File No. 33-59216
File No. 811-7556
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
Pre-effective Amendment No. [ ]
Post-effective Amendment No. 7 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 [ X ]
Amendment No. 8 [ X ]
(check appropriate box or boxes)
KEYPORT VARIABLE INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)
Federal Reserve Plaza, 600 Atlantic Avenue,
Boston, Massachusetts 02210
Registrant's Telephone Number Including Area Code: (617) 722-6000
JOHN A. BENNING, ESQ.
Senior Vice President and General Counsel
Liberty Financial Companies, Inc.
Federal Reserve Plaza, 600 Atlantic Avenue
(Name and Address of Agent for Service)
<PAGE>
Approximate Date of Proposed Public Offering:
It is proposed that this filing become effective (check appropriate box)
____ immediately upon filing pursuant to paragraph (b) of Rule 485
_X__ on May 1, 1996 pursuant to paragraph (b) of Rule 485
____ 60 days after filing pursuant to paragraph (a)(i) of Rule 485
____ on _____ pursuant to paragraph (a)(i) of Rule 485
____ 75 days after filing pursuant to paragraph (a)(ii) of Rule 485
____ on _____ pursuant to paragraph (a)(ii) of Rule 485
An indefinite number of shares of beneficial interest of all existing and
subsequently created series of the Trust under the Securities Act of 1933 were
registered by the Registration Statement filed on March 8, 1993 under the
Securities Act of 1933 pursuant to Rule 24f-2. A Rule 24f-2 Notice with respect
to the fiscal year ended December 31, 1995 was filed on February 28, 1996.
<PAGE>
KEYPORT VARIABLE INVESTMENT TRUST
CROSS REFERENCE SHEET
(as required by Rule 481(a))
PART A
FORM N-1A LOCATION
1. Cover Page Cover Page
2. Synopsis The Trust
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Cover Page; The Trust
5. Management of the Fund Trust Management Organizations
5A. Management's Discussion of Fund Information required by Item 5A
Performance is included in the Registrant's
Annual Report for the year ended
December 31, 1995. As required by said
Item 5, the Registrant undertakes
under "Financial Highlights" in the
Prospectus to provide a copy of said
Annual Report free of charge to
persons requesting the same.
6. Capital Stock and Other Securities The Trust; Other
Considerations: Purchases and
Redemptions, Net Asset Value,
Distributions, Taxes, Shareholder
Communications, Organization,
Meetings and Voting Rights
7. Purchase of Securities Being Offered Other Considerations:
Purchases and Redemptions, Net
Asset Value
8. Redemption or Repurchase Other Considerations: Purchases and
Redemptions
9. Pending Legal Proceedings Not Applicable
<PAGE>
KEYPORT VARIABLE INVESTMENT TRUST
Federal Reserve Plaza
600 Atlantic Avenue
Boston, Massachusetts 02210
Keyport Variable Investment Trust ("Trust") is an open-end management
investment company that currently includes six separate Funds, each with its
own investment objective and policies. The six Funds and their investment
objectives are:
(bullet) Colonial-Keyport Growth and Income Fund seeks primarily income and
long-term capital growth and, secondarily, preservation of capital.
(bullet) Colonial-Keyport Utilities Fund seeks primarily current income and,
secondarily, long-term capital growth.
(bullet) Colonial-Keyport International Fund For Growth seeks long-term
capital growth, by investing primarily in non-U.S. equity
securities. The Fund is non-diversified and may invest more than 5%
of its total assets in the securities of a single issuer, thereby
increasing the risk of loss compared to a diversified fund.
(bullet) Colonial-Keyport U.S. Fund For Growth seeks growth exceeding over
time the S&P 500 Index (Standard & Poor's Corporation Composite
Stock Price Index) performance.
(bullet) Colonial-Keyport Strategic Income Fund seeks a high level of current
income, as is consistent with prudent risk and maximizing total
return, by diversifying investments primarily in U.S. and foreign
government and high yield, high risk corporate debt securities. The
Fund may invest a substantial portion of its assets in high yield,
high risk bonds (commonly referred to as "junk bonds") and therefore
may not be suitable for all investors. High risk, high yield bonds
are regarded as speculative as to payment of principal and interest.
Purchasers should carefully assess the risks associated with an
investment in the Fund.
(bullet) Newport-Keyport Tiger Fund seeks long-term capital growth by
investing primarily in equity securities of companies located in the
four Tigers of Asia (Hong Kong, Singapore, South Korea and Taiwan)
and the other mini-Tigers of East Asia (Malaysia, Thailand,
Indonesia, China and the Philippines).
There is no assurance that the objectives of the Funds will be realized.
Other Funds may be added or deleted from time to time.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
This Prospectus contains information about the Funds that a prospective
investor should know before applying for certain variable annuity contracts
and variable life insurance policies offered by separate accounts of
insurance companies investing in the Trust. Please read it carefully and
retain it for future reference.
Additional facts about the Funds are included in a Statement of Additional
Information dated May 1, 1996, incorporated herein by reference, which has
been filed with the Securities and Exchange Commission. For a free copy write
to Keyport Financial Services Corp. at 125 High Street, Boston, Massachusetts
02110 or other broker-dealers offering the variable annuity contracts and
variable life insurance policies of Participating Insurance Companies (as
such term is defined in this Prospectus).
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, OF
INDEPENDENCE LIFE & ANNUITY COMPANY AND OF LIBERTY LIFE ASSURANCE COMPANY OF
BOSTON, OR OF OTHER PARTICIPATING INSURANCE COMPANIES.
THIS PROSPECTUS MUST BE ACCOMPANIED BY A CURRENT PROSPECTUS FOR THE APPROPRIATE
VA CONTRACTS OR VLI POLICIES OF PARTICIPATING INSURANCE COMPANIES. BOTH
PROSPECTUSES SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
The date of this Prospectus is May 1, 1996
<PAGE>
TABLE OF CONTENTS
Page
-------
THE TRUST 3
FINANCIAL HIGHLIGHTS 4
THE FUNDS 9
How the Funds Invest 9
Colonial-Keyport Growth and Income Fund 9
Colonial-Keyport Utilities Fund 9
Colonial-Keyport International Fund For Growth 10
Colonial-Keyport U.S. Fund For Growth 10
Colonial-Keyport Strategic Income Fund 10
Newport-Keyport Tiger Fund 11
TRUST MANAGEMENT ORGANIZATIONS 11
The Trustees 11
The Manager: Keyport Advisory Services Corp.
(KASC) 11
Sub-Advisers: Colonial Management Associates, Inc.
(Colonial), Newport Fund Management, Inc.
(Newport) and State Street Bank and Trust
Company (State Street) 12
TRUST SERVICE ORGANIZATIONS 13
Underwriter: Keyport Financial Services Corp. (KFSC) 13
Custodians: Boston Safe Deposit and Trust Company
and UMB, n.a. 13
Independent Accountants: Price Waterhouse LLP 13
OTHER CONSIDERATIONS 13
Expenses of the Funds 13
Purchases and Redemptions 14
Investment Return 14
Net Asset Value 14
Distributions 14
Taxes 15
Shareholder Communications 16
Organization, Meetings, and Voting Rights 16
Additional Information 16
OTHER INVESTMENT PRACTICES, RISK CONSIDERATIONS, AND
POLICIES OF THE FUNDS 16
Short-Term Trading 16
Cash Reserves and Repurchase Agreements 17
Forward Commitments and When-Issued Securities;
Dollar Roll Transactions 17
Foreign Securities 17
Mortgage-Backed Securities 19
Collateralized Mortgage Obligations (CMOs) and Real
Estate Mortgage Investment Conduits (REMICs) 19
Zero-Coupon Bonds 19
High Yield, High Risk Bonds 20
Foreign Stock Index Futures 20
Writing and Purchasing Covered Put Options on
Securities 20
Interest Rate Futures 20
Certain Policies to Reduce Risk 20
CHANGES TO INVESTMENT OBJECTIVES AND NON- FUNDAMENTAL
POLICIES 21
APPENDIX A: Description of Bond Ratings A-1
APPENDIX B: C-K Strategic Income Fund -- Schedule of
Portfolio Asset Composition by Rating for 1995 B-1
<PAGE>
THE TRUST
The Trust is an open-end management investment company currently consisting of
six series: Colonial-Keyport Growth and Income Fund ("C-K Growth and Income
Fund"), Colonial- Keyport Utilities Fund ("C-K Utilities Fund"),
Colonial-Keyport International Fund For Growth ("C-K International Fund For
Growth"), Colonial-Keyport U.S. Fund For Growth ("C-K U.S. Fund For Growth"),
Colonial-Keyport Strategic Income Fund ("C-K Strategic Income Fund") and
Newport-Keyport Tiger Fund ("N-K Tiger Fund") (individually referred to as a
"Fund" or by the initials indicated, or collectively as the "Funds"). Each of
C-K Growth and Income Fund, C-K Utilities Fund, C-K U.S. Fund For Growth, C-K
Strategic Income Fund and N-K Tiger Fund is a diversified fund. C-K
International Fund For Growth is non-diversified and may invest more than 5% of
its total assets in the securities of a single issuer. This increases the risk
of loss compared to a diversified fund. The Trust issues shares of beneficial
interest in each Fund that represent interests in a separate portfolio of
securities and other assets. The Trust may add or delete Funds from time to
time.
The Trust is the funding vehicle for variable annuity contracts ("VA
contracts") and variable life insurance policies ("VLI policies") offered by
the separate accounts of life insurance companies ("Participating Insurance
Companies"). The shares of the Funds currently are sold only to Keyport Life
Insurance Company ("Keyport"), Independence Life & Annuity Company
("Independence") and Liberty Life Assurance Company of Boston ("Liberty
Life").
The Participating Insurance Companies and their separate accounts are the
shareholders or investors ("shareholders") of the Funds. Owners of VA
contracts and owners of VLI policies invest in sub-accounts of separate
accounts of the Participating Insurance Companies that, in turn, invest in
the Funds.
The prospectuses of the separate accounts of the Participating Insurance
Companies describe which Funds are available to the separate accounts
offering the VA contracts and VLI policies. The Trust assumes no
responsibility for those prospectuses. However, Keyport Advisory Services
Corp. ("KASC") and the Board of Trustees of the Trust ("Board of Trustees")
monitor events to identify any material conflicts that may arise between the
interests of the Participating Insurance Companies or between the interests
of owners of VA contracts and VLI policies. The Trust currently does not
foresee any disadvantages to the owners of VA contracts and VLI policies
arising from the fact that certain interests of the owners may differ. The
Statement of Additional Information contains additional information regarding
such differing interests and related risks.
KASC provides investment management and advisory services to the Funds
pursuant to its Management Agreements with the Trust.
Colonial Management Associates, Inc. ("Colonial") provides sub-advisory
services to each Fund (other than N-K Tiger Fund) pursuant to separate
Sub-Advisory Agreements (the "Colonial Sub-Advisory Agreements") with each
such Fund and KASC.
Newport Fund Management, Inc. ("Newport") provides sub- advisory services to
N-K Tiger Fund pursuant to a separate Sub- Advisory Agreement (the "Newport
Sub-Advisory Agreement") with such Fund and KASC.
In addition, in the case of C-K U.S. Fund For Growth, pursuant to a separate
Sub-Advisory Agreement among the Fund, KASC, Colonial and State Street Global
Advisors, a division of State Street Bank and Trust Company ("State Street"),
Colonial has delegated portfolio management of the Fund to State Street.
KASC has delegated various administrative matters to Colonial. Colonial also
provides transfer agency and pricing and record keeping services to the
Trust. Keyport Financial Services Corp. ("KFSC") serves as the principal
underwriter of the Trust.
KASC, Colonial, Newport, KFSC, Keyport and Independence are wholly-owned
indirect subsidiaries of Liberty Financial Companies, Inc. ("LFC"). As of
March 31, 1996, approximately 81.5% of the combined voting power of LFC's
issued and outstanding voting stock was held, indirectly, by Liberty Mutual
Insurance Company ("Liberty Mutual"). Liberty Life is a wholly- owned
subsidiary of Liberty Mutual.
3
<PAGE>
FINANCIAL HIGHLIGHTS
The tables below present certain financial information for each Fund in the
Trust for the period beginning with such Fund's commencement of operations (July
1, 1993 for each of C-K Growth and Income Fund and C-K Utilities Fund; May 2,
1994 for C-K International Fund For Growth; July 5, 1994 for each of C-K U.S.
Fund For Growth and C-K Strategic Income Fund; and May 1, 1995 for N-K Tiger
Fund) and ended December 31, 1995. The information has been audited and reported
on by the Trust's independent accountants, Price Waterhouse LLP, whose report
thereon appears in the Trust's annual report to shareholders for the fiscal year
ended December 31, 1995 (which may be obtained without charge from KFSC), and is
incorporated by reference into the Statement of Additional Information. The
Funds' total returns presented below do not reflect the cost of insurance and
other insurance company separate account charges which vary with the VA
contracts and VLI policies offered through the separate accounts of
Participating Insurance Companies.
Colonial-Keyport Growth and Income Fund
<TABLE>
<CAPTION>
Period Ended December 31,
-------------------------------
1995(a) 1994 1993***
------- ------- ---------
Per share operating performance:
<S> <C> <C> <C>
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 KASC, this ratio would have been 1.23% (annualized)
for the period ended December 31, 1993.
(d) Computed giving effect to KASC's expense limitation undertaking.
(e) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits received,
if any.
8
<PAGE>
Colonial-Keyport Utilities Fund
<TABLE>
<CAPTION>
Period Ended December 31,
-------------------------------------
1995(a) 1994 1993***
--------- --------- -----------
Per share operating performance:
<S> <C> <C> <C>
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 KASC's expense limitation undertaking.
(d) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' 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 KASC, this ratio would have been 1.09% (annualized)
for the period ended December 31, 1993.
5
<PAGE>
Colonial-Keyport International Fund For Growth
<TABLE>
<CAPTION>
Period Ended December
31,
------------------------
1995(a) 1994***
--------- -----------
Per share operating performance:
<S> <C> <C>
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>
* Annualized
** Not 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 years' ratios are net of benefits
received, if any.
6
<PAGE>
Colonial-Keyport U.S. Fund For Growth
<TABLE>
<CAPTION>
Period Ended December
31,
------------------------
1995(a) 1994***
--------- -----------
Per share operating performance:
<S> <C> <C>
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 from:
Dividends from net investment income (0.16) (0.11)
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 KASC'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 KASC, 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 years' ratios are net of benefits
received, if any.
7
<PAGE>
Colonial-Keyport Strategic Income Fund
<TABLE>
<CAPTION>
Period Ended December
31,
------------------------
1995(a) 1994***
--------- -----------
Per share operating performance:
<S> <C> <C>
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 from:
Dividends from net investment income (0.56) (0.31)
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 KASC's expense limitation undertaking.
(d) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' 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 KASC, these ratios would have been 0.94% and 1.60%
(annualized), respectively.
Newport-Keyport Tiger Fund (a)
<TABLE>
<CAPTION>
Period Ended
December 31,
1995**
-----------------
Per share operating performance:
<S> <C>
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.
8
<PAGE>
Further information about the performance of the Funds is contained in the
Trust's annual report to shareholders for the period ended December 31, 1995,
which may be obtained without charge from KFSC.
THE FUNDS
How The Funds Invest
All investments, including mutual funds, have risks, and no one mutual fund
is suitable for all investors. No one Fund by itself constitutes a complete
investment program. The net asset value of the shares of the Funds will vary
with market conditions and there can be no guarantee that any Fund will
achieve its investment objective.
Each Fund and its investment objectives and policies are described below.
Certain additional investment policies and techniques common to some or all
of the Funds are described under "OTHER INVESTMENT PRACTICES, RISK
CONSIDERATIONS, AND POLICIES OF THE FUNDS" below.
More information about the portfolio securities in which the Funds invest,
including certain risks and investment limitations, is provided in the
Statement of Additional Information.
Colonial-Keyport Growth and Income Fund
Investment Objective. The Fund seeks primarily income and long-term capital
growth and, secondarily, preservation of capital.
Investment Program. The Fund may invest without limit in U.S. and foreign
common stocks that, when purchased, meet quantitative standards that, in
Colonial's judgment, indicate above average financial soundness and high
intrinsic value relative to price. The issuer of any common stock the Fund
purchases must have, when purchased, consolidated net worth in excess of
total consolidated debt, except for banking institutions and electric
utilities, whose consolidated net worth must exceed 35% of total
capitalization.
When purchased, each common stock must also meet one of the following
criteria:
1. Earnings yield equals or exceeds the prevailing average yield to maturity
of the five most recently issued, actively traded long-term U.S.
Government bonds;
2. Dividend yield equals or exceeds 66% of the prevailing average yield to
maturity of the five most recently issued, actively traded long-term U.S.
Government bonds; or
3. Per share going-concern value (as estimated by Colonial) exceeds book
value and market value. No purchases will be made based on this criterion
if at the time more than 25% of the Fund's total market value of common
stocks was purchased on this criterion.
Notwithstanding the foregoing, up to 5% of the Fund's net assets may be
invested in common stocks without regard to the quantitative standards in
clauses 1 through 3 above pertaining to consolidated net worth, earnings
yield, dividend yield and estimated going-concern value.
The Fund may also invest in debt securities, but currently intends to limit
those investments to U.S. Government and agency obligations (except for
temporary or defensive investments). The market value of debt securities will
fluctuate with changing interest rates which could affect the value of Fund
shares.
The portion of total assets invested in common stocks and debt securities
will vary based on the availability of common stocks meeting the foregoing
criteria and Colonial's judgment of the investment merit of common stocks
relative to debt securities.
The Fund may invest without limit in securities traded outside of the U.S.
and may purchase foreign currencies on a spot or forward basis in conjunction
with its investments in foreign securities and to hedge against fluctuations
in foreign currencies. The Fund may also invest in money market instruments
including repurchase agreements ("REPOs") collateralized by U.S. Government
Securities.
Colonial-Keyport Utilities Fund
Investment Objective. The Fund seeks primarily current income and, secondarily,
long-term capital growth.
Investment Program. The Fund normally invests at least 65% of its total assets
in common and preferred equity securities of utility companies.
The Fund will normally invest substantially all of its total assets in the
equity securities (preferred and common stocks) of utility companies
(including the manufacturing, production, generation, transmission, and sale
of electricity and natural gas, water or other sanitation services,
telephone, telegraph, satellite, microwave or other communication services to
the public), except temporarily for defensive purposes. The market price and
dividends of securities in the utilities industry may be adversely affected
by fluctuating economic conditions, fuel availability and cost, energy
conservation, competition (particularly as a result of deregulation) and,
while relative to the utilities in general, particularly to nuclear
facilities: environmental regulations, shortened economic life, and untimely
or inadequate rate adjustments by regulatory commissions.
9
<PAGE>
Colonial-Keyport International Fund For Growth
Investment Objective. The Fund seeks long-term capital growth by investing
primarily in non-U.S. equity securities.
Investment Program. The Fund normally invests at least 65% of its assets in
equity securities, consisting of common and preferred stock, warrants to
purchase such stock, and convertible debt, of issuers in at least three
countries other than the U.S. The Fund may also invest up to 35% of its
assets in high quality foreign government debt securities. The value of debt
securities usually fluctuates inversely to changes in interest rates. The
Fund may invest in both exchange and over-the-counter traded securities.
The Fund is non-diversified and may invest more than 5% of its total assets
in the securities of a single issuer, increasing the risk of loss compared to
a diversified fund.
The Fund may invest up to 10% of its total assets in closed-end investment
companies commonly referred to as "country funds." Such investments will
involve the payment of duplicative fees through the indirect payment of a
portion of the expenses, including advisory fees, of such other investment
companies.
The Fund may invest in smaller, less well established companies which may
offer greater opportunities for capital appreciation than larger, better
established companies. These stocks may also involve certain special risks
related to limited product lines, markets or financial resources and
dependence on a small management group. Their securities may trade less
frequently, in smaller volumes and fluctuate more sharply in value than
exchange listed securities of larger companies.
For a discussion of certain special risks and other considerations pertaining
to investments in foreign securities applicable to the Fund, see "OTHER
INVESTMENT PRACTICES, RISK CONSIDERATIONS, AND POLICIES OF THE FUNDS: Foreign
Securities;" and "Foreign Stock Index Futures."
Colonial-Keyport U.S. Fund For Growth
Investment Objective. The Fund seeks growth over time exceeding the S&P 500
Index's performance.
Investment Program. The Fund normally invests at least 65% of its total
assets in U.S. common stocks that State Street believes have superior growth
and value characteristics selected from a universe which meets certain
guidelines for liquidity and investment information. To select securities,
State Street uses quantitative standards, designed to identify above average
intrinsic value relative to price and favorable earnings trends. The State
Street Bank Stock Universe consists of approximately 1,000 securities that
State Street believes have the highest capitalization and liquidity and are
followed by most analysts in the U.S. The Fund intends to invest in
approximately 100 of the securities in the State Street Bank Stock Universe
ranked highest by State Street based on its evaluation of (i) "Value"
criteria and (ii) the momentum of "Sentiment" of Wall Street analysts'
earnings estimates. State Street compiles its "Value" rankings based upon
comparisons of an issuer's assets, projected earnings and projected growth of
income and cash flow. State Street compiles its "Sentiment" rankings based
upon the strength and consistency of changes in Wall Street analysts'
earnings estimates.
The S&P 500 Index is a market-value weighted index of 500 common stocks
publicly traded in the open stock market chosen on the basis of market value
and industry diversification. Standard & Poor's Corporation ("S&P") and the
S&P 500 Index are not affiliated with nor do they sponsor nor recommend the
Fund or the Trust.
The Fund will not concentrate more than 25% of its total assets in any one
industry. The Fund's investments are not limited to securities in the S&P 500
Index and will not precisely match the composition of the S&P 500 Index, but
may be managed to correlate with the sectors, capitalization and volatility
of the S&P 500 Index.
Portfolio securities may be sold without regard to time held (subject to
certain limitations imposed by the Code), causing a portfolio turnover rate
substantially higher than that of most funds, resulting in higher brokerage
commissions and custodian fees.
Generally the Fund will maintain less than 5% of total assets in cash
equivalents to meet current cash flow needs. The Fund may also invest
temporarily available cash in money market investment companies, subject to
the limits of the Investment Company Act of 1940. This will involve the
indirect payment of a portion of the expenses, including advisory fees, of
such investment companies.
The Fund may lend securities to certain institutions (that State Street
considers qualified) to increase income. The loans will not exceed 33% of
total assets. Securities lending involves the risk of loss to the Fund if the
borrower defaults.
Colonial-Keyport Strategic Income Fund
Investment Objectives. The Fund seeks a high level of current income, as is
consistent with prudent risk and maximizing total return, by diversifying
investments primarily in U.S. and foreign government and high yield, high 15
risk corporate debt securities.
Investment Program. The Fund will seek to achieve its objectives by investing
its assets in each of the following sectors of the debt securities markets:
(i) U.S. Government Securities; (ii) debt securities issued by foreign
governments and their political subdivisions; and (iii) high yield, high risk
securities, some of which may involve equity features. The Fund may invest in
debt securities of any maturity. The allocation of investments among these
types of securities at any given time is based on Colonial's estimate of
expected performance and risk of each
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type of investment. The value of debt securities (and thus of Fund shares)
usually will fluctuate inversely to changes in interest rates.
The U.S. Government Securities in which the Fund invests include (1) U.S.
Treasury obligations; (2) obligations issued or guaranteed by U.S. Government
agencies and instrumentalities ("Agencies") which are supported by (a) the
full faith and credit of the U.S. Government, (b) the right of the issuer or
guarantor to borrow an amount limited to a line of credit with the U.S.
Treasury, (c) discretionary power of the U.S. Government to purchase
obligations of the Agencies, or (d) the credit of the Agencies; (3) real
estate mortgage investment conduits ("REMICs"), and collateralized mortgage
obligations ("CMOs"), including privately-issued asset-backed securities and
privately-issued mortgage-backed securities guaranteed by an Agency; (4)
"when-issued" commitments relating to the foregoing; and (5) certain high
quality U.S. Government money market instruments, including REPOs
collateralized by U.S. Government Securities. The Fund may invest in U.S.
Government Securities of any maturity and in zero coupon securities. The Fund
also may invest in certificates representing undivided interests in the
interest or principal of mortgage-backed securities (interest only/principal
only), which tend to be more volatile than other types of securities. See
"OTHER INVESTMENT PRACTICES, RISK CONSIDERATIONS AND POLICIES OF THE FUNDS:
Mortgage-Backed Securities."
The Fund may invest any portion of its assets in securities issued or
guaranteed by foreign governments. For a discussion of certain special risks
and other considerations pertaining to investments in foreign securities
applicable to the Fund, see "OTHER INVESTMENT PRACTICES, RISK CONSIDERATIONS
AND POLICIES OF THE FUNDS: Foreign Securities."
The Fund may purchase high yield, high risk bonds (commonly referred to as
junk bonds), including bonds in the lowest rating categories (C for Moody's
Investors Services, Inc. ("Moody's") and D for S&P) and unrated bonds. The
lowest rating categories include bonds which are in default. Because these
securities are regarded as predominantly speculative as to payment of
principal and interest, the Fund will not purchase the debt securities of a
single issuer rated by Ca by Moody's or CC by S&P or lower or comparable
unrated securities, if as a result holdings of that issuer exceed 0.5% of the
Fund's net assets. High yield, high risk bonds are those rated lower than Baa
by Moody's or BBB by S&P, or comparable unrated securities. For a discussion
of certain risks and other considerations pertaining to investments in high
yield bonds, see "OTHER INVESTMENT PRACTICES, RISK CONSIDERATIONS AND
POLICIES OF THE FUNDS: High Yield, High Risk Bonds." Appendix A to this
Prospectus provides a description of bond ratings.
Newport-Keyport Tiger Fund
Investment Objective. The Fund seeks long-term capital growth.
Investment Program. The Fund invests primarily in equity securities of
companies located in the four Tigers of East Asia (Hong Kong, Singapore,
South Korea and Taiwan), and the other mini-Tigers of East Asia (Malaysia,
Thailand, Indonesia, China and the Philippines). These nine countries are
referenced to herein as the "Tiger countries." Normally, the Fund will seek
to be fully invested in securities of companies located in the Tiger
countries.
Equity securities in which the Fund invests include common and preferred
stock, warrants (rights) to purchase stock, debt securities convertible into
stock, and shares of closed-end investment companies that invest primarily in
the foregoing securities.
The Fund may invest up to 10% of its total assets in closed-end investment
companies commonly referred to as "country funds." Such investments will
involve the payment of duplicative fees through the indirect payment of a
portion of the expenses, including advisory fees, of such other investment
companies.
For a discussion of certain special risks and other considerations pertaining
to investments in foreign securities applicable to the Fund, see "OTHER
INVESTMENT PRACTICES, RISK CONSIDERATIONS, AND POLICIES OF THE FUNDS: Foreign
Securities." Such special risks are particularly relevant to investments in
equity securities issued by companies located in the Tiger countries.
TRUST MANAGEMENT ORGANIZATION
The Trustees
The business of the Trust and the Funds is supervised by the Trust's Board of
Trustees. The Statement of Additional Informa- tion contains the names of and
biographical information on the Trustees.
The Manager: Keyport Advisory Services Corp. (KASC)
KASC, 125 High Street, Boston Massachusetts 02110, is the manager of the Trust.
KASC was incorporated on January 8, 1993 under the laws of the Commonwealth of
Massachusetts.
In accordance with its Management Agreements with the Trust, KASC designs and
supervises a continuous investment program for the Trust, evaluates,
recommends, and monitors Colonial's, Newport's and State Street's
performance, investment programs, and compliance with applicable laws and
regulations, and recommends to the Board of Trustees whether Colonial's,
Newport's, and State Street's respective contracts should be continued or
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modified and whether a new sub-adviser or multiple sub-advisers should be
added or deleted. KASC is also responsible for administering the Trust's
operations, including the provision of office space and equipment in
connection with the maintenance of the Trust's headquarters, preparation and
filing of required reports, arrangements for Trustees' and shareholders'
meetings, maintenance of the Trust's corporate books and records,
communications with shareholders, and oversight of custodial, accounting and
other services provided to the Funds by others. In accordance with its
Management Agreements with the Trust, KASC may, at its own expense, delegate
the performance of certain of its administrative responsibilities to its
affiliate LFC, or any of LFC's majority- owned subsidiaries. KASC has
delegated its administrative responsibilities to Colonial in accordance with
this authority. KASC, or its affiliates, pay all compensation of the Trust's
directors and officers who are employees of KASC or its affiliates.
The Trust may add funds that utilize the investment advisory services of more
than one portfolio adviser, whereby each portfolio adviser is responsible for
specified portions of the Funds' investments. KASC will be responsible for
the selection and supervision of such advisers and the allocation of the
portions of the assets among such advisers.
The Trust pays KASC management fees, accrued daily and paid monthly, at the
following maximum annual rates of the average daily net assets of the
specified Fund.
C-K Growth and Income Fund 0.65%
C-K Utilities Fund 0.65%
C-K International Fund For
Growth 0.90%
C-K U.S. Fund For Growth 0.80%
C-K Strategic Income Fund 0.65%
N-K Tiger Fund 0.90%
The fee for the C-K U.S. Fund For Growth is higher than most management fees
for funds with comparable investment objectives.
Sub-Advisers: Colonial Management Associates, Inc. (Colonial),
Newport Fund Management, Inc. (Newport) and
State Street Bank and Trust Company (State Street)
Colonial
Colonial, an investment adviser since 1931, is the Sub-Adviser of each of the
current Funds (other than N-K Tiger Fund). Colonial, whose principal business
address is One Financial Center, Boston, Massachusetts, 02111, is an indirect
wholly owned subsidiary of LFC.
KASC, out of the management fees it receives from the Trust, pays Colonial
sub-advisory fees at the following annual rates of the average daily net
assets of the specified Fund:
C-K Growth and Income Fund 0.45%
C-K Utilities Fund 0.45%
C-K International Fund For Growth 0.70%
C-K U.S. Fund For Growth 0.60%
C-K Strategic Income Fund 0.45%
Under the Colonial Sub-Advisory Agreements, Colonial manages the assets of
the respective Funds in accordance with their investment objectives,
investment programs, policies, and restrictions under the supervision of KASC
and the Board of Trustees. Colonial determines which securities and other
instruments are purchased and sold for each Fund and obtains and evaluates
certain financial data relevant to each Fund, which it provides to KASC,
except that Colonial has delegated portfolio management of the C-K U.S. Fund
For Growth to State Street. Colonial also provides transfer agency and
certain pricing and record keeping services for the Funds under separate
agreements.
Mr. Daniel Rie, Senior Vice President, Colonial, and director of Colonial's
Equity Group, manages the C-K Growth and Income Fund. Mr. Rie manages The
Colonial Fund, and has managed or co-managed various other Colonial equity
funds since 1986.
John E. Lennon and James P. Haynie co-manage the C-K Utilities Fund. Mr.
Lennon has been a Vice President of Colonial since 1983 and has managed
Colonial Utilities Fund since 1984 and various other Colonial Funds since
1982. Mr. Haynie, a Vice President of Colonial, has managed various other
Colonial equity funds since 1993. Prior to joining Colonial in 1993, Mr.
Haynie was a Vice President at Massachusetts Financial Services Company and a
Portfolio Manager at Trinity Investment Management.
Carl C. Ericson manages the C-K Strategic Income Fund. Mr. Ericson, a Senior
Vice President of Colonial and director of Colonial's Taxable Fixed Income
Group, has managed the Colonial Strategic Income Fund since 1991 and various
other Colonial taxable income funds since 1985.
Bruno Bertocci and David Harris, each of whom is jointly employed by Colonial
and Stein Roe & Farnham Incorporated (Stein Roe), an indirect wholly owned
subsidiary of LFC, have co-managed the C-K International Fund For Growth
since January 1, 1996. Prior to joining Stein Roe in May, 1995, each of
Messrs. Bertocci and Harris was employed by Rockefeller & Co., Inc., Mr.
Bertocci as a Managing Director and Mr. Harris as a Portfolio Manager. 19
<PAGE>
Colonial utilizes the trading facilities of Stein Roe to place all orders for
the purchase and sale of portfolio securities, futures contracts and foreign
currencies for the C-K International Fund For Growth. In selecting
broker-dealers, Colonial may direct Stein Roe to consider research and
brokerage services furnished to Colonial.
Newport
Newport is the Sub-Advisor of the N-K Tiger Fund. Newport, whose principal
address is 580 California Street, Suite 1960, San Francisco, California
94104, is an indirect wholly owned subsidiary of LFC.
KASC, out of the management fees it receives from the Trust, pays Newport a
sub-advisory fee at the annual rate of 0.70% of the average daily net assets
of the N-K Tiger Fund.
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Under the Newport Sub-Advisory Agreement, Newport manages the assets of the
Fund in accordance with its investment objective, its investment program,
policies, and restrictions under the supervision of KASC and the Board of
Trustees. Newport determines which securities and other instruments are
purchased and sold for the Fund and obtains and evaluates certain financial
data relevant to the Fund, which it provides to KASC.
John M. Mussey and Thomas R. Tuttle, President and Managing Director,
respectively, of Newport, co-manage the Fund. Mr. Mussey has managed the
Colonial Newport Tiger Fund since 1989. (The Colonial Newport Tiger Fund is
the successor by merger to the Newport Tiger Fund, which commenced operations
in 1989). Mr. Tuttle has co-managed the Colonial Newport Tiger Fund since
November, 1995. Messrs. Mussey and Tuttle have been officers of Newport since
1984.
State Street
Colonial has delegated portfolio management of the C-K U.S. Fund For Growth to
State Street. State Street is the largest provider of securities processing and
recordkeeping services for U.S. mutual funds and pension funds. State Street is
a wholly- owned subsidiary of State Street Boston Corporation, a publicly held
bank holding company. State Street Global Advisors (formerly State Street Asset
Management), a division of the bank established in 1978, specializes in
quantitative investment products and is the largest U.S. Manager of
international pension assets. State Street Global Advisors, with over $194
billion under management as of December 31, 1995, provides complete global
investment management services.
State Street, subject to the supervision of the Trustees, KASC and Colonial,
directs the investment of C-K U. S. Fund For Growth in accordance with the
Fund's investment objective, policies and restrictions. For these services,
Colonial pays State Street a monthly fee at the annual rate of (i) 0.40% of
the first $200 million of average daily net assets of the Fund and (ii) 0.35%
of average daily net assets in excess of $200 million out of Colonial's own
sub-advisory fee.
Jeffrey P. Adams, Assistant Vice President of State Street is primarily
responsible for the day-to-day management and investment decisions for the
Fund and is supported by a group of other investment professionals that
assist in the management of the Fund. Mr. Adams joined State Street in 1989.
TRUST SERVICE ORGANIZATION
Underwriter: Keyport Financial Services Corp. (KFSC)
KFSC, 125 High Street, Boston, Massachusetts 02110, serves as principal
underwriter for the Trust pursuant to an Underwriting Agreement. KFSC is
registered as a broker-dealer under the Securities Exchange Act of 1934 and
is a member of the National Association of Securities Dealers, Inc.
Custodian: Boston Safe Deposit and Trust Company and UMB, n.a.
Boston Safe Deposit and Trust Company, One Boston Place, Boston, Massachusetts
02109, is the custodian for each of the Funds other than the N-K Tiger Fund.
UMB, n.a., 928 Grand Ave., Kansas City, Missouri 64141, is the custodian for the
N-K Tiger Fund. Foreign securities are maintained in the custody of foreign
branches of U.S. banks, foreign banks and foreign trust companies that are
members of such banks' respective global custody networks or foreign
depositories used by such members.
Independent Accountants: Price Waterhouse LLP
Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110 are the
Trust's independent accountants.
OTHER CONSIDERATIONS
Expenses of the Funds
The Funds generally will pay all their expenses, other than those borne by
KASC, Colonial, Newport and State Street. KASC has agreed to reimburse all
expenses, including management fees, but excluding interest, taxes,
brokerage, and other expenses which are capitalized in accordance with
accepted accounting procedures, and extraordinary expenses, incurred by (i)
C-K Growth and Income Fund, C-K Utilities Fund and C-K U.S. Fund For Growth
in excess of 1.00% of average net asset value per annum, (ii) each of C-K
International Fund For Growth and N-K Tiger Fund in excess of 1.75% of
average net asset value per annum and (iii) C-K Strategic Income Fund in
excess of 0.80% of average net asset value per annum, in each case for the
period beginning May 1, 1996 until April 30, 1997.
The expenses payable by the Funds include, among other things, the management
fees payable to KASC, described above; fees for services of independent
accountants; consultant fees; legal fees; transfer agent, custodian and
portfolio record keeping and tax information services; fees for pricing and
recordkeeping services, and of equipment for communication
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among the Funds' custodian, KASC, Colonial, Newport, State Street and others;
taxes and the preparation of the Funds' tax returns; brokerage fees and
commissions; interest; costs of Board of Trustees and shareholder meetings;
updates and printing of prospectuses and reports to shareholders; fees for
filing reports with regulatory bodies and the maintenance of the Trust's
existence; membership dues for industry trade associations; fees to federal
authorities for the registration of the shares of the Funds; fees and
expenses of Trustees who are not directors, officers, employees or
stockholders of KASC, Colonial, Newport, State Street or their affiliates;
insurance and fidelity bond premiums; and other extraordinary expenses of a
non-recurring nature.
It is the policy of the Trust that expenses directly charged or attributable
to any particular Fund will be paid from the assets of that Fund. General
expenses of the Trust will be allocated among and charged to the assets of
each of the Funds on a basis that the Board of Trustees deems fair and
equitable, which may be based on the relative assets of each Fund or the
nature of the services performed and their relative applicability to each
Fund.
Purchase and Redemptions
The Participating Insurance Companies place daily orders to purchase and redeem
shares of each Fund based on, among other things, the net amount of purchase
payments to be invested and surrender and transfer requests to be effected on
that day pursuant to the VA contracts and VLI policies, including deductions for
fees and charges by the applicable insurance company separate account. The Trust
continuously offers and redeems shares at net asset value without the addition
of any selling commission, sales load or redemption charge. Shares are sold and
redeemed at their net asset value as next determined after receipt of purchase
payments or redemption requests, respectively, by the separate accounts.
Similarly, shares are sold or redeemed as a result of such other transactions
under the VA contracts and VLI policies at the net asset value computed for the
day on which such transactions are effected by the separate accounts. The right
of redemption may be suspended or payments postponed whenever permitted by
applicable law and regulations.
Investment Return
The total return from an investment in a Fund is measured by the distributions
received (assuming reinvestment of all distributions) plus or minus the change
in the net asset value per share for a given period. A total return percentage
is calculated by first dividing the value of a share at the end of the period
(including reinvestment of distributions) by the value of the share at the
beginning of the period and then subtracting 1.0. A Fund's average annual total
return is determined by computing the annual percentage change in value of a
$1.00 investment in such Fund for a specified period, assuming reinvestment of
all dividends and distributions.
Performance information describes a Fund's performance for the period shown
and does not predict future performance. Comparison of a Fund's yield or
total return with those of alternative investments should consider
differences between the Fund and the alternative investments. A Fund's
investment performance figures do not reflect the cost of insurance and the
separate account fees and charges which vary with the VA contracts and VLI
policies offered through the separate accounts of the Participating Insurance
Companies, and which will decrease the return realized by a contract or
policyholder.
Net Asset Value
The initial net asset value of each Fund (other than C-K International Fund For
Growth and N-K Tiger Fund) at the commencement of operations was established at
$10.00. The initial net asset value of each of C-K International Fund For Growth
and N-K Tiger Fund was established at $2.00. The net asset value per share of
each Fund is determined as of the close of regular trading on the New York Stock
Exchange ("NYSE") (currently 4:00 p.m., New York time). Net asset value per
share is calculated for each Fund by dividing the current market value of total
portfolio assets, less all liabilities (including accrued expenses), by the
total number of shares outstanding. Net asset value is determined on each day
when the NYSE is open, except on such days in which no order to purchase or
redeem shares is received. The NYSE is scheduled to be open Monday through
Friday throughout the year except for certain federal and other holidays.
All assets denominated in foreign currencies are converted to U.S. dollars.
The books and records of the Trust are recorded in U.S. dollars.
Fund securities are valued based on market quotations or, if such quotations
are not available, at fair market value determined in good faith under
procedures established by the Board of Trustees. Investments maturing in 60
days or less are valued at amortized cost.
Distributions
Each Fund intends to declare and distribute, as dividends or capital gains
distributions, at least annually, substantially all of its net investment income
and net profits realized from the sale of portfolio securities, if any, to its
shareholders (Participating Insurance Companies' separate accounts). The net
investment income of each Fund consists of all dividends or interest
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received by such Fund, less estimated expenses (including the advisory and
administrative fees). Income dividends will be declared and distributed annually
in the case of each Fund. All net short-term and long-term capital gains of each
Fund, net of carry-forward losses, if any, realized during the fiscal year, are
declared and distributed periodically, no less frequently than annually. All
dividends and distributions are reinvested in additional shares of the Fund at
net asset value, as of the record date for the distributions.
Taxes
Each Fund intends to elect to be treated and to qualify as a "regulated
investment company" under Subchapter M of the Code. As a result of such
election, for any tax year in which a Fund meets the investment limitations and
the distribution, diversification and other requirements referred to below, to
the extent a Fund distributes its taxable net investment income and its net
realized long-term and short-term capital gains, that Fund will not be subject
to federal income tax, and the income of the Fund will be treated as the income
of its shareholders. Under current law, since the shareholders are life
insurance company "segregated asset accounts," they will not be subject to
income tax currently on this income to the extent such income is applied to
increase the values of VA contracts and VLI policies.
Among the conditions for qualification and avoidance of taxation at the Trust
level, Subchapter M imposes investment limitations, distribution
requirements, and requirements relating to the diversification of
investments. The requirements of Subchapter M may affect the investments made
by each Fund. Any of the applicable diversification requirements could
require a sale of assets of a Fund that would affect the net asset value of
the Fund.
In addition, the Tax Reform Act of 1986 made certain changes to the tax
treatment of regulated investment companies, including the imposition of a
nondeductible 4% excise tax on certain undistributed amounts. To avoid this
tax, each Fund must declare and distribute to its shareholders by the end of
each calendar year at least 98% of ordinary income earned during that
calendar year and at least 98% of capital gain net income, net of
carry-forward losses, if any, realized for the twelve-month period ending
October 31 of that year, plus any remaining undistributed income from the
prior year.
Pursuant to the requirements of Section 817(h) of the Code, the only
shareholders of the Trust and its Funds will be Participating Insurance
Companies and their separate accounts that fund VA contracts, VLI policies
and other variable insurance contracts and retirement plans. The prospectus
that describes a particular VA contract or VLI policy discusses the taxation
of both separate accounts and the owner of such contract or policy.
Each Fund intends to comply with the requirements of Section 817(h) of the
Code and the related regulations issued thereunder by the Treasury
Department. These provisions impose certain diversification requirements
affecting the securities in which the Funds may invest and other limitations.
The diversification requirements of Section 817(h) of the Code are in
addition to the diversification requirements under Subchapter M and the
Investment Company Act of 1940. The consequences of failure to meet the
requirements of Section 817(h) could result in taxation of the Participating
Insurance Company offering the VA contracts and VLI policies and immediate
taxation of all owners of the contracts and policies to the extent of
appreciation on investment under the contracts. The Trust believes it is in
compliance with these requirements.
The Secretary of the Treasury may issue additional rulings or regulations
that will prescribe the circumstances in which a variable insurance contract
owner's control of the investments of a segregated asset account may cause
such owner, rather than the insurance company, to be treated as an owner of
the assets of a segregated asset account. It is expected that such
regulations would have prospective application. However, if a ruling or
regulation were not considered to set forth a new position, the ruling or
regulation could have retroactive effect.
The Trust therefore may find it necessary, and reserves the right to take
action to assure, that a VA contract or VLI policy continues to qualify as an
annuity or insurance contract under federal tax laws. The Trust, for example,
may be required to alter the investment objectives of any Fund or substitute
the shares of one Fund for those of another. No such change of investment
objectives or substitution of securities will take place without notice to
the contract and policy owners with interests invested in the affected Fund
and without prior approval of the Securities and Exchange Commission, or the
approval of a majority of such owners, to the extent legally required.
To the extent a Fund invests in foreign securities, investment income
received by the Fund from sources within foreign countries may be subject to
foreign income taxes withheld at the source. The United States has entered
into tax treaties with many foreign countries which entitle a Fund to a
reduced tax or exemption from tax on such income.
Gains and losses from foreign currency dispositions, foreign- currency
denominated debt securities and payables or receivables, and foreign currency
forward contracts are subject to special tax rules that generally cause them
to be recharacterized as ordinary income and losses, and may affect the 23
<PAGE>
timing and amount of the Fund's recognition of income, gain or loss.
In order to avoid adverse tax consequences, a Fund may be required to limit
its equity investments in non-U.S. corporations that are treated as "passive
foreign investment companies" under the Code. C-K International Fund For
Growth, however, does invest in such entities. See "PASSIVE FOREIGN
INVESTMENT COMPANIES" in the Statement of Additional Information.
It is impossible to determine the effective rate of foreign tax in advance
since the amount of a Fund's assets, if any, to be invested within various
countries will fluctuate and the extent to which tax refunds will be
recovered is uncertain. The Funds intend to operate so as to qualify for
treaty-reduced tax rates where applicable.
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The preceding is a brief summary of some relevant tax considerations. This
discussion is not intended as a complete explanation or a substitute for
careful tax planning and consultation with individual tax advisers.
Shareholder Communications
Owners of VA contracts and VLI policies, issued by the Participating Insurance
Companies or for which shares of one or more Funds are the investment vehicles,
receive from the Participating Insurance Company unaudited semi-annual financial
statements and audited year-end financial statements of such Funds certified by
the Trust's independent auditors. Each report shows the investments owned by
each Fund and provides other information about the Trust and its operations.
Copies of such reports may be obtained from the Participating Insurance Company
or the Secretary of the Trust.
Organization, Meetings, and Voting Rights
The Trust is organized as a Massachusetts business trust under an Agreement and
Declaration of Trust ("Declaration of Trust") dated March 4, 1993. The
Declaration of Trust may be amended by a vote of either the Trust's shareholders
or the Board of Trustees. The Trust is authorized to issue an unlimited number
of shares of beneficial interest without par value, in one or more series as the
Board of Trustees may authorize. Each Fund is a separate series of the Trust.
Each share of a Fund is entitled to participate pro rata in any dividends and
other distributions declared by the Board of Trustees with respect to that
Fund, and all shares of a Fund have equal rights in the event of liquidation
of that Fund.
The Trust is not required to hold annual meetings and does not intend to do
so. However, special meetings may be called for purposes such as electing
Trustees or approving an amendment to an advisory contract. Shareholders
receive one vote for each Fund share. Shares of the Trust vote together
except when required to vote separately by Fund. Shareholders have the power
to remove Trustees and to call meetings to consider removal.
Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Trust's Declaration of Trust disclaims liability of the
shareholders, the Trustees, or officers of the Trust for acts or obligations
of the Trust, which are binding only on the assets and property of the Trust
(or the applicable Fund thereof) and requires that notice of such disclaimer
be given in each agreement, obligation, or contract entered into or executed
by the Trust or the Board. The Declaration of Trust provides for
indemnification out of the Trust's assets (or the applicable Fund) for all
losses and expenses of any shareholder held personally liable for the
obligations of the Trust. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is believed to be remote because it
is limited to circumstances in which the disclaimer is inoperative and the
Trust itself is unable to meet its obligations. The risk to any one Fund of
sustaining a loss on account of liabilities incurred by another Fund also is
believed to be remote.
Additional Information
This Prospectus, including the Statement of Additional Information which has
been incorporated by reference herein, does not contain all the information set
forth in the Registration Statement filed by the Trust with the Securities and
Exchange Commission under the Securities Act of 1933. Copies of the Registration
Statement may be obtained from the Commission or may be examined at the office
of the Commission in Washington, D.C.
OTHER INVESTMENT PRACTICES, RISK CONSIDERATIONS, AND POLICIES OF THE FUNDS
A number of the investment policies and techniques referred to below are subject
to certain additional risks described more fully in the Statement of Additional
Information.
Short-Term Trading
In seeking each Fund's objective, Colonial (or State Street, in the case of C-K
U.S. Fund For Growth, and Newport, in the case of The N-K Tiger Fund) will buy
or sell portfolio securities whenever it believes it is appropriate. The
decisions of Colonial, State Street or Newport will not generally be influenced
by how long the Fund may have owned the security. A Fund may buy securities
intending to seek short-term trading profits, subject to limitations imposed by
the Code. A change in the securities held by a Fund is known as "portfolio
turnover" and generally involves some expense to the Fund. These expenses may
include brokerage commissions or dealer mark-ups, custodian fees and other
transaction costs on both the sale of securities and the reinvestment of the
proceeds in other securities. If sales of portfolio securities cause a Fund to
realize net short-term capital gains, such gains will be taxable as ordinary
income.
16
<PAGE>
As a result of a Fund's investment policies, under certain market conditions,
a Fund's portfolio turnover rate may be higher than that of other mutual
funds. Portfolio turnover rate for a fiscal year is the ratio of the lesser
of purchases or sales of portfolio securities to the monthly average of the
value of portfolio securities, excluding securities whose maturities at
acquisition were one year or less. A 100% turnover rate would occur if all of
the securities in the portfolio were sold and either repurchased or replaced
within one year. Although the Funds cannot predict portfolio turnover rate,
it is estimated that, under normal circumstances, the annual rate for each
Fund (other than the C-K U.S. Fund For Growth) will be no greater than 100%.
C-K U.S. Fund For Growth uses quantitative techniques which may result in a
high level of short-term trading. Colonial and State Street anticipate that
its turnover rate will not exceed 200%. C-K Utilities Fund and C-K
International Fund For Growth also may have a higher rate of turnover than
the other Funds or alternative investment funds because of the flexibility of
their investment policies permitting shifts between different types of
investments and the use of aggressive strategies and investments. The
portfolio turnover rates of the Funds for the period ended December 31, 1995
are shown under "FINANCIAL HIGHLIGHTS" above. A Fund's portfolio turnover
rate is not a limiting factor when Colonial, State Street or Newport
considers a change in the Fund's portfolio.
Cash Reserves and Repurchase Agreements
Each of the Funds may invest temporarily available cash in U.S. dollar
denominated money market instruments. Such money market instruments will be
limited to high-quality securities rated within the two highest credit
categories by any nationally recognized securities rating organization or, if
not rated, of comparable investment quality as determined by Colonial, State
Street or Newport. Such domestic money market instruments may include: U.S.
Government securities; certificates of deposit; bankers' acceptances; bank time
deposits; commercial paper; short-term corporate debt securities; and repurchase
agreements with a securities dealer or bank. In these repurchase transactions,
the underlying security, which is held by the custodian through the federal
book-entry system for a Fund as collateral, will be marked to market on a daily
basis to ensure full collateralization of the repurchase agreement. In the event
of a bankruptcy or default of certain sellers of repurchase agreements, a Fund
could experience costs and delays in liquidating the underlying security and
might incur a loss if such collateral held declines in value during this period.
Not more than 15% of a Fund's total assets will be invested in repurchase
agreements maturing in more than seven days and other illiquid assets.
Forward Commitments and When-Issued Securities; Dollar Roll Transcations
Each of C-K Growth and Income Fund and C-K Strategic Income Fund may purchase
securities on a when-issued, delayed delivery, or forward commitment basis. When
such transactions are negotiated, the price of such securities is fixed at the
time of the commitment, but delivery and payment for the securities may take
place up to 120 days after the date of the commitment to purchase. The
securities so purchased are subject to market fluctuation, and no interest
accrues to the purchaser during this period. When-issued securities or forward
commitments involve a risk of loss if the value of the security to be purchased
declines prior to the settlement date. Colonial does not believe that the net
asset value or income of the Funds will be adversely affected by the purchase of
securities on a when-issued or forward commitment basis. The Funds will not
enter into such transactions for leverage (borrowing) purposes.
C-K Strategic Income Fund may enter into dollar roll transactions. A dollar
roll transaction involves a sale by the Fund of securities that it holds with
an agreement by the Fund to repurchase substantially similar securities at an
agreed upon price and date. During the period between the sale and
repurchase, the Fund will not be entitled to accrue interest and receive
principal payments on the securities sold. Dollar roll transactions involve
the risk that the market value of the securities sold by the Fund may decline
below the repurchase price of those securities. In the event the buyer of
securities under a dollar roll transaction files for bankruptcy or becomes
insolvent, the Fund's use of proceeds of the transaction may be restricted
pending a determination by or with respect to the other party.
Foreign Securities
N-K Tiger Fund normally will remain fully invested in equity securities of
companies located in the Tiger countries. C-K International Fund For Growth
normally invests primarily in foreign securities. Investments in foreign
securities include sovereign risks and risks pertaining to the local economy in
the country or countries in which the foreign issuer conducts business. C-K
Strategic Income Fund may invest any portion of its assets in securities issued
or guaranteed by foreign governments. C-K Growth and Income Fund also may invest
in foreign securities. Investments in foreign securities also involve certain
risks that are not typically associated with investing in domestic issuers,
including: (i) foreign securities traded for foreign currencies and/or
denominated in foreign currencies may be affected favorably or unfavorably by
changes in currency exchange rates and exchange control regulations, and the
Fund may incur costs in connection with conversions between various currencies;
(ii) less publicly available information about the securities and about the
foreign company or government issuing them; (iii) less comprehensive accounting,
auditing, and financial reporting standards, practices, and requirements; (iv)
17
<PAGE>
securities markets outside the United States may be less developed or efficient
than those in the United States and government supervision and regulation of
those securities markets and brokers and the issuers in those markets is less
comprehensive than that in the United States; (v) the securities of some foreign
issuers may be less liquid and more volatile than securities of comparable
domestic issuers; (vi) settlement of transactions with respect to foreign
securities may sometimes be delayed beyond periods customary in the United
States; (vii) fixed brokerage commissions on certain foreign securities
exchanges and custodial costs with respect to securities of foreign issuers
generally exceed domestic costs; and (viii) with respect to some countries,
there is the possibility of unfavorable changes in investment or exchange
control regulations, expropriation, or confiscatory taxation, taxation at the
source of the income payment or dividend distribution, difficulties in enforcing
judgements, limitations on the removal of funds or other assets of the Fund,
political or social instability, or diplomatic developments that could adversely
affect United States investments in those countries.
C-K International Fund For Growth's investments in foreign securities may
include investments in countries whose economies or securities markets are
not yet highly developed. Special risks associated with these investments (in
addition to the considerations regarding foreign investments generally) may
include, among others, greater political uncertainties, an economy's
dependence on revenues from particular commodities or on international aid or
development assistance, currency transfer restrictions, highly limited
numbers of potential buyers for such securities and delays and disruptions in
securities settlement procedures. See "DESCRIPTION OF CERTAIN INVESTMENTS:
Investments in Less Developed Countries" in the Statement of Additional
Information for a list of the countries whose economies or securities markets
currently are considered by Colonial not to be highly developed. Normally no
more than 25% of the Fund's assets will be invested in such securities.
Foreign Currency Transactions. Transactions in foreign securities include
currency conversion costs. N-K Tiger Fund, C-K International Fund For Growth,
C-K Strategic Income Fund and C-K Growth and Income Fund may engage in
currency exchange transactions to convert currencies to or from U.S. dollars.
These Funds may purchase foreign currencies on a spot or forward basis. Such
transactions will be entered into (i) to lock in a particular foreign
exchange rate pending settlement of a purchase or sale of a foreign security
or pending the receipt of interest, principal or dividend payments on a
foreign security held by the Funds, or (ii) to hedge against a decline in the
value, in U.S. dollars or in another currency, of a foreign currency in which
securities held by the Fund are denominated.
C-K International Fund For Growth and C-K Strategic Income Fund also may buy
and sell currency futures contracts and options thereon for such hedging
purposes. C-K Strategic Income Fund also may buy or sell options on
currencies for hedging purposes.
The Funds will not attempt, nor would they be able, to eliminate all foreign
currency risk. The precise matching of foreign currency exchange transactions
and the portfolio securities will not generally be possible since the future
value of such securities in foreign currencies will change as a consequence
of market movements which cannot be precisely forecast. Currency hedging does
not eliminate fluctuations in the underlying prices of securities, but rather
establishes a rate of exchange at some future point in time. Although hedging
may lessen the risk of loss due to a decline in the value of the hedged
currency, it tends to limit potential gain from increases in currency values.
The purchase and sale of foreign currencies on a forward basis and the
purchase and sale of currency futures contracts and options thereon may
present additional risks associated with the use of leverage. Leverage may
magnify the effect of fluctuations in the values of the Fund's portfolio
securities underlying these transactions. In accordance with Securities and
Exchange Commission pronouncements, to reduce (but not necessarily eliminate)
leverage, a Fund will either "cover" its obligations under such transactions
by holding the currency (or rights to acquire the currency) it is obligated
to deliver under such contracts, or deposit and maintain in a segregated
account with its custodian high quality liquid debt securities, or equity
securities denominated in the particular currency, equal in value to the
Fund's obligations under such contracts.
ADRs. With respect to equity securities, each of N-K Tiger Fund, C-K Growth
and Income Fund and C-K U.S. Fund For Growth may purchase American Depositary
Receipts ("ADRs"). ADRs are U.S. dollar-denominated certificates issued by a
United States bank or trust company representing the right to receive
securities of a foreign issuer deposited in a domestic bank or foreign branch
of that bank or a corresponding bank and traded on a United States exchange
or in an over-the- counter market. Generally, ADRs are in registered form.
There are no fees imposed on the purchase or sale of ADRs when purchased from
the issuing bank or trust company in the initial underwriting, although the
issuing bank or trust company may impose charges for the collection of
dividends and the conversion of ADRs into the underlying securities.
Investment in ADRs has certain advantages over direct investment in the
underlying foreign securities since: (i) ADRs are U.S. dollar-denominated
investments that are registered domestically, easily transferable and for
which market quotations are readily available; and (ii) issuers whose
securities are represented by ADRs are subject to the same auditing,
accounting, and financial reporting standards as domestic issuers.
Investments in ADRs, however, are otherwise subject to the same general
considerations and risks pertaining to foreign securities described above.
See "DESCRIPTION OF CERTAIN INVESTMENTS: Investments in Less Developed
Countries;" "Foreign Currency Transactions;" "Forward Currency and Futures
Contracts;" "Currency Options;" "Settlement Procedures;" "Foreign Currency
Conversion;" and "Passive Foreign Investment Companies" in the Statement of
Additional Information for more information about foreign investments.
18
<PAGE>
Mortgage-Backed Securities
C-K Strategic Income Fund may invest in mortgage-backed securities, which are
securities representing interests in pools of mortgages. Principal and interest
payments made on the mortgages in the pools are passed through to the holder of
such securities. Payment of principal and interest on some mortgage- backed
securities (but not the market value of the securities themselves) may be
guaranteed by the full faith and credit of the U.S. Government (in the case of
securities guaranteed by GNMA), or guaranteed by agencies or instrumentalities
of the U.S. Government (in the case of securities guaranteed by the FNMA or
FHLMC). Mortgage-backed securities created by non- governmental issuers (such as
commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers, and other secondary market issuers) may be
supported by various forms of insurance or guarantees, including individual
loan, title, pool and hazard insurance and letters of credit, which may be
issued by governmental entities, private insurers, or the mortgage poolers. The
Fund will only invest in mortgage-backed securities that are issued or
guaranteed by governmental entities.
Unscheduled or early repayment of principal on mortgage- backed securities
(arising from prepayment of principal due to the sale of the underlying
property, refinancing, or foreclosure, net of fees and costs which may be
incurred) may expose the Fund to a lower rate of return upon reinvestment of
principal. The Fund may only be able to invest prepaid principal at lower
yields. The prepayment of securities purchased at a premium may result in
losses equal to the premium. Like other fixed- income securities, when
interest rates rise, the value of a mortgage-related security generally will
decline; however, when interest rates are declining, the value of
mortgage-related securities with prepayment features may not increase as much
as other fixed-income securities.
C-K Strategic Income Fund also may invest in certificates representing
undivided interests in the interest or principal of mortgage-backed
securities (interest only/principal only securities). These securities tend
to be more volatile than other types of debt securities. The interest only
class involves the risk of loss of the entire value of the investment if the
underlying mortgages are prepaid. In the case of principal only class
securities, the Fund recognizes (accrues) as income for accounting purposes a
portion of the difference between purchase price and face value. Because the
Fund includes this accrued income in calculating its dividend even though it
has not received payment, the Fund may have to sell other investments to
obtain cash needed to make income distributions.
Collateralized Mortgage Obligations (CMOs) and Real Estate Mortgage
Investment Conduits (REMICs)
C-K Strategic Income Fund may invest in CMOs and REMICs of investments grade
or considered by Colonial to be of comparable quality. CMOs and REMICs are
debt securities issued by special-purpose trusts collateralized by underlying
mortgage loans or pools of mortgage-backed securities guaranteed by GNMA,
FHLMC, or FNMA. CMOs and REMICs may be issued by agencies or
instrumentalities of the U.S. Government, or by private originators of, or
investors in mortgage loans, including depository institutions, mortgage
banks, investment banks and special-purpose subsidiaries of the foregoing.
CMOs and REMICs are not, however, "mortgage pass-through" securities, such as
those described above under "Mortgage- Backed Securities." Rather they are
pay-through securities, i.e., securities backed by the cash flow from the
underlying mortgages. Investors in CMOs and REMICs are not owners of the
underlying mortgages, which serve as collateral for such debt securities, but
are simply owners of a fixed-income security backed by such pledged assets.
CMOs and REMICs typically are structured into multiple classes, with each
class bearing a different stated maturity and having different payment
streams. One class (the Residual) is in the nature of equity. The Fund will
not invest in the Residual class. Although the structures of CMOs and REMICs
vary greatly, monthly payments of principal, including prepayments, typically
are first returned to the investors holding the shortest maturity class;
investors holding longer maturity classes typically receive principal
payments only after the shorter class or classes have been retired. The Fund
may experience costs and delays in liquidating the collateral if the issuer
defaults or enters bankruptcy and may incur a loss. Principal on a REMIC, CMO
or other mortgage-backed security may be prepaid if the underlying mortgages
are prepaid. Because of the prepayment feature these investments may not
increase in value when interest rates fall. The Fund may be able to invest
prepaid principal only at lower yields. The prepayment of REMICs, CMOs or
other mortgage-backed securities purchased at a premium may result in losses
equal to the premium.
Zero-Coupon Bonds
C-K Strategic Income Fund may invest in zero-coupon bonds. Such bonds may be
issued directly by agencies and instrumentalities of the U.S. Government or by
private corporations. Zero- coupon bonds may originate as such or may be created
by stripping an outstanding bond. Zero-coupon bonds do not make regular interest
payments. Instead, they are sold at a deep discount from their face value.
Because a zero-coupon bond does not pay current income, its price can be very
volatile when interest rates change. In calculating its dividend, the Fund takes
into account as income a portion of the difference between a zero-coupon bond's
purchase price and its face value. Thus, the Fund may have to sell other
investments to obtain cash needed to make income distributions.
19
<PAGE>
High Yield, High Risk Bonds
C-K Strategic Income Fund may invest a significant portion of its assets in
lower rated bonds (commonly referred to as "junk bonds") which are regarded as
speculative as to payment of principal and interest. Relative to comparable
securities of higher quality:
1. The market price is likely to be more volatile because:
a. an economic downturn or increased interest rates may have a more
significant effect on the yield, price and potential for default;
b. the secondary market may at times become less liquid or respond to adverse
publicity or investor perceptions, increasing the difficulty in valuing or
disposing of the bonds;
c. existing or future legislation limits and may further limit (i) investment
by certain institutions and (ii) tax deductibility of the interest by the
issuer, which may adversely affect value; and
d. certain high yield, high risk bonds do not pay interest in cash on a
current basis. However, the Fund will accrue and distribute this interest
on a current basis, and may have to sell securities to generate cash for
distributions.
2. The Fund's achievement of its investment objectives in respect of investments
in high yield, high risk bonds is more dependent on Colonial's credit
analysis.
3. High yield, high risk bonds are less sensitive to interest rate changes but
are more sensitive to adverse economic developments.
Foreign stock Index Futures
C-K International Fund For Growth may purchase futures contracts on foreign
stock indexes (index futures). Under an index future, the Fund will either
receive or pay cash on a specified maturity date, based on the value of a
specified stock index on that date. The Fund may also seek to "close out" an
index futures position before the maturity date, realizing either a gain or a
loss, by entering into an offsetting transaction on a futures exchange. The Fund
may invest in index futures to invest cash temporarily pending investment in
stocks, but not to hedge against market declines.
Writing and Purchasing covered Put Options on Securities
To minimize anticipated declines in the value of the securities, the C-K
Utilities Fund may purchase (i.e., buy) exchange traded put options on
securities. The Fund may also write (i.e., sell) covered put options on
securities to generate premium income. A put option on a security gives the
holder the right to sell and obligates the writer to purchase, in return for a
premium paid, the underlying security at the exercise price during the option
period.
Although these investment practices will be used to reduce the effect of any
adverse price movement in the securities subject to the option, they do
involve certain risks that are different in some respects from investment
risks associated with similar funds which do not engage in such activities.
These risks include the following: writing covered put options -- the
inability to effect closing transactions at favorable prices and the
obligation to purchase the specified securities at prices which may not
reflect current market values; and purchasing put options --possible loss of
the entire premium paid.
Interest Rate Future
C-K Strategic Income Fund may engage in transactions involving interest rate
futures contracts and options thereon to hedge against changes in interest
rates. See "DESCRIPTION OF CERTAIN INVESTMENTS: Futures Contracts and Related
Options" in the Statement of Additional Information. The Fund will engage in
such activities only with respect to securities it may otherwise purchase or
indices composed of such securities. The Fund will enter into such futures
contracts only when, in compliance with the requirements of the Securities and
Exchange Commission, cash or high quality liquid debt securities equal in value
to the commodity value (less any applicable margin deposits) have been deposited
in a segregated account of the Fund's custodian.
Certain Policies to Reduce Risk
Each Fund has adopted certain fundamental investment policies in managing its
portfolio that are designed to maintain the portfolio's diversity and reduce
risk. Each Fund will not: (i) with respect to 75% of each Fund's total assets,
invest in more than 10% of the outstanding voting securities of any one issuer
or invest more than 5% of its total assets in the securities of any one issuer;
or (ii) borrow money except temporarily from banks to facilitate redemption
requests that might otherwise require untimely disposition of portfolio
securities and in amounts not exceeding 10% of each Fund's total assets.
Limitation (i) does not apply to the C-K International Fund For Growth or, in
the case of the other Funds, to U.S. Government Securities. The investment
policies described above in this paragraph are fundamental and may be changed
for a Fund only by approval of that Fund's shareholders.
It is the policy of each Fund that when Colonial (or State Street or Newport,
as the case may be) deems a temporary defensive position advisable, the Fund
may invest, without limitation (i.e., up to 100% of its assets), in
high-quality fixed-income securities, or hold assets in cash or cash
equivalents, to the extent Colonial (or State Street or Newport, as the case
may be) believes such
20
<PAGE>
alternative investments to be less risky than those securities in which the
Fund normally invests.
Additional investment restrictions are set forth in the Statement of
Additional Information.
CHANGES TO INVESTMENT OBJECTIVES AND NON-FUNDAMENTAL POLICIES
The Funds may not always achieve their investment objectives. The Funds
investment objectives and nonfundamental policies may be changed without
shareholder approval. The holders of VA Contracts and VLI Policies will be
notified at least thirty days prior to any material change in a Fund's
investment objective. A Fund's fundamental investment policies listed in the
Statement of Additional Information cannot be changed without shareholder
majority approval.
21
<PAGE>
<PAGE>
APPENDIX A
Description of Bond Ratings
The ratings of certain debt instruments in which one or more of the Funds may
invest are described below:
AAA The highest rating assigned by S&P indicates an extremely strong capacity
to repay principal and interest.
AA bonds also qualify as high quality. Capacity to repay principal and pay
interest is very strong, and the majority of instances, they differ from AAA
only in small degree.
A bonds have a strong capacity to repay principal and interest, although they
are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB bonds are regarded as having an adequate capacity to repay principal and
interest. Whereas they normally exhibit protection parameters, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to repay principal and interest than for bonds in the A
category.
BB, B, CCC and CC bonds are regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and principal in
accordance with the terms of the obligation. BB indicates the lowest degree
of speculation and CC the highest degree. While likely to have some quality
and protection characteristics, these are outweighed by large uncertainties
or major risk exposure to adverse conditions.
Aaa bonds are judged to be of the best quality. They carry the smallest
degree of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa bonds are judged to be of high quality by all standards. Together with Aaa
bonds they comprise what are generally known as high-grade bonds. They are
rated lower than the best bonds because margins of protective elements may be
of greater amplitude or there may be other elements present which make the
long-term risk appear somewhat larger than Aaa securities.
Those bonds in the Aa through B groups which Moody's believes possess the
strongest investment attributes are designated by the symbol Aa1, A1 and
Baa1.
A bonds possess many of the favorable investment attributes and are to be
considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa bonds are considered as medium grade, neither highly protected nor poorly
secured. Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and, in fact, have speculative
characteristics as well.
Ba bonds are judged to have speculative elements; their future cannot be
considered as well secured. Often, the protection of interest and principal
payments may be very moderate and thereby not well safeguarded during both
good and bad times over the future. Uncertainty of position characterizes
these bonds.
B bonds generally lack characteristics of the desirable investment. Assurance
of interest and principal payments or of maintenance of other terms of the
contract over any long period of time may be small.
Caa bonds are of poor standing. They may be in default or there may be
present elements of danger with respect to principal or interest.
Ca bonds are speculative in a high degree, often in default or having other
marked shortcomings.
C bonds are the lowest rated class of bonds and can be regarded as having
extremely poor prospects of ever attaining any real investment standing.
A-1
<PAGE>
<PAGE>
APPENDIX B
C-K Strategic Income Fund -- Schedule of Portfolio Asset
Composition by Rating For 1995
<TABLE>
<CAPTION>
Month
--------------------------------------------------------------------------------------------------------------------
Rating January February March April May June July August September October November December
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ---------
(percentage of portfolio)
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aaa/AAA 44.2% 39.6% 50.5% 51.7% 50.7% 53.6% 52.4% 52.9% 48.5% 61.1% 48.4% 50.0%
Aa/AA 14.0% 13.8% 13.8% 5.9% 5.7% 5.5% 7.1% 6.7% 7.7% 7.2% 7.2% 5.9%
A/A 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Baa/BBB 0.0% 0.0% 0.0% 1.5% 1.4% 0.0% 0.0% 0.0% 0.0% 2.9% 1.8% 1.8%
Ba/BB 2.8% 4.9% 2.9% 2.2% 2.1% 2.1% 3.0% 5.2% 5.4% 8.1% 11.2% 11.0%
B/B 39.0% 40.3% 32.8% 38.7% 38.8% 37.5% 36.3% 34.1% 36.8% 20.0% 29.9% 29.3%
Caa/CCC 0.0% 0.0% 0.0% 0.0% 1.3% 1.3% 1.2% 1.1% 1.6% 0.7% 1.5% 2.0%
Ca/CC 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
C 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
D 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Unrated 0.0% 1.4% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
</TABLE>
1995
Rating (percentage of portfolio)
--------------------------
Aaa/AAA 50.3%
Aa/AA 8.4%
A/A 0.0%
Baa/BBB 0.8%
Ba/BB 5.1%
B/B 34.4%
Caa/CCC 0.9%
Ca/CC 0.0%
C 0.0%
D 0.0%
Unrated 0.1%
------------------------
Total 100.0%
========================
B-1
<PAGE>
<PAGE>
Distributed by:
Keyport Financial Services Corp.
125 High Street, Boston, MA 02110-2712
VA Contract and VLI Policy Service Hotline
800-367-3653 (Option 3)
Keyline 800-367-3654
Keyport Variable Investment Trust Managed and Advised by:
Keyport Advisory Services Corp.
125 High Street
Boston, Massachusetts 02110
Sub-Adviser (all Funds Except N-K Tiger Fund):
Colonial Management Associates, Inc.
One Financial Center
Boston, Massachusetts 02111
Sub-Adviser (N-K Tiger Fund):
Newport Fund Management, Inc.
580 California Street
San Francisco, California 94104
C-K U.S. Fund For Growth Sub-Adviser:
State Street Bank and Trust Company
Two International Place
Boston, Massachusetts 02110
SteinRoe Variable Investment Trust Advised by:
Stein Roe & Farnham Incorporated
One South Wacker Drive
Chicago, Illinois 60606
Keyport Logo is a registered service mark of Keyport Life Insurance Company.
VIT 5/96
PART B
FORM N-1A LOCATION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History More Facts About the Trust:
Mixed and Shared Funding,
Organization
13. Investment Objectives and Policies Investment Restrictions;
Description of Certain Investments
14. Management of the Fund Investment Management and
Other Services; More Facts About
the Trust: Trustees and Officers
15. Control Persons and Principal More Facts About the Trust: Principal
Holders of Securities Holders of Securities
16. Investment Advisory and Other Investment Management and
Services Other Services; More Facts
About the Trust: Custodian,
Independent Accountants and Financial
Statements
17. Brokers Allocation and Other Other Considerations:
Practices Portfolio Transactions
18. Capital Stock and Other Securities Other Considerations:
Expenses of the Funds, Purchases
and Redemptions, Net Asset Value
(Part A)
19. Purchase, Redemption and Pricing Other Considerations:
of Securities Being Offered Purchases and Redemptions, Net
Asset Value (Part A)
20. Tax Status Other Considerations: Taxes
(Part A)
<PAGE>
21. Underwriters Other Considerations: Purchases
and Redemptions (Part A)
22. Calculation of Performance Data Investment Performance
23. Financial Statements The financial statements
required by item 23 are
incorporated by reference from the
Registrant's Annual Report for the
year ended December 31, 1995 and
are included in Part B.
KEYPORT VARIABLE INVESTMENT TRUST
Federal Reserve Plaza, 600 Atlantic Avenue
Boston, Massachusetts 02210
STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information ("SAI") is not a Prospectus,
but should be read in conjunction with the Trust's Prospectus, dated May 1,
1996 and any supplement thereto, which may be obtained by calling Keyport
Financial Services Corp. at (800) 437-4466.
The date of this SAI is May 1, 1996.
<PAGE>
S-5
RasicotM/KVIT96/SAI.AM9
TABLE OF CONTENTS
ITEM PAGE
INVESTMENT MANAGEMENT AND OTHER SERVICES.................. S-3
General............................................. S-3
KASC's Responsibilities................................... S-4
Trust Charges and Expenses.......................... S-5
INVESTMENT RESTRICTIONS................................... S-6
C-K Growth and Income Fund......................... S-7
C-K Utilities Fund.................................. S-8
C-K International Fund For Growth................... S-9
C-K U.S. Fund For Growth............................ S-11
C-K Strategic Income Fund........................... S-12
N-K Tiger Fund...................................... S-14
MORE FACTS ABOUT TRUST.................................... S-15
Mixed and Shared Funding............................ S-15
Organization.............................................. S-16
Trustees and Officers..................................... S-16
Principal Holders of Securities........................... S-19
Custodian................................................................
S-20
OTHER CONSIDERATIONS...................................... S-20
Portfolio Turnover........................................ S-20
Suspension of Redemptions........................... S-21
Valuation of Securities................................... S-21
Portfolio Transactions.................................... S-22
DESCRIPTION OF CERTAIN INVESTMENTS........................ S-25
Money Market Instruments............................ S-25
Investments in Less Developed Countries................... S-28
Foreign Currency Transactions....................... S-28
Options on Securities..................................... S-33
Futures Contracts and Related Options............... S-33
Passive Foreign Investment Companies................ S-36
Securities Loans.................................... S-36
INVESTMENT PERFORMANCE.................................... S-37
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS......S-38
<PAGE>
Keyport Variable Investment Trust (the "Trust"), a Massachusetts
business trust, is registered with the Securities and Exchange Commission
("SEC") as an open-end management investment company. The Trust currently
offers six Funds: Colonial-Keyport Growth and Income Fund ("C-K Growth and
Income Fund"); Colonial-Keyport Utilities Fund ("C-K Utilities Fund");
Colonial-Keyport International Fund For Growth ("C-K International Fund For
Growth"); Colonial-Keyport U.S. Fund For Growth ("C-K U.S. Fund For Growth");
Colonial-Keyport Strategic Income Fund ("C-K Strategic Income Fund"); and
Newport-Keyport Tiger Fund ("N-K Tiger Fund"). The Trust may add or delete
Funds from time to time. The Trust commenced operations on July 1, 1993.
INVESTMENT MANAGEMENT AND OTHER SERVICES
General
Keyport Advisory Services Corp. ("KASC") serves as Manager pursuant to
three investment advisory agreements between the Trust on behalf of one or
more of the Funds and KASC (the "Management Agreements"). KASC is a direct
wholly-owned subsidiary of Keyport Life Insurance Company ("Keyport"), which
is an indirect wholly-owned subsidiary of Liberty Financial Companies, Inc.
("LFC"). As of March 31, 1995, approximately 81.5% of the combined voting
power of LFC's outstanding voting stock was owned, indirectly, by Liberty
Mutual Insurance Company ("Liberty Mutual").
KASC and the Trust, on behalf of each Fund (other than N-K Tiger Fund),
have entered into a separate Sub-Advisory Agreement ("Colonial Sub-Advisory
Agreements") with Colonial Management Associates, Inc. ("Colonial").
Colonial is an indirect wholly owned subsidiary of LFC. Colonial has
delegated portfolio management of the C-K U.S. Fund For Growth to State
Street Global Advisors, a division of State Street Bank and Trust Company
("State Street"), pursuant to a separate Sub-Advisory Agreement (the "State
Street Sub-Advisory Agreement") among the Fund, KASC, Colonial and State
Street.
KASC and the Trust, on behalf of the N-K Tiger Fund, have entered into
a separate Sub-Advisory Agreement (the "Newport Sub-Advisory Agreement") with
Newport Fund Management, Inc. ("Newport"). Newport is an indirect wholly
owned subsidiary of LFC.
Keyport Advisory Services Corp. Keyport owns all of the outstanding
common stock of KASC. The directors and principal executive officer of KASC
are: John W. Rosensteel, (principal executive officer); John E. Arant,
III; James J. Klopper; Paul H. LeFevre, Jr.; and Lee R. Roberts. Messrs.
Rosensteel and Roberts also are directors of Keyport Financial Services Corp.
("KFSC"), the principal underwriter for shares of the Funds.
Colonial Management Associates, Inc. The Colonial Group, Inc., One
Financial Center, Boston, Massachusetts 02111, owns all of the outstanding
common stock of Colonial. LFC owns all of the outstanding common stock of The
Colonial Group, Inc. The directors and principal executive officer of
Colonial are Bonny E. Boatman, Sheila A. Carroll, Harold W. Cogger (principal
executive officer), Carl C. Ericson, C. Frazier Evans, Donald S. MacKinnon,
Jeffrey L. McGregor, Charles A. O'Neill, Helen Frame Peters, Daniel Rie,
Davey S. Scoon, Richard A. Silver and Arthur O. Stern.
State Street Global Advisors. State Street Boston Corporation, a
publicly traded bank holding company, owns all of the outstanding capital
stock of State Street. The directors and principal executive officer of
State Street are Tenley B. Albright, Joseph A. Baute, L. MacAllister Booth,
Marshall N. Carter (principal executive officer), James L. Cash, Jr., Truman
S. Casner, Nader F. Darehshori, Charles F. Kaye, John M. Kucharski, Charles
R. LaMantia, David B. Perini, Dennis J. Picard and David A. Spina.
Newport. Newport Pacific Management, Inc. ("Newport Pacific") owns all
of the outstanding common stock of Newport. Liberty Newport Holdings, Ltd.
("LNH") owns all of the outstanding common stock of Newport Pacific. LFC
owns all of the outstanding stock of LNH. The directors and principal
executive officer of Newport are John M. Mussey (principal executive
officer), Sabino Marinella, Kenneth R. Leibler, Lindsay Cook, Thomas R.
Tuttle, Pamela Frantz, Gerald Rush and Linda Couch.
The Management Agreements and the Sub-Advisory Agreements provide that
none of KASC, Colonial, State Street or Newport, nor any of their respective
directors, officers, stockholders (or partners of stockholders), agents, or
employees shall have any liability to the Trust or any shareholder of any
Fund for any error of judgment, mistake of law or any loss arising out of any
investment, or for any other act or omission in the performance by KASC,
Colonial, State Street or Newport of its respective duties under the
Agreement and the Sub-Advisory Agreements to which it is party, except for
liability resulting from willful misfeasance, bad faith or gross negligence
on the part of KASC, Colonial, State Street or Newport, as the case may be,
in the performance of its respective duties or from reckless disregard by
KASC, Colonial, State Street or Newport, as the case may be, of its
respective obligations and duties under the Management Agreements and
Sub-Advisory Agreements.
KASC's Responsibilities
In addition to its duties described in the Prospectus, KASC, in
furtherance of such duties and responsibilities, gathers and evaluates
general economic, statistical, and financial data for presentation to the
Board of Trustees, recommends, following inquiry, the addition or deletion of
Funds, assists Colonial, State Street and Newport in the performance of their
respective duties, coordinates the provision of information to shareholders,
coordinates with Colonial, State Street, Newport and KFSC to provide
requested performance information and coordinates the activities of other
service entities such as (i) the custodian, (ii) independent auditors, (iii)
outside legal counsel, (iv) Colonial as the transfer agent or as delegated to
perform administrative duties, and (v) KFSC.
KASC, at its own expense, provides office space, facilities and
supplies, equipment and personnel for the performance of its functions under
the Agreement and pays all compensation of the Trustees, officers, and
employees who are employees of KASC, KFSC or Keyport. Employees of other
affiliates of KASC are paid by such other affiliates.
Trust Charges and Expenses
Each of C-K Growth and Income Fund and C-K Utilities Fund commenced
operations on July 1, 1993. C-K International Fund For Growth commenced
operations on May 2, 1994. Each of C-K U.S. Fund For Growth and C-K
Strategic Income Fund commenced operations on July 5, 1994. N-K Tiger Fund
commenced operations on May 1, 1995.
Management Fees. During 1994 and 1995, respectively, pursuant to the
Management Agreements described in the Prospectus, each Fund listed below
paid KASC management fees as follows:
1994 1995
C-K Growth and Income Fund: $273,406 $384,179
C-K Utilities Fund: $269,227 $284,469
C-K International Fund For Growth: $ 88,260 $183,697
C-K U.S. Fund For Growth: $ 48,403
$237,547
C-K Strategic Income Fund: $ 36,266 $181,811
N-K Tiger Fund: $ 86,228
Certain Administrative Expenses. During 1995 each Fund listed below
made payments as follows to Colonial for pricing and bookkeeping services.
C-K Growth and Income Fund: $30,524
C-K Utilities Fund: $27,000
C-K International Fund For Growth: $27,000
C-K U.S. Fund For Growth: $27,000
C-K Strategic Income Fund: $27,000
N-K Tiger Fund: $18,000
In addition during 1995 each Fund listed below made payments as follows
to Colonial for transfer agent services:
C-K Growth and Income Fund: $7,500
C-K Utilities Fund: $7,500
C-K International Fund For Growth: $7,500
C-K U.S. Fund For Growth: $7,500
C-K Strategic Income Fund: $7,500
N-K Tiger Fund: $5,000
Expense Limitations. KASC has agreed to reimburse all expenses,
including management fees, but excluding interest, taxes, brokerage, and
other expenses which are capitalized in accordance with accepted accounting
procedures, and extraordinary expenses, incurred by (i) each of C-K Growth
and Income Fund, C-K Utilities Fund and C-K U.S. Fund For Growth in excess of
1.00% of average net asset value per annum, (ii) each of C-K International
Fund For Growth and the N-K Tiger Fund in excess of 1.75% of average daily
net asset value per annum, and (iii) C-K Strategic Income Fund in excess of
0.80% of average daily net asset value per annum, in each case for the period
from May 1, 1996 until April 30, 1997. These expense limitations have been
in effect prior to May 1, 1995 for each Fund (other than N-K Tiger Fund,
which commenced operations on that date), except that prior to May 1, 1995
the annual expense limitation of C-K Strategic Income Fund was 1.00% of
average daily net asset value per annum. Pursuant to such limitations the
total expenses of the following Funds were reduced during 1995 by the
following amounts:
C-K Strategic Income Fund: $27,470
C-K U.S. Fund For Growth $19,671
INVESTMENT RESTRICTIONS
In addition to the restrictions set forth in the Prospectus with
respect to each Fund which are described as fundamental investment policies,
the investment restrictions specified below with respect to each Fund as
"Fundamental Investment Policies" have been adopted as fundamental investment
policies of each Fund. Such fundamental investment policies may be changed
only with the consent of a "majority of the outstanding voting securities" of
the particular Fund. As used in the Prospectus and in this SAI, the term
"majority of the outstanding voting securities" means the lesser of (i) 67%
of the voting securities of a Fund present at a meeting where the holders of
more than 50% of the outstanding voting securities of a Fund are present in
person or by proxy, or (ii) more than 50% of the outstanding voting
securities of a Fund. Shares of each Fund will be voted separately on
matters affecting only that Fund, including approval of changes in the
fundamental objectives, policies, or restrictions of that Fund.
Total assets and net assets are determined at current value for
purposes of compliance with investment restrictions and policies. All
percentage limitations will apply at the time of investment and are not
violated unless an excess or deficiency occurs as a result of such
investment. For purposes of the diversification requirement of the
Investment Company Act of 1940, as amended (the "1940 Act"), the issuer with
respect to a security is the entity whose revenues support the security.
<PAGE>
C-K Growth and Income Fund
Fundamental Investment Policies. The C-K Growth and Income Fund may:
1. Issue senior securities only through borrowing money from banks
for temporary or emergency purposes up to 10% of its net assets;
however, the Fund will not purchase additional portfolio
securities while borrowings exceed 5% of net assets;
2. Invest up to 15% of its net assets in illiquid assets;
3. Underwrite securities issued by others only when disposing of
portfolio securities;
4. Make loans through lending of securities not exceeding 30% of
total assets, through the purchase of debt instruments and
similar evidences of indebtedness typically sold privately to
financial institutions and through repurchase agreements;
5. Not concentrate more than 25% of its total assets in any one
industry; and
6. With respect to 75% of total assets not purchase any security
(other than obligations of the U.S. Government and cash items
including receivables) if as a result more than 5% of its total
assets would then be invested in securities of a single issuer or
purchase the voting securities of an issuer if, as a result of
such purchase, the Fund would own more than 10% of the
outstanding voting shares of such issuer.
Other Investment Policies. As non-fundamental investment policies of
the C-K Growth and Income Fund which may be changed without a shareholder
vote, the Fund may not:
1. Purchase securities on margin, but it may receive short-term
credit to clear securities transactions and may make initial or
maintenance margin deposits in connection with futures
transactions;
2. Own real estate unless it is acquired as the result of owning
securities and not more than 5% of total assets;
3. Purchase and sell futures contracts and related options if the
total initial margin and premiums required to establish
non-hedging positions exceeds 5% of its total assets;
4. Have a short securities position, unless the Fund owns, or owns
rights (exercisable without payment) to acquire, an equal amount
of such securities;
5. Invest in interests in oil, gas, or other mineral exploration or
development programs, including leases;
6. Purchase any security resulting in the Fund having more than 5%
of its total assets invested in securities of companies
(including predecessors) less than three years old; or
7. Pledge more than 33% of its total assets.
C-K Utilities Fund
Fundamental Investment Policies. The C-K Utilities Fund may:
1. Issue senior securities only through borrowing money from banks
for temporary or emergency purposes up to 10% of its net assets;
however, the Fund will not purchase additional portfolio
securities while borrowings exceed 5% of net assets;
2. Invest up to 15% of its net assets in illiquid assets;
3. Underwrite securities issued by others only when disposing of
portfolio securities;
4. Make loans through lending of securities not exceeding 30% of
total assets, through the purchase of debt instruments and
similar evidences of indebtedness typically sold privately to
financial institutions and through repurchase agreements; and
5. With respect to 75% of total assets not purchase any security
(other than obligations of the U.S. Government and cash items
including receivables) if as a result more than 5% of its total
assets would then be invested in securities of a single issuer or
purchase the voting securities of an issuer if, as a result of
such purchase, the Fund would own more than 10% of the
outstanding voting shares of such issuer.
Other Investment Policies. As non-fundamental investment policies of
C-K Utilities Fund which may be changed without a shareholder vote, the Fund
may not:
1. Purchase securities on margin, but it may receive short-term
credit to clear securities transactions and may make initial or
maintenance margin deposits in connection with futures
transactions;
2. Own real estate unless it is acquired as the result of owning
securities and not more than 5% of total assets;
3. Purchase and sell futures contracts and related options if the
total initial margin and premiums required to establish
non-hedging positions exceeds 5% of its total assets;
4. Have a short securities position, unless the Fund owns, or owns
rights (exercisable without payment) to acquire, an equal amount
of such securities;
5. Invest in interests in oil, gas, or other mineral exploration or
development programs, including leases;
6. Purchase any security resulting in the Fund having more than 5%
of its total assets invested in securities of companies
(including predecessors) less than three years old; or
7. Pledge more than 33% of its total assets.
C-K International Fund For Growth
Fundamental Investment Policies. The C-K International Fund For Growth
may:
1. Issue senior securities only through borrowing money from banks
for temporary or emergency purposes up to 10% of its net assets;
however, the Fund will not purchase additional portfolio
securities while borrowings exceed 5% of net assets;
2. Underwrite securities issued by others only when disposing of
portfolio securities;
3. Make loans through lending of securities not exceeding 30% of
total assets, through the purchase of debt instruments and
similar evidences of indebtedness typically sold privately to
financial institutions and through repurchase agreements;
4. Not concentrate more than 25% of its total assets in any one
industry;
5. Only own real estate acquired as the result of owning securities
and not more than 5% of total assets;
6. Purchase and sell futures contracts and related options so long
as the total initial margin and premiums on the contracts do not
exceed 5% of its total assets; and
7. Not purchase any security issued by another investment company if
immediately after such purchase the Fund would own in the
aggregate (i) more than 3% of the total outstanding voting
securities of such other investment company, (ii) securities
issued by such other investment company having an aggregate value
in excess of 5% of the Fund's total assets, or (iii) securities
issued by investment companies having an aggregate value in
excess of 10% of the Fund's total assets.
Other Investment Policies. As non-fundamental investment policies of
the C-K International Fund For Growth which may be changed without a
shareholder vote, the Fund may not:
1. Purchase securities on margin, but it may receive short-term
credit to clear securities transactions and may make initial or
maintenance margin deposits in connection with futures
transactions;
2. Have a short securities position, unless the Fund owns, or owns
rights (exercisable without payment) to acquire, an equal amount
of such securities;
3. Invest in interests in oil, gas, or other mineral exploration or
development programs, including leases;
4. Purchase any security resulting in the Fund having more than 5%
of its total assets invested in securities of companies
(including predecessors) less than three years old;
5. Pledge more than 33% of its total assets;
6. Purchase any security if, as a result of such purchase, more than
10% of its total assets would be invested in the securities of
issuers which are restricted as to disposition;
7. Invest more than 15% of its net assets in illiquid assets;
8. Invest in warrants if, immediately after giving effect to any
such investment, the Fund's aggregate investment in warrants,
valued at the lower of cost or market, would exceed 10% of the
value of the Fund's net assets. Included within that amount, but
not to exceed 2% of the value of the Fund's net assets, may be
warrants whose underlying securities are not traded on principal
domestic or foreign exchanges. Warrants acquired by the Fund in
units or attached to securities will be deemed to be without
value;
9. With respect to 75% of total assets, purchase any voting security
of an issuer if, as a result of such purchase, the Fund would own
more than 10% of the outstanding voting securities of such issuer;
10. Purchase puts, calls, straddles, spreads, or any combination
thereof if, as a result of such purchase, the Fund's aggregate
investment in such securities would exceed 5% of total assets;
11. Acquire any security issued by a person that, in its most recent
fiscal year, derived 15% or less of its gross revenues from
securities related activities (within the meaning of Rule 12d3-1
under the Investment Company Act of 1940 (the "1940 Act")) if the
Fund would control such person after such acquisition; or
12. Acquire any security issued by a person that, in its most recent
fiscal year, derived more than 15% of its gross revenues from
securities related activities (as so defined) unless (i)
immediately after such acquisition of any equity security, the
Fund owns 5% or less of the outstanding securities of that class
of the issuer's equity securities, (ii) immediately after such
acquisition of a debt security, the Fund owns 10% or less of the
outstanding principal amount of the issuer's debt securities, and
(iii) immediately after such acquisition, the Fund has invested
not more than 5% of its total assets in the securities of the
issuer.
C-K U.S. Fund For Growth
Fundamental Investment Policies. The C-K U.S. Fund For Growth may:
1. Issue senior securities only through borrowing money from banks
for temporary or emergency purposes up to 10% of its net assets;
however, the Fund will not purchase additional portfolio
securities while borrowings exceed 5% of net assets;
2. Underwrite securities issued by others only when disposing of
portfolio securities;
3. Make loans through lending of securities not exceeding 30% of
total assets, through the purchase of debt instruments and
similar evidences of indebtedness typically sold privately to
financial institutions and through repurchase agreements;
4. Not concentrate more than 25% of its total assets in any one
industry; and
5. With respect to 75% of total assets not purchase any security
(other than obligations of the U.S. Government and cash items
including receivables) if as a result more than 5% of its total
assets would then be invested in securities of a single issuer or
purchase the voting securities of an issuer if, as a result of
such purchase, the Fund would own more than 10% of the
outstanding voting shares of such issuer;
6. Only own real estate acquired as the result of owning securities
and not more than 5% of total assets; and
7. Purchase and sell futures contracts and related options so long
as the total initial margin and premiums on the contracts do not
exceed 5% of its total assets.
Other Investment Policies. As non-fundamental investment policies of
C-K U.S. Fund For Growth which may be changed without a shareholder vote, the
Fund may not:
1. Purchase securities on margin, but it may receive short-term
credit to clear securities transactions and may make initial or
maintenance margin deposits in connection with futures
transactions;
2. Have a short securities position, unless the Fund owns, or owns
rights (exercisable without payment) to acquire, an equal amount
of such securities;
3. Invest in interests in oil, gas, or other mineral exploration or
development programs, including leases;
4. Purchase any security resulting in the Fund having more than 5%
of its total assets invested in securities of companies
(including predecessors) less than three years old; and
5. Pledge more than 33% of its total assets;
6. Purchase any security if, as a result of such purchase, more than
10% of its total assets would be invested in the securities of
issuers which are restricted as to disposition;
7. Invest more than 15% of its net assets in illiquid assets;
8. Invest in warrants if, immediately after giving effect to any
such investment, the Fund's aggregate investment in warrants,
valued at the lower of cost or market, would exceed 10% of the
value of the Fund's net assets. Included within that amount, but
not to exceed 2% of the value of the Fund's net assets, may be
warrants whose underlying securities are not traded on principal
domestic or foreign exchanges. Warrants acquired by the Fund in
units or attached to securities will be deemed to be without
value; or
9. Purchase or sell commodity contracts if the total initial margin
and premiums on the contracts would exceed 5% of its total assets.
C-K Strategic Income Fund
Fundamental Investment Policies. The C-K Strategic Income Fund may:
1. Issue senior securities only through borrowing money from banks
for temporary or emergency purposes up to 10% of its net assets;
however, the Fund will not purchase additional portfolio
securities while borrowings exceed 5% of net assets;
2. Underwrite securities issued by others only when disposing of
portfolio securities;
3. Make loans through lending of securities not exceeding 30% of
total assets, through the purchase of debt instruments and
similar evidences of indebtedness typically sold privately to
financial institutions and through repurchase agreements;
4. Not concentrate more than 25% of its total assets in any one
industry;
5. With respect to 75% of total assets not purchase any security
(other than obligations of the U.S. Government and cash items
including receivables) if as a result more than 5% of its total
assets would then be invested in securities of a single issuer or
purchase the voting securities of an issuer if, as a result of
such purchase, the Fund would own more than 10% of the
outstanding voting shares of such issuer;
6. Only own real estate acquired as the result of owning securities
and not more than 5% of total assets; and
7. Purchase and sell futures contracts and related options so long
as the total initial margin and premiums on the contracts do not
exceed 5% of its total assets.
Other Investment Policies. As non-fundamental investment policies of
the C-K Strategic Income Fund which may be changed without a shareholder
vote, the Fund may not:
1. Purchase securities on margin, but it may receive short-term
credit to clear securities transactions and may make initial or
maintenance margin deposits in connection with futures
transactions;
2. Have a short securities position, unless the Fund owns, or owns
rights (exercisable without payment) to acquire, an equal amount
of such securities;
3. Invest in interests in oil, gas, or other mineral exploration or
development programs, including leases;
4. Purchase any security resulting in the Fund having more than 5%
of its total assets invested in securities of companies
(including predecessors) less than three years old;
5. Pledge more than 33% of its total assets;
6. Purchase any security if, as a result of such purchase, more than
10% of its total assets would be invested in the securities of
issuers which are restricted as to disposition;
7. Invest more than 15% of its net assets in illiquid assets; or
8. Invest in warrants if, immediately after giving effect to any
such investment, the Fund's aggregate investment in warrants,
valued at the lower of cost or market, would exceed 10% of the
value of the Fund's net assets. Included within that amount, but
not to exceed 2% of the value of the Fund's net assets, may be
warrants whose underlying securities are not traded on principal
domestic or foreign exchanges. Warrants acquired by the Fund in
units or attached to securities will be deemed to be without
value.
N-K Tiger Fund
Fundamental Investment Policies. The N-K Tiger Fund may not:
1. With respect to 75% of total assets purchase any security (other
than obligations of the U.S. Government and cash items including
receivables) if as a result more than 5% of its total assets
would then be invested in securities of a single issuer or
purchase the voting securities of an issuer if, as a result of
such purchase, the Fund would own more than 10% of the
outstanding voting shares of such issuer;
2. Underwrite securities issued by others except when disposing of
portfolio securities;
3. Buy or sell commodities or commodity contracts (other than
currency forward contracts);
4. Borrow amounts in excess of 5% of the Fund's net asset value, and
only from banks as a temporary measure for extraordinary or
emergency purposes and not for investment in securities. To
avoid the untimely disposition of assets to meet redemptions it
may borrow up to 20% of the net value of its assets to meet
redemptions. The Fund will not make other investments while such
borrowings referred to above in this item are outstanding. The
Fund will not mortgage, pledge or in any other manner transfer,
as security for indebtedness, any of its assets. (Short-term
credits necessary for the clearance of purchases or sales of
securities will not be deemed to be borrowings by the Fund.);
5. Make loans, except that the Fund may: (a) acquire for investment
a portion of an issue of bonds, debentures, notes or other
evidences of indebtedness of a corporation or government; (b)
enter into repurchase agreements, secured by obligations of the
United States or any agency or instrumentality thereof;
6. Issue senior securities (except in accordance with 4 above);
7. Concentrate more than 25% of its total assets in any one of its
industry;
8. Purchase or sell real estate, provided that securities of
companies which deal in real estate or interests therein will not
be deemed to be investments in real estate.
Other Investment Policies. As non-fundamental investment policies of
the N-K Tiger Fund which may be changed without a shareholder vote, the Fund
may not:
1. Purchase any security resulting in the Fund having more than 5%
of its total assets invested in securities of companies
(including predecessors) less than three years old;
2. Invest in companies for the purpose of exercising control;
3. Invest in securities of other investment companies except by
purchase in the open market involving only customary broker's
commissions, or as part of a merger, consolidation, or
acquisition of assets;
4. Participate on a joint and several basis in any securities
trading account;
5. Write or trade in put or call options;
6. Purchase securities on margin, but the Fund may utilize such
short-term credits as may be necessary for clearance of purchases
or sales of securities;
7. Engage in short sales of securities; or
8. Invest in interests in oil, gas or other mineral exploration or
development programs, including leases.
MORE FACTS ABOUT THE TRUST
Mixed and Shared Funding
As described in the Prospectus, the Trust serves as the funding medium
for VA contracts and VLI policies of Keyport, Independence Life & Annuity
Company ("Independence"), a wholly owned subsidiary of Keyport, and Liberty
Life Assurance Company of Boston ("Liberty Life"), 90%-owned subsidiary of
Liberty Mutual. This is referred to as "mixed and shared funding." The
interests of owners of VA contracts and VLI policies could diverge based on
differences in state regulatory requirements, changes in the tax laws or
other unanticipated developments. The Trust does not foresee any such
differences or disadvantages at this time. However, the Board of Trustees
monitors for such developments to identify any material irreconcilable
conflicts and to determine what action, if any, should be taken in response
to such conflicts. If such a conflict were to occur, one or more separate
accounts of Participating Insurance Companies (as such term is defined in the
Prospectus) might be required to withdraw its investments in one or more
Funds or shares of another Fund may be substituted. This might force a Fund
to sell securities at disadvantageous prices.
At this time the Trust does not offer its shares to separate accounts
of insurance companies that are unaffiliated with Keyport or Liberty Mutual,
but may do so in the future.
Organization
The Trust is required to hold a shareholders' meeting to elect Trustees
to fill vacancies in the event that less than a majority of Trustees were
elected by shareholders. Trustees may also be removed by the vote of
two-thirds of the outstanding shares at a meeting called at the request of
shareholders whose interests represent 10% or more of the outstanding shares.
The shares do not have cumulative voting rights, which means that the
holders of more than 50% of the shares of the Funds voting for the election
of Trustees can elect all of the Trustees, and, in such event, the holders of
the remaining shares will not be able to elect any Trustees.
The Funds are not required by law to hold regular annual meetings of
their shareholders and do not intend to do so. However, special meetings may
be called for purposes such as electing or removing Trustees or changing
fundamental policies.
Under Massachusetts law, shareholders of a business trust may, under
certain circumstances, be held personally liable for the obligations of the
Trust. The Trust's shareholders are the separate accounts and general
accounts of Keyport, Independence and Liberty Life. However, the Trust's
Declaration of Trust disclaims liability of the shareholders, the Trustees,
or officers of the Trust for acts or obligations of the Trust, which are
binding only on the assets and property of the Trust (or the applicable Fund
thereof) and requires that notice of such disclaimer be given in each
agreement, obligation, or contract entered into or executed by the Trust or
the Board of Trustees. The Declaration of Trust provides for indemnification
out of the Trust's assets (or the applicable Fund) for all losses and
expenses of any shareholder held personally liable for the obligations of the
Trust. Thus, the risk of a shareholder incurring financial loss on account
of shareholder liability is believed to be remote because it is limited to
circumstances in which the disclaimer is inoperative and the Trust itself is
unable to meet its obligations. The risk to any one Fund of sustaining a
loss on account of liabilities incurred by another Fund is also believed to
be remote.
Trustees and Officers
The Trustees and officers of the Trust, together with information as to
their principal addresses and business occupations during the last five
years, are shown below. An asterisk next to a name indicates that a Trustee
is considered an "interested person" of the Trust (as defined in the 1940
Act).
<PAGE>
<PAGE>
=======================================================================
Positions(s) held Principal occupations
Name and Address with the Trust during past five years
=======================================================================
===========================-------------------=========================
Richard R. Christensen* President and President, Liberty
Federal Reserve Plaza Trustee Investment Services,
600 Atlantic Avenue Inc.
Boston, MA 02210
===========================-------------------=========================
John A. Bacon Jr. Trustee Private Investor;
4N640 Honey Hill Road Director, Duplex
Box 296 Products, Inc.
Wayne, IL 60184
===========================-------------------=========================
Salvatore Macera Trustee Private Investor
20 Rowes Wharf
Boston, MA 02109
===========================-------------------=========================
Dr. Thomas E. Stitzel Professor of Finance,
2208 Tawny Woods Place Trustee College of Business,
Boise, ID 83706 Boise State University;
Business Consultant and
Author
===========================-------------------=========================
Richard A. Silver Treasurer Senior Vice President
One Financial Center and Chief Financial
Boston, MA 02111 Officer, Colonial
Management Associates,
Inc.
===========================-------------------=========================
Peter L. Lydecker Controller Controller -- Colonial
One Financial Center Funds, Vice President,
Boston, MA 02111 Colonial Management
Associates, Inc.
===========================-------------------=========================
Daniel Rie Vice President Senior Vice President
One Financial Center and director of Equity
Boston, MA 02111 Investments,
Colonial Management
Associates, Inc.
===========================-------------------=========================
Leslie W. Finnemore Vice President Vice President, Colonial
One Financial Center Management Associates,
Boston, MA 02111 Inc.
- ----------------------------------------------=========================
John E. Lennon Vice President Vice President, Colonial
One Financial Center Management Associates,
Boston, MA 02111 Inc.
- ----------------------------------------------=========================
<PAGE>
===========================-------------------=========================
Michael H. Koonce Vice President Vice President and
One Financial Center Counsel, Colonial
Boston, MA 02111 Management Associates,
Inc. (1992-present);
Associate, Ropes &
Gray, Boston, MA (prior
thereto)
===========================-------------------=========================
Carl C. Ericson Vice President Senior Vice President
One Financial Center (Vice President prior
Boston, MA 02111 to 1996) and director
of Taxable Fixed Income
Investments, Colonial
Management Associates,
Inc.
===========================-------------------=========================
John M. Mussey Vice President President, Newport Fund
580 California Street Management, Inc.
San Francisco, CA 94104
===========================-------------------=========================
John A. Benning Secretary Senior Vice President
Federal Reserve Plaza and General Counsel,
600 Atlantic Avenue Liberty Financial
Boston, MA 02210 Companies, Inc.
=======================================================================
Kevin M. Carome Assistant Since April 1993,
Federal Reserve Plaza Secretary Associate General
600 Atlantic Avenue Counsel and Vice
Boston, MA 02210 President (since
February 1995), Liberty
Financial Companies,
Inc.; Associate, Ropes
& Gray, prior thereto
=======================================================================
As indicated in the above table, certain Trustees and officers of the
Trust also hold positions with LFC, Keyport, KASC, KFSC, Colonial, Newport
and/or certain of their affiliates. Certain of the Trustees and officers of
the Trust hold comparable positions with certain other investment companies.
Compensation of Trustees
The table set forth below presents certain information regarding the
fees paid to the Trustees for their services in such capacity and total fees
paid to them by all other investment companies affiliated with the Trust.
Trustees do not receive any pension or retirement benefits from the Trust.
No officers of the Trust or other individuals who are affiliated with the
Trust receive any compensation from the Trust for services provided to it.
<PAGE>
Compensation Table
- ------------------------------------------------------------------------------
Total Compensation
From the Trust and
Affiliated Investment
Name of Trustee Aggregate 1995 Compensation* Companies in 1995**
Richard R. Christensen -- --
John A. Bacon Jr. $9,000 $27,000
Salvatore Macera 9,000 27,000
Dr. Thomas E. Stitzel 9,000 27,000
* Consists of Trustee fees in the amount of (i) a $5,000 annual retainer,
(ii) a $1,000 meeting fee for
each meeting attended in person and (iii) a $500 meeting fee for each
telephone meeting
** Includes Trustee fees paid by the Trust and Trustee fees paid by SteinRoe
Variable Investment Trust
Principal Holders of Securities
All the shares of the Funds are held of record by sub-accounts of
separate accounts of Keyport, Independence or Liberty Life on behalf of the
owners of VA contracts and VLI policies or by the general account of
Keyport. At March 31, 1996 the general account of Keyport owned of record,
27.1% of C-K Growth and Income Fund, 42.4% of C-K International Fund For
Growth, 29.6% of C-K U.S. Fund For Growth, and 88.8% of N-K Tiger Fund. As
of that date, Keyport's general account owned of record less than 25% of the
outstanding shares of C-K Utilities Fund and C-K Strategic Income Fund. At
all meetings of shareholders of the Funds, Keyport, Independence and Liberty
Life will vote the shares held of record by subaccounts of their respective
separate accounts as to which instructions are received from the VA contract
and VLI policy owners on behalf of whom such shares are held only in
accordance with such instructions. All such shares as to which no
instructions are received (as well as, in the case of Keyport, all shares
held by its general account) will be voted in the same proportion as shares
as to which instructions are received (with Keyport's general account shares
being voted in the proportions determined by instructing owners of Keyport VA
contracts and VLI policies). There is no requirement as to the minimum level
of instructions which must be received from policy and contract owners.
Accordingly, each of Keyport, Independence and Liberty Life disclaims
beneficial ownership of the shares of the Funds held of record by the
sub-accounts of their respective separate accounts (or, in the case of
Keyport, its general account). None of Keyport, Independence or Liberty Life
know of any owner of a VA contract or VLI policy issued by it which on March
31, 1996 owned beneficially 5% or more of the outstanding shares of any Fund.
Custodians
Boston Safe Deposit and Trust Company ("The Boston Company"), One
Boston Place, Boston, Massachusetts 02108, is custodian of the securities and
cash owned by the Funds, other than N-K Tiger Fund. UMB, n.a. ("UMB"), 928
Grand Ave., Kansas City, Missouri 64141, is custodian for N-K Tiger Fund.
Each of the Boston Company and UMB is responsible for holding all securities
and cash of each Fund for which it acts as custodian, receiving and paying
for securities purchased, delivering against payment securities sold,
receiving and collecting income from investments, making all payments
covering expenses of the Fund, and performing other administrative duties,
all as directed by persons authorized by the Trust. The custodians do not
exercise any supervisory function in such matters as the purchase and sale of
portfolio securities, payment of dividends, or payment of expenses of the
Funds or the Trust. Portfolio securities of the Funds purchased in the U.S.
are maintained in the custody of the applicable custodian and may be entered
into the Federal Reserve Book Entry system, or the security depository system
of the Depository Trust Company or other security depository systems.
Pursuant to the custodian agreement between the Trust and the applicable
custodian, portfolio securities purchased outside the U.S. are maintained in
the custody of various foreign branches of The Boston Company and/or third
party subcustodians, including foreign banks and foreign securities
depositories.
OTHER CONSIDERATIONS
Portfolio Turnover
Although no Fund purchases securities with a view to rapid turnover,
there are no limitations on the length of time that securities must be held
by any Fund and a Fund's annual portfolio turnover rate may vary
significantly from year to year. A 100% turnover rate would occur if all of
the securities in the portfolio were sold and either repurchased or replaced
within one year. Although the Funds cannot predict portfolio turnover rate,
it is estimated that, under normal circumstances, the annual rate for each
Fund (other than the C-K U.S. Fund For Growth) will be no greater than 100%.
Colonial and State Street anticipate that the portfolio turnover rate of the
C-K U.S. Fund For Growth will not exceed 200%. The portfolio turnover rates
of the Funds are shown under "Financial Highlights" in the Prospectus.
If a Fund writes a substantial number of call or put options (on
securities or indexes) or engages in the use of futures contracts or options
on futures contracts (all referred to as "Collateralized Transactions"), and
the market prices of the securities underlying the Collateralized
Transactions move inversely to the Collateralized Transaction, there may be a
very substantial turnover of the portfolios. The Funds pay brokerage
commissions in connection with options and futures transactions and effecting
closing purchase or sale transactions, as well as for the purchases and sales
of other portfolio securities other than fixed income securities.
C-K U.S. Fund For Growth uses quantitative techniques which may result
in a high level of short-term trading producing a high portfolio turnover
rate. C-K International Fund For Growth may be expected to experience higher
portfolio turnover rates if such Fund makes a change in its investments from
one geographic sector (e.g., Europe; Japan; emerging Asian markets; etc.) to
another geographic sector. Costs will be greater if the change is from the
sector in which the greatest proportion of its assets are invested.
Suspension of Redemptions
The right to redeem shares or to receive payment with respect to any
redemption of shares of the Funds may only be suspended (i) for any period
during which trading on the New York Stock Exchange ("NYSE") is restricted or
the NYSE is closed, other than customary weekend and holiday closing, (ii)
for any period during which an emergency exists as a result of which disposal
of securities or determination of the net asset value of the Funds is not
reasonably practicable, or (iii) for such other periods as the SEC may by
order permit for protection of shareholders of the Funds.
Valuation of Securities
The assets of the Funds are valued as follows:
Debt securities generally are valued by a pricing service which
determines valuations based upon market transactions for normal,
institutional-size trading units of similar securities. However, in
circumstances where such prices are not available or where Colonial (the
Trust's pricing and bookkeeping agent) deems it appropriate to do so, an
over-the-counter or exchange bid quotation is used. Securities listed on an
exchange or on NASDAQ are valued at the last sale price. Listed securities
for which there were no sales during the day and unlisted securities are
valued at the last quoted bid prices. Short-term obligations with a maturity
of 60 days or less are valued at amortized cost when such cost approximates
market value pursuant to procedures approved by the Trustees. The values of
foreign securities quoted in foreign currencies are translated into U.S.
dollars at the exchange rate as of 3:00 p.m. Eastern time. Portfolio
positions for which there are no such valuations and other assets are valued
at fair value as determined in good faith under the direction of the
Trustees.
The net asset value of shares of each Fund is normally calculated as of
the close of regular trading on the NYSE, currently 4:00 p.m., Eastern time,
on every day the NYSE is open for trading, except on days where both (i) the
degree of trading in a Fund's portfolio securities would not materially
affect the net asset value of that Fund's shares and (ii) no shares of a Fund
were tendered for redemption and no purchase order was received. The NYSE is
open Monday through Friday, except on the following national holidays: New
Year's Day, Washington's Birthday, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day.
Generally, trading in certain securities (such as foreign securities)
is substantially completed each day at various times prior to the close of
the NYSE. The values of these securities used in determining the net asset
value are computed as of such times. Also, because of the amount of time
required to collect and process trading information as to large numbers of
securities issues, the values of certain securities (such as convertible
bonds and U.S. government securities) are determined based on market
quotations collected earlier in the day at the latest practicable time prior
to the close of the NYSE. Occasionally, events affecting the value of such
securities may occur between such times and the close of the NYSE which will
not be reflected in the computation of a Fund's net asset value. If events
materially affecting the value of such securities occur during such period,
then these securities will be valued at their fair value following procedures
approved by the Trustees.
Portfolio Transactions
The Trust has no obligation to do business with any broker-dealer or
group of broker-dealers in executing transactions in securities with respect
to the Funds, and the Funds have no intention to deal exclusively with any
particular broker-dealer or group of broker-dealers.
Each of Colonial, State Street and Newport places the transactions of
the Funds with broker-dealers selected by it and, if applicable, negotiates
commissions. Broker-dealers may receive brokerage commissions on portfolio
transactions, including the purchase and writing of options, the effecting of
closing purchase and sale transactions, and the purchase and sale of
underlying securities upon the exercise of options and the purchase or sale
of other instruments. The Funds from time to time may also execute portfolio
transactions with such broker-dealers acting as principals.
Except as described below in connection with commissions paid to a
clearing agent on sales of securities, it is each Fund's policy and the
policy of each of Colonial, State Street and Newport always to seek best
execution, which is to place the Fund's transactions where the Fund can
obtain the most favorable combination of price and execution services in
particular transactions or provided on a continuing basis by a broker-dealer,
and to deal directly with a principal market maker in connection with
over-the-counter transactions, except when Colonial, State Street or Newport
believes that best execution is obtainable elsewhere. In evaluating the
execution services of, including the overall reasonableness of brokerage
commissions paid to, a broker-dealer, consideration is given to, among other
things, the firm's general execution and operational capabilities, and to its
reliability, integrity and financial condition.
Subject to such policy of always seeking best execution, securities
transactions of the Funds may be executed by broker-dealers who also provide
research services (as defined below) to Colonial, State Street, Newport, the
Funds or other accounts as to which Colonial, State Street, or Newport
exercises investment discretion. Each of Colonial, State Street and Newport
may use all, some or none of such research services in providing investment
advisory services to each of its clients, including the Funds it advises. To
the extent that such services are used by Colonial, State Street, or Newport
they tend to reduce their expenses. In the opinion of Colonial, State Street
and Newport, it is impossible to assign an exact dollar value for such
services.
Subject to such policies as the Board of Trustees may determine, each
of Colonial, State Street and Newport may cause a Fund to pay a broker-dealer
that provides brokerage and research services to it an amount of commission
for effecting a securities transaction, including the sale of an option or a
closing purchase transaction, for a Fund in excess of the amount of
commission that another broker-dealer would have charged for effecting that
transaction. As provided in Section 28(e) of the Securities Exchange Act of
1934, "brokerage and research services" include advice as to the value of
securities, the advisability of investing in, purchasing or selling
securities and the availability of securities or purchasers or sellers of
securities; furnishing analyses and reports concerning issuers, industries,
securities, economic factors and trends and portfolio strategy and
performance of accounts; and effecting securities transactions and performing
functions incidental thereto (such as clearance and settlement). Each of
Colonial, State Street and Newport must determine in good faith that such
greater commission is reasonable in relation to the value of the brokerage
and research services provided to it by the executing broker-dealer viewed in
terms of that particular transaction or its overall responsibilities to the
Fund and all its other clients.
Certain of the other accounts of Colonial, State Street and Newport may
have investment objectives and programs that are similar to those of the
Funds. Accordingly, occasions may arise when each of Colonial, State Street
and Newport engages in simultaneous purchase and sale transactions of
securities that are consistent with the investment objectives and programs of
a Fund and such other accounts. On those occasions, Colonial, State Street
or Newport will allocate purchase and sale transactions in an equitable
manner according to written procedures as approved by the Board of Trustees.
Such procedures may, in particular instances, be either advantageous or
disadvantageous to a Fund.
The portfolio managers for the C-K International Fund For Growth are
Bruno Bertocci and David Harris, each of whom is jointly employed by Colonial
and Stein Roe & Farnham Incorporated ("Stein Roe"), an affiliate of Colonial
and KASC and a wholly owned subsidiary of LFC. Messrs. Bertocci and Harris
also are the portfolio managers for the Colonial International Fund For
Growth, an open-end investment company sponsored by Colonial, and various
investment company and non-investment company clients of Stein Roe. Colonial
utilizes the trading facilities of Stein Roe to place all orders on behalf of
the C-K International Fund For Growth and the Colonial International Fund For
Growth for the purchase and sale of portfolio securities, futures contracts
and foreign currencies. The C-K International Fund For Growth and the other
accounts advised by Messrs. Bertocci and Harris sometimes invest in the same
securities and sometimes enter into similar transactions utilizing futures
contracts and foreign currencies. In certain cases, purchases and sales on
behalf of the Fund and such other accounts will be bunched and executed on an
aggregate basis. In such cases, each participating account (including the
C-K International Fund for Growth) will receive the average price at which
the trade is executed. Where less than the desired aggregate amount is able
to be purchased or sold, the actual amount purchased or sold will be
allocated among the participating accounts (including the C-K International
Fund for Growth) in proportion to the amounts desired to be purchased or sold
by each. Although in some cases these practices could have a detrimental
effect on the price or volume of the securities, futures or currencies as far
as the C-K International Fund for Growth is concerned, Colonial believes
that in most cases these practices should produce better executions. It is
the opinion of Colonial that the advantages of these practices outweigh the
disadvantages, if any, which might result from them.
Portfolio transactions on behalf of the C-K International Fund for
Growth may be executed by broker-dealers who provide research services to
Colonial and Stein Roe which are used in the investment management of such
Fund or other accounts over which Colonial and Stein Roe exercise investment
discretion. Such transactions will be effected in accordance with the
policies described above. No portfolio transactions on behalf of the Fund
will be directed to a broker-dealer in consideration of the broker-dealer's
provision of research services to Colonial, or to Colonial and Stein Roe,
unless a determination is made that such research assists Colonial in its
investment management of the C-K International Fund for Growth or other
accounts over which Colonial exercises investment discretion (including,
without limitation, the Colonial International Fund For Growth).
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to seeking best execution and such
other policies as the Board of Trustees may determine, each of Colonial,
State Street and Newport may consider sales of VA contracts and VLI policies
as a factor in the selection of broker-dealers to execute securities
transactions for the Funds.
The table below shows information on brokerage commissions paid by each
Fund during the periods indicated (other than C-K Strategic Income Fund,
which did not pay commissions on any of its transactions).
- -------------------------------------------------------------------------------
C-K Growth C-K C-K C-K U.S. N-K Tiger
and Income Utilities International Fund For Fund
Fund Fund Fund For Growth
Growth
- --------------------------------------------------------------------------------
Total amount of $110,453 $24,902 $52,394 $81,150 $129,019
brokerage
commissions paid
during 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Amount of such $13,962 $489 $0 $0 $0
commissions paid
to brokers or
dealers who
supplied research
services to
Colonial, State
Street or Newport
- --------------------------------------------------------------------------------
- -------------------- ------------ ---------- ------------ --------- ------------
Amount of $13,962 $489 $0 $0 $0
commissions paid
to brokers or
dealers that were
allocated to such
brokers or dealers
by Colonial, State
Street or Newport
because of
research services
provided to the
Fund
- -------------------- ------------ ---------- ------------ --------- ------------
Total brokerage $64,373 $37,872 $68,394 $31,950 --
paid during 1994
- -------------------- ------------ ---------- ------------ --------- ------------
- -------------------- ------------ ---------- ------------ --------- ------------
Total brokerage $25,577 $57,260 -- -- --
paid during period
from July 1, 1993
(commencement of
operation) through
December 31, 1993
- -------------------- ------------ ---------- ------------ --------- ------------
DESCRIPTION OF CERTAIN INVESTMENTS
The following is a description of certain types of investments which
may be made by one or more of the Funds.
Money Market Instruments
As stated in the Prospectus, each Fund may invest in a variety of
high-quality money market instruments. The money market instruments that may
be used by each Fund may include:
<PAGE>
United States Government Obligations. These consist of various types
of marketable securities issued by the U.S. Treasury, i.e., bills, notes and
bonds. Such securities are direct obligations of the U.S. Government and
differ mainly in the length of their maturity. Treasury bills, the most
frequently issued marketable government security, have a maturity of up to
one year and are issued on a discount basis.
United States Government Agency Securities. These consist of debt
securities issued by agencies and instrumentalities of the U.S. Government,
including the various types of instruments currently outstanding or which may
be offered in the future. Agencies include, among others, the Federal
Housing Administration, Government National Mortgage Association, Farmer's
Home Administration, Export-Import Bank of the United States, Maritime
Administration, and General Services Administration. Instrumentalities
include, for example, each of the Federal Home Loan Banks, the National Bank
for Cooperatives, the Federal Home Loan Mortgage Corporation, the Farm Credit
Banks, the Federal National Mortgage Association, and the United States
Postal Service. These securities are either: (i) backed by the full faith
and credit of the U.S. Government (e.g., U.S. Treasury Bills); (ii)
guaranteed by the U.S. Treasury (e.g., Government National Mortgage
Association mortgage-backed securities); (iii) supported by the issuing
agency's or instrumentality's right to borrow from the U.S. Treasury (e.g.,
Federal National Mortgage Association Discount Notes); or (iv) supported only
by the issuing agency's or instrumentality's own credit (e.g., securities
issued by the Farmer's Home Administration).
Bank and Savings and Loan Obligations. These include certificates of
deposit, bankers' acceptances, and time deposits. Certificates of deposit
generally are short-term, interest-bearing negotiable certificates issued by
commercial banks or savings and loan associations against funds deposited in
the issuing institution. Bankers' acceptances are time drafts drawn on a
commercial bank by a borrower, usually in connection with an international
commercial transaction (e.g., to finance the import, export, transfer, or
storage of goods). With a bankers' acceptance, the borrower is liable for
payment as is the bank, which unconditionally guarantees to pay the draft at
its face amount on the maturity date. Most bankers' acceptances have
maturities of six months or less and are traded in secondary markets prior to
maturity. Time deposits are generally short-term, interest-bearing
negotiable obligations issued by commercial banks against funds deposited in
the issuing institutions. The Funds will not invest in any security issued
by a commercial bank or a savings and loan association unless the bank or
savings and loan association is organized and operating in the United States,
has total assets of at least one billion dollars, and is a member of the
Federal Deposit Insurance Corporation ("FDIC"), in the case of banks, or
insured by the FDIC in the case of savings and loan associations; provided,
however, that such limitation will not prohibit investments in foreign
branches of domestic banks which meet the foregoing requirements. The Funds
will not invest in time-deposits maturing in more than seven days.
Short-Term Corporate Debt Instruments. These include commercial paper
(i.e., short-term, unsecured promissory notes issued by corporations to
finance short-term credit needs). Commercial paper is usually sold on a
discount basis and has a maturity at the time of issuance not exceeding nine
months. Also included are non-convertible corporate debt securities (e.g.,
bonds and debentures). Corporate debt securities with a remaining maturity
of less than 13 months are liquid (and tend to become more liquid as their
maturities lessen) and are traded as money market securities. Each Fund may
purchase corporate debt securities having greater maturities.
Repurchase Agreements. The Funds may invest in repurchase agreements.
A repurchase agreement is an instrument under which the investor (such as a
Fund) acquires ownership of a security (known as the "underlying security")
and the seller (i.e., a bank or primary dealer) agrees, at the time of the
sale, to repurchase the underlying security at a mutually agreed upon time
and price, thereby determining the yield during the term of the agreement.
This results in a fixed rate of return insulated from market fluctuations
during such period, unless the seller defaults on its repurchase
obligations. The underlying securities will consist only of securities
issued by the U.S. Government, its agencies or instrumentalities ("U.S.
Government Securities"). Repurchase agreements are, in effect,
collateralized by such underlying securities, and, during the term of a
repurchase agreement, the seller will be required to mark-to-market such
securities every business day and to provide such additional collateral as is
necessary to maintain the value of all collateral at a level at least equal
to the repurchase price. Repurchase agreements usually are for short
periods, often under one week, and will not be entered into by a Fund for a
duration of more than seven days if, as a result, more than 15% of the value
of that Fund's total assets would be invested in such agreements or other
securities which are illiquid.
The Funds will seek to assure that the amount of collateral with
respect to any repurchase agreement is adequate. As with any extension of
credit, however, there is risk of delay in recovery or the possibility of
inadequacy of the collateral should the seller of the repurchase agreement
fail financially. In addition, a Fund could incur costs in connection with
disposition of the collateral if the seller were to default. The Funds will
enter into repurchase agreements only with sellers deemed to be creditworthy
under creditworthiness standards approved by the Board of Trustees and only
when the economic benefit to the Funds is believed to justify the attendant
risks. The Board of Trustees believes these standards are designed to
reasonably assure that such sellers present no serious risk of becoming
involved in bankruptcy proceedings within the time frame contemplated by the
repurchase agreement. The Funds may enter into repurchase agreements only
with commercial banks or registered broker-dealers.
Adjustable Rate and Floating Rate Securities. Adjustable rate
securities (i.e., variable rate and floating rate instruments) are securities
that have interest rates that are adjusted periodically, according to a set
formula. The maturity of some adjustable rate securities may be shortened
under certain special conditions described more fully below.
Variable rate instruments are obligations (usually certificates of
deposit) that provide for the adjustment of their interest rates on
predetermined dates or whenever a specific interest rate changes. A variable
rate instrument subject to a demand feature is considered to have a maturity
equal to the longer of the period remaining until the next readjustment of
the interest rate or the period remaining until the principal amount can be
recovered through demand.
Floating rate instruments (generally corporate notes, bank notes or
Eurodollar certificates of deposit) have interest rate reset provisions
similar to those for variable rate instruments and may be subject to demand
features like those for variable rate instruments. The interest rate is
adjusted, periodically (e.g. daily, monthly, semi-annually), to the
prevailing interest rate in the marketplace. The interest rate on floating
rate securities is ordinarily determined by reference to, or is a percentage
of, a bank's prime rate, the 90-day U.S. Treasury bill rate, the rate of
return on commercial paper or bank certificates of deposit, an index of
short-term interest rates or some other objective measure. The maturity of a
floating rate instrument is considered to be the period remaining until the
principal amount can be recovered through demand.
Investments in Less Developed Countries
The C-K International Fund For Growth's investments in foreign
securities may include investments in countries whose economies or securities
markets are considered by Colonial not to be highly developed (referred to as
"emerging market countries"). Normally no more than 40% of the Fund's assets
will be invested in such emerging market countries. As of May 1, 1996, the
following countries were considered by Colonial to be emerging market
countries:
===========================--------------------------==========================
Asia Latin America Europe and the Middle
East
===========================--------------------------==========================
India Argentina Greece
===========================--------------------------==========================
Indonesia Brazil Israel
===========================--------------------------==========================
Korea Chile Jordan
===========================--------------------------==========================
Pakistan Colombia Portugal
===========================--------------------------==========================
Philippines Mexico Turkey
===========================--------------------------==========================
Sri Lanka Peru
===========================--------------------------==========================
Taiwan Venezuela
- -----------------------------------------------------==========================
Thailand
- -----------------------------------------------------==========================
N-K Tiger Fund invests primarily in companies located in the Tiger
countries, which include Indonesia, Korea, the Philippines, Taiwan and
Thailand.
Foreign Currency Transactions
Each of C-K International Fund For Growth, N-K Tiger Fund, C-K
Strategic Income Fund and C-K Growth and Income Fund may engage in currency
exchange transactions to protect against uncertainty in the level of future
currency exchange rates. These Funds may purchase foreign currencies on a
spot or forward basis in conjunction with their investments in foreign
securities and to hedge against fluctuations in foreign currencies. C-K
International Fund For Growth and C-K Strategic Income Fund also may buy and
sell currency futures contracts and options thereon for such hedging
purposes. C-K Strategic Income Fund also may buy options on currencies for
hedging purposes.
A Fund may engage in both "transaction hedging" and "position
hedging." When it engages in transaction hedging, a Fund enters into foreign
currency transactions with respect to specific receivables or payables of the
Fund generally arising in connection with purchases or sales of its portfolio
securities. A Fund will engage in transaction hedging when it desires to
"lock in" the U.S. dollar price of a security it has agreed to purchase or
sell, or the U.S. dollar equivalent of a dividend or interest payment in a
foreign currency. By transaction hedging a Fund attempts to protect itself
against a possible loss resulting from an adverse change in the relationship
between the U.S. dollar and the applicable foreign currency during the period
between the date on which the security is purchased or sold, or on which the
dividend or interest payments is declared, and the date on which such
payments are made or received.
A Fund may purchase or sell a foreign currency on a spot (or cash)
basis at the prevailing spot rate in connection with the settlement of
transactions in portfolio securities denominated in that foreign currency. A
Fund may also enter into contracts to purchase or sell foreign currencies at
a future date ("forward contracts") and (if the Fund is so authorized)
purchase and sell foreign currency futures contracts.
For transaction hedging purposes a Fund which is so authorized may also
purchase exchange-listed and over-the-counter call and put options on foreign
currency futures contracts and on foreign currencies. Over-the-counter
options are considered to be illiquid by the SEC staff. A put option on a
futures contract gives the Fund the right to assume a short position in the
futures contract until expiration of the option. A put option on a currency
gives the Fund the right to sell a currency at an exercise price until the
expiration of the option. A call option on a futures contract gives the Fund
the right to assume a long position in the futures contract until the
expiration of the option. A call option on a currency gives the Fund the
right to purchase a currency at the exercise price until the expiration of
the option.
When it engages in position hedging, a Fund enters into foreign
currency exchange transactions to protect against a decline in the values of
the foreign currencies in which its portfolio securities are denominated (or
an increase in the value of currency for securities which the Fund expects to
purchase, when the Fund holds cash or short-term investments). In connection
with position hedging, a Fund which is so authorized may purchase put or call
options on foreign currency and foreign currency futures contracts and buy or
sell forward contracts and foreign currency futures contracts. A Fund may
enter into short sales of a foreign currency to hedge a position in a
security denominated in that currency. In such circumstances, the Fund will
maintain in a segregated account with the Fund's Custodian an amount of cash
or liquid debt securities equal to the excess of (i) the amount of foreign
currency required to cover such short sale position over (ii) the amount of
such foreign currency which could then be realized through the sale of the
foreign securities denominated in the currency subject to the hedge.
The precise matching of the amounts of foreign currency exchange
transactions and the value of the portfolio securities involved will not
generally be possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the value of
those securities between the dates the currency exchange transactions are
entered into and the dates they mature.
It is impossible to forecast with precision the market value of
portfolio securities at the expiration or maturity of a forward or futures
contract. Accordingly, it may be necessary for a Fund to purchase additional
foreign currency on the spot market (and bear the expense of such purchase)
if the market value of the security or securities being hedged is less than
the amount of foreign currency the Fund is obligated to deliver and if a
decision is made to sell the security or securities and make delivery of the
foreign currency. Conversely, it may be necessary to sell on the spot market
some of the foreign currency received upon the sale of the portfolio security
or securities if the market value of such security or securities exceeds the
amount of foreign currency the Fund is obligated to deliver.
Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which the Fund owns or intends to
purchase or sell. They simply establish a rate of exchange which the Fund
can achieve at some future point in time. Additionally, although these
techniques tend to minimize the risk of loss due to a decline in the value of
the hedged currency, they tend to limit any potential gain which might result
from the increase in value of such currency.
Currency Forward and Futures Contracts
Each of C-K International Fund For Growth, C-K Strategic Income Fund
and N-K Tiger Fund will enter into such contracts only when cash or
equivalents equal in value to either (i) the commodity value (less any
applicable margin deposits) or (ii) the difference between the commodity
value (less any applicable margin deposits) and the aggregate market value of
all equity securities denominated in the particular currency held by the Fund
have been deposited in a segregated account of the Fund's custodian. A
forward currency contract involves an obligation to purchase or sell specific
currency at a future date, which may be any fixed number of days from the
date of the contract as agreed by the parties, at a price set at the time of
the contract. In the case of a cancelable contract, the holder has the
unilateral right to cancel the contract at maturity by paying a specified
fee. The contracts are traded in the interbank market conducted directly
between currency traders (usually large commercial banks) and their
customers. A contract generally has no deposit requirement, and no
commissions are charged at any stage for trades. A currency futures contract
is a standardized contract for the future delivery of a specified amount of a
foreign currency at a future date at a price set at the time of the
contract. Currency futures contracts traded in the United States are
designed and traded on exchanges regulated by the Commodities Futures Trading
Commission ("CFTC"), such as the New York Mercantile Exchange. (N-K Tiger
Fund may not invest in currency futures contracts.)
Forward currency contracts differ from currency futures contracts in
certain respects. For example, the maturity date of a forward contract may
be any fixed number of days from the date of the contract agreed upon the
parties, rather than a predetermined date in a given month. Forward contracts
may be in any amounts agreed upon by the parties rather than predetermined
amounts. Also, forward contracts are traded directly between currency traders
so that no intermediary is required. A forward contract generally requires
no margin or other deposit.
At the maturity of a forward or futures contract, the Fund may either
accept or make delivery of the currency specified in the contract, or at or
prior to maturity enter into a closing transaction involving the purchase or
sale of an offsetting contract. Closing transactions with respect to forward
contracts are usually effected with the currency trader who is a party to the
original forward contract. Closing transactions with respect to futures
contracts are effected on a commodities exchange; a clearing corporation
associated with the exchange assumes responsibility for closing out such
contracts.
Positions in currency futures contracts may be closed out only on an
exchange or board of trade which provides a secondary market in such
contracts. Although the Funds intend to purchase or sell currency futures
contracts only on exchanges or boards of trade where there appears to be an
active secondary market, there is no assurance that a secondary market on an
exchange or board of trade will exist for any particular contract or at any
particular time. In such event, it may not be possible to close a futures
position and, in the event of adverse price movements, the Fund would
continue to be required to make daily cash payments or variation margin.
Currency Options
In general, options on currencies operate similarly to options on
securities and are subject to many risks similar to those applicable to
currency futures and forward contracts. Currency options are traded
primarily in the over-the-counter market, although options on currencies have
recently been listed on several exchanges. Options are traded not only on
the currencies of individual nations, but also on the European Currency Unit
("ECU"). The ECU is composed of amounts of a number of currencies, and is
the official medium of exchange of the European Economic Community's European
Monetary System.
C-K Strategic Income Fund will only purchase or write currency options
when Colonial believes that a liquid secondary market exists for such
options. There can be no assurance that a liquid secondary market will exist
for a particular option at any specified time. Currency options are affected
by all of those factors which influence exchange rates and investments
generally. To the extent that these options are traded over the counter,
they are considered to be illiquid by the SEC staff.
The value of any currency, including the U.S. dollar, may be affected
by complex political and economic factors applicable to the issuing country.
In addition, the exchange rates of currencies (and therefore the value of
currency options) may be significantly affected, fixed, or supported directly
or indirectly by government actions. Government intervention may increase
risks involved in purchasing or selling currency options, since exchange
rates may not be free to fluctuate in respect to other market forces.
The value of a currency option reflects the value of an exchange rate
which in turn reflects relative values of two currencies, the U.S. dollar and
the foreign currency in question. Because currency transactions occurring in
the interbank market involve substantially larger amounts than those that may
be involved in the exercise of currency options, investors may be
disadvantaged by having to deal in an odd-lot market for the underlying
currencies in connection with options at prices that are less favorable than
for round-lots. Foreign governmental restrictions or taxes could result in
adverse changes in the cost of acquiring or disposing of currencies.
Valuations
There is no systematic reporting of last sale information for
currencies and there is no regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely
basis. Available quotation information is generally representative of very
large round-lot transactions in the interbank market and thus may not reflect
exchange rates for smaller odd-lot transactions (less than $1 million) where
rates may be less favorable. The interbank market in currencies is a global,
around-the-clock market. To the extent that options markets are closed while
the markets for the underlying currencies remain open, significant price and
rate movements may take place in the underlying markets that cannot be
reflected in the options markets.
Settlement Procedures
Settlement procedures relating to the Funds' investments in foreign
securities and to their foreign currency exchange transactions may be more
complex than settlements with respect to investments in debt or equity
securities of U.S. issuers, and may involve certain risks not present in such
Funds' domestic investments, including foreign currency risks and local
custom and usage. Foreign currency transactions may also involve the risk
that an entity involved in the settlement may not meet its obligations.
Foreign Currency Conversion
Although foreign exchange dealers do not charge a fee for currency
conversion, they do realize a profit based on the difference (the "spread")
between prices at which they are buying and selling various currencies.
Thus, a dealer may offer to sell a foreign currency to the Funds at one rate,
while offering a lesser rate of exchange should the Funds desire to resell
that currency to the dealer. Foreign currency transactions may also involve
the risk that an entity involved in the settlement may not meet its
obligations.
<PAGE>
Options on Securities
C-K Utilities Fund may write covered put options on securities and may
purchase put options on securities. The Fund will only utilize options on
securities that are exchange traded.
A put option is a contract that gives the purchaser thereof, during the
term of the option, the right to sell a specified amount of the security
underlying the put option at the exercise price upon exercise of the option.
Through the writing of a covered put option, the Fund will receive
premium income but will also thereby obligate itself during the term of the
option, upon the exercise thereof, to purchase from the holder of the put
option the security underlying the option regardless of the market value of
the security during the option period.
To cover a put option written, the Fund may, for example, establish a
segregated asset account with the Trust's custodian containing cash or liquid
assets that, when added to amounts, if any, deposited with its broker as
margin, equal the market value of the securities underlying the put option
written.
The Fund may purchase put options on securities for defensive purposes
in order to hedge against an anticipated decline in the value of its
portfolio securities. In addition, the Fund may write put options on
securities, which may partially offset the effects of adverse changes in the
value of the Fund's portfolio securities.
Although these investment practices will be used to attempt to reduce
the effect of any adverse price movement in the securities subject to the
option, they do involve certain risks that are different, in some respects,
from the investment risks associated with similar funds that do not engage in
such activities. These risks include the inability to effect closing
transactions at favorable prices and the obligation to purchase the specified
securities at prices which may not reflect their current market values. In
addition, when purchasing put options, the Fund is exposed to the possible
loss of the entire premium paid if the option expires unexercised.
Futures Contracts and Related Options
C-K Strategic Income Fund may engage in transactions involving interest
rate futures contracts and options thereon to hedge against changes in
interest rates. The Fund will engage in such transactions only with respect
to securities it may otherwise purchase or indices composed of such
securities.
A futures contract sale creates an obligation by the seller to deliver
the type of financial instrument called for in the contract in a specified
delivery month for a stated price. A futures contract purchase creates an
obligation by the purchaser to take delivery of the type of financial
instrument called for in the contract in a specified delivery month at a
stated price. The specific instruments delivered or taken at settlement date
are not determined until on or near that date. The determination is made in
accordance with the rules of the exchanges on which the futures contract was
made. Futures contracts are traded in the United States only on a commodity
exchange or boards of trade -- known as "contract markets" -- approved for
such trading by the CFTC, and must be executed through a futures commission
merchant or brokerage firm which is a member of the relevant contract market.
Although futures contracts by their terms call for actual delivery or
acceptance of the underlying financial instruments, the contracts usually are
closed out before the settlement date without the making or taking of
delivery. Closing out a futures contract sale is effected by purchasing a
futures contract for the same aggregate amount of the specific type of
financial instrument with the same delivery date. If the price of the
initial sale of the futures contract exceeds the price of the offsetting
purchase, the seller is paid the difference and realizes a gain. Conversely,
if the price of the offsetting purchase exceeds the price of the initial
sale, the seller realizes a loss. Similarly, the closing out of a futures
contract purchase is effected by the purchaser's entering into a futures
contract sale. If the offsetting sale price exceeds the purchase price, the
purchaser realizes a gain, and if the purchase price exceeds the offsetting
sale price, the purchaser realizes a loss.
Unlike when the Fund purchases or sells a security, no price is paid or
received by the Fund upon the purchase or sale of a futures contract,
although the Fund is required to deposit with its custodian in a segregated
account in the name of the futures broker an amount of cash and/or U.S.
Government Securities. This amount is known as "initial margin." The nature
of initial margin in futures transactions is different from that of margin in
security transactions in that futures contract margin does not involve the
borrowing of funds by the Fund to finance the transactions. Rather, initial
margin is in the nature of a performance bond or good faith deposit on the
contract that is returned to the Fund upon termination of the futures
contract, assuming all contractual obligations have been satisfied. Futures
contracts also involve brokerage costs.
Subsequent payments, called "variation margin", to and from the broker
(or the custodian) are made on a daily basis as the price of the underlying
security or commodity fluctuates, making the long and short positions in the
futures contract more or less valuable, a process known as "marking to
market." The Fund may elect to close some or all of its futures positions at
any time prior to their expiration. The purpose of making such a move would
be to reduce or eliminate the hedge position then currently held by the
Fund. The Fund may close its positions by taking opposite positions which
will operate to terminate the Fund's position in the futures contracts.
Final determinations of variation margin are then made, additional cash is
required to be paid by or released to the Fund, and the Fund realizes a loss
or gain. Such closing transactions involve additional commission costs.
The Fund will enter into futures contracts only when, in compliance
with the SEC's requirements, cash or high quality liquid debt securities
equal in value to the commodity value (less any applicable margin deposits)
have been deposited in a segregated account of the Fund's custodian.
Options on futures contracts
The Fund may purchase and write call and put options on futures
contracts it may buy or sell and enter into closing transactions with respect
to such options to terminate existing positions. The Fund may use such
options on futures contracts in lieu of purchasing and selling the underlying
futures contracts. Such options generally operate in the same manner as
options purchased or written directly on the underlying investments.
As with options on securities, the holder or writer of an option may
terminate his position by selling or purchasing an offsetting option. There
is no guarantee that such closing transactions can be effected.
The Fund will be required to deposit initial margin and maintenance
margin with respect to put and call options on futures contracts written by
it pursuant to brokers' requirements similar to those described above. The
Fund will enter into written options on futures contracts only when, in
compliance with the SEC's requirements, cash or equivalents equal in value to
the commodity value (less any applicable margin deposits) have been deposited
in a segregated account of the Fund's custodian.
Risks of transactions in futures contracts and related options
Successful use of futures contracts by the Fund is subject to
Colonial's ability to predict correctly movements in the direction of
interest rates and other factors affecting securities markets.
Compared to the purchase or sale of futures contracts, the purchase of
call or put options on futures contracts involves less potential risk to the
Fund because the maximum amount at risk is the premium paid for the options
(plus transaction costs). However, there may be circumstances when the
purchase of a call or put option on a futures contract would result in a loss
to the Fund when the purchase or sale of a futures contract would not, such
as when there is no movement in the prices of the hedged investments. The
writing of an option on a futures contract involves risks similar to those
relating to the sale of futures contracts.
There is no assurance that higher than anticipated trading activity or
other unforeseen events might not at times render certain market clearing
facilities inadequate, and thereby result in the institution by exchanges of
special procedures which may interfere with the timely execution of customer
orders.
To reduce or eliminate a hedge position held by the Fund, the Fund may
seek to close out a position. The ability to establish and close out
positions will be subject to the development and maintenance of a liquid
secondary market. It is not certain that this market will develop or
continue to exist for a particular futures contract. Reasons for the absence
of a liquid secondary market on an exchange include the following: (i)
there may be insufficient trading interest in certain contracts or options;
(ii) restrictions may be imposed by an exchange on opening transactions or
closing transactions or both; (iii) trading halts, suspensions or other
restrictions may be imposed with respect to particular classes or series of
contracts or options, or underlying securities; (iv) unusual or unforeseen
circumstances may interrupt normal operations on an exchange; (v) the
facilities of an exchange or a clearing corporation may not at all times be
adequate to handle current trading volume; or (vi) one or more exchanges
could, for economic or other reasons, decide or be compelled at some future
date to discontinue the trading of contracts or options (or a particular
class or series of contracts or options), in which event the secondary market
on that exchange (or in the class or series of contacts or options), would
cease to exist, although outstanding contracts or options on the exchange
that had been issued by a clearing corporation as a result of trades on that
exchange would continue to be exercisable in accordance with their terms.
Passive Foreign Investment Companies
The C-K International Fund For Growth and N-K Tiger Fund may invest in
certain Passive Foreign Investment Companies (PFICs) which may be subject to
U.S. federal income tax on a portion of any "excess distribution" or gain
(PFIC tax) related to the investment. The PFIC tax is the highest ordinary
income rate and it could be increased by an interest charge on the deemed tax
deferral. The Funds may possibly elect to include in its income its pro rata
share of the ordinary earnings and net capital gain of the PFIC. This
election requires certain annual information from the PFICs which in many
cases may be difficult to obtain. An alternative election would permit the
Fund to recognize as income any appreciation (but not depreciation) on its
holdings of PFICs as of the end of its fiscal year.
Securities Loans
C-K U.S. Fund For Growth may make loans of its portfolio securities
amounting to not more than 30% of its total assets. The risks in lending
portfolio securities, as with other extensions of credit, consist of possible
delay in recovery of the securities or possible loss of rights in the
collateral should the borrower fail financially. As a matter of policy,
securities loans are made to broker-dealers pursuant to agreements requiring
that loans be continuously secured by collateral in cash or short-term debt
obligations at least equal at all times to the value of the securities on
loan. This collateral is deposited with the Trust's custodian which
segregates and identifies these assets on its books as security for the
loan. The borrower pays to the Fund an amount equal to any dividends,
interest or other distributions received on securities lent. The borrower is
obligated to return identical securities on termination of the loan. The
Fund retains all or a portion of the interest received on investment of the
cash collateral or receives a fee from the borrower. Although voting rights
or rights to consent with respect to the loaned securities pass to the
borrower, the Fund retains the right to call the loans at any time on
reasonable notice, and it will do so in order that the securities may be
voted by the Fund if the holders of such securities are asked to vote upon or
consent to matters materially affecting the investment. The Fund may also
call such loans in order to sell the securities involved. The Trust has
adopted these policies, in part, so that interest, dividends and other
distributions received on the loaned securities, the interest or fees paid by
the borrower to the Fund for the loan, and the investment income from the
collateral will qualify under certain investment limitations under Subchapter
M of the Internal Revenue Code.
INVESTMENT PERFORMANCE
Each of the Funds may quote total return figures from time to time.
Total return on a per share basis is the amount of dividends received per
share plus or minus the change in the net asset value per share for a given
period. Total return percentages may be calculated by dividing the value of
a share at the end of a given period by the value of the share at the
beginning of the period and subtracting one.
Average Annual Total Return is computed as follows:
ERV = P(1+T)n
Where: P =a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the
period (or fractional portion thereof).
For example, for a $1,000 investment in the Funds, the "Total Return",
the "Total Return Percentage" and (where applicable) the "Average Annual
Total Return" for the life of each Fund listed below (the period from July 1,
1993 in the case of C-K Growth and Income Fund and C-K Utilities Fund; May 2,
1994, in the case of C-K International Fund For Growth; July 5, 1994 in the
case of C-K U.S. Fund For Growth and C-K Strategic Income Fund; and May 1,
1995, in the case of N-K Tiger Fund) through December 31, 1995 were:
================================------------------------------================
Fund Total Return Total Return Average
Percentage Annual Total
Return
================================------------------------------================
C-K Growth and Income Fund $1,355 35.51% 12.9%
================================------------------------------================
C-K Utilities Fund $1,192 19.21% 7.27%
================================------------------------------================
C-K International Fund For $ 995 (0.50)%
Growth (0.30)%
================================------------------------------================
C-K U.S. Fund For Growth $1,354 35.40% 22.50%
- --------------------------------------------------------------================
C-K Strategic Income Fund $1,196 19.60% 12.73%
- --------------------------------------------------------------================
==============================================================================
N-K Tiger Fund $1,150 15.00% N/A
==============================================================================
The figures contained in this "Investment Performance" section assume
reinvestment of all dividends and distributions. They are not necessarily
indicative of future results. The performance of a Fund is a result of
conditions in the securities markets, portfolio management, and operating
expenses. Although information such as that shown above is useful in
reviewing a Fund's performance and in providing some basis for comparison
with other investment alternatives, it should not be used for comparison with
other investments using different reinvestment assumptions or time periods.
The Fund's total returns do not reflect the cost of insurance and other
insurance company separate account charges which vary with the VA contracts
and VLI policies offered through the separate accounts of the Participating
Insurance Companies.
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS
Price Waterhouse LLP are the Trust's independent accountants. The
financial statements incorporated by reference in this SAI have been so
incorporated, and the schedule of financial highlights has been included in
the Prospectus, in reliance upon the report of Price Waterhouse LLP given on
the authority of said firm as experts in accounting and auditing.
The financial statements of the Fund and Report of Independent
Accountants appearing on pages 15 to 52 of the December 31, 1995 Annual
Report of the Trust are incorporated in this SAI by reference.
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
PART C
Information required to be set forth in Part C is set forth under the
appropriate item, so numbered, in Part C of the Registration Statement.
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements.
The following financial statements for each of the Funds in the Trust
are included in this filing as part of Part B:
Independent Accountants' Report
Schedule of Investments as of December 31, 1995
Statement of Assets and Liabilities as of December 31, 1995
Statement of Operations for the year or period ended December 31, 1995
Statement of Changes in Net Assets for the years or periods ended
December 31, 1995 and 1994
Financial Highlights for the years or periods ended December 31, 1995
and 1994
(b) Exhibits.
1. Agreement and Declaration of Trust (1)
2. By-Laws (1)
3. Not Applicable
4(a). [Deleted]
4(b). Specimen Share Certificate for Colonial-Keyport Growth and
Income Fund (2)
4(c). Specimen Share Certificate for Colonial-Keyport Utilities
Fund (2)
4(d). Specimen Share Certificate for Colonial-Keyport International
Fund For Growth (3)
4(e). Specimen Share Certificate for Colonial-Keyport U.S. Fund For
Growth (4)
4(f). Specimen Share Certificate For Colonial-Keyport Strategic
Income Fund (4)
4(g). Specimen Share Certificate For Newport-Keyport Tiger Fund (5)
5(a)(i). Management Agreement between Keyport Variable Investment
Trust, on behalf of Colonial-Keyport Growth and Income Fund
and Colonial-Keyport Utilities Fund, and Keyport Advisory
Services Corp. (2)
5(a)(ii). Management Agreement between Keyport Variable Investment
Trust, on behalf of each of the Colonial-Keyport
International Fund For Growth, the Colonial-Keyport U.S. Fund
For Growth and the Colonial-Keyport Strategic Income Fund,
and Keyport Advisory Services Corp. (3)
5(a)(iii) Amendment No. 1 to Management Agreements listed as Exhibits
5(a)(i) and 5(a)(ii). (5)
5(a)(iv). Management Agreement between Keyport Variable Investment
Trust, on behalf of the Newport-Keyport Tiger Fund, and
Keyport Advisory Services Corp. (5)
5(b)(i). [Deleted]
5(b)(ii). Colonial-Keyport Growth and Income Fund: Colonial Management
Sub-Advisory Agreement among Keyport Variable Investment
Trust, on behalf of the Colonial-Keyport Growth and Income
Fund, Keyport Advisory Services Corp. and Colonial Management
Associates, Inc. (2)
5(b)(iii).Colonial-Keyport Utilities Fund Colonial Management
Sub-Advisory Agreement among Keyport Variable Investment Trust,
on behalf of the Colonial-Keyport Utilities Fund, Keyport
Advisory Services Corp. and Colonial Management Associates, Inc.
(2)
5(b)(iv). Colonial-Keyport International Fund For Growth Colonial
Management Sub-Advisory Agreement among Keyport Variable
Investment Trust, on behalf of Colonial-Keyport International
Fund For Growth, Keyport Advisory Services Corp. and Colonial
Management Associates, Inc. (3)
5(b)(v). [Deleted]
5(b)(vi). Colonial-Keyport U.S. Fund For Growth Colonial Management Sub-
Advisory Agreement among Keyport Variable Investment Trust,
on behalf of Colonial-Keyport U.S. Fund For Growth, Keyport
Advisory Services Corp. and Colonial Management Associates,
Inc. (4)
5(b)(vii).Colonial-Keyport U.S. Fund For Growth Second-Tier Sub-Advisory
Agreement among Keyport Variable Investment Trust, on behalf
of Colonial-Keyport U.S. Fund For Growth, Keyport Advisory
Services Corp., Colonial Management Associates, Inc. and
State Street Bank and Trust Company (4)
5(b)(viii). Colonial-Keyport Strategic Income Fund Colonial Management
Sub-Advisory Agreement among Keyport Variable Investment Trust,
on behalf of Colonial Strategic Income Fund, Keyport Advisory
Services Corp. and Colonial Management Associates, Inc. (4)
5(b)(ix). Newport-Keyport Tiger Fund Newport Management Sub-Advisory
Agreement among Keyport Variable Investment Trust, on behalf
of Newport-Keyport Tiger Fund, Keyport Advisory Services
Corp. and Newport Fund Management, Inc. (5)
6. Underwriting Agreement between Keyport Variable Investment Trust
and Keyport Financial Services Corp. (2)
7. Not Applicable
8. Form of Custody Agreement between Keyport Variable Investment
Trust, on behalf of each Fund, and The Boston Safe Deposit and
Trust Company (1)
9(a)(i). Joinder and Release Agreement with Respect to Transfer
Agency Agreement dated as of January 3, 1995 among Keyport
Variable Investment Trust, Liberty Investment Services, Inc.
and Colonial Investors Service Center, Inc. (including form
of Transfer Agency Agreement and Amendment No. One thereto)
(5)
9(a)(ii). Amendment No. Two to Transfer Agency Agreement (5)
9(b). Participation Agreement among Keyport Variable Investment
Trust, Keyport Financial Services Corp., Keyport Life Insurance
Company, and Liberty Life Assurance Company of Boston (2)
9(c)(i). Pricing and Bookkeeping Agreement between Keyport Variable
Investment Trust and Colonial Management Associates, Inc. (2)
9(c)(ii). Amendment No. One to Pricing and Bookkeeping Agreement (3)
9(c)(iii).Amendment No. Two to Pricing and Bookkeeping Agreement (5)
<PAGE>
10. Opinion and consent of counsel as to the legality of the
securities being
registered (included with annual Rule 24f-2 Notices)
11. Consent of Independent Accountants
12. Not Applicable
13. Not Applicable
14. Not applicable
15. Not applicable
16. Calculation of Total Returns
17. Financial Data Schedule
18. Not applicable
19(a). Power of Attorney executed by each Trustee of the Trust
pertaining to this Registration Statement (6)
19(b). Power of Attorney executed by Richard A. Silver and Peter L.
Lydecker pertaining to this Registration Statement.(4)
(1) Incorporated by reference to Keyport Variable Investment Trust,
Registration Statement on Form N-1A (33-59216) (the "Registration
Statement"), as filed with the SEC on March 8, 1993.
(2) Incorporated by reference to Pre-Effective Amendment No. 1 to the
Registration Statement, as filed with the SEC on June 11, 1993.
(3) Incorporated by reference to Post-Effective Amendment No. 3 to the
Registration Statement, as filed with the SEC on April 27, 1994.
(4) Incorporated by reference to Post-Effective Amendment No. 4 to the
Registration Statement, as filed with the SEC on May 4, 1994.
(5) Incorporated by reference to Post-Effective Amendment No. 6 to the
Registration Statement, as filed on April 27, 1995.
(6) Contained on Signature Pages to Post-Effective Amendment No. 3 to
the Registration Statement, as filed with the SEC on April 27, 1994
(and incorporated therefrom by reference).
Item 25. Persons Controlled by or Under Common Control with Registrant.
Shares of the Trust registered pursuant to this Registration Statement
will be offered and sold to Keyport Life Insurance Company ("Keyport"), a stock
life insurance company organized under the laws of Rhode Island, and to certain
of its separate investment accounts and certain of the respective separate
investment accounts of Liberty Life Assurance Company of Boston ("Liberty
Life"), a stock life insurance company organized as a Massachusetts corporation,
and Independence Life & Annuity Company, a stock life insurance company
organized under the laws of Rhode Island (formerly known as "Crown America Life
Insurance Company" and thereafter formerly known as "Keyport America Life
Insurance Company") ("Independence"). Shares of the Registrant may in the future
be sold to other separate accounts of Keyport, Liberty Life, Independence or
other life insurance companies as the funding medium for other insurance
contracts and policies in addition to the currently offered contracts and
policies. The purchasers of insurance contracts and policies issued in
connection with such accounts will have the right to instruct Keyport, Liberty
Life and Independence with respect to the voting of the Registrant's shares held
by their respective separate accounts. Subject to such voting instruction
rights, Keyport, Liberty Life, Independence and their respective separate
accounts directly control the Registrant.
Keyport Financial Services Corp. ("KFSC"), the Trust's principal
underwriter, Keyport Advisory Services Corp. ("KASC"), the Trust's investment
manager, Colonial Management Associates, Inc. ("Colonial"), KASC's sub-adviser
with respect to each Fund of the Registrant (other than the Newport-Keyport
Tiger Fund), Newport Fund Management, Inc. ("Newport"), KASC's sub-adviser with
respect to the Newport-Keyport Tiger Fund, Keyport and Independence are each
wholly owned indirect subsidiaries of Liberty Financial Companies, Inc.
("Liberty Financial"), Boston, Massachusetts. Liberty Mutual Insurance Company
("Liberty Mutual"), Boston, Massachusetts, as of March 31, 1996 owned,
indirectly, approximately 81.5% of the combined voting power of the outstanding
voting stock of Liberty Financial (with the balance being publicly-held).
Liberty Life is a 90%-owned subsidiary of Liberty Mutual.
Item 26. Number of Holders of Securities.
As of March 31, 1996, the number of holders of shares of beneficial
interest of each Fund of the Trust was as follows:
Title of Class Number of Record Holders
Colonial-Keyport Growth and Income Fund 13
Colonial-Keyport Utilities Fund 9
Colonial-Keyport International 11
Fund For Growth 11
Colonial-Keyport U.S. Fund For Growth 11
Colonial-Keyport Strategic Income Fund 11
Newport-Keyport Tiger Fund 11
Item 27. Indemnification.
Article Tenth of the Agreement and Declaration of Trust of Registrant
(Exhibit 1), which Article is incorporated herein by reference, provides that
Registrant shall provide indemnification of its trustees and officers (including
each person who serves or has served at Registration's request as a director,
officer, or trustee of another organization in which Registrant has any interest
as a shareholder, creditor or otherwise) ("Covered Persons") under specified
circumstances.
Section 17(h) of the 1940 Act provides that neither the Agreement and
Declaration of Trust nor the By-Laws of Registrant, nor any other instrument
pursuant to which Registrant is organized or administered, shall contain any
provision which protects or purports to protect any trustee or officer of
Registrant against any liability to Registrant or its shareholders to which he
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office. In accordance with Section 17(h) of the 1940 Act, Article Tenth shall
not protect any person against any liability to Registrant or its shareholders
to which he would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved in the
conduct of his office.
To the extent required under the 1940 Act:
(i) Article Tenth does not protect any person against any liability to
Registrant or to its shareholders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office;
(ii) in the absence of a final decision on the merits by a court or other
body before whom a proceeding was brought that a Covered Person was not liable
by reason of willful misfeasance, bad, faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office, no
indemnification is permitted under Article Tenth unless a determination that
such person was not so liable is made on behalf of Registrant by (a) the vote of
a majority of the trustees who are neither "interested persons" of Registrant,
as defined in Section 2(a)(19) of the 1940 Act, nor parties to the proceeding
("disinterested, non-party trustees"), or (b) an independent legal counsel as
expressed in a written opinion; and
(iii) Registrant will not advance attorney's fees or other expenses
incurred by a Covered Person in connection with a civil or criminal action, suit
or proceeding unless Registrant receives an undertaking by or on behalf of the
Covered Person to repay the advance (unless it is ultimately determined that he
is entitled to indemnification) and (a) the Covered Person provides security for
his undertaking, or (b) Registrant is insured against losses arising by reason
of any lawful advances, or (c) a majority of the disinterested, non-party
trustees of Registrant or an independent legal counsel as expressed in a written
opinion, determine, based on a review of readily-available facts (as opposed to
a full trail-type inquiry), that there is reason to believe that the Covered
Person ultimately will be found entitled to indemnification.
Any approval of indemnification pursuant to Article Tenth does not prevent
the recovery from any Covered Person of any amount paid to such Covered Person
in accordance with Article Tenth as indemnification if such Covered Person is
subsequently adjudicated by a court of competent jurisdiction not to have acted
in good faith in the reasonable belief that such Covered Person's action was in,
or not opposed to, the best interests of Registrant or to have been liable to
Registrant or its shareholders by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
such Covered Person's office.
Article Tenth also provides that its indemnification provisions are not
exclusive.
Insofar as indemnification for liabilities arising under the 1933 Act may
be permitted to trustees, officers, and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, Registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by Registrant of expenses incurred or
paid by a trustee, officer, or controlling person of Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
trustee, officer, or controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
Registrant, its trustees and officers, its investment manager, and persons
affiliated with them are insured against certain expenses in connection with the
defense of actions, suits, or proceedings, and certain liabilities that might be
imposed as a result of such actions, suits, or proceedings. Registrant will not
pay any portion of the premiums for coverage under such insurance that would (1)
protect any trustee or officer against any liability to Registrant or its
shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office or (2) protect its investment manager or
principal underwriter, if any, against any liability to Registrant or its
shareholders to which such person would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence, in the performance of its
duties, or by reason of its reckless disregard of its duties and obligations
under its contract or agreement with the Registrant; for this purpose the
Registrant will rely on an allocation of premiums determined by the insurance
company.
In addition, KASC, Registrant's investment manager, maintains investment
advisory professional liability insurance to insure it, for the benefit of the
Trust and its non-interested trustees, against loss arising out of any error,
omission, or breach of any duty owed to the Trust or any Fund by the investment
manager.
Item 28. Business and Other Connections of Investment Adviser
Certain information pertaining to business and other connections of the
Registrant's investment manager, KASC, of Colonial Management Associates Inc.
("Colonial"), the sub-adviser to each of Registrant's Funds (other than the
Newport-Keyport Tiger Fund), of State Street Global Advisors, a division of
State Street Bank and Trust Company ("State Street"), to whom Colonial has
delegated portfolio management of the Colonial-Keyport U.S. Fund For Growth, and
of Newport Fund Management, Inc. ("Newport"), the sub-adviser to the
Newport-Keyport Tiger Fund, is incorporated herein by reference to the section
of the Prospectus captioned "TRUST MANAGEMENT ORGANIZATIONS" and to the section
of the Statement of Additional Information captioned "INVESTMENT MANAGEMENT AND
OTHER SERVICES." Set forth below is a list of each director and officer of KASC,
and each director and certain officers of Colonial, State Street and Newport
indicating each business, profession, vocation, or employment of a substantial
nature in which each such person has been, at any time during the past two
fiscal years, engaged for his or her own account or in the capacity of director,
officer, partner, or trustee.
KASC
KASC is a direct wholly owned subsidiary of Keyport. Keyport is a direct
wholly owed subsidiary of SteinRoe Services, Inc. ("SSI"). SSI is a direct
wholly owned subsidiary of Liberty Financial. As stated above, Liberty Financial
is an indirect majority owned subsidiary of Liberty Mutual.
<PAGE>
================================================================================
Name and Current Position Position During
with Adviser Past Two Fiscal Years
================================================================================
John W. President and Director and President and Chief Executive
Rosensteel Chairman of Officer of Keyport, Chairman of the Board
the Board of of KFSC and Chairman of the Board and
Directors President of KASC since January 1, 1993;
President, Chief Executive Officer and Chairman of
the Board of Keyport America since October 1,
1993; prior to 1993 Senior Vice President of Aetna
International, Inc., a division of Aetna Life and
Casualty Company
================================================================================
<PAGE>
================================================================================
Name and Current Position Position During
with Adviser Past Two Fiscal Years
================================================================================
================================================================================
Paul H. Senior Vice Senior Vice President-Chief Financial
LeFevre, Jr. President and Officer of Keyport and Director and Senior
Director Vice President-Chief Financial Officer of
KASC; Senior Vice President, Chief
Financial Officer and Director of Keyport
America since October 1, 1993
- -------------------------------------------------------------------------------
William L. Vice President Vice President-Compliance of Keyport, KFSC
Dixon and KASC; Vice President--Compliance and
Assistant Secretary of Keyport America
since October 1, 1993
- -------------------------------------------------------------------------------
Stewart R. Vice President Vice President-Investments of Keyport and
Morrison KASC; Vice President-Investments of
Keyport America since October 1, 1993
- -------------------------------------------------------------------------------
Francis E. Senior Vice Senior Vice President-Chief Administrative
Reinhart President Officer of Keyport and KASC and Vice
President-Administration of KFSC; Senior
Vice President and Chief Administrative
Officer of Keyport America since October
1, 1993
- -------------------------------------------------------------------------------
John E. Senior Vice Senior Vice President and Chief Sales
Arant, III President and Officer of Keyport since May 16, 1994;
Director Vice President and Chief Sales Officer of
KFSC since May 20, 1994; Director and
Senior Vice President and Chief Sales
Officer of KASC and Keyport America since
March 10, 1995
- -------------------------------------------------------------------------------
James J. Vice Vice President, Counsel and Assistant
Klopper President and Secretary of Keyport; Clerk of KFSC;
Director Director, Vice President, Counsel and
Secretary of KASC and Keyport America
since March 10, 1995
- -------------------------------------------------------------------------------
The business address of KASC and each individual listed in the foregoing
table is c/o Keyport Life Insurance Company, 125 High Street, Boston,
Massachusetts 02110.
Colonial
Colonial is a direct wholly owned subsidiary of The Colonial Group,
Inc. ("TCG"). TCG is a direct wholly owned subsidiary of Liberty Financial.
<PAGE>
================================================================================
Name and Current Position with Adviser Positions During
Past Two Fiscal
Years
================================================================================
Bonny E. Boatman Director, Senior Vice President and Vice President
manager of Tax-Exempt Fixed Income
Investments
- -------------------------------------------------------------------------------
Sheila A. Carroll Director and Senior Vice President
- -------------------------------------------------------------------------------
Harold W. Cogger Chairman, Director, President and Executive Vice
Chief Executive Officer President
- -------------------------------------------------------------------------------
Carl C. Ericson Director, Senior Vice President and Vice President
Director of Taxable Fixed Income
Investments
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
C. Frazier Evans Director, Senior Vice President
- -------------------------------------------------------------------------------
Donald S. Director, Senior Vice President
MacKinnon
- -------------------------------------------------------------------------------
Jeffrey L. McGregor Director, Senior Vice President
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
Helen Frame Peters Director, Senior Vice President and Director of
Chief Investment Officer Taxable Fixed
Income Investments
- -------------------------------------------------------------------------------
Daniel Rie Director, Senior Vice President and
Director of Equity Investments
- -------------------------------------------------------------------------------
Davey S. Scoon Director, Executive Vice President
- -------------------------------------------------------------------------------
Richard A. Silver Director, Senior Vice President,
Chief Financial Officer, Treasurer
- -------------------------------------------------------------------------------
Arthur O. Stern Director, Executive Vice President,
General Counsel and Clerk
- -------------------------------------------------------------------------------
The business address of Colonial and each individual listed in the
foregoing table is c/o Colonial Management Associates, Inc., One Financial
Place, Boston, Massachusetts 02111.
State Street
State Street Boston Corporation, a New York Stock Exchange-listed company,
owns 100% of the common stock of State Street.
<PAGE>
=====================================================================
Name Positions with Positions During the
State Street Past Two Fiscal Years
=====================================================================
- -------------------------------------------------------------------------------
Jeffrey Adams Assistant Vice
President
- -------------------------------------------------------------------------------
Gustaff V. Fish, Jr. Senior Vice
President
- -------------------------------------------------------------------------------
Douglas T. Holmes Senior Vice
President
- -------------------------------------------------------------------------------
Nicholas A. Lopardo Executive Vice
President
- -------------------------------------------------------------------------------
Larry L. Martin Senior Vice
President
- -------------------------------------------------------------------------------
Ben Salm Vice President
- -------------------------------------------------------------------------------
Peter M. Stonberg Vice President
- -------------------------------------------------------------------------------
Tenley E. Albright, Director Physician
M.D.
- -------------------------------------------------------------------------------
Joseph A. Baute Director Retired
- -------------------------------------------------------------------------------
L. MacAllister Booth Director Chairman, President and
Chief Executive Officer,
Polaroid Corporation
- -------------------------------------------------------------------------------
Marshall N. Carter Chairman and Chief also Chairman, President
Executive Officer and Chief Executive
Officer, State Street
Boston Corporation
- -------------------------------------------------------------------------------
James L. Cash Director Professor of Business
Administration, Harvard
Graduate School of
Business
- -------------------------------------------------------------------------------
Truman S. Casner Director Partner, Ropes & Gray
- -------------------------------------------------------------------------------
Nader F. Darehshori Director Chairman, President and
Chief Executive Officer,
Houghton Miffin
Corporation
- -------------------------------------------------------------------------------
Charles F. Kaye Director President,
Transportation
Investments, Inc.
- -------------------------------------------------------------------------------
<PAGE>
=====================================================================
Name Positions with Positions During the
State Street Past Two Fiscal Years
=====================================================================
- -------------------------------------------------------------------------------
John M. Kucharski Director Chairman, President and
Chief Executive Officer,
EG&G Inc.
- -------------------------------------------------------------------------------
Charles R. LaMantia Director President and Chief
Executive Officer,
Arthur D. Little, Inc.
- -------------------------------------------------------------------------------
David B. Perini Director Chairman and President,
Perini Corporation
- -------------------------------------------------------------------------------
Dennis J. Picard Director Chairman and Chief
Executive Officer,
Raytheon Company
- -------------------------------------------------------------------------------
David A. Spina Director and Chief Vice Chairman, Treasurer
Financial Officer and Chief Financial
Officer, State Street
Boston Corporation and
State Street Bank and
Trust Company
- -------------------------------------------------------------------------------
The business address of each individual listed in the foregoing table is
c/o State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110.
Newport
Newport is a direct wholly owned subsidiary of Newport Pacific
Management, Inc. ("Newport Pacific"). Newport Pacific is a direct wholly
owned subsidiary of Liberty Newport Holdings, Ltd. ("LNH"). LNH is a direct
wholly owned subsidiary of Liberty Financial.
At the time the shares of the Newport-Keyport Tiger Fund covered by this
Registration Statement are first offered to Keyport and separate accounts of
Participating Insurance Companies, the officers and directors of Newport will be
as follows:
<PAGE>
===============================================================================
Positions and Positions During Past Two Fiscal Years
Name Offices with
Newport
===============================================================================
John M. Mussey President and Similar positions with Newport Pacific
Director
- -------------------------------------------------------------------------------
Kenneth R. Director President and (since January 1, 1995)
Leibler Chief Executive Officer of Liberty
Financial
- -------------------------------------------------------------------------------
Lindsay Cook Director and Senior Vice President -- Mutual Funds of
Senior Vice Liberty Financial since February 1994;
President Vice President of Liberty Financial
prior thereto
- -------------------------------------------------------------------------------
Thomas R. Tuttle Senior Vice Similar position with Newport Pacific
President
- -------------------------------------------------------------------------------
Pamela Frantz Executive Vice Similar positions with Newport Pacific
President,
Treasurer and
Secretary
- -------------------------------------------------------------------------------
Gerald Rush Vice President Vice President, Finance of Liberty
Finance Financial
- -------------------------------------------------------------------------------
Linda Couch Vice President Similar position with Newport Pacific
- -------------------------------------------------------------------------------
The principal business address of Newport and Messrs. Mussey and Tuttle
and Mss. Frantz and Couch is 580 California Street, Suite 1960, San Francisco,
California 94104. The principal address of each other person listed in the
preceding table is 600 Atlantic Avenue, Suite 2400, Boston, Massachusetts 02210.
Item 29. Principal Underwriters
(a) KFSC acts as principal underwriter of the Registrant's shares on a
best-efforts basis. KFSC also serves as principal underwriter for the SteinRoe
Variable Investment Trust.
(b) Set forth below is information concerning each director and
officer of KFSC.
Name and Principal Positions and Positions and
Business Address* Offices Offices with the
with Underwriter Registrant
John W. Rosensteel Chairman None
Lee R. Roberts Director None
William L. Dixon Vice President - None
Compliance
Jimmie D. Massingill Vice President - None
Marketing Operations
Francis E. Vice President - None
Reinhart Vice President -
Administration
John E. Arant, III Vice President -- None
Chief Sales Officer
James J. Klopper Clerk None
------------------
* The principal business address of KFSC and each person listed in the table is
c/o Keyport Life Insurance Company, 125 High Street, Boston, Massachusetts
02110.
(c) Not applicable.
Item 30. Location of Accounts and Records
The following entities prepare, maintain, and preserve the records
required by Section 31(a) of the Investment Company Act of 1940 (the "1940 Act")
for the Registrant. These services are provided to the Registrant through
written agreements between the parties to the effect that such services will be
provided to the Registrant for such periods prescribed by the rules and
regulations of the Securities and Exchange Commission under the 1940 Act and
such records are the property of the entity required to maintain and preserve
such records and will be surrendered promptly on request.
Boston Safe Deposit and Trust Company, One Boston Place, Boston, MA 02108,
serves as custodian for the Registrant with respect to each Fund other than the
Newport-Keyport Tiger Fund; UMB, n.a., 928 Grand Ave., Kansas City, Missouri
64141, serves as custodian for the Newport-Keyport Tiger Fund; and in such
respective capacities, such custodian banks keep records regarding securities
and other assets in custody and in transfer, bank statements, canceled checks,
financial books and records, and other records relating to their duties in their
respective capacities as custodians. Colonial Investors Service Center, Inc.,
One Financial Center, Boston, MA 02111, serves as the transfer agent and
dividend disbursing agent for the Registrant, and in such capacities is
responsible for records regarding each shareholder's account and all
disbursements made to shareholders. In addition, KASC, pursuant to its Fund
Management Agreements with the Registrant with respect to the Trust, has
delegated to (i) Colonial Management Associates, Inc., One Financial Center,
Boston, Massachusetts 02111, and (ii) Liberty Financial Companies, Inc., 600
Atlantic Avenue, Boston, Massachusetts 02210, the obligation to maintain the
records required pursuant to such agreements. Colonial Management Associates,
Inc., One Financial Center, Boston, MA 02111, pursuant to its Sub-Advisory
Agreement with each Fund (other than the Newport-Keyport Tiger Fund), maintains
all records required pursuant to those Agreements. Colonial Management
Associates, Inc. also maintains all records pursuant to its Pricing and
Bookkeeping Agreement with the Trust. Newport Fund Management, Inc., 580
California Street, Suite 1960, San Francisco, CA 94104, pursuant to its
Sub-Advisory Agreement with the Newport-Keyport Tiger Fund, will maintain all
records required pursuant to that Agreement. KFSC, 125 High Street, Boston,
Massachusetts 02110, serves as principal underwriter for the Trust, and in such
capacity maintains all records required pursuant to its Underwriting Agreement
with the Registrant.
Item 31. Management Services
KASC, pursuant to its Fund Managed Agreements with the Trust, has
delegated its duties thereunder to provide certain administrative services to
the Trust to Colonial and Liberty Financial.
Item 32. Undertakings
(a) Not applicable.
(b) Reference is made to Item 32 of Pre-Effective Amendment No. 1 to
this Registration Statement filed on June 11, 1993, incorporated herein by
reference.
(c) The Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, Registrant has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Boston, and Commonwealth of Massachusetts on the
25th day of April, 1996. The Registrant hereby certifies, in accordance with
Rule 485(b)(4) under the Securities Act of 1933, that this amendment meets the
requirements for effectiveness under Rule 485(b) thereunder.
KEYPORT VARIABLE INVESTMENT TRUST
(Registrant)
By: /s/ RICHARD R. CHRISTENSEN *
Richard R. Christensen
President
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form N-1A has been signed below by the following
persons in the capacities and on the dates indicated.
Signature Title Date
/s/ RICHARD R. CHRISTENSEN * President and Trustee April 25, 1996
Richard R. Christensen (Principal Executive
Officer)
/s/ RICHARD A. SILVER * Treasurer (Principal April 25, 1996
Richard A. Silver Financial Officer)
/s/ PETER L. LYDECKER * Controller (Principal April 25, 1996
Peter L. Lydecker Accounting Officer)
/s/ JOHN A BACON, JR. * Trustee April 25, 1996
John A. Bacon, Jr.
/s/ SALVATORE MACERA * Trustee April 25, 1996
Salvatore Macera
/s/ THOMAS E. STITZEL * Trustee April 25, 1996
Thomas E. Stitzel
*By/S/ KEVIN M. CAROME
Kevin M. Carome
Attorney-in-Fact
<PAGE>
Exhibit Index
11. Consent of Independent Accountants
16. Calculation of Total Returns
17. Financial Data Schedule
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 7 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated February 9, 1996, relating to the financial
statements and financial highlights appearing in the December 31, 1995 Annual
Report to Shareholders of Keyport Variable Investment Trust, which are also
incorporated by reference into the Registration Statement. We also consent to
the references to us under the heading "Independent Accountants and Financial
Statements" in the Statement of Additional Information and "Financial
Highlights" in the Prospectus.
PRICE WATERHOUSE LLP
Boston, Massachusetts
April 24, 1996
PERFORMANCE CALCULATION COLONIAL
KEYPORT GROWTH & INCOME FUND
Fiscal Year End: 12/31/95
SINCE INCEPTION
7/1/93 TO 12/31/95
Initial Investment $1,000.00
Maximum Load 0.00%
Amount Invested $1,000.00
Initial NAV $10.00
Initial Shares 100.000
Shares from Distribution 7.549
End of Period NAV $12.60
Total Return 35.51%
Average Annual
Total Return 12.90%
PERFORMANCE CALCULATION
COLONIAL KEYPORT INTERNATIONAL FUND FOR GROWTH
Fiscal Year End: 12/31/95
SINCE INCEPTION
5/1/94 TO 12/31/95
Initial Investment $1,000.00
Maximum Load 0.00%
Amount Invested $1,000.00
Initial NAV $2.00
Initial Shares 500.000
Shares from Distribution 5.076
End of Period NAV $1.97
Total Return -0.50%
Average Annual
Total Return -0.30%
PERFORMANCE CALCULATION
COLONIAL KEYPORT STRATEGIC INCOME FUND
Fiscal Year End: 12/31/95
SINCE INCEPTION
7/5/94 TO 12/31/95
Initial Investment $1,000.00
Maximum Load 0.00%
Amount Invested $1,000.00
Initial NAV $10.00
Initial Shares 100.000
Shares from Distribution 8.824
End of Period NAV $10.99
Total Return 19.60%
Average Annual
Total Return 12.73%
PERFORMANCE CALCULATION
COLONIAL KEYPORT UTILITIES FUND
Fiscal Year End: 12/31/95
SINCE INCEPTION
7/1/93 TO 12/31/95
Initial Investment $1,000.00
Maximum Load 0.00%
Amount Invested $1,000.00
Initial NAV $10.00
Initial Shares 100.000
Shares from Distribution 13.532
End of Period NAV $10.50
Total Return 19.21%
Average Annual
Total Return 7.27%
PERFORMANCE CALCULATION
COLONIAL KEYPORT US FUND FOR GROWTH
Fiscal Year End: 12/31/95
SINCE INCEPTION
7/5/94 TO 12/31/95
Initial Investment $1,000.00
Maximum Load 0.00%
Amount Invested $1,000.00
Initial NAV $10.00
Initial Shares 100.000
Shares from Distribution 9.545
End of Period NAV $12.36
Total Return 35.40%
Average Annual
Total Return 22.50%
PERFORMANCE CALCULATION
NEWPORT KEYPORT TIGER FUND
Fiscal Year End: 12/31/95
SINCE INCEPTION
5/1/95 TO 12/31/95
Initial Investment $1,000.00
Maximum Load 0.00%
Amount Invested $1,000.00
Initial NAV $2.00
Initial Shares 500.000
Shares from Distribution 8.811
End of Period NAV $2.28
Total Return 16.01%
Average Annual
Total Return N/A
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL
STATEMENTS OF COLONIAL-KEYPORT GROWTH AND INCOME FUND YEAR END
DEC-31-1995 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS OF
COLONIAL-KEYPORT GROWTH AND INCOME FUND YEAR END DEC-31-1995
</LEGEND>
<CIK> 0000898445
<NAME> KEYPORT VARIABLE INVESTMENT TRUST
<SERIES>
<NUMBER> 1
<NAME> COLONIAL-KEYPORT GROWTH AND INCOME FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 59249
<INVESTMENTS-AT-VALUE> 70885
<RECEIVABLES> 286
<ASSETS-OTHER> 7
<OTHER-ITEMS-ASSETS> 21
<TOTAL-ASSETS> 71199
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 129
<TOTAL-LIABILITIES> 129
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 59354
<SHARES-COMMON-STOCK> 5639
<SHARES-COMMON-PRIOR> 4792
<ACCUMULATED-NII-CURRENT> 84
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11636
<NET-ASSETS> 71070
<DIVIDEND-INCOME> 1315
<INTEREST-INCOME> 651
<OTHER-INCOME> 0
<EXPENSES-NET> 482
<NET-INVESTMENT-INCOME> 1484
<REALIZED-GAINS-CURRENT> 1939
<APPREC-INCREASE-CURRENT> 11877
<NET-CHANGE-FROM-OPS> 15300
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1366
<DISTRIBUTIONS-OF-GAINS> 1027
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1243
<NUMBER-OF-SHARES-REDEEMED> 587
<SHARES-REINVESTED> 191
<NET-CHANGE-IN-ASSETS> 10111
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (915)
<OVERDISTRIB-NII-PRIOR> 35
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 384
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 482
<AVERAGE-NET-ASSETS> 59223
<PER-SHARE-NAV-BEGIN> 10.03
<PER-SHARE-NII> 0.29
<PER-SHARE-GAIN-APPREC> 2.72
<PER-SHARE-DIVIDEND> 0.25
<PER-SHARE-DISTRIBUTIONS> 0.19
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.60
<EXPENSE-RATIO> 0.81
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL
STATEMENT OF COLONIAL-KEYPORT INTERNATIONAL FUND FOR GROWTH YEAR END
DEC-31-1995
AND IS QUALIFIED IN ITS ENTIRETY BY REFRERENCE TO SUCH FINANCIAL STATEMENTS OF
COLONIAL-KEYPORT INTERNATIONAL FUND FOR GROWTH YEAR END DEC-31-1995.
</LEGEND>
<CIK> 0000898445
<NAME> KEYPORT VARIABLE INVESTMENT TRUST
<SERIES>
<NUMBER> 4
<NAME> COLONIAL-KEYPORT INTERNATIONAL FUND FOR GROWTH
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 20976
<INVESTMENTS-AT-VALUE> 22099
<RECEIVABLES> 706
<ASSETS-OTHER> 7
<OTHER-ITEMS-ASSETS> 15
<TOTAL-ASSETS> 22827
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 63
<TOTAL-LIABILITIES> 63
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 22654
<SHARES-COMMON-STOCK> 11555
<SHARES-COMMON-PRIOR> 10170
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 53
<ACCUMULATED-NET-GAINS> (957)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1120
<NET-ASSETS> 22764
<DIVIDEND-INCOME> 369
<INTEREST-INCOME> 70
<OTHER-INCOME> 0
<EXPENSES-NET> 286
<NET-INVESTMENT-INCOME> 153
<REALIZED-GAINS-CURRENT> (906)
<APPREC-INCREASE-CURRENT> 2045
<NET-CHANGE-FROM-OPS> 1292
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 228
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4013
<NUMBER-OF-SHARES-REDEEMED> 2744
<SHARES-REINVESTED> 116
<NET-CHANGE-IN-ASSETS> 3618
<ACCUMULATED-NII-PRIOR> 13
<ACCUMULATED-GAINS-PRIOR> (57)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 184
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 286
<AVERAGE-NET-ASSETS> 20424
<PER-SHARE-NAV-BEGIN> 1.88
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> 0.11
<PER-SHARE-DIVIDEND> 0.02
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.97
<EXPENSE-RATIO> 1.40
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL
STATEMENTS OF COLONIAL KEYPORT STRATEGIC INCOME FUND, YEAR END
DEC-31-1995 AND
IS QULAIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTES OF
COLONIAL KEYPORT STRATEGIC INCOME FUND YEAR END DEC-31-1995
</LEGEND>
<CIK> 0000898445
<NAME> KEYPORT VARIABLE INVESTMENT TRUST
<SERIES>
<NUMBER> 5
<NAME> COLONIAL KEYPORT STRATEGIC INCOME FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 45509
<INVESTMENTS-AT-VALUE> 47110
<RECEIVABLES> 1517
<ASSETS-OTHER> 5
<OTHER-ITEMS-ASSETS> 14
<TOTAL-ASSETS> 48646
<PAYABLE-FOR-SECURITIES> 13
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 299
<TOTAL-LIABILITIES> 312
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 46814
<SHARES-COMMON-STOCK> 4396
<SHARES-COMMON-PRIOR> 1363
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (69)
<ACCUMULATED-NET-GAINS> (1)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1591
<NET-ASSETS> 48334
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2496
<OTHER-INCOME> 0
<EXPENSES-NET> 236
<NET-INVESTMENT-INCOME> 2261
<REALIZED-GAINS-CURRENT> 267
<APPREC-INCREASE-CURRENT> 1746
<NET-CHANGE-FROM-OPS> 4274
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2313
<DISTRIBUTIONS-OF-GAINS> 141
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4889
<NUMBER-OF-SHARES-REDEEMED> 2079
<SHARES-REINVESTED> 224
<NET-CHANGE-IN-ASSETS> 34992
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (131)
<OVERDISTRIB-NII-PRIOR> (13)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 182
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 263
<AVERAGE-NET-ASSETS> 27991
<PER-SHARE-NAV-BEGIN> 9.79
<PER-SHARE-NII> 0.55
<PER-SHARE-GAIN-APPREC> 1.24
<PER-SHARE-DIVIDEND> 0.56
<PER-SHARE-DISTRIBUTIONS> 0.03
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.99
<EXPENSE-RATIO> 0.84
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL
STATEMENTS OF COLONIAL KEYPORT UTILITIES FUND YEAR END DEC-31-1995
AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
OF COLONIAL
KEYPORT UTILITIES FUND YEAR END DEC-31-1995
</LEGEND>
<CIK> 0000898445
<NAME> KEYPORT VARIABLE INVESTMENT TRUST
<SERIES>
<NUMBER> 2
<NAME> COLONIAL-KEYPORT UTILITIES FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 45542
<INVESTMENTS-AT-VALUE> 51400
<RECEIVABLES> 298
<ASSETS-OTHER> 3
<OTHER-ITEMS-ASSETS> 14
<TOTAL-ASSETS> 51715
<PAYABLE-FOR-SECURITIES> 9
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 109
<TOTAL-LIABILITIES> 118
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 50432
<SHARES-COMMON-STOCK> 4915
<SHARES-COMMON-PRIOR> 4707
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (29)
<ACCUMULATED-NET-GAINS> (4664)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5858
<NET-ASSETS> 51597
<DIVIDEND-INCOME> 2431
<INTEREST-INCOME> 115
<OTHER-INCOME> 0
<EXPENSES-NET> 366
<NET-INVESTMENT-INCOME> 2180
<REALIZED-GAINS-CURRENT> (1331)
<APPREC-INCREASE-CURRENT> 12516
<NET-CHANGE-FROM-OPS> 13365
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2164
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 942
<NUMBER-OF-SHARES-REDEEMED> (941)
<SHARES-REINVESTED> 207
<NET-CHANGE-IN-ASSETS> 13441
<ACCUMULATED-NII-PRIOR> (45)
<ACCUMULATED-GAINS-PRIOR> (3332)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 284
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 366
<AVERAGE-NET-ASSETS> 43813
<PER-SHARE-NAV-BEGIN> 8.11
<PER-SHARE-NII> 0.46
<PER-SHARE-GAIN-APPREC> 2.39
<PER-SHARE-DIVIDEND> 0.46
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.50
<EXPENSE-RATIO> 0.83
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL
INFORMATION EXTRACTED FROM FINANCIAL STATEMENTS OF COLONIAL-KEYPORT
US FUND
FOR GROWTH YEAR END DEC-31-1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE
TO SUCH FINANCIAL STATEMENTS OF COLONIAL-KEYPORT US FUND FOR GROWTH
YEAR END
DEC-31-1995.
</LEGEND>
<CIK> 0000898445
<NAME> KEYPORT VARIABLE INVESTMENT TRUST
<SERIES>
<NUMBER> 6
<NAME> COLONIAL-KEYPORT US FUND FOR GROWTH
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 38729
<INVESTMENTS-AT-VALUE> 42869
<RECEIVABLES> 226
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 14
<TOTAL-ASSETS> 43110
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 93
<TOTAL-LIABILITIES> 93
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38912
<SHARES-COMMON-STOCK> 1982
<SHARES-COMMON-PRIOR> 1497
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 35
<ACCUMULATED-NET-GAINS> (1)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4141
<NET-ASSETS> 43017
<DIVIDEND-INCOME> 716
<INTEREST-INCOME> 94
<OTHER-INCOME> 0
<EXPENSES-NET> 298
<NET-INVESTMENT-INCOME> 512
<REALIZED-GAINS-CURRENT> 2620
<APPREC-INCREASE-CURRENT> 3847
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 518
<DISTRIBUTIONS-OF-GAINS> 2577
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2241
<NUMBER-OF-SHARES-REDEEMED> 509
<SHARES-REINVESTED> 250
<NET-CHANGE-IN-ASSETS> 27645
<ACCUMULATED-NII-PRIOR> 13
<ACCUMULATED-GAINS-PRIOR> (57)
<OVERDISTRIB-NII-PRIOR> 00
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 238
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 318
<AVERAGE-NET-ASSETS> 29806
<PER-SHARE-NAV-BEGIN> 10.27
<PER-SHARE-NII> 0.21
<PER-SHARE-GAIN-APPREC> 2.84
<PER-SHARE-DIVIDEND> 0.16
<PER-SHARE-DISTRIBUTIONS> 0.80
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.36
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS OF NEWPORT-KEYPORT TIGER FUND YEAR END DEC-31-1995 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF NEWPORT-KEYPORT
TIGER FUND YEAR END DEC-31-1995 </LEGEND> <CIK> 0000898445 <NAME> KEYPORT
VARIABLE INVESTMENT TRUST <SERIES>
<NUMBER> 7
<NAME> NEWPORT-KEYPORT TIGER FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 17522
<INVESTMENTS-AT-VALUE> 19265
<RECEIVABLES> 91
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 19356
<PAYABLE-FOR-SECURITIES> 321
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 58
<TOTAL-LIABILITIES> 379
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 17328
<SHARES-COMMON-STOCK> 8327
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 93
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1742
<NET-ASSETS> 18977
<DIVIDEND-INCOME> 162
<INTEREST-INCOME> 95
<OTHER-INCOME> 0
<EXPENSES-NET> 171
<NET-INVESTMENT-INCOME> 86
<REALIZED-GAINS-CURRENT> (15)
<APPREC-INCREASE-CURRENT> 1742
<NET-CHANGE-FROM-OPS> 1813
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 164
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8624
<NUMBER-OF-SHARES-REDEEMED> 369
<SHARES-REINVESTED> 72
<NET-CHANGE-IN-ASSETS> 18977
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 86
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 171
<AVERAGE-NET-ASSETS> 14359
<PER-SHARE-NAV-BEGIN> 2.00
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> 0.29
<PER-SHARE-DIVIDEND> 0.02
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 2.28
<EXPENSE-RATIO> 1.79
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
