Liberty Variable Investment Trust
Colonial Growth and Income Fund, Variable Series
Stein Roe Global Utilities Fund, Variable Series
Colonial International Fund for Growth, Variable Series
Colonial Strategic Income Fund, Variable Series
Colonial U.S. Stock Fund, Variable Series
Newport Tiger Fund, Variable Series
Liberty All-Star Equity Fund, Variable Series
SteinRoe Variable Investment Trust
Stein Roe Special Venture Fund, Variable Series
Stein Roe Growth Stock Fund, Variable Series
Stein Roe Balanced Fund, Variable Series
Stein Roe Mortgage Securities Fund, Variable Series
Stein Roe Money Market Fund, Variable Series
Semiannual Report
June 30, 1998
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
PRESIDENT'S LETTER
Liberty Variable Investment Trust
Stein Roe Variable Investment Trust
- --------------------------------------------------------------------------------
Dear Fellow Contract Owner:
We are pleased to present this semiannual report for the Liberty Variable
Investment Trust -- Colonial Growth & Income Fund, Variable Series; Stein Roe
Global Utilities Fund, Variable Series; Colonial International Fund for Growth,
Variable Series; Colonial U.S. Stock Fund, Variable Series; Colonial Strategic
Income Fund, Variable Series; Newport Tiger Fund, Variable Series; and Liberty
All-Star Equity Fund, Variable Series -- and the Stein Roe Variable Investment
Trust -- Stein Roe Special Venture Fund, Variable Series; Stein Roe Growth
Stock Fund, Variable Series; Stein Roe Balanced Fund, Variable Series; Stein
Roe Mortgage Securities Fund, Variable Series; and Stein Roe Money Market Fund,
Variable Series.
In the following pages, you'll find an overview of economic and market events
over the past six months, an explanation of the strategies employed by each
fund during the period, and your portfolio manager's outlook for the investment
period ahead.
Health U.S. Economy Enabled Companies To Prosper
The economic environment we have enjoyed throughout the first six months of
this year has been a healthy one for corporate America. Companies within a
variety of industries continued to prosper in a favorable climate of low
interest rates, low unemployment, almost non-existent inflation and steady
economic growth. Equity valuations soared to new heights during the period,
with much of the leadership coming from a relatively small group of U.S.
multinational companies. U.S. stock prices, as measured by the S&P 500 Index,
posted an impressive 17.7% return over the six-month period ended June 30,
1998. Unlike mutual funds, indexes are not investments and do not incur fees or
sales charges.
Global Economy Also Appears Strong
Many countries are at an earlier stage in the growth curve than the United
States, particularly in continental Europe. Companies in these markets have
started to accomplish growth as a result of a "leaner" and more disciplined
approach to running their operations. The efforts to cut costs and increase
profitability are paying off. And the local economies within these countries
have also cooperated, the combination of strong, steady earnings growth and
relatively low inflation offer the potential for some positive outcomes in the
months and years to come.
Continued Volatility Within Southeast Asia
The first half of 1998 continued to be a difficult period for Asian markets.
Volatility that initially began during the Asian currency crisis in October
1997 persisted over the past six months. Falling currency values and rising
interest rates within the region had a noticeable impact on Asian stock prices.
This helped fuel a "flight to quality," where foreign and U.S. investors alike
shifted assets out of Southeast Asia and into more stable markets. Within
Southeast Asia, the economies of the more-established Asian markets such as
China, Hong Kong and Singapore remained relatively strong, despite the turmoil
that surrounds them. However, less-developed markets within the region will
likely need more time to get back on solid ground. While there's no telling
when the environment in Southeast Asia will change, the region continues to
offer a combination of attractive long-term growth potential and low stock
prices. Investors who can withstand higher levels of volatility and maintain a
long-term perspective may be well positioned to prosper from future growth
potential within the region.
Fixed-Income Investments Remained Relatively Attractive
While the past six months were positive for fixed-income investments,
conditions varied during the period as the market's expectations about the
economy shifted. Investors focused heavily on the economic crisis in Southeast
Asia and its potential affects on the U.S. economy. Anticipation of a reduction
in export activity to the Pacific Rim induced widespread belief that the U.S.
economy would slow down. The result was a decline in interest rates and an
upward movement in bond prices. During the middle part of the period the trend
was reversed, as mild winter weather resulted in earlier-than-typical demand
for construction. Continued strength in the equity market helped generate
additional shareholder wealth, positive consumer sentiment, and ultimately,
higher levels of economic growth. By the end of the period, growth once again
settled back to more modest levels as certain measures of
<PAGE>
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PRESIDENT'S LETTER
Liberty Variable Investment Trust
Stein Roe Variable Investment Trust
- --------------------------------------------------------------------------------
industrial production declined. This, in combination with continued low
inflation, reduced investors' fears that the Federal Reserve Board would raise
rates to keep economic growth in check. In response, bond prices recovered
nicely by the end of the period.
Summary
History has shown us time and again the most important guideline for successful
investing is to withstand periods of volatility and maintain a disciplined,
long-term investment outlook. Since no one can time the markets with precision,
patient investors willing to stay the course have the potential to achieve
favorable results.
We hope you find the information in this report helpful, and we thank you for
giving us the opportunity to serve your investment needs.
Sincerely,
/s/ Richard R. Christensen
- --------------------------
Richard R. Christensen
President
August 11, 1998
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Liberty Variable Investment Trust
<S> <C>
Portfolio Managers' Discussions:
Colonial Growth and Income Fund, Variable Series ................ 1
Stein Roe Global Utilities Fund, Variable Series ................ 3
Colonial International Fund for Growth, Variable Series ......... 5
Colonial Strategic Income Fund, Variable Series ................. 7
Colonial U.S. Stock Fund, Variable Series ....................... 9
Newport Tiger Fund, Variable Series ............................. 11
Liberty All-Star Equity Fund, Variable Series ................... 13
Financial Statements:
Colonial Growth and Income Fund, Variable Series ................ 14
Stein Roe Global Utilities Fund, Variable Series ................ 21
Colonial International Fund for Growth, Variable Series ......... 26
Colonial Strategic Income Fund, Variable Series ................. 33
Colonial U.S. Stock Fund, Variable Series ....................... 40
Newport Tiger Fund, Variable Series ............................. 46
Liberty All-Star Equity Fund, Variable Series ................... 51
Notes to Financial Statements .................................... 58
</TABLE>
<PAGE>
<PAGE>
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PORTFOLIO MANAGERS' DISCUSSION
Liberty Variable Investment Trust Colonial Growth and Income Fund, Variable
Series
- --------------------------------------------------------------------------------
Dear Contract Owner:
Colonial Growth and Income Fund, Variable Series seeks primarily income
and long-term capital growth and, secondarily, preservation of capital.
Fund Performance (as of June 30, 1998)
<TABLE>
<S> <C>
Inception Date ................................ 7/1/93
Assuming reinvestment of all distributions
Six-month total return ..................... 9.97%
Net asset value per share on 6/30/98 .......... $ 16.87
Net asset value per share on 12/31/97 ......... $ 15.34
</TABLE>
Portfolio Manager's Discussion
John Lennon and Gordon Johnson are portfolio co-managers for Colonial
Growth and Income Fund, Variable Series and vice presidents of Colonial
Management Associates, Inc.
What was the investment environment like over the past six months?
The economic environment we have enjoyed this year was favorable for stock
and bond investors. With interest rates on a downward trend over the past six
months, bond prices continued their general upward climb. In the equity market,
companies within a variety of industries continue to prosper in a healthy
economic climate of low interest rates, low unemployment, almost non-existent
inflation and steady economic growth. U.S. stocks provided particularly strong
returns, with the S&P 500 Index posting a 17.7% gain over the six-month period
ended June 30, 1998. Much of the leadership came from a relatively small group
of U.S. multinational companies. While all sectors but one provided positive
gains over the six-month period, a few posted returns that were notably higher
than the overall index, including consumer cyclicals (up 32.9%), health care
(up 28.8%) and technology (up 41.6%).*
*Sector performance based on the Standard & Poor's 500 Index. Unlike mutual
funds, indexes are not investments and do not incur fees or expenses.
What was the Fund's strategy during the period?
In managing the portfolio, we continue to group our equity holdings into
three categories: value stocks, those that, in comparison to their peers,
appear reasonably priced based on a variety of measures; defensive stocks,
those that historically have shown a stable pattern of earnings growth; and
stocks that offer growth at a reasonable price. While we remain dedicated to
maintaining broad diversification across a variety of industries and sectors,
two sectors that produced favorable results for us over the last six months
include health care and financial services.
What is your outlook for the period ahead?
We feel it will be difficult for domestic equities to continue growing at
the pace they have over the last few years. However, should current economic
conditions remain relatively stable -- with low inflation, low unemployment and
low interest rates -- well-managed companies have the ability to maintain
reasonable growth in earnings. There is always the potential for a short-term
period of volatility. However, it is also our belief that, regardless of where
broad markets may head, opportunities for individual companies to grow will
always exist within a variety of industries. Current market conditions help
underscore the importance of careful security selection through a very
disciplined and time-tested investment approach.
1
<PAGE>
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PORTFOLIO MANAGERS' DISCUSSION
Liberty Variable Investment Trust Colonial Growth and Income Fund, Variable
Series
- --------------------------------------------------------------------------------
Colonial Growth & Income Fund, Variable Series vs. S&P 500 Index
Change in value of $10,000 from 7/1/93-6/30/98
<TABLE>
<CAPTION>
Average Annual Total Returns on June 30, 1998
Since Inception 1 Year 3 Years 5 Years
<S> <C> <C> <C>
17.76% 22.22% 23.21% 17.77%
</TABLE>
[line chart]
<TABLE>
<CAPTION>
Colonial
Growth & Income
Fund
Variable Series S&P 500
<S> <C> <C>
10000 10000
7/1/93 10070 9960
10530 10337
10560 10258
10680 10470
10410 10370
12/31/93 10501 10495
10856 10852
10704 10557
10339 10098
10420 10227
10339 10394
6/30/94 10116 10140
10400 10473
10785 10901
10582 10635
10572 10873
10217 10478
12/31/94 10422 10633
10536 10909
10941 11333
11180 11667
11461 12010
11793 12490
6/30/95 12115 12779
12458 13203
12645 13236
12874 13794
12884 13745
13477 14348
12/31/95 13551 14624
14078 15121
14239 15262
14229 15409
14476 15636
14748 16038
6/30/96 14715 16099
14026 15389
14468 15714
14952 16597
15275 17055
15975 18343
12/31/96 15976 17979
16502 19102
16686 19252
15907 18463
16617 19564
17681 20760
6/30/97 18540 21683
19558 23408
19135 22097
20027 23307
19432 22529
19947 23571
12/31/97 20604 23976
20658 24241
22041 25988
22592 27318
22780 27598
22323 27124
6/30/98 22659 28225
</TABLE>
[end line chart]
Past performance is no guarantee of future results. 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. The Standard & Poor's 500 Index is an unmanaged
index that tracks the performance of a selection of widely held common stocks.
Indexes are not investments, do not incur fees or expenses and are not
professionally managed.
2
<PAGE>
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PORTFOLIO MANAGERS' DISCUSSION
Liberty Variable Investment Trust Stein Roe Global Utilities Fund, Variable
Series
- --------------------------------------------------------------------------------
Dear Contract Owner:
Stein Roe Global Utilities Fund, Variable Series seeks current income and
long-term growth of capital and income.
Fund Performance (as of June 30, 1998)
<TABLE>
<S> <C>
Inception Date ................................ 7/1/93
Assuming reinvestment of all distributions
Six-month total return ..................... 10.23%
Net asset value per share on 6/30/98 .......... $ 13.14
Net asset value per share on 12/31/97 ......... $ 11.92
</TABLE>
Portfolio Manager's Discussion
Ophelia Barsketis and Deborah Jansen, senior vice presidents of the
Advisor, are portfolio co-managers of Stein Roe Global Utilities Fund, Variable
Series.
What was the investment environment like over the past six months?
The uncertainty originally triggered by the Asian currency crisis in late
1997 receded somewhat during the period. In fact, many global markets saw
significant improvement during the first six months of 1998. The U.S. stock
market and many European markets achieved double-digit returns during the
period. These markets also experienced fewer negative effects than
less-developed markets because their well-developed fiscal and monetary
policies created a "safe haven" for investors. Low or falling inflation
continued to benefit the markets, as well as slow and steady economic growth --
conditions that are favorable for utility stocks.
What was the Fund's strategy during the period?
Overall, the Fund sought to shelter shareholders from much of the negative
effects of the "Asian flu," while maintaining the ability to participate in the
growing worldwide demand for utility services. By investing more than 75% of
the Fund's assets in the United States and Europe, the Fund was able to shield
shareholders from the worst of the declines in Southeast Asia. The Fund
maintained its conservative focus, diversifying assets among a group of
well-managed utility companies offering good growth prospects. These utility
stocks represented a variety of utility sectors from a number of different
countries.
What is your outlook for the period ahead?
Looking ahead, we anticipate that worldwide utility demand will continue
to grow. Domestically, we expect that utility stock prices will continue to be
driven by deregulation and merger activity. We believe many U.S. utility stocks
are inexpensive relative to their future growth potential, and we view these as
buying candidates. Overseas, utility demand is even higher than in the United
States. As a result, we will continue to emphasize international utility stocks
as well as U.S. utility stocks that operate on a global basis. Privatization
and deregulation should continue to present new opportunities worldwide, as
should the tremendous need for basic utility services in many of the smaller,
developing nations. We continue to believe the Fund presents shareholders with
a conservative opportunity to participate in worldwide growth and economic
development.
3
<PAGE>
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PORTFOLIO MANAGERS' DISCUSSION
Liberty Variable Investment Trust Stein Roe Global Utilities Fund, Variable
Series
- --------------------------------------------------------------------------------
Stein Roe Global Utilities Fund, Variable Series vs. MSCI World ND Index
and S&P Utilities Index
Change in value of $10,000 from 7/1/93-6/30/98
<TABLE>
<CAPTION>
Average Annual Total Returns on June 30, 1998
Since Inception 1 Year 3 Years 5 Years
<S> <C> <C> <C>
12.50% 32.29% 21.45% 12.50%
</TABLE>
[line chart]
<TABLE>
<CAPTION>
Stein Roe
Global Utilities Fund, S&P MSCI
Variable Series Utilities World ND
<S> <C> <C>
10000 10000 10000
7/1/93 10110 10232 10203
10350 10727 10669
10260 10700 10469
10120 10681 10755
9670 10143 10144
12/31/93 9830 10090 10638
9667 10156 11337
9219 9582 11188
8954 9257 10703
9148 9489 11031
8761 9232 11057
6/30/94 8577 9255 11024
8883 9566 11231
8913 9536 11567
8699 9299 11260
8812 9371 11578
8771 9237 11073
12/31/94 8820 9289 11178
9353 10012 11007
9418 9993 11165
9364 9930 11701
9560 10301 12106
9995 10622 12207
6/30/95 10060 10667 12200
10136 10941 12808
10376 11164 12520
10930 11864 12882
11180 12116 12676
11387 12248 13113
12/31/95 11921 13109 13494
12148 13281 13735
11864 12761 13816
11751 12486 14043
11660 12635 14371
11682 12606 14380
6/30/96 12125 13115 14450
11682 12266 13936
11739 12552 14094
11785 12673 14642
12239 13303 14742
12625 13601 15565
12/31/96 12699 13518 15313
12984 13585 15494
13150 13471 15670
12699 13063 15357
12794 12843 15856
13233 13416 16832
6/30/97 13625 13830 17668
13850 14132 18479
13542 13896 17240
14183 14494 18174
14373 14620 17214
15619 15674 17516
12/31/97 16350 16851 17727
16076 16158 18218
16872 16730 19447
17983 17798 20265
17955 17440 20460
17695 17372 20201
6/30/98 18024 18013 20677
</TABLE>
[end line chart]
Past performance is no guarantee of future results. 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. The Morgan Stanley Capital International World
Index ND is an unmanaged index that tracks the performance of global stocks. The
Standard & Poor's Utilities Index is an unmanaged index that tracks the
performance of domestic utility stocks. Indexes are not investments, do not
incur fees or expenses and are not professionally managed.
4
<PAGE>
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PORTFOLIO MANAGERS' DISCUSSION
Liberty Variable Investment Trust Colonial International Fund for Growth,
Variable Series
- --------------------------------------------------------------------------------
Dear Contract Owner:
Colonial International Fund for Growth, Variable Series seeks long-term
capital growth by investing primarily in non-U.S. equity securities. The Fund
is non-diversified and may invest more than 5% of its total assets in the
securities of a single issuer, thereby increasing the risk of loss compared to
a diversified fund.
Fund Performance (as of June 30, 1998)
<TABLE>
<S> <C>
Inception Date ................................ 5/2/94
Assuming reinvestment of all distributions
Six-month total return ..................... 14.61%
Net asset value per share on 6/30/98 .......... $ 2.04
Net asset value per share on 12/31/97 ......... $ 1.78
</TABLE>
Portfolio Manager's Discussion
David Harris is portfolio manager of Colonial International Fund for
Growth, Variable Series and senior vice president of Stein Roe & Farnham
Incorporated. He is also an investment management principal with Stein Roe
Global Capital Management, a division of Stein Roe & Farnham Incorporated.
What was the investment environment like over the past six months?
The economic downturn originally triggered by the Asian currency crisis in
late 1997 continued in countries in Southeast Asia during the first half of
1998. Together, falling stock prices, lower currency values and high inflation
served to further depress the economies of countries throughout the region.
However, the uncertainty that had crept into many European markets in late 1997
subsided somewhat during the period. In fact, global markets saw significant
improvement during the period, posting double-digit returns in many cases.
European markets were able to experience fewer negative effects than
less-developed markets because their well-developed fiscal and monetary
policies created a "safe haven" for investors. At the end of the period, many
European markets continued to benefit from low or falling inflation, as well as
slow and steady economic growth.
What was the Fund's strategy during the period?
Based on our belief of promising future growth prospects within the
region, approximately 70% of the Fund's assets were invested in Europe at the
end of the period. The Fund's value-oriented emphasis on stocks of smaller
companies hindered performance during the early part of the period, as
investors favored large, well-known companies early in the year. However,
European markets were energized later in the period by continued economic
recovery and strong corporate earnings attributed to restructuring efforts over
the past few years. During the second part of the period, the stock prices of
many small and mid-sized companies owned by the Fund moved considerably higher.
What is your outlook for the period ahead?
Should current conditions remain fairly stable, with low or falling
inflation, strong corporate earnings and the favorable progression of European
Monetary Union (EMU), we foresee fairly strong growth potential in Europe. The
EMU will help remove trade barriers within the region. This, in turn, should
build more positive momentum across Europe by enabling companies to better
leverage their operations in a more global business environment. Companies that
have already achieved success are now in an even stronger position for future
growth. We believe that successful European companies have the potential to
grow their earnings even further in the years to come.
5
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS' DISCUSSION
Liberty Variable Investment Trust Colonial International Fund for Growth,
Variable Series
- --------------------------------------------------------------------------------
Colonial International Fund for Growth, Variable Series vs. Morgan Stanley
Capital International EAFE Index
Change in value of $10,000 from 5/2/94-6/30/98
<TABLE>
<CAPTION>
Average Annual Total Returns on June 30, 1998
Since Inception 1 Year 3 Years
<S> <C> <C>
3.73% (3.00)% 8.78%
</TABLE>
[line chart]
<TABLE>
<CAPTION>
Colonial
International
Fund for Growth, MSCI
Variable Series EAFE
<S> <C> <C>
10000 10000
5/2/94 9900 9943
6/30/94 9700 10083
9950 10180
10250 10421
9950 10093
10000 10429
9550 9928
12/30/94 9400 9990
8850 9606
8700 9579
8850 10176
9100 10559
9100 10433
6/30/95 9050 10250
9550 10888
9550 10473
9700 10677
9550 10390
9700 10679
12/29/95 9950 11110
9899 11155
9899 11193
10101 11431
10657 11763
10556 11546
6/28/96 10606 11611
10202 11272
10354 11297
10455 11597
10202 11478
10606 11935
12/31/96 10508 11781
10562 11369
10669 11555
10669 11597
10615 11658
11420 12417
6/30/97 12009 13102
12063 13314
11225 12319
11655 13010
10634 12010
10312 11887
12/31/97 10164 11991
10507 12539
11021 13344
11706 13755
11935 13864
11935 13796
6/30/98 11649 13901
</TABLE>
[end line chart]
6
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS' DISCUSSION
Liberty Variable Investment Trust Colonial Strategic Income Fund, Variable
Series
- --------------------------------------------------------------------------------
Dear Contract Owner:
Colonial Strategic Income Fund, Variable Series seeks a high level of
current income, as is consistent with prudent risk and maximizing total return,
by diversifying investments primarily in U.S. and foreign assets in lower-rated
corporate debt securities. The Fund may invest a substantial portion of its
assets in lower-rated bonds (commonly referred to as "junk bonds"), and
therefore, may not be suitable for all investors. Purchasers should carefully
assess the risks associated with an investment in the Fund.
Fund Performance (as of June 30, 1998)
<TABLE>
<S> <C>
Inception Date ................................ 7/5/94
Assuming reinvestment of all distributions
Six-month total return ..................... 3.68%
Net asset value per share on 6/30/98 .......... $ 11.56
Net asset value per share on 12/31/97 ......... $ 11.15
</TABLE>
Portfolio Manager's Discussion
Carl Ericson is portfolio manager of Colonial Strategic Income Fund,
Variable Series. Mr. Ericson is a senior vice president of Colonial Management
Associates, Inc. and director of the Taxable Fixed Income Department.
What was the investment environment like over the past six months?
Overall, conditions for bonds over the first half of the year been
relatively favorable. Interest rates have been on a downward trend. In the past
six months, low inflation and modest economic growth helped push interest rates
even lower. In turn, bond prices continued their general upward climb.
What was the Fund's strategy during the period?
High-Yield Corporate Bonds
High-yield corporate bonds continue to account for the highest percentage
of the portfolio -- approximately 38.8% at the end of the period. High-yield
corporates were also the leading performers in the portfolio, particularly
during the first part of the period. However, toward the end of the period,
this segment of the bond market did not perform as well as it had earlier in
the period. Part of the slowdown stemmed from some industry consolidation.
U.S. Government Bonds
U.S. government issues accounted for approximately 26.4% of the total
portfolio at the end of the period. The average duration of these bonds is six
years -- an intermediate time horizon that has served the Fund well,
particularly in the last quarter. In May and June, the U.S. government market
rallied strongly and the Fund was able to benefit. At the end of the period,
approximately 10% of our U.S. government holdings were in mortgage paper. These
securities can provide a cushion in the event of a decline in bond prices,
because they are not as quick to react to interest rate movements as Treasury
securities.
Foreign Bonds
Positions in Spain have performed particularly well, and the Fund recently
sold these holdings for a sizable profit. Part of the success of these issues
can be attributed to the anticipated introduction of the Euro -- the common
currency for the European Economic Community. With the entire European market
becoming more unified, yields on foreign bonds have converged closer to those
of Germany -- the strongest currency in Europe. Along with a unified currency,
the investment choices for foreign bonds will start to narrow. In response, the
Fund is monitoring the market for opportunities to develop. In addition to
positions in Spain, the portfolio also holds bonds in Latin America, Greece,
Poland, Sweden, Denmark and the United Kingdom, with no exposure to Asia.
What is your outlook for the period ahead?
Our outlook for bonds continues to be positive. The high-yield sector remains
attractive because high-yield bonds tend to perform well in a steadily growing
economy. We also anticipate a healthy environment for Treasurys. The Fund has
been able to capitalize on a favorable environment of low inflation, slow
growth and rising bond prices. We are committed to investing at least 20%, but
no more than 50%, within three bond sectors -- U.S. Treasurys, high-yield bonds
and foreign government bonds. These ranges allow us to seek out the best
performing bonds while maintaining broad diversification to help manage risk.
Currently, we plan to maintain allocations similar to where the Fund was at the
end of the period. Should the current economic and market climate change, we
will access the potential value of an adjustment to our allocations. If
warranted, we will shift assets to the fixed-income sector we believe offers a
promising combination of income and total return potential.
7
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS' DISCUSSION
Liberty Variable Investment Trust Colonial Strategic Income Fund, Variable
Series
- --------------------------------------------------------------------------------
Colonial Strategic Income Fund, Variable Series vs. Lehman Brothers
Government/Corporate Bond Index
Change in value of $10,000 from 7/31/94-6/30/98
<TABLE>
<CAPTION>
Average Annual Total Returns on June 30, 1998
Since Inception 1 Year 3 Years
<S> <C> <C>
10.43% 9.45% 9.80%
</TABLE>
[line chart]
<TABLE>
<CAPTION>
Colonial
Strategic Income Fund, Lehman Government/
Variable Series Corporate Bond Index
<S> <C> <C>
7/94 10000 10000
10050 10004
9/94 10010 9853
10050 9842
9940 9824
12/94 10029 9889
10163 10079
10408 10312
3/95 10593 10382
10788 10526
11085 10968
6/95 11136 11055
11238 11013
11238 11154
9/95 11433 11267
11587 11432
11699 11620
12/95 11865 11792
12038 11865
11940 11613
3/96 11886 11516
11940 11437
11951 11418
6/96 12027 11570
12124 11597
12264 11568
9/96 12513 11774
12707 12049
13009 12271
12/96 13031 12134
12995 12148
13090 12174
3/97 12901 12029
13066 12205
13279 12319
6/97 13468 12467
13786 12848
13692 12704
9/97 13987 12904
14011 13111
14081 13180
12/97 14218 13318
14448 13506
14486 13478
3/98 14588 13520
14652 13588
14715 13734
6/98 14741 13873
</TABLE>
[end line chart]
Past performance is no guarantee of future results. 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. 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.
8
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS' DISCUSSION
Liberty Variable Investment Trust Colonial U.S. Stock Fund, Variable Series
- --------------------------------------------------------------------------------
Dear Contract Owner:
Colonial U.S. Stock Fund, Variable Series seeks long-term capital growth
by investing primarily in large capitalization equity securities.
Fund Performance (as of June 30, 1998)
<TABLE>
<S> <C>
Inception Date ................................ 7/5/94
Assuming reinvestment of all distributions
Six-month total return ..................... 14.92%
Net asset value per share on 6/30/98 .......... $ 18.72
Net asset value per share on 12/31/97 ......... $ 16.29
</TABLE>
Portfolio Manager's Discussion
Mark Stoeckle is portfolio manager of Colonial U.S. Stock Fund, Variable
Series. Mr. Stoeckle is a vice president of Colonial Management Associates,
Inc.
What was the investment environment like over the past six months?
The economic environment we have enjoyed during the first half of the year
could not have been healthier for corporate America. Companies within a variety
of industries continue to prosper in a favorable climate of low interest rates,
low unemployment, almost non-existent inflation and steady economic growth.
Equity valuations soared to new heights during the period, with much of the
leadership coming from a relatively small group of U.S. multinational
companies. U.S. stock prices, as measured by the S&P 500 Index, posted a 17.7%
return over the six-month period ended June 30, 1998. Large-company stocks
continued to provide stronger returns in comparison to smaller company stocks.
Much of the gain in the large-cap market can be attributed to the stellar
performance of only a handful of the 500 stocks that comprise the S&P 500. The
performance of this very narrow group of stocks made it even more difficult for
equity fund managers to outperform the index, particularly if they did not hold
at least some of these stocks in their portfolios. While all sectors but one
provided positive gains over the six-month period, a few posted returns that
were notably higher than the overall index, including consumer cyclicals (up
32.9%), health care (up 28.8%) and technology (up 41.6%).*
*Sector performance based on the Standard & Poor's 500 Index. Unlike mutual
funds, indexes are not investments, do not incur fees or expenses and are not
professionally managed.
What was the Fund's strategy during the period?
The Fund's strong performance during the period. This can be attributed
mainly to two factors -- broad sector diversification and good stock selection.
Colonial's New Value[RegTM] management approach includes a mandate that we
maintain a broadly diversified portfolio and avoid making large bets in
specific industries or sectors of the economy. This enables us to reduce the
risk that any single industry adversely affects the portfolio, while providing
access to a wide array of investment opportunities. Moreover, it encourages us
to dig deeper into each industry in search of solid companies that are
attractively priced relative to their peers.
What is your outlook for the period ahead?
It would be difficult for domestic equities to continue growing at the
impressive pace they have set over the last few years. Nevertheless, our
long-term outlook remains cautious. There is always the potential for
short-term periods of volatility. However, we believe that well-managed
companies should continue to find ways to increase productivity and maintain
reasonable earnings growth rates.
Asia's economic crisis and the extent of its impact on U.S. corporate
earnings is still uncertain. We may continue to see foreign investors moving
money into U.S. blue-chip companies as part of a flight-to-quality trend. While
most large multinational companies have at least some exposure to Asian
countries, they have had six to eight months to make appropriate adjustments.
We are encouraged to see that larger companies are continuing to look for ways
to further reduce costs and increase productivity. With the help of technology,
well-seasoned management teams are focusing on what their companies do well,
while shedding unproductive divisions.
9
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS' DISCUSSION
Liberty Variable Investment Trust Colonial U.S. Stock Fund, Variable Series
- --------------------------------------------------------------------------------
Colonial U.S. Stock Fund, Variable Series vs. S&P 500 Index
Change in value of $10,000 from 7/31/94-6/30/98
<TABLE>
<CAPTION>
Average Annual Total Returns on June 30, 1998
Since Inception 1 Year 3 Years
<S> <C> <C>
25.89% 27.71% 26.65%
</TABLE>
[line chart]
<TABLE>
<CAPTION>
Colonial
U.S. Stock Fund,
Variable Series S&P 500
<S> <C> <C>
7/31/94 10000 10000
10400 10409
10195 10155
10361 10383
9990 10005
12/31/94 10175 10153
10433 10416
10849 10822
11136 11140
11364 11468
11770 11926
6/30/95 12028 12202
12444 12607
12394 12638
12810 13171
12761 13124
13246 13700
12/31/95 13197 13964
13549 14439
13816 14573
13891 14713
14403 14930
14745 15314
6/30/96 14425 15373
13731 14694
14190 15004
14884 15848
15257 16285
16346 17515
12/31/96 16079 17168
17255 18240
17243 18383
16554 17629
17436 18681
18431 19823
6/30/97 19132 20704
20658 22351
19946 21100
20975 22255
20014 21512
20828 22507
12/31/97 21261 22893
21496 23146
22984 24815
24146 26085
24133 26352
23532 25899
6/30/98 24433 26951
</TABLE>
[end line chart]
Past performance is no guarantee of future results. 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. The Standard & Poor's 500 Index is an unmanaged
index that tracks the performance of a selection of widely held common stocks.
Indexes are not investments, do not incur fees or expenses and are not
professionaly managed.
10
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS' DISCUSSION
Liberty Variable Investment Trust Newport Tiger Fund, Variable Series
- --------------------------------------------------------------------------------
Dear Contract Owner:
Newport Tiger Fund, Variable Series seeks long-term capital growth by
investing primarily in equity securities of companies located in the nine
Tigers of Asia (Hong Kong, Singapore, South Korea, Taiwan, Malaysia, Thailand,
Indonesia, China and the Philippines).
Fund Performance (as of June 30, 1998)
<TABLE>
<S> <C>
Inception Date ................................ 5/1/95
Assuming reinvestment of all distributions
Six-month total return ..................... (26.32)%
Net asset value per share on 6/30/98 .......... $ 1.26
Net asset value per share on 12/31/97 ......... $ 1.71
</TABLE>
Portfolio Manager's Discussion
Jack Mussey is president and chief executive officer of Newport Fund
Management, Inc. and portfolio co-manager of Newport Tiger Fund, Variable
Series. Tim Tuttle is managing director of Newport Fund Management and
portfolio co-manager of Newport Tiger Fund, Variable Series. While the Tiger
markets are subject to emerging market risks beyond those of more developed
countries, the Fund's management team has more than 20 years of investment
experience in the region.
What was the investment environment like over the past six months?
The first half of 1998 presented a challenging task for investment
managers seeking growth opportunities in Southeast Asia. Together, falling
stock prices and lower currency values served to further depress the economies
of countries throughout the region. While a few bright spots can be found in
some of the stronger Tiger markets, it's fair to say that some of the weaker
and less-developed Asian countries such as Malaysia, Thailand, South Korea and
Indonesia have slipped into a recession. The stronger, more-developed Tiger
markets such as Hong Kong, China and Singapore fared better than their weaker
neighbors and remain financially sound.
What was the Fund's strategy during the period?
While much of Southeast Asia continued to struggle through difficult
economic times during the period, select Tiger markets continued to offer
favorable characteristics for the long-term investor. In this environment, we
focused our efforts on identifying high-quality stocks of well-established
companies within the strongest Tiger markets. This has resulted in a highly
focused portfolio of large-company stocks from Hong Kong, Singapore and
mainland China.
What is your outlook for the period ahead?
Until the outlook for the weaker Tiger countries improves, we will likely
continue to avoid all but the strongest potential investment opportunities in
these markets. At the same time, we remain optimistic about opportunities in
Hong Kong, Singapore and China. Thus, the nature of the portfolio will continue
to reflect large, "blue-chip" stocks from these countries.
We believe that China's massive population, the largest in the world, has
the potential to stimulate substantial consumer demand. China has been able to
remain a "self-supportive" country, with low current inflation and only 5% of
its GDP coming from net exports. We believe that Hong Kong also has a healthy
foundation for future growth. As the financial capital of Asia, Hong Kong is
home to some of the regions largest and best-capitalized businesses. With the
help of declining interest rates, Hong Kong is already showing signs of
improvement. Additionally, several well-managed companies in Hong Kong continue
to generate healthy revenues despite the economic and financial uncertainty
within the region. Singapore is another Tiger market that has been able to
sidestep deep economic distress. One of Singapore's most promising prospects
for future growth lies in its ability to attract businesses seeking to set up
new factories. Currently, we believe that large "blue-chip" companies are
trading at significant discounts and remain poised for future growth. As a
result, the nature of the portfolio will continue to reflect large, "blue-chip"
stocks from the strongest Tiger countries.
11
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS' DISCUSSION
Liberty Variable Investment Trust Newport Tiger Fund, Variable Series
- --------------------------------------------------------------------------------
Newport Tiger Fund, Variable Series vs. Morgan Stanley Capital
International EAFE GDP
Change in value of $10,000 from 5/1/95-6/30/98
<TABLE>
<CAPTION>
Average Annual Total Returns on June 30, 1998
Since Inception 1 Year 3 Years
<S> <C> <C>
(12.62)% (51.57)% (15.74)%
</TABLE>
[line chart]
<TABLE>
<CAPTION>
Newport
Tiger Fund MSCI
Variable Series EAFE GDP
<S> <C> <C>
10000 10000
5/01/95 11100 9903
6/30/95 10900 9793
11200 10433
10850 9997
9/30/95 11050 10116
11000 9823
11050 10030
12/31/95 11500 10459
12661 10592
12560 10623
3/31/96 12560 10764
12509 11099
12459 10935
6/30/96 12207 11021
11551 10705
11954 10699
9/30/96 12307 10993
12207 10873
12812 11337
12/31/96 12850 11257
12748 11045
12748 11121
3/31/97 11983 11333
11779 11306
12850 11895
6/30/97 13462 12603
13666 12881
11321 11956
9/30/97 11678 12724
9026 11784
8873 11736
12/31/97 8848 11906
7554 12525
9210 13245
3/31/98 9158 13966
8382 14176
7244 14377
6/30/98 6520 14511
</TABLE>
[end line chart]
Past performance is no guarantee of future results. 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. The Morgan Stanley Capital International
Europe, Australia and Far East (MSCI EAFE) GDP Index is a broad based, unmanaged
index that tracks the performance of foreign stocks. Indexes are not
investments, do not incur fees or expenses and are not professionally managed.
12
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS' DISCUSSION
Liberty Variable Investment Trust Liberty All-Star Equity Fund, Variable Series
- --------------------------------------------------------------------------------
Dear Contract Owner:
Liberty All-Star Equity Fund, Variable Series seeks total investment
return, comprised of long-term capital appreciation and current income, through
investment primarily in a diversified portfolio of equity securities.
Fund Performance (as of June 30, 1988)
<TABLE>
<S> <C>
Inception Date ................................ 11/17/97
Assuming reinvestment of all distributions
Six-month total return ..................... 13.70%
Net asset value per share on 6/30/98 .......... $ 11.45
Net asset value per share on 12/31/97 ......... $ 10.07
</TABLE>
Portfolio Manager's Discussion
Liberty Asset Management Company ("LAMCO") is the manager of the Fund. No
one individual at LAMCO is responsible for LAMCO's investment management of the
Fund.
What is your investment strategy?
The Fund's investment program is based upon LAMCO's multi-manager concept.
LAMCO allocates the Fund's portfolio assets on an approximately equal basis
among a number of independent investment management organization's ("Portfolio
Managers") -- currently five in number -- each of which employs a different
investment style, and from time to time rebalances the portfolio among the
Portfolio Managers so as to maintain an approximately equal allocation of the
portfolio among them throughout all market cycles.
In LAMCO's opinion, the multi-manager concept provides advantages over the
use of a single manager because of the following primary factors:
(i) Most equity investment management firms consistently employ a distinct
investment "style" which causes them to emphasize stocks with particular
characteristics;
(ii) Because of changing investor preferences, any given investment style
will move into and out of market favor and will result in better investment
performance under certain market conditions but less successful performance
under other conditions;
(iii) Consequently, by allocating the Fund's portfolio on an approximately
equal basis among Portfolio Managers employing different styles, the impact of
any one such style on investment performance will be diluted, and the
investment performance of the total portfolio will be more consistent and less
volatile over the long term than if a single style were employed throughout the
entire period; and
(iv) more consistent performance at a given annual rate of return over
time produces a higher rate of return for the long term than more volatile
performance having the same average annual rate of return.
LAMCO, based on the foregoing principles and on its analysis and
evaluation of information regarding the personnel and investment styles and
performance of a universe of several hundred professional investment management
firms, has selected for appointment by the Fund a group of Portfolio Managers
representing a blending of different styles which, in its opinion, is
appropriate to the Fund's investment objective.
LAMCO continuously monitors the performance and investment styles of the
Fund's Portfolio Managers and from time to time may recommend changes of
Portfolio Managers based on factors such as changes in a Portfolio Manager's
investment style or departure by a Portfolio Manager from the investment style
for which it had been selected, a deterioration in a Portfolio Manager's
performance relative to that of other investment management firms practicing a
similar style, or adverse changes in its ownership or personnel.
The Fund's current Portfolio Managers are:
(1) Boston Partners Asset Management, L.P.
(2) J.P. Morgan Investment Management Inc.
(3) Oppenheimer Capital
(4) Westwood Management Corporation
(5) Wilke/Thompson Capital Management, Inc.
What is your market outlook?
LAMCO and the Portfolio Managers generally believe that the long-term
fundamentals for the domestic equities markets remain favorable, despite the
recent market pullback. The benign inflation environment coupled with a Federal
Reserve that is more likely to ease rather than tighten monetary policy should
continue to foster a positive climate for financial assets. More important,
especially to variable annuity investors seeking to accumulate retirement funds
over a period of years, is the long-term outlook for equities. Therefore, we
continue to believe that a style-diversified portfolio of quality equity
securities is the best core holding over the long term.
13
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Unaudited)
Liberty Variable Investment Trust Colonial Growth and Income Fund, Variable
Series / June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Country
Abbrev. Shares Value
--------- -------------- -----------
<S> <C> <C> <C>
COMMON STOCKS--90.0%
Construction--2.8%
Building Construction
Centex Corp. ....................................................... 49,200 $1,857,300
Hollandsche Beton Groep
NV .............................................................. Ne 68,500 1,424,948
KoninklijkeVolker Wessels
Stevin NV ....................................................... Ne 12,000 352,067
----------
3,634,315
----------
Finance, Insurance & Real Estate--18.8%
Depository Institutions--6.6%
Astoria Financial Corp. ............................................ 31,000 1,658,500
Bank of Montreal ................................................... Ca 17,300 954,727
Commerce Bancshares, Inc. .......................................... 2,149 104,898
First Union Corp. .................................................. 6,202 361,270
Greenpoint Financial Corp. ......................................... 85,000 3,198,125
M & T Bank Corp. ................................................... 300 166,200
National Australia Bank Ltd. Au 38,800 511,856
Toronto Dominion Bank .............................................. Ca 34,100 1,544,984
----------
8,500,560
----------
Insurance Carriers--9.2%
Allstate Corp. ..................................................... 13,100 1,199,469
American Bankers Insurance
Group, Inc. ..................................................... 34,400 2,068,300
Cigna Corp. ........................................................ 19,200 1,324,800
Mercury General Corp. .............................................. 23,600 1,520,725
Old Republic International
Corp. ........................................................... 38,100 1,116,806
Orion Capital Corp. ................................................ 2,500 139,688
St. Paul Cos., Inc. ................................................ 24,000 1,009,500
Sunamerica, Inc. ................................................... 21,600 1,240,650
Travelers Group, Inc. .............................................. 31,300 1,897,563
United Healthcare Corp. ............................................ 5,700 361,950
----------
11,879,451
----------
Nondepository Credit Institution--0.2%
Associates First Capital Corp. 4,062 312,266
----------
Security Brokers & Dealers--2.8%
A.G. Edwards, Inc. ................................................. 51,300 2,193,075
Merrill Lynch & Co., Inc. .......................................... 15,000 1,383,750
----------
3,576,825
----------
Manufacturing--37.1%
Apparel--0.7%
Gamma Holding NV ................................................... Ne 3,000 165,583
VF Corp. ........................................................... 15,000 772,500
----------
938,083
----------
Chemicals & Allied Products--8.8%
Akzo Nobel NV ADR .................................................. Ne 14,074 1,560,455
Allergan, Inc. ..................................................... 6,900 319,987
Bristol-Myers Squibb Co. ........................................... 22,800 2,620,575
Dow Chemical Co. ................................................... 15,700 1,517,994
</TABLE>
<TABLE>
<CAPTION>
Country
Abbrev. Shares Value
--------- -------------- ----------
<S> <C> <C> <C>
International Specialty
Products, Inc. (a) .............................................. 15,000 $ 279,375
Johnson & Johnson .................................................. 22,800 1,681,500
Merck & Co., Inc. .................................................. 16,200 2,166,750
Norsk Hydro A.S. ADR ............................................... No 7,100 313,287
Olin Corp. ......................................................... 22,000 917,125
----------
11,377,048
----------
Communications Equipment--0.1%
Ericsson SPA ....................................................... It 3,000 177,812
----------
Electronic Components--0.4%
SCI Systems, Inc. (a) .............................................. 14,600 549,325
----------
Fabricated Metal--1.3%
Danaher Corp. ...................................................... 8,000 293,500
Harsco Corp. ....................................................... 30,800 1,411,025
----------
1,704,525
----------
Food & Kindred Products--0.9%
Interstate Bakeries Corp. .......................................... 35,900 1,191,431
----------
Furniture & Fixtures--1.4%
Herman Miller, Inc. ................................................ 31,000 753,687
Johnson Controls, Inc. ............................................. 6,000 343,125
Masco Corp. ........................................................ 11,000 665,500
----------
1,762,312
----------
Machinery & Computer Equipment--9.2%
Black & Decker Corp. ............................................... 19,800 1,207,800
Caterpillar, Inc. .................................................. 18,200 962,325
Compaq Computer Corp. .............................................. 62,400 1,770,600
EMC Corp. (a) ...................................................... 20,000 896,250
Lexmark International
Group, Inc. (a) ................................................. 18,000 1,098,000
Storage Technology Corp. (a) 18,000 780,750
Sun Microsystems, Inc. (a) ......................................... 72,800 3,162,250
Timken Co. ......................................................... 30,000 924,375
Tyco International Ltd. ............................................ 5,800 365,400
Varco International, Inc. (a) ...................................... 38,000 752,875
----------
11,920,625
----------
Measuring & Analyzing Instruments--0.5%
Tektronix, Inc. .................................................... 17,500 619,063
----------
Miscellaneous Manufacturing--0.5%
Callaway Golf Co. .................................................. 36,200 712,687
----------
Petroleum Refining--4.7%
Amerada Hess Corp. ................................................. 17,600 955,900
Exxon Corp. ........................................................ 8,800 627,550
Mobil Corp. ........................................................ 13,000 996,125
Phillips Petroleum Co. ............................................. 34,100 1,643,194
Sun Co., Inc. ...................................................... 18,000 698,625
USX-Marathon Group ................................................. 35,800 1,228,388
----------
6,149,782
----------
Primary Metal--0.1%
Bethlehem Steel Corp. (a) .......................................... 12,000 149,250
----------
</TABLE>
See Notes to Investment Portfolio.
14
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Continued)
Liberty Variable Investment Trust Colonial Growth and Income Fund, Variable
Series / June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Country
Abbrev. Shares Value
--------- -------------- -----------
<S> <C> <C> <C>
Primary Smelting--0.8%
Phelps Dodge Corp. ................................................. 17,400 $ 995,063
-----------
Printing & Publishing--0.2%
Wallace Computer Services,
Inc. ............................................................ 12,000 285,000
Workflow Management,
Inc. (a) ........................................................ 3,838 30,944
-----------
315,944
-----------
Rubber & Plastic--1.5%
Goodyear Tire & Rubber Co. ......................................... 6,000 386,625
Illinois Tool Works, Inc. .......................................... 2,300 153,381
Premark International, Inc. ........................................ 33,000 1,064,250
Wynn's International, Inc. ......................................... 20,000 385,000
-----------
1,989,256
-----------
Tobacco Products--0.7%
Gallaher Group PLC ADR ............................................. UK 41,100 899,062
-----------
Transportation Equipment--5.3%
Cordant Technologies, Inc. ......................................... 20,000 922,500
Equipements et Composants
pour l'Industrie
Automobile ...................................................... Fr 2,050 568,082
Fleetwood Enterprises, Inc. ........................................ 13,900 556,000
Ford Motor Co. ..................................................... 20,000 1,180,000
General Dynamics Corp. ............................................. 24,400 1,134,600
General Motors Corp. ............................................... 8,300 554,544
Textron, Inc. ...................................................... 27,000 1,935,563
-----------
6,851,289
-----------
Mining & Energy--0.3%
Metal Mining
Cleveland-Cliffs, Inc. ............................................. 6,700 359,287
-----------
Retail Trade--8.8%
Apparel & Accessory Stores--0.2%
Koninklijke Bijenkorf Beheer Ne 3,000 209,739
-----------
Food Stores--2.9%
Albertson's, Inc. .................................................. 23,000 1,191,687
Kroger Corp. (a) ................................................... 24,500 1,050,437
Vedior NV .......................................................... Ne 22,400 631,925
Vendex International NV ............................................ Ne 22,700 851,981
-----------
3,726,030
-----------
General Merchandise Stores--1.8%
Family Dollar Stores, Inc. ......................................... 32,000 590,000
Kmart Corp. ........................................................ 60,000 1,155,000
Sears, Roebuck & Co. ............................................... 10,000 610,625
-----------
2,355,625
-----------
Home Furnishings & Equipment--0.9%
CompUSA, Inc. (a) .................................................. 16,500 298,031
Tandy Corp. ........................................................ 16,100 854,306
-----------
1,152,337
-----------
</TABLE>
<TABLE>
<CAPTION>
Country
Abbrev. Shares Value
--------- -------------- -----------
<S> <C> <C> <C>
Miscellaneous Retail--3.0%
Fingerhut Companies, Inc. .......................................... 37,000 $ 1,221,000
Office Depot, Inc. (a) ............................................. 57,000 1,799,063
OfficeMax, Inc. (a) ................................................ 5,700 94,050
Rite Aid Corp. ..................................................... 18,000 675,000
School Specialty, Inc. (a) ......................................... 3,198 52,367
-----------
3,841,480
-----------
Services--10.8%
Business Services--1.5%
Omnicom Group, Inc. ................................................ 38,800 1,935,150
-----------
Computer Related Services--1.4%
Aztec Technology Partners,
Inc. (a) ........................................................ 5,757 43,537
Cadence Design Systems,
Inc. (a) ........................................................ 23,300 728,125
HBO & Co. .......................................................... 28,800 1,017,000
-----------
1,788,662
-----------
Computer Software--1.4%
BMC Software, Inc. (a) ............................................. 18,000 934,875
Sterling Software, Inc. (a) ........................................ 15,000 442,500
Symantec Corp. (a) ................................................. 17,000 444,125
-----------
1,821,500
-----------
Engineering, Accounting, Research &
Management--1.5%
Corrections Corp. of
America (a) ..................................................... 15,600 366,600
Dun & Bradstreet Corp .............................................. 25,000 900,000
International-Muller NV ............................................ Ne 18,400 614,763
-----------
1,881,363
-----------
Health Services--5.0%
Healthsouth Rehabilitation
Corp. (a) ....................................................... 21,000 570,937
Lincare Holdings, Inc. (a) ......................................... 18,600 782,362
Tenet Healthcare Corp. (a) ......................................... 54,700 1,709,375
Universal Health Services,
Inc., Class B (a) ............................................... 58,500 3,414,938
-----------
6,477,612
-----------
Transportation, Communication,
Electric, Gas & Sanitary Services--10.1%
Air Transportation--1.5%
Continental Airlines, Inc.,
Class B (a) ..................................................... 15,000 913,125
US Airways Group, Inc. (a) ......................................... 12,700 1,006,475
-----------
1,919,600
-----------
Electric, Gas & Sanitary Services--0.6%
Sempra Energy (a) .................................................. 30,000 834,375
-----------
</TABLE>
See Notes to Investment Portfolio.
15
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Continued)
Liberty Variable Investment Trust Colonial Growth and Income Fund, Variable
Series / June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Country
Abbrev. Shares Value
--------- -------- -----------
<S> <C> <C> <C>
Electric Services--2.5%
Boston Edison Co. .................................................... 19,000 $ 788,500
Edison International ................................................. 20,000 591,250
Energy East Corp. .................................................... 10,000 416,250
NIPSCO Industries, Inc. .............................................. 32,800 918,400
Public Service Enterprise
Group, Inc. ....................................................... 16,000 551,000
-----------
3,265,400
-----------
Gas Services--0.3%
Gas y Electricidad SA ................................................ Sp 4,550 345,667
-----------
Motor Freight & Warehousing--0.7%
CNF Transportation ................................................... 21,000 892,500
-----------
Sanitary Services--0.6%
Severn Trent Water PLC ............................................... UK 23,750 415,685
United Utilities PLC ................................................. UK 25,100 366,042
-----------
781,727
-----------
Telecommunication--3.8%
AT&T Corp. ........................................................... 24,000 1,371,000
Ameritech Corp. ...................................................... 39,400 1,768,075
Bell Atlantic Corp. .................................................. 10,000 456,250
BellSouth Corp. ...................................................... 9,000 604,125
US West Communications
Group ............................................................. 16,000 752,000
-----------
4,951,450
-----------
Transportation Services--0.0%
Navigant International,
Inc. (a) .......................................................... 2,878 24,463
-----------
Water Transportation--0.1%
Tidewater, Inc. ...................................................... 4,000 132,000
-----------
Wholesale Trade--1.3%
Durable Goods--1.2%
Arrow Electronics, Inc. (a) .......................................... 27,000 587,250
Beers NV ............................................................. Ne 7,235 427,728
CHS Electronics, Inc. (a) ............................................ 13,000 232,375
Marshall Industries (a) .............................................. 10,300 280,675
-----------
1,528,028
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
----------- ------------
<S> <C> <C>
Nondurable Goods--0.1%
U.S. Office Products Co. (a) ......... 7,197 $ 140,337
------------
Total Common Stocks
(cost of $81,671,217)............................ 116,570,306
------------
Par
----------
U.S. GOVERNMENT & AGENCY
OBLIGATIONS--4.0%
U.S. Government Agency
Obligations--4.0%
Federal Home Loan Mortgage
Corp., 6.500% 01/01/2026 .......... $1,522,421 1,518,127
------------
Federal National Mortgage
Association:
6.000% 12/01/2008 ................... 1,567,523 1,550,375
6.500%12/01/2023 .................... 2,151,049 2,142,294
------------
3,692,669
------------
Total U.S. Government & Agency
Obligations
(cost of $5,141,954) ............................ 5,210,796
------------
Total Investments--94.0%
(cost of $86,813,171)............................ 121,781,102
------------
SHORT-TERM OBLIGATIONS--5.0%
Repurchases agreement with
ABN AMRO Chicago Corp.,
dated 06/30/98, due 07/01/98
at 6.100%, collateralized by
U.S. Treasury notes & bill with
various maturities to 2027,
market value $6,689,838
(repurchase proceeds
$6,549,109)........................ 6,548,000 6,548,000
------------
Other Assets & Liabilities, Net--1.0% 1,324,454
------------
Net Assets--100.0% ................................. $129,653,556
============
</TABLE>
Notes to Investment Portfolio:
(a) Non-income producing.
(b) The cost for federal income tax purposes of total investments and short-
term obligations is identical. Gross unrealized appreciation and
depreciation at June 30, 1998 is as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 37,388,482
Gross unrealized depreciation (2,420,551)
------------
Net unrealized appreciation $ 34,967,931
============
</TABLE>
See Notes to Investment Portfolio.
16
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Continued)
Liberty Variable Investment Trust Colonial Growth and Income Fund, Variable
Series / June 30, 1998
- --------------------------------------------------------------------------------
Summary of Securities by Country
<TABLE>
<CAPTION>
% of Total
Country Securities
Summary of Securities by Country Abbrev. Value at Value
- ---------------------------------- --------- --------------- -----------
<S> <C> <C> <C>
United States .................. $109,444,709 89.9%
Netherlands .................... Ne 6,239,189 5.1
Canada ......................... Ca 2,499,711 2.1
United Kingdom ................. UK 1,680,789 1.4
France ......................... Fr 568,082 0.5
Australia ...................... Au 511,856 0.4
Spain .......................... Sp 345,667 0.3
Norway ......................... No 313,287 0.2
Italy .......................... It 177,812 0.1
------------ -----
$121,781,102 100.0%
============ =====
</TABLE>
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
<TABLE>
<CAPTION>
Acronym Name
- --------- ----------------------------
<S> <C>
ADR American Depositary Receipt
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
Liberty Variable Investment Trust Colonial Growth and Income Fund, Variable
Series / June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments, at market value (Identified cost $86,813,171) ...................... $ 121,781,102
Short-term obligations .......................................................... 6,548,000
Cash (including foreign currencies) ............................................. 31,664
Receivable for investments sold ................................................. 1,204,621
Dividends, tax reclaims and interest receivable ................................. 181,327
Other assets .................................................................... 3,411
-------------
Total assets .................................................................. 129,750,105
-------------
Liabilities:
Management fee payable .......................................................... 67,724
Bookkeeping fee payable ......................................................... 4,493
Transfer agent fee payable ...................................................... 625
Accrued expenses payable ........................................................ 23,707
-------------
Total liabilities ............................................................. 96,549
-------------
Net assets ...................................................................... $ 129,653,556
=============
Net assets represented by:
Paid-in capital ................................................................ $ 91,881,482
Accumulated undistributed net investment income ................................ 806,373
Accumulated net realized gains on investments and foreign currency transactions 1,997,512
Net unrealized appreciation on investments and foreign currency transactions ... 34,968,189
-------------
Total net assets applicable to shares of beneficial interest outstanding ........ $ 129,653,556
=============
Shares of beneficial interest outstanding ....................................... 7,685,969
=============
Net asset value per share ....................................................... $16.87
======
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (Unaudited)
For the Six Months ended June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment income:
Dividends (net of nonrebatable foreign taxes withheld at source of $40,437) $ 832,379
Interest income ................................................................... 455,899
-----------
Total investment income ......................................................... 1,288,278
-----------
Expenses:
Management fee ................................................................... 385,017
Bookkeeping fee .................................................................. 25,688
Transfer agent fee ............................................................... 3,750
Audit fee ........................................................................ 9,672
Printing expense ................................................................. 6,421
Trustees' expense ................................................................ 4,355
Custodian fee .................................................................... 6,598
Legal fee ........................................................................ 2,951
Amortization of organization expense ............................................. 2,663
Miscellaneous expense ............................................................ 5,903
-----------
Total expenses .................................................................. 453,018
-----------
Net investment income ............................................................. 835,260
Realized and unrealized gains (losses) on investments and foreign currency transactions:
Net realized gains on investments ................................................ 1,964,361
Net realized losses on foreign currency transactions ............................. (4,083)
Unrealized appreciation on investments and foreign currency transactions ......... 8,137,740
-----------
Net increase in net assets resulting from operations .............................. $10,933,278
===========
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Liberty Variable Investment Trust Colonial Growth and Income Fund, Variable
Series
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
Six Months Year Ended
Ended December 31,
June 30, 1998 1997
---------------- ---------------
<S> <C> <C>
Operations:
Net investment income .......................................................... $ 835,260 $ 1,653,377
Net realized gains on investments .............................................. 1,964,361 14,229,486
Net realized losses on foreign currency transactions ........................... (4,083) (5,695)
Unrealized appreciation on investments and foreign currency transactions ....... 8,137,740 7,164,338
------------ -------------
Net increase in net assets resulting from operations ........................... 10,933,278 23,041,506
------------ -------------
Distributions declared from:
Net investment income .......................................................... -- (1,645,577)
In excess of net investment income ............................................. -- (30,753)
Net realized gains ............................................................. -- (14,188,931)
------------ -------------
Total distributions ............................................................ -- (15,865,261)
------------ -------------
Fund share transactions:
Proceeds from fund shares sold ................................................. 15,694,617 30,092,306
Cost of fund shares repurchased ................................................ (3,883,681) (39,471,310)
Distributions reinvested ....................................................... -- 15,865,261
------------ -------------
Net increase in net assets resulting from fund share transactions ............... 11,810,936 6,486,257
------------ -------------
Total increase in net assets .................................................... 22,744,214 13,662,502
Net assets:
Beginning of period ............................................................ 106,909,342 93,246,840
------------ -------------
End of period .................................................................. $129,653,556 $ 106,909,342
============ =============
Accumulated undistributed (overdistributed) net investment income included in
ending net assets .............................................................. $ 806,373 $ (31,448)
============ =============
Analysis of changes in shares of beneficial interest:
Shares sold .................................................................... 951,971 1,875,504
Shares redeemed ................................................................ (235,041) (2,624,840)
Distributions reinvested ....................................................... -- 1,039,663
------------ -------------
Net increase .................................................................... 716,930 290,327
============ =============
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Liberty Variable Investment Trust Colonial Growth and Income Fund, Variable
Series
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
Six Months
Ended
June 30,
------------
1998
------------
<S> <C>
Per share operating performance:
Net asset value, beginning of period ......... $ 15.34
-------
Net investment income (a) .................... 0.11
Net realized and unrealized gains (losses)
on investments and foreign currency
transactions ................................ 1.42
-------
Total from investment operations ............. 1.53
-------
Less distributions from:
Dividends from net investment income --
In excess of net investment income .......... --
Dividends from net realized gains ........... --
--------
Total distributions .......................... --
--------
Net asset value, end of period ............... $ 16.87
========
Total return:
Total investment return (b) ................. 9.97%**
Ratios/supplemental data:
Net assets, end of period (000) .............. $129,654
Ratio of net expenses to average net
assets ...................................... 0.76%*(e)
Ratio of net investment income to
average net assets .......................... 1.39%*(e)
Portfolio turnover ratio ..................... 12%**
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------------------
1997 1996 1995 1994 1993***
---------------- ---------------- ---------------- ----------- --------------------
<S> <C> <C> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of period ......... $ 13.96 $ 12.60 $ 10.03 $ 10.36 $10.00
-------- ------- ------- ------- ------
Net investment income (a) .................... 0.28 0.28 0.29 0.26 0.09
Net realized and unrealized gains (losses)
on investments and foreign currency
transactions ................................ 3.75 1.98 2.72 (0.34) 0.41
-------- ------- ------- ------- ------
Total from investment operations ............. 4.03 2.26 3.01 (0.08) 0.50
-------- ------- ------- ------- ------
Less distributions from:
Dividends from net investment income (0.27) (0.28) (0.25) (0.25) (0.11)
In excess of net investment income .......... (0.01) -- -- -- --
Dividends from net realized gains ........... (2.37) (0.62) (0.19) -- (0.03)
-------- ------- ------- ------- -------
Total distributions .......................... (2.65) (0.90) (0.44) (0.25) (0.14)
-------- ------- ------- ------- -------
Net asset value, end of period ............... $ 15.34 $ 13.96 $ 12.60 $ 10.03 $10.36
======== ======= ======= ======= =======
Total return:
Total investment return (b) ................. 28.97% 17.89% 30.03% (0.76)% 5.01%**(c)
Ratios/supplemental data:
Net assets, end of period (000) .............. $106,909 $93,247 $71,070 $48,052 $29,298
Ratio of net expenses to average net
assets ...................................... 0.79%(e) 0.79%(e) 0.81%(e) 0.87% 1.00%*(d)
Ratio of net investment income to
average net assets .......................... 1.77%(e) 2.02%(e) 2.51%(e) 2.82% 2.32%*(c)
Portfolio turnover ratio ..................... 60% 24% 79% 55% 8%**
</TABLE>
* Annualized
** Not Annualized.
*** For the period from the commencement of operations July 1, 1993 to
December 31, 1993.
(a) Per share data was calculated using average shares outstanding during the
period.
(b) Total return at net asset value assuming all distributions reinvested.
(c) 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, this ratio would have been 1.23%
(annualized) for the period ended December 31, 1993.
(e) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
See Notes to Financial Statements.
20
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Unaudited)
Liberty Variable Investment Trust Stein Roe Global Utilities Fund, Variable
Series / June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Country
Abbrev. Shares Value
--------- ----------- ----------
<S> <C> <C> <C>
COMMON STOCKS--87.9%
Construction--2.4%
Heavy Construction--
Non-Building Construction
Vivendi ........................................................ Fr 7,100 $1,511,934
----------
Finance, Insurance & Real Estate--1.5%
Real Estate Investment Trusts
Liberty Property Trust ......................................... 37,300 953,481
----------
Manufacturing--13.2%
Communications Equipment--8.7%
Lucent Technologies, Inc. ...................................... 20,200 1,680,388
Nokia Corp., ADR ............................................... Fi 23,000 1,668,938
Portugal Telecom SA ............................................ Pt 22,500 1,191,094
Tellabs, Inc. (a) .............................................. 10,800 773,550
----------
5,313,970
----------
Machinery & Computer Equipment--2.1%
Alstom (a) ..................................................... Fr 17,900 587,563
Security Capital Industrial
Trust ....................................................... 27,800 695,000
----------
1,282,563
----------
Petroleum Refining--1.3%
YPF Sociedad Anonima
ADR ......................................................... Ar 27,000 811,688
----------
Tobacco Products--1.1%
Grupo Carso SA de CV,
Series A1 ................................................... Mx 167,000 690,867
----------
Transportation, Communication, Electric,
Gas & Sanitary Services--68.9%
Electric Services--25.3%
AES Corp. (a) .................................................. 23,900 1,256,244
Cia Energetica de Minas
Gerais ...................................................... Br 20,681,713 643,761
CMS Energy Corp. ............................................... 27,600 1,214,400
Edison International ........................................... 38,300 1,132,244
Electric De Portugal--ADR ...................................... Pt 12,500 575,781
FPL Group, Inc. ................................................ 20,500 1,291,500
Hong Kong Electric
Holdings Ltd., ADR .......................................... HK 278,500 862,786
Iberdrola SA ................................................... Sp 82,200 1,333,581
National Power PLC ADR ......................................... UK 23,700 873,938
New Century Energies, Inc. ..................................... 23,800 1,081,413
NIPSCO Industries, Inc. ........................................ 44,500 1,246,000
Pinnacle West Capital Corp. 28,200 1,269,000
Scottish Power PLC ADR ......................................... UK 30,000 1,057,500
Sierra Pacific Resources ....................................... 16,000 581,000
Texas Utilities Co. ............................................ 26,300 1,094,738
----------
15,513,886
----------
</TABLE>
<TABLE>
<CAPTION>
Country
Abbrev. Shares Value
--------- ------------- ----------
<S> <C> <C> <C>
Gas Services--10.2%
Columbia Energy Group .......................................... 20,250 $1,126,406
Kinder Morgan Energy
Partners, L.P. .............................................. 29,600 1,069,300
MCN Energy Group , Inc. ........................................ 27,400 686,713
Questar Corp. .................................................. 53,000 1,040,125
UGI Corp. ...................................................... 40,100 997,488
Williams Companies, Inc. ....................................... 39,100 1,319,625
----------
6,239,657
----------
Sanitary Services--4.5%
American Water Works
Co., Inc. ................................................... 36,300 1,125,300
Companhia de Saneamento
Basico do Estado de Sao
Paulo ....................................................... Br 2,400,000 288,444
USA Waste Services, Inc. (a) 26,700 1,318,313
----------
2,732,057
----------
Telecommunications--26.5%
Airtouch Communications,
Inc. (a) .................................................... 27,100 1,583,656
Ameritech Corp. ................................................ 26,000 1,166,750
AT&T Corp. ..................................................... 19,500 1,113,937
COLT Telecom Group
ADR (a) ..................................................... UK 12,200 1,994,700
Cable & Wireless PLC ADR ....................................... UK 18,500 682,188
Nortel Inversora SA (a) ........................................ Ar 18,600 1,006,724
SBC Communications, Inc. ....................................... 29,200 1,168,000
Smartone
Telecommunications
Holdings Ltd. ............................................... HK 245,000 597,715
Sprint Corp. ................................................... 18,300 1,290,150
Telecom Italia S.p.A. .......................................... It 208,900 1,013,908
Telecomunicacoes
Brasileiras SA .............................................. Br 7,600 829,825
Telefonica de Espana ........................................... Sp 9,300 1,293,281
Telefonos de Mexico SA ......................................... Mx 23,000 1,105,437
WorldCom, Inc. (a) ............................................. 28,400 1,375,625
----------
16,221,896
----------
Transportation Services--2.4%
VIAG AG ........................................................ G 2,100 1,442,588
----------
Wholesale Trade--1.9%
Nondurable Goods
VEBA AG ........................................................ G 16,900 1,134,300
----------
Total Common Stocks
(cost of $43,329,555) .............................................................
53,848,887
----------
</TABLE>
See Notes to Investment Portfolio.
21
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Continued)
Liberty Variable Investment Trust Stein Roe Global Utilities Fund, Variable
Series / June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Country
Abbrev. Shares Value
--------- ---------- ------------
<S> <C> <C> <C>
PREFERRED STOCK--2.4%
Transportation, Communication, Electric,
Gas & Sanitary Services--2.4%
Communications
Ericsson LM, 4.250%
(cost of $953,422)......... Sw 189,500 $ 1,444,938
-----------
Par
-------
BOND & NOTES--4.3%
CORPORATE FIXED-INCOME BONDS--2.3%
Transportation, Communication, Electric,
Gas & Sanitary Services--2.3%
Electric Services
Hydro-Quebec (cost of
$1,362,761) 8.050%
07/07/24 .................. Ca $1,150,000 1,393,627
-----------
Foreign Government & Agency Obligations--2.0%
Financiera Energetica
Nacional S.A. (cost of
$1,231,500) 9.000%
11/08/99 .................. Co 1,200,000 1,212,000
-----------
Total Investments--94.6%
(cost of $46,877,238) ........................... 57,899,452
-----------
</TABLE>
<TABLE>
<CAPTION>
Par Value
----------- ------------
<S> <C> <C>
SHORT-TERM OBLIGATIONS--4.7%
Repurchase agreement with ABN
AMRO Chicago Corp., dated
06/30/98, due 07/01/98 at
6.100%, collateralized by U.S.
Treasury notes & bill with
various maturities to 2027,
market value $2,933,190
(repurchase proceeds
$2,871,486)....................... $2,871,000 $ 2,871,000
-----------
Other Assets & Liabilities, Net--0.7% ............ 461,472
-----------
Net Assets--100.0% ............................... $61,231,924
===========
</TABLE>
Notes to Investment Portfolio:
(a) Non-income producing.
(b) The cost for federal income tax purposes is $46,879,581. Gross unrealized
appreciation and depreciation at June 30, 1998 is as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 12,632,617
Gross unrealized depreciation (1,612,746)
------------
Net unrealized appreciation $ 11,019,871
============
</TABLE>
Summary of Securities by Country
<TABLE>
<CAPTION>
% of Total
Country Securities
Summary of Securities by Country Abbrev. Value at Value
- ---------------------------------- --------- -------------- -----------
<S> <C> <C> <C>
United States .................. $30,650,346 52.9%
United Kingdom ................. UK 4,608,326 8.0
Spain .......................... Sp 2,626,862 4.5
Germany ........................ G 2,576,888 4.5
France ......................... Fr 2,099,497 3.6
Argentina ...................... Ar 1,818,412 3.1
Mexico ......................... Mx 1,796,304 3.1
Portugal ....................... Pt 1,766,875 3.1
Brazil ......................... Br 1,762,030 3.0
Finland ........................ Fi 1,668,938 2.9
Hong Kong ...................... HK 1,460,501 2.5
Sweden ......................... Sw 1,444,938 2.5
Canada ......................... Ca 1,393,627 2.4
Columbia ....................... Co 1,212,000 2.1
Italy .......................... It 1,013,908 1.8
----------- -----
$57,899,452 100.0%
=========== =====
</TABLE>
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
<TABLE>
<CAPTION>
Acronym Name
- --------- ----------------------------
<S> <C>
ADR American Depositary Receipt
</TABLE>
See Notes to Financial Statements.
22
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
Liberty Variable Investment Trust Stein Roe Global Utilities Fund, Variable
Series / June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments, at market value (Identified cost $46,877,238) ...................... $57,899,452
Short-term obligations .......................................................... 2,871,000
Cash ............................................................................ 489
Dividends, tax reclaims and interest receivable ................................. 227,252
Receivable for investments sold ................................................. 209,801
Receivable for fund shares sold ................................................. 92,844
Other assets .................................................................... 2,793
-----------
Total assets .................................................................. 61,303,631
-----------
Liabilities:
Payable for fund shares repurchased ............................................. 280
Management fee payable .......................................................... 32,058
Bookkeeping fee payable ......................................................... 2,543
Transfer agent fee payable ...................................................... 625
Accrued expenses payable ........................................................ 36,201
-----------
Total liabilities ............................................................. 71,707
-----------
Net assets ...................................................................... $61,231,924
===========
Net assets represented by:
Paid-in capital ................................................................ $48,556,112
Accumulated undistributed net investment income ................................ 593,181
Accumulated net realized gains on investments and foreign currency transactions 1,060,918
Net unrealized appreciation on investments and foreign currency transactions ... 11,021,713
-----------
Total net assets applicable to shares of beneficial interest outstanding ........ $61,231,924
===========
Shares of beneficial interest outstanding ....................................... 4,659,622
===========
Net asset value per share ....................................................... $13.14
======
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (Unaudited)
For the Six Months ended June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment income:
Dividends .......................................................................... $ 748,924
Interest income .................................................................... 131,835
----------
Total investment income .......................................................... 880,759
----------
Expenses:
Management fee .................................................................... 186,258
Bookkeeping fee ................................................................... 14,864
Transfer agent fee ................................................................ 3,750
Audit fee ......................................................................... 9,806
Printing expense .................................................................. 2,560
Trustees' fees .................................................................... 2,582
Custodian fee ..................................................................... 3,062
Legal fee ......................................................................... 2,714
Amortization of organization expense .............................................. 2,733
Miscellaneous expense ............................................................. 6,937
----------
Total expenses ................................................................... 235,266
----------
Net investment income .............................................................. 645,493
Realized and unrealized gains (losses) on investments and foreign currency transactions:
Net realized gains on investments ................................................. 535,077
Net realized losses on foreign currency transactions .............................. (3,489)
Unrealized appreciation on investments and foreign currency transactions 4,393,333
----------
Net increase in net assets resulting from operations ............................... $5,570,414
==========
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Liberty Variable Investment Trust Stein Roe Global Utilities Fund, Variable
Series
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
Six Months Year Ended
Ended December 31,
June 30, 1998 1997
--------------- ---------------
<S> <C> <C>
Operations:
Net investment income .......................................................... $ 645,493 $ 1,894,428
Net realized gains on investments .............................................. 535,077 10,703,205
Net realized losses on foreign currency transactions ........................... (3,489) (42,539)
Unrealized appreciation (depreciation) on investments and foreign currency
transactions .................................................................. 4,393,333 (100,383)
------------ -------------
Net increase in net assets resulting from operations ........................... 5,570,414 12,454,711
------------ -------------
Distributions declared from:
Net investment income .......................................................... -- (1,882,751)
Net realized gains ............................................................. -- (5,469,889)
------------ -------------
Total distributions ............................................................. -- (7,352,640)
------------ -------------
Fund share transactions:
Proceeds from fund shares sold ................................................. 4,356,825 6,189,301
Cost of fund shares repurchased ................................................ (3,298,328) (11,947,796)
Distributions reinvested ....................................................... -- 7,352,640
------------ -------------
Net increase in net assets resulting from fund share transactions ............... 1,058,497 1,594,145
------------ -------------
Total increase in net assets .................................................... 6,628,911 6,696,216
Net assets:
Beginning of period ............................................................ 54,603,013 47,906,797
------------ -------------
End of period .................................................................. $ 61,231,924 $ 54,603,013
============ =============
Accumulated undistributed (overdistributed) net investment income included in
ending net assets .............................................................. $ 593,181 $ (47,338)
============ =============
Analysis of changes in shares of beneficial interest:
Shares sold .................................................................... 341,392 528,994
Shares redeemed ................................................................ (261,780) (1,042,449)
Distributions reinvested ....................................................... -- 617,350
------------ -------------
Net increase .................................................................... 79,612 103,895
============ =============
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Liberty Variable Investment Trust Stein Roe Global Utilities Fund, Variable
Series
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
Six Months
Ended
June 30,
------------
1998
------------
<S> <C>
Per share operating performance:
Net asset value, beginning of period ......... $11.92
------
Net investment income (a) .................... 0.14
Net realized and unrealized gains (losses)
on investments and foreign currency
transactions ................................ 1.08
------
Total from investment operations ............. 1.22
------
Less distributions from:
Dividends from net investment income --
Dividends from net realized gains ........... --
-------
Total distributions .......................... --
-------
Net asset value, end of period ............... $13.14
=======
Total return:
Total investment return (b) ................. 10.23%**
Ratios/supplemental data:
Net assets, end of period (000) .............. $61,232
Ratio of net expenses to average net
assets ...................................... 0.81%*(e)
Ratio of net investment income to
average net assets .......................... 2.24%*(e)
Portfolio turnover ratio ..................... 24%**
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------
1997 1996 1995 1994
---------------- ---------------- ---------------- -------------
<S> <C> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of period ......... $ 10.70 $ 10.50 $ 8.11 $ 9.65
------- ------- ------- -------
Net investment income (a) .................... 0.46 0.46 0.46 0.54
Net realized and unrealized gains (losses)
on investments and foreign currency
transactions ................................ 2.62 0.23 2.39 (1.53)
------- ------- ------- -------
Total from investment operations ............. 3.08 0.69 2.85 (0.99)
------- ------- ------- -------
Less distributions from:
Dividends from net investment income (0.48) (0.49) (0.46) (0.55)
Dividends from net realized gains ........... (1.38) -- -- --
------- ------- ------- -------
Total distributions .......................... (1.86) (0.49) (0.46) (0.55)
------- ------- ------- -------
Net asset value, end of period ............... $ 11.92 $ 10.70 $ 10.50 $ 8.11
======= ======= ======= =======
Total return:
Total investment return (b) ................. 28.75% 6.53% 35.15% (10.27)%
Ratios/supplemental data:
Net assets, end of period (000) .............. $54,603 $47,907 $51,597 $38,156
Ratio of net expenses to average net
assets ...................................... 0.83%(e) 0.81%(e) 0.83%(e) 0.86%
Ratio of net investment income to
average net assets .......................... 3.96%(e) 4.36%(e) 4.98%(e) 5.80%
Portfolio turnover ratio ..................... 89% 14% 18% 16%
<CAPTION>
Year Ended December 31,
-----------------------
1993***
----------------------
<S> <C>
Per share operating performance:
Net asset value, beginning of period ......... $10.00
------
Net investment income (a) .................... 0.18
Net realized and unrealized gains (losses)
on investments and foreign currency
transactions ................................ (0.35)
--------
Total from investment operations ............. (0.17)
--------
Less distributions from:
Dividends from net investment income (0.18)
Dividends from net realized gains ........... --
--------
Total distributions .......................... (0.18)
--------
Net asset value, end of period ............... $ 9.65
========
Total return:
Total investment return (b) ................. (1.70)%**(c)
Ratios/supplemental data:
Net assets, end of period (000) .............. $ 54,441
Ratio of net expenses to average net
assets ...................................... 1.00%*(d)
Ratio of net investment income to
average net assets .......................... 5.10%*(c)
Portfolio turnover ratio ..................... 2%**
</TABLE>
* Annualized
** Not Annualized
*** For the period from the commencement of operations July 1, 1993 to
December 31, 1993.
(a) Per share data was calculated using average shares outstanding during the
period.
(b) Total return at net asset value assuming all distributions reinvested.
(c) Computed giving effect to Manager's expense limitation undertaking.
(d) 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.
(e) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
See Notes to Financial Statements.
25
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Unaudited)
Liberty Variable Investment Trust Colonial International Fund for Growth,
Variable Series / June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Country
Abbrev. Shares Value
--------- ------------ ---------
<S> <C> <C> <C>
COMMON STOCKS--90.6%
Agriculture, Forestry & Fishing--0.0%
Agricultural Services
PT Chareon Pokphand
Indonesia ...................................................... In 162,500 $ 2,745
---------
Construction--2.5%
Non-Building Construction
Kaneshita Construction ............................................ Ja 21,000 109,134
Vivendi ........................................................... Fr 4,696 1,000,006
---------
1,109,140
---------
Finance, Insurance & Real Estate--22.1%
Depository Institutions--13.9%
Banco Latinoamericano
de Exportaciones, SA (a) .......................................... Pt 12,400 381,300
Banco Popolare di Milano
(BPM) .......................................................... It 107,600 857,181
Banque Nationale de Paris Fr 16,800 1,368,940
Deutsche Bank AG .................................................. G 17,000 1,434,845
Generale Banque ................................................... Be 1,455 1,077,944
Generale Banque VVPR
STRIP .......................................................... Be 105 3
Merita Ltd., Class A .............................................. Fi 160,700 1,058,584
Siam Commercial Bank .............................................. Th 48,000 15,355
---------
6,194,152
---------
Financial Services--0.1%
Industrial Finance Corp. of
Thailand ....................................................... Th 170,700 35,192
---------
Holding Companies--2.1%
Fortis Amev NV .................................................... Ne 15,902 929,193
---------
Insurance Carriers--0.9%
Reinsurance Australia Corp. Au 166,208 424,322
---------
Investment Companies--1.7%
Fleming Russian Securities
Fund Ltd. (a) .................................................. Ru 9,900 79,200
Japan OTC Equity Fund,
Inc. (a) ....................................................... Ja 250 84,500
World Equity Benchmark
Share--Japan (a) ............................................... Ja 60,000 588,600
---------
752,300
---------
Non-Depository Credit Institution--1.0%
Promise Co., Ltd. ................................................. Ja 10,800 443,878
---------
Real Estate--1.8%
Asticus AB ........................................................ Sw 27,550 303,164
Diligentia AB ..................................................... Sw 52,900 456,434
IOI Properties Berhad ............................................. Ma 62,000 32,967
PT Kawasan Industri
Jababeka ....................................................... In 300,000 5,575
---------
798,140
---------
</TABLE>
<TABLE>
<CAPTION>
Country
Abbrev. Shares Value
--------- ----------- ---------
<S> <C> <C> <C>
Security Brokers & Dealers--0.6%
Kokusai Securities Co., Ltd. Ja 27,000 $ 266,249
---------
Manufacturing--44.0%
Apparel--0.9%
Tokyo Style ....................................................... Ja 40,000 391,564
---------
Chemicals & Allied Products--8.1%
Henkel KGAA ....................................................... G 1,067 88,405
Henkel KGAA Preferred
Shares ......................................................... G 12,033 1,187,993
Indian Petrochemicals
Corp., Ltd. GDR (a) ............................................ In 15,800 45,820
Kemira Oy ......................................................... Fi 50,000 517,706
Norsk Hydro AS .................................................... No 11,200 493,209
Novartis .......................................................... Sz 322 534,602
Reliance Industries Ltd.
GDR (a) ........................................................ In 12,000 78,300
SmithKline Beecham PLC ............................................ UK 53,826 654,121
---------
3,600,156
---------
Communications Equipment--4.9%
Koor Industries Ltd. (a) .......................................... Is 10,000 233,750
Matsushaita Electric
Industrial Co. ................................................. Ja 54,000 866,768
Portugal Telecom SA (a) ........................................... Pt 7,300 386,444
Racal Electronics PLC ............................................. UK 125,300 708,384
---------
2,195,346
---------
Electronic Components--5.8%
Alcatel Alsthom ................................................... Fr 5,255 1,067,036
Murata Manufacturing
Co., Ltd. ...................................................... Ja 15,000 483,697
Royal Philips Electronics
N.V. (a) ....................................................... Ne 9,400 798,413
Samsung Electronics ............................................... Ko 13,400 161,388
Samsung Electronics Co. ........................................... Ko 6 186
Samsung Electronics
GDS (a) ........................................................ Ko 1,269 20,145
Samsung Electronics Old
Preferred GDS (a) .............................................. Ko 10,064 85,544
---------
2,616,409
---------
Fabricated Metal--1.4%
Friedrich Grohe AG ................................................ G 1,800 607,301
---------
Food & Kindred Products--0.4%
Perdigao S.A.X. ................................................... Br 70,000,000 87,761
Vitasoy International
Holdings Ltd. .................................................. HK 291,000 95,785
---------
183,546
---------
</TABLE>
See Notes to Investment Portfolio.
26
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Continued)
Liberty Variable Investment Trust Colonial International Fund for Growth,
Variable Series / June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Country
Abbrev. Shares Value
--------- ----------- ----------
<S> <C> <C> <C>
Household Appliances--0.9%
Moulinex ........................................................ Fr 15,300 $ 395,970
---------
Machinery & Computer Equipment--7.5%
AGIV-AG fuer Industrie
und Verkehrswesen ............................................ G 22,400 619,469
Bucher Holding .................................................. Sz 487 637,481
Canon, Inc. ..................................................... Ja 26,000 589,506
Hitachi Ltd. .................................................... Ja 58,000 377,816
Mannesmann AG ................................................... G 11,000 1,128,595
---------
3,352,867
---------
Measuring & Analyzing Instruments--0.5%
Celsis International PLC ........................................ UK 138,670 78,628
Orbotech, Ltd. (a) .............................................. Is 4,200 152,775
---------
231,403
---------
Paper Products--5.5%
Enso Oy, Series R ............................................... Fi 72,000 773,010
Metro Pacific Corp. ............................................. Ph 1,992,340 45,389
Metsa-Serla Oy, B Shares ........................................ Fi 80,600 777,341
Royal Koninklijke PTT
Nederland NV ................................................. Ne 13,254 509,156
TNT Post Group Nv ............................................... Ne 13,254 338,137
---------
2,443,033
---------
Petroleum Refining--3.5%
Compagnie Francaise de
Petroleum, Total B
Shares ....................................................... Fr 7,089 919,085
YPF Sociedad Anonima
ADR .......................................................... Ar 21,000 631,312
---------
1,550,397
---------
Primary Metal--2.7%
Avesta Sheffield AB ............................................. Sw 59,400 293,398
Billiton PLC .................................................... UK 241,000 488,328
Ssab Svenskt AB, Series B ....................................... Sw 28,263 424,104
---------
1,205,830
---------
Rubber & Plastic--1.5%
Michelin Class B ................................................ Fr 11,700 673,534
---------
Stone, Clay, Glass & Concrete--0.4%
Companion Building
Materials, Ltd. .............................................. HK 1,911,840 27,146
N.V. Koninklijke Sphinx
Gustavsberg .................................................. Ne 14,046 170,213
---------
197,359
---------
Textile Mill Products--0.0%
PT Evershine Textile
Industry ..................................................... In 427,396 8,664
---------
Mining & Energy--1.8%
Coal Mining--0.2%
Samchully Co. ................................................... Ko 6,273 77,840
---------
</TABLE>
<TABLE>
<CAPTION>
Country
Abbrev. Shares Value
--------- ----------- ----------
<S> <C> <C> <C>
Crude Petroleum & Natural Gas--1.2%
Saga Petroleum A.S. ............................................. No 36,400 $ 560,431
---------
Miscellaneous Metal--0.4%
Southern Peru Cooper
Co. (a) ...................................................... Pe 13,000 169,000
---------
Retail Trade--3.5%
Auto Dealers & Gas Stations--1.7%
Inchcape PLC .................................................... UK 236,788 758,191
---------
General Merchandise Stores--1.8%
Globex Utilidades SA ............................................ Br 15,600 134,884
Ito-Yokado Co., Ltd. ............................................ Ja 14,000 658,029
PT Matahari Putra Prima ......................................... In 858,000 8,696
---------
801,609
---------
Services--2.0%
Computer Software
Ing C. Olivetti & SPA ........................................... It 597,380 884,341
---------
Transportation, Communication,
Electric, Gas & Sanitary Services --12.5%
Air Transportation--0.6%
Helikopter Service
Group A/S .................................................... No 28,600 291,071
---------
Gas Services--2.6%
BG PLC .......................................................... UK 144,376 836,070
Centrica PLC .................................................... UK 187,000 314,979
---------
1,151,049
---------
Sanitary Services--0.3%
Companhia de Saneamento
Basico do Estado
de Sao Paulo ................................................. Br 1,070,000 128,598
---------
Communications--7.7%
Nippon Telegraph &
Telephone Corp. .............................................. Ja 90 744,980
SK Telecom Co., Ltd. ............................................ Ko 133 61,632
Tele-Communications
International, Inc.,
Series A (a) ................................................. $ 35,700 716,231
Telecom Argentina S.A.
ADR (a) ...................................................... Ar 7,400 220,612
Telecom Italia .................................................. It 134,775 654,138
Telecom Italia SPA .............................................. It 75,000 546,594
Telecomunicacoes
Brasileiras SA ADR (a) ....................................... Br 4,700 513,181
---------
3,457,368
---------
Water Transportation--1.3%
Danzas Holding AG ............................................... Sz 1,775 476,369
Hong Kong Ferry Holdings
Co. .......................................................... HK 153,000 102,698
---------
579,067
---------
</TABLE>
See Notes to Investment Portfolio.
27
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Continued)
Liberty Variable Investment Trust Colonial International Fund for Growth,
Variable Series / June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Country
Abbrev. Shares Value
--------- ---------- -----------
<S> <C> <C> <C>
Wholesale Trade--2.2%
Durable Goods
Biora AB ADR (a) .................. Sw 8,200 $ 217,300
Brierley Investments Ltd. ......... NZ 713,000 354,800
Powerscreen International
PLC ............................ UK 141,190 216,626
Yamazen Corp. ..................... Ja 116,000 202,059
----------
990,785
----------
Total Common Stocks
(cost of $37,518,322).................................. 40,458,040
----------
Rights--0.0% (a)
Manufacturing--0.0%
Electronic & Electrical Equipment
Samsung Electronics
Common Rights
(cost of $0).................... Ko 33 (b)
-----------
WARRANTS--0.0% (a)
Construction--0.0%
Non-Building Construction
Vivendi ........................... Fr 2,755 5,408
-----------
Finance, Insurance & Real Estate--0.0%
Depository Institutions
Siam Commercial Bank (c) Th 12,000 (b)
-----------
Total Warrants
(cost of $1,864) ...................................... 5,408
-----------
Total Investments--90.6%
(cost of $37,520,186) (d) ............................. 40,463,448
-----------
</TABLE>
<TABLE>
<CAPTION>
Par Value
---------- -----------
<S> <C> <C>
SHORT-TERM OBLIGATIONS--7.2%
Repurchase agreement with ABN
AMRO Chicago Corp., dated
06/30/98, due 07/01/98 at
6.100%, collateralized by U.S.
Treasury notes & bill with
various maturities to 2027,
market value $3,273,403
(repurchase proceeds
$3,204,543)................... $3,204,000 $ 3,204,000
-----------
Other Assets & Liabilities, Net--2.2% ....... 978,755
-----------
Net Assets--100.0% .......................... $44,646,203
===========
</TABLE>
Notes to Investment Portfolio:
(a) Non-income producing.
(b) Rounds to less than one.
(c) Represents fair value as determined in good faith under the direction of
the Trustees.
(d) The cost for federal income tax purposes is $37,761,853. Gross unrealized
appreciation and depreciation at June 30, 1998 is as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 9,080,539
Gross unrealized depreciation (6,378,944)
------------
Net unrealized appreciation $ 2,701,595
============
</TABLE>
See Notes to Investment Portfolio.
28
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Continued)
Liberty Variable Investment Trust Colonial International Fund for Growth,
Variable Series / June 30, 1998
- --------------------------------------------------------------------------------
Summary of Securities by Country
<TABLE>
<CAPTION>
% of Total
Country Securities
Summary of Securities by Country Abbrev. Value at Value
- ---------------------------------- --------- ------------- -----------
<S> <C> <C> <C>
Japan .......................... Ja $ 5,806,780 14.3%
France ......................... Fr 5,429,979 13.4
Germany ........................ G 5,066,608 12.5
United Kingdom ................. UK 4,055,327 10.0
Finland ........................ Fi 3,126,641 7.7
Italy .......................... It 2,942,254 7.3
Netherlands .................... Ne 2,745,112 6.8
Sweden ......................... Sw 1,694,400 4.2
Switzerland .................... Sz 1,648,452 4.1
Norway ......................... No 1,344,711 3.3
Belgium ........................ Be 1,077,947 2.7
Brazil ......................... Br 864,424 2.1
Argentina ...................... Ar 851,924 2.1
Portugal ....................... Pt 767,744 1.9
United States .................. $ 716,231 1.8
Australia ...................... Au 424,322 1.0
Korea .......................... Ko 406,735 1.0
Israel ......................... Is 386,525 1.0
New Zealand .................... NZ 354,800 0.9
Hong Kong ...................... HK 225,629 0.6
Peru ........................... Pe 169,000 0.4
Indonesia ...................... In 149,800 0.4
Russia ......................... Ru 79,200 0.2
Thailand ....................... Th 50,547 0.1
Philippines .................... Ph 45,389 0.1
Malaysia ....................... Ma 32,967 0.1
----------- -----
$40,463,448 100.0%
=========== =====
</TABLE>
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
<TABLE>
<CAPTION>
Acronym Name
- ------- ------------------------------------------
<S> <C>
ADR American Depositary Receipt
GDR Global Depositary Receipt
GDS Global Depositary Shares
STRIP Separately Traded Receipt of Interest and
Principal
</TABLE>
See Notes to Financial Statements.
29
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
Liberty Variable Investment Trust Colonial International Fund for Growth,
Variable Series / June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments, at market value (Identified cost $37,520,186) ....................... $ 40,463,448
Short-term obligations ........................................................... 3,204,000
Cash (including foreign currencies) .............................................. 914,593
Receivable for fund shares sold .................................................. 1,036,320
Receivable for investments sold .................................................. 93,006
Dividends, tax reclaims and interest receivable .................................. 90,267
Unamortized organization expenses ................................................ 3,609
Other assets ..................................................................... 17,691
------------
Total assets ................................................................... 45,822,934
------------
Liabilities:
Payable for investments purchased ................................................ 1,126,526
Payable for fund shares repurchased .............................................. 352
Management fee payable ........................................................... 31,432
Bookkeeping fee payable .......................................................... 2,250
Transfer agent fee payable ....................................................... 625
Accrued expenses payable ......................................................... 15,546
------------
Total liabilities .............................................................. 1,176,731
------------
Net assets ....................................................................... $ 44,646,203
============
Net assets represented by:
Paid-in capital ................................................................. $ 42,832,168
Accumulated undistributed net investment income ................................. 139,806
Accumulated net realized losses on investments and foreign currency transactions (1,261,709)
Net unrealized appreciation on investments and foreign currency transactions .... 2,935,938
------------
Total net assets applicable to outstanding shares of beneficial interest ......... $ 44,646,203
============
Shares of beneficial interest outstanding ........................................ 21,890,285
============
Net asset value per share ........................................................ $ 2.04
============
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (Unaudited)
For the Six Months ended June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment income:
Dividends (net of nonrebatable foreign taxes withheld at source of $71,230) ...... $ 477,346
Interest income .................................................................. 85,856
----------
Total investment income ........................................................ 563,202
----------
Expenses:
Management fee .................................................................. 162,206
Bookkeeping fee ................................................................. 13,500
Transfer agent fee .............................................................. 3,750
Audit fee ....................................................................... 10,739
Printing expense ................................................................ 1,678
Trustees' expense ............................................................... 1,834
Custodian fee ................................................................... 22,611
Legal fee ....................................................................... 1,517
Amortization of organization expense ............................................ 2,141
Miscellaneous expense ........................................................... 4,924
----------
Total expenses ................................................................. 224,900
----------
Net investment income ............................................................ 338,302
Realized and unrealized gains (losses) on investments and foreign currency transactions:
Net realized losses on investments .............................................. (920,521)
Net realized losses on foreign currency transactions ............................ (22,914)
Unrealized appreciation on investments and foreign currency transactions ........ 4,751,563
----------
Net increase in net assets resulting from operations ............................. $4,146,430
==========
</TABLE>
See Notes to Financial Statements.
30
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Liberty Variable Investment Trust Colonial International Fund for Growth,
Variable Series
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
Six Months Year Ended
Ended December 31,
June 30, 1998 1997
--------------- ---------------
<S> <C> <C>
Operations:
Net investment income .......................................................... $ 338,302 $ 247,637
Net realized gains (losses) on investments ..................................... (920,521) 1,240,608
Net realized losses on foreign currency transactions ........................... (22,914) (60,375)
Change in unrealized appreciation (depreciation) on investments and foreign
currency transactions .......................................................... 4,751,563 (2,415,992)
------------ -------------
Net increase (decrease) in net assets resulting from operations ................ 4,146,430 (988,122)
------------ -------------
Distributions declared from:
Net investment income .......................................................... -- (247,637)
In excess of net investment income ............................................. -- (352,525)
Net realized gains ............................................................. -- (1,215,847)
------------ -------------
Total distributions ............................................................ -- (1,816,009)
------------ -------------
Fund share transactions:
Proceeds from fund shares sold ................................................. 14,639,616 20,868,051
Cost of fund shares repurchased ................................................ (4,739,656) (15,873,163)
Distributions reinvested ....................................................... -- 1,816,009
------------ -------------
Net increase in net assets resulting from fund share transactions ............... 9,899,960 6,810,897
------------ -------------
Total increase in net assets .................................................... 14,046,390 4,006,766
Net assets:
Beginning of period ............................................................ 30,599,813 26,593,047
------------ -------------
End of period .................................................................. $ 44,646,203 $ 30,599,813
------------ -------------
Accumulated undistributed (overdistributed) net investment income included in
ending net assets .............................................................. $ 139,806 $ (171,584)
============ =============
Analysis of changes in shares of beneficial interest:
Shares sold .................................................................... 7,260,141 10,248,160
Shares redeemed ................................................................ (2,595,792) (7,607,101)
Distributions reinvested ....................................................... -- 987,446
------------ -------------
Net increase .................................................................... 4,664,349 3,628,505
============ =============
</TABLE>
See Notes to Financial Statements.
31
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Liberty Variable Investment Trust Colonial International Fund for Growth,
Variable Series
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
Six Months
Ended
June 30,
------------
1998
------------
<S> <C>
Per share operating performance:
Net asset value, beginning of period ......................... $ 1.78
------
Net investment income (a) .................................... 0.02
Net realized and unrealized gains (losses) on
investments and foreign currency transactions ............... 0.24
------
Total from investment operations ............................. 0.26
------
Less distributions from:
Dividends from net investment income ........................ --
In excess of net investment income .......................... --
Dividends from net realized gains ........................... --
-------
Total distributions ......................................... --
-------
Net asset value, end of period ............................... $ 2.04
=======
Total return:
Total investment return (b) ................................. 14.61%**
Ratios/supplemental data:
Net assets, end of period (000) .............................. $44,646
Ratio of net expenses to average net assets .................. 1.23%*(c)
Ratio of net investment income to average net assets ......... 1.86%*(c)
Portfolio turnover ratio ..................................... 10%**
<CAPTION>
Period
Ended
Year Ended December 31, December 31,
------------------------------------------------ --------------
1997 1996 1995 1994***
-------------- ---------------- ---------------- --------------
<S> <C> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of period ......................... $ 1.96 $ 1.97 $ 1.88 $ 2.00
------- ------- ------- -------
Net investment income (a) .................................... 0.02 0.02 0.01 --
Net realized and unrealized gains (losses) on
investments and foreign currency transactions ............... (0.08) 0.09 0.10 (0.12)
------- ------- ------- --------
Total from investment operations ............................. (0.06) 0.11 0.11 (0.12)
------- ------- ------- --------
Less distributions from:
Dividends from net investment income ........................ (0.02) -- (0.02) --
In excess of net investment income .......................... (0.02) -- -- --
Dividends from net realized gains ........................... (0.08) (0.12) -- --
------- ------- ------- -------
Total distributions ......................................... (0.12) (0.12) (0.02) --
------- ------- ------- -------
Net asset value, end of period ............................... $ 1.78 $ 1.96 $ 1.97 $ 1.88
======= ======= ======= =======
Total return:
Total investment return (b) ................................. (3.27)% 5.61% 5.85% (6.00)%**
Ratios/supplemental data:
Net assets, end of period (000) .............................. $30,600 $26,593 $22,764 $19,146
Ratio of net expenses to average net assets .................. 1.34%(c) 1.40%(c) 1.40%(c) 1.74%*
Ratio of net investment income to average net assets ......... 0.82%(c) 0.84%(c) 0.75%(c) 0.13%*
Portfolio turnover ratio ..................................... 28% 115% 40% 31%**
</TABLE>
* Annualized
** Not Annualized
*** For the period from the commencement of operations May 2, 1994 to December
31, 1994.
(a) Per share data was calculated using average shares outstanding during the
period.
(b) Total return at net asset value assuming all distributions reinvested.
(c) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
See Notes to Financial Statements.
32
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
Liberty Variable Investment Trust Colonial Strategic Income Fund, Variable
Series / June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
--------- -----------
<S> <C> <C>
BONDS & NOTES--90.9%
CORPORATE FIXED-INCOME BONDS & NOTES--39.3%
Construction--1.2%
Building Construction
Falcon Building Products, Inc.,
stepped coupon (10.500%
06/15/02) (a) 06/15/07 ............. $ 500,000 $ 332,500
Nortek, Inc., 9.875% 03/01/04 ......... 500,000 512,500
USG Corp., 9.250% 09/15/01 ............ 250,000 268,873
-----------
1,113,873
-----------
Manufacturing--15.5%
Chemicals & Allied Products--2.0%
Agricultural Minerals Co., L.P.,
10.750% 09/30/03 ................... 200,000 213,750
LaRoche Industries, Inc., 9.500%
09/15/07 ........................... 500,000 485,000
Sterling Chemicals, Inc., 11.250%
04/01/07 ........................... 600,000 594,000
Trans-Resources, 10.750% 03/15/08 ..... 500,000 516,250
-----------
1,809,000
-----------
Fabricated Metal--1.5%
Euramax International, PLC.,
11.250% 10/01/06 (b) ............... 250,000 270,000
Renco Metals, Inc., 11.500%
07/01/03 ........................... 500,000 535,000
U.S. Can Corp., 10.125% 10/15/06 ...... 500,000 518,750
-----------
1,323,750
-----------
Lumber & Wood Products--0.3%
Triangle Pacific Corp., 10.500%
08/01/03 ........................... 250,000 260,000
-----------
Machinery & Computer Equipment--1.4%
IMO Industries, Inc., 11.750%
05/01/06 ........................... 500,000 562,500
Numatics, Inc., 9.625% 04/01/08 (c) 650,000 656,500
-----------
1,219,000
-----------
Miscellaneous Manufacturing--1.2%
AEI Holding Co., 10.000%
11/15/07 (c) ....................... 500,000 498,750
JTM Industries, Inc., 10.000%
04/15/08 ........................... 580,000 588,700
-----------
1,087,450
-----------
Paper Products--1.9%
Repap New Brunswick, Inc.,
10.625% 04/15/05 ................... 670,000 676,700
Riverwood International Corp.,
10.625% 08/01/07 ................... 500,000 520,000
Stone Container Corp., 10.750%
10/01/02 ........................... 500,000 530,625
-----------
1,727,325
-----------
Par Value
--- -----
Primary Metal--4.1%
Algoma Steel, Inc., 12.375%
07/15/05 ........................... $ 500,000 $ 560,000
Bayou Steel Corp., 9.500%
05/15/08 ........................... 500,000 495,000
Kaiser Aluminum & Chemical
Corp., 10.875% 10/15/06 ............ 1,000,000 1,080,000
Keystone Consolidated Industries,
Inc., 9.625% 08/01/07 .............. 500,000 513,125
WCI Steel, Inc., 10.000% 12/01/04 ..... 500,000 515,000
WHX Corp., 10.500% 04/15/05 ........... 500,000 507,500
-----------
3,670,625
-----------
Printing & Publishing--1.2%
American Lawyer Media, Inc.,
9.750% 12/15/07 (c) ................ 500,000 518,750
Hollinger International Publishing,
Inc., 9.250% 03/15/07 .............. 500,000 522,500
-----------
1,041,250
-----------
Transportation Equipment--1.9%
Collins & Aikman Products Co.,
11.500% 04/15/06 ................... 500,000 556,875
Johnstown America Industries,
Inc., 11.750% 08/15/05 ............. 500,000 553,750
LDM Technologies, Inc., 10.750%
01/15/07 ........................... 600,000 624,000
-----------
1,734,625
-----------
Mining & Energy--1.7%
Crude Petroleum & Natural Gas--0.3%
Ferrellgas Finance Corp., L.P.,
10.000% 08/01/01 ................... 250,000 261,250
-----------
Oil & Gas Extraction--1.4%
Magnum Hunter Resources, Inc.
10.000% 06/01/07 ................... 1,000,000 1,025,000
Nuevo Energy Co., 9.500%
04/15/06 ........................... 250,000 260,000
-----------
1,285,000
-----------
Retail Trade--1.0%
Food Stores
Pathmark Stores, Inc., 9.625%
05/01/03 ........................... 500,000 506,250
stepped coupon, (10.750%
11/01/99) (a) 11/01/03 ............. 500,000 421,250
-----------
927,500
-----------
Services--3.5%
Amusement & Recreation--0.6%
Regal Cinemas, 9.500%
06/01/08 (c) ....................... 500,000 505,000
-----------
Business Services--0.6%
UNISYS Corp., 11.750% 10/15/04 ........ 500,000 576,875
-----------
</TABLE>
See Notes to Investment Portfolio.
33
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Continued)
Liberty Variable Investment Trust Colonial Strategic Income Fund, Variable
Series / June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
--------- -----------
<S> <C> <C>
Hotels, Camps & Lodging--1.6%
Eldorado Resorts, LLC, 10.500%
08/15/06 ........................... $ 500,000 $ 552,500
HMH Properties, Inc., 9.500%
05/15/05 ........................... 250,000 272,500
Horseshoe Gaming, LLC, 9.375%
06/15/07 ........................... 600,000 639,000
-----------
1,464,000
-----------
Other Services--0.7%
Borg-Warner Security Corp.,
9.625% 03/15/07 .................... 600,000 672,000
-----------
Transportation, Communication,
Electric, Gas & Sanitary Services--15.9%
Air Transportation--1.0%
U.S. Air, Inc., Pass Through
Certificates, 10.375% 03/01/13 ..... 500,000 566,250
United Airlines, Inc., 9.200%
03/22/08 ........................... 258,567 295,868
-----------
862,118
-----------
Broadcasting--2.2%
Allbritton Communications Co.,
9.750% 11/30/07 .................... 500,000 550,000
Fox Family Worldwide, Inc.,
stepped coupon, (10.250%
11/01/02) (a) 11/01/07 ............. 500,000 325,000
NWCG Holding Corp., (d)
06/15/99 ........................... 425,000 400,461
Young Broadcasting Corp.,
11.750% 11/15/04 ................... 650,000 715,000
-----------
1,990,461
-----------
Cable--3.1%
Comcast UK Cable Partners Ltd.,
stepped coupon, (11.200%
11/15/00) (a) 11/15/07 ............. 500,000 417,500
Diamond Cable Co., stepped
coupon, (10.750% 02/15/02) (a)
02/15/07 (b) ....................... 500,000 367,500
Echostar Communications Corp.,
stepped coupon, (12.875%
06/01/99) (a) 06/01/04 ............. 500,000 486,875
Marcus Cable Co., L.P., stepped
coupon, (14.250% 06/15/00) (a)
12/15/05 ........................... 600,000 558,000
Northland Cable, 10.250%
11/15/07 ........................... 500,000 535,000
Telewest Communication PLC,
stepped coupon, (11.000%
10/01/00) (a) 10/01/07 (b) ......... 500,000 412,500
-----------
2,777,375
-----------
Electric Services--0.2%
Par Value
----- -------
California Energy Co., Inc., 9.500%
09/15/06 ........................... $ 150,000 $ 161,813
-----------
Gas Services--0.5%
California Energy Co., Inc., 9.875%
06/30/03 ........................... 400,000 433,000
-----------
Pipelines--0.4%
Falcon Holding Group L.P.,
stepped coupon, (9.285%
04/15/03) (a) 04/15/10 (c) ......... 500,000 317,500
-----------
Sanitary Services--0.6%
Allied Waste North America, Inc.,
10.250% 12/01/06 ................... 500,000 548,125
-----------
Telecommunication--7.9%
Adelphia Communications Corp.,
9.875% 03/01/07 .................... 500,000 541,250
Clearnet Communications, Inc.,
stepped coupon, (14.750%
12/15/00) (a) 12/15/05 (e) ......... 500,000 420,000
Comcast Cellular Communications,
Inc., 9.500% 05/01/07 .............. 500,000 522,500
GST USA, Inc., stepped coupon,
(13.875% 12/15/00) (a) 12/15/05 500,000 407,500
Hyperion Telecommunications,
Inc., stepped coupon, (13.000%
04/15/01) (a) 04/15/03 (c) ......... 500,000 372,500
ICG Holding, Inc., stepped
coupon, (13.500% 09/15/00) (a)
09/15/05 ........................... 500,000 424,375
Intermedia Communications, Inc.,
stepped coupon, (11.250%
07/15/02) (a) 07/15/07 ............. 500,000 365,000
McLeodUSA, Inc., 8.375% 03/15/08 ...... 500,000 498,750
Metrocall, Inc., 10.375% 10/01/07 ..... 500,000 515,000
Nextel Communications, Inc.,
stepped coupon, (9.750%
10/31/02) (a) 10/31/07 ............. 500,000 325,000
Nextlink Communications, Inc.,
stepped coupon, (9.450%
04/15/03) (a) 04/15/08 (c) ......... 500,000 306,250
Orion Network Systems, Inc.,
stepped coupon, (12.500%
01/15/02) (a) 01/15/07 ............. 500,000 381,250
Price Communications Wire,
9.125% 12/15/06 (c) ................ 500,000 500,000
Sprint Spectrum, L.P., stepped
coupon, (12.500% 08/15/01) (a)
08/15/06 ........................... 850,000 735,250
Teleport Communications Group,
Inc., stepped coupon, (11.125%
07/01/98) (a) 07/01/07 ............. 1,000,000 858,750
-----------
7,173,375
-----------
</TABLE>
See Notes to Investment Portfolio.
34
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Continued)
Liberty Variable Investment Trust Colonial Strategic Income Fund, Variable
Series / June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
--------- -----------
<S> <C> <C>
Wholesale Trade--0.5%
Nondurable Goods
AmeriServ Food Co., 10.125%
07/15/07 ........................... $ 500,000 $ 514,375
-----------
Total Corporate Fixed-Income
Bonds & Notes
(cost of $34,740,167) ................................ 35,456,665
-----------
U.S. Government & Agency Obligations--26.9%
U.S. Treasury Bonds:
8.750% 05/15/17 ...................... 5,496,000 7,401,573
11.625% 11/15/04 ..................... 4,294,000 5,678,128
-----------
13,079,701
-----------
U.S. Treasury Notes, 11.875%
11/15/03 (f) ....................... 8,689,000 11,197,949
-----------
Total U.S. Government & Agency Obligations
(cost of $23,486,099) ................................ 24,277,650
-----------
</TABLE>
<TABLE>
<CAPTION>
Country
Abbrev. Value
--------- ---------
<S> <C> <C> <C>
Foreign Government & Agency Obligations--24.3%
Argentina Global Bonds,
11.375% 01/30/17 (g) ......... 780,000 828,750
Government of Sweden,
10.250% 05/05/03 ............. SK 13,500,000 2,094,770
Hellenic Republic:
8.600% 03/26/08 ................ GD 246,000,000 849,793
8.900% 03/21/04 ................ GD 306,000,000 1,016,886
Kingdom of Denmark,
8.000% 03/15/06 .............. DK 4,900,000 850,578
Mexican Global Bonds:
9.750% 02/06/01 (h) ............ 545,000 567,481
11.375% 09/15/16 (h) ........... 1,210,000 1,346,125
Poland Non-U.S. Global
Registered Bond, 6.688%
10/27/24 (i) ................. 638,000 626,436
Republic of Argentina,
11.250% 04/10/06 (j) ......... DM 975,000 612,071
Republic of Brazil, 10.125%
05/15/27 (k) ................. 1,700,000 1,464,125
Republic of Poland (Brady),
Past Due Interest, stepped
coupon, (5.00% 10/27/98)
4.000% 10/27/14 (l) .......... 1,327,000 1,197,618
Russian Ministry of
Finance:
9.375% 03/31/05 (c)(m) ......... DM 1,440,000 649,115
10.000% 06/26/07 ............... 790,000 602,375
</TABLE>
<TABLE>
<CAPTION>
Country
Abbrev. Par Value
--------- ---------- ---------
<S> <C> <C> <C>
Treasury Corp. Victoria:
10.250% 11/15/06 ......................... A$ $2,280,000 $1,827,125
12.500% 10/15/03 ......................... A$ 771,000 626,340
United Kingdom Treasury:
9.000% 08/06/12 .......................... UK 620,000 1,349,417
9.500% 04/18/05 .......................... UK 860,000 1,698,657
10.000% 09/08/03 ......................... UK 1,115,000 2,156,422
United Mexican States,
10.375% 01/29/03 (n) ................... DM 720,000 444,027
Western Australia
Treasury Corp., 8.000%
10/15/07 ............................... A$ 1,592,000 1,136,075
----------
Foreign Government & Agency Obligations
(cost of $22,408,043) .............................................. 21,944,186
----------
Corporate Convertible Bonds--0.3%
Mining & Energy
Oil & Gas Extraction
HS Resources, Inc.,
(cost of $281,406) 9.250%
11/15/06 ............................................. 275,000 277,750
----------
Non-Agency Mortgage Backed Securities--0.1%
MDC Mortgage Funding Corp.,
CMO, (cost of $115,426)
8.85% 03/20/18 ...................................... 111,471 112,481
----------
Total Bonds & Notes
(cost of $81,031,141) ............................................ 82,068,732
----------
PREFERRED STOCKS--2.0%
Transportation, Communication, Electric,
Gas & Sanitary Services
Cable
CSC Holdings Ltd.:
11.125% Series PIK .................................... 1,585 182,656
11.750% Series PIK .................................... 3,708 433,813
----------
616,469
----------
Time Warner, Inc., 10.25%
Preferred, Series M ................................. 1,064 1,182,370
----------
Total Preferred Stocks
(cost of $1,800,120) ............................................. 1,798,839
----------
Total Investments--92.9%
(cost of $82,831,261) (o) ........................................ 83,867,571
----------
</TABLE>
See Notes to Investment Portfolio.
35
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Continued)
Liberty Variable Investment Trust Colonial Strategic Income Fund, Variable
Series / June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
---------- ------------
<S> <C> <C>
SHORT-TERM OBLIGATIONS--8.2%
Repurchase agreement with ABN
AMRO Chicago Corp., dated
6/30/98, due 7/01/98 at
6.100%, collateralized by U.S.
Treasury notes & bill with
various maturities to 2027,
market value $7,563,359
(repurchase proceeds
$7,404,254) .................. $7,403,000 $ 7,403,000
-----------
Foreign Currency Contracts--0.0% (p) .......... (41,822)
Other Assets & Liabilities--(1.1)% ............ (968,636)
-----------
Net Assets--100.0% ............................ $90,260,113
===========
</TABLE>
Notes to Investment Portfolio:
(a) Currently zero coupon. Shown parenthetically is the interest rate to be paid
and the date the Fund will begin accruing this rate.
(b) This is a British security. Par amount is stated in U.S. dollars.
(c) 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 June 30, 1998,
the value of these securities amounted to $4,324,365 or 4.8% of net assets.
(d) Zero coupon bond.
(e) This is a Canadian security. Par amount is stated in U.S. dollars.
(f) This security, or a portion thereof, with a total market value of
$10,324,960 is being used to collateralize the forward currency contracts
shown below.
(g) This is an Argentinean security. Par amount is stated in U.S. dollars.
(h) This is a Mexican security. Par amount is stated in U.S. dollars.
(i) This is a Polish security. Par amount is stated in U.S. dollars. Interest
rate shown is a floating rate coupon which changes every six months.
(j) This is an Argentinean security. Par amount is stated in German
Deutschemarks.
(k) This is a Brazilian security. Par amount is stated in U.S. dollars.
(l) This is a Polish security. Shown parenthetically is the interest rate to be
paid and the date the Fund will begin accruing this rate.
(m) This is a Russian security. Par amount is stated in German Deutschemarks.
(n) This is a Mexican security. Par amount is stated in German Deutschemarks.
(o) Cost for federal income tax purposes is $82,858,451. Gross unrealized
appreciation (depreciation) at June 30, 1998 is as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 2,826,852
Gross unrealized depreciation $ (1,817,732)
------------
Net unrealized appreciation $ 1,009,120
============
</TABLE>
(p) As of June 30, 1998, the Fund had entered into the following forward
currency exchange contracts:
<TABLE>
<CAPTION>
Appreciation
Contracts Settlement (Depreciation)
to Deliver In Exchange For Date (U.S. $)
- ------------------- ------------------- ------------ ---------------
<S> <C> <C> <C>
UK 2,391,000 US$ 3,995,606 07/23/1998 $ 13,156
AD 5,857,000 US$ 3,606,035 08/04/1998 (23,431)
DK 3,510,000 US$ 503,226 07/14/1998 (6,663)
US$ 517,666 DK 3,510,000 07/14/1998 (7,778)
SK 8,212,000 US$ 1,031,247 07/09/1998 4,047
US$ 1,031,247 SK 3,800,000 07/09/1998 (21,153)
---------
$ (41,822)
=========
</TABLE>
Summary of Securities by Currency
<TABLE>
<CAPTION>
Currency Value % of Total
---------- -------------- -----------
<S> <C> <C> <C>
United States ................... $60,453,385 72.1%
United Kingdom .................. UK 6,254,496 7.5
Australia ....................... A$ 3,589,540 4.3
Mexico .......................... 2,357,633 2.8
Sweden .......................... SK 2,094,770 2.5
Greece .......................... GD 1,866,679 2.2
Poland .......................... 1,824,054 2.2
Argentina ....................... 1,440,821 1.7
Brazil .......................... 1,464,125 1.7
Russia .......................... 1,251,490 1.5
Denmark ......................... DK 850,578 1.0
Canada .......................... 420,000 0.5
----------- -----
$83,867,571 100.0%
----------- -----
</TABLE>
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
<TABLE>
<CAPTION>
Acronym Name
- ----------- ----------------
<S> <C>
PIK Payment-In-Kind
DM Deutschemarks
</TABLE>
See Notes to Financial Statements.
36
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
Liberty Variable Investment Trust Colonial Strategic Income Fund, Variable
Series / June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments, at market value (Identified cost $82,831,261) ......................... $ 83,867,571
Short-term obligations ............................................................. 7,403,000
Cash ............................................................................... 1,052,702
Dividends and interest receivable .................................................. 1,343,380
Receivable for fund shares sold .................................................... 391,280
Receivable for investments sold .................................................... 2,015
Expense reimbursement due from Adviser ............................................. 5,217
Unamortized organization expenses .................................................. 4,018
Other assets ....................................................................... 2,987
------------
Total assets ..................................................................... 94,072,170
------------
Liabilities:
Payable for investments purchased .................................................. 3,691,350
Unrealized depreciation on forward currency exchange contracts ..................... 41,822
Payable for fund shares repurchased ................................................ 7,578
Management fee payable ............................................................. 47,187
Bookkeeping fee payable ............................................................ 3,370
Transfer agent fee payable ......................................................... 625
Accrued expenses payable ........................................................... 20,125
------------
Total liabilities ................................................................ 3,812,057
------------
Net assets ......................................................................... $ 90,260,113
============
Net assets represented by:
Paid-in capital ................................................................... $ 85,833,190
Accumulated undistributed net investment income ................................... 3,214,368
Accumulated net realized gains on investments and foreign currency transactions ... 217,069
Net unrealized appreciation on investments and foreign currency transactions ...... 995,486
------------
Total net assets applicable to outstanding shares of beneficial interest ........... $ 90,260,113
============
Shares of beneficial interest outstanding .......................................... 7,811,104
============
Net asset value per share .......................................................... $ 11.56
============
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (Unaudited)
For the Six Months ended June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment income:
Interest income ............................................................... $3,381,171
Dividends ..................................................................... 88,505
----------
Total investment income ..................................................... 3,469,676
----------
Expenses:
Management fee ............................................................... 261,694
Bookkeeping fee .............................................................. 18,975
Transfer agent fee ........................................................... 3,750
Audit fee .................................................................... 10,852
Printing expense ............................................................. 4,425
Trustees' expense ............................................................ 3,608
Custodian fee ................................................................ 8,216
Legal fee .................................................................... 3,021
Amortization of organization expense ......................................... 1,969
Miscellaneous expense ........................................................ 3,255
----------
Total expenses .............................................................. 319,765
----------
Net investment income ......................................................... 3,149,911
Realized and unrealized gains on investments and foreign currency transactions:
Net realized gains on investments ............................................ 115,102
Net realized gains on foreign currency transactions .......................... 267,977
Unrealized appreciation on investments and foreign currency transactions ..... (719,733)
----------
Net increase in net assets resulting from operations .......................... $2,813,257
==========
</TABLE>
See Notes to Financial Statements.
37
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Liberty Variable Investment Trust Colonial Strategic Income Fund, Variable
Series
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
Six Months Year Ended
Ended December 31,
June 30, 1998 1997
--------------- ---------------
<S> <C> <C>
Operations:
Net investment income .......................................................... $ 3,149,911 $ 4,834,642
Net realized gains (losses) on investments ..................................... 115,102 (557,481)
Net realized gains on foreign currency transactions ............................ 267,977 1,104,281
Change in unrealized appreciation on investments and foreign currency
transactions .................................................................. (719,733) 101,719
------------ -------------
Net increase in net assets resulting from operations ........................... 2,813,257 5,483,161
------------ -------------
Distributions declared from:
Net investment income .......................................................... -- (4,834,643)
In excess of net investment income ............................................. -- (296,671)
Net realized gains on investments .............................................. -- (328,008)
In excess of net realized gains ................................................ -- (7,971)
------------ -------------
Total distributions ........................................................... -- (5,467,293)
------------ -------------
Fund share transactions:
Proceeds from fund shares sold ................................................. 18,999,701 29,075,205
Cost of fund shares repurchased ................................................ (4,727,862) (14,776,284)
Distributions reinvested ....................................................... 5,467,293
-------------
Net increase in net assets resulting from fund share transactions ............... 14,271,839 19,766,214
------------ -------------
Total increase in net assets .................................................... 17,085,096 19,782,082
Net assets:
Beginning of period ............................................................ 73,175,017 53,392,935
------------ -------------
End of period .................................................................. $ 90,260,113 $ 73,175,017
============ =============
Accumulated undistributed (overdistributed) net investment income included in
ending net assets .............................................................. $ 3,214,368 $ (23,401)
============ =============
Analysis of changes in shares of beneficial interest:
Shares sold .................................................................... 1,659,428 2,534,934
Shares redeemed ................................................................ (413,330) (1,299,060)
Distributions reinvested ....................................................... -- 490,780
------------ -------------
Net increase .................................................................... 1,246,098 1,726,654
============ =============
</TABLE>
See Notes to Financial Statements.
38
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Liberty Variable Investment Trust Colonial Strategic Income Fund, Variable
Series
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
Six Months
Ended
June 30,
--------------
1998
--------------
<S> <C>
Per share operating performance:
Net asset value, beginning of period ................... $ 11.15
--------
Net investment income (a) .............................. 0.44
Net realized and unrealized gains (losses) on
investments and foreign currency transactions ......... (0.03)
---------
Total from investment operations ....................... 0.41
---------
Less distributions from:
Dividends from net investment income .................. --
In excess of net investment income .................... --
Dividends from net realized gains ..................... --
In excess of net realized gains ....................... --
---------
Total distributions .................................... --
---------
Net asset value, end of period ......................... $ 11.56
=========
Total return:
Total investment return (b)(c) ......................... 3.68%**
Ratios/supplemental data:
Net assets, end of period (000) ........................ $ 90,260
Ratio of net expenses to average net assets ............ 0.79%*
Ratio of net investment income to average net assets
(c) ................................................... 7.75%*
Portfolio turnover ratio ............................... 23%**
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------------
1997 1996 1995
---------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of period ................... $ 11.04 $ 10.99 $ 9.79
----------- ----------- -----------
Net investment income (a) .............................. 0.90 0.92 0.55
Net realized and unrealized gains (losses) on
investments and foreign currency transactions ......... 0.11 0.16 1.24
----------- ----------- -----------
Total from investment operations ....................... 1.01 1.08 1.79
----------- ----------- -----------
Less distributions from:
Dividends from net investment income .................. (0.79) (0.96) (0.56)
In excess of net investment income .................... (0.05) -- --
Dividends from net realized gains ..................... (0.05) (0.07) (0.03)
In excess of net realized gains ....................... (0.01) -- --
----------- ----------- -----------
Total distributions .................................... (0.90) (1.03) (0.59)
----------- ----------- -----------
Net asset value, end of period ......................... $ 11.15 $ 11.04 $ 10.99
=========== =========== ===========
Total return:
Total investment return (b)(c) ......................... 9.11% 9.83% 18.30%
Ratios/supplemental data:
Net assets, end of period (000) ........................ $ 73,175 $ 53,393 $ 48,334
Ratio of net expenses to average net assets ............ 0.80%(d)(e) 0.80%(d)(e) 0.84%(d)(e)
Ratio of net investment income to average net assets
(c) ................................................... 7.86%(e) 8.13%(e) 8.08%(e)
Portfolio turnover ratio ............................... 94% 114% 281%
<CAPTION>
Period
Ended
December 31,
---------------------
1994***
---------------------
<S> <C>
Per share operating performance:
Net asset value, beginning of period ................... $ 10.00
----------
Net investment income (a) .............................. 0.30
Net realized and unrealized gains (losses) on
investments and foreign currency transactions ......... (0.19)
-----------
Total from investment operations ....................... 0.11
-----------
Less distributions from:
Dividends from net investment income .................. (0.31)
In excess of net investment income .................... --
Dividends from net realized gains ..................... (0.01)
In excess of net realized gains ....................... --
-----------
Total distributions .................................... (0.32)
-----------
Net asset value, end of period ......................... $ 9.79
===========
Total return:
Total investment return (b)(c) ......................... 1.10%**
Ratios/supplemental data:
Net assets, end of period (000) ........................ $ 13,342
Ratio of net expenses to average net assets ............ 1.00%(d)*
Ratio of net investment income to average net assets
(c) ................................................... 7.33%*
Portfolio turnover ratio ............................... 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 0.82%, 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.
See Notes to Financial Statements.
39
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Unaudited)
Liberty Variable Investment Trust Colonial U.S. Stock Fund, Variable
Series / June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
--------- ----------
<S> <C> <C>
COMMON STOCKS--90.9%
Agriculture, Forestry & Fishing--0.4%
Agriculture--Crops
RJR Nabisco Holdings Corp. ............... 22,700 $ 539,125
----------
Finance, Insurance & Real Estate--22.3%
Depository Institutions--6.1%
BankAmerica Corp. ........................ 12,700 1,097,756
Chase Manhattan Corp. .................... 42,500 3,208,750
Citicorp ................................. 13,500 2,014,875
Comerica, Inc. ........................... 19,650 1,301,813
Dime Bancorp, Inc. ....................... 22,000 658,625
----------
8,281,819
----------
Insurance Carriers--11.4%
Allmerica Financial Corp. ................ 9,900 643,500
Allstate Corp. ........................... 6,500 595,156
American International Group, Inc. 9,800 1,430,800
Conseco, Inc. ............................ 28,800 1,346,400
Equitable Companies, Inc. ................ 9,700 726,894
ITT Hartford Group, Inc. ................. 9,700 1,109,438
Mercury General Corp. .................... 23,800 1,533,613
Old Republic International Corp. ......... 46,425 1,360,833
Travelers Group, Inc. .................... 57,799 3,504,064
United Healthcare Corp. .................. 25,600 1,625,600
Wellpoint Health Networks, Inc.,
Class A ............................... 21,000 1,554,000
----------
15,430,298
----------
Nondepository Credit Institutions--2.6%
American Express Co. ..................... 18,600 2,120,400
Student Loan Marketing
Association ........................... 28,750 1,408,750
----------
3,529,150
----------
Security Brokers & Dealers--2.2%
Bear Stearns Companies, Inc. ............. 12,100 688,188
Lehman Brothers Holdings, Inc. ........... 16,800 1,303,050
Morgan Stanley Dean Witter
Discover & Co. ........................ 11,000 1,005,125
----------
2,996,363
----------
Manufacturing--39.3%
Apparel--1.3%
VF Corp. ................................. 34,200 1,761,300
----------
Chemicals & Allied Products--9.4%
American Home Products Corp. ............. 24,000 1,242,000
Dow Chemical Co. ......................... 13,500 1,305,281
Eli Lilly & Co. .......................... 12,700 839,788
Goodrich (B.F.) Co. ...................... 12,000 595,500
Johnson & Johnson ........................ 8,200 604,750
Merck & Co., Inc. ........................ 18,700 2,501,125
Procter & Gamble Co. ..................... 7,600 692,075
Rohm & Haas Company ...................... 9,300 966,619
Shares Value
------ -------
Schering-Plough Corp. .................... 27,600 $2,528,850
Warner-Lambert Co. ....................... 22,500 1,560,938
----------
12,836,926
----------
Communications Equipment--1.1%
Lucent Technologies, Inc. ................ 18,754 1,560,098
----------
Electrical Industrial Equipment--2.8%
General Electric Co. ..................... 41,300 3,758,300
----------
Electronic Components--0.6%
SCI Systems, Inc. (a) .................... 22,700 854,088
----------
Fabricated Metal--0.9%
Danaher Corp. ............................ 35,000 1,284,063
----------
Food & Kindred Products--2.1%
Interstate Bakeries Corp. ................ 18,000 597,375
Philip Morris Co., Inc. .................. 57,100 2,248,313
----------
2,845,688
----------
Furniture & Fixtures--1.8%
Herman Miller, Inc. ...................... 29,000 705,063
Hillenbrand Industries, Inc. ............. 10,000 600,000
Masco Corp. .............................. 19,500 1,179,750
----------
2,484,813
----------
Machinery & Computer Equipment--7.4%
Baker Hughes, Inc. ....................... 16,000 553,000
Caterpillar, Inc. ........................ 10,000 528,750
Compaq Computer Corp. .................... 40,729 1,155,685
EMC Corp. (a) ............................ 51,200 2,294,400
Ingersoll Rand Co. ....................... 23,800 1,048,688
Sun Microsystems, Inc. (a) ............... 28,900 1,255,344
Timken Co. ............................... 14,100 434,456
Tyco International Ltd. .................. 35,500 2,236,500
Varco International, Inc. (a) ............ 24,000 475,500
----------
9,982,323
----------
Measuring & Analyzing Instruments--1.7%
Honeywell, Inc. .......................... 4,500 376,031
Tektronix, Inc. .......................... 15,400 544,775
Thermo Electron Corp. (a) ................ 40,700 1,391,431
----------
2,312,237
----------
Petroleum Refining--5.1%
Ashland Oil, Inc. ........................ 9,500 490,438
Atlantic Richfield Co. ................... 15,600 1,218,750
Chevron Corp. ............................ 2,600 215,963
Exxon Corp. .............................. 20,200 1,440,513
Mobil Corp. .............................. 16,800 1,287,300
Texaco, Inc. ............................. 17,400 1,038,563
USX-Marathon Group ....................... 34,600 1,187,213
----------
6,878,740
----------
Primary Metal--0.4%
USX-US Steel Group ....................... 15,000 495,000
----------
</TABLE>
See Notes to Investment Portfolio.
40
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Continued)
Liberty Variable Investment Trust Colonial U.S. Stock Fund, Variable
Series / June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
--------- ----------
<S> <C> <C>
Transportation Equipment--4.7%
Chrysler Corp. ........................... 18,000 $ 1,014,750
Dana Corp. ............................... 12,000 642,000
Eaton Corp. .............................. 5,400 419,850
Ford Motor Co. ........................... 13,000 767,000
General Dynamics Corp. ................... 25,600 1,190,400
Textron, Inc. ............................ 16,200 1,161,338
United Technologies Corp. ................ 12,800 1,184,000
-----------
6,379,338
-----------
Mining & Energy--1.5%
Nonmetallic, Except Fuels--0.3%
Vulcan Materials Co. ..................... 3,900 416,081
-----------
Oil & Gas Extraction--0.5%
Transocean Offshore, Inc. ................ 14,500 645,250
-----------
Oil & Gas Field Services--0.7%
Schlumberger Ltd. ........................ 14,000 956,375
-----------
Retail Trade--9.6%
Apparel & Accessory Stores--1.8%
TJX Companies, Inc. ...................... 102,200 2,465,575
-----------
Food Stores--2.3%
Albertson's, Inc. ........................ 26,200 1,357,488
Safeway, Inc. (a) ........................ 43,670 1,776,823
-----------
3,134,311
-----------
General Merchandise Stores--3.0%
Dayton Hudson Corp. ...................... 44,000 2,134,000
Dillard Department Stores, Inc. .......... 16,400 679,575
Federated Department Stores,
Inc. (a) .............................. 23,000 1,237,688
-----------
4,051,263
-----------
Home Furnishings & Equipment--0.3%
CompUSA, Inc. (a) ........................ 22,100 399,181
-----------
Miscellaneous Retail--2.2%
CVS Corp. ................................ 24,600 957,863
Office Depot, Inc. (a) ................... 65,100 2,054,719
-----------
3,012,582
-----------
Services--6.8%
Business Services--0.8%
Cendant Corp. ............................ 50,765 1,059,710
-----------
Computer Related Services--1.5%
Autodesk, Inc. ........................... 36,400 1,405,950
Cadence Design Systems, Inc. (a) ......... 21,900 684,375
-----------
2,090,325
-----------
Computer Software--3.9%
Computer Associates International,
Inc. .................................. 16,500 916,781
Microsoft Corp. (a) ...................... 29,500 3,197,063
Oracle Systems Corp. (a) ................. 48,000 1,179,000
-----------
5,292,844
-----------
Shares Value
------ -------
Health Services--0.6%
HEALTHSOUTH Corp. (a) .................... 32,000 $ 870,000
-----------
Transportation, Communication, Electric,
Gas & Sanitary Services--10.2%
Air Transportation--1.2%
AMR Corp. (a) ............................ 4,000 333,000
Continental Airlines, Inc.,
Class B (a) ........................... 15,000 913,125
US Airways Group, Inc. (a) ............... 4,500 356,625
-----------
1,602,750
-----------
Electric, Gas & Sanitary Services--0.4%
Sempra Energy (a) ........................ 18,400 511,750
-----------
Electric Services--2.6%
FPL Group, Inc. .......................... 14,400 907,200
GPU, Inc. ................................ 30,200 1,141,938
MarketSpan Corp. ......................... 30,448 911,537
NIPSCO Industries, Inc. .................. 20,600 576,800
-----------
3,537,475
-----------
Motor Freight & Warehousing--0.7%
CNF Transportation ....................... 23,000 977,500
-----------
Telecommunications--5.3%
AT&T Corp. ............................... 13,000 742,625
Ameritech Corp. .......................... 28,700 1,287,913
Bell Atlantic Corp. ...................... 7,736 352,955
BellSouth Corp. .......................... 9,000 604,125
MCI Communications Corp. ................. 12,000 697,500
SBC Communications, Inc. ................. 16,762 670,480
US West Communications Group ............. 28,600 1,344,200
WorldCom, Inc. (a) ....................... 30,000 1,453,125
-----------
7,152,923
-----------
Wholesale Trade--0.8%
Nondurable Goods
Bergen Brunswig Corp., Class A ........... 15,500 718,813
Richfood Holdings, Inc. .................. 15,850 327,897
-----------
1,046,710
-----------
Total Common Stocks
(cost of $93,555,954) ................................. 123,432,274
-----------
Par
-------
CORPORATE FIXED INCOME BONDS & NOTES--2.7%
Depository Institutions--0.4%
Fleet/Norstar Financial Group, Inc.
8.125% 07/01/04 ....................... $ 500,000 547,005
-----------
Nondepository Credit Institutions--1.1%
Ford Motor Credit Co. 8.000%
06/15/02 .............................. 1,000,000 1,063,520
Household Finance Co., 8.250%
02/15/05 .............................. 400,000 439,672
-----------
1,503,192
-----------
</TABLE>
See Notes to Investment Portfolio.
41
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Continued)
Liberty Variable Investment Trust Colonial U.S. Stock Fund, Variable
Series / June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
---------- ------------
<S> <C> <C>
Manufacturing--0.8%
Transportation Equipment
General Motors Corp., 9.125%
07/15/01 ............................. $1,000,000 $ 1,084,600
------------
Retail Trade--0.4%
General Merchandise Stores
Wal-Mart Stores, Inc., 8.625%
04/01/01 ............................. 500,000 535,690
------------
Total Corporate Fixed Income
Bonds & Notes (cost of $3,674,015) ..................... 3,670,487
------------
Total Investments--93.6%
(cost of $97,229,969) (b) .............................. 127,102,761
------------
SHORT-TERM OBLIGATIONS--6.9%
Repurchase agreement with ABN
AMRO Chicago Corp., dated
6/30/98, due 7/01/98 at
6.100%, collateralized by U.S.
Treasury notes & bill with
various maturities to 2027,
market value $9,565,815
(repurchase proceeds
$9,364,587)........................... $9,363,000 $ 9,363,000
------------
Other Assets & Liabilities, Net--(0.5)% ................... (703,800)
------------
Net Assets--100.0% ........................................ $135,761,961
============
</TABLE>
Notes to Investment Portfolio:
(a) Non-incoming producing.
(b) Cost for federal income tax purposes is 97,246,064. Gross unrealized
appreciation and depreciation at June 30, 1998 is as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 32,043,800
Gross unrealized depreciation $ (2,187,103)
------------
Net unrealized appreciation $ 29,856,697
============
</TABLE>
See Notes to Financial Statements.
42
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
Liberty Variable Investment Trust Colonial U.S. Stock Fund, Variable
Series / June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments, at market value (Identified cost $97,229,969) .............. $ 127,102,761
Short-term obligations .................................................. 9,363,000
Cash .................................................................... 755
Receivable for fund shares sold ......................................... 629,243
Dividends and interest receivable ....................................... 198,541
Unamortized organization expenses ....................................... 4,018
Other assets ............................................................ 904
-------------
Total assets .......................................................... 137,299,222
-------------
Liabilities:
Payable for investments purchased ....................................... 1,393,956
Payable for fund shares repurchased ..................................... 37,058
Management fee payable .................................................. 85,354
Bookkeeping fee payable ................................................. 4,584
Transfer agent fee payable .............................................. 625
Accrued expenses payable ................................................ 15,684
-------------
Total liabilities ..................................................... 1,537,261
-------------
Net assets .............................................................. $ 135,761,961
=============
Net assets represented by:
Paid-in capital ........................................................ $ 101,197,654
Accumulated undistributed net investment income ........................ 510,508
Accumulated net realized gains on investments .......................... 4,181,007
Net unrealized appreciation on investments ............................. 29,872,792
-------------
Total net assets applicable to outstanding shares of beneficial interest $ 135,761,961
=============
Shares of beneficial interest outstanding ............................... 7,250,828
=============
Net asset value per share ............................................... $ 18.72
=============
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (Unaudited)
For the Six Months ended June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment income:
Dividends .................................................... $ 741,885
Interest income .............................................. 336,350
-----------
Total investment income .................................... 1,078,235
-----------
Expenses:
Management fee .............................................. 462,311
Bookkeeping fee ............................................. 25,178
Transfer agent fee .......................................... 3,750
Audit fee ................................................... 9,215
Printing expense ............................................ 4,328
Trustees' expense ........................................... 3,328
Custodian fee ............................................... 2,043
Legal fee ................................................... 4,712
Amortization of organization expense ........................ 1,969
Miscellaneous expense ....................................... 2,926
-----------
Total expenses ............................................. 519,760
-----------
Net investment income ........................................ 558,475
Realized and unrealized gains on investments:
Net realized gains on investments ........................... 4,232,373
Change in unrealized appreciation on investments ............ 10,688,072
-----------
Net increase in net assets resulting from operations ......... $15,478,920
===========
</TABLE>
See Notes to Financial Statements.
43
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Liberty Variable Investment Trust Colonial U.S. Stock Fund, Variable Series
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
Six Months Year Ended
Ended December 31,
June 30, 1998 1997
------------ -------------
<S> <C> <C>
Operations:
Net investment income ....................................................... $ 558,475 $ 932,129
Net realized gains on investments ........................................... 4,232,373 11,726,262
Change in unrealized appreciation on investments ............................ 10,688,072 8,137,807
------------ -------------
Net increase in net assets resulting from operations ......................... 15,478,920 20,796,198
------------ -------------
Distributions declared from:
Net investment income ....................................................... -- (932,130)
In excess of net investment income .......................................... -- (47,965)
Net realized gains .......................................................... -- (11,726,262)
In excess of net realized gains ............................................. -- (34,889)
------------ -------------
Total distributions .......................................................... -- (12,741,246)
------------ -------------
Fund share transactions:
Proceeds from fund shares sold .............................................. 28,399,530 29,081,474
Cost of fund shares repurchased ............................................. (4,831,630) (14,017,158)
Distributions reinvested .................................................... -- 12,741,246
------------ -------------
Net increase in net assets resulting from fund share transactions ............ 23,567,900 27,805,562
------------ -------------
Total increase in net assets ................................................. 39,046,820 35,860,514
Net assets:
Beginning of period ......................................................... 96,715,141 60,854,627
------------ -------------
End of period ............................................................... $135,761,961 $ 96,715,141
============ =============
Accumulated undistributed (overdistributed) net investment income included
in ending net assets ........................................................ $ 510,508 $ (47,967)
============ =============
Analysis of changes in shares of beneficial interest:
Shares sold ................................................................. 1,586,581 1,713,649
Shares redeemed ............................................................. (271,710) (842,285)
Distributions reinvested .................................................... -- 785,527
------------ -------------
Net increase ................................................................. 1,314,871 1,656,891
============ =============
</TABLE>
See Notes to Financial Statements.
44
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Liberty Variable Investment Trust Colonial U.S. Stock Fund, Variable Series
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
Six Months
Ended
June 30,
------------------
1998
------------------
<S> <C>
Per share operating performance:
Net asset value, beginning of period ......................... $ 16.29
---------
Net investment income (a) .................................... 0.09
Net realized and unrealized gains on investments ............. 2.34
---------
Total from investment operations ............................. 2.43
---------
Less distributions from:
Dividends from net investment income ........................ --
In excess of net investment income .......................... --
Dividends from net realized gains ........................... --
In excess of net realized gains ............................. --
----------
Total distributions .......................................... --
----------
Net asset value, end of period ............................... $ 18.72
==========
Total return:
Total investment return (b) ................................. 14.92%**
Ratios/supplemental data:
Net assets, end of period (000) .............................. $ 135,762
Ratio of net expenses to average net assets .................. 0.90%*(e)
Ratio of net investment income to average net assets ......... 0.96%*(e)
Portfolio turnover ratio ..................................... 21%**
<CAPTION>
Year Ended December 31,
--------------------------------------------------------
1997 1996 1995
---------------- ---------------- ----------------------
<S> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of period ......................... $ 14.22 $ 12.36 $ 10.27
--------- --------- -----------
Net investment income (a) .................................... 0.20 0.19 0.21
Net realized and unrealized gains on investments ............. 4.37 2.52 2.84
--------- --------- -----------
Total from investment operations ............................. 4.57 2.71 3.05
--------- --------- -----------
Less distributions from:
Dividends from net investment income ........................ (0.18) (0.17) (0.16)
In excess of net investment income .......................... (0.01) -- --
Dividends from net realized gains ........................... (2.30) (0.68) (0.80)
In excess of net realized gains ............................. (0.01) -- --
--------- --------- -----------
Total distributions .......................................... (2.50) (0.85) (0.96)
--------- --------- -----------
Net asset value, end of period ............................... $ 16.29 $ 14.22 $ 12.36
========= ========= ===========
Total return:
Total investment return (b) ................................. 32.23% 21.84% 29.70%(c)
Ratios/supplemental data:
Net assets, end of period (000) .............................. $ 96,715 $ 60,855 $ 43,017
Ratio of net expenses to average net assets .................. 0.94%(e) 0.95%(e) 1.00%(d)(e)
Ratio of net investment income to average net assets ......... 1.19%(e) 1.39%(e) 1.72%(c)(e)
Portfolio turnover ratio ..................................... 63% 77% 115%
<CAPTION>
Period
Ended
December 31,
--------------------
1994***
--------------------
<S> <C>
Per share operating performance:
Net asset value, beginning of period ......................... $ 10.00
----------
Net investment income (a) .................................... 0.09
Net realized and unrealized gains on investments ............. 0.35
----------
Total from investment operations ............................. 0.44
----------
Less distributions from:
Dividends from net investment income ........................ (0.11)
In excess of net investment income .......................... --
Dividends from net realized gains ........................... (0.06)
In excess of net realized gains ............................. --
----------
Total distributions .......................................... (0.17)
----------
Net asset value, end of period ............................... $ 10.27
==========
Total return:
Total investment return (b) ................................. 4.40%(c)**
Ratios/supplemental data:
Net assets, end of period (000) .............................. $ 15,373
Ratio of net expenses to average net assets .................. 1.00%(d)*
Ratio of net investment income to average net assets ......... 2.16%(c)*
Portfolio turnover ratio ..................................... 52%**
</TABLE>
* Annualized
** Not Annualized
*** For the period from the commencement of operations July 5, 1994 to December
31, 1994.
(a) Per share data was calculated using average shares outstanding during the
period.
(b) 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 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.
See Notes to Financial Statements.
45
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Unaudited)
Liberty Variable Investment Trust Newport Tiger Fund, Variable
Series / June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Country
Abbrev. Shares Value
--------- ------------ -------------
<S> <C> <C> <C>
COMMON STOCKS--93.9%
Finance, Insurance & Real Estate--53.7%
Depository Institutions--19.9%
Development Bank of
Singapore Ltd. ............................ Si 200,200 $1,109,914
HSBC Holdings PLC ............................ HK 48,400 1,172,006
Hang Seng Bank ............................... HK 133,600 755,348
Oversea-Chinese Banking
Corp. Ltd ................................. Si 174,200 593,922
Thai Farmers Bank Ltd. ....................... Th 138,000 121,813
----------
3,753,003
----------
Holding Companies--15.2%
Cheung Kong Holdings Ltd. HK 168,000 826,230
Citic Pacific Ltd. ........................... HK 298,000 526,991
Hutchison Whampoa Ltd. ....................... HK 195,000 1,029,495
Singapore Technologies
Engineering Ltd. .......................... Si 680,000 479,810
----------
2,862,526
----------
Insurance Carriers--0.7%
National Mutual Asia Ltd. .................... HK 200,000 127,791
----------
Investment Companies--0.2%
Taiwan Fund, Inc. ............................ Tw 3,000 40,313
----------
Real Estate--17.7%
Ayala Land, Inc., Class B .................... Ph 178,500 51,367
China Resources Enterprises
Ltd. ...................................... HK 302,000 311,863
City Developments Ltd. ....................... Si 246,000 688,479
Filinvest Development Corp. Ph 485,000 24,424
New World Development
Co., Ltd. ................................. HK 287,000 555,699
SM Prime Holdings, Inc. ...................... Ph 2,510,000 397,266
Sun Hung Kai Properties
Ltd. ...................................... HK 156,000 662,502
Swire Pacific Ltd., Series A ................. HK 173,000 653,188
----------
3,344,788
----------
Manufacturing--5.2%
Fabricated Metal--0.3%
Kian Joo Can Factory
Berhad .................................... Ma 70,000 64,290
----------
Measuring and Analyzing Instruments--0.4%
China Hong Kong Photo
Products Holdings Ltd. .................... HK 460,000 64,722
----------
Printing and Publishing--4.4%
Singapore Press Holdings
Ltd. ...................................... Si 123,517 827,596
----------
Rubber and Plastic--0.1%
Nylex Malaysia Berhad ........................ Ma 92,000 $ 23,125
----------
Retail Trade--1.2%
Apparel & Accessory Stores--0.4%
Giordano International Ltd. .................. HK 354,000 71,741
----------
Auto Dealers and Gas Stations--0.8%
Cycle & Carriage Ltd. ........................ Si 65,000 158,790
----------
Services--1.5%
Hotels, Camps & Lodging--0.5%
Genting Berhad ............................... Ma 49,400 89,547
----------
Miscellaneous Repair Services--1.0%
Keppel Land Ltd. ............................. Si 210,000 193,003
----------
Transportation, Communication, Electric, Gas &
Sanitary Services--25.8%
Electric Services--5.5%
Hong Kong Electric
Holdings Ltd. ............................. HK 332,000 1,028,527
----------
Gas Services--5.1%
Hong Kong and China Gas
Co., Ltd. ................................. HK 729,230 828,349
Petronas Gas Berhad .......................... Ma 73,000 135,855
----------
964,204
----------
Telecommunication--12.6%
China Telecom Ltd. (a) ....................... HK 500,000 868,078
Hong Kong
Telecommunications Ltd. ................... HK 526,569 997,190
Philippine Long Distance
Telephone, ADR ............................ Ph 22,500 509,063
----------
2,374,331
----------
Transportation Services--2.6%
New World Infrastructure
Ltd. (a) .................................. HK 430,000 493,998
----------
Wholesale Trade--6.5%
Durable Goods
Li & Fung Ltd. ............................... HK 758,000 1,223,054
----------
Total Common Stocks
(cost of $27,768,476) ............................................ 17,705,349
----------
Warrants (a)-- 0.0%
Transportation, Communication,
Electric, Gas and Sanitary Services--0.0%
Gas Services
Hong Kong & China Gas
(cost of $0)............................... HK 33,147 2,268
----------
Total Investments
(cost of $27,768,476)(b) ......................................... 17,707,617
----------
</TABLE>
See Notes to Investment Portfolio.
46
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Continued)
Liberty Variable Investment Trust Newport Tiger Fund, Variable
Series / June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
----------- ---------------
<S> <C> <C>
SHORT-TERM OBLIGATIONS--4.5%
Repurchase agreement with ABN
AMRO Chicago Corp. dated
6/30/98 due 07/01/98 at
6.100%, collateralized by U.S.
Treasury notes & bill with
various maturities to 2027,
market value $871,477
(repurchase proceeds
$853,145) ...................... $853,000 $ 853,000
-----------
Foreign Currency Contracts (c)--0.0% .......... (502)
Other Assets and Liabilities, Net--1.6% ....... 294,007
-----------
Net Assets--100.0% ............................ $18,854,122
===========
</TABLE>
Notes to Investment Portfolio:
(a) Non-income producing.
(b) The cost for federal income tax purposes is identical. Gross unrealized
appreciation and depreciation at June 30, 1998 is as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 1,251,345
Gross unrealized depreciation (11,312,204)
-------------
Net unrealized depreciation $ (10,060,859)
=============
</TABLE>
(c) As of June 30, 1998, the Fund had entered into the following forward
currency exchange contract:
<TABLE>
<CAPTION>
Net Unrealized
Contracts In Exchange Settlement Depreciation
to Deliver For Date (U.S.$)
- ------------ ------------- ------------ ---------------
<S> <C> <C> <C>
MR 155,402 US$ 37,058 07/02/1998 502
</TABLE>
Summary of Securities by Country
<TABLE>
<CAPTION>
Country
Country Abbrev. Value % of Total
- -------------------------------- --------- -------------- -----------
<S> <C> <C> <C>
Hong Kong .................... HK $12,199,040 68.9%
Singapore .................... Si 4,051,514 22.9
Philippines .................. Ph 982,120 5.5
Malaysia (MR) ................ Ma 312,817 1.8
Thailand ..................... Th 121,813 0.7
Taiwan ....................... Tw 40,313 0.2
----------- -----
$17,707,617 100.0%
=========== =====
</TABLE>
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
<TABLE>
<CAPTION>
Acronym Name
- ----------- ----------------------------
<S> <C>
ADR American Depositary Receipt
</TABLE>
See Notes to Financial Statements.
47
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
Liberty Variable Investment Trust Newport Tiger Fund, Variable
Series / June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments, at market value (Identified cost $27,768,476) ....................... $ 17,707,617
Short-term obligations ........................................................... 853,000
Cash (including foreign currencies) .............................................. 34,681
Receivable for investments sold .................................................. 156,453
Receivable for fund shares sold .................................................. 81,934
Dividends, tax reclaims and interest receivable .................................. 65,819
-------------
Total assets ................................................................... 18,899,504
-------------
Liabilities:
Payable for fund shares repurchased .............................................. 3,573
Unrealized depreciation of forward currency contracts ............................ 502
Management fee payable ........................................................... 14,003
Bookkeeping fee payable .......................................................... 2,250
Transfer agent fee payable ....................................................... 625
Accrued expenses payable ......................................................... 24,429
-------------
Total liabilities .............................................................. 45,382
-------------
Net assets ....................................................................... $ 18,854,122
=============
Net assets represented by:
Paid-in capital ................................................................. $ 33,732,627
Accumulated undistributed net investment income ................................. 201,147
Accumulated net realized losses on investments and foreign currency transactions (5,013,481)
Net unrealized depreciation on investments and foreign currency transactions .... (10,066,171)
-------------
Total net assets applicable to shares of beneficial interest outstanding ......... $ 18,854,122
=============
Shares of beneficial interest outstanding ........................................ 15,012,753
=============
Net asset value per share ........................................................ $ 1.26
=============
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (Unaudited)
For the Six Months Ended June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment income:
Dividends (net of nonrebatable foreign taxes withheld at source of $20,421) $ 384,028
Interest income ............................................................ 30,590
------------
Total investment income .................................................. 414,618
------------
Expenses:
Management fee ............................................................ 104,894
Bookkeeping fee ........................................................... 13,500
Transfer agent fee ........................................................ 3,750
Audit fee ................................................................. 9,723
Printing expense .......................................................... 1,328
Trustees' expense ......................................................... 1,737
Custodian fee ............................................................. 14,865
Legal expense ............................................................. 1,181
Miscellaneous expense ..................................................... 1,780
------------
Total expenses ........................................................... 152,758
------------
Net investment income ...................................................... 261,860
Realized and unrealized gains (losses) on investments and foreign currency
transactions:
Net realized losses on investments ........................................ (1,727,476)
Net realized gains on foreign currency transactions ....................... 1,868
Unrealized depreciation on investments and foreign currency transactions .. (5,447,669)
------------
Net decrease in net assets resulting from operations ....................... $ (6,911,417)
============
</TABLE>
See Notes to Financial Statements.
48
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Liberty Variable Investment Trust Newport Tiger Fund, Variable Series
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
Six Months Year Ended
Ended December 31,
June 30, 1998 1997
--------------- ---------------
<S> <C> <C>
Operations:
Net investment income ........................................................ $ 261,860 $ 385,359
Net realized losses on investments ........................................... (1,727,476) (3,259,158)
Net realized gains (losses) on foreign currency transactions ................. 1,868 (86,529)
Unrealized depreciation on investments and foreign currency transactions ..... (5,447,669) (8,619,923)
------------ -------------
Net decrease in net assets resulting from operations ......................... (6,911,417) (11,580,251)
------------ -------------
Distributions declared from:
Net investment income ........................................................ -- (312,640)
In excess of net investment income ........................................... -- (49,487)
Net realized gains ........................................................... -- --
In excess of net realized gains .............................................. -- (749)
------------ -------------
Total distributions ........................................................... -- (362,876)
------------ -------------
Fund share transactions:
Proceeds from fund shares sold ............................................... 3,877,829 12,286,867
Cost of fund shares repurchased .............................................. (3,046,214) (10,415,067)
Distributions reinvested ..................................................... -- 362,876
------------ -------------
Net increase in net assets resulting from fund share transactions ............. 831,615 2,234,676
------------ -------------
Total decrease in net assets .................................................. (6,079,802) (9,708,451)
Net assets:
Beginning of period .......................................................... 24,933,924 34,642,375
------------ -------------
End of period ................................................................ $ 18,854,122 $ 24,933,924
============ =============
Accumulated undistributed (overdistributed) net investment income included
in ending net assets ......................................................... $ 201,147 $ (62,383)
============ =============
Analysis of changes in shares of beneficial interest:
Shares sold .................................................................. 2,408,330 5,307,469
Shares redeemed .............................................................. (1,965,483) (4,695,322)
Distributions reinvested ..................................................... -- 211,357
------------ -------------
Net increase .................................................................. 442,847 823,504
============ =============
</TABLE>
See Notes to Financial Statements.
49
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Liberty Variable Investment Trust Newport Tiger Fund, Variable Series
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
Six Months
Ended Period Ended
June 30, Year Ended December 31, December 31,
----------------- --------------------------- -------------
1998 1997 1996 1995***
----------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of period ......................... $ 1.71 $ 2.52 $ 2.28 $ 2.00
------- -------- ------- ------
Net investment income (a) .................................... 0.02 0.03 0.03 0.01
Net realized and unrealized gains (losses) on
investments and foreign currency transactions ............... (0.47) (0.81) 0.24 0.29
--------- -------- ------- ------
Total from investment operations ............................. (0.45) (0.78) 0.27 0.30
--------- -------- ------- ------
Less distributions from:
Dividends from net investment income ........................ -- (0.02) (0.02) (0.01)
In excess of net investment income .......................... -- (0.01) -- (0.01)
Dividends from net realized gains ........................... -- -- (0.01) --
In excess of net realized gains ............................. -- -- -- --
--------- -------- ------- -------
Total distributions ......................................... -- (0.03) (0.03) (0.02)
--------- -------- ------- -------
Net asset value, end of period ............................... $ 1.26 $ 1.71 $ 2.52 $ 2.28
========= ======== ======= =======
Total return:
Total investment return (b) ................................. (26.32)%** (31.14)% 11.73% 15.00%**
Ratios/supplemental data:
Net assets, end of period (000) .............................. $18,854 $ 24,934 $34,642 $18,977
Ratio of net expenses to average net assets (c) .............. 1.30%* 1.25% 1.27% 1.75%*
Ratio of net investment income to average net assets (c) ..... 2.23%* 1.14% 1.20% 0.89%*
Portfolio turnover ratio ..................................... 2%** 27% 7% 12%**
</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.
See Notes to Financial Statements.
50
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Unaudited)
Liberty Variable Investment Trust Liberty All-Star Equity Fund, Variable
Series / June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Value
----------- ----------
<S> <C> <C>
COMMON STOCKS--95.7%
Aerospace & Defense--1.7%
Boeing Co. .............................. 7,300 $ 325,306
Litton Industries (a) ................... 1,500 88,594
Lockheed Martin Corp. ................... 1,500 158,813
---------
572,713
---------
Autos Tires & Accessories--1.4%
Chrysler Corp. .......................... 3,200 180,400
Ford Motor Corp. ........................ 3,600 212,400
Lear Corp. (a) .......................... 1,600 82,100
---------
474,900
---------
Banks--5.5%
ABN AMRO Holding NV ADR ................. 3,836 89,906
Ahmanson H. F. & Co. .................... 2,100 148,969
Astoria Financial Corp. ................. 500 26,750
Citicorp ................................ 1,900 283,575
First Union Corp. ....................... 7,600 442,703
Fleet Financial Group, Inc. ............. 2,500 208,750
Long Island Bancorp, Inc. ............... 400 24,300
Nations Bank Corp. ...................... 1,300 99,450
Norwest Corp. ........................... 700 26,163
The Chase Manhattan Corp. (New) 3,000 226,500
Washington Mutual, Inc. ................. 750 32,578
Wells Fargo & Co. ....................... 600 221,400
---------
1,831,044
---------
Business Services--1.4%
Catalina Marketing Corp. (a) ............ 1,700 88,294
Cintas Corp. ............................ 3,500 178,500
Robert Half International, Inc. (a) ..... 3,300 184,388
---------
451,182
---------
Chemicals--2.6%
Albemarle Corp. ......................... 1,700 37,506
E.I. du Pont de Nemours & Co. ........... 1,500 111,938
Monsanto Co. ............................ 5,100 284,964
Praxair, Inc. ........................... 3,700 173,206
Rohm & Haas Co. ......................... 800 83,150
Sherwin-Williams Co. .................... 3,800 125,875
Union Carbide Corp. ..................... 500 26,688
---------
843,327
---------
Communications Equipment--2.4%
Black Box Corp. (a) ..................... 3000 99,563
Cisco Systems, Inc. (a) ................. 2,300 211,744
CommScope, Inc. (a) ..................... 4,700 76,081
Lucent Technologies, Inc. ............... 2,400 199,650
Nokia Corp. ADR ......................... 3,000 217,689
---------
804,727
---------
Computer & Business Equipment--4.0%
Bay Networks, Inc. (a) .................. 2,000 64,500
Market
Shares Value
------ -------
Compaq Computer Corp. ................... 5,400 $ 153,225
EMC Corp. (a) ........................... 2,700 120,994
Ingram Micro, Inc., Class A (a) ......... 3,450 152,663
International Business Machines
Corp. ................................ 4,100 470,734
Saville Systems Ireland PLC ADR
(a) .................................. 1,800 90,225
Sun Microsystems, Inc. (a) .............. 2,800 121,625
Tech Data Corp. (a) ..................... 3,400 145,988
---------
1,319,954
---------
Computer Services & Software--6.0%
Acxiom Corp. (a) ........................ 4,650 115,959
Automatic Data Processing, Inc. ......... 3,200 233,201
CBT Group PLC ADR (a) ................... 1,600 85,600
Computer Associates International,
Inc. ................................. 900 50,006
Concord EFS, Inc. (a) ................... 3,750 97,969
Electronic Arts, Inc. (a) ............... 1,200 64,800
Fiserv, Inc. (a) ........................ 3,525 149,703
HBO & Co. ............................... 4,400 155,375
HNC Software (a) ........................ 1,600 65,400
J. D. Edwards & Co. (a) ................. 3,200 137,400
Microsoft Corp. (a) ..................... 1,600 173,400
Oracle Corp. (a) ........................ 2,900 71,231
PeopleSoft, Inc. (a) .................... 1,900 89,300
Policy Management Systems (a) ........... 2,900 113,825
Sterling Commerce, Inc. (a) ............. 2,100 101,850
Sterling Software, Inc. (a) ............. 6,600 194,700
Wang Laboratories, Inc. (a) ............. 3,500 89,031
---------
1,988,750
---------
Consumer Products--4.5%
Hasbro, Inc. ............................ 1,200 47,100
Liz Claiborne, Inc. ..................... 2,900 151,706
Philip Morris Companies, Inc. ........... 12,200 480,373
Polo Ralph Lauren Corp. (a) ............. 3,100 86,800
Procter & Gamble Co. .................... 1,400 127,488
Ralston Purina Co. ...................... 600 70,088
Unilever NV ADR ......................... 1,200 94,725
Warnaco Group, Class A .................. 1,700 186,725
Whirlpool Corp. ......................... 3,300 226,875
---------
1,471,880
---------
Cosmetics & Toiletries--0.9%
Avon Products, Inc. ..................... 2,500 193,750
Gillette Co. ............................ 1,600 90,700
---------
284,450
---------
Diversified--3.3%
Allied Signal, Inc. ..................... 2,800 124,250
Cooper Industries, Inc. ................. 1,000 54,938
General Electric Co. .................... 2,000 182,000
</TABLE>
See Notes to Investment Portfolio.
51
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Continued)
Liberty Variable Investment Trust Liberty All-Star Equity Fund, Variable
Series / June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Value
------ ----------
<S> <C> <C>
Loews Corp. .......................................... 1,600 $ 139,400
Minnesota Mining & Manufacturing
Co. ............................................... 2,000 164,375
The Seagram Co., Ltd. ................................ 2,500 102,344
Tyco International Ltd. .............................. 3,100 195,301
US Industries, Inc. .................................. 4,500 111,375
---------
1,073,983
---------
Drugs & Health Care--9.0%
Alza Corp. (a) ....................................... 1,300 56,225
American Home Products Corp. ......................... 6,200 320,851
Bristol-Myers Squibb Co. ............................. 1,600 183,900
Columbia/HCA Healthcare Corp. ........................ 3,600 104,850
Crescendo Pharmaceuticals
Corp. (a) ......................................... 100 1,269
DENTSPLY International, Inc. ......................... 2,600 64,838
Dura Pharmaceuticals, Inc. (a) ....................... 2,500 55,938
Elan Corp. ADR (a) ................................... 2,650 170,428
Eli Lilly & Co. ...................................... 1,400 92,575
Genzyme Corp. (a) .................................... 3,600 92,025
HEALTHSOUTH Corp. (a) ................................ 3,700 100,594
Henry Shein, Inc. (a) ................................ 2,100 96,863
Humana, Inc. (a) ..................................... 5,600 174,650
Merck & Co., Inc. .................................... 1,500 200,625
Omnicare, Inc. ....................................... 2,500 95,313
Pfizer, Inc. ......................................... 2,200 239,113
Quorum Health Group, Inc. (a) ........................ 2,900 76,850
R. P. Scherer Corp. (a) .............................. 1,000 88,625
SmithKline Beecham PLC ADR ........................... 3,000 181,500
Steris Corp. (a) ..................................... 2,700 171,703
Sybron International Corp. (a) ....................... 2,750 69,438
Tenet Healthcare Corp. (a) ........................... 5,400 168,750
Warner-Lambert Co. ................................... 2,200 152,625
---------
2,959,548
---------
Electric & Gas Utilities--2.4%
Central & South West Corp. ........................... 2,200 59,125
Columbia Energy Group ................................ 450 25,031
Florida Progress Corp. ............................... 4,100 168,613
Houston Industries, Inc. ............................. 6,100 188,339
MarketSpan Corp. ..................................... 2,640 79,035
Northern States Power Co. ............................ 2,100 60,113
P G & E Corp. ........................................ 5,300 167,281
Texas Utilities Co. .................................. 800 33,300
---------
780,837
---------
Electronics & Electrical Equipment--2.8%
Arrow Electronics, Inc. (a) .......................... 4,000 87,000
Berg Electronics Corp. (a) ........................... 3,900 76,294
General Semiconductor, Inc. (a) ...................... 400 3,950
Intel Corp. .......................................... 2,000 148,250
International Game Technology ........................ 1,700 41,225
Market
Shares Value
------ -------
CLinear Technology Corp. .............................. 2,400 $ 144,750
Molex, Inc. .......................................... 3,750 93,750
Perkin-Elmer Corp. ................................... 900 55,969
Sensormatic Electronics Corp. ........................ 4,200 58,800
Sony Corp. ........................................... 2,300 197,945
Texas Instruments, Inc. .............................. 200 11,623
---------
919,556
---------
Financial Services--5.6%
Associates First Capital Corp. ....................... 800 61,500
Countrywide Credit Industries, Inc. 2,500 126,875
Federal Home Loan Mortgage
Corp. ............................................. 8,000 376,500
Federal National Mortgage Co. ........................ 2,100 127,575
Morgan Stanley Dean Witter
& Co. ............................................. 2,000 182,750
Paychex, Inc. ........................................ 5,175 210,558
SLM Holding Corp. .................................... 6,300 308,700
Travelers Group, Inc. ................................ 7,500 454,691
---------
1,849,149
---------
Food, Beverage & Restaurants--5.2%
Agribrands International, Inc. (a) ................... 50 1,513
Anheuser Busch, Inc. ................................. 6,500 306,720
Campbell Soup Co. .................................... 3,300 175,313
Diageo PLC ADR ....................................... 4,000 192,750
Dole Food Co. ........................................ 3,000 149,063
Dreyers Grand Ice Cream .............................. 7,250 145,906
International Home Foods, Inc. (a) 3,600 81,900
McDonald's Corp. ..................................... 3,000 207,000
PepsiCo, Inc. ........................................ 2,300 94,731
Starbucks Corp. (a) .................................. 5,400 288,563
Whole Foods Market, Inc. (a) ......................... 1,300 78,650
---------
1,722,109
---------
Hotel & Entertainment / Leisure--0.8%
Marriott International, Inc.,
Class A ........................................... 4,000 129,500
Mirage Resorts, Inc. ................................. 1,400 29,838
Time Warner, Inc. .................................... 1,100 93,981
---------
253,319
---------
Industrial Equipment--2.7%
Caterpillar, Inc. .................................... 4,000 211,500
Deere & Co. .......................................... 3,800 198,550
Dover Corp. .......................................... 5,000 171,250
Fastenal Co. (a) ..................................... 3,700 172,050
MSC Industrial Direct Co., Inc. (a) .................. 5,200 148,200
---------
901,550
---------
Insurance--6.7%
ACE Limited .......................................... 4,500 175,500
AFLAC, Inc. .......................................... 9,000 272,813
Allmerica Financial Corp. ............................ 2,500 162,500
</TABLE>
See Notes to Investment Portfolio.
52
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Continued)
Liberty Variable Investment Trust Liberty All-Star Equity Fund, Variable
Series / June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Value
-------- ----------
<S> <C> <C>
Ambac Financial Group, Inc. .................................. 1,000 $ 58,500
CIGNA Corp. .................................................. 2,500 172,500
Conseco, Inc. ................................................ 7,900 369,325
EXEL Limited ................................................. 5,000 389,066
Hartford Financial Services
Group, Inc. ............................................... 1,400 160,125
Marsh & McLennan Companies,
Inc. ...................................................... 1,050 63,459
Progressive Corp. ............................................ 1,000 141,000
Transamerica Corp. ........................................... 1,500 172,688
Unum Corp. ................................................... 1,100 61,050
----------
2,198,526
----------
Metals & Mining--1.6%
Allegheny Teledyne, Inc. ..................................... 4,600 105,225
Aluminum Company of America .................................. 2,500 164,844
British Steel PLC ADR ........................................ 6,400 145,600
Freeport-McMoRan Copper &
Gold, Inc., Class A ....................................... 7,000 106,313
----------
521,982
----------
Oil & Gas--4.8%
Apache Corp. ................................................. 2,700 85,050
Atlantic Richfield Co. ....................................... 1,500 117,188
Baker Hughes, Inc. ........................................... 4,200 145,163
British Petroleum Co. ADR .................................... 601 53,038
Burlington Resources, Inc. ................................... 2,200 94,738
Cooper Cameron Corp. (a) ..................................... 800 41,400
ELF Aquitaine ADR ............................................ 2,700 191,700
Exxon Corp. .................................................. 1,600 114,100
Mobil Corp. .................................................. 2,100 160,913
Pennzoil Co. ................................................. 2,700 136,688
Phillips Petroleum Co. ....................................... 1,300 62,644
Texaco, Inc. ................................................. 1,400 83,563
Tosco Corp. .................................................. 9,600 282,001
----------
1,568,186
----------
Paper--1.6%
Champion International Corp. ................................. 2,500 122,969
Fort James Corp. ............................................. 4,900 218,050
Georgia Pacific Corp. ........................................ 300 17,681
MacMillan Bloedel Ltd. ....................................... 6,500 69,063
Temple-Inland, Inc. .......................................... 1,800 96,975
----------
524,738
----------
Pollution Control--1.1%
U.S.A. Waste Services, Inc. (a) .............................. 5,400 266,625
WMX Technologies, Inc. ....................................... 100 3,500
Waste Management, Inc. ....................................... 2,900 101,500
----------
371,625
----------
Publishing--0.5%
R. R. Donnelley & Sons Co. ................................... 4,000 183,000
----------
Market
Shares Value
------ -------
CReal Estate Investment Trusts--1.8%
Crescent Real Estate Equities Co. ............................ 2,700 $ 90,788
Patriot American Hospitality, Inc. ........................... 3,800 90,963
Rouse Company ................................................ 3,300 103,744
Starwood Hotels & Resorts .................................... 4,400 212,571
Vornado Realty Trust ......................................... 2,300 91,281
----------
589,347
----------
Retail Trade--8.5%
AnnTaylor Stores Corp. (a) ................................... 4,200 88,988
CDW Computer Centers, Inc. (a) ............................... 1,800 90,000
Circuit City Stores, Inc. .................................... 2,900 135,938
CVS Corp. .................................................... 9,068 353,086
Dollar General Corp. ......................................... 4,662 184,440
Family Dollar Stores, Inc. ................................... 5,400 99,563
Federated Department Stores,
Inc. (a) .................................................. 6,300 339,019
Fred Meyer, Inc. (a) ......................................... 3,200 136,000
Gap, Inc. .................................................... 1,100 67,788
Harcourt General, Inc. ....................................... 1,700 101,150
Home Depot, Inc. ............................................. 1,900 157,819
Kmart Corp. .................................................. 9,800 188,650
Kohl's Corp. (a) ............................................. 2,800 145,250
May Department Stores Co. .................................... 3,000 196,500
Safeway, Inc. (a) ............................................ 2,300 93,581
Staples, Inc. (a) ............................................ 7,050 204,009
Toys R Us, Inc. (a) .......................................... 2,000 47,125
Walgreen Co. ................................................. 3,200 132,200
Wal-Mart Stores, Inc. ........................................ 600 36,450
----------
2,797,556
----------
Telecommunications--5.3%
AT&T Corp. ................................................... 4,800 274,200
Bell Atlantic Corp. .......................................... 3,800 173,375
Comcast Corp.-Special Class A ................................ 1,700 69,009
GTE Corp. .................................................... 5,000 278,125
MCI Communications Corp. ..................................... 3,100 180,188
SBC Communications, Inc. ..................................... 7,500 300,001
Sprint Corp. ................................................. 3,000 211,500
WorldCom, Inc. (a) ........................................... 5,300 256,719
----------
1,743,117
----------
Transportation--1.6%
AMR Corp. (a) ................................................ 3,500 291,375
Delta Air Lines, Inc. ........................................ 1,000 129,250
Union Pacific Corp. .......................................... 2,500 110,313
----------
530,938
----------
Total Common Stocks
(Cost $26,069,701)........................................................... 31,531,993
----------
</TABLE>
See Notes to Investment Portfolio.
53
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Continued)
Liberty Variable Investment Trust Liberty All-Star Equity Fund, Variable Series
/ June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Value
------ ----------
<S> <C> <C>
PREFERRED STOCKS--0.3%
Electric Utilities--0.3%
Houston Industries 7% Convertible
(Cost $2,793,250) ............ 1,300 $ 96,850
----------
Total Investments--96.0%
(Cost $28,862,951) (b) ...................... 31,628,843
Par
SHORT-TERM OBLIGATIONS--3.3% -----
Repurchase agreement with ABN
AMRO Chicago Corp., dated
6/30/98, 6.10% to be
repurchased at $1,085,184 on
7/1/98, collateralized by U.S.
Treasury notes & bill with
various maturities to 2027, with
a current market value of
$1,108,503 ..................... $1,085,000 1,085,000
---------
Other Assets and Liabilities, Net--0.7% ........ 222,550
---------
Net Assets--100.0% ............................. $32,936,393
===========
</TABLE>
Notes to Investment Portfolio:
(a) Non-income producing.
(b) The cost for federal income tax purposes is $28,895,433. Gross unrealized
appreciation and depreciation of investments at June 30, 1998 is as
follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 3,772,824
Gross unrealized depreciation (1,039,414)
------------
Net unrealized appreciation $ 2,733,410
============
</TABLE>
<TABLE>
<CAPTION>
Acronym Name
- ----------- ----------------------------
<S> <C>
ADR American Depositary Receipt
</TABLE>
See Notes to Financial Statements.
54
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
Liberty Variable Investment Trust Liberty All-Star Equity Fund, Variable
Series / June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments, at market value (Identified cost $28,862,951) .............. $ 31,628,843
Short-term obligations .................................................. 1,085,000
Cash (including foreign currencies) ..................................... 2,801
Receivable for fund shares sold ......................................... 376,140
Receivable for investments sold ......................................... 155,743
Dividends and interest receivable ....................................... 32,236
Expense reimbursement due from Adviser .................................. 3,917
------------
Total assets .......................................................... 33,284,680
------------
Liabilities:
Payable for investments purchased ....................................... 309,398
Management fee payable .................................................. 20,556
Bookkeeping fee payable ................................................. 2,250
Transfer agent fee payable .............................................. 625
Accrued expenses payable ................................................ 15,458
------------
Total liabilities ..................................................... 348,287
------------
Net assets .............................................................. $ 32,936,393
============
Net assets represented by:
Paid-in capital ........................................................ $ 29,507,318
Accumulated undistributed net investment income ........................ 82,470
Accumulated net realized gains on investments .......................... 580,713
Net unrealized appreciation on investments ............................. 2,765,892
------------
Total net assets applicable to shares of beneficial interest outstanding $ 32,936,393
============
Shares of beneficial interest outstanding ............................... 2,875,332
============
Net asset value per share ............................................... $11.45
======
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (Unaudited)
For the Six Months Ended June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment income:
Dividends (net of nonrebatable foreign taxes withheld at source of $1,864) $ 181,980
Interest income .......................................................... 36,155
----------
Total investment income ................................................ 218,135
----------
Expenses:
Management fee .......................................................... 111,719
Bookkeeping fee ......................................................... 13,500
Transfer agent fee ...................................................... 3,750
Audit fee ............................................................... 9,371
Printing expense ........................................................ 2,303
Trustees' expenses ...................................................... 1,684
Custodian fee ........................................................... 2,384
Legal fee ............................................................... 789
Miscellaneous expense ................................................... 1,645
----------
Total expenses ......................................................... 147,145
----------
Less:
Expenses reimbursable by Manager ........................................ (11,555)
----------
Net expenses ............................................................. 135,590
----------
Net investment income .................................................... 82,545
Realized and unrealized gains on investments:
Net realized gains on investments ....................................... 584,923
Change in unrealized appreciation on investments ........................ 2,623,550
----------
Net increase in net assets resulting from operations ..................... $3,291,018
==========
</TABLE>
See Notes to Financial Statements.
55
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Liberty Variable Investment Trust Liberty All-Star Equity Fund, Variable Series
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
Six Months
Ended Period Ended
June 30, December 31,
1998 1997*
--------------- ---------------
<S> <C> <C>
Operations:
Net investment income ................................................................... $ 82,545 $ 21,046
Net realized gains (losses) on investments .............................................. 584,923 (4,218)
Unrealized appreciation on investments .................................................. 2,623,550 142,342
----------- -----------
Net increase in net assets resulting from operations .................................... 3,291,018 159,170
----------- -----------
Distributions declared from:
Net investment income ................................................................... -- (21,113)
----------- -----------
Fund share transactions:
Proceeds from fund shares sold .......................................................... 7,866,788 22,104,982
Cost of fund shares repurchased ......................................................... (449,004) (36,561)
Distributions reinvested ................................................................ -- 21,113
----------- -----------
Net increase in net assets resulting from fund share transactions ........................ 7,417,784 22,089,534
----------- -----------
Total increase in net assets ............................................................. 10,708,802 22,227,591
Net assets:
Beginning of period ..................................................................... 22,227,591 0
----------- -----------
End of period ........................................................................... $32,936,393 $22,227,591
=========== ===========
Accumulated undistributed (overdistributed) net investment income included in ending net
assets .................................................................................. $ 82,470 $ (67)
=========== ===========
Analysis of changes in shares of beneficial interest:
Shares sold ............................................................................. 707,753 2,209,591
Shares redeemed ......................................................................... (40,457) (3,658)
Distributions reinvested ................................................................ -- 2,103
----------- -----------
Net increase ............................................................................. 667,296 2,208,036
=========== ===========
</TABLE>
* For the period from the commencement of operations November 17, 1997 to
December 31, 1997.
See Notes to Financial Statements.
56
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Liberty Variable Investment Trust Liberty All-Star Equity Fund, Variable Series
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
Six Months
Ended Period Ended
June 30, December 31,
-------------- -------------
1998 1997***
-------------- -------------
<S> <C> <C>
Per share operating performance:
Net asset value, beginning of period ................................ $ 10.07 $ 10.00
------- -------
Net investment income (a) ........................................... 0.03 0.01
Net realized and unrealized gains on investments .................... 1.35 0.07
------- -------
Total from investment operations .................................... 1.38 0.08
------- -------
Less distributions from:
Dividends from net investment income ............................... -- (0.01)
-------- --------
Net asset value, end of period ...................................... $ 11.45 $ 10.07
======== ========
Total return:
Total investment return (b)(c) ..................................... 13.70%** 0.80%**
Ratios/supplemental data:
Net assets, end of period (000) ..................................... $32,936 $22,228
Ratio of net expenses to average net assets (d)(e) .................. 1.00%* 1.00%*
Ratio of net investment income to average net assets (c)(e) ......... 0.60%* 0.83%*
Portfolio turnover ratio ............................................ 40%** 1%**
</TABLE>
* Annualized
** Not Annualized.
*** For the period from the commencement of operations November 17, 1997 to
December 31, 1997.
(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 1.08%, 1.45% (annualized),
respectively.
(e) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
See Notes to Financial Statements.
57
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Note 1. Organization and Accounting Policies
Liberty Variable Investment Trust (the "Trust"), an open-end management
investment company, was organized as a Massachusetts business trust on March 4,
1993. At June 30, 1998 the Trust consisted of seven series of Funds, each with
its own investment objective, policies and restrictions: Colonial Growth and
Income Fund, Variable Series ("Growth and Income Fund"), Stein Roe Global
Utilities Fund, Variable Series ("Global Utilities Fund"), Colonial
International Fund for Growth, Variable Series ("International Fund for
Growth"), Colonial Strategic Income Fund, Variable Series ("Strategic Income
Fund"), Colonial U.S. Stock Fund, Variable Series ("U.S. Stock Fund"), Newport
Tiger Fund, Variable Series ("Tiger Fund") and Liberty All-Star Equity Fund,
Variable Series ("All-Star Equity 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 long-term capital growth and,
secondarily, preservation of capital.
Global Utilities Fund seeks current income and long-term growth of capital and
income.
International Fund for Growth seeks long-term capital growth, by investing
primarily in non-U.S. equity securities. The Fund is non-diversified and may
invest more than 5% of its total assets in the securities of a single issuer,
thereby increasing the risk of loss compared to a diversified fund.
Strategic Income Fund seeks a high level of current income, as is consistent
with prudent risk and maximizing total return, by diversifying investments
primarily in U.S. and foreign assets in lower rated corporate debt securities.
U.S. Stock Fund seeks long-term capital growth by investing primarily in large
capitalization equity securities.
Tiger Fund seeks long-term capital growth by investing primarily in equity
securities of companies located in the nine Tigers of Asia (Hong Kong,
Singapore, South Korea, Taiwan, Malaysia, Thailand, Indonesia, China and the
Philippines).
All-Star Equity Fund seeks total investment return, comprised of long-term
capital appreciation and current income, through investment primarily in a
diversified portfolio of equity securities.
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") offered by the separate
accounts of life insurance companies ("Participating Insurance Companies").
Certain Participating Insurance Companies are affiliated with the Investment
Adviser and sub-advisers to the Funds ("Affiliated Participating Insurance
Companies"). Such Affiliated Participating Insurance Companies are Keyport Life
Insurance Company ("Keyport"), Independence Life & Annuity Company
("Independence") and Liberty Life Assurance Company of Boston ("Liberty Life").
The Participating Insurance Companies and their separate accounts own all the
shares of the Funds. Liberty Advisory Services Corp. (the Manager) ("LASC"),
provides investment management and advisory services to the Funds pursuant to
its Management Agreements with the Trust. Colonial Management Associates, Inc.
("Colonial") provides sub-advisory services to four Funds: Growth and Income
Fund, International Fund for Growth, U.S. Stock Fund and Strategic Income Fund.
Stein Roe & Farnham Incorporated ("Stein Roe") provides sub-advisory services
to Global Utilities Fund. Newport Fund Management, Inc. ("Newport") provides
sub-advisory services to Tiger Fund. Liberty Asset Management Company ("LAMCO")
provides sub-advisory services to the All-Star Equity Fund. LASC has delegated
various administrative matters to Colonial. Colonial also provides transfer
agency and pricing and record keeping services to the Trust. Keyport Financial
Services Corp. ("KFSC") serves as the principal underwriter of the Trust with
respect to sales of shares to Affiliated Participating Insurance Companies. The
Manager, Colonial, Stein Roe, Newport, LAMCO, KFSC, Keyport and Independence
are wholly-owned indirect subsidiaries of Liberty Financial Companies, Inc.
("LFC"). As of June 30, 1998, Liberty Mutual Insurance Companies ("Liberty
Mutual") owned approximately 73% of the outstanding voting shares of LFC.
Liberty Life is a subsidiary of Liberty Mutual.
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 generally 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 generally are valued at the latest bid quotation.
Long-term debt securities generally 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
58
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
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 securities 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 contracts are used to minimize the exposure to foreign exchange
rate fluctuations during the period between trade and settlement date of the
contracts. The Funds may also enter into forward currency contracts to hedge
certain other foreign currency denominated assets. 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.
The cost of investments purchased and proceeds from investments sold excluding
short-term investments for the six months ended June 30, 1998, for the Funds
were as follows:
<TABLE>
<CAPTION>
Growth Global International
and Income Utilities Fund for
Fund Fund Growth
-------------- -------------- --------------
<S> <C> <C> <C>
Cost of investments
purchased ................ $23,093,323 $13,655,394 $15,337,304
Proceeds from
investments sold ......... 13,562,369 13,217,056 3,285,562
</TABLE>
<TABLE>
<CAPTION>
Strategic All-Star
Income U.S. Stock Tiger Equity
Fund Fund Fund Fund
-------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Cost of investments
purchased .............. $32,160,805 $41,968,836 $1,804,935 $18,103,567
Proceeds from
investments sold ....... 17,167,291 22,785,451 526,734 10,427,858
</TABLE>
59
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
For Growth and Income Fund and Strategic Income Fund, none and $2,251,745 and
$3,318,697 and $747,812, respectively, represent the purchase cost and proceeds
of sales of U.S. Government securities, respectively.
At December 31, 1997, Tiger Fund had capital loss carryovers of $2,436,000
which will expire in or before 2005, if not utilized.
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 June 30, 1998 have
been reclassified as follows:
<TABLE>
<CAPTION>
International
Growth and Global Fund for
Income Fund Utilities Fund Growth
------------- ---------------- --------------
<S> <C> <C> <C>
Accumulated net
investment income ......... $2,561 $ (4,974) $ 26,912
Accumulated net
realized gains (losses) 2,561 4,974 (26,912)
Paid in capital ............. -- -- --
</TABLE>
<TABLE>
<CAPTION>
Strategic All-Star
Income Fund Tiger Fund Equity Fund
------------- ------------ ------------
<S> <C> <C> <C>
Accumulated net
investment income ......... $87,858 $ 1,670 $ (8)
Accumulated net
realized gains (losses) (87,858) (1,670) 8
Paid in capital ............. -- -- --
</TABLE>
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, Stein Roe, Newport and LAMCO,
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:
<TABLE>
<CAPTION>
Annual Rate
as a Percent
of Average
Daily
Fund Net Assets
- --------------------------------------- -------------
<S> <C>
Growth and Income Fund ................ 0.65 of 1%
Global Utilities Fund ................. 0.65 of 1%
International Fund for Growth ......... 0.90 of 1%
Strategic Income Fund ................. 0.65 of 1%
U.S. Stock Fund ....................... 0.80 of 1%
Tiger Fund ............................ 0.90 of 1%
All-Star Equity Fund .................. 0.80 of 1%
</TABLE>
The Manager, out of the management fee it receives from the Funds, pays
Colonial, Stein Roe, Newport and LAMCO a sub-advisory fee based upon the
average daily net assets of the Funds at annual rates as follows:
<TABLE>
<CAPTION>
Annual Rate
as a Percent
of Average
Daily
Fund Net Assets
- --------------------------------------- -------------
<S> <C>
Growth and Income Fund ................ 0.45 of 1%
Global Utilities Fund ................. 0.45 of 1%
International Fund for Growth ......... 0.70 of 1%
Strategic Income Fund ................. 0.45 of 1%
U.S. Stock Fund ....................... 0.60 of 1%
Tiger Fund ............................ 0.70 of 1%
All-Star Equity Fund .................. 0.60 of 1%
</TABLE>
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 pay Colonial Investors Service Center,
Inc., an affiliate of Colonial, for transfer agent services rendered at an
annual rate of $7,500.
Expense Reimbursement--Through April 30, 1999, the Manager has agreed to
reimburse all expenses, including management fees, in excess of 1.00% of
average daily net assets for Growth and Income Fund, Global Utilities Fund,
U.S. Stock Fund, and All-Star Equity Fund, 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.
60
<PAGE>
Liberty Variable Investment Trust Distributor
Keyport Financial Services Corp.
Adviser 125 High Street
Liberty Advisory Services Corp. Boston, Massachusetts 02110
125 High Street
Boston, Massachusetts 02110
Client Services
Sub-Investment Adviser and Keyport Life Insurance Company
Transfer and Dividend Disbursing Agent 125 High Street
Colonial Management Associates, Inc. Boston, Massachusetts 02110
One Financial Center 800-367-3653 (Press 3)
Boston, Massachusetts 02111-2365
Custodian
Sub-Investment Adviser The Chase Manhattan Bank
Stein Roe & Farnham, Inc. 270 Park Avenue
One South Wacker Drive New York, New York 10017-2070
Chicago, Illinois 60606
Legal Counsel
Newport Fund Management Bingham Dana LLP
580 California Street 150 Federal Street
Suite 1960 Boston, Massachusetts 02110
San Francisco, California 94104
The Trustees
Liberty Asset Management Company John A. Bacon Jr.
Federal Reserve Plaza Richard R. Christensen
600 Atlantic Avenue Salvatore Macera
Boston, Massachusetts 02110 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, Independence Life
& Annuity Company, or Liberty Life Assurance Company of Boston.
12/97 NIM 30m
<PAGE>
[This Page Intentionally Left Blank]
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Stein Roe Variable Investment Trust
<TABLE>
<S> <C>
Portfolio Manager's Discussion:
Stein Roe Special Venture Fund, Variable Series ............. 1
Stein Roe Growth Stock Fund, Variable Series ................ 3
Stein Roe Balanced Fund, Variable Series .................... 5
Stein Roe Mortgage Securities Fund, Variable Series ......... 7
Stein Roe Money Market Fund, Variable Series ................ 9
Financial Statements:
Stein Roe Special Venture Fund, Variable Series ............. 10
Stein Roe Growth Stock Fund, Variable Series ................ 15
Stein Roe Balanced Fund, Variable Series .................... 20
Stein Roe Mortgage Securities Fund, Variable Series ......... 26
Stein Roe Money Market Fund, Variable Series ................ 31
Notes to Financial Statements ................................ 35
</TABLE>
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER'S DISCUSSION
Stein Roe Special Venture Fund, Variable Series
- --------------------------------------------------------------------------------
Q: How did the Fund perform?
A: For the six-month period ended June 30, 1998, Stein Roe Special Venture Fund,
Variable Series returned -6.25 percent, underperforming the Russell 2000 Index
and the Lipper small-cap peer group which returned 4.93 percent and 6.02
percent, respectively. Small-cap stocks continued to lag their larger-cap
counterparts throughout the period despite relatively better earnings growth in
the small stock sector. The Fund underperformed its peers as many of its
holdings suffered from a "ripple effect" from reduced demand from Asian markets.
Q: What was the premise for small-cap stock underperformance?
A: Small-cap stocks outperformed large-cap stocks from April 1997 through
October 1997 until the currency crisis in Asia caused many investors to flee to
the relative safety of large-cap stocks. This "safety in size" mentality left
small-cap stocks lagging their large-cap counterparts ever since. For the
six-month period, the Russell 2000, the proxy for the small-cap market, trailed
the large-cap S&P 500 benchmark by 12.79 percentage points.
The second quarter of 1998 was the most difficult quarter for small-cap stocks
this decade. The majority of stock market purchasing has favored large-cap
stocks, with influences from indexing, mutual fund activity, and large foreign
institutions. Small stock prices have suffered from indifference. If past phases
of market activity are any indication of what's to come, investors should again
favor the excellent growth potential and reasonable valuations of the small-cap
sector. In the mean time, we're using this opportunity to purchase attractive
stocks at inexpensive prices.
Q: What sectors underperformed?
A: Two sectors that underperformed for the Fund were energy and technology. Our
oil and gas exploration and production holdings, including Barrett Resources and
Meridian Resources (0.3 percent, and 1.4 percent of total net assets), suffered
from the weakened outlook for oil and gas prices. During the first quarter, we
reduced our exposure to the energy sector from 5.7 percent to 1.7 percent of
total net assets (an underweighted position relative to the Russell 2000),
because, in our opinion, energy prices still look uncertain going forward.
Technology holdings that impacted the Fund's performance included AVX (1.8
percent of total net assets), Kent Electronics (1.8 percent of total net
assets), Artesyn Technologies (2.3 percent of net assets), and Andrew
Corporation which we sold out of before the end of the period. Earnings growth
expectations were reduced on these companies as demand from Asia slowed.
Q: When do you sell disappointing stocks?
A: We generally only sell a stock if there is a sudden change in business
strategy that suggests to us that company or industry fundamentals are
deteriorating. We thoroughly research each purchase so that our buying is based
on long-term fundamentals. However, disappointing short-term performance will
trigger a fundamental review of a stock.
Q: What holdings performed well?
A: LaSalle Partners (2.4 percent of total net assets) rose 24.7 percent over the
past six months reflecting higher commercial real estate activity. Xomed
Surgical Products (4.8 percent of total net assets) increased 24.2 percent as
its less-invasive surgical products market share rose in
Stein Roe Special Venture Fund, Variable Series, and Russell 2000 Index
Performance of a hypothetical $10,000 investment Jan. 1, 1989, to June 30, 1998
[line chart]
<TABLE>
<CAPTION>
Special Russell
Venture Fund 2000 Index
<S> <C> <C>
1/89 10000 10000
12/89 13083 11626
12/90 11918 9362
12/91 16357 13672
12/92 18726 16189
12/93 25406 19246
12/94 25708 18895
12/95 28729 24271
12/96 36470 28274
12/97 39318 34597
6/98 36860 36302
</TABLE>
[end line chart]
<TABLE>
<CAPTION>
- --------------------------------------
Average Annual Total Return
at June 30, 1998
1-Year 5-Year Since Inception
<S> <C> <C>
-5.68% 12.36% 14.73%
- --------------------------------------
</TABLE>
1
<PAGE>
- -------------------------------------------------------------------------------
PORTFOLIO MANAGER'S DISCUSSION (continued)
Stein Roe Special Venture Fund, Variable Series
- -------------------------------------------------------------------------------
the ears, nose and throat market. Also, Metamor Worldwide (2.9 percent of total
net assets), benefiting from the trend toward outsourcing of information
technology staff and consulting services, increased 36.7 percent over the last
six months.
Q: What is your outlook for the small-cap market? Based on that, what is your
outlook for the Fund?
A: Small cap stocks are as cheap as they've been at any time during the past
twenty years, relative to larger cap stocks. The earnings growth outlook for
small stocks remains favorable. This suggests to us that this sector has the
potential for long-term outperformance with moderate shorter-term risk.
We continue to add to our positions in companies that have experienced
management, financial strength and evidence of a sustainable competitive
advantage.
Past performance is no guarantee of future results. Share price and investment
returns will vary, so you may have a gain or loss when you sell shares.
Portfolio holdings are as of June 30, 1998, and are subject to change. Total
return performance includes changes in share price and reinvestment of income
and capital gains distributions. The Russell 2000 is an unmanaged group of
stocks that differs from the composition of each Stein Roe Fund; it is not
available for direct investment. According to Lipper Analytical Services, Inc.,
an independent monitor of mutual fund performance, the median returns for the
Fund's variable annuity small-cap fund peer group for the one-, five-year and
since inception periods ended June 30, 1998, were 18.13 percent, 15.78 percent
and 17.78 percent, respectively. Performance numbers reflect all fund expenses,
but do not include any insurance charges imposed by your insurance company's
separate accounts. If performance information included the effect of these
additional amounts, it would be lower.
* Funds that emphasize investments in smaller companies may experience
short-term volatility.
2
<PAGE>
- -------------------------------------------------------------------------------
PORTFOLIO MANAGER'S DISCUSSION
Stein Roe Growth Stock Fund, Variable Series
- -------------------------------------------------------------------------------
Q: How did the Fund perform?
A: Stein Roe Growth Stock Fund, Variable Series performed well during the
six-month period ending June 30, 1998. The Fund's total return of 18.68 percent
beat both the Lipper growth fund peer group return of 15.65 percent and the S&P
500 Index return of 17.72 percent for the same period.
Q: What contributed to performance?
A: For the past six months the U.S. economy has been strong amid continued
global affects from the Asian crisis. Large-cap stocks historically perform well
in a strong economy. They also are considered the equity investment of choice
when markets are volatile because of their historical stability and liquidity.
Combined, these two factors helped boost the performance of the Fund.
Q: What sectors performed the best?
A: The U.S. consumer has benefited from extremely favorable economic conditions.
Therefore, retail companies have benefited from strong consumer spending. The
Fund's performance was supported by holdings in global consumer franchises such
as Gillette, Procter & Gamble and Walt Disney (3.1 percent, 3.2 percent and 2.1
percent of total net assets, respectively). Other top performers in the retail
sector were Home Depot and Kohl's. Home Depot's profits were driven by record
sales of new and existing homes (3.3 percent of total net assets). Kohl's, a
Midwestern value-priced retailer (3.3 percent of total net assets), is
benefiting from its East Coast expansion. Our health care holdings Merck,
Medtronic and Pfizer (2.6 percent, 3.1 percent, and 3.4 percent of total net
assets, respectively) continued to perform well due to their strong product
lines. Rounding out top performers were telecommunications equipment companies
Lucent Technologies, Cisco Systems and LM Ericsson Telecommunications (3.9
percent, 4.4 percent and 3.2 percent of total net assets, respectively). These
companies continue to benefit from the dramatic worldwide need to upgrade
telecommunications infrastructures to accommodate voice, video and data
services.
Q: What sectors underperformed?
A: Oil services was a disappointing sector as companies suffered from decreasing
oil prices. In this sector, holdings Schlumberger Limited and R&B Falcon
underperformed (2.2 percent and 0.9 percent of total net assets, respectively).
However, our long-term outlook for this area is favorable, so we plan to
continue to hold these companies.
Q: Technology is one of your top sectors. How did your holdings fare?
A: The first quarter is usually tough for certain technology companies, but this
year's seasonal slowness was exacerbated by the turmoil in Asia. Some of the
Fund's holdings suffered due to earnings concerns as well, such as Motorola --
which we sold, and Intel -- which we continue to hold (2.3 percent of total net
assets). Our long-term outlook for the technology sector overall continues to be
favorable because we believe companies will continue to purchase new technology
in order to compete globally. We invest in technology companies that we think
have excellent product lines and are less susceptible to economic downturns
because of their market dominance. For example, we continue to hold this
microprocessor manufacturer because, like Coca-Cola (3.0 percent of total net
assets) and Gillette, Intel is the dominant company in its industry around the
globe.
Stein Roe Growth Stock Fund, Variable Series, and S&P 500 Index
Performance of a hypothetical $10,000 investment Jan. 1, 1989, to June 30, 1998
[line chart]
<TABLE>
<CAPTION>
Growth S&P 500
Stock Fund Index
<S> <C> <C>
1/89 10000 10000
12/89 13130 13163
12/90 12913 12754
12/91 19114 16631
12/92 20382 17896
12/93 21394 19696
12/94 20035 19955
12/95 27595 27445
12/96 33467 33742
12/97 44269 44995
6/98 52539 52969
</TABLE>
[end line chart]
<TABLE>
<CAPTION>
- ----------------------------------------
Average Annual Total Return
at June 30, 1998
1-Year 5-Year Since Inception
<S> <C> <C>
31.29% 21.56% 19.10%
- ---------------------------------------
</TABLE>
3
<PAGE>
- ----------------------------------------------------------------------------
PORTFOLIO MANAGER'S DISCUSSION (continued)
Stein Roe Growth Stock Fund, Variable Series
- ----------------------------------------------------------------------------
Q: What are some new names we'll see in the portfolio?
A: We established positions in Time Warner, NationsBank and Peoplesoft during
the period (3.4 percent, 1.8 percent and 1.6 percent of total net assets,
respectively) because we believe these companies will be able to grow their
earnings consistently over time.
Q: What did you sell during the period?
A: We sold our position in McDonald's after it experienced continued decreases
in same-store sales growth. We also sold Wells Fargo, Baker-Hughes and
Thermo-Electron due to weaker than expected earnings.
Q: What investment themes do you plan to follow going forward?
A: We intend to take advantage of the trend toward global democracy and we will
continue to look for companies that will benefit from increased global consumer
demand. Greater disposable income leads to greater consumer demand for products.
And our belief is that global consumer franchises that perfect their business in
multiple markets stand to benefit tremendously from this opportunity. For
example, we believe Procter & Gamble is the most globally dominant company
within its respective markets, and it is one of the portfolio's largest
holdings.
We also will continue to focus on companies that we believe stand to benefit
from the aging of the baby boomer generation. As these 80 million consumers age,
they're going to require more and better health care. For, example, we believe
pharmaceutical maker Eli Lilly (2.6 percent of total net assets) should be
driven by sales of Evista, which is its osteoporosis drug for post-menopausal
women. As market segments change, product demand will change. Therefore, we will
continue to monitor the market and invest in companies that we believe are
positioned to leverage this trend.
Q: What's your outlook?
A: Our long-term outlook for large-cap companies remains positive despite the
possibility that growth for some of these companies may decelerate sometime in
the future due to the Asian crisis. Therefore, we will focus on companies that
have proved their ability to deliver consistent earnings despite the overall
strength or weakness of the general market. We believe that the U.S. economy
will slow in the second half of 1998. If that does occur, then growth stocks may
continue to outperform as investors pay a premium for the consistent earnings
growth they can provide.
Past performance is no guarantee of future results. Share price and investment
returns will vary, so you may have a gain or loss when you sell shares.
Portfolio holdings are as of June 30, 1998, and are subject to change. Total
return performance includes changes in share price and reinvestment of income
and capital gains distributions. The S&P 500 is an unmanaged group of stocks
that differs from the composition of each Stein Roe Fund; it is not available
for direct investment. According to Lipper Analytical Services, Inc., an
independent monitor of mutual fund performance, the median returns for the
Fund's growth fund peer group for the one-, five- and since inception-periods
ended June 30, 1998, were 29.14 percent, 19.97 percent and 17.95 percent,
respectively. Performance numbers reflect all fund expenses, but do not include
any insurance charges imposed by your insurance company's separate accounts. If
performance information included the effect of these additional amounts, it
would be lower.
4
<PAGE>
- ------------------------------------------------------------------------------
PORTFOLIO MANAGER'S DISCUSSION
Stein Roe Balanced Fund, Variable Series
- ------------------------------------------------------------------------------
Q: How did the Fund perform?
A: The Fund returned 6.56 percent for the six-month period ended June 30, 1998,
underperforming both the Lipper flexible portfolio peer group median return of
9.85 percent and the S&P 500 Index return of 17.72 percent. The benchmark S&P
500 Index is comprised of large-cap equity stocks, reflecting the main portion
of the Fund's investments. However, the Fund also invests significant assets in
international equities and fixed income securities, and for that reason we think
it's useful to mention the returns for those two categories as well. Fixed
income securities as represented by the Lehman Intermediate Government/Corporate
Index returned 3.47 percent and international equities as represented by the
Morgan Stanley Capital International Europe Australia and Far East Index
returned 13.74 percent for the same period.
Q: What affected the markets and therefore the Fund during the past six months?
A: The Asian crisis has led to favorable and unfavorable developments in the
United States. On the positive side the dollar is strong, and energy prices and
inflation are low. On the negative side, the U.S. trade balance has deteriorated
as exports diminished and imports remained firm. The combined result is that the
U.S. consumer is benefiting from solid economic growth, with employment gains
and real wages showing the sharpest increase in over 20 years. The Fund
benefited from strong consumer spending, and retail stock holdings Wal-Mart
Stores and Home Depot, (1.5 percent and 1.5 percent of total net assets,
respectively) were among the best-performing holdings.
Q: Do you expect current economic conditions to continue?
A: We anticipate reduced U.S. corporate profits and profit margins over the next
several quarters. Factors we believe will influence weaker pricing power
include, increased foreign competition, reduced exports and increased salary
payments. We have been investing in companies that we believe stand to counter
these trends, such as drug companies experiencing new product cycles and
financial companies benefiting from lower long-term interest rates. Holdings in
these sectors boosted the Fund's performance during the period. Drug stocks that
performed well were Pfizer, Eli Lilly, American Home Products and Bristol-Myers
Squibb (1.1 percent, 1.1 percent, 1.1 percent and 1.2 percent of total net
assets, respectively).
Q: What hurt performance?
A: Our investment in REIT stocks has been disappointing. Investors have been
steering away from these stocks this year even though earnings have been solid
and dividend yields high because of concerns over legislation, new issue supply
and new construction. However, we plan to maintain our exposure to REIT stocks,
because we believe they are excellent value investments that possess strong
upside potential.
Another drag on performance came from Cendant; previously one of the Fund's
largest holdings. This stock dropped significantly after accounting
irregularities were exposed (0.9 percent of total net assets).
Latin American holdings that supported the Fund's performance in the first
quarter of 1998 restricted performance in the recent quarter, as these stocks
reacted more than we anticipated to a second round of Asian turmoil.
Stein Roe Balanced Fund, Variable Series, and S&P 500 Index
Performance of a hypothetical $10,000 investment Jan. 1, 1989, to June 30, 1998
[line chart]
<TABLE>
<CAPTION>
Balanced S&P 500
Fund Index
<S> <C> <C>
1/89 10000 10000
12/89 12238 13163
12/90 12155 12754
12/91 15550 16631
12/92 16721 17896
12/93 18274 19696
12/94 17691 19955
12/95 22197 27445
12/96 25665 33742
12/97 29982 44995
6/98 31950 52969
</TABLE>
[end line chart]
<TABLE>
<CAPTION>
- ----------------------------------------
Average Annual Total Return
at June 30, 1998
1-Year 5-Year Since Inception
<S> <C> <C>
14.03% 12.77% 13.02%
- ----------------------------------------
</TABLE>
5
<PAGE>
- -----------------------------------------------------------------------------
PORTFOLIO MANAGER'S DISCUSSION (continued)
Stein Roe Balanced Fund, Variable Series
- -----------------------------------------------------------------------------
We also were disappointed by the performance of our holdings in the energy
sector. We reduced our exposure to this sector early in the first quarter of
1998 as oil prices began to deteriorate.
Early in the second quarter, we reduced our equity exposure modestly by selling
investments which were not performing in line with our expectations. We then
redeployed the cash toward the end of the period as conditions were falling into
place for renewed stock market improvement.
Q: What did you purchase?
A: We added several names to the portfolio to increase the Fund's industry
diversification. They include WorldCom in the telecommunications area, Travelers
Group in the financial services area and TCI Group in the media area (1.3
percent, 1.1 percent and 0.6 percent of total net assets, respectively).
Q: How did the portfolio's fixed income portion perform?
A: Our longer-duration strategy in fixed income holdings benefited the Fund's
performance, as interest rates were modestly lower during the period. We expect
the Federal Reserve Board to maintain the current interest rate environment for
the foreseeable future. Therefore, we continue to hold a full, high-quality
position in fixed income. We are now in the environment of a federal budget
surplus and anticipate that the government will use some of the budget surplus
this year to pay down debt. This event would provide support for the fixed
income market. Also, in anticipation of slowing growth in the economy, we
anticipate that the yields on long-term bonds will ease further by year-end.
Q: What's your outlook?
A: We are somewhat cautious about the stock market's ability to maintain its
current strength because we think the valuations of many stocks are high. We
continue to project moderate U.S. economic activity with real growth of 2 to
2-1/2 percent through the end of 1999. In this environment, inflation should
remain muted and interest rates may drift lower. Selectivity in purchasing will
become increasingly important, as the overall stock market in coming months
likely will be digesting the gains of the past few years.
Past performance is no guarantee of future results. Share price and investment
returns will vary, so you may have a gain or loss when you sell shares.
Portfolio holdings are as of June 30, 1998; portfolio data is subject to change.
Total return performance includes changes in share price and reinvestment of
income and capital gains distributions. The S&P 500, the Lehman Intermediate
Government/Corporate Index and the MSCI EAFE are unmanaged groups of securities
that differ from the composition of each Stein Roe Fund; they are not available
for direct investment. According to Lipper Analytical Services, Inc., an
independent monitor of mutual fund performance, the median returns for the
Fund's variable annuity flexible portfolio fund peer group for the for the one-,
five- and since inception-periods ended June 30, 1998, were 18.64 percent, 14.21
percent and 13.81 percent, respectively. Performance numbers reflect all fund
expenses, but do not include any insurance charges imposed by your insurance
company's separate accounts. If performance information included the effect of
these additional amounts, it would be lower.
6
<PAGE>
- ------------------------------------------------------------------------------
PORTFOLIO MANAGER'S DISCUSSION
Stein Roe Mortgage Securities Fund, Variable Series
- ------------------------------------------------------------------------------
Q: How did the Fund perform?
A: For the six-month period ended June 30, 1998, Mortgage Securities Fund,
Variable Series, returned 3.43 percent, beating the Lipper U.S. mortgage fund
peer group median and the Lehman Mortgage Backed Securities Fixed Rate Index
returns of 3.42 percent and 3.38 percent, respectively.
Q: What transpired in the mortgage securities market over the past six months?
A: During the first quarter, the differences, or spreads, between yields on
mortgage securities and U.S. Treasury securities widened, an event that occurred
in the corporate and other bond markets as well. Corporate bond yields widened
in reaction to the Asian financial crisis and fears of a slowdown in U.S.
economic activity.
In the second quarter, falling bond yields dropped home-mortgage rates to their
lowest levels in five years. However, what is great news to homeowners -- the
opportunity to refinance their mortgage -- is often a negative to investors in
mortgage-backed securities. Prices of these bonds, which represent an ownership
interest in mortgage loans made by financial institutions, usually lag behind
Treasury bonds as interest rates fall, and that has been the case throughout
much of the second quarter. From a historical perspective, however, the decline
in yields was relatively benign and much smaller than the expected interest rate
move priced into the yield spread between mortgage-backed securities and
Treasuries. This enabled mortgage returns to perform reasonably well in a
difficult environment of spread widening and faster-than-expected prepayments.
While concerns regarding Asia and its impact on the U.S. economy may persist for
some time, we believe this widening of spreads has made both the mortgage and
corporate sectors attractive. This, together with an outlook of subdued interest
rate volatility, bodes well for mortgage securities in the period ahead.
Q: What strategies aided the Fund's performance?
A: One strategy that supported our outperformance was our longer duration. We've
been maintaining it at three and a quarter to three and one half years, and this
relatively longer stance helped performance as interest rates dropped and
longer-term securities rose in market value.
Another factor that supported the Fund's performance was the high quality of our
holdings. Mortgage funds that invest more aggressively, such as hedge funds or
real estate investment trusts (REITs), use leverage or borrowed money to
increase their profits. While this tactic can be successful, it also can falter
when mortgage prepayments do not conform to expectations. Recently, when
interest rates fell, prepayment rates on higher-coupon mortgages accelerated
beyond market expectations because of a stronger housing market and improvements
in refinancing technology. Struggling hedge funds and REITs were forced to dump
their leveraged positions in interest-only mortgage securities, which are
extremely sensitive to accelerating prepayment trends. This depressed prices of
interest-only securities by 20 percent. While press reports regarding the
condition of the mortgage market have been alarming, they have overstated the
extent to which problems facing the interest-only sector have spilled over to
the overall market for mortgage-backed issues. Those mortgage funds that have
invested in the riskiest mortgage securities suffer the most. While we held
positions in seasoned premium mortgages that prepaid faster than expected, our
position in interest-only securities is small. This conservative approach has
stood the test of time and is another reason we outperformed our peer group.
Stein Roe Mortgage Securities Fund, Variable Series, and
Lehman Mortgage-Backed Securities Index
Performance of a hypothetical $10,000 investment Jan. 1, 1989, to June 30, 1998
[line chart]
<TABLE>
<CAPTION>
Mortgage Securities Lehman Mortgage-Backed
Income Fund Securities Index
<S> <C> <C>
1/89 10000 10000
12/89 11284 11535
12/90 12311 12771
12/91 14094 14779
12/92 14933 15808
12/93 15868 16890
12/94 15635 16618
12/95 18077 19410
12/96 18926 20449
12/97 20368 22390
6/98 21346 23148
</TABLE>
[end line chart]
<TABLE>
<CAPTION>
- ----------------------------------------
Average Annual Total Return
at June 30, 1998
1-Year 5-Year Since Inception
<S> <C> <C>
9.13% 6.39% 8.32%
- ----------------------------------------
</TABLE>
7
<PAGE>
- ------------------------------------------------------------------------------
PORTFOLIO MANAGER'S DISCUSSION (continued)
Stein Roe Mortgage Securities Fund, Variable Series
- ------------------------------------------------------------------------------
Q: Where else did you focus your investments?
A: We continue to maintain a positive outlook regarding our exposure to
subordinate home equity and home improvement loans, even though they have
underperformed since our initial purchase during late 1997. These high-quality
holdings possess substantial credit protection to adequately handle adverse
delinquency and loss environments. They are also currently priced better than
comparably-rated corporate alternatives. We expect spreads in this sector to
narrow over the coming 12-18 months as prepayments become more common.
Q: Are you still underweight mortgage-backed securities?
A: The portfolio continues to hold a slightly lower-than-normal weighting of
83.8 percent of total net assets in mortgage securities. This can be compared to
a typical historical weighting of 85 percent to 90 percent of total net assets.
However, we did increase our exposure during the period, up from 72.3 percent at
the beginning of the year, by purchasing discount government mortgage bonds that
we believe to be relatively insensitive to prepayment risk. At the end of the
year, we took advantage of supply pressures and reinvested principal prepayments
into home-equity loans with non-accelerating senior (NAS) structures. These
securities offer yield spreads up to one third of a percent higher than other
mortgage alternatives such as agency collateralized mortgage obligations (CMOs).
Home equity loan NAS investments are attractive because they are less sensitive
to prepayment risk and contain structural protection whereby principal cash
flows are "locked out" from prepayments for the first three years of the
transaction. This combination of refinancing and structural protection is
expected to lead to total rates of return greater than the initial yield
advantage versus agency CMOs. Our outlook for the sector has improved slightly,
and we plan to increase the percentage of mortgage holdings when opportunities
arise.
We plan to maintain our positions in Treasury securities and corporate bonds. If
interest rates decline, Treasury securities should outperform mortgage-backed
securities over the near term. The corporate bonds we hold are all
investment-grade issues rated 'A' or higher. We believe the specific corporate
issues we own offer income and total return potential comparable to or better
than mortgage-backed securities, but without the refinancing risk.
Q: What's your outlook?
A: Compared to historical experience, interest rate volatility has been very low
over the past eighteen-month period. A combination of moderate economic growth
and low inflation is expected to keep existing Federal Reserve interest rate
policy on hold. We therefore continue to believe that interest rate volatility
will remain subdued. This, coupled with wider yield spreads, should provide a
favorable environment going forward for mortgage-backed securities.
Past performance is no guarantee of future results. Share price and investment
return will vary, so you may have a gain or loss when you sell shares. Portfolio
holdings are as of June 30, 1998; portfolio data is subject to change. Total
return performance includes changes in share price and reinvestment of income
and capital gains distributions. The Fund is neither insured nor guaranteed by
the U. S. government. Up to 20 percent of the Fund's assets may be invested in
other types of securities. The Lehman Mortgage Backed Securities Fixed Rate
Index represents an unmanaged group of government securities that differs from
the composition of the Fund; it is not available for direct investment.
According to Lipper Analytical Services, Inc., an independent monitor of mutual
fund performance, the median returns for the Fund's variable annuity mortgage
fund peer group for the one-, five- and since inception-periods ended June 30,
1998, were 9.07 percent, 6.62 percent and 9.06 percent, respectively. The Fund's
Adviser currently limits expenses to 0.70 percent of average net assets. Absent
past limits, total return would have been less. Performance numbers reflect all
fund expenses, but do not include any insurance charges imposed by your
insurance company's separate accounts. If performance information included the
effect of these additional amounts, it would be lower.
8
<PAGE>
- ------------------------------------------------------------------------------
PORTFOLIO MANAGER'S DISCUSSION
Stein Roe Money Market Fund, Variable Series
- ------------------------------------------------------------------------------
Q: How did the Fund perform?
A: The Stein Roe Money Market Fund, Variable Series, performed in line with the
peer group and the Index for the six-month period ended June 30, 1998. The total
return for the Fund was 2.55 percent, versus 2.53 percent for the 90-day
Treasury Bill Index and 2.48 percent for the Lipper money market fund peer
group. The Fund's average total return for the one-year, five-year and since
inception periods ended June 30, 1998, were 3.85 percent, 4.39 percent and 5.17
percent, respectively.
Q: What affected the change in the Fund's yield?
A: When year-end financing pressures wore off, the inflated rates being offered
by money market securities lowered, as we expected. As a result, the Fund's
seven-day yield decreased from 5.32 percent at Dec. 31, 1997 to 5.05 percent at
June 30, 1998. With the exception of the year-end peak keeping yields high at
the beginning of the year, the yield curve remained flat. We lengthened the
Fund's weighted average maturity to approximately 33.1 days (neutral maturity)
because we don't expect the Federal Reserve to increase interest rates anytime
soon.
Q: Did the Fund's structure change throughout the period?
A: We've been moving into domestic commercial paper throughout 1998, as
reflected in the Fund's holdings. We've limited our Japanese positions in
letters of credit commercial paper and Yankee CDs because we believe it was in
the Fund's best interest to limit exposure to that area. However, our position
in Yankee CDs increased because we believe securities backed by Canadian and
European banks are still attractive purchases. During the first quarter of the
fiscal year, our holdings in federal agency securities matured. Although we
would have liked to maintain the Fund's exposure to that sector, it was too
expensive to make attractive new purchases. We wanted to add to our position in
variable rate note securities as a hedge against interest rate fluctuations, but
we had a hard time finding any of these "floaters" throughout the year, as they
were not offered at attractive prices. We instead replaced our floaters and a
maturing federal agency note with a one-year Yankee CD from Canada (4.0 percent
of total net assets) and some regular commercial paper.
Q: Based on the riskiness of investing in Asian markets, does the Fund have any
exposure there?
A: The Fund did hold Japanese letter of credit commercial paper. We often invest
in Japanese-backed issues when they are offering attractive yields. However,
during this period, when the Fund's Japanese holdings matured we did not replace
them because we believe there is presently too much risk in having exposure to
that area. We invested the proceeds in regular commercial paper and a Yankee CD.
The Fund's average yield decreased slightly as a result of this move.
Q: Was there any change in interest rate activity throughout the six-month
period?
A: We saw a spark in the shortest-term rates near the end of the six-month
period, as the date of the Federal Open Market Committee (FOMC) meeting
approached and created speculation about the direction of interest rates.
However, long-term interest rates remained unchanged throughout the entire
period. There was a stated bias toward tightening rates at the May meeting, but
rates remained unchanged, likely due to problems in Asia. In the days since that
meeting, the situation in Asia has become worse. Because of that, we believe
interest rates will remain unchanged for at least a few more months.
Q: Although a flat yield curve restricts some value trading, isn't stability
good for a money market fund?
A: Yes. In circumstances like we've seen this year, when the stock and bond
markets are high and both markets are volatile, many investors shift assets into
money market funds for stability. Investors also use money market funds as the
cash basis of their investment portfolio. While money market funds have not
returned resounding rates, given the current interest rate environment, we
believe they have provided decent returns for short-term, high-liquidity
investing.
Q: What's your investment strategy for the remainder of 1998?
A: Part of our strategy will depend on what the Federal Reserve does with
interest rates. Until investors begin to believe that there will be a change in
interest rates, yields will remain flat. Factors that may push rates up include
a recovery in Asia, increased inflation in the United States or
stronger-than-expected economic growth.
We plan to lengthen the Fund's duration when we see the potential for profiting
from this move. We'll remain cautious in our maturity range, too. Without
finding value in the Japanese market, we plan to remain heavily invested in U.S.
commercial paper. We will also continue to invest in letter of credit commercial
paper and European and Canadian Yankee CDs when they offer good relative values.
Past performance is no guarantee of future results. Share price and investment
returns will vary, so you may have a gain or loss when you sell shares.
Portfolio holdings are as of June 30, 1998; portfolio data is subject to change.
Total return performance includes changes in share price and reinvestment of
income and capital gains distributions. The 30-day Treasury Bill Index is an
unmanaged group of stocks that differs from the composition of each Stein Roe
fund; it is not available for direct investment. According to Lipper Analytical
Services, Inc., an independent monitor of mutual fund performance, the median
returns for the Fund's money market fund peer group for the one-, five- and
since inception-periods ended June 30, 1998, were 5.22 percent, 4.71 percent and
5.34 percent, respectively. Performance numbers reflect all fund expenses, but
do not include any insurance charges imposed by your insurance company's
separate accounts. If performance information included the effect of these
additional amounts, it would be lower.
9
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
Stein Roe Special Venture Fund, Variable Series / June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Value
------- -----------
<S> <C> <C>
COMMON STOCKS--(93.1%)
Apparel Manufacturers--(2.1%)
Columbia Sportswear (a) ............. 185,700 $ 3,528,300
-----------
Banks/Savings and Loans--(2.5%)
National Bancorp of Alaska .......... 74,800 2,309,450
Rancho Santa Fe National Bank (a) ... 111,900 1,846,350
-----------
4,155,800
-----------
Broadcasting/Media--(9.8%)
Central European Media Enterprises
Limited (a) ....................... 293,000 6,336,125
Metro Networks (a) .................. 234,600 10,117,125
-----------
16,453,250
-----------
Business Services--(6.5%)
Alternative Resources (a) ........... 405,800 5,021,775
Interim Services (a) ................ 34,100 1,095,462
Metamor Worldwide (a) ............... 136,000 4,785,500
-----------
10,902,737
-----------
Computer Hardware, Software, and Services--(6.5%)
BARRA (a) ........................... 147,700 3,618,650
National Computer Systems ........... 80,200 1,924,800
Radiant Systems (a) ................. 108,600 1,574,700
SPSS (a) ............................ 157,700 3,666,525
-----------
10,784,675
-----------
Containers-Metal/Glass--(1.9%)
Silgan Holdings (a) ................. 115,700 3,239,600
-----------
Cosmetics--(2.6%)
Nu Skin Asia (a) .................... 224,000 4,368,000
-----------
Dental Products--(1.7%)
National Dentex (a) ................. 118,000 2,773,000
-----------
Diversified Operations--(4.7%)
Fisher Companies .................... 39,500 2,804,500
Triarc Companies .................... 228,000 5,001,750
-----------
7,806,250
-----------
Electronic Components--(10.6%)
Artesyn Technologies (a) ............ 244,000 3,904,000
AVX ................................. 186,600 2,997,262
Black Box (a) ....................... 133,400 4,427,212
Kent Electronics (a) ................ 162,800 2,981,275
Hubbell
Class A ........................... 5,000 218,125
Class B ........................... 78,700 3,275,888
-----------
17,803,762
-----------
Market
Shares Value
----- ------
Health Services and Equipment--(8.9%)
BioSource International (a) ......... 262,000 $ 1,457,375
Complete Management (a) ............. 142,000 559,125
Urologix (a) ........................ 166,900 1,418,650
Uroquest Medical (a) ................ 309,200 811,650
Xomed Surgical Products (a) ......... 256,900 7,996,013
Young Innovations (a) ............... 174,700 2,686,013
-----------
14,928,826
-----------
Insurance--(6.7%)
Meadowbrook Insurance Group ......... 331,800 9,020,812
PAULA Financial ..................... 112,200 2,258,025
-----------
11,278,837
-----------
Marketing Services--(0.3%)
Catalina Marketing (a) .............. 9,000 467,437
-----------
Oil/Gas--(1.7%)
Barrett Resources (a) ............... 15,000 561,562
Meridian Resource (a) ............... 325,800 2,300,962
-----------
2,862,524
-----------
Optical Supplies--(3.7%)
Sola International (a) .............. 191,400 6,256,388
-----------
Pharmaceuticals--(1.7%)
Ligand Pharmaceuticals (a) .......... 150,200 1,933,825
Shire Pharmaceuticals
Group ADRs (a) .................... 43,300 925,538
-----------
2,859,363
-----------
Photographic Equipment and Supplies--(2.3%)
Ballantyne of Omaha (a) ............. 461,750 3,867,156
-----------
Publishing--(2.6%)
CMP Media (a) ....................... 248,500 4,348,750
-----------
Real Estate Development/Management--(8.2%)
CB Commercial Real Estate
Services Group (a) ................ 292,000 9,763,750
LaSalle Partners (a) ................ 89,000 3,960,500
-----------
13,724,250
-----------
Retail--(2.9%)
Regis ............................... 120,400 3,559,325
Video Update (a) .................... 879,000 1,263,563
-----------
4,822,888
Specialty Chemical--(1.9%)
ChemFirst ........................... 127,800 3,226,950
-----------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Market
SCHEDULE OF INVESTMENTS Shares Value
(Continued) ------- -----------
<S> <C> <C>
COMMON STOCKS (Continued)
Wholesale Distribution--(3.3%)
Henry Schein (a) .............................. 81,300 $ 3,749,963
School Specialty (a) .......................... 111,000 1,817,625
-------------
5,567,588
-------------
Total Common Stocks
(Cost $159,525,243) ........................... 156,026,331
-------------
Principal Market
Amount Value
------- -----------
SHORT-TERM OBLIGATIONS--(7.6%)
Commercial Paper--(7.6%)
Associate Corp. of North America 6.250% 7/01/98 $ 7,770,000 $ 7,770,000
Windmill Funding 6.250% 7/01/98 ............... 5,000,000 5,000,000
-------------
Total Short-Term Obligations
(Cost $12,770,000) ............................ 12,770,000
-------------
Total Investments--(100.7%)
(Cost $172,295,243) (b) ....................... 168,796,331
Other Assets, less Liabilities--(-0.7%) ....... (1,224,745)
-------------
Total Net Assets--(100.0%) .................... $ 167,571,586
=============
</TABLE>
Notes to Portfolio of Investments
- --------------------------------------------------------------------------------
(a) Non-income producing security.
(b) At June 30, 1998, the cost of investments for federal income tax purposes
was $172,300,497. Net unrealized depreciation was $3,504,166, comprising of
gross unrealized appreciation of $18,860,999 and gross unrealized
depreciation of $22,365,165.
See Notes to Financial Statements.
11
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
Stein Roe Special Venture Fund, Variable Series / June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments, at market value (identified cost $172,295,243) ............ $ 168,796,331
Cash ................................................................... 53,444
Receivable for investments sold ........................................ 2,462,157
Dividends receivable ................................................... 59,756
Other assets ........................................................... 18,248
-------------
Total assets ....................................................... 171,389,936
-------------
Liabilities:
Payable for investments purchased ...................................... 3,319,705
Payable for fund shares repurchased .................................... 335,313
Payable to investment adviser and transfer agent ....................... 91,229
Accrued expenses payable ............................................... 72,103
-------------
Total liabilities .................................................. 3,818,350
-------------
Net assets ............................................................. $ 167,571,586
=============
Net assets represented by:
Paid-in capital ...................................................... $ 164,682,376
Accumulated net investment loss ...................................... (143,089)
Accumulated net realized gains on investments ........................ 6,532,029
Net unrealized depreciation on investments ........................... (3,499,730)
-------------
Total net assets applicable to outstanding shares of beneficial interest $ 167,571,586
=============
Shares of beneficial interest outstanding .............................. 10,852,908
=============
Net asset value per share .............................................. $ 15.44
=============
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment income:
Interest income .................................................. $ 314,006
Dividends ........................................................ 242,599
------------
Total investment income ...................................... 556,605
------------
Expenses:
Management fee ................................................. 476,837
Administrative fee ............................................. 143,051
Accounting fee ................................................. 14,281
Printing expense ............................................... 11,160
Audit and legal fees ........................................... 9,300
Trustees' expense .............................................. 3,906
Transfer agent fee ............................................. 3,750
Miscellaneous expense .......................................... 37,243
------------
Total expenses ............................................... 699,528
------------
Net investment loss .............................................. (142,923)
Realized and unrealized gains (losses) on investments:
Net realized gains on investments .............................. 6,588,529
Change in unrealized appreciation or depreciation on investments (17,207,265)
------------
Net decrease in net assets resulting from operations ............. $(10,761,659)
============
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
- ------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Stein Roe Special Venture Fund, Variable Series / June 30, 1998
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1998 December 31,
(Unaudited) 1997
------------- -------------
<S> <C> <C>
Operations:
Net investment income (loss) ..................................................... $ (142,923) $ 84,501
Net realized gains on investments ................................................ 6,588,529 16,866,896
Change in unrealized appreciation or depreciation on investments ................. (17,207,265) (2,574,259)
------------- -------------
Net increase (decrease) in net assets resulting from operations .................... (10,761,659) 14,377,138
------------- -------------
Distributions declared from:
Net investment income ............................................................ (51,000) (265,000)
Net realized gains on investments ................................................ (16,912,000) (36,940,000)
------------- -------------
Total distributions ................................................................ (16,963,000) (37,205,000)
------------- -------------
Fund share transactions:
Proceeds from fund shares sold ................................................... 11,542,902 56,760,177
Cost of fund shares repurchased .................................................. (33,799,412) (66,766,579)
Distributions reinvested ......................................................... 16,963,000 37,205,000
------------- -------------
Net increase (decrease) in net assets resulting from fund share transactions ....... (5,293,510) 27,198,598
------------- -------------
Total increase (decrease) in net assets ............................................ (33,018,169) 4,370,736
Net assets:
Beginning of year ................................................................ 200,589,755 196,219,019
------------- -------------
End of year ...................................................................... $ 167,571,586 $ 200,589,755
============= =============
Accumulated undistributed net investment income (loss) included in ending net assets $ (143,089) $ 50,834
============= =============
Analysis of changes in shares of beneficial interest:
Shares sold ...................................................................... 666,516 3,128,771
Shares repurchased ............................................................... (1,957,828) (3,703,394)
Distributions reinvested ......................................................... 998,996 2,256,218
------------- -------------
Net increase (decrease) ............................................................ (292,316) 1,681,595
============= =============
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Stein Roe Special Venture Fund, Variable Series
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Years Ended December 31,
June 30, 1998 ----------------------------------------------
(Unaudited) 1997 1996 1995 1994
----------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of year ........................ $ 18.00 $ 20.73 $ 16.33 $ 14.74 $ 16.53
-------- -------- -------- -------- --------
Net investment income (loss) .............................. (0.01) 0.01 0.04 0.04 0.06
Net realized and unrealized gains (losses) on investments . (0.98) 1.25 4.36 1.69 0.09
-------- -------- -------- -------- --------
Total from investment operations .......................... (0.99) 1.26 4.40 1.73 0.15
-------- -------- -------- -------- --------
Less distributions:
Dividends from and in excess of net investment income ... -- (0.03) -- (0.04) (0.07)
Distributions from and in excess of net realized gains
on investments ........................................ (1.57) (3.96) -- (0.10) (1.87)
-------- -------- -------- -------- --------
Total distributions ....................................... (1.57) (3.99) -- (0.14) (1.94)
-------- -------- -------- -------- --------
Net asset value, end of year .............................. $ 15.44 $ 18.00 $ 20.73 $ 16.33 $ 14.74
======== ======== ======== ======== ========
Total return:
Total investment return ................................... (6.25)% 7.81% 26.94% 11.75% 1.19%(b)
Ratios/supplemental data:
Net assets, end of year (000's) ........................... $167,572 $200,590 $196,219 $143,248 $134,078
Ratio of expenses to average net assets ................... 0.73% 0.73% 0.75% 0.76% 0.80%(a)
Ratio of net investment income (loss) to average net assets (0.15)% 0.04% 0.20% 0.26% 0.44%(b)
Portfolio turnover ratio .................................. 32% 93% 100% 132% 144%
Average commissions (per share) ........................... $ 0.0353 $ 0.0453 $ 0.0251 -- --
</TABLE>
(a) These ratios were not materially affected by the reimbursement of certain
expenses by the Adviser.
(b) Computed giving effect to the Adviser's expense limitation undertaking.
See Notes to Financial Statements.
14
<PAGE>
- ------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
Stein Roe Growth Stock Fund, Variable Series / June 30, 1998 (Unaudited)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Value
------ -----------
<S> <C> <C>
COMMON STOCKS--(97.2%)
Banks--(1.8%)
NationsBank ............................ 60,000 $ 4,590,000
-----------
Business Services--(2.7%)
Paychex ................................ 165,000 6,713,438
-----------
Computers and Computer Software--(11.3%)
Cisco Systems (a) ...................... 120,000 11,047,500
Intel .................................. 80,000 5,930,000
Microsoft (a) .......................... 70,000 7,586,250
Peoplesoft (a) ......................... 85,000 3,995,000
-----------
28,558,750
-----------
Consumer Related--(10.5%)
Cendant (a) ............................ 275,000 5,740,625
Gillette ............................... 140,000 7,936,250
Procter & Gamble ....................... 90,000 8,195,625
Unilever ............................... 60,000 4,736,250
-----------
26,608,750
-----------
Drugs--(8.7%)
Eli Lilly & Company .................... 100,000 6,606,250
Merck & Company ........................ 50,000 6,687,500
Pfizer ................................. 80,000 8,695,000
-----------
21,988,750
-----------
Electrical Equipment--(4.9%)
General Electric ....................... 100,000 9,100,000
Philips Electronics .................... 40,000 3,400,000
-----------
12,500,000
-----------
Energy--(2.2%)
Schlumberger Limited ................... 80,000 5,465,000
-----------
Financial Services--(9.7%)
American Express ....................... 75,000 8,550,000
Fannie Mae ............................. 140,000 8,505,000
Household International ................ 150,000 7,462,500
-----------
24,517,500
-----------
Food/Beverage/Tobacco--(3.0%)
Coca-Cola .............................. 90,000 7,695,000
-----------
Market
Shares Value
------ -----------
Health Care--(2.3%)
Johnson & Johnson ...................... 80,000 $ 5,900,000
-----------
Insurance--(6.8%)
American International Group ........... 56,250 8,212,500
Travelers Group ........................ 150,000 9,093,750
-----------
17,306,250
-----------
Leisure & Entertainment--(5.4%)
Walt Disney ............................ 50,000 5,253,125
Time Warner ............................ 100,000 8,543,750
-----------
13,796,875
-----------
Medical Supplies--(3.2%)
Medtronic .............................. 125,000 7,968,750
-----------
Oil and Gas--(0.9%)
R&B Falcon (a) ......................... 100,000 2,262,500
-----------
Retail--(6.6%)
Home Depot ............................. 100,000 8,306,250
Kohl's (a) ............................. 160,000 8,300,000
-----------
16,606,250
-----------
Rubber, Plastic & Related--(2.6%)
Illinois Tool Works .................... 100,000 6,668,750
-----------
Telecommunications--(14.6%)
Alcatel Alsthom ADRs ................... 100,000 4,068,750
LM Ericcson Telecommunications
ADRs, class B ........................ 280,000 8,015,000
Lucent Technologies .................... 120,000 9,982,500
Tellabs (a) ............................ 100,000 7,162,500
WorldCom (a) ........................... 160,000 7,750,000
-----------
36,978,750
-----------
Total Common Stocks
(Cost $114,512,773) .................. 246,125,313
-----------
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS Principal Market
(Continued) Amount Value
--------- ------------
<S> <C> <C>
SHORT-TERM OBLIGATION--(2.6%)
Commercial Paper--(2.6%)
Associates Corp. of North America
6.250% 7/01/98
(Cost $6,725,000) .................. $6,725,000 $ 6,725,000
------------
Total Investments--(99.8%)
(Cost $121,237,773) (b) .............. 252,850,313
Other Assets, less Liabilities--(0.2%) 400,715
------------
Total Net Assets (100.0%) ............ $253,251,028
============
</TABLE>
Notes to Portfolio of Investments
- --------------------------------------------------------------------------------
(a) Non-income producing security.
(b) At June 30, 1998, the cost of investments for federal income tax purposes
was $121,239,014. Net unrealized appreciation was $131,611,299, comprising
of gross unrealized appreciation of $132,196,561 and gross unrealized
depreciation of $585,262.
See Notes to Financial Statements.
16
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
Stein Roe Growth Stock Fund, Variable Series / June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments, at market value (identified cost $121,237,773) ............ $252,850,313
Cash ................................................................... 50,251
Receivable for fund shares sold ........................................ 354,263
Dividends receivable ................................................... 152,587
Other assets ........................................................... 11,536
------------
Total assets ....................................................... 253,418,950
------------
Liabilities:
Payable to investment adviser and transfer agent ....................... 131,895
Accrued expenses payable ............................................... 35,355
Payable for fund shares repurchased .................................... 672
------------
Total liabilities .................................................. 167,922
------------
Net assets ............................................................. $253,251,028
============
Net assets represented by:
Paid-in capital ...................................................... $114,840,012
Accumulated undistributed net investment income ...................... 203,594
Accumulated net realized gains on investments ........................ 6,594,613
Net unrealized appreciation on investments ........................... 131,612,809
------------
Total net assets applicable to outstanding shares of beneficial interest $253,251,028
============
Shares of beneficial interest outstanding .............................. 6,270,143
============
Net asset value per share .............................................. $ 40.39
============
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment income:
Dividends ................................................................. $ 838,457
Interest income ........................................................... 166,418
-----------
Total investment income ............................................... 1,004,875
-----------
Expenses:
Management fee .......................................................... 574,099
Administrative fee ...................................................... 172,230
Accounting fee .......................................................... 14,767
Audit and legal fees .................................................... 8,100
Trustees' expense ....................................................... 7,921
Printing expense ........................................................ 5,340
Transfer agent fee ...................................................... 3,750
Miscellaneous expense ................................................... 14,422
-----------
Total expenses ........................................................ 800,629
-----------
Net investment income ..................................................... 204,246
Realized and unrealized gains on investments:
Net realized gains on investments ....................................... 6,596,089
Change in unrealized appreciation or depreciation on investments ........ 33,094,381
-----------
Net increase in net assets resulting from operations ...................... $39,894,716
===========
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Stein Roe Growth Stock Fund, Variable Series
- --------------------------------------------------------------------------------------------------------------
Six Months Ended Year Ended
June 30, 1998 December 31,
(Unaudited) 1997
------------- -------------
<S> <C> <C>
Operations:
Net investment income ..................................................... $ 204,246 $ 610,654
Net realized gains on investments ......................................... 6,596,089 12,625,736
Change in unrealized appreciation or depreciation on investments .......... 33,094,381 39,257,702
------------- -------------
Net increase in net assets resulting from operations ........................ 39,894,716 52,494,092
------------- -------------
Distributions declared from:
Net investment income ..................................................... (590,000) (710,000)
Net realized gains on investments ......................................... (12,603,000) (7,500,000)
------------- -------------
Total distributions ......................................................... (13,193,000) (8,210,000)
------------- -------------
Fund share transactions:
Proceeds from fund shares sold ............................................ 18,004,675 35,528,562
Cost of fund shares repurchased ........................................... (18,047,824) (36,502,167)
Distributions reinvested .................................................. 13,193,000 8,210,000
------------- -------------
Net increase in net assets resulting from fund share transactions ........... 13,149,851 7,236,395
------------- -------------
Total increase in net assets ................................................ 39,851,567 51,520,487
Net assets:
Beginning of year ......................................................... 213,399,461 161,878,974
------------- -------------
End of year ............................................................... $ 253,251,028 $ 213,399,461
============= =============
Accumulated undistributed net investment income included in ending net assets $ 203,594 $ 589,348
============= =============
Analysis of changes in shares of beneficial interest:
Shares sold ............................................................... 477,159 1,104,794
Shares repurchased ........................................................ (479,934) (1,131,238)
Distributions reinvested .................................................. 366,676 274,215
------------- -------------
Net increase ................................................................ 363,901 247,771
============= =============
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Stein Roe Growth Stock Fund, Variable Series
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Years Ended December 31,
June 30, 1998 ----------------------------------------------
(Unaudited) 1997 1996 1995 1994
----------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of year ..................... $ 36.13 $ 28.61 $ 23.59 $ 18.11 $ 20.65
-------- -------- -------- -------- -------
Net investment income .................................. 0.03 0.10 0.13 0.15 0.15
Net realized and unrealized gains (losses)
on investments ....................................... 6.45 8.84 4.89 6.68 (1.46)
-------- -------- -------- -------- -------
Total from investment operations ....................... 6.48 8.94 5.02 6.83 (1.31)
-------- -------- -------- -------- -------
Less distributions:
Dividends from and in excess of net investment income (0.10) (0.12) -- (0.15) (0.17)
Distributions from and in excess of net realized gains
on investments ..................................... (2.12) (1.30) -- (1.20) (1.06)
-------- -------- -------- -------- -------
Total distributions .................................... (2.22) (1.42) -- (1.35) (1.23)
-------- -------- -------- -------- -------
Net asset value, end of year ........................... $ 40.39 $ 36.13 $ 28.61 $ 23.59 $ 18.11
======== ======== ======== ======== =======
Total return:
Total investment return ................................ 18.68% 32.28% 21.28% 37.73% (6.35)%
Ratios/supplemental data:
Net assets, end of year (000's) ........................ $253,251 $213,399 $161,879 $136,834 $98,733
Ratio of expenses to average net assets ................ 0.70% 0.71% 0.73% 0.74% 0.77%
Ratio of net investment income to average net assets ... 0.18% 0.32% 0.49% 0.72% 0.75%
Portfolio turnover ratio ............................... 22% 28% 35% 41% 72%
Average commissions (per share) ........................ $ 0.0564 $ 0.0583 $ 0.0534 -- --
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
Stein Roe Balanced Fund, Variable Series / June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Value
------ -----------
<S> <C> <C>
COMMON STOCKS--(56.9%)
Automotive--(0.7%)
Honda Motor Company ADRs ............ 32,000 $ 2,286,000
-----------
Banks--(5.8%)
Banc One ............................ 64,125 3,578,949
BankAmerica ......................... 56,000 4,840,500
Bayerische Vereinsbank .............. 33,000 2,806,371
Citicorp ............................ 26,000 3,880,500
Royal Bank of Scotland Group ........ 150,000 2,603,037
Westpac Banking ..................... 345,000 2,104,440
-----------
19,813,797
-----------
Building and Construction--(1.4%)
Masco ............................... 40,000 2,420,000
Royal Group Technologies Limited (a) 80,000 2,320,000
-----------
4,740,000
-----------
Chemicals--(1.8%)
E.I. Du Pont de Nemours ............. 43,000 3,208,875
Praxair ............................. 60,000 2,808,750
-----------
6,017,625
-----------
Commercial Services--(1.8%)
Cendant (a) ......................... 138,186 2,884,633
Unilever ............................ 40,000 3,157,500
-----------
6,042,133
-----------
Computers--(0.8%)
International Business Machines ..... 24,000 2,755,500
-----------
Drugs/Health Care--(6.7%)
American Home Products .............. 90,000 4,657,500
Bristol-Myers Squibb ................ 34,000 3,907,875
Elan ADRs (a) ....................... 57,000 3,665,812
Eli Lilly & Company ................. 58,000 3,831,625
Pfizer .............................. 34,000 3,695,375
SmithKline Beecham ADRs ............. 50,000 3,025,000
-----------
22,783,187
-----------
Electrical Equipment--(3.4%)
Emerson Electric .................... 62,000 3,743,250
General Electric .................... 50,000 4,550,000
Hubbell, class B .................... 75,000 3,121,875
-----------
11,415,125
-----------
Electronics--(2.3%)
Analog Devices (a) .................. 95,000 2,333,437
Intel ............................... 37,000 2,742,625
Sony ADRs ........................... 30,000 2,581,875
-----------
7,657,937
-----------
Market
Shares Value
------ -----------
Entertainment--(0.5%)
CBS ................................. 53,000 $ 1,682,750
-----------
Financial Services--(2.8%)
Freddie Mac ......................... 84,000 3,953,250
Heller Financial (a) ................ 60,000 1,800,000
Travelers Group ..................... 60,000 3,637,500
-----------
9,390,750
-----------
Food/Beverage/Tobacco--(2.8%)
PepsiCo ............................. 70,000 2,883,125
Philip Morris Companies ............. 80,000 3,150,000
Sara Lee ............................ 60,000 3,356,250
-----------
9,389,375
-----------
Funeral Services--(0.9%)
Service Corporation International ... 70,000 3,001,250
-----------
Housewares--(1.0%)
Newell .............................. 67,000 3,337,437
-----------
Networking Products--(0.8%)
Cisco Systems (a) ................... 28,000 2,577,750
-----------
Oil/Gas--(2.2%)
British Petroleum ADRs .............. 27,000 2,382,750
Chevron ............................. 17,000 1,412,062
Cooper Cameron (a) .................. 42,000 2,142,000
Ocean Energy (a) .................... 84,500 1,653,031
-----------
7,589,843
-----------
Paper & Forest Products--(0.6%)
Plum Creek Timber Company, L.P. ..... 74,000 2,224,625
-----------
Real Estate--(2.8%)
Crescent Real Estate Equities ....... 60,000 2,017,500
Reckson Associates .................. 103,800 2,452,275
Reckson Service Industries (a) ...... 26,520 87,847
Security Capital Group, class B (a) . 100,000 2,662,500
Security Capital Group, class B
warrants (a) ...................... 4,654 1,600
Starwood Hotels & Resorts ........... 48,000 2,319,000
-----------
9,540,722
-----------
Retail--(3.9%)
Home Depot .......................... 60,500 5,025,281
Kohl's (a) .......................... 62,000 3,216,250
Wal-Mart Stores ..................... 83,000 5,042,250
-----------
13,283,781
-----------
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS Market
(Continued) Shares Value
--------- ------------
<S> <C> <C>
COMMON STOCKS (Continued)
Telecommunications--(8.5%)
AirTouch Communications (a) ......... 80,000 $ 4,675,000
Alcatel Alsthom ADRs ................ 70,000 2,848,125
GTE ................................. 57,000 3,170,625
LM Ericsson Telecommunications ADRs,
class B ........................... 140,000 4,007,500
Lucent Technologies ................. 28,000 2,329,250
Telebras ADRs ....................... 27,500 3,002,656
Tele-Communications (a) ............. 55,000 2,114,063
Tellabs (a) ......................... 31,000 2,220,375
WorldCom (a) ........................ 90,000 4,359,375
-----------
28,726,969
-----------
Transportation--(1.4%)
Canadian National Railway ........... 41,000 2,178,125
FDX (a) ............................. 39,000 2,447,250
-----------
4,625,375
-----------
Utilities--(3.2%)
El Paso Natural Gas ................. 76,000 2,907,000
Endesa ADRs ......................... 110,000 2,378,750
Enron Corporation ................... 40,000 2,162,500
Kinder Morgan Energy Partners, L.P. . 92,409 3,338,286
-----------
10,786,536
-----------
Water Treatment Systems--(0.8%)
U.S. Filter (a) ..................... 100,000 2,806,250
-----------
Total Common Stocks
(Cost $136,012,976) ............................... 192,474,717
-----------
</TABLE>
<TABLE>
<CAPTION>
Par
Value
--------
<S> <C> <C>
LONG-TERM OBLIGATIONS--(37.0%)
Air Transportation--(0.7%)
Federal Express 1994
Pass-Through Certificates
Series A310-A1 7.530% 9/23/06 ................. $1,575,000 1,657,483
United Airlines 1991
Pass-Through Certificates
Series A-1 9.200% 3/22/08 ..................... 646,417 739,669
----------
2,397,152
----------
Asset-Backed Securities--(1.4%)
ALPS Series 1994-1 Class C2 9.350% 9/15/04 ...... 1,989,855 2,124,170
American Mortgage Trust Series 1993-3
Class 3B 8.190% 9/27/22 ....................... 2,091,860 2,074,644
Greentree Home Improvement
Loan Trust Series 1994-A Class A 7.050% 3/15/14 583,938 594,233
----------
4,793,047
----------
</TABLE>
<TABLE>
<CAPTION>
Par Market
Value Value
-------- ----------
<S> <C> <C>
Banks--(2.0%)
Den Danske Bank 6.550% 9/15/03 .................. $2,250,000 $2,281,927
Deutsche Ausgleichsbank 7.000% 9/24/01 .......... 2,250,000 2,332,057
First Chicago NBD 6.125% 2/15/06 ................ 2,250,000 2,232,675
----------
6,846,659
----------
Construction & Housing--(0.8%)
Hanson Overseas 6.750% 9/15/05 .................. 2,500,000 2,570,600
----------
Drugs/Healthcare--(0.7%)
Glaxo Wellcome 6.125% 1/25/06 ................... 2,500,000 2,534,525
----------
Extractive-Energy--(0.8%)
BOC Group 5.875% 1/29/01 ........................ 2,750,000 2,742,575
----------
Foreign Government Regional Bond--(0.9%)
Corporacion Andina de Fomento 6.625% 10/14/98 ... 2,900,000 2,901,827
----------
Financial--(1.2%)
Associates Corp. of North America 7.500% 4/15/02 4,000,000 4,176,920
----------
Industrial--(0.9%)
USX 6.850% 3/1/08 ............................... 3,000,000 3,026,580
----------
Insurance--(0.8%)
Prudential Insurance 7.650% 7/1/07 .............. 2,500,000 2,703,725
----------
Mortgage-Backed Securities--(0.1%)
MDC Mortgage Funding Series Q
Class 5 8.850% 3/20/18 ........................ 159,244 165,666
----------
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS Par Market
(Continued) Value Value
------ -----
<S> <C> <C>
LONG-TERM OBLIGATIONS (Continued)
U.S. Government and Agency Obligations--(26.7%)
FHLMC Gold
6.500% 12/1/10 ............................... $ 906,589 $ 912,255
6.500% 5/1/11 ................................ 777,518 782,378
6.500% 6/1/11 ................................ 5,048,136 5,078,777
12.000% 7/1/20 ............................... 1,044,924 1,199,050
6.500% 3/1/26 ................................ 3,481,668 3,472,964
6.500% 6/1/26 ................................ 2,279,116 2,273,419
6.500% 2/1/27 ................................ 976,835 973,475
6.500% 3/1/27 ................................ 2,767,531 2,758,012
6.500% 4/1/27 ................................ 920,982 917,814
GNMA
7.125% 7/20/25 ............................... 695,552 709,011
8.000% 3/15/26 ............................... 3,823,215 3,961,806
U.S. Treasury Bonds
7.250% 5/15/16 ............................... 5,500,000 6,444,405
7.875% 2/15/21 ............................... 4,500,000 5,711,850
7.125% 2/15/23 ............................... 4,150,000 4,910,114
U.S. Treasury Notes
6.375% 1/15/99 ............................... 4,000,000 4,021,000
6.875% 8/31/99 ............................... 5,500,000 5,582,610
6.750% 4/30/00 ............................... 3,500,000 3,573,955
6.375% 5/15/00 ............................... 9,700,000 9,849,768
7.875% 8/15/01 ............................... 3,250,000 3,461,608
6.250% 2/15/03 ............................... 6,500,000 6,686,550
5.750% 8/15/03 ............................... 8,000,000 8,085,360
6.500% 5/15/05 ............................... 4,500,000 4,751,010
6.500% 8/15/05 ............................... 4,000,000 4,221,920
------------
90,339,111
------------
Total Long-Term Obligations
(Cost $120,695,126) ........................................... 125,198,387
------------
Par Market
Value Value
------ -------------
SHORT-TERM OBLIGATIONS
Commercial Paper--(5.5%)
Associates Corp. of North America 6.250% 7/01/98 $ 13,615,000 $ 13,615,000
Windmill Funding 6.250% 7/1/98 ................. 5,000,000 5,000,000
------------
Total Short-Term Obligations
(Cost $18,615,000) ............................................ 18,615,000
------------
Total Investments--(99.4%)
(Cost $275,323,102) (b) ....................................... 336,288,104
Other Assets, less Liabilities--(0.6%) ........................ 2,152,601
------------
Total Net Assets--(100.0%) .................................... $338,440,705
============
</TABLE>
Notes to Portfolio of Investments
- --------------------------------------------------------------------------------
(a) Non-income producing security.
(b) At June 30, 1998, the cost of investments for federal income tax purposes
was $275,361,018. Net unrealized appreciation was $60,927,086 comprising of
gross unrealized appreciation of $64,794,264 and gross unrealized
depreciation of $3,867,178.
See Notes to Financial Statements.
22
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
Stein Roe Balanced Fund, Variable Series / June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments, at market value (identified cost $275,323,102) ............ $336,288,104
Cash ................................................................... 53,272
Dividends and interest receivable ...................................... 2,431,989
Receivable for investments sold ........................................ 1,524,646
Receivable for fund shares sold ........................................ 21,394
Other assets ........................................................... 34,096
------------
Total assets ....................................................... 340,353,501
------------
Liabilities:
Payable for investments purchased ...................................... 1,467,303
Payable for fund shares repurchased .................................... 171,317
Payable to investment adviser and transfer agent ....................... 164,231
Accrued expenses payable ............................................... 109,945
------------
Total liabilities .................................................. 1,912,796
------------
Net assets ............................................................. $338,440,705
============
Net assets represented by:
Paid-in capital ...................................................... $259,361,884
Accumulated undistributed net investment income ...................... 5,233,961
Accumulated net realized gains on investments ........................ 12,876,947
Net unrealized appreciation on investments ........................... 60,967,913
------------
Total net assets applicable to outstanding shares of beneficial interest $338,440,705
============
Shares of beneficial interest outstanding .............................. 20,852,950
============
Net asset value per share .............................................. $ 16.23
============
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment income:
Interest income .................................................. $ 5,019,957
Dividend income (net of foreign taxes withheld of $40,704) ....... 1,136,643
-----------
Total investment income ...................................... 6,156,600
-----------
Expenses:
Management fee ................................................. 747,961
Administrative fee ............................................. 249,320
Accounting fee ................................................. 16,064
Audit and legal fees ........................................... 14,260
Trustees' expense .............................................. 11,050
Printing expense ............................................... 7,350
Transfer agent fee ............................................. 3,750
Miscellaneous expense .......................................... 38,027
-----------
Total expenses ............................................... 1,087,782
-----------
Net investment income ............................................ 5,068,818
Realized and unrealized gains on investments:
Net realized gains on investments .............................. 12,998,956
Net realized gains on foreign currency transactions ............ 7,029
Change in unrealized appreciation or depreciation on investments
and foreign currency translations ............................ 3,124,948
-----------
Net increase in net assets resulting from operations ............. $21,199,751
===========
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Stein Roe Balanced Fund, Variable Series
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1998 December 31,
(Unaudited) 1997
------------- -------------
<S> <C> <C>
Operations:
Net investment income ..................................................... $ 5,068,818 $ 10,029,494
Net realized gains on investments and foreign currency transactions ....... 13,005,985 21,520,997
Change in unrealized appreciation or depreciation on investments
and foreign currency translations ....................................... 3,124,948 17,307,337
------------- -------------
Net increase in net assets resulting from operations ........................ 21,199,751 48,857,828
------------- -------------
Distributions declared from:
Net investment income ..................................................... (9,728,000) (10,262,000)
Net realized gains on investments ......................................... (21,533,000) (25,340,000)
------------- -------------
Total distributions ......................................................... (31,261,000) (35,602,000)
------------- -------------
Fund share transactions:
Proceeds from fund shares sold ............................................ 8,411,748 30,523,814
Cost of fund shares repurchased ........................................... (16,203,416) (53,533,240)
Distributions reinvested .................................................. 31,261,000 35,602,000
------------- -------------
Net increase in net assets resulting from fund share transactions ........... 23,469,332 12,592,574
------------- -------------
Total increase in net assets ................................................ 13,408,083 25,848,402
Net assets:
Beginning of year ......................................................... 325,032,622 299,184,220
------------- -------------
End of year ............................................................... $ 338,440,705 $ 325,032,622
============= =============
Accumulated undistributed net investment income included in ending net assets $ 5,321,012 $ 9,886,774
============= =============
Analysis of changes in shares of beneficial interest:
Shares sold ............................................................... 522,289 1,916,696
Shares repurchased ........................................................ (992,926) (3,350,160)
Distributions reinvested .................................................. 1,989,880 2,387,734
------------- -------------
Net increase ................................................................ 1,519,243 954,270
============= =============
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Stein Roe Balanced Fund, Variable Series
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Years Ended December 31,
June 30, 1998 ----------------------------------------------
(Unaudited) 1997 1996 1995 1994
----------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of year ...................... $ 16.81 $ 16.28 $ 14.08 $ 12.18 $ 13.11
-------- -------- -------- -------- --------
Net investment income ................................... 0.25 0.53 0.57 0.48 0.51
Net realized and unrealized gains (losses) on investments
and foreign currency transactions ..................... 0.80 1.96 1.63 2.61 (0.93)
-------- -------- -------- -------- --------
Total from investment operations ........................ 1.05 2.49 2.20 3.09 (0.42)
-------- -------- -------- -------- --------
Less distributions:
Dividends from and in excess of net investment income . (0.51) (0.56) -- (0.48) (0.51)
Distributions from and in excess of net realized gains
on investments ...................................... (1.12) (1.40) -- (0.71) --
-------- -------- -------- -------- --------
Total distributions ..................................... (1.63) (1.96) -- (1.19) (0.51)
-------- -------- -------- -------- --------
Net asset value, end of year ............................ $ 16.23 $ 16.81 $ 16.28 $ 14.08 $ 12.18
======== ======== ======== ======== ========
Total return:
Total investment return ................................. 6.56% 16.82% 15.63% 25.43% (3.19)%
Ratios/supplemental data:
Net assets, end of year (000's) ......................... $338,441 $325,033 $299,184 $277,014 $196,278
Ratio of expenses to average net assets ................. 0.65% 0.66% 0.67% 0.66% 0.68%
Ratio of net investment income to average net assets .... 3.05% 3.18% 3.68% 3.12% 4.01%
Portfolio turnover ratio (a) ............................ 24% 44% 76% 66% 71%
Average commissions (per share) ......................... $ 0.0595 $ 0.0539 $ 0.0547 -- --
</TABLE>
(a) The portfolio turnover ratio includes dollar roll transactions, if any.
See Notes to Financial Statements.
25
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
Stein Roe Mortgage Securities Fund, Variable Series / June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Market
Value Value
----- -------
<S> <C> <C>
ASSET-BACKED SECURITIES--(8.4%)
ALPS Pass-Through Trust Series 1994-1
Class C2 9.350% 9/15/04 ........................... $ 994,927 $ 1,062,084
ContiMortgage Home Equity Loan
Trust Series 1997-1 Class M1 7.420% 2/15/15 ....... 1,250,000 1,271,900
First Boston Home Equity Loan Pass-
Through Certificates Series 1993-H1,
Class A-IO (effective yield 12.820%) 9/28/13 ...... 3,982,349 155,550
Green Tree Home Improvement Loan
Trust Series 1994-A Class A 7.050% 3/15/14 ........ 437,954 445,674
Green Tree Financial Corporation
Series 1997-6 Class A8 7.070% 1/15/29 ............. 1,472,369 1,533,281
IMC Home Equity Loan Trust
Series 1997-3 Class M2 7.550% 8/20/28 ............. 1,000,000 1,023,210
Mego Mortgage Title I Loan Trust
Series 1997-3 Class M1 7.500% 8/25/23 ............. 1,500,000 1,531,890
-----------
Total Asset-Backed Securities
(Cost $6,804,234) ................................................. 7,023,589
-----------
MORTGAGE-BACKED SECURITIES--(18.7%)
American Mortgage Trust Series 1993-3
Class 3B 8.190% 9/27/22 ........................... 790,258 783,754
Amresco Residential Securities
Mortgage Loan Series 1996-3 Class A5 7.550% 2/25/23 1,135,000 1,157,904
Asset Securitization Corporation
Series 1997-D5 Class A1C 6.750% 2/14/41 ........... 1,375,000 1,427,250
Citicorp Mortgage Securities
Series 1987-10 10.000% 7/1/17 ..................... 110,773 114,918
Comfed Savings Bank Adjustable Rate
Mortgage Series 1987-1A 7.550% 1/1/18 ............. 119,480 101,558
Delta Funding Home Equity Loan Trust
Series 1998-2 Class A6F 6.370% 7/15/28 ............ 1,000,000 999,060
Glendale Federal Savings & Loan
Series 1978-A 9.125% 1/25/08 ...................... 20,788 22,152
First Plus Home Loan Trust Series 1996-3
Class A3 7.050% 11/20/08 .......................... 1,000,000 1,004,330
Imperial Savings & Loan Adjustable Rate
Mortgage Series 1987-4A 8.826% 7/25/17 ............ 21,389 22,261
Merrill Lynch Mortgage Investments
8.000% 12/20/18 Series 20-D ....................... 1,015,880 1,036,187
7.088% 12/26/25 Series 1995-C3
Class A3 ARM .................................... 2,000,000 2,125,020
5.890% 11/15/26 Series 1987-A ARM ................. 78,973 80,436
Par Market
Value Value
----- -------
MORTGAGE-BACKED SECURITIES--(Continued)
Nomura Asset Securities Corporation
MBS Series 1996-MD5 Class A1B 7.120% 4/13/36 ...... $ 1,000,000 $ 1,076,400
Residential Funding Mortgage Securities
I Series 1998-HI2 Class AI1 6.330% 11/25/14 ...... 1,000,000 1,000,000
Residential Asset Securities Corporation
Series 1998-KS2 Class AI1 6.775% 7/25/29 .......... 1,500,000 1,500,000
Sears Mortgage Securities Corporation
Series 1987-A 6.500% 3/25/17 ...................... 6,456 6,428
Structured Asset Securities Corporation
Series 1996-CFL Class X1-IO
(effective yield 12.960%) 2/25/28 ................ 9,608,210 508,947
Series 1996-CFL Class C 6.525% 2/25/28 ............ 1,242,500 1,242,549
UCFC Home Equity Loan
Series 1997-C Class A7 6.875% 1/15/29 ............. 1,275,000 1,295,119
-----------
Total Mortgage-Backed Securities
(Cost $14,254,157) ................................................ 15,504,273
-----------
CORPORATE SECURITIES--(8.1%)
GMAC Euro 6.750% 7/10/02 ............................ 1,000,000 1,017,450
National Power 7.125% 7/11/01 ....................... 1,500,000 1,544,055
National Rural Utilities
6.375% 10/15/04 ................................... 1,000,000 1,014,120
Noram Energy 6.500% 2/1/98 .......................... 1,500,000 1,509,240
Zurich Capital Trust I 8.376% 6/1/37 ................ 1,450,000 1,607,209
-----------
Total Corporate Securities
(Cost $6,448,565) ................................................. 6,692,074
-----------
FHLMC CERTIFICATES--(13.5%)
8.500% 5/1/06 Gold .................................. 97,964 101,393
6.500% 6/1/08 ....................................... 21,682 21,811
6.500% various due dates to 6/1/09
Gold .............................................. 1,627,787 1,637,454
10.750% 11/1/09 ..................................... 177,969 194,709
12.000% 7/1/13 ...................................... 60,881 69,043
11.250% various due dates to 11/1/15 ................ 63,118 70,861
10.500% various due dates to 2/1/19 ................. 375,325 415,789
12.000% 7/1/20 Gold ................................. 752,345 863,315
7.500% various due dates to 5/1/24
Gold .............................................. 5,856,569 6,012,654
7.000% 1/1/26 ....................................... 1,821,775 1,847,972
-----------
Total FHLMC Certificates
(Cost $10,930,851) ................................................ 11,235,001
-----------
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS Par Market
(Continued) Value Value
----- ------
<S> <C> <C>
FNMA CERTIFICATES--(24.7%)
10.500% 2/1/01 ........................ $ 43,689 $ 44,877
12.250% 9/1/12 FHA/VA Guaranteed ...... 76,675 88,657
10.250% 2/1/16 ........................ 156,605 173,173
10.000% various due dates to 3/1/16 ... 274,909 299,209
8.500% 3/1/17 ......................... 123,317 129,792
9.000% various due dates to 5/1/20 .... 153,023 162,408
6.000% various due dates to 2/1/25 .... 11,333,203 11,171,803
7.000% various due dates to 8/1/25 .... 4,468,766 4,546,491
6.500% various due dates to 1/1/26 .... 3,936,954 3,917,755
-----------
Total FNMA Certificates
(Cost $20,935,897) .................................. 20,534,165
-----------
GNMA CERTIFICATES--(17.3%)
8.000% various due dates to 7/15/08 ... 1,502,400 1,559,208
11.500% various due dates to 5/15/13 .. 451,250 515,131
8.500% 2/15/17 ........................ 171,304 182,117
10.000% various due dates to 11/15/19 . 538,201 593,702
9.000% various due dates to 1/15/20 ... 1,559,163 1,680,876
9.500% various due dates to 8/15/22 ... 1,596,281 1,743,050
7.000% 4/15/23 ........................ 480,330 488,136
6.500% various due dates to 3/15/28 ... 6,185,690 6,163,962
7.125% 7/20/25 ARM .................... 1,391,103 1,418,022
-----------
Total GNMA Certificates
(Cost $14,118,146) .................................. 14,344,204
-----------
REAL ESTATE MORTGAGE INVESTMENT
CONDUITS--(1.2%)
FHLMC Corporation Series 11-C
9.500% 4/15/19 ...................... 44,810 45,729
FNMA Trust Series 1988-4Z
9.250% 3/25/18 ...................... 924,966 983,054
FNMA Trust Series 1991-91SA-IO
(effective yield 14.400%) 7/25/98 ... 328,024 4,166
-----------
Total Real Estate Mortgage
Investment Conduits
(Cost $1,050,510) ................................... 1,032,949
-----------
U.S. GOVERNMENT SECURITIES--(5.3%) Par Market
U.S. Treasury Bonds Value Value
----- -----
6.750% 8/15/26 .................... $ 800,000 $ 915,744
6.375% 8/15/27 .................... 1,000,000 1,098,600
U.S. Treasury Notes
5.750% 11/1/00 .................... 1,000,000 1,004,940
5.750% 10/31/02 ................... 1,350,000 1,360,975
-----------
Total U.S. Government Securities
(Cost $4,180,955) ................................... 4,380,259
-----------
SHORT-TERM OBLIGATIONS--(10.1%)
Commercial Paper--(10.1%)
Associates Corp. of North America
6.250% 7/1/98 ....................... 4,425,000 4,425,000
Windmill Funding
6.250% 7/1/98 ....................... 4,000,000 4,000,000
-----------
Total Short-Term Obligations
(Cost $8,425,000) ................................. 8,425,000
-----------
Total Investments--(107.3%)
(Cost $87,148,315) ................................ 89,171,514
Other Assets, less Liabilities--(-7.3%).............. (6,051,781)
-----------
Total Net Assets--(100.0%) .......................... $83,119,733
===========
</TABLE>
Notes to Portfolio of Investments
- -------------------------------------------------------------------------------
(a) At June 30, 1998, the cost of investments for financial reporting and
federal income tax purposes was identical. Net unrealized appreciation was
$2,023,199, comprising of gross unrealized appreciation of $2,141,829 and
gross unrealized depreciation of $118,630.
See Notes to Financial Statements.
27
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
Stein Roe Mortgage Securities Fund, Variable Series / June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments, at market value (identified cost $87,148,315) ............. $ 89,171,514
Cash ................................................................... 36,220
Interest receivable .................................................... 670,173
Receivable for fund shares sold ........................................ 292,409
Other assets ........................................................... 21,552
------------
Total assets ....................................................... 90,191,868
------------
Liabilities:
Payable for investments purchased ...................................... 6,954,034
Accrued expenses payable ............................................... 50,332
Payable to investment adviser and transfer agent ....................... 40,877
Payable for fund shares repurchased .................................... 26,892
------------
Total liabilities .................................................. 7,072,135
------------
Net assets ............................................................. $ 83,119,733
============
Net assets represented by:
Paid-in capital ...................................................... $ 81,558,818
Accumulated undistributed net investment income ...................... 2,361,282
Accumulated net realized losses on investments ....................... (2,823,566)
Net unrealized appreciation on investments ........................... 2,023,199
------------
Total net assets applicable to outstanding shares of beneficial interest $ 83,119,733
============
Shares of beneficial interest outstanding .............................. 7,955,039
============
Net asset value per share .............................................. $ 10.45
============
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Interest income ............................................................. $2,637,620
----------
Expenses:
Management fee ............................................................ 157,725
Administrative fee ........................................................ 59,147
Audit and legal fees ...................................................... 13,500
Accounting fee ............................................................ 12,869
Trustees' expense ......................................................... 4,258
Transfer agent fee ........................................................ 3,750
Printing expense .......................................................... 3,600
Miscellaneous expense ..................................................... 21,169
----------
Total expenses .......................................................... 276,018
----------
Net investment income ....................................................... 2,361,602
Realized and unrealized gains on investments:
Net realized gains on investments ......................................... 202,499
Change in unrealized appreciation or depreciation on investments .......... 137,619
----------
Net increase in net assets resulting from operations ........................ $2,701,720
==========
</TABLE>
See Notes to Financial Statements.
28
<PAGE>
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Stein Roe Mortgage Securities Fund, Variable Series
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1998 December 31,
(Unaudited) 1997
------------ ------------
<S> <C> <C>
Operations:
Net investment income ..................................................... $ 2,361,602 $ 4,890,904
Net realized gains on investments ......................................... 202,499 3,468
Change in unrealized appreciation or depreciation on investments .......... 137,619 1,494,843
------------ ------------
Net increase in net assets resulting from operations ........................ 2,701,720 6,389,215
------------ ------------
Distributions declared from:
Net investment income ..................................................... (4,580,000) --
------------ ------------
Fund share transactions:
Proceeds from fund shares sold ............................................ 6,612,697 9,622,128
Cost of fund shares repurchased ........................................... (3,368,127) (14,847,051)
Distributions reinvested .................................................. 4,580,000 --
------------ ------------
Net increase (decrease) in net assets resulting from fund share transactions 7,824,570 (5,224,923)
------------ ------------
Total increase in net assets ................................................ 5,946,290 1,164,292
Net assets:
Beginning of year ......................................................... 77,173,443 76,009,151
------------ ------------
End of year ............................................................... $ 83,119,733 $ 77,173,443
============ ============
Accumulated undistributed net investment income included in ending net assets $ 2,361,282 $ 4,579,680
============ ============
Analysis of changes in shares of beneficial interest:
Shares sold ............................................................... 634,255 929,462
Shares repurchased ........................................................ (321,869) (1,459,037)
Distributions reinvested .................................................. 448,137 --
------------ ------------
Net increase (decrease) ..................................................... 760,523 (529,575)
============ ============
</TABLE>
See Notes to Financial Statements.
29
<PAGE>
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Stein Roe Mortgage Securities Fund, Variable Series
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Years Ended December 31,
June 30, 1998 ---------------------------------------------
(Unaudited) 1997 1996 1995 1994
----------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of year ..................... $ 10.73 $ 9.84 $ 10.16 $ 9.28 $ 10.17
------- ------- ------- -------- -------
Net investment income .................................. 0.29 0.68 0.78 0.57 0.73
Net realized and unrealized gains (losses)
on investments ....................................... 0.06 0.21 (0.30) 0.89 (0.89)
------- ------- ------- -------- -------
Total from investment operations ....................... 0.35 0.89 0.48 1.46 (0.16)
------- ------- ------- -------- -------
Less distributions:
Dividends from and in excess of net investment income (0.63) -- (0.80) (0.58) (0.73)
Distributions from and in excess of net realized gains
on investments ..................................... -- -- -- -- --
------- ------- ------- -------- -------
Total distributions .................................... (0.63) -- (0.80) (0.58) (0.73)
------- ------- ------- -------- -------
Net asset value, end of year ........................... $ 10.45 $ 10.73 $ 9.84 $ 10.16 $ 9.28
======= ======= ======= ======== =======
Total return:
Total investment return ................................ 3.43% 9.04% 4.70% 15.74% (1.57)%(b)
Ratios/supplemental data:
Net assets, end of period (000's) ...................... $83,120 $77,173 $76,009 $101,778 $72,420
Ratio of expenses to average net assets ................ 0.70% 0.70% 0.70%(a) 0.69% 0.70%(a)
Ratio of net investment income to average net assets ... 5.99% 6.59% 6.71%(b) 6.76% 6.71%(b)
Portfolio turnover ratio (c) ........................... 6% 29% 72% 112% 241%
</TABLE>
(a) If the Fund had paid all of its expenses and there had been no reimbursement
from the Adviser, this ratio would have been 0.72% and 0.71% for the years
ended December 31, 1996 and 1994, respectively.
(b) Computed giving effect to the Adviser's expense limitation undertaking.
(c) The portfolio turnover ratio includes dollar roll transactions, if any.
See Notes to Financial Statements.
30
<PAGE>
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
Stein Roe Money Market Fund, Variable Series / June 30, 1998 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Amortized
Value Cost
----- ---------
<S> <C> <C>
COMMERCIAL PAPER--(96.1%)
Beverages--(4.0%)
Coca-Cola 5.805% 10/19/98 (b) .......... $ 3,000,000 $ 2,949,308
------------
Business Credit Institution--(4.0%)
Finova Capital 5.685% 7/22/98 .......... 3,000,000 2,990,288
------------
Chemicals-Plastics--(4.0%)
Formosa Plastic (LOC ABN AMRO)
5.740% 8/25/98 ....................... 3,000,000 2,974,562
------------
Consulting Services--(4.0%)
CSC Enterprises (gtd. by Computer
Sciences) 5.701% 7/9/98 ................ 3,000,000 2,996,293
------------
Electronics--(4.0%)
General Signal 5.666% 7/7/98 (b) ...... 3,000,000 2,997,230
------------
Electric Intergrated--(8.1%)
New England Power 5.662% 7/6/98 ........ 3,000,000 2,997,696
Northern Indiana Public Service
5.777% 7/22/98 ....................... 3,000,000 2,990,113
------------
5,987,809
------------
Medical Products--(4.0%)
Baxter International 5.676% 7/7/98 ..... 3,000,000 2,997,225
------------
Miscellaneous Financial--(48.0%)
Associates Corp. of North America
6.339% 7/1/98 ........................ 1,770,000 1,770,000
BAT Capital (gtd. by BAT Industries)
5.781% 7/14/98 ....................... 3,000,000 2,993,912
CXC 5.701% 7/24/98 (b) ................. 2,000,000 1,992,908
Enterprise Funding
5.643% 7/2/98 (b) .................... 3,000,000 2,999,539
GTE Funding 5.722% 7/21/98 ............ 3,000,000 2,990,667
Harley-Davidson Funding
(gtd. By Eaglemark Financial Services)
5.795% 9/14/98 (b) ................... 3,000,000 2,965,187
Merrill Lynch & Co 5.733% 7/10/98 ...... 2,000,000 1,997,186
Old Line Funding
5.674% 7/2/98 (b) .................... 3,000,000 2,999,538
Pooled Accounts Receivable Capital
5.659% 7/8/98 ........................ 3,000,000 2,996,774
Preferred Receivables Funding
5.679% 7/1/98 (b) .................... 3,000,000 3,000,000
Miscellaneous Financial--(continued)
Par Amortized
Value Cost
----- ---------
Receivables Capital
5.732% 7/28/98 (b) ................... $ 3,000,000 $ 2,987,422
Thames Asset Global Securitization No. 1
5.760% 8/31/98 (b) .................. 3,000,000 2,971,838
Windmill Funding
5.711% 7/23/98 (b) .................. 3,000,000 2,989,788
------------
35,654,759
------------
Mortgage Banking--(4.0%)
Countrywide Home Loans (gtd. by
Countrywide Credit Industries)
5.740% 7/27/98 ....................... 3,000,000 2,987,867
------------
Retails--(8.0%)
Cosmair (gtd. by L'Oreal)
5.718% 7/28/98 (b) ................... 3,000,000 2,987,445
Southland 5.756% 9/9/98 ............... 3,000,000 2,967,742
------------
5,955,187
------------
Sovereign Agency--(4.0%)
Venantius AB 5.764% 7/20/98 (b) ........ 3,000,000 2,991,054
------------
Total Commercial Paper ................................. 71,481,582
------------
YANKEE CERTIFICATE OF DEPOSIT--(4.0%)
Banks--(4.0%)
Canadian Imperial Bank
5.650% 2/4/99 ........................ 3,000,000 3,000,000
------------
Total Investments--(100.1%) (a) ........................ 74,481,582
Other Assets, less Liabilities--(-0.1%)................ (44,760)
------------
Total Net Assets--(100.0%) ............................. $ 74,436,822
============
</TABLE>
Notes to Portfolio of Investments
- --------------------------------------------------------------------------------
(a) At June 30, 1998, the cost of investments for financial reporting and
federal income tax purposes was identical.
(b) Represents private placement securities exempt from registration by Section
4(2) of the Securities Act of 1933. These securities generally are issued to
investors who agree that they are purchasing the securities for investment
and not for public distribution. Any resale by the Fund must be in an exempt
transaction, normally to other institutional investors. At June 30, 1998,
the aggregate value of the Fund's private placement securities was
$34,831,257 which represented 46.8 percent of net assets. None of these
securities were deemed illiquid.
See Notes to Financial Statements.
31
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
Stein Roe Money Market Fund, Variable Series / June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments, at amortized cost ......................................... $74,481,582
Cash ................................................................... 53,854
Receivable for fund shares sold ........................................ 508,338
Interest receivable .................................................... 69,212
Other assets ........................................................... 9,431
-----------
Total assets ....................................................... 75,122,417
-----------
Liabilities:
Payable for fund shares repurchased .................................... 599,124
Payable to investment adviser and transfer agent ....................... 33,036
Accrued expenses payable ............................................... 53,435
-----------
Total liabilities .................................................. 685,595
-----------
Net assets ............................................................. $74,436,822
===========
Net assets represented by:
Paid-in capital ...................................................... $74,436,822
-----------
Total net assets applicable to outstanding shares of beneficial interest $74,436,822
===========
Shares of beneficial interest outstanding .............................. 74,436,822
===========
Net asset value per share .............................................. $ 1.00
===========
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Interest income ....................................................... $1,994,008
----------
Expenses:
Management fee ...................................................... 122,069
Administrative fee .................................................. 52,315
Accounting fee ...................................................... 12,685
Audit and legal fees ................................................ 8,900
Trustees' expense ................................................... 3,948
Transfer agent fee .................................................. 3,750
Printing expense .................................................... 2,670
Miscellaneous expense ............................................... 16,896
----------
Total expenses .................................................... 223,233
----------
Net investment income ................................................. 1,770,775
----------
Net increase in net assets resulting from operations .................. $1,770,775
==========
</TABLE>
See Notes to Financial Statements.
32
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Stein Roe Money Market Fund, Variable Series
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1998 December 31,
(Unaudited) 1997
------------ ------------
<S> <C> <C>
Operations:
Net investment income ......................................... $ 1,770,775 $ 3,418,664
------------ ------------
Net increase in net assets resulting from operations ............ 1,770,775 3,418,664
------------ ------------
Distributions declared from:
Net investment income ......................................... (1,770,775) (3,418,664)
------------ ------------
Fund share transactions:
Proceeds from fund shares sold ................................ 30,367,397 67,656,312
Cost of fund shares repurchased ............................... (24,838,074) (69,399,644)
Distributions reinvested ...................................... 1,770,775 3,418,664
------------ ------------
Net increase in net assets resulting from fund share transactions 7,300,098 1,675,332
------------ ------------
Total increase in net assets .................................... 7,300,098 1,675,332
Net assets:
Beginning of year ............................................. 67,136,724 65,461,392
------------ ------------
End of year ................................................... $ 74,436,822 $ 67,136,724
============ ============
Analysis of changes in shares of beneficial interest:
Shares sold ................................................... 30,367,397 67,656,312
Shares repurchased ............................................ (24,838,074) (69,399,644)
Distributions reinvested ...................................... 1,770,775 3,418,664
------------ ------------
Net increase .................................................... 7,300,098 1,675,332
============ ============
</TABLE>
See Notes to Financial Statements.
33
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Stein Roe Money Market Fund, Variable Series
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Years Ended December 31,
June 30, 1998 -------------------------------------------
(Unaudited) 1997 1996 1995 1994
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of year ................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- ------- ------- -------
Net investment income .............................. 0.025 0.050 0.049 0.055 0.037
------- ------- ------- ------- -------
Less distributions:
Distributions from net investment income ......... (0.025) (0.050) (0.049) (0.055) (0.037)
------- ------- ------- ------- -------
Net asset value, end of year ....................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= =======
Total return:
Total investment return ............................ 2.55% 5.18% 5.01% 5.62% 3.81%
Ratios/supplemental data:
Net assets, end of period (000's) .................. $74,437 $67,137 $65,461 $64,992 $78,698
Ratio of expenses to average net assets ............ 0.64% 0.65% 0.65% 0.63% 0.62%
Ratio of net investment income to average net assets 5.08% 5.05% 4.90% 5.48% 3.73%
</TABLE>
See Notes to Financial Statements.
34
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Note 1. Organization and Accounting Policies
SteinRoe Variable Investment Trust (the "Trust"), an open-end management
investment company, was organized as a Massachusetts business trust on June 9,
1987. At June 30, 1998 the Trust consisted of five diversified Funds with
differing investment objectives, policies and restrictions (individually
referred to as a "Fund," or collectively referred to as the "Funds"):
Stein Roe Special Venture Fund, Variable Series--seeks capital growth by
investing in equity securities.
Stein Roe Growth Stock Fund, Variable Series--seeks long-term growth of
capital by investing 65 percent of total assets in growth companies.
Stein Roe Balanced Fund, Variable Series--seeks high total investment return
by investing in equity and debt securities.
Stein Roe Mortgage Securities Fund, Variable Series--seeks highest possible
level of current income by investing at least 65 percent of total assets in
mortgage pass-through certificates.
Stein Roe Money Market Fund, Variable Series--seeks high current income while
emphasizing capital preservation from investment in short-term money market
instruments.
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 various affiliated insurance
companies and, in the case of Stein Roe Special Venture Fund, Variable Series,
also of Transamerica Life Companies, Great-West Life & Annuity Insurance Company
and Providian Life & Health Insurance Company. Stein Roe & Farnham, Incorporated
(the "Adviser") provides investment advisory services to the Funds as well as
management and administrative services. SteinRoe Services, Inc. provides
transfer agent services. Keyport Financial Services Corp., a subsidiary of
Keyport Life Insurance Company ("Keyport"), serves as the underwriter of the
Trust. Keyport, the Adviser and the Transfer Agent are direct subsidiaries of
Liberty Financial Companies, Inc. At June 30, 1998, various affiliated insurance
companies of Liberty Financial Companies Inc. owned 100 percent of the
outstanding shares of all Funds, except for Stein Roe Special Venture Fund,
Variable Series, of which Liberty Financial Companies Inc. affiliates owned 93.0
percent, Great-West Life & Annuity Insurance Company owned 5.3 percent,
Transamerica Life Companies owned 1.6 percent, and Providian Life & Health
Insurance Company owned 0.1 percent.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements. The policies are in
conformity with generally accepted accounting principles. 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
increases and decreases in net assets from operations during the reporting
period. Actual results could differ from those estimates.
Certain prior-year amounts have been reclassified to conform to current-year
presentation.
Valuation of Investments--Portfolio securities listed on domestic exchanges 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. Foreign security
valuations are generally based upon market quotations which, depending upon
local convention or regulation, may be last sale price, last bid or asked price,
or the mean between last bid and asked prices as of, in each case, the close of
the appropriate exchange or other designated time. Long-term debt securities are
valued on the basis of dealer-supplied quotations or valuations furnished by a
pricing service. 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 securities with remaining
maturities of 60 days or less are valued at amortized cost unless the Trustees
determine this does not represent fair value. Stein Roe Money Market Fund,
Variable Series, values investments utilizing the amortized cost valuation
technique permitted in accordance with Rule 2a-7 under the Investment Company
Act of 1940, which requires the Fund to comply with certain conditions. This
technique involves valuing a portfolio security initially at its cost and,
thereafter, assuming a constant amortization to maturity of any discount or
premium.
Federal Income Taxes--The Funds now qualify and intend to continue qualifying 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.
Foreign Currency Transactions--Certain of the Funds have entered into foreign
exchange contracts for the settlement of purchases and sales of securities
denominated in a foreign currency to reduce the risk to the Funds from adverse
changes in the relationship between the U.S. dollar and the foreign currency.
The face or contract amount in U.S. dollars reflects the total exposure the Fund
has in that particular currency contract. In the event that the counterparty in
the foreign exchange contract fails to meet the terms of the contract, the Fund
could be exposed to the effects of changes in the relationship between the U.S.
dollar and the foreign currency.
35
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Investment Transactions--The Funds may purchase or sell securities on a
when-issued, delayed delivery 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. Stein Roe Balanced
Fund, Variable Series, and Stein Roe Mortgage Securities Fund, Variable Series,
may also enter into dollar roll transactions. In a dollar roll transaction, the
Fund sells securities for delivery in the current month and simultaneously
contracts to repurchase, typically in 30 days to 60 days, substantially similar
securities at an agreed upon price and date. These transactions may increase the
risk if the other party to the transaction fails to deliver and causes the Fund
to subsequently invest at less advantageous yields. The Funds identify
securities as segregated in their custodial records with a value at least equal
to the amount of the purchase commitment.
Investment in Repurchase Agreements--Each Fund may enter into repurchase
agreements with banks, broker-dealer firms and other recognized financial
institutions whereby such institutions sell an instrument to the Fund, and the
seller agrees, at the time of the sale, to repurchase that instrument at a
specified time and price. The Funds 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 an amount at all times equal to or in excess of
the value of the repurchase agreement plus accrued interest. In the event the
seller of the instrument defaults on the repurchase obligation, a Fund could
receive less than the repurchase price on the sale of the securities to another
party or could be subject to delays in selling the securities.
Other--Security transactions are accounted for on trade date. Interest income is
recorded on the accrual basis. Discounts on debt securities are amortized in
accordance with Internal Revenue Code requirements. Dividend income and
distributions to shareholders are recorded on the ex-dividend date. Net realized
and unrealized gains (losses) on foreign currency transactions include the
fluctuation in exchange rates on gains and losses between trade and settlement
dates on security transactions, gains and losses arising from the disposition of
foreign currency, and currency gains and 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 investment from the fluctuations arising from
changes in market prices of securities held. Such fluctuations are included with
the net realized and unrealized gain or loss from investments.
Unrealized appreciation and depreciation and realized gains and losses may
differ between financial statements and tax earnings due to deferred losses from
wash sales and certain other transactions.
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 and losses are computed on the identified cost basis for both
financial reporting and federal income tax purposes. At December 31, 1997, Stein
Roe Mortgage Securities Fund, Variable Series, had a capital loss carryforward
of $3,026,065, which will expire between 2002 and 2005, if not utilized. The
cost of investments purchased and proceeds from investments sold, excluding
short-term investments, for the six months ended June 30, 1998, for the Funds,
excluding Stein Roe Money Market Fund, Variable Series, were as follows:
<TABLE>
<CAPTION>
Special Growth Balanced Mortgage
Venture Fund, Stock Fund, Fund, Securities Fund,
Variable Series Variable Series Variable Series Variable Series
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Cost of
investments
Purchased $58,720,479 $50,142,410 $74,865,702 $13,797,389
Proceeds from
investments
Sold 78,514,379 52,399,172 80,200,762 4,695,985
</TABLE>
Note 4. Distributions to Shareholders
The Funds, with the exception of the Stein Roe Money Market Fund, Variable
Series, intend to distribute as dividends or capital gain distributions, at
least annually, substantially all of their net investment income and net gains
realized from the sale of portfolio securities. All dividends and distributions
are reinvested in additional shares of the Funds. Stein Roe Money Market Fund,
Variable Series, declares dividends daily and reinvests all dividends declared
monthly in additional shares at net asset value. Income and capital gains
distributions are determined in accordance with federal income tax regulations,
which may differ from generally accepted accounting principles, primarily
relating to foreign currency gains or losses and book-tax timing differences.
36
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Note 5. Management and Administrative Fees
The Funds have advisory and administrative agreements with the Adviser. The
following investment advisory fee rates were in effect as of June 30, 1998:
<TABLE>
<CAPTION>
Annual rate as a
percent of average
Fund daily net assets
- ----- ---------------
<S> <C>
Stein Roe Special Venture Fund, Variable Series .50 of 1%
Stein Roe Growth Stock Fund, Variable Series .50 of 1%
Stein Roe Balanced Fund, Variable Series .45 of 1%
Stein Roe Mortgage Securities Fund, Variable Series .40 of 1%
Stein Roe Money Market Fund, Variable Series .35 of 1%
</TABLE>
As of June 30, 1998, for all the Funds, the administrative fee was .15 of 1
percent of average annual net assets. Both the investment advisory fees and the
administrative fees are computed daily and paid monthly.
The Adviser also provides the Funds with certain accounting services. The fee is
$25,000 annually plus .0025 of 1 percent of assets in excess of $50 million. For
the six months ended June 30, 1998, Stein Roe Special Venture Fund, Variable
Series, Stein Roe Growth Stock Fund, Variable Series, Stein Roe Balanced Fund,
Variable Series, Stein Roe Mortgage Securities Fund, Variable Series and Stein
Roe Money Market Fund, Variable Series incurred charges of $14,281, $14,767,
$16,064, $12,869 and $12,685, respectively.
The Funds pay SteinRoe Services, Inc. for transfer agent services rendered at an
annual rate of $7,500 computed on the basis of $625 per month.
The Adviser has agreed to reimburse all expenses, including management fees,
incurred by the Funds on an annual basis as follows:
<TABLE>
<CAPTION>
Fund Expenses exceeding
- ----- ------------------
<S> <C>
Stein Roe Special Venture Fund, .80 of 1% of average daily net assets
Variable Series
Stein Roe Growth Stock Fund, .80 of 1% of average daily net assets
Variable Series
Stein Roe Balanced Fund, .75 of 1% of average daily net assets
Variable Series
Stein Roe Mortgage Securities Fund, .70 of 1% of average daily net assets
Variable Series
Stein Roe Money Market Fund, .65 of 1% of average daily net assets
Variable Series
</TABLE>
The expense limitations expire April 30, 1999.
37
<PAGE>
Investment Adviser and Administrator
Stein Roe & Farnham Incorporated
One South Wacker Drive
Chicago, IL 60606
Transfer Agent
SteinRoe Services, Inc.
One South Wacker Drive
Chicago, IL 60606
Distributor
Keyport Financial Services Corp.
125 High Street
Boston, MA 02110
Client Services
Keyport Life Insurance Company
125 High Street
Boston, MA 02110
800-367-3653 (Press 3)
Custodian
State Street Bank & Trust Company
P.O. Box 366
Boston, MA 02101
Independent Auditors
KPMG Peat Marwick LLP
Peat Marwick Plaza
303 East Wacker Drive
Chicago, IL 60601
Legal Counsel
Bingham, Dana & Gould
150 Federal Street
Boston, MA 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, Independence Life
Insurance Company, or Liberty Life Assurance Company of Boston.
6/98 NIM 30m
<PAGE>
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<PAGE>
Keyport Life Insurance Co.
125 High Street
Boston, MA 02110-2712
