<PAGE>
Dear Policyholder,
During the first half of 1996, US economic growth has been stronger than was
generally expected. This stronger than expected growth has led to a rise in
interest rates and rising interest rates typically cause difficulty for both
equity and fixed income markets. As a general rule, rising interest rates
occurring concurrent with rising corporate profits generally signal the peak of
profitability for the economic cycle. Equity investors respond by bidding stock
prices lower anticipating lower earnings, or at least a reduction in the rate of
growth in earnings, in the future. Another reason for foundering equity prices
is the competition provided by more attractive yields on fixed income
instruments, as investors choose to buy more bonds than stocks. With rising
rates we would expect the fixed income markets to perform poorly also since bond
prices move inversely with interest rates.
The second quarter witnessed a divergence in the performance of the US
equity and fixed income markets. The US equity markets, despite rising interest
rates and inflation concerns, generated a strong return in the second quarter.
The S&P 500 had a total return of 4.5% while many smaller capitalization indices
had significantly higher returns. Bond markets continued to perform poorly given
the mixed economic signals. The Lehman Brothers Government/Corporate Index
returned .47% for the quarter; an improvement over the first quarter but still
only slightly better than break even. The most notable aspect of 1996, in both
the equity and fixed income markets, has been the increase in price volatility.
Volatility in recent years has been lower than what history would suggest is
normal. The increased volatility this year would not be considered high by
historical standards but the reversal of market volatility trending lower makes
the change appear more pronounced.
Globally, consensus expectations are that the current international cyclical
slowdown has troughed. Worldwide, inflation has been subdued and continues to
surprise market participants who expect reinflation given the accommodative
central banks throughout the world. The continued liquidity boost provided by
accommodative central banks coupled with a troughing economic slowdown bodes
well for financial asset prices.
Your variable annuity sub-account managers are continuing to manage your
assets within this economic backdrop. The managers performance relative to their
respective benchmarks has met expectations. We expect that each manager will
continue to gain in relative performance with respect to their benchmarks as the
portfolios begin to season. Alexander Hamilton will continue to monitor this
performance and will make any adjustments necessary to ensure that you have a
sufficient number or quality investment sub-advisers to meet your needs.
Respectfully,
[SIGNATURE]
PRESIDENT
August 19, 1996
<PAGE>
TABLE OF CONTENTS
PORTFOLIO OF INVESTMENTS:
Investment Grade Bond Fund Page 1
High Yield Bond Fund 3
Balanced Fund 6
Growth & Income Fund 12
Growth Fund 15
Emerging Growth Fund 19
International Equity Fund 23
STATEMENT OF ASSETS AND LIABILITIES 26
STATEMENT OF OPERATIONS 27
STATEMENT OF CHANGES IN NET ASSETS 28
FINANCIAL HIGHLIGHTS 29
NOTES TO FINANCIAL STATEMENTS 30
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
INVESTMENT GRADE BOND FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
CORPORATE BONDS - 29.5%
CONVERTIBLE BOND - 0.8%
INDUSTRIAL & COMMERCIAL SERVICES - 0.8%
Ryerson Tull, Inc., 8.50%, due 7/15/01 $25,000 $24,928
-------
NONCONVERTIBLE BONDS - 28.7%
AUTOMOTIVE - 4.9%
Aegis Auto Rec., Ser. 1996 - 2, 8.90%, 140,000 142,240
due 1/20/02 -------
BANKING & FINANCIAL SERVICES - 14.1%
Metropolitan Life Insurance Co., 7.80%, 135,000 130,141
due 11/01/25
Midland Bank PLC, 7.625%, due 6/15/06 140,000 141,699
Trans Financial Bank, 6.32%, due 10/17/97 140,000 139,353
-------
411,193
-------
BUILDING PRODUCTS & MATERIALS - 0.9%
Schuller International Corp., 10.875%,
due 12/15/99 25,000 26,906
------
INDUSTRIAL - 4.2%
Celulosa Arauco, 6.75%, due 12/15/03 130,000 121,832
-------
UTILITIES - 4.6%
Boston Edison Co., 6.05%, due 8/15/00 140,000 133,431
-------
TOTAL NONCONVERTIBLE BONDS 835,602
-------
TOTAL CORPORATE BONDS
(COST $858,648) 860,530
-------
MORTGAGE BOND - 4.7%
Premier Auto Trust Mortgage, 6.15%,
due 3/06/00
(COST $140,208) 140,000 138,828
-------
FOREIGN BOND - 4.4%
Quebec Province, 9.00%, due 5/08/01
(COST $131,656) 120,000 128,410
-------
</TABLE>
-1-
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
INVESTMENT GRADE BOND FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. GOVERNMENT & U.S. GOVERNMENT
AGENCY OBLIGATIONS - 68.7%
U.S. GOVERNMENT OBLIGATIONS - 22.2%
U.S. Treasury Bond, 11.625%, due 11/15/02 $320,000 $403,000
U.S. Treasury Note, 10.75%, due 8/15/05 193,000 244,989
-------
647,989
U.S. GOVERNMENT AGENCY OBLIGATIONS - 46.5% -------
Federal Home Loan Mortgage Corp.,
Gold Pool #C00427, 8.00%, due 10/01/25 190,718 192,684
Federal National Mortgage Assoc.,
7.50%, due 1/01/26 * 150,000 148,031
Federal National Mortgage Assoc.,
Pool #337434, 6.50%, due 2/01/26 141,045 132,152
Federal National Mortgage Assoc.,
Pool #338690, 6.00%, due 3/01/26 141,041 128,215
Federal National Mortgage Assoc.,
Pool #303998, 9.00%, due 6/01/26 85,850 89,526
Government National Mortgage Assoc. II,
8.00%, due 1/01/26 * 175,000 167,125
Government National Mortgage Assoc.,
Pool #383618, 7.50%, due 3/15/26 141,207 139,309
Government National Mortgage Assoc.,
Pool #408110, 7.00%, due 4/15/26 141,177 135,573
Government National Mortgage Assoc.,
Pool #422881, 8.00%, due 5/15/26 222,750 224,976
-------
1,357,591
TOTAL U.S. GOVERNMENT & U.S. GOVERNMENT ---------
AGENCY OBLIGATIONS (COST $2,033,537) 2,005,580
---------
TOTAL INVESTMENTS (COST $3,164,049) - 107.3% 3,133,348
LIABILITIES IN EXCESS OF OTHER ASSETS - (7.3%) (212,061)
--------
NET ASSETS (100.0%) $2,921,287
----------
----------
</TABLE>
* Security has been purchased on a when-issued basis, whereby
the settlement date is after the normal settlement.
See notes to financial statements.
-2-
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
CORPORATE BONDS - 89.5%
STEP UP BONDS - 10.0%
BUILDING PRODUCTS & MATERIALS - 2.9%
American Standard, 10.50%, due 6/01/05 $25,000 $21,750
Building Materials Corp., Ser. B,
11.75%, due 7/01/04 50,000 37,125
-------
58,875
-------
TELECOMMUNICATIONS - 7.1%
Intelecom Group USA, Inc., Ser. 144-A,
12.50%, due 5/01/06 50,000 27,125
MFS Communications, 8.875%, due 1/15/06 100,000 60,750
Mobilmedia Communications,
10.50%, due 12/01/03 75,000 53,625
--------
141,500
--------
TOTAL STEP UP BONDS 200,375
--------
CONVERTIBLE BOND - 2.5%
AUTOMOTIVE PARTS & EQUIPMENT - 2.5%
Hayes Wheels International, 11.00%, due 7/15/06 50,000 50,750
-------
NONCONVERTIBLE BONDS - 77.0%
CHEMICALS - 3.8%
NL Industries, 11.75%, due 10/15/03 75,000 76,875
-------
CONTAINERS & PACKAGING - 4.0%
Owens Illinois, Inc., 11.00%, due 12/01/03 75,000 80,813
-------
COSMETICS & TOILETRIES - 3.8%
Revlon Consumer Products, Ser. B,
10.50%, due 2/15/03 75,000 75,563
-------
ENTERTAINMENT & LEISURE - 1.2%
American Skiing Corp., Ser. 144-A ,
12.00%, due 7/15/06 25,000 24,500
-------
FINANCIAL SERVICES - 3.9%
Mesa Operating Co., 10.625%, due 7/01/06 25,000 25,281
UCC Investors, 10.50%, due 5/01/02 50,000 52,750
-------
78,031
-------
-3-
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
FOOD PRODUCTS - 1.3%
Smiths Food & Drug Centers,
11.25%, due 5/15/07 $25,000 $25,250
-------
HEALTH CARE PRODUCTS & SERVICES - 6.3%
Beverly Enterprises. Inc., 9.00%, due 2/15/06 50,000 46,500
Tenet Healthcare Corp., 10.125%, due 3/01/05 75,000 79,500
-------
126,000
-------
INDUSTRIAL - 17.0%
AAF-McQuay, Inc., 8.875%, due 2/15/03 100,000 95,500
Atlantis Group, Inc., 11.00%, due 2/15/03 20,000 19,000
Calmar, Inc., Ser. B, 11.50%, due 8/15/05 75,000 73,500
Clark-Schwebel, Inc., Ser. 144-A,
10.50%, due 4/15/06 25,000 25,625
Harvard Industries, Inc., 11.125%, due 8/01/05 25,000 23,750
Howmet Corp., 10.00%, due 12/01/03 50,000 52,875
IMO Industries, Ser. 144-A,
11.75%, due 5/01/06 25,000 25,687
Moog, Inc., Ser. 144-A, 10.00%, due 5/01/06 25,000 25,187
-------
341,124
-------
MEDIA & BROADCASTING - 11.0%
Cablevision Systems Corp.,
9.25%, due 11/01/05 75,000 70,125
Century Communications, 9.50%, due 3/01/05 25,000 24,500
Comcast Corp., 9.375%, due 5/15/05 75,000 72,938
SCI Television, 11.00%, due 6/30/05 50,000 52,250
-------
219,813
-------
METALS - 6.7%
Kaiser Aluminum & Chemical,
9.875%, due 2/15/02 75,000 74,250
WCI Steel, Inc., Ser. B, 10.50%, due 3/01/02 60,000 61,050
-------
135,300
-------
RETAILING - 4.7%
Pathmark Stores, 9.625%, due 5/01/03 100,000 94,375
-------
TELECOMMUNICATIONS - 5.9%
Lenfest Communications, Ser. 144-A,
10.50%, due 6/15/06 50,000 50,250
Paging Network, 8.875%, due 2/01/06 75,000 68,344
-------
118,594
-------
-4-
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
TEXTILES - 3.7%
Westpoint Stevens, Inc.,
9.375%, due 12/15/05 $75,000 $73,125
-------
TRANSPORTATION - 1.2%
CHC Helicopter, 11.50%, due 7/15/02 25,000 23,625
-------
UTILITIES - 2.5%
El Paso Electric Co., Ser. D,
8.90%, due 2/01/06 50,000 49,625
-------
TOTAL NONCONVERTIBLE BONDS 1,542,613
---------
TOTAL CORPORATE BONDS (COST $1,868,391) 1,793,738
---------
TOTAL INVESTMENTS (COST $1,868,391) - 89.5% 1,793,738
OTHER ASSETS IN EXCESS OF LIABILITIES - 10.5% 209,598
---------
NET ASSETS - 100.0% $2,003,336
- ------------------- ---------
---------
See notes to financial statements.
-5-
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
BALANCED FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------ -----
COMMON STOCKS - 58.9%
AEROSPACE & DEFENSE - 3.2%
AlliedSignal, Inc. 400 $22,850
Boeing Co. 400 34,850
ITT Industries, Inc. 1,100 27,638
Rohr, Inc. * 2,100 43,837
------
129,175
-------
AUTOMOTIVE MANUFACTURING - 0.6%
General Motors Corp., Class H 400 24,050
------
BANKING & FINANCIAL SERVICES - 5.0%
Banc One Corp. 740 25,160
Citicorp 100 8,262
Corestates Financial Corp. 355 13,667
Dean Witter Discover & Co. 400 22,900
Edwards, (A.G.), Inc. 600 16,275
First Chicago NBD Corp. 400 15,650
First Union Corp. 300 18,262
Great Western Financial 1,300 31,037
NationsBank Corp. 600 49,575
------
200,788
-------
BROADCASTING & MEDIA - 0.8%
Turner Broadcasting System, Inc., Class B 1,100 30,250
------
BUILDING MATERIALS - 1.5%
Owens-Corning Fiberglas Corp. * 600 25,800
USG Corp. * 1,300 36,238
------
62,038
------
CHEMICALS - 3.5%
Albemarle Corp. 2,200 40,150
Du Pont (E.I.) de Nemours & Co. 800 63,300
Union Carbide Corp. 980 38,955
------
142,405
-------
COMPUTERS & COMPUTER SOFTWARE - 2.5%
Autodesk, Inc. 700 20,912
EMC Corp. * 1,200 22,350
-6-
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
BALANCED FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------ -----
COMPUTERS & COMPUTER SOFTWARE (CONT'D) - 2.5%
International Business Machines 190 $18,810
Softkey International, Inc. * 900 17,044
Sun Microsystems, Inc. * 390 22,961
------
102,077
-------
CONGLOMERATES - 0.7%
Unilever NV 200 29,025
-------
ELECTRICAL & ELECTRONICS - 2.9%
Anixter International, Inc. * 1,400 20,825
General Instrument Corp. * 2,100 60,638
Grainger (W.W.), Inc. 200 15,500
Perkin-Elmer Corp. 400 19,300
------
116,263
-------
ENTERTAINMENT & LEISURE - 1.2%
Boyd Gaming Corp. * 380 5,700
Mirage Resorts, Inc. * 500 27,000
Viacom, Inc., Class B * 400 15,550
------
48,250
------
ENVIRONMENTAL MANAGEMENT - 1.8%
Browning Ferris Industries 900 26,100
WMX Technologies, Inc. 1,400 45,850
------
71,950
------
FOOD, BEVERAGE & TOBACCO - 4.2%
Kellogg Co. 200 14,650
PepsiCo, Inc. 600 21,225
Philip Morris Cos. 600 62,400
Ralston-Purina Group 600 38,475
Sara Lee Corp. 970 31,404
------
168,154
-------
HEALTH CARE PRODUCTS & SERVICES - 3.3%
Columbia/HCA Healthcare Corp. 1,360 72,590
Humana, Inc. * 2,600 46,475
United Healthcare Corp. 300 15,150
------
134,215
-------
-7-
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
BALANCED FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------ -----
HOUSEHOLD PRODUCTS - 1.3%
Procter & Gamble Co. 580 $52,563
-------
INSURANCE - 2.1%
Providian Corp. 1,200 51,450
Capital RE Corp. 900 33,075
------
84,525
------
MACHINERY & EQUIPMENT - 1.3%
Cooper Industries, Inc. 1,300 53,950
------
MANUFACTURING - 1.1%
Johnson Controls, Inc. 300 20,850
Teledyne, Inc. 600 21,675
------
42,525
------
MEDICAL SUPPLIES - 0.4%
Forest Laboratories, Inc. * 390 15,064
------
METALS - 0.3%
Aluminum Co. of America 200 11,475
------
PETROLEUM - 5.6%
Anadarko Petroleum Corp. 800 46,400
British Petroleum Ltd. ADR 300 32,063
Chevron Corp. 400 23,600
Diamond Shamrock, Inc. 1,160 33,495
Exxon Corp. 500 43,438
Texaco, Inc. 400 33,550
TransCanada Pipelines Ltd. 780 11,505
------
224,051
-------
PHARMACEUTICALS - 2.4%
American Home Products Corp. 400 24,050
Pfizer, Inc. 300 21,413
Warner-Lambert Co. 900 49,500
------
94,963
------
-8-
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
BALANCED FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------ -----
RETAILING - 2.8%
Melville Corp. 500 $20,250
Toys R Us * 1100 31,350
Wal-Mart Stores, Inc. 2,400 60,900
------
112,500
-------
TELECOMMUNICATIONS - 6.1%
AT&T Corp. 1,100 68,200
Ameritech Corp. 400 23,750
MCI Communications 1,360 34,850
NYNEX Corp. 700 33,250
SBC Communications, Inc. 500 24,625
Tele-Communications, Class A 2,100 38,062
US West Media Group, Inc. * 1,160 21,170
------
243,907
-------
TEXTILES - 0.8%
Collins & Aikman Corp. * 5,630 33,780
------
TRANSPORTATION - 1.8%
Conrail, Inc. 200 13,275
Consolidated Freightways 1,100 23,238
Union Pacific Corp. 500 34,938
------
71,451
------
UTILITIES - 1.7%
Entergy Corp. 400 11,350
Pacific Gas & Electric 1,600 37,200
Pinnacle West Capital Corp. 300 9,113
Wisconsin Energy Corp. 400 11,550
------
69,213
------
TOTAL COMMON STOCKS (COST $2,387,743) 2,368,607
CORPORATE BONDS - 10.7%
CONVERTIBLE BOND - 0.2%
INDUSTRIAL & COMMERCIAL SERVICES - 0.2%
Ryerson Tull, Inc., 8.50%, due 7/15/01 10,000 9,971
-----
-9-
<PAGE>
<TABLE>
<CAPTION>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
BALANCED FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares or
Principal Market
Amount Value
-------- -------
<S> <C> <C>
NONCONVERTIBLE BONDS - 10.5%
AUTOMOTIVE - 1.7%
Aegis Auto Rec., Ser. 1996-2, 8.90%, due 1/20/02 $70,000 $71,120
-------
BANKING & FINANCIAL SERVICES - 5.2%
Metropolitan Life Insurance Co., 7.80%, due 11/01/25 70,000 67,481
Midland Bank PLC, 7.625%, due 6/15/06 70,000 70,849
Trans Financial Bank, 6.32%, due 10/17/97 70,000 69,676
------
208,006
-------
BUILDING MATERIALS - 0.3%
Schuller International Corp., 10.875%, due 12/15/04 10,000 10,762
------
INDUSTRIAL & COMMERCIAL SERVICES - 1.7%
Celulosa Arauco, 6.75%, due 12/15/03 70,000 65,602
------
UTILITIES - 1.6%
Boston Edison Co., 6.05%, due 8/15/00 70,000 66,716
------
TOTAL NONCONVERTIBLE BONDS 422,206
-------
TOTAL CORPORATE BONDS (COST $431,106) 432,177
-------
MORTGAGE BOND - 1.7%
Premier Auto Trust Mortgage, 6.15%, due 3/06/00
(COST $70,103) 70,000 69,414
------
FOREIGN BOND - 1.6%
Quebec Province, 9.00%, due 5/08/01
(COST $65,828) 60,000 64,205
------
U.S. GOVERNMENT & U.S. GOVERNMENT
AGENCY OBLIGATIONS - 28.1%
U.S. GOVERNMENT OBLIGATIONS - 10.3%
U.S. Treasury Bond, 11.625%, due 11/15/02 179,000 225,428
U.S. Treasury Note, 10.75%, due 8/15/05 61,000 77,432
U.S. Treasury Bond, 8.50%, due 2/15/20 97,000 113,096
-------
415,956
-------
</TABLE>
-10-
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
BALANCED FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------ -----
U.S. GOVERNMENT AGENCY OBLIGATIONS - 17.8%
Federal Home Loan Mortgage Corp.,
Gold Pool #C00427, 8.00%, due 10/01/25 $90,340 $91,271
Federal National Mortgage Assoc.,
7.50%, due 1/01/26 ** 70,000 69,081
Federal National Mortgage Assoc., Pool #337434,
6.50%, due 2/01/26 70,523 66,076
Federal National Mortgage Assoc., Pool #339454,
6.00%, due 3/01/26 70,556 64,140
Federal National Mortgage Assoc., Pool #303998,
9.00%, due 6/01/26 45,450 47,396
Government National Mortgage Assoc. II,
8.00%, due 1/01/26 ** 125,000 119,375
Government National Mortgage Assoc., Pool #383618,
7.50%, due 3/15/26 70,604 69,654
Government National Mortgage Assoc., Pool #408110,
7.00%, due 4/15/26 70,588 67,786
Government National Mortgage Assoc., Pool #422913,
8.00%, due 6/15/26 118,800 119,987
-------
714,766
-------
TOTAL U.S. GOVERNMENT & U.S. GOVERNMENT
AGENCY OBLIGATIONS (COST $1,150,941) 1,130,722
---------
TOTAL INVESTMENTS (COST $4,105,721) - 101.0% 4,065,125
LIABILITIES IN EXCESS OF OTHER ASSETS - (1.0%) (41,764)
-------
NET ASSETS - 100.0% $4,023,361
----------
ADR - American Depository Receipt.
* Non-income producing security.
** Security has been purchased on a when-issued basis, whereby the settlement
date is after the normal settlement.
See notes to financial statements.
-11-
<PAGE>
- --------------------------------------------------------------------------------
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
COMMON STOCKS - 86.1%
AEROSPACE & DEFENSE - 5.4%
GRC International, Inc. * 5,500 $211,063
Litton Industries * 1,500 65,250
------
276,313
-------
BANKING - 15.9%
BankAmerica Co. 2,000 151,500
Bank of New York Co., Inc. 2,100 107,625
Bankers Trust NY Corp. 1,500 110,812
Chase Manhattan Corp. 1,000 70,625
Greenpoint Financial Corp. 1,500 42,375
Merchantile Bank Corp. 2,000 89,000
PNC Bank Corp. 3,000 89,250
Wells Fargo & Co. 666 159,091
-------
820,278
-------
BROADCASTING & MEDIA - 0.9%
Grupo Televisa SA GDS* 1,500 46,125
------
BUSINESS SERVICES - 4.0%
Sterling Commerce, Inc. * 5,500 204,188
-------
COMPUTERS & COMPUTER SOFTWARE - 6.2%
Amdahl Corp. * 3,500 37,625
Honeywell, Inc. 3,000 163,500
Intuit, Inc. * 1,500 70,875
Network Peripherals, Inc. * 1,500 25,687
Sybase, Inc. * 800 18,900
------
316,587
-------
ELECTRONICS - 1.2%
Lexmark International Group, Class A * 3,000 60,375
------
ENGINEERING - 2.2%
Stone & Webster, Inc. 3,400 116,025
-------
FINANCIAL SERVICES - 5.9%
Aetna Life & Casualty Co. 1,500 107,250
Schwab (Charles ) Corp. 1,500 36,750
-12-
<PAGE>
- --------------------------------------------------------------------------------
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
FINANCIAL SERVICES (CONT'D) - 5.9%
Student Loan Marketing Association 800 $59,200
USF&G Corp. 6,000 98,250
------
301,450
-------
FOREST & PAPER PRODUCTS - 2.9%
Westvaco Corp. 2,900 86,637
Weyerhaeuser Co. 1,500 63,750
------
150,387
-------
HEALTHCARE - 4.6%
ALZA Corp. * 2,500 68,437
Biomet, Inc. * 2,000 28,750
FoxMeyer Health Corp. 5,000 74,375
STERIS Corp. * 2,000 64,000
------
235,562
-------
INDUSTRIAL MANUFACTURING & PROCESSING - 1.9%
Inco Ltd. 3,000 96,750
------
METALS & MINING - 20.2%
Echo Bay Mines Ltd. 6,000 64,500
Homestake Mining Co. 13,000 222,625
Newmont Mining Corp. 6,000 296,250
Pegasus Gold, Inc. * 15,000 183,750
Placer Dome, Inc. 10,000 238,750
Prime Resource Group, Inc. 5,000 37,024
------
1,042,899
---------
OIL SERVICES - 4.8%
Baker Hughes, Inc. 5,000 164,375
Halliburton Co. 1,500 83,250
------
247,625
-------
PHARMACEUTICALS - 2.8%
Biogen, Inc. * 1,000 54,875
Columbia Laboratories, Inc. * 2,000 29,750
Creative Biomolecules, Inc. * 3,000 25,500
Cytogen Corp. * 4,000 36,250
------
146,375
-------
-13-
<PAGE>
- --------------------------------------------------------------------------------
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
TELECOMMUNICATIONS - 7.2%
AirTouch Communications, Inc. * 4,500 $127,125
Frontier Corp. 3,000 91,875
Globalstar Telecommunications Ltd. * 1,000 44,250
Lucent Technologies, Inc. * 1,700 64,388
Telefonos de Mexico, Class L ADR 1,300 43,550
------
371,188
-------
TOTAL COMMON STOCKS (COST $4,509,996) 4,432,127
---------
REPURCHASE AGREEMENT - 13.9%
Repurchase agreement with State Street Bank,
5.10%, due 7/01/96, dated 6/28/96, with a
maturity value of $716,304; collateralized by
$720,000 U.S. Treasury Note, 6.00%, due 8/31/97;
market value $733,500
(cost $716,000) 716,000 716,000
-------
TOTAL INVESTMENTS (COST $5,225,996) - 100.0% 5,148,127
LIABILITIES IN EXCESS OF OTHER ASSETS - 0.0% (1,605)
------
NET ASSETS - 100.0% $5,146,522
- ------------------- ----------
----------
ADR - American Depository Receipt.
* Non-income producing security.
See notes to financial statements.
-14-
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
GROWTH FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
------ -----
COMMON STOCKS - 89.2%
APPAREL & TEXTILES - 2.3%
Nautica Enterprises, Inc. * 1,500 $43,125
Nike, Inc., Class B 600 61,650
Tommy Hilfiger Corp. * 700 37,538
--------
142,313
--------
AUTOMOTIVE MANUFACTURING - 0.9%
Harley-Davidson, Inc. 1,400 57,575
--------
BANKING & FINANCIAL SERVICES - 2.3%
Aames Financial Corp. 1,200 43,050
First Bank System, Inc. 1,300 75,400
First USA Paymentech, Inc. 600 24,000
--------
142,450
--------
BUSINESS EQUIPMENT - 2.2%
BT Office Products International, Inc. * 1,900 33,963
Danka Business Systems PLC ADR 3,500 102,375
--------
136,338
--------
--------
CHEMICALS - 2.8%
Monsanto Co. 4,500 146,250
Olin Corp. 300 26,775
--------
173,025
--------
COMMERCIAL SERVICES - 9.8%
Accustaff, Inc. * 5,000 136,250
CUC International, Inc. * 2,500 88,750
Career Horizons, Inc. * 1,400 49,000
Corestaff, Inc. * 2,500 111,875
Medaphis Corp. * 800 31,800
PMT Services, Inc. * 1,500 42,938
Quintiles Transnational Corp. * 500 32,875
Service Corp. International 1,500 86,250
SITEL Corp. * 800 33,600
--------
613,338
--------
COMMUNICATIONS EQUIPMENT - 2.2%
US Robotics Corp. * 1,600 136,800
--------
-15-
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
GROWTH FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
------ -----
COMPUTERS & COMPUTER SOFTWARE - 11.1%
HBO & Co. 1,200 $81,300
Baan Co. NV * 800 27,200
CBT Group PLC ADR * 1,000 46,250
Cisco Systems, Inc. * 1,700 96,262
HNC Software * 1,800 83,250
McAfee Associates, Inc. * 1,300 63,700
Microsoft Corp. * 600 72,075
Planning Sciences ADR * 1,700 38,250
Sykes Enterprises, Inc. * 2,000 98,500
Visio Corp. * 2,400 86,400
--------
693,187
--------
ELECTRONICS & ELECTRONIC EQUIPMENT - 3.0%
Checkpoint Systems, Inc. * 1,000 34,375
Uniphase Corp. * 2,500 88,750
Intel Corp. 900 66,094
--------
189,219
--------
ENTERTAINMENT & LEISURE - 1.5%
Circus Circus Enterprises, Inc. * 600 24,600
Regal Cinemas, Inc. * 1,500 68,625
--------
93,225
--------
FOODS & BEVERAGES - 2.0%
PepsiCo, Inc. 3,500 123,813
--------
HEALTH CARE PRODUCTS & SERVICES - 2.6%
ABR Information Services, Inc. * 1,000 50,250
HEALTHSOUTH Corp. * 1,400 50,400
Orthodontic Centers of America, Inc. * 1,000 26,500
Physicians Resource Group, Inc. * 1,100 36,712
--------
163,862
--------
HOUSEHOLD PRODUCTS - 1.0%
USA Detergents, Inc. * 1,500 59,812
--------
MEDICAL SUPPLIES - 4.3%
Guidant Corp. 1,500 73,875
Heartport, Inc. * 4,000 121,000
Johnson & Johnson 1,500 74,250
--------
269,125
--------
-16-
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
GROWTH FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
------ -----
PETROLEUM & PETROLEUM SERVICES - 2.2%
Chesapeake Energy Corp. 400 $35,950
Pride Petroleum Services* 2,500 35,625
Schlumberger Ltd. 400 33,700
Smith International, Inc. * 1,000 30,125
--------
135,400
--------
PHARMACEUTICALS - 10.1%
Cardinal Health 1,000 72,125
Dura Pharmaceuticals, Inc. * 1,300 72,800
Elan Corp. PLC ADR * 2,000 114,250
Eli Lilly & Co. 1,800 117,000
Merck & Co. 1,400 90,475
PAREXEL International Corp. * 1,000 48,250
Pfizer, Inc. 1,600 114,200
--------
629,100
--------
PUBLISHING - 1.0%
Tribune Co. 900 65,363
--------
RESTAURANTS & LODGING - 6.1%
Apple South, Inc. 1,400 37,450
Hospitality Franchise Systems, Inc. * 3,000 210,000
Promus Hotel Corp. * 2,000 59,250
Rainforest Cafe, Inc. * 1,500 75,000
--------
381,700
--------
RETAILING - 11.5%
AutoZone, Inc. * 1,300 45,175
Consolidated Stores Corp. * 1,800 66,150
Corporate Express, Inc. * 4,000 160,000
Dollar Tree Stores, Inc. * 2,200 69,850
Garden Ridge Corp. * 1,500 75,750
Gucci Group NV 400 25,800
Kohl's Corp. * 2,000 73,250
Staples, Inc. * 2,500 48,750
Viking Office Products, Inc. * 5,000 156,875
--------
721,600
--------
TELECOMMUNICATIONS - 7.6%
Adtran, Inc. * 300 21,262
-17-
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
GROWTH FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
------ -----
TELECOMMUNICATIONS (CONT'D) - 7.6%
Ameritech Corp. 1,600 $95,000
Andrew Corp. * 1,000 53,750
Cascade Communications Corp. 1,400 95,200
Cincinnati Bell, Inc. 1,500 78,187
Tellabs, Inc. * 1,400 93,625
U.S. Long Distance Corp. * 1,100 39,050
--------
476,074
--------
TRANSPORTATION - 1.0%
Midwest Express Holdings, Inc. * 2,000 64,250
--------
WHOLESALE DISTRIBUTION - 1.7%
Alco Standard Corp. 1,100 49,775
AmeriSource Health Corp., Class A * 1,800 59,850
--------
109,625
--------
TOTAL COMMON STOCKS (COST $4,938,194) 5,577,194
----------
TOTAL INVESTMENTS (COST $4,938,194) - 89.2% 5,577,194
OTHER ASSETS IN EXCESS OF LIABILITIES - 10.8% 675,910
---------
NET ASSETS - 100.0% $6,253,104
-----------
-----------
ADR - American Depository Receipt.
* Non-income producing security.
See notes to financial statements.
-18-
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
EMERGING GROWTH FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
--------- ------
COMMON STOCKS - 93.1%
BANKING & FINANCIAL SERVICES - 8.1%
ADVANTA Corp., Class B 1,300 $58,825
Capital One Financial Corp. 1,900 54,150
Countrywide Credit Industries, Inc. 1,900 47,025
Credit Acceptance Corp. * 2,800 58,800
FINOVA Group 800 39,000
First USA Paymentech, Inc. 100 4,000
Franklin Resources, Inc. 1,400 85,400
Green Tree Financial Corp. 2,100 65,625
Northern Trust Corp. 500 28,875
--------
441,700
--------
BROADCASTING & MEDIA - 1.4%
Heritage Media Corp., Class A * 800 31,900
Infinity Broadcasting * 1,500 45,000
------
76,900
------
COMMERCIAL SERVICES - 4.2%
CUC International, Inc. * 2,550 90,525
Franklin Quest Co. * 2,100 43,575
Loewen Group, Inc. 1,500 45,375
Service Corp. International 800 46,000
-------
225,475
-------
COMMUNICATIONS EQUIPMENT - 2.3%
Glenayre Technologies, Inc. * 1,450 72,500
US Robotics Corp. * 600 51,300
-------
123,800
-------
COMPUTERS & COMPUTER SOFTWARE - 27.7%
Adobe Systems, Inc. 1,900 68,162
Autodesk, Inc. 2,700 80,662
BISYS Group, Inc. * 700 26,425
BMC Software, Inc. * 2,100 125,475
Cabletron Systems, Inc. * 1,590 109,114
Cadence Design System, Inc. * 1,300 43,875
Ceridian Corp. * 1,200 60,600
Computer Sciences Corp. * 900 67,275
Compuware Corp. * 1,200 47,400
Davidison & Associates, Inc. * 500 15,000
-19-
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
EMERGING GROWTH FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
--------- ------
COMPUTERS & COMPUTER SOFTWARE
(CONT'D) - 27.7%
Electronic Arts * 2,700 $72,225
Fiserv, Inc. * 2,100 63,000
Gateway 2000, Inc. * 800 27,200
Informix Corp. * 2,800 63,000
Oracle Corp. * 6,300 248,456
SPS Transaction Services CRP, Inc. * 2,100 37,800
Sybase, Inc. * 3,500 82,687
Symantec Corp. * 2,900 36,250
Synopsys, Inc. * 4,200 166,950
System Software Associates, Inc. 3,700 62,900
---------
1,504,456
---------
ELECTRICAL EQUIPMENT - 0.9%
Cable Design Technologies * 1,500 49,125
------
ELECTRONICS - 3.2%
ADT Ltd. * 3,500 66,063
LSI Logic Corp. * 2,400 62,400
Xilinx, Inc. * 1,400 44,450
-------
172,913
-------
ENTERTAINMENT & LEISURE - 7.3%
Bally Entertainment Corp. 4,400 121,000
Grand Casinos, Inc. 1,700 43,775
Harrah's Entertainment, Inc. * 4,600 129,950
Showboat, Inc. 3,400 102,425
-------
397,150
-------
HEALTH CARE PRODUCTS & SERVICES - 11.5%
Foundation Health Corp. * 1,400 50,225
HEALTHSOUTH Corp. * 1,300 46,800
Health Management Associates, Inc., Class A * 4,350 88,088
Healthsource, Inc. * 2,700 47,250
Manor Care, Inc. 1,200 47,250
Mariner Health Group, Inc. * 2,100 38,588
PacifiCare Health Systems, Class A * 2,230 147,180
United Healthcare Corp. 3,100 156,550
-------
621,931
-------
-20-
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
EMERGING GROWTH FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
--------- ------
HOUSEHOLD PRODUCTS - 0.6%
Department 56, Inc. * 1,400 $31,675
-------
MEDICAL SUPPLIES - 3.2%
St. Jude Medical, Inc. * 2,500 83,750
Ventritex, Inc. * 5,300 90,762
-------
174,512
-------
METALS - 0.1%
Titanium Metals Corp. * 300 7,763
-------
PETROLEUM - 2.0%
Belco Oil & Gas Corp. * 2,000 71,000
Carbo Ceramics, Inc. 1,800 39,600
-------
110,600
-------
PUBLISHING - 0.6%
Pulitzer Publishing Co. 500 29,625
-------
RESTAURANTS & LODGING - 7.0%
Applebee's International, Inc. 2,850 92,269
Buffets, Inc. * 2,400 29,400
Hospitality Franchise Systems, Inc. * 2,450 171,500
Promus Hotel Corp. * 2,400 71,100
Renaissance Hotel Group NV * 800 17,200
-------
381,469
-------
RETAILING - 5.9%
AutoZone, Inc. * 900 31,275
General Nutrition Cos. * 4,000 70,000
Gymboree Corp. * 1,900 57,950
Nine West Group, Inc. * 1,300 66,462
Office Depot * 4,600 93,725
-------
319,412
-------
TELECOMMUNICATIONS - 5.3%
Paging Network, Inc. * 1,900 45,600
Rogers Cantel Mobile, Class B * 4,200 98,175
Telephone and Data Systems, Inc. 1,400 63,000
Worldcom, Inc. * 1,500 83,063
-------
289,838
-------
-21-
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
EMERGING GROWTH FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
--------- ------
TRANSPORTATION - 1.8%
Wisconsin Central Transportation Corp. * 3,000 $97,500
-------
TOTAL COMMON STOCKS (COST $4,928,481) 5,055,844
---------
TOTAL INVESTMENTS (COST $4,928,481) - 93.1% 5,055,844
OTHER ASSETS IN EXCESS OF LIABILITIES - 6.9% 372,503
---------
NET ASSETS $5,428,347
---------
---------
* Non-income producing security.
See notes to financial statements.
-22-
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
------ -----
COMMON STOCKS - 95.1%
AUSTRALIA - 3.5%
National Australian Bank Ltd. 9,200 $85,080
Broken Hill Proprietary 7,700 106,480
--------
191,560
--------
FRANCE - 4.3%
Christian Dior SA 850 110,624
Sodexho SA 280 124,225
--------
234,849
--------
GERMANY - 4.0%
Siemens AG 1,800 96,472
Veba AG 2,300 122,242
--------
218,714
--------
HONG KONG - 5.5%
Cheung Kong Holdings 15,000 108,035
HSBC Holdings PLC 6,800 102,784
Hong Kong Telecommunications Ltd. 51,600 92,661
--------
303,480
--------
ITALY - 1.5%
Banca Commerciale Italiana 42,100 84,587
--------
JAPAN - 39.4%
Aiwa Co. Ltd. 4100 87,098
Autobacs Seven Co. Ltd. 1,000 96,643
DDI Corp. 13 113,310
Fast Retailing Co. Ltd. 2,000 83,697
Hitachi Ltd. 9,000 83,697
Jusco Co. 3,000 98,193
Kokuyo 4,000 110,502
Mitsubishi Estate Co. Ltd. 8,000 110,137
New Oji Paper Co. Ltd. 10,000 86,250
Nintendo Corp. Ltd. 700 52,078
Nippon Express Co. Ltd. 10,000 97,555
Nippon Fire & Marine Insurance 16,000 104,302
Nippon Steel Co. 29,000 99,415
Nomura Securities Co. Ltd. 4,000 78,044
Rohm Co. 2,000 132,019
-23-
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
------ -----
JAPAN (CONT'D) - 39.4%
Shima Seiki Mfg. Ltd. 1,000 $60,448
Shin-Etsu Chemical Co. 5,250 100,518
Sumitomo Bank 5,000 96,644
Sumitomo Trust & Banking 7,000 95,732
Toda Construction Co. 11,000 107,311
Tokai Rubber Industries 7,000 89,988
Ushio, Inc. 8,000 97,738
Yamada Denki 3000 84,517
--------
2,165,836
----------
MALAYSIA - 3.7%
Malayan Banking Berhad 21,000 201,985
--------
NETHERLANDS - 5.8%
Internationale Nederlanden Groep NV 4,000 119,275
Konilklijke PTT Nederland NV 2,600 98,396
VNU-Verenigde Nederlandse Uitgeversbed 6,600 102,462
--------
320,133
--------
SINGAPORE - 1.8%
Development Bank of Singapore 8,000 99,756
--------
SWEDEN - 4.8%
Atlas Copco AB 6,470 120,420
Scania AB * 1,550 42,981
Telefonaktiebolaget LM Ericsson, Class B 4,660 100,427
--------
263,828
--------
SWITZERLAND - 5.0%
Ciba-Geigy AG 118 143,771
Sandoz, Ltd. AG 113 129,193
--------
272,964
--------
UNITED KINGDOM - 15.8%
Barclays PLC 7,500 90,082
British Petroleum Co. 11,000 96,483
Compass Group PLC 11,500 105,425
Glaxo Wellcome PLC 6,000 80,782
Granada Group PLC 8,000 107,150
Henlys Group PLC 10,000 102,240
NEXT PLC 12,000 104,975
Rentokil Group PLC 14,000 88,971
-24-
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
------ -----
UNITED KINGDOM (CONT'D) - 15.8%
Vodafone Group PLC 24,000 $89,499
--------
865,607
--------
TOTAL COMMON STOCKS (COST $4,934,305) 5,223,299
----------
TOTAL INVESTMENTS (COST $ 4,934,305) - 95.1% 5,223,299
OTHER ASSETS IN EXCESS OF LIABILITIES - 4.9% 271,083
--------
NET ASSETS - 100.0% $5,494,382
- ------------------- -----------
* Non-income producing security.
See notes to financial statements.
-25-
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT HIGH YIELD GROWTH & EMERGING INTERNATIONAL
GRADE BOND BOND BALANCED INCOME GROWTH GROWTH EQUITY
---------- ------ -------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments in securities, at market
value (Note 2) . . . . . . . . . . $3,133,348 $1,793,738 $4,065,125 $4,432,127 $5,577,194 $5,055,844 $5,223,299
Repurchase agreements, at
amortized cost (Note 2). . . . . . - - - 716,000 - - -
Cash . . . . . . . . . . . . . . . . . 68,704 279,830 115,645 716,617 1,508,051 420,488 231,242
Cash denominated in foreign currencies - - - - - - 31,048
Receivables:
Investment securities sold . . . 31,297 46,188 110,587 - 1,296,132 3,007 -
Dividends and interest . . . . . 31,027 36,769 22,607 4,138 34,106 1,791 11,045
Due from Adviser . . . . . . . . 4,401 5,503 2,330 3,436 3,604 - -
Foreign taxes recoverable. . . . - - - - - - 2,721
Unrealized appreciation of forward
exchange currency contracts
(Note 2) . . . . . . . . . . - - - - - - 14,629
Prepaid insurance expense. . . . . . . 2,048 2,048 2,048 2,048 2,048 2,048 2,048
-------------------------------------------------------------------------------------------
TOTAL ASSETS. . . . . . . . 3,270,825 2,164,076 4,318,342 5,874,366 8,421,135 5,483,178 5,516,032
-------------------------------------------------------------------------------------------
LIABILITIES:
Payables:
Investment securities purchased. 340,120 152,916 284,500 716,000 2,154,639 43,592 -
Accrued advisory fees. . . . . . - - - - - 1,067 3,656
Other payables and accrued
expenses . . . . . . . . . . . 9,418 7,824 10,481 11,844 13,392 10,172 17,994
-------------------------------------------------------------------------------------------
TOTAL LIABILITIES . . . . . 349,538 160,740 294,981 727,844 2,168,031 54,831 21,650
-------------------------------------------------------------------------------------------
NET ASSETS . . . . . . . . . . . . . . $2,921,287 $2,003,336 $4,023,361 $5,146,522 $6,253,104 $5,428,347 $5,494,382
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
SOURCE OF NET ASSETS:
Paid-in capital. . . . . . . . . . . . $3,005,750 $2,041,656 $4,030,342 $5,115,784 $5,351,415 $5,289,574 $5,093,082
Net unrealized appreciation
(depreciation) on:
Investment securities. . . . . . (30,701) (74,653) (40,596) (77,869) 639,000 127,363 288,994
Foreign currency related
transactions . . . . . . . . . - - - - - - 14,429
Undistributed net investment
income (loss) . . . . . . . . . . . 77,345 59,102 54,087 15,558 28,090 (2,538) 31,504
Accumulated net realized gain (loss) . (131,107) (22,769) (20,472) 93,049 234,599 13,948 66,373
-------------------------------------------------------------------------------------------
NET ASSETS . . . . . . . . . . . . . . $2,921,287 $2,003,336 $4,023,361 $5,146,522 $6,253,104 $5,428,347 $5,494,382
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Shares outstanding . . . . . . . . . . 300,598 204,258 403,013 511,058 529,985 527,793 508,684
Net asset value per share. . . . . . . $9.72 $9.81 $9.98 $10.07 $11.80 $10.28 $10.80
Cost of investments. . . . . . . . . . 3,164,049 1,868,391 4,105,721 4,509,996 4,938,194 4,928,481 4,934,305
Cost of repurchase agreements. . . . . - - - 716,000 - - -
Cost of foreign currencies . . . . . . - - - - - - 31,300
See notes to financial statements.
</TABLE>
-26-
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE PERIOD FEBRUARY 8, 1996* THROUGH JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT HIGH YIELD GROWTH & EMERGING INTERNATIONAL
GRADE BOND BOND BALANCED INCOME GROWTH GROWTH EQUITY
---------- ------ -------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME: (NOTE 2)
Interest . . . . . . . . . . . . . $87,110 $63,426 $50,598 $11,843 $13,836 $7,528 $7,561
Dividends . . . . . . . . . . . . . - - 19,411 22,611 36,277 3,204 60,129
-------------------------------------------------------------------------------------------
87,110 63,426 70,009 34,454 50,113 10,732 67,690
Foreign taxes withheld . . . . . . . . - - (158) (321) - - (7,293)
-------------------------------------------------------------------------------------------
Total investment income. . . . . . 87,110 63,426 69,851 34,133 50,113 10,732 60,397
-------------------------------------------------------------------------------------------
EXPENSES: (NOTE 3)
Investment advisory fees . . . . . 3,447 2,716 5,505 4,118 3,303 8,133 10,273
Sub-advisory fees. . . . . . . . . 3,447 3,104 7,078 10,293 13,213 8,133 10,273
Administration fees. . . . . . . . 1,478 1,425 1,544 1,626 1,664 1,622 1,619
Cash management fees . . . . . . . 121 121 121 121 121 121 121
Audit fees . . . . . . . . . . . . 1,907 1,907 1,907 1,907 1,907 1,907 1,907
Legal fees . . . . . . . . . . . . 1,701 1,701 1,701 1,701 1,701 1,701 1,701
Accounting fees and expenses . . . 1,189 1,146 1,241 1,308 1,338 1,304 2,208
Reports to shareholders. . . . . . 874 874 874 874 874 874 874
Custodian fees and expenses. . . . 541 541 541 541 541 541 541
Trustees' fees . . . . . . . . . . 494 494 494 494 494 494 494
Insurance expense. . . . . . . . . 452 452 452 452 452 452 452
Other expenses . . . . . . . . . . 1,962 1,166 2,141 2,694 3,322 3,187 5,047
-------------------------------------------------------------------------------------------
Total expenses . . . . . . . . . . . . 17,613 15,647 23,599 26,129 28,930 28,469 35,510
Fees waivers and expense
reimbursements . . . . . . . . . (7,848) (11,323) (7,835) (7,554) (6,907) (15,199) (6,617)
-------------------------------------------------------------------------------------------
Net expenses . . . . . . . . . . . . . 9,765 4,324 15,764 18,575 22,023 13,270 28,893
-------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) . . . . . 77,345 59,102 54,087 15,558 28,090 (2,538) 31,504
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investment securities. . . . . . . (131,107) (22,769) (20,472) 93,049 234,599 13,948 60,119
Foreign currency related
transactions . . . . . . . . . . - - - - - - 6,254
-------------------------------------------------------------------------------------------
Net realized gain (loss)
on investments. . . . . . . . (131,107) (22,769) (20,472) 93,049 234,599 13,948 66,373
-------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) on:
Investment securities. . . . . . . (30,701) (74,653) (40,596) (77,869) 639,000 127,363 288,994
Foreign currency related
transactions . . . . . . . . . . - - - - - - 14,429
Net unrealized appreciation
-------------------------------------------------------------------------------------------
(depreciation) on investments. (30,701) (74,653) (40,596) (77,869) 639,000 127,363 303,423
-------------------------------------------------------------------------------------------
NET GAIN (LOSS) ON INVESTMENTS . . . . (161,808) (97,422) (61,068) 15,180 873,599 141,311 369,796
-------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS. . . . ($84,463) ($38,320) ($6,981) $30,738 $901,689 $138,773 $401,300
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
* Commencement of operations.
See notes to financial statements.
</TABLE>
-27-
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FEBRUARY 8, 1996* THROUGH JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT HIGH YIELD GROWTH & EMERGING INTERNATIONAL
GRADE BOND BOND BALANCED INCOME GROWTH GROWTH EQUITY
---------- ------ -------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) . . . . . $77,345 $59,102 $54,087 $15,558 $28,090 ($2,538) $31,504
Net realized gain (loss) on
investments. . . . . . . . . . . . . (131,107) (22,769) (20,472) 93,049 234,599 13,948 66,373
Net unrealized appreciation (depreciation)
on investments. . . . . . . . . . (30,701) (74,653) (40,596) (77,869) 639,000 127,363 303,423
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations. . . . (84,463) (38,320) (6,981) 30,738 901,689 138,773 401,300
-------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Proceeds from shares sold. . . . . . . 3,005,750 2,041,656 4,030,342 5,115,784 5,351,415 5,289,574 5,093,082
Net asset value of shares issued upon
reinvestment of distributions . . . - - - - - - -
Payments for shares redeemed . . . . . - - - - - - -
Net increase in net assets
-------------------------------------------------------------------------------------------
from share transactions . . . . 3,005,750 2,041,656 4,030,342 5,115,784 5,351,415 5,289,574 5,093,082
-------------------------------------------------------------------------------------------
Net increase in net assets . . . . . . 2,921,287 2,003,336 4,023,361 5,146,522 6,253,104 5,428,347 5,494,382
NET ASSETS:
Beginning of period . . . . . . . - - - - - - -
-------------------------------------------------------------------------------------------
End of period ( including
undistributed
net investment income) . . . . $2,921,287 $2,003,336 $4,023,361 $5,146,522 $6,253,104 $5,428,347 $5,494,382
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Undistributed net investment
income (loss). . . . . . . . . . . . $77,345 $59,102 $54,087 $15,558 $28,090 ($2,538) $31,504
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Shares sold. . . . . . . . . . . . . . 300,598 204,258 403,013 511,058 529,985 527,793 508,684
Shares issued upon reinvestment. . . . - - - - - - -
Shares redeemed. . . . . . . . . . . . - - - - - - -
-------------------------------------------------------------------------------------------
Net increase . . . . . . . . . . . . . 300,598 204,258 403,013 511,058 529,985 527,793 508,684
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
* Commencement of operations.
See notes to financial statements.
-28-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OUTSTANDING THROUGHOUT THE PERIOD (UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD FEBRUARY 8, 1996* THROUGH JUNE 30, 1996
-----------------------------------------------------------------------------------------
INVESTMENT HIGH YIELD GROWTH & EMERGING INTERNATIONAL
GRADE BOND BOND BALANCED INCOME GROWTH GROWTH EQUITY
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE PER SHARE,
BEGINNING OF PERIOD. . . . . . . . . . . $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00
----------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss). . . . . . 0.26 0.29 0.13 0.03 0.05 (0.05) 0.06
Net realized and unrealized gain
(loss) . . . . . . . . . . . . . . . (0.54) (0.48) (0.15) 0.04 1.75 0.33 0.74
----------------------------------------------------------------------------------------
Net change in net asset value . (0.28) (0.19) (0.02) 0.07 1.80 0.28 0.80
----------------------------------------------------------------------------------------
Net asset value per share, end of period . $9.72 $9.81 $9.98 $10.07 $11.80 $10.28 $10.80
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
TOTAL RETURN (a) **. . . . . . . . . . . . (2.80%) (1.90%) (0.20%) 0.70% 18.00% 2.80% 8.00%
Net assets, end of period (000 omitted). . $2,921 $2,003 $4,023 $5,147 $6,253 $5,428 $5,494
Ratio to average net assets of: ***
Expenses, net of fee waivers and
expense reimbursements . . . . . . 0.85% 0.55% 1.00% 0.90% 1.00% 0.65% 1.40%
Expenses, prior to fee waivers and
expense reimbursements . . . . . . 1.53% 2.02% 1.50% 1.27% 1.31% 1.40% 1.72%
Net investment income, net of fee
waivers and expense
reimbursements . . . . . . . . . . 6.74% 7.62% 3.44% 0.76% 1.27% (0.12%) 1.53%
Portfolio turnover rate ** . . . . . . . . 311% 54% 156% 67% 129% 25% 20%
Average commission rate paid per share
traded . . . . . . . . . . . . . . . . . - - $0.0549 $0.0600 $0.0443 $0.0407 $0.0429
</TABLE>
* Commencement of operations.
** Not annualized.
*** Annualized.
(a) Total returns do not reflect any seperate account
charges under variable annuity contracts.
See notes to financial statements.
-29-
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION AND BUSINESS:
The Alexander Hamilton Variable Insurance Trust (the "Trust") is an open-end,
management investment company established as a Massachusetts business trust
under a Declaration of Trust dated July 18, 1994. The Trust consists of
seven separate investment portfolios or funds (the "Funds" or a "Fund"), each of
which is, in effect, a separate mutual fund.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES:
(A) The net asset value per share of each Fund is normally determined once
daily as of the close of regular trading on the New York Stock Exchange,
currently 4:00 p.m. New York time, on each day when the New York Stock Exchange
is open, except as noted below. The New York Stock Exchange is scheduled to be
open Monday through Friday throughout the year, except for certain federal and
other holidays. The net asset value of each Fund's shares will not be
calculated on the Friday following Thanksgiving, the Friday following Christmas
if Christmas falls on a Thursday and the Monday before Christmas if Christmas
falls on a Tuesday. The net asset value of each Fund is determined by dividing
the value of the Fund's securities, cash, and other assets (including accrued
but uncollected interest and dividends), less all liabilities (including accrued
expenses but excluding capital and surplus) by the number of shares of the Fund
outstanding.
(B) The value of each Fund's securities and assets, except those of certain
short-term debt securities held by the Funds, is determined on the basis of
their market values. All short-term debt securities having remaining maturities
of sixty days or less held by the Funds are valued by the amortized cost method,
which is intended to approximate market value. Investments for which market
quotations are not readily available are valued at their fair value as
determined in good faith by, or under authority delegated by, the Trust's Board
of Trustees.
(C) Tax Status - The Trust believes that each Fund will qualify as a regulated
investment company under Subchapter M, Chapter 1, Subtitle A of the Code and
each Fund intends to distribute substantially all of its net income and net
investment capital gain to its shareholders. As a result, under the provisions
of subchapter M, there should be little or no income or gains taxable to the
Funds. In addition, each Fund intends to comply with certain other distribution
rules specified in the Code so that it will not incur a 4% nondeductible federal
excise tax that otherwise would apply. The Funds intend to distribute
substantially all of their net investment income and substantially all of their
net realized capital gains annually. All income dividends and capital gain
distributions made by a Fund will be reinvested in shares of that Fund at the
Fund's net asset value.
(D) Security Transactions and Investment Income - Security transactions are
recorded the day following a trade date. Net realized gains and losses from
security transactions are recorded on the basis of identified cost. Interest
income is recorded on the accrual basis and dividend income is recorded on the
ex-dividend date.
-30-
<PAGE>
(E) Repurchase Agreements - The Funds' custodian or designated sub-custodians,
as the case may be under tri-party repurchase agreements, takes possession of
the collateral pledged for investments in repurchase agreements. The underlying
collateral is valued daily on a mark-to-market basis to ensure that the value,
including accrued interest, is at least equal to the repurchase price. In the
event of default of the obligation to repurchase, the Funds have the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation. Under certain circumstances, in the event of default or bankruptcy
by the other party to the agreement, realization and/or retention of the
collateral may be subject to legal proceedings.
(F) Foreign investments involve special risks not typically associated with
investing in securities of U.S. issuers. The risks include revaluation of
currencies and future adverse political and economic developments. Moreover,
securities of many foreign issuers and their markets may be less liquid and
their prices more volatile than those of securities of comparable U.S. issuers.
Funds investing in foreign securities or currencies may be required to pay
withholding or other taxes to foreign governments. The investment yield of the
Funds that invest in foreign securities or currencies will be reduced by these
foreign taxes. Funds investing in securities of passive foreign investment
companies may be subject to U.S. federal income taxes and interest charges, and
the investment yield of the Funds making such investments will be reduced by
these taxes and interest charges.
(G) Foreign Currency Translations - The books and records of the International
Equity Fund are maintained in U.S. dollars. Foreign currency transactions are
translated into U.S. dollars on the following basis.
(i) market value of investment securities, other assets and
liabilities at the daily rates of exchange, and
(ii) purchases and sales of investment securities, dividends and
interest income and certain expenses at the rates of
exchange prevailing on the respective dates of such
transactions.
Net realized and unrealized gain (loss) from foreign currency related
transactions includes gains and losses between trade and settlement dates on
securities transactions, gains and losses arising from sale of foreign currency,
and gains and losses between the ex and payment dates on dividends, interest,
and foreign withholding taxes.
(H) Forward Exchange Currency Contracts - The Funds may enter into forward
exchange currency contracts in order to hedge their exposure to changes in
foreign currency exchange rates on foreign portfolio holdings and to hedge
certain firm purchase and sale commitments denominated in foreign currencies. A
forward exchange currency contract is a commitment to purchase or sell a foreign
currency at a future date at a negotiated forward rate. The gain or loss
arising from the difference between the original contract and the closing of
such contract is included in net realized gain or loss from foreign currency
transactions.
-31-
<PAGE>
Fluctuations in the value of forward exchange currency contracts are recorded
for financial reporting purposes as unrealized gains or losses by the Fund.
The Funds' custodian will place and maintain cash not available for investment
or securities in a separate account of the Fund having a value equal to the
aggregate amount of the Fund's commitments under forward exchange currency
contracts entered into with respect to position hedges.
Risks may arise from the potential inability of the counterparty to meet the
terms of a contract and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. The face or foreign currency amount, in
U.S. dollars, as reflected in the following table, reflects the total exposure
the Fund has in that particular currency contract.
At June 30, 1996, the International Equity Fund had outstanding forward exchange
currency contracts to sell foreign currencies against the U.S. dollar, as
follows:
FOREIGN PROCEEDS ON U.S. $ UNREALIZED
FOREIGN CURRENCY CURRENCY ORIGINATION CURRENCY APPRECIATION
SELL CONTRACTS AMOUNT DATE VALUE (DEPRECIATION)
- ---------------- -------- ----------- -------- -------------
Deutsche Marks,
expiring 8/20/96 304,580 $200,000 $200,610 ($610)
Japanese Yen,
expiring 8/20/96 52,750 500,000 484,761 15,239
-------
$14,629
-------
-------
(I) Dollar Roll Transactions - The Funds may enter into mortgage dollar roll
transactions, with selected banks and broker-dealers pursuant to which a Fund
sells mortgage-backed securities for delivery in the future and simultaneously
contracts to repurchase substantially similar securities on a specified future
date. In the event that the party with whom the Fund contracts to replace
substantially similar securities on a future date fails to deliver such
securities, the Fund may not be able to obtain such securities at the price
specified in the contract and thus may not benefit from the price differential
between the current sales price and the repurchase price.
NOTE 3 - FEES AND RELATED PARTY POLICIES:
(A) Alexander Hamilton Capital Management, Inc. (the "Adviser"), 33045
Hamilton Court, Farmington Hills, Michigan 48334-3358, is the investment
adviser of the Trust and its Funds. The adviser is a wholly-owned subsidiary of
the Alexander Hamilton Life Insurance Company of America ("Alexander Hamilton
Life"), a Michigan stock life insurance company. Alexander Hamilton Life was
incorporated under the laws of Michigan on October 31, 1963. It is principally
engaged in the sale of life insurance
-32-
<PAGE>
and annuities, and is licensed in Canada, the District of Columbia, and all
states except New York. As of December 31, 1995, Alexander Hamilton Life had
assets of over $5.4 billion. Alexander Hamilton Life is wholly-owned by
Jefferson-Pilot Corporation, a $16.5 billion asset company based in Greensboro,
North Carolina. Jefferson-Pilot is in the insurance business through Jefferson-
Pilot Life Insurance Company, and in the communications business through
television and radio stations.
For its services to the Trust, the Adviser receives a monthly management fee.
The fee is deducted daily from the assets of each of the Funds and paid to the
Adviser monthly. The fee for each Fund is based on the average daily net assets
of the Fund at the following annual rates:
ADVISORY
FUND FEE
---- ---
Investment Grade Bond 0.60%
High Yield Bond 0.75%
Balanced 0.80%
Growth & Income 0.70%
Growth 0.75%
Emerging Growth 0.80%
International Equity 1.00%
For the period ending June 30, 1996, Alexander Hamilton voluntarily
waived fees in the following amounts:
Investment Grade Bond $3,447
High Yield Bond 2,716
Balanced 5,505
Growth & Income 4,118
Growth 3,303
Emerging Growth 7,066
International Equity 6,617
(B) Sub-Advisers :
J.P. Morgan Investment Management, Inc. ("Morgan") is the sub-adviser to the
Investment Grade Bond Fund and the Balanced Fund. Morgan, with principal
offices at 522 Fifth Avenue, New York, NY 10036, is a wholly-owned subsidiary
of J.P. Morgan & Co. Incorporated, a bank holding company organized under the
laws of Delaware.
-33-
<PAGE>
Massachusetts Financial Services Company ("MFS") is the sub-adviser to the
High Yield Bond Fund and the Emerging Growth Fund. MFS was established in
1924 and is a wholly-owned subsidiary of Sun Life Assurance Company of Canada
(U.S.).
Warburg, Pincus Counsellors, Inc. ("Counsellors"), serves as the sub-adviser to
the Growth & Income Fund. Counsellors is a privately held corporation.
Strong Capital Management, Inc. ("Strong"), the sub-adviser to the Growth
Fund, was organized in 1974. Strong's principal mailing address is P.O. Box
2936, Milwaukee, Wisconsin 53201. Richard S. Strong is the controlling
shareholder of the sub-adviser.
Lombard Odier, the sub-adviser to the International Equity Fund, provides
investment advisory services with respect to the Fund's investments in foreign
securities, including recommending optimal geographic and equity allocation.
Lombard Odier is wholly-owned by Lombard, Odier & Cie ("LOC"), one of the
largest and oldest private banks in Switzerland, established in 1798.
As compensation for its services, the sub-advisers receive a monthly fee from
the Adviser based on the average daily net assets of each Fund at the following
annual rates:
SUB-ADVISER SUB-ADVISORY FEE
- ----------- ----------------
J.P. Morgan (Investment Grade Bond Fund) 0.30%
J.P. Morgan (Balanced Fund)* 0.45%
MFS (High Yield Bond Fund)** 0.40%
MFS (Emerging Growth Fund)** 0.40%
Warburg, Pincus Counsellors (Growth & Income Fund) 0.50%
Strong (Growth Fund)* 0.60%
Lombard Odier (International Equity Fund) 0.50%
* At certain specified net asset levels, the sub-advisory fee for the
Balanced Fund and the Growth Fund will each decrease as a percentage of net
assets. Specifically, the sub-advisory fee for the Balanced Fund equals 0.45%
of the Fund's net assets up to $100 million, 0.40% of net assets between $100
million and $200 million, 0.35% of net assets between $200 million and $400
million and 0.30% of net assets above $400 million. The sub-advisory fee for
the Growth Fund equals 0.60% of the Fund's net assets up to $25 million,
0.50% of net assets between $25 million and $50 million, 0.40% of net assets
between $50 million and $100 million and 0.30% of net assets above $100
million.
** MFS has voluntarily agreed to waive its sub-advisory fee for the period
2/08/96 to 8/08/96 and 2/08/96 to 11/08/96 for the High Yield Bond and the
Emerging Growth Funds, respectively. The total sub-advisory fees waived for
the period ending June 30, 1996, were $3,104 and $8,133, respectively, for the
High Yield Bond and the Emerging Growth Funds.
-34-
<PAGE>
The Adviser has voluntarily agreed to reimburse operating expenses of the
Trust or of any Fund to the extent the expenses exceed a predetermined
percentage of a Fund's estimated daily net assets on an annualized basis.
For the period ending ending June 30, 1996, the Adviser reimbursed Fund
expenses in the following amounts pursuant to these voluntary limitations:
Investment Grade Bond $4,401
High Yield Bond 5,503
Balanced 2,330
Growth & Income 3,436
Growth 3,604
Emerging Growth 0
International Equity 0
NOTE 4 - SECURITIES TRANSACTIONS:
For the period ended June 30, 1996, the cost of purchases and the proceeds
from sales of portfolio securities (excluding short-term investments) were as
follows:
PURCHASES SALES
--------- -----
Investment Grade Bond $11,613,160 $8,633,286
High Yield Bond 2,864,869 975,844
Balanced 9,932,860 5,995,265
Growth & Income 7,629,787 3,212,841
Growth 11,421,622 6,718,305
Emerging Growth 6,145,951 1,231,419
International Equity 5,861,251 987,066
At June 30, 1996, the cost of each Fund's securities for federal income tax
purposes was substantially the same as for financial reporting purposes.
Accordingly, the Investment Grade Bond Fund, High Yield Bond Fund, Growth &
Income Fund, Balanced Fund, Growth Fund, Emerging Growth and International
Equity Fund had net unrealized appreciation (depreciation) of $(30,701),
$(74,653), $(40,596) $(77,869), $639,000, $127,363 and $303,423, respectively,
consisting of gross unrealized appreciation of $7,473, $5,957, $94,554,
$209,616, $735,270 $505,432 and $409,138, respectively, and gross unrealized
depreciation of $(38,174), $(80,610), $(135,150) $(287,485), $(96,270),
$(378,069) and $(105,715), respectively.
NOTE 5 - INDUSTRY CONCENTRATIONS:
At June 30, 1996, the International Equity Fund had the following concentrations
by industry (as a percentage of total investments):
-35-
<PAGE>
% OF
TOTAL
U.S. VALUE INVESTMENTS
---------- -----------
Banking & Finance $1,053,969 20.2%
Telecommunications 494,293 9.4%
Retailing 468,025 9.0%
Electronics 400,552 7.7%
Pharmaceuticals 353,746 6.8%
Petroleum 218,725 4.2%
Real Estate Development 218,172 4.2%
Commercial Services 213,196 4.1%
Metals & Mining 205,895 3.9%
Automotive & Trucking 199,795 3.8%
Construction Equipment 120,420 2.3%
Cosmetics & Toiletries 110,624 2.1%
Business Equipment 110,502 2.1%
Engineering 107,311 2.1%
Entertainment & Leisure 107,150 2.1%
Restaurants 105,425 2.0%
Insurance 104,302 2.0%
Publishing 102,462 2.0%
Chemicals 100,518 1.9%
Manufacturing 96,472 1.8%
Tire & Rubber 89,988 1.7%
Forest & Paper Products 86,250 1.6%
Machinery & Equipment 60,448 1.2%
Toys 52,078 1.0%
Miscellaneous 42,981 0.8%
---------- ------
$5,223,299 100.0%
---------- ------
---------- ------
-36-
