<PAGE>
ALEXANDER HAMILTON
VARIABLE INSURANCE TRUST
ANNUAL REPORT
DECEMBER 31, 1996
ALEXANDER HAMILTON LIFE
-----------------------
A LIFE INSURANCE SUBSIDIARY OF JEFFERSON-PILOT CORPORATION
<PAGE>
TABLE OF CONTENTS
------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
LETTER TO SHAREHOLDERS 1
REVIEW AND OUTLOOK
Investment Grade Bond Fund 2
High Yield Bond Fund 3
Balanced Fund 4
Growth & Income Fund 5
Growth Fund 6
Emerging Growth Fund 7
International Equity Fund 8
PORTFOLIO OF INVESTMENTS
Investment Grade Bond Fund 9
High Yield Bond Fund 11
Balanced Fund 15
Growth & Income Fund 21
Growth Fund 24
Emerging Growth Fund 28
International Equity Fund 32
STATEMENT OF ASSETS AND LIABILITIES 35
STATEMENT OF OPERATIONS 36
STATEMENT OF CHANGES IN NET ASSETS 37
FINANCIAL HIGHLIGHTS 38
NOTES TO FINANCIAL STATEMENTS 39
INDEPENDENT AUDITOR'S REPORT 46
</TABLE>
This report is not authorized for distribution to prospective investors unless
accompanied by a current prospectus for the Alexander Hamilton Variable
Insurance Trust. Please read the prospectus carefully before sending money.
<PAGE>
Dear Policyholder,
During 1996, the U.S. economy recorded continued economic growth accompanied
by subdued inflation. Despite one of the longest periods of expansion since
World War II, the economy has yet to experience the inventory and inflation
pressures that typically occur late in an economic cycle. While specific
economic statistics last year were somewhat volatile from month to month, on an
annual basis they averaged out to produce only modest change. As investors tried
to extrapolate long-term trends from conflicting economic releases, the equity
and fixed income markets experienced short-term instability. The outlook for
1997 is for a continuation of modest economic growth and inflation due to the
combination of just in time inventory management, fiscal restraint, growing
global competition, and a slowdown in consumer spending.
The stock market advanced sharply in 1996, following dramatic gains in 1995.
For 1995 and 1996 combined, the total return on the Standard & Poor's 500 was
almost 60%. The last time the market showed such a substantial two-year gain was
in 1975-1976. The strong performance of the equity market in 1996 is even more
remarkable since it occurred without a supportive bond market. Much of the gains
in the major stock market indexes, however, came from a small group of large
capitalization companies. The lack of market breadth made it especially
difficult for many equity managers to outperform market benchmarks. One of the
main factors behind the stock market's advance was the large flow of money into
equity mutual funds. This is expected to continue in 1997; however, since
corporate profit growth will likely slow in 1997, a meaningful increase in stock
prices will probably require lower interest rates.
While the overall rate of inflation in 1996 remained low, an increase in
energy prices and wage rates put pressure on bond prices. During 1996, interest
rates increased across the yield curve despite little policy change by the
Federal Reserve. High yield bonds outperformed investment grade bonds with
Treasuries being one of the poorest performing sectors.
Globally, the outlook for 1997 calls for continued economic growth and
subdued inflation. Economic growth in the developing countries will generally
exceed that of Europe and Japan as these mature economies face the same
environment of fiscal restraint, slow population growth, and an aging population
as seen in the United States. Worldwide inflation will remain low as growing
manufacturing capacity translates into intense price competition.
Your variable annuity sub account managers are continuing to manage your
assets within this economic outlook. Alexander Hamilton will continue to monitor
sub account performance and make the necessary adjustments to ensure that you
obtain the results you expect.
Respectfully,
/s/ E. J. Yelton
E. J. Yelton
PRESIDENT
February 7, 1997
1
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
INVESTMENT GRADE BOND FUND
REVIEW OF PERFORMANCE
DECEMBER 31, 1996
-------------------------------------------------------------------------
The Investment Grade Bond Fund, managed by J.P. Morgan Investment Management,
slightly underperformed the Salomon Brothers Broad Investment Grade Bond Index
during the 11 months since the Fund's inception on February 8, 1996. In terms of
sector strategy, the Fund achieved positive investment results by maintaining
overweighted positions in mortgage-backed securities and corporates while
maintaining an underweighted position in U.S. Treasuries throughout the entire
year. The sectors continue to be supported by sustained investor demand and U.S.
economic stability. The Fund's duration decision slightly detracted from its
relative return in 1996. The negative impact of a longer-than-benchmark duration
during the first half more than offset the positive impact when a similar
strategy was pursued during the second half.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
<S> <C> <C>
Since Inception on 2/8/96
AHVIT Investment Grade Bond
2.20%
Value on 12/31/96
AHVIT Investment Grade Bond $10,220
Salomon Brothers Broad Investment Grade Bond $10,292
AHVIT Investment Grade Bond
2/8/96 $ 10,000.00
2/29/96 $ 9,820.00
3/31/96 $ 9,720.00
4/30/96 $ 9,640.00
5/31/96 $ 9,610.00
6/30/96 $ 9,720.00
7/31/96 $ 9,740.00
8/31/96 $ 9,740.00
9/30/96 $ 9,910.00
10/31/96 $ 10,130.00
11/30/96 $ 10,300.00
12/31/96 $ 10,220.00
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
<S> <C>
Since Inception on 2/8/96
AHVIT Investment Grade Bond
2.20%
Value on 12/31/96
AHVIT Investment Grade Bond
Salomon Brothers Broad Investment Grade Bond
Salomon Brothers Broad Investment Grade Bond
2/8/96 $ 10,000.00
2/29/96 $ 9,830.00
3/31/96 $ 9,759.00
4/30/96 $ 9,687.00
5/31/96 $ 9,682.00
6/30/96 $ 9,807.00
7/31/96 $ 9,834.00
8/31/96 $ 9,819.00
9/30/96 $ 9,990.00
10/31/96 $ 10,214.00
11/30/96 $ 10,383.00
12/31/96 $ 10,292.00
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
2
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
HIGH YIELD BOND FUND
REVIEW OF PERFORMANCE
DECEMBER 31, 1996
-------------------------------------------------------------------------
The high yield market was the best performing domestic fixed income market in
1996. The economy was stronger than generally forecasted, and most high yield
issuers fared well. Favorable technical factors reinforced these positive
fundamentals. Continued inflows into high yield mutual funds and increased
purchases by crossover buyers, insurance companies and pension plan sponsors all
fueled demand for these securities. These favorable credit and technical factors
caused the yield spread between high yield and treasury securities to narrow
from 4.25 percentage points a year ago to 3.25 percentage points presently.
The High Yield Bond Fund, managed by Massachusetts Financial Services Company,
is overweighed in issues in the consumer products, general industrial and
telecommunications sectors. We have emphasized companies where we think credit
quality will improve primarily due to either good growth potential (like Revlon
or Sprint Spectrum) or from being able to generate enough free cash flow to pay
down debt (like many of our industrial holdings). We have concentrated our
holdings in the bonds of better quality companies as we do not think investors
are adequately compensated for the risk of lower tier credits.
The high yield market's yield premium to treasuries of 3.25 percentage points is
near the narrow end of its historic trading range. However, we do not anticipate
a downturn in the economy and therefore, think this 50% yield premium is
adequate compensation for the credit risk of the securities we own.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
<S> <C> <C>
Since Inception on 2/8/96
AHVIT High Yield Bond
8.96%
Value on 12/31/96
AHVIT High Yield Bond $10,896
Merrill Lynch High Yield Bond $10,934
AHVIT High Yield Bond Merrill Lynch High Yield Bond
2/8/1996 $ 10,000.00 $ 10,000.00
2/29/1996 $ 9,980.00 $ 10,015.00
3/31/1996 $ 9,810.00 $ 9,988.00
4/30/1996 $ 9,820.00 $ 9,992.00
5/31/1996 $ 9,850.00 $ 10,064.00
6/30/1996 $ 9,810.00 $ 10,125.00
7/31/1996 $ 9,910.00 $ 10,194.00
8/31/1996 $ 10,190.00 $ 10,299.00
9/30/1996 $ 10,510.00 $ 10,520.00
10/31/1996 $ 10,530.00 $ 10,635.00
11/30/1996 $ 10,760.00 $ 10,850.00
12/31/1996 $ 10,896.00 $ 10,934.00
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
3
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
BALANCED FUND
REVIEW OF PERFORMANCE
DECEMBER 31, 1996
-------------------------------------------------------------------------
Last year, the Balanced Fund, managed by J.P. Morgan Investment Management,
underperformed its benchmark, which is a blended return weighted 65% by the S&P
500 Index and 35% by the Salomon Brothers Investment Grade Bond Index. During
this time the total return on the stock market exceeded that of the bond market.
As the Fund's equity exposure was less than that of the benchmark, its
performance suffered; however, the Fund's equity exposure has been increased
which should aid performance in 1997.
Within the fixed income sector, the Fund achieved positive performance results
by maintaining an overweight position in mortgage-backed securities (the
market's best performer) and investment grade corporates. The Fund was
underweighted in U.S. Treasuries, a sector that performed relatively poor for
the year. The Fund's longer-than-benchmark duration hurt performance during the
first half of 1996, but it was beneficial during the second half of the year.
The Fund's well-diversified, value-oriented approach to investing, which avoids
dependence on the strength of a few stocks or industry sectors, was not rewarded
during most of the year as stock market leadership was narrowly focused.
However, towards the end of the year, this strategy began to add to the
performance of the Fund as breadth returned to the market.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
<S> <C> <C>
Since Inception on 2/8/96
AHVIT Balanced
8.30%
Value on 12/31/96
AHVIT Balanced $10,830
65% S&P 500/35% Salomon Brothers
Investment Grade Bond Index $11,317
AHVIT Balanced
02/08/1996 $ 10,000.00
02/29/1996 $ 9,807.00
03/31/1996 $ 9,940.00
04/30/1996 $ 10,020.00
05/31/1996 $ 10,080.00
06/30/1996 $ 9,980.00
07/31/1996 $ 9,720.00
08/31/1996 $ 9,890.00
09/30/1996 $ 10,200.00
10/31/1996 $ 10,360.00
11/30/1996 $ 10,870.00
12/31/1996 $ 10,830.00
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
<S> <C>
Since Inception on 2/8/96
AHVIT Balanced
8.30%
Value on 12/31/96
AHVIT Balanced
65% S&P 500/35% Salomon Brothers
Investment Grade Bond Index
65% S&P 500/35% Salomon Brothers Investment Grade Bond Index
02/08/1996 $ 10,000.00
02/29/1996 $ 10,001.00
03/31/1996 $ 10,038.00
04/30/1996 $ 10,108.00
05/31/1996 $ 10,276.00
06/30/1996 $ 10,348.00
07/31/1996 $ 10,061.00
08/31/1996 $ 10,193.00
09/30/1996 $ 10,628.00
10/31/1996 $ 10,902.00
11/30/1996 $ 11,501.00
12/31/1996 $ 11,317.00
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
4
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
GROWTH & INCOME FUND
REVIEW OF PERFORMANCE
DECEMBER 31, 1996
-------------------------------------------------------------------------
The Growth & Income Fund, managed by Warburg, Pincus Counsellors, Inc., had
disappointing performance in 1996. This was largely due to price weakness,
earlier in the year, of two of the Fund's more heavily weighted sectors, gold
and industrial cyclicals. Despite continued growth in the economy, industrial
commodity prices did not perform as expected and gold and industrial stocks
underperformed the market. As a result, the portfolio's exposure to this area
was reduced in the second half of the year as gold, steel and paper stocks were
sold. Proceeds from the sales of these stocks were used to increase the Fund's
weighting in financial stocks, especially money-center banks, healthcare and
pharmaceutical stocks, plus technology and telecommunications stocks. Finally,
the Fund added to its exposure to the aerospace industry which is benefiting
from an accelerating trend toward consolidation.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
<S> <C> <C>
Since inception on 2/8/96
AHVIT Growth & Income
(0.38)%
Value on 12/31/96
AHVIT Growth & Income $9,962
S&P 500 $11,884
AHVIT Growth & Income S&P 500
02/08/1996 $ 10,000.00 $ 10,000.00
02/01/1996 $ 9,760.00 $ 10,066.10
03/01/1996 $ 10,330.00 $ 10,186.76
04/01/1996 $ 10,840.00 $ 10,336.71
05/01/1996 $ 11,190.00 $ 10,602.47
06/01/1996 $ 10,070.00 $ 10,642.88
07/01/1996 $ 9,330.00 $ 10,173.41
08/01/1996 $ 9,640.00 $ 10,388.17
09/01/1996 $ 9,560.00 $ 10,971.67
10/01/1996 $ 9,740.00 $ 11,273.94
11/01/1996 $ 10,290.00 $ 12,124.45
12/01/1996 $ 9,962.00 $ 11,884.50
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
5
<PAGE>
ALEXANDER HAMILTON VARIABLE ANNUITY INSURANCE TRUST
-------------------------------------------------------------------------
GROWTH FUND
REVIEW OF PERFORMANCE
DECEMBER 31, 1996
-------------------------------------------------------------------------
In 1996, large-capitalization equities significantly outperformed the broader
market. Despite this outperformance of large company stocks, the portfolio
significantly outpaced the return of the large-cap dominated S&P 500 index and
the Russell 1000. From inception (February 8), the portfolio returned 22.59%,
compared with 16.30% for the S&P 500 index and 16.08% for the Russell 1000
index. Both non-U.S. investors and domestic index fund purchases have pushed the
prices of many large, highly liquid companies to approximately twice the
expected growth rate of their earnings -- a very high level of valuation. Within
the U.S., many small-and-medium-sized companies are selling at much more
reasonable multiples of their growth rates. For this reason, we continue to
overweight high quality medium- and small-cap growth companies relative to the
popular large capitalization indexes. Favored sectors included technology,
financial services, and healthcare.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
<S> <C> <C>
Since inception on 2/8/96
AHVIT Growth
22.59%
Value on 12/31/96
AHVIT Growth $12,259
Russell 1000 $11,608
AHVIT Growth Russell 1000
02/08/1996 $ 10,000.00 $ 10,000.00
02/29/1996 $ 10,220.00 $ 9,913.60
03/31/1996 $ 10,510.00 $ 10,002.43
04/30/1996 $ 11,580.00 $ 10,154.76
05/31/1996 $ 12,240.00 $ 10,398.88
06/30/1996 $ 11,800.00 $ 10,410.32
07/31/1996 $ 10,770.00 $ 9,908.02
08/31/1996 $ 11,130.00 $ 10,177.62
09/30/1996 $ 12,040.00 $ 10,749.81
10/31/1996 $ 12,080.00 $ 10,987.81
11/30/1996 $ 12,650.00 $ 11,798.71
12/31/1996 $ 12,259.00 $ 11,607.81
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
6
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
EMERGING GROWTH FUND
REVIEW OF PERFORMANCE
DECEMBER 31, 1996
-------------------------------------------------------------------------
During 1996, the Fund, managed by Massachusetts Financial Services Company,
underperformed its benchmark, the Standard and Poor's Midcap Index. Most of this
underperformance occurred during the fourth quarter and can be attributed to
unexpected problems of two of our holdings plus weakness in certain segments of
the healthcare and technology sector.
Within healthcare, certain sectors such as medical devices performed quite well
and the portfolio benefited from its holding in Ventritex. The HMO area,
however, remained under pressure due to concerns over cost controls and
reimbursement rates and the exposure to this sector hurt overall performance.
Mariner Health, a sub-acute provider, announced a major change to earnings based
on reimbursement issues for nursing care.
In the technology sector, performance varied depending on which sub-sector was
selected. While semiconductor and electronic design automation stocks performed
well, many of the software stocks such as Oracle and Adobe underperformed.
During 1996, large capitalization stocks outperformed mid-capitalization names.
As a result, the valuation gap has grown between these areas and we have made
adjustments accordingly. Certain large cap names have been sold and replaced by
smaller capitalization names such as HCIA Corporation and Viking Office
Products.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
<S> <C> <C>
Since inception on 2/8/96
AHVIT Emerging Growth
4.24%
Value on 12/31/96
AHVIT Emerging Growth $10,424
S&P 400 Midcap $11,745
AHVIT Emerging Growth S&P 400 Midcap
02/08/1996 $ 10,000.00 $ 10,000.00
02/29/1996 $ 9,890.00 $ 10,338.00
03/31/1996 $ 9,950.00 $ 10,466.00
04/30/1996 $ 10,670.00 $ 10,783.00
05/31/1996 $ 10,720.00 $ 10,931.00
06/30/1996 $ 10,280.00 $ 10,763.00
07/31/1996 $ 9,280.00 $ 10,037.00
08/31/1996 $ 9,690.00 $ 10,615.00
09/30/1996 $ 10,610.00 $ 11,078.00
10/31/1996 $ 10,150.00 $ 11,110.00
11/30/1996 $ 10,680.00 $ 11,736.00
12/31/1996 $ 10,424.00 $ 11,745.00
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
7
<PAGE>
ALEXANDER HAMILTON VARIABLE ANNUITY INSURANCE TRUST
-------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
REVIEW OF PERFORMANCE
DECEMBER 31, 1996
-------------------------------------------------------------------------
During 1996, the Fund, managed by Lombard Odier International Portfolio
Management Limited, dramatically outperformed its benchmark, the Morgan Stanley
International EAFE index. The primary drivers of this were successful stock
selections and an underweighting in the Japanese stock market. While most
European and Far East stock markets performed well last year, the Japanese
market declined. Currently the portfolio remains underweighted in Japan with
none of the top ten holdings being a Japanese company.
The backdrop for equity investing in the U.K. and Continental Europe remains
favorable. Slow, but steady economic growth, modest inflation, and the
increasing desire of corporate management to embrace the concept of shareholder
value should be highly supportive for stocks. The Pacific Rim also looks
attractive as these countries pursue increasing global free trade and market
oriented policies. Until the Japanese economy shows clearer signs of strength,
the outlook for corporate profit growth there remains cloudy.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
<S> <C> <C>
Since inception on 2/8/96
AHVIT International Equity
10.59%
Value on 12/31/96
AHVIT International Equity $11,059
MSCI EAFE Index $10,476
AHVIT International Equity MSCI EAFE Index
2/8/96 $ 10,000.00 $ 10,000.00
2/29/96 $ 9,980.00 $ 10,476.00
3/31/96 $ 10,360.00 $ 10,163.00
4/30/96 $ 10,780.00 $ 10,459.00
5/31/96 $ 10,710.00 $ 10,266.00
6/30/96 $ 10,800.00 $ 10,324.00
7/31/96 $ 10,430.00 $ 10,022.00
8/31/96 $ 10,560.00 $ 10,044.00
9/30/96 $ 10,770.00 $ 10,312.00
10/31/96 $ 10,690.00 $ 10,206.00
11/30/96 $ 11,010.00 $ 10,613.00
12/31/96 $ 11,059.00 $ 10,476.00
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
8
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
INVESTMENT GRADE BOND FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- --------------
<S> <C> <C>
CORPORATE BONDS - 38.4%
CONVERTIBLE BOND - 0.8%
INDUSTRIAL - 0.8%
Ryerson Tull, Inc., 8.50%, due 7/15/01 (cost $24,934) $25,000 $25,649
--------------
NON-CONVERTIBLE BONDS - 37.6%
AUTOMOTIVE - 12.4%
Aegis Auto Rec., 1996-2, 8.90%, due 1/20/02 126,669 128,569
General Motors Corp., 7.40%, due 9/01/25 125,000 124,219
Premier Auto Trust Mortgage, 6.15%, due 3/06/00 (a) 140,000 140,302
--------------
393,090
--------------
BANKS AND SAVINGS & LOANS - 4.5%
Midland Bank PLC, 7.625%, due 6/15/06 140,000 144,839
--------------
FINANCIAL SERVICES - 10.3%
Green Tree Financial Corp., 1995-10 A2,
5.80% due 2/15/27 (a) 140,000 140,085
Metropolitan Life Insurance Co., 7.80%, due 11/01/25 135,000 136,687
Santista Export Sec., I, 8.09%, due 11/30/06 50,000 50,000
--------------
326,772
--------------
INDUSTRIAL - 4.8%
AK Steel Corp., 9.125%, due 12/15/06 25,000 25,688
Celulosa Arauco, 6.75%, due 12/15/03 130,000 125,878
--------------
151,566
--------------
RETAILING - 0.8%
Federated Department Stores, 8.50%, due 6/15/03 25,000 26,014
--------------
TELECOMMUNICATIONS & EQUIPMENT - 0.5%
TCI Communications, Inc., 7.875%, due 2/15/26 20,000 17,344
--------------
UTILITIES - 4.3%
Boston Edison Co., 6.05%, due 8/15/00 140,000 135,875
--------------
TOTAL NON-CONVERTIBLE BONDS (COST $1,170,503) 1,195,500
--------------
TOTAL CORPORATE BONDS (COST $1,195,437) 1,221,149
--------------
</TABLE>
9
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
INVESTMENT GRADE BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- --------------
<S> <C> <C>
U.S. GOVERNMENT & U.S. GOVERNMENT
AGENCY OBLIGATIONS - 58.8%
U.S. GOVERNMENT OBLIGATIONS - 15.2%
U.S. Treasury Bond, 11.875%, due 11/15/03 $84,000 $109,541
U.S. Treasury Bond, 10.75%, due 8/15/05 56,000 71,838
U.S. Treasury Bond, 8.75%, due 8/15/20 50,000 61,578
U.S. Treasury Note, 6.875%, due 3/31/00 233,000 238,315
--------------
TOTAL U.S. GOVERNMENT OBLIGATIONS (COST $485,671) 481,272
--------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 43.6%
Federal Home Loan Mortgage Corp.,
Gold Pool #C00427, 8.00%, due 10/01/25 183,681 187,412
Federal Home Loan Mortgage Corp.,
Gold Pool CMTMT, 7.50%, due 1/01/26 200,000 201,250
Federal National Mortgage Assoc.,
Pool #337434, 6.50%, due 2/01/26 140,011 133,888
Federal National Mortgage Assoc.,
Pool #338690, 6.00%, due 2/01/26 139,974 130,187
Federal National Mortgage Assoc.,
Pool #303998, 9.00%, due 7/01/26 78,569 83,694
Federal National Mortgage Assoc.,
Pool #352795, 7.00%, due 7/01/26 131,616 128,979
Federal National Mortgage Assoc.,
Pool #250672, 7.00%, due 9/01/26 128,100 125,958
Government National Mortgage Assoc. I,
Pool #422881, 8.00%, due 5/15/26 217,417 222,037
Government National Mortgage Assoc. II,
Pool #2247, 7.00%, due 7/20/26 175,827 171,157
--------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (COST $1,367,567) 1,384,562
--------------
TOTAL U.S. GOVERNMENT & U.S. GOVERNMENT AGENCY OBLIGATIONS
(COST $1,853,238) 1,865,834
--------------
TOTAL INVESTMENTS (COST $3,048,675) - 97.2% 3,086,983
OTHER ASSETS IN EXCESS OF LIABILITIES - 2.8% 88,378
--------------
NET ASSETS - 100.0% $3,175,361
--------------
--------------
</TABLE>
(a) Mortgage trust bond.
See notes to financial statements.
10
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- --------------
<S> <C> <C>
CORPORATE BONDS - 94.3%
CONVERTIBLE BONDS - 6.4%
AUTOMOTIVE PARTS & EQUIPMENT - 2.3%
Hayes Wheels International, 11.00%, due 7/15/06 $50,000 $54,500
--------------
BUILDING & CONSTRUCTION - 1.1%
Nortek, Inc., 9.875%, due 3/01/04 25,000 25,312
--------------
CONGLOMERATES - 0.4%
Reeves Industries, Inc., 11.00%, due 7/15/02 10,000 9,550
--------------
TEXTILES - 2.6%
Synthetic Industries, 12.75%, due 12/01/02 55,000 60,912
--------------
TOTAL CONVERTIBLE BONDS (COST $141,538) 150,274
--------------
NON-CONVERTIBLE BONDS - 87.9%
AEROSPACE & DEFENSE - 2.5%
BE Aerospace, Inc., 9.875%, due 2/01/06 25,000 26,375
K&F Industries, Inc., 10.375%, due 9/01/04 30,000 31,800
--------------
58,175
--------------
BUILDING PRODUCTS & MATERIALS - 4.5%
American Standard, 10.50%, due 6/01/05 (a) 25,000 23,563
Building Materials Corp., 11.75%, due 7/01/04 (a) 50,000 43,000
Building Materials Corp., 8.625%, due 12/15/06 40,000 40,000
--------------
106,563
--------------
CHEMICALS - 1.1%
UCC Investors, 10.50%, due 5/01/02 25,000 26,875
--------------
COMMUNICATIONS & MEDIA - 1.1%
Cablevision Systems Corp., 9.25%, due 11/01/05 25,000 24,875
--------------
CONGLOMERATES - 0.9%
Atlantis Group, Inc., 11.00%, due 2/15/03 20,000 20,450
--------------
CONTAINERS & PACKAGING - 4.4%
Calmar, Inc.,11.50%, due 8/15/05 25,000 25,937
Gaylord Container, 12.75%, due 5/15/05 45,000 49,837
U.S. Can Corp., 10.125%, due 10/15/06 25,000 26,375
--------------
102,149
--------------
COSMETICS & TOILETRIES - 0.7%
Revlon Worldwide, 0.00%, due 3/15/98 (c) 20,000 17,450
--------------
</TABLE>
11
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- --------------
<S> <C> <C>
DIVERSIFIED HOLDING COMPANIES - 3.6%
E&S Holdings Corp., 144A, 10.375%, due 10/01/06 (d) $50,000 $52,563
Thermadyne Holding Corp., 10.75%, due 11/01/03 30,000 30,675
--------------
83,238
--------------
ENERGY - 1.2%
Mesa Operating Co., 10.625%, due 7/01/06 25,000 27,187
--------------
ENTERTAINMENT & LEISURE - 2.2%
American Skiing Corp., 144A, 12.00%, due 7/15/06 (d) 25,000 26,438
Grand Casinos, Inc., 10.125%, due 12/01/03 25,000 25,375
--------------
51,813
--------------
FOOD & BEVERAGE - 0.7%
Delta Beverage Group, 9.75%, due 12/15/03 15,000 15,431
--------------
GAMING & HOTELS - 3.1%
El Dorado Resorts, 10.50%, due 8/15/06 45,000 47,700
Red Roof Inns, 9.625%, due 12/15/03 20,000 20,300
Santa Fe Hotel, 11.00%, due 12/15/00 5,000 3,725
--------------
71,725
--------------
HEALTH CARE - 2.4%
Tenet Healthcare Corp., 10.125%, due 3/01/05 50,000 55,500
--------------
INDUSTRIAL - 26.6%
AAF-McQuay, Inc., 8.875%, due 2/15/03 50,000 50,250
Clark-Schwebel, Inc.,144A, 10.50%, due 4/15/06 (d) 25,000 26,750
Finlay Enterprises, 12.00%, due 5/01/98 (a) 25,000 22,000
Genmar Holdings, 13.50%, due 7/15/01 20,000 19,500
Harvard Industries, Inc., 11.125%, due 8/01/05 25,000 21,063
Haynes International, Inc., 11.625%, due 9/01/04 50,000 52,750
Howmet Corp., 10.00%, due 12/01/03 50,000 54,750
IMO Industries, 144A,11.75%, due 5/01/06 (d) 30,000 27,900
Interlake Corp., 12.125%, due 3/01/02 35,000 36,313
International Knife & Saw, 144A, 11.375%, due 11/15/06 (d) 40,000 41,600
Iron Mountain, Inc., 10.125%, due 10/01/06 50,000 53,250
Marvel Holdings, 0.00%, due 4/15/98 (c) 20,000 3,100
Mettler Toledo, Inc., 9.75%, due 10/01/06 45,000 47,475
Moog, Inc., 144A, 10.00%, due 5/01/06 (d) 25,000 26,068
Motors & Gears, Inc., 10.75%, due 11/15/06 50,000 52,000
Pierce Leahy Corp., 11.125%, due 7/15/06 50,000 54,875
</TABLE>
12
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- --------------
<S> <C> <C>
INDUSTRIAL (CONT'D) - 26.6%
Polymer Group, 12.25%, due 7/15/02 $30,000 $32,700
--------------
622,344
--------------
METALS & MINING - 1.5%
Kaiser Aluminum & Chemical, 9.875%, due 2/15/02 35,000 35,787
--------------
OFFICE & BUSINESS EQUIPMENT - 1.1%
Quest Diagnostic, Inc., 10.75%, due 12/15/06 25,000 26,375
--------------
STEEL - 7.6%
AK Steel Corp., 144A, 9.125%, due 12/15/06 (d) 25,000 25,687
Algoma Steel, Inc., 12.375%, due 7/15/05 25,000 27,000
Gulf States Steel Alabama, 13.50%, due 4/15/03 50,000 47,500
WCI Steel, Inc., 10.00%, due 12/01/04 75,000 76,875
--------------
177,062
--------------
SUPERMARKETS - 5.3%
Grand Union Co., 12.00%, due 9/01/04 20,000 21,300
Jitney-Jungle, 12.00%, due 3/01/06 5,000 5,325
Pathmark Stores, 9.625%, due 5/01/03 50,000 48,125
Ralph's Grocery Co., 10.45%, due 6/15/04 20,000 21,350
Smiths Food & Drug Centers, 11.25%, due 5/15/07 25,000 27,750
--------------
123,850
--------------
TELECOMMUNICATIONS - 15.2%
Colt Telecommunications Group PLC, 12.00%, due 12/15/06 (a) 50,000 30,250
Echostar Satellite Broadcast, 13.125%, due 3/15/04 (a) 30,000 23,100
Intelecom Group USA, Inc.,144A, 12.50%, due 5/01/06 (a) (d) 50,000 32,875
Lenfest Communications, 144A, 10.50%, 10.50%, due 6/15/06
(d) 25,000 26,500
MFS Communications, 8.875%, due 1/15/06 (a) 100,000 74,125
Mobilmedia Communications, 10.50%, due 12/01/03 (a) 25,000 5,250
Paging Network, 8.875%, due 2/01/06 25,000 23,969
Sprint Spectrum L.P. Fin., 11.00%, due 8/15/06 50,000 54,375
Sygnet Wireless, Inc., 11.50%, due 10/01/06 25,000 25,750
Teleport Communications, 11.125%, due 7/01/07 (a) 50,000 34,500
Western Wireless Communications, 10.50%, due 2/01/07 25,000 26,219
--------------
356,913
--------------
</TABLE>
13
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- --------------
<S> <C> <C>
TEXTILES & APPAREL - 1.1%
Westpoint Stevens, Inc., 9.375%, due 12/15/05 (b) $25,000 $25,875
--------------
TRANSPORTATION - 1.1%
CHC Helicopter, 11.50%, due 7/15/02 25,000 25,625
--------------
TOTAL NON-CONVERTIBLE BONDS (COST $1,997,562) 2,055,262
--------------
TOTAL CORPORATE BONDS (COST $2,139,100) 2,205,536
--------------
TOTAL INVESTMENTS (COST $2,139,100) - 94.3% 2,205,536
OTHER ASSETS IN EXCESS OF LIABILITIES - 5.7% 133,827
--------------
NET ASSETS - 100.0% $2,339,363
--------------
--------------
</TABLE>
(a) Step coupon bond. Zero coupon at December 31, 1996, interest rate stated
begins on a specified future date.
(b) Collateral trust bond.
(c) Zero coupon bond.
(d) Security exempt from registration under Rule 144A of the Securities Act of
1933.
These securities may be resold in transactions exempt from registration
normally to qualified institutional buyers. At December 31, 1996, these
securities amounted to a value of $286,381 or 12.2% of net assets.
See notes to financial statements.
14
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------ --------------
<S> <C> <C>
COMMON STOCKS - 57.1%
AEROSPACE & DEFENSE - 3.2%
Coltec Industries * 900 $16,987
General Motors Corp., Class H 940 52,875
McDonnell Douglas Corp. 300 19,200
Rohr, Inc. * 2,790 63,124
--------------
152,186
--------------
APPAREL & TEXTILES - 0.8%
Collins & Aikman Corp. * 5,650 35,313
--------------
BANKS AND SAVINGS & LOANS - 1.5%
Boatmen's Bancshares, Inc. 460 29,670
Crestar Financial Corp. 100 7,438
First Chicago NBD Corp. 440 23,650
Firstar Corp. 200 10,500
--------------
71,258
--------------
BUILDING MATERIALS - 0.5%
Owens-Corning Fiberglas Corp. * 540 23,017
--------------
CAPITAL EQUIPMENT - 0.8%
AlliedSignal, Inc. 540 36,180
--------------
CHEMICALS - 3.0%
Albemarle Corp. 2,480 44,950
Crompton & Knowles Corp. 750 14,437
Du Pont (E.I.) de Nemours & Co. 640 60,400
Union Carbide Corp. 440 17,985
--------------
137,772
--------------
COMMUNICATIONS & MEDIA - 0.8%
Time Warner, Inc. 990 37,125
--------------
COMPUTERS & COMPUTER SOFTWARE - 4.6%
Cisco Systems, Inc. * 760 48,355
Compaq Computer Corp. * 210 15,593
EMC Corp. * 1,190 39,419
International Business Machines Corp. 340 51,340
Learning Company, Inc. 990 14,231
Read-Rite Corp. * 930 23,482
Sun Microsystems, Inc. * 850 21,834
--------------
214,254
--------------
</TABLE>
15
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
BALANCED FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------ --------------
<S> <C> <C>
CONGLOMERATES - 1.7%
Unilever NV 440 $77,110
--------------
CONSUMER DURABLES - 1.4%
General Motors Corp. 1,140 63,555
--------------
CONTAINERS - 0.6%
Temple-Inland, Inc. 540 29,228
--------------
ELECTRICAL EQUIPMENT - 0.5%
Anixter International, Inc. * 1,570 25,316
--------------
ELECTRONICS - 1.3%
General Instrument Corp. * 570 12,326
Intel Corp. 210 27,497
Perkin-Elmer Corp. 330 19,429
--------------
59,252
--------------
ENTERTAINMENT & LEISURE - 0.4%
Boyd Gaming Corp. * 300 2,475
International Game Technology 900 16,425
--------------
18,900
--------------
ENVIRONMENTAL MANAGEMENT - 0.8%
WMX Technologies, Inc. 1,140 37,193
--------------
FINANCIAL SERVICES - 6.6%
ADVANTA CORP, Class B 530 21,664
Bear Stearns Co. Inc. 2,000 55,750
Capital RE Corp. 640 29,840
Dean Witter Discover & Co. 640 42,400
Edwards, (A.G.), Inc. 540 18,157
Great Western Financial 1,290 37,410
Providian Corp. 1,250 64,219
Salomon, Inc. 750 35,344
--------------
304,784
--------------
FOOD, BEVERAGE & TOBACCO - 2.1%
CPC International, Inc. 200 15,500
Kellogg Co. 310 20,344
Philip Morris Cos. 540 60,818
--------------
96,662
--------------
</TABLE>
16
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
BALANCED FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------ --------------
<S> <C> <C>
HEALTH CARE PRODUCTS & SERVICES - 1.9%
Columbia/HCA Healthcare Corp. 1,400 $57,050
United Healthcare Corp. 700 31,500
--------------
88,550
--------------
HOUSEHOLD PRODUCTS - 1.5%
Procter & Gamble Co. 630 67,725
--------------
MACHINERY & EQUIPMENT - 1.8%
Cooper Industries, Inc. 2,000 84,250
--------------
MANUFACTURING - 0.3%
Allegheny Teledyne, Inc. 675 15,525
--------------
OFFICE & BUSINESS EQUIPMENT - 0.6%
Xerox Corp. 520 27,365
--------------
OIL & OIL SERVICES - 6.9%
Anadarko Petroleum Corp. 330 21,368
Ashland, Inc. 630 27,641
British Petroleum Ltd. ADR 340 48,350
Chevron Corp. 210 13,650
Exxon Corp. 900 88,200
Panenergy Corp. 520 23,400
Ultramar Diamond Shamrock 1,540 48,702
Union Pacific Resources Group 488 14,274
Wheelabrator Technologies, Inc. * 1,970 32,012
--------------
317,597
--------------
PHARMACEUTICALS - 3.2%
Bristol-Myers Squibb Co. 440 47,850
Forest Laboratories, Inc. * 510 16,702
Schering Plough 210 13,598
Warner-Lambert Co. 930 69,750
--------------
147,900
--------------
RETAILING - 2.3%
General Nutrition Cos. * 1,700 28,688
Toys R Us * 750 22,500
Wal-Mart Stores, Inc. 2,480 56,730
--------------
107,918
--------------
</TABLE>
17
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
BALANCED FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------ --------------
<S> <C> <C>
TELECOMMUNICATIONS & EQUIPMENT - 5.1%
MCI Communications 1,350 $44,128
NYNEX Corp. 860 41,387
SBC Communications, Inc. 210 10,868
TCI Satellite Entertainment, Class A * 569 5,619
Tele-Communications, Class A 5,700 74,456
US West Media Group, Inc. * 750 24,188
WorldCom, Inc. * 1,290 33,621
--------------
234,267
--------------
TRANSPORTATION - 1.4%
Consolidated Freightways Corp. * 590 5,236
Consolidated Freightways, Inc. 1,180 26,255
Union Pacific Corp. 570 34,271
--------------
65,762
--------------
UTILITIES - 1.5%
Dominion Resources, Inc. 670 25,795
New England Electric System 440 15,345
Pacific Gas & Electric 710 14,910
Portland General Corp. 310 13,020
--------------
69,070
--------------
TOTAL COMMON STOCKS (COST $2,436,854) 2,645,034
--------------
<CAPTION>
PRINCIPAL
AMOUNT
------------
<S> <C> <C>
CORPORATE BONDS - 13.2%
CONVERTIBLE BOND - 0.2%
INDUSTRIAL - 0.2%
Ryerson Tull, Inc., 8.50%, due 7/15/01 (cost $9,974) $10,000 10,259
--------------
NON-CONVERTIBLE BONDS - 13.0%
AUTOMOTIVE - 4.4%
Aegis Auto Rec., Ser. 1996-2, 8.90%, due 1/20/02 63,335 64,379
General Motors Corp., 7.40%, due 9/01/25 70,000 69,563
Premier Auto Trust Mortgage, 6.15%, due 3/06/00 (a) 70,000 70,151
--------------
204,093
--------------
BANKS AND SAVINGS & LOANS - 1.5%
Midland Bank PLC, 7.625%, due 6/15/06 70,000 72,419
--------------
</TABLE>
18
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
BALANCED FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------ --------------
FINANCIAL SERVICES - 3.5%
<S> <C> <C>
Green Tree Financial Corp. 1995-10 A2, 5.80%, due 2/15/27
(a) $70,000 $70,043
Metropolitan Life Insurance Co., 7.80%, due 11/01/25 70,000 70,875
Santista Export Sec. I, 8.09%, due 11/30/06 20,000 20,000
--------------
160,918
--------------
INDUSTRIAL - 1.7%
AK Steel Corp., 9.125%, due 12/15/06 10,000 10,144
Celulosa Arauco, 6.75%, due 12/15/03 70,000 67,780
--------------
77,924
--------------
RETAILING - 0.2%
Federated Department Stores, 8.50%, due 6/15/03 10,000 10,406
--------------
TELECOMMUNICATIONS & EQUIPMENT - 0.2%
TCI Communications, Inc., 7.875%, due 2/15/26 10,000 8,672
--------------
UTILITIES - 1.5%
Boston Edison Co., 6.05%, due 8/15/00 70,000 67,938
--------------
TOTAL NON-CONVERTIBLE BONDS (COST $589,577) 602,370
--------------
TOTAL CORPORATE BONDS (COST $599,551) 612,629
--------------
U.S. GOVERNMENT & U.S. GOVERNMENT AGENCY OBLIGATIONS - 27.7%
U.S. GOVERNMENT OBLIGATIONS - 13.1%
U.S. Treasury Note, 6.875%, due 3/31/00 134,000 137,057
U.S. Treasury Note, 6.50%, due 10/15/06 25,000 25,148
U.S. Treasury Bond, 11.875%, due 11/15/03 12,000 15,649
U.S. Treasury Bond, 8.50%, due 2/15/20 357,000 428,512
--------------
TOTAL U.S. GOVERNMENT OBLIGATIONS (COST $591,529) 606,366
--------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 14.6%
Federal Home Loan Mortgage Corp., Gold Pool #C00427, 8.00%,
due 10/01/25 87,007 88,774
Federal Home Loan Mortgage Corp., Gold Pool CMTMT, 7.50%,
due 1/01/26 75,000 75,469
Federal National Mortgage Assoc., Pool #337434, 6.50%, due
2/01/26 70,005 66,944
Federal National Mortgage Assoc., Pool #339454, 6.00%, due
3/01/26 70,114 65,211
Federal National Mortgage Assoc., Pool #303998, 9.00%, due
7/01/26 41,596 44,308
</TABLE>
19
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
BALANCED FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------ --------------
U.S. GOVERNMENT AGENCY OBLIGATIONS (CONT'D) - 14.6%
<S> <C> <C>
Federal National Mortgage Assoc., Pool #352795, 7.00%, due
7/01/26 $43,873 $42,994
Federal National Mortgage Assoc., Pool #354237, 7.00%, due
8/01/26 59,168 57,982
Government National Mortgage Assoc., Pool #422913, 8.00%,
due 6/15/26 112,669 115,064
Government National Mortgage Assoc., Pool #2247 7.00%, due
7/20/26 125,591 122,255
--------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (COST $670,698) 679,001
--------------
TOTAL U.S. GOVERNMENT & U.S. GOVERNMENT AGENCY OBLIGATIONS
(COST $1,262,227) 1,285,367
--------------
TOTAL INVESTMENTS (COST $4,298,632) - 98.0% 4,543,030
OTHER ASSETS IN EXCESS OF LIABILITIES - 2.0% 90,924
--------------
NET ASSETS - 100.0% $4,633,954
--------------
--------------
</TABLE>
* Non-income producing security.
ADR - American Depository Receipt.
(a) Mortgage bond.
See notes to financial statements.
20
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------ --------------
<S> <C> <C>
COMMON STOCKS - 94.7%
AEROSPACE & DEFENSE - 9.6%
General Motors Corp., Class H 2,000 $112,500
GRC International, Inc. * 5,500 44,688
Litton Industries * 3,500 166,688
Lockheed Martin 800 73,200
Loral Space & Communications * 2,000 36,750
Sundstrand Corp. 2,000 85,000
--------------
518,826
--------------
BANKS AND SAVINGS & LOANS - 17.6%
BankAmerica Co. 1,800 179,550
Bank of New York Co., Inc. 4,000 135,000
Bankers Trust NY Corp. 1,500 129,375
Chase Manhattan Corp. 2,000 178,500
Morgan (J.P.) & Co. 800 78,100
PNC Bank Corp. 3,000 112,875
Wells Fargo & Co. 500 134,875
--------------
948,275
--------------
BUSINESS SERVICES - 1.0%
First Data Corp. 1,500 54,750
--------------
CAPITAL EQUIPMENT - 1.0%
AlliedSignal, Inc. 800 53,600
--------------
COMMUNICATIONS & MEDIA - 2.8%
Infinity Broadcasting, Class A * 3,500 117,687
Spelling Entertainment Group * 4,500 33,188
--------------
150,875
--------------
COMPUTERS & COMPUTER SOFTWARE - 9.0%
Amdahl Corp. * 6,000 72,750
Hewlett-Packard 800 40,200
Honeywell, Inc. 3,500 230,125
Informix Corp. * 1,500 30,563
Newbridge Networks Corp. * 2,000 56,500
Sun Microsystems, Inc. * 2,000 51,375
--------------
481,513
--------------
</TABLE>
21
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------ --------------
<S> <C> <C>
CONSUMER DURABLES - 3.2%
Ford Motor Co. 4,500 $143,437
General Motors Corp. 500 27,875
--------------
171,312
--------------
ELECTRONICS - 0.8%
VeriFone, Inc. * 1,500 44,250
--------------
ENTERTAINMENT & LEISURE - 2.6%
Mirage Resorts, Inc. * 6,500 140,562
--------------
FINANCIAL SERVICES - 17.4%
Aetna Life & Casualty Co. 2,500 200,000
Capital One Financial Corp. 2,100 75,600
Chubb Corp. 800 43,000
Federal National Mortgage Association 1,000 37,250
Student Loan Marketing Association 2,000 186,250
The Charles Schwab Corp. 5,000 160,000
TIG Holdings, Inc. 2,000 67,750
Transamerica Corp. 500 39,500
USF&G Corp. 6,000 125,250
--------------
934,600
--------------
HEALTH CARE - 7.9%
ALZA Corp. * 5,000 129,375
Allergan, Inc. 2,500 89,063
Baxter International, Inc. 2,100 86,100
Biomet, Inc. * 2,000 30,250
Humana, Inc. * 3,000 57,375
Nellcor Puritan Bennett, Inc. * 1,500 32,812
--------------
424,975
--------------
INDUSTRIAL MANUFACTURING & PROCESSING - 5.4%
Corning, Inc. 3,500 161,875
Inco Ltd. 4,000 127,500
--------------
289,375
--------------
LODGING & RESTAURANTS - 1.2%
ITT Corp. * 1,500 65,062
--------------
OIL SERVICES - 5.1%
Baker Hughes, Inc. 4,500 155,250
Halliburton Co. 2,000 120,500
--------------
275,750
--------------
</TABLE>
22
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------ --------------
<S> <C> <C>
PHARMACEUTICALS - 0.6%
Columbia Laboratories, Inc. * 2,000 $29,000
--------------
RETAILING - 1.0%
Staples, Inc. * 3,000 54,188
--------------
TELECOMMUNICATIONS & EQUIPMENT - 7.3%
Bay Networks, Inc. * 2,000 41,750
DSC Communications Corp. * 5,000 89,375
General Instrument Corp. * 1,800 38,925
Globalstar Telecommunications * 1,000 63,000
Lucent Technologies, Inc. * 1,700 78,625
QUALCOMM, Inc. * 2,000 79,750
--------------
391,425
--------------
TRANSPORTATION - 1.2%
Southwest Airlines 3,000 66,375
--------------
TOTAL COMMON STOCKS (COST $4,803,562) 5,094,713
--------------
<CAPTION>
PRINCIPAL
AMOUNT
------------
<S> <C> <C>
REPURCHASE AGREEMENT - 3.4%
Repurchase agreement with State Street Bank, 5.00%, due
1/02/97, dated 12/31/96, with a maturity value of $185,051;
collateralized by $190,000 U.S. Treasury Note, 6.125%, due
5/15/98; market value $192,138
(COST $185,000) $185,000 185,000
--------------
TOTAL INVESTMENTS (COST $4,988,562) - 98.1% 5,279,713
OTHER ASSETS IN EXCESS OF LIABILITIES - 1.9% 102,547
--------------
NET ASSETS - 100.0% $5,382,260
--------------
--------------
</TABLE>
* Non-income producing security.
See notes to financial statements.
23
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------ --------------
<S> <C> <C>
COMMON STOCKS - 84.7%
APPAREL & TEXTILES - 1.0%
Jones Apparel Group, Inc. * 1,000 $37,375
Nautica Enterprises, Inc. * 1,700 42,925
--------------
80,300
--------------
BANKS AND SAVINGS & LOANS - 6.4%
Chase Manhattan Corp. 700 62,475
Citicorp 1,100 113,300
First Bank System, Inc. 1,200 81,900
Firstar Corp. 1,000 52,500
Mellon Bank Corp. 900 63,900
Norwest Corp. 1,700 73,950
TCF Financial Corp. 1,200 52,200
--------------
500,225
--------------
CHEMICALS - 1.5%
Monsanto Co. 3,000 116,625
--------------
COMMERCIAL SERVICES - 3.1%
AccuStaff, Inc. * 3,000 63,375
CoreStaff, Inc. * 1,850 43,822
CUC International, Inc. * 2,200 52,250
Service Corp. International 3,000 84,000
--------------
243,447
--------------
COMPUTERS & COMPUTER SOFTWARE - 12.2%
3Com Corp. * 1,500 110,062
CBT Group PLC ADR * 1,400 75,950
Cadence Design System, Inc. * 1,300 51,675
Cisco Systems, Inc. * 2,500 159,063
Dell Computer Corp. * 700 37,187
International Business Machines Corp. 1,000 151,000
McAfee Associates, Inc. * 800 35,200
Microsoft Corp. * 1,000 82,625
Netscape Communications Corp. * 600 34,125
Parametric Technology Corp. * 1,400 71,925
PeopleSoft, Inc. * 1,500 71,906
Sykes Enterprises, Inc. * 2,000 75,000
--------------
955,718
--------------
DIVERSIFIED OPERATIONS - 0.5%
Alco Standard Corp. 800 41,300
--------------
</TABLE>
24
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------ --------------
<S> <C> <C>
ELECTRICAL EQUIPMENT - 1.7%
Applied Materials, Inc.* 1,000 $35,937
General Electric Co. 1,000 98,875
--------------
134,812
--------------
ELECTRONICS - 7.4%
Altera Corp. * 700 50,881
Intel Corp. 1,500 196,406
Maxim Integrated Products, Inc. * 1,300 56,225
National Semiconductor Corp. * 2,400 58,500
Perkin-Elmer Corp. 1,300 76,538
Sipex Corp. * 1,300 41,925
Teradyne, Inc. * 1,800 43,875
Uniphase Corp. * 1,000 52,500
--------------
576,850
--------------
ENTERTAINMENT & LEISURE - 2.0%
Carnival Corp., Class A 2,500 82,500
Regal Cinemas, Inc. * 2,300 70,725
--------------
153,225
--------------
FINANCIAL SERVICES - 9.1%
American Express Co. 2,000 113,000
Conseco, Inc. 2,000 127,500
Federal Home Loan Mortgage Corp. 700 77,088
Federal National Mortgage Association 1,600 59,600
MGIC Investment Corp. 1,000 76,000
Starwood Lodging Trust 2,000 110,250
The Charles Schwab Corp. 2,000 64,000
The Travelers Corp. 1,866 84,670
--------------
712,108
--------------
FOOD, BEVERAGE & TOBACCO - 3.9%
Interstate Bakeries Corp. 1,500 73,687
Philip Morris Cos., Inc. 1,000 112,625
Sara Lee Corp. 2,000 74,500
The Coca-Cola Co. 800 42,100
--------------
302,912
--------------
FOREST & PAPER PRODUCTS - 1.0%
Kimberly-Clark Corp. 800 76,200
--------------
</TABLE>
25
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------ --------------
<S> <C> <C>
HEALTH CARE PRODUCTS & SERVICES - 6.5%
AmeriSource Distribution Corp., Class A * 2,000 $96,500
Boston Scientific Corp. * 2,000 120,000
HealthSouth Corp. * 2,000 77,250
Medtronic, Inc. 2,000 136,000
Oxford Health Plans, Inc. * 1,300 76,131
--------------
505,881
--------------
OFFICE EQUIPMENT - 1.8%
Danka Business Systems PLC ADR 4,000 141,500
--------------
OIL & OIL SERVICES - 8.0%
B.J. Services Co. * 1,200 61,200
Baker Hughes, Inc. 2,500 86,250
Cooper Cameron Corp. * 1,500 114,750
Diamond Offshore Drilling, Inc. * 700 39,900
ENSCO International, Inc. * 1,500 72,750
Global Marine, Inc. * 1,800 37,125
Noble Affiliates, Inc. 1,000 47,875
Schlumberger Ltd. 700 69,913
Smith International, Inc. * 2,200 98,725
--------------
628,488
--------------
PHARMACEUTICALS - 7.9%
Abbott Laboratories 1,000 50,750
American Home Products Corp. 600 35,175
Cardinal Health, Inc. 3,000 174,750
Dura Pharmaceuticals, Inc. * 2,000 95,500
Eli Lilly & Co. 1,500 109,500
Parexel International Corp. * 1,100 56,788
Pfizer, Inc. 1,100 91,163
--------------
613,626
--------------
PUBLISHING - 0.5%
Cognizant Corp. 1,100 36,300
--------------
RESTAURANTS & LODGING - 2.1%
Boston Chicken, Inc. * 2,000 71,750
Hospitality Franchise Systems, Inc. * 600 35,850
Starbucks Corp. * 2,000 57,250
--------------
164,850
--------------
</TABLE>
26
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------ --------------
<S> <C> <C>
RETAILING - 3.1%
Consolidated Stores Corp. * 2,000 $64,500
Dollar Tree Stores, Inc. * 2,000 76,500
Kohl's Corp. * 1,500 58,875
Staples, Inc. * 2,400 43,350
--------------
243,225
--------------
TELECOMMUNICATIONS & EQUIPMENT - 4.5%
Advanced Fibre Communication, Inc. * 500 27,812
Cincinnati Bell, Inc. 2,500 154,063
Tellabs, Inc. * 2,500 94,062
US Robotics Corp. * 1,000 72,000
--------------
347,937
--------------
TRANSPORTATION - 0.5%
Midwest Express Holdings, Inc. * 1,100 39,600
--------------
TOTAL COMMON STOCKS (COST $5,926,440) 6,615,129
--------------
TOTAL INVESTMENTS (COST $5,926,440) - 84.7% 6,615,129
OTHER ASSETS IN EXCESS OF LIABILITIES - 15.3% 1,198,883
--------------
NET ASSETS - 100.0% $7,814,012
--------------
--------------
</TABLE>
* Non-income producing security.
ADR - American Depository Receipt.
See notes to financial statements.
27
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
EMERGING GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------ --------------
<S> <C> <C>
COMMON STOCKS - 93.8%
COMMERCIAL SERVICES - 4.5%
ADT Ltd. 3,200 $73,200
CUC International, Inc. * 2,362 56,098
Loewen Group, Inc. 4,450 174,106
--------------
303,404
--------------
COMMUNICATIONS & MEDIA - 2.6%
Cox Radio, Inc. * 1,600 28,000
Heritage Media Corp., Class A * 7,200 81,000
Infinity Broadcasting * 1,900 63,888
--------------
172,888
--------------
COMPUTERS & COMPUTER SOFTWARE - 23.1%
Adobe Systems, Inc. 2,800 104,650
BISYS Group, Inc. * 1,100 40,769
BMC Software, Inc. * 3,900 161,363
Cabletron Systems, Inc. * 5,780 192,185
Cadence Design System, Inc. * 2,900 115,275
Ceridian Corp. * 800 32,400
Computer Sciences Corp. * 1,100 90,337
Cooper & Chyan Technology * 3,000 98,250
DST Systems, Inc. * 2,100 65,888
Edify Corp. * 1,100 17,600
Electronic Arts * 5,200 155,675
Epic Design Technology, Inc. * 700 17,500
Fiserv, Inc. * 2,700 99,225
HBO & Co. 1,100 65,312
Oracle Corp. * 3,800 158,650
SPS Transaction Services CRP, Inc. * 2,700 41,175
Synopsys, Inc. * 2,100 97,125
--------------
1,553,379
--------------
ELECTRICAL EQUIPMENT - 1.9%
Cable Design Technologies * 4,100 127,612
--------------
ELECTRONICS - 1.4%
Atmel Corp. * 700 23,188
LSI Logic Corp. * 2,600 69,550
--------------
92,738
--------------
</TABLE>
28
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
EMERGING GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------ --------------
<S> <C> <C>
ENTERTAINMENT & LEISURE - 3.0%
Grand Casinos, Inc. 2,200 $29,700
Harrah's Entertainment, Inc. * 5,400 107,325
Hollywood Entertainment Corp. * 300 5,550
Showboat, Inc. 3,600 62,100
--------------
204,675
--------------
FINANCIAL SERVICES - 12.1%
ADVANTA Corp., Class B 2,100 85,838
Capital One Financial Corp. 2,500 90,000
Countrywide Credit Industries, Inc. 1,800 51,525
FINOVA Group 1,100 70,675
First USA, Inc. 1,800 62,325
First USA Paymentech, Inc. 100 3,388
Franklin Resources, Inc. 2,400 164,100
Green Tree Financial Corp. 3,500 135,187
Riscorp, Inc., Class A * 5,300 19,212
United Cos. Financial Corp. 4,900 130,462
--------------
812,712
--------------
HEALTH CARE PRODUCTS & SERVICES - 19.2%
CompDent Corp. * 1,900 66,975
Coventry Corp * 2,200 20,384
HCIA, Inc. * 4,000 138,000
HEALTHSOUTH Corp. * 2,300 88,837
Health Management Associates, Inc., Class A * 8,250 185,625
Healthsource, Inc. * 5,600 73,500
Manor Care, Inc. 800 21,600
Mariner Health Group, Inc. * 8,500 71,187
PacifiCare Health Systems, Class A * 2,030 164,938
St. Jude Medical, Inc. * 800 34,100
United Healthcare Corp. 4,100 184,500
Ventritex, Inc. * 8,700 214,238
Vivra, Inc. * 1,200 33,150
--------------
1,297,034
--------------
HOUSEHOLD PRODUCTS - 0.7%
Department 56, Inc. * 1,900 47,025
--------------
OFFICE EQUIPMENT - 1.0%
Danka Business Systems PLC ADR 2,000 70,750
--------------
</TABLE>
29
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
EMERGING GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------ --------------
<S> <C> <C>
OIL SERVICES - 0.1%
Titan Exploration, Inc. * 300 $3,600
--------------
RESTAURANTS & LODGING - 5.8%
Applebee's International, Inc. 2,200 60,500
Buffets, Inc. * 3,100 28,287
Choice Hotels Corp., Inc. * 800 14,100
Hospitality Franchise Systems, Inc. * 2,950 176,263
Promus Hotel Corp. * 2,900 85,913
Renaissance Hotel Group NV * 1,100 25,850
--------------
390,913
--------------
RETAILING - 9.3%
AnnTaylor Stores * 2,900 50,750
AutoZone, Inc. * 1,100 30,250
General Nutrition Cos. * 5,900 99,562
Gymboree Corp. * 5,200 118,950
Nine West Group, Inc. * 1,900 88,112
Office Depot * 5,900 104,725
Rite Aid Corp. 1,300 51,675
Viking Office Products, Inc. * 3,000 80,063
--------------
624,087
--------------
TELECOMMUNICATIONS & EQUIPMENT - 6.1%
Aerial Communications, Inc. * 4,900 39,813
Ascend Communications, Inc. * 500 31,062
Glenayre Technologies, Inc. * 6,350 136,922
Rogers Cantel Mobile, Class B * 2,900 56,188
Telephone and Data Systems, Inc. 4,100 148,625
--------------
412,610
--------------
TRANSPORTATION - 2.9%
Kansas City Southern Industries 700 31,500
Wisconsin Central Transportation Corp. * 4,100 162,463
--------------
193,963
--------------
TRAVEL SERVICES - 0.0%
Sabre Group Holdings, Inc. * 100 2,787
--------------
WHOLESALE DISTRIBUTION - 0.1%
Earthgrains 100 5,225
--------------
TOTAL COMMON STOCKS (COST $6,260,217) 6,315,402
--------------
</TABLE>
30
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
EMERGING GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------ --------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 8.9%
<S> <C> <C>
Federal Home Loan Bank, 6.50%, due 1/02/97
(COST $599,892) $600,000 $599,783
--------------
TOTAL INVESTMENTS (COST $6,860,109) - 102.7% 6,915,185
LIABILITIES IN EXCESS OF OTHER ASSETS - (2.7%) (180,796)
--------------
NET ASSETS - 100.0% $6,734,389
--------------
--------------
</TABLE>
* Non-income producing security.
ADR - American Depository Receipt.
See notes to financial statements.
31
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------ --------------
<S> <C> <C>
COMMON STOCKS - 84.7%
AUSTRALIA - 2.0%
National Australian Bank Ltd. 9,000 $105,795
WMC Limited 4,500 28,343
--------------
134,138
--------------
CANADA - 1.7%
BCE, Inc. 300 14,292
BRE-X Minerals Ltd. 900 14,249
Bank of Montreal 500 15,905
Barrick Gold Corp. 1,000 28,636
Berkley Petroleum Corp. 500 12,074
Cinram Ltd. 500 13,680
Gulfstream Resources CDA Ltd. 1,500 14,336
--------------
113,172
--------------
CHINA - 1.6%
Guangzhou Investment 220,000 105,236
--------------
FRANCE - 6.3%
Christian Dior SA 850 136,851
Pinault-Printemps 320 126,677
Sodexho SA 280 155,653
--------------
419,181
--------------
GERMANY - 5.9%
BASF AG 3,900 149,308
Gehe AG 1,700 109,042
Veba AG 2,300 132,080
--------------
390,430
--------------
HONG KONG - 4.6%
Cheung Kong Holdings 17,000 151,099
HSBC Holdings PLC 7,200 154,096
--------------
305,195
--------------
ITALY - 1.6%
Gucci Group NV 1,550 103,946
--------------
JAPAN - 24.5%
Aiwa Co. Ltd. 5,000 85,724
Autobacs Seven Co. Ltd. 1,000 70,561
Fast Retailing Co. Ltd. 2,200 56,294
Fuji Machine Mfg Co. 3,000 79,349
</TABLE>
32
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------ --------------
<S> <C> <C>
JAPAN (CONT'D) - 24.5%
Hitachi Ltd. 9,000 $83,743
Meiwa Estate Co. Ltd. 2,000 49,970
Mitsui Trust & Banking 3,000 23,391
NTT Data Corp. 3 87,619
Nichiei Co. Ltd. 900 65,986
Nintendo Corp. Ltd. 700 49,996
Nippon Steel Co. 21,000 61,876
Nippon Telegraph & Telephone 7 52,951
Nomura Securities Co. Ltd. 4,000 59,964
Rohm Co. 1,000 65,478
Shima Seiki Mfg. Ltd. 1,000 46,524
Sony Corp. 1,100 71,931
Sumitomo Bank 5,000 71,939
The Bank of Tokyo 5,000 92,616
Toda Construction Co. 11,000 83,398
Tokai Rubber Industries 5,000 55,139
Tokio Marine & Fire Insurance 4,000 37,564
Tokyo Style 5,000 69,785
Ushio, Inc. 8,000 86,844
West Japan Railway Co. 16 51,693
Yamada Denki 3,000 65,908
--------------
1,626,243
--------------
MALAYSIA - 3.5%
Malayan Banking Berhad 21,000 232,825
--------------
NETHERLANDS - 6.2%
Elsevier NV 2,480 41,865
Internationale Nederlanden Groep NV 4,070 146,354
Royal Dutch Petroleum 250 43,778
VNU-Verenigde Nederlandse Uitgeversbed 6,600 137,743
Wolters Kluwer - CVA 330 43,784
--------------
413,524
--------------
SINGAPORE - 1.9%
United Overseas Bank 11,000 122,675
--------------
SPAIN - 1.4%
Centros Comerciales Pryca, SA 4,250 89,852
--------------
</TABLE>
33
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------ --------------
<S> <C> <C>
SWEDEN - 3.5%
Atlas Copco AB 1,950 $47,408
Scania AB 1,550 38,591
Telefonaktiebolaget LM Ericsson, Class B 4,660 144,004
--------------
230,003
--------------
SWITZERLAND - 4.1%
Novartis AG * 238 271,727
--------------
UNITED KINGDOM - 15.9%
BBA Group PLC 20,000 121,160
Barclays PLC 8,500 145,533
British Petroleum Co. 11,000 131,864
Granada Group PLC 8,000 117,943
Henlys Group PLC 13,000 119,577
NEXT PLC 12,000 116,540
Rentokil Group PLC 14,000 105,176
Rolls Royce PLC 23,000 101,352
Zeneca Group 3,500 98,678
--------------
1,057,823
--------------
TOTAL COMMON STOCKS (COST $5,101,151) 5,615,970
--------------
PREFERRED STOCK - 1.1%
JAPAN - 1.1%
Koito Manufacturing Co. Ltd
(COST $68,346) 11,000 73,447
--------------
TOTAL INVESTMENTS (COST $5,169,497) - 85.8% 5,689,417
OTHER ASSETS IN EXCESS OF LIABILITIES - 14.2% 944,843
--------------
NET ASSETS - 100.0% $6,634,260
--------------
--------------
</TABLE>
* Non-income producing security.
See notes to financial statements.
34
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<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 value
(Note 2)........................... $3,086,983 $2,205,536 $4,543,030 $5,094,713 $6,615,129 $6,915,185 $5,689,417
Repurchase agreements, at value
(Note 2)........................... - - - 185,000 - - -
Cash................................ 35,729 59,313 53,362 734 1,624,762 25,736 936,897
Cash denominated in foreign
currencies......................... - - - - - - 1,553
Receivables:
Investment securities sold........ 201,309 75,937 103,396 91,321 177,956 36,503 -
Dividends and interest............ 33,452 50,756 31,055 3,762 9,721 2,190 8,222
Due from Adviser.................. 48,200 51,920 48,619 48,322 50,357 39,062 34,714
Foreign taxes recoverable......... - - - - - - 3,131
Unrealized appreciation on forward
exchange
currency contracts (Note 2)...... - - - - - - 3,341
Prepaid insurance expense........... 788 788 788 788 788 788 788
-----------------------------------------------------------------------------------------
TOTAL ASSETS.................... 3,406,461 2,444,250 4,780,250 5,424,640 8,478,713 7,019,464 6,678,063
-----------------------------------------------------------------------------------------
LIABILITIES:
PAYABLES:
Investment securities purchased... 200,500 75,000 111,226 6,395 623,744 246,683 4,836
Fund shares redeemed.............. - - - - - 4,149 -
Other payables and accrued
expenses......................... 30,600 29,887 35,070 35,985 40,957 34,243 38,967
-----------------------------------------------------------------------------------------
TOTAL LIABILITIES............... 231,100 104,887 146,296 42,380 664,701 285,075 43,803
-----------------------------------------------------------------------------------------
NET ASSETS.......................... $3,175,361 $2,339,363 $4,633,954 $5,382,260 $7,814,012 $6,734,389 $6,634,260
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
SOURCE OF NET ASSETS:
Capital stock, at par............... $ 329 $ 230 $ 439 $ 545 $ 664 $ 664 $ 609
Additional paid-in capital.......... 3,280,700 2,306,836 4,403,430 5,444,996 6,943,506 6,634,175 6,182,517
Net unrealized appreciation on:
Investment securities............. 38,308 66,436 244,398 291,151 688,689 55,076 519,920
Foreign currency related
transactions..................... - - - - - - 3,494
Undistributed net investment income
(loss)............................. 905 526 1,340 108 381 (649) 602
Accumulated net realized gain
(loss)............................. (144,881) (34,665) (15,653) (354,540) 180,772 45,123 (72,882)
-----------------------------------------------------------------------------------------
NET ASSETS.......................... $3,175,361 $2,339,363 $4,633,954 $5,382,260 $7,814,012 $6,734,389 $6,634,260
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Shares outstanding.................. 328,576 229,859 439,047 544,662 664,422 661,770 609,481
Net asset value per share........... $9.66 $10.18 $10.55 $9.88 $11.76 $10.18 $10.89
Cost of investments................. 3,048,675 2,139,100 4,298,632 4,803,562 5,926,440 6,860,109 5,169,497
Cost of repurchase agreements....... - - - 185,000 - - -
Cost of foreign currencies.......... - - - - - - 1,512
</TABLE>
See notes to financial statements.
35
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE PERIOD FEBRUARY 8, 1996* THROUGH DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<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.......................... $197,526 $167,840 $118,818 $31,845 $37,682 $24,245 $16,984
Dividends......................... - - 40,020 55,259 134,884 8,255 87,638
-----------------------------------------------------------------------------------------
197,526 167,840 158,838 87,104 172,566 32,500 104,622
Foreign taxes withheld.............. - - (553) (820) (84) - (10,498)
-----------------------------------------------------------------------------------------
Total investment income........... 197,526 167,840 158,285 86,284 172,482 32,500 94,124
-----------------------------------------------------------------------------------------
EXPENSES: (NOTE 3)
Investment advisory fees.......... 16,024 13,908 29,724 32,538 42,552 40,790 50,056
Administration fees............... 17,566 17,513 17,632 17,714 17,752 17,710 17,710
Accounting fees and expenses...... 14,333 14,290 14,385 14,452 14,482 14,448 24,368
Audit fees........................ 7,957 7,957 7,957 7,957 7,957 7,957 7,957
Legal fees........................ 7,095 7,095 7,095 7,095 7,095 7,095 7,095
Custodian fees and expenses....... 3,654 3,653 9,558 6,728 12,123 7,558 7,323
Reports to shareholders........... 3,647 3,647 3,647 3,647 3,647 3,647 3,647
Cash management fees.............. 2,145 2,145 2,145 2,145 2,145 2,145 2,145
Trustees' fees.................... 2,059 2,059 2,059 2,059 2,059 2,059 2,059
Insurance expense................. 1,713 1,713 1,713 1,713 1,713 1,713 1,713
Other expenses.................... 2,721 1,924 2,898 3,452 4,078 3,946 5,800
-----------------------------------------------------------------------------------------
Total expenses...................... 78,914 75,904 98,813 99,500 115,603 109,068 129,873
Fees waivers and expense
reimbursements................... (56,213) (62,354) (61,623) (57,619) (58,867) (75,919) (59,739)
-----------------------------------------------------------------------------------------
Net expenses........................ 22,701 13,550 37,190 41,881 56,736 33,149 70,134
-----------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS)........ 174,825 154,290 121,095 44,403 115,746 (649) 23,990
NET REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities............. (144,881) (34,665) (15,653) (354,540) 383,458 202,815 (27,870)
Foreign currency related
transactions..................... - - - - - - 33,028
-----------------------------------------------------------------------------------------
Net realized gain (loss) on
investments.................... (144,881) (34,665) (15,653) (354,540) 383,458 202,815 5,158
-----------------------------------------------------------------------------------------
Net unrealized appreciation on:
Investment securities............. 38,308 66,436 244,398 291,151 688,689 55,076 519,920
Foreign currency related
transactions..................... - - - - - - 3,494
-----------------------------------------------------------------------------------------
Net unrealized appreciation on
investments.................... 38,308 66,436 244,398 291,151 688,689 55,076 523,414
-----------------------------------------------------------------------------------------
NET GAIN (LOSS) ON INVESTMENTS...... (106,573) 31,771 228,745 (63,389) 1,072,147 257,891 528,572
-----------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS... $68,252 $186,061 $349,840 ($18,986) $1,187,893 $257,242 $552,562
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
</TABLE>
* Commencement of operations.
See notes to financial statements.
36
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FEBRUARY 8, 1996* THROUGH DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<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)........ $174,825 $154,290 $121,095 $44,403 $115,746 ($649) $23,990
Net realized gain (loss) on
investments........................ (144,881) (34,665) (15,653) (354,540) 383,458 202,815 5,158
Net unrealized appreciation on
investments........................ 38,308 66,436 244,398 291,151 688,689 55,076 523,414
-----------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations....................... 68,252 186,061 349,840 (18,986) 1,187,893 257,242 552,562
-----------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income............... (173,920) (153,764) (119,755) (44,295) (115,365) - (56,416)
Net realized gain from investment
transactions....................... - - - - (202,686) (157,692) (45,012)
-----------------------------------------------------------------------------------------
Total Distributions to
shareholders..................... (173,920) (153,764) (119,755) (44,295) (318,051) (157,692) (101,428)
-----------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Proceeds from shares sold........... 3,108,990 2,170,394 4,388,096 5,542,511 6,934,982 7,090,949 6,287,701
Cost of shares issued upon
reinvestment of distributions...... 173,920 153,764 119,755 44,295 318,051 157,692 101,428
Payments for shares redeemed........ (1,881) (17,092) (103,982) (141,265) (308,863) (613,802) (206,003)
-----------------------------------------------------------------------------------------
Net increase in net assets from
share transactions................. 3,281,029 2,307,066 4,403,869 5,445,541 6,944,170 6,634,839 6,183,126
-----------------------------------------------------------------------------------------
Net increase in net assets.......... 3,175,361 2,339,363 4,633,954 5,382,260 7,814,012 6,734,389 6,634,260
NET ASSETS
Beginning of period............... - - - - - - -
-----------------------------------------------------------------------------------------
End of period (including
undistributed net investment
income (loss))................... $3,175,361 $2,339,363 $4,633,954 $5,382,260 $7,814,012 $6,734,389 $6,634,260
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Undistributed Net Investment Income
(Loss)............................. $905 $526 $1,340 $108 $381 ($649) $602
-----------------------------------------------------------------------------------------
SHARE TRANSACTIONS
Shares sold....................... 310,759 216,429 437,742 554,436 662,842 705,476 619,314
Shares issued upon reinvestment... 18,004 15,104 11,351 4,483 27,045 15,490 9,314
Shares redeemed................... (187) (1,674) (10,046) (14,257) (25,465) (59,196) (19,147)
-----------------------------------------------------------------------------------------
Net increase........................ 328,576 229,859 439,047 544,662 664,422 661,770 609,481
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
</TABLE>
* Commencement of operations.
See notes to financial statements.
37
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OUTSTANDING THROUGHOUT THE PERIOD
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FEBRUARY 8, 1996* THROUGH DECEMBER 31, 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)...... 0.56 0.72 0.28 0.08 0.18 - 0.04
Net realized and unrealized gain
(loss)........................... (0.34) 0.18 0.55 (0.12) 2.08 0.42 1.02
-----------------------------------------------------------------------------------------
Total from investment
operations..................... 0.22 0.90 0.83 (0.04) 2.26 0.42 1.06
-----------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment
income........................... (0.56) (0.72) (0.28) (0.08) (0.18) - (0.09)
Distributions from net realized
gains............................ - - - - (0.32) (0.24) (0.08)
-----------------------------------------------------------------------------------------
Total distributions............. (0.56) (0.72) (0.28) (0.08) (0.50) (0.24) (0.17)
-----------------------------------------------------------------------------------------
Net increase (decrease) in net asset
value.............................. (0.34) 0.18 0.55 (0.12) 1.76 0.18 0.89
Net asset value per share, end of
period............................. $9.66 $10.18 $10.55 $9.88 $11.76 $10.18 $10.89
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
TOTAL RETURN (A) **................. 2.20% 8.96% 8.30% (0.38%) 22.59% 4.24% 10.59%
Net assets, end of period (000's
omitted)........................... $3,175 $2,339 $4,634 $5,382 $7,814 $6,734 $6,634
Ratio to average net assets of: ***
Expenses, net of fee waivers and
expense reimbursements........... 0.85% 0.73% 1.00% 0.90% 1.00% 0.65% 1.40%
Expenses, prior to fee waivers and
expense reimbursements........... 2.95% 4.09% 2.66% 2.14% 2.03% 2.14% 2.59%
Net investment income, net of fee
waivers and expense
reimbursements................... 6.54% 8.32% 3.26% 0.95% 2.04% (0.01%) 0.48%
Portfolio turnover rate **.......... 421% 165% 241% 131% 349% 79% 62%
Average commission rate paid per
share of securities purchased and
sold............................... - - $0.0549 $0.0594 $0.0383 $0.0470 $0.0323
</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.
38
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
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 September 16, 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.
The Trust is intended to be a funding vehicle for variable annuity
contracts to be offered by a separate account of Alexander Hamilton Life
Insurance Company and affiliates.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES:
(A) Net Asset Value - 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. The net asset value of each Fund is determined by
dividing the value of the Fund's securities and other assets, less all
liabilities by the number of shares of the Fund outstanding.
(B) Portfolio Valuation - The value of each Fund's securities and other
assets, except those of certain short-term debt securities held by the
Funds, is determined on the basis of their fair 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 fair 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.
Portfolio securities traded on more than one U.S. national securities
exchange or foreign securities exchange are valued at the last sale price
on each business day at the close of the exchange representing the
principal market for such securities. If no sale occurs, securities traded
on a U.S. exchange or NASDAQ are valued at the mean between the closing bid
and closing asked prices and securities traded on a foreign exchange will
be valued at the official bid price.
Debt securities with a remaining maturity of 61 days or more are valued on
the basis of dealer-supplied quotations or by a pricing service selected by
the sub-adviser and approved by the Board of Trustees of the Trust if those
prices are deemed by the sub-adviser to be representative of market values
at the close of business of the New York Stock Exchange.
Forward foreign currency exchange contracts are valued based upon
quotations supplied by dealers in such contracts.
(C) Tax Status - It is the policy of each Fund to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code, and to
make distributions of taxable income and net realized capital gains
sufficient to relieve
39
<PAGE>
it from all, or substantially all, Federal income and excise taxes. For
Federal income tax purposes, each Fund is treated as a separate single
entity for the purposes of determining such qualification. For Federal
income tax purposes, the Funds indicated below have capital loss
carryforwards as of December 31, 1996 which are available to offset future
capital gains, if any. The carryovers do not include net realized losses
from November 1, 1996 through December 31, 1996; if any, which are treated
for Federal income tax purposes as arising in fiscal 1997. Accordingly, no
capital gains distribution is expected to be paid to shareholders until net
gains have been realized in excess of such amounts.
<TABLE>
<CAPTION>
CAPITAL LOSS
CARRYFORWARD EXPIRATION
-------------- -------------
<S> <C> <C>
Investment Grade Bond $ 142,000 2004
High Yield Bond 32,000 2004
Balanced 1,900 2004
Growth & Income 136,000 2004
</TABLE>
As a result of varying treatment for financial reporting and Federal income
tax purposes, the International Equity Fund reclassed $33,028 of net
realized gains from foreign currency related transactions from accumulated
net realized gains to undistributed net investment income.
(D) Security Transactions and Investment Income - Security transactions are
recorded on a trade date basis. Net realized gains and losses from security
transactions are recorded on the basis of identified cost. Interest income,
adjusted for amortization of premiums and, when appropriate, discounts on
investments, is recorded on the accrual basis and dividend income is
recorded on the ex-dividend date.
(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.
40
<PAGE>
(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 expenses -- at the rates of exchange
prevailing on the respective dates of such transactions.
Net realized gain (loss) on foreign currency related transactions includes
realized foreign currency gains and losses between trade and settlement
dates on securities transactions, gains and losses arising from sale of
foreign currency, realized foreign currency gains and losses from the sale
of investment securities and foreign currency gains and losses between the
ex-date and payment date on dividends and interest. Gains and losses from
translating foreign currency denominated assets and liabilities at year-end
exchange rates are included in net unrealized appreciation (depreciation)
on foreign currency related transactions.
(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.
Fluctuations in the value of forward exchange currency contracts are
recorded for financial reporting purposes as net unrealized appreciation
(depreciation) on foreign currency related transactions 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
exhange 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.
41
<PAGE>
At December 31, 1996, the International Equity Fund had outstanding forward
exchange currency contracts to sell foreign currencies against the U.S.
dollar, as follows:
<TABLE>
<CAPTION>
FOREIGN PROCEEDS ON U.S. $
FOREIGN CURRENCY CURRENCY ORIGINATION CURRENCY UNREALIZED
SELL CONTRACTS AMOUNT DATE VALUE APPRECIATION
- ------------------------ ----------- -------------- ---------- --------------
<S> <C> <C> <C> <C>
Japanese Yen, expiring
3/04/97 22,600,000 $200,000 $196,659 $3,341
</TABLE>
(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 current month
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.
(J) Accounting Estimates - 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 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.
(K) Expenses - Expenses directly attributable to a Fund are charged to that
Fund's operations; expenses which are applicable to all Funds are allocated
among them.
NOTE 3 - FEES AND RELATED PARTY TRANSACTIONS:
(A) Alexander Hamilton Capital Management, Inc. (the "Adviser"), is the
investment adviser of the 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 is wholly-owned by Jefferson-Pilot Corporation.
42
<PAGE>
For its services to the Trust, the Adviser receives a management fee,
payable monthly, based on the average daily net assets of the Fund at the
following annual rates:
<TABLE>
<CAPTION>
ADVISORY
FUND FEE
- --------------------------------------------------------- -----------
<S> <C>
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%
</TABLE>
The Adviser has voluntarily agreed to waive fees and reimburse operating
expenses of the Trust or of any Fund to the extent the expenses exceed a
predetermined percentage of a Fund's average daily net assets. For the
period ending December 31, 1996, the Adviser voluntarily waived fees and
reimbursed Fund expenses in the following amounts pursuant to these
voluntary limitations:
<TABLE>
<CAPTION>
FEE WAIVER AND EXPENSE
EXPENSE CAP REIMBURSEMENT
--------------- ---------------------------
<S> <C> <C>
Investment Grade Bond 0.85% $ 56,213
High Yield Bond 0.95 62,354
Balanced 1.00 61,623
Growth & Income 0.90 57,619
Growth 1.00 58,867
Emerging Growth 1.05 75,919
International Equity 1.40 59,739
</TABLE>
(B) Sub-Advisers:
J.P. Morgan Investment Management, Inc. ("Morgan") is the sub-adviser to
the Investment Grade Bond Fund and the Balanced Fund.
Massachusetts Financial Services Company ("MFS") is the sub-adviser to the
High Yield Bond Fund and the Emerging Growth Fund.
Warburg, Pincus Counsellors, Inc. ("Counsellors"), serves as the
sub-adviser to the Growth & Income Fund.
Strong Capital Management, Inc. ("Strong"), is the sub-adviser to the
Growth Fund.
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.
43
<PAGE>
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:
<TABLE>
<CAPTION>
SUB-ADVISER SUB-ADVISORY FEE
- -------------------------------------------------- -----------------------
<S> <C>
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 GrowthFund) 0.40%
Warburg, Pincus Counsellors (Growth & Income Fund) 0.50%
Strong (Growth Fund)* 0.60%
Lombard Odier (International Equity Fund) 0.50%
</TABLE>
* At certain specified net asset levels, the sub-advisory fee paid by the
adviser for the Balanced Fund and the Growth Fund will decrease.
NOTE 4 - SECURITIES TRANSACTIONS:
For the period ended December 31, 1996, the cost of purchases and the
proceeds from sales of portfolio securities (excluding short-term
investments) were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Investment Grade Bond $15,362,690 $12,170,523
High Yield Bond 5,350,021 3,195,738
Balanced 13,953,654 9,639,689
Growth & Income 11,180,168 6,022,067
Growth 25,083,652 19,540,948
Emerging Growth 10,317,063 4,259,352
International Equity 8,450,722 3,253,354
</TABLE>
At December 31, 1996, the cost of each Fund's securities for federal income
tax purposes was substantially the same as for financial reporting
purposes.
The unrealized appreciation (depreciation) of the Funds' investments as of
December 31, 1996 were as follows:
<TABLE>
<CAPTION>
GROSS UNREALIZED GROSS UNREALIZED NET UNREALIZED
FUND APPRECIATION DEPRECIATION APPRECIATION
- --------------------------------- ----------------- ----------------- ---------------
<S> <C> <C> <C>
Investment Grade Bond $ 43,913 $ (5,605) $ 38,308
High Yield Bond 101,907 (35,471) 66,436
Balanced 297,356 (52,958) 244,398
Growth & Income 518,748 (227,597) 291,151
Growth 768,974 (80,285) 688,689
Emerging Growth 529,959 (474,883) 55,076
International Equity 777,102 (257,182) 519,920
</TABLE>
44
<PAGE>
NOTE 5 - INDUSTRY CONCENTRATIONS:
At December 31, 1996, the International Equity Fund had the following
concentrations by industry (as a percentage of total investments):
<TABLE>
<CAPTION>
% OF TOTAL
U.S. VALUE INVESTMENTS
----------- -------------
<S> <C> <C>
Banking $988,455 17.4%
Retailing 629,778 11.1%
Pharmaceuticals 479,447 8.4%
Oil & Gas 334,132 5.9%
Electronics 321,789 5.7%
Commercial Services 260,829 4.6%
Financial Services 248,625 4.4%
Automotive & Trucking 240,737 4.2%
Publishing 223,392 3.9%
Telecommunications 211,247 3.7%
Real Estate Development 201,069 3.5%
Engineering 184,750 3.3%
Chemicals 149,308 2.6%
Cosmetics & Toiletries 136,851 2.4%
Machinery & Equipment 125,873 2.2%
Metals & Mining 118,855 2.1%
Entertainment & Leisure 117,943 2.1%
Diversified Holding Companies 105,235 1.8%
Computers 87,619 1.5%
Manufacturing 87,127 1.5%
Electrical Equipment 71,931 1.3%
Distribution & Wholesale 69,785 1.2%
Tire & Rubber 55,139 1.0%
Miscellaneous 52,840 0.9%
Transportation 51,693 0.9%
Toys 49,996 0.9%
Construction Equipment 47,408 0.8%
Insurance 37,564 0.7%
----------- -------------
$5,689,417 100.0%
----------- -------------
----------- -------------
</TABLE>
45
<PAGE>
ALEXANDER HAMILTON VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
REPORT OF ERNST & YOUNG, LLP INDEPENDENT AUDITORS
-------------------------------------------------------------------------
The Board of Trustees and Shareholders
Alexander Hamilton Variable Insurance Trust
We have audited the accompanying statement of assets and liabilities, including
the portfolios of investments, of Alexander Hamilton Variable Insurance Trust
(comprising, respectively, the Investment Grade Bond, High Yield Bond, Balanced,
Growth and Income, Growth, Emerging Growth and International Equity Funds) (the
"Trust") as of December 31, 1996, and the related statements of operations,
changes in net assets, and financial highlights for the period from February 8,
1996 (commencement of operations) to December 31, 1996. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements and
financial highlights. Our procedures included confirmation of investments owned
as of December 31, 1996, by correspondence with the custodian and brokers. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective Funds constituting the Alexander Hamilton Variable Insurance
Trust at December 31, 1996, the results of their operations, the changes in
their net assets, and their financial highlights for the period from February 8,
1996 to December 31, 1996, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
New York, New York
January 24, 1997
46
<PAGE>
ALLEGIANCE -R-
VARIABLE ANNUITY
ONE OF THE ALLEGIANCE FAMILY OF VARIABLE PRODUCTS
ABOUT ALEXANDER HAMILTON LIFE
SINCE BEGINNING OPERATIONS IN 1964, THE DRIVING FORCE BEHIND ALEXANDER
HAMILTON LIFE'S SUCCESS HAS BEEN AN UNCOMPROMISING COMMITMENT TO
FINANCIAL STRENGTH AND STABILITY. THIS COMMITMENT HAS EARNED
THE TRUST AND CONFIDENCE OF OUR POLICYHOLDERS WHO LOOK
TO HAMILTON FOR QUALITY INSURANCE AND
FINANCIAL SERVICES PRODUCTS.
ALEXANDER HAMILTON LIFE IS RATED A++ (SUPERIOR) BY
A.M. BEST & COMPANY AND HAS EARNED THE HIGHEST
AVAILABLE AAA CLAIMS-PAYING RATING BY STANDARD &
POOR'S AND DUFF & PHELPS INDEPENDENT RATING SERVICES.
ALEXANDER HAMILTON LIFE IS A SUBSIDIARY OF JEFFERSON-PILOT
CORPORATION, A HOLDING COMPANY BASED IN GREENSBORO, NORTH CAROLINA.
ALEXANDER HAMILTON
------------------
A LIFE INSURANCE SUBSIDIARY OF JEFFERSON-PILOT CORPORATION
32991 HAMILTON COURT - FARMINGTON HILLS, MI 48334-3358
ALLEGIANCE VARIABLE ANNUITY IS ISSUED BY ALEXANDER HAMILTON LIFE AND
DISTRIBUTED BY JEFFERSON-PILOT INVESTOR SERVICES, INC.
MEMBER, NATIONAL ASSOCIATION OF SECURITIES DEALERS
27426
