Keyport Variable Investment Trust
Colonial-Keyport Growth and Income Fund
Colonial-Keyport Utilities Fund
Colonial-Keyport International Fund for Growth
Colonial-Keyport Strategic Income Fund
Colonial-Keyport U.S. Fund for Growth
Newport-Keyport Tiger Fund
Annual Report
December 31, 1996
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TABLE OF CONTENTS
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President's Letter 1
Portfolio Manager's Discussion:
Colonial-Keyport Growth and Income Fund 3
Colonial-Keyport Utilities Fund 5
Colonial-Keyport International Fund for Growth 7
Colonial-Keyport Strategic Income Fund 9
Colonial-Keyport U.S. Fund for Growth 11
Newport-Keyport Tiger Fund 13
Report of Independent Accountants 15
Financial Statements:
Colonial-Keyport Growth and Income Fund 16
Colonial-Keyport Utilities Fund 22
Colonial-Keyport International Fund for Growth 27
Colonial-Keyport Strategic Income Fund 34
Colonial-Keyport U.S. Fund for Growth 40
Newport-Keyport Tiger Fund 46
Notes to Financial Statements 51
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PRESIDENT'S LETTER
Keyport Variable Investment Trust
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Dear Fellow Contract Owner:
We are pleased to present this annual report for the Keyport Variable
Investment Trust -- Growth and Income Fund, Utilities Fund, International
Fund for Growth, Strategic Income Fund, U.S. Fund for Growth and Newport
Tiger Fund.
Another Vintage Year for Stocks
Despite increased volatility and some confusion about the strength of the
economy, 1996 was another stellar year for the U.S. stock market. A seemingly
picture-perfect backdrop, characterized by moderate economic growth, low
unemployment, minimal inflation, stable interest rates, surging exports and
strong corporate profits, helped the stock market post record-breaking gains.
Internationally, the Tiger countries of the Pacific Rim continue to offer a
good combination of growth and value. In the European markets, short-term
interest rates continue to be much lower than long-term rates. We expect
these conditions to prevail until we see an increase in economic activity.
Mixed Signals for Fixed Income Investors
It was a much tougher year for bond investors, however. Long considered a
haven of stability, bonds were more volatile investments than stocks this
past year.
The greatest single contributor to the bond market's uninspiring
performance over the past year was probably concern about the direction of
interest rates. Despite the fact that most of the rise in long-term interest
rates actually took place in the first quarter of 1996, investors were never
able to overcome their uneasiness about the direction in which interest rates
were actually headed. Adding to this anxiety was the release of several
stronger than expected economic reports that raised fears that the economy
was overheating. In fact, many investors believed these reports signaled that
the Federal Reserve would have to raise short-term interest rates in order to
stave off inflation. As a result, most of the bond market was stung early in
the year and never really came back.
Less of the Same
Most signals now point to an economic slowdown. This should help to resolve
many of the conflicts that plagued investors during this past year. Going
forward, we expect moderate economic growth, modest inflation and continued
stock market gains.
There are some clouds on the horizon, however. For example, although
earnings are still coming in strong, concern about narrowing profit margins
remains. That's because corporate profitability appears to have reached a
plateau. For the past several years, companies haven't had to raise prices to
make money because unit labor costs remain relatively unchanged. With wages
increasing and unemployment hovering near a seven-year low, however, unit
labor costs are starting to increase. This means many companies will probably
either have to raise prices or watch their profit margins slip. Moreover, a
stronger dollar and higher interest rates also could begin to eat away at
corporate profits. Consequently, although we think earnings will remain
generally positive, we expect that some companies may have problems meeting
their earnings estimates.
1
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PRESIDENT'S LETTER
Keyport Variable Investment Trust
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Nonetheless, as long as the economy continues to grow and inflation remains
subdued, we believe the stock market still has room to run--although probably
not at the same pace as this past year. And, if we are indeed seeing a real
moderation in economic activity, we think the next move by the Federal
Reserve will be a rate cut, probably some time next spring. Given this
environment, we believe fixed income securities could also perform well in
the months to come.
The Basics
We think last year's volatility should serve as a reminder to investors that
the markets can be strongly influenced by any number of factors, and can, at
times, react abruptly to these events. That's why we think it's important for
you to try to understand the factors affecting the markets--not just to
profit from them, but to gain the patience to ride out the volatility in your
investments. No matter what direction you think the economy is heading, it's
important to remember the basics: Think long term and periodically reevaluate
your portfolio to make sure it continues to match your goals, risk tolerance
and time horizon.
As always, we thank you for investing in the Keyport Variable Investment
Trust. We look forward to serving your investment needs.
Sincerely,
/s/Richard R. Christensen
Richard R. Christensen
President
Keyport Variable Investment Trust
2
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PORTFOLIO MANAGER'S DISCUSSION
Keyport Variable Investment Trust Colonial-Keyport Growth and Income Fund
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Dear Contract Owner:
Colonial-Keyport Growth and Income Fund seeks primarily income and capital
growth and, secondarily, capital preservation.
Fund Performance (as of December 31, 1996)
Inception Date 7/1/93
Assuming reinvestment of all distributions
12-month total return 17.89%
Net asset value per share on 12/31/95 $12.60
Net asset value per share on 12/31/96 $13.96
Portfolio Manager's Discussion
Daniel Rie is lead portfolio manager of Colonial-Keyport Growth and Income
Fund. Dan is a senior vice president of Colonial Management Associates, Inc.
and Director of the Equity Investment Department.
What was the investment environment for stocks during 1996?
The past 12 months were generally favorable for equity investments, with
both large and small company stocks posting strong returns until July, when a
price-based correction took place. The stock markets rebounded in August and
the Dow Jones Industrial Average topped the 6000 mark for the first time in
October, on the way to several more record levels by year end. The market
has, however, continued to favor growth stocks rather than the value-oriented
stocks of mid- sized companies in which the Fund invests.
Has there been any change in your investment strategy?
We recently changed the Fund's investment strategy to expand the definition
of value investing. This modification allowed us to better diversify the Fund
and give it more flexibility to hold stocks that we believe have above
average earnings potential. Under this new definition of "value" the Fund
will have access to all segments of the economy, and will no longer be
limited to the narrow universe of stocks defined by low P/Es and high yields.
What is your market outlook for the Fund?
While growth stocks have dominated the stock market for the past several
years, we are confident that value stocks will regain favor. The Fund should
be well positioned to capitalize on that shift when it occurs. As always, the
Fund will be managed to reduce risk and provide protection in down markets.
3
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PORTFOLIO MANAGER'S DISCUSSION
Keyport Variable Investment Trust Colonial-Keyport Growth and Income Fund
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Colonial-Keyport Growth & Income Fund and S&P 500 Index
Performance of a Hypothetical $10,000 Investment
July 1, 1993 to December 31, 1996
Average Annual Return on December 31, 1996
Since Inception 12 Month
14.29% 17.89%
[typeset representation of line chart]
Colonial-Keyport
Growth & Income S&P 500
10000 10000
10070 9960
10530 10337
10560 10258
10680 10470
10410 10370
10501.1 10495
10855.9 10852
10703.8 10557
10338.9 10098
10420 10227
10338.9 10394
10115.9 10140
10399.7 10473
10784.9 10901
10582.2 10635
10572 10873
10217.3 10478
10421.8 10633
10536.1 10909
10941.3 11333
11180.3 11667
11460.8 12010
11793.3 12490
12115.5 12779
12458.3 13203
12645.4 13236
12874 13794
12884.4 13745
13476.6 14348
13551.2 14624
14078.2 15121
14239.5 15262
14228.7 15409
14476.1 15636
14747.6 16038
14715.3 16099
14026.4 15389
14467.7 15714
14952.1 16597
15275 17055
15974.8 18343
15976.1 17979
[end line chart]
Performance numbers reflect all Fund net expenses, but do not include
insurance charges imposed by your insurance company's separate accounts or
certain expenses reimbursed by the Manager. If performance information
included the effect of these additional amounts, returns would be lower.
4
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PORTFOLIO MANAGER'S DISCUSSION
Keyport Variable Investment Trust Colonial-Keyport Utilities Fund
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Dear Contract Owner:
Colonial-Keyport Utilities Fund seeks primarily current income and
secondarily long-term capital growth. The Fund pursues its objective by
investing primarily in common and preferred stock issued by domestic utility
companies.
Fund Performance (as of December 31, 1996)
Inception Date 7/1/93
Assuming reinvestment of all distributions
12-month total return 6.53%
Net asset value per share on 12/31/95 $10.50
Net asset value per share on 12/31/96 $10.70
Portfolio Manager's Discussion
John Lennon is lead portfolio manager of Colonial-Keyport Utilities Fund and
is a vice president of Colonial Management Associates, Inc.
How have utility stocks performed during the past 12 months?
While the total returns seen by utilities in 1996 did not match the strong
results of a year ago, they did post fairly attractive returns in an
environment that was generally unfavorable for utility stocks. During the
first six months, the Dow Jones Utility Average generated only a modest total
return of 0.6%. This period was characterized by rising interest rates, a
negative for utility stocks. A reversal of this interest rate pattern
resulted in a stronger second half that led the Dow Jones Utility Average to
a total return of 9.1% for the year.
What factors affected performance during this period?
As mentioned previously, interest rates were a significant factor,
particularly in the first half of the period when rising rates limited
performance. Other factors included a cold winter season, mergers and
deregulation. In early 1996, many parts of the country were hit with severe
winter weather, which generated an increased demand for gas, and in turn,
boosted the earnings and stock prices of natural gas companies. In response
to the onset of deregulation, a number of managements in both the electric
and natural gas industries sought to improve their competitive position by
merging with other utilities. The stock prices of several utilities reacted
positively to these merger announcements. In the fourth quarter, telephone
stocks rebounded from their earlier disappointing performance. This resulted
from investor uncertainty surrounding the forthcoming expansion of
competition within the local and long distance markets. Progress continues to
be made on a state by state basis in the restructuring of the electric
utility industry, which is aimed at reducing the cost to the consumer by
deregulating the generation and sale of electricity. Public utility
commissions in several states have recognized the existing provider's need
for full recovery of stranded costs, which has been viewed favorably by
utility investors.
How did the Fund's performance compare to the Dow Jones Utility Average and
the Standard & Poor's 500 Index?
For the 12-month period, the Fund underperformed both the Dow Jones Utility
Average and the Standard & Poor's 500 Index, two unmanaged indexes that track
the performance of utility stocks and U.S. stocks, respectively. The total
return for the Fund was 6.53% while the return on the Dow Jones Utility
Average was 9.10% and the return on the Standard & Poor's 500 Index was
22.94%. The 15-stock Dow Jones Utility Average benefited significantly from
its four natural gas holdings. During the second half of the year, two of
these companies signed merger agreements with electric utilities at
substantial price premiums. The Fund's exposure to gas issues was smaller and
more diversified than that of the Average. The Fund underperformed the
Standard & Poor's 500 Index because the Index tracks the broader market and
includes many industrial and financial companies that benefited from a strong
economy.
5
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PORTFOLIO MANAGER'S DISCUSSION
Keyport Variable Investment Trust Colonial-Keyport Utilities Fund
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Colonial-Keyport Utilities Fund, Dow Jones Utility Average and S&P 500 Index
Performance of a Hypothetical $10,000 Investment
July 1, 1993 to December 31, 1996
Average Annual Return on December 31, 1996
Since Inception 12 Month
7.05% 6.53%
[typeset representation of line chart]
Colonial-Keyport Dow Jones
Utilities Utility Avg. S&P 500
10000 10000 10000
10110 10237 9960
10350 10556 10337
10260 10340 10258
10120 9986 10470
9670 9405 10370
9830 9631 10495
9667 9508 10852
9218 8911 10557
8954 8369 10098
9147 8517 10227
8760 8011 10394
8577 7686 10140
8882 8102 10473
8913 8286 10901
8699 8010 10635
8811 8023 10873
8770 8008 10478
8820 8158 10633
9353 8697 10909
9418 8793 11333
9364 8566 11667
9559 8902 12010
9994 9514 12490
10060 9377 12779
10136 9483 13203
10375 9461 13236
10930 10081 13794
11180 10116 13745
11387 10247 14348
11920 10768 14624
12147 11053 15121
11864 10561 15262
11750 10305 15409
11659 10202 15636
11682 10256 16038
12125 10831 16099
11682 10110 15389
11739 10627 15714
11784 10807 16597
12238 11325 17055
12624 11835 18343
12699 11747 17979
[end line chart]
Performance numbers reflect all Fund net expenses, but do not include
insurance charges imposed by your insurance company's separate accounts or
certain expenses reimbursed by the Manager. If performance information
included the effect of these additional amounts, returns would be lower.
6
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PORTFOLIO MANAGER'S DISCUSSION
Keyport Variable Investment Trust Colonial-Keyport International Fund for
Growth
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Dear Contract Owner:
Colonial-Keyport International Fund for Growth seeks long-term growth by
investing primarily in non-U.S. equities.
Fund Performance (as of December 31, 1996)
Inception Date 5/2/94
Assuming reinvestment of all distributions
12-month total return 5.61%
Net asset value per share on 12/31/95 $1.97
Net asset value per share on 12/31/96 $1.96
Portfolio Manager's Discussion
Bruno Bertocci and David Harris are portfolio co-managers of
Colonial-Keyport International Fund for Growth and vice presidents of
Colonial Management Associates, Inc. They are also investment management
principals with Stein Roe Global Capital Management, a division of Stein Roe
& Farnham, Inc.
What was the investment environment for international stocks during 1996?
International market conditions generally improved during the course of the
year, but they did not match the record-high performance of U.S. blue chip
stocks. European markets began to accelerate as interest rates declined,
particularly in Scandinavia and Germany. In Japan, market conditions improved
modestly, but a weakening yen minimized real gains to U.S. investors.
Economic growth in Southeast Asia and some Latin American countries was
strong, averaging 5% or more compared to 2%-3% for Europe and the U.S.
How did the Fund perform during the past 12 months?
The Fund generated a total return of 6.04% for the year, somewhat lower than
the return of 7.62% posted by the Morgan Stanley Capital International
Europe, Australia, Far East (GDP) Index. After taking over management of the
Fund from Gartmore Capital Management, the first half of the year was spent
restructuring the portfolio to better reflect our style and outlook. This
extensive trading activity lowered the Fund's returns for the period.
However, we believe the Fund is now well positioned to benefit from growth
opportunities in international markets.
What types of investments did you favor?
We look for undervalued stocks in fast growing markets and industries. Over
the period we increased our positions in the capital equipment and materials
sectors. Geographically, we added to holdings in Scandinavia, Southeast Asia
and Latin America. We reduced the Fund's position in the United Kingdom. We
also tended to invest in companies with a smaller average market
capitalization than most international funds.
What is your market outlook?
Over the past two years, U.S. equities have outperformed international
equities, resulting in high valuations in the U.S. market relative to the
rest of the world. We believe this inequality won't persist much longer and
that foreign markets will be the most attractive place to find the best
performing stocks over the next several years.
7
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PORTFOLIO MANAGER'S DISCUSSION
Keyport Variable Investment Trust Colonial-Keyport International Fund for
Growth
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Colonial-Keyport International Fund for Growth and Morgan Stanley Europe
Australia Far East Index
Performance of a Hypothetical $10,000 Investment
May 2, 1994 to December 31, 1996
Average Annual Return on December 31, 1996
Since Inception 12 Month
1.87% 5.61%
[typeset representation of line chart]
Colonial-Keyport
International Fund
for Growth MSCI EAFE
10000 10000
9900 9943
9700 10083
9950 10180
10250 10421
9950 10093
10000 10429
9550 9928
9400 9990
8850 9606
8700 9579
8850 10176
9100 10559
9100 10433
9050 10250
9550 10888
9550 10473
9700 10677
9550 10390
9700 10679
9950 11110
9899 11155
9899 11193
10101 11431
10657 11763
10556 11546
10606 11611
10202 11272
10354 11297
10455 11597
10202 11478
10606 11935
10508 11781
[end line chart]
Performance numbers reflect all Fund net expenses, but do not include
insurance charges imposed by your insurance company's separate accounts or
certain expenses reimbursed by the Manager. If performance information
included the effect of these additional amounts, returns would be lower.
8
<PAGE>
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PORTFOLIO MANAGER'S DISCUSSION
Keyport Variable Investment Trust Colonial-Keyport Strategic Income Fund
-----------------------------------------------------------------------------
Dear Contract Holder:
Colonial-Keyport Strategic Income Fund seeks as high a level of current
income and total return as is consistent with prudent risk, by diversifying
investments in U.S. and foreign government and lower rated corporate debt
securities.
Fund Performance (as of December 31, 1996)
Inception Date 7/5/94
Assuming reinvestment of all distributions
12-month total return 9.83%
Net asset value per share on 12/31/95 $10.99
Net asset value per share on 12/31/96 $11.04
Portfolio Manager's Discussion
Carl Ericson is portfolio manager of Colonial-Keyport Strategic Income Fund.
Carl is a senior vice president of Colonial Management Associates, Inc. and
Director of the Taxable Fixed Income Department.
What was the Fund's investment strategy during 1996?
The volatile investment environment of 1996 led us to carefully manage the
Fund's diversification throughout the year. Our ability to invest in three
major bond markets--high yield corporate, international and U.S.
government--allowed shareholders to benefit from the effects of
diversification because each of these market segments has unique
characteristics. The high yield market generated attractive returns by
capitalizing on the healthy economy. The international bond market
outperformed the U.S. treasury market as foreign economies lagged the U.S.
economy's pace. The U.S. government market sector posted the weakest
performance as stronger than anticipated economic reports early in the year
caused interest rates to rise, inflation fears to accelerate and the high
grade markets to sell off sharply. However, our diversification strategy
allowed us to enhance returns by reducing the Fund's investments in U.S.
government securities relative to high yield and international.
How did the Fund perform over the past 12 months?
The Fund's total return of 9.83% was greater than that of the Lehman
Brothers Government/Corporate Bond Index that posted a total return of 2.90%
for the year. The Fund was able to outperform the Index primarily due to its
ability to invest in market sectors less closely related to U.S. interest
rate activity and expectations, namely domestic high yield corporate bonds
and international bonds.
What is your market outlook?
We are anticipating modest economic growth with continuing low levels of
inflation. As a result, we do not see a near- term threat that the Federal
Reserve Board will increase interest rates. We expect to see domestic market
volatility continue in 1997, although we believe that investors will be
better compensated for it. Therefore, we feel that strong investor interest
in markets providing good levels of income should provide ongoing support for
corporate and international bonds. We will continue to diversify the Fund,
focusing on market sectors that are generating the most attractive,
risk-adjusted returns.
9
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PORTFOLIO MANAGER'S DISCUSSION
Keyport Variable Investment Trust Colonial-Keyport Strategic Income Fund
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Colonial-Keyport Strategic Income Fund and Lehman Brothers
Government/Corporate Bond Index*
Performance of a Hypothetical $10,000 Investment
July 31, 1994 to December 31, 1996
Average Annual Return on December 31, 1996
Since Inception 12 Month
11.55% 9.83%
[typeset representation of line chart]
Colonial-Keyport Lehman Government/Corporate
Strategic Income Bond Index
10000 10000
10049 10004
10009 9853
10049 9842
9940 9824
10029 9889
10162 10079
10408 10312
10592 10382
10787 10526
11084 10968
11135 11055
11238 11013
11238 11154
11432 11267
11586 11432
11699 11620
11864 11792
12037 11865
11940 11613
11886 11516
11940 11437
11951 11418
12026 11570
12123 11597
12264 11568
12512 11774
12706 12049
13009 12271
13031 12134
[end line chart]
*The Lehman Brothers Government/Corporate Bond Index is an unmanaged index
that tracks the performance of a selection of U.S. government agency,
Treasury and investment-grade corporate bonds. The Lehman Mutual Fund
General Bond Index (used previously to track performance) ceased to exist in
May 1995, the Lehman Brothers Government/Corporate Bond Index most closely
parallels that Index's performance. Unlike mutual funds, indexes are not
investments, do not incur fees or expenses and it is not possible to invest
in an index.
Performance numbers reflect all Fund net expenses, but do not include
insurance charges imposed by your insurance company's separate accounts or
certain expenses reimbursed by the Manager. If performance information
included the effect of these additional amounts, returns would be lower.
10
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PORTFOLIO MANAGER'S DISCUSSION
Keyport Variable Investment Trust Colonial-Keyport U.S. Fund for Growth
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Dear Contract Owner:
Colonial-Keyport U.S. Fund for Growth seeks growth over time exceeding the
Standard & Poor's 500 Index performance.
Fund Performance (as of December 31, 1996)
Inception Date 7/5/94
Assuming reinvestment of all distributions
12-month total return 21.84%
Net asset value per share on 12/31/95 $12.36
Net asset value per share on 12/31/96 $14.22
Portfolio Manager's Discussion
Mark Stoeckle and Peter Wiley were named co-portfolio managers of
Colonial-Keyport U.S. Fund for Growth effective November 18, 1996. Mr.
Stoeckle and Mr. Wiley are vice presidents of Colonial Management Associates,
Inc. The Fund was previously sub-advised by State Street Global Advisors, a
division of State Street Bank and Trust Company.
As new managers of the Fund, what will your investment strategy be?
The Fund will be managed as a large capitalization, value- oriented
portfolio. We employ a systematic approach to screening a broad universe of
potential investments. After the initial screening, we concentrate on the
fundamental factors affecting the remaining companies to identify the best
candidates for purchase. We will take the best from the traditional value
investing themes of low price-to-book, low price-to- earnings and yield, and
incorporate a relative valuation component. By evaluating companies on an
absolute, as well as on a relative basis, we expand the potential investment
candidate list across all sectors. By paying careful attention to risk and
value relationships within sectors, we will invest in those companies
representing the best values. This will allow us to overweight sectors where
we believe we can find uncommon values.
How will these changes benefit the Fund?
Our commitment to large capitalization stocks will reposition the Fund to be
better aligned with its objectives. In addition, our disciplined investment
process should allow us to better identify stocks that represent a blend of
traditional value and growth at a reasonable price, allowing the Fund to
capture potential value across all sectors.
Have you begun to implement your strategy?
Our primary objective over the short term has been to increase the Fund's
average market capitalization. We spent the last part of 1996 selling stocks
that were more accurately defined as middle capitalization and eliminating a
number of small positions that did not provide a lot of promise. We
reinvested the proceeds in large capitalization stocks.
What is your market outlook?
We anticipate moderating economic growth, making stock selection more
critical than it may have been during 1996--a fast growing economy tends to
carry many companies along with it, regardless of their financial and
operating fundamentals. We expect to overweight technology and financials,
sectors with strong fundamental characteristics whose growth should continue
to outpace that of the economy.
11
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PORTFOLIO MANAGER'S DISCUSSION
Keyport Variable Investment Trust Colonial-Keyport U.S. Fund for Growth
-----------------------------------------------------------------------------
Colonial-Keyport U.S. Fund for Growth and S&P 500 Index
Performance of a Hypothetical $10,000 Investment
July 31, 1994 to December 31, 1996
Average Annual Return on December 31, 1996
Since Inception 12 Month
22.21% 21.84%
[typeset representation of line chart]
Colonial-Keyport U.S.
Fund for Growth S&P 500
10000 10000
10399 10409
10194 10155
10360 10383
9990 10005
10174 10153
10432 10416
10848 10822
11135 11140
11363 11468
11770 11926
12027 12202
12443 12607
12394 12638
12810 13171
12760 13124
13246 13700
13196 13964
13549 14439
13815 14573
13890 14713
14403 14930
14744 15314
14424 15373
13730 14694
14189 15004
14883 15848
15257 16285
16346 17515
16078 17168
[end line chart]
Performance numbers reflect all Fund net expenses, but do not include
insurance charges imposed by your insurance company's separate accounts or
certain expenses reimbursed by the Manager. If performance information
included the effect of these additional amounts, returns would be lower.
12
<PAGE>
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PORTFOLIO MANAGER'S DISCUSSION
Keyport Variable Investment Trust Newport-Keyport Tiger Fund
-----------------------------------------------------------------------------
Dear Contract Owner:
Newport-Keyport Tiger Fund seeks capital appreciation by investing in equity
securities issued by companies located in the nine "Tigers" of Asia--Hong
Kong, China, Singapore, Malaysia, Thailand, Indonesia, the Philippines, South
Korea and Taiwan. While these markets are subject to risks not associated
with more developed countries, Fund management has more than 20 years of
investment experience in the region.
Fund Performance (as of December 31, 1996)
Inception Date 5/1/95
Assuming reinvestment of all distributions
12-month total return 11.73%
Net asset value per share on 12/31/95 $2.28
Net asset value per share on 12/31/96 $2.52
Portfolio Manager's Discussion
Jack Mussey is President and Chief Executive Officer of Newport Fund
Management, Inc. and portfolio co-manager of Newport-Keyport Tiger Fund. Tim
Tuttle is Managing Director of Newport Fund Management and portfolio
co-manager of Newport-Keyport Tiger Fund.
What was the Fund's strategy during the past year?
We maintained our long-term, large capitalization investment approach and
continued to focus on the high quality Asian markets and companies, primarily
those of Hong Kong, Singapore and Malaysia. While the first half of the year
saw small capitalization stocks outperform large caps for the first time in
seven years, we continued to focus on the large company stocks because we
expect them to benefit from long- term secular trends. During the second half
of 1996, the Tiger markets once again favored these large company stocks and
the Fund's shareholders were rewarded.
How did the Fund perform in 1996?
The Fund's total return of 11.73% exceeded that of the Morgan Stanley
Capital International Europe, Australia, Far East (GDP) Index, which returned
7.62% for the 12 month period. The Fund's outperformance can be attributed to
the rebound of the Asian large cap market in the second half of the year and
to our significant investment in the Hong Kong market (51.0% of Fund net
assets) that returned 33.53% for the year.
What investments contributed to performance?
The biggest contributor to performance was Hong Kong. It experienced
increased investor enthusiasm as a result of greater liquidity in the market,
as well as a growing acceptance that the June 1997 transfer of Hong Kong's
control from the British to the Chinese will stimulate the local economy. In
contrast, other Asian markets were held back during the year, including
Thailand and Singapore. The decline in these markets was due in part to
investors shifting their assets to Hong Kong stocks as well as to a
short-term cyclical downturn in the electronics sector, a principal export
market for both countries.
What is your market outlook?
We believe that the Fund's performance in 1997 will continue to be paced by
a strong Hong Kong market. However, the rebound in other countries such as
Thailand and Singapore should refocus investor attention on these growth
markets. We expect to see continued capital flows to the Tiger countries as a
result of their relatively large sustainable growth rates that should
translate into strong stock market performance.
13
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PORTFOLIO MANAGER'S DISCUSSION
Keyport Variable Investment Trust Newport-Keyport Tiger Fund
-----------------------------------------------------------------------------
Newport-Keyport Tiger Fund and Morgan Stanley Capital International EAFE GDP
Performance of a Hypothetical $10,000 Investment
May 1, 1995 to December 31, 1996
Average Annual Return on December 31, 1996
Since Inception 12 Month
16.16% 11.73%
[typeset representation of line chart]
Newport-Keyport MSCI EAFE
Tiger Fund GDP
10000 10000
11100 9903
10900 9793
11200 10433
10850 9997
11050 10116
11000 9823
11050 10030
11500 10459
12660 10592
12559 10623
12559 10764
12509 11099
12458 10935
12206 11021
11550 10705
11954 10699
12307 10993
12206 10873
12811 11337
12849 11257
[end line chart]
Performance numbers reflect all Fund net expenses, but do not include
insurance charges imposed by your insurance company's separate accounts or
certain expenses reimbursed by the Manager. If performance information
included the effect of these additional amounts, returns would be lower.
14
<PAGE>
-----------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
-----------------------------------------------------------------------------
To the Shareholders and Trustees of
Keyport Variable Investment Trust
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of each of the six
series (Colonial-Keyport Growth and Income Fund, Colonial-Keyport Utilities
Fund, Colonial-Keyport International Fund for Growth, Colonial-Keyport
Strategic Income Fund, Colonial-Keyport U.S. Fund for Growth and
Newport-Keyport Tiger Fund), constituting Keyport Variable Investment Trust
(the "Trust"), at December 31, 1996, 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, 1996 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 12, 1997
15
<PAGE>
-----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
Keyport Variable Investment Trust Colonial-Keyport Growth and Income Fund /
December 31, 1996
-----------------------------------------------------------------------------
Country
Abbrev. Shares Value
--------- -------------------------------
COMMON STOCKS--(87.2%)
Construction--(2.0%)
Building Construction--(2.0%)
Hollandsche Beton Groep NV Ne 6,850 $ 1,418,512
Koninklijke Volker Stevin NV Ne 3,000 280,333
Lennar Corp. 5,300 144,425
------------------
1,843,270
------------------
Special Trade Contractors--(0.0%)
Ericsson SPA It 3,000 40,794
------------------
Finance, Insurance & Real Estate--(23.8%)
Depository Institutions--(8.0%)
Astoria Financial Corp. 80,800 2,979,500
Bank of Montreal Ca 17,300 550,348
Commerce Bancshares, Inc. 1,365 63,131
Den Danske Bank De 3,000 241,751
Greenpoint Financial Corp. 42,500 2,013,437
Jyske Bank De 3,000 225,464
National Australia Bank Ltd. Au 38,800 456,435
Toronto Dominion Bank Ca 34,100 875,794
------------------
7,405,860
------------------
Insurance Carriers--(11.0%)
Allstate Corp. 4,100 237,287
American Bankers Insurance Group,
Inc. 27,700 1,416,162
Bankers Life Holding Corp. 16,500 412,500
CIGNA Corp. 18,500 2,527,562
CMAC Investment Corp. 5,000 183,750
Loews Corp. 14,700 1,385,475
Mercury General Corp. 11,800 619,500
Old Republic International Corp. 65,400 1,749,450
Reinsurance Group of America 1,500 70,687
Safeco Corp. 6,000 236,625
Sunamerica, Inc. 14,400 639,000
Vesta Insurance Group, Inc. 24,300 762,412
------------------
10,240,410
------------------
Security Brokers & Dealers--(4.8%)
A.G. Edwards, Inc. 88,200 2,965,725
Alex Brown, Inc. 18,000 1,305,000
John Nuveen & Co., Inc. 9,000 238,500
------------------
4,509,225
------------------
Manufacturing--(40.8%)
Apparel--(0.2%)
Gamma Holding NV Ne 3,000 144,766
------------------
Chemicals & Allied Products--(7.5%)
ARCO Chemical Co. 11,400 $ 558,600
Akzo Nobel NV Ne 14,074 949,995
Johnson & Johnson 24,900 1,238,775
Norsk Hydro A.S. No 7,100 380,737
Pharmacia & Upjohn, Inc. 43,355 1,717,942
Rhone-Poulene Rorer, Inc. 24,700 1,929,687
Wellman, Inc. 11,000 188,375
------------------
6,964,111
------------------
Electronic & Electrical Equipment--(0.7%)
Komag, Inc. (a) 20,800 564,200
SCI Systems, Inc. (a) 2,300 102,637
------------------
666,837
------------------
Fabricated Metal--(1.5%)
Ball Corp. 8,500 221,000
Harsco Corp. 17,500 1,198,750
------------------
1,419,750
------------------
Food & Kindred Products--(2.5%)
Archer Daniels Midland Co. 38,970 857,340
IBP, Inc. 62,800 1,522,900
------------------
2,380,240
------------------
Furniture & Fixtures--(0.3%)
Johnson Controls, Inc. 3,000 248,625
------------------
Machinery & Computer Equipment--(2.7%)
Sun Microsystems, Inc. (a) 82,800 2,126,925
Tecumseh Products Co., Class A 6,100 349,987
------------------
2,476,912
------------------
Measuring & Analyzing Instruments--(0.9%)
Becton, Dickinson & Co. 8,200 355,675
Hologic, Inc. (a) 900 22,275
Medtronic, Inc. 4,100 278,800
Raytheon Co. 4,600 221,375
------------------
878,125
------------------
Miscellaneous Manufacturing--(1.1%)
Callaway Golf Co. 36,200 1,040,750
------------------
Paper Products--(1.5%)
Potlatch Corp. 29,600 1,272,800
Westvaco Corp. 5,700 163,875
------------------
1,436,675
------------------
Petroleum Refining--(6.3%)
Amerada Hess Corp. 26,600 1,539,475
Exxon Corp. 4,400 431,200
Mobil Corp. 8,100 990,225
Phillips Petroleum Co. 60,100 2,659,425
Sun Co., Inc. 11,700 285,187
------------------
5,905,512
------------------
See Notes to Investment Portfolio.
16
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Continued)
Keyport Variable Investment Trust Colonial-Keyport Growth and Income Fund /
December 31, 1996
- --------------------------------------------------------------------------------
Country
Abbrev. Shares Value
--------- -------------------------------
Primary Metal--(2.3%)
Alumax, Inc. (a) 24,400 $ 814,350
Asarco, Inc. 29,700 738,787
Texas Industries, Inc. 11,100 561,937
------------------
2,115,074
------------------
Primary Smelting--(1.3%)
Phelps Dodge Corp. 17,400 1,174,500
------------------
Printing & Publishing--(0.9%)
Moore Corp. Ltd. 8,200 167,075
New York Times Co., Class A 15,800 600,400
Standard Register Co. 2,900 94,250
------------------
861,725
------------------
Rubber & Plastic--(1.7%)
Goodyear Tire & Rubber Co. 31,300 1,608,038
------------------
Stone, Clay, Glass & Concrete--(0.7%)
Global Industrial Technologies,
Inc. (a) 27,500 608,438
------------------
Textile Mill Products--(1.3%)
Springs Industries, Inc. 29,000 1,247,000
------------------
Tobacco Products--(2.6%)
American Brands, Inc. 41,100 2,039,588
UST, Inc. 11,100 359,363
------------------
2,398,951
------------------
Transportation Equipment--(4.8%)
Equipements et Composants pour
l'Industrie Automobile Fr 2,050 316,782
Fleetwood Enterprises, Inc. 13,900 382,250
General Dynamics Corp. 7,200 507,600
Harley-Davidson, Inc. 10,400 488,800
McDonnell Douglas Corp. 27,400 1,753,600
Strattec Security Corp. (a) 120 2,190
TRW, Inc. 6,400 316,800
Thiokol Corp. 15,900 711,525
------------------
4,479,547
------------------
Mining & Energy--(0.3%)
Metal Mining
Cleveland-Cliffs, Inc. 6,700 304,013
------------------
Retail Trade--(4.2%)
Apparel & Accessory Stores--(0.3%)
Koninklijke Bijenkorf Beheer Ne 3,000 216,108
Macintosh N.V. Ne 3,000 65,961
------------------
282,069
------------------
Food Stores--(1.3%)
Vendex International N.V. Ne 22,700 970,624
Weis Markets, Inc. 7,700 245,438
------------------
1,216,062
------------------
General Merchandise Stores--(1.8%)
Bon-Ton Stores, Inc. (a) 6,500 39,813
Dillard Department Stores, Inc. 22,700 $ 700,863
Fred Meyer, Inc. 11,300 401,150
Mercantile Stores Co., Inc. 10,600 523,375
1,665,201
------------------
Miscellaneous Retail--(0.8%)
Revco D.S., Inc. (a) 7,000 259,000
Walgreen Co. 12,200 488,000
------------------
747,000
------------------
Services--(5.1%)
Amusement & Recreation--(0.0%)
Grand Casinos, Inc. (a) 3,450 46,575
------------------
Business Services--(2.1%)
Cadence Design Systems, Inc. (a) 16,650 661,838
HBO & Co. 7,200 427,500
Omnicom Group, Inc. 19,400 887,550
------------------
1,976,888
------------------
Engineering, Accounting, Research &
Management--(1.0%)
Corrections Corp. of
America (a) 15,600 477,750
International-Muller N.V. Ne 18,400 462,049
------------------
939,799
------------------
Health Services--(2.0%)
Sun Healthcare Group,
Inc. (a) 11,500 155,250
Universal Health Services, Inc.,
Class B (a) 58,500 1,674,563
------------------
1,829,813
------------------
Transportation, Communication, Electric, Gas & Sanitary Services--(10.4%)
Communications--(2.3%)
Ameritech Corp. 19,700 1,194,313
BellSouth Corp. 9,000 363,375
Frontier Corp. 26,900 608,613
------------------
2,166,301
------------------
Electric, Gas & Sanitary Services--(0.7%)
Gas y Electricidad SA Sp 4,550 290,746
Teco Energy, Inc. 14,300 344,988
------------------
635,734
------------------
Electric Services--(2.5%)
Boston Edison Co. 19,000 510,625
DTE Energy Co. 3,100 100,363
NIPSCO Industries, Inc. 16,400 649,850
Portland General Corp. 25,400 1,066,800
------------------
2,327,638
------------------
Gas Services--(3.5%)
Brooklyn Union Gas Co. 10,600 319,325
Consolidated Natural Gas Co. 15,900 878,475
See Notes to Investment Portfolio.
17
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Continued)
Keyport Variable Investment Trust Colonial-Keyport Growth and Income Fund /
December 31, 1996
- --------------------------------------------------------------------------------
Country
Abbrev. Shares Value
--------- -------------------------------
National Fuel Gas Co. 10,700 $ 441,375
People's Energy Corp. 30,300 1,026,413
Sonat, Inc. 10,800 556,200
------------------
3,221,788
------------------
Sanitary Services--(0.6%)
Severn Trent Water PLC UK 25,000 285,214
United Utilities PLC UK 25,100 267,007
------------------
552,221
------------------
Water Transportation--(0.8%)
APL Ltd. 32,400 765,450
------------------
Wholesale Trade--(0.6%)
Durable Goods
Beers NV Ne 7,235 257,451
Marshall Industries (a) 10,300 315,438
------------------
572,889
------------------
Total Common Stocks
(Cost of $61,570,282) 81,344,576
------------------
Par
-------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS--(5.3%)
U.S. Government Agencies--(3.2%)
Federal National Mortgage
Association, 6.500% maturities
ranging from 08/01/08-04/01/09 $3,048,720 2,995,073
-------------
Par Value
------------- --------------
U.S. Government Bonds--(2.1%)
U.S. Treasury Notes, 7.875%
04/15/98 $1,895,000 $ 1,944,441
--------------
Total Government Obligations
(Cost of $5,047,715) 4,939,514
--------------
Total Investments--(92.5%)
(Cost of $66,617,997) (b) 86,284,090
--------------
SHORT-TERM OBLIGATIONS--(7.4%)
Repurchase agreement with Lehman
Brothers, Inc., dated 12/31/96,
due 01/02/97 at 6.900%,
collateralized by U.S. Treasury
notes with various maturities to
2022, market value $7,002,790
(repurchase proceeds $6,910,648) 6,908,000 6,908,000
--------------
Other Assets & Liabilities, Net--(0.1%) 54,750
--------------
Net Assets--(100.0%) $93,246,840
==============
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, 1996 is as follows:
Gross unrealized appreciation $20,646,099
Gross unrealized depreciation (980,006)
--------------
Net unrealized appreciation $19,666,093
==============
Summary of Securities by Country
% of Total
Country Securities
Country Abbrev. Value at Value
--------------- --------- -------------- ------------
United States $ $77,587,219 89.9%
Netherlands Ne 4,765,799 5.5
Canada Ca 1,426,142 1.7
United Kingdom UK 552,221 0.6
Denmark De 467,215 0.5
Australia Au 456,435 0.5
Norway No 380,737 0.5
France Fr 316,782 0.4
Spain Sp 290,746 0.3
Italy It 40,794 0.1
-------------- ------------
$86,284,090 100.0%
============== ============
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, 1996
-----------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments, at market value (Identified cost $66,617,997) $86,284,090
Short-term obligations 6,908,000
Cash (including foreign currencies) 986
Dividends and interest receivable 175,312
Receivable for fund shares sold 8,840
Unamortized organization expenses 8,032
Other assets 3,411
-----------
Total assets 93,388,671
-----------
Liabilities:
Payable for fund shares repurchased 62,512
Management fee payable 50,806
Bookkeeping fee payable 3,648
Transfer agent fee payable 625
Accrued expenses payable 24,240
-----------
Total liabilities 141,831
-----------
Net assets $93,246,840
===========
Net assets represented by:
Paid-in capital $73,572,564
Accumulated undistributed net investment income 11,633
Accumulated net realized losses on investments and foreign currency transactions (3,468)
Net unrealized appreciation on investments and foreign currency transactions 19,666,111
-----------
Total net assets applicable to shares of beneficial interest outstanding $93,246,840
===========
Shares of beneficial interest outstanding 6,678,712
===========
Net asset value per share $13.96
===========
</TABLE>
-----------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Year ended December 31, 1996
----------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment income:
Dividends (net of nonrebatable foreign taxes withheld at source of $34,718) $ 1,599,302
Interest income 719,838
-----------
Total investment income 2,319,140
-----------
Expenses:
Management fee 538,173
Bookkeeping fee 40,025
Transfer agent fee 7,500
Audit fee 16,658
Printing expense 17,145
Trustees' expense 6,287
Custodian fee 8,227
Legal fee 1,508
Amortization of organization expense 5,384
Miscellaneous expense 11,099
-----------
Total expenses 652,006
-----------
Net investment income 1,667,134
Realized and unrealized gains on investments and foreign currency transactions:
Net realized gains on investments 3,883,301
Net realized gains on foreign currency transactions 10,848
Change in unrealized appreciation on investments and foreign currency transactions 8,029,922
-----------
Net increase in net assets resulting from operations $13,591,205
===========
</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,
1996 1995
-------------- --------------
<S> <C> <C>
Operations:
Net investment income $ 1,667,134 $ 1,484,201
Net realized gains on investments 3,883,301 1,935,503
Net realized gains on foreign currency transactions 10,848 3,868
Unrealized appreciation on investments and foreign currency transactions 8,029,922 11,876,516
-------------- --------------
Net increase in net assets resulting from operations 13,591,205 15,300,088
-------------- --------------
Distributions declared from:
Net investment income (1,744,707) (1,366,483)
Net realized gains (3,888,095) (1,027,019)
-------------- --------------
Total distributions (5,632,802) (2,393,502)
-------------- --------------
Fund share transactions:
Proceeds from fund shares sold 18,289,038 14,488,981
Cost of fund shares repurchased (9,703,359) (6,771,090)
Distributions reinvested 5,632,802 2,393,502
-------------- --------------
Net increase in net assets resulting from fund share transactions 14,218,481 10,111,393
-------------- --------------
Total increase in net assets 22,176,884 23,017,979
Net assets:
Beginning of period 71,069,956 48,051,977
-------------- --------------
End of period $93,246,840 $71,069,956
============== ==============
Accumulated undistributed net investment income included in ending net assets $ 11,633 $ 83,580
============== ==============
Analysis of changes in shares of beneficial interest:
Shares sold 1,353,533 1,243,691
Shares redeemed (716,029) (587,044)
Distributions reinvested 402,075 190,717
-------------- --------------
Net increase 1,039,579 847,364
============== ==============
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
-----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Keyport Variable Investment Trust Colonial-Keyport Growth and Income Fund
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------
1996 1995 1994 1993***
---------------------- --------- -------------
<S> <C> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of period $ 12.60 $ 10.03 $ 10.36 $ 10.00
---------------------- --------- -------------
Net investment income (a) 0.28 0.29 0.26 0.09
Net realized and unrealized gains (losses) on investments
and foreign currency transactions (a) 1.98 2.72 (0.34) 0.41
---------------------- --------- -------------
Total from investment operations 2.26 3.01 (0.08) 0.50
---------------------- --------- -------------
Less distributions from:
Dividends from net investment income (0.28) (0.25) (0.25) (0.11)
Dividends from net realized gains on investments (0.62) (0.19) -- (0.03)
---------------------- --------- -------------
Total distributions (0.90) (0.44) (0.25) (0.14)
====================== ========= =============
Net asset value, end of period $ 13.96 $ 12.60 $ 10.03 $ 10.36
====================== ========= =============
Total return:
Total investment return (b) 17.89% 30.03% (0.76)% 5.01%**(d)
Ratios/supplemental data:
Net assets, end of period (000) $93,247 $71,070 $48,052 $29,298
Ratio of net expenses to average net assets 0.79%(e) 0.81%(e) 0.87% 1.00%*(c)
Ratio of net investment income to average net assets 2.02%(e) 2.51%(e) 2.82% 2.32%*(d)
Portfolio turnover ratio 24% 79% 55% 8%**
Average commission rate (f) $0.0383 -- -- --
</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 years' ratios are net benefits
received, if any.
(f) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades
on which commissions are charged.
Federal Income Tax Information (unaudited)
73.9% of the gain distribution recorded in December 1996 and paid in January
1997 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, 1996
-----------------------------------------------------------------------------
Shares Value
------------- --------------
COMMON STOCKS & CONVERTIBLES--(83.1%)
Transportation, Communication, Electric,
Gas & Sanitary Services--(83.1%)
Communications--(26.5%)
AT&T Corp. 7,500 $ 326,250
Ameritech Corp. 32,400 1,964,250
Bell Atlantic Corp. 15,500 1,003,625
BellSouth Corp. 39,000 1,574,625
Frontier Corp. 18,400 416,300
GTE Corp. 40,000 1,820,000
Lucent Technologies, Inc. 4,862 224,844
MCI Communications Corp. 11,500 375,906
NYNEX Corp. 39,000 1,876,875
Pacific Telesis Group, Inc. 16,000 588,000
SBC Communications, Inc. 29,100 1,505,925
Sprint Corp. 3,500 139,563
360 Communications Co. (a) 1,500 34,687
US West Communications Group 18,000 580,500
US West Media Group (a) 15,000 277,500
--------------
12,708,850
--------------
Electric Services--(44.6%)
American Electric Power Co., Inc. 19,500 801,937
Boston Edison Co. 13,000 349,375
CMS Energy Corp. 25,000 840,625
CMS Energy Corp., Class G 25,000 459,375
Carolina Power & Light Co. 17,000 620,500
Cinergy Corp. 45,500 1,518,562
Citizens Utilities Co. 5% Convertible
Preferred 5,000 238,750
DPL, Inc. 58,000 1,421,000
DTE Energy Co. 26,600 861,175
Eastern Utilities Assoc. 11,300 196,337
Edison International 35,000 695,625
Entergy Corp. 6,200 172,050
FPL Group, Inc. 33,000 1,518,000
GPU, Inc. 37,000 1,244,125
Houston Industries, Inc. 29,100 658,387
IES Industries, Inc. 12,900 385,388
KU Energy Corp. 8,000 240,000
Kansas City Power & Light Co. 22,500 641,250
MidAmerican Energy Co. 20,000 317,500
North Carolina Natural Gas Corp. 8,000 231,000
Ohio Edison Co. 11,700 266,175
PacifiCorp 56,500 1,158,250
Pinnacle West Capital Corp. 15,000 476,250
Portland General Corp. 22,000 924,000
Public Service Co. of Colorado 23,500 913,563
Public Service Enterprise Group, Inc. 7,500 204,375
Puget Sound Power & Light Co. 2,700 64,800
Rochester Gas & Electric Corp. 1,600 30,600
Scana Corp. 15,000 401,250
Sierra Pacific Resources 10,000 $ 287,500
Southern Co. 47,000 1,063,375
Texas Utilities Co. 33,000 1,344,750
Union Electric Co. 3,800 146,300
Utilicorp United, Inc. 16,800 453,600
Western Resources, Inc. 6,500 200,688
--------------
21,346,437
--------------
Gas Services--(12.0%)
Consolidated Natural Gas Co. 10,000 552,500
Energen Corp. 900 27,225
MCN Corp. 37,500 1,082,813
MDU Resources Group, Inc. 6,500 149,500
Pacific Enterprises 15,500 470,813
PanEnergy Corp. 18,700 841,500
Peoples Energy Corp. 7,600 257,450
Public Service Co. of North Carolina 25,000 456,250
UGI Corp. 21,000 469,875
Williams Companies, Inc. 38,850 1,456,875
--------------
5,764,801
--------------
Total Common Stocks & Convertibles
(Cost of $32,967,473) 39,820,088
--------------
PREFERRED STOCKS--(11.5%)
Transportation, Communication, Electric,
Gas & Sanitary Services--(11.5%)
Electric Services--(9.7%)
Arizona Public Service Co.,
Series W $1.8125 12,000 301,500
Baltimore Gas & Electric Co., 6.75%,
Series 1987 1,503 151,239
Central Power & Light Co., 7.12% 6,000 591,000
Commonwealth Edison Co., 7.24%, 5,500 534,875
Montana Power Co., $6.875 5,000 505,625
Northern Indiana Public Service Co.,
7.44% 1,000 98,750
Peco Energy Co., 7.48% 2,000 208,250
PSI Energy, Inc., 7.44% 13,000 329,875
PSI Energy, Inc., 6.875% 4,000 422,500
Pennsylvania Power & Light Co., 6.75% 5,000 521,250
Southern California Edison Co., 7.36% 11,000 270,875
TU Electric Capital, 8.25% 28,000 700,000
--------------
4,635,739
--------------
Gas Services--(1.8%)
Enron Corp., 8.00% 20,000 502,500
MCN Corp., 8.75% 2,500 69,063
Pacific Enterprises, $4.50 550 36,850
Williams Cos., Inc., $3.50 3,000 262,875
--------------
871,288
--------------
See Notes to Investment Portfolio.
22
<PAGE>
-----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Continued)
Keyport Variable Investment Trust Colonial-Keyport Utilities Fund / December
31, 1996
-----------------------------------------------------------------------------
Shares Value
------------- --------------
PREFERRED STOCKS (Continued)
Total Preferred Stocks
(Cost of $5,630,879) $ 5,507,027
--------------
Total Investments
(Cost of $38,598,352) (b) 45,327,115
--------------
SHORT-TERM OBLIGATIONS--(3.8%)
Par
-------------
Repurchase agreement with Lehman
Brothers, Inc., dated 12/31/96, due
01/02/97 at 6.900% collateralized by
U.S. Treasury notes with various
maturities to 2022, market value
$1,826,727 (repurchase proceeds
$1,802,691) $1,802,000 1,802,000
--------------
Other Assets & Liabilities, Net--(1.6%) 777,682
--------------
Net Assets--(100.0%) $47,906,797
==============
Notes to investment portfolio:
(a) Non-income producing
(b) Cost for federal income tax purposes is $38,600,695. Gross unrealized
appreciation and depreciation at December 31, 1996 is as follows:
Gross unrealized appreciation $7,275,005
Gross unrealized depreciation (548,585)
-------------
Net unrealized appreciation $6,726,420
=============
See Notes to Financial Statements.
23
<PAGE>
-----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
Keyport Variable Investment Trust Colonial-Keyport Utilities Fund / December
31, 1996
----------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments, at market value (Identified cost $38,598,352) $45,327,115
Short-term obligations 1,802,000
Cash 132
Receivable for investments sold 662,920
Dividends and interest receivable 168,430
Unamortized organization expenses 8,244
Other assets 2,792
--------------
Total assets 47,971,633
--------------
Liabilities:
Payable for fund shares repurchased 15,771
Management fee payable 26,099
Bookkeeping fee payable 2,250
Transfer agent fee payable 625
Accrued expenses payable 19,858
Other liabilities 233
--------------
Total liabilities 64,836
--------------
Net assets $47,906,797
==============
Net assets represented by:
Paid-in capital $45,903,470
Accumulated overdistributed net investment income (16,477)
Accumulated net realized losses on investments (4,708,959)
Net unrealized appreciation on investments 6,728,763
--------------
Total net assets applicable to shares of beneficial interest outstanding $47,906,797
==============
Shares of beneficial interest outstanding 4,476,115
==============
Net asset value per share $10.70
==============
</TABLE>
-----------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Year ended December 31, 1996
----------------------------------------------------------------------------
Investment income:
Dividends $2,438,433
Interest income 67,813
-------------
Total investment income 2,506,246
-------------
Expenses:
Management fee 315,944
Bookkeeping fee 27,000
Transfer agent fee 7,500
Audit fee 16,824
Printing expense 11,013
Trustees' fees 3,511
Custodian fee 4,393
Legal fee 57
Amortization of organization expense 5,527
Miscellaneous expense 2,880
-------------
Total expenses 394,649
-------------
Net investment income 2,111,597
Realized and unrealized gains (losses) on investments:
Net realized losses on investments (45,156)
Change in unrealized appreciation on investments 871,144
-------------
Net increase in net assets resulting from operations $2,937,585
=============
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,
1996 1995
--------------- --------------
<S> <C> <C>
Operations:
Net investment income $ 2,111,597 $ 2,180,202
Net realized losses on investments (45,156) (1,331,430)
Unrealized appreciation on investments 871,144 12,515,955
--------------- --------------
Net increase in net assets resulting from operations 2,937,585 13,364,727
--------------- --------------
Distributions declared from:
Net investment income (2,098,660) (2,164,475)
--------------- --------------
Fund share transactions:
Proceeds from fund shares sold 5,054,022 8,726,703
Cost of fund shares repurchased (11,681,570) (8,650,479)
Distributions reinvested 2,098,660 2,164,475
--------------- --------------
Net increase (decrease) in net assets resulting from fund share transactions (4,528,888) 2,240,699
--------------- --------------
Total increase (decrease) in net assets (3,689,963) 13,440,951
Net assets:
Beginning of period 51,596,760 38,155,809
--------------- --------------
End of period $ 47,906,797 $51,596,760
=============== ==============
Accumulated overdistributed net investment income included in ending net assets $ (16,477) $ (29,414)
=============== ==============
Analysis of changes in shares of beneficial interest:
Shares sold 478,345 942,276
Shares redeemed (1,111,326) (940,625)
Distributions reinvested 194,321 206,533
--------------- --------------
Net increase (decrease) (438,660) 208,184
=============== ==============
</TABLE>
See Notes to Financial Statements.
25
<PAGE>
-----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Keyport Variable Investment Trust Colonial-Keyport Utilities Fund
----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------
1996 1995 1994 1993***
----------- ----------- ----------- ---------------
<S> <C> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of period $ 10.50 $ 8.11 $ 9.65 $ 10.00
----------- ----------- ----------- ---------------
Net investment income (a) 0.46 0.46 0.54 0.18
Net realized and unrealized gains (losses) on investments (a) 0.23 2.39 (1.53) (0.35)
----------- ----------- ----------- ---------------
Total from investment operations 0.69 2.85 (0.99) (0.17)
----------- ----------- ----------- ---------------
Less distributions from:
Dividends from net investment income (0.49) (0.46) (0.55) (0.18)
----------- ----------- ----------- ---------------
Net asset value, end of period $ 10.70 $ 10.50 $ 8.11 $ 9.65
=========== =========== =========== ===============
Total return:
Total investment return (b) 6.53% 35.15% (10.27)% (1.70)%**(c)
Ratios/supplemental data:
Net assets, end of period (000) $47,907 $51,597 $38,156 $54,441
Ratio of net expenses to average net assets 0.81%(d) 0.83%(d) 0.86% 1.00%*(e)
Ratio of net investment income to average net assets 4.36%(d) 4.98%(d) 5.80% 5.10%*(c)
Portfolio turnover ratio 14% 18% 16% 2%**
Average commission rate (f) $0.0468 -- -- --
</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 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 the Manager, this ratio would have been 1.09%
(annualized) for the period ended December 31, 1993.
(f) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades
on which commissions are charged.
See Notes to Financial Statements.
26
<PAGE>
-----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
Keyport Variable Investment Trust Colonial-Keyport International Fund For
Growth / December 31, 1996
-----------------------------------------------------------------------------
Country
Abbrev. Shares Value
---------------------- -------------
COMMON STOCKS--(92.4%)
Agriculture, Forestry & Fishing--(0.3%)
Agricultural--Crops
PT Chareon Pokphand Indonesia In 65,000 $ 73,613
-------------
Construction--(1.8%)
Heavy Construction
Non Building Construction--(1.8%)
Company Generale des Eaux Fr 2,355 291,766
Kaneshita Construction Ja 13,000 123,329
Sino Thai Engineering &
Construction Public Co., Ltd. Th 28,600 74,700
-------------
489,795
-------------
Finance, Insurance & Real Estate--(20.1%)
Depository Institutions--(5.5%)
Banco Latinoamericano de
Exportaciones SA Po 8,300 421,225
Banco Popolare di Milano It 51,000 258,829
Generale de Banque SA Be 1,155 413,910
Generale de Banque SA STRIPS
(a) Be 105 60
International Bank of Asia HK 190,000 126,511
Korea Exchange Bank HK 25,591 233,419
-------------
1,453,954
-------------
Holding Companies--(1.6%)
Fortis Amev NV Ne 12,407 434,313
-------------
Insurance Carriers--(1.3%)
Reinsurance Australia Corp. Au 89,000 346,634
-------------
Holding & Other Investment Companies--(4.1%)
Fleming Russia Securities Fund
(a) Ru 32,000 344,000
Japan OTC Equity Fund,
Inc. (a) Ja 170 127,500
ROC Taiwan Fund Tw 24,975 255,994
World Equity Benchmark Share
(a) Ja 27,000 352,620
-------------
1,080,114
-------------
Nondepository Credit Institution--(1.7%)
Promise Co., Ltd. Ja 9,000 442,432
-------------
Real Estate--(4.6%)
Diligentia Ab (a) Sw 24,000 376,662
HKR International Ltd. HK 131,000 221,029
Kawasan Industri Jababeka In 212,000 246,825
New World Development Co., Ltd. HK 41,000 276,973
Property Perfect Public Co.,
Ltd. Th 39,800 41,116
Tian An China Investments HK 490,000 70,321
-------------
1,232,926
-------------
Security Brokers & Dealers--(1.3%)
Kokusai Securities Co., Ltd. Ja 20,000 $ 188,012
L.G. Securities (a) Ko 16,000 162,840
-------------
350,852
-------------
Manufacturing--(38.6%)
Apparel--(1.0%)
Tokyo Style Ja 19,000 265,459
-------------
Chemicals & Allied Products--(8.0%)
Henkel KGAA (a) G 1,067 51,083
Indian Petrochemicals Corp.,
Ltd. GDR In 15,800 181,700
Indupa S.A. (a) Ar 186,285 214,268
Kemira Oy Fi 40,300 507,557
Norsk Hydro A/S No 8,200 444,842
PT Evershine Textile Industry In 427,396 126,662
Reliance Industries Ltd. GDR In 6,000 72,000
Smithkline Beecham PLC UK 24,206 334,882
Yizheng Cemical Fibre Co., Ltd. HK 846,000 205,634
-------------
2,138,628
-------------
Electronic & Electrical Equipment--(6.1%)
Alcatel Alsthom Fr 3,455 277,465
Koor Industries Ltd. ADR UK 7,200 122,400
LG Electronics Ko 11,000 141,031
Matsushaita Electric Industrial
Co. Ja 26,000 423,804
Moulinex Fr 13,000 299,326
Murata Manufacturing Co., Ltd. Ja 10,000 327,728
Samsung Electronics GDR Bonus
Shares Ko 52 1,872
Samsung Electronics GDS Bonus
Shares (a) Ko 175 7,241
1,600,867
-------------
Food & Kindred Products--(0.7%)
Perdigao SA Comercio e
Industria (a) Br 70,000,000 134,732
Vitasoy International Holdings
Ltd. HK 133,000 58,035
-------------
192,767
-------------
Lumber & Wood Products--(1.6%)
Metsa-Serla, Series B Fi 56,000 419,526
-------------
Machinery & Computer Equipment--(6.1%)
Agiv-AG G 14,300 206,870
Canon, Inc. Ja 14,000 309,099
Hitachi Ltd. Ja 42,000 391,203
Mannesmann AG G 1,070 462,984
Mori Seiki Ja 19,000 262,182
-------------
1,632,338
-------------
See Notes to Investment Portfolio.
27
<PAGE>
-----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Continued)
Keyport Variable Investment Trust Colonial-Keyport International Fund For
Growth / December 31, 1996
-----------------------------------------------------------------------------
Country
Abbrev. Shares Value
---------------------- -------------
Paper Products--(2.3%)
Enso-Gutzeit Oy Fi 45,000 $ 364,479
Metro Pacific Corp. Ph 950,000 234,791
-------------
599,270
-------------
Petroleum Refining--(3.4%)
NESTE Oy Fi 11,700 282,007
YPF Sociedad Anonima ADR Ar 15,000 378,750
Yukong Ltd. (a) Ko 12,700 240,473
-------------
901,230
-------------
Primary Metal--(5.1%)
Acerinox SA Sp 2,100 303,303
Avesta Sheffield Sw 42,400 454,972
Svenskt Stal AB (SSAB), Series
B Sw 30,000 499,296
TransTec PLC UK 48,222 85,908
-------------
1,343,479
-------------
Rubber & Plastic--(0.2%)
World Houseware Holdings Ltd. HK 990,000 56,319
-------------
Stone, Clay, Glass & Concrete--(2.6%)
Companion Building Materials,
Ltd. HK 731,200 136,134
Freidrich Grohe AG G 1,200 330,847
Kim Hin Industry Bhd (a) Ma 57,000 95,696
N.V. Koninklijke Sphinx
Gustavberg Ne 11,546 132,943
-------------
695,620
-------------
Textile Mill Products--(0.5%)
Companhia de Tecidos Norte de
Minas Br 440,000 140,418
-------------
Transportation Equipment--(1.0%)
Suzuki Motor Co., Ltd. Ja 28,000 255,972
-------------
Mining & Energy--(3.6%)
Coal Mining--(0.9%)
Samchully Co. Ko 2,600 182,900
Samchully Co. New 1 (a) Ko 488 35,493
Samchully Co. New 2 (a) Ko 195 13,834
-------------
232,227
-------------
Crude Petroleum & Natural Gas--(2.7%)
Compagnie Francaise de
Petroleum Total B Fr 4,089 332,477
Saga Petroleum A/S No 23,100 387,535
-------------
720,012
-------------
Retail Trade--(7.8%)
Auto Dealers & Gas Stations--(2.0%)
Inchcape PLC UK 115,472 536,048
-------------
Food Stores--(2.6%)
Jardine Matheson Holdings Ltd.
(a) Ja 29,394 $ 194,001
Jusco Co., Ltd. Ja 15,000 508,409
-------------
702,410
-------------
General Merchandise Stores--(2.4%)
Ito-Yokado Co., Ltd. Ja 7,000 304,269
PT Matahari Putra Prima In 278,000 323,666
-------------
627,935
-------------
General Merchandise Stores--(0.8%)
Globex Utilidades SA (a) Br 13,000 211,433
-------------
Services--(2.3%)
Business Services--(1.2%)
Ing C. Olivetti & SPA (a) It 782,000 274,266
Intrum Justitia UK 32,186 57,340
-------------
331,606
-------------
Health Services--(1.1%)
Novartis Sz 260 296,894
-------------
Transportation, Communication, Electric, Gas & Sanitary
Services--(13.3%)
Air Transportation--(1.0%)
Helikopter Service A/S No 22,000 286,297
-------------
Communications--(8.1%)
DDI Corp. Ja 40 264,252
Portugal Telecom ADR Po 17,000 480,250
Royal Koninklijke PTT Nederland
NV Ne 11,583 441,659
Tele-Communications
International, Inc. (a) 18,400 243,800
Telecom Argentina SA ADR Ar 5,600 226,100
Telecom Italia It 72,000 143,004
Telecom Italia SPA It 135,000 350,394
-------------
2,149,459
-------------
Gas Services--(1.9%)
British Gas Corp. UK 130,000 501,053
-------------
Transportation Services--(0.9%)
Danzas Holding Sz 120 132,737
Precious Shipping Public Co.,
Ltd. Th 60,800 117,324
-------------
250,061
-------------
Water Transportation--(1.4%)
Hong Kong Ferry Holdings Co. HK 90,000 175,706
Transpotacion Maritima Meicana
ADR Mx 35,400 185,850
-------------
361,556
-------------
See Notes to Investment Portfolio.
28
<PAGE>
-----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Continued)
Keyport Variable Investment Trust Colonial-Keyport International Fund For
Growth / December 31, 1996
-----------------------------------------------------------------------------
Country
Abbrev. Shares Value
---------------------- -------------
Wholesale Trade--(4.6%)
Durable Goods--(3.8%)
Brierley Investments Ltd. NZ 353,000 $ 326,614
Celsis International PLC (a) UK 82,685 151,554
Powerscreen International PLC UK 25,800 249,704
Yamazen Corp. (a) Ja 73,000 270,720
-------------
998,592
-------------
Nondurable Goods--(0.8%)
Lion Nathan Ltd. NZ 88,600 212,140
-------------
Total Common Stocks
(Cost $23,862,074) 24,564,249
-------------
PREFERRED STOCKS--(2.3%)
Manufacturing--(2.0%)
Chemicals and Allied Products--(1.5%)
Henkel KGAA (a) G 7,733 387,779
-------------
Electronic & Electrical Equipment--(0.5%)
Samsung Electronics Ko 400 10,338
Samsung Electronics GDS Ko 6,197 114,335
Samsung Electronics GDR Bonus
Shares (a) Ko 1,867 29,872
-------------
154,545
-------------
Transportation, Communication, Electric, Gas & Sanitary
Services--(0.3%)
Electric Integrated--(0.3%)
Electricidade Sao Paulo, Class
B Br 490,000 72,385
-------------
Total Preferred Stocks
(Cost $717,015) 614,709
-------------
Total Investments
(Cost $24,579,089) (b) 25,178,958
-------------
Par Value
------------- --------------
SHORT-TERM OBLIGATIONS--(5.5%)
Repurchase agreement with
Lehman Brothers, Inc., dated
12/31/96, due 01/02/97 at
6.900%, collateralized by
U.S. Treasury notes with
various maturities to 2022,
market value $1,479,020
(repurchase proceeds
$1,459,559) $1,459,000 $ 1,459,000
--------------
Other Assets & Liabilities, Net--(-0.2%) (44,911)
--------------
Net Assets--(100%) $26,593,047
==============
Notes to investment portfolio:
(a) Non-income producing.
(b) The cost for federal income tax purposes is
$24,583,636. Gross unrealized appreciation and
depreciation at December 31, 1996 is as follows:
Gross unrealized appreciation $ 3,422,613
Gross unrealized depreciation (2,827,291)
--------------
Net unrealized appreciation $ 595,322
==============
See Notes to Investment Portfolio.
29
<PAGE>
-----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Continued)
Keyport Variable Investment Trust Colonial-Keyport International Fund for
Growth / December 31, 1996
-----------------------------------------------------------------------------
Summary of Securities by Country
% of Total
Country Securities
Country Abbrev. Value at Value
---------------- ----------------------- ------------
Japan Ja $ 5,010,991 19.9%
United Kingdom UK 2,038,889 8.1
Finland Fi 1,573,569 6.2
Hong Kong HK 1,560,081 6.2
Germany G 1,439,563 5.7
Sweden Sw 1,330,930 5.3
France Fr 1,201,034 4.8
Norway No 1,118,674 4.4
Italy It 1,026,493 4.1
Indonesia In 1,024,466 4.1
Netherlands Ne 1,008,915 4.0
Korea Ko 940,229 3.7
Portugal Po 901,475 3.6
Argentina Ar 819,118 3.3
Brazil Br 558,968 2.2
New Zealand NZ 538,754 2.1
Switzerland Sz 429,631 1.7
Belgium Be 413,970 1.6
Australia Au 346,634 1.4
Russia Ru 344,000 1.4
Spain Sp 303,303 1.2
Taiwan Tw 255,994 1.0
United States $ 243,800 1.0
Thailand Th 233,140 0.9
Philippines Ph 234,791 0.9
Mexico Mx 185,850 0.7
Malaysia Ma 95,696 0.5
-------------- ------------
$25,178,958 100.0%
============== ============
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
Acronym Name
- ----------------------------------------------------
ADR American Depository Receipt
GDR Global Depository Receipt
GDS Global Depository Shares
STRIPS Separately Traded of Registered Interest
and Principal of Security
See Notes to Financial Statements.
30
<PAGE>
-----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
Keyport Variable Investment Trust Colonial-Keyport International Fund for
Growth / December 31, 1996
-----------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments, at market value (Identified cost $24,579,089) $25,178,958
Short-term obligations 1,459,000
Cash (including foreign currencies) 293,521
Dividends, tax reclaims and interest receivable 51,318
Unamortized organization expenses 10,068
Other assets 622
--------------
Total assets 26,993,487
--------------
Liabilities:
Foreign currencies 289,202
Payable for investments bought 52,923
Payable for fund shares repurchased 3,552
Management fee payable 19,934
Bookkeeping fee payable 2,250
Transfer agent fee payable 625
Accrued expenses payable 31,954
--------------
Total liabilities 400,440
--------------
Net assets $26,593,047
==============
Net assets represented by:
Paid-in capital $25,953,311
Accumulated overdistributed net investment income (3,447)
Accumulated net realized gains on investments and foreign currency transactions 42,816
Net unrealized appreciation on investments and foreign currency transactions 600,367
--------------
Total net assets applicable to outstanding shares of beneficial interest $26,593,047
==============
Shares of beneficial interest outstanding 13,597,431
==============
Net asset valueer share $1.96
==============
</TABLE>
-----------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Year ended December 31, 1996
----------------------------------------------------------------------------
Investment income:
Dividends (net of nonrebatable foreign taxes withheld at
source of $63,801) $ 499,762
Interest income 55,711
------------
Total investment income 555,473
------------
Expenses:
Management fee 224,146
Bookkeeping fee 27,000
Transfer agent fee 7,500
Audit fee 20,400
Printing expense 4,710
Trustees' expense 2,014
Custodian fee 56,655
Amortization of organization expense 4,331
Miscellaneous expense 1,020
------------
Total expenses 347,776
------------
Net investment income 207,697
Realized and unrealized gains (losses) on investments and
foreign currency transactions:
Net realized gains on investments 1,628,143
Net realized losses on foreign currency transactions (41,603)
Change in unrealized depreciation on investments and
foreign currency transactions (520,184)
------------
Net increase in net assets resulting from operations $1,274,053
============
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 Ended Year Ended
December 31, December 31,
1996 1995
-------------- --------------
<S> <C> <C>
Operations:
Net investment income $ 207,697 $ 153,289
Net realized gains (losses) on investments 1,628,143 (747,347)
Net realized losses on foreign currency transactions (41,603) (158,469)
Change in unrealized appreciation (depreciation) on investments and foreign
currency transactions (520,184) 2,044,305
-------------- --------------
Net increase in net assets resulting from operations 1,274,053 1,291,778
-------------- --------------
Distributions declared from:
Net investment income -- (228,274)
Net realized gains (1,535,936) --
-------------- --------------
Total distributions (1,535,936) (228,274)
-------------- --------------
Fund share transactions:
Proceeds from fund shares sold 6,030,306 7,406,320
Cost of fund shares repurchased (3,475,389) (5,079,991)
Distributions reinvested 1,535,936 228,274
-------------- --------------
Net increase in net assets resulting from fund share transactions 4,090,853 2,554,603
-------------- --------------
Total increase in net assets 3,828,970 3,618,107
Net assets:
Beginning of period 22,764,077 19,145,970
-------------- --------------
End of period $26,593,047 $22,764,077
-------------- --------------
Accumulated overdistributed net investment income included in ending net assets $ (3,447) $ (53,329)
============== ==============
Analysis of changes in shares of beneficial interest:
Shares sold 2,963,621 4,012,557
Shares redeemed (1,708,699) (2,743,550)
Distributions reinvested 787,660 115,875
-------------- --------------
Net increase 2,042,582 1,384,882
============== ==============
</TABLE>
See Notes to Financial Statements.
32
<PAGE>
-----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Keyport Variable Investment Trust Colonial-Keyport International Fund for
Growth
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period
Year Ended December Ended
31, December 31,
---------------------- ---------------
1996 1995 1994***
---------------------- ---------------
<S> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of period $ 1.97 $ 1.88 $ 2.00
---------------------- ---------------
Net investment income (a) 0.02 0.01 --
Net realized and unrealized gains (losses) on investments and foreign
currency transactions (a) 0.09 0.10 (0.12)
---------------------- ---------------
Total from investment operations 0.11 0.11 (0.12)
---------------------- ---------------
Less distributions from:
Dividends from net investment income -- (0.02) --
Dividends from net realized gains on investments (0.12) -- --
Total distributions (0.12) (0.02) --
---------------------- ---------------
Net asset value, end of period $ 1.96 $ 1.97 $ 1.88
====================== ===============
Total return:
Total investment return (b) 5.61% 5.85% (6.00)%**
Ratios/supplemental data:
Net assets, end of period (000) $26,593 $22,764 $19,146
Ratio of net expenses to average net assets 1.40%(c) 1.40%(c) 1.74%*
Ratio of net investment income to average net assets 0.84%(c) 0.75%(c) 0.13%*
Portfolio turnover ratio 114% 40% 31%**
Average commission rate (d) $0.0010 -- --
</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.
(d) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades on
which commissions are charged.
Federal Income Tax Information (unaudited)
51.8% of the gain distribution recorded in December 1996 and paid in January
1997 was derived from long-term gains.
See Notes to Financial Statements.
33
<PAGE>
-----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
Keyport Variable Investment Trust Colonial-Keyport Strategic Income Fund /
December 31, 1996
----------------------------------------------------------------------------
Par Value
----------- ------------
BONDS & NOTES--(95.5%)
CORPORATE FIXED-INCOME BONDS
& NOTES--(39.0%)
Construction--(0.5%)
Building Construction
USG Corp., 9.250% 09/15/01 $250,000 $ 266,875
------------
Manufacturing--(14.1%)
Chemicals & Allied Products--(1.2%)
Agricultural Minerals Co., L.P., 10.750%
09/30/03 200,000 213,250
Revlon Worldwide Corp., (a) 03/15/98 500,000 430,000
------------
643,250
------------
Electronic & Electrical Equipment--(1.0%)
UNISYS Corp., 11.750% 10/15/04 500,000 533,750
------------
Fabricated Metal--(3.0%)
Euramax International, PLC, 11.250% 10/01/06
(b)(e) 250,000 258,750
Renco Metals, Inc., 11.500% 07/01/03 500,000 523,125
Rexnord Holdings, Inc., 10.750% 07/01/02 750,000 805,178
------------
1,587,053
------------
Food & Kindred Products--(1.5%)
FoodBrands America, Inc., 10.750% 05/15/06 250,000 266,250
Van De Kamps, Inc., 12.000% 09/15/05 500,000 551,250
------------
817,500
------------
Lumber & Wood Products--(0.5%)
Triangle Pacific Corp., 10.500% 08/01/03 250,000 266,563
------------
Machinery & Computer Equipment--(0.9%)
IMO Industries, 11.750% 05/01/06 500,000 467,500
------------
Miscellaneous Manufacturing--(0.9%)
American Standard Co., stepped coupon, (10.500%
06/01/98) (c) 06/01/05 350,000 327,688
Coleman Holdings Co., Series B, (a) 05/27/98 200,000 166,750
------------
494,438
------------
Primary Metal--(2.0%)
Algoma Steel, Inc., 12.375%
07/15/05 500,000 541,250
US Can Corp., 10.125% 10/15/06 (b) 500,000 525,000
------------
1,066,250
------------
Stone, Clay, Glass & Concrete--(1.0%)
Owens-Illinois, Inc., 10.500% 06/15/02 $500,000 $ 528,750
------------
Transportation Equipment--(2.1%)
Aftermarket Technology Corp., Series B, 12.000%
08/01/04 500,000 558,750
Collins & Aikman Products Co., 11.500% 04/15/06 500,000 547,500
------------
1,106,250
------------
Mining & Energy--(3.0%)
Crude Petroleum & Natural Gas--(0.5%)
Ferrellgas Finance Corp., L.P., 10.000%
08/01/01 250,000 262,813
------------
Oil & Gas Extraction--(2.5%)
Coastal Corp., 9.750% 08/01/03 500,000 572,205
Gulf Canada Resources Ltd., 9.250% 01/15/04 (d) 250,000 264,375
Nevo Energy Co., 9.500%
04/15/06 250,000 265,000
Santa Fe Energy Resources, Inc., 11.000%
05/15/04 225,000 248,625
------------
1,350,205
------------
Retail Trade--(2.0%)
Food Stores--(1.5%)
Pathmark Stores, Inc., 9.625% 05/01/03 250,000 239,375
Smiths Food & Drug, 11.250% 05/15/07 500,000 552,500
------------
791,875
------------
Miscellaneous Retail--(0.5%)
Finlay Fine Jewelry Corp., 10.625% 05/01/03 250,000 261,875
------------
Services--(5.1%)
Health Services--(3.1%)
GranCare, Inc., 9.375% 09/15/05 500,000 545,000
OrNda Health Corp., 11.375% 08/15/04 250,000 289,375
Tenet Healthcare Corp., 10.125% 03/01/05 750,000 828,750
------------
1,663,125
------------
Hotels, Camps & Lodging--(2.0%)
Eldorado Resorts Corp., 10.500% 08/15/06 (b) 500,000 527,500
HMH Properties, Inc., 9.500% 05/15/05 250,000 260,938
Wyndham Hotel Corp., 10.500% 05/15/06 250,000 266,250
------------
1,054,688
------------
See Notes to Investment Portfolio.
34
<PAGE>
-----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Continued)
Keyport Variable Investment Trust Colonial-Keyport Strategic Income Fund /
December 31, 1996
----------------------------------------------------------------------------
Par Value
----------- ------------
Transportation, Communication, Electric, Gas & Sanitary
Services--(14.3%)
Air Transportation--(2.0%)
Greenwich Air Services, Inc., 10.500% 06/01/06 $250,000 $ 267,500
U.S. Air, Inc., 10.375% 03/01/13 500,000 521,250
United Airlines, Inc., 9.200% 03/22/08 276,590 302,136
------------
1,090,886
------------
Broadcasting--(2.0%)
NWCG Holding Corp., (a)
06/15/99 425,000 353,813
Young Broadcasting Corp., 11.750% 11/15/04 650,000 715,000
------------
1,068,813
------------
Cable--(3.9%)
Bell Cablemedia PLC, stepped coupon, (11.950%
07/15/99) (c) 07/15/04 (e) 400,000 350,000
Cablevision Systems Corp., 10.750% 04/01/04 250,000 258,125
Comcast Cable Partners Ltd., stepped coupon,
(11.200% 11/15/00) (c) 11/15/07 (e) 500,000 353,750
Lenfest Communications, Inc., 8.375% 11/01/05 400,000 387,000
Marcus Cable Co., L.P. 11.875% 10/01/05 500,000 536,250
Videotron Holding PLC, stepped coupon, (11.000%
08/15/00) (c) 08/15/05 (e) 250,000 201,250
------------
2,086,375
------------
Electric, Gas & Sanitary Services--(1.0%)
Mesa Operating Co., 10.625% 07/01/06 500,000 543,750
------------
Electric Services--(0.3%)
California Energy Co., Inc., 9.500% 09/15/06 150,000 154,125
------------
Gas Services--(0.5%)
California Energy Co., Inc., 9.875% 06/30/03 250,000 260,000
------------
Telecommunication--(4.6%)
Brooks Fiber Properties, Inc., stepped coupon,
(10.875% 03/01/01) (c) 03/01/06 500,000 333,750
ICG Holding, Inc., stepped coupon, (13.500%
09/15/00)
(c) 09/15/05 500,000 358,750
MFS Communications Co., Inc., stepped coupon:
(8.875% 01/15/01) (c) 01/15/06 500,000 365,625
(9.375% 01/15/99) (c) 01/15/04 500,000 435,000
Paging Network, Inc., 10.125% 08/01/07 $500,000 $ 510,625
PanAmSat Corp., stepped coupon, (11.375%
08/01/98) (c) 08/01/03 500,000 463,750
------------
2,467,500
------------
Total Corporate Fixed-Income
Bonds & Notes (Cost of $20,083,707) 20,834,209
------------
Currency
-----------
Foreign Government & Agency Obligations--(32.7%)
Argentina Global Bonds,
11.000% 10/09/06 (f) 400,000 419,200
Government of Finland Bond,
7.250% 04/18/06 FM 12,000,000 2,791,488
Kingdom of Denmark, 8.000%
05/15/03 DK 15,841,000 2,978,199
Republic of Poland (Brady),
Past Due Interest, stepped
coupon, (5.000% 10/27/98)
4.000% 10/27/14 (g) 1,705,000 1,438,594
Spanish Government Bonds,
11.300%
01/15/02 SP 332,910,000 3,123,033
Swedish Government Bonds,
10.250%
05/05/03 SK 15,200,000 2,695,686
Treasury Corp. of Victoria,
10.250% 11/15/06 A$ 2,493,000 2,340,878
Western Australia Treasury
Corp., 12.000% 08/01/01 A$ 1,740,000 1,647,047
--------------
Total Foreign
Government & Agency Obligations
(Cost of $16,748,050) 17,434,125
--------------
US Government & Agency Obligations--(23.8%)
Federal Home Loan Mortgage
Corp., CMO, 9.500% 04/15/19 21,935 22,712
--------------
MDC Mortgage Funding Corp., CMO, 8.850%
03/20/18 161,795 165,436
--------------
U.S. Treasury Bonds:
8.750% 05/15/17 (h) 4,056,000 4,948,969
11.625% 11/15/04 166,000 219,171
--------------
5,168,140
--------------
U.S. Treasury Notes, 11.875%
11/15/03 (h) 5,625,000 7,337,981
--------------
Total U.S. Government & Agency Obligations
(Cost of $12,495,374) 12,694,269
--------------
Total Bonds & Notes
(Cost of $49,327,131) 50,962,603
--------------
See Notes to Investment Portfolio.
35
<PAGE>
-----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Continued)
Keyport Variable Investment Trust Colonial-Keyport Strategic Income Fund /
December 31, 1996
-----------------------------------------------------------------------------
Shares Value
-------- ------------
Preferred Stocks--(0.7%)
Transportation, Communication, Electric,
Gas & Sanitary Services
Communications
Cablevision Systems Corp.,
11.125% PIK, Series M
(Cost $413,001) 4,287 $ 384,800
Total Investments--(96.2%)
(Cost of $49,740,132) (i) 51,347,403
------------
Par
-----------
Short-Term Obligations--(1.2%)
Repurchase agreement with Lehman
Brothers, Inc., dated 12/31/96,
due 01/02/97 at 6.900%,
collateralized by U.S. Treasury
notes with various maturities to
2022, market value $651,823
(repurchase proceeds $643,246) $643,000 643,000
-------------
Forward Currency Contracts--(0.0%) (j) 11,223
Other Assets & Liabilities, Net--(2.6%) 1,391,309
-------------
Net Assets--100.0% $53,392,935
=============
Notes to Investment Portfolio:
(a) Zero coupon bond.
(b) Security is exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At December 31,
1996, the value of these securities amounted to $1,311,250 or 2.5% of net
assets.
(c) Currently zero coupon. Shown parenthetically is the interest rate to be
paid and the date the Fund will begin accruing this rate.
(d) This is a Canadian security. Par amount is stated in U.S. dollars.
(e) This is a British security. Par amount is stated in U.S. dollars.
(f) This is an Argentinean security. Par amount is stated in U.S. dollars.
(g) This is a Polish security. Par amount is stated in U.S. dollars. Shown
parenthetically is the interest rate to be paid and the date the Fund
will begin accruing this rate.
(h) These securities, or a portion thereof, with a total market value of
$7,826,045 are being used to collateralize the forward currency contracts
shown below.
(i) Cost for federal income tax purposes is $49,750,870. Gross unrealized
appreciation and depreciation at December 31, 1996 is as follows:
Gross unrealized appreciation $1,898,412
Gross unrealized depreciation (301,879)
-------------
Net unrealized appreciation $1,596,533
=============
(j) As of December 31, 1996, 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. $)
------------------------------ ------------- ----------------
FF 178,867 US$ 34,279 01/16/1997 (216)
FF 4,056,525 US$ 773,613 01/13/1997 (8,554)
FF 4,517,198 US$ 874,422 01/08/1997 3,714
FM 1,210,822 US$ 260,953 01/13/1997 (2,191)
FM 1,106,764 US$ 240,053 01/16/1997 (531)
DK 8,764,649 US$ 1,485,436 01/16/1997 (2,704)
DK 244,831 US$ 41,781 01/08/1997 231
A$ 1,260,328 US$ 1,001,961 01/23/1997 520
FM 4,290,205 US$ 934,474 01/08/1997 2,450
SK 5,944,766 US$ 874,037 01/16/1997 5,576
SK 3,472,794 US$ 520,074 01/08/1997 12,928
----------------
$11,223
================
Summary of Securities by Currency
Currency Value % of Total
------------------------- -------------
United States $ $35,771,072 69.7%
Australia A$ 3,987,925 7.8
Spain SP 3,123,033 6.1
Denmark DK 2,978,199 5.8
Finland FM 2,791,488 5.4
Sweden SK 2,695,686 5.2
-------------- -------------
$51,347,403 100.0%
============== =============
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
Acronym Name
- ---------------------------------
PIK Payment-In-Kind
FF French Francs
See Notes to Financial Statements.
36
<PAGE>
-----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
Keyport Variable Investment Trust Colonial-Keyport Strategic Income Fund /
December 31, 1996
----------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments, at market value (Identified cost $49,740,132) $51,347,403
Short-term obligations 643,000
Cash 697
Dividends and interest receivable 1,459,958
Expense reimbursement due from Adviser 7,152
Unrealized appreciation on forward currency exchange contracts 11,223
Unamortized organization expenses 9,958
Other assets 2,987
--------------
Total assets 53,482,378
--------------
Liabilities:
Payable for fund shares repurchased 29,641
Management fee payable 29,187
Bookkeeping fee payable 2,250
Transfer agent fee payable 625
Accrued expenses payable 27,740
--------------
Total liabilities 89,443
--------------
Net assets $53,392,935
==============
Net assets represented by:
Paid-in capital $51,796,138
Accumulated overdistributed net investment income (5,726)
Accumulated net realized losses on investments and foreign currency transactions (10,977)
Net unrealized appreciation on investments and foreign currency transactions 1,613,500
--------------
Total net assets applicable to outstanding shares of beneficial interest $53,392,935
==============
Shares of beneficial interest outstanding 4,838,352
==============
Net asset value per share $11.04
==============
</TABLE>
-----------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Year ended December 31, 1996
----------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment income:
Interest income $4,372,353
Dividends 41,090
-------------
Total investment income 4,413,443
-------------
Expenses:
Management fee 322,142
Bookkeeping fee 27,000
Transfer agent fee 7,500
Audit fee 20,000
Printing expense 12,934
Trustees' expense 4,392
Custodian fee 19,302
Legal fee 1,971
Amortization of organization expense 3,982
Miscellaneous expense 3,714
-------------
Total expenses 422,937
-------------
Less:
Expenses reimbursable by Manager (27,636)
-------------
Net expenses 395,301
-------------
Net investment income 4,018,142
Realized and unrealized gains on investments and foreign currency transactions:
Net realized gains on investments 259,150
Net realized gains on foreign currency transactions 330,664
Change in unrealized appreciation on investments and foreign currency transactions 22,412
-------------
Net increase in net assets resulting from operations $4,630,368
=============
</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 Ended Year Ended
December 31, December 31,
1996 1995
--------------- ---------------
<S> <C> <C>
Operations:
Net investment income $ 4,018,142 $ 2,260,858
Net realized gains on investments 259,150 356,528
Net realized gains (losses) on foreign currency transactions 330,664 (89,581)
Change in unrealized appreciation on investments and foreign currency transactions 22,412 1,745,890
--------------- ---------------
Net increase in net assets resulting from operations 4,630,368 4,273,695
--------------- ---------------
Distributions declared from:
Net investment income (4,244,982) (2,313,068)
Net realized gains on investments (309,530) (140,532)
--------------- ---------------
Total distributions (4,554,512) (2,453,600)
--------------- ---------------
Fund share transactions:
Proceeds from fund shares sold 15,151,911 17,078,534
Receipts for shares issued in acquisition of SteinRoe Managed Income Fund -- 37,220,278
Cost of fund shares repurchased (14,723,831) (23,580,161)
Distributions reinvested 4,554,512 2,453,600
--------------- ---------------
Net increase in net assets resulting from fund share transactions 4,982,592 33,172,251
--------------- ---------------
Total increase in net assets 5,058,448 34,992,346
Net assets:
Beginning of period 48,334,487 13,342,141
--------------- ---------------
End of period $ 53,392,935 $ 48,334,487
=============== ===============
Accumulated overdistributed net investment income included in ending net assets $ (5,726) $ (68,878)
=============== ===============
Analysis of changes in shares of beneficial interest:
Shares sold 1,337,261 1,586,240
Issued in acquisition of SteinRoe Managed Income Fund -- 3,302,598
Shares redeemed (1,307,531) (2,079,174)
Distributions reinvested 412,547 223,869
--------------- ---------------
Net increase 442,277 3,033,533
=============== ===============
</TABLE>
See Notes to Financial Statements.
38
<PAGE>
-----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Keyport Variable Investment Trust Colonial-Keyport Strategic Income Fund
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period
Year Ended December Ended
31, December 31,
---------------------- ---------------
1996 1995 1994***
----------- ----------- ---------------
<S> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of period $ 10.99 $ 9.79 $ 10.00
----------- ----------- ---------------
Net investment income (a) 0.92 0.55 0.30
Net realized and unrealized gains (losses) on investments and
foreign currency transactions (a) 0.16 1.24 (0.19)
----------- ----------- ---------------
Total from investment operations 1.08 1.79 0.11
----------- ----------- ---------------
Less distributions:
Dividends from net investment income (0.96) (0.56) (0.31)
Dividends from net realized gains on investments (0.07) (0.03) (0.01)
----------- ----------- ---------------
Total distributions (1.03) (0.59) (0.32)
----------- ----------- ---------------
Net asset value, end of period $ 11.04 $ 10.99 $ 9.79
=========== =========== ===============
Total return:
Total investment return (b)(c) 9.83% 18.30% 1.10%**
Ratios/supplemental data:
Net assets, end of period (000) $53,393 $48,334 $13,342
Ratio of net expenses to average net assets (d) 0.80%(e) 0.84%(e) 1.00%*
Ratio of net investment income to average net assets (c) 8.13%(e) 8.08%(e) 7.33%*
Portfolio turnover ratio 114% 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) If the Fund had paid all of its expenses and there had been no
reimbursement from the Manager, these ratios would have been 0.86%,
0.94% and 1.60% (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.
Federal Income Tax Information (unaudited)
59.1% of the gain distribution recorded in December 1996 and paid in January
1997 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, 1996
----------------------------------------------------------------------------
Shares Value
------------- ---------------
COMMON STOCKS--(94.1%)
Finance, Insurance & Real Estate--(15.3%)
Depository Institutions--(5.8%)
BankAmerica Corp. 10,500 $1,047,375
Charter One Financial, Inc. 6,100 256,200
Chase Manhattan Corp. 8,200 731,850
Comerica, Inc. 5,100 267,112
First Bank System, Inc. 3,900 266,175
First Union Corp. 6,900 510,600
Keycorp 8,000 404,000
Nations Bank Corp. 500 48,875
---------------
3,532,187
---------------
Insurance Carriers--(4.1%)
AMBAC, Inc. 1,200 79,650
Allmerica Financial Corp. 300 10,050
Allstate Corp. 8,724 504,900
CIGNA Corp. 4,400 601,150
Everest Reinsurance Holdings, Inc. 15,800 454,250
Mercury General Corp. 4,800 252,000
Old Republic International Corp. 8,550 228,712
Travelers Group, Inc. 3,266 148,195
Wellpoint Health Networks, Inc.,
Class A 6,135 210,891
---------------
2,489,798
---------------
Nondepository Credit Institutions--(4.6%)
American Express Co. 15,800 892,700
Beneficial Corp. 10,300 652,762
ITT Hartford Group, Inc. 9,700 654,750
Student Loan Marketing Association 6,600 614,625
---------------
2,814,837
---------------
Security Brokers & Dealers--(0.8%)
Donaldson, Lufkin & Jenrette, Inc. 5,900 212,400
Merrill Lynch & Co., Inc. 3,200 260,800
---------------
473,200
---------------
Manufacturing--(51.7%)
Chemicals & Allied Products--(11.7%)
Abbott Laboratories 1,700 86,275
American Home Products Corp. 12,000 703,500
Amgen, Inc. (a) 13,200 717,750
Bristol-Myers Squibb Co. 11,500 1,250,625
Clorox Co. 3,100 311,162
Dow Chemical Co. 6,600 517,275
International Specialty Products,
Inc. (a) 100 1,225
Johnson & Johnson 18,000 895,500
Merck & Co., Inc. 20,500 1,624,625
PPG Industries, Inc. 2,200 123,475
Procter & Gamble Co. 800 86,000
Schering-Plough Corp. 5,300 $ 343,175
Union Carbide Corp. 11,500 470,062
---------------
7,130,649
---------------
Electronic & Electrical Equipment--(6.2%)
Cooper Industries, Inc. 9,000 379,125
General Electric Co. 11,300 1,117,288
Intel Corp. 14,400 1,885,500
Pairgain Technologies, Inc. (a) 600 18,262
SCI Systems, Inc. (a) 8,200 365,925
---------------
3,766,100
---------------
Food & Kindred Products--(6.7%)
Archer Daniels Midland Co. 7,200 158,400
Coca Cola Co. 16,000 842,000
Conagra, Inc. 8,900 442,775
Heinz (H.J.) Co. 13,200 471,900
Hershey Foods, Corp. 8,400 367,500
Hormel Foods Corp. 1,000 27,000
Interstate Bakeries Corp. 9,000 442,125
Philip Morris Co., Inc. 7,300 822,162
Sara Lee Corp. 14,300 532,675
---------------
4,106,537
---------------
Furniture & Fixtures--(1.2%)
Johnson Controls, Inc. 7,200 596,700
Leggett & Platt, Inc. 4,200 145,425
---------------
742,125
---------------
Lumber & Wood Products--(0.1%)
Georgia Pacific Corp. 600 43,200
---------------
Machinery & Computer Equipment--(8.1%)
Case Corp. 4,500 245,250
Caterpillar, Inc. 8,900 669,725
Compaq Computer Corp. (a) 12,500 928,125
Cooper Cameron Corp. (a) 1,900 145,350
Dell Computer Corp. (a) 15,600 828,750
Gateway 2000, Inc. (a) 10,000 535,625
Storage Technology Corp. (a) 8,800 419,100
Sun Microsystems, Inc. (a) 7,400 190,087
Tecumseh Products Co., Class A 5,300 304,087
Western Digital Corp. (a) 11,900 676,812
---------------
4,942,911
---------------
Measuring & Analyzing Instruments--(3.4%)
Beckman Instruments, Inc. 9,300 356,888
Becton, Dickinson & Co. 8,600 373,025
Honeywell, Inc. 10,200 670,650
Tektronix, Inc. 12,600 645,750
---------------
2,046,313
---------------
Miscellaneous Manufacturing--(0.8%)
Callaway Golf Co. 17,400 500,250
---------------
See Notes to Investment Portfolio.
40
<PAGE>
-----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Continued)
Keyport Variable Investment Trust Colonial-Keyport U.S. Fund For Growth /
December 31, 1996
----------------------------------------------------------------------------
Shares Value
------------- ---------------
Paper Products--(1.3%)
Consolidated Papers, Inc. 2,000 $ 98,250
Fort Howard Corp. (a) 11,300 312,869
International Paper Co. 1,400 56,525
Mead Corp. 5,100 296,438
---------------
764,082
---------------
Petroleum Refining--(7.1%)
Amoco Corp. 7,900 635,950
Atlantic Richfield Co. 2,300 304,750
Exxon Corp. 16,100 1,577,800
Mobil Corp. 8,400 1,026,900
Phillips Petroleum Co. 6,800 300,900
USX-Marathon Group 19,800 472,725
---------------
4,319,025
---------------
Primary Metal--(0.4%)
USX-US Steel Group 8,200 257,275
---------------
Printing & Publishing--(0.8%)
Tribune Co. 6,400 504,800
---------------
Stone, Clay, Glass & Concrete--(0.4%)
USG Corp. (a) 7,900 267,613
---------------
Tobacco Products--(0.8%)
American Brands, Inc. 7,100 352,338
RJR Nabisco Holdings Corp. 4,600 156,400
---------------
508,738
---------------
Transportation Equipment--(2.7%)
Chrysler Corp. 17,800 587,400
General Dynamics Corp. 500 35,250
McDonnell Douglas Corp. 13,900 889,600
Trinity Industries, Inc. 3,500 131,250
---------------
1,643,500
---------------
Mining & Energy--(2.0%)
Crude Petroleum & Natural Gas--(1.1%)
Apache Corp. 18,800 665,050
---------------
Nonmetallic, Except Fuels--(0.1%)
Vulcan Materials Co. 800 48,700
---------------
Oil & Gas Extraction--(0.8%)
Rowan Companies, Inc. (a) 6,500 147,063
Trans Ocean Offshore Drilling, Inc. 5,400 338,175
---------------
485,238
---------------
Retail Trade--(5.8%)
Apparel & Accessory Stores--(1.3%)
TJX Companies, Inc. 16,900 800,638
---------------
Building, Hardware & Garden Supply--(0.9%)
Lowes Companies, Inc. 15,100 536,050
---------------
Food Stores--(0.6%)
Vons Companies, Inc. (a) 6,200 371,225
---------------
General Merchandise Stores--(1.3%)
Dayton Hudson Corp. 16,500 $ 647,625
Staples, Inc. (a) 6,800 122,825
---------------
770,450
---------------
Home Furnishings & Equipment--(0.3%)
CompUSA, Inc. (a) 7,600 156,750
---------------
Miscellaneous Retail--(1.4%)
Borders Group, Inc. (a) 15,000 538,125
Office Depot, Inc. (a) 16,500 292,875
Tiffany & Co. 1,000 36,625
---------------
867,625
---------------
Services--(6.4%)
Business Services--(2.5%)
Computer Associates International,
Inc. 12,750 634,313
Microsoft Corp. (a) 4,600 380,075
Sterling Software, Inc. (a) 2,700 85,388
The Learning Company, Inc. (a) 28,900 415,438
---------------
1,515,214
---------------
Health Services--(1.8%)
Manor Care, Inc. 6,300 170,100
OrNda Health Corp. (a) 12,900 377,325
Tenet Healthcare Corp. (a) 25,400 555,625
---------------
1,103,050
---------------
Hotels, Camps & Lodging--(0.9%)
Choice Hotels Holdings, Inc. (a) 6,300 111,038
MGM Grand, Inc. (a) 12,900 449,888
---------------
560,926
---------------
Motion Pictures--(1.2%)
King World Productions, Inc. (a) 11,800 435,125
Walt Disney Co. 3,900 271,538
---------------
706,663
---------------
Transportation, Communication, Electric,
Gas & Sanitary Services--(12.7%)
Air Transportation--(0.1%)
Delta Air Lines, Inc. 800 56,700
---------------
Communications--(8.7%)
AT&T Corp. 2,400 104,400
Ameritech Corp. 17,600 1,067,000
Bell Atlantic Corp. 2,700 174,825
BellSouth Corp. 9,000 363,375
Compuware Corp. (a) 12,300 616,538
GTE Corp. 13,700 623,350
Lucent Technologies, Inc. 3,678 170,100
NYNEX Corp. 6,600 317,625
Pacific Telesis Group, Inc. 6,400 235,200
SBC Communications, Inc. 12,700 657,225
Southern New England
Telecommunications Corp. 2,600 101,075
See Notes to Investment Portfolio. 41
<PAGE>
-----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Continued)
Keyport Variable Investment Trust Colonial-Keyport U.S. Fund For Growth /
December 31, 1996
----------------------------------------------------------------------------
Shares Value
------------- ---------------
Sprint Corp. 20,700 $ 825,412
---------------
5,256,125
---------------
Electric, Gas & Sanitary Services--(0.7%)
Enova Corp. 18,400 418,600
---------------
Electric Services--(2.2%)
Boston Edison Co. 6,500 174,688
Central & South West Corp. 10,900 279,312
Consolidated Edison Co.
of New York 2,700 78,975
Entergy Corp. 7,700 213,675
Ohio Edison Co. 20,100 457,275
Rochester Gas & Electric Corp. 3,200 61,200
Texas Utilities Co. 1,600 65,200
---------------
1,330,325
---------------
Gas Services--(0.3%)
Consolidated Natural Gas Co. 1,900 104,975
National Fuel Gas Co. 2,300 94,875
---------------
199,850
---------------
Railroad--(0.7%)
CSX Corp. 5,400 228,150
Illinois Central Corp. 200 6,400
Kansas City Southern Industries, Inc. 4,600 207,000
---------------
441,550
---------------
Wholesale Trade--(0.2%)
Nondurable Goods--(0.2%)
Caraustar Industries, Inc. 1,100 $ 36,575
Richfood Holdings, Inc. 2,850 69,112
---------------
105,687
---------------
Total Common Stocks
(Cost of $46,202,643) (b) 57,249,556
---------------
SHORT TERM OBLIGATIONS--(5.8%)
Repurchase agreement with Lehman Par
Brothers, Inc., dated 12/31/96, due
01/02/97 at 6.900%, collateralized
by U.S. Treasury notes with various
maturities to 2022, market value
$3,557,150 (repurchase proceeds
$3,510,345) $3,509,000 3,509,000
---------------
Other Assets & Liabilities, Net--(0.1%) 96,071
---------------
Net Assets--(100%) $60,854,627
===============
Notes to Investment Portfolio:
(a) Non-income producing.
(b) The cost for federal income tax purposes is $46,204,622. Gross
unrealized appreciation and depreciation at December 31, 1996 is as
follows:
Gross unrealized appreciation $11,849,801
Gross unrealized depreciation 804,867
--------------
Net unrealized appreciation $11,044,934
==============
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, 1996
----------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments, at market value (Identified cost $46,202,643) $57,249,556
Short-term obligations 3,509,000
Cash 725
Dividends and interest receivable 109,293
Unamortized organization expenses 9,958
Other assets 100,408
--------------
Total assets 60,978,940
--------------
Liabilities:
Management fee payable 41,342
Bookkeeping fee payable 2,250
Transfer agent fee payable 625
Accrued expenses payable 22,150
Other liabilities 57,946
--------------
Total liabilities 124,313
--------------
Net assets $60,854,627
==============
Net assets represented by:
Paid-in capital $49,824,192
Accumulated overdistributed net investment income (1)
Accumulated net realized losses on investments (16,477)
Net unrealized appreciation on investments 11,046,913
--------------
Total net assets applicable to outstanding shares of beneficial interest $60,854,627
==============
Shares of beneficial interest outstanding 4,279,066
==============
Net asset value per share $14.22
==============
</TABLE>
-----------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Year ended December 31, 1996
----------------------------------------------------------------------------
Investment income:
Dividends $ 1,157,283
Interest income 68,626
-------------
Total investment income 1,225,909
-------------
Expenses:
Management fee 418,745
Bookkeeping fee 27,000
Transfer agent fee 7,500
Audit fee 13,132
Printing expense 8,573
Trustees' expense 3,853
Custodian fee 8,930
Legal fee 233
Amortization of organization expense 3,982
Miscellaneous expense 6,296
-------------
Total expenses 498,244
-------------
Net investment income 727,665
Realized and unrealized gains on investments:
Net realized gains on investments 2,722,737
Change in unrealized appreciation on investments 6,906,156
-------------
Net increase in net assets resulting from operations $10,356,558
=============
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 Ended Year Ended
December 31, December 31,
1996 1995
--------------- --------------
<S> <C> <C>
Operations:
Net investment income $ 727,665 $ 512,329
Net realized gains on investments 2,722,737 2,620,298
Change in unrealized appreciation on investments 6,906,156 3,846,518
--------------- --------------
Net increase in net assets resulting from operations 10,356,558 6,979,145
--------------- --------------
Distributions declared from:
Net investment income (692,338) (518,493)
Net realized gains on investments (2,738,643) (2,576,965)
--------------- --------------
Total distributions (3,430,981) (3,095,458)
--------------- --------------
Fund share transactions:
Proceeds from fund shares sold 17,615,945 26,906,230
Cost of fund shares repurchased (10,135,228) (6,240,626)
Distributions reinvested 3,430,981 3,095,458
--------------- --------------
Net increase in net assets resulting from fund share transactions 10,911,698 23,761,062
--------------- --------------
Total increase in net assets 17,837,275 27,644,749
Net assets:
Beginning of period 43,017,352 15,372,603
--------------- --------------
End of period $ 60,854,627 $43,017,352
=============== ==============
Accumulated overdistributed net investment income included
in ending net assets $ (1) $ (35,328)
=============== ==============
Analysis of changes in shares of beneficial interest:
Shares sold 1,304,388 2,240,739
Shares redeemed (742,371) (508,643)
Distributions reinvested 237,611 250,442
--------------- --------------
Net increase 799,628 1,982,538
=============== ==============
</TABLE>
See Notes to Financial Statements.
44
<PAGE>
-----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Keyport Variable Investment Trust Colonial-Keyport U.S. Fund for Growth
----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period
Ended
Year Ended December 31, December 31,
-------------------------- ---------------
1996 1995 1994***
----------- -------------- ---------------
<S> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of period $ 12.36 $ 10.27 $ 10.00
----------- -------------- ---------------
Net investment income (a) 0.19 0.21 0.09
Net realized and unrealized gains on investments (a) 2.52 2.84 0.35
----------- -------------- ---------------
Total from investment operations 2.71 3.05 0.44
----------- -------------- ---------------
Less distributions:
Dividends from net investment income (0.17) (0.16) (0.11)
Dividends from net realized gains on investments (0.68) (0.80) (0.06)
----------- -------------- ---------------
Total Distributions (0.85) (0.96) (0.17)
----------- -------------- ---------------
Net asset value, end of period $ 14.22 $ 12.36 $ 10.27
=========== ============== ===============
Total return:
Total investment return (c) 21.84% 29.70%(b) 4.40%(b)**
Ratios/supplemental data:
Net assets, end of period (000) $60,855 $43,017 $15,373
Ratio of net expenses to average net assets 0.95%(e) 1.00%(d)(e) 1.00%(d)*
Ratio of net investment income to average net assets 1.39%(e) 1.72%(b)(e) 2.16%(b)*
Portfolio turnover ratio 77% 115% 52%**
Average commission rate (f) $0.0395 -- --
</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 years' ratios are net of benefits
received, if any.
(f) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades
on which commissions are charged.
Federal Income Tax Information (unaudited)
87.6% of the gain distribution recorded in December 1996 and paid in January
1997 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,
1996
-----------------------------------------------------------------------------
Country
Abbrev. Shares Value
---------------------- --------------
COMMON STOCKS--(94.8%)
Agriculture, Forestry & Fishing--(2.0%)
Agriculture--(Crops--(2.0%)
Sime Darby Bhd Ma 173,000 $ 681,588
--------------
Construction--(4.2%)
Heavy Construction--Non Building
Construction--(4.2%)
Citic Pacific Ltd. HK 254,000 1,474,510
--------------
Finance, Insurance & Real Estate--(22.8%)
Depository Institutions--(22.8%)
Bank of Ayudhya Ltd. Th 97,250 229,363
Development Bank of Singapore
Ltd. Si 94,000 1,269,453
Guoco Group Ltd. HK 147,000 822,949
HSBC Holdings PLC HK 76,200 1,630,500
Hang Seng Bank HK 122,600 1,489,999
Oversea-Chinese Banking Corp.
Ltd (Foreign) Si 88,500 1,100,322
Public Bank Bhd Ma 397,666 842,413
Thai Farmers Bank Ltd. Th 81,500 508,342
--------------
7,893,341
--------------
Holding & Other Investment Companies--(6.6%)
Ayala Land Inc., Class B Ph 30,000 34,221
Hutchison Whampoa Ltd. HK 197,000 1,547,320
Singapore Technologies
Industrial Corp. Si 256,000 640,229
Taiwan Fund, Inc. Tw 3,000 66,750
--------------
2,288,520
--------------
Real Estate--(21.4%)
China Overseas Land &
Investment HK 400,000 202,987
Cheung Kong (Holdings) Ltd. HK 187,000 1,662,195
City Developments Ltd. Si 133,000 1,197,428
Filinvest Development Corp. Ph 325,000 96,388
Land and House Co., Ltd. Th 30,000 218,696
New World Development Co., Ltd. HK 163,000 1,101,138
SM Prime Holdings, Inc. Ph 130,000 33,612
Sun Hung Kai Properties Ltd. HK 118,000 1,445,536
Swire Pacific Ltd., Series A HK 153,000 1,458,885
--------------
7,416,865
--------------
Manufacturing--(9.8%)
Chemicals & Allied Products--(0.7%)
Kalbe Farma In 129,000 147,460
PT Darya Varia Laboratoria In 62,640 100,776
--------------
248,236
--------------
Electronic & Electrical Equipment--(0.8%)
Nylex Malaysia Bhd Ma 120,000 $ 270,837
--------------
Fabricated Metal--(1.1%)
Kian Joo Can Factory Bhd Ma 72,000 399,129
--------------
Food & Kindred Products--(2.9%)
Guangdong Investments HK 802,000 772,500
PT Mayora Indah (Foreign) In 515,000 239,839
--------------
1,012,339
--------------
Measuring & Analyzing Instruments--(1.1%)
China Hong Kong Photo Products
Holdings Ltd. HK 460,000 154,632
Pt Modern Photo Film Reg. In 73,500 233,383
--------------
388,015
--------------
Printing & Publishing--(2.8%)
Singapore Press Holdings Ltd. Si 48,800 962,401
--------------
Stone, Clay, Glass & Concrete--(0.4%)
Siam Cement Co., Ltd. Th 5,000 156,713
--------------
Retail Trade--(3.5%)
Apparel & Accessory Stores--(1.2%)
Giordano International Ltd. HK 472,000 402,767
--------------
Auto Dealers & Gas Stations--(2.3%)
Cycle & Carriage Ltd. Si 65,000 794,212
--------------
Services--(5.5%)
Hotels, Camps & Lodging--(2.4%)
Genting Berhad Ma 121,000 833,657
--------------
Miscellaneous Repair Services--(3.1%)
Keppel Corp. Si 137,000 1,067,024
--------------
Transportation, Communication, Electric,
Gas & Sanitary Services--(19.0%)
Communications--(9.4%)
Advanced Information Services Th 46,000 383,752
Hong Kong Telecommunications
Ltd. HK 493,369 794,162
PT Indosat In 132,000 363,251
PT Telekomunikasi Indonesia In 250,000 431,308
Philippine Long Distance
Telephone ADR Ph 7,550 385,050
Telekom Malaysia Berhad Ma 101,000 899,822
--------------
3,257,345
--------------
Electric Services--(4.0%)
Hong Kong Electric Holdings
Ltd. HK 332,000 1,103,161
Korea Electric Power Corp., ADR Ko 13,000 266,500
--------------
1,369,661
--------------
See Notes to Investment Portfolio.
46
<PAGE>
-----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Continued)
Keyport Variable Investment Trust Newport-Keyport Tiger Fund / December 31,
1996
-----------------------------------------------------------------------------
Country
Abbrev. Shares Value
---------------------- --------------
Gas Services--(5.6%)
Hong Kong And China Gas Co.,
Ltd. HK 823,280 $ 1,591,316
Petronas Gas Berhad Ma 80,000 332,607
--------------
1,923,923
--------------
Total Common Stocks
(Cost of $28,837,762) 32,841,083
--------------
Warrants--(0.0%)
Thai Farmers Bank
(Cost of $7,427) Th 7,500 5,921
--------------
Total Investments
(Cost of $28,845,189) (a) 32,847,004
--------------
SHORT-TERM OBLIGATIONS--(3.7%) Par
-------------
Repurchase agreement with Lehman Brothers,
Inc., dated 12/31/96 due 01/02/97 at
6.900% collateralized by a U.S. Treasury
note with a maturity of 1998, market
value $1,306,602 (repurchase proceeds
$1,276,489) $1,276,000 1,276,000
--------------
Value
--------------
Other Assets & Liabilities, Net--(1.5%) $ 519,371
--------------
Nets Assets--(100.0%) $34,642,375
==============
Notes to Investment Portfolio:
(a) Cost for federal income tax purposes is identical. Gross unrealized
appreciation and depreciation at December 31, 1996 is as follows:
Gross unrealized appreciation $ 6,430,280
Gross unrealized depreciation (2,428,465)
--------------
Net unrealized appreciation $ 4,001,815
==============
Acronym Name
------------ --------------------------------
ADR American Depository Receipt
Summary of Securites by Country
Country
Country Abbrev. Value % of Total
- --------------- ------- ----- ----------
Hong Kong HK $17,654,557 53.7%
Singapore Si 7,031,069 21.4
Malaysian Ma 4,260,053 13.0
Indonesia In 1,516,017 4.6
Thailand Th 1,502,787 4.6
Philippines Ph 549,271 1.7
South Korea Ko 266,500 0.8
Taiwan Tw 66,750 0.2
-------------- ------------
$32,847,004 100.0%
============== ============
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,
1996
-----------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments, at market value (Identified cost $28,845,189) $32,847,004
Short-term obligations 1,276,000
Cash (including foreign currencies) 1,283,940
Receivable for fund shares sold 15,250
Dividends and interest receivable 21,875
--------------
Total assets 35,444,069
--------------
Liabilities:
Payable for investments purchased 739,566
Payable for fund shares repurchased 7,340
Management fee payable 25,901
Bookkeeping fee payable 2,250
Transfer agent fee payable 625
Accrued expenses payable 26,012
--------------
Total liabilities 801,694
--------------
Net assets $34,642,375
==============
Net assets represented by:
Paid-in capital $30,666,336
Accumulated undistributed net investment income 920
Accumulated net realized losses on investments and foreign currency transactions (26,302)
Net unrealized appreciation on investments and foreign currency transactions 4,001,421
--------------
Total net assets applicable to shares of beneficial interest outstanding $34,642,375
==============
Shares of beneficial interest outstanding 13,746,402
==============
Net asset value per share $2.52
==============
</TABLE>
-----------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Year ended December 31, 1996
----------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment income:
Dividends (net of nonrebatable foreign taxes withheld at source of $39,548) $ 564,771
Interest income 142,061
------------
Total investment income 706,832
------------
Expenses:
Management fee 258,891
Bookkeeping fee 27,000
Transfer agent fee 7,500
Audit fee 7,759
Printing expense 4,434
Trustees' expense 1,911
Custodian fee 51,295
Legal expense 535
Miscellaneous expense 4,191
------------
Total expenses 363,516
------------
Net investment income 343,316
Realized and unrealized gains (losses) on investments and foreign currency transactions:
Net realized gains on investments 109,471
Net realized losses on foreign currency transactions (11,295)
Change in unrealized appreciation on investments and foreign currency transactions 2,259,060
------------
Net increase in net assets resulting from operations $2,700,552
============
</TABLE>
See Notes to Financial Statements.
48
<PAGE>
-----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Keyport Variable Investment Trust Newport-Keyport Tiger Fund
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Period Ended
December 31, December 31,
1996 1995*
-------------- --------------
<S> <C> <C>
Operations:
Net investment income $ 343,316 $ 85,551
Net realized gains (losses) on investments 109,471 (75)
Net realized losses on foreign currency transactions (11,295) (14,780)
Unrealized appreciation on investments and foreign currency transactions 2,259,060 1,742,361
-------------- --------------
Net increase in net assets resulting from operations 2,700,552 1,813,057
-------------- --------------
Distributions declared from:
Net investment income (237,595) (85,551)
In excess of net investment income -- (78,657)
Net realized gains (135,767) --
-------------- --------------
Total distributions (373,362) (164,208)
-------------- --------------
Fund share transactions:
Proceeds from fund shares sold 19,071,741 17,964,083
Cost of fund shares repurchased (6,107,372) (799,686)
Distributions reinvested 373,362 164,208
-------------- --------------
Net increase in net assets resulting from fund share transactions 13,337,731 17,328,605
-------------- --------------
Total increase in net assets 15,664,921 18,977,454
Net assets:
Beginning of period 18,977,454 0
-------------- --------------
End of period $34,642,375 $18,977,454
============== ==============
Accumulated undistributed (overdistributed) net investment income included in
ending net assets 920 $ (93,375)
============== ==============
Analysis of changes in shares of beneficial interest:
Shares sold 7,766,949 8,623,798
Shares redeemed (2,495,545) (369,219)
Distributions reinvested 148,081 72,338
-------------- --------------
Net increase 5,419,485 8,326,917
============== ==============
</TABLE>
* For the period from the commencement of operations May 1, 1995 to December
31, 1995.
See Notes to Financial Statements.
49
<PAGE>
-----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Keyport Variable Investment Trust Newport-Keyport Tiger Fund
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Period Ended
December 31, December 31,
-------------- ---------------
1996 1995***
-------------- ---------------
<S> <C> <C>
Per share operating performance:
Net asset value, beginning of period $ 2.28 $ 2.00
-------------- ---------------
Net investment income (a) 0.03 0.01
Net realized and unrealized gains on investments and foreign currency transactions (a) 0.24 0.29
-------------- ---------------
Total from investment operations 0.27 0.30
-------------- ---------------
Less distributions from:
Dividends from net investment income (0.02) (0.01)
In excess of net investment income -- (0.01)
Dividends from net realized gains on investments (0.01) --
-------------- ---------------
Total distributions (0.03) (0.02)
-------------- ---------------
Net asset value, end of period $ 2.52 $ 2.28
============== ===============
Total return:
Total investment return (b) 11.73% 15.00%**
Ratios/supplemental data:
Net assets, end of period (000) $34,642 $18,977
Ratio of net expenses to average net assets (c) 1.27% 1.75%*
Ratio of net investment income to average net assets (c) 1.20% 0.89%*
Portfolio turnover ratio 7% 12%**
Average commission rate (d) $0.0172 --
</TABLE>
* Annualized
** Not Annualized.
*** For the period from the commencement of operations May 1, 1995 to
December 31, 1995.
(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.
(d) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades
on which commissions are charged.
Federal Income Tax Information (unaudited)
87.7% of the gain distribution recorded in December 1996 and paid in January
1997 was derived from long-term gains.
See Notes to Financial Statements.
50
<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, 1996 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
capital growth.
International Fund for Growth seeks long-term growth.
Strategic Income Fund seeks a high level of current income and total return,
as is consistent with prudent risk.
U.S. Fund for Growth seeks growth over time exceeding the S&P 500 Index's
performance.
Tiger Fund seeks capital appreciation.
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-
51
<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 gains (losses) arising from the fluctuation in
exchange rates 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 gains (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, 1996,
Utilities Fund had capital loss carryovers of $4,706,616 which will expire in
or before 2004, if not utilized.
The cost of investments purchased and proceeds from investments sold
excluding short-term investments for the year ended December 31, 1996, for
the Funds were as follows:
Growth International
and Income Utilities Fund for
Fund Fund Growth
-------------- ------------- ---------------
Cost of investments
purchased $26,192,900 $ 6,670,567 $30,426,903
Proceeds from
investments sold 18,328,874 10,470,243 27,201,372
Strategic
Income U.S. Fund
Fund for Growth Tiger Fund
-------------- -------------- --------------
Cost of investments
purchased $58,496,088 $45,412,339 $14,919,603
Proceeds from
investments sold 53,554,221 39,139,763 1,874,363
For Growth and Income Fund and Strategic Income Fund, none and $359,576 and
$12,408,233 and $11,672,392, respectively, represent the purchase cost and
proceeds of sales of U.S. Government securities, respectively.
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, 1996 have been reclassified as
follows:
52
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NOTES TO FINANCIAL STATEMENTS (Continued)
Inter-
Growth national Strategic
and Income Fund for Income Tiger
Fund Growth Fund Fund
------------ ------------------------- ------------
Accumulated net
investment
income $ 5,626 $(157,815) $ 289,992 $(11,426)
Accumulated net
realized gain
(losses) on
investments (5,743) 949,336 (289,992) 11,426
Paid in capital 117 (791,521) -- --
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 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, 1997, the Manager has agreed to
reimburse all expenses, including management fees, in excess of 1.00% of
average daily net assets per annum for Growth and Income Fund, Utilities Fund
and U.S. Fund for Growth, in excess of 0.80% of average daily net assets for
Strategic Income Fund and in excess of 1.75% of average daily net assets for
International Fund for Growth and Tiger Fund.
Note 6. Investment in Repurchase Agreements
Each Fund may enter into repurchase agreements, which require 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 substitution of 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.
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Adviser
Keyport Advisory Services Corp.
125 High Street
Boston, Massachusetts 02110
Sub-Investment Adviser and
Transfer and Dividend Disbursing Agent
Colonial Management Associates, Inc.
One Financial Center
Boston, Massachusetts 02111-2365
Sub-Investment Adviser
Newport Fund Management
580 California Street
Suite 1960
San Francisco, California 94104
Distributor
Keyport Financial Services Corp.
125 High Street
Boston, Massachusetts 02110
Client Services
Keyport Life Insurance Company
125 High Street
Boston, Massachusetts 02110
800-367-3653 (Press 3)
Custodians
Boston Safe Deposit & Trust Company
One Cabot Road
Medford, Massachusetts 02155
United Missouri Bank
928 Grand Avenue
Kansas City, Missouri 64100
Independent Accountants
Price Waterhouse LLP
160 Federal Street
Boston, Massachusetts 02110
Legal Counsel
Bingham, Dana & Gould
150 Federal Street
Boston, Massachusetts 02110
The Trustees
John A. Bacon Jr.
Richard R. Christensen
Salvatore Macera
Dr. Thomas E. Stitzel
This report is authorized for use as sales literature only when accompanied
by a current prospectus of the Trust and a current prospectus for a variable
insurance product offered by Keyport Life Insurance Company, Keyport America
Life Insurance Company, or Liberty Life Assurance Company of Boston.
12/95 NIM 9.5m
