Keyport Variable Investment Trust
Colonial-Keyport Growth and Income Fund
Colonial-Keyport Utilities Fund
Colonial-Keyport International Fund for Growth
Colonial-Keyport Strategic Income Fund
Colonial-Keyport U.S. Fund for Growth
Newport-Keyport Tiger Fund
Annual Report
December 31, 1995
<PAGE>
TABLE OF CONTENTS
President's Letter 1
Portfolio Manager's Discussion:
Colonial-Keyport Growth and Income Fund 3
Colonial-Keyport Utilities Fund 5
Colonial-Keyport International Fund for Growth 7
Colonial-Keyport Strategic Income Fund 9
Colonial-Keyport U.S. Fund for Growth 11
Newport-Keyport Tiger Fund 13
Report of Independent Accountants 15
Financial Statements:
Colonial-Keyport Growth and Income Fund 16
Colonial-Keyport Utilities Fund 22
Colonial-Keyport International Fund for Growth 27
Colonial-Keyport Strategic Income Fund 34
Colonial-Keyport U.S. Fund for Growth 40
Newport-Keyport Tiger Fund 46
Notes to Financial Statements 50
<PAGE>
PRESIDENT'S LETTER
Keyport Variable Investment Trust
Dear Fellow Contract Owner:
We are pleased to present this annual report for the Keyport Variable
Investment Trust -- Growth and Income Fund, Utilities Fund, International
Fund for Growth, Strategic Income Fund, U.S. Fund for Growth, and Newport
Tiger Fund.
What a Difference a Year Makes
A year ago, almost no one expected 1995 would turn into one of the biggest
runups in the history of the U.S. stock market. The Dow Jones Industrial
Average vaulted past 5,000 and the S & P 500 Index was up more than 30
percent for the year. And while the stock market rally attracted most of the
attention of investors during 1995, fixed income funds certainly weren't
wallflowers. Fueled largely by falling interest rates, bond funds roared back
in 1995, helping to make 1994's losses a distant memory. Indeed, fixed income
funds had one of their best years on record. At year end, the yield on the
benchmark 30-year Treasury bond hit 6 percent--compared with more than 8
percent at this time last year. Money market funds also fared well, as assets
silently swelled more than $133 billion in 1995 to total more than $771
billion, their highest level in 10 years and an increase of more than 18
percent over 1994.(1)
A Tough Act to Follow?
Given the seemingly picture-perfect economic backdrop--tumbling interest
rates, no recession in sight, a possible solution to the nagging budget
deficit and investors who keep pouring cash into mutual funds--a market
correction might seem unlikely. But as 1996 unfolds, predictions are flying
over whether the stock and bond market rallies can repeat themselves.
Opinions vary from the doomsayers who believe a major correction is
inevitable, to others who see 1995 as the start of a new economic era bound
to bring further record-breaking gains. We, however, don't predict either of
those extremes.
We think there is some truth in the cautionary notes being sounded. Most of
the positive economic developments already have been factored into the
market, making prices relatively expensive and leaving virtually no room for
error. Meanwhile, some of the forces that propelled the market skyward are
waning. Long-term interest rates, for example, surprised everyone by tumbling
2 percentage points in 1995, and while they may fall a bit more in 1996,
another such drop in the span of a year would be unprecedented. If anything
goes wrong, such as a surprising uptick in interest rates, the market could
be snagged by a long-overdue correction.
Our belief is that moderate economic growth, mild inflation and lower
interest rates could help the stock market hold 1995 gains and move upward in
1996, albeit not at the same pace as last year. Disappointing corporate
earnings or an unresolved budget bill could contribute to stock market
volatility early in the year. But if you can resist the temptation to flee
the stock market at the first sign of trouble, we think you can look forward
to a year of okay--but not blockbuster--returns. And while back-to-back boom
years in the fixed income markets are also rare, we believe there may still
be some steam left in the rally. Growing investor sentiment that the equity
market can't sustain its current level of growth, or a deficit-cutting budget
deal, for example, could pave the way for further bond market gains.
- ---------------------
(1) Source: Strategic Insight
1
<PAGE>
PRESIDENT'S LETTER
Keyport Variable Investment Trust
The Basics
While no one can predict what might happen to the markets in the future, we
believe investors should understand the factors that move the markets--not
just to profit from them, but to gain the patience to ride out short-term
volatility in their investments. As always, no matter what direction you
think the economy is heading, we think it's important to remember the basics.
Think long term and re-evaluate your investment portfolio from time to time
to make sure it continues to match your goals, risk tolerance and time
horizon.
As always, we thank you for investing in Keyport Variable Investment Trust,
and we look forward to serving your investment needs.
Sincerely,
/s/Richard R. Christensen
Richard R. Christensen
President
Keyport Variable Investment Trust
2
<PAGE>
PORTFOLIO MANAGER'S DISCUSSION
Keyport Variable Investment Trust Colonial-Keyport Growth and Income Fund
Dear Contract Owner:
Colonial-Keyport Growth & Income Fund seeks primarily income and capital
growth and, secondarily, capital preservation.
Fund Performance (as of December 31, 1995)
Inception Date 7/01/93
12-month total return, assuming reinvestment
of all distributions 30.03%
Net asset value per share on 12/31/94 $10.03
Net asset value per share on 12/31/95 $12.60
Portfolio Manager's Discussion
Daniel Rie is Senior Vice President of Colonial Management Associates, Inc.,
and Lead Portfolio Manager of Colonial-Keyport Growth and Income Fund. Dan
also directs our equity investment group. He has over 21 years of investment
experience.
Stock selection criteria takes advantage of market
Potential acquisitions for the portfolio's diverse group of holdings must
meet one of three value investment criteria: the stock's earnings yield must
equal or exceed the yield from long-term U.S. government securities; the
stock's dividend yield must be at least two thirds of yields available from
long-term U.S. government securities; or the stock's value must be greater
than its estimated book value. The first two requirements are directly tied
to long-term Treasury bond yields and, consequently, the decline in yields
during the fiscal year increased the pool of stocks available for investment
by your Fund.
To help us manage risk, we use a technique called benchmarking. We create a
benchmark portfolio of stocks by combining the actual holdings of other
growth and income funds. We use the benchmark to help us maintain a level of
risk equal to or lower than our competition, while using an internal stock
selection process to outperform the benchmark.
Fund performance vs. the S&P 500
For the year ended December 31, 1995, the Fund underperformed the Standard &
Poor's 500 Index. This is in line with expectations. The Fund is positioned
with a portion of its holdings in U.S. government bonds and foreign stocks.
This greater diversification can provide a cushion for the Fund when U.S.
markets are down. As a result, performance may not rise as dramatically as
U.S. stocks in an up market, such as the one we have seen over the Fund's
fiscal year.
U.S. and European economies are favorable
The U.S. economy was more vigorous during the last half of 1995 than in
either of the prior two quarters--industrial production increased at an
annual rate of 5.7%. We believe interest rates should remain low and
inflation will stay under control. Europe's equity markets have also
improved. The Bundesbank (Germany's central bank), which generally sets the
interest rate trend for Europe, appears reluctant to cut rates aggressively.
However, interest rates in many European countries have begun moving lower.
Weak dollar helps technology stocks
The dollar weakened versus most major currencies, which had a positive
impact on technology stocks. Many companies in this sector have significant
business dealings overseas. As the dollar weakened, prices for their products
became more competitive with foreign companies, reflected in increased profit
margins and market share. Our investments in technology stocks, including
Micron Technology and Motorola, helped the Fund take advantage of this
favorable trend. Although these stocks underperformed during the last
quarter, we believe that their values will continue to appreciate.
Financial stocks also contribute to performance
Financial stocks like First Interstate Bank provided attractive returns. We
took advantage of the increase that occurred in this stock's price when Wells
Fargo Bank announced its takeover bid--and our First Interstate investment
was sold at a profit.
Foreign investments decreased
Although foreign markets generally underperformed the U.S., some markets
posted relatively strong returns. We made only a slight reduction in foreign
investments at the end of the year. This maintained the diversity of the
portfolio.
Looking ahead
Although the economy should continue to grow, we believe inflation will
remain under control through the beginning of 1996. However, should
conditions change, we will make adjustments in the portfolio to take
advantage of any new opportunities that may arise in the future.
3
<PAGE>
PORTFOLIO MANAGER'S DISCUSSION
Keyport Variable Investment Trust Colonial-Keyport Growth and Income Fund
[typeset representation of line chart]
Colonial-Keyport Growth & Income Fund and S&P 500 Index
Performance of a Hypothetical $10,000 Investment July 1, 1993 to December 31,
1995
Average Annual Total Return at December 31, 1995
Since Inception 12 Month
12.94% 30.03%
Colonial-Keyport S&P
Growth & Income 500
7/1/93 10000 9959
9/30/93 10540 10257
12/31/93 10501 10495
3/31/94 10339 10097
6/30/94 10116 10140
9/30/94 10582 10634
12/31/94 10422 10633
3/31/95 11180 11667
6/30/95 12115 12779
9/30/95 12874 13794
12/31/95 13562 14624
Performance numbers are net of Fund expenses, but do not include insurance
charges imposed by your insurance company's separate accounts or certain
expenses reimbursed by the Manager. If performance information included the
effect of these additional amounts, returns would be lower.
[end line chart]
4
<PAGE>
PORTFOLIO MANAGER'S DISCUSSION
Keyport Variable Investment Trust Colonial-Keyport Utilities Fund
Dear Contract Owner:
Colonial-Keyport Utilities Fund has two straightforward goals: primarily
current income, and secondarily, long-term growth. The Fund pursues its
objective by investing in common and preferred stocks issued by domestic
utility companies.
Fund Performance (as of December 31, 1995)
Inception Date 7/01/93
12-month total return, assuming reinvestment
of all distributions 35.15%
Net asset value per share on 12/31/94 $8.11
Net asset value per share on 12/31/95 $10.50
Portfolio Manager's Discussion
John E. Lennon is a Vice President of Colonial Management Associates, Inc.
and is the Lead Portfolio Manager of the Colonial-Keyport Utilities Fund.
How did utilities perform during 1995?
The utilities market rebounded strongly in 1995 from a disappointing 1994.
Telephone, electric, and natural gas stocks all contributed to this
performance, with telephone stocks doing especially well.
What factors contributed to the strong performance of utilities?
Two factors predominated. One was a significant decline in interest rates.
The other was a desire by some managers to become more defensively invested
at certain times during the year. During these periods, assets were shifted
into high-yielding, low volatility stocks, such as utilities. Electric
utility stocks also benefited from a reduced level of concern about the
impact of competition in the electric market. In addition, the market reacted
favorably to proposed Congressional legislation for deregulating the local
and long distance telephone industries. Finally, a weather-induced increase
in demand and prices helped natural gas stocks.
What was your investment strategy during the period?
We increased investments in the natural gas and telephone sectors to improve
our total return potential.
What is your outlook for the utilities market?
We see room for further gains in the market. If economic growth remains
moderate and inflation stays under control, interest rates may continue to
decline in the months ahead. This would have a favorable impact on utility
stock prices. However, after the strong recovery in 1995, the utilities
market will likely produce less dramatic returns in 1996.
How did the Fund's performance compare to the Dow Jones Utilities Average and
the Standard & Poor's 500 Index?
During the period, the Fund outperformed the Dow Jones Utilities Average and
underperformed the Standard & Poor's 500 Index, two broad based, unmanaged
indexes that track the performance of utility stocks and U.S. stocks,
respectively. The total return for the Fund was 35.15%, while the Dow Jones
Utilities Average posted a return of 31.98% and the return from the S&P 500
Index was 37.54%. Almost all U.S. stocks benefited from increased corporate
earnings. In the case of the Dow Jones Utilities Average, which the Fund
outperformed, the Fund benefited from its ability to invest in a broader
range of utility stocks than the Average. The Fund invests in telephone,
electric, and natural gas stocks, while the Average tracks only the latter
two sectors. In the case of the S&P 500 Index, certain sectors, including
technology stocks, did especially well. This explains why the Fund
underperformed the S&P 500, which tracks the broader stock market.
5
<PAGE>
PORTFOLIO MANAGER'S DISCUSSION
Keyport Variable Investment Trust Colonial-Keyport Utilities Fund
[typeset representation of line chart]
Colonial-Keyport Utilities Fund, Dow Jones Utility Average and S&P 500 Index
Performance of a Hypothetical $10,000 Investment July 1, 1993 to December 31,
1995
Average Annual Total Return at December 31, 1995
Since Inception 12 Month
7.27% 35.15%
Colonial-Keyport S&P Dow Jones
Utilities 500 Utility Avg.
7/1/93 10000 10212 9959
9/30/93 10260 10204 10257
12/31/93 9830 9367 10495
3/31/94 8954 8018 10097
6/30/94 8577 7237 10140
9/30/94 8699 7412 10634
12/31/94 8820 7415 10633
3/31/95 9364 7665 11667
6/30/95 10060 8255 12779
9/30/95 10930 8753 13794
12/31/95 11921 9207 14624
Performance numbers are net of Fund expenses, but do not include insurance
charges imposed by your insurance company's separate accounts or certain
expenses reimbursed by the Manager. If performance information included the
effect of these additional amounts, returns would be lower.
{end line chart]
6
<PAGE>
PORTFOLIO MANAGER'S DISCUSSION
Keyport Variable Investment Trust Colonial-Keyport International Fund for
Growth
Dear Contract Owner:
Colonial-Keyport International Fund for Growth seeks long-term growth by
investing primarily in non-U.S. equities.
Fund Performance (as of December 31, 1995)
Inception Date 5/02/94
12-month total return, assuming reinvestment of
all distributions 5.85%
Net asset value per share on 12/31/94 $1.88
Net asset value per share on 12/31/95 $1.97
Portfolio Manager's Discussion
The following commentary was made by Andrew Fleming, the Portfolio Manager
of Colonial-Keyport International Fund for Growth for the period of January
1, 1995 to December 31, 1995. Mr. Fleming has been affiliated with Gartmore
Capital Management, Ltd., the Fund's sub-adviser since 1984.
Performance
During the period, the Fund significantly underperformed the Morgan Stanley
Capital International EAFE (GDP) Index, primarily due to its reliance on
currency hedging. However, conditions may improve in the months ahead. Over
the near term, some international economies may experience volatility. Some
of the world's emerging markets may be a source of interesting investment
opportunities. Gartmore Capital Management believes that as investors
gradually refocus on emerging markets, stock prices should improve.
Questions remain about the Japanese economy
During the Fund's fiscal year, the strength of the yen relative to the U.S.
dollar had a negative impact on corporate profits, making foreign products
more attractively priced than their Japanese counterparts. To stimulate the
economy, the Bank of Japan, the nation's central bank, lowered the official
interest rate during the year, with rates reaching an all time low of 0.5% in
September.
In continental Europe, consumer, business confidence is low
Western European economies have been hurt by low levels of consumer
confidence. It also appears that business confidence has deteriorated; there
has been a significant decline in spending on capital improvements. The
Bundesbank (Germany's central bank), which generally sets the interest rate
trend for Europe, moved German rates lower in March, but since then has shown
no inclination to make further cuts. In France, which represents the third
largest country position in the portfolio, interest rates have begun to
decline. However, Gartmore Capital Management believes they are not low
enough to provide the stimulus needed to produce the growth required by
President Chirac's budget plan.
United Kingdom, economy slowing, still sets pace for Europe
Economic growth in the United Kingdom has slowed noticeably, but the economy
does not appear to be sliding into a recession. Two of the signs of slower
growth were the decline in manufacturing output and retail sales in the last
quarter of the year. As a consequence, the Bank of England is no longer
advocating higher interest rates.
Returns mixed in emerging markets
While some of the "tigers" of the Far East, including Hong Kong, South
Korea, and Taiwan, produced positive returns, other countries in the region
had to contend with difficult conditions. Inflation has become a concern in
Thailand, the Philippines, and Malaysia, where it is being driven by strong
economic growth and higher wages and food prices. In general, corporate
profits have continued to grow throughout the region.
Looking Ahead
Effective January 1, 1996, Colonial Management Associates will replace
Gartmore Capital Management. The Colonial-Keyport International Fund for
Growth will be managed by Bruno Bertocci and David P. Harris of Stein Roe &
Farnham, a direct subsidiary of Liberty Financial Companies, Inc. Colonial is
enthusiastic about the prospects this team offers, and believe that their
strategy is closely in line with Colonial's overall investment philosophy. We
are confident this change will benefit both current and new investors.
7
<PAGE>
PORTFOLIO MANAGER'S DISCUSSION
Keyport Variable Investment Trust Colonial-Keyport International Fund for
Growth
[typeset representation of line chart]
Colonial-Keyport International Fund for Growth and the Morgan Stanley Europe
Australia Far East Index
Performance of a Hypothetical $10,000 Investment May 2, 1994 to December 31,
1995
Average Annual Total Return at December 31, 1995
Since Inception 12 Month
(0.3%) 5.85%
Colonial-Keyport International MSCI
Fund for Growth EAFE
5/2/94 10000 10000
6/30/94 9700 9766
9/30/94 9950 9804
12/31/94 9400 9725
3/31/95 8850 9894
6/30/95 9050 10122
9/30/95 9700 10456
12/31/95 9950 10811
Performance numbers are net of Fund expenses, but do not include insurance
charges imposed by your insurance company's separate accounts or certain
expenses reimbursed by the Manager. If performance information included the
effect of these additional amounts, returns would be lower.
[end line chart]
8
<PAGE>
PORTFOLIO MANAGER'S DISCUSSION
Keyport Variable Investment Trust Colonial-Keyport Strategic Income Fund
Dear Contract Holder:
Colonial-Keyport Strategic Income Fund seeks as high a level of current
income and total return as is consistent with prudent risk, by diversifying
investments in U.S. and foreign government and lower rated corporate debt
securities.
Fund Performance (as of December 31, 1995)
Inception Date 7/05/94
12-month total return, assuming reinvestment
of all distributions 18.30%
Net asset value per share on 12/31/94 $9.79
Net asset value per share on 12/31/95 $10.99
Portfolio Manager's Discussion
Carl Ericson is Vice President of Colonial Management Associates, Inc. and
Portfolio Manager of the Colonial-Keyport Strategic Income Fund.
What were the prevailing economic conditions during the Fund's fiscal year?
Both the stock and bond markets were bolstered by favorable economic
conditions over the past 12 months. Lowered interest rates and moderate U.S.
economic growth set the stage for an extended bond rally over the year.
Because non-investment grade and foreign bonds tend to lag the U.S.
Government market, we experienced strong performance from those sectors later
in the period.
During the period 1/1/95 to 12/31/95, how has the Fund performed?
The Fund had a total return of 18.30% compared to 18.02% for the average
income fund in the General Bond category, tracked by Lipper Analytical
Services, Inc., an independent mutual fund rating service.
How did the Fund perform relative to the Lehman Brothers Mutual Fund General
Bond Index and why?
During the period, the Fund slightly underperformed the Lehman Mutual Fund
General Bond Index, which tracks the performance of general income funds. The
total return for the Fund was 18.30%, while the Lehman Mutual Fund General
Bond Index posted a return of 19.25%. Since inception, Colonial-Keyport
Strategic Income Fund slightly outperformed the Index by virtue of its
multi-market diversification, whereas the Index represents only U.S. issues.
What strategies helped the Fund's performance during the period?
Early in 1995 we were able to participate in the U.S. bond rally via the
Treasury market. Mid-year we dropped our cash position to 3% from 13% and
increased our exposure to foreign bonds to 30% from 26%. Because foreign
markets tend to lag the U.S. markets, we were able to capture some gains
later in the year by virtue of this move. That is the advantage of the
flexibility offered by a multi-market diversified fund like Colonial-Keyport
Strategic Income Fund--when a sector slides a bit, other sectors of the Fund
may pick up in its place.
Another positive trend that emerged this year was that a number of corporate
bond issuers bought back bonds (called in) at a premium. The economy and
lower interest rates have had a positive influence on cash flows of these
companies, enabling them to reduce their debt. This trend played a role in
increasing the Fund's net asset value during the year.
What is your outlook for the coming year?
While we continue to have a positive outlook for the U.S. bond market, it is
currently the smallest of the three sectors in which the Fund invests. The
Fund currently has 26% of its assets invested in U.S. Government obligations.
Moving forward, we are optimistic about the potential in high yield corporate
and foreign bond markets.
9
<PAGE>
PORTFOLIO MANAGER'S DISCUSSION
Keyport Variable Investment Trust Colonial-Keyport Strategic Income Fund
[typeset representation of line chart]
Colonial-Keyport Strategic Income Fund and the Lehman Brothers Mutual Fund
General Bond Index
Performance of a Hypothetical $10,000 Investment July 5, 1994 to December 31,
1995
Average Annual Total Return at December 31, 1995
Since Inception 12 Month
12.73% 18.30%
Colonial-Keyport Lehman Brothers Mutual Fund
Strategic Income General Bond Index
7/31/94 10000 10000
9/30/94 10010 9852
12/31/94 10029 9888
3/31/95 10593 10381
6/30/95 11138 11055
9/30/95 11433 11266
12/31/95 11865 11792
Performance numbers are net of Fund expenses, but do not include insurance
charges imposed by your insurance company's separate accounts or certain
expenses reimbursed by the Manager. If performance information included the
effect of these additional amounts, returns would be lower.
[end line chart]
10
<PAGE>
PORTFOLIO MANAGER'S DISCUSSION
Keyport Variable Investment Trust Colonial-Keyport U.S. Fund for Growth
Dear Contract Owner:
Colonial-Keyport U.S. Fund for Growth seeks growth over time exceeding the
Standard & Poor's 500 Index performance.
Fund Performance (as of December 31, 1995)
Inception Date 7/05/94
12-month total return, assuming reinvestment
of all distributions 29.70%
Net asset value per share on 12/31/94 $10.27
Net asset value per share on 12/31/95 $12.36
Portfolio Manager's Discussion
Colonial Keyport U.S. Fund for Growth's portfolio is sub-advised by State
Street Global Advisors, a division of State Street Bank and Trust Company
(Sub-Adviser). Investment decisions for the Fund are made by the portfolio
team of the Sub-Adviser.
How did the Fund perform during the last one year period?
Our Fund performed well during the period, achieving a total return of
29.70%. It did, however, underperform the S&P 500, which had a total return
of 37.54% for the one year period. Historically, the stock market has moved
in cycles--sometimes favoring growth-oriented stocks and other times favoring
value-oriented stocks. Our strategy has remained consistent--we invest in
both growth and value stocks to take advantage of market cycles and help
control volatility.
We focus on the underlying value and growth potential of a stock when making
investment decisions. We believe that owning stocks with strong underlying
value and growth potential has positioned the Fund to take advantage of
opportunities during the new year.
How did your strategy affect the Fund's performance?
Generally rising U.S. stock market prices benefited most U.S. stocks.
Certain sectors, including technology, finance, and pharmaceuticals,
performed particularly well. Managers who made large bets in these sectors
were well rewarded for their efforts. Our strategy remains sector neutral.
Therefore, we were not heavily weighted in any one sector. However, the
strategy did isolate the Fund from some fluctuating prices, especially in the
technology sector.
How does the Fund's strategy help reduce volatility in the portfolio?
Colonial-Keyport U.S. Fund for Growth's disciplined sector allocation
strategy can stabilize the Fund's price in times of economic and market
uncertainty. The Fund's investments are designed to mirror the market sector
weightings represented in the S&P 500 Index.
What is your outlook for the Fund's next fiscal year?
The U.S. stock market continues to look strong for 1996. We will be
monitoring several issues for their impact on market performance including,
the Federal Reserve Board's position on interest rates and the budget battle
on Capitol Hill.
11
<PAGE>
PORTFOLIO MANAGER'S DISCUSSION
Keyport Variable Investment Trust Colonial-Keyport U.S. Fund for Growth
[typeset representation of line chart]
Colonial-Keyport U.S. Fund for Growth and the S&P 500 Index
Performance of a Hypothetical $10,000 Investment July 5, 1994 to December 31,
1995
Average Annual Total Return at December 31, 1995
Since Inception 12 Month
22.50% 29.70%
Colonial-Keyport U.S. S&P
Fund for Growth 500
7/31/94 10000 10000
9/30/94 10195 10154
12/31/94 10175 10153
3/31/95 11136 11140
6/30/95 12028 12202
9/30/95 12810 13171
12/31/95 13197 13964
Performance numbers are net of Fund expenses, but do not include insurance
charges imposed by your insurance company's separate accounts or certain
expenses reimbursed by the Manager. If performance information included the
effect of these additional amounts, returns would be lower.
[end line chart]
12
<PAGE>
PORTFOLIO MANAGER'S DISCUSSION
Keyport Variable Investment Trust Newport-Keyport Tiger Fund
Dear Contract Owner:
Newport-Keyport Tiger Fund seeks capital appreciation by investing primarily
in equity securities of companies in the nine "Tigers" of Asia (China, Hong
Kong, Indonesia, South Korea, Malaysia, the Philippines, Singapore, Taiwan
and Thailand). While these markets are subject to risks not associated with
more developed countries, Fund management has more than 25 years of
investment experience in the region, and is a leader in Asian investing.
Fund Performance (as of December 31, 1995)
Inception Date 5/01/95
Cumulative total return since inception,
assuming reinvestment of all distributions 15.00%
Net asset value per share on 5/01/95 $2.00
Net asset value per share on 12/31/95 $2.28
Portfolio Manager's Discussion
Jack Mussey is President and Chief Executive Officer of Newport Fund
Management and Portfolio Co-Manager of Newport-Keyport Tiger Fund. Tim Tuttle
is Managing Director of Newport Fund Management and Portfolio Co-Manager of
Newport-Keyport Tiger Fund.
Fund takes advantage of most attractive Tigers
During the year, investments were focused on six of the nine countries in
which the Fund can invest. The Fund gained 15.0%, which is a significant
premium over the Morgan Stanley Capital International EAFE (GDP) Index, which
was up 11.16%. We attribute this superior performance to our conservative
large-cap approach and our significant overweighting in Hong Kong. Despite
short-term fluctuations that may occur, management believes the region offers
great potential over the long term. Investments in Hong Kong, Singapore,
Malaysia and Thailand received particular emphasis.
The Hong Kong market which represents 46.9% of the Fund's portfolio rose in
1995 as some managers began anticipating the benefits of falling U.S.
interest rates and an improving political and economic environment in China.
With lower interest rates, the outlook for a rebound in Hong Kong's
residential property prices in 1996 is good. This should have a positive
effect on consumer confidence and spending. China appears to have
successfully engineered a slowdown in their overheated economy. Some easing
of monetary policy in China is expected which should benefit Hong Kong
companies doing business in China as well as increase trade flows through
Hong Kong.
Politics in China appear more stable with Jiang Zemin solidifying his power.
Fears of Hong Kong's transition to China in 1997 are turning to recognition
of the immense opportunity Hong Kong will have as the financial and trade
center for the world's fastest growing economy. Although Singapore rose in
1995, its performance does not adequately reflect the exemplary economic
fundamentals this "Safe-Haven" of Asia produces: a huge current account
surplus and a strong currency. Malaysia and Thailand suffered from growing
pains in 1995 producing deteriorating current accounts. To slow these
economies to more sustainable growth rates, the authorities raised interest
rates which temporarily dampened their stock markets.
Looking ahead
We are optimistic that the high quality large-cap growth businesses favored
for investment in the Fund represent good value at current levels. Because
the Tigers have an economic environment that is growing 2 to 3 times faster
than the U.S., Europe or Japan, we could expect superior performance in the
years ahead.
13
<PAGE>
PORTFOLIO MANAGER'S DISCUSSION
Keyport Variable Investment Trust Newport-Keyport Tiger Fund
[typeset representation of line chart]
Newport-Keyport Tiger Fund and the Morgan Stanley EAFE GDP
Performance of a Hypothetical $10,000 Investment May 1, 1995 to December 31,
1995
Average Annual Total Return at December 31, 1995
Since Inception
15.00%
Newport-Keyport MSCI EAFE
Tiger Fund GDP
5/1/95 10000 10000
6/30/95 10900 9707
8/31/95 10850 9918
10/31/95 11000 9840
12/31/95 11500 10522
Performance numbers are net of Fund expenses, but do not include insurance
charges imposed by your insurance company's separate accounts or certain
expenses reimbursed by the Manager. If performance information included the
effect of these additional amounts, returns would be lower.
[end line chart]
14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of
Keyport Variable Investment Trust
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of each of the six
series (Colonial-Keyport Growth and Income Fund, Colonial-Keyport Utilities
Fund, Colonial-Keyport International Fund for Growth, Colonial-Keyport
Strategic Income Fund, Colonial-Keyport U.S. Fund for Growth and
Newport-Keyport Tiger Fund (commencement of operations May 1, 1995)),
constituting Keyport Variable Investment Trust (the "Trust"), at December 31,
1995, the results of their operations, the changes in their net assets and
the financial highlights for the periods indicated, in conformity with
generally accepted accounting principles. These financial statements and the
financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Trust's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1995 by correspondence with the
custodian and brokers, and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable
basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
February 9, 1996
15
<PAGE>
SCHEDULE OF INVESTMENTS
Keyport Variable Investment Trust Colonial-Keyport Growth and Income Fund /
December 31, 1995
Country
Abbrev. Shares Value
------ ----- ----------
COMMON STOCKS--(86.0%)
Construction--(0.4%)
Building Construction--(0.3%)
Koninklijke Volker Stevin NV Ne 3,000 $ 180,970
--------
Special Trade Contractors--(0.1%)
Ericsson Spa It 3,000 37,783
--------
Finance, Insurance & Real Estate--(14.8%)
Depository Institutions--(2.5%)
Bank of Montreal Ca 17,300 393,254
Den Danske Bank No 3,000 206,413
Jyske Bank No 3,000 204,797
National Australia Bank Ltd. Au 38,800 348,706
Toronto Dominion Bank Ca 34,100 600,110
--------
1,753,280
--------
Insurance Carriers--(8.8%)
AFLAC, Inc. 5,900 255,912
Allstate Corp. 9,800 403,025
American Bankers Insurance Group, Inc. 22,700 885,300
CIGNA Corp. 18,500 1,910,125
CMAC Investment Corp. 1,700 74,800
Mercury General Corp. 11,000 525,250
Old Republic International Corp. 33,000 1,171,500
Reinsurance Group of America 1,500 54,938
ReliaStar Financial Corp. 14,200 630,125
Safeco Corp. 10,600 365,700
--------
6,276,675
--------
Security Brokers & Dealers--(3.5%)
A.G. Edwards, Inc. 62,000 1,480,250
Alex Brown, Inc. 12,000 504,000
John Nuveen & Co., Inc. 9,000 222,750
Quick & Reilly Group, Inc. 13,800 282,900
--------
2,489,900
--------
Manufacturing--(49.4%)
Apparel--(0.2%)
Gamma Holding NV Ne 3,000 136,194
--------
Chemicals--(9.0%)
Akzo Nobel NV Ne 14,074 816,292
ARCO Chemical Co. 16,400 797,450
Norsk Hydro A.S. No 7,100 297,313
Pharmacia & Upjohn, Inc. 43,355 1,680,006
Rhone-Poulenc Rorer, Inc. 24,700 1,315,275
Union Carbide Corp. 28,000 1,050,000
Wellman, Inc. 20,500 466,375
--------
6,422,711
--------
Electronic & Electrical Equipment--(1.2%)
Alliance Semiconductor Corp. (a) 2,500 $ 29,062
Komag Inc. (a) 6,400 295,200
National Semiconductor Corp. (a) 2,200 48,950
Texas Instruments, Inc. 4,100 211,150
Varian Associates, Inc. 6,000 286,500
--------
870,862
--------
Fabricated Metal--(1.8%)
Ball Corp. 8,500 233,750
Harsco Corp. 17,500 1,017,187
--------
1,250,937
--------
Food & Kindred Products--(3.2%)
Archer Daniels Midland Co. 37,115 668,070
IBP, Inc. 31,400 1,585,700
--------
2,253,770
--------
Furniture & Fixtures--(0.3%)
Johnson Controls, Inc. 3,000 206,250
--------
Lumber & Wood Products--(0.3%)
Weyerhaeuser 4,500 194,625
--------
Machinery & Computer Equipment--(6.8%)
Harris Computer Systems Corp. (a) 275 3,712
International Business Machines Corp. 5,000 458,750
Seagate Technology, Inc. (a) 40,200 1,909,500
Sun Microsystems, Inc. (a) 47,400 2,162,625
Tecumseh Products Co., Class A 6,100 315,675
--------
4,850,262
--------
Measuring & Analyzing Instruments--(1.0%)
Becton Dickinson & Co. 4,100 307,500
Loral Corp. 5,400 191,025
Raytheon Co. 4,600 217,350
--------
715,875
--------
Miscellaneous Manufacturing--(1.2%)
Callaway Golf Co. 36,200 819,025
--------
Paper & Paper Mills--(0.4%)
Westvaco Corp. 10,600 294,150
--------
Petroleum Refining--(2.5%)
Exxon Corp. 4,400 352,550
Imperial Oil Ltd. 6,400 231,200
Mobil Corp. 8,100 907,200
Sun Co., Inc. 11,700 320,288
--------
1,811,238
--------
See Notes to Investment Portfolio.
16
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
Keyport Variable Investment Trust Colonial-Keyport Growth and Income Fund /
December 31, 1995
Country
Abbrev. Shares Value
------ ----- ----------
Primary Metal--(5.5%)
Asarco, Inc. 29,700 $ 950,400
Carpenter Technology Corp. 7,800 320,775
Magma Copper Co., Class B 72,800 2,029,300
Texas Industries, Inc. 11,100 588,300
--------
3,888,775
--------
Primary Smelting--(1.5%)
Phelps Dodge Corp. 17,400 1,083,150
--------
Printing & Publishing--(1.0%)
Moore Corp. Ltd 8,200 152,725
New York Times Co., Class A 15,800 468,075
Standard Register Co. 2,900 58,363
--------
679,163
--------
Rubber & Plastic--(2.0%)
Goodyear Tire & Rubber Co. 31,300 1,420,237
--------
Stone, Clay, Glass & Concrete--(0.7%)
Global Industrial Technologies, Inc. (a) 27,500 519,062
--------
Textile Mill Products--(1.7%)
Springs Industries 29,000 1,199,875
--------
Tobacco Products--(3.1%)
American Brands, Inc. 41,100 1,834,087
UST Inc. 11,100 370,463
--------
2,204,550
--------
Transportation Equipment--(6.0%)
Equipements et Composants pour
l'Industrie Automobile Fr 2,050 216,427
General Dynamics Corp. 7,200 425,700
McDonnell Douglas Corp. 13,700 1,260,400
Strattec Security Corp. (a) 120 2,160
Textron, Inc. 23,600 1,593,000
Thiokol Corp. 15,900 538,613
TRW, Inc. 3,200 248,000
--------
4,284,300
--------
Mining & Energy--(0.8%)
Metal Mining
Cleveland-Cliffs, Inc. 6,700 274,700
Cyprus Amax Minerals Co. 10,500 274,313
--------
549,013
--------
Retail Trade--(3.9%)
Apparel & Accessory Stores--(0.4%)
Koninklijke Bijenkorf Beheer Ne 3,000 197,761
Macintosh NV Ne 3,000 66,791
--------
264,552
--------
Food Stores--(0.1%)
Weis Markets, Inc. 3,300 93,225
--------
General Merchandise Stores--(2.9%)
Bon-Ton Stores, Inc. (a) 6,500 $ 32,500
Dillard Department Stores, Inc. Class A 22,700 646,950
Mercantile Stores Co., Inc. 10,600 490,250
Waban, Inc. (a) 47,600 892,500
--------
2,062,200
--------
Miscellaneous Retail--(0.5%)
Walgreen Co. 12,200 364,475
--------
Services--(0.8%)
Amusement & Recreation--(0.2%)
Grand Casinos, Inc. (a) 4,950 115,087
--------
Engineering, Accounting, Research &
Management--(0.4%)
International-Muller NV Ne 4,600 317,251
--------
Health Services--(0.2%)
Sun Healthcare Group Inc. (a) 11,500 155,250
--------
Transportation, Communication, Electric, Gas & Sanitary
Services--(14.7%)
Communications--(3.3%)
Ameritech Corp. 19,700 1,162,300
BellSouth Corp. 9,000 391,500
Frontier Corp. 26,900 807,000
--------
2,360,800
--------
Electric, Gas & Sanitary Services--(0.9%)
Gas y Electricidad SA Sp 4,550 253,847
Teco Energy, Inc. 14,300 366,438
--------
620,285
--------
Electric Services--(4.2%)
Boston Edison Co. 24,500 722,750
Detroit Edison Co. 3,100 106,950
Houston Industries, Inc. 14,200 344,350
Portland General Corp. 34,800 1,013,550
Unicom Corp. 23,900 782,725
--------
2,970,325
--------
Gas Services--(2.0%)
Brooklyn Union Gas Co. 10,600 310,050
Consolidated Natural Gas Co. 7,900 358,463
National Fuel Gas Co. 10,700 359,788
People's Energy Corp. 11,800 374,650
--------
1,402,951
--------
Railroad--(1.8%)
Burlington Northern Santa Fe Corp. 4,400 343,200
Conrail, Inc. 13,800 966,000
--------
1,309,200
--------
See Notes to Investment Portfolio.
17
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
Keyport Variable Investment Trust Colonial-Keyport Growth and Income Fund /
December 31, 1995
Country
Abbrev. Shares Value
------ ----- ----------
Sanitary Services--(1.5%)
Northumbrian Water Group PLC UK 30,600 $ 557,572
Severn Trent Water PLC UK 25,000 266,535
United Utilities PLC UK 25,100 239,771
--------
1,063,878
--------
Water Transportation--(1.0%)
American Presidents Co. 32,400 745,200
--------
Wholesale Trade--(1.2%)
Durable Goods--(0.8%)
Beers NV Ne 1,447 204,272
Marshall Industries (a) 10,300 330,888
--------
535,160
--------
Nondurable Goods--(0.4%)
International Multifoods Corp. 15,300 307,912
--------
Total Common Stocks (Cost $49,461,244) 61,080,383
--------
Par
---------
U.S. GOVERNMENT & AGENCY OBLIGATIONS--(7.6%)
U.S. Government Agencies--(4.8%)
Federal National Mortgage
Association, 6.500%
maturities ranging from
8/01/08 - 4/01/09 $3,408,295 3,425,336
--------
U.S. Government Bonds--(2.8%)
U.S. Treasury Notes, 7.875%
04/15/98 1,895,000 2,001,007
--------
Total U.S. Government & Agency Obligations
(Cost $5,409,427) 5,426,343
--------
Par Value
--------- ----------
Total Investments--(93.6%)
(Cost $54,870,671)(b) $66,506,726
--------
SHORT-TERM OBLIGATIONS--(6.1%)
Repurchase agreement with
Bankers Trust Securities
Corp., dated 12/29/95, due
01/02/96 at 5.700%,
collateralized by U.S.
Treasury notes with various
maturities to 2000, market
value $2,994,841 (repurchase
proceeds $2,933,857) $2,932,000 2,932,000
Repurchase agreement with Chase
Securities, Inc., dated
12/29/95, due 01/02/96 at
5.500%, collateralized by a
U.S. Treasury note maturing in
1996, market value $1,478,617
(repurchase proceeds
$1,446,884) 1,446,000 1,446,000
-----------
Total Short-Term Obligations 4,378,000
-----------
Other Assets and Liabilities--Net--(0.3%) 185,230
-----------
Net Assets--(100%) $71,069,956
===========
Notes to investment portfolio:
(a) Non-income producing.
(b) The cost for federal income tax purposes is identical. Gross unrealized
appreciation and depreciation at December 31, 1995 is as follows:
Gross unrealized appreciation $12,767,430
Gross unrealized depreciation (1,131,375)
----------
Net unrealized appreciation $11,636,055
==========
Summary of Securities by Country
% of Total
Country Securities
Country Abbrev. Value at Value
------------------ ------ ---------- ----------
United States $60,964,667 91.7%
Netherlands Ne 1,919,531 2.9
United Kingdom UK 1,063,878 1.6
Canada Ca 993,364 1.5
Norway No 708,523 1.1
Australia Au 348,706 0.5
Spain Sp 253,847 0.4
France Fr 216,427 0.3
Italy It 37,783 0.0
---------- ----------
$66,506,726 100.0%
========== ==========
Certain securities are listed by country of underlying exposure
but may trade predominantly on other exchanges.
See Notes to Financial Statements.
18
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
Keyport Variable Investment Trust Colonial-Keyport Growth and Income Fund /
December 31, 1995
<TABLE>
<S> <C>
Assets:
Investments, at market value (Identified cost $54,870,671) $66,506,726
Short-term obligations 4,378,000
Cash (including foreign currencies) 682
Receivable for fund shares sold 100,319
Dividends and interest receivable 192,972
Unamortized organization expenses 13,416
Other assets 6,889
----------
Total assets 71,199,004
----------
Liabilities:
Payable for fund shares repurchased 61,373
Management fee payable 38,693
Accrued expenses payable 28,982
----------
Total liabilities 129,048
----------
Net assets $71,069,956
==========
Net assets represented by:
Paid-in capital $59,353,966
Accumulated undistributed net investment income 83,580
Accumulated net realized losses on investments and foreign currency
transactions (3,779)
Net unrealized appreciation on investments and foreign currency transactions 11,636,189
----------
Total net assets applicable to shares of beneficial interest outstanding $71,069,956
==========
Shares of beneficial interest outstanding 5,639,133
==========
Net asset value per share $12.60
==========
</TABLE>
STATEMENT OF OPERATIONS
For the Year ended December 31, 1995
<TABLE>
<S> <C>
Investment income:
Dividends (net of nonrebatable foreign taxes withheld at source of $31,095) $ 1,314,881
Interest income 650,795
---------
Total investment income 1,965,676
---------
Expenses:
Management fee 384,179
Bookkeeping fee 30,524
Transfer agent fee 7,500
Audit fee 20,000
Printing expense 6,032
Trustees' expense 7,195
Custodian fee 9,662
Legal fee 4,360
Amortization of organization expense 5,369
Miscellaneous expense 6,654
---------
Total expenses 481,475
---------
Net investment income 1,484,201
Realized and unrealized gains on investments and foreign currency transactions:
Net realized gains on investments 1,935,503
Net realized gains on foreign currency transactions 3,868
Change in unrealized appreciation on investments and foreign currency
transactions 11,876,516
---------
Net increase in net assets resulting from operations $15,300,088
=========
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
Keyport Variable Investment Trust Colonial-Keyport Growth and Income Fund
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, December 31,
1995 1994
---------- ------------
<S> <C> <C>
Operations:
Net investment income $ 1,484,201 $ 1,187,189
Net realized gains (losses) on investments 1,935,503 (916,325)
Net realized gains on foreign currency transactions 3,868 1,095
Unrealized appreciation (depreciation) on investments and foreign currency
transactions 11,876,516 (750,636)
-------- ----------
Net increase (decrease) in net assets resulting from operations 15,300,088 (478,677)
-------- ----------
Distributions declared from:
Net investment income (1,366,483) (1,166,885)
Net realized gains (1,027,019) --
-------- ----------
Total distributions (2,393,502) (1,166,885)
-------- ----------
Fund share transactions:
Proceeds from fund shares sold 14,488,981 24,032,360
Cost of fund shares repurchased (6,771,090) (4,799,935)
Distributions reinvested 2,393,502 1,166,885
-------- ----------
Net increase in net assets resulting from fund share transactions 10,111,393 20,399,310
-------- ----------
Total increase in net assets 23,017,979 18,753,748
Net assets:
Beginning of period 48,051,977 29,298,229
-------- ----------
End of period $71,069,956 $48,051,977
======== ==========
Accumulated undistributed (overdistributed) net investment income included
in ending net assets $ 83,580 $ (35,365)
======== ==========
Analysis of changes in shares of beneficial interest:
Shares sold 1,243,691 2,314,716
Shares redeemed (587,044) (468,593)
Distributions reinvested 190,717 117,157
-------- ----------
Net increase 847,364 1,963,280
======== ==========
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
FINANCIAL HIGHLIGHTS (a)
Keyport Variable Investment Trust Colonial-Keyport Growth and Income Fund
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------
1995 1994 1993***
------- ------ -----------
<S> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of period $ 10.03 $ 10.36 $ 10.00
----- ---- ---------
Net investment income 0.29 0.26 0.09
Net realized and unrealized gains (losses) on investments and
foreign currency transactions 2.72 (0.34) 0.41
----- ---- ---------
Total from investment operations 3.01 (0.08) 0.50
----- ---- ---------
Less distributions from:
Dividends from net investment income (0.25) (0.25) (0.11)
Net realized gains on investments (0.19) -- (0.03)
----- ---- ---------
Total distributions (0.44) (0.25) (0.14)
===== ==== =========
Net asset value, end of period $ 12.60 $ 10.03 $ 10.36
===== ==== =========
Total return:
Total investment return (b) 30.03% (0.76)% 5.01%**(d)
Ratios/supplemental data:
Net assets, end of period (000) $71,070 $48,052 $29,298
Ratio of net expenses to average net assets 0.81%(e) 0.87% 1.00%*(c)
Ratio of net investment income to average net assets 2.51%(e) 2.82% 2.32%*(d)
Portfolio turnover ratio 79% 55% 8%**
</TABLE>
* Annualized
** Not Annualized.
*** For the period from the commencement of operations July 1, 1993 to
December 31, 1993.
(a) Per share data was calculated using average shares outstanding during the
period.
(b) Total return at net asset value assuming all distributions reinvested.
(c) If the Fund had paid all of its expenses and there had been no
reimbursement from the Manager, this ratio would have been 1.23%
(annualized) for the period ended December 31, 1993.
(d) Computed giving effect to Manager's expense limitation undertaking.
(e) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior year ratios are net benefits received,
if any.
Federal Income Tax Information (unaudited)
75.9% of the gain distribution recorded in December 1995 and paid in January
1996 was derived from long-term gains.
See Notes to Financial Statements.
21
<PAGE>
SCHEDULE OF INVESTMENTS
Keyport Variable Investment Trust Colonial-Keyport Utilities Fund / December
31, 1995
Shares Value
----- -----------
COMMON STOCKS--(81.3%)
Transportation, Communication, Electric
Gas & Sanitary Services--(81.3%)
Communications--(27.2%)
AT&T Corp. 10,000 $ 647,500
Ameritech Corp. 27,000 1,593,000
Bell Atlantic Corp. 20,800 1,391,000
BellSouth Corp. 38,600 1,679,100
Frontier Corp. 15,300 459,000
GTE Corp. 42,800 1,883,200
MCI Communications Corp. 13,500 352,687
NYNEX Corp. 41,000 2,214,000
Pacific Telesis Group, Inc. 16,000 538,000
Southwestern Bell Corp. 27,500 1,581,250
Sprint Corp. 4,500 179,438
US West Media Group 25,000 475,000
US West, Inc. 29,500 1,054,625
---------
14,047,800
---------
Electric Services--(44.4%)
American Electric Power Co., Inc. 16,000 648,000
Boston Edison Co. 14,000 413,000
CMS Energy Corp. 25,000 746,875
CMS Energy Corp., Class G 25,000 471,875
Carolina Power & Light Co. 17,000 586,500
Cincinnati Gas & Electric Co. 40,000 1,225,000
DPL, Inc. 53,000 1,311,750
Detroit Edison Co. 40,500 1,397,250
Eastern Utilities Assoc. 11,300 266,962
Entergy Corp. 16,000 468,000
FPL Group, Inc. 36,000 1,669,500
Florida Progress Corp. 8,800 311,300
General Public Utilities Corp. 37,000 1,258,000
Hawaiian Electric Industries, Inc. 15,800 612,250
Houston Industries, Inc. 12,000 291,000
IES Industries, Inc. 21,100 559,150
KU Energy Corp. 8,000 240,000
Kansas City Power & Light Co. 22,500 587,812
New York State Electric & Gas Corp. 12,000 310,500
North Carolina Natural Gas 4,000 100,000
Northeast Utilities 9,000 219,375
Ohio Edison Co. 11,700 274,950
PacifiCorp 65,500 1,391,875
PECO Energy Co. 12,600 379,575
Pinnacle West Capital Corp. 25,000 718,750
Portland General Corp. 22,000 640,750
Public Service Co. of Colorado 19,500 689,813
Public Service Enterprise Group, Inc. 14,000 428,750
Puget Sound Power & Light Co. 3,200 74,400
Rochester Gas & Electric Corp. 4,000 $ 90,500
SCE Corp. 17,400 308,850
Scana Corp. 12,000 343,500
Sierra Pacific Resources 7,500 175,313
Southern Co. 55,000 1,354,375
Texas Utilities Co. 24,000 987,000
Union Electric Co. 3,800 158,650
Utilicorp United, Inc. 20,500 602,188
Western Resources, Inc. 18,000 600,750
---------
22,914,088
---------
Gas Services--(9.7%)
Energen Corp. 6,700 161,637
KN Energy, Inc. 10,000 291,250
MCN Corp. 33,000 767,250
MDU Resources Group, Inc. 9,000 178,875
Pacific Enterprises 16,900 477,425
Panhandle Eastern Corp. 22,200 618,825
People's Energy Corp. 7,600 241,300
Public Service Co. of North Carolina 30,000 536,250
UGI Corp. 27,000 560,250
Williams Companies, Inc. 26,400 1,158,300
---------
4,991,362
---------
Total Common Stocks
(Cost $36,120,303) 41,953,250
---------
PREFERRED STOCKS--(12.3%)
Transportation, Communication, Electric,
Gas & Sanitary Services--(12.3%)
Electric Services--(10.8%)
Appalachian Power Co., 7.40% 1,000 101,500
Arizona Public Service Co., $1.8125,
Series W 12,000 300,000
Baltimore Gas & Electric Co., 6.75% 1,551 157,427
Central Power & Light Co., 7.12% 6,000 592,500
Commonwealth Edison Co., 7.24% 5,500 511,500
Detroit Edison Co., 7.36% 3,000 294,000
Florida Power & Light Co., 7.40% 343 34,300
Florida Power & Light Co., 7.40%,
Series G 2,500 257,500
Montana Power Co., $6.875 5,000 505,000
Northern Indiana Public Service Co.,
7.44% 1,000 99,000
PSI Energy, Inc.:
6.875% 4,000 412,000
7.44% 13,000 326,625
PECO Energy Co., 7.48% 2,000 206,000
Pennsylvania Power & Light Co., 6.75% 22 5,000 497,500
See Notes to Investment Portfolio.
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
Keyport Variable Investment Trust Colonial-Keyport Utilities Fund / December
31, 1995
Shares Value
----- -----------
PREFERRED STOCKS (Continued)
Public Service Electric & Gas Co.,
7.52% 2,000 $ 192,000
Southern California Edison Co., 7.36% 11,000 280,500
Tu Electric Capital, 8.25% 28,000 714,000
Union Electric Co., $7.44 1,000 100,000
---------
5,581,352
---------
Gas Services--(1.5%)
Enron Corp., 8.00% 20,000 510,000
Pacific Enterprises, $4.50 550 35,681
Williams Co., Inc., $3.50 3,000 220,500
---------
766,181
---------
Total Preferred Stocks (Cost $6,322,881) 6,347,533
---------
Total Investments--(93.6%)
(Cost $42,443,184) (a) 48,300,783
---------
Par
---------
SHORT-TERM OBLIGATIONS--(6.0%)
Repurchase agreement with
Bankers Trust Securities
Corp., dated 12/29/95 due
1/02/96 at 5.70%,
collateralized by U.S.
Treasury notes with various
maturites to 2000, market
value $2,107,220 (repurchase
proceeds $2,064,307) $2,063,000 2,063,000
Par Value
--------- ------------
Repurchase agreement with Chase
Securities, Inc., dated
12/29/95 due 1/02/96 at 5.50%
collateralized by U.S.
Treasury notes with various
maturities to 2000, market
value $1,059,370 (repurchase
proceeds $1,036,633) $1,036,000 $ 1,036,000
----------
Total Short-Term Obligations 3,099,000
----------
Other Assets & Liabilities Net--(0.4%) 196,977
----------
Net Assets--(100.0%) $51,596,760
==========
Note to investment portfolio:
(a) Cost for federal income tax purposes is $42,446,183. Gross unrealized
appreciation and depreciation at December 31, 1995 is as follows:
Gross unrealized appreciation $6,533,541
Gross unrealized depreciation (678,941)
---------
Net unrealized appreciation $5,854,600
=========
See Notes to Financial Statements.
23
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
Keyport Variable Investment Trust Colonial-Keyport Utilities Fund / December
31, 1995
<TABLE>
<S> <C>
Assets:
Investments, at market value (Identified cost $42,443,184) $48,300,783
Short-term obligations 3,099,000
Receivable for fund shares sold 76,363
Receivable for investments sold 19,094
Dividends and interest receivable 202,401
Unamortized organization expenses 13,771
Other assets 3,376
----------
Total assets 51,714,788
----------
Liabilities:
Payable for fund shares repurchased 59,842
Payable for investments purchased 8,565
Management fee payable 27,650
Accrued expenses payable 21,971
----------
Total liabilities 118,028
----------
Net assets $51,596,760
==========
Net assets represented by:
Paid-in capital $50,432,358
Accumulated overdistributed net investment income (29,414)
Accumulated net realized losses on investments (4,663,803)
Net unrealized appreciation on investments 5,857,619
----------
Total net assets applicable to shares of beneficial interest
outstanding $51,596,760
==========
Shares of beneficial interest outstanding 4,914,775
==========
Net asset value per share $10.50
==========
</TABLE>
STATEMENT OF OPERATIONS
For the Year ended December 31, 1995
Investment income:
Dividends $ 2,431,112
Interest income 114,719
----------
Total investment income 2,545,831
----------
Expenses:
Management fee 284,469
Bookkeeping fee 27,000
Transfer agent fee 7,500
Audit fee 20,000
Printing expense 2,068
Trustees' fees 4,927
Custodian fee 4,811
Legal fee 3,366
Registration fee 37
Amortization of organization expense 5,511
Miscellaneous expense 5,940
----------
Total expenses 365,629
----------
Net investment income 2,180,202
Realized and unrealized gains (losses) on investments:
Net realized losses on investments (1,331,430)
Change in unrealized appreciation on investments 12,515,955
----------
Net increase in net assets resulting from operations $13,364,727
==========
See Notes to Financial Statements.
24
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
Keyport Variable Investment Trust Colonial-Keyport Utilities Fund
<TABLE>
<CAPTION>
Year Year
Ended Ended
December 31, December 31,
1995 1994
------------ --------------
<S> <C> <C>
Operations:
Net investment income $ 2,180,202 $ 2,402,638
Net realized losses on investments (1,331,430) (3,328,893)
Unrealized appreciation (depreciation) on investments 12,515,955 (4,219,576)
---------- ------------
Net increase (decrease) in net assets resulting from operations 13,364,727 (5,145,831)
---------- ------------
Distributions declared from:
Net investment income (2,164,475) (2,402,638)
Distributions in excess of net investment income -- (20,932)
---------- ------------
Total distributions (2,164,475) (2,423,570)
---------- ------------
Fund share transactions:
Proceeds from fund shares sold 8,726,703 14,643,077
Cost of fund shares repurchased (8,650,479) (25,782,409)
Distributions reinvested 2,164,475 2,423,570
---------- ------------
Net increase (decrease) in net assets resulting from fund share transactions 2,240,699 (8,715,762)
---------- ------------
Total increase (decrease) in net assets 13,440,951 (16,285,163)
Net assets:
Beginning of period 38,155,809 54,440,972
---------- ------------
End of period $51,596,760 $ 38,155,809
========== ============
Accumulated overdistributed net investment income included in ending net
assets $ (29,414) $ (45,141)
========== ============
Analysis of changes in shares of beneficial interest:
Shares sold 942,276 1,633,132
Shares redeemed (940,625) (2,867,457)
Distributions reinvested 206,533 298,102
---------- ------------
Net increase (decrease) 208,184 (936,223)
========== ============
</TABLE>
See Notes to Financial Statements.
25
<PAGE>
FINANCIAL HIGHLIGHTS (a)
Keyport Variable Investment Trust Colonial-Keyport Utilities Fund
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------
1995 1994 1993***
----------- ----------- -------------
<S> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of period $ 8.11 $ 9.65 $ 10.00
--------- --------- -----------
Net investment income 0.46 0.54 0.18
Net realized and unrealized gains (losses) on
investments 2.39 (1.53) (0.35)
--------- --------- -----------
Total from investment operations 2.85 (0.99) (0.17)
--------- --------- -----------
Less distributions from:
Dividends from net investment income (0.46) (0.55) (0.18)
--------- --------- -----------
Net asset value, end of period $ 10.50 $ 8.11 $ 9.65
========= ========= ===========
Total return:
Total investment return (b) 35.15% (10.27)% (1.70)%**(c)
Ratios/supplemental data:
Net assets, end of period (000) $51,597 $38,156 $54,441
Ratio of net expenses to average net assets 0.83%(d) 0.86% 1.00%*(e)
Ratio of net investment income to average net assets 4.98%(d) 5.80% 5.10%*(c)
Portfolio turnover ratio 18% 16% 2%**
</TABLE>
* Annualized
** Not Annualized
*** For the period from the commencement of operations July 1, 1993 to
December 31, 1993.
(a) Per share data was calculated using average shares outstanding during the
period.
(b) Total return at net asset value assuming all distributions reinvested.
(c) Computed giving effect to Manager's expense limitation undertaking.
(d) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior year ratios are net of benefits
received, if any.
(e) If the Fund had paid all of its expenses and there had been no
reimbursement from the Manager, this ratio would have been 1.09%
(annualized) for the period ended December 31, 1993.
See Notes to Financial Statements.
26
<PAGE>
SCHEDULE OF INVESTMENTS
Keyport Variable Investment Trust Colonial-Keyport International Fund For
Growth / December 31, 1995
Country
Abbrev. Shares Value
------ ------ ----------
COMMON STOCKS--(90.9%)
Construction--(2.3%)
Building Construction--(1.2%)
Mitsui Fudosan Co. Ja 5,000 $ 61,412
Shimizu Corp. Ja 20,000 203,095
----------
264,507
----------
Special Trade Contractors--(1.1%)
Tele Danmark A/S, Series B (a) De 4,500 244,948
----------
Finance, Insurance & Real Estate--(22.7%)
Depository Institutions--(9.9%)
Allied Irish Bank UK 25,000 136,466
Asahi Bank Ltd. Ja 25,000 314,313
Australia & New Zealand Banking
Group Ltd. Au 15,000 70,301
Banco De Galicia Bueno ADR (a) Ar 2,714 55,976
Banco Popular Espanol SA Sp 1,800 330,849
Bank International Indonesia In 12,000 39,755
Barclays PLC UK 20,000 229,201
Credit Commercial de France Fr 2,000 101,865
Credit Local de France Fr 2,500 199,735
Dao Heng Bank Group Ltd. (a) HK 20,000 71,904
Deutsche Pfandbrief und
Hypothekenbank AG G 2,000 77,469
Development Bank of Singapore Ltd. Si 10,000 124,443
Shinhan Bank Ko 7,086 153,147
Shizuoka Bank Ja 20,000 251,451
Sumitomo Trust & Banking Ja 7,000 98,839
----------
2,255,714
----------
Holding & Other Investment Companies--(4.4%)
Amev NV Ne 3,500 233,986
Elsivier NV Ne 25,000 332,711
Hong Leong Credit Berhard Ma 20,000 99,252
Smaller Companies Investment Trust UK 88,000 173,312
Thai Euro Fund IDR (a) Th 5,000 152,500
----------
991,761
----------
Insurance Carriers--(3.5%)
General Accident Fire and Life UK 20,000 201,753
Yasuda Fire & Marine Insurance Co. Ja 27,000 190,619
Zurich Versicherungsgesellschaft Sz 1,350 403,596
----------
795,968
----------
Nondepository Credit Institutions--(0.2%)
Acom Co. Ltd. Ja 1,000 $ 41,780
----------
Real Estate--(3.7%)
Cheung Kong Ltd. HK 30,000 182,735
Hong Kong Land Co. HK 50,000 92,500
Land & General Holdings Bhd Ma 48,000 103,978
Malaysian Resources Corp. Ma 100,000 160,693
Staits Steamship Land Ltd. Si 50,000 168,988
Sun Hung Kai Properties Ltd. HK 16,000 130,876
----------
839,770
----------
Security Brokers & Dealers--(1.0%)
Yamaichi Securities Co. Ltd. Ja 30,000 232,979
----------
Manufacturing--(36.2%)
Apparel--(1.4%)
Onward Kasiyama Co. Ltd. Ja 20,000 324,952
----------
Chemicals--(8.7%)
Allied Colloids Group PLC UK 40,000 82,500
Bayer AG G 1,400 370,737
L'Oreal Fr 500 133,598
LVMH Moet Hennessy Louis Fr 1,500 311,831
Nippon Sanso Corp. Ja 40,000 191,876
Norsk Hydro AS No 2,500 104,744
Reliance Industries GDR UK 2,500 35,000
Roche Holding AG Sz 50 395,364
Schering AG (a) G 2,500 165,682
Smithkline Beecham Consumer Brands
PLC UK 18,000 198,186
----------
1,989,518
----------
Electronic & Electrical Equipment--(4.2%)
Ericsson L.M. (a) Sw 10,000 195,614
Polygram NV Ne 5,000 264,925
ROHM Co. Ltd. Ja 4,000 222,437
Samsung Electronics GDR (a) Ko 217 11,413
Samsung Electronics GDS (a) Ko 1,118 68,251
TDK Corp. Ja 4,000 203,868
----------
966,508
----------
Fabricated Metal--(1.5%)
Tostem Corp. Ja 10,000 331,721
----------
Food & Kindred Products--(3.4%)
Bass PLC UK 25,000 278,553
Cadbury Schweppes PLC UK 30,000 247,269
Guinness PLC UK 15,000 110,142
Nestle SA Sz 120 132,686
----------
768,650
----------
See Notes to Investment Portfolio.
27
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
Keyport Variable Investment Trust Colonial-Keyport International Fund For
Growth / December 31, 1995
Country
Abbrev. Shares Value
------ ------ ----------
Machinery & Computer Equipment--(5.6%)
BTR PLC UK 40,000 $ 204,079
Mannesmann AG G 800 253,964
Mitsubishi Heavy Industries Ltd. Ja 30,000 238,781
NTN Corp. Ja 40,000 266,925
Toshiba Corp. Ja 40,000 312,959
----------
1,276,708
----------
Miscellaneous Manufacturing--(1.1%)
Atlas Copco AB, Series A Sw 17,000 255,803
----------
Paper & Paper Mills--(1.2%)
Aracruz Celulose SA, Series B Br 4,000 31,000
Inti Indorayon Utama (a) In 15,000 15,745
Oji Paper Co. Ltd. Ja 25,000 225,822
----------
272,567
----------
Petroleum Refining--(1.1%)
British Petroleum Ltd. UK 30,000 250,524
----------
Primary Metal--(0.8%)
Nippon Steel Co. Ja 50,000 171,180
----------
Printing & Publishing--(2.2%)
Singapore Press Holdings Ltd. (a) Si 12,000 212,119
Wolters Kluwer Ne 3,000 283,209
----------
495,328
----------
Stone, Clay, Glass & Concrete--(2.6%)
BPB Industries PLC UK 30,000 140,265
Compagnie de Saint Gobain Fr 1,600 174,136
Semen Cibinong In 25,000 62,322
UBE Industries Ltd. Ja 60,000 226,306
----------
603,029
----------
Textile Mill Products--(1.2%)
Teijin Ltd. Ja 52,000 265,532
----------
Tobacco Products--(1.2%)
B.A.T. Industries PLC UK 30,000 264,015
----------
Mining & Energy--(2.5%)
Crude Petroleum & Natural Gas--(1.2%)
Compagnie Francaise de Petroleum
Total B Fr 4,000 269,439
----------
Miscellaneous Metal Ores--(0.8%)
CRA Ltd. Au 13,000 190,605
----------
Oil & Gas Extraction--(0.5%)
Hong Kong & China Gas Co., Ltd. HK 75,000 120,757
----------
Retail Trade--(6.1%)
Auto Dealers & Gas Stations--(0.6%)
Inchcape PLC UK 35,000 135,148
----------
Food Stores--(1.6%)
Carrefour Fr 450 $ 272,486
Jardine Matheson Holdings Ltd. (a) HK 15,000 102,750
----------
375,236
----------
General Merchandise Stores--(2.1%)
La Rinascente SPA It 10,000 60,459
Marui Co. Ltd. Ja 20,000 415,861
----------
476,320
----------
Miscellaneous Retail--(1.8%)
Argos PLC UK 35,000 323,215
Centros Comerciales Continente (a) Sp 4,000 90,054
----------
413,269
----------
Services--(3.3%)
Business Services--(1.2%)
Reuters Holdings PLC UK 30,000 274,250
----------
Engineering, Accounting, Research, &
Management--(0.6%)
United Engineers Ltd. Ma 20,000 127,609
----------
Other Services--(1.5%)
Veba Agency G 8,000 338,804
----------
Transportation, Communication, Electric,
Gas & Sanitary Services--(15.9%)
Air Transportation--(2.9%)
British Airport Authority PLC UK 30,000 225,634
Lufthansa AG G 1,000 138,039
Qantas Airways Limited ADR Au 345 5,766
Singapore Airlines Ltd. Si 15,000 139,999
Swire Pacific Ltd., Series A HK 20,000 155,189
----------
664,627
----------
Communications--(6.0%)
British Telecommunications PLC UK 35,000 192,138
Hong Kong Telecommunications Ltd. HK 80,000 142,774
Indonesian Satellite ADR (a) In 6,000 219,000
Nippon Telegraph & Telephone Corp. Ja 14 113,056
Telecom Italia Mobile SPA (a) It 160,000 281,107
Telecom Italia SPA It 75,000 116,325
Telecomunicacoes Brasileiras SA Br 1,000 47,375
Tokyo Broadcasting System Ja 15,000 246,615
----------
1,358,390
----------
See Notes to Investment Portfolio.
28
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
Keyport Variable Investment Trust Colonial-Keyport International Fund For
Growth / December 31, 1995
Country
Abbrev. Shares Value
------ ------ ----------
Electric Services--(5.0%)
BBC Brown Boveri AG Sz 270 $ 313,518
Compania Naviera Perez Companc, SA
ADR Ar 5,000 51,250
Empresa Nacional De Electricidad Sp 3,800 214,502
Korea Electric Power Corp., ADR (a) Ko 10,000 267,500
Powergen PLC UK 20,000 165,155
Tokyo Electric Power Ja 5,050 134,797
----------
1,146,722
----------
Motor Freight & Warehousing--(1.1%)
Nippon Express Co. Ltd. Ja 25,000 240,329
----------
Water Transportation--(0.9%)
Nippon Yusem Kabushiki Kaish Ja 35,000 202,756
----------
Wholesale Trade--(1.9%)
Durable Goods
Canon Sales Ja 9,450 251,330
China Steel Corp. (a) Tw 11,000 191,125
----------
442,455
----------
Total Common Stocks
(Cost $19,510,996) 20,680,178
----------
Par Value
------- ----------
CORPORATE FIXED-INCOME BONDS--(0.5%)
Manufacturing--(0.5%)
Electronic & Electrical Equipment
Daewoo Electronics
Co., 3.500%
12/31/07 $100,000 $ 121,500
--------
Total Corporate Fixed-Income Bonds
(Cost $167,624) 121,500
--------
Total Investments--(91.4%)
(Cost $19,678,620) (b) 20,801,678
--------
SHORT-TERM OBLIGATIONS--(5.7%)
Repurchase agreement with Bankers Trust
Securities Corp., dated 12/29/95, due
01/02/96 at 5.700%, collateralized by U.S.
Treasury notes with various maturities to
2000, market value $881,500 (repurchase
proceeds $863,547) 863,000 863,000
Repurchase agreement with Chase Securities,
Inc., dated 12/29/95, due 01/02/96 at
5.500%, collateralized by a U.S. Treasury
note maturing in 1996, market value
$443,790 (repurchase proceeds $434,265) 434,000 434,000
--------
Total Short-Term Obligations 1,297,000
--------
Other Assets and Liabilities--(2.9%) 665,399
--------
Net Assets--(100%) $22,764,077
========
Notes to investment portfolio:
(a) Non-income producing.
(b) The cost for federal income tax purposes is identical. Gross unrealized
appreciation and depreciation at December 31, 1995 is as follows:
Gross unrealized appreciation $1,996,022
Gross unrealized depreciation (872,964)
---------
Net unrealized appreciation $1,123,058
=========
See Notes to Investment Portfolio.
29
<PAGE>
Summary of Securities by Country
% of Total
Country Securities
Country Abbrev. Value at Value
---------------- ------ ---------- ----------
Japan Ja $ 5,981,591 28.7%
United Kingdom UK 3,866,805 18.6
France Fr 1,463,090 7.0
Germany G 1,344,695 6.5
Switzerland Sz 1,245,164 6.0
Netherlands Ne 1,114,831 5.4
Hong Kong HK 999,485 4.8
Singapore Si 645,549 3.1
Spain Sp 635,405 3.0
South Korea Ko 621,811 3.0
Malaysia Ma 491,532 2.4
Italy It 457,891 2.2
Sweden Sw 451,417 2.2
Indonesia In 336,822 1.6
Australia Au 266,672 1.3
Denmark De 244,948 1.2
Taiwan Tw 191,125 0.9
Thailand Th 152,500 0.7
Argentina Ar 107,226 0.5
Norway No 104,744 0.5
Brazil Br 78,375 0.4
-------- --------
$20,801,678 100.0%
======== ========
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
Acronym Name
---------- -----------------------------------
ADR American Depository Receipts
GDR Global Depository Receipts
GDS Global Depository Shares
IDR International Depository Receipts
See Notes to Financial Statements.
30
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
Keyport Variable Investment Trust Colonial-Keyport International Fund for
Growth / December 31, 1995
<TABLE>
<S> <C>
Assets:
Investments, at market value (Identified cost $19,678,620) $20,801,678
Short-term obligations 1,297,000
Cash (including foreign currencies) 619
Receivable for investments sold 577,506
Receivable for fund shares sold 63,214
Dividends and interest receivable 65,754
Unamortized organization expenses 14,399
Other assets 6,634
----------
Total assets 22,826,804
----------
Liabilities:
Payable for fund shares repurchased 16,931
Management fee payable 16,997
Accrued expenses payable 28,799
----------
Total liabilities 62,727
----------
Net assets $22,764,077
==========
Net assets represented by:
Paid-in capital $22,653,979
Accumulated overdistributed net investment income (53,329)
Accumulated net realized losses on investments and foreign currency
transactions (957,124)
Net unrealized appreciation on investments and foreign currency transactions 1,120,551
----------
Total net assets applicable to outstanding shares of beneficial interest $22,764,077
==========
Shares of beneficial interest outstanding 11,554,849
==========
Net asset value per share $1.97
==========
</TABLE>
STATEMENT OF OPERATIONS
For the Year ended December 31, 1995
<TABLE>
<S> <C>
Investment income:
Dividends (net of nonrebatable foreign taxes withheld at source of $55,243) $ 369,404
Interest income 69,860
--------
Total investment income 439,264
--------
Expenses:
Management fee 183,697
Bookkeeping fee 27,000
Transfer agent fee 7,500
Audit fee 20,000
Printing expense 3,800
Trustees' expense 4,263
Custodian fee 27,919
Legal expense 5,064
Amortization of organization expense 4,318
Miscellaneous expense 2,414
--------
Total expenses 285,975
--------
Net investment income 153,289
Realized and unrealized gains (losses) on investments and foreign currency
transactions:
Net realized losses on investments (747,347)
Net realized losses on foreign currency transactions (158,469)
Change in unrealized appreciation on investments and foreign currency transactions 2,044,305
--------
Net increase in net assets resulting from operations $1,291,778
========
</TABLE>
See Notes to Financial Statements.
31
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
Keyport Variable Investment Trust Colonial-Keyport International Fund for
Growth
<TABLE>
<CAPTION>
Year Period
Ended Ended
December 31, December 31,
1995 1994*
------------ --------------
<S> <C> <C>
Operations:
Net investment income $ 153,289 $ 13,075
Net realized losses on investments (747,347) (21,586)
Net realized losses on foreign currency transactions (158,469) (199,438)
Change in unrealized appreciation (depreciation) on investments and
foreign currency transactions 2,044,305 (923,754)
---------- ------------
Net increase (decrease) in net assets resulting from operations 1,291,778 (1,131,703)
---------- ------------
Distributions declared from:
Net investment income (228,274) --
---------- ------------
Fund share transactions:
Proceeds from fund shares sold 7,406,320 21,072,283
Cost of fund shares repurchased (5,079,991) (794,610)
Distributions reinvested 228,274 --
---------- ------------
Net increase in net assets resulting from fund share transactions 2,554,603 20,277,673
---------- ------------
Total increase in net assets 3,618,107 19,145,970
Net assets:
Beginning of period 19,145,970 0
---------- ------------
End of period $22,764,077 $19,145,970
========== ============
Accumulated undistributed (overdistributed) net investment income included
in ending net assets $ (53,329) $ 13,059
========== ============
Analysis of changes in shares of beneficial interest:
Shares sold 4,012,557 10,578,046
Shares redeemed (2,743,550) (408,079)
Distributions reinvested 115,875 --
---------- ------------
Net increase 1,384,882 10,169,967
========== ============
</TABLE>
* For the period from the commencement of operations May 2, 1994 to December
31, 1994.
See Notes to Financial Statements.
32
<PAGE>
FINANCIAL HIGHLIGHTS (a)
Keyport Variable Investment Trust Colonial-Keyport International Fund for
Growth
<TABLE>
<CAPTION>
Year Period
Ended Ended
December 31, December 31,
------------ --------------
1995 1994***
------------ --------------
<S> <C> <C>
Per share operating performance:
Net asset value, beginning of period $ 1.88 $ 2.00
---------- ------------
Net investment income 0.01 --
Net realized and unrealized gains (losses) on investments and foreign
currency transactions 0.10 (0.12)
---------- ------------
Total from investment operations 0.11 (0.12)
---------- ------------
Less distributions from:
Dividends from net investment income (0.02) --
---------- ------------
Net asset value, end of period $ 1.97 $ 1.88
========== ============
Total return:
Total investment return (b) 5.85% (6.00)%*
Ratios/supplemental data:
Net assets, end of period (000) $22,764 $19,146
Ratio of net expenses to average net assets 1.40%(c) 1.74%**
Ratio of net investment income to average net assets 0.75%(c) 0.13%**
Portfolio turnover ratio 40% 31%*
</TABLE>
* Not Annualized
** Annualized
*** For the period from the commencement of operations May 2, 1994 to
December 31, 1994.
(a) Per share data was calculated using average shares outstanding during the
period.
(b) Total return at net asset value assuming all distributions reinvested.
(c) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior year ratios are net of benefits
received, if any.
See Notes to Financial Statements.
33
<PAGE>
SCHEDULE OF INVESTMENTS
Keyport Variable Investment Trust Colonial-Keyport Strategic Income Fund /
December 31, 1995
Par Value
------- ----------
CORPORATE FIXED-INCOME BONDS
& NOTES--(38.7%)
Construction--(0.6%)
Building Construction
USG Corp., 9.250% 09/15/01 $250,000 $ 266,250
--------
Manufacturing--(9.1%)
Chemicals--(1.5%)
Agricultural Minerals Co., L.P., 10.750%
09/30/03 200,000 219,000
Huntsman Corp., 11.000% 04/15/04 200,000 229,250
N.L. Industries, Inc., 11.750% 10/15/03 250,000 266,875
--------
715,125
--------
Fabricated Metal--(1.7%)
Rexnord Holdings, Inc., 10.750% 07/01/02 750,000 837,120
--------
Food & Kindred Products--(1.6%)
Doskocil Companies Inc., 9.750% 07/15/00 250,000 238,750
Van De Kamps, Inc., 12.000% 09/15/05 500,000 517,500
--------
756,250
--------
Lumber & Wood Products--(0.5%)
Triangle Pacific Corp., 10.500% 08/01/03 250,000 265,000
--------
Miscellaneous Manufacturing--(1.0%)
American Standard Co., stepped coupon,
(10.500% 06/01/98) 06/01/05 (a) 350,000 300,125
Coleman Holdings Co., Series B, (b) 05/27/98 200,000 161,500
--------
461,625
--------
Paper Products--(0.8%)
Repap Wisconsin, Inc., 9.875% 05/01/06 250,000 236,250
SD Warren Co. 12.000% 12/15/04 150,000 164,250
--------
400,500
--------
Primary Metal--(0.9%)
A.K. Steel Corp., 10.750%
04/01/04 250,000 276,875
Magma Copper Co., 12.000% 12/15/01 150,000 166,313
--------
443,188
--------
Stone, Clay, Glass & Concrete--(1.1%)
Owens-Illinois, Inc., 10.500% 06/15/02 500,000 534,375
--------
Mining & Energy--(4.0%)
Crude Petroleum & Natural Gas--(1.1%)
Ferrellgas Finance Corp., L.P., 10.000%
08/01/01 $250,000 $ 267,500
Triton Energy Corp., (b) 11/01/97 300,000 258,750
--------
526,250
--------
Oil & Gas Extraction--(2.9%)
Coastal Corp., 9.750% 08/01/03 500,000 596,275
Gulf Canada Resources Ltd., 9.250% 01/15/04 250,000 257,500
Rowan Companies, Inc., 11.875% 12/01/01 250,000 271,250
Santa Fe Energy Resources, Inc., 11.000%
05/15/04 225,000 248,344
--------
1,373,369
--------
Retail Trade--(3.2%)
Food Stores--(1.6%)
Dominick's Finer Foods, Inc., 10.875%
05/01/05 500,000 532,500
Pathmark Stores, Inc., 9.625% 05/01/03 250,000 242,500
--------
775,000
--------
Miscellaneous Retail--(1.6%)
Finlay Fine Jewelry Corp., 10.625% 05/01/03 250,000 237,500
Thrifty Payless Holdings, Inc., 11.750%
04/15/03 500,000 542,500
--------
780,000
--------
Services--(7.0%)
Amusement & Recreation--(2.6%)
Bally's Grand, Inc., Series B, 10.375%
12/15/03 250,000 255,000
Boyd Gaming Corp., 10.750% 09/01/03 500,000 522,500
Trump Taj Mahal Funding, Inc., PIK, 11.350%
11/15/99 500,000 481,250
--------
1,258,750
--------
Health Services--(3.9%)
GranCare, Inc., 9.375% 09/15/05 500,000 505,000
Integrated Health Services, Inc., 10.750%
07/15/04 250,000 267,500
ORNDA Health Corp., 11.375% 08/15/04 250,000 280,625
Tenet Healthcare Corp., 10.125% 03/01/05 750,000 830,625
--------
1,883,750
--------
Hotels, Camps & Lodging--(0.5%)
HMH Properties, Inc., 9.500% 05/15/05 250,000 255,000
--------
See Notes to Investment Portfolio.
34
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
Keyport Variable Investment Trust Colonial-Keyport Strategic Income Fund /
December 31, 1995
Par Value
------- ----------
Transportation, Communication, Electric,
Gas & Sanitary Services--(14.0%)
Air Transportation--(0.7%)
United Airlines, Inc., 9.200% 03/22/08 $284,479 $ 325,822
--------
Communications--(12.8%)
Bell Cablemedia PLC, stepped coupon,
(11.950% 07/15/99) 07/15/04 (a) (c) 400,000 283,000
Cablevision Systems Corp., 10.750% 04/01/04 250,000 263,750
Cellular Communications Units, (b) 08/15/00
(d) 250,000 153,750
Comcast Corp., 9.125% 10/15/06 750,000 780,938
Comcast Cable Partners Ltd., stepped coupon,
(11.200% 11/15/00) 11/15/07 (a) (c) 500,000 290,000
Continental Cablevision, Inc., 11.000%
06/01/07 500,000 559,375
Lenfest Communications, Inc., 8.375%
11/01/05 400,000 400,000
NWCG Holding Corp., (b) 06/15/99 425,000 293,250
Paging Network, Inc., 10.125% 08/01/07 500,000 545,000
PanAmSat Corp., stepped coupon (11.375%
08/01/98) 08/01/03 (a) 500,000 407,500
SCI Television, Inc., 11.000% 06/30/05 250,000 265,625
Sinclair Broadcast Group, Inc., 10.000%
09/30/05 250,000 255,625
Tele-Communications, Inc., 7.375% 02/15/00 800,000 829,976
Videotron Holding PLC, stepped coupon,
(11.000% 08/15/00) 08/15/05 (a)(c) 250,000 155,625
Young Broadcasting Corp., 11.750% 11/15/04 650,000 727,187
--------
6,210,601
--------
Gas Services--(0.5%)
California Energy Co., Inc., 9.875% 06/30/03 250,000 261,250
--------
Wholesale Trade--(0.8%)
Nondurable Goods
Revlon Worldwide Corp., (b) 03/15/98 500,000 370,000
--------
Total Corporate Fixed-Income
Bonds & Notes (Cost $18,035,172) 18,699,225
--------
Currency
Abbrev Par Value
------ --------- -----------
Foreign Government & Agency Obligations--(29.8%)
Government of Finland
9.500% 03/15/04 FM 10,000,000 $ 2,592,797
Kingdom of Denmark,
8.000% 05/15/03 DK 28,118,000 5,378,613
Republic of Poland
(Brady), Past Due
Interest, stepped
coupon, (4.000%
10/27/96) 3.750%
10/27/14 (e) PL 1,705,000 1,095,463
Republic of South
Africa, 12.000%
02/28/05 SA 4,000,000 974,023
Treasury Corp. of
Victoria., 12.000%
09/22/01 A$ 1,600,000 1,403,298
United Kingdom Treasury,
10.000% 09/08/03 UK 870,800 1,565,612
Western Australia
Treasury, 12.000%
08/01/01 A$ 1,603,000 1,402,524
-----------
Total Foreign Government & Agency Obligations
(Cost $14,072,492) 14,412,330
---------
U.S. Government & Agency Obligations--(26.0%)
Federal Home Loan Mortgage
Corp., CMO, 9.500%
04/15/19 32,556 33,644
MDC Mortgage Funding Corp.,
CMO, 8.850% 03/20/18 218,388 228,624
U.S. Treasury Bonds, 8.000%
08/15/99 3,823,000 4,153,919
U.S. Treasury Notes,
11.875% 11/15/03 5,845,000 8,165,640
---------
Total U.S. Government &
Agency Obligations
(Cost $11,984,294) 12,581,827
---------
Total Investments--(94.5%)
(Cost $44,091,958)(f) 45,693,382
---------
Short-Term Obligations--(2.9%)
Repurchase agreement with
Bankers Trust Securities
Corp., dated 12/29/95, due
01/02/96 at 5.70%,
collateralized by U.S.
Treasury notes with various
maturities to 2000, market
value $1,090,890 (repurchase
proceeds $1,068,676) 1,068,000 1,068,000
------ -------
See Notes to Investment Portfolio.
35
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
Keyport Variable Investment Trust Colonial-Keyport Strategic Income Fund /
December 31, 1995
Par Value
------- -----------
Short-Term Obligations--continued
Repurchase agreement with Chase
Securities, Inc., dated
12/29/95, due 01/02/96 at
5.500%, collateralized by a
U.S. Treasury note maturing in
1996, market value $356,870
(repurchase proceeds $349,213) $349,000 $ 349,000
---------
1,417,000
---------
Forward Currency Contracts--(0.0)(g) (4,039)
Other Assets & Liabilities, Net--(2.6%) 1,228,144
---------
Net Assets--(100%) $48,334,487
=========
Notes to investment portfolio:
(a) Currently zero coupon. Shown parenthetically is the interest rate to be
paid and the date the Fund will begin accruing this rate.
(b) Zero coupon bond.
(c) This is a British security. Par amount is stated in U.S. dollars.
(d) Each unit consists of one bond and one warrant to purchase shares of
common stock.
(e) Shown parenthetically is the interest rate to be paid and the date the
Fund will begin accruing this rate.
(f) Cost for federal income tax purposes is $44,094,902. Gross unrealized
appreciation and depreciation at December 31, 1995 is as follows:
Gross unrealized appreciation $1,664,746
Gross unrealized depreciation (66,266)
---------
Net unrealized appreciation $1,598,480
=========
(g) As of December 31, 1995, the Fund had entered into the following forward
currency exchange contracts:
Net Unrealized
Appreciation
Contracts Settlement (Depreciation)
to deliver In exchange for Date (U.S. $)
---------------- --------------- -------- --------------
DK 3,778,240 USD 675,591 01/05/96 $(3,249)
FM 3,016,915 USD 702,589 01/05/96 10,810
DK 11,508,907 USD 2,064,082 02/05/96 (5,450)
UK 515,255 USD 792,122 02/05/96 (6,150)
------------
$(4,039)
============
Acronym Name
---------- ------------------------------------
PIK Payment-in-Kind
CMO Collateralized Mortgage Obligation
Summary of Securities by Currency
Currency
Currency Value Value % of Total
- -------------- ------ ---------- -----------
United States $31,281,052 68.5%
Denmark DK 5,378,613 11.8
Australia A$ 2,805,822 6.1
Finland FM 2,592,797 5.7
United Kingdom UK 1,565,612 3.4
Poland PL 1,095,463 2.4
South Africa SA 974,023 2.1
---------- -----------
$45,693,382 100.0%
========== ===========
Certain securities are listed by country of underlying exposure
but may trade predominantly on other exchanges.
See Notes to Financial Statements.
36
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
Keyport Variable Investment Trust Colonial-Keyport Strategic Income Fund /
December 31, 1995
<TABLE>
<S> <C>
Assets:
Investments, at market value (Identified cost $44,091,958) $45,693,382
Short-term obligations 1,417,000
Dividends and interest receivable 1,256,699
Receivable for investments sold 252,691
Receivable for fund shares sold 7,351
Unamortized organization expenses 13,940
Other assets 5,093
----------
Total assets 48,646,156
----------
Liabilities:
Payable for fund shares repurchased 237,225
Payable for investments purchased 13,093
Unrealized on forward currency exchange contracts 4,039
Management fee payable 30,694
Accrued expenses payable 25,448
Other liabilities 1,170
----------
Total liabilities 311,669
----------
Net assets $48,334,487
==========
Net assets represented by:
Paid-in capital $46,813,546
Accumulated overdistributed net investment income (68,878)
Accumulated net realized losses on investments and foreign currency
transactions (1,269)
Net unrealized appreciation on investments and foreign currency transactions 1,591,088
----------
Total net assets applicable to outstanding shares of beneficial interest $48,334,487
==========
Shares of beneficial interest outstanding 4,396,075
==========
Net asset value per share $10.99
==========
</TABLE>
STATEMENT OF OPERATIONS
For the Year ended December 31, 1995
<TABLE>
<S> <C>
Investment income:
Interest income $2,496,412
---------
Expenses:
Management fee 181,811
Bookkeeping fee 27,000
Transfer agent fee 7,500
Audit fee 20,000
Printing expense 3,097
Trustees' expense 3,540
Custodian fee 7,115
Legal fee 3,119
Amortization of organization expense 3,971
Miscellaneous expense 5,871
---------
Total expenses 263,024
---------
Less:
Expenses reimbursable by Manager (27,470)
---------
Net expenses 235,554
---------
Net investment income 2,260,858
Realized and unrealized gains (losses) on investments and foreign currency
transactions:
Net realized gains on investments 356,528
Net realized losses on foreign currency transactions (89,581)
Change in unrealized appreciation on investments and foreign currency transactions 1,745,890
---------
Net increase in net assets resulting from operations $4,273,695
=========
</TABLE>
See Notes to Financial Statements.
37
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
Keyport Variable Investment Trust Colonial-Keyport Strategic Income Fund
<TABLE>
<CAPTION>
Year Period
Ended Ended
December 31, December 31,
1995 1994*
------------- ------------
<S> <C> <C>
Operations:
Net investment income $ 2,260,858 $ 409,250
Net realized gains (losses) on investments 356,528 (131,439)
Net realized gains (losses) on foreign currency transactions (89,581) 2,133
Change in unrealized appreciation (depreciation) on investments and foreign
currency transactions 1,745,890 (154,802)
----------- ----------
Net increase in net assets resulting from operations 4,273,695 125,142
----------- ----------
Distributions declared from:
Net investment income (2,313,068) (409,250)
Distributions in excess of net investment income -- (1,787)
Net realized gains on investments (140,532) (13,259)
----------- ----------
Total distributions (2,453,600) (424,296)
----------- ----------
Fund share transactions:
Proceeds from fund shares sold 17,078,534 13,468,257
Receipts for shares issued in acquisition of SteinRoe Managed Income Fund 37,220,278 --
Cost of fund shares repurchased (23,580,161) (251,258)
Distributions reinvested 2,453,600 424,296
----------- ----------
Net increase in net assets resulting from fund share transactions 33,172,251 13,641,295
----------- ----------
Total increase in net assets 34,992,346 13,342,141
Net assets:
Beginning of period 13,342,141 0
----------- ----------
End of period $ 48,344,487 $13,342,141
=========== ==========
Accumulated overdistributed net investment income included in ending net
assets $ (68,878) $ (13,029)
=========== ==========
Analysis of changes in shares of beneficial interest:
Shares sold 1,586,240 1,344,428
Issued in acquisition of SteinRoe Managed Income Fund 3,302,598 --
Shares redeemed (2,079,174) (25,182)
Distributions reinvested 223,869 43,296
----------- ----------
Net increase 3,033,533 1,362,542
=========== ==========
</TABLE>
* For the period from the commencement of operations July 5, 1994 to December
31, 1994.
See Notes to Financial Statements.
38
<PAGE>
FINANCIAL HIGHLIGHTS (a)
Keyport Variable Investment Trust Colonial-Keyport Strategic Income Fund
<TABLE>
<CAPTION>
Year Period
Ended Ended
December 31, December 31,
------------- ---------------
1995 1994***
------------- ---------------
<S> <C> <C>
Per share operating performance:
Net asset value, beginning of period $ 9.79 $ 10.00
----------- -------------
Net investment income 0.55 0.30
Net realized and unrealized gains (losses) on investments and
foreign currency transactions 1.24 (0.19)
----------- -------------
Total from investment operations 1.79 0.11
----------- -------------
Less distributions:
Dividends from net investment income (0.56) (0.31)
Distributions from net realized gains on investments (0.03) (0.01)
----------- -------------
Total distributions (0.59) (0.32)
----------- -------------
Net asset value, end of period $ 10.99 $ 9.79
=========== =============
Total return:
Total investment return (b)(c) 18.30% 1.10%**
Ratios/supplemental data:
Net assets, end of period (000) $48,334 $13,342
Ratio of net expenses to average net assets (e) 0.84%(d) 1.00%*
Ratio of net investment income to average net assets (c) 8.08%(d) 7.33%*
Portfolio turnover ratio 281% 94%**
</TABLE>
* Annualized
** Not Annualized
*** For the period from the commencement of operations July 5, 1994 to
December 31, 1994.
(a) Per share data was calculated using average shares outstanding during the
period.
(b) Total return at net asset value assuming all distributions reinvested.
(c) Computed giving effect to Manager's expense limitation undertaking.
(d) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior year ratios are net of benefits
received, if any.
(e) If the Fund had paid all of its expenses and there had been no
reimbursement from the Manager, these ratios would have been 0.94% and
1.60% (annualized), respectively.
Federal Income Tax Information (unaudited)
1.7% of the gain distribution recorded in December 1995 and paid in January
1996 was derived from long-term gains.
See Notes to Financial Statements.
39
<PAGE>
SCHEDULE OF INVESTMENTS
Keyport Variable Investment Trust Colonial-Keyport U.S. Fund For Growth /
December 31, 1995
Shares Value
----- -----------
COMMON STOCKS--(96.1%)
Finance, Insurance & Real Estate--(14.5%)
Depository Institutions--(8.1%)
BancOne Corp. 5,500 $ 207,625
BankAmerica Corp. 14,800 958,300
First Union Corp. 2,800 155,750
Mellon Bank Corp. 6,300 338,625
Nations Bank Corp. 13,600 946,900
Wells Fargo & Co. 4,000 864,000
---------
3,471,200
---------
Insurance Carriers--(2.2%)
Allstate Corp. 11,124 457,474
CIGNA Corp. 2,800 289,100
Old Republic International Corp. 5,700 202,350
Providian Corp. 300 12,225
---------
961,149
---------
Nondepository Credit Institutions--(1.7%)
Beneficial Corp. 15,400 718,025
---------
Security Brokers & Dealers--(2.5%)
A.G. Edwards, Inc. 22,200 530,025
Bear Stearns Cos., Inc. 19,000 377,625
Travelers Group, Inc. 2,700 169,763
---------
1,077,413
---------
Manufacturing--(53.9%)
Chemicals--(11.3%)
Abbott Laboratories 1,700 70,975
Bristol-Myers Squibb Co. 13,700 1,176,487
Clorox Co. 8,500 608,812
Eastman Chemical Co. 7,200 450,900
Ecolab, Inc. 4,200 126,000
Johnson & Johnson 14,500 1,241,562
Merck & Co., Inc. 12,600 828,450
Morton International, Inc. 1,300 46,638
Procter & Gamble Co. 3,100 257,300
Terra Industries, Inc. 3,500 49,438
---------
4,856,562
---------
Electronic & Electrical Equipment--(3.8%)
Micron Technology, Inc. 9,000 356,625
Novellus Systems, Inc. (a) 800 43,200
Read-Rite Corp. (a) 32,500 755,625
Texas Instruments, Inc. 3,800 195,700
Thomas & Betts Corp. 4,100 302,375
---------
1,653,525
---------
Fabricated Metal--(1.3%)
Parker-Hannifin Corp 3,400 116,450
Snap-On, Inc. 9,900 447,975
---------
564,425
---------
Food & Kindred Products--(6.0%)
Campbell Soup Co. 3,300 $ 198,000
Heinz (H.J.) Co. 3,900 129,187
IBP, Inc. 12,800 646,400
PepsiCo, Inc. 2,200 122,925
Phillip Morris Co., Inc. 2,800 253,400
Ralston-Ralston Purina Group 12,600 785,925
Sara Lee Corp. 14,300 455,813
---------
2,591,650
---------
Furniture & Fixtures--(1.4%)
Johnson Controls, Inc. 5,900 405,625
Leggett & Platt, Inc. 7,700 186,725
---------
592,350
---------
Machinery & Computer Equipment--(8.9%)
AGCO Corp. 300 15,300
Applied Materials, Inc. (a) 21,000 826,875
Case Corp. 2,400 109,800
Compaq Computer Corp. (a) 4,400 211,200
Dell Computer Corp. (a) 16,000 554,000
Dover Corp. 600 22,125
Hewlett-Packard Co. 11,000 921,250
International Business Machines
Corp. 7,900 724,825
Seagate Technology, Inc. (a) 8,800 418,000
Storage Technology Corp. (a) 900 21,375
---------
3,824,750
---------
Measuring & Analyzing Instruments--(3.9%)
Becton, Dickinson & Co. 4,300 322,500
Honeywell, Inc. 1,100 53,487
Millipore Corp. 17,600 723,800
Tektronix, Inc. 11,600 569,850
---------
1,669,637
---------
Miscellaneous Manufacturing--(2.2%)
Callaway Golf Co. 20,600 466,075
Jostens, Inc. 19,900 482,575
---------
948,650
---------
Paper & Paper Mills--(1.3%)
Champion International Corp. 11,100 466,200
Consolidated Papers, Inc. 2,000 112,250
---------
578,450
---------
Petroleum Refining--(7.2%)
Amoco Corp. 5,600 402,500
Atlantic Richfield Co. 4,200 465,150
Exxon Corp. 16,100 1,290,012
Mobil Corp. 8,400 940,800
---------
3,098,462
---------
See Notes to Investment Portfolio.
40
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
Keyport Variable Investment Trust Colonial-Keyport U.S. Fund For Growth /
December 31, 1995
Shares Value
----- -----------
Printing & Publishing--(1.6%)
Tribune Co. 6,400 $ 391,200
Washington Post Co. 1,000 282,000
---------
673,200
---------
Rubber & Plastic--(0.8%)
Nike, Inc., Class B 5,200 362,050
---------
Stone, Clay, Glass & Concrete--(1.7%)
Owens-Corning Fiberglas Corp.
(a) 16,600 744,925
---------
Transportation Equipment--(2.5%)
General Dynamics Corp. 4,400 260,150
PACCAR, Inc. 3,100 130,588
Teledyne, Inc. 26,200 671,375
---------
1,062,113
---------
Mining & Energy--(0.8%)
Oil & Gas Extraction
Sonat Offshore Drilling Co. 7,700 344,575
---------
Retail Trade--(3.8%)
Apparel & Accessory Stores--(2.0%)
TJX Companies, Inc. 44,300 836,163
---------
Food Stores--(0.5%)
Kroger Corp. (a) 4,800 180,000
Vons Cos. (a) 800 22,600
---------
202,600
---------
Miscellaneous Retail--(1.1%)
Eckerd Corp. (a) 800 35,700
Rite Aid Corp. 8,800 301,400
Walgreen Co. 4,800 143,400
---------
480,500
---------
Restaurants--(0.2%)
Luby's Cafeterias, Inc. 4,600 102,350
---------
Services--(3.1%)
Business Services--(2.1%)
Computer Associates
International, Inc. 15,800 898,625
---------
Motion Pictures--(1.0%)
King World Productions, Inc. (a) 11,100 431,513
---------
Transportation, Communication, Electric, Gas & Sanitary
Services--(19.0%)
Air Transportation--(2.7%)
AMR Corp. (a) 2,100 155,925
Delta Air Lines, Inc. 1,600 118,200
Northwest Airlines Corp. Class A
(a) 5,700 290,700
UAL, Inc. (a) 3,200 571,200
---------
1,136,025
---------
Communications--(9.4%)
Ameritech Corp. 16,300 $ 961,700
Bell Atlantic Corp. 2,700 180,562
BellSouth Corp. 2,800 121,800
Century Telephone Enterprises,
Inc. 3,800 120,650
Compuware Corp. (a) 5,000 92,500
GTE Corp. 12,300 541,200
NYNEX Corp. 6,600 356,400
Southwestern Bell Corp. 12,700 730,250
Sprint Corp. 23,900 953,013
---------
4,058,075
---------
Electric Services--(3.2%)
Central & South West Corp. 10,900 303,837
Consolidated Edison Co. of New
York 2,700 86,400
NIPSCO Industries, Inc. 800 30,600
Ohio Edison Co. 15,900 373,650
Rochester Gas & Electric Corp. 3,200 72,400
San Diego Gas & Electric Co. 18,400 437,000
Unicom Corp. 2,100 68,775
---------
1,372,662
---------
Gas Services--(2.7%)
Consolidated Natural Gas Co. 7,000 317,625
Pacific Enterprises 3,500 98,875
Panhandle Eastern Corp. 3,200 89,200
Williams Companies, Inc. 14,900 653,738
---------
1,159,438
---------
Water Transportation--(1.0%)
Tidewater, Inc. 14,200 447,300
---------
Wholesale Trade--(1.0%)
Durable Goods--(0.7%)
AVNET INC 6,900 308,775
---------
Nondurable Goods--(0.3%)
Supervalu, Inc. 3,600 113,400
---------
Total Common Stocks
(Cost $37,199,682) 41,340,537
---------
PREFERRED STOCKS--(0.0%)
Manufacturing--(0.0%)
Transportation Equipment--(0.0%)
Teledyne, Inc. Series E (Cost
$3,864) 262 3,766
---------
Total Investments--(96.1%)
(Cost $37,203,546) (b) 41,344,303
---------
See Notes to Investment Portfolio.
41
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
Keyport Variable Investment Trust Colonial-Keyport U.S. Fund For Growth /
December 31, 1995
Par Value
------- --------
SHORT-TERM OBLIGATIONS--(3.5%)
Repurchase agreement with
Bankers Trust Securities
Corp. dated 12/29/95, due
1/02/96 at 5.700%
collateralized by U.S.
Treasury notes with various
maturities to 2000, market
value $1,016,330 (repurchase
proceeds $995,630) $995,000 $995,000
------
Par Value
------- ---------
Repurchase agreement with Chase
Securities, Inc., dated
12/29/95, due 1/02/96 at
5.500% collateralized by a
U.S. Treasury note maturing in
1996, market value $541,960
(repurchase proceeds $530,324) $530,000 $ 530,000
-------
Total Short-Term Obligations 1,525,000
-------
Other Assets & Liabilities, Net--(0.4%) 148,049
-------
Net Assets--(100%) $43,017,352
=======
(a) Non-income producing security.
(b) The cost of investments for federal income tax purposes is $37,204,116.
Gross unrealized appreciation and depreciation at December 31, 1995 is as
follows:
Gross unrealized appreciation $ 5,377,004
Gross unrealized depreciation (1,236,817)
----------
Net unrealized appreciation $ 4,140,187
==========
See Notes to Financial Statements.
42
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
Keyport Variable Investment Trust Colonial-Keyport U.S. Fund for Growth /
December 31, 1995
<TABLE>
<S> <C>
Assets:
Investments, at market value (Identified cost $37,203,546) $41,344,303
Short-term obligations 1,525,000
Receivable for fund shares sold 147,809
Dividends and interest receivable 77,466
Unamortized organization expenses 13,940
Other assets 1,481
----------
Total assets 43,109,999
----------
Liabilities:
Payable for fund shares repurchased 36,416
Management fee payable 32,720
Accrued expenses payable 23,511
----------
Total liabilities 92,647
----------
Net assets $43,017,352
==========
Net assets represented by:
Paid-in capital $38,912,494
Accumulated overdistributed net investment income (35,328)
Accumulated net realized losses on investments (571)
Net unrealized appreciation on investments 4,140,757
----------
Total net assets applicable to outstanding shares of beneficial
interest $43,017,352
==========
Shares of beneficial interest outstanding 3,479,438
==========
Net asset value per share $12.36
==========
</TABLE>
STATEMENT OF OPERATIONS
For the Year ended December 31, 1995
<TABLE>
<S> <C>
Investment income:
Dividends $ 715,847
Interest income 94,757
--------
Total investment income 810,604
--------
Expenses:
Management fee 237,547
Bookkeeping fee 27,000
Transfer agent fee 7,500
Audit fee 20,000
Printing expense 1,174
Trustees' expense 3,059
Custodian fee 7,888
Legal fee 1,676
Amortization of organization expense 3,971
Miscellaneous expense 8,131
--------
Total expenses 317,946
--------
Less:
Expenses reimbursable by Manager (19,671)
--------
Net expenses 298,275
--------
Net investment income 512,329
Realized and unrealized gains on investments:
Net realized gains on investments 2,620,298
Change in unrealized appreciation on investments 3,846,518
--------
Net increase in net assets resulting from operations $6,979,145
========
</TABLE>
See Notes to Financial Statements.
43
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
Keyport Variable Investment Trust Colonial-Keyport U.S. Fund for Growth
<TABLE>
<CAPTION>
Year Period
Ended Ended
December 31, December 31,
1995 1994*
------------ ------------
<S> <C> <C>
Operations:
Net investment income $ 512,329 $ 130,873
Net realized gains on investments 2,620,298 43,388
Change in unrealized appreciation on investments 3,846,518 294,239
---------- ----------
Net increase in net assets resulting from operations 6,979,145 468,500
---------- ----------
Distributions declared from:
Net investment income (518,493) (130,873)
In excess of net investment income -- (29,164)
Net realized gains on investments (2,576,965) (43,388)
In excess of net realized gains on investments -- (43,904)
---------- ----------
Total distributions (3,095,458) (247,329)
---------- ----------
Fund share transactions:
Proceeds from fund shares sold 26,906,230 15,205,777
Cost of fund shares repurchased (6,240,626) (301,674)
Distributions reinvested 3,095,458 247,329
---------- ----------
Net increase in net assets resulting from fund share transactions 23,761,062 15,151,432
---------- ----------
Total increase in net assets 27,644,749 15,372,603
Net assets:
Beginning of period 15,372,603 0
---------- ----------
End of period $43,017,352 $15,372,603
========== ==========
Accumulated overdistributed net investment income included in ending net
assets $ (35,328) $ (29,164)
========== ==========
Analysis of changes in shares of beneficial interest:
Shares sold 2,240,739 1,501,690
Shares redeemed (508,643) (28,803)
Distributions reinvested 250,442 24,013
---------- ----------
Net increase 1,982,538 1,496,900
========== ==========
</TABLE>
* For the period from the commencement of operations July 5, 1994 to December
31, 1994.
See Notes to Financial Statements.
44
<PAGE>
FINANCIAL HIGHLIGHTS (a)
Keyport Variable Investment Trust Colonial-Keyport U.S. Fund for Growth
<TABLE>
<CAPTION>
Year Period
Ended Ended
December 31, December 31,
------------- ---------------
1995 1994***
------------- ---------------
<S> <C> <C>
Per share operating performance:
Net asset value, beginning of period $ 10.27 $ 10.00
----------- -------------
Net investment income 0.21 0.09
Net realized and unrealized gains on investments 2.84 0.35
----------- -------------
Total from investment operations 3.05 0.44
----------- -------------
Less distributions:
Dividends from net investment income (0.16) (0.11)
Distributions from net realized gains on investments (0.80) (0.06)
----------- -------------
Total Distributions (0.96) (0.17)
----------- -------------
Net asset value, end of period $ 12.36 $ 10.27
=========== =============
Total return:
Total investment return (b)(c) 29.70% 4.40%**
Ratios/supplemental data:
Net assets, end of period (000) $43,017 $15,373
Ratio of net expenses to average net assets (d) 1.00%(e) 1.00%*
Ratio of net investment income to average net assets
(b) 1.72%(e) 2.16%*
Portfolio turnover ratio 115% 52%**
</TABLE>
* Annualized
** Not Annualized
*** For the period from the commencement of operations July 5, 1994 to
December 31, 1994.
(a) Per share data was calculated using average shares outstanding during the
period.
(b) Computed giving effect to Manager's expense limitation undertaking.
(c) Total return at net asset value assuming all distributions reinvested.
(d) If the Fund had paid all of its expenses and there had been no
reimbursement from the Manager, these ratios would have been 1.07% and
1.64% (annualized), respectively.
(e) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior year ratios are net of benefits
received, if any.
Federal Income Tax Information (unaudited)
15.7% of the gain distribution recorded in December 1995 and paid in January
1996 was derived from long-term gains.
See Notes to Financial Statements.
45
<PAGE>
SCHEDULE OF INVESTMENTS
Keyport Variable Investment Trust Newport-Keyport Tiger Fund / December 31,
1995
Country
Abbrev. Shares Value
------ ------ ----------
COMMON STOCKS--(92.0%)
Finance, Insurance & Real Estate--(39.3%)
Depository Institutions--(20.0%)
Bank of Ayudhya Ltd. Th 47,000 $ 263,081
Development Bank of Singapore Ltd. Si 54,000 671,993
HSBC Holdings PLC HK 46,200 699,050
Hang Seng Bank HK 83,600 748,697
Overseas-Chinese Banking Corp. Ltd. Si 51,000 638,266
Public Bank Berhard Ma 155,000 296,692
Thai Farmers Bank Ltd. Th 48,000 484,002
----------
3,801,781
----------
Holdings & Other Investment Companies--(2.2%)
Singapore Technologies Si 140,000 316,765
Taiwan Fund, Inc. Tw 5,250 107,625
----------
424,390
----------
Nondepository Credit Institutions--(0.8%)
Manhattan Card Co. Ltd. HK 340,000 145,102
----------
Real Estate--(13.4%)
Cheung Kong Holdings Ltd. HK 113,000 688,303
City Developments Ltd. Si 65,000 473,379
Land and House Co. Ltd. Th 15,000 246,526
Sun Hung Kai Properties Ltd. HK 75,000 613,482
Wharf Holdings HK 157,000 522,826
----------
2,544,516
----------
Security Brokers & Dealers--(2.9%)
Guoco Group Ltd. HK 114,000 549,913
----------
Manufacturing--(19.2%)
Apparel--(2.1%)
Giordano International Ltd. HK 458,000 390,922
----------
Chemicals--(0.9%)
Pt Kalbe Farma In 36,500 123,715
Pt Darya Varia Laboratoria (a) In 22,000 39,930
----------
163,645
----------
Electronic & Electrical Equipment--(3.2%)
Hutchison Whampoa Ltd. HK 100,000 609,117
----------
Fabricated Metal--(1.6%)
Kian Joo Can Factory Berhard Ma 72,000 297,755
----------
Food & Kindred Products--(1.2%)
PT Mayora Indah (a) In 321,000 231,642
----------
Machinery & Computer Equipment--(1.1%)
PT Modern Photo Film (a) In 36,500 211,513
----------
Petroleum Refining--(0.9%)
Nylex Malaysia Berhard Ma 58,000 175,896
----------
Primary Metal--(0.9%)
Pohang Iron & Steel Co. Ltd. Ko 8,000 $ 175,000
----------
Printing & Publishing--(4.0%)
Singapore Press Holdings Ltd. Si 42,800 756,558
----------
Stone, Clay, Glass & Concrete--(1.5%)
Siam Cement Co. Ltd. Th 5,000 277,094
----------
Transportation Equipment--(1.8%)
Keppel Corp. (a) Si 38,000 338,542
----------
Mining & Energy--(4.3%)
Oil & Gas Extraction
Hong Kong and China Gas Co. Ltd. HK 426,000 685,897
Petronas Gas Berhard Ma 40,000 136,274
----------
822,171
----------
Retail Trade--(3.4%)
Auto Dealers & Gas Stations
Cycle & Carriage Ltd. Si 65,000 648,024
----------
Services--(2.2%)
Hotels, Camps & Lodging
Genting Berhard (b) Ma 51,000 425,837
----------
Transportation, Communication, Electric, Gas & Sanitary
Services--(18.3%)
Air Transportation--(3.1%)
Swire Pacific Ltd., Series A HK 75,000 581,959
----------
Communications--(9.6%)
Advanced Information Services Th 23,000 407,225
Hong Kong Telecommunications Ltd. HK 319,200 569,668
PT Indosat In 72,000 261,360
Philippine Long Distance Telephone,
ADR Ph 2,200 119,075
Telekom Malaysia Berhard Ma 59,000 460,102
----------
1,817,430
----------
Electric Services--(4.4%)
Hong Kong Electric Holdings Ltd. HK 148,000 485,199
Korea Electric Power Corp., ADR (a) Ko 13,000 347,750
----------
832,949
----------
Water Transportation--(1.2%)
Shun Tak Holdings Ltd. HK 316,000 222,722
----------
Wholesale Trade--(5.3%)
Durable Goods
China Steel Corp., GDS (a) Tw 2,000 34,750
Citic Pacific Ltd. (a) HK 196,000 670,443
Sime Barby Berhard Ma 117,000 311,048
----------
1,016,241
----------
See Notes to Investment Portfolio.
46
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
Keyport Variable Investment Trust Newport-Keyport Tiger Fund / December 31,
1995
Shares Value
-------- -----------
Total Investments
(Cost $15,718,002) (c) $17,460,719
---------
Par
--------
SHORT-TERM OBLIGATIONS--(9.5%)
Repurchase agreement with Chase
Securities, Inc., dated
12/29/95, due 01/02/96 at
5.500%, collateralized by a
U.S. Treasury note maturing in
1996, market value $159,533
(repurchase proceeds $154,094) $ 154,000 154,000
Repurchase agreement with J.P.
Morgan Securities Corp., dated
12/29/95, due 01/02/96 at
5.625%, collateralized by a
U.S. Treasury note maturing in
1998, market value $1,685,711
(repurchase proceeds
$1,651,031) 1,650,000 1,650,000
---------
Total Short-Term Obligations 1,804,000
---------
OTHER ASSETS & LIABILITIES--(-1.5%) (287,265)
---------
Net Assets--(100%) $18,977,454
=========
Notes to investment portfolio:
(a) Non-income producing.
(b) Genting Berhard is a restricted security which was acquired on May 2,
1995 and May 19, 1995 at a cost of $484,912. The fair value is determined
under the direction of the Trustees. This security represents 2.2% of the
Fund's net assets at December 31, 1995.
(c) The cost of investments for federal income tax purposes is identical.
Gross unrealized appreciation and depreciation at December 31, 1995 is as
follows:
Gross unrealized appreciation $1,997,654
Gross unrealized depreciation (254,937)
---------
Net unrealized appreciation $1,742,717
=========
Acronym Name
- ---------- -----------------------------
ADR American Depository Receipts
GDS Global Depository Shares
Summary of Securities by Country
Country Value % of Total
------ ---------- -----------
Hong Kong HK $ 8,183,300 46.9%
Singapore Si 3,843,527 22.0
Malaysia Ma 2,103,604 12.0
Thailand Th 1,677,928 9.6
Indonesia In 868,160 5.0
South Korea Ko 522,750 3.0
Taiwan Tw 142,375 0.8
Philippines Ph 119,075 0.7
---------- -----------
$17,460,719 100%
========== ===========
Certain securities are listed by country of underlying exposure
but may trade predominantly on other exchanges.
See Notes to Financial Statements.
47
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
Keyport Variable Investment Trust Newport-Keyport Tiger Fund / December 31,
1995
<TABLE>
<S> <C>
Assets:
Investments, at market value (Identified cost $15,718,002) $17,460,719
Short-term obligations 1,804,000
Cash (including foreign currencies) 519
Receivable for fund shares sold 67,203
Dividends and interest receivable 23,986
----------
Total assets 19,356,427
----------
Liabilities:
Payable for investments purchased 321,056
Payable for fund shares repurchased 10,047
Management fee payable 13,902
Accrued expenses payable 33,968
----------
Total liabilities 378,973
----------
Net assets $18,977,454
==========
Net assets represented by:
Paid-in capital $17,328,605
Accumulated overdistributed net investment income (93,375)
Accumulated net realized losses on investments and foreign currency
transactions (137)
Net unrealized appreciation on investments and foreign currency transactions 1,742,361
----------
Total net assets applicable to shares of beneficial interest outstanding $18,977,454
==========
Shares of beneficial interest outstanding 8,326,917
==========
Net asset value per share $2.28
==========
</TABLE>
STATEMENT OF OPERATIONS
For the period from the commencement of operations May 1, 1995 to December
31, 1995
<TABLE>
<S> <C>
Investment income:
Dividends (net of nonrebatable foreign taxes withheld at source of $12,789) $ 162,027
Interest income 94,555
--------
Total investment income 256,582
--------
Expenses:
Management fee 86,228
Bookkeeping fee 18,000
Transfer agent fee 5,000
Audit fee 20,000
Printing expense 2,122
Trustees' expense 1,769
Custodian fee 32,006
Legal expense 2,267
Miscellaneous expense 3,639
--------
Total expenses 171,031
--------
Net investment income 85,551
Realized and unrealized gains (losses) on investments and foreign currency transactions:
Net realized losses on investments (75)
Net realized losses on foreign currency transactions (14,780)
Change in unrealized appreciation on investments and foreign currency
transactions 1,742,361
--------
Net increase in net assets resulting from operations $1,813,057
========
</TABLE>
See Notes to Financial Statements.
48
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
Keyport Variable Investment Trust Newport-Keyport Tiger Fund
<TABLE>
<CAPTION>
Period Ended
December 31,
1995*
------------
<S> <C>
Operations:
Net investment income $ 85,551
Net realized losses on investments (75)
Net realized losses on foreign currency transactions (14,780)
Unrealized appreciation on investments and foreign currency transactions 1,742,361
----------
Net increase in net assets resulting from operations 1,813,057
----------
Distributions declared from:
Net investment income (85,551)
In excess of net investment income (78,657)
----------
(164,208)
----------
Fund share transactions:
Proceeds from fund shares sold 17,964,083
Cost of fund shares repurchased (799,686)
Distributions reinvested 164,208
----------
Net increase in net assets resulting from fund share transactions 17,328,605
----------
Total increase in net assets 18,977,454
Net assets:
Beginning of period 0
----------
End of period $18,977,454
==========
Accumulated overdistributed net investment income included in ending net
assets $ (93,375)
==========
Analysis of changes in shares of beneficial interest:
Shares sold 8,623,798
Shares redeemed (369,219)
Distributions reinvested 72,338
----------
Net increase 8,326,917
==========
</TABLE>
* For the period from the commencement of operations May 1, 1995 to December
31, 1995.
FINANCIAL HIGHLIGHTS (a)
<TABLE>
<CAPTION>
Period Ended
December 31,
-------------
1995**
-------------
<S> <C>
Per share operating performance:
Net asset value, beginning of period $ 2.00
-----------
Net investment income 0.01
Net realized and unrealized gains on investments and foreign currency
transactions 0.29
-----------
Total from investment operations 0.30
-----------
Less distributions from:
Dividends from net investment income (0.01)
In excess of net investment income (0.01)
-----------
Total distributions (0.02)
-----------
Net asset value, end of period $ 2.28
===========
Total return:
Total investment return (b) 15.00%***
Ratios/supplemental data:
Net assets, end of period (000) $18,977
Ratio of net expenses to average net assets 1.79%*(c)
Ratio of net investment income to average net assets 0.89%*(c)
Portfolio turnover ratio 12%
</TABLE>
* Annualized
** For the period from the commencement of operations May 1, 1995 to
December 31, 1995.
*** Not annualized.
(a) Per share data was calculated using average shares outstanding during the
period.
(b) Total return at net asset value assuming all distributions reinvested.
(c) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
See Notes to Financial Statements.
49
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Note 1. Organization and Accounting Policies
Keyport Variable Investment Trust (the "Trust") an open-end, diversified
management investment company, was organized as a Massachusetts business
trust on March 4, 1993. At December 31, 1995 the Trust consisted of six
series of Funds with different investment objectives, policies, and
restrictions: Colonial-Keyport Growth and Income Fund ("Growth and Income
Fund"), Colonial-Keyport Utilities Fund ("Utilities Fund"), Colonial-Keyport
International Fund for Growth ("International Fund for Growth"),
Colonial-Keyport Strategic Income Fund ("Strategic Income Fund"),
Colonial-Keyport U.S. Fund for Growth ("U.S. Fund for Growth"), and
Newport-Keyport Tiger Fund ("Tiger Fund") (individually referred to as a
"Fund", or collectively referred to as the "Funds"). Each Fund's objective is
as follows:
Growth and Income Fund seeks primarily income and capital growth and,
secondarily, capital preservation.
Utilities Fund seeks primarily current income and, secondarily, long-term
growth.
International Fund for Growth seeks long-term growth.
Strategic Income Fund seeks a high level of current income, as is consistent
with prudent risk and maximizing total return.
U.S. Fund for Growth seeks growth over time exceeding the S&P 500 Index's
performance.
Tiger Fund seeks long-term capital growth.
Shares of the Trust are available and are being marketed exclusively as a
pooled funding vehicle for variable annuity contracts ("VA contracts") and
Variable Life insurance Policies ("VLI Policies") of Keyport Life Insurance
Company ("Keyport"), Keyport America Life Insurance Company (formerly Crown
America Life Insurance Company) (a wholly-owned subsidiary of Keyport), and
the VA contracts of Liberty Life Assurance Company of Boston ("Liberty
Life"). The insurance companies and their separate accounts own all the
shares of the Funds. Keyport Advisory Services Corp. (the "Manager"), a
wholly-owned subsidiary of Keyport, provides investment management, advisory,
and administrative services to the Trust. Colonial Management Associates,
Inc. ("Colonial") provides sub-advisory services to each Fund of the Trust,
other than the Tiger Fund. Newport Fund Management, Inc. ("Newport") provides
sub-advisory services to the Tiger Fund. Colonial also provides pricing and
recordkeeping services to the Trust. Keyport Financial Services Corp., a
wholly-owned subsidiary of Keyport, serves as the underwriter of the Trust.
The Manager, Keyport, Colonial and Newport are indirect wholly-owned
subsidiaries of Liberty Financial Companies, Inc. ("Liberty Financial").
Liberty Mutual Insurance Company ("Liberty Mutual") owns approximately 82% of
the outstanding voting shares of Liberty Financial. Liberty Life is a
wholly-owned subsidiary of Liberty Mutual and Liberty Mutual Fire Insurance
Company.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements. The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Valuation of Investments--Portfolio securities listed on an exchange and
over-the-counter securities quoted on the NASDAQ system are valued on the
basis of the last sale on the date as of which the valuation is made, or,
lacking any sales, at the current bid prices. Over-the-counter securities not
quoted on the NASDAQ system are valued at the latest bid quotation. Long-term
debt securities are valued on the basis of dealer-supplied quotations or
valuations furnished by a pricing service which may employ electronic data
processing techniques, including a "matrix" system to determine the
valuations. Foreign debt securities are valued at the current bid price
furnished by market makers. Foreign equity securities listed on an exchange
are valued on the basis of last sale on the date as of which the valuation is
made, or lacking any sales, at the current bid prices. Forward currency
contracts are valued based on the weighted value of the exchange traded
contracts with similar durations. In certain countries, the Fund may hold
foreign designated shares. If the foreign share price is not readily
available as a result of limited share activity, the securities are valued at
the last sale price of the local shares in the principal market in which such
securities are normally traded. Korean equity securities that have reached
the limit for aggregate foreign ownership and for which premiums to the local
exchange prices may be paid by foreign investors are valued by applying a
broker quoted premium to the local share price. Securities for which reliable
quotations are not readily available are valued at fair value, as determined
in good faith and pursuant to procedures established by the Trustees.
Short-term instruments with remaining maturities of 60 days or less are
valued at amortized cost unless the Trustees determine this does not
represent fair value.
Federal Income Taxes--The Funds intend to qualify as "regulated investment
companies" and as such (and by complying with the applicable provisions of
the Internal Revenue Code) will not be subject to Federal income tax on
taxable income (including realized capital gains) distributed to
shareholders. By making the distributions required under the Internal Revenue
Code, the Funds intend to avoid excise tax liability.
Organization Expenses--Costs incurred in connection with the organization
and offering of the Funds are being deferred and amortized over 60 months
from the date those Funds commenced business.
Delayed Delivery Transactions--Growth and Income Fund and Strategic Income
Fund may purchase or sell secu-
50
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
rities on a when-issued or forward commitment basis. Payment and delivery may
take place a month or more after the date of the transaction. The price of
the underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated. This may
increase the risk if the other party involved in the transaction fails to
deliver and causes the Funds to subsequently invest at less advantageous
prices. The Funds identify securities as segregated in their custodial
records with a value at least equal to the amount of the purchase commitment.
Expenses--Most expenses of the Trust can be attributed to a Fund. Expenses
which cannot be directly attributed are apportioned among the Funds in the
Trust.
Other--Security transactions are accounted for on trade date. Interest
income is recorded on the accrual basis. Dividend income is recorded on the
ex-dividend date. Net realized and unrealized gains (losses) on foreign
currency transactions include the fluctuation in exchange rates on gains
(losses) between trade and settlement dates on security transactions, gains
(losses) arising from the disposition of foreign currency, and currency gains
(losses) between the accrual and payment dates on dividend and interest
income and foreign withholding taxes. The Funds do not isolate that portion
of the results of operations resulting from changes in foreign exchange rates
on investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain (losses) from investments. The Funds may enter into forward
currency contracts to purchase or sell foreign currencies at predetermined
exchange rates in connection with the settlement of purchases and sales of
securities. The Funds may also enter into forward currency contracts to hedge
certain other foreign currency denominated assets. The contracts are used to
minimize the exposure to foreign exchange rate fluctuations during the period
between trade and settlement date of the contracts. All contracts are
marked-to-market daily, resulting in unrealized gains (losses) which become
realized at the time the forward currency contracts are closed or mature.
Realized and unrealized gains (losses) arising from such transactions are
included in net realized and unrealized gains (losses) on foreign currency
transactions. Forward currency contracts do not eliminate fluctuations in the
prices of the Funds' portfolio securities. While the maximum potential loss
from such contracts is the aggregate face value in U.S. dollars at the time
the contract was opened, exposure is typically limited to the change in value
of the contract (in U.S. dollars) over the period it remains open. Risks may
also arise if counterparties fail to perform their obligations under the
contracts.
Note 2. Fund Share Transactions
Each Fund's capitalization consists of an unlimited number of shares of
beneficial interest without par value that represent a separate series of the
Trust. Each share of a Fund represents an equal proportionate beneficial
interest in that Fund and, when issued and outstanding, is fully paid and
nonassessable. Shareholders would be entitled to share proportionally in the
net assets of a Fund available for distribution to shareholders upon
liquidation of a Fund.
Note 3. Security Transactions
Realized gains (losses) are computed on the identified cost basis for both
financial reporting and Federal income tax purposes. At December 31, 1995,
Utilities Fund and International Fund for Growth had capital loss carryovers
of $4,660,804 and $957,124, respectively, which will expire in or before
2003, if not utilized.
The cost of investments purchased and proceeds from investments sold
excluding short-term investments for the year or period ended December 31,
1995, for the Funds were as follows:
Growth International
and Income Utilities Fund for
Fund Fund Growth
---------- --------- -------------
Cost of investments
purchased $50,440,792 $9,423,054 $9,497,260
Proceeds from
investments sold 42,971,592 7,392,815 7,624,945
Strategic
Income U.S. Fund
Fund for Growth Tiger Fund
---------- ---------- ------------
Cost of investments
purchased $71,450,599 $52,348,582 $17,228,179
Proceeds from
investments sold 77,165,752 32,381,772 1,483,780
Note 4. Distributions to Shareholders
The Funds intend to distribute as dividends or capital gain distributions, at
least annually, substantially all of their net investment income and net
profits realized from the sale of investments. All dividends and
distributions are reinvested in additional shares of the Funds at net asset
value as of the record date of the distribution. Income and capital gain
distributions are determined in accordance with Federal Income tax
regulations, which may differ from generally accepted accounting principles.
The character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally
accepted accounting principles. Reclassifications are made to the Fund's
capital accounts to reflect income and gains available for distribution (or
available capital loss carryforwards) under income tax regulations.
Accordingly, amounts as of December 31, 1995 have been reclassified as
follows:
51
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Inter-
national
Growth Fund Strategic
and Income for Income Tiger
Fund Growth Fund Fund
------------ ------- ------- ----------
Accumulated net
investment income $ 1,227 $ 8,597 $(3,639) $(14,718)
Accumulated net
realized gain
(losses) on
investments (1,227) 5,228 3,639 14,718
Paid in capital -- (13,925) -- --
In all cases net assets were not affected by these changes.
Note 5. Fees and Compensation Paid to Affiliates
Management and Sub-Advisory Fees--The Funds have management and
sub-advisory agreements with the Manager, Colonial and Newport, respectively.
For all the Funds, the management fee to be paid to the Manager is computed
daily and paid monthly based upon the average daily net assets of the Funds
at annual rates as follows:
Annual Rate
as a Percent
of Average
Daily
Fund Net Assets
- -------------------------------- --------------
Growth and Income Fund 0.65 of 1%
Utilities Fund 0.65 of 1%
International Fund for Growth 0.90 of 1%
Strategic Income Fund 0.65 of 1%
U.S. Fund for Growth 0.80 of 1%
Tiger Fund 0.90 of 1%
The Manager, out of the management fee it receives from the Funds, pays
Colonial and Newport a sub-advisory fee based upon the average daily net
assets of the Funds at annual rates as follows:
Annual Rate
as a Percent
of Average
Daily
Fund Net Assets
- -------------------------------- --------------
Growth and Income Fund 0.45 of 1%
Utilities Fund 0.45 of 1%
International Fund for Growth 0.70 of 1%
Strategic Income Fund 0.45 of 1%
U.S. Fund for Growth 0.60 of 1%
Tiger Fund 0.70 of 1%
Bookkeeping Fee--Colonial provides bookkeeping and pricing services to
each Fund for $27,000 per year plus rates ranging from 0.035% of the Fund's
average daily net assets over $50 million.
Transfer Agent Fee--Each of the Funds paid Colonial Investment Services,
Inc., an affiliate of Colonial, for transfer agent services rendered at an
annual rate of $7,500.
Expense Reimbursement--Through April 30, 1996, the Manager has agreed to
reimburse all expenses, including management fees in excess of 1.00% of
average daily net assets per annum for all Funds other than International
Fund for Growth and Tiger Fund which will be reimbursed for all expenses
exceeding 1.75% of average daily net assets. Effective May 1, 1995, the
expense limit on Strategic Income Fund changed to 0.80% of average daily net
assets until April 30, 1996.
Note 6. Investment in Repurchase Agreements
Each Fund may enter into repurchase agreements and requires the seller of the
instrument to maintain on deposit with the Funds' custodian bank or in the
Federal Reserve Book-Entry System securities in the amount at all times equal
to or in excess of the value of the repurchase agreement plus accrued
interest. The Funds may experience costs and delays in liquidating the
collateral if the issuer defaults or enters bankruptcy.
Note 7. Fund Substitutions
The Trustees approved the substitution of shares of Colonial Keyport
Strategic Income Fund ("CKSIF") for the shares of Managed Income Fund ("MIF")
and the shares of the Mortgage Securities Income Fund ("MSIF") for the shares
of Colonial Keyport U.S. Government Fund ("CKUSGF") (formerly a series of the
Trust). MIF and MSIF are series funds of the SteinRoe Variable Investment
Trust. The substitutions occurred on October 13, 1995 as the net asset value
of shares totaling $37,220,278 in MIF were substituted for shares in CKSIF.
Additionally on this date, the net asset value of shares totaling $25,976,438
in CKUSGF were substituted for shares of MSIF.
52
<PAGE>
Adviser
Keyport Advisory Services Corp.
125 High Street
Boston, Massachusetts 02110
Sub-Investment Adviser and
Transfer and Dividend Disbursing Agent
Colonial Management Associates, Inc.
One Financial Center
Boston, Massachusetts 02111-2365
Sub-Investment Adviser
Newport Fund Management
580 California Street
Suite 1960
San Francisco, California 94104
Distributor
Keyport Financial Services Corp.
125 High Street
Boston, Massachusetts 02110
Client Services
Keyport Life Insurance Company
125 High Street
Boston, Massachusetts 02110
800-367-3653 (Press 3)
Custodian
Boston Safe Deposit & Trust Company
One Cabot Road
Medford, Massachusetts 02155
Independent Accountants
Price Waterhouse LLP
160 Federal Street
Boston, Massachusetts 02110
Legal Counsel
Bingham, Dana & Gould
150 Federal Street
Boston, Massachusetts 02110
The Trustees
John A. Bacon Jr.
Richard R. Christensen
Salvatore Macera
Dr. Thomas E. Stitzel
This report is authorized for use as sales literature only when accompanied
by a current prospectus of the Trust and a current prospectus for a variable
insurance product offered by Keyport Life Insurance Company, Keyport America
Life Insurance Company, or Liberty Life Assurance Company of Boston.
12/95 NIM 9.5m
