JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
FROM THE PRESIDENT
--------------------------------------------------------------------------------
[PHOTO]
Dear Policyholder:
Volatility characterized the markets' performance during the first half of
the year reflecting inflation and interest rate uncertainties and concerns over
the extreme valuations of technology stocks. While first quarter returns were
generally positive, returns for the second quarter were negative across many
sectors of the market. Growth stocks, such as those in the technology and
telecommunication sectors, receded during the second quarter while value stocks
(those with an earnings history and strong fundamentals) came back into favor.
On balance, the average stock fund returned 3% for the first half of the year.
For the six months ended June 30th, large capitalization stocks in the
U.S., as measured by the S&P 500 Index, fell 0.42%. Medium capitalization growth
stocks, (Russell Mid-Cap Growth Index) were standout performers with a total
return of 12.15%. The small cap Russell 2000 Index also ended in positive
territory with a 3.04% gain. Overseas markets had a tougher time of it, with the
MSCI EAFE index (large cap stocks in Europe, Australasia and the Far East)
falling 4.63% for the period.
Within the Jefferson Pilot Variable Fund, two Portfolios delivered
noteworthy performance in the first six months while another, the Balanced
Portfolio, completed a solid twelve months under new its sub-advisor, Janus
Capital Corp.
The World Growth Stock Portfolio, managed by Templeton Global Advisors
Limited, increased 4.20%, significantly better than the -3.04% return of its
benchmark, the MSCI World Index. Continuing its pattern of providing superior
returns to shareholders, the Capital Growth Portfolio managed by Janus grew by
6.91% in the period vs. the aforementioned -0.42% for the S&P 500 Index of
domestic large cap stocks. Last, we are well pleased with the solid 12-month
return of 15.03% for the Balanced Portfolio. This compares very favorably with
the 5.98% gain posted by a composite benchmark (consisting of large cap stocks,
intermediate term bonds and treasury bills) for the same one year timeframe. As
you'll recall, Janus became the sub-advisor for this Portfolio on May 1, 1999.
On May 1, 2000, we added a new Portfolio to the Fund. Sub-advised by
Barclays Global Fund Advisors, the S&P 500(1) Index Portfolio seeks to
approximate, before fees and expenses, the total rate of return of common stocks
publicly traded in the United States as represented by the S&P 500 Index. While
not a household name, Barclays has impressive credentials. They created the
first index strategy more than 25 years ago. And with $825 billion under
management, they are the largest institutional investment manager in the
world(2).
1
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<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
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FROM THE PRESIDENT
--------------------------------------------------------------------------------
Sales of Jefferson Pilot Financial's variable life and variable annuity
products remained strong in the first half of 2000. As a result, net new
contributions to the Fund totaled over $77 million in the period. Net assets in
the Fund at the end of June were over $1.3 billion, almost 10 times the level of
5 years ago. While some of this growth is due to the strong stock market
performance of the second half of the `90s, the remainder is attributable to new
purchases and additional contributions from our Ensemble(R), Allegiance(R), and
Alpha policyholders. We thank you for your confidence and will continue to
manage these products to meet your financial planning needs.
Sincerely,
/s/ Ronald R. Angarella
Ronald R. Angarella
President, Jefferson Pilot Variable Fund, Inc.
(1) "S&P 500(R)" is a trademark of The McGraw-Hill Companies, Inc. and has been
licensed for use by Jefferson Pilot Variable Corporation. Ensemble, Allegiance
and Alpha products are not sponsored, endorsed, sold or promoted by Standard &
Poor's and Standard & Poor's makes no representation regarding the advisability
of purchasing either of these products.
(2) Assets under management as of March 31, 2000
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
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<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
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INDEX
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Page
Portfolio Profiles
International Equity Portfolio 5
World Growth Stock Portfolio 13
Global Hard Assets Portfolio 21
Emerging Growth Portfolio 29
Capital Growth Portfolio 37
Small Company Portfolio 45
Growth Portfolio 53
S&P 500 Index Portfolio 59
Value Portfolio 71
Balanced Portfolio 77
High Yield Bond Portfolio 85
Money Market Portfolio 97
Financial Statements 102
Notes to Financial Statements 110
3
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JEFFERSON PILOT VARIABLE FUND, INC.
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INTERNATIONAL EQUITY PORTFOLIO
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"If the US slowdown is confirmed, global markets are well placed to repeat the
fourth quarter rallies seen in both 1998 and 1999."
--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 6/30/00
$42,102,547
---------------------------------------------------
NUMBER OF HOLDINGS
60
---------------------------------------------------
PORTFOLIO TURNOVER
51.57%
--------------------------------------------------------------------------------
----------------------------------------
IN THIS SECTION
----------------------------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
----------------------------------------
RONALD ARMIST
Managing Director
Chief Investment Officer,
Equities
o Joined Lombard in 1983
o 19 years of investment experience
o B.B.S. from University of Cape Town
o Chartered Accountant
----------------------------------------
5
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<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
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INTERNATIONAL EQUITY PORTFOLIO
--------------------------------------------------------------------------------
[SIDEBAR]
[PIE CHART]
Common Stock - 91.02%
Preferred Stock - 4.49%
Cash - 4.49%
------------------------------------
PERCENT OF
TOP TEN EQUITIES PORTFOLIO++
------------------------------------
BP Amoco, PLC 4.02%
Nokia Oyj 3.30%
Total Fina Elf, SA 3.21%
Vodafone AirTouch, PLC 3.19%
Telefonaktiebolaget LM
Ericsson, AB 3.12%
Nippon Telegraph &
Telephone Corp. 2.64%
Aventis, SA 2.61%
CGU, PLC 2.53%
HSBC Holdings, PLC 2.42%
Roche Holding, AG 2.30%
------------------------------------
PERCENTOF
TOP TEN COUNTRIES PORTFOLIO++
------------------------------------
Japan 25.75%
United Kingdom 22.60%
France 8.04%
Netherlands 7.87%
Germany 7.41%
Switzerland 5.32%
Finland 3.30%
Sweden 3.13%
Brazil 3.11%
Ireland 2.46%
++Represents market value of
investments plus cash.
Foreign securities are subject to higher risks than domestic issues including
currency fluctuations, political instability and differences in accounting
methods.
[ENDSIDEBAR]
The value of your JPVF International Equity Portfolio fell 6.3% during the
first six months of 2000. Global equity markets experienced a period of almost
unprecedented volatility, as the rally in technology, media and
telecommunications (TMT) stocks finally gave way to a period of sharp
underperformance when the Dot.Com bubble burst. Unfortunately, markets proved
indiscriminate in their subsequent hostility towards anything redolent of the
`New Economy' and many quality TMTs were thrown out with the Dot.Com bathwater.
Your Portfolio's holdings in such companies as Sony, Vodafone Airtouch and
Vivendi consequently proved detrimental to performance, especially in the second
quarter.
The US economy is at last showing some willingness to respond to Mr.
Greenspan's cooling remedies. Having peaked at 7.3% in the fourth quarter of
1999 (quarter over quarter annualised), US GDP growth slowed to 5.5% in Q1 2000.
Current evidence points to a further slowdown to maybe 3.5% in Q2. June's NAPM
survey implies that Q2's slower rate of growth will be extended into Q3 --
supporting the soft-landing scenario and reinforcing the belief that the Fed has
"almost done enough". Despite this hopefully benign environment, we remain
cautious on the outlook for US equities -- at least on a relative basis compared
with the better prospects available in other global markets. The current account
deficit remains a problem -- albeit one that most investors have been happy to
ignore -- and equity valuations are still extended. Current valuations are
incompatible with anything except a soft-landing. If the earnings story begins
to unravel and investment returns falter, the IT capex cycle -- the key driver
behind the US "productivity miracle" -- will begin to run out of steam. Against
this background international markets look to offer some excellent
diversification benefits for US investors.
In Europe, the leading indicators are following the global pattern, with
evidence of a weaker growth outlook starting to emerge after almost eighteen
months of solid improvement. This augurs well for interest rates, although with
CPI in eight of the eleven EMU members now above the European Central Bank's
comfort level of 2%, we are not as far down the tightening curve as either the
US or the UK. Aggregate TMT valuations have corrected roughly two thirds of the
excesses built up in the
6
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JEFFERSON PILOT VARIABLE FUND, INC.
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INTERNATIONAL EQUITY PORTFOLIO
--------------------------------------------------------------------------------
latter part of last year and the early part of this year. The prospect of more
sustainable headline growth and falling bond yields over the next year or so
should support renewed growth stock outperformance. Restructuring momentum
continues to gather pace following the recent passage of tax reform legislation
in Germany. We are moving overweight.
In the UK, interest rates have peaked. The next move will be down. This
supports our long-held belief that with UK CPI -- as defined by the ECB's
harmonised measure -- now the lowest in Europe, the UK's high real interest
rates are unsustainable. With the leading indicators also pointing downwards,
the UK would appear closest to achieving the soft-landing. With interest rates
set to rise further in the US and Euroland, the relative outlook for UK equities
remains favourable. The only obvious threat is the risk of a fall in sterling,
although given the mounting hysteria over the alleged disadvantages of sterling
remaining outside the EMU, anything which helped remove the barriers to
membership would probably be greeted positively by the market. We remain
overweight.
Japan rebounded from two quarters of contracting GDP with a storming 10%
annualised quarter over quarter growth in Q1. The Bank of Japan's recent TANKAN
survey of business sentiment revealed that manufacturing conditions had improved
to their best level in three years. However, given the likely slowdown in global
growth over the next two or three quarters, the continuing strength of Japan's
external sector -- one of the key drivers of the recent recovery -- must be open
to question. The Bank of Japan's apparent determination to raise rates at the
earliest opportunity also raises the possibility of a significant policy error
on a par with disastrous consumption tax hike of 1997. From a bottom-up
perspective, corporate re-structuring has failed to achieve critical mass,
whilst "New Economy" stocks have been discredited by the performance of Softbank
and Hikari Tsushin. Without more optimism from the consumer, Japan sadly remains
a mean-reverting warrant on global growth. We are moving to underweight.
In the Pacific Rim, growth momentum is peaking and adverse base effects
will inevitably produce less attractive headline numbers in the second half. The
recent passage of legislation through the US Congress granting China "permanent
normal trading relations" effectively guarantees WTO membership. This should
help accelerate structural change over the longer term, but the stellar
performance of the Chinese indices year-to-date pretty much reflects this. Other
markets continue to be led to a greater or lesser degree by a volatile NASDAQ
and slowing global growth expectations. The region is just as TMT dependent as
most other global markets, so the recent "soft landing rally" has supported good
7
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JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO
--------------------------------------------------------------------------------
[SIDEBAR]
--------------------------------------------------------------------------------
International Equity Portfolio and the MSCI EAFE Index
Comparison of Change in Value of $10,000 Investment.
--------------------------------------------------------------------------------
[LINE GRAPH]
INTERNATIONAL
EQUITY MSCI
PORTFOLIO EAFE
1/1/98 10000 10000
10336 10444
11118 11101
11535 11430
11611 11506
11759 11437
6/98 11604 11510
11837 11613
10452 10160
10103 9835
10840 10846
11603 11388
12/98 12166 11823
12327 11774
12063 11480
12704 11945
13203 12415
12526 11761
6/99 13091 12206
13503 12554
13521 12586
13560 12698
13962 13160
14594 13603
12/99 16124 14810
15023 13856
15432 14215
16383 14752
15406 13962
14883 13608
6/00 15112 14125
---------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
---------------------------------------
MSCI
INTERNATIONAL EAFE
EQUITY INDEX
YTD -6.28% -4.63%
1 YEAR 15.44% 15.72%
INCEPTION 17.99% 14.82%
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 Port folio reflects all recurring
expenses and includes the reinvestment of all dividends and distributions. Total
return figures for periods of less than one year have not been annualized.
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.
[ENDSIDEBAR]
recoveries from the likes of China Telecom, Hutchison Whampoa and Samsung
Electronics. However, with the risk of contracting global liquidity, slowing US
growth and the possibility of a stalled recovery in Japan, we remain neutral the
Pacific Rim.
Despite an environment of slowing global growth and increased market
volatility, we remain optimistic on the outlook for equities over the balance of
this year. Our optimism is driven by the following three assumptions.
First, global economies are on track to achieve their much-desired soft
landing as economic growth -- especially in the US -- slows to more sustainable
trend levels. Pro-active monetary tightening appears to be achieving some
measure of success in warding off the supposed evils of inflation. Interest
rates remain on an upward trajectory, but the worst of the tightening is now
behind us. Interest rates in the US, Europe and the UK are likely to peak at
much lower levels than in previous cycles, offering significant positive
surprise potential. Focus will now shift to the timing of the next cuts!
Second, structural reform in Germany and economic recovery in Japan are
gaining momentum. Information technology, software services and
telecommunications capital expenditures will continue to support growth as the
rest of the world begins to close the gap on the US "productivity miracle". The
US continues to provide the model, but as other economies play catch-up,
leadership momentum is crossing the Atlantic. The stubborn refusal of the
Japanese consumer to respond to treatment remains the only major stumbling
block.
Third, the technology, media and telecommunications sectors suffered heavy
losses in the early part of the quarter, correcting at least a portion of the
valuation excesses built up during the irrational Dot.Com euphoria of the
November to March period. Financials and growth stocks are returning to favour.
Buoyant earnings in both the US and Europe should support this trend.
If the US slowdown is confirmed, global markets are well placed to repeat
the fourth quarter rallies seen in both 1998 and 1999.
8
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<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
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INTERNATIONAL EQUITY PORTFOLIO
--------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
(Unaudited)
Six Months
Ended Year Ended Year Ended
June December December
30, 2000 31, 1999 31, 1998
<S> <C> <C> <C>
Net asset value, beginning of period $ 16.07 $ 12.12 $ 10.00
Income From Investment Operations
Net investment loss (0.01) (0.01)
Net gains and losses on securities
(both realized and unrealized) (0.91) 3.96 2.16
------------- --------------- ---------------
Total from investment operations (0.92) 3.95 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 (1.12)
Returns of capital
------------- --------------- ---------------
Total distributions (1.12) 0.00 (0.04)
Net asset value, end of period $ 14.03 $ 16.07 $ 12.12
============= =============== ===============
Total Return (A) (6.28%) 32.54% 21.66%
Ratios to Average Net Assets: (B)
Expenses 1.19% 1.25% 1.55%
Net investment income 0.26% (0.05%) 0.04%
Portfolio Turnover Rate 51.57% 71.98% 77.23%
Net Assets, At End of Period $ 42,102,547 $ 35,640,381 $ 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.
(B) Per share data and ratios are calculated on an annualized basis.
9
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<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)
COMMON STOCK--91.79%
Company Shares Market Value
------------------------------------------------------------------------------
Aerospace & Defense-1.04%
BAE Systems, PLC 69,877 $ 435,872
----------
Automotive Manufacturing-3.57%
Honda Motor Co., Ltd. 20,000 682,410
Toyota Motor Corp. 18,000 821,727
----------
1,504,137
----------
Banking-9.05%
Anglo Irish Bank Corp., PLC 181,700 393,385
Bank of Tokyo-Mitsubishi, Ltd., The 50,000 605,379
Barclays, PLC 31,250 777,347
Credit Suisse Group 2,270 452,995
Deutsche Bank, AG 11,750 973,160
Industrial Bank of Japan, Ltd., The 80,000 607,931
----------
3,810,197
----------
Beverages-2.01%
BRL Hardy, Ltd. 75,610 326,138
Heineken, N.V. 8,534 521,513
----------
847,651
----------
Building Construction-1.19%
Berkeley Group, PLC, The 52,580 499,928
----------
Building Materials-2.83%
CRH, PLC 35,930 652,678
Tostem Corp. 33,000 539,595
----------
1,192,273
----------
Chemicals-2.63%
Aventis, SA (France) 15,100 1,106,590
----------
Commercial Services-2.83%
Granada Group, PLC 67,496 674,449
Vivendi, SA 5,837 517,284
----------
1,191,733
----------
Computer Network-1.01%
Fujitsu Support and Service, Inc. 4,300 426,743
----------
Computer Software - Mini & Micro-1.18%
Trend Micro, Inc.+ 3,000 496,212
----------
Diversified Operations-1.19%
Hutchison Whampoa, Ltd. 40,000 502,886
----------
Electronic Components-1.71%
Epcos, AG+ 3,200 323,313
Koninklijke (Royal) Philips Electronics, N.V. 8,400 397,776
----------
721,089
----------
Electronics-4.93%
Mabuchi Motor Co., Ltd. 2,000 258,976
Samsung Electronics, GDR 6,469 591,105
Sharp Corp. 32,000 567,100
Sony Corp. 7,000 655,000
----------
2,072,181
----------
Electronics - Semiconductors-5.72%
ARM Holdings, PLC+ 58,000 621,711
Infineon Technologies, AG+ 6,460 513,976
Rohm Co., Ltd. 1,900 556,703
STMicroelectronics, N.V. 11,322 716,308
----------
2,408,698
----------
Engineering & Construction-1.74%
ABB, Ltd. 6,097 732,082
----------
Financial Services-2.44%
HSBC Holdings, PLC 89,760 1,026,702
----------
Insurance-5.30%
Aegon, N.V. 20,466 731,181
AXA, SA 2,700 427,051
CGU, PLC 64,430 1,073,020
----------
2,231,252
----------
Manufacturing-1.07%
BBA Group, PLC 68,523 449,212
----------
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
10
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<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)--CONTINUED
COMMON STOCK--CONTINUED
Company Shares Market Value
------------------------------------------------------------------------------
Mining & Metals - Ferrous & Nonferrous-3.10%
Mitsui Mining & Smelting Co., Ltd. 89,000 $ 677,164
Nippon Steel Corp. 297,000 625,993
------------
1,303,157
------------
Oil & Gas - Integrated-8.90%
BP Amoco, PLC 177,870 1,707,337
LUKoil Holding, SA 13,282 678,976
Total Fina Elf, SA 8,840 1,360,914
------------
3,747,227
------------
Oil & Gas Producers-0.56%
Surgutneftegaz, ADR 17,553 233,894
------------
Pharmaceutical-5.23%
Roche Holding, AG 100 976,570
SmithKline Beecham, PLC 53,260 697,500
Takeda Chemical Industries, Ltd. 8,000 526,269
------------
2,200,339
------------
Publishing & Printing-2.24%
Singapore Press Holdings, Ltd. 31,493 491,794
VNU, N.V. 8,680 450,142
------------
941,936
------------
Retail Stores-1.82%
Marui Co., Ltd. 40,000 767,475
------------
Telecommunications - Equipment
& Services-6.47%
Nokia Oyj 27,340 1,400,808
Telefonaktiebolaget LM Ericsson, AB 66,483 1,322,732
------------
2,723,540
------------
Telecommunications - Integrated-5.68%
Deutsche Telekom, AG 13,070 746,714
KPN, N.V. 11,700 525,446
Nippon Telegraph & Telephone Corp. 84 1,119,455
------------
2,391,615
------------
Telecommunications - Wireless-5.07%
China Mobile (Hong Kong), Ltd.+ 58,000 511,546
NTT Mobile Communication
Network, Inc. 10 271,263
Vodafone AirTouch, PLC 335,224 1,355,104
------------
2,137,913
------------
Utilities - Electric & Gas-1.28%
Tokyo Electric Power Co. 22,100 539,959
------------
TOTAL COMMON STOCK
(Cost $35,766,868) 38,642,493
------------
PREFERRED STOCK-4.53%
Computer Software - Mini & Micro-1.40%
SAP, AG 3,171 588,179
------------
Telecommunications - Wireless-3.13%
Tele Sudeste Celular Participacoes,
SA, ADR 26,958 822,219
Telesp Celular Participacoes, SA, ADR 11,098 498,023
------------
1,320,242
------------
TOTAL PREFERRED STOCK
(Cost $1,470,888) 1,908,421
------------
TOTAL INVESTMENTS
(Cost $37,237,756) 96.32% 40,550,914
Other assets, less liabilities 3.68 1,551,633
------ ------------
TOTAL NET ASSETS 100.00% $ 42,102,547
====== ============
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
11
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JEFFERSON PILOT VARIABLE FUND, INC.
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WORLD GROWTH STOCK PORTFOLIO
--------------------------------------------------------------------------------
"...our constant challenge has been to consistently balance risk with potential
reward, even in the face of wide swings in market sentiment."
--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 6/30/00
$138,019,691
---------------------------------------------------
NUMBER OF HOLDINGS
121
---------------------------------------------------
PORTFOLIO TURNOVER
34.76%
--------------------------------------------------------------------------------
----------------------------------------
IN THIS SECTION
----------------------------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
----------------------------------------
----------------------------------------
CINDY SWEETING, CFA
o Joined Templeton
organization in 1997
o Previously vice president
of investments with
McDermott International
Co., Inc.
o Serves on Board of
Directors of the
International Society of
Financial Analysts
o B.A. from Georgetown
University
o Chartered Financial
Analyst
----------------------------------------
13
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JEFFERSON PILOT VARIABLE FUND, INC.
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WORLD GROWTH STOCK PORTFOLIO
--------------------------------------------------------------------------------
[SIDEBAR]
[PIE CHART]
Common Stock - 92.80%
Preferred Stock - 4.45%
Cash - 2.75%
------------------------------------
PERCENT OF
TOP TEN EQUITIES PORTFOLIO++
------------------------------------
ING Groep, N.V. 2.27%
BAE Systems, PLC 2.08%
Aventis, SA 2.00%
Telefonos de Mexico,
SA, ADR, Class L 1.98%
E.On, AG 1.92%
Compaq Computer Corp. 1.91%
Akzo Nobel, N.V. 1.83%
SBC Communications, Inc. 1.81%
Hutchison Whampoa, Ltd. 1.69%
ProSieben Media, AG 1.64%
------------------------------------
PERCENT OF
TOP TEN COUNTRIES PORTFOLIO++
------------------------------------
United States 23.87%
United Kingdom 15.49%
France 7.82%
Japan 7.49%
Netherlands 6.97%
Germany 6.29%
Hong Kong 5.65%
Australia 3.91%
Mexico 2.67%
Spain 2.30%
++Represents market value of
investments plus cash.
Foreign securities are subject to higher risks than domestic issues including
currency fluctuations, political instability and differences in accounting
methods.
[ENDSIDEBAR]
During the first months of 2000, global equity markets continued their
infatuation with technology, media and telecommunications (TMT) companies, but
the final weeks of the first quarter began a fairly significant reversal in the
seemingly entrenched outperformance of TMT stocks versus so-called old economy
stocks. Rising short-term interest rates worldwide triggered the initial decline
in the TMT group, but while even the most exuberant bulls seemed relieved that
the six-month superheated rise of TMT issues had cooled down, the over 40%
plummet of the NASDAQ in the U.S. -- a good proxy for the TMT group as a whole
-- did prove problematic for most other stocks globally during the second
quarter.
The first half of 2000 was therefore generally weak across almost all
markets, with the MSCI World Index declining 3.0% for the period. The
performance of the World Growth Stock Portfolio, which rose 4.2% for the period,
was aided by good stock selection in Europe, particularly in the United Kingdom,
France and the Netherlands, and an increase in the U.S. exposure -- particularly
in undervalued, non-TMT holdings which began to receive more investor attention.
In addition, the portfolio's underweight in Japan added value during the first
half, but this was offset by the underperformance of our Hong Kong and Latin
American holdings, which lagged the overall market.
Given the persistence of the market's multi-year trend favoring growth and
technology, the performance of this most recent period is encouraging given the
very attractive valuation characteristics of your Portfolio. Your Portfolio is
now trading at just over half the valuation of the index benchmarks on a
price-to-earnings and price-to-cashflow basis. This discount is a wide margin by
even our own historical standards, but we remain convinced that while the
Internet and new technologies are hugely important developments, it has not
repealed the laws of earnings and cash flow generation.
We have continued to focus on maintaining a portfolio underpinned by
robust valuations, with our research analysis centered on identifying companies
with improving fundamentals and appreciable upside potential over a three to
five year horizon. Because of the valuation support of your holdings, as well as
their improving corporate fundamentals, the Portfolio has held up reasonably
well during the sharp pullback in global markets -- in which numerous high
profile names that had been
14
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JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
WORLD GROWTH STOCK PORTFOLIO
--------------------------------------------------------------------------------
accorded almost divine status last winter, fell 60% to 90%. The TMT bubble was
simply a case of unattainable expectations. As mentioned above, the Internet is
certainly a transforming technology, but we continue to believe that the biggest
beneficiaries of its potential are likely to be not technology stocks, but
mainstream companies that learn how to use it well.
As you know, there has been considerable discussion about the performance
gap in recent years between so-called "growth" and "value" styles of investing.
To us, one thing stands out: we believe that, over the long term, the weight of
evidence firmly supports our conviction that margins, earnings, and valuations
matter -- irrespective of style. For us, stock selection is not about style
dogma. Rather, we focus dispassionately on ascertaining the earnings power of a
company on a five-year basis, roughly one business cycle, and on being rigorous
about what we are willing to pay for this earnings stream. Sometimes, "growth"
stocks fit the bill. At other times, companies with far more pedestrian earnings
prospects may be the best bargain candidates. For instance, the utility
weighting in the portfolio has been increasing because of what we see as a very
favorable interplay between deregulation, negative sentiment, and attractive
dividend yields. Overall, our constant challenge has been to consistently
balance risk with potential reward, even in the face of wide swings in market
sentiment.
During the second quarter, we continued to take profits in some of our
major telecom, media or technology positions when they reached our target
valuation levels, such as Nortel, Agilent, Applied Materials, Sony and ProSieben
Media. Nomura Securities, Japan's leading stock brokerage firm, is another stock
that has fueled the portfolio's recent performance, appreciating over 40% in the
first half of the year. We initiated a position in Nomura in 1998, when Nomura
was trading at a Price-to-Book ratio under 2x, which made it quite a bit cheaper
than US competitors such as Morgan Stanley and Merrill Lynch. We found the stock
intriguing because of the tremendous growth potential for managed assets in
Japan. This year, that premise has begun to play out, with Japanese savers
moving assets out of the Postal Savings System and into managed equity
investments. By virtue of its commanding domestic market position, Nomura has
been able to gather a good percentage of this new money. While we have trimmed
positions somewhat, we are comfortable with our remaining holdings and believe
that Nomura is well placed to make further gains.
Alcatel was another outstanding performer in the first half of the year,
up over 50%. Investors began to place more value on the French company's optical
networking capabilities and its leading position in broadband access equipment.
After an earnings disappointment in late 1998, the company's management has
proven its ability to unlock shareholder
15
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JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
WORLD GROWTH STOCK PORTFOLIO
--------------------------------------------------------------------------------
[SIDEBAR]
--------------------------------------------------------------------------------
World Growth Stock Portfolio and the MSCI World Index
Comparison of Change in Value of $10,000 Investment.
--------------------------------------------------------------------------------
[LINE GRAPH]
WORLD GROWTH MSCI
STOCK WORLD
PORTFOLIO INDEX
8/1/85 10000 10000
9112 10137
10526 11822
12932 14371
6/86 12715 15328
12765 16146
13449 16882
14918 20707
14999 21951
16167 23311
12408 19712
13855 22022
6/88 14352 21836
14141 21928
14034 24433
15373 25008
15862 24689
18247 27584
18041 28634
17244 24562
6/90 18671 26580
15554 21760
16176 23904
17797 26288
17325 25434
18848 27260
19812 28439
19777 26152
6/92 20910 26660
20281 27143
21015 27114
22440 29479
23314 31306
25138 32814
28104 33384
27156 33628
6/94 26728 34678
28551 35464
27248 35248
27603 36944
29865 38568
31357 40772
31703 42762
33105 44543
6/96 34373 45880
34737 46568
37795 48757
38862 48935
43136 56368
47062 58029
43588 56656
48979 64769
6/98 47104 66084
39514 58160
44831 70223
44840 72518
50285 75767
49060 74433
54181 86767
53309 87442
6/00 56459 84131
-----------------------------------
AVERAGE ANNUAL TOTAL RETURNS
-----------------------------------
WORLD MSCI
GROWTH WORLD
STOCK INDEX
YTD 4.20% -3.04%
1 YEAR 12.28% 11.04%
5 YEAR 13.58% 15.51%
10 YEAR 11.70% 10.21%
INCEPTION 12.30% 15.34%
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 Port folio reflects all recurring expenses
and includes the reinvestment of all dividends and distributions. Total return
figures for periods of less than one year have not been annualized.
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.
[ENDSIDEBAR]
value though cost-cutting and renewed dedication to profitable growth.
Because of the markets' increasing insistence on the delivery of near-term
earnings estimates, and the inability of many companies to match expectations,
we have seen a two-tier market emerge globally, and are finding potential
bargains among high-quality names. The consumer goods sector is a good example.
We have recently been able to purchase several household-name companies at what
we consider excellent prices. In the energy sector, we added certain European
energy companies some time ago when a pall of gloom hung over the oil patch due
to falling oil prices.
In terms of individual markets, it is always difficult to generalize.
However, Japan stands out this quarter for several reasons. First, the MSCI
Japan Index fell a sizable 6%, partly due to the unraveling of overinflated
near-term expectations for Japanese companies and the economy. The difficulty
Japan still finds itself in, fully a decade after the equity market peak, was
exemplified by the political disarray evident in the general election. To
investors, this signals a lack of policy direction, and an economy that is still
weak. There are certainly numerous macro-economic reasons not to want to invest
in Japan -- low growth, politics, interest rate uncertainty, slow deregulation,
an aging population -- but there is really nothing new in these. So while the
restraints on economic acceleration in Japan remain real and deeply frustrating
-- these factors do not in themselves prevent corporations in Japan from
improving their profit margins. These restructuring companies are the focus of
our analysis and as they have been identified, the portfolio's weighting in
Japan has increased. Conversely, we are encouraged by the rapid economic
recovery in other markets in the Asian region. The recent pullbacks in Hong Kong
and Korea have provided us with good bargain-hunting prospects once again.
In sum, even with the latest recovery of some technology stocks, the
recent declines have underscored the extreme overvaluation and riskiness of many
of these companies and reinforced our conviction that following our stock
selection discipline is well suited to positioning the portfolio for the long
term.
16
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JEFFERSON PILOT VARIABLE FUND, INC.
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WORLD GROWTH STOCK PORTFOLIO
--------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
(Unaudited)
Six Months
Ended Year Ended Year Ended Year Ended Year Ended Year Ended
June December December December December December
30, 2000 31, 1999 31, 1998 31, 1997 31, 1996 31, 1995
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 26.08 $ 21.90 $ 23.28 $ 23.31 $ 21.20 $ 19.00
Income From Investment Operations
Net investment income 0.23 0.41 0.56 0.53 0.49 0.45
Net gains and losses on securities
(both realized and unrealized) 0.87 4.10 0.12 2.97 3.56 2.65
------------ ------------ ------------ ------------ ------------ ------------
Total from investment operations 1.10 4.51 0.68 3.50 4.05 3.10
Less Distributions to Shareholders
Dividends from net investment income (0.23) (0.07) (0.47) (0.53) (0.48) (0.43)
Dividends in excess of net
investment income (0.13) (0.03)
Distributions from capital gains (0.39) (0.26) (1.59) (2.76) (1.46) (0.47)
Distributions in excess of capital gains (0.21)
Returns of capital
------------ ------------ ------------ ------------ ------------ ------------
Total distributions (0.75) (0.33) (2.06) (3.53) (1.94) (0.90)
Net asset value, end of period $ 26.43 $ 26.08 $ 21.90 $ 23.28 $ 23.31 $ 21.20
============ ============ ============ ============ ============ ============
Total Return (A) 4.20% 20.86% 2.85% 15.33% 19.22% 16.35%
Ratios to Average Net Assets: (B)
Expenses 0.87% 0.88% 0.92% 0.91% 0.88% 0.96%
Net investment income 2.00% 1.73% 2.44% 2.33% 2.20% 2.31%
Portfolio Turnover Rate 34.72% 24.80% 33.95% 30.22% 27.50% 18.09%
Net Assets, At End of Period $138,019,691 $133,027,008 $110,897,303 $105,567,503 $ 91,995,634 $ 73,692,357
</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) Per share data and ratios are calculated on an annualized basis.
17
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JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
WORLD GROWTH STOCK PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)
COMMON STOCK--92.35%
Company Shares Market Value
------------------------------------------------------------------------------
Aerospace & Defense-2.76%
BAE Systems, PLC 457,500 $ 2,853,747
Rolls-Royce, PLC 269,698 957,520
------------
3,811,267
------------
Agricultural Operations-0.64%
Archer-Daniels-Midland Co. 90,568 888,699
------------
Airlines-1.69%
British Airways, PLC 143,900 827,888
Singapore Airlines, Ltd. 92,800 917,802
Swire Pacific, Ltd. 732,000 596,305
------------
2,341,995
------------
Appliances-0.28%
Best Denki Company, Ltd. 200 1,378
Guangdong Kelon Electrical
Holdings Company, Ltd. 711,000 385,372
------------
386,750
------------
Automotive Manufacturing-0.99%
Volkswagen, AG 24,000 920,245
Volvo, AB 20,000 436,681
------------
1,356,926
------------
Automotive Parts & Equipment-0.40%
Autoliv, Inc. 22,200 546,729
------------
Banking-4.55%
Banca Nazionale del Lavoro 376,000 1,329,985
Bank Austria, AG 30,800 1,506,342
Bank Handlowy W Warszawie 12,212 192,644
DBS Group Holdings, Ltd. 67,337 864,593
Nordic Baltic Holding 162,600 1,232,843
Westpac Banking Corporation, Ltd. 161,100 1,165,569
------------
6,291,976
------------
Building Materials-0.70%
Cemex, SA de CV, CPO 4 19
Nichiha Corp. 67,200 539,879
Owens Corning 46,500 430,125
------------
970,023
------------
Building Services-0.20%
Hanson, PLC+ 39,500 275,113
------------
Chemicals-5.50%
Akzo Nobel, N.V. 58,800 2,508,244
Aventis, SA (France) 18,100 1,326,443
Aventis, SA (Germany) 19,654 1,422,428
BASF, AG 31,000 1,261,455
Clariant, AG 2,900 1,080,743
------------
7,599,313
------------
Commercial Services-2.43%
Dun & Bradstreet Corp., The 47,100 1,348,238
Gartner Group, Inc., Class B+ 110,000 1,086,250
Invensys, PLC 243,900 915,779
------------
3,350,267
------------
Computer Equipment & Services-2.66%
Compaq Computer Corp. 102,800 2,627,825
Hewlett-Packard Co. 8,400 1,048,950
------------
3,676,775
------------
Computer Information & Technology-0.13%
Fujitsu, Ltd. 5,000 173,438
------------
Computer Network-1.46%
24/7 Media, Inc.+ 30,550 477,344
3Com Corp.+ 26,600 1,532,825
------------
2,010,169
------------
Diversified Operations-2.44%
Hutchison Whampoa, Ltd. 184,800 2,323,335
Internatio-Muller, N.V. 60,800 1,049,080
------------
3,372,415
------------
Electronics-0.91%
Sony Corp. 13,400 1,253,857
------------
Environmental Controls-0.92%
Waste Management, Inc. 67,000 1,273,000
------------
Financial Services-4.42%
Australia & New Zealand Banking
Group, Ltd. 51,000 392,261
ICICI, Ltd., ADR 43,900 823,125
ING Groep, N.V. 45,900 3,115,146
Nomura Securities Co., Ltd., The 72,000 1,765,948
------------
6,096,480
------------
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
18
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JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
WORLD GROWTH STOCK PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)-CONTINUED
--------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Company Shares Market Value
------------------------------------------------------------------------------
Food Products-0.33%
Northern Foods, PLC 255,954 $ 461,143
------------
Forest Products & Paper-1.57%
International Paper Co. 29,100 867,544
Stora Enso, Oyj, Class R 93,800 858,694
UPM-Kymmene Oyj 17,900 446,127
------------
2,172,365
------------
Home Furnishings-0.96%
Newell Rubbermaid, Inc. 51,600 1,328,700
------------
Import & Export-1.32%
Li & Fung, Ltd. 363,000 1,816,164
------------
Insurance-5.84%
Ace, Ltd. 32,000 896,000
AXA 12,800 2,024,540
ReliaStar Financial Corp. 36,200 1,898,238
UnumProvident Corp. 37,700 756,356
XL Capital, Ltd. 15,300 828,113
Zurich Allied, AG 3,300 1,635,693
------------
8,038,940
------------
Machinery-0.60%
Makita Corp. 86,000 821,784
------------
Manufacturing-1.60%
Desc, SA de CV, Series B 111,000 69,916
Grupo Imsa, SA de CV, ADR 43,000 620,813
Metso Oyj 56,400 681,212
Varitronix International, Ltd. 483,500 840,465
------------
2,212,406
------------
Medical Products-0.79%
Nycomed Amersham, PLC 112,875 1,096,066
------------
Mining & Metals - Ferrous & Nonferrous-1.79%
Broken Hill Proprietary Co. 105,200 1,247,493
Industrias Penoles, SA 143,300 243,123
Pechiney, SA+ 23,485 983,795
------------
2,474,411
------------
Mining & Metals - Precious-0.49%
Anglo American Platinum Corp. 23,392 674,179
------------
Oil & Gas - Distribution & Marketing-1.32%
Burlington Resources, Inc. 47,800 1,828,350
------------
Oil & Gas - Integrated-5.61%
Elf Aquitaine, SA 10,500 2,158,982
Occidental Petroleum Corp. 77,500 1,632,344
Repsol, SA 111,000 2,218,510
Shell Transport & Trading Co. 208,600 1,741,755
------------
7,751,591
------------
Oil & Gas Producers-0.67%
Ranger Oil, Ltd.+ 172,500 919,721
------------
Pharmaceutical-6.31%
Abbott Laboratories 39,600 1,764,675
AstraZeneca, PLC 28,924 1,352,097
Celltech Group, PLC+ 66,164 1,282,209
Elan Corp., PLC, ADR+ 27,500 1,332,031
Merck KGaA 29,000 884,011
Mylan Laboratories, Inc. 55,400 1,011,050
Ono Pharmaceutical Co., Ltd. 25,000 1,075,127
------------
8,701,200
------------
Publishing & Printing-1.60%
Wolters Kluwer, N.V., CVA 82,550 2,207,769
------------
Railroad-0.72%
East Japan Railway Co. 170 989,778
------------
Real Estate-1.36%
Nationwide Health Properties, Inc. 42,600 593,738
Unibail (Union du
Credit-Bail Immobilier) 9,200 1,278,758
------------
1,872,496
------------
Retail Stores-5.99%
Adidas-Salomon, AG 12,200 675,959
Albertson's, Inc. 49,900 1,659,175
Federated Department Stores, Inc.+ 29,700 1,002,375
Hudson's Bay Co. 46,700 494,830
J.C. Penney Co., Inc. 94,900 1,749,719
Marks & Spencer, PLC 194,500 683,916
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
19
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JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
WORLD GROWTH STOCK PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)-CONTINUED
--------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Company Shares Market Value
------------------------------------------------------------------------------
Retail Stores-Continued
Matsuzakaya Co., Ltd 3,000 $ 8,081
Safeway, PLC 240,700 936,562
Tesco, PLC 334,339 1,040,222
------------
8,250,839
------------
Security Systems-0.78%
Williams, PLC 184,600 1,076,018
------------
Telecommunications - Equipment &
Services-2.15%
Alcatel, SA, ADR 23,227 1,544,596
MasTec, Inc.+ 16,200 618,638
Nortel Networks Corp. 11,680 797,160
------------
2,960,394
------------
Telecommunications - Integrated-5.82%
Nippon Telegraph & Telephone Corp. 110 1,465,953
SBC Communications, Inc. 57,400 2,482,550
Telecom Corporation of New
Zealand, Ltd. 146,800 514,857
Telefonica de Argentina, SA 27,000 857,250
Telefonos de Mexico, SA, ADR, Class L 47,600 2,719,150
------------
8,039,760
------------
Telecommunications - Wireline-0.20%
Telesp - Telecomunicacoes de
Sao Paulo, SA (Brazil) 17,222,060 185,204
Telesp - Telecomunicacoes de
Sao Paulo, SA (US) 5,310 98,235
------------
283,439
------------
Textiles & Apparel-0.48%
Yue Yuen Industrial Holdings 300,000 665,811
------------
Toys-0.69%
Mattel, Inc. 72,300 953,456
------------
Transportation-1.88%
Airborne Freight Corp. 45,800 867,338
Koninklijke Frans Maas Groep, N.V. 29,800 685,583
Seino Transportation Company, Ltd. 205,000 1,034,673
------------
2,587,594
------------
Utilities - Electric & Gas-6.76%
E.On, AG 53,500 2,636,024
Hongkong Electric Holdings, Ltd. 299,000 962,784
Iberdrola, SA 72,900 943,395
Korea Electric Power Corp. 20,500 636,150
National Grid Group, PLC 152,670 1,204,255
National Power, PLC 121,700 775,711
Potomac Electric Power Co. 42,362 1,059,050
PowerGen, PLC 130,100 1,112,892
------------
9,330,261
------------
Water Treatment-1.64%
Kurita Water Industries, Ltd. 52,137 1,150,644
Thames Water, PLC 85,843 1,111,215
------------
2,261,859
------------
TOTAL COMMON STOCK
(Cost $109,903,813) 127,451,686
------------
PREFERRED STOCK-4.43%
Broadcasting-1.64%
ProSieben Media, AG 17,980 2,257,841
------------
Multimedia-1.03%
News Corporation Ltd., The 117,267 1,419,807
------------
Telecommunications - Integrated-1.48%
Embratel Participacoes, SA, ADR 64,700 1,528,538
Telecomunicacoes Brasileiras, SA, ADR 5,310 515,734
------------
2,044,272
Telecommunications - Wireless-0.28%
Tele Sudeste Celular Participacoes,
SA, ADR 12,542 382,531
------------
TOTAL PREFERRED STOCK
(Cost $2,588,774) 6,104,451
------------
TOTAL INVESTMENTS
(Cost $112,492,587) 96.78% 133,556,137
------------
Other assets, less liabilities 3.22 4,463,554
------ ------------
TOTAL NET ASSETS 100.00% $138,019,691
====== ============
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
20
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JEFFERSON PILOT VARIABLE FUND, INC.
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GLOBAL HARD ASSETS PORTFOLIO
--------------------------------------------------------------------------------
"...hard assets had mixed results, with exceptional returns on most energy
securities and healthy performance in the real estate sector, but disappointing
results in most other hard asset sectors."
--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 6/30/00
$5,853,086
---------------------------------------------------
NUMBER OF HOLDINGS
87
---------------------------------------------------
PORTFOLIO TURNOVER
52.55%
---------------------------------------------------
--------------------------------------------------------------------------------
----------------------------------------
IN THIS SECTION
----------------------------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
----------------------------------------
DEREK S. VAN ECK, CFA
o M.B.A. from J.L. Kellogg
Graduate School of Management
o B.A. from Williams College
o Chartered Financial Analyst
----------------------------------------
----------------------------------------
KEVIN L. REID
o Joined Van Eck in 1995
o MBA from Harvard Business School
o B.A. from Colgate University
----------------------------------------
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JEFFERSON PILOT VARIABLE FUND, INC.
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GLOBAL HARD ASSETS PORTFOLIO
--------------------------------------------------------------------------------
[SIDEBAR]
[PIE CHART]
Common Stock - 98.93%
Rights and Warrants - 0.05%
Cash - 1.02%
------------------------------------
PERCENT OF
TOP TEN EQUITIES PORTFOLIO++
------------------------------------
Stillwater Mining Co. 3.39%
Apache Corp. 3.32%
Alcoa, Inc. 2.72%
Talisman Energy, Inc. 2.68%
Boston Properties, Inc. 2.61%
Anadarko Petroleum Corp. 2.45%
Equity Office Properties
Trust 2.45%
Global Industries, Ltd. 2.39%
Canadian Natural
Resources, Ltd. 2.20%
Grant Prideco, Inc. 2.11%
------------------------------------
PERCENT OF
TOP TEN INDUSTRIES PORTFOLIO++
------------------------------------
Oil & Gas Producers 19.15%
Real Estate 18.95%
Oil & Gas - Integrated 12.20%
Mining & Metals - Precious 10.16%
Oil & Gas Services &
Equipment 10.15%
Forest Products & Paper 9.63%
Mining & Metals -
Ferrous & Nonferrous 7.38%
Oil & Gas - Distribution
& Marketing 4.69%
Aerospace & Defense 1.71%
++Represents market value of
investments plus cash.
Foreign securities are subject to higher risks than domestic issues including
currency fluctuations, political instability and differences in accounting
methods.
[ENDSIDEBAR]
We are pleased to report that the JPVF Global Hard Assets Portfolio had a
total return of 0.9% for the six months ended June 30, 2000, compared with a
0.4% loss for the S&P 500 Index. During that period, hard assets had mixed
results, with exceptional returns on most energy securities and healthy
performance in the real estate sector, but disappointing results in most other
hard asset sectors. Large allocations to the energy and real estate sectors and
reductions in forest products and industrial metals holdings proved beneficial
to portfolio performance during the period.
Market Review
In the first half of the year, energy commodities and stocks were the
clear winners, particularly those that were natural gas-related. Natural gas
prices soared, up 92% in the first half of the year. Natural gas-oriented
exploration and production companies, having languished in the first quarter,
suddenly exploded higher in April and May as it became clear that the natural
gas supply and demand equation was turning dramatically positive. A confluence
of events was responsible for this, including favorable weather during April and
May (30% warmer-than-normal weather led to increased natural gas usage for air
conditioning and electricity generation), declining supplies, and a
longer-than-expected maintenance period for nuclear generators, resulting in
greater demand for natural gas. These factors resulted in a significant
inventory decline that continues to worsen.
The price of crude oil jumped by over 35% during the six month period as
OPEC agreed to limit production, inventories were at historical lows, and oil
producers were reluctant to increase production. Exploration and production
stocks were up approximately 52% and oil services stocks were up on average
almost 40% over the last six months.
During the first half of the year, we increased the Portfolio's allocation
to energy shares from 36% at the beginning of 2000 to 46% of portfolio assets, a
move that helped performance. We continued to emphasize exploration and
production companies.
Real estate securities substantially outperformed the general market in
the first half of the year, providing returns of over 13%. Strong fundamentals,
very attractive valuations and 7% yields all contributed to the sector's strong
performance. However, the strongest influence was an investor shift in focus
from growth stocks to defensive value
22
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GLOBAL HARD ASSETS PORTFOLIO
--------------------------------------------------------------------------------
stocks in a highly volatile market. The top performing sectors among real estate
securities in the first half were hotel and apartment stocks, while office
properties also performed well. Our emphasis on these sectors and our decision
to increase the Portfolio's real estate allocation from about 17% in January to
20% by the end of June both proved beneficial.
The forest and paper products sector was down sharply overall in the first
half of the year, in spite of rising pulp prices. Lumber prices fell
substantially lower and forest product stocks declined over 38% for the period
despite strong fundamentals, promising supply/demand pictures and healthy
corporate restructuring activity. Rather than focusing on these strengths, the
market rejected cyclical stocks as central banks worldwide continued to raise
interest rates and investors began to worry about a possible global economic
slowdown. We reduced the Portfolio's position in forest and paper product stocks
from 24% in January to the current approximately 10% as market direction became
clear in the second quarter.
Being cyclical in nature, industrial metals shares experienced much of the
same negative bias as the forest and paper products sector and, as a result,
were down dramatically in the first half of the year, despite only a slight
decline in related commodity prices and low inventories. We reduced the
Portfolio's industrial metals weighting from over 12% at the start of the year
to about 8% by June 30.
Precious metals have had mixed results so far this year, with a slight
decline in the price of gold, but record highs for platinum prices and strength
in palladium prices. Precious metals shares, however, had disappointing
performance. We have maintained a small position of about 10% in this sector,
primarily in those metals companies that have an industrial demand base, such as
palladium.
The Outlook
Looking forward, fundamentals for most hard asset sectors remain strong.
Most commodity companies have strong earnings momentum, and while this momentum
will probably slow in coming quarters, we expect earnings to continue to
surprise on the upside.
Forecasts of a slowdown in global economic growth, we believe, have been
exaggerated--the accelerated growth rates of the last two years may not be
repeated, but we do not believe we are heading into a global recession. Thus, in
general, hard asset securities should perform well.
We plan to continue to favor energy companies in the near future, which
are expected to post second quarter earnings that are up sharply and which are
substantially higher than those of the general market or even those of the
technology sector. A reversion back to colder winters (with the end of La Nina)
23
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
GLOBAL HARD ASSETS PORTFOLIO
--------------------------------------------------------------------------------
[SIDEBAR]
--------------------------------------------------------------------------------
Global Hard Assets Portfolio, the S&P 500 Index and the
Lipper Benchmark(1)
Comparison of Change in Value of $10,000 Investment.
--------------------------------------------------------------------------------
[LINE GRAPH]
GLOBAL
HARD ASSETS LIPPER S&P 500
PORTFOLIO BENCHMARK INDEX
8/1/85 10000 10000 10000
9602 9916 9481
9960 11626 9069
10217 13264 10276
6/86 10141 14049 9058
12987 13070 12189
13646 13800 12415
22164 16745 19345
20392 17584 18429
24761 18746 22113
18325 14519 16944
16901 15345 15396
6/88 16755 16359 15041
14766 16411 13359
14433 16915 13768
15249 18110 14711
14364 19705 14488
15006 21812 15770
17210 22256 18387
15812 21585 16804
6/90 13785 22936 14925
14846 19799 15425
13035 21564 13893
12337 24685 13197
13532 24631 14518
12194 25947 13445
12316 28106 13809
11826 27399 12923
6/92 12760 27921 13400
12844 28801 12548
11916 30245 11167
14112 31562 13844
18279 31711 18325
15635 32520 16453
19578 33274 20875
19639 32021 19124
6/94 17542 32160 18704
19936 33732 22616
16882 33725 19626
17214 36998 18492
17323 40519 18717
18152 43729 19788
17348 46353 18676
21724 49103 22803
6/96 19740 51595 21453
18695 53500 21026
17793 58251 19758
16473 58505 18114
14423 68711 15898
14571 73857 16091
9852 75978 11395
10722 86553 12346
6/98 9650 89402 11564
8439 80526 9846
8487 97646 9610
8912 102504 10284
10080 109717 12179
9921 102866 12324
10113 118171 12591
10016 120882 13696
6/00 10204 117670 14228
----------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
----------------------------------------------------
GLOBAL HARD S&P 500 LIPPER
ASSETS INDEX BENCHMARK(1)
YTD 0.90% -0.42% 13.34%
1 YEAR 1.23% 7.25% 15.27%
5 YEAR -10.04% 23.77% -5.33%
10 YEAR -2.96% 17.76% -0.48%
INCEPTION 0.14% 17.97% 2.39%
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"), 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 Port folio
reflects all recurring expenses and includes reinvestment of all dividends and
distributions. Total return figures for periods of less than one year have not
been annualized.
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 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, 2000. 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.
[ENDSIDEBAR]
this year, increasing demand for natural gas-fired electricity and declining
supplies should support higher natural gas prices. On the oil side, current high
prices of $30 per barrel for crude may not be maintained, but we expect prices
to be supported in the mid-$20 range due primarily to a lack of excess capacity
as well as a dearth of reinvestment in the industry. We will continue to focus
on those energy companies that will benefit the most from these elevated prices.
We expect real estate securities to continue to provide competitive
returns in the second half of the year, driven by healthy fundamentals,
attractive dividends and continued rotation into the sector as a defensive play
in an uncertain market.
We would like to thank you for your participation in the JPVF Global Hard
Assets Portfolio and look forward to helping you meet your investment objectives
in the future.
24
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JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
GLOBAL HARD ASSETS PORTFOLIO
--------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
(Unaudited)
Six Months
Ended Year Ended Year Ended Year Ended Year Ended Year Ended
June December December December December December
30, 2000 31, 1999 31, 1998 31, 1997 31, 1996 31, 1995
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.99 $ 7.55 $ 8.92 $ 16.60 $ 16.61 $ 16.25
Income From Investment Operations
Net investment income (loss) 0.07 0.14 0.17 0.02 (0.03) 0.05
Net gains and losses on securities
(both realized and unrealized) 0.01 1.31 (1.41) (7.30) 0.45 0.40
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 0.08 1.45 (1.24) (7.28) 0.42 0.45
Less Distributions to Shareholders
Dividends from net investment income (0.07) (0.01) (0.13) (0.02) (0.05)
Dividends in excess of net
investment income (0.04) (0.07) (0.04)
Distributions from capital gains (0.43)
Distributions in excess of capital gains (0.31)
Returns of capital
---------- ---------- ---------- ---------- ---------- ----------
Total distributions (0.11) (0.01) (0.13) (0.40) (0.43) (0.09)
Net asset value, end of period $ 8.96 $ 8.99 $ 7.55 $ 8.92 $ 16.60 $ 16.61
========== ========== ========== ========== ========== ==========
Total Return (A) 0.90% 19.15% (13.85%) (44.63%) 2.57% 2.76%
Ratios to Average Net Assets: (B)
Expenses 1.11% 1.17% 1.44% 1.07% 1.04% 1.01%
Net investment income 1.77% 1.51% 2.13% 0.63% (0.11%) 0.24%
Portfolio Turnover Rate 52.55% 215.51% 193.80% 19.70% 64.78% 23.98%
Net Assets, At End of Period $5,853,086 $5,524,726 $4,333,663 $5,204,654 $7,554,427 $6,867,645
</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) Per share data and ratios are calculated on an annualized basis.
25
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JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
GLOBAL HARD ASSETS PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
COMMON STOCK--100.23%
Company Shares Market Value
------------------------------------------------------------------------------
Aerospace & Defense-1.73%
Honeywell International, Inc. 3,000 $ 101,063
------------
Building Materials-0.93%
Louisiana-Pacific Corp. 5,000 54,375
------------
Commercial Services-1.36%
Mayne Nickless, Ltd. 38,750 79,803
------------
Forest Products & Paper-9.76%
Abitibi-Consolidated, Inc. 12,500 117,188
Aracruz Celulose, SA, ADR 900 17,381
Canfor Corp. 6,500 57,687
Fort James Corp. 2,000 46,250
Georgia-Pacific Group 1,550 40,688
Plum Creek Timber Company, Inc. 800 20,800
Sappi, Ltd., ADR 5,000 36,875
Stora Enso, Oyj, Class R 5,500 50,350
Tembec, Inc., Class A+ 6,250 60,952
TimberWest Forest Corp. 9,400 65,978
Weyerhaeuser Co. 1,000 43,000
Willamette Industries, Inc. 500 13,625
------------
570,774
------------
Lodging-0.94%
Host Marriott Corp. 3,000 28,125
Interstate Hotels Corp.+ 22 65
Wyndham International, Inc., Class A+ 10,752 26,880
------------
55,070
------------
Mining & Metals - Ferrous & Nonferrous-7.46%
AK Steel Holdings Corp. 11,009 88,072
Alcan Aluminium, Ltd. 1,600 49,600
Alcoa, Inc. 5,554 161,066
Billiton, PLC 10,700 43,578
Capral Aluminum, Ltd. 4,300 6,442
Portman, Ltd.+ 109,300 52,501
WMC, Ltd. 8,000 35,896
------------
437,155
------------
Mining & Metals - Precious-10.29%
AngloGold, Ltd. 2,188 91,698
Barrick Gold Corp. 1,500 27,281
Franco-Nevada Mining Corp., Ltd. 308 3,555
Gold Fields of South Africa, Ltd., ADR 4,000 5,125
Gold Fields, Ltd. 425 1,667
Homestake Mining Co. 10,000 68,750
Newcrest Mining, Ltd.+ 38,000 102,672
Placer Dome, Inc. 10,550 100,884
Stillwater Mining Co.+ 7,200 200,691
------------
602,323
------------
Oil & Gas - Distribution & Marketing-4.75%
Enron Corp. 800 51,600
Tidewater, Inc. 2,350 84,600
Valero Energy Corp. 1,700 53,975
Williams Companies, Inc., The 2,100 87,544
------------
277,719
------------
Oil & Gas - Integrated-12.36%
AO Tatneft, ADR+ 4,200 41,213
BP Amoco, PLC, ADR 2,200 124,438
Conoco, Inc., Class A 800 17,600
Exxon Mobil Corp. 1,006 78,971
Grant Prideco, Inc.+ 5,000 125,000
Nabors Industries, Inc.+ 2,450 101,828
Royal Dutch Petroleum Co., ADR 1,500 92,344
Texaco, Inc. 1,300 69,225
USX-Marathon Group 2,900 72,681
------------
723,300
------------
Oil & Gas Producers-19.41%
Alberta Energy Co., Ltd. 2,100 84,754
Anadarko Petroleum Corp. 2,950 145,472
Apache Corp. 3,350 197,022
Barrett Resources Corp.+ 1,250 38,047
Canadian Natural Resources, Ltd.+ 4,500 130,593
Ensign Resource Service Group, Inc. 1,500 49,403
Global Marine, Inc.+ 3,300 93,019
Ocean Energy, Inc.+ 5,100 72,356
Origin Energy, Ltd. 48,297 46,688
Santa Fe International Corp. 3,400 118,788
Talisman Energy, Inc. (Canada)+ 3,000 99,312
Talisman Energy, Inc. (US)+ 1,800 59,625
------------
1,135,079
------------
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
26
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JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
GLOBAL HARD ASSETS PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)-CONTINUED
--------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Company Shares Market Value
------------------------------------------------------------------------------
Oil & Gas Services & Equipment-10.29%
Cooper Cameron Corp.+ 1,230 $ 81,180
ENSCO International, Inc. 3,300 118,181
Global Industries, Ltd.+ 7,500 141,563
NQL Drilling Tools, Inc., Class A+ 5,000 30,371
R & B Falcon Corp.+ 4,000 94,250
Schlumberger, Ltd. 500 37,313
Stolt Offshore, SA+ 2,100 29,663
Transocean Sedco Forex, Inc. 1,296 69,255
------------
601,776
------------
Real Estate-19.16%
AMB Property Corp. 2,000 45,625
Apartment Investment & Management Co. 700 30,275
Bedford Property Investors, Inc. 1,500 27,844
Boston Properties, Inc. 4,000 154,500
Brandywine Realty Trust 2,800 53,550
Brookfield Properties Corp. 6,000 79,571
Cresent Real Estate Equities Co. 1,500 30,750
Equity Office Properties Trust 5,278 145,468
Equity Residential Properties Trust 1,400 64,400
Kilroy Realty Corp. 1,000 25,938
Macerich Co., The 1,500 33,094
Mack-Cali Realty Corp. 2,250 57,797
Oxford Properties Group, Inc.+ 7,500 85,797
Prentiss Properties Trust 3,800 91,200
Prologis Trust 2,000 42,625
Simon Property Group, Inc. 2,800 62,125
TrizecHahn Corp. 5,000 89,375
------------
1,119,934
------------
Transportation-0.62%
Knightsbridge Tankers, Ltd. 1,800 36,000
------------
Utilities - Electric & Gas-1.17%
United Energy, Ltd. 35,000 68,508
------------
TOTAL COMMON STOCK
(Cost $5,770,928) 5,862,879
------------
RIGHTS AND WARRANTS--0.05%
Company Shares Market Value
------------------------------------------------------------------------------
Real Estate-0.05%
Unibail, exp. 05/11/04 @ 130 EUR+ 500 $ 2,986
------------
TOTAL RIGHTS AND WARRANTS
(Cost $769) 2,986
------------
TOTAL INVESTMENTS
(Cost $5,771,697) 100.28% 5,865,865
Other assets, less liabilities (0.28) (12,779)
------ -----------
TOTAL NET ASSETS 100.00% $ 5,853,086
====== ===========
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
27
--------------------------------------------------------------------------------
<PAGE>
[This page intentionally left blank]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
EMERGING GROWTH PORTFOLIO
--------------------------------------------------------------------------------
"In our opinion, the recent correction was good for the market in general
because it returned stocks to valuations that made sense."
--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 6/30/00
$204,862,352
---------------------------------------------------
NUMBER OF HOLDINGS
184
---------------------------------------------------
PORTFOLIO TURNOVER
102.20%
--------------------------------------------------------------------------------
----------------------------------------
IN THIS SECTION
----------------------------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
----------------------------------------
----------------------------------------
JOHN W. BALLEN
Executive Vice President
o Director, MFS Equity
Portfolio Management
o Joined MFS in 1984
o Serves as MFS senior
small capitalization
growth equity portfolio
manager
o M.B.A. from Stanford
University Graduate
School of Business
o B.A. from Harvard
University
-------------------------
TONI Y. SHIMURA
Vice President,
Investments
o Joined MFS in 1987
o M.B.A. from Sloan School
of Management,
Massachusetts Institute of
Technology
o B.A. from Wellesley
College
----------------------------------------
29
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<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
EMERGING GROWTH PORTFOLIO
--------------------------------------------------------------------------------
[SIDEBAR]
[PIE CHART]
Common Stock - 97.36%
Short Term Obligations - 2.63%
Cash - 0.01%
------------------------------------
PERCENT OF
TOP TEN EQUITIES PORTFOLIO++
------------------------------------
Oracle Corp. 11.60%
Cisco Systems, Inc. 6.26%
Nortel Networks Corp. 3.77%
Microsoft Corp. 3.62%
Micron Technology, Inc. 3.32%
Tyco International, Ltd. 3.23%
Intel Corp. 2.97%
Altera Corp. 2.60%
Corning Inc. 2.53%
CIENA Corp. 1.98%
------------------------------------
PERCENT OF
TOP TEN INDUSTRIES PORTFOLIO++
------------------------------------
Telecommunications -
Equipment & Services 12.71%
Electronics -
Semiconductors 12.65%
Computer Software -
Mainframe 12.49%
Computer Software -
Mini & Micro 7.85%
Computer Network 7.32%
Manufacturing 5.76%
Electronic Components 5.21%
Computer Equipment &
Services 4.27%
Pharmaceutical 3.74%
Telecommunications -
Wireless 3.40%
++Represents market value of
investments plus cash.
[ENDSIDEBAR]
Despite the extreme market volatility in the first half of 2000, we viewed
this as a period of opportunity. In our opinion, the recent correction was good
for the market in general because it returned stocks to valuations that made
sense. But in some cases the market brought down what we believed were both
healthy and unhealthy companies simultaneously, and that offered us the chance
to buy stock in healthy companies at what we felt were more reasonable prices.
We have also taken more positions in companies that are somewhat highly
valued, even after the correction, but which our research indicates has strong
prospects for high earnings growth. We believe this increased aggressiveness may
help position us to outperform when the market becomes more favorable.
This approach has consistently been part of our strategy for managing the
Portfolio in periods of volatility. In general, when we think the market is
overly exuberant, we have tended to decrease risk, and when we think aggressive
growth stocks are depressed, we tend to increase the relative risk. Our
experience has been that this has helped moderate the downside during a drop in
the market and has helped increase our upside potential coming out of a down
market.
We also feel that our overall tendency is to own the types of stocks that
have historically ridden out market volatility relatively well. Our strategy is
to focus on companies with strong earnings growth, companies whose stocks we
feel we can hold for five years or more, that have the potential to become major
players in their markets. Companies without current earnings or cash flows --
the types of firms whose stocks we believe were hardest hit in the correction
last March and April -- tend not to be a large part of our portfolio.
Looking forward for the Portfolio, we're working to capitalize on four
major ideas. First, we foresee the market broadening, both by industry and by
market capitalization. Whereas technology seemed to be the only sector doing
well over much of the past year, we believe good performance has recently
broadened to include a larger number of sectors. Second, we think our software
holdings such as BMC Software and
30
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<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
EMERGING GROWTH PORTFOLIO
--------------------------------------------------------------------------------
Compuware could potentially be strong performers later this year as expanding
Internet initiatives and other new technologies force companies to upgrade their
software to remain competitive. Third, we believe that companies building the
Internet's infrastructure, such as VeriSign, Oracle, and Cisco, will continue to
prosper from Internet growth. We expect that one of the biggest drivers of this
growth will be businesses seizing upon Internet applications to reduce costs and
increase productivity. A fourth theme found in the portfolio is business
services companies such as First Data and Affiliated Computer Services. Services
provided by these companies make it possible for larger firms to outsource,
downsize, and restructure in order to increase productivity and earnings.
While some of our holdings, most notably Oracle and Cisco, have grown into
large, rather mature companies, we still consider ours to be an emerging growth
portfolio. That is because we feel it is the growth rate of a company, rather
than its size, that classifies it as emerging growth; our definition of an
emerging growth company is one that is growing earnings, on average, by 20% or
more per year. According to our research, this compares to a historical average
earnings growth rate for the Standard & Poor's 500 Index of about 8% over the
past 60 years and a more recent average of about 15% over the past five to seven
extraordinary years. We view Oracle and Cisco as the software and communications
leaders of the Internet, and the Internet as the biggest emerging growth area in
the economy. So in spite of their size and maturity, we feel these are still
very much emerging growth companies.
[SIDEBAR]
--------------------------------------------------------------------------------
Emerging Growth Portfolio and the Russell 2000 Index
Comparison of Change in Value of $10,000 Investment.
--------------------------------------------------------------------------------
[LINE GRAPH]
EMERGING RUSSELL
GROWTH 2000
PORTFOLIO INDEX
5/1/95 10000 10000
10377 10164
6/95 10962 10681
12821 11728
13291 11984
14225 12593
6/96 15349 13241
15938 13285
15724 13963
14483 13244
6/97 17184 15381
19507 17662
18942 17062
22928 18819
6/98 22878 17959
19792 14341
25180 16680
25977 15775
6/99 28236 18229
28521 17077
44444 20225
49202 21657
6/00 43636 20839
------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
------------------------------------
RUSSELL
EMERGING 2000
GROWTH INDEX
YTD -1.82% 3.04%
1 YEAR 54.54% 14.32%
5 YEAR 31.82% 14.27%
INCEPTION 32.97% 15.26%
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 Port folio reflects all recurring
expenses and includes the reinvestment of all dividends and distributions. Total
return figures for periods of less than one year have not been annualized.
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.
[ENDSIDEBAR]
31
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JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
EMERGING GROWTH PORTFOLIO
--------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
(Unaudited) Period From
Six Months May 1,
Ended Year Ended Year Ended Year Ended Year Ended 1995 to
June December December December December December
30, 2000 31, 1999 31, 1998 31, 1997 31, 1996 31, 1995(A)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 40.67 $ 23.04 $ 17.47 $ 15.23 $ 13.29 $ 10.00
Income From Investment Operations
Net investment loss (0.06) (0.10) (0.11) (0.07) (0.05) (0.04)
Net gains and losses on securities
(both realized and unrealized) (0.24) 17.73 5.85 3.19 2.48 3.33
------------ ------------ ------------ ------------ ------------ ------------
Total from investment operations (0.30) 17.63 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 (3.82) (0.11)
Returns of capital
------------ ------------ ------------ ------------ ------------ ------------
Total distributions (3.82) 0.00 (0.17) (0.88) (0.49) 0.00
Net asset value, end of period $ 36.55 $ 40.67 $ 23.04 $ 17.47 $ 15.23 $ 13.29
============ ============ ============ ============ ============ ============
Total Return (B) (1.82%) 76.51% 32.93% 20.47% 18.30% 32.91%
Ratios to Average Net Assets: (C)
Expenses 0.90% 0.94% 0.94% 1.00% 1.16% 1.63%
Net investment income (0.35%) (0.42%) (0.61%) (0.61%) (0.48%) (0.84%)
Portfolio Turnover Rate 102.20% 163.56% 77.07% 122.85% 94.58% 30.31%
Net Assets, At End of Period $204,862,352 $189,472,948 $ 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 are calculated on an annualized basis.
32
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JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
EMERGING GROWTH PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
COMMON STOCK--97.46%
Company Shares Market Value
------------------------------------------------------------------------------
Banking-1.40%
AXA Financial, Inc. 11,300 $ 384,200
Charter One Financial, Inc. 4,200 96,600
Citigroup, Inc. 20,400 1,229,100
First Tennessee National Corp. 200 3,313
Golden West Financial Corp. 8,600 350,988
PNC Financial Services Group 7,400 346,875
Providian Financial Corp. 3,600 324,000
State Street Corp. 1,100 116,669
------------
2,851,745
------------
Beverages-0.40%
Anheuser-Busch Companies, Inc. 5,100 380,906
Coca-Cola Co., The 7,500 430,781
------------
811,687
------------
Broadcasting-0.82%
AT&T Corp. - Liberty Media Group+ 31,400 761,450
Clear Channel Communications, Inc.+ 7,100 532,500
USA Networks, Inc.+ 17,600 380,600
------------
1,674,550
------------
Building Construction-0.83%
Bouygues, SA 2,530 1,697,661
------------
Commercial Services-0.05%
Cendant Corp.+ 5,762 80,668
Quanta Services, Inc.+ 300 16,500
------------
97,168
------------
Computer Equipment & Services-4.25%
Automatic Data Processing, Inc. 25,000 1,339,063
Compaq Computer Corp. 10,600 270,963
Computer Sciences Corp.+ 14,400 1,075,500
Comverse Technology, Inc.+ 5,800 539,400
Dell Computer Corp.+ 13,900 685,444
EMC Corp.+ 47,400 3,646,838
Emulex Corp.+ 1,600 105,100
First Data Corp. 13,400 664,975
Fiserv, Inc.+ 3,600 155,700
Insight Enterprises, Inc.+ 150 8,897
Seagate Technology, Inc.+ 4,800 264,000
------------
8,755,880
------------
Computer Information Systems-0.14%
i2 Technologies, Inc.+ 2,700 281,517
------------
Computer Network-7.32%
Allscripts, Inc.+ 350 8,050
Brocade Communications
Systems, Inc.+ 2,600 477,059
Cabletron Systems, Inc.+ 9,800 247,450
Cisco Systems, Inc.+ 202,060 12,843,439
Foundry Networks, Inc.+ 1,200 132,600
Juniper Networks, Inc.+ 7,000 1,018,938
ONI Systems Corp.+ 280 32,817
Redback Networks, Inc.+ 1,400 249,200
------------
15,009,553
------------
Computer Software - Mainframe-12.50%
BMC Software, Inc.+ 40,235 1,467,950
Cadence Design Systems, Inc.+ 10,360 211,085
E.piphany, Inc.+ 1,300 139,344
Oracle Corp.+ 283,050 23,793,878
------------
25,612,257
------------
Computer Software - Mini & Micro-7.87%
Ariba, Inc.+ 1,200 117,656
Check Point Software
Technologies, Inc.+ 7,500 1,588,125
Computer Associates International, Inc. 18,612 952,702
Lightspan, Inc.+ 290 1,595
Mercury Interactive Corp.+ 3,600 348,300
Microsoft Corp.+ 92,800 7,424,000
SAP, AG, ADR 900 42,244
Siebel Systems, Inc.+ 7,000 1,144,938
Sun Microsystems, Inc.+ 30,900 2,809,969
VERITAS Software Corp.+ 14,800 1,672,631
------------
16,102,160
------------
Diversified Operations-0.53%
General Electric Co. 20,500 1,086,500
------------
Educational Services-0.23%
Learning Tree International, Inc.+ 7,700 471,625
------------
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
33
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
EMERGING GROWTH PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)-CONTINUED
--------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Company Shares Market Value
------------------------------------------------------------------------------
Electrical Equipment-0.40%
AES Corp., The+ 15,500 $ 707,188
Emerson Electric Co. 1,800 108,675
------------
815,863
------------
Electronic Components-5.22%
Analog Devices, Inc.+ 39,400 2,994,400
Flextronics International, Ltd.+ 16,820 1,155,324
Jabil Circuit, Inc.+ 2,520 125,055
Linear Technology Corp. 18,600 1,189,238
Maxim Integrated Products, Inc.+ 260 17,664
Micrel, Inc.+ 400 17,375
Microchip Technology, Inc.+ 255 14,858
Sanmina Corp.+ 10,860 928,530
SIPEX Corp.+ 1,300 35,994
Solectron Corp.+ 14,100 590,438
Xilinx, Inc.+ 43,900 3,624,494
------------
10,693,370
------------
Electronics-0.44%
Credence Systems Corp.+ 400 22,075
LTX Corp.+ 600 20,963
New Focus, Inc.+ 140 11,498
Teradyne, Inc.+ 11,500 845,250
------------
899,786
------------
Electronics - Semiconductors-12.68%
Altera Corp.+ 52,300 5,331,331
Applied Materials, Inc.+ 7,500 679,688
ARM Holdings, PLC+ 12,500 133,989
ARM Holdings, PLC, ADR+ 69,300 2,278,238
Atmel Corp.+ 11,400 420,375
ATMI, Inc.+ 240 11,160
Burr-Brown Corp.+ 300 26,006
Conductus, Inc.+ 700 13,825
Intel Corp. 45,500 6,082,781
Lam Research Corp.+ 15,400 577,500
LSI Logic Corp.+ 25,000 1,353,125
Marvell Technology Group, Ltd.+ 200 11,400
Micron Technology, Inc.+ 77,400 6,816,038
Motorola, Inc. 2,600 75,563
National Semiconductor Corp.+ 22,100 1,254,175
Novellus Systems, Inc.+ 2,100 118,781
Photronics, Inc.+ 280 7,945
PMC-Sierra, Inc.+ 2,600 461,988
Texas Instruments, Inc. 4,200 288,488
------------
25,942,396
------------
Environmental Controls-0.13%
Waters Corp.+ 2,200 274,588
------------
Financial Services-1.12%
American Express Co. 6,600 344,025
Household International, Inc. 7,200 299,250
Mellon Financial Corp. 9,300 338,869
Merrill Lynch & Co., Inc. 11,200 1,288,000
Waddell & Reed Financial, Inc. 300 9,844
------------
2,279,988
------------
Healthcare-0.49%
Bausch & Lomb, Inc. 4,900 379,138
Cardinal Health, Inc. 6,800 503,200
Quest Diagnostics, Inc.+ 1,500 107,344
------------
989,682
------------
Insurance-0.49%
American International Group, Inc. 6,000 705,000
Hartford Financial Services
Group, Inc., The 5,500 307,656
------------
1,012,656
------------
Internet Services-1.74%
Art Technology Group, Inc.+ 600 60,563
BEA Systems, Inc.+ 1,000 49,438
Internet Commerce Corp.+ 400 5,800
VeriSign, Inc.+ 19,560 3,452,340
------------
3,568,141
------------
Manufacturing-5.77%
Capstone Turbine Corp.+ 220 9,914
Corning, Inc. 19,200 5,181,600
Tyco International, Ltd. 139,898 6,627,668
------------
11,819,182
------------
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
34
--------------------------------------------------------------------------------
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JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
EMERGING GROWTH PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)-CONTINUED
--------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Company Shares Market Value
------------------------------------------------------------------------------
Medical - Biotechnology-2.21%
Abgenix, Inc.+ 1,000 $ 119,859
Amgen, Inc.+ 20,400 1,433,100
BioSource International, Inc.+ 2,200 48,950
Genentech, Inc.+ 6,800 1,169,600
Human Genome Sciences, Inc.+ 1,500 200,063
Immunex Corp.+ 11,800 583,363
Merrill Lynch Biotech Holding Co. 4,400 783,200
Pharmacia Corp. 4,000 206,750
------------
4,544,885
------------
Medical Products-0.02%
Alkermes, Inc.+ 400 18,850
BioSphere Medical, Inc.+ 800 11,200
------------
30,050
------------
Medical Supplies-0.63%
Pe Corp-Pe Biosystems Group 19,600 1,291,150
------------
Multimedia-0.46%
Viacom, Inc., Class B+ 13,700 934,169
------------
Oil & Gas - Distribution & Marketing-0.28%
Enron Corp. 9,000 580,500
------------
Oil & Gas - Integrated-0.01%
Grant Prideco, Inc.+ 400 10,000
Weatherford International, Inc.+ 400 15,925
------------
25,925
------------
Oil & Gas Producers-2.18%
Anadarko Petroleum Corp. 10,500 517,781
Apache Corp. 6,200 364,638
Coastal Corp., The 15,500 943,563
Devon Energy Corp. 4,800 269,700
EOG Resources, Inc. 43,800 1,467,300
Global Marine, Inc.+ 11,600 326,975
Noble Affiliates, Inc. 2,200 81,950
Noble Drilling Corp.+ 12,100 498,369
------------
4,470,276
------------
Oil & Gas Services & Equipment-0.94%
Baker Hughes, Inc. 23,900 764,800
Dynegy, Inc. 8,200 560,163
Halliburton Co. 6,800 320,875
Transocean Sedco Forex, Inc. 5,200 277,875
------------
1,923,713
------------
Pharmaceutical-3.74%
Abbott Laboratories 22,800 1,016,025
Allergan, Inc. 4,000 298,000
ALZA Corp.+ 1,900 112,338
American Home Products Corp. 3,900 229,125
Andrx Corp.+ 1,600 102,275
Bristol-Myers Squibb Co. 9,600 559,200
MedImmune, Inc.+ 4,200 310,800
Pfizer, Inc. 42,200 2,025,600
Sepracor, Inc.+ 21,900 2,641,688
Teva Pharmaceutical Industries, Ltd. 6,600 365,888
------------
7,660,939
------------
Professional Sports-0.01%
International Speedway Corp. 308 12,744
------------
Retail Stores-2.86%
Albertson's, Inc. 12,000 399,000
CVS Corp. 14,100 564,000
Kohl's Corp.+ 1,900 105,688
Kroger Co., The+ 9,600 211,800
Safeway, Inc.+ 53,600 2,418,700
RadioShack Corp. 17,900 848,013
Wal-Mart Stores, Inc. 23,000 1,325,375
------------
5,872,576
------------
Telecommunications - Equipment &
Services-12.73%
ADC Telecommunications, Inc.+ 19,562 1,640,763
Alcatel, SA, ADR 6,900 458,850
Amdocs, Ltd.+ 600 46,050
CIENA Corp.+ 24,400 4,067,175
Global Crossing, Ltd.+ 23,000 605,188
ITC^DeltaCom, Inc.+ 300 6,694
JDS Uniphase Corp.+ 11,470 1,374,966
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
35
--------------------------------------------------------------------------------
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JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
EMERGING GROWTH PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)-CONTINUED
--------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Company Shares Market Value
------------------------------------------------------------------------------
Telecommunications - Equipment &
Services-Continued
Lucent Technologies, Inc. 1,800 $ 106,650
Metromedia Fiber Network, Inc.+ 64,480 2,559,050
MRV Communications, Inc.+ 1,700 114,325
Nokia Oyj, SA, ADR 58,400 2,916,350
Nortel Networks Corp. 113,328 7,734,636
Scientific-Atlanta, Inc. 300 22,350
Sycamore Networks, Inc.+ 8,200 905,075
Telefonaktiebolaget LM
Ericsson, AB, ADR 96,800 1,936,000
Tellabs, Inc.+ 23,000 1,574,063
------------
26,068,185
------------
Telecommunications - Integrated-0.98%
China Unicom, Ltd., ADR+ 2,000 42,500
Intermedia Communications, Inc.+ 5,500 163,625
MGC Communications, Inc.+ 3,100 185,806
NEXTLINK Communications, Inc.+ 1,200 45,525
WorldCom, Inc.+ 34,608 1,587,642
------------
2,025,098
------------
Telecommunications - Wireless-3.39%
Nextel Communications, Inc.+ 8,200 501,738
Sprint Corp. - PCS Group+ 37,500 2,231,250
Vodafone AirTouch, PLC 280,565 1,134,154
Vodafone AirTouch, PLC, ADR 17,400 721,013
VoiceStream Wireless Corp.+ 20,521 2,386,529
------------
6,974,684
------------
Telecommunications - Wireline-0.87%
Sonera Oyj 16,500 755,248
Sprint Corp. - Fon Group 20,000 1,020,000
------------
1,775,248
------------
Tobacco-0.03%
Philip Morris Companies, Inc. 2,600 69,063
------------
Travel Services-0.00%
Pegasus Solutions, Inc.+ 300 3,263
------------
Utilities - Electric & Gas-1.30%
Calpine Corp.+ 40,400 2,656,300
------------
Wholesale Distributor-0.00%
United Stationers, Inc.+ 300 9,713
------------
TOTAL COMMON STOCK
(Cost $145,707,941) 199,676,436
------------
SHORT-TERM OBLIGATIONS-2.63%
Principal Value
---------------
Government Agency-2.63%
Federal Home Loan Mortgage Corp.,
6.570%, due 07/03/00 $5,400,000 5,398,029
------------
TOTAL SHORT-TERM OBLIGATIONS
(Cost $5,398,029) 5,398,029
------------
TOTAL INVESTMENTS
(Cost $151,105,970) 100.00% 205,074,465
Other assets, less liabilities (0.09) (212,113)
------ ------------
TOTAL NET ASSETS 100.00% $204,862,352
====== ============
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
36
--------------------------------------------------------------------------------
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JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
CAPITAL GROWTH PORTFOLIO
--------------------------------------------------------------------------------
"Fast-growing, well-managed companies with time-tested business models prevailed
while much of the unhealthy hype that had sustained the extreme valuations in
some sectors was washed out of the market."
--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 6/30/00
$413,162,780
---------------------------------------------------
NUMBER OF HOLDINGS
45
---------------------------------------------------
PORTFOLIO TURNOVER
7.74%
--------------------------------------------------------------------------------
----------------------------------------
IN THIS SECTION
----------------------------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
----------------------------------------
MARK PINTO, CFA
Vice President
o Joined Janus Capital
Corporation in 1994
o 14 years of investment
experience
o B.A. from Yale University
o M.B.A. from Harvard
University
o Chartered Financial
Analyst
----------------------------------------
37
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JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
CAPITAL GROWTH PORTFOLIO
--------------------------------------------------------------------------------
[SIDEBAR]
[PIE CHART]
Common Stock - 97.09%
Cash - 2.91%
------------------------------------
PERCENT OF
TOP TEN EQUITIES PORTFOLIO++
------------------------------------
Nokia Oyj, SA, ADR 6.02%
Cisco Systems, Inc. 4.97%
EMC Corp. 4.62%
Time Warner, Inc. 4.46%
Viacom, Inc., Class B 4.39%
Comcast Corp. 4.28%
Linear Technology Corp. 4.15%
General Electric Co. 3.42%
Sun Microsystems, Inc. 3.30%
Applied Materials, Inc. 3.29%
------------------------------------
PERCENT OF
TOP TEN INDUSTRIES PORTFOLIO++
------------------------------------
Broadcasting 9.83%
Electronics -
Semiconductors 9.26%
Multimedia 8.85%
Telecommunications -
Equipment & Services 7.98%
Financial Services 7.27%
Telecommunications -
Wireless 6.28%
Computer Software -
Mini & Micro 5.89%
Computer Equipment
& Services 5.44%
Computer Network 4.97%
Banking 4.29%
++Represents market value of
investments plus cash.
[ENDSIDEBAR]
Although markets entered the year on a positive note, a retreat by
technology stocks that began in March weighed against stocks for much of the
period as investors re-examined the extreme valuations placed on a number of the
market's highest fliers. By June, however, things had changed. A 0.50% increase
in short-term interest rates by the Federal Reserve in late May, together with a
slowdown in housing starts, weak industrial production numbers and a lukewarm
reading on business confidence suggested that the vibrant U.S. economy was
finally slowing to a sustainable pace. This emboldened traders and allowed the
market to stage a comeback that partially erased the losses sustained during the
spring volatility, but not before a healthy winnowing out of companies whose
prospects for long-term success were marginal.
On balance, the market's retrenchment and the selective recovery that
followed represented a healthy and much-needed evolution in market sentiment.
Fast-growing, well-managed companies with time-tested business models prevailed
while much of the unhealthy hype that had sustained the extreme valuations in
some sectors was washed out of the market. We are extremely pleased with the
Portfolio's performance in this challenging environment. Our traditional growth
franchises in areas like consumer staples, financial services and
pharmaceuticals supported performance during the most difficult first months of
the period only to transfer leadership to our carefully selected media,
telecommunications and technology stocks in June as fortunes at that end of the
market improved. This allowed us to gain 6.91% while our benchmark, the S&P 500
Index gave back 0.42%.
While a number of stocks contributed to performance, our semiconductor
positions were particularly buoyant. After a long period of cyclical decline,
semiconductor manufacturers across the globe are running at full capacity to
keep up with burgeoning demand created by booming sales of a whole range of new
and increasingly sophisticated electronic
38
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JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
CAPITAL GROWTH PORTFOLIO
--------------------------------------------------------------------------------
devices. Texas Instruments and Linear Technologies, whose microchips are widely
used in telecommunications devices such as cellular phones and base stations,
continued to outperform as a result of explosive growth in cellular penetration
rates worldwide. Meanwhile, this strength also filtered down to companies that
supply the machinery used to manufacture semiconductors, including Applied
Materials, as industry leaders moved to increase the scale of their
manufacturing operations.
Several of our financial services positions also gained ground. Charles
Schwab and Morgan Stanley Dean Witter both overcame an unsettled interest rate
environment to post strong gains. Trading volumes at Schwab's online unit
continued to outpace even the most optimistic estimates, allowing the company's
stock to continue its long climb. Morgan Stanley also surprised analysts by
reporting back-to-back quarters of estimate-beating results, including an
impressive 49% increase in profit for the quarter ended February 29. The
company's solid performance was led by higher trading volumes as well as
strength at its merger advisory and underwriting units, and we look for Morgan
Stanley to further increase its leading position in these businesses in coming
months. Bank of New York also gained as it continued to increase its market
share in securities custody and processing, a lucrative, fee-based business that
gives the company a stable source of revenue in times of market turmoil.
While we were pleased with the Portfolio's performance, there were a few
setbacks. Several of our retail positions traded lower after investors became
concerned that the Federal Reserve would be unable to engineer a soft landing
for the U.S. economy, thereby stoking fears of a slowdown in retail sales.
Notable disappointments included warehouse retailer Costco, which fell sharply
after the company hinted that profit growth would slow for the remainder of the
year. While we believe the market's reaction was somewhat overdone, we trimmed
the position as a matter of discipline.
In technology, Microsoft was perhaps our most visible disappointment. In
early April, U.S. District Court Judge Thomas Penfield Jackson ruled that the
company should be split into two separate companies, one that focuses on
operating systems and another that focuses on application software and other
products. The stock declined sharply on the news and has yet to fully recover to
its pre-judgement high. Although Microsoft's decline was discouraging, we have
always believed the company is capable of prevailing on appeal. Furthermore, the
worst-case scenario -- a complete break up of Microsoft -- does nothing to
change the extremely strong fundamentals currently supporting the company.
Still, uncertainty related to the
39
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JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
CAPITAL GROWTH PORTFOLIO
--------------------------------------------------------------------------------
[SIDEBAR]
--------------------------------------------------------------------------------
Capital Growth Portfolio and the S&P 500 Index
Comparison of Change in Value of $10,000 Investment.
--------------------------------------------------------------------------------
[LINE GRAPH]
CAPITAL S&P
GROWTH 500
PORTFOLIO INDEX
5/1/92 10000 10000
6/92 10087 9958
10925 10272
12724 10787
13604 11256
6/93 13635 11310
14752 11598
15869 11867
15387 11420
6/94 14720 11470
15553 12031
15353 12028
16045 13195
6/05 17479 14451
20143 15596
21762 16532
23919 17512
6/96 25766 18399
26224 19074
25951 20767
26015 20860
6/97 30540 24494
33805 26326
33582 27079
39281 30849
6/98 41989 31864
36869 28701
46502 34802
50983 36534
6/99 53243 39105
51361 36663
67270 42118
74984 43084
6/00 71917 41940
-----------------------------------
AVERAGE ANNUAL TOTAL RETURNS
-----------------------------------
CAPITAL S&P 500
GROWTH INDEX
YTD 6.91% -0.42%
1 YEAR 35.07% 7.25%
5 YEARS 32.70% 23.77%
INCEPTION 27.31% 19.18%
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 Port folio reflects all recurring expenses
and includes the reinvestment of all dividends and distributions. Total return
figures for periods of less than one year have not been annualized.
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.
[ENDSIDEBAR]
ongoing litigation will likely create a sizable overhang for the stock over the
near- to mid-term, and we have sized our position accordingly.
We took advantage of extreme volatility in the biotechnology sector to
build our position in PE Biosystems, a company that provides scientists with the
equipment and supplies necessary to conduct research in exciting new areas such
as genomics and proteomics. We believe the company provides us exposure to the
genomics sector while assuming a level of risk that is consistent with our style
of management and were pleased to purchase a stake in the company at a sizable
discount to its 52-week high.
Looking forward, while a return to the extreme volatility that rattled the
market during the first quarter of 2000 seems unlikely, a range of factors that
include interest rate uncertainty may keep markets unsettled in coming months.
However, our investment thesis is unchanged -- the market will continue to
reward companies capable of long-term growth and we hope to participate by
leveraging our hands-on research to identify individual standouts, one by one.
40
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JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
CAPITAL GROWTH PORTFOLIO
--------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
(Unaudited)
Six Months
Ended Year Ended Year Ended Year Ended Year Ended Year Ended
June December December December December December
30, 2000 31, 1999 31, 1998 31, 1997 31, 1996 31, 1995
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 39.27 $ 27.90 $ 21.23 $ 17.26 $ 17.38 $ 13.38
Income From Investment Operations
Net investment income (loss) (0.13) (0.12) (0.09) 0.05 0.03
Net gains and losses on securities
(both realized and unrealized) 2.91 12.31 8.25 4.99 3.24 5.56
------------ ------------ ------------ ------------ ------------ ------------
Total from investment operations 2.78 12.19 8.16 4.99 3.29 5.59
Less Distributions to Shareholders
Dividends from net investment income (0.05) (0.03)
Dividends in excess of net
investment income
Distributions from capital gains (1.82) (0.82) (1.49) (0.81) (3.36) (1.56)
Distributions in excess of capital gains (0.21)
Returns of capital
------------ ------------ ------------ ------------ ------------ ------------
Total distributions (1.82) (0.82) (1.49) (1.02) (3.41) (1.59)
Net asset value, end of period $ 40.23 $ 39.27 $ 27.90 $ 21.23 $ 17.26 $ 17.38
============ ============ ============ ============ ============ ============
Total Return (A) 6.91% 44.65% 38.47% 29.41% 19.25% 41.74%
Ratios to Average Net Assets: (B)
Expenses 1.08% 1.03% 1.09% 1.09% 1.13% 1.15%
Net investment income (0.67%) (0.42%) (0.38%) 0.02% 0.30% 0.21%
Portfolio Turnover Rate 7.74% 41.65% 54.58% 91.66% 147.82% 170.32%
Net Assets, At End of Period $413,162,780 $365,864,399 $198,002,451 $124,123,995 $ 70,832,162 $ 49,853,029
</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) Per share data and ratios are calculated on an annualized basis.
41
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JEFFERSON PILOT VARIABLE FUND, INC.
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CAPITAL GROWTH PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
COMMON STOCK--97.14%
Company Shares Market Value
------------------------------------------------------------------------------
Banking-4.30%
Bank of New York Co., Inc., The 220,170 $ 10,237,905
Citigroup, Inc. 124,812 7,519,923
------------
17,757,828
------------
Beverages-1.10%
Anheuser-Busch Companies, Inc. 60,850 4,544,734
------------
Broadcasting-9.83%
AT&T Corp. - Liberty Media Group+ 343,000 8,317,750
Cablevision Systems Corp.+ 121,275 8,231,541
Comcast Corp.+ 436,540 17,679,870
Grupo Televisa, SA, ADR+ 93,000 6,411,188
------------
40,640,349
------------
Computer Equipment & Services-5.44%
Dell Computer Corp.+ 69,095 3,407,247
EMC Corp.+ 248,100 19,088,194
------------
22,495,441
------------
Computer Network-4.97%
Cisco Systems, Inc.+ 323,067 20,534,946
------------
Computer Software - Mini & Micro-5.89%
Microsoft Corp.+ 133,785 10,702,800
Sun Microsystems, Inc.+ 149,950 13,636,078
------------
24,338,878
------------
Diversified Operations-3.42%
General Electric Co. 266,565 14,127,945
------------
Electronic Components-4.15%
Linear Technology Corp. 268,200 17,148,038
------------
Electronics - Semiconductors-9.27%
Applied Materials, Inc.+ 150,250 13,616,406
ASM Lithography Holding, N.V.+ 235,125 10,374,891
Taiwan Semiconductor
Manufacturing Co., Ltd.+ 130,208 5,045,560
Texas Instruments, Inc. 134,765 9,256,671
------------
38,293,528
------------
Entertainment & Leisure-3.04%
Autotote Corp.+ 4,672 20,440
Carnival Corp. 119,565 2,331,518
MGM Grand, Inc. 319,110 10,251,409
------------
12,603,367
------------
Financial Services-7.28%
American Express Co. 163,985 8,547,718
Charles Schwab Corp., The 213,411 7,175,945
Fannie Mae 74,385 3,881,967
Morgan Stanley Dean Witter & Co. 125,420 10,441,215
------------
30,046,845
------------
Internet Services-1.29%
VeriSign, Inc.+ 30,150 5,321,475
------------
Manufacturing-1.40%
Tyco International, Ltd. 122,110 5,784,961
------------
Medical - Biotechnology-1.16%
Genentech, Inc.+ 27,815 4,784,180
------------
Medical Supplies-1.09%
Pe Corp-Pe Biosystems Group 68,345 4,502,227
------------
Multimedia-8.85%
Time Warner, Inc. 242,615 18,438,740
Viacom, Inc., Class B+ 266,266 18,156,013
------------
36,594,753
------------
Oil & Gas - Distribution & Marketing-2.03%
Enron Corp. 129,925 8,380,163
------------
Pharmaceutical-2.43%
Pfizer, Inc. 155,238 7,451,400
Schering-Plough Corp. 51,800 2,615,900
------------
10,067,300
------------
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
42
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JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
CAPITAL GROWTH PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000-CONTINUED
--------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Company Shares Market Value
------------------------------------------------------------------------------
Retail Stores-4.06%
Costco Wholesale Corp.+ 112,875 $ 3,724,875
Home Depot, Inc., The 119,077 5,946,408
Staples, Inc.+ 218,115 3,353,518
Wal-Mart Stores, Inc. 65,255 3,760,319
------------
16,785,120
------------
Telecommunications - Equipment &
Services-7.98%
General Motors Corp., Class H+ 54,325 4,767,019
Lucent Technologies, Inc. 55,940 3,314,445
Nokia Oyj, SA, ADR 498,520 24,894,840
------------
32,976,304
------------
Telecommunications - Integrated-1.87%
Telefonica, SA, ADR+ 120,745 7,735,227
------------
Telecommunications - Wireless-6.29%
Nextel Communications, Inc.+ 171,930 10,519,967
Sprint Corp. - PCS Group+ 192,320 11,443,040
Vodafone AirTouch, PLC, ADR 96,400 3,994,575
------------
25,957,582
------------
TOTAL COMMON STOCK
(Cost $230,725,275) 401,421,191
------------
TOTAL INVESTMENTS
(Cost $230,725,275) 97.14% 401,421,191
Other assets, less liabilities 2.86 11,741,589
------ ------------
TOTAL NET ASSETS 100.00% $413,162,780
====== ============
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
43
--------------------------------------------------------------------------------
<PAGE>
[This page intentionally left blank]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
SMALL COMPANY PORTFOLIO
--------------------------------------------------------------------------------
"Should economic growth remain strong, we believe the prospect for earnings
growth for small companies remains excellent."
--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 6/30/00
$84,952,098
---------------------------------------------------
NUMBER OF HOLDINGS
188
---------------------------------------------------
PORTFOLIO TURNOVER
33.24%
--------------------------------------------------------------------------------
----------------------------------------
IN THIS SECTION
----------------------------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
----------------------------------------
STEPHEN J. MCGRUDER,
CFA
Partner
o Joined Lord, Abbett in
1995
o Nearly 30 years of
industry experience
o B.S. from Stanford
University
o B.A. in Business
Economics from
Claremont McKenna
College
o Chartered Financial
Analyst
----------------------------------------
45
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
SMALL COMPANY PORTFOLIO
--------------------------------------------------------------------------------
[SIDEBAR]
[PIE CHART]
Common Stock - 95.61%
Cash - 4.39%
------------------------------------
PERCENT OF
TOP TEN EQUITIES PORTFOLIO++
------------------------------------
Plantronics, Inc. 4.36%
TeleTech Holdings, Inc. 2.13%
RadiSys Corp. 1.97%
Coherent, Inc. 1.90%
Timberland Co., The 1.83%
OM Group, Inc. 1.70%
Sawtek, Inc. 1.57%
NVIDIA Corp. 1.42%
Core Laboratories, N.V. 1.37%
Technitrol, Inc. 1.37%
------------------------------------
PERCENT OF
TOP TEN INDUSTRIES PORTFOLIO++
------------------------------------
Computer Equipment &
Services 8.74%
Commercial Services 7.33%
Retail Stores 6.91%
Telecommunications -
Equipment & Services 5.61%
Textiles & Apparel 5.50%
Medical Products 4.81%
Computer Software -
Mini & Micro 4.25%
Electronic Components 4.19%
Oil & Gas Producers 4.14%
Internet Services 3.72%
++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.
[ENDSIDEBAR]
Market Review
During the first quarter of 2000, the combination of a strong economy and
increased investor stock trading via the Internet created what we consider to be
a volatile "market of extremes." During this time, we saw the prices of some
technology and biotechnology companies rise to extraordinarily high levels. We
believe that, in many cases, these high prices were the result of the
predominance of momentum styles of investing and excitement with everything
"tech," and not because of attractive valuations. Upon seeing increasingly
deteriorating company fundamentals, investors abandoned their pursuit of
overpriced speculative tech stocks late in the quarter and shifted their focus
toward companies with real earnings and reasonable valuations.
During April and May, the performance of the technology-heavy Russell 2000
Index dropped substantially as investors in small company stocks continued to
show intolerance for any earnings shortfall or reported company problem, no
matter how slight. In addition, uncertainty around the Federal Reserve's (the
Fed) activities and their potential influence on the economy caused investors to
retreat from the stocks of companies that had previously led the small company
market's performance (e.g., technology, Internet). Instead, they sought safety
in the stocks of more established firms that exhibited earnings history and
other strong fundamentals. In June, the picture changed once again, and the
Russell 2000 Index, led primarily by the performance of stocks of technology and
biotechnology companies, came storming back.
Portfolio Review
During the first quarter of 2000, the Portfolio continued to execute its
proven philosophy of long-term investing in small-growth companies. Performance
benefited most significantly during the quarter from our holdings in the stocks
of technology and biotechnology companies which continued to benefit from both
rapid multiple expansion and strong earnings growth. We were, however,
underweighted in technology and biotechnology companies relative to the Russell
2000 Growth Index because we believed many of the stocks were overvalued. As a
result, the Portfolio underperformed the Index for the quarter.
46
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
SMALL COMPANY PORTFOLIO
--------------------------------------------------------------------------------
During the market's down period in April and May, we took the opportunity
to make select additions to the Portfolio from across many industries, in
companies where we believed fundamentals and prices were attractive. The
Portfolio's performance kept pace with the Index through May, due to our
relatively minimal exposure to faltering technology issues. However, in June,
the resurgence of investors' enthusiasm, especially for these stocks of
biotechnology companies, hurt the Portfolio's performance, as our exposure to
these companies was minimal.
Outlook
As we move into the second half of the year, we believe the volatility in
the market is likely to continue in the short-term and liquidity and earnings
shortfalls will continue to be concerns for small company investors. However, as
the economy continues to slow, we believe many smaller companies will experience
strong performance. Regardless of market conditions, we will continue to execute
our disciplined investment approach, remaining focused on finding the high
quality companies with attractive long-term earnings growth prospects.
We believe the best course of action in light of the stock market's
current volatile environment is to continue making long-term investments. The
stocks of small growth companies with strong management, visionary business
plans and attractive valuations offer investors long-term investment
opportunity. The recent relative outperformance of small companies is
encouraging. Should economic growth remain strong, we believe the prospect for
earnings growth for small companies remains excellent. Additionally, we believe
that the valuations of many different types of small growth companies are
reasonable, especially compared to the stocks of larger companies.
As always, we remain committed to constructing the very best Portfolio
possible for our clients and appreciate the opportunity to help you meet your
investment goals.
[SIDEBAR]
--------------------------------------------------------------------------------
Small Company Portfolio and the
Russell 2000 Growth Index
Comparison of Change in Value of $10,000 Investment.
--------------------------------------------------------------------------------
[LINE GRAPH]
SMALL COMPANY RUSSELL 2000
PORTFOLIO GROWTH INDEX
4/86 10000 10000
6/86 10372 10400
9863 8710
10565 8806
11914 11200
12813 11045
13698 11403
10395 7883
12119 9256
6/88 13176 9844
13151 9573
13129 9489
14183 10194
15054 10853
16226 11823
15669 11403
15299 11100
6/90 15505 11801
12071 8721
12759 9418
15336 12295
15663 11869
16103 13149
16999 14238
18699 14628
6/92 17992 12871
18527 13121
21506 15345
22691 15070
22524 15504
23910 16951
24925 17397
24982 16688
6/94 24337 15636
26469 17097
26834 16974
28241 17905
29736 19682
33164 21920
34809 22244
37702 23521
6/96 39076 24896
38570 24684
40537 24749
38833 22153
44729 26042
52097 30448
50105 27953
53395 31274
6/98 51272 29478
39894 22886
44205 28296
40113 27821
43794 31925
41405 30354
50480 40489
51933 44246
6/00 44989 40985
-------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
-------------------------------------
RUSSELL 2000
SMALL GROWTH
COMPANY INDEX
YTD -10.88% 1.22%
1 YEAR 2.73% 28.39%
5 YEAR 8.63% 15.80%
10 YEAR 11.24% 13.26%
INCEPTION 11.16% 10.46%
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") at its inception with a similar investment in the
Russell 2000 Growth Index. For the purposes of this graph and the accompanying
table, the average annual total return for the Port folio reflects all recurring
expenses and includes the reinvestment of all dividends and distributions. Total
return figures for periods of less than one year have not been annualized.
The Russell 2000 Growth Index is an unmanaged index and include 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.
[ENDSIDEBAR]
47
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
SMALL COMPANY PORTFOLIO
--------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
(Unaudited)
Six Months
Ended Year Ended Year Ended Year Ended Year Ended Year Ended
June December December December December December
30, 2000 31, 1999 31, 1998 31, 1997 31, 1996 31, 1995
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 18.05 $ 16.24 $ 20.43 $ 18.19 $ 17.87 $ 15.94
Income From Investment Operations
Net investment income (loss) (0.04) (0.02) 0.22 0.09 0.06 0.15
Net gains and losses on securities
(both realized and unrealized) (1.92) 2.22 (2.59) 4.17 2.85 4.48
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations (1.96) 2.20 (2.37) 4.26 2.91 4.63
Less Distributions to Shareholders
Dividends from net investment income (0.02) (0.19) (0.09) (0.06) (0.15)
Dividends in excess of net
investment income
Distributions from capital gains (0.37) (1.63) (1.93) (2.53) (2.55)
Distributions in excess of capital gains
Returns of capital
----------- ----------- ----------- ----------- ----------- -----------
Total distributions 0.00 (0.39) (1.82) (2.02) (2.59) (2.70)
Net asset value, end of period $ 16.09 $ 18.05 $ 16.24 $ 20.43 $ 18.19 $ 17.87
=========== =========== =========== =========== =========== ===========
Total Return (A) (10.88%) 14.20% (11.78%) 23.60% 16.46% 29.72%
Ratios to Average Net Assets: (B)
Expenses 0.84% 0.86% 0.87% 0.83% 0.85% 0.87%
Net investment income (0.53%) (0.14%) 1.23% 0.47% 0.31% 0.95%
Portfolio Turnover Rate 33.24% 143.95% 43.06% 52.92% 49.75% 64.17%
Net Assets, At End of Period $84,952,098 $92,991,539 $78,343,648 $81,505,107 $62,166,366 $48,517,886
</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) Per share data and ratios are calculated on an annualized basis.
48
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
SMALL COMPANY PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
COMMON STOCK--95.60%
Company Shares Market Value
------------------------------------------------------------------------------
Aerospace & Defense-1.52%
Armor Holdings, Inc.+ 37,600 $ 488,800
Orbital Sciences Corp.+ 65,300 795,844
------------
1,284,644
Airlines-1.31%
Frontier Airlines, Inc.+ 29,100 416,494
SkyWest, Inc. 18,700 693,069
------------
1,109,563
------------
Broadcasting-0.54%
Regent Communications, Inc.+ 32,400 278,439
Salem Communications Corp.+ 19,100 177,273
------------
455,712
------------
Building Construction-0.34%
Crossmann Communities, Inc.+ 17,600 290,400
------------
Building Materials-0.57%
Elcor Corp. 20,900 480,700
------------
Chemicals-1.97%
H. B. Fuller Co. 5,000 227,813
OM Group, Inc. 32,800 1,443,200
------------
1,671,013
------------
Commercial Services-7.32%
Acxiom Corp.+ 38,900 1,060,025
Advance Paradigm, Inc.+ 22,100 453,050
Cornell Cos., Inc.+ 21,800 174,400
Healthcare Services Group, Inc.+ 26,400 118,800
Hooper Holmes, Inc. 58,600 468,800
Iron Mountain, Inc.+ 32,300 1,098,200
McGrath RentCorp 13,700 232,900
MemberWorks, Inc.+ 14,200 477,475
NCO Group, Inc.+ 14,500 335,313
TeleTech Holdings, Inc.+ 58,200 1,807,818
------------
6,226,781
------------
Computer Equipment & Services-8.74%
Advanced Digital Information Corp.+ 57,800 921,188
CheckFree Holdings Corp.+ 9,400 484,688
Ciber, Inc.+ 18,800 249,100
Infocus Corp.+ 15,700 505,344
Insight Enterprises, Inc.+ 18,300 1,085,419
MicroTouch Systems, Inc.+ 27,500 237,188
NVIDIA Corp.+ 19,000 1,207,688
RadiSys Corp.+ 29,450 1,671,288
Sykes Enterprises, Inc.+ 29,700 382,388
Xircom, Inc.+ 14,400 684,000
------------
7,428,291
------------
Computer Information &
Technology-1.31%
Manhattan Associates, Inc.+ 13,100 327,500
MarchFirst, Inc.+ 20,846 380,440
Multex.com, Inc.+ 13,100 329,956
Technology Solutions Co.+ 10,600 65,588
------------
1,103,484
------------
Computer Information Systems-3.03%
Dendrite International, Inc.+ 14,450 481,366
iGate Capital Corp.+ 39,400 541,750
MICROS Systems, Inc.+ 22,400 415,800
National Computer Systems, Inc. 23,000 1,132,750
------------
2,571,666
------------
Computer Network-0.18%
FVC.COM, Inc.+ 19,900 154,225
------------
Computer Software - Mainframe-0.92%
Manugistics Group, Inc.+ 8,500 397,375
Verity, Inc.+ 10,100 383,800
------------
781,175
------------
Computer Software - Mini & Micro-4.27%
3DO Co., The+ 21,900 171,779
Activision, Inc.+ 20,500 133,250
Cambridge Technology Partners, Inc.+ 81,400 709,710
eCollege.com+ 23,500 102,813
ePresence, Inc.+ 5,500 39,875
Exchange Application Inc.+ 13,200 351,450
IMRglobal Corp.+ 10,900 142,381
InfoCure Corp.+ 15,700 88,313
Landmark Systems Corp.+ 21,600 129,600
National Instruments Corp.+ 13,350 582,394
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
49
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
SMALL COMPANY PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)-CONTINUED
--------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Company Shares Market Value
------------------------------------------------------------------------------
Computer Software - Mini &
Micro-Continued
Optio Software, Inc.+ 14,000 $ 83,782
Phoenix Technologies, Ltd.+ 16,600 270,788
Primus Knowledge Solutions, Inc.+ 5,200 234,000
Project Software & Development, Inc.+ 9,700 174,600
RAVISENT Technologies, Inc.+ 14,800 104,525
Scansoft, Inc.+ 35,367 99,470
THQ, Inc.+ 15,700 191,344
------------
3,610,074
------------
Consulting Services-2.88%
Corporate Executive Board Co., The+ 18,900 1,131,638
Diamond Technology Partners, Inc.+ 11,900 1,047,200
eLoyalty Corp.+ 10,600 135,150
First Consulting Group, Inc.+ 11,600 64,525
Renaissance Worldwide, Inc.+ 43,100 67,344
------------
2,445,857
------------
Cosmetics & Personal Care-0.72%
Steiner Leisure, Ltd.+ 21,800 493,225
Twinlab Corp.+ 19,200 122,400
------------
615,625
------------
Electrical Equipment-0.79%
Dionex Corp.+ 4,600 123,050
Helix Technology Corp. 3,100 120,900
SLI, Inc. 35,900 435,288
------------
679,238
------------
Electronic Components-4.19%
Moog, Inc.+ 8,000 211,000
Sawtek, Inc.+ 23,100 1,329,694
Technitrol, Inc. 12,000 1,162,500
Three-Five Systems, Inc.+ 14,450 852,550
------------
3,555,744
------------
Electronics-2.19%
Ampex Corp.+ 67,900 114,581
Analogic Corp. 12,000 480,000
Artesyn Technologies, Inc.+ 25,300 703,656
EMS Technologies, Inc.+ 13,800 248,400
LeCroy Corp.+ 16,700 164,913
Universal Electronics, Inc.+ 6,100 149,831
------------
1,861,381
------------
Electronics - Semiconductors-0.63%
American Xtal Technology, Inc.+ 6,300 272,475
Pioneer-Standard Electronics, Inc. 7,800 115,050
Rudolph Technologies, Inc.+ 3,800 147,250
------------
534,775
------------
Entertainment & Leisure-0.55%
Bally Total Fitness Holding Corp.+ 14,600 370,475
Cinar Corp.+ 17,000 90,666
------------
461,141
------------
Financial Services-0.34%
Federal Agricultural Mortgage Corp.+ 19,900 289,794
------------
Food Products-0.56%
Horizon Organic Holding Corp.+ 13,200 140,250
Smithfield Foods, Inc.+ 11,700 328,331
------------
468,581
------------
Food Service & Restaurants-0.65%
CEC Entertainment, Inc.+ 9,500 243,438
P.F. Chang's China Bistro, Inc.+ 9,500 303,406
------------
546,844
------------
Healthcare-1.36%
Apria Healthcare Group, Inc.+ 34,900 427,525
Matria Healthcare, Inc.+ 65,900 302,731
MedQuist, Inc.+ 12,400 421,600
------------
1,151,856
------------
Human Resources-1.39%
Butler International , Inc.+ 14,150 120,275
CDI Corp.+ 7,900 160,963
Labor Ready, Inc.+ 20,900 138,463
Modis Professional Services, Inc.+ 22,100 196,138
On Assignment, Inc.+ 18,800 573,400
------------
1,189,239
------------
Internet Services-3.72%
Alloy Online, Inc.+ 14,800 166,500
Corillian Corp.+ 7,400 123,025
CyberSource Corp.+ 11,100 153,319
eMerge Interactive, Inc.+ 12,900 231,394
Etinuum, Inc.+ 11,300 63,563
Jupiter Communications, Inc.+ 11,500 264,500
Lionbridge Technologies, Inc.+ 17,400 169,650
NBC Internet, Inc.+ 500 6,250
Netopia, Inc.+ 7,100 285,775
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
50
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
SMALL COMPANY PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)-CONTINUED
--------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Company Shares Market Value
------------------------------------------------------------------------------
Internet Services-Continued
Proxicom, Inc.+ 4,700 $ 225,013
S1 Corp.+ 32,300 752,994
Student Advantage, Inc.+ 59,500 435,094
Switchboard, Inc.+ 16,900 169,000
Vicinity Corp.+ 5,900 115,788
------------
3,161,865
------------
Machinery-0.67%
Flow International Corp.+ 19,400 194,000
Semitool, Inc.+ 21,500 372,219
------------
566,219
------------
Manufacturing-2.01%
Cable Design Technologies Corp.+ 17,300 579,550
Identix, Inc.+ 10,400 163,150
Matthews International Corp. 14,300 414,700
Meade Instruments Corp.+ 12,300 309,038
Therma-Wave, Inc.+ 3,400 75,863
Wabtec, Inc. 16,750 173,781
------------
1,716,082
------------
Medical - Biotechnology-1.15%
Corixa Corp.+ 15,100 648,356
Maxim Pharmaceuticals, Inc.+ 6,500 333,938
------------
982,294
------------
Medical Products-4.81%
Arrow International, Inc. 21,100 706,850
ATS Medical, Inc.+ 38,000 555,750
Coherent, Inc.+ 19,200 1,610,400
Hanger Orthopedic Group, Inc.+ 28,900 142,694
Orthofix International, N.V.+ 20,900 373,588
SonoSite, Inc.+ 14,100 406,256
Theragenics Corp.+ 33,500 286,844
------------
4,082,382
------------
Mining & Metals - Precious-1.26%
Stillwater Mining Co.+ 38,500 1,073,188
------------
Oil & Gas - Distribution & Marketing-0.21%
TransMontaigne, Inc.+ 29,400 180,075
------------
Oil & Gas Producers-4.14%
Evergreen Resources, Inc.+ 22,200 657,675
EXCO Resources, Inc.+ 15,800 158,000
Louis Dreyfus Natural Gas Corp.+ 30,500 955,031
Stone Energy Corp.+ 12,600 752,850
Vintage Petroleum, Inc. 44,100 995,006
------------
3,518,562
------------
Oil & Gas Services & Equipment-1.88%
Core Laboratories, N.V.+ 40,200 1,165,800
Seitel, Inc.+ 20,600 167,375
Superior Energy Services, Inc.+ 25,600 265,600
------------
1,598,775
------------
Pharmaceutical-3.68%
Albany Molecular Research, Inc.+ 7,500 408,281
Barr Laboratories, Inc.+ 7,950 356,259
ICOS Corp.+ 20,700 910,800
ILEX Oncology, Inc.+ 7,800 274,950
Kos Pharmaceuticals, Inc.+ 8,300 133,319
Noven Pharmaceutical Inc.+ 9,100 273,569
PathoGenesis Corp.+ 24,600 639,600
Pharmaceutical Product
Development, Inc.+ 6,400 134,400
------------
3,131,178
------------
Professional Sports-0.44%
Championship Auto Racing Teams, Inc.+ 14,500 369,750
------------
Railroad-0.10%
RailWorks Corp.+ 10,700 86,938
------------
Real Estate-0.36%
Catellus Development Corp.+ 9,200 138,000
Healthcare Realty Trust, Inc. 10,000 170,625
------------
308,625
------------
Retail - Internet-0.38%
Cyberian Outpost, Inc.+ 22,500 108,281
Fatbrain.com, Inc.+ 17,900 118,029
iGo Corp.+ 23,200 89,900
------------
316,210
------------
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
51
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
SMALL COMPANY PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)-CONTINUED
--------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Company Shares Market Value
------------------------------------------------------------------------------
Retail Stores-6.91%
Ames Department Stores, Inc.+ 16,800 $ 130,200
AnnTaylor Stores Corp.+ 34,700 1,149,438
Children's Place Retail Stores, Inc., The+ 28,500 584,250
Cost Plus, Inc.+ 9,360 268,515
MSC Industrial Direct Co., Inc.+ 39,100 818,656
Pacific Sunwear of California, Inc.+ 37,050 694,688
Shoe Carnival, Inc.+ 23,600 147,500
Tuesday Morning Corp.+ 14,200 149,100
ValueVision International, Inc.+ 25,600 614,400
Whole Foods Market, Inc.+ 24,700 1,020,419
Wild Oats Markets, Inc.+ 18,250 229,266
Zany Brainy, Inc.+ 25,600 67,200
------------
5,873,632
------------
Telecommunications - Equipment &
Services-5.60%
ADC Telecommunications, Inc.+ 3,440 288,530
CellStar Corp.+ 96,100 267,283
Comtech Telecommunications+ 16,700 275,550
Netro Corp.+ 4,000 229,500
Plantronics, Inc.+ 32,100 3,707,550
------------
4,768,413
------------
Telecommunications - Integrated-1.32%
GST Telecommunications+ 28,500 0
Lightbridge, Inc.+ 15,700 374,838
MGC Communications, Inc.+ 12,500 749,219
------------
1,124,057
------------
Telecommunications - Wireless-1.58%
Boston Communications Group+ 20,200 282,800
Clearnet Communications, Inc.+ 27,600 766,331
TALK.com, Inc.+ 51,500 299,344
------------
1,348,475
------------
Telecommunications - Wireline-0.11%
Aegis Communications Group, Inc.+ 90,600 91,506
------------
Textiles & Apparel-5.49%
Cutter & Buck, Inc.+ 15,200 120,650
G & K Services, Inc. 27,000 676,688
Kenneth Cole Productions, Inc.+ 14,050 562,000
Quicksilver, Inc.+ 43,300 673,856
Tarrant Apparel Group+ 28,800 257,400
Timberland Co., The+ 22,000 1,557,875
Tropical Sportswear Int'l Corp.+ 29,600 518,000
Vans, Inc.+ 21,000 307,125
------------
4,673,594
------------
Travel Services-0.87%
American Classic Voyages Co.+ 18,200 375,375
Pegasus Solutions, Inc.+ 33,450 363,769
------------
739,144
------------
Utilities - Electric & Gas-0.25%
Independent Energy Holdings,
PLC, ADR+ 25,700 213,631
------------
Water Treatment-0.39%
Ionics, Inc.+ 10,900 333,813
------------
TOTAL COMMON STOCK
(Cost $80,684,554) 81,226,211
------------
TOTAL INVESTMENTS
(Cost $80,684,554) 95.60% 81,226,211
Other assets, less liabilities 4.40 3,725,887
------ ------------
TOTAL NET ASSETS 100.00% $ 84,952,098
====== ============
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
--------------------------------------------------------------------------------
52
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
GROWTH PORTFOLIO
--------------------------------------------------------------------------------
"...it seems likely that the valuation disparity between technology stocks and
`Old Economy' issues will continue to close."
--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 6/30/00
$73,922,517
---------------------------------------------------
NUMBER OF HOLDINGS
103
---------------------------------------------------
PORTFOLIO TURNOVER
176.39%
--------------------------------------------------------------------------------
----------------------------------------
IN THIS SECTION
----------------------------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
----------------------------------------
----------------------------------------
RONALD C. OGNAR, CFA
o Joined Strong in 1993
o 31 years of investment \
experience
o B.S. from University of
Illinois
o Chartered Financial
Analyst
----------------------------------------
53
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
GROWTH PORTFOLIO
--------------------------------------------------------------------------------
[SIDEBAR]
[PIE CHART]
Common Stock - 90.75%
Cash - 9.25%
------------------------------------
PERCENT OF
TOP TEN EQUITIES PORTFOLIO++
------------------------------------
Juniper Networks, Inc. 4.79%
Cisco Systems, Inc. 4.36%
Kohl's Corp. 3.51%
Pfizer, Inc. 3.49%
SDL, Inc. 3.13%
JDS Uniphase Corp. 3.04%
E-Tek Dynamics, Inc. 2.17%
Corning, Inc. 2.04%
VERITAS Software Corp. 1.94%
PMC-Sierra, Inc. 1.71%
------------------------------------
PERCENT OF
TOP TEN INDUSTRIES PORTFOLIO++
------------------------------------
Computer Network 11.50%
Telecommunications -
Equipment & Services 10.48%
Pharmaceutical 9.72%
Electronics -
Semiconductors 9.41%
Computer Software -
Mini & Micro 6.29%
Retail Stores 6.13%
Oil & Gas Producers 3.70%
Medical - Biotechnology 3.56%
Oil & Gas Services &
Equipment 3.51%
Banking 2.58%
++Represents market value of
investments plus cash.
[ENDSIDEBAR]
For the first quarter, despite the late quarter sell-off, the NASDAQ
Composite and the "New Economy" stocks outperformed the S&P 500 Index and the
Dow Jones Industrial Average. Higher oil prices and higher interest rates moved
investors to the highest revenue growth companies in anticipation of a slowing
economy and an inevitable deceleration in the earnings of the "Old Economy"
stocks. When valuations reached extreme levels for both groups of stocks, the
playing field evened out modestly in the last weeks of the quarter with the DJIA
and the S&P 500 rallying from oversold depths. The second quarter was
characterized by severe market volatility, most notably in NASDAQ issues,
combined with a rotation from highly valued growth stocks into less expensive
market sectors. The sell-off has reduced the valuation disparity between
sectors, especially for concept stocks lacking meaningful earnings. The S&P 500
fared much better than the NASDAQ mainly because investors shifted back into
"Old Economy" stocks.
In the first quarter, technology, retailers, and oil services companies
provided the strongest relative performance for the Fund. While we took profits
in many of the most expensive technology stocks, we continued to focus on our
favorite long-term core holdings such as Cisco, JDS Uniphase, Kohls, and Home
Depot. In the second quarter, optical and networking technology companies as
well as various health care related stocks provided the strongest relative
performance.
We remain committed to our investments in the direct beneficiaries of the
networked economy. The successful implementation of technology will lead the
best companies to market share gains and superior returns on capital. The
acceptance of the Internet as an important source of competitive advantage
should continue to enhance the prospects of
54
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
GROWTH PORTFOLIO
--------------------------------------------------------------------------------
companies engaged in e-commerce, wireless communications, bandwidth expansion,
and software. In addition, the genomics revolution continues with several
important milestones achieved so far this year. Although progress will be slow,
we continue to focus on the enablers of genomic discovery and some of the
leading companies in biotech research. Overall, we continue to like the secular
healthcare demands of an aging population and the outlook for high quality
pharmaceutical and drug store stocks.
With recent economic data pointing to more moderate growth trends, it is
becoming increasingly likely that an end to the Fed's tightening phase is upon
us. As investor attention shifts from Fed policy to the risk-reward profile of
individual issues, it seems likely that the valuation disparity between
technology stocks and "Old Economy" issues will continue to close. Although
technology remains an attractive growth area, reasonably valued companies
positioned to capitalize on the networked economy will likely gain ground on a
relative basis. We are also watching specialty retail stocks, which have again
become attractive to us because we believe that the pressure put on these stocks
by Fed tightening should ease during the next quarter. We will continue to focus
on the well-managed growth companies that are pure plays in dynamic industries
and are providing innovative products and services. As growth investors, our
team is constantly on the lookout for investments exhibiting sustainable
fundamental improvement in order to strive to consistently outperform the
broader market averages.
[SIDEBAR]
--------------------------------------------------------------------------------
Growth Portfolio and Russell Midcap Growth Index
Comparison of Change in Value of $10,000 Investment.
--------------------------------------------------------------------------------
[LINE GRAPH]
RUSSELL MIDCAP
GROWTH GROWTH
PORTFOLIO INDEX
1/1/98 10000 10000
3/98 11160 11238
6/98 11691 11232
9/98 10420 9356
12/98 13114 11834
3/99 14487 12239
6/99 15102 13514
9/99 15055 12837
12/99 23652 17904
3/00 28610 21686
6/00 25892 20080
------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
------------------------------------
RUSSELL
MIDCAP
GROWTH
GROWTH INDEX
YTD 9.47% 12.15%
1 YEAR 71.45% 48.60%
INCEPTION 46.40% 32.18%
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 Port folio reflects all recurring
expenses and includes the reinvestment of all dividends and distributions. Total
return figures for periods of less than one year have not been annualized.
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.
[ENDSIDEBAR]
55
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
GROWTH PORTFOLIO
--------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
(Unaudited)
Six Months
Ended Year Ended Year Ended
June December December
30, 2000 31, 1999 31, 1998
<S> <C> <C> <C>
Net asset value, beginning of period $ 23.38 $ 13.11 $ 10.00
Income From Investment Operations
Net investment loss (0.03) (0.06) (0.05)
Net gains and losses on securities
(both realized and unrealized) 2.40 10.50 3.16
----------- ----------- -----------
Total from investment operations 2.37 10.44 3.11
Less Distributions to Shareholders
Dividends from net investment income
Dividends in excess of net
investment income
Distributions from capital gains (1.74) (0.17)
Distributions in excess of capital gains
Returns of capital
----------- ----------- -----------
Total distributions (1.74) (0.17) 0.00
Net asset value, end of period $ 24.01 $ 23.38 $ 13.11
=========== =========== ===========
Total Return (A) 9.47% 80.36% 31.14%
Ratios to Average Net Assets: (B)
Expenses 0.86% 0.96% 1.08%
Net investment income (0.31%) (0.54%) (0.47%)
Portfolio Turnover Rate 176.39% 326.19% 283.36%
Net Assets, At End of Period $73,922,517 $44,334,220 $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.
(B) Per share data and ratios are calculated on an annualized basis.
56
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
GROWTH PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
COMMON STOCK--89.51%
Company Shares Market Value
------------------------------------------------------------------------------
Banking-2.54%
Citigroup, Inc. 16,000 $ 964,000
Golden West Financial Corp. 4,500 183,656
Northern Trust Corp. 8,000 520,500
State Street Corp. 2,000 212,125
------------
1,880,281
------------
Beverages-0.32%
Pepsi Bottling Group, Inc. 8,000 233,500
------------
Broadcasting-0.84%
Univision Communications, Inc.+ 6,000 621,000
------------
Commercial Services-1.44%
Concord EFS, Inc.+ 9,500 247,000
Paychex, Inc. 19,500 819,000
------------
1,066,000
------------
Computer Equipment & Services-2.24%
CDW Computer Centers, Inc.+ 5,000 312,500
Comverse Technology, Inc.+ 7,500 697,500
15,000 648,750
------------
1,658,750
------------
Computer Network-11.34%
Brocade Communications Systems, Inc.+ 1,700 311,923
Cisco Systems, Inc.+ 50,000 3,178,125
Juniper Networks, Inc.+ 24,000 3,493,489
Redback Networks, Inc.+ 6,500 1,157,000
WebTrends Corp.+ 6,200 239,863
------------
8,380,400
------------
Computer Software - Mainframe-2.41%
BroadVision, Inc.+ 11,000 558,938
Oracle Corp.+ 14,500 1,218,906
------------
1,777,844
------------
Computer Software - Mini & Micro-6.20%
Check Point Software Technologies, Inc.+ 3,000 635,250
Macromedia, Inc.+ 2,800 270,725
Mercury Interactive Corp.+ 4,500 435,375
Portal Software, Inc.+ 4,200 268,275
Siebel Systems, Inc.+ 5,800 948,663
Sun Microsystems, Inc.+ 5,000 454,688
VERITAS Software Corp.+ 12,500 1,412,695
Vignette Corp.+ 3,000 156,047
------------
4,581,718
------------
Educational Services-0.32%
Apollo Group, Inc.+ 8,500 238,000
------------
Electronic Components-1.56%
Celestica, Inc.+ 4,500 223,313
Flextronics International, Ltd.+ 2,700 185,456
Xilinx, Inc.+ 9,000 743,063
------------
1,151,832
------------
Electronics - Semiconductors-9.29%
Altera Corp.+ 5,000 509,688
Applied Materials, Inc.+ 2,700 244,688
Applied Micro Circuits Corp.+ 10,000 987,500
Integrated Device Technology, Inc.+ 8,500 508,938
Integrated Silicon Solution, Inc.+ 11,000 418,000
Micron Technology, Inc.+ 4,000 352,250
National Semiconductor Corp.+ 5,500 312,125
PMC-Sierra, Inc.+ 7,000 1,243,813
SDL, Inc.+ 8,000 2,281,500
------------
6,858,502
------------
Financial Services-1.44%
Legg Mason, Inc.+ 5,000 250,000
Morgan Stanley Dean Witter & Co. 5,500 457,875
Paine Webber Group, Inc. 4,500 204,750
Waddell & Reed Financial, Inc. 4,500 147,656
------------
1,060,281
------------
Healthcare-1.98%
Cardinal Health, Inc. 11,100 821,400
UnitedHealth Group, Inc. 7,500 643,125
------------
1,464,525
------------
Human Resources-0.97%
Robert Half International, Inc.+ 25,200 718,200
------------
Internet Services-1.40%
Exodus Communications, Inc.+ 4,000 184,250
VeriSign, Inc.+ 4,800 847,200
------------
1,031,450
------------
Investment Companies-0.19%
Federated Investors, Inc.+ 4,000 140,250
------------
Manufacturing-2.01%
Corning, Inc. 5,500 1,484,313
------------
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
57
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
GROWTH PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)-CONTINUED
--------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Company Shares Market Value
------------------------------------------------------------------------------
Medical - Biotechnology-3.50%
Amgen, Inc.+ 9,000 $ 632,250
Genentech, Inc.+ 2,400 412,800
Human Genome Sciences, Inc.+ 5,400 720,225
Immunex Corp.+ 2,000 98,875
Millennium Pharmaceuticals, Inc.+ 6,500 727,188
------------
2,591,338
------------
Medical Products-1.20%
Medtronic, Inc. 5,600 278,950
Stryker Corp.+ 13,800 603,750
------------
882,700
------------
Medical Supplies-0.83%
Pe Corp-Pe Biosystems Group 9,300 612,638
------------
Oil & Gas - Distribution & Marketing-1.68%
Enron Corp. 10,300 664,350
Tidewater, Inc. 16,000 576,000
------------
1,240,350
------------
Oil & Gas - Integrated-0.45%
Nabors Industries, Inc.+ 8,000 332,500
------------
Oil & Gas Producers-3.65%
Anadarko Petroleum Corp. 12,000 591,750
Apache Corp. 10,000 588,125
Coastal Corp., The 13,600 827,900
Devon Energy Corp. 4,000 224,750
Noble Affiliates, Inc. 7,000 260,750
Noble Drilling Corp.+ 5,000 205,938
------------
2,699,213
------------
Oil & Gas Services & Equipment-3.45%
BJ Services Co.+ 8,000 500,000
Dynegy, Inc. 6,000 409,875
ENSCO International, Inc. 17,500 626,719
Key Energy Services, Inc.+ 40,000 385,000
R & B Falcon Corp.+ 15,500 365,219
Smith International, Inc.+ 3,700 269,406
------------
2,556,219
------------
Pharmaceutical-9.59%
Allergan, Inc. 6,700 499,150
ALZA Corp.+ 13,500 798,188
Celgene Corp.+ 3,500 206,063
Forest Laboratories, Inc.+ 6,500 656,500
IVAX Corp.+ 5,500 228,250
MedImmune, Inc.+ 5,100 377,400
Pfizer, Inc. 53,000 2,544,000
Sepracor, Inc.+ 4,700 566,938
Teva Pharmaceutical Industries, Ltd. 7,000 388,063
Titan Pharmaceuticals, Inc.+ 6,000 258,000
Watson Pharmaceuticals, Inc.+ 10,400 559,000
------------
7,081,552
------------
Real Estate-0.63%
Starwood Hotels & Resorts
Worldwide, Inc. 14,300 462,069
------------
Retail Stores-6.04%
Best Buy Co., Inc.+ 3,700 234,025
Dollar Tree Stores, Inc.+ 11,250 445,078
Home Depot, Inc., The 15,000 749,063
Kohl's Corp.+ 46,000 2,558,750
Walgreen Co. 15,000 482,813
------------
4,469,729
------------
Telecommunications - Equipment &
Services-10.33%
ADC Telecommunications, Inc.+ 12,000 1,006,500
Aeroflex, Inc.+ 5,500 273,281
Andrew Corp.+ 9,000 302,063
Digital Microwave Corp.+ 10,500 400,313
E-Tek Dynamics, Inc.+ 6,000 1,582,875
JDS Uniphase Corp.+ 18,500 2,217,688
Nokia Oyj, SA, ADR 19,100 953,806
Nortel Networks Corp. 6,200 423,150
Scientific-Atlanta, Inc. 3,500 260,750
Vitesse Semiconductor, Inc.+ 3,000 220,688
------------
7,641,114
------------
Telecommunications - Wireless-1.25%
Sprint Corp. - PCS Group+ 11,000 654,500
VoiceStream Wireless Corp.+ 2,300 267,483
------------
921,983
------------
Telecommunications - Wireline-0.42%
Copper Mountain Networks, Inc.+ 3,500 308,438
------------
TOTAL COMMON STOCK
(Cost $53,218,752) 66,146,689
------------
TOTAL INVESTMENTS
(Cost $53,218,752) 89.51% 66,146,689
Other assets, less liabilities 10.49 7,775,828
------ ------------
TOTAL NET ASSETS 100.00% $ 73,922,517
====== ============
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
58
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
S&P 500 INDEX PORTFOLIO
--------------------------------------------------------------------------------
"Economic figures have begun to suggest that the economy might be approaching
the Fed's desired `soft landing', although it is too early to be certain."
--Barclays Global Fund Advisors, Portfolio Manager--
--------------------------------------------------------------------------------
INCEPTION DATE
May 1, 2000
---------------------------------------------------
FUND MANAGER
Barclays Global Fund Advisors
---------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGY
To approximate, before fees and expenses, the
total rate of return of common stocks represented
by the S&P 500 Index.
---------------------------------------------------
NET ASSETS AS OF 6/30/00
$180,253,814
---------------------------------------------------
NUMBER OF HOLDINGS
501
---------------------------------------------------
PORTFOLIO TURNOVER
2.68%
--------------------------------------------------------------------------------
----------------------------------------
IN THIS SECTION
----------------------------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
----------------------------------------
59
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
S&P 500 INDEX PORTFOLIO
--------------------------------------------------------------------------------
[SIDEBAR]
[PIE CHART]
Common Stock-94.46%
Cash-0.07%
S&P 500 Index Futures-3.47%
-----------------------------------------
PERCENT OF
TOP TEN EQUITIES PORTFOLIO++
-----------------------------------------
General Electric Co. 4.19%
Intel Corp. 3.58%
Cisco Systems, Inc. 3.54%
Microsoft Corp. 3.37%
Pfizer, Inc. 2.42%
Exxon Mobil Corp. 2.19%
Wal-Mart Stores, Inc. 2.05%
Oracle Corp. 1.91%
Citigroup, Inc. 1.63%
Nortel Networks Corp. 1.62%
-----------------------------------------
PERCENT OF
TOP TEN COUNTRIES PORTFOLIO++
-----------------------------------------
Pharmaceutical 18.31%
Electronics -
Semiconductors 15.84%
Computer Equipment
& Services 15.25%
Computer Software -
Mini & Micro 13.78%
Retail Stores 13.49%
Banking 12.02%
Financial Services 11.69%
Diversified Operations 10.41%
Oil & Gas - Integrated 10.32%
Telecommunications -
Equipment & Services 10.16%
++Represents market value of
investments plus cash.
[ENDSIDEBAR]
May and June witnessed continued volatility in the equity markets amid
growing inflationary fears. The S&P 500 Index, which has endured price declines
and volatility for much of the year, declined further in May before resuming its
uptrend in June. In a reversal of the first quarter's trends, inflationary
concerns drove investors back to "old economy" stocks.
The month of May experienced the inflationary concerns and market
volatility that had become common in the market during April. The retreat from
"new economy" to "old economy" stocks that had begun earlier in the year
continued into May. Telecommunications and technology shares suffered, while
more traditional sectors, such as financial and utilities, fared well. On May
16, a much-anticipated 0.50% interest hike by the Federal Reserve, accompanied
by a suggestion that future rate increases were likely, spurred additional
volatility in the markets and sent stock prices lower. However, encouraging
reports of lower existing home sales and durable goods orders in April -- down
6.2% and 6.4%, respectively -- showed some signs of a slowing economy. The S&P
500 Index was buoyed by the news, but still finished the month on a negative
note, declining 2.05%.
Thanks to positive economic numbers released in June, pointing to a slower
60
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
S&P 500 INDEX PORTFOLIO
--------------------------------------------------------------------------------
economy, the Federal Reserve Board left rates unchanged. The markets responded
to the benign interest-rate environment by rebounding. However, because this
news was particularly favorable to "new economy" stocks, the strongest rally was
seen in Nasdaq shares, while the S&P 500 Index recovered 2.47% for the month.
Economic figures have begun to suggest that the economy might be approaching the
Fed's desired "soft landing", although it is too early to be certain.
The technology sector's meltdown in April and May led many investors to
value stocks, which strongly outperformed growth during the month of May. In
June, however, renewed confidence in the economy brought investors back to
growth stocks, which outpaced value.
Barclays Global Investors (BGI) is the world's largest institutional
manager and the world's largest provider of structured investment strategies
such as indexing, tactical asset allocation and quantitative active strategies.
With more than $783 billion in assets under management for almost 1,600 clients
in 36 countries, BGI manages over 1,500 funds, which track over 200 indexes
around the world.
[SIDEBAR]
----------------------------------------------------
S&P 500 Index Portfolio and the S&P 500 Index
Comparison of Change in Value of $10,000 Investment.
----------------------------------------------------
[LINE GRAPH]
S&P 500
INDEX S&P 500
PORTFOLIO INDEX
5/1/00 10000 10000
5/31/00 9793 9795
6/30/00 10029 10037
----------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
----------------------------------------
S&P 500
INDEX S&P 500
PORTFOLIO INDEX
YTD 0.29% 0.36%
Inception 0.29% 0.36%
Commencement of operations May 1, 2000. Past performance is not predictive of
future performance.
This graph compares an initial $10,000 investment made in the S&P 500 Index
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 Port folio reflects all recurring expenses
and includes the reinvestment of all dividends and distributions. Total return
figures for periods of less than one year have not been annualized.
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.
[ENDSIDEBAR]
61
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
S&P 500 INDEX PORTFOLIO
--------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Unaudited)
Period from
May 1, 2000
to
June 30, 2000(A)
Net asset value, beginning of period $ 10.00
Income From Investment Operations
Net investment income 0.02
Net gains and losses on securities
(both realized and unrealized) 0.01
------------
Total from investment operations 0.03
Less Distributions to Shareholders
Dividends from net investment income
Dividends in excess of net
investment income
Distributions from capital gains
Distributions in excess of capital gains
Returns of capital
------------
Total distributions 0.00
Net asset value, end of period $ 10.03
============
Total Return (B) 0.29%
Ratios to Average Net Assets: (C)
Expenses 0.28%
Net investment income 0.36%
Portfolio Turnover Rate 2.68%
Net Assets, At End of Period $180,253,814
--------------------------------------------------------------------------------
(A) Per share data calculated from the initial offering date, May 1, 2000, for
sale to Jefferson Pilot Financial separate accounts.
(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) Jefferson Pilot Investment Advisory Corp. ("JPIA") has entered into an
Expense Reimbursement Plan with the Portfolio. JPIA has agreed to maintain
the operating expenses (excluding interest, taxes, brokerage commissions
or extraordinary expenses) of the Portfolio at an annual rate of 0.28% of
average daily net assets. Had these fees not been reimbursed, the expense
ratio would have been 0.37% and the net investment income ratio would have
been 0.27% for the period from May 1, 2000 through June 30, 2000. Per
share data and ratios are calculated on an annualized basis.
62
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
S&P 500 INDEX PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
COMMON STOCK 96.30%
Company Shares Market Value
--------------------------------------------------------------------------------
Advertising-0.25%
Interpublic Group of Companies, Inc., The 4,186 $ 179,998
Omnicom Group, Inc. 2,464 219,450
Young & Rubicam, Inc. 1,000 57,188
-------------
456,636
-------------
Aerospace & Defense-0.99%
B.F. Goodrich Co., The 1,500 51,094
Boeing Co., The 12,586 526,252
General Dynamics Corp. 2,800 146,300
Honeywell International, Inc. 11,050 372,247
Lockheed Martin Corp. 5,552 137,759
Northrop Grumman Corp. 970 64,263
Raytheon Co., Class B 4,700 90,475
United Technologies Corp. 6,528 384,336
-------------
1,772,726
-------------
Agricultural Operations-0.05%
Archer-Daniels-Midland Co. 8,400 82,425
-------------
Airlines-0.17%
AMR Corp.+ 2,100 55,519
Delta Air Lines, Inc. 1,698 85,855
Southwest Airlines Co. 6,884 130,366
US Airways Group, Inc.+ 924 36,036
-------------
307,776
-------------
Appliances-0.05%
Maytag Corp. 1,087 40,083
Whirlpool Corp. 1,000 46,625
-------------
86,708
-------------
Automotive Manufacturing-0.67%
Ford Motor Co. 16,722 719,046
General Motors Corp. 7,422 430,940
Navistar International Corp.+ 858 26,652
PACCAR, Inc. 1,062 42,148
-------------
1,218,786
-------------
Automotive Parts & Equipment-0.23%
Cooper Tire & Rubber Co. 1,100 12,238
Cummins Engine Co., Inc. 600 16,350
Dana Corp. 2,113 44,769
Delphi Automotive Systems Corp. 7,811 113,748
Genuine Parts Co. 2,500 50,000
Goodyear Tire & Rubber Co., The 2,200 44,000
Johnson Controls, Inc. 1,200 61,575
TRW, Inc. 1,700 73,738
Visteon Corp.+ 2,189 26,547
-------------
442,965
-------------
Automotive Truck Rental-0.01%
Ryder System, Inc. 870 16,476
-------------
Banking-4.86%
AmSouth Bancorporation 5,400 85,050
Bank of New York Co., Inc., The 10,232 475,788
Bank One Corp. 15,912 422,663
Bank of America Corp. 22,994 988,742
Charter One Financial, Inc. 2,910 66,930
Chase Manhattan Corp., The 17,160 790,433
Citigroup, Inc. 46,822 2,821,026
Comerica, Inc. 2,170 97,379
First Union Corp. 13,604 337,549
Golden West Financial Corp. 2,192 89,461
Huntington Bancshares, Inc. 3,100 49,019
KeyCorp 6,032 106,314
Northern Trust Corp. 3,084 200,653
Old Kent Financial Corp. 1,869 49,996
PNC Financial Services Group 4,028 188,813
Providian Financial Corp. 1,980 178,200
Southtrust Corp. 2,350 53,169
State Street Corp. 2,232 236,732
Summit Bancorp 2,450 60,331
SunTrust Banks, Inc. 4,196 191,705
U.S. Bancorp 10,430 200,778
Union Planters Corp. 1,900 53,081
Wachovia Corp. 2,800 151,900
Wells Fargo & Co. 22,354 866,218
-------------
8,761,930
-------------
Beverages-2.13%
Adolph Coors Co., Class B 500 30,250
Anheuser-Busch Companies, Inc. 6,268 468,141
Brown-Forman Corp., Class B 950 51,063
Coca-Cola Enterprises, Inc. 5,834 95,167
Coca-Cola Co., The 34,340 1,972,404
PepsiCo, Inc. 19,994 888,483
Seagram Co., Ltd., The 6,040 350,320
-------------
3,855,828
-------------
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
63
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
S&P 500 INDEX PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)-CONTINUED
--------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Company Shares Market Value
--------------------------------------------------------------------------------
Broadcasting-0.48%
Clear Channel Communications, Inc.+ 4,702 $ 352,650
Comcast Corp.+ 12,454 504,387
-------------
857,037
-------------
Building Construction-0.03%
Centex Corp. 800 18,800
Kaufman & Broad Home Corp. 700 13,869
Pulte Corp. 600 12,975
-------------
45,644
-------------
Building Materials-0.05%
Armstrong Holdings, Inc. 600 9,188
Louisiana-Pacific Corp. 1,500 16,313
Owens Corning 800 7,400
Vulcan Materials Co. 1,400 59,763
-------------
92,664
-------------
Chemicals-0.94%
Air Products & Chemicals, Inc. 3,181 98,015
Ashland, Inc. 1,000 35,063
Dow Chemical Co., The 9,380 283,159
E.I. du Pont de Nemours & Co. 14,530 635,688
Eastman Chemical Co. 1,064 50,806
Ecolab, Inc. 1,800 70,313
Engelhard Corp. 1,800 30,713
Great Lakes Chemical Corp. 754 23,751
Hercules, Inc. 1,500 21,094
PPG Industries, Inc. 2,400 106,350
Praxair, Inc. 2,200 82,363
Rohm & Haas Co. 3,018 104,121
Sigma-Aldrich Corp. 1,182 34,574
Union Carbide Corp. 1,870 92,565
W.R. Grace & Co.+ 1,000 12,125
-------------
1,680,700
-------------
Commercial Services-0.33%
Cendant Corp.+ 10,004 140,056
Convergys Corp.+ 2,130 110,494
Dun & Bradstreet Corp., The 2,243 64,206
McDermott International, Inc. 800 7,050
Paychex, Inc. 5,151 216,342
Quintiles Transnational Corp.+ 1,600 22,600
W.W. Grainger, Inc. 1,300 40,056
-------------
600,804
-------------
Computer Equipment & Services-6.19%
Apple Computer, Inc.+ 4,516 236,526
Automatic Data Processing, Inc. 8,702 466,101
Ceridian Corp.+ 2,000 48,125
Compaq Computer Corp. 23,558 602,201
Computer Sciences Corp.+ 2,322 173,424
Comverse Technology, Inc.+ 2,120 197,160
Dell Computer Corp.+ 35,728 1,761,837
Electronic Data Systems Corp. 6,462 266,558
EMC Corp.+ 30,106 2,316,280
First Data Corp. 5,720 283,855
Hewlett-Packard Co. 13,876 1,732,766
International Business Machines Corp. 24,598 2,695,018
Lexmark International, Inc.+ 1,780 119,705
Parametric Technology Corp.+ 3,800 41,800
Seagate Technology, Inc.+ 3,152 173,360
-------------
11,114,716
-------------
Computer Information Systems-0.07%
NCR Corp.+ 1,320 51,398
Unisys Corp.+ 4,350 63,347
-------------
114,745
-------------
Computer Network-3.83%
3Com Corp.+ 4,868 280,519
Adaptec, Inc.+ 1,400 31,850
Cabletron Systems, Inc.+ 2,500 63,125
Cisco Systems, Inc.+ 96,514 6,134,671
Network Appliance, Inc.+ 4,230 340,515
Novell, Inc.+ 4,600 42,550
-------------
6,893,230
-------------
Computer Software - Mainframe-1.94%
BMC Software, Inc.+ 3,400 124,047
Compuware Corp.+ 5,000 51,875
Oracle Corp.+ 39,382 3,310,549
-------------
3,486,471
-------------
Computer Software - Mini & Micro-5.58%
Adobe Systems, Inc. 1,660 215,800
Autodesk, Inc. 800 27,750
Citrix Systems, Inc.+ 2,568 48,632
Computer Associates International, Inc. 8,164 417,895
Gateway, Inc.+ 4,464 253,332
Mercury Interactive Corp.+ 1,100 106,425
Microsoft Corp.+ 73,014 5,841,120
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
64
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
S&P 500 INDEX PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)-CONTINUED
--------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Company Shares Market Value
--------------------------------------------------------------------------------
Computer Software - Mini & Micro-Continued
PeopleSoft, Inc.+ 3,800 $ 63,650
Siebel Systems, Inc.+ 2,768 452,741
Sun Microsystems, Inc.+ 22,000 2,000,625
VERITAS Software Corp.+ 5,420 612,545
-------------
10,040,515
-------------
Consulting Services-0.05%
Sapient Corp.+ 816 87,261
-------------
Cosmetics & Personal Care-0.91%
Alberto-Culver Co., Class B 772 23,594
Avon Products, Inc. 3,294 146,583
Colgate-Palmolive Co. 8,000 479,000
Gillette Co., The 14,484 506,035
International Flavors & Fragrances, Inc. 1,426 43,047
Kimberly-Clark Corp. 7,708 442,247
-------------
1,640,506
-------------
Diversified Operations-4.21%
FMC Corp.+ 420 24,360
Fortune Brands, Inc. 2,196 50,645
General Electric Co. 137,268 7,275,155
Illinois Tool Works, Inc. 4,200 239,400
-------------
7,589,560
-------------
Electrical Equipment-0.46%
AES Corp., The+ 5,914 269,826
American Power Conversion Corp.+ 2,680 109,378
Emerson Electric Co. 5,920 357,420
PerkinElmer, Inc. 680 44,965
Thermo Electron Corp.+ 2,162 45,537
-------------
827,126
-------------
Electronic Components-1.01%
Analog Devices, Inc.+ 4,908 373,008
Linear Technology Corp. 4,316 275,954
Maxim Integrated Products, Inc.+ 3,922 266,451
Sanmina Corp.+ 2,058 175,959
Solectron Corp.+ 8,272 346,390
Thomas & Betts Corp. 800 15,300
Xilinx, Inc.+ 4,458 368,064
-------------
1,821,126
-------------
Electronics-0.43%
Agilent Technologies, Inc.+ 6,271 462,486
Molex, Inc. 2,722 130,996
Teradyne, Inc.+ 2,390 175,665
-------------
769,147
-------------
Electronics - Semiconductors-6.42%
Advanced Micro Devices, Inc.+ 2,125 164,156
Altera Corp.+ 2,762 281,551
Applied Materials, Inc.+ 11,204 1,015,363
Conexant Systems, Inc.+ 3,020 146,848
Intel Corp. 46,466 6,211,923
KLA-Tencor Corp.+ 2,580 151,091
LSI Logic Corp.+ 4,258 230,464
Micron Technology, Inc.+ 7,698 677,905
Motorola, Inc. 29,862 867,864
National Semiconductor Corp.+ 2,448 138,924
Novellus Systems, Inc.+ 1,810 102,378
Texas Instruments, Inc. 22,704 1,559,481
-------------
11,547,948
-------------
Engineering & Construction-0.02%
Fluor Corp. 1,059 33,491
-------------
Entertainment & Leisure-0.74%
Brunswick Corp. 1,218 20,173
Carnival Corp. 8,386 163,527
Harrah's Entertainment, Inc.+ 1,690 35,384
Walt Disney Co., The 28,828 1,118,887
-------------
1,337,971
-------------
Environmental Controls-0.10%
Allied Waste Industries, Inc.+ 2,620 26,200
Waste Management, Inc. 8,616 163,704
-------------
189,904
-------------
Financial Services-4.76%
American Express Co. 18,535 966,137
Associates First Capital Corp. 10,106 225,490
BB&T Corp. 4,800 114,600
Bear Stearns Companies, Inc., The 1,534 63,853
Capital One Financial Corp. 2,716 121,202
Charles Schwab Corp., The 18,892 635,244
Countrywide Credit Industries, Inc. 1,600 48,500
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
65
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
S&P 500 INDEX PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)-CONTINUED
--------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Company Shares Market Value
--------------------------------------------------------------------------------
Financial Services-Continued
Deluxe Corp. 1,002 $ 23,610
Equifax, Inc. 1,958 51,398
Freddie Mac 9,644 390,582
Fannie Mae 13,976 729,373
Fifth Third Bancorp 4,300 271,975
Firstar Corp. 13,458 283,459
FleetBoston Financial Corp. 12,504 425,136
Franklin Resources, Inc. 3,378 102,607
H&R Block, Inc. 1,364 44,160
Household International, Inc. 6,560 272,650
J.P. Morgan & Co., Inc. 2,252 248,002
Lehman Brothers Holdings, Inc. 1,680 158,865
MBIA, Inc. 1,364 65,728
MBNA Corp. 11,124 301,739
Mellon Financial Corp. 6,814 248,285
Merrill Lynch & Co., Inc. 5,382 618,930
MGIC Investment Corp. 1,468 66,794
Morgan Stanley Dean Witter & Co. 15,704 1,307,358
National City Corp. 8,410 143,496
Paine Webber Group, Inc. 2,020 91,910
Regions Financial Corp. 3,060 60,818
SLM Holding Corp. 2,172 81,314
Synovus Financial Corp. 3,918 69,055
T. Rowe Price Associates, Inc. 1,675 71,188
Washington Mutual, Inc. 7,600 219,450
-------------
8,522,908
-------------
Food Products-1.01%
Bestfoods 3,808 263,704
Campbell Soup Co. 5,862 170,731
General Mills, Inc. 4,044 154,683
H.J. Heinz Co. 4,886 213,763
Hershey Foods Corp. 1,900 92,506
Kellogg Co. 5,600 166,600
Nabisco Group Holdings Corp. 4,528 117,445
Quaker Oats Co., The 1,816 136,427
Ralston-Ralston Purina Group 4,256 84,854
Sara Lee Corp. 12,064 232,986
SUPERVALU, Inc. 1,800 34,313
Wm. Wrigley Jr. Co. 1,582 126,857
-------------
1,794,869
-------------
Food Service & Restaurants-0.59%
ConAgra, Inc. 6,800 129,625
Darden Restaurants, Inc. 1,716 27,885
McDonald's Corp. 18,540 610,661
SYSCO Corp. 4,610 194,196
Tricon Global Restaurants, Inc.+ 2,046 57,800
Wendy's International, Inc. 1,578 28,108
-------------
1,048,275
-------------
Forest Products & Paper-0.36%
Boise Cascade Corp. 800 20,700
Fort James Corp. 2,854 65,999
Georgia-Pacific Group 2,400 63,000
International Paper Co. 6,703 199,829
Mead Corp., The 1,400 35,350
Potlatch Corp. 400 13,250
Temple-Inland, Inc. 726 30,492
Westvaco Corp. 1,394 34,589
Weyerhaeuser Co. 3,232 138,976
Willamette Industries, Inc. 1,536 41,856
-------------
644,041
-------------
Healthcare-0.65%
Bausch & Lomb, Inc. 736 56,948
Cardinal Health, Inc. 3,820 282,680
HCA-The Healthcare Corp. 7,736 234,981
HEALTHSOUTH Corp.+ 5,400 38,813
Humana, Inc.+ 2,300 11,213
IMS Health, Inc. 4,123 74,214
Manor Care, Inc.+ 1,400 9,800
McKesson HBOC, Inc. 3,908 81,824
Tenet Healthcare Corp. 4,338 117,126
UnitedHealth Group, Inc. 2,252 193,109
WellPoint Health Networks, Inc.+ 860 62,296
-------------
1,163,004
-------------
Holding Companies-0.05%
Loews Corp. 1,368 82,080
-------------
Home Furnishings-0.13%
Leggett & Platt, Inc. 2,725 44,963
Masco Corp. 6,200 111,988
Newell Rubbermaid, Inc. 3,698 95,224
-------------
252,175
-------------
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
66
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
S&P 500 INDEX PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)-CONTINUED
--------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Company Shares Market Value
--------------------------------------------------------------------------------
Household Products-0.85%
Clorox Co., The 3,256 $ 145,910
Procter & Gamble Co., The 18,146 1,038,859
Unilever, NV 7,930 340,990
-------------
1,525,759
-------------
Insurance-2.70%
Aetna, Inc. 1,954 125,422
AFLAC, Inc. 3,700 169,969
Allstate Corp., The 10,331 229,865
American General Corp. 3,450 210,450
American International Group, Inc. 21,386 2,512,855
Aon Corp. 3,550 110,272
Chubb Corp., The 2,426 149,199
CIGNA Corp. 2,259 211,217
Cincinnati Financial Corp. 2,230 70,106
Conseco, Inc. 4,600 44,850
Hartford Financial Services
Group, Inc., The 2,981 166,750
Jefferson-Pilot Corp. 1,430 80,706
Lincoln National Corp. 2,660 96,093
Marsh & McLennan Companies, Inc. 3,740 390,596
Progressive Corp., The 1,012 74,888
SAFECO Corp. 1,800 35,775
St. Paul Companies, Inc., The 2,942 100,396
Torchmark Corp. 1,800 44,438
UnumProvident Corp. 3,336 66,929
-------------
4,890,776
-------------
Internet Services-1.45%
America Online, Inc.+ 31,876 1,681,459
Yahoo!, Inc.+ 7,538 933,770
-------------
2,615,229
-------------
Lodging-0.10%
Hilton Hotels Corp. 5,100 47,813
Marriott International, Inc. 3,324 119,872
-------------
167,685
-------------
Machinery-0.21%
Black & Decker Corp., The 1,200 47,175
Briggs & Stratton Corp. 300 10,275
Caterpillar, Inc. 4,836 163,820
Ingersoll-Rand Co. 2,246 90,402
Snap-on, Inc. 800 21,300
Stanley Works, The 1,200 28,500
-------------
361,472
-------------
Manufacturing-2.01%
Cooper Industries, Inc. 1,300 42,331
Corning, Inc. 3,826 1,032,542
Crane Co. 840 20,423
Danaher Corp. 1,966 97,194
Deere & Co. 3,246 120,102
Dover Corp. 2,816 114,224
Eaton Corp. 1,000 67,000
Harley-Davidson, Inc. 4,200 161,700
ITT Industries, Inc. 1,250 37,969
Millipore Corp. 638 48,089
Minnesota Mining & Manufacturing Co. 5,492 453,090
National Service Industries, Inc. 600 11,700
Pall Corp. 1,700 31,450
Parker-Hannifin Corp. 1,570 53,773
Rockwell International Corp. 2,600 81,900
Textron, Inc. 2,000 108,625
Timken Co., The 800 14,900
Tyco International, Ltd. 23,420 1,109,523
-------------
3,606,535
-------------
Medical - Biotechnology-1.14%
Amgen, Inc.+ 14,250 1,001,063
Biogen, Inc.+ 2,060 132,870
Pharmacia Corp. 17,612 910,320
-------------
2,044,253
-------------
Medical Products-2.06%
Baxter International, Inc. 4,028 283,219
Becton, Dickinson and Co. 3,500 100,406
Biomet, Inc. 1,641 63,076
Boston Scientific Corp.+ 5,656 124,079
C. R. Bard, Inc. 700 33,688
Guidant Corp.+ 4,252 210,474
Johnson & Johnson 19,298 1,965,984
Mallinckrodt, Inc. 932 40,484
Medtronic, Inc. 16,606 827,186
St. Jude Medical, Inc.+ 1,162 53,307
-------------
3,701,903
-------------
Medical Supplies-0.11%
Pe Corp-Pe Biosystems Group 2,880 189,720
-------------
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
67
--------------------------------------------------------------------------------
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JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
S&P 500 INDEX PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)-CONTINUED
--------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Company Shares Market Value
--------------------------------------------------------------------------------
Mining & Metals - Ferrous & Nonferrous-0.33%
Alcan Aluminium, Ltd. 3,036 $ 94,116
Alcoa, Inc. 11,988 347,652
Allegheny Technologies, Inc. 1,154 20,772
Bethlehem Steel Corp.+ 1,700 6,056
Inco, Ltd.+ 2,520 38,745
Nucor Corp. 1,180 39,161
Phelps Dodge Corp. 1,092 40,609
USX-U.S. Steel Group 1,250 23,203
Worthington Industries, Inc. 1,200 12,600
-------------
622,914
-------------
Mining & Metals - Precious-0.13%
Barrick Gold Corp. 5,500 100,031
Freeport-McMoRan Copper & Gold, Inc.+ 2,200 20,350
Homestake Mining Co. 3,613 24,839
Newmont Mining Corp. 2,350 50,819
Placer Dome, Inc. 4,600 43,988
-------------
240,027
-------------
Multimedia-1.77%
Gannett Co., Inc. 3,698 221,187
McGraw-Hill Cos., Inc., The 2,698 145,692
Time Warner, Inc. 18,256 1,387,456
Viacom, Inc., Class B+ 21,159 1,442,779
-------------
3,197,114
-------------
Office Equipment-0.28%
Avery Dennison Corp. 1,556 104,447
Pitney Bowes, Inc. 3,576 143,040
Tektronix, Inc. 668 49,432
Xerox Corp. 9,244 191,813
-------------
488,732
-------------
Oil & Gas - Distribution & Marketing-0.77%
Burlington Resources, Inc. 3,000 114,750
Columbia Energy Group 1,118 73,369
El Paso Energy Corp. 3,200 163,000
Enron Corp. 10,156 655,062
NICOR, Inc. 644 21,011
ONEOK, Inc. 400 10,375
Sempra Energy 2,800 47,600
Tosco Corp. 2,004 56,738
Williams Companies, Inc., The 6,128 255,461
-------------
1,397,366
-------------
Oil & Gas - Integrated-4.18%
Amerada Hess Corp. 1,270 78,423
Chevron Corp. 9,046 767,214
Conoco, Inc., Class B 8,662 212,760
Exxon Mobil Corp. 48,300 3,791,550
Occidental Petroleum Corp. 5,150 108,472
Phillips Petroleum Co. 3,522 178,521
Royal Dutch Petroleum Co., ADR 29,752 1,831,608
Sunoco, Inc. 1,228 36,149
Texaco, Inc. 7,658 407,789
USX-Marathon Group 4,300 107,769
-------------
7,520,255
-------------
Oil & Gas Producers-0.36%
Anadarko Petroleum Corp. 1,776 87,579
Apache Corp. 1,578 92,806
Coastal Corp., The 2,968 180,677
Kerr-McGee Corp. 1,300 76,619
Rowan Companies, Inc.+ 1,302 39,548
Union Pacific Resources Group, Inc. 3,496 76,912
Unocal Corp. 3,369 111,598
-------------
665,739
-------------
Oil & Gas Services & Equipment-0.66%
Baker Hughes, Inc. 4,600 147,200
Halliburton Co. 6,170 291,147
Schlumberger, Ltd. 7,896 589,239
Transocean Sedco Forex, Inc. 2,920 156,038
-------------
1,183,624
-------------
Packaging & Containers-0.09%
Ball Corp. 400 12,875
Bemis Co., Inc. 736 24,748
Crown Cork & Seal Co., Inc. 1,776 26,640
Owens-Illinois, Inc.+ 2,000 23,375
Pactiv Corp.+ 2,450 19,294
Sealed Air Corp.+ 1,170 61,279
Tupperware Corp. 800 17,600
-------------
185,811
-------------
Pharmaceutical-7.41%
Abbott Laboratories 21,498 958,005
Allergan, Inc. 1,798 133,951
ALZA Corp.+ 1,424 84,194
American Home Products Corp. 18,095 1,063,081
Bristol-Myers Squibb Co. 27,368 1,594,186
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
68
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
S&P 500 INDEX PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)-CONTINUED
--------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Company Shares Market Value
--------------------------------------------------------------------------------
Pharmaceutical-Continued
Eli Lilly & Co. 15,670 $ 1,565,041
MedImmune, Inc.+ 2,894 214,156
Merck & Co., Inc. 31,904 2,444,644
Pfizer, Inc. 87,336 4,192,104
Schering-Plough Corp. 20,314 1,025,857
Watson Pharmaceuticals, Inc.+ 1,340 72,025
-------------
13,347,244
-------------
Photo Equipment-0.15%
Eastman Kodak Co. 4,298 255,731
Polaroid Corp. 600 10,838
-------------
266,569
-------------
Publishing & Printing-0.28%
American Greetings Corp., Class A 894 16,986
Dow Jones & Co., Inc. 1,220 89,365
Harcourt General, Inc. 994 54,049
Knight-Ridder, Inc. 1,078 57,336
Meredith Corp. 700 23,625
New York Times Co., The 2,358 93,141
R. R. Donnelley & Sons Co. 1,690 38,131
Tribune Co. 4,278 149,730
-------------
522,363
-------------
Railroad-0.12%
Burlington Northern Sante Fe Corp. 5,942 136,295
Norfolk Southern Corp. 5,315 79,061
-------------
215,356
-------------
Retail Stores-5.46%
Albertson's, Inc. 5,878 195,444
AutoZone, Inc.+ 1,856 40,832
Bed Bath & Beyond, Inc.+ 1,946 70,543
Best Buy Co., Inc.+ 2,850 180,263
Circuit City Stores-Circuit City Group 2,800 92,925
Consolidated Stores Corp.+ 1,500 18,000
Costco Wholesale Corp.+ 6,200 204,600
CVS Corp. 5,414 216,560
Dillards, Inc., Class A 1,298 15,901
Dollar General Corp. 4,566 89,037
Federated Department Stores, Inc.+ 2,968 100,170
Gap, Inc., The 11,806 368,938
Great Atlantic & Pacific
Tea Co., Inc., The 500 8,313
Home Depot, Inc., The 32,090 1,602,494
J.C. Penney Co., Inc. 3,600 66,375
Kmart Corp.+ 6,700 45,644
Kohl's Corp.+ 4,526 251,759
Kroger Co., The+ 11,584 255,572
Limited, Inc., The 6,000 129,750
Longs Drug Stores Corp. 500 10,875
Lowe's Companies, Inc. 5,300 217,631
May Department Stores Co., The 4,650 111,600
Nordstrom, Inc. 1,900 45,838
Office Depot, Inc.+ 4,386 27,413
Rite Aid Corp. 3,700 24,281
Safeway, Inc.+ 6,886 310,731
Sears, Roebuck & Co. 4,891 159,569
Sherwin-Williams Co., The 2,300 48,731
Staples, Inc.+ 6,720 103,320
Starbucks Corp.+ 2,560 97,760
RadioShack Corp. 2,590 122,701
Target Corp. 6,326 366,908
Tiffany & Co. 1,006 67,905
TJX Companies, Inc., The 4,162 78,038
Toys "R" Us, Inc.+ 3,000 43,688
Walgreen Co. 13,984 450,110
Wal-Mart Stores, Inc. 61,840 3,563,530
Winn-Dixie Stores, Inc. 2,000 28,625
-------------
9,832,374
-------------
Telecommunications - Equipment &
Services-4.12%
ADC Telecommunications, Inc.+ 4,682 392,703
Andrew Corp.+ 1,118 37,523
Global Crossing, Ltd.+ 12,250 322,328
Lucent Technologies, Inc. 45,182 2,677,034
Nortel Networks Corp. 41,100 2,805,075
QUALCOMM, Inc.+ 10,290 617,400
Scientific-Atlanta, Inc. 2,200 163,900
Tellabs, Inc.+ 5,682 388,862
-------------
7,404,825
-------------
Telecommunications - Integrated-3.80%
ALLTEL Corp. 4,380 271,286
AT&T Corp. 52,066 1,646,571
Bell Atlantic Corp. 21,446 1,089,725
SBC Communications, Inc. 47,198 2,041,314
WorldCom, Inc.+ 39,724 1,822,339
-------------
6,871,235
-------------
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
69
--------------------------------------------------------------------------------
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S&P 500 INDEX PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)-CONTINUED
--------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Company Shares Market Value
--------------------------------------------------------------------------------
Telecommunications - Wireless-0.78%
Nextel Communications, Inc.+ 10,522 $ 643,815
Sprint Corp. - PCS Group+ 12,698 755,531
-------------
1,399,346
-------------
Telecommunications - Wireline-1.79%
BellSouth Corp. 26,106 1,112,768
CenturyTel, Inc. 1,946 55,948
GTE Corp. 13,358 831,536
Sprint Corp. - Fon Group 12,150 619,650
U S WEST, Inc. 7,050 604,538
-------------
3,224,440
-------------
Textiles & Apparel-0.13%
Liz Claiborne, Inc. 756 26,649
Nike, Inc., Class B 3,794 151,049
Reebok International, Ltd.+ 800 12,750
Russell Corp. 500 10,000
Springs Industries, Inc., Class A 250 8,047
V.F. Corp. 1,584 37,719
-------------
246,214
-------------
Tobacco-0.49%
Philip Morris Companies, Inc. 31,726 842,722
UST, Inc. 2,250 33,047
-------------
875,769
-------------
Toys-0.06%
Hasbro, Inc. 2,388 35,969
Mattel, Inc. 5,900 77,806
-------------
113,775
-------------
Transportation-0.28%
CSX Corp. 3,000 63,563
FedEx Corp.+ 4,050 153,900
Kansas City Southern Industries, Inc. 1,546 137,111
Union Pacific Corp. 3,438 127,851
-------------
482,425
-------------
Travel Services-0.03%
Sabre Holdings Corp. 1,790 51,015
-------------
Utilities - Electric & Gas-1.45%
Ameren Corp. 1,904 64,260
American Electric Power Co., Inc. 4,460 132,128
Cinergy Corp. 2,204 56,064
CMS Energy Corp. 1,522 33,674
Consolidated Edison, Inc. 2,940 87,098
Constellation Energy Group 2,076 67,600
CP&L, Inc. 2,214 70,710
Dominion Resources, Inc. 3,300 141,488
DTE Energy Co. 1,978 60,453
Duke Energy Corp. 5,100 287,513
Eastern Enterprises 380 23,940
Edison International 4,610 94,505
Entergy Corp. 3,190 86,728
FirstEnergy Corp. 3,170 74,099
Florida Progress Corp. 1,368 64,125
FPL Group, Inc. 2,472 122,364
GPU, Inc. 1,682 45,519
New Century Energies, Inc. 1,616 48,480
Niagara Mohawk Holdings, Inc.+ 2,391 33,325
Northern States Power Co. 2,179 43,989
PECO Energy Co. 2,352 94,815
Peoples Energy Corp. 500 16,188
PG&E Corp. 5,346 131,645
Pinnacle West Capital Corp. 1,200 40,650
PPL Corp. 2,001 43,897
Public Service Enterprise Group, Inc. 3,000 103,875
Reliant Energy, Inc. 4,102 121,265
Southern Co., The 8,999 209,789
TXU Corp. 3,658 107,911
Unicom Corp. 2,466 95,403
-------------
2,603,500
-------------
TOTAL COMMON STOCK
(Cost $173,043,190) 173,341,538
SHORT-TERM OBLIGATIONS--0.20%
Principal Value
---------------
Government Agency-0.20%
US Treasury Bill, 5.780%,
due 09/21/00* $ 360,000 355,464
-------------
TOTAL SHORT-TERM OBLIGATIONS
(Cost $355,388) 355,464
-------------
TOTAL INVESTMENTS
(Cost $173,398,578) 96.50% 173,697,002
Other assets, less liabilities 3.50 6,556,812
------ ------------
TOTAL NET ASSETS 100.00% $180,253,814
====== ============
+Non-income producing security.
*Security was pledged to cover margin requirements for futures contracts.
--------------------------------------------------------------------------------
See notes to financial statements.
70
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--------------------------------------------------------------------------------
VALUE PORTFOLIO
--------------------------------------------------------------------------------
"We believe that sentiment toward value stocks will continue to improve
materially in the future."
--Scott T. Lewis and Robert E. Rescoe, Portfolio Managers--
--------------------------------------------------------------------------------
INCEPTION DATE
May 1, 1992
---------------------------------------------------
FUND MANAGER
Credit Suisse Asset Management, LLC
---------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGY
To seek long-term growth of capital by investing
primarily in companies whose earnings power,
asset value, or intrinsic worth do not appear
to be reflected in the current stock price.
---------------------------------------------------
NET ASSETS AS OF 6/30/00
$77,907,067
---------------------------------------------------
NUMBER OF HOLDINGS
75
---------------------------------------------------
PORTFOLIO TURNOVER
37.32%
--------------------------------------------------------------------------------
----------------------------------------
IN THIS SECTION
----------------------------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
----------------------------------------
----------------------------------------
SCOTT T. LEWIS
Managing Director
o Joined Credit Suisse in 1999,
formerly with Warburg Pincus Asset
Management since 1986
o 16 years of investment experience
o M.B.A. from New York University's
Stern School of Business
o B.S. from New York University
----------------------------------------
----------------------------------------
ROBERT E. RESCOE, CFA
Director
o Joined Credit Suisse in 1999,
formerly with Warburg Pincus Asset
Management since 1983
o M.B.A. from University of Texas
o B.A. from Tulane University
o Chartered Financial Analyst
----------------------------------------
71
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--------------------------------------------------------------------------------
VALUE PORTFOLIO
--------------------------------------------------------------------------------
[SIDEBAR]
[PIE CHART]
Common Stock-91.66%
Preferred Stock-0.57%
Cash-7.77%
-----------------------------------------
PERCENT OF
TOP TEN EQUITIES PORTFOLIO++
-----------------------------------------
BP Amoco, ADR 3.19%
Keebler Foods Co. 2.66%
R & B Falcon Corp. 2.59%
Eli Lilly and Co. 2.58%
Lehman Brothers
Holdings, Inc. 2.33%
Exxon Mobil Corp. 2.05%
Comerica, Inc. 2.04%
Total Fina, SA, ADR 1.91%
Devon Energy Corp. 1.89%
General Mills, Inc. 1.86%
-----------------------------------------
PERCENT OF
TOP TEN INDUSTRIES PORTFOLIO++
-----------------------------------------
Oil & Gas - Integrated 10.73%
Retail Stores 7.31%
Telecommunications -
Integrated 6.48%
Banking 6.47%
Manufacturing 6.38%
Food Products 6.02%
Pharmaceutical 5.05%
Financial Services 4.62%
Oil & Gas Services &
Equipment 4.27%
Oil & Gas Producers 4.25%
++Represents market value of
investments plus cash.
[ENDSIDEBAR]
While the first quarter was an overall positive (though quite turbulent
period) for the U.S. stock market, the second quarter was difficult and highly
volatile, reflecting inflation and interest-rate uncertainties, concerns over
valuations on technology stocks and other factors, such as worries regarding the
wider implications of the government's antitrust suit against Microsoft.
The air of uncertainty aided a number of value stocks, however. Investors
deemed certain relatively inexpensive stocks to be attractive on the basis of
their potential downside protection and their underlying companies' earnings
prospects (to be sure, a number of value stocks continued to languish). All
told, the value group handily outperformed growth-oriented stocks for the second
quarter of this year vs. the first quarter where growth stocks were favored.
The JPVF Value Portfolio had a modest loss of 0.45% for the three months,
vs. a loss of 2.66% for the S&P 500 Index and a loss of 1.53% for the Lipper
Multi-Cap Value Index. Stocks that helped the Portfolio included its energy,
health-care and food & beverage holdings. On the negative side, stocks that
hampered the Portfolio included its retail holdings.
We made few noteworthy changes to the Portfolio during the first half of
the year in terms of sector emphasis or, for that matter, individual holdings.
The Portfolio's relatively low turnover for the period was consistent with our
value-based stock-selection process, and value investing generally, which
typically stresses a patient approach (momentum investing, by contrast, often
generates high turnover, with investors rotating quickly among market sectors).
The Portfolio's largest sector weighting throughout the period remained
the energy area (15.79%), where we believe a number of stocks offer compelling
value. We continued to emphasize integrated multinational oil companies
undergoing significant restructurings, for example as the result of merger
activity. Representative holdings in this regard continued to include BP Amoco
(3.35%) and Exxon Mobil (2.15%). Another energy holding worthy of mention, and
one we added in May, was El Paso Energy (1.28%), which owns North America's
largest natural-gas pipeline system.
Another area of emphasis for the Portfolio remained financial-services and
bank and savings & loans sectors during the first six months (5.96% and 7.06% of
the portfolio, respectively). While the group continued to be restrained by
interest-rate uncertainties, we believe that certain financial names are
compelling, given their relatively low valuations and a supportive backdrop of
global economic growth and stable
72
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VALUE PORTFOLIO
--------------------------------------------------------------------------------
inflation. One financial name we added during the second quarter was Allied
Capital (0.93%), an investment company that provides capital to small, rapidly
growing enterprises, among other investment targets.
Within the consumer segment, we maintained a noteworthy position in the
retail sector (7.81%). Notwithstanding the group's difficult quarter, we believe
that retail stocks, and certain names in particular, will benefit over the
longer term from a healthy economy and improved inventory management. We also
maintained exposure to less-cyclical consumer stocks, mostly via the food,
beverages and tobacco sector (7.87%), where ongoing restructuring programs and a
wave of consolidation activity stand to materially improve earnings going
forward.
Elsewhere of note, we modestly raised our weighting in the
telecommunications & equipment sector (8.86%), purchasing CenturyTel in May
(1.30%), a diversified regional services provider based in Louisiana. We
established the position after the stock declined sharply in April on earnings
uncertainties. In our view, the company's recent acquisitions (which have
clouded its near-term earnings outlook) will prove to be significant sources of
earnings improvements over time.
The rest of the portfolio remained invested across a range of sectors,
including capital-equipment (7.22%), industrial manufacturing & processing
(4.56%), health-care (4.19%) and pharmaceuticals (5.47%). We remained
underweighted in technology stocks, which we generally deemed to be expensive,
though we deemed certain computer names to be attractive based on factors such
as healthy balance sheets and good unit-growth prospects.
Looking ahead, we believe that sentiment toward value stocks will continue
to improve materially in the future. Valuation discrepancies between
growth-oriented stocks and those typically associated with value investing
(e.g., out-of-favor economically sensitive stocks) remain as wide as they have
been in decades. Many value stocks, meanwhile, represent companies with healthy
and improving fundamentals. This stands to benefit value-oriented sectors of the
market, barring any long-term retreat from equities (generally given the strong
economy, we believe that stocks will remain, on the whole, compelling compared
to other asset classes). As ever, our focus will remain on identifying
fundamentally undervalued companies with the brightest longer-term prospects.
[SIDEBAR]
----------------------------------------------------
Value Portfolio and the S&P 500 Index
Comparison of Change in Value of $10,000 Investment.
----------------------------------------------------
[LINE GRAPH]
VALUE S&P 500
PORTFOLIO INDEX
5/1/92 10000 10000
6/92 9696 9958
9824 10272
10820 10787
11276 11256
6/93 11300 11310
11895 11598
12436 11867
12070 11420
6/94 11996 11470
12248 12031
11910 12028
12871 13195
6/95 14352 14451
15496 15596
15908 16532
16489 17512
6/96 17365 18399
17639 19074
19548 20767
19874 20860
6/97 22999 24494
25028 26326
25200 27079
28197 30849
6/98 28530 31864
24440 28701
28384 34802
28195 36534
6/99 32628 39105
30015 36663
30016 42118
29536 43084
6/00 29404 41940
----------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
----------------------------------------
S&P 500
VALUE INDEX
YTD -2.04% -0.42%
1 YEAR -9.88% 7.25%
5 YEARS 15.43% 23.77%
Inception 14.11% 19.18%
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 Value 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 Port folio reflects all recurring expenses and
includes the reinvestment of all dividends and distributions. Total return
figures for periods of less than one year have not been annualized.
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.
[ENDSIDEBAR]
73
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--------------------------------------------------------------------------------
VALUE PORTFOLIO
--------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
(Unaudited)
Six Months
Ended Year Ended Year Ended Year Ended Year Ended Year Ended
June December December December December December
30, 2000 31, 1999 31, 1998 31, 1997 31, 1996 31, 1995
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 20.06 $ 19.12 $ 17.11 $ 16.91 $ 14.41 $ 11.22
Income From Investment Operations
Net investment income 0.10 0.17 0.15 0.15 0.18 0.15
Net gains and losses on securities
(both realized and unrealized) (0.49) 0.92 2.01 4.67 3.12 3.62
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations (0.39) 1.09 2.16 4.82 3.30 3.77
Less Distributions to Shareholders
Dividends from net investment income (0.10) (0.15) (0.15) (0.18) (0.15)
Dividends in excess of net
investment income (0.07)
Distributions from capital gains (0.15) (4.21) (0.62) (0.29)
Distributions in excess of capital gains (2.08) (0.26) (0.14)
Returns of capital
----------- ----------- ----------- ----------- ----------- -----------
Total distributions (2.25) (0.15) (0.15) (4.62) (0.80) (0.58)
Net asset value, end of period $ 17.42 $ 20.06 $ 19.12 $ 17.11 $ 16.91 $ 14.41
=========== =========== =========== =========== =========== ===========
Total Return (A) (2.04%) 5.75% 12.63% 28.92% 22.88% 33.58%
Ratios to Average Net Assets: (B)
Expenses 0.83% 0.85% 0.86% 0.85% 0.88% 0.92%
Net investment income 1.21% 0.89% 0.87% 1.03% 1.39% 1.50%
Portfolio Turnover Rate 37.32% 99.60% 66.19% 129.53% 35.69% 32.30%
Net Assets, At End of Period $77,907,067 $76,424,174 $65,309,530 $39,678,076 $23,711,696 $13,126,023
</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) Per share data and ratios are calculated on an annualized basis.
74
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JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
VALUE PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
COMMON STOCK--89.85%
Company Shares Market Value
--------------------------------------------------------------------------------
Aerospace & Defense-2.03%
Boeing Co., The 20,000 $ 836,250
Honeywell International, Inc. 22,100 744,494
-------------
1,580,744
-------------
Automotive Manufacturing-2.34%
Ford Motor Co. 30,000 1,290,000
Navistar International Corp.+ 17,000 528,063
-------------
1,818,063
-------------
Automotive Parts & Equipment-2.15%
Borg Warner, Inc. 12,500 439,063
Johnson Controls, Inc. 12,300 631,144
Visteon Corp.+ 49,928 605,377
-------------
1,675,584
-------------
Banking-6.35%
Bank One Corp. 24,500 650,781
Chase Manhattan Corp., The 12,000 552,750
Comerica, Inc. 34,700 1,557,163
Compass Bancshares, Inc. 33,500 571,594
Wachovia Corp. 16,100 873,425
Wells Fargo & Co. 19,000 736,250
-------------
4,941,963
-------------
Beverages-0.98%
Anheuser-Busch Companies, Inc. 10,250 765,547
-------------
Broadcasting-1.02%
Comcast Corp.+ 19,600 793,800
-------------
Building Materials-2.85%
American Standard Companies, Inc.+ 33,100 1,357,100
USG Corp. 28,500 865,688
-------------
2,222,788
-------------
Chemicals-0.31%
Crompton Corp. 20,000 245,000
-------------
Commercial Services-1.02%
Harsco Corp. 31,300 798,150
-------------
Computer Equipment & Services-1.61%
Compaq Computer Corp. 49,200 1,257,675
-------------
Computer Information Systems-0.96%
Unisys Corp.+ 51,200 745,600
-------------
Financial Services-4.53%
Allied Capital Corp. 40,000 680,000
Fannie Mae 18,500 965,469
Labranche & Co., Inc.+ 7,100 102,063
Lehman Brothers Holdings, Inc. 18,850 1,782,503
-------------
3,530,035
-------------
Food Products-5.90%
General Mills, Inc. 37,100 1,419,075
Keebler Foods Co. 54,800 2,034,450
Quaker Oats Co., The 15,200 1,141,900
-------------
4,595,425
-------------
Food Service & Restaurants-0.46%
ConAgra, Inc.+ 19,000 362,188
-------------
Insurance-0.91%
American General Corp. 11,600 707,600
-------------
Machinery-1.76%
Ingersoll-Rand Co. 34,100 1,372,525
-------------
Manufacturing-6.26%
Eaton Corp. 12,500 837,500
ITT Industries, Inc. 24,000 729,000
Minnesota Mining & Manufacturing Co. 8,100 668,250
Parker-Hannifin Corp. 22,000 753,500
Textron, Inc. 13,000 706,063
Tyco International, Ltd. 24,900 1,179,638
-------------
4,873,951
-------------
Medical - Biotechnology-1.28%
Pharmacia Corp. 19,280 996,535
-------------
Medical Products-2.50%
Baxter International, Inc. 12,250 861,328
Becton, Dickinson and Co. 37,700 1,081,519
-------------
1,942,847
-------------
Office Equipment-0.94%
Pitney Bowes, Inc. 18,400 736,000
-------------
Oil & Gas - Distribution & Marketing-1.20%
El Paso Energy Corp. 18,300 932,156
-------------
Oil & Gas - Integrated-10.52%
Amerada Hess Corp. 12,200 753,350
BP Amoco, PLC, ADR 43,020 2,433,309
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
75
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JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
VALUE PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)-CONTINUED
--------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Company Shares Market Value
--------------------------------------------------------------------------------
Oil & Gas - Integrated-Continued
Exxon Mobil Corp. 19,900 $ 1,562,150
Nabors Industries, Inc.+ 21,300 885,281
Royal Dutch Petroleum Co., ADR 17,900 1,101,969
Total Fina, SA, ADR 19,000 1,459,438
-----------
8,195,497
-----------
Oil & Gas Producers-4.17%
Devon Energy Corp. 25,700 1,444,019
Kerr-McGee Corp. 14,900 878,169
Union Pacific Resources Group, Inc. 42,100 926,200
-----------
3,248,388
-----------
Oil & Gas Services & Equipment-4.18%
Pride International, Inc.+ 51,900 1,284,525
R & B Falcon Corp.+ 83,800 1,974,538
-----------
3,259,063
-----------
Pharmaceutical-4.95%
Abbott Laboratories 19,600 873,425
American Home Products Corp. 17,300 1,016,375
Eli Lilly & Co. 19,700 1,967,538
-----------
3,857,338
-----------
Publishing & Printing-1.27%
New York Times Co., The 25,100 991,450
-----------
Railroad-0.45%
Burlington Northern Sante Fe Corp. 15,300 350,944
-----------
Retail Stores-7.16%
Federated Department Stores, Inc.+ 25,000 843,750
May Department Stores Co., The 34,050 817,200
Ross Stores, Inc. 47,800 815,588
Safeway, Inc.+ 23,000 1,037,875
TJX Companies, Inc., The 59,600 1,117,500
Toys "R" Us, Inc.+ 65,100 948,019
-----------
5,579,932
-----------
Telecommunications - Equipment &
Services-0.40%
Harris Corp. 9,600 314,400
-----------
Telecommunications - Integrated-6.35%
ALLTEL Corp. 13,000 805,188
AT&T Corp. 17,200 543,950
Bell Atlantic Corp. 20,918 1,062,896
SBC Communications, Inc. 29,508 1,276,221
WorldCom, Inc.+ 27,500 1,261,563
-----------
4,949,818
-----------
Telecommunications - Wireline-1.13%
CenturyTel, Inc. 30,700 882,625
-----------
Transportation-0.84%
Kansas City Southern Industries, Inc. 7,400 656,288
-----------
Utilities - Electric & Gas-1.07%
Allegheny Energy, Inc. 19,000 520,125
American Electric Power Co., Inc. 10,500 311,063
-----------
831,188
-----------
TOTAL COMMON STOCK
(Cost $70,209,727) 70,011,107
-----------
PREFERRED STOCKS--0.56%
Real Estate-0.56%
Equity Residential Properties Trust,
Series G, 7.250%, due 09/15/02 19,300 434,250
TOTAL PREFERRED STOCKS
(Cost $471,580) 434,250
TOTAL INVESTMENTS
(Cost $70,681,307) 90.41% 70,445,357
Other assets, less liabilities 9.59 7,461,710
------ -----------
TOTAL NET ASSETS 100.00% $77,907,067
====== ===========
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
76
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JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
BALANCED PORTFOLIO
--------------------------------------------------------------------------------
"...where we hope to consistently add value is by staying focused on the
fundamentals -- namely uncovering companies whose outstanding management teams
are committed to growing their top lines and improving returns on capital."
--Karen L. Reidy, 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 6/30/00
$58,821,589
---------------------------------------------------
NUMBER OF HOLDINGS
113
---------------------------------------------------
PORTFOLIO TURNOVER
38.52%
--------------------------------------------------------------------------------
-----------------------------------------
IN THIS SECTION
-----------------------------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
-----------------------------------------
-----------------------------------------
KAREN L REIDY, CFA
o Joined Janus in 1995
o B.S. from University of Colorado
o Chartered Financial Analyst
-----------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
BALANCED PORTFOLIO
--------------------------------------------------------------------------------
[SIDEBAR]
[PIE CHART]
Common Stock-42.67%
Preferred Stock-4.86%
Corporate Bonds-26.67%
Government & Agency Obligations-16.89%
Cash-8.91%
-----------------------------------------
PERCENT OF
TOP TEN HOLDINGS PORTFOLIO++
-----------------------------------------
U.S. Treasury Note, 5.875%,
due 11/15/04 8.01%
U.S. Treasury Note, 6.000%,
due 08/15/09 4.04%
General Electric Co. 3.24%
EMC Corp. 3.04%
U.S. Treasury Note, 5.875%,
due 11/30/01 2.56%
Nokia Oyj, SA, ADR 1.99%
Viacom, Inc., 7.750%,
due 06/01/05 1.74%
IBM Credit Corp., 7.000%,
due 01/28/02 1.72%
AT&T Corp. - Liberty
Media Group 1.53%
Sun Microsystems, Inc. 1.52%
-----------------------------------------
PERCENT OF
TOP TEN INDUSTRIES PORTFOLIO++
-----------------------------------------
Financial Services 11.65%
Broadcasting 8.95%
Computer Equipment &
Services 4.99%
Telecommunications -
Wireless 4.37%
Internet Services 4.09%
Retail Stores 3.92%
Telecommunications -
Equipment & Services 3.49%
Diversified Operations 3.24%
Multimedia 3.18%
Chemicals 2.82%
++Represents market value of
investments plus cash.
[ENDSIDEBAR]
Having assumed the reins of the Portfolio early this year, I wanted to
take a few moments to discuss my investment strategy. First and foremost, my
approach is grounded in Janus' bottom-up, research-intensive discipline, meaning
I focus on individual companies and issuers, rather than broader trends in the
economy or the markets. On the equity side, I look for businesses with a history
of predictable earnings, rising returns on invested capital and declining
capital intensity. With regard to fixed-income, I tend to avoid interest rate
bets by investing in medium duration bonds. Not unlike my equity approach, I
favor issuers whose earnings growth, free cash flow and decreasing debt ratio
suggest that they can outperform market expectations.
Given the extreme volatility that rocked the financial markets during the
second quarter, we faced numerous challenges. As is often the case, higher
interest rates and fears of further rate hikes contributed to the uncertainty.
This, in turn, prompted a sell-off in many stocks, particularly within the
technology sector. Bond markets also came under pressure, as investors flocked
to long-term Treasuries following the launch of the Treasury Department's
buyback plan. Because spreads or differences in yields between Treasuries and
corporate bonds widened, corporates suffered as a result.
Although these events affected the performance of the Portfolio, they were
beyond our control. However, where we hope to consistently add value is by
staying focused on the fundamentals -- namely uncovering companies whose
outstanding management teams are committed to growing their top lines and
improving returns on capital. To that end, we took steps to raise our cash
position throughout the period in anticipation of compelling opportunities in
both the equity and fixed-income markets.
In light of the atypical environment for bonds, we restructured the
fixed-income side of the Portfolio to reflect a more even mix of Treasuries and
corporate debt. While we missed out on the Treasury rally earlier in the year,
we recently increased our exposure to the Treasury market on the belief that the
buyback program will move through the maturity spectrum. In addition, we've
taken on a number of short-term investment-grade issues, which offer
78
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--------------------------------------------------------------------------------
BALANCED PORTFOLIO
--------------------------------------------------------------------------------
attractive yields and present little in the way of interest rate or credit risk.
Moving to the equity portion of the Portfolio, we used the sell-off in
technology stocks to increase our holdings in Texas Instruments and EMC Corp,
two top performers. Texas Instruments continued to gain share in the analog
semiconductor market, while solidifying its position as the leading maker of
digital signal processors, or DSPs. These chips, which power wireless phones,
will also play a key role in personal wireless Internet devices currently in
development. EMC, the preeminent producer of memory storage and retrieval
systems for large mainframe computers, recently introduced a host of new
middle-market products that support network-attached storage. By enabling
servers to have their own, rather than a shared, storage unit, users benefit
from quicker and more efficient data access.
As for disappointments, Wal-Mart, the nation's largest retailer, fell on
weakness in retail stocks following reports of a slowdown in consumer spending.
Wal-Mart's lofty valuation put it at a higher risk than other retailers,
although its fundamentals, across the board, are far superior. The successful
rollout of its Supercenter stores, which offer both groceries and general
merchandise, continues to fuel impressive sales growth. That said, we saw the
drop as a buying opportunity and added to our position. Cable operator Comcast
also slipped as investors questioned the cash flow dynamics from the
introduction of new value-added services. While we trimmed the position
slightly, we believe the downturn is temporary.
Looking ahead, we expect market volatility to persist as long as the
economy shows few signs of slowing. Of course, under these circumstances many
investors are inclined to stay close to their computer screens, monitoring daily
price fluctuations. We, on the other hand, believe this is the perfect time to
get out there and beat the bushes -- visiting our companies, attending trade
shows and talking to customers -- to bolster our confidence in our holdings and
reaffirm our reasons for investing.
[SIDEBAR]
---------------------------------------------------------------
Balanced Portfolio, S&P 500 Index and the Balanced Benchmark(1)
Comparison of Change in Value of $10,000 Investment.
---------------------------------------------------------------
[LINE GRAPH]
BALANCED S&P 500 BALANCED
PORTFOLIO INDEX BENCHMARK
5/92 10000 10000 10099
6/92 10081 9958 10070
10467 10272 10406
10847 10787 10712
11379 11256 11133
6/93 11526 11310 11275
11856 11598 11545
11852 11867 11705
11654 11420 11352
6/94 11550 11470 11349
11698 12031 11690
11694 12028 11720
12186 13195 12572
6/95 12848 14451 13518
13481 15596 14221
14308 16532 14925
14377 17512 15292
6/96 14850 18399 15721
15163 19074 16112
15819 20767 17040
15663 20860 17280
6/97 17218 24494 19185
18243 26326 20225
18402 27079 21383
19856 30849 23169
6/98 20162 31864 23808
18914 28701 22892
21667 34802 25625
21830 36534 26309
6/99 23440 39105 27175
22766 36663 26433
26490 42118 28421
27858 43084 29037
6/00 26962 41940 28898
----------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
----------------------------------------------------
S&P 500 BALANCED
BALANCED INDEX BENCHMARK(1)
YTD 1.78% -0.42% 1.68%
1 YEAR 15.03% 7.25% 5.98%
5 YEARS 15.98% 23.77% 14.91%
Inception 12.91% 19.18% 13.58%
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 Balanced Benchmark(1). For the purposes of this graph and the
accompanying table, the average annual total return for the Port folio reflects
all recurring expenses and includes the reinvestment of all dividends and
distributions. Total return figures for periods of less than one year have not
been annualized.
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) 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, 2000.
[ENDSIDEBAR]
79
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
BALANCED PORTFOLIO
--------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
(Unaudited)
Six Months
Ended Year Ended Year Ended Year Ended Year Ended Year Ended
June December December December December December
30, 2000 31, 1999 31, 1998 31, 1997 31, 1996 31, 1995
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.27 $ 12.71 $ 11.75 $ 12.07 $ 11.91 $ 10.62
Income From Investment Operations
Net investment income 0.19 0.31 0.24 0.30 0.26 0.37
Net gains and losses on securities
(both realized and unrealized) 0.12 2.47 1.84 1.60 0.99 1.99
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations 0.31 2.78 2.08 1.90 1.25 2.36
Less Distributions to Shareholders
Dividends from net investment income (0.19) (0.24) (0.30) (0.26) (0.37)
Dividends in excess of net
investment income (0.12)
Distributions from capital gains (0.12) (0.22) (0.88) (1.64) (0.83) (0.70)
Distributions in excess of capital gains (0.71) (0.28)
Returns of capital
----------- ----------- ----------- ----------- ----------- -----------
Total distributions (1.14) (0.22) (1.12) (2.22) (1.09) (1.07)
Net asset value, end of period $ 14.44 $ 15.27 $ 12.71 $ 11.75 $ 12.07 $ 11.91
=========== =========== =========== =========== =========== ===========
Total Return (A) 1.78% 22.26% 17.74% 16.33% 10.56% 22.35%
Ratios to Average Net Assets: (B)
Expenses 0.73% 0.97% 0.94% 0.97% 0.97% 0.99%
Net investment income 3.00% 2.49% 2.08% 2.60% 2.20% 3.20%
Portfolio Turnover Rate 38.52% 237.64% 247.07% 254.04% 222.35% 164.70%
Net Assets, At End of Period $58,821,589 $53,313,418 $35,113,754 $22,637,577 $18,256,430 $14,532,268
</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.
(B) Per share data and ratios are calculated on an annualized basis.
80
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
BALANCED PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
COMMON STOCK--42.04%
Company Shares Market Value
--------------------------------------------------------------------------------
Banking-1.56%
Bank of New York Co., Inc., The 6,380 $ 296,670
Citigroup, Inc. 10,320 621,780
-----------
918,450
-----------
Beverages-0.38%
Anheuser-Busch Companies, Inc. 3,010 224,809
-----------
Broadcasting-4.61%
AT&T Corp. - Liberty Media Group+ 36,550 886,338
Comcast Corp.+ 14,895 603,248
Hispanic Broadcasting Corp.+ 11,220 371,663
Infinity Broadcasting Corp.+ 12,465 454,193
Univision Communications, Inc.+ 3,825 395,888
-----------
2,711,330
-----------
Chemicals-1.22%
E.I. du Pont de Nemours & Co. 1,860 81,375
Lyondell Chemical Co. 32,770 548,898
Praxair, Inc. 2,315 86,668
-----------
716,941
-----------
Commercial Services-0.42%
Paychex, Inc. 5,920 248,640
-----------
Computer Equipment & Services-4.92%
Automatic Data Processing, Inc. 11,045 591,598
EMC Corp.+ 22,905 1,762,253
Symbol Technologies Inc. 9,957 537,678
-----------
2,891,529
-----------
Computer Network-0.90%
Cisco Systems, Inc.+ 8,320 528,840
-----------
Computer Software - Mainframe-0.97%
Cadence Design Systems, Inc.+ 6,545 133,354
Oracle Corp.+ 5,170 434,603
-----------
567,957
-----------
Computer Software - Mini & Micro-2.01%
Sun Microsystems, Inc.+ 9,720 883,913
VERITAS Software Corp.+ 2,640 298,361
-----------
1,182,274
-----------
Diversified Operations-3.19%
General Electric Co. 35,430 1,877,786
-----------
Electronic Components-1.38%
Linear Technology Corp. 7,380 471,859
Maxim Integrated Products, Inc.+ 5,050 343,084
-----------
814,943
-----------
Electronics-1.09%
Samsung Electronics, GDR 7,035 642,823
-----------
Electronics - Semiconductors-1.91%
Advanced Micro Devices, Inc.+ 6,105 471,611
Texas Instruments, Inc. 9,530 654,592
-----------
1,126,203
-----------
Financial Services-2.13%
American Express Co. 9,345 487,108
Associates First Capital Corp. 12,175 271,655
Charles Schwab Corp., The 14,662 493,010
-----------
1,251,773
-----------
Insurance-0.81%
American International Group, Inc. 1,570 184,475
Prudential, PLC 20,198 296,013
-----------
480,488
-----------
Internet Services-1.60%
America Online, Inc.+ 6,175 325,731
VeriSign, Inc.+ 3,498 617,397
-----------
943,128
-----------
Manufacturing-0.71%
Corning, Inc. 1,185 319,802
Harley-Davidson, Inc. 2,640 101,640
-----------
421,442
-----------
Marketing Services-0.02%
DoubleClick, Inc.+ 265 10,103
-----------
Medical - Biotechnology-1.68%
Genentech, Inc.+ 2,275 391,300
Pharmacia Corp. 11,450 591,822
-----------
983,122
-----------
Multimedia-1.42%
Viacom, Inc., Class B+ 12,245 834,956
-----------
Oil & Gas - Distribution &
Marketing-0.53%
Enron Corp. 4,845 312,503
-----------
+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, 2000 (UNAUDITED)-CONTINUED
--------------------------------------------------------------------------------
COMMON STOCK--CONTINUED
Company Shares Market Value
--------------------------------------------------------------------------------
Pharmaceutical-1.06%
King Pharmaceuticals, Inc.+ 6,540 $ 286,943
Pfizer, Inc. 6,935 332,880
----------
619,823
----------
Retail Stores-2.11%
Gap, Inc., The 4,570 142,813
Home Depot, Inc., The 5,860 292,634
Staples, Inc.+ 1,470 22,601
Wal-Mart Stores, Inc. 13,540 780,243
----------
1,238,291
----------
Telecommunications - Equipment &
Services-2.33%
Nokia Oyj, SA, ADR 23,120 1,154,555
Telefonaktiebolaget LM Ericsson,
AB, ADR 10,905 218,100
----------
1,372,655
----------
Telecommunications - Integrated-1.15%
Telefonica, SA+ 31,474 678,839
----------
Telecommunications - Wireless-1.58%
Nextel Communications, Inc.+ 2,690 164,594
Sprint Corp. - PCS Group+ 11,310 672,945
Vodafone AirTouch, PLC, ADR 2,255 93,442
----------
930,981
----------
Telecommunications - Wireline-0.35%
McLeodUSA, Inc.+ 10,050 207,909
----------
TOTAL COMMON STOCK
(Cost $19,134,630) 24,738,538
----------
PREFERRED STOCKS--4.81%
Broadcasting-2.10%
Comcast Corp., 2.000%, due 10/15/29 4,500 510,750
Cox Communications, Inc., 7.000% 8,500 522,219
MediaOne Group, Inc., 6.250% 2,210 198,762
----------
1,231,731
----------
Internet Services-0.42%
PSINet, Inc., Series 144A, 7.000%+ 7,235 245,086
----------
Publishing & Printing-0.91%
Tribune Co., 2.000%, due 05/15/29 4,625 533,031
----------
Utilities - Electric & Gas-1.38%
Houston Industries, Inc.,
7.000%, due 07/01/00 2,495 306,885
Reliant Energy, Inc., due 09/15/29 6,970 506,196
----------
813,081
----------
TOTAL PREFERRED STOCKS
(Cost $2,881,341) 2,822,929
----------
CONVERTIBLE BONDS-2.39%
Principal Value
---------------
Broadcasting-0.18%
TeleWest Communications, PLC,
Series 144A, 5.250%, due 02/19/07 $ 80,000 107,728
----------
Computer Software - Mainframe-0.22%
i2 Technologies, Inc., Series 144A,
5.250%, due 12/15/06 85,000 129,731
----------
Internet Services-0.66%
BEA Systems, Inc., Series 144A,
4.000%, due 12/15/06 111,000 172,466
Exodus Communications, Inc.,
4.750%, due 07/15/08 152,000 216,600
----------
389,066
----------
Telecommunications - Wireless-0.58%
Nextel Communications, Inc.,
4.750%, due 07/01/07 130,000 342,875
----------
Telecommunications - Wireline-0.53%
Telefonos de Mexico,
4.250%, due 06/15/04 240,000 310,800
----------
Utilities - Electric & Gas-0.22%
Alliant Energy Resources, Inc.,
Series 144A, 7.250%, due 02/15/30 1,875 128,906
----------
TOTAL CONVERTIBLE BONDS
(Cost $1,187,416) 1,409,106
----------
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
82
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JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
BALANCED PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)-CONTINUED
--------------------------------------------------------------------------------
CORPORATE BONDS--23.87%
Company Principal Value Market Value
--------------------------------------------------------------------------------
Banking-0.08%
Firstar Bank Corp, NA, 7.125%,
due 12/01/09 $ 50,000 $ 47,411
----------
Beverages-1.61%
Anheuser-Busch Co., Inc.,
5.375%, due 09/15/08 500,000 437,088
Coca-Cola Entertainment, Inc.,
6.625%, due 08/01/04 140,000 136,955
Coca-Cola Entertainment, Inc.,
7.125%, due 09/30/09 390,000 376,242
----------
950,285
----------
Broadcasting-1.94%
Libery Media Group,
7.875%, due 07/15/09 275,000 264,765
Cox Communications, Inc.,
7.000%, due 08/15/01 200,000 198,951
Cox Communications, Inc.,
7.500%, due 08/15/04 230,000 228,882
Cox Communications, Inc.,
7.750%, due 08/15/06 250,000 248,782
CSC Holdings, Inc., Series B,
8.125%, due 07/15/09 100,000 97,317
CSC Holdings, Inc., Series B,
8.125%, due 08/15/09 100,000 97,290
----------
1,135,987
----------
Chemicals-1.56%
E. I. du Pont Nemours and Co.,
6.750%, due 10/15/04 500,000 493,741
E. I. du Pont Nemours and Co.,
6.875%, due 10/15/09 125,000 121,566
Lyondell Chemical Co., Series A,
9.625%, due 05/01/07 305,000 300,425
----------
915,732
----------
Computer Software - Mini & Micro-0.22%
Sun Microsystems, Inc., 7.650%,
due 08/15/09 130,000 129,936
----------
Financial Services-9.35%
American Express Co.,
6.750%, due 06/23/04 285,000 278,091
Charles Schwab Corp., The,
8.050%, due 03/01/10+ 200,000 199,833
Ford Motor Credit,
7.250%, due 01/15/03 375,000 371,631
Ford Motor Credit,
7.750%, due 02/15/07+ 250,000 249,614
Ford Motor Credit,
5.800%, due 01/12/09 600,000 521,958
GE Capital Corp.,
7.000%, due 03/01/02+ 485,000 483,559
GE Capital Corp.,
7.000%, due 02/03/03+ 590,000 587,603
GE Capital Corp.,
7.250%, due 02/01/05+ 500,000 500,917
GE Capital Corp.,
7.370%, due 01/19/10 500,000 504,715
General Motors Acceptance Corp.,
5.850%, 01/14/09 800,000 699,670
Houshold Finance Corp.,
8.000%, due 05/09/05+ 110,000 110,871
International Business Machine Corp.,
7.000%, 01/28/02+ 1,000,000 996,684
----------
5,505,146
----------
Internet Services-1.35%
Exodus Communications, Inc.,
11.250%, due 07/01/08 500,000 495,000
PSINet, Inc., 11.000%, due 08/01/09 325,000 300,625
----------
795,625
----------
Medical - Biotechnology-0.40%
Pharmacia Corp., 5.375%, due 12/01/05 250,000 233,955
----------
Multimedia-1.71%
Viacom, Inc., 7.750%, due 06/01/05 1,000,000 1,006,969
----------
Retail Stores-1.75%
Wal-Mart Stores, Inc.,
6.150%, due 08/10/01 250,000 247,601
Wal-Mart Stores, Inc.,
6.550%, due 08/10/04 300,000 296,053
Wal-Mart Stores, Inc.,
6.875%, due 08/10/09 500,000 488,930
----------
1,032,584
----------
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
83
--------------------------------------------------------------------------------
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JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
BALANCED PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)-CONTINUED
--------------------------------------------------------------------------------
CORPORATE BONDS--CONTINUED
Company Principal Value Market Value
--------------------------------------------------------------------------------
Telecommunications - Equipment &
Services-1.10%
Lucent Technoligies, Inc.,
5.500%, due 11/15/08 $ 600,000 $ 534,656
------------
Metromedia Fiber Network, Inc.,
10.000%, due 12/15/09 115,000 113,275
------------
647,931
------------
Telecommunications - Integrated-0.66%
360 Communications Corp.,
7.500%, due 03/01/06 125,000 123,730
AT&T Corp., 6.000%, due 03/15/09 300,000 267,492
------------
391,222
------------
Telecommunications - Wireless-2.14%
Nextel Communications, Inc.,
9.375%, due 11/15/09 727,000 694,285
VoiceStream Wireless Corp.,
10.375%, due 11/15/09 545,000 564,075
------------
1,258,360
------------
TOTAL CORPORATE BONDS
(Cost $14,412,923) 14,051,143
------------
GOVERNMENT & AGENCY OBLIGATIONS--16.65%
Government Agency-2.25%
Federal Home Loan Bank,
6.750%, due 02/01/02+ 250,000 249,397
Federal Home Loan Mortgage Corp.,
7.000%, due 03/15/10+ 100,000 99,158
Federal National Mortgage Association,
6.250%, due 11/15/02 425,000 418,626
Federal National Mortgage Association,
5.750%, due 04/15/03 575,000 557,171
------------
1,324,352
------------
U.S. Treasury Bonds and Notes-14.40%
United States Treasury Note,
5.875%, due 11/30/01 1,495,000 1,481,919
United States Treasury Note,
5.875%, due 11/15/04 4,715,000 4,644,275
United States Treasury Note,
6.000%, due 08/15/09 2,360,000 2,340,825
------------
8,467,019
------------
TOTAL GOVERNMENT &
AGENCY OBLIGATIONS
(Cost $9,866,604) 9,791,371
------------
TOTAL INVESTMENTS
(Cost $47,482,914) 89.76% 52,813,087
Other assets, less liabilities 10.24 6,008,502
------ ------------
TOTAL NET ASSETS 100.00% $ 58,821,589
====== ============
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
84
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
HIGH YIELD BOND PORTFOLIO
--------------------------------------------------------------------------------
"Yield spreads have widened significantly during the past year, making the
yields on high-income bonds very attractive relative to other fixed-income
securities."
--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 6/30/00
$10,793,942
---------------------------------------------------
NUMBER OF HOLDINGS
218
---------------------------------------------------
PORTFOLIO TURNOVER
21.15%
--------------------------------------------------------------------------------
---------------------------------------------------
DOLLAR WEIGHTED AVERAGE MATURITY
7.4 years
--------------------------------------------------------------------------------
-----------------------------------------
IN THIS SECTION
-----------------------------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
-----------------------------------------
-----------------------------------------
BERNARD SCOZZAFAVA
Vice President
o Joined MFS in 1989
o M.S. from Massachusetts Institute of
Technology
o Graduate of Hamilton College
-----------------------------------------
85
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<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
HIGH YIELD BOND PORTFOLIO
--------------------------------------------------------------------------------
[SIDEBAR]
[PIE CHART]
Corporate Bonds-94.39%
Common Stock-0.39%
Preferred Stock-2.24%
Rights and Warrants-0.75%
Cash-2.23%
-----------------------------------------
PERCENT OF
PORTFOLIO QUALITY PORTFOLIO++
-----------------------------------------
AA 1.11%
BBB 1.55%
BB 11.09%
B 68.29%
CCC 7.27%
D 0.26%
Not Rated 4.82%
Cash & Cash Equivalents 2.23%
-----------------------------------------
PERCENT OF
TOP TEN HOLDINGS PORTFOLIO++
-----------------------------------------
PSINet, Inc., 11.000%,
due 08/01/09 1.22%
Riverwood Int'l. Corp.,
10.250%, due 04/01/06 1.13%
COLT Telecom Group,
0.000%, Step, due 12/15/06 1.12%
Esat Telecom, Series B,
11.875%, due 12/01/08 1.11%
Nextel Communication,
0.000%, Step, 02/15/08 1.10%
NTL, Inc., Series B, 0.000%,
Step, due 04/01/08 1.03%
P&L Coal Holdings, 9.625%,
due 05/15/08 1.00%
LIN Television Corp.,
0.000%, Step, due 03/01/08 0.99%
Paxson Communication,
11.625%, due 10/01/02 0.96%
Tele1 Europe, B.V., 13.000%,
due 05/15/09 0.96%
++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.
[ENDSIDEBAR]
In a market where many bonds traded flat or lower, successful avoidance of
the credit problems and bankruptcies that hurt a variety of industries really
helped the Portfolio's performance. We also weren't afraid to lock in profits on
a number of subscription warrants -- securities issued with a bond or preferred
stock that entitles the holder to buy a proportionate amount of common stock at
a specified price. Some of these warrants, such as Jazztel PLC , Colt
Telecommunications, and Versatel Telecom all spiked up dramatically early in the
period. We could have been tempted to hold on to these positions given the
strong fundamental outlook for these companies, but we weren't comfortable with
the additional risk and decided to reduce our exposure. Many of these
telecommunications and technology securities have subsequently come down quite a
bit following the sell off in the equity market during the second quarter.
The key to avoiding credit defaults is research. I believe MFS' research
capabilities are second to none in the industry. JPVF High Yield Bond Portfolio
is backed by a large group of investment professionals dedicated exclusively to
the high-income market. Our research analysts use a variety of models to analyze
the credit risk and business prospects of the companies they cover. We carefully
measure and manage the underlying financial stability of each company we hold in
the portfolio.
Our strategy for picking securities for this Portfolio is similar to
equity investing, it is a research intensive, company-by-company, bottom-up
approach. First, we look at a company's business risks, then we consider the
financial risks. Finally, we look at all the different ways of investing in the
company and how the market is pricing each one of the securities. From this
analysis, we try to pick the bond that offers the best risk-adjusted return.
Some of the holdings that helped our portfolio's performance were Jazztel,
Colt Telecommunications, and Versatel Telecom. Our holding in Esat Holdings,
Ltd., another telecommunications company, also provided a nice boost to
performance after it was bought out by British Telecom. In addition, despite the
weak performance for many chemical companies, our holding in Lyondell Chemical
was one of our strongest performers during the quarter. The company's bonds
experienced a strong rally following an improvement in its financial results due
to higher prices for its core products and successful cost-reduction programs.
Additionally, the Company closed a large asset sale during the quarter and used
the proceeds to pay down debt.
As for future opportunities, we view telecom and media as defensive
industries that offer attractive growth and income
86
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JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
HIGH YIELD BOND PORTFOLIO
--------------------------------------------------------------------------------
possibilities in this volatile market. Most people are not going to turn off
their cable or mobile phones if the economy slows down. On the other hand, some
of the big-ticket capital items may experience a slow down in consumer spending
due to higher interest rates. Given the current economic environment, we like
the telecom and media sectors, and we've increased our exposure to these
industries by about two percent since the beginning of the year. We've taken
some money off the table in some of the more cyclical industries, such as steel
and paper packaging, as well as in general manufacturing. We increased holdings
in gaming and energy bonds, which we also view as somewhat defensive positions.
In particular, energy companies have been paying down debt and increasing their
cash reserves in the event oil prices come down a bit, but we see oil prices
remaining steady in the near term.
Looking ahead, we're cautiously optimistic about a recovery for the
high-income market. While it's difficult to rule out further volatility given
the uncertain interest-rate environment, the high-income market has been weak
for quite some time now. Yield spreads--the yield difference between
non-investment grade debt and Treasuries--have widened significantly during the
past year, making the yields on high-income bonds very attractive relative to
other fixed-income securities. In addition, we believe the economy will remain
healthy and corporate earnings will remain strong. And, ultimately, the
high-yield market tracks corporate earnings.
--------------------------------------------------------------------------------
High Yield Bond Portfolio and Lehman Bros. High Yield Bond Index
Comparison of Change in Value of $10,000 Investment.
--------------------------------------------------------------------------------
[LINE GRAPH]
HIGH YIELD LEHMAN
BOND BROTHERS
PORTFOLIO HIGH YIELD
1/1/98 10000 10000
10289 10336
6/98 10387 10450
9640 9975
10089 10187
10537 10375
6/99 10470 10410
10338 10263
10572 10430
10524 10186
6/00 10529 10303
----------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
----------------------------------------
LEHMAN
HIGH BROS. HIGH
YIELD YIELD BOND
BOND INDEX
YTD -0.41% -1.21%
1 YEAR 0.57% -1.02%
INCEPTION 2.09% 1.20%
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 Port folio reflects
all recurring expenses and includes the reinvestment of all dividends and
distributions. Total return figures for periods of less than one year have not
been annualized.
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.
87
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
HIGH YIELD BOND PORTFOLIO
--------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
(Unaudited)
Six Months
Ended Year Ended Year Ended
June December December
30, 2000 31, 1999 31, 1998
<S> <C> <C> <C>
Net asset value, beginning of period $ 9.19 $ 9.49 $ 10.00
Income From Investment Operations
Net investment income 0.38 0.75 0.60
Net gains and losses on securities
(both realized and unrealized) (0.42) (0.30) (0.51)
---------- --------- ---------
Total from investment operations (0.04) 0.45 0.09
Less Distributions to Shareholders
Dividends from net investment income (0.75) (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 (0.75) (0.60)
Net asset value, end of period $ 9.15 $ 9.19 $ 9.49
========== ========= =========
Total Return (A) (0.41%) 4.79% 0.89%
Ratios to Average Net Assets: (B)
Expenses 1.17% 1.15% 1.24%
Net investment income 8.28% 7.58% 7.85%
Portfolio Turnover Rate 21.15% 43.44% 84.21%
Net Assets, At End of Period $10,793,942 $9,401,814 $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.
(B) Per share data and ratios are calculated on an annualized basis.
88
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
HIGH YIELD BOND PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
COMMON STOCK--0.38%
Company Shares Market Value
--------------------------------------------------------------------------------
Telecommunications - Wireline-0.38%
Comple Tel Holdings, LLC,
Series 144A, Class B+ 500 $ 25,000
Viatel, Inc.+ 575 16,423
-----------
41,423
-----------
TOTAL COMMON STOCK
(Cost $4,841) 41,423
-----------
PREFERRED STOCK--2.20%
Broadcasting-0.50%
CSC Holdings, Inc., Series M,
11.125%, due 04/01/08 513 53,993
-----------
Publishing & Printing-0.52%
Primedia, Inc., Series H,
8.625%, due 04/01/10 650 55,900
-----------
Telecommunications - Equipment
& Services-0.36%
Global Crossing, Ltd.,
10.500%, due 12/01/08 400 38,600
-----------
Telecommunications - Wireless-0.82%
Crown Castle International Corp.,
12.750%, due 12/15/10 60 60,842
Rural Cellular Corp., Series B,
11.375%, due 05/15/10 30 28,203
-----------
89,045
-----------
TOTAL PREFERRED STOCK
(Cost $235,642) 237,538
-----------
RIGHTS AND WARRANTS--0.73%
Broadcasting-0.15%
Ono Finance, PLC, Series 144A,
Equity Value Certificate, due 05/31/09+ 105 15,724
-----------
Telecommunications - Equipment &
Services-0%
DTI Holdings, Inc., Warrants,
exp. 03/01/08+ 325 3
-----------
Telecommunications - Integrated-0.03%
Jazztel, PLC, Warrants, exp. 04/01/09+ 40 3,690
-----------
Telecommunications - Wireless-0.02%
American Mobile Satellite Corp.,
Warrants, exp. 04/01/08+ 60 2,400
-----------
Telecommunications - Wireline-0.53%
Allegiance Telecom, Inc.,
Warrants, exp. 02/03/08+ 100 14,013
Versatel Telecom, B.V.,
Series 144A, Warrants, exp. 05/15/08+ 80 43,570
-----------
57,583
-----------
TOTAL RIGHTS AND WARRANTS
(Cost $4,700) 79,400
-----------
CORPORATE BONDS--78.91%
Principal Value
---------------
Aerospace & Defense-1.91%
Argo-Tech Corp., 8.625%,
due 10/01/07 $ 40,000 28,000
BE Aerospace, Inc., Series B, 8.000%,
due 03/01/08 50,000 42,250
K & F Industries, Inc., Series B,
9.250%, due 10/15/07 90,000 85,050
L-3 Communications Corp., Series B,
10.375%, due 05/01/07 50,000 50,875
-----------
206,175
-----------
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
89
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
HIGH YIELD BOND PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)-CONTINUED
--------------------------------------------------------------------------------
CORPORATE BONDS--CONTINUED
Company Principal Value Market Value
--------------------------------------------------------------------------------
Automotive Parts & Equipment-0.69%
Hayes Wheels International, Inc.,
11.000%, due 07/15/06 $ 57,000 $ 56,003
Hayes Wheels International, Inc.,
Series B, 9.125%, due 07/15/07 20,000 17,900
-----------
73,903
-----------
Broadcasting-13.03%
Adelphia Communications Corp.,
Series 144A, 8.375%, due 02/01/08 100,000 88,375
Adelphia Communications Corp.,
9.375%, due 11/15/09 20,000 18,500
Albritton Communications Co.,
Series B, 9.750%, due 11/30/07 40,000 38,400
Chancellor Media Corp., Series B,
8.750%, due 06/15/07 40,000 40,100
Chancellor Media Corp., 8.000%,
due 11/01/08 50,000 50,313
Benedek Communications Corp.,
Zero Coupon, Step-up, due 05/15/06 80,000 56,000
Charter Communications Holdings, LLC,
8.250%, due 04/01/07 100,000 88,250
Charter Communications Holdings, LLC,
Zero Coupon, Step-up, due 04/01/11 115,000 65,263
Citadel Broadcasting Co., 9.025%,
due 11/15/08 60,000 58,200
CSC Holdings, Inc., Series B, 8.125%,
due 08/15/09 50,000 48,645
Cumulus Media, Inc., 10.375%,
due 07/01/08 50,000 42,250
EchoStar DBS Corp., 9.375%,
due 02/01/09 100,000 96,000
Fox/Liberty Networks, LLC, 8.875%,
due 08/15/07 55,000 54,588
Frontiervision, LP, 11.000%, due 10/15/06 50,000 50,500
Frontiervision Holdings, LP, Zero Coupon,
Step-up, due 09/15/07 45,000 38,925
Granite Broadcasting Corp., 10.375%,
due 05/15/05 5,000 4,750
Granite Broadcasting Corp., 8.875%,
due 05/15/08 15,000 12,975
Insight Midwest, LP/Insight Capital, Inc.,
9.750%, due 10/01/09 90,000 88,200
Lenfest Communications, Inc., 8.375%,
due 11/01/05 40,000 40,842
LIN Television Corp., Zero Coupon,
Step-up, due 03/01/08 160,000 105,200
Paxon Communications Corp.,
11.625%, due 10/01/02 100,000 102,250
Telemundo Group, Inc., Series B,
Zero Coupon, Step-up, due 08/15/08 125,000 86,250
United International Holdings, Inc.
Series B, Zero Coupon, Step-up,
due 02/15/08 85,000 59,500
XM Satellite Radio Inc., Series 144A,
14.000%, due 03/15/10 55,000 48,400
Young Broadcasting, Inc., Series B,
8.750%, due 06/15/07 25,000 23,000
-----------
1,405,676
-----------
Building Materials-3.66%
American Standard Companies, Inc.,
7.375%, due 02/01/08 100,000 90,500
Building Materials Holding Corp.,
Series B, 7.750%, due 07/15/05 50,000 41,125
Building Materials Holding Corp.,
Series B, 8.625%, due 12/15/06 65,000 54,113
Formica Corp., Series B, 10.875%,
due 03/01/09 50,000 39,000
MMI Products, Inc., Series B,
11.250%, due 04/15/07 60,000 59,100
Nortek, Inc., 9.875%, due 03/01/04 30,000 28,500
Nortek, Inc., Series B, 9.250%,
due 03/15/07 25,000 23,375
Nortek, Inc., Series B, 8.875%,
due 08/01/08 20,000 18,100
Synthetic Industries, Inc.,
Series 144A, 13.000%, due 12/13/00 41,250 40,631
-----------
394,444
-----------
--------------------------------------------------------------------------------
See notes to financial statements.
90
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
HIGH YIELD BOND PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)-CONTINUED
--------------------------------------------------------------------------------
CORPORATE BONDS--CONTINUED
Company Principal Value Market Value
--------------------------------------------------------------------------------
Chemicals-3.05%
Huntsman ICI Chemicals, LLC,
10.125%, due 07/01/09 $ 100,000 $ 100,750
Lyondell Chemical Co., Series A,
9.625%, due 05/01/07 35,000 34,475
Lyondell Chemical Co., Series B,
9.875%, due 05/01/07 65,000 64,188
Lyondell Chemical Co., 10.875%,
due 05/01/09 10,000 9,950
Sovereign Specialty Chemicals, Inc.
Series 144A, 11.875% due 03/15/10 45,000 46,294
Sterling Chemicals, Inc., Series B,
12.375%, due 07/15/06 15,000 15,225
Sterling Chemicals, Inc., Series A,
11.250%, due 04/01/07 75,000 59,250
-----------
330,132
-----------
Commercial Services-1.80%
Anacomp, Inc., Series B,
10.875%, due 04/01/04 95,000 60,681
Iron Mountain, Inc., 10.125%,
due 10/01/06 25,000 25,000
Pierce Leahy Corp., 11.125%,
due 07/15/06 30,000 30,975
Williams Scotsman, Inc., 9.875%,
due 06/01/07 85,000 77,350
-----------
194,006
-----------
Computer Software - Mainframe-0.49%
Verio, Inc., 10.375%, due 4/01/05 50,000 52,500
-----------
Cosmetics & Personal Care-0.23%
Remington Product Co., LLC, Series B,
11.000%, due 05/15/06 30,000 25,350
-----------
Educational Services-0.47%
Kindercare Learning Centers, Inc.,
Series B, 9.500%, due 02/15/09 55,000 50,600
-----------
Electronic Components-0.45%
Moog, Inc., Series B, 10.000%,
due 05/01/06 50,000 48,750
-----------
Entertainment & Leisure-5.98%
Argosy Gaming Co., 10.750%,
due 06/01/09 80,000 82,700
Aztar Corp., 8.875%, due 05/15/07 85,000 80,113
Boyd Gaming Corp., 9.500%,
due 07/15/07 100,000 96,000
Coast Hotels & Casinos, Inc.,
9.500%, due 04/01/09 100,000 95,000
Hollywood Park, Inc., Series B,
9.250%, due 02/15/07 50,000 49,750
Horseshoe Gaming, Series B,
8.625%, due 05/15/09 65,000 61,263
Isle of Capri Casinos, Inc.,
8.750%, due 04/15/09 20,000 18,500
MGM Grand, Inc., 9.750%,
due 06/01/07 80,000 81,400
Station Casinos, Inc., 8.875%,
due 12/01/08 85,000 80,963
-----------
645,689
-----------
Financial Services-0.17%
Madison River Capital, LLC,
Series 144A, 13.250%,
due 03/01/10 20,000 18,000
-----------
Forest Products & Paper-1.92%
Buckeye Technologies, Inc., 8.500%,
due 12/15/05 40,000 38,500
Buckeye Technologies, Inc., 9.250%,
due 09/15/08 40,000 40,000
Specialty Paperboard, Inc., 9.375%,
due 10/15/06 70,000 67,200
U.S. Timberlands Co., L.P., 9.625%,
due 11/15/07 70,000 61,600
-----------
207,300
-----------
Healthcare-1.19%
Fresenius Medical Capital Trust II, Unit,
7.875%, due 02/01/08 35 31,150
Prime Medical Services, Inc.,
8.750%, due 04/01/08 60,000 49,800
Tenet Healthcare Corp.,
8.000%, due 01/15/05 50,000 48,000
-----------
128,950
-----------
--------------------------------------------------------------------------------
See notes to financial statements.
91
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
HIGH YIELD BOND PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)-CONTINUED
--------------------------------------------------------------------------------
CORPORATE BONDS--CONTINUED
Company Principal Value Market Value
--------------------------------------------------------------------------------
Home Furnishings-1.07%
Sealy Mattress, Co., Series B,
9.875%, due 12/15/07 $ 65,000 $ 62,725
Simmons Co., Series B,
10.250%, due 03/15/09 60,000 53,250
-----------
115,975
-----------
Internet Services-2.68%
Exodus Communications, Inc.,
11.250%, due 07/01/08 50,000 49,500
Exodus Communications, Inc.,
10.750%, due 12/15/09 15,000 14,475
Exodus Communications, Inc.,
Series 144A, 11.625%, due 07/15/10 50,000 50,125
Globix Corp., 12.50% due 02/01/10 45,000 36,900
PSINet, Inc., 11.500%, due 11/01/08 10,000 9,400
PSINet, Inc., 11.000%, due 08/01/09 140,000 129,489
-----------
289,889
-----------
Lodging-0.30%
HMH Properties, Inc., Series C,
8.450%, due 12/01/08 35,000 32,419
-----------
Machinery-1.99%
Columbus McKinnon Corp.,
8.500%, due 04/01/08 75,000 64,500
Newcor, Inc., Series B,
9.875%, due 03/01/08 40,000 12,000
Numatics, Inc., Series B,
9.625%, due 04/01/08 40,000 32,000
Simonds Industries, Inc.,
10.250%, due 07/01/08 35,000 28,744
Thermadyne Holdings Corp., Zero
Coupon, Step-up, due 06/01/08 150,000 54,000
Thermadyne Holdings Corp.,
9.875%, due 06/01/08 30,000 23,063
-----------
214,307
-----------
Manufacturing-2.10%
Blount International, Inc.,
13.000%, due 08/01/09 75,000 76,500
Classic Cable, Inc.,
10.500%, due 03/01/10 35,000 32,288
International Knife & Saw, Inc.,
11.375%, due 11/15/06 50,000 26,000
Polymer Group, Inc., Series B,
9.000%, due 07/01/07 50,000 42,500
Samsonite Corp., 10.750%, due 06/15/08 60,000 50,100
-----------
227,388
-----------
Medical Products-0.32%
ALARIS Medical Systems, Inc.,
9.750%, due 12/01/06 45,000 29,700
ALARIS Medical, Inc., Zero Coupon,
Step-up, due 08/01/08 30,000 4,575
-----------
34,275
-----------
Mining & Metals - Ferrous & Nonferrous-4.42%
AK Steel Holding Corp., 9.125%,
due 12/15/06 58,000 55,680
Commonwealth Aluminum Corp.,
10.750%, due 10/01/06 45,000 43,200
Earle M. Jorgensen Co., Series B,
9.500%, due 04/01/05 50,000 46,500
Haynes International, Inc., 11.625%,
due 09/01/04 75,000 52,500
International Utility Structures, Inc.,
10.750%, due 02/01/08 40,000 32,800
Kaiser Aluminum & Chemical Corp.,
9.875%, due 02/15/02 75,000 71,250
Metal Management, Inc., 10.000%,
due 05/15/08 50,000 27,500
Oxford Automotive, Inc., Series D,
10.125%, due 06/15/07 15,000 13,050
P & L Coal Holdings Corp., 9.625%,
due 05/15/08 115,000 106,663
WCI Steel, Inc., Series B, 10.000%,
due 12/01/04 30,000 27,900
-----------
477,043
-----------
--------------------------------------------------------------------------------
See notes to financial statements.
92
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
HIGH YIELD BOND PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)-CONTINUED
--------------------------------------------------------------------------------
CORPORATE BONDS--CONTINUED
Company Principal Value Market Value
--------------------------------------------------------------------------------
Office Equipment-0.18%
General Binding Corp., 9.375%,
due 06/01/08 $ 30,000 $ 19,500
-----------
Oil & Gas - Distribution & Marketing-0.49%
Clark USA, Inc., Trizec, 10.875%,
due 12/01/05 40,000 22,000
Clark R&M, Inc., 8.625%, due 08/15/08 40,000 31,400
-----------
53,400
-----------
Oil & Gas - Integrated-0.48%
Pioneer Natural Resources Co.,
9.625%, due 04/01/10 50,000 51,631
-----------
Oil & Gas Producers-2.86%
Chesapeake Energy Corp., Series B,
9.625%, due 05/01/05 90,000 87,300
Continental Resources, Inc.,
10.250%, due 08/01/08 25,000 22,313
Forest Oil Corp., 10.500%,
due 01/15/06 50,000 50,875
HS Resources, Inc., 9.250%,
due 11/15/06 50,000 48,625
Ocean Energy, Inc., Series B,
8.875%, due 07/15/07 100,000 99,500
-----------
308,613
-----------
Oil & Gas Services & Equipment-0.42%
R & B Falcon Corp., 9.500%,
due 12/15/08 45,000 45,225
-----------
Packaging & Containers-4.04%
Applied Extrusion Technologies, Inc.,
Series B, 11.500%, due 04/01/02 25,000 25,063
Ball Corp., 8.250%, due 08/01/08 60,000 56,400
Gaylord Container Corp., Series B,
9.875%, due 02/15/08 65,000 51,350
Gaylord Container Corp., Series B,
9.750%, due 06/15/07 80,000 52,000
Huntsman Packaging Corp., UNIT,
Series 144A, 13.000%, 06/01/10 20,000 20,600
Riverwood International Corp.,
10.250%, due 04/01/06 125,000 120,000
Silgan Holdings, Inc., 9.000%,
due 06/01/09 65,000 59,963
US Can Corp., Series B, 10.125%,
due 10/15/06 50,000 51,250
-----------
436,626
-----------
Photo Equipment-0.10%
Polaroid Corp., 11.500%, due 2/15/06 10,000 10,600
-----------
Publishing & Printing-1.08%
Hollinger International Publishing, Inc.,
9.250%, due 03/15/07 50,000 49,250
Liberty Group Operating, Inc., 9.375%,
due 02/01/08 20,000 16,400
Mail-Well, Inc., Series B, 8.750%,
due 12/15/08 5,000 4,200
World Color Press, Inc., 8.375%,
due 11/15/08 25,000 24,150
World Color Press, Inc., 7.750%,
due 02/15/09 25,000 23,145
-----------
117,145
-----------
Retail Stores-1.44%
Duane Reade, Inc., 9.250%, due 02/15/08 50,000 44,250
Finlay Fine Jewelery Corp., 9.000%,
due 05/01/08 10,000 8,800
Finlay Fine Jewelery Corp., 8.375%,
due 05/01/08 25,000 22,250
Jitney-Jungle Stores America, Inc.,
12.000%, due 03/01/06+ 90,000 13,500
Musicland Group, Inc., 9.000%,
due 06/15/03 25,000 22,625
Musicland Group, Inc., Series B,
9.875%, due 03/15/08 35,000 28,700
Pathmark Stores, Inc., 11.625%,
due 06/15/02 55,000 13,750
-----------
153,875
-----------
+Non-income producing security.
--------------------------------------------------------------------------------
See notes to financial statements.
93
--------------------------------------------------------------------------------
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JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
HIGH YIELD BOND PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)-CONTINUED
--------------------------------------------------------------------------------
CORPORATE BONDS--CONTINUED
Company Principal Value Market Value
--------------------------------------------------------------------------------
Telecommunications - Equipment & Services-4.77%
DTI Holdings, Inc., Series B, Zero Coupon,
Step-up, due 03/01/08 $ 65,000 $ 27,300
Global Crossing Holdings, Ltd.,
9.625%, due 05/15/08 85,000 82,450
ITC^DeltaCom, Inc., 11.000%,
due 06/01/07 95,000 95,950
Level 3 Communications, Inc.,
Series 144A, 10.750%, due 03/15/08 25,000 22,455
Level 3 Communications, Inc.,
9.125%, due 05/01/08 105,000 94,238
Metromedia Fiber Network, Inc.,
10.000%, due 11/15/08 90,000 88,650
NorthEast Optic Network, Inc.,
12.750%, due 08/15/08 25,000 23,875
Spectrasite Holdings, Inc., Zero Coupon,
Step-up, due 07/15/08 25,000 17,375
Spectrasite Holdings, Inc., Zero Coupon,
Step-up, due 04/15/09 75,000 43,875
Spectrasite, Series 144A, 10.750%,
due 03/15/10 20,000 19,950
-----------
516,118
-----------
Telecommunications - Integrated-3.46%
Hyperion Telecommunications, Inc.,
12.000%, due 11/01/07 55,000 51,700
MGC Communications, Inc., Series 144A,
13.000%, due 04/01/10 75,000 70,500
NEXTLINK Communications, Inc.,
9.625%, due 10/01/07 30,000 28,275
NEXTLINK Communications, Inc.,
10.750%, due 06/01/09 90,000 88,650
NTL, Inc., Series B, Zero Coupon,
Step-up, due 04/01/08 175,000 109,375
NTL Communications Corp., Series B,
Zero Coupon, Step-up, due 10/01/08 40,000 25,400
-----------
373,900
-----------
Telecommunications - Wireless-5.56%
Centennial Cellular Corp., 10.750%,
due 12/15/08 95,000 92,269
Crown Castle International Corp.,
10.750%, due 08/01/11 90,000 91,238
AMSC Acquisition Co., Inc., Series B,
12.250%, due 04/01/08 60,000 46,800
Nextel Communications, Inc.,
Zero Coupon, Step-up, due 10/31/07 50,000 37,125
Nextel Communications, Inc.,
Zero Coupon, Step-up, due 02/15/08 160,000 117,200
Nextel International, Inc.,
Zero Coupon, Step-up, due 04/15/08 70,000 45,500
Rural Cellular Corp., Series B,
9.625%, due 05/15/08 65,000 63,050
Triton PCS, Inc., Zero Coupon,
Step-up, due 05/01/08 50,000 36,250
VoiceStream Wireless Corp.,
10.375%, due 11/15/09 20,000 20,700
Western Wireless Corp.,
10.500%, due 02/01/07 50,000 51,000
-----------
601,132
-----------
Telecommunications - Wireline-4.97%
Allegiance Telecom, Inc., Series B,
Zero Coupon, Step-up, due 02/15/08 75,000 54,375
Allegiance Telecom, Inc.,
12.875%, due 05/15/08 85,000 92,013
Focal Communications Corp.,
Series B, Zero Coupon, Step-up,
due 02/15/08 35,000 23,625
Focal Communications Corp.,
Series 144A, 11.875%, due 01/15/10 65,000 65,325
GT Group Telecom, Inc., UNIT,
Zero Coupon, Step-up, due 02/01/10 100,000 55,500
ICG Holdings, Inc., Zero Coupon,
Step-up, due 05/01/06 60,000 49,650
MJD Communications, Inc., Series B,
9.500%, due 05/01/08 45,000 40,050
NorthPoint Communications Group, Inc.,
Series 144A, 12.875%, due 02/15/10 35,000 25,200
Time Warner Telecom, LLC, 9.750%,
due 07/15/08 55,000 53,213
Viatel, Inc., 11.250%, due 04/15/08 55,000 40,700
Viatel, Inc., Zero Coupon, Step-up,
due 04/15/08 85,000 38,250
-----------
537,901
-----------
--------------------------------------------------------------------------------
See notes to financial statements.
94
--------------------------------------------------------------------------------
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JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
HIGH YIELD BOND PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)-CONTINUED
--------------------------------------------------------------------------------
CORPORATE BONDS--CONTINUED
Company Principal Value Market Value
--------------------------------------------------------------------------------
Textiles & Apparel-0.50%
J. Crew Operating Corp., 10.375%,
due 10/15/07 $ 55,000 $ 45,100
J. Crew Group, Series B, Zero Coupon,
Step-up, due 10/15/08 15,000 8,138
-----------
53,238
-----------
Transportation-0.64%
GulfMark Offshore, Inc., 8.750%,
due 06/01/08 75,000 69,563
-----------
TOTAL CORPORATE BONDS
(Cost $9,398,219) 8,521,238
-----------
FOREIGN BONDS--14.00%
Aerospace & Defense-0.34%
Satelites Mexicanos, S.A., de CV,
Series B, 10.125%, due 11/01/04 55,000 36,850
-----------
Beverages-0.15%
Fage Dairy Industries, SA, 9.000%,
due 02/01/07 20,000 16,000
-----------
Broadcasting-2.65%
Callahan Nordrhein-Westfalen,
Series 144A, 14.000%, due 07/15/10 60,000 60,000
TeleWest Communications, PLC,
9.625%, due 10/01/06 45,000 42,075
Telewest Communications, PLC,
Zero Coupon, Step-up, due 10/01/07 25,000 23,688
Telewest Communications, PLC,
Series 144A, 9.875%, due 02/01/10 10,000 9,300
Telewest Communications, PLC,
Series 144A, Zero Coupon,
Step-up, due 02/01/10 50,000 26,750
United Pan-Europe Communications,
N.V., Series B, 10.875%,
due 08/01/09 100,000 87,000
United Pan-Europe Communications,
N.V., Series B, 11.250%,
due 02/01/10 40,000 35,600
-----------
284,413
-----------
Chemicals-0.17%
PCI Chemicals Canada, Inc.,
9.250%, due 10/15/07 30,000 18,600
-----------
Financial Services-0.92%
Ono Finance, PLC, UNIT,
13.000%, due 05/01/09 105,000 99,225
-----------
Insurance-0.62%
Willis Corroon Corp., 9.000%,
due 02/01/09 80,000 67,200
-----------
Lodging-0.45%
Prime Hospitality Corp., Series B,
9.750%, due 04/01/07 50,000 48,250
-----------
Mining & Metals - Ferrous & Nonferrous-0.48%
Russel Metals, Inc., UNIT, 10.000%,
due 06/01/09 55,000 52,319
-----------
Telecommunications - Equipment &
Services-0.50%
Energis, PLC, 9.750%, due 06/15/09 55,000 53,900
-----------
Telecommunications - Integrated-0.30%
Jazztel, PLC, 14.000%, due 04/01/09 35,000 31,850
-----------
Telecommunications - Wireless-1.38%
Dolphin Telecom, PLC, Zero Coupon,
Step-up, due 06/01/08 100,000 37,500
Dolphin Telecom, PLC, Series B,
Zero Coupon, Step-up, due 05/15/09 25,000 8,750
Millicom International Cellular, S A.,
Zero Coupon, Step-up, due 06/01/06 85,000 72,250
PTC International Finance II, SA,
11.250%, due 02/01/09 30,000 30,450
-----------
148,950
-----------
--------------------------------------------------------------------------------
See notes to financial statements.
95
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
HIGH YIELD BOND PORTFOLIO
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)-CONTINUED
--------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
Company Principal Value Market Value
--------------------------------------------------------------------------------
Telecommunications - Wireline-6.04%
360 Networks, Inc., 13.000%,
due 07/15/07 $ 20,000 $ 20,175
Comple Tel Europe, N.V., Series B,
Zero Coupon, Step-up due 02/15/09 50,000 25,000
Colt Telecom Group, PLC, Zero Coupon,
Step-up, due 12/15/06 135,000 118,969
Esat Telecom Group, PLC, Series B,
11.875%, due 12/01/08 100,000 117,750
Esprit Telecom Group, PLC, 10.875%,
due 06/15/08 50,000 34,000
Hermes Europe Railtel, B.V., 10.375%,
due 01/15/09 75,000 61,125
MetroNet Communications Corp.,
Zero Coupon, Step-up, due 11/01/07 25,000 21,958
Tele1 Europe, B.V., 13.000%,
due 05/15/09 100,000 101,500
Versatel Telecom, B.V., 13.250%,
due 05/15/08 80,000 81,400
Worldwide Fiber, Inc., 12.000%,
due 8/01/09 75,000 70,875
-----------
652,752
-----------
TOTAL FOREIGN BONDS
(Cost $1,640,251) 1,510,309
-----------
TOTAL INVESTMENTS
(Cost $11,283,653) 96.22% 10,389,908
Other assets, less liabilities 3.78 404,034
------ -----------
TOTAL NET ASSETS 100.00% $10,793,942
====== ===========
--------------------------------------------------------------------------------
See notes to financial statements.
96
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
--------------------------------------------------------------------------------
"While the Fed refrained from raising interest rates during its last meeting, we
don't believe the possibility of future interest rates hikes can be ruled out."
--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 6/30/00
$30,447,742
---------------------------------------------------
NUMBER OF HOLDINGS
24
---------------------------------------------------
DOLLAR WEIGHTED AVERAGE MATURITY
30.6 days
--------------------------------------------------------------------------------
-----------------------------------------
IN THIS SECTION
-----------------------------------------
Portfolio Facts
Portfolio
Composition
Financial Highlights
Schedule of
Portfolio Investments
-----------------------------------------
-----------------------------------------
Jean O. Alessandro
o Joined MFS in 1986
o Assistant Vice President of MFS
Investment Management
o Bachelors degree from the University
of Connecticut
-----------------------------------------
97
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
--------------------------------------------------------------------------------
[SIDEBAR]
[PIE CHART]
Short-Term Obligations-98.45%
Cash-1.55%
-----------------------------------------
PERCENT OF
PORTFOLIO QUALITY PORTFOLIO++
-----------------------------------------
AAA 100.00%
++Represents market value of
investments plus cash.
An investment in the Money Market Portfolio is neither insured nor guaranteed by
the FDIC or any other U.S. Government agency.
[ENDSIDEBAR]
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.
Despite some signs of moderating economic growth in the second quarter of
2000, the U.S. economy continued to grow steadily and unemployment fell to
30-year lows. Historically, these conditions have caused inflation to
accelerate, and the Federal Reserve Board (the Fed) moved to contain the
inflationary pressures that usually accompany this backdrop.
While the Fed refrained from raising interest rates during its last
meeting, we don't believe the possibility of future interest rates hikes can be
ruled out. Current consensus is that the Federal Reserve will raise the discount
and Fed funds rate at least 0.25 basis points. The range of estimates is for a
0.25 basis points increase to a 0.50 basis points increase by year-end. This
increase will most likely come at the end of August with some analysts
predicting another increase of 0.25 basis points in December. The Federal
Reserve has raised rates three times already this year for a total increase of
100 basis points.
We continue to limit the Portfolio's investments to securities issued or
guaranteed by the U.S. Treasury, agencies, or instrumentalities of the U.S.
government, as well as to the highest quality corporate and bank issues, in
order to provide maximum security against credit risk. On June 30, 2000,
approximately 35% of the portfolio was invested in high-quality commercial
paper, with the balance invested in U.S. government or government-guaranteed
issues.
98
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<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
--------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
(Unaudited)
Six Months
Ended Year Ended Year Ended Year Ended Year Ended Year Ended
June December December December December December
30, 2000 31, 1999 31, 1998 31, 1997 31, 1996 31, 1995
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.85 $ 10.37 $ 10.23 $ 10.25 $ 10.27 $ 10.25
Income From Investment Operations
Net investment income 0.32 0.44 0.35 0.52 0.50 0.50
Net gains and losses on securities
(both realized and unrealized) (0.04) 0.04 0.14 (0.02) (0.02) 0.02
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations 0.28 0.48 0.49 0.50 0.48 0.52
Less Distributions to Shareholders
Dividends from net investment income (0.32) (0.35) (0.52) (0.50) (0.50)
Dividends in excess of net
investment income (0.22)
Distributions from capital gains
Distributions in excess of capital gains
Returns of capital
----------- ----------- ----------- ----------- ----------- -----------
Total distributions (0.54) 0.00 (0.35) (0.52) (0.50) (0.50)
Net asset value, end of period $ 10.59 $ 10.85 $ 10.37 $ 10.23 $ 10.25 $ 10.27
=========== =========== =========== =========== =========== ===========
Total Return (A) 2.76% 4.57% 4.86% 4.86% 4.65% 5.06%
Ratios to Average Net Assets: (B)
Expenses 0.57% 0.60% 0.64% 0.60% 0.62% 0.63%
Net investment income 5.45% 4.46% 4.74% 4.74% 4.54% 4.89%
Portfolio Turnover Rate (C) N/A N/A N/A N/A N/A N/A
Net Assets, At End of Period $30,447,742 $36,381,953 $24,416,645 $ 9,435,454 $ 7,896,257 $ 8,312,676
</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) Per share data and ratios are calculated on an annualized basis.
(C) 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, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS--99.78%
Company Principal Value Market Value
--------------------------------------------------------------------------------
Aerospace & Defense-3.27%
United Technologies Corp.,
6.570%, due 07/28/00 $ 1,000,000 $ 995,073
-----------
Agricultural Operations-2.78%
Archer-Daniels-Midland Co.,
6.550%, due 07/21/00 850,000 846,907
-----------
Financial Services-22.89%
American Express Co., 6.480%,
due 07/06/00 1,000,000 999,100
Bell Atlantic Network Funding,
6.550%, due 08/16/00 1,000,000 991,631
Ford Motor Credit Co., 6.480%,
due 07/10/00 1,000,000 998,380
Gannett Co., Inc., 6.550%,
due 07/20/00 1,000,000 996,543
International Business Machine Corp.,
6.510%, 07/12/00 1,000,000 998,011
McGraw-Hill Companies Inc., The,
6.530%, due 08/08/00 1,000,000 993,107
Morgan Stanley Dean Witter & Co.,
6.090%, due 08/28/00 1,000,000 989,318
-----------
6,966,090
-----------
Government Agency-64.32%
Federal Home Loan Bank, 6.480%,
due 07/03/00 1,700,000 1,699,388
Federal Home Loan Bank, 6.460%,
due 09/05/00 1,395,000 1,378,955
Federal Home Loan Bank, 6.460%,
due 09/08/00 1,000,000 987,959
Federal Farm Credit Bank, 6.420%,
due 09/13/00 1,500,000 1,480,590
Federal Home Loan Mortgage Corp.,
6.360%, due 07/05/00 3,800,000 3,797,292
Federal Home Loan Mortgage Corp.,
6.410%, due 07/18/00 1,300,000 1,296,065
Federal Home Loan Mortgage Corp.,
6.450%, due 08/10/00 1,000,000 992,833
Federal Home Loan Mortgage Corp.,
6.420%, due 08/15/00 1,500,000 1,487,963
Federal National Mortgage Association,
6.440%, due 07/07/00 1,200,000 1,196,565
Federal National Mortgage Association,
6.370%, due 07/11/00 1,000,000 998,230
Federal National Mortgage Association,
6.400%, due 07/19/00 1,500,000 1,495,200
Federal National Mortgage Association,
6.420%, due 08/03/00 1,000,000 994,115
Federal National Mortgage Association,
6.510%, due 08/24/00 1,800,000 1,782,495
-----------
19,587,650
-----------
Oil & Gas Services & Equipment-3.24%
Halliburton Co., 6.560%,
due 09/18/00 1,000,000 985,684
-----------
Telecommunications - Integrated-3.28%
SBC Communications, Inc., 6.460%,
due 07/07/00 1,000,000 998,923
-----------
TOTAL SHORT-TERM OBLIGATIONS
(Cost $30,379,045) 30,380,327
TOTAL INVESTMENTS
(Cost $30,379,045) 99.78% 30,380,327
Other assets, less liabilities 0.22 67,415
------ -----------
TOTAL NET ASSETS 100.00% $30,447,742
====== ===========
--------------------------------------------------------------------------------
See notes to financial statements.
100
--------------------------------------------------------------------------------
<PAGE>
[This page intentionally left blank]
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
International World Global Hard Emerging Capital
Equity Growth Stock Assets Growth Growth
Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C> <C>
Assets
Investments, at cost-see
accompanying portfolios $37,237,756 $112,492,587 $5,771,697 $151,105,970 $230,725,275
=========== ============ ========== ============ ============
Investments, at market value (Notes B and C) $40,550,914 $133,556,137 $5,865,865 $205,074,465 $401,421,191
Cash 1,905,985 3,775,559 60,480 29,547 12,036,924
Accrued investment income 107,982 617,634 14,916 48,174 52,021
Receivable for portfolio securities sold 160,079 172,821 8,835,540
Receivable for foreign currency contracts 1,570
Receivable for daily variation on
futures contracts
Other assets 2,384
----------- ------------ ---------- ------------ ------------
Total Assets 42,564,881 138,109,409 6,116,466 213,989,296 413,510,136
Liabilities
Payable for portfolio securities purchased 420,843 256,085 8,983,432
Payable for foreign currency contracts
Accrued investment advisory fees (Note D) 34,930 83,763 3,931 131,730 327,965
Accrued expenses 6,561 5,955 980 11,782 19,391
Other liabilities 2,384
----------- ------------ ---------- ------------ ------------
Total Liabilities 462,334 89,718 263,380 9,126,944 347,356
NET ASSETS $42,102,547 $138,019,691 $5,853,086 $204,862,352 $413,162,780
=========== ============ ========== ============ ============
Net Assets Consist of:
Par value $ 30,016 $ 52,223 $ 6,535 $ 56,048 $ 102,697
Capital paid in 37,537,755 101,439,334 9,490,642 119,345,462 230,464,177
Undistributed net investment income (loss) (65,974) 1,004,659 46,938 (389,262) (1,302,428)
Accumulated net realized gain (loss) 1,280,948 14,436,761 (3,785,176) 31,883,320 13,202,418
Net unrealized gain (loss) on investments 3,313,158 21,063,550 94,168 53,968,495 170,695,916
Net unrealized loss on futures contracts
Net unrealized gain (loss) on
translation of assets and liabilities
in foreign currency 6,644 23,164 (21) (1,711)
----------- ------------ ---------- ------------ ------------
NET ASSETS $42,102,547 $138,019,691 $5,853,086 $204,862,352 $413,162,780
=========== ============ ========== ============ ============
Shares of common stock
outstanding ($0.01 par value,
1,000,000,000 shares authorized) 3,001,565 5,222,301 653,551 5,604,906 10,269,738
=========== ============ ========== ============ ============
Net asset value, offering & redemption
price per share $ 14.03 $ 26.43 $ 8.96 $ 36.55 $ 40.23
=========== ============ ========== ============ ============
</TABLE>
--------------------------------------------------------------------------------
See notes to financial statements.
102
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Small S&P 500 High Yield Money
Company Growth Index Value Balanced Bond Market
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
<C> <C> <C> <C> <C> <C> <C>
$80,684,554 $53,218,752 $173,398,578 $70,681,307 $47,482,914 $11,283,653 $30,379,045
=========== =========== ============ =========== =========== =========== ===========
$81,226,211 $66,146,689 $173,697,002 $70,445,357 $52,813,087 $10,389,908 $30,380,327
3,729,609 6,738,891 5,942,266 5,933,206 5,165,582 237,461 478,707
18,409 28,385 174,725 169,252 493,844 228,502 624
36,179 2,381,713 911,695 3,422,990 569,434 58,093 2,900,000
151
42,290
----------- ----------- ------------ ----------- ----------- ----------- -----------
85,010,408 75,295,678 180,767,978 79,970,805 59,042,098 10,913,964 33,759,658
4,648 1,326,731 476,429 2,006,477 182,403 110,000 3,298,802
116
50,846 43,014 35,380 49,949 35,740 6,762 12,340
2,816 3,416 2,355 7,312 2,366 3,144 774
----------- ----------- ------------ ----------- ----------- ----------- -----------
58,310 1,373,161 514,164 2,063,738 220,509 120,022 3,311,916
$84,952,098 $73,922,517 $180,253,814 $77,907,067 $58,821,589 $10,793,942 $30,447,742
=========== =========== ============ =========== =========== =========== ===========
$ 52,797 $ 30,783 $ 179,741 $ 44,725 $ 40,734 $ 11,796 $ 28,738
86,794,787 56,086,925 179,563,575 76,771,546 50,359,047 11,768,824 29,588,725
(230,012) (97,074) 315,597 454,596 786,812 446,810 830,263
(2,207,131) 4,973,946 (523) 872,150 2,304,842 (539,642) (1,266)
541,657 12,927,937 298,424 (235,950) 5,330,173 (893,745) 1,282
(103,000)
(19) (101)
----------- ----------- ------------ ----------- ----------- ----------- -----------
$84,952,098 $73,922,517 $180,253,814 $77,907,067 $58,821,589 $10,793,942 $30,447,742
=========== =========== ============ =========== =========== =========== ===========
5,279,685 3,078,374 17,974,073 4,472,556 4,073,339 1,179,585 2,873,801
=========== =========== ============ =========== =========== =========== ===========
$ 16.09 $ 24.01 $ 10.03 $ 17.42 $ 14.44 $ 9.15 $ 10.59
=========== =========== ============ =========== =========== =========== ===========
</TABLE>
103
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
For the Period Ended June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
International World Global Hard Emerging Capital
Equity Growth Stock Assets Growth Growth
Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C> <C>
Investment Income
Income
Interest $ 32,207 $ 66,968 $ 13,404 $ 414,171 $ 220,104
Dividends 272,076 1,998,907 71,535 138,136 613,366
Foreign taxes withheld (18,755) (161,423) (3,179) (9,471) (28,379)
----------- ------------ -------- ------------ -----------
Total investment income 285,528 1,904,452 81,760 542,836 805,091
----------- ------------ -------- ------------ -----------
Expenses:
Advisory fees (Note D) 195,856 497,968 21,283 790,413 1,989,913
Custodian fees 21,567 34,184 5,581 43,663 1,999
Shareholder reports 7,498 22,312 948 33,209 74,588
Professional fees 2,145 7,319 311 10,927 23,502
Insurance expense 118 404 17 601 1,619
Directors fees 437 1,493 64 2,210 4,705
Security valuation 5,092 7,857 3,269 6,822 1,296
Miscellaneous expenses 966 3,291 140 4,902 9,897
----------- ------------ -------- ------------ -----------
Gross expenses 233,679 574,828 31,613 892,747 2,107,519
Expenses paid by JPIA (Note D)
----------- ------------ -------- ------------ -----------
Total net expenses 233,679 574,828 31,613 892,747 2,107,519
Net investment income (loss) 51,849 1,329,624 50,147 (349,911) (1,302,428)
----------- ------------ -------- ------------ -----------
Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Net realized gain (loss) on investments 1,399,107 14,436,761 42,738 32,229,907 13,212,517
Net realized gain on futures contracts
Net realized gain (loss) from foreign
currency transactions (91,704) (128,529) (2,640) (2,918)
Net unrealized gain (loss) on investments (3,834,271) (10,114,208) (17,364) (36,124,377) 13,879,340
Net unrealized loss on futures contracts
Net unrealized gain (loss) on translation
of assets and liabilities in
foreign currency 6,848 42,843 (12) (4,058)
----------- ------------ -------- ------------ -----------
Net realized and unrealized
gain (loss) on investments
and foreign currency (2,520,020) 4,236,867 22,722 (3,901,446) 27,091,857
----------- ------------ -------- ------------ -----------
Net increase (decrease) in net assets
resulting from operations $(2,468,171) $ 5,566,491 $ 72,869 $ (4,251,357) $25,789,429
=========== ============ ======== ============ ===========
</TABLE>
--------------------------------------------------------------------------------
See notes to financial statements.
104
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Small S&P 500 High Yield Money
Company Growth Index Value Balanced Bond Market
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
<C> <C> <C> <C> <C> <C> <C>
$ 78,316 $ 137,021 $ 39,068 $ 111,958 $ 931,366 $ 502,406 $917,306
58,248 32,544 362,181 659,188 99,624 6,304
(478) (4,828) (4,847) (2,363)
------------ ----------- --------- ----------- ----------- --------- --------
136,564 169,087 396,421 766,299 1,028,627 508,710 917,306
------------ ----------- --------- ----------- ----------- --------- --------
329,775 233,049 69,278 281,340 175,985 40,356 76,179
10,030 14,239 7,084 4,697 7,131 7,345 2,487
14,894 10,229 7,989 14,752 9,245 1,805 5,153
4,886 3,384 3,502 4,791 3,035 592 1,685
269 240 483 339 215 33 119
990 682 587 991 618 121 344
5,121 2,872 4,098 2,723 4,444 12,561 345
2,190 1,466 3,938 2,070 1,317 266 731
------------ ----------- --------- ----------- ----------- --------- --------
368,155 266,161 96,959 311,703 201,990 63,079 87,043
(16,135)
------------ ----------- --------- ----------- ----------- --------- --------
368,155 266,161 80,824 311,703 201,990 63,079 87,043
(231,591) (97,074) 315,597 454,596 826,637 445,631 830,263
------------ ----------- --------- ----------- ----------- --------- --------
1,746,644 5,132,010 (39,388) 1,010,666 2,312,294 (112,820) (68)
38,865
(9,204) 1,179
(11,543,669) (1,589,856) 298,424 (3,022,952) (2,162,723) (378,907) (40)
(103,000)
(2,222) (101)
------------ ----------- --------- ----------- ----------- --------- --------
(9,797,025) 3,542,154 194,901 (2,012,286) 138,145 (490,649) (108)
------------ ----------- --------- ----------- ----------- --------- --------
$(10,028,616) $ 3,445,080 $ 510,498 $(1,557,690) $ 964,782 $ (45,018) $830,155
============ =========== ========= =========== =========== ========= ========
</TABLE>
--------------------------------------------------------------------------------
105
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International World Global Hard
Equity Growth Stock Assets
Portfolio Portfolio Portfolio
-------------------------- ---------------------------- ---------------------------
(Unaudited) (Unaudited) (Unaudited)
Six Months Year Six Months Year Six Months Year
Ended Ended Ended Ended Ended Ended
June December June December June December
30, 2000 31, 1999 30, 2000 31, 1999 30, 2000 31, 1999
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Net investment income (loss) $ 51,849 $ (12,916) $ 1,329,624 $ 2,119,222 $ 50,147 $ 87,486
Net realized gain (loss) on
security transactions 1,399,107 2,863,886 14,436,761 2,002,877 42,738 (106,911)
Net realized gain (loss) from foreign
currency transactions (91,704) (41,980) (128,529) (65,980) (2,640) (8,795)
Net unrealized gain (loss)
on investments (3,834,271) 5,181,215 (10,114,208) 19,470,411 (17,364) 758,154
Net unrealized gain (loss) on
translation of assets and
liabilities in foreign currency 6,848 41,176 42,843 (25,501) (12) 338
----------- ----------- ------------ ------------ ------------ -----------
Net increase (decrease) in net assets
resulting from operations (2,468,171) 8,031,381 5,566,491 23,501,029 72,869 730,272
Distribution to shareholders from
net investment income (1,814,768) (369,547) (69,014) (5,738)
Distribution to shareholders from
capital gains (2,889,915) (1,975,834) (1,361,644)
Increase (decrease) in net assets
derived from shareholder
transactions (Note E) 11,820,252 11,032,719 3,216,794 359,867 324,505 466,529
----------- ----------- ------------ ------------ ------------ -----------
Net increase (decrease) in net assets 6,462,166 19,064,100 4,992,683 22,129,705 328,360 1,191,063
NET ASSETS:
Beginning of Period 35,640,381 16,576,281 133,027,008 110,897,303 5,524,726 4,333,663
----------- ----------- ------------ ------------ ------------ -----------
End of Period $42,102,547 $35,640,381 $138,019,691 $133,027,008 $ 5,853,086 $ 5,524,726
=========== =========== ============ ============ ============ ===========
Undistributed net investment
income (loss) $ (65,974) $ (26,119) $ 1,004,659 $ 1,618,332 $ 46,938 $ 68,445
=========== =========== ============ ============ ============ ===========
</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) (Unaudited) (Unaudited)
Six Months Year Six Months Year Six Months Year
Ended Ended Ended Ended Ended Ended
June December June December June December
30, 2000 31, 1999 30, 2000 31, 1999 30, 2000 31, 1999
<C> <C> <C> <C> <C> <C>
$ (349,911) $ (484,703) $ (1,302,428) $ (1,097,039) $ (231,591) $ (110,303)
32,229,907 19,583,258 13,212,517 17,603,105 1,746,644 (4,075,104)
(2,918) (53,344)
(36,124,377) 60,477,704 13,879,340 90,958,724 (11,543,669) 15,549,849
(4,058) 2,366 (74)
------------ ------------ ------------ ------------ ------------ -----------
(4,251,357) 79,525,281 25,789,429 107,464,716 (10,028,616) 11,364,442
(104,318)
(18,808,455) (17,514,623) (6,500,203) (1,941,991)
38,449,216 14,152,290 39,023,575 66,897,435 1,989,175 5,329,758
------------ ------------ ------------ ------------ ------------ -----------
15,389,404 93,677,571 47,298,381 167,861,948 (8,039,441) 14,647,891
189,472,948 95,795,377 365,864,399 198,002,451 92,991,539 78,343,648
------------ ------------ ------------ ------------ ------------ -----------
$204,862,352 $189,472,948 $413,162,780 $365,864,399 $ 84,952,098 $92,991,539
============ ============ ============ ============ ============ ===========
$ (389,262) $ (36,433) $ (1,302,428) $ 0 $ (230,012) $ 1,579
============ ============ ============ ============ ============ ===========
</TABLE>
--------------------------------------------------------------------------------
107
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P 500
Growth Index Value
Portfolio Portfolio Portfolio
----------------------------- ------------- -----------------------------
(Unaudited) (Unaudited) (Unaudited)
Six Months Year Period from Six Months Year
Ended Ended May 1, 2000 Ended Ended
June December through June December
30, 2000 31, 1999 June 30, 2000 31, 1999 31, 1999
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Net investment income (loss) $ (97,074) $ (108,379) $ 315,597 $ 454,596 $ 650,206
Net realized gain (loss) on
security transactions 5,132,010 4,619,061 (39,388) 1,010,666 7,959,217
Net realized gain on futures contracts 38,865
Net realized gain (loss) from foreign
currency transactions
Net unrealized gain (loss)
on investments (1,589,856) 12,117,757 298,424 (3,022,952) (4,805,279)
Net unrealized loss on
futures contracts (103,000)
Net unrealized gain (loss) on
translation of assets and
liabilities in foreign currency
----------- ----------- ------------ ----------- -----------
Net increase (decrease) in net assets
resulting from operations 3,445,080 16,628,439 510,498 (1,557,690) 3,804,144
Distribution to shareholders from
net investment income (648,155)
Distribution to shareholders from
capital gains (4,572,296) (165,744) (8,077,932) (517,197)
Increase (decrease) in net assets
derived from shareholder
transactions (Note E) 30,715,513 16,327,783 179,743,316 11,766,670 7,827,697
----------- ----------- ------------ ----------- -----------
Net increase (decrease) in net assets 29,588,297 32,790,478 180,253,814 1,482,893 11,114,644
NET ASSETS:
Beginning of Period 44,334,220 11,543,742 0 76,424,174 65,309,530
----------- ----------- ------------ ----------- -----------
End of Period $73,922,517 $44,334,220 $180,253,814 $77,907,067 $76,424,174
=========== =========== ============ =========== ===========
Undistributed net investment
income (loss) $ (97,074) $ 0 $ 315,597 $ 454,596 $ 648,155
=========== =========== ============ =========== ===========
</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) (Unaudited) (Unaudited)
Six Months Year Six Months Year Six Months Year
Ended Ended Ended Ended Ended Ended
June December June December June December
30, 2000 31, 1999 30, 2000 31, 1999 30, 2000 31, 1999
<C> <C> <C> <C> <C> <C>
$ 826,637 $ 1,088,188 $ 445,631 $ 771,576 $ 830,263 $ 1,459,257
2,312,294 3,234,523 (112,820) (240,738) (68) (307)
(9,204) 7,471 1,179 (25)
(2,162,723) 5,096,361 (378,907) (94,693) (40) 3,884
(2,222) (4,667) (101)
----------- ----------- ----------- ---------- ----------- -----------
964,782 9,421,876 (45,018) 436,120 830,155 1,462,834
(1,118,262) (7,596) (771,551) (1,459,257)
(2,957,773) (703,150)
8,619,424 9,488,534 1,437,146 1,768,402 (5,305,109) 10,502,474
----------- ----------- ----------- ---------- ----------- -----------
5,508,171 18,199,664 1,392,128 1,432,971 (5,934,211) 11,965,308
53,313,418 35,113,754 9,401,814 7,968,843 36,381,953 24,416,645
----------- ----------- ----------- ---------- ----------- -----------
$58,821,589 $53,313,418 $10,793,942 $9,401,814 $30,447,742 $36,381,953
=========== =========== =========== ========== =========== ===========
$ 786,812 $ 1,087,641 $ 446,810 $ 0 $ 830,263 $ 1,459,257
=========== =========== =========== ========== =========== ===========
</TABLE>
--------------------------------------------------------------------------------
109
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FOR THE PERIOD ENDED JUNE 30, 2000 (UNAUDITED)
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 twelve 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 S&P 500 Index Portfolio, the
Value Portfolio, the Balanced Portfolio, the High Yield Bond Portfolio, and the
Money Market Portfolio.
NOTE B--SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared in conformity with generally
accepted accounting principles which require management to make certain
estimates and assumptions at the date of the financial statements. The following
summarizes the significant accounting policies of the Company:
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 bid price 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.
110
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FOR THE PERIOD ENDED JUNE 30, 2000 (UNAUDITED)
The Portfolios do not isolate the portion of the operating results due to
changes in foreign exchange rates on investments from the fluctuations arising
from changes in the market value of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign currency gains and losses arise from the
fluctuation of exchange rates between trade date and settlement date on security
transactions and from the difference between accrual date and payment date on
accrued investment income. Net unrealized foreign exchange gains and losses are
related to the fluctuation of exchange rates on the payables and receivables for
securities and accrued investment income at June 30, 2000.
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 changes in the market values are recorded by the Portfolios as
unrealized appreciation or depreciation of foreign currency translations. At
June 30, 2000, the Emerging Growth Portfolio, Balanced Portfolio and High Yield
Bond Portfolio had the following open forward foreign currency contracts:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
U.S. Dollar Unrealized
Contracts Settlement Contracts to Value at Appreciation
Sold Date Deliver Proceeds 06/30/00 (Depreciation)
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Emerging Growth Portfolio
Great British
pounds 07/06/00 392,915 $596,445 $594,875 $ 1,570
========
Balanced Portfolio
Great British
pounds 07/05/00 62,722 94,831 94,962 $ (131)
Great British
pounds 07/06/00 67,636 102,683 102,401 282
--------
$ 151
========
High Yield Bond Portfolio
Euro dollars 09/13/00 25,000 23,960 24,076 $ (116)
========
----------------------------------------------------------------------------------------------------------
</TABLE>
Futures Contracts: The Portfolios (excluding World Growth Stock and Money Market
Portfolios) may enter into futures contracts in order to manage exposure to
changes in market conditions which may be more efficient or cost effective than
trading the underlying securities. A futures contract is an agreement to buy or
sell a security at a set price on a future date and is exchange traded. Upon
entering into a futures contract, each Portfolio is required to deposit either
cash or securities of up to 5% of the contract value as collateral ("initial
margin"). Subsequent payments ("variation margin") are made or received, daily,
by the Portfolios. The variation margin is equal to the daily change in the
contract value and is recorded to the
111
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FOR THE PERIOD ENDED JUNE 30, 2000 (UNAUDITED)
Portfolios as an unrealized gain or loss. The risks of entering into futures
contracts include the possibility that the change in the value of the contract
may not correlate with changes in the underlying securities and that the market
for the futures contract may be illiquid.
As of June 30, 2000, the Portfolios held the following futures contracts:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Market
Contracts Expiration Number of Value Unrealized
Purchased Date Contracts 06/30/00 Depreciation
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
S&P 500 Index Portfolio
S&P 500 Stock Index Contracts 9/15/00 18 $6,239,425 $(103,000)
------------------------------------------------------------------------------------------------
</TABLE>
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, 2000, gross unrealized gains and losses were as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
Portfolio Gains Losses Gain (Loss)
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
International Equity Portfolio $ 5,286,003 $ 1,972,845 $ 3,313,158
World Growth Stock Portfolio 31,907,246 10,843,696 21,063,550
Global Hard Assets Portfolio 706,790 612,622 94,168
Emerging Growth Portfolio 60,190,036 6,221,541 53,968,495
Capital Growth Portfolio 178,095,829 7,399,913 170,695,916
Small Company Portfolio 19,457,078 18,915,421 541,657
Growth Portfolio 13,644,664 716,727 12,927,937
S&P 500 Index Portfolio 9,610,200 9,311,776 298,424
Value Portfolio 6,778,624 7,014,574 (235,950)
Balanced Portfolio 6,580,533 1,250,360 5,330,173
High Yield Bond Portfolio 206,021 1,099,766 (893,745)
Money Market Portfolio 1,282 0 1,282
---------------------------------------------------------------------------------------
</TABLE>
At June 30, 2000, the International Equity and World Growth Stock Portfolios had
unrealized foreign currency gains of $6,644, and $23,164, respectively. The
Global Hard Assets, Emerging Growth, Balanced, and High Yield Bond Portfolios
had unrealized foreign currency losses of $21, $1,711, $19, and $101,
respectively.
At December 31, 1999, the following Portfolios had accumulated realized capital
losses, for Federal income tax purposes, which are available to be used to
offset future
112
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FOR THE PERIOD ENDED JUNE 30, 2000 (UNAUDITED)
realized capital gains: the Global Hard Assets Portfolio had $3,748,893 of which
$168,664 expires in 2007, $3,350,893 expires in 2006, and $229,336 expires in
2005; Small Company Portfolio had $3,929,985 which expires in 2007, High Yield
Bond Portfolio had $389,261 of which $261,114 expires in 2007 and $128,147
expires in 2006; Money Market Portfolio had $1,197 of which $339 expires in
2007, $400 expires in 2002, $391 expires in 2004, and $67 expires in 2005.
In addition, during the period from November 1, 1999 through December 31, 1999,
the International Equity and Emerging Growth Portfolios incurred foreign
currency losses of $26,119 and $36,711, respectively. The Global Hard Assets and
High Yield Bond Portfolios incurred capital losses of $8,393 and $29,028,
respectively. These losses are treated for Federal income tax purposes as if
they occurred on January 1, 2000. Accordingly, during 1999 these Portfolios may
have made distributions, as required by Internal Revenue Code Regulations, in
excess of amounts recognized for financial reporting purposes.
Purchases and sales of investment securities for the period ended June 30, 2000,
other than short-term obligations, were as follows:
--------------------------------------------------------------------
Cost of
Investment Proceeds from
Securities Investment
Portfolio Purchased Securities Sold
--------------------------------------------------------------------
International Equity Portfolio $ 27,715,189 $ 19,207,573
World Growth Stock Portfolio 45,566,936 45,115,609
Global Hard Assets Portfolio 3,020,760 2,691,557
Emerging Growth Portfolio 204,111,513 189,477,634
Capital Growth Portfolio 45,821,380 29,541,190
Small Company Portfolio 31,210,356 28,154,836
Growth Portfolio 119,468,970 98,941,018
S&P 500 Index Portfolio 176,141,469 3,058,892
Value Portfolio 28,354,149 26,134,763
Balanced Portfolio 21,263,191 19,949,759
High Yield Bond Portfolio 3,333,279 2,114,046
--------------------------------------------------------------------
NOTE D--INVESTMENT ADVISORY FEES AND OTHER AFFILIATED TRANSACTIONS
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; Barclays Global
113
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FOR THE PERIOD ENDED JUNE 30, 2000 (UNAUDITED)
Fund Advisors to provide investment advisory services for the S&P 500 Index
Portfolio; Credit Suisse Asset Management, LLC, to provide investment advisory
services for the Value 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
Portfolio 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%
S&P 500 Index Portfolio .24% .24% .24%
Value Portfolio .75% .70% .65%
Balanced Portfolio .75% .70% .65%
High Yield Bond Portfolio .75% .75% .75%
Money Market Portfolio .50% .45% .40%
----------------------------------------------------------------------------------------------
</TABLE>
In addition, JPIA has entered into an expense reimbursement plan with the S&P
500 Index Portfolio. Under the Plan, JPIA has agreed to maintain an expense cap
which limits the amount of expenses that can be borne by the Portfolio.
Accordingly, JPIA will reimburse the Portfolio to the extent that the
Portfolio's operating expenses (excluding interest, taxes, brokerage commissions
or extraordinary expenses) exceed 0.28% of the Portfolio's average daily net
assets.
NOTE E--SHAREHOLDERS' TRANSACTIONS
Following is a summary of transactions with shareholders for each Portfolio.
International Equity Portfolio
<TABLE>
<CAPTION>
For the Six Months Ended Year Ended
June 30, 2000 December 31, 1999
------------------------------------------------------------------
Shares Dollars Shares Dollars
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares issued 769,688 $ 11,578,276 1,292,588 $ 17,117,146
Shares issued as reinvestment
of dividends 190,037 2,889,915 4,687 56,828
Shares redeemed (176,066) (2,647,939) (446,527) (6,141,255)
-------- ------------ --------- ------------
Net increase 783,659 $ 11,820,252 850,748 $ 11,032,719
======== ============ ========= ============
</TABLE>
114
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FOR THE PERIOD ENDED JUNE 30, 2000 (UNAUDITED)
World Growth Stock Portfolio
<TABLE>
<CAPTION>
For the Six Months Ended Year Ended
June 30, 2000 December 31, 1999
------------------------------------------------------------------
Shares Dollars Shares Dollars
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares issued 172,683 $ 4,480,065 276,903 $ 6,365,605
Shares issued as reinvestment
of dividends 143,807 3,790,602 428,951 9,394,729
Shares redeemed (195,667) (5,053,873) (667,802) (15,400,467)
-------- ------------ -------- ------------
Net increase 120,823 $ 3,216,794 38,052 $ 359,867
======== ============ ======== ============
</TABLE>
Global Hard Assets Portfolio
<TABLE>
<CAPTION>
For the Six Months Ended Year Ended
June 30, 2000 December 31, 1999
---------------------------------------------------------------
Shares Dollars Shares Dollars
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares issued 315,500 $ 2,786,149 558,304 $ 4,852,391
Shares issued as reinvestment
of dividends 7,851 69,014 9,544 72,099
Shares redeemed (284,277) (2,530,658) (526,997) (4,457,961)
-------- ----------- -------- -----------
Net increase 39,074 $ 324,505 40,851 $ 466,529
======== =========== ======== ===========
</TABLE>
Emerging Growth Portfolio
<TABLE>
<CAPTION>
For the Six Months Ended Year Ended
June 30, 2000 December 31, 1999
------------------------------------------------------------------
Shares Dollars Shares Dollars
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares issued 642,556 $ 25,502,160 842,144 $ 22,789,922
Shares issued as reinvestment
of dividends 456,374 18,808,455 20,335 468,598
Shares redeemed (152,303) (5,861,399) (361,203) (9,106,230)
-------- ------------ -------- ------------
Net increase 946,627 $ 38,449,216 501,276 $ 14,152,290
======== ============ ======== ============
</TABLE>
Capital Growth Portfolio
<TABLE>
<CAPTION>
For the Six Months Ended Year Ended
June 30, 2000 December 31, 1999
------------------------------------------------------------------
Shares Dollars Shares Dollars
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares issued 705,645 $ 28,329,421 1,812,698 $ 55,642,674
Shares issued as reinvestment
of dividends 417,542 17,514,623 583,668 16,688,505
Shares redeemed (171,274) (6,820,469) (176,653) (5,433,744)
-------- ------------ --------- ------------
Net increase 951,913 $ 39,023,575 2,219,713 $ 66,897,435
======== ============ ========= ============
</TABLE>
115
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FOR THE PERIOD ENDED JUNE 30, 2000 (UNAUDITED)
Small Company Portfolio
<TABLE>
<CAPTION>
For the Six Months Ended Year Ended
June 30, 2000 December 31, 1999
---------------------------------------------------------------
Shares Dollars Shares Dollars
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares issued 292,111 $ 4,856,656 329,975 $ 4,975,909
Shares issued as reinvestment
of dividends 617,583 9,761,271
Shares redeemed (163,026) (2,867,481) (619,778) (9,407,422)
-------- ----------- -------- -----------
Net increase 129,085 $ 1,989,175 327,780 $ 5,329,758
======== =========== ======== ===========
</TABLE>
Growth Portfolio
<TABLE>
<CAPTION>
For the Six Months Ended Year Ended
June 30, 2000 December 31, 1999
------------------------------------------------------------------
Shares Dollars Shares Dollars
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares issued 1,197,366 $ 30,666,424 1,082,322 $ 17,287,033
Shares issued as reinvestment
of dividends 172,315 4,572,295 11,575 165,744
Shares redeemed (187,746) (4,523,206) (77,732) (1,124,994)
--------- ------------ --------- ------------
Net increase 1,181,935 $ 30,715,513 1,016,165 $ 16,327,783
========= ============ ========= ============
</TABLE>
S & P 500 Index Portfolio
For the Period from
May 1, 2000 through
June 30, 2000
------------------------------
Shares Dollars
Shares issued 18,256,042 $ 182,515,802
Shares issued as reinvestment
of dividends
Shares redeemed (281,969) (2,772,486)
---------- -------------
Net increase 17,974,073 $ 179,743,316
========== =============
Value Portfolio
<TABLE>
<CAPTION>
For the Six Months Ended Year Ended
June 30, 2000 December 31, 1999
------------------------------------------------------------------
Shares Dollars Shares Dollars
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares issued 481,588 $ 8,739,794 677,470 $ 13,575,173
Shares issued as reinvestment
of dividends 498,718 8,726,087 54,012 1,025,140
Shares redeemed (316,931) (5,699,211) (338,369) (6,772,616)
-------- ------------ -------- ------------
Net increase 663,375 $ 11,766,670 393,113 $ 7,827,697
======== ============ ======== ============
</TABLE>
116
--------------------------------------------------------------------------------
<PAGE>
JEFFERSON PILOT VARIABLE FUND, INC.
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FOR THE PERIOD ENDED JUNE 30, 2000 (UNAUDITED)
Balanced Portfolio
<TABLE>
<CAPTION>
For the Six Months Ended Year Ended
June 30, 2000 December 31, 1999
---------------------------------------------------------------
Shares Dollars Shares Dollars
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares issued 399,730 $ 5,912,215 730,355 $ 9,652,134
Shares issued as reinvestment
of dividends 273,188 4,076,035 299,519 3,800,882
Shares redeemed (90,803) (1,368,826) (300,362) (3,964,482)
------- ----------- -------- -----------
Net increase 582,115 $ 8,619,424 729,512 $ 9,488,534
======= =========== ======== ===========
</TABLE>
High Yield Bond Portfolio
<TABLE>
<CAPTION>
For the Six Months Ended Year Ended
June 30, 2000 December 31, 1999
---------------------------------------------------------------
Shares Dollars Shares Dollars
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares issued 230,503 $ 2,114,468 650,374 $ 6,381,383
Shares issued as reinvestment
of dividends 83,973 771,551 53,246 505,196
Shares redeemed (158,158) (1,448,873) (520,250) (5,118,177)
-------- ----------- -------- -----------
Net increase 156,318 $ 1,437,146 183,370 $ 1,768,402
======== =========== ======== ===========
</TABLE>
Money Market Portfolio
<TABLE>
<CAPTION>
For the Six Months Ended Year Ended
June 30, 2000 December 31, 1999
---------------------------------------------------------------
Shares Dollars Shares Dollars
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares issued 2,604,111 $ 27,937,242 4,619,214 $ 48,821,940
Shares issued as reinvestment
of dividends 139,702 1,459,257 79,554 825,203
Shares redeemed (3,224,290) (34,701,608) (3,698,386) (39,144,669)
---------- ------------ ---------- ------------
Net increase (decrease) (480,477) $ (5,305,109) 1,000,382 $ 10,502,474
========== ============ ========== ============
</TABLE>
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