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JEFFERSON PILOT VARIABLE FUND, INC.
ONE GRANITE PLACE
CONCORD, NEW HAMPSHIRE 03301
(800) 258-3648 EXT. 7719 (OUTSIDE NH)
(800) 322-0235 EXT. 7719 (INSIDE NH)
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 22, 1998
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TO THE SHAREHOLDERS OF JEFFERSON PILOT VARIABLE FUND, INC.:
Notice is hereby given that a Meeting of Shareholders of Jefferson Pilot
Variable Fund, Inc. (the "Fund") will be held at One Granite Place, Concord,
New Hampshire on Thursday, October 22, 1998, at 8:00 A.M., Eastern Time, for
the following purposes:
1. To approve a change in the Domestic Growth Stock Portfolio's
investment objective. +
2. To approve a change in the Fund's investment restrictions to permit
the Domestic Growth Stock Portfolio to invest more than 5% of its total
assets in securities of unseasoned issuers. +
3. To approve a change in the Fund's investment restrictions to permit
the Domestic Growth Stock Portfolio to write covered call options, to
purchase call and put options, and to utilize margin and make the margin
deposits required in connection with such transactions. +
4. To approve a change in the Fund's investment restrictions to permit
the Domestic Growth Stock Portfolio to purchase or write financial futures
contracts and options thereon, and to utilize margin and make the margin
deposits required in connection with such transactions. +
5. To consider and act on a proposal to permit Jefferson Pilot Investment
Advisory Corporation, without further shareholder approval, to replace
Subadvisers or add Subadvisers to the High Yield Bond, Growth, and
International Equity Portfolios, and to enter into Subadvisory Agreements
with those Subadvisers. ++
6. To consider and act upon any other matters which may come before the
meeting or any adjournment thereof.
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+ Only Domestic Growth Stock Portfolio shareholders vote on Proposals 1-4.
++ Only shareholders of High Yield Bond, International Equity, and Growth
Portfolios vote on Proposal No. 5.
Shareholders of record at the close of business on Thursday, August 13,
1998, are entitled to notice of, and to vote at, the Special Meeting.
By Order of the Board of
Directors,
Craig D. Moreshead
Assistant Secretary
September 23, 1998
WHETHER YOU EXPECT TO ATTEND THE SPECIAL MEETING OR NOT, PLEASE COMPLETE,
DATE, AND SIGN THE ENCLOSED VOTING INSTRUCTIONS CARD AND RETURN IT
PROMPTLY.
THE MEETING WILL HAVE TO BE ADJOURNED WITHOUT CONDUCTING ANY BUSINESS IF
LESS THAN A MAJORITY OF THE ELIGIBLE SHARES IS REPRESENTED, AND THE FUND
WILL HAVE TO CONTINUE TO SOLICIT VOTES UNTIL A QUORUM IS OBTAINED.
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JEFFERSON PILOT VARIABLE FUND, INC.
ONE GRANITE PLACE
CONCORD, NEW HAMPSHIRE 03301
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PROXY STATEMENT
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SPECIAL MEETING OF SHAREHOLDERS
THURSDAY, OCTOBER 22, 1998
This Proxy Statement is furnished to shareholders of JEFFERSON PILOT
VARIABLE FUND, INC. (formerly, Chubb America Fund, Inc.) (the "Fund") in
connection with the solicitation by the Fund's Board of Directors of proxies
to be used at a Special Meeting of Shareholders of the Fund (the "Special
Meeting") to be held at the offices of the Fund, One Granite Place, Concord,
New Hampshire on Thursday, October 22, 1998, at 8:00 A.M., Eastern Time, for
the purposes set forth in the accompanying Notice of Special Meeting of
Shareholders. The enclosed proxy card can be revoked by notice in writing to
the Fund at any time before it is exercised or by appearing personally at the
Special Meeting. The cost of preparing the proxy statement and soliciting
proxies will be borne by the affected Portfolios of the Fund as well as
Pioneering Management Corporation ("Pioneer"), Subadviser of the Domestic
Growth Stock Portfolio. In addition to solicitation by mail, officers and
employees of Jefferson Pilot Financial Insurance Company ("Jefferson Pilot
Financial") and Alexander Hamilton Life Insurance Company of America
("Alexander Hamilton Life"), without extra remuneration, may conduct
additional solicitation by telephone, telegraph and personal interview. This
proxy material is being mailed to shareholders on or about September 23, 1998.
The Fund currently serves as a funding medium for the variable life
insurance policies (the "Policies") issued by Jefferson Pilot Financial and
the variable annuity contracts (the "Contracts") issued by Alexander Hamilton
Life. Shares of the Portfolios are purchased by corresponding divisions of
Jefferson Pilot Financial Separate Account A to fund the Policies, and by
corresponding divisions of Alexander Hamilton Separate Account A to fund the
Contracts. Each Policy and Contract provides pass-through voting rights to its
Owner on any proposal affecting the Fund. The Policies and Contracts are
described in the applicable separate account prospectuses issued by Jefferson
Pilot Financial and Alexander Hamilton Life. Under certain circumstances,
Jefferson Pilot Financial and Alexander Hamilton Life have the right to
disregard the voting instructions of shareholders. However, the Fund's Board
of Directors does not believe that these circumstances exist with respect to
the matters to be considered at the Special Meeting.
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SUMMARY OF PROPOSALS
1. For Domestic Growth Stock Portfolio Only. To approve a change in the
Domestic Growth Stock Portfolio's investment objective.
2. For Domestic Growth Stock Portfolio Only. To approve a change in the
Fund's investment restrictions to permit the Domestic Growth Stock Portfolio
to invest more than 5% of its total assets in securities of unseasoned
issuers.
3. For Domestic Growth Stock Portfolio Only. To approve a change in the
Fund's investment restrictions to permit the Domestic Growth Stock Portfolio
to write covered call options, to purchase call and put options, and to
utilize margin and make the margin deposits required in connection with such
transactions.
4. For Domestic Growth Stock Portfolio Only. To approve a change in the
Fund's investment restrictions to permit the Domestic Growth Stock Portfolio
to purchase or write financial futures contracts and options thereon, and to
utilize margin and make the margin deposits required in connection with such
transactions.
5. For High Yield Bond, International Equity and Growth Portfolios Only. To
consider and act on a proposal to permit Jefferson Pilot Investment Advisory
Corporation, without further shareholder approval, to replace Subadvisers or
add Subadvisers to the High Yield Bond, Growth, and International Equity
Portfolios, and to enter into Subadvisory Agreements with those Subadvisers.
VOTING PROCEDURES
Each proxy received will be voted by Jefferson Pilot Financial and Alexander
Hamilton Life in accordance with instructions received from owners of the
Contracts and Policies with respect to the proposals set forth in the
accompanying Notice of Special Meeting. Shares as to which no voting
instructions have been received will be voted in the same proportions as the
shares for which voting instructions have been received. The presence in
person or by proxy of the holders of record of a majority of the shares of the
Portfolio entitled to vote shall constitute a quorum.
For the purposes of determining the presence of a quorum for transacting
business at the Meeting, abstentions will be treated as shares that are
present but which have not been voted. For this reason, abstentions will have
the effect of a vote "against" the Proposal for the purposes of obtaining the
requisite approval.
Shareholders of record at the close of business on August 13, 1998, are
entitled to vote at the Special Meeting.
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In the event there are insufficient votes to approve the proposals at the
time of the Special Meeting, the Special Meeting may be adjourned in order to
permit further solicitations of proxies by the Fund. If the Fund proposes to
adjourn the Special Meeting by a vote of the shareholders, the persons named
in the enclosed Voting Instructions Form will vote all shares for which they
have voting authority in favor of such adjournment.
Approval of each Proposal is to be determined by the vote of a majority of
the outstanding shares as defined in the Investment Company Act of 1940, (the
"Act"). This means the affirmative vote of the lesser of (1) a majority of the
outstanding shares of the Portfolio, or (2) 67% or more of the shares of the
Portfolio represented at the Special Meeting if more than 50% of the
outstanding shares of the Portfolio are present or represented by proxy.
Shareholders of Domestic Growth Stock Portfolio only vote on Proposals No. 1
through 4. Shareholders of High Yield Bond, International Equity, and Growth
Portfolios only vote separately on Proposal No. 5.
SHARES OF BENEFICIAL INTEREST OUTSTANDING
As of August 13, 1998, there were outstanding approximately 4,606,596 shares
of beneficial interest of the Domestic Growth Stock Portfolio, 960,710 shares
of the International Equity Portfolio, 833,619 shares of the Growth Portfolio,
and 772,844 shares of the High Yield Bond Portfolio. Each full share is
entitled to one full vote and each fractional share is entitled to a
proportionate share of one vote.
Jefferson Pilot Financial Separate Account A is the owner of record, not the
beneficial owner, of 4,571,870 (99.25%), 311,235 (32.40%), 100,843 (12.10%),
and 437,684 (56.63%) shares of the Domestic Growth Stock, International
Equity, Growth and High Yield Bond Portfolios respectively. Alexander Hamilton
Life Separate Account A is the owner of record of 34,726 (.75%), 102,649
(10.68%), 31,170 (3.74%), and 135,158 (17.49%) shares of the Domestic Growth
Stock, International Equity, Growth and High Yield Bond Portfolios
respectively. Jefferson-Pilot Separate Account C is the record owner of
546,824 (56.92%) shares of the International Equity Portfolio and 701,605
(84.16%) shares of the Growth Portfolio. Alexander Hamilton Life is the
beneficial owner of 200,000 (25.88%) shares of the High Yield Bond Portfolio,
which shares may be voted by Alexander Hamilton Life in its sole discretion.
As of August 13, 1998, there were no other persons or entities owning of
record or known by the Fund to be beneficial owners of more than 5% of the
outstanding shares of the respective Portfolios.
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ANNUAL REPORT
The Fund's annual report for the year ended December 31, 1997, was provided
to shareholders on or about February 28, 1998. The Fund's semi-annual report
for the six month period ended June 30, 1998, was provided to shareholders on
or about August 28, 1998. Additional copies of these reports will be provided
free of charge by contacting Wendy Chase at the toll-free telephone number or
at the address provided on the Notice of Special Meeting accompanying this
Proxy Statement.
SHAREHOLDER MEETINGS
The Fund is organized as a Maryland corporation and as such is not required
to hold regular or annual meetings of shareholders unless otherwise required
by the Act. Shareholders representing 25% or more of the outstanding shares of
the Fund have the right to compel the Directors to call a meeting of
shareholders.
INVESTMENT ADVISERS
The Fund's Investment Adviser is Jefferson Pilot Investment Advisory
Corporation, a registered investment adviser. Its address is One Granite
Place, Concord, NH 03301.
Pioneering Management Corporation, a registered investment adviser and a
Delaware corporation is Subadviser of the Domestic Growth Stock Portfolio. Its
address is 60 State Street, Boston, Massachusetts 10016. Massachusetts
Financial Services Company, a registered investment adviser and a Delaware
corporation is Subadviser of the High Yield Bond Portfolio. Its address is 500
Boylston Street, Boston, Massachusetts 02116. Lombard Odier, a registered
investment adviser and an English corporation is Subadviser of the
International Equity Portfolio. Its address is Norfolk House, 13 Southampton
Place, London WC1A2AJ UK. Strong Capital Management, a registered investment
adviser and a Wisconsin corporation is Subadviser of the Growth Portfolio. Its
address is 100 Heritage Reserve, Menomonee Falls, Wisconsin 53051.
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PROPOSAL NO. 1
APPROVAL OF A CHANGE IN THE DOMESTIC GROWTH STOCK PORTFOLIO'S INVESTMENT
OBJECTIVE
The Domestic Growth Stock Portfolio's present investment objective is "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 to be undervalued in light of the company's earning
power and growth potential." It is proposed that the Portfolio's investment
objective be changed to the following:
The investment objective of the Small Company Portfolio (formerly,
Domestic Growth Stock Portfolio) is to achieve growth of capital. The
Portfolio pursues its objective by investing primarily in a diversified
portfolio of equity securities issued by small companies.
The Board of Directors has been informed that Pioneering Management
Corporation (the "Subadviser" or "Pioneer"), believes that the Portfolio's
current dual objective of achieving capital growth and income restricts the
Subadviser's flexibility to take advantage of investment opportunities that
may be consistent with achieving capital growth. Specifically, the Portfolio
has been required to invest at least 60% of its assets in securities which
have paid dividends or interest within the preceding 12 months. Although
switching from a dual objective of capital growth and income to a single
objective of capital growth involves more risk, the Board has concluded that
it is appropriate at this time to sharpen the focus of the Portfolio by
eliminating the income component from the Portfolio's objective and instead
focusing on achieving capital growth for its shareholders.
The Portfolio would pursue its objective by investing primarily in a
diversified portfolio of equity securities issued by small companies. Small
companies would be defined as companies with market capitalizations equal to
or less than the capitalization of the largest company in the Russell 2000
Index. As of June 30, 1998, the largest company in the index had an
approximate market capitalization of $1.4 billion.
Although there are inherent risks to investing in small company securities,
focusing on small company securities will offer shareholders the potential for
significant capital appreciation. While past performance is no guarantee of
future results, over the last seven decades small company stocks have rewarded
investors with a compound annual return superior to that of large company
stocks. (The risks of investing in small company stocks are discussed below.)
It is the Company's intention, if this proposal is approved by shareholders,
to rename the Portfolio the "Small Company Portfolio" in order to reflect the
new objective and investment policies.
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Issuers of small company securities tend to be companies which are smaller
or newer than those listed on the New York or American Stock Exchanges and are
traded primarily in the over-the-counter market (though they may be listed for
trading on the New York or American Stock Exchange). Because issuers of small
company securities tend to be smaller or less well established companies, they
may have limited product lines, market share or financial resources. While
small company securities may offer a greater capital appreciation potential
than investments in securities of larger companies, they may also present
greater risks. Small company securities tend to be more sensitive to changes
in earnings expectations and have lower trading volumes than the securities of
larger companies and, as a result, they may experience more abrupt and erratic
price movements.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL NO. 1.
PROPOSAL NO. 2
APPROVAL OF A CHANGE IN THE FUND'S INVESTMENT RESTRICTIONS TO PERMIT THE
DOMESTIC GROWTH STOCK PORTFOLIO TO INVEST MORE THAN 5% OF ITS TOTAL ASSETS IN
SECURITIES OF UNSEASONED ISSUERS
The Domestic Growth Stock Portfolio is presently subject to an investment
restriction which requires the Portfolio to limit its investments in the
securities of unseasoned issuers to not more than 5% of the total assets of
the Portfolio. An unseasoned issuer is defined as a company having a record of
less than three years' continuous operations, including predecessors and
unconditional guarantors. It is anticipated that many of the small companies
which the Subadviser ("Pioneer") would consider investing in have been in
existence for less than three years. The Board of Directors has been informed
that the Subadviser believes that if Proposal No. 1 is approved, in order to
pursue its objective and effectively operate as a "small company" fund, this
restriction on investing in the securities of unseasoned issuers would have to
be eliminated.
Set forth below is the relevant investment restriction that will change if
this proposal is approved, additions are underscored:
A Portfolio will not:
7. Except with respect to the International Equity Portfolio, Growth and
Income Portfolio, Capital Growth Portfolio, Balanced Portfolio, Emerging
Growth Portfolio, Global Hard Assets Portfolio, Small Company Portfolio
and High
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Yield Bond Portfolio invest more than 5% of the value of the total assets
of the Portfolio in securities of companies having a record of less than
three years' continuous operations, including predecessors and
unconditional guarantors.
If this proposal is approved, it is anticipated that the Portfolio will
benefit from the increased investment flexibility afforded thereby. Securities
of unseasoned issuers do, however, entail certain risks. These securities may
have lower trading volumes than securities of issuers that have been in
operation for a greater period of time and, as a result, they may experience
more abrupt and erratic price movements. In general, unseasoned issuers tend
to be small companies and, as such, their securities carry all of the
investment risks attendant with small company securities. (See Proposal No. 1
for a discussion of the risks.)
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL NO. 2.
PROPOSAL NO. 3
APPROVAL OF A CHANGE IN THE FUND'S INVESTMENT RESTRICTIONS TO PERMIT THE
DOMESTIC GROWTH STOCK PORTFOLIO TO WRITE COVERED CALL OPTIONS,
TO PURCHASE CALL AND PUT OPTIONS, AND TO UTILIZE MARGIN AND MAKE THE MARGIN
DEPOSITS REQUIRED IN CONNECTION WITH SUCH TRANSACTIONS
The Board of Directors has been informed that the Subadviser ("Pioneer") of
the Domestic Growth Stock Portfolio believes that the Portfolio needs the
flexibility to write covered call options and purchase call and put options.
The Subadviser believes that these strategies will provide the Portfolio with
a means of attempting to hedge against changes in the market value of the
Portfolio's securities. In order to utilize such investment strategies, the
Portfolio's investment restrictions must be liberalized to provide for the use
of margin.
Put and call options are derivative securities. Upon the writing of an
option and the receipt of the associated premium, the writer has the
obligation to sell (call option) or buy (put option) an underlying asset at an
agreed upon exercise price. The holder of the option has the corresponding
right to purchase (call option) or sell (put option) the underlying asset at
the exercise price. If the option is not exercised or sold by its expiration
date, it becomes worthless and the premium payment is lost to the option
holder. The writer of the option keeps the premium whether or not the option
is exercised.
In order to hedge against changes in the market value of its securities, the
Portfolio might buy put options on Portfolio securities which would give the
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Portfolio the right to sell its securities at a given price (exercise price)
if the securities decline in value, essentially locking in a profit. The
Portfolio might also hedge by writing covered call options on Portfolio
securities. If the underlying securities decline in value, the call options
would expire without value to the purchasers, while the Portfolio as the
writer would retain the premiums as income. If the underlying securities
increase in value, the purchaser could exercise the option whereby the
Portfolio would be obligated to deliver the underlying securities at the
exercise price.
An option on a securities index is similar to an option on an individual
security, except that the value of the option depends upon the weighted value
of the group of securities comprising the index, and all settlements are made
in cash rather than by delivery of a particular security. The Portfolio may
write covered call options and purchase put and call options on appropriate
securities indexes for the purpose of hedging against the risk of unfavorable
movements in the market which could adversely affect the value of the
Portfolio as a whole.
Set forth below are the investment restrictions that will change if the
proposal is approved, as they apply to the Portfolio; additions are
underscored:
A Portfolio will not:
12. Buy securities on margin, except that (1) it may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
securities, and (2) the Growth and Income Portfolio, the Capital Growth
Portfolio, the Balanced Portfolio, Growth Portfolio, Global Hard Assets
Portfolio, Small Company Portfolio and the Emerging Growth Portfolio may
make margin deposits in connection with futures contracts and options
transactions to the extent permitted by restrictions 3 and 13.
13. Except for the Growth Portfolio, Growth and Income Portfolio, High Yield
Bond Portfolio, International Equity Portfolio, Balanced Portfolio,
Capital Growth Portfolio, Global Hard Assets Portfolio, Small Company
Portfolio and Emerging Growth Portfolio invest in or write puts, calls,
straddles, or spreads (except that the Small Company Portfolio may not
write puts). However, this restriction shall not prohibit the Portfolios
(other than the Money Market Portfolio) from writing or selling covered
call options or purchasing call options in order to close transactions.
Nor shall this restriction prohibit the Emerging Growth, Global Hard
Assets Portfolio or Capital Growth Portfolio from writing or selling
covered call and put options or purchasing call or put options. (In
addition, as a matter of operating policy, no Portfolio may write covered
call options if, as a result, a Portfolio's securities covering all call
options written or subject to put or call options would exceed 25% of the
value of the Portfolio's total assets.) Provided that the International
Equity Portfolio
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and the High Yield Bond Portfolio may write covered calls or put options
with respect to 25% of their assets at any time in purchased puts, calls,
spreads or straddles, or any combination thereof other than protective put
options. The aggregate value or premiums paid on all options held by either
the International Equity Portfolio, Global Hard Assets Portfolio, or the
High Yield Bond Portfolio may not exceed 20% of the Portfolio's total net
assets.
When the Portfolio enters into certain of these contracts it is necessary to
make an initial deposit known as "initial margin" as a partial guarantee of its
performance under the contract. As the value of the underlying security or
index fluctuates, either party to the contract must make additional margin
payments known as "variation margin", to cover any additional obligation it may
have under the contract.
Purchasing a put or call option on securities and securities indices involves
the risk that the Portfolio may lose the premium paid plus transaction costs.
The writing of call options on securities and securities indices involves the
following risks: (1) during the option period, the writer of a call option
gives up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but retains the
risk of loss should the price of the underlying security or index decline, and
(2) the inability to close out options previously written, which would require
the Portfolio to retain the option and the securities covering the option until
its exercise or expiration.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL NO. 3.
PROPOSAL NO. 4
APPROVAL OF A CHANGE IN THE FUND'S INVESTMENT RESTRICTIONS TO PERMIT THE
DOMESTIC GROWTH STOCK PORTFOLIO TO PURCHASE OR WRITE FINANCIAL FUTURES
CONTRACTS AND OPTIONS THEREON, AND TO UTILIZE MARGIN AND MAKE THE MARGIN
DEPOSITS REQUIRED IN CONNECTION WITH SUCH TRANSACTIONS
The Domestic Growth Stock Portfolio currently has an investment restriction
which prohibits it from investing in commodities and commodity contracts. This
limitation was contained in the original prospectus of the Portfolio in 1986
when various financial contracts that may be considered commodity contracts
were not widely used. Over the last decade, financial futures contracts have
become important vehicles for mutual funds in hedging against changing market
conditions.
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The Board of Directors believes that these instruments will afford the
Portfolio greater investment flexibility while further diversifying its
investment risk by expanding the range of available hedging techniques.
A futures contract is an agreement to buy or sell a security for a set price
in the future. The Portfolio may purchase or sell futures contracts on debt
securities and indexes of debt securities (i.e., interest rate futures
contracts) as a hedge against principal fluctuations resulting from
anticipated interest rate changes. The Portfolio may also purchase or sell
stock index futures which can be used to protect the value of the Portfolio
from an overall decline in the equity market.
In order to hedge against a rise in interest rates which would adversely
affect the value of the Portfolio's debt securities, the Portfolio may sell
contracts for the future delivery of debt securities held by the Portfolio.
When hedging of this character is successful, any depreciation in the value of
Portfolio securities would be substantially offset by appreciation in the
value of the futures position.
An option on a futures contract gives the purchaser the right, but not the
obligation, in return for the premium paid, to purchase (call option) or sell
(put option) a futures contract at a specified exercise price at any time
before the option expires. Options on futures can be used to hedge the same
risks as might be addressed by the direct purchase or sale of the underlying
futures contracts themselves.
Upon entering into a futures contract, the Portfolio will be required to
deposit with a futures commission a certain percentage (usually 1% to 5%) of
the contract's market value as initial margin. Initial margin is in the nature
of a performance bond or good faith deposit on the contract which is returned
upon termination of the futures contract if all contractual obligations have
been satisfied. The initial margin in most cases will consist of cash or U.S.
Government securities. Subsequent payments, called variation margin, may be
made with the futures commission merchant as the contract value fluctuates.
Positions taken in futures markets are normally liquidated through
offsetting transactions which may result in a gain or a loss. However, the
Portfolio may make or take delivery of underlying securities whenever it
appears economically advantageous to do so. An index futures contract does not
require the physical delivery of securities, but merely provides for profits
and losses based on the difference between the value of the index at the
beginning and at the end of the contract period.
Set forth below is the relevant part of the investment restriction to which
this proposal relates, the proposed changes thereto are underscored:
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A Portfolio will not:
3. Invest in commodities or commodity contracts, except that the Growth and
Income Portfolio, International Equity Portfolio, High Yield Bond
Portfolio, the Growth Portfolio, the Capital Growth Portfolio, the
Balanced Portfolio, Global Hard Assets Portfolio, Small Company Portfolio
and the Emerging Growth Portfolio may each enter into financial futures
contracts and options thereon that are listed on a national securities or
commodities exchange.
9. Except with respect to the Emerging Growth Portfolio, borrow money, except
that as a temporary measure and for extraordinary or emergency purposes,
any Portfolio may borrow money from banks up to 5% of its assets taken at
cost, provided in each case that total borrowings have an asset coverage
of at least 300%. The Emerging Growth, High Yield Bond Portfolio and
Growth Portfolio may not borrow money in excess of 33 1/3% of its total
assets, and then only as a temporary measure for extraordinary or
emergency purposes. This restriction will not prevent the Growth
Portfolio, International Equity Portfolio, Growth and Income Portfolio,
the Capital Growth Portfolio, Global Hard Assets Portfolio, the Balanced
Portfolio, Small Company Portfolio or Emerging Growth Portfolio from
entering into futures contracts as set forth above in restriction 3.
12. Buy securities on margin, except that (1) it may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
securities, and (2) the Growth and Income Portfolio, the Capital Growth
Portfolio, the Balanced Portfolio, Growth Portfolio, Global Hard Assets
Portfolio, Small Company Portfolio and the Emerging Growth Portfolio may
make margin deposits in connection with futures contracts and options
transactions to the extent permitted by restrictions 3 and 13.
The use of futures contracts as hedging instruments is not without risks.
There can be no assurance that the prices of the futures contract and the
hedged security will move as anticipated. If prices do not move as anticipated
the Portfolio may incur a loss on its investment. Also, investments in futures
contracts and options on futures contracts may reduce the gains which would
otherwise be realized from the sale of underlying securities which are being
hedged. Finally, positions in futures contracts and options thereon can be
closed out only on an exchange that provides a market for those instruments.
There can be no assurance that such a market will exist for a particular
futures contract or option. If the Portfolio cannot close out an exchange
traded futures contract or option which it holds, it would have to perform its
contract obligation or exercise its option to realize any profit and would
incur transaction costs on the sale of the underlying assets.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL NO. 4.
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PROPOSAL NO. 5
TO CONSIDER AND ACT ON A PROPOSAL TO PERMIT THE ADVISER, WITHOUT FURTHER
SHAREHOLDER APPROVAL, TO REPLACE SUBADVISERS OR ADD SUBADVISERS TO THE HIGH
YIELD BOND, GROWTH, AND INTERNATIONAL EQUITY PORTFOLIOS, AND TO ENTER INTO
SUBADVISORY AGREEMENTS WITH THOSE SUBADVISERS
The Fund has obtained an exemptive order from the Securities and Exchange
Commission dated July 1, 1998, which permits Jefferson Pilot Investment
Advisory Corporation (the "Adviser"), without the formal shareholder approval
required under the Investment Company Act of 1940, to replace or add
Subadvisers and to enter into Subadvisory Agreements with those Subadvisers
upon approval of the Board of Directors. This order will not become effective
with respect to the High Yield Bond, Growth, and International Equity
Portfolios unless and until this Proposal has been approved by the
shareholders of these Portfolios. The shareholders of the World Growth Stock,
Money Market, Global Hard Assets (formerly, Gold Stock), Bond, Domestic Growth
Stock, Growth and Income, Capital Growth, Balanced, and Emerging Growth
Portfolios approved a similar proposal at a Special Meeting held on August 15,
1997.
The relief provided by the exemptive order is subject to certain conditions.
For example, within sixty days of the hiring of any new Subadviser or the
implementation of any proposed material change to an Investment Subadvisory
Agreement, shareholders will be furnished all information that would be
included in a proxy statement regarding the new Subadviser or Subadvisory
Agreement. Moreover, the Adviser will not enter into an Investment Subadvisory
Agreement with any Affiliated Subadviser without shareholder approval. In
addition, whenever a Subadviser is hired or terminated, the Adviser will
provide the Board of Directors with information showing the expected impact on
the Adviser's profitability and will report on such impact quarterly.
The Board of Directors, including a majority of the Independent Directors
(in consultation with counsel), believe that the authority to replace
Subadvisers or add Subadvisers, and to enter into Investment Subadvisory
Agreements with the Adviser would allow the Adviser to better perform the
functions the Portfolios are currently paying it to perform--i.e., selecting
Subadvisers, monitoring their performance and making whatever changes to the
roster of Subadvisers as the Adviser deems appropriate, subject to approval by
the Fund's Board of Directors. The Directors further believe that requiring
shareholder approval of each new Investment Subadvisory Agreement results in
unnecessary administrative expenses to the Portfolios and may result in delays
in executing changes in Subadvisers or
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their Investment Subadvisory Agreements, which may be detrimental to the
Portfolios.
Shareholders should recognize that in engaging new Subadvisers and entering
into Investment Subadvisory Agreements, the Adviser will negotiate fees with
those Subadvisers and, because these fees are paid by the Adviser and not
directly by each Portfolio, any fee reduction negotiated by the Adviser may
inure to the Adviser's benefit and any increase will inure to its detriment.
The fees paid to the Adviser by the Portfolios and the fees paid Subadvisers
by the Adviser are considered by the Board in approving the advisory and
subadvisory arrangements, and any change in fees paid by a Portfolio to the
Adviser would require shareholder approval.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL NO. 5.
OTHER MATTERS TO COME BEFORE THE MEETING
The Directors do not intend to present any other business at the Special
Meeting, nor are they aware that any shareholder intends to do so. If,
however, any other matters are properly brought before the Special Meeting,
the persons named as proxies will vote according to their best judgment with
respect to these matters.
By Order of the Board of Directors,
Craig D. Moreshead
Assistant Secretary
September 23, 1998
WHETHER OR NOT YOU PLAN TO ATTEND, IT WOULD BE APPRECIATED IF YOU WOULD FILL
IN, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE. NO POSTAGE IS NECESSARY IF IT IS MAILED IN THE CONTINENTAL UNITED
STATES.
13
<PAGE>
JEFFERSON PILOT FINANCIAL JEFFERSON PILOT VARIABLE FUND,INC.
INSURANCE COMPANY VOTING INSTRUCTIONS
To be voted at the October 22, 1998,
ADDRESS SERVICE REQUESTED Special Meeting of Shareholders
THESE VOTING INSTRUCTIONS ARE SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
I hereby instruct the above-referenced Insurance Company ( the "Insurance
Company") to vote the shares of the above-referenced Portfolio (the
"Portfolio"), as to which I am entitled to give voting instructions, at the
Special Meeting of Shareholders of the Portfolio to be held at the offices of
Jefferson Pilot Variable Fund, Inc., One Granite Place, Concord, New Hampshire
03301, on October 22, 1998, at 8:00 a.m. and at any adjournment of the Special
Meeting. The Insurance Company is instructed to vote as indicated on the
matters referred to in the Proxy and Voting Instructions Statement for the
Special Meeting, receipt of which is hereby acknowledged, with discretionary
power to vote on such other business as may properly come before the Special
Meeting or any adjournment of the Special Meeting.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE
Date:__________________, 1998
Note: Please sign exactly as your name
appears on this Voting Instruction Form.
When signing in a fiduciary capacity, such
as an executor, administrator, trustee,
guardian, etc., please so indicate.
Corporate and partnership proxies should be
signed by an authorized person indicating
the person's title.
___________________________________________
Signature(s), Title(s) (if applicable)
<PAGE>
PLEASE VOTE BY FILLING IN THE BOXES BELOW
IMPORTANT: YOUR VOTING INSTRUCTION IS NOT VALID UNLESS IT IS SIGNED
PLEASE SIGN ON REVERSE SIDE
The Board of directors recommends that you vote FOR each proposal.
Please vote by filling in the appropriate boxes below. FOR AGAINST ABSTAIN
1. FOR DOMESTIC GROWTH STOCK PORTFOLIO ONLY. To approve
a change in the Domestic Growth Stock Portfolio's
investment objective.
2. FOR DOMESTIC GROWTH STOCK PORTFOLIO ONLY. To approve
a change in the Fund's investment restrictions to
permit the Domestic Growth Stock Portfolio to
invest more than 5% of its total assets in securities
of unseasoned issuers.
3. FOR DOMESTIC GROWTH STOCK PORTFOLIO ONLY. To approve
a change in the Fund's investment restrictions to
permit the Domestic Growth Stock Portfolio
to write covered call options, to purchase call and
put options, and to utilize margin and make the margin
deposits required in connection with such transactions.
4. FOR DOMESTIC GROWTH STOCK PORTFOLIO ONLY. To approve a
change in the Fund's investment restrictions to permit
the Domestic Growth Stock Portfolio to purchase or
write financial futures contracts and options thereon,
and to utilize margin and make margin deposits required
in connection with such transactions.
5. FOR HIGH YIELD BOND, INTERNATIONAL EQUITY, AND GROWTH
PORTFOLIOS ONLY. To consider and act on a proposal to
permit Jefferson Pilot Investment Advisory Corporation,
without further shareholder approval, to replace
Subadvisers or add Subadvisers to the Portfolios,
and to enter into Subadvisory Agreements with those
Subadvisers.
