<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
FROM THE PRESIDENT
- --------------------------------------------------------------------------------
[PHOTO]
Dear Policyholder:
The equity markets continue to march steadily toward the third millennium,
providing very positive results for your investments in an Ensemble-Registered
Trademark-, Allegiance-Registered Trademark- or Alpha policy.
The domestic and foreign stock markets continued their historic run,
delivering positive returns in the first six months of 1999. Stateside, the S&P
500 Index large company stocks advanced 12.38%. We also began to see broader
market advances as evident by a 14.19% gain in the Russell Mid-Cap Growth Index.
Small capitalization stocks also participated with the Russell 2000 Index
forging ahead 9.28%.
I am pleased to report that within the Jefferson Pilot Variable Fund, four
of five domestic equity portfolios provided better six month returns to
shareholders than the unmanaged indices against which they are compared.
Overseas, the MSCI EAFE Index (stocks of large companies in Europe,
Australia and the Far East) advanced 3.24% during the period. The continued
strong performance of the JPVF International Equity Portfolio compares very
favorably to this benchmark with a first half return of 7.60%. Since its
inception on January 1, 1998, Lombard Odier's Ronald Armist, the Portfolio
Manager, has beaten the index by more than five percentage points.
On May 1, 1999 we replaced sub-advisers on the Small Company Portfolio and
the Balanced Portfolio. The Small Company Portfolio is now managed by Lord,
Abbett & Company, an experienced investment firm in New York. Janus Capital
Corporation, sub-adviser to the Capital Growth Porftolio since its inception in
May, 1992, has taken over the management of the Balanced Portfolio. We are
confident that these changes will have a positive impact on returns to
shareholders. One more note regarding sub-advisers; Credit Suisse Group acquired
100% of Warburg Pincus Asset Management, Inc. last month. As a result of the
acquisition and the combination of Warburg Pincus with Credit Suisse's existing
U.S. asset management business, Credit Suisse Asset Management, LLC has become
the sub-adviser of the Growth and Income Portfolio.
During the first half of the year, Standard & Poors re-affirmed its
"AAA" financial strength rating on the Jefferson Pilot Financial group of
insurance companies, consisting of Jefferson-Pilot Life Insurance Company
(issuer of Alpha), Jefferson Pilot Financial Insurance Company (issuer of
Ensemble-Registered Trademark- II and Ensemble-Registered Trademark- SL),
Alexander Hamilton Life Insurance Company (issuer of Allegiance-Registered
Trademark-) and Jefferson Pilot LifeAmerica Insurance Company (issuer of
Ensemble-Registered Trademark- II in New York). Combined with top-tier
ratings from A.M. Best and Duff & Phelps, Jefferson Pilot Financial remains
in a very small and elite group of life companies relative to financial
strength.
For policyholders, an important service has been added to Jefferson Pilot
Financial's ExpressLine automated voice response system. It is now possible to
perform financial transactions such as fund transfers and premium allocation
changes via a toll free number. We hope that you will take advantage of this
service the next time you need information about your policy. Simply call (800)
672-4822 between 7 AM and 7 PM, Monday through Friday and have your policy
number available. If a wallet card, with useful information about using
- --------------------------------------------------------------------------------
1
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
FROM THE PRESIDENT
- --------------------------------------------------------------------------------
ExpressLine, is not enclosed in this report, please call (800) 258-3648 ext.
7719 to request one.
Thank you for your continued confidence in Jefferson Pilot Financial and
in your Ensemble-Registered Trademark- variable universal life or Allegiance
- -Registered Trademark- or Alpha variable annuity policy. We hope you close
the millennium with health and prosperity.
Sincerely,
/s/ Ron Angarella
Ronald R. Angarella
PRESIDENT, JEFFERSON PILOT VARIABLE FUND, INC.
*The Jefferson Pilot Variable Fund investment options offered to policyholders
will vary based on the variable insurance or variable annuity contract
purchased. Please consult your product prospectus for a full listing of
available investment options.
- --------------------------------------------------------------------------------
2
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
FROM THE PRESIDENT
- --------------------------------------------------------------------------------
PAGE
Portfolio Profiles
International Equity Portfolio 5
World Growth Stock Portfolio 13
Global Hard Assets Portfolio 25
Emerging Growth Portfolio 33
Capital Growth Portfolio 45
Small Company Portfolio 51
Growth Portfolio 59
Growth and Income Portfolio 67
Balanced Portfolio 75
High Yield Bond Portfolio 83
Money Market Portfolio 97
Financial Statements 102
Notes to Financial Statements 111
- --------------------------------------------------------------------------------
3
<PAGE>
[This page intentionally left blank]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
"WE HAVE BECOME MORE OPTIMISTIC ON THE PROSPECTS FOR EUROPEAN EQUITIES,
BELIEVING THE EURO HAS FOUND SUPPORT CLOSE TO PARITY WITH THE US DOLLAR, AND
THAT GROWTH WILL SURPRISE ON THE UPSIDE."
--Ronald Armist, Portfolio Manager--
- --------------------------------------------------------------------------------
INCEPTION DATE
January 1, 1998
------------------------------------------------------------------
FUND MANAGER
Lombard Odier International Portfolio
Management Limited
------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGY
To realize long-term capital appreciation by
investing substantially all of its total assets in
equity securities of companies
from countries outside of the United States.
------------------------------------------------------------------
NET ASSETS AS OF 6/30/99
$24,575,163
------------------------------------------------------------------
NUMBER OF HOLDINGS
71
------------------------------------------------------------------
PORTFOLIO TURNOVER
32.97%
- --------------------------------------------------------------------------------
----------------------
IN THIS SECTION
----------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RONALD ARMIST
MANAGING DIRECTOR
CHIEF INVESTMENT OFFICER,
EQUITIES
- - Joined Lombard in 1983
- - 21 years of investment experience
- - B.B.S. from University of Cape Town
- - Chartered Accountant
- --------------------------------------------------------------------------------
5
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
[CHART]
EDGAR REPRESENTION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
% of Portfolio ++
<S> <C>
Common Stock 89.19%
Preferred Stock 3.53%
Cash 7.28%
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------
PERCENT OF
TOP TEN EQUITIES PORTFOLIO++
- --------------------------------------
<S> <C>
BP Amoco, PLC 3.77%
Toyota Motor Corp. 2.67%
Nippon Telegraph &
Telephone Corp. 2.60%
Nokia Oyj 2.56%
Elf Aquitaine, SA 2.24%
Nippon Steel Corp. 2.06%
Barclays, PLC 1.91%
Ito-Yakado Company, Ltd. 1.88%
Nintendo Co., Ltd. 1.81%
Novartis, AG 1.80%
<CAPTION>
- --------------------------------------
PERCENT OF
TOP TEN COUNTRIES PORTFOLIO++
- --------------------------------------
<S> <C>
Japan 22.48%
United Kingdom 20.42%
France 10.26%
Netherlands 7.29%
Germany 4.85%
Sweden 4.49%
Switzerland 4.00%
Ireland 3.76%
Finland 2.56%
Brazil 2.48%
</TABLE>
++Represents market value of investments plus cash.
FOREIGN SECURITIES ARE SUBJECT TO HIGHER RISKS THAT DOMESTIC ISSUES INCLUDING
CURRENCY FLUCTUATIONS, POLITICAL INSTABILITY AND DIFFERENCES IN ACCOUNTING
METHODS.
"The global investment world has changed dramatically over the past
quarter. The end of the Kosovo Crisis coincided with better than expected GDP
numbers from both Germany and Japan. US money managers now have genuine
investment opportunities outside their own capital markets. This will have a
major impact on global fund flows over the balance of the year".
The International Equity Portfolio outperformed the MSCI EAFE Index by 4.3%
during the first half of 1999. Both top-down country allocation and bottom-up
stock selection contributed to this performance. Particularly, the Portfolio
benefited from the decision to reduce the underweight in Japanese equities as
improving growth expectations helped rally the Nikkei off the lows of last
October. The Portfolio also retained an overweight position in global
telecommunications and cellular phone operators, such as Japan's NTT and
Finland's Nokia, both of which performed strongly over the period. Overweight
positions in economically sensitive basic materials companies, such as BP Amoco
and Elf Aquitaine, also made a significant positive contribution to portfolio
performance.
The International Equity Portfolio outperformed the MSCI EAFE Index by 0.8%
during the quarter. Both top down country allocation and bottom up stock
selection contributed to this performance. Underweight positions in Germany and
Switzerland were beneficial, whilst the upweight in Japan contributed, as better
growth prospects helped generate substantial gains on the Nikkei. Overweight
positions in select telecommunications issues such as Nokia, and basic materials
companies such as BP Amoco, also supported the Portfolio's performance.
The expansionary monetary policies put in place following last summer's
financial crisis have achieved their twin objectives of avoiding widespread
deflation and promoting global growth. Equities have responded in kind, with
many key global markets now trading at or near historic highs. The first half
was particularly notable for the dramatic moves in most of the Asian "recovery"
markets. Singapore, Korea, Thailand and Indonesia all produced returns in excess
of 40% - most of the gains coming in the second quarter. The real star was
China, with gains in excess of 120% following the adoption of more aggressively
pro-growth policies by the Beijing authorities. Even Japan continues to attract
foreign buying, as first quarter GDP surprised on the upside.
The Fed's recent rate hike has potentially signalled the end - or at least
the beginning of the end - to global "easy money". A modest slowdown in the US
could lead to a resynchronisation of global growth, if the nascent signs of
recovery in Germany and Japan are not to be choked off by higher rates.
- --------------------------------------------------------------------------------
6
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
Our core strategy remains one of optimism for markets outside the US, with
European and Asian growth likely to surprise on the upside. However, given the
strength of recent market moves, some consolidation would seem reasonable over
the short term.
The key risk of higher US interest rates has now become a reality and is
largely discounted by markets. The duration of the tightening cycle remains
problematic, however. The consensus believes we are likely to have only more
"touch on the pedal" - one more rate hike only - at worst. We believe this view
may prove rather complacent. The bulls of non-inflationary growth should
remember that the Fed jacked up rates six times in `94 despite retaining a
"neutral bias".
Doubts over the potential for European growth have already been reflected
in the poor performance of the spanking new Euro currency. European egos have
taken a severe battering in consequence. However, prospects for European growth
are now significantly more encouraging.
The outlook for Germany, in particular, is set to improve. First quarter
German GDP numbers revealed surprisingly strong final demand, whilst a pick up
in business sentiment - as revealed by the IFO Survey - is generally a good
leading indicator for improving manufacturing output. The longer-term positive
arguments in favour of European equities remain in place. The momentum of
structural reform is increasing, whilst corporate restructuring and
rationalisation continues to be a dominant theme with the dramatic upsurge in
M&A activity.
The lagged effects of the weak Euro are also beginning to feed through to
improving export orders. Any recovery in the German economy also augurs well for
the "satellite" manufacturing economies of Poland, Hungary and the Czech
Republic. Longer term convergence arguments for these potential third round
entrants into the European Monetary System provide additional support. We have
consequently become more optimistic on the prospects for European equities,
believing the Euro has found support close to parity with the US dollar, and
that growth will surprise on the upside.
The bull case for UK equities remains firmly in place. Convergence support
is still strong with the UK set to become the next "Euro bubble" as interest
rates decline towards those of the EMU area. Moreover, UK rates will fall,
irrespective of the convergence dictates of EMU membership. UK inflation is
substantially below the government's target level and now threatens to drop
below the point at which reflationary action is triggered. Given this benign
inflationary backdrop and the strength of sterling year-to-date, the Bank of
England has ample scope to cut interest rates, not just once, but several times.
Economic recovery, buoyant M&A activity and a positive earnings outlook, all
lend additional support. We continue to remain overweight UK equities.
The Japanese "turnaround" has perhaps been the most significant development
over the period, and has caused the greatest change in our Portfolio, as we have
moved from a
- --------------------------------------------------------------------------------
7
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
significant underweight to a neutral position. The Japanese economy and stock
market have now bottomed. After five consecutive quarters of negative GDP
growth, Japan has finally confounded the sceptics with tangible evidence of
economic turnaround.
Corporate restructuring, "free money" and pro-active government policies,
to support the economy and accelerate the pace of structural reform, all support
a more positive outlook. GDP growth rates of 8% are clearly unsustainable and
probably questionable. However, international investors - ourselves included -
have been sufficiently convinced of the merits of Japan's "turnaround" to at
least close their negative bets in Japanese equities.
The Japanese valuation excesses of the late 1980's have now been eliminated
as Japan begins to emerge from its decade long bear market. Liquidity support,
international portfolio flows and domestic pension fund reform all indicate
substantial upside potential over the long term. The market's low correlation
with Wall Street may prove an additional incentive. We are currently neutral to
the index and may be looking to go overweight, if further evidence of
sustainable economic growth emerges.
The encouraging signs of economic turnaround in Europe and Asia support a
bullish scenario, which calls for a resynchronisation of global growth over the
next eighteen months. International valuation comparisons relative to bonds also
favour Germany and Japan, our two global manufacturing "recovery" markets. In
the US, arguments relating to sky-high equity valuations, less benign monetary
conditions and the possible/potential/inevitable build up of inflationary
pressures have all been rehearsed many times. It is not necessary to create a
bear case for the US in order to present a bull case for the rest of the world.
We would simply content ourselves with a misquote from the Czech writer Milan
Kundera: "Life may be elsewhere..."!
[GRAPH]
INTERNATIONAL EQUITY PORTFOLIO AND THE MSCI EAFE INDEX
Comparison of Change in Value of $10,000 Investment
<TABLE>
<CAPTION>
INTERNATIONAL MSCI
EQUITY EAFE INDEX
PORTFOLIO
<S> <C> <C>
1/1/98 $10,000 $10,000
1/31/98 $10,336 $10,444
2/28/98 $11,118 $11,101
3/31/98 $11,535 $11,430
4/30/98 $11,611 $11,506
5/31/98 $11,759 $11,437
6/30/98 $11,604 $11,510
7/31/98 $11,837 $11,613
8/31/98 $10,452 $10,160
9/30/98 $10,103 $ 9,835
10/31/98 $10,840 $10,846
11/30/98 $11,603 $11,388
12/31/98 $12,166 $11,823
1/31/99 $12,327 $11,774
2/28/99 $12,063 $11,480
3/31/99 $12,704 $11,945
4/30/99 $13,203 $12,415
5/31/99 $12,526 $11,761
6/30/99 $13,091 $12,206
</TABLE>
- -----------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- -----------------------------------
<TABLE>
<CAPTION>
MSCI
INTERNATIONAL EAFE
EQUITY INDEX
<S> <C> <C>
YTD 7.60% 3.24%
1 YEAR 12.81% 6.05%
INCEPTION 19.76% 14.25%
</TABLE>
COMMENCEMENT OF OPERATIONS JANUARY 1, 1998. PAST PERFORMANCE IS NOT PREDICTIVE
OF FUTURE PERFORMANCE.
THIS GRAPH COMPARES AN INITIAL $10,000 INVESTMENT MADE IN THE INTERNATIONAL
EQUITY PORTFOLIO (THE "PORTFOLIO") AT ITS INCEPTION WITH A SIMILAR INVESTMENT IN
THE MSCI EAFE 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.
THE MSCI EAFE 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.
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.
- --------------------------------------------------------------------------------
8
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED
JUNE DECEMBER
30, 1999 31, 1998
<S> <C> <C>
Net asset value, beginning of period $ 12.12 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income
Net gains and losses on securities
(both realized and unrealized) 0.93 2.16
----------- -----------
Total from investment operations 0.93 2.16
LESS DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income
Dividends in excess of net investment income
Distributions from capital gains (0.04)
Distributions in excess of capital gains
Returns of capital ----------- -----------
Total distributions 0.00 (0.04)
Net asset value, end of period $ 13.05 $ 12.12
----------- -----------
----------- -----------
Total Return (A) 7.60% 21.66%
Ratios to Average Net Assets:
Expenses 1.35% 1.55%
Net investment income 0.48% 0.04%
Portfolio Turnover Rate 32.97% 77.23%
Net Assets, At End of Period $24,575,163 $16,576,281
</TABLE>
(A) Total return assumes reinvestment of all dividends during the period and
does not reflect deduction of account fees and charges that apply to the
separate account or related insurance policies. 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 of less than one year have
not been annualized.
- --------------------------------------------------------------------------------
9
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
- -------------------------------------------------------------
COMMON STOCK--90.20%
- -------------------------------------------------------------
Market
Company Shares Value
- -------------------------------------------------------------
<S> <C> <C>
AEROSPACE & DEFENSE-1.06%
British Aerospace, PLC 40,257 $ 261,283
-------------
261,283
-------------
APPLIANCES-1.76%
Electrolux, AB, Series B 20,706 433,521
-------------
433,521
-------------
AUTOMOTIVE MANUFACTURING-3.87%
DaimlerChrysler, AG 3,312 286,901
Toyota Motor Corp. 21,000 664,512
-------------
951,413
-------------
BANKING-12.75%
Allied Irish Banks, PLC 20,800 275,410
Alpha Credit Bank 5,317 342,749
Anglo Irish Bank Corp., PLC 75,000 186,791
Argentaria, Caja Postal y Banco
Hipotecario de Espana, SA 5,952 135,588
Banca Intesa, SPA 63,868 306,925
Bank of Ireland 10,000 168,093
Bank of Tokyo-
Mitsubishi, Ltd., The 20,000 284,708
Barclays, PLC 16,300 474,303
Industrial Bank of
Japan, Ltd., The 53,000 420,370
Lloyds TSB Group, PLC 23,687 321,104
Unicredito Italiano, SPA 49,690 218,293
-------------
3,134,334
-------------
BEVERAGES-0.97%
BRL Hardy, Ltd. 56,217 238,368
-------------
238,368
-------------
<CAPTION>
- -------------------------------------------------------------
COMMON STOCK--CONTINUED
- -------------------------------------------------------------
Market
Company Shares Value
- -------------------------------------------------------------
<S> <C> <C>
BUILDING CONSTRUCTION-1.48%
Berkeley Group, PLC, The 21,400 $ 257,380
New World Infrastructure, Ltd.+ 57,000 107,262
-------------
364,642
-------------
BUILDING MATERIALS-4.24%
CRH, PLC 17,200 304,695
Lafarge, SA 3,700 351,800
Tostem Corp. 20,000 384,183
-------------
1,040,678
-------------
COMMERCIAL SERVICES-2.82%
Granada Group, PLC 20,158 373,991
Vivendi Ex-Gen des Eaux 3,927 318,104
-------------
692,095
-------------
COMPUTER INFORMATION SYSTEMS-2.34%
Cap Gemini, SA 2,352 369,645
Groupe Steria, SCA+ 5,000 204,702
-------------
574,347
-------------
DELIVERY & FREIGHT SERVICES-1.01%
TNT Post Group, N.V. 10,432 249,047
-------------
249,047
-------------
ELECTRONICS-2.59%
Mabuchi Motor Co., Ltd. 2,900 269,547
Sony Corp. 3,400 366,585
-------------
636,132
-------------
ELECTRONICS - SEMICONDUCTORS-1.11%
STMicroelectronics, N.V. 4,094 272,736
-------------
272,736
-------------
ENTERTAINMENT & LEISURE-0.94%
NAMCO, Ltd. 8,600 230,923
-------------
230,923
-------------
</TABLE>
+ Non-income producing security.
See notes to financial statements.
- -------------------------------------------------------------
10
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)-CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------
COMMON STOCK--CONTINUED
- -------------------------------------------------------------
Market
Company Shares Value
- -------------------------------------------------------------
<S> <C> <C>
FINANCIAL SERVICES-1.80%
ING Groep, N.V. 3,927 $ 212,610
Schroders, PLC 11,207 228,945
-------------
441,555
-------------
INSURANCE-3.08%
AEGON, N.V. 3,608 261,754
Allianz, AG 1,083 300,430
Zurich Allied, AG 344 195,610
-------------
757,794
-------------
LODGING-1.29%
Accor, SA 1,259 316,146
-------------
316,146
-------------
MANUFACTURING-2.40%
BBA Group, PLC 30,423 233,544
Mannesmann, AG 2,390 356,639
-------------
590,183
-------------
MINING & METALS - FERROUS & NONFERROUS-3.22%
Mitsui Mining &
Smelting Co., Ltd. 54,000 278,842
Nippon Steel Corp. 221,000 513,078
-------------
791,920
-------------
MINING & METALS - PRECIOUS-0.48%
WMC, Ltd. 27,200 116,844
-------------
116,844
-------------
OFFICE EQUIPMENT-0.28%
Ricoh Co., Ltd. 5,000 68,822
-------------
68,822
-------------
OIL & GAS - INTEGRATED-6.08%
BP Amoco, PLC 52,300 937,344
Elf Aquitaine, SA 3,802 557,930
-------------
1,495,274
-------------
<CAPTION>
- -------------------------------------------------------------
COMMON STOCK--CONTINUED
- -------------------------------------------------------------
Market
Company Shares Value
- -------------------------------------------------------------
<S> <C> <C>
PHARMACEUTICAL-5.00%
Novartis, AG 307 $ 448,276
Roche Holding, AG 34 349,492
SmithKline Beecham, PLC 33,100 430,185
-------------
1,227,953
-------------
PUBLISHING & PRINTING-3.01%
Singapore Press Holdings, Ltd. 17,494 297,982
VNU, N.V. 11,080 442,766
-------------
740,748
-------------
RAILROAD-1.13%
Railtrack Group, PLC 13,600 278,045
-------------
278,045
-------------
REAL ESTATE-1.20%
City Developments, Ltd. 46,200 295,789
-------------
295,789
-------------
RETAIL STORES-9.13%
Hennes & Maruitz, AB 14,392 355,496
Ito-Yokado Co., Ltd. 7,000 468,455
Kingfisher, PLC 24,600 283,071
Koninklijke Ahold, N.V. 10,815 372,508
Marui Company, Ltd. 20,000 330,479
Pinault-Printemps-Redoute, SA 2,522 432,774
-------------
2,242,783
-------------
TELECOMMUNICATIONS-7.39%
Nippon Telegraph &
Telephone Corp. 55 645,262
Portugal Telecom, SA 4,869 198,084
Telefonaktiebolaget LM Ericsson 10,179 326,262
Telekomunikacja Polska, SA,
Series 144A, GDR+ 37,200 260,746
Vodafone AirTouch, PLC 19,529 384,792
-------------
1,815,146
-------------
</TABLE>
+ Non-income producing security.
- -------------------------------------------------------------
See notes to financial statements.
- -------------------------------------------------------------
11
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)-CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------
COMMON STOCK--CONTINUED
- -------------------------------------------------------------
Market
Company Shares Value
- -------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS EQUIPMENT-2.59%
Nokia Oyj 7,260 $ 636,382
-------------
636,382
-------------
TOYS-1.83%
Nintendo Co., Ltd. 3,200 449,717
-------------
449,717
-------------
TRANSPORTATION-2.49%
Arriva, PLC 42,300 250,706
Stagecoach Holdings, PLC 100,559 360,215
-------------
610,921
-------------
UTILITIES - ELECTRIC & GAS-0.86%
Tokyo Electric Power Co. 10,000 211,094
-------------
211,094
-------------
TOTAL COMMON STOCK
(Cost $19,837,833) 22,166,635
-------------
<CAPTION>
- -------------------------------------------------------------
PREFERRED STOCK-3.57%
- -------------------------------------------------------------
Market
Company Shares Value
- -------------------------------------------------------------
<S> <C> <C>
COMPUTER SOFTWARE - MINI & MICRO-1.07%
SAP, AG 657 $ 262,543
-------------
262,543
-------------
TELECOMMUNICATIONS-2.50%
Tele Sudeste Celular
Participacoes, SA, ADR 9,700 281,300
Telesp Celular Participacoes, SA+ 12,500 334,375
-------------
615,675
-------------
TOTAL PREFERRED STOCK
(Cost $700,884) 878,218
-------------
<CAPTION>
- -------------------------------------------------------------
RIGHTS AND WARRANTS--0.00%
- -------------------------------------------------------------
Market
Company Shares Value
- -------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS-0.00%
Portugal Telecom, SA+ 4,869 $ 300
-------------
300
-------------
TOTAL RIGHTS AND WARRANTS
(Cost $0) 300
-------------
TOTAL INVESTMENTS
(Cost $20,538,717) 93.77% 23,045,153
Other assets, less liabilities 6.23 1,530,010
------- -------------
TOTAL NET ASSETS 100.00% $24,575,163
------- -------------
------- -------------
</TABLE>
+ Non-income producing security.
See notes to financial statements.
- -------------------------------------------------------------
12
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
WORLD GROWTH STOCK PORTFOLIO
- --------------------------------------------------------------------------------
"AS BOTTOM UP STOCK PICKERS, WE ARE CONTINUOUSLY SEARCHING FOR COMPANIES WHOSE
FUTURE EARNINGS POTENTIAL OR ASSET VALUE ARE BEING UNDERVALUED BY THE MARKET."
--Cindy Sweeting, Portfolio Manager--
- --------------------------------------------------------------------------------
INCEPTION DATE
August 1, 1985
---------------------------------------------------
FUND MANAGER
Templeton Global Advisors Limited
---------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGY
To achieve long-term capital growth through
a policy of investing primarily in
stocks of domestic or foreign companies.
---------------------------------------------------
NET ASSETS AS OF 6/30/99
$126,574,487
---------------------------------------------------
NUMBER OF HOLDINGS
145
---------------------------------------------------
PORTFOLIO TURNOVER
15.96%
- --------------------------------------------------------------------------------
---------------------------------
IN THIS SECTION
---------------------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CINDY SWEETING, CFA
- - Joined Templeton organization in 1997
- - Previously vice president of investments with McDermott International Co.,
Inc.
- - Serves on Board of Directors of the International Society of Financial
Analysts
- - B.A. from Georgetown University
- - Chartered Financial Analyst
- --------------------------------------------------------------------------------
13
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
WORLD GROWTH STOCK PORTFOLIO
- --------------------------------------------------------------------------------
[CHART]
<TABLE>
<CAPTION>
% of Portfolio ++
<S> <C>
Common Stock 94.72%
Preferred Stock 2.36%
Cash 2.68%
Corporate Bonds 0.24%
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------
PERCENT OF
TOP TEN EQUITIES PORTFOLIO++
- ----------------------------------------
<S> <C>
Hutchison Whampoa, Ltd. 2.64%
Repsol, SA 1.80%
Telefonos de Mexico, SA,
ADR, Class L 1.71%
UNUM Corp. 1.64%
J.C. Penney Company, Inc. 1.60%
Nortel Networks Corp. 1.50%
Zurich Allied, AG 1.49%
Anglo American
Platinum Corp. 1.34%
Coles Myer, Ltd. 1.31%
Bank Austria, AG 1.29%
<CAPTION>
- ----------------------------------------
PERCENT OF
TOP TEN COUNTRIES PORTFOLIO++
- ----------------------------------------
<S> <C>
United States 22.64%
United Kingdom 13.79%
Hong Kong 8.59%
France 7.44%
Australia 4.94%
Japan 4.45%
Mexico 4.18%
Netherlands 3.24%
Spain 3.19%
Germany 3.17%
</TABLE>
++ Represents market value of
investments plus cash.
FOREIGN SECURITIES ARE SUBJECT TO HIGHER RISKS THAT DOMESTIC ISSUES INCLUDING
CURRENCY FLUCTUATIONS, POLITICAL INSTABILITY AND DIFFERENCES IN ACCOUNTING
METHODS.
During the middle of 1998, investors were clearly worried about the health of
the global economy and the potential for substantial earnings shortfalls. The
Asian economic crisis appeared to be spreading to other regions, particularly
Russia and Latin America, and as it threatened to negatively impact the US
economy, sentiment toward global equity markets plummeted. Three quick and
successive interest rate reductions by Federal Reserve Chairman Alan Greenspan
last autumn proved to be the catalyst for the stabilization of both the world
economic outlook and investor confidence. Over the past six months, the global
recovery that began in the last quarter of 1998 took hold. Investor confidence
resolutely spread throughout world markets. Fortunately, the World Growth
Portfolio was well positioned to take advantage of the revitalized health of the
global economy, as amidst this widespread renewal in investor confidence, value
stocks finally returned to favor. In addition to strong performance by the
Portfolio's holdings in the Asian and South American markets in the first half
of 1999, cyclical stocks and laggards perceived to be dependent on a global
recovery also showed good returns.
Though not outweighing the positives, pockets of difficulty existed and
continue to exist. The perceived panacea of European monetary union did not
resolve some of the structural economic difficulties of member countries, as
reflected by the weak Euro. European policymakers struggled with the need to
stimulate sluggish growth through lower interest rates while simultaneously
defending the value of the beleaguered currency. Although the weaker Euro is
playing a welcome economic role in encouraging greater exports and reduced
imports, we believe Europe will also need to address structural impediments in
its labor markets to make the Euro a long-term success. The weak Euro did not
prevent many of the European bourses from performing well, but it did dampen
some European returns in U.S. dollar terms. Notable exceptions were those who
have not yet taken part in monetary union including Norway, Sweden, and the UK,
all of which finished in positive territory. Last year, we had lightened our
overall position in European equities, as valuations for some stocks were
beginning to look rather full to us. This aided our relative performance in
1999's first half as many European stocks, particularly the most expensive,
shares in which we had little exposure, performed poorly. On an encouraging
note, many European companies showed initiative by restructuring and/or
acquiring to gain critical mass and reduce costs, and the Portfolio benefited
from these trends. In particular, the Portfolio was helped by holdings in the UK
where we have uncovered bargains in a number of
- -------------------------------------------------------------------------------
14
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
WORLD GROWTH STOCK PORTFOLIO
- --------------------------------------------------------------------------------
smaller, engineering firms over the past year. Many of these stocks have posted
sizeable gains this year.
In Latin America, we identified many stocks last year we believed to be
bargain priced. Over the past six months, these markets have epitomized the
optimism of equity investors and Latin American equities were some of the
primary beneficiaries of the receding atmosphere of economic crisis and
resultant recovery in commodity prices during the first half of 1999. The
Brazilian devaluation, which many thought might again send the Latin markets
reeling, had a positive impact which has not only resulted in the rebound of the
Brazilian market, but has brought to the forefront, a global debate on the
benefits of floating versus pegged currencies in the developing markets. Brazil
has benefited from the continued stabilization of the real, which together with
benign inflation and a pick up in exports, has allowed interest rates to be
reduced by more than half from their peak this year. Mexico is also benefiting
from a stable currency, a strong U.S. economy and higher oil prices. The Mexican
market is among the best performing markets in the world thus far this year.
Yet, in spite of the rallies in these countries, they remain among the most
attractive globally and we continue to identify bargains. We feel that if
inflation remains under control, local interest rates fall further, fiscal and
trade imbalances are addressed, and privatizations move forward, the potential
for further capital gains on our holdings may be significant.
Southeast Asian stock markets were also major beneficiaries of the improved
health of the global economies and, again, the Portfolio was well exposed to
this trend. The Korean, Thai, and Singaporean stock markets each rose more than
50% in U.S. dollar terms, and Hong Kong equities, where most of our Asian
exposure was placed, advanced over 30% during the first six months of 1999.
Government-led bail-outs to end the regional banking crisis, some progress on
debt restructuring, improved current account positions, and sharply falling
interest rates all appear to have signaled to the financial markets that the
"point of maximum pessimism" that Templeton's research analysts are always
searching for, had passed. The recovery in sentiment and resumed investment in
Asian markets has been justified by the long needed, and once unthinkable,
reforms being implemented by governments across Asia. Many changes are yet to be
made, but the direction remains positive. We hope to take advantage of
attractively priced new issues of equity, as we believe that many Asian
companies still need to sell shares in order to rebuild balance sheets weakened
by the economic crisis in 1997-98.
Our largest Asian weighting remains Hong Kong, though our overweight position
in Asia includes other exposure in the region. The Hong Kong market has more
than doubled from its low in July 1998. Though valuations have indeed risen and
we have taken advantage of improved stock prices to trim some of our larger
positions, we maintain an overweight position, believing that the
- -------------------------------------------------------------------------------
15
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
WORLD GROWTH STOCK PORTFOLIO
- --------------------------------------------------------------------------------
full earnings recovery is yet to come. Companies trading at 26x projected 1999
earnings make Hong Kong stocks appear expensive when compared with the US and
Europe. However, the comparison does not consider that earnings for Hong Kong
companies remain depressed and consumer confidence is only just rebuilding. As
the economy continues to improve and interest rates continue to come down, we
believe that our exposure in Hong Kong will continue to outperform.
Japanese stocks also posted a strong advance in the past quarter. While many
challenges remain for the Japanese economy, investors' fears that the nation was
entering into a more rapid downward economic spiral never fully materialized.
While many Japanese stocks are still not inexpensive enough to meet our strict
Templeton long-term value criteria, we were able to identify several shares that
were. For the first time in many years, the Portfolio has a meaningful exposure
to Japanese stocks. However, our holdings in these shares still represent an
underweight position relative to the index, and this detracted from our returns
in the first half.
As bottom up stock pickers, we are continuously searching for companies whose
future earnings potential or asset value are being undervalued by the market. We
attempt to identify companies within a certain sector or industry whose current
results are being negatively impacted by a certain macroeconomic trend that we
believe is, or will be, changing.
During the last six months, the World Growth Portfolio's performance has
benefited from industry exposure as cyclical companies rebounded on the back of
an unanticipated improvement in commodity prices. Many of these companies were
selling at valuations that were near 20-year lows, relative to their respective
markets. Our bottom up approach led us to take advantage of these depressed
multiples by establishing significant positions in chemicals, forest products,
metals and mining companies. Signs of continued expansion in the U.S., coupled
with a recovery in Asia, have bid up materials prices from aluminum to zinc.
Among the beneficiaries in the Portfolio were Finnish forest products companies,
including Stora Enso and UPM-Kymmene, and metal producers Anglo American
Platinum and WMC, Inc. Similarly, a rebound in oil prices helped our holdings in
the energy sector. Share prices responded positively to continued consolidation
in the sector, including our position in YPF in Argentina which was successfully
acquired by Repsol, and our position in the French company Elf Aquitaine, the
most recent target of a bid by Total Fina.
Rising commodity prices also fueled the U.S. market. While in previous
quarters, and indeed for several years, gains in technology stocks and growth
stocks have predominated, the perception of a global recovery shifted U.S.
investors' focus to cyclical companies. This transition, and the continued
strong
- -------------------------------------------------------------------------------
16
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
WORLD GROWTH STOCK PORTFOLIO
- --------------------------------------------------------------------------------
economic data and ever falling unemployment numbers, triggered Federal Reserve
Chairman Alan Greenspan's inflation vigilance, causing him to take back 25 of
the 75 basis point interest rate cut that the Fed utilized last fall, to offset
the strain of the Asian crisis. Those rate cuts and the resultant increase in
liquidity stimulated an already strong US economy to a growth rate we believe to
be in excess of its long run potential. While inflation still appears dormant,
this growth trend has reduced the available labor pool dramatically, thereby
posing the threat of wage gains in excess of productivity growth. Meanwhile,
earnings growth remains very strong, enabling the U.S. stock market to shrug off
rising interest rates and move to new record highs. Given these considerations,
as well as the high level of valuations in the U.S. stock market, our holdings
in U.S. stocks remain substantially below that of the index. This has impaired
results in the Portfolio thus far in 1999, but we believe that our long-standing
approach of focusing exclusively on bargain-priced shares should ultimately
yield better results.
The US is among the world's three most expensive markets, which explains our
difficulty in finding a large number of bargains in the U.S., and hence, our
relative underweight versus the World Index. However, we are finding a number of
new investments in the U.S. without altering our value philosophy. Some of our
more recent additions have been focused in the energy and insurance sectors,
with companies like Occidental Petroleum and ReliaStar Financial, among others.
The rebound in cyclical and energy related companies coupled with improvement
in Asian and Latin American investments accounted for much of the improved
performance of the World Growth Portfolio this year. These positions were built
up over the past few years and contributed to the weaker performance experienced
in 1998. So far, 1999 has proved a kinder year to value-oriented investors. As
other investors scramble to pay high prices for those stocks with the most
attractive current outlook or most appealing trend, Templeton's analysts
diligently search for those shares selling at the lowest prices in relation to
long-term earnings potential. At Templeton, we remain committed to implementing
our disciplined investment process and consequently, we remain more steadfast
than ever in our conviction that Templeton's value-based stocking approach will
produce superior returns for investors over the long term.
[GRAPH]
WORLD GROWTH STOCK PORTFOLIO AND THE MSCI WORLD INDEX
Comparison of Change in Value of $10,000 Investment.
<TABLE>
<CAPTION>
WORLD GROWTH MSCI
STOCK WORLD
PORTFOLIO INDEX
<S> <C> <C>
8/1/85 $10,000 $10,000
9/30/85 $ 9,112 $10,137
12/31/85 $10,526 $11,822
3/31/86 $12,932 $14,371
6/30/86 $12,715 $15,328
9/30/86 $12,765 $16,146
12/31/86 $13,449 $16,882
3/31/87 $14,918 $20,707
6/30/87 $14,999 $21,851
9/30/87 $16,167 $23,311
12/31/87 $12,408 $19,712
3/31/88 $13,855 $22,022
6/30/88 $14,352 $21,836
9/30/88 $14,141 $21,928
12/31/88 $14,034 $24,433
3/31/89 $15,373 $25,008
6/30/89 $15,862 $24,689
9/30/89 $18,247 $27,584
12/31/89 $18,041 $28,634
3/31/90 $17,244 $24,562
6/30/90 $18,671 $26,580
9/30/90 $15,554 $21,760
12/31/90 $16,176 $23,904
3/31/91 $17,797 $26,288
6/30/91 $17,325 $25,434
9/30/91 $18,848 $27,260
12/31/91 $19,812 $28,439
3/31/92 $19,777 $26,152
6/30/92 $20,910 $26,660
9/30/92 $20,281 $27,143
12/31/92 $21,015 $27,114
3/31/93 $22,440 $29,479
6/30/93 $23,314 $31,306
9/30/93 $25,138 $32,814
12/31/93 $28,014 $33,384
3/31/94 $27,156 $33,628
6/30/94 $26,728 $34,678
9/30/94 $28,551 $35,464
12/31/94 $27,248 $35,248
3/31/95 $27,603 $36,944
6/30/95 $29,865 $38,568
9/30/95 $31,357 $40,772
12/31/95 $31,703 $42,762
3/31/96 $33,105 $44,543
6/30/96 $34,373 $45,880
9/30/96 $34,737 $46,568
12/31/96 $37,795 $48,757
3/31/97 $38,862 $48,935
6/30/97 $43,136 $56,368
9/30/97 $47,062 $58,029
12/31/97 $43,588 $56,656
3/31/98 $48,979 $64,769
6/30/98 $47,104 $66,084
9/30/98 $39,514 $58,160
12/31/98 $44,831 $70,223
3/31/99 $44,840 $72,518
6/30/99 $50,285 $75,767
</TABLE>
- ----------------------------
AVERAGE ANNUAL TOTAL RETURNS
- ----------------------------
<TABLE>
<CAPTION>
MSCI
WORLD WORLD
GROWTH INDEX
<S> <C> <C>
YTD 12.17% 7.90%
1 YEAR 6.75% 14.28%
5 YEAR 13.47% 15.05%
10 YEAR 12.23% 9.63%
INCEPTION 12.30% 15.66%
</TABLE>
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.
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.
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.
- -------------------------------------------------------------------------------
17
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
WORLD GROWTH STOCK PORTFOLIO
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
30, 1999 31, 1998 31, 1997 31, 1996 31, 1995 31, 1994
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 21.90 $ 23.28 $ 23.31 $ 21.20 $ 19.00 $ 20.89
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.28 0.56 0.53 0.49 0.45 0.25
Net gains and losses on securities
(both realized and unrealized) 2.35 0.12 2.97 3.56 2.65 (0.89)
----------- ----------- ----------- ---------- ---------- ----------
Total from investment operations 2.63 0.68 3.50 4.05 3.10 (0.64)
LESS DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.07) (0.47) (0.53) (0.48) (0.43) (0.25)
Dividends in excess of net
investment income (0.03)
Distributions from capital gains (0.26) (1.59) (2.76) (1.46) (0.47) (0.81)
Distributions in excess of capital gains (0.21) (0.19)
Returns of capital
----------- ----------- ----------- ---------- ---------- ----------
Total distributions (0.33) (2.06) (3.53) (1.94) (0.90) (1.25)
Net asset value, end of period $ 24.20 $ 21.90 $ 23.28 $ 23.31 $ 21.20 $ 19.00
----------- ----------- ----------- ---------- ---------- ----------
----------- ----------- ----------- ---------- ---------- ----------
Total Return (A) 12.17% 2.85% 15.33% 19.22% 16.35% (3.05%)
Ratios to Average Net Assets:
Expenses 0.88% 0.92% 0.91% 0.88% 0.96% 1.00%
Net investment income 2.48% 2.44% 2.33% 2.20% 2.31% 1.56%
Portfolio Turnover Rate 15.96% 33.95% 30.22% 27.50% 18.09% 18.47%
Net Assets, At End of Period $126,574,487 $110,897,303 $105,567,503 $91,995,634 $73,692,357 $52,903,768
</TABLE>
(A) Total return assumes reinvestment of all dividends during the period and
does not reflect deduction of account fees and charges that apply to the
separate account or related insurance policies. 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 of
less than one year have not been annualized.
- --------------------------------------------------------------------------------
18
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
WORLD GROWTH STOCK PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
COMMON STOCK--94.68%
- --------------------------------------------------------------------------------
Market
Company Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
AEROSPACE & DEFENSE-3.17%
Boeing Co., The 9,600 $ 424,200
Kaman Corp., Class A 73,600 1,154,600
Raytheon Co., Class A 21,600 1,487,700
Rolls-Royce, PLC 133,298 564,163
Saab, AB, Class B 49,800 386,605
----------
4,017,268
----------
AGRICULTURAL OPERATIONS-0.71%
Archer-Daniels-Midland Co. 58,065 896,378
----------
896,378
----------
AIRLINES-1.59%
British Airways, PLC 84,400 582,379
Singapore Airlines, Ltd. 92,800 883,031
Swire Pacific, Ltd. 732,000 547,212
----------
2,012,622
----------
APPLIANCES-1.01%
Best Denki Co., Ltd. 57,200 454,155
Guangdong Kelon Electrical
Holdings Company, Ltd. 711,000 829,344
----------
1,283,499
----------
AUTOMOTIVE MANUFACTURING-2.74%
Fiat, SpA 150,830 477,517
Fiat, SpA, RNC 514,910 878,804
Volkswagen, AG 24,000 1,536,970
Volvo, AB 20,000 579,884
----------
3,473,175
----------
AUTOMOTIVE PARTS & EQUIPMENT-0.53%
Autoliv, Inc., Swed Dep. Receipt 22,200 676,312
----------
676,312
----------
<CAPTION>
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
- --------------------------------------------------------------------------------
Market
Company Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
BANKING-4.49%
Banco Bradesco, SA, ADR 45,500 $ 228,405
Bank Austria, AG 30,800 1,619,882
Bank Handlowy W Warszawie,
GDR, Series 144A+ 71,500 993,221
Credit Commercial de France 14,800 1,599,505
Development Bank of
Singapore, Ltd. 57,900 707,383
National Bank of Canada 41,300 538,574
----------
5,686,970
----------
BEVERAGES-0.35%
Embotelladora Andina,
SA, ADR, Series B 29,309 446,962
----------
446,962
----------
BROADCASTING-0.53%
Television Broadcasts, Ltd. 144,000 675,586
----------
675,586
----------
BUILDING MATERIALS-2.42%
Cemex, SA de CV, CPO 4,994 24,553
Cemex, SA de CV, Class B 130,000 642,590
Nichiha Corp. 67,200 711,219
Owens Corning+ 19,600 673,750
Pioneer International, Ltd. 195,000 496,922
Pioneer International,
Ltd., ADR 200,000 509,680
----------
3,058,714
----------
CHEMICALS-2.06%
Akzo Nobel, N.V. 15,100 635,331
Hoechst, AG 26,200 1,186,119
Lyondell Chemical Co. 38,200 787,875
----------
2,609,325
----------
COMPUTER EQUIPMENT & SERVICES-0.67%
Hewlett-Packard Co. 8,400 844,200
----------
844,200
----------
</TABLE>
+ Non-income producing security
See notes to financial statements.
- --------------------------------------------------------------------------------
19
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
WORLD GROWTH STOCK PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)-CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
- --------------------------------------------------------------------------------
Market
Company Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
COMPUTER NETWORK-0.56%
3Com Corp.+ 26,600 $ 709,888
----------
709,888
----------
ELECTRONICS-0.66%
Sony Corp. 7,700 830,206
----------
830,206
----------
ELECTRONICS - SEMICONDUCTORS-1.57%
Applied Materials, Inc.+ 21,200 1,566,150
Motorola, Inc. 4,500 426,375
----------
1,992,525
----------
ENGINEERING & CONSTRUCTION-1.90%
ABB AB, Class A+ 80,000 1,063,317
Internatio-Muller, N.V. 60,800 1,338,641
----------
2,401,958
----------
ENVIRONMENTAL CONTROLS-0.94%
Waste Management, Inc. 22,185 1,192,444
----------
1,192,444
----------
FINANCIAL SERVICES-4.58%
Compagnie Financiere de Paribas 6,200 694,998
Hutchison Whampoa, Ltd. 368,000 3,332,044
ICICI, Ltd. 43,900 372,079
Nomura Securities
Company, Ltd., The 85,000 995,116
Singapore Finance, Ltd. 308,000 396,194
----------
5,790,431
----------
FOOD PRODUCTS-1.83%
IBP, Inc. 42,309 1,004,839
Northern Foods, PLC 255,954 522,479
Showa Sangyo Company, Ltd. 379,000 789,086
----------
2,316,404
----------
<CAPTION>
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
- --------------------------------------------------------------------------------
Market
Company Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
FOREST PRODUCTS & PAPER-3.54%
Bowater, Inc. 11,500 $ 543,375
Fletcher Challenge Forests+ 762,276 428,177
International Paper Co. 25,000 1,262,500
Portucel Industrial
Empresa Produtora+ 97,000 533,180
Stora Enso Oyj, Class R 111,300 1,193,689
UPM-Kymmene Oyj 17,900 513,169
----------
4,474,090
----------
IMPORT & EXPORT-1.58%
Fritz Companies, Inc .+ 60,300 648,225
Li & Fung, Ltd. 564,000 1,352,100
----------
2,000,325
----------
INSURANCE-7.03%
Ace, Ltd. 21,700 613,025
Axa 12,800 1,561,555
Axa China Region, Ltd. 750,000 599,335
ReliaStar Financial Corp. 36,200 1,583,750
UNUM Corp. 37,700 2,064,075
XL Capital, Ltd., Class A 10,700 604,550
Zurich Allied, AG 3,300 1,876,496
----------
8,902,786
----------
MACHINERY-0.83%
Makita Corp. 21,000 237,524
Stork, N.V. 35,900 818,181
----------
1,055,705
----------
MANUFACTURING-6.33%
Alfa, SA de CV, Class A 127,500 528,343
Caradon, PLC 213,500 504,808
Desc, SA de CV, ADR 13,100 296,388
Desc, SA de CV, Series B 185,000 203,647
Grupo Imsa, SA de CV , ADR 43,000 688,000
Invensys, PLC 243,900 1,154,334
</TABLE>
+ Non-income producing security
See notes to financial statements.
- --------------------------------------------------------------------------------
20
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
WORLD GROWTH STOCK PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)-CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
- --------------------------------------------------------------------------------
Market
Company Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING-CONTINUED
Laird Group, PLC 238,000 $ 997,919
McBride, PLC 439,100 775,208
McKechnie, PLC 119,100 906,767
Valmet Oyj 56,400 639,786
Varitronix International, Ltd. 483,500 1,006,435
Vickers, PLC 118,933 305,581
----------
8,007,216
----------
MEDICAL PRODUCTS-0.63%
Nycomed Amersham, PLC 112,875 802,952
----------
802,952
----------
MINING & METALS - FERROUS & NONFERROUS-2.63%
Industrias Penoles, SA 143,300 414,079
Oregon Steel Mills 67,800 902,587
Pechiney, SA, Class A 26,136 1,123,387
SKF, AB, Class B 48,000 886,411
----------
3,326,464
----------
MINING & METALS - PRECIOUS-2.19%
Anglo American Platinum Corp. 72,482 1,691,243
WMC, Ltd. 250,800 1,077,371
----------
2,768,614
----------
<CAPTION>
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
- --------------------------------------------------------------------------------
Market
Company Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
OIL & GAS - DISTRIBUTION & MARKETING-1.54%
BG, PLC 105,335 $ 643,400
Burlington Resources, Inc. 18,000 778,500
Centrica, PLC 226,170 531,200
----------
1,953,100
----------
OIL & GAS - INTEGRATED-5.31%
Elf Aquitaine, SA 10,500 1,540,837
Occidental Petroleum Corp. 30,400 642,200
Ranger Oil, Ltd.+ 145,700 703,889
Repsol, SA 111,000 2,266,474
Shell Transport & Trading
Company, PLC 208,600 1,564,336
----------
6,717,736
----------
PHARMACEUTICAL-1.76%
AstraZeneca Group, PLC 28,924 1,126,109
Medeva, PLC 169,600 275,359
Rhone-Poulenc, SA 18,100 827,071
----------
2,228,539
----------
PUBLISHING & PRINTING-0.47%
Roto Smeets de Boer, N.V. 20,500 599,335
----------
599,335
----------
REAL ESTATE-2.16%
Jardine Matheson
Holdings, Ltd. 111,600 558,000
Nationwide Health
Properties, Inc. 42,600 812,062
Unibail 10,700 1,369,362
----------
2,739,424
----------
RETAIL STORES-5.89%
Coles Myer, Ltd. 283,312 1,648,340
Federated Department
Stores, Inc.+ 13,600 719,950
Hudson's Bay Co. 46,700 520,642
J.C. Penney Company, Inc. 41,500 2,015,344
Marks & Spencer, PLC 93,100 538,583
Matsuzakaya Company, Ltd. 154,000 661,620
Tesco, PLC 524,439 1,349,538
----------
7,454,017
----------
</TABLE>
+ Non-income producing security
See notes to financial statements.
- --------------------------------------------------------------------------------
21
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
WORLD GROWTH STOCK PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)-CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
- --------------------------------------------------------------------------------
Market
Company Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS-5.70%
APT Satellite Holdings,
Ltd., ADR+ 25,600 $ 104,000
Companhia Riograndense de
Telecomunicacoes - PFA 14,812 3,626
Celular CRT Participacoes, SA 14,812 2,005
Korea Telecom Corp., ADR+ 17,700 708,000
Newbridge Networks Corp.+ 14,800 425,500
Telec de Sao Paulo, SA 2,457,100 200,266
Telecom Italia SPA, RNC+ 44,969 243,928
Telecomunicacoes Brasileiras,
SA, ADR+ 5,310 332
Telecomunicacoes Brasileiras,
SA, ADR, Preferred Block 5,310 478,896
Telefonica de Argentina, SA 18,100 567,888
Telefonica, SA, ADR 4,370 642,889
Telefonos de Mexico,
SA, ADR, Class L 26,700 2,157,694
Telesp Celular, SA 9,394,500 296,741
Tele Sudeste Celular
Participacoes, SA, ADR 16,800 487,200
U S WEST, Inc. 15,200 893,000
-------------
7,211,965
-------------
TELECOMMUNICATIONS EQUIPMENT-2.59%
Alcatel, SA, ADR 23,227 659,066
MasTec, Inc.+ 25,500 720,375
Nortel Networks Corp. 21,840 1,895,985
-------------
3,275,426
-------------
TEXTILES & APPAREL-0.55%
Yue Yuen Industrial Holdings 300,000 692,135
-------------
692,135
-------------
<CAPTION>
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
- --------------------------------------------------------------------------------
Market
Company Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION-1.47%
Airborne Freight Corp. 30,400 $ 841,700
Arriva, PLC 54,400 322,421
Koninklijke Frans
Maas Groep, N.V. 23,100 690,832
-------------
1,854,953
-------------
TRAVEL SERVICES-1.04%
Kuoni Reisen, AG 340 1,311,141
-------------
1,311,141
-------------
UTILITIES - ELECTRIC & GAS-7.57%
Hongkong Electric
Holdings, Ltd. 299,000 963,447
Iberdrola, SA 72,900 1,110,377
Korea Electric Power Corp. 35,500 1,475,252
National Grid Group, PLC 152,670 1,062,481
National Power, PLC 121,700 886,277
Potomac Electric Power Co. 42,362 1,247,031
PowerGen, PLC 83,400 899,206
Texas Utilities Co. 16,000 660,000
Veba, AG 21,700 1,275,549
-------------
9,579,620
-------------
WATER TREATMENT-1.56%
Kurita Water Industries, Ltd. 52,137 934,739
Thames Water, PLC 65,943 1,045,691
-------------
1,980,430
-------------
TOTAL COMMON STOCK
(Cost $95,501,192) 119,850,840
-------------
</TABLE>
+Non-income producing security.
See notes to financial statements.
- --------------------------------------------------------------------------------
22
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
WORLD GROWTH STOCK PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)--CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PREFERRED STOCK--1.97%
- --------------------------------------------------------------------------------
Market
Company Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
BANKING-1.17%
National Australia Bank, 7.875% 48,700 $ 1,479,262
--------------
1,479,262
--------------
MULTIMEDIA-0.80%
The News Corporation,
Ltd., 5.000% 132,167 1,006,912
--------------
1,006,912
--------------
TOTAL PREFERRED STOCK
(Cost $1,959,532) 2,486,174
--------------
<CAPTION>
- --------------------------------------------------------------------------------
RIGHTS AND WARRANTS--0.00%
- --------------------------------------------------------------------------------
Market
Company Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS-0.00%
Celular CRT Participacoes, SA,
exp. 07/05/99 @ 0.297 BRL+ 6,242 $ 0
------------
TOTAL RIGHTS AND WARRANTS
(Cost $0) 0
------------
<CAPTION>
- --------------------------------------------------------------------------------
CORPORATE BONDS--0.24%
- --------------------------------------------------------------------------------
Principal Market
Company Value Value
- --------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING-0.24%
Alfa, SA de CV, Series 144A,
8.000%, due 09/15/00 $300,000 $ 301,500
--------------
TOTAL CORPORATE BONDS
(Cost $467,343) 301,500
--------------
TOTAL INVESTMENTS
(Cost $97,928,067) 96.89% 122,638,514
Other assets, less liabilities 3.11 3,935,973
--------------
TOTAL NET ASSETS 100.00% $126,574,487
--------------
--------------
</TABLE>
+Non-income producing security.
See notes to financial statements.
- --------------------------------------------------------------------------------
23
<PAGE>
[This page intentionally left blank]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
GLOBAL HARD ASSETS PORTFOLIO
- --------------------------------------------------------------------------------
"THE MACROECONOMIC BACKGROUND FOR HARD ASSETS REMAINS POSITIVE. WE EXPECT THE
UNPRECEDENTED MONETARY STIMULUS THE WORLD HAS EXPERIENCED DURING THE LAST NINE
MONTHS TO CONTINUE TO STIMULATE WORLDWIDE ECONOMIC GROWTH."
--Derek S. van Eck and Kevin L. Reid, Portfolio Managers--
- --------------------------------------------------------------------------------
INCEPTION DATE
August 1, 1985
--------------------------------------------
FUND MANAGER
Van Eck Associates Corporation
--------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGY
To realize long-term capital appreciation
by globally investing primarily in
"Hard Asset Securities."
--------------------------------------------
NET ASSETS AS OF 6/30/99
$5,202,680
--------------------------------------------
NUMBER OF HOLDINGS
81
--------------------------------------------
PORTFOLIO TURNOVER
127.33%
- --------------------------------------------------------------------------------
---------------------
IN THIS SECTION
---------------------
Portfolio Facts
Portfolio Composition
Financial Highlights
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DEREK S. VAN ECK, CFA
- - M.B.A. from J.L. Kellogg Graduate School of Management
- - B.A. from Williams College
- - Chartered Financial Analyst
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
KEVIN L. REID
- - Joined Van Eck in 1995
- - MBA from Harvard Business School
- - B.A. from Colgate University
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
25
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
GLOBAL HARD ASSETS PORTFOLIO
- --------------------------------------------------------------------------------
[CHART]
<TABLE>
<CAPTION>
% of Portfolio ++
<S> <C>
Common Stock 86.55%
Preferred Stock 4.25%
Corporate Bonds 1.60%
Short-Term Obligations 3.78%
Rights and Warrants 0.12%
Cash 3.70%
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------
PERCENT OF
TEN TOP INDUSTRIES PORTFOLIO++
- ---------------------------------------------
<S> <C>
Real Estate 24.77%
Forest Products & Paper 14.19%
Oil & Gas Producers 12.35%
Oil & Gas - Integrated 11.20%
Mining & Metals -
Ferrous & Nonferrous 10.04%
Oil & Gas Services 9.26%
Mining & Metals - Precious 4.71%
Investment Companies 2.24%
Lodging 1.67%
Oil & Gas - Distribution &
Marketing 1.46%
<CAPTION>
- ---------------------------------------------
PERCENT OF
TOP COUNTRIES PORTFOLIO++
- ---------------------------------------------
<S> <C>
United States 67.82%
Canada 15.37%
Australia 4.17%
United Kingdom 2.31%
Norway 2.01%
Brazil 1.66%
France 1.32%
Netherlands 1.20%
Ghana 0.28%
South Africa 0.19%
</TABLE>
++Represents market value of investments plus cash.
FOREIGN SECURITIES ARE SUBJECT TO HIGHER RISKS THAT DOMESTIC ISSUES INCLUDING
CURRENCY FLUCTUATIONS, POLITICAL INSTABILITY AND DIFFERENCES IN ACCOUNTING
METHODS.
We are pleased to report that hard assets had an excellent first half of
the year and the Jefferson Pilot Global Hard Assets Portfolio rose 18.77%. Hard
assets substantially outperformed financial assets during the period - in
comparison, the S&P 500 rose 12.38% for the six month period ended June 30,
1999. Hard asset performance was driven by two factors: 1) a realization that
global economic growth was rising; and 2) an increasingly favorable
supply/demand environment for most hard asset sectors.
REVIEW
The first half of 1999 witnessed a reversal of the major trends that
affected the hard assets markets throughout 1998. Confidence in global economic
growth returned in the first quarter as the emerging economies, particularly in
Asia, began to recover strongly after 18 months in a downward spiral. The
Japanese economy also began to recover after several years with zero growth and
government waffling, as positive steps were finally taken to remedy the
situation. Economic growth figures for the developed world came in higher than
expected and fears of a global slowdown subsided. Further, several hard asset
sectors have gone through major supply cutbacks as a result of a number of
factors, including an OPEC agreement to cut supplies made in April, and mergers
and acquisitions activity, which has resulted in reductions in supply. These two
factors - a solid increase in demand due to strong global growth and the
decrease in supply - provided an extremely positive environment for these
investments in the first half, and we expect these trends to remain in place
throughout the year. An additional positive force was a broad move from growth
stocks into cyclical and "value" stocks in the second quarter - partly a result
of revised economic growth figures, but also an investor reaction to the lofty
valuations and questionable earnings of technology (particularly Internet)
stocks.
Energy prices rose very strongly during the second quarter as a result of
the OPEC supply cutback that was announced on March 13 after two years of OPEC
indecision. Energy stocks, which remain the Portfolio's largest weighting at
approximately 35% of total assets at June 30, were up 53% overall for the first
six months of the year. We continue to favor exploration and production
companies, such as Anadarko, and oil service companies. We are emphasizing
companies with substantial natural gas exposure since we believe this sector
currently offers the best fundamentals among hard assets, with strong demand
growth (expected at over 3% this year) and an expected supply decline of almost
3%. As for crude oil, we don't expect the price to rise much further, but if the
price is sustained at current levels, the oil service companies should capture
higher profits. Some of
- --------------------------------------------------------------------------------
26
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
GLOBAL HARD ASSETS PORTFOLIO
- --------------------------------------------------------------------------------
the Portfolio's oil service stocks, such as Baker Hughes and Cooper Cameron,
were significant contributors to performance in the first half. Mergers and
acquisitions continue to play an important positive role in this sector. Recent
deals include the pending merger of Exxon and Mobil, the takeover of YPF by
Repsol, British Petroleum's takeover of Amoco, and recent rumors of Texaco as a
possible takeover target.
Real estate securities, which account for about 25% of the Portfolio's
holdings at June 30, turned in positive performance for the six months ended
June 30 (4.6% for the Morgan Stanley REIT index). The U.S. real estate market,
which accounted for most of the Portfolio's real estate holdings, began the year
with negative performance, a result of economic slowdown concerns and continued
focus on growth stocks. However, in the second quarter, those trends reversed
and several other positive developments also boosted returns - Warren Buffet
purchased REITs in April, which helped investor perception of the sector, real
estate companies reported continued strong earnings, and there were several
management-led privatizations, an additional sign of strength and confidence.
This sector continues to offer a low risk, income producing component for the
Portfolio, and values here remain attractive.
Forest products and paper, about 14% of the Portfolio's holdings at
June 30, had an explosive run in the first half of the year, ending the period
up about 25%. In addition to increased demand with renewed economic growth,
certain companies have shut down excess capacity, a push that has been driven
primarily by mergers and acquisitions activity (Portfolio holding Smurfit Stone
Container has been notable in this regard). The combination of these factors has
led to several price increases either announced or realized in certain segments
of the industry. Furthermore, talk of further consolidation in the sector has
fueled returns. One example, Weyerhauser's announced bid for McMillan Blodell,
the largest Canadian paper company (and a Portfolio holding) helped boost the
entire Canadian paper sector. Meanwhile, timber and building materials prices
have sky-rocketed as a result of the strong housing market in the U.S. and
holdings such as Plum Creek Timber (which converted from a publicly-traded
partnership to a REIT - the first timber REIT) contributed to performance. The
only sectors within this group that have yet to rebound are the newsprint and
pulp sectors and we believe they will perform well into the second half. We have
bought several of these stocks, including Brazilian pulp company Aracruz, among
the lowest cost producers in the world.
Industrial metals (approximately 10% of assets at June 30) performed well
overall, with mixed performance among the metals. While sensitive to the
economic turnaround, the supply-demand scenario has not been as strong as it has
for the energy and forest products sectors, so we have kept this weighting
fairly low, with only selective holdings. While aluminum and copper companies
have yet to rebound substantially, Alcoa, a company that has done well even in
flat to declining
- --------------------------------------------------------------------------------
27
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
GLOBAL HARD ASSETS PORTFOLIO
- --------------------------------------------------------------------------------
commodity markets, turned in solid gains.
Precious metals (about 5% of assets) had mixed results. The platinum and
palladium markets stayed afloat, with decent supply-demand pictures and some
industrial demand. The gold market, however, fell further, primarily the result
of further central bank selling. In this sector, we hold only selective stocks
based on their individual strengths, and thus, Stillwater, a platinum and
palladium producer, and our largest holding in this sector, was up substantially
for the first half.
THE OUTLOOK
The macroeconomic background for hard assets remains positive. We expect the
unprecedented monetary stimulus the world has experienced during the last nine
months there have been 156 interest rates cuts in the last nine months - to
continue to stimulate worldwide economic growth. The US economy has been running
in overdrive and should continue plow ahead. The European economy has been
sluggish, but appears to be strengthening. The Japanese economy has slowly begun
to turn up. Asia is recovering from its recession and even Latin America has
turned in better-than-expected growth. The global economy is getting stronger.
This should be a positive factor for hard asset performance.
[GRAPH]
GLOBAL HARD ASSETS PORTFOLIO, S&P 500 INDEX AND LIPPER BENCHMARK(1)
Comparison of Change in Value of $10,000 Investment.
<TABLE>
<CAPTION>
GLOBAL LIPPER
HARD ASSETS S&P 500 BENCHMARK
PORTFOLIO INDEX INDEX
<S> <C> <C> <C>
8/1/85 $10,000 $ 10,000 $10,000
9/30/85 $ 9,602 $ 9,916 $ 9,481
12/31/85 $ 9,960 $ 11,626 $ 9,069
3/31/86 $10,217 $ 13,264 $10,276
6/30/86 $10,141 $ 14,049 $ 9,058
9/30/86 $12,987 $ 13,070 $12,189
12/31/86 $13,646 $ 13,800 $12,415
3/31/87 $22,164 $ 16,745 $19,345
6/30/87 $20,392 $ 17,584 $18,429
9/30/87 $24,761 $ 18,746 $22,113
12/31/87 $18,325 $ 14,519 $16,944
3/31/88 $16,901 $ 15,345 $15,396
6/30/88 $16,755 $ 16,359 $15,041
9/30/88 $14,766 $ 16,411 $13,359
12/31/88 $14,433 $ 16,915 $13,768
3/31/89 $15,249 $ 18,110 $14,711
6/30/89 $14,364 $ 19,705 $14,488
9/30/89 $15,006 $ 21,812 $15,770
12/31/89 $17,210 $ 22,256 $18,387
3/31/90 $15,812 $ 21,585 $16,804
6/30/90 $13,785 $ 22,936 $14,925
9/30/90 $14,846 $ 19,799 $15,425
12/31/90 $13,035 $ 21,564 $13,893
3/31/91 $12,337 $ 24,685 $13,197
6/30/91 $13,532 $ 24,631 $14,518
9/30/91 $12,194 $ 25,947 $13,445
12/31/91 $12,316 $ 28,106 $13,809
3/31/92 $11,826 $ 27,399 $12,923
6/30/92 $12,760 $ 27,921 $13,400
9/30/92 $12,844 $ 28,801 $12,548
12/31/92 $11,916 $ 30,245 $11,167
3/31/93 $14,112 $ 31,562 $13,844
6/30/93 $18,279 $ 31,711 $18,325
9/30/93 $15,635 $ 32,520 $16,453
12/31/93 $19,578 $ 33,274 $20,875
3/31/94 $19,639 $ 32,021 $19,124
6/30/94 $17,542 $ 32,160 $18,704
9/30/94 $19,936 $ 33,732 $22,616
12/31/94 $16,882 $ 33,725 $19,626
3/31/95 $17,214 $ 36,998 $18,492
6/30/95 $17,323 $ 40,519 $18,717
9/30/95 $18,152 $ 43,729 $19,788
12/31/95 $17,348 $ 46,353 $18,676
3/31/96 $21,724 $ 49,103 $22,803
6/30/96 $19,740 $ 51,595 $21,453
9/30/96 $18,695 $ 53,500 $21,026
12/31/96 $17,793 $ 58,251 $19,758
3/31/97 $16,473 $ 58,505 $18,114
6/30/97 $14,423 $ 68,711 $15,898
9/30/97 $14,571 $ 73,857 $16,091
12/31/97 $ 9,852 $ 75,978 $11,395
3/31/98 $10,722 $ 86,553 $12,346
6/30/98 $ 9,650 $ 89,402 $11,564
9/30/98 $ 8,439 $ 80,526 $ 9,846
12/31/98 $ 8,487 $ 97,646 $ 9,610
3/31/99 $ 8,912 $102,504 $10,284
6/30/99 $10,080 $109,717 $12,179
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
--------------------------------------------------
GLOBAL HARD S&P 500 LIPPER
ASSETS INDEX BENCHMARK(1)
<S> <C> <C> <C>
YTD 18.77% 12.38% 26.73%
1 YEAR 4.46% 22.76% 5.32%
5 YEAR -10.49% 27.84% -8.22%
10 YEAR -3.48% 18.75% -1.72%
INCEPTION 0.06% 18.78% 1.43%
</TABLE>
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 GLOBAL HARD ASSETS
PORTFOLIO (THE "PORTFOLIO"), FORMERLY THE GOLD STOCK PORTFOLIO, AT ITS INCEPTION
WITH A SIMILAR INVESTMENT IN THE S&P 500 INDEX AND THE LIPPER BENCHMARK. FOR THE
PURPOSES OF THIS LINE GRAPH, AND THE ACCOMPANYING TABLE, THE AVERAGE ANNUAL
TOTAL RETURN FOR THE PORTFOLIO REFLECTS ALL RECURRING EXPENSES AND INCLUDES
REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS.
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.
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 POLICIES WHICH MAY INCLUDE A PREMIUM TAX
CHARGE, ACCOUNT FEES, COST OF INSURANCE, MORTALITY EXPENSE AND SURRENDER CHARGE,
AS APPLICABLE.
(1)THE INVESTMENT OBJECTIVE OF THE PORTFOLIO WAS CHANGED ON MAY 1, 1998. THE
LIPPER BENCHMARK REFLECTS THE PERFORMANCE OF THE LIPPER GOLD FUND AVERAGE
FROM AUGUST 1, 1985 THROUGH APRIL 30, 1998 AND THE LIPPER NATURAL RESOURCES
FUND AVERAGE FROM MAY 1, 1998 THROUGH JUNE 30, 1999. THE LIPPER GOLD FUND AND
NATURAL RESOURCES FUND AVERAGES ARE BASED ON THE RETURNS OF ALL MUTUAL FUNDS
WITHIN THE CORRESPONDING OBJECTIVE AS COMPILED BY LIPPER ANALYTICAL SERVICES.
THE AVERAGES INCLUDE THE REINVESTMENT OF ALL DIVIDENDS AND UNDERLYING FUND
OPERATING EXPENSES.
- --------------------------------------------------------------------------------
28
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
GLOBAL HARD ASSETS PORTFOLIO
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
30, 1999 31, 1998 31, 1997 31, 1996 31, 1995 31, 1994
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 7.55 $ 8.92 $ 16.60 $ 16.61 $ 16.25 $ 19.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.07 0.17 0.02 (0.03) 0.05 0.03
Net gains and losses on securities
(both realized and unrealized) 1.35 (1.41) (7.30) 0.45 0.40 (2.65)
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 1.42 (1.24) (7.28) 0.42 0.45 (2.62)
LESS DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.01) (0.13) (0.02) (0.05) (0.03)
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 (0.01) (0.13) (0.40) (0.43) (0.09) (0.13)
Net asset value, end of period $ 8.96 $ 7.55 $ 8.92 $ 16.60 $ 16.61 $ 16.25
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Total Return (A) 18.77% (13.85%) (44.63%) 2.57% 2.76% (13.77%)
Ratios to Average Net Assets:
Expenses 1.31% 1.44% 1.07% 1.04% 1.01% 0.99%
Net investment income 2.06% 2.13% 0.63% (0.11%) 0.24% 0.18%
Portfolio Turnover Rate 127.33% 193.80% 19.70% 64.78% 23.98% 11.12%
Net Assets, At End of Period $5,202,680 $4,333,663 $5,204,654 $7,554,427 $6,867,645 $7,351,625
</TABLE>
(A)Total return assumes reinvestment of all dividends during the period and
does not reflect deduction of account fees and charges that apply to the
separate account or related insurance policies. 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 of less than
one year have not been annualized.
- --------------------------------------------------------------------------------
29
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
GLOBAL HARD ASSETS PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------
COMMON STOCK--83.57%
- ------------------------------------------------------------
Market
Company Shares Value
- ------------------------------------------------------------
<S> <C> <C>
FOREST PRODUCTS & PAPER-13.64%
Abitibi-Consolidated, Inc. 5,000 $ 57,095
Aracruz Celulose, SA, ADR 3,800 83,600
Asia Pulp & Paper
Company, Ltd., ADR+ 2,600 25,025
Bowater, Inc. 2,180 103,005
Georgia-Pacific Group 1,100 52,113
International Paper Co. 1,800 90,900
MacMillan Bloedel, Ltd. 1,500 26,706
Plum Creek Timber Company, L.P. 3,850 119,831
Smurfit-Stone Container Corp.+ 4,000 82,250
St. Laurent Paperboard, Inc.+ 5,500 69,493
-----------
710,018
-----------
INVESTMENT COMPANIES-2.16%
Central Fund of Canada,
Ltd., Class A 30,000 112,500
-----------
112,500
-----------
LODGING-1.62%
Host Marriott Corp. 3,000 35,625
Interstate Hotels Corp.+ 22 92
Wyndham International, Inc.,
Class A+ 10,752 48,384
-----------
84,101
-----------
MINING & METALS - FERROUS & NONFERROUS-9.69%
AK Steel Holdings Corp. 3,200 72,000
Alcan Aluminium, Ltd. 1,500 47,906
Alcoa, Inc. 800 49,500
Billiton, PLC 15,700 54,754
Broken Hill Proprietary Co. 6,000 69,500
Nucor Corp. 1,000 47,438
Pasminco, Ltd. 80,500 88,876
Portman Mining, Ltd. 29,707 12,978
Reynolds Metals Co. 1,040 61,360
-----------
504,312
-----------
<CAPTION>
- ------------------------------------------------------------
COMMON STOCK--CONTINUED
- ------------------------------------------------------------
Market
Company Shares Value
- ------------------------------------------------------------
<S> <C> <C>
MINING & METALS - PRECIOUS-2.99%
Acacia Resources, Ltd. 32,500 $ 37,645
Ashanti Goldfields Co., Ltd. 2,222 13,825
Euro-Nevada Mining Corp. 400 4,757
Gold Fields of South Africa,
Ltd., ADR 4,000 8,000
Gold Fields, Ltd. 426 1,460
Stillwater Mining Co.+ 2,750 89,891
-----------
155,578
-----------
OIL & GAS - DISTRIBUTION & MARKETING-1.41%
Burlington Resources, Inc. 1,700 73,525
-----------
73,525
-----------
OIL & GAS - INTEGRATED-6.72%
BP Amoco, ADR 550 59,675
Exxon Corp. 1,300 100,263
Mobil Corp. 800 79,200
Royal Dutch Petroleum Co. 1,000 60,250
Texaco, Inc. 800 50,000
-----------
349,388
-----------
OIL & GAS PRODUCERS-11.93%
Anadarko Petroleum Corp. 3,750 138,047
Anderson Exploration, Ltd.+ 4,600 60,142
Apache Corp. 3,350 130,650
Berkley Petroleum Corp.+ 2,500 20,861
Chevron Corp. 600 57,113
Marine Drilling Companies, Inc.+ 3,500 47,906
Ocean Energy, Inc.+ 7,200 69,300
Santa Fe International Corp. 4,200 96,600
-----------
620,619
-----------
OIL & GAS SERVICES-8.94%
Baker Hughes, Inc. 3,000 100,500
Cooper Cameron Corp.+ 2,930 108,593
</TABLE>
+Non-income producing security.
See notes to financial statements
- --------------------------------------------------------------------------------
30
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
GLOBAL HARD ASSETS PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)--CONTINUED
<TABLE>
<CAPTION>
- ------------------------------------------------------------
COMMON STOCK--CONTINUED
- ------------------------------------------------------------
Market
Company Shares Value
- ------------------------------------------------------------
<S> <C> <C>
OIL & GAS SERVICES-CONTINUED
Global Industries, Ltd.+ 9,600 $ 123,000
Schlumberger, Ltd. 500 31,844
Stolt Comex Seaway, SA+ 9,300 101,137
-----------
465,074
-----------
PACKAGING & CONTAINERS-0.59%
Fletcher Challenge Canada, Ltd.,
Class A 2,700 30,740
-----------
30,740
-----------
REAL ESTATE-23.88%
AMB Property Corp. 2,000 47,000
Apartment Investment &
Management Co., Class A 1,000 42,750
Bedford Property Investors, Inc. 3,000 53,625
Bentall Corp. 2,000 20,743
Boardwalk Equities, Inc.+ 4,500 45,304
Boston Properties, Inc. 1,500 53,812
Brandywine Realty Trust 2,800 55,475
Brookfield Properties Corp. 5,000 64,696
Cadillac Fairview Corp.+ 3,000 56,625
Carramerica Realty Corp. 1,500 37,500
Cornerstone Properties, Inc. 3,500 55,562
Cresent Real Estate Equities Co. 2,500 59,375
Equity Office Properties Trust 1,000 25,625
Equity Residential Properties Trust 700 31,544
Kilroy Realty Corp. 1,700 41,331
Macerich Co., The 2,000 52,500
Mack-Cali Realty Corp. 2,300 71,156
New Plan Excel Realty Trust 2,200 39,600
Oxford Properties Group, Inc.+ 5,000 52,703
Prentiss Properties Trust 1,700 39,950
Prologis Trust 2,500 50,625
Simon Property Group, Inc. 700 17,763
Starwood Hotels & Resorts
Worldwide 2,000 61,125
TrizecHahn Corp. 5,000 101,875
<CAPTION>
- ------------------------------------------------------------
COMMON STOCK--CONTINUED
- ------------------------------------------------------------
Market
Company Shares Value
- ------------------------------------------------------------
<S> <C> <C>
REAL ESTATE-CONTINUED
Unibail 500 $ 63,989
-----------
1,242,253
-----------
TOTAL COMMON STOCK
(Cost $4,126,513) 4,348,108
-----------
<CAPTION>
- ------------------------------------------------------------
PREFERRED STOCK--4.10%
- ------------------------------------------------------------
Market
Company Shares Value
- ------------------------------------------------------------
<S> <C> <C>
OIL & GAS - INTEGRATED-4.10%
J.P. Morgan Commodity-Indexed
Preferred Securities, Series B+ 11,539 $ 213,472
-----------
TOTAL PREFERRED STOCK
(Cost $150,007) 213,472
-----------
<CAPTION>
- ------------------------------------------------------------
RIGHTS AND WARRANTS--0.13%
- ------------------------------------------------------------
Market
Company Shares Value
- ------------------------------------------------------------
<S> <C> <C>
FOREST PRODUCTS & PAPER-0.06%
Asia Pulp & Paper,
exp. 07/27/00 @ 9.36 USD+ 1,080 $ 2,835
-----------
2,835
-----------
MINING & METALS - PRECIOUS-0.02%
Portman Mining, Ltd.,
exp. 07/12/99 @ 0.66 AUD+ 13,909 64
Randfontein Estates Gold,
exp. 06/01/02 @ 25 ZAR+ 2,470 831
-----------
895
-----------
</TABLE>
+Non-income producing security.
See notes to financial statements.
- --------------------------------------------------------------------------------
31
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
GLOBAL HARD ASSETS PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)--CONTINUED
<TABLE>
<CAPTION>
- ------------------------------------------------------------
RIGHTS AND WARRANTS--CONTINUED
- ------------------------------------------------------------
Market
Company Shares Value
- ------------------------------------------------------------
<S> <C> <C>
REAL ESTATE-0.05%
Unibail, exp. 05/11/04
@130 EUR+ 500 $ 2,413
-------------
2,413
-------------
TOTAL RIGHTS AND WARRANTS
(Cost $769) 6,143
-------------
<CAPTION>
- ------------------------------------------------------------
CORPORATE BONDS--1.55%
- ------------------------------------------------------------
Principal Market
Company Value Value
- ------------------------------------------------------------
<S> <C> <C>
MINING & METALS - PRECIOUS-1.55%
YenGold Structured Note,
4.850%, due 09/30/99+ $100,000 $ 80,400
------------
TOTAL CORPORATE BONDS
(Cost $100,000) 80,400
------------
<CAPTION>
- ------------------------------------------------------------
SHORT-TERM OBLIGATIONS--3.65%
- ------------------------------------------------------------
Principal Market
Company Value Value
- ------------------------------------------------------------
<S> <C> <C>
FINANCIAL SERVICES-3.65%
American Express Capital Corp.,
5.500%, due 07/01/99 $190,000 $ 190,000
-----------
TOTAL SHORT-TERM OBLIGATIONS
(Cost $190,000) 190,000
-----------
TOTAL INVESTMENTS
(Cost $4,567,289) 93.00% 4,838,123
Other assets, less liabilities 7.00 364,557
------- ----------
TOTAL NET ASSETS 100.00% $5,202,680
------- ----------
------- ----------
</TABLE>
+Non-income producing security.
See notes to financial statements.
- --------------------------------------------------------------------------------
32
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
EMERGING GROWTH PORTFOLIO
- -------------------------------------------------------------------------------
"OUR INVESTMENTS IN STOCKS WITH PROVEN BUSINESS MODELS HELPED TO PROTECT THE
PORTFOLIO FROM A DECLINE IN INTERNET STOCK SPECULATION."
- John W. Ballen and Toni Y. Shimura, Portfolio Managers -
- -------------------------------------------------------------------------------
INCEPTION DATE
May 1, 1995
----------------------------------------------
FUND MANAGER
Massachusetts Financial Services Company
----------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGY
To seek long-term growth of capital
by investing primarily in common stocks
of small and medium-sized companies.
----------------------------------------------
NET ASSETS AS OF 6/30/99
$112,326,695
----------------------------------------------
NUMBER OF HOLDINGS
305
----------------------------------------------
PORTFOLIO TURNOVER
75.56%
- -------------------------------------------------------------------------------
----------------------------
IN THIS SECTION
----------------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
JOHN W. BALLEN
EXECUTIVE VICE PRESIDENT
- - Director, MFS Equity Portfolio Management
- - Joined MFS in 1984
- - Serves as MFS senior small capitalization growth equity portfolio manager
- - M.B.A. from Standford University Graduate School of Business
- - B.A. from Harvard
University
----------------------------------------------
TONI Y. SHIMURA
VICE PRESIDENT, INVESTMENTS
- - Joined MFS in 1987
- - M.B.A. from Sloan School of Management, Massachusetts Institute of
Technology
- - B.A. from Wellesley
College
- -------------------------------------------------------------------------------
33
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
EMERGING GROWTH PORTFOLIO
- -------------------------------------------------------------------------------
[CHART]
<TABLE>
<CAPTION>
% of Portfolio++
<S> <C>
Common Stock 91.93%
Short-term Obligations 7.68%
Cash 0.39%
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------
PERCENT OF
TOP TEN EQUITIES PORTFOLIO++
- ----------------------------------------
<S> <C>
Cisco Systems, Inc. 6.34%
Tyco International, Ltd. 6.19%
MCI WorldCom, Inc. 5.59%
Microsoft Corp. 5.32%
Oracle Corp. 5.31%
QUALCOMM, Inc. 2.82%
Time Warner, Inc. 2.61%
Cendant Corp. 2.25%
Global TeleSystems
Group, Inc. 2.16%
AT&T Corp. - Liberty
Media Group 2.04%
<CAPTION>
- ----------------------------------------
PERCENT OF
TOP TEN INDUSTRIES PORTFOLIO++
- ----------------------------------------
<S> <C>
Telecommunications 17.15%
Telecommunications
Equipment 9.57%
Broadcasting 9.01%
Computer Network 7.72%
Manufacturing 7.65%
Computer Software -
Mainframe 7.27%
Computer Software -
Mini & Micro 7.00%
Electronics -
Semiconductors 6.94%
Electronics 2.52%
Multimedia 2.61%
</TABLE>
++Represents market value of
investments plus cash.
For the six months ended June 30, 1999, the Portfolio provided a total
return of 12.14% (including the reinvestment of any distributions). This
compares to a 9.28% return over the same period for the Russell 2000 Total
Return Index (the Russell 2000), an unmanaged index comprised of 2,000 of the
smallest U.S.-domiciled company common stocks that are traded on the New York
Stock Exchange, the American Stock Exchange, and NASDAQ.
The Portfolio's performance was impacted by three important factors.
First, the Portfolio has holdings in small, mid-sized, and large companies.
Until early April, when the market began to broaden, its best-performing
segment was made up of a narrow group of about 50 of the largest-company
growth stocks in the S&P 500, as well as some Internet stocks. As a result,
prices of the large-company stocks, relative to their earnings, reached
excessive levels. Now, investors have moved into a broader range of stocks
that are selling at cheaper prices relative to their earnings. We think the
broadening of the market will continue, and that should be a positive for the
Portfolio because it invests in companies of all market capitalizations.
Second, the Portfolio was affected by the fact that we have not invested
in many of the Internet stocks. While we have been reluctant to own Internet
companies that have unproven business models, we do own established companies
such as Cisco Systems, which provides systems to support Internet traffic,
and Oracle, which is the Internet database of choice. Many of the Internet
stocks, including new companies that have shown no profit, performed very
well in the early part of the year. However, when investors became nervous
over their valuations, they rushed out of them. Our investments in stocks
with proven business models helped to protect the Portfolio from a decline in
Internet stock speculation.
- -------------------------------------------------------------------------------
34
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
EMERGING GROWTH PORTFOLIO
- -------------------------------------------------------------------------------
The third factor has been our exposure to computer software companies. Many
software companies have faced uncertainty over the Year 2000 (Y2K) computer
issue. Earlier this year, it looked like many businesses would reduce their
spending on computer software and systems to give themselves time to ensure
their existing systems were Y2K ready. Although it now looks like spending won't
be cut as much as people feared, the stocks have been impacted. We think the Y2K
issue will be behind us by next spring. At that time, companies such as BMC
Software and Computer Associates, which are dominant in their markets, should be
among the best positioned in what we expect to be a very rapidly growing
industry.
Technology continues to be the Portfolio's largest sector. Companies are
still increasing earnings growth by aggressively downsizing, restructuring,
and outsourcing many business functions. Technology allows these companies to
be more productive without necessarily hiring more people. We believe these
trends will continue both domestically and internationally, and they should
continue to benefit such holdings as Microsoft and Compuware.
Several of the Portfolio's telecommunications and media holdings also have
performed well. MCI WorldCom is a dominant player in telecommunications and
the backbone of worldwide cellular traffic. MediaOne, which is being acquired
by AT&T, has been a big beneficiary of the growth of cable, both for
entertainment and for Internet access. Also, after several years of not being
able to increase prices, health maintenance organizations such as United
HealthCare have been raising their rates, which should make them more
profitable.
[GRAPH]
EMERGING GROWTH PORTFOLIO AND THE RUSSELL 2000 INDEX
Comparison of Change in Value of $10,000 Investment.
<TABLE>
<CAPTION>
EMERGING
GROWTH RUSSELL 2000
PORTFOLIO INDEX
<S> <C> <C>
5/1/95 $10,000 $10,000
6/30/95 $10,962 $10,681
9/30/95 $12,821 $11,728
12/31/95 $13,291 $11,984
3/31/96 $14,225 $12,593
6/30/96 $15,349 $13,241
9/30/96 $15,938 $13,285
12/31/96 $15,724 $13,963
3/31/97 $14,483 $13,244
6/30/97 $17,184 $15,381
9/30/97 $19,507 $17,662
12/31/97 $18,942 $17,062
3/31/98 $22,928 $18,819
6/30/98 $22,878 $17,959
9/30/98 $19,792 $14,341
12/31/99 $25,180 $16,680
3/31/99 $25,977 $15,775
6/30/99 $28,236 $18,229
</TABLE>
- ----------------------------
AVERAGE ANNUAL TOTAL RETURNS
- ----------------------------
<TABLE>
<CAPTION>
RUSSELL
EMERGING 2000
GROWTH INDEX
<S> <C> <C>
YTD 12.14% 9.28%
1 YEAR 23.42% 1.50%
INCEPTION 28.29% 15.50%
</TABLE>
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 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.
THE RUSSELL 2000 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.
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.
- -------------------------------------------------------------------------------
35
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
EMERGING GROWTH PORTFOLIO
- -------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(UNAUDITED) PERIOD FROM
SIX MONTHS MAY 1,
ENDED YEAR ENDED YEAR ENDED YEAR ENDED 1995 TO
JUNE DECEMBER DECEMBER DECEMBER DECEMBER
30, 1999 31, 1998 31, 1997 31, 1996 31, 1995 (A)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 23.04 $ 17.47 $ 15.23 $ 13.29 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (0.05) (0.11) (0.07) (0.05) (0.04)
Net gains and losses on securities
(both realized and unrealized) 2.85 5.85 3.19 2.48 3.33
---------- ----------- ------------ ------------ -----------
Total from investment operations 2.80 5.74 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 (0.06) (0.88) (0.49)
Distributions in excess of capital gains (0.11)
Returns of capital
---------- ----------- ------------ ------------ -----------
Total distributions 0.00 (0.17) (0.88) (0.49) 0.00
Net asset value, end of period $ 25.84 $ 23.04 $ 17.47 $ 15.23 $ 13.29
---------- ----------- ------------ ------------ -----------
---------- ----------- ------------ ------------ -----------
Total Return (B) 12.14% 32.93% 20.47% 18.30% 32.91%
Ratios to Average Net Assets:
Expenses 0.94% 0.94% 1.00% 1.16% 1.63% (C)
Net investment income (0.41%) (0.61%) (0.61%) (0.48%) (0.84%)(C)
Portfolio Turnover Rate 75.56% 77.07% 122.85% 94.58% 30.31% (C)
Net Assets, At End of Period $112,326,695 $95,795,377 $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 Jefferson Pilot Financial Separate Account A.
(B) Total return assumes reinvestment of all dividends during the period and
does not reflect deduction of account fees and charges that apply to the
separate account or related insurance policies. 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 of
less than one year have not been annualized.
(C) Per share data and ratios calculated on an annualized basis.
- -------------------------------------------------------------------------------
36
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- -------------------------------------------------------------------------------
EMERGING GROWTH PORTFOLIO
- -------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)-CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
COMMON STOCK-92.59%
- -------------------------------------------------------------------------------
Market
Company Shares Value
- -------------------------------------------------------------------------------
<S> <C> <C>
ADVERTISING-0.11%
Big Flower Holdings, Inc.+ 200 $ 6,375
Lamar Advertising Co.+ 100 4,093
Omnicom Group, Inc. 1,100 88,000
Outdoor Systems, Inc.+ 400 14,600
Telefonica Publicidad e
Informacion, SA+ 800 15,963
----------
129,031
----------
AEROSPACE & DEFENSE-0.37%
Allied Signal, Inc. 2,525 159,075
Gulfstream Aerospace Corp.+ 100 6,756
Raytheon Co., Class B 3,600 253,350
----------
419,181
----------
AIRLINES-0.00%
SkyWest, Inc. 200 4,988
----------
4,988
----------
AUCTION HOUSE/ART DEALER-0.01%
Sotheby's Holdings, Inc. 200 7,625
----------
7,625
----------
AUTOMOTIVE MANUFACTURING-0.00%
Navistar International Corp.+ 100 5,000
----------
5,000
----------
AUTOMOTIVE PARTS & EQUIPMENT-0.09%
CSK Auto Corp.+ 200 5,400
Dana Corp. 1,900 87,518
Dura Automotive Systems, Inc.+ 100 3,325
----------
96,243
----------
BANKING-0.06%
First Tennessee National Corp. 200 7,663
U.S. Trust Corp. 600 55,500
----------
63,163
----------
<CAPTION>
- -------------------------------------------------------------------------------
COMMON STOCK-CONTINUED
- -------------------------------------------------------------------------------
Market
Company Shares Value
- -------------------------------------------------------------------------------
<S> <C> <C>
BROADCASTING-9.08%
AT&T Corp.-
Liberty Media Group+ 62,900 $ 2,311,575
CBS Corp.+ 12,700 551,656
Cablevision Systems Corp.+ 4,800 336,000
Century Communications
Corp., Class A+ 1,900 87,400
Clear Channel
Communications, Inc.+ 21,444 1,478,295
Comcast Corp. 47,100 1,810,406
Cox Communications, Inc.+ 5,800 213,512
Cox Radio, Inc. 13,800 748,650
Grupo Televisa, SA, ADR+ 2,000 89,625
Hearst-Argyle Television, Inc.+ 200 4,800
Hispanic Broadcasting
Corp., Class A+ 200 15,175
Infinity Broadcasting Corp.+ 5,700 169,575
MediaOne Group, Inc. 29,700 2,208,938
Source Media, Inc.+ 300 5,100
TCA Cable TV, Inc.+ 200 11,100
TV Guide, Inc., Class A+ 200 7,325
USA Networks, Inc.+ 300 12,037
Univision Communications, Inc.+ 1,900 125,400
Westwood One, Inc.+ 200 7,138
----------
10,193,707
----------
BUILDING SERVICES-0.00%
Building One Services Corp.+ 122 1,692
----------
1,692
----------
COMMERCIAL SERVICES-2.28%
Cendant Corp.+ 124,365 2,549,482
Concord EFS, Inc.+ 200 8,463
Quanta Services, Inc.+ 200 8,800
----------
2,566,745
----------
</TABLE>
+Non-income producing security.
See notes to financial statements.
- -------------------------------------------------------------------------------
37
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
EMERGING GROWTH PORTFOLIO
- -------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)-CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
COMMON STOCK-CONTINUED
- -------------------------------------------------------------------------------
Market
Company Shares Value
- -------------------------------------------------------------------------------
<S> <C> <C>
COMPUTER EQUIPMENT & SERVICES-1.44%
Affiliated Computer Services, Inc.+ 200 $ 10,125
BISYS Group, Inc., The+ 3,400 198,900
Ceridian Corp.+ 900 29,418
CheckFree Holdings Corp.+ 230 6,339
Computer Horizons Corp.+ 700 9,668
CSG Systems International, Inc.+ 160 4,190
Electronics for Imaging, Inc.+ 200 10,275
EMC Corp./Mass+ 2,000 110,000
First Data Corp. 23,600 1,154,925
Fiserv, Inc.+ 150 4,697
Insight Enterprises, Inc.+ 150 3,713
Maxtor Corp.+ 400 2,013
Microchip Technology, Inc.+ 170 8,053
Seagate Technology, Inc.+ 200 5,125
SIPEX Corp. 200 4,099
SunGard Data Systems, Inc.+ 1,700 58,650
------------
1,620,190
------------
COMPUTER INFORMATION & TECHNOLOGY-0.13%
ASM Lithography
Holding, N.V.+ 2,000 118,750
Keane, Inc. 1,200 27,150
------------
145,900
------------
COMPUTER INFORMATION SYSTEMS-0.03%
Internet Commerce Corp.+ 1,200 15,600
NCR Corp.+ 140 6,833
Synopsys, Inc.+ 147 8,113
------------
30,546
------------
COMPUTER NETWORK-7.78%
ACT Networks, Inc.+ 300 5,119
Adaptec, Inc.+ 15,600 550,875
Ariba, Inc.+ 200 19,450
Cisco Systems, Inc.+ 111,180 7,171,110
<CAPTION>
- -------------------------------------------------------------------------------
COMMON STOCK-CONTINUED
- -------------------------------------------------------------------------------
Market
Company Shares Value
- -------------------------------------------------------------------------------
<S> <C> <C>
COMPUTER NETWORK-CONTINUED
Equant NV, NY
Registered Shares+ 9,600 $ 903,600
Inktomi Corp.+ 500 65,281
Novell, Inc.+ 300 7,950
Redback Networks, Inc.+ 100 12,556
------------
8,735,941
------------
COMPUTER SOFTWARE - MAINFRAME-7.33%
BMC Software, Inc.+ 12,135 655,290
Business Objects, SA+ 200 7,300
Cadence Design Systems, Inc.+ 27,960 356,490
Compuware Corp.+ 31,000 986,188
Informatica Corp.+ 100 3,563
Manugistics Group, Inc.+ 1,700 24,650
Oracle Corp.+ 161,725 6,004,040
Software.com, Inc.+ 100 2,319
Verity, Inc.+ 3,500 189,656
------------
8,229,496
------------
COMPUTER SOFTWARE - MINI & MICRO-7.05%
Adobe Systems, Inc. 100 8,215
Aspen Technology, Inc.+ 200 2,350
Clarify, Inc.+ 280 11,550
Computer Associates
International, Inc.+ 20,512 1,128,160
IMRglobal Corp.+ 5,700 109,725
Microsoft Corp.+ 66,800 6,024,525
Sun Microsystems, Inc.+ 9,100 626,763
Vantive Corp., The+ 900 10,294
------------
7,921,582
------------
COSMETICS & PERSONAL CARE-0.02%
Carson, Inc.+ 8,200 27,163
------------
27,163
------------
</TABLE>
+Non-income producing security.
See notes to financial statements.
- -------------------------------------------------------------------------------
38
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- -------------------------------------------------------------------------------
EMERGING GROWTH PORTFOLIO
- -------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)-CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
COMMON STOCK-CONTINUED
- -------------------------------------------------------------------------------
Market
Company Shares Value
- -------------------------------------------------------------------------------
<S> <C> <C>
EDUCATIONAL SERVICES-0.09%
Learning Tree
International, Inc.+ 9,700 $ 106,094
------------
106,094
------------
ELECTRICAL EQUIPMENT-0.62%
AES Corp.+ 5,900 342,938
Sanmina Corp.+ 100 7,587
Solectron Corp.+ 5,100 340,106
Whittaker Corp. 300 8,400
------------
699,031
------------
ELECTRONICS-2.54%
Analog Devices, Inc.+ 14,900 747,794
Credence Systems Corp.+ 200 7,425
Electro Scientific Industries, Inc.+ 180 7,521
DII Group, Inc., The+ 300 11,193
Flextronics International, Ltd.+ 160 8,880
Gemstar International
Group, Ltd.+ 3,400 221,850
Gentex Corp.+ 300 8,400
Hitachi, Ltd 42,000 393,849
Jabil Circuit, Inc.+ 160 7,220
Koninklijke Phillips
Electronics, N.V. 4,064 409,956
Maxim Integrated Products, Inc.+ 130 8,645
Micrel, Inc.+ 100 7,400
Oak Industries, Inc.+ 800 34,950
Optical Coating Laboratory, Inc.+ 100 8,362
Powerwave Technologies, Inc.+ 200 6,450
RF Micro Devices, Inc.+ 100 7,463
SCI Systems, Inc.+ 100 4,750
Teradyne, Inc.+ 7,200 516,600
Uniphase Corp.+ 2,600 431,600
------------
2,850,308
------------
<CAPTION>
- -------------------------------------------------------------------------------
COMMON STOCK-CONTINUED
- -------------------------------------------------------------------------------
Market
Company Shares Value
- -------------------------------------------------------------------------------
<S> <C> <C>
ELECTRONICS - SEMICONDUCTORS-6.99%
ARM Holdings, PLC, ADR+ 13,360 $ 465,930
ATMI, Inc.+ 240 7,140
Altera Corp.+ 32,100 1,181,681
Applied Materials, Inc.+ 6,700 494,962
Applied Micro Circuits Corp.+ 200 16,450
Atmel Corp.+ 2,600 68,088
Burr-Brown Corp.+ 200 7,325
Conexant Systems, Inc.+ 200 11,613
Etec Systems, Inc.+ 120 3,990
Galileo Technology, Ltd.+ 500 22,656
GlobeSpan, Inc.+ 100 3,975
LSI Logic Corp.+ 3,600 166,050
Level One Communications, Inc.+ 180 8,808
MIPS Technologies, Inc.+ 200 9,588
Micron Technology, Inc. 3,000 120,938
Motorola, Inc. 20,600 1,951,850
PMC-Sierra, Inc.+ 200 11,787
Photronics, Inc.+ 280 6,860
STMicroelectronics, N.V.,
NY Registered Shares 3,400 235,875
Texas Instruments, Inc. 13,300 1,928,500
Xilinx, Inc.+ 19,700 1,127,825
------------
7,851,891
------------
ENTERTAINMENT & LEISURE-0.01%
Harrah's Entertainment, Inc.+ 300 6,600
Premier Parks, Inc.+ 250 9,188
------------
15,788
------------
ENVIRONMENTAL CONTROLS-0.06%
Waters Corp.+ 1,200 63,750
------------
63,750
------------
</TABLE>
+Non-income producing security.
See notes to financial statements.
- -------------------------------------------------------------------------------
39
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- -------------------------------------------------------------------------------
EMERGING GROWTH PORTFOLIO
- -------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)-CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
COMMON STOCK-CONTINUED
- -------------------------------------------------------------------------------
Market
Company Shares Value
- -------------------------------------------------------------------------------
<S> <C> <C>
FINANCIAL SERVICES-0.03%
Affiliated Managers+ 200 $ 6,038
Finet.com, Inc.+ 800 4,450
Hambrecht & Quist Group+ 200 7,425
Paine Webber Group, Inc. 100 4,675
The CIT Group, Inc. 200 5,775
Waddell & Reed Financial, Inc. 200 5,487
------------
33,850
------------
FOOD SERVICE & RESTAURANTS-0.03%
Applebee's International, Inc.+ 300 9,038
Brinker International, Inc.+ 200 5,437
CEC Entertainment, Inc.+ 200 8,450
CKE Restaurants, Inc. 110 1,788
IHOP Corp.+ 200 4,812
Papa John's International, Inc.+ 100 4,469
------------
33,994
------------
FOREST PRODUCTS & PAPER-1.19%
Bowater, Inc. 900 42,525
International Paper Co. 10,200 515,100
Mead Corp., The 3,600 150,300
Smurfit-Stone Container Corp.+ 300 6,169
Weyerhaeuser Co. 9,100 625,625
------------
1,339,719
------------
HEALTHCARE-0.98%
HEALTHSOUTH Corp.+ 700 10,456
LifePoint Hospitals, Inc.+ 289 3,883
Mid Atlantic Medical
Services, Inc.+ 600 5,925
PacifiCare Health Systems, Inc.+ 100 7,193
Province Healthcare Co.+ 200 3,900
Triad Hospitals, Inc.+ 289 3,902
United Healthcare Corp. 16,900 1,058,363
Wellpoint Health Networks, Inc.+ 100 8,488
------------
1,102,110
------------
<CAPTION>
- -------------------------------------------------------------------------------
COMMON STOCK-CONTINUED
- -------------------------------------------------------------------------------
Market
Company Shares Value
- -------------------------------------------------------------------------------
<S> <C> <C>
HOUSEHOLD PRODUCTS-0.01%
Dial Corp., The 200 $ 7,438
------------
7,438
------------
HUMAN RESOURCES-0.01%
Interim Services, Inc.+ 300 6,188
Metamor Worldwide, Inc.+ 300 7,218
------------
13,406
------------
INSURANCE-0.01%
Ace, Ltd. 200 5,650
------------
5,650
------------
INTERNET SERVICES-0.47%
Covad Communication Group+ 6,550 349,197
Critical Path, Inc.+ 100 5,531
GoTo.com, Inc.+ 100 2,800
Rhythms NetConnections, Inc+ 2,900 169,288
------------
526,816
------------
LODGING-0.02%
Four Seasons Hotels, Inc. 200 8,813
Promus Hotel Corp.+ 382 11,842
------------
20,655
------------
MACHINERY-0.21%
Case Corp. 900 43,313
Caterpillar, Inc. 2,700 162,000
SPX Corp.+ 300 25,050
------------
230,363
------------
MANUFACTURING-7.70%
Callaway Golf Co. 500 7,313
Deere & Co. 800 31,700
Eaton Corp. 4,600 423,200
Honeywell, Inc. 3,600 417,150
Mannesmann, AG+ 4,600 686,418
Martin Marietta Materials, Inc. 200 11,800
</TABLE>
+Non-income producing security.
See notes to financial statements.
- -------------------------------------------------------------------------------
40
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- -------------------------------------------------------------------------------
EMERGING GROWTH PORTFOLIO
- -------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)-CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
COMMON STOCK-CONTINUED
- -------------------------------------------------------------------------------
Market
Company Shares Value
- -------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING-CONTINUED
New Holland, N.V. 500 $ 8,563
Parker-Hannifin Corp. 200 9,150
SI Handling Systems, Inc.+ 4,850 50,925
Timken Co., The 300 5,850
Tyco International, Ltd. 73,899 7,001,930
------------
8,653,999
------------
MARKETING SERVICES-0.01%
Abacus Direct Corp.+ 100 9,150
------------
9,150
------------
MEDICAL - BIOTECHNOLOGY-0.08%
Biogen, Inc.+ 900 57,881
Biomatrix, Inc.+ 200 4,325
Enzon, Inc.+ 500 10,344
Liposome Company, Inc.+ 500 9,563
Transkaryotic Therapies, Inc.+ 200 6,600
------------
88,713
------------
MEDICAL PRODUCTS-0.41%
Boston Scientific Corp.+ 9,900 434,981
C. R. Bard, Inc. 100 4,781
Henry Schein, Inc.+ 100 3,169
IDEXX Laboratories, Inc.+ 300 6,994
QLT PhotoTherapeutics, Inc. 160 8,800
Respironics, Inc.+ 300 4,538
------------
463,263
------------
MINING & METALS - FERROUS & NONFERROUS-0.01%
Cyprus Amax Minerals Co. 500 7,594
------------
7,594
------------
MULTIMEDIA-2.62%
Time Warner, Inc. 40,100 2,947,350
------------
2,947,350
------------
<CAPTION>
- -------------------------------------------------------------------------------
COMMON STOCK-CONTINUED
- -------------------------------------------------------------------------------
Market
Company Shares Value
- -------------------------------------------------------------------------------
<S> <C> <C>
OIL & GAS - DISTRIBUTION & MARKETING-0.92%
Williams Companies, Inc., The 24,301 $1,034,311
----------
1,034,311
----------
OIL & GAS - INTEGRATED-0.01%
Nabors Industries, Inc.+ 400 9,775
----------
9,775
----------
OIL & GAS PRODUCERS-0.69%
Apache Corp. 5,900 230,100
Diamond Offshore Drilling, Inc. 6,500 184,438
Global Marine, Inc.+ 2,700 41,681
Noble Drilling Corp.+ 12,500 246,094
Rowan Companies, Inc.+ 500 9,218
Santa Fe International Corp. 2,600 59,800
----------
771,331
----------
OIL & GAS SERVICES-1.23%
Atwood Oceanics, Inc.+ 200 6,250
BJ Services Co.+ 300 8,831
Baker Hughes, Inc. 5,500 184,250
Cal Dive International, Inc.+ 200 5,976
ENSCO International, Inc. 6,700 133,581
Global Industries, Ltd.+ 100 1,281
Halliburton Co. 21,100 954,775
Smith International, Inc.+ 1,600 69,500
Varco International, Inc.+ 500 5,469
Veritas DGC, Inc.+ 400 7,325
----------
1,377,238
----------
PACKAGING & CONTAINERS-0.01%
Owens-Illinois, Inc.+ 300 9,806
Sealed Air Corp.+ 100 6,488
----------
16,294
----------
</TABLE>
+Non-income producing security.
See notes to financial statements.
- -------------------------------------------------------------------------------
41
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- -------------------------------------------------------------------------------
EMERGING GROWTH PORTFOLIO
- -------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)-CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
COMMON STOCK-CONTINUED
- -------------------------------------------------------------------------------
Market
Company Shares Value
- -------------------------------------------------------------------------------
<S> <C> <C>
PHARMACEUTICAL-0.38%
Alpharma Inc. $6,401
Andrx Corp.+ 200 15,425
ICON, PLC, ADR+ 100 1,963
King Pharmaceuticals, Inc.+ 600 15,525
Millennium Pharmaceuticals, Inc.+ 300 10,800
Professional Detailing, Inc.+ 200 4,700
Sepracor, Inc.+ 4,600 373,750
----------
428,564
----------
PROFESSIONAL SPORTS-0.02%
International Speedway Corp. 100 4,750
Penske Motorsports, Inc.+ 200 9,925
Speedway Motorsports, Inc.+ 200 7,863
----------
22,538
----------
REAL ESTATE-0.01%
Starwood Hotels & Resorts
Worldwide 200 6,113
----------
6,113
----------
RETAIL STORES-2.26%
Abercrombie & Fitch Co.+ 1,600 76,800
AnnTaylor Stores Corp.+ 170 7,650
Autonation, Inc.+ 700 12,469
Bebe Stores, Inc.+ 200 6,800
Best Buy Co., Inc.+ 700 47,250
Boise Cascade Office
Products Corp.+ 300 3,525
CompUSA, Inc.+ 600 4,463
Consolidated Stores Corp.+ 150 4,050
Gap, Inc., The 2,400 120,900
General Instrument Corp.+ 5,200 221,000
General Nutrition
Companies, Inc.+ 400 9,325
Group 1 Automotive, Inc.+ 200 4,225
<CAPTION>
- -------------------------------------------------------------------------------
COMMON STOCK-CONTINUED
- -------------------------------------------------------------------------------
Market
Company Shares Value
- -------------------------------------------------------------------------------
<S> <C> <C>
RETAIL STORES-CONTINUED
Intimate Brands, Inc. 525 $ 24,871
Lands' End+ 300 14,550
Linens 'n Things, Inc.+ 200 8,750
Micro Warehouse, Inc+ 8,900 159,088
Office Depot, Inc.+ 75,100 1,656,894
Sherwin-Williams Co., Th 200 5,550
Staples, Inc.+ 4,025 124,523
Talbots, Inc., The+ 200 7,625
Tiffany & Co. 110 10,615
----------
2,530,923
----------
TELECOMMUNICATIONS-17.27%
ALLTEL Corp. 4,300 307,450
Amdocs, Ltd.+ 400 9,100
Centennial Cellular Corp.+ 200 7,125
CenturyTel, Inc. 9,675 384,581
Cincinnati Bell, Inc. 8,925 222,567
CommNet Cellular, Inc.+ 300 7,875
Copper Mountain Networks, Inc.+ 100 7,725
EchoStar Communications Corp.+ 100 15,344
Frontier Corp. 23,800 1,404,200
Global TeleSystems Group, Inc.+ 30,200 2,446,200
Hyperion
Telecommunications, Inc.+ 500 9,406
ITC^DeltaCom, Inc.+ 300 8,400
Intermedia Communications, Inc.+ 4,700 141,000
L-3 Communications
Holdings, Inc.+ 200 9,663
MCI WorldCom, Inc.+ 73,372 6,328,335
NTL, Inc.+ 7,100 611,931
Nextel Communication Inc.+ 9,500 476,781
Omnipoint Corp.+ 600 17,363
Premiere Technologies, Inc.+ 500 5,750
Qwest Communications
International, Inc.+ 61,700 2,039,956
</TABLE>
+Non-income producing security.
See notes to financial statements.
- -------------------------------------------------------------------------------
42
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- -------------------------------------------------------------------------------
EMERGING GROWTH PORTFOLIO
- -------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)-CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
COMMON STOCK-CONTINUED
- -------------------------------------------------------------------------------
Market
Company Shares Value
- -------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS-CONTINUED
SK Telecom Co., Ltd., ADR 2,700 $ 45,900
Sprint Corp. - Fon Group 31,800 1,679,438
Sprint Corp. - PCS Group+ 29,400 1,679,475
TALK.com, Inc.+ 4,300 48,375
Telecomunicacoes Brasileiras,
SA, ADR+ 11,100 694
Time Warner Telecom, Inc.+ 300 8,700
United States Satellite
Broadcasting Co., Inc.+ 400 7,200
Viatel, Inc.+ 1,300 72,962
Vodafone AirTouch, PLC+ 6,800 1,339,600
Voicestream Wireless Corp.+ 200 5,687
Western Wireless, Corp.+ 200 5,400
WinStar Communications, Inc.+ 900 43,875
-----------
19,398,058
-----------
TELECOMMUNICATIONS EQUIPMENT-9.64%
ADC Telecommunications, Inc.+ 3,700 168,581
Aware, Inc.+ 100 4,612
DSP Communications, Inc.+ 1,900 54,863
General Motors Corp., Class H+ 2,400 135,000
Harmonic, Inc.+ 200 11,487
Linear Technology Corp. 3,700 248,825
Lucent Technologies, Inc. 14,100 950,869
Metromedia Fiber Network, Inc.+ 10,200 366,563
Nokia Oyj, SA, ADR 11,300 1,034,656
Nortel Networks Corp. 20,200 1,753,613
QUALCOMM, Inc.+ 22,200 3,185,700
Scientific-Atlanta, Inc. 4,200 151,200
Tekelec+ 1,300 15,844
Telefonaktiebolaget
LM Ericsson, ADR 28,100 925,544
Tellabs, Inc.+ 27,000 1,824,188
-----------
10,831,545
-----------
<CAPTION>
- -------------------------------------------------------------------------------
COMMON STOCK-CONTINUED
- -------------------------------------------------------------------------------
Number Market
Company of Shares Value
- -------------------------------------------------------------------------------
<S> <C> <C>
TEXTILES & APPAREL-0.01%
Quicksilver, Inc.+ 300 $ 7,819
Tommy Hilfiger Corp.+ 100 7,350
-----------
15,169
-----------
TRANSPORTATION-0.17%
Airborne Freight Corp. 200 5,537
Atlas Air, Inc.+ 150 4,838
Kansas City Southern
Industries, Inc. 2,900 185,056
-----------
195,431
-----------
TRAVEL SERVICES-0.09%
Galileo International, Inc. 1,800 96,188
Pegasus Systems, Inc.+ 200 7,487
-----------
103,675
-----------
TOTAL COMMON STOCK
(Cost $73,334,854) 104,010,090
-----------
</TABLE>
+Non-income producing security.
See notes to financial statements.
- -------------------------------------------------------------------------------
43
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- -------------------------------------------------------------------------------
EMERGING GROWTH PORTFOLIO
- -------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)-CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS
- -------------------------------------------------------------------------------
Principal Market
Company Value Value
- -------------------------------------------------------------------------------
<S> <C> <C>
Government Agency-7.74%
Federal Agricultural Mortgage Corp.,
4.850%, due 07/16/99 $3,200,000 $3,193,533
Federal Farm Credit Bank,
4.980%, due 07/02/99 5,500,000 5,499,239
------------
8,692,772
------------
TOTAL SHORT-TERM OBLIGATIONS
(Cost $8,692,772) 8,692,772
------------
TOTAL INVESTMENTS
(Cost $82,027,626) 100.33% 112,702,862
Other assets, less liabilities (0.33) (376,167)
-------- ------------
TOTAL NET ASSETS 100.00% $112,326,695
-------- ------------
-------- ------------
</TABLE>
See notes to financial statements.
- -------------------------------------------------------------------------------
44
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
CAPITAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
"WE WILL CONTINUE TO FOCUS ONLY ON FAST GROWING COMPANIES CAPABLE OF
OUTPERFORMING THE MARKET, REGARDLESS OF THE MACROECONOMIC ENVIRONMENT."
--Mark Pinto, Portfolio Manager--
- --------------------------------------------------------------------------------
INCEPTION DATE
May 30, 1992
---------------------------------------------
FUND MANAGER
Janus Capital Corporation
---------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGY
To seek capital growth.
Realization of income is not a significant
investment consideration.
---------------------------------------------
NET ASSETS AS OF 6/30/99
$258,702,054
---------------------------------------------
NUMBER OF HOLDINGS
42
---------------------------------------------
PORTFOLIO TURNOVER
12.98%
- --------------------------------------------------------------------------------
---------------------------------------------
IN THIS SECTION
---------------------------------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MARK PINTO, CFA
VICE PRESIDENT
- - Joined Janus Capital
Corporation in 1994
- - 13 years of investment
experience
- - B.A. from Yale University
- - M.B.A. from Harvard
University
- - Chartered Financial
Analyst
- --------------------------------------------------------------------------------
45
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
CAPITAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
[CHART]
<TABLE>
<CAPTION>
% of Portfolio ++
<S> <C>
Common Stock 94.83%
Cash 5.17%
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------
PERCENT OF
TOP TEN EQUITIES PORTFOLIO++
- ---------------------------------------
<S> <C>
Cisco Systems, Inc. 5.37%
Microsoft Corp. 4.59%
Time Warner, Inc. 4.58%
Nokia Oyj, SA 4.17%
Morgan Stanley Dean
Witter, & Co. 3.88%
Comcast Corp. 3.23%
General Electric Co. 3.17%
AT&T Corp. 2.94%
The Charles Schwab Corp. 2.86%
Eli Lilly and Co. 2.56%
<CAPTION>
- ---------------------------------------
PERCENT OF
TOP TEN INDUSTRIES PORTFOLIO++
- ---------------------------------------
<S> <C>
Financial Services 15.09%
Pharmaceutical 9.43%
Broadcasting 8.67%
Multimedia 6.99%
Computer Software - Mini
& Micro 6.64%
Telecommunications
Equipment 6.39%
Computer Network 5.37%
Manufacturing 5.29%
Telecommunications 5.19%
Banking 4.92%
</TABLE>
++ Represents market value of
investments plus cash.
An improving global economic outlook, led most noticeably by improvements
in Asia, raised concerns among investors that the U.S. economy might grow too
hot for its own good. As a result, investors discounted higher interest rates
into share prices and sparked a roll into cyclical shares that began in April
and carried into the waning days of the period. On June 30, however, the Federal
Reserve put to rest the fears of many investors by raising short-term rates by a
mere 25 basis points, sending shares broadly higher and allowing growth stocks
to regain some of their earlier momentum.
The Portfolio outperformed the S&P 500 Index, despite a difficult
environment for growth shares that weighed against a number of our holdings late
in the first half. Pharmaceutical stocks in particular were pressured as higher
interest rates and an uncertain regulatory climate weighed against the entire
sector. Our holdings in Pfizer and Pharmacia & Upjohn suffered as a result, and
we are monitoring developments in the industry closely.
Meanwhile, however, our exposure to the semiconductor industry proved
profitable as ASM Lithography, Applied Materials and Linear Technology gained.
Rapid changes in technology, both among the products that utilize microchips as
well as technology critical to the chips themselves, are boosting demand across
the entire industry. Our media and cable positions also advanced, once again led
by gains in Comcast and MediaOne. Elsewhere in the Portfolio, selected financial
shares including MBNA, Citigroup and American Express
- --------------------------------------------------------------------------------
46
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
CAPITAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
gained despite a relatively dramatic increase in interest rates.
Cable and media stocks remained an important theme within the Portfolio.
AT&T's victory in the bidding war for MediaOne underscored the value of the
nation's cable infrastructure and allowed our positions in both MediaOne and
Comcast, the bidder pushed aside by AT&T's rich offer, to gain nicely. Comcast
emerged from the fracas with $1.5 billion in breakup fees, cash that it
immediately used to increase its national subscriber network. Comcast, MediaOne
and AT&T all finished higher during the second quarter. Meanwhile, our new
position in AT&T Liberty Media Group gained as the premium placed by the market
on the company's impressive content portfolio widened. The company, which is run
by cable veteran John Malone, possesses extraordinary potential and an extremely
deep balance sheet underwritten by AT&T. We are also impressed with Liberty's
array of strategic shareholdings, which includes significant stakes in names
such as Time Warner, Sprint PCS and a number of national cable companies.
Looking forward, inflation and a fear of rising interest rates are likely
to set the market's tone during the second half. While further tightening by
the Federal Reserve is a possibility, evidence of inflation remains
conspicuously absent from most economic data. Meanwhile, we will continue to
focus only on fast growing companies capable of outperforming the market,
regardless of the macroeconomic environment.
[GRAPH]
CAPITAL GROWTH PORTFOLIO AND THE S&P 500 INDEX
Comparison of Change in Value of $10,000 Investment
<TABLE>
<CAPTION>
CAPITAL
GROWTH S&P 500
PORTFOLIO INDEX
<S> <C> <C>
5/1/92 $10,000 $10,000
6/30/92 $10,087 $ 9,958
9/30/92 $10,925 $10,272
12/31/92 $12,724 $10,787
3/31/93 $13,604 $11,256
6/30/93 $13,635 $11,310
9/30/93 $14,752 $11,598
12/31/93 $15,869 $11,867
3/31/94 $15,387 $11,420
6/30/94 $14,720 $11,470
9/30/94 $15,553 $12,031
12/31/94 $15,353 $12,028
3/31/95 $16,045 $13,195
6/30/95 $17,479 $14,451
9/30/95 $20,143 $15,596
12/31/95 $21,762 $16,532
3/31/96 $23,919 $17,512
6/30/96 $25,766 $18,399
9/30/96 $26,224 $19,074
12/31/96 $25,951 $20,767
3/31/97 $26,015 $20,860
6/30/97 $30,540 $24,494
9/30/97 $33,805 $26,326
12/31/97 $33,582 $27,079
3/31/98 $39,281 $30,849
6/30/98 $41,989 $31,864
9/30/98 $36,869 $28,701
12/31/98 $46,502 $34,802
3/31/99 $50,983 $36,534
6/30/99 $53,243 $39,105
</TABLE>
- ----------------------------
AVERAGE ANNUAL TOTAL RETURNS
- ----------------------------
<TABLE>
<CAPTION>
CAPITAL S&P 500
GROWTH INDEX
<S> <C> <C>
YTD 14.49% 12.38%
1 YEAR 26.80% 22.76%
5 YEAR 29.32% 27.84%
INCEPTION 26.28% 20.96%
</TABLE>
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.
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.
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.
- --------------------------------------------------------------------------------
47
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
CAPITAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
30, 1999 31, 1998 31, 1997 31, 1996 31, 1995 31, 1994
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 27.90 $ 21.23 $ 17.26 $ 17.38 $ 13.38 $ 14.26
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.05) (0.09) 0.05 0.03 0.03
Net gains and losses on securities
(both realized and unrealized) 4.05 8.25 4.99 3.24 5.56 (0.49)
----------- -------------- ------------- ------------ ----------- -----------
----------- -------------- ------------- ------------ ----------- -----------
Total from investment operations 4.00 8.16 4.99 3.29 5.59 (0.46)
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 (0.82) (1.49) (0.81) (3.36) (1.56) (0.33)
Distributions in excess of capital gains (0.21) (0.06)
Returns of capital
----------- -------------- ------------- ------------ ----------- -----------
Total distributions (0.82) (1.49) (1.02) (3.41) (1.59) (0.42)
Net asset value, end of period $ 31.08 $ 27.90 $ 21.23 $ 17.26 $ 17.38 $ 13.38
----------- -------------- ------------- ------------ ----------- -----------
----------- -------------- ------------- ------------ ----------- -----------
Total Return (A) 14.49% 38.47% 29.41% 19.25% 41.74% (3.26%)
Ratios to Average Net Assets:
Expenses 1.06% 1.09% 1.09% 1.13% 1.15% 1.22%
Net investment income (0.35%) (0.38%) 0.02% 0.30% 0.21% 0.25%
Portfolio Turnover Rate 12.98% 54.58% 91.66% 147.82% 170.32% 202.04%
Net Assets, At End of Period $268,702,054 $198,002,451 $124,123,995 $70,832,162 $49,853,029 $27,564,086
</TABLE>
(A) TOTAL RETURN ASSUMES REINVESTMENT OF ALL DIVIDENDS DURING THE PERIOD AND
DOES NOT REFLECT DEDUCTION OF ACCOUNT FEES AND CHARGES THAT APPLY TO THE
SEPARATE ACCOUNT OR RELATED INSURANCE POLICIES. 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 OF
LESS THAN ONE YEAR HAVE NOT BEEN ANNUALIZED.
- --------------------------------------------------------------------------------
48
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
CAPITAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30,1999 (UNAUDITED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
COMMON STOCK--96.55%
- --------------------------------------------------------------------------------
Market
Company Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
AIRLINES-3.36%
Southwest Airlines Co. 135,120 $ 4,205,610
UAL Corp.+ 74,350 4,832,750
------------
9,038,360
------------
BANKING-5.01%
Bank of America Corp. 69,049 5,062,155
Bank of New York
Company, Inc. 133,770 4,907,687
Citigroup, Inc. 73,687 3,500,132
------------
13,469,974
------------
BEVERAGES-2.31%
Coca-Cola Enterprises, Inc. 201,985 6,211,039
------------
6,211,039
------------
BROADCASTING-8.83%
AT&T Corp. - Liberty
Media Group+ 110,650 4,066,388
CBS Corp.+ 102,020 4,431,494
Comcast Corp. 229,630 8,826,403
MediaOne Group, Inc. 85,870 6,386,581
------------
23,710,866
------------
COMPUTER EQUIPMENT & SERVICES-4.47%
Dell Computer Corp.+ 150,415 5,565,355
EMC Corp./Mass+ 117,370 6,455,350
------------
12,020,705
------------
COMPUTER INFORMATION & TECHNOLOGY-1.85%
ASM Lithography Holding, N.V. 83,875 4,980,078
------------
4,980,078
------------
COMPUTER NETWORK-5.47%
Cisco Systems, Inc.+ 227,696 14,686,392
------------
14,686,392
------------
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
- --------------------------------------------------------------------------------
Market
Company Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
COMPUTER SOFTWARE - MINI & MICRO-6.76%
Microsoft Corp.+ 139,110 $12,545,983
Sun Microsystems, Inc.+ 81,525 5,615,035
------------
18,161,018
------------
ELECTRONICS - SEMICONDUCTORS-2.26%
Applied Materials, Inc.+ 82,350 6,083,606
------------
6,083,606
------------
ENTERTAINMENT & LEISURE-3.81%
Autotote Corp.+ 4,672 11,096
Carnival Corp. 140,715 6,824,677
MGM Grand, Inc.+ 69,385 3,399,865
------------
10,235,638
------------
FINANCIAL SERVICES-15.37%
American Express Co. 41,370 5,383,271
Charles Schwab Corp., The 71,137 7,816,178
Fannie Mae 77,900 5,326,413
Freddie Mac+ 71,330 4,137,140
Goldman Sachs Group, Inc. 19,000 1,372,750
MBNA Corp. 216,500 6,630,313
Morgan Stanley
Dean Witter & Co. 103,595 10,618,487
------------
41,284,552
------------
MANUFACTURING-5.38%
General Electric Co. 76,770 8,675,010
Tyco International, Ltd. 61,055 5,784,961
------------
14,459,971
------------
MULTIMEDIA-7.11%
Time Warner, Inc. 170,440 12,527,340
Viacom, Inc., Class B+ 149,775 6,590,100
------------
19,117,440
------------
PHARMACEUTICAL-9.60%
Eli Lilly and Co. 97,795 7,004,567
Pfizer, Inc. 59,725 6,554,819
Pharmacia & Upjohn, Inc. 97,595 5,544,616
</TABLE>
+Non-income producing security.
See notes to financial statements.
- --------------------------------------------------------------------------------
49
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
CAPITAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30,1999 (UNAUDITED)-CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
- --------------------------------------------------------------------------------
Market
Company Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
PHARMACEUTICAL-CONTINUED
Warner-Lambert Co. 96,400 $ 6,687,750
------------
25,791,752
------------
RETAIL STORES-3.16%
Home Depot, Inc., The 74,235 4,783,518
Kroger Co., The+ 132,760 3,708,982
------------
8,492,500
------------
TELECOMMUNICATIONS-5.29%
AT&T Corp. 144,084 8,041,688
Sprint Corp. - PCS Group 41,465 2,368,688
Vodafone Group, PLC 19,280 3,798,160
------------
14,208,536
------------
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
- --------------------------------------------------------------------------------
Market
Company Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Telecommunications Equipment-6.51%
Linear Technology Corp. 90,250 $ 6,069,313
Nokia Oyj, SA 124,630 11,411,434
------------
17,480,747
------------
TOTAL COMMON STOCK
(Cost $160,988,568) 259,433,174
------------
TOTAL INVESTMENTS
(Cost $160,988,568) 96.55% 259,433,174
Other assets, less liabilities 3.45 9,268,880
------- ------------
TOTAL NET ASSETS 100.00% $268,702,054
------- ------------
------- ------------
</TABLE>
+Non-income producing security.
See notes to financial statements.
- --------------------------------------------------------------------------------
50
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
SMALL COMPANY PORTFOLIO
- --------------------------------------------------------------------------------
"WHILE SMALL-COMPANY STOCKS HAVE BEGUN TO FIND FAVOR ONCE AGAIN, WE BELIEVE THAT
THE RETURN POTENTIAL IN THE SMALL-CAP GROWTH SECTOR HAS YET TO BE FULLY
APPRECIATED, AND WE EXPECT IMPROVING MARKET CONDITIONS FOR SMALL-CAP GROWTH
STOCKS."
--Stephen J. McGruder, Portfolio Manager--
- --------------------------------------------------------------------------------
INCEPTION DATE
April 18, 1986
-------------------------------------------------
FUND MANAGER
Lord, Abbett and Company
-------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGY
To achieve growth of capital by investing in a
diversified portfolio primarily of U.S. equity
securities issued by small companies.
-------------------------------------------------
NET ASSETS AS OF 6/30/99
$81,637,793
-------------------------------------------------
NUMBER OF HOLDINGS
127
-------------------------------------------------
PORTFOLIO TURNOVER
117.79%
- --------------------------------------------------------------------------------
-------------------------------
IN THIS SECTION
-------------------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STEPHEN J. MCGRUDER,
CFA
PARTNER
- - Joined Lord, Abbett in 1995
- - Nearly 30 years of industry experience
- - B.S. from Stanford University
- - B.A. in Business Economics from Claremont McKenna College
- - Chartered Financial Analyst
- ---------------------------------------------------------------
- --------------------------------------------------------------------------------
51
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
SMALL COMPANY PORTFOLIO
- --------------------------------------------------------------------------------
[CHART]
<TABLE>
% of Portfolio++
<S> <C>
Common Stock- 92.92%
Cash- 7.08%
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------
PERCENT OF
TOP TEN EQUITIES PORTFOLIO++
- --------------------------------------
<S> <C>
Plantronics, Inc. 3.03%
Pacific Sunwear of
California, Inc. 2.21%
Security First
Technology, Inc. 2.13%
Orbital Sciences Corp. 1.99%
IMRglobal Corp. 1.84%
Ames Department Stores, Inc. 1.78%
Stillwater Mining Co. 1.60%
SLI, Inc. 1.58%
Nielsen Media Research, Inc. 1.49%
The Kroll-O'Gara Co. 1.49%
<CAPTION>
- --------------------------------------
PERCENT OF
TOP TEN INDUSTRIES PORTFOLIO++
- --------------------------------------
<S> <C>
Computer Software -
Mini & Micro 9.33%
Manufacturing 8.45%
Textiles & Apparel 7.84%
Retail Stores 7.12%
Commercial Services 6.05%
Healthcare 5.17%
Telecommunications
Equipment 5.12%
Computer Equipment &
Services 3.73%
Food Products 2.85%
Electronics 2.83%
</TABLE>
++Represents market value of investments plus cash.
THE PORTFOLIO INVESTS IN STOCKS OF DEVELOPING COMPANIES, WHICH INVOLVE GREATER
RISK AND ARE GENERALLY MORE VOLATILE THAN INVESTMENTS IN MATURE COMPANIES.
In May of this year, Lord, Abbett & Co. became the investment manager for
the Jefferson Pilot Variable Small Company Portfolio. Lord, Abbett is pleased to
be part of Jefferson Pilot's variable product offerings and looks forward to
serving your investment needs over the long term.
OUR INVESTMENT STRATEGY
In managing the Small Company Portfolio, we look for companies with market
capitalizations less than $1.3 billion that have the potential to grow
dramatically over several years. A recent Morningstar report (March,1999)
outlined our team's investment strategy:
"MANAGER STEPHEN MCGRUDER FOLLOWS ONE OF THE MORE DISCIPLINED STRATEGIES IN
THE SMALL-GROWTH CATEGORY. HE AND HIS TEAM OF SEVEN ANALYSTS START WITH A SERIES
OF GROWTH, BALANCE SHEET AND OTHER SCREENS TO NARROW THE SMALL-CAP UNIVERSE TO
400 OR SO NAMES. MCGRUDER AND HIS ANALYSTS THEN SCRUTINIZE THESE FIRMS, VETTING
THEIR NUMBERS AND DOING COMPANY, CUSTOMER AND SUPPLIER VISITS TO DETERMINE WHICH
ENJOY THE BEST LONG-TERM BUSINESS PLANS AND EARNINGS PROSPECTS. ALL THESE
ATTRACTIVE ATTRIBUTES MAKE THIS FUND ONE OF THE SMALL-GROWTH CATEGORY'S BEST."
MARKET REVIEW
Although we experienced a broadening of the market during the second
quarter -more stocks participated in the market's move higher than had been the
case in earlier quarters - small-cap growth stocks did not advance as strongly
as their value-oriented counterparts. Internet stocks, which were subject to
some volatility, influenced performance in the small-cap growth sector.
PORTFOLIO REVIEW
Careful bottom-up stock selection contributed to the Portfolio's positive
return. For example, two of our holdings in the Internet banking arena
participated in a mid-quarter technology advance. The Portfolio is currently
- --------------------------------------------------------------------------------
52
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
SMALL COMPANY PORTFOLIO
- --------------------------------------------------------------------------------
maintaining larger weightings in the technology and healthcare sectors than
it has in the past, though it still carries less exposure to these sectors than
the Russell 2000 Growth Index. We remain underweighted in financial services
stocks, because we believe this area generally does not offer the long-term
earnings growth potential we seek. The Portfolio was overweighted in the
consumer discretionary sector, which includes companies in the retail and
leisure industries, where we uncovered several opportunities as a result of our
ongoing, proprietary research.
OUTLOOK
While valuations are high for many Internet-related issues, we believe that
there are companies in this sector possessing fundamental strength and excellent
growth potential. Going forward, we expect to make select investments in this
area. We are also confident that opportunities we have identified in the retail
and healthcare sectors may enhance return potential for the Portfolio.
In our opinion, renewed investor confidence and an anticipated global
economic expansion create a favorable environment for earnings growth among
smaller companies. While small-company stocks have begun to find favor once
again, we believe that the return potential in the small-cap growth sector has
yet to be fully appreciated, and we expect improving market conditions for
small-cap growth stocks.
[GRAPH]
SMALL COMPANY PORTFOLIO, S&P 500 AND
RUSSELL 2000 GROWTH INDEX(1)
Comparison of Change in Value of $10,000 Investment.
<TABLE>
<CAPTION>
SMALL RUSSELL 2000
COMPANY S&P 500 GROWTH
PORTFOLIO INDEX INDEX
<S> <C> <C> <C>
4/18/86 $10,000 $10,000 $10,000
6/30/86 $10,372 $10,712 $10,400
9/30/86 $9,863 $9,965 $8,710
12/31/86 $10,565 $10,522 $8,806
3/31/87 $11,914 $12,768 $11,200
6/30/87 $12,813 $13,408 $11,045
9/30/87 $13,698 $14,294 $11,403
12/31/87 $10,395 $11,071 $7,883
3/31/88 $12,119 $11,701 $9,256
6/30/88 $13,176 $12,474 $9,844
9/30/88 $13,151 $12,514 $9,573
12/31/88 $13,129 $12,898 $9,489
3/31/89 $14,183 $13,809 $10,194
6/30/89 $15,054 $15,025 $10,853
9/30/89 $16,226 $16,632 $11,823
12/31/89 $15,669 $16,971 $11,403
3/31/90 $15,299 $16,459 $11,100
6/30/90 $15,505 $17,489 $11,801
9/30/90 $12,071 $15,097 $8,721
12/31/90 $12,759 $16,443 $9,418
3/31/91 $15,336 $18,823 $12,295
6/30/91 $15,663 $18,782 $11,869
9/30/91 $16,103 $19,785 $13,149
12/31/91 $16,999 $21,431 $14,238
3/31/92 $18,699 $20,983 $14,628
6/30/92 $17,992 $21,291 $12,871
9/30/92 $18,527 $21,961 $13,121
12/31/92 $21,506 $23,062 $15,345
3/31/93 $22,691 $24,066 $15,070
6/30/93 $22,524 $24,180 $15,504
9/30/93 $23,910 $24,802 $16,951
12/31/93 $24,925 $25,377 $17,397
3/31/94 $24,982 $24,422 $16,688
6/30/94 $24,337 $24,527 $15,636
9/30/94 $26,469 $25,727 $17,097
12/31/94 $26,834 $25,721 $16,974
3/31/95 $28,241 $28,217 $17,905
6/30/95 $29,736 $30,902 $19,682
9/30/95 $33,164 $33,351 $21,920
12/31/95 $34,809 $35,352 $22,244
3/31/96 $37,702 $37,447 $23,521
6/30/96 $39,076 $39,346 $24,896
9/30/96 $38,570 $40,788 $24,684
12/31/96 $40,537 $44,408 $24,749
3/31/97 $38,833 $44,602 $22,153
6/30/97 $44,729 $52,383 $26,042
9/30/97 $52,097 $56,302 $30,448
12/31/97 $50,105 $57,913 $27,953
3/31/98 $53,395 $65,974 $31,274
6/30/98 $51,272 $68,146 $29,478
9/30/98 $39,894 $61,380 $22,886
12/31/98 $44,205 $74,429 $28,296
3/31/99 $40,113 $78,132 $27,821
6/30/99 $43,794 $83,630 $31,925
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- -----------------------------------------------
RUSSELL 2000
SMALL S&P 500 GROWTH
COMPANY INDEX INDEX(1)
<S> <C> <C> <C>
YTD -0.93% 12.38% 12.82%
1 YEAR -14.58% 22.76% 8.30%
5 YEAR 12.47% 27.84% 15.33%
10 YEAR 11.27% 18.75% 11.39%
INCEPTION 11.83% 17.44% 9.21%
</TABLE>
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 SMALL COMPANY
PORTFOLIO (THE "PORTFOLIO") FORMERLY THE DOMESTIC GROWTH STOCK PORTFOLIO, AT ITS
INCEPTION WITH A SIMILAR INVESTMENT IN THE S&P 500 INDEX AND THE RUSSELL 200
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.
THE S&P 500 INDEX AND THE RUSSELL 2000 GROWTH INDEX ARE UNMANAGED INDICES 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.
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.
(1) EFFECTIVE MAY 1, 1999, THE PERFORMANCE BENCHMARK OF THE PORTFOLIO HAS BEEN
CHANGED FROM THE S&P 500 INDEX TO THE RUSSELL 2000 GROWTH INDEX. THE
RUSSELL 2000 GROWTH INDEX BETTER REPRESENTS THE INVESTMENT STYLE AND
OBJECTIVE OF THE PORTFOLIO BY INCLUDING A BROADER BLEND OF SMALL
CAPITALIZATION STOCKS.
- --------------------------------------------------------------------------------
53
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
SMALL COMPANY PORTFOLIO
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
30, 1999 31, 1998 31, 1997 31, 1996 31, 1995 31, 1994
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.24 $ 20.43 $ 18.19 $ 17.87 $ 15.94 $ 16.14
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.03 0.22 0.09 0.06 0.15 0.09
Net gains and losses on securities
(both realized and unrealized) (0.22) (2.59) 4.17 2.85 4.48 1.12
----------- ----------- ----------- ----------- ----------- ------------
Total from investment operations (0.19) (2.37) 4.26 2.91 4.63 1.21
LESS DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.02) (0.19) (0.09) (0.06) (0.15) (0.09)
Dividends in excess of net
investment income
Distributions from capital gains (0.37) (1.63) (1.93) (2.53) (2.55) (1.32)
Distributions in excess of capital gains
Returns of capital
----------- ----------- ----------- ----------- ----------- ------------
Total distributions (0.39) (1.82) (2.02) (2.59) (2.70) (1.41)
Net asset value, end of period $ 15.66 $ 16.24 $ 20.43 $ 18.19 $ 17.87 $ 15.94
----------- ----------- ----------- ----------- ----------- ------------
----------- ----------- ----------- ----------- ----------- ------------
Total Return (A) (0.93%) (11.78%) 23.60% 16.46% 29.72% 7.66%
Ratios to Average Net Assets:
Expenses 0.86% 0.87% 0.83% 0.85% 0.87% 0.89%
Net investment income 0.36% 1.23% 0.47% 0.31% 0.95% 0.63%
Portfolio Turnover Rate 117.79% 43.06% 52.92% 49.75% 64.17% 46.65%
Net Assets, At End of Period $81,637,793 $78,343,648 $81,505,107 $62,166,366 $48,517,886 $31,458,666
</TABLE>
(A) Total return assumes reinvestment of all dividends during the period and
does not reflect deduction of account fees and charges that apply to the
separate account or related insurance policies. 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 of
less than one year have not been annualized.
- --------------------------------------------------------------------------------
54
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
SMALL COMPANY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
COMMON STOCK--93.36%
- ----------------------------------------------------------
Market
Company Shares Value
- ----------------------------------------------------------
<S> <C> <C>
AEROSPACE & DEFENSE-2.77%
Armor Holdings, Inc.+ 60,300 $ 629,381
Orbital Sciences Corp.+ 69,000 1,630,125
---------------
2,259,506
---------------
BANKING-0.54%
Net.B@nk, Inc.+ 11,700 444,600
---------------
444,600
---------------
BUILDING CONSTRUCTION-1.07%
Crossmann Communities, Inc.+ 30,000 871,875
---------------
871,875
---------------
CHEMICALS-0.98%
OM Group, Inc. 23,100 796,950
---------------
796,950
---------------
COMMERCIAL SERVICES-6.08%
Caribiner International, Inc.+ 57,400 355,162
Cornell Corrections, Inc.+ 26,700 438,881
Healthcare Services Group, Inc.+ 44,500 433,875
Iron Mountain, Inc.+ 24,400 698,450
McGrath RentCorp 21,900 438,000
Nielsen Media Research, Inc.+ 41,900 1,225,575
TeleTech Holdings, Inc.+ 83,300 843,413
U S Liquids, Inc.+ 25,300 528,138
---------------
4,961,494
---------------
COMPUTER EQUIPMENT & SERVICES-3.75%
Advanced Digital
Information Corp.+ 16,200 656,100
CheckFree Holdings Corp.+ 12,500 344,531
Ciber, Inc.+ 30,200 577,575
Computer Horizons Corp.+ 23,200 320,450
In Focus Systems, Inc.+ 24,900 373,500
Insight Enterprises, Inc.+ 15,700 388,575
MicroTouch Systems, Inc.+ 27,000 401,625
---------------
3,062,356
---------------
<CAPTION>
- ----------------------------------------------------------
COMMON STOCK--CONTINUED
- ----------------------------------------------------------
Market
Company Shares Value
- ----------------------------------------------------------
<S> <C> <C>
COMPUTER INFORMATION & TECHNOLOGY-0.86%
Mastech Corp.+ 20,900 $ 389,262
National Computer Systems, Inc. 9,300 313,875
---------------
703,137
---------------
COMPUTER NETWORK-1.18%
Fvc.com, Inc.+ 34,100 221,650
Xircom, Inc.+ 24,600 739,537
---------------
961,187
---------------
COMPUTER SOFTWARE - MAINFRAME-1.58%
Landmark Systems Corp.+ 49,200 510,450
Transaction Systems
Architects, Inc.+ 20,000 780,000
---------------
1,290,450
---------------
COMPUTER SOFTWARE - MINI & MICRO-9.37%
Activision, Inc.+ 35,200 512,600
Best Software, Inc.+ 26,600 428,925
Caere Corp.+ 39,300 520,725
Cambridge Technology
Partners, Inc.+ 57,700 1,013,356
Dendrite International, Inc.+ 14,000 505,750
IMRglobal Corp.+ 78,600 1,513,050
MICROS Systems, Inc.+ 34,900 1,186,600
National Instruments Corp.+ 10,500 423,938
Sequent Computer
Systems, Inc.+ 42,500 754,375
THQ, Inc.+ 11,500 330,625
Visio Corp.+ 12,100 460,556
---------------
7,650,500
---------------
CONSULTING SERVICES-2.48%
AnswerThink Consulting
Group, Inc.+ 12,800 323,200
Cognicase, Inc.+ 16,000 262,000
Diamond Technology
Partners, Inc.+ 14,700 328,912
Metzler Group, Inc.+ 13,000 359,125
</TABLE>
+Non-income producing security.
See notes to financial statements.
- --------------------------------------------------------------------------------
55
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
SMALL COMPANY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)--CONTINUED
<TABLE>
<CAPTION>
- ----------------------------------------------------------
COMMON STOCK--CONTINUED
- ----------------------------------------------------------
Market
Company Shares Value
- ----------------------------------------------------------
<S> <C> <C>
CONSULTING SERVICES-CONTINUED
SCB Computer
Technology, Inc.+ 43,400 $ 227,850
USWeb Corp.+ 23,600 523,625
---------------
2,024,712
---------------
COSMETICS & PERSONAL CARE-0.39%
Steiner Leisure, Ltd.+ 10,400 315,250
---------------
315,250
---------------
ELECTRONICS-2.85%
Ampex Corp.+ 66,600 337,163
Analogic Corp.+ 17,600 547,251
LeCroy Corp.+ 27,300 646,669
Sawtek, Inc.+ 17,300 793,637
---------------
2,324,720
---------------
ELECTRONICS - SEMICONDUCTORS-0.68%
American Xtal Technology, Inc.+ 23,200 552,450
---------------
552,450
---------------
ENTERTAINMENT & LEISURE-0.41%
Family Golf Centers, Inc.+ 43,200 332,100
---------------
332,100
---------------
Financial Services-0.03%
Federal Agricultural
Mortgage Corp.+ 400 27,450
---------------
27,450
---------------
FOOD PRODUCTS-2.86%
Horizon Organic
Holding Corp.+ 22,300 326,137
Northland Cranberries, Inc. 30,000 253,125
Smithfield Foods, Inc.+ 19,400 648,687
Twinlab Corp.+ 26,200 225,158
<CAPTION>
- ----------------------------------------------------------
COMMON STOCK--CONTINUED
- ----------------------------------------------------------
Market
Company Shares Value
- ----------------------------------------------------------
<S> <C> <C>
FOOD PRODUCTS-CONTINUED
United Natural Foods, Inc.+ 17,500 $ 433,125
Wild Oats Markets, Inc.+ 14,900 452,123
---------------
2,338,355
---------------
HEALTHCARE-5.19%
CareMatrix Corp.+ 56,200 698,988
Express Scripts, Inc+ 8,400 505,575
Hanger Orthopedic
Group, Inc.+ 46,300 656,881
Hooper Holmes, Inc. 48,200 982,075
Matria Healthcare, Inc.+ 73,100 529,975
Sunrise Assisted Living, Inc.+ 24,800 864,900
---------------
4,238,394
---------------
HOLDING COMPANIES-0.44%
TransMontaigne, Inc.+ 28,800 361,800
---------------
361,800
---------------
HUMAN RESOURCES-1.10%
Butler International , Inc.+ 24,150 323,006
Labor Ready, Inc.+ 17,600 572,000
---------------
895,006
---------------
INTERNET SERVICES-2.50%
Beyond.com Corp.+ 10,200 292,613
Security First
Technologies Corp.+ 38,800 1,750,850
---------------
2,043,463
---------------
MANUFACTURING-8.49%
Artesyn Technologies+ 31,700 703,344
Cable Design
Technologies Corp.+ 21,000 324,187
Flow International Corp.+ 31,100 336,269
Identix, Inc.+ 41,400 406,237
JLG Industries, Inc. 16,000 326,000
</TABLE>
+Non-income producing security.
See notes to financial statements.
- --------------------------------------------------------------------------------
56
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
SMALL COMPANY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)--CONTINUED
<TABLE>
<CAPTION>
- ----------------------------------------------------------
COMMON STOCK--CONTINUED
- ----------------------------------------------------------
Market
Company Shares Value
- ----------------------------------------------------------
<S> <C> <C>
MANUFACTURING-CONTINUED
Matthews International Corp. 23,600 $ 699,150
MotivePower Industries, Inc.+ 46,600 838,800
RadiSys Corp.+ 30,900 1,201,238
SLI, Inc.+ 48,000 1,296,000
Technitrol, Inc. 24,900 803,025
---------------
6,934,250
---------------
MARKETING SERVICES-1.05%
M/A/R/C, Inc. 21,900 317,550
NFO Worldwide, Inc.+ 38,300 536,200
---------------
853,750
---------------
MEDICAL PRODUCTS-2.29%
ATS Medical, Inc.+ 49,300 388,237
Arrow International, Inc. 14,200 367,425
Maxxim Medical, Inc.+ 27,200 634,100
Orthofix International, N.V.+ 15,300 227,588
Theragenics Corp.+ 36,700 254,606
---------------
1,871,956
---------------
MINING & METALS - PRECIOUS-1.61%
Stillwater Mining Co.+ 40,100 1,310,769
---------------
1,310,769
---------------
OIL & GAS - INTEGRATED-1.12%
Eagle Geophysical, Inc.+ 2,494 1,870
Stone Energy Corp.+ 21,500 911,063
---------------
912,933
---------------
Oil & Gas Producers-1.93%
Evergreen Resources, Inc.+ 26,800 675,025
Harken Energy Corp.+ 115,300 187,362
Vintage Petroleum, Inc. 66,100 710,575
---------------
1,572,962
---------------
<CAPTION>
- ----------------------------------------------------------
COMMON STOCK--CONTINUED
- ----------------------------------------------------------
Market
Company Shares Value
- ----------------------------------------------------------
<S> <C> <C>
OIL & GAS SERVICES-1.74%
Core Laboratories, N.V.+ 57,000 $ 794,438
Seitel, Inc.+ 38,800 628,075
---------------
1,422,513
---------------
PHARMACEUTICAL-1.65%
Albany Molecular
Research, Inc.+ 11,500 342,125
ICOS Corp.+ 24,600 1,003,988
---------------
1,346,113
---------------
PROFESSIONAL SPORTS-0.88%
Championship Auto
Racing Teams, Inc.+ 24,100 721,494
---------------
721,494
---------------
REAL ESTATE-0.74%
Catellus Development Corp.+ 16,000 248,000
Healthcare Realty Trust, Inc. 16,800 352,800
---------------
600,800
---------------
RETAIL STORES-7.15%
Ames Department Stores, Inc.+ 32,000 1,460,000
Cost Plus, Inc.+ 23,600 1,073,800
dELiA*s, Inc.+ 15,700 211,950
General Nutrition
Companies, Inc.+ 35,000 815,937
Pacific Sunwear of
California, Inc.+ 74,250 1,809,844
Party City Corp.+ 12,500 23,875
Stage Stores Inc.+ 68,100 442,650
---------------
5,838,056
---------------
SECURITY SYSTEMS-1.49%
Kroll-O'Gara Co., The+ 55,300 1,220,056
---------------
1,220,056
---------------
</TABLE>
+Non-income producing securities.
See notes to financial statements.
- --------------------------------------------------------------------------------
57
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
SMALL COMPANY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)--CONTINUED
<TABLE>
<CAPTION>
- ----------------------------------------------------------
COMMON STOCK--CONTINUED
- ----------------------------------------------------------
Market
Company Shares Value
- ----------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS-1.54%
Boston Communications
Group+ 37,400 $ 502,563
GST Telecommunications+ 27,900 367,931
TALK.com, Inc.+ 34,100 383,625
---------------
1,254,119
---------------
TELECOMMUNICATIONS EQUIPMENT-5.14%
CellStar Corp.+ 89,400 704,025
PairGain Technologies, Inc.,+ 48,600 558,900
Plantronics, Inc.+ 38,200 2,487,775
SBA Communications Corp.+ 46,100 446,594
---------------
4,197,294
---------------
TEXTILES & APPAREL-7.87%
G & K Services, Inc. 7,600 398,050
Kenneth Cole
Productions, Inc.+ 22,500 627,187
Quicksilver, Inc.+ 44,100 1,149,356
Shoe Carnival, Inc.+ 34,900 593,300
Skechers U.S.A., Inc.+ 46,300 486,150
St. John Knits, Inc. 11,000 321,750
Tarrant Apparel Group+ 26,100 593,775
Timberland Co., The+ 17,000 1,157,063
Tropical Sportswear
Int'l Corp.+ 22,100 704,438
Vans, Inc.+ 34,600 396,277
---------------
6,427,346
---------------
<CAPTION>
- ----------------------------------------------------------
COMMON STOCK--CONTINUED
- ----------------------------------------------------------
Market
Company Shares Value
- ----------------------------------------------------------
<S> <C> <C>
TRAVEL SERVICES-1.16%
American Classic Voyages Co.+ 6,600 $ 158,400
Pegasus Systems, Inc.+ 21,000 786,188
---------------
944,588
---------------
UTILITIES - ELECTRIC & GAS-0.40%
Independent Energy
Holdings, PLC+ 24,200 329,725
---------------
329,725
---------------
TOTAL COMMON STOCK
(Cost $74,605,482) 76,214,479
TOTAL INVESTMENTS
(Cost $74,605,482) 93.36% 76,214,479
Other assets, less liabilities 6.64 5,423,314
-------- -------------
TOTAL NET ASSETS 100.00% $ 81,637,793
-------- -------------
-------- -------------
</TABLE>
+Non-income producing security.
See notes to financial statements.
- --------------------------------------------------------------------------------
58
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
"OUR INVESTMENT FOCUS WILL CONTINUE TO BE ON THOSE GREAT COMPANIES THAT ARE
DELIVERING THE EARNINGS GROWTH AND BENEFITING FROM THE SECULAR FORCES DRIVING
THE U.S. ECONOMY,"
--Ronald C. Ognar, Portfolio Manager--
- --------------------------------------------------------------------------------
INCEPTION DATE
January 1, 1998
- --------------------------------------------------------------------------------
FUND MANAGER
Strong Capital Management, Inc.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGY
To seek capital growth by investing primarily
in equity securities.
- --------------------------------------------------------------------------------
NET ASSETS AS OF 6/30/99
$18,454,950
- --------------------------------------------------------------------------------
NUMBER OF HOLDINGS
124
- --------------------------------------------------------------------------------
PORTFOLIO TURNOVER
137.21%
-----------------------
IN THIS SECTION
-----------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RONALD C. OGNAR,
CFA
- - Joined Strong in 1993
- - 31 years of investment experience
- - B.S. from University of Illinois
- - Chartered Financial Analyst
- --------------------------------------------------------------------------------
59
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
[CHART]
[EDGAR REPRESENTATION OF DATA POINTS USED IN
PRINTED GRAPHIC]
<TABLE>
<CAPTION>
% of Portfolio++
<S> <C>
Common Stock - 92.89%
Cash - 7.11%
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------
PERCENT OF
TOP TEN EQUITIES PORTFOLIO++
- ---------------------------------------
<S> <C>
Cisco Systems, Inc. 4.29%
Kohl's Corp. 3.03%
MCI WorldCom, Inc. 3.01%
Uniphase Corp. 2.26%
Tyco International, Ltd. 2.17%
Tellabs, Inc. 1.92%
Lowes Companies, Inc. 1.89%
Allergan, Inc. 1.57%
Tandy Corp. 1.49%
First Data Corp. 1.47%
<CAPTION>
- ---------------------------------------
PERCENT OF
TOP TEN INDUSTRIES PORTFOLIO++
- ---------------------------------------
<S> <C>
Retail Stores 16.63%
Computer Network 7.11%
Telecommunications 6.47%
Telecommunications
Equipment 5.94%
Electronics 5.50%
Computer Software -
Mini & Micro 5.09%
Computer Equipment &
Services 4.95%
Electronics -
Semiconductors 3.73%
Manufacturing 3.54%
Pharmaceutical 2.38%
</TABLE>
++ Represents market value of
investments plus cash.
The year began with a continuation of the fourth quarter broad rally in the
equity markets, yet uncertainty over the fate of the Brazilian economy and
rising interest rates prompted several prominent strategists to recommend
reducing exposure to equities. Investors decided to take some money off the
table until it was clear which direction the Fed was leaning. Positive economic
releases in late February prompted a large cap run to new record highs. A change
in market leadership started to unfold early in the second quarter, as the
market performance broadened out to both smaller and mid-cap stocks, as well as
to the more economically sensitive sectors. Continued strength in U.S. economy,
along with the prospects for recovery in the emerging markets, drove this shift
in sentiment.
The first quarter GDP growth released in late April seemed to spark the
revolution of inflationary concerns. Fears heightened in May as the April CPI
number showed that inflation had grown at its fastest pace in the last nine
years. The Federal Reserve compounded the fear by adopting an official
tightening bias on interest rates. The combined affect seemed to entrap the
stock market in a trading range, while sending the bond market on a decline, as
rates rapidly escalated through the 6% barrier. Rising interest rates created
volatility in many high-growth and high-multiple market sectors, such as
pharmaceuticals, technology, and consumer growth stocks. Employment releases
continued to remain strong throughout the quarter, although there were no
apparent pressures on wages. Investors continued to be entranced with each piece
of data released. When the May economic data showed a benign inflation
environment, investors began a quarter end rally in stocks and bonds, despite
the indications from the Fed that there would be a 25bp increase on June 30th.
Over the period, the Portfolio was up 15.16% relative to the S&P 500
Index's 12.38% return. Strong performances
- --------------------------------------------------------------------------------
60
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
from the telecommunications, semiconductors, computer software, and computer
workstation stocks led the outperformance in the first half of 1999.
Technology stocks remain heavily favored in the Portfolio. As the Internet
grows in depth and scope, E-commerce software enablers and companies involved in
the expansion of the infrastructure are likely to prosper. After a horrid 1998,
the prospects for leading semiconductor companies are beginning to improve,
driven by the rapid build-out of the Internet, the demand for service companies
to provide improved transmission capacity (bandwidth), and signs of
stabilization in Asian demand. Although Y2K fears will likely resurface in some
form as we approach the new year, more and more companies are declaring
themselves compliant. Demand patterns in technology spending will be impacted,
the question is by how much and to what extent. We will monitor the situation
closely and hope to capitalize on opportunities when they present themselves.
The broadening that occurred during the second quarter has healthy
implications for the stock market going forward. However, the market may remain
in a trading range until interest rates stabilize and the risks of further Fed
tightening abate. While there are only pockets of inflation, a watchful eye will
be on the recoveries in Japan and Europe, as well as U.S. wage rates, for any
hints of a general rise in inflation. Our investment focus will continue to be
on those great companies that are delivering the earnings growth and benefiting
from the secular forces driving the U.S. economy, such as technology and
communications, as well as the healthy environment for the U.S. consumer.
GROWTH PORTFOLIO AND RUSSELL MIDCAP GROWTH INDEX
Comparison of Change in Value of $10,000 Investment.
[CHART]
[EDGAR REPRESENTATION OF DATA POINTS USED IN
PRINTED GRAPHIC]
<TABLE>
<CAPTION>
GROWTH RUSSELL MIDCAP
PORTFOLIO GROWTH INDEX
<S> <C> <C>
1/1/98 $10,000 $10,000
2/28/98 $10,638 $10,786
3/31/98 $11,160 $11,238
4/30/98 $11,060 $11,391
5/31/98 $10,716 $10,923
6/30/98 $11,691 $11,232
7/31/98 $11,443 $10,751
8/31/98 $9,702 $8,699
9/30/98 $10,420 $9,356
10/31/98 $10,605 $10,045
11/30/98 $11,371 $10,723
12/31/98 $13,114 $11,834
1/29/99 $13,990 $12,188
2/26/99 $13,225 $11,592
3/31/99 $14,487 $12,238
4/30/99 $14,472 $12,795
5/31/99 $13,951 $12,631
6/30/99 $15,102 $13,514
</TABLE>
- -------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- -------------------------------------
<TABLE>
<CAPTION>
RUSSELL
MIDCAP
GROWTH
GROWTH INDEX
<S> <C> <C>
YTD 15.16% 14.19%
1 YEAR 29.17% 20.31%
INCEPTION 31.79% 22.30%
</TABLE>
COMMENCEMENT OF OPERATIONS JANUARY 1, 1998. PAST PERFORMANCE IS NOT PREDICTIVE
OF FUTURE PERFORMANCE.
THIS GRAPH COMPARES AN INITIAL $10,000 INVESTMENT MADE IN THE GROWTH PORTFOLIO
(THE "PORTFOLIO") AT ITS INCEPTION WITH A SIMILAR INVESTMENT IN THE RUSSELL
MIDCAP 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.
THE RUSSELL MIDCAP 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.
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.
- --------------------------------------------------------------------------------
61
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED
JUNE DECEMBER
30, 1999 31, 1998
<S> <C> <C>
Net asset value, beginning of period $ 13.11 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (0.03) (0.05)
Net gains and losses on securities
(both realized and unrealized) 2.02 3.16
------------- ------------
Total from investment operations 1.99 3.11
LESS DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income
Dividends in excess of net investment income
Distributions from capital gains (0.17)
Distributions in excess of capital gains
Returns of capital
------------- ------------
Total distributions (0.17) 0.00
Net asset value, end of period $ 14.93 $ 13.11
------------- ------------
------------- ------------
Total Return (A) 15.16% 31.14%
Ratios to Average Net Assets:
Expenses 1.00% 1.08%
Net investment income (0.59%) (0.47%)
Portfolio Turnover Rate 137.21% 283.36%
Net Assets, At End of Period $18,454,950 $11,543,742
</TABLE>
(A) Total return assumes reinvestment of all dividends during the period and
does not reflect deduction of account fees and charges that apply to the
separate account or related insurance policies. 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 of
less than one year have not been annualized.
- --------------------------------------------------------------------------------
62
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
COMMON STOCK--92.32%
- --------------------------------------------------------------------------------
Market
Company Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
ADVERTISING-1.05%
Outdoor Systems, Inc.+ 5,300 $ 193,450
-------------
193,450
-------------
AIRLINES-0.46%
Midwest Express Holdings, Inc.+ 2,500 85,000
-------------
85,000
-------------
BANKING-0.42%
First Tennessee National Corp. 2,000 76,625
-------------
76,625
-------------
BROADCASTING-2.32%
AT&T Corp. - Liberty
Media Group+ 4,000 147,000
Clear Channel
Communications, Inc.+ 2,800 193,025
Infinity Broadcasting Corp.+ 3,000 89,250
-------------
429,275
-------------
CHEMICALS-0.50%
Praxair, Inc. 1,900 92,981
-------------
92,981
-------------
COMMERCIAL SERVICES-0.96%
Concord EFS, Inc.+ 4,200 177,713
-------------
177,713
-------------
COMPUTER EQUIPMENT & SERVICES-4.92%
Apple Computer, Inc.+ 3,200 148,200
Comverse Technology, Inc.+ 3,500 264,250
First Data Corp. 5,500 269,156
Fiserv, Inc.+ 2,000 62,625
Microchip Technology, Inc.+ 1,900 90,013
Sykes Enterprises, Inc.+ 2,200 73,425
-------------
907,669
-------------
<CAPTION>
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
- --------------------------------------------------------------------------------
Market
Company Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
COMPUTER INFORMATION & TECHNOLOGY-1.32%
ASM Lithography Holding, N.V.+ 1,800 $ 106,875
Macromedia, Inc.+ 1,500 52,875
Rambus, Inc.+ 900 82,969
-------------
242,719
-------------
COMPUTER INFORMATION SYSTEMS-0.59%
New Era of Networks, Inc.+ 900 39,544
PRI Automation, Inc.+ 1,900 68,875
-------------
108,419
-------------
COMPUTER NETWORK-7.07%
Cisco Systems, Inc.+ 12,200 786,900
Computer Network
Technology Corp.+ 4,000 86,500
Equant NV, NY Registered
Shares+ 1,100 103,537
Inktomi Corp.+ 1,000 130,562
Transwitch Corp.+ 2,700 127,913
Yahoo!, Inc.+ 400 68,900
-------------
1,304,312
-------------
COMPUTER PRINTERS-0.57%
Lexmark International
Group, Inc.+ 1,600 105,700
-------------
105,700
-------------
COMPUTER SOFTWARE - MAINFRAME-2.13%
BroadVision, Inc.+ 1,200 88,500
Business Objects, SA, ADR+ 2,800 102,200
Compuware Corp.+ 3,000 95,437
Marimba, Inc.+ 900 47,419
Verity, Inc.+ 1,100 59,606
-------------
393,162
-------------
COMPUTER SOFTWARE - MINI & MICRO-5.05%
America Online, Inc.+ 1,400 154,700
Citrix Systems, Inc.+ 4,000 226,000
Intuit, Inc.+ 1,000 90,125
</TABLE>
+Non-income producing security.
See notes to financial statements.
- --------------------------------------------------------------------------------
63
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED) - CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
- --------------------------------------------------------------------------------
Market
Company Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
COMPUTER SOFTWARE - MINI & MICRO-CONTINUED
Microsoft Corp.+ 2,700 $ 243,506
Rational Software Corp.+ 2,500 82,344
RealNetworks, Inc.+ 600 41,325
VERITAS Software Corp.+ 1,000 94,937
-------------
932,937
-------------
ELECTRICAL EQUIPMENT-0.51%
Solectron Corp.+ 1,400 93,363
-------------
93,363
-------------
ELECTRONICS-5.46%
Jabil Circuit, Inc.+ 2,000 90,250
Maxim Integrated Products, Inc.+ 1,700 113,050
Optical Coating Laboratory, Inc.+ 700 58,537
Tandy Corp. 5,600 273,700
Teradyne, Inc.+ 800 57,400
Uniphase Corp.+ 2,500 415,000
-------------
1,007,937
-------------
ELECTRONICS - SEMICONDUCTORS-3.71%
Altera Corp.+ 700 25,769
LSI Logic Corp.+ 2,000 92,250
Lam Research Corp.+ 2,400 112,050
Novellus Systems, Inc.+ 1,300 88,725
PMC-Sierra, Inc.+ 2,800 165,025
Xilinx, Inc.+ 3,500 200,375
-------------
684,194
ENVIRONMENTAL CONTROLS-1.15%
Waters Corp.+ 4,000 212,500
-------------
212,500
-------------
FINANCIAL SERVICES-1.23%
Charles Schwab Corp., The 500 54,937
Goldman Sachs Group, Inc.+ 600 43,350
MGIC Investment Corp. 1,300 63,213
Metris Companies, Inc. 1,600 65,200
-------------
226,700
-------------
<CAPTION>
- --------------------------------------------------------------------------------
Market
Company Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
FOOD SERVICE & RESTAURANTS-1.74%
Outback Steakhouse, Inc.+ 3,700 $ 145,456
Starbucks Corp.+ 4,700 176,544
-------------
322,000
-------------
HEALTHCARE-1.97%
Bausch & Lomb, Inc. 1,500 114,750
Cardinal Health, Inc. 800 51,300
HEALTHSOUTH Corp.+ 5,900 88,131
MedQuist, Inc.+ 2,500 109,375
-------------
363,556
-------------
HOME FURNISHINGS-0.71%
Leggett & Platt, Inc. 1,900 52,844
Pier 1 Imports, Inc. 7,000 78,750
-------------
131,594
-------------
INSURANCE-0.49%
Marsh & McLennan
Companies, Inc. 1,200 90,600
-------------
90,600
-------------
INTERNET SERVICES-1.13%
Covad Communication Group+ 3,900 207,919
-------------
207,919
-------------
INVESTMENT COMPANIES-0.22%
E*TRADE Group, Inc.+ 1,000 39,938
-------------
39,938
-------------
MANUFACTURING-3.51%
Harley-Davidson, Inc. 1,500 81,562
Kaydon Corp. 1,600 53,800
Rockwell International Corp. 1,900 115,425
Tyco International, Ltd. 4,200 397,950
-------------
648,737
-------------
MEDICAL - BIOTECHNOLOGY-1.75%
Biogen, Inc.+ 4,000 257,250
Centocor, Inc.+ 1,400 65,275
-------------
322,525
-------------
</TABLE>
+Non-income producing security.
See notes to financial statements.
- --------------------------------------------------------------------------------
64
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED) - CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
- --------------------------------------------------------------------------------
Market
Company Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
MEDICAL PRODUCTS-1.32%
Boston Scientific Corp.+ 2,000 $ 87,875
Medtronic, Inc. 2,000 155,750
-------------
243,625
-------------
MEDICAL SUPPLIES-0.87%
Pe Corp. - Pe Biosystems Group 1,400 160,650
-------------
160,650
-------------
MULTIMEDIA-0.44%
Time Warner, Inc. 1,100 80,850
-------------
80,850
-------------
OIL & GAS PRODUCERS-1.97%
Apache Corp. 1,500 58,500
Rowan Companies, Inc.+ 11,500 212,031
Union Pacific Resources
Group, Inc. 5,700 92,981
-------------
363,512
-------------
OIL & GAS SERVICES-2.29%
BJ Services Co.+ 3,000 88,312
Cooper Cameron Corp.+ 2,200 81,538
Ensco International, Inc. 6,400 127,600
Smith International, Inc.+ 2,900 125,969
-------------
423,419
-------------
PHARMACEUTICAL-2.37%
Allergan, Inc. 2,600 288,600
Andrx Corp.+ 1,400 107,975
Sepracor, Inc.+ 500 40,625
-------------
437,200
-------------
PROFESSIONAL SPORTS-0.18%
International Speedway Corp. 700 33,250
-------------
33,250
-------------
<CAPTION>
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
- --------------------------------------------------------------------------------
Market
Company Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
RETAIL STORES-16.53%
99 Cents Only Stores+ 1,100 $ 54,931
Abercrombie & Fitch Co.+ 1,800 86,400
American Eagle Outfitters, Inc.+ 5,200 236,600
BJ's Wholesale Club, Inc.+ 4,100 123,256
Bed Bath & Beyond, Inc.+ 1,500 57,750
Best Buy Co., Inc.+ 3,800 256,500
Circuit City Stores - Circuit
City Group 2,500 232,500
Dollar Tree Stores, Inc.+ 3,400 149,600
Gap, Inc., The 1,500 75,563
Home Depot, Inc., The 4,000 257,750
Kohl's Corp.+ 7,200 555,750
Kroger Co., The+ 3,200 89,400
Limited, Inc., The 1,800 81,675
Linens `n Things, Inc.+ 3,500 153,125
Lowe's Companies, Inc. 6,100 345,794
Staples, Inc.+ 3,100 95,906
Wal-Mart Stores, Inc. 1,900 91,675
Walgreen Co. 3,600 105,750
-------------
3,049,925
-------------
SECURITY SYSTEMS-0.84%
VeriSign, Inc.+ 1,800 155,250
-------------
155,250
-------------
TELECOMMUNICATIONS-6.43%
Frontier Corp. 3,500 206,500
Global Crossing Ltd.+ 819 34,859
MCI WorldCom, Inc.+ 6,400 552,000
Qwest Communications
International, Inc.+ 4,200 138,862
Sprint Corp. - PCS Group 1,800 102,825
Telephone and Data
Systems, Inc. 1,300 94,981
Viatel, Inc.+ 1,000 56,125
-------------
1,186,152
-------------
</TABLE>
+Non-income producing security.
See notes to financial statements.
- --------------------------------------------------------------------------------
65
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED) - CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
- --------------------------------------------------------------------------------
Market
Company Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS EQUIPMENT-5.91%
Antec Corp.+ 1,800 $ 57,713
Broadcom Corp.+ 1,000 144,563
General Instrument Corp.+ 2,400 102,000
Level 3 Communications, Inc.+ 1,300 78,081
Lucent Technologies, Inc. 3,795 255,925
QUALCOMM, Inc.+ 700 100,450
Tellabs, Inc.+ 5,200 351,325
-------------
1,090,057
-------------
TEXTILES & APPAREL-1.66%
Nike, Inc., Class B 3,100 196,269
Tommy Hilfiger Corp.+ 1,500 110,250
-------------
306,519
-------------
<CAPTION>
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
- --------------------------------------------------------------------------------
Market
Company Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
UTILITIES - ELECTRIC & GAS-0.57%
Montana Power Co. 1,500 $ 105,750
-------------
105,750
-------------
TOTAL COMMON STOCK
(Cost $14,224,105) 17,037,684
-------------
TOTAL INVESTMENTS
(Cost $14,224,105) 92.32% 17,037,684
Other assets, less liabilities 7.68 1,417,266
-------- -----------
TOTAL NET ASSETS 100.00% $18,454,950
-------- -----------
-------- -----------
</TABLE>
+Non-income producing security.
See notes to financial statements.
- --------------------------------------------------------------------------------
66
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
GROWTH AND INCOME PORTFOLIO
- --------------------------------------------------------------------------------
"WE BELIEVE STOCK PERFORMANCE COULD VARY GREATLY BY SECTOR AND COMPANY,
NECESSITATING CONTINUED CAREFUL ANALYSIS OF COMPANY FUNDAMENTALS."
--Brian S. Posner, Portfolio Manager--
- --------------------------------------------------------------------------------
INCEPTION DATE
May 1, 1992
-----------------------------------------------------
FUND MANAGER
Warburg Pincus Asset Management, 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 current income.
-----------------------------------------------------
NET ASSETS AS OF 6/30/99
$79,019,379
-----------------------------------------------------
NUMBER OF HOLDINGS
87
-----------------------------------------------------
PORTFOLIO TURNOVER
51.41%
- --------------------------------------------------------------------------------
-------------------------------
IN THIS SECTION
-------------------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
-------------------------------
- ----------------------------------------------------------
BRIAN S. POSNER
MANAGING DIRECTOR
- - Joined Warburg Pincus in 1997
- - 13 years industry experience
- - Previously with Fidelity Investments since 1987
- - Managed Fidelity Equity Income II from 4/92 to 12/96
- - M.B.A. from University of Chicago
- - B.A. from Northwestern University
- ----------------------------------------------------------
- --------------------------------------------------------------------------------
67
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
GROWTH AND INCOME PORTFOLIO
- --------------------------------------------------------------------------------
[CHART]
<TABLE>
<CAPTION>
% of Portfolio++
<S> <C>
Common Stock 87.59%
Corporate Bonds 0.37%
Preferred Stock 0.48%
Cash 11.56%
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------
PERCENT OF
TOP TEN EQUITIES PORTFOLIO++
- ------------------------------------
<S> <C>
Royal Dutch
Petroleum, Inc. 3.13%
Comerica, Inc. 2.88%
Intel Corp. 2.11%
International Business
Machines Corp. 2.11%
Bell Atlantic Corp. 2.09%
Lehman Brothers
Holdings, Inc. 2.01%
Unisys Corp. 1.95%
Philip Morris
Companies, Inc. 1.88%
BMC Software, Inc. 1.85%
BP Amoco, ADR 1.78%
<CAPTION>
- ------------------------------------
PERCENT OF
TOP TEN INDUSTRIES PORTFOLIO++
- ------------------------------------
<S> <C>
Financial Services 9.81%
Retail Stores 8.04%
Banking 7.41%
Oil & Gas - Integrated 6.65%
Manufacturing 5.82%
Telecommunications 4.66%
Computer Information
Systems 4.06%
Aerospace & Defense 3.26%
Automotive Parts &
Equipment 2.79%
Automotive Manufacturing 2.62%
</TABLE>
++Represents market value of investments plus cash.
The Jefferson Pilot Variable Fund Growth & Income Portfolio (the
"Portfolio") posted a gain of 14.95% year-to-date through June 30, 1999 vs.
gains of 11.59% and 12.38% for the Lipper Growth & Income Funds Index and S&P
500 Index, respectively. The Portfolio's return since Warburg Pincus assumed
management on 8/31/97 was 17.95%.
While the first quarter of 1999 was one of considerable volatility for the
U.S. stock market -- reflecting an uncertain mix of healthy economic data and
some highly visible earnings disappointments -- the second quarter was a
positive one for the U.S. stock market, with most major equity indexes advancing
at least modestly, despite rising bond yields through the period. The market's
rally was paced by a surge in value-type stocks (e.g., recently out-of-favor
cyclical issues). This contrasted sharply with 1998 and the first quarter of
1999, when a handful of large-cap growth stocks propelled the market's continued
advance. Driving the market's rotation toward value/cyclical stocks over the
April-through-June span were signs of a robust economy and positive profit
surprises announced by some highly visible commodity-sensitive companies.
Against this backdrop, a number of the Portfolio's holdings saw good
performances, supported by the more-hospitable environment for value-type stocks
through the period (we continued to employ a value-based investment approach),
in particular its energy, retail, capital-equipment and industrial holdings.
Also contributing positively to the Portfolio's return were its computer
holdings, which were aided by an improving inventory backdrop.
Few material changes were made to the Portfolio during the first half of
1999 in terms of sector/industry concentration, remaining well-diversified. One
of our largest areas of concentration remained financial stocks, where we
continued to have a modest overweighting. We maintained significant exposure to
the financial-services sector, in part, due to our optimism regarding pricing
power in the insurance area. We also had a significant weighting in the banks
and savings & loan sector. We had a limited weighting here through much of 1998,
but saw a number of buying opportunities emerge late last year and early this
year as credit-quality concerns weighed on the sector. We judged specific bank
stocks to be oversold, believing that the market was overly pessimistic
regarding certain
- --------------------------------------------------------------------------------
68
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
GROWTH AND INCOME PORTFOLIO
- --------------------------------------------------------------------------------
companies' loan-growth prospects (our increased weighting here was also based on
a steepening yield curve, which can enhance profit margins for lenders). We
continued, through the quarter, to find the best values among banks that
concentrate primarily on commercial (e.g., industrial) loans.
We also maintained a weighting in the capital-equipment sector. We made
little in the way of noteworthy changes here, other than to eliminate a position
which had appreciated to reach our sell target. Notwithstanding the healthy
rally exhibited by these stocks during the quarter, we remain optimistic
regarding the group's longer-term prospects. A number of capital-equipment
companies continue to operate well below full capacity, and hence, offer
significant "operating leverage" (such companies can potentially keep a firm
hand on unit costs during periods of rising demand for their products).
Another noteworthy area of concentration for the Portfolio remained the
technology area, most specifically the computer sector. We maintained a bias
here toward equipment companies with relatively healthy balance sheets and
leadership status within their respective markets. We continued to largely avoid
the electronics sector, reflecting our ongoing concerns regarding valuations
here. That aside, we did add one electronics stock during the quarter that we
considered to be attractive, in part due to the company's increasingly efficient
use of capital.
Sector weightings we lowered somewhat included telecommunications &
equipment, reflecting our general concerns over relatively high valuations in
the area. We also reduced our exposure to the health-care sector.
Looking ahead to the next several months, we see ample grounds for optimism
regarding equities. For one, the economy's buoyancy stands to support earnings
growth, particularly within certain areas. The interest-rate backdrop,
meanwhile, could stabilize, given the Federal Reserve's stated near-term
disinclination to raise rates in the wake of its June 30 increase. That said, we
believe stock performance could vary greatly by sector and company,
necessitating continued careful analysis of company fundamentals.
[GRAPH]
GROWTH AND INCOME PORTFOLIO AND THE S&P 500 INDEX
Comparison of Change in Value of $10,000 Investment.
<TABLE>
<CAPTION>
GROWTH & S&P 500
INCOME PORTFOLIO INDEX
<S> <C> <C>
5/1/92 $10,000 $10,000
6/30/92 $ 9,696 $ 9,958
9/30/92 $ 9,824 $10,272
12/31/92 $10,820 $10,787
3/31/93 $11,276 $11,256
6/30/93 $11,300 $11,310
9/30/93 $11,895 $11,598
12/31/93 $12,436 $11,867
3/31/94 $12,070 $11,420
6/30/94 $11,996 $11,470
9/30/94 $12,248 $12,031
12/31/94 $11,910 $12,028
3/31/95 $12,871 $13,195
6/30/95 $14,352 $14,451
9/30/95 $15,496 $15,596
12/31/95 $15,908 $16,532
3/31/96 $16,489 $17,512
6/30/96 $17,365 $18,399
9/30/96 $17,639 $19,074
12/31/96 $19,548 $20,767
3/31/97 $19,874 $20,860
6/30/97 $22,999 $24,494
9/30/97 $25,028 $26,326
12/31/97 $25,200 $27,079
3/31/98 $28,197 $30,849
6/30/98 $28,530 $31,864
9/30/98 $24,440 $28,701
12/31/98 $28,384 $34,802
3/31/99 $28,195 $36,534
6/30/99 $32,628 $39,105
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- ----------------------------------
<S> <C> <C>
GROWTH & S&P 500
INCOME INDEX
YTD 14.95% 12.38%
1 YEAR 14.37% 22.76%
5 YEAR 22.15% 27.84%
INCEPTION 17.94% 20.96%
</TABLE>
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.
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.
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.
- --------------------------------------------------------------------------------
69
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
GROWTH AND INCOME PORTFOLIO
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
30, 1999 31, 1998 31, 1997 31, 1996 31, 1995 31, 1994
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 19.12 $ 17.11 $ 16.91 $ 14.41 $ 11.22 $ 12.35
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.09 0.15 0.15 0.18 0.15 0.13
Net gains and losses on securities
(both realized and unrealized) 2.75 2.01 4.67 3.12 3.62 (0.65)
------------- ------------- ------------- ------------- ------------- --------------
Total from investment
operations 2.84 2.16 4.82 3.30 3.77 (0.52)
LESS DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.15) (0.15) (0.18) (0.15) (0.13)
Dividends in excess of net
investment income
Distributions from capital gains (0.15) (4.21) (0.62) (0.29) (0.48)
Distributions in excess of capital gains (0.26) (0.14)
Returns of capital
------------- ------------- ------------- ------------- ------------- --------------
Total distributions (0.15) (0.15) (4.62) (0.80) (0.58) (0.61)
Net asset value, end of period $ 21.81 $ 19.12 $ 17.11 $ 16.91 $ 14.41 $ 11.22
------------- ------------- ------------- ------------- ------------- --------------
------------- ------------- ------------- ------------- ------------- --------------
Total Return (A) 14.95% 12.63% 28.92% 22.88% 33.58% (4.24%)
Ratios to Average Net Assets:
Expenses 0.85% 0.86% 0.85% 0.88% 0.92% 1.10%
Net investment income 0.90% 0.87% 1.03% 1.39% 1.50% 1.52%
Portfolio Turnover Rate 51.41% 66.19% 129.53% 35.69% 32.30% 38.17%
Net Assets, At End of Period $79,019,379 $65,309,530 $39,678,076 $23,711,696 $13,126,023 $5,610,472
</TABLE>
(A) Total return assumes reinvestment of all dividends during the period and
does not reflect deduction of account fees and charges that apply to the
separate account or related insurance policies. 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 of
less than one year have not been annualized.
- --------------------------------------------------------------------------------
70
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
GROWTH AND INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
COMMON STOCK-87.78%
- ----------------------------------------------------------
Market
Company Shares Value
- ----------------------------------------------------------
<S> <C> <C>
ADVERTISING-0.63%
WPP Group PLC, ADR 5,800 $ 497,350
-------------
497,350
-------------
AEROSPACE & DEFENSE-3.27%
AlliedSignal, Inc. 10,800 680,400
Gulfstream Aerospace Corp.+ 8,400 567,525
Litton Industries, Inc.+ 8,250 591,938
Raytheon Co., Class A 10,800 743,850
-------------
2,583,713
-------------
APPLIANCES-0.65%
Premark International, Inc. 13,800 517,500
-------------
517,500
-------------
AUTOMOTIVE MANUFACTURING-2.62%
Ford Motor Co. 24,600 1,388,363
Navistar International Corp.+ 13,700 685,000
-------------
2,073,363
-------------
AUTOMOTIVE PARTS & EQUIPMENT-2.80%
Dana Corp. 8,500 391,531
Federal-Mogul Corp. 26,400 1,372,800
Meritor Automotive, Inc. 17,600 448,800
-------------
2,213,131
-------------
BANKING-7.43%
AmSouth Bancorp. 15,200 352,450
Bank One Corp. 22,700 1,352,069
Citigroup, Inc. 8,275 393,063
Comerica, Inc. 38,400 2,282,400
Compass Bancshares, Inc. 13,200 359,700
Golden West Financial Corp. 7,300 715,400
UnionBanCal Corp. 11,500 415,437
-------------
5,870,519
-------------
BEVERAGES-0.67%
Anheuser-Busch Companies, Inc. 7,450 528,484
-------------
528,484
-------------
<CAPTION>
- ----------------------------------------------------------
COMMON STOCK-CONTINUED
- ----------------------------------------------------------
Market
Company Shares Value
- ----------------------------------------------------------
<S> <C> <C>
BUILDING MATERIALS-1.30%
USG Corp. 18,400 $ 1,030,400
------------
1,030,400
------------
CHEMICALS-1.66%
Ferro Corp. 21,250 584,375
Rhone-Poulenc, SA 15,850 731,081
------------
1,315,456
------------
COMPUTER EQUIPMENT & SERVICES-1.32%
Hewlett-Packard Co. 10,400 1,045,200
------------
1,045,200
------------
COMPUTER INFORMATION SYSTEMS-4.07%
International Business Machines
Corp. 12,900 1,667,325
Unisys Corp.+ 39,700 1,545,819
------------
3,213,144
------------
COMPUTER SOFTWARE - MAINFRAME-1.85%
BMC Software, Inc.+ 27,100 1,463,400
------------
1,463,400
------------
ELECTRICAL EQUIPMENT-0.51%
Emerson Electric Co. 6,350 399,256
------------
399,256
------------
ELECTRONICS-SEMICONDUCTORS-2.12%
Intel Corp. 28,100 1,671,950
------------
1,671,950
------------
ENVIRONMENTAL CONTROLS-2.29%
Allied Waste Industries, Inc.+ 25,000 493,750
Waste Management, Inc. 24,500 1,316,875
------------
1,810,625
------------
FINANCIAL SERVICES-9.83%
Countrywide Credit
Industries, Inc. 24,300 1,038,825
Household International, Inc. 22,900 1,084,888
</TABLE>
+Non-income producing security.
See notes to financial statements.
- --------------------------------------------------------------------------------
71
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
GROWTH AND INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)--CONTINUED
<TABLE>
<CAPTION>
- ----------------------------------------------------------
COMMON STOCK-CONTINUED
- ----------------------------------------------------------
Market
Company Shares Value
- ----------------------------------------------------------
<S> <C> <C>
FINANCIAL SERVICES-CONTINUED
FINOVA Group, Inc., The 9,850 $ 518,356
Lehman Brothers Holdings, Inc. 25,550 1,590,487
MBIA, Inc. 16,500 1,068,375
MGIC Investment Corp. 20,700 1,006,538
Wachovia Corp. 10,000 855,625
Waddell & Reed Financial, Inc. 9,300 255,169
Washington Mutual, Inc. 9,800 346,675
-------------
7,764,938
-------------
FOOD PRODUCTS-2.28%
Corn Products International, Inc. 11,450 348,509
H.J. Heinz Co. 6,200 310,775
Keebler Foods Co.+ 37,500 1,139,063
-------------
1,798,347
-------------
HEALTHCARE-1.03%
Trigon Healthcare, Inc.+ 22,450 816,619
-------------
816,619
-------------
INSURANCE-3.32%
Ace, Ltd. 23,200 655,400
PMI Group, Inc., The 18,850 1,184,016
Terra Nova Bermuda
Holdings, Ltd. 29,000 781,187
-------------
2,620,603
-------------
MACHINERY-0.63%
Case Corp. 10,400 500,500
-------------
500,500
-------------
MANUFACTURING-5.83%
American Standard Companies,
Inc.+ 16,500 792,000
Eaton Corp. 6,300 579,600
Harsco Corp. 21,100 675,200
ITT Industries, Inc. 10,300 392,688
<CAPTION>
- ----------------------------------------------------------
COMMON STOCK-CONTINUED
- ----------------------------------------------------------
Market
Company Shares Value
- ----------------------------------------------------------
<S> <C> <C>
MANUFACTURING-CONTINUED
Ingersoll-Rand Co. 18,900 $ 1,221,412
Kennametal, Inc. 4,200 130,200
Minnesota Mining &
Manufacturing Co. 9,400 817,213
------------
4,608,313
------------
MEDICAL PRODUCTS-1.71%
Baxter International, Inc. 12,250 742,656
Becton, Dickinson & Co. 20,200 606,000
------------
1,348,656
------------
MINING & METALS - FERROUS & NONFERROUS-1.75%
Alcoa, Inc. 22,384 1,385,010
------------
1,385,010
------------
OFFICE EQUIPMENT-0.58 %
Pitney Bowes, Inc. 7,100 456,175
------------
456,175
------------
OIL & GAS - INTEGRATED-6.66%
Amerada Hess Corp. 13,700 815,150
BP Amoco, ADR 12,960 1,406,160
Royal Dutch Petroleum Co. 41,100 2,476,275
Total Fina, SA+ 8,800 567,050
------------
5,264,635
------------
OIL & GAS PRODUCERS-0.65%
Union Pacific Resources
Group, Inc. 31,600 515,475
------------
515,475
------------
OIL & GAS SERVICES-1.37%
Baker Hughes, Inc. 17,100 572,850
Halliburton Co. 11,200 506,800
------------
1,079,650
------------
PRODUCTION EQUIPMENT-1.29%
UNOVA, Inc.+ 64,300 1,020,762
------------
1,020,762
------------
</TABLE>
+Non-income producing security.
See notes to financial statements.
- --------------------------------------------------------------------------------
72
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
GROWTH AND INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)--CONTINUED
<TABLE>
<CAPTION>
- ----------------------------------------------------------
COMMON STOCK-CONTINUED
- ----------------------------------------------------------
Market
Company Shares Value
- ----------------------------------------------------------
<S> <C> <C>
PUBLISHING & PRINTING-0.53%
New York Times Co., The 11,300 $ 415,981
-------------
415,981
-------------
RAILROAD-0.45%
Burlington Northern
Sante Fe Corp. 11,500 356,500
-------------
356,500
-------------
REAL ESTATE-0.18%
Equity Residential Properties
Trust 3,100 139,694
-------------
139,694
-------------
RETAIL STORES-8.06%
Consolidated Stores Corp.+ 13,700 369,900
Federated Department
Stores, Inc.+ 18,700 989,931
May Department Stores Co., The 28,650 1,171,069
OfficeMax, Inc.+ 28,500 342,000
Payless ShoeSource, Inc.+ 5,249 280,822
Ross Stores, Inc. 26,200 1,319,825
Saks, Inc.+ 11,325 327,009
Sears, Roebuck & Co. 8,500 378,781
TJX Companies, Inc., The 35,700 1,189,256
-------------
6,368,593
-------------
TELECOMMUNICATIONS-4.67%
Ameritech Corp. 15,900 1,168,650
Bell Atlantic Corp. 25,318 1,655,164
SBC Communications, Inc. 14,900 864,200
-------------
3,688,014
-------------
TOBACCO-1.89%
Philip Morris Companies, Inc. 37,100 1,490,956
-------------
1,490,956
-------------
<CAPTION>
- ----------------------------------------------------------
COMMON STOCK-CONTINUED
- ----------------------------------------------------------
Market
Company Shares Value
- ----------------------------------------------------------
<S> <C> <C>
UTILITIES - ELECTRIC & GAS-1.88%
Allegheny Energy, Inc. 14,300 $ 458,494
American Electric Power Co., Inc. 9,200 345,575
Illinova Corp. 10,500 286,125
Wisconsin Energy Corp. 15,900 398,494
-------------
1,488,688
-------------
TOTAL COMMON STOCK
(Cost $58,467,852) 69,361,600
-------------
<CAPTION>
- ----------------------------------------------------------
PREFERRED STOCK-0.48%
- ----------------------------------------------------------
Market
Company Shares Value
- ----------------------------------------------------------
<S> <C> <C>
REAL ESTATE-0.48%
Equity Residential Properties
Trust, Series G, 7.250% 15,800 $ 376,237
-------------
TOTAL PREFERRED STOCK
(COST $398,701) 376,237
-------------
- ----------------------------------------------------------
CORPORATE BONDS-0.37%
- ----------------------------------------------------------
Principal Market
Company Value Value
- ----------------------------------------------------------
<S> <C> <C>
ELECTRONICS - SEMICONDUCTORS-0.37%
National Semiconductor Corp.,
6.500%, due 10/01/02 $310,000 $ 295,663
-------------
TOTAL CORPORATE BONDS
(Cost $295,495) 295,663
-------------
TOTAL INVESTMENTS
(Cost $59,162,048) 88.63% 70,033,500
Other assets, less liabilities 11.37 8,985,879
------- -------------
TOTAL NET ASSETS 100.00% $79,019,379
------- -------------
------- -------------
</TABLE>
+Non-income producing security.
See notes to financial statements.
- --------------------------------------------------------------------------------
73
<PAGE>
[This page intentionally left blank]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
"WE ARE CONVINCED THAT IN ANY MARKET OR ECONOMIC ENVIRONMENT, THERE WILL ALWAYS
BE GREAT COMPANIES WITH DYNAMIC BUSINESS MODELS AND ROBUST EARNINGS GROWTH."
--Blaine P. Rollins, Portfolio Manager--
- --------------------------------------------------------------------------------
INCEPTION DATE
May 1, 1992
--------------------------------------------------------------------
FUND MANAGER
Janus Capital Corporation
--------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGY
To seek reasonable current income and
long-term capital growth, consistent
with conservation of capital.
--------------------------------------------------------------------
NET ASSETS AS OF 6/30/99
$44,798,853
--------------------------------------------------------------------
NUMBER OF HOLDINGS
125
--------------------------------------------------------------------
PORTFOLIO TURNOVER
189.53%
- --------------------------------------------------------------------------------
-----------------------
IN THIS SECTION
-----------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
- --------------------------------------------------------------------------------
BLAINE P. ROLLINS,
CFA
- - Joined Janus in 1990
- - 8 years of professional investment experience
- - B.S. in finance from University of Colorado
- - Chartered Financial Analyst
- --------------------------------------------------------------------------------
75
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
[CHART]
<TABLE>
<CAPTION>
% of Portfolio++
<S> <C>
Common Stock 29.85%
Government & Agency Obligations 6.59%
Corporate Bonds 43.73%
Preferred Stock 17.73%
Cash 2.10%
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------
PERCENT OF
TOP TEN HOLDINGS PORTFOLIO++
- -------------------------------------
<S> <C>
Houston Industries, Inc.,
7.000%, 07/01/00 5.61%
The Home Depot, Inc.,
3.250%, 10/01/01 4.77%
Royal Caribbean Cruises,
Ltd., 7.250%, 02/17/00 4.66%
Adelphia Comm., Inc.,
5.500%, 05/15/02 3.38%
The Charles Schwab Corp. 2.53%
Viacom, Inc.,
7.750%, 06/01/05 2.31%
Qwest Comm., Inc.,
10.875%, 04/01/07 2.27%
Level 3 Comm., Inc.,
9.125%, 05/01/08 2.21%
U.S. Treasury Note,
5.625%, 02/15/06 2.20%
U.S. Treasury Note,
5.625%, 05/15/08 2.19%
<CAPTION>
- -------------------------------------
PERCENT OF
TOP TEN INDUSTRIES PORTFOLIO++
- -------------------------------------
<S> <C>
Broadcasting 15.72%
Retail Stores 9.41%
Internet Services 7.16%
Telecommunications
Equipment 6.27%
Financial Services 6.05%
Utilities - Gas & Electric 5.61%
Multimedia 5.61%
Entertainment & Leisure 5.21%
Telecommunications 4.02%
Insurance 3.57%
</TABLE>
++Represents market value of
investments plus cash.
We are pleased to report on the results of the Balanced Portfolio since
assuming investment management on May 3rd. Our strategy is to build the
Portfolio one company at a time by investing in a diversified, yet flexible mix
of equity and income-producing securities (40% to 60% of each). Among the
Portfolio's equity component, we focus on earnings growth by searching for
companies that we believe are trading at reasonable prices relative to their
future earnings prospects. We compliment this with a variety of fixed-income
positions, including Treasuries and investment grade corporate debt. To add
additional value in the Portfolio's fixed-income component, we also search for
promising high-yield and convertible positions.
Despite rising interest rates and fears of renewed inflation leading to
heightened volatility, U.S. equity markets gained ground during the first
half. During the later part of the period, small-, medium-sized, and cyclical
companies led the market's advance.
The Portfolio enjoyed solid returns from a variety of technology and media
holdings; however, selected financial services and fixed-income positions
hindered our results. Among our technology positions, Linear Technology and
Maxim Integrated Products posted exceptional results. Linear and Maxim produce
analog and mixed-signal semiconductors - a non-commodotized and highly
differentiated market with little competition and huge barriers to entry.
Additionally, the majority of their business comes from wireless and
telecommunications exposure, which we believe is an explosive area for future
growth.
Additionally, Cisco Systems, which has essentially built the technical
infrastructure that supports the Internet, continued to surge ahead. Royal
Caribbean and Carnival Cruise Lines also logged strong results. Thanks to a
robust U.S. economy and the Kosovo
- --------------------------------------------------------------------------------
76
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
peace, these exceptional operators received a strong tailwind during the second
quarter.
Our media-related positions also gained nicely during the period, and
Univision and Hispanic Broadcasting stood out. Univision focuses on television
while Hispanic Broadcasting operates radio stations, and their respective
franchises target Hispanic audiences across the U.S., which is the fastest
growing demographic segment in America. Both companies are rapidly gaining
market share and, thanks to their broad geographic reach that spans the U.S.,
advertising revenues continued to pick up speed.
While we were pleased with the Portfolio's results, a persistent rise in
long-term rates hindered performance for selected fixed-income positions,
particularly investment-grade positions such as IBM, Disney and our Treasury
positions. High-grade corporate debt and Treasury bonds have a high correlation
with interest rates, which took a negative swing during the period.
Given the increase in long-term interest rates and the Federal Reserve's
recent tightening, the U.S. economy should slow from its robust pace in the
first half of the year. But we don't have a crystal ball and we can't predict
where interest rates or the market will ultimately end up. However, we are
convinced that in any market or economic environment, there will always be great
companies with dynamic business models and robust earnings growth. Given this
conviction, we remain optimistic about the Portfolio thanks to our extensive
hands-on research for every holding.
BALANCED PORTFOLIO, S&P 500 INDEX AND BALANCED BENCHMARK(1)
Comparison of Change in Value of $10,000 Investment.
[GRAPH]
<TABLE>
<CAPTION>
BALANCED S&P 500 BALANCED
PORTFOLIO INDEX BENCHMARK
<S> <C> <C> <C>
5/1/92 $10,000 $10,000 $10,099
6/30/92 $10,081 $9,958 $10,070
9/30/92 $10,467 $10,272 $10,403
12/31/92 $10,847 $10,787 $10,712
3/31/93 $11,379 $11,256 $11,129
6/30/93 $11,526 $11,310 $11,273
9/30/93 $11,856 $11,598 $11,545
12/31/93 $11,852 $11,867 $11,702
3/31/94 $11,654 $11,420 $11,351
6/30/94 $11,550 $11,470 $11,347
9/30/94 $11,698 $12,031 $11,691
12/31/94 $11,694 $12,028 $11,725
3/31/95 $12,186 $13,195 $12,573
6/30/95 $12,848 $14,451 $13,516
9/30/95 $13,481 $15,596 $14,220
12/31/95 $14,308 $16,532 $14,917
3/31/96 $14,377 $17,512 $15,286
6/30/96 $14,850 $18,399 $15,717
9/30/96 $15,163 $19,074 $16,114
12/31/96 $15,819 $20,767 $17,056
3/31/97 $15,663 $20,860 $17,298
6/30/97 $17,218 $24,494 $19,176
9/30/97 $18,243 $26,326 $20,172
12/31/97 $18,402 $27,079 $20,736
3/31/98 $19,856 $30,849 $22,605
6/30/98 $20,162 $31,864 $23,226
9/30/98 $18,914 $28,701 $22,325
12/31/98 $21,667 $34,802 $24,995
3/31/99 $21,830 $36,534 $25,668
6/30/99 $23,440 $39,105 $26,635
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- ---------------------------------------------
S&P 500 BALANCED
BALANCED INDEX BENCHMARK(1)
<S> <C> <C> <C>
YTD 8.18% 12.38% 6.56%
1 YEAR 16.26% 22.76% 14.68%
5 YEAR 15.21% 27.84% 18.61%
INCEPTION 12.62% 20.96% 14.65%
</TABLE>
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.
THE S&P 500 INDEX AND THE BALANCED BENCHMARK 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.
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.
(1)EFFECTIVE MAY 1, 1999, THE WEIGHTING OF THE BALANCED BENCHMARK HAS BEEN
CHANGED. THE BALANCED BENCHMARK REFLECTS THE PERFORMANCE OF THE 55% S&P
500/35% LEHMAN AGGREGATE/10% 90 DAY T-BILL INDEX FROM MAY 1, 1992 THROUGH
APRIL 30, 1999 AND THE 50% S&P 500/40% LEHMAN AGGREGATE/10% 90 DAY T-BILL
INDEX FROM MAY 1, 1999 THROUGH JUNE 30, 1999. THIS CHANGE IN THE BALANCED
BENCHMARK BETTER REPRESENTS THE INVESTMENT STYLE OF THE PORTFOLIO AFTER THE
CHANGE OF PORTFOLIO MANAGEMENT.
- --------------------------------------------------------------------------------
77
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
30, 1999 31, 1998 31, 1997 31, 1996 31, 1995 31, 1994
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.71 $ 11.75 $ 12.07 $ 11.91 $ 10.62 $ 11.22
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.12 0.24 0.30 0.26 0.37 0.32
Net gains and losses on securities
(both realized and unrealized) 0.90 1.84 1.60 0.99 1.99 (0.47)
--------- ------------ ------------ ----------- --------- --------
Total from investment operations 1.02 2.08 1.90 1.25 2.36 (0.15)
LESS DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.24) (0.30) (0.26) (0.37) (0.32)
Dividends in excess of net
investment income
Distributions from capital gains (0.22) (0.88) (1.64) (0.83) (0.70) (0.13)
Distributions in excess of capital (0.28)
gains
Returns of capital
--------- ------------ ------------ ----------- --------- --------
Total distributions (0.22) (1.12) (2.22) (1.09) (1.07) (0.45)
Net asset value, end of period $ 13.51 $ 12.71 $ 11.75 $ 12.07 $ 11.91 $ 10.62
--------- ------------ ------------ ----------- --------- --------
--------- ------------ ------------ ----------- --------- --------
Total Return (A) 8.18% 17.74% 16.33% 10.56% 22.35% (1.33%)
Ratios to Average Net Assets:
Expenses 0.93% 0.94% 0.97% 0.97% 0.99% 1.01%
Net investment income 1.95% 2.08% 2.60% 2.20% 3.20% 3.34%
Portfolio Turnover Rate 189.53% 247.07% 254.04% 222.35% 164.70% 103.68%
Net Assets, At End of Period $44,798,853 $35,113,754 $22,637,577 $18,256,430 $14,532,268 $14,764,853
</TABLE>
(A) Total return assumes reinvestment of all dividends during the period and
does not reflect deduction of account fees and charges that apply to the
separate account or related insurance policies. 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 of
less than one year have not been annualized.
- --------------------------------------------------------------------------------
78
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
COMMON STOCK--29.74%
- --------------------------------------------------------------------------------
Market
Company Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
BANKING-2.32%
Bank of New York Co., Inc. 11,125 $ 408,148
Carolina First Corp. 8,005 195,122
M&T Bank Corp. 375 206,250
Northern Trust Corp. 2,355 228,435
-------------
1,037,955
-------------
BEVERAGES-0.58%
Heineken, N.V. 5,110 261,639
-------------
261,639
-------------
BROADCASTING-4.26%
AT&T Corp.-Liberty Media
Group+ 6,730 247,328
Comcast Corp.+ 19,040 731,850
Hispanic Broadcasting Corp.,
Class A+ 2,500 189,688
Infinity Broadcasting Corp.+ 16,315 485,371
Univision Communications, Inc.+ 3,825 252,450
-------------
1,906,687
-------------
COMPUTER NETWORK-1.49%
Cisco Systems, Inc.+ 10,350 667,575
-------------
667,575
-------------
COMPUTER SOFTWARE - MINI & MICRO-1.15%
Sun Microsystems, Inc.+ 7,500 516,562
-------------
516,562
-------------
ELECTRICAL EQUIPMENT-0.46%
Dionex Corp.+ 5,100 206,550
-------------
206,550
-------------
ELECTRONICS-0.55%
Maxim Integrated Products, Inc.+ 3,700 246,050
-------------
246,050
-------------
ELECTRONICS - SEMICONDUCTORS-0.97%
Texas Instruments, Inc. 3,000 435,000
-------------
435,000
-------------
<CAPTION>
- --------------------------------------------------------------------------------
COMMON STOCK---CONTINUED
- --------------------------------------------------------------------------------
Market
Company Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
ENTERTAINMENT & LEISURE-0.55%
Carnival Corp. 5,100 $ 247,350
-------------
247,350
-------------
FINANCIAL SERVICES-3.97%
Affiliated Managers Group, Inc.+ 7,415 223,841
American Express Co. 1,665 216,658
Charles Schwab Corp., The 10,295 1,131,163
Paychex, Inc. 6,502 207,251
-------------
1,778,913
-------------
FOOD SERVICE & RESTAURANTS-0.26%
McDonald's Corp. 2,780 114,849
-------------
114,849
-------------
INSURANCE-3.56%
Mutual Risk Management, Ltd. 5,405 180,392
Progressive Corp., The 2,975 431,375
Prudential Corp. PLC 6,087 89,616
Reinsurance Group of
America, Inc. 12,310 433,928
Reinsurance Group of
America, Inc., Common
Non-Voting Shares 50 1,675
StanCorp Financial Group, Inc.+ 15,225 456,750
-------------
1,593,736
-------------
MULTIMEDIA-2.16%
Viacom, Inc., Class B+ 22,035 969,540
-------------
969,540
-------------
OIL & GAS - INTEGRATED-1.36%
Enron Corp. 7,455 609,446
-------------
609,446
-------------
PHARMACEUTICAL-1.38%
Pharmacia & Upjohn, Inc. 6,895 391,722
Schering-Plough Corp. 4,285 227,105
-------------
618,827
-------------
</TABLE>
+Non-income producing security.
See notes to financial statements.
- --------------------------------------------------------------------------------
79
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED) - CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
- --------------------------------------------------------------------------------
Market
Company Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
RETAIL STORES-2.79%
Costco Companies, Inc.+ 5,100 $ 408,319
eBay, Inc.+ 1,135 171,385
Staples, Inc.+ 11,350 351,140
Wal-Mart Stores, Inc. 6,600 318,450
-------------
1,249,294
-------------
TELECOMMUNICATIONS EQUIPMENT-1.93%
Level 3 Communications, Inc.+ 1,300 78,081
Linear Technology Corp. 3,690 248,153
Nokia Oyj, SA, ADR 5,865 537,014
-------------
863,248
-------------
TOTAL COMMON STOCK
(Cost $11,819,556) 13,323,221
-------------
<CAPTION>
- --------------------------------------------------------------------------------
PREFERRED STOCK--17.67%
- --------------------------------------------------------------------------------
Market
Company Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
BROADCASTING-5.29%
Adelphia Communications Corp.,
Series D, 5.500%, due 05/15/02+ 7,500 $ 1,507,500
MediaOne Group, Inc., 6.250% 9,500 859,750
-------------
2,367,250
-------------
ENTERTAINMENT & LEISURE-4.64%
Royal Caribbean Cruises, Ltd.,
Series A, 7.250%, due 02/17/00 15,400 2,079,000
-------------
2,079,000
-------------
INTERNET SERVICES-2.15%
PSINet, Inc., Series C, 6.750%,
due 05/15/02+ 20,000 965,000
-------------
965,000
-------------
<CAPTION>
- --------------------------------------------------------------------------------
PREFERRED STOCK--CONTINUED
- --------------------------------------------------------------------------------
Market
Company Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
UTILITIES - ELECTRIC & GAS-5.59%
Houston Industries, Inc., 7.000%,
due 07/01/00 21,000 $ 2,504,250
-------------
2,504,250
-------------
TOTAL PREFERRED STOCK
(Cost $7,499,566) 7,915,500
-------------
<CAPTION>
- --------------------------------------------------------------------------------
CORPORATE BONDS-43.57%
- --------------------------------------------------------------------------------
Principal Market
Company Value Value
- --------------------------------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE MANUFACTURING-2.05%
Ford Motor Credit, 5.800%,
due 01/12/09+ $1,000,000 $ 916,800
-------------
916,800
-------------
BEVERAGES-1.02%
Anheuser-Busch Co., Inc., 5.375%,
due 09/15/08 500,000 454,504
-------------
454,504
-------------
BROADCASTING-6.12%
Bresnan Communications, Series 144A,
8.000%, due 02/01/09+ 750,000 744,375
Charter Communications Holdings,
LLC, Series 144A, 8.625%,
due 04/01/09+ 600,000 579,000
Falcon Holdings Group, L.P.,
Series B, 8.325%,
due 04/15/10 750,000 744,375
Mediacom, LLC,
Series 144A, 7.875%,
due 02/15/11+ 750,000 673,125
-------------
2,740,875
-------------
</TABLE>
+Non-income producing security.
See notes to financial statements.
- --------------------------------------------------------------------------------
80
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED) - CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CORPORATE BONDS--CONTINUED
- --------------------------------------------------------------------------------
Principal Market
Company Value Value
- --------------------------------------------------------------------------------
<S> <C> <C>
COMPUTER EQUIPMENT & SERVICES-2.04%
International Business
Machines Corp.,
5.375%, due 02/01/09+ $1,000,000 $ 914,570
-------------
914,570
-------------
COMPUTER NETWORK-1.18%
Exodus Communications, Inc.,
11.250%, due 07/01/08 500,000 527,500
-------------
527,500
-------------
COMPUTER SOFTWARE - MINI & MICRO-1.07%
Dell Computer Corp., 6.550%,
due 04/15/08 500,000 480,714
-------------
480,714
-------------
FINANCIAL SERVICES-2.05%
General Motors Acceptance Corp.,
5.850%, due 01/14/09+ 1,000,000 920,200
-------------
920,200
-------------
INTERNET SERVICES-4.98%
America Online, Inc., 4.000%,
due 11/15/02 90,000 760,388
Exodus Communications, Inc.,
Series 144A, 5.000%,
due 03/15/06+ 200,000 518,250
MindSpring Enterprises, Inc.,
5.000%, due 04/15/06+ 1,000,000 951,250
-------------
2,229,888
-------------
MANUFACTURING-2.57%
KpnQwest, BV, Series 144A,
7.125%, due 06/01/09+ 215,000 221,441
Tyco International, Ltd.,
6.125%, due 11/01/08 1,000,000 933,311
-------------
1,154,752
-------------
<CAPTION>
- --------------------------------------------------------------------------------
CORPORATE BONDS--CONTINUED
- --------------------------------------------------------------------------------
Principal Market
Company Value Value
- --------------------------------------------------------------------------------
<S> <C> <C>
MULTIMEDIA-3.43%
Viacom, Inc., 7.750%,
due 06/01/05 $1,000,000 $ 1,029,923
Walt Disney Co., Series B,
6.750%, due 03/30/06 500,000 504,782
-------------
1,534,705
-------------
OIL & GAS - DISTRIBUTION & MARKETING-2.15%
Enron Corp., 6.750%,
due 08/01/09+ 1,000,000 965,247
-------------
965,247
-------------
RETAIL STORES-6.58%
Amazon.com, Inc., Series 144A,
4.750%, due 02/01/09+ 860,000 818,075
The Home Depot, Inc.,
3.250%, due 10/01/01 770,000 2,130,975
-------------
2,949,050
-------------
TELECOMMUNICATIONS-4.00%
Airtouch Communications, Inc.,
6.650%, due 05/01/08 500,000 487,271
Level 3 Communications, Inc.,
9.125%, due 05/01/08 1,000,000 987,500
Nextlink Communications, Inc.,
10.750%, due 06/01/09+ 310,000 319,300
-------------
1,794,071
-------------
TELECOMMUNICATIONS EQUIPMENT-4.33%
Lucent Technologies, Inc.,
5.500%, due 11/15/08 1,000,000 922,550
Qwest Communications
International, Inc., Series B,
10.875%, due 04/01/07 900,000 1,014,750
-------------
1,937,300
-------------
TOTAL CORPORATE BONDS
(Cost $20,136,059) 19,520,176
-------------
</TABLE>
+Non-income producing security.
See notes to financial statements.
- --------------------------------------------------------------------------------
81
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED) - CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
GOVERNMENT & AGENCY OBLIGATIONS--6.57%
- --------------------------------------------------------------------------------
Principal Market
Company Value Value
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. TREASURY NOTES AND BONDS-6.57%
U.S. Treasury Note, 5.625%,
due 02/15/06 $1,000,000 $ 985,000
U.S. Treasury Note, 5.625%,
due 05/15/08 1,000,000 979,688
U.S. Treasury Note, 5.500%,
due 05/15/09+ 1,000,000 976,875
-------------
2,941,563
-------------
TOTAL GOVERNMENT &
AGENCY OBLIGATIONS
(Cost $2,926,086) 2,941,563
-------------
TOTAL INVESTMENTS
(Cost $42,381,267) 97.55% 43,700,460
Other assets, less liabilities 2.45 1,098,393
------- -------------
TOTAL NET ASSETS 100.00% $44,798,853
------- -------------
------- -------------
</TABLE>
+Non-income producing security.
See notes to financial statements.
- --------------------------------------------------------------------------------
82
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
HIGH YIELD BOND PORTFOLIO
- --------------------------------------------------------------------------------
"THE CONTINUED STRENGTH OF THE U.S. ECONOMY IN 1999 HAS HELPED THE HIGH-YIELD
MARKET REBOUND. INVESTOR CONFIDENCE IN THIS MARKET STRENGTHENED BECAUSE
COMPANIES ISSUING HIGH-YIELD BONDS HAVE GENERATED STRONG CASH FLOWS, ENHANCING
THEIR CREDITWORTHINESS."
--Bernard A. Scozzafava, Portfolio Manager--
- --------------------------------------------------------------------------------
INCEPTION DATE
January 1, 1998
----------------------------------------------
FUND MANAGER
Massachusetts Financial Services Company
----------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGY
To seek a high level of income by investing
primarily in corporate obligations with
emphasis on higher-yielding, higher risk,
lower-rated or unrated securities.
----------------------------------------------
NET ASSETS AS OF 6/30/99
$10,475,173
----------------------------------------------
NUMBER OF HOLDINGS
205
----------------------------------------------
PORTFOLIO TURNOVER
25.29%
----------------------------------------------
DOLLAR WEIGHTED AVERAGE MATURITY
8.2 years
- --------------------------------------------------------------------------------
-------------------------------
IN THIS SECTION
-------------------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
-------------------------------
- --------------------------------------------------
BERNARD SCOZZAFAVA
VICE PRESIDENT
- - Joined MFS in 1989
- - M.S. from Massachusetts Institute of Technology
- - Graduate of Hamilton College
- --------------------------------------------------
- --------------------------------------------------------------------------------
83
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
HIGH YIELD BOND PORTFOLIO
- --------------------------------------------------------------------------------
[CHART]
[EDGAR REPRESENTATION OF DATA POINTS]
<TABLE>
<CAPTION>
- -------------------------------------
PERCENT OF
PORTFOLIO++
- -------------------------------------
<S> <C>
Corporate Bonds - 92.22%
Common Stock - 0.31%
Perferred Stock - 1.83%
Rights and Warrants - 0.14%
Short-term Obligations - 5.04%
Cash - 0.46%
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------
PERCENT OF
PORTFOLIO QUALITY PORTFOLIO++
- ------------------------------------
<S> <C>
BB 8.42%
B 69.79%
CCC 8.96%
Not Rated 5.04%
Cash 0.46%
<CAPTION>
- ------------------------------------
PERCENT OF
TOP TEN HOLDINGS PORTFOLIO++
- ------------------------------------
<S> <C>
JITNEY-JUNGLE STORES,
12.000%, 03/01/06 1.16%
COLT Telecom Group,
0.000%, Step-up, 12/15/06 1.08%
MetroNet Comm., 0.000%,
Step-up, 06/15/08 1.03%
NTL, Inc., B, 0.000%,
Step-up, 04/01/08 1.03%
Level 3 Communications,
9.125%, 05/01/08 1.00%
ITC^DeltaCom, Inc.,
11.000%, 06/01/07 1.00%
Time Warner Telecom,
9.750%, 07/15/08 0.99%
EchoStar OBS, 144A,
9.375%, 02/01/09 0.98%
Huntsman ICI, 144A,
10.125%, 07/01/09 0.97%
Anacomp, Inc.,
10.875%, 04/01/04 0.96%
</TABLE>
++Represents market value of investments plus cash.
THIS PORTFOLIO CARRIES A HIGHER DEGREE OF RISK THAN OTHER BOND PORTFOLIOS
BECAUSE IT INVESTS IN LOWER GRADE ISSUES.
For the six months ended June 30, 1999, the Portfolio provided a total
return of 3.77% (including the reinvestment of any distributions). This compares
to a 2.20% return for the Lehman Brothers High Yield Bond Index, an unmanaged
index of noninvestment-grade corporate debt, and to a 3.85% return for the
Lipper High Yield Bond Fund Index. The Lipper mutual fund indices are unmanaged,
net-asset-value-weighted indices of the largest qualifying mutual funds within
their respective investment objectives, adjusted for the reinvestment of capital
gain distributions and income dividends.
The Portfolio has benefited from a favorable environment for high-yield
securities, specifically, moderate economic growth and low inflation in the
United States. Historically, this has been a good climate for owning high-yield
bonds because there have been fewer credit problems, such as defaults and
bond-rating reductions, than would be in a weaker environment. Also, the
continued strength of the U.S. economy in 1999 has helped the high-yield market
rebound. Investor confidence in this market strengthened because companies
issuing high-yield bonds have generated strong cash flows, enhancing their
creditworthiness.
However, the Portfolio's slight underweighting in the energy sector, plus
the fact that we owned the higher-quality bonds within that sector, detracted
from performance. As oil prices rose recently, we missed the price rally by
medium-quality energy companies. At the same time, our focus on high-quality
issuers meant that we avoided the numerous bankruptcies among low-rated energy
companies when oil prices fell in 1998.
We believe the best opportunities for high-yield bonds are in the
telecommunications sector. Since the deregulation of this industry in 1996,
several companies have used the high-yield market to help pay for the
development of their communications networks or to help finance mergers and
acquisitions. For example, AT&T Canada has merged with MetroNet, a
- --------------------------------------------------------------------------------
84
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JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
HIGH YIELD BOND PORTFOLIO
- --------------------------------------------------------------------------------
competitive local exchange company in Canada, in hopes of becoming a
full-service business communications provider. The Portfolio also has a position
in Global Crossing, which is growing rapidly as it acquires other companies and
puts together integrated communications networks. Finally, our position in
Nextel Communication, a company that provides a variety of telecommunications
services, went up in value when Microsoft announced that it is investing $600
million in the company.
The Portfolio's second-largest industry is media, a sector in which some
companies are bridging the media and telecommunications areas. On its own, we
think cable is a good defensive industry that tends to have steady revenue
streams through varying economic conditions. Now, cable companies such as
Cablevision Systems and Charter Communications are being recognized as efficient
ways to deliver Internet service to the home, which makes this industry even
more attractive to us. We also like general industrial companies such as Hayes
Wheels, the world's largest manufacturer of automotive wheels, and Oxford
Automotive, a sheet metal fabricator for the auto industry.
The Portfolio's overseas holdings are primarily in Europe, where our focus
is the same as in our domestic portfolio. We like telecommunications and media
companies such as NTL, which offers cable and telephone services to homes in the
United Kingdom, and Esprit Telecom, a U.K.-based telecommunications company.
Europe was slower to deregulate these industries than the United States, but we
now are seeing more bonds being issued by cable and telecommunications companies
in Germany, France, Spain, and the United Kingdom.
[GRAPH]
[EDGAR REPRESENTATION OF DATA POINTS]
HIGH YIELD BOND PORTFOLIO AND LEHMAN BROS.
HIGH YIELD BOND INDEX
Comparison of Change in Value of $10,000 Investment.
<TABLE>
<CAPTION>
- ----------------------------------------------------------
HIGH YIELD LEHMAN BROS.
BOND PORTFOLIO HIGH YIELD INDEX
<S> <C> <C>
1/1/98 $10,000 $10,000
2/28/98 $10,160 $10,240
3/31/98 $10,289 $10,336
4/30/98 $10,310 $10,377
5/31/98 $10,346 $10,413
6/30/98 $10,387 $10,450
7/31/98 $10,513 $10,510
8/31/98 $ 9,722 $ 9,930
9/30/98 $ 9,640 $ 9,975
10/31/98 $ 9,430 $ 9,770
11/30/98 $10,094 $10,176
12/31/98 $10,089 $10,187
1/31/99 $10,302 $10,337
2/28/99 $10,343 $10,276
3/31/99 $10,537 $10,374
4/30/99 $10,766 $10,575
5/31/99 $10,544 $10,433
6/30/99 $10,470 $10,411
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- ------------------------------------------
<S> <C> <C>
LEHMAN
BROS. HIGH
HIGH YIELD YIELD BOND
BOND INDEX
YTD 3.77% 2.20%
1 YEAR 0.80% -0.38%
INCEPTION 3.12% 2.72%
</TABLE>
COMMENCEMENT OF OPERATIONS JANUARY 1, 1998. PAST PERFORMANCE IS NOT PREDICTIVE
OF FUTURE PERFORMANCE.
THIS GRAPH COMPARES AN INITIAL $10,000 INVESTMENT MADE IN THE HIGH YIELD BOND
PORTFOLIO (THE "PORTFOLIO") AT ITS INCEPTION WITH A SIMILAR INVESTMENT IN THE
LEHMAN BROS. HIGH YIELD 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.
THE LEHMAN BROS. HIGH YIELD 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.
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.
- --------------------------------------------------------------------------------
85
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
HIGH YIELD BOND PORTFOLIO
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED
JUNE DECEMBER
30, 1999 31, 1998
<S> <C> <C>
Net asset value, beginning of period $ 9.49 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.34 0.60
Net gains and losses on securities
(both realized and unrealized) 0.02 (0.51)
----------- -------------
Total from investment operations 0.36 0.09
LESS DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.60)
Dividends in excess of net investment income
Distributions from capital gains
Distributions in excess of capital gains
Returns of capital
----------- -------------
Total distributions 0.00 (0.60)
Net asset value, end of period $ 9.85 $ 9.49
----------- -------------
----------- -------------
Total Return (A) 3.77% 0.89%
Ratios to Average Net Assets:
Expenses 1.17% 1.24%
Net investment income 7.38% 7.85%
Portfolio Turnover Rate 25.29% 84.21%
Net Assets, At End of Period $10,475,173 $7,968,843
</TABLE>
(A) Total return assumes reinvestment of all dividends during the period and
does not reflect deduction of account fees and charges that apply to the
separate account or related insurance policies. 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 of
less than one year have not been annualized.
- --------------------------------------------------------------------------------
86
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
HIGH YIELD BOND PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------
COMMON STOCK--0.31%
- ---------------------------------------------------------
Market
Company Shares Value
- ---------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS-0.31%
Viatel, Inc.+ 575 $ 32,272
--------------
TOTAL COMMON STOCK
(Cost $4,841) 32,272
--------------
<CAPTION>
- ---------------------------------------------------------
PREFERRED STOCK--1.82%
- ---------------------------------------------------------
Market
Company Shares Value
- ---------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS-1.82%
Crown Castle International Corp.,
Series 144A, 12.750%,
due 12/15/10+ 53 $ 56,003
Global Crossing Holding, Ltd.,
10.500%, due 12/01/08 400 42,500
Primedia, Inc., Series H,
8.625%, due 04/01/10+ 650 61,994
Rural Cellular Corp., Series B,
11.375%, due 05/15/10+ 30 30,375
--------------
190,872
--------------
TOTAL PREFERRED STOCK
(Cost $182,775) 190,872
--------------
<CAPTION>
- ---------------------------------------------------------
CORPORATE BONDS--91.66%
- ---------------------------------------------------------
Principal Market
Company Value Value
- ---------------------------------------------------------
<S> <C> <C>
ADVERTISING-0.50%
Outdoor Systems, Inc., 8.875%,
due 06/15/07 $50,000 $ 52,375
------------
52,375
------------
AEROSPACE & DEFENSE-2.61%
Argo-Tech Corp., 8.625%,
due 10/01/07 40,000 37,200
<CAPTION>
- ---------------------------------------------------------
CORPORATE BONDS--CONTINUED
- ---------------------------------------------------------
Principal Market
Company Value Value
- ---------------------------------------------------------
<S> <C> <C>
AEROSPACE & DEFENSE-CONTINUED
BE Aerospace, Inc., Series B,
9.875%, due 02/01/06 $ 50,000 $ 51,000
BE Aerospace, Inc., Series B,
8.000%, due 03/01/08 50,000 47,000
K & F Industries, Inc.,
Series B, 9.250%, due 10/15/07 75,000 74,062
Satelites Mexicanos, SA, de CV,
Series B, 10.125%,
due 11/01/04 70,000 55,825
Stellex Industries, Inc., Series B,
9.500%, due 11/01/07 10,000 8,450
------------
273,537
------------
AUTOMOTIVE PARTS & EQUIPMENT-1.35%
Hayes Wheels International, Inc.,
11.000%, due 07/15/06 92,000 100,050
Hayes Wheels International,
Inc., Series B, 9.125%,
due 07/15/07 20,000 20,150
Talon Automotive Group, LLC,
Series B, 9.625%,
due 05/01/08 25,000 21,125
------------
141,325
------------
BROADCASTING-12.20%
Adelphia Communications Corp.,
Series 144A, 8.375%,
due 02/01/08 100,000 96,750
Albritton Communications Co.,
Series B, 9.750%,
due 11/30/07 40,000 40,700
Avalon Cable, Series 144A,
9.375%, due 12/01/08 75,000 76,594
Bresnan Communications,
Series 144A, 8.000%,
due 02/01/09+ 75,000 74,437
CSC Holdings, Inc., Series B,
8.125%, due 08/15/09 50,000 51,125
</TABLE>
+Non-income producing security.
See notes to financial statements.
- --------------------------------------------------------------------------------
87
<PAGE>
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- --------------------------------------------------------------------------------
HIGH YIELD BOND PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)--CONTINUED
<TABLE>
<CAPTION>
- ---------------------------------------------------------
CORPORATE BONDS--CONTINUED
- ---------------------------------------------------------
Principal Market
Company Value Value
- ---------------------------------------------------------
<S> <C> <C>
BROADCASTING-CONTINUED
Chancellor Media Corp.,
Series B, 8.750%, due 06/15/07 $ 40,000 $ 40,050
Chancellor Media Corp.,
8.000%, due 11/01/08+ 100,000 98,500
Charter Communications
Holdings, LLC, Series 144A,
8.250%, due 04/01/07+ 50,000 48,125
Charter Communications
Holdings, LLC, Series 144A,
Zero Coupon, Step-up,
due 04/01/11+ 80,000 50,000
Cumulus Media, Inc.,
10.375%, due 07/01/08 50,000 53,250
EchoStar DBS Corp.,
Series 144A, 9.375%,
due 02/01/09+ 100,000 102,250
Fox/Liberty Networks, LLC,
8.875%, due 08/15/07 65,000 67,763
Frontiervision Holdings, LP,
Zero Coupon, Step-up,
due 09/15/07+ 45,000 38,981
Frontiervision, LP/Capital,
11.000%, due 10/15/06 50,000 54,750
Granite Broadcasting Corp.,
10.375%, due 05/15/05 15,000 15,225
Granite Broadcasting Corp.,
8.875%, due 05/15/08 25,000 23,938
LIN Television Corp., Zero
Coupon, Step-up,
due 03/01/08+ 60,000 39,900
Lenfest Communications, Inc.,
8.375%, due 11/01/05 40,000 41,700
Rogers Cablesystems, Ltd.,
9.625%, due 08/01/02 40,000 42,000
<CAPTION>
- ----------------------------------------------------------
CORPORATE BONDS--CONTINUED
- ----------------------------------------------------------
Principal Market
Company Value Value
- ----------------------------------------------------------
<S> <C> <C>
BROADCASTING-CONTINUED
Telemundo Holdings, Inc.,
Series B, Zero Coupon,
Step-up, due 08/15/08+ $125,000 $ 63,750
TeleWest Communications,
PLC, 9.625%, due 10/01/06 75,000 77,625
United International
Holdings, Inc., Series B,
Zero Coupon, Step-up,
due 02/15/08+ 85,000 56,312
Young Broadcasting, Inc.,
Series B, 8.750%,
due 06/15/07 25,000 24,375
-------------
1,278,100
-------------
BUILDING MATERIALS-2.23%
American Standard
Companies, Inc.,
7.375%, due 02/01/08 25,000 24,250
Building Matierials Corp.,
Series B, 7.750%,
due 07/15/05 50,000 47,000
Formica Corp., Series 144A,
10.875%, due 03/01/09+ 25,000 24,375
MMI Products, Inc.,
Series B, 11.250%,
due 04/15/07 35,000 36,050
Nortek, Inc., Series B,
9.250%, due 03/15/07 25,000 25,125
Schuff Steel Co., 10.500%,
due 06/01/08 45,000 40,275
Synthetic Industries, Inc.,
Series B, 9.250%,
due 02/15/07 35,000 36,050
-------------
233,125
-------------
CHEMICALS-3.27%
Huntsman ICI Chemicals,
Series 144A, 10.125%,
due 07/01/09+ 100,000 101,500
</TABLE>
+Non-income producing security.
See notes to financial statements.
- --------------------------------------------------------------------------------
88
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
HIGH YIELD BOND PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)--CONTINUED
<TABLE>
<CAPTION>
- -----------------------------------------------------------
CORPORATE BONDS--CONTINUED
- -----------------------------------------------------------
Principal Market
Company Value Value
- -----------------------------------------------------------
<S> <C> <C>
CHEMICALS-CONTINUED
Lyondell Chemical Co.,
Series 144A, 9.625%,
due 05/01/07+ $ 35,000 $ 36,138
Lyondell Chemical Co.,
Series 144A, 9.875%,
due 05/01/07+ 65,000 66,787
PCI Chemicals Canada, 9.250%,
due 10/15/07 70,000 57,050
Sterling Chemicals, Inc.,
Series A, 11.250%,
due 04/01/07 75,000 55,875
ZSC Specialty Chemicals, PLC,
Series 144A, 11.000%,
due 07/01/09+ 25,000 25,344
--------------
342,694
--------------
COMMERCIAL SERVICES-0.39%
Dialog Corp., PLC, Series A,
11.000%, due 11/15/07 45,000 40,950
--------------
40,950
--------------
COMPUTER EQUIPMENT & SERVICES-1.88%
Anacomp, Inc., 10.875%,
due 04/01/04 95,000 100,225
Continental Resources, Inc.,
10.250%, due 08/01/08 25,000 18,469
Iron Mountain, Inc., 10.125%,
due 10/01/06 75,000 78,000
--------------
196,694
--------------
COMPUTER NETWORK-0.85%
Exodus Communications, Inc.,
11.250%, due 07/01/08 50,000 52,750
PSINet, Inc., 10.000%,
due 02/15/05 25,000 25,250
PSINet, Inc., 11.500%,
due 11/01/08 10,000 10,600
--------------
88,600
--------------
<CAPTION>
- -----------------------------------------------------------
CORPORATE BONDS--CONTINUED
- -----------------------------------------------------------
Principal Market
Company Value Value
- -----------------------------------------------------------
<S> <C> <C>
COSMETICS & PERSONAL CARE-1.27%
Remington Product Co., Series B,
11.000%, due 05/15/06 $ 55,000 $ 45,375
Revlon Consumer Products Corp.,
8.625%, due 02/01/08 90,000 87,300
-------------
132,675
-------------
EDUCATIONAL SERVICES-0.59%
Kindercare Learning Centers, Inc.,
Series B, 9.500%,
due 02/15/09 65,000 62,075
-------------
62,075
-------------
ENGINEERING & CONSTRUCTION-0.36%
Furon Co., 8.125%,
due 03/01/08 40,000 37,800
-------------
37,800
-------------
ENTERTAINMENT & LEISURE-4.16%
AMC Entertainment, Inc.,
9.500%, due 03/15/09 25,000 23,875
Boyd Gaming Corp., 9.500%,
due 07/15/07 100,000 100,000
Cinemark USA, Inc., Series B,
9.625%, due 08/01/08 50,000 49,250
Florida Panthers Holdings,
9.875%, due 04/15/09+ 25,000 23,500
Hollywood Park, Inc.,
Series B, 9.250%,
due 02/15/07+ 25,000 24,938
Isle of Capri, Series 144A,
8.750%, due 04/15/09+ 20,000 18,850
Lady Luck Gaming Corp.,
11.875%, due 03/01/01 55,000 55,962
Regal Cinemas, Inc.,
9.500%, due 06/01/08 70,000 65,800
Station Casinos, 8.875%,
due 12/01/08 75,000 73,125
-------------
435,300
-------------
</TABLE>
+Non-income producing security.
See notes to financial statements.
- --------------------------------------------------------------------------------
89
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- --------------------------------------------------------------------------------
HIGH YIELD BOND PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)--CONTINUED
<TABLE>
<CAPTION>
- -----------------------------------------------------------
CORPORATE BONDS--CONTINUED
- -----------------------------------------------------------
Principal Market
Company Value Value
- -----------------------------------------------------------
<S> <C> <C>
FINANCIAL SERVICES-1.02%
Ono Finance, PLC, Unit,
13.000%, due 05/01/09+ $ 65,000 $ 67,112
Williams Scotsman, Inc.,
9.875%, due 06/01/07 40,000 39,800
-------------
106,912
-------------
FOOD PRODUCTS-0.24%
Vlasic Foods International, Inc.,
Series 144A, 10.250%,
due 07/01/09+ 25,000 24,750
-------------
24,750
-------------
FOOD SERVICE & RESTAURANTS-0.08%
Friendly Ice Cream Corp.,
10.500%, due 12/01/07 10,000 8,950
-------------
8,950
-------------
FOREST PRODUCTS & PAPER-2.66%
Buckeye Technologies, Inc.,
5.500%, due 12/15/05 40,000 39,700
Buckeye Technologies, Inc.,
9.250%, due 09/15/08 40,000 41,400
REPAP New Brunswick, Inc.,
9.000%, due 06/01/04 50,000 46,875
Specialty Paperboard, Inc.,
9.375%, due 10/15/06 70,000 70,350
U.S. Timberlands Co., L.P.,
9.625%, due 11/15/07 80,000 80,400
-------------
278,725
-------------
HEALTHCARE-0.87%
Prime Medical Services, Inc.,
8.750%, due 04/01/08 60,000 58,500
Tenet Healthcare Corp.,
Series B, 7.625%,
due 06/01/08 35,000 32,900
-------------
91,400
-------------
<CAPTION>
- -----------------------------------------------------------
CORPORATE BONDS--CONTINUED
- -----------------------------------------------------------
Principal Market
Company Value Value
- -----------------------------------------------------------
<S> <C> <C>
HOLDING COMPANIES-0.33%
Simonds Industries, Inc.,
10.250%, due 07/01/08 $ 35,000 $ 34,475
-------------
34,475
-------------
HOME FURNISHINGS-0.49%
Simmons Co., Series 144A,
10.250%, due 03/15/09+ 50,000 51,000
-------------
51,000
-------------
INSURANCE-0.83%
Willis Corroon Corp.,
Series 144A, 9.000%,
due 02/01/09+ 90,000 87,188
-------------
87,188
-------------
LODGING-1.87%
Coast Hotels & Casinos, Inc.,
Series 144A, 9.500%,
due 04/01/09+ 100,000 96,750
Prime Hospitality Corp.,
Series B, 9.750%,
due 04/01/07 50,000 48,750
Red Roof Inns, Inc., 9.625%,
due 12/15/03 50,000 50,000
-------------
195,500
-------------
MACHINERY-3.07%
Columbus McKinnon Corp.,
8.500%, due 04/01/08 75,000 72,375
Fairfield Manufacturing Co., Inc.,
Series 144A, 9.625%,
due 10/15/08+ 50,000 49,375
Newcor, Inc., Series B, 9.875%,
due 03/01/08 90,000 81,000
Numatics, Inc., Series B,
9.625%, due 04/01/08 25,000 20,375
Thermadyne Holdings Corp.,
Zero Coupon, Step-up,
due 06/01/08+ 150,000 72,000
</TABLE>
+Non-income producing security.
See notes to financial statements.
- --------------------------------------------------------------------------------
90
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JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
HIGH YIELD BOND PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)--CONTINUED
<TABLE>
<CAPTION>
- -----------------------------------------------------------
CORPORATE BONDS--CONTINUED
- -----------------------------------------------------------
Principal Market
Company Value Value
- -----------------------------------------------------------
<S> <C> <C>
MACHINERY-CONTINUED
Thermadyne Holdings Corp.,
9.875%, due 06/01/08 $ 30,000 $ 26,550
--------------
321,675
--------------
MANUFACTURING-2.45%
Classic Cable, Inc., 9.875%,
due 08/01/08 40,000 41,500
Dura Operating Corp.,
Series 144A , 9.000%,
due 05/01/09+ 25,000 24,000
International Knife & Saw, Inc.,
11.375%, due 11/15/06 50,000 47,250
Moog, Inc., Series B, 10.000%,
due 05/01/06 25,000 25,493
Pierce Leahy Corp., 11.125%,
due 07/15/06 30,000 32,700
Polymer Group, Inc., Series B,
9.000%, due 07/01/07 50,000 48,750
Samsonite Corp., 10.750%,
due 06/15/08 45,000 36,450
--------------
256,143
--------------
MEDICAL - BIOTECHNOLOGY-0.24%
Quest Diagnostic, Inc.,
Series 144A, 9.875%,
due 07/01/09 25,000 25,313
--------------
25,313
--------------
MEDICAL PRODUCT-0.16%
Alaris Medical, Inc., Zero Coupon,
Step-up, due 08/01/08+ 30,000 16,425
--------------
16,425
--------------
MEDICAL SUPPLIES-0.31%
Fresenius Medical Capital Trust II,
7.875%, due 02/01/08 35,000 32,638
--------------
32,638
--------------
<CAPTION>
- -----------------------------------------------------------
CORPORATE BONDS--CONTINUED
- -----------------------------------------------------------
Principal Market
Company Value Value
- -----------------------------------------------------------
<S> <C> <C>
MINING & METALS - FERROUS & NONFERROUS-5.51%
AK Steel Holding Corp., 9.125%,
due 12/15/06 $ 35,000 $ 36,225
AK Steel Corp., Series 144A,
7.875%, due 02/15/09+ 25,000 24,125
Commonwealth Aluminum Corp.,
10.750%, due 10/01/06 50,000 49,813
Jorgensen Co., Series B, 9.500%,
due 04/01/05 50,000 47,250
Kaiser Aluminum &
Chemical Corp., 9.875%,
due 02/15/02 75,000 76,125
Keystone Consolidated Industries,
9.625%, due 08/01/07 40,000 39,000
Metal Management, Inc.,
10.000%, due 05/15/08 50,000 39,750
Oxford Automotive, Inc.,
10.125%, due 06/15/07 65,000 65,325
P & L Coal Holdings Corp.,
9.625%, due 05/15/08 90,000 89,775
Russel Metals, Inc., Unit,
10.000%, due 06/01/09+ 25,000 25,187
WCI Steel, Inc., Series B,
10.000%, due 12/01/04 60,000 61,350
Weirton Steel Corp., 10.750%,
due 06/01/05 25,000 23,812
---------------
577,737
---------------
MULTIMEDIA-0.98%
Time Warner Telecom, LLC,
9.750%, due 07/15/08 100,000 103,000
---------------
103,000
---------------
OFFICE EQUIPMENT-0.36%
General Binding Corp., 9.375%,
due 06/01/08 40,000 37,600
---------------
37,600
---------------
</TABLE>
+Non-income producing security.
See notes to financial statements.
- --------------------------------------------------------------------------------
91
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
HIGH YIELD BOND PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)--CONTINUED
<TABLE>
<CAPTION>
- -----------------------------------------------------------
CORPORATE BONDS--CONTINUED
- -----------------------------------------------------------
Principal Market
Company Value Value
- -----------------------------------------------------------
<S> <C> <C>
OIL & GAS - INTEGRATED-0.50%
Forest Oil Corp., 10.500%,
due 01/15/06+ $ 50,000 $ 52,125
-------------
52,125
-------------
OIL & GAS PRODUCERS-0.79%
Chesapeake Energy Corp.,
Series B, 9.625%,
due 05/01/05 40,000 37,600
HS Resources, Inc., 9.250%,
due 11/15/06+ 25,000 24,875
Pride International, Inc.,
10.000%, due 06/01/09+ 20,000 20,400
-------------
82,875
-------------
OIL & GAS SERVICES-0.38%
Pool Energy Services Co., 8.625%,
due 04/01/08 40,000 39,800
-------------
39,800
-------------
PACKAGING & CONTAINERS-3.13%
Applied Extrusion Technologies, Inc.,
Series B, 11.500%,
due 04/01/02 25,000 25,531
Ball Corp., 8.250%,
due 08/01/08 50,000 49,500
Gaylord Container Corp.,
Series B, 9.750%,
due 06/15/07 80,000 69,800
Gaylord Container Corp.,
Series B, 9.875%,
due 02/15/08 65,000 62,075
Graham Packaging Co., GPC,
8.750%, due 01/15/08 50,000 46,750
Packaging Corporation of America,
Series 144A, 9.625%,
due 04/01/09+ 25,000 25,500
<CAPTION>
- -----------------------------------------------------------
CORPORATE BONDS--CONTINUED
- -----------------------------------------------------------
Principal Market
Company Value Value
- -----------------------------------------------------------
<S> <C> <C>
PACKAGING & CONTAINERS-CONTINUED
Silgan Holdings, Inc., 9.000%,
due 06/01/09 $ 50,000 $ 48,750
-------------
327,906
-------------
PUBLISHING & PRINTING-2.68%
Big Flower Press Holdings, Inc.,
8.875%, due 07/01/07 50,000 47,250
Big Flower Press Holdings, Inc.,
8.625%, due 12/01/08+ 50,000 46,250
Hollinger International
Publishing, Inc., 9.250%,
due 03/15/07 65,000 66,950
Liberty Group Operations Inc.,
9.375%, due 02/01/08 50,000 47,250
Mail-Well, Inc., 8.750%,
due 12/15/08 25,000 24,375
World Color Press, Inc.,
8.375%, due 11/15/08 25,000 25,000
World Color Press, Inc.,
7.750%, due 02/15/09+ 25,000 23,625
-------------
280,700
-------------
REAL ESTATE-0.69%
Clark USA, Inc., Trizec,
10.875%, due 12/01/05 40,000 35,050
Clark R&M, Inc., 8.625%,
due 08/15/08 40,000 37,400
-------------
72,450
-------------
RETAIL STORES-3.19%
Cole National Group, Inc.,
8.625%, due 08/15/07 30,000 25,950
Finlay Fine Jewelery Corp.,
8.375%, due 05/01/08 25,000 24,250
Finlay Fine Jewelery Corp.,
9.000%, due 05/01/08 10,000 9,600
Jitney-Jungle Stores
America, Inc., 12.000%,
due 03/01/06 150,000 120,750
</TABLE>
+Non-income producing security.
See notes to financial statements.
- --------------------------------------------------------------------------------
92
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
HIGH YIELD BOND PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)--CONTINUED
<TABLE>
<CAPTION>
- -----------------------------------------------------------
CORPORATE BONDS--CONTINUED
- -----------------------------------------------------------
Principal Market
Company Value Value
- -----------------------------------------------------------
<S> <C> <C>
RETAIL STORES-CONTINUED
Musicland Group, Inc., 9.000%,
due 06/15/03 $ 25,000 $ 24,125
Musicland Group, Inc., 9.875%,
due 03/15/08 50,000 47,750
Pathmark Stores, Inc., 11.625%,
due 06/15/02 55,000 56,238
Pathmark Stores, Inc., 9.625%,
due 05/01/03 25,000 25,562
-------------
334,225
-------------
TELECOMMUNICATIONS-22.94%
Allegiance Telecom, Inc., Series B,
Zero Coupon, Step-up,
due 02/15/08+ 75,000 47,250
Allegiance Telecom, Inc.,
12.875%, due 05/15/08 35,000 37,975
American Cellular Corp.,
10.500%, due 05/15/08 50,000 51,000
AMSC Acquisition Co., Inc.,
Series B, 12.250%,
due 04/01/08 35,000 26,950
Centennial Cellular, Series 144A,
10.750%, due 12/15/08 50,000 51,875
Clearnet Communications, Inc.,
Zero Coupon, Step-up,
due 12/15/05+ 25,000 23,000
Colt Telecom Group, PLC,
Zero Coupon, Step-up,
due 12/15/06+ 135,000 112,725
Completel Europe, NV, Unit,
Zero Coupon, Step-up,
due 02/15/09+ 50,000 26,750
Dolphin Telecom, PLC,
Zero Coupon, Step-up,
due 06/01/08+ 100,000 51,000
<CAPTION>
- -----------------------------------------------------------
CORPORATE BONDS--CONTINUED
- -----------------------------------------------------------
Principal Market
Company Value Value
- -----------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS-CONTINUED
Dolphin Telecom, PLC,
Series 144A, Zero Coupon,
Step-up, due 05/15/09+ $ 25,000 $ 12,000
Esat Telecom Group, PLC,
Series B, 11.875%,
due 12/01/08 40,000 41,400
Esprit Telecom Group, 10.875%,
due 06/15/08 75,000 78,375
General Communication, Inc.,
9.750%, due 08/01/07 65,000 64,350
Global Crossing Holdings, Ltd.,
9.625%, due 05/15/08 50,000 51,250
Hermes Europe Railtel, BV,
10.375%, due 01/15/09+ 75,000 76,313
Hyperion Telecommunications,
Inc., Series 144A, 12.000%,
due 11/01/07 25,000 25,687
ICG Holdings, Inc.,
Zero Coupon, Step-up,
due 05/01/06+ 115,000 90,275
ITC^DeltaCom, Inc., 11.000%,
due 06/01/07 95,000 103,669
Intermedia Communications,
Inc., Series B, 8.875%,
due 11/01/07 100,000 94,250
Jazztel, PLC, Series 144A,
14.000%, due 04/01/09+ 35,000 34,563
Level 3 Communications, Inc.,
9.125%, due 05/01/08 105,000 103,687
MJD Communications, Inc.,
Series B, 9.500%,
due 05/01/08 45,000 44,775
Metromedia Fiber Network,
Series B, 10.000%,
due 11/15/08+ 90,000 92,925
MetroNet Communications
Corp., Zero Coupon, Step-up,
due 11/01/07+ 25,000 19,625
</TABLE>
+Non-income producing security.
See notes to financial statements.
- --------------------------------------------------------------------------------
93
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
HIGH YIELD BOND PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)--CONTINUED
<TABLE>
<CAPTION>
- -----------------------------------------------------------
CORPORATE BONDS--CONTINUED
- -----------------------------------------------------------
Principal Market
Company Value Value
- -----------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS-CONTINUED
MetroNet Communications
Corp., Zero Coupon, Step-up,
due 06/15/08+ $145,000 $ 107,300
Millicom International Cellular,
Zero Coupon, Step-up,
due 06/01/06+ 115,000 85,100
NEXTLINK Communications,
Inc., 9.625%, due 10/01/07 30,000 29,325
NEXTLINK Communications,
Inc., 10.750%, due 06/01/09+ 95,000 97,850
NTL, Inc., Series B,
Zero Coupon, Step-up,
due 04/01/08+ 155,000 106,950
Nextel Communications, Inc.,
Zero Coupon, Step-up,
due 10/31/07+ 50,000 35,125
Nextel Communications, Inc.,
Zero Coupon, Step-up,
due 02/15/08+ 110,000 75,900
Nextel International, Inc.,
Zero Coupon, Step-up,
due 04/15/08+ 70,000 35,350
Qwest Communications
International, Inc.,
Zero Coupon, Step-up,
due 10/15/07+ 45,000 35,325
Qwest Communications
International, Inc., 7.250%,
due 11/01/08+ 50,000 49,250
Rural Cellular Corp., Series B,
9.625%, due 05/15/08 65,000 65,650
Triton PCS, Inc., Zero Coupon,
Step-up, due 05/01/08+ 110,000 71,225
Versatel Telecom, BV,
13.250%, due 05/15/08 80,000 83,200
Viatel, Inc., Zero Coupon,
Step-up, due 04/15/08+ 85,000 54,825
<CAPTION>
- -----------------------------------------------------------
CORPORATE BONDS--CONTINUED
- -----------------------------------------------------------
Principal Market
Company Value Value
- -----------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS-CONTINUED
Viatel, Inc., 11.250%,
due 04/15/08 $ 55,000 $ 56,375
Western Wireless Corp.,
10.500%, due 02/01/07 50,000 53,250
-------------
2,403,669
-------------
TELECOMMUNICATIONS EQUIPMENT-2.60%
DTI Holdings, Inc., Series B,
Zero Coupon, Step-up,
due 03/01/08+ 65,000 24,375
Energis, PLC, Series 144A,
9.750%, due 06/15/09+ 55,000 55,963
L-3 Communications Corp.,
Series B, 10.375%,
due 05/01/07 85,000 89,356
NorthEast Optic Network, Inc.,
12.750%, due 08/15/08 25,000 26,000
Pagemart Wireless, Inc.,
Zero Coupon, Step-up,
due 02/01/08+ 45,000 18,225
Spectrasite Holdings, Inc.,
Series 144A, Zero Coupon,
Step-up, due 07/15/08+ 25,000 15,875
Spectrasite Holdings, Inc.,
Series 144A, Zero Coupon,
Step-up, due 04/15/09+ 75,000 42,375
-------------
272,169
-------------
TEXTILES & APPAREL-0.74%
Galey & Lord, Inc., 9.125%,
due 03/01/08 35,000 23,100
J Crew Operating Corp.,
10.375%, due 10/15/07 55,000 54,175
-------------
77,275
-------------
TRANSPORTATION-0.51%
Johnstown America
Industries, Inc., 11.750%,
due 08/15/05 25,000 26,625
</TABLE>
+Non-income producing security.
See notes to financial statements.
- --------------------------------------------------------------------------------
94
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
HIGH YIELD BOND PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)--CONTINUED
<TABLE>
<CAPTION>
- -----------------------------------------------------------
CORPORATE BONDS--CONTINUED
- -----------------------------------------------------------
Principal Market
Company Value Value
- -----------------------------------------------------------
<S> <C> <C>
TRANSPORTATION-CONTINUED
Johnstown America
Industries, Inc., Series C,
11.750%, due 08/15/05 $ 25,000 $ 26,625
-------------
53,250
-------------
UTILITIES - ELECTRIC & GAS-0.38%
International Utility
Structures, Inc., 10.750%,
due 02/01/08 40,000 40,300
-------------
40,300
-------------
TOTAL CORPORATE BONDS
(Cost $9,977,387) 9,601,425
-------------
<CAPTION>
- -----------------------------------------------------------
SHORT-TERM OBLIGATIONS--5.01%
- -----------------------------------------------------------
Principal Market
Company Value Value
- -----------------------------------------------------------
<S> <C> <C>
GOVERNMENT AGENCY-5.01%
Federal Home Loan Mortgage
Corp., 4.600%, due 07/01/99 $525,000 $ 525,000
------------
TOTAL SHORT-TERM
OBLIGATIONS (Cost $525,000) 525,000
------------
<CAPTION>
- -----------------------------------------------------------
RIGHTS AND WARRANTS--0.13%
- -----------------------------------------------------------
Market
Company Shares Value
- -----------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS-0.13%
Allegiance Telecom, Inc.,
Warrants, exp. 02/03/08+ 100 $ 5,713
American Mobile Satellite Corp.,
Warrants, exp. 04/01/08+ 35 1,404
Jazztel, PLC, Warrants,
exp. 04/01/09+ 175 2,734
Versatel Telecom, BV, Warrants,
exp. 05/15/08+ 80 4,010
------------
13,861
------------
TELECOMMUNICATIONS EQUIPMENT 0.00%
DTI Holdings, Inc., Warrants,
exp. 03/01/08+ 325 39
------------
39
------------
TOTAL RIGHTS AND
WARRANTS (Cost $300) 13,900
------------
TOTAL INVESTMENTS
(Cost $10,690,303) 98.93% 10,363,469
Other assets, less liabilities 1.07 111,704
------- ------------
TOTAL NET ASSETS 100.00% $10,475,173
------- ------------
------- ------------
</TABLE>
+Non-income producing security.
See notes to financial statements.
- --------------------------------------------------------------------------------
95
<PAGE>
[This page intentionally left blank]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
"WE EXPECT FLAT TO SLIGHTLY HIGHER SHORT-TERM INTEREST RATES OVER THE NEXT
SEVERAL MONTHS."
--Jean O. Alessandro, Portfolio Manager--
- --------------------------------------------------------------------------------
INCEPTION DATE
August 1, 1985
------------------------------------------------------------------
FUND MANAGER
Massachusetts Financial Services Company
------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGY
To achieve the highest possible current income,
consistent with preservation of capital and
maintenance of liquidity.
------------------------------------------------------------------
NET ASSETS AS OF 6/30/99
$34,673,246
------------------------------------------------------------------
NUMBER OF HOLDINGS
31
------------------------------------------------------------------
DOLLAR WEIGHTED AVERAGE MATURITY
29.8 days
-----------------------
IN THIS SECTION
-----------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JEAN O. ALESSANDRO
- - Joined MFS in 1986
- - Assistant Vice President of MFS Investment Management
- - Bachelors degree from the University of Connecticut
- --------------------------------------------------------------------------------
97
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Portfolio++
<S> <C>
Short-term Obligations 99.71%
Cash 0.29%
</TABLE>
PORTFOLIO QUALITY
<TABLE>
<CAPTION>
- --------------------------------------------
PERCENT OF
RATING PORTFOLIO++
- --------------------------------------------
<S> <C>
AAA 100.00%
</TABLE>
++ Represents on market value of
investments plus cash.
AN INVESTMENT THE MONEY MARKET PORTFOLIO IS NEITHER INSURED NOR GUARANTEED BY
THE U.S. GOVERNMENT.
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 and bank issues, in order to minimize credit risk. As
of June 30, 1999, the Portfolio had assets of approximately $34.7 million. The
average maturity of the Portfolio was 30 days.
We expect flat to slightly higher short-term interest rates over the next
several months.
Investments in the Portfolio are not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
- --------------------------------------------------------------------------------
98
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
30, 1999 31, 1998 31, 1997 31, 1996 31, 1995 31, 1994
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.37 $ 10.23 $ 10.25 $ 10.27 $ 10.25 $ 10.26
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.21 0.35 0.52 0.50 0.50 0.35
Net gains and losses on securities
(both realized and unrealized) 0.01 0.14 (0.02) (0.02) 0.02 (0.01)
--------- ----------- --------- ---------- ---------- ---------
Total from investment operations 0.22 0.49 0.50 0.48 0.52 0.34
LESS DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.35) (0.52) (0.50) (0.50) (0.35)
Dividends in excess of net
investment income
Distributions from capital gains
Distributions in excess of capital
gains
Returns of capital
--------- ----------- --------- ---------- ---------- ---------
Total distributions 0.00 (0.35) (0.52) (0.50) (0.50) (0.35)
Net asset value, end of period $ 10.59 $ 10.37 $ 10.23 $ 10.25 $ 10.27 $ 10.25
--------- ----------- --------- ---------- ---------- ---------
--------- ----------- --------- ---------- ---------- ---------
Total Return (A) 2.14% 4.86% 4.86% 4.65% 5.06% 3.28%
Ratios to Average Net Assets:
Expenses 0.60% 0.64% 0.60% 0.62% 0.63% 0.65%
Net investment income 4.25% 4.74% 4.74% 4.54% 4.89% 3.31%
Portfolio Turnover Rate (B) N/A N/A N/A N/A N/A N/A
Net Assets, At End of Period $34,673,246 $24,416,645 $9,435,454 $7,896,257 $8,312,676 $7,680,485
</TABLE>
(A)Total return assumes reinvestment of all dividends during the period and
does not reflect deduction of account fees and charges that apply to the
separate account or related insurance policies. 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 of less than
one year have not been annualized.
(B)There were no purchases and/or sales of securities other than short term
obligations during the period. Therefore, the portfolio turnover rate has not
been calculated.
- --------------------------------------------------------------------------------
99
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS-99.47%
- --------------------------------------------------------------------------------
Principal Market
Company Value Value
- --------------------------------------------------------------------------------
<S> <C> <C>
GOVERNMENT AGENCY-99.47%
Federal Agricultural
Mortgage Corp., 4.720%,
due 07/01/99 $ 1,700,000 $ 1,700,000
Federal Agricultural
Mortgage Corp., 4.890%,
due 08/20/99 1,800,000 1,787,775
Federal Farm Credit Bank,
4.720%, due 07/12/99 1,000,000 998,558
Federal Farm Credit Bank,
4.770%, due 07/14/99 1,200,000 1,197,933
Federal Farm Credit Bank,
4.830%, due 08/03/99 1,600,000 1,592,916
Federal Farm Credit Bank,
4.700%, due 08/06/99 950,000 945,535
Federal Farm Credit Bank,
4.820%, due 08/19/99 900,000 894,095
Federal Home Loan Bank,
4.670%, due 07/02/99 1,000,000 999,870
Federal Home Loan Bank,
4.770%, due 07/07/99 500,000 499,603
Federal Home Loan Bank,
4.710%, due 07/16/99 1,000,000 998,037
Federal Home Loan Bank,
4.700%, due 07/21/99 1,500,000 1,496,083
Federal Home Loan Bank,
5.010%, due 07/28/99 1,000,000 996,243
Federal Home Loan Bank,
4.780%, due 07/30/99 1,000,000 996,149
Federal Home Loan Bank,
4.930%, due 08/25/99 900,000 893,221
Federal Home Loan
Mortgage Corp., 4.710%,
due 07/06/99 1,148,000 1,147,249
Federal Home Loan
Mortgage Corp., 4.790%,
due 08/02/99 1,000,000 995,742
<CAPTION>
- --------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS-CONTINUED
- --------------------------------------------------------------------------------
Principal Market
Company Value Value
- --------------------------------------------------------------------------------
<S> <C> <C>
GOVERNMENT AGENCY-CONTINUED
Federal Home Loan
Mortgage Corp., 5.050%,
due 08/10/99 $ 850,000 $ 845,231
Federal Home Loan
Mortgage Corp., 4.950%,
due 08/16/99 800,000 794,940
Federal Home Loan
Mortgage Corp., 4.790%,
due 08/19/99 1,000,000 993,480
Federal Home Loan
Mortgage Corp., 4.731%,
due 08/27/99 1,000,000 992,509
Federal Home Loan
Mortgage Corp., 4.892%,
due 09/02/99 900,000 892,377
Federal Home Loan
Mortgage Corp., 4.967%,
due 09/03/99 1,000,000 991,396
Federal National Mortgage
Association, 4.720%,
due 07/09/99 1,500,000 1,498,427
Federal National Mortgage
Association, 4.670%,
due 07/15/99 1,200,000 1,197,821
Federal National Mortgage
Association, 4.800%,
due 07/19/99 1,525,000 1,521,340
Federal National Mortgage
Association, 4.780%,
due 07/20/99 1,200,000 1,196,916
Federal National Mortgage
Association, 4.720%,
due 07/23/99 1,500,000 1,495,674
Federal National Mortgage
Association, 4.850%,
due 08/04/99 1,000,000 995,420
Federal National Mortgage
Association, 4.810%,
due 08/13/99 1,000,000 994,255
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
100
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)-CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS-CONTINUED
- --------------------------------------------------------------------------------
Principal Market
Company Value Value
- --------------------------------------------------------------------------------
<S> <C> <C>
GOVERNMENT AGENCY-CONTINUED
Federal National Mortgage
Association, 4.790%,
due 08/24/99 $1,000,000 $ 992,815
Tennessee Valley Authority,
4.800%, due 07/22/99 950,000 947,340
-------------
TOTAL SHORT-TERM
OBLIGATIONS
(Cost $34,488,642) 34,488,950
-------------
TOTAL INVESTMENTS
(Cost $34,488,642) 99.47% 34,488,950
Other assets, less liabilities 0.53 184,296
-------------
TOTAL NET ASSETS 100.00% $34,673,246
-------------
-------------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
101
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1999 (UNAUDITED)
INTERNATIONAL WORLD GLOBAL HARD EMERGING
EQUITY GROWTH STOCK ASSETS GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C>
ASSETS
Investments, at cost-see accompanying portfolios $20,538,717 $ 97,928,067 $ 4,567,289 $ 82,027,625
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
Investments, at market value (Notes B and C) $23,045,153 $122,638,514 $ 4,838,123 $112,702,862
Cash 1,808,332 3,373,968 185,805 433,847
Accrued investment income 71,236 636,801 16,441 28,089
Receivable for portfolio securities sold 174,949 28,955 408,965 1,512,184
Other assets 3,367
----------- ------------ ----------- ------------
TOTAL ASSETS 25,099,670 126,678,238 5,452,701 114,676,982
LIABILITIES
Payable for portfolio securities purchased 483,303 240,101 2,258,228
Payable for foreign forward contracts 13,624 19
Accrued investment advisory fees (Note D) 17,488 87,328 3,526 76,803
Accrued expenses 10,092 16,423 3,027 15,237
Other liabilities 3,367
----------- ------------ ----------- ------------
TOTAL LIABILITIES 524,507 103,751 250,021 2,350,287
NET ASSETS $24,575,163 $126,574,487 $5,202,680 $112,326,695
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
NET ASSETS CONSIST OF:
Par value $ 18,838 $ 52,301 $ 5,805 $ 43,468
Capital paid in 21,333,340 101,352,355 8,716,887 71,330,957
Accumulated undistributed net investment
income (loss) 477 978,897 42,197 (209,364)
Accumulated undistributed net realized gain (loss)
on investments 731,278 (500,222) (3,833,487) 10,486,603
Net unrealized gain (loss) on investments and
translation of assets and liabilities in foreign
currency (Note C) 2,491,230 24,691,156 271,278 30,675,031
----------- ------------ ----------- ------------
NET ASSETS $24,575,163 $126,574,487 $ 5,202,680 $112,326,695
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
Shares of common stock outstanding ($0.01 par
value, 1,000,000,000 shares authorized) 1,883,761 5,230,062 580,510 4,346,756
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
Net asset value, offering and redemption
price per share $ 13.05 $ 24.20 $ 8.96 $ 25.84
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
See notes to financial statements.
- -------------------------------------------------------------------------------
102
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITAL SMALL GROWTH AND
GROWTH COMPANY GROWTH INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C>
ASSETS
Investments, at cost-see accompanying portfolios $160,988,568 $74,605,482 $14,224,105 $59,162,048
------------ ----------- ----------- -----------
------------ ----------- ----------- -----------
Investments, at market value (Notes B and C) $259,433,174 $76,214,479 $17,037,684 $70,033,500
Cash 14,144,280 5,810,203 1,303,804 9,155,418
Accrued investment income 118,022 30,789 7,386 132,148
Receivable for portfolio securities sold 429,728 255,738
Other assets
------------ ----------- ----------- -----------
TOTAL ASSETS 273,695,476 82,055,471 18,778,602 79,576,804
LIABILITIES
Payable for portfolio securities purchased 4,754,360 347,256 307,184 496,077
Payable for foreign forward contracts
Accrued investment advisory fees (Note D) 211,541 53,259 11,524 52,218
Accrued expenses 27,521 17,163 4,944 9,130
Other liabilities
------------ ----------- ----------- -----------
TOTAL LIABILITIES 4,993,422 417,678 323,652 557,425
NET ASSETS $268,702,054 $81,637,793 $18,454,950 $79,019,379
------------ ----------- ----------- -----------
------------ ----------- ----------- -----------
NET ASSETS CONSIST OF:
Par value $ 86,462 $ 52,122 $ 12,364 $ 36,232
Capital paid in 170,881,326 85,896,615 14,134,262 61,220,013
Accumulated undistributed net investment
income (loss) (406,966) 244,335 (41,615) 318,505
Accumulated undistributed net realized gain (loss)
on investments (303,091) (6,164,276) 1,536,360 6,573,177
Net unrealized gain (loss) on investments and
translation of assets and liabilities in foreign
currency (Note C) 98,444,323 1,608,997 2,813,579 10,871,452
------------ ----------- ----------- -----------
NET ASSETS $268,702,054 $81,637,793 $18,454,950 $79,019,379
------------ ----------- ----------- -----------
------------ ----------- ----------- -----------
Shares of common stock outstanding ($0.01 par
value, 1,000,000,000 shares authorized) 8,646,244 5,212,140 1,236,400 3,623,252
------------ ----------- ----------- -----------
------------ ----------- ----------- -----------
Net asset value, offering and redemption
price per share $ 31.08 $ 15.66 $ 14.93 $ 21.81
------------ ----------- ----------- -----------
------------ ----------- ----------- -----------
<CAPTION>
HIGH YIELD MONEY
BALANCED BOND MARKET
PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C>
ASSETS
Investments, at cost-see accompanying portfolios $42,381,267 $10,690,303 $34,488,642
----------- ----------- -----------
----------- ----------- -----------
Investments, at market value (Notes B and C) $43,700,460 $10,363,469 $34,488,950
Cash 935,704 48,273 99,028
Accrued investment income 402,115 197,441 459
Receivable for portfolio securities sold 652,901 1,100,000
Other assets
----------- ----------- -----------
TOTAL ASSETS 45,038,279 11,262,084 35,688,437
LIABILITIES
Payable for portfolio securities purchased 200,171 775,884 996,103
Payable for foreign forward contracts 470 28
Accrued investment advisory fees (Note D) 32,679 6,854 15,490
Accrued expenses 6,106 4,145 3,598
Other liabilities
----------- ----------- -----------
TOTAL LIABILITIES 239,426 786,911 1,015,191
NET ASSETS $44,798,853 $10,475,173 $34,673,246
----------- ----------- -----------
----------- ----------- -----------
NET ASSETS CONSIST OF:
Par value $ 33,154 $ 10,640 $ 32,727
Capital paid in 39,303,397 10,734,224 33,967,288
Accumulated undistributed net investment
income (loss) 394,609 356,922 674,135
Accumulated undistributed net realized gain (loss)
on investments 3,748,663 (299,779) (1,212)
Net unrealized gain (loss) on investments and
translation of assets and liabilities in foreign
currency (Note C) 1,319,030 (326,834) 308
----------- ----------- -----------
NET ASSETS $44,798,853 $10,475,173 $34,673,246
----------- ----------- -----------
----------- ----------- -----------
Shares of common stock outstanding ($0.01 par
value, 1,000,000,000 shares authorized) 3,315,420 1,063,943 3,272,716
----------- ----------- -----------
----------- ----------- -----------
Net asset value, offering and redemption
price per share $ 13.51 $ 9.85 $ 10.59
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
- -------------------------------------------------------------------------------
103
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
INTERNATIONAL WORLD GLOBAL HARD EMERGING
EQUITY GROWTH STOCK ASSETS GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Income:
Interest $ 16,032 $ 53,690 $ 14,465 $ 166,115
Dividends 176,935 2,078,118 69,418 100,742
Foreign taxes withheld (13,957) (125,124) (1,803) (2,151)
------------ ------------ ------------ ------------
Total investment income 179,010 2,006,684 82,080 264,706
------------ ------------ ------------ ------------
Expenses:
Advisory fees (Note D) 97,872 447,424 18,264 404,426
Custodian fees 22,804 26,233 9,218 22,796
Shareholder reports 4,788 29,085 1,188 24,548
Professional fees 1,849 11,372 465 9,628
Insurance expense 134 824 33 697
Directors fees 307 1,881 77 1,592
Security valuation 3,916 6,826 2,605 6,788
Miscellaneous expenses 666 4,107 167 3,477
------------ ------------ ------------ ------------
Total expenses 132,336 527,752 32,017 473,952
------------ ------------ ------------ ------------
Net investment income (loss) 46,674 1,478,932 50,063 (209,246)
------------ ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain (loss) on investments 792,680 (500,222) (103,576) 11,106,359
Net realized gain (loss) from foreign
currency transactions (46,197) (38,082) (6,528) (97)
Net unrealized gain (loss) on investments 540,222 13,003,100 917,456 1,060,069
Net unrealized gain (loss) on translation
of assets and liabilities in
foreign currency 26,174 (25,113) 791 (187)
------------ ------------ ------------ ------------
Net realized and unrealized
gain (loss) on investments
and foreign currency 1,312,879 12,439,683 808,143 12,166,144
------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations $ 1,359,553 $ 13,918,615 $ 858,206 $ 11,956,898
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
104
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITAL SMALL GROWTH AND
GROWTH COMPANY GROWTH INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <S> <C> <C> <C>
INVESTMENT INCOME
Income:
Interest $ 180,070 $ 110,136 $ 16,891 $ 119,460
Dividends 664,560 375,104 12,092 507,455
Foreign taxes withheld (10,069) (12,242)
------------ ------------ ------------ ------------
Total investment income 834,561 485,240 28,983 614,673
------------ ------------ ------------ ------------
Expenses:
Advisory fees (Note D) 1,145,747 296,673 53,171 262,949
Custodian fees 1,924 6,091 9,298 5,033
Shareholder reports 57,210 25,143 3,467 17,093
Professional fees 22,334 7,572 1,340 6,667
Insurance expense 1,618 548 97 483
Directors fees 3,692 1,251 219 1,102
Security valuation 934 1,820 2,524 2,040
Miscellaneous expenses 8,068 2,734 482 2,407
------------ ------------ ------------ ------------
Total expenses 1,241,527 341,832 70,598 297,774
------------ ------------ ------------ ------------
Net investment income (loss) (406,966) 143,408 (41,615) 316,899
------------ ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain (loss) on investments (204,510) (6,163,313) 1,632,811 6,596,635
Net realized gain (loss) from foreign
currency transactions
Net unrealized gain (loss) on investments 32,586,754 5,073,520 413,543 3,279,171
Net unrealized gain (loss) on translation
of assets and liabilities in
foreign currency (357)
------------ ------------ ------------ ------------
Net realized and unrealized
gain (loss) on investments
and foreign currency 32,381,887 (1,089,793) 2,046,354 9,875,806
------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations $ 31,974,921 $ (946,385) $ 2,004,739 $ 10,192,705
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
<CAPTION>
HIGH YIELD MONEY
BALANCED BOND MARKET
PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Interest $ 450,097 $ 408,550 $ 769,687
Dividends 134,424 4,891
Foreign taxes withheld (2,037)
------------ ------------ ------------
Total investment income 582,484 413,441 769,687
------------ ------------ ------------
Expenses:
Advisory fees (Note D) 158,969 36,279 79,313
Custodian fees 9,062 6,129 2,028
Shareholder reports 9,846 2,353 7,705
Professional fees 3,848 921 3,009
Insurance expense 280 67 218
Directors fees 635 154 496
Security valuation 3,806 10,257 1,695
Miscellaneous expenses 1,393 332 1,088
------------ ------------ ------------
Total expenses 187,839 56,492 95,552
------------ ------------ ------------
Net investment income (loss) 394,645 356,949 674,135
------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain (loss) on investments 4,034,013 (113,695) (321)
Net realized gain (loss) from foreign
currency transactions 6,834 (27)
Net unrealized gain (loss) on investments (1,077,342) 93,311 2,870
Net unrealized gain (loss) on translation
of assets and liabilities in
foreign currency (7,033)
------------ ------------ ------------
Net realized and unrealized
gain (loss) on investments
and foreign currency 2,956,472 (20,411) 2,549
------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations $ 3,351,117 $ 336,538 $ 676,684
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
105
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL WORLD GLOBAL
EQUITY GROWTH STOCK HARD ASSETS
PORTFOLIO PORTFOLIO PORTFOLIO
----------------------------- ---------------------------- ------------------------------
(UNAUDITED) YEAR (UNAUDITED) YEAR (UNAUDITED) YEAR
SIX MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED
ENDED JUNE DECEMBER ENDED JUNE DECEMBER ENDED JUNE DECEMBER
30, 1999 31, 1998 30, 1999 31, 1998 30, 1999 31, 1998
<S> <C> <C> <C> <C> <C> <C>
INCREASE(DECREASE) IN NET ASSETS:
Net investment income (loss) $ 46,674 $ 3,547 $ 1,478,932 $ 2,975,735 $ 50,063 $ 104,164
Net realized gain (loss) on
security transactions 792,680 89,758 (500,222) 8,469,883 (103,576) (3,440,007)
Net realized gain (loss) from
foreign currency transactions (46,197) (156,658) (38,082) (175,497) (6,528) (10,261)
Net unrealized gain (loss)
on investments 540,222 1,966,214 13,003,100 (7,851,427) 917,456 2,712,585
Net unrealized gain (loss) on
translation of assets and
liabilities in foreign currencies 26,174 (41,380) (25,113) 12,664 791 (347)
------------ ------------ ------------ ------------ ------------ -----------
Net increase in net
assets resulting
from operations 1,359,553 1,861,481 13,918,615 3,431,358 858,206 (633,866)
Distribution to shareholders
from net investment income (369,547) (2,384,505) (5,738) (72,099)
Distribution to shareholders
from capital gains (56,828) (1,361,644) (8,089,550)
Distribution to shareholders in
excess of capital gains
Increase in net assets
derived from shareholder
transactions (Note E) 6,639,329 14,771,618 3,489,760 12,372,497 16,549 (165,026)
------------ ------------ ------------ ------------ ------------ -----------
Net increase in net assets 7,998,882 16,576,271 15,677,184 5,329,800 869,017 (870,991)
Net Assets:
Beginning of period 16,576,281 10 110,897,303 105,567,503 4,333,663 5,204,654
------------ ------------ ------------ ------------ ------------ -----------
End of period $ 24,575,163 $ 16,576,281 $126,574,487 $110,897,303 $ 5,202,680 $ 4,333,663
------------ ------------ ------------ ------------ ------------ -----------
------------ ------------ ------------ ------------ ------------ -----------
Undistributed net investment
income (loss) $ 477 $ 0 $978,897 $ (92,406) $ 42,197 $ (4,400)
------------ ------------ ------------ ------------ ------------ -----------
------------ ------------ ------------ ------------ ------------ -----------
</TABLE>
See notes to financial statements
- --------------------------------------------------------------------------------
106
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EMERGING CAPITAL SMALL
GROWTH GROWTH COMPANY
PORTFOLIO PORTFOLIO PORTFOLIO
----------------------------- ------------------------------ ------------------------------
(UNAUDITED) YEAR (UNAUDITED) YEAR (UNAUDITED) YEAR
SIX MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED
ENDED JUNE DECEMBER ENDED JUNE DECEMBER ENDED JUNE DECEMBER
30, 1999 31, 1998 30, 1999 31, 1998 30, 1999 31, 1998
<S> <C> <C> <C> <C> <C> <C>
INCREASE(DECREASE) IN NET ASSETS:
Net investment income (loss) $ (209,246) $ (445,035) $ (406,966) $ (629,314) $ 143,408 $ 1,082,537
Net realized gain (loss) on
security transactions 11,106,359 258,669 (204,510) 16,589,924 (6,163,313) 8,755,432
Net realized gain (loss) from
foreign currency transactions (97) (3,643) (266)
Net unrealized gain (loss)
on investments 1,060,069 22,327,253 32,586,754 37,765,178 5,073,520 (20,518,258)
Net unrealized gain (loss) on
translation of assets and
liabilities in foreign currencies (187) (19) (357) 112
------------- ------------- ------------- ------------- ------------- ------------
Net increase in net
assets resulting
from operations 11,956,898 22,137,225 31,974,921 53,725,634 (946,385) (10,680,289)
Distribution to shareholders
from net investment income (104,318) (902,706)
Distribution to shareholders
from capital gains (258,669) (6,500,203) 10,537,442 (1,941,991) (7,789,869)
Distribution to shareholders in
excess of capital gains (422,623)
Increase in net assets
derived from shareholder
transactions (Note E) 4,574,420 18,110,269 45,224,885 30,690,264 6,286,839 16,211,405
------------- ------------- ------------- ------------- -------------- -------------
Net increase in net assets 16,531,318 39,566,202 70,699,603 73,878,456 3,294,145 (3,161,459)
Net Assets:
Beginning of period 95,795,377 56,229,175 198,002,451 124,123,995 78,343,648 81,505,107
------------- ------------- ------------- ------------- -------------- -------------
End of period $ 112,326,695 $ 95,795,377 $ 268,702,054 $ 198,002,451 $ 81,637,793 $ 78,343,648
------------- ------------- ------------- ------------- -------------- -------------
------------- ------------- ------------- ------------- -------------- -------------
Undistributed net investment
income (loss) $ (209,364) $ (21) $ (406,966) $ 0 $ 244,335 $ 205,245
------------- ------------- ------------- ------------- -------------- -------------
------------- ------------- ------------- ------------- -------------- -------------
</TABLE>
- --------------------------------------------------------------------------------
107
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH
GROWTH AND INCOME
PORTFOLIO PORTFOLIO
---------------------------- ---------------------------
(UNAUDITED) YEAR (UNAUDITED) YEAR
SIX MONTHS ENDED SIX MONTHS ENDED
ENDED JUNE DECEMBER ENDED JUNE DECEMBER
30, 1999 31, 1998 30, 1999 31, 1998
<S> <C> <C> <C> <C>
INCREASE(DECREASE) IN NET ASSETS:
Net investment income (loss) $ (41,615) $ (39,937) $ 316,899 $ 507,944
Net realized gain (loss) on
security transactions 1,632,811 109,231 6,596,635 669,425
Net realized gain (loss) from
foreign currency transactions
Net unrealized gain (loss)
on investments 413,543 2,400,036 3,279,171 5,278,331
Net unrealized gain (loss) on
translation of assets and
liabilities in foreign currencies
------------ ------------ ------------ ------------
Net increase in net assets
resulting from operations 2,004,739 2,469,330 10,192,705 6,455,700
Distribution to shareholders
from net investment income (507,944)
Distribution to shareholders
from capital gains (165,744) (517,197)
Increase in net assets
derived from shareholder
transactions (Note E) 5,072,213 9,074,402 4,034,341 19,683,698
------------ ------------ ------------ ------------
Net increase in net assets 6,911,208 11,543,732 13,709,849 25,631,454
Net Assets:
Beginning of period 11,543,742 10 65,309,530 39,678,076
------------ ------------ ------------ ------------
End of period $ 18,454,950 $ 11,543,742 $ 79,019,379 $ 65,309,530
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Undistributed net investment
income (loss) $ (41,615) $ (39,937) $ 318,505 $ 1,606
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
108
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HIGH YIELD MONEY
BALANCED BOND MARKET
PORTFOLIO PORTFOLIO PORTFOLIO
---------------------------- ---------------------------- -----------------------------
(UNAUDITED) YEAR (UNAUDITED) YEAR (UNAUDITED) YEAR
SIX MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED
ENDED JUNE DECEMBER ENDED JUNE DECEMBER ENDED JUNE DECEMBER
30, 1999 31, 1998 30, 1999 31, 1998 30, 1999 31, 1998
<S> <C> <C> <C> <C> <C> <C>
INCREASE(DECREASE) IN NET ASSETS:
Net investment income (loss) $ 394,645 $ 653,714 $ 356,949 $ 505,196 $ 674,135 $ 825,203
Net realized gain (loss) on
security transactions 4,034,013 2,873,015 (113,695) (186,084) (321) 17
Net realized gain (loss) from
foreign currency transactions 6,834 (987) (27)
Net unrealized gain (loss)
on investments (1,077,342) 1,776,147 93,311 (420,145) 2,870 (2,562)
Net unrealized gain (loss) on
translation of assets and
liabilities in foreign currencies (7,033) 6,870
------------ ------------ ------------ ------------ ------------ ------------
Net increase in net assets
resulting from operations 3,351,117 5,308,759 336,538 (101,033) 676,684 822,658
Distribution to shareholders
from net investment income (7,596) (651,185) (505,196) (825,203)
Distribution to shareholders
from capital gains (703,150) (2,438,951)
Increase in net assets
derived from shareholder
transactions (Note E) 7,044,728 10,257,554 2,169,792 8,575,062 9,579,917 14,983,736
------------ ------------ ------------ ------------ ------------ ------------
Net increase in net assets 9,685,099 12,476,177 2,506,330 7,968,833 10,256,601 14,981,191
Net Assets:
Beginning of period 35,113,754 22,637,577 7,968,843 10 24,416,645 9,435,454
------------ ------------ ------------ ------------ ------------ ------------
End of period $ 44,798,853 $ 35,113,754 $ 10,475,173 $ 7,968,843 $ 34,673,246 $ 24,416,645
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
Undistributed net investment
income (loss) $ 394,609 $ 705 $ 356,922 $ 0 $ 674,135 $ 0
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
109
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE A--ORGANIZATION
Jefferson Pilot Variable Fund, Inc. (the "Company") 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 and variable annuity contracts issued by
Jefferson Pilot Financial Insurance Company and its affiliates. The Company is
composed of eleven separate portfolios (the "Portfolios"): the International
Equity Portfolio, the World Growth Stock Portfolio, the Global Hard Assets
Portfolio, the Emerging Growth Portfolio, the Capital Growth Portfolio, the
Small Company Portfolio, the Growth Portfolio, the Growth and Income Portfolio,
the Balanced Portfolio, the High Yield Bond Portfolio, and the Money Market
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.
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.
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.
- --------------------------------------------------------------------------------
110
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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 June 30, 1999.
The Portfolios may enter into forward foreign currency contracts to protect
securities and related receivables and payables against fluctuations in future
foreign currency rates. A forward contract is an agreement to buy or sell
currencies of different countries on a specified future date at a specified
currency relative to the U.S. dollar. The market value of the contract will
fluctuate with changes in the currency exchange rates. Contracts are valued
daily and the change in the market values are recorded by the Portfolios as
unrealized appreciation or depreciation of foreign currency translations. At
June 30, 1999, the International Equity, Emerging Growth, Balanced, and High
Yield Bond Portfolios had the following open forward foreign currency contracts:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
U.S. DOLLAR UNREALIZED
SETTLEMENT CONTRACTS TO VALUE AT APPRECIATION
SALES CONTRACTS DATE DELIVER PROCEEDS 06/30/99 (DEPRECIATION)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INTERNATIONAL EQUITY PORTFOLIO
Japanese yen 08/18/99 130,956,500 $1,084,550 $1,086,997 $(2,447)
-------
$(2,447)
-------
-------
HIGH YIELD BOND PORTFOLIO
Euro dollars 07/01/99 25,063 25,864 25,846 $ 18
-------
$ 18
-------
-------
<CAPTION>
- ---------------------------------------------------------------------------------------
U.S. DOLLAR UNREALIZED
PURCHASE SETTLEMENT CONTRACTS TO VALUE AT APPRECIATION
CONTRACTS DATE RECEIVE COST 06/30/99 (DEPRECIATION)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INTERNATIONAL EQUITY PORTFOLIO
Euro dollars 07/01/99 93,287 $ 97,046 $ 96,202 $ (844)
Great British pounds 07/01/99 81,402 128,746 128,314 (432)
Japanese yen 08/18/99 129,241,057 1,084,550 1,074,649 (9,901)
---------
$(11,177)
---------
---------
EMERGING GROWTH PORTFOLIO
Japanese yen 07/02/99 5,575,204 46,081 46,062 $ (19)
---------
$ (19)
---------
---------
BALANCED PORTFOLIO
Great British pounds 07/01/99 22,897 36,362 36,091 $ (271)
Great British pounds 07/02/99 8,423 13,391 13,277 (114)
Great British pounds 07/05/99 10,021 15,885 15,797 (88)
Great British pounds 07/06/99 13,234 20,858 20,861 3
---------
$ (470)
---------
---------
HIGH YIELD BOND PORTFOLIO
Euro dollars 07/01/99 24,844 25,666 25,620 $ (46)
---------
$ (46)
---------
---------
</TABLE>
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111
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
FEDERAL INCOME TAXES: Each Portfolio intends to qualify as a regulated
investment company by complying with the requirements of the Internal Revenue
Code 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.
At June 30, 1999, gross unrealized gains and losses were as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
UNREALIZED UNREALIZED UNREALIZED
GAINS LOSSES GAIN (LOSS)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
International Equity Portfolio $ 3,227,216 $ 720,780 $ 2,506,436
World Growth Stock Portfolio 31,431,181 6,720,734 24,710,447
Global Hard Assets Portfolio 542,057 271,223 270,834
Emerging Growth Portfolio 32,709,898 2,034,661 30,675,237
Capital Growth Portfolio 98,508,503 63,897 98,444,606
Small Company Portfolio 5,812,635 4,203,638 1,608,997
Growth Portfolio 2,947,328 133,749 2,813,579
Growth and Income Portfolio 12,028,928 1,157,476 10,871,452
Balanced Portfolio 2,547,304 1,228,111 1,319,193
High Yield Portfolio 143,924 470,758 (326,834)
Money Market Portfolio 308 - 308
</TABLE>
At June 30, 1999, the Global Hard Assets Portfolio had an unrealized foreign
currency gain of $444. The International Equity, World Growth Stock, Emerging
Growth, Capital Growth, and Balanced Portfolios had unrealized foreign currency
losses of $15,206, $19,291, $206, $283 and $163, respectively.
At December 31, 1998, the following Portfolios had accumulated realized capital
losses, for Federal income tax purposes, which are available to be used to
offset future realized capital gains: the Global Hard Assets Portfolio had
$3,580,229 of which $3,350,893 expires in 2006, and $229,336 expires in 2005;
High Yield Bond Portfolio had $128,147 which expires in 2006; Money Market
Portfolio had $858 of which $400 expires in 2002, $391 expires in 2004, and $67
expires in 2005.
In addition, during the period from November 1, 1998 through December 31, 1998,
the International Equity, Global Hard Assets, and Emerging Growth Portfolios
incurred foreign currency losses of $38,592, $427, and $21, respectively. The
Global Hard Assets, Emerging Growth, High Yield Bond, and Money Market
Portfolios incurred capital losses of $128,614, $85,526, $55,941, and $33,
respectively. These losses are treated for Federal income tax purposes as if
they occurred on January 1, 1999. Accordingly, during 1998 these Portfolios may
have made distributions, as required by Internal Revenue Code Regulations, in
excess of amounts recognized for financial reporting purposes.
- --------------------------------------------------------------------------------
112
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Purchases and sales of investment securities for the period ended June 30, 1999,
other than short-term obligations, were as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
COST OF PROCEEDS
INVESTMENT FROM
SECURITIES INVESTMENT
PURCHASED SECURITIES SOLD
- --------------------------------------------------------------------------------
<S> <C> <C>
International Equity Portfolio $11,913,453 $ 6,196,326
World Growth Stock Portfolio 18,482,235 18,510,008
Global Hard Assets Portfolio 5,588,701 5,402,508
Emerging Growth Portfolio 72,233,571 74,806,151
Capital Growth Portfolio 68,378,737 29,203,199
Small Company Portfolio 88,750,543 93,063,674
Growth Portfolio 22,462,046 18,471,072
Growth and Income Portfolio 33,347,727 32,601,366
Balanced Portfolio 75,740,720 72,045,189
High Yield Portfolio 3,786,161 2,334,809
</TABLE>
NOTE D--INVESTMENT ADVISORY FEES AND MANAGEMENT AGREEMENT
The Company has entered into an investment management agreement with Jefferson
Pilot Investment Advisory Corporation, "JPIA", a wholly-owned subsidiary of
Jefferson-Pilot Corporation. Under the agreement, JPIA provides investment
management and certain administrative services for the Company. JPIA has, in
turn, retained Lombard Odier International Portfolio Management Limited to
provide investment advisory services for the International Equity Portfolio;
Templeton Global Advisors Limited to provide investment advisory services for
the World Growth Stock Portfolio; Van Eck Associates Corporation to provide
investment advisory services for the Global Hard Assets Portfolio; Lord, Abbett
& Company to provide investment advisory services for the Small Company
Portfolio; Strong Capital Management, Inc. to provide investment advisory
services for the Growth Portfolio; Warburg Pincus Asset Management, Inc. to
provide investment advisory services for the Growth and Income Portfolio; Janus
Capital Corporation to provide investment advisory services for the Capital
Growth and Balanced Portfolios; and Massachusetts Financial Services Company to
provide investment advisory services for the Emerging Growth, High Yield Bond
and Money Market 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 asset value of each Portfolio as shown
below:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FIRST $200 NEXT $1.10 OVER $1.30
MILLION BILLION BILLION
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
International Equity Portfolio 1.00% 1.00% 1.00%
World Growth Stock Portfolio .75% .70% .65%
Global Hard Assets Portfolio .75% .70% .65%
Emerging Growth Portfolio .80% .75% .70%
Capital Growth Portfolio 1.00% .95% .90%
Small Company Portfolio .75% .70% .65%
Growth Portfolio .75% .75% .75%
Growth and Income Portfolio .75% .70% .65%
Balanced Portfolio .75% .70% .65%
High Yield Bond Portfolio .75% .75% .75%
Money Market Portfolio .50% .45% .40%
</TABLE>
- --------------------------------------------------------------------------------
113
<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.
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY PORTFOLIO
FOR THE SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
--------------------------------------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares issued 663,288 $ 8,415,285 1,388,935 $15,009,669
Shares issued as reinvestment
of dividends 4,687 56,828 - -
Shares redeemed (151,372) (1,832,784) (21,778) (238,051)
----------- ----------- ----------- -----------
Net increase 516,603 $ 6,639,329 1,367,157 $14,771,618
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
<CAPTION>
WORLD GROWTH STOCK PORTFOLIO
FOR THE SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
---------------------------------------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares issued 158,301 $ 3,498,091 394,394 $ 9,327,872
Shares issued as reinvestment
of dividends 428,951 9,394,729 638,687 14,983,192
Shares redeemed (420,616) (9,403,060) (503,891) (11,938,567)
------- ------------ ---------- ------------
Net increase 166,636 $ 3,489,760 529,190 $ 12,372,497
------- ------------ ---------- ------------
------- ------------ ---------- ------------
<CAPTION>
GLOBAL HARD ASSETS PORTFOLIO
FOR THE SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
---------------------------------------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares issued 89,806 $ 717,002 193,513 $ 1,631,108
Shares issued as reinvestment
of dividends 9,544 72,099 5,873 52,180
Shares redeemed (92,466) (772,552) (209,525) (1,848,314)
------- ------------ ---------- ------------
Net increase (decrease) 6,884 $ 16,549 (10,139) $ (165,026)
------- ------------ ---------- ------------
------- ------------ ---------- ------------
<CAPTION>
EMERGING GROWTH PORTFOLIO
FOR THE SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
---------------------------------------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares issued 399,667 $ 9,642,605 1,257,911 $24,404,057
Shares issued as reinvestment
of dividends 20,335 468,598 170,978 3,023,470
Shares redeemed (230,249) (5,536,783) (490,481) (9,317,258)
------- ------------ ---------- ------------
Net increase 189,753 $ 4,574,420 938,408 $18,110,269
------- ------------ ---------- ------------
------- ------------ ---------- ------------
</TABLE>
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114
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITAL GROWTH STOCK PORTFOLIO
FOR THE SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
---------------------------------------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares issued 1,050,920 $ 31,099,613 1,446,669 $ 36,281,815
Shares issued as reinvestment
of dividends 583,668 16,688,505 211,952 4,549,478
Shares redeemed (86,456) (2,563,233) (407,453) (10,141,029)
--------- ------------ ---------- -------------
Net increase 1,548,132 $ 45,224,885 1,251,168 $ 30,690,264
--------- ------------ ---------- -------------
--------- ------------ ---------- -------------
<CAPTION>
SMALL COMPANY PORTFOLIO
FOR THE SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
---------------------------------------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares issued 158,941 $ 2,383,940 834,248 $ 15,895,855
Shares issued as reinvestment
of dividends 617,583 9,761,271 422,227 8,677,237
Shares redeemed (387,204) (5,858,372) (423,026) (8,361,687)
--------- ------------ ---------- -------------
Net increase 389,320 $ 6,286,839 833,449 $ 16,211,405
--------- ------------ ---------- -------------
--------- ------------ ---------- -------------
<CAPTION>
GROWTH PORTFOLIO
FOR THE SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
---------------------------------------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares issued 398,985 $ 5,656,731 1,007,173 $ 10,464,685
Shares issued as reinvestment
of dividends 11,575 165,744 - -
Shares redeemed (54,434) (750,262) (126,900) (1,390,283)
--------- ------------ ---------- -------------
Net increase 356,126 $ 5,072,213 880,273 $ 9,074,402
--------- ------------ ---------- -------------
--------- ------------ ---------- -------------
<CAPTION>
GROWTH AND INCOME PORTFOLIO
FOR THE SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
---------------------------------------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares issued 367,331 $ 7,227,151 1,172,029 $ 21,565,743
Shares issued as reinvestment
of dividends 54,012 1,025,140 588,835 10,072,665
Shares redeemed (214,159) (4,217,950) (664,326) (11,954,710)
--------- ------------ ---------- -------------
Net increase 207,184 $ 4,034,341 1,096,538 $ 19,683,698
--------- ------------ ---------- -------------
--------- ------------ ---------- -------------
</TABLE>
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115
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED PORTFOLIO
FOR THE SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
---------------------------------------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares issued 429,419 $ 5,526,061 697,627 $ 8,776,809
Shares issued as reinvestment
of dividends 299,519 3,800,882 301,238 3,539,231
Shares redeemed (175,230) (2,282,215) (163,928) (2,058,486)
--------- ------------ ---------- -------------
Net increase 553,708 $ 7,044,728 834,937 $ 10,257,554
--------- ------------ ---------- -------------
--------- ------------ ---------- -------------
<CAPTION>
HIGH YIELD BOND PORTFOLIO
FOR THE SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
---------------------------------------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares issued 411,996 $ 4,035,915 1,294,477 $ 13,092,077
Shares issued as reinvestment
of dividends 53,246 505,196 - -
Shares redeemed (241,196) (2,371,319) (454,581) (4,517,015)
--------- ------------ ---------- -------------
Net increase 224,046 $ 2,169,792 839,896 $ 8,575,062
--------- ------------ ---------- -------------
--------- ------------ ---------- -------------
<CAPTION>
MONEY MARKET PORTFOLIO
FOR THE SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
---------------------------------------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares issued 2,880,067 $ 30,157,248 4,602,276 $ 48,227,174
Shares issued as reinvestment
of dividends 79,554 825,203 46,686 477,433
Shares redeemed (2,040,801) (21,402,534) (3,217,716) (33,720,871)
--------- ------------ ---------- -------------
Net increase 918,820 $ 9,579,917 1,431,246 $ 14,983,736
--------- ------------ ---------- -------------
--------- ------------ ---------- -------------
</TABLE>
NOTE F--YEAR 2000
Many computer systems use six-digit fields to store and/or calculate dates. With
the approach of the year 2000, certain programs and systems will need to be
enhanced in order to recognize the difference between the year 1900 and the year
2000. Failure to adequately address this issue could have a negative impact on
JPIA's ability to process security transactions, determine net asset values, and
process shareholder activity. JPIA is taking steps that is believes are
reasonably designed to address this problem with respect to its computer systems
and to obtain reasonable assurances that comparable steps are being taken by the
Company's major service providers.
- --------------------------------------------------------------------------------
116
