prevent
recession. Corporate bonds also rallied with Treasuries and outperformed
Treasury returns. Corporations have continued to expand profits and improve
their credit profiles through the generation of excess cash flow. The resulting
reduced need to issue debt coupled by improved credit quality caused spreads to
tighten on corporates. Mortgage-backed securities were also in short supply with
new CMO issuance down approximately 90% in the first quarter. The fears of heavy
prepayments on MBS and very high volatility, however, caused mortgages to lag
non-callable instruments.
The stance of the Fed has certainly changed to that of accommodation; however,
the degree of the change and the economy's need for monetary stimulus is less
certain. The balance of 1995 could see some pickup in economic activity driven
by the current low interest rate environment. Interest rates could trend higher
as a result. However, the underlying trend of moderate growth and subdued
inflation should remain intact and lead to stable to lower rates. Our Fund will
continue to maintain a duration consistent with the Lehman Aggregate Index and
our usual high credit quality profile.
On June 30, 1995, the Fund's assets were invested approximately 93.1% in medium
and long-term bonds.
19
<PAGE>
PORTFOLIO DIVERSIFICATION:
SECTOR % OF TOTAL NET ASSETS
U. S. Government 41.48
Mortgage-Backed Securities 12.65
Industrials 15.19
Financials 9.98
Electric Utilities 3.09
Telephone Utilities 3.45
Gas Utilities 7.25
Cash Equivalents 6.91
Your continued support and interest in the Jefferson-Pilot Investment Grade Bond
Fund are appreciated, and we welcome any questions.
Jefferson-Pilot Investment Grade Bond Fund, Inc.
/s/ E. J. Yelton
President
July 21, 1995
* These results do not include the sales charge. If the maximum sales charge of
4.50% of the initial investment is included, the rates of return of the Fund
for the one, three, five, and ten-year periods ended June 30, 1995, were
+6.58%, +4.76%, +6.88%, and +8.80%, respectively. These results represent past
performance and are not necessarily an indication of future results.
20
<PAGE>
ABOUT YOUR FUND
As a shareowner of Jefferson-Pilot Investment Grade Bond Fund, you have several
valuable benefits and privileges:
* You may be able to acquire additional shares at a reduced sales charge through
either the Combined Purchases, Accumulated Purchases, or Statement of Intention
provisions of the Fund. (See those sections of your prospectus that describe
these provisions.)
* You may exchange shares owned at any time for an equal value of shares of
Jefferson-Pilot Capital Appreciation Fund, subject to certain minimum amounts,
without charge.
* You may reinvest all income and capital gains distributions in additional Fund
shares at the Fund's net asset value (without a sales charge).
* Provided you own shares or currently purchase shares having a net asset of at
least $10,000, you may elect to have monthly or quarterly payments made to you
under a Systematic Withdrawal Plan.
Additionally, the Fund provides a printed confirmation of each transaction,
quarterly reports, and other account information, making ownership of Fund
shares easy and convenient.
The cost of purchasing and owning shares is reasonable. The services provided
plus professional management plus diversification of investments would otherwise
be prohibitively expensive for most investors.
We hope that this information will encourage you to increase the level of your
future investments in Jefferson-Pilot Investment Grade Bond Fund - or you may
wish to add a Jefferson-Pilot Capital Appreciation Fund account.
21
<PAGE>
JEFFERSON-PILOT INVESTMENT GRADE BOND FUND, INC.
STATEMENT OF INVESTMENTS
June 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
FACE
RATINGS* AMOUNT ISSUE VALUE
<S> <C> <C> <C>
BONDS - 95.44%
U.S. GOVERNMENT - 42.53%
$ 750,000 U.S. Treasury Notes
5 1/8% due 11/30/98 $ 730,778
750,000 U.S. Treasury Notes
6 3/8% due 8/15/02 758,902
1,000,000 U.S. Treasury Notes
6 1/2% due 4/30/99 1,017,190
1,000,000 U.S. Treasury Notes
6 7/8% due 3/31/00 1,035,000
850,000 U.S. Treasury Notes
7 1/2% due 1/31/96 858,237
750,000 U.S. Treasury Notes
8% due 10/15/96 769,920
500,000 U.S. Treasury Bonds
8 7/8% due 8/15/17 622,500
750,000 U.S. Treasury Notes
9 3/8% due 4/15/96 770,745
1,000,000 U.S. Treasury Bonds
10 3/8% due 11/15/09 1,278,590
1,000,000 U.S. Treasury Bonds
12 3/4% due 11/15/10 1,476,720
MORTGAGE-BACKED SECURITIES - 12.97%
1,000,000 Federal Home Loan Mortgage Corporation
6% due 3/15/09 907,810
2,000,000 Federal Home Loan Mortgage Corporation
7% due 9/15/23 1,934,360
22
<PAGE>
INDUSTRIALS - 25.81%
FINANCE - 10.24%
A1 1,000,000 Ford Motor Credit Company
6 3/4% Notes due 8/15/08 968,440
A1 750,000 Merrill Lynch & Company, Inc.
6 7/8% Notes due 3/01/03 745,665
A1 500,000 SunTrust Banks, Inc.
8 7/8% Notes due 2/01/98 528,765
FOODS - 3.43%
Aa2 750,000 Archer-Daniels-Midland Company
7 1/8% Debs. due 3/01/13 751,642
MACHINERY - INDUSTRIAL/SPECIALTY - 2.45%
A2 500,000 Johnson Controls, Inc.
7.70% Debs. due 3/01/15 536,835
NATURAL GAS - 1.63%
Baa2 350,000 Tennessee Gas Pipeline Company
9 1/4% Notes due 5/15/96 358,074
POLLUTION CONTROL - 2.33%
Baa2 500,000 Laidlaw, Inc.
7.70% Debs. due 8/15/02 510,170
RAILROADS - 3.28%
Baa2 750,000 Kansas City Southern Industries, Inc.
6 5/8% Senior Notes due 3/01/05 720,000
TOBACCO - 2.45%
A2 500,000 Philip Morris Companies, Inc.
8 1/4% Senior Notes due 10/15/03 536,605
UTILITIES - 14.13%
UTILITIES - ELECTRIC - 3.17%
A2 113,000 Carolina Power & Light Company
8 1/8% 1st Mtge. due 11/01/03 115,902
A1 500,000 South Carolina Electric & Gas Company
9% 1st & Ref. due 7/15/06 577,445
UTILITIES - GAS - 7.43%
Aa3 500,000 Laclede Gas Company
8 1/2% 1st Mtge. due 11/15/04 550,370
23
<PAGE>
A3 500,000 National Fuel Gas Company
7 3/4% Debs. due 2/01/04 523,370
Baa1 500,000 Texas Gas Transmission
8 5/8% Notes due 4/01/04 554,775
UTILITIES - TELEPHONE - 3.53%
A3 750,000 United Telephone Company of Pennsylvania
7 3/8% 1st Mtge. Ser. Y due 12/01/02 773,993
-----------
Total Bonds (Cost - $19,341,956+) 20,912,803
-----------
SHORT-TERM SECURITIES - 4.56%
A1 500,000 General Electric Capital Corporation, 7/05/95 499,587
A1 500,000 SunTrust Banks, Inc., 7/11/95 499,089
-----------
Total Short-Term Securities
(Cost - $998,676+) 998,676
-----------
Total Investments
(Cost - $20,340,632+) $21,911,479
-----------
-----------
</TABLE>
* Bonds are rated by Moody's Investors Service, Inc. and Commercial Paper is
rated by Standard & Poor's Corporation.
+ Aggregate cost for Federal income tax purposes is the same.
See Notes to Financial Statements.
24
<PAGE>
JEFFERSON-PILOT INVESTMENT GRADE BOND FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1995 (Unaudited)
ASSETS
Investment in securities at value (cost $20,340,632) $ 21,911,479
Cash 223,798
Receivables:
Interest 359,361
Capital shares sold 1,410
------------
Total Assets 22,496,048
------------
LIABILITIES
Payables:
Accrued expenses 29,996
------------
Total Liabilities 29,996
------------
NET ASSETS
Net Assets, equivalent to $9.54 per share on
2,353,910 shares of capital stock outstanding
(Note 2) $ 22,466,052
------------
------------
Computation of public offering price:
Net asset value per share $ 9.54
----------
----------
Offering price per share (100/95.5 x $9.54)
(reduced on sales of $25,000 or more) $ 9.99
----------
----------
See Notes to Financial Statements.
25
<PAGE>
JEFFERSON-PILOT INVESTMENT GRADE BOND FUND, INC.
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1995 (Unaudited)
Investment Income:
Interest $ 810,822
-----------
Expenses:
Investment Adviser's fee (Note 3) 53,853
Custodian and Transfer Agent fees 19,844
Directors' fees 1,680
Professional fees 10,173
Shareholder accounting services (Note 3) 6,000
-----------
Total expenses 91,550
-----------
Investment income - net 719,272
-----------
Realized and Unrealized Gain (Loss) on Investments:
Net realized loss on investments (45,405)
Unrealized appreciation of investments for the period 1,724,561
-----------
Net gain on investments 1,679,156
-----------
Net increase in net assets from operations $ 2,398,428
-----------
-----------
See Notes to Financial Statements.
26
<PAGE>
JEFFERSON-PILOT INVESTMENT GRADE BOND FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended June 30, 1995 and Year Ended December 31, 1994 (Unaudited)
SIX MONTHS YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
1995 1994
-------------- ------------
Increase (Decrease) in Net Assets from:
Operations:
Investment income - net $ 719,272 $ 1,479,005
Net realized loss on investments (45,405) (774,526)
Unrealized appreciation (depreciation)
for the period 1,724,561 (2,124,538)
----------- -----------
Net increase (decrease) in net
assets from operations 2,398,428 (1,420,059)
Dividends paid to shareholders from
investment income - net (381,213) (1,443,508)
Capital share transactions (Note 2) (582,808) 263,565
----------- -----------
Total increase (decrease) 1,434,407 (2,600,002)
Net Assets
Beginning of period 21,031,645 23,631,647
----------- -----------
End of period (including undistributed net
investment income of $373,556 and
$35,497, respectively) $22,466,052 $21,031,645
----------- -----------
----------- -----------
See Notes to Financial Statements.
27
<PAGE>
JEFFERSON-PILOT INVESTMENT GRADE BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES:
Jefferson-Pilot Investment Grade Bond Fund, Inc. is an open-end management
investment company registered under the Investment Company Act of 1940. The
following is a summary of significant accounting policies followed in the
preparation of its financial statements:
VALUATION OF SECURITIES - Fixed income securities are valued by using market
quotations or independent pricing services which utilize prices provided by
market makers or estimates based on yield data related to similar securities;
short-term securities are stated at amortized cost which approximates value.
FEDERAL INCOME TAXES - It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to "regulated investment companies" and
to distribute all of its taxable income to its shareholders. Therefore, no
provision for Federal income tax is required.
GENERAL - Securities transactions are accounted for on the trade date.
Distributions to shareholders are recorded on the ex-dividend date. Interest
income is accrued as earned.
2. CAPITAL STOCK:
At June 30, 1995, 10,000,000 shares of capital stock ($1.00 par value) were
authorized and capital paid-in amounted to $21,411,416. Transactions in capital
stock were as follows:
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31, 1994
---------------- -----------------
Shares Amount Shares Amount
Sold 18,533 $ 168,848 150,431 $1,421,796
Issued on reinvestment
of dividends 26,455 239,739 101,556 909,213
Redeemed (108,971) (991,395) (224,210) (2,067,444)
------- ---------- ------- ---------
Net increase (decrease) ( 63,983) ($ 582,808) 27,777 $ 263,565
------- ---------- ------- ---------
------- ---------- ------- ---------
3. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
JP Investment Management Company received investment advisory fees of $53,853
during the six months ended June 30, 1995. This fee is computed at the annual
rate of 0.5% of the Fund's average daily net asset value. If the Fund's
expenses, excluding interest and taxes, exceed 1% of the average daily net asset
value, the Investment Adviser will pay the excess. No such reimbursement was
required during the period.
Expenses include $6,000 of fees paid to JP Investment Management Company for
shareholder accounting services.
Jefferson-Pilot Investor Services, Inc. received sales commissions of $3,870 in
its capacity as Principal Distributor for the Fund.
28
<PAGE>
4. INVESTMENT TRANSACTIONS:
Purchases and sales of investment securities, excluding short-term securities,
were $7,023,037 and $7,681,421, respectively.
Realized gains and losses are reported on an identified cost basis. Accumulated
undistributed net realized loss at June 30, 1995 was $889,767. This loss may be
carried forward to offset future capital gain.
At June 30, 1995, the aggregate gross unrealized appreciation and (depreciation)
of portfolio securities was as follows:
Unrealized appreciation $1,616,497
Unrealized depreciation (45,650)
----------
Net unrealized appreciation $1,570,847
----------
----------
29
<PAGE>
5. FINANCIAL HIGHLIGHTS:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
-------- ------------------------------------------------------------------
1995 1994 1993 1992 1991 1990
-------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period $ 8.70 $ 9.89 $ 9.57 $ 9.65 $ 9.23 $ 9.48
------ ------ ------ ------ ------ ------
Income from investment operations
Net investment income .31 .62 .64 .66 .76 .82
Net realized and unrealized gain (loss)
on investments .69 (1.21) .32 (.06) .44 (.25)
------ ------ ------ ------ ------ ------
Total from investment operations 1.00 (.59) .96 .60 1.20 .57
------ ------ ------ ------ ------ ------
Less distributions
Dividends from net investment income (.16) (.60) (.64) (.68) (.78) (.82)
Distributions from net realized gains - - - - - -
------ ------ ------ ------ ------ ------
Total distributions (.16) (.60) (.64) (.68) (.78) (.82)
------ ------ ------ ------ ------ ------
Net asset value, end of period $ 9.54 $ 8.70 $ 9.89 $ 9.57 $ 9.65 $ 9.23
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
TOTAL RETURN (WITHOUT DEDUCTION
OF SALES LOAD) 11.61% (5.97%) 10.24% 6.53% 13.76% 6.54%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $22,466 $21,032 $23,632 $21,359 $19,313 $18,083
Ratios to average net assets:
Expenses .85% .85% .86% .93% .93% .91%
Net investment income 6.68 8.32 6.46 6.99 8.18 8.96
Portfolio turnover rate 34.42 41.01 21.34 25.53 23.65 -
</TABLE>
30
<PAGE>
JEFFERSON-PILOT INVESTMENT GRADE BOND FUND, INC.
CHANGES IN INVESTMENT POSITIONS
For the Period April 1, 1995 to June 30, 1995
ADDITIONS
Merrill Lynch & Company, Inc.
6 7/8% Notes due 3/01/03
U.S. Treasury Notes
5 1/8% due 11/30/98
U.S. Treasury Notes
6 3/8% due 8/15/02
U.S. Treasury Notes
6 1/2% due 4/30/99
U.S. Treasury Notes
6 7/8% due 3/31/00
ELIMINATIONS
TMC, Inc.
7 1/4% Debs. due 3/01/13
U.S. Treasury Notes
5 5/8% due 8/31/97
U.S. Treasury Notes
6% due 6/30/96
U.S. Treasury Notes
7 1/4% due 11/30/96
Weyerhaeuser Company
7 1/2% Debs. due 3/01/13
31
<PAGE>
[LOGO]
FAMILY
OF FUNDS
- --------------------------
JEFFERSON-PILOT
CAPITAL APPRECIATION FUND
INVESTMENT GRADE BOND FUND
- --------------------------
SEMI-ANNUAL REPORT
JUNE 30, 1995
THIS REPORT AND ACCOMPANYING FINANCIAL STATEMENTS ARE SUBMITTED FOR INFORMATION
OF THE FUND SHAREHOLDERS AND ARE NOT TO BE CONSIDERED AS AN OFFER OR
SOLICITATION OF OFFERS TO BUY OR SELL ANY SHARES OF THE FUND. SUCH OFFERING IS
MADE ONLY IF PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
