JEFFERSON PILOT VARIABLE FUND, INC.
FROM THE PRESIDENT
Dear Policyholder:
You hold in your hands the first annual report for the Jefferson Pilot
Variable Fund (formerly Chubb America Fund), which combines the sub advisor
managed portfolios of Ensemble II Variable Universal Life, and Allegiance and
Alpha Variable Annuities under a common fund structure. Through this union, we
are bringing together the investment management expertise of the Alexander
Hamilton Variable Insurance Trust (AHVIT) and Chubb America Fund under the new
name of Jefferson Pilot Variable Fund.
Whichever of these products you own, you will realize advantages from this
realignment. In the future, both variable life and annuity contract holders
should receive the benefits of lower fund expenses achieved through the
economies created by this merger. And whether you are a variable life or
variable annuity contract holder, you now have a stronger more diverse selection
of portfolios from which to choose. The specific changes relative to each
product have been previously communicated to you.
The year 1997 proved to be a great one for investors. Many financial markets
continued their advance through the second half of the year, albeit with greater
fluctuations. Pacific Region stocks, which comprise only a small percentage of
our holdings, were the exception as they suffered from the expanding financial
crisis in that part of the world. Here at home, large cap stocks continued to
outperform all other categories as reflected by a 33 percent gain in the S&P 500
Index. The Capital Growth and Growth & Income Portfolios led the Jefferson Pilot
Fund group of portfolios, returning 29.4 percent and 28.9 percent, respectively,
for the year.
In February, Jefferson Pilot Corporation unveiled a new brand identity,
Jefferson Pilot Financial, supported by a national print and television
advertising campaign. This new name acknowledges Jefferson Pilot's growth,
supported by the acquisition of Alexander Hamilton Life and the Chubb Life
Companies, into one of the largest publicly-owned life insurance and financial
services companies in the nation. By taking advantage of the opportunities
associated with this growth, the transition to the Jefferson Pilot Variable Fund
positions us to better meet our commitment to provide you with the finest
insurance and investment products available.
Sincerely,
/s/ Ronald R. Angarella
- -----------------------
Ronald R. Angarella
President, Jefferson Pilot Variable Fund
_____________________________________________________________________________[1]
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<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
INDEX
Page
Portfolio Profiles
World Growth Stock Portfolio 5
Money Market Portfolio 13
Gold Stock Portfolio 17
Domestic Growth Stock Portfolio 23
Bond Portfolio 29
Growth and Income Portfolio 35
Capital Growth Portfolio 43
Balanced Portfolio 49
Emerging Growth Portfolio 57
Financial Statements 66
Notes to Financial Statements 72
Report of Independent Auditors 80
_____________________________________________________________________________[3]
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<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
WORLD GROWTH STOCK PORTFOLIO
"The best way to truly minimize
volatility is to invest in the most
undervalued securities worldwide. We
focus on companies which trade at
bargain valuations because short-term
concerns are masking long-term
potential."
- --Cindy Sweeting, Portfolio Manager--
- --------------------------------------------------------------------------------
INCEPTION DATE
August 1, 1985
- --------------------------------------------------------------------------------
FUND MANAGER
Templeton Global Advisors, Ltd.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGY
To achieve long-term capital growth through
a policy of investing primarily in stocks of companies
organized in the United States or in any foreign nation.
- --------------------------------------------------------------------------------
NET ASSETS AS OF 12/31/97
$105,567,503
- --------------------------------------------------------------------------------
NUMBER OF HOLDINGS
136
- --------------------------------------------------------------------------------
PORTFOLIO TURNOVER
30.22%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IN THIS SECTION
- --------------------------------------------------------------------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CINDY SWEETING, CFA
[bullet] Joined Templeton organization in 1997
[bullet] Previously vice president of investments with McDermott International
Co., Inc.
[bullet] Serves on Board of Directors of the International Society of Financial
Analysts
[bullet] B.A. from Georgetown University
[bullet] Chartered Financial Anyalst
_____________________________________________________________________________[5]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
WORLD GROWTH STOCK PORTFOLIO
- ---------------------------------[Pie Chart]------------------------------------
% of Portfolio*
Common Stock--87.89%
Short-Term Obligations--4.18%
Preferred Stock--4.51%
Cash--1.98%
Corporate Bonds--1.44%
- --------------------------------------------------------------------------------
- ----------------------------------------------------
PERCENT OF
TOP TEN EQUITIES PORTFOLIO
- ----------------------------------------------------
AT&T Corp. 2.28%
Telefonica de Espana, ADR 1.53%
Oshawa Group, Ltd. 1.52%
Telecom Italia 1.49%
Thames Water, PLC 1.45%
Credit Commercial de France 1.45%
British Energy, PLC 1.44%
Tesco, PLC 1.38%
Repsol, SA 1.32%
Zurich Versicherungs-
Gesellschaft 1.32%
- ----------------------------------------------------
PERCENT OF
TOP TEN COUNTRIES PORTFOLIO
- ----------------------------------------------------
United States 25.83%
United Kingdom 15.13%
France 5.59%
Hong Kong 5.01%
Australia 4.85%
Spain 3.84%
Italy 3.45%
Canada 3.29%
Mexico 2.77%
Netherlands 2.48%
*Represents market value of
investments plus cash.
Nineteen ninety-seven proved to be a year of contrasting fortunes, increased
volatility and widely divergent equity market returns. The developed markets in
North America and Europe, for the most part, continued in strong uptrends,
powered by continued economic expansion, subdued inflation, corporate
restructuring and extraordinary demand for financial assets. The exception to
the rule for developed markets was Japan, where the eight year bear market
continued to grind on, most recently with high profile bankruptcies such as
Yamaichi Securities. In the emerging markets, the outcome was mixed. Dramatic
declines were experienced in Asia, and the ten worst performing markets were all
in the Pacific Rim. Thailand, South Korea and Indonesia sustained U.S. dollar
declines of over 75% on the year. Other non-Asian emerging markets made
substantial gains, with Turkey, Hungary, Greece and Mexico all recording U.S.
dollar returns in excess in 30%.
Despite the divergent returns, a common thread in the global arena surfaced
in the second half of the year, driven by the financial and economic turmoil in
Asia. Complacency has been replaced by uncertainty and a general sense of unease
had developed among investors. Accordingly, equity price volatility has
escalated dramatically. The Portfolio's investment philosophy is well suited to
excessive volatility, as volatility causes share prices to fluctuate more widely
than share values. While remaining cognizant of risk, such environments provide
good opportunities to add companies to the Portfolio at attractive levels by
systematically and rationally determining when undue concerns are reflected in
stock prices.
The Portfolio gained 15.33% for the year, nearing its benchmark index, the
MSCI World Index, which rose by 16.20% in 1997. After three strong quarters, the
fourth quarter produced a decline of 7.38% as the Asian crisis took hold and
spread throughout the region. The Portfolio's return lagged the benchmark during
the final quarter due to underweighting in the U.S.
The U.S. equity market showed exceptionally strong returns for the full
year, over 30%. In addition to serving as a "safe haven", as funds fled emerging
markets, it is clear that U.S. companies have shown a remarkable rise in
profitability as reflected in return on equity (ROE) levels soaring to almost
double the long-term average. While strong economic growth, declining interest
rates, a favorable currency and extensive corporate restructuring have
occasioned this achievement, it appears to be fully accepted and priced into
share valuations.
Although 1997 showed strong returns in the region, our European weighting
remains substantial as new bargain opportunities are still available. From a
valuation standpoint, the average European company had a ROE and a price/book
value 30% less than the average U.S. company. This difference could be justified
by the observation that American companies are more profitable than their
European counterparts, but what is important is how comparisons are likely to
change in the future. The imminent onset of European Monetary Union (EMU) and
the resultant necessity to improve competitive positions has increased the
urgency of restructuring initiatives.
We are focusing on companies whose stock prices have yet to benefit from
increased efforts to improve productivity and returns on capital through
corporate restructuring.
We believe that restructuring initiatives in Europe are an on-going process,
driven and sustained by global competition. Our analysts' focus on company
specific initiatives and the competence and ability of management to deliver
improvements have led to a meaningful weighting in the region.
Over the course of 1997, an increasing number of UK companies have met our
bar-
[6]_____________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
WORLD GROWTH STOCK PORTFOLIO
gain list valuation criteria--some because of negative short term results and
sentiment related to the strength of the British pound.
The picture in our emerging markets exposure has been generally negative
since mid year, as fears of similar currency and economic deterioration
affecting Asian share prices also spread to Latin America, particularly Brazil,
which until then had been performing quite well. Many reasons caused the
dramatic declines in Asia, notably excessive investment--often financed by
foreign debt--and large capital flows which pushed asset prices to unsustainably
high levels. In addition, unsound real estate loans and other kinds of lending
undermined the countries' financial systems. These financial imbalances led to
productive overcapacity and overvalued exchange rates. Consequently, these
countries lost the confidence of both domestic and international investors.
While markets in Asia have been decimated almost across the board, this
should not obscure the fact that there will be bargain opportunities as
companies will be affected in different ways by the current environment. We
continue to believe that opportunities are borne out of adversity, and such
opportunities often appear when the short-term outlook appears bleakest. We are
actively focusing on long-term potential and searching for sound, strategically
positioned companies with strong balance sheets who will be survivors in the
current turmoil. For example, Indosat is Indonesia's primary carrier of
international telephone traffic with a 90% market share. The company has no U.S.
dollar loans, has net cash on its balance sheet which will be a beneficiary of
higher interest rates, and receives a good portion of its revenues in U.S.
dollars. We recently added Indosat to the Portfolio, and are looking for similar
well-positioned companies in other emerging market countries.
Japan, Asia's largest developed market, has also been under pressure this
year due to continued concerns about the nonperforming loan exposure in the
banking system. We are searching diligently for new ideas as valuations have
fallen, and have added Matsuzakaya, a premier brand name retailer, and Yamato
Kogyo, a leading steel minimill operator. In general, however, the market has
not yet reached bargain valuations and we are still significantly underweighted
in the Japanese market.
Templeton's approach to managing the Portfolio remains the same. In our
view, the best way to truly minimize volatility is to invest in the most
undervalued securities worldwide. We focus on companies which trade at bargain
valuations because short-term concerns are masking long-term potential. We
believe our philosophy greatly enhances the possibility of acquiring shares at
attractive levels for our investors while reducing risk. Risk lies in investing
in securities which are over-valued and thus risk can be minimized--but not
removed-- by diligent research. Safety will not be found in buying high quality
companies whose shares are overvalued. High quality companies can sustain sharp
share price falls, as the experience of Japanese blue chips since 1989
demonstrates.
After this year's events, there is likely to be a greater proportion of
undervalued securities in the emerging markets and we would expect the Portfolio
to reflect this through the coming year. In the developed markets, there are now
fewer undervalued securities, and in some cases, overvalued securities. Hence,
exposure here is likely to fall. The current environment is certainly
challenging, but our disciplined philosophy has serviced us well in the past,
and we anticipate it will continue to do so.
- ---------------------------------------[Line Chart]----------------------------
World Growth Stock Portfolio and the MSCI World Index
Comparison of Change in Value of $10,000 Investment.
MSCI World Index
World Growth Stock Portfolio
MSCI
WORLD WORLD
DATE GROWTH INDEX
- ---- ------ -----
08/02/85 10,000 10,000
09/30/85 9,112 10,137
12/31/85 10,526 11,822
03/31/86 12,932 14,371
06/30/86 12,712 15,328
09/30/86 12,765 16,146
12/31/86 13,449 16,882
03/31/87 14,918 20,707
06/30/87 14,999 21,951
09/30/87 16,167 23,311
12/31/87 12,408 19,712
03/31/88 13,855 22,022
06/30/88 14,352 21,836
09/30/88 14,141 21,928
12/31/88 14,034 24,433
03/31/89 15,373 25,008
06/30/89 15,862 24,689
09/30/89 18,247 27,584
12/31/89 18,041 28,634
03/31/90 17,244 24,562
06/30/90 18,671 26,580
09/30/90 15,554 21,760
12/31/90 16,176 23,904
03/31/91 17,797 26,288
06/30/91 17,325 25,434
09/30/91 18,848 27,260
12/31/91 19,812 28,439
03/31/92 19,777 26,152
06/30/92 20,910 26,660
09/30/92 20,281 27,143
12/31/92 21,015 27,114
03/31/93 22,440 29,479
06/30/93 23,314 31,306
09/30/93 25,138 32,814
12/31/93 28,104 33,384
03/31/94 27,156 33,628
06/30/94 26,728 34,678
09/30/94 28,551 35,464
12/31/94 27,248 35,248
03/31/95 27,603 36,944
06/30/95 29,865 38,568
09/30/95 31,357 40,772
12/31/95 31,703 42,762
03/31/96 33,105 44,543
06/30/96 34,373 45,880
09/30/96 34,737 46,568
12/31/96 37,395 48,757
03/31/97 38,862 48,935
06/30/97 43,136 56,368
09/30/97 47,062 58,029
12/31/97 43,588 56,656
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
MSCI
WORLD WORLD
GROWTH INDEX
1 YEAR 15.33% 16.20%
5 YEAR 15.71% 15.88%
10 YEAR 13.39% 11.13%
INCEPTION 12.58% 14.98%
Commencement of operations August 1, 1985. Past performance is not predictive of
future performance.
This graph compares an initial $10,000 investment made in the World Growth Stock
Portfolio (the "Portfolio") at its inception with a similar investment in the
MSCI World Index. For the purposes of this graph and the accompanying table, the
average annual total return for the Portfolio reflects all recurring expenses
and includes the reinvestment of all dividends and distributions.
Shares of the Portfolio are offered only through the variable products of
Jefferson Pilot Financial and its affiliates. Total returns do not reflect any
separate account expenses imposed on the policies which may include a premium
tax charge, account fees, cost of insurance, mortality expenses and surrender
charges, as applicable.
The MSCI World Index is an unmanaged index and includes the reinvestment of all
dividends, but does not reflect the payment of transaction costs, advisory fees
or expenses that are associated with an investment in the Portfolio.
_____________________________________________________________________________[7]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
WORLD GROWTH STOCK PORTFOLIO
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Year Ended
December December December December December
31, 1997 31, 1996 31, 1995 31, 1994 31, 1993
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 23.31 $ 21.20 $ 19.00 $ 20.89 $ 16.73
Income From Investment Operations
Net investment income 0.53 0.49 0.45 0.25 0.24
Net gains and losses on
securities and foreign currency
(both realized and unrealized) 2.97 3.56 2.65 (0.89) 5.40
--------- --------- --------- --------- ---------
Total from investment operations 3.50 4.05 3.10 (0.64) 5.64
Less Distributions to Shareholders
Dividends from net investment income (0.53) (0.48) (0.43) (0.25) (0.24)
Dividends in excess of net
investment income (0.03)
Distributions from capital gains (2.76) (1.46) (0.47) (0.81) (1.24)
Distributions in excess
of capital gains (0.21) (0.19)
Returns of capital
--------- --------- --------- --------- ---------
Total distributions (3.53) (1.94) (0.90) (1.25) (1.48)
Net asset value, end of year $ 23.28 $ 23.31 $ 21.20 $ 19.00 $ 20.89
========= ========= ========= ========= =========
Total Return (A) 15.33% 19.22% 16.35% (3.05%) 33.73%
Ratios to Average Net Assets:
Expenses 0.91% 0.88% 0.96% 1.00% 1.04%
Net investment income 2.33% 2.20% 2.31% 1.56% 1.64%
Portfolio Turnover Rate 30.22% 27.50% 18.09% 18.47% 34.90%
Average Commission Rate Paid $ 0.0120 $ 0.0155
Net Assets, At End of Year $105,567,503 $91,995,634 $73,692,357 $52,903,768 $42,031,141
</TABLE>
(A) Total return assumes reinvestment of all dividends during the year and does
not reflect deduction of account fees and charges that apply to separate
accounts or related insurance policies and annuity contracts. Investment returns
and principal values will fluctuate and shares, when redeemed, may be worth more
or less than the original cost.
[8]____________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
WORLD GROWTH STOCK PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF DECEMBER 31, 1997
- --------------------------------------------------------------------------------
COMMON STOCK--99.37%
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Airlines-1.24%
Helikopter Services
Group, ASA 51,500 $ 628,712
Swire Pacific, Ltd., "B" Shares 672,000 680,803
---------
1,309,515
---------
Automotive Manufacturing-2.85%
Fiat, SPA 280,830 817,215
Fiat, SPA, RNC 514,910 851,867
Volkswagen, AG 2,400 1,341,458
---------
3,010,540
---------
Automotive Parts & Accessories-0.93%
Goodyear Tire & Rubber Co. 15,500 986,188
---------
Banking-6.28%
Bank Handlowy W Warszawie,
144A, GDR+ 71,500 874,838
BPI-SGPS, SA 59,256 1,442,362
Credit Commercial de France 25,300 1,734,788
Industrial Credit & Investment Corp.
of India, GDR 25,600 249,736
Kookmin Bank 32,800 173,194
Korea Long-Term Bank 40,276 247,125
Krung Thai Bank Public Co., Ltd. 85,000 17,646
Lippo Bank+ 595,500 66,160
National Bank of Canada 65,000 1,071,961
Uniao de Bancos Brasileiros, SA+ 23,500 756,406
---------
6,634,216
---------
Building & Construction-0.64%
Owens Corning 10,000 341,250
Sociedade de Construcoes Soares
da Costa, SA 48,100 334,891
---------
676,141
---------
+Non-income producing security.
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Building Materials & Tools-1.61%
Pioneer International, Ltd. 195,000 $ 532,350
Pioneer International, Ltd., ADR 200,000 545,980
Unitor, ASA 50,700 618,946
---------
1,697,276
---------
Chemicals-1.35%
Courtaulds, PLC 202,700 990,554
Yizheng Chemical Fibre
Co., Ltd. 2,408,100 434,903
---------
1,425,457
---------
Computer Network Products & Services-1.76%
3Com Corp.+ 26,600 929,338
Bay Networks, Inc.+ 36,400 930,475
---------
1,859,813
---------
Consumer Products-0.56%
Illovo Sugar, Ltd. 344,600 587,715
---------
Electronics-2.45%
Hitachi, Ltd. 146,900 1,050,717
Sony Corp. 17,200 1,534,519
---------
2,585,236
---------
Engineering-3.84%
ABB, AB 80,000 947,776
BTR, PLC 390,800 1,199,209
Internatio-Muller, N.V. 40,000 1,258,860
The BICC Group 229,907 650,637
---------
4,056,482
---------
Entertainment & Leisure-0.30%
Fila Holding, SPA, ADR 11,600 233,450
Hollinger International, Inc. 6,300 88,200
---------
321,650
---------
Environmental Control-1.48%
Waste Management, Inc.+ 30,600 841,500
Wheelabrator Technologies, Inc.+ 45,000 722,813
---------
1,564,313
---------
See notes to financial statements.
_____________________________________________________________________________[9]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
WORLD GROWTH STOCK PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF DECEMBER 31, 1997-CONTINUED
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Financial Services-0.78%
Chile Fund, Inc. 23,140 $ 412,182
Metro Pacific Corp. 3,853,050 107,885
Singapore Finance, Ltd. 308,000 210,210
Thailand International Fund+ 12 89,280
---------
819,557
---------
Food Processing-2.48%
IBP, Inc. 60,209 1,260,626
Northern Foods, PLC 313,054 1,359,844
---------
2,620,470
---------
Forest Products-0.60%
Fletcher Challenge Forests 762,276 632,918
---------
Household Products-1.21%
McBride, PLC 439,100 1,278,791
---------
Insurance-4.84%
AXA-UAP 16,300 1,261,816
National Mutual Asia, Ltd. 750,000 745,275
UNUM Corp.+ 28,000 1,522,500
Zurich Versicherungs-Gesellschaft 3,300 1,574,713
---------
5,104,304
---------
Lodging-0.36%
Brierley Investments, Ltd. 525,000 374,955
---------
Machinery-0.74%
Valmet Corp. 56,400 778,861
---------
Manufacturing-1.90%
Ceramco Corp., Ltd. 620,100 522,062
Laird Group, PLC 203,100 1,487,098
---------
2,009,160
---------
Mining & Metals-6.12%
Anglo-American Platnium Corp.+ 72,482 968,142
Industrius Penoles, SA 97,000 431,941
+Non-income producing security.
COMMON STOCK--continued
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Mining & Metals-(Continued)
Oregon Steel Mills, Inc. 67,800 $1,444,988
Pechiney, SA, Class A 26,136 1,032,254
S.K.F., AB 48,000 1,022,386
Union Miniere, SA 6,000 416,195
WMC, Ltd. 250,800 874,239
Yamato Kogyo Co. 45,000 271,683
---------
6,461,828
---------
Multimedia-0.29%
News Corp., Ltd., ADR 13,808 308,091
---------
Oil & Gas - Distribution
& Marketing-1.98%
British Energy, PLC 246,400 1,714,944
Centrica, PLC+ 251,300 370,064
---------
2,085,008
---------
Oil & Gas - Integrated-3.88%
Elf Aquitaine, SA 10,500 1,221,770
Petron Corp. 175,000 14,683
Repsol, SA 37,000 1,577,923
YPF Sociedad Anonima,
SA, ADR+ 37,600 1,285,450
---------
4,099,826
---------
Packaging & Containers-0.15%
Thai Glass Industries Public
Co., Ltd. 200,400 153,987
---------
Paper Products-5.57%
Boise Cascade Corp. 19,000 574,750
Bowater, Inc. 21,000 933,188
Carter Holt Harvey, Ltd. 645,651 997,208
Enso Oy, Series R 111,300 862,519
Fort James Corp. 22,000 841,500
International Paper Co.+ 25,000 1,078,125
Portucel Industrial-Empresa
Productora de Celulosa,
SA, ADR 97,000 592,515
---------
5,879,805
---------
See notes to financial statements.
[10]___________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
WORLD GROWTH STOCK PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF DECEMBER 31, 1997-CONTINUED
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Pharmaceuticals-3.25%
Astra, AB, Class B 57,333 $ 964,657
China Pharmaceutical Enterprise
& Investment Corp. 390,000 39,741
Kalbe Farma 412,500 73,178
Medeva, PLC 169,600 452,069
Nycomed-Amersham, PLC 41,834 1,556,999
Rhone-Poulenc 7,800 349,555
---------
3,436,199
---------
Real Estate-3.89%
Jardine Matheson Holdings,
Ltd., ADR 111,600 569,160
Meditrust Corp., Paired Stock 28,718 1,051,797
Nationwide Health Properties,
Inc. 42,600 1,086,300
Union du Credit-Bail Immobilier 10,700 1,068,956
Wereldhave, N.V. 5,200 326,791
---------
4,103,004
---------
Retail Stores-7.61%
Coles Myer, Ltd. 283,312 1,360,464
Federated Department
Stores, Inc.+ 13,600 585,650
Hudson's Bay Co. 46,700 1,039,393
Hutchison Whampoa, Ltd. 247,000 1,549,258
Matsuzakaya Co., Ltd. 8,000 30,149
Oshawa Group, Ltd. 103,700 1,811,638
Tesco, PLC 204,913 1,652,091
---------
8,028,643
---------
Telecommunications-14.35%
APT Satellite Holdings, ADR+ 48,300 567,525
AT&T Corp. 44,400 2,719,499
Cable & Wireless, PLC, ADR 22,000 598,125
DSC Communications Corp.+ 28,500 684,000
Indosat, ADR+ 7,300 140,981
MCI Communications Corp. 36,000 1,541,250
+Non-income producing security.
Telecommunications-(Continued)
Nokia, AB, Oy, A Shares 12,200 $ 867,030
Tele Danmark, AS, B Shares 18,100 1,123,449
Telecom Italia+ 277,700 1,774,892
Telecom Italia, RNC+ 152,669 673,531
Telecomunicacoes Brasileiras,
SA, ADR 5,310 618,283
Telefonica de Argentina, SA,
Class B, ADR+ 18,100 674,225
Telefonica de Espana, ADR 20,000 1,821,250
U.S. West Communications
Group, NPV+ 29,900 1,349,238
---------
15,153,278
---------
Textiles & Apparel-2.17%
Dawson International, PLC 466,166 517,724
The Limited, Inc. 44,600 1,137,300
Yue Yuen Industrial
Holdings, Ltd. 300,000 634,980
---------
2,290,004
---------
Transportation & Shipping-3.35%
Frans Maas Groep, N.V. 17,000 583,654
Great Eastern Shipping Co.,
GDR+ 54,400 293,760
Guangshen Railway Co., Ltd. 46,300 622,156
Koninklijke Nedlloyd Groep, N.V. 34,600 785,109
Transport Development
Group, PLC 288,100 971,761
Transportation Maritima Mexicana
SA de CV + 45,000 279,090
---------
3,535,530
---------
Travel Services-1.21%
Kuoni Reisen, AG 340 1,276,267
---------
Utilities - Electric & Gas-5.70%
BG, PLC 221,735 999,649
Hong Kong Electric Holdings,
Ltd. 299,000 1,136,439
Iberdrola, SA 90,000 1,183,932
See notes to financial statements.
____________________________________________________________________________[11]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
WORLD GROWTH STOCK PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF DECEMBER 31, 1997-CONTINUED
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Utilities - Electric & Gas--(Continued)
Korea Electric Power Corp. 35,500 $ 328,829
National Grid Group, PLC 304,200 1,446,533
Shandong Huaneng Power
Co., Ltd. 38,000 261,250
Texas Utilities Co.+ 16,000 665,000
---------
6,021,632
---------
Water Treatment-1.65%
Thames Water, PLC 116,429 1,736,597
---------
TOTAL COMMON STOCK
(Cost $85,883,574) 104,903,257
---------
PREFERRED STOCK--5.10%
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Financial Services-4.12%
Bangkok Investments Co., Ltd.+ 2,500 $ 82,500
Bank Austria, AG, New+ 30,800 1,387,731
Nacional Financiera, SA,
Conv., ADR+ 26,700 1,495,200
National Australia Bank,
7.578%, Unit 48,600 1,382,062
---------
4,347,493
---------
Multimedia-0.75%
News Corp., Ltd., ADR 6,904 137,217
News Corporation, Ltd.,
5.000% 132,167 653,950
---------
791,167
---------
Retail Stores-0.15%
Dairy Farm International Holding,
Ltd., 6.500%+ 210,000 160,125
---------
+ Non-income producing security.
* On January 9, 1998, the company filed for liquidation. At February 13, 1998
the market value of this holding is $42,000.
PREFERRED STOCK--CONTINUED
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Textiles & Apparel-0.08%
Lojas Americanas, SA, ADR+ $18,400 $ 85,731
---------
Total Preferred Stock
(Cost $4,541,339) 5,384,516
---------
CORPORATE BONDS--1.63%
Principal Market Value
Company Value (Note B)
- --------------------------------------------------------------------------------
Financial Services-1.63%
ALFA, SA, 8.000%,
due 09/15/00 $ 760,000 $1,096,300
PIV Investment Finance Ltd.,
4.500%, Conv., due 12/01/00* 840,000 627,900
---------
Total Corporate Bonds
(Cost $2,028,286) 1,724,200
---------
- --------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS--4.73%
Principal Market Value
Company Value (Note B)
- --------------------------------------------------------------------------------
U.S. Treasury Bill, 4.880%,
due 01/15/98 $5,000,000 $ 4,990,511
---------
Total Short-Term Obligations
(Cost $4,990,511) 4,990,511
---------
Total Investments
(Cost $97,443,710) 110.83% 117,002,484
Other assets, less liabilities (10.83) (11,434,981)
------ ---------
Total Net Assets 100.00% $105,567,503
------ ---------
See notes to financial statements.
[12]___________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
MONEY MARKET PORTFOLIO
"Inflation remains under control, and
the Fed will most likely take a
wait-and-see attitude toward raising
interest rates."
- --Geoffrey Kurinsky , Portfolio Manager--
- --------------------------------------------------------------------------------
INCEPTION DATE
August 1, 1985
- --------------------------------------------------------------------------------
FUND MANAGER
Massachusetts Financial Services Co.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGY
To achieve the highest possible current income, consistent with
preservation of capital and maintenance of liquidity,
by investing primarily in short-term money market
instruments other than commercial paper.
- --------------------------------------------------------------------------------
NET ASSETS AS OF 12/31/97
$9,435,454
- --------------------------------------------------------------------------------
NUMBER OF HOLDINGS
10
- --------------------------------------------------------------------------------
PORTFOLIO QUALITY
AAA-100%
- --------------------------------------------------------------------------------
DOLLAR WEIGHTED AVERAGE MATURITY
23 days
- --------------------------------------------------------------------------------
IN THIS SECTION
- --------------------------------------------------------------------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
- --------------------------------------------------------------------------------
GEOFFREY KURINSKY
Senior Vice President
[bullet] Joined MFS in 1987
[bullet] M.B.A. from Boston University
[bullet] B.A. from University of Massachusetts
____________________________________________________________________________[13]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
MONEY MARKET PORTFOLIO
- -------------------------------[PIE CHART]-------------------------------------
% of Portfolio ++
Short-Term Obligations--97.45%
Cash--2.46%
- --------------------------------------------------------------------------------
PORTFOLIO QUALITY
- --------------------------------------------------------------------------------
PERCENT OF
RATING PORTFOLIO
- --------------------------------------------------------------------------------
AAA 100.00%
DOLLAR WEIGHTED
AVERAGE MATURITY
23 days
* An investment in the portfolio is neither insured nor guaranteed by the
U.S. Government.
++ Represents market value of investments plus cash.
The Portfolio seeks as high a level of current income as is considered
consistent with the preservation of capital and liquidity by investing in
short-term money market securities issued or guaranteed by the U.S. Treasury,
its agencies, or instrumentalities of the U.S. government, as well as in the
highest-quality corporate issues, in order to minimize credit risk*. As of
December 31, 1997, the Portfolio had assets of approximately $9.4 million, and
the Portfolio's average maturity was 23 days.
Thanks to a sustained period of relative stability and moderate growth, the
U.S. economy has produced thousands of new jobs, inflation has remained under
control, and the investment climate has, for the most part, been favorable. The
increased use of technology and other productivity enhancements, as well as
corporate restructuring and global competition, is improving companies' balance
sheets and helping control inflation. The rapid pace of growth seen in the first
quarter slowed to an annual rate of 3.3% in the second quarter and 3.5% in the
third. We believe this economic momentum will carry well into the first quarter
of 1998 as a result of lower interest rates and continuing growth in the money
supply. While economic growth in the United States continued to be impressive,
this is partially being offset by events in the Pacific Rim. Thus, markets will
most likely continue to focus on activity by the Federal Reserve Board (the Fed)
and its response to both U.S. and world events.
The U.S. government bond market has benefited from the deflationary events
in Asia, while the high-yield and emerging-debt markets have come under severe
pressure. Inflation remains under control, and the Fed will most likely take a
wait-and-see attitude toward raising interest rates. As a result, our near-term
outlook for high-grade markets is neutral to moderately positive. At the same
time, high-yield markets, having gone through a substantial correction, could
offer reasonable value but require careful selection. Overall, fixed-income
markets appear to be reasonably valued.
[14]___________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
MONEY MARKET PORTFOLIO
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Year Ended
December December December December December
31, 1997 31, 1996 31, 1995 31, 1994 31, 1993
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 10.25 $ 10.27 $ 10.25 $ 10.26 $ 10.22
Income From Investment Operations
Net investment income 0.52 0.50 0.50 0.35 0.20
Net gains and losses on securities
(both realized and unrealized) (0.02) (0.02) 0.02 (0.01) 0.04
--------- --------- --------- --------- ---------
Total from investment operations 0.50 0.48 0.52 0.34 0.24
Less Distributions to Shareholders
Dividends from net investment income (0.52) (0.50) (0.50) (0.35) (0.20)
Dividends in excess of net
investment income
Distributions from capital gains
Distributions in excess of capital gains
Returns of capital
--------- --------- --------- --------- ---------
Total distributions (0.52) (0.50) (0.50) (0.35) (0.20)
Net asset value, end of year $ 10.23 $ 10.25 $ 10.27 $ 10.25 $ 10.26
========= ========= ========= ========= =========
Total Return (A) 4.86% 4.65% 5.06% 3.28% 2.32%
Ratios to Average Net Assets:
Expenses 0.60% 0.62% 0.63% 0.65% 0.74%
Net investment income 4.74% 4.54% 4.89% 3.31% 2.32%
Portfolio Turnover Rate (B) N/A N/A N/A N/A N/A
Average Commission Rate Paid (C) N/A N/A
Net Assets, At End of Year $9,435,454 $7,896,257 $8,312,676 $7,680,485 $5,061,181
</TABLE>
(A) Total return assumes reinvestment of all dividends during the year and does
not reflect deduction of account fees and charges that apply to separate
accounts or related insurance policies and annuity contracts. Investment returns
and principal values will fluctuate and shares, when redeemed, may be worth more
or less than the original cost.
(B) There were no purchases and/or sales of securities other than short-term
obligations during the year. Therefore, the portfolio turnover rate has not been
calculated.
(C) During the year, the Portfolio held less than 10% of the value of its
average net assets in equity securities. Therefore, the Average Commission Rate
Paid has not been calculated.
____________________________________________________________________________[15]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
MONEY MARKET PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS--101.75%
Principal Market Value
Company Value (Note B)
- --------------------------------------------------------------------------------
Federal Farm Credit Bank,
5.500%, due 01/20/98 $ 700,000 $ 697,968
Federal Farm Credit Bank,
5.650%, due 02/09/98 900,000 894,491
Federal Home Loan Bank,
5.410%, due 01/05/98 900,000 899,459
Federal Home Loan Bank,
5.580%, due 01/15/98 800,000 798,264
Federal Home Loan
Mortgage Corp.,
5.530%, due 02/20/98 1,000,000 992,319
Federal National
Mortgage Assn.,
5.600%, due 01/16/98 935,000 932,818
Federal National
Mortgage Assn.,
5.470%, due 02/05/98 1,300,000 1,293,087
Student Loan Marketing
Association,
5.460%, due 01/27/98 1,000,000 996,057
Tennessee Valley Authority,
5.450%, due 01/12/98 1,000,000 998,335
Tennessee Valley Authority,
5.527%, due 01/16/98 1,100,000 1,097,467
---------
TOTAL INVESTMENTS
(Cost $9,600,265) 101.75% 9,600,265
Other assets, less liabilities (1.75) (164,811)
------- ---------
TOTAL NET ASSETS 100.00% $9,435,454
------- ---------
See notes to financial statements.
[16]___________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
GOLD STOCK PORTFOLIO
"A primary purpose of gold related
investments is to protect one's
portfolio from economic instability of
both inflationary and deflationary
origins which may lead to imbalances in
the world's monetary and credit system."
- --Henry J. Bingham, Portfolio Manager--
INCEPTION DATE
August 1, 1985
- --------------------------------------------------------------------------------
FUND MANAGER
Van Eck Associates Corporation
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGY
To realize long-term capital appreciation, while
retaining the option to take current income into
account, by investing primarily, and sometimes
exclusively, in common stocks of gold mining companies.
- --------------------------------------------------------------------------------
NET ASSETS AS OF 12/31/97
$5,204,654
- --------------------------------------------------------------------------------
NUMBER OF HOLDINGS
65
- --------------------------------------------------------------------------------
PORTFOLIO TURNOVER
19.70%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IN THIS SECTION
- --------------------------------------------------------------------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
- --------------------------------------------------------------------------------
HENRY J. BINGHAM
President, Van Eck
Institutional Advisors
[bullet] Joined Van Eck Associates in 1978
[bullet] 30 years of investment management experience
[bullet] M.B.A. from the Amos Tuck School of Business, Dartmouth College
[bullet] B.A. from Dartmouth College
[bullet] Member of the American Institute of Mining and Metallurgy
____________________________________________________________________________[17]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
GOLD STOCK PORTFOLIO
- -------------------------------------[PIE CHART]--------------------------------
% of Portfolio ++
Common Stock--84.11%
Commercial Paper--9.76%
Cash--4.63%
Corporate Bonds--1.50%
- --------------------------------------------------------------------------------
PERCENT OF
TOP TEN EQUITIES PORTFOLIO
- --------------------------------------------------------------------------------
Newmont Mining Corp. 6.79%
Driefontein Consolidated,
Ltd., ADR 4.85%
Normandy Mining, Ltd. 4.15%
Getchell Gold Corp. 4.05%
Placer Dome, Inc. 4.05%
Homestake Mining Co. 4.00%
Barrick Gold Corp. 3.50%
EuroNevada Mining Corp. 3.45%
Meridian Gold, Inc. 3.31%
Plutonic Resources, Ltd. 3.14%
- --------------------------------------------------------------------------------
PERCENT OF
TOP COUNTRIES PORTFOLIO
- --------------------------------------------------------------------------------
United States 50.52%
Canada 19.41%
South Africa 16.83%
Australia 11.45%
Ghana 1.03%
Peru 0.76%
++Represents market value of
investments plus cash.
During 1997, the net asset value of the JPVF Gold Stock Portfolio declined
44.6% to $8.92 per share. The price of gold itself declined 21% to $289.90 an
ounce. Despite intermittent rallies, gold trended lower during most of the year.
Gold Fields Mineral Services, however, recently reported that the overall
demand for fabricated gold products rose 16% in 1997 from 1996. Also, the Asian
monetary crisis and the expansionary credit policies employed to contain it may
have a longer term favorable effect on gold demand.
Overshadowing these factors have been:
1) the deflationary implications of the Asian crisis,
2) the flight from weak currencies to the perceived strength of the U.S.
dollar, and
3) persistent reports of central bank gold sales or potential future sales.
While these sales have been small in the context of a 200,000 ton a year gold
trading market, they apparently created a negative sentiment last year toward
gold's monetary characteristics. Recent statements by German and French central
bank officials affirming the continuing importance of gold reserves did not
entirely dispel market uncertainty.
Although many mining companies adopted cost cutting measures, their earnings
remained leveraged to the price of gold. This feature accounts for the more
pronounced decline of their share prices than of the price of gold itself. On a
regional basis, the Australian gold share index, which may also have been
affected by currency depreciation, declined 55% in 1997, while the South African
and North American indices were down 49% and 46%, respectively, all in U.S.
dollar terms.
During this period, the Portfolio's policy has been to concentrate its
investments primarily in the shares of low cost, high quality gold mines of the
major gold producing nations of the world. The Portfolio has however, maintained
considerably smaller positions in companies which would most benefit from a
change in market direction, which history demonstrates can occur unexpectedly
and dramatically. The Portfolio also holds small positions in selected companies
which are particularly sensitive to exploration success.
At present, however, emphasis is on companies, regardless of geographic
location, which have the operating and financial strength to sustain themselves
under current market conditions. Most of these companies would also benefit
significantly by an addition to gold reserves when gold prices rise.
The South African mines, on average, have somewhat above average operating
costs. These companies, however, are especially well financed, generally are
debt free and have access to the resources of financially strong mining finance
parent organizations.
Lower gold prices have led to a considerable restructuring of the industry.
In South Africa, two of the major mining houses, Gold Fields of South Africa and
Gencor Ltd., are combining several operations and, in effect, merging most of
their gold mines into a single entity. The
[18]___________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
GOLD STOCK PORTFOLIO
objectives are to reduce costs and better avail themselves of prospective global
mining opportunities. Anglo American Corporation, operator of the world's
largest gold complex, has announced a planned consolidation of all of its mines
into a single corporate entity to achieve operating as well as exploration and
mine development efficiencies.
In Australia, Normandy Mining, by acquisition, has solidified its position
in one of Australia's most productive and prospective gold mining areas which it
now can develop more efficiently.
Homestake Mining, a company with major American and Australian operations,
has announced the acquisition of Plutonic Resources, one of Australia's premier
gold companies. The merger combines the prospective low cost attributes of
Plutonic with the underground mining expertise of Homestake. Similarly, Newmont
Mining and Santa Fe Pacific Gold combined their operations last year to gain the
synergy of unifying contiguous operations. More such consolidations are likely
to achieve operating and exploration cost efficiencies. It is a goal of the
Portfolio to capitalize on these opportunities.
Outlook
A primary purpose of gold related investments is to protect one's portfolio
from economic instability of both inflationary and deflationary origins which
may lead to imbalances in the world's monetary and credit system.
The current Asian crisis follows years of excessive credit extension to a
region which developed substantial excess capacity in industrial and real estate
projects. The subsequent loss of confidence and flight from these currencies has
resulted in a crisis of insolvency.
The resources of the International Monetary Fund clearly are insufficient to
stabilize the Asian economies. The IMF has called on major nations and their
banks to create credit to shore up Asian financial institutions. Already, global
central bank policy appears to be moving from price stability to stimulating
demand to provide the monetary liquidity to promote economic growth. This policy
is similar to the response to the higher oil prices of the 1970's which led to
accelerating inflation and rising gold demand.
Gold is a monetary asset whose value is uninfluenced by unexpected changes
in monetary policy, exchange controls or asset freezes that can afflict national
currencies. Perhaps that is why the premium on gold bars rose recently to a
record $5 an ounce in Hong Kong from pennies in normal times. High premiums have
also been reported in Singapore and India. Some Asians may be spending their
gold to survive. Others may be accumulating gold for its monetary anonymity and
because they recognize that historically gold related investments have provided
protection against all these monetary contingencies.
- ----------------------------------[LINE CHART]----------------------------------
Gold Stock Portfolio, S&P 500 Index and Lipper Gold Fund Index
Comparison of Change in Value of $10,000 Investment.
Gold Stock Portfolio
S&P 500 Index
Lipper Gold Fund Index
GOLD S&P LIPPER
STOCK 500 GOLD FUND
DATE PORTFOLIO INDEX INDEX
- ---- --------- ----- -----
08/02/85 10,000 10,000 10,000
09/30/85 9,602 9,916 9,481
12/31/85 9,960 11,626 9,069
03/31/86 10,217 13,264 10,276
06/30/86 10,141 14,049 9,058
09/30/86 12,987 13,070 12,189
12/31/86 13,646 13,800 12,415
03/31/87 22,164 16,745 19,345
06/30/87 20,392 17,584 18,429
09/30/87 24,761 18,746 22,113
12/31/87 18,325 14,519 16,994
03/31/88 16,901 15,345 15,396
06/30/88 16,755 16,359 15,041
09/30/88 15,931 16,411 13,359
12/31/88 14,433 16,915 13,768
03/31/89 15,249 18,110 14,711
06/30/89 14,364 19,705 14,488
09/30/89 15,006 21,812 15,770
12/31/89 17,210 22,256 18,387
03/31/90 15,812 21,585 16,804
06/30/90 13,785 22,936 14,925
09/30/90 14,846 19,799 15,425
12/31/90 13,035 21,564 13,893
03/31/91 12,337 24,685 13,197
06/30/91 13,532 24,631 14,518
09/30/91 12,194 25,947 13,445
12/31/91 12,316 28,106 13,809
03/31/92 11,826 27,399 12,923
06/30/92 12,760 27,921 13,400
09/30/92 12,844 28,801 12,548
12/31/92 11,916 30,245 11,167
03/31/93 14,112 31,562 13,844
06/30/93 18,279 31,711 18,325
09/30/93 15,635 32,520 16,453
12/31/93 19,578 33,274 20,875
03/31/94 19,639 32,021 19,124
06/30/94 17,542 32,160 18,704
09/30/94 19,936 33,732 22,616
12/31/94 16,882 33,725 19,626
03/31/95 17,214 36,998 18,492
06/30/95 17,323 40,519 18,717
09/30/95 18,152 43,729 19,788
12/31/95 17,348 46,353 18,676
03/31/96 21,724 49,103 22,803
06/30/96 19,740 51,595 21,453
09/30/96 18,695 53,500 21,026
12/31/96 17,793 58,251 19,758
03/31/97 16,473 58,505 18,114
06/30/97 14,423 68,711 15,898
09/30/97 14,571 73,857 16,091
12/31/97 9,852 75,978 11,395
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
LIPPER
GOLD S&P 500 GOLD FUND
STOCK INDEX INDEX
1 YEAR (44.63%) 33.35% (42.33%)
5 YEAR (3.73%) 20.23% 0.40%
10 YEAR (6.02%) 16.99% (3.89%)
INCEPTION (0.12%) 17.73% 1.06%
Commencement of operations August 1, 1985. Past performance is not predictive of
future performance.
This graph compares an initial $10,000 investment made in the Gold Stock
Portfolio (the "Portfolio") at its inception with a similar investment in the
S&P 500 Index and the Lipper Gold Fund Index. For the purposes of this graph and
the accompanying table, the average annual total return for the Portfolio
reflects all recurring expenses and includes the reinvestment of all dividends
and distributions.
Shares of the Portfolio are offered only through the variable products of
Jefferson Pilot Financial and its affiliates. Total returns do not reflect any
separate account expenses imposed on the policies which may include a premium
tax charge, account fees, cost of insurance, mortality expenses and surrender
charges, as applicable.
The S&P 500 Index and the Lipper Gold Fund Index are unmanaged indexes and
include the reinvestment of all dividends, but do not reflect the payment of
transaction costs, advisory fees or expenses that are associated with an
investment in the Portfolio.
____________________________________________________________________________[19]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
GOLD STOCK PORTFOLIO
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Year Ended
December December December December December
31, 1997 31, 1996 31, 1995 31, 1994 31, 1993
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 16.60 $ 16.61 $ 16.25 $ 19.00 $ 11.57
Income From Investment Operations
Net investment income (loss) 0.02 (0.03) 0.05 0.03 0.02
Net gains and losses on securities
and foreign currency (both
realized and unrealized) (7.30) 0.45 0.40 (2.65) 7.43
--------- --------- --------- --------- ---------
Total from investment operations (7.28) 0.42 0.45 (2.62) 7.45
Less Distributions to Shareholders
Dividends from net investment income (0.02) (0.05) (0.03) (0.02)
Dividends in excess of net
investment income (0.07) (0.04)
Distributions from capital gains (0.43)
Distributions in excess of capital gains (0.31) (0.10)
Returns of capital
--------- --------- --------- --------- ---------
Total distributions (0.40) (0.43) (0.09) (0.13) (0.02)
Net asset value, end of year $ 8.92 $ 16.60 $ 16.61 $ 16.25 $ 19.00
========= ========= ========= ========= =========
Total Return (A) (44.63%) 2.57% 2.76% (13.77%) 63.90%
Ratios to Average Net Assets:
Expenses 1.07% 1.04% 1.01% 0.99% 1.01%
Net investment income 0.63% (0.11%) 0.24% 0.18% 0.14%
Portfolio Turnover Rate 19.70% 64.78% 23.98% 11.12% 7.32%
Average Commission Rate Paid $ 0.0181 $ 0.0151
Net Assets, At End of Year $5,204,654 $7,554,427 $6,867,645 $7,351,625 $7,863,581
</TABLE>
(A) Total return assumes reinvestment of all dividends during the year and does
not reflect deduction of account fees and charges that apply to separate
accounts or related insurance policies and annuity contracts. Investment returns
and principal values will fluctuate and shares, when redeemed, may be worth more
or less than the original cost.
[20]___________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
GOLD STOCK PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF DECEMBER 31, 1997
- --------------------------------------------------------------------------------
COMMON STOCK--86.12%
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Australia-11.73%
Acacia Resources, Ltd. 60,000 $ 54,726
Avgold+ 26,617 20,782
Delta Gold, Ltd. 35,000 36,852
Emperor Mines, Ltd. 40,000 11,728
Gullewa Gold, N.L.+ 300,000 2,340
Herald Resources, Ltd. 110,354 16,895
Normandy Mining, Ltd. 228,000 221,342
Plutonic Resources, Ltd. 60,000 167,322
Ranger Minerals, N.L. 14,000 30,101
Resolute, Ltd.+ 35,000 25,540
Sons of Gwalia, N.L., ADR 2,000 22,805
---------
610,433
---------
Canada-19.87%
Barrick Gold Corp. 10,000 186,250
Battle Mountain Canada, Inc. 4,593 26,479
Cambior, Inc. 10,000 58,750
Dayton Mining Corp.+ 15,000 29,063
Echo Bay Mines, Ltd. 17,000 41,438
EuroNevada Mining Corp. 13,600 183,896
Francisco Gold Corp.+ 1,000 7,337
FrancoNevada Mining Corp., Ltd. 3,000 58,909
Golden Star Resources, Ltd.+ 10,000 35,625
Greenstone Resources, Ltd.+ 7,000 34,125
International African Mining
Gold Corp.+ 12,000 37,735
Miramar Mining Corp.+ 15,000 28,593
Namibian Minerals Corp.+ 6,000 18,000
Pacific Rim Mining Corp.+ 2,200 2,690
Pangea Goldfields, Inc.+ 10,000 11,879
Placer Dome, Inc. 17,000 215,688
Queenstake Resources, Ltd.+ 2,800 1,722
Rift Resources, Ltd.+ 51,500 10,794
Romanco Minerals, Inc.+ 8,000 17,050
Vista Gold Corp.+ 90,000 28,125
---------
1,034,148
---------
+Non-income producing security.
COMMON STOCK--CONTINUED
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Ghana-1.05%
Ashanti Goldfields Co., Ltd. 2,222 $ 17,230
Ashanti Goldfields Co., Ltd., GDR 5,000 37,500
---------
54,730
---------
Peru-0.78%
Compania de Minas
Buenaventura, SA 2,550 40,800
---------
South Africa-17.23%
Anglo American Platinum Corp.+ 4,000 53,428
Driefontein Consolidated, Ltd.,
ADR 39,000 258,375
Evander Gold Mines, Ltd., ADR 15,000 28,358
Free State Consolidated Gold
Mines, Ltd., ADR 14,000 62,125
Gencor, Ltd. 35,000 57,897
Gold Fields of South Africa, Ltd. 6,000 91,855
HJ Joel Gold Mining Co., Ltd. 60,000 29,586
Harmony Gold Mining, ADR+ 10,000 22,500
Kloof Gold Mining Co.,
Ltd., ADR 10,000 33,125
Vaal Reefs Exploration & Mining
Co., Ltd., ADR 12,000 46,124
Western Areas Gold Mining Co. 10,000 55,072
Western Deep Levels, Ltd., ADR 8,500 158,313
---------
896,758
---------
United States-35.46%
Battle Mountain Gold Co., Inc. 24,406 143,385
Crown Resources Corp.+ 30,000 125,625
Freeport McMoRan Copper &
Gold, Inc. 8,000 122,500
Getchell Gold Corp.+ 9,000 216,000
Goldcorp, Inc., Class A+ 20,000 77,500
Homestake Mining Co. 24,000 213,000
Meridian Gold, Inc.+ 60,000 176,250
Newmont Gold Co. 5,000 149,063
Newmont Mining Corp. 12,309 361,577
See notes to financial statements.
____________________________________________________________________________[21]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
GOLD STOCK PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF DECEMBER 31, 1997-CONTINUED
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
United States-(Continued)
Pegasus Gold, Inc.+ 12,000 $ 7,500
Rangold Resources, 144A+ 3,000 15,000
Royal Gold, Inc.+ 8,700 41,325
Royal Oak Mines, Inc.+ 40,000 62,500
Stillwater Mining Co.+ 6,000 100,500
TVX Gold, Inc.+ 10,000 33,750
---------
1,845,475
---------
Total Common Stock
(Cost $7,771,801) 4,482,344
---------
- --------------------------------------------------------------------------------
CORPORATE BONDS--1.54%
Principal Market Value
Company Value (Note B)
- --------------------------------------------------------------------------------
United States-1.54%
Randgold Finance, Ltd., 144A,
7.000%, due 09/30/01 $ 150,000 $ 80,250
---------
TOTAL CORPORATE BONDS
(Cost $150,000) 80,250
---------
- --------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS--9.99%
Principal Market Value
Company Value (Note B)
- --------------------------------------------------------------------------------
United States-9.99%
American Express Capital Corp.,
6.450%, due 01/02/98 $ 260,000 $ 259,954
General Electric Capital Corp.,
5.650%, due 01/02/98 260,000 259,959
---------
TOTAL SHORT-TERM OBLIGATIONS
(Cost $519,913) 519,913
---------
- --------------------------------------------------------------------------------
WARRANTS--0.00%
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Canada-0.00%
Rift Resources, Ltd.,
exp. 08/01/98 @ 1.75 CAD*+ 50,000 $ 0
Tombstone Exploration Co., Ltd.,
exp. 05/23/98 @ 0.45 CAD*+ 50,000 0
---------
TOTAL WARRANTS
(Cost $0) 0
---------
TOTAL INVESTMENTS
(Cost $8,441,714) 97.65% 5,082,507
Other assets, less liabilities 2.35 122,147
------ ---------
TOTAL NET ASSETS 100.00% $5,204,654
====== =========
+Non-income producing security.
*CAD - Canadian dollars
See notes to financial statements.
[22]___________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
DOMESTIC GROWTH STOCK PORTFOLIO
"In a year dominated by the popularity of large
companies, we continued to find the best values
in medium- and small-sized companies."
- --Robert W. Benson, Portfolio Manager--
- --------------------------------------------------------------------------------
INCEPTION DATE
April 18, 1986
- --------------------------------------------------------------------------------
FUND MANAGER
Pioneering Management Corporation
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGY
To achieve reasonable income and growth of capital
by investing primarily in a diversified portfolio of
equity securities issued by companies organized in
the U.S. and considered by the sub-investment
manager to be undervalued in light of the company's
earning power and growth potential.
- --------------------------------------------------------------------------------
NET ASSETS AS OF 12/31/97
$81,505,107
- --------------------------------------------------------------------------------
NUMBER OF HOLDINGS
55
- --------------------------------------------------------------------------------
PORTFOLIO TURNOVER
52.92%
- --------------------------------------------------------------------------------
IN THIS SECTION
- --------------------------------------------------------------------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ROBERT W. BENSON, CFA
Senior Vice President
[bullet] Joined Pioneer in 1974
[bullet] Manages Pioneer Winthrop Real Estate Shares
[bullet] M.B.A. from the Wharton School of Business,
The University of Pennsylvania
[bullet] B.S. from Tufts University
____________________________________________________________________________[23]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
DOMESTIC GROWTH STOCK PORTFOLIO
- ---------------------------------[Pie Chart]------------------------------------
% of Portfolio++
Common Stock--96.86%
Cash--3.14%
- --------------------------------------------------------------------------------
- ----------------------------------------------
PERCENT OF
TOP TEN EQUITIES PORTFOLIO
- ----------------------------------------------
AMRESCO, Inc. 3.72%
First Brands Corp. 3.01%
Schering-Plough Corp. 2.78%
Consolidated Stores Corp. 2.69%
Starwood Lodging Trust 2.59%
American Bankers Insurance
Group, Inc. 2.57%
National Golf Properties, Inc. 2.57%
Weatherford Enterra, Inc. 2.55%
Equity Office Properties
Trust 2.48%
Host Marriot Corp. 2.41%
- ----------------------------------------------
PERCENT OF
TOP TEN INDUSTRIES PORTFOLIO
- ----------------------------------------------
Real Estate 17.16%
Insurance 11.38%
Human Resources 5.25%
Lodging 5.00%
Retail Stores 4.85%
Building & Construction 4.66%
Financial Services 4.59%
Electronics 3.43%
Oil & Gas - Drilling &
Exploration 3.40%
Packaging & Containers 3.01%
++Represents market value of
investments plus cash.
We are pleased to report that the Domestic Growth Stock Portfolio lived up
to its name in 1997, posting a total return of 23.60% for the year. The
Portfolio's performance was in line with major measures of stock market
performance. Small company stocks came on strong in the fourth quarter after
lagging larger issues for most of the year, and the Russell 2000 Index posted a
22.23% total return for the year. Large company stocks, as measured by the Dow
Jones Industrial Average, gained 24.87% in 1997, while the broader Standard &
Poor's 500 Index generated a 33.35% return.
These returns reflected several key events. In the U.S., stocks benefited
from the progress toward a balanced Federal budget, the economy's continued
strong growth and the low interest rates made possible by the absence of
inflation. Late in the year, the freefall in Asia's currencies and financial
markets prompted investors to question whether large, global companies could
sustain 1997's growth rate. Consequently, there was more interest in smaller
stocks. What the numbers don't show, however, is the increasing volatility in
stock prices. This past year, it was not unusual to see the broad market gain or
lose 3% a day for several days in a row, or to see individual stock prices get
chopped in half, or run up 50%, in the space of a few days. The choppiness in
the market - and especially October's sell-off and immediate rebound - made it
especially important to have a disciplined, research-driven investment strategy
such as we use for your Portfolio.
A Diversified Portfolio
We stuck with our philosophy of keeping the Portfolio fully invested rather
than attempting to "time" the market, and held only about 3% in short-term cash
equivalents. The Portfolio is diversified across a number of industries, with 55
holdings representing nine sectors at year-end. Investments are also
[24]____________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
DOMESTIC GROWTH STOCK PORTFOLIO
spread among companies of various sizes; holdings have a median market-
capitalization of $1.08 billion.
One of the best-performing, although volatile, stock groups this year was
technology. The Portfolio included Cisco, 3Com, EMC and Teradyne. All
appreciated sharply in 1997, and we sold them when they hit our target price.
Other growth-oriented winners this year were Action Performance, a maker of
NASCAR memorabilia, pharmaceutical company Schering Plough and Crossman, a
Mid-West homebuilder.
An overweighting in financial stocks also paid off. Of note was American
Bankers Insurance, an annuity provider that racked up big gains when it was
taken over by AIG. Another insurance company, UNUM, also performed well.
Included in the financial sector are real estate investment trusts (REITs),
which are an effective way to add both income and growth potential. By year-end,
several REITs were among the 10 largest holdings, including Starwood Hotels &
Resorts and National Golf Properties. We also held significant positions in two
real estate-related companies, finance company AMRESCO and service-provider Host
Marriott. All met or exceeded their projected earnings and posted strong gains
for the year, although hotel-related properties fell-off in the fourth quarter.
We think they still have a lot to offer in 1998, since the real estate sector
did not advance as quickly as other groups in 1997.
Looking Ahead
In a year dominated by the popularity of large companies, we continued to
find the best values in medium- and small-sized companies. While this
diversification did not always help your Portfolio's performance this year,
experience tells us it is an important ingredient for long-term success and we
look forward to 1998.
- ---------------------------------------[Line Chart]----------------------------
Domestic Growth Stock Portfolio and the S&P 500 Index
Comparison of Change in Value of $10,000 Investment.
Domestic Growth Stock Portfolio
S&P 500 Index
DOMESTIC S&P
GROWTH STOCK 500
DATE PORTFOLIO INDEX
- ---- ------ -----
04/18/86 10,000 10,000
06/30/86 10,372 10,712
09/30/86 9,863 9,965
12/31/86 10,565 10,522
03/31/87 11,914 12,768
06/30/87 12,813 13,408
09/30/87 13,698 14,294
12/31/87 10,395 11,071
03/31/88 12,119 11,701
06/30/88 13,176 12,474
09/30/88 13,151 12,514
12/31/88 13,129 12,898
03/31/89 14,183 13,809
06/30/89 15,054 15,025
09/30/89 16,226 16,632
12/31/89 15,669 16,971
03/31/90 15,299 16,459
06/30/90 15,505 17,489
09/30/90 12,071 15,097
12/31/90 12,759 16,443
03/31/91 15,336 18,823
06/30/91 15,663 18,782
09/30/91 16,103 19,785
12/31/91 16,999 21,431
03/31/92 18,699 20,893
06/30/92 17,992 21,291
09/30/92 18,527 21,961
12/31/92 21,506 23,062
03/31/93 22,691 24,066
06/30/93 22,524 24,180
09/30/93 23,910 24,802
12/31/93 24,925 25,377
03/31/94 24,982 24,422
06/30/94 24,337 24,527
09/30/94 26,469 25,727
12/31/94 26,834 25,721
03/31/95 28,241 28,217
06/30/95 29,736 30,902
09/30/95 33,164 33,351
12/31/95 34,809 35,352
03/31/96 37,702 37,447
06/30/96 39,076 39,346
09/30/96 38,570 40,788
12/31/96 40,537 44,408
03/31/97 38,833 44,602
06/30/97 44,729 52,383
09/30/97 52,097 56,302
12/31/97 50,105 57,913
- --------------------------------------------------------------------------------
- -------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- -------------------------------------------------------
DOMESTIC S&P 500
GROWTH INDEX
1 YEAR 23.60% 33.35%
5 YEAR 18.43% 20.23%
10 YEAR 17.03% 16.99%
INCEPTION 14.75% 16.18%
Commencement of operations April 18, 1986. Past performance is not predictive of
future performance.
This graph compares an initial $10,000 investment made in the Domestic Growth
Stock Portfolio (the "Portfolio") at its inception with a similar investment in
the S&P 500 Index. For the purposes of this graph and the accompanying table,
the average annual total return for the Portfolio reflects all recurring
expenses and includes the reinvestment of all dividends and distributions.
Shares of the Portfolio are offered only through the variable products of
Jefferson Pilot Financial and its affiliates. Total returns do not reflect any
separate account expenses imposed on the policies which may include a premium
tax charge, account fees, cost of insurance, mortality expenses and surrender
charges, as applicable.
The S&P 500 Index is an unmanaged index and includes the reinvestment of all
dividends, but does not reflect the payment of transaction costs, advisory fees
or expenses that are associated with an investment in the Portfolio.
____________________________________________________________________________[25]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
DOMESTIC GROWTH STOCK PORTFOLIO
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Year Ended
December December December December December
31, 1997 31, 1996 31, 1995 31, 1994 31, 1993
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 18.19 $ 17.87 $ 15.94 $ 16.14 $ 15.16
Income From Investment Operations
Net investment income 0.09 0.06 0.15 0.09 0.12
Net gains and losses on securities
(both realized and unrealized) 4.17 2.85 4.48 1.12 2.29
---------- ---------- ---------- ---------- ----------
Total from investment operations 4.26 2.91 4.63 1.21 2.41
Less Distributions to Shareholders
Dividends from net investment income (0.09) (0.06) (0.15) (0.09) (0.12)
Dividends in excess of net
investment income
Distributions from capital gains (1.93) (2.53) (2.55) (1.32) (1.31)
Distributions in excess of capital gains
Returns of capital
---------- ---------- ---------- ---------- ----------
Total distributions (2.02) (2.59) (2.70) (1.41) (1.43)
Net asset value, end of year $ 20.43 $ 18.19 $ 17.87 $ 15.94 $ 16.14
========== ========== ========== ========== ==========
Total Return (A) 23.60% 16.46% 29.72% 7.66% 15.89%
Ratios to Average Net Assets:
Expenses 0.83% 0.85% 0.87% 0.89% 0.97%
Net investment income 0.47% 0.31% 0.95% 0.63% 0.76%
Portfolio Turnover Rate 52.92% 49.75% 64.17% 46.65% 49.47%
Average Commission Rate Paid $ 0.0554 $ 0.0555
Net Assets, At End of Year $81,505,107 $62,166,366 $48,517,886 $31,458,666 $25,072,289
</TABLE>
(A) Total return assumes reinvestment of all dividends during the year and does
not reflect deduction of account fees and charges that apply to separate
accounts or related insurance policies and annuity contracts. Investment returns
and principal values will fluctuate and shares, when redeemed, may be worth
more or less than the original cost.
[26]____________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
DOMESTIC GROWTH STOCK PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF DECEMBER 31, 1997
COMMON STOCK--106.26%
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Aerospace Equipment & Systems-0.46%
First Aviation Services, Inc.+ 50,000 $ 371,875
----------
Automotive & Trucking-2.71%
United Auto Group, Inc.+ 75,000 1,359,375
Wabash National Corp. 30,000 853,125
----------
2,212,500
----------
Banking-2.45%
PNCBank Corp. 35,000 1,997,188
----------
Building & Construction-5.11%
Belmont Homes, Inc.+ 150,000 1,153,125
Crossmann Communities, Inc.+ 70,000 1,933,750
Southern Energy Homes, Inc.+ 135,000 1,080,000
----------
4,166,875
----------
Chemicals-2.58%
Monsanto Co. 50,000 2,100,000
----------
Collectibles-1.86%
Action Performance Companies,
Inc.+ 40,000 1,515,000
----------
Computer Equipment & Services-1.48%
Applied Materials, Inc.+ 40,000 1,205,000
----------
Computer Information Systems-2.62%
DST Systems, Inc.+ 50,000 2,134,375
----------
Computer Network Products & Services-2.64%
Ascend Communications, Inc.+ 40,000 980,000
First Data Corp. 40,000 1,170,000
----------
2,150,000
----------
Electronics-3.76%
American Residential Services,
Inc.+ 90,000 1,406,250
Arrow Electronics, Inc.+ 30,000 973,125
Vishay Intertechnology, Inc.+ 29,112 687,771
----------
3,067,146
----------
+Non-income producing security.
COMMON STOCK--CONTINUED
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Financial Services-5.03%
Aames Financial Corp. 60,000 $ 776,250
AMRESCO, Inc.+ 110,000 3,327,500
----------
4,103,750
----------
Food Processing-0.74%
WLR Foods, Inc. 70,000 603,750
----------
Human Resources-5.75%
AccuStaff, Inc.+ 80,000 1,840,000
Kelly Services, Inc., Class A 40,000 1,200,000
Personnel Group of America, Inc.+ 50,000 1,650,000
----------
4,690,000
----------
Insurance-12.48%
American Bankers Insurance
Group, Inc. 50,000 2,296,874
Citizens Corp. 50,000 1,437,500
Executive Risk, Inc. 25,000 1,745,313
TIG Holdings, Inc. 32,000 1,062,000
UNUM Corp. 30,000 1,631,250
Western National Corp. 67,500 1,999,688
----------
10,172,625
----------
Lodging-5.49%
Host Marriott Corp.+ 110,000 2,158,749
Starwood Lodging Trust 40,000 2,315,000
----------
4,473,749
----------
Machinery-1.20%
Flowserve Corp. 35,000 977,813
----------
Medical - Biotech-1.97%
Heartstream, Inc.+ 150,000 1,603,125
----------
Mining & Metals-2.31%
Getchell Gold Corp.+ 41,300 991,200
N.N. Ball & Roller, Inc. 100,000 887,500
----------
1,878,700
----------
See notes to financial statements.
____________________________________________________________________________[27]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
DOMESTIC GROWTH STOCK PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF DECEMBER 31, 1997-CONTINUED
COMMON STOCK--CONTINUED
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Office Equipment & Supplies-2.06%
John H. Harland Co. 80,000 $1,680,000
----------
Oil & Gas - Drilling & Exploration-3.73%
ENSCO International, Inc. 40,000 1,340,000
Union Pacific Resources
Group, Inc. 70,000 1,697,500
----------
3,037,500
----------
Oil & Gas - Equipment & Field Services-2.80%
Weatherford Enterra, Inc.+ 52,110 2,279,813
----------
Packaging & Containers-3.31%
First Brands Corp. 100,000 2,693,750
----------
Pharmaceuticals-3.05%
Schering-Plough Corp. 40,000 2,485,000
----------
Rail Transportation-2.27%
Norfolk Southern Corp. 60,000 1,848,750
----------
Real Estate-18.82%
Alexandria Real Estate Equities,
Inc. 50,000 1,578,125
Catellus Development Corp.+ 100,000 2,000,000
CenterPoint Properties Corp. 57,000 2,002,125
Equity Office Properties Trust 70,315 2,219,316
Gables Residential Trust 50,000 1,381,250
Glenborough Realty Trust, Inc. 67,500 1,999,688
Kilroy Realty Corp. 65,000 1,868,750
National Golf Properties, Inc. 70,000 2,296,875
----------
15,346,129
----------
+Non-income producing security.
COMMON STOCK--CONTINUED
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Retail Stores-5.32%
Consolidated Stores Corp.+ 54,687 $ 2,402,810
Party City Corp.+ 60,000 1,935,000
----------
4,337,810
----------
Telecommunications Equipment-1.33%
DSPCommunications, Inc.+ 90,000 1,080,000
----------
Textile & Apparel-2.55%
Nike, Inc., Class B 30,000 1,177,500
Ridgeview, Inc.+ 145,000 906,250
----------
2,083,750
----------
Toys-0.38%
Toy Biz, Inc.+ 40,000 310,000
----------
Total Common Stock
(Cost $69,552,238) 86,605,973
----------
Total Investments
(Cost $69,552,238) 106.26% 86,605,973
Other assets, less liabilities (6.26) (5,100,866)
------ ----------
Total Net Assets 100.00% $81,505,107
====== ==========
See notes to financial statements.
[28]____________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
BOND PORTFOLIO
"We believe that an asset allocation to a
professionally managed fixed income
fund continues to make sense."
- --Ned Gerstman, Portfolio Manager--
- --------------------------------------------------------------------------------
INCEPTION DATE
April 18, 1986
- --------------------------------------------------------------------------------
FUND MANAGER
Chubb Asset Managers, Inc.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGY
To provide a stable level of income, consistent
with limiting risk to principal, by investing
primarily in high quality corporate debt securities
and U.S. Government debt obligations.
- --------------------------------------------------------------------------------
NET ASSETS AS OF 12/31/97
$13,460,496
- --------------------------------------------------------------------------------
NUMBER OF HOLDINGS
18
- --------------------------------------------------------------------------------
PORTFOLIO TURNOVER
8.41%
- --------------------------------------------------------------------------------
PORTFOLIO QUALITY
AAA-99.61%
AA-0.39%
- --------------------------------------------------------------------------------
DOLLAR WEIGHTED AVERAGE MATURITY
10.25 Years
- --------------------------------------------------------------------------------
IN THIS SECTION
- --------------------------------------------------------------------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
- --------------------------------------------------------------------------------
NED GERSTMAN
Senior Vice President
[bullet] Joined Chubb Corporation in 1987
[bullet] Serves on the investment committees of New York
Property Insurance and American Nuclear Insurance
[bullet] B.S. from New York University
- --------------------------------------------------------------------------------
____________________________________________________________________________[29]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
BOND PORTFOLIO
- ---------------------------------[Pie Chart]------------------------------------
% of Portfolio++
U.S. Government & Agency Obligations -- 98.30%
Cash -- 1.32%
Corporate Bonds -- 0.38%
- --------------------------------------------------------------------------------
- -----------------------------
PERCENT OF
RATING PORTFOLIO
- -----------------------------
AAA 99.61%
A 0.39%
DOLLAR WEIGHTED
AVERAGE MATURITY
10.25 years
++Represents market value of
investments plus cash.
The year 1997 turned out to be another battle between the cyclical and
secular forces in the bond market. By cyclical forces we refer to the elements
that build up as one moves through a business cycle. The secular forces are
those trends that appear to be occurring across more than one business cycle or
the longer term-factors. Based on conventional wisdom, the cyclical forces
should have put upward pressure on interest rate during 1997. These forces
include the length of this expansion, the strength of the economy, the tightness
in the labor markets and rising domestic capacity utilization rates. The Federal
Reserve Bank, recognizing these issues, raised the federal funds rate target in
March in order to keep these late cycle forces from putting upward pressure on
inflation. As a result of the Federal Reserve's action and cyclical concerns,
interest rates rose modestly during the first quarter. To the surprise of most
economists and market participants, inflation, which when rising erodes a bond's
value, not only didn't rise but actually continued to fall. This pattern of a
strong late cycle economy with tight labor markets but falling inflation and
commodity prices, continued through the rest of 1997. So despite a Federal
Reserve tightening earlier in the year, interest rate out along the yield curve
fell during 1997, with longer maturity rates
[30]____________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
BOND PORTFOLIO
falling more then shorter maturities (a flattening of the yield curve). The
secular forces of increased global competition and increased global capacity
helped to move inflation lower despite the cyclical issues.
Going into 1998, we continue to see good value in the bond market. Many of
the forces that were in place during 1997 are likely to be in place during 1998.
These include low inflation, a small Federal budget deficit (even the
possibility of a surplus), demographic trends that encourage savings, a highly
valued stock market that may result in asset allocations to bonds and finally,
the fact that real interest rates are historically attractive. This last point
is the essence of what describes whether there is value in the bond market. By
real rates we mean the difference between inflation and the yield on thirty year
Treasury Bonds. With trailing twelve month inflation as measured by the CPI at
1.7% and bonds yielding 5.9%, real interest rates are 4.2%. Rarely was this
measure above 3% prior to 1980. And with the forward looking inflation outlook
very good, interest rates could continue to chase inflation lower. Given our
outlook, we believe that an asset allocation to a professionally managed fixed
income fund continues to make sense.
- ---------------------------------------[Line Chart]----------------------------
Bond Portfolio and the Lehman Bros. Govt Index
Comparison of Change in Value of $10,000 Investment.
Bond Portfolio
Lehman Brothers Gov't Bond Index
LEHMAN BROS.
BOND GOV'T BOND
DATE PORTFOLIO INDEX
- ---- ------ -----
04/18/86 10,000 10,000
06/30/86 10,116 10,132
09/30/86 10,310 10,330
12/31/86 10,447 10,613
03/31/87 10,234 10,737
06/30/87 10,279 10,549
09/30/87 9,960 10,265
12/31/87 10,339 10,845
03/31/88 10,613 11,203
06/30/88 10,701 11,308
09/30/88 10,811 11,499
12/31/88 10,920 11,607
03/31/89 10,970 11,730
06/30/89 11,837 12,674
09/30/89 11,903 12,779
12/31/89 12,329 13,259
03/31/90 12,185 13,095
06/30/90 12,633 13,553
09/30/90 12,679 13,666
12/31/90 13,370 14,416
03/31/91 13,713 14,729
06/30/91 13,862 14,928
09/30/91 14,625 15,778
12/31/91 15,428 16,624
03/31/92 15,015 16,333
06/30/92 15,679 16,978
09/30/92 16,501 17,817
12/31/92 16,572 17,824
03/31/93 17,061 18,630
06/30/93 17,558 19,168
09/30/93 17,693 19,791
12/31/93 18,009 19,724
03/31/94 17,633 33,628
06/30/94 17,574 18,913
09/30/94 17,662 18,993
12/31/94 17,598 19,059
03/31/95 18,405 19,957
06/30/95 19,407 21,194
09/30/95 19,716 21,569
12/31/95 20,548 22,555
03/31/96 20,110 22,045
06/30/96 20,121 22,150
09/30/96 20,488 22,522
12/31/96 21,056 23,180
03/31/97 20,894 22,992
06/30/97 21,609 23,790
09/30/97 22,255 24,613
12/31/97 22,803 25,430
- --------------------------------------------------------------------------------
- ---------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- ---------------------------------------
LEHMAN
BOND BROS. GOVT
PORTFOLIO INDEX
1 YEAR 8.30% 9.71%
5 YEAR 6.59% 7.37%
10 YEAR 8.23% 8.90%
INCEPTION 7.29% 8.30%
Commencement of operations April 18, 1986. Past performance is not predictive of
future performance.
This graph compares an initial $10,000 investment made in the Bond Portfolio
(the "Portfolio") at its inception with a similar investment in the Lehman
Brothers Government Bond Index. For the purposes of this graph and the
accompanying table, the average annual total return for the Portfolio reflects
all recurring expenses and includes the reinvestment of all dividends and
distributions.
Shares of the Portfolio are offered only through the variable products of
Jefferson Pilot Financial and its affiliates. Total returns do not reflect any
separate account expenses imposed on the policies which may include a premium
tax charge, account fees, cost of insurance, mortality expenses and surrender
charges, as applicable.
The Lehman Brothers Government Bond Index is an unmanaged index and includes the
reinvestment of all dividends, but does not reflect the payment of transaction
costs, advisory fees or expenses that are associated with an investment in the
Portfolio.
____________________________________________________________________________[31]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
BOND PORTFOLIO
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Year Ended
December December December December December
31, 1997 31, 1996 31, 1995 31, 1994 31, 1993
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 10.27 $ 10.59 $ 9.70 $ 10.28 $ 10.21
Income From Investment Operations
Net investment income 0.59 0.56 0.74 0.35 0.74
Net gains and losses on securities
(both realized and unrealized) 0.26 (0.29) 0.89 (0.58) 0.13
---------- ---------- ---------- ---------- ----------
Total from investment operations 0.85 0.27 1.63 (0.23) 0.87
Less Distributions to Shareholders
Dividends from net investment income (0.59) (0.56) (0.74) (0.35) (0.74)
Dividends in excess of net
investment income
Distributions from capital gains (0.01) (0.03) (0.06)
Distributions in excess of capital gains
Returns of capital
---------- ---------- ---------- ---------- ----------
Total distributions (0.60) (0.59) (0.74) (0.35) (0.80)
Net asset value, end of year $ 10.52 $ 10.27 $ 10.59 $ 9.70 $ 10.28
========== ========== ========== ========== ==========
Total Return (A) 8.30% 2.47% 16.76% (2.28%) 8.68%
Ratios to Average Net Assets:
Expenses 0.60% 0.60% 0.63% 0.68% 0.74%
Net investment income 5.86% 5.93% 6.43% 6.07% 7.59%
Portfolio Turnover Rate 8.41% 23.25% 127.74% 140.30% 112.66%
Average Commission Rate Paid (B) N/A N/A
Net Assets, At End of Year $13,460,496 $11,717,693 $ 9,230,090 $13,066,445 $ 5,461,879
</TABLE>
(A) Total return assumes reinvestment of all dividends during the year and does
not reflect deduction of account fees and charges that apply to separate
accounts or related insurance policies and annuity contracts. Investment returns
and principal values will fluctuate and shares, when redeemed, may be worth more
or less than the original cost.
(B) During the year, the Portfolio held less than 10% of the value of its
average net assets in equity securities. Therefore, the Average Commission Rate
Paid has not been calculated.
[32]____________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
BOND PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF DECEMBER 31, 1997
CORPORATE BONDS--0.40%
Principal Market Value
Company Value (Note B)
- -------------------------------------------------------------------------------
Manufacturing
Corning Glass, 8.250%,
due 03/15/02 $ 50,000 $ 53,733
----------
Total Corporate Bonds
(Cost $49,066) 53,733
----------
US GOVERNMENT AND AGENCY
OBLIGATIONS--102.46%
Principal Market Value
Company Value (Note B)
- -------------------------------------------------------------------------------
Federal Home Loan Mortgage
Corp., Pool #C80090,
6.000%, due 01/01/24 $ 487,815 $ 472,253
Federal National Mortgage
Association, CMO #8829B,
9.500%, due 12/25/18 55,842 60,044
Federal National Mortgage
Association, Pool #248672,
6.000%, due 12/01/23 158,579 152,781
Federal National Mortgage
Association, Pool #261605,
6.000%, due 01/01/24 653,763 629,860
Federal National Mortgage
Association, Pool #267376,
6.000%, due 01/01/24 154,790 149,130
Government National Mortgage
Association, Pool #190666,
9.000%, due 12/15/16 82,628 88,360
Government National Mortgage
Association, Pool #780339,
8.000%, due 12/15/23 785,224 818,117
US GOVERNMENT AND AGENCY
OBLIGATIONS--CONTINUED
Principal Market Value
Company Value (Note B)
- -------------------------------------------------------------------------------
Government National Mortgage
Association, Pool #402760,
8.000%, due 08/15/25 $ 772,751 $ 801,246
U.S. Treasury Bond, 10.375%,
due 11/15/12 1,375,000 1,827,891
U.S. Treasury Note, 7.750%,
due 11/30/99 730,000 756,919
U.S. Treasury Note, 6.750%,
due 04/30/00 280,000 286,387
U.S. Treasury Note, 6.125%,
due 09/30/00 2,050,000 2,072,421
U.S. Treasury Note, 8.000%,
due 05/15/01 200,000 213,812
U.S. Treasury Note, 6.625%,
due 06/30/01 500,000 514,218
U.S. Treasury Note, 6.625%,
due 07/31/01 500,000 514,375
U.S. Treasury Note, 6.250%,
due 10/31/01 1,100,000 1,119,593
U.S. Treasury Note, 6.250%,
due 02/15/03 3,240,000 3,313,911
----------
Total U.S. Government
and Agency Obligations
(Cost $13,485,706) 13,791,318
----------
Total Investments
(Cost $13,534,772) 102.86% 13,845,051
----------
Other assets, less liabilities (2.86) (384,555)
------ ----------
Total Net Assets 100.00% $13,460,496
====== ==========
See notes to financial statements.
____________________________________________________________________________[33]
<PAGE>
[This page intentionally left blank]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
GROWTH AND INCOME PORTFOLIO
"We will continue to evaluate existing holdings and
potential acquisitions on a risk-adjusted total-return
basis, holding and purchasing those stocks we believe
have the better potential for longer-term performance."
--Brian S. Posner, Portfolio Manager--
- --------------------------------------------------------------------------------
INCEPTION DATE
May 1, 1992
- --------------------------------------------------------------------------------
FUND MANAGER
Warburg Pincus Counsellors, Inc.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGY
To seek long-term growth of capital by investing
primarily in a wide range of equity issues that may
offer capital appreciation and, secondarily, to seek a
reasonable level of current income.
- --------------------------------------------------------------------------------
NET ASSETS AS OF 12/31/97
$39,678,076
- --------------------------------------------------------------------------------
NUMBER OF HOLDINGS
97
- --------------------------------------------------------------------------------
PORTFOLIO TURNOVER
129.53%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IN THIS SECTION
- --------------------------------------------------------------------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BRIAN S. POSNER
Managing Director
[bullet] Joined Warburg Pincus in 1997
[bullet] 12 years industry
experience
[bullet] Previously with Fidelity Investments since 1987
[bullet] Managed Fidelity Equity Income II from 4/92 to 12/96
[bullet] M.B.A. from University of Chicago
[bullet] B.A. from Northwestern University
- --------------------------------------------------------------------------------
____________________________________________________________________________[35]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
GROWTH AND INCOME PORTFOLIO
- ---------------------------------[Pie Chart]------------------------------------
% of Portfolio++
Common Stock--87.28%
Cash--9.55%
Preferred Stock--2.11%
Corporate Bonds--1.06%
- --------------------------------------------------------------------------------
- ----------------------------------------
PERCENT OF
TOP TEN EQUITIES PORTFOLIO
- ----------------------------------------
British Petroleum, PLC,
ADR 2.98%
Chrysler Corp. 2.70%
International Business
Machines Corp. 2.20%
Citicorp 2.12%
Philip Morris Companies, Inc. 2.11%
Exxon Corp. 1.98%
Bell Atlantic Corp. 1.85%
Merck & Co., Inc. 1.82%
USG Corp. 1.77%
PMI Group, Inc. 1.73%
- ----------------------------------------
PERCENT OF
TOP TEN INDUSTRIES PORTFOLIO
- ----------------------------------------
Oil & Gas-Drilling &
Exploration 10.52%
Financial Services 7.84%
Aerospace Equipment &
Systems 7.23%
Insurance 6.38%
Retail Stores 5.88%
Telecommunications 5.69%
Medical - Healthcare Services 5.27%
Manufacturing 5.04%
Automotive Manufacturing 4.06%
Food Processing 3.75%
++Represents market value of
investments plus cash.
During the fourth quarter, and since Warburg Pincus assumed management of
the Growth & Income Portfolio on September 1, 1997, the Portfolio has posted
modest gains. These gains were supported in the fourth quarter primarily by its
holdings in the pharmaceutical, financial-services, retail and
telecommunications sectors. Holdings that contributed to the Portfolio lagging
the S&P 500 Index for this period included its energy and computer stocks.
In terms of specific strategies, the Portfolio is oriented toward a
total-return approach, focusing on equities with what Warburg Pincus deems to be
the best risk-adjusted-return prospects. We have looked for stocks that have
been temporarily depressed for cyclical or other identifiable reasons. We place
particular emphasis on factors such as management changes, restructurings, and
new products and service that could potentially improve earnings and free cash
flow. Because of this, many of the Portfolio's holdings were purchased at P/E
multiples significantly below that of the S&P 500 Index. Examples include
deep-water drilling stocks such as Noble Drilling, Reading & Bates and
Transocean Offshore, which were bought earlier this year, when fears of
declining oil prices drove their P/Es down to about 10 times estimated 1998
earnings. Warburg Pincus viewed these securities as oversold, given the
companies' potentially lucrative contracts for projects in the Gulf of Mexico
and the North Sea.
Other areas that contained a number of what were believed to be undervalued
stocks included retail. One such stock was Wal-Mart. We believed the market had
underestimated the company's potential to improve return on assets, given
Wal-Mart's recent restructuring and expansion overseas. The stock contributed
positively to the Portfolio's performance.
With regard to sectors, the Portfolio's industry weightings, few changes
were made during the final quarter of 1997 and it remained broadly diversified
by industry. Given the prevailing market conditions, we saw little incentive
from a risk-reward perspective, to heavily overweight sectors, though it should
be stressed that we will significantly increase specific industry weightings as
stock valuations warrant it. During this quarter, it was company-specific
factors rather than top-down considerations that continued
[36]___________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
GROWTH AND INCOME PORTFOLIO
to influence stock selection.
At year-end, the Portfolio continued to hold a modest overweighting in the
financial-services sector comprised of insurance, asset-management and
mortgage-services issues that we found to be reasonably priced. Within this
sector, the Portfolio was underweighted in both banks and savings & loans. An
exception to this pattern was Citicorp, which we considered to be attractively
valued.
Technology was a sector in which we reduced exposure during the past three
months. This was accomplished by eliminating positions in disk-drive
manufacturers where competition within the industry is increasing. Warburg
Pincus still finds value among industry leaders in the computer sector, but
overall exposure to the sector was trimmed.
The Portfolio retained its significant position in the food, beverages &
tobacco sectors. Among the issues that helped boost performance during the final
quarter was Sara Lee where the company announced better-than-expected earnings
growth during October. The Portfolio's retail exposure was pared on
profit-taking, while its weighting in the consumer non-durables sector was
increased. Here, Warburg Pincus viewed market volatility as a purchasing
opportunity and added two names to the Portfolio: Newell, a diverse
office-products and home furnishings manufacturer, and Premark International
which markets its food and decorative products to commercial as well as retail
customers. In each of these companies, we believe there is an opportunity to
benefit as they streamline costs and expand revenues as a result of recent
acquisitions.
Looking forward to 1998, Warburg Pincus anticipates a continuation of the
volatility that has characterized the markets for the past several months. This
is due in large part to enduring concerns relating to uncertainties in the Asian
markets. Within this context, bottom-up stock selection remains crucial. We will
continue to evaluate existing holdings and potential acquisitions on a
risk-adjusted total-return basis, holding and purchasing those stocks we believe
have the better potential for longer-term performance.
- ---------------------------------------[Line Chart]----------------------------
Growth and Income Portfolio and the S&P 500 Index
Comparison of Change in Value of $10,000 Investment.
S&P 500 Index
Growth & Income Portfolio
S&P GROWTH &
500 INCOME
DATE INDEX PORTFOLIO
- ---- ------ -----
05/01/92 10,000 10,000
06/30/92 9,958 9,696
09/30/92 10,272 9,824
12/31/92 10,787 10,820
03/31/93 11,256 11,276
06/30/93 11,310 11,300
09/30/93 11,598 11,895
12/31/93 11,867 12,436
03/31/94 11,420 12,070
06/30/94 11,470 11,996
09/30/94 12,031 12,248
12/31/94 12,028 11,910
03/31/95 13,195 12,871
06/30/95 14,451 14,352
09/30/95 15,596 15,496
12/31/95 16,532 15,908
03/31/96 17,512 16,489
06/30/96 18,399 17,365
09/30/96 19,074 17,639
12/31/96 20,767 19,548
03/31/97 20,860 19,874
06/30/97 24,494 22,999
09/30/97 26,326 25,028
12/31/97 27,079 25,200
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
GROWTH & S&P 500
INCOME INDEX
1 YEAR 28.92% 33.35%
5 YEAR 18.42% 20.23%
INCEPTION 17.70% 19.20%
Commencement of operations May 1, 1992. Past performance is not predictive of
future performance.
This graph compares an initial $10,000 investment made in the Growth and Income
Portfolio (the "Portfolio") at its inception with a similar investment in the
S&P 500 Index. For the purposes of this graph and the accompanying table, the
average annual total return for the Portfolio reflects all recurring expenses
and includes the reinvestment of all dividends and distributions.
Shares of the Portfolio are offered only through the variable products of
Jefferson Pilot Financial and its affiliates. Total returns do not reflect any
separate account expenses imposed on the policies which may include a premium
tax charge, account fees, cost of insurance, mortality expenses and surrender
charges, as applicable.
The S&P 500 Index is an unmanaged index and includes the reinvestment of all
dividends, but does not reflect the payment of transaction costs, advisory fees
or expenses that are associated with an investment in the Portfolio.
____________________________________________________________________________[37]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
GROWTH AND INCOME PORTFOLIO
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Year Ended
December December December December December
31, 1997 31, 1996 31, 1995 31, 1994 31, 1993
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 16.91 $ 14.41 $ 11.22 $ 12.35 $ 11.10
Income From Investment Operations
Net investment income 0.15 0.18 0.15 0.13 0.12
Net gains and losses on securities
(both realized and unrealized) 4.67 3.12 3.62 (0.65) 1.53
----------- ----------- ----------- ----------- -----------
Total from investment operations 4.82 3.30 3.77 (0.52) 1.65
Less Distributions to Shareholders
Dividends from net investment income (0.15) (0.18) (0.15) (0.13) (0.12)
Dividends in excess of net investment income
Distributions from capital gains (4.21) (0.62) (0.29) (0.48) (0.28)
Distributions in excess of capital gains (0.26) (0.14)
Returns of capital
----------- ----------- ----------- ----------- -----------
Total distributions (4.62) (0.80) (0.58) (0.61) (0.40)
Net asset value, end of year $ 17.11 $ 16.91 $ 14.41 $ 11.22 $ 12.35
=========== =========== =========== =========== ===========
Total Return (A) 28.92% 22.88% 33.58% (4.24%) 14.94%
Ratios to Average Net Assets:
Expenses 0.85% 0.88% 0.92% 1.10% 1.35%
Net investment income 1.03% 1.39% 1.50% 1.52% 1.38%
Portfolio Turnover Rate 129.53% 35.69% 32.30% 38.17% 77.68%
Average Commission Rate Paid $ 0.0604 $ 0.0700
Net Assets, At End of Year $39,678,076 $23,711,696 $13,126,023 $ 5,610,472 $ 2,831,442
</TABLE>
(A) Total return assumes reinvestment of all dividends during the year and does
not reflect deduction of account fees and charges that apply to separate
accounts or related insurance policies and annuity contracts. Investment returns
and principal values will fluctuate and shares, when redeemed, may be worth more
or less than the original cost.
[38]___________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
GROWTH AND INCOME PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF DECEMBER 31, 1997
- --------------------------------------------------------------------------------
COMMON STOCK--110.23%
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Aerospace Equipment & Systems-9.13%
AlliedSignal, Inc. 11,800 $ 459,462
Gulfstream Aerospace Corp.+ 22,500 658,125
Litton Industries, Inc.+ 10,150 583,625
Lockheed Martin Corp. 6,250 615,625
Raytheon Co., Class A+ 11,900 586,819
United Technologies Corp. 9,900 720,844
----------
3,624,500
----------
Appliances-0.67%
Maytag Corp. 7,100 264,919
----------
Automotive Manufacturing-5.13%
Chrysler Corp. 38,500 1,354,719
Ford Motor Co. 14,000 681,625
----------
2,036,344
----------
Automotive Parts & Accessories-2.49%
Cummins Engine Co., Inc. 6,100 360,281
ITT Industries, Inc. 20,000 627,500
----------
987,781
----------
Banking-1.02%
The Bank of New York Company,
Inc. 7,000 404,688
----------
Beverages-1.98%
Anheuser Busch Companies, Inc. 17,850 785,400
----------
Building & Construction-2.24%
USG Corp.+ 18,100 886,900
----------
Chemicals-2.86%
Ferro Corp. 10,500 255,281
IMC Global, Inc. 7,400 242,350
Union Carbide Corp. 14,900 639,769
----------
1,137,400
----------
+Non-income producing security.
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Computer Equipment & Services-3.65%
Hewlett Packard Co. 5,500 $ 343,750
International Business Machines
Corp. 10,550 1,103,134
----------
1,446,884
----------
Computer Network Products & Services-1.78%
Automatic Data Processing, Inc. 5,450 334,494
Sun Microsystems, Inc.+ 9,300 370,837
----------
705,331
----------
Consumer Products-1.27%
Ralston-Ralston Purina Group 2,900 269,519
Swedish Match Co., ADR 7,000 232,750
----------
502,269
----------
Electronics-1.00%
Emerson Electric Co. 7,050 397,884
----------
Financial Services-8.89%
American Express Co. 500 44,625
Citicorp 8,400 1,062,074
Deluxe Corp. 6,400 220,800
Finova Group, Inc. 10,650 529,172
Fannie Mae 10,800 616,275
Freddie Mac 8,600 360,663
H&R Block, Inc. 4,600 206,138
Household International, Inc. 1,400 178,588
Lehman Brothers Holdings, Inc. 6,050 308,550
----------
3,526,885
----------
Food Processing-4.74%
Philip Morris Companies, Inc. 23,300 1,055,781
RJR Nabisco Holdings, Corp. 12,000 450,000
Sara Lee Corp. 6,650 374,478
----------
1,880,259
----------
See notes to financial statements.
____________________________________________________________________________[39]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
GROWTH AND INCOME PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF DECEMBER 31, 1997-CONTINUED
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Household Products-1.69%
Newell Co. 5,100 $ 216,750
Premark International, Inc. 15,600 452,400
----------
669,150
----------
Industrial Machines-0.80%
Unova, Inc.+ 19,200 315,600
----------
Insurance-7.22%
MBIA, Inc. 8,600 574,588
PMI Group, Inc. 12,000 867,749
Provident Companies, Inc. 10,800 417,150
Terra Nova Bermuda Holdings,
Ltd., Class A+ 9,000 236,250
Travelers Property Casualty Corp. 9,400 413,600
W.R. Berkley Corp. 8,100 355,388
----------
2,864,725
----------
Lodging-1.73%
La Quinta Inns, Inc. 35,600 687,525
----------
Machinery-1.45%
Caterpillar, Inc. 5,100 247,669
Ingersoll-Rand Co. 8,100 328,050
----------
575,719
----------
Manufacturing-6.36%
American Standard Companies,
Inc.+ 11,600 444,425
Harsco Corp. 13,000 560,625
Olin Corp. 8,600 403,125
Polaroid Corp. 11,200 545,300
Unilever N.V., N.Y. Shares 9,150 571,303
----------
2,524,778
----------
Medical - Healthcare Services-6.65%
American Home Products, Inc. 8,800 673,199
Baxter International, Inc. 10,150 511,941
Foundation Health Systems, Inc.+ 5,900 132,013
+Non-income producing security.
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Medical - Healthcare Services-(Continued)
Tenet Healthcare Corp.+ 12,700 $ 420,688
Trigon Healthcare, Inc.+ 21,100 551,237
Wellpoint Health Networks, Inc.+ 8,300 350,675
----------
2,639,753
----------
Mining & Metals-2.66%
Alumax, Inc.+ 19,800 673,200
Aluminum Company of America 5,450 383,544
----------
1,056,744
----------
Office Equipment & Supplies-0.67%
Pitney Bowes, Inc. 2,950 265,316
----------
Oil & Gas - Drilling & Exploration-13.28%
British Petroleum, PLC, ADR 18,768 1,495,574
Exxon Corp. 16,250 994,297
Mobil Corp. 11,700 844,594
Noble Drilling Corp.+ 14,850 454,781
Reading & Bates Corp.+ 10,100 422,938
Total, SA 12,300 682,650
Transocean Offshore, Inc. 7,800 375,863
----------
5,270,697
----------
Pharmaceuticals-3.71%
Merck & Co., Inc. 8,600 913,750
Rhone-Poulenc, SA, ADR 12,550 556,906
----------
1,470,656
----------
Rail Transportation-1.71%
Burlington Northern Santa Fe 3,100 288,106
CSX Corp. 7,200 388,800
----------
676,906
----------
Retail Stores-6.58%
Carson Pirie Scott & Co.+ 3,500 175,438
Federated Department Stores,
Inc.+ 17,200 740,674
See notes to financial statements.
[40]___________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
GROWTH AND INCOME PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF DECEMBER 31, 1997--CONTINUED
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Retail Stores-(Continued)
May Department Stores Co. 7,000 $ 368,813
Neiman Marcus Group, Inc.+ 7,800 235,950
Payless ShoeSource, Inc.+ 7,250 486,656
Rite Aid Corp. 600 35,213
Wal-Mart Stores, Inc. 14,400 567,900
----------
2,610,644
----------
Telecommunications-6.37%
Alltel Corp. 5,500 225,844
Ameritech Corp. 6,600 531,300
Bell Atlantic Corp. 10,209 929,018
BellSouth Corp. 8,600 484,288
SBC Communications, Inc. 4,900 358,925
----------
2,529,375
----------
Utilities - Electric & Gas-2.50%
Allegheny Energy, Inc. 7,800 253,500
American Electric Power Co., Inc. 6,600 340,725
DQE, Inc. 400 14,050
Entergy Corp. 7,100 212,556
Illinova Corp. 6,400 172,400
----------
993,231
----------
Total Common Stock
(Cost $41,473,626) 43,738,263
----------
+Non-income producing security.
- --------------------------------------------------------------------------------
PREFERRED STOCK--2.67%
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Financial Services-1.02%
Equity Residential Properties,
7.250% 15,800 $ 404,875
----------
Insurance-0.84%
Allstate Corp., Conv., 6.765% 5,550 333,000
----------
Telecommunications-0.81%
Airtouch Communications, Inc.,
6.000% 9,000 320,625
----------
Total Preferred Stock
(Cost $1,020,594) 1,058,500
----------
See notes to financial statements.
____________________________________________________________________________[41]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
GROWTH AND INCOME PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF DECEMBER 31, 1997-CONTINUED
- --------------------------------------------------------------------------------
CORPORATE BONDS--1.33%
Principal Market Value
Company Value (Note B)
- --------------------------------------------------------------------------------
Electronics-0.49%
Micron Technology, Inc., 7.000%,
Conv., due 07/01/04 $210,000 $ 194,775
-----------
Retail Stores-0.84%
Costco Companies, Inc., Zero
Coupon, due 08/19/17 200,000 119,250
Rite Aid Corp., 144A, 5.250%,
due 09/15/02 200,000 216,000
-----------
335,250
-----------
Total Corporate Bonds
(Cost $519,537) 530,025
-----------
+Non-income producing security.
- --------------------------------------------------------------------------------
WARRANTS--0.02%
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Pharmaceutical-0.02%
Rhone-Poulenc, SA, ADR+ 2,100 $ 6,825
-----------
Total Warrants
(Cost $5,906) 6,825
-----------
Total Investments
(Cost $43,019,663) 114.25% 45,333,613
Other assets, less liabilities (14.25) (5,655,537)
------ -----------
Total Net Assets 100.00% $39,678,076
====== ===========
See notes to financial statements.
[42]____________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
CAPITAL GROWTH PORTFOLIO
"We have focused the Portfolio on
areas where we have a high degree
of confidence in the companies'
earnings ability. If we are correct,
these companies will be recognized
for their relative earnings strength
and their relative price/earnings
ratios will appreciate."
- --Mark Pinto, Portfolio Manager--
- --------------------------------------------------------------------------------
INCEPTION DATE
May 1, 1992
- --------------------------------------------------------------------------------
FUND MANAGER
Janus Capital Corporation
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGY
To seek capital growth. Realization of income is
not a significant investment consideration and
any income realized will be incidental.
- --------------------------------------------------------------------------------
NET ASSETS AS OF 12/31/97
$124,123,995
- --------------------------------------------------------------------------------
NUMBER OF HOLDINGS
48
- --------------------------------------------------------------------------------
PORTFOLIO TURNOVER
91.66%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IN THIS SECTION
- --------------------------------------------------------------------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
- --------------------------------------------------------------------------------
MARK PINTO, CFA
Vice President
[bullet] Joined Janus Capital Corporation in 1994
[bullet] 12 years of investment experience
[bullet] B.A. from Yale University
[bullet] M.B.A. from Harvard University
[bullet] Chartered Financial Analyst
____________________________________________________________________________[43]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
CAPITAL GROWTH PORTFOLIO
- ---------------------------------[Pie Chart]------------------------------------
% of Portfolio++
Common Stock-99.16%
Cash-0.84%
- --------------------------------------------------------------------------------
- ----------------------------------------------
PERCENT OF
TOP TEN EQUITIES PORTFOLIO
- ----------------------------------------------
Coca-Cola Enterprises, Inc. 5.04%
Microsoft Corp. 4.48%
E.I. du Pont de Nemours
& Co. 4.10%
General Electric Co. 4.02%
Warner-Lambert Co. 4.00%
Pfizer, Inc. 3.99%
SLM Holding Corp. 3.95%
Dell Computer Corp. 3.88%
Monsanto Co. 3.84%
Schlumberger, Ltd. 3.82%
- ----------------------------------------------
PERCENT OF
TOP TEN INDUSTRIES PORTFOLIO
- ----------------------------------------------
Financial Services 22.74%
Pharmaceuticals 12.95%
Chemicals 11.95%
Computer Software - Mini
& Micro 6.66%
Beverages 5.04%
Oil & Gas - Equipment &
Field Services 4.64%
Computers 4.58%
Airlines 3.91%
Telecommunications
Equipment 3.22%
Oil & Gas - Drilling &
Exploration 3.15%
++Represents market value of
investments plus cash.
As the year ended, Southeast Asia became the focal point of international
markets, injecting volatility into equities worldwide. Despite substantial, and
at times unsettling fluctuations, the S&P 500 Index gained 2.87% during the
fourth quarter.
Asia's expanding financial crisis engulfed new victims, and South Korea, the
world's eleventh largest economy, became the latest to be infected with the
"Asian Contagion." At home, the growing Asian downturn raised new concerns about
corporate earnings, and those companies with exposure to the region saw their
shares decline. As a result, the Dow Jones experienced its worst single day
point decline, dropping over 555 points on October 27. Markets around the world
moved lower, and most established markets actually experienced a true
correction.
However, domestic and European equities proved resilient, and many investors
treated the decline as a buying opportunity. Specifically, a global flight
toward quality benefited the Treasury market, where long-term yields fell from
6.40% to 5.92%--a substantial decline. Although stocks drew strength from
falling interest rates, the rebound was limited in scope. The large
multinationals drove the S&P 500's gains towards year-end, although most other
areas underperformed the Index. For the quarter, the Dow Jones was essentially
flat, returning (0.01%), while the NASDAQ Composite and the Russell 2000
declined 6.85% and 3.35%, respectively.
During the period, we stayed true to our discipline and invested in superior
companies with solid growth potential. We continued to hold several high-quality
pharmaceutical manufacturers, including Eli Lilly, Pfizer, and Warner-Lambert.
These companies have either launched or are rolling out several exciting new
products with exceptional sales potential. Lilly is scheduled to launch Evista,
which treats osteoporosis and acts as a hormone replacement therapy for women,
while Pfizer plans to introduce Viagra, a new treatment for male impotence.
These new products, coupled with an aging population that will increasingly draw
on pharmaceutical products to treat ailments, should create a solid long-term
earnings scenario for the drug manufacturers. Although Waner-Lambert enjoyed an
incredible run in 1997, the stock price suffered a temporary setback during the
fourth quarter. One of its two new blockbuster drugs (Rezulin) received negative
press over concerns related to liver toxicity; however, due to Rezulin's quality
of life improvements for Type 2 diabetics, we still believe that the drug could
eventually generate over a billion dollars in sales per year.
We also added Bristol-Meyers Squibb during the period. The company recently
outlined an aggressive new commitment to research and development (R&D), which
should dramatically expand its product pipeline in the coming years. The company
already has over thirty pre-clinical compounds in development, so the additional
emphasis on R&D should further enhance the company's product pipeline.
Among our financial services companies, Fannie Mae and Freddie Mac were
standouts. The decline in long-term yields helped both positions, as did the
Federal Reserve's decision to stay on the sidelines. Loan volumes are up almost
15% year-over-year, while the decline in mortgage yields is boosting
refinancings and new loan volumes. Our position in Charles Schwab also
appreciated nicely. Schwab has embraced cutting-edge technology, and this has
helped the discount brokerage house gain market share, even from its full
service competitors. Meanwhile, Sallie Mae, the largest private student loan
organization, lost ground, due primarily to concerns, that
[44]____________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
CAPITAL GROWTH PORTFOLIO
the rate on student loans would be cut. With the government's lending program in
disarray, it is highly unlikely that Congress would disincentivize the private
lending program. We opted instead to increase our position because Sallie Mae's
fundamentals appear solid and the stock is trading at very reasonable
valuations.
The technology sector was generally weak due to fears that Asia's downturn
would impact earnings, so wefocused on blue-chip companies with predictable
earnings streams. Microsoft remains a core position in the Portfolio. The
company dominates the software industry, and is now making strong headway into
networking with the proliferation of its Windows NT product. We also held Dell
Computers which, despite reporting record earnings, finished the period lower on
concerns over the Far East. We still believe that Dell's long-term earnings
potential is intact because revenues from the far East account for less than 10%
of Dell's sales. Recently, we took advantage of the sector's volatility to add
Cisco Systems, the premier networking company.
Semiconductor stocks were also hurt by Asia's downturn, because a
disproportionate share of Asia's technology spending goes to these companies.
However, we've maintained, and in some cases boosted, our positions in Intel,
Texas Instruments, and ASM Lithography. We are very confident in each company's
ability to grow earnings, given the strength of their businesses in other
geographies, notably the United States and Europe.
Even though our positions in the oil services sector came under pressure
during the quarter, we remain confident in the long-term potential for our
deep-water offshore drilling and oil services stocks. Fears of a global economic
slowdown, lower oil and natural gas prices, and the warmest year on record
created a negative backdrop for the group, which moved away from its recent
peaks. Certainly, a further decline in oil and natural gas prices may curtail
exploration and production spending; however, these companies have corrected to
a point where the stock prices appear to have factored in this risk, and demand
remains strong for oil and gas service providers. New technologies developed by
the leading providers, have enabled customers to significantly lower extraction
costs, making oil exploration and extraction much more feasible and profitable,
even at current energy prices.
As we enter 1998, weremain constructive on the market for a variety of
reasons. With interest rates below 6% and trending lower, stocks are now
receiving critical support. And liquidity flows into equities remain strong,
fueled in part by lower yields. Looking at the economy, the adjustment to GDP
from Asia's downturn will act as a brake on the economy, reining in potentially
inflationary growth. Such moderate economic growth is positive for both bonds
and equities. If the economy does venture into a less-robust environment,
companies that can still show meaningful and consistent earnings growth will be
well rewarded. We have, therefore, focused the Portfolio on areas where we have
a high degree of confidence in the companies' earnings ability. If we are
correct, these companies will be recognized for their relative earnings strength
and their relative price/earnings ratios will appreciate. In short, we are very
positive on the Portfolio, and as a result, are optimistic about our prospects
going into the new year.
Thank you for your continued investment with Janus.
- --------------------------------[Line Chart]------------------------------------
Capital Growth Portfolio and the S&P 500 Index
Comparison of Change in Value of $10,000 Investment.
Capital Growth Portfolio
S&P 500 Index
CAPITAL S&P
GROWTH 500
DATE PORTFOLIO INDEX
- ---- ------ -----
05/01/92 10,000 10,000
06/30/92 10,087 9,958
09/30/92 10,925 10,272
12/31/92 12,724 10,787
03/31/93 13,604 11,256
06/30/93 13,635 11,310
09/30/93 14,752 11,598
12/31/93 15,869 11,867
03/31/94 15,387 11,420
06/30/94 14,720 11,470
09/30/94 15,553 12,031
12/31/94 15,353 12,028
03/31/95 16,045 13,195
06/30/95 17,479 14,451
09/30/95 20,143 15,596
12/31/95 21,762 16,532
03/31/96 23,919 17,512
06/30/96 25,766 18,399
09/30/96 26,224 19,074
12/31/96 25,951 20,767
03/31/97 26,015 20,860
06/30/97 30,540 24,494
09/30/97 33,805 26,326
12/31/97 33,582 27,079
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
CAPITAL S&P 500
GROWTH INDEX
1 YEAR 29.41% 33.35%
5 YEAR 21.42% 20.23%
INCEPTION 23.81% 19.20%
Commencement of operations May 1, 1992. Past performance is not predictive of
future performance.
This graph compares an initial $10,000 investment made in the Capital Growth
Portfolio (the "Portfolio") at its inception with a similar investment in the
S&P 500 Index. For the purposes of this graph and the accompanying table, the
average annual total return for the Portfolio reflects all recurring expenses
and includes the reinvestment of all dividends and distributions.
Shares of the Portfolio are offered only through the variable products of
Jefferson Pilot Financial and its affiliates. Total returns do not reflect any
separate account expenses imposed on the policies which may include a premium
tax charge, account fees, cost of insurance, mortality expenses and surrender
charges, as applicable.
The S&P 500 Index is an unmanaged index and includes the reinvestment of all
dividends, but does not reflect the payment of transaction costs, advisory fees
or expenses that are associated with an investment in the Portfolio.
____________________________________________________________________________[45]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
CAPITAL GROWTH PORTFOLIO
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Year Ended
December December December December December
31, 1997 31, 1996 31, 1995 31, 1994 31, 1993
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 17.26 $ 17.38 $ 13.38 $ 14.26 $ 12.42
Income From Investment Operations
Net investment income (loss) 0.05 0.03 0.03
Net gains and losses on securities
and foreign currency (both
realized and unrealized) 4.99 3.24 5.56 (0.49) 3.03
----------- ----------- ----------- ---------- -----------
Total from investment operations 4.99 3.29 5.59 (0.46) 3.03
Less Distributions to Shareholders
Dividends from net investment income (0.05) (0.03) (0.03)
Dividends in excess of net
investment income
Distributions from capital gains (0.81) (3.36) (1.56) (0.33) (1.19)
Distributions in excess of capital gains (0.21) (0.06)
Returns of capital
----------- ----------- ----------- ---------- -----------
Total distributions (1.02) (3.41) (1.59) (0.42) (1.19)
Net asset value, end of year $ 21.23 $ 17.26 $ 17.38 $ 13.38 $ 14.26
=========== =========== =========== ========== ===========
Total Return (A) 29.41% 19.25% 41.74% (3.26%) 24.73%
Ratios to Average Net Assets:
Expenses 1.09% 1.13% 1.15% 1.22% 1.33%
Net investment income 0.02% 0.30% 0.21% 0.25% (0.11%)
Portfolio Turnover Rate 91.66% 147.82% 170.32% 202.04% 162.79%
Average Commission Rate Paid $ 0.0568 $ 0.0502
Net Assets, At End of Year $124,123,995 $70,832,162 $49,853,029 $27,564,086 $15,373,489
</TABLE>
(A) Total return assumes reinvestment of all dividends during the year and does
not reflect deduction of account fees and charges that apply to separate
accounts or related insurance policies and annuity contracts. Investment returns
and principal values will fluctuate and shares, when redeemed, may be worth more
or less than the original cost.
[46]___________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
CAPITAL GROWTH PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF DECEMBER 31, 1997
- --------------------------------------------------------------------------------
COMMON STOCK--102.25%
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Agricultural Operations-0.57%
Delta & Pine Land Co. 23,167 $ 706,583
------------
Airlines-4.03%
Alaska Air Group, Inc.+ 12,175 471,781
UAL Corp.+ 48,960 4,528,800
------------
5,000,581
------------
Automotive Parts & Accessories-1.07%
Federal-Mogul Corp. 32,875 1,331,438
------------
Beverages-5.20%
Coca-Cola Enterprises, Inc. 181,500 6,454,594
------------
Broadcasting-1.05%
Tele-Communications, Inc.
Class A+ 46,800 1,307,475
------------
Chemicals-12.32%
Cytec Industries, Inc.+ 55,550 2,607,378
E.I. du Pont de Nemours & Co. 87,300 5,243,456
Monsanto Co. 117,175 4,921,350
Solutia, Inc. 94,645 2,525,839
------------
15,298,023
------------
Computer Equipment & Services-0.93%
Linear Technology Corp. 20,000 1,152,500
------------
Computer Network Products & Services-2.79%
Cisco Systems, Inc. 62,188 3,466,953
------------
Computer Software - Mini & Micro-6.87%
Cadence Design Systems, Inc. 113,700 2,785,650
Microsoft Corp.+ 44,405 5,739,346
------------
8,524,996
------------
Computers-4.72%
Compaq Computer Corp. 16,000 903,000
Dell Computer Corp. 59,075 4,962,300
------------
5,865,300
------------
+Non-income producing security.
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Electronics-2.00%
Philips Electronics 2,134 $ 128,005
Philips Electronics, N.V., ADR 21,275 1,287,137
Texas Instruments, Inc. 23,625 1,063,125
------------
2,478,267
------------
Electronics - Semiconductor-2.75%
Applied Materials, Inc. 49,275 1,484,409
Intel Corp. 27,450 1,928,363
------------
3,412,772
------------
Financial Services-23.45%
Charles Schwab Corp. 38,975 1,634,514
Citicorp 26,575 3,360,077
Fannie Mae 80,000 4,565,000
Federal Home Loan Mortgage
Corp. 75,700 3,174,669
General Electric Co. 70,100 5,143,587
Merrill Lynch & Co., Inc. 34,750 2,534,578
MGIC Investment Corp. 13,250 881,125
Morgan Stanley, Dean Witter,
Discover and Co. 14,125 835,141
PMI Group, Inc. 6,925 500,764
SLM Holding Corp. 36,320 5,053,020
Wells Fargo & Co. 4,201 1,425,977
------------
29,108,452
------------
Food & Household Products-1.50%
Ralston-Ralston Purina Group 20,000 1,858,750
------------
Media-2.53%
CBS Corp. 96,975 2,854,701
Comcast Corp., Special Class A 9,075 286,430
------------
3,141,131
------------
Mining & Metals-2.04%
Assa Abloy, AB, B Shares 95,511 2,527,904
------------
Machinery-General Industrial-2.07%
ASM Lithography Holding, N.V. 38,015 2,566,013
------------
See notes to financial statements.
____________________________________________________________________________[47]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
CAPITAL GROWTH PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF DECEMBER 31, 1997-CONTINUED
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Oil & Gas - Drilling & Exploration-3.25%
Diamond Offshore Drilling, Inc. 56,375 $ 2,713,047
Transocean Offshore, Inc. 27,450 1,322,747
-----------
4,035,794
-----------
Oil & Gas - Equipment & Field Services-4.78%
Halliburton Co. 20,130 1,045,502
Schlumberger, Ltd. 60,725 4,888,362
-----------
5,933,864
-----------
Pharmaceuticals-13.35%
Bristol-Myers Squibb Co. 26,750 2,531,219
Eli Lilly & Co. 54,850 3,818,931
Pfizer, Inc. 68,425 5,101,939
Warner-Lambert Co. 41,300 5,121,200
-----------
16,573,289
-----------
Retail Stores-0.67%
Fred Meyer, Inc. 22,900 832,988
-----------
+Non-income producing security.
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Telecommunications-0.99%
Qwest Communications
International, Inc.+ 20,600 $ 1,225,700
------------
Telecommunications Equipment-3.32%
Lucent Technologies, Inc. 51,550 4,117,556
------------
Total Common Stock
(Cost $98,828,249) 126,920,923
------------
Total Investments
(Cost $98,828,249) 102.25% 126,920,923
Other assets, less liabilities (2.25) (2,796,928)
------ ------------
Total Net Assets 100.00% $124,123,995
====== ============
- --------------------------------------------------------------------------------
See notes to financial statements.
[48]____________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
BALANCED PORTFOLIO
"We will continue our strategy of using extensive
fundamental research to identify individual
securities which we believe are underpriced
relative to their longer-term earnings prospects."
--Michael Kelly and Harriet Huber, Portfolio Managers--
- --------------------------------------------------------------------------------
INCEPTION DATE
May 1, 1992
- --------------------------------------------------------------------------------
FUND MANAGER
J.P. Morgan Investment Management, Inc.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGY
To seek reasonable current income and long-term
capital growth, consistent with conservation of
capital, by investing primarily in common
stocks and fixed income securities.
- --------------------------------------------------------------------------------
NET ASSETS AS OF 12/31/97
$22,637,577
- --------------------------------------------------------------------------------
NUMBER OF HOLDINGS
99
- --------------------------------------------------------------------------------
PORTFOLIO TURNOVER
254.04%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IN THIS SECTION
- --------------------------------------------------------------------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
- --------------------------------------------------------------------------------
MICHAEL KELLY
Vice President
[bullet] Joined J.P. Morgan in 1985
[bullet] Portfolio Manager in the Equity and Balanced Accounts Group
[bullet] M.B.A. from the Wharton School of Business, University of Pennsylvania
[bullet] B.A. from Gettysburg College
- --------------------------------------------------------------------------------
HARRIET HUBER
Vice President
[bullet] Joined J.P. Morgan in 1989
[bullet] 19 years industry
experience
____________________________________________________________________________[49]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
BALANCED PORTFOLIO
- ---------------------------------[Pie Chart]------------------------------------
% of Portfolio++
Government & Agency Obligations--34.06%
Corporate Bonds--6.53%
Cash--3.56%
Common Stock--55.85%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PERCENT OF
TOP TEN HOLDINGS PORTFOLIO
- --------------------------------------------------------------------------------
U.S. Treasury Notes
& Bonds 19.21%
GNMA's 9.61%
FNMA's 4.02%
Tosco Corp. 1.80%
Pfizer, Inc. 1.64%
Merck & Co., Inc. 1.57%
MCI Communications Corp. 1.54%
Warner Lambert Co. 1.36%
Anheuser Busch Companies,
Inc. 1.35%
Tele-Communications TCI
Ventures Group 1.31%
- --------------------------------------------------------------------------------
PERCENT OF
TOP TEN INDUSTRIES PORTFOLIO
- --------------------------------------------------------------------------------
Telecommunications 5.70%
Banking 5.62%
Financial Services 5.15%
Pharmaceuticals 4.57%
Oil & Gas - Integrated 3.76%
Utilities - Electric & Gas 2.98%
Oil & Gas - Distribution &
Marketing 2.58%
Computer Network Products
& Services 2.41%
Beverages 2.08%
Food Processing 1.91%
++Represents market value of
investments plus cash.
After a volatile first quarter, dominated by strong fourth quarter 1996
earnings releases and fears of rising interest rates, the market stabilized in
the second quarter as leading indicators pointed to continued low inflation and
a cooling U.S. economy. Overall, U.S. equity market returns continued to be
dominated by the largest capitalization stocks deemed the "Nifty Fifty", a trend
which has been present for the past few years. This trend reversed briefly
during the third quarter as the market broadened and the largest companies
underperformed. However, the fourth quarter saw a reversion to the "Nifty Fifty"
phenomenon as investors sought `safe haven' in the midst of broadening emerging
markets turmoil.
This narrow equity market environment made it very difficult for the
majority of active managers to keep pace with the S&P 500. For the year 1997,
the top 10 performing S&P stocks accounted for 26% of the Index's advance. Two
stocks, General Electric and Microsoft, accounted for over 8% of the Index's
gain. As J.P. Morgan continues to view these and a number of the other strongest
performing "Nifty Fifty" stocks as overvalued, they were not held in the
Balanced Portfolio, thus, contributing to the Portfolio's underperformance
relative to the S&P 500.
During the fourth quarter, the U.S. economy continued to grow at above
trend levels. However, the turmoil in Southeast Asia spilled into other markets
during the quarter causing increased global financial market volatility and a
`flight to quality' with many investors. In
[50]___________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
BALANCED PORTFOLIO
fact, the yield on the 30-year U.S. Treasury bond fell from 6.40% on
September 30 to 5.92% on December 31, 1997.
In equities, Drugs and Finance were the strongest performing S&P 500 sectors
during 1997, returning 52% and 48%, respectively. Stock selection within the
Balanced Portfolio continued to be strong, especially in the Services sector
which returned 38%. Service sector holdings TCI Ventures and Time Warner
performed particularly well, returning over 43% and 66%, respectively, for the
year.
Within the fixed income portion of the Portfolio, performance was enhanced
by the decision to overweight higher yielding investment-grade corporate and
mortgage securities relative to U.S. Treasury securities. Without a strong
conviction as to the direction of interest rates throughout much of the year,
the Portfolio maintained a duration similar to that of the market index.
Going into 1998, J.P. Morgan believes the volatility in the financial
markets will continue, and for that reason, we have increased the Balanced
Portfolio's holdings in Treasury securities. Within asset classes, we will
continue our successful strategy of using extensive fundamental research to
identify individual securities which we believe are underpriced relative to
their longer-term earnings prospects.
- ---------------------------------[Line Chart]-----------------------------------
Balanced Portfolio, S&P 500 Index and Balanced Benchmark Index
Comparision of Change in Value of $10,000 Investment.
Balanced Portfolio
S&P 500 Index
55% S&P 500/35% Lehman Aggregate/10% 90 Day T-Bills
S&P 55% S&P 500
BALANCED 500 35% LEHMAN AGGREGATE
DATE PORTFOLIO INDEX 10% 90 DAY T-BILLS
- ---- --------- ----- -----
05/01/92 10,000 10,000 10,099
06/30/92 10,081 9,958 10,070
09/30/92 10,467 10,272 10,403
12/31/92 10,847 10,787 10,712
03/31/93 11,379 11,256 11,129
06/30/93 11,526 11,310 11,273
09/30/93 11,856 11,598 11,545
12/31/93 11,852 11,867 11,702
03/31/94 11,654 11,420 11,351
06/30/94 11,550 11,470 11,347
09/30/94 11,698 12,031 11,691
12/31/94 11,694 12,028 11,725
03/31/95 12,186 13,195 12,573
06/30/95 12,848 14,451 13,516
09/30/95 13,481 15,596 14,220
12/31/95 14,308 16,532 14,917
03/31/96 14,377 17,512 15,286
06/30/96 14,850 18,399 15,717
09/30/96 15,163 19,074 16,114
12/31/96 15,819 20,767 17,056
03/31/97 15,663 20,860 17,298
06/30/97 17,218 24,494 19,176
09/30/97 18,243 26,326 20,172
12/31/97 18,402 27,079 20,736
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
S&P 500 BALANCED
BALANCED INDEX BENCHMARK
1 YEAR 16.33% 33.35% 21.58%
5 YEAR 11.15% 20.23% 14.12%
INCEPTION 11.35% 19.20% 13.72%
Commencement of operations May 1, 1992. Past performance is not predictive of
future performance.
This graph compares an initial $10,000 investment made in the Balanced Portfolio
(the "Portfolio") at its inception with a similar investment in the S&P 500
Index and the 55% S&P 500/35% Lehman Aggregate/10% 90 Day T-Bill Index. For the
purposes of this graph and the accompanying table, the average annual total
return for the Portfolio reflects all recurring expenses and includes the
reinvestment of all dividends and distributions.
Shares of the Portfolio are offered only through the variable products of
Jefferson Pilot Financial and its affiliates. Total returns do not reflect any
separate account expenses imposed on the policies which may include a premium
tax charge, account fees, cost of insurance, mortality expenses and surrender
charges, as applicable.
The S&P 500 Index and the 55% S&P 500/35% Lehman Aggregate/10% 90 Day T-Bill
Index are unmanaged indexes and include the reinvestment of all dividends, but
do not reflect the payment of transaction costs, advisory fees or expenses that
are associated with an investment in the Portfolio.
____________________________________________________________________________[51]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
BALANCED PORTFOLIO
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Year Ended
December December December December December
31, 1997 31, 1996 31, 1995 31, 1994 31, 1993
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 12.07 $ 11.91 $ 10.62 $ 11.22 $ 10.77
Income From Investment Operations
Net investment income 0.30 0.26 0.37 0.32 0.25
Net gains and losses on securities
(both realized and unrealized) 1.60 0.99 1.99 (0.47) 0.74
---------- ---------- ----------- ------------ ------------
Total from investment operations 1.90 1.25 2.36 (0.15) 0.99
Less Distributions to Shareholders
Dividends from net investment (0.30) (0.26) (0.37) (0.32) (0.25)
income
Dividends in excess of net
investment income
Distributions from capital gains (1.64) (0.83) (0.70) (0.13) (0.25)
Distributions in excess of capital (0.28) (0.04)
gains
Returns of capital
---------- ---------- ----------- ------------ ------------
Total distributions (2.22) (1.09) (1.07) (0.45) (0.54)
Net asset value, end of year $ 11.75 $ 12.07 $ 11.91 $ 10.62 $ 11.22
========== ========== =========== ============ ============
Total Return (A) 16.33% 10.56% 22.35% (1.33%) 9.27%
Ratios to Average Net Assets:
Expenses 0.97% 0.97% 0.99% 1.01% 1.07%
Net investment income 2.60% 2.20% 3.20% 3.34% 2.79%
Portfolio Turnover Rate 254.04% 222.35% 164.70% 103.68% 65.49%
Average Commission Rate Paid $ 0.0351 $ 0.0601
Net Assets, At End of Year $22,637,577 $18,256,430 $14,532,268 $4,764,853 $ 11,703,898
</TABLE>
(A) Total return assumes reinvestment of all dividends during the year and does
not reflect deduction of account fees and charges that apply to separate
accounts or related insurance policies and annuity contracts. Investment returns
and principal values will fluctuate and shares, when redeemed, may be worth more
or less than the original cost.
[52]___________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
BALANCED PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF DECEMBER 31, 1997
- --------------------------------------------------------------------------------
COMMON STOCK--65.18%
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Aerospace Equipment & Systems-1.52%
AlliedSignal, Inc. 7,200 $ 280,350
Boeing Co., The 1,300 63,619
---------
343,969
---------
Automotive Parts & Accessories-1.24%
Goodyear Tire & Rubber Co. 4,400 279,950
---------
Banking-4.80%
Chase Manhattan Bank 1,200 131,400
First Union Corp. 6,390 327,487
Fleet Financial Group, Inc. 2,100 157,369
NationsBank Corp. 3,750 228,047
Providian Financial Corp. 3,800 171,713
Southtrust Corp. 1,100 69,781
---------
1,085,797
---------
Beverages-2.43%
Anheuser Busch Companies, Inc. 8,100 356,399
PepsiCo, Inc. 5,300 193,119
---------
549,518
---------
Chemicals-0.86%
Albermarle Corp. 2,200 52,525
Dow Chemical Co. 1,400 142,100
---------
194,625
---------
Computer Equipment & Services-1.98%
EMC Corp./Mass+ 11,100 304,555
Quantum Corp.+ 7,200 144,450
---------
449,005
---------
Computer Network Products & Services-2.81%
Bay Networks, Inc.+ 3,900 99,694
Cisco Systems, Inc.+ 2,050 114,288
First Data Corp. 8,600 251,549
Sun Microsystems, Inc.+ 4,300 171,463
---------
636,994
---------
+Non-income producing security.
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Computer Software - Mini & Micro-0.23%
Autodesk, Inc. 1,400 $ 51,800
---------
Computers-1.34%
International Business
Machines Corp. 2,900 303,231
---------
Electrical Equipment-1.47%
Cooper Industries, Inc. 6,800 333,200
---------
Electronics-1.44%
Emerson Electric Co. 2,600 146,737
Tyco International, Ltd. 4,000 180,250
---------
326,987
---------
Electronics - Semiconductor-0.45%
Motorola, Inc. 1,800 102,713
---------
Environmental Control-1.40%
WMX Technologies, Inc. 11,500 316,250
---------
Financial Services-2.95%
American Express Co. 1,600 142,800
Financial Security Assurance
Holdings, Ltd. 2,700 130,275
Morgan Stanley, Dean Witter,
Discover and Co. 3,200 189,200
Washington Mutual, Inc. 3,200 204,200
---------
666,475
---------
Food Processing-2.23%
Philip Morris Companies, Inc 6,400 290,000
Ralston-Ralston Purina Group 2,300 213,756
---------
503,756
---------
Household Products-1.41%
Procter & Gamble Co. 4,000 319,250
---------
Insurance-1.28%
Marsh & McLennan, Inc. 3,900 290,794
---------
See notes to financial statements.
____________________________________________________________________________[53]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
BALANCED PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF DECEMBER 31, 1997-CONTINUED
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Lodging-0.44%
ITT Corp.+ 1,200 $ 99,450
---------
Manufacturing-0.79%
Tenneco, Inc. 4,550 179,725
---------
Medical - Biotech-0.44%
Perkin-Elmer Corp. 1,400 99,488
---------
Medical - Healthcare Services-1.96%
Humana, Inc.+ 5,300 109,975
United Healthcare Corp. 6,700 332,905
---------
442,880
---------
Mining & Metals-0.31%
Allegheny Teledyne, Inc. 2,700 69,863
---------
Multimedia-0.36%
Time Warner, Inc. 1,300 80,600
---------
Oil & Gas - Distribution & Marketing-2.11%
Tosco Corp. 12,600 476,438
---------
Oil & Gas - Equipment & Field Services-1.15%
Input/Output, Inc.+ 8,800 261,250
---------
Oil & Gas - Integrated-4.39%
Atlantic Richfield Co. 1,900 152,238
Enron Corp. 4,500 187,031
Exxon Corp. 3,500 214,156
Mobil Corp. 4,000 288,750
Occidental Petroleum Corp. 5,200 152,425
---------
994,600
---------
Paper Products-0.88%
Temple-Inland, Inc. 3,800 198,788
---------
+Non-income producing security.
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Pharmaceuticals-5.33%
Merck & Co., Inc. 3,900 $ 414,375
Pfizer, Inc. 5,800 432,463
Warner Lambert Co. 2,900 359,600
---------
1,206,438
---------
Rail Transportation-1.77%
Union Pacific Corp. 4,800 299,700
Wisconsin Central Transportation
Corp.+ 4,300 100,513
---------
400,213
---------
Real Estate-2.08%
Simon Debartolo Group, Inc. 4,700 153,631
Starwood Lodging Trust 5,500 318,313
---------
471,944
---------
Retail Stores-1.12%
Circuit City Stores-Circuit
City Group 3,400 120,913
Federated Department Stores, Inc.+ 3,100 133,493
---------
254,406
---------
Telecommunications-6.65%
GTE Corp. 6,100 318,725
MCI Communications Corp. 9,500 406,718
Sprint Corp. 4,300 252,088
Tele-Communications TCI Ventures
Group+ 12,204 345,526
U.S. West Media Group+ 6,300 181,913
---------
1,504,970
---------
Textiles & Apparel-1.88%
Fruit of the Loom, Inc.+ 9,600 246,000
Westpoint Stevens, Inc.+ 3,800 179,550
---------
425,550
---------
Toys-1.15%
Toys R Us+ 8,300 260,931
---------
See notes to financial statements.
[54]___________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
BALANCED PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF DECEMBER 31, 1997-CONTINUED
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Travel Services-0.93%
Galileo International, Inc. 7,600 $ 209,950
---------
Utilities - Electric & Gas-1.60%
Dominion Resources, Inc. 2,900 123,431
New England Electric System 3,700 158,175
Northern States Power Co. 1,400 81,550
----------
363,156
----------
Total Common Stock
(Cost $14,326,806) 14,754,954
----------
- --------------------------------------------------------------------------------
CORPORATE BONDS--7.62%
Principal Market Value
Company Value (Note B)
- --------------------------------------------------------------------------------
Banking-1.78%
Canadian Imperial Bank, 6.200%,
due 08/01/00 $200,000 $200,599
Providian Master Trust, 6.250%,
due 06/15/07 200,000 201,012
----------
401,611
----------
Financial Services-3.07%
First Union-Lehman Brothers CMT,
6.650%, due 11/18/29 100,000 100,906
Fleetwood Credit Corp., Grantor
Trust, 6.900%, due 03/15/12 36,378 36,894
Green Tree Financial Corp., 6.270%,
due 09/15/12 200,000 201,028
Morgan Stanley Capital I, 6.590%,
due 10/03/30 149,326 150,866
Sears Roebuck Acceptance Corp.,
6.930%, due 11/15/02 200,000 205,466
----------
695,160
----------
+Non-income producing security.
- --------------------------------------------------------------------------------
CORPORATE BONDS--CONTINUED
Principal Market Value
Company Value (Note B)
- --------------------------------------------------------------------------------
Oil & Gas - Distribution & Marketing-0.90%
Trans-Canada Pipelines, Med. Term
Note, 7.060%, due 10/14/25 $200,000 $ 204,904
----------
Utilities - Electric & Gas-1.87%
National Fuel Gas, Med. Term
Note, 6.214%, due 08/12/27 200,000 203,688
Southern Company Cap Trust I,
8.190%, due 02/01/37 200,000 219,256
----------
422,944
----------
Total corporate bonds
(Cost $1,700,835) 1,724,619
----------
- --------------------------------------------------------------------------------
GOVERNMENT & AGENCY OBLIGATIONS--39.76%
Principal Market Value
Company Value (Note B)
- --------------------------------------------------------------------------------
Foreign Government Obligations-1.43%
Quebec Province, 7.500%,
due 07/15/23 $300,000 $ 324,222
----------
U.S. Government & Agency Obligations-38.33%
Federal National Mortgage
Association, Pool #376093,
8.500%, due 05/01/27 63,272 66,139
Federal National Mortgage
Association, Pool #393172,
8.500%, due 07/01/27 514,695 538,016
Federal National Mortgage
Association, Pool #395415,
7.000%, due 11/01/27 454,500 458,193
Government National Mortgage
Association, Pool #351336,
6.500%, due 12/15/23 167,413 165,791
Government National Mortgage
Association, Pool #354765,
7.000%, due 02/15/24 79,283 79,977
- --------------------------------------------------------------------------------
See notes to financial statements.
____________________________________________________________________________[55]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
BALANCED PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF DECEMBER 31, 1997-CONTINUED
- --------------------------------------------------------------------------------
GOVERNMENT & AGENCY OBLIGATIONS--CONTINUED
Principal Market Value
Company Value (Note B)
- --------------------------------------------------------------------------------
U.S. Government & Agency Obligations-(Continued)
Government National Mortgage
Association, Pool #378174,
7.000%, due 05/15/24 $ 514,883 $ 519,388
Government National Mortgage
Association, Pool #780035,
6.500%, due 07/15/24 297,224 294,792
Government National Mortgage
Association, Pool #423323,
6.500%, due 04/15/26 981,287 971,781
Government National Mortgage
Association, Pool #455491,
7.500%, due 09/15/27 493,701 506,198
U.S. Treasury Bond, 6.250%,
due 08/15/23 275,000 283,508
U.S. Treasury Note, 5.875%,
due 02/15/00 45,000 45,197
U.S. Treasury Note, 6.000%,
due 08/15/00 771,000 776,783
U.S. Treasury Note, 6.250%,
due 10/31/01 700,000 712,468
U.S. Treasury Note, 6.250%,
due 08/31/02 320,000 326,700
- --------------------------------------------------------------------------------
GOVERNMENT & AGENCY OBLIGATIONS--CONTINUED
Principal Market Value
Company Value (Note B)
- --------------------------------------------------------------------------------
U.S. Government & Agency Obligations-(Continued)
U.S. Treasury Note, 6.250%,
due 02/15/03 $ 500,000 $ 511,250
U.S. Treasury Note, 5.750%,
due 08/15/03 1,045,000 1,046,307
U.S. Treasury Note, 7.875%,
due 11/15/04 760,000 849,775
U.S. Treasury Note, 6.500%,
due 10/15/06 500,000 523,750
----------
8,676,013
----------
Total Government &
Agency Obligations
(Cost $8,831,779) 9,000,235
----------
Total Investments
(Cost $24,859,420) 112.56% 25,479,808
Other assets, less liabilities (12.56) (2,842,231)
------ ----------
Total Net Assets 100.00% $22,637,577
====== ===========
- --------------------------------------------------------------------------------
See notes to financial statements.
[56]____________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
EMERGING GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
"Emerging growth stocks should generate stronger
relative earnings growth than their large cap,
multinational counterparts, who are typically
more exposed to the turmoil in Asia."
--John W. Ballen and Toni Y. Shimura, Portfolio Managers--
- --------------------------------------------------------------------------------
INCEPTION DATE
May 1, 1995
- --------------------------------------------------------------------------------
FUND MANAGER
Massachusetts Financial Services Co.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGY
To seek long-term growth of capital by investing
primarily in common stocks of small and medium-sized
companies. The Portfolio is intended for investors who
understand and are willing to accept risks entailed
in seeking long-term growth of capital.
- --------------------------------------------------------------------------------
NET ASSETS AS OF 12/31/97
$56,229,175
- --------------------------------------------------------------------------------
NUMBER OF HOLDINGS
180
- --------------------------------------------------------------------------------
PORTFOLIO TURNOVER
122.85%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IN THIS SECTION
- --------------------------------------------------------------------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
- --------------------------------------------------------------------------------
JOHN W. BALLEN
Senior Vice President
[bullet] Director, MFS Equity Portfolio Management
[bullet] Joined MFS in 1984
[bullet] Serves as MFS senior small capitalization growth equity portfolio
manager
[bullet] M.B.A. from Standford University Graduate School of Business
[bullet] B.A. from Harvard University
- --------------------------------------------------------------------------------
TONI Y. SHIMURA
Vice President, Investments
[bullet] Joined J.P. Morgan in 1987
[bullet] M.B.A. from Sloan School of Management, Massachusetts Institute of
Technology
[bullet] B.A. from Wellesley College
____________________________________________________________________________[57]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
EMERGING GROWTH PORTFOLIO
- ---------------------------------[Pie Chart]------------------------------------
% of Portfolio++
Common Stock--91.54%
Short-Term Obligations--4.35%
Cash--2.41%
Preferred Stock--1.70%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PERCENT OF
TOP TEN EQUITIES PORTFOLIO
- --------------------------------------------------------------------------------
Cendant Corp. 8.36%
Tyco International, Ltd. 6.14%
Computer Associates
International, Inc. 4.96%
Cisco Systems, Inc. 4.41%
Oracle Corp. 3.50%
United Healthcare Corp. 3.26%
BMC Software, Inc. 3.21%
Microsoft Corp. 3.05%
Compuware Corp. 2.91%
Cadence Design Systems,
Inc. 2.76%
- --------------------------------------------------------------------------------
PERCENT OF
TOP TEN INDUSTRIES PORTFOLIO
- --------------------------------------------------------------------------------
Computer Software - Mini
& Micro 10.42%
Computer Software -
Mainframe 9.24%
Business & Public Services 8.76%
Retail Stores 6.83%
Medical - Healthcare Services 6.27%
Electronics 6.20%
Broadcasting 6.17%
Telecommunications 5.77%
Computer Network Products
& Services 5.61%
Computer Information
Systems 5.22%
++Represents market value of
investments plus cash.
For the one year period ended December 31, 1997, the JPVF Emerging Growth
Portfolio provided a total return of 20.47%. This compares to a 22.23% return
for the Russell 2000 Growth Index. Although the Portfolio's performance
benefited from the stock price appreciation of many of its holdings in the
technology, leisure, and retailing sectors, the overall stock market in 1997
continued to be dominated by the larger capitalization issues as represented by
the Dow Jones Industrial Average and Standard & Poor's 500.
Nineteen ninety-seven was a paradoxical year. On one hand, the economy was
stronger than expected, yet inflation remained extremely low. Economic growth
was, in fact, so strong early in the year that concerns about possible interest
rate increases enhanced the appeal of larger capitalization stocks of the Dow
and S&P 500 compared to emerging growth stocks despite their superior earnings'
growth and attractive valuations. At mid-year, when it became apparent that
inflation was subdued, emerging growth stocks outperformed the larger
capitalization stocks. However, in late 1997, with the concerns generated by the
economic problems in Asia, investors again sought the liquidity and perceived
safety of the larger cap stocks.
The Portfolio's performance benefited from the strong performance of its
largest sector, technology. Our holdings are primarily in software, where the
Portfolio owns the leading database, design automation, and mainframe software
companies such as Cadence Design, BMC Software, Compuware, SAP, and Microsoft,
which are helping corporations around the world become more productive. Our
holdings in leisure, primarily lodging and media, also helped performance. The
stocks of radio and television broadcasting companies such as Clear Channel and
Cox Radio were buoyed by positive advertising trends and continued consolidation
within their
[58]___________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
EMERGING GROWTH PORTFOLIO
markets. Drug store and food retailers such as CVS, Rite Aid, and Fred Meyer
also contributed to performance because of strong underlying growth and cost
cutting opportunities generated by mergers and acquisitions. The market finally
recognized the many synergies of the Portfolio's largest position, Cendant, the
new company formed by the merger of HFS and CUC International, two leading
consumer service companies. The Portfolio's second largest position, Tyco
International (a diversified company) contributed favorably as well, due to
additive acquisitions and strong internal growth.
One area that did not perform as well as expected was healthcare, in
particular the stocks of HMO's. Higher than expected expenses more than offset
price increases, creating earnings disappointments. Now that these companies
have a more realistic view of the cost of doing business and should price their
product more realistically, earnings should begin to meet investors'
expectations.
Looking ahead, the fundamental outlook for emerging growth stocks remains
positive. In 1998, we expect a slowing of economic growth and a continuation of
the benign interest rate environment that marked this past year. Emerging growth
stocks should generate stronger relative earnings growth than their large cap,
multinational counterparts, who are typically more exposed to the turmoil in
Asia. Robust earnings combined with attractive valuations should help
performance. Moreover, the recent capital gains tax cut should also increase the
investment appeal of the group. We believe that our strategy of searching out
rapidly growing companies, early in their development, and growth stocks at
reasonable prices, will be rewarded by investors in 1998.
- ----------------------------------[LINE CHART]----------------------------------
Emerging Growth Portfolio and the Russell 2000 Growth Index
Comparison of Change in Value of $10,000 Investment.
Emerging Growth Portfolio
Russell 2000 Growth
EMERGING RUSSELL
GROWTH 2000
DATE PORTFOLIO GROWTH
- ---- ------ -----
05/01/95 10,000 10,000
06/30/95 10,962 10,829
09/30/95 12,821 12,060
12/31/95 13,291 12,239
03/31/96 14,225 12,862
06/30/96 15,349 13,523
09/30/96 15,938 13,569
12/31/96 15,724 14,264
03/31/97 14,483 13,530
06/30/97 17,184 15,713
09/30/97 19,507 18,043
12/31/97 18,942 17,430
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
RUSSELL
2000
EMERGING GROWTH
GROWTH INDEX
1 YEAR 20.47% 22.23%
INCEPTION 27.01% 22.10%
Commencement of operations May 1, 1995. Past performance is not predictive of
future performance.
This graph compares an initial $10,000 investment made in the Emerging Growth
Portfolio (the "Portfolio") at its inception with a similar investment in the
Russell 2000 Growth Index. For the purposes of this graph and the accompanying
table, the average annual total return for the Portfolio reflects all recurring
expenses and includes the reinvestment of all dividends and distributions.
Shares of the Portfolio are offered only through the variable products of
Jefferson Pilot Financial and its affiliates. Total returns do not reflect any
separate account expenses imposed on the policies which may include a premium
tax charge, account fees, cost of insurance, mortality expenses and surrender
charges, as applicable.
The Russell 2000 Growth Index is an unmanaged index and includes the
reinvestment of all dividends, but does not reflect the payment of transaction
costs, advisory fees or expenses that are associated with an investment in the
Portfolio.
____________________________________________________________________________[59]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
EMERGING GROWTH PORTFOLIO
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Period From
May 1, 1995
Year Ended Year Ended Through
December December December
31, 1997 31, 1996 31, 1995 (A)
<S> <C> <C> <C>
Net asset value, beginning of year $ 15.23 $ 13.29 $ 10.00
Income From Investment Operations
Net investment loss (0.07) (0.05) (0.04)
Net gains and losses on securities
and foreign currency
(both realized and unrealized) 3.19 2.48 3.33
----------- ----------- -----------
Total from investment operations 3.12 2.43 3.29
Less Distributions to Shareholders
Dividends from net investment income
Dividends in excess of net
investment income
Distributions from capital gains (0.88) (0.49)
Distributions in excess of capital gains
Returns of capital
----------- ----------- -----------
Total distributions (0.88) (0.49) 0.00
Net asset value, end of year $ 17.47 $ 15.23 $ 13.29
========== ========== ==========
Total Return (B) 20.47% 18.30% 32.91%
Ratios to Average Net Assets:
Expenses 1.00% 1.16% 1.63%(C)
Net investment income (0.61%) (0.48%) (0.84%)(C)
Portfolio Turnover Rate 122.85% 94.58% 30.31%
Average Commission Rate Paid $ 0.0688 $ 0.0390
Net Assets, At End of Year $56,229,175 $30,794,030 $11,439,524
</TABLE>
- --------------------------------------------------------------------------------
(A) Per share data calculated from the initial offering date, May 1, 1995, for
sale to Chubb Separate Account A.
(B) Total return assumes reinvestment of all dividends during the year and does
not reflect deduction of account fees and charges that apply to separate
accounts or related insurance policies and annuity contracts. Investment returns
and principal values will fluctuate and shares, when redeemed, may be worth more
or less than the original cost. Total return figures for periods less than one
year have not been annualized.
(C) Ratios calculated on an annualized basis.
[60]___________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
EMERGING GROWTH PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF DECEMBER 31, 1997
- --------------------------------------------------------------------------------
COMMON STOCK--98.36%
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Advertising-0.23%
Lamar Advertising Co.+ 700 $ 27,825
Outdoor Systems, Inc.+ 2,600 99,775
---------
127,600
---------
Aerospace Equipment & Systems-0.08%
Thiokol Corp. 550 44,687
---------
Airlines-0.00%
Virgin Express Holdings, PLC, ADR+ 100 2,075
---------
Automotive Rental-2.20%
Avis Rent A Car, Inc.+ 1,600 51,100
Dollar Thrifty Automotive Group,
Inc.+ 3,400 69,700
Republic Industries, Inc.+ 47,500 1,107,344
United Rentals, Inc.+ 400 7,725
---------
1,235,869
---------
Banking-0.72%
Charter One Financial, Inc. 3,105 196,003
Compass Bancshares, Inc. 1,500 65,625
First Security Corp. 700 29,313
First Virginia Banks, Inc. 400 20,675
Summit Bancorp 500 26,625
Union Planters Corp. 400 27,175
U.S. Trust Corp. 600 37,575
---------
402,991
---------
Beverages-0.01%
Beringer Wine Estates Holdings,
Inc.+ 200 7,600
---------
Broadcasting-6.50%
American Radio Systems Corp.+ 5,700 303,881
Clear Channel Communications,
Inc.+ 10,325 820,192
Cox Radio, Inc.+ 11,900 478,975
+Non-income producing security.
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Broadcasting-(Continued)
Emmis Broadcasting Corp.+ 2,700 $ 123,187
Hearst-Argyle Television, Inc.+ 3,100 92,225
Jacor Communications, Inc.+ 10,600 563,125
LIN Television Corp.+ 10,125 551,812
SFX Broadcasting, Inc.+ 3,400 272,850
Sinclair Broadcasting Group, Inc. 2,600 121,225
TCA Cable TV, Inc. 700 32,200
Univision Communications, Inc.+ 4,200 293,212
---------
3,652,884
---------
Building Materials & Tools-1.05%
Home Depot, Inc. 9,600 565,200
Lowe's Companies, Inc. 500 23,844
---------
589,044
---------
Business & Public Services-9.23%
Cendant Corp.+ 144,065 4,952,244
Consolidated Capital Corp.+ 10,200 207,187
Service Corp. International 800 29,550
---------
5,188,981
---------
Chemicals-0.05%
VWR Scientific Products, Inc.+ 1,000 28,250
---------
Computer Equipment & Services-0.28%
Micro Warehouse, Inc.+ 11,300 157,494
---------
Computer Information Systems-5.50%
Affiliated Computer Services, Inc.+ 5,300 139,456
DST Systems, Inc.+ 3,200 136,600
HBO & Co. 1,100 52,800
Oracle Corp.+ 93,050 2,076,178
Technology Solutions Co.+ 19,600 516,950
The BISYS Group, Inc.+ 5,100 169,575
---------
3,091,559
---------
Computer Network Products & Services-5.92%
Cisco Systems, Inc.+ 46,900 2,614,675
First Data Corp. 12,800 374,400
- --------------------------------------------------------------------------------
See notes to financial statements.
____________________________________________________________________________[61]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
EMERGING GROWTH PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF DECEMBER 31, 1997-CONTINUED
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Computer Network Products & Services-(Continued)
Inter-Tel, Inc. 2,200 $ 42,625
Security Dynamics Technologies,
Inc.+ 300 10,725
Sun Microsystems, Inc.+ 7,100 283,113
---------
3,325,538
---------
Computer Software - Mainframe-9.73%
BMC Software, Inc.+ 29,000 1,903,125
Cadence Design Systems, Inc.+ 66,860 1,638,070
Compuware Corp.+ 53,900 1,724,800
Scopus Technology, Inc.+ 5,000 60,000
Synopsys, Inc.+ 3,447 123,230
Transaction Systems Architects,
Inc.+ 600 22,800
---------
5,472,025
---------
Computers Software - Mini & Micro-8.75%
Adobe Systems, Inc. 400 16,500
Autodesk, Inc. 3,700 136,900
Computer Associates
International, Inc. 55,613 2,940,511
Dassault Systems, S.A., ADR 500 15,437
Microsoft Corp.+ 14,000 1,809,500
Rational Software Corp.+ 200 2,275
---------
4,921,123
---------
Computers-0.26%
Compaq Computer Corp. 2,550 143,915
---------
Cosmetics-0.20%
Carson, Inc.+ 17,100 114,356
---------
Educational Institutions-0.01%
EduTrek International, Inc.,
Class A+ 100 2,600
---------
+Non-income producing security.
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Electronics-6.53%
Gemstar International Group, Ltd.+ 1,500 $ 36,562
Tyco International, Ltd. 80,708 3,636,904
---------
3,673,466
---------
Electronics - Semiconductor-0.78%
Allied Waste Industries, Inc.+ 4,900 114,231
Altera Corp.+ 8,100 268,313
Xilinx, Inc.+ 1,600 56,100
---------
438,644
---------
Entertainment & Leisure-0.20%
Harrah's Entertainment, Inc.+ 5,900 111,363
---------
Financial Services-3.37%
Associates First Capital Corp. 2,600 184,925
CIT Group, Inc., The+ 200 6,450
Conning Corp.+ 100 1,675
Donaldson, Lufkin & Jenrette, Inc. 1,300 103,350
FIRSTPLUS Financial Group, Inc.+ 100 3,838
Firstar Corp. 600 25,463
Fiserv, Inc.+ 3,000 147,375
Franklin Resources, Inc. 9,700 843,294
Interra Financial, Inc. 300 20,700
Lehman Brothers Holdings, Inc. 1,300 66,300
LINC Capital, Inc.+ 200 3,925
Morgan Stanley, Dean Witter,
Discover & Co. 2,800 165,550
Peoples Heritage Financial Group,
Inc. 1,200 55,200
Provident Financial Group, Inc. 500 24,250
SPS Transaction Services, Inc.+ 3,000 67,688
T. Rowe Price Associates, Inc. 2,800 176,050
---------
1,896,033
---------
Food Processing-0.70%
Corn Products International, Inc.+ 500 14,906
McCormick & Co., Inc. 5,100 142,800
Suiza Food Corp.+ 1,900 113,169
Tootsie Roll Industries, Inc. 2,000 125,000
---------
395,875
---------
- --------------------------------------------------------------------------------
See notes to financial statements.
[62]___________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
EMERGING GROWTH PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF DECEMBER 31, 1997-CONTINUED
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Home Furnishings-0.04%
Pier 1 Imports, Inc. 900 $ 20,363
---------
Household Products-0.05%
Benckiser, N.V., B Shares+ 700 28,971
---------
Human Resources-1.99%
AccuStaff, Inc.+ 14,700 338,100
CORESTAFF, Inc.+ 5,700 151,050
Learning Tree International, Inc.+ 21,750 628,031
---------
1,117,181
---------
Insurance-0.35%
Ace, Ltd. 500 48,250
Conseco, Inc.+ 2,700 122,681
ESG Re, Ltd.+ 400 9,400
Hartford Life, Inc. 300 13,594
---------
193,925
---------
Lodging-1.36%
Choice Hotels International, Inc.+ 900 14,400
ITT Corp.+ 3,100 256,913
Promus Hotel Corp.+ 10,083 423,465
Suburban Lodges of America, Inc.+ 5,300 70,556
---------
765,334
---------
Machinery-0.12%
SI Handling Systems, Inc. 4,950 68,063
---------
Medical - Biotech-1.73%
Arterial Vascular Engineering Inc.+ 4,700 305,500
Guidant Corp. 9,100 566,475
Medtronic, Inc. 1,200 62,775
Mentor Corp. 1,000 36,500
---------
971,250
---------
Medical - Healthcare Services-6.60%
Columbia/HCA Healthcare Corp. 3,200 94,800
Foundation Health Systems, Inc.+ 130 2,909
+Non-income producing security.
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Medical - Healthcare Services-(Continued)
Health Management Associates,
Inc., Class A+ 1,050 $ 26,512
HEALTHSOUTH Corp.+ 18,000 499,500
Integrated Health Services 5,700 177,768
Mariner Health Group, Inc.+ 21,300 346,125
Orthodontic Centers of
America, Inc.+ 8,900 147,963
Oxford Health Plans, Inc.+ 4,100 63,806
PacifiCare Health Systems,
Class B+ 4,100 214,737
Renal Treatment Centers, Inc.+ 5,700 205,913
United Healthcare Corp. 38,900 1,932,844
---------
3,712,877
---------
Medical - Supplies & Services-0.63%
Cyberonics, Inc.+ 11,400 173,850
McKesson Corp. 1,025 110,892
Physician Sales & Services, Inc.+ 600 12,900
Safeskin Corp.+ 800 45,400
St. Jude Medical, Inc.+ 400 12,200
---------
355,242
---------
Multimedia-1.77%
CBS Corp. 11,300 332,644
Chancellor Media Corp.+ 2,700 201,487
The E.W. Scripps Co. 900 43,594
Viacom, Inc.+ 10,100 418,519
---------
996,244
---------
Office Equipment & Supplies-4.49%
Corporate Express, Inc.+ 19,750 254,281
Danka Business Systems,
PLC, ADR 20,500 326,719
IKON Office Solutions, Inc. 400 11,250
Office Depot, Inc.+ 46,200 1,105,913
Staples, Inc.+ 8,100 224,775
U.S. Office Products Co.+ 24,000 471,000
Viking Office Products, Inc.+ 6,100 133,056
---------
2,526,994
---------
- --------------------------------------------------------------------------------
See notes to financial statements.
____________________________________________________________________________[63]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
EMERGING GROWTH PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF DECEMBER 31, 1997-CONTINUED
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Oil & Gas - Drilling & Exploration-0.48%
Diamond Offshore Drilling, Inc. 3,100 $ 149,187
Noble Drilling Corp.+ 4,000 122,500
---------
271,687
---------
Oil & Gas - Equipment & Field Services-0.67%
Cooper Cameron Corp.+ 2,100 128,100
Global Industries, Ltd.+ 8,400 142,800
Input/Output, Inc.+ 900 26,719
Veritas DGC, Inc.+ 500 19,750
Weatherford Enterra, Inc.+ 1,400 61,250
---------
378,619
---------
Packaging & Containers-0 01%
Ivex Packaging Corp.+ 300 7,200
---------
Pharmaceuticals-0.14%
PathoGenesis Corp.+ 1,200 44,550
Zonagen, Inc.+ 1,900 34,556
---------
79,106
---------
Publishing & Printing-0.19%
Applied Graphics Technologies,
Inc.+ 800 42,600
Mail-Well, Inc.+ 1,500 60,750
---------
103,350
---------
Real Estate-0.05%
Starwood Lodging Trust 500 28,937
---------
Restaurants & Food Service-0.27%
Applebee's International, Inc. 8,100 146,306
Fine Host Corp.+ 1,000 7,500
---------
153,806
---------
Retail Stores-7.20%
Albertson's, Inc. 600 28,425
CVS Corp. 10,850 695,078
Consolidated Stores Corp.+ 8,550 375,666
+Non-income producing security.
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Retail Stores-(Continued)
Dollar General Corp. 700 $ 25,375
Fred Meyer, Inc.+ 28,590 1,039,961
General Nutrition Companies, Inc.+ 6,500 221,000
Kroger Co.+ 1,100 40,631
Linens `N Things, Inc.+ 900 39,262
Rite Aid Corp. 21,100 1,238,306
Safeway, Inc.+ 1,600 101,200
The Gymboree Corp.+ 7,400 202,575
Whole Foods Market, Inc.+ 800 40,900
---------
4,048,379
---------
Shipyards-0.46%
Newport News Shipbuilding, Inc. 10,200 259,463
---------
Telecommunications-6.08%
American Communications Services,
Inc.+ 2,300 29,469
Brooks Fiber Properties, Inc.+ 800 44,000
Century Telephone Enterprises Inc. 3,600 179,325
Cincinnati Bell, Inc. 5,500 170,500
Cox Communications, Inc.+ 1,000 40,063
Intermedia Communications, Inc.+ 11,300 686,475
LCI International, Inc.+ 3,800 116,850
MCI Communications Corp. 27,700 1,185,906
NEXTLINK Communications, Inc.,
Class A+ 2,000 42,625
Tel-Save Holdings, Inc.+ 1,200 23,850
Teleport Communications Group,
Inc.+ 1,000 54,875
WorldCom, Inc.+ 27,900 843,975
---------
3,417,913
---------
Telecommunications Equipment-0.50%
Aspect Telecommunications Corp.+ 1,800 37,575
Loral Space & Communications+ 6,600 141,488
Lucent Technologies, Inc. 1,300 103,838
---------
282,901
---------
- --------------------------------------------------------------------------------
See notes to financial statements.
[64]___________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
EMERGING GROWTH PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF DECEMBER 31, 1997
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Textiles & Apparel-0.01%
Tefron, Ltd., ADR+ 200 $ 4,600
-----------
Transportation & Shipping-0.72%
Kansas City Southern
Industries, Inc. 12,700 403,225
-----------
Travel Services-0.15%
Galileo International, Inc. 800 22,100
Royal Caribbean Cruises, Ltd. 1,200 63,975
-----------
86,075
-----------
Total Common Stock
(Cost $48,435,678) 55,305,677
-----------
- --------------------------------------------------------------------------------
PREFERRED STOCK--2.23%
Number Market Value
Company of Shares (Note B)
- --------------------------------------------------------------------------------
Computer Software - Mini & Micro-2.23%
Systeme, Anwendugen, Produckte 3,850 $ 1,250,899
-----------
Total Preferred Stock
(Cost $832,983) 1,250,899
-----------
+Non-income producing security.
- --------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS--4.62% Principal Market Value
Company Value (Note B)
- --------------------------------------------------------------------------------
Federal Home Loan Bank,
4.750%, due 01/02/98 $2,600,000 $ 2,599,657
-----------
Total Short-Term Obligations
(Cost $2,599,657) 2,599,657
-----------
Total Investments
(Cost $51,868,318) 105.21% 59,156,233
Other assets, less liabilities (5.21) (2,927,058)
------ -----------
Total Net Assets 100.00% $56,229,175
====== ===========
- --------------------------------------------------------------------------------
See notes to financial statements.
____________________________________________________________________________[65]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997
<TABLE>
<CAPTION>
Money Domestic
World Growth Market Gold Stock Growth Stock
Stock Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C>
Assets
Investments, at cost-see
accompanying portfolios $ 97,443,710 $ 9,600,265 $ 8,441,714 $ 69,552,238
============= ============= ============= =============
Investments, at market
value (Notes B and C) $ 117,002,484 $ 9,600,265 $ 5,082,507 $ 86,605,973
Cash 2,359,338 241,630 246,484 2,803,383
Receivable for accrued
investment income 414,815 535 4,984 97,205
Receivable for portfolio
securities sold 8,336 575,000 446,432
Other assets 4,995
------------- ------------- ------------- ------------
Total Assets 119,784,973 10,417,430 5,785,402 89,506,561
Liabilities
Dividends payable 13,903,866 477,433 52,180 7,699,624
Payable for portfolio
securities purchased 207,681 498,778 519,825 230,414
Accrued investment
advisory fees (Note D) 80,357 4,672 3,123 59,207
Accrued expenses 18,724 1,093 625 12,209
Other liabilities 6,842 4,995
------------- ------------- ------------- -------------
Total Liabilities 14,217,470 981,976 580,748 8,001,454
NET ASSETS $ 105,567,503 $ 9,435,454 $ 5,204,654 $ 81,505,107
============= ============= ============= =============
Net Assets Consist of:
Par value $ 45,342 $ 9,227 $ 5,838 $ 39,894
Capital paid in excess
of par 85,497,055 9,427,135 8,865,331 63,410,599
Under (over) distribution of
net investment income (458,232) (17,094) 23,265
Accumulated net realized
gain (loss) on investments 931,406 (908) (290,214) 977,614
Net unrealized gain (loss)
on investments 19,558,774 (3,359,207) 17,053,735
Net unrealized loss on
translation of assets
and liabilities in foreign
currencies (Note C) (6,842)
------------- ------------- ------------- -------------
NET ASSETS $ 105,567,503 $ 9,435,454 $ 5,204,654 $ 81,505,107
============= ============= ============= =============
Shares of common stock
outstanding ($.01 par value,
1,000,000,000 shares
authorized) 4,534,236 922,650 583,765 3,989,371
============= ============= ============= =============
Net asset value, offering
and redemption
price per share $ 23.28 $ 10.23 $ 8.92 $ 20.43
============= ============= ============= =============
</TABLE>
See notes to financial statements.
[66]____________________________________________________________________________
<PAGE>
<TABLE>
<CAPTION>
Growth and Capital Emerging
Bond Income Growth Balanced Growth
Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C> <C>
Assets
Investments, at cost-see
accompanying portfolios $ 13,534,772 $ 43,019,663 $ 98,828,249 $ 24,859,420 $ 51,868,318
============= ============= ============= ============= =============
Investments, at market
value (Notes B and C) $ 13,845,051 $ 45,333,613 $ 126,920,923 $ 25,479,808 $ 59,156,233
Cash 185,558 4,788,020 1,077,271 941,852 91,714
Receivable for accrued
investment income 201,315 107,818 82,768 167,560 11,283
Receivable for portfolio
securities sold 856,333 544,185 184,393 3,130,343
Other assets 42
------------- ------------- ------------- ------------- -------------
Total Assets 14,231,924 51,085,826 128,625,147 26,773,613 62,389,573
Liabilities
Dividends payable 765,180 10,072,665 4,200,338 3,539,231 2,810,777
Payable for portfolio
securities purchased 1,296,222 172,052 575,267 3,300,421
Accrued investment
advisory fees (Note D) 4,838 31,896 112,775 17,200 40,120
Accrued expenses 1,410 6,967 15,949 4,338 9,080
Other liabilities 38
------------- ------------- ------------- ------------- -------------
Total Liabilities 771,428 11,407,750 4,501,152 4,136,036 6,160,398
NET ASSETS $ 13,460,496 $ 39,678,076 $ 124,123,995 $ 22,637,577 $ 56,229,175
============= ============= ============= ============= =============
Net Assets Consist of:
Par value $ 12,797 $ 23,195 $ 58,469 $ 19,268 $ 32,186
Capital paid in excess
of par 13,135,654 37,515,011 95,623,897 22,041,525 49,106,206
Under (over) distribution of
net investment income (147) 778
Accumulated net realized
gain (loss) on investments 1,766 (174,080) 349,140 (44,382) (197,132)
Net unrealized gain (loss)
on investments 310,279 2,313,950 28,092,674 620,388 7,287,915
Net unrealized loss on
translation of assets
and liabilities in foreign (38)
currencies (Note C)(6,842) ------------- ------------- ------------- ------------- -------------
NET ASSETS $ 13,460,496 $ 39,678,076 $ 124,123,995 $ 22,637,577 $ 56,229,175
============= ============= ============= ============= =============
Shares of common stock
outstanding ($.01 par value,
1,000,000,000 shares
authorized) 1,279,737 2,319,530 5,846,944 1,926,775 3,218,595
============= ============= ============= ============= =============
Net asset value, offering
and redemption
price per share $ 10.52 $ 17.11 $ 21.23 $ 11.75 $ 17.47
============= ============= ============= ============= =============
</TABLE>
See notes to financial statements.
____________________________________________________________________________[67]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
Money Domestic
World Growth Market Gold Stock Growth Stock
Stock Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C>
Investment Income
Income:
Interest $ 440,374 $ 538,304 $ 31,785 $ 165,285
Dividends 3,460,488 87,367 884,475
Foreign taxes withheld (271,945) (4,466)
------------ ----------- ----------- -----------
Total investment income 3,628,917 538,304 114,686 1,049,760
------------ ----------- ----------- -----------
Expenses:
Advisory fees (Note D) 843,936 50,381 50,733 604,347
Custodian fees 80,944 1,710 6,677 5,820
Shareholder reports 41,384 3,759 2,536 29,820
Professional fees 24,656 2,121 1,490 17,889
Insurance expense 3,940 355 238 2,838
Directors fees 4,566 412 277 3,288
Security valuation 16,886 612 8,968 4,002
Miscellaneous expenses 5,411 1,521 1,396 4,195
Organization expense (Note B)
------------ ----------- ----------- -----------
Total expenses 1,021,723 60,871 72,315 672,199
------------ ----------- ----------- -----------
Net investment income (loss) 2,607,194 477,433 42,371 377,561
------------ ----------- ----------- -----------
Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency
Net realized gain (loss) on investments 12,496,321 200 (81,714) 8,322,941
Net realized loss from foreign
currency transactions (278,740) (2,145)
Net unrealized gain (loss) on investments 184,832 1,235 (3,629,157) 7,988,122
Net unrealized gain (loss) on translation
of assets and liabilities in foreign currency (5,060) 1,336
------------ ----------- ----------- -----------
Net realized and unrealized gain (loss) on
investments and foreign currency 12,397,353 1,435 (3,711,680) 16,311,063
------------ ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations $ 15,004,547 $ 478,868 $(3,669,309) $16,688,624
============ =========== =========== ===========
</TABLE>
See notes to financial statements.
[68]____________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Growth and Capital Emerging
Bond Income Growth Balanced Growth
Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C> <C>
Investment Income
Income:
Interest $ 831,556 $ 96,778 $ 219,129 $ 635,546 $ 88,301
Dividends 539,554 973,129 158,227 62,528
Foreign taxes withheld (2,676) (10,672) (307) (1,333)
---------- ----------- ------------ ----------- -----------
Total investment income 831,556 633,656 1,181,586 793,466 149,496
---------- ----------- ------------ ----------- -----------
Expenses:
Advisory fees (Note D) 64,378 251,630 1,064,671 166,038 309,563
Custodian fees 1,004 6,150 13,594 24,374 34,648
Shareholder reports 4,794 12,395 39,219 8,230 14,184
Professional fees 2,669 7,607 23,753 4,869 8,846
Insurance expense 453 1,191 3,749 782 1,356
Directors fees 483 1,201 3,741 700 1,561
Security valuation 2,136 4,392 3,700 9,115 10,366
Miscellaneous expenses 1,626 2,380 5,137 1,977 2,545
Organization expense (Note B) 175 180 175
---------- ----------- ------------ ----------- -----------
Total expenses 77,543 287,121 1,157,744 216,260 383,069
---------- ----------- ------------ ----------- -----------
Net investment income (loss) 754,013 346,535 23,842 577,206 (233,573)
---------- ----------- ------------ ----------- -----------
Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency
Net realized gain (loss) on investments 12,931 9,552,050 4,529,357 3,064,434 3,356,014
Net realized loss from foreign
currency transactions (3,868) (50)
Net unrealized gain (loss) on investment 266,347 (1,869,319) 21,641,474 (330,942) 3,520,953
Net unrealized gain (loss) on translation
of assets and liabilities in foreign currency 9
---------- ----------- ------------ ----------- -----------
Net realized and unrealized gain (loss) on
investments and foreign currency 279,278 7,682,731 26,166,972 2,733,492 6,876,917
---------- ----------- ------------ ----------- -----------
Net increase (decrease) in net assets
resulting from operations $1,033,291 $ 8,029,266 $ 26,190,814 $ 3,310,698 $ 6,643,344
========== =========== ============ =========== ===========
</TABLE>
See notes to financial statements.
____________________________________________________________________________[69]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Money
World Growth Market
Stock Portfolio Portfolio
-------------------------------------- ------------------------------------------
Year Year Year Year
Ended Ended Ended Ended
December December December December
31, 1997 31, 1996 31, 1997 31, 1996
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
From Operations:
Net investment
income (loss) $ 2,607,194 $ 1,928,244 $ 477,433 $ 387,924
Net realized gain (loss) on
investments 12,496,321 7,256,749 200 (163)
Net realized
gain (loss) from
foreign currency
transactions (278,740) (68,459)
Net unrealized gain (loss)
on investments 184,832 6,417,179 1,235 (2,551)
Net unrealized gain (loss) on
translation of assets and
liabilities in foreign currencies (5,060) 27,256
------------- ------------- ------------- -------------
Net increase (decrease)
in net assets resulting
from operations 15,004,547 15,560,969 478,868 385,210
Distributions to
shareholders
from net investment
income (2,328,454) (1,859,775) (477,433) (387,924)
Distributions to
shareholders in
excess of net investment
income (174,949) (36,899)
Distributions to
shareholders
from capital gains (12,496,321) (5,766,822)
Distributions to
shareholders
in excess of capital gains (930,784)
Increase (decrease)
in net assets
derived from shareholder
transactions (Note E) 14,497,830 10,405,804 1,537,762 (413,705)
------------- ------------- ------------- -------------
Net increase (decrease)
in net assets 13,571,869 18,303,277 1,539,197 (416,419)
Net Assets:
Beginning of period 91,995,634 73,692,357 7,896,257 8,312,676
------------- ------------- ------------- -------------
End of period $ 105,567,503 $ 91,995,634 $ 9,435,454 $ 7,896,257
============= ============= ============= =============
Including under (over)
distribution
of net investment income $ (458,232) $ (490,907) $ 0 $ 0
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
Domestic
Gold Stock Growth Stock
Portfolio Portfolio
-------------------------------------- ------------------------------------------
Year Year Year Year
Ended Ended Ended Ended
December December December December
31, 1997 31, 1996 31, 1997 31, 1996
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
From Operations:
Net investment
income (loss) $ 42,371 $ 9,393) $ 377,561 $ 201,993
Net realized gain (loss) on
investments (81,714) 589,746 8,322,941 7,787,402
Net realized
gain (loss) from
foreign currency
transactions (2,145) (9,933)
Net unrealized gain (loss)
on investments (3,629,157) (473,134) 7,988,122 1,251,74
Net unrealized gain (loss) on
translation of assets and
liabilities in foreign currencies 1,336 (1,344)
------------- ------------- ------------- -------------
Net increase (decrease)
in net assets resulting
from operations (3,669,309) 95,942 16,688,624 9,241,135
Distributions to
shareholders
from net investment
income (40,226) (377,561) (201,993)
Distributions to
shareholders in
excess of net investment
income (11,954)
Distributions to
shareholders
from capital gains (196,148) (7,681,445) (8,608,136)
Distributions to
shareholders
in excess of capital gains (154,999)
Increase (decrease)
in net assets
derived from shareholder
transactions (Note E) 1,526,715 786,988 10,709,123 13,217,474
------------- ------------- ------------- -------------
Net increase (decrease)
in net assets (2,349,773) 686,782 19,338,741 13,648,480
Net Assets:
Beginning of period 7,554,427 6,867,645 62,166,366 48,517,886
------------- ------------- ------------- -------------
End of period $ 5,204,654 $ 7,554,427 $ 81,505,107 $ 62,166,366
============= ============= ============= =============
Including under (over)
distribution
of net investment income $ (17,094) $ 105,318 $ 23,265 $ 0
============= ============= ============= =============
</TABLE>
See notes to financial statements.
[70]___________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Growth and
Bond Income
Portfolio Portfolio
-------------------------------------- ------------------------------------------
Year Year Year Year
Ended Ended Ended Ended
December December December December
31, 1997 31, 1996 31, 1997 31, 1996
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
From Operations:
Net investment
income (loss) $ 754,013 $ 635,318 $ 346,535 $ 250,244
Net realized gain (loss) on
investments 12,931 70,071 9,552,050 1,429,616
Net realized
gain (loss) from
foreign currency
transactions (17)
Net unrealized gain (loss)
on investments 266,347 (363,167) (1,869,319) 2,322,094
Net unrealized gain (loss) on
translation of assets and
liabilities in foreign currencies
------------- ------------- ------------- -------------
Net increase (decrease)
in net assets resulting
from operations 1,033,291 342,222 8,029,266 4,001,937
Distributions to
shareholders
from net investment
income (754,013) (635,318) (346,535) (250,227)
Distributions to
shareholders in
excess of net investment
income
Distributions to
shareholders
from capital gains (12,302) (34,269) (9,552,050) (873,208)
Distributions to
shareholders
in excess of capital gains (598,314)
Increase (decrease)
in net assets
derived from shareholder
transactions (Note E) 1,475,827 2,814,968 18,434,013 7,707,171
------------- ------------- ------------- -------------
Net increase (decrease)
in net assets 1,742,803 2,487,603 15,966,380 10,585,673
Net Assets:
Beginning of period 11,717,693 9,230,090 23,711,696 13,126,023
------------- ------------- ------------- -------------
End of period $ 13,460,496 $ 11,717,693 $ 39,678,076 $ 23,711,696
============= ============= ============= =============
Including under (over)
distribution
of net investment income $ 0 $ 0 $ 0 $ 0
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
Capital
Growth Balanced
Portfolio Portfolio
-------------------------------------- ------------------------------------------
Year Year Year Year
Ended Ended Ended Ended
December December December December
31, 1997 31, 1996 31, 1997 31, 1996
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
From Operations:
Net investment
income (loss) $ 23,842 $ 209,119 $ 577,206 $ 395,706
Net realized gain (loss) on
investments 4,529,357 13,354,485 3,064,434 1,710,587
Net realized
gain (loss) from
foreign currency
transactions (3,868) 574 (2)
Net unrealized gain (loss)
on investments 21,641,474 (2,436,070) (330,942) (325,936)
Net unrealized gain (loss) on
translation of assets and
liabilities in foreign currencies 9 (55)
------------- ------------- ------------- -------------
Net increase (decrease)
in net assets resulting
from operations 26,190,814 11,128,053 3,310,698 1,780,355
Distributions to
shareholders
from net investment
income (19,974) (206,677) (577,375) (395,535)
Distributions to
shareholders in
excess of net investment
income (2,020)
Distributions to
shareholders
from capital gains (4,529,357) (13,430,158) (3,064,434) (1,248,566)
Distributions to
shareholders
in excess of capital gains (1,177,521) (527,439)
Increase (decrease)
in net assets
derived from shareholder
transactions (Note E) 32,829,891 23,487,915 5,239,697 3,587,908
------------- ------------- ------------- -------------
Net increase (decrease)
in net assets 53,291,833 20,979,133 4,381,147 3,724,162
Net Assets:
Beginning of period 70,832,162 49,853,029 18,256,430 14,532,268
------------- ------------- ------------- -------------
End of period $ 124,123,995 $ 70,832,162 $ 22,637,577 $ 18,256,430
============= ============= ============= =============
Including under (over)
distribution
of net investment income $ (147) $ 0 $ 778 $ 169
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
Emerging
Growth
Portfolio
--------------------------------------
Year Year
Ended Ended
December December
31, 1997 31, 1996
<S> <C> <C>
Increase (decrease) in net assets:
From Operations:
Net investment
income (loss) $ (233,573) $ (103,938)
Net realized gain (loss) on
investments 3,356,014 867,544
Net realized
gain (loss) from
foreign currency
transactions (50) 358
Net unrealized gain (loss)
on investments 3,520,953 2,223,109
Net unrealized gain (loss) on
translation of assets and
liabilities in foreign currencies
------------- -------------
Net increase (decrease)
in net assets resulting
from operations 6,643,344 2,987,073
Distributions to
shareholders
from net investment
income
Distributions to
shareholders in
excess of net investment
income
Distributions to
shareholders
from capital gains
Distributions to
shareholders
in excess of capital gains (62,702)
Increase (decrease)
in net assets
derived from shareholder
transactions (Note E) 21,607,896 17,331,519
------------- -------------
Net increase (decrease)
in net assets 25,435,1451 19,354,506
Net Assets:
Beginning of period 30,794,030 11,439,524
------------- -------------
End of period $ 56,229,175 $ 30,794,030
============= =============
Including under (over)
distribution
of net investment income $ 0 $ 0
============= =============
</TABLE>
See notes to financial statements.
___________________________________________________________________________[71]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A--ORGANIZATION
Jefferson Pilot Variable Fund, Inc. (the "Company"), formerly Chubb America
Fund, Inc., is a diversified open-end series management investment company
registered under the Investment Company Act of 1940, as amended. The Company was
incorporated under the laws of the State of Maryland on October 19, 1984 for the
purpose of funding Flexible Premium Variable Life Insurance Policies issued by
Chubb Life Insurance Company of America ("Chubb Life"), a wholly owned
subsidiary of Jefferson Pilot Financial. At December 31, 1997, the Company is
composed of nine separate portfolios (the "Portfolios"): the World Growth Stock
Portfolio, the Money Market Portfolio, the Gold Stock Portfolio, the Domestic
Growth Stock Portfolio, the Bond Portfolio, the Growth and Income Portfolio, the
Capital Growth Portfolio, the Balanced Portfolio and the Emerging Growth
Portfolio.
NOTE B--SIGNIFICANT ACCOUNTING POLICIES
Valuation of Investments: Investment securities are valued at the closing sales
price on the exchange on which such securities are principally traded;
securities traded in the over-the-counter market and securities traded on a
national exchange for which no sales took place on the day of valuation are
valued at the mean of the bid and ask prices at the close of trading. Quotations
for foreign securities are in United States dollars and, accordingly, unrealized
gains and losses on these securities reflect all foreign exchange fluctuations.
Restricted securities are valued at fair value as determined in good faith by
the Board of Directors. Short-term debt instruments with a remaining maturity of
60 days or less are valued at amortized cost, which approximates market value.
Investment Security Transactions: Investment security transactions are recorded
as of the trade date, the date the order to buy or sell is executed. Dividend
income is recorded on the ex-dividend date. Interest income is recorded on an
accrual basis.
Deferred Organizational Costs: Costs incurred by the Company in connection with
the organization and initial public offering of the Growth and Income, Capital
Growth and Balanced Portfolios have been deferred and are being amortized over a
five year period using the straight line method from the date the shares were
first offered to the public. In the event that any of the initial shares are
redeemed, by any holder thereof, during the amortization period, the proceeds
will be reduced for any unamortized organizational costs in the same proportion
as the number of initial shares being redeemed bears to the number of initial
shares outstanding at the time of redemption.
Distributions to Shareholders: Distributions to shareholders from ordinary
income and net realized capital gains are declared and distributed at least once
annually. Distributions to shareholders are recorded on the ex-dividend date.
The Company distinguishes between dividends on a tax basis and a financial
reporting basis and only distributions in excess of tax basis earnings and
profits are reported in the financial statements as a return of capital.
Differences in the recognition or classification of income between the financial
statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes are classified as dividends
in excess of net investment income or accumulated net realized gains.
Call Options: A call option is a contract in which the writer of the option
grants the buyer of the option the right to purchase from the writer a
designated instrument at a
[72]___________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
specified price within a specified period of time. During the year, the Balanced
Portfolio wrote call options. In general, written call options may serve as a
partial hedge against decreases in value in the underlying securities to the
extent of the option premium received.
Premiums received by the Portfolio upon writing a covered option are recorded in
the liability section of the Portfolio's Statement of Assets and Liabilities and
are subsequently adjusted to the current market value. When an option expires,
is exercised, or is closed, the Portfolio realizes a gain or loss and the
liability is eliminated. If the Portfolio writes an option and the option
expires unexercised, the Portfolio will realize income, in the form of a capital
gain, to the extent of the amount of premium received for the option. If the
Portfolio elects to close out the option, it would recognize a gain or loss
based on the difference between the cost of closing the option and the initial
premium received. The gain or loss recognized by the Portfolio upon the exercise
of a written call option is adjusted for the amount of option premium. A
Portfolio continues to bear the risk of a decline in the price of the security
during the period, although any potential loss during the period would be
reduced by the amount of the option premium received. All securities covering
outstanding options are held in escrow by the custodian bank.
Summary of Option Transactions for the Balanced Portfolio for the Year Ended
December 31, 1997:
- --------------------------------------------------------------------------------
Number Value When
of Contracts Written
- --------------------------------------------------------------------------------
Contracts outstanding 12/31/96 0 $ 0
Contracts written 102 12,864
Contracts expired (52) (4,463)
Contracts exercised (36) (5,772)
Contracts closed (14) (2,629)
--- -------
Contracts outstanding 12/31/97 0 $ 0
- --------------------------------------------------------------------------------
Foreign Currency Transactions: Certain Portfolios may engage in portfolio
transactions that are denominated in foreign currency. All related receivables
and payables are marked to market daily based on the most recent exchange rates
listed at the close of the New York Stock Exchange.
The Portfolios do not isolate the portion of the operating results due to
changes in foreign exchange rates on investments from the fluctuations arising
from changes in the market value of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign currency gains and losses arise from the
fluctuation of exchange rates between trade date and settlement date on security
transactions and from the difference between accrual date and payment date on
accrued investment income. Net unrealized foreign exchange gains and losses are
related to the fluctuation of exchange rates on the payables and receivables for
securities and accrued investment income at December 31, 1997.
Federal Income Taxes: The Company intends to qualify as a regulated investment
company by complying with the requirements of the Internal Revenue Code
____________________________________________________________________________[73]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
applicable to regulated investment companies, and by distributing all of its
ordinary income and net realized capital gains. Therefore, no Federal tax
provision is required.
Foreign taxes withheld represents amounts withheld by foreign tax authorities,
net of refunds recoverable.
NOTE C--INVESTMENTS
Net realized gains and losses on investment securities sold are determined by
using the first-in, first-out method.
As of December 31, 1997, gross unrealized gains and losses for Federal Income
tax purposes were as follows:
- --------------------------------------------------------------------------------
Gross Gross Net
Unrealized Unrealized Unrealized
Gains Losses Gain (Loss)
- --------------------------------------------------------------------------------
World Growth Stock Portfolio $ 28,644,767 $9,660,333 $ 18,984,434
Gold Stock Portfolio 7,223 3,483,939 (3,476,716)
Domestic Growth Stock Portfolio 22,619,232 5,542,232 17,077,000
Bond Portfolio 310,279 -- 310,279
Growth and Income Portfolio 3,343,035 1,038,794 2,304,241
Capital Growth Portfolio 29,951,766 1,859,092 28,092,674
Balanced Portfolio 1,226,312 608,482 617,830
Emerging Growth Portfolio 9,431,075 2,267,553 7,163,522
- --------------------------------------------------------------------------------
As of December 31, 1997, the World Growth Stock Portfolio and the Capital Growth
Portfolio had unrealized foreign currency losses of $6,842 and $38,
respectively.
At December 31, 1997, the Money Market Portfolio had $792 of accumulated
realized capital losses, for Federal Income tax purposes, of which $401 expires
in 2002, and $391 expires in 2004. These losses are available to be used to
offset future realized capital gains.
In addition, during the period from November 1, 1997 through December 31, 1997,
the World Growth Stock Portfolio incurred foreign currency losses of $28,586,
the Money Market Portfolio incurred capital losses of $117, the Growth and
Income Portfolio incurred capital losses of $164,371, and the Emerging Growth
Portfolio incurred capital losses of $285,435 that are treated for Federal
Income tax purposes as if they had occurred on January 1, 1998. Accordingly,
during 1997 these Portfolios made distributions, as required by Internal Revenue
Code Regulations, in excess of amounts recognized for financial reporting
purposes.
At December 31, 1997, the adjusted cost basis of investments for Federal Income
tax purposes was $98,018,050 for the World Growth Portfolio, $9,600,265 for the
Money Market Portfolio, $8,559,223 for the Gold Stock Portfolio, $69,528,973 for
the Domestic Growth Stock Portfolio, $13,534,772 for the Bond Portfolio,
$43,029,414 for the Growth and Income Portfolio, $98,828,249 for the Capital
Growth Portfolio, $24,861,978 for the Balanced Portfolio, and $51,992,711 for
the Emerging Growth Portfolio.
[74]____________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
Purchases and sales of investment securities for the year ended December 31,
1997, other than short-term obligations, were as follows:
- --------------------------------------------------------------------------------
Cost of Investment Proceeds from
Securities Investment
Purchased Securities Sold
World Growth Stock Portfolio $40,639,263 $31,488,794
Gold Stock Portfolio 2,030,151 1,281,322
Domestic Growth Stock Portfolio 44,324,594 40,212,781
Bond Portfolio 2,457,480 1,051,292
Growth and Income Portfolio 53,559,501 39,541,889
Capital Growth Portfolio 112,720,996 91,610,534
Balanced Portfolio 56,301,532 52,120,167
Emerging Growth Portfolio 70,648,031 49,689,615
- --------------------------------------------------------------------------------
NOTE D--INVESTMENT ADVISORY FEES AND MANAGEMENT AGREEMENT
The Company has entered into an investment management agreement with Jefferson
Pilot Investment Advisory Corporation, "JPIA", (formerly Chubb Investment
Advisory Corporation), a wholly-owned subsidiary of Chubb Life. Under the
agreement, JPIA provides investment management and certain administrative
services for the Company. JPIA has, in turn, retained Templeton Global Advisors,
Inc. to provide investment advisory services for the World Growth Stock
Portfolio; Van Eck Associates Corporation to provide investment advisory
services for the Gold Stock Portfolio; Pioneering Management Corporation to
provide investment advisory services for the Domestic Growth Stock Portfolio;
Chubb Asset Managers, Inc. to provide investment advisory services for the Bond
Portfolio; Warburg, Pincus Councellors, Inc. to provide investment advisory
services for the Growth and Income Portfolio; Janus Capital Corporation to
provide investment advisory services for the Capital Growth Portfolio; J.P.
Morgan Investment Management, Inc. to provide investment advisory services for
the Balanced Portfolio, and Massachusetts Financial Services Co. to provide
investment advisory services for the Money Market and Emerging Growth
Portfolios. For its investment management and administrative services, JPIA is
paid an annual fee through a daily charge based on a percentage of the average
daily net assets of each Portfolio as shown below:
- --------------------------------------------------------------------------------
First $200 Next $1.1 Over $1.3
Million Billion Billion
- --------------------------------------------------------------------------------
World Growth Stock Portfolio .75% .70% .65%
Money Market Portfolio .50% .45% .40%
Gold Stock Portfolio .75% .70% .65%
Domestic Growth Stock Portfolio .75% .70% .65%
Bond Portfolio .50% .45% .40%
Growth and Income Portfolio .75% .70% .65%
Capital Growth Portfolio 1.00% .95% .90%
Balanced Portfolio .75% .70% .65%
Emerging Growth Portfolio .80% .75% .70%
- --------------------------------------------------------------------------------
____________________________________________________________________________[75]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE E--SHAREHOLDERS' TRANSACTIONS
Following is a summary of transactions with shareholders for each Portfolio.
World Growth Stock Portfolio
Year Ended Year Ended
December 31, 1997 December 31, 1996
---------------------------------------------------------
Shares Dollars Shares Dollars
------ ------- ------ -------
Shares issued 506,207 $13,074,639 480,289 $10,849,212
Shares issued as
reinvestment
of dividends 391,173 9,133,398 173,957 3,708,652
Shares redeemed (310,198) (7,710,207) (182,468) (4,152,060)
---------- ----------- ---------- -----------
Net increase 587,182 $14,497,830 471,778 $10,405,804
========== =========== ========== ===========
Money Market Portfolio
Year Ended Year Ended
December 31, 1997 December 31, 1996
---------------------------------------------------------
Shares Dollars Shares Dollars
------ ------- ------ -------
Shares issued 1,949,895 $20,442,569 1,371,889 $14,448,718
Shares issued as
reinvestment
of dividends 37,860 387,924 39,106 401,686
Shares redeemed (1,835,753) (19,292,731) (1,449,618) (15,264,109)
---------- ----------- ---------- -----------
Net increase
(decrease) 152,002 $ 1,537,762 (38,623) $ (413,705)
========== =========== ========== ===========
Gold Stock Portfolio
Year Ended Year Ended
December 31, 1997 December 31, 1996
---------------------------------------------------------
Shares Dollars Shares Dollars
------ ------- ------ -------
Shares issued 364,373 $ 4,043,620 119,333 $ 2,262,264
Shares issued as
reinvestment
of dividends 22,106 351,147 2,259 37,521
Shares redeemed (257,709) (2,868,052) (80,029) (1,512,797)
---------- ----------- ---------- -----------
Net increase 128,770 $ 1,526,715 41,563 $ 786,988
========== =========== ========== ===========
Domestic Growth Stock Portfolio
Year Ended Year Ended
December 31, 1997 December 31, 1996
---------------------------------------------------------
Shares Dollars Shares Dollars
------ ------- ------ -------
Shares issued 490,812 $ 9,906,195 674,482 $12,867,172
Shares issued as
reinvestment
of dividends 440,314 7,989,396 401,256 7,238,564
Shares redeemed (360,301) (7,186,468) (372,862) (6,888,262)
---------- ----------- ---------- -----------
Net increase 570,825 $10,709,123 702,876 $13,217,474
========== =========== ========== ===========
[76] ___________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
Bond Portfolio
Year Ended Year Ended
December 31, 1997 December 31, 1996
---------------------------------------------------------
Shares Dollars Shares Dollars
------ ------- ------ -------
Shares issued 325,519 $ 3,473,622 526,422 $ 5,515,501
Shares issued as
reinvestment
of dividends 65,340 670,724 60,897 644,900
Shares redeemed (252,612) (2,668,519) (317,408) (3,345,433)
---------- ----------- ---------- -----------
Net increase 138,247 $ 1,475,827 269,911 $ 2,814,968
========== =========== ========== ===========
Growth and Income Portfolio
Year Ended Year Ended
December 31, 1997 December 31, 1996
---------------------------------------------------------
Shares Dollars Shares Dollars
------ ------- ------ -------
Shares issued 1,041,889 $21,005,816 638,373 $ 9,952,481
Shares issued as
reinvestment
of dividends 91,528 1,547,670 36,642 528,059
Shares redeemed (216,351) (4,119,473) (183,357) (2,773,369)
---------- ----------- ---------- -----------
Net increase 917,066 $18,434,013 491,658 $ 7,707,171
========== =========== ========== ===========
Capital Growth Portfolio
Year Ended Year Ended
December 31, 1997 December 31, 1996
---------------------------------------------------------
Shares Dollars Shares Dollars
------ ------- ------ -------
Shares issued 1,194,055 $24,087,593 1,090,550 $21,217,632
Shares issued as
reinvestment
of dividends 787,041 13,563,036 348,517 6,162,273
Shares redeemed (237,318) (4,820,738) (205,098) (3,891,990)
---------- ----------- ---------- -----------
Net increase 1,743,777 $32,829,891 1,233,969 $23,487,915
========== =========== ========== ===========
Balanced Portfolio
Year Ended Year Ended
December 31, 1997 December 31, 1996
---------------------------------------------------------
Shares Dollars Shares Dollars
------ ------- ------ -------
Shares issued 388,779 $ 5,063,053 444,592 $ 5,423,155
Shares issued as
reinvestment
of dividends 176,844 2,106,291 118,592 1,411,330
Shares redeemed (152,011) (1,929,647) (270,460) (3,246,577)
---------- ----------- ---------- -----------
Net increase 413,613 $ 5,239,697 292,724 $ 3,587,908
========== =========== ========== ===========
___________________________________________________________________________ [77]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
Emerging Growth Portfolio
Year Ended Year Ended
December 31, 1997 December 31, 1996
---------------------------------------------------------
Shares Dollars Shares Dollars
------ ------- ------ -------
Shares issued 1,772,417 $30,948,672 1,255,676 $18,753,571
Shares issued as
reinvestment
of dividends 61,482 935,922 2,359 33,482
Shares redeemed (637,221) (10,276,698) (96,996) (1,455,534)
---------- ----------- ---------- -----------
Net increase 1,196,678 $21,607,896 1,161,039 $17,331,519
========== =========== ========== ===========
NOTE F--RESTRICTED SECURITIES
The Portfolios may not invest more than 5% of each portfolio's assets in
securities subject to legal or contractual restrictions on resale. At December
31, 1997, the Gold Stock Portfolio owned the following restricted securities
which may not be publicly sold without registration under the Securities Act of
1933. The Portfolio did not have the right to demand that such securities be
registered. The value of these securities is determined by valuations supplied
by a pricing service or, if not available, in good faith by or at the direction
of the Board of Directors.
- -------------------------------------------------------------------------------
Restricted Date of Market
Security Acquisition Cost Value
- -------------------------------------------------------------------------------
Gold Stock Portfolio
Rift Resources, Ltd., Warrants July 19, 1996 $ 0 $ 0
Tombstone Exploration Co., Warrants October 3, 1996 0 0
- -------------------------------------------------------------------------------
NOTE G--SUBSEQUENT EVENTS
Effective January 1, 1998, the name of the Chubb America Fund, Inc. has been
changed to Jefferson Pilot Variable Fund, Inc.
Pursuant to an order approving substitutions and granting exemptions from the
Securities and Exchange Commission, on January 16, 1998 shares in the Bond
Portfolio were substituted with shares in the Oppenheimer Bond Fund, effectively
liquidating the Bond Portfolio.
[78] ___________________________________________________________________________
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE H--SHAREHOLDER MEETING (unaudited)
A Special Meeting of Shareholders of JPVF was held on August 15, 1997 at which
time the following proposals were ratified: Election of Board of Directors
(Proposal No. 1): Approval of a new Investment Management Agreement between the
Fund, on behalf of each of its Portfolios, and Jefferson Pilot Investment
Advisory (the "Advisor) (Proposal No. 2); Approval of a new Investment
Subadvisory Agreements between the Advisor and (a) the current investment
subadvisors to the World Growth Stock Portfolio, Gold Stock Portfolio, Domestic
Growth Stock Portfolio, Bond Portfolio, Capital Growth Stock Portfolio, and
Emerging Growth Stock Portfolio, and (b) the proposed investment subadvisors to
the Money Market Portfolio, Growth and Income Portfolio, and Balanced Portfolio
(Proposal No. 3); and approval of an agreement allowing the Adviser to replace
or add subadvisors without further shareholder approval (Proposal No. 4). The
following is a summary of the votes cast:
- -------------------------------------------------------------------------------
Withheld/
Nominee/Proposal For Against Abstain Total
- -------------------------------------------------------------------------------
Proposal No. 1
Ronald Angarella 21,417,306 423,718 21,841,024
James J. Weisbart 21,351,713 489,311 21,841,024
Michael D. Coughlin 21,424,790 416,234 21,824,024
Elizabeth D. Hager 21,412,774 428,250 21,824,024
Proposal No. 2 20,224,450 428,294 1,188,280 21,841,024
Proposal No. 3 20,142,947 477,754 1,220,323 21,841,024
Proposal No. 4 19,069,699 1,311,156 1,460,169 21,841,024
- -------------------------------------------------------------------------------
___________________________________________________________________________ [79]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders
Jefferson Pilot Variable Fund, Inc.
We have audited the accompanying statement of assets and liabilities of
Jefferson Pilot Variable Fund, Inc. (formerly Chubb America Fund, Inc.) (the
"Fund", comprising, respectively, the World Growth Stock Portfolio, Money Market
Portfolio, Gold Stock Portfolio, Domestic Growth Stock Portfolio, Bond
Portfolio, Growth and Income Portfolio, Capital Growth Portfolio, Balanced
Portfolio and Emerging Growth Portfolio) (the "Portfolios"), including the
related schedules of portfolio investments, as of December 31, 1997, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the periods indicated herein. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997 by correspondence with the custodian and brokers, or other
appropriate auditing procedures where replies from brokers were not received. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
respective Portfolios constituting Jefferson Pilot Variable Fund, Inc. at
December 31, 1997, the results of their operations, the changes in their net
assets and the financial highlights for each of the periods indicated above, in
conformity with generally accepted accounting principles.
/s/Ernst & Young LLP
Boston, Massachusetts
February 13, 1998
[80] ___________________________________________________________________________
<PAGE>
[back cover]
This material has been prepared for policyowners of Ensemble(R) II variable
universal life insurance and Allegiance variable annuity. If used for
prospecting purposes, it must be preceded or accompanied by a current
prospectus. Always read these materials carefully before investing or sending
money. Policy may involve limitations or exclusions. For costs and complete
details of coverage, contact your agent.
Distributor:
Jefferson Pilot Variable Corporation
One Granite Place
Concord, New Hampshire 03301
Form 3-5915 Ed. 12/97
<PAGE>
[front cover]
Allegiance(R) Ensemble(R) II
Variable Annuity Variable Universal Life Insurance
Annual Reports
Jefferson Pilot Variable Fund, Inc.
Formerly Chubb America Fund, Inc.
Templeton Variable Products Series Fund
Fidelity Variable Insurance Products Fund
Fidelity Variable Insurance Products Fund II
Oppenheimer Variable Account Funds
[graphic of woman looking at pie chart]
[graphic of section of Declaration of Independence]
[graphic of man working with stat sheets]
[graphic of various coins]
December 31, 1997
