LONDON PACIFIC LIFE & ANNUITY COMPANY
LPLA SEPARATE ACCOUNT ONE
AND
LPT VARIABLE INSURANCE SERIES TRUST
REGENCY SERIES
FLEXIBLE CONTRIBUTION DEFERRED VARIABLE ANNUITY
ANNUAL REPORT
FOR THE PERIOD ENDED DECEMBER 31, 1996
This Annual Report has been prepared to provide information to the owners of
London Pacific Life & Annuity Company's Regency Series Variable Annuity. If it
is used for any other purpose, it must be accompanied or preceded by a current
Regency Series prospectus, which discloses any charges and other important
information about the Separate Account, together with the current prospectus for
the LPT Variable Insurance Series Trust.
CONTENTS
Message from the President..................................................2
LPLA SEPARATE ACCOUNT ONE:
Statement of Assets & Liabilities...........................................3
Statement of Operations.....................................................4
Statement of Changes in Net Assets..........................................5
Notes to Financial Statements.............................................6-9
Report of Independent Accountants..........................................10
LPT VARIABLE INSURANCE SERIES TRUST:
Individual Portfolio Review.............................................11-17
Statements of Assets & Liabilities.........................................18
Statements of Operations...................................................19
Statements of Changes in Net Assets........................................20
Financial Highlights.......................................................21
Schedules of Investments................................................22-52
Notes to Financial Statements...........................................53-60
Report of Independent Accountants..........................................61
MESSAGE FROM THE PRESIDENT
Dear Contract Owner:
We are pleased to provide you with the Annual Reports for LPLA Separate Account
One and LPT Variable Insurance Series Trust for the year ending December 31,
1996. Thank you for investing with us!
As you may know, the financial markets have continued their upward trend, not
only with a sharp rise in the Dow Jones industrial Average, but with increases
in other major indexes like the S&P 500 and the Russell 2000 as well. As of this
writing, the Dow Jones is breaking all records at the 7,000 level and confirms
what some economists say is a sustained bull market. While we hope that you have
benefitted from the rise in the markets and that you have diversified your
assets according to your financial advisor's instructions, timing is everything.
A noted economist once told me that the difference between a prudent investor
and an anxious investor is three years. Opportunities E will always exist to buy
low and sell high. Depending on your entry date, any market can be volatile,
even the best of bull markets.
We are pleased to announce that the 1996 performance* of the underlying LPT
Variable Insurance Series [nest portfolios has been very good since the February
9, 1996 effective date. Most of the Portfolios performed quite well relative to
their comparative indexes for the year. Strong Growth Portfolio was up 20.27%
versus the Russell 2000 Stock Index of 14.55%, Lexington Corporate Leaders
Portfolio was up 12 84% and MAS Value Portfolio was up 20.39% versus the S & P
500 Stock Index of 15.14% and the Lipper Growth & Income Index of 14.14%. Strong
International Portfolio was up 5.85% versus the Morgan Stanley EAFE Index of
3.99% and Berkeley Smaller Companies Portfolio was up 2.42 % versus the Russell
2000 Stock Index of 14.55%. MFS Total Return Portfolio was up 9.81% versus the
Lipper Balanced Fund Index of 9.41% and Salomon U. S. Quality Bond Portfolio was
up 2.27% versus the Lipper Government Intermediate Index of 2.16%.
When considering the financial markets for 1997, diversify your assets and
expect volatility. Furthermore, it is always a good idea to keep in touch with
your financial advisor, especially if the market environment changes.
Thank you for selecting the Regency Variable Annuity. We appreciate the
confidence that you have placed in us. and we look forward to serving your
investment needs for the future.
Mark E. PRILLAMAN
President
LPT Variable Insurance Series Trust
*Past performance of unmanaged indexes or of the LPT Variable Insurance Series
Trust Portfolios is no guarantee of future results. Investment return and
principal value of the investment will fluctuate so that the investor's shares,
when redeemed, may be worth more or less than their original cost. Performance
numbers are net of all portfolio operating expenses, however they do not reflect
the deduction of insurance charges against assets.
LPLA SEPARATE ACCOUNT ONE
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MFS Total Salomon U.S. Salomon Money Strong
MAS Value Return Quality Bond Market International Stock
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
------------ -------------- --------------- ---------------- --------------------
ASSETS
Investments in the LPT
Variable Insurance Trust,
at value (Note 3) $766,457 $1,046,614 $926,451 $417,951 $565,195
------------ -------------- --------------- ---------------- --------------------
Total Assets 766,457 1,046,614 926,451 417,951 565,195
------------ -------------- --------------- ---------------- --------------------
LIABILITIES
Accrued expenses payable to
London Pacific Life & Annuity
Company (Note 4) 22 32 31 16 15
Amounts retained by London
Pacific Life & Annuity Co. in
LPLA Separate Account One
(Note 7) 153,196 139,219 127,999 130,261 133,139
------------ ------------- --------------- ---------------- --------------------
TOTAL LIABILITIES 153,218 139,251 128,030 130,277 133,154
------------ ------------- --------------- ---------------- --------------------
NET ASSETS ATTRIBUTABLE TO
CONTRACT OWNERS $613,239 $907,363 $798,421 $287,674 $432,041
============ ============= ============== ================ ====================
UNIT VALUE $12.12 $11.03 $10.15 $10.36 $10.58
============ ============= ============== ================ ====================
50,583 82,279 78,700 27,763 40,840
============ ============= ============== ================ ====================
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Berkeley Smaller Lexington
Strong Growth Companies Corporate Leaders
Sub-Account Sub-Account Sub-Account
------------ ---------------- -----------------
Investments in the LPT
Variable Insurance Trust,
at value (Note 3) $722,959 $674,793 $489,190
------------ ---------------- -----------------
Total Assets 722,959 674,793 489,190
------------ ---------------- -----------------
LIABILITIES
Accrued expenses payable to
London Pacific Life & Annuity
Company (Note 4) 17 17 13
Amounts retained by London
Pacific Life & Annuity Co. in
LPLA Separate Account One
(Note 7) 160,583 131,253 144,672
------------- ---------------- -----------------
TOTAL LIABILITIES 160,600 131,270 144,685
------------- ---------------- -----------------
NET ASSETS ATTRIBUTABLE TO
CONTRACT OWNERS $562,359 $543,523 $344,505
============ ================ =================
UNIT VALUE $12.62 $10.35 $11.51
============ ================ =================
44,555 52,516 29,933
============ ================ =================
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
LPLA SEPARATE ACCOUNT ONE
STATEMENT OF OPERATIONS
FOR THE PERIOD JANUARY 31, 1996 (COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1996
<S> <C> <C> <C> <C> <C>
MFS Total Salomon U.S. Salomon Money Strong
MAS Value Return Quality Bond Market International Stock
INCOME AND EXPENSES Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Income: ------------ -------------- --------------- ---------------- --------------------
Dividends from the LPT Variable
Insurance Series Trust
$19,181 $15,103 $37,717 $15,124 $2,659
Expenses:
Mortality and other expense
charges (Note 4)
Net investment income 1,620 2,240 5,845 1,903 1,726
------------ -------------- --------------- ---------------- --------------------
17,561 12,863 31,872 13,221 36,980
------------ -------------- --------------- ---------------- --------------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS.
Net realized gain on sales of
investments
Net unrealized appreciation
(depreciation) on investments 29 2 102 0 75
Beginning of period ------------ -------------- --------------- ---------------- ---------------------
End of period
Net unrealized appreciation
(depreciation) during period
0 0 0 0 0
NET REALIZED AND UNREALIZED GAIN 40,172 19,948 646 0 2,107
(LOSS) ON INVESTMENTS ------------ -------------- --------------- ---------------- ---------------------
NET INCREASE (DECREASE) IN NET 40,172 19,948 646 0 2,107
ASSETS RESULTING FROM OPERATIONS ------------ -------------- --------------- ---------------- ---------------------
40,201 19,950 748 0 2,182
------------ -------------- --------------- ---------------- ---------------------
$57,762 $32,813 $32,620 $13,221 $3,115
============ ============== =============== ================ =====================
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Berkeley Smaller Lexington
Strong Growth Companies Corporate Leaders
INCOME AND EXPENSES Sub-Account Sub-Account Sub-Account
Income: ------------ ---------------- -----------------
Dividends from the LPT Variable
Insurance Series Trust
$38,140 $112,982 $4,264
Expenses:
Mortality and other expense
charges (Note 4)
Net investment income 1,160 1,558 672
------------ --------------- ------------------
36,980 111,424 3,592
REALIZED AND UNREALIZED GAIN ------------ --------------- ------------------
(LOSS) ON INVESTMENTS.
Net realized gain on sales of
investments
Net unrealized appreciation
(depreciation) on investments 551 85 4
Beginning of period ------------ --------------- ------------------
End of period
Net unrealized appreciation
(depreciation) during period
0 0 0
NET REALIZED AND UNREALIZED GAIN (5,660) (142,697) 24,589
(LOSS) ON INVESTMENTS ------------- ---------------- -----------------
NET INCREASE (DECREASE) IN NET (5,660) (142,697) 24,589
ASSETS RESULTING FROM OPERATIONS ------------- ---------------- -----------------
(5,109) (142,612) 24,593
------------- ---------------- -----------------
$31,871 ($31,188) $28,185
============= ================ =================
</TABLE>
See Notes to Financial Statements
LPLA SEPARATE ACCOUNT ONE
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD JANUARY 31, 1996 (COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MFS Total Salomon U.S. Salomon Money Strong
MAS Value Return Quality Bond Market International Stock
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
------------ -------------- --------------- ---------------- --------------------
INCREASE(DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income $17,561 $12,863 $31,872 $13,221 $933
Net realized gain on sales 29 2 102 0 75
Net unrealized appreciation
(depreciation) during the period 40,172 19,948 646 0 2,107
------------ -------------- --------------- ---------------- --------------------
Net increase (decrease) in net assets
resulting from operations 57,762 32,813 32,260 13,221 3,115
------------ -------------- --------------- ---------------- --------------------
CONTRACT RELATED TRANSACTIONS:
Transfers in from net premiums 286,034 414,918 95,545 2,841,064 155,627
Transfers out from contract related
transactions (357) (3,655) (3,368) 0 (1,948)
Transfers between Separate Account
investment portfolios 297,996 477,506 676,623 (2,561,350) 283,386
------------ -------------- ---------------- ---------------- --------------------
Net increase in net assets resulting
from contract related transactions 583,673 888,769 768,800 279,714 437,065
------------ -------------- ---------------- --------------- --------------------
INITIAL CONTRIBUTION BY LONDON PACIFIC
LIFE & ANNUITY COMPANY 125,000 125,000 125,000 125,000 125,000
Change in amount retained by London
Pacific Life & Annuity Company in
LPLA Separate Account One (Note 7) (153,196) (139,219) (127,999) (130,261) (133,139)
------------- -------------- ---------------- ---------------- --------------------
INCREASE IN NET ASSETS 613,239 907,363 798,421 287,674 432,041
NET ASSETS, BEGINNING OF PERIOD 0 0 0 0 0
------------ -------------- ---------------- ---------------- --------------------
NET ASSETS, END OF PERIOD $613,239 $907,363 $798,421 $287,674 $432,041
============ ============== ================ ================ ====================
</TABLE>
<TABLE>
<CAPTION><S> <C> <C> <C>
Berkeley Smaller Lexington
Strong Growth Companies Corporate Leaders
Sub-Account Sub-Account Sub-Account
------------ ---------------- -----------------
INCREASE(DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income $36,980 $111,424 $3,592
Net realized gain on sales 551 85 4
Net unrealized appreciation
(depreciation) during the period (5,660) (142,697) 24,589
------------ ----------------- -----------------
Net increase (decrease) in net assets
resulting from operations 31,871 (31,188) 28,185
------------ ----------------- -----------------
CONTRACT RELATED TRANSACTIONS:
Transfers in from net premiums 227,819 246,768 187,429
Transfers out from contract related
transactions (2,879) (1,896) (53)
Transfers between Separate Account
investment portfolios 341,131 336,092 148,616
------------ ------------------ -----------------
Net increase in net assets resulting
from contract related transactions 566,071 580,964 335,992
------------ ------------------ -----------------
INITIAL CONTRIBUTION BY LONDON PACIFIC
LIFE & ANNUITY COMPANY 125,000 125,000 125,000
Change in amount retained by London
Pacific Life & Annuity Company in
LPLA Separate Account One (Note 7) (160,583) (131,253) (144,672)
------------- --------------- ------------------
INCREASE IN NET ASSETS 562,359 543,523 344,505
NET ASSETS, BEGINNING OF PERIOD 0 0 0
------------- ---------------- -----------------
NET ASSETS, END OF PERIOD $562,359 $543,523 $344,505
============= ================ =================
</TABLE>
LPLA SEPARATE ACCOUNT ONE
Notes to Financial Statements
December 31, 1996
NOTE 1 - Organization
LPLA Separate Account One ("Separate Account") is a separate investment account
of London Pacific Life & Annuity Company ("Company"). The Separate Account was
established on November 23, 1994 under the insurance laws of the State of North
Carolina for the purpose of issuing flexible payment variable annuity contracts.
Under North Carolina's insurance laws, the assets of the Separate Account are
clearly identified and distinguished from the other assets and liabilities of
the Company. The Separate Account cannot be charged with liabilities arising out
of any other business of the Company.
The Separate Account is a unit investment trust registered with the Securities
and Exchange Commission under the Investment Company Act of 1940. Contract
owners may allocate their account values to one or more of the Separate
Account's investment Sub-Accounts. Funds of the investment Sub-Accounts of the
Separate Account are invested exclusively in a corresponding investment
portfolio of the LPT Variable Insurance Series Trust ("Trust") managed by LPIMC
Insurance Marketing Services ("LPIMC"), a registered investment advisor and a
wholly-owned subsidiary of the Company.
NOTE 2 - Significant Accounting Policies
The following is a summary of significant accounting policies which are in
conformity with generally accepted accounting principles consistently followed
by the Separate Account in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reported period. Actual results could differ from those estimates.
Investments - Security transactions are recorded on the trade date. Investments
held by the Sub-Accounts are stated at the net asset value per share of the
respective investment portfolio of the Trust. Realized gains and losses on sales
of shares of the Trust are determined based on the first-in, first-out method.
Dividends and capital gain distributions are recorded on the ex-dividend date
and are reinvested in additional shares of the respective investment portfolio
of the Trust.
Federal Income Taxes - Operations of the Separate Account are included in the
income tax return of the Company, which is taxed as a life insurance company
under the Internal Revenue Code. The Separate Account will not be taxed as a
registered investment company under Sub-Chapter M of the Internal Revenue Code.
Under existing federal income tax law, no taxes are payable on the investment
income or on the capital gains of the Separate Account.
LPLA SEPARATE ACCOUNT ONE
Notes to Financial Statements
December 31, 1996
NOTE 3 - Investments
The number of shares owned, aggregate cost, and net asset value per share of
each Sub-Account's investment in the Trust at December 31, 1996 were as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Portfolio Information
Investment Number of Aggregate Net Asset
Sub-Account Shares Cost Value Per Share
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MAS Value 64,647 $726,285 $11.86
MFS Total Return 96,012 1,026,666 10.90
Salomon U.S. Quality Bond 94,436 925,805 9.81
Salomon Money Market 417,951 417,951 1.00
Strong International Stock 53,401 563,088 10.58
Strong Growth 60,664 728,619 11.92
Berkeley Smaller Companies 78,575 817,490 8.58
Lexington Corporate Leaders 42,749 464,601 11.44
</TABLE>
NOTE 4 - Related Party Transactions
The Company assesses a charge of 1.25% per annum based on the average daily net
assets of each Sub-Account at each valuation date for mortality and expense
risks. The Company also charges each Sub-Account .15% and .10% per annum based
on the average daily net assets of each Sub-Account for administrative and
distribution expenses, respectively. These charges are deducted from the daily
unit value of each Sub-Account but are paid to the Company on a monthly basis. A
contract maintenance charge of $36 is currently deducted on the policy
anniversary date and upon full surrender of the policy when the accumulated
value is $50,000 or less.
London Pacific Financial and Insurance Services ("LPFIS"), a registered
broker/dealer and wholly-owned subsidiary of the Company, is principal
underwriter and general distributor of the Separate Account. LPFIS does not
receive any compensation for sales of the variable annuity contracts.
LPLA SEPARATE ACCOUNT ONE
Notes to Financial Statements
December 31, 1996
Note 5 - Changes in Units Outstanding
Changes in units outstanding for the period January 31, 1996 (commencement of
operations) to December 31, 1996 were as follows:
<TABLE>
<CAPTION>
Units Units Units Net
Investment Sub-Account Purchased Transferred Redeemed Increase
- ------------------------------- --------------- --------------- ----------- ----------
<S> <C> <C> <C> <C>
MAS Value 23,988 26,628 (33) 50,583
MFS Total Return 37,908 44,705 (334) 82,279
Salomon U.S. Quality Bond 9,805 69,231 (336) 78,700
Salomon Money Market 277,258 (249,495) 0 27,763
Strong International Stock 14,759 26,267 (186) 40,840
Strong Growth 17,977 26,809 (231) 44,555
Berkeley Smaller Companies 22,713 29,987 (184) 52,516
Lexington Corporate Leaders 16,470 13,468 (5) 29,933
</TABLE>
NOTE 6 - Diversification Requirements
Under the provisions of Section 817(h) of the Internal Revenue Code a variable
annuity contract, other than a contract issued in connection with certain types
of employee benefit plans, will not be treated as an annuity contract for
federal income tax purposes for any period for which the investments of the
segregated asset account on which the contract is based are not adequately
diversified. The Code provides that the "adequately diversified" requirement may
be met if the underlying investments satisfy either a statutory safe harbor test
or diversification requirements set forth in regulations issued by the Secretary
of Treasury.
The Internal Revenue Service has issued regulations under Section 817(h) of the
Code. The Company believes that it satisfies the current requirements of the
regulations, and it intends that the Separate Account will continue to meet such
requirements.
NOTE 7 - Amount Retained by the Company
The amount retained by the Company is attributable to the Company's initial
contribution to the Separate Account and the underlying investment results. The
change in this amount arises from that portion, determined ratably, of the
Separate Account's investment results applicable to the net assets owned by the
Company. The funds contributed by the Company, as well as any investment
appreciation or depreciation, are not subject to charges for mortality and
expense risks, administration expenses and distribution expenses.
Amounts retained by the Company in the Separate Account may be transferred by
the Company to its General Account at any time.
LPLA SEPARATE ACCOUNT ONE
Notes to Financial Statements
December 31, 1996
NOTE 8 - Purchases and Sales of Securities
Cost of purchases and proceeds from sales of the Trust shares by the Separate
Account during the year ended December 31, 1996 were as follows:
<TABLE>
<CAPTION>
Investment Sub-Account Purchases Sales
------------------------- --------- -----
<S> <C> <C>
MAS Value $726,613 $357
MFS Total Return 1,026,717 53
Salomon U.S. Quality Bond 980,727 55,024
Salomon Money Market 2,853,937 2,435,986
Strong International Stock 564,621 1,608
Strong Growth 730,723 2,655
Berkeley Smaller Companies 819,174 1,769
Lexington Corporate Leaders 464,650 53
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of London Pacific Life & Annuity
Company and Contract Owners of LPLA Separate Account One
In our opinion, the accompanying statement of assets and liabilities and the
related statements of operations and of changes in net assets present fairly, in
all material respects, the financial position of each of the Sub-Accounts (MAS
Value, MFS Total Return, Salomon U.S. Quality Bond, Salomon Money Market, Strong
International Stock, Strong Growth, Berkeley Smaller Companies and Lexington
Corporate Leaders) constituting LPLA Separate Account One at December 31, 1996,
the results of each of their operations and the changes in each of their net
assets for the period indicated, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
London Pacific Life & Annuity Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of investments owned at December 31, 1996 by
correspondence with the Trust, provide a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
February 18, 1997
MAS VALUE PORTFOLIO
INVESTMENT SUB-ADVISOR
Miller, Anderson & Sherrerd, LLP
ABOUT THE PORTFOLIO
Invests in companies with equity capitalizations usually greater than $400
million that are believed to be undervalued based on price/earnings and
price/book ratios.
PERFORMANCE
Net total return for the period February 9, 1996 through December 31, 1996
MAS Value Portfolio 20.39%
S&P 500 Index 15.14%
Lipper Growth &
Income Index 14.14%
THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX ("S&P 500 INDEX") IS AN
UNMANAGED INDEX OF 500 LEADING STOCKS. RESULTS FOR THE S&P 500 INDEX DO NOT
REFLECT THE EXPENSES AND INVESTMENT MANAGEMENT FEES INCURRED BY THE PORTFOLIO.
THE LIPPER GROWTH & INCOME INDEX IS A NON-WEIGHTED INDEX OF 139 FUNDS INVESTING
IN STOCKS AND CORPORATE AND GOVERNMENT BONDS. RESULTS FOR THE INDEX DO NOT
REFLECT THE EXPENSES AND INVESTMENT MANAGEMENT FEES INCURRED BY THE PORTFOLIO.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND
PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES
WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE
NUMBERS ARE NET OF ALL PORTFOLIO OPERATING EXPENSES, BUT DO NOT REFLECT THE
DEDUCTION OF INSURANCE CHARGES.
* DURING THE PERIOD NOTED, THE INVESTMENT ADVISOR (LPIMC INSURANCE MARKETING
SERVICES) WAIVED A PORTION OF ITS MANAGEMENT FEE AND LONDON PACIFIC LIFE AND
ANNUITY COMPANY VOLUNTARILY AGREED TO REIMBURSE CERTAIN OPERATING EXPENSES OF
THE PORTFOLIO. IN THE ABSENCE OF THE WAIVER AND EXPENSE REIMBURSEMENT, TOTAL
RETURN WOULD HAVE BEEN LOWER.
The MAS Value Portfolio earned a total return of 20.39% from the date of
its inception on February 9, 1996 through December 31, 1996. This return
surpassed by a substantial margin the 15.14% return earned over the same period
by the Standard & Poor's 500 Composite Index (S&P 500 Index) and the 14.14%
return earned during that time period by the average growth and income mutual
fund, as measured by Lipper Analytical Services.
Successful sector and stock selections contributed to the Portfolio's
strong relative performance for the period. Overweightings compared to the S&P
500 Index in financial services and heavy industrials benefited performance.
Heavy industry represented our largest overweighting with significant positions
in Trinova, Cummins Engine, Harnischfeger, FMC and Kennametal. Within financial
services, banking and insurance companies delivered healthy earnings growth
while trading at large valuation discounts. The Portfolio's larger holdings
within the sector included American Re, Chase Manhattan, Providian, Great
Western, Allstate, Citicorp, Transatlantic Holdings and Old Republic
International.
The Portfolio also outperformed the S&P 500 Index in the basic resources,
technology, telephone, utilities, and energy sectors. Strong performances were
delivered by such individual securities as Dupont, Rohm and Haas, PHH, Seagate,
IBM, Sprint and British Petroleum. The Portfolio also can attribute part of its
solid performance to sectors of the market that were avoided. Underweightings,
as compared to the S&P 500 Index, in telephone utilities and consumer services
served the Portfolio well as their performance lagged.
On the other hand, the Portfolio's performance suffered somewhat as a
result of investors' affection for large capitalization, defensive growth stocks
during the year. For the past two years, growth stocks have outperformed
cyclical stocks and large company stocks have outperformed smaller ones. The
Portfolio's holdings tend to be somewhat smaller and more cyclical than the S&P
500 Index. A rotation toward smaller and more cyclical companies is long overdue
and could further enhance the relative outperformance of the Portfolio.
Moving ahead, the Portfolio remains prudently optimistic for the potential
of the equity market. Underweightings should continue in the consumer, health
care, energy and utility sectors which include most beverage, personal care,
food, consumer services, drug and medical products companies. As investors drove
up prices for these securities, due to their affection for large capitalization,
defensive growth companies, the securities have been priced out of the
Portfolio's disciplined valuation range as have many technology sector
securities, although the Portfolio continues to hold significant positions in
IBM, Seagate, Compaq and Tektronix. Energy and telephone utility stocks remain
underweighted due to high price-earnings ratios and modest growth outlooks.
Deteriorating competitive condition for electric utilities likely will keep that
sector at current, near-market weightings in the Fund.
The Portfolio's overweighted position in banking and insurance should serve
it well as consolidation continues to benefit shareholders. Strategically, the
Portfolio will seek a more defensive overall structure given the high valuations
of the market overall. Specifically, cash levels could remain in the 10% to 15%
range, while individual security selection may tend toward more conservative
price-earnings, price-sales and price-book levels.
$10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION FEBRUARY 9, 1996
|
$12,309 * |
|
$11,514 # |
|
$11,414 X |
|
|
$10,000 ----------------------------------------------------------------
2/9/96 12/31/96
* MAS VALUE PORTFOLIO
# S&P 500
X LIPPER GROWTH & INCOME INDEX
THE CHART ABOVE ILLUSTRATES THE GROWTH IN VALUE OF A HYPOTHETICAL $10,000
INVESTMENT MADE IN THE MAS VALUE PORTFOLIO, THE S&P 500 INDEX, AND THE
LIPPER GROWTH & INCOME INDEX ON FEBRUARY 9, 1996, THE INCEPTION DATE OF THE
PORTFOLIO. THE FIGURES FOR THE PORTFOLIO, THE S&P 500 INDEX AND THE LIPPER
GROWTH & INCOME INDEX INCLUDE REINVESTMENT OF DIVIDENDS.
MFS TOTAL RETURN PORTFOLIO
INVESTMENT SUB-ADVISOR
Massachusetts Financial Services Company
ABOUT THE PORTFOLIO
Invests in securities which are expected to provide above-average income and
opportunities for growth of capital and income, consistent with the prudent
employment of capital.
PERFORMANCE
Net total return for the period February 9, 1996 through December 31, 1996
MFS Total
Return Portfolio 9.81%
Lehman Brothers
Aggregate Bond Index 0.34%
Lipper Balanced
Fund Index 9.41%
THE LEHMAN BROTHERS AGGREGATE BOND INDEX IS AN UNMANAGED INDEX OF AVERAGE YIELD
U.S. INVESTMENT GRADE BONDS. RESULTS FOR THE LEHMAN AGGREGATE BOND INDEX DO NOT
REFLECT THE EXPENSES AND INVESTMENT MANAGEMENT FEES INCURRED BY THE PORTFOLIO.
THE LIPPER BALANCED FUND INDEX IS A NON-WEIGHTED INDEX OF 210 FUNDS INVESTING IN
STOCKS AND CORPORATE AND GOVERNMENT BONDS. RESULTS FOR THE INDEX DO NOT REFLECT
THE EXPENSES AND INVESTMENT MANAGEMENT FEES INCURRED BY THE PORTFOLIO.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND
PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES
WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE
NUMBERS ARE NET OF ALL PORTFOLIO OPERATING EXPENSES, BUT DO NOT REFLECT THE
DEDUCTION OF INSURANCE CHARGES.
* DURING THE PERIOD NOTED, THE INVESTMENT ADVISOR (LPIMC INSURANCE MARKETING
SERVICES) WAIVED A PORTION OF ITS MANAGEMENT FEE AND LONDON PACIFIC LIFE AND
ANNUITY COMPANY VOLUNTARILY AGREED TO REIMBURSE CERTAIN OPERATING EXPENSES OF
THE PORTFOLIO. IN THE ABSENCE OF THE WAIVER AND EXPENSE REIMBURSEMENT, TOTAL
RETURN WOULD HAVE BEEN LOWER.
The MFS Total Return Portfolio earned a total return of 9.81% from the date
of its inception on February 9, 1996 through December 31, 1996, far
outdistancing the 0.34% return of the Lehman Brothers Aggregate Bond Index
during the period. The Portfolio's performance also exceeded the average
balanced mutual fund which earned a 9.41% return during the period, as measured
by Lipper Analytical Services.
The Portfolio invests in both common stocks and corporate and government
bonds. In addition, the Portfolio purchases preferred stocks and convertible
bonds, which can provide similar returns to common stocks with less risk. During
1996, the Portfolio maintained about 55% of its investments in common and
preferred stocks and convertible bonds. Fueled by the continuing spectacular
returns earned by the U. S. stock market, these holdings generated the bulk of
the Portfolio's returns during the period.
The remainder of the Portfolio was invested in corporate and U.S. Treasury
bonds with an overall duration of five to six years. The fixed income portion of
the Portfolio also provided positive returns, however, the magnitude was far
less than that of the Portfolio's stock portion. For example, the securities
within the Lehman Brothers Government Corporate Bond Index, which were fairly
representative of the Portfolio's bond allocation, earned a total return of
3.28% during the year.
Some of the best performers among the Portfolio's stock holdings came from
the financial services sectors. Bank stocks in particular performed well.
Earnings have risen steadily and an increase in merger activity has made nearly
all banks more valuable. During the year, the Portfolio avoided investment in
the technology and consumer sectors. In the manager's view, technology companies
with high valuations represented greater risk than other securities and the
growth prospects for consumer companies were limited by restrictions on their
ability to raise prices.
The Portfolio's stock investment strategy has focused on companies that the
manager believes have earnings prospects or asset values equal to or higher than
the overall market as measured by the Standard & Poor's 500 Composite Stock
Index. In addition to the energy sector, the manager believes the healthcare and
aerospace industries fit this investment criteria. Strong earnings and industry
consolidation have combined to improve the outlook for many health care
companies. The manager believes the aerospace industry will benefit from a
cyclical increase in the number of aircraft built in the next three years.
Given where equity valuations are today, the Portfolio likely will maintain
its current allocation between stock and bond investments. However, should the
equity market experience a meaningful correction, the manager would seek to add
to the Portfolio's stock allocation while shares are at lower prices.
$10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION FEBRUARY 9, 1996
|
$10,981 * |
|
$10,941 X |
|
$10,034 # |
|
|
$10,000 ----------------------------------------------------------------
2/9/96 12/31/96
* MFS TOTAL RETURN PORTFOLIO
# LEHMAN BROTHERS AGGREGATE BOND INDEX
X LIPPER BOND FUND INDEX
THE CHART ABOVE ILLUSTRATES THE GROWTH IN VALUE OF A HYPOTHETICAL $10,000
INVESTMENT MADE IN THE MFS TOTAL RETURN PORTFOLIO, THE LEHMAN BROTHERS AGGREGATE
BOND INDEX, AND THE LIPPER BALANCED FUND INDEX ON FEBRUARY 9, 1996, THE
INCEPTION DATE OF THE PORTFOLIO. THE FIGURES FOR THE PORTFOLIO, THE LEHMAN
BROTHERS AGGREGATE BOND INDEX, AND THE LIPPER BALANCED FUND INDEX INCLUDE
REINVESTMENT OF DIVIDENDS
SALOMON U.S. QUALITY BOND PORTFOLIO
INVESTMENT SUB-ADVISOR
Salomon Brothers
Asset Management
ABOUT THE PORTFOLIO
Invests primarily in high quality debt securities of the U.S. Government and its
agencies to obtain a high level of current income.
PERFORMANCE
Net total return for the period February 9, 1996 through December 31, 1996
Salomon U.S. Quality
Bond Portfolio 2.27%
Lipper Government
Intermediate Index 2.16%
THE LIPPER GOVERNMENT INTERMEDIATE FUND INDEX IS A NON-WEIGHTED INDEX OF 139
FUNDS INVESTING IN INTERMEDIATE GOVERNMENT BONDS. RESULTS FOR THE INDEX DO NOT
REFLECT THE EXPENSES AND INVESTMENT MANAGEMENT FEES INCURRED BY THE PORTFOLIO.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND
PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES
WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE
NUMBERS ARE NET OF ALL PORTFOLIO OPERATING EXPENSES, BUT DO NOT REFLECT THE
DEDUCTION OF INSURANCE CHARGES.
* DURING THE PERIOD NOTED, THE INVESTMENT ADVISOR (LPIMC INSURANCE MARKETING
SERVICES) WAIVED A PORTION OF ITS MANAGEMENT FEE AND LONDON PACIFIC LIFE AND
ANNUITY COMPANY VOLUNTARILY AGREED TO REIMBURSE CERTAIN OPERATING EXPENSES OF
THE PORTFOLIO. IN THE ABSENCE OF THE WAIVER AND EXPENSE REIMBURSEMENT, TOTAL
RETURN WOULD HAVE BEEN LOWER.
The Salomon U. S. Quality Bond Portfolio earned a total return of 2.27%
from the date of its inception on February 9, 1996 through December 31, 1996,
beating by a narrow margin the 2.16% return of the average mutual fund investing
in intermediate term government securities, as measured by the Lipper Government
Intermediate Bond Index during the period.
The bond market rally of 1995 stalled in early 1996 as signs of a growing
U. S. economy emerged. In fact, during the first six months of 1996, the
Portfolio realized negative returns due to a sharp rise in interest rates. Gains
in consumption, housing, business, investment and net exports combined to
accelerate the pace of economic growth and push interest rates higher.
Typically, as interest rates rise, the prices of most bonds decline.
Even a fourth quarter rally in the bond market could not push total
returns, comprised of the income generated by bonds and the increase in their
market value, beyond generally mediocre levels for the period. Most bond funds
failed to earn total returns equivalent to their income yields during the
period.
At the close of the period on December 31, 1996, the Portfolio had
allocated its investments in fixed income securities across the following bond
market sectors: 46% U.S. Treasury securities, 27% mortgage-backed securities;
16% U.S. Government Agency Obligations, 4% Corporate Notes and Bonds, and 7%
Cash Equivalents.
As the Portfolio moves into 1997, the outlook for mortgage-backed
securities appears attractive as higher interest rates have reduced the
incentive for homeowners to refinance their mortgages. Barring a significant
rally, mortgages should continue to perform well in the months ahead. These
securities will continue to be a core holding for the Fund.
Opportunities are limited to achieve significant returns in the arena of
high quality corporate bonds. Current spreads between the prices for these
securities and their yield are at historically rich levels. The Portfolio's
assets can be better invested for greater incremental return elsewhere without
incurring a significantly different level of risk.
$10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION FEBRUARY 9, 1996
|
|
|
$10,227 * |
|
$10,216 X |
|
|
$10,000 ----------------------------------------------------------------
2/9/96 12/31/96
* SALOMON U.S. QUALITY BOND PORTFOLIO
X LIPPER GOVERNMENT INTERMEDIATE INDEX
THE CHART ABOVE ILLUSTRATES THE GROWTH IN VALUE OF A HYPOTHETICAL $10,000
INVESTMENT MADE IN THE SALOMON U.S. QUALITY BOND PORTFOLIO AND THE LIPPER
GOVERNMENT INTERMEDIATE INDEX ON FEBRUARY 9, 1996, THE INCEPTION DATE OF THE
PORTFOLIO. THE FIGURES FOR THE PORTFOLIO AND THE LIPPER GOVERNMENT INTERMEDIATE
INDEX INCLUDE REINVESTMENT OF DIVIDENDS.
STRONG INTERNATIONAL STOCK PORTFOLIO
INVESTMENT SUB-ADVISOR
Strong Capital Management, Inc.
ABOUT THE PORTFOLIO
Invests primarily in companies located outside of the United States that are
believed to have strong potential for capital growth.
PERFORMANCE
Net total return for the period February 9, 1996 through December 31, 1996
Strong International
Stock Portfolio 5.85%*
Morgan Stanley
EAFE Index 3.99%
Lipper International
Index 11.38%
THE MORGAN STANLEY EUROPE, ASIA, FAR EAST INDEX IS AN UNMANAGED INDEX OF
LEADING INTERNATIONAL STOCKS. RESULTS FOR THE INDEX DO NOT REFLECT THE EXPENSES
AND INVESTMENT MANAGEMENT FEES INCURRED BY THE PORTFOLIO.
THE LIPPER INTERNATIONAL FUND INDEX IS A NON-WEIGHTED INDEX OF 115 FUNDS THAT
INVEST ASSETS IN SECURITIES WHOSE PRIMARY MARKETS ARE OUTSIDE THE UNITED STATES.
RESULTS FOR THE INDEX DO NOT REFLECT THE EXPENSES AND INVESTMENT MANAGEMENT FEES
INCURRED BY THE PORTFOLIO.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND
PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES
WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE
NUMBERS ARE NET OF ALL PORTFOLIO OPERATING EXPENSES, BUT DO NOT REFLECT THE
DEDUCTION OF INSURANCE CHARGES.
* DURING THE PERIOD NOTED, THE INVESTMENT ADVISOR (LPIMC INSURANCE MARKETING
SERVICES) WAIVED A PORTION OF ITS MANAGEMENT FEE AND LONDON PACIFIC LIFE AND
ANNUITY COMPANY VOLUNTARILY AGREED TO REIMBURSE CERTAIN OPERATING EXPENSES OF
THE PORTFOLIO. IN THE ABSENCE OF THE WAIVER AND EXPENSE REIMBURSEMENT, TOTAL
RETURN WOULD HAVE BEEN LOWER.
The Strong International Stock Portfolio earned a total return of 5.85%
from the date of its inception on February 9, 1996 through December 31, 1996,
surpassing the total return during the same period for the Morgan Stanley
Capital International Europe, Asia and Far East Index which was 3.99%. Lipper
Analytical Services set the total return for the average mutual fund investing
in foreign stocks at 11.38% during the same period.
During the fourth quarter of 1996, international markets continued to make
little progress and on the whole continued to lag a still strong U.S. equity
market. In general, Europe continued to perform satisfactorily, driven not so
much by economic strength as by the continued move toward restructuring,
improved shareholder return and better corporate profitability.
Unfortunately the Portfolio's gains in Europe were partially offset by
weakness in Asia, where the Portfolio maintained a larger exposure. Solid gains
in Hong Kong, Indonesia and New Zealand were more than offset by declines in
Japan and Thailand. Slower economic and export growth, overheating economies,
over capacity and decreased competitiveness are some of the problems that have
variously affected several Asian countries.
The widespread recovery in international markets has yet to materialize as
the Portfolio's manager has anticipated. Strength has been evident, but only
inconsistently. Nevertheless, valuations in several markets now seem
unreasonably low, the manager believes, both relative to their history and to
the U.S. stock market. The manager expects many of these undervaluations to
begin to catch up to Wall Street valuation levels in the year ahead.
While the positive restructuring story in Europe will no doubt continue,
the manager believes in particular that strength should return during the year
to come in some Asian markets, whose weaknesses have been exaggerated. In
addition, a number of emerging markets in Eastern Europe, Africa and Latin
America should also regain strength as investors rediscover the value of
accessing higher growth rate potentials that are available in the developed
world.
$10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION FEBRUARY 9, 1996
|
$11,380 X |
|
$10,585 * |
|
$10,399 # |
|
|
$10,000 ----------------------------------------------------------------
2/9/96 12/31/96
* STRONG INTERNATIONAL PORTFOLIO
# MORGAN STANLEY EAFE INDEX
X LIPPER INTERNATIONAL INDEX
THE CHART ABOVE ILLUSTRATES THE GROWTH IN VALUE OF A HYPOTHETICAL $10,000
INVESTMENT MADE IN THE STRONG INTERNATIONAL STOCK PORTFOLIO, THE MORGAN STANLEY
EAFE INDEX, AND THE LIPPER INTERNATIONAL INDEX ON FEBRUARY 9, 1996, THE
INCEPTION DATE OF THE PORTFOLIO. THE FIGURES FOR THE PORTFOLIO, THE MORGAN
STANLEY EAFE INDEX, AND THE LIPPER INTERNATIONAL INDEX INCLUDE REINVESTMENT OF
DIVIDENDS
STRONG GROWTH PORTFOLIO
INVESTMENT SUB-ADVISOR
Strong Capital Management, Inc.
ABOUT THE PORTFOLIO
Invests in equity securities that are believed to have above average capital
growth potential.
PERFORMANCE
Net total return for the period February 9, 1996 through December 31, 1996
Strong Growth Portfolio 20.27%
Russell 2000 Small
Company Index 14.55%
S&P 500 Index 15.14%
THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX ("S&P 500 INDEX") IS AN
UNMANAGED INDEX OF 500 LEADING STOCKS. RESULTS FOR THE S&P 500 INDEX DO NOT
REFLECT THE EXPENSES AND INVESTMENT MANAGEMENT FEES INCURRED BY THE PORTFOLIO.
THE RUSSELL 2000 SMALL COMPANY INDEX IS AN UNMANAGED INDEX OF 2000 SMALL COMPANY
STOCKS. RESULTS FOR THE INDEX DO NOT REFLECT THE EXPENSES AND INVESTMENT
MANAGEMENT FEES INCURRED BY THE PORTFOLIO.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND
PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES
WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE
NUMBERS ARE NET OF ALL PORTFOLIO OPERATING EXPENSES, BUT DO NOT REFLECT THE
DEDUCTION OF INSURANCE CHARGES.
* DURING THE PERIOD NOTED, THE INVESTMENT ADVISOR (LPIMC INSURANCE MARKETING
SERVICES) WAIVED A PORTION OF ITS MANAGEMENT FEE AND LONDON PACIFIC LIFE AND
ANNUITY COMPANY VOLUNTARILY AGREED TO REIMBURSE CERTAIN OPERATING EXPENSES OF
THE PORTFOLIO. IN THE ABSENCE OF THE WAIVER AND EXPENSE REIMBURSEMENT, TOTAL
RETURN WOULD HAVE BEEN LOWER.
The Strong Growth Portfolio earned a total return of 20.27% from the date
of its inception on February 9, 1996 through December 31, 1996. The Portfolio's
performance compared well against the 14.55% return earned by the Russell 2000
Index, and the 15.14% return generated by the Standard & Poor's 500 Composite
Stock Index (S&P 500 Index) during the same period.
During the fourth quarter of 1996, the large-capitalization U. S. equity
market continued to significantly outperform the broader market. Both non-U.S.
investors and domestic index fund purchases continued to push prices of many
large, highly liquid companies to approximately two times their growth rates.
Within the U. S. many small- and medium-sized companies are selling at a more
reasonable one times their growth rates. For this reason, the Portfolio
continues to overweight high quality medium- and small-cap growth companies
relative to the popular large capitalization indexes such as the S&P 500 Index.
During the fourth quarter of 1996, the Portfolio's overall risk was lowered
by adding shares of more large-cap stocks and those with lower price-earnings
ratios, as well as by trimming higher-multiple issues.
While the long-term outlook for technology companies remains favorable in
the manager's view, selected shares were sold from the Portfolio's holdings in
this sector. Also, the manager sold several positions in commercial services
companies and in consumer oriented stocks, particularly retailers. The outlook
in this sector may be somewhat uncertain, the manager believes, because consumer
credit is reaching record levels.
The Portfolio added select investments in the financial services sector as
well as other interest-sensitive businesses, in response to interest rate
declines during the fourth quarter. In addition, the Portfolio increased its
commitment to oil services stocks in light of the accelerating demand for these
companies' services.
The manager's outlook for the coming months is somewhat cautious. It is
likely that the relative disparity between the valuations of small- and
mid-sized companies compared to those of larger companies will tighten as
investors take advantage of the disequilibrium across size segments of the
markets. High valuations and the likelihood of three consecutive years of double
digit returns, an historically unusual occurrence, may signal the market is
poised for a rest. Continued growth in corporate earnings and low interest rates
will be essential to keep this bull market running in the short-term. In this
environment, the manager expects to focus on adding to the Portfolio quality
companies with sustainable earnings growth and attractive valuations.
$10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION FEBRUARY 9, 1996
|
$12,027 * |
|
$11,514 X |
|
$11,455 # |
|
|
$10,000 ----------------------------------------------------------------
2/9/96 12/31/96
* STRONG GROWTH PORTFOLIO
# RUSSELL 2000 SMALL COMPANY INDEX
X S&P 500
THE CHART ABOVE ILLUSTRATES THE GROWTH IN VALUE OF A HYPOTHETICAL $10,000
INVESTMENT MADE IN THE STRONG GROWTH PORTFOLIO, THE RUSSELL 2000 SMALL COMPANY
INDEX, AND THE S&P 500 INDEX ON FEBRUARY 9, 1996, THE INCEPTION DATE OF THE
PORTFOLIO. THE FIGURES FOR THE PORTFOLIO, THE RUSSELL 2000 SMALL COMPANY INDEX,
AND THE S&P 500 INDEX INCLUDE REINVESTMENT OF DIVIDENDS.
BERKELEY SMALLER COMPANIES PORTFOLIO
INVESTMENT SUB-ADVISOR
Berkeley Capital Management
ABOUT THE PORTFOLIO
Invests in securities of companies that typically have market capitalization of
less than $1 billion that are expected to provide long-term capital
appreciation.
PERFORMANCE
Net total return for the period February 9, 1996 through December 31, 1996
Berkeley Smaller
Companies Portfolio 2.42%
Russell 2000 Small
Company Index 14.55%
S&P 500 Index 15.14%
THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX ("S&P 500 INDEX") IS AN
UNMANAGED INDEX OF 500 LEADING STOCKS. RESULTS FOR THE S&P 500 INDEX DO NOT
REFLECT THE EXPENSES AND INVESTMENT MANAGEMENT FEES INCURRED BY THE PORTFOLIO.
THE RUSSELL 2000 SMALL COMPANY INDEX IS AN UNMANAGED INDEX OF 2000 SMALL COMPANY
STOCKS. RESULTS FOR THE INDEX DO NOT REFLECT THE EXPENSES AND INVESTMENT
MANAGEMENT FEES INCURRED BY THE PORTFOLIO.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND
PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES
WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE
NUMBERS ARE NET OF ALL PORTFOLIO OPERATING EXPENSES, BUT DO NOT REFLECT THE
DEDUCTION OF INSURANCE CHARGES.
* DURING THE PERIOD NOTED, THE INVESTMENT ADVISOR (LPIMC INSURANCE MARKETING
SERVICES) WAIVED A PORTION OF ITS MANAGEMENT FEE AND LONDON PACIFIC LIFE AND
ANNUITY COMPANY VOLUNTARILY AGREED TO REIMBURSE CERTAIN OPERATING EXPENSES OF
THE PORTFOLIO. IN THE ABSENCE OF THE WAIVER AND EXPENSE REIMBURSEMENT, TOTAL
RETURN WOULD HAVE BEEN LOWER.
The Berkeley Smaller Companies Portfolio earned a total return of 2.42%
from the date of its inception on February 9, 1996 through December 31, 1996.
The Portfolio's return significantly trailed the returns of its two benchmark
indexes: the Russell 2000 Index at 14.55% and the Standard & Poor's 500
Composite Stock Index (S&P 500 Index) at 15.14%
It is interesting to note that while returns for the U.S. equity market in
1996 were strong, they also were fairly narrowly concentrated. For example, the
NASDAQ Composite's return was 20.30% for the year. However, for nearly half of
the 5,400 publicly traded NASDAQ stocks with market valuations of over $10
million but under $1 billion, the average total return was -30.00% for the year.
Close to one-third of the NASDAQ's total return could be attributed to three
companies: Microsoft, Intel and Cisco Systems. A small number of large companies
fueled strong gains for the broader equity market as investors flocked to
larger, more growth oriented companies. Investors' flight to quality, inspired
by an overall concern for the duration of the bull market, disrupted the normal
valuation premium that typically attaches to small, aggressive growth companies.
Further, the Portfolio's performance lagged due to selected Portfolio
holdings as well. For example, the Portfolio's 10% position in retail stocks
hurt performance. Fundamental performance of retailers owned by the Portfolio
was generally quite good. However, the securities had been purchased at
relatively high prices after a first quarter rally in the share prices of
retailers, under the assumption that positive wage and consumer confidence
trends would continue to benefit share prices. While this proved correct in
large part, stock performance did not follow. In the fourth quarter, when
Christmas sales were unexceptional, already weak stocks exhibited even weaker
performance relative to the market.
On a positive note, the Portfolio's mid-1996 reduction of healthcare
holdings proved beneficial. The manager believed that new efforts to reform
healthcare were likely with the beginning of a new presidential term in 1997 and
share prices would suffer as a result. The decision was a good one as healthcare
stocks were one of the worst performing sectors of the S&P 500 Index during the
year. The Portfolio's shift out of the healthcare sector was accompanied by the
establishment of initial positions in the business services sector during the
summer. The Portfolio entered the sector at attractive valuation levels and
added to its total position as the year progressed. Opportunity in the business
services sector is being driven by the accelerating level of outsourcing
occurring throughout the economy, resulting in new revenue growth opportunities
for outsourcers as well as improving margins. At December 31, 1996, the
Portfolio invested 15% of assets in the business services sector.
Going forward, the Portfolio plans to maintain investment initiatives in
energy and technology. The energy sector is undergoing a cyclical upturn in
demand. which should result in positive trends for this normally slow-growth
business. Technology companies continue to improve demand for their products by
positively impacting the economics of their customers' businesses. At December
31, 1996, the Portfolio invested 8% of its assets in semiconductor stocks, 8% in
local area networking and wide area networking stocks, 11% in communications
stocks and 23% in software stocks.
$10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION FEBRUARY 9, 1996
|
$11,514 X |
|
$11,455 # |
|
$10,242 * |
|
|
$10,000 ----------------------------------------------------------------
2/9/96 12/31/96
* BERKELEY SMALLER COMPANIES PORTFOLIO
# RUSSELL 2000 SMALL COMPANY INDEX
X S&P 500
THE CHART ABOVE ILLUSTRATES THE GROWTH IN VALUE OF A HYPOTHETICAL $10,000
INVESTMENT MADE IN THE BERKELEY SMALLER COMPANIES PORTFOLIO, THE RUSSELL 2000
SMALL COMPANY INDEX, AND THE S&P 500 INDEX ON FEBRUARY 9, 1996, THE INCEPTION
DATE OF THE PORTFOLIO. THE FIGURES FOR THE PORTFOLIO, THE RUSSELL 2000 SMALL
COMPANY INDEX, AND THE S&P 500 INDEX INCLUDE REINVESTMENT OF DIVIDENDS.
LEXINGTON CORPORATE LEADERS PORTFOLIO
INVESTMENT SUB-ADVISOR
Lexington Management Corporation
ABOUT THE PORTFOLIO
Invests in large well-established companies believed to have long-term potential
for strong capital growth and earnings.
PERFORMANCE
Net total return for the period February 9, 1996 through December 31, 1996
Lexington Corporate
Leaders Portfolio 12.84%
S&P 500 Index 15.14%
Lipper Growth &
Income Index 14.14%
THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX ("S&P 500 INDEX") IS AN
UNMANAGED INDEX OF 500 LEADING STOCKS. RESULTS FOR THE S&P 500 INDEX DO NOT
REFLECT THE EXPENSES AND INVESTMENT MANAGEMENT FEES INCURRED BY THE PORTFOLIO.
THE LIPPER GROWTH & INCOME INDEX IS A NON-WEIGHTED INDEX OF 139 FUNDS INVESTING
IN STOCKS AND CORPORATE AND GOVERNMENT BONDS. RESULTS FOR THE INDEX DO NOT
REFLECT THE EXPENSES AND INVESTMENT MANAGEMENT FEES INCURRED BY THE PORTFOLIO.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND
PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES
WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE
NUMBERS ARE NET OF ALL PORTFOLIO OPERATING EXPENSES, BUT DO NOT REFLECT THE
DEDUCTION OF INSURANCE CHARGES.
* DURING THE PERIOD NOTED, THE INVESTMENT ADVISOR (LPIMC INSURANCE MARKETING
SERVICES) WAIVED A PORTION OF ITS MANAGEMENT FEE AND LONDON PACIFIC LIFE AND
ANNUITY COMPANY VOLUNTARILY AGREED TO REIMBURSE CERTAIN OPERATING EXPENSES OF
THE PORTFOLIO. IN THE ABSENCE OF THE WAIVER AND EXPENSE REIMBURSEMENT, TOTAL
RETURN WOULD HAVE BEEN LOWER.
The Lexington Corporate Leaders Portfolio earned a total return of 12.84%
from the date of its inception on February 9, 1996 through December 31, 1996,
trailing the 15.14% return earned by the Standard & Poor's 500 Composite Stock
Index (S&P 500 Index) and the 14.14% return earned by the average growth and
income mutual fund tracked by Lipper Analytical Services during the period.
Throughout the year, the Portfolio benefited from the continued strength in
blue chip and multinational companies. The oil sector which lagged for most of
1996 gained momentum late in the fourth quarter and contributed to the
Portfolio's performance.
The positive economic factors that serve as a backdrop for the financial
markets have not changed materially over the past year. Key positive factors
like moderate economic growth, low inflation, a benign interest rate
environment, positive earnings growth and a favorable supply/demand dynamic for
stocks may have varied considerably during the year, contributing to some bond
market volatility, but by year-end interest rates were 60 basis points higher
and the S&P 500 Index had a total return of 23%, fueled partly by strong cash
flows into equity mutual funds and, to a lesser extent, favorable earnings.
As 1997 begins, the U.S. economy appears to be on a continued moderate
growth curve, inflation has yet to show up in the commonly watched statistics,
earnings should be able to grow in the 7% to 10% range, and cash flows into
equity mutual funds appear strong. Much like last year the manager expects that
changes in the perceptions of these issues will cause some volatility in the
markets, but at the end of the day, the scenario should result in a bond market
that does not move significantly in either direction and a stock market that can
generate a total return of between 8% and 12%.
Although the differences between the current environment and that of early
1996 may be few, they can be significant.
1) Stock valuations are less attractive. The price-earnings multiple
for the unmanaged S&P 500 Index entering 1996 was 15.5 times estimated earnings
and, currently stands at 17.5 times 1997 estimated earnings. At current interest
rate and inflation levels, that valuation level does not appear excessive,
however, there is less margin for error.
2) While reported inflation remains benign, pressures are building.
Wages have been rising for some time with corporations able to offset these
increases with increased productivity and aggressive control of benefit costs.
As the economic expansion matures, these controls become more difficult to
sustain. Additionally, energy and food costs have been rising and although the
markets have so far ignored them, further upward pressure could force the
markets to pay attention.
3) Estimates of only moderate earnings growth do not permit much room
for disappointment which can come from several directions: the previously
discussed wage pressures, strong dollar, higher energy costs and less than
expected demand either domestically or from overseas.
Although market risks have increased, the manager believes that the U.S.
economy will remain strong and investors in the Portfolio should benefit from
continued economic growth.
$10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION FEBRUARY 9, 1996
|
$11,514 # |
|
$11,414 * |
|
$11,284 X |
|
|
$10,000 ----------------------------------------------------------------
2/9/96 12/31/96
* LEXINGTON CORPORATE LEADERS PORTFOLIO
# S&P 500
X LIPPER GROWTH & INCOME INDEX
THE CHART ABOVE ILLUSTRATES THE GROWTH IN VALUE OF A HYPOTHETICAL $10,000
INVESTMENT MADE IN THE BERKELEY SMALLER COMPANIES PORTFOLIO, THE RUSSELL 2000
SMALL COMPANY INDEX, AND THE S&P 500 INDEX ON FEBRUARY 9, 1996, THE INCEPTION
DATE OF THE PORTFOLIO. THE FIGURES FOR THE PORTFOLIO, THE RUSSELL 2000 SMALL
COMPANY INDEX, AND THE S&P 500 INDEX INCLUDE REINVESTMENT OF DIVIDENDS.
<TABLE>
<CAPTION>
LPT VARIABLE INSURANCE SERIES TRUST
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<S> <C> <C> <C> <C> <C>
MFS TOTAL SALOMON U.S. SALOMON MONEY STRONG
MAS VALUE RETURN QUALITY BOND MARKET INTERNATIONAL STOCK
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------ ------------- --------------------
ASSETS
Investments at value, see accompanying
schedules $1,201,185 $1,358,282 $1,432,344 $1,102,547 $1,211,266
Repurchase agreements at cost and value 238,000 283,000 181,000 239,000 0
Cash 622 644 327 417 7,663
Foreign currency at value 0 157 0 0 7,939
Dividends and/or interest receivable 1,807 12,839 19,904 48 1,278
Receivable for investments securities 0 0 0 0 0
sold
Receivable for Trust shares sold 0 51,207 0 0 12,517
Expense reimbursements receivable
14,133 13,105 12,606 13,915 13,123
---------- ----------- --------- ---------- -------------------
TOTAL ASSETS $1,455,747 $1,719,234 $1,646,181 $1,355,927 $1,253,786
Investments at cost $1,026,427 $1,260,663 $1,426,036 $1,102,547 $1,162,642
Foreign currency at cost $0 $168 $0 $0 $7,856
LIABILITIES
Payable for investment securities $14,564 $119,721 $74,219 $0 $0
purchased
Payable for Trust shares redeemed 0 49,500 0 158,793 12,100
Custodian fees payable 2,900 4,203 2,400 2,149 3,574
Advisory fees payable 1,016 935 731 416 750
Accrued legal and audit fees 13,003 13,003 13,003 13,003 13,003
Accrued expenses and other liabilities 3,201 3,197 3,280 3,179 3,190
---------- ---------- ------------ ---------- -----------------
3,190
TOTAL LIABILITIES 34,684 190,559 93,633 177,540 32,617
NET ASSETS $1,421,063 $1,528,675 $1,552,548 $1,178,387 $1,221,169
========== ========== ========== ========== ================
COMPONENTS OF NET ASSETS:
Paid-in capital $1,229,226 $1,433,860 $1,568,259 $1,178,387 $1,165,571
Undistributed net investment
income/(loss) 0 166 6 0 0
Accumulated net realized
gain/(loss) on
securities and foreign 17,079 (2,959) (22,025) 0 6,891
currency
transactions
Net unrealized appreciation/
(depreciation) of securities
and foreign currency
transactions 174,758 97,608 6,308 0 48,707
NET ASSETS $1,421,063 $1,528,675 $1,552,548 $1,178,387 $1,221,169
========== ========== ========== ========== ==========
SHARES OUTSTANDING (UNLIMITED
AUTHORIZATION, $.01 PAR VALUE)
119,862 140,275 158,255 1,178,387 115,378
========== ========== ========== ========== ==========
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE, PER SHARE (NET ASSETS/
SHARES OUTSTANDING) $11.86 $10.90 $9.81 $1.00 $10.58
========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
BERKELEY SMALLER LEXINGTON
STRONG GROWTH COMPANIES CORPORATE LEADERS
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ---------------- -----------------
ASSETS
Investments at value, see accompanying
schedules $1,345,844 $1,170,474 $1,305,536
Repurchase agreements at cost and value 254,000 325,000 0
Cash 566 15,068 21,703
Foreign currency at value 0 0 0
Dividends and/or interest receivable 731 24 2,338
Receivable for investments securities 61,565 7,166 0
sold
Receivable for Trust shares sold 50,069 0 0
Expense reimbursements receivable
14,660 11,423 13,521
------------ --------------- -----------------
TOTAL ASSETS $1,727,435 $1,529,155 $1,343,098
Investments at cost $1,206,209 $1,202,494 $1,156,549
Foreign currency at cost $0 $0 $0
LIABILITIES
Payable for investment securities $114,952 $66,775 $0
purchased
Payable for Trust shares redeemed 48,400 0 0
Custodian fees payable 3,970 3,705 2,783
Advisory fees payable 955 1,249 712
Accrued legal and audit fees 13,003 13,003 13,003
Accrued expenses and other liabilities 3,192 3,179 3,179
---------- -------------- ------------------
TOTAL LIABILITIES 214,472 87,911 19,677
NET ASSETS $1,512,963 $1,441,244 $1,323,421
========== ============== ==================
COMPONENTS OF NET ASSETS:
Paid-in capital $1,337,112 $1,738,580 $1,174,334
Undistributed net investment
income/(loss) 93 20 102
Accumulated net realized
gain/(loss) on
securities and foreign 36,123 (265,336) (2)
currency
transactions
Net unrealized appreciation/
(depreciation) of securities
and foreign currency
transactions 139,635 (32,020) 148,987
NET ASSETS $1,5124963 $1,441,244 $1,323,421
========== ============= ===================
SHARES OUTSTANDING (UNLIMITED
AUTHORIZATION, $.01 PAR VALUE)
126,979 167,884 115,649
========== ============= ===================
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE, PER SHARE (NET ASSETS/
SHARES OUTSTANDING) $11.92 $8.58 $11.44
========== ============= ===================
</TABLE>
<TABLE>
<CAPTION>
LPT VARIABLE INSURANCE SERIES TRUST
STATEMENTS OF OPERATIONS
FOR THE PERIOD JANUARY 31, 1996 (COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1996
<S> <C> <C> <C> <C> <C>
MFS TOTAL SALOMON U. S. STRONG
MAS VALUE RETURN QUALITY BOND SALOMON MONEY INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO MARKET PORTFOLIO STOCK PORTFOLIO
---------------- ---------------- ---------------- ----------------- ---------------
INVESTMENT INCOME
Income:
Dividends $20,847 $16,418 $0 $0 $14,718
Foreign withholding tax on
dividend income (127) (199) 0 0 (1,260)
Interest 2,804 24,063 75,535 51,088 4,235
----- ------ ------ ------ -----
TOTAL INVESTMENT INCOME 23,524 40,282 75,535 51,088 17,693
------ ------ ------ ------ ------
EXPENSES:
Investment advisory fees 9,048 7,846 6,497 4,340 7,681
Administration fees 18,511 18,511 18,511 18,511 18,511
Custodian fees 25,778 31,006 18,723 16,671 28,335
Printing expenses 1,284 1,284 1,284 1,284 1,284
Legal and audit fees 15,495 15,495 15,495 15,495 15,495
Insurance expense 3,854 3,854 3,854 3,854 3,854
Trustees' fees and expenses 3,185 3,185 3,185 3,185 3,185
Other expense 1,000 1,000 1,000 1,000 1,000
----- ----- ----- ----- -----
Expenses before waiver of
fees and expense
reimbursement 78,155 82,181 68,549 64,340 79,345
Fees waived by investment
advisor (Note 3) (2,907) (3,879) (2,954) (2,321) (1,351)
Expense reimbursement
(Note 3) (62,226) (65,124) (54,144) (53,653) (63,100)
-------- -------- -------- -------- --------
TOTAL EXPENSES 13,022 13,178 11,451 8,366 14,894
------ ------ ------ ----- ------
NET INVESTMENT INCOME 10,502 27,104 64,084 42,722 2,799
------ ------ ------ ------ -----
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss) on securities
and foreign currency transactions 49,011 (2,959) (22,025) 0 10,921
Net change in unrealized
appreciation/(depreciation) of
securities and foreign currency
transactions 174,758 97,608 6,308 0 48,707
------- ------ ----- - ------
NET GAIN (LOSS) ON INVESTMENTS 223,769 94,649 (15,717) 0 59,628
------- ------ -------- - ------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $234,271 $121,753 $48,367 $42,722 $62,427
======== ======== ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
LPT VARIABLE INSURANCE SERIES TRUST
STATEMENTS OF OPERATIONS
FOR THE PERIOD JANUARY 31, 1996 (COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1996
<S> <C> <C> <C>
LEXINGTON
BERKELEY SMALLER CORPORATE
STRONG GROWTH COMPANIES LEADERS
PORTFOLIO PORTFOLIO PORTFOLIO
---------------- ----------------- ---------------
INVESTMENT INCOME
Income:
Dividends $37,460 $261,566 $25,805
Foreign withholding tax on
dividend income (28) 0 (338)
Interest 3,397 8,880 1,123
----- ----- -----
TOTAL INVESTMENT INCOME 40,829 270,446 26,590
------ ------- ------
EXPENSES:
Investment advisory fees 8,705 12,480 6,503
Administration fees 18,511 18,511 18,511
Custodian fees 30,363 31,784 18,848
Printing expenses 1,284 1,284 1,284
Legal and audit fees 15,495 15,495 15,495
Insurance expense 3,854 3,854 3,854
Trustees' fees and expenses 3,185 3,185 3,185
Other expense 1,000 1,000 1,000
----- ----- -----
Expenses before waiver of
fees and expense
reimbursement 82,397 87,593 68,680
Fees waived by investment
advisor (Note 3) (1,476) (5,873) (1,290)
Expense reimbursement
(Note 3) (66,268) (64,717) (54,801)
-------- -------- --------
TOTAL EXPENSES 14,653 17,003 12,589
------ ------ ------
NET INVESTMENT INCOME 26,176 253,443 14,001
------ ------- ------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss) on securities
and foreign currency transactions 106,629 (265,336) (2)
Net change in unrealized
appreciation/(depreciation) of
securities and foreign currency
transactions 139,635 (32,020) 148,987
------- -------- -------
NET GAIN (LOSS) ON INVESTMENTS 246,264 (297,356) 148,985
------- --------- -------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $272,440 $(43,913) $162,986
======== ========= ========
</TABLE>
<TABLE>
<CAPTION>
LPT VARIABLE INSURANCE SERIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD JANUARY 31, 1996 (COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1996
<S> <C> <C> <C> <C> <C>
MFS TOTAL SALOMON U. S. STRONG
MAS VALUE RETURN QUALITY BOND SALOMON MONEY INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO MARKET PORTFOLIO STOCK PORTFOLIO
---------------- ---------------- ---------------- ----------------- ---------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income $10,502 $27,104 64,084 42,722 2,799
Net realized gain/(loss) on
securities and foreign currency
transactions 49,011 (2,959) (22,025) 0 10,921
Net unrealized appreciation
(depreciation)of securities and
foreign currency transactions during
the period 174,758 97,608 6,308 0 48,707
Net increase (decrease) in net assets
resulting from operations 234,271 121,753 48,367 42,722 62,427
------- ------- ------ ------ ------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (10,502) (26,938) (64,078) (42,722) (576)
Net realized gain on investments (31,932) 0 0 0 (6,253)
-------- - - - -------
Total distributions (42,434) (26,938) (64,078) (42,722) (6,829)
SHARE TRANSACTIONS
Net proceeds from sale of shares 1,387,694 1,661,251 1,674,647 3,995,273 1,327,854
Issued to shareholders in 42,434 26,938 64,078 42,722 6,829
reinvestment of dividends
Cost of shares repurchased (200,902) (254,329) (170,466) (2,859,608) (169,112)
--------- --------- --------- ----------- ---------
Net increase from share 1,229,226 1,433,860 1,568,259 1,178,387 1,165,571
transactions (Note 5) --------- --------- --------- --------- ---------
TOTAL INCREASE IN NET ASSETS 1,421,063 1,528,675 1,552,548 1,178,387 1,221,169
--------- --------- --------- --------- ---------
NET ASSETS AT BEGINNING OF PERIOD 0 0 0 0 0
--------- --------- --------- --------- ---------
NET ASSETS AT END OF PERIOD $1,421,063 $1,528,675 $1,552,548 $1,178,387 $1,221,169
========== ========== ========== ========== ==========
Accumulated undistributed net
investment income (loss) included
in net assets at end of period $0 $166 $6 $0 $0
========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
LEXINGTON
BERKELEY SMALLER CORPORATE
STRONG GROWTH COMPANIES LEADERS
PORTFOLIO PORTFOLIO PORTFOLIO
---------------- ----------------- ---------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income $26,176 $253,443 14,001
Net realized gain/(loss) on
securities and foreign currency
transactions 10,921 106,629 (2)
Net unrealized appreciation
(depreciation)of securities and
foreign currency transactions during
the period 139,635 (32,020) 148,987
Net increase (decrease) in net assets
resulting from operations 272,440 (43,913) 162,986
------- -------- -------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (26,083) (253,423) (13,899)
Net realized gain on investments (70,506) 0 0
-------- - -
Total distributions (96,589) (253,423) (13,899)
SHARE TRANSACTIONS
Net proceeds from sale of shares 1,481,628 2,060,025 1,250,539
Issued to shareholders in 96,589 253,423 13,929
reinvestment of dividends
Cost of shares repurchased (241,105) (574,868) (90,134)
--------- --------- ---------
Net increase from share 1,337,112 1,738,580 1,174,334
transactions (Note 5) --------- --------- ----------
TOTAL INCREASE IN NET ASSETS 1,512,963 1,441,244 1,323,421
--------- --------- ---------
NET ASSETS AT BEGINNING OF PERIOD 0 0 0
--------- --------- ---------
NET ASSETS AT END OF PERIOD $1,512,963 $1,441,244 $1,323,421
========== ========== ==========
Accumulated undistributed net
investment income (loss) included
in net assets at end of period $93 $20 $102
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
LPT VARIABLE INSURANCE SERIES TRUST
FINANCIAL HIGHLIGHTS
FOR THE PERIOD JANUARY 31, 1996 (COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1996
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<S> <C> <C> <C> <C> <C>
SALOMON U. S. STRONG
MAS VALUE MFS TOTAL QUALITY BOND SALOMON MONEY INTERNATIONAL
PORTFOLIO RETURN PORTFOLIO PORTFOLIO MARKET PORTFOLIO STOCK PORTFOLIO
------------- ----------------- ------------------- ----------------- ----------------
Net asset value, beginning of period $10.00 $10.00 $10.00 $1.00 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.10 0.25 0.49 0.04 0.03
Net realized and unrealized gain
(loss) on investments 2.13 0.85 (0.25) 0.00 0.61
---- ---- ------ ---- ----
Total from investment operations 2.23 1.10 0.24 0.04 0.64
---- ---- ---- ---- ----
Dividends from net investment income (0.10) (0.20) (0.43) (0.04) (0.01)
Distributions from net realized (0.27) (0.00) (0.00) (0.00) (0.05)
capital gains ------ ------ ------ ------ ------
Total distributions (0.37) (0.20) (0.43) (0.04) (0.06)
------ ------ ------ ------ ------
Net asset value, end of period $11.86 $10.90 $9.81 $1.00 $10.58
====== ====== ===== ===== ======
TOTAL RETURN ++ 20.39% 9.81% 2.27% 3.93% 5.85%
====== ===== ===== ===== =====
RATIOS TO AVERAGE NET
ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $1,421 $1,529 $1,553 $1,178 $1,221
Ratio of operating expenses to
average net assets + 1.26% 1.26% 0.97% 0.87% 1.45%
Ratio of net investment income to
average net assets + 1.01% 2.59% 5.41% 4.43% 0.27%
Portfolio turnover rate 41.08% 53.91% 231.03% N/A 49.32%
Average commission rate per share +++ $0.0542 $0.0571 N/A N/A $0.0096
Ratio of operating expenses to
average net assets before waiver of fees
and expense reimbursements + 7.55% 7.84% 5.79% 6.67% 7.74%
Net investment income (loss) per share before waiver of fees and expense
reimbursements ($0.52) ($0.38) $0.05 ($0.01) ($0.58)
</TABLE>
<TABLE>
<CAPTION>
LPT VARIABLE INSURANCE SERIES TRUST
FINANCIAL HIGHLIGHTS
FOR THE PERIOD JANUARY 31, 1996 (COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1996
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<S> <C> <C> <C>
LEXINGTON
BERKELEY SMALLER CORPORATE
STRONG GROWTH COMPANIES LEADERS
PORTFOLIO PORTFOLIO PORTFOLIO
------------------ ------------------- ---------------
Net asset value, beginning of period $10.00 $10.00 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.25 2.10 0.14
Net realized and unrealized gain
(loss) on investments 2.49 (1.69) 1.42
---- ------ ----
Total from investment operations 2.74 0.41 1.56
---- ---- ----
LESS DISTRIBUTIONS:
Dividends from net investment income (0.22) (1.83) (0.12)
Distributions from net realized (0.60) (0.00) (0.00)
capital gains ------ ------ ------
Total distributions (0.82) (1.83) (0.12)
------ ------ ------
Net asset value, end of period $11.92 $8.58 $11.44
====== ===== ======
TOTAL RETURN ++ 20.27% 2.42% 12.84%
====== ===== ======
RATIOS TO AVERAGE NET
ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $1,513 $1,441 $1,323
Ratio of operating expenses to
average net assets + 1.26% 1.36% 1.26%
Ratio of net investment income to
average net assets + 2.25% 20.30% 1.40%
Portfolio turnover rate 422.67% 2242.85% 0.00%
Average commission rate per share +++ $0.0575 $0.0478 $0.0500
Ratio of operating expenses to
average net assets before waiver of fees
and expense reimbursements + 7.09% 7.02% 6.86%
Net investment income (loss) per
share before waiver of fees and expense
reimbursements ($0.39) $1.51 ($0.41)
<FN>
+ Annualized
++ Total return represents aggregate total return for the period February 9, 1996 (effective date) to
December 31, 1996. The total return would have been lower if certain fees had not been waived by the
investment advisor, and if certain expenses had not been reimbursed by London Pacific.
+++ Average commission rate paid per share on equity securities purchased and sold by the Portfolio. Amount
excludes mark-ups, mark-downs or spreads paid on shares traded.
</TABLE>
<TABLE>
<CAPTION>
THE LPT VARIABLE INSURANCE SERIES TRUST
MAS VALUE PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
<S> <C>
VALUE
SHARES (NOTE 2)
- ------ --------
COMMON STOCKS - 84.53%
FINANCIAL SERVICES - 18.86%
254 Allstate Corporation................................................... $14,700
250 American General Corporation........................................... 10,219
304 Bank of New York Company, Inc.......................................... 10,260
250 Capital One Financial Corporation...................................... 9,000
150 Chase Manhattan Corporation (New)...................................... 13,387
100 Chubb Corporation ..................................................... 5,375
132 Citicorp............................................................... 13,596
100 Crestar Financial Corporation.......................................... 7,437
193 Dean Witter Discover & Company......................................... 12,786
280 Everest Reinsurance Holdings........................................... 8,050
100 Federal Home Loan Mortgage Corporation................................. 11,012
300 Federal National Mortgage Association.................................. 11,175
200 First Chicago NBD Corporation.......................................... 10,750
100 First Union Corporation................................................ 7,400
462 Great Western Financial Corporation.................................... 13,398
155 ITT Hartford Group, Inc................................................ 10,462
134 Mellon Bank Corporation................................................ 9,514
340 Old Republic International Corporation................................. 9,095
350 Providian Corporation.................................................. 17,981
198 Reliastar Financial Corporation........................................ 11,434
123 Republic New York Corporation.......................................... 10,040
154 Salomon, Inc........................................................... 7,257
302 Signet Banking Corporation............................................. 9,286
100 St. Paul Companies, Inc................................................ 5,862
163 Standard Federal Bancorporation........................................ 9,271
115 Transatlantic Holdings, Inc............................................ 9,257
-----
268,004
-------
PRODUCER DURABLES - 12.12%
281 Case Corporation....................................................... 15,314
100 Caterpillar, Inc....................................................... 7,525
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
THE LPT VARIABLE INSURANCE SERIES TRUST
MAS VALUE PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
<S> <C>
VALUE
SHARES (Note 2)
- ------ --------
COMMON STOCKS - (CONTINUED)
PRODUCE DURABLES - (CONTINUED)
587 Cummins Engine, Inc.................................................... $27,002
300 Deere & Company........................................................ 12,187
535 Harnischfeger Industries, Inc.......................................... 25,747
423 Kennametal, Inc........................................................ 16,444
257 Parker-Hannifin Corporation............................................ 9,959
322 Tecumseh Products Company.............................................. 18,475
150 Textron, Inc........................................................... 14,137
700 Trinova Corporation.................................................... 25,462
------
172,252
-------
AUTOS & TRANSPORTATION - 9.88%
200 AMR Corporation +...................................................... 17,625
100 Burlington Northern Santa Fe........................................... 8,638
200 CSX Corporation........................................................ 8,450
200 Eaton Corporation...................................................... 13,950
745 Ford Motor Company..................................................... 23,747
450 General Motors Corporation............................................. 25,088
540 Goodyear Tire and Rubber............................................... 27,743
242 UAL Corporation +...................................................... 15,125
------
140,366
-------
TECHNOLOGY - 9.84%
350 Beckman Industries, Inc................................................ 13,431
233 Compaq Computer Corporation +.......................................... 17,300
202 International Business Machines........................................ 30,502
200 Raytheon Company....................................................... 9,625
612 Seagate Technology +................................................... 24,174
150 Standard Register...................................................... 4,875
571 Stratus Computer, Inc +................................................ 15,560
282 Tektronix, Inc......................................................... 14,452
200 TRW, Inc............................................................... 9,900
-----
139,819
-------
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
THE LPT VARIABLE INSURANCE SERIES TRUST
MAS VALUE PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
<S> <C>
VALUE
SHARES (NOTE 2)
- ------ --------
COMMON STOCKS - (CONTINUED)
MATERIALS AND PROCESSING - 9.22%
90 Bowater, Inc........................................................... $3,386
200 Cabot Corporation...................................................... 5,025
250 Cyprus Amax Materials Company.......................................... 5,844
103 Dow Chemical Company................................................... 8,073
200 DuPont (E.I.) DeNemours & Company...................................... 18,875
195 FMC Corporation +...................................................... 13,674
427 Great Lakes Chemical Corporation....................................... 19,962
300 Mallinckrodt Group, Inc................................................ 13,238
61 Potash Corporation of Saskatchewan..................................... 5,185
300 Premark International, Inc............................................. 6,675
306 Rhone Poulnec SA, ADR.................................................. 10,368
219 Rohm & Haas Company.................................................... 17,876
100 Westvaco Corporation................................................... 2,875
-----
131,056
-------
ENERGY - 6.78%
189 Amoco Corporation...................................................... 15,215
100 Atlantic Richfield Company............................................. 13,250
122 British Petroleum, PLC, ADR............................................ 17,248
400 Mapco, Inc............................................................. 13,600
188 Panenergy Corporation.................................................. 8,460
251 Repsol, S.A., ADR...................................................... 9,569
300 Ultramar Corporation................................................... 9,488
375 YPF, S.A., ADR......................................................... 9,469
-----
96,299
------
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
THE LPT VARIABLE INSURANCE SERIES TRUST
MAS VALUE PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
<S> <C>
VALUE
SHARES (NOTE 2)
- ------ --------
COMMON STOCKS - (CONTINUED)
CONSUMER STAPLES - 5.55%
472 Archer-Daniels-Midland Company......................................... $10,384
405 IBP, Inc............................................................... 9,821
251 Philip Morris Companies, Inc........................................... 28,269
250 RJR Nabisco Holdings Corporation....................................... 8,500
233 Tupperware Corporation................................................. 12,495
266 Universal Foods Corporation............................................ 9,377
-----
78,846
------
UTILITIES - 4.63%
400 Central Maine Power Company............................................ 4,650
172 Cinergy Corporation.................................................... 5,741
267 DTE Energy Company..................................................... 8,644
250 El Paso Natural Gas Company............................................ 12,625
307 Entergy Corporation.................................................... 8,519
253 General Public Utilities Corporation................................... 8,507
349 Peco Energy Company.................................................... 8,812
305 Unicom Corporation..................................................... 8,273
-----
65,771
------
DRUGS & HEALTH CARE - 2.88%
400 Bergen Brunswig Corporation, Class A................................... 11,400
374 Foundation Health Corporation +........................................ 11,875
300 Maxicare Health Plans, Inc. +.......................................... 6,675
200 Nellcor Puritan Bennett, Inc. +........................................ 4,375
300 Tenet Healthcare Corporation +......................................... 6,563
-----
40,888
------
CONSUMER DISCRETIONARY - 2.32%
329 Dillard Department Stores, Inc......................................... 10,158
150 Springs Industries, Inc., Class A...................................... 6,450
100 Talbots, Inc........................................................... 2,863
200 VF Corporation......................................................... 13,500
------
32,971
------
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
THE LPT VARIABLE INSURANCE SERIES TRUST
MAS VALUE PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
<S> <C>
VALUE
SHARES (NOTE 2)
- ------ --------
COMMON STOCKS - (CONTINUED)
COMMUNICATION - 2.00%
526 MCI Communications Corporation......................................... $17,194
282 Sprint Corporation..................................................... 11,245
------
28,439
------
BUSINESS SERVICES - 0.45%
428 Olsten Corporation..................................................... 6,474
-----
TOTAL COMMON STOCKS (COST $1,026,427) 1,201,185
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C>
SHORT-TERM OBLIGATIONS - 16.75%
$238,000 Repurchase Agreement with State Street
Bank and Trust Company, dated 12/31/96 at
2.0%, due 01/02/97, maturity value
$238,025
(collateralized by U.S. Treasury Note,
6.00%, due 05/31/98, par value $245,000;
market value $247,170) (Cost $238,000).......................... 238,000
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS (COST $1,264,427*)................. 101.28% 1,439,185
OTHER ASSETS AND LIABILITIES (NET)................... (1.28) (18,122)
-------- ----------
NET ASSETS........................................... 100.00% $1,421,063
======= ==========
<FN>
* Aggregate cost for Federal tax purposes (Note 4)
+ Non-income producing security
</TABLE>
---------------------------------------------------------------
GLOSSARY OF TERMS
ADR American Depository Receipt
---------------------------------------------------------------
See Notes to Financial Statements
<TABLE>
<CAPTION>
THE LPT VARIABLE INSURANCE SERIES TRUST
MFS TOTAL RETURN PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
<S> <C>
VALUE
SHARES (NOTE 2)
- ------ --------
COMMON STOCKS - 53.41%
FINANCIAL SERVICES - 11.36%
160 Allstate Corporation................................................... $9,260
160 American Express Company............................................... 9,040
100 Arden Reality, Inc. ................................................... 2,775
50 Associates First Capital Corporation, Class A.......................... 2,206
140 Bank of Boston Corporation............................................. 8,995
270 Bank of New York Company, Inc.......................................... 9,112
155 Chase Manhattan Corporation (New)...................................... 13,833
120 Chubb Corporation...................................................... 6,450
90 Cigna Corporation...................................................... 12,296
80 Crestar Financial Corporation.......................................... 5,950
70 Federal Home Loan Mortgage Corporation................................. 7,709
200 Fleet Financial Group, Inc............................................. 9,975
270 National City Corporation.............................................. 12,116
150 Nationsbank Corporation................................................ 14,662
50 Northern Trust Corporation............................................. 1,812
160 Norwest Corporation.................................................... 6,960
100 Salomon, Inc. +........................................................ 6,025
280 Southern National Corporation.......................................... 10,150
160 St. Paul Companies, Inc................................................ 9,380
150 Travelers Group, Inc. ................................................. 6,806
160 Torchmark.............................................................. 8,080
-----
173,592
-------
ENERGY - 8.59%
110 Amoco Corporation...................................................... 8,855
60 Atlantic Richfield Company............................................. 7,950
120 British Petroleum PLC, ADR............................................. 16,965
300 Enron Corporation...................................................... 7,200
100 Exxon Corporation...................................................... 9,800
80 Mobil Corporation...................................................... 9,780
340 Occidental Petroleum Company........................................... 7,947
220 Panenergy Corporation.................................................. 9,900
140 Repsol SA, ADR......................................................... 5,337
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
THE LPT VARIABLE INSURANCE SERIES TRUST
MFS TOTAL RETURN PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
<S> <C>
VALUE
SHARES (NOTE 2)
- ------ --------
COMMON STOCK - (CONTINUED)
ENERGY - (CONTINUED)
70 Royal Dutch Petroleum Company, NY Shares............................... $11,952
90 Schlumberger, Ltd...................................................... 8,989
30 Sun, Inc............................................................... 731
90 Texaco, Inc............................................................ 8,831
200 Union Pacific Resource Group, Inc. .................................... 5,850
470 USX Marathon Group..................................................... 11,221
------
131,308
-------
TECHNOLOGY - 4.78%
180 Allied Signal, Inc..................................................... 12,060
40 Analog Devices, Inc. +................................................. 1,355
160 Digital Equipment Corporation +........................................ 5,820
90 General Dynamics Corporation........................................... 6,345
70 Honeywell, Inc......................................................... 4,603
50 International Business Machines........................................ 7,550
80 Lockheed Martin Corporation............................................ 7,320
170 Raytheon Company....................................................... 8,181
300 United Technologies Corporation........................................ 19,800
------
73,034
------
MATERIALS AND PROCESSING - 4.56%
40 Air Products and Chemicals, Inc. ...................................... 2,765
110 Aluminum Company of America............................................ 7,012
50 Dow Chemical Company................................................... 3,919
100 DuPont (E.I.) DeNemours & Company...................................... 9,437
150 Freeport McMoran Copper & Gold, Class B................................ 4,481
310 B.F. Goodrich Company.................................................. 12,555
100 Nalco Chemical Company................................................. 3,702
100 Olin Corporation....................................................... 3,763
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
THE LPT VARIABLE INSURANCE SERIES TRUST
MFS TOTAL RETURN PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
<S> <C>
VALUE
SHARES (NOTE 2)
- ------ --------
COMMON STOCKS - (CONTINUED)
MATERIALS AND PROCESSING (CONTINUED)
20 Phelps Dodge Corporation............................................... $1,350
100 Praxair, Inc........................................................... 4,613
100 Rohm & Haas Company.................................................... 8,163
90 Weyerhaeuser Company................................................... 4,264
120 Witco Corporation...................................................... 3,660
-----
69,684
------
UTILITIES - 4.47%
100 Allegheny Power Systems, Inc........................................... 3,037
100 CMS Energy Corporation................................................. 3,362
200 Carolina Power & Light Company......................................... 7,300
230 Coastal Corporation.................................................... 11,241
100 Eastern Enterprises.................................................... 3,537
160 FPL Group, Inc......................................................... 7,360
80 Peco Energy Company.................................................... 2,020
200 Pinnacle West Capital Corporation...................................... 6,350
100 Portland General Corporation........................................... 4,200
100 Sonat, Inc............................................................. 5,150
100 Texas Utilities Company................................................ 4,075
200 UGI Corporation........................................................ 4,475
165 Williams Companies, Inc................................................ 6,187
-----
68,294
------
DRUGS & HEALTH CARE - 4.18%
140 American Home Products Corporation..................................... 8,208
120 Astra AB, ADR.......................................................... 5,880
100 Baxter International, Inc.............................................. 4,100
120 Columbia/HCA Healthcare Corporation.................................... 4,890
200 Lion Nathan, Ltd. (New Zealand)........................................ 479
110 Meditrust.............................................................. 4,400
190 Pharmacia & Upjohn, Inc. .............................................. 7,529
90 Rhone-Poulenc Rorer, Inc............................................... 7,031
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
THE LPT VARIABLE INSURANCE SERIES TRUST
MFS TOTAL RETURN PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
<S> <C>
VALUE
SHARES (NOTE 2)
- ------ --------
COMMON STOCKS - (CONTINUED)
DRUGS & HEALTH CARE - (CONTINUED)
70 St. Jude Medical, Inc. +............................................... $2,984
180 SmithKline Beecham, PLC, ADR........................................... 12,240
140 United Healthcare Corporation.......................................... 6,300
-----
64,041
------
CONSUMER STAPLES - 3.51%
100 American Brands, Inc................................................... 4,963
80 Colgate Palmolive Company.............................................. 7,380
100 Dimon, Inc............................................................. 2,313
110 General Mills, Inc..................................................... 6,971
130 McCormick & Company, Inc. ............................................. 3,063
110 Pepsico, Inc. ......................................................... 3,218
160 Phillip Morris Companies, Inc.......................................... 18,019
90 Rubbermaid, Inc........................................................ 2,048
210 Stanley Works.......................................................... 5,670
-----
53,645
------
PRODUCER DURABLES - 2.77%
140 Browning Ferris Industries, Inc... .................................... 3,675
100 Cooper Industries, Inc. ............................................... 4,213
230 Deere & Company........................................................ 9,344
160 General Electric Company............................................... 15,820
150 WMX Technologies, Inc. ................................................ 4,894
80 York International Corporation......................................... 4,470
-----
42,416
------
CONSUMER DISCRETIONARY - 2.60%
160 Eastman Kodak Company.................................................. 12,840
100 May Department Stores Company.......................................... 4,675
70 Rite Aid Corporation................................................... 2,783
170 Sears Roebuck & Company................................................ 7,841
120 VF Corporation......................................................... 8,100
150 Wal-Mart Stores, Inc................................................... 3,431
-----
39,670
------
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
THE LPT VARIABLE INSURANCE SERIES TRUST
MFS TOTAL RETURN PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
<S> <C>
VALUE
SHARES (NOTE 2)
- ------ --------
COMMON STOCKS - (CONTINUED)
COMMUNICATION - 2.41%
30 AT&T Corporation....................................................... $1,305
100 Ameritech Corporation.................................................. 6,063
170 BellSouth Corporation.................................................. 6,864
210 GTE Corporation........................................................ 9,555
320 MCI Communications Corporation......................................... 10,460
70 Telephone & Data Systems, Inc.......................................... 2,538
-----
36,785
------
AUTOS & TRANSPORTATION - 2.28%
100 Burlington Northern Santa Fe........................................... 8,638
70 CSX Corporation........................................................ 2,958
150 Dana Corporation....................................................... 4,894
220 Ford Motor Company..................................................... 7,013
40 General Motors Corporation............................................. 2,230
210 Illinois Central Corporation........................................... 6,720
110 Volvo Artiebolaget, ADR................................................ 2,393
-----
34,846
------
OTHER - 1.90%
100 Henkel KGAA (Germany).................................................. 5,023
200 Hospitality Properties Trust........................................... 5,800
11 Novartis AG (Switzerland).............................................. 12,209
110 Sherwin Williams Company............................................... 6,160
-----
29,192
------
TOTAL COMMON STOCKS (COST $725,872).................................... 816,507
=======
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
THE LPT VARIABLE INSURANCE SERIES TRUST
MFS TOTAL RETURN PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
<S> <C>
VALUE
SHARES (NOTE 2)
- ------ --------
PREFERRED STOCKS - 2.26%
50 American Radio Systems Corporation, Non-Voting, 144A................... $2,350
60 Case Corporation, Series A, Non-Voting................................. 7,965
100 Finova Financial Trust ............................................... 5,250
100 Host Marriott Financial Trust, 144A.................................... 5,363
80 Loral Space & Communications, 144A..................................... 4,550
50 Timet Capital Trust, 144A.............................................. 2,700
111 Unocal Corporation, Non-Voting......................................... 6,299
-----
TOTAL PREFERRED STOCKS (COST $31,550).................................. 34,477
------
PRINCIPAL
AMOUNT
TREASURY OBLIGATIONS - 32.99%
$ 80,000 United States Treasury Bond, 6.75%
Due 08/15/2026.................................................. 80,600
80,000 United States Treasury Note, 6.875%
Due 05/15/2006.................................................. 82,488
339,000 United States Treasury Note, 6.375%
Due 08/15/2002.................................................. 341,224
-------
TOTAL TREASURY OBLIGATIONS (COST $500,530)...................... 504,312
-------
CORPORATE BONDS AND NOTES - 0.20%
3,000 ADT Operations, Inc., LYON
0.00%, due 07/06/2010.......................................... 1,965
1,000 National Data Corporation, Subordinated Convertible
Note, 5.00%, Due 11/01/2003.................................... 1,021
-----
TOTAL CORPORATE BONDS AND NOTES (COST $2,711).................. 2,986
-----
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION> THE LPT VARIABLE INSURANCE SERIES TRUST
MFS TOTAL RETURN PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
<S> <C>
SHORT-TERM OBLIGATIONS - 18.51%
$283,000 Repurchase Agreement with State Street Bank & Trust
Company, dated 12/31/96 at 2.0%, due 01/02/97, maturity
value $283,031 (collateralized by U.S. Treasury Note, 6.00%,
due 05/31/98, par value $290,000; market value $292,569)
(Cost $283,000)................................................. $283,000
--------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS (COST $1,543,663*)................. 107.37% 1,641,282
OTHER ASSETS AND LIABILITIES......................... (7.37) (112,607)
-------- ----------
NET ASSETS........................................... 100.0% $1,528,675
====== ==========
<FN>
* Aggregate cost for Federal tax purposes is $1,543,692 (Note 4)
+ Non-income producing security
144A after the name of a security represents those securities exempt under
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. The value of these securities amounted to $14,963 or 0.98%
of net assets.
</TABLE>
---------------------------------------------------------------
GLOSSARY OF TERMS
ADR American Depository Receipt
LYON Liquid Yield Option Note
---------------------------------------------------------------
See Notes to Financial Statements
<TABLE>
<CAPTION>
THE LPT VARIABLE INSURANCE SERIES TRUST
SALOMON U.S. QUALITY BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
<S> <C>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------- --------
TREASURY OBLIGATIONS - 45.46%
U.S. TREASURY NOTES - 43.84%
$200,000 6.50%, due 05/31/2001............................................ $202,188
100,000 6.625%, due 07/31/2001........................................... 101,594
125,000 5.875%, due 11/15/2005........................................... 120,527
150,000 7.00%, due 07/15/2006............................................ 155,837
100,000 6.50%, due 10/15/2006............................................ 100,547
-------
TOTAL U.S. TREASURY NOTES (COST $674,777)........................ 680,693
-------
U.S. TREASURY BOND - 1.62%
25,000 6.750%, due 08/15/2026 (Cost $24,801)............................ 25,187
------
Total Treasury Obligations (Cost $699,578)....................... 705,880
-------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 43.21%
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) - 18.81%
50,000 7.00%, 30 Year (A)............................................... 48,906
248,351 Pool #432575, 7.00%, due 04/15/2026.............................. 243,074
-------
Total GNMA (Cost $291,005)....................................... 291,980
-------
STUDENT LOAN MARKETING ASSOCIATION (SLMA) - 8.30%
125,000 7.20%, due 11/09/2000 (Cost $128,639)............................ 128,809
-------
FEDERAL HOME LOAN BANK (FHLB) - 7.96%
125,000 5.89%, due 07/24/2000 (Cost $124,030)........................... 123,574
-------
Federal National Mortgage Association (FNMA) - 4.12%
25,000 7.00%, 30 Year (A).............................................. 24,445
4,811 Pool #100090, 14.50%, due 11/01/2014............................ 5,934
7,833 Pool #303791, 12.50%, due 08/01/2015............................ 9,201
12,224 Pool #100089, 13.00%, due 11/01/2015............................ 14,436
8,665 Pool #303792, 11.50%, due 09/01/2019............................ 9,880
------
TOTAL FNMA (COST $64,239) 63,896
------
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
THE LPT VARIABLE INSURANCE SERIES TRUST
SALOMON U.S. QUALITY BOND PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
<S> <C>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------- --------
U.S. GOVERNMENTAL AGENCY OBLIGATIONS (CONTINUED)
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) - 4.02%
$55,959 11.75%, due 08/01/2014 (Cost $62,604) $62,621
-------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(COST $670,517)................................................. 670,880
=======
CORPORATE BONDS AND NOTES - 3.58%
50,000 Mellon Financial Company, 9.75%
Due 06/15/2001 (Cost $55,941)................................... 55,584
------
SHORT TERM OBLIGATION - 11.66%
181,000 Repurchase Agreement with State Street Bank & Trust
Company, dated 12/31/96 at 6.25%, due 01/02/97,
maturity value $181,063 (collateralized by U.S. Treasury Bond,
5.125%, due 05/15/98, par value $185,000; market value $187,313)
(Cost $181,000)................................................. 181,000
--------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS (COST $1,607,036*)................. 103.91% 1,613,344
OTHER ASSETS AND LIABILITIES (NET)................... (3.91) (60,796)
------- ----------
NET ASSETS........................................... 100.00% $1,552,548
======= ==========
<FN>
* Aggregate cost for Federal tax purposes (Note 4)
(A) Dollar Roll (Note 2)
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
THE LPT VARIABLE INSURANCE SERIES TRUST
SALOMON MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
<S> <C>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------- --------
U.S. TREASURY BILLS - 21.19%
$230,000 4.60%, due 01/09/1997+.......................................... $229,765
20,000 4.70%, due 01/09/1997+.......................................... 19,979
TOTAL U.S. TREASURY BILLS (COST $249,744)....................... 249,744
-------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 68.15%
FEDERAL FARM CREDIT BANK (FFCB) - 23.76%
280,000 5.24%, due 01/02/1997+ (Cost $279,959)........................... 279,959
-------
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) - 21.09%
250,000 5.23%, due 02/10/1997+ (Cost $248,547)........................... 248,547
-------
FEDERAL HOME LOAN BANK (FHLB) - 14.82%
175,000 5.46%, due 01/14/1997+ (Cost $174,655)........................... 174,655
-------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) - 8.48%
100,000 5.22%, due 01/07/1997+ (Cost $99,913)........................... 99,913
------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(COST $803,074) ................................................ 803,074
=======
COMMERCIAL PAPER - 4.22%
50,000 Ford Motor Credit Company, 5.28%
Due 02/07/1997+ (Cost $49,729).................................. 49,729
------
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
THE LPT VARIABLE INSURANCE SERIES TRUST
SALOMON MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
<S> <C>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------- --------
REPURCHASE AGREEMENT - 20.28%
$239,000 Repurchase Agreement with State Street
Bank and Trust Company, dated 12/31/96 at
6.25%, due 01/02/97, maturity value $239,083
(collateralized by U.S. Treasury Bond,
6.125%, due 05/15/98, par value $245,000;
market value $248,063) (Cost $239,000).................... $239,000
</TABLE>
<TABLE>
<CAPTION><S> <C> <C>
TOTAL INVESTMENTS (COST $1,341,547*)................. 113.84% $1,341,547
OTHER ASSETS AND LIABILITIES (NET)................... (13.84) (163,160)
------- ----------
NET ASSETS........................................... 100.00% $1,178,387
======= ==========
<FN>
* Aggregate cost for Federal tax purposes (Note 4)
+ Rate represents annualized yield at date of purchase
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
THE LPT VARIABLE INSURANCE SERIES TRUST
STRONG INTERNATIONAL STOCK PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
<S> <C>
VALUE
SHARES (NOTE 2)
- ------ --------
COMMON STOCKS - 73.52%
NEW ZEALAND - 14.57%
97,533 Guinness Peat Group, PLC............................................... $56,541
175,000 Shortland Property..................................................... 121,244
-------
177,785
-------
JAPAN - 14.48%
1,100 Canon Sales Company, Inc............................................... 24,506
3,000 Chubu Steel Plate Company, Ltd......................................... 16,035
1,100 Family Mart Company.................................................... 43,977
10,000 Ishikawajima Harina Heavy Industries................................... 44,469
2,000 Nomura Securities Company, Ltd......................................... 30,049
2,000 TOC Company............................................................ 17,788
------
176,824
-------
ITALY - 14.30%
128,000 Gemina +............................................................... 62,945
30,000 Simint, SPA +.......................................................... 111,734
-------
174,679
-------
HONG KONG - 7.63%
84,984 CDL Hotels International............................................... 48,620
26,000 Peregrine Investment Holdings.......................................... 44,541
------
93,161
------
AUSTRALIA - 6.87%
26,461 Normandy Mining, Ltd................................................... 36,596
7,508 WMC, Ltd.... .......................................................... 47,324
------
83,920
------
MALAYSIA - 4.77%
13,000 IJM Corporation Berhad................................................. 30,628
7,000 Malaysian Resource Corporation......................................... 27,579
------
58,207
------
INDONESIA - 4.34%
32,000 Bukaka Teknik Utama.................................................... 24,047
9,000 Semen Gresik .......................................................... 28,959
------
53,006
------
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
THE LPT VARIABLE INSURANCE SERIES TRUST
STRONG INTERNATIONAL STOCK PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
<S> <C>
VALUE
SHARES (NOTE 2)
- ------ --------
COMMON STOCKS - (CONTINUED)
FRANCE - 1.97% 100 Pathe.................................................................. $24,092
-------
UNITED KINGDOM - 1.96%
5,152 Inchcape, PLC.......................................................... 23,919
------
UNITED STATES - 1.82%
1,300 Compania De Minas Buenaventura, ADR.................................... 22,263
------
THAILAND - 0.81%
4,900 Finance One Public Company, Ltd. ...................................... 9,935
TOTAL COMMON STOCKS (COST $855,288).................................... 897,791
=======
PREFERRED STOCK - 8.81%
AUSTRALIA - 8.81%
24,179 News Corporation (Cost $99,291)........................................ 107,625
-------
WARRANTS - 0.69%
1,100 Morgan Stanley Group, Inc. (United States) expires 08/15/1997 +........ 4,125
10,400 Normandy Mining (Australia) expires 04/08/2001 +....................... 3,472
2,600 Peregrine Investment Holdings (Hong Kong),
expires 05/15/1998 + .................................................. 832
---
TOTAL WARRANTS (COST $10,642).......................................... 8,429
=====
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
THE LPT VARIABLE INSURANCE SERIES TRUST
STRONG INTERNATIONAL STOCK PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
<S> <C>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------- ---------
U.S. TREASURY BILL - 16.17%
$200,000 5.045%, due 04/03/1997+ (Cost $197,421)............................... $197,421
--------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS (COST $1,162,642*)................. 99.19% 1,211,266
OTHER ASSETS AND LIABILITIES (NET)................... 0.81 9,903
------- -----
NET ASSETS........................................... 100.00% $1,221,169
======= ==========
<FN>
* Aggregate cost for Federal tax purposes (Note 4)
+ Non-income producing security
+ Rate represents annualized yield at rate of purchase
</TABLE>
---------------------------------------------------------------
GLOSSARY OF TERMS
ADR American Depository Receipt
---------------------------------------------------------------
See Notes to Financial Statements
<TABLE>
<CAPTION>
The LPT Variable Insurance Series Trust
Strong International Stock Portfolio
Schedule of Investments (Continued)
December 31, 1996 (Unaudited)
As of December 31, 1996, sector diversification of the Portfolio was as follows:
% OF VALUE
SECTOR DIVERSIFICATION NET ASSETS (NOTE 2)
---------------------- ---------- ---------
<S> <C> <C>
COMMON STOCKS:
Consumer Discretionary............................... 22.68% $276,849
Producer Durables.................................... 10.49 128,103
Materials and Processing............................. 10.44 127,534
Financial Services................................... 16.85 205,769
Other................................................ 13.06 159,536
----- -------
TOTAL COMMON STOCKS.................................. 73.52 897,791
PREFERRED STOCKS..................................... 8.81 107,625
WARRANTS............................................. 0.69 8,429
U.S. TREASURY BILLS.................................. 16.17 197,421
----- -------
TOTAL INVESTMENTS.................................... 99.19 1,211,266
OTHER ASSETS AND LIABILITIES (Net)................... 0.81 9,903
----- ----------
NET ASSETS........................................... 100.0% $1,221,169
====== ==========
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
THE LPT VARIABLE INSURANCE SERIES TRUST
STRONG GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
<S> <C>
VALUE
SHARES (NOTE 2)
- ------ --------
COMMON STOCKS - 82.41%
TECHNOLOGY - 23.06%
100 Advanced Fibre Communications +........................................ $5,562
100 Altera Corporation +................................................... 7,269
200 Candence Design System, Inc. +......................................... 7,950
300 CBT Group Publishing, Ltd., ADR +...................................... 16,275
500 Cisco Systems, Inc. +.................................................. 31,812
800 Danka Business System, ADR ............................................ 28,300
100 Dell Computer Corporation +............................................ 5,312
300 Intel Corporation...................................................... 39,281
200 International Business Machines........................................ 30,200
200 Maxim Integrated Products, Inc. +...................................... 8,650
200 McAfee Associates, Inc. +.............................................. 8,800
200 Microsoft Corporation +............................................... 16,525
500 National Semiconductor Corporation +................................... 12,187
100 Netscape Communications Corporation +.................................. 5,687
300 Parametric Technology Corporation +.................................... 15,413
200 Perkin Elmer Corporation +............................................. 11,775
300 Sipex Corporation +.................................................... 9,675
400 Sykes Enterprises, Inc +............................................... 15,000
300 3Com Corporation +..................................................... 22,013
500 Tellabs, Inc. +........................................................ 18,813
300 Teradyne, Inc. + ...................................................... 7,313
200 US Robotics Corporation +............................................. 14,400
200 Uniphase Corporation +................................................ 10,500
------
348,712
-------
DRUGS & HEALTH CARE - 13.05%
200 Abbott Labs............................................................ 10,150
100 American Home Products Corporation..................................... 5,863
400 Amerisource Health Corporation, Class A +.............................. 19,300
600 Cardinal Health, Inc................................................... 34,950
300 Dura Pharmaceuticals, Inc. +........................................... 14,325
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
THE LPT VARIABLE INSURANCE SERIES TRUST
STRONG GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
<S> <C>
VALUE
SHARES (NOTE 2)
- ------ --------
COMMON STOCKS - (CONTINUED)
DRUGS & HEALTH CARE - (CONTINUED)
500 Healthsouth Corporation +.............................................. $19,312
300 Eli Lilly & Company.................................................... 21,900
400 Medtronic, Inc. ....................................................... 27,200
300 Oxford Health Plans, Inc. + ........................................... 17,569
200 Parexel International Corporation +.................................... 10,325
200 Pfizer, Inc. .......................................................... 16,575
------
197,469
-------
FINANCIAL SERVICES - 12.89%
400 American Express Company............................................... 22,600
100 Chase Manhattan Corporation (New)...................................... 8,925
200 Citicorp............................................................... 20,600
400 Conseco, Inc. ......................................................... 25,500
300 Federal National Mortgage Association.................................. 11,175
200 First Bank Systems, Inc................................................ 13,650
200 Firstar Corporation New................................................ 10,500
200 Mellon Bank Corporation................................................ 14,200
200 MGIC Investment Corporation............................................ 15,200
300 Norwest Corporation.................................................... 13,050
400 Schwab Charles Corporation............................................. 12,800
200 TCF Financial Corporation.............................................. 8,700
400 Travelers Group, Inc. ................................................. 18,150
------
195,050
-------
CONSUMER DISCRETIONARY - 12.02%
300 Boston Chicken, Inc. + ................................................ 10,762
200 Coca Cola Company...................................................... 10,525
500 Carnival Corporation................................................... 16,500
500 Consolidated Stores Corporation +...................................... 16,062
200 Cognizant Corporation.................................................. 6,600
400 CUC International, Inc. +.............................................. 9,500
400 Dollar Tree Stores, Inc. +............................................. 15,300
100 HFS, Inc. + .......................................................... 5,975
200 Jones Apparel Group, Inc. + ........................................... 7,475
300 Kohl's Corporation +................................................... 11,775
200 Midwest Express Holdings, Inc. +....................................... 7,200
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
THE LPT VARIABLE INSURANCE SERIES TRUST STRONG GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
<S> <C>
VALUE
SHARES (NOTE 2)
- ------ --------
COMMON STOCKS - (CONTINUED)
CONSUMER DISCRETIONARY - (CONTINUED)
300 Nautica Enterprises, Inc. +............................................ $7,575
200 Peoplesoft, Inc. +..................................................... 9,587
350 Regal Cinemas, Inc. + ................................................ 10,762
600 Service Corporation International...................................... 16,800
600 Staples, Inc. +........................................................ 10,837
300 Starbucks Corporation +................................................ 8,588
-----
181,823
-------
ENERGY - 5.81%
400 Baker Hughes, Inc. .................................................... 13,800
200 BJ Services Company +.................................................. 10,200
100 Diamond Offshore Drilling, Inc. + ..................................... 5,700
200 Ensco International, Inc. + ........................................... 9,700
300 Global Marine, Inc. + ................................................. 6,188
300 Noble Affiliates, Inc. ................................................ 14,363
100 Schlumberger, Ltd....................................................... 9,987
400 Smith International, Inc. +............................................ 17,950
------
87,888
------
MATERIALS AND EQUIPMENT - 4.30%
1,000 Accustaff, Inc. +...................................................... 21,125
100 Alco Standard Corporation.............................................. 5,162
200 Applied Materials, Inc. + ............................................. 7,188
350 Corestaff, Inc. +...................................................... 8,291
600 Monsanto Company....................................................... 23,325
------
65,091
------
CONSUMER STAPLES - 2.97%
300 Interstate Bakeries Corporation........................................ 14,738
200 Kimberly Clark Corporation............................................. 19,050
100 Philip Morris Companies, Inc. ......................................... 11,263
------
45,051
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
THE LPT VARIABLE INSURANCE SERIES TRUST
STRONG GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
<S> <C>
VALUE
SHARES (NOTE 2)
- ------ --------
COMMON STOCKS - (CONTINUED)
PRODUCT DURABLES - 2.89%
400 Boston Scientific Corporation +........................................ $24,000
200 General Electric Company............................................... 19,775
------
43,775
------
COMMUNICATIONS - 2.44%
600 Cincinnati Bell, Inc................................................... 36,975
------
UTILITIES - 1.52%
300 Cooper Cameron Corporation +........................................... 22,950
------
REAL ESTATE - 1.46%
400 Starwood Lodging Trust................................................. 22,050
------
Total Common Stocks (Cost $1,107,199).................................. 1,246,834
=========
PRINCIPAL
AMOUNT
- ------
SHORT TERM OBLIGATIONS - 23.33%
U.S. TREASURY BILLS - 6.54%
$100,000 5.02%, due 03/13/1997+ (Cost $99,010)................................. 99,010
------
REPURCHASE AGREEMENT - 16.79%
254,000 Repurchase Agreement with State Street Bank and Trust Company, dated
12/31/96 at 2.00%, due 01/02/97, maturity value $254,028
(collateralized by U.S. Treasury Note, 6.00%, due 05/31/98,
par value $260,000; market value $262,303)
(Cost $254,000)....................................................... 254,000
-------
Total Short Term Obligations (Cost $353,010)........................... 353,010
-------
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
THE LPT VARIABLE INSURANCE SERIES TRUST
STRONG GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
VALUE
SHARES (NOTE 2)
- ------ --------
<S> <C> <C>
TOTAL INVESTMENTS (COST $1,460,209*)................. 105.74% $1,599,844
OTHER ASSETS AND LIABILITIES (NET)................... (5.74) (86,881)
------- ----------
NET ASSETS........................................... 100.00% $1,512,963
======= ==========
<FN>
* Aggregate cost for Federal tax purposes is $1,469,950 (Note 4)
+ Non-income producing security
+ Rate represents annualized yield at date of purchase
</TABLE>
---------------------------------------------------------------
GLOSSARY OF TERMS
ADR American Depository Receipt
---------------------------------------------------------------
See Notes to Financial Statements
<TABLE>
<CAPTION>
THE LPT VARIABLE INSURANCE SERIES TRUST
BERKELEY SMALLER COMPANIES PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
<S> <C>
VALUE
SHARES (NOTE 2)
- ------ --------
COMMON STOCKS - 63.88%
TECHNOLOGY - 26.37%
500 ADC Telecommunications, Inc. +......................................... $15,563
250 Apac Teleservices, Inc. +.............................................. 9,594
300 Applied Magnetics Corporation +....................................... 8,963
800 Bitstream, Inc. +...................................................... 5,200
600 Aspect Teleservices, Inc. +............................................ 38,100
300 Chips & Technologies, Inc. +........................................... 5,475
500 Cotelligent Group, Inc. +.............................................. 12,062
200 Davox Corporation +................................................... 8,250
900 Edify Software, Inc. +................................................. 14,400
700 Fore Systems, Inc. +.................................................. 23,013
500 Forte Software, Inc. +................................................. 16,375
100 Gateway 2000, Inc. +................................................... 5,356
500 Hologic, Inc.+......................................................... 12,375
600 I2 Technologies, Inc. +................................................ 22,950
500 Inacom Corporation +.................................................. 20,000
500 Inso Corporation +.................................................... 19,875
700 McAfee Associates, Inc. +.............................................. 30,800
400 Pegasystems, Inc. +.................................................... 12,050
500 Pure Atria Corporation +.............................................. 12,375
900 Sunquest Information Systems, Inc. +................................... 12,825
2,000 Systemsoft Corporation +............................................... 29,750
200 U.S. Robotics Corporation.............................................. 14,400
700 Vantive Corporation +................................................. 21,875
200 Videoserver, Inc. +................................................... 8,500
-----
380,126
-------
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
THE LPT VARIABLE INSURANCE SERIES TRUST
BERKELEY SMALLER COMPANIES PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
<S> <C>
VALUE
SHARES (NOTE 2)
- ------ --------
COMMON STOCKS - (CONTINUED)
COMMUNICATIONS - 10.71%
100 Adtran, Inc. +......................................................... $4,150
700 Ascend Communications, Inc. +.......................................... 43,488
250 Cascade Communications Corporation +.................................. 13,781
1,700 DSP Communications, Inc. +............................................. 32,937
1,200 Pairgain Technologies +................................................ 36,525
700 Snyder Communications, Inc. +.......................................... 18,900
200 Westell Technologies +................................................ 4,575
-----
154,356
-------
DRUGS & HEALTH CARE - 8.48%
900 ABR Information Services, Inc. +....................................... 35,437
500 Access Health, Inc. +.................................................. 22,375
400 Cohr, Inc. +.......................................................... 10,800
700 Endosonics Corporation +.............................................. 10,675
1,200 Medical Resources, Inc. +............................................. 13,650
800 Rexall Sundown, Inc. +................................................. 21,750
300 Spine Tech, Inc. +.................................................... 7,500
-----
122,187
-------
BUSINESS SERVICES - 5.24%
200 CKS Group, Inc. +...................................................... $8,362
1,200 Cognos, Inc. +......................................................... 33,750
200 Metzler Group, Inc. +................................................. 6,350
200 Quintiles Transnational Corporation +.................................. 13,250
300 Registry, Inc. +...................................................... 13,838
------
75,550
------
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
THE LPT VARIABLE INSURANCE SERIES TRUST
BERKELEY SMALLER COMPANIES PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
<S> <C>
VALUE
SHARES (NOTE 2)
- ------ --------
COMMON STOCKS - (CONTINUED)
ENERGY - 5.16%
400 ENSCO International, Inc. +............................................ $19,400
500 Marine Drilling Companies, Inc. +...................................... 9,844
400 Pride Petroleum Services, Inc. +...................................... 9,300
400 Reading & Bates Corporation +.......................................... 10,600
400 Seacor Holdings, Inc. +................................................ 25,200
------
74,344
------
Consumer Discretionary - 4.35%
500 Claire S Stores, Inc................................................... 6,500
500 Finish Line, Inc., Class A +........................................... 10,562
400 Hot Topic, Inc. +...................................................... 7,900
600 Just for Feet, Inc. +.................................................. 15,750
200 Party City Corporation +............................................... 3,400
800 Vans, Inc. +.......................................................... 10,000
400 Wet Seal, Inc. +....................................................... 8,550
-----
62,662
------
ELECTRICAL EQUIPMENT - 1.31%
600 Kent Electronics Corporation +........................................ 15,450
400 Lightbridge, Inc. +................................................... 3,425
-----
18,875
------
PRODUCER DURABLE - 1.15%
400 American Disposal Services, Inc. +.................................... 7,400
700 Industri Matematik International Corporation +........................ 9,188
-----
16,588
------
TRANSPORTATION - 0.63%
200 Tidewater, Inc......................................................... 9,050
-----
CONSUMER SERVICES - 0.48%
350 WMS Industries, Inc. +................................................ 7,000
-----
TOTAL COMMON STOCKS (COST $952,758) 920,738
=======
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
THE LPT VARIABLE INSURANCE SERIES TRUST
BERKELEY SMALLER COMPANIES PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
<S> <C>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- ------ --------
SHORT-TERM OBLIGATION - 39.88%
U.S. TREASURY BILL - 17.33%
$250,000 4.75%, due 01/09/97+ (Cost $249,736)............................ $249,736
--------
REPURCHASE AGREEMENT - 22.55%
325,000 Repurchase Agreement with State Street
Bank and Trust Company, dated 12/31/96 at
2.0%, due 01/02/97, maturity value $325,036
(collateralized by U.S. Treasury Note,
6.00%, due 05/31/98, par value $330,000;
market value $332,923) (Cost $325,000)......................... 325,000
-------
TOTAL SHORT-TERM OBLIGATION (COST $574,736)..................... 574,736
-------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS (COST $1,527,494*)................. 103.76% $1,495,474
OTHER ASSETS AND LIABILITIES (NET)................... (3.76) (54,230)
------- -----------
NET ASSETS........................................... 100.00% $1,441,244
======= ==========
<FN>
* Aggregate cost for Federal tax purposes is $1,532,498 (Note 4)
+ Non-income producing security
+ Rate represents annualized yield at date of purchase
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
THE LPT VARIABLE INSURANCE SERIES TRUST
LEXINGTON CORPORATE LEADERS PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
<S> <C>
VALUE
SHARES (NOTE 2)
- ------ --------
COMMON STOCKS - 98.64%
ENERGY - 23.10%
450 Chevron Corporation.................................................... $29,250
450 Exxon Corporation...................................................... 44,100
450 Mobil Corporation...................................................... 55,012
450 Royal Dutch Petroleum Company, NY Shares............................... 76,837
450 Schlumberger, Ltd...................................................... 44,944
450 Texaco, Inc. .......................................................... 44,156
390 Union Pacific Resource Group, Inc. .................................... 11,407
------
305,706
-------
CONSUMER DISCRETIONARY - 19.92%
450 American Brands, Inc................................................... 22,331
840 Coca Cola Company...................................................... 44,205
450 Eastman Kodak Company.................................................. 36,112
450 McDonalds Corporation.................................................. 20,362
450 Philip Morris Companies, Inc........................................... 50,681
450 Procter & Gamble Company............................................... 48,375
450 Wal-Mart Stores, Inc................................................... 10,294
450 Walt Disney Company.................................................... 31,331
------
263,691
-------
TECHNOLOGY - 11.17%
450 Allied Signal, Inc..................................................... 30,150
450 Boeing Company......................................................... 47,869
840 Hewlett Packard Company................................................ 42,210
450 Motorola, Inc.......................................................... 27,619
------
147,848
-------
AUTOS & TRANSPORTATION - 8.62%
450 Burlington Northern Santa Fe........................................... 38,869
450 General Motors Corporation............................................. 25,087
450 Goodyear Tire and Rubber Company....................................... 23,119
450 Union Pacific Corporation.............................................. 27,056
------
114,131
-------
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
THE LPT VARIABLE INSURANCE SERIES TRUST
LEXINGTON CORPORATE LEADERS PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
<S> <C>
VALUE
SHARES (NOTE 2)
- ------ --------
COMMON STOCKS - (CONTINUED)
MATERIALS & PROCESSING - 8.45%
450 Aluminum Company of America............................................ $28,687
450 Bethlehem Steel Corporation +.......................................... 4,050
450 DuPont (E.I.) DeNemours & Company...................................... 42,469
450 International Paper Company............................................ 18,169
450 Union Carbide Corporation.............................................. 18,394
------
111,769
-------
FINANCIAL SERVICES - 8.12%
450 American Express Company............................................... 25,425
450 J.P. Morgan & Company, Inc............................................. 43,931
840 Travelers Group, Inc................................................... 38,115
------
107,471
-------
PRODUCER DURABLES - 5.92%
450 Caterpillar, Inc....................................................... 33,863
450 General Electric Company............................................... 44,494
------
78,357
------
DRUGS & HEALTH CARE - 5.85%
840 Johnson & Johnson...................................................... 41,790
450 Merck & Company, Inc................................................... 35,663
------
77,453
------
UTILITIES - 5.36%
450 Consolidated Edison Company of New York................................ 13,163
450 Duke Power Company..................................................... 20,813
450 Houston Industries, Inc................................................ 10,181
450 Pacific Gas & Electric Company......................................... 9,450
450 Union Electric Company................................................. 17,325
------
70,932
------
COMMUNICATIONS - 2.13%
450 AT&T Corporation....................................................... 19,575
186 Lucent Technologies, Inc. ............................................. 8,603
-----
28,178
------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS (COST $1,156,549*)................. 98.64% 1,305,536
OTHER ASSETS AND LIABILITIES......................... 1.36 17,885
------ ---------
NET ASSETS........................................... 100.0% $1,323,421
====== ==========
<FN>
* Aggregate cost for Federal tax purposes
+ Non-income producing security
</TABLE>
See Notes to Financial Statements
THE LPT VARIABLE INSURANCE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. ORGANIZATION AND BUSINESS
The LPT Variable Insurance Series Trust (the "Trust") was organized under
the laws of the Commonwealth of Massachusetts on January 23, 1995, and is a
business entity commonly known as a "Massachusetts Business Trust". The Trust is
registered under the Investment Company Act of 1940, as amended, (the "1940
Act"), as an open-end series management investment company. The trust offers
eight managed investment portfolios (the "Portfolios") to the public only
through certain variable annuity contracts offered by London Pacific Life and
Annuity Company ("London Pacific"): the Salomon Money Market Portfolio (the
"Money Portfolio"); the Salomon U.S. Quality Bond Portfolio (the "Bond
Portfolio"); and the MAS Value, MFS Total Return, Strong International Stock,
Strong Growth, Berkeley Smaller Companies, and Lexington Corporate Leaders
Portfolios (the "Equity Portfolios").
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies which are
in conformity with generally accepted accounting principles consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reported period. Actual results could differ from those estimates.
SECURITY VALUATION: Securities which are traded on a recognized exchange
(including securities traded through the National Market System) are valued at
the last sale price on the securities exchange on which such securities are
primarily traded, or, if there were no sales during the day, at the closing bid
price. Portfolio securities that are primarily traded on foreign exchanges are
generally valued at the most recent closing values of such securities on their
respective exchanges, except when an occurrence subsequent to the time a value
was so established is likely to have changed the value, then the fair value of
those securities will be determined by the Board of Trustees or its delegates.
Over-the-counter securities that are not traded through the National Market
System are valued on the basis of the bid price at the close of business on each
day. Short-term investments that mature in 60 days or less are valued at
amortized cost. Long-term debt securities are valued using information furnished
by an independent pricing service approved by the Board of Trustees which
utilizes market quotations and transactions, quotations from dealers and various
relationships among securities in determining value. If not valued by a pricing
service, such securities are valued at prices obtained from independent brokers.
Investments with prices that cannot be readily obtained, if any, are stated at
fair value as determined in good faith under consistently applied procedures
established by and under the supervision of the Board of Trustees. The
investments of the Money Portfolio are valued utilizing the amortized cost
valuation method permitted in accordance with Rule 2a-7 under the Investment
Company Act of 1940. This method involves valuing a portfolio security initially
at its cost, and, thereafter, assuming a constant amortization to maturity of
any discount or premium.
REPURCHASE AGREEMENTS: Each Portfolio may engage in Repurchase Agreement
transactions. Under the terms of a typical Repurchase Agreement, the Portfolio
through its custodian takes possession of an underlying debt obligation, subject
to an obligation of the seller to repurchase and the Portfolio to resell, the
obligation at an agreed-upon price and time, thereby determining the yield
during the Portfolio's holding period. This arrangement results in a fixed rate
of return that is not subject to market fluctuations during the Portfolio's
holding period. The value of the collateral is at least equal at all times to
the total amount of the repurchase obligations, including interest. In the event
of counterparty default, the Portfolio has the right to use the collateral to
offset losses incurred. There is potential loss to the Portfolio in the event
the Portfolio is delayed or prevented from exercising its rights to dispose of
the collateral securities, including the risk of a possible decline in the value
of the underlying securities during the period while the Portfolio seeks to
assert its rights. Each Portfolio may enter into Repurchase Agreements only with
banks or dealers which, in the opinion of each Portfolio's Sub-advisor, based on
guidelines established by the Trust's Board of Trustees, are deemed
creditworthy.
THE LPT VARIABLE INSURANCE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
DOLLAR ROLL TRANSACTIONS: The Salomon U.S. Quality Bond Portfolio in
order to seek a high level of current income, may enter into dollar roll
transactions with financial institutions to take advantage of opportunities in
the mortgage market. The values of the dollar roll transactions are reflected in
the Portfolio's Statements of Assets and Liabilities. A dollar roll transaction
involves the sale by the Portfolio of securities that it holds with an agreement
by the Portfolio to repurchase similar securities at a agreed upon price and
date. The securities repurchased will bear the same interest as those sold, but
generally will be collateralized at time of delivery by different pools of
mortgages with different prepayment histories than those securities sold. The
Portfolio is paid a fee for entering into a dollar roll transaction, that is
accrued as income over the life of the dollar roll contract. During the period
between the sale and repurchase, the Portfolio will not be entitled to receive
interest and principal payments on the securities sold. Management anticipates
that the proceeds of the sale will be invested in additional instruments for the
Portfolio, and the income from these investments, together with any additional
income received on the sale will generate income for the Portfolio exceeding the
interest that would have been earned on the securities sold. Dollar roll
transactions involve the risk that the market value of the securities sold by
the Portfolio may decline below the repurchase price of those similar securities
which the Portfolio is obligated to purchase or that the return earned by the
Portfolio with the proceeds of a dollar roll may not exceed transaction costs.
FOREIGN CURRENCY TRANSLATION: The books and records of the Portfolios are
maintained in U.S. Dollars. Investment valuations, other assets and liabilities
initially expressed as foreign currencies are converted each business day into
U.S. dollars based upon current exchange rates. Purchases and sales of foreign
investments and income and expenses are converted into U.S. dollars based upon
exchange rates prevailing on the respective dates of such transactions. That
portion of unrealized gains or losses on investments due to fluctuations in
foreign currency exchange rates is not separately disclosed.
SECURITY TRANSACTIONS AND INVESTMENT INCOME: Security transactions are
recorded on the trade date. Net realized gains and losses from security
transactions are recorded on the basis of identified cost. Interest income is
recorded on the accrual basis and consists of interest accrued, and, if
applicable, discount earned less premiums amortized. Dividend income is recorded
on the ex-dividend date, except that certain dividends from foreign securities
are recorded as soon as a portfolio is informed of the ex-dividend date.
DISTRIBUTIONS TO SHAREHOLDERS: Dividends from net investment income are
declared daily and reinvested monthly for the Money Portfolio and are declared
and distributed annually for all other Portfolios. All Portfolios, with the
exception of the Money Portfolio, declare and distribute, if any, all net
realized capital gains at least annually. The amount and character of income and
gains to be distributed are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles. These
differences include treatment of losses on wash sale transactions and realized
and unrealized gains and losses on foreign currency contracts. Reclassifications
are made to a portfolio's capital accounts to reflect income and gains available
for distribution (or available capital loss carryovers) under income tax
regulations. The calculation of net investment income per share in the financial
highlights table excludes these adjustments.
FEDERAL INCOME TAXES: The Trust treats each Portfolio as a separate
entity for Federal income tax purposes. Each Portfolio of the Trust intends to
qualify each year as a "regulated investment company" under Subchapter M of the
Internal Revenue Code of 1986, as amended. By so qualifying, each Portfolio will
not be subject to Federal income taxes to the extent it distributes all of its
taxable income and net realized gains for the tax year ending December 31. In
addition, by distributing during each calendar year substantially all of its net
investment income, capital gains, and certain other amounts, if any, each
Portfolio will not be subject to Federal excise tax. Therefore, no Federal
income tax provision is required. Withholding taxes on foreign dividend income
and gains have been paid or provided for in accordance with the applicable
country's tax rules and rates.
EXPENSES: The Trust accounts separately for assets, liabilities, and
operations of each Portfolio. Expenses directly attributed to a Portfolio are
charged to the Portfolio, while expenses which are attributable to more than one
Portfolio of the Trust are allocated among the respective Portfolios.
THE LPT VARIABLE INSURANCE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
3. INVESTMENT ADVISORY, SUB-ADVISORY, ADMINISTRATION FEES, AND OTHER RELATED
PARTY TRANSACTIONS
LPIMC Insurance Marketing Services ("LPIMC"), a wholly owned subsidiary
of London Pacific, serves as investment advisor to the Trust. Berkeley Capital
Management, a wholly owned subsidiary of the London Pacific Group, Ltd., and an
affiliate of London Pacific, serves as Sub-advisor to the Berkeley Smaller
Companies Portfolio, Miller, Anderson & Sherrerd, LLP, an indirect, wholly owned
subsidiary of the Morgan Stanley Group, Inc., serves as Sub-advisor to the MAS
Value Portfolio, Massachusetts Financial Services Company, an indirect wholly
owned subsidiary of Sun Life Assurance Company of Canada, serves as Sub-advisor
to the MFS Total Return Portfolio, Salomon Brothers Asset Management Inc., an
indirect, wholly owned subsidiary of Salomon Inc., serves as Sub-advisor to the
Salomon U.S. Quality Bond and Salomon Money Market Portfolios, Strong Capital
Management, Inc., a privately held corporation, serves as Sub-advisor to the
Strong International Stock and Strong Growth Portfolios, and Lexington
Management Corporation, a wholly owned subsidiary of Lexington Global Asset
Managers, Inc., serves as Sub-advisor to the Lexington Corporate Leaders
Portfolio.
The Trust pays LPIMC a monthly fee in arrears based on a percentage of
the average daily net assets of each Portfolio during the month, out of which
LPIMC pays the Sub-advisor of each Portfolio a monthly fee in arrears at annual
rates as follows:
<TABLE>
<CAPTION>
FEES ON FEES ON FEES ON
AVERAGE NET AVERAGE NET AVERAGE NET
FEES ON ASSETS BETWEEN ASSETS BETWEEN ASSETS
AVERAGE NET $25 MILLION AND $100 MILLION EXCEEDING
NAME OF PORTFOLIO ASSETS UP TO $100 MILLION AND $500 $500 MILLION
$25 MILLION MILLION
----------------- ----------- ------------ ------- ------------
<S> <C> <C> <C> <C>
MAS Value Portfolio
LPIMC .25% .25% .25% .25%
Sub-advisor .625% .375% .25% .20%
----- ----- ---- ----
Total Fees Paid to
LPIMC * .875% .625% .50% .45%
===== ===== ==== ====
</TABLE>
<TABLE>
<CAPTION>
FEES ON
AVERAGE FEES ON
FEES ON NET ASSETS AVERAGE NET
AVERAGE NET BETWEEN $200 ASSETS
NAME OF PORTFOLIO ASSETS UP TO MILLION AND EXCEEDING $1.3
$200 MILLION $1.3 BILLION BILLION
----------------- ------------ ------------ ---------
<S> <C> <C> <C>MFS Total Return Portfolio
LPIMC .25% .25% .25%
Sub-advisor .50% .45% .40%
---- ---- ----
Total Fees Paid to .75% .70% .65%
==== ==== ====
LPIMC *
</TABLE>
<TABLE>
<CAPTION>
FEES ON
FEES ON AVERAGE FEES ON AVERAGE NET
NET ASSETS AVERAGE NET ASSETS
FEES ON BETWEEN $50 ASSETS BETWEEN BETWEEN
AVERAGE NET MILLION AND $150 MILLION $300 MILLION
NAME OF PORTFOLIO ASSETS UP TO $150 MILLION AND $300 AND $500
$50 MILLION MILLION MILLION
------------------ ----------- -------------- ------- -------
<S> <C> <C> <C> <C>
Salomon U.S. Quality Bond
Portfolio
LPIMC .25% .25% .25% 25%
Sub-advisor .30% .275% .25% .20%
---- ----- ---- ----
Total Fees Paid to
LPIMC * .55% .525% .50% .45%
==== ===== ==== ====
</TABLE>
THE LPT VARIABLE INSURANCE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
FEES ON
FEES ON AVERAGE FEES ON AVERAGE NET
NET ASSETS AVERAGE NET ASSETS
FEES ON BETWEEN $50 ASSETS BETWEEN BETWEEN
AVERAGE NET MILLION AND $150 MILLION $300 MILLION
ASSETS UP TO $150 MILLION AND $300 AND $500
$50 MILLION MILLION MILLION
------------ ---------------- -------------- -------------
<S> <C> <C> <C> <C>
Salomon Money Market Portfolio
LPIMC .25% .25% .25% .25%
Sub-advisor .20% .175% .15% .10%
---- ----- ---- ----
Total Fees Paid to
LPIMC * .45% .425% .40% .35%
==== ===== ==== ====
</TABLE>
<TABLE>
<CAPTION>
FEES ON
AVERAGE NET FEES ON
FEES ON ASSETS BETWEEN AVERAGE NET
AVERAGE NET $150 MILLION ASSETS
NAME OF PORTFOLIO ASSETS UP TO AND $500 EXCEEDING $500
$150 MILLION MILLION MILLION
----------------- --------------- -------------- ----------------
<S> <C> <C> <C>
Strong International Stock
Portfolio and Strong Growth
Portfolio
LPIMC .25% .25% .25%
Sub-advisor .50% .45% .40%
---- ---- ----
Total Fees Paid to
LPIMC * .75% .70% .65%
==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
FEES ON
FEES ON AVERAGE NET
AVERAGE NET ASSETS
NAME OF PORTFOLIO ASSETS UP TO EXCEEDING $10
$10 MILLION MILLION
----------------- ---------------- ----------------
<S> <C> <C>Berkeley Smaller Companies
Portfolio
LPIMC .25% .25%
Sub-advisor .75% .50%
---- ----
Total Fees Paid to
LPIMC * 1.00% .75%
===== ====
</TABLE>
<TABLE>
<CAPTION>
FEES ON
AVERAGE NET FEES ON
FEES ON ASSETS BETWEEN AVERAGE NET
AVERAGE NET $10 MILLION ASSETS
NAME OF PORTFOLIO ASSETS UP TO AND $100 EXCEEDING $100
$10 MILLION MILLION MILLION
----------------- --------------- --------------- ---------------
<S> <C> <C> <C>
Lexington Corporate Leaders
Portfolio
LPIMC .25% .25% .25%
Sub-advisor .40% .35% .30%
---- ---- ----
Total Fees Paid to
LPIMC * .65% .60% .55%
==== ==== ====
<FN>
* Fees paid to LPIMC include fees paid for services rendered by
LPIMC to the Portfolio and those fees that LPIMC will in turn pay to the
Sub-advisor.
</TABLE>
THE LPT VARIABLE INSURANCE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
LPIMC and certain Sub-advisors have voluntarily agreed to waive a
portion of the fees payable to them during the first six months of operations.
Any fee waivers by a Sub-advisor are passed through to the Portfolios.
The Trust and LPIMC also entered into an Administrative Agreement
with State Street Bank and Trust Company ("SSB&T"), a Massachusetts Trust
Company, whereby SSB&T performed administrative services for each of the
Portfolios and received an administration fee and certain out-of-pocket
expenses. The Trust terminated the Administrative Agreement effective October 1,
1996 and LPIMC began providing the administrative services previously performed
by SSB&T. LPIMC does not charge the Portfolios a separate fee for this service.
In the event normal operating expenses of each Portfolio, excluding
brokerage commissions, but including the advisory fee, exceed certain voluntary
expense limitations based on average net assets (MAS Value Portfolio - 1.29%;
MFS Total Return Portfolio - 1.29%; Salomon U.S. Quality Bond Portfolio - 0.99%;
Salomon Money Market Portfolio - 0.89%; Strong International Stock Portfolio -
1.49%; Strong Growth - 1.29%; Berkeley Smaller Companies Portfolio - 1.39%; and
Lexington Corporate Leaders Portfolio - 1.29%), London Pacific has agreed,
through December 31, 1997, to reimburse each Portfolio for expenses in excess of
the stated expense limitations. The expense limitations may be removed or
revised after December 31, 1997, without prior notice to existing shareholders.
For the eleven months ended December 31, 1996, London Pacific
voluntarily agreed to reimburse the Portfolios as follows:
NAME OF PORTFOLIO REIMBURSEMENT
------------------ --------------
MAS Value Portfolio $62,226
MFS Total Return Portfolio 65,124
Salomon U.S. Quality Bond Portfolio 54,144
Salomon Money Market Portfolio 53,653
Strong International Stock Portfolio 63,100
Strong Growth Portfolio 66,268
Berkeley Smaller Companies Portfolio 64,717
Lexington Corporate Leaders Portfolio 54,801
The Trust pays no salaries or compensation to any of its officers.
Trustees who are not directors, officers, or employees of the Trust or any
investment advisor are reimbursed for their travel expenses in attending
meetings of the Trustees, and receive fees for each Trust meeting attended. Such
amounts are paid by the Trust.
4. PURCHASES AND SALES OF SECURITIES
The cost of purchases and proceeds from sales of investment securities,
excluding short-term investments, for the eleven months ended December 31, 1996,
were as follows:
<TABLE><CAPTION>
PURCHASES SALES
------------------------------------------------
PORTFOLIO OTHER GOVERNMENT OTHER GOVERNMENT
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MAS Value Portfolio $1,391,680 $0 $416,264 $0
MFS Total Return Portfolio 953,489 848,569 204,452 333,949
Salomon U.S. Quality Bond Portfolio 56,808 4,279,022 0 2,883,377
Strong International Stock Portfolio 1,430,980 0 478,929 0
Strong Growth Portfolio 5,801,123 0 4,800,552 0
Berkeley Smaller Companies Portfolio 21,079,668 0 19,861,575 0
Lexington Corporate Leaders Portfolio 1,156,577 0 26 0
</TABLE>
THE LPT VARIABLE INSURANCE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
At December 31, 1996, aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost and aggregate
gross unrealized depreciation for all securities in which there was an excess of
tax cost over value were as follows:
<TABLE>
<CAPTION>
TAX BASIS
---------
NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
PORTFOLIO APPRECIATION DEPRECIATION (DEPRECIATION) COST
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MAS Value Portfolio $189,822 $15,064 $174,758 $1,264,427
MFS Total Return Portfolio 104,049 6,459 97,590 1,543,692
Salomon U.S. Quality Bond Portfolio 10,350 4,042 6,308 1,607,036
Strong International Stock Portfolio 130,339 81,715 48,624 1,162,642
Strong Growth Portfolio 146,534 16,640 129,894 1,469,950
Berkeley Smaller Companies Portfolio 43,364 80,388 (37,024) 1,532,498
Lexington Corporate Leaders Portfolio 165,068 16,081 148,987 1,156,549
</TABLE>
5. SHARES OF BENEFICIAL INTEREST
The Trust's Declaration of Trust authorizes the Trustees to issue an
unlimited number of shares of beneficial interest for the Portfolios, each with
a $.01 par value.
The Salomon Money Market Portfolio has sold shares, issued reinvestment
of dividends and redeemed shares only at a constant net asset value of $1.00 per
share, the number of shares represented by such sales, reinvestments and
redemptions are the same as the dollar amounts shown for such transactions.
London Pacific directly and through its LPLA Separate Account One, owns
of record 100% of each Portfolio's outstanding shares. Changes in shares of
beneficial interest for the period from January 31, 1996 to December 31, 1996
were as follows:
SHARES AND AMOUNT
-----------------
SALOMON MONEY MARKET PORTFOLIO
Sold $3,995,273
Issued as reinvestment
of dividends 42,722
Redeemed (2,859,608)
-----------
Net increase $1,178,387
==========
SHARES AMOUNT
------ ------
MAS VALUE FUND
Sold 134,159 $1,387,694
Issued as reinvestment
of dividends 3,597 42,434
Redeemed (17,894) (200,902)
-------- ---------
Net increase 119,862 $1,229,226
======= ==========
THE LPT VARIABLE INSURANCE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
SHARES AMOUNT
------ ------
MFS TOTAL RETURN PORTFOLIO
Sold 161,535 $1,661,251
Issued as reinvestment
of dividends 2,481 26,938
Redeemed (23,741) (254,329)
-------- ----------
Net increase 140,275 $1,433,860
======= ==========
SALOMON U.S. QUALITY BOND PORTFOLIO
Sold 168,853 $1,674,647
Issued as reinvestment
of dividends 6,530 64,078
Redeemed (17,128) (170,466)
-------- ----------
Net increase 158,255 $1,568,259
======= ==========
STRONG INTERNATIONAL STOCK PORTFOLIO
Sold 130,739 $1,327,854
Issued as reinvestment
of dividends 647 6,829
Redeemed (16,008) (169,112)
-------- ----------
Net increase 115,378 $1,165,571
======= ==========
STRONG GROWTH PORTFOLIO
Sold 138,342 $1,481,628
Issued as reinvestment
of dividends 8,177 96,589
Redeemed (19,540) (241,105)
-------- ----------
Net increase 126,979 $1,337,112
======= ==========
BERKELEY SMALLER COMPANIES PORTFOLIO
Sold 191,499 $2,060,025
Issued as reinvestment
of dividends 29,494 253,423
Redeemed (53,109) (574,868)
-------- ----------
Net increase 167,884 $1,738,580
======= ==========
Shares Amount
LEXINGTON CORPORATE LEADERS PORTFOLIO
Sold 122,449 $1,250,539
Issued as reinvestment
of dividends 1,232 13,929
Redeemed (8,032) (90,134)
------- ----------
Net increase 115,649 $1,174,334
======= ==========
THE LPT VARIABLE INSURANCE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
6. FOREIGN SECURITIES
All Portfolios may invest in securities of foreign companies and foreign
governments. There are certain risks involved in investing in foreign
securities that are in addition to the usual risks inherent in domestic
investments. These risks include those resulting from future adverse
political and economic developments, reduced availability of public
information concerning issues, lower standards of accounting, auditing, and
financial reporting, less market liquidity, greater volatility of prices,
and a possible imposition of currency exchange blockages or restrictions on
securities, transactions, or transfer of assets.
7. CAPITAL LOSS CARRYFORWARD
At December 31, 1996, the following funds had a capital loss carryforward
which expires on December 31, 2004:
FUND AMOUNT
---- ------
MFS Total Return Portfolio $2,904
Salomon U.S. Quality Bond Portfolio 22,025
Salomon Money Market Portfolio 27
Berkeley Smaller Companies Portfolio 46,696
Lexington Corporate Leaders Portfolio 2
At December 31, 1996, Berkeley Smaller Companies Portfolio has a
Post-October loss of $213,636, which is deferred until January 1, 1997.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of
The London Pacific Trust
Variable Insurance Series Trust
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of each of
the portfolios (Berkeley Smaller Companies, Lexington Corporate Leaders,
MAS Value, MFS Total Return, Salomon Money Market, Salomon U.S. Quality
Bond, Strong Growth, Strong International Stock) constituting The London
Pacific Trust Variable Insurance Series Trust (the "Trust") at December 31,
1996, and the results of each of their operations, the changes in each of
their net assets and their financial highlights for the period January 31,
1996 (commencement of operations) to December 31, 1996, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Trust's management; our responsibility is to
express an opinion on these financial statements based on our audit. We
conducted our audit of these financial statements in accordance with
generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit, which included
confirmation of securities at December 31, 1996 by correspondence with the
custodian and brokers and the application of alternative auditing
procedures where confirmations from brokers were not received, provides a
reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
February 10, 1997
This Annual Report has been prepared to provide information to the
owners of London Pacific Life & Annuity Company's Regency Series
Variable Annuity. If it is used for any other purpose, it must be
accompanied or preceded by a current Regency Series prospectus, which
discloses any charges and other important information about the
Separate Account, together with the current prospectus for the LPT
Variable Insurance Series Trust.
