<Page> ----------------------------- OMB APPROVAL ----------------------------- OMB Number: 3235-0570 Expires: November 30, 2005 Estimated average burden hours per response....... 5.0 ----------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-7556 811-5199 --------------------------------------------- Liberty Variable Investment Trust SteinRoe Variable Investment Trust - ------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) One Financial Center, Boston, Massachusetts 02111 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Russell L. Kane, Esq. Columbia Management Group, Inc. One Financial Center Boston, MA 02111 - ------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 1-617-426-3363 ---------------------------- Date of fiscal year end: December 31, 2003 -------------------------- Date of reporting period: June 30, 2003 ------------------------- Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. Section 3507. <Page> ITEM 1. REPORTS TO STOCKHOLDERS SEMIANNUAL REPORT JUNE 30, 2003 [GRAPHIC] LIBERTY VARIABLE INVESTMENT TRUST STEINROE VARIABLE INVESTMENT TRUST <Page> PRESIDENT'S MESSAGE Liberty Variable Investment Trust SteinRoe Variable Investment Trust Dear Shareholder: Despite the uncertainty that hung over the markets and the economy as the nation prepared to go to war in Iraq, the six-month period ended on a high note. Virtually all major segments of the stock and bond markets posted positive returns for the period. The economy, though still struggling, has made progress toward recovery. And a new tax law is intended to boost consumer spending power and make investing more attractive. The Jobs and Growth Tax Relief Reconciliation Act of 2003 accelerates income tax rate cuts for virtually all Americans and slashes the tax rates on dividends and long-term capital gains. The government is counting on Americans to turn their good fortune into higher spending. And the financial media has been full of advice on how to take advantage of the new rate structure. As you debate what you will do if the lower tax rate turns into a modest personal windfall, consider strategies that could have a long-term impact on your portfolio. If your take-home pay increases as a result of the tax break and any rebate check you are entitled to receive--and if it's not eaten up by higher state taxes--consider investing at least one third of it. Consider adding it to your retirement account, using it to start an education account for your child or setting it aside for an emergency. But make a commitment and stick to it. Think of it as found money, because that is what it is. You didn't have it before. But now that you've found it, you can put it to work for a long-term goal. And, before you take advice from a television pundit or a magazine cover story, talk to your financial advisor. There may be tax-related strategies that make sense for you. But there are no one-size-fits-all solutions. Keep in mind that tax rates change, and many of the provisions of this law are set to expire in just a few short years. CONSOLIDATION AND A NEW NAME: COLUMBIA On a separate note, I am pleased to announce that, effective April 1, 2003, six of the asset management firms brought together when Columbia Management Group, Inc. was formed were consolidated and renamed Columbia Management Advisors, Inc. (Columbia Management). This consolidation does not affect the management or investment objectives of your fund and is the next step in our efforts to create a consistent identity and to streamline our organization. By consolidating these firms, we are able to create a more efficient organizational structure and strengthen certain key functions, such as research. Although the name of the asset manager familiar to you has changed, what hasn't changed is the commitment of our specialized investment teams to a multi-disciplined approach to investing, focused on our goal of offering shareholders the best products and services. Sincerely, /s/ Joseph R. Palombo Joseph R. Palombo President MEET THE NEW PRESIDENT Joseph R. Palombo, president and chairman of the Board of Trustees for Liberty Funds, is also chief operating officer and executive vice president of Columbia Management. Mr. Palombo has over 19 years of experience in the financial services industry. Prior to joining Columbia Management, he was chief operating officer and chief compliance officer for Putnam Mutual Funds. Prior to that, he was a partner at Coopers & Lybrand. Mr. Palombo received his degree in economics/accounting from the College of the Holy Cross, where he was a member of Phi Beta Kappa. He earned his master's degree in taxation from Bentley College and participated in the Executive Program at the Amos B. Tuck School at Dartmouth College. - NOT FDIC INSURED - MAY LOSE VALUE - NO BANK GUARANTEE The examples provided should be viewed as illustrations. They do not constitute tax or legal advice. Neither Columbia Management Advisors, Inc., nor its affiliates, including Liberty Funds Distributor, Inc., provide tax or legal advice. A tax advisor or attorney can provide you with answers to specific questions about taxes and other legal issues. Economic and market conditions change frequently. There is no assurance that the trends described in this report will continue or commence. <Page> IMPORTANT NOTE TO SHAREHOLDERS At a special meeting on February 19, 2003, shareholders approved the fund mergers listed below. These mergers occurred during April 2003. LIBERTY VARIABLE INVESTMENT TRUST <Table> <Caption> MERGING FUND ACQUIRING FUND NEW NAME OF ACQUIRING FUND - ---------------------------------------- ------------------------------------ ------------------------------------ - - Colonial Global Equity Fund, Colonial International Fund for Columbia International Fund, Variable Series Growth, Variable Series Variable Series - - Colonial International Horizons Fund, Variable Series - - Stein Roe Global Utilities Fund, Variable Series - - Colonial High Yield Securities Fund, Columbia High Yield Fund, Columbia High Yield Fund, Variable Series Variable Series Variable Series - - Galaxy VIP Columbia High Yield Fund II - - Crabbe Huson Real Estate Columbia Real Estate Equity Fund, Columbia Real Estate Equity Fund, Investment Fund, Variable Series Variable Series Variable Series - - Galaxy VIP Columbia Real Estate Equity Fund II - - Galaxy VIP Growth and Income Fund Liberty Equity Fund, Variable Series Liberty Equity Fund, Variable Series - - Galaxy VIP Equity Fund - - Liberty Value Fund, Variable Series Colonial U.S. Growth & Income Fund, Liberty Growth & Income Fund, Variable Series Variable Series </Table> STEINROE VARIABLE INVESTMENT TRUST <Table> <Caption> MERGING FUND ACQUIRING FUND NAME OF COMBINED FUND - ---------------------------------------- ------------------------------------ ------------------------------------ - - Galaxy VIP Asset Allocation Fund Stein Roe Balanced Fund, Liberty Asset Allocation Fund, Variable Series Variable Series - - Galaxy VIP Money Market Fund Stein Roe Money Market Fund, Liberty Money Market Fund, Variable Series Variable Series - - Galaxy VIP Quality Plus Bond Fund Liberty Federal Securities Fund, Liberty Federal Securities Fund, Variable Series Variable Series - - Galaxy VIP Small Company Growth Fund Stein Roe Small Company Growth Fund, Liberty Small Company Growth Fund, Variable Series Variable Series </Table> If you were invested in a fund that merged, your investment is now in the acquiring fund. If you have questions about this event, please contact your insurance company. <Page> PERFORMANCE AT A GLANCE Liberty Variable Investment Trust SteinRoe Variable Investment Trust Wanger Advisors Trust <Table> <Caption> AVERAGE ANNUAL TOTAL RETURN AS OF 6/30/03 (%) (CUMULATIVE) INCEPTION 6-MONTH 1-YEAR 5-YEAR 10-YEAR LIFE - ----------------------------------------------------------------------------------------------------------------------------------- LIBERTY VARIABLE INVESTMENT TRUST Colonial Small Cap Value Fund, Variable Series -- A 5/19/98 10.02 -1.65 4.26 -- 4.26 Colonial Strategic Income Fund, Variable Series -- A 7/5/94 11.80 18.80 5.55 -- 7.69 Columbia High Yield Fund, Variable Series -- A 3/3/98 7.86 11.41 5.46 -- 5.71 Columbia International Fund, Variable Series -- A 5/2/94 11.11 -2.39 -3.83 -- -0.46 Columbia Real Estate Equity Fund, Variable Series -- A 3/3/98 11.84 2.86 6.20 -- 5.62 Liberty All-Star Equity Fund, Variable Series -- A 11/17/97 16.73 3.64 -1.97 -- 0.66 Liberty Equity Fund, Variable Series -- A 1/11/93 11.91 -2.10 -1.67 8.08 -- Liberty Growth & Income Fund, Variable Series -- A 7/5/94 7.77 -3.97 0.28 -- 10.94 Liberty S&P 500 Index Fund, Variable Series -- A 5/30/00 11.46 -0.29 -- -- -10.11 Liberty Select Value Fund, Variable Series -- A 5/30/00 7.59 -6.17 -- -- 3.24 Newport Tiger Fund, Variable Series -- A 5/1/95 7.59 -4.75 5.56 -- -1.91 STEINROE VARIABLE INVESTMENT TRUST Liberty Asset Allocation Fund, Variable Series -- A 1/1/89 9.29 3.12 0.60 6.51 -- Liberty Federal Securities Fund, Variable Series -- A 1/1/89 3.10 9.15 6.99 6.69 -- Liberty Money Market Fund, Variable Series -- A 1/1/89 0.36 0.89 3.71 4.20 -- Liberty Small Company Growth Fund, Variable Series -- A 1/1/89 17.15 0.25 -0.31 5.84 -- Stein Roe Growth Stock Fund, Variable Series -- A 1/1/89 10.85 -5.00 -5.39 7.24 -- </Table> Past performance is no guarantee of future investment results. The principal value and investment returns will fluctuate, resulting in a gain or loss on sale. <Page> TABLE OF CONTENTS Liberty Variable Investment Trust <Table> PORTFOLIO MANAGERS' DISCUSSIONS Colonial Small Cap Value Fund, Variable Series 2 Colonial Strategic Income Fund, Variable Series 15 Columbia High Yield Fund, Variable Series 32 Columbia International Fund, Variable Series 49 Columbia Real Estate Equity Fund, Variable Series 63 Liberty All-Star Equity Fund, Variable Series 75 Liberty Equity Fund, Variable Series 88 Libery Growth & Income Fund, Variable Series 101 Liberty S&P 500 Index Fund, Variable Series 113 Liberty Select Value Fund, Variable Series 129 Newport Tiger Fund, Variable Series 139 FINANCIAL STATEMENTS Colonial Small Cap Value Fund, Variable Series 4 Colonial Strategic Income Fund, Variable Series 17 Columbia High Yield Fund, Variable Series 34 Columbia International Fund, Variable Series 51 Columbia Real Estate Equity Fund, Variable Series 65 Liberty All-Star Equity Fund, Variable Series 77 Liberty Equity Fund, Variable Series 90 Libery Growth & Income Fund, Variable Series 103 Liberty S&P 500 Index Fund, Variable Series 115 Liberty Select Value Fund, Variable Series 131 Newport Tiger Fund, Variable Series 141 </Table> <Page> TABLE OF CONTENTS SteinRoe Variable Investment Trust Wanger Advisors Trust <Table> STEINROE VARIABLE INVESTMENT TRUST PORTFOLIO MANAGERS' DISCUSSIONS Liberty Asset Allocation Fund, Variable Series 152 Liberty Federal Securities Fund, Variable Series 177 Liberty Money Market Fund, Variable Series 192 Liberty Small Company Growth Fund, Variable Series 203 Stein Roe Growth Stock Fund, Variable Series 216 FINANCIAL STATEMENTS Liberty Asset Allocation Fund, Variable Series 153 Liberty Federal Securities Fund, Variable Series 178 Liberty Money Market Fund, Variable Series 193 Liberty Small Company Growth Fund, Variable Series 204 Stein Roe Growth Stock Fund, Variable Series 217 </Table> Must be preceded or accompanied by a prospectus. Liberty Funds Distributor, Inc. 8/2003 <Page> Liberty Variable Investment Trust LIBERTY VARIABLE INVESTMENT TRUST <Page> PORTFOLIO MANAGER'S DISCUSSION Colonial Small Cap Value Fund, Variable Series / June 30, 2003 Colonial Small Cap Value Fund, Variable Series seeks long-term growth by investing primarily in smaller capitalization equities. Stephen D. Barbaro, CFA, has managed the fund since June 2002. He joined a predecessor of Columbia Management Advisors, Inc. in 1976. After three years of declines, stocks made a strong comeback in the first half of 2003. Nearly all sectors posted positive returns, buoyed by an end to the major military campaigns in the war with Iraq and an improved economic outlook. As investor optimism increased, small-cap stocks beat their large-cap counterparts. The fund posted strong gains despite weak stock selection in the industrial and health care sectors. INEXPENSIVE STOCKS WITH GOOD FINANCIALS FELL FROM FAVOR We maintained the fund's strategic focus on stocks with inexpensive valuations, good earnings prospects and balance sheets that included low levels of debt and high cash positions. We stayed with our discipline even though the best performers during the spring rally were lower quality names. Some of the fund's largest sector positions posted strong returns. Within financials, the fund benefited from focusing on banks, insurers and specialty financial companies. In the consumer discretionary sector, strong stock selection among specialty retailers, restaurants and clothing manufacturers helped performance. Our technology stock picks also did well. However, the fund's technology holdings appreciated less than those in the S&P SmallCap/600 Barra Value Index because we underweighted more speculative Internet and semiconductor equipment names. Our investments in industrial and health care companies also fell behind the index because we avoided the lower-quality, speculative companies that posted the best gains for the period. OPPORTUNISTIC BUYING AND SELLING When a stock's valuation is no longer inexpensive or a company's prospects weaken, our strategy is generally to sell and look for better opportunities elsewhere. As a result of this approach, we reduced our stake in the consumer discretionary sector during the period. We sold specialty retailers that had appreciated and restaurants whose prospects had weakened. We invested some of the proceeds in economically-sensitive technology stocks with reasonable valuations, including semi-conductor and hardware stocks as well as software and services names. As the economy continues to show slow and steady economic improvement in the second half of 2003, we believe that small-cap stocks have the potential to benefit. Economic and market conditions can frequently change. There is no assurance that the trends described here will continue or commence. Investing in Colonial Small Cap Value Fund, Variable Series may present special risks, including possible illiquidity and greater price volatility than stocks of larger, more established companies. 2 <Page> PERFORMANCE INFORMATION Colonial Small Cap Value Fund, Variable Series / June 30, 2003 AVERAGE ANNUAL TOTAL RETURN AS OF JUNE 30, 2003 (%) <Table> <Caption> (CUMULATIVE) 6-MONTH 1-YEAR 5-YEAR LIFE - -------------------------------------------------------------------------- Class A (5/19/98) 10.02 -1.65 4.26 4.26 S&P SmallCap 600/ Barra Value Index(1) 12.97 -8.38 3.81 3.74 </Table> Inception date of share class is in parentheses. [CHART] VALUE OF A $10,000 INVESTMENT, 5/19/98 - 6/30/03 <Table> <Caption> CLASS A SHARES S&P SMALLCAP 600/BARRA VALUE INDEX May-98 $ 10,020 $ 10,000 06/01/1998 - 06/30/1998 $ 10,050 $ 9,995 07/01/1998 - 07/31/1998 $ 9,120 $ 9,070 08/01/1998 - 08/31/1998 $ 7,201 $ 7,434 09/01/1998 - 09/30/1998 $ 7,461 $ 7,829 10/01/1998 - 10/31/1998 $ 7,881 $ 8,171 11/01/1998 - 11/30/1998 $ 8,401 $ 8,520 12/01/1998 - 12/31/1998 $ 8,675 $ 8,855 01/01/1999 - 01/31/1999 $ 8,464 $ 8,753 02/01/1999 - 02/28/1999 $ 7,626 $ 8,040 03/01/1999 - 03/31/1999 $ 7,525 $ 8,009 04/01/1999 - 04/30/1999 $ 8,030 $ 8,707 05/01/1999 - 05/31/1999 $ 8,354 $ 9,054 06/01/1999 - 06/30/1999 $ 8,788 $ 9,604 07/01/1999 - 07/31/1999 $ 8,778 $ 9,454 08/01/1999 - 08/31/1999 $ 8,324 $ 9,058 09/01/1999 - 09/30/1999 $ 8,273 $ 8,891 10/01/1999 - 10/31/1999 $ 8,313 $ 8,686 11/01/1999 - 11/30/1999 $ 8,545 $ 8,881 12/01/1999 - 12/31/1999 $ 9,226 $ 9,124 01/01/2000 - 01/31/2000 $ 8,640 $ 8,656 02/01/2000 - 02/29/2000 $ 9,216 $ 9,048 03/01/2000 - 03/31/2000 $ 9,358 $ 9,382 04/01/2000 - 04/30/2000 $ 9,459 $ 9,447 05/01/2000 - 05/31/2000 $ 9,317 $ 9,293 06/01/2000 - 06/30/2000 $ 9,702 $ 9,560 07/01/2000 - 07/31/2000 $ 9,793 $ 9,748 08/01/2000 - 08/31/2000 $ 10,582 $ 10,318 09/01/2000 - 09/30/2000 $ 10,582 $ 10,297 10/01/2000 - 10/31/2000 $ 10,633 $ 10,347 11/01/2000 - 11/30/2000 $ 9,874 $ 9,663 12/01/2000 - 12/31/2000 $ 10,969 $ 11,028 01/01/2001 - 01/31/2001 $ 11,071 $ 11,901 02/01/2001 - 02/28/2001 $ 10,744 $ 11,399 03/01/2001 - 03/31/2001 $ 10,570 $ 10,926 04/01/2001 - 04/30/2001 $ 11,358 $ 11,584 05/01/2001 - 05/31/2001 $ 11,695 $ 11,879 06/01/2001 - 06/30/2001 $ 11,777 $ 12,333 07/01/2001 - 07/31/2001 $ 11,849 $ 12,217 08/01/2001 - 08/31/2001 $ 11,614 $ 12,020 09/01/2001 - 09/30/2001 $ 10,226 $ 10,300 10/01/2001 - 10/31/2001 $ 10,462 $ 10,771 11/01/2001 - 11/30/2001 $ 11,167 $ 11,633 12/01/2001 - 12/31/2001 $ 11,990 $ 12,472 01/01/2002 - 01/31/2002 $ 12,083 $ 12,706 02/01/2002 - 02/28/2002 $ 12,321 $ 12,651 03/01/2002 - 03/31/2002 $ 13,182 $ 13,750 04/01/2002 - 04/30/2002 $ 13,421 $ 14,313 05/01/2002 - 05/31/2002 $ 13,006 $ 13,770 06/01/2002 - 06/30/2002 $ 12,591 $ 13,155 07/01/2002 - 07/31/2002 $ 11,056 $ 11,016 08/01/2002 - 08/31/2002 $ 11,305 $ 11,002 09/01/2002 - 09/30/2002 $ 10,531 $ 10,192 10/01/2002 - 10/31/2002 $ 10,749 $ 10,397 11/01/2002 - 11/30/2002 $ 11,581 $ 10,958 12/01/2002 - 12/31/2002 $ 11,255 $ 10,668 01/01/2003 - 01/31/2003 $ 10,912 $ 10,227 02/01/2003 - 02/28/2003 $ 10,353 $ 9,849 03/01/2003 - 03/31/2003 $ 10,385 $ 9,818 04/01/2003 - 04/30/2003 $ 11,202 $ 10,707 05/01/2003 - 05/31/2003 $ 12,126 $ 11,705 Jun-03 $ 12,380 $ 12,052 </Table> <Table> <Caption> NET ASSET VALUE PER SHARE ($) 12/31/02 6/30/03 - ------------------------------------------------------ Class A 10.48 11.53 </Table> PAST PERFORMANCE CANNOT PREDICT FUTURE INVESTMENT RESULTS. SHARE PRICE AND INVESTMENT RETURN WILL VARY, SO YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. Total return performance includes changes in share price and reinvestment of all distributions. The (Standard & Poor's) S&P SmallCap 600/Barra Value Index is an unmanaged index that tracks the performance of value stocks determined by low price-to-book ratios, in the S&P SmallCap 600 Index. Indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. MUTUAL FUND PERFORMANCE CHANGES OVER TIME. CURRENT RETURNS FOR THE FUND MAY BE DIFFERENT THAN THAT SHOWN. Performance numbers reflect all fund expenses, but do not include any insurance charges imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. (1) Index performance is from May 31, 1998. 3 <Page> INVESTMENT PORTFOLIO Colonial Small Cap Value Fund, Variable Series / June 30, 2003 (Unaudited) <Table> <Caption> SHARES VALUE ------------ ------------ COMMON STOCKS--96.5% CONSUMER DISCRETIONARY--17.5% AUTO COMPONENTS--1.1% BorgWarner, Inc. 1,900 $ 122,360 Modine Manufacturing Co. 3,350 64,890 Standard Motor Products, Inc. 6,500 72,150 ------------ 259,400 ------------ AUTOMOBILES--0.2% Monaco Coach Corp. (a) 3,600 55,188 ------------ HOTELS, RESTAURANTS & LEISURE--2.9% Bally Total Fitness Holding Corp. (a) 12,400 111,972 CBRL Group, Inc. 3,900 151,554 Landry's Restaurants, Inc. 6,650 156,940 Lone Star Steakhouse & Saloon 8,850 192,664 Magna Entertainment Corp. (a) 100 500 Prime Hospitality Corp. (a) 11,220 75,286 ------------ 688,916 ------------ HOUSEHOLD DURABLES--2.0% American Greetings Corp. (a) 6,500 127,660 Bassett Furniture Industries, Inc. 7,350 97,608 Jacuzzi Brands Inc. (a) 18,600 98,394 Russ Berrie & Co, Inc. 1,300 47,463 Toro Co. 2,900 115,275 ------------ 486,400 ------------ LEISURE EQUIPMENT & PRODUCTS--0.8% Jakks Pacific, Inc. (a) 8,650 114,958 Johnson Outdoors, Inc. (a) 4,600 62,790 Travis Boats & Motors, Inc. (a) 10,336 8,372 ------------ 186,120 ------------ MEDIA--1.5% Alliance Atlantis Communications, Inc. (a) 13,200 191,796 Liberty Corp. 3,800 161,500 ------------ 353,296 ------------ MULTI-LINE RETAIL--0.9% Neiman-Marcus Group, Inc. (a) 3,900 142,740 ShopKo Stores, Inc. (a) 5,850 76,050 ------------ 218,790 ------------ SPECIALTY RETAIL--5.4% Building Material Holding Corp. 3,900 57,759 Dress Barn, Inc. (a) 6,300 79,821 Friedman's, Inc. 6,800 77,316 Goody's Family Clothing, Inc. 11,900 102,935 GTSI Corp. (a) 3,650 31,755 Hughes Supply, Inc. 2,900 100,630 Monro Muffler, Inc. (a) 5,750 162,495 Movie Gallery, Inc. (a) 5,900 108,855 Office Max Inc. (a) 10,300 67,465 Rent-Way, Inc. (a) 18,100 84,165 TBC Corp. (a) 8,150 155,258 United Rentals, Inc. (a) 6,300 87,507 Zale Corp. (a) 3,950 158,000 ------------ 1,273,961 ------------ TEXTILES & APPAREL--2.7% Delta Apparel, Inc. 3,150 $ 51,187 Kellwood Co. 6,050 191,362 Maxwell Shoe Co. (a) 9,150 131,760 Nautica Enterprises, Inc. (a) 6,000 76,980 Phillips-Van Heusen 1,100 14,993 Russell Corp. 6,400 121,600 Stride Rite Corp. 5,200 51,792 ------------ 639,674 ------------ CONSUMER STAPLES--2.7% FOOD PRODUCTS--2.0% Central Garden and Pet Co. (a) 4,800 114,480 Corn Products International, Inc. 6,500 195,195 Ralcorp Holdings, Inc. (a) 6,950 173,472 ------------ 483,147 ------------ PERSONAL PRODUCTS--0.1% Inter Parfums, Inc. (a) 4,800 35,520 ------------ TOBACCO--0.6% Universal Corp.-Va 3,200 135,360 ------------ ENERGY--5.4% ENERGY EQUIPMENT & SERVICES--1.6% Lufkin Industries, Inc. 5,450 132,708 Universal Compression Holdings, Inc. (a) 4,650 96,999 Willbros Group, Inc. (a) 14,140 146,915 ------------ 376,622 ------------ OIL & GAS--3.8% Denbury Resources, Inc. (a) 8,850 118,855 Harvest Natural Resources, Inc. (a) 22,950 146,191 Peabody Energy Corp. 10,550 354,374 Vintage Petroleum, Inc. 12,700 143,256 Westport Resources Corp. (a) 6,650 151,288 ------------ 913,964 ------------ FINANCIALS--20.9% BANKS--10.5% Bancfirst Corp. 700 36,302 BancorpSouth, Inc. 6,200 129,270 Bank of Granite Corp. 5,800 98,890 Bryn Mawr Bank Corp. 3,800 140,866 Capitol Bancorp, Ltd. 2,800 75,880 Chemical Financial Corp. 5,967 177,817 Chittenden Corp. 7,200 196,920 Community First Bankshares, Inc. 4,550 124,215 Community Trust Bancorp, Inc. 3,140 82,080 Corus Bankshares, Inc. 3,100 150,133 First Citizens BancShares, Inc. 900 90,756 First Financial Bankshares, Inc. 2,875 96,197 Hancock Holding Co. 1,400 65,884 </Table> See Notes to Investment Portfolio. 4 <Page> <Table> <Caption> SHARES VALUE ------------ ------------ MainSource Financial Group, Inc. 2,100 $ 51,177 MASSBANK Corp. 2,000 72,340 Merchants Bancshares, Inc. 4,800 124,800 MetroCorp. Bancshares, Inc. 1,150 13,915 Mid-State Bancshares 8,450 166,888 Northrim BanCorp., Inc. 4,400 79,772 Omega Financial Corp. 1,700 58,140 Riggs National Corp. 9,380 142,764 Simmons First National Corp. 4,600 92,046 Trico Bancshares 6,050 153,852 Whitney Holding Corp. 2,100 67,137 ------------ 2,488,041 ------------ DIVERSIFIED FINANCIALS--1.9% Cash America International, Inc. 16,340 216,015 CompuCredit Corp. (a) 3,200 38,880 Metris Cos., Inc. 17,800 98,790 MFC Bancorp, Ltd. (a) 13,600 112,866 ------------ 466,551 ------------ INSURANCE--3.6% AmerUs Group Co. 2,300 64,837 Commerce Group, Inc. 3,000 108,600 Delphi Financial Group 4,024 188,323 Kansas City Life Insurance Co. (a) 900 38,556 Navigators Group, Inc. 1,600 47,712 Phoenix Cos., Inc. 15,150 136,804 RLI Corp. 4,200 138,180 State Auto Financial Corp. 4,250 95,412 Universal American Financial Corp. (a) 5,700 36,309 ------------ 854,733 ------------ REAL ESTATE--4.9% American Financial Realty Trust 2,800 41,748 Boykin Lodging Co. 9,000 70,200 EastGroup Properties, Inc. 4,250 114,750 Equity One, Inc. 6,900 113,160 Getty Realty Corp. 4,850 108,252 Keystone Property Trust 4,850 89,774 Mid-America Apartment Communities, Inc. 4,950 133,699 Nationwide Health Properties, Inc. 8,150 129,829 PS Business Parks, Inc. 5,000 176,500 RFS Hotel Investors, Inc. 1,250 15,400 Universal Health Realty Income Trust 3,200 86,400 Urstadt Biddle Properties 6,600 84,876 ------------ 1,164,588 ------------ HEALTH CARE--6.2% HEALTH CARE EQUIPMENT & SUPPLIES--0.5% Sola International, Inc. (a) 7,000 121,800 ------------ HEALTH CARE PROVIDERS & SERVICES--5.2% Cross Country Healthcare Inc. (a) 6,800 89,692 Genesis Health Ventures, Inc. (a) 7,400 130,610 Humana, Inc. (a) 10,000 151,000 Kindred Healthcare, Inc. (a) 3,800 $ 67,792 LifePoint Hospitals, Inc. (a) 2,300 48,162 MAXIMUS, Inc. (a) 2,300 63,549 Pacificare Health Systems (a) 3,500 172,655 Pediatrix Medical Group, Inc. (a) 3,400 121,210 Province Healthcare Co. (a) 4,500 49,815 Stewart Enterprises, Inc. (a) 19,500 83,850 Sunrise Assisted Living, Inc. (a) 4,200 93,996 US Oncology, Inc. (a) 23,770 175,660 ------------ 1,247,991 ------------ PHARMACEUTICALS--0.5% Alpharma, Inc. 5,200 112,320 ------------ INDUSTRIALS--16.7% AEROSPACE & DEFENSE--1.6% Armor Holdings, Inc. (a) 7,700 103,180 Herley Industries, Inc. (a) 4,700 79,806 Ladish Co., Inc. (a) 10,950 72,489 Precision Castparts Corp. 4,200 130,620 ------------ 386,095 ------------ AIR FREIGHT & COURIERS--0.5% Ryder System, Inc. 4,900 125,538 ------------ AIRLINES--1.3% Atlantic Coast Airlines Holdings, Inc. (a) 9,300 125,457 Mesaba Holdings, Inc. (a) 6,350 39,180 Skywest, Inc. 7,400 141,044 ------------ 305,681 ------------ BUILDING PRODUCTS--0.9% NCI Building Systems, Inc. (a) 5,100 85,170 Watsco, Inc. 8,150 134,964 ------------ 220,134 ------------ COMMERCIAL SERVICES & SUPPLIES--5.2% Banta Corp. 3,600 116,532 Cable Design Technologies Corp. (a) 8,900 63,635 Casella Waste Systems, Inc. (a) 17,000 153,510 Century Business Services, Inc. (a) 18,600 60,450 Consolidated Graphics, Inc. (a) 6,950 159,016 Electro Rent Corp. (a) 2,950 31,801 Handleman Co. (a) 9,000 144,000 Imagistics International, Inc. (a) 7,650 197,370 Kimball International 8,900 138,840 ProsoftTraining (a) 53,554 23,028 Sourcecorp (a) 4,700 101,520 Teletech Holdings Inc. (a) 9,400 39,762 ------------ 1,229,464 ------------ CONSTRUCTION & ENGINEERING--2.0% Chicago Bridge & Iron Co. NV 4,520 102,514 Comfort Systems USA, Inc. (a) 16,450 43,263 EMCOR Group, Inc. (a) 4,500 222,120 Shaw Group, Inc. (a) 7,850 94,592 ------------ 462,489 ------------ </Table> See Notes to Investment Portfolio. 5 <Page> <Table> <Caption> SHARES VALUE ------------ ------------ ELECTRICAL EQUIPMENT--0.9% Genlyte Group, Inc. (a) 2,600 $ 90,922 Tecumseh Products Co. 3,200 122,592 ------------ 213,514 ------------ INDUSTRIAL CONGLOMERATES--0.4% Carlisle Cos., Inc. 2,500 105,400 ------------ MACHINERY--3.1% Alamo Group, Inc. 3,600 43,992 Briggs & Stratton 2,300 116,150 Esterline Technologies Corp. (a) 7,000 121,870 Harsco Corp. 5,400 194,670 Kadant, Inc. (a) 6,600 123,750 Oshkosh Truck Corp. 2,200 130,504 ------------ 730,936 ------------ ROAD & RAIL--0.8% Covenant Transport, Inc. (a) 5,450 92,650 Kansas City Southern 5,450 65,564 US Xpress Enterprises, Inc. (a) 3,200 34,112 ------------ 192,326 ------------ INFORMATION TECHNOLOGY--14.8% COMMUNICATIONS EQUIPMENT--1.6% Allen Telecom, Inc. (a) 6,600 109,032 Black Box Corp. 3,000 108,600 Optical Communication Products, Inc. (a) 23,900 43,020 Tollgrade Communications, Inc. (a) 6,150 114,698 ------------ 375,350 ------------ COMPUTERS & PERIPHERALS--1.9% Crossroads Systems, Inc. (a) 11,800 19,930 Electronics for Imaging (a) 4,700 95,363 Hutchinson Technology, Inc. (a) 1,100 36,179 Imation Corp. 1,200 45,384 Intergraph Corp. (a) 5,000 107,500 Iomega Corp. (a) 12,900 136,740 ------------ 441,096 ------------ ELECTRONIC EQUIPMENT & INSTRUMENTS--4.3% Analogic Corp. 1,900 92,644 Anixter International, Inc. (a) 2,950 69,118 Benchmark Electronics, Inc. (a) 3,500 107,660 Checkpoint Systems, Inc. (a) 7,100 100,465 MTS Systems Corp. 8,250 121,605 NU Horizons Electronics Corp. (a) 11,600 69,600 Pioneer Standard Electronics 11,750 99,640 Plexus Corp. (a) 7,400 85,322 Somera Communications, Inc. (a) 19,200 28,032 Tech Data Corp. (a) 4,400 117,524 Vishay Intertechnology, Inc. (a) 10,000 132,000 ------------ 1,023,610 ------------ INTERNET SOFTWARE & SERVICES--1.2% SonicWALL, Inc. (a) 24,650 118,320 Stellent Inc. (a) 13,000 70,200 Trizetto Group (a) 5,300 $ 32,012 Valueclick, Inc. (a) 11,650 70,250 ------------ 290,782 ------------ INFORMATION TECHNOLOGY CONSULTING & SERVICES--2.4% Acxiom Corp. (a) 6,900 104,121 American Management Systems, Inc. (a) 12,600 179,928 Computer Horizons Corp. (a) 8,500 38,590 Management Network Group, Inc. (a) 34,282 66,850 MPS Group, Inc. (a) 26,100 179,568 ------------ 569,057 ------------ SEMICONDUCTOR EQUIPMENT & PRODUCTION--1.8% Dupont Photomasks, Inc. (a) 5,350 100,740 Exar Corp. (a) 4,700 74,401 Integrated Device Technology (a) 10,200 112,710 Pericom Semiconductor Corp. (a) 7,100 66,030 Zoran Corp. (a) 4,300 82,603 ------------ 436,484 ------------ SOFTWARE--1.6% Novell, Inc. (a) 24,050 74,074 Pervasive Software, Inc. (a) 13,050 69,818 PLATO Learning, Inc. (a) 18,362 105,582 Sybase, Inc. (a) 8,600 119,626 ------------ 369,100 ------------ MATERIALS--6.0% CHEMICALS--3.0% Cytec Industries, Inc. (a) 7,200 243,360 HB Fuller Co. 4,300 94,686 Lubrizol Corp. 5,100 158,049 Minerals Technologies, Inc. 2,700 131,382 Schulman (A.), Inc. 5,450 87,527 ------------ 715,004 ------------ CONSTRUCTION MATERIALS--0.8% Amcol International Corp. 5,000 40,000 Centex Construction Products, Inc. 3,500 140,315 ------------ 180,315 ------------ CONTAINERS & PACKAGING--0.9% Aptargroup, Inc. 3,200 115,200 Greif, Inc. 4,150 95,450 ------------ 210,650 ------------ METALS & MINING--0.9% Carpenter Technology Corp. 7,000 109,200 RTI International Metals, Inc. (a) 9,350 101,260 ------------ 210,460 ------------ PAPER & FOREST PRODUCTS--0.4% Glatfelter 3,700 54,575 Schweitzer-Mauduit International, Inc. 2,000 48,280 ------------ 102,855 ------------ </Table> See Notes to Investment Portfolio. 6 <Page> <Table> <Caption> SHARES VALUE ------------ ------------ TELECOMMUNICATION SERVICES--1.6% DIVERSIFIED TELECOMMUNICATION--1.5% Advanced Fibre Communications (a) 7,800 $ 126,906 Mastec, Inc. (a) 23,800 137,088 North Pittsburgh Systems, Inc. 5,200 78,364 ------------ 342,358 ------------ WIRELESS TELECOMMUNICATION SERVICES--0.1% Metro One Telecommunications (a) 5,500 28,380 ------------ UTILITIES--4.7% ELECTRIC UTILITIES--3.6% Central Vermont Public Service Corp. 7,700 150,535 CH Energy Group, Inc. 5,200 234,000 El Paso Electric Co. (a) 8,400 103,572 Maine Public Service Co. 1,600 52,016 MGE Energy, Inc. 3,000 94,500 Northeast Utilities 12,400 207,576 ------------ 842,199 ------------ GAS UTILITIES--0.8% Cascade Natural Gas Corp. 3,400 64,940 Northwest Natural Gas Co. 2,400 65,400 WGL Holdings, Inc. 2,600 69,420 ------------ 199,760 ------------ MULTI-UTILITIES--0.3% MDU Resources Group, Inc. 1,900 63,631 ------------ TOTAL COMMON STOCKS (cost of $20,780,056) 22,935,050 ------------ LIMITED PURPOSE TRUST--0.2% INDUSTRIALS--0.2% TRADING COMPANIES & DISTRIBUTORS--0.2% Versacold Income Fund (cost of $43,984) 8,150 49,474 ------------ SINGLE PURPOSE TRUST--0.2% MATERIALS--0.2% PAPER & FOREST PRODUCTS--0.2% PRT Forest Regeneration Income Fund (cost of $35,585) 5,500 37,323 ------------ <Caption> PAR VALUE ------------ ------------ SHORT-TERM OBLIGATION--3.6% Repurchase agreement with State Street Bank & Trust Co., dated 6/30/2003, due 7/1/2003 at 1.000%, collateralized by a U.S.Treasury Bond maturing 5/15/2030, market value $871,281 (repurchase proceeds $854,024) (cost of $854,000) $ 854,000 $ 854,000 ------------ TOTAL INVESTMENTS--100.5% (cost of $21,713,625) (b) 23,875,847 ------------ OTHER ASSETS & LIABILITIES, NET--(0.5)% (118,142) ------------ NET ASSETS--100.0% $ 23,757,705 ============ </Table> NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing. (b) Cost for both financial statement and federal income tax purposes is the same. See Notes to Financial Statements. 7 <Page> STATEMENT OF ASSETS & LIABILITIES Colonial Small Cap Value Fund, Variable Series / June 30, 2003 (Unaudited) <Table> ASSETS: Investments, at cost $ 21,713,625 ------------ Investments, at value $ 23,875,847 Cash 281 Receivable for: Fund shares sold 58,595 Interest 24 Dividends 21,707 Deferred Trustees' compensation plan 2,752 ------------ TOTAL ASSETS 23,959,206 ------------ LIABILITIES: Expense reimbursement due to Manager/Distributer 6,328 Payable for: Investments purchased 39,647 Fund shares repurchased 124,942 Management fee 15,177 Distribution fee--Class B 138 Transfer agent fee 595 Audit fee 4,804 Reports to Shareholders 6,671 Deferred Trustees' fee 2,752 Other liabilities 447 ------------ TOTAL LIABILITIES 201,501 ------------ NET ASSETS $ 23,757,705 ------------ COMPOSITION OF NET ASSETS: Paid-in capital $ 21,731,794 Undistributed net investment income 54,459 Accumulated net realized loss (190,770) Net unrealized appreciation on investments 2,162,222 ------------ NET ASSETS $ 23,757,705 ------------ CLASS A: Net assets $ 8,483,342 Shares outstanding 735,535 ============ Net asset value per share $ 11.53 ============ CLASS B: Net assets $ 15,274,363 Shares outstanding 1,325,159 ============ Net asset value per share $ 11.53 ============ </Table> See Notes to Financial Statements. 8 <Page> STATEMENT OF OPERATIONS Colonial Small Cap Value Fund, Variable Series For the Six Months Ended June 30, 2003 (Unaudited) <Table> INVESTMENT INCOME: Dividends $ 155,923 Interest 1,804 ------------ Total Investment Income (net of foreign taxes withheld of $739) 157,727 ------------ EXPENSES: Management fee 78,288 Distribution fee--Class B 14,965 Pricing and bookkeeping fees 5,404 Transfer agent fee 3,720 Trustees' fee 3,227 Custody fee 9,880 Audit fee 8,760 Other expenses 5,028 ------------ Total Expenses 129,272 Fees and expenses waived or reimbursed by Manager (6,658) Fees reimbursed by Distributor--Class B (14,965) Custody earnings credit (25) ------------ Net Expenses 107,624 ------------ Net Investment Income 50,103 ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: Net realized gain (loss) on: Investments (614,575) Foreign currency transactions 384 ------------ Net realized loss (614,191) ------------ Net change in unrealized appreciation/depreciation on: Investments 2,623,747 Foreign currency translations 23 ------------ Net change in unrealized appreciation/depreciation 2,623,770 ------------ Net Gain 2,009,579 ------------ Net Increase in Net Assets from Operations $ 2,059,682 ============ </Table> See Notes to Financial Statements. 9 <Page> STATEMENTS OF CHANGES IN NET ASSETS Colonial Small Cap Value Fund, Variable Series <Table> <Caption> (UNAUDITED) SIX MONTHS ENDED YEAR ENDED JUNE 30, DECEMBER 31, INCREASE (DECREASE) IN NET ASSETS: 2003 2002 - ---------------------------------- ------------ ------------ OPERATIONS: Net investment income $ 50,103 $ 37,492 Net realized gain (loss) on investments and foreign currency transactions (614,191) 1,098,128 Net change in unrealized appreciation/depreciation on investments and foreign currency translations 2,623,770 (2,952,616) ------------ ------------ Net Increase (Decrease) from Operations 2,059,682 (1,816,996) ------------ ------------ DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income: Class A -- (8,389) Class B -- (12,808) From net realized gains: Class A -- (263,235) Class B -- (401,913) ------------ ------------ Total Distributions Declared to Shareholders -- (686,345) ------------ ------------ SHARE TRANSACTIONS: Class A: Subscriptions 1,043,530 4,146,927 Distributions reinvested -- 271,624 Redemptions (1,210,696) (4,761,716) ------------ ------------ Net Decrease (167,166) (343,165) ------------ ------------ Class B: Subscriptions 3,200,644 6,130,731 Distributions reinvested -- 414,721 Redemptions (1,307,717) (2,107,183) ------------ ------------ Net Increase 1,892,927 4,438,269 ------------ ------------ Net Increase from Share Transactions 1,725,761 4,095,104 ------------ ------------ Total Increase in Net Assets 3,785,443 1,591,763 NET ASSETS: Beginning of period 19,972,262 18,380,499 ------------ ------------ End of period (including undistributed net investment income of $54,459 and $4,356, respectively) $ 23,757,705 $ 19,972,262 ============ ============ CHANGES IN SHARES: Class A: Subscriptions 99,825 350,768 Issued for distributions reinvested -- 25,946 Redemptions (117,541) (433,274) ------------ ------------ Net Decrease (17,716) (56,560) ------------ ------------ Class B: Subscriptions 295,611 524,962 Issued for distributions reinvested -- 39,619 Redemptions (123,911) (191,963) ------------ ------------ Net Increase 171,700 372,618 ------------ ------------ </Table> See Notes to Financial Statements. 10 <Page> NOTES TO FINANCIAL STATEMENTS Colonial Small Cap Value Fund, Variable Series / June 30, 2003 (Unaudited) NOTE 1. ORGANIZATION AND ACCOUNTING POLICIES ORGANIZATION--Colonial Small Cap Value Fund, Variable Series (the "Fund"), a series of Liberty Variable Investment Trust (the "Trust"), is a diversified portfolio of a Massachusetts business trust, registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund's investment goal is to seek long-term growth by investing primarily in smaller capitalization stocks of U.S. companies. The Fund's capitalization consists of an unlimited number of shares of beneficial interest without par value that represent a separate series of the Trust. The Fund offers two classes of shares: Class A and Class B. Each share of a class represents an equal proportionate beneficial interest in that share class and, when issued and outstanding, is fully paid and nonassessable. Shareholders would be entitled to share proportionally in the net assets of their share class available for distribution to shareholders upon liquidation of the Fund. Shares of the Fund are available and are being marketed exclusively as a pooled funding vehicle for variable annuity contracts ("VA contracts") and Variable Life Insurance Policies ("VLI Policies") offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies"). The Participating Insurance Companies and their separate accounts own all the shares of the Fund. On April 1, 2003, Liberty Advisory Services Corp., the investment advisor to the Fund and Colonial Management Associates, Inc. ("Colonial"), the sub-advisor to the Fund, merged into Columbia Management Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co., an indirect wholly owned subsidiary of FleetBoston Financial Corporation. At the time of the merger, Columbia assumed the obligations of Liberty Advisory Services Corp. and Colonial with respect to the Fund. The merger did not change the way the Fund is managed, the investment personnel assigned to manage the Fund or the fees paid by the Fund. Columbia provides investment management and advisory services to the Fund pursuant to its Management Agreement with the Fund. Columbia also provides pricing and bookkeeping services to the Fund. Liberty Funds Distributor, Inc. ("LFD"), an affiliate of Columbia, serves as the principal underwriter of the Fund. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION AND TRANSACTIONS--Equity securities generally are valued at the last sale price or, in the case of unlisted or listed securities for which there were no sales during the day, at the current quoted bid price. Short-term obligations with a maturity of 60 days or less are valued at amortized cost. Investments for which market quotations are not readily available, or quotations which management believes are not appropriate, are valued at fair value under procedures approved by the Board of Trustees. Security transactions are accounted for on the date the securities are purchased, sold or mature. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS--All income, expenses (other than the Class B distribution fee), and realized and unrealized gains (losses) are allocated to each class proportionately on a daily basis for purposes of determining the net asset value of each class. The per share data was calculated using average shares outstanding during the period. In addition, Class B net investment income per share data and ratios reflect the distribution fee applicable to Class B shares only. FEDERAL INCOME TAXES--Consistent with the Fund's policy to qualify as a regulated investment company and to distribute all of its taxable income, no federal income tax has been accrued. DISTRIBUTIONS TO SHAREHOLDERS--The Fund intends to distribute as income dividends or capital gains distributions, at least annually, substantially all of its net investment income and net profits realized from the sale of investments. All dividends and distributions are reinvested in additional shares of the Fund at net asset value as of the record date of the distribution. Income and capital gain distributions are determined in accordance with federal income tax regulations. FOREIGN CURRENCY TRANSACTIONS--Net realized and unrealized gains (losses) on foreign currency transactions and translations includes gains (losses) arising from the fluctuations in exchange rates between trade and settlement dates on securities transactions, gains (losses) arising from the disposition of foreign currency, and currency gains (losses) between the accrual and payment dates on dividends, interest income and foreign withholding taxes. 11 <Page> The Fund does not distinguish that portion of gains (losses) on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the investments. Such fluctuations are included with the net realized and unrealized gains (losses) on investments. OTHER--Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date (except for certain foreign securities which are recorded as soon after ex-date as the Fund becomes aware of such), net of non-reclaimable tax withholdings. Where a high level of uncertainty as to collection exists, income on securities is recorded net of all tax withholdings with any rebates recorded when received. The Fund's custodian takes possession through the federal book-entry system of securities collateralizing repurchase agreements. Collateral is marked-to-market daily to ensure that the market value of the underlying assets remains sufficient to protect the Fund. The Fund may experience costs and delays in liquidating the collateral if the issuer defaults or enters bankruptcy. NOTE 2. FEDERAL TAX INFORMATION Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES MANAGEMENT FEE--Columbia receives a monthly fee equal to 0.80% annually of the Fund's average daily net assets. PRICING AND BOOKKEEPING FEES--Columbia is responsible for providing pricing and bookkeeping services to the Fund under a Pricing and Bookkeeping Agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Bank & Trust Company ("State Street"). Columbia pays fees to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual flat fee of $10,000, paid monthly, and in any month that the Fund's average daily net assets are more than $50 million, a monthly fee equal to the average daily net assets of the Fund for that month multiplied by a fee rate that is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. The Fund also pays out-of-pocket costs for pricing services. TRANSFER AGENT FEE--Liberty Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia, provides shareholder services for an annual rate of $7,500. DISTRIBUTION FEE--The Fund has adopted a 12b-1 plan, which requires it to pay LFD a monthly distribution fee equal to 0.25% annually of Class B average daily net assets. EXPENSE LIMITS--Columbia and LFD have voluntarily agreed to reimburse all expenses, including management fees and distribution fees, but excluding interest, taxes, brokerage and extraordinary expenses incurred by the Fund, in excess of 1.10% annually of the Fund's average daily net assets. LFD will first reimburse the Class B distribution fee up to 0.25% annually to reach the 1.10% limit on Class B expenses. If additional reimbursement is needed to meet the limit for each class, Columbia will then reimburse other expenses to the extent necessary. If additional reimbursement is still needed to reach the expense limit, Columbia will then waive a portion of its management fee to reach the expense limit. This arrangement may be terminated or modified by Columbia or LFD at any time. OTHER--The Fund pays no compensation to its officers, all of whom are employees of Columbia or its affiliates. The Fund's Independent Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. The Fund has an agreement with its custodian bank under which $25 of custody fees were reduced by balance credits for the six months ended June 30, 2003. The Fund could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if it had not entered into such an agreement. 12 <Page> NOTE 4. PORTFOLIO INFORMATION INVESTMENT ACTIVITY--For the six months ended June 30, 2003, purchases and sales of investments, other than short-term obligations, were $8,624,530 and $7,381,518, respectively. Unrealized appreciation (depreciation) at June 30, 2003, based on cost of investments for federal income tax purposes, was: <Table> Gross unrealized appreciation $ 3,047,775 Gross unrealized depreciation (885,553) ----------- Net unrealized appreciation $ 2,162,222 =========== </Table> OTHER--The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. Investing in the Fund may present special risks, including possible illiquidity and greater price volatility than stocks of larger, more established companies. 13 <Page> FINANCIAL HIGHLIGHTS Colonial Small Cap Value Fund, Variable Series--Class A Shares Selected data for a share outstanding throughout each period is as follows: <Table> <Caption> (UNAUDITED) SIX MONTHS PERIOD ENDED YEAR ENDED DECEMBER 31, ENDED JUNE 30, ----------------------------------------------- DECEMBER 31, 2003 2002 2001 2000 1999 1998 (a) ------------ -------- -------- -------- -------- ------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 10.48 $ 11.56 $ 10.73 $ 9.12 $ 8.59 $ 10.00 -------- -------- -------- -------- -------- -------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (b) 0.03 0.02 0.02 0.07 0.02 0.08 Net realized and unrealized gain (loss) on investments and foreign currency 1.02 (0.73) 0.98 1.65 0.52 (1.41) -------- -------- -------- -------- -------- -------- Total from Investment Operations 1.05 (0.71) 1.00 1.72 0.54 (1.33) -------- -------- -------- -------- -------- -------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- (0.01) (0.02) (0.05) (0.01) (0.07) In excess of net investment income -- -- -- -- -- (0.01) From net realized gains -- (0.36) (0.15) (0.06) -- -- -------- -------- -------- -------- -------- -------- Total Distributions Declared to Shareholders -- (0.37) (0.17) (0.11) (0.01) (0.08) -------- -------- -------- -------- -------- -------- NET ASSET VALUE, END OF PERIOD $ 11.53 $ 10.48 $ 11.56 $ 10.73 $ 9.12 $ 8.59 ======== ======== ======== ======== ======== ======== Total return (c)(d)(e) 10.02%(f) (6.12)% 9.30% 18.88% 6.34% (13.25)%(f) RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (g) 1.10%(h) 1.10% 1.10% 1.07% 1.00% 1.00%(h) Net investment income (g) 0.51%(h) 0.18% 0.22% 0.76% 0.23% 1.41%(h) Waiver/reimbursement 0.07%(h) 0.04% 0.22% 0.82% 2.66% 3.32%(h) Portfolio turnover rate 37%(f) 125% 56% 54% 74% 51%(f) Net assets, end of period (000's) $ 8,483 $ 7,893 $ 9,361 $ 7,616 $ 3,817 $ 1,782 </Table> (a) For the period from commencement of operations on May 19, 1998 to December 31, 1998. (b) Per share data was calculated using average shares outstanding during the period. (c) Total return at net asset value assuming all distributions reinvested. (d) Had the Manager and/or Distributor not waived or reimbursed a portion of expenses, total return would have been reduced. (e) Total return figure does not include any insurance company charges associated with a variable annuity. If included, total return would be reduced. (f) Not annualized. (g) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (h) Annualized. 14 <Page> PORTFOLIO MANAGER'S DISCUSSION Colonial Strategic Income Fund, Variable Series / June 30, 2003 Colonial Strategic Income Fund, Variable Series seeks current income consistent with prudent risk and maximum total return. Laura A. Ostrander is the fund's portfolio manager. She has managed or co-managed a number of funds for Columbia Management Advisors, Inc. and its predecessors since 1996. At the beginning of the period, investors remained wary of equities as issues over corporate governance and accounting scandals undermined confidence, and corporate profits showed little growth. Uncertainty about the outcome of a confrontation with Iraq also hung over the financial markets. During the second quarter, the major campaigns of the war ended, yields on US Treasuries reached a 45-year low and the Federal Reserve Board cut a key short-term interest rate to 1.0%. As a result, many investors were willing to take on additional risk in order to get additional yield. Low interest rates and an accommodating attitude on the part of banks also helped the environment for high-yield bonds. Debt issued by emerging markets benefited from the reduced uncertainty that followed the declaration of military victory in Iraq as well as low global interest rates. In addition, the US dollar, long felt to be overvalued against other world currencies, fell sharply. We increased our exposure to high-yield bonds, which benefited performance. The timing of our decision allowed us to participate significantly in the high-yield rally that began in the fourth quarter of 2002. Our emerging markets debt also performed well as investors looked outside the United States in search of additional yield. Yields of non-US government bonds were generally in line with US Treasuries. But as the value of the US dollar declined, non-US government bonds outperformed US Treasuries. The fund's exposure to bonds denominated in the Australian dollar, the New Zealand dollar, and the euro all helped performance as the US dollar declined sharply against other world currencies. At the end of the period, the fund's assets were divided roughly as follows: 40% in high-yield bonds; 26% in US Treasuries, other US government bonds and preferred stock; and 31% in non-US developed and emerging-market debt. The balance of our investments was in short-term securities and other assets. We kept our currency exposure stable during the period. LOOKING AHEAD We plan to maintain our exposure to high-yield bonds around the current level because we expect firmer economic growth in the second half of 2003. We are unlikely to increase exposure because we believe that this view on the economy is already priced into the market. Emerging market bonds continue to offer value at current levels, although we expect the pace of outperformance to slow. We also believe that the pace of the US dollar's decline versus other currencies will slow, and we will take this into consideration in managing our currency exposure going forward. Economic and market conditions can frequently change. There is no assurance that the trends described here will continue or commence. Strategic investing offers attractive income and total return opportunities, but also involves certain risks. The value and return of your investment may fluctuate as a result of changes in interest rates, the financial strength of issuers of lower-rated bonds, foreign, political and economic developments, and changes in currency exchange rates. Some of the countries the fund invests in are considered emerging economies, which means there may be greater risks associated with investing there than in more developed countries. In addition, concentration of investments in a single region may result in greater volatility. Investing in high-yield securities offers the potential for high current income and attractive total return, but involves certain risks. Lower-rated bond risks include default of the issuer, rising interest rates and risk associated with investing in securities of foreign and emerging markets, including currency exchange rate fluctuations and economic and political change. 15 <Page> PERFORMANCE INFORMATION Colonial Strategic Income Fund, Variable Series / June 30, 2003 AVERAGE ANNUAL TOTAL RETURN AS OF JUNE 30, 2003 (%) <Table> <Caption> (CUMULATIVE) 6-MONTH 1-YEAR 5-YEAR LIFE - --------------------------------------------------------------------------- Class A (7/5/94) 11.80 18.80 5.55 7.69 Lehman Brothers Government/Credit Index(1) 5.23 13.15 7.84 8.38 </Table> Inception date of share class is in parentheses. [CHART] VALUE OF A $10,000 INVESTMENT, 7/5/94 - 6/30/03 <Table> <Caption> CLASS A SHARES LEHMAN BROTHERS GOVERNMENT/CREDIT INDEX Jul-94 $ 10,000 $ 10,000 7/31/1994 $ 10,080 $ 10,200 8/31/1994 $ 10,130 $ 10,204 9/30/1994 $ 10,091 $ 10,050 10/31/1994 $ 10,131 $ 10,039 11/30/1994 $ 10,021 $ 10,021 12/31/1994 $ 10,110 $ 10,087 1/31/1995 $ 10,244 $ 10,281 2/28/1995 $ 10,492 $ 10,519 3/31/1995 $ 10,678 $ 10,590 4/30/1995 $ 10,875 $ 10,738 5/31/1995 $ 11,174 $ 11,188 6/30/1995 $ 11,225 $ 11,277 7/31/1995 $ 11,328 $ 11,233 8/31/1995 $ 11,328 $ 11,377 9/30/1995 $ 11,524 $ 11,493 10/31/1995 $ 11,679 $ 11,662 11/30/1995 $ 11,792 $ 11,855 12/31/1995 $ 11,959 $ 12,029 1/31/1996 $ 12,134 $ 12,103 2/29/1996 $ 12,036 $ 11,847 3/31/1996 $ 11,982 $ 11,747 4/30/1996 $ 12,036 $ 11,666 5/31/1996 $ 12,046 $ 11,646 6/30/1996 $ 12,122 $ 11,801 7/31/1996 $ 12,220 $ 11,828 8/31/1996 $ 12,362 $ 11,799 9/30/1996 $ 12,612 $ 12,009 10/31/1996 $ 12,807 $ 12,289 11/30/1996 $ 13,112 $ 12,515 12/31/1996 $ 13,134 $ 12,376 1/31/1997 $ 13,099 $ 12,391 2/28/1997 $ 13,195 $ 12,417 3/31/1997 $ 13,005 $ 12,269 4/30/1997 $ 13,171 $ 12,448 5/31/1997 $ 13,386 $ 12,564 6/30/1997 $ 13,576 $ 12,715 7/31/1997 $ 13,898 $ 13,104 8/31/1997 $ 13,803 $ 12,957 9/30/1997 $ 14,101 $ 13,160 10/31/1997 $ 14,125 $ 13,371 11/30/1997 $ 14,197 $ 13,442 12/31/1997 $ 14,335 $ 13,583 1/31/1998 $ 14,566 $ 13,775 2/28/1998 $ 14,604 $ 13,747 3/31/1998 $ 14,706 $ 13,790 4/30/1998 $ 14,771 $ 13,859 5/31/1998 $ 14,836 $ 14,007 6/30/1998 $ 14,861 $ 14,150 7/31/1998 $ 14,990 $ 14,161 8/31/1998 $ 14,435 $ 14,437 9/30/1998 $ 14,757 $ 14,850 10/31/1998 $ 14,782 $ 14,745 11/30/1998 $ 15,207 $ 14,833 12/31/1998 $ 15,198 $ 14,870 1/31/1999 $ 15,321 $ 14,976 2/28/1999 $ 15,143 $ 14,619 3/31/1999 $ 15,349 $ 14,692 4/30/1999 $ 15,555 $ 14,729 5/31/1999 $ 15,239 $ 14,577 6/30/1999 $ 15,253 $ 14,532 7/31/1999 $ 15,239 $ 14,492 8/31/1999 $ 15,184 $ 14,480 9/30/1999 $ 15,266 $ 14,610 10/31/1999 $ 15,266 $ 14,648 11/30/1999 $ 15,362 $ 14,639 12/31/1999 $ 15,468 $ 14,550 1/31/2000 $ 15,320 $ 14,546 2/29/2000 $ 15,513 $ 14,728 3/31/2000 $ 15,454 $ 14,941 4/30/2000 $ 15,321 $ 14,868 5/31/2000 $ 15,188 $ 14,855 6/30/2000 $ 15,468 $ 15,158 7/31/2000 $ 15,588 $ 15,318 8/31/2000 $ 15,751 $ 15,534 9/30/2000 $ 15,565 $ 15,593 10/31/2000 $ 15,284 $ 15,692 11/30/2000 $ 15,016 $ 15,960 12/31/2000 $ 15,494 $ 16,274 1/31/2001 $ 16,135 $ 16,548 2/28/2001 $ 16,185 $ 16,718 3/31/2001 $ 15,840 $ 16,795 4/30/2001 $ 15,709 $ 16,669 5/31/2001 $ 15,775 $ 16,766 6/30/2001 $ 15,594 $ 16,846 7/31/2001 $ 15,659 $ 17,266 8/31/2001 $ 15,938 $ 17,487 9/30/2001 $ 15,477 $ 17,648 10/31/2001 $ 15,921 $ 18,096 11/30/2001 $ 16,135 $ 17,799 12/31/2001 $ 16,064 $ 17,658 1/31/2002 $ 16,136 $ 17,787 2/28/2002 $ 16,171 $ 17,939 3/31/2002 $ 16,225 $ 17,574 4/30/2002 $ 16,531 $ 17,915 5/31/2002 $ 16,604 $ 18,080 6/30/2002 $ 16,388 $ 18,234 7/31/2002 $ 16,208 $ 18,453 8/31/2002 $ 16,497 $ 18,866 9/30/2002 $ 16,587 $ 19,272 10/31/2002 $ 16,642 $ 19,087 11/30/2002 $ 17,002 $ 19,098 12/31/2002 $ 17,416 $ 19,604 1/31/2003 $ 17,632 $ 19,604 2/28/2003 $ 18,004 $ 19,953 3/31/2003 $ 18,161 $ 19,927 4/30/2003 $ 18,826 $ 20,140 5/31/2003 $ 19,334 $ 20,712 Jun-03 $ 19,466 $ 20,634 </Table> <Table> <Caption> NET ASSET VALUE PER SHARE ($) 12/31/02 6/30/03 - ------------------------------------------------------ Class A 8.90 9.95 </Table> PAST PERFORMANCE CANNOT PREDICT FUTURE INVESTMENT RESULTS. SHARE PRICE AND INVESTMENT RETURN WILL VARY, SO YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. Total return performance includes changes in share price and reinvestment of all distributions. The Lehman Brothers Government/Credit Index is an unmanaged index that tracks the performance of a selection of US government and investment grade US corporate bonds. Indices are not investments, do not incur fees or expenses, and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. MUTUAL FUND PERFORMANCE CHANGES OVER TIME. CURRENT RETURNS FOR THE FUND MAY BE DIFFERENT THAN THAT SHOWN. Performance numbers reflect all fund expenses, but do not include any insurance charges imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. (1) Index performance is from June 30, 1994. 16 <Page> INVESTMENT PORTFOLIO Colonial Strategic Income Fund, Variable Series / June 30, 2003 (Unaudited) <Table> <Caption> PAR VALUE --------------- --------------- CORPORATE FIXED-INCOME BONDS & NOTES--39.7% CONSTRUCTION--1.2% BUILDING CONSTRUCTION--1.2% Associated Materials, Inc., 9.750% 04/15/12 $ 190,000 $ 207,100 Atrium Companies, Inc., 10.500% 05/01/09 130,000 137,800 Congoleum Corp., 8.625% 08/01/08 140,000 87,500 D.R. Horton, Inc., 9.750% 09/15/10 575,000 667,000 K. Hovnanian Enterprise, Inc.: 8.875% 04/01/12 45,000 48,712 10.500% 10/01/07 250,000 292,500 Lyon Williams Homes, Inc., 10.750% 04/01/13 140,000 148,400 Standard Pacific Corp., 9.250% 04/15/12 275,000 306,625 --------------- 1,895,637 --------------- CONSUMER STAPLES--0.3% HOUSEHOLD PRODUCTS--0.2% American Greetings Corp., 11.750% 07/15/08 175,000 201,688 Armkel LLC, 9.500% 08/15/09 115,000 129,950 --------------- 331,638 --------------- OFFICE EQUIPMENTS--0.1% Xerox Corp., 7.125% 06/15/10 100,000 100,750 --------------- FINANCE, INSURANCE & REAL ESTATE--0.8% FINANCIAL SERVICES--0.6% Arch Western Finance, 6.750% 07/01/13 (a) 70,000 71,575 MDP Acquisitions PLC, 9.625% 10/01/12 (a) 340,000 375,700 Orion Power Holdings, Inc., 12.000% 05/01/10 75,000 86,625 Thornburg Mortgage, Inc., 8.000% 05/15/13 160,000 163,200 Tiers-MIR-2001-14, 7.200% 06/15/04 (a) 270,000 207,900 --------------- 905,000 --------------- INSURANCE AGENTS & BROKERS--0.1% Willis Corroon Corp., 9.000% 02/01/09 190,000 203,300 --------------- REAL ESTATE--0.1% Forest City Enterprises, Inc., 7.625% 06/01/15 105,000 107,625 iStar Financial, Inc., 8.750% 08/15/08 125,000 137,500 --------------- 245,125 --------------- MANUFACTURING--10.8% APPAREL--0.2% Levi Strauss & Co., 12.250% 12/15/12 $ 135,000 $ 112,388 Warnaco, Inc., 8.875% 06/15/13 (a) 65,000 67,925 William Carter Co., 10.875% 08/15/11 150,000 169,313 --------------- 349,626 --------------- AUTO PARTS & EQUIPMENT--0.2% Rexnord Corp., 10.125% 12/15/12 (a) 85,000 93,500 TRW Automotive Acquisition, 11.000% 02/15/13 215,000 236,500 United Components, Inc., 9.375% 06/15/13 (a) 40,000 42,100 --------------- 372,100 --------------- AUTOMOBILES--0.0% General Motors, 7.125% 07/15/13 80,000 80,251 --------------- CHEMICALS & ALLIED PRODUCTS--1.8% Avecia Group PLC, 11.000% 07/01/09 200,000 180,000 Equistar Chemicals LP, 10.125% 09/01/08 145,000 148,987 FMC Corp., 10.250% 11/01/09 (a) 280,000 316,400 Huntsman ICI Holdings LLC, 12/31/09 (b) 2,410,000 891,700 Lyondell Chemical Co., 9.625% 05/01/07 440,000 433,400 MacDermid, Inc., 9.125% 07/15/11 260,000 291,200 Polyone Corp., 10.625% 05/15/10 170,000 167,450 Terra Capital, Inc., 12.875% 10/15/08 400,000 436,000 --------------- 2,865,137 --------------- ELECTRONIC & ELECTRICAL EQUIPMENT--1.2% Amkor Technology, Inc.: 7.750% 05/15/13 85,000 79,900 9.250% 02/15/08 185,000 191,475 10.500% 05/01/09 180,000 184,500 Flextronics International Ltd., 9.875% 07/01/10 300,000 330,000 TransDigm, Inc., 10.375% 12/01/08 1,000,000 1,070,000 --------------- 1,855,875 --------------- FABRICATED METAL--0.4% Owens-Brockway Glass Container, 8.250% 05/15/13 370,000 384,800 Earle M. Jorgensen & Co., 9.750% 06/01/12 250,000 265,000 --------------- 649,800 --------------- </Table> See Notes to Investment Portfolio. 17 <Page> <Table> <Caption> PAR VALUE --------------- --------------- FOOD & KINDRED PRODUCTS--1.4% Del Monte Corp., 9.250% 05/15/11 $ 420,000 $ 457,800 Dole Food Co., 8.625% 05/01/09 275,000 291,500 Dominos, Inc., 8.250% 07/01/11 (a) 130,000 134,225 Merisant Co., 07/15/13 (9.500% 07/15/08) (a)(e) 135,000 139,387 Premier International Foods PLC, 12.000% 09/01/09 750,000 828,750 Smithfield Foods, Inc., 8.000% 10/15/09 295,000 317,863 --------------- 2,169,525 --------------- FURNITURE & FIXTURES--0.2% Juno Lighting, Inc., 11.875% 07/01/09 195,000 210,600 Simmons Co., 10.250% 03/15/09 50,000 53,500 --------------- 264,100 --------------- MACHINERY & COMPUTER EQUIPMENT--0.1% Cummins, Inc., 9.500% 12/01/10 195,000 219,375 --------------- MEASURING & ANALYZING INSTRUMENTS--0.2% Fisher Scientific International Inc., 8.125% 05/01/12 250,000 270,000 --------------- MISCELLANEOUS MANUFACTURING--2.1% Actuant Corp., 13.000% 05/01/09 211,000 246,870 AGCO Corp., 9.500% 05/01/08 220,000 242,000 American Standard, Inc., 7.375% 02/01/08 260,000 287,625 Applied Extrusion Technologies, 10.750% 07/01/11 215,000 159,100 Ball Corp., 6.875% 12/15/12 300,000 318,750 Crown European Holdings SA, 10.875% 03/01/13 190,000 207,575 Flowserve Corp., 12.250% 08/15/10 205,000 239,850 Hexcel Corp.: 9.750% 01/15/09 145,000 144,275 9.875% 10/01/08 40,000 43,600 Koppers Industries, Inc., 9.875% 12/01/07 325,000 335,563 Owens-Illinois, Inc., 7.150% 05/15/05 90,000 91,800 SPX Corp., 7.500% 01/01/13 165,000 177,375 Tekni-Plex, Inc., 12.750% 06/15/10 550,000 543,125 Terex Corp., 10.375% 04/01/11 215,000 238,650 --------------- 3,276,158 --------------- PAPER PRODUCTS--1.0% Georgia Pacific Corp., 8.875% 02/01/10 $ 200,000 $ 216,000 Jefferson Smurfit Corp., 8.250% 10/01/12 (a) 165,000 178,200 Norske Skog Canada Ltd., 8.625% 06/15/11 90,000 92,700 Packaging Corp., 9.625% 04/01/09 260,000 286,000 Riverwood International Corp., 10.875% 04/01/08 675,000 691,875 Tembec Industries, Inc., 8.500% 02/01/11 150,000 148,500 --------------- 1,613,275 --------------- POLLUTION CONTROL--0.0% Envirosource, Inc., 14.000% 12/15/08 68,416 61,574 --------------- PRIMARY METAL--0.4% Bayou Steel Corp., 9.500% 05/15/08 (d) 500,000 107,500 Kaiser Aluminum & Chemical Corp., 10.875% 10/15/06 (d) 420,000 298,200 Steel Dymanics, Inc., 9.500% 03/15/09 50,000 52,500 WCI Steel, Inc., 10.000% 12/01/04 (c) 320,000 102,400 Wheeling-Pittsburgh Corp., 9.250% 11/15/07 (d) 750,000 67,500 --------------- 628,100 --------------- PRINTING & PUBLISHING--1.2% CBD Media/CBD Finance, 8.625% 06/01/11 (a) 30,000 31,050 Dex Media East LLC, 12.125% 11/15/12 (a) 370,000 440,300 Hollinger, Inc., 11.875% 03/01/11 195,000 217,425 Primedia, Inc., 8.875% 05/15/11 375,000 398,438 Von Hoffman Corp., 10.250% 03/15/09 285,000 304,950 Yell Finance BV, 10.750% 08/01/11 470,000 542,850 --------------- 1,935,013 --------------- TEXTILE MILL PRODUCTS--0.1% Collins & Aikman Floor Covering, Inc., 9.750% 02/15/10 150,000 156,750 --------------- TRANSPORTATION EQUIPMENT--0.3% Sequa Corp., 8.875% 04/01/08 315,000 329,175 Teekay Shipping Corp., 8.875% 07/15/11 85,000 90,950 --------------- 420,125 --------------- </Table> See Notes to Investment Portfolio. 18 <Page> <Table> <Caption> PAR VALUE --------------- --------------- MINING & ENERGY--5.0% METAL MINING--0.2% TriMas Corp., 9.875% 06/15/12 (a) $ 355,000 $ 362,100 --------------- OIL & GAS EXTRACTION--4.6% Benton Oil & Gas Co., 9.375% 11/01/07 215,000 195,113 Chesapeake Energy Corp.: 7.750% 01/15/15 185,000 197,950 8.125% 04/01/11 100,000 107,750 Compton Petroleum Corp., 9.90% 05/15/09 195,000 213,525 Denbury Management, Inc., 7.500% 04/01/13 110,000 113,850 Dynegy Holdings, Inc., 8.750% 02/15/12 200,000 187,000 El Paso Energy Corp.: 7.750% 06/15/10 380,000 355,300 7.750% 06/01/13 210,000 211,050 8.500% 06/01/10 175,000 187,687 Encore Acquisition Co., 8.375% 06/15/12 (a) 195,000 207,675 Forest Oil Corp., 8.000% 06/15/08 250,000 265,000 Houston Exploration Co., 7.000% 06/15/13 (a) 50,000 52,375 Magnum Hunter Resources, Inc., 9.600% 03/15/12 100,000 110,500 Mariner Energy, Inc., 10.500% 08/01/06 215,000 215,000 Northwest Pipeline Corp., 8.125% 03/01/10 85,000 91,588 PDVSA Finance Ltd.: 6.250% 02/15/06 EUR 396,750 424,611 6.650% 02/15/06 $ 240,000 226,800 Pemex Project Funding Master Trust: 7.375% 12/15/14 290,000 315,636 9.125% 10/13/10 950,000 1,149,500 Pioneer Natural Resource Co.: 7.500% 04/15/12 70,000 80,500 9.625% 04/01/10 315,000 385,875 Pogo Producing Co., 8.250% 04/15/11 425,000 471,750 Premcor Refining Group, 7.500% 06/15/15 165,000 165,000 Sonat, Inc., 7.625% 07/15/11 145,000 131,950 Southern Natural Gas Co., 8.875% 03/15/10 130,000 142,675 Stone Energy Corp., 8.250% 12/15/11 135,000 142,425 Tesoro Pete Corp., 8.000% 04/15/08 70,000 72,100 Williams Companies, Inc.: 8.125% 03/15/12 430,000 441,825 8.625% 06/01/10 55,000 57,475 XTO Energy, Inc., 7.500% 04/15/12 $ 325,000 $ 372,125 --------------- 7,291,610 --------------- OIL & GAS FIELD SERVICES--0.2% Frontier Escrow Corp., 8.000% 4/15/13 55,000 57,612 Newpark Resources, Inc., 8.625% 12/15/07 195,000 198,900 --------------- 256,512 --------------- RETAIL TRADE--1.6% FOOD & KINDRED PRODUCTS--0.3% Constellation Brands, 8.125% 01/15/12 175,000 189,000 Roundy's Inc., 8.875% 06/15/02 275,000 288,750 --------------- 477,750 --------------- FOOD STORES--0.4% Winn-Dixie Stores, Inc., 8.875% 04/01/08 560,000 599,200 --------------- MISCELLANEOUS RETAIL--0.8% Gap, Inc., 10.550% 12/15/08 190,000 230,850 JC Penney Co., Inc., 8.000% 03/01/10 270,000 283,500 Rite Aid Corp.: 8.125% 05/01/10 80,000 83,600 9.250% 06/01/13 295,000 292,050 Saks, Inc., 8.250% 11/15/08 70,000 74,550 Steinway Musical Instruments, Inc., 8.750% 04/15/11 270,000 270,000 --------------- 1,234,550 --------------- RESTAURANTS--0.1% Yum! Brands, Inc., 7.700% 07/01/12 200,000 227,000 --------------- SERVICES--7.6% AMUSEMENT & RECREATION--3.4% Ameristar Casinos, Inc., 10.750% 02/15/09 215,000 244,025 Argosy Gaming Co., 10.750% 06/01/09 305,000 333,213 Boyd Gaming Corp., 8.750% 04/15/12 85,000 93,075 Circus & Eldorado/Silver Legacy Capital Corp., 10.125% 03/01/12 270,000 265,275 Coast Hotels & Casinos, Inc., 9.500% 04/01/09 325,000 347,750 Corrections Corp., 9.875% 05/01/09 180,000 201,600 </Table> See Notes to Investment Portfolio. 19 <Page> <Table> <Caption> PAR VALUE --------------- --------------- Corus Entertainment Inc., 8.750% 03/01/12 $ 115,000 $ 123,625 Hollywood Casino Shreveport, 13.000% 08/01/06 470,000 319,600 Hollywood Entertainment Corp., 9.625% 03/15/11 235,000 256,150 Majestic Investment Holdings LLC, 11.653% 11/30/07 135,000 135,000 Mohegan Tribal Gaming: 8.000% 04/01/12 350,000 377,125 8.375% 07/01/11 125,000 135,000 Park Place Entertainment Corp., 9.375% 02/15/07 285,000 314,925 Penn National Gaming, Inc., 11.125% 03/01/08 250,000 277,500 Pinnacle Entertainment, Inc., 9.250% 02/15/07 750,000 742,500 Regal Cinemas, Inc., 9.375% 02/01/12 360,000 396,000 Royal Caribbean Cruises, Ltd., 8.000% 05/15/10 145,000 149,712 Six Flags, Inc., 9.500% 02/01/09 435,000 428,475 Town Sports International, Inc., 9.625% 04/15/11 115,000 121,325 Venetian Casino Resort LLC, 11.000% 06/15/10 (a) 205,000 231,650 --------------- 5,493,525 --------------- AUTO EQUIPMENT & RENTAL SERVICES--0.9% Accuride Corp., 9.250% 02/01/08 75,000 68,625 Collins & Aikman Products Co., 10.750% 12/31/11 285,000 252,225 Dana Corp.: 9.000% 08/15/11 135,000 146,137 10.125% 03/15/10 125,000 137,500 Dura Operating Corp., 8.625% 04/15/12 225,000 232,312 Lear Corp., 8.110% 05/15/09 370,000 426,425 United Rentals NA, Inc., 10.750% 04/15/08 170,000 185,725 --------------- 1,448,949 --------------- COMMERCIAL SERVICES--0.2% Iron Mountains, Inc., 6.625% 01/01/16 210,000 206,850 Moore North America, 7.875% 01/15/11 110,000 114,950 --------------- 321,800 --------------- FUNERAL SERVICES--0.4% Service Corp. International, 7.700% 04/15/09 400,000 407,000 Stewart Enterprises, Inc., 10.750% 07/01/08 235,000 262,025 --------------- 669,025 --------------- HEALTH SERVICES--2.2% AmerisourceBergen Corp.: 7.250% 11/15/12 (a) $ 140,000 $ 152,250 8.125% 09/01/08 250,000 275,625 Coventry Health Care Inc., 8.125% 02/15/12 265,000 288,850 HCA, 8.750% 09/01/10 610,000 721,496 Iasis Healthcare Corp., 13.000% 10/15/09 185,000 206,275 Insight Health Services Corp., 9.875% 11/01/11 230,000 239,200 Magellan Health Services, Inc., 9.375% 11/15/07 (a) 210,000 208,950 Medquest, Inc., 11.875% 08/15/12 (a) 335,000 353,425 Pacificare Health Systems, Inc., 10.750% 06/01/09 325,000 372,125 Tenet Healthcare Corp., 6.375% 12/01/11 405,000 382,725 United Surgical Partners Holdings, Inc., 10.000% 12/15/11 250,000 270,000 --------------- 3,470,921 --------------- HOTELS, CAMPS & LODGING--0.5% Hard Rock Hotel, Inc., 8.875% 06/01/13 95,000 99,275 Host Marriott LP, 9.500% 01/15/07 225,000 243,562 Starwood Hotels & Resorts Worldwide, Inc., 7.875% 05/01/12 (a) 375,000 410,625 --------------- 753,462 --------------- TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS & SANITARY SERVICES--12.2% AEROSPACE--0.2% BE Aerospace, Inc., 8.875% 05/01/11 175,000 137,375 Vought Aircraft Industries, Inc., 8.000% 07/15/11 (a) 105,000 105,788 --------------- 243,163 --------------- AIR TRANSPORTATION--0.5% Northwest Airlines Inc., 9.875% 03/15/07 220,000 179,300 Petroleum Helicopters, Inc., 9.375% 05/01/09 325,000 364,000 U.S. Airways, Inc., 10.375% 03/01/13 (c) 850,000 212,500 --------------- 755,800 --------------- BROADCASTING--1.4% Advanstar Communications, Inc., 12.000% 02/15/11 300,000 282,750 </Table> See Notes to Investment Portfolio. 20 <Page> <Table> <Caption> PAR VALUE --------------- --------------- Canwest Media, Inc., 10.625% 05/15/11 $ 390,000 $ 446,550 Chancellor Media Corp., 8.000% 11/01/08 85,000 100,300 Emmis Communications, 03/15/11 (12.500% 03/15/06) (e) 317,000 275,790 Quebecor Media, Inc., 11.125% 07/15/11 400,000 460,000 Sinclair Broadcast Group, Inc., 8.750% 12/15/11 250,000 275,000 TV Azteca SA de CV, 10.500% 02/15/07 470,000 470,000 --------------- 2,310,390 --------------- CABLE--2.0% British Sky Broadcasting Group, 8.200% 07/15/09 345,000 403,105 Charter Communications Holding LLC: 04/01/11 (9.920% 4/01/04) (e) 990,000 653,400 10.000% 04/01/09 275,000 207,625 Comcast UK Cable Partners Ltd., 11.200% 11/15/07 450,000 439,875 CSC Holdings, Inc., 7.625% 04/01/11 195,000 197,925 Direct TV Holdings LCC, 8.375% 3/15/13 200,000 223,500 EchoStar DBS Corp.: 9.125% 01/15/09 90,000 100,575 9.375% 02/01/09 200,000 213,500 Insight Communications, Inc., 02/15/11 (12.250% 02/15/06) (e) 340,000 280,500 Northland Cable Television, Inc., 10.250% 11/15/07 400,000 384,000 Rogers Cable, Inc., 6.250% 06/15/13 (a) 105,000 105,150 --------------- 3,209,155 --------------- COMMUNICATIONS--0.7% L-3 Communications Corp., 7.625% 06/15/12 280,000 308,000 Level 3 Communications, 10.500% 12/01/08 415,000 348,600 Vivendi SA, 9.250% 04/15/10 175,000 203,000 XM Satellite Radio Holdings, Inc., 12/31/09 (14.000% 01/01/06) (e) 310,485 223,549 --------------- 1,083,149 --------------- COMMUNICATION SERVICES--0.8% Colt Telecom Group PLC: 2.000% 03/29/06 EUR 175,000 167,074 12.000% 12/15/06 $ 155,000 155,775 Crown Castle International Corp.: 05/15/11 (10.375% 05/15/04) (e) $ 175,000 $ 167,562 10.750% 08/01/11 30,000 32,625 Fairpoint Communications, 11.875% 03/01/10 115,000 133,400 Lucent Technologies, Inc.: 6.450% 03/15/29 220,000 149,600 7.250% 07/15/06 145,000 137,025 SBA Communication Corp., 10.250% 02/01/09 290,000 265,350 --------------- 1,208,411 --------------- ELECTRIC, GAS & SANITARY SERVICES--1.0% Allied Waste North America, Inc.: 8.500% 12/01/08 285,000 307,088 10.000% 08/01/09 1,090,000 1,160,850 HydroChem Industrial Services, Inc., 10.375% 08/01/07 150,000 105,000 --------------- 1,572,938 --------------- ELECTRIC SERVICES--2.1% AES Corp.: 9.000% 05/15/15 170,000 180,200 9.500% 06/01/09 432,000 438,480 Beaver Valley Funding Corp., 9.000% 06/01/17 235,000 281,161 Caithness Coso Funding Corp., 9.050% 12/15/09 312,054 327,657 Calpine Corp.: 8.500% 02/15/11 440,000 330,000 8.625% 08/15/10 140,000 105,000 CEnergy Corp., 8.900% 07/15/08 260,000 273,000 Edison Mission Energy, 9.875% 04/15/11 200,000 188,000 Illinois Power Co., 11.500% 12/15/10 75,000 85,687 Mission Energy Holdings Co., 13.500% 07/15/08 60,000 40,800 MSW Energy Holdings, 8.500% 09/01/10 (a) 270,000 278,100 Nevada Power Co., 10.875% 10/15/09 (a) 215,000 242,950 PG&E Corp., 6.875% 07/15/08(a) 80,000 80,160 PSEG Energy Holdings, 8.625% 02/15/08 215,000 231,125 UCAR, Inc., 10.250% 02/15/12 230,000 225,400 --------------- 3,307,720 --------------- MARINE SERVICES--0.2% Stena AB, 9.625% 12/01/12 (a) 170,000 186,575 Trico Marine Services, Inc., 8.875% 05/15/12 170,000 148,750 --------------- 335,325 --------------- </Table> See Notes to Investment Portfolio. 21 <Page> <Table> <Caption> PAR VALUE --------------- --------------- MOTOR FREIGHT & WAREHOUSING--0.2% Allied Holdings, Inc., 8.625% 10/01/07 $ 155,000 $ 139,500 Offshore Logistic, 6.125% 06/15/13 65,000 65,325 QDI LLC: 12.000% 06/15/09 (a) 83,857 12,474 12.500% 06/15/08 341,000 135,974 --------------- 353,273 --------------- RADIO & TELEPHONE COMMUNICATIONS--1.7% AirGate PCS, Inc., 10/01/09 (13.500% 10/01/04) (e) 230,000 108,100 Avaya, Inc., 11.125% 04/01/09 150,000 164,250 Horizon PCS, Inc., 13.750% 06/15/11 285,000 51,300 Nextel Communications, Inc.: 9.750% 10/31/07 685,000 708,975 9.375% 11/15/09 415,000 448,200 Nextel Partners, Inc., 11.000% 03/15/10 225,000 244,125 Nortel Networks Ltd., 6.125% 02/15/06 340,000 329,800 Rogers Cantel, Inc., 9.750% 06/01/16 460,000 520,950 US Unwired, Inc., 11/01/09 (13.375% 11/01/04) (e) 500,000 220,000 --------------- 2,795,700 --------------- RAIL ROAD--0.2% Kansas City Southern, 7.500% 06/15/09 140,000 144,900 TFM SA de CV, 12.500% 06/15/12 (a) 230,000 248,400 --------------- 393,300 --------------- TELECOMMUNICATIONS--1.2% AT&T Wireless Services, Inc., 7.875% 03/01/11 145,000 171,448 Carrier1 International SA, 13.250% 02/15/09 (d) 500,000 15,000 Centennial Cell/Communications, 10.125 6/15/13 (a) 80,000 79,200 Insight Midwest/Insight Capital, 9.750% 10/01/09 (a) 215,000 227,900 Qwest Corp.: 8.875% 03/15/12 280,000 312,200 13.500% 12/15/10 320,000 361,600 Spectrasite, 8.250% 05/15/10 130,000 135,525 Time Warner Telecom, LLC: 9.750% 07/15/08 200,000 194,500 10.125% 02/01/11 295,000 286,887 Triton PCS, Inc., 8.750% 11/15/11 135,000 135,000 --------------- 1,919,260 --------------- WHOLESALE TRADE--0.2% DURABLE GOODS--0.2% Playtex Products, Inc., 9.375% 06/01/11 $ 300,000 $ 300,000 --------------- TOTAL CORPORATE FIXED INCOME BONDS & NOTES (cost of $61,298,948) 63,262,222 --------------- U.S. GOVERNMENT AGENCIES & OBLIGATIONS--24.9% Federal Home Loan Mortgage Corp., 8.000% 10/01/26 368,505 398,034 --------------- Federal National Mortgage Association, 6.500% TBA (f) 2,795,000 2,914,659 --------------- Government National Mortgage Association, 8.000% 04/15/17 121,983 133,389 --------------- U.S. Treasury Bonds: 7.500% 11/15/24 1,310,000 1,839,117 8.750% 05/15/17 4,911,000 7,350,962 10.375% 11/15/12 3,800,000 5,061,866 11.625% 11/15/04 2,900,000 3,312,345 12.000% 08/15/13 9,548,000 13,875,555 --------------- 31,439,845 --------------- U.S. Treasury Notes: 5.625% 05/15/08 2,500,000 2,866,015 6.500% 10/15/06 1,730,000 1,987,607 --------------- 4,853,622 --------------- TOTAL U.S. GOVERNMENT AGENCIES & OBLIGATIONS (cost of $38,063,783) 39,739,549 --------------- FOREIGN GOVERNMENT OBLIGATIONS--31.3% European Investment Bank, 7.625% 12/07/07 GBP 455,000 864,416 Government of Australia, 6.250% 04/15/15 AUD 1,750,000 1,293,983 Government of Canada: 5.500% 06/01/10 CAD 1,020,000 811,313 10.000% 06/01/08 2,656,000 2,502,018 Government of New Zealand: 6.000% 11/15/11 NZD 6,410,000 3,925,517 6.500% 04/15/13 2,545,000 1,617,457 Government of Sweden: 5.500% 10/08/12 SEK 10,210,000 1,393,863 6.750% 05/05/14 15,230,000 2,281,300 </Table> See Notes to Investment Portfolio. 22 <Page> <Table> <Caption> PAR VALUE --------------- --------------- Republic of France: 5.000% 10/25/16 EUR 1,100,000 $ 1,368,055 5.500% 10/25/10 975,000 1,268,590 Kingdom of Norway: 6.000% 05/16/11 NOK 20,420,000 3,089,758 6.750% 01/15/07 2,985,000 452,848 Poland Government Bond, 8.500% 05/12/07 PLN 3,357,000 968,175 Republic of Brazil: 9.500% 01/24/11 $ 500,000 533,429 11.000% 08/17/40 EUR 443,000 404,237 11.500% 04/02/09 930,000 1,061,175 14.500% 10/15/09 $ 725,000 839,187 Republic of Bulgaria, 7.500% 01/15/13 EUR 1,238,000 1,569,971 Republic of Colombia: 9.750% 04/09/11 $ 651,123 740,653 10.000% 01/23/12 782,000 875,840 11.500% 05/31/11 EUR 335,000 439,088 Republic of Germany, 5.375% 01/04/10 905,000 1,163,902 Republic of Greece: 5.350% 05/08/11 $ 1,115,000 1,429,200 8.600% 03/26/08 381,000 545,069 Republic of Hungary, 8.500% 10/12/05 HUF 195,650,000 842,444 Republic of Italy, 5.250% 08/01/11 EUR 2,330,000 2,978,921 Republic of Peru, 9.875% 02/06/15 $ 435,000 477,413 Republic of South Africa: 5.250% 05/16/13 EUR 555,000 615,088 13.000% 08/31/10 ZAR 14,455,000 2,341,017 Republic of Venezuela, 9.250% 09/15/27 $ 1,103,000 816,220 Russian Federation: 5.000% 03/31/30 2,200,000 2,134,000 11.000% 07/24/18 445,000 638,130 12.750% 06/24/28 405,000 680,400 Treasury Corp. of Victoria, Australia, 7.500% 08/15/08 AUD 3,100,000 2,326,487 United Kingdom Treasury: 5.000% 03/07/12 GBP 540,000 947,013 9.000% 07/12/11 615,000 1,355,015 United Mexican States: 7.500% 03/08/10 EUR 375,000 478,792 8.300% 08/15/31 $ 665,000 765,748 11.375% 09/15/16 777,000 1,130,535 --------------- TOTAL FOREIGN GOVERNMENT OBLIGATIONS (cost of $42,245,625) 49,966,267 --------------- TOTAL BONDS & NOTES (cost of $141,608,356) 152,968,038 --------------- <Caption> SHARES VALUE --------------- --------------- PREFERRED STOCKS--0.6% FINANCIAL SERVICES--0.1% Sinclair Capital, 11.625% 2,000 $ 209,300 --------------- TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS & SANITARY SERVICES--0.4% CSC Holdings Ltd.: 11.125% 3,232 332,896 11.750% 2,291 235,973 --------------- 568,869 --------------- COMMUNICATIONS--0.1% Dobson Communication Corp., 12.25% PIK, 221 218,790 --------------- POLLUTION CONTROL--0.0% Envirosource, Inc., 7.250% 232 10,741 --------------- TOTAL PREFERRED STOCKS (cost of $997,010) 1,007,700 --------------- COMMON STOCKS--0.0% TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS & SANITARY SERVICES--0.0% POLLUTION CONTROL--0.0% Envirosource, Inc. (h) 2,000 460 Fairlane Management Corp. (g) 2,000 -- --------------- 460 --------------- TELECOMMUNICATIONS--0.0% Price Communications Corp. 1 13 --------------- TOTAL COMMON STOCKS (cost of $64) 473 --------------- WARRANTS (h)--0.1% <Caption> UNITS --------------- RETAIL TRADE--0.0% FOOD STORES--0.0% Pathmark Stores, Inc., expires 9/19/10 2,938 3,731 --------------- TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS & SANITARY SERVICES--0.0% CABLE--0.0% Cable Satisfaction International, Inc., expires 03/01/05 515 5 Ono Finance PLC: expires 02/15/11 150 2 expires 05/31/09 500 1 --------------- 8 --------------- COMMUNICATIONS--0.1% Horizon PCS, Inc., expires 10/1/10 (a) 315 -- UbiquiTel, Inc., expires 04/15/10 (a) 225 2 </Table> See Notes to Investment Portfolio. 23 <Page> <Table> <Caption> UNITS VALUE --------------- --------------- XM Satellite Radio Holdings, Inc.: expires 03/15/10 (a) 150 $ 825 expires 12/31/09 (a) 235 162,150 --------------- 162,977 --------------- MOTOR FREIGHT & WAREHOUSING--0.0% Quality Distribution Inc., LLC, expires 06/15/06 (a) 1,020 -- --------------- -- --------------- TELECOMMUNICATIONS--0.0% Jazztel PLC, expires 07/15/10 95 -- Carrier1 International SA, expires 02/19/09 235 2 --------------- 2 --------------- TOTAL WARRANTS (cost of $527,407) 166,718 --------------- SHORT-TERM OBLIGATION--3.0% <Caption> PAR --------------- Repurchase agreement with State Street Bank & Trust Co., dated 06/30/03, due 7/01/03 at 1.000%, collateralized by a U.S. Treasury Bond maturing 2/15/29, market value $4,908,368 (repurchase proceeds $ 4,809,134) (cost of $4,809,000) $ 4,809,000 4,809,000 --------------- TOTAL INVESTMENTS--99.6% (cost of $147,941,837) (i) 158,951,929 --------------- OTHER ASSETS & LIABILITIES, NET--0.4% 652,929 --------------- NET ASSETS--100.0% $ 159,604,858 =============== </Table> NOTES TO INVESTMENT PORTFOLIO: (a) Securities are exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At June 30, 2003 the value of these securities amounted to $5,806,986 or 3.6% of net assets. (b) Zero coupon bond. (c) This issuer is in default of certain debt covenants. Income is not being accrued. (d) As of June 30, 2003, the Fund held certain securities that have filed for bankruptcy protection under Chapter 11, representing 0.3% of net assets. This issuer is in default of certain debt covenants. Income is not being accrued. (e) Stepped coupon bond currently accruing at zero. Shown parenthetically is the next interest rate to be paid and the date the Fund will begin accruing this rate. (f) Settlement of this security is on delayed delivery basis. (g) Represents fair value as determined in good faith under the direction of the Trustees. (h) Non-income producing. (i) Cost for federal income tax purposes is $149,395,433. The difference between cost for generally accepted accounting principles and cost on a tax basis is related to amortization/accretion tax elections on fixed income securities. As of June 30, 2003, the Fund had entered into the following forward currency contracts: <Table> <Caption> IN CONTRACTS EXCHANGE SETTLEMENT NET UNREALIZED TO DELIVER FOR DATE APPRECIATION - --------------- -------------- ---------- -------------- CAD 746,000 US $ 548,830 08/11/03 $ 265 EUR 112,600 US $ 129,374 08/06/03 2,208 EUR 3,897,500 US $ 4,479,939 07/23/03 52,997 GBP 347,500 US $ 573,411 07/23/03 5,825 NOK 8,438,000 US $ 1,167,374 07/23/03 35,753 NZD 2,790,000 US $ 1,632,860 07/21/03 185 SEK 6,530,000 US $ 814,311 08/25/03 26,534 --------- $ 123,767 ========= </Table> <Table> <Caption> IN CONTRACTS EXCHANGE SETTLEMENT NET UNREALIZED TO DELIVER FOR DATE APPRECIATION - --------------- -------------- ---------- -------------- AUD 2,430,669 US $ 1,628,364 07/21/03 $ (4,681) ========= </Table> <Table> <Caption> SUMMARY OF SECURITIES % OF TOTAL BY COUNTRY VALUE INVESTMENTS - --------------------- -------------- ----------- United States $ 102,091,230 64.2% New Zealand 5,542,974 3.5% Canada 5,400,561 3.4% United Kingdom 4,745,373 3.0% Sweden 3,861,738 2.4% Australia 3,620,470 2.3% Norway 3,542,606 2.2% Russia 3,452,530 2.2% Italy 2,978,921 1.9% South Africa 2,956,105 1.9% Mexico 2,845,074 1.8% France 2,839,645 1.8% Brazil 2,838,028 1.8% Colombia 2,055,581 1.3% Greece 1,974,269 1.2% Bulgaria 1,569,971 1.0% Germany 1,163,902 0.7% Poland 968,175 0.6% Hungary 842,444 0.5% Venezuela 816,220 0.5% Netherlands 542,850 0.3% Peru 477,413 0.3% Bermuda 439,875 0.3% Cayman Islands 424,611 0.3% Ireland 375,700 0.2% Singapore 330,000 0.2% Liberia 149,713 0.1% Marshall Islands 90,950 0.1% Luxembourg 15,000 0.0% -------------- ----- $ 158,951,929 100.0% ============== ===== </Table> Certain securities are listed by country of underlying exposure but may trade predominantly on other exchanges. <Table> <Caption> ACRONYM NAME ------- ---- PIK Payment-In-Kind AUD Australian Dollars CAD Canadian Dollars EUR European Currency GBP British Pounds HUF Hungarian Forint NOK Norwegian Krona NZD New Zealand Dollars PLN Polish Zloty ZAR South African Rand SEK Swedish Krona </Table> See Notes to Financial Statements. 24 <Page> STATEMENT OF ASSETS & LIABILITIES Colonial Strategic Income Fund, Variable Series / June 30, 2003 (Unaudited) <Table> ASSETS: Investments, at cost $ 147,941,837 -------------- Investments, at value $ 158,951,929 Cash 494 Foreign currency (cost of $496,631) 494,632 Receivable for: Investments sold 189,475 Fund shares sold 883,545 Interest 2,984,639 Dividends 15,719 Net unrealized appreciation on forward foreign currency contracts 119,086 Expense reimbursement due from Distributor 1,130 Deferred Trustees' compensation plan 5,339 -------------- TOTAL ASSETS 163,645,988 -------------- LIABILITIES: Payable for: Investments purchased 895,686 Investments purchased on a delayed delivery basis 2,912,697 Fund shares repurchased 86,681 Management fee 82,080 Distribution fee--Class B 917 Transfer agent fee 595 Trustees' fee 313 Reports to Shareholders 47,193 Deferred Trustees' fee 5,339 Other liabilities 9,629 -------------- TOTAL LIABILITIES 4,041,130 -------------- NET ASSETS $ 159,604,858 ============== COMPOSITION OF NET ASSETS: Paid-in capital $ 173,888,923 Undistributed net investment income 3,467,142 Accumulated net realized loss (28,902,565) Net unrealized appreciation on: Investments 11,010,092 Foreign currency translations 141,266 -------------- NET ASSETS $ 159,604,858 ============== CLASS A: Net assets $ 110,780,339 Shares outstanding 11,128,834 ============== Net asset value per share $ 9.95 ============== CLASS B: Net assets $ 48,824,519 Shares outstanding 4,913,759 ============== Net asset value per share $ 9.94 ============== </Table> See Notes to Financial Statements. 25 <Page> STATEMENT OF OPERATIONS Colonial Strategic Income Fund, Variable Series For the Six Months Ended June 30, 2003 (Unaudited) <Table> INVESTMENT INCOME: Dividends $ 30,684 Interest 5,647,195 Dollar roll fee income 15,704 -------------- Total Investment Income (net of foreign taxes withheld of $18,336) 5,693,583 -------------- EXPENSES: Management fee 480,131 Distribution fee--Class B 50,294 Pricing and bookkeeping fees 30,592 Transfer agent fee 3,720 Trustees' fee 5,969 Custody fee 20,928 Audit fee 13,436 Reports to shareholders 17,583 Other expenses 4,926 -------------- Total Expenses 627,579 Fees reimbursed by Distributor--Class B (6,242) Custody earnings credit (181) -------------- Net Expenses 621,156 -------------- Net Investment Income 5,072,427 -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: Net realized gain (loss) on: Investments 1,208,428 Foreign currency transactions (920,917) -------------- Net realized gain 287,511 -------------- Net change in unrealized appreciation/depreciation on: Investments 10,984,793 Foreign currency translations 295,612 -------------- Net change in unrealized appreciation/depreciation 11,280,405 -------------- Net Gain 11,567,916 -------------- Net Increase in Net Assets from Operations $ 16,640,343 ============== </Table> See Notes to Financial Statements. 26 <Page> STATEMENT OF CHANGES IN NET ASSETS Colonial Strategic Income Fund, Variable Series <Table> <Caption> (UNAUDITED) SIX MONTHS ENDED YEAR ENDED JUNE 30, DECEMBER 31, INCREASE (DECREASE) IN NET ASSETS: 2003 2002 - ---------------------------------- --------------- --------------- OPERATIONS: Net investment income $ 5,072,427 $ 9,896,562 Net realized gain (loss) on investments and foreign currency transactions 287,511 (8,483,465) Net change in unrealized appreciation/depreciation on investments and foreign currency translations 11,280,405 9,597,438 --------------- --------------- Net Increase from Operations 16,640,343 11,010,535 --------------- --------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income: Class A -- (8,337,510) Class B -- (2,438,046) Return of capital: Class A -- (171,968) Class B -- (50,287) --------------- --------------- Total Distributions Declared to Shareholders -- (10,997,811) --------------- --------------- SHARE TRANSACTIONS: Class A: Subscriptions 3,349,817 3,738,599 Distributions reinvested -- 8,509,478 Redemptions (11,109,265) (29,202,076) --------------- --------------- Net Decrease (7,759,448) (16,953,999) --------------- --------------- Class B: Subscriptions 14,884,414 15,913,161 Distributions reinvested -- 2,488,333 Redemptions (2,982,222) (5,160,875) --------------- --------------- Net Increase 11,902,192 13,240,619 --------------- --------------- Net Increase (Decrease) from Share Transactions 4,142,744 (3,713,380) --------------- --------------- Total Increase (Decrease) in Net Assets 20,783,087 (3,700,656) NET ASSETS: Beginning of period 138,821,771 142,522,427 --------------- --------------- End of period (including undistributed net investment income of $3,467,142 and overdistributed net investment income of $(1,605,285)) $ 159,604,858 $ 138,821,771 =============== =============== CHANGES IN SHARES: Class A: Subscriptions 354,352 407,376 Issued for distributions reinvested -- 956,121 Redemptions (1,182,274) (3,201,245) --------------- --------------- Net Decrease (827,922) (1,837,748) --------------- --------------- Class B: Subscriptions 1,587,002 1,749,903 Issued for distributions reinvested -- 279,902 Redemptions (318,121) (572,003) --------------- --------------- Net Increase 1,268,881 1,457,802 --------------- --------------- </Table> See Notes to Financial Statements. 27 <Page> NOTES TO FINANCIAL STATEMENTS Colonial Strategic Income Fund, Variable Series / June 30, 2003 (Unaudited) NOTE 1. ORGANIZATION AND ACCOUNTING POLICIES ORGANIZATION--Colonial Strategic Income Fund, Variable Series (the "Fund"), a series of Liberty Variable Investment Trust (the "Trust"), is a diversified portfolio of a Massachusetts business trust, registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund's investment goal is to seek current income, consistent with prudent risk and maximum total return. The Fund's capitalization consists of an unlimited number of shares of beneficial interest without par value that represent a separate series of the Trust. The Fund offers two classes of shares: Class A and Class B. Each share of the class represents an equal proportionate beneficial interest in that share class and, when issued and outstanding, is fully paid and nonassessable. Shareholders would be entitled to share proportionally in the net assets of their share class available for distribution to shareholders upon liquidation of the Fund. Shares of the Fund are available and are being marketed exclusively as a pooled funding vehicle for variable annuity contracts ("VA contracts") and Variable Life Insurance Policies ("VLI Policies") offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies"). The Participating Insurance Companies and their separate accounts own all the shares of the Fund. On April 1, 2003, Liberty Advisory Services Corp., the investment advisor to the Fund and Colonial Management Associates, Inc. ("Colonial"), the sub-advisor to the Fund, merged into Columbia Management Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co., an indirect wholly owned subsidiary of FleetBoston Financial Corporation. At the time of the merger, Columbia assumed the obligations of Liberty Advisory Services Corp. and Colonial with respect to the Fund. The merger did not change the way the Fund is managed, the investment personnel assigned to manage the Fund or the fees paid by the Fund. Columbia provides investment management and advisory services to the Fund pursuant to its Management Agreement with the Fund. Columbia also provides pricing and bookkeeping services to the Fund. Liberty Funds Distributor, Inc. ("LFD"), an affiliate of Columbia, serves as the principal underwriter of the Fund. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION AND TRANSACTIONS--Debt securities generally are valued by a pricing service based upon market transactions for normal, institutional-size trading units of similar securities. When management deems it appropriate, an over-the-counter or exchange bid quotation is used. Equity securities generally are valued at the last sale price or, in the case of unlisted or listed securities for which there were no sales during the day, at the current quoted bid price. Forward currency contracts are valued based on the weighted value of exchange-traded contracts with similar durations. Short-term obligations with a maturity of 60 days or less are valued at amortized cost. The values of all assets and liabilities quoted in foreign currencies are translated into U.S. dollars at that day's exchange rates. Investments for which market quotations are not readily available, or quotations which management believes are not appropriate, are valued at fair value under procedures approved by the Board of Trustees. Generally, trading in foreign securities is substantially completed each day at various times prior to the close of the New York Stock Exchange ("NYSE"). The values of such securities used in computing the net asset value of the Fund's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which they are determined and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If events materially affecting the value of such securities and such exchange rates occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Trustees. Security transactions are accounted for on the date the securities are purchased, sold or mature. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. The Fund may enter into mortgage dollar roll transactions. A mortgage dollar roll transaction involves a sale by the Fund of securities that it holds with an agreement by the Fund to repurchase substantially similar securities at an agreed upon price and date. During the period between 28 <Page> the sale and the repurchase, the Fund will not be entitled to accrue interest and receive principal payments on the securities sold. Mortgage dollar roll transactions involve the risk that the market value of the securities sold by the Fund may decline below the repurchase price of those securities. In the event the buyer of the securities under a mortgage dollar roll transaction files for bankruptcy or becomes insolvent, the Fund's use of proceeds of the transaction may be restricted pending a determination by or with respect to the other party. The Fund may trade securities on other than normal settlement terms. This may increase the risk if the other party to the transaction fails to deliver and causes the Fund to subsequently invest at less advantageous prices. The Fund maintains U.S. government securities or other liquid high-grade debt obligations as collateral with respect to mortgage dollar roll transactions and securities traded on other than normal settlement terms. DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS--All income, expenses (other than the Class B distribution fee), and realized and unrealized gains (losses) are allocated to each class proportionately on a daily basis for purposes of determining the net asset value of each class. The per share data was calculated using average shares outstanding during the period. In addition, Class B net investment income per share data and ratios reflect the distribution fee applicable to Class B shares only. FEDERAL INCOME TAXES--Consistent with the Fund's policy to qualify as a regulated investment company and to distribute all of its taxable income, no federal income tax has been accrued. INTEREST INCOME, DEBT DISCOUNT AND PREMIUM--Interest income is recorded on the accrual basis. Discount is accreted to interest income over the life of a security with a corresponding increase in the cost basis. Premium is amortized against interest income with a corresponding decrease in the cost basis. DISTRIBUTIONS TO SHAREHOLDERS--The Fund intends to distribute as income dividends or capital gains distributions, at least annually, substantially all of its net investment income and net profits realized from the sale of investments. All dividends and distributions are reinvested in additional shares of the Fund at net asset value as of the record date of the distribution. Income and capital gain distributions are determined in accordance with federal income tax regulations. FOREIGN CURRENCY TRANSACTIONS--Net realized and unrealized gains (losses) on foreign currency transactions and translations includes gains (losses) arising from the fluctuations in exchange rates between trade and settlement dates on securities transactions, gains (losses) arising from the disposition of foreign currency, and currency gains (losses) between the accrual and payment dates on dividends, interest income and foreign withholding taxes. The Fund does not distinguish that portion of gains (losses) on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the investments. Such fluctuations are included with the net realized and unrealized gains (losses) on investments. FORWARD CURRENCY CONTRACTS--The Fund may enter into forward currency contracts to purchase or sell foreign currencies at predetermined exchange rates in connection with the settlement of purchases and sales of securities. The Fund may also enter into forward currency contracts to hedge certain other foreign currency denominated assets. The contracts are used to minimize the exposure to foreign exchange rate fluctuations during the period between trade and settlement date of the contracts. All contracts are marked-to-market daily, resulting in unrealized gains (losses) which become realized at the time the forward currency contracts are closed or mature. Realized and unrealized gains (losses) arising from such transactions are included in net realized and unrealized gains (losses) on foreign currency transactions and translations. Forward currency contracts do not eliminate fluctuations in the prices of the Fund's portfolio securities. While the maximum potential loss from such contracts is the aggregate face value in U.S. dollars at the time the contract was opened, exposure is typically limited to the change in value of the contract (in U.S. dollars) over the period it remains open. Risks may also arise if counterparties fail to perform their obligations under the contracts. OTHER--Corporate actions and dividend income are recorded on the ex-date (except for certain foreign securities which are recorded as soon after ex-date as the Fund becomes aware of such), net of non-reclaimable tax withholdings. Where a high level of uncertainty as to collection exists, income on securities is recorded net of all tax withholdings with any rebates recorded when received. The Fund's custodian takes possession through the federal book-entry system of securities collateralizing repurchase agreements. Collateral is marked-to-market daily to ensure that the market value of the underlying assets remains sufficient to protect the Fund. The Fund may experience costs and delays in liquidating the collateral if the issuer defaults or enters bankruptcy. 29 <Page> NOTE 2. FEDERAL TAX INFORMATION Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. The following capital loss carryforwards, determined as of December 31, 2002, are available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: <Table> <Caption> YEAR OF CAPITAL LOSS EXPIRATION CARRYFORWARD ---------- ------------ 2006 $ 101,588 2007 844,603 2008 5,837,414 2009 11,079,118 2010 11,028,566 ------------ $ 28,891,289 ============ </Table> NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES MANAGEMENT FEE--Columbia receives a monthly fee equal to 0.65% annually of the Fund's average daily net assets. PRICING AND BOOKKEEPING FEES--Columbia is responsible for providing pricing and bookkeeping services to the Fund under a Pricing and Bookkeeping Agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Bank & Trust Company ("State Street"). Columbia pays fees to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual flat fee of $10,000, paid monthly, and in any month that the Fund's average daily net assets are more than $50 million, a monthly fee equal to the average daily net assets of the Fund for that month multiplied by a fee rate that is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. For the six months ended June 30, 2003, the annualized net asset based fee rate was 0.032%. The Fund also pays out-of-pocket costs for pricing services. TRANSFER AGENT FEE--Liberty Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia, provides shareholder services for an annual rate of $7,500. DISTRIBUTION FEE--The Fund has adopted a 12b-1 plan, which requires it to pay LFD a monthly distribution fee equal to 0.25% annually of Class B average daily net assets. EXPENSE LIMITS--Columbia and LFD have voluntarily agreed to reimburse all expenses, including management fees and distribution fees, but excluding interest, taxes, brokerage and extraordinary expenses incurred by the Fund, in excess of 1.00% annually of the Fund's average daily net assets. LFD will first reimburse the Class B distribution fee up to 0.25% annually to reach the 1.00% limit on Class B expenses. If additional reimbursement is needed to meet the limit for each class, Columbia will then reimburse other expenses to the extent necessary. If additional reimbursement is still needed to reach the expense limit, Columbia will then waive a portion of its management fee to reach the expense limit. This arrangement may be terminated or modified by Columbia or LFD at any time. OTHER--The Fund pays no compensation to its officers, all of whom are employees of Columbia or its affiliates. The Fund's Independent Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. The Fund has an agreement with its custodian bank under which $181 of custody fees were reduced by balance credits for the six months ended June 30, 2003. The Fund could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if it had not entered into such an agreement. NOTE 4. PORTFOLIO INFORMATION INVESTMENT ACTIVITY--For the six months ended June 30, 2003, purchases and sales of investments, other than short-term obligations, were $52,238,531 and $45,261,513, respectively, of which $5,420,405 and $206,567, respectively, were U.S. Government securities. Unrealized appreciation (depreciation) at June 30, 2003, based on cost of investments for federal income tax purposes, was: <Table> Gross unrealized appreciation $ 15,091,378 Gross unrealized depreciation (5,534,882) ------------ Net unrealized appreciation $ 9,556,496 ============ </Table> OTHER--There are certain additional risks involved when investing in foreign securities that are not inherent with investments in domestic securities. These risks may involve foreign currency exchange rate fluctuations, adverse political and economic developments and the possible prevention of foreign currency exchange or the imposition of other foreign governmental laws or restrictions. The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. 30 <Page> FINANCIAL HIGHLIGHTS Colonial Strategic Income Fund, Variable Series--Class A Shares Selected data for a share outstanding throughout each period is as follows: <Table> <Caption> (UNAUDITED) SIX MONTHS YEAR ENDED DECEMBER 31, ENDED -------------------------------------------------------------------- JUNE 30, 2003 2002 2001 2000 1999 1998 ------------- --------- --------- --------- --------- --------- NET ASSET VALUE, BEGINNING OF PERIOD $ 8.90 $ 8.92 $ 9.43 $ 10.44 $ 11.08 $ 11.15 --------- --------- --------- --------- --------- --------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (a) 0.32 0.65 0.81(b) 0.97 0.95 0.91 Net realized and unrealized gain (loss) on investments and foreign currency 0.73 0.10 (0.46)(b) (0.96) (0.75) (0.24) --------- --------- --------- --------- --------- --------- Total from Investment Operations 1.05 0.75 0.35 0.01 0.20 0.67 --------- --------- --------- --------- --------- --------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- (0.75) (0.84) (0.99) (0.84) (0.72) In excess of net investment income -- -- -- -- -- (0.02) Return of capital -- (0.02) (0.02) (0.03) -- -- --------- --------- --------- --------- --------- --------- Total Distributions Declared to Shareholders -- (0.77) (0.86) (1.02) (0.84) (0.74) --------- --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 9.95 $ 8.90 $ 8.92 $ 9.43 $ 10.44 $ 11.08 ========= ========= ========= ========= ========= ========= Total return (c)(d) 11.80%(e) 8.41% 3.68% 0.16% 1.78% 6.03% RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (f) 0.78%(g) 0.76% 0.85% 0.76% 0.75% 0.78% Net investment income (f) 6.92%(g) 7.16% 8.42%(b) 9.36% 8.57% 7.92% Portfolio turnover rate 31%(e) 62% 62% 31% 35% 50% Net assets, end of period (000's) $ 110,780 $ 106,415 $ 123,041 $ 143,629 $ 170,702 $ 118,985 </Table> (a) Per share data was calculated using average shares outstanding during the period. (b) Effective January 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing and accreting premium and discount on all debt securities. The effect of this change for the year ended December 31, 2001 was to decrease net investment income per share by $0.03, increase net realized and unrealized gain/loss per share by $0.03 and decrease the ratio of net investment income to average net assets from 8.70% to 8.42%. Per share data and ratios for periods prior to December 31, 2001 have not been restated to reflect this change in presentation. (c) Total return at net asset value assuming all distributions reinvested. (d) Total return figure does not include any insurance company charges associated with a variable annuity. If included, total return would be reduced. (e) Not annualized. (f) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (g) Annualized. 31 <Page> PORTFOLIO MANAGERS' DISCUSSION Columbia High Yield Fund, Variable Series / June 30, 2003 Columbia High Yield Fund, Variable Series seeks a high level of income, with capital appreciation as a secondary goal, by investing primarily in non-investment-grade corporate debt securities, commonly referred to as "junk" or "high-yield" bonds. Jeffrey L. Rippey and Kurt M. Havnaer are portfolio managers for the fund. Mr. Rippey has managed the fund and its predecessor since 1998, and Mr. Havnaer has comanaged the fund and its predecessor since 2000. On April 14, 2003, Columbia High Yield Fund, Variable Series acquired two funds: Colonial High Yield Securities Fund, Variable Series and Galaxy VIP Columbia High Yield Fund II. The combined fund retained the name Columbia High Yield Fund, Variable Series. The fund's focus on high-quality issuers had a negative impact on relative performance during the period because lower-quality issues delivered the high-yield market's strongest returns. The energy, utility and cable industries gained renewed strength following a wave of corporate scandals. Many of these utility and energy companies were able to refinance their debt at lower interest rates over longer terms, a strategy that helped strengthen their balance sheets. One notable example of this strategy of extending maturities was AES. The fund did not have an investment in AES. Although we missed out on gains from these lower-quality investments, we identified attractive opportunities in the homebuilding and the hotel sectors, which benefited the portfolio. CREDIT RESEARCH DRIVES SECURITY SELECTION The fund uses bottom-up credit analysis to identify high-quality companies with attractive long-term business prospects and also to stay abreast of potential negative influences in order to limit or avoid potential losses. During the period, our research led us to increase our weight in several existing holdings and to add new names based on expectations for improving margins and debt. For example, in the paper/forest products industry, we added Abitibi-Consolidated and Cascades (0.9% and 0.9% of net assets, respectively). In the publishing/printing industry, we purchased Houghton Mifflin (1.0% of net assets). We also increased our position in the chemical sector, adding three new names to the portfolio including Equistar Chemicals, MacDermid and Ethyl Corporation (0.9%, 0.8% and 0.7% of net assets, respectively). Finally, in the health care industry, we purchased Apogent and Province Healthcare (0.1% and 0.8% of net assets, respectively). Ongoing credit analysis and careful portfolio monitoring also prompted us to reduce or eliminate selected holdings. For example, we sold our position in Pennzoil because we believed that its bonds had achieved fair value following the company's acquisition by Royal Dutch Shell. In addition, IMC Global, a chemical-related company, delivered weaker-than-anticipated performance and was subsequently eliminated from the portfolio. We reduced our overall exposure to homebuilders following the sale of Technical Olympic. LOOKING AHEAD We believe that a declining default rate, attractive yields and an increased focus on corporate business practices bode well for the high-yield market. High-yield investments are generally riskier, but they offer investors a compelling alternative to traditional fixed-income investments. We remain optimistic that when the economy finally recovers, these companies will be well positioned to continue to deliver attractive returns on a risk-adjusted basis. Economic and market conditions change frequently. There is no assurance that the trends described here will continue or commence. An investment in the Columbia High Yield Fund, Variable Series offers the potential for high income and attractive total returns, but also involves certain risks, including credit risks associated with lower-rated bonds, and interest rate risks. Holdings are disclosed as of June 30, 2003, and are subject to change. 32 <Page> PERFORMANCE INFORMATION Columbia High Yield Fund, Variable Series / June 30, 2003 AVERAGE ANNUAL TOTAL RETURN AS OF JUNE 30, 2003 (%) <Table> <Caption> (CUMULATIVE) 6-MONTH 1-YEAR 5-YEAR LIFE - --------------------------------------------------------------------------- Class A (3/3/98) 7.86 11.41 5.46 5.71 Merrill Lynch US High Yield, Cash Pay Only Index(1) 17.24 21.11 3.59 3.86 </Table> Inception date of share class is in parentheses. [CHART] VALUE OF A $10,000 INVESTMENT, 3/3/98 - 6/30/03 <Table> <Caption> CLASS A SHARES MERRILL LYNCH US HIGH YIELD CASH PAY ONLY INDEX 3/31/1998 $ 10,133 $ 10,086 4/30/1998 $ 10,204 $ 10,133 5/31/1998 $ 10,255 $ 10,204 6/30/1998 $ 10,314 $ 10,255 7/31/1998 $ 9,868 $ 10,314 8/31/1998 $ 9,888 $ 9,868 9/30/1998 $ 9,726 $ 9,888 10/31/1998 $ 10,168 $ 9,726 11/30/1998 $ 10,171 $ 10,168 12/31/1998 $ 10,272 $ 10,171 1/31/1999 $ 10,194 $ 10,272 2/28/1999 $ 10,282 $ 10,194 3/31/1999 $ 10,442 $ 10,282 4/30/1999 $ 10,370 $ 10,442 5/31/1999 $ 10,350 $ 10,370 6/30/1999 $ 10,366 $ 10,350 7/31/1999 $ 10,264 $ 10,366 8/31/1999 $ 10,221 $ 10,264 9/30/1999 $ 10,161 $ 10,221 10/31/1999 $ 10,277 $ 10,161 11/30/1999 $ 10,330 $ 10,277 12/31/1999 $ 10,278 $ 10,330 1/31/2000 $ 10,288 $ 10,278 2/29/2000 $ 10,144 $ 10,288 3/31/2000 $ 10,147 $ 10,144 4/30/2000 $ 10,035 $ 10,147 5/31/2000 $ 10,207 $ 10,035 6/30/2000 $ 10,280 $ 10,207 7/31/2000 $ 10,406 $ 10,280 8/31/2000 $ 10,345 $ 10,406 9/30/2000 $ 10,042 $ 10,345 10/31/2000 $ 9,728 $ 10,042 11/30/2000 $ 9,939 $ 9,728 12/31/2000 $ 10,531 $ 9,939 1/31/2001 $ 10,698 $ 10,531 2/28/2001 $ 10,557 $ 10,698 3/31/2001 $ 10,441 $ 10,557 4/30/2001 $ 10,642 $ 10,441 5/31/2001 $ 10,423 $ 10,642 6/30/2001 $ 10,584 $ 10,423 7/31/2001 $ 10,687 $ 10,584 8/31/2001 $ 10,002 $ 10,687 9/30/2001 $ 10,296 $ 10,002 10/31/2001 $ 10,631 $ 10,296 11/30/2001 $ 10,555 $ 10,631 12/31/2001 $ 10,614 $ 10,555 1/31/2002 $ 10,512 $ 10,614 2/28/2002 $ 10,762 $ 10,512 3/31/2002 $ 10,934 $ 10,762 4/30/2002 $ 10,875 $ 10,934 5/31/2002 $ 10,101 $ 10,875 6/30/2002 $ 9,699 $ 10,101 7/31/2002 $ 9,942 $ 9,699 8/31/2002 $ 9,783 $ 9,942 9/30/2002 $ 9,701 $ 9,783 10/31/2002 $ 10,282 $ 9,701 11/30/2002 $ 10,436 $ 10,282 12/31/2002 $ 10,736 $ 10,436 1/31/2003 $ 10,875 $ 10,736 2/28/2003 $ 11,157 $ 10,875 3/31/2003 $ 11,784 $ 11,157 4/30/2003 $ 11,911 $ 11,784 5/31/2003 $ 12,236 $ 11,911 Jun-03 $ 13,444 $ 12,236 </Table> <Table> <Caption> NET ASSET VALUE PER SHARE ($) 12/31/02 6/30/03 - ------------------------------------------------------- Class A 8.96 9.35 </Table> PAST PERFORMANCE CANNOT PREDICT FUTURE INVESTMENT RESULTS. SHARE PRICE AND INVESTMENT RETURN WILL VARY, SO YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. Total return performance includes changes in share price and reinvestment of all distributions. The Merrill Lynch US High Yield, Cash Pay Only Index is an unmanaged index comprised of non-investment-grade corporate bonds. Indices are not investments, do not incur fees or expenses, and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. MUTUAL FUND PERFORMANCE CHANGES OVER TIME. CURRENT RETURNS FOR THE FUND MAY BE DIFFERENT THAN THAT SHOWN. Performance numbers reflect all fund expenses, but do not include any insurance charges imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. (1) Index performance is from February 28, 1998. 33 <Page> INVESTMENT PORTFOLIO Columbia High Yield Fund, Variable Series / June 30, 2003 (Unaudited) <Table> <Caption> PAR VALUE --------------- --------------- CORPORATE FIXED-INCOME BONDS & NOTES--91.8% BASIC MATERIALS--1.8% FOREST PRODUCTS & PAPER--1.8% Abitibi Consolidated, Inc., 7.875% 08/01/09 $ 300,000 $ 330,879 Cascades, Inc., 7.250% 02/15/13 (a) 320,000 337,600 --------------- 668,479 --------------- CONSUMER CYCLICALS--4.9% HOME BUILDERS--4.9% KB Home: 8.625% 12/15/08 400,000 452,000 9.500% 02/15/11 150,000 168,750 K. Hovnanian Enterprises, Inc.: 8.875% 04/01/12 155,000 167,788 10.500% 10/01/07 110,000 128,700 Standard Pacific Corp., 9.250% 04/15/12 125,000 139,375 Toll Corp.: 7.750% 09/15/07 100,000 103,500 8.000% 05/01/09 50,000 52,750 8.250% 12/01/11 500,000 557,500 William Lyons Home, Inc., 10.750% 04/01/13 60,000 63,600 --------------- 1,833,963 --------------- CONSUMER NON-CYCLICALS -- 8.5% COMMERCIAL SERVICES--1.9% Tricon Global Restaurants, Inc.: 8.500% 04/15/06 50,000 55,125 8.875% 04/15/11 575,000 672,750 --------------- 727,875 --------------- HEALTH CARE SERVICES--0.9% Select Medical Corp., 9.500% 06/15/09 300,000 327,000 --------------- HOUSEHOLD PRODUCTS & WARES--2.0% Scotts Co., 8.625% 01/15/09 700,000 749,000 --------------- PHARMACEUTICALS--1.6% Omnicare, Inc.: 6.125% 06/01/13 300,000 307,500 8.125% 03/15/11 275,000 300,438 --------------- 607,938 --------------- TOYS, GAMES & HOBBIES--2.1% Hasbro, Inc.: 6.150% 07/15/08 725,000 757,625 8.500% 03/15/06 25,000 27,500 --------------- 785,125 --------------- CONSUMER STAPLES--2.8% FOOD, BEVERAGES & TOBACCO--2.7% Cott Beverages, Inc.: 8.000% 12/15/11 $ 700,000 $ 756,875 8.500% 03/01/09 225,000 240,750 8.625% 08/01/06 25,000 27,313 --------------- 1,024,938 --------------- HOUSEHOLD PRODUCTS--0.1% Playtex Products, Inc., 9.375% 06/01/11 20,000 20,000 --------------- ENERGY--1.8% COAL--1.0% Arch Western Financial LLC, 6.750% 07/01/03 (a) 225,000 230,062 Peabody Energy Corp., 6.875% 03/15/13 (a) 125,000 131,250 --------------- 361,312 --------------- ENERGY EQUIPMENT & SERVICES--0.8% Offshore Logistics, Inc., 6.125% 06/15/13 (a) 215,000 216,075 Universal Compression, Inc., 7.250% 05/15/10 (a) 100,000 104,000 --------------- 320,075 --------------- FINANCE, INSURANCE & REAL ESTATE--0.1% FINANCIAL SERVICES--0.1% QDI LLC: 12.000% 06/15/09 (a) 12,577 1,871 12.500% 06/15/08 50,750 20,237 --------------- 22,108 --------------- INDUSTRIALS--4.5% HAND & MACHINE TOOLS--0.1% Kennametal, Inc., 7.200% 06/15/12 40,000 43,923 --------------- PACKAGING & CONTAINERS--4.4% Ball Corp.: 6.875% 12/15/12 110,000 116,875 7.750% 08/01/06 100,000 109,500 8.250% 08/01/08 370,000 386,650 Constar International, Inc., 11.000% 12/01/12 250,000 271,250 Owens Brockway, 8.875% 02/15/09 250,000 271,250 Owens-Illinois, Inc.: 7.150% 05/15/05 40,000 40,800 7.350% 05/15/08 50,000 50,250 7.500% 05/15/10 90,000 87,300 8.100% 05/15/07 50,000 51,250 Silgan Corp., 9.000% 06/01/09 275,000 284,625 --------------- 1,669,750 --------------- </Table> See Notes to Investment Portfolio. 34 <Page> <Table> <Caption> PAR VALUE --------------- --------------- MANUFACTURING--11.6% AUTO PARTS & EQUIPMENT--2.3% American Axle & Manufacturing, Inc., 9.750% 03/01/09 $ 495,000 $ 533,362 Dura Operating Corp., 8.625% 04/15/12 90,000 92,925 Lear Corp.: 7.960% 05/15/05 50,000 53,625 8.110% 05/15/09 170,000 195,925 --------------- 875,837 --------------- CHEMICALS & ALLIED PRODUCTS--3.0% Airgas, Inc., 9.125% 10/01/11 110,000 123,200 Equistar Chemical Funding LP: 10.125% 09/01/08 155,000 159,262 10.625% 05/01/11 (a) 165,000 169,125 Ethyl Corp., 8.875% 05/01/10 (a) 255,000 261,375 FMC Corp., 10.250% 11/01/09 105,000 118,650 MacDermid, Inc., 9.125% 07/15/11 275,000 308,000 --------------- 1,139,612 --------------- ELECTRONIC & ELECTRICAL EQUIPMENT--0.4% Flextronics International Ltd., 9.875% 07/01/10 130,000 143,000 --------------- FOOD & KINDRED PRODUCTS--1.1% Constellation Brands, Inc., 8.125% 01/15/12 75,000 81,000 Del Monte Corp., 9.250% 05/15/11 60,000 65,400 Dole Food Co., Inc., 8.625% 05/01/09 135,000 143,100 Smithfield Foods, Inc., 8.000% 10/15/09 115,000 123,913 --------------- 413,413 --------------- FURNITURE & FIXTURES--0.1% Congoleum Corp., 8.625% 08/01/08 65,000 40,625 --------------- MEASURING & ANALYZING INSTRUMENTS--0.0% Fisher Scientific International, Inc., 8.125% 05/01/12 (a) 20,000 21,600 --------------- MISCELLANEOUS MANUFACTURING--0.6% Flowserve Corp., 12.250% 08/15/10 81,000 94,770 Terex Corp., Series 2001 B, 10.375% 04/01/11 105,000 116,550 --------------- 211,320 --------------- PAPER PRODUCTS--0.4% Jefferson Smurfit Corp., 8.250% 10/01/12 70,000 75,600 Tembec Industries, Inc., 8.500% 02/01/11 90,000 89,100 --------------- 164,700 --------------- PRIMARY METAL--0.1% Wheeling-Pittsburgh Corp., 9.250% 11/15/07 (b) $ 250,000 $ 22,500 --------------- PRINTING & PUBLISHING--3.6% Dex Media East LLC, 12.125% 11/15/12 145,000 172,550 Houghton Mifflin Co., 9.875% 02/01/13 (a) 340,000 375,700 Moore North America Finance, Inc., 7.875% 01/15/11 (a) 50,000 52,250 PriMedia Inc., 8.875% 05/15/11 150,000 159,375 RH Donnelley Finance Corp., 10.875% 12/15/12 (a) 510,000 591,600 --------------- 1,351,475 --------------- MINING & ENERGY--8.8% OIL & GAS EXTRACTION--8.5% Chesapeake Energy Corp.: 7.500% 09/15/13 (a) 25,000 26,500 8.125% 04/01/11 200,000 215,500 9.000% 08/15/12 550,000 616,000 Denbury Resources, Inc., 7.500% 04/01/13 (a) 55,000 56,925 Forest Oil Corp., 8.000% 06/15/08 95,000 100,700 Grant Prideco, Inc.: 9.000% 12/15/09 25,000 27,875 9.625% 12/01/07 525,000 574,875 Key Energy Services, Inc., 6.375% 05/01/13 315,000 319,725 Magnum Hunter Resources, Inc., 9.600% 03/15/12 50,000 55,250 Pioneer Natural Resources Co., 7.500% 04/15/12 25,000 28,750 Pogo Producing Co., 8.250% 04/15/11 205,000 227,550 Pride International, Inc., 10.000% 06/01/09 25,000 27,250 Semco Energy, Inc.: 7.125% 05/15/08 (a) 15,000 15,600 7.750% 05/15/13 (a) 100,000 106,000 Stone Energy Corp., 8.250% 12/15/11 50,000 52,750 Trico Marine Services, Inc., 8.875% 05/15/12 80,000 70,000 Westport Resources Corp., 8.250% 11/01/11 350,000 381,500 XTO Energy, Inc.: 6.250% 04/15/13 (a) 100,000 106,500 7.500% 04/15/12 155,000 177,475 --------------- 3,186,725 --------------- </Table> See Notes to Investment Portfolio. 35 <Page> <Table> <Caption> PAR VALUE --------------- --------------- OIL & GAS FIELD SERVICES--0.3% Premcor Refining Group: 9.500% 02/01/13 $ 65,000 $ 71,825 9.500% 02/01/10 50,000 54,500 --------------- 126,325 --------------- REAL ESTATE INVESTMENT TRUSTS (REITs)--1.8% Health Care REIT, Inc., 7.500% 08/15/07 325,000 350,282 Istar Financial, Inc.: 7.000% 03/15/08 100,000 105,000 8.750% 08/15/08 220,000 242,000 --------------- 697,282 --------------- RETAIL TRADE--1.6% FOOD RETAIL--1.2% Winn Dixie Stores, Inc., 8.875% 04/01/08 410,000 438,700 --------------- MISCELLANEOUS RETAIL--0.4% JC Penney Co., Inc., 8.000% 03/01/10 175,000 183,750 --------------- SERVICES--23.8% AMUSEMENT & RECREATION--2.3% Cinemark USA, Inc.: 9.000% 02/01/13 (a) 10,000 10,900 9.000% 02/01/13 (a) 400,000 436,000 Premier Parks, 9.750% 06/15/07 10,000 9,900 Regal Cinemas, Inc., 9.375% 02/01/12 150,000 165,000 Six Flags, Inc., 9.500% 02/01/09 260,000 256,100 --------------- 877,900 --------------- AUTO EQUIPMENT & RENTAL SERVICES--1.1% United Rentals, Inc.: 8.800% 08/15/08 300,000 291,000 9.250% 01/15/09 50,000 49,250 9.500% 06/01/08 80,000 80,400 --------------- 420,650 --------------- CASINOS & GAMING--6.2% Coast Hotels & Casinos, Inc., 9.500% 04/01/09 100,000 107,000 Harrah's Operating Co., Inc., 7.875% 12/15/05 600,000 651,000 International Game Technology: 7.875% 05/15/04 25,000 26,125 8.375% 05/15/09 25,000 30,500 Mohegan Tribal Gaming Authority: 8.000% 04/01/12 40,000 43,100 8.375% 07/01/11 50,000 54,000 Park Place Entertainment: 7.875% 03/15/10 $ 100,000 $ 106,875 9.375% 02/15/07 550,000 607,750 Station Casinos, Inc., 9.875% 07/01/10 545,000 604,950 Venetian Casino Resort LLC, 11.000% 06/15/10 100,000 113,000 --------------- 2,344,300 --------------- ENTERTAINMENT--0.9% Speedway Motorsports, Inc., 6.750% 06/01/13 (a) 325,000 334,750 --------------- FUNERAL SERVICES--0.4% Service Corp. International, 7.700% 04/15/09 160,000 162,800 --------------- HEALTH SERVICES--7.5% AdvancePCS, 8.500% 04/01/08 400,000 430,000 AmerisourceBergen Corp.: 7.250% 11/15/12 655,000 712,312 8.125% 09/01/08 150,000 165,375 Apogent Technologies, Inc., 6.500% 05/15/13 (a) 50,000 51,625 HCA Inc., 8.750% 09/01/10 620,000 733,324 MedQuest, Inc., 11.875% 08/15/12 125,000 131,875 Province Healthcare Co., 7.500% 06/01/13 300,000 298,500 Triad Hospital, Inc., 8.750% 05/01/09 300,000 324,000 --------------- 2,847,011 --------------- LODGING--2.3% Extended Stay America, Inc.: 9.150% 03/15/08 50,000 51,750 9.875% 06/15/11 300,000 322,500 Host Marriott LP, 9.500% 01/15/07 100,000 108,250 ITT Corp., 6.750% 11/15/05 35,000 36,400 Starwood Hotels & Resorts Worldwide, Inc.: 7.375% 05/01/07 15,000 15,825 7.875% 05/01/12 290,000 317,550 --------------- 852,275 --------------- OTHER SERVICES--3.1% Corrections Corp.: 7.500% 05/01/11 275,000 288,062 9.875% 05/01/09 100,000 112,000 Iron Mountain, Inc.: 7.775% 01/15/15 50,000 53,000 8.625% 04/01/13 650,000 700,375 --------------- 1,153,437 --------------- </Table> See Notes to Investment Portfolio. 36 <Page> <Table> <Caption> PAR VALUE --------------- --------------- TRANSPORTATION, COMMUNICATIONS, ELECTRIC, GAS & SANITARY SERVICES--19.8% AEROSPACE--2.6% K&F Industries, 9.625% 12/15/10 $ 275,000 $ 302,500 L-3 Communications Corp., 7.625% 06/15/12 610,000 671,000 --------------- 973,500 --------------- BROADCASTING--3.1% British Sky Broadcasting PLC: 7.300% 10/15/06 20,000 22,068 8.200% 07/15/09 200,000 233,684 Chancellor Media Corp., 8.000% 11/01/08 45,000 53,100 LIN Television Corp., 6.500% 05/15/13 (a) 350,000 350,875 Sinclair Broadcast Group, Inc., 8.750% 12/15/11 450,000 495,000 --------------- 1,154,727 --------------- CABLE--4.1% CSC Holdings, Inc., Senior Notes: 7.625% 04/01/11 50,000 50,750 9.875% 02/15/13 50,000 51,000 10.500% 05/15/16 425,000 463,250 DirecTV Holdings Finance, 8.375% 03/15/13 (a) 340,000 379,950 Mediacom LLC/Mediacom Capital One, 9.500% 01/15/013 475,000 505,875 Rogers Communications, Inc., 8.875% 07/15/07 25,000 25,750 TCI Communications, Inc., 8.750% 08/01/15 46,000 60,020 --------------- 1,536,595 --------------- ELECTRIC, GAS & SANITARY SERVICES--2.2% Allied Waste North America, Inc., 10.000% 08/01/09 650,000 692,250 Synagro Technologies, Inc., 9.500% 04/01/09 125,000 133,750 --------------- 826,000 --------------- ELECTRIC SERVICES--0.1% Beaver Valley Funding Corp., 9.000% 06/01/17 45,000 53,839 --------------- MARINE TRANSPORTATION--1.7% Teekay Shipping Corp., 8.875% 07/15/11 595,000 636,650 --------------- MEDIA--2.1% Lamar Media Corp., 7.250% 01/01/13 675,000 718,875 Vivendi Universal SA, 9.250% 04/15/10 (a) 70,000 81,200 --------------- 800,075 --------------- POLLUTION CONTROL--0.1% Envirosource, Inc., 14.000% 12/15/08 41,050 36,945 --------------- RADIOTELEPHONE COMMUNICATIONS--3.5% Nextel Communications, Inc.: 9.75% 10/31/2007 $ 100,000 $ 103,500 9.375% 11/15/09 300,000 324,000 10.650% 09/15/07 25,000 25,875 Rogers Cantel, Inc.: 6.250% 06/15/13 (a) 650,000 650,930 9.750% 06/01/16 195,000 220,838 --------------- 1,325,143 --------------- RAILROAD--0.2% Kansas City Southern, 7.500% 06/15/09 80,000 82,800 --------------- TELECOMMUNICATIONS--0.1% Colt Telecom Group PLC, 2.000% 03/29/06 EUR 40,000 38,188 --------------- TOTAL CORPORATE FIXED-INCOME BONDS & NOTES (cost of $34,207,756) 34,635,935 --------------- <Caption> SHARES --------------- PREFERRED STOCKS--0.8% TRANSPORTATION, COMMUNICATIONS, ELECTRIC, GAS & SANITARY SERVICES--0.8% CABLE--0.8% CSC Holdings Ltd. 11.125% PIK 2,896 298,288 --------------- POLLUTION CONTROL--0.0% EnviroSource, Inc. 7.250% 139 6,435 --------------- TOTAL PREFERRED STOCKS (cost of $338,408) 304,723 --------------- COMMON STOCKS--0.1% TRANSPORTATION, COMMUNICATIONS, ELECTRIC, GAS & SANITARY SERVICES--0.1% CABLE--0.1% NTL, Inc. 1,259 42,957 --------------- POLLUTION CONTROL--0.0% EnviroSource, Inc. 1,200 276 --------------- TOTAL COMMON STOCKS (cost of $236,260) 43,233 --------------- <Caption> UNITS --------------- WARRANTS (c)--0.0% TRANSPORTATION, COMMUNICATIONS, ELECTRIC, GAS & SANITARY SERVICES--0.0% CABLE--0.0% Cable Satisfaction International, Inc., expires 03/01/05 220 2 Ono Finance PLC, expires 02/15/11 85 -- --------------- 2 --------------- </Table> See Notes to Investment Portfolio. 37 <Page> <Table> <Caption> UNITS VALUE --------------- --------------- COMMUNICATIONS--0.0% UbiquiTel Inc., expires 04/15/10 50 $ 1 XM Satellite Radio Holdings, Inc., expires 03/15/10 150 825 --------------- 826 --------------- MOTOR FREIGHT & WAREHOUSING--0.0% QDI LLC, expires 06/15/06 (a) 153 -- --------------- TELECOMMUNICATIONS--0.0% Horizon PCS, Inc., expires 10/01/10 145 -- Jazztel PLC, expires 07/15/10 60 -- --------------- -- --------------- WIRELESS TELECOMMUNICATION--0.0% Carrier 1 International SA, expires 02/19/09 113 1 --------------- TOTAL WARRANTS (cost of $22,621) 829 --------------- <Caption> PAR VALUE --------------- --------------- SHORT-TERM OBLIGATION--6.9% Repurchase agreement with State Street Bank & Trust Co., dated 06/30/03 due 07/01/03 at 0.95%, collateralized by a U.S. Treasury Bond maturing 11/15/10, market value $2,658,375 (repurchase proceeds $2,605,069) (cost of $2,605,000) $ 2,605,000 $ 2,605,000 --------------- TOTAL INVESTMENTS--99.6% (cost of $37,410,045) (d) 37,589,720 --------------- OTHER ASSETS & LIABILITIES, NET--0.4% 167,632 --------------- NET ASSETS--100.0% $ 37,757,352 =============== </Table> NOTES TO INVESTMENT PORTFOLIO: (a) These securities are exempt from registration under Rule 144A of the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At June 30, 2003, the value of these securities amounted to $5,100,263 which represents 13.5% of net assets. (b) As of June 30, 2003, the Fund held certain securities that have filed for bankruptcy protection under chapter 11, representing 0.1% of net assets. This issuer is in default of certain debt covenants. Income is not being accrued. (c) Non-incoming producing. (d) Cost for federal income tax purposes is $37,425,909. The difference between cost for generally accepted accounting principles and cost on a tax basis is related to amortization/accretion tax elections on fixed income securities. <Table> <Caption> ACRONYM NAME ------- ---- EUR European Currency PIK Payment-In-Kind </Table> See Notes to Financial Statements. 38 <Page> STATEMENT OF ASSETS AND LIABILITIES Columbia High Yield Fund, Variable Series / June 30, 2003 (Unaudited) <Table> ASSETS: Investments, at cost $ 37,410,045 -------------- Investments, at value $ 37,589,720 Cash 78 Receivable for: Investments sold 284,463 Fund shares sold 629,623 Interest 639,004 Dividends 8,507 Merger 12,548 Deferred Trustees' compensation plan 756 Expense reimbursement due from Manager/Distributor 11,300 -------------- TOTAL ASSETS 39,175,999 -------------- LIABILITIES: Payable for: Investments purchased 1,381,324 Fund shares repurchased 3,249 Management fee 17,277 Administration fee 2,448 Distribution fee--Class B 179 Pricing and bookkeeping fees 3,424 Audit fee 5,512 Reports to shareholders 1,624 Deferred Trustees' fee 756 Other liabilities 2,854 -------------- TOTAL LIABILITIES 1,418,647 -------------- NET ASSETS $ 37,757,352 ============== COMPOSITION OF NET ASSETS: Paid-in capital $ 38,514,284 Overdistributed net investment income (5,167) Accumulated net realized loss (931,443) Net unrealized appreciation on: Investment 179,675 Foreign currency translations 3 -------------- NET ASSETS $ 37,757,352 ============== CLASS A: Net assets $ 15,417,772 Shares outstanding 1,648,084 ============== Net asset value per share $ 9.35 ============== CLASS B: Net assets $ 22,339,580 Shares outstanding 2,387,983 ============== Net asset value per share $ 9.35 ============== </Table> See Notes to Financial Statements. 39 <Page> STATEMENT OF OPERATIONS Columbia High Yield Fund, Variable Series For the Six Months Ended June 30, 2003 (Unaudited) <Table> INVESTMENT INCOME: Dividends $ 10,038 Interest 596,783 ------------- Total Investment Income 606,821 ------------- EXPENSES: Management fee 47,486 Administration fee 6,727 Distribution fee--Class B 10,474 Pricing and bookkeeping fees 15,923 Transfer agent fee 2,496 Trustees' fee 26 Custody fee 4,321 Audit fee 5,492 Other expenses 2,871 ------------- Total Expenses 95,816 Fees and expenses waived or reimbursed by Manager (31,307) Fees waived by Distributor--Class B (7,960) Custody earnings credit (384) ------------- Net Expenses 56,165 ------------- Net Investment Income 550,656 ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: Net realized loss on: Investments (565,362) Foreign currency transactions (1,918) ------------- Net realized loss (567,280) ------------- Net change in unrealized appreciation/depreciation on: Investments 1,466,145 Foreign currency translations 3 ------------- Net change in unrealized appreciation/depreciation 1,466,148 ------------- Net Gain 898,868 ------------- Net Increase in Net Assets from Operations $ 1,449,524 ============= </Table> See Notes to Financial Statements. 40 <Page> STATEMENT OF CHANGES IN NET ASSETS Columbia High Yield Fund, Variable Series <Table> <Caption> (UNAUDITED) SIX MONTHS ENDED YEAR ENDED JUNE 30, DECEMBER 31, INCREASE (DECREASE) IN NET ASSETS: 2003 2002 - ---------------------------------- --------------- --------------- OPERATIONS: Net investment income $ 550,656 $ 153,065 Net realized loss on investments and foreign currency transactions (567,280) (126,213) Net change in unrealized appreciation/depreciation on investments and foreign currency translations 1,466,148 30,091 --------------- --------------- Net Increase from Operations 1,449,524 56,943 --------------- --------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income: Class A (266,167) (149,903) Class B (303,403) -- --------------- --------------- Total Distributions Declared to Shareholders (569,570) (149,903) --------------- --------------- SHARE TRANSACTIONS: Class A: Subscriptions 4,459,161 626,496 Proceeds received in connection with merger 12,120,783 -- Distributions reinvested 266,167 149,903 Redemptions (4,035,937) (907,995) --------------- --------------- Net Increase (Decrease) 12,810,174 (131,596) --------------- --------------- Class B: Subscriptions 4,776,203 -- Proceeds received in connection with merger 17,750,911 -- Distributions reinvested 303,403 -- Redemptions (960,028) -- --------------- --------------- Net Increase 21,870,489 -- --------------- --------------- Net Increase (Decrease) from Share Transactions 34,680,663 (131,596) --------------- --------------- Total Increase (Decrease) in Net Assets 35,560,617 (224,556) NET ASSETS: Beginning of period 2,196,735 2,421,291 --------------- --------------- End of period (including overdistributed net investment income of $(5,167) and undistributed net investment income of $13,747) $ 37,757,352 $ 2,196,735 =============== =============== CHANGES IN SHARES: Class A: Subscriptions 490,018 69,617 Issued in connection with merger 1,328,306 -- Issued for distributions reinvested 19,445 16,631 Redemptions (434,938) (101,745) --------------- --------------- Net Increase (Decrease) 1,402,831 (15,497) --------------- --------------- Class B: Subscriptions 524,602 -- Issued in connection with merger 1,946,759 -- Issued for distributions reinvested 19,964 -- Redemptions (103,342) -- --------------- --------------- Net Increase 2,387,983 -- --------------- --------------- </Table> See Notes to Financial Statements. 41 <Page> NOTES TO FINANCIAL STATEMENTS Columbia High Yield Fund, Variable Series / June 30, 2003 (Unaudited) NOTE 1. ORGANIZATION AND ACCOUNTING POLICIES ORGANIZATION--Columbia High Yield Fund, Variable Series (the "Fund"), a series of Liberty Variable Investment Trust (the "Trust"), is a diversified portfolio of a Massachusetts business trust, registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund's investment goal is to seek a high level of income, with capital appreciation as a secondary goal, by investing primarily in non-investment-grade corporate debt securities, commonly referred to as "junk" or "high-yield" bonds. The Fund's capitalization consists of an unlimited number of shares of beneficial interest without par value that represent a separate series of the Trust. The Fund offers two classes of shares: Class A and Class B. Class B commenced operations on April 14, 2003. Each share of a class represents an equal proportionate beneficial interest in that share class and, when issued and outstanding, is fully paid and nonassessable. Shareholders would be entitled to share proportionally in the net assets of their share class available for distribution to shareholders upon liquidation of the Fund. Shares of the Fund are available and are being marketed exclusively as a pooled funding vehicle for variable annuity contracts ("VA contracts") and Variable Life Insurance Policies ("VLI Policies") offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies"). The Participating Insurance Companies and their separate accounts own all the shares of the Fund. On April 1, 2003, Fleet Investment Advisors Inc., the investment advisor to the predecessor Fund, merged into Columbia Management Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co., an indirect wholly owned subsidiary of FleetBoston Financial Corporation. At the time of the merger, Columbia assumed the obligations of Fleet Investment Advisors Inc. with respect to the predecessor Fund. Columbia provides investment management and advisory services to the Fund pursuant to its Management Agreement with the Fund. Columbia also provides administrative and pricing and bookkeeping services to the Fund. Liberty Funds Distributor, Inc. ("LFD"), an affiliate of Columbia, serves as the principal underwriter of the Fund. On April 14, 2003, the Colonial High Yield Securities Fund, Variable Series merged into the Galaxy VIP Columbia High Yield Fund II, previously a fund of the Galaxy VIP Fund, a separate Massachusetts business trust (the "predecessor trust"). Also on April 14, 2003, Galaxy VIP Columbia High Yield Fund II, created a Class B into which Colonial High Yield Securities Fund, Variable Series Class B shares were reorganized. Galaxy VIP Columbia High Yield Fund II received a tax-free transfer of assets from Colonial High Yield Securities Fund, Variable Series as follows: <Table> <Caption> SHARES NET ASSETS UNREALIZED ISSUED RECEIVED DEPRECIATION(1) --------- ------------ --------------- 3,275,065 $ 29,871,694 $ 1,356,159 </Table> <Table> <Caption> NET ASSETS OF GALAXY VIP NET ASSETS NET ASSETS OF COLUMBIA OF COLONIAL HIGH GALAXY VIP COLUMBIA HIGH YIELD YIELD SECURITIES HIGH YIELD FUND II FUND II FUND, VARIABLE SERIES IMMEDIATELY PRIOR TO IMMEDIATELY PRIOR TO AFTER COMBINATION COMBINATION COMBINATION ------------- --------------------- ------------------- $ 2,264,927 $ 29,871,694 $ 32,136,621 </Table> (1) Unrealized depreciation is included in the Net Assets Received amount shown above. Also on April 14, 2003, subsequent to the merger described above, the Galaxy VIP Columbia High Yield Fund II was reorganized as the Columbia High Yield Fund, Variable Series. The accompanying statement of operations, statement of changes in net assets and financial highlights for the Fund represents the historical operations of the Galaxy VIP Columbia High Yield Fund II for periods prior to April 14, 2003. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION AND TRANSACTIONS--Debt securities generally are valued by a pricing service based upon market transactions for normal, institutional-size trading units of similar securities. When management deems it appropriate, an over-the-counter or exchange bid quotation is used. Equity securities generally are valued at the last sale price or, in the case of unlisted or listed securities for which there were no sales during the day, at the current quoted bid price. Forward currency contracts are valued based on the weighted value of exchange-traded contracts with similar durations. 42 <Page> Short-term obligations with a maturity of 60 days or less are valued at amortized cost. The values of all assets and liabilities quoted in foreign currencies are translated into U.S. dollars at that day's exchange rates. Investments for which market quotations are not readily available, or quotations which management believes are not appropriate, are valued at fair value under procedures approved by the Board of Trustees. Generally, trading in foreign securities is substantially completed each day at various times prior to the close of the New York Stock Exchange ("NYSE"). The values of such securities used in computing the net asset value of the Fund's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which they are determined and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If events materially affecting the value of such securities and such exchange rates occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Trustees. Security transactions are accounted for on the date the securities are purchased, sold or mature. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. The Fund may trade securities on other than normal settlement terms. This may increase the risk if the other party to the transaction fails to deliver and causes the Fund to subsequently invest at less advantageous prices. DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS--All income, expenses (other than the Class B distribution fee), and realized and unrealized gains (losses) are allocated to each class proportionately on a daily basis for purposes of determining the net asset value of each class. The per share data was calculated using average shares outstanding during the period. In addition, Class B net investment income per share data and ratios reflect the distribution fee applicable to Class B shares only. FEDERAL INCOME TAXES--Consistent with the Fund's policy to qualify as a regulated investment company and to distribute all of its taxable income, no federal income tax has been accrued. INTEREST INCOME, DEBT DISCOUNT AND PREMIUM--Interest income is recorded on the accrual basis. Discount is accreted to interest income over the life of a security with a corresponding increase in the cost basis. Premium is amortized against interest income with a corresponding decrease in the cost basis. DISTRIBUTIONS TO SHAREHOLDERS--The Fund intends to distribute as income dividends or capital gains distributions, at least annually, substantially all of its net investment income and net profits realized from the sale of investments. All dividends and distributions are reinvested in additional shares of the Fund at net asset value as of the record date of the distribution. Income and capital gain distributions are determined in accordance with federal income tax regulations. FOREIGN CURRENCY TRANSACTIONS--Net realized and unrealized gains (losses) on foreign currency transactions and translations includes gains (losses) arising from the fluctuations in exchange rates between trade and settlement dates on securities transactions, gains (losses) arising from the disposition of foreign currency, and currency gains (losses) between the accrual and payment dates on dividends, interest income and foreign withholding taxes. The Fund does not distinguish that portion of gains (losses) on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the investments. Such fluctuations are included with the net realized and unrealized gains (losses) on investments. FORWARD CURRENCY CONTRACTS--The Fund may enter into forward currency contracts to purchase or sell foreign currencies at predetermined exchange rates in connection with the settlement of purchases and sales of securities. The Fund may also enter into forward currency contracts to hedge certain other foreign currency denominated assets. The contracts are used to minimize the exposure to foreign exchange rate fluctuations during the period between trade and settlement date of the contracts. All contracts are marked-to-market daily, resulting in unrealized gains (losses) which become realized at the time the forward currency contracts are closed or mature. Realized and unrealized gains (losses) arising from such transactions are included in net realized and unrealized gains (losses) on foreign currency transactions and translations. Forward currency contracts do not eliminate fluctuations in the prices of the Fund's portfolio securities. While the maximum potential loss from such contracts is the aggregate face value in U.S. dollars at the time the contract was opened, exposure is typically limited to the change in value of the contract (in U.S. dollars) over the period it remains 43 <Page> open. Risks may also arise if counterparties fail to perform their obligations under the contracts. OTHER--Corporate actions and dividend income are recorded on the ex-date (except for certain foreign securities which are recorded as soon after ex-date as the Fund becomes aware of such), net of non-reclaimable tax withholdings. Where a high level of uncertainty as to collection exists, income on securities is recorded net of all tax withholdings with any rebates recorded when received. The Fund's custodian takes possession through the federal book-entry system of securities collateralizing repurchase agreements. Collateral is marked-to-market daily to ensure that the market value of the underlying assets remains sufficient to protect the Fund. The Fund may experience costs and delays in liquidating the collateral if the issuer defaults or enters bankruptcy. NOTE 2. FEDERAL TAX INFORMATION Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. The following capital loss carryforwards, determined as of December 31, 2002, are available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: <Table> <Caption> YEAR OF CAPITAL LOSS EXPIRATION CARRYFORWARD ---------- ------------ 2007 $ 33,837 2008 59,785 2009 150,572 2010 126,297 ------------ $ 370,491 ============ </Table> NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES MANAGEMENT AND ADMINISTRATION FEES--Columbia receives a monthly management fee equal to 0.60% annually of the Fund's average daily net assets. Columbia provides, pursuant to an Administrative Agreement with the Fund, certain administrative services for a monthly fee equal to 0.085% annually of the Fund's average daily net assets. Prior to April 14, 2003, the administration fee was computed daily and paid monthly at the annual rate of 0.085% of the first $1 billion of the combined average daily net assets of the funds in the predecessor trust, 0.078% of the next $1.5 billion of combined average daily net assets and 0.073% of combined average daily net assets in excess of $2.5 billion. PRICING AND BOOKKEEPING FEES--Columbia is responsible for providing pricing and bookkeeping services to the Fund under a Pricing and Bookkeeping Agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Bank & Trust Company ("State Street"). Columbia pays fees to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual fee based on the average daily net assets of the Fund as follows: <Table> <Caption> AVERAGE DAILY NET ASSETS FEE - ------------------------ ----------- Under $50 million $ 25,000 Of $50 million but less than $200 million 35,000 Of $200 million but less than $500 million 50,000 Of $500 million but less than $1 billion 85,000 In excess of $1 billion 125,000 </Table> The annual fees for a Fund with more than 25% in non-domestic assets will be 150% of the annual fees described above. The Fund also pays out-of-pocket costs for pricing services. TRANSFER AGENT FEE--Liberty Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia, provides shareholder services for a monthly fee based on a per account charge or minimum of $5,000 annually per Fund. DISTRIBUTION FEE--The Fund has adopted a 12b-1 plan, which requires it to pay LFD a monthly distribution fee equal to 0.25% annually of Class B average daily net assets. EXPENSE LIMITS--Effective April 14, 2003, Columbia has voluntarily agreed to waive expenses at the rate of 0.27% annually of the Fund's average daily net assets. In addition, LFD has voluntarily agreed to waive Class B distribution fees at the rate of 0.19% annually of the Class B average daily net assets. These waiver agreements will continue until April 14, 2004, after which they may be modified or terminated at any time. Prior to April 14, 2003, Fleet Investment Advisors, Inc. and/or its affiliates and/or PFPC Inc., the former fund administrator, could voluntarily waive all or a portion of the fees payable to them by the predecessor fund. OTHER--The Fund pays no compensation to its officers, all of whom are employees of Columbia or its affiliates. The Fund's Independent Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. 44 <Page> The Fund has an agreement with its custodian bank under which $384 of custody fees were reduced by balance credits for the six months ended June 30, 2003. The Fund could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if it had not entered into such an agreement. NOTE 4. PORTFOLIO INFORMATION INVESTMENT ACTIVITY--For the six months ended June 30, 2003, purchases and sales of investments, other than short-term obligations, were $26,177,258 and $19,025,482, respectively. Unrealized appreciation (depreciation) at June 30, 2003, based on cost of investments for federal income tax purposes, was: <Table> Gross unrealized appreciation $ 918,109 Gross unrealized depreciation (754,298) ---------- Net unrealized appreciation $ 163,811 ========== </Table> OTHER--High yield investing offers the potential for high income and attractive total return, but also certain additional risks. These include credit risks associated with lower-rated bonds, changes in interest rates and certain risks associated with foreign investments. The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. 45 <Page> FINANCIAL HIGHLIGHTS Columbia High Yield Fund, Variable Series--Class A Shares (a) Selected data for a share outstanding throughout each period is as follows: <Table> <Caption> (UNAUDITED) PERIOD SIX MONTHS YEAR ENDED DECEMBER 31, ENDED ENDED ---------------------------------------------- DECEMBER 31, JUNE 30, 2003 2002 2001 2000 1999 1998 (b) ------------- -------- -------- -------- -------- ------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 8.96 $ 9.29 $ 9.35 $ 9.70 $ 10.36 $ 10.00 ------------- -------- -------- -------- -------- ------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.16(c) 0.59 0.64(d) 0.69 0.70 0.49 Net realized and unrealized gain (loss) on investments and foreign currency 0.53 (0.35) (0.07)(d) (0.35) (0.65) 0.45 ------------- -------- -------- -------- -------- ------------ Total from Investment Operations 0.69 0.24 0.57 0.34 0.05 0.94 ------------- -------- -------- -------- -------- ------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.30) (0.57) (0.63) (0.69) (0.70) (0.49) From net realized gains -- -- -- -- (0.01) (0.09) ------------- -------- -------- -------- -------- ------------ Total Distributions Declared to Shareholders (0.30) (0.57) (0.63) (0.69) (0.71) (0.58) ------------- -------- -------- -------- -------- ------------ NET ASSET VALUE, END OF PERIOD $ 9.35 $ 8.96 $ 9.29 $ 9.35 $ 9.70 $ 10.36 ============= ======== ======== ======== ======== ============ Total return (e)(f)(g) 7.86%(h) 2.74% 6.18% 3.66% 0.56% 9.61%(h) RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 0.77%(j) 1.68% 1.60% 1.60% 1.60% 1.60%(j) Net investment income (i) 7.00%(j) 6.46% 6.89%(d) 7.29% 7.00% 6.18%(j) Waiver/reimbursement 0.54%(j) 1.68% 1.63% 1.58% 1.29% 2.65%(j) Portfolio turnover rate 127%(h) 49% 54% 46% 35% 89%(h) Net assets, end of period (000's) $ 15,418 $ 2,197 $ 2,421 $ 2,188 $ 2,403 $ 2,454 </Table> (a) The information shown in this table for the periods prior to the six months ended June 30, 2003, related to shares of the Galaxy VIP Columbia High Yield Fund II, the predecessor to the Columbia High Yield Fund, Variable Series. (b) For the period from commencement of operations on March 3, 1998 to December 31, 1998. (c) Per share data was calculated using average shares outstanding during the period. (d) The Fund adopted the provisions of the AICPA Audit Guide for Investment Companies effective January 1, 2001. The effect of the changes for the year ended December 31, 2001 (which is reflected in the amounts shown above) on the net investment income per share, the net realized and unrealized gain (loss) per share and the ratio of net investment income to average net assets is to $0.01, $(0.01) and 0.25%, respectively. (e) Total return at net asset value assuming all distributions reinvested. (f) Total return figure does not include any insurance company charges associated with a variable annuity. If included, total return would be reduced. (g) Had the Manager and/or Distributor not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. 46 <Page> SHAREHOLDER MEETING RESULTS Columbia High Yield Fund, Variable Series RESULTS OF THE ANNUAL MEETING OF SHAREHOLDERS On February 19, 2003, the Annual Meeting of Shareholders of the Trust was held to conduct a vote for or against the approval of the following items listed on the Trust's Proxy Statement for said Meeting. On December 2, 2002, the record date for the Meeting, the Colonial High Yield Securities Fund, Variable Series had 4,180,951.887 common shares outstanding and the Galaxy VIP Columbia High Yield Fund II had 245,636.316 common shares outstanding. The votes cast were as follows: SHAREHOLDER RESPONSE SUMMARY REPORT LIBERTY VARIABLE INVESTMENT TRUST/STEINROE VARIABLE INVESTMENT TRUST COLONIAL HIGH YIELD SECURITIES FUND, VARIABLE SERIES FEBRUARY 19, 2003 1. To approve an Agreement and Plan of Reorganization providing for the sale of all of the assets of the Colonial High Yield Securities Fund, Variable Series to, and the assumption of all of the liabilities of the Colonial High Yield Securities Fund, Variable Series by, the Columbia High Yield Fund, Variable Series, in exchange for shares of the Columbia High Yield Fund, Variable Series, and the distribution of such shares to the shareholders of the Colonial High Yield Securities Fund, Variable Series in complete liquidation of the Colonial High Yield Securities Fund, Variable Series. <Table> <Caption> % OF % OF NO. OF OUTSTANDING SHARES SHARES SHARES VOTED ------------- ----------- -------- Affirmative 3,601,167.762 86.133% 86.515% Against 93,366.123 2.233% 2.243% Abstain 467,931.327 11.192% 11.242% TOTAL 4,162,465.212 99.558% 100.000% <Caption> **FUND TOTALS: SHARES RECORD TOTAL 4,180,951.887 VOTED SHARES 4,162,465.212 PERCENT VOTED 99.558% </Table> SHAREHOLDER RESPONSE SUMMARY REPORT LIBERTY VARIABLE INVESTMENT TRUST/STEINROE VARIABLE INVESTMENT TRUST GALAXY VIP COLUMBIA HIGH YIELD FUND II FEBRUARY 19, 2003 2. To approve an Agreement and Plan of Reorganization providing for (i) the sale of all of the assets of the Galaxy VIP Columbia High Yield Fund II to, and the assumption of all of the liabilities of the Galaxy VIP Columbia High Yield Fund II by, the Columbia High Yield Fund, Variable Series, in exchange for shares of the Columbia High Yield Fund, Variable Series and the distribution of such shares to the shareholders of the Galaxy VIP Columbia High Yield Fund II in complete liquidation of the Galaxy VIP Columbia High Yield Fund II; (ii) the de-registration of The Galaxy VIP Fund as an investment company under the Investment Company Act of 1940, as amended, and (iii) the Galaxy VIP Fund's termination as a Massachusetts business trust under Massachusetts law. <Table> <Caption> % OF % OF NO. OF OUTSTANDING SHARES SHARES SHARES VOTED ------------- ----------- -------- Affirmative 222,628.183 90.633% 90.633% Against 302.568 .123% .123% Abstain 22,705.565 9.244% 9.244% TOTAL 245,636.316 100.000% 100.000% <Caption> **FUND TOTALS: SHARES RECORD TOTAL 245,636.316 VOTED SHARES 245,636.316 PERCENT VOTED 100.000% </Table> 47 <Page> CHANGE IN INDEPENDENT AUDITOR Columbia High Yield Fund, Variable Series Based on the recommendation of the Audit Committee of the Fund on May 6, 2003, the Board of Trustees determined not to retain Ernst & Young LLP ("E&Y") as the Fund's independent auditor and voted to appoint PricewaterhouseCoopers LLP for the fiscal year ended December 31, 2003. During the two most recent fiscal years, E&Y's audit reports contained no adverse opinion or disclaimer of opinion; nor were its reports qualified or modified as to uncertainty, audit scope, or accounting principle. Further, in connection with its audits for the two most recent fiscal years and through May 6, 2003, there were no disagreements between the Fund and E&Y on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which if not resolved to the satisfaction of E&Y would have caused it to make reference to the disagreements in its report on the financial statements for such years. 48 <Page> PORTFOLIO MANAGER'S DISCUSSION Columbia International Fund, Variable Series / June 30, 2003 Columbia International Fund, Variable Series seeks long-term capital growth by investing primarily in equity securities of growth companies located outside the United States. James M. McAlear is the lead manager of the fund. He has managed international portfolios since joining the Columbia Management Advisors, Inc. in 1992. On April 7, 2003, Colonial International Fund for Growth, Variable Series acquired the following funds: Stein Roe Global Utilities Fund, Variable Series; Colonial International Horizons Fund, Variable Series and Colonial Global Equity Fund, Variable Series. The new fund was renamed Columbia International Fund, Variable Series. For the six-month period that ended June 30, 2003, the portfolio performed in line with its new benchmark, the MSCI All Country World Free ex US Index. We are comparing the fund's returns to this index because it includes emerging markets (such as China) and other countries (such as Canada and Mexico), which are part of the fund's investment universe. By contrast, the fund's former benchmark, the MSCI EAFE Index, only tracks stocks in Europe, Australia and the major markets of the Far East (Japan, Hong Kong and Singapore). During the period, fund performance was also comparable to the MSCI EAFE Index. Our investments in Japan and China were largely responsible for the fund's strong return. At the beginning of the period, uncertainty about the war in Iraq, the SARS (severe acute respiratory syndrome) epidemic and the global economic slowdown took their toll on the international stock markets. In this environment, the portfolio benefited from a heavy commitment to defensive stocks--those that tend to perform well during periods of economic weakness. These included companies in the consumer staples and utility sectors. Once the major military offensive in Iraq ended and the SARS outbreak appeared to be abating, market sentiment became more positive. As a result, we moved away from these defensive areas that had done well early in the period and sought investments that we believe have the potential to perform well when economic growth picks up. At the end of the six months, many international markets had risen significantly. While European markets generated strong gains, Asian markets--especially Japan--were the global leaders. INVESTORS GRAVITATED TOWARD OUT-OF-FAVOR COMPANIES As the international markets rose during the last three months of the period, investors tended to emphasize companies that were selling at depressed prices and that had been out-of-favor for a year or more. Consequently, some of the portfolio's long-term holdings, which had generated strong performance in the past, did poorly. For example, Unilever (0.9% of net assets), the world's largest household products company, reported losses for the period. Heineken also performed poorly and we eliminated our position in this company during the period. ASIAN STOCKS LED PORTFOLIO PERFORMANCE The portfolio's position in Japan was a major contributor to performance. After experiencing steep declines early in the year, Japanese stocks were attractively valued and benefited from the widespread restructuring of individual companies. The portfolio's investment in Olympus Optical (1.2% of net assets), a manufacturer of endoscopes and other optical equipment, contributed to results. Tokyo Electron (0.4% of net assets), a manufacturer of industrial electronics, also aided total return. About 7% of the portfolio was invested in China, an area that is benefiting from regional growth and domestic expansion. In China, we favored utility companies, which did well because of strong consumer and business demand. GENERIC PHARMACEUTICALS WERE A THEME Capitalizing on the global emphasis on reducing health care costs, we purchased several generic pharmaceutical companies. These included Ranbaxy Laboratories in India and Teva Pharmaceutical in Israel; (0.4%, and 1.2%, of net assets, respectively). Both companies made positive contributions to the fund's performance. LOOKING FORWARD TO A GLOBAL ECONOMIC RECOVERY Recently the Paris-based Organization for Economic Cooperation and Development (OECD) forecasted an upturn in industrial production over the next six months. In one of its latest publications, the OECD stated that economic indicators for all major countries stabilized in April, started to improve in May and had a sharp improvement in June. We believe these indicators are a precursor to more positive economic news in the coming months. We intend to take advantage of the better economic environment by maintaining a portfolio of high-quality companies with attractive growth prospects. Economic and market conditions can change frequently. There is no assurance that the trends described here will continue or commence. An investment in the Columbia International Fund, Variable Series may present certain risks, including stock market fluctuations that occur in response to economic and business developments. The fund invests in foreign securities, which have special risks, including political or economic instability and higher transactions costs; different regulations, accounting standards, trading practices and levels of information; and currency exchange rate fluctuations. As a non-diversified portfolio, the fund may invest a significant percentage of its assets in a single issuer. As a result it may have increased risk compared to a more diversified fund. Holdings are disclosed as of June 30, 2003, and are subject to change. 49 <Page> PERFORMANCE INFORMATION Columbia International Fund, Variable Series / June 30, 2003 AVERAGE ANNUAL TOTAL RETURN AS OF JUNE 30, 2003 (%) <Table> <Caption> (CUMULATIVE) 6-MONTH 1-YEAR 5-YEAR LIFE - --------------------------------------------------------------------- Class A (5/2/94) 11.11 -2.39 -3.83 -0.46 MSCI All Country World Free ex-US Index(1) 11.10 -4.19 -2.81 1.72 MSCI EAFE Index(1) 9.47 -6.46 -4.00 1.38 </Table> Inception date of share class is in parentheses. [CHART] VALUE OF A $10,000 INVESTMENT, 5/2/94 - 6/30/03 <Table> <Caption> CLASS A SHARES MSCI ALL COUNTRY WORLD FREE EX-US INDEX MSCI EAFE INDEX May-94 $ 10,000 5/31/1994 $ 9,900 $ 10,003 $ 9,943 6/30/1994 $ 9,700 $ 10,074 $ 10,083 7/31/1994 $ 9,950 $ 10,238 $ 10,180 8/31/1994 $ 10,251 $ 10,582 $ 10,421 9/30/1994 $ 9,950 $ 10,320 $ 10,093 10/31/1994 $ 10,000 $ 10,597 $ 10,429 11/30/1994 $ 9,550 $ 10,087 $ 9,927 12/31/1994 $ 9,400 $ 10,063 $ 9,990 1/31/1995 $ 8,850 $ 9,607 $ 9,606 2/28/1995 $ 8,701 $ 9,555 $ 9,579 3/31/1995 $ 8,850 $ 10,094 $ 10,176 4/30/1995 $ 9,100 $ 10,488 $ 10,559 5/31/1995 $ 9,100 $ 10,441 $ 10,433 6/30/1995 $ 9,050 $ 10,297 $ 10,251 7/31/1995 $ 9,549 $ 10,881 $ 10,889 8/31/1995 $ 9,549 $ 10,503 $ 10,474 9/30/1995 $ 9,699 $ 10,683 $ 10,679 10/31/1995 $ 9,549 $ 10,398 $ 10,391 11/30/1995 $ 9,699 $ 10,642 $ 10,680 12/31/1995 $ 9,949 $ 11,063 $ 11,111 1/31/1996 $ 9,898 $ 11,215 $ 11,156 2/29/1996 $ 9,898 $ 11,215 $ 11,194 3/31/1996 $ 10,100 $ 11,425 $ 11,431 4/30/1996 $ 10,656 $ 11,771 $ 11,764 5/31/1996 $ 10,555 $ 11,594 $ 11,548 6/30/1996 $ 10,605 $ 11,653 $ 11,612 7/31/1996 $ 10,201 $ 11,266 $ 11,273 8/31/1996 $ 10,353 $ 11,332 $ 11,298 9/30/1996 $ 10,455 $ 11,613 $ 11,599 10/31/1996 $ 10,202 $ 11,497 $ 11,480 11/30/1996 $ 10,606 $ 11,940 $ 11,937 12/31/1996 $ 10,508 $ 11,802 $ 11,783 1/31/1997 $ 10,562 $ 11,585 $ 11,371 2/28/1997 $ 10,670 $ 11,797 $ 11,557 3/31/1997 $ 10,670 $ 11,772 $ 11,599 4/30/1997 $ 10,616 $ 11,871 $ 11,660 5/31/1997 $ 11,421 $ 12,605 $ 12,419 6/30/1997 $ 12,010 $ 13,300 $ 13,104 7/31/1997 $ 12,064 $ 13,569 $ 13,316 8/31/1997 $ 11,226 $ 12,501 $ 12,321 9/30/1997 $ 11,656 $ 13,177 $ 13,011 10/31/1997 $ 10,635 $ 12,056 $ 12,011 11/30/1997 $ 10,312 $ 11,905 $ 11,888 12/31/1997 $ 10,165 $ 12,042 $ 11,992 1/31/1998 $ 10,508 $ 12,402 $ 12,540 2/28/1998 $ 11,021 $ 13,229 $ 13,345 3/31/1998 $ 11,707 $ 13,687 $ 13,756 4/30/1998 $ 11,935 $ 13,786 $ 13,864 5/31/1998 $ 11,935 $ 13,536 $ 13,796 6/30/1998 $ 11,650 $ 13,485 $ 13,901 7/31/1998 $ 11,992 $ 13,613 $ 14,042 8/31/1998 $ 10,238 $ 11,693 $ 12,302 9/30/1998 $ 9,780 $ 11,447 $ 11,924 10/31/1998 $ 10,524 $ 12,645 $ 13,167 11/30/1998 $ 11,095 $ 13,324 $ 13,841 12/31/1998 $ 11,481 $ 13,784 $ 14,386 1/31/1999 $ 11,481 $ 13,769 $ 14,343 2/28/1999 $ 11,252 $ 13,460 $ 14,002 3/31/1999 $ 11,653 $ 14,111 $ 14,586 4/30/1999 $ 12,342 $ 14,816 $ 15,176 5/31/1999 $ 11,768 $ 14,120 $ 14,395 6/30/1999 $ 12,456 $ 14,769 $ 14,956 7/31/1999 $ 12,916 $ 15,116 $ 15,400 8/31/1999 $ 13,031 $ 15,169 $ 15,457 9/30/1999 $ 13,088 $ 15,272 $ 15,613 10/31/1999 $ 13,433 $ 15,840 $ 16,199 11/30/1999 $ 14,294 $ 16,474 $ 16,761 12/31/1999 $ 16,139 $ 18,046 $ 18,266 1/31/2000 $ 15,156 $ 17,066 $ 17,106 2/29/2000 $ 15,735 $ 17,527 $ 17,566 3/31/2000 $ 15,966 $ 18,186 $ 18,248 4/30/2000 $ 14,751 $ 17,171 $ 17,288 5/31/2000 $ 14,462 $ 16,731 $ 16,866 6/30/2000 $ 14,520 $ 17,444 $ 17,526 7/31/2000 $ 14,057 $ 16,755 $ 16,791 8/31/2000 $ 14,230 $ 16,963 $ 16,938 9/30/2000 $ 13,777 $ 16,021 $ 16,113 10/31/2000 $ 13,309 $ 15,512 $ 15,732 11/30/2000 $ 12,899 $ 14,815 $ 15,142 12/31/2000 $ 13,159 $ 15,321 $ 15,680 1/31/2001 $ 12,750 $ 15,550 $ 15,672 2/28/2001 $ 11,795 $ 14,319 $ 14,497 3/31/2001 $ 10,841 $ 13,306 $ 13,530 4/30/2001 $ 11,386 $ 14,211 $ 14,470 5/31/2001 $ 11,046 $ 13,819 $ 13,959 6/30/2001 $ 10,910 $ 13,288 $ 13,388 7/31/2001 $ 10,568 $ 12,993 $ 13,145 8/31/2001 $ 10,432 $ 12,671 $ 12,812 9/30/2001 $ 9,750 $ 11,327 $ 11,514 10/31/2001 $ 9,818 $ 11,644 $ 11,809 11/30/2001 $ 9,955 $ 12,176 $ 12,245 12/31/2001 $ 9,955 $ 12,333 $ 12,317 1/31/2002 $ 9,478 $ 11,805 $ 11,663 2/28/2002 $ 9,614 $ 11,890 $ 11,745 3/31/2002 $ 9,819 $ 12,586 $ 12,436 4/30/2002 $ 9,956 $ 12,617 $ 12,461 5/31/2002 $ 9,956 $ 12,755 $ 12,620 6/30/2002 $ 9,819 $ 12,204 $ 12,117 7/31/2002 $ 8,932 $ 11,014 $ 10,921 8/31/2002 $ 8,932 $ 11,015 $ 10,896 9/30/2002 $ 8,387 $ 9,847 $ 9,726 10/31/2002 $ 8,591 $ 10,375 $ 10,248 11/30/2002 $ 8,659 $ 10,874 $ 10,714 12/31/2002 $ 8,625 $ 10,523 $ 10,354 1/31/2003 $ 8,283 $ 10,154 $ 9,922 2/28/2003 $ 8,283 $ 9,948 $ 9,695 3/31/2003 $ 8,352 $ 9,755 $ 9,505 4/30/2003 $ 8,900 $ 10,695 $ 10,436 5/31/2003 $ 9,447 $ 11,376 $ 11,068 6/30/2003 $ 9,584 $ 11,694 $ 11,336 </Table> <Table> <Caption> NET ASSET VALUE PER SHARE ($) 12/31/02 6/30/03 - ---------------------------------------------------------------------- Class A 1.26 1.40 </Table> PAST PERFORMANCE CANNOT PREDICT FUTURE INVESTMENT RESULTS. SHARE PRICE AND INVESTMENT RETURN WILL VARY, SO YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. Total return performance includes changes in share price and reinvestment of all distributions. The MSCI (Morgan Stanley Capital International) All Country World Free ex-US Index is an unmanaged index of global stock market performance excluding the United States. The MSCI EAFE Index is an unmanaged index that tracks the performance of equity securities of developed countries outside North America. Indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. MUTUAL FUND PERFORMANCE CHANGES OVER TIME. CURRENT RETURNS FOR THE FUND MAY BE DIFFERENT THAN THAT SHOWN. Performance numbers reflect all fund expenses, but do not include any insurance charges imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. (1) Index performance is from April 30, 1994. 50 <Page> INVESTMENT PORTFOLIO Columbia International Fund, Variable Series / June 30, 2003 (Unaudited) <Table> <Caption> SHARES VALUE -------------- -------------- COMMON STOCKS--98.5% CONSUMER DISCRETIONARY--10.6% AUTO COMPONENTS -- 0.8% FCC Co., Ltd. 6,700 $ 158,758 Nissan Shatai Co., Ltd. 113,000 379,951 -------------- 538,709 -------------- AUTOMOBILES--1.0% Honda Motor Co., Ltd. 9,100 345,459 Toyota Motor Corp. 14,400 373,652 -------------- 719,111 -------------- HOUSEHOLD DURABLES--2.7% Sanyo Electric Co., Ltd. 144,000 493,797 Koninklijke Philips Electronics NV 33,700 641,923 Pioneer Corp. 36,200 815,485 -------------- 1,951,205 -------------- MEDIA--2.7% JC Decaux SA (a) 30,100 377,386 Pearson PLC 81,300 760,596 Reed Elsevier PLC 48,600 405,069 VNU NV 13,000 401,196 -------------- 1,944,247 -------------- MULTILINE RETAIL--1.3% Wal-Mart de Mexico SA de CV 328,000 967,097 -------------- SPECIALTY RETAIL--1.3% Kingfisher PLC 99,200 454,601 Next PLC 30,042 509,723 -------------- 964,324 -------------- TEXTILES & APPAREL--0.8% LVMH Moet Hennessy Louis Vuitton SA 8,000 397,434 Sanyo Shokai Ltd. 32,000 193,834 -------------- 591,268 -------------- CONSUMER STAPLES-- 6.9% BEVERAGES--1.5% Diageo PLC 26,002 278,072 Foster's Group Ltd. 218,519 617,711 Pernod-Ricard 2,300 205,561 -------------- 1,101,344 -------------- FOOD & DRUG RETAILING--1.3% Carrefour SA 8,037 394,558 Seven-Eleven Japan Co., Ltd. 23,000 573,777 -------------- 968,335 -------------- FOOD PRODUCTS--1.7% Nestle SA 2,710 560,406 Unilever PLC 81,122 646,968 -------------- 1,207,374 -------------- HOUSEHOLD PRODUCTS--1.0% Reckitt Benckiser PLC 40,534 745,025 -------------- PERSONAL PRODUCTS--0.8% L'Oreal SA 8,427 595,160 -------------- TOBACCO--0.6% Imperial Tobacco Group PLC 22,876 $ 409,501 -------------- ENERGY-- 3.3% OIL & GAS--3.3% BP PLC 76,306 530,046 ENI-Ente Nazionale Idrocarburi SpA 58,500 886,205 Fortum Oyj 100,000 802,875 Total SA 1,300 196,785 -------------- 2,415,911 -------------- FINANCIALS-- 11.7% BANKS--8.7% Anglo Irish Bank Corp., PLC 73,100 647,441 Banco Popular Espanol SA 7,257 367,284 Banco Santander Central Hispano SA 82,900 727,564 Bank of Ireland 31,804 384,483 Credit Agricole SA 25,576 486,881 Credit Suisse Group 37,090 978,291 Danske Bank 25,300 493,437 Grupo Financiero BBVA Bancomer (a) 240,000 202,804 Royal Bank of Scotland Group PLC 30,337 852,449 Standard Chartered PLC 37,335 454,193 UniCredito Italiano SpA 149,500 713,644 -------------- 6,308,471 -------------- DIVERSIFIED FINANCIALS--1.5% Euronext NV 14,400 357,608 ING Groep NV 41,700 725,717 -------------- 1,083,325 -------------- INSURANCE--0.9% Converium Holding AG 3,200 147,973 Irish Life & Permanent PLC 48,500 524,399 -------------- 672,372 -------------- REAL ESTATE--0.6% Mitsubishi Estate Co., Ltd. 60,000 406,992 -------------- HEALTH CARE-- 9.1% HEALTH CARE EQUIPMENT & SUPPLIES--2.2% Olympus Optical Co., Ltd. 43,000 891,536 Smith & Nephew PLC 115,697 665,978 -------------- 1,557,514 -------------- PHARMACEUTICALS--6.9% Chugai Pharmaceutical Co., Ltd. 32,400 368,726 Dr. Reddy's Laboratories, Ltd., ADR 11,700 272,727 GlaxoSmithKline PLC 41,876 846,522 Novartis AG (Registered) 15,330 607,937 </Table> See Notes to Investment Portfolio. 51 <Page> <Table> <Caption> SHARES VALUE -------------- -------------- Ranbaxy Laboratories Ltd., ADR 14,600 $ 278,860 Roche Holding AG 5,200 408,775 Sanofi-Synthelabo SA 9,065 531,778 Takeda Chemical Industries Ltd. 22,000 813,149 Teva Pharmaceutical Industries, Ltd. ADR 15,800 899,494 -------------- 5,027,968 -------------- INDUSTRIALS-- 10.8% AIRLINES--1.1% Cathay Pacific Airways Ltd. 289,000 389,131 Singapore Airlines Ltd. 65,000 383,927 -------------- 773,058 -------------- COMMERCIAL SERVICES & SUPPLIES--0.4% Capita Group PLC 70,660 263,954 -------------- ELECTRICAL EQUIPMENT--0.5% Matsushita Electric Works Ltd. 66,000 391,523 -------------- INDUSTRIAL CONGLOMERATES--0.6% Hutchison Whampoa Ltd. 8,000 48,730 Smiths Group PLC 32,900 382,294 -------------- 431,024 -------------- TRANSPORTATION INFRASTRUCTURE--8.2% Acesa Infraestructuras SA 251,636 3,522,538 BAA PLC 69,384 562,529 Brisa-Auto Estradas de Portugal SA 129,200 728,200 Jiangsu Express 3,026,000 1,135,019 -------------- 5,948,286 -------------- INFORMATION TECHNOLOGY-- 6.8% COMMUNICATIONS EQUIPMENT--0.8% Nortel Networks Corp. (a) 119,700 321,378 Nokia Oyj 14,763 243,510 -------------- 564,888 -------------- ELECTRONIC EQUIPMENT & INSTRUMENTS--1.5% Hoya Corp. 10,700 738,300 Keyence Corp. 1,700 312,044 -------------- 1,050,344 -------------- IT CONSULTING & SERVICES--0.5% Indra Sistemas SA 39,200 399,045 -------------- OFFICE ELECTRONICS--2.1% Canon, Inc. 33,000 1,517,083 -------------- SEMICONDUCTOR EQUIPMENT & PRODUCTS--1.9% ARM Holdings PLC (a) 182,000 201,555 Rohm Co., Ltd. 3,900 425,940 Taiwan Semiconductor Manufacturing Co., Ltd., ADR (a) 44,200 445,536 Tokyo Electron Ltd. 6,200 294,339 -------------- 1,367,370 -------------- MATERIALS-- 2.5% CHEMICALS--0.5% Air Liquide 2,465 $ 366,046 -------------- CONTAINERS & PACKAGING--1.0% Amcor Ltd. 138,000 752,400 -------------- METALS & MINING--1.0% BHP Billiton Ltd. 119,300 692,099 -------------- PRIVATE PLACEMENT-- 0.0% BANKS--0.0% Fortis Bank Nederland (a)(b) 525 -- -------------- TELECOMMUNICATION SERVICES-- 8.7% DIVERSIFIED TELECOMMUNICATION--4.5% SBC Communications, Inc. 35,539 908,021 Telecom Italia SpA 40,800 369,810 Telefonica SA 82,872 963,721 Verizon Communications, Inc. 25,900 1,021,755 -------------- 3,263,307 -------------- WIRELESS TELECOMMUNICATION SERVICES--4.2% NTT DoCoMo, Inc. 402 872,054 Orange SA (a) 50,243 446,732 Vodafone Group PLC 897,546 1,758,012 -------------- 3,076,798 -------------- UTILITIES-- 28.1% ELECTRIC UTILITIES--16.4% Beijing Datang Power Gen. Co., Ltd. 4,000,000 1,769,650 Edison International (a) 57,400 943,082 Exelon Corp. 13,100 783,511 FirstEnergy Corp. 12,300 472,935 FPL Group, Inc. 8,000 534,800 Huaneng Power International, Inc. 1,904,000 2,173,028 National Grid Transco PLC 127,404 865,509 Northeast Utilities 27,400 458,676 Pepco Holdings, Inc. 28,300 542,228 PG&E Corp. (a) 30,400 642,960 Pinnacle West Capital Corp. 19,500 730,275 PNM Resources, Inc. 22,000 588,500 Public Service Enterprise Group, Inc. 9,000 380,250 Scottish & Southern Energy PLC 100,000 1,031,410 -------------- 11,916,814 -------------- GAS UTILITIES--10.6% Enagas 366,311 3,139,053 Hong Kong & China Gas Co., Ltd. 1,168,970 1,476,550 Snam Rete Gas SpA. 577,000 2,269,835 Tokyo Gas Co., Ltd. 280,000 805,974 -------------- 7,691,412 -------------- </Table> See Notes to Investment Portfolio. 52 <Page> <Table> <Caption> SHARES VALUE -------------- -------------- WATER UTILITIES--1.1% Severn Trent PLC 70,324 $ 795,072 -------------- TOTAL COMMON STOCKS (cost of $66,660,923) 71,435,776 -------------- <Caption> PAR -------------- CONVERTIBLE BOND--0.4% PRIVATE PLACEMENT--0.4% Bil Finance Ltd., 8.19%, 10/15/03 (cost of $567,550) NZD 496,375 290,470 -------------- <Caption> UNITS -------------- WARRANT--0.0% (a) FINANCIALS--0.0% BANKS-0.0% Siam Commercial Bank, expires 06/22/04 (cost of $0) 12,000 1,740 -------------- <Caption> PAR -------------- SHORT-TERM OBLIGATION--1.5% Repurchase agreement with State Street Bank & Trust Co., dated 6/30/03, due 07/01/03 at 1.000%, collateralized by U.S. Treasury Bond maturing 08/15/23, market value $1,069,625 (repurchase proceeds $1,047,029) (cost of $1,047,000) $ 1,047,000 1,047,000 -------------- TOTAL INVESTMENTS--100.4% (cost of $68,275,473) (c) 72,774,986 -------------- OTHER ASSETS & LIABILITIES, NET--(0.4%) (272,648) -------------- NET ASSETS--100.0% $ 72,502,338 ============== </Table> NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing. (b) Represents fair value as determined in good faith under the direction of the Trustees. (c) Cost for both financial statement and federal income tax purposes is the same. <Table> <Caption> SUMMARY OF SECURITIES % OF TOTAL BY COUNTRY VALUE INVESTMENTS United Kingdom $ 13,419,080 18.5% Japan 11,172,372 15.5% Spain 9,119,205 12.5% United States 9,053,994 12.5% China 5,077,698 7.0% Italy 4,239,494 5.8% France 3,998,321 5.5% Switzerland 2,703,382 3.7% Netherlands 2,126,444 2.9% Australia 2,062,209 2.8% Hong Kong 1,914,410 2.6% Ireland 1,556,323 2.1% Mexico 1,169,901 1.6% Finland 1,046,384 1.4% Israel 899,494 1.2% Portugal 728,200 1.0% India 551,587 0.8% Denmark 493,437 0.7% Taiwan 445,536 0.6% Singapore 383,927 0.5% Canada 321,378 0.4% New Zealand 290,470 0.4% Thailand 1,740 0.0% Belgium -- 0.0% -------------- ----- $ 72,774,986 100.0% ============== ===== </Table> Certain securities are listed by country of underlying exposure but may trade predominantly on other exchanges. <Table> <Caption> ACRONYM NAME ------- ---- ADR American Depositary Receipt NZD New Zealand Dollar </Table> See Notes to Financial Statements. 53 <Page> STATEMENT OF ASSETS & LIABILITIES Columbia International Fund, Variable Series / June 30, 2003 (Unaudited) <Table> ASSETS: Investments, at cost $ 68,275,473 -------------- Investments, at value $ 72,774,986 Cash 307 Foreign currency (cost of $180,681) 180,698 Receivable for: Interest 5,048 Dividends 338,440 Expense reimbursement due from Manager 25,816 Deferred Trustees' compensation plan 3,400 -------------- TOTAL ASSETS 73,328,695 -------------- LIABILITIES: Payable for: Fund shares repurchased 763,030 Distribution fee--Class B 434 Management fee 55,435 Transfer agent fee 595 Pricing and bookkeeping fees 899 Deferred Trustees' fee 3,400 Other liabilities 2,564 -------------- TOTAL LIABILITIES 826,357 -------------- NET ASSETS $ 72,502,338 ============== COMPOSITION OF NET ASSETS: Paid-in capital $ 85,643,291 Undistributed net investment income 945,897 Accumulated net realized loss (18,591,540) Net unrealized appreciation on: Investments 4,499,513 Foreign currency translations 5,177 -------------- NET ASSETS $ 72,502,338 ============== CLASS A: Net assets $ 66,613,412 Shares outstanding 47,607,643 ============== Net asset value per share $ 1.40 ============== CLASS B: Net assets $ 5,888,926 Shares outstanding 4,224,482 ============== Net asset value per share $ 1.39 ============== </Table> See Notes to Financial Statements. 54 <Page> STATEMENT OF OPERATIONS Columbia International Fund, Variable Series For the Six Months Ended June 30, 2003 (Unaudited) <Table> INVESTMENT INCOME: Dividends $ 1,155,999 Interest 18,662 -------------- Total Investment Income (net of foreign taxes withheld of $82,977) 1,174,661 -------------- EXPENSES: Management fee 218,753 Distribution fee--Class B 3,614 Pricing and bookkeeping fees 9,521 Transfer agent fee 3,720 Trustees' fee 3,189 Custody fee 13,976 Audit fee 12,342 Other expenses 7,142 -------------- Total Expenses 272,257 Fees and expenses waived or reimbursed by Manager (36,335) Custody earnings credit (83) -------------- Net Expenses 235,839 -------------- Net Investment Income 938,822 -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: Net realized loss on: Investments (2,699,464) Foreign currency transactions (76,517) -------------- Net realized loss (2,775,981) -------------- Net change in unrealized appreciation/depreciation on: Investments 9,562,317 Foreign currency translations (1,382) -------------- Net change in unrealized appreciation/depreciation 9,560,935 -------------- Net Gain 6,784,954 -------------- Net Increase in Net Assets from Operations $ 7,723,776 ============== </Table> See Notes to Financial Statements. 55 <Page> STATEMENT OF CHANGES IN NET ASSETS Columbia International Fund, Variable Series <Table> <Caption> (UNAUDITED) SIX MONTHS ENDED YEAR ENDED JUNE 30, DECEMBER 31, INCREASE (DECREASE) IN NET ASSETS: 2003 2002 - --------------------------------- -------------- -------------- OPERATIONS: Net investment income $ 938,822 $ 213,923 Net realized loss on investments and foreign currency transactions (2,775,981) (8,171,078) Net change in unrealized appreciation/depreciation on investments and foreign currency translations 9,560,935 3,002,063 -------------- -------------- Net Increase (Decrease) from Operations 7,723,776 (4,955,092) -------------- -------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income: Class A -- (113,012) Class B -- (1) -------------- -------------- Total Distributions Declared to Shareholders -- (113,013) -------------- -------------- SHARE TRANSACTIONS: Class A: Subscriptions 2,139,943 3,503,319 Proceeds received in connection with merger 35,910,049 -- Distributions reinvested -- 113,012 Redemptions (7,375,449) (10,964,351) -------------- -------------- Net Increase (Decrease) 30,674,543 (7,348,020) -------------- -------------- Class B: Subscriptions 46,673 -- Proceeds received in connection with merger 5,503,084 -- Distributions reinvested -- 1 Redemptions (329,247) -- -------------- -------------- Net Increase 5,220,510 1 -------------- -------------- Net Increase (Decrease) from Share Transactions 35,895,053 (7,348,019) -------------- -------------- Total Increase (Decrease) in Net Assets 43,618,829 (12,416,124) NET ASSETS: Beginning of period 28,883,509 41,299,633 -------------- -------------- End of period (including undistributed net investment income of $945,897 and $7,075, respectively) $ 72,502,338 $ 28,883,509 ============== ============== CHANGES IN SHARES: Class A: Subscriptions 1,618,297 2,647,684 Issued in connection with merger 28,728,067 -- Issued for distributions reinvested -- 90,410 Redemptions (5,590,748) (8,091,137) -------------- -------------- Net Increase (Decrease) 24,755,616 (5,353,043) -------------- -------------- Class B: Subscriptions 34,974 -- Issued in connection with merger 4,437,971 -- Issued for distributions reinvested -- 1 Redemptions (248,951) -- -------------- -------------- Net Increase 4,223,994 1 -------------- -------------- </Table> See Notes to Financial Statements. 56 <Page> NOTES TO FINANCIAL STATEMENTS Columbia International Fund, Variable Series / June 30, 2003 (Unaudited) NOTE 1. ORGANIZATION AND ACCOUNTING POLICIES ORGANIZATION--Columbia International Fund, Variable Series (the "Fund"), a series of Liberty Variable Investment Trust (the "Trust"), is a non-diversified portfolio of a Massachusetts business trust, registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund's investment goal is to seek long-term growth. The Fund's capitalization consists of an unlimited number of shares of beneficial interest without par value that represent a separate series of the Trust. The Fund offers two classes of shares: Class A and Class B. Each share of a class represents an equal proportionate beneficial interest in that share class and, when issued and outstanding, is fully paid and nonassessable. Shareholders would be entitled to share proportionally in the net assets of their share class available for distribution to shareholders upon liquidation of the Fund. Shares of the Fund are available and are being marketed exclusively as a pooled funding vehicle for variable annuity contracts ("VA contracts") and Variable Life Insurance Policies ("VLI Policies") offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies"). The Participating Insurance Companies and their separate accounts own all the shares of the Fund. On April 1, 2003, Liberty Advisory Services Corp., the investment advisor to the Fund and Colonial Management Associates, Inc. ("Colonial"), the sub-advisor to the Fund, merged into Columbia Management Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co., an indirect wholly owned subsidiary of FleetBoston Financial Corporation. At the time of the merger, Columbia assumed the obligations of Liberty Advisory Services Corp. and Colonial with respect to the Fund. The merger did not change the way the Fund is managed, the investment personnel assigned to manage the Fund or the fees paid by the Fund. Columbia provides investment management and advisory services to the Fund pursuant to its Management Agreement with the Fund. Columbia also provides pricing and bookkeeping services to the Fund. Liberty Funds Distributor, Inc. ("LFD"), an affiliate of Columbia, serves as the principal underwriter of the Fund. On April 7, 2003, the Colonial International Horizons Fund, Variable Series, Colonial Global Equity Fund, Variable Series and Stein Roe Global Utilities Fund, Variable Series (collectively, "the target funds") merged into the Colonial International Fund for Growth, Variable Series. The Colonial International Fund for Growth, Variable Series, received a tax-free transfer of assets from the target funds as follows: <Table> <Caption> SHARES NET ASSETS UNREALIZED ISSUED RECEIVED DEPRECIATION(1) ----------- ------------ --------------- Colonial International Horizons Fund, Variable Series: 3,046,706 $ 3,777,920 $ 852,127 Colonial Global Equity Fund, Variable Series: 1,391,632 1,725,629 1,018,882 Stein Roe Global Utilities Fund, Variable Series: 28,727,700 35,909,584 610,951 </Table> <Table> <Caption> NET ASSETS NET ASSETS NET ASSETS OF COLONIAL OF COLONIAL OF THE INTERNATIONAL INTERNATIONAL TARGET FUND FOR FUND FOR FUNDS GROWTH, VS GROWTH, VS IMMEDIATELY IMMEDIATELY PRIOR TO PRIOR TO AFTER COMBINATION COMBINATION COMBINATION ------------- ------------ ------------- $ 27,327,712 $ 41,413,133 $ 68,740,845 </Table> (1) Unrealized depreciation is included in the respective Net Assets Received amount shown above. Also on April 7, 2003, subsequent to the merger described above, the Colonial International Fund for Growth, Variable Series was renamed Columbia International Fund, Variable Series. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION AND TRANSACTIONS--Debt securities generally are valued by a pricing service based upon market transactions for normal, institutional-size trading units of similar securities. When management deems it appropriate, an over-the-counter or exchange bid quotation is used. Equity securities generally are valued at the last sale price or, in the case of unlisted or listed securities for which there were no sales during the day, at the current quoted bid price. Forward currency contracts are valued based on the weighted value of exchange-traded contracts with similar durations. 57 <Page> Short-term obligations with a maturity of 60 days or less are valued at amortized cost. The values of all assets and liabilities quoted in foreign currencies are translated into U.S. dollars at that day's exchange rates. Investments for which market quotations are not readily available, or quotations which management believes are not appropriate, are valued at fair value under procedures approved by the Board of Trustees. Generally, trading in foreign securities is substantially completed each day at various times prior to the close of the New York Stock Exchange ("NYSE"). The values of such securities used in computing the net asset value of the Fund's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which they are determined and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If events materially affecting the value of such securities and such exchange rates occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Trustees. Security transactions are accounted for on the date the securities are purchased, sold or mature. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS--All income, expenses (other than the Class B distribution fee), and realized and unrealized gains (losses) are allocated to each class proportionately on a daily basis for purposes of determining the net asset value of each class. The per share data was calculated using average shares outstanding during the period. In addition, Class B net investment income per share data and ratios reflect the distribution fee applicable to Class B shares only. FEDERAL INCOME TAXES--Consistent with the Fund's policy to qualify as a regulated investment company and to distribute all of its taxable income, no federal income tax has been accrued. DISTRIBUTIONS TO SHAREHOLDERS--The Fund intends to distribute as income dividends or capital gains distributions, at least annually, substantially all of its net investment income and net profits realized from the sale of investments. All dividends and distributions are reinvested in additional shares of the Fund at net asset value as of the record date of the distribution. Income and capital gain distributions are determined in accordance with federal income tax regulations. FOREIGN CURRENCY TRANSACTIONS--Net realized and unrealized gains (losses) on foreign currency transactions and translations includes gains (losses) arising from the fluctuations in exchange rates between trade and settlement dates on securities transactions, gains (losses) arising from the disposition of foreign currency, and currency gains (losses) between the accrual and payment dates on dividends, interest income and foreign withholding taxes. The Fund does not distinguish that portion of gains (losses) on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the investments. Such fluctuations are included with the net realized and unrealized gains (losses) on investments. FORWARD CURRENCY CONTRACTS--The Fund may enter into forward currency contracts to purchase or sell foreign currencies at predetermined exchange rates in connection with the settlement of purchases and sales of securities. The Fund may also enter into forward currency contracts to hedge certain other foreign currency denominated assets. The contracts are used to minimize the exposure to foreign exchange rate fluctuations during the period between trade and settlement date of the contracts. All contracts are marked-to-market daily, resulting in unrealized gains (losses) which become realized at the time the forward currency contracts are closed or mature. Realized and unrealized gains (losses) arising from such transactions are included in net realized and unrealized gains (losses) on foreign currency transactions and translations. Forward currency contracts do not eliminate fluctuations in the prices of the Fund's portfolio securities. While the maximum potential loss from such contracts is the aggregate face value in U.S. dollars at the time the contract was opened, exposure is typically limited to the change in value of the contract (in U.S. dollars) over the period it remains open. Risks may also arise if counterparties fail to perform their obligations under the contracts. OTHER--Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date (except for certain foreign securities which are recorded as soon after ex-date as the Fund becomes aware of such), net of non-reclaimable tax withholdings. Where a high level of uncertainty as to collection exists, income on securities is recorded net of all tax withholdings with any rebates recorded when received. 58 <Page> The Fund's custodian takes possession through the federal book-entry system of securities collateralizing repurchase agreements. Collateral is marked-to-market daily to ensure that the market value of the underlying assets remains sufficient to protect the Fund. The Fund may experience costs and delays in liquidating the collateral if the issuer defaults or enters bankruptcy. NOTE 2. FEDERAL TAX INFORMATION Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. The following capital loss carryforwards, determined as of December 31, 2002, are available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: <Table> <Caption> YEAR OF CAPITAL LOSS EXPIRATION CARRYFORWARD ---------- ------------ 2009 $ 6,904,893 2010 7,745,544 ------------ $ 14,650,437 ============ </Table> NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES MANAGEMENT FEE--Columbia receives a monthly fee equal to 0.90% annually of the first $1 billion of the Fund's average daily net assets and 0.85% in excess of $1 billion. PRICING AND BOOKKEEPING FEES--Columbia is responsible for providing pricing and bookkeeping services to the Fund under a Pricing and Bookkeeping Agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Bank & Trust Company ("State Street"). Columbia pays fees to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual flat fee of $10,000, paid monthly, and in any month that the Fund's average daily net assets are more than $50 million, a monthly fee equal to the average daily net assets of the Fund for that month multiplied by a fee rate that is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. The Fund also pays out-of-pocket costs for pricing services. TRANSFER AGENT FEE--Liberty Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia, provides shareholder services for an annual rate of $7,500. DISTRIBUTION FEE--The Fund has adopted a 12b-1 plan, which requires it to pay LFD a monthly distribution fee equal to 0.25% annually of Class B average daily net assets. EXPENSE LIMITS--Effective April 7, 2003, Columbia has voluntarily agreed to waive expenses at the rate of 0.21% annually of the Fund's average daily net assets. This waiver agreement will continue until April 7, 2004 after which it may be modified or terminated at any time. Prior to April 7, 2003, Liberty Advisory Services Corp. had voluntarily agreed to reimburse all expenses, including management fees, but excluding interest, taxes, distribution fees, brokerage and extraordinary expenses incurred by the Fund in excess of 1.15% annually of the Fund's average daily net assets. OTHER--The Fund pays no compensation to its officers, all of whom are employees of Columbia or its affiliates. The Fund's Independent Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. The Fund has an agreement with its custodian bank under which $83 of custody fees were reduced by balance credits for the six months ended June 30, 2003. The Fund could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if it had not entered into such an agreement. NOTE 4. PORTFOLIO INFORMATION INVESTMENT ACTIVITY--For the six months ended June 30, 2003, purchases and sales of investments, other than short-term obligations, were $18,652,134 and $26,303,049, respectively. Unrealized appreciation (depreciation) at June 30, 2003, based on cost of investments for federal income tax purposes, was: <Table> Gross unrealized appreciation $ 10,832,798 Gross unrealized depreciation (6,333,285) ------------ Net unrealized appreciation $ 4,499,513 ============ </Table> OTHER--There are certain additional risks involved when investing in foreign securities that are not inherent with investments in domestic securities. These risks may involve foreign currency exchange rate fluctuations, adverse political and economic developments and the possible prevention of foreign currency exchange or the imposition of other foreign governmental laws or restrictions. The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. 59 <Page> FINANCIAL HIGHLIGHTS Columbia International Fund, Variable Series--Class A Shares Selected data for a share outstanding throughout each period is as follows: <Table> <Caption> (UNAUDITED) SIX MONTHS YEAR ENDED DECEMBER 31, ENDED ---------------------------------------------------------- JUNE 30, 2003 2002 2001 2000 1999 1998 ------------- -------- -------- -------- -------- -------- NET ASSET VALUE, BEGINNING OF PERIOD $ 1.26 $ 1.46 $ 1.93 $ 2.79 $ 2.00 $ 1.78 ------------- -------- -------- -------- -------- -------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (a) 0.03 0.01 0.01 0.03 0.03 0.02 Net realized and unrealized gain (loss) on investments and foreign currency 0.11 (0.20) (0.48) (0.55) 0.78 0.21 ------------- -------- -------- -------- -------- -------- Total from Investment Operations 0.14 (0.19) (0.47) (0.52) 0.81 0.23 ------------- -------- -------- -------- -------- -------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- (0.01) -- (0.04) (0.02) -- In excess of net investment income -- -- -- --(b) -- (0.01) From net realized gains -- -- -- (0.30) -- -- In excess of net realized gains -- -- -- --(b) -- -- ------------- -------- -------- -------- -------- -------- Total Distributions Declared to Shareholders -- (0.01) -- (0.34) (0.02) (0.01) ------------- -------- -------- -------- -------- -------- NET ASSET VALUE, END OF PERIOD $ 1.40 $ 1.26 $ 1.46 $ 1.93 $ 2.79 $ 2.00 ============= ======== ======== ======== ======== ======== Total return (c)(d) 11.11%(e)(f) (13.35)% (24.35)% (18.47)% 40.58% 12.96% RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (g) 0.96%(h) 1.13% 1.23% 1.08% 1.10% 1.24% Net investment income (g) 3.87%(h) 0.62% 0.41% 1.20% 1.14% 0.77% Waiver/reimbursement 0.15%(h) -- -- -- -- -- Portfolio turnover rate 41%(f) 39% 34% 76% 35% 28% Net assets, end of period (000's) $ 66,613 $ 28,883 $ 41,299 $ 61,372 $ 82,071 $ 52,468 </Table> (a) Per share data was calculated using average shares outstanding during the period. (b) Rounds to less than $0.01 per share. (c) Total return at net asset value assuming all distributions reinvested. (d) Total return figure does not include any insurance company charges associated with a variable annuity. If included, total return would be reduced. (e) Had the Manager not waived or reimbursed a portion of expenses, total return would have been reduced. (f) Not annualized. (g) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (h) Annualized. 60 <Page> SHAREHOLDER MEETING RESULTS Columbia International Fund, Variable Series RESULTS OF THE ANNUAL MEETING OF SHAREHOLDERS On February 19, 2003, the Annual Meeting of Shareholders of the Trust was held to conduct a vote for or against the approval of the following items listed on the Trust's Proxy Statement for said Meeting. On December 2, 2002, the record date for the Meeting, the Colonial Global Equity Fund, Variable Series had 838,893.529 common shares outstanding, the Colonial International Horizons Fund, Variable Series had 1,063,601.395 common shares outstanding, and the Stein Roe Global Utilities Fund, Variable Series had 4,230,321.144 common shares outstanding. The votes cast were as follows: SHAREHOLDER RESPONSE SUMMARY REPORT LIBERTY VARIABLE INVESTMENT TRUST/STEINROE VARIABLE INVESTMENT TRUST COLONIAL GLOBAL EQUITY FUND, VARIABLE SERIES FEBRUARY 19, 2003 1. To approve an Agreement and Plan of Reorganization providing for the sale of all of the assets of Colonial Global Equity Fund, Variable Series to, and the assumption of all of the liabilities of the Colonial Global Equity Fund, Variable Series by, the Colonial International Fund for Growth, Variable Series, in exchange for shares of the Colonial International Fund for Growth, Variable Series and the distribution of such shares to the shareholders of the Colonial Global Equity Fund, Variable Series in complete liquidation of the Colonial Global Equity Fund, Variable Series. (Item 1 of the Notice.) <Table> <Caption> % OF % OF NO. OF OUTSTANDING SHARES SHARES SHARES VOTED -------------- ----------- ------- Affirmative 827,644.724 98.659% 98.659% Against 182.199 .022% .022% Abstain 11,066.606 1.319% 1.319% TOTAL 838,893.529 100.000% 100.000% <Caption> ** FUND TOTALS: SHARES RECORD TOTAL 838,893.529 VOTED SHARES 838,893.529 PERCENT VOTED 100.000% </Table> SHAREHOLDER RESPONSE SUMMARY REPORT LIBERTY VARIABLE INVESTMENT TRUST/STEINROE VARIABLE INVESTMENT TRUST COLONIAL INTERNATIONAL HORIZONS FUND, VARIABLE SERIES FEBRUARY 19, 2003 2. To approve an Agreement and Plan of Reorganization providing for the sale of all of the assets of Colonial International Horizons Fund, Variable Series to, and the assumption of all of the liabilities of the Colonial International Horizons Fund, Variable Series by, the Colonial International Fund for Growth, Variable Series, in exchange for shares of the Colonial International Fund for Growth, Variable Series and the distribution of such shares to the shareholders of the Colonial International Horizons Fund, Variable Series in complete liquidation of the Colonial International Horizons Fund, Variable Series. (Item 2 of the Notice.) <Table> <Caption> % OF % OF NO. OF OUTSTANDING SHARES SHARES SHARES VOTED -------------- ----------- ------- Affirmative 949,134.858 89.238% 89.238% Against 20,720.929 1.948% 1.948% Abstain 93,745.608 8.814% 8.814% TOTAL 1,063,601.395 100.000% 100.000% <Caption> ** FUND TOTALS: SHARES RECORD TOTAL 1,063,601.395 VOTED SHARES 1,063,601.395 PERCENT VOTED 100.000% </Table> 61 <Page> SHAREHOLDER RESPONSE SUMMARY REPORT LIBERTY VARIABLE INVESTMENT TRUST/STEINROE VARIABLE INVESTMENT TRUST STEIN ROE GLOBAL UTILITIES FUND, VARIABLE SERIES FEBRUARY 19, 2003 3. To approve an Agreement and Plan of Reorganization providing for the sale of all of the assets of Stein Roe Global Utilities Fund, Variable Series to, and the assumption of all of the liabilities of the Stein Roe Global Utilities Fund, Variable Series by, the Colonial International Fund for Growth, Variable Series, in exchange for shares of the Colonial International Fund for Growth, Variable Series and the distribution of such shares to the shareholders of the Stein Roe Global Utilities Fund, Variable Series in complete liquidation of the Stein Roe Global Utilities Fund, Variable Series.(Item 3 of the Notice.) <Table> <Caption> % OF % OF NO. OF OUTSTANDING SHARES SHARES SHARES VOTED -------------- ----------- ------- Affirmative 3,747,379.502 88.584% 88.694% Against 101,566.732 2.401% 2.404% Abstain 376,122.561 8.891% 8.902% TOTAL 4,225,068.795 99.876% 100.000% <Caption> ** FUND TOTALS: SHARES RECORD TOTAL 4,230,321.144 VOTED SHARES 4,225,068.795 PERCENT VOTED 99.876% </Table> 62 <Page> PORTFOLIO MANAGER'S DISCUSSION Columbia Real Estate Equity Fund, Variable Series / June 30, 2003 Columbia Real Estate Equity Fund, Variable Series seeks capital appreciation and above-average current income. David W. Jellison has managed the fund and its predecessor since its inception in March 1998. On April 14, 2003, Columbia Real Estate Equity Fund, Variable Series acquired two funds: Crabbe Huson Real Estate Investment Fund, Variable Series and Galaxy VIP Columbia Real Estate Equity Fund II. The combined fund retained the name Columbia Real Estate Equity Fund, Variable Series. The fund's performance fell short of the return of its benchmark, the NAREIT Index, primarily because the fund was more heavily invested in forest products securities. We made this investment late in 2002 in anticipation of a more rapid improvement in the economy, which failed to materialize. The fund also was significantly underexposed to health care real estate investment trusts (REITs). This was a sector that performed well during the period. In addition, the fund's defensive cash position detracted from performance. UNDERLYING ECONOMIC CONDITIONS GENERALLY LESS HOSPITABLE TO GROWTH Business conditions underlying the nation's real estate markets were generally weak throughout the period. Job growth, which directly affects the health of the US office and apartment markets, remained sluggish. The average vacancy rate in the major metropolitan office markets reached 17%, a level that was significantly higher than the historical average. For 2002, most office REITs reported weaker earnings than the previous year, and few expected earnings to turn positive before the end of 2004. With vacancy rates running high, we are doubtful that landlords will be able to extract meaningful rent increases as office leases come up for renewal. Similarly, apartment vacancy rates have increased, as low mortgage rates and a single-family construction boom have been prompting renters to buy houses. As a result of these factors, we have maintained an underweight position in both office and apartment companies. By contrast, the retail sector has benefited from a combination of brisk consumer spending, attractive lease structures and unabated demand by retailers for high-quality mall space. As a result, the fund's holdings of higher-quality regional mall and shopping center companies have done well. Nevertheless, we have some concerns about consumers who, saddled by high debt and static incomes, may not be able to propel retail earnings growth indefinitely. As a result, we have taken profits from some of the fund's retail holdings. We continue to overweight the industrial sector, where we particularly like ProLogis (4.6% of net assets), which has been leading the modernization of logistics technology for distribution facilities in both Europe and Japan. During the second quarter we added a new position in Duke Realty (2.4% of net assets). Duke's management has significantly reduced the debt on its balance sheet, which will help it achieve greater growth if the manufacturing economies in which the company operates continue to improve. RISKS RISE FOR REITS REITs generated strong returns over the past year partly as investors looked for higher yields than they could get from alternative fixed-income investments. Going forward, we believe the business conditions underlying the REIT markets likely have bottomed or are close to bottoming. As we have noted in the past, however, REIT returns tend to lag those of the broader stock market, which could make real estate securities less attractive if equities strengthen. The other risk facing REITs is that investors may become disappointed if the economic fundamentals underlying company earnings do not improve quickly enough to justify what we perceive to be a pricier market for their shares. Overall, however, we are generally encouraged by the income stability and liquidity that REITs offer, and we believe the fund is well positioned to benefit from eventual economic recovery over the long term. Economic and market conditions can frequently change. There is no assurance that the trends described here will continue or commence. An investment in the fund may present certain risks, including stock market fluctuations that occur in response to economic and business developments. The fund may be subject to the same types of risks associated with direct ownership of real estate including the decline of property value due to general, local and regional economic conditions. In addition, the fund's share price will likely be subject to more volatility than the overall stock market because it concentrates in real estate stocks. Holdings are disclosed as of June 30, 2003, and are subject to change. 63 <Page> PERFORMANCE INFORMATION Columbia Real Estate Equity Fund, Variable Series / June 30, 2003 AVERAGE ANNUAL TOTAL RETURN AS OF JUNE 30, 2003 (%) <Table> <Caption> (CUMULATIVE) 6-MONTH 1-YEAR 5-YEAR LIFE - ---------------------------------------------------------------- Class A (3/3/98) 11.84 2.86 6.20 5.62 NAREIT Index(1) 13.87 4.00 7.12 6.08 S&P 500 Index(1) 11.76 0.25 -1.61 0.02 </Table> Inception date of share class is in parentheses. [CHART] VALUE OF A $10,000 INVESTMENT, 3/3/98 - 6/30/03 <Table> <Caption> CLASS A SHARES NAREIT INDEX S&P 500 INDEX 3/3/1998 $ 10,000 $ 10,000 $ 10,000 3/31/1998 $ 10,350 $ 10,179 $ 10,512 4/30/1998 $ 9,981 $ 9,847 $ 10,618 5/31/1998 $ 9,931 $ 9,778 $ 10,436 6/30/1998 $ 9,908 $ 9,712 $ 10,859 7/31/1998 $ 9,356 $ 9,081 $ 10,744 8/31/1998 $ 8,664 $ 8,224 $ 9,191 9/30/1998 $ 9,079 $ 8,690 $ 9,780 10/31/1998 $ 8,917 $ 8,529 $ 10,575 11/30/1998 $ 9,079 $ 8,654 $ 11,216 12/31/1998 $ 9,044 $ 8,436 $ 11,862 1/31/1999 $ 8,889 $ 8,260 $ 12,357 2/28/1999 $ 8,827 $ 8,066 $ 11,973 3/31/1999 $ 8,753 $ 8,029 $ 12,452 4/30/1999 $ 9,406 $ 8,791 $ 12,934 5/31/1999 $ 9,675 $ 8,985 $ 12,629 6/30/1999 $ 9,443 $ 8,839 $ 13,330 7/31/1999 $ 9,077 $ 8,558 $ 12,914 8/31/1999 $ 9,066 $ 8,450 $ 12,850 9/30/1999 $ 8,645 $ 8,128 $ 12,498 10/31/1999 $ 8,454 $ 7,928 $ 13,289 11/30/1999 $ 8,370 $ 7,799 $ 13,559 12/31/1999 $ 8,670 $ 8,046 $ 14,358 1/31/2000 $ 8,702 $ 8,073 $ 13,637 2/29/2000 $ 8,487 $ 7,977 $ 13,379 3/31/2000 $ 8,925 $ 8,239 $ 14,688 4/30/2000 $ 9,466 $ 8,793 $ 14,246 5/31/2000 $ 9,552 $ 8,879 $ 13,954 6/30/2000 $ 9,874 $ 9,107 $ 14,298 7/31/2000 $ 10,772 $ 9,903 $ 14,075 8/31/2000 $ 10,323 $ 9,501 $ 14,949 9/30/2000 $ 10,731 $ 9,804 $ 14,160 10/31/2000 $ 10,234 $ 9,379 $ 14,101 11/30/2000 $ 10,521 $ 9,499 $ 12,989 12/31/2000 $ 11,145 $ 10,168 $ 13,053 1/31/2001 $ 11,023 $ 10,274 $ 13,516 2/28/2001 $ 10,866 $ 10,109 $ 12,284 3/31/2001 $ 10,659 $ 10,207 $ 11,505 4/30/2001 $ 11,041 $ 10,451 $ 12,399 5/31/2001 $ 11,254 $ 10,704 $ 12,482 6/30/2001 $ 11,776 $ 11,331 $ 12,179 7/31/2001 $ 11,527 $ 11,106 $ 12,059 8/31/2001 $ 11,900 $ 11,512 $ 11,304 9/30/2001 $ 11,101 $ 11,035 $ 10,391 10/31/2001 $ 10,688 $ 10,719 $ 10,589 11/30/2001 $ 11,352 $ 11,309 $ 11,402 12/31/2001 $ 11,668 $ 11,584 $ 11,502 1/31/2002 $ 11,737 $ 11,608 $ 11,334 2/28/2002 $ 11,979 $ 11,832 $ 11,115 3/31/2002 $ 12,477 $ 12,542 $ 11,533 4/30/2002 $ 12,569 $ 12,648 $ 10,834 5/31/2002 $ 12,812 $ 12,819 $ 10,754 6/30/2002 $ 13,010 $ 13,169 $ 9,988 7/31/2002 $ 12,277 $ 12,480 $ 9,210 8/31/2002 $ 12,149 $ 12,455 $ 9,270 9/30/2002 $ 11,642 $ 11,977 $ 8,263 10/31/2002 $ 11,256 $ 11,401 $ 8,990 11/30/2002 $ 11,852 $ 11,938 $ 9,519 12/31/2002 $ 11,966 $ 12,026 $ 8,960 1/31/2003 $ 11,643 $ 11,676 $ 8,726 2/28/2003 $ 11,768 $ 11,869 $ 8,595 3/31/2003 $ 11,988 $ 12,106 $ 8,678 4/30/2003 $ 12,510 $ 12,639 $ 9,393 5/31/2003 $ 13,121 $ 13,402 $ 9,888 6/30/2003 $ 13,383 $ 13,697 $ 10,011 </Table> <Table> <Caption> NET ASSET VALUE PER SHARE ($) 12/31/02 6/30/03 - ------------------------------------------------------------ Class A 9.64 10.72 </Table> PAST PERFORMANCE CANNOT PREDICT FUTURE INVESTMENT RESULTS. SHARE PRICE AND INVESTMENT RETURN WILL VARY, SO YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. Total return performance includes changes in share price and reinvestment of all distributions. The NAREIT (National Association of Real Estate Investment Trusts) Index is an unmanaged index that reflects performance of all publicly-traded equity REITs. The S&P (Standard & Poor's) 500 Index is an unmanaged index that tracks the performance of 500 widely held, large-capitalization US stocks. Indices are not investments, do not incur fees, expenses, or taxes and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. MUTUAL FUND PERFORMANCE CHANGES OVER TIME. CURRENT RETURNS FOR THE FUND MAY BE DIFFERENT THAN THAT SHOWN. Performance numbers reflect all fund expenses, but do not include any insurance charges imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. (1) Index performance is from February 28, 1998. 64 <Page> INVESTMENT PORTFOLIO Columbia Real Estate Equity Fund, Variable Series / June 30, 2003 (Unaudited) <Table> <Caption> SHARES VALUE -------------- -------------- COMMON STOCKS--96.6% CONSUMER DISCRETIONARY--6.1% HOTELS, RESTAURANTS & LEISURE--6.1% Hilton Hotels Corp. 4,775 $ 61,072 Marriott International, Inc. 850 32,657 Starwood Hotels & Resorts Worldwide, Inc. 3,225 92,203 -------------- 185,932 -------------- FINANCIALS--83.2% REAL ESTATE--83.2% Alexandria Real Estate Equities, Inc. 2,475 111,375 American Financial Realty Trust 2,100 31,311 Apartment Investment & Management Co., Class A 1,800 62,280 Archstone-Smith Trust 2,400 57,600 Avalonbay Communities, Inc. 1,825 77,818 Boston Properties, Inc. 1,775 77,745 CarAmerica Realty Corp. 1,075 29,896 Catellus Development Corp. (a) 1,500 33,000 CenterPoint Properties Corp. 1,000 61,250 Chelsea Property Group, Inc. 1,500 60,465 Cousins Properties, Inc. 6,150 171,585 Duke Realty Corp. 2,650 73,008 Equity Office Properties Trust 3,636 98,208 Equity Residential 2,300 59,685 First Industrial Realty Trust, Inc. 1,025 32,390 General Growth Properties, Inc. 2,325 145,173 iStar Financial, Inc. 4,325 157,863 Kimco Realty Corp. 2,837 107,522 Liberty Property Trust 1,475 51,035 Manufactured Home Communities, Inc. 675 23,699 Newcastle Investment Corp. 2,425 47,481 Pan Pacific Retail Properties, Inc. 1,050 41,317 Parkway Properties, Inc. 325 13,666 Prentiss Properties Trust 725 21,743 ProLogis Trust 5,190 141,687 Public Storage, Inc. 2,300 77,901 Reckson Associates Realty Corp. 900 18,774 Regency Centers Corp. 3,200 111,936 Rouse Co. 3,000 114,300 Simon Property Group, Inc. 4,025 157,096 SL Green Realty Corp. 900 31,401 St. Joe Co. 3,150 98,280 Taubman Centers, Inc. 1,575 30,177 United Dominion Realty Trust, Inc. 1,875 32,287 Vornado Realty Trust 2,025 88,290 -------------- 2,549,244 -------------- MATERIALS--7.3% PAPER & FOREST PRODUCTS--7.3% Bowater, Inc. 2,775 $ 103,924 International Paper Co. 1,950 69,674 MeadWestvaco Corp. 1,975 48,783 -------------- 222,381 -------------- TOTAL COMMON STOCKS (cost of $2,702,719) 2,957,557 -------------- <Caption> PAR -------------- SHORT-TERM OBLIGATION--4.0% Repurchase agreement with State Street Bank & Trust Co., dated 06/30/03, due 07/01/03 at 1.000%, collateralized by a U.S. Treasury Bond maturing 5/15/10, market value $128,700, (repurchase proceeds $124,003) (cost of $124,000) $ 124,000 124,000 -------------- TOTAL INVESTMENTS--100.6% (cost of $2,826,719) (b) 3,081,557 -------------- OTHER ASSETS & LIABILITIES, NET--(0.6)% (18,502) -------------- NET ASSETS--100.0% $ 3,063,055 ============== </Table> NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing. (b) Cost for both financial statement and federal income tax purposes is the same. See Notes to Financial Statements. 65 <Page> STATEMENT OF ASSETS & LIABILITIES Columbia Real Estate Equity Fund, Variable Series / June 30, 2003 (Unaudited) <Table> ASSETS: Investments, at cost $ 2,826,719 -------------- Investments, at value $ 3,081,557 Cash 1,138 Receivable for: Investments sold 3,885 Interest 3 Dividends 9,765 Deferred Trustees' compensation plan 522 -------------- TOTAL ASSETS 3,096,870 -------------- LIABILITIES: Expense reimbursement due to Manager 453 Payable for: Fund shares repurchased 7,545 Management fee 2,687 Administration fee 216 Distribution fee--Class B 26 Pricing and bookkeeping fees 2,477 Custody fee 2,061 Reports to Shareholders 17,195 Deferred Trustees' fee 522 Other liabilities 633 -------------- TOTAL LIABILITIES 33,815 -------------- NET ASSETS $ 3,063,055 ============== COMPOSITION OF NET ASSETS: Paid-in capital $ 2,498,569 Undistributed net investment income 7,587 Accumulated net realized gain 302,061 Net unrealized appreciation on investments 254,838 -------------- NET ASSETS $ 3,063,055 ============== CLASS A: Net assets $ 962,608 Shares outstanding 89,787 ============== Net asset value per share $ 10.72 ============== CLASS B: Net assets $ 2,100,447 Shares outstanding 195,912 ============== Net asset value per share $ 10.72 ============== </Table> See Notes to Financial Statements. 66 <Page> STATEMENT OF OPERATIONS Columbia Real Estate Equity Fund, Variable Series For the Six Months Ended June 30, 2003 (Unaudited) <Table> INVESTMENT INCOME: Dividends $ 38,910 Interest 646 -------------- Total Investment Income 39,556 -------------- EXPENSES: Management fee 6,877 Administration fee 779 Distribution fee--Class B 1,115 Pricing and bookkeeping fees 13,469 Transfer agent fee 2,496 Trustees' fee 7 Custody fee 4,281 Audit fee 5,492 Reports to shareholders 7,214 Other expenses 886 -------------- Total Expenses 42,616 Fees and expenses waived or reimbursed by Manager (21,217) Custody earnings credit (12) -------------- Net Expenses 21,387 -------------- Net Investment Income 18,169 -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain on investments 301,551 Net change in unrealized appreciation/depreciation on investments (30,821) -------------- Net Gain 270,730 -------------- Net Increase in Net Assets from Operations $ 288,899 ============== </Table> See Notes to Financial Statements. 67 <Page> STATEMENT OF CHANGES IN NET ASSETS Columbia Real Estate Equity Fund, Variable Series <Table> <Caption> (UNAUDITED) SIX MONTHS YEAR ENDED ENDED JUNE 30, DECEMBER 31, INCREASE (DECREASE) IN NET ASSETS: 2003 2002 - --------------------------------- -------------- -------------- OPERATIONS: Net investment income $ 18,169 $ 41,411 Net realized gain on investments 301,551 40,621 Net change in unrealized appreciation/depreciation on investments (30,821) (66,916) -------------- -------------- Net Increase from Operations 288,899 15,116 -------------- -------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income: Class A (5,360) (33,393) Class B (5,208) -- From net realized gains: Class A -- (39,385) Class B -- -- -------------- -------------- Total Distributions Declared to Shareholders (10,568) (72,778) -------------- -------------- SHARE TRANSACTIONS: Class A: Subscriptions 90,949 224,088 Proceeds received in connection with merger 1,269 -- Distributions reinvested 5,360 72,778 Redemptions (216,844) (372,423) -------------- -------------- Net Decrease (119,266) (75,557) -------------- -------------- Class B: Subscriptions 137,755 -- Proceeds received in connection with merger 1,868,312 -- Distributions reinvested 5,208 -- Redemptions (86,444) -- -------------- -------------- Net Increase 1,924,831 -- -------------- -------------- Net Increase (Decrease) from Share Transactions 1,805,565 (75,557) -------------- -------------- Total Increase (Decrease) in Net Assets 2,083,896 (133,219) NET ASSETS: Beginning of period 979,159 1,112,378 -------------- -------------- End of period (including undistributed net investment income of $7,587 and overdistributed net investment income of $(14)) $ 3,063,055 $ 979,159 ============== ============== CHANGES IN SHARES: Class A: Subscriptions 8,583 20,934 Issued in connection with merger 129 -- Issued for distributions reinvested 531 7,407 Redemptions (21,047) (36,726) -------------- -------------- Net Decrease (11,804) (8,385) -------------- -------------- Class B: Subscriptions 13,409 -- Issued in connection with merger 190,256 -- Issued for distributions reinvested 480 -- Redemptions (8,233) -- -------------- -------------- Net Increase 195,912 -- -------------- -------------- </Table> See Notes to Financial Statements. 68 <Page> NOTES TO FINANCIAL STATEMENTS Columbia Real Estate Equity Fund, Variable Series / June 30, 2003 (Unaudited) NOTE 1. ORGANIZATION AND ACCOUNTING POLICIES ORGANIZATION--Columbia Real Estate Equity Fund, Variable Series (the "Fund"), a series of Liberty Variable Investment Trust (the "Trust"), is a diversified portfolio of a Massachusetts business trust, registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund's investment goal is to provide growth of capital and current income. The Fund's capitalization consists of an unlimited number of shares of beneficial interest without par value that represent a separate series of the Trust. The Fund offers two classes of shares: Class A and Class B. Class B commenced operations on April 14, 2003. Each share of a class represents an equal proportionate beneficial interest in that share class and, when issued and outstanding, is fully paid and nonassessable. Shareholders would be entitled to share proportionally in the net assets of their share class available for distribution to shareholders upon liquidation of the Fund. Shares of the Fund are available and are being marketed exclusively as a pooled funding vehicle for variable annuity contracts ("VA contracts") and Variable Life Insurance Policies ("VLI Policies") offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies"). The Participating Insurance Companies and their separate accounts own all the shares of the Fund. On April 1, 2003, Fleet Investment Advisors Inc., the investment advisor to the predecessor Fund, merged into Columbia Management Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co., an indirect wholly owned subsidiary of FleetBoston Financial Corporation. At the time of the merger, Columbia assumed the obligations of Fleet Investment Advisors Inc. with respect to the predecessor Fund. Columbia provides investment management and advisory services to the Fund pursuant to its Management Agreement with the Fund. Columbia also provides administrative and pricing and bookkeeping services to the Fund. Liberty Funds Distributor, Inc. ("LFD"), an affiliate of Columbia, serves as the principal underwriter of the Fund. On April 14, 2003, the Crabbe Huson Real Estate Investment Fund, Variable Series merged into the Galaxy VIP Columbia Real Estate Equity Fund II, previously a fund of the Galaxy VIP Fund, a separate Massachusetts business trust (the "predecessor trust"). Also on April 14, 2003, Galaxy VIP Columbia Real Estate Equity Fund II, created a Class B into which Crabbe Huson Real Estate Investment Fund, Variable Series Class B shares were reorganized. The Galaxy VIP Columbia Real Estate Equity Fund II received a tax-free transfer of assets from the Crabbe Huson Real Estate Investment Fund, Variable Series as follows: <Table> <Caption> SHARES NET ASSETS UNREALIZED ISSUED RECEIVED APPRECIATION(1) ---------------------- -------- -------------- 190,385 $ 1,869,581 $ 243,393 </Table> <Table> <Caption> NET ASSETS OF GALAXY VIP NET ASSETS OF NET ASSETS OF GALAXY COLUMBIA REAL CRABBE HUSON VIP COLUMBIA ESTATE EQUITY REAL ESTATE INVESTMENT REAL ESTATE EQUITY FUND II PRIOR TO FUND, VARIABLE SERIES FUND II IMMEDIATELY COMBINATION PRIOR TO COMBINATION AFTER COMBINATION ---------------- ---------------------- -------------------- $ 998,543 $ 1,869,581 $ 2,868,124 </Table> (1) Unrealized appreciation is included in the Net Assets Received amount shown above. Also on April 14, 2003, subsequent to the merger described above, the Galaxy VIP Columbia Real Estate Equity Fund II was reorganized as the Columbia Real Estate Equity Fund, Variable Series. The accompanying statement of operations, statement of changes in net assets and financial highlights for the Fund represents the historical operations of the Galaxy VIP Columbia Real Estate Equity Fund II for periods prior to April 14, 2003. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION AND TRANSACTIONS--Equity securities generally are valued at the last sale price or, in the case of unlisted or listed securities for which there were no sales during the day, at the current quoted bid price. Short-term obligations with a maturity of 60 days or less are valued at amortized cost. The values of all assets and liabilities quoted in foreign currencies are translated into U.S. dollars at that day's exchange rates. Investments for which market quotations are not readily available, or quotations which management believes are not appropriate, are valued at fair value under procedures approved by the Board of Trustees. Security transactions are accounted for on the date the securities are purchased, sold or mature. 69 <Page> Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS--All income, expenses (other than the Class B distribution fee), and realized and unrealized gains (losses) are allocated to each class proportionately on a daily basis for purposes of determining the net asset value of each class. The per share data was calculated using average shares outstanding during the period. In addition, Class B net investment income per share data and ratios reflect the distribution fee applicable to Class B shares only. FEDERAL INCOME TAXES--Consistent with the Fund's policy to qualify as a regulated investment company and to distribute all of its taxable income, no federal income tax has been accrued. DISTRIBUTIONS TO SHAREHOLDERS--The Fund intends to distribute as income dividends or capital gains distributions, at least annually, substantially all of its net investment income and net profits realized from the sale of investments. All dividends and distributions are reinvested in additional shares of the Fund at net asset value as of the record date of the distribution. Income and capital gain distributions are determined in accordance with federal income tax regulations. OTHER--Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date. The Fund's custodian takes possession through the federal book-entry system of securities collateralizing repurchase agreements. Collateral is marked-to-market daily to ensure that the market value of the underlying assets remains sufficient to protect the Fund. The Fund may experience costs and delays in liquidating the collateral if the issuer defaults or enters bankruptcy. NOTE 2. FEDERAL TAX INFORMATION Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES MANAGEMENT AND ADMINISTRATION FEES--Columbia receives a monthly management fee equal to 0.75% annually of the Fund's average daily net assets. Columbia provides, pursuant to an Administrative Agreement with the Fund, certain administrative services for a monthly fee equal to 0.085% annually of the Fund's average daily net assets. Prior to April 14, 2003, the administration fee was computed daily and paid monthly at the annual rate of 0.085% of the first $1 billion of the combined average daily net assets of the funds in the predecessor trust, 0.078% of the next $1.5 billion of combined average daily net assets and 0.073% of combined average daily net assets in excess of $2.5 billion. PRICING AND BOOKKEEPING FEES--Columbia is responsible for providing pricing and bookkeeping services to the Fund under a Pricing and Bookkeeping Agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Bank & Trust Company ("State Street"). Columbia pays fees to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual fee based on the average daily net assets of the Fund as follows: <Table> <Caption> AVERAGE DAILY NET ASSETS FEE Under $50 million $ 25,000 Of $50 million but less than $200 million 35,000 Of $200 million but less than $500 million 50,000 Of $500 million but less than $1 billion 85,000 In excess of $1 billion 125,000 </Table> The annual fees for a Fund with more than 25% in non-domestic assets will be 150% of the annual fees described above. The Fund also pays out-of-pocket costs for pricing services. TRANSFER AGENT FEE--Liberty Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia, provides shareholder services for a monthly fee based on a per account charge or minimum of $5,000 annually per Fund. DISTRIBUTION FEE--The Fund has adopted a 12b-1 plan, which requires it to pay LFD a monthly distribution fee equal to 0.25% annually of Class B average daily net assets. EXPENSE LIMITS--Effective April 14, 2003, Columbia has voluntarily agreed to waive expenses at the rate of 0.90% annually of the Fund's average daily net assets. This waiver agreement will continue until April 14, 2004, after which it may be modified or terminated at any time. Prior to April 14, 2003, Fleet Investment Advisors, Inc. and/or its affiliates and/or PFPC Inc., the former fund administrator, could voluntarily waive all or a portion of the fees payable to them by the predecessor fund. OTHER--The Fund pays no compensation to its officers, all of whom are employees of Columbia or its affiliates. 70 <Page> The Fund's Independent Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. The Fund has an agreement with its custodian bank under which $12 of custody fees were reduced by balance credits for the six months ended June 30, 2003. The Fund could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if it had not entered into such an agreement. NOTE 4. PORTFOLIO INFORMATION INVESTMENT ACTIVITY--For the six months ended June 30, 2003, purchases and sales of investments, other than short-term obligations, were $6,663,720 and $5,142,479, respectively. Unrealized appreciation (depreciation) at June 30, 2003, based on cost of investments for both financial statement and federal income tax purposes, was: <Table> Gross unrealized appreciation $ 277,712 Gross unrealized depreciation (22,874) --------- Net unrealized appreciation $ 254,838 ========= </Table> OTHER--The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. 71 <Page> FINANCIAL HIGHLIGHTS Columbia Real Estate Equity Fund, Variable Series--Class A Shares (a) Selected data for a share outstanding throughout each period is as follows: <Table> <Caption> (UNAUDITED) PERIOD SIX MONTHS YEAR ENDED DECEMBER 31, ENDED ENDED ---------------------------------------------- DECEMBER 31, JUNE 30, 2003 2002 2001 2000 1999 1998(b) ------------- -------- -------- -------- -------- ------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 9.64 $ 10.11 $ 9.96 $ 8.08 $ 8.78 $ 10.00 ------------- -------- -------- -------- -------- -------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.14(c) 0.40 0.38 0.41 0.38 0.28 Net realized and unrealized gain (loss) on investments 1.00 (0.14) 0.07 1.86 (0.74) (1.24) ------------- -------- -------- -------- -------- -------- Total from Investment Operations 1.14 0.26 0.45 2.27 (0.36) (0.96) ------------- -------- -------- -------- -------- -------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.06) (0.32) (0.30) (0.38) (0.34) (0.26) In excess of net investment income -- -- -- (0.01) -- -- From net realized gains -- (0.41) -- -- -- -- ------------- -------- -------- -------- -------- -------- Total Distributions Declared to Shareholders (0.06) (0.73) (0.30) (0.39) (0.34) (0.26) ------------- -------- -------- -------- -------- -------- NET ASSET VALUE, END OF PERIOD $ 10.72 $ 9.64 $ 10.11 $ 9.96 $ 8.08 $ 8.78 ============= ======== ======== ======== ======== ======== Total return (d)(e)(f) 11.84%(g) 2.57% 4.68% 28.57% (4.13)% 9.57%(g) RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (h) 2.04%(i) 1.78% 1.70% 1.70% 1.70% 1.70%(i) Net investment income (h) 2.55%(i) 3.68% 3.81% 4.39% 4.84% 4.62%(i) Waiver/reimbursement 3.60%(i) 5.85% 4.29% 4.06% 4.21% 8.79%(i) Portfolio turnover rate 294%(g) 98% 54% 41% 33% 3%(g) Net assets, end of period (000's) $ 963 $ 979 $ 1,112 $ 1,092 $ 983 $ 784 </Table> (a) The information shown in this table, for the periods prior to the six months ended June 30, 2003, relates to shares of the Galaxy VIP Real Estate Equity Fund II, the predecessor to the Columbia Real Estate Equity Fund, Variable Series. (b) For the period from commencement of operations March 3, 1998 to December 31, 1998. (c) Per share data was calculated using average shares outstanding during the period. (d) Total return at net asset value assuming all distributions reinvested. (e) Had the Manager not waived or reimbursed a portion of expenses, total return would have been reduced. (f) Total return figure does not include any insurance company charges associated with a variable annuity. If included, total return would be reduced. (g) Not annualized. (h) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (i) Annualized. 72 <Page> SHAREHOLDER MEETING RESULTS Columbia Real Estate Equity Fund, Variable Series RESULTS OF THE ANNUAL MEETING OF SHAREHOLDERS On February 19, 2003, the Annual Meeting of Shareholders of the Trust was held to conduct a vote for or against the approval of the following items listed on the Trust's Proxy Statement for said Meeting. On December 2, 2002, the record date for the Meeting, the Crabbe Huson Real Estate Investment Fund, Variable Series had 428,385.881 common shares outstanding and the Galaxy VIP Columbia Real Estate Equity Fund II had 96,432.390 common shares outstanding. The votes cast were as follows: SHAREHOLDER RESPONSE SUMMARY REPORT LIBERTY VARIABLE INVESTMENT TRUST/STEINROE VARIABLE INVESTMENT TRUST CRABBE HUSON REAL ESTATE INVESTMENT FUND, VARIABLE SERIES FEBRUARY 19, 2003 1. To approve an Agreement and Plan of Reorganization providing for the sale of all of the assets of the Crabbe Huson Real Estate Investment Fund, Variable Series to, and the assumption of all of the liabilities of the Crabbe Huson Real Estate Investment Fund, Variable Series by, the Columbia Real Estate Equity Fund, Variable Series, in exchange for shares of the Columbia Real Estate Equity Fund, Variable Series, and the distribution of such shares to the shareholders of the Crabbe Huson Real Estate Investment Fund, Variable Series in complete liquidation of the Crabbe Huson Real Estate Investment Fund, Variable Series. <Table> <Caption> % OF % OF NO. OF OUTSTANDING SHARES SHARES SHARES VOTED -------------- ----------- ------- Affirmative 395,954.809 92.429% 92.429% Against 881.446 .206% .206% Abstain 31,549.626 7.365% 7.365% TOTAL 428,385.881 100.000% 100.000% <Caption> ** FUND TOTALS: SHARES RECORD TOTAL 428,385.881 VOTED SHARES 428,385.881 PERCENT VOTED 100.000% </Table> SHAREHOLDER RESPONSE SUMMARY REPORT LIBERTY VARIABLE INVESTMENT TRUST/STEINROE VARIABLE INVESTMENT TRUST GALAXY VIP COLUMBIA REAL ESTATE EQUITY FUND II FEBRUARY 19, 2003 2. To approve an Agreement and Plan of Reorganization providing for (i) the sale of all of the assets of the Galaxy VIP Columbia Real Estate Equity Fund II to, and the assumption of all of the liabilities of the Galaxy VIP Columbia Real Estate Equity Fund II by, the Columbia Real Estate Equity Fund, Variable Series, in exchange for shares of the Columbia Real Estate Equity Fund, Variable Series and the distribution of such shares to the shareholders of the Galaxy VIP Columbia Real Estate Equity Fund II in complete liquidation of the Galaxy VIP Columbia Real Estate Equity Fund II; (ii) the de-registration of The Galaxy VIP Fund as an investment company under the Investment Company Act of 1940, as amended, and (iii) The Galaxy VIP Fund's termination as a Massachusetts business trust under Massachusetts law. <Table> <Caption> % OF % OF NO. OF OUTSTANDING SHARES SHARES SHARES VOTED -------------- ----------- ------- Affirmative 89,998.688 93.328% 93.328% Against .000 .000% .000% Abstain 6,433.702 6.672% 6.672% TOTAL 96,432.390 100.000% 100.000% <Caption> ** FUND TOTALS: SHARES RECORD TOTAL 96,432.390 VOTED SHARES 96,432.390 PERCENT VOTED 100.000% </Table> 73 <Page> CHANGE IN INDEPENDENT AUDITOR Columbia Real Estate Equity Fund, Variable Series Based on the recommendation of the Audit Committee of the Fund on May 6, 2003, the Board of Trustees determined not to retain Ernst & Young LLP ("E&Y") as the Fund's independent auditor and voted to appoint PricewaterhouseCoopers LLP for the fiscal year ended December 31, 2003. During the two most recent fiscal years, E&Y's audit reports contained no adverse opinion or disclaimer of opinion; nor were its reports qualified or modified as to uncertainty, audit scope, or accounting principle. Further, in connection with its audits for the two most recent fiscal years and through May 6, 2003, there were no disagreements between the Fund and E&Y on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which if not resolved to the satisfaction of E&Y would have caused it to make reference to the disagreements in its report on the financial statements for such years. 74 <Page> PORTFOLIO MANAGERS' DISCUSSION Liberty All-Star Equity Fund, Variable Series / June 30, 2003 Liberty All-Star Equity Fund, Variable Series seeks total investment return, which is composed of long-term capital appreciation and current income, through investment primarily in a diversified portfolio of equity securities. The fund's investment program is based upon Liberty Asset Management Company's (LAMCO) multi-manager concept. LAMCO allocates the fund's portfolio assets on an approximately equal basis among a number of independent investment management organizations ("Portfolio Managers") -- currently five in number. Each Portfolio Manager employs a different investment style. LAMCO, from time to time, rebalances the portfolio among the Portfolio Managers to maintain an approximately equal allocation of the portfolio among them throughout all market cycles. The fund's current Portfolio Managers are: - Boston Partners Asset Management, L.P.; INVESTMENT STYLE-VALUE - Oppenheimer Capital; INVESTMENT STYLE-VALUE - Schneider Capital Management; INVESTMENT STYLE-VALUE - Mastrapasqua Asset Management, Inc.; INVESTMENT STYLE-GROWTH - TCW Investment Management Company; INVESTMENT STYLE-GROWTH INVESTMENT APPROACH Instead of relying on a single investment manager, LAMCO employs a multi-management approach for the fund. Because investment styles go in and out of favor, a style that produces strong returns one year may produce disappointing results the next. By contrast, a multi-management approach combines managers who practice different but complementary investment styles in an attempt to reduce volatility while providing attractive returns. Liberty All-Star Equity Fund, Variable Series is structured as a core investment, combining both growth and value style managers within the fund. Using our expertise, experience and state-of-the-art tools, we select managers for the fund and evaluate them on an ongoing basis. The investment managers LAMCO selects for the fund are distinguished by the following characteristics: - - a consistent focus on a particular style of investing - - a disciplined investment decision-making process - - a record of success relative to their peers who practice the same strategy - - continuity among the investment professionals, so that those who have built the record remain the managers - - a well-managed, highly responsive organization LAMCO performs all the due diligence, research, selection and monitoring that would be expected of a professional investment management firm. LAMCO adds value by selecting best of breed managers and replacing them when necessary. STRONG PERFORMANCE AFTER A WEAK START The equity markets entered the new year facing strong headwinds. Stock prices fell during the first quarter of 2003 as a result of geopolitical concerns. After the major campaigns of the war ended, investors turned their attention back to the economy and corporate profits. They responded favorably to accommodative monetary and fiscal policies, both in the United States and abroad. As a result, stock prices rose strongly in the second quarter, pushing most widely-followed equity indices ahead by double digits for the first half of the year. The fund participated in the strong advance of stock prices, outpacing the S&P 500 Index by a significant margin. While increasing our emphasis on technology last year hurt the fund's results during the last half of 2002, that strategy enhanced results in the first half of 2003. Selected technology stocks turned around in response to increased investor optimism. Economic and market conditions can frequently change. There is no assurance that the trends described here will continue to commence. The fund is intended to be a long-term investment vehicle and is not designed to provide a means of speculating on short-term stock market movements. The fund has adopted certain investment policies in managing its portfolio that are designed to maintain the diversity of the fund's investment portfolio and reduce risk. The fund may not always achieve its investment objective. The fund's investment objective and non-fundamental investment policies may be changed without shareholder approval. 75 <Page> PERFORMANCE INFORMATION Liberty All-Star Equity Fund, Variable Series / June 30, 2003 AVERAGE ANNUAL TOTAL RETURN AS OF JUNE 30, 2003 (%) <Table> <Caption> (CUMULATIVE) 6-MONTH 1-YEAR 5-YEAR LIFE - ------------------------------------------------------------------------------ Class A (11/17/97) 16.73 3.64 -1.97 0.66 Russell 3000 Index(1) 12.71 0.77 -1.13 1.87 S&P 500 Index(1) 11.75 0.25 -1.61 1.79 </Table> Inception date of share class is in parentheses. [CHART] VALUE OF A $10,000 INVESTMENT, 11/17/97 - 6/30/03 <Table> <Caption> CLASS A SHARES RUSSELL 3000 INDEX S&P 500 INDEX Nov-97 $ 10,000 11/30/1997 $ 10,000 $ 10,000 $ 10,000 12/31/1997 $ 10,080 $ 10,200 $ 10,172 1/31/1998 $ 10,030 $ 10,253 $ 10,284 2/28/1998 $ 10,900 $ 10,986 $ 11,025 3/31/1998 $ 11,421 $ 11,531 $ 11,590 4/30/1998 $ 11,522 $ 11,644 $ 11,708 5/31/1998 $ 11,212 $ 11,356 $ 11,507 6/30/1998 $ 11,462 $ 11,740 $ 11,974 7/31/1998 $ 11,221 $ 11,527 $ 11,847 8/31/1998 $ 9,469 $ 9,761 $ 10,135 9/30/1998 $ 10,080 $ 10,426 $ 10,785 10/31/1998 $ 10,821 $ 11,218 $ 11,660 11/30/1998 $ 11,351 $ 11,904 $ 12,367 12/31/1998 $ 11,962 $ 12,661 $ 13,079 1/31/1999 $ 11,982 $ 13,092 $ 13,626 2/28/1999 $ 11,561 $ 12,628 $ 13,202 3/31/1999 $ 11,963 $ 13,092 $ 13,730 4/30/1999 $ 12,677 $ 13,682 $ 14,262 5/31/1999 $ 12,496 $ 13,422 $ 13,925 6/30/1999 $ 12,988 $ 14,100 $ 14,695 7/31/1999 $ 12,456 $ 13,673 $ 14,238 8/31/1999 $ 12,073 $ 13,517 $ 14,167 9/30/1999 $ 11,782 $ 13,171 $ 13,779 10/31/1999 $ 12,275 $ 13,997 $ 14,651 11/30/1999 $ 12,395 $ 14,389 $ 14,949 12/31/1999 $ 12,976 $ 15,307 $ 15,828 1/31/2000 $ 12,550 $ 14,707 $ 15,033 2/29/2000 $ 12,404 $ 14,844 $ 14,749 3/31/2000 $ 13,653 $ 16,006 $ 16,191 4/30/2000 $ 13,466 $ 15,442 $ 15,704 5/31/2000 $ 13,497 $ 15,009 $ 15,382 6/30/2000 $ 13,570 $ 15,453 $ 15,760 7/31/2000 $ 13,445 $ 15,179 $ 15,515 8/31/2000 $ 14,371 $ 16,306 $ 16,478 9/30/2000 $ 14,064 $ 15,567 $ 15,608 10/31/2000 $ 14,285 $ 15,346 $ 15,542 11/30/2000 $ 13,170 $ 13,931 $ 14,318 12/31/2000 $ 13,800 $ 14,165 $ 14,388 1/31/2001 $ 14,000 $ 14,649 $ 14,899 2/28/2001 $ 12,879 $ 13,310 $ 13,541 3/31/2001 $ 12,024 $ 12,443 $ 12,684 4/30/2001 $ 12,989 $ 13,441 $ 13,668 5/31/2001 $ 13,067 $ 13,548 $ 13,760 6/30/2001 $ 12,834 $ 13,299 $ 13,426 7/31/2001 $ 12,534 $ 13,079 $ 13,294 8/31/2001 $ 11,746 $ 12,308 $ 12,463 9/30/2001 $ 10,427 $ 11,222 $ 11,457 10/31/2001 $ 10,871 $ 11,484 $ 11,676 11/30/2001 $ 11,884 $ 12,368 $ 12,572 12/31/2001 $ 12,031 $ 12,542 $ 12,682 1/31/2002 $ 11,792 $ 12,385 $ 12,497 2/28/2002 $ 11,358 $ 12,133 $ 12,256 3/31/2002 $ 11,997 $ 12,664 $ 12,717 4/30/2002 $ 11,358 $ 11,999 $ 11,946 5/31/2002 $ 11,084 $ 11,860 $ 11,859 6/30/2002 $ 10,011 $ 11,006 $ 11,015 7/31/2002 $ 9,075 $ 10,131 $ 10,157 8/31/2002 $ 9,087 $ 10,179 $ 10,223 9/30/2002 $ 8,048 $ 9,109 $ 9,112 10/31/2002 $ 8,779 $ 9,834 $ 9,913 11/30/2002 $ 9,612 $ 10,429 $ 10,496 12/31/2002 $ 8,888 $ 9,840 $ 9,880 1/31/2003 $ 8,682 $ 9,599 $ 9,622 2/28/2003 $ 8,602 $ 9,440 $ 9,478 3/31/2003 $ 8,740 $ 9,540 $ 9,570 4/30/2003 $ 9,484 $ 10,319 $ 10,358 5/31/2003 $ 10,331 $ 10,942 $ 10,902 Jun-03 $ 10,375 $ 11,090 $ 11,042 </Table> <Table> <Caption> NET ASSET VALUE PER SHARE ($) 12/31/02 6/30/03 - -------------------------------------------------------------- Class A 7.77 9.07 </Table> PAST PERFORMANCE CANNOT PREDICT FUTURE INVESTMENT RESULTS. SHARE PRICE AND INVESTMENT RETURN WILL VARY, SO YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. Total return performance includes changes in share price and reinvestment of all distributions. The Russell 3000 Index is an unmanaged index that tracks the performance of the 3,000 largest US companies based on total market capitalization. The S&P (Standard & Poor's) 500 Index is an unmanaged index that tracks the performance of 500 widely held, large-capitalization US stocks. Indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities on the fund may not match those in an index. MUTUAL FUND PERFORMANCE CHANGES OVER TIME. CURRENT RETURNS FOR THE FUND MAY BE DIFFERENT THAN THAT SHOWN. Performance numbers reflect all fund expenses, but do not include any insurance charges imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. (1) Index performance is from November 30, 1997. 76 <Page> INVESTMENT PORTFOLIO Liberty All-Star Equity Fund, Variable Series / June 30, 2003 (Unaudited) <Table> <Caption> SHARES VALUE ------------ ------------ COMMON STOCKS --97.5% CONSUMER DISCRETIONARY--15.2% AUTO COMPONENTS--0.3% Visteon Corp. 16,250 $ 111,638 ------------ AUTOMOBILES--0.2% Harley-Davidson, Inc. 1,650 65,769 ------------ HOTELS RESTAURANTS & LEISURE--2.4% Brinker International, Inc. (a) 2,600 93,652 Carnival Corp. 6,000 195,060 Harrah's Entertainment, Inc. (a) 4,100 164,984 Mandalay Resort Group 4,100 130,585 McDonald's Corp. 14,000 308,840 ------------ 893,121 ------------ HOUSEHOLD DURABLES--0.4% Clayton Homes, Inc. 10,950 137,422 ------------ INTERNET & CATALOG RETAIL--2.4% Amazon.com, Inc. (a) 13,600 496,264 eBay, Inc. (a) 3,600 375,048 ------------ 871,312 ------------ LEISURE EQUIPMENT & PRODUCTS--0.8% Brunswick Corp. 2,950 73,809 Eastman Kodak Co. 5,000 136,750 Mattel, Inc. 4,000 75,680 ------------ 286,239 ------------ MEDIA--4.7% AOL Time Warner, Inc. (a) 10,000 160,900 Clear Channel Communications, Inc. (a) 6,000 254,340 Comcast Corp. (a) 2,500 72,075 Walt Disney Co. 3,200 63,200 Fox Entertainment Group, Inc. (a) 5,000 143,900 InterActiveCorp. (a) 2,000 79,140 Liberty Media Corp. (a) 30,761 355,597 Pixar, Inc. (a) 4,100 249,444 Scripps Co. (E.W.) 1,600 141,952 Viacom, Inc. (a) 4,750 207,385 ------------ 1,727,933 ------------ MULTI-LINE RETAIL--2.5% Dollar General Corp. 10,000 182,600 JC Penney Co., Inc. 15,300 257,805 May Department Stores Co. 4,000 89,040 Target Corp. 4,800 181,632 Wal-Mart Stores, Inc. 3,750 201,262 ------------ 912,339 ------------ SPECIALTY RETAIL--0.7% Gap, Inc. 3,500 65,660 Home Depot, Inc. 5,000 165,600 Toys R US, Inc. (a) 2,400 29,088 ------------ 260,348 ------------ TEXTILES & APPAREL--0.8% Liz Claiborne, Inc. 8,500 299,625 ------------ CONSUMER STAPLES--6.9% BEVERAGES--0.5% PepsiCo, Inc. 4,500 $ 200,250 ------------ FOOD & DRUG RETAILING--2.1% CVS Corp. 14,100 395,223 Kroger Co. (a) 15,000 250,200 Walgreen Co. 4,500 135,450 ------------ 780,873 ------------ FOOD PRODUCTS--1.9% Smithfield Foods, Inc. (a) 3,350 76,782 Archer-Daniels-Midland Co. 9,250 119,048 Kraft Foods, Inc. 3,600 117,180 Tate & Lyle Plc 14,150 319,888 Tyson Foods, Inc. 4,950 52,569 ------------ 685,467 ------------ HOUSEHOLD PRODUCTS--0.8% Procter & Gamble Co. 3,400 303,212 ------------ PERSONAL PRODUCTS--0.8% Avon Products, Inc. 2,000 124,400 Gillette Co. 5,000 159,300 ------------ 283,700 ------------ TOBACCO--0.8% UST, Inc. 8,000 280,240 ------------ ENERGY--4.8% ENERGY EQUIPMENT & SERVICES--1.2% Nabors Industries, Ltd. (a) 1,950 77,122 Patterson-UTI Energy, Inc. (a) 2,450 79,380 Transocean, Inc. (a) 12,900 283,413 ------------ 439,915 ------------ OIL & GAS--3.6% Burlington Resources, Inc. 350 18,924 Canadian Natural Resources, Ltd. 4,100 163,631 ChevronTexaco Corp. 8,100 584,820 EL Paso Corp. (a) 6,000 48,480 Kerr-McGee Corp. 8,400 376,320 Premcor, Inc. (a) 5,400 116,370 ------------ 1,308,545 ------------ FINANCIALS--20.5% BANKS--2.6% FleetBoston Financial Corp. (b) 12,000 356,520 National City Corp. 3,900 127,569 Wachovia Corp. 3,200 127,872 Wells Fargo & Co. 7,000 352,800 ------------ 964,761 ------------ DIVERSIFIED FINANCIALS--9.4% CIT Group, Inc., New 13,950 343,868 Charles Schwab Corp. 17,450 176,070 Citigroup, Inc. 15,000 642,000 </Table> See Notes to Investment Portfolio. 77 <Page> <Table> <Caption> SHARES VALUE ------------ ------------ Countrywide Financial Corp. 8,450 $ 587,866 Freddie Mac 17,850 906,244 Goldman Sachs Group, Inc. 1,700 142,375 iShares Russell 1000 Value Index Fund 5,200 262,964 Merrill Lynch & Co., Inc. 5,500 256,740 Morgan Stanley 3,000 128,250 ------------ 3,446,377 ------------ INSURANCE--7.8% ACE, Ltd. 9,100 312,039 AFLAC, Inc. 12,850 395,138 Allstate Corp. 2,725 97,146 American International Group, Inc. 6,181 341,068 AON Corp. 5,700 137,256 Loews Corp. 1,400 66,206 PartnerRe, Ltd. 2,350 120,108 The Progressive Corp. 10,560 771,936 Travelers Property Casualty Corp. 5,050 80,295 UnumProvident Corp. 7,000 93,870 XL Capital, Ltd. 5,000 415,000 ------------ 2,830,062 ------------ REAL ESTATE--0.7% The St. Joe Co. 2,250 70,200 Starwood Hotels & Resorts Worldwide, Inc. 6,450 184,406 ------------ 254,606 ------------ HEALTH CARE--12.1% BIOTECHNOLOGY--6.4% Amgen, Inc. (a) 10,100 671,044 Genentech, Inc. (a) 10,070 726,248 Genzyme Corp. (a) 6,000 250,800 IDEC Pharmaceuticals Corp. (a) 3,900 132,600 Invitrogen Corp. (a) 4,100 157,317 MedImmune, Inc. (a) 11,200 407,344 ------------ 2,345,353 ------------ HEALTH CARE PROVIDERS & SERVICES--1.3% Aetna, Inc. 2,400 144,480 AmerisourceBergen Corp. 2,000 138,700 Cigna Corp. 1,400 65,716 Quest Diagnostics, Inc. (a) 900 57,420 Tenet Healthcare Corp. (a) 4,300 50,095 ------------ 456,411 ------------ PHARMACEUTICALS--4.4% Biovail Corp. (a) 5,000 235,300 Bristol-Myers Squibb Co. 7,000 190,050 Eli Lilly & Co. 4,400 303,468 Pfizer, Inc. 10,620 362,673 Shire Pharmaceuticals Group PLC (a) 7,900 155,630 Wyeth 8,200 373,510 ------------ 1,620,631 ------------ INDUSTRIALS--7.0% AEROSPACE & DEFENSE--1.1% Boeing Co. 7,850 $ 269,412 Lockheed Martin Corp. 2,400 114,168 ------------ 383,580 ------------ AIR FREIGHT & COURIERS--0.9% Expeditors International Washington, Inc. 4,500 155,880 FedEx Corp. 700 43,421 Ryder System, Inc. 4,400 112,728 ------------ 312,029 ------------ AIRLINES--0.7% Delta Air Lines, Inc. 1,450 21,286 Southwest Airlines Co. 13,850 238,220 ------------ 259,506 ------------ INDUSTRIAL CONGLOMERATES--2.5% 3M Co. 2,000 257,960 General Electric Co. 5,800 166,344 Tyco International, Ltd. 26,400 501,072 ------------ 925,376 ------------ MACHINERY--0.7% Navistar International Corp. (a) 5,600 182,728 PACCAR, Inc. 1,250 84,450 ------------ 267,178 ------------ ROAD & RAIL--1.1% CSX Corp. 7,100 213,639 Swift Transportation Co., Inc. (a) 9,900 184,338 ------------ 397,977 ------------ INFORMATION TECHNOLOGY--24.5% COMMUNICATIONS EQUIPMENT--2.6% 3Com Corp. (a) 18,000 84,240 Cisco Systems, Inc. (a) 33,200 554,108 Nokia Oyj, ADR 9,600 157,728 QUALCOMM, Inc. 4,100 146,575 ------------ 942,651 ------------ COMPUTERS & PERIPHERALS--4.5% Dell Computer Corp. (a) 16,400 524,144 EMC Corp. (a) 31,100 325,617 Hewlett-Packard Co. 12,800 272,640 Network Appliance, Inc. (a) 24,350 394,714 Sun Microsystems, Inc. (a) 29,200 134,320 ------------ 1,651,435 ------------ ELECTRONIC EQUIPMENT & INSTRUMENTS--2.8% Agilent Technologies, Inc. (a) 21,200 414,460 Arrow Electronics, Inc. (a) 1,350 20,574 Avnet, Inc. (a) 14,350 181,958 Jabil Circuit, Inc. (a) 3,000 66,300 Sanmina-SCI Corp. (a) 26,550 167,530 Waters Corp. (a) 6,000 174,780 ------------ 1,025,602 ------------ </Table> See Notes to Investment Portfolio. 78 <Page> <Table> <Caption> SHARES VALUE ------------ ------------ INTERNET SOFTWARE & SERVICES--1.0% Yahoo, Inc. (a) 10,800 $ 353,808 ------------ INFORMATION TECHNOLOGY CONSULTING & SERVICES--0.8% Computer Sciences Corp. (a) 4,800 182,976 Electronic Data Systems Corp. 5,550 119,048 ------------ 302,024 ------------ OFFICE ELECTRONICS--0.5% Xerox Corp. (a) 16,100 170,499 ------------ SEMICONDUCTOR EQUIPMENT & PRODUCTS--7.9% Analog Devices, Inc. (a) 5,000 174,100 Applied Materials, Inc. (a) 33,100 524,966 Intel Corp. 22,700 471,797 Maxim Integrated Products, Inc. 9,800 335,062 Micron Technology, Inc. (a) 30,500 354,715 Novellus Systems, Inc. (a) 5,000 183,105 Teradyne, Inc. (a) 28,050 485,546 Texas Instruments, Inc. 8,700 153,120 Xilinx, Inc. (a) 8,500 215,135 ------------ 2,897,546 ------------ SOFTWARE--4.4% Microsoft Corp. 34,725 889,307 Oracle Corp. (a) 23,300 280,066 Siebel Systems, Inc. (a) 26,260 250,520 Symantec Corp. (a) 1,000 43,860 VERITAS Software Corp. (a) 5,600 160,552 ------------ 1,624,305 ------------ MATERIALS--2.6% CHEMICALS--0.8% Dow Chemical Co. 3,950 122,292 IMC Global, Inc. 20,400 136,884 Monsanto Co. 682 14,758 ------------ 273,934 ------------ CONTAINERS & PACKAGING--0.3% Smurfit-Stone Container Corp. (a) 8,000 104,240 ------------ METALS & MINING--1.3% Alcan, Inc. 4,850 151,757 CONSOL Energy, Inc. 3,550 80,727 Freeport-McMoRan Copper & Gold, Inc. 6,000 147,000 United States Steel Corp. 5,950 97,402 ------------ 476,886 ------------ PAPER & FOREST PRODUCTS--0.2% Bowater, Inc. 2,350 88,008 ------------ TELECOMMUNICATION SERVICES--2.2% DIVERSIFIED TELECOMMUNICATION--1.6% Alltel Corp. 3,300 $ 159,126 SBC Communications, Inc. 8,200 209,510 Verizon Communications, Inc. 5,000 197,250 ------------ 565,886 ------------ WIRELESS TELECOMMUNICATION SERVICES--0.6% AT&T Wireless Services, Inc. (a) 27,300 224,133 ------------ UTILITIES--1.7% ELECTRIC UTILITIES--1.7% Edison International (a) 3,200 52,576 FirstEnergy Corp. 6,500 249,925 PG&E Corp. (a) 16,100 340,515 ------------ 643,016 ------------ TOTAL COMMON STOCKS (cost of $39,955,419) 35,655,768 ------------ <Caption> PAR ------------ CONVERTIBLE BONDS--0.6% INFORMATION TECHNOLOGY--0.2% TELECOMMUNICATIONS EQUIPMENT--0.2% Corning, Inc., 3.500%, 11/1/2008 $ 51,000 54,761 ------------ MATERIALS--0.3% METALS & MINING--0.3% Freeport-McMoRan Copper & Gold, Inc., 8.250%, 01/31/2006 69,000 122,561 ------------ UTILITIES--0.1% GAS UTILITIES--0.0% El Paso Corp., 02/28/2021 (c) 19,000 8,313 ------------ MULTI-UTILITIES & UNREGULATED POWER--0.1% Calpine Corp., 4.000%, 12/26/2006 34,000 30,600 ------------ TOTAL CONVERTIBLE BONDS (cost of $180,135) 216,235 ------------ </Table> See Notes to Investment Portfolio. 79 <Page> <Table> <Caption> SHARES VALUE ------------ ------------ PREFERRED STOCK--0.3% CONSUMER DISCRETIONARY--0.3% MEDIA--0.3% News Corp., Ltd. ADR (cost of $161,823) 5,000 $ 125,250 ------------ <Caption> PAR ------------ SHORT-TERM OBLIGATION--2.9% Repurchase agreement with State Street Bank & Trust Co., dated 06/30/03, due 07/01/03 at 1.000%, collateralized by U.S. Treasury Bonds and Federal National Mortgage Association Note with various maturities to 02/15/29, market value $1,082,572 (repurchase proceeds $1,059,029) (cost of $1,059,000) $ 1,059,000 1,059,000 ------------ TOTAL INVESTMENTS--101.3% (cost of $41,356,377) (d) 37,056,253 ------------ OTHER ASSETS & LIABILITIES, NET--(1.3)% (493,390) ------------ NET ASSETS--100.0% $ 36,562,863 ============ </Table> NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing. (b) Investments in Affiliates during the six months ended June 30, 2003: Security Name: Fleet Boston Financial Corp., the parent company of the Manager. <Table> Shares as of 12/31/02: 12,000 Shares purchased: -- Shares sold: -- Shares as of 06/30/03: 12,000 Net realized gain (loss): -- Dividend income earned: $ 4,200 Value at end of period: $ 356,520 </Table> (c) Zero-coupon bond. (d) Cost for both financial statement and federal income tax purposes is the same. <Table> <Caption> ACRONYM NAME ------- ---- ADR American Depositary Receipt </Table> See Notes to Financial Statements. 80 <Page> STATEMENT OF ASSETS & LIABILITIES Liberty All-Star Equity Fund, Variable Series / June 30, 2003 (Unaudited) <Table> ASSETS: Investments, at cost $ 41,356,377 ------------ Investments, at value $ 37,056,253 Cash 20,906 Receivable for: Investments sold 93,408 Fund shares sold 84 Interest 2,738 Dividends 22,777 Deferred Trustees' compensation plan 3,690 ------------ TOTAL ASSETS 37,199,856 ------------ LIABILITIES: Expense reimbursement due to Manager/Distributor 37,789 Payable for: Investments purchased 103,651 Fund shares repurchased 433,111 Management fee 26,098 Distribution fee--Class B 16 Transfer agent fee 595 Trustees' fee 209 Audit fee 11,189 Custody fee 10,263 Reports to Shareholders 10,231 Deferred Trustees' fee 3,690 Other liabilities 151 ------------ TOTAL LIABILITIES 636,993 ------------ NET ASSETS $ 36,562,863 ============ COMPOSITION OF NET ASSETS: Paid-in capital $ 48,446,054 Undistributed net investment income 28,981 Accumulated net realized loss (7,612,047) Net unrealized depreciation on: Investments (4,300,124) Foreign currency translations (1) ------------ NET ASSETS $ 36,562,863 ============ CLASS A: Net assets $ 33,495,424 Shares outstanding 3,692,955 ============ Net asset value per share $ 9.07 ============ CLASS B: Net assets $ 3,067,439 Shares outstanding 338,057 ============ Net asset value per share $ 9.07 ============ </Table> See Notes to Financial Statements. 81 <Page> STATEMENT OF OPERATIONS Liberty All-Star Equity Fund, Variable Series For the Six Months Ended June 30, 2003 (Unaudited) <Table> INVESTMENT INCOME: Dividends $ 194,808 Interest 7,751 ------------ Total Investment Income (net of foreign taxes withheld of $1,078) 202,559 ------------ EXPENSES: Management fee 135,783 Distribution fee--Class B 3,622 Pricing and bookkeeping fees 5,697 Transfer agent fee 3,720 Trustees' fee 3,091 Custody fee 22,852 Audit fee 10,114 Other expenses 7,736 ------------ Total Expenses 192,615 Fees and expenses waived or reimbursed by Manager (18,856) Fees reimbursed by Distributor--Class B (3,622) Custody earnings credit (454) ------------ Net Expenses 169,683 ------------ Net Investment Income 32,876 ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: Net realized loss on: Investments (1,593,445) Foreign currency transactions (1) ------------ Net realized loss (1,593,446) ------------ Net change in unrealized appreciation/depreciation on: Investments 6,866,393 Foreign currency translations 4 ------------ Net change in unrealized appreciation/depreciation 6,866,397 ------------ Net Gain 5,272,951 ------------ Net Increase in Net Assets from Operations $ 5,305,827 ============ </Table> See Notes to Financial Statements. 82 <Page> STATEMENT OF CHANGES IN NET ASSETS Liberty All-Star Equity Fund, Variable Series <Table> <Caption> (UNAUDITED) SIX MONTHS ENDED YEAR ENDED JUNE 30, DECEMBER 31, INCREASE (DECREASE) IN NET ASSETS: 2003 2002 - --------------------------------- ------------ ------------ OPERATIONS: Net investment income $ 32,876 $ 63,580 Net realized loss on investments and foreign currency transactions (1,593,446) (4,338,083) Net change in unrealized appreciation/depreciation on investments and foreign currency translations 6,866,397 (9,538,018) ------------ ------------ Net Increase (Decrease) from Operations 5,305,827 (13,812,521) ------------ ------------ DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income: Class A -- (65,711) Class B -- (6,028) ------------ ------------ Total Distributions Declared to Shareholders -- (71,739) ------------ ------------ SHARE TRANSACTIONS: Class A: Subscriptions 396,787 1,891,429 Distributions reinvested -- 65,711 Redemptions (3,090,871) (10,155,230) ------------ ------------ Net Decrease (2,694,084) (8,198,090) ------------ ------------ Class B: Subscriptions 124,632 665,510 Distributions reinvested -- 6,028 Redemptions (423,345) (965,793) ------------ ------------ Net Decrease (298,713) (294,255) ------------ ------------ Net Decrease from Share Transactions (2,992,797) (8,492,345) ------------ ------------ Total Increase (Decrease) in Net Assets 2,313,030 (22,376,605) NET ASSETS: Beginning of period 34,249,833 56,626,438 ------------ ------------ End of period (including undistributed net investment income of $28,981 and overdistributed net investment income of $(3,895)) $ 36,562,863 $ 34,249,833 ============ ============ CHANGES IN SHARES: Class A: Subscriptions 45,619 233,321 Issued for distributions reinvested -- 8,478 Redemptions (383,532) (1,168,100) ------------ ------------ Net Decrease (337,913) (926,301) ------------ ------------ Class B: Subscriptions 15,288 70,849 Issued for distributions reinvested -- 777 Redemptions (51,495) (113,272) ------------ ------------ Net Decrease (36,207) (41,646) ------------ ------------ </Table> See Notes to Financial Statements. 83 <Page> NOTES TO FINANCIAL STATEMENTS Liberty All-Star Equity Fund, Variable Series / June 30, 2003 (Unaudited) NOTE 1. ORGANIZATION AND ACCOUNTING POLICIES ORGANIZATION--Liberty All-Star Equity Fund, Variable Series (the "Fund"), a series of Liberty Variable Investment Trust (the "Trust"), is a diversified portfolio of a Massachusetts business trust, registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund's investment goal is to seek total investment return, comprised of long-term capital appreciation and current income, through investments primarily in a diversified portfolio of equity securities. The Fund's capitalization consists of an unlimited number of shares of beneficial interest without par value that represent a separate series of the Trust. The Fund offers two classes of shares: Class A and Class B. Each share of a class represents an equal proportionate beneficial interest in that share class and, when issued and outstanding, is fully paid and nonassessable. Shareholders would be entitled to share proportionally in the net assets of their share class available for distribution to shareholders upon liquidation of the Fund. Shares of the Fund are available and are being marketed exclusively as a pooled funding vehicle for variable annuity contracts ("VA contracts") and Variable Life Insurance Policies ("VLI Policies") offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies"). The Participating Insurance Companies and their separate accounts own all the shares of the Fund. On April 1, 2003, Liberty Advisory Services Corp., the investment advisor to the Fund, merged into Columbia Management Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co., an indirect wholly owned subsidiary of FleetBoston Financial Corporation. At the time of the merger, Columbia assumed the obligations of Liberty Advisory Services Corp. with respect to the Fund. The merger did not change the way the Fund is managed, the investment personnel assigned to manage the Fund or the fees paid by the Fund. Columbia provides investment management and advisory services to the Fund pursuant to its Management Agreement with the Fund. Columbia also provides pricing and bookkeeping services to the Fund. Liberty Funds Distributor, Inc. ("LFD"), an affiliate of Columbia, serves as the principal underwriter of the Fund. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION AND TRANSACTIONS--Debt securities generally are valued by a pricing service based upon market transactions for normal, institutional-size trading units of similar securities. When management deems it appropriate, an over-the-counter or exchange bid quotation is used. Equity securities generally are valued at the last sale price or, in the case of unlisted or listed securities for which there were no sales during the day, at the current quoted bid price. Short-term obligations with a maturity of 60 days or less are valued at amortized cost. Investments for which market quotations are not readily available, or quotations which management believes are not appropriate, are valued at fair value under procedures approved by the Board of Trustees. Security transactions are accounted for on the date the securities are purchased, sold or mature. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS--All income, expenses (other than the Class B distribution fee), and realized and unrealized gains (losses) are allocated to each class proportionately on a daily basis for purposes of determining the net asset value of each class. The per share data was calculated using average shares outstanding during the period. In addition, Class B net investment income per share data and ratios reflect the distribution fee applicable to Class B shares only. FEDERAL INCOME TAXES--Consistent with the Fund's policy to qualify as a regulated investment company and to distribute all of its taxable income, no federal income tax has been accrued. DISTRIBUTIONS TO SHAREHOLDERS--The Fund intends to distribute as income dividends or capital gains distributions, at least annually, substantially all of its net investment income and net profits realized from the sale of investments. All dividends and distributions are reinvested in additional shares of the Fund at net asset value as of the record date of the distribution. Income and capital gain distributions are determined in accordance with federal income tax regulations. FOREIGN CURRENCY TRANSACTIONS--Net realized and unrealized gains (losses) on foreign currency transactions and translations includes gains (losses) arising from the 84 <Page> fluctuations in exchange rates between trade and settlement dates on securities transactions, gains (losses) arising from the disposition of foreign currency, and currency gains (losses) between the accrual and payment dates on dividends, interest income and foreign withholding taxes. The Fund does not distinguish that portion of gains (losses) on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the investments. Such fluctuations are included with the net realized and unrealized gains (losses) on investments. OTHER--Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date (except for certain foreign securities which are recorded as soon after ex-date as the Fund becomes aware of such), net of non-reclaimable tax withholdings. Where a high level of uncertainty as to collection exists, income on securities is recorded net of all tax withholdings with any rebates recorded when received. The Fund's custodian takes possession through the federal book-entry system of securities collateralizing repurchase agreements. Collateral is marked-to-market daily to ensure that the market value of the underlying assets remains sufficient to protect the Fund. The Fund may experience costs and delays in liquidating the collateral if the issuer defaults or enters bankruptcy. NOTE 2. FEDERAL TAX INFORMATION Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. The following capital loss carryforwards, determined as of December 31, 2002, are available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: <Table> <Caption> YEAR OF CAPITAL LOSS EXPIRATION CARRYFORWARD ---------- ------------ 2009 $ 524,787 2010 3,157,493 ------------ $ 3,682,280 ============ </Table> NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES MANAGEMENT AND SUB-ADVISORY FEES--Columbia receives a monthly management fee equal to 0.80% annually of the Fund's average daily net assets. Columbia, out of the management fee it receives, pays Liberty Asset Management Company a monthly sub-advisory fee equal to 0.60% annually of the Fund's average daily net assets. PRICING AND BOOKKEEPING FEES--Columbia is responsible for providing pricing and bookkeeping services to the Fund under a Pricing and Bookkeeping Agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Bank & Trust Company ("State Street"). Columbia pays fees to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual flat fee of $10,000, paid monthly, and in any month that the Fund's average daily net assets are more than $50 million, a monthly fee equal to the average daily net assets of the Fund for that month multiplied by a fee rate that is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. The Fund also pays out-of-pocket costs for pricing services. TRANSFER AGENT FEE--Liberty Funds Services, Inc. (the "Transfer Agent"), an affiliate of the Manager, provides shareholder services for an annual rate of $7,500. DISTRIBUTION FEE--The Fund has adopted a 12b-1 plan, which requires it to pay LFD a monthly distribution fee equal to 0.25% annually of Class B average daily net assets. EXPENSE LIMITS--Columbia and LFD have voluntarily agreed to reimburse all expenses, including management fees and distribution fees, but excluding interest, taxes, brokerage and extraordinary expenses incurred by the Fund, in excess of 1.00% annually of the Fund's average daily net assets. LFD will first reimburse the Class B distribution fee up to 0.25% annually to reach the 1.00% limit on Class B expenses. If additional reimbursement is needed to meet the limit for each class, Columbia will then reimburse other expenses to the extent necessary. If additional reimbursement is still needed to reach the expense limit, Columbia will then waive a portion of its management fee to reach the expense limit. This arrangement may be terminated or modified by the Columbia or LFD at any time. OTHER--The Fund pays no compensation to its officers, all of whom are employees of Columbia or its affiliates. The Fund's Independent Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. The Fund has an agreement with its custodian bank under which $454 of custody fees were reduced by balance credits 85 <Page> for the six months ended June 30, 2003. The Fund could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if it had not entered into such an agreement. NOTE 4. PORTFOLIO INFORMATION INVESTMENT ACTIVITY--For the six months ended June 30, 2003, purchases and sales of investments, other than short-term obligations, were $8,753,910 and $11,763,572, respectively. Unrealized appreciation (depreciation) at June 30, 2003, based on cost of investments for federal income tax purposes, was: <Table> Gross unrealized appreciation $ 4,155,083 Gross unrealized depreciation (8,455,207) ------------ Net unrealized depreciation $ (4,300,124) ============ </Table> 86 <Page> FINANCIAL HIGHLIGHTS Liberty All-Star Equity Fund, Variable Series--Class A Shares Selected data for a share outstanding throughout each period is as follows: <Table> <Caption> (UNAUDITED) SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ---------------------------------------------------------------- 2003 2002 2001 2000 1999 1998 ----------- --------- --------- --------- --------- -------- NET ASSET VALUE, BEGINNING OF PERIOD $ 7.77 $ 10.54 $ 12.43 $ 12.47 $ 11.90 $ 10.07 ----------- --------- --------- --------- --------- -------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (a) 0.01 0.01 0.03 0.05 0.06 0.06 Net realized and unrealized gain (loss) on investments and foreign currency 1.29 (2.76) (1.66) 0.75 0.94 1.82 ----------- --------- --------- --------- --------- -------- Total from Investment Operations 1.30 (2.75) (1.63) 0.80 1.00 1.88 ----------- --------- --------- --------- --------- -------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- (0.02) (0.03) (0.05) (0.05) (0.05) From net realized gains -- -- (0.23) (0.79) (0.38) -- ----------- --------- --------- --------- --------- -------- Total Distributions Declared to Shareholders -- (0.02) (0.26) (0.84) (0.43) (0.05) ----------- --------- --------- --------- --------- -------- Net Asset Value, End of Period $ 9.07 $ 7.77 $ 10.54 $ 12.43 $ 12.47 $ 11.90 =========== ========= ========= ========= ========= ======== Total return (b)(c) 16.73%(d)(e) (26.13)%(d) (12.81)% 6.35%(d) 8.47% 18.67%(d) RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (f) 1.00%(g) 1.00% 1.00% 0.98% 0.95% 1.00% Net investment income (f) 0.19%(g) 0.14% 0.26% 0.37% 0.47% 0.54% Waiver/reimbursement 0.11%(g) 0.04% -- 0.02% -- 0.04% Portfolio turnover rate 26%(e) 84% 62% 97% 75% 70% Net assets, end of period (000's) $ 33,495 $ 31,339 $ 52,245 $ 69,249 $ 80,095 $ 44,870 </Table> (a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested. (c) Total return figure does not include any insurance company charges associated with a variable annuity. If included, total return would be reduced. (d) Had the Manager not waived or reimbursed a portion of expenses, total return would have been reduced. (e) Not annualized. (f) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (g) Annualized. 87 <Page> PORTFOLIO MANAGER'S DISCUSSION Liberty Equity Fund, Variable Series / June 30, 2003 Liberty Equity Fund, Variable Series seeks long-term growth by investing in companies that the fund's investment advisor believes have above-average earnings potential. Robert Armknecht, CFA has managed Liberty Equity Fund, Variable Series and its predecessors since 1998. Mr. Armknecht has managed equity portfolios for Columbia Management Advisors, Inc. and its predecessors since 1988. The fund is the successor to the Galaxy VIP Equity Fund. On April 14, 2003, Galaxy VIP Growth and Income Fund merged into Galaxy VIP Equity Fund. The new fund was renamed Liberty Equity Fund, Variable Series. LARGE-CAP GROWTH STOCKS ADVANCE STRONGLY After falling sharply in the first quarter of 2003, US stocks rallied strongly enough in the second quarter to produce sizable gains for the six months ended June 30, 2003. In addition to reduced tensions in Iraq during the latter half of the period, stocks benefited from yet another cut in a key short-term interest rate and from news that a scheduled reduction in federal income tax rates would be accelerated into 2003. Both fostered expectations for faster economic growth and improvements in corporate earnings. Stocks of large growth companies participated fully in the market's advance, and the fund's returns were in line with those of its market benchmarks. POSITIVE CONTRIBUTIONS FROM INDUSTRIAL, HEALTH CARE AND FINANCIAL STOCKS The fund benefited from above-average performances by its holdings in the industrial, health care and financial sectors. Among industrial stocks, where the fund had a slight overweight position, Raytheon, Cendant and United Technologies Corporation (0.7%, 1.6% and 2.0% of net assets, respectively) generated superior performance. In the health care sector, a significant overweight position for the fund, investments in Boston Scientific Corporation, Biovail Corp., Abbott Laboratories and Teva Pharmaceutical Industries Ltd. all did well (1.7%, 1.1%, 1.3% and 1.5% of net assets, respectively). Financial stocks such as Bank of America Corporation, Bank of New York Company, Inc., J.P. Morgan Chase & Co. and Citigroup Inc. (2.3%, 1.2%, 1.7% and 2.8% of net assets, respectively) also contributed positively to fund returns. In the technology sector, which led the market's advance, stock selection dampened fund returns. We were disappointed by the performance of Microsoft Corp. (4.0% of net assets), which suffered from concerns about the company's near-term business prospects. Stock selection also detracted from returns in the energy sector, where the fund was overweight, as well as in the consumer staples and defense areas. TRADES IN TECHNOLOGY AND HEALTH CARE SECTORS During the reporting period, we added Lexmark International, Inc. (1.0% of net assets), a manufacturer of computer printers. In addition to continued gains in market share, we believe the company should benefit from a new partnership with Dell Computer Corporation (0.9% of net assets), which we also added to the portfolio. Within the technology sector, we eliminated our investment in Texas Instruments Incorporated and used the proceeds to invest in companies that we believe demonstrate better earnings potential, such as Oracle Corporation, VERITAS Software Corporation and SAP AG (0.5%, 0.5% and 0.5% of net assets, respectively). In health care, we initiated a position in Amgen Inc., a biotech firm with above-average returns for the period, and in Biovail Corporation, a pharmaceutical company (0.7% and 1.1% of net assets, respectively). We paid for these purchases by selling Forest Laboratories, Inc. and Wyeth and reducing the fund's position in Pfizer, Inc. (3.9% of net assets). In the communications sector, we eliminated our position in The Walt Disney Company. FURTHER ADVANCE REQUIRES BETTER EARNINGS Given the strength of the market's recent advance, further improvements in stock prices are likely to depend on actual earnings improvement rather than the anticipation of better earnings. If economic conditions continue to strengthen, as we expect, earnings should strengthen as well. In an improving economy, we believe that larger growth companies should participate fully in an earnings revival. The fund maintains overweight positions in the health care and energy sectors. We believe health care stocks should benefit from new product development, particularly in generic drugs. Energy stocks should continue to benefit from the need for further exploration to develop new natural gas supplies. We expect to keep underweight positions in basic materials and utility firms, believing that these sectors have below-average growth potential. Economic and market conditions can frequently change. There is no assurance that the trends described here will continue or commence. An investment in the fund offers the potential for long-term growth, but also involves certain risks, including stock market fluctuations due to economic and business development. The fund's approach offers the potential for long-term growth, but also involves the possibility of losses due to the sensitivity of growth stock prices to changes in current or expected earnings. Holdings are disclosed as of June 30, 2003, and are subject to change. 88 <Page> PERFORMANCE INFORMATION Liberty Equity Fund, Variable Series / June 30, 2003 AVERAGE ANNUAL TOTAL RETURN AS OF JUNE 30, 2003 (%) <Table> <Caption> (CUMULATIVE) 6-MONTH 1-YEAR 5-YEAR 10-YEAR - ------------------------------------------------------------------------------ Class A (1/11/93) 11.91 -2.10 -1.67 8.08 S&P 500 Index 11.75 0.25 -1.61 10.04 </Table> Inception date of share class is in parentheses. [CHART] VALUE OF A $10,000 INVESTMENT, 6/30/93 - 6/30/03 <Table> <Caption> CLASS A SHARES S&P 500 INDEX Jun-93 $ 10,000 $ 10,000 07/01/1993 - 07/31/1993 $ 9,970 $ 9,960 08/01/1993 - 08/31/1993 $ 10,253 $ 10,337 09/01/1993 - 09/30/1993 $ 10,184 $ 10,258 10/01/1993 - 10/31/1993 $ 10,337 $ 10,470 11/01/1993 - 11/30/1993 $ 10,348 $ 10,371 12/01/1993 - 12/31/1993 $ 10,461 $ 10,496 01/01/1994 - 01/31/1994 $ 10,768 $ 10,853 02/01/1994 - 02/28/1994 $ 10,604 $ 10,559 03/01/1994 - 03/31/1994 $ 10,298 $ 10,100 04/01/1994 - 04/30/1994 $ 10,380 $ 10,229 05/01/1994 - 05/31/1994 $ 10,595 $ 10,396 06/01/1994 - 06/30/1994 $ 10,391 $ 10,141 07/01/1994 - 07/31/1994 $ 10,607 $ 10,474 08/01/1994 - 08/31/1994 $ 10,978 $ 10,902 09/01/1994 - 09/30/1994 $ 10,765 $ 10,636 10/01/1994 - 10/31/1994 $ 11,014 $ 10,874 11/01/1994 - 11/30/1994 $ 10,745 $ 10,478 12/01/1994 - 12/31/1994 $ 10,825 $ 10,633 01/01/1995 - 01/31/1995 $ 11,076 $ 10,909 02/01/1995 - 02/28/1995 $ 11,409 $ 11,333 03/01/1995 - 03/31/1995 $ 11,728 $ 11,668 04/01/1995 - 04/30/1995 $ 11,990 $ 12,011 05/01/1995 - 05/31/1995 $ 12,345 $ 12,490 06/01/1995 - 06/30/1995 $ 12,574 $ 12,780 07/01/1995 - 07/31/1995 $ 12,930 $ 13,203 08/01/1995 - 08/31/1995 $ 12,784 $ 13,236 09/01/1995 - 09/30/1995 $ 13,035 $ 13,794 10/01/1995 - 10/31/1995 $ 13,119 $ 13,744 11/01/1995 - 11/30/1995 $ 13,635 $ 14,346 12/01/1995 - 12/31/1995 $ 13,724 $ 14,623 01/01/1996 - 01/31/1996 $ 14,093 $ 15,121 02/01/1996 - 02/29/1996 $ 14,124 $ 15,261 03/01/1996 - 03/31/1996 $ 14,385 $ 15,408 04/01/1996 - 04/30/1996 $ 14,555 $ 15,634 05/01/1996 - 05/31/1996 $ 14,926 $ 16,036 06/01/1996 - 06/30/1996 $ 14,899 $ 16,097 07/01/1996 - 07/31/1996 $ 14,464 $ 15,385 08/01/1996 - 08/31/1996 $ 14,794 $ 15,710 09/01/1996 - 09/30/1996 $ 15,463 $ 16,593 10/01/1996 - 10/31/1996 $ 15,739 $ 17,051 11/01/1996 - 11/30/1996 $ 16,838 $ 18,338 12/01/1996 - 12/31/1996 $ 16,671 $ 17,975 01/01/1997 - 01/31/1997 $ 17,526 $ 19,097 02/01/1997 - 02/28/1997 $ 17,430 $ 19,248 03/01/1997 - 03/31/1997 $ 17,097 $ 18,459 04/01/1997 - 04/30/1997 $ 18,287 $ 19,559 05/01/1997 - 05/31/1997 $ 19,028 $ 20,754 06/01/1997 - 06/30/1997 $ 19,639 $ 21,677 07/01/1997 - 07/31/1997 $ 21,111 $ 23,401 08/01/1997 - 08/31/1997 $ 20,250 $ 22,090 09/01/1997 - 09/30/1997 $ 21,011 $ 23,299 10/01/1997 - 10/31/1997 $ 20,429 $ 22,520 11/01/1997 - 11/30/1997 $ 21,012 $ 23,563 12/01/1997 - 12/31/1997 $ 21,295 $ 23,968 01/01/1998 - 01/31/1998 $ 21,436 $ 24,232 02/01/1998 - 02/28/1998 $ 22,668 $ 25,979 03/01/1998 - 03/31/1998 $ 23,466 $ 27,309 04/01/1998 - 04/30/1998 $ 23,694 $ 27,588 05/01/1998 - 05/31/1998 $ 23,140 $ 27,113 06/01/1998 - 06/30/1998 $ 23,676 $ 28,214 07/01/1998 - 07/31/1998 $ 23,317 $ 27,915 08/01/1998 - 08/31/1998 $ 19,420 $ 23,881 09/01/1998 - 09/30/1998 $ 20,925 $ 25,412 10/01/1998 - 10/31/1998 $ 23,028 $ 27,476 11/01/1998 - 11/30/1998 $ 24,281 $ 29,141 12/01/1998 - 12/31/1998 $ 26,299 $ 30,819 01/01/1999 - 01/31/1999 $ 27,519 $ 32,107 02/01/1999 - 02/28/1999 $ 26,300 $ 31,109 03/01/1999 - 03/31/1999 $ 27,715 $ 32,353 04/01/1999 - 04/30/1999 $ 28,305 $ 33,605 05/01/1999 - 05/31/1999 $ 27,538 $ 32,812 06/01/1999 - 06/30/1999 $ 29,763 $ 34,627 07/01/1999 - 07/31/1999 $ 28,793 $ 33,550 08/01/1999 - 08/31/1999 $ 28,502 $ 33,382 09/01/1999 - 09/30/1999 $ 28,226 $ 32,467 10/01/1999 - 10/31/1999 $ 29,725 $ 34,522 11/01/1999 - 11/30/1999 $ 31,015 $ 35,223 12/01/1999 - 12/31/1999 $ 33,452 $ 37,294 01/01/2000 - 01/31/2000 $ 32,128 $ 35,422 02/01/2000 - 02/29/2000 $ 33,063 $ 34,753 03/01/2000 - 03/31/2000 $ 36,405 $ 38,152 04/01/2000 - 04/30/2000 $ 35,728 $ 37,003 05/01/2000 - 05/31/2000 $ 34,281 $ 36,245 06/01/2000 - 06/30/2000 $ 35,382 $ 37,136 07/01/2000 - 07/31/2000 $ 34,872 $ 36,557 08/01/2000 - 08/31/2000 $ 37,533 $ 38,827 09/01/2000 - 09/30/2000 $ 35,780 $ 36,777 10/01/2000 - 10/31/2000 $ 35,197 $ 36,623 11/01/2000 - 11/30/2000 $ 31,733 $ 33,737 12/01/2000 - 12/31/2000 $ 32,844 $ 33,902 01/01/2001 - 01/31/2001 $ 33,655 $ 35,106 02/01/2001 - 02/28/2001 $ 30,159 $ 31,907 03/01/2001 - 03/31/2001 $ 27,589 $ 29,888 04/01/2001 - 04/30/2001 $ 29,678 $ 32,207 05/01/2001 - 05/31/2001 $ 29,977 $ 32,423 06/01/2001 - 06/30/2001 $ 28,556 $ 31,635 07/01/2001 - 07/31/2001 $ 28,154 $ 31,325 08/01/2001 - 08/31/2001 $ 26,341 $ 29,367 09/01/2001 - 09/30/2001 $ 23,791 $ 26,997 10/01/2001 - 10/31/2001 $ 24,614 $ 27,513 11/01/2001 - 11/30/2001 $ 26,477 $ 29,623 12/01/2001 - 12/31/2001 $ 26,880 $ 29,884 01/01/2002 - 01/31/2002 $ 25,840 $ 29,447 02/01/2002 - 02/28/2002 $ 25,033 $ 28,879 03/01/2002 - 03/31/2002 $ 26,763 $ 29,965 04/01/2002 - 04/30/2002 $ 25,085 $ 28,149 05/01/2002 - 05/31/2002 $ 24,481 $ 27,944 06/01/2002 - 06/30/2002 $ 22,233 $ 25,954 07/01/2002 - 07/31/2002 $ 20,455 $ 23,932 08/01/2002 - 08/31/2002 $ 20,590 $ 24,088 09/01/2002 - 09/30/2002 $ 18,191 $ 21,472 10/01/2002 - 10/31/2002 $ 19,803 $ 23,359 11/01/2002 - 11/30/2002 $ 20,995 $ 24,733 12/01/2002 - 12/31/2002 $ 19,454 $ 23,281 01/01/2003 - 01/31/2003 $ 18,915 $ 22,673 02/01/2003 - 02/28/2003 $ 18,746 $ 22,333 03/01/2003 - 03/31/2003 $ 18,973 $ 22,550 04/01/2003 - 04/30/2003 $ 20,472 $ 24,406 05/01/2003 - 05/31/2003 $ 21,619 $ 25,689 06/01/2003 - 06/30/2003 $ 21,665 $ 26,018 </Table> <Table> <Caption> NET ASSET VALUE PER SHARE ($) 12/31/02 6/30/03 - ------------------------------------------------------------ Class A 11.56 12.92 </Table> PAST PERFORMANCE CANNOT PREDICT FUTURE INVESTMENT RESULTS. SHARE PRICE AND INVESTMENT RETURN WILL VARY, SO YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. Total return performance includes changes in share price and reinvestment of all distributions. The S&P (Standard & Poor's) 500 index is an unmanaged index that tracks the performance of 500 widely held, large-capitalization US stocks. Indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. MUTUAL FUND PERFORMANCE CHANGES OVER TIME. CURRENT RETURNS FOR THE FUND MAY BE DIFFERENT THAN THAT SHOWN. Performance numbers reflect all fund expenses, but do not include any insurance charges imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. 89 <Page> INVESTMENT PORTFOLIO Liberty Equity Fund, Variable Series / June 30, 2003 (Unaudited) <Table> <Caption> SHARES VALUE ------------ ------------ COMMON STOCK--99.7% CONSUMER DISCRETIONARY--14.3% MEDIA--3.8% InterActiveCorp (a) 7,500 $ 296,775 Liberty Media Corp. (a) 50,000 578,000 Viacom, Inc., Class B (a) 20,000 873,200 ------------ 1,747,975 ------------ MULTI-LINE RETAIL--6.7% Costco Wholesale Corp. 13,000 475,800 Kohl's Corp. (a) 9,000 462,420 Target Corp. 29,000 1,097,360 Wal-Mart Stores, Inc. 20,000 1,073,400 ------------ 3,108,980 ------------ SPECIALTY RETAIL--3.8% Bed Bath & Beyond, Inc. (a) 19,800 768,438 Home Depot, Inc. 15,000 496,800 Staples, Inc. (a) 25,500 467,925 ------------ 1,733,163 ------------ CONSUMER STAPLES--8.3% BEVERAGES--4.2% Anheuser-Busch Cos., Inc. 11,000 561,550 Coca-Cola Co. 12,300 570,843 PepsiCo, Inc. 17,900 796,550 ------------ 1,928,943 ------------ FOOD & DRUG RETAILING--1.0% Walgreen Co. 14,700 442,470 ------------ FOOD PRODUCTS--1.4% Kraft Foods, Inc. 20,000 651,000 ------------ HOUSEHOLD PRODUCTS--1.7% Procter & Gamble Co. 9,000 802,620 ------------ ENERGY--8.4% ENERGY EQUIPMENT & SERVICES--3.7% Baker Hughes, Inc. 15,900 533,763 National-Oilwell, Inc. (a) 25,000 550,000 Noble Corp. (a) 17,800 610,540 ------------ 1,694,303 ------------ OIL & GAS--4.7% BP PLC ADR 20,500 861,410 ConocoPhillips 16,000 876,800 Kerr-McGee Corp. 10,150 454,720 ------------ 2,192,930 ------------ FINANCIALS--18.8% BANKS--6.9% Bank of America Corp. 13,400 1,059,002 Bank of New York Co., Inc. 20,000 575,000 Mellon Financial Corp. 20,000 $ 555,000 Wells Fargo & Co. 20,000 1,008,000 ------------ 3,197,002 ------------ DIVERSIFIED FINANCIALS--8.2% Citigroup, Inc. 29,700 1,271,160 Fannie Mae 11,300 762,072 Goldman Sachs Group, Inc. 11,200 938,000 J.P. Morgan Chase & Co. 23,500 803,230 ------------ 3,774,462 ------------ INSURANCE--3.7% American International Group, Inc. 17,500 965,650 Marsh & McLennan Cos., Inc. 14,250 727,747 ------------ 1,693,397 ------------ HEALTH CARE--19.7% BIOTECHNOLOGY--0.7% Amgen, Inc. (a) 4,700 312,268 ------------ HEALTH CARE EQUIPMENT & SUPPLIES--6.5% Alcon, Inc. 13,000 594,100 Baxter International, Inc. 20,000 520,000 Boston Scientific Corp. (a) 12,500 763,750 Medtronic, Inc. 23,200 1,112,904 ------------ 2,990,754 ------------ HEALTH CARE PROVIDERS & SERVICES--0.9% WellPoint Health Networks, Inc. (a) 5,000 421,500 ------------ PHARMACEUTICALS--11.6% Abbott Laboratories 13,500 590,760 Biovail Corp. (a) 11,000 517,660 Johnson & Johnson 17,350 896,995 Merck & Co., Inc. 10,700 647,885 Pfizer, Inc. 52,500 1,792,875 Teva Pharmaceutical Industries, Ltd. ADR 12,500 711,625 Watson Pharmaceuticals, Inc. (a) 5,500 222,035 ------------ 5,379,835 ------------ INDUSTRIALS--12.1% AEROSPACE & DEFENSE--4.2% L-3 Communications Holdings, Inc. (a) 8,500 369,665 Northrop Grumman Corp. 4,000 345,160 Raytheon Co. 10,000 328,400 United Technologies Corp. 12,700 899,541 ------------ 1,942,766 ------------ AIR FREIGHT & LOGISTICS--1.0% FedEx Corp. 7,500 465,225 ------------ COMMERCIAL SERVICES & SUPPLIES--1.6% Cendant Corp. (a) 40,000 732,800 ------------ </Table> See Notes to Investment Portfolio. 90 <Page> <Table> <Caption> SHARES VALUE ------------ ------------ INDUSTRIAL CONGLOMERATES--3.9% 3M Co. 4,500 $ 580,410 General Electric Co. 42,100 1,207,428 ------------ 1,787,838 ------------ MACHINERY--1.4% Illinois Tool Works, Inc. 10,000 658,500 ------------ INFORMATION TECHNOLOGY--16.7% COMMUNICATIONS EQUIPMENT--2.4% Cisco Systems, Inc. (a) 43,200 721,008 Nokia Oyj 24,800 407,464 ------------ 1,128,472 ------------ COMPUTERS & PERIPHERALS--3.7% Dell Computer Corp. (a) 12,500 399,500 International Business Machines Corp. 10,400 858,000 Lexmark International, Inc. (a) 6,500 460,005 ------------ 1,717,505 ------------ ELECTRONIC EQUIPMENT & INSTRUMENTS--1.9% Celestica, Inc. (a) 25,000 394,000 Flextronics International Ltd. (a) 45,000 467,550 ------------ 861,550 ------------ SEMICONDUCTOR EQUIPMENT & PRODUCTS--3.2% Analog Devices, Inc. (a) 6,600 229,812 Intel Corp. 25,000 519,600 Maxim Integrated Products, Inc. 10,000 341,900 Teradyne, Inc. (a) 22,000 380,820 ------------ 1,472,132 ------------ SOFTWARE--5.5% Microsoft Corp. 72,500 1,856,725 Oracle Corp. (a) 18,200 218,764 SAP AG 7,500 219,150 VERITAS Software Corp. (a) 8,000 229,360 ------------ 2,523,999 ------------ TELECOMMUNICATION SERVICES--1.0% DIVERSIFIED TELECOMMUNICATION SERVICES--1.0% American Tower Corp. (a) 50,000 $ 442,500 ------------ UTILITIES--0.4% MULTI-UTILITIES--0.4% The Williams Cos., Inc. 25,000 197,500 ------------ TOTAL COMMON STOCKS (cost of $47,602,400) 46,002,389 ------------ PREFERRED STOCK--0.7% UTILITIES--0.7% GAS UTILITIES--0.7% The Williams Companies, Inc. (cost of $956,379) 25,000 308,750 ------------ TOTAL INVESTMENTS--100.4% (cost of $48,558,779) (b) 46,311,139 ------------ OTHER ASSETS & LIABILITIES, NET--(0.4)% (194,169) ------------ NET ASSETS--100.0% $ 46,116,970 ============ </Table> NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing. (b) Cost for both financial statement and federal income tax purposes is the same. <Table> <Caption> ACRONYM NAME ------- ---- ADR American Depositary Receipt </Table> See Notes to Financial Statements. 91 <Page> STATEMENT OF ASSETS & LIABILITIES Liberty Equity Fund, Variable Series / June 30, 2003 (Unaudited) <Table> ASSETS: Investments, at cost $ 48,558,779 ------------ Investments, at value $ 46,311,139 Receivable for: Investments sold 851,122 Fund shares sold 1,047 Dividends 27,502 Expense reimbursement due from Manager 6,938 Deferred Trustees' compensation plan 7 ------------ TOTAL ASSETS 47,197,755 ------------ LIABILITIES: Payable to custodian bank 737,512 Payable for: Fund shares repurchased 218,438 Management fee 29,308 Administration fee 3,322 Pricing and bookkeeping fees 2,827 Merger costs 8,682 Trustees' fee 348 Reports to Shareholders 43,640 Deferred Trustees' fee 7 Other liabilities 36,701 ------------ TOTAL LIABILITIES 1,080,785 ------------ NET ASSETS $ 46,116,970 ============ COMPOSITION OF NET ASSETS: Paid-in capital $ 58,015,251 Undistributed net investment income 10,588 Accumulated net realized loss (9,661,229) Net unrealized depreciation on investments (2,247,640) ------------ NET ASSETS $ 46,116,970 ============ CLASS A: Net assets $ 46,115,859 Shares outstanding 3,570,189 ============ Net asset value per share $ 12.92 ============ CLASS B: Net assets $ 1,111 Shares outstanding 86 ============ Net asset value per share $ 12.92 ============ </Table> See Notes to Financial Statements. 92 <Page> STATEMENT OF OPERATIONS Liberty Equity Fund, Variable Series For the Six Months Ended June 30, 2003 (Unaudited) <Table> INVESTMENT INCOME: Dividends $ 312,167 Interest 1,179 ------------ Total Investment Income (net of foreign taxes withheld of $3,309) 313,346 ------------ EXPENSES: Management fee 161,753 Administration fee 18,332 Distribution fee--Class B 1 Pricing and bookkeeping fees 14,067 Transfer agent fee 2,497 Trustees' fee 362 Custody fee 4,436 Legal fee 19,588 Reports to shareholders 25,639 Other expenses 7,304 ------------ Total Expenses 253,979 Fees and expenses waived or reimbursed by Manager (1,992) ------------ Net Expenses 251,987 ------------ Net Investment Income 61,359 ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized loss on investments (2,186,204) Net change in unrealized appreciation on investments 7,138,140 ------------ Net Gain 4,951,936 ------------ Net Increase in Net Assets from Operations $ 5,013,295 ============ </Table> See Notes to Financial Statements. 93 <Page> STATEMENT OF CHANGES IN NET ASSETS Liberty Equity Fund, Variable Series <Table> <Caption> (UNAUDITED) SIX MONTHS YEAR ENDED ENDED JUNE 30, DECEMBER 31, INCREASE (DECREASE) IN NET ASSETS: 2003 2002 - ---------------------------------- ------------ ------------ OPERATIONS: Net investment income $ 61,359 $ 108,103 Net realized loss on investments (2,186,204) (3,306,702) Net change in unrealized appreciation/depreciation on investments 7,138,140 (17,120,856) ------------ ------------ Net Increase (Decrease) from Operations 5,013,295 (20,319,455) ------------ ------------ DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income: Class A (49,167) (125,623) ------------ ------------ SHARE TRANSACTIONS: Class A: Subscriptions 148,676 851,624 Proceeds received in connection with merger 4,822,551 -- Distributions reinvested 49,167 125,623 Redemptions (7,471,836) (16,742,361) ------------ ------------ Net Decrease (2,451,442) (15,765,114) ------------ ------------ Class B: Subscriptions 1,000 -- ------------ ------------ Net Decrease from Share Transactions (2,450,442) (15,765,114) ------------ ------------ Total Increase (Decrease) in Net Assets 2,513,686 (36,210,192) NET ASSETS: Beginning of period 43,603,284 79,813,476 ------------ ------------ End of period (including undistributed net investment income of $10,588 and overdistributed net investment income of $(1,604)) $ 46,116,970 $ 43,603,284 ============ ============ CHANGES IN SHARES: Class A: Subscriptions 12,210 58,751 Issued in connection with merger 416,815 -- Issued for distributions reinvested 4,449 10,720 Redemptions (633,863) (1,280,602) ------------ ------------ Net Decrease (200,389) (1,211,131) ------------ ------------ Class B: Subscriptions 86 -- ------------ ------------ </Table> See Notes to Financial Statements. 94 <Page> NOTES TO FINANCIAL STATEMENTS Liberty Equity Fund, Variable Series / June 30, 2003 (Unaudited) NOTE 1. ORGANIZATION AND ACCOUNTING POLICIES ORGANIZATION--Liberty Equity Fund, Variable Series (the "Fund"), a series of Liberty Variable Investment Trust (the "Trust"), is a diversified portfolio of a Massachusetts business trust, registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund's investment goal is to seek long term growth by investing in companies which are believed to have above average earnings potential. The Fund's capitalization consists of an unlimited number of shares of beneficial interest without par value that represent a separate series of the Trust. The Fund offers two classes of shares: Class A and Class B. Class B commenced operations on April 14, 2003. Each share of a class represents an equal proportionate beneficial interest in that share class and, when issued and outstanding, is fully paid and nonassessable. Shareholders would be entitled to share proportionally in the net assets of their share class available for distribution to shareholders upon liquidation of the Fund. Shares of the Fund are available and are being marketed exclusively as a pooled funding vehicle for variable annuity contracts ("VA contracts") and Variable Life Insurance Policies ("VLI Policies") offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies"). The Participating Insurance Companies and their separate accounts own all the shares of the Fund. On April 1, 2003, Fleet Investment Advisors Inc., the investment advisor to the predecessor Fund, merged into Columbia Management Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co., an indirect wholly owned subsidiary of FleetBoston Financial Corporation. At the time of the merger, Columbia assumed the obligations of Fleet Investment Advisors Inc. with respect to the predecessor Fund. Columbia provides investment management and advisory services to the Fund pursuant to its Management Agreement with the Fund. Columbia also provides administrative and pricing and bookkeeping services to the Fund. Liberty Funds Distributor, Inc. ("LFD"), an affiliate of Columbia, serves as the principal underwriter of the Fund. On April 14, 2003, the Galaxy VIP Growth & Income Fund, previously a fund of the Galaxy VIP Fund, a separate Massachusetts business trust ("the predecessor trust"), merged into the Galaxy VIP Equity Fund, also previously a fund of the predecessor trust and collectively, the "target funds". The Galaxy VIP Equity Fund received a tax-free transfer of assets from the Galaxy VIP Growth & Income Fund, as follows: <Table> <Caption> SHARES NET ASSETS UNREALIZED ISSUED RECEIVED DEPRECIATION(1) ------ ----------- --------------- 416,815 $ 4,822,551 $ 1,331,049 </Table> <Table> <Caption> NET ASSETS NET ASSETS NET ASSETS OF GALAXY OF GALAXY OF GALAXY VIP EQUITY VIP GROWTH & INCOME VIP EQUITY FUND FUND PRIOR TO FUND, PRIOR TO IMMEDIATELY AFTER COMBINATION COMBINATION COMBINATION ------------- ------------------- ----------------- $ 39,395,832 $ 4,822,551 $ 44,218,383 </Table> (1) Unrealized depreciation is included in the Net Assets Received amount above. Also on April 14, 2003, subsequent to the merger described above, the Galaxy VIP Equity Fund was reorganized as the Liberty Equity Fund, Variable Series. The accompanying statement of operations, statement of changes in net assets and financial highlights for the Fund represents the historical operations of the Galaxy VIP Equity Fund for periods prior to April 14, 2003. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION AND TRANSACTIONS--Equity securities generally are valued at the last sale price or, in the case of unlisted or listed securities for which there were no sales during the day, at the current quoted bid price. Short-term obligations with a maturity of 60 days or less are valued at amortized cost. Investments for which market quotations are not readily available, or quotations which management believes are not appropriate, are valued at fair value under procedures approved by the Board of Trustees. Security transactions are accounted for on the date the securities are purchased, sold or mature. 95 <Page> Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS--All income, expenses (other than the Class B distribution fee), and realized and unrealized gains (losses) are allocated to each class proportionately on a daily basis for purposes of determining the net asset value of each class. The per share data was calculated using average shares outstanding during the period. In addition, Class B net investment income per share data and ratios reflect the distribution fee applicable to Class B shares only. FEDERAL INCOME TAXES--Consistent with the Fund's policy to qualify as a regulated investment company and to distribute all of its taxable income, no federal income tax has been accrued. DISTRIBUTIONS TO SHAREHOLDERS--The Fund intends to distribute as income dividends or capital gains distributions, at least annually, substantially all of its net investment income and net profits realized from the sale of investments. All dividends and distributions are reinvested in additional shares of the Fund at net asset value as of the record date of the distribution. Income and capital gain distributions are determined in accordance with federal income tax regulations. OTHER--Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date. The Fund's custodian takes possession through the federal book-entry system of securities collateralizing repurchase agreements. Collateral is marked-to-market daily to ensure that the market value of the underlying assets remains sufficient to protect the Fund. The Fund may experience costs and delays in liquidating the collateral if the issuer defaults or enters bankruptcy. NOTE 2. FEDERAL TAX INFORMATION Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. The following capital loss carryforwards, determined as of December 31, 2002, are available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: <Table> <Caption> YEAR OF CAPITAL LOSS EXPIRATION CARRYFORWARD ---------- ------------ 2009 $ 2,908,429 2010 3,698,775 ------------ $ 6,607,204 ============ </Table> NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES MANAGEMENT AND ADMINISTRATION FEES--Columbia receives a monthly management fee equal to 0.75% annually of the Fund's average daily net assets. Columbia provides, pursuant to an Administrative Agreement with the Fund, certain administrative services for a monthly fee equal to 0.085% annually of the Fund's average daily net assets. Prior to April 14, 2003, the administration fee was computed daily and paid monthly at the annual rate of 0.085% of the first $1 billion of the combined average daily net assets of the funds in the predecessor trust, 0.078% of the next $1.5 billion of combined average daily net assets and 0.073% of combined average daily net assets in excess of $2.5 billion. PRICING AND BOOKKEEPING FEES--Columbia is responsible for providing pricing and bookkeeping services to the Fund under a Pricing and Bookkeeping Agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Bank & Trust Company ("State Street"). Columbia pays fees to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual fee based on the average daily net assets of the Fund as follows: <Table> <Caption> AVERAGE DAILY NET ASSETS FEE - ------------------------ --------- Under $50 million $ 25,000 Of $50 million but less than $200 million 35,000 Of $200 million but less than $500 million 50,000 Of $500 million but less than $1 billion 85,000 In excess of $1 billion 125,000 </Table> The annual fees for a Fund with more than 25% in non-domestic assets will be 150% of the annual fees described above. The Fund also pays out-of-pocket costs for pricing services. TRANSFER AGENT FEE--Liberty Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia, provides shareholder services for a monthly fee based on a per account charge or minimum of $5,000 annually per Fund. 96 <Page> DISTRIBUTION FEE--The Fund has adopted a 12b-1 plan, which requires it to pay LFD a monthly distribution fee equal to 0.25% annually of Class B average daily net assets. EXPENSE LIMITS--Effective April 14, 2003, Columbia has voluntarily agreed to waive expenses at the rate of 0.02% annually of the Fund's average daily net assets. This waiver agreement will continue until April 14, 2004, after which it may be modified or terminated at any time. Prior to April 14, 2003, Fleet Investment Advisors, Inc. and/or its affiliates and/or PFPC Inc., the former fund administrator, could voluntarily waive all or a portion of the fees payable to them by the predecessor fund. OTHER--The Fund pays no compensation to its officers, all of whom are employees of Columbia or its affiliates. The Fund's Independent Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. NOTE 4. PORTFOLIO INFORMATION INVESTMENT ACTIVITY--For the six months ended June 30, 2003, purchases and sales of investments, other than short-term obligations, were $9,356,632 and $16,615,222, respectively. Unrealized appreciation (depreciation) at June 30, 2003, based on cost of investments for federal income tax purposes, was: <Table> Gross unrealized appreciation $ 4,990,113 Gross unrealized depreciation (7,237,753) ------------ Net unrealized depreciation $ (2,247,640) ============ </Table> 97 <Page> FINANCIAL HIGHLIGHTS Liberty Equity Fund, Variable Series -- Class A Shares (a) Selected data for a share outstanding throughout each period is as follows: <Table> <Caption> (UNAUDITED) SIX MONTHS YEAR ENDED DECEMBER 31, ENDED ---------------------------------------------------------------- JUNE 30, 2003 2002 2001 2000 1999 1998 ------------- --------- --------- --------- --------- -------- NET ASSET VALUE, BEGINNING OF PERIOD $ 11.56 $ 16.02 $ 19.81 $ 22.21 $ 19.20 $ 19.68 ------------- --------- --------- --------- --------- -------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) 0.02(b) 0.03 --(c) (0.02) (0.02) 0.13 Net realized and unrealized gain (loss) on investments 1.35 (4.46) (3.58) (0.37) 5.05 4.25 ------------- --------- --------- --------- --------- -------- Total from Investment Operations 1.37 (4.43) (3.58) (0.39) 5.03 4.38 ------------- --------- --------- --------- --------- -------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.01) (0.03) -- -- -- (0.13) From net realized gains -- -- (0.21) (2.01) (2.02) (4.73) ------------- --------- --------- --------- --------- -------- Total Distributions Declared to Shareholders (0.01) (0.03) (0.21) (2.01) (2.02) (4.86) ------------- --------- --------- --------- --------- -------- NET ASSET VALUE, END OF PERIOD $ 12.92 $ 11.56 $ 16.02 $ 19.81 $ 22.21 $ 19.20 ============= ========= ========= ========= ========= ======== Total return (d)(e) 11.91%(f)(g) (27.64)% (18.17)% (1.82)% 27.18% 23.52% RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (h) 1.16%(i) 1.09% 1.02% 0.98% 0.96% 1.05% Net investment income (loss) (h) 0.28%(i) 0.18% 0.00% (0.11)% (0.11)% 0.61% Waiver/reimbursement 0.01%(i) -- -- -- -- -- Portfolio turnover rate 22%(g) 35% 51% 54% 60% 75% Net assets, end of period (000's) $ 46,116 $ 43,603 $ 79,813 $ 120,712 $ 119,799 $ 92,620 </Table> (a) The information shown in this table, for the periods prior to the six months ended June 30, 2003, relates to shares of Galaxy VIP Equity Fund, the predecessor to the Liberty Equity Fund, Variable Series. (b) Per share data was calculated using average shares outstanding during the period. (c) Rounds to less than $0.01 per share. (d) Total return at net asset value assuming all distributions reinvested. (e) Total return figure does not include any insurance company charges associated with a variable annuity. If included, total return would be reduced. (f) Had the Manager not waived or reimbursed a portion of expenses, total return would have been reduced. (g) Not annualized. (h) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (i) Annualized. 98 <Page> SHAREHOLDER MEETING RESULTS Liberty Equity Fund, Variable Series RESULTS OF THE ANNUAL MEETING OF SHAREHOLDERS On February 19, 2003, the Annual Meeting of Shareholders of the Trust was held to conduct a vote for or against the approval of the following items listed on the Trust's Proxy Statement for said Meeting. On December 2, 2002, the record date for the Meeting, the Galaxy VIP Growth and Income Fund had 730,203.532 common shares outstanding and the Galaxy VIP Equity Fund had 3,825,799.735 common shares outstanding. The votes cast were as follows: SHAREHOLDER RESPONSE SUMMARY REPORT LIBERTY VARIABLE INVESTMENT TRUST/STEINROE VARIABLE INVESTMENT TRUST GALAXY VIP GROWTH AND INCOME FUND FEBRUARY 19, 2003 1. To approve an Agreement and Plan of Reorganization providing for i) the sale of all of the assets of the Galaxy VIP Growth and Income Fund to, and the assumption of all of the liabilities of the Galaxy VIP Growth and Income Fund by, the Liberty Equity Fund, Variable Series, in exchange for shares of the Liberty Equity Fund, Variable Series, and the distribution of such shares to the shareholders of the Galaxy VIP Growth and Income Fund in complete liquidation of the Galaxy VIP Growth and Income Fund; (ii) the de-registration of The Galaxy VIP Fund as an investment company under the Investment Company Act of 1940, as amended, and (iii) The Galaxy VIP Fund's termination as a Massachusetts business trust under Massachusetts law. (Item 1 in the Notice.) <Table> <Caption> % OF % OF NO. OF OUTSTANDING SHARES SHARES SHARES VOTED ----------- ----------- -------- Affirmative 673,392.240 92.220% 93.123% Against 2,781.596 .381% .385% Abstain 46,944.481 6.429% 6.492% TOTAL 723,118.317 99.030% 100.000% <Caption> ** FUND TOTALS: SHARES RECORD TOTAL 730,203.532 VOTED SHARES 723,118.317 PERCENT VOTED 99.030% </Table> SHAREHOLDER RESPONSE SUMMARY REPORT LIBERTY VARIABLE INVESTMENT TRUST/STEINROE VARIABLE INVESTMENT TRUST GALAXY VIP EQUITY FUND FEBRUARY 19, 2003 2. To approve an Agreement and Plan of Reorganization providing for (i) the sale of all of the assets of the Galaxy VIP Equity Fund to, and the assumption of all of the liabilities of the Galaxy VIP Equity Fund by, the Liberty Equity Fund, Variable Series, in exchange for shares of the Liberty Equity Fund, Variable Series, and the distribution of such shares to the shareholders of the Galaxy VIP Equity Fund in complete liquidation of the Galaxy VIP Equity Fund; (ii) the de-registration of The Galaxy VIP Fund as an investment company under the Investment Company Act of 1940, as amended, and (iii) The Galaxy VIP Fund's termination as a Massachusetts business trust under Massachusetts law. (Item 2 of the Notice.) <Table> <Caption> % OF % OF NO. OF OUTSTANDING SHARES SHARES SHARES VOTED ------------- ----------- -------- Affirmative 3,402,836.839 88.944% 89.137% Against 98,743.838 2.581% 2.587% Abstain 315,933.927 8.258% 8.276% TOTAL 3,817,514.604 99.783% 100.000% <Caption> ** FUND TOTALS: SHARES RECORD TOTAL 3,825,799.735 VOTED SHARES 3,817,514.604 PERCENT VOTED 99.783% </Table> 99 <Page> CHANGE IN INDEPENDENT AUDITOR Liberty Equity Fund, Variable Series Based on the recommendation of the Audit Committee of the Fund on May 6, 2003, the Board of Trustees determined not to retain Ernst & Young LLP ("E&Y") as the Fund's independent auditor and voted to appoint PricewaterhouseCoopers LLPfor the fiscal year ended December 31, 2003. During the two most recent fiscal years, E&Y's audit reports contained no adverse opinion or disclaimer of opinion, nor were its reports qualified or modified as to uncertainty, audit scope, or accounting principle. Further, in connection with its audits for the two most recent fiscal years and through May 6, 2003, there were no disagreements between the Fund and E&Y on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which if not resolved to the satisfaction of E&Y would have caused it to make reference to the disagreements in its report on the financial statements for such years. 100 <Page> PORTFOLIO MANAGERS' DISCUSSION Liberty Growth & Income Fund, Variable Series / June 30, 2003 Liberty Growth & Income Fund, Variable Series seeks long-term growth and income. Scott L. Davis and Gregory M. Miller have co-managed the fund since April 30, 2003. Prior to that date, Scott Schermerhorn managed the fund. Mr. Davis and Mr. Miller have been with Columbia Management Advisors, Inc. since 1985. On April 7, 2003, Liberty Value Fund, Variable Series was merged into Colonial US Growth & Income Fund, Variable Series. The new fund was renamed Liberty Growth & Income Fund, Variable Series. SLOW START, STRONG FINISH The fund did not perform as well as the broader US stock market during a period that began poorly for stocks but ended with impressive gains. Stock selection in the consumer discretionary and consumer staples sectors hurt the fund's relative performance. Several of our largest holdings generated disappointing returns during the first quarter. However, the fund regained much of its lost ground by the end of the period. The first three months of the year were dominated by concerns about the economy and impending war with Iraq. Stocks trended downward as corporations and investors were paralyzed by uncertainty. But markets rallied once it became clear that the US military action would be victorious, and returns remained strong through the end of June. DISAPPOINTING RESULTS FROM CONSUMER STAPLES Three of our top ten holdings performed poorly during the period: Safeway, Sara Lee and ConAgra. We sold Safeway, a food retailer whose prospects were clouded by concern over competition with WalMart. In Sara Lee's case, we determined that its cheap price was due to weakness in its underlying businesses, including brands that the company may not be able to revive in today's markets. We again eliminated our stake. Shares of ConAgra (2.5% of net assets) declined early in the period when the company's earnings fell short of expectations. However, ConAgra gained ground later in the period when it restructured to emphasize its key food processing business. One of the worst performers in the first quarter of 2003, McDonald's (2.6% of net assets), generated strong double-digit returns in the second quarter. Our research showed that the company was in the process of making management improvements and enhanced menu offerings. This news improved investor perception of the company's potential and resulted in a dramatically higher stock price. Other names that did well included industrials Textron and Honeywell and electric utility PG&E (2.3%, 2.0% and 0.7% of net assets, respectively). FINE TUNING OUR HOLDINGS When we took over the management of the fund on April 30, we evaluated the size and quality of the fund's holdings. In some cases we trimmed or eliminated positions that we felt were too large. One example is managed health care provider Aetna Inc., a stock that had generated solid performance but had grown to almost 5% of net assets. We took some gains and pared back that position to 2.4% of net assets. We also eliminated several holdings that had low prices, but in our opinion little rebound potential, including AT&T and Motorola. We favored the financial sector during the period and added to holdings to bring the fund's allocation more in line with the index. We also established new positions in Bank of America Corporation, U.S. Bancorp and State Street Corporation (2.5%, 1.5% and 0.5% of net assets, respectively). We also made some changes based on our expectation of an improving economy. LOOKING AHEAD Moving forward, we believe that conditions could become somewhat more difficult for stocks because market expectations have risen. Valuation is still important, but we expect quality to become a bigger factor in determining which companies will succeed. As bottom-up, research-driven managers, we will continue to select the companies we believe have the best prospects under a variety of market environments. Economic and market conditions can frequently change. There is no assurance that the trends described here will continue or commence. An investment in the Liberty Growth & Income Fund, Variable Series offers significant long-term growth potential, but also involves certain risks. The fund may be affected by stock market fluctuations due to economic and business developments. Holdings are disclosed as of June 30, 2003, and are subject to change. 101 <Page> PERFORMANCE INFORMATION Liberty Growth & Income Fund, Variable Series / June 30, 2003 AVERAGE ANNUAL TOTAL RETURN AS OF JUNE 30, 2003 (%) <Table> <Caption> (CUMULATIVE) 6-MONTH 1-YEAR 5-YEAR LIFE - ------------------------------------------------------------------------------ Class A (7/5/94) 7.77 -3.97 0.28 10.94 S&P 500 Index(1) 11.75 0.25 -1.61 11.04 </Table> Inception date of share class is in parentheses. [CHART] VALUE OF A $10,000 INVESTMENT, 7/5/94 - 6/30/03 <Table> <Caption> CLASS A SHARES S&P 500 INDEX 7/5/1994 $ 10,000 $ 10,000 7/30/1994 $ 10,260 $ 10,328 8/31/1994 $ 10,670 $ 10,750 9/30/1994 $ 10,460 $ 10,488 10/31/1994 $ 10,631 $ 10,723 11/30/1994 $ 10,251 $ 10,333 12/31/1994 $ 10,441 $ 10,486 1/31/1995 $ 10,705 $ 10,757 2/28/1995 $ 11,132 $ 11,176 3/31/1995 $ 11,427 $ 11,505 4/30/1995 $ 11,661 $ 11,844 5/31/1995 $ 12,078 $ 12,316 6/30/1995 $ 12,342 $ 12,602 7/31/1995 $ 12,769 $ 13,019 8/31/1995 $ 12,718 $ 13,052 9/30/1995 $ 13,145 $ 13,602 10/31/1995 $ 13,094 $ 13,553 11/30/1995 $ 13,592 $ 14,147 12/31/1995 $ 13,541 $ 14,420 1/31/1996 $ 13,903 $ 14,910 2/29/1996 $ 14,177 $ 15,049 3/31/1996 $ 14,253 $ 15,193 4/30/1996 $ 14,779 $ 15,417 5/31/1996 $ 15,130 $ 15,813 6/30/1996 $ 14,801 $ 15,873 7/31/1996 $ 14,089 $ 15,172 8/31/1996 $ 14,560 $ 15,492 9/30/1996 $ 15,272 $ 16,362 10/31/1996 $ 15,655 $ 16,814 11/30/1996 $ 16,773 $ 18,083 12/31/1996 $ 16,498 $ 17,725 1/31/1997 $ 17,704 $ 18,831 2/28/1997 $ 17,692 $ 18,980 3/31/1997 $ 16,984 $ 18,202 4/30/1997 $ 17,889 $ 19,287 5/31/1997 $ 18,911 $ 20,465 6/30/1997 $ 19,629 $ 21,376 7/31/1997 $ 21,196 $ 23,075 8/31/1997 $ 20,465 $ 21,783 9/30/1997 $ 21,520 $ 22,975 10/31/1997 $ 20,535 $ 22,207 11/30/1997 $ 21,371 $ 23,235 12/31/1997 $ 21,815 $ 23,635 1/31/1998 $ 22,055 $ 23,895 2/28/1998 $ 23,581 $ 25,618 3/31/1998 $ 24,772 $ 26,930 4/30/1998 $ 24,760 $ 27,204 5/31/1998 $ 24,143 $ 26,736 6/30/1998 $ 25,068 $ 27,822 7/31/1998 $ 24,572 $ 27,527 8/31/1998 $ 20,569 $ 23,549 9/30/1998 $ 21,519 $ 25,059 10/31/1998 $ 23,355 $ 27,094 11/30/1998 $ 24,775 $ 28,735 12/31/1998 $ 26,209 $ 30,391 1/31/1999 $ 26,893 $ 31,661 2/28/1999 $ 25,820 $ 30,676 3/31/1999 $ 26,657 $ 31,903 4/30/1999 $ 27,395 $ 33,138 5/31/1999 $ 27,034 $ 32,356 6/30/1999 $ 28,610 $ 34,145 7/31/1999 $ 27,897 $ 33,083 8/31/1999 $ 27,590 $ 32,918 9/30/1999 $ 26,641 $ 32,016 10/31/1999 $ 27,702 $ 34,042 11/30/1999 $ 28,064 $ 34,734 12/31/1999 $ 29,355 $ 36,776 1/31/2000 $ 27,773 $ 34,930 2/29/2000 $ 26,826 $ 34,270 3/31/2000 $ 29,474 $ 37,621 4/30/2000 $ 29,444 $ 36,489 5/31/2000 $ 29,297 $ 35,741 6/30/2000 $ 28,899 $ 36,620 7/31/2000 $ 29,107 $ 36,049 8/31/2000 $ 30,970 $ 38,287 9/30/2000 $ 30,248 $ 36,266 10/31/2000 $ 30,463 $ 36,113 11/30/2000 $ 28,991 $ 33,268 12/31/2000 $ 30,418 $ 33,431 1/31/2001 $ 30,217 $ 34,617 2/28/2001 $ 30,018 $ 31,464 3/31/2001 $ 28,853 $ 29,472 4/30/2001 $ 29,369 $ 31,759 5/31/2001 $ 29,919 $ 31,972 6/30/2001 $ 29,219 $ 31,195 7/31/2001 $ 30,069 $ 30,889 8/31/2001 $ 29,885 $ 28,959 9/30/2001 $ 28,702 $ 26,622 10/31/2001 $ 28,848 $ 27,130 11/30/2001 $ 30,008 $ 29,211 12/31/2001 $ 30,236 $ 29,468 1/31/2002 $ 29,731 $ 29,038 2/28/2002 $ 29,419 $ 28,478 3/31/2002 $ 30,781 $ 29,548 4/30/2002 $ 29,673 $ 27,758 5/31/2002 $ 29,634 $ 27,555 6/30/2002 $ 26,484 $ 25,593 7/31/2002 $ 24,307 $ 23,599 8/31/2002 $ 24,618 $ 23,753 9/30/2002 $ 21,078 $ 21,173 10/31/2002 $ 22,887 $ 23,034 11/30/2002 $ 24,638 $ 24,389 12/31/2002 $ 23,600 $ 22,957 1/31/2003 $ 22,753 $ 22,358 2/28/2003 $ 21,490 $ 22,023 3/31/2003 $ 21,411 $ 22,236 4/30/2003 $ 22,967 $ 24,066 5/31/2003 $ 24,860 $ 25,332 6/30/2003 $ 25,426 $ 25,656 </Table> <Table> <Caption> NET ASSET VALUE PER SHARE ($) 12/31/02 6/30/03 - -------------------------------------------------------------- Class A 11.97 12.90 </Table> PAST PERFORMANCE CANNOT PREDICT FUTURE INVESTMENT RESULTS. SHARE PRICE AND INVESTMENT RETURN WILL VARY, SO YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. Total return performance includes changes in share price and reinvestment of all distributions. The S&P (Standard & Poor's) 500 Index is an unmanaged index that tracks the performance of 500 widely held, large-capitalization US stocks. Indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. MUTUAL FUND PERFORMANCE CHANGES OVER TIME. CURRENT RETURNS FOR THE FUND MAY BE DIFFERENT THAN THAT SHOWN. Performance numbers reflect all fund expenses, but do not include any insurance charges imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. (1) Index performance is from June 30, 1994. 102 <Page> INVESTMENT PORTFOLIO Liberty Growth & Income Fund, Variable Series / June 30, 2003 (Unaudited) <Table> <Caption> SHARES VALUE ------------ ------------- COMMON STOCKS--95.6% CONSUMER DISCRETIONARY--8.9% AUTO COMPONENTS--1.7% Delphi Corp. 486,878 $ 4,201,757 ------------- AUTOMOBILES--0.0% Ford Motor Co. 16 176 ------------- HOTELS RESTAURANTS & LEISURE--2.6% McDonald's Corp. 291,800 6,437,108 ------------- MEDIA--2.4% AOL Time Warner, Inc. (a) 155,600 2,503,604 Interpublic Group of Companies, Inc. 245,700 3,287,466 ------------- 5,791,070 ------------- SPECIALTY RETAIL--2.2% Office Depot, Inc. (a) 368,300 5,344,033 ------------- CONSUMER STAPLES--7.2% BEVERAGES--1.3% Coca-Cola Co. 68,700 3,188,367 ------------- FOOD PRODUCTS--3.9% ConAgra Foods, Inc. 263,000 6,206,800 Kraft Foods, Inc. 103,300 3,362,415 ------------- 9,569,215 ------------- HOUSEHOLD PRODUCTS--1.0% Kimberly-Clark Corp. 46,100 2,403,654 ------------- TOBACCO--1.0% Altria Group, Inc. 55,000 2,499,200 ------------- ENERGY--13.6% ENERGY EQUIPMENT & SERVICES--2.8% Baker Hughes, Inc. 84,900 2,850,093 Halliburton Co. 173,300 3,985,900 ------------- 6,835,993 ------------- OIL & GAS--10.8% BP PLC, ADR 140,000 5,882,800 ConocoPhillips 109,870 6,020,876 Exxon Mobil Corp. 167,370 6,010,257 Marathon Oil Corp. 176,000 4,637,600 Royal Dutch Petroleum Co., NY Shares 80,700 3,762,234 ------------- 26,313,767 ------------- FINANCIALS--25.5% BANKS--7.3% Bank of America Corp. 78,300 6,188,049 Bank of New York Co., Inc. 107,600 3,093,500 Bank One Corp. 98,100 3,647,358 Fifth Third Bancorp 23,100 1,324,554 US Bancorp 144,700 3,545,150 ------------- 17,798,611 ------------- DIVERSIFIED FINANCIALS--9.4% Citigroup, Inc. 298,800 12,788,640 Freddie Mac 69,400 3,523,438 JP Morgan Chase & Co. 152,700 $ 5,219,286 State Street Corp. 32,700 1,288,380 ------------- 22,819,744 ------------- INSURANCE--8.8% AMBAC Financial Group, Inc. 52,500 3,478,125 American International Group, Inc. 130,300 7,189,954 Berkshire Hathaway, Inc., Class A (a) 63 4,567,500 Lincoln National Corp. 123,300 4,393,179 MGIC Investment Corp. 38,300 1,786,312 ------------- 21,415,070 ------------- HEALTH CARE--8.7% HEALTH CARE PROVIDERS & SERVICES--3.4% Aetna, Inc. 98,400 5,923,680 McKesson Corp. 65,100 2,326,674 ------------- 8,250,354 ------------- PHARMACEUTICALS--5.3% Bristol-Myers Squibb Co. 100,500 2,728,575 Merck & Co., Inc. 126,300 7,647,465 Pfizer, Inc. 71,900 2,455,385 ------------- 12,831,425 ------------- INDUSTRIALS--9.1% AEROSPACE & DEFENSE--4.2% General Dynamics Corp. 34,400 2,494,000 Honeywell International, Inc. 179,800 4,827,630 Raytheon Co. 90,900 2,985,156 ------------- 10,306,786 ------------- COMMERCIAL SERVICES & SUPPLIES--1.8% Waste Management, Inc. 180,400 4,345,836 ------------- INDUSTRIAL CONGLOMERATES--2.3% Textron, Inc. 143,600 5,603,272 ------------- MACHINERY--0.8% Dover Corp. 68,250 2,044,770 ------------- INFORMATION TECHNOLOGY--3.6% ELECTRONIC EQUIPMENT & INSTRUMENTS--1.0% Celestica, Inc. (a) 146,400 2,307,264 ------------- INFORMATION TECHNOLOGY CONSULTING & SERVICES--1.1% Electronic Data Systems Corp. 127,700 2,739,165 ------------- OFFICE ELECTRONICS--1.5% Xerox Corp. (a) 342,100 3,622,839 ------------- MATERIALS--3.5% CHEMICALS--1.0% Air Products & Chemicals, Inc. 57,400 2,387,840 ------------- METALS & MINING--1.2% Barrick Gold Corp. 164,600 2,946,340 ------------- </Table> See Notes to Investment Portfolio. 103 <Page> <Table> <Caption> SHARES VALUE ------------ ------------- PAPER & FOREST PRODUCTS--1.3% Bowater, Inc. 54,200 $ 2,029,790 Weyerhaeuser Co. 23,100 1,247,400 ------------- 3,277,190 ------------- TELECOMMUNICATION SERVICES--9.0% DIVERSIFIED TELECOMMUNICATION--9.0% BellSouth Corp. 249,100 6,633,533 SBC Communications, Inc. 302,500 7,728,875 Verizon Communications, Inc. 194,300 7,665,135 ------------- 22,027,543 ------------- UTILITIES--6.5% ELECTRIC UTILITIES--4.5% American Electric Power Co., Inc. 105,900 3,158,997 Consolidated Edison, Inc. 84,900 3,674,472 PG&E Corp. (a) 77,200 1,632,780 TXU Corp. 105,100 2,359,495 ------------- 10,825,744 ------------- MULTI-UTILITIES & UNREGULATED POWER--2.0% Duke Energy Corp. 245,500 4,897,725 ------------- TOTAL COMMON STOCKS (cost of $225,749,460) 233,031,858 ------------- <Caption> PAR VALUE ------------ ------------- SHORT-TERM OBLIGATION--3.3% Repurchase agreement with State Street Bank & Trust Co., dated 06/30/03, due 07/01/03 at 1.000%, collateralized by a U.S. Treasury Bond maturing 02/15/29, market value $8,175,104 (repurchase proceeds $8,013,223) (cost of $8,013,000) $ 8,013,000 $ 8,013,000 ------------- TOTAL INVESTMENTS--98.9% (cost of $233,762,460) (b) 241,044,858 ------------- OTHER ASSETS & LIABILITIES, NET--1.1% 2,774,146 ------------- NET ASSETS--100.0% $ 243,819,004 ============= </Table> NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing. (b) Cost for financial statement and federal income tax purposes is the same. <Table> <Caption> ACRONYM NAME ------- ---- ADR American Depositary Receipt </Table> See Notes to Financial Statements. 104 <Page> STATEMENT OF ASSETS & LIABILITIES Liberty Growth & Income Fund, Variable Series / June 30, 2003 (Unaudited) <Table> ASSETS: Investments, at cost $ 233,762,460 ------------- Investments, at value $ 241,044,858 Cash 319 Receivable for: Investments sold 4,819,618 Fund shares sold 50,514 Interest 223 Dividends 312,738 Expense reimbursement due from Manager 19,195 Deferred Trustees' compensation plan 11,914 ------------- TOTAL ASSETS 246,259,379 ------------- LIABILITIES: Payable for: Investments purchased 326,440 Fund shares repurchased 1,827,858 Distribution fee--Class B 236 Management fee 165,290 Transfer agent fee 594 Pricing and bookkeeping fees 9,739 Merger costs 28,600 Reports to Shareholders 59,078 Deferred Trustees' fee 11,914 Other liabilities 10,626 ------------- TOTAL LIABILITIES 2,440,375 ------------- NET ASSETS $ 243,819,004 ============= COMPOSITION OF NET ASSETS: Paid-in capital $ 285,555,050 Undistributed net investment income 1,483,755 Accumulated net realized loss (50,502,199) Net unrealized appreciation on investments 7,282,398 ------------- NET ASSETS $ 243,819,004 ============= CLASS A: Net assets $ 204,920,304 Shares outstanding 15,880,221 ============= Net asset value per share $ 12.90 ============= CLASS B: Net assets $ 38,898,700 Shares outstanding 3,019,361 ============= Net asset value per share $ 12.88 ============= </Table> See Notes to Financial Statements. 105 <Page> STATEMENT OF OPERATIONS Liberty Growth & Income Fund, Variable Series For the Six Months Ended June 30, 2003 (Unaudited) <Table> INVESTMENT INCOME: Dividends $ 2,238,267 Interest 30,484 ------------- Total Investment Income (net of foreign taxes withheld of $51,751) 2,268,751 ------------- EXPENSES: Management fee 725,568 Distribution fee--Class B 39,072 Pricing and bookkeeping fees 34,701 Transfer agent fee 3,720 Trustees' fee 4,253 Custody fee 5,609 Other expenses 40,462 ------------- Total Expenses 853,385 Fees and expenses waived or reimbursed by Manager: (60,799) Fees reimbursed by Distributor--Class B (14,089) ------------- Net Expenses 778,497 ------------- Net Investment Income 1,490,254 ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized loss on investments (21,466,615) Net change in unrealized appreciation/depreciation on investments 44,200,452 ------------- Net Gain 22,733,837 ------------- Net Increase in Net Assets from Operations $ 24,224,091 ============= </Table> See Notes to Financial Statements. 106 <Page> STATEMENT OF CHANGES IN NET ASSETS Liberty Growth & Income Fund, Variable Series <Table> <Caption> (UNAUDITED) SIX MONTHS YEAR ENDED ENDED JUNE 30, DECEMBER 31, INCREASE (DECREASE) IN NET ASSETS: 2003 2002 - ---------------------------------- --------------- -------------- OPERATIONS: Net investment income $ 1,490,254 $ 1,860,948 Net realized loss on investments (21,466,615) (28,158,847) Net change in unrealized appreciation/depreciation on investments 44,200,452 (19,133,885) --------------- -------------- Net Increase (Decrease) from Operations 24,224,091 (45,431,784) --------------- -------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income: Class A -- (1,556,810) Class B -- (354,201) --------------- -------------- Total Distributions Declared to Shareholders -- (1,911,011) --------------- -------------- SHARE TRANSACTIONS: Class A: Subscriptions 2,091,226 6,842,505 Proceeds received in connection with merger 88,842,502 -- Distributions reinvested -- 1,556,810 Redemptions (20,239,046) (35,673,636) --------------- -------------- Net Increase (Decrease) 70,694,682 (27,274,321) --------------- -------------- Class B: Subscriptions 10,513,574 13,543,954 Proceeds received in connection with merger 7,935,880 -- Distributions reinvested -- 354,201 Redemptions (10,640,209) (3,985,341) --------------- -------------- Net Increase 7,809,245 9,912,814 --------------- -------------- Net Increase (Decrease) from Share Transactions 78,503,927 (17,361,507) --------------- -------------- Total Increase (Decrease) in Net Assets 102,728,018 (64,704,302) NET ASSETS: Beginning of period 141,090,986 205,795,288 --------------- -------------- End of period (including undistributed net investment income of $1,483,755 and overdistributed net investment income of $(6,499)) $ 243,819,004 $ 141,090,986 =============== ============== CHANGES IN SHARES: Class A: Subscriptions 177,833 498,777 Issued in connection with merger 7,939,987 -- Issued for distributions reinvested -- 131,377 Redemptions (1,706,957) (2,737,362) --------------- -------------- Net Increase (Decrease) 6,410,863 (2,107,208) --------------- -------------- Class B: Subscriptions 929,860 950,359 Issued in connection with merger 710,257 -- Issued for distributions reinvested -- 29,941 Redemptions (944,168) (314,657) --------------- -------------- Net Increase 695,949 665,643 --------------- -------------- </Table> See Notes to Financial Statements. 107 <Page> NOTES TO FINANCIAL STATEMENTS Liberty Growth & Income Fund, Variable Series / June 30, 2003 (Unaudited) NOTE 1. ORGANIZATION AND ACCOUNTING POLICIES ORGANIZATION--Liberty Growth & Income Fund, Variable Series (the "Fund"), a series of Liberty Variable Investment Trust (the "Trust"), is a diversified portfolio of a Massachusetts business trust, registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund's investment goal is to seek long-term growth and income. The Fund's capitalization consists of an unlimited number of shares of beneficial interest without par value that represent a separate series of the Trust. The Fund offers two classes of shares: Class A and Class B. Each share of a class represents an equal proportionate beneficial interest in that share class and, when issued and outstanding, is fully paid and nonassessable. Shareholders would be entitled to share proportionally in the net assets of their share class available for distribution to shareholders upon liquidation of the Fund. Shares of the Fund are available and are being marketed exclusively as a pooled funding vehicle for variable annuity contracts ("VA contracts") and Variable Life Insurance Policies ("VLI Policies") offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies"). The Participating Insurance Companies and their separate accounts own all the shares of the Fund. On April 1, 2003, Liberty Advisory Services Corp., the investment advisor to the Fund and Colonial Management Associates, Inc. ("Colonial"), the sub-advisor to the Fund, merged into Columbia Management Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co., an indirect wholly owned subsidiary of FleetBoston Financial Corporation. At the time of the merger, Columbia assumed the obligations of Liberty Advisory Services Corp. and Colonial with respect to the Fund. The merger did not change the way the Fund is managed, the investment personnel assigned to manage the Fund or the fees paid by the Fund. Columbia provides investment management and advisory services to the Fund pursuant to its Management Agreement with the Fund. Columbia also provides pricing and bookkeeping services to the Fund. Liberty Funds Distributor, Inc. ("LFD"), an affiliate of Columbia, serves as the principal underwriter of the Fund. On April 7, 2003, the Liberty Value Fund, Variable Series (the target fund), merged into the Colonial U.S. Growth & Income Fund, Variable Series (the surviving fund). The Colonial U.S. Growth & Income Fund, Variable Series received a tax-free transfer of assets from the Liberty Value Fund, Variable Series as follows: <Table> <Caption> SHARES NET ASSETS UNREALIZED ISSUED RECEIVED DEPRECIATION(1) --------- ------------ --------------- 8,650,244 $ 96,778,382 $ 17,342,259 </Table> <Table> <Caption> NET ASSETS NET ASSETS NET ASSETS OF COLONIAL OF COLONIAL OF LIBERTY U.S. GROWTH & U.S. GROWTH & VALUE FUND, INCOME FUND, INCOME FUND, VARIABLE SERIES VARIABLE SERIES VARIABLE SERIES IMMEDIATELY IMMEDIATELY PRIOR TO PRIOR TO AFTER COMBINATION COMBINATION COMBINATION --------------- --------------- --------------- $ 126,206,600 $ 96,778,382 $ 222,984,982 </Table> (1) Unrealized depreciation is included in the Net Assets Received amount shown above. Also on April 7, 2003, subsequent to the merger described above, the Colonial U.S. Growth & Income Fund, Variable Series was renamed the Liberty Growth & Income Fund, Variable Series. Class A and Class B shares of the surviving fund were issued in exchange for Class A and Class B shares, respectively, of the target fund. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION AND TRANSACTIONS--Equity securities generally are valued at the last sale price or, in the case of unlisted or listed securities for which there were no sales during the day, at the current quoted bid price. Debt securities generally are valued by a pricing service based upon market transactions for normal, institutional-size trading units of similar securities. When management deems it appropriate, an over-the-counter or exchange bid quotation is used. Short-term obligations with a maturity of 60 days or less are valued at amortized cost. Investments for which market quotations are not readily available, or quotations which management believes are not appropriate, are valued at fair value under procedures approved by the Board of Trustees. 108 <Page> Security transactions are accounted for on the date the securities are purchased, sold or mature. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS--All income, expenses (other than the Class B distribution fee), and realized and unrealized gains (losses) are allocated to each class proportionately on a daily basis for purposes of determining the net asset value of each class. The per share data was calculated using average shares outstanding during the period. In addition, Class B net investment income per share data and ratios reflect the distribution fee applicable to Class B shares only. FEDERAL INCOME TAXES--Consistent with the Fund's policy to qualify as a regulated investment company and to distribute all of its taxable income, no federal income tax has been accrued. DISTRIBUTIONS TO SHAREHOLDERS--The Fund intends to distribute as income dividends or capital gains distributions, at least annually, substantially all of its net investment income and net profits realized from the sale of investments. All dividends and distributions are reinvested in additional shares of the Fund at net asset value as of the record date of the distribution. Income and capital gain distributions are determined in accordance with federal income tax regulations. OTHER--Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date. The Fund's custodian takes possession through the federal book-entry system of securities collateralizing repurchase agreements. Collateral is marked-to-market daily to ensure that the market value of the underlying assets remains sufficient to protect the Fund. The Fund may experience costs and delays in liquidating the collateral if the issuer defaults or enters bankruptcy. NOTE 2. FEDERAL TAX INFORMATION Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. The following capital loss carryforwards, determined as of December 31, 2002, are available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: <Table> <Caption> YEAR OF CAPITAL LOSS EXPIRATION CARRYFORWARD ---------- ------------ 2010 $ 28,492,336 </Table> NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES MANAGEMENT FEE--Columbia receives a monthly fee equal to 0.80% annually of the first $1 billion of the Fund's average daily net assets and 0.70% in excess of $1 billion. PRICING AND BOOKKEEPING FEES--Columbia is responsible for providing pricing and bookkeeping services to the Fund under a Pricing and Bookkeeping Agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Bank & Trust Company ("State Street"). Columbia pays fees to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual flat fee of $10,000, paid monthly, and in any month that the Fund's average daily net assets are more than $50 million, a monthly fee equal to the average daily net assets of the Fund for that month multiplied by a fee rate that is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. For the six months ended June 30, 2003, the annualized net asset based fee rate was .032%. The Fund also pays out-of-pocket costs for pricing services. TRANSFER AGENT FEE--Liberty Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia, provides shareholder services for an annual rate of $7,500. DISTRIBUTION FEE--The Fund has adopted a 12b-1 plan, which requires it to pay LFD a monthly distribution fee equal to 0.25% annually of Class B average daily net assets. EXPENSE LIMITS--Effective April 7, 2003, Columbia has voluntarily agreed to waive expenses at the rate of 0.11% annually of the Fund's average daily net assets. In addition, LFD has voluntarily agreed to waive Class B distribution fees at the rate of 0.02% annually of the Class B average daily net assets. These waiver agreements will continue until April 7, 2004, after which they may be modified or terminated at any time. 109 <Page> Prior to April 7, 2003, Liberty Advisory Services Corp. and LFD had voluntarily agreed to reimburse all expenses, including management fees and distribution fees, but excluding interest, taxes, brokerage and extraordinary expenses incurred by the Fund in excess of 1.00% annually of the Fund's average daily net assets. LFD would first reimburse the Class B distribution fee up to 0.25% annually to reach the 1.00% limit on Class B expenses. If additional reimbursement were necessary to meet the limit for each class, the Manager would then reimburse other expenses to the extent necessary. If additional reimbursement were still necessary to reach the expense limit, the Manager would then waive a portion of its management fee to reach the expense limit. OTHER--The Fund pays no compensation to its officers, all of whom are employees of Columbia or its affiliates. The Fund's Independent Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. NOTE 4. PORTFOLIO INFORMATION INVESTMENT ACTIVITY--For the six months ended June 30, 2003, purchases and sales of investments, other than short-term obligations, were $65,379,140 and $92,029,460, respectively. Unrealized appreciation (depreciation) at June 30, 2003, based on cost of investments for both financial statement and federal income tax purposes, was: <Table> Gross unrealized appreciation $ 23,537,322 Gross unrealized depreciation (16,254,924) ------------- Net unrealized appreciation $ 7,282,398 ============= </Table> OTHER--The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. 110 <Page> FINANCIAL HIGHLIGHTS Liberty Growth & Income Fund, Variable Series--Class A Shares Selected data for a share outstanding throughout each period is as follows: <Table> <Caption> (UNAUDITED) SIX MONTHS YEAR ENDED DECEMBER 31, ENDED ----------------------------------------------------------------- JUNE 30, 2003 2002 2001 2000 1999 1998 ------------- --------- --------- --------- --------- --------- NET ASSET VALUE, BEGINNING OF PERIOD $ 11.97 $ 15.55 $ 18.27 $ 19.85 $ 18.79 $ 16.29 ------------- --------- --------- --------- --------- --------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (a) 0.10 0.15 0.16 0.17 0.14 0.16 Net realized and unrealized gain (loss) on investments 0.83 (3.56) (0.35) 0.54 2.07 3.12 ------------- --------- --------- --------- --------- --------- Total from Investment Operations 0.93 (3.41) (0.19) 0.71 2.21 3.28 ------------- --------- --------- --------- --------- --------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- (0.17) (0.15) (0.17) (0.11) (0.12) In excess of net investment income -- -- -- --(b) -- -- From net realized gains -- -- (2.34) (2.12) (1.04) (0.64) In excess of net realized gains -- -- -- -- -- (0.02) Return of capital -- -- (0.04) -- -- -- ------------- --------- --------- --------- --------- --------- Total Distributions Declared to Shareholders -- (0.17) (2.53) (2.29) (1.15) (0.78) ------------- --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 12.90 $ 11.97 $ 15.55 $ 18.27 $ 19.85 $ 18.79 ============= ========= ========= ========= ========= ========= Total return (c)(d) 7.77%(e)(f) (21.95)% (0.60)% 3.60% 12.00% 20.15% RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (g) 0.83%(h) 0.88% 0.96% 0.88% 0.88% 0.90% Net investment income (g) 1.67%(h) 1.08% 0.92% 0.85% 0.69% 0.88% Waiver/reimbursement 0.07%(h) -- -- -- -- -- Portfolio turnover rate 38%(f) 69% 53% 120% 101% 64% Net assets, end of period (000's) $ 204,920 $ 113,335 $ 180,053 $ 203,366 $ 212,355 $ 146,239 </Table> (a) Per share data was calculated using average shares outstanding during the period. (b) Round to less than $0.01 per share. (c) Total return at net asset value assuming all distributions reinvested. (d) Total return figure does not include any insurance company charges associated with a variable annuity. If included, total return would be reduced. (e) Had the Manager and/or Distributor not waived or reimbursed a portion of expenses, total return would have been reduced. (f) Not annualized. (g) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (h) Annualized. 111 <Page> SHAREHOLDER MEETING RESULTS Liberty Growth & Income Fund, Variable Series RESULTS OF THE ANNUAL MEETING OF SHAREHOLDERS On February 19, 2003, the Annual Meeting of Shareholders of the Trust was held to conduct a vote for or against the approval of the following items listed on the Trust's Proxy Statement for said Meeting. On December 2, 2002, the record date for the Meeting, the Liberty Value Fund, Variable Series had 10,198,577.979 common shares outstanding. The votes cast were as follows: SHAREHOLDER RESPONSE SUMMARY REPORT LIBERTY VARIABLE INVESTMENT TRUST/STEINROE VARIABLE INVESTMENT TRUST LIBERTY VALUE FUND, VARIABLE SERIES FEBRUARY 19, 2003 1. To approve an Agreement and Plan of Reorganization providing for the sale of all of the assets of Liberty Value Fund, Variable Series to, and the assumption of all of the liabilities of the Liberty Value Fund, Variable Series by, the Colonial U.S. Growth & Income Fund, Variable Series, in exchange for shares of the Colonial U.S. Growth & Income Fund, Variable Series and the distribution of such shares to the shareholders of the Liberty Value Fund, Variable Series in complete liquidation of the Liberty Value Fund, Variable Series. <Table> <Caption> % OF % OF NO. OF OUTSTANDING SHARES SHARES SHARES VOTED -------------- ----------- ------- Affirmative 9,014,841.643 88.393% 88.393% Against 418,060.682 4.099% 4.099% Abstain 765,675.654 7.508% 7.508% TOTAL 10,198,577.979 100.000% 100.000% <Caption> **FUND TOTALS: SHARES RECORD TOTAL 10,198,577.979 VOTED SHARES 10,198,577.979 PERCENT VOTED 100.000% </Table> 112 <Page> PORTFOLIO MANAGER'S DISCUSSION Liberty S&P 500 Index Fund, Variable Series / June 30, 2003 Liberty S&P 500 Index Fund, Variable Series seeks capital appreciation by matching the performance of the S&P 500 Index that measures the investment returns of stocks of large US companies. Tom O'Brien, a principal of SSgA Funds Management, Inc., is the portfolio manager of the fund. After a relatively weak start to the new year, returns on stocks were positive during the first half of 2003. The S&P 500 Index rose 11.75% for the six-month period ended June 30, 2003. The fund's performance was comparable to the index for the period. Uncertainty over Iraq quickly dissipated when it became apparent that the major military campaigns of war would be brief and the US economy was stabilizing. Investors responded favorably to fiscal stimulus in the form of a tax package, monetary stimulus from a cut in interest rates and reduced geopolitical concerns. Large-cap stocks trailed both mid-cap and small-cap stocks during the first half of the year. Overall, small-cap stocks were the best performers. So far this year, value stocks have edged out growth stocks. ALL SECTORS RALLY All ten economic sectors posted gains for the first half of 2003. In an environment which favored sectors that had suffered the worst beatings over the past three years, information technology made the largest positive contribution to returns. Intel, Cisco Systems and Dell Computer turned in the strongest performances (1.5%, 1.3% and 0.9% of net assets, respectively). The financial sector, which struggled early in the year, was another standout performer helped by low interest rates and an outlook for economic improvement. Citigroup, JP Morgan Chase and Bank of America also made strong gains (2.4%, 0.7% and 1.3% of net assets, respectively). In telecommunications, the smallest sector in the S&P 500 Index, Nextel (0.2% of net assets) was the strongest performer. The industrial and financial sectors were also home to some of the index's weakest performers. In the industrial sector, Automatic Data Processing (0.2% of net assets) dampened the sector's positive return. ADP shares had a double-digit loss for the period. The weakest performers in the financial sector included AIG, Freddie Mac and Charles Schwab (1.6%, 0.4% and 0.1% of net assets, respectively). In the telecommunications sector, AT&T (0.2% of net assets) had the most significant negative impact on results. The stock lost more than 24% during the period. FOCUS ON COST-EFFECTIVE EXECUTION Our focus on cost-effective trade execution is the hallmark of our management style. Unlike actively managed funds where the portfolio managers spend time researching which stocks to include or exclude from a fund, we concentrate on trading in a low-cost manner when buying the stocks listed in the S&P 500 Index. We manage the fund with a full replication investment strategy. This approach means that the fund generally holds each of the 500 securities included in the S&P 500 Index in approximately the same weighting as the company's representation in the index. A full replication strategy tends to match the performance of the index more closely than other methods. Of course, the fund's return can diverge from the index: the fund incurs trading costs associated with seeking to maintain the appropriate weight of each security in the index. In addition, the fund may be required to sell securities to meet redemption demand or buy securities to invest new monies that come into the fund. Economic and market conditions can frequently change. There is no assurance that the trends described here will continue or commence. The primary risks involved with investing in the fund include equity risk, market risk and tracking error risk. Unlike the S&P 500 Index, the fund incurs administrative expenses and transaction costs in trading stocks. The composition of the S&P 500 Index and the stocks held by the fund may occasionally diverge. Holdings are disclosed as of June 30, 2003, and are subject to change. 113 <Page> PERFORMANCE INFORMATION Liberty S&P 500 Index Fund, Variable Series / June 30, 2003 AVERAGE ANNUAL TOTAL RETURN AS OF JUNE 30, 2003 (%) <Table> <Caption> (CUMULATIVE) 6-MONTH 1-YEAR LIFE - -------------------------------------------------------------- Class A (5/30/00) 11.46 -0.29 -10.11 S&P 500 Index(1) 11.75 0.25 -10.20 </Table> Inception date of share class is in parentheses. [CHART] VALUE OF A $10,000 INVESTMENT, 5/30/00 - 6/30/03 <Table> <Caption> CLASS A SHARES S&P 500 INDEX May-00 $ 10,008 $ 10,000 06/01/2000 - 06/30/2000 $ 10,316 $ 10,246 07/01/2000 - 07/31/2000 $ 10,167 $ 10,086 08/01/2000 - 08/31/2000 $ 10,792 $ 10,713 09/01/2000 - 09/30/2000 $ 10,225 $ 10,147 10/01/2000 - 10/31/2000 $ 10,209 $ 10,104 11/01/2000 - 11/30/2000 $ 9,426 $ 9,308 12/01/2000 - 12/31/2000 $ 9,471 $ 9,354 01/01/2001 - 01/31/2001 $ 9,815 $ 9,686 02/01/2001 - 02/28/2001 $ 8,944 $ 8,803 03/01/2001 - 03/31/2001 $ 8,367 $ 8,246 04/01/2001 - 04/30/2001 $ 9,012 $ 8,886 05/01/2001 - 05/31/2001 $ 9,070 $ 8,946 06/01/2001 - 06/30/2001 $ 8,835 $ 8,728 07/01/2001 - 07/31/2001 $ 8,743 $ 8,643 08/01/2001 - 08/31/2001 $ 8,207 $ 8,102 09/01/2001 - 09/30/2001 $ 7,554 $ 7,449 10/01/2001 - 10/31/2001 $ 7,688 $ 7,591 11/01/2001 - 11/30/2001 $ 8,274 $ 8,173 12/01/2001 - 12/31/2001 $ 8,336 $ 8,245 01/01/2002 - 01/31/2002 $ 8,201 $ 8,125 02/01/2002 - 02/28/2002 $ 8,042 $ 7,968 03/01/2002 - 03/31/2002 $ 8,336 $ 8,267 04/01/2002 - 04/30/2002 $ 7,822 $ 7,766 05/01/2002 - 05/31/2002 $ 7,764 $ 7,710 06/01/2002 - 06/30/2002 $ 7,216 $ 7,161 07/01/2002 - 07/31/2002 $ 6,652 $ 6,603 08/01/2002 - 08/31/2002 $ 6,694 $ 6,646 09/01/2002 - 09/30/2002 $ 5,970 $ 5,924 10/01/2002 - 10/31/2002 $ 6,483 $ 6,445 11/01/2002 - 11/30/2002 $ 6,853 $ 6,824 12/01/2002 - 12/31/2002 $ 6,454 $ 6,423 01/01/2003 - 01/31/2003 $ 6,284 $ 6,256 02/01/2003 - 02/28/2003 $ 6,182 $ 6,162 03/01/2003 - 03/31/2003 $ 6,242 $ 6,222 04/01/2003 - 04/30/2003 $ 6,751 $ 6,734 05/01/2003 - 05/31/2003 $ 7,100 $ 7,088 Jun-03 $ 7,195 $ 7,178 </Table> <Table> <Caption> NET ASSET VALUE PER SHARE ($) 12/31/02 6/30/03 - ------------------------------------------------------ Class A 7.59 8.46 </Table> PAST PERFORMANCE CANNOT PREDICT FUTURE INVESTMENT RESULTS. SHARE PRICE AND INVESTMENT RETURN WILL VARY, SO YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. Total return performance includes changes in share price and reinvestment of all distributions. The S&P (Standard & Poor's) 500 Index is an unmanaged index that tracks the performance of 500 widely held, large-capitalization US stocks. Indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. MUTUAL FUND PERFORMANCE CHANGES OVERTIME. CURRENT RETURNS FOR THE FUND MAY BE DIFFERENT THAN THAT SHOWN. Performance numbers reflect all fund expenses, but do not include any insurance charges imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. (1) Index performance is from May 31, 2000. 114 <Page> INVESTMENT PORTFOLIO Liberty S&P 500 Index Fund, Variable Series / June 30, 2003 (Unaudited) <Table> <Caption> SHARES VALUE ------------ ------------ COMMON STOCKS--96.8% CONSUMER DISCRETIONARY--13.3% AUTO COMPONENTS--0.2% Cooper Tire & Rubber Co. 300 $ 5,277 Dana Corp. 473 5,468 Delphi Corp. 2,141 18,477 Goodyear Tire & Rubber Co. (a) 531 2,788 Johnson Controls, Inc. 330 28,248 Visteon Corp. 346 2,377 ------------ 62,635 ------------ AUTOMOBILES--0.6% Ford Motor Co. 7,108 78,117 General Motors Corp. 2,170 78,120 Harley-Davidson, Inc. 1,196 47,673 ------------ 203,910 ------------ HOTELS RESTAURANTS & LEISURE--1.1% Carnival Corp. 2,435 79,162 Darden Restaurants, Inc. 571 10,838 Harrah's Entertainment, Inc. 419 16,861 Hilton Hotels Corp. 1,361 17,407 International Game Technology, Inc. 319 32,643 Marriott International, Inc., Class A 926 35,577 McDonald's Corp. 4,899 108,072 Starbucks Corp. (a) 1,504 36,878 Starwood Hotels & Resorts Worldwide, Inc. 743 21,242 Wendy's International, Inc. 440 12,747 Yum! Brands, Inc. 1,161 34,319 ------------ 405,746 ------------ HOUSEHOLD DURABLES--0.5% American Greetings Corp., Class A (a) 257 5,047 Black & Decker Corp. 278 12,079 Centex Corp. 250 19,447 Fortune Brands, Inc. 593 30,955 KB Home Corp. 190 11,776 Leggett & Platt, Inc. 716 14,678 Maytag Corp. 251 6,129 Newell Rubbermaid, Inc. 1,050 29,400 Pulte Homes, Inc. 223 13,750 Snap-On, Inc. 238 6,909 Stanley Works 381 10,516 Tupperware Corp. 150 2,154 Whirlpool Corp. 253 16,116 ------------ 178,956 ------------ INTERNET & CATALOG RETAIL--0.3% eBay, Inc. (a) 1,222 127,308 ------------ LEISURE EQUIPMENT & PRODUCTS--0.2% Brunswick Corp. 391 9,783 Eastman Kodak Co. 1,148 31,398 Hasbro, Inc. 672 11,753 Mattel, Inc. 1,765 33,394 ------------ 86,328 ------------ MEDIA--4.0% AOL Time Warner, Inc. (a) 17,315 278,598 Clear Channel Communications, Inc. 2,366 100,295 Comcast Corp., Special Class A (a) 8,659 $ 261,329 Dow Jones & Co., Inc. 285 12,264 Gannett Co., Inc. 1,035 79,498 Interpublic Group Cos., Inc. 1,472 19,695 Knight-Ridder, Inc. 312 21,506 McGraw-Hill Cos., Inc. 761 47,182 Meredith Corp. 157 6,908 New York Times Co., Class A 607 27,618 Omnicom Group, Inc. 733 52,556 Tribune Co. 1,193 57,622 Univision Communications, Inc., Class A (a) 845 25,688 Viacom, Inc., Class B (a) 6,823 297,892 Walt Disney Co. 7,852 155,077 ------------ 1,443,728 ------------ MULTILINE RETAIL--3.8% Big Lots, Inc. (a) 401 6,031 Costco Wholesale Corp. 1,771 64,819 Dillard's, Inc., Class A 322 4,337 Dollar General Corp. 1,210 22,095 Family Dollar Stores, Inc. 643 24,530 Federated Department Stores, Inc. 724 26,679 JC Penney Co., Inc. 976 16,446 Kohl's Corp. (a) 1,308 67,205 May Department Stores Co. 1,091 24,286 Nordstrom, Inc. 520 10,150 Sears, Roebuck and Co. 1,239 41,680 Target Corp. 3,500 132,440 Wal-Mart Stores, Inc. 16,976 911,102 ------------ 1,351,800 ------------ SPECIALTY RETAIL--2.3% Autonation, Inc. (a) 1,004 15,783 AutoZone, Inc. (a) 388 29,476 Bed Bath & Beyond, Inc. (a) 1,177 45,679 Best Buy Co., Inc. (a) 1,261 55,383 Circuit City Stores, Inc. 672 5,914 Gap, Inc. 3,436 64,459 Home Depot, Inc. 8,917 295,331 Limited Brands 2,076 32,178 Lowe's Cos., Inc. 3,007 129,151 Office Depot, Inc. (a) 1,176 17,064 RadioShack Corp. 605 15,918 Sherwin-Williams Co. 518 13,924 Staples, Inc. (a) 1,861 34,149 Tiffany & Co. 589 19,249 TJX Cos., Inc. 2,106 39,677 Toys R US, Inc. (a) 846 10,254 ------------ 823,589 ------------ TEXTILES & APPAREL--0.3% Jones Apparel Group, Inc. (a) 531 15,537 Liz Claiborne, Inc. 406 14,312 Nike, Inc. 1,029 55,041 Reebok International, Ltd. (a) 285 9,585 VF Corp. 453 15,388 ------------ 109,863 ------------ </Table> See Notes to Investment Portfolio. 115 <Page> <Table> <Caption> SHARES VALUE ------------ ------------ CONSUMER STAPLES--8.6% BEVERAGES--2.7% Anheuser-Busch Cos., Inc. 3,213 $ 164,024 Brown-Forman Corp., Class B 231 18,161 Coca-Cola Co. 9,562 443,772 Coca-Cola Enterprises, Inc. 1,805 32,761 Coors (Adolph) 129 6,318 Pepsi Bottling Group, Inc. 1,032 20,661 PepsiCo, Inc. 6,622 294,679 ------------ 980,376 ------------ FOOD & DRUG RETAILING--1.0% Albertson's, Inc. 1,373 26,362 CVS Corp. 1,494 41,877 Kroger Co. 3,000 50,040 Safeway, Inc. (a) 1,739 35,580 Supervalu, Inc. 529 11,278 Sysco Corp. 2,531 76,031 Walgreen Co. 3,948 118,835 Winn-Dixie Stores, Inc. 458 5,638 ------------ 365,641 ------------ FOOD PRODUCTS--1.2% Archer-Daniels-Midland Co. 2,421 31,158 Campbell Soup Co. 1,618 39,641 ConAgra Foods, Inc. 2,106 49,702 General Mills, Inc. 1,431 67,844 Hershey Foods Corp. 535 37,268 HJ Heinz Co. 1,314 43,336 Kellogg Co. 1,599 54,958 McCormick & Co., Inc. 513 13,954 Sara Lee Corp. 3,046 57,295 WM Wrigley Jr. Co. 884 49,707 ------------ 444,863 ------------ HOUSEHOLD PRODUCTS--2.0% Clorox Co. 826 35,229 Colgate-Palmolive Co. 2,074 120,188 Kimberly-Clark Corp. 1,985 103,498 Procter & Gamble Co. 5,025 448,130 ------------ 707,045 ------------ PERSONAL PRODUCTS--0.6% Alberto-Culver Co., Inc., Class B 219 11,191 Avon Products, Inc. 904 56,229 Gillette Co. 4,021 128,109 ------------ 195,529 ------------ TOBACCO--1.1% Altria Group, Inc. 7,866 357,431 RJ Reynolds Tobacco Holdings, Inc. 300 11,163 UST, Inc. 624 21,859 ------------ 390,453 ------------ ENERGY--5.7% ENERGY EQUIPMENT & SERVICES--0.8% Baker Hughes, Inc. 1,262 42,365 BJ Services Co. (a) 581 21,706 Halliburton Co. 1,711 $ 39,353 Nabors Industries, Ltd. (a) 534 21,120 Noble Corp. (a) 517 17,733 Rowan Cos., Inc. 340 7,616 Schlumberger, Ltd. 2,246 106,842 Transocean, Inc. (a) 1,237 27,177 ------------ 283,912 ------------ OIL & GAS--4.9% Amerada Hess Corp. 342 16,820 Anadarko Petroleum Corp. 989 43,981 Apache Corp. 627 40,793 Ashland, Inc. 276 8,468 Burlington Resources, Inc. 831 44,932 ChevronTexaco Corp. 4,151 299,702 ConocoPhillips 2,605 142,754 Devon Energy Corp. 943 50,356 EL Paso Corp. 2,264 18,293 EOG Resources, Inc. 445 18,619 Exxon Mobil Corp. 25,894 929,854 Kerr-McGee Corp. 388 17,382 Marathon Oil Corp. 1,215 32,015 Occidental Petroleum Corp. 1,475 49,486 Sunoco, Inc. 339 12,794 Unocal Corp. 1,014 29,092 ------------ 1,755,341 ------------ FINANCIALS--19.8% BANKS--7.1% AmSouth Bancorp 1,295 28,283 Bank of America Corp. 5,814 459,480 Bank of New York Co., Inc. 2,963 85,186 Bank One Corp. 4,474 166,343 BB&T Corp. 1,829 62,735 Charter One Financial, Inc. 826 25,755 Comerica, Inc. 688 31,992 Fifth Third Bancorp 2,225 127,582 First Tennessee National Corp. 467 20,506 FleetBoston Financial Corp. (b) 4,044 120,147 Golden West Financial Corp. 604 48,326 Huntington Bancshares, Inc. 861 16,807 KeyCorp 1,590 40,179 Marshall & Ilsley Corp. 830 25,381 Mellon Financial Corp. 1,684 46,731 National City Corp. 2,367 77,425 North Fork Bancorporation, Inc. 612 20,845 Northern Trust Corp. 833 34,811 PNC Financial Services Group, Inc. 1,106 53,984 Regions Financial Corp. 874 29,524 SouthTrust Corp. 1,297 35,278 SunTrust Banks, Inc. 1,096 65,037 Synovus Financial Corp. 1,216 26,144 Union Planters Corp. 802 24,886 US Bancorp 7,477 183,186 Wachovia Corp. 5,222 208,671 </Table> See Notes to Investment Portfolio. 116 <Page> <Table> <Caption> SHARES VALUE ------------ ------------ Washington Mutual, Inc. 3,642 $ 150,415 Wells Fargo & Co. 6,484 326,794 Zions Bancorporation 340 17,207 ------------ 2,559,640 ------------ DIVERSIFIED FINANCIALS--7.9% American Express Co. 5,045 210,931 Bear Stearns Cos., Inc. 392 28,389 Capital One Financial Corp. 867 42,639 Charles Schwab Corp. 5,230 52,771 Citigroup, Inc. 19,959 854,245 Countrywide Financial Corp. 497 34,576 Fannie Mae 3,815 257,284 Federated Investors, Inc. 428 11,736 Franklin Resources, Inc. 967 37,781 Freddie Mac 2,675 135,810 Goldman Sachs Group, Inc. 1,815 152,006 Janus Capital Group, Inc. 861 14,120 JP Morgan Chase & Co. 7,821 267,322 Lehman Brothers Holdings, Inc. 941 62,558 MBNA Corp. 4,930 102,741 Merrill Lynch & Co., Inc. 3,625 169,215 Moody's Corp. 553 29,149 Morgan Stanley 4,234 181,004 Principal Financial Group 1,260 40,635 Providian Financial Corp. (a) 1,146 10,612 SLM Corp. 1,785 69,918 State Street Corp. 1,316 51,850 T Rowe Price Group, Inc. 462 17,440 ------------ 2,834,732 ------------ INSURANCE--4.5% ACE, Ltd. 1,033 35,422 Aflac, Inc. 2,018 62,054 Allstate Corp. 2,715 96,790 AMBAC Financial Group, Inc. 390 25,837 American International Group, Inc. 10,119 558,366 AON Corp. 1,231 29,642 Chubb Corp. 713 42,780 Cincinnati Financial Corp. 593 21,994 Hartford Financial Services Group, Inc. 1,095 55,144 Jefferson-Pilot Corp. 545 22,596 John Hancock Financial Services, Inc. 1,072 32,943 Lincoln National Corp. 717 25,547 Loews Corp. 763 36,082 Marsh & McLennan Cos., Inc. 2,072 105,817 MBIA, Inc. 546 26,618 Metlife, Inc. 2,940 83,261 MGIC Investment Corp. 359 16,744 Progressive Corp. 847 61,916 Prudential Financial, Inc. 2,194 73,828 SAFECO Corp. 555 19,580 St. Paul Cos. 899 32,822 Torchmark Corp. 487 18,141 Travelers Property Casualty Corp., Class B 3,909 61,645 UnumProvident Corp. 1,114 $ 14,939 XL Capital, Ltd., Class A 534 44,322 ------------ 1,604,830 ------------ REAL ESTATE--0.3% Apartment Investment & Management Co. 400 13,840 Equity Office Properties Trust 1,562 42,190 Equity Residential 1,081 28,052 Plum Creek Timber Co., Inc. 682 17,698 Simon Property Group Inc. 700 27,321 ------------ 129,101 ------------ HEALTH CARE--14.4% BIOTECHNOLOGY--1.3% Amgen, Inc. (a) 4,894 325,157 Biogen, Inc. (a) 623 23,674 Chiron Corp. (a) 740 32,353 Genzyme Corp. (a) 842 35,196 MedImmune, Inc. (a) 1,006 36,588 ------------ 452,968 ------------ HEALTH CARE EQUIPMENT & SUPPLIES--1.9% Applera Corp. - Applied Biosystems Group 804 15,300 Bausch & Lomb, Inc. 179 6,712 Baxter International, Inc. 2,307 59,982 Becton Dickinson & Co. 999 38,811 Biomet, Inc. 1,017 29,147 Boston Scientific Corp. (a) 1,577 96,355 CR Bard, Inc. 213 15,189 Guidant Corp. 1,226 54,422 Medtronic, Inc. 4,744 227,570 St. Jude Medical, Inc. 696 40,020 Stryker Corp. 776 53,831 Zimmer Holdings, Inc. 769 34,643 ------------ 671,982 ------------ HEALTH CARE PROVIDERS & SERVICES--1.7% Aetna, Inc. 606 36,481 AmerisourceBergen Corp. 412 28,572 Anthem, Inc. (a) 557 42,973 Cardinal Health, Inc. 1,744 112,139 Cigna Corp. 565 26,521 HCA, Inc. 1,994 63,888 Health Management Associates, Inc. 926 17,085 Humana, Inc. (a) 550 8,305 IMS Health, Inc. 867 15,597 Manor Care, Inc. (a) 358 8,954 McKesson Corp. 1,149 41,065 Quest Diagnostics, Inc. (a) 421 26,860 Quintiles Transnational Corp. (a) 396 5,619 Tenet Healthcare Corp. (a) 1,880 21,902 UnitedHealth Group, Inc. 2,282 114,670 WellPoint Health Networks (a) 581 48,978 ------------ 619,609 ------------ </Table> See Notes to Investment Portfolio. 117 <Page> <Table> <Caption> SHARES VALUE ------------ ------------ PHARMACEUTICALS--9.5% Abbott Laboratories 6,068 $ 265,536 Allergan, Inc. 508 39,167 Bristol-Myers Squibb Co. 7,543 204,792 Eli Lilly & Co. 4,366 301,123 Forest Laboratories, Inc. (a) 1,406 76,978 Johnson & Johnson 11,516 595,377 King Pharmaceuticals, Inc. (a) 854 12,605 Merck & Co., Inc. 8,700 526,785 Pfizer, Inc. 30,602 1,045,058 Schering-Plough Corp. 5,657 105,220 Watson Pharmaceuticals, Inc. (a) 462 18,651 Wyeth 5,164 235,220 ------------ 3,426,512 ------------ INDUSTRIALS--11.1% AEROSPACE & DEFENSE--1.7% Boeing Co. 3,240 111,197 General Dynamics Corp. 749 54,302 Goodrich Corp. 385 8,085 Honeywell International, Inc. 3,307 88,793 Lockheed Martin Corp. 1,764 83,913 Northrop Grumman Corp. 710 61,266 Raytheon Co. 1,584 52,019 Rockwell Collins, Inc. 673 16,576 United Technologies Corp. 1,812 128,344 ------------ 604,495 ------------ AIR FREIGHT & COURIERS--1.0% FedEx Corp. 1,157 71,769 Ryder System, Inc. 264 6,764 United Parcel Service, Inc. 4,374 278,624 ------------ 357,157 ------------ AIRLINES--0.2% Delta Air Lines, Inc. 400 5,872 Southwest Airlines Co. 3,039 52,271 ------------ 58,143 ------------ BUILDING PRODUCTS--0.2% American Standard Cos., Inc. (a) 292 21,588 Crane Co. 250 5,657 Masco Corp. 1,839 43,860 ------------ 71,105 ------------ COMMERCIAL SERVICES & SUPPLIES--1.9% Allied Waste Industries, Inc. (a) 770 7,738 Apollo Group, Inc., Class A (a) 675 41,688 Automatic Data Processing, Inc. 2,320 78,555 Avery Dennison Corp. 481 24,146 Cendant Corp. (a) 3,996 73,207 Cintas Corp. 682 24,170 Concord EFS, Inc. (a) 1,924 28,321 Convergys Corp. (a) 680 10,880 Deluxe Corp. 237 10,618 Equifax, Inc. 496 12,896 First Data Corp. 2,897 120,052 Fiserv, Inc. (a) 764 27,206 H&R Block, Inc. 670 $ 28,977 Monster Worldwide, Inc. (a) 400 7,892 Paychex, Inc. 1,472 43,144 Pitney Bowes, Inc. 952 36,566 Robert Half International, Inc. 600 11,364 RR Donnelley & Sons Co. 481 12,573 Sabre Holdings Corp. 556 13,705 Waste Management, Inc. 2,315 55,768 ------------ 669,466 ------------ CONSTRUCTION & ENGINEERING--0.0% Fluor Corp. 309 10,395 McDermott International, Inc. (a) 150 950 ------------ 11,345 ------------ ELECTRICAL EQUIPMENT--0.4% American Power Conversion Corp. 693 10,804 Cooper Industries, Ltd. 399 16,479 Emerson Electric Co. 1,627 83,140 Molex, Inc. 715 19,298 Power-One, Inc. (a) 167 1,194 Rockwell Automation, Inc. 698 16,640 Thomas & Betts Corp. (a) 150 2,168 ------------ 149,723 ------------ INDUSTRIAL CONGLOMERATES--4.1% 3M Co. 1,522 196,308 General Electric Co. 38,737 1,110,977 Textron, Inc. 565 22,046 Tyco International, Ltd. 7,684 145,842 ------------ 1,475,173 ------------ MACHINERY--1.1% Caterpillar, Inc. 1,334 74,250 Cummins, Inc. 180 6,460 Danaher Corp. 597 40,626 Deere & Co. 897 40,993 Dover Corp. 740 22,170 Eaton Corp. 298 23,426 Illinois Tool Works, Inc. 1,190 78,362 Ingersoll-Rand Co. 678 32,083 ITT Industries, Inc. 340 22,256 Navistar International Corp. 271 8,843 Paccar, Inc. 432 29,186 Pall Corp. 500 11,250 Parker Hannifin Corp. 456 19,147 ------------ 409,052 ------------ ROAD & RAIL--0.4% Burlington Northern Santa Fe Corp. 1,403 39,901 CSX Corp. 863 25,968 Norfolk Southern Corp. 1,562 29,990 Union Pacific Corp. 987 57,266 ------------ 153,125 ------------ TRADING COMPANIES & DISTRIBUTION--0.1% Genuine Parts Co. 645 20,646 WW Grainger, Inc. 325 15,197 ------------ 35,843 ------------ </Table> See Notes to Investment Portfolio. 118 <Page> <Table> <Caption> SHARES VALUE ------------ ------------ INFORMATION TECHNOLOGY--14.7% COMMUNICATIONS EQUIPMENT--2.2% ADC Telecommunications, Inc. (a) 3,064 $ 7,133 Andrew Corp. (a) 250 2,300 Avaya, Inc. (a) 1,498 9,677 CIENA Corp. (a) 2,019 10,479 Cisco Systems, Inc. (a) 27,238 454,602 Comverse Technology, Inc. (a) 736 11,062 Corning, Inc. (a) 4,874 36,019 JDS Uniphase Corp. (a) 5,393 18,929 Lucent Technologies, Inc. 15,398 31,258 Motorola, Inc. 8,908 84,002 Qualcomm, Inc. 3,045 108,859 Scientific-Atlanta, Inc. 605 14,423 Tellabs, Inc. (a) 1,419 9,323 ------------ 798,066 ------------ COMPUTERS & PERIPHERALS--3.8% Apple Computer, Inc. (a) 1,336 25,544 Dell Computer Corp. (a) 9,978 318,897 EMC Corp. 8,499 88,985 Gateway, Inc. (a) 845 3,084 Hewlett-Packard Co. 11,869 252,810 International Business Machines Corp. 6,704 553,080 Lexmark International Group, Inc. 498 35,243 NCR Corp. 380 9,736 Network Appliance, Inc. (a) 1,384 22,435 Sun Microsystems, Inc. (a) 12,407 57,072 ------------ 1,366,886 ------------ ELECTRONIC EQUIPMENT & INSTRUMENTS--0.4% Agilent Technologies, Inc. (a) 1,873 36,617 Jabil Circuit, Inc. (a) 815 18,012 Millipore Corp. 201 8,918 PerkinElmer, Inc. 537 7,416 Sanmina Corp. (a) 2,003 12,639 Solectron Corp. (a) 2,986 11,168 Symbol Technologies, Inc. 894 11,631 Tektronix, Inc. (a) 287 6,199 Thermo Electron Corp. (a) 677 14,231 Waters Corp. (a) 451 13,138 ------------ 139,969 ------------ INTERNET SOFTWARE & SERVICES--0.2% Yahoo, Inc. 2,295 75,184 ------------ IT CONSULTING & SERVICES--0.3% Computer Sciences Corp. (a) 741 28,247 Electronic Data Systems Corp. 1,791 38,417 Sungard Data Systems, Inc. (a) 1,123 29,097 Unisys Corp. (a) 1,137 13,962 ------------ 109,723 ------------ OFFICE ELECTRONICS--0.1% Xerox Corp. (a) 3,009 31,865 ------------ SEMICONDUCTOR EQUIPMENT & PRODUCTS--3.2% Advanced Micro Devices, Inc. 1,337 8,570 Altera Corp. (a) 1,517 24,879 Analog Devices, Inc. (a) 1,435 49,967 Applied Materials, Inc. (a) 6,369 $ 101,012 Applied Micro Circuits Corp. (a) 1,304 7,889 Broadcom Corp., Class A (a) 1,041 25,931 Intel Corp. 25,353 526,937 KLA-Tencor Corp. (a) 713 33,147 Linear Technology Corp. 1,244 40,069 LSI Logic Corp. (a) 1,591 11,264 Maxim Integrated Products, Inc. 1,287 44,003 Micron Technology, Inc. 2,324 27,028 National Semiconductor Corp. (a) 695 13,705 Novellus Systems, Inc. (a) 542 19,849 NVIDIA Corp. (a) 622 14,312 PMC - Sierra, Inc. (a) 698 8,188 QLogic Corp. (a) 355 17,157 Teradyne, Inc. 776 13,433 Texas Instruments, Inc. 6,663 117,269 Xilinx, Inc. (a) 1,326 33,561 ------------ 1,138,170 ------------ SOFTWARE--4.5% Adobe Systems, Inc. 893 28,639 Autodesk, Inc. 400 6,464 BMC Software, Inc. (a) 862 14,076 Citrix Systems, Inc. (a) 661 13,458 Computer Associates International, Inc. 2,239 49,885 Compuware Corp. (a) 1,536 8,863 Electronic Arts, Inc. (a) 578 42,766 Intuit, Inc. (a) 813 36,203 Mercury Interactive Corp. (a) 307 11,853 Microsoft Corp. 41,615 1,065,760 Novell, Inc. (a) 1,136 3,499 Oracle Corp. (a) 20,210 242,924 Parametric Technology Corp. (a) 691 2,108 PeopleSoft, Inc. (a) 1,281 22,533 Siebel Systems, Inc. (a) 1,775 16,934 Symantec Corp. (a) 547 23,991 Veritas Software Corp. (a) 1,602 45,929 ------------ 1,635,885 ------------ MATERIALS--2.6% CHEMICALS--1.4% Air Products & Chemicals, Inc. 892 37,107 Dow Chemical Co. 3,514 108,793 Du Pont EI de Nemours & Co. 3,824 159,231 Eastman Chemical Co. 267 8,456 Ecolab, Inc. 1,020 26,112 Engelhard Corp. 484 11,989 Great Lakes Chemical Corp. 155 3,162 Hercules, Inc. 383 3,792 International Flavors & Fragrances, Inc. 327 10,441 Monsanto Co. 955 20,666 PPG Industries, Inc. 669 33,945 Praxair, Inc. 626 37,623 Rohm & Haas Co. 881 27,337 Sigma-Aldrich Corp. 253 13,708 ------------ 502,362 ------------ </Table> See Notes to Investment Portfolio. 119 <Page> <Table> <Caption> SHARES VALUE ------------ ------------ CONSTRUCTION MATERIALS--0.0% Vulcan Materials Co. 422 $ 15,644 ------------ CONTAINERS & PACKAGING--0.2% Ball Corp. 190 8,647 Bemis Co., Inc. 198 9,266 Pactiv Corp. (a) 672 13,245 Sealed Air Corp. (a) 290 13,821 Temple-Inland, Inc. 213 9,140 ------------ 54,119 ------------ METALS & MINING--0.5% Alcoa, Inc. 3,268 83,334 Allegheny Technologies, Inc. 282 1,861 Freeport-McMoRan Copper & Gold, Inc., Class B 580 14,210 Newmont Mining Corp. 1,589 51,579 Nucor Corp. 294 14,362 Phelps Dodge Corp. (a) 314 12,039 United States Steel Corp. 409 6,695 Worthington Industries, Inc. 301 4,033 ------------ 188,113 ------------ PAPER & FOREST PRODUCTS--0.5% Boise Cascade Corp. 250 5,975 Georgia-Pacific Corp. 909 17,226 International Paper Co. 1,820 65,029 Louisiana-Pacific Corp. (a) 370 4,011 MeadWestvaco Corp. 811 20,032 Weyerhaeuser Co. 857 46,278 ------------ 158,551 ------------ TELECOMMUNICATION SERVICES--3.8% DIVERSIFIED TELECOMMUNICATION--3.3% Alltel Corp. 1,243 59,937 AT&T Corp. 3,044 58,597 BellSouth Corp. 7,149 190,378 CenturyTel, Inc. 588 20,492 Citizens Communications Co. 1,079 13,908 Qwest Communications International, Inc. 6,656 31,816 SBC Communications, Inc. 12,906 329,748 Sprint Corp. (FON Group) 3,492 50,285 Verizon Communications, Inc. 10,676 421,168 ------------ 1,176,329 ------------ WIRELESS TELECOMMUNICATION SERVICES--0.5% AT&T Wireless Services, Inc. (a) 10,488 86,106 Nextel Communications, Inc., Class A (a) 3,997 72,266 Sprint Corp. (PCS Group) (a) 3,746 21,540 ------------ 179,912 ------------ UTILITIES--2.8% ELECTRIC UTILITIES--2.2% Allegheny Energy, Inc. (a) 367 $ 3,101 Ameren Corp. 603 26,592 American Electric Power Co., Inc. 1,521 45,371 Cinergy Corp. 678 24,944 CMS Energy Corp. (a) 400 3,240 Consolidated Edison, Inc. 860 37,221 Constellation Energy Group, Inc. 608 20,854 Dominion Resources, Inc. 1,190 76,481 DTE Energy Co. 629 24,305 Edison International (a) 1,206 19,815 Entergy Corp. 869 45,866 Exelon Corp. 1,252 74,882 FirstEnergy Corp. 1,159 44,564 FPL Group, Inc. 726 48,533 PG&E Corp. (a) 1,622 34,305 Pinnacle West Capital Corp. 312 11,684 PPL Corp. 657 28,251 Progress Energy, Inc. 929 40,783 Public Service Enterprise Group, Inc. 900 38,025 Southern Co. 2,760 86,002 TECO Energy, Inc. 600 7,194 TXU Corp. 1,200 26,940 Xcel Energy, Inc. 1,457 21,913 ------------ 790,866 ------------ GAS UTILITIES--0.3% KeySpan Corp. 569 20,171 Kinder Morgan, Inc. 446 24,374 Nicor, Inc. 145 5,381 NiSource, Inc. 1,009 19,171 Peoples Energy Corp. 152 6,519 Sempra Energy 780 22,253 ------------ 97,869 ------------ MULTI-UTILITIES--0.3% AES Corp.(a) 2,526 16,040 Calpine Corp. (a) 1,526 10,072 Centerpoint Energy, Inc. 1,093 8,908 Duke Energy Corp. 3,461 69,047 Dynegy, Inc. 1,600 6,720 Mirant Corp. (a) 1,228 3,561 Williams Cos., Inc. 2,058 16,258 ------------ 130,606 ------------ TOTAL COMMON STOCKS (cost of $38,852,813) 34,801,143 ------------ </Table> See Notes to Investment Portfolio. 120 <Page> <Table> <Caption> PAR VALUE ------------ ------------ U.S. GOVERNMENT OBLIGATION--0.2% GOVERNMENT ISSUES--0.2% U.S. Treasury Bills, 0.900%, 09/11/03 (cost of $69,874)(c) $ 70,000 $ 69,874 ------------ SHORT-TERM OBLIGATION--2.6% Repurchase agreement with State Street Bank & Trust Co., dated 6/30/03, due 07/01/03 at 1.000%, collateralized by U.S. Treasury Bond maturing 2/15/29, market value $975,063 (repurchase proceeds $954,027) (cost of $954,000) 954,000 954,000 ------------ TOTAL INVESTMENTS--99.6% (cost of $39,876,687)(d) 35,825,017 ------------ OTHER ASSETS & LIABILITIES, NET--0.4% 135,831 ------------ NET ASSETS--100.0% $ 35,960,848 ============ </Table> NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing. (b) Investments in Affiliates during the six months ended June 30, 2003: Security Name: Fleet Boston Financial Corp., the parent company of the investment manager (see Note 3). <Table> Shares as of 12/31/02: 3,612 Shares purchased: 485 Shares sold: 53 Shares as of 06/30/03: 4,044 Net realized loss: $ 785 Dividend income earned: $ 2,629 Value at end of period: $ 120,147 </Table> (c) This security, or portion thereof, with total market value of $69,874 is being used to collateralize the futures contracts shown below. (d) Cost for both financial statements and federal income tax purposes is the same. Long futures contracts open on June 30, 2003: <Table> <Caption> NUMBER OF EXPIRATION UNREALIZED TYPE CONTRACTS MONTH DEPRECIATION - ---- --------- ---------- ------------ S&P Mini 500 21 September $ (37,200) ========== </Table> See Notes to Financial Statements. 121 <Page> STATEMENT OF ASSETS & LIABILITIES Liberty S&P 500 Index Fund, Variable Series / June 30, 2003 (Unaudited) <Table> ASSETS: Investments, at cost $ 39,876,687 ------------- Investments, at value $ 35,825,017 Cash 643 Receivable for: Fund shares sold 362,519 Interest 27 Dividends 42,101 Futures variation margin 78 Deferred Trustees' compensation plan 1,367 Other assets 3,668 ------------- TOTAL ASSETS 36,235,420 ------------- LIABILITIES: Expense reimbursement due to Distributor 1,706 Payable for: Fund shares repurchased 234,310 Distribution fee--Class B 823 Management fee 11,662 Transfer agent fee 594 Audit fee 9,361 Custody fee 3,417 Reports to shareholders 11,332 Deferred Trustees' fee 1,367 ------------- TOTAL LIABILITIES 274,572 ------------- NET ASSETS $ 35,960,848 ============= COMPOSITION OF NET ASSETS: Paid-in capital $ 43,273,216 Undistributed net investment income 155,839 Accumulated net realized loss (3,379,337) Net unrealized depreciation on: Investments (4,051,670) Futures contracts (37,200) ------------- NET ASSETS $ 35,960,848 ============= CLASS A: Net assets $ 71,947 Shares outstanding 8,505 ============= Net asset value per share $ 8.46 ============= CLASS B: Net assets $ 35,888,901 Shares outstanding 4,254,777 ============= Net asset value per share $ 8.43 ============= </Table> See Notes to Financial Statements. 122 <Page> STATEMENT OF OPERATIONS Liberty S&P 500 Index Fund, Variable Series For the Six Months Ended June 30, 2003 (Unaudited) <Table> INVESTMENT INCOME: Dividends $ 264,805 Interest 5,071 ------------- Total Investment Income 269,876 ------------- EXPENSES: Management fee 60,420 Distribution fee--Class B 37,680 Pricing and bookkeeping fees 4,818 Transfer agent fee 3,720 Trustees' fee 2,701 Custody fee 12,002 Audit fee 8,604 Other expenses 1,879 ------------- Total Expenses 131,824 Fees reimbursed by Distributor--Class B (18,566) Custody earnings credit (13) ------------- Net Expenses 113,245 ------------- Net Investment Income 156,631 ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES CONTRACTS: Net realized gain (loss) on: Investments (499,845) Futures contracts 122,567 ------------- Net realized loss (377,278) ------------- Net change in unrealized appreciation/depreciation on: Investments 3,590,150 Futures contracts (11,785) ------------- Net change in unrealized appreciation/depreciation 3,578,365 ------------- Net Gain 3,201,087 ------------- Net Increase in Net Assets from Operations $ 3,357,718 ============= </Table> See Notes to Financial Statements. 123 <Page> STATEMENT OF CHANGES IN NET ASSETS Liberty S&P 500 Index Fund, Variable Series <Table> <Caption> (UNAUDITED) SIX MONTHS ENDED YEAR ENDED JUNE 30, DECEMBER 31, INCREASE (DECREASE) IN NET ASSETS: 2003 2002 - --------------------------------- ------------ ------------ OPERATIONS: Net investment income $ 156,631 $ 245,814 Net realized loss on investments and futures contracts (377,278) (2,364,659) Net change in unrealized appreciation/depreciation on investments and futures contracts 3,578,365 (5,099,064) ------------ ------------ Net Increase (Decrease) from Operations 3,357,718 (7,217,909) ------------ ------------ DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income: Class A -- (587) Class B -- (243,630) Return of capital: Class A -- (53) Class B -- (21,942) ------------ ------------ Total Distributions Declared to Shareholders -- (266,212) ------------ ------------ SHARE TRANSACTIONS: Class A: Distributions reinvested -- 640 ------------ ------------ Net Increase -- 640 ------------ ------------ Class B: Subscriptions 5,545,118 13,853,223 Distributions reinvested -- 265,572 Redemptions (1,768,215) (6,727,578) ------------ ------------ Net Increase 3,776,903 7,391,217 ------------ ------------ Net Increase from Share Transactions 3,776,903 7,391,857 ------------ ------------ Total Increase (Decrease) in Net Assets 7,134,621 (92,264) NET ASSETS: Beginning of period 28,826,227 28,918,491 ------------ ------------ End of period (including undistributed net investment income of $155,839 and overdistributed net investment income of $(792)) $ 35,960,848 $ 28,826,227 ============ ============ CHANGES IN SHARES: Class A: Issued for distributions reinvested -- 85 ------------ ------------ Net Increase -- 85 ------------ ------------ Class B: Subscriptions 683,736 1,597,362 Issued for distributions reinvested -- 35,222 Redemptions (227,166) (749,858) ------------ ------------ Net Increase 456,570 882,726 ------------ ------------ </Table> See Notes to Financial Statements. 124 <Page> NOTES TO FINANCIAL STATEMENTS Liberty S&P 500 Index Fund, Variable Series / June 30, 2003 (Unaudited) NOTE 1. ORGANIZATION AND ACCOUNTING POLICIES ORGANIZATION--Liberty S&P 500 Index Fund, Variable Series (the "Fund"), a series of Liberty Variable Investment Trust (the "Trust"), is a diversified portfolio of a Massachusetts business trust, registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund's investment goal is to seek capital appreciation by matching the performance of a benchmark index that measures the investment returns of stocks of large U.S. companies. The Fund's capitalization consists of an unlimited number of shares of beneficial interest without par value that represent a separate series of the Trust. The Fund offers two classes of shares: Class A and Class B. Each share of a class represents an equal proportionate beneficial interest in that share class and, when issued and outstanding, is fully paid and nonassessable. Shareholders would be entitled to share proportionally in the net assets of their share class available for distribution to shareholders upon liquidation of the Fund. Shares of the Fund are available and are being marketed exclusively as a pooled funding vehicle for variable annuity contracts ("VA contracts") and Variable Life Insurance Policies ("VLI Policies") offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies"). The Participating Insurance Companies and their separate accounts own all the shares of the Fund. On April 1, 2003, Liberty Advisory Services Corp., the investment advisor to the Fund and Colonial Management Associates, Inc. ("Colonial"), the sub-advisor to the Fund, merged into Columbia Management Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co., an indirect wholly owned subsidiary of FleetBoston Financial Corporation. At the time of the merger, Columbia assumed the obligations of Liberty Advisory Services Corp. and Colonial with respect to the Fund. The merger did not change the way the Fund is managed, the investment personnel assigned to manage the Fund or the fees paid by the Fund. Columbia provides investment management and advisory services to the Fund pursuant to its Management Agreement with the Fund. Columbia also provides pricing and bookkeeping services to the Fund. Liberty Funds Distributor, Inc. ("LFD"), an affiliate of Columbia, serves as the principal underwriter of the Fund. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION AND TRANSACTIONS--Equity securities generally are valued at the last sale price or, in the case of unlisted or listed securities for which there were no sales during the day, at the current quoted bid price. Short-term obligations with a maturity of 60 days or less are valued at amortized cost. Short-term obligations with a maturity of greater than 60 days are valued at their market yield. Investments for which market quotations are not readily available, or quotations which management believes are not appropriate, are valued at fair value under procedures approved by the Board of Trustees. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded. Security transactions are accounted for on the date the securities are purchased, sold or mature. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS--All income, expenses (other than the Class B distribution fee), and realized and unrealized gains (losses) are allocated to each class proportionately on a daily basis for purposes of determining the net asset value of each class. The per share data was calculated using average shares outstanding during the period. In addition, Class B net investment income per share data and ratios reflect the distribution fee applicable to Class B shares only. FEDERAL INCOME TAXES--Consistent with the Fund's policy to qualify as a regulated investment company and to distribute all of its taxable income, no federal income tax has been accrued. DISTRIBUTIONS TO SHAREHOLDERS--The Fund intends to distribute as income dividends or capital gains distributions, at least annually, substantially all of its net investment income and net profits realized from the sale of investments. All dividends and distributions are reinvested in additional shares of the Fund at net asset value as of the record date of the distribution. Income and capital gain distributions are determined in accordance with federal income tax regulations. 125 <Page> OTHER--Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date. The Fund's custodian takes possession through the federal book-entry system of securities collateralizing repurchase agreements. Collateral is marked-to-market daily to ensure that the market value of the underlying assets remains sufficient to protect the Fund. The Fund may experience costs and delays in liquidating the collateral if the issuer defaults or enters bankruptcy. NOTE 2. FEDERAL TAX INFORMATION Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. The following capital loss carryforwards, determined as of December 31, 2002, are available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: <Table> <Caption> YEAR OF CAPITAL LOSS EXPIRATION CARRYFORWARD ---------- ------------ 2008 $ 19,479 2009 243,840 2010 1,209,651 ------------ $ 1,472,970 ============ </Table> NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES MANAGEMENT FEE--Columbia receives a monthly fee equal to 0.40% annually of the Fund's average daily net assets. Columbia, out of the management fee it receives, pays State Street Global Advisors ("SSgA") a sub-advisory fee at the annual rate of $25,000 on average daily net assets up to $50 million and 0.05% on average daily net assets thereafter. PRICING AND BOOKKEEPING FEES--Columbia is responsible for providing pricing and bookkeeping services to the Fund under a Pricing and Bookkeeping Agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Bank & Trust Company ("State Street"). Columbia pays fees to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual flat fee of $10,000, paid monthly, and in any month that the Fund's average daily net assets are more than $50 million, a monthly fee equal to the average daily net assets of the Fund for that month multiplied by a fee rate that is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. The Fund also pays out-of-pocket costs for pricing services. TRANSFER AGENT FEE--Liberty Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia, provides shareholder services for an annual rate of $7,500. DISTRIBUTION FEE--The Fund has adopted a 12b-1 plan, which requires it to pay LFD a monthly distribution fee equal to 0.25% annually of Class B average daily net assets. EXPENSE LIMITS--Columbia and LFD have voluntarily agreed to reimburse all expenses, including management fees and distribution fees, but excluding interest, taxes, brokerage and extraordinary expenses incurred by the Fund in excess of 0.75% annually of the Fund's average daily net assets. LFD will first reimburse the Class B distribution fee up to 0.25% annually to reach the 0.75% limit on Class B expenses. If additional reimbursement is needed to meet the limit for each class, Columbia will then reimburse other expenses to the extent necessary. If additional reimbursement is still needed to reach the expense limit, Columbia will then waive a portion of its management fee to reach the expense limit. This arrangement may be terminated or modified by Columbia or LFD at any time. OTHER--The Fund pays no compensation to its officers, all of whom are employees of Columbia or its affiliates. The Fund's Independent Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. The Fund has an agreement with its custodian bank under which $13 of custody fees were reduced by balance credits for the six months ended June 30, 2003. The Fund could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if it had not entered into such an agreement. NOTE 4. PORTFOLIO INFORMATION INVESTMENT ACTIVITY--For the six months ended June 30, 2003, purchases and sales of investments, other than short-term obligations, were $4,250,145 and $732,365, respectively. 126 <Page> Unrealized appreciation (depreciation) at June 30, 2003, based on cost of investments for federal income tax purposes, was: <Table> Gross unrealized appreciation $ 2,628,294 Gross unrealized depreciation (6,679,964) ------------ Net unrealized depreciation $ (4,051,670) ============ </Table> OTHER--The Fund may purchase or sell futures contracts. The Fund will use these instruments to hedge against the effects of changes in the portfolio securities due to market conditions and not for trading purposes. The use of futures contracts involves certain risks which include (1) imperfect correlation between the price movement of the instruments and the underlying securities, (2) inability to close out a position due to different trading hours, or the absence of a liquid market for either the instrument or the underlying securities or (3) an inaccurate prediction by Columbia of the future direction of the market or stock price or interest rate trends. Any of these risks may involve amounts exceeding the variation margin recorded in the Fund's Statement of Assets and Liabilities at any given time. 127 <Page> FINANCIAL HIGHLIGHTS Liberty S&P 500 Index Fund, Variable Series--Class A Shares Selected data for a share outstanding throughout each period is as follows: <Table> <Caption> (UNAUDITED) SIX MONTHS PERIOD ENDED YEAR ENDED DECEMBER 31, ENDED JUNE 30, ----------------------------- DECEMBER 31, 2003 2002 2001 2000(a) ------------ ------------ ------------ ------------- Net Asset Value, Beginning of Period $ 7.59 $ 9.90 $ 11.31 $ 12.00 ------------ ------------ ------------ ------------- Income from Investment Operations: Net investment income (b) 0.05 0.09 0.07 0.07 Net realized and unrealized gain (loss) on investments and futures contracts 0.82 (2.32) (1.42) (0.70) ------------ ------------ ------------ ------------- Total from Investment Operations 0.87 (2.23) (1.35) (0.63) ------------ ------------ ------------ ------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- (0.07) (0.06) (0.06) Return of capital -- (0.01) -- -- ------------ ------------ ------------ ------------- Total Distributions Declared to Shareholders -- (0.08) (0.06) (0.06) ------------ ------------ ------------ ------------- NET ASSET VALUE, END OF PERIOD $ 8.46 $ 7.59 $ 9.90 $ 11.31 ============ ============ ============ ============= Total return (c)(d) 11.46%(e) (22.55)% (11.98)%(f) (5.29)%(f)(e) RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (g) 0.62%(h) 0.64% 0.75% 0.75%(h) Net investment income (g) 1.16%(h) 0.99% 0.72% 0.89%(h) Waiver/reimbursement -- -- 0.28% 0.36%(h) Portfolio turnover rate 2%(e) 17% 7% 2%(e) Net assets, end of period (000's) $ 72 $ 65 $ 83 $ 95 </Table> (a) For the period from commencement of operation May 30, 2000 to December 31, 2000. (b) Per share data was calculated using average shares outstanding during the period. (c) Total return at net asset value assuming all distributions reinvested. (d) Total return figures do not include any insurance company charges associated with a variable annuity. If included, total return would be reduced. (e) Not annualized. (f) Had the Manager not waived or reimbursed a portion of expenses, total return would have been reduced. (g) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (h) Annualized. 128 <Page> PORTFOLIO MANAGERS DISCUSSION Liberty Select Value Fund, Variable Series / June 30, 2003 Liberty Select Value Fund, Variable Series seeks long-term growth. Daniel K. Cantor and Jeffrey C. Kinzel are co-managers of the fund. Mr. Cantor has been affiliated with Columbia Management Advisors, Inc. and its predecessors since 1985. Mr. Kinzel has been with the firm and its predecessors since 1991. CONSERVATIVE STRATEGY RESTRAINED PERFORMANCE The fund continued to focus on stable, less risky value stocks during the period. This strategy, which helped the fund outperform in previous periods, restrained performance during the past six months as more aggressive stocks did particularly well. Stock selection in the technology, consumer discretionary and health care sectors also hampered the fund's performance relative to its benchmark and peer group. The reporting period was marked by a sharp shift in investor sentiment. Uncertainty related to the war in Iraq dominated the first quarter of 2003, resulting in weak equity returns. However, in the second quarter, expectations for economic recovery fueled a strong rally. Investors responded favorably to the relatively swift end to the major fighting in Iraq, further interest rate cuts and increasing consumer confidence. Legislation that included reductions in dividend and capital gains tax rates further buoyed the market. With investors demonstrating an increased appetite for risk, aggressive, volatile stocks were the top performers. Among the biggest gainers were technology stocks and companies with high amounts of debt on their balance sheets. ECLECTIC MIX OF GOOD AND POOR PERFORMERS Dean Foods, a leading dairy processor, and Cendant, a diversified travel and real estate company (2.6% and 1.5% of net assets, respectively), contributed most positively to the fund's performance. Other strong gains came from AMR, the parent company of American Airlines, and Federated Department Stores, Inc., the country's largest upscale department store company (0.6% and 1.9% of net assets, respectively). Individual issues that hurt performance included HCA, the nation's largest for-profit hospital company, and Pepsi Bottling Group (0.7% and 0.8% of net assets, respectively). HCA declined because hospital admissions growth was lower than expected and because a potential regulatory change could have a negative impact on earnings. Pepsi Bottling Group performed poorly primarily because cold weather and a lull in new product introductions hurt first quarter sales and earnings. A GRADUAL CHANGE IN STRATEGY During the period, we pared back investments in several defensive stocks to create a somewhat more aggressively positioned portfolio. We eliminated the fund's position in Patterson Dental, a manufacturer of dental supplies, because we believed the shares were fully valued, and we trimmed our holdings in Ecolab and Zebra Technologies (0.3% and 1.1% of net assets, respectively). We gradually added to more cyclical areas, such as paper companies Georgia-Pacific and Meadwestvaco (1.2% and 1.1% of net assets, respectively), as well as Carlisle Companies (1.1% of net assets), a diversified industrial firm. We expect these companies to benefit from an economic recovery. We continue to manage the fund consistent with our objective of running a concentrated portfolio of about 100 securities. During the period we increased the number of investments to 101 from 97 at the start of the year. In addition, we lowered our cash and cash equivalents from 8.9 to 4.7% of net assets. OUTLOOK We continue to focus on identifying well-managed companies in good or improving businesses with attractive valuations. We believe that the pendulum favoring aggressive stocks may have swung too far, and that the market could rotate back to the higher quality names that the fund tends to favor. Longer term, the lower capital gains tax rate included in President Bush's fiscal package is likely to help stocks. More importantly, the reduction in taxes on dividends should benefit value stocks disproportionately, as they tend to pay higher dividends than growth stocks. Economic and market conditions can frequently change. There is no assurance that the trends described here will continue or commence. An investment in the Liberty Select Value Fund, Variable Series offers the potential for long-term growth, but also involves certain risks, including stock market fluctuations due to economic and business developments. The value and returns earned on an investment in the fund may also be affected by stock market fluctuations. Mid-cap stocks can present special risks including greater price volatility than stocks of larger, more established companies. Holdings are disclosed as of June 30, 2003, and are subject to change. 129 <Page> PERFORMANCE INFORMATION Liberty Select Value Fund, Variable Series / June 30, 2003 AVERAGE ANNUAL TOTAL RETURN AS OF JUNE 30, 2003 (%) <Table> <Caption> (CUMULATIVE) 6-MONTH 1-YEAR LIFE - ------------------------------------------------------------------ Class A (5/30/00) 7.59 -6.17 3.24 S&P MidCap 400 Index(1) 12.41 -0.71 1.45 </Table> Inception date of share class is in parentheses. [CHART] VALUE OF A $10,000 INVESTMENT, 5/30/00 - 6/30/03 <Table> <Caption> CLASS A SHARES S&P MIDCAP 400 INDEX May-00 $ 10,200 $ 10,000 06/01/2000 - 06/30/2000 $ 10,066 $ 10,147 07/01/2000 - 07/31/2000 $ 10,333 $ 10,307 08/01/2000 - 08/31/2000 $ 11,184 $ 11,459 09/01/2000 - 09/30/2000 $ 10,983 $ 11,381 10/01/2000 - 10/31/2000 $ 11,034 $ 10,995 11/01/2000 - 11/30/2000 $ 10,309 $ 10,165 12/01/2000 - 12/31/2000 $ 11,139 $ 10,942 01/01/2001 - 01/31/2001 $ 11,551 $ 11,186 02/01/2001 - 02/28/2001 $ 11,206 $ 10,548 03/01/2001 - 03/31/2001 $ 10,961 $ 9,764 04/01/2001 - 04/30/2001 $ 11,769 $ 10,841 05/01/2001 - 05/31/2001 $ 12,106 $ 11,094 06/01/2001 - 06/30/2001 $ 11,870 $ 11,049 07/01/2001 - 07/31/2001 $ 11,971 $ 10,885 08/01/2001 - 08/31/2001 $ 11,676 $ 10,529 09/01/2001 - 09/30/2001 $ 10,238 $ 9,219 10/01/2001 - 10/31/2001 $ 10,439 $ 9,626 11/01/2001 - 11/30/2001 $ 11,070 $ 10,343 12/01/2001 - 12/31/2001 $ 11,533 $ 10,876 01/01/2002 - 01/31/2002 $ 11,626 $ 10,819 02/01/2002 - 02/28/2002 $ 11,828 $ 10,832 03/01/2002 - 03/31/2002 $ 12,377 $ 11,607 04/01/2002 - 04/30/2002 $ 12,411 $ 11,552 05/01/2002 - 05/31/2002 $ 12,444 $ 11,357 06/01/2002 - 06/30/2002 $ 11,760 $ 10,526 07/01/2002 - 07/31/2002 $ 10,923 $ 9,505 08/01/2002 - 08/31/2002 $ 11,000 $ 9,553 09/01/2002 - 09/30/2002 $ 9,835 $ 8,783 10/01/2002 - 10/31/2002 $ 10,038 $ 9,164 11/01/2002 - 11/30/2002 $ 10,620 $ 9,694 12/01/2002 - 12/31/2002 $ 10,256 $ 9,296 01/01/2003 - 01/31/2003 $ 9,993 $ 9,024 02/01/2003 - 02/28/2003 $ 9,764 $ 8,810 03/01/2003 - 03/31/2003 $ 9,764 $ 8,884 04/01/2003 - 04/30/2003 $ 10,384 $ 9,528 05/01/2003 - 05/31/2003 $ 10,978 $ 10,318 Jun-03 $ 11,035 $ 10,451 </Table> <Table> <Caption> NET ASSET VALUE PER SHARE ($) 12/31/02 6/30/03 - -------------------------------------------------------- Class A 12.12 13.04 </Table> PAST PERFORMANCE CANNOT PREDICT FUTURE INVESTMENT RESULTS. SHARE PRICE AND INVESTMENT RETURN WILL VARY, SO YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. Total return performance includes changes in share price and reinvestment of all distributions. The S&P (Standard & Poor's) MidCap 400 Index is an unmanaged index that tracks the performance of middle-capitalization US stocks. Indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. MUTUAL FUND PERFORMANCE CHANGES OVER TIME. CURRENT RETURNS FOR THE FUND MAY BE DIFFERENT THAN THAT SHOWN. Performance numbers reflect all fund expenses, but do not include any insurance charges imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. (1) Index performance is from May 31, 2000. 130 <Page> INVESTMENT PORTFOLIO Liberty Select Value Fund, Variable Series / June 30, 2003 (Unaudited) <Table> <Caption> SHARES VALUE ------------ ------------ COMMON STOCKS--99.2% CONSUMER DISCRETIONARY--18.9% AUTO COMPONENTS--4.2% Gentex Corp. (a) 9,700 $ 296,917 Johnson Controls, Inc. 3,000 256,800 Lear Corp. (a) 7,900 363,558 Superior Industries International 7,400 308,580 ------------ 1,225,855 ------------ HOTELS RESTAURANTS & LEISURE--4.7% Brinker International, Inc. (a) 14,000 504,280 Darden Restaurants, Inc. 8,700 165,126 Harrah's Entertainment, Inc. (a) 5,300 213,272 International Game Technology, Inc. 3,000 306,990 Six Flags, Inc. (a) 28,000 189,840 ------------ 1,379,508 ------------ HOUSEHOLD DURABLES--1.2% Newell Rubbermaid, Inc. 12,600 352,800 ------------ LEISURE EQUIPMENT & PRODUCTS--0.8% Mattel, Inc. 12,600 238,392 ------------ MEDIA--2.5% Knight-Ridder, Inc. 3,300 227,469 Mediacom Communications Corp. (a) 18,800 185,556 The New York Times Co., Class A 7,000 318,500 ------------ 731,525 ------------ MULTI-LINE RETAIL--1.9% Federated Department Stores, Inc. 15,000 552,750 ------------ SPECIALTY RETAIL--3.1% Borders Group, Inc. (a) 13,100 230,691 Ross Stores, Inc. 4,400 188,056 TJX Companies., Inc. 26,000 489,840 ------------ 908,587 ------------ TEXTILES & APPAREL--0.5% Wolverine World Wide, Inc. 7,100 136,746 ------------ CONSUMER STAPLES--5.5% BEVERAGES--0.8% Pepsi Bottling Group, Inc. 12,000 240,240 ------------ FOOD PRODUCTS--3.1% Dean Foods Co. (a) 24,300 765,450 Hormel Foods Corp. 5,900 139,830 ------------ 905,280 ------------ PERSONAL PRODUCTS--1.6% Avon Products, Inc. 7,400 460,280 ------------ ENERGY--7.4% ENERGY EQUIPMENT & SERVICES--3.2% BJ Services Co. (a) 5,400 201,744 Noble Corp. (a) 8,200 281,260 Transocean, Inc. (a) 12,650 $ 277,920 Weatherford International, Ltd. (a) 4,400 184,360 ------------ 945,284 ------------ OIL & GAS--4.2% Amerada Hess Corp. 7,100 349,178 Occidental Petroleum Corp. 6,100 204,655 XTO Energy, Inc. 32,833 660,272 ------------ 1,214,105 ------------ FINANCIALS--22.1% BANKS--11.2% Banknorth Group, Inc. 11,800 301,136 Charter One Financial, Inc. 9,895 308,526 City National Corp. 6,300 280,728 Cullen/Frost Bankers, Inc. 3,800 121,980 Golden West Financial Corp. 8,600 688,086 Greenpoint Financial Corp. 9,000 458,460 North Fork Bancorporation, Inc. 13,900 473,434 Sovereign Bancorp, Inc. 26,500 414,725 Webster Financial Corp. 6,100 230,580 ------------ 3,277,655 ------------ DIVERSIFIED FINANCIALS--4.4% Bear Stearns Cos., Inc. 3,700 267,954 Citigroup, Inc. 6,831 292,367 Janus Capital Group, Inc. 30,700 503,480 Lehman Brothers Holdings, Inc. 3,500 232,680 ------------ 1,296,481 ------------ INSURANCE--6.5% AMBAC Financial Group, Inc. 7,250 480,312 Cincinnati Financial Corp. 3,300 122,397 Loews Corp. 3,300 156,057 Nationwide Financial Services, Class A 5,300 172,250 PMI Group, Inc. 12,300 330,132 Radian Group, Inc. 9,900 362,835 St. Paul Companies, Inc. 7,900 288,429 ------------ 1,912,412 ------------ HEALTH CARE--4.9% HEALTH CARE EQUIPMENT & SUPPLIES--1.0% Biomet, Inc. 10,000 286,600 ------------ HEALTH CARE PROVIDERS & SERVICES--3.9% Anthem, Inc. (a) 2,700 208,305 First Health Group Corp. (a) 15,800 436,080 HCA, Inc. 6,800 217,872 WellPoint Health Networks (a) 3,200 269,760 ------------ 1,132,017 ------------ INDUSTRIALS--11.8% AEROSPACE & DEFENSE--0.9% Alliant Techsystems, Inc. (a) 3,300 171,303 Northrop Grumman Corp. 1,200 103,548 ------------ 274,851 ------------ </Table> See Notes to Investment Portfolio. 131 <Page> <Table> <Caption> SHARES VALUE ------------ ------------ AIR FREIGHT & LOGISTICS--0.6% CNF, Inc. 6,500 $ 164,970 ------------ AIRLINES--0.6% AMR Corp. (a) 16,600 182,600 ------------ COMMERCIAL SERVICES & SUPPLIES--4.1% The Brinks Co. 18,000 262,260 Cendant Corp. (a) 24,400 447,008 DST Systems, Inc. (a) 6,500 247,000 Manpower, Inc. 6,700 248,503 ------------ 1,204,771 ------------ ELECTRICAL EQUIPMENT--0.4% Ametek, Inc. 3,000 109,950 ------------ INDUSTRIAL CONGLOMERATES--1.1% Carlisle Cos., Inc. 7,900 333,064 ------------ MACHINERY--4.1% Dover Corp. 4,800 143,808 Ingersoll-Rand Co. 6,000 283,920 Mueller Industries, Inc. (a) 4,700 127,417 Navistar International Corp. (a) 14,300 466,609 Parker Hannifin Corp. 4,000 167,960 ------------ 1,189,714 ------------ INFORMATION TECHNOLOGY--10.1% COMMUNICATIONS EQUIPMENT--0.9% Andrew Corp. (a) 28,900 265,880 ------------ ELECTRONIC EQUIPMENT & INSTRUMENTS--5.9% Amphenol Corp. (a) 10,000 468,200 Arrow Electronics, Inc. (a) 10,400 158,496 AVX Corp. 13,600 149,464 Littelfuse, Inc. (a) 11,000 245,960 Millipore Corp. (a) 7,900 350,523 Varian, Inc. (a) 6,700 232,289 Vishay Intertechnology, Inc. (a) 9,450 124,740 ------------ 1,729,672 ------------ INFORMATION TECHNOLOGY CONSULTING & SERVICES--1.1% Affiliated Computer Services, Inc. (a) 6,900 315,537 ------------ OFFICE ELECTRONICS--1.1% Zebra Technologies Corp. (a) 4,200 315,798 ------------ SOFTWARE--1.1% Reynolds & Reynolds Co. 11,100 317,016 ------------ MATERIALS--11.1% CHEMICALS--7.7% Air Products & Chemicals, Inc. 6,800 282,880 Eastman Chemical Co. 9,100 288,197 Ecolab, Inc. 3,600 92,160 Engelhard Corp. 8,500 210,545 International Flavors & Fragrances, Inc. 12,900 411,897 Lubrizol Corp. 7,900 244,821 OM Group, Inc. (a) 4,700 69,231 PPG Industries, Inc. 6,700 $ 339,958 Praxair, Inc. 5,300 318,530 ------------ 2,258,219 ------------ CONTAINERS & PACKAGING--0.8% Packaging Corp. of America (a) 12,200 224,846 ------------ PAPER & FOREST PRODUCTS--2.6% Boise Cascade Corp. 4,500 107,550 Georgia-Pacific Corp. 18,100 342,995 MeadWestvaco Corp. 12,634 312,060 ------------ 762,605 ------------ TELECOMMUNICATION SERVICES--1.4% WIRELESS TELECOMMUNICATION SERVICES--1.4% Telephone & Data Systems, Inc. 8,500 422,450 ------------ UTILITIES--6.0% ELECTRIC UTILITIES--5.4% Allete, Inc. 6,700 177,885 Entergy Corp. 5,400 285,012 Exelon Corp. 7,850 469,509 PPL Corp. 4,800 206,400 Progress Energy, Inc. 9,800 430,220 ------------ 1,569,026 ------------ MULTI-UTILITIES & UNREGULATED POWER--0.6% Energy East Corp. 9,300 193,068 ------------ TOTAL COMMON STOCKS (cost of $28,386,403) 29,030,554 ------------ <Caption> PAR ------------ SHORT-TERM OBLIGATION--4.7% Repurchase agreement with State Street Bank & Trust Co., dated 06/30/03, due 07/01/03 at 1.000%, collateralized by a U.S. Treasury Bond maturing 02/15/29, market value $1,404,752 (repurchase proceeds $1,372,038) (cost of $1,372,000) $ 1,372,000 1,372,000 ------------ TOTAL INVESTMENTS--103.9% (cost of $29,758,403) (b) 30,402,554 ------------ OTHER ASSETS & LIABILITIES, NET--(3.9)% (1,141,655) ------------ NET ASSETS--100.0% $ 29,260,899 ============ </Table> NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing. (b) Cost for financial statement and federal income tax purposes is the same. See Notes to Financial Statements. 132 <Page> STATEMENT OF ASSETS & LIABILITIES Liberty Select Value Fund, Variable Series / June 30, 2003 (Unaudited) <Table> ASSETS: Investments, at cost $ 29,758,403 ------------- Investments, at value $ 30,402,554 Cash 3 Receivable for: Fund shares sold 1,945 Interest 38 Dividends 18,613 Deferred Trustees' compensation plan 1,294 ------------- TOTAL ASSETS 30,424,447 ------------- LIABILITIES: Expense reimbursement due to Distributor 1,070 Payable for: Fund shares repurchased 1,128,986 Management fee 17,259 Distribution fee--Class B 237 Transfer agent fee 594 Custody fee 1,807 Reports to Shareholders 6,216 Deferred Trustees' fee 1,294 Other liabilities 6,085 ------------- TOTAL LIABILITIES 1,163,548 ------------- NET ASSETS $ 29,260,899 ============= COMPOSITION OF NET ASSETS: Paid-in capital $ 29,644,232 Undistributed net investment income 23,929 Accumulated net realized loss (1,051,413) Net unrealized appreciation on investments 644,151 ------------- NET ASSETS $ 29,260,899 ============= CLASS A: Net assets $ 1,100,369 Shares outstanding 84,366 ============= Net asset value per share $ 13.04 ============= CLASS B: Net assets $ 28,160,530 Shares outstanding 2,163,022 ============= Net asset value per share $ 13.02 ============= </Table> See Notes to Financial Statements. 133 <Page> STATEMENT OF OPERATIONS Liberty Select Value Fund, Variable Series For the Six Months Ended June 30, 2003 (Unaudited) <Table> INVESTMENT INCOME: Dividends $ 157,167 Interest 12,217 ------------- Total Investment Income 169,384 ------------- EXPENSES: Management fee 92,391 Distribution fee--Class B 31,905 Pricing & bookkeeping fees 5,408 Transfer agent fee 3,720 Trustees' fee 2,708 Custody fee 2,838 Audit fee 8,604 Other expenses 4,717 ------------- Total Expenses 152,291 Fees reimbursed by Distributor--Class B (7,929) Custody earnings credit (3) ------------- Net Expenses 144,359 ------------- Net Investment Income 25,025 ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized loss on investments (982,265) Net change in unrealized appreciation/depreciation on investments 3,076,733 ------------- Net Gain 2,094,468 ------------- Net Increase in Net Assets from Operations $ 2,119,493 ============= </Table> See Notes to Financial Statements. 134 <Page> STATEMENT OF CHANGES IN NET ASSETS Liberty Select Value Fund, Variable Series <Table> <Caption> (UNAUDITED) SIX MONTHS YEAR ENDED ENDED JUNE 30, DECEMBER 31, INCREASE (DECREASE) IN NET ASSETS: 2003 2002 - ---------------------------------- ------------- ------------- OPERATIONS: Net investment income $ 25,025 $ 18,662 Net realized loss on investments (982,265) (64,635) Net change in unrealized appreciation/depreciation on investments 3,076,733 (2,874,205) ------------- ------------- Net Increase (Decrease) from Operations 2,119,493 (2,920,178) ------------- ------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income: Class A -- (1,387) Class B -- (20,257) From net realized gains: Class A -- -- Class B -- -- ------------- ------------- Total Distributions Declared to Shareholders -- (21,644) ------------- ------------- SHARE TRANSACTIONS: Class A: Subscriptions 439,707 546,422 Distributions reinvested -- 1,387 Redemptions (54,942) (9,127) ------------- ------------- Net Increase 384,765 538,682 ------------- ------------- Class B: Subscriptions 3,623,415 14,432,250 Distributions reinvested -- 20,257 Redemptions (2,114,167) (3,803,086) ------------- ------------- Net Increase 1,509,248 10,649,421 ------------- ------------- Net Increase from Share Transactions 1,894,013 11,188,103 ------------- ------------- Total Increase in Net Assets 4,013,506 8,246,281 NET ASSETS: Beginning of period 25,247,393 17,001,112 ------------- ------------- End of period (including undistributed net investment income of $23,929 and overdistributed net investment income of $(1,096)) $ 29,260,899 $ 25,247,393 ============= ============= CHANGES IN SHARES: Class A: Subscriptions 36,646 44,354 Issued for distributions reinvested -- 115 Redemptions (4,440) (752) ------------- ------------- Net Increase 32,206 43,717 ------------- ------------- Class B: Subscriptions 298,970 1,069,404 Issued for distributions reinvested -- 1,685 Redemptions (169,333) (275,153) ------------- ------------- Net Increase 129,637 795,936 ------------- ------------- </Table> See Notes to Financial Statements. 135 <Page> NOTES TO FINANCIAL STATEMENTS Liberty Select Value Fund, Variable Series / June 30, 2003 (Unaudited) NOTE 1. ORGANIZATION AND ACCOUNTING POLICIES ORGANIZATION--Liberty Select Value Fund, Variable Series (the "Fund"), a series of Liberty Variable Investment Trust (the "Trust"), is a diversified portfolio of a Massachusetts business trust, registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund's investment goal is to seek long-term growth. The Fund's capitalization consists of an unlimited number of shares of beneficial interest without par value that represent a separate series of the Trust. The Fund offers two classes of shares: Class A and Class B. Each share of a class represents an equal proportionate beneficial interest in that share class and, when issued and outstanding, is fully paid and nonassessable. Shareholders would be entitled to share proportionally in the net assets of their share class available for distribution to shareholders upon liquidation of the Fund. Shares of the Fund are available and are being marketed exclusively as a pooled funding vehicle for variable annuity contracts ("VA contracts") and Variable Life Insurance Policies ("VLI Policies") offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies"). The Participating Insurance Companies and their separate accounts own all the shares of the Fund. On April 1, 2003, Liberty Advisory Services Corp., the investment advisor to the Fund and Colonial Management Associates, Inc. ("Colonial"), the sub-advisor to the Fund, merged into Columbia Management Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co., an indirect wholly owned subsidiary of FleetBoston Financial Corporation. At the time of the merger, Columbia assumed the obligations of Liberty Advisory Services Corp. and Colonial with respect to the Fund. The merger did not change the way the Fund is managed, the investment personnel assigned to manage the Fund or the fees paid by the Fund. Columbia provides investment management and advisory services to the Fund pursuant to its Management Agreement with the Fund. Columbia also provides pricing and bookkeeping services to the Fund. Liberty Funds Distributor, Inc. ("LFD"), an affiliate of Columbia, serves as the principal underwriter of the Fund. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION AND TRANSACTIONS--Equity securities generally are valued at the last sale price or, in the case of unlisted or listed securities for which there were no sales during the day, at the current quoted bid price. Short-term obligations with a maturity of 60 days or less are valued at amortized cost. Investments for which market quotations are not readily available, or quotations which management believes are not appropriate, are valued at fair value under procedures approved by the Board of Trustees. Security transactions are accounted for on the date the securities are purchased, sold or mature. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS--All income, expenses (other than the Class B distribution fee), and realized and unrealized gains (losses) are allocated to each class proportionately on a daily basis for purposes of determining the net asset value of each class. The per share data was calculated using average shares outstanding during the period. In addition, Class B net investment income per share data and ratios reflect the distribution fee applicable to Class B shares only. FEDERAL INCOME TAXES--Consistent with the Fund's policy to qualify as a regulated investment company and to distribute all of its taxable income, no federal income tax has been accrued. DISTRIBUTIONS TO SHAREHOLDERS--The Fund intends to distribute as income dividends or capital gains distributions, at least annually, substantially all of its net investment income and net profits realized from the sale of investments. All dividends and distributions are reinvested in additional shares of the Fund at net asset value as of the record date of the distribution. Income and capital gain distributions are determined in accordance with federal income tax regulations. OTHER--Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date. The Fund's custodian takes possession through the federal book-entry system of securities collateralizing repurchase agreements. Collateral is marked-to-market daily to ensure that the market value of the underlying assets remains sufficient to protect the Fund. The Fund may 136 <Page> experience costs and delays in liquidating the collateral if the issuer defaults or enters bankruptcy. NOTE 2. FEDERAL TAX INFORMATION Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. The following capital loss carryforwards, determined as of December 31, 2002, are available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: <Table> <Caption> YEAR OF CAPITAL LOSS EXPIRATION CARRYFORWARD ---------- ------------ 2010 $ 20,614 </Table> NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES MANAGEMENT FEE--Columbia receives a monthly fee equal to 0.70% annually of the Fund's average daily net assets. PRICING AND BOOKKEEPING FEES--Columbia is responsible for providing pricing and bookkeeping services to the Fund under a Pricing and Bookkeeping Agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Bank & Trust Company ("State Street"). Columbia pays fees to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual flat fee of $10,000, paid monthly, and in any month that the Fund's average daily net assets are more than $50 million, a monthly fee equal to the average daily net assets of the Fund for that month multiplied by a fee rate that is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. The Fund also pays out-of-pocket costs for pricing services. TRANSFER AGENT FEE--Liberty Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia, provides shareholder services for an annual rate of $7,500. DISTRIBUTION FEE--The Fund has adopted a 12b-1 plan, which requires it to pay LFD a monthly distribution fee equal to 0.25% annually of Class B average daily net assets. EXPENSE LIMITS--Columbia and LFD have voluntarily agreed to reimburse all expenses, including management fees and distribution fees, but excluding interest, taxes, brokerage and extraordinary expenses incurred by the Fund, in excess of 1.10% annually of the Fund's average daily net assets. LFD will first reimburse the Class B distribution fee up to 0.25% annually to reach the 1.10% limit on Class B expenses. If additional reimbursement is needed to meet the limit for each class, Columbia will then reimburse other expenses to the extent necessary. If additional reimbursement is still needed to reach the expense limit, Columbia will then waive a portion of its management fee to reach the expense limit. This arrangement may be terminated or modified by Columbia or LFD at any time. OTHER--The Fund pays no compensation to its officers, all of whom are employees of Columbia or its affiliates. The Fund's Independent Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. The Fund has an agreement with its custodian bank under which $3 of custody fees were reduced by balance credits for the six months ended June 30, 2003. The Fund could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if it had not entered into such an agreement. NOTE 4. PORTFOLIO INFORMATION INVESTMENT ACTIVITY--For the six months ended June 30, 2003, purchases and sales of investments, other than short-term obligations, were $6,439,834 and $2,550,298, respectively. Unrealized appreciation (depreciation) at June 30, 2003, based on cost of investments for federal income tax purposes, was: <Table> Gross unrealized appreciation $ 3,285,061 Gross unrealized depreciation (2,640,910) ------------- Net unrealized appreciation $ 644,151 ============= </Table> OTHER--The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. 137 <Page> FINANCIAL HIGHLIGHTS Liberty Select Value Fund, Variable Series--Class A Shares Selected data for a share outstanding throughout each period is as follows: <Table> <Caption> (UNAUDITED) SIX MONTHS PERIOD ENDED YEAR ENDED DECEMBER 31, ENDED JUNE 30, ------------------------- DECEMBER 31, 2003 2002 2001 2000(a) ------------ ---------- ---------- ------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 12.12 $ 13.66 $ 13.24 $ 12.00 ------------ ---------- ---------- ------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (b) 0.02 0.03 0.05 0.09 Net realized and unrealized gain (loss) on investments 0.90 (1.54) 0.42 1.28 ------------ ---------- ---------- ------------ Total from Investment Operations 0.92 (1.51) 0.47 1.37 ------------ ---------- ---------- ------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- (0.03) (0.03) (0.07) From net realized gains -- -- (0.02) --(c) Return of capital -- -- -- (0.06) ------------ ---------- ---------- ------------ Total Distributions Declared to Shareholders -- (0.03) (0.05) (0.13) ------------ ---------- ---------- ------------ NET ASSET VALUE, END OF PERIOD $ 13.04 $ 12.12 $ 13.66 $ 13.24 ============ ========== ========== ============ Total return (d)(e) 7.59%(f) (11.07)% 3.55%(g) 11.38%(f)(g) RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (h) 0.91%(i) 0.93% 1.10% 1.10%(i) Net investment income (h) 0.37%(i) 0.26% 0.34% 1.13%(i) Waiver/reimbursement -- -- 0.48% 1.31%(i) Portfolio turnover rate 10%(f) 21% 15% 26%(f) Net assets, end of period (000's) $ 1,100 $ 632 $ 115 $ 111 </Table> (a) For the period from commencement of operations on May 30, 2000 to December 31, 2000. (b) Per share data was calculated using average shares outstanding during the period. (c) Rounds to less than $0.01 per share. (d) Total return at net asset value assuming all distributions reinvested. (e) Total return figure does not include any insurance company charges associated with a variable annuity. If included, total return would be reduced. (f) Not annualized. (g) Had the Manager not waived or reimbursed a portion of expenses, total return would have been reduced. (h) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (i) Annualized. 138 <Page> PORTFOLIO MANAGER'S DISCUSSION Newport Tiger Fund, Variable Series / June 30, 2003 Newport Tiger Fund, Variable Series seeks long-term capital appreciation. Eric Sandlund has managed the fund since August 2002. Early in the six-month period, the war in Iraq, slow economic growth and the SARS (severe acute respiratory syndrome) epidemic had a negative effect on the Asian stock markets. However, once the major military campaigns in Iraq were over and SARS appeared under control, the stock markets began to recover. During the six-month period that ended June 30, 2003, the fund benefited from this reversal of fortune in the markets. However, it underperformed its benchmark, the MSCI AC Free Asia ex Japan Index, because of an overweight position in Hong Kong. Hong Kong was severely affected by the SARS epidemic. Performance was also hurt by the fund's position in Infosys Technologies (2.8% of net assets), an India-based technology services company. Infosys's share price declined after forecasting disappointing earnings. We continue to hold Infosys in the portfolio because we believe it has a competitive advantage in the rapidly growing area of technology outsourcing. SHIFT IN SOME LONG-TERM HOLDINGS We trimmed some of our long-term holdings in China, Singapore and Hong Kong. In China we reduced Huaneng Power International (3.7% of net assets), which had appreciated nicely. We also sold Legend Group, a personal computer manufacturer, because we were concerned that increased competition from multi-national companies selling into the China market would cut into Legend's market share and profits. In Singapore, we reduced our positions in Singapore Press Holdings (2.7% of net assets) and Venture Corp. (0.8% of net assets). Also we eliminated our position in Singapore Technologies Engineering during the period. We made the biggest reductions in Hong Kong. We pared back on our positions in Hang Seng Bank (2.7% of net assets) and Hong Kong and China Gas (3.9% of net assets). BUILDING POSITIONS IN SOUTHEAST ASIA We invested the proceeds from these sales primarily in the Philippines, Indonesia, Taiwan and India, where we favored companies with attractive valuations and prospects for significant growth. In the Philippines and Indonesia, declining interest rates, strengthening currencies relative to the US dollar, and improving economies provided a favorable backdrop for stocks. We added Philippine Long Distance Telephone (PLDT) (1.4% of net assets), the country's largest integrated telephone company. PLDT has restructured its balance sheet, dramatically reducing its debt and improving its cash flow. We believe the company should be in a position to pay a dividend by 2005. In Indonesia, we purchased Astra International (1.2% of net assets), a conglomerate whose core business is selling automobiles and motor cycles in distributorships throughout the Indonesian archipelago. Astra also runs heavy equipment, agriculture and vehicle financing businesses. The company has significantly improved its balance sheet and should benefit from low interest rates. We also invested in Telkom Indonesia (0.9% of net assets). The country's leading wireless company, Telkom Indonesia has been paying an attractive dividend. We increased our share in technology companies in Taiwan, whose stock prices had been beaten down below what we thought they were worth. We added to Asustek (1.6% of net assets) and built new positions in Ambit Microsystems, Phoenixtec Power and Realtek Semiconductor (0.9%, 0.4% and 0.9% of net assets, respectively). In an effort to capitalize on the global trend of limiting health care costs, we also invested in Ranbaxy Laboratories Ltd. (1.2% of net assets), a generic pharmaceutical company in India with cost advantages that give it a competitive edge. GROWING DOMESTIC ECONOMIES SHOULD BENEFIT THE FUND We believe the fund is well positioned to take advantage of the developing domestic economies of Asia. Many companies are trading at historically low valuations, have good balance sheets and returns on invested capital that either match or exceed their American counterparts. Because exports are a major component of many of the markets in which we invest, an economic recovery in the United States would be an added benefit to the companies in the fund. Economic and market conditions can frequently change. There is no assurance that the trends described here will continue or commence. An investment in the Newport Tiger Fund, Variable Series offers long-term growth potential; however, the net asset value of the fund will fluctuate due to economic and political developments and currency exchange rate fluctuations. Many of the Asian countries are considered emerging economies, which means there may be greater risks associated with investing there than in more developed countries. In addition, concentration of investments in a single region may result in greater volatility. Holdings are disclosed as of June 30, 2003, and are subject to change. 139 <Page> PERFORMANCE INFORMATION Newport Tiger Fund, Variable Series / June 30, 2003 AVERAGE ANNUAL TOTAL RETURN AS OF JUNE 30, 2003 (%) <Table> <Caption> (CUMULATIVE) 6-MONTH 1-YEAR 5-YEAR LIFE - ---------------------------------------------------------------- Class A (5/1/95) 7.59 -4.75 5.56 -1.91 MSCI AC Free Asia ex Japan Index(1) 9.85 -4.00 4.93 -4.63 </Table> Inception date of share class is in parentheses. [CHART] VALUE OF A $10,000 INVESTMENT, 5/1/95 - 6/30/03 <Table> <Caption> CLASS A SHARES MSCI AC FREE ASIA EX JAPAN INDEX May-95 $ 11,100 $ 11,125 06/01/1995 - 06/30/1995 $ 10,900 $ 10,951 07/01/1995 - 07/31/1995 $ 11,200 $ 11,157 08/01/1995 - 08/31/1995 $ 10,851 $ 10,643 09/01/1995 - 09/30/1995 $ 11,050 $ 10,770 10/01/1995 - 10/31/1995 $ 11,000 $ 10,584 11/01/1995 - 11/30/1995 $ 11,050 $ 10,344 12/01/1995 - 12/31/1995 $ 11,501 $ 10,856 01/01/1996 - 01/31/1996 $ 12,661 $ 11,700 02/01/1996 - 02/29/1996 $ 12,560 $ 11,827 03/01/1996 - 03/31/1996 $ 12,560 $ 11,914 04/01/1996 - 04/30/1996 $ 12,510 $ 12,342 05/01/1996 - 05/31/1996 $ 12,460 $ 12,204 06/01/1996 - 06/30/1996 $ 12,208 $ 12,022 07/01/1996 - 07/31/1996 $ 11,552 $ 11,135 08/01/1996 - 08/31/1996 $ 11,956 $ 11,471 09/01/1996 - 09/30/1996 $ 12,308 $ 11,669 10/01/1996 - 10/31/1996 $ 12,207 $ 11,447 11/01/1996 - 11/30/1996 $ 12,813 $ 11,987 12/01/1996 - 12/31/1996 $ 12,851 $ 11,945 01/01/1997 - 01/31/1997 $ 12,750 $ 12,193 02/01/1997 - 02/28/1997 $ 12,750 $ 12,296 03/01/1997 - 03/31/1997 $ 11,985 $ 11,602 04/01/1997 - 04/30/1997 $ 11,781 $ 11,429 05/01/1997 - 05/31/1997 $ 12,852 $ 11,946 06/01/1997 - 06/30/1997 $ 13,464 $ 12,384 07/01/1997 - 07/31/1997 $ 13,668 $ 12,488 08/01/1997 - 08/31/1997 $ 11,324 $ 10,274 09/01/1997 - 09/30/1997 $ 11,681 $ 10,227 10/01/1997 - 10/31/1997 $ 9,028 $ 7,954 11/01/1997 - 11/30/1997 $ 8,876 $ 7,408 12/01/1997 - 12/31/1997 $ 8,850 $ 7,132 01/01/1998 - 01/31/1998 $ 7,556 $ 6,515 02/01/1998 - 02/28/1998 $ 9,212 $ 7,897 03/01/1998 - 03/31/1998 $ 9,161 $ 7,781 04/01/1998 - 04/30/1998 $ 8,385 $ 7,098 05/01/1998 - 05/31/1998 $ 7,246 $ 6,015 06/01/1998 - 06/30/1998 $ 6,522 $ 5,340 07/01/1998 - 07/31/1998 $ 6,004 $ 5,205 08/01/1998 - 08/31/1998 $ 5,124 $ 4,455 09/01/1998 - 09/30/1998 $ 6,003 $ 4,897 10/01/1998 - 10/31/1998 $ 7,763 $ 5,961 11/01/1998 - 11/30/1998 $ 8,281 $ 6,442 12/01/1998 - 12/31/1998 $ 8,281 $ 6,576 01/01/1999 - 01/31/1999 $ 7,806 $ 6,472 02/01/1999 - 02/28/1999 $ 7,806 $ 6,345 03/01/1999 - 03/31/1999 $ 8,492 $ 7,106 04/01/1999 - 04/30/1999 $ 10,338 $ 8,405 05/01/1999 - 05/31/1999 $ 9,652 $ 8,224 06/01/1999 - 06/30/1999 $ 10,707 $ 9,509 07/01/1999 - 07/31/1999 $ 10,707 $ 9,300 08/01/1999 - 08/31/1999 $ 10,760 $ 9,530 09/01/1999 - 09/30/1999 $ 10,338 $ 8,863 10/01/1999 - 10/31/1999 $ 11,023 $ 9,148 11/01/1999 - 11/30/1999 $ 12,342 $ 10,017 12/01/1999 - 12/31/1999 $ 13,912 $ 10,829 01/01/2000 - 01/31/2000 $ 13,274 $ 10,776 02/01/2000 - 02/29/2000 $ 13,646 $ 10,551 03/01/2000 - 03/31/2000 $ 14,177 $ 10,799 04/01/2000 - 04/30/2000 $ 13,274 $ 9,809 05/01/2000 - 05/31/2000 $ 12,530 $ 8,955 06/01/2000 - 06/30/2000 $ 13,857 $ 9,429 07/01/2000 - 07/31/2000 $ 13,805 $ 9,026 08/01/2000 - 08/31/2000 $ 13,698 $ 8,959 09/01/2000 - 09/30/2000 $ 12,742 $ 7,932 10/01/2000 - 10/31/2000 $ 12,159 $ 7,309 11/01/2000 - 11/30/2000 $ 11,522 $ 7,026 12/01/2000 - 12/31/2000 $ 11,736 $ 7,015 01/01/2001 - 01/31/2001 $ 12,594 $ 7,918 02/01/2001 - 02/28/2001 $ 11,843 $ 7,543 03/01/2001 - 03/31/2001 $ 10,396 $ 6,690 04/01/2001 - 04/30/2001 $ 10,985 $ 6,700 05/01/2001 - 05/31/2001 $ 10,664 $ 6,690 06/01/2001 - 06/30/2001 $ 10,342 $ 6,530 07/01/2001 - 07/31/2001 $ 10,127 $ 6,283 08/01/2001 - 08/31/2001 $ 9,484 $ 6,185 09/01/2001 - 09/30/2001 $ 7,984 $ 5,213 10/01/2001 - 10/31/2001 $ 8,198 $ 5,494 11/01/2001 - 11/30/2001 $ 9,109 $ 6,228 12/01/2001 - 12/31/2001 $ 9,566 $ 6,746 01/01/2002 - 01/31/2002 $ 9,566 $ 7,015 02/01/2002 - 02/28/2002 $ 9,404 $ 7,067 03/01/2002 - 03/31/2002 $ 9,782 $ 7,542 04/01/2002 - 04/30/2002 $ 9,782 $ 7,618 05/01/2002 - 05/31/2002 $ 9,459 $ 7,446 06/01/2002 - 06/30/2002 $ 8,972 $ 7,075 07/01/2002 - 07/31/2002 $ 8,486 $ 6,807 08/01/2002 - 08/31/2002 $ 8,270 $ 6,687 09/01/2002 - 09/30/2002 $ 7,567 $ 5,951 10/01/2002 - 10/31/2002 $ 7,891 $ 6,253 11/01/2002 - 11/30/2002 $ 8,324 $ 6,585 12/01/2002 - 12/31/2002 $ 7,944 $ 6,184 01/01/2003 - 01/31/2003 $ 7,889 $ 6,235 02/01/2003 - 02/28/2003 $ 7,615 $ 5,983 03/01/2003 - 03/31/2003 $ 7,341 $ 5,703 04/01/2003 - 04/30/2003 $ 7,451 $ 5,883 05/01/2003 - 05/31/2003 $ 8,053 $ 6,391 Jun-03 $ 8,545 $ 6,793 </Table> <Table> <Caption> NET ASSET VALUE PER SHARE ($) 12/31/02 6/30/03 - --------------------------------------------------------------- Class A 1.45 1.56 </Table> PAST PERFORMANCE CANNOT PREDICT FUTURE INVESTMENT RESULTS. SHARE PRICE AND INVESTMENT RETURN WILL VARY, SO YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. Total return performance includes changes in share price and reinvestment of all distributions. The MSCI (Morgan Stanley Capital International) AC Free Asia ex Japan Index is an unmanaged index that tracks the performance of equity securities in eleven countries in Asia, excluding Japan and also takes into account local market restrictions on share ownership by foreigners. Indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. MUTUAL FUND PERFORMANCE CHANGES OVER TIME. CURRENT RETURNS FOR THE FUND MAY BE DIFFERENT THAN THAT SHOWN. Performance numbers reflect all fund expenses, but do not include any insurance charges imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. (1) Index performance is from April 30, 1995. 140 <Page> INVESTMENT PORTFOLIO Newport Tiger Fund, Variable Series / June 30, 2003 (Unaudited) <Table> <Caption> SHARES VALUE --------------- --------------- COMMON STOCKS--96.6% CONSUMER DISCRETIONARY--11.3% AUTOMOBILES--3.1% Hyundai Motors Co., Ltd. 15,200 $ 402,110 PT Astra International Tbk (a) 596,500 258,483 --------------- 660,593 --------------- HOTELS, RESTAURANTS & LEISURE--2.4% Genting Berhad 128,000 505,263 --------------- MEDIA--3.8% Singapore Press Holdings Ltd. 54,164 562,943 Television Broadcasts Ltd. 66,000 235,710 --------------- 798,653 --------------- TEXTILES, APPAREL & LUXURY GOODS--2.0% Li & Fung Ltd. 328,000 422,716 --------------- CONSUMER STAPLES--1.1% FOOD & DRUG RETAILING--0.2% Convenience Retail Asia Ltd. (a) 198,000 45,957 --------------- FOOD PRODUCTS--0.9% Nestle India Ltd. 14,800 186,477 --------------- FINANCIALS--27.6% BANKS--13.3% Bangkok Bank Public Co., Ltd. (a) 297,400 395,874 DBS Group Holdings Ltd. 32,638 190,925 Hang Seng Bank Ltd. 54,300 572,722 Hong Leong Bank Berhad 167,000 203,037 Kookmin Bank 13,783 415,394 Public Bank Berhad 525,750 417,833 Siam Commercial Bank Public Co., Ltd. (a) 189,500 162,158 United Overseas Bank Ltd. 66,000 464,802 --------------- 2,822,745 --------------- DIVERSIFIED FINANCIALS--4.3% Housing Development Finance Corp., Ltd. 78,108 689,491 Swire Pacific Ltd., Series A 50,000 218,000 --------------- 907,491 --------------- REAL ESTATE--10.0% City Developments Ltd. 133,000 335,380 Henderson Land Development Co., Ltd. 70,000 200,176 Land & Houses Public Co., Ltd. 1,827,300 412,630 SM Prime Holdings, Inc. 2,599,000 286,806 Sun Hung Kai Properties Ltd. 173,000 871,861 --------------- 2,106,853 --------------- HEALTH CARE--4.2% PHARMACEUTICALS--4.2% Dr. Reddy's Laboratories Ltd., ADR 27,800 $ 648,018 Ranbaxy Laboratories Ltd. (a) 14,700 248,917 --------------- 896,935 --------------- INDUSTRIALS--8.2% ELECTRICAL EQUIPMENT--0.4% Phoenixtec Power Co., Ltd 96,000 80,717 --------------- INDUSTRIAL CONGLOMERATES--7.8% Big C Supercenter Public Co., Ltd. (Non Voting Depository Receipts) 99,400 42,057 China Merchants Holdings International Co., Ltd. 337,000 302,508 Hutchison Whampoa Ltd. 156,500 953,271 Kasikornbank Public Co., Ltd. (Non Voting Depository Receipts) (a) 455,000 367,720 --------------- 1,665,556 --------------- INFORMATION TECHNOLOGY--21.7% COMMUNICATIONS EQUIPMENT--1.3% UTStarcom, Inc. (a) 7,800 277,446 --------------- COMPUTERS & PERIPHERALS--2.5% Ambit Microsystems Corp. 63,000 194,770 Asustek Computer, Inc. 132,000 333,719 --------------- 528,489 --------------- ELECTRONIC EQUIPMENT & INSTRUMENTS--0.8% Venture Corp., Ltd. 18,000 164,589 --------------- INFORMATION TECHNOLOGY CONSULTING & SERVICES--2.8% Infosys Technologies Ltd. 8,557 602,747 --------------- SEMICONDUCTOR EQUIPMENT & PRODUCTS--14.3% Realtek Semiconductor Corp. 92,000 187,402 Samsung Electronics Co., Ltd. 5,450 1,619,715 Taiwan Semiconductor Manufacturing Co., Ltd. (a) 738,541 1,216,320 --------------- 3,023,437 --------------- </Table> See Notes to Investment Portfolio. 141 <Page> <Table> <Caption> SHARES VALUE --------------- --------------- MATERIALS--2.1% CONSTRUCTION MATERIALS--2.1% The Siam Cement Public Co., Ltd. (Non Voting Depository Receipts) 123,450 $ 440,159 --------------- TELECOMMUNICATION SERVICES--10.1% DIVERSIFIED TELECOMMUNICATION SERVICES--5.8% PT Telekomunikasi Indonesia 323,600 181,412 KT Corp., ADR 19,200 750,640 Philippine Long Distance Telephone Co. (a) 27,600 291,667 --------------- 1,223,719 --------------- WIRELESS TELECOMMUNICATION SERVICES--4.3% China Mobile (Hong Kong) Ltd. (a)(b) 385,500 909,600 --------------- TRANSPORTATION--1.3% TRANSPORTATION INFRASTRUCTURE--1.3% Zhejiang Expressway Co., Ltd. 692,000 286,183 --------------- UTILITIES--9.0% ELECTRIC UTILITIES--5.1% Beijing Datang Power Generation Co., Ltd. 700,000 309,689 Huaneng Power International, Inc. 686,000 782,929 --------------- 1,092,618 --------------- GAS UTILITIES--3.9% Hong Kong & China Gas Co., Ltd. 653,002 824,820 --------------- TOTAL COMMON STOCKS (cost of $17,559,079) 20,473,763 --------------- <Caption> PAR VALUE --------------- --------------- SHORT-TERM OBLIGATION--1.9% Repurchase agreement with State Street Bank & Trust Co., dated 06/30/03, due 07/01/03 at 1.000%, collateralized by a U.S. Treasury Bond maturing 2/15/29, market value $402,145, (repurchase proceeds $393,011) (cost of $393,000) $ 393,000 $ 393,000 --------------- TOTAL INVESTMENTS--98.5% (cost of $17,952,079) (c) 20,866,763 --------------- OTHER ASSETS & LIABILITIES, NET--1.5% 320,319 --------------- NET ASSETS--100.0% $ 21,187,082 =============== </Table> NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing. (b) Represents fair value as determined in good faith under the direction of the Trustees. (c) Cost for both financial statements and federal income tax purposes is the same. <Table> <Caption> SUMMARY OF SECURITIES % OF TOTAL BY COUNTRY VALUE INVESTMENTS - ------------------- --------------- --------------- Hong Kong $ 5,088,668 24.4% South Korea 3,187,859 15.3 India 2,375,649 11.4 Taiwan 2,012,928 9.7 Thailand 1,820,598 8.7 Singapore 1,718,638 8.2 China 1,378,801 6.6 Malaysia 1,126,133 5.4 United States 670,446 3.2 Philippines 578,474 2.8 Indonesia 439,896 2.1 Bermuda 422,716 2.0 Cayman Islands 45,957 0.2 --------------- ----- $ 20,866,763 100.0% =============== ===== </Table> Certain securities are listed by country of underlying exposure but may trade predominantly on other exchanges. <Table> <Caption> ACRONYM NAME ------- ---- ADR American Depository Receipt </Table> See Notes to Financial Statements. 142 <Page> STATEMENT OF ASSETS & LIABILITIES Newport Tiger Fund, Variable Series / June 30, 2003 (Unaudited) <Table> ASSETS: Investments, at cost $ 17,952,079 --------------- Investments, at value $ 20,866,763 Cash 770 Foreign currency (cost of $54,918) 54,915 Receivable for: Fund shares sold 410,417 Interest 11 Dividends 19,802 Deferred Trustees' compensation plan 3,324 Other assets 1,465 --------------- TOTAL ASSETS 21,357,467 --------------- LIABILITIES: Payable for: Investments purchased 36,378 Fund shares repurchased 16,516 Distribution fee--Class B 47 Management fee 15,354 Transfer agent fee 595 Audit fee 8,553 Custody fee 12,679 Reports to shareholders 8,373 Foreign capital gains tax 68,566 Deferred Trustees' fee 3,324 --------------- TOTAL LIABILITIES 170,385 --------------- NET ASSETS $ 21,187,082 =============== COMPOSITION OF NET ASSETS: Paid-in capital $ 30,726,250 Undistributed net investment income 208,679 Accumulated net realized loss (12,593,812) Net unrealized appreciation (depreciation) on: Investments 2,914,684 Foreign currency translations (68,719) --------------- NET ASSETS $ 21,187,082 =============== CLASS A: Net assets $ 19,604,874 Shares outstanding 12,527,970 =============== Net asset value per share $ 1.56 =============== CLASS B: Net assets $ 1,582,208 Shares outstanding 994,343 =============== Net asset value per share $ 1.59 =============== </Table> See Notes to Financial Statements. 143 <Page> STATEMENT OF OPERATIONS Newport Tiger Fund, Variable Series For the Six Months Ended June 30, 2003 (Unaudited) <Table> INVESTMENT INCOME: Dividends $ 371,075 Interest 1,686 --------------- Total Investment Income (net of foreign taxes withheld of $23,901) 372,761 --------------- EXPENSES: Management fee 98,715 Distribution fee--Class B 1,355 Pricing and bookkeeping fees 5,421 Transfer agent fee 3,720 Trustees' fee 2,946 Custody fee 29,965 Audit fee 11,353 Other expenses 7,106 --------------- Total Expenses 160,581 Custody earnings credit (61) --------------- Net Expenses 160,520 --------------- Net Investment Income 212,241 --------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: Net realized loss on: Investments (453,109) Foreign currency transactions (20,565) Foreign capital gains tax (3,531) --------------- Net realized loss (477,205) --------------- Net change in unrealized appreciation/depreciation on: Investments 1,775,847 Foreign currency translations (68,278) --------------- Net change in unrealized appreciation/depreciation 1,707,569 --------------- Net Gain 1,230,364 --------------- Net Increase in Net Assets from Operations $ 1,442,605 =============== </Table> See Notes to Financial Statements. 144 <Page> STATEMENT OF CHANGES IN NET ASSETS Newport Tiger Fund, Variable Series <Table> <Caption> (UNAUDITED) SIX MONTHS YEAR ENDED ENDED JUNE 30, DECEMBER 31 INCREASE (DECREASE) IN NET ASSETS: 2003 2002 - ---------------------------------- --------------- --------------- OPERATIONS: Net investment income $ 212,241 $ 304,732 Net realized loss on investments and foreign currency transactions and foreign capital gains tax (477,205) (48,595) Net change in unrealized appreciation/depreciation on investments and foreign currency translations 1,707,569 (3,025,068) --------------- --------------- Net Increase (Decrease) from Operations 1,442,605 (2,768,931) --------------- --------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income: Class A -- (253,001) Class B -- (11,587) Return of capital: Class A -- (62,217) Class B -- (2,850) --------------- --------------- Total Distributions Declared to Shareholders -- (329,655) --------------- --------------- SHARE TRANSACTIONS: Class A: Subscriptions 3,431,799 349,774,001 Distributions reinvested -- 315,218 Redemptions (8,261,919) (357,739,000) --------------- --------------- Net Decrease (4,830,120) (7,649,781) --------------- --------------- Class B: Subscriptions 449,300 2,488,667 Distributions reinvested -- 14,437 Redemptions (47,833) (3,501,399) --------------- --------------- Net Increase (Decrease) 401,467 (998,295) --------------- --------------- Net Decrease from Share Transactions (4,428,653) (8,648,076) --------------- --------------- Total Decrease in Net Assets (2,986,048) (11,746,662) NET ASSETS: Beginning of period 24,173,130 35,919,792 --------------- --------------- End of period (including undistributed net investment income of $208,679 and overdistributed net investment income of $(3,562)) $ 21,187,082 $ 24,173,130 =============== =============== CHANGES IN SHARES: Class A: Subscriptions 2,378,545 199,407,089 Issued for distributions reinvested -- 214,434 Redemptions (5,821,645) (202,704,318) --------------- --------------- Net Decrease (3,443,100) (3,082,795) --------------- --------------- Class B: Subscriptions 289,405 1,369,557 Issued for distributions reinvested -- 9,625 Redemptions (33,451) (1,874,153) --------------- --------------- Net Increase (Decrease) 255,954 (494,971) --------------- --------------- </Table> See Notes to Financial Statements. 145 <Page> NOTES TO FINANCIAL STATEMENTS Newport Tiger Fund, Variable Series / June 30, 2003 (Unaudited) NOTE 1. ORGANIZATION AND ACCOUNTING POLICIES ORGANIZATION--Newport Tiger Fund, Variable Series (the "Fund"), a series of Liberty Variable Investment Trust (the "Trust"), is a diversified portfolio of a Massachusetts business trust, registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund's investment goal is to seek capital appreciation. The Fund's capitalization consists of an unlimited number of shares of beneficial interest without par value that represent a separate series of the Trust. The Fund offers two classes of shares: Class A and Class B. Each share of a class represents an equal proportionate beneficial interest in that share class and, when issued and outstanding, is fully paid and nonassessable. Shareholders would be entitled to share proportionally in the net assets of their share class available for distribution to shareholders upon liquidation of the Fund. Shares of the Fund are available and are being marketed exclusively as a pooled funding vehicle for variable annuity contracts ("VA contracts") and Variable Life Insurance Policies ("VLI Policies") offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies"). The Participating Insurance Companies and their separate accounts own all the shares of the Fund. On April 1, 2003, Liberty Advisory Services Corp., the investment advisor to the Fund and Newport Fund Management, Inc. ("Newport"), the sub-advisor to the Fund, merged into Columbia Management Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co., an indirect wholly owned subsidiary of FleetBoston Financial Corporation. At the time of the merger, Columbia assumed the obligations of Liberty Advisory Services Corp. and Newport with respect to the Fund. The merger did not change the way the Fund is managed, the investment personnel assigned to manage the Fund or the fees paid by the Fund. Columbia provides investment management and advisory services to the Fund pursuant to its Management Agreement with the Fund. Columbia also provides pricing and bookkeeping services to the Fund. Liberty Funds Distributor, Inc. ("LFD"), an affiliate of Columbia, serves as the principal underwriter of the Fund. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION AND TRANSACTIONS--Equity securities generally are valued at the last sale price or, in the case of unlisted or listed securities for which there were no sales during the day, at the current quoted bid price. Forward currency contracts are valued based on the weighted value of exchange-traded contracts with similar durations. Short-term obligations with a maturity of 60 days or less are valued at amortized cost. The values of all assets and liabilities quoted in foreign currencies are translated into U.S. dollars at that day's exchange rates. Investments for which market quotations are not readily available, or quotations which management believes are not appropriate, are valued at fair value under procedures approved by the Board of Trustees. Generally, trading in foreign securities is substantially completed each day at various times prior to the close of the New York Stock Exchange ("NYSE"). The values of such securities used in computing the net asset value of the Fund's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which they are determined and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If events materially affecting the value of such securities and such exchange rates occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Trustees. Security transactions are accounted for on the date the securities are purchased, sold or mature. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS--All income, expenses (other than the Class B distribution fee), and realized and unrealized gains (losses) are allocated to each class proportionately on a daily basis for purposes of determining the net asset value of each class. The per share data was calculated using average shares outstanding during the period. In addition, Class B net investment income per share data and ratios reflect the distribution fee applicable to Class B shares only. FEDERAL INCOME TAXES--Consistent with the Fund's policy to qualify as a regulated investment company and to 146 <Page> distribute all of its taxable income, no federal income tax has been accrued. DISTRIBUTIONS TO SHAREHOLDERS--The Fund intends to distribute as income dividends or capital gains distributions, at least annually, substantially all of its net investment income and net profits realized from the sale of investments. All dividends and distributions are reinvested in additional shares of the Fund at net asset value as of the record date of the distribution. Income and capital gain distributions are determined in accordance with federal income tax regulations. FOREIGN CURRENCY TRANSACTIONS--Net realized and unrealized gains (losses) on foreign currency transactions and translations includes gains (losses) arising from the fluctuations in exchange rates between trade and settlement dates on securities transactions, gains (losses) arising from the disposition of foreign currency, and currency gains (losses) between the accrual and payment dates on dividends, interest income and foreign withholding taxes. The Fund does not distinguish that portion of gains (losses) on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the investments. Such fluctuations are included with the net realized and unrealized gains (losses) on investments. FORWARD CURRENCY CONTRACTS--The Fund may enter into forward currency contracts to purchase or sell foreign currencies at predetermined exchange rates in connection with the settlement of purchases and sales of securities. The Fund may also enter into forward currency contracts to hedge certain other foreign currency denominated assets. The contracts are used to minimize the exposure to foreign exchange rate fluctuations during the period between trade and settlement date of the contracts. All contracts are marked-to-market daily, resulting in unrealized gains (losses) which become realized at the time the forward currency contracts are closed or mature. Realized and unrealized gains (losses) arising from such transactions are included in net realized and unrealized gains (losses) on foreign currency transactions and translations. Forward currency contracts do not eliminate fluctuations in the prices of the Fund's portfolio securities. While the maximum potential loss from such contracts is the aggregate face value in U.S. dollars at the time the contract was opened, exposure is typically limited to the change in value of the contract (in U.S. dollars) over the period it remains open. Risks may also arise if counterparties fail to perform their obligations under the contracts. FOREIGN CAPITAL GAINS TAXES--Realized gains in certain countries may be subject to foreign taxes at the fund level, at rates ranging from approximately 10% to 30%. The Fund accrues for such foreign taxes on net realized and unrealized gains at the appropriate rate for each jurisdiction. OTHER--Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date (except for certain foreign securities which are recorded as soon after ex-date as the Fund becomes aware of such), net of non-reclaimable tax withholdings. Where a high level of uncertainty as to collection exists, income on securities is recorded net of all tax withholdings with any rebates recorded when received. The Fund's custodian takes possession through the federal book-entry system of securities collateralizing repurchase agreements. Collateral is marked-to-market daily to ensure that the market value of the underlying assets remains sufficient to protect the Fund. The Fund may experience costs and delays in liquidating the collateral if the issuer defaults or enters bankruptcy. NOTE 2. FEDERAL TAX INFORMATION Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carry-forwards) under income tax regulations. The following capital loss carryforwards, determined as of December 31, 2002, are available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: <Table> <Caption> YEAR OF CAPITAL LOSS EXPIRATION CARRYFORWARD ---------- ------------ 2005 $ 2,191,366 2006 5,726,423 2007 1,050,865 2009 2,161,521 2010 879,602 ------------ $ 12,009,777 ============ </Table> NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES MANAGEMENT FEE--Columbia receives a monthly fee equal to 0.90% annually of the Fund's average daily net assets. PRICING AND BOOKKEEPING FEES--Columbia is responsible for providing pricing and bookkeeping services to the Fund under a Pricing and Bookkeeping Agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Bank & Trust Company ("State Street"). Columbia pays fees to State Street under the Outsourcing Agreement. 147 <Page> Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual flat fee of $10,000, paid monthly, and in any month that the Fund's average daily net assets are more than $50 million, a monthly fee equal to the average daily net assets of the Fund for that month multiplied by a fee rate that is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. The Fund also pays out-of-pocket costs for pricing services. TRANSFER AGENT FEE--Liberty Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia, provides shareholder services for an annual rate of $7,500. DISTRIBUTION FEE--The Fund has adopted a 12b-1 plan, which requires it to pay LFD a monthly distribution fee equal to 0.25% annually of Class B average daily net assets. OTHER--The Fund pays no compensation to its officers, all of whom are employees of Columbia or its affiliates. The Fund's Independent Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. The Fund has an agreement with its custodian bank under which $61 of custody fees were reduced by balance credits for the six months ended June 30, 2003. The Fund could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if it had not entered into such an agreement. NOTE 4. PORTFOLIO INFORMATION INVESTMENT ACTIVITY--For the six months ended June 30, 2003, purchases and sales of investments, other than short-term obligations, were $3,822,849 and $8,534,153, respectively. Unrealized appreciation (depreciation) at June 30, 2003, based on cost of investments for federal income tax purposes, was: <Table> Gross unrealized appreciation $ 4,351,707 Gross unrealized depreciation (1,437,023) ------------ Net unrealized appreciation $ 2,914,684 ============ </Table> OTHER--There are certain additional risks involved when investing in foreign securities that are not inherent with investments in domestic securities. These risks may involve foreign currency exchange rate fluctuations, adverse political and economic developments and the possible prevention of foreign currency exchange or the imposition of other foreign governmental laws or restrictions. The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. 148 <Page> FINANCIAL HIGHLIGHTS Newport Tiger Fund, Variable Series--Class A Shares Selected data for a share outstanding throughout each period is as follows: <Table> <Caption> (UNAUDITED) SIX MONTHS YEAR ENDED DECEMBER 31, ENDED -------------------------------------------------------------- JUNE 30, 2003 2002 2001 2000 1999 1998 ------------- ---------- ---------- ---------- ---------- --------- NET ASSET VALUE, BEGINNING OF PERIOD $ 1.45 $ 1.77 $ 2.19 $ 2.62 $ 1.57 $ 1.71 ---------- ---------- ---------- ---------- ---------- --------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (a) 0.01 0.02 0.02 0.02 0.03 0.03 Net realized and unrealized gain (loss) on investments and foreign currency 0.10 (0.32) (0.42) (0.43) 1.04 (0.14) ---------- ---------- ---------- ---------- ---------- --------- Total from Investment Operations 0.11 (0.30) (0.40) (0.41) 1.07 (0.11) ---------- ---------- ---------- ---------- ---------- --------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- (0.02) (0.02) (0.02) (0.02) (0.03) Return of capital -- --(b) -- -- -- -- ---------- ---------- ---------- ---------- ---------- --------- Total Distributions Declared to Shareholders -- (0.02) (0.02) (0.02) (0.02) (0.03) ---------- ---------- ---------- ---------- ---------- --------- NET ASSET VALUE, END OF PERIOD $ 1.56 $ 1.45 $ 1.77 $ 2.19 $ 2.62 $ 1.57 ========== ========== ========== ========== ========== ========= Total return (c)(d) 7.59%(e) (16.96)% (18.48)% (15.63)% 68.01% (6.43)% RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (f) 1.45%(g) 1.27% 1.31% 1.15% 1.21% 1.30% Net investment income (f) 1.95%(g) 0.96% 0.99% 0.80% 1.65% 2.16% Portfolio turnover rate 18%(e) 28% 24% 22% 12% 16% Net assets, end of period (000's) $ 19,605 $ 23,087 $ 33,688 $ 44,346 $ 46,125 $ 23,655 </Table> (a) Per share data was calculated using average shares outstanding during the period. (b) Rounds to less than $0.01 per share. (c) Total return at net asset value assuming all distributions reinvested. (d) Total return figures do not include any insurance company charges associated with a variable annuity. If included, total return would be reduced. (e) Not annualized. (f) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (g) Annualized. 149 <Page> LIBERTY VARIABLE INVESTMENT TRUST INVESTMENT MANAGER AND ADMINISTRATOR Columbia Management Advisors, Inc. 100 Federal Street Boston, MA 02110 TRANSFER AGENT Liberty Funds Services, Inc. PO Box 8081 Boston, MA 02266-8081 150 <Page> SteinRoe Variable Investment Trust STEINROE VARIABLE INVESTMENT TRUST <Page> PORTFOLIO MANAGER'S DISCUSSION Liberty Asset Allocation Fund, Variable Series / June 30, 2003 Liberty Asset Allocation Fund, Variable Series seeks high total investment return. Harvey B. Hirschhorn, CFA, is the lead portfolio manager of the fund. Inc. He has been associated with Columbia Management Advisors, and its predecessors since 1973. Mr. Hirschhorn is responsible for allocating the fund's assets among various asset classes, while investment decisions for the portion of the fund allocated to each asset class are made by investment professionals with particular expertise in such asset class. On April 7, 2003, Galaxy VIP Asset Allocation Fund was merged into Stein Roe Balanced Fund, Variable Series. The combined fund was renamed Liberty Asset Allocation Fund, Variable Series. For the six-month period ended June 30, 2003, the fund did not perform as well as its equity benchmark, the S&P 500 Index, primarily because one-third of the portfolio was invested in fixed-income securities. During the period, fixed-income securities generally did not perform as well as stocks. However, fund performance outpaced the Lehman Brothers Aggregate Bond Index because of its equity exposure. The equity portion of the fund benefited from the stock market rally during the second half of the period. The fund's investments in growth stocks of all capitalization categories and real estate investment trusts (REITs) had the highest total returns. UNCERTAINTY, THEN RELIEF At the start of 2003, the US equity markets were paralyzed by uncertainty over the looming war in Iraq. But three major events helped get them back on track. First, the relatively short duration of the major battles of the war--and the absence of any significant surprises--jolted the stock market out of its doldrums. Then, first quarter corporate profits came in somewhat higher than expected, adding additional momentum to the rally. Finally, Congress signed a fiscal stimulus bill that accelerated income tax cuts that were passed in 2001 and cut the tax rate on dividends and long-term capital gains. These additional incentives helped propel stock prices higher. Also during the period, weakness in the dollar improved corporate earnings of foreign subsidiaries, and the lowest long-term interest rates in 40+ years continued to help reduce the cost of consumer and corporate debt. EFFECTIVE ASSET ALLOCATION HELPED PERFORMANCE We made only minor changes to the fund's allocations during the period. Through price appreciation the overall exposure to stocks increased, from 59.6% of net assets on December 31, 2002 to 66.4% of net assets on June 30, 2003. We had only a small allocation to international stocks, which did not perform as well as domestic stocks. The fund's positions in growth and value companies were about equal, but growth generally outperformed value during these past six months. Our preference for large- and small-cap US companies over foreign stocks also had a positive impact on returns. In general, small-cap stocks were the strongest performers, a reflection that investors expect these companies to benefit when a full-blown economic recovery materializes. We reduced fixed-income exposure by about two percentage points and continued to favor high-yield securities and to underweight investment-grade securities, a strategy that worked well for the fund. The relatively strong performance of REITs took us by surprise. Late last year, we had pared back our REIT position believing that prospects for the real estate market were weakening. But in a market desperate for income-producing securities, the relatively high yields on REITs made them more attractive to investors than we had anticipated. A BRIGHTER OUTLOOK We believe short-term interest rates are likely to remain low, as the Federal Reserve Board has indicated that it will keep them there for some time. However, we expect longer-term interest rates to move higher over the next six to 12 months if economic growth picks up. We believe that earnings growth is likely to be a key indicator of an improving economy. If economic growth of 3.5% to 4% occurs as we anticipate, it would bode well for stocks because it would reflect higher corporate profits, but less well for bonds. As a result, we plan to maintain the current allocation between equities and fixed income. Economic and market conditions can frequently change. There is no assurance that the trends described here will continue or commence. An investment in Liberty Asset Allocation Fund, Variable Series offers the potential for long-term growth, but also involves certain risks, including stock market fluctuations due to economic and business developments. In addition, because the fund invests in high-yield securities it offers the potential for high current income and attractive total return, but involves certain risks, including credit risks associated with lower-rated bonds and interest rate risks. The fund also invests in foreign securities, which have risks greater than US investments including currency fluctuations, political and economical instability and less regulations. Investing in small-cap stocks may present special risks, including possible illiquidity and greater price volatility than stocks of larger, more established companies. An investment in the fund may be subject to certain risks associated with ownership of real estate such as possible declines in value, environmental problems, natural disasters, changes in interest rates, liquidity and local economic conditions. 152 <Page> PERFORMANCE INFORMATION Liberty Asset Allocation Fund, Variable Series / June 30, 2003 AVERAGE ANNUAL TOTAL RETURN AS OF JUNE 30, 2003 (%) <Table> <Caption> (CUMULATIVE) 6-MONTH 1-YEAR 5-YEAR 10-YEAR - ------------------------------------------------------------------- Class A (1/1/89) 9.29 3.12 0.60 6.51 S&P 500 Index 11.75 0.25 -1.61 10.04 Lehman Brothers Aggregate Bond Index 3.93 10.40 7.55 7.21 Lehman Brothers Government/Credit Index 5.23 13.15 7.84 7.35 </Table> Inception date of share class is in parentheses. [CHART] VALUE OF A $10,000 INVESTMENT, 6/30/93 - 6/30/03 <Table> <Caption> LEHMAN BROTHERS LEHMAN BROTHERS AGGREGATE CLASS A SHARES S&P 500 INDEX GOVERNMENT/CREDIT INDEX BOND INDEX Jun-93 $ 10,000 $ 10,000 $ 10,000 $ 10,000 07/01/1993 - 07/31/1993 $ 9,977 $ 9,960 $ 10,064 $ 10,057 08/01/1993 - 08/31/1993 $ 10,251 $ 10,337 $ 10,295 $ 10,233 09/01/1993 - 09/30/1993 $ 10,251 $ 10,258 $ 10,332 $ 10,261 10/01/1993 - 10/31/1993 $ 10,365 $ 10,470 $ 10,374 $ 10,299 11/01/1993 - 11/30/1993 $ 10,289 $ 10,371 $ 10,257 $ 10,211 12/01/1993 - 12/31/1993 $ 10,429 $ 10,496 $ 10,302 $ 10,266 01/01/1994 - 01/31/1994 $ 10,636 $ 10,853 $ 10,456 $ 10,405 02/01/1994 - 02/28/1994 $ 10,501 $ 10,559 $ 10,228 $ 10,224 03/01/1994 - 03/31/1994 $ 10,151 $ 10,100 $ 9,978 $ 9,971 04/01/1994 - 04/30/1994 $ 10,135 $ 10,229 $ 9,895 $ 9,891 05/01/1994 - 05/31/1994 $ 10,238 $ 10,396 $ 9,877 $ 9,890 06/01/1994 - 06/30/1994 $ 10,071 $ 10,141 $ 9,854 $ 9,869 07/01/1994 - 07/31/1994 $ 10,286 $ 10,474 $ 10,051 $ 10,065 08/01/1994 - 08/31/1994 $ 10,516 $ 10,902 $ 10,056 $ 10,077 09/01/1994 - 09/30/1994 $ 10,262 $ 10,636 $ 9,904 $ 9,929 10/01/1994 - 10/31/1994 $ 10,245 $ 10,874 $ 9,893 $ 9,920 11/01/1994 - 11/30/1994 $ 9,943 $ 10,478 $ 9,875 $ 9,898 12/01/1994 - 12/31/1994 $ 10,095 $ 10,633 $ 9,940 $ 9,967 01/01/1995 - 01/31/1995 $ 10,211 $ 10,909 $ 10,131 $ 10,164 02/01/1995 - 02/28/1995 $ 10,571 $ 11,333 $ 10,366 $ 10,406 03/01/1995 - 03/31/1995 $ 10,737 $ 11,668 $ 10,435 $ 10,469 04/01/1995 - 04/30/1995 $ 10,969 $ 12,011 $ 10,582 $ 10,616 05/01/1995 - 05/31/1995 $ 11,316 $ 12,490 $ 11,025 $ 11,027 06/01/1995 - 06/30/1995 $ 11,524 $ 12,780 $ 11,113 $ 11,107 07/01/1995 - 07/31/1995 $ 11,855 $ 13,203 $ 11,070 $ 11,083 08/01/1995 - 08/31/1995 $ 11,880 $ 13,236 $ 11,212 $ 11,217 09/01/1995 - 09/30/1995 $ 12,112 $ 13,794 $ 11,326 $ 11,326 10/01/1995 - 10/31/1995 $ 11,996 $ 13,744 $ 11,492 $ 11,473 11/01/1995 - 11/30/1995 $ 12,402 $ 14,346 $ 11,682 $ 11,645 12/01/1995 - 12/31/1995 $ 12,665 $ 14,623 $ 11,854 $ 11,808 01/01/1996 - 01/31/1996 $ 12,917 $ 15,121 $ 11,927 $ 11,886 02/01/1996 - 02/29/1996 $ 13,026 $ 15,261 $ 11,674 $ 11,679 03/01/1996 - 03/31/1996 $ 13,187 $ 15,408 $ 11,576 $ 11,597 04/01/1996 - 04/30/1996 $ 13,241 $ 15,634 $ 11,496 $ 11,532 05/01/1996 - 05/31/1996 $ 13,350 $ 16,036 $ 11,477 $ 11,509 06/01/1996 - 06/30/1996 $ 13,494 $ 16,097 $ 11,630 $ 11,664 07/01/1996 - 07/31/1996 $ 13,242 $ 15,385 $ 11,656 $ 11,695 08/01/1996 - 08/31/1996 $ 13,431 $ 15,710 $ 11,627 $ 11,675 09/01/1996 - 09/30/1996 $ 13,818 $ 16,593 $ 11,834 $ 11,878 10/01/1996 - 10/31/1996 $ 14,205 $ 17,051 $ 12,110 $ 12,142 11/01/1996 - 11/30/1996 $ 14,817 $ 18,338 $ 12,333 $ 12,350 12/01/1996 - 12/31/1996 $ 14,647 $ 17,975 $ 12,196 $ 12,235 01/01/1997 - 01/31/1997 $ 15,105 $ 19,097 $ 12,210 $ 12,273 02/01/1997 - 02/28/1997 $ 14,942 $ 19,248 $ 12,236 $ 12,303 03/01/1997 - 03/31/1997 $ 14,576 $ 18,459 $ 12,090 $ 12,167 04/01/1997 - 04/30/1997 $ 15,013 $ 19,559 $ 12,267 $ 12,349 05/01/1997 - 05/31/1997 $ 15,624 $ 20,754 $ 12,381 $ 12,467 06/01/1997 - 06/30/1997 $ 15,991 $ 21,677 $ 12,530 $ 12,615 07/01/1997 - 07/31/1997 $ 16,908 $ 23,401 $ 12,913 $ 12,956 08/01/1997 - 08/31/1997 $ 16,328 $ 22,090 $ 12,768 $ 12,846 09/01/1997 - 09/30/1997 $ 17,040 $ 23,299 $ 12,969 $ 13,034 10/01/1997 - 10/31/1997 $ 16,735 $ 22,520 $ 13,176 $ 13,223 11/01/1997 - 11/30/1997 $ 16,907 $ 23,563 $ 13,246 $ 13,284 12/01/1997 - 12/31/1997 $ 17,110 $ 23,968 $ 13,385 $ 13,418 01/01/1998 - 01/31/1998 $ 17,262 $ 24,232 $ 13,574 $ 13,590 02/01/1998 - 02/28/1998 $ 17,749 $ 25,979 $ 13,547 $ 13,579 03/01/1998 - 03/31/1998 $ 18,164 $ 27,309 $ 13,589 $ 13,625 04/01/1998 - 04/30/1998 $ 18,210 $ 27,588 $ 13,657 $ 13,696 05/01/1998 - 05/31/1998 $ 17,973 $ 27,113 $ 13,803 $ 13,826 06/01/1998 - 06/30/1998 $ 18,232 $ 28,214 $ 13,944 $ 13,944 07/01/1998 - 07/31/1998 $ 18,164 $ 27,915 $ 13,955 $ 13,973 08/01/1998 - 08/31/1998 $ 16,546 $ 23,881 $ 14,227 $ 14,201 09/01/1998 - 09/30/1998 $ 17,130 $ 25,412 $ 14,634 $ 14,533 10/01/1998 - 10/31/1998 $ 17,882 $ 27,476 $ 14,530 $ 14,456 11/01/1998 - 11/30/1998 $ 18,499 $ 29,141 $ 14,617 $ 14,539 12/01/1998 - 12/31/1998 $ 19,252 $ 30,819 $ 14,654 $ 14,582 01/01/1999 - 01/31/1999 $ 19,735 $ 32,107 $ 14,758 $ 14,686 02/01/1999 - 02/28/1999 $ 19,285 $ 31,109 $ 14,406 $ 14,429 03/01/1999 - 03/31/1999 $ 19,644 $ 32,353 $ 14,479 $ 14,508 04/01/1999 - 04/30/1999 $ 19,911 $ 33,605 $ 14,515 $ 14,555 05/01/1999 - 05/31/1999 $ 19,618 $ 32,812 $ 14,365 $ 14,426 06/01/1999 - 06/30/1999 $ 20,287 $ 34,627 $ 14,321 $ 14,380 07/01/1999 - 07/31/1999 $ 19,934 $ 33,550 $ 14,281 $ 14,318 08/01/1999 - 08/31/1999 $ 19,825 $ 33,382 $ 14,269 $ 14,311 09/01/1999 - 09/30/1999 $ 19,860 $ 32,467 $ 14,398 $ 14,477 10/01/1999 - 10/31/1999 $ 20,371 $ 34,522 $ 14,435 $ 14,531 11/01/1999 - 11/30/1999 $ 20,674 $ 35,223 $ 14,426 $ 14,529 12/01/1999 - 12/31/1999 $ 21,660 $ 37,294 $ 14,338 $ 14,460 01/01/2000 - 01/31/2000 $ 21,136 $ 35,422 $ 14,334 $ 14,412 02/01/2000 - 02/29/2000 $ 21,282 $ 34,753 $ 14,513 $ 14,586 03/01/2000 - 03/31/2000 $ 22,446 $ 38,152 $ 14,724 $ 14,779 04/01/2000 - 04/30/2000 $ 21,712 $ 37,003 $ 14,652 $ 14,736 05/01/2000 - 05/31/2000 $ 21,215 $ 36,245 $ 14,638 $ 14,729 06/01/2000 - 06/30/2000 $ 22,055 $ 37,136 $ 14,937 $ 15,035 07/01/2000 - 07/31/2000 $ 21,976 $ 36,557 $ 15,095 $ 15,172 08/01/2000 - 08/31/2000 $ 23,130 $ 38,827 $ 15,308 $ 15,392 09/01/2000 - 09/30/2000 $ 22,382 $ 36,777 $ 15,366 $ 15,489 10/01/2000 - 10/31/2000 $ 22,159 $ 36,623 $ 15,463 $ 15,591 11/01/2000 - 11/30/2000 $ 21,110 $ 33,737 $ 15,728 $ 15,847 12/01/2000 - 12/31/2000 $ 21,438 $ 33,902 $ 16,037 $ 16,141 01/01/2001 - 01/31/2001 $ 21,909 $ 35,106 $ 16,307 $ 16,406 02/01/2001 - 02/28/2001 $ 20,586 $ 31,907 $ 16,475 $ 16,549 03/01/2001 - 03/31/2001 $ 19,693 $ 29,888 $ 16,551 $ 16,632 04/01/2001 - 04/30/2001 $ 20,620 $ 32,207 $ 16,426 $ 16,562 05/01/2001 - 05/31/2001 $ 20,509 $ 32,423 $ 16,522 $ 16,661 06/01/2001 - 06/30/2001 $ 20,213 $ 31,635 $ 16,601 $ 16,724 07/01/2001 - 07/31/2001 $ 20,157 $ 31,325 $ 17,014 $ 17,099 08/01/2001 - 08/31/2001 $ 19,371 $ 29,367 $ 17,232 $ 17,296 09/01/2001 - 09/30/2001 $ 18,402 $ 26,997 $ 17,391 $ 17,498 10/01/2001 - 10/31/2001 $ 18,669 $ 27,513 $ 17,832 $ 17,864 11/01/2001 - 11/30/2001 $ 19,470 $ 29,623 $ 17,540 $ 17,617 12/01/2001 - 12/31/2001 $ 19,470 $ 29,884 $ 17,401 $ 17,505 01/01/2002 - 01/31/2002 $ 19,287 $ 29,447 $ 17,528 $ 17,646 02/01/2002 - 02/28/2002 $ 19,090 $ 28,879 $ 17,677 $ 17,818 03/01/2002 - 03/31/2002 $ 19,474 $ 29,965 $ 17,319 $ 17,522 04/01/2002 - 04/30/2002 $ 19,053 $ 28,149 $ 17,655 $ 17,862 05/01/2002 - 05/31/2002 $ 19,025 $ 27,944 $ 17,817 $ 18,013 06/01/2002 - 06/30/2002 $ 18,214 $ 25,954 $ 17,968 $ 18,168 07/01/2002 - 07/31/2002 $ 17,273 $ 23,932 $ 18,184 $ 18,388 08/01/2002 - 08/31/2002 $ 17,374 $ 24,088 $ 18,591 $ 18,699 09/01/2002 - 09/30/2002 $ 16,259 $ 21,472 $ 18,991 $ 19,002 10/01/2002 - 10/31/2002 $ 17,026 $ 23,359 $ 18,809 $ 18,915 11/01/2002 - 11/30/2002 $ 17,650 $ 24,733 $ 18,820 $ 18,909 12/01/2002 - 12/31/2002 $ 17,185 $ 23,281 $ 19,319 $ 19,300 01/01/2003 - 01/31/2003 $ 16,852 $ 22,673 $ 19,319 $ 19,318 02/01/2003 - 02/28/2003 $ 16,635 $ 22,333 $ 19,663 $ 19,584 03/01/2003 - 03/31/2003 $ 16,711 $ 22,550 $ 19,637 $ 19,569 04/01/2003 - 04/30/2003 $ 17,642 $ 24,406 $ 19,847 $ 19,731 05/01/2003 - 05/31/2003 $ 18,542 $ 25,689 $ 20,411 $ 20,098 06/01/2003 - 06/30/2003 $ 18,791 $ 26,037 $ 20,333 $ 20,064 </Table> <Table> <Caption> NET ASSET VALUE PER SHARE ($) 12/31/02 6/30/03 - ------------------------------------------------------------ Class A 11.87 12.52 </Table> PAST PERFORMANCE CANNOT PREDICT FUTURE INVESTMENT RESULTS. SHARE PRICE AND INVESTMENT RETURN WILL VARY, SO YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. Total return performance includes changes in share price and reinvestment of all distributions. The S&P (Standard & Poor's) 500 Index is an unmanaged index that tracks the performance of 500 widely held, large-capitalization US stocks. The Lehman Brothers Aggregate Bond Index is a market value-weighted index that tracks the daily price, coupon, pay-downs, and total return performance of fixed-rate, publicly placed, dollar-denominated, and non-convertible investment grade debt issues with at least $100 million par amount outstanding and with at least one year to final maturity. The Lehman Brothers Government/Credit Index is an unmanaged index that tracks the performance of a selection of US government and investment-grade US corporate bonds. Indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. MUTUAL FUND PERFORMANCE CHANGES OVER TIME. CURRENT RETURNS FOR THE FUND MAY BE DIFFERENT THAN THAT SHOWN. Performance numbers reflect all fund expenses, but do not include any insurance charges imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. 153 <Page> INVESTMENT PORTFOLIO Liberty Asset Allocation Fund, Variable Series / June 30, 2003 (Unaudited) <Table> <Caption> SHARES VALUE --------------- --------------- COMMON STOCKS--63.7% CONSUMER DISCRETIONARY--9.1% AUTO COMPONENTS--0.6% BorgWarner, Inc. 900 $ 57,960 Delphi Corp. 126,300 1,089,969 Gentex Corp. (a) 5,000 153,050 Johnson Controls, Inc. 800 68,480 Lear Corp. (a) 2,200 101,244 Modine Manufacturing Co. 1,400 27,118 Standard Motor Products, Inc. 3,300 36,630 Superior Industries International 2,000 83,400 --------------- 1,617,851 --------------- AUTOMOBILES--0.1% Honda Motor Co., Ltd. 10,700 406,199 Monaco Coach Corp. (a) 1,500 22,995 --------------- 429,194 --------------- DISTRIBUTORS--0.0% Handleman Co. (a) 4,300 68,800 --------------- HOTELS, RESTAURANTS & LEISURE--1.5% Applebee's International, Inc. 4,400 138,292 Bally Total Fitness Holding Corp.(a) 5,600 50,568 Brinker International, Inc. (a) 6,300 226,926 California Pizza Kitchen, Inc. (a) 4,000 86,000 Carnival Plc 5,633 171,412 CBRL Group, Inc. 1,900 73,834 Compass Group Plc 56,920 307,417 Darden Restaurants, Inc. 6,600 125,268 Harrah's Entertainment, Inc. (a) 1,600 64,384 Hilton Hotels Corp. 4,575 58,514 International Game Technology, Inc. 1,000 102,330 Landry's Restaurants, Inc. 3,200 75,520 Lone Star Steakhouse & Saloon 4,200 91,434 Marriott International, Inc. 775 29,775 McDonald's Corp. 75,200 1,658,912 MGM Mirage, Inc. (a) 1,800 61,524 Outback Steakhouse, Inc. 1,500 58,500 Prime Hospitality Corp. (a) 4,500 30,195 Red Robin Gourmet Burgers, Inc. (a) 1,300 24,648 Scientific Games Corp. (a) 10,400 97,760 Six Flags, Inc. (a) 9,600 65,088 Starwood Hotels & Resorts Worldwide, Inc. 5,350 152,956 Station Casinos, Inc. (a) 6,300 159,075 Wendy's International, Inc. 9,800 283,906 YUM! Brands, Inc. (a) 8,900 263,084 --------------- 4,457,322 --------------- HOUSEHOLD DURABLES--0.3% American Greetings Corp. (a) 3,200 62,848 Bassett Furniture Industries, Inc. 3,500 46,480 Beazer Homes USA, Inc. (a) 1,100 91,850 Harman International Industries, Inc. 900 71,226 Kimball International 4,300 67,080 Koninklijke Philips Electronics NV 21,300 405,725 Meritage Corp. (a) 900 44,334 Newell Rubbermaid, Inc. 3,400 $ 95,200 Russ Berrie & Co, Inc. 700 25,557 Toro Co. 1,400 55,650 --------------- 965,950 --------------- INTERNET & CATALOG RETAIL--0.2% eBay, Inc. (a) 4,900 510,482 Sharper Image Corp. (a) 3,800 103,626 --------------- 614,108 --------------- LEISURE EQUIPMENT & PRODUCTS--0.1% Jakks Pacific, Inc. (a) 4,100 54,489 Johnson Outdoors, Inc. (a) 1,100 15,015 Mattel, Inc. 4,800 90,816 SCP Pool Corp. (a) 2,100 72,240 --------------- 232,560 --------------- MEDIA--2.5% Alliance Atlantis Communications, Inc. (a) 6,500 94,445 AOL Time Warner, Inc. (a) 76,300 1,227,667 British Sky Broadcasting Plc (a) 31,000 344,076 Clear Channel Communications, Inc. (a) 17,400 737,586 Comcast Corp. (a) 8,100 249,412 COX Radio, Inc. (a) 3,900 90,129 Gray Television, Inc. 4,300 53,320 Grupo Televisa SA (a) 6,600 227,700 Hispanic Broadcasting Corp. (a) 4,200 106,890 Interactive Corp. (a) 15,150 599,485 Interpublic Group Cos., Inc. 64,600 864,348 Knight-Ridder, Inc. 600 41,358 Liberty Corp. 1,800 76,500 Liberty Media Corp. (a) 37,600 434,656 Lin TV Corp. (a) 4,000 94,200 Mediacom Communications Corp. (a) 5,200 51,324 New York Times Co. 1,700 77,350 Radio One, Inc. (a) 5,900 104,843 Sinclair Broadcast Group, Inc. (a) 5,400 62,694 Societe Television Francaise 1 9,420 290,388 Univision Communications, Inc. (a) 1,900 57,760 Viacom, Inc. (a) 13,700 598,142 Westwood One, Inc. (a) 1,100 37,323 WPP Group Plc 33,650 264,196 XM Satellite Radio Holdings, Inc. (a) 22,500 248,625 --------------- 7,034,417 --------------- MULTI-LINE RETAIL--1.4% Dollar Tree Stores, Inc. (a) 1,200 38,076 Family Dollar Stores, Inc. 1,500 57,225 Federated Department Stores, Inc. 4,000 147,400 Ito-Yokado Co., Ltd. 3,000 71,962 Kohl's Corp. (a) 20,100 1,032,738 Neiman-Marcus Group, Inc. (a) 1,900 69,540 ShopKo Stores, Inc. (a) 2,800 36,400 Target Corp. 29,000 1,097,360 Wal-Mart Stores, Inc. 28,500 1,529,595 --------------- 4,080,296 --------------- </Table> See Notes to Investment Portfolio. 154 <Page> <Table> <Caption> SHARES VALUE --------------- --------------- SPECIALTY RETAIL--2.1% Advance Auto Parts (a) 2,600 $ 158,340 Bed Bath & Beyond, Inc. (a) 15,500 601,555 Blue Rhino Corp. (a) 6,400 76,736 Borders Group, Inc. (a) 3,400 59,874 Building Materials Holding Corp. 1,900 28,139 Chico's FAS, Inc. (a) 24,900 524,145 Cost Plus, Inc. (a) 2,500 89,150 Dress Barn, Inc. (a) 3,000 38,010 Friedman's, Inc. 3,300 37,521 Goody's Family Clothing, Inc. 5,500 47,575 GTSI Corp. (a) 1,700 14,790 Home Depot, Inc. 28,300 937,296 Hughes Supply, Inc. 1,300 45,110 Kingfisher Plc 37,700 172,767 Lowe's Cos., Inc. 16,100 691,495 Monro Muffler, Inc. (a) 2,800 79,128 Mothers Work, Inc. (a) 1,700 45,509 Movie Gallery, Inc. (a) 2,900 53,505 Office Depot, Inc. (a) 95,400 1,384,254 OfficeMax, Inc. (a) 4,100 26,855 Party City Corp. (a) 3,100 31,837 Petco Animal Supplies, Inc. (a) 6,600 143,484 Rent-Way, Inc. (a) 8,900 41,385 Ross Stores, Inc. 1,400 59,836 TBC Corp. (a) 3,100 59,055 TJX Cos., Inc. 6,400 120,576 Too, Inc. (a) 4,900 99,225 Ultimate Electronics, Inc. (a) 2,200 28,204 United Rentals, Inc. (a) 3,100 43,059 Williams-Sonoma, Inc. (a) 5,500 160,600 Zale Corp. (a) 1,800 72,000 --------------- 5,971,015 --------------- TEXTILES & APPAREL--0.3% Delta Apparel, Inc. 1,100 17,875 Fast Retailing Co. 3,800 117,625 Gucci Group NV 3,385 331,345 Kellwood Co. 2,800 88,564 Maxwell Shoe Co. (a) 4,400 63,360 Nautica Enterprises, Inc. (a) 2,800 35,924 Phillips-Van Heusen 700 9,541 Russell Corp. 2,600 49,400 Stride Rite Corp. 2,500 24,900 Wolverine World Wide, Inc. 2,100 40,446 --------------- 778,980 --------------- CONSUMER STAPLES--4.2% BEVERAGES--1.1% Anheuser-Busch Cos., Inc. 4,600 234,830 Coca-Cola Co. 30,500 1,415,505 Diageo Plc 17,400 186,080 Pepsi Bottling Group, Inc. 3,100 62,062 PepsiCo, Inc. 28,100 1,250,450 --------------- 3,148,927 --------------- FOOD & DRUG RETAILING--0.3% Performance Food Group Co. (a) 3,000 $ 111,000 Sysco Corp. 14,300 429,572 Whole Foods Market, Inc. (a) 3,900 185,367 --------------- 725,939 --------------- FOOD PRODUCTS--1.6% American Italian Pasta Co. (a) 2,000 83,300 Central Garden and Pet Co. (a) 2,300 54,855 ConAgra Foods, Inc. 68,200 1,609,520 Corn Products International, Inc. 3,100 93,093 Dean Foods Co. (a) 18,500 582,750 Hormel Foods Corp. 900 21,330 Kraft Foods, Inc. 27,200 885,360 Nestle SA 3,930 812,692 Numico NV 9,887 152,392 Ralcorp Holdings, Inc. (a) 3,400 84,864 WM Wrigley Jr Co. 4,300 241,789 --------------- 4,621,945 --------------- HOUSEHOLD PRODUCTS--0.4% Kimberly-Clark Corp. 11,900 620,466 Procter & Gamble Co. 6,200 552,916 --------------- 1,173,382 --------------- PERSONAL PRODUCTS--0.4% Alberto-Culver Co., Inc., Class B 8,450 431,795 Avon Products, Inc. 1,900 118,180 Gillette Co. 18,300 583,038 Inter Parfums, Inc. 2,400 17,760 Shiseido Co., Ltd. 9,000 87,631 --------------- 1,238,404 --------------- TOBACCO--0.4% Altria Group, Inc. 24,200 1,099,648 Schweitzer-Mauduit International, Inc. 1,000 24,140 Universal Corp.-Va 1,400 59,220 --------------- 1,183,008 --------------- ENERGY--5.6% ENERGY EQUIPMENT & SERVICES--1.9% Baker Hughes, Inc. 21,400 718,398 BJ Services Co. (a) 15,800 590,288 Halliburton Co. 47,100 1,083,300 Key Energy Services, Inc. (a) 15,600 167,232 Lufkin Industries, Inc. 2,500 60,875 Matrix Service Co. 7,600 130,568 Maverick Tube Corp. (a) 8,200 157,030 Nabors Industries, Ltd. (a) 12,300 486,465 National-Oilwell, Inc. (a) 3,400 74,800 Noble Corp. (a) 10,500 360,150 Patterson-UTI Energy, Inc. (a) 11,400 369,360 Saipem SpA 20,000 149,993 Schlumberger, Ltd. 7,400 352,018 Smith International, Inc. (a) 6,000 220,440 Superior Energy Services (a) 7,400 70,152 Transocean, Inc. (a) 3,200 70,304 </Table> See Notes to Investment Portfolio. 155 <Page> <Table> <Caption> SHARES VALUE --------------- --------------- Unit Corp. (a) 6,400 $ 133,824 Universal Compression Holdings, Inc. (a) 2,200 45,892 Weatherford International, Ltd. (a) 1,000 41,900 Willbros Group, Inc. (a) 6,500 67,535 --------------- 5,350,524 --------------- OIL & GAS--3.7% Amerada Hess Corp. 2,000 98,360 Apache Corp. 6,460 420,288 BP Plc 37,000 257,014 BP Plc, ADR 35,600 1,495,912 Comstock Resources, Inc. (a) 4,300 58,824 ConocoPhillips 31,100 1,704,280 ENI-Ente Nazionale Idrocarburi SpA 17,000 257,530 Exxon Mobil Corp. 43,400 1,558,494 Frontier Oil Corp. 6,600 100,320 Harvest Natural Resources, Inc. (a) 11,100 70,707 Marathon Oil Corp. 42,800 1,127,780 Murphy Oil Corp. 4,900 257,740 Occidental Petroleum Corp. 1,300 43,615 Patina Oil & Gas Corp. 3,000 96,450 Premcor, Inc. (a) 1,400 30,170 Remington Oil & Gas Corp. (a) 2,900 53,302 Royal Dutch Petroleum Co. 4,060 188,762 Royal Dutch Petroleum Co., New York Shares 22,100 1,030,302 Shell Transport & Trading Co. Plc 79,100 522,978 Spinnaker Exploration Co. (a) 3,600 94,320 St. Mary Land & Exploration Co. 2,900 79,170 Tom Brown, Inc. (a) 2,100 58,359 Total Fina Elf SA 4,100 620,629 Valero Energy Corp. 2,500 90,825 Vintage Petroleum, Inc. 6,300 71,064 Westport Resources Corp. (a) 3,300 75,075 XTO Energy, Inc. 11,533 231,929 --------------- 10,694,199 --------------- FINANCIALS--11.8% BANKS--3.7% Allied Irish Banks Plc 6,500 97,271 Bancfirst Corp. 400 20,744 Bancorpsouth, Inc. 2,900 60,465 Bank of America Corp. 20,300 1,604,309 Bank of Granite Corp. 2,800 47,740 Bank of New York Co., Inc. 27,800 799,250 Bank One Corp. 25,500 948,090 Bankinter SA 2,555 90,900 Banknorth Group, Inc. 2,700 68,904 Boston Private Financial Holdings, Inc. 2,400 50,592 Bryn Mawr Bank Corp. 1,700 63,019 Capitol Bancorp, Ltd. 1,300 35,230 Charter One Financial, Inc. 2,300 71,714 Chemical Financial Corp. 2,810 83,738 Chittenden Corp. 3,200 $ 87,520 City National Corp./CA 1,600 71,296 Commercial Capital Bancorp, Inc. (a) 1,900 29,165 Community First Bankshares, Inc. 2,200 60,060 Community Trust Bancorp, Inc. 1,600 41,824 Corus Bankshares, Inc. 1,500 72,645 Cullen/Frost Bankers, Inc. 1,000 32,100 DBS Group Holdings, Ltd. 30,000 175,493 Deutsche Bank AG 2,450 159,167 Dime Community Bancshares, Inc. 5,400 137,430 East-West Bancorp, Inc. 2,700 97,578 Fifth Third Bancorp 7,200 412,848 First Citizens BancShares, Inc. 500 50,420 First Financial Bankshares, Inc. 1,375 46,008 ForeningsSparbanken AB 20,450 282,635 Golden West Financial Corp. 2,600 208,026 Greenpoint Financial Corp. 1,700 86,598 Hancock Holding Co. 700 32,942 Lloyds TSB Group Plc 98,790 702,556 MainSource Financial Group, Inc. 1,050 25,588 MASSBANK Corp. 900 32,553 Mercantile Bankcorp 1,300 37,128 Merchants Bancshares, Inc. 2,300 59,800 Mid-State Bancshares 4,000 79,000 North Fork Bancorporation, Inc. 2,600 88,556 Northrim BanCorp., Inc. 2,100 38,073 Omega Financial Corp. 800 27,360 Prosperity Bancshares, Inc. 4,400 84,700 Riggs National Corp. 4,500 68,490 Sanpaolo IMI SpA 35,150 327,089 Simmons First National Corp. 2,000 40,020 Sovereign Bancorp, Inc. 5,900 92,335 Sumitomo Mitsui Financial Group, Inc. 20 43,719 Trico Bancshares 2,900 73,747 UBS AG 18,750 1,045,289 UCBH Holdings, Inc. 3,300 94,644 UFJ Holdings, Inc. (a) 73 107,196 UniCredito Italiano SpA 70,350 335,818 US Bancorp 37,600 921,200 W Holding Co., Inc. 1,900 32,148 Webster Financial Corp. 1,500 56,700 Whitney Holding Corp. 1,000 31,970 --------------- 10,571,400 --------------- DIVERSIFIED FINANCIALS--3.9% Asta Funding, Inc. (a) 1,100 26,400 Bear Stearns Cos., Inc. 1,000 72,420 Cash America International, Inc. 8,100 107,082 Citigroup, Inc. 125,400 5,367,120 CompuCredit Corp. (a) 1,700 20,655 Fannie Mae 8,950 603,588 Fortis 18,040 313,748 Freddie Mac 17,900 908,783 Goldman Sachs Group, Inc. 5,900 494,125 </Table> See Notes to Investment Portfolio. 156 <Page> <Table> <Caption> SHARES VALUE --------------- --------------- Investors Financial Services Corp. 5,400 $ 156,654 Janus Capital Group, Inc. 6,900 113,160 Jefferies Group, Inc. 1,800 89,622 JP Morgan Chase & Co. 39,700 1,356,946 Legg Mason, Inc. 700 45,465 Lehman Brothers Holdings, Inc. 1,200 79,776 Metris Cos., Inc. 8,600 47,730 MFC Bancorp, Ltd. (a) 7,000 58,093 Moody's Corp. 900 47,439 MTC Technologies, Inc. (a) 2,700 63,342 Nomura Holdings, Inc. 25,000 317,884 Promise Co., Ltd. 3,300 123,624 Providian Financial Corp. (a) 4,200 38,892 SLM Corp. 9,300 364,281 State Street Corp. 8,500 334,900 --------------- 11,151,729 --------------- INSURANCE--3.1% Alleanza Assicurazioni SpA 35,650 339,533 AMB Generali Holding AG 3,400 223,310 AMBAC Financial Group, Inc. 17,400 1,152,750 American International Group, Inc. 47,800 2,637,604 AmerUs Group Co. 1,100 31,009 Arthur J Gallagher & Co. 2,800 76,160 Berkshire Hathaway, Inc. (a) 16 1,160,000 Cincinnati Financial Corp. 900 33,381 Commerce Group, Inc. 1,400 50,680 Delphi Financial Group 2,000 93,600 Hilb Rogal & Hamilton Co. 2,900 98,716 Infinity Property & Casualty Corp. 2,700 63,828 Kansas City Life Insurance Co. 300 12,852 Lincoln National Corp. 31,500 1,122,345 Loews Corp. 900 42,561 Marsh & McLennan Cos., Inc. 5,500 280,885 MGIC Investment Corp. 11,400 531,696 Nationwide Financial Services 1,400 45,500 Navigators Group, Inc. (a) 900 26,838 Philadelphia Consolidated Holding Co. (a) 2,100 84,840 Phoenix Cos., Inc. 6,900 62,307 PMI Group, Inc. 3,400 91,256 Radian Group, Inc. 2,100 76,965 RLI Corp. 2,700 88,830 St. Paul Cos. 1,400 51,114 Stancorp Financial Group, Inc. 2,200 114,884 State Auto Financial Corp. 2,100 47,145 Swiss Re 1,650 91,619 Universal American Financial Corp. (a) 2,900 18,473 --------------- 8,750,681 --------------- REAL ESTATE--1.1% Alexandria Real Estate Equities, Inc. 2,475 111,375 Apartment Investment & Management Co. 1,700 58,820 Archstone-Smith Trust 2,425 58,200 American Financial Realty Trust 11,200 166,992 Avalonbay Communities, Inc. 1,750 74,620 Boston Properties, Inc. 1,750 $ 76,650 Boykin Lodging Co. 4,500 35,100 CarrAmerica Realty Corp. 1,000 27,810 Catellus Development Corp. (a) 1,350 29,700 CenterPoint Properties Trust 925 56,656 Chelsea Property Group, Inc. 1,375 55,426 Cousins Properties, Inc. 5,800 161,820 Duke Realty Corp. 2,550 70,253 EastGroup Properties, Inc. 2,100 56,700 Equity Office Properties Trust 3,300 89,133 Equity One, Inc. 3,400 55,760 Equity Residential 2,275 59,036 First Industrial Realty Trust, Inc. 1,000 31,600 General Growth Properties, Inc. 2,300 143,612 Getty Realty Corp. 2,200 49,104 iStar Financial, Inc. 4,150 151,475 Keystone Property Trust 2,300 42,573 Kimco Realty Corp. 2,750 104,225 Liberty Property Trust 1,475 51,035 Manufactured Home Communities, Inc. 650 22,821 Mid-America Apartment Communities, Inc. 2,200 59,422 Nationwide Health Properties, Inc. 3,700 58,941 Newcastle Investment Corp. 2,300 45,034 PS Business Parks, Inc. 2,400 84,720 Pan Pacific Retail Properties, Inc. 1,075 42,301 Parkway Properties, Inc. 350 14,717 Prentiss Properties Trust 675 20,243 ProLogis 5,075 138,548 Public Storage, Inc. 2,225 75,361 RFS Hotel Investors, Inc. 600 7,392 Reckson Associates Realty Corp. 850 17,731 Regency Centers Corp. 3,100 108,438 Rouse Co. 2,825 107,632 Simon Property Group, Inc. 3,950 154,169 SL Green Realty Corp. 900 31,401 St. Joe Co. (The) 3,100 96,720 Taubman Centers, Inc. 1,600 30,656 United Dominion Realty Trust, Inc. 1,750 30,135 Universal Health Realty Income Trust 1,500 40,500 Urstadt Biddle Properties 3,300 42,438 Vornado Realty Trust 1,950 85,020 --------------- 3,132,015 --------------- HEALTH CARE--10.4% BIOTECHNOLOGY--0.8% Amgen, Inc. (a) 24,400 1,621,136 Biogen, Inc. (a) 400 15,200 BioMarin Pharmaceuticals, Inc. (a) 4,700 45,872 Charles River Laboratories International, Inc. (a) 3,100 99,758 Ciphergen Biosystems, Inc. (a) 5,200 53,300 Gilead Sciences, Inc. (a) 1,100 61,138 Idec Pharmaceuticals Corp. (a) 1,000 34,000 </Table> See Notes to Investment Portfolio. 157 <Page> <Table> <Caption> SHARES VALUE --------------- --------------- MedImmune, Inc. (a) 600 $ 21,822 Neurocrine Biosciences, Inc. (a) 1,200 59,928 Protein Design Labs, Inc. (a) 4,500 62,910 Serologicals Corp. (a) 9,800 133,574 Telik, Inc. (a) 4,200 67,494 --------------- 2,276,132 --------------- HEALTH CARE EQUIPMENT & SUPPLIES--1.5% Alcon, Inc. 6,600 301,620 American Medical Systems Holdings, Inc. (a) 4,900 82,663 Becton Dickinson & Co. 12,500 485,625 Bio Rad Laboratories, Inc. (a) 1,800 99,630 Biomet, Inc. 3,400 97,444 Boston Scientific Corp. (a) 10,950 669,045 Cie Generale D'Optique Essilor International SA 8,700 351,052 Hillenbrand Industries, Inc. 700 35,315 Integra LifeSciences Holdings Corp. (a) 5,400 142,452 Kyphon, Inc. (a) 5,900 89,208 Medical Action Industries, Inc. (a) 8,300 135,539 Medtronic, Inc. 15,300 733,941 Noven Pharmaceuticals, Inc. (a) 8,000 81,920 Respironics, Inc. (a) 1,700 63,784 Sola International, Inc. (a) 3,100 53,940 SonoSite, Inc. (a) 3,900 77,805 St. Jude Medical, Inc. (a) 10,800 621,000 Varian Medical Systems, Inc. (a) 1,270 73,114 Wright Medical Group, Inc. (a) 3,600 68,400 Zoll Medical Corp. (a) 1,800 60,408 --------------- 4,323,905 --------------- HEALTH CARE PROVIDERS & SERVICES--2.6% Accredo Health, Inc. (a) 2,400 52,320 Aetna, Inc. 26,100 1,571,220 AmerisourceBergen Corp. 2,600 180,310 Anthem, Inc. (a) 8,300 640,345 Caremark Rx, Inc. (a) 25,200 647,136 Cobalt Corp. (a) 3,900 80,145 Community Health Systems, Inc. (a) 3,100 59,799 Cross Country Healthcare, Inc. (a) 3,400 44,846 DaVita, Inc. (a) 2,900 77,662 First Health Group Corp. (a) 7,000 193,200 Genesis Health Ventures, Inc. (a) 3,600 63,540 HCA, Inc. 1,900 60,876 Hooper Holmes, Inc. 6,600 42,504 Humana, Inc. (a) 4,700 70,970 Kindred Healthcare, Inc. (a) 1,900 33,896 Laboratory Corporation of America Holdings (a) 2,200 66,330 LifePoint Hospitals, Inc. (a) 4,700 98,418 Lincare Holdings, Inc. (a) 2,500 78,775 MAXIMUS, Inc. (a) 1,100 30,393 McKesson Corp. 22,400 800,576 Pacificare Health Systems (a) 1,700 83,861 Pediatrix Medical Group, Inc. (a) 1,600 57,040 Province Healthcare Co. (a) 2,200 24,354 Stewart Enterprises, Inc. (a) 9,700 $ 41,710 Sunrise Assisted Living, Inc. (a) 2,100 46,998 UnitedHealth Group, Inc. 22,600 1,135,650 US Oncology, Inc. (a) 11,100 82,029 WebMD Corp. (a) 7,400 80,142 WellChoice, Inc. (a) 4,500 131,760 WellPoint Health Networks (a) 8,100 682,830 --------------- 7,259,635 --------------- PHARMACEUTICALS--5.5% Abbott Laboratories 18,000 787,680 Adolor Corp. (a) 1,600 19,632 Alpharma, Inc. 2,100 45,360 Andrx Corp. (a) 4,800 95,520 Atrix Labs, Inc. (a) 2,600 57,174 Aventis SA 8,200 451,890 Barr Laboratories, Inc. (a) 2,650 173,575 Biovail Corp. (a) 14,400 677,664 Bristol-Myers Squibb Co. 28,700 779,205 GlaxoSmithKline plc 21,350 431,590 InterMune, Inc. (a) 2,600 41,886 Johnson & Johnson 31,600 1,633,720 Merck & Co., Inc. 44,300 2,682,365 Nektar Therapeutics (a) 2,900 26,767 Novartis AG 15,950 632,524 Novo-Nordisk A/S 7,000 245,418 Pfizer, Inc. 138,500 4,729,775 Salix Pharmaceuticals, Ltd. (a) 4,000 41,960 SFBC International, Inc. (a) 2,000 36,200 Shire Pharmaceuticals Plc (a) 21,325 140,992 SICOR, Inc. (a) 5,200 105,768 Takeda Chemical Industries, Ltd. 8,100 299,387 Taro Pharmaceuticals Industries (a) 1,900 104,272 Teva Pharmaceutical Industries, Ltd., ADR 12,700 723,011 Trimeris, Inc. (a) 2,000 91,360 Wyeth 16,100 733,355 --------------- 15,788,050 --------------- INDUSTRIALS--6.6% AEROSPACE & DEFENSE--1.3% Alliant Techsystems, Inc. (a) 600 31,146 Armor Holdings, Inc. (a) 3,100 41,540 DRS Technologies, Inc. (a) 4,000 111,680 General Dynamics Corp. 10,300 746,750 Herley Industries, Inc. (a) 1,800 30,564 Honeywell International, Inc. 45,800 1,229,730 Integrated Defense Technologies, Inc. (a) 2,500 38,775 Ladish Co., Inc. (a) 5,100 33,762 Lockheed Martin Corp. 8,700 413,859 Mercury Computer Systems, Inc.(a) 2,100 38,136 Northrop Grumman Corp. 300 25,887 Precision Castparts Corp. 2,000 62,200 Raytheon Co. 25,000 821,000 --------------- 3,625,029 --------------- </Table> See Notes to Investment Portfolio. 158 <Page> <Table> <Caption> SHARES VALUE --------------- --------------- AIR FREIGHT & COURIERS--0.5% CNF, Inc. 1,500 $ 38,070 EGL Inc. (a) 2,700 41,040 Exel plc 17,000 174,778 FedEx Corp. 7,100 440,413 JB Hunt Transport Services, Inc. (a) 2,000 75,500 Ryder System, Inc. 2,300 58,926 TPG NV 15,502 269,607 United Parcel Service, Inc. 5,000 318,500 UTI Worldwide, Inc. 1,900 59,261 --------------- 1,476,095 --------------- AIRLINES--0.1% AMR Corp. (a) 5,100 56,100 Atlantic Coast Airlines Holdings, Inc. (a) 4,600 62,054 Mesaba Holdings, Inc. (a) 2,700 16,659 Ryanair Holding Plc, ADR (a) 4,000 179,600 Skywest, Inc. 3,600 68,616 --------------- 383,029 --------------- BUILDING PRODUCTS--0.1% Jacuzzi Brands, Inc. (a) 9,500 50,255 NCI Building Systems, Inc. (a) 2,600 43,420 Watsco, Inc. 3,900 64,584 --------------- 158,259 --------------- COMMERCIAL SERVICES & SUPPLIES--1.8% Adecco SA 5,000 206,422 Arbitron, Inc. (a) 2,900 103,530 Banta Corp. 1,700 55,029 Bellsystem 24, Inc. 700 112,428 BISYS Group, Inc. (a) 4,200 77,154 Brinks Co. 4,500 65,565 Casella Waste Systems, Inc. (a) 8,100 73,143 Cendant Corp. (a) 6,900 126,408 Century Business Services, Inc. (a) 7,100 23,075 ChoicePoint, Inc. (a) 2,700 93,204 Chubb Plc 127,650 159,300 Concord EFS, Inc. (a) 39,600 582,912 Consolidated Graphics, Inc. (a) 3,400 77,792 Corporate Executive Board Co. (a) 3,800 155,116 Dai Nippon Printing Co., Ltd. 16,000 169,538 DST Systems, Inc. (a) 900 34,200 Electro Rent Corp. (a) 3,400 36,652 First Data Corp. 10,700 443,408 FTI Consulting, Inc. (a) 3,450 86,146 Imagistics International, Inc. (a) 3,700 95,460 Kroll, Inc. (a) 1,200 32,472 Manpower, Inc. 1,900 70,471 Navigant Consulting, Inc. (a) 1,900 22,515 NCO Group, Inc. (a) 3,700 66,267 Republic Services, Inc. (a) 3,300 74,811 Robert Half International, Inc. (a) 3,400 64,396 Secom Co., Ltd. 8,000 234,951 Securitas AB 10,000 $ 102,562 Sourcecorp (a) 4,600 99,360 Sylvan Learning Systems, Inc. (a) 4,700 107,348 TeleTech Holdings, Inc. (a) 4,100 17,343 United Stationers, Inc. (a) 1,400 50,638 Waste Connections, Inc. (a) 2,300 80,615 Waste Management, Inc. 51,500 1,240,635 Weight Watchers International, Inc. (a) 2,200 100,078 --------------- 5,140,944 --------------- CONSTRUCTION & ENGINEERING--0.1% Chicago Bridge & Iron Co., NV 5,500 124,740 Comfort Systems USA, Inc. (a) 7,600 19,988 EMCOR Group, Inc. (a) 2,200 108,592 Mastec, Inc. (a) 11,000 63,360 Shaw Group, Inc. (a) 3,700 44,585 --------------- 361,265 --------------- ELECTRICAL EQUIPMENT--0.3% American Power Conversion 2,500 38,975 Ametek, Inc. 1,000 36,650 Genlyte Group, Inc. (a) 1,300 45,461 Rayovac Corp. (a) 4,000 51,800 Samsung Electronics Co., GDR 1,600 238,000 Tecumseh Products Co. 1,500 57,465 Ushio, Inc. 21,000 243,544 --------------- 711,895 --------------- INDUSTRIAL CONGLOMERATES--1.6% Carlisle Cos., Inc. 3,200 134,912 Denbury Resources, Inc. (a) 4,400 59,092 General Electric Co. 72,700 2,085,036 Siemens AG 2,925 143,731 Textron, Inc. 37,200 1,451,544 Tyco International, Ltd. 34,900 662,402 --------------- 4,536,717 --------------- MACHINERY--0.6% AGCO Corp. (a) 3,800 64,904 Alamo Group, Inc. 1,800 21,996 Briggs & Stratton 1,200 60,600 Cuno, Inc. (a) 2,600 93,912 Dover Corp. 19,000 569,240 Esterline Technologies Corp. (a) 3,300 57,453 Harsco Corp. 2,500 90,125 Ingersoll-Rand Co., Ltd. 1,900 89,908 Kadant, Inc. (a) 3,300 61,875 Mueller Industries, Inc. (a) 1,500 40,665 Navistar International Corp. (a) 3,600 117,468 Oshkosh Truck Corp. 1,100 65,252 Parker Hannifin Corp. 1,000 41,990 Sandvik AB 5,000 131,016 Tomra Systems ASA 29,600 127,203 --------------- 1,633,607 --------------- </Table> See Notes to Investment Portfolio. 159 <Page> <Table> <Caption> SHARES VALUE --------------- --------------- ROAD & RAIL--0.1% Covenant Transport, Inc. (a) 2,200 $ 37,400 Dollar Thrifty Automotive Group (a) 3,000 55,650 Genesee & Wyoming, Inc. (a) 4,400 90,508 Heartland Express, Inc. (a) 3,600 80,100 Kansas City Southern (a) 2,700 32,481 Old Dominion Freight Line (a) 1,800 38,916 US Xpress Enterprises, Inc. (a) 1,600 17,056 --------------- 352,111 --------------- TRADING COMPANIES & DISTRIBUTORS--0.1% CDW Corp. (a) 1,600 73,280 Fastenal Co. 2,100 71,274 Mitsubishi Corp. 26,000 180,702 WW Grainger, Inc. 2,100 98,196 --------------- 423,452 --------------- INFORMATION TECHNOLOGY--9.4% COMMUNICATIONS EQUIPMENT--1.3% 3Com Corp. (a) 6,700 31,356 Advanced Fibre Communications (a) 3,100 50,437 Allen Telecom, Inc. (a) 3,000 49,560 Andrew Corp. (a) 8,500 78,200 Avocent Corp. (a) 1,600 47,888 Black Box Corp. 1,400 50,680 Cable Design Technologies Corp. (a) 4,400 31,460 Cisco Systems, Inc. (a) 98,500 1,643,965 Comverse Technology, Inc. (a) 6,400 96,192 Datacraft Asia, Ltd. (a) 76,000 76,000 F5 Networks, Inc. (a) 4,400 74,140 Juniper Networks, Inc. (a) 4,400 54,428 Motorola, Inc. 27,500 259,325 Nokia Oyj 26,060 429,849 Optical Communication Products, Inc. (a) 12,100 21,780 Scientific-Atlanta, Inc. 2,800 66,752 Tollgrade Communications, Inc. (a) 2,800 52,220 Utstarcom, Inc. (a) 20,000 711,400 --------------- 3,825,632 --------------- COMPUTERS & PERIPHERALS--1.0% Applied Films Corp. (a) 4,500 116,460 AU Optronics Corp., ADR (a) 5,900 40,828 Cray, Inc. (a) 12,300 97,170 Crossroads Systems, Inc. (a) 3,000 5,067 Dell Computer Corp. (a) 39,500 1,262,420 Electronics for Imaging (a) 2,100 42,609 Hutchinson Technology, Inc. (a) 500 16,445 Imation Corp. 500 18,910 Intergraph Corp. (a) 2,300 49,450 Iomega Corp. (a) 6,100 64,660 Legend Group, Ltd. 338,000 112,693 Lexmark International, Inc. (a) 14,400 1,019,088 --------------- 2,845,800 --------------- ELECTRONIC EQUIPMENT & INSTRUMENTS--0.9% Amphenol Corp. (a) 2,800 $ 131,096 Analogic Corp. 800 39,008 Anixter International, Inc. (a) 3,700 86,691 Arrow Electronics, Inc. (a) 3,100 47,244 AVX Corp. 4,400 48,356 Benchmark Electronics, Inc. (a) 1,600 49,216 Brocade Communications Systems, Inc. (a) 21,400 126,046 Celestica, Inc. (a) 38,100 600,456 Checkpoint Systems, Inc. (a) 3,400 48,110 Garmin, Ltd. (a) 4,800 191,376 Global Imaging Systems, Inc. (a) 4,300 99,588 Hoya Corp. 3,400 234,600 Itron, Inc. (a) 4,600 99,176 Jabil Circuit, Inc. (a) 5,800 128,180 Littelfuse, Inc. (a) 3,400 76,024 Millipore Corp. (a) 2,300 102,051 MTS Systems Corp. 3,800 56,012 NU Horizons Electronics Corp. (a) 5,800 34,800 Pioneer Standard Electronics 5,600 47,488 Planar Systems, Inc. (a) 2,600 50,856 Plexus Corp. (a) 12,400 142,972 Somera Communications, Inc. (a) 9,100 13,286 Symbol Technologies, Inc. 3,900 50,739 Tech Data Corp. (a) 2,100 56,091 Varian, Inc. (a) 1,600 55,472 Vishay Intertechnology, Inc. (a) 6,200 81,840 --------------- 2,696,774 --------------- INTERNET SOFTWARE & SERVICES--0.2% Check Point Software Technologies (a) 1,900 37,145 Digital River, Inc. (a) 4,900 94,570 Fidelity National Information Solutions, Inc. (a) 3,100 80,848 SonicWALL, Inc. (a) 11,600 55,680 Stellent, Inc. (a) 5,800 31,320 Trizetto Group (a) 2,300 13,892 Valueclick, Inc. (a) 5,600 33,768 webMethods, Inc. (a) 8,400 68,292 --------------- 415,515 --------------- INFORMATION TECHNOLOGY CONSULTING & SERVICES--0.6% Acxiom Corp. (a) 3,400 51,306 Affiliated Computer Services, Inc. (a) 2,600 118,898 American Management Systems, Inc. (a) 6,000 85,680 Cognizant Technology Solutions Corp. (a) 3,400 82,824 Computer Horizons Corp. (a) 4,100 18,614 Electronic Data Systems Corp. 31,500 675,675 Management Network Group, Inc. (a) 15,900 31,005 </Table> See Notes to Investment Portfolio. 160 <Page> <Table> <Caption> SHARES VALUE --------------- --------------- MPS Group, Inc. (a) 12,500 $ 86,000 PEC Solutions, Inc. (a) 5,400 86,940 Priority Healthcare Corp. (a) 2,300 42,665 SAP AG, ADR 14,800 432,456 SRA International Inc. (a) 3,300 105,600 --------------- 1,817,663 --------------- OFFICE ELECTRONICS--0.4% Canon, Inc. 3,000 137,917 Xerox Corp. (a) 88,800 940,392 Zebra Technologies Corp. (a) 1,200 90,228 --------------- 1,168,537 --------------- SEMICONDUCTOR EQUIPMENT & PRODUCTION--2.9% Agere Systems, Inc. (a) 29,700 69,201 Altera Corp. (a) 2,100 34,440 Amkor Technology, Inc. (a) 3,100 40,734 Analog Devices, Inc. (a) 8,800 306,416 Applied Micro Circuits Corp. (a) 24,200 146,410 Artisan Components, Inc. (a) 2,800 63,308 ASML Holding NV, New York Shares (a) 13,000 124,280 Broadcom Corp. (a) 14,000 348,740 Brooks Automation, Inc. (a) 9,900 112,266 Cabot Microelectronics Corp. (a) 12,400 625,828 Cymer, Inc. (a) 2,000 64,020 DSP Group, Inc. (a) 2,600 55,978 Dupont Photomasks, Inc. (a) 2,500 47,075 Entegris, Inc. (a) 11,500 154,560 Exar Corp. (a) 2,100 33,243 Fairchild Semiconductor International, Inc. (a) 3,600 46,044 Helix Technology Corp. 3,100 41,013 Infineon Technologies AG, ADR (a) 40,500 388,395 Integrated Circuit Systems, Inc. (a) 1,500 47,145 Integrated Device Technology, Inc. (a) 4,100 45,305 Intel Corp. 48,900 1,016,338 Intersil Corp. (a) 33,900 902,079 Lattice Semiconductor Corp. (a) 10,200 83,946 Marvell Technology Group, Ltd. (a) 19,000 653,030 Maxim Integrated Products, Inc. 2,500 85,475 Microchip Technology, Inc. 13,580 334,475 Mykrolis Corp. (a) 5,400 54,810 National Semiconductor Corp. (a) 3,200 63,104 Novellus Systems, Inc. (a) 2,700 98,877 NVIDIA Corp. (a) 30,050 691,450 Pericom Semiconductor Corp. (a) 3,500 32,550 PMC-Sierra, Inc. (a) 52,900 620,517 Skyworks Solutions, Inc. (a) 5,000 33,850 Taiwan Semiconductor Manufacturing Co., Ltd., ADR (a) 31,900 321,552 Teradyne, Inc. (a) 2,160 37,390 Texas Instruments, Inc. 16,650 293,040 Zoran Corp. (a) 5,500 105,655 --------------- 8,222,539 --------------- SOFTWARE--2.1% Activision, Inc. (a) 6,450 $ 83,334 Adobe Systems, Inc. 10,000 320,700 Amdocs, Ltd. (a) 5,800 139,200 BMC Software, Inc. (a) 3,500 57,155 Borland Software Corp. (a) 11,600 113,332 Electronic Arts, Inc. (a) 6,050 447,640 Henry (Jack) & Associates 3,000 53,370 Intuit, Inc. (a) 1,400 62,342 Magma Design Automation, Inc. (a) 3,000 51,450 Mercury Interactive Corp. (a) 2,500 96,525 Micromuse, Inc. (a) 3,500 27,965 Microsoft Corp. 105,900 2,712,099 Novell, Inc. (a) 11,200 34,496 Oracle Corp. (a) 38,300 460,366 Pervasive Software, Inc. (a) 5,800 31,030 PLATO Learning, Inc. (a) 8,500 48,875 Reynolds & Reynolds Co. 2,900 82,824 SAP AG 3,205 378,609 Siebel Systems, Inc. (a) 5,000 47,700 Sybase, Inc. (a) 4,000 55,640 Symantec Corp. (a) 2,500 109,650 Take-Two Interactive Software (a) 1,700 48,178 VERITAS Software Corp. (a) 16,500 473,055 --------------- 5,935,535 --------------- MATERIALS--1.9% CHEMICALS--0.8% Air Products & Chemicals, Inc. 16,600 690,560 Cytec Industries, Inc. (a) 3,400 114,920 DSM NV 5,000 211,186 Eastman Chemical Co. 2,100 66,507 Ecolab, Inc. 1,600 40,960 Engelhard Corp. 2,100 52,017 HB Fuller Co. 2,000 44,040 International Flavors & Fragrances, Inc. 3,700 118,141 Kaneka Corp. 37,000 228,443 Lubrizol Corp. 4,200 130,158 Methanex Corp. 1,200 12,827 Minerals Technologies, Inc. 1,300 63,258 PPG Industries, Inc. 1,000 50,740 Praxair, Inc. 1,500 90,150 Schulman (A.), Inc. 2,600 41,756 Shin-Etsu Chemical Co., Ltd. 5,000 171,040 --------------- 2,126,703 --------------- CONSTRUCTION MATERIALS--0.0% Amcol International Corp. 2,900 23,200 Centex Construction Products, Inc. 1,600 64,144 --------------- 87,344 --------------- CONTAINERS & PACKAGING--0.1% Aptargroup, Inc. 1,500 54,000 Crown Holdings, Inc. (a) 7,300 52,122 </Table> See Notes to Investment Portfolio. 161 <Page> <Table> <Caption> SHARES VALUE --------------- --------------- Greif, Inc. 2,000 $ 46,000 Jarden Corp. (a) 5,800 160,486 Packaging Corp. of America (a) 2,000 36,860 --------------- 349,468 --------------- METALS & MINING--0.5% Barrick Gold Corp. 40,800 730,320 BHP Billiton, Ltd. 15,000 87,020 Carpenter Technology Corp. 3,100 48,360 JFE Holdings, Inc. 11,600 174,210 Peabody Energy Corp. 5,000 167,950 Pechiney SA 4,650 167,199 RTI International Metals, Inc. (a) 4,500 48,735 --------------- 1,423,794 --------------- PAPER & FOREST PRODUCTS--0.5% Boise Cascade Corp. 1,000 23,900 Bowater, Inc. 15,800 591,710 Georgia-Pacific Corp. 3,200 60,640 Glatfelter 1,700 25,075 International Paper Co. 1,850 66,101 MeadWestvaco Corp. 4,575 113,002 UPM-Kymmene Oyj 17,050 249,266 Weyerhaeuser Co. 6,000 324,000 --------------- 1,453,694 --------------- TELECOMMUNICATION SERVICES--2.8% DIVERSIFIED TELECOMMUNICATION--2.2% BellSouth Corp. 63,100 1,680,353 Intrado, Inc. (a) 2,100 33,159 North Pittsburgh Systems, Inc. 2,700 40,689 SBC Communications, Inc. 76,800 1,962,240 Telecom Italia SpA 31,150 282,343 Telefonica SA (a) 38,333 445,776 Verizon Communications, Inc. 50,400 1,988,280 --------------- 6,432,840 --------------- WIRELESS TELECOMMUNICATION SERVICES--0.6% AT&T Wireless Services, Inc. (a) 16,200 133,002 China Mobile, Ltd./HK 98,000 231,234 Metro One Telecommunications (a) 3,000 15,480 Mobile Telesystems, ADR (a) 3,300 194,700 NTT DoCoMo, Inc. 140 303,700 Sprint Corp.-PCS Group (a) 15,600 89,700 Telephone & Data Systems, Inc. 2,400 119,280 Vodafone Group Plc 295,000 577,813 --------------- 1,664,909 --------------- UTILITIES--1.9% ELECTRIC UTILITIES--1.4% Allete, Inc. 1,900 50,445 American Electric Power Co., Inc. 26,500 790,495 Central Vermont Public Service Corp. 3,800 74,290 CH Energy Group, Inc. 2,500 112,500 Consolidated Edison, Inc. 22,000 952,160 El Paso Electric Co. (a) 3,700 45,621 Entergy Corp. 1,300 $ 68,614 Exelon Corp. 1,600 95,696 Maine Public Service Co. 900 29,259 MGE Energy, Inc. 1,500 47,250 National Grid Transco Plc 54,400 369,562 Northeast Utilities 6,100 102,114 PG&E Corp. (a) 19,400 410,310 PPL Corp. 1,000 43,000 Progress Energy, Inc. 2,100 92,190 TXU Corp. 28,200 633,090 --------------- 3,916,596 --------------- GAS UTILITIES--0.0% Cascade Natural Gas Corp. 1,600 30,560 Northwest Natural Gas Co. 1,200 32,700 WGL Holdings, Inc. 1,200 32,040 --------------- 95,300 --------------- MULTI-UTILITIES--0.5% Duke Energy Corp. 62,200 1,240,890 Energy East Corp. 2,600 53,976 MDU Resources Group, Inc. 1,000 33,490 --------------- 1,328,356 --------------- TOTAL COMMON STOCKS (cost of $172,667,040) 182,249,770 --------------- <Caption> PAR --------------- CORPORATE BONDS--17.1% CONSUMER DISCRETIONARY--2.5% AUTO COMPONENTS--0.1% American Axle & Manufacturing, Inc., 9.750%, 03/01/09 $ 75,000 80,813 Lear Corp., 8.110%, 05/15/09 275,000 316,937 --------------- 397,750 --------------- AUTOMOBILES--0.1% General Motors Corp., 7.125%, 07/15/13 150,000 150,471 --------------- HOTELS, RESTAURANTS & LEISURE--1.0% Cinemark USA, Inc., 02/01/13 (b) 250,000 272,500 Extended Stay America, 9.150%, 03/15/08 230,000 238,050 Harrah's Entertainment, Inc., 7.875%, 12/15/05 400,000 434,000 Host Marriott LP, 9.500%, 01/15/07 135,000 146,137 International Game Technology, Inc., 8.375%, 05/15/09 100,000 122,000 Park Place Entertainment Corp., 9.375%, 02/15/07 325,000 359,125 Six Flags, Inc., 9.500%, 02/01/09 5,000 4,925 9.750%, 06/15/07 110,000 108,900 </Table> See Notes to Investment Portfolio. 162 <Page> <Table> <Caption> PAR VALUE --------------- --------------- Speedway Motorsports, Inc., 6.750%, 06/01/13 (b) $ 200,000 $ 206,000 Starwood Hotels & Resorts, Inc., 7.875%, 05/01/12 225,000 246,375 Station Casinos, Inc., 8.875%, 12/01/08 350,000 365,750 YUM! Brands, Inc., 7.450%, 05/15/05 50,000 53,000 7.650%, 05/15/08 50,000 55,500 7.700%, 07/01/12 195,000 221,325 8.875%, 04/15/11 45,000 52,650 --------------- 2,886,237 --------------- LEISURE EQUIPMENT & PRODUCTS--0.1% Scotts Co., 8.625%, 01/15/09 250,000 267,500 --------------- MEDIA--1.0% AOL Time Warner, Inc., 7.625%, 04/15/31 75,000 85,926 British Sky Broadcasting Plc, 8.200%, 07/15/2009 150,000 175,263 CSC Holdings, Inc., 8.125%, 08/15/09 50,000 51,250 9.875%, 02/15/13 220,000 224,400 Dex Media East LLC, 12.125%, 11/15/12 250,000 297,500 DirectTV Holdings LLC, 8.375%, 03/15/13 (b) 110,000 122,925 Houghton Mifflin Co., 9.875%, 02/01/13 (b) 275,000 303,875 Lamar Media Corp., 7.250%, 01/01/13 375,000 399,375 Lin TV Corp., 6.500%, 05/15/13 (b) 175,000 175,438 Mediacom Communications Corp., 9.500%, 01/15/13 325,000 346,125 Rogers Cable, Inc., 7.875%, 05/01/12 350,000 363,328 Sinclair Broadcast Group, Inc., 8.750%, 12/15/11 260,000 286,000 TCI Communications, Inc., 8.750%, 08/01/15 100,000 130,478 --------------- 2,961,883 --------------- SPECIALTY RETAIL--0.2% Hasbro, Inc., 8.500%, 03/15/06 200,000 220,000 United Rentals, Inc., 8.800%, 08/15/08 200,000 194,000 --------------- 414,000 --------------- CONSUMER STAPLES--0.8% BEVERAGES--0.2% Constellation Brands, Inc., 8.125%, 01/15/12 $ 300,000 $ 324,000 8.500%, 03/01/09 50,000 53,500 Cott Beverages, Inc., 8.000%, 12/15/11 350,000 378,438 --------------- 755,938 --------------- FOOD & DRUG RETAILING--0.1% Winn-Dixie Stores, Inc., 8.875%, 04/01/08 206,000 220,420 --------------- HOUSEHOLD PRODUCTS--0.5% Procter & Gamble Co., 4.750%, 06/15/07 1,250,000 1,358,275 --------------- ENERGY--2.0% ENERGY EQUIPMENT & SERVICES--0.2% Grant Prideco, Inc., 9.625%, 12/01/07 400,000 438,000 Key Energy Services, Inc., 6.375%, 05/01/13 75,000 76,125 Universal Compression Holdings, Inc., 7.250%, 05/15/10 (b) 25,000 26,000 --------------- 540,125 --------------- OIL & GAS--1.8% Amerada Hess Corp., 7.125%, 03/15/33 725,000 830,045 Devon Financing Corp., 6.875%, 09/30/11 1,000,000 1,174,730 Nexen, Inc., 7.875%, 03/15/32 1,250,000 1,545,575 Pride International, Inc., 10.000%, 06/01/09 350,000 381,500 Pemex Project Funding Master Trust, 7.875%, 02/01/09 300,000 342,000 Vintage Petroleum, Inc., 7.875%, 05/15/11 250,000 261,875 Westport Resources Corp., 8.250%, 11/01/11 350,000 381,500 XTO Energy, Inc., 7.500%, 04/15/12 220,000 251,900 --------------- 5,169,125 --------------- FINANCIALS--6.0% BANKS--0.4% Den Danske Bank, 6.550%, 09/15/03 (b) 1,250,000 1,261,788 --------------- DIVERSIFIED FINANCIALS--4.5% Countrywide Home Loan, Inc., 6.850%, 06/15/04 1,000,000 1,050,760 </Table> See Notes to Investment Portfolio. 163 <Page> <Table> <Caption> PAR VALUE --------------- --------------- Fannie Mae, 4.500%, 04/25/13 $ 615,000 $ 629,929 5.000%, 12/25/15-04/01/49 2,115,000 2,191,814 6.250%, 05/15/29 50,000 58,558 6.625%, 09/15/09 2,320,000 2,783,573 Freddie Mac, 5.250%, 01/15/06 150,000 163,289 6.000%, 06/15/11 100,000 116,788 6.250%, 07/15/04 100,000 105,279 Ford Motor Credit Corp., 7.375%, 02/01/11 925,000 951,057 Goldman Sachs Group, Inc., 5.700%, 09/01/12 600,000 661,308 6.600%, 01/15/12 300,000 348,840 Household Financial Corp., 5.875%, 02/01/09 900,000 1,009,548 IBM Canada Credit Services Company, 3.750%, 11/30/07 (b) 1,000,000 1,027,140 International Lease Financial Corp., 6.375%, 03/15/09 1,250,000 1,400,987 RH Donnelley Financial Corp., 10.875%, 12/15/12 (b) 350,000 406,000 --------------- 12,904,870 --------------- INSURANCE--1.0% Florida Windstorm Underwriting Association, 7.125%, 02/25/19 (b) 1,150,000 1,378,609 Prudential Insurance Co., 7.650%, 07/01/07 (b) 1,150,000 1,335,483 --------------- 2,714,092 --------------- REAL ESTATE--0.1% Health Care REIT, Inc., 7.500%, 08/15/07 200,000 215,558 IStar Financial, Inc., 7.000%, 03/15/08 100,000 105,000 --------------- 320,558 --------------- HEALTH CARE--1.4% HEALTH CARE EQUIPMENT & SUPPLIES--0.0% Apogent Technologies, Inc., 6.500%, 05/15/13 (b) 25,000 25,813 --------------- HEALTH CARE PROVIDERS & SERVICES--1.4% AmerisourceBergen Corp., 7.250%, 11/15/12 100,000 108,750 8.125%, 09/01/08 265,000 292,163 HCA Healthcare Co., 7.125%, 06/01/06 900,000 973,404 7.875%, 02/01/11 50,000 55,381 8.750%, 09/01/10 75,000 88,708 Omnicare, Inc., 8.125%, 03/15/11 400,000 437,000 Province Healthcare Co., 7.500%, 06/01/13 175,000 174,125 Select Medical Corp., 9.500%, 06/15/09 250,000 272,500 Tenet Healthcare Corp., 5.375%, 11/15/06 $ 1,125,000 $ 1,091,250 Triad Hospitals, Inc., 8.750%, 05/01/09 350,000 378,000 --------------- 3,871,281 --------------- INDUSTRIALS--1.4% AEROSPACE & DEFENSE--0.7% K&F Industries, Inc., 9.625%, 12/15/10 175,000 192,500 Raytheon Co., 8.300%, 03/01/10 1,500,000 1,856,790 --------------- 2,049,290 --------------- AIR FREIGHT & COURIERS--0.0% Offshore Logistics, Inc., 6.125%, 06/15/13 (b) 50,000 50,250 --------------- COMMERCIAL SERVICES & SUPPLIES--0.3% Allied Waste North America, Inc., 7.875%, 01/01/09 300,000 310,500 10.000%, 08/01/09 75,000 79,875 Corrections Corp. of America, 7.500%, 05/01/11 125,000 130,938 Iron Mountain, Inc., 8.625%, 04/01/13 350,000 377,125 Synagro Technologies, Inc., 9.500%, 04/01/09 25,000 26,750 --------------- 925,188 --------------- CONSTRUCTION & ENGINEERING--0.2% KB Home, 7.750%, 02/01/10 100,000 108,000 8.625%, 12/15/08 225,000 254,250 9.500%, 02/15/11 25,000 28,125 Toll Corp., 7.750%, 09/15/07 200,000 207,000 --------------- 597,375 --------------- MACHINERY--0.1% Kennametal, Inc., 7.200%, 06/15/12 150,000 164,712 --------------- ROAD & RAIL--0.1% Burlington Northern Santa Fe, 6.875%, 02/15/16 100,000 119,248 Kansas City Southern, 7.500%, 06/15/09 54,000 55,890 9.500%, 10/01/08 150,000 167,625 --------------- 342,763 --------------- MATERIALS--1.2% CHEMICALS--0.2% Airgas, Inc., 9.125%, 10/01/11 85,000 95,200 Ethyl Corp., 8.875%, 05/01/10 (b) 195,000 199,875 </Table> See Notes to Investment Portfolio. 164 <Page> <Table> <Caption> PAR VALUE --------------- --------------- Equistar Chemicals LP, 10.125%, 09/01/08 $ 60,000 $ 61,650 10.625%, 05/01/11 (b) 140,000 143,500 Macdermid, Inc., 9.125%, 07/15/11 20,000 22,400 --------------- 522,625 --------------- CONTAINERS & PACKAGING--0.5% Ball Corp., 6.875%, 12/15/12 350,000 371,875 Constar International, Inc., 11.000%, 12/01/12 150,000 162,750 Owens-Illinois, Inc., 7.350%, 05/15/08 270,000 271,350 Silgan Holdings, Inc., 9.000%, 06/01/09 375,000 388,125 Stone Container Corp., 9.750%, 02/01/11 200,000 218,000 --------------- 1,412,100 --------------- METALS & MINING--0.1% Peabody Energy Corp., 6.875%, 03/15/13 (b) 200,000 210,000 --------------- PAPER & FOREST PRODUCTS--0.4% Abitibi Consolidated, Inc., 7.875%, 08/01/09 200,000 220,586 Cascades, Inc., 7.250%, 02/15/13 (b) 140,000 147,700 Georgia Pacific Corp., 8.875%, 05/15/31 1,000,000 980,000 --------------- 1,348,286 --------------- TELECOMMUNICATION SERVICES--1.2% DIVERSIFIED TELECOMMUNICATION--0.4% France Telecom SA, 10.000%, 03/01/31 50,000 68,966 L 3 Communications Corp., 7.625%, 06/15/12 225,000 247,500 Sprint Capital Corp., 6.125%, 11/15/08 375,000 407,906 Worldcom, Inc., 8.250%, 05/15/31 (c) 1,525,000 453,688 --------------- 1,178,060 --------------- WIRELESS TELECOMMUNICATION SERVICES--0.8% AT&T Wireless Services, Inc., 7.875%, 03/01/11 400,000 472,960 Advance PCS, 8.500%, 04/1/08 400,000 430,000 Nextel Comunications, Inc., 9.950%, 02/15/08 50,000 52,125 10.650%, 09/15/07 275,000 284,625 Verizon Wireless Capital LLC, 5.375%, 12/15/06 900,000 988,794 --------------- 2,228,504 --------------- UTILITIES--0.6% ELECTRIC UTILITIES--0.6% Chesapeake Energy Corp., 7.500%, 09/15/13 (b) $ 165,000 $ 174,900 8.125%, 04/01/11 50,000 53,875 8.375%, 11/01/08 100,000 108,000 9.000%, 08/15/12 25,000 28,000 FirstEnergy Corp., 5.500%, 11/15/06 1,050,000 1,125,107 Indiana Michigan Power Co., 6.125%, 12/15/06 35,000 38,937 6.875%, 07/01/04 50,000 52,298 Transalta Corp., 7.450%, 05/15/05 75,000 77,659 --------------- 1,658,776 --------------- GAS UTILITIES--0.0% Semco Energy, Inc., 7.125%, 05/15/08 (b) 10,000 10,400 --------------- TOTAL CORPORATE BONDS (cost of $46,794,037) 48,918,455 --------------- FOREIGN GOVERNMENT OBLIGATION--0.1% State of Israel, 6.625%, 08/15/03 (cost of $267,872) 250,000 251,605 --------------- U.S. GOVERNMENT OBLIGATIONS--7.6% U.S. GOVERNMENT AGENCIES--6.0% Federal Home Loan Mortgage Corp., 5.500%, 12/01/32 188,742 194,981 6.500%, 12/01/10-07/01/31 5,782,551 6,040,383 7.000%, 04/01/29-08/01/31 142,735 149,717 7.500%, 07/01/15-01/01/30 86,255 91,749 8.000%, 09/01/15 41,535 44,895 12.000%, 07/01/20 218,278 251,379 --------------- 6,773,104 --------------- Federal National Mortgage Association, 5.500%, 05/01/16 119,023 123,657 6.000%, 04/01/16-07/01/31 379,231 395,158 6.120%, 10/01/08 236,589 260,347 6.500%, 08/01/31-12/01/31 2,181,771 2,275,210 7.000%, 07/01/31-12/01/32 1,573,807 1,657,372 7.500%, 09/01/15-08/01/31 335,794 357,419 8.000%, 04/01/30-05/01/30 94,801 102,229 --------------- 5,171,392 --------------- </Table> See Notes to Investment Portfolio. 165 <Page> <Table> <Caption> PAR VALUE --------------- --------------- Government National Mortgage Association, 5.750%, 07/20/25 $ 75,176 $ 76,781 6.000%, 12/15/28-03/15/29 3,100,687 3,255,332 6.500%, 05/15/13-05/15/29 521,964 551,067 7.000%, 11/15/13-06/15/31 76,795 81,395 7.500%, 09/15/29 175,345 186,403 8.000%, 03/15/26 995,757 1,079,454 9.000%, 12/15/17 12,275 13,673 --------------- 5,244,105 --------------- U.S. GOVERNMENT BONDS & NOTES--1.6% U.S. Treasury Bonds, 5.375%, 02/15/31 695,000 782,608 7.250%, 08/15/22 150,000 203,232 7.625%, 02/15/25 150,000 213,275 8.125%, 08/15/19 150,000 216,943 12.000%, 08/15/13 35,000 50,863 --------------- 1,466,921 --------------- U.S. Treasury Notes, 3.000%, 11/15/07 205,000 211,454 3.625%, 05/15/13 55,000 55,430 3.875%, 02/15/13 930,000 956,991 4.000%, 11/15/12 1,700,000 1,768,996 5.500%, 05/15/09 200,000 230,359 --------------- 3,223,230 --------------- TOTAL U.S. GOVERNMENT OBLIGATIONS (cost of $20,503,399) 21,878,752 --------------- NON-AGENCY MORTGAGE-BACKED & ASSET-BACKED SECURITIES--5.9% ASSET-BACKED SECURITIES--3.5% American Express Credit Card Trust, 5.600%, 11/15/06 125,000 129,348 Chase Manhattan Auto Owner Trust, 3.800%, 05/15/08 250,000 258,965 Chase Manhattan Auto Owner Trust, 5.070%, 02/15/08 100,000 104,604 Chemical Bank Master Credit Card Trust, 5.980%, 09/15/08 150,000 160,623 Citibank Credit Card Issuance Trust, 4.950%, 02/09/09 205,000 221,656 Continental Airlines Pass-Through Trust, 7.461%, 04/01/15 334,171 307,438 Federal Express Corp. Pass-Through Certificate, 7.530%, 09/23/06 871,992 970,624 Honda Auto Receivables, 5.090%, 10/18/06 50,000 51,521 MBNA Master Credit Card Trust, 6.600%, 04/16/07 4,250,000 4,541,380 Standard Credit Card Master Trust, 6.550%, 10/07/07 1,500,000 1,652,325 Toyota Auto Receivables, 4.720%, 09/15/08 200,000 209,038 United Airlines Pass-Through Certificate, 7.032%, 10/01/10 (d) $ 1,372,048 $ 1,166,241 9.200%, 03/22/08 (c) 507,021 111,545 Wells Fargo Auto Trust, 5.070%, 03/15/08 250,000 256,950 --------------- 10,142,258 --------------- NON-AGENCY MORTGAGE-BACKED SECURITIES--2.4% American Mortgage Trust, 7.432%, 09/27/22 89,094 80,184 Citicorp Pass-Through Trust, 8.040%, 12/15/19 (b) 1,950,000 2,353,943 LB-UBS Commercial Mortgage Trust, 6.510%, 12/15/26 3,750,000 4,393,487 Rural Housing Trust, 6.330%, 04/01/26 20,707 21,041 --------------- 6,848,655 --------------- TOTAL NON-AGENCY MORTGAGE-BACKED & ASSET-BACKED SECURITIES (cost of $16,263,427) 16,990,913 --------------- MUNICIPAL BONDS--0.5% California Infrastructure & Economic Development Authority, 6.420%, 12/26/09 1,200,000 1,369,956 New Jersey Economic Development Authority, 7.425%, 02/15/29 100,000 132,506 --------------- TOTAL MUNICIPAL BONDS (cost of $1,481,723) 1,502,462 --------------- <Caption> SHARES --------------- POOLED INVESTMENT VEHICLES--1.8% S&P MidCap 400 Depositary Receipts 23,300 2,043,876 SPDR Trust Series 1 30,000 2,928,900 --------------- TOTAL POOLED INVESTMENT VEHICLES (cost of $4,298,020) 4,972,776 --------------- PREFERRED STOCKS--0.9% CONSUMER DISCRETIONARY--0.1% MEDIA--0.1% News Corp., Ltd., ADR 12,600 315,630 --------------- FINANCIALS--0.7% DIVERSIFIED FINANCIALS--0.7% HSBC Capital Funding 1,000,000 1,320,344 RBS Capital Trust 700,000 704,907 --------------- 2,025,251 --------------- HEALTH CARE--0.1% HEALTH CARE EQUIPMENT & SUPPLIES--0.1% Fresenius AG 5,475 259,147 --------------- TOTAL PREFERRED STOCKS (cost of $2,877,532) 2,600,028 --------------- </Table> See Notes to Investment Portfolio. 166 <Page> <Table> <Caption> PAR VALUE --------------- --------------- SHORT-TERM OBLIGATIONS--2.5% Repurchase agreement with State Street Bank & Trust Co., dated 06/30/03, due 07/01/03 at 0.95%, collateralized by U.S. Treasury Bonds with various maturities to 11/15/10, market value $2,290,125 (repurchase proceeds $2,241,059) $ 2,241,000 $ 2,241,000 --------------- Repurchase agreement with State Street Bank & Trust Co., dated 06/30/03, due 07/01/03 at 1.00%, collateralized by U.S. Treasury Bonds with various maturities to 02/15/29, market value $4,887,204 (repurchase proceeds $4,777,133) 4,777,000 4,777,000 --------------- TOTAL SHORT-TERM OBLIGATIONS (cost of $7,018,000) 7,018,000 --------------- TOTAL INVESTMENTS--100.1% (cost of $272,171,050) (e) 286,382,761 --------------- OTHER ASSETS & LIABILITIES, NET--(0.1)% (310,310) --------------- NET ASSETS--100.0% $ 286,072,451 =============== </Table> NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing. (b) Securities are exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At June 30, 2003, the value of these securities amounted to $9,832,139 or 3.4% of the net assets. (c) As of June 30, 2003 the Fund held certain securities that have filed for bankruptcy protection under Chapter 11, representing 0.2% of net assets. This issuer is in default of certain debt covenants. Income is not being accrued. (d) As of June 30, 2003, this security has filed for bankruptcy protection under Chapter 11, representing 0.4% of net assets. This issuer is in default of certain debt covenants, however, income is being accrued as a special escrow account has been set up for eighteen months of interest. (e) Cost for federal income tax purposes is $272,370,389. The difference between cost for generally accepted accounting principles and cost on a tax basis is related to amortization/accretion elections on fixed income securities. <Table> <Caption> ACRONYM NAME ------- ---- ADR American Depositary Receipt GDR Global Depositary Receipt </Table> See Notes to Financial Statements. 167 <Page> STATEMENT OF ASSETS & LIABILITIES Liberty Asset Allocation Fund, Variable Series / June 30, 2003 (Unaudited) <Table> ASSETS: Investments, at cost $ 272,171,050 --------------- Investments, at value $ 286,382,761 Cash 157,819 Foreign currency (cost of $861,266) 838,589 Receivable for: Investments sold 5,447,922 Fund shares sold 143,163 Interest 1,032,758 Dividends 228,147 Expense reimbursement due from Manager/Distributor 27,027 Deferred Trustees' compensation plan 3,263 Other assets 28,906 --------------- TOTAL ASSETS 294,290,355 --------------- LIABILITIES: Payable for: Investments purchased 5,336,061 Fund shares repurchased 2,626,315 Management fee 110,144 Administration fee 35,931 Transfer agent fee 594 Pricing and bookkeeping fees 3,827 Merger costs 25,843 Trustees' fee 334 Reports to Shareholders 75,592 Deferred Trustees' fee 3,263 --------------- TOTAL LIABILITIES 8,217,904 --------------- NET ASSETS $ 286,072,451 =============== COMPOSITION OF NET ASSETS: Paid-in capital $ 296,803,534 Undistributed net investment income 3,098,610 Accumulated net realized loss (28,024,938) Net unrealized appreciation (depreciation) on: Investments 14,211,711 Foreign currency translations (16,466) --------------- NET ASSETS $ 286,072,451 =============== CLASS A: Net assets $ 231,917,367 Shares outstanding 18,522,489 =============== Net asset value per share $ 12.52 =============== CLASS B: Net assets $ 54,155,084 Shares outstanding 4,338,075 =============== Net asset value per share $ 12.48 =============== </Table> See Notes to Financial Statements. 168 <Page> STATEMENT OF OPERATIONS Liberty Asset Allocation Fund, Variable Series For the Six Months Ended June 30, 2003 (Unaudited) <Table> INVESTMENT INCOME: Dividends $ 1,456,777 Interest 2,742,293 --------------- Total Investment Income (net of foreign taxes withheld of $61,774) 4,199,070 --------------- EXPENSES: Management fee 576,432 Administration fee 192,144 Distribution fee--Class B 64,056 Pricing and bookkeeping fees 49,665 Transfer agent fee 3,720 Trustees' fee 5,781 Custody fee 20,480 Other expenses 55,540 --------------- Total Expenses 967,818 Fees reimbursed by Distributor--Class B (14,362) --------------- Net Expenses 953,456 --------------- Net Investment Income 3,245,614 --------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY AND FUTURES CONTRACTS: Net realized gain (loss) on: Investments (2,955,086) Foreign currency transactions 54,064 Futures contracts (49,412) Net increase in reimbursement due from Manager (See Note 5) 24,301 --------------- Net realized loss (2,926,133) --------------- Net change in unrealized appreciation/depreciation on: Investments 24,479,225 Foreign currency translations (38,539) Futures contracts 42,065 --------------- Net change in unrealized appreciation/depreciation 24,482,751 --------------- Net Gain 21,556,618 --------------- Net Increase in Net Assets from Operations $ 24,802,232 =============== </Table> See Notes to Financial Statements. 169 <Page> STATEMENT OF CHANGES IN NET ASSETS Liberty Asset Allocation Fund, Variable Series <Table> <Caption> (UNAUDITED) SIX MONTHS YEAR ENDED ENDED JUNE 30, DECEMBER 31, INCREASE (DECREASE) IN NET ASSETS: 2003 2002 - ---------------------------------- --------------- --------------- OPERATIONS: Net investment income $ 3,245,614 $ 7,651,311 Net realized loss on investments, foreign currency transactions and futures contracts (2,926,133) (18,935,561) Net change in unrealized appreciation/depreciation on investments, foreign currency translations and futures contracts 24,482,751 (25,560,282) --------------- --------------- Net Increase (Decrease) from Operations 24,802,232 (36,844,532) --------------- --------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income: Class A (6,166,140) (8,018,427) Class B (1,566,119) (1,439,933) --------------- --------------- Total Distributions Declared to Shareholders (7,732,259) (9,458,360) --------------- --------------- SHARE TRANSACTIONS: Class A: Subscriptions 1,022,765 4,404,498 Proceeds received in connection with merger 38,966,649 -- Distributions reinvested 6,166,140 8,018,427 Redemptions (22,615,815) (59,391,356) --------------- --------------- Net Increase (Decrease) 23,539,739 (46,968,431) --------------- --------------- Class B: Subscriptions 4,158,920 16,230,124 Distributions reinvested 1,566,119 1,439,933 Redemptions (6,128,611) (5,779,970) --------------- --------------- Net Increase (Decrease) (403,572) 11,890,087 --------------- --------------- Net Increase (Decrease) from Share Transactions 23,136,167 (35,078,344) --------------- --------------- Total Increase (Decrease) in Net Assets 40,206,140 (81,381,236) NET ASSETS: Beginning of period 245,866,311 327,247,547 --------------- --------------- End of period (including undistributed net investment income of $3,098,610 and $7,585,255, respectively) $ 286,072,451 $ 245,866,311 =============== =============== CHANGES IN SHARES: Class A: Subscriptions 82,997 337,897 Issued in connection with merger 3,421,128 -- Issued for distributions reinvested 570,939 595,723 Redemptions (1,919,756) (4,734,716) --------------- --------------- Net Increase (Decrease) 2,155,308 (3,801,096) --------------- --------------- Class B: Subscriptions 348,443 1,269,931 Issued for distributions reinvested 145,415 107,218 Redemptions (514,452) (476,977) --------------- --------------- Net Increase (Decrease) (20,594) 900,172 --------------- --------------- </Table> See Notes to Financial Statements. 170 <Page> NOTES TO FINANCIAL STATEMENTS Liberty Asset Allocation Fund, Variable Series / June 30, 2003 (Unaudited) NOTE 1. ORGANIZATION AND ACCOUNTING POLICIES ORGANIZATION--Liberty Asset Allocation Fund, Variable Series (the "Fund"), a series of SteinRoe Variable Investment Trust (the "Trust"), is a diversified portfolio of a Massachusetts business trust, registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund's investment goal is to seek high total investment return by investing primarily in a diversified portfolio of common stocks, securities convertible to common stock, bonds, and cash. The Fund's capitalization consists of an unlimited number of shares of beneficial interest without par value that represent a separate series of the Trust. The Fund offers two classes of shares: Class A and Class B. Each share of a class represents an equal proportionate beneficial interest in that share class and, when issued and outstanding, is fully paid and nonassessable. Shareholders would be entitled to share proportionally in the net assets of their share class available for distribution to shareholders upon liquidation of the Fund. Shares of the Fund are available and are being marketed exclusively as a pooled funding vehicle for variable annuity contracts ("VA contracts") and Variable Life Insurance Policies ("VLI Policies") offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies"). The Participating Insurance Companies and their separate accounts own all the shares of the Fund. On April 1, 2003, Stein Roe & Farnham Incorporated, the investment advisor to the Fund, merged into Columbia Management Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co., an indirect wholly owned subsidiary of FleetBoston Financial Corporation. At the time of the merger, Columbia assumed the obligations of Stein Roe & Farnham Incorporated with respect to the Fund. The merger did not change the way the Fund is managed, the investment personnel assigned to manage the Fund or the fees paid by the Fund. Columbia provides investment management and advisory services to the Fund pursuant to its Management Agreement with the Fund. Columbia also provides pricing and bookkeeping services to the Fund. Liberty Funds Distributor, Inc. ("LFD"), an affiliate of Columbia, serves as the principal underwriter of the Fund. On April 7, 2003, the Galaxy VIP Asset Allocation Fund (the target fund), previously a single class fund of Galaxy VIP Fund, a separate Massachusetts business trust, merged into the Stein Roe Balanced Fund, Variable Series. The Stein Roe Balanced Fund, Variable Series received a tax-free transfer of assets from the Galaxy VIP Asset Allocation Fund as follows: <Table> <Caption> SHARES NET ASSETS UNREALIZED ISSUED RECEIVED DEPRECIATION(1) ------ -------- --------------- 3,421,128 $ 38,966,649 $ 3,453,289 </Table> <Table> <Caption> NET ASSETS NET ASSETS NET ASSETS OF GALAXY VIP OF STEIN ROE OF STEIN ROE ASSET ALLOCATION BALANCED FUND, BALANCED FUND, FUND VARIABLE SERIES VARIABLE SERIES IMMEDIATELY IMMEDIATELY PRIOR TO PRIOR TO AFTER COMBINATION COMBINATION COMBINATION -------------- ---------------- ---------------- $ 233,114,098 $ 38,966,649 $ 272,080,747 </Table> Also on April 7, 2003, subsequent to the merger described above, the Stein Roe Balanced Fund, Variable Series was renamed the Liberty Asset Allocation Fund, Variable Series. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION AND TRANSACTIONS--Debt securities generally are valued by a pricing service based upon market transactions for normal, institutional-size trading units of similar securities. When management deems it appropriate, an over-the-counter or exchange bid quotation is used. Equity securities generally are valued at the last sale price or, in the case of unlisted or listed securities for which there were no sales during the day, at the current quoted bid price. 171 <Page> Short-term obligations with a maturity of 60 days or less are valued at amortized cost. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded. The values of all assets and liabilities quoted in foreign currencies are translated into U.S. dollars at that day's exchange rates. Investments for which market quotations are not readily available, or quotations which management believes are not appropriate, are valued at fair value under procedures approved by the Board of Trustees. Generally, trading in foreign securities is substantially completed each day at various times prior to the close of the New York Stock Exchange ("NYSE"). The values of such securities used in computing the net asset value of the Fund's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which they are determined and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If events materially affecting the value of such securities and such exchange rates occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Trustees. Security transactions are accounted for on the date the securities are purchased, sold or mature. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS--All income, expenses (other than the Class B distribution fee), and realized and unrealized gains (losses) are allocated to each class proportionately on a daily basis for purposes of determining the net asset value of each class. The per share data was calculated using average shares outstanding during the period. In addition, Class B net investment income per share data and ratios reflect the distribution fee applicable to Class B shares only. FEDERAL INCOME TAXES--Consistent with the Fund's policy to qualify as a regulated investment company and to distribute all of its taxable income, no federal income tax has been accrued. INTEREST INCOME, DEBT DISCOUNT AND PREMIUM--Interest income is recorded on the accrual basis. Discount is accreted to interest income over the life of a security with a corresponding increase in the cost basis. Premium is amortized against interest income with a corresponding decrease in the cost basis. DISTRIBUTIONS TO SHAREHOLDERS--The Fund intends to distribute as income dividends or capital gains distributions, at least annually, substantially all of its net investment income and net profits realized from the sale of investments. All dividends and distributions are reinvested in additional shares of the Fund at net asset value as of the record date of the distribution. Income and capital gain distributions are determined in accordance with federal income tax regulations. FOREIGN CURRENCY TRANSACTIONS--Net realized and unrealized gains (losses) on foreign currency transactions and translations includes gains (losses) arising from the fluctuations in exchange rates between trade and settlement dates on securities transactions, gains (losses) arising from the disposition of foreign currency, and currency gains (losses) between the accrual and payment dates on dividends, interest income and foreign withholding taxes. The Fund does not distinguish the portion of gains (losses) on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the investments. Such fluctuations are included with the net realized and unrealized gains (losses) on investments. OTHER--Corporate actions and dividend income are recorded on the ex-date (except for certain foreign securities which are recorded as soon after ex-date as the Fund becomes aware of such), net of non-reclaimable tax withholdings. Where a high level of uncertainty as to collection exists, income on securities is recorded net of all tax withholdings with any rebates recorded when received. The Fund's custodian takes possession through the federal book-entry system of securities collateralizing repurchase agreements. Collateral is marked-to-market daily to ensure that the market value of the underlying assets remains sufficient to protect the Fund. The Fund may experience costs and delays in liquidating the collateral if the issuer defaults or enters bankruptcy. 172 <Page> NOTE 2. FEDERAL TAX INFORMATION Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. The following capital loss carryforwards, determined as of December 31, 2002, are available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: <Table> <Caption> YEAR OF CAPITAL LOSS EXPIRATION CARRYFORWARD ---------- ------------ 2009 $ 4,375,998 2010 14,373,391 ------------ $ 18,749,389 ============ </Table> NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES MANAGEMENT AND ADMINISTRATIVE FEES--Columbia receives monthly fees equal to 0.45% and 0.15% annually of the Fund's average daily net assets for management and administrative services, respectively. Nordea Investment Management North America, Inc. ("Nordea") has been retained by Columbia as sub-advisor to manage the portion of the Fund's assets allocated to foreign stocks. Columbia, out of the management fee it receives, pays Nordea a monthly sub-advisory fee equal to 0.40% annually of the average daily net assets of that portion of the Fund's assets managed by Nordea. PRICING AND BOOKKEEPING FEES--Columbia is responsible for providing pricing and bookkeeping services to the Fund under a Pricing and Bookkeeping Agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Bank & Trust Company ("State Street"). The Manager pays fees to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual flat fee of $10,000, paid monthly, and in any month that the Fund's average daily net assets are more than $50 million, a monthly fee equal to the average daily net assets of the Fund for that month multiplied by a fee rate that is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. For the six months ended June 30, 2003, the net asset based fee rate was 0.033%. The Fund also pays out-of-pocket costs for pricing services. TRANSFER AGENT FEE--Liberty Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia, provides shareholder services for an annual rate of $7,500. DISTRIBUTION FEE--The Fund has adopted a 12b-1 plan, which requires it to pay LFD a monthly distribution fee totaling 0.25% annually on Class B average daily net assets. EXPENSE LIMITS--Columbia has voluntarily agreed to reimburse all expenses, including management fees, but excluding interest, taxes, distribution fees, brokerage and extraordinary expenses of the Fund in excess of 0.75% annually of the Fund's average daily net assets. LFD has voluntarily agreed to reimburse the Fund's Class B share distribution fee in excess of 0.15% when the total operating expenses of the Fund applicable to Class B shares, including distribution fees, are in excess of 0.90% annually of Class B average daily net assets. These arrangements may be terminated or modified by Columbia or LFD at any time. OTHER--The Fund pays no compensation to its officers, all of whom are employees of Columbia or its affiliates. The Fund's Independent Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. NOTE 4. PORTFOLIO INFORMATION INVESTMENT ACTIVITY--For the six months ended June 30, 2003, purchases and sales of investments, other than short-term obligations, were $140,959,934 and $157,262,027, respectively, of which $9,290,113 and $10,669,215, respectively, were U.S. Government securities. Unrealized appreciation (depreciation) at June 30, 2003, based on cost of investments for federal income tax purposes, was: <Table> Gross unrealized appreciation $ 28,321,110 Gross unrealized depreciation (14,308,738) ------------- Net unrealized appreciation $ 14,012,372 ============= </Table> 173 <Page> OTHER--There are certain additional risks involved when investing in foreign securities that are not inherent with investments in domestic securities. These risks may involve foreign currency exchange rate fluctuations, adverse political and economic developments and the possible prevention of foreign currency exchange or the imposition of other foreign governmental laws or restrictions. The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. The Fund may purchase or sell futures contracts. The Fund will use these instruments to hedge against the effects of changes in the portfolio securities due to market conditions and not for trading purposes. The use of futures contracts involves certain risks which include (1) imperfect correlation between the price movement of the instruments and the underlying securities, (2) inability to close out a position due to different trading hours, or the absence of a liquid market for either the instrument or the underlying securities or (3) an inaccurate prediction by the Manager of the future direction of the market or stock price or interest rate trends. Any of these risks may involve amounts exceeding the variation margin recorded in the Fund's Statement of Assets and Liabilities at any given time. NOTE 5. OTHER During the six months ended June 30, 2003, the Fund was reimbursed $24,301 by the Manager for a loss incurred outside of the Fund's direct control on the sale of a portion of Barrick Gold Corp. shares. 174 <Page> FINANCIAL HIGHLIGHTS Liberty Asset Allocation Fund, Variable Series--Class A Shares Selected data for a share outstanding throughout each period is as follows: <Table> <Caption> (UNAUDITED) SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ----------------------------- 2003 2002 2001 ------------- ------------ ------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 11.87 $ 13.86 $ 16.35 ------------ ------------ ------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (a) 0.15 0.36 0.39(b) Net realized and unrealized gain (loss) on investments, foreign currency and futures contracts 0.89 (1.94) (1.86)(b) ------------ ------------ ------------ Total from Investment Operations 1.04 (1.58) (1.47) ------------ ------------ ------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.39) (0.41) (0.45) From net realized gains -- -- (0.57) ------------ ------------ ------------ Total Distributions Declared to Shareholders (0.39) (0.41) (1.02) ------------ ------------ ------------ NET ASSET VALUE, END OF PERIOD $ 12.52 $ 11.87 $ 13.86 ============ ============ ============ Total return (c)(d) 9.29%(e) (11.73)% (9.19)% RATIOS TO AVERAGE NET ASSETS/ SUPPLEMENTAL DATA: Expenses (f) 0.70%(g) 0.70% 0.71% Net investment income (f) 2.57%(g) 2.73% 2.68%(b) Portfolio turnover rate 57%(e) 118% 57% Net assets, end of period (000's) $ 231,917 $ 194,327 $ 279,493 <Caption> YEAR ENDED DECEMBER 31, ------------------------------------------------- 2000 1999 1998 ------------ ------------ ------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 17.80 $ 17.14 $ 16.81 ------------ ------------ ------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (a) 0.45 0.28 0.48 Net realized and unrealized gain (loss) on investments, foreign currency and futures contracts (0.63) 1.74 1.48 ------------ ------------ ------------ Total from Investment Operations (0.18) 2.02 1.96 ------------ ------------ ------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.47) (0.47) (0.51) From net realized gains (0.80) (0.89) (1.12) ------------ ------------ ------------ Total Distributions Declared to Shareholders (1.27) (1.36) (1.63) ------------ ------------ ------------ NET ASSET VALUE, END OF PERIOD $ 16.35 $ 17.80 $ 17.14 ============ ============ ============ Total return (c)(d) (1.02)% 12.53% 12.54% RATIOS TO AVERAGE NET ASSETS/ SUPPLEMENTAL DATA: Expenses (f) 0.64% 0.63%(h) 0.65% Net investment income (f) 2.66% 2.60%(h) 3.00% Portfolio turnover rate 39% 43% 61% Net assets, end of period (000's) $ 376,183 $ 425,005 $ 361,823 </Table> (a) Per share data was calculated using average shares outstanding during the period (b) As required, effective January 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium and accreting discount on all debt securities. The effect of this change, for the year ended December 31, 2001, was to decrease net investment income per share by $0.01, decrease net realized and unrealized gain per share by $0.01 and to decrease the ratio of net investment income to average net assets from 2.73% to 2.68%. Per share data and ratios for periods prior to December 31, 2001 have not been restated to reflect this change in presentation. (c) Total return at net asset value assuming all distributions reinvested. (d) Total return figure does not include any insurance company charges associated with a variable annuity. If included, total return would be reduced. (e) Not annualized. (f) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (g) Annualized. (h) During the year ended December 31, 1999, the Fund Experienced a one-time reduction in its expenses of two basis points as a result of expenses accrued in a prior period. The Fund's ratios disclosed above reflect the actual rate at which expenses were incurred throughout the current fiscal year without the reduction. 175 <Page> SHAREHOLDER MEETING RESULTS Liberty Asset Allocation Fund, Variable Series RESULTS OF THE ANNUAL MEETING OF SHAREHOLDERS On February 19, 2003, the Annual Meeting of Shareholders of the Trust was held to conduct a vote for or against the approval of the following items listed on the Trust's Proxy Statement for said Meeting. On December 2, 2002, the record date for the Meeting, the Galaxy VIP Asset Allocation Fund had 3,715,956.172 common shares outstanding. The votes cast were as follows: SHAREHOLDER RESPONSE SUMMARY REPORT LIBERTY VARIABLE INVESTMENT TRUST/STEINROE VARIABLE INVESTMENT TRUST GALAXY VIP ASSET ALLOCATION FUND FEBRUARY 19, 2003 1. To approve an Agreement and Plan of Reorganization providing for (i) the sale of all of the assets of the Galaxy VIP Asset Allocation Fund to, and the assumption of all of the liabilities of the Galaxy VIP Asset Allocation Fund by, the Stein Roe Balanced Fund, Variable Series, in exchange for shares of the Stein Roe Balanced Fund, Variable Series, and the distribution of such shares to the shareholders of the Galaxy VIP Asset Allocation Fund in complete liquidation of the Galaxy VIP Asset Allocation Fund; (ii) the de-registration of The Galaxy VIP Fund as an investment company under the Investment Company Act of 1940, as amended, and (iii) The Galaxy VIP Fund's termination as a Massachusetts business trust under Massachusetts law. <Table> <Caption> % OF % OF NO. OF OUTSTANDING SHARES SHARES SHARES VOTED ------------- ----------- ------ Affirmative 3,344,940.074 90.016% 90.464% Against 41,413.212 1.114% 1.120% Abstain 311,197.311 8.375% 8.416% TOTAL 3,697,550.597 99.505% 100.000% <Caption> ** FUND TOTALS: SHARES RECORD TOTAL 3,715,956.172 VOTED SHARES 3,697,550.597 PERCENT VOTED 99.505% </Table> 176 <Page> PORTFOLIO MANAGER'S DISCUSSION Liberty Federal Securities Fund, Variable Series / June 30, 2003 Liberty Federal Securities Fund, Variable Series seeks the highest possible level of current income, consistent with the safety of principal and maintenance of liquidity. Ann T. Peterson has managed or co-managed the fund since June 2000. Since 1993 she has managed or co-managed other funds for the advisor. On April 7, 2003, Galaxy VIP Quality Plus Bond Fund was merged into Liberty Federal Securities Fund, Variable Series. DECLINING INTEREST RATES BENEFIT BONDS Government bonds continued to post modest gains during the first half of 2003. As the economy remained sluggish with no inflation in sight, interest rates, which drive government bond returns, continued to decline. The yield on the five-year US Treasury bond bottomed in mid-June at 2.03%. Soon after, the Federal Reserve lowered the federal funds rate--the target overnight interest rate at which commercial banks lend money to each other--to 1.00%. With interest rates at historical lows, investors reached for yield. The best performers were bonds with a yield advantage over Treasuries, including mortgage bonds, asset-backed securities and corporate bonds. MORTGAGES AND LONGER DURATION BOOST PERFORMANCE The fund, which focuses on government bonds, benefited from maintaining a high concentration in mortgage bonds and other bonds that provided additional yield. About 47% of the fund's net assets were in mortgage bonds, which did well in an environment in which investors looked to purchase bonds with higher yields than Treasuries. During the period, we added mortgage bonds with relatively lower coupons (or stated interest rates). As interest rates declined, these coupons helped lower prepayment risk (or the risk that a bond might be paid off before its maturity date). Prepayments occur as homeowners refinance to take advantage of lower interest rates. When this happens, bond investors lose income as they are forced to reinvest at lower prevailing rates. The fund acquired a small position in high-quality corporate bonds as a result of its merger in April with Galaxy VIP Quality Plus Bond Fund, an investment grade bond fund. The corporate bond position represented about 4% of the fund's net assets at the end of the period. Investment-grade corporate bonds did well as investors looked to add higher yielding securities in an environment of low interest rates. The merger also effectively reduced our stake in Treasuries from 43% to approximately 38% of net assets. Within the Treasury area, we focused on bonds with five-year maturities, which turned in slightly better performance than either shorter- or longer-maturity bonds. In an environment of declining interest rates, the fund's relatively longer duration further benefited performance. Duration is a measure of a bond's interest-rate sensitivity. The longer a bond's duration, the more its price will rise as interest rates fall, or fall as interest rates rise. We actively manage the fund's duration by lengthening it when we expect interest rates to fall and shortening it when we expect interest rates to rise. Our strategy going forward will be to continue to look for relative value primarily among Treasuries and mortgage bonds, while actively managing the fund's exposure to interest rate risk. Economic and market conditions can frequently change. There is no assurance that the trends described here will continue or commence. An investment in Liberty Federal Securities Fund, Variable Series offers the potential for attractive current income and total returns, but also involves certain risks. The value and return of your investment may fluctuate as a result of changes in interest rates; the financial strength of issuers of lower-rated bonds; foreign, political and economic developments; and changes in currency exchange rates. 177 <Page> PERFORMANCE INFORMATION Liberty Federal Securities Fund, Variable Series / June 30, 2003 AVERAGE ANNUAL TOTAL RETURN AS OF JUNE 30, 2003 (%) <Table> <Caption> (CUMULATIVE) 6-MONTH 1-YEAR 5-YEAR 10-YEAR - ---------------------------------------------------------------- Class A (1/1/89) 3.10 9.15 6.99 6.69 Lehman Brothers Intermediate US Government Bond Index 2.63 8.62 7.28 6.59 </Table> Inception date of share class is in parentheses. [CHART] VALUE OF A $10,000 INVESTMENT, 6/30/93 - 6/30/03 <Table> <Caption> CLASS A SHARES LEHMAN BROTHERS INTERMEDIATE US GOVERNMENT BOND INDEX Jun-93 $ 10,000 $ 10,000 9/30/1993 $ 10,065 $ 10,211 12/31/1993 $ 10,132 $ 10,226 3/31/1994 $ 9,953 $ 10,037 6/30/1994 $ 9,883 $ 9,981 9/30/1994 $ 9,954 $ 10,058 12/31/1994 $ 9,973 $ 10,048 3/31/1995 $ 10,435 $ 10,466 6/30/1995 $ 10,951 $ 10,954 9/30/1995 $ 11,176 $ 11,124 12/31/1995 $ 11,543 $ 11,496 3/31/1996 $ 11,463 $ 11,418 6/30/1996 $ 11,531 $ 11,494 9/30/1996 $ 11,770 $ 11,692 12/31/1996 $ 12,085 $ 11,962 3/31/1997 $ 12,073 $ 11,960 6/30/1997 $ 12,491 $ 12,293 9/30/1997 $ 12,859 $ 12,608 12/31/1997 $ 13,178 $ 12,887 3/31/1998 $ 13,356 $ 13,081 6/30/1998 $ 13,630 $ 13,323 9/30/1998 $ 14,047 $ 13,945 12/31/1998 $ 14,074 $ 13,980 3/31/1999 $ 14,142 $ 13,942 6/30/1999 $ 14,073 $ 13,915 9/30/1999 $ 14,211 $ 14,055 12/31/1999 $ 14,225 $ 14,048 3/31/2000 $ 14,447 $ 14,278 6/30/2000 $ 14,681 $ 14,538 9/30/2000 $ 15,150 $ 14,928 12/31/2000 $ 15,765 $ 15,521 3/31/2001 $ 16,173 $ 15,986 6/30/2001 $ 16,234 $ 16,053 9/30/2001 $ 17,045 $ 16,851 12/31/2001 $ 16,874 $ 16,828 3/31/2002 $ 16,825 $ 16,784 6/30/2002 $ 17,510 $ 17,432 9/30/2002 $ 18,422 $ 18,272 12/31/2002 $ 18,536 $ 18,449 3/31/2003 $ 18,720 $ 18,621 Jun-03 $ 19,112 $ 18,933 </Table> <Table> <Caption> NET ASSET VALUE PER SHARE ($) 12/31/02 6/30/03 - ------------------------------------------------------- Class A 11.37 11.25 </Table> PAST PERFORMANCE CANNOT PREDICT FUTURE INVESTMENT RESULTS. SHARE PRICE AND INVESTMENT RETURN WILL VARY, SO YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. Total return performance includes changes in share price and reinvestment of all distributions. The Lehman Brothers Intermediate US Government Bond Index is an unmanaged index that tracks the performance of intermediate US government securities. Indices are not investments, do not incur fees or expenses, and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. MUTUAL FUND PERFORMANCE CHANGES OVER TIME. CURRENT RETURNS FOR THE FUND MAY BE DIFFERENT THAN THAT SHOWN. Performance numbers reflect all fund expenses, but do not include any insurance charges imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. 178 <Page> INVESTMENT PORTFOLIO Liberty Federal Securities Fund, Variable Series / June 30, 2003 (Unaudited) <Table> <Caption> PAR VALUE --------------- --------------- U.S. GOVERNMENT AGENCIES--47.8% Federal Home Loan Mortgage Corp.: 3.000% 07/15/04 $ 140,000 $ 142,705 5.500% 8/1/17-12/01/17 449,044 465,742 5.875% 03/21/11 180,000 202,476 6.000% 04/01/32 83,838 86,928 6.250% 7/15/04-07/15/32 250,000 275,581 6.750% 03/15/31 265,000 329,926 7.000% 06/01/16-01/01/26 421,453 444,057 7.500% 02/01/23-05/01/24 677,689 725,431 8.500% 05/01/06 2,994 3,161 10.500% 02/01/19-06/01/13 71,614 80,133 10.750% 11/01/09 42,830 47,685 11.250% 10/1/09-07/01/13 13,299 15,031 12.000% 07/01/13-07/01/20 169,263 195,112 To Be Announced: 5.000% (a) 11,365,000 11,734,362 5.500% (a) 27,300,000 28,161,643 --------------- 42,909,973 --------------- Federal National Mortgage Association: 5.000% 09/25/12-2/1/18 443,303 455,676 5.500% 02/15/06 200,000 219,556 6.000% 12/15/05-7/25/26 2,353,519 2,420,801 6.500% 03/01/09-08/01/31 5,007,574 5,231,233 7.000% 07/01/11-03/01/29 1,282,473 1,358,399 7.125% 03/15/07 250,000 294,465 7.500% 11/01/29 545,130 579,440 8.000% 04/01/30 61,199 65,994 8.500% 05/01/30 1,136,532 1,222,518 9.000% 10/01/05-05/01/20 29,518 32,457 9.250% 03/25/18 157,401 172,127 10.000% 03/01/16 72,934 82,052 12.250% 09/01/12 30,586 35,784 To Be Announced: 5.000% (a) 5,850,000 6,041,950 5.500% (a) 5,049,000 5,243,073 6.000% (a) 32,455,000 33,734,477 7.500% (a) 6,544,000 6,953,000 --------------- 64,143,002 --------------- Government National Mortgage Association: 5.750% 07/20/22-07/20/25 232,946 237,956 6.000% 03/15/29-08/15/29 5,926,136 6,220,502 6.500% 10/15/13-03/15/28 2,481,320 2,610,990 7.000% 09/15/29 202,737 214,285 7.500% 10/15/27-09/15/29 90,488 96,260 8.000% 04/15/08-07/15/08 190,689 205,882 8.500% 04/15/30 38,014 40,961 9.000% 06/15/16-01/15/20 206,517 230,225 9.500% 06/15/09-08/15/22 1,182,808 1,325,816 10.000% 06/15/10-11/15/19 96,802 109,209 11.500% 04/15/13-05/15/13 83,956 98,110 To Be Announced: 6.000% (a) 2,500,000 2,618,750 --------------- 14,008,946 --------------- TOTAL U.S. GOVERNMENT AGENCIES (cost of $119,302,067) 121,061,921 --------------- U.S. GOVERNMENT OBLIGATIONS--37.7% U.S. Treasury Bonds/Notes: 3.250% 12/31/03 $ 475,000 $ 480,381 3.375% 04/30/04 25,000 25,491 5.250% 05/15/04 220,000 228,061 6.000% 08/15/04 793,000 836,677 5.875% 11/15/04 160,000 170,281 1.750% 12/31/04 100,000 100,867 7.500% 02/15/05 8,078,000 8,895,897 5.750% 11/15/05 4,050,000 4,457,373 9.375% 02/15/06 5,525,000 6,640,575 7.000% 07/15/06 6,840,000 7,905,542 3.000% 11/15/07 100,000 103,148 5.500% 05/15/09 3,260,000 3,754,858 6.000% 08/15/09 250,000 294,892 6.500% 02/15/10 (b) 638,000 773,999 5.750% 08/15/10 18,084,000 21,167,467 4.375% 08/15/12 12,290,000 13,177,670 3.875% 02/15/13 220,000 226,385 7.125% 02/15/23 3,333,000 4,466,350 6.875% 08/15/25 5,745,000 7,569,486 6.750% 08/15/26 5,820,000 7,583,961 5.500% 08/15/28 3,610,000 4,060,828 5.250% 11/15/28 2,200,000 2,394,821 5.375% 02/15/31 235,000 264,623 --------------- TOTAL U.S. GOVERNMENT OBLIGATIONS (cost of $90,495,444) 95,579,633 --------------- CORPORATE BONDS--3.8% BASIC MATERIALS--0.1% FOREST PRODUCTS & PAPER--0.1% International Paper Co.: 5.850% 10/30/12 50,000 54,572 8.125% 07/08/05 80,000 89,617 Weyerhaeuser Company, Debenture, 7.375% 03/15/32 100,000 114,676 --------------- 258,865 --------------- CONSUMER CYCLICAL--0.2% AUTO MANUFACTURER--0.1% Ford Motor Co., 7.450% 07/16/31 205,000 189,980 --------------- RETAIL--0.1% Dayton Hudson Corp., 6.650% 08/01/28 125,000 143,196 Home Depot, Inc., Senior Note, 5.375% 04/01/06 120,000 131,029 --------------- 274,225 --------------- TEXTILES--0.0% Cintas Corp., Number 2, 6.000% 06/01/12 100,000 113,021 --------------- </Table> See Notes to Investment Portfolio. 179 <Page> <Table> <Caption> PAR VALUE --------------- --------------- CONSUMER DISCRETIONARY--0.3% MEDIA--0.3% AOL Time Warner, Inc., 6.875% 05/01/12 $ 100,000 $ 114,314 Cox Communications, Inc., 7.750% 11/01/10 125,000 152,024 Disney (Walt) Co.: 7.300% 02/08/05 100,000 108,555 6.375% 03/01/12 75,000 85,161 Gannett Co., Inc.: 5.500% 04/01/07 100,000 110,935 6.375% 04/01/12 100,000 117,048 --------------- 688,037 --------------- CONSUMER NON-CYCLICAL--0.2% AGRICULTURE--0.1% Cargill, Inc., 6.375% 06/01/12 (c) 130,000 148,853 --------------- COMMERCIAL SERVICES--0.1% Leland Stanford Junior Univ., 6.875% 02/01/24 150,000 180,955 --------------- COSMETICS/PERSONAL CARE--0.0% Gillette Co., 4.000% 06/30/05 60,000 63,014 --------------- PHARMACEUTICALS--0.0% Pharmacia Corp., Debenture, 6.600% 12/01/28 20,000 24,357 --------------- CONSUMER STAPLES--0.3% BEVERAGES--0.0% Anheuser Busch Cos., Inc., 7.550% 10/01/30 40,000 52,922 --------------- FOOD & DRUG RETAILING--0.3% Bestfoods Medium Term, 6.625% 04/15/28 125,000 145,472 ConAgra Foods, Inc., 6.750% 09/15/11 100,000 117,677 Kellogg Co., Series B, 6.000% 04/01/06 25,000 27,629 Kroger Co., 6.200% 06/15/12 50,000 54,851 Pepsi Bottling Holdings, Inc., 5.625% 02/17/09 (c) 100,000 113,063 Safeway, Inc., 5.800% 08/15/12 50,000 53,160 Sara Lee Corp., 6.250% 09/15/11 100,000 115,741 Sysco Corp., Debenture, 6.500% 08/01/28 100,000 114,772 --------------- 742,365 --------------- ENERGY--0.2% OIL & GAS--0.2% Amerada Hess Corp., 7.125% 03/15/33 $ 100,000 $ 114,489 Anadarko Finance Co., Series B, 6.750% 05/01/11 100,000 116,998 Conoco, Inc., Senior Note, 6.950% 04/15/29 65,000 78,044 Occidental Petroleum Corp., Senior Note, 6.500% 04/01/05 140,000 150,786 Texaco Capital, Inc., 5.500% 01/15/09 75,000 84,275 --------------- 544,592 --------------- FINANCIALS--1.5% BANKS--0.6% Bank of America Corp., Senior Note, 4.875% 01/15/13 175,000 185,750 Bank of New York Co., Inc., Senior Note, 5.200% 07/01/07 150,000 164,489 Bank One Corp., Subordinated Note, 7.875% 08/01/10 50,000 62,221 Comerica, Inc., Subordinated Note, 7.250% 08/01/07 150,000 171,465 Deutsche Bank Financial LLC, 5.375% 03/02/15 100,000 107,115 European Investment Bank, 4.625% 03/01/07 80,000 87,318 Mellon Bank, N.A., Subordinated Bank Note, 7.625% 09/15/07 100,000 119,354 National City Corp, Subordinated Note, 5.750% 02/01/09 110,000 120,454 Sovereign Bank, 5.125% 03/15/13 100,000 103,507 SunTrust Bank, Atlanta Subordinated Note, BN, 7.250% 09/15/06 125,000 143,368 U.S. Bancorp., 3.125% 03/15/08 150,000 151,757 Wachovia Corp., Senior Note, 7.450% 07/15/05 100,000 111,310 Wells Fargo Bank, N.A., Subordinated Note, 6.450% 02/01/11 50,000 58,579 --------------- 1,586,687 --------------- DIVERSIFIED FINANCIALS SERVICES--0.8% American Express Co., 6.875% 11/01/05 55,000 61,537 Bear Stearns Cos., Inc., 3.000% 03/30/06 90,000 92,218 </Table> See Notes to Investment Portfolio. 180 <Page> <Table> <Caption> PAR VALUE --------------- --------------- Boeing Capital Corp., Senior Note, 5.750% 02/15/07 $ 100,000 $ 109,332 Chase Manhattan Corp., Subordinated Note, 7.875% 06/15/10 125,000 152,015 Citigroup, Inc., Senior Note, 6.750% 12/01/05 100,000 111,319 Citigroup, Inc., Subordinated Note, 7.250% 10/01/10 100,000 120,745 Ford Motor Credit Co., 7.600% 08/01/05 120,000 128,758 General Electric Capital Corp., Series A MTN: 6.750% 03/15/32 100,000 117,508 6.800% 11/01/05 125,000 139,523 General Motors Acceptance Corp.: 6.750% 01/15/06 150,000 159,331 7.250% 03/02/11 50,000 51,080 7.500% 07/15/05 50,000 53,580 Goldman Sachs Group, Inc.: 4.125% 01/15/08 50,000 52,505 5.250% 04/01/13 50,000 53,252 Household Finance Corp.: 4.625% 01/15/08 50,000 53,296 6.375% 10/15/11 50,000 56,937 International Lease Finance Corp., 4.000% 01/17/06 90,000 93,105 John Deere Capital Corp., Series D, MTN, Senior Note, 3.125% 12/15/05 75,000 77,103 Mellon Funding Corp., 4.875% 06/15/07 50,000 53,861 Merrill Lynch & Co., Inc., Series B, MTN, 4.000% 11/15/07 150,000 157,370 Morgan Stanley Dean Witter & Co., Unsubordinated Note, 6.100% 04/15/06 80,000 88,330 --------------- 1,982,705 --------------- INSURANCE--0.0% Marsh & McLennan Cos., Inc., Senior Note, 6.250% 03/15/12 100,000 115,829 --------------- REAL ESTATE--0.1% EOP Operating Ltd., 7.000% 07/15/11 110,000 128,525 --------------- INDUSTRIALS--0.4% AEROSPACE & DEFENSE--0.0% Raytheon Co., 7.200% 08/15/27 50,000 58,476 --------------- HAND & MACHINE TOOLS--0.0% Black & Decker Corp., Senior Note, 7.125% 06/01/11 50,000 59,090 --------------- MISCELLANEOUS MANUFACTURING--0.2% Illinois Tool Works, Inc., 5.750% 03/01/09 $ 155,000 $ 175,878 Minnesota Mining & Manufacturing Co., 6.375% 02/15/28 155,000 177,384 --------------- 353,262 --------------- PACKAGING & CONTAINERS--0.0% Bemis Co., Inc., 6.500% 08/15/08 50,000 57,789 --------------- ROAD & RAIL--0.2% Burlington Northern Santa Fe Corp., Debenture, 7.000% 12/15/25 150,000 173,139 Norfolk Southern Corp., Senior Note, 7.250% 02/15/31 75,000 89,691 Union Pacific Corp., Debenture, 6.625% 02/01/29 50,000 56,803 United Parcel Services, Inc., Debenture, 8.375% 04/01/30 90,000 126,882 --------------- 446,515 --------------- MANUFACTURING--0.0% METALS & MINING--0.0% Alcoa, Inc., 7.250% 08/01/05 25,000 27,846 --------------- MATERIALS--0.0% CHEMICALS--0.0% Rohm & Haas Co., Debenture, 7.850% 07/15/29 50,000 64,938 --------------- TECHNOLOGY--0.1% COMPUTERS--0.1% IBM Corp., 4.875% 10/01/06 200,000 216,980 IBM Corp., Debenture, 6.220% 08/01/27 100,000 111,756 --------------- 328,736 --------------- TELECOMMUNICATION SERVICES--0.3% DIVERSIFIED TELECOMMUNICATIONS--0.3% AT&T Corp., Senior Note, 7.000% 11/15/06 70,000 77,505 AT&T Corp., Senior Note, 8.500% 11/15/31 (c) 20,000 22,813 Ameritech Capital Funding Corp., 6.550% 01/15/28 50,000 56,686 BellSouth Capital Funding, Debenture, 7.875% 02/15/30 100,000 128,514 SBC Communications, Inc., 5.750% 05/02/06 100,000 110,239 </Table> See Notes to Investment Portfolio. 181 <Page> <Table> <Caption> PAR VALUE --------------- --------------- Sprint Capital Corp.: 6.000% 01/15/07 $ 50,000 $ 53,888 6.875% 11/15/28 50,000 50,958 Verizon New England, Inc., Senior Note, 6.500% 09/15/11 120,000 138,787 --------------- 639,390 --------------- WIRELESS TELECOMMUNICATION SERVICES--0.0% AT&T Wireless Services, Inc., Senior Note, 8.750% 03/01/31 50,000 62,328 Cingular Wireless LLC, Senior Note, 7.125% 12/15/31 45,000 52,793 --------------- 115,121 --------------- UTILITIES--0.2% ELECTRIC UTILITIES--0.2% Consolidated Edison Co. of New York, Inc., 7.150% 12/01/09 50,000 60,854 Consolidated Edison Co. of New York, Inc., Series B, Debenture, 4.875% 02/01/13 50,000 52,515 Florida Power & Light Co., First Mortgage, 6.875% 12/01/05 100,000 111,788 Potomac Electric Power Co., First Mortgage, 6.250% 10/15/07 100,000 111,576 Virginia Electric & Power, Series A, Senior Note, 5.375% 02/01/07 100,000 109,475 --------------- 446,208 --------------- TOTAL CORPORATE BONDS (cost of $7,573,984) 9,692,303 --------------- NON-AGENCY MORTGAGE-BACKED & ASSET-BACKED SECURITIES--8.6% Advanta Mortgage Loan Trust, 7.550% 06/25/27 253,558 259,079 American Mortgage Trust, 7.432% 09/27/22 33,658 30,292 Asset Securitization Corp., 6.750% 02/14/43 1,375,000 1,578,128 BMW Vehicle Owner Trust, Series 2002-A, Class A-3, 3.800% 05/25/06 90,000 91,892 Chase Funding Mortgage Loan: 6.448% 09/25/30 2,300,000 2,354,970 5.638% 11/25/31 2,000,000 2,047,540 6.975% 02/25/32 3,000,000 3,209,970 Chase Manhattan Auto Owner Trust, Series 2001-A, Class A-4, 5.070% 02/15/08 $ 125,000 $ 130,755 Chase Manhattan Auto Owner Trust, Series 2001-B, Class A-4, 3.800% 05/15/08 250,000 258,965 Citibank Credit Card Issuance Trust, Series 2002-A1, Class A-1, 4.950% 02/09/09 250,000 270,312 Citicorp Mortgage Securities, Inc., 10.000% 07/01/17 27,700 27,655 Comfed Bancorp, Inc., 6.033% 01/01/18 22,405 17,924 Glendale Federal Bank, 9.125% 01/25/08 3,699 3,692 GS Mortgage Securities Corp., 7.750% 09/20/27 1,469,628 1,522,944 Harley-Davidson Motorcycle Trust, Series 2001-2, Class A-1, 3.770% 04/17/06 34,238 34,739 Honda Auto Receivables Owner Trust, Series 2002-2, Class A-3, 3.830% 02/15/06 185,000 188,783 Imperial Savings Association, 8.888% 07/25/17 4,491 4,481 JP Morgan Commercial Mortgage Finance Corp., 7.400% 07/15/31 2,000,000 2,383,221 LB Commercial Conduit Mortgage Trust: 6.210% 10/15/35 1,800,000 2,039,680 6.590% 02/18/30 1,500,000 1,702,395 Merrill Lynch Mortgage Investors, Inc., 7.127% 12/26/25 428,850 444,842 Mid-State Trust, 7.340% 07/01/35 1,273,882 1,403,069 Nomura Asset Securities Corp., 7.120% 04/13/39 1,000,000 1,120,514 Private Export Funding Corp., 5.340% 03/15/06 125,000 136,783 Rural Housing Trust, 6.330% 04/01/26 103,536 105,208 Structured Asset Securities Corp., Interest Only 1.869% 02/25/28 2,475,065 131,287 Wells Fargo Auto Trust Series 2001-A, Class A-4, 5.070% 03/15/08 200,000 205,560 --------------- TOTAL NON-AGENCY MORTGAGE-BACKED & ASSET-BACKED SECURITIES (cost of $19,991,988) 21,704,680 --------------- </Table> See Notes to Investment Portfolio. 182 <Page> <Table> <Caption> PAR VALUE --------------- --------------- SOVEREIGN DEBT--0.3% Export Development of Canada, 4.000% 08/01/07 $ 100,000 $ 106,313 Hydro-Quebec, Series HH, Yankee, 8.500% 12/01/29 75,000 111,105 Inter-American Development Bank Yankee, Debenture, 8.875% 06/01/09 125,000 164,056 Province of British Columbia, 5.375% 10/29/08 50,000 56,201 Province of Manitoba, 4.250% 11/20/06 100,000 107,014 Province of Manitoba, Yankee, Debenture, 5.500% 10/01/08 50,000 56,524 Province of New Brunswick, Senior Unsubordinated Note, 3.500% 10/23/07 50,000 52,015 Province of Nova Scotia, 5.750% 02/27/12 15,000 17,162 Province of Ontario, 6.000% 02/21/06 40,000 44,301 State of Israel, 6.750% 08/15/04 100,000 104,334 --------------- TOTAL SOVEREIGN DEBT (cost of $749,257) 819,025 --------------- SHORT-TERM OBLIGATIONS--37.9% U.S. GOVERNMENT AGENCY--9.2% Federal Home Loan Mortgage Corp. 0.950% 07/01/03 23,268,000 23,268,000 --------------- REPURCHASE AGREEMENT--28.7% Repurchase agreement with State Street Bank & Trust Co., dated 06/30/03, due 07/01/03 at 1.050%, collateralized by Federal Home Loan Bank with various maturities to 04/13/04, market value $74,215,229 (repurchase proceeds $72,756,122) 72,754,000 72,754,000 --------------- TOTAL SHORT-TERM OBLIGATIONS (cost of $96,022,000) 96,022,000 --------------- TOTAL INVESTMENTS--136.1% (cost of $334,134,740) (d) 344,879,562 --------------- OTHER ASSETS & LIABILITIES, NET--(36.1)% (91,494,971) --------------- NET ASSETS--100.0% $ 253,384,591 =============== </Table> NOTES TO INVESTMENT PORTFOLIO: (a) These securities, or a portion thereof, have been purchased on a delayed delivery basis whereby the terms that are fixed are the purchase price, interest rate and settlement date. The exact quantity purchased may be slightly more or less than the amount shown. (b) This security, or portion thereof, with a total market value of $773,999 is being used to collateralize open futures contracts. (c) These securities are exempt from registration under Rule 144A of the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At June 30, 2003, the value of these securities amounted to $284,729 which represents 0.1% of net assets. (d) Cost for federal income tax purposes is $335,318,091. The difference between cost for generally accepted accounting principles and cost on a tax basis is related to amortization/accretion tax elections on fixed income securities. Short futures contracts open on June 30, 2003: <Table> <Caption> UNREALIZED NUMBER OF EXPIRATION APPRECIATION TYPE CONTRACTS MONTH (DEPRECIATION) - -------------------------- --------- ---------- -------------- 2 Year U.S. Treasury Note 11 September $ (3,151) 10 Year U.S. Treasury Note 17 September 17,570 U.S. Treasury Bond 3 September 1,953 -------- $ 16,372 ======== </Table> <Table> <Caption> ACRONYM NAME ------- ------ MTN Medium Term Note </Table> See Notes to Financial Statements. 183 <Page> STATEMENT OF ASSETS & LIABILITIES Liberty Federal Securities Fund, Variable Series/June 30, 2003 (Unaudited) <Table> ASSETS: Investments, at cost (includes short-term obligation) $ 334,134,740 --------------- Investments, at value $ 272,125,562 Repurchase agreement 72,754,000 Cash 143 Receivable for: Fund shares sold 2,225,287 Interest 2,216,697 Dollar Rolls 161,383 Expense reimbursement due from Distributor 2,160 Deferred Trustees' compensation plan 2,159 --------------- TOTAL ASSETS 349,487,391 --------------- LIABILITIES: Payable for: Investments purchased on a delayed delivery basis 94,675,139 Fund shares repurchased 1,218,731 Futures variation margin 10,844 Distribution fee--Class B 513 Management fee 82,418 Administration fee 30,851 Transfer agent fee 595 Pricing and bookkeeping fees 11,735 Merger costs 21,481 Reports to shareholders 36,066 Deferred Trustees' fee 2,159 Other liabilities 12,268 --------------- TOTAL LIABILITIES 96,102,800 --------------- NET ASSETS $ 253,384,591 =============== COMPOSITION OF NET ASSETS: Paid-in capital $ 237,048,432 Undistributed net investment income 3,357,154 Accumulated net realized gain 2,217,811 Net unrealized appreciation on: Investments 10,744,822 Futures contracts 16,372 --------------- NET ASSETS $ 253,384,591 =============== CLASS A: Net assets $ 141,055,163 Shares outstanding 12,540,501 =============== Net asset value per share $ 11.25 =============== CLASS B: Net assets $ 112,329,428 Shares outstanding 10,040,027 =============== Net asset value per share $ 11.19 =============== </Table> See Notes to Financial Statements. 184 <Page> STATEMENT OF OPERATIONS Liberty Federal Securities Fund, Variable Series For the Six Months Ended June 30, 2003 (Unaudited) <Table> INVESTMENT INCOME: Interest $ 4,018,082 Dollar roll fee income 1,175,388 --------------- Total Investment Income 5,193,470 --------------- EXPENSES: Management fee 477,971 Administration fee 179,239 Distribution fee--Class B 132,738 Pricing and bookkeeping fees 48,005 Transfer agent fee 3,719 Trustees' fee 5,280 Custody fee 8,938 Other expenses 36,156 --------------- Net Expenses 892,046 --------------- Net Investment Income 4,301,424 --------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES CONTRACTS: Net realized gain (loss) on: Investments 2,713,173 Futures contracts (265,146) --------------- Net realized gain 2,448,027 --------------- Net change in unrealized appreciation/depreciation on: Investments 441,937 Futures contracts 101,130 --------------- Net change in unrealized appreciation/depreciation 543,067 --------------- Net Gain 2,991,094 --------------- Net Increase in Net Assets from Operations $ 7,292,518 =============== </Table> See Notes to Financial Statements. 185 <Page> STATEMENT OF CHANGES IN NET ASSETS Liberty Federal Securities Fund, Variable Series <Table> <Caption> (UNAUDITED) SIX MONTHS ENDED YEAR ENDED JUNE 30, DECEMBER 31, INCREASE (DECREASE) IN NET ASSETS: 2003 2002 - ---------------------------------- --------------- --------------- OPERATIONS: Net investment income $ 4,301,424 $ 8,005,123 Net realized gain on investments and futures contracts 2,448,027 2,774,759 Net change in unrealized appreciation/depreciation on investments and futures contracts 543,067 7,193,833 --------------- --------------- Net Increase from Operations 7,292,518 17,973,715 --------------- --------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income: Class A (5,108,886) (4,876,880) Class B (4,100,433) (2,478,958) --------------- --------------- Total Distributions Declared to Shareholders (9,209,319) (7,355,838) --------------- --------------- SHARE TRANSACTIONS: Class A: Subscriptions 6,913,561 27,971,432 Proceeds received in connection with merger 20,365,187 -- Distributions reinvested 5,108,886 4,876,880 Redemptions (16,361,814) (22,614,928) --------------- --------------- Net Increase 16,025,820 10,233,384 --------------- --------------- Class B: Subscriptions 14,580,706 54,512,916 Distributions reinvested 4,100,433 2,478,958 Redemptions (8,022,495) (8,937,222) --------------- --------------- Net Increase 10,658,644 48,054,652 --------------- --------------- Net Increase from Share Transactions 26,684,464 58,288,036 --------------- --------------- Total Increase in Net Assets 24,767,663 68,905,913 NET ASSETS: Beginning of period 228,616,928 159,711,015 --------------- --------------- End of period (including undistributed net investment income of $3,357,154 and $8,265,049, respectively) $ 253,384,591 $ 228,616,928 =============== =============== CHANGES IN SHARES: Class A: Subscriptions 611,355 2,555,228 Issued in connection with merger 1,854,753 -- Issued for distributions reinvested 460,675 470,741 Redemptions (1,459,099) (2,074,589) --------------- --------------- Net Increase 1,467,684 951,380 --------------- --------------- Class B: Subscriptions 1,303,880 5,022,381 Issued for distributions reinvested 371,416 240,442 Redemptions (719,733) (815,987) --------------- --------------- Net Increase 955,563 4,446,836 --------------- --------------- </Table> See Notes to Financial Statements. 186 <Page> NOTES TO FINANCIAL STATEMENTS Liberty Federal Securities Fund, Variable Series / June 30, 2003 (Unaudited) NOTE 1. ORGANIZATION AND ACCOUNTING POLICIES ORGANIZATION--Liberty Federal Securities Fund, Variable Series (the "Fund"), a series of SteinRoe Variable Investment Trust (the "Trust"), is a diversified portfolio of a Massachusetts business trust, registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund's investment goal is to seek the highest possible level of current income consistent with the safety of principal and maintenance of liquidity. The Fund's capitalization consists of an unlimited number of shares of beneficial interest without par value that represent a separate series of the Trust. The Fund offers two classes of shares: Class A and Class B. Each share of a class represents an equal proportionate beneficial interest in that share class and, when issued and outstanding, is fully paid and nonassessable. Shareholders would be entitled to share proportionally in the net assets of their share class available for distribution to shareholders upon liquidation of the Fund. Shares of the Fund are available and are being marketed exclusively as a pooled funding vehicle for variable annuity contracts ("VA contracts") and Variable Life Insurance Policies ("VLI Policies") offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies"). The Participating Insurance Companies and their separate accounts own all the shares of the Fund. On April 1, 2003, Stein Roe & Farnham Incorporated, the investment advisor to the Fund, merged into Columbia Management Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co., an indirect wholly owned subsidiary of FleetBoston Financial Corporation. At the time of the merger, Columbia assumed the obligations of Stein Roe & Farnham Incorporated with respect to the Fund. The merger did not change the way the Fund is managed, the investment personnel assigned to manage the Fund or the fees paid by the Fund. Columbia provides investment management and advisory services to the Fund pursuant to its Management Agreement with the Fund. Columbia also provides pricing and bookkeeping services to the Fund. Liberty Funds Distributor, Inc. ("LFD"), an affiliate of Columbia, serves as the principal underwriter of the Fund. On April 7, 2003, the Galaxy VIP Quality Plus Bond Fund, previously a single class fund of Galaxy VIP Fund, a separate Massachusetts business trust, merged into the Fund's Class A shares. The Fund received a tax-free transfer of assets from the Galaxy VIP Quality Plus Bond Fund as follows: <Table> <Caption> SHARES NET ASSETS UNREALIZED ISSUED RECEIVED APPRECIATION(1) --------- ------------- --------------- 1,854,753 $ 20,365,187 $ 1,020,254 </Table> <Table> <Caption> NET ASSETS OF GALAXY VIP QUALITY PLUS NET ASSETS NET ASSETS BOND FUND OF THE FUND OF THE FUND IMMEDIATELY IMMEDIATELY PRIOR TO PRIOR TO AFTER COMBINATION COMBINATION COMBINATION --------------- ------------- -------------- $ 231,382,451 $ 20,365,187 $ 251,747,638 </Table> (1)Unrealized appreciation is included in the Net Assets Received amount shown above. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION AND TRANSACTIONS--Debt securities generally are valued by a pricing service based upon market transactions for normal, institutional-size trading units of similar securities. When management deems it appropriate, an over-the-counter or exchange bid quotation is used. Short-term obligations with a maturity of 60 days or less are valued at amortized cost. Investments for which market quotations are not readily available, or quotations which management believes are not appropriate, are valued at fair value under procedures approved by the Board of Trustees. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded. Security transactions are accounted for on the date the securities are purchased, sold or mature. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. The Fund may enter into mortgage dollar roll transactions. A mortgage dollar roll transaction involves a sale by the Fund of securities that it holds with an agreement by the Fund to repurchase substantially similar securities at an agreed upon price and date. During the period between the sale and the repurchase, the Fund will not be entitled to accrue interest and receive principal payments on the securities sold. Mortgage dollar roll transactions involve the risk that the market value of the securities sold by the Fund may decline below the repurchase price of those securities. In the event the buyer of the securities under a mortgage dollar roll transaction files for bankruptcy or 187 <Page> becomes insolvent, the Fund's use of proceeds of the transaction may be restricted pending a determination by or with respect to the other party. The Fund may trade securities on other than normal settlement terms. This may increase the risk if the other party to the transaction fails to deliver and causes the Fund to subsequently invest at less advantageous prices. The Fund maintains U.S. government securities or other liquid high-grade debt obligations as collateral with respect to mortgage dollar roll transactions and securities traded on other than normal settlement terms. DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS--All income, expenses (other than the Class B distribution fee), and realized and unrealized gains (losses) are allocated to each class proportionately on a daily basis for purposes of determining the net asset value of each class. The per share data was calculated using average shares outstanding during the period. In addition, Class B net investment income per share data and ratios reflect the distribution fee applicable to Class B shares only. FEDERAL INCOME TAXES--Consistent with the Fund's policy to qualify as a regulated investment company and to distribute all of its taxable income, no federal income tax has been accrued. INTEREST INCOME, DEBT DISCOUNT AND PREMIUM-- Interest income is recorded on the accrual basis. Fee income attributable to mortgage dollar roll transactions is recorded on the accrual basis over the term of the transaction. Discount is accreted to interest income over the life of a security with a corresponding increase in the cost basis. Premium is amortized against interest income with a corresponding decrease in the cost basis. DISTRIBUTIONS TO SHAREHOLDERS--The Fund intends to distribute as income dividends or capital gains distributions, at least annually, substantially all of its net investment income and net profits realized from the sale of investments. All dividends and distributions are reinvested in additional shares of the Fund at net asset value as of the record date of the distribution. Income and capital gain distributions are determined in accordance with federal income tax regulations. OTHER--The Fund's custodian takes possession through the federal book-entry system of securities collateralizing repurchase agreements. Collateral is marked-to-market daily to ensure that the market value of the underlying assets remains sufficient to protect the Fund. The Fund may experience costs and delays in liquidating the collateral if the issuer defaults or enters bankruptcy. NOTE 2. FEDERAL TAX INFORMATION Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES MANAGEMENT AND ADMINISTRATIVE FEES--Columbia receives monthly fees equal to 0.40% and 0.15% annually of the Fund's average daily net assets for management and administrative services, respectively. PRICING AND BOOKKEEPING FEES--Columbia is responsible for providing pricing and bookkeeping services to the Fund under a Pricing and Bookkeeping Agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Bank & Trust Company ("State Street"). Columbia pays fees to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual flat fee of $10,000, paid monthly, and in any month that the Fund's average daily net assets are more than $50 million, a monthly fee equal to the average daily net assets of the Fund for that month multiplied by a fee rate that is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. For the six months ended June 30, 2003, the annualized net asset based fee rate was 0.033%. The Fund also pays out-of-pocket costs for pricing services. TRANSFER AGENT FEE--Liberty Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia, provides shareholder services for an annual rate of $7,500. DISTRIBUTION FEE--The Fund has adopted a 12b-1 plan, which requires it to pay LFD a monthly distribution fee equal to 0.25% annually of ClassB average daily net assets. EXPENSE LIMITS--Columbia has voluntarily agreed to reimburse all expenses, including management fees, but excluding interest, taxes, distribution fees, brokerage and extraordinary expenses of the Fund in excess of 0.70% annually of the Fund's average daily net assets. LFD has voluntarily agreed to reimburse the Fund's Class B share distribution fee in excess of 0.20% when the total operating expenses of the Fund applicable to Class B shares, including distribution fees, are in excess of 0.90% annually of Class B average daily net assets. 188 <Page> These arrangements may be terminated or modified by Columbia or LFD at any time. OTHER--The Fund pays no compensation to its officers, all of whom are employees of Columbia or its affiliates. The Fund's Independent Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. NOTE 4. PORTFOLIO INFORMATION INVESTMENT ACTIVITY--For the six months ended June 30, 2003, purchases and sales of investments, other than short-term obligations, were $37,617,394 and $49,204,945, respectively, of which $33,317,446 and $48,378,871, respectively, were U.S. Government securities. Unrealized appreciation (depreciation) at June 30, 2003, based on cost of investments for federal income tax purposes, was: <Table> Gross unrealized appreciation $ 10,027,395 Gross unrealized depreciation (465,924) ------------- Net unrealized appreciation $ 9,561,471 ============= </Table> OTHER--The Fund may purchase or sell futures contracts. The Fund will use these instruments to hedge against the effects of changes in the portfolio securities due to market conditions and not for trading purposes. The use of futures contracts involves certain risks which include (1) imperfect correlation between the price movement of the instruments and the underlying securities, (2) inability to close out a position due to different trading hours, or the absence of a liquid market for either the instrument or the underlying securities or (3) an inaccurate prediction by Columbia of the future direction of the market or interest rate trends. Any of these risks may involve amounts exceeding the variation margin recorded in the Fund's Statement of Assets and Liabilities at any given time. 189 <Page> FINANCIAL HIGHLIGHTS Liberty Federal Securities Fund, Variable Series--Class A Shares Selected data for a share outstanding throughout each period is as follows: <Table> <Caption> (UNAUDITED) SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ------------------------------------------------------------------ 2003 2002 2001 2000 1999 1998 ------------ --------- --------- --------- --------- --------- NET ASSET VALUE, BEGINNING OF PERIOD $ 11.37 $ 10.84 $ 10.76 $ 10.35 $ 10.79 $ 10.73 ------------ --------- --------- --------- --------- --------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (a) 0.21 0.47 0.56(b) 0.66 0.66 0.55 Net realized and unrealized gain (loss) on investments and futures contracts 0.14 0.55 0.17(b) 0.40 (0.55) 0.14 ------------ --------- --------- --------- --------- --------- Total from Investment Operations 0.35 1.02 0.73 1.06 0.11 0.69 ------------ --------- --------- --------- --------- --------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.47) (0.49) (0.65) (0.65) (0.55) (0.63) ------------ --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 11.25 $ 11.37 $ 10.84 $ 10.76 $ 10.35 $ 10.79 ============ ========= ========= ========= ========= ========= Total return (c)(d) 3.10%(e) 9.85% 7.03% 10.83% 1.08% 6.80% RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (f) 0.63%(g) 0.66% 0.70% 0.63% 0.64%(h) 0.70% Net investment income (f) 3.71%(g) 4.27% 5.23%(b) 6.52% 6.29%(h) 5.91% Portfolio turnover rate 26%(e) 69% 36% 43% 28%(i) 8%(i) Net assets, end of period (000's) $ 141,055 $ 125,946 $ 109,724 $ 105,064 $ 105,898 $ 96,693 </Table> (a) Per share data was calculated using average shares outstanding during the period. (b) Effective January 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing and accreting premium and discount on all debt securities. The effect of this change, for the year ended December 31, 2001, was to decrease the ratio of net investment income to average net assets from 5.26% to 5.23%. The impact to net investment income and net realized and unrealized gain per shares was less than $0.01. Per share data and ratios for periods prior to December 31, 2001 have not been restated to reflect this change in presentation. (c) Total return at net asset value assuming all distributions reinvested. (d) Total return figure does not include any insurance company charges associated with a variable annuity. If included, total return would be reduced. (e) Not annualized. (f) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (g) Annualized. (h) During the year ended December 31, 1999, the Fund experienced a one-time reduction in its expenses of three basis points as a result of expenses accrued in a prior period. The Fund's ratios disclosed above reflect the actual rate at which expenses were incurred throughout the current fiscal year without the reduction. (i) Portfolio turnover includes dollar roll transactions. 190 <Page> SHAREHOLDER MEETING RESULTS Liberty Federal Securities Fund, Variable Series RESULTS OF THE ANNUAL MEETING OF SHAREHOLDERS On February 19, 2003, the Annual Meeting of Shareholders of the Trust was held to conduct a vote for or against the approval of the following items listed on the Trust's Proxy Statement for said Meeting. On December 2, 2002, the record date for the Meeting, the Galaxy VIP Quality Plus Bond Fund had 1,788,366.817 common shares outstanding. The votes cast were as follows: SHAREHOLDER RESPONSE SUMMARY REPORT LIBERTY VARIABLE INVESTMENT TRUST/STEINROE VARIABLE INVESTMENT TRUST GALAXY VIP QUALITY PLUS BOND FUND FEBRUARY 19, 2003 1. To approve an Agreement and Plan of Reorganization providing for (i) the sale of all of the assets of the Galaxy VIP Quality Plus Bond Fund to, and the assumption of all of the liabilities of the Galaxy VIP Quality Plus Bond Fund by, the Liberty Federal Securities Fund, Variable Series, in exchange for shares of the Liberty Federal Securities Fund, Variable Series, and the distribution of such shares to the shareholders of the Galaxy VIP Quality Plus Bond Fund in complete liquidation of the Galaxy VIP Quality Plus Bond Fund; (ii) the de-registration of The Galaxy VIP Fund as an investment company under the Investment Company Act of 1940, as amended, and (iii) The Galaxy VIP Fund's termination as a Massachusetts business trust under Massachusetts law. <Table> <Caption> % OF % OF NO. OF OUTSTANDING SHARES SHARES SHARES VOTED ------------- ------------- ------------- Affirmative 1,572,115.272 87.908% 90.280% Against 12,124.421 .678% .696% Abstain 157,143.545 8.787% 9.024% TOTAL 1,741,383.238 97.373% 100.000% <Caption> ** FUND TOTALS: SHARES RECORD TOTAL 1,788,366.817 VOTED SHARES 1,741,383.238 PERCENT VOTED 97.373% </Table> 191 <Page> PORTFOLIO MANAGER'S DISCUSSION Liberty Money Market Fund, Variable Series / June 30, 2003 Liberty Money Market Fund, Variable Series seeks maximum current income, consistent with capital preservation and the maintenance of liquidity. Karen M. Arneil has been the fund's portfolio manager since 2002. She has managed other funds for Columbia Management Advisors, Inc. and its predecessors since 1996. On April 7, 2003, Galaxy VIP Money Market Fund was merged into Stein Roe Money Market Fund, Variable Series. The new fund was renamed Liberty Money Market Fund, Variable Series. INTEREST RATES FURTHER REDUCED The Federal Reserve Board cut the federal funds rate twice during the 12-month reporting period. These moves brought the key interbank overnight borrowing rate down from 1.75% to 1.00%--a 45-year low. The most recent reduction in this leading indicator for short-term interest rates took place late in June as the Fed once again tried to jump-start growth in a weak US economy. The lower rate may have been a welcomed move for consumers and businesses, but the effect on money market funds was to bring returns on eligible portfolio securities down to an all-time low. HIGH QUALITY AND LIQUIDITY REMAIN THE FUND'S FOCUS Despite declining short-term rates, we are committed to our universe of government agency obligations and high quality corporate and bank obligations. To strive for the highest available yield from these securities, we employed a "barbell" management strategy. We invested in a mix of securities with maturities ranging from one month to three months and also in securities with maturities of one year. The shorter-term investments keep the portfolio liquid, while the longer-term securities bring a higher return. Additionally, we emphasized purchases in floating-rate debt over traditional fixed-rate securities. This strategy brought higher levels of income to the fund and enabled us to sustain an average portfolio maturity of 64 days. STAYING THE COURSE We don't expect any major rate changes in the foreseeable future, and our strategy remains unchanged. We will continue to pursue the highest possible returns from high quality, liquid investments in this now very low-rate environment. Economic and market conditions can frequently change. There is no assurance that the trends described here will continue or commence. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund. 192 <Page> PERFORMANCE INFORMATION Liberty Money Market Fund, Variable Series / June 30, 2003 AVERAGE ANNUAL TOTAL RETURN AS OF JUNE 30, 2003 (%) <Table> <Caption> (CUMULATIVE) 6-MONTH 1-YEAR 5-YEAR 10-YEAR - --------------------------------------------------------------- The Fund (1/1/89) 0.36 0.89 3.71 4.20 US Consumer Price Index 1.10 2.11 2.43 2.44 </Table> Inception date of the fund is in parentheses. <Table> <Caption> NET ASSET VALUE PER SHARE ($) 12/31/02 6/30/03 - --------------------------------------------------------------- The Fund 1.00 1.00 </Table> PAST PERFORMANCE CANNOT PREDICT FUTURE INVESTMENT RESULTS. SHARE PRICE AND INVESTMENT RETURN CAN VARY, SO YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. Total return performance includes changes in share price and reinvestment of all distributions. The US Consumer Price Index is the government's measure of retail inflation. MUTUAL FUND PERFORMANCE CHANGES OVER TIME. CURRENT RETURNS FOR THE FUND MAY BE DIFFERENT THAN THAT SHOWN. Performance numbers reflect all fund expenses, but do not include any insurance charges imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. 193 <Page> INVESTMENT PORTFOLIO Liberty Money Market Fund, Variable Series / June 30, 2003 (Unaudited) <Table> <Caption> PAR VALUE (a) --------------- --------------- BANK NOTES--4.6% Bank One Corp., 1.320% 04/13/04 (b) $ 10,000,000 $ 10,006,706 Wells Fargo Bank, 0.984% 11/24/03 (b) 700,000 700,000 --------------- TOTAL BANK NOTES (cost of $10,706,706) 10,706,706 --------------- CERTIFICATES OF DEPOSIT--9.8% Canadian Imperial Bank of Canada, 1.200% 07/15/04 (b) 7,000,000 7,000,000 First Tennessee Bank, 1.240% 02/04/04 5,700,000 5,699,382 Rabobank Nederland N.V., 1.330% 04/19/04 5,000,000 5,000,000 Toronto-Dominion Bank, 0.930% 09/23/03 5,000,000 5,000,058 --------------- TOTAL CERTIFICATES OF DEPOSIT (cost of $22,699,440) 22,699,440 --------------- COMMERCIAL PAPER--54.3% (c) Amstel Funding Corp., 1.240% 07/07/03 (d) 8,000,000 7,998,347 Amstel Funding Corp., 1.270% 07/07/03 (d) 2,500,000 2,499,471 Aventis, Inc., 1.230% 07/10/03 (d) 3,000,000 2,999,078 Aventis, Inc., 1.230% 08/05/03 (d) 7,000,000 6,991,629 Credit Suisse First Boston, 1.040% 10/01/03 10,000,000 9,973,422 Falcon Asset Securitization, 0.960% 07/23/03 (d) 4,000,000 3,997,653 Falcon Asset Securitization, 0.980% 09/15/03 (d) 6,000,000 5,987,587 Fountain Square Commercial Funding Corp., 1.230% 08/04/03 (d) 5,000,000 4,994,192 Govco Inc., 1.230% 07/07/03 (d) 4,000,000 3,999,180 Govco Inc., 0.930% 09/15/03 (d) 6,000,000 5,988,220 Johnson & Johnson, 1.160% 08/19/03 (d) 10,000,000 9,984,211 Jupiter Securitization Corp., 1.230% 07/01/03 (d) 6,000,000 6,000,000 Jupiter Securitization Corp., 0.990% 07/25/03 (d) 4,000,000 3,997,360 Koch Industries, 1.230% 07/01/03 (d) 10,000,000 10,000,000 National Rural Utilities Corp., 1.150% 07/18/03 5,500,000 5,497,013 Old Line Funding Corp., 1.230% 07/07/03 (d) $ 5,506,000 $ 5,504,871 Old Line Funding Corp., 0.980% 08/01/03 (d) 4,511,000 4,507,193 Preferred Receivables Funding Corp., 0.960% 07/30/03 (d) 5,000,000 4,996,133 UBS Finance Corp., 1.310% 07/01/03 10,000,000 10,000,000 Variable Funding Capital Corp., 1.220% 07/08/03 (d) 10,000,000 9,997,628 --------------- TOTAL COMMERCIAL PAPER (cost of $125,913,188) 125,913,188 --------------- CORPORATE BONDS--10.9% American Express Corp., 1.124% 07/19/04 (b)(e) 3,000,000 3,000,000 American Express Corp., 1.350% 03/05/04 (b) 5,000,000 5,000,000 American Honda Finance Corp., 1.439% 07/15/04 (b)(e) 5,000,000 5,010,350 Autumn House at Powder Mill,Inc., (LOC: Suntrust Bank) 1.100% 02/01/28 (b) 1,000,000 1,000,000 Citigroup, Inc. 1.520% 03/09/04 (b) 8,000,000 8,016,976 NBD Bank, 6.250% 08/15/03 580,000 582,915 Pepin Distributing Co., Inc., (Series 1998), (LOC: Wachovia Bank N.A.) 1.090% 06/01/08 (b) 2,230,000 2,230,000 Walmart Stores, Inc., 4.375% 08/01/03 500,000 500,856 --------------- TOTAL CORPORATE BONDS (cost of $25,341,097) 25,341,097 --------------- MUNICIPAL BONDS--7.0% Dade County Florida Expressway Authority Toll System, Revenue Bonds, (FGIC INS), 1.000% 07/01/19 (b) 20,000 20,000 Detroit MI, (LOC: Bank One) 1.050% 05/01/05 (b) 1,750,000 1,750,000 Fairview Hospital Healthcare & Services, MN, (FSA INS)/ (SPA: U.S. Bank) 1.050% 11/01/15 (b) 700,000 700,000 Missouri St, Health & Educational Facilities, (LOC: U.S. Bank N.A.) 1.200% 11/15/22 (b) 3,710,000 3,710,000 </Table> See Notes to Investment Portfolio. 194 <Page> <Table> <Caption> PAR VALUE (a) --------------- --------------- New Jersey Economic Development Authority St. Pension Funding, (FSA INS)/ (SPA: Dexia Credit Local) 1.040% 02/15/29 (b) $ 10,000,000 $ 10,000,000 --------------- TOTAL MUNICIPAL BONDS (cost of $16,180,000) 16,180,000 --------------- U.S. GOVERNMENT AGENCIES--18.9% Federal Home Loan Bank, 4.875% 04/16/04 8,000,000 8,222,779 Federal Home Loan Bank, 1.310% 04/13/04 5,400,000 5,400,000 Federal Home Loan Bank, 1.335% 05/07/04 2,500,000 2,500,000 Federal Home Loan Mortgage Corp., 5.250% 02/15/04 1,000,000 1,024,211 Federal Home Loan Mortgage, Discount Note, 1.030% 09/12/03 (c) 4,800,000 4,790,072 Federal Home Loan Mortgage, Discount Note, 0.980% 09/25/03 (c) 5,000,000 4,988,294 Federal Home Loan Mortgage, Discount Note, 0.900% 09/30/03 (c) 4,950,000 4,938,739 Federal Home Loan Mortgage, Discount Note, 0.960% 11/14/03 (c) 1,400,000 1,394,923 Federal Home Loan Mortgage, Discount Note, 1.040% 05/20/04 (c) 3,200,000 3,170,048 Federal National Mortgage Association, 1.300% 01/09/04 2,000,000 1,986,133 Federal National Mortgage Association, Discount Note, 1.040% 05/28/04 (c) 2,500,000 2,476,022 Student Loan Marketing Association, 1.400% 02/20/04 3,050,000 3,050,000 --------------- TOTAL U.S. GOVERNMENT AGENCIES (cost of $43,941,221) 43,941,221 --------------- REPURCHASE AGREEMENT--0.6% Repurchase agreement with State Street Bank & Trust Co., dated 06/30/03, due 07/01/03 at 1.050%, collateralized by a Federal Home Loan Bank Note, maturing 06/17/05, market value $1,291,613 (repurchase proceeds $1,266,037) (cost of $1,266,000) $ 1,266,000 $ 1,266,000 --------------- TOTAL INVESTMENTS--106.1% (cost of $246,047,652) (f) 246,047,652 --------------- OTHER ASSETS & LIABILITIES, NET--(6.1)% (14,113,260) --------------- NET ASSETS--100.0% $ 231,934,392 =============== </Table> NOTES TO INVESTMENT PORTFOLIO: (a) See Note 1. (b) Interest rates on variable rate securities change periodically. The rate listed is as of June 30, 2003. (c) The interest rates listed reflect the effective rate at the date of purchase. (d) Represents private placement securities exempt from registration by Section 4(2) of the Securities Act of 1933. These securities generally are issued to investors who agree that they are purchasing the securities for investments and not for public distribution. Any resale by the Fund must be in an exempt transaction, normally to other institutional investors. At June 30, 2003, the aggregate amortized cost of the Fund's private placement securities was $100,442,753 which represents 43.3% of net assets. None of these securities were deemed illiquid. (e) This security is exempt from registration under Rule 144A of the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At June 30, 2003, the value of these securities amounted to $8,010,350 which represents 3.5% of net assets. (f) Cost for both financial statement and federal income tax purposes is the same. <Table> <Caption> ACRONYM NAME ------- ---- FGIC Financial Guaranty Insurance Company FSA Financial Security Assurance INS Insured LOC Letter of Credit SPA Stand-by Purchase Agreement </Table> See Notes to Financial Statements. 195 <Page> STATEMENT OF ASSETS & LIABILITIES Liberty Money Market Fund, Variable Series / June 30, 2003 (Unaudited) <Table> ASSETS: Investments, at amortized cost approximating value $ 246,047,652 --------------- Cash 547 Receivable for: Fund shares sold 1,035,935 Interest 274,522 Expense reimbursement due from Advisor 6,449 Deferred Trustees' compensation plan 2,814 --------------- TOTAL ASSETS 247,367,919 --------------- LIABILITIES: Payable for: Investments purchased 14,973,565 Fund shares repurchased 220,906 Management fee 68,448 Administration fee 29,263 Transfer agent fee 594 Pricing and bookkeeping fees 17,445 Merger fee 12,519 Reports to shareholders 99,853 Deferred Trustees' fee 2,814 Other liabilities 8,120 --------------- TOTAL LIABILITIES 15,433,527 --------------- NET ASSETS $ 231,934,392 =============== COMPOSITION OF NET ASSETS: Paid-in capital $ 231,943,174 Overdistributed net investment income (8,799) Accumulated net realized gain 17 =============== NET ASSETS $ 231,934,392 =============== Net assets $ 231,934,392 Shares outstanding 231,977,863 =============== Net asset value per share $ 1.00 =============== </Table> See Notes to Financial Statements. 196 <Page> STATEMENT OF OPERATIONS Liberty Money Market Fund, Variable Series For the Six Months Ended June 30, 2003 (Unaudited) <Table> INVESTMENT INCOME: Interest $ 1,677,551 --------------- EXPENSES: Management fee 447,143 Administration fee 191,633 Pricing and bookkeeping fees 51,669 Transfer agent fee 3,719 Trustees' fee 5,940 Custody fee 5,460 Reports to shareholders 44,340 Other expenses 14,566 --------------- Total Expenses 764,470 Custody earnings credit (213) --------------- Net Expenses 764,257 --------------- Net Investment Income 913,294 --------------- NET REALIZED GAIN ON INVESTMENTS: Net realized gain on investment 17 --------------- Net Increase in Net Assets from Operations $ 913,311 =============== </Table> See Notes to Financial Statements. 197 <Page> STATEMENTS OF CHANGES IN NET ASSETS Liberty Money Market Fund, Variable Series <Table> <Caption> (UNAUDITED) SIX MONTHS ENDED YEAR ENDED JUNE 30, DECEMBER 31, INCREASE (DECREASE) IN NET ASSETS: 2003 2002 - ---------------------------------- --------------- --------------- OPERATIONS: Net investment income $ 913,294 $ 3,281,299 Net realized gain on investments 17 -- --------------- --------------- Net Increase from Operations 913,311 3,281,299 --------------- --------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (922,093) (3,321,856) --------------- --------------- SHARE TRANSACTIONS: Subscriptions 148,304,195 708,951,720 Proceeds received in connection with merger 14,534,445 -- Distributions reinvested 922,093 3,321,856 Redemptions (190,720,286) (720,315,374) --------------- --------------- Net Decrease from Share Transactions (26,959,553) (8,041,798) --------------- --------------- Total Decrease in Net Assets (26,968,335) (8,082,355) NET ASSETS: Beginning of period 258,902,727 266,985,082 --------------- --------------- End of period (including overdistribution of net investment income of $(8,799) at June 30, 2003) $ 231,934,392 $ 258,902,727 =============== =============== CHANGES IN SHARES: Subscriptions 148,297,364 708,951,720 Issued in connection with merger 14,534,816 -- Issued for distributions reinvested 922,093 3,321,856 Redemptions (190,720,286) (720,313,147) --------------- --------------- Net Decrease (26,966,013) (8,039,571) --------------- --------------- </Table> See Notes to Financial Statements. 198 <Page> NOTES TO FINANCIAL STATEMENTS Liberty Money Market Fund, Variable Series / June 30, 2003 (Unaudited) NOTE 1. ORGANIZATION AND ACCOUNTING POLICIES ORGANIZATION--Liberty Money Market Fund, Variable Series (the "Fund"), a series of SteinRoe Variable Investment Trust (the "Trust"), is a diversified portfolio of a Massachusetts business trust, registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund's investment goal is to seek high current income consistent with capital preservation and maintenance of liquidity. The Fund's capitalization consists of an unlimited number of shares of beneficial interest without par value that represent a separate series of the Trust. Each share of the Fund represents an equal proportionate beneficial interest in the Fund and, when issued and outstanding, is fully paid and nonassessable. Shareholders would be entitled to share proportionally in the net assets of the Fund available for distribution to shareholders upon liquidation of the Fund. Shares of the Fund are available and are being marketed exclusively as a pooled funding vehicle for variable annuity contracts ("VA contracts") and Variable Life Insurance Policies ("VLI Policies") offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies"). The Participating Insurance Companies and their separate accounts own all the shares of the Fund. On April 1, 2003, Stein Roe & Farnham Incorporated, the investment advisor to the Fund, merged into Columbia Management Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co., an indirect wholly owned subsidiary of FleetBoston Financial Corporation. At the time of the merger, Columbia assumed the obligations of Stein Roe & Farnham Incorporated with respect to the Fund. The merger did not change the way the Fund is managed, the investment personnel assigned to manage the Fund or the fees paid by the Fund. Columbia provides investment management and advisory services to the Fund pursuant to its Management Agreement with the Fund. Columbia also provides pricing and bookkeeping services to the Fund. Liberty Funds Distributor, Inc. ("LFD"), an affiliate of Columbia, serves as the principal underwriter of the Fund. On April 7, 2003, Galaxy VIP Money Market Fund, previously a fund of the Galaxy VIP Fund, a separate Massachusetts business trust, merged into the Stein Roe Money Market Fund, Variable Series Class A shares. Stein Roe Money Market Fund, Variable Series received a tax-free transfer of assets from Galaxy VIP Money Market Fund as follows: <Table> <Caption> SHARES ISSUED NET ASSETS RECEIVED ------------- ------------------- 14,534,816 $ 14,534,445 </Table> <Table> <Caption> NET ASSETS NET ASSETS OF STEIN ROE NET ASSETS OF OF STEIN ROE MONEY MARKET GALAXY VIP MONEY MONEY MARKET FUND, VARIABLE MARKET FUND FUND, VARIABLE SERIES PRIOR TO IMMEDIATELY PRIOR SERIES IMMEDIATELY COMBINATION TO COMBINATION AFTER COMBINATION --------------- ----------------- ------------------ $ 256,836,286 $ 14,534,445 $ 271,370,731 </Table> Also on April 7, 2003, subsequent to the merger described above, Stein Roe Money Market Fund, Variable Series was renamed the Liberty Money Market Fund, Variable Series. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION AND TRANSACTIONS--The Fund values securities utilizing the amortized cost valuation technique permitted in accordance with Rule 2a-7 under the Investment Company Act of 1940, which requires the Fund to comply with certain conditions. This technique involves valuing a portfolio security initially at its cost and thereafter, assuming a constant amortization to maturity of any discount or premium with amortized cost approximating value. 199 <Page> FEDERAL INCOME TAXES--Consistent with the Fund's policy to qualify as a regulated investment company and to distribute all of its taxable income, no federal income tax has been accrued. INTEREST INCOME, DEBT DISCOUNT AND PREMIUM--Interest income, including discount accretion and premium amortization, is recorded daily on the accrual basis. DISTRIBUTIONS TO SHAREHOLDERS--The Fund declares dividends daily and reinvests all dividends declared monthly in additional shares at net asset value. OTHER--The Fund's custodian takes possession through the federal book-entry system of securities collateralizing repurchase agreements. Collateral is marked-to-market daily to ensure that the market value of the underlying assets remains sufficient to protect the Fund. The Fund may experience costs and delays in liquidating the collateral if the issuer defaults or enters bankruptcy. NOTE 2. FEDERAL TAX INFORMATION Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution under income tax regulations. NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES MANAGEMENT AND ADMINISTRATIVE FEES--Columbia receives monthly fees equal to 0.35% and 0.15% annually of the Fund's average daily net assets for management and administrative services, respectively. PRICING AND BOOKKEEPING FEES--Columbia is responsible for providing pricing and bookkeeping services to the Fund under a Pricing and Bookkeeping Agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Bank & Trust Company ("State Street"). Columbia pays fees to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual flat fee of $10,000, paid monthly, and in any month that the Fund's average daily net assets are more than $50 million, a monthly fee equal to the average daily net assets of the Fund for that month multiplied by a fee rate that is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. For the six months ended June 30, 2003, the annualized net asset based fee rate was 0.034%. The Fund also pays out-of-pocket costs for pricing services. TRANSFER AGENT FEE--Liberty Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia, provides shareholder services for an annual rate of $7,500. EXPENSE LIMITS--Columbia has voluntarily agreed to reimburse all expenses, including management fees, but excluding interest, taxes, brokerage and extraordinary expenses of the Fund in excess of 0.65% annually of the Fund's average daily net assets. OTHER--The Fund pays no compensation to its officers, all of whom are employees of Columbia or its affiliates. The Fund's Independent Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. The Fund has an agreement with its custodian bank under which $213 of custody fees were reduced by balance credits for the six months ended June 30, 2003. The Fund could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if it had not entered into such an agreement. 200 <Page> FINANCIAL HIGHLIGHTS Liberty Money Market Fund, Variable Series Selected data for a share outstanding throughout each period is as follows: <Table> <Caption> (UNAUDITED) SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ---------------------------------------------------------------- 2003 2002 2001 2000 1999 1998 ------------ --------- --------- --------- --------- --------- NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 ------------ --------- --------- --------- --------- --------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (a) 0.004 0.012 0.036 0.059 0.047 0.050 ------------ --------- --------- --------- --------- --------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.004) (0.012) (0.036) (0.059) (0.047) (0.050) ------------ --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 ============ ========= ========= ========= ========= ========= Total return (b)(c) 0.36%(d) 1.23% 3.64% 6.05% 4.79% 5.17% RATIOS TO AVERAGE NET ASSETS/ SUPPLEMENTAL DATA: Expenses (e) 0.60%(f) 0.65% 0.56% 0.56% 0.52%(g) 0.62% Net investment income (e) 0.72%(f) 1.25% 3.45% 5.90% 4.75%(g) 4.99% Net assets, end of period (000's) $ 231,934 $ 258,903 $ 266,985 $ 212,317 $ 170,539 $ 101,340 </Table> (a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested. (c) Total return figure does not include any insurance company charges associated with a variable annuity. If included, total return would be reduced. (d) Not annualized. (e) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (f) Annualized. (g) During the year ended December 31, 1999, the Fund experienced a one-time reduction in its expenses of two basis points as a result of expenses accrued in a prior period. The Fund's ratios disclosed above reflect the actual rate at which expenses were incurred throughout the fiscal year without the reduction. 201 <Page> SHAREHOLDER MEETING RESULTS Liberty Money Market Fund, Variable Series RESULTS OF THE ANNUAL MEETING OF SHAREHOLDERS On February 19, 2003, the Annual Meeting of Shareholders of the Trust was held to conduct a vote for or against the approval of the following items listed on the Trust's Proxy Statement for said Meeting. On December 2, 2002, the record date for the Meeting, the Galaxy VIP Money Market Fund had 16,289,880.934 common shares outstanding. The votes cast were as follows: SHAREHOLDER RESPONSE SUMMARY REPORT LIBERTY VARIABLE INVESTMENT TRUST/STEINROE VARIABLE INVESTMENT TRUST GALAXY VIP MONEY MARKET FUND FEBRUARY 19, 2003 1. To approve an Agreement and Plan of Reorganization providing for (i) the sale of all of the assets of the Galaxy VIP Money Market Fund to, and the assumption of all of the liabilities of the Galaxy VIP Money Market Fund by, the Stein Roe Money Market Fund, Variable Series, in exchange for shares of the Stein Roe Money Market Fund, Variable Series, and the distribution of such shares to the shareholders of the Galaxy VIP Money Market Fund in complete liquidation of the Galaxy VIP Money Market Fund; (ii) the de-registration of The Galaxy VIP Fund as an investment company under the Investment Company Act of 1940, as amended, and (iii) The Galaxy VIP Fund's termination as a Massachusetts business trust under Massachusetts law. <Table> <Caption> % OF % OF NO. OF OUTSTANDING SHARES SHARES SHARES VOTED -------------- ----------- -------- Affirmative 13,000,904.962 79.810% 84.548% Against 608,194.097 3.733% 3.956% Abstain 1,767,803.935 10.852% 11.496% TOTAL 15,376,902.994 94.395% 100.000% <Caption> ** FUND TOTALS: SHARES RECORD TOTAL 16,289,880.934 VOTED SHARES 15,376,902.994 PERCENT VOTED 94.395% </Table> 202 <Page> PORTFOLIO MANAGER'S DISCUSSION Liberty Small Company Growth Fund, Variable Series / June 30, 2003 Liberty Small Company Growth Fund, Variable Series seeks long-term growth. William M. Garrison is the fund's portfolio manager. He has managed other funds for Columbia Management Advisors, Inc. and its predecessors since September 1998. On April 14, 2003, Galaxy VIP Small Company Growth Fund was merged into Stein Roe Small Company Growth Fund, Variable Series. The combined fund was renamed Liberty Small Company Growth Fund, Variable Series. STOCKS OF SMALL COMPANIES AMONG MARKET LEADERS After trailing the market in the first quarter of 2003, stocks of smaller firms rebounded strongly in the second quarter and outpaced large and mid-cap stocks for the six-month reporting period. Investors bet on the tendency of smaller companies to respond more quickly to improving business conditions and to benefit more from a domestic recovery than larger firms tied to foreign economies. Stocks of small companies were also boosted by a sizable representation of technology firms, which led other industry sectors. THE FUND'S TECHNOLOGY EXPOSURE HAMPERED PERFORMANCE The fund's underweight position in technology stocks relative to its benchmark, the Russell 2000 Growth Index, hampered performance because technology was the best performing sector during the six-month reporting period. The fund's performance was also hindered by an underweight stake in the micro-cap sector, which was a strong performer, and an overweight position the energy sector, which underperformed. The fund derived its returns from a variety of industry groups. Gaming operator Station Casinos, Inc. (1.4% of net assets) benefited from improved business in Las Vegas and a new enterprise in California. Integra LifeSciences Corporation, a medical technology firm, beat earnings expectations, and Taro Pharmaceutical Industries Ltd., a generic drug manufacturer, benefited from approvals for new products and solid earnings results (1.4% and 0.9% of net assets, respectively). Stocks that trailed for the period were concentrated in the health care sector. One such stock was Accredo Health, Inc. (0.5% of net assets), whose earnings disappointed investors. COMPETITIVE CONCERNS, ECONOMY DROVE PORTFOLIO ACTIVITY In the face of regulatory and competitive concerns, we reduced the fund's health care position by selling disappointing issues such as Cerner Corporation and taking profits in stocks that had performed particularly well--such as American Healthways Inc. We also took profits in stocks of several biotechnology firms. When the economic outlook dimmed early in the reporting period, we eliminated retail holdings such as Hot Topic Inc. As consumer confidence improved, we increased our exposure, adding stocks such as specialty retailer The Sharper Image and media firm Sinclair Broadcast Group, Inc. (0.9% and 0.5% of net assets, respectively). Within the energy sector, we increased existing holdings such as Key Energy Services, Inc. and Maverick Tube Corporation (1.5% and 1.4% of net assets, respectively). We eliminated Cal Dive International, Inc. and highly-valued exploration companies such as Evergreen Resources, Inc. and Ultra Petroleum Corporation. The fund remained underweight relative to its benchmark in financial stocks. However, we increased our position with new holdings such as Investors Financial Services Corp, an asset management firm whose stock price became attractive when falling interest rates threatened profits from the company's money market funds, and Jefferies Group, Inc., an investment bank and securities broker that should benefit from an improving stock market (1.4% and 0.8% of net assets, respectively). MANY ATTRACTIVE OPPORTUNITIES Stocks could face another turning point over the next six months, as it remains to be seen whether earnings can support further market advances. Although prices for stocks of smaller companies have recently outpaced other sectors, we believe they have the potential to go higher if earnings continue to improve. If earnings remain weak, stocks of smaller firms may be more vulnerable to a price retreat than those of larger firms. Individually, we believe stocks of many small companies offer attractive opportunities. With a stronger economic outlook, we expect to boost sectors that could benefit from an expansion, such as technology and consumer cyclical firms. In the meantime, we plan to watch the energy sector, which may be vulnerable to a changing balance of supply and demand. Economic and market conditions can frequently change. There is no assurance that the trends described here will continue or commence. Investing in small-cap stocks may present special risks, including possible illiquidity and greater price volatility than stocks of larger, more established companies. Holdings are disclosed as of June 30, 2003, and are subject to change. 203 <Page> PERFORMANCE INFORMATION Liberty Small Company Growth Fund, Variable Series / June 30, 2003 AVERAGE ANNUAL TOTAL RETURN AS OF JUNE 30, 2003 (%) <Table> <Caption> (CUMULATIVE) 6-MONTH 1-YEAR 5-YEAR 10-YEAR - --------------------------------------------------------------------------------------------- Class A (1/1/89) 17.15 0.25 -0.31 5.84 Russell 2000 Growth Index 19.33 0.69 -4.25 4.35 </Table> Inception date of share class is in parentheses. [CHART] VALUE OF A $10,000 INVESTMENT, 6/30/93 - 6/30/03 <Table> <Caption> CLASS A SHARES RUSSELL 2000 GROWTH INDEX Jun-93 $ 10,000 $ 10,000 9/30/1993 $ 11,335 $ 10,934 12/31/1993 $ 12,345 $ 11,222 3/31/1994 $ 11,697 $ 10,764 6/30/1994 $ 11,516 $ 10,086 9/30/1994 $ 12,593 $ 11,028 12/31/1994 $ 12,491 $ 10,948 3/31/1995 $ 12,491 $ 11,548 6/30/1995 $ 12,245 $ 12,694 9/30/1995 $ 13,627 $ 14,137 12/31/1995 $ 13,959 $ 14,346 3/31/1996 $ 15,155 $ 15,170 6/30/1996 $ 16,275 $ 16,056 9/30/1996 $ 17,345 $ 15,919 12/31/1996 $ 17,721 $ 15,961 3/31/1997 $ 16,431 $ 14,286 6/30/1997 $ 18,989 $ 16,794 9/30/1997 $ 20,687 $ 19,635 12/31/1997 $ 19,106 $ 18,025 3/31/1998 $ 20,650 $ 20,166 6/30/1998 $ 17,912 $ 19,009 9/30/1998 $ 14,131 $ 14,758 12/31/1998 $ 15,801 $ 18,247 3/31/1999 $ 14,583 $ 17,941 6/30/1999 $ 16,753 $ 20,587 9/30/1999 $ 17,275 $ 19,574 12/31/1999 $ 23,389 $ 26,110 3/31/2000 $ 29,040 $ 28,533 6/30/2000 $ 27,335 $ 26,430 9/30/2000 $ 28,322 $ 25,381 12/31/2000 $ 22,136 $ 20,254 3/31/2001 $ 18,320 $ 17,175 6/30/2001 $ 21,909 $ 20,262 9/30/2001 $ 16,373 $ 14,572 12/31/2001 $ 19,919 $ 18,386 3/31/2002 $ 19,985 $ 18,025 6/30/2002 $ 17,599 $ 15,195 9/30/2002 $ 14,294 $ 11,925 12/31/2002 $ 15,060 $ 12,821 3/31/2003 $ 14,403 $ 12,323 Jun-03 $ 17,637 $ 15,303 </Table> <Table> <Caption> NET ASSET VALUE PER SHARE ($) 12/31/02 6/30/03 - ----------------------------------------------------------------- Class A 6.88 8.06 </Table> PAST PERFORMANCE CANNOT PREDICT FUTURE INVESTMENT RESULTS. SHARE PRICE AND INVESTMENT RETURN WILL VARY, SO YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. Total return performance includes changes in share price and reinvestment of all distributions. The Russell 2000 Growth Index comprises securities in the Russell 2000 Index with a greater-than-average growth orientation. Companies in this index tend to exhibit higher price-to-book and price-to-earnings ratios. Indices are not investments, do not incur fees or expenses, and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. MUTUAL FUND PERFORMANCE CHANGES OVER TIME. CURRENT RETURNS FOR THE FUND MAY BE DIFFERENT THAN THAT SHOWN. Performance numbers reflect all fund expenses, but do not include any insurance charges imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. 204 <Page> INVESTMENT PORTFOLIO Liberty Small Company Growth Fund / June 30, 2003 (Unaudited) <Table> <Caption> SHARES VALUE -------- --------------- COMMON STOCK--97.1% CONSUMER DISCRETIONARY--16.4% HOTELS, RESTAURANTS & LEISURE--4.5% Applebee's International, Inc. 21,900 $ 688,317 California Pizza Kitchen, Inc. (a) 20,400 438,600 Red Robin Gourmet Burgers (a) 7,600 144,096 Scientific Games Corp., Class A (a) 51,400 483,160 Station Casinos, Inc. (a) 30,700 775,175 --------------- 2,529,348 --------------- HOUSEHOLD DURABLES--1.8% Beazer Homes USA, Inc. (a) 5,700 475,950 Harman International Industries, Inc. 4,000 316,560 Meritage Corp. 4,200 206,892 --------------- 999,402 --------------- LEISURE EQUIPMENT & PRODUCTS--0.6% SCP Pool Corp. (a) 10,400 357,760 --------------- MEDIA--2.7% Gray Television, Inc. 19,400 240,560 Lin TV Corp. (a) 19,400 456,870 Radio One, Inc. (a) 27,900 495,783 Sinclair Broadcast Group, Inc. (a) 26,300 305,343 --------------- 1,498,556 --------------- SPECIALTY RETAIL--6.8% Advance Auto Parts, Inc. (a) 13,100 797,790 Blue Rhino Corp. (a) 31,600 378,884 Cost Plus, Inc. (a) 11,400 406,524 Mothers Work, Inc. (a) 7,800 208,806 Party City Corp. (a) 15,100 155,077 Petco Animal Supplies, Inc. (a) 32,300 702,202 Sharper Image Corp. (a) 18,700 509,949 Too, Inc. (a) 23,800 481,950 Ultimate Electronics, Inc. (a) 10,900 139,738 --------------- 3,780,920 --------------- CONSUMER STAPLES--1.7% FOOD & DRUG RETAILING--1.0% Performance Food Group Co. (a) 14,800 547,600 --------------- FOOD PRODUCTS--0.7% American Italian Pasta Co. (a) 10,200 424,830 --------------- ENERGY--10.6% ENERGY EQUIPMENT & SERVICES--5.8% Key Energy Services, Inc. (a) 76,600 821,152 Matrix Service Co. (a) 37,200 639,096 Maverick Tube Corp. (a) 40,400 773,660 Superior Energy Services, Inc. (a) 36,600 346,968 Unit Corp. (a) 31,400 $ 656,574 --------------- 3,237,450 --------------- OIL & GAS--4.8% Comstock Resources, Inc. (a) 21,200 290,016 Frontier Oil Corp. 32,500 494,000 Patina Oil & Gas Corp. 14,525 466,979 Premcor, Inc. (a) 7,000 150,850 Remington Oil & Gas Corp. (a) 12,600 231,588 Spinnaker Exploration Co. (a) 17,700 463,740 St. Mary Land & Exploration Co. 12,120 330,876 Tom Brown, Inc. (a) 10,000 277,900 --------------- 2,705,949 --------------- FINANCIALS--11.3% BANKS--4.7% Boston Private Financial Holdings, Inc. 11,300 238,204 Dime Community Bancshares 26,500 674,425 East-West Bancorp, Inc. 14,100 509,574 Mercantile Bank Corp. 7,400 211,344 Prosperity Bancshares, Inc. 22,100 425,425 UCBH Holdings, Inc. 15,000 430,200 W Holding Co., Inc. 9,400 159,048 --------------- 2,648,220 --------------- DIVERSIFIED FINANCIALS--3.2% ASTA Funding, Inc. (a) 5,400 129,600 Commercial Capital Bancorp, Inc. (a) 9,300 142,755 Investors Financial Services Corp. 26,200 760,062 Jefferies Group, Inc. 9,100 453,089 MTC Technologies, Inc. (a) 13,300 312,018 --------------- 1,797,524 --------------- INSURANCE--2.4% Hilb, Rogal and Hamilton Co. 14,400 490,176 Infinity Property & Casualty Corp. 11,800 278,952 Philadelphia Consolidated Holding Co. (a) 10,900 440,360 RLI Corp. 3,100 101,990 --------------- 1,311,478 --------------- REAL ESTATE--1.0% American Financial Realty Trust 37,800 563,598 --------------- HEALTH CARE--19.5% BIOTECHNOLOGY--4.6% Bio-Marin Pharmaceuticals, Inc. (a) 23,700 231,312 Charles River Laboratories International, Inc. (a) 16,000 514,880 Ciphergen Biosystems, Inc. (a) 25,700 263,425 Neurocrine Biosciences, Inc. (a) 6,100 304,634 </Table> See Notes to Investment Portfolio. 205 <Page> <Table> <Caption> SHARES VALUE -------- --------------- Protein Design Labs, Inc. (a) 22,000 $ 307,560 Serologicals Corp. (a) 48,100 655,603 Telik, Inc. (a) 20,600 331,042 --------------- 2,608,456 --------------- HEALTH CARE EQUIPMENT & SUPPLIES--7.7% American Medical Systems Holdings, Inc. (a) 25,500 430,185 Bio-Rad Laboratories, Inc. (a) 9,000 498,150 Integra LifeSciences Holdings (a) 29,500 778,210 Kyphon, Inc. (a) 21,200 320,544 Medical Action Industries, Inc. (a) 41,200 672,796 Noven Pharmaceuticals, Inc. (a) 26,700 273,408 Respironics, Inc. (a) 8,200 307,664 SonoSite, Inc. (a) 21,600 430,920 Wright Medical Group, Inc. (a) 17,900 340,100 Zoll Medical Corp. (a) 7,900 265,124 --------------- 4,317,101 --------------- HEALTH CARE PROVIDERS & SERVICES--2.6% Accredo Health, Inc. (a) 11,650 253,970 Cobalt Corp. (a) 19,300 396,615 LifePoint Hospitals, Inc. (a) 17,900 374,826 WellChoice, Inc. (a) 14,600 427,488 --------------- 1,452,899 --------------- PHARMACEUTICALS--4.6% Adolor Corp. (a) 7,600 93,252 Atrix Laboratories, Inc. (a) 12,800 281,472 InterMune, Inc. (a) 12,000 193,320 Nektar Therapeutics (a) 14,500 133,835 Salix Pharmaceuticals, Ltd. (a) 19,500 204,555 SFBC International, Inc. (a) 8,900 161,090 SICOR, Inc. (a) 25,400 516,636 Taro Pharmaceuticals Industries Ltd. (a) 9,500 521,360 Trimeris, Inc. (a) 10,050 459,084 --------------- 2,564,604 --------------- INDUSTRIALS--13.8% AEROSPACE & DEFENSE--1.6% DRS Technologies, Inc. (a) 19,400 541,648 Integrated Defense Technologies, Inc. (a) 12,000 186,120 Mercury Computer Systems, Inc. (a) 10,500 190,680 --------------- 918,448 --------------- AIR FREIGHT & LOGISTICS--1.4% EGL, Inc. (a) 11,900 180,880 J.B. Hunt Transport Services, Inc. (a) 8,100 305,775 UTI Worldwide, Inc. 9,600 299,424 --------------- 786,079 --------------- COMMERCIAL SERVICES & SUPPLIES--5.6% Arbitron, Inc. 14,100 $ 503,370 Corporate Executive Board Co. (a) 10,000 408,200 FTI Consulting, Inc. (a) 17,550 438,224 Kroll, Inc. (a) 6,000 162,360 Navigant Consulting, Inc. (a) 9,200 109,020 NCO Group, Inc. (a) 18,200 325,962 SOURCECORP (a) 500 10,800 Sylvan Learning Systems, Inc. (a) 23,100 527,604 United Stationers, Inc. 7,000 253,190 Waste Connections, Inc. (a) 11,300 396,065 --------------- 3,134,795 --------------- CONSTRUCTION & ENGINEERING--0.7% Chicago Bridge & Iron Co. NV 16,300 369,684 --------------- ELECTRICAL EQUIPMENT--0.6% Rayovac Corp. (a) 23,900 309,505 --------------- MACHINERY--1.4% AGCO Corp. (a) 22,300 380,884 Cuno, Inc. (a) 11,475 414,477 --------------- 795,361 --------------- ROAD & RAIL--2.5% Dollar Thrifty Automotive Group, Inc. (a) 15,600 289,380 Genesee & Wyoming, Inc. (a) 23,100 475,167 Heartland Express, Inc. (a) 21,000 467,250 Old Dominion Freight Line, Inc. (a) 9,150 197,823 --------------- 1,429,620 --------------- INFORMATION TECHNOLOGY--21.6% COMMUNICATIONS EQUIPMENT--1.1% Avocent Corp. (a) 7,900 236,447 F5 Networks, Inc. (a) 21,300 358,905 --------------- 595,352 --------------- COMPUTERS & PERIPHERALS--1.9% Applied Films Corp. (a) 22,200 574,536 Cray, Inc. (a) 60,400 477,160 --------------- 1,051,696 --------------- ELECTRONIC EQUIPMENT & INSTRUMENTS--3.6% Anixter International, Inc. (a) 11,000 257,730 Global Imaging Systems, Inc. (a) 21,800 504,888 Itron, Inc. (a) 22,500 485,100 Planar Systems, Inc. (a) 12,800 250,368 Plexus Corp. (a) 43,500 501,555 --------------- 1,999,641 --------------- INTERNET SOFTWARE & SERVICES--2.2% Digital River, Inc. (a) 23,900 461,270 Fidelity National Information Solutions, Inc. (a) 17,400 453,792 </Table> See Notes to Investment Portfolio. 206 <Page> <Table> <Caption> SHARES VALUE -------- --------------- webMethods, Inc. (a) 40,600 $ 330,078 --------------- 1,245,140 --------------- INFORMATION TECHNOLOGY CONSULTING & SERVICES--2.8% Cognizant Technology Solutions Corp. (a) 16,700 406,812 PEC Solutions, Inc. (a) 26,200 421,820 Priority Healthcare Corp. (a) 11,600 215,180 SRA International, Inc. (a) 16,300 521,600 --------------- 1,565,412 --------------- SEMICONDUCTOR EQUIPMENT & PRODUCTS--6.7% Artisan Components, Inc. (a) 13,700 309,757 Brooks Automation, Inc. (a) 43,100 488,754 Cymer, Inc. (a) 9,700 310,497 DSP Group, Inc. (a) 13,200 284,196 Entegris, Inc. (a) 56,400 758,016 Helix Technology Corp. 15,000 198,450 Integrated Circuit Systems, Inc. (a) 7,500 235,725 Lattice Semiconductor Corp. (a) 40,300 331,669 Mykrolis Corp. (a) 33,200 336,980 Skyworks Solutions, Inc. 24,700 167,219 Zoran Corp. (a) 18,000 345,780 --------------- 3,767,043 --------------- SOFTWARE--3.3% Activision, Inc. (a) 31,500 406,980 Borland Software Corp. (a) 56,900 555,913 Henry (Jack) & Associates, Inc. 15,000 266,850 Magma Design Automation, Inc. (a) 16,000 274,400 Micromuse, Inc. (a) 17,000 135,830 Secure Computing Corp. (a) 88 768 Take-Two Interactive Software, Inc. (a) 8,200 232,388 --------------- 1,873,129 --------------- MATERIALS--1.8% CONTAINERS & PACKAGING--1.8% Crown Holdings, Inc. (a) 31,100 222,054 Jarden Corp. (a) 29,400 813,498 --------------- 1,035,552 --------------- TELECOMMUNICATION SERVICES--0.4% DIVERSIFIED TELECOMMUNICATION SERVICES--0.4% Intrado, Inc. (a) 12,500 197,375 --------------- TOTAL COMMON STOCKS (cost of $48,169,809) 54,419,527 --------------- <Caption> PAR VALUE ----------------- --------------- SHORT-TERM OBLIGATION--1.7% Repurchase agreement with State Street Bank & Trust Co.,dated 06/30/03, due 07/01/03 at 1.000%, collateralized by a U.S. Treasury Bond maturing 2/15/29, market value $991,589, (repurchase proceeds $970,027) (cost of $970,000) $ 970,000 $ 970,000 --------------- TOTAL INVESTMENTS--98.8% (cost of $49,139,809) (b) 55,389,527 --------------- OTHER ASSETS & LIABILITIES, NET--1.2% 648,076 --------------- NET ASSETS--100.0% $ 56,037,603 =============== </Table> NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing. (b) Cost for both financial statements and federal income tax purposes is the same. See Notes to Financial Statements. 207 <Page> STATEMENT OF ASSETS & LIABILITIES Liberty Small Company Growth Fund, Variable Series / June 30, 2003 (Unaudited) <Table> ASSETS: Investments, at cost $ 49,139,809 --------------- Investments, at value $ 55,389,527 Cash 557 Receivable for: Investments sold 1,997,144 Fund shares sold 297 Interest 27 Dividends 4,040 Expense reimbursement due from Manager 11,493 Deferred Trustees' compensation plan 1,501 --------------- TOTAL ASSETS 57,404,586 --------------- LIABILITIES: Payable for: Investments purchased 1,147,116 Fund shares repurchased 142,021 Management fee 23,042 Administration fee 6,724 Transfer agent fee 595 Pricing and bookkeeping fees 1,811 Merger costs 9,081 Trustees' fee 321 Audit fee 15,325 Reports to Shareholders 18,573 Deferred Trustees' fee 1,501 Other liabilities 873 --------------- TOTAL LIABILITIES 1,366,983 --------------- NET ASSETS $ 56,037,603 =============== COMPOSITION OF NET ASSETS: Paid-in capital $ 92,403,950 Accumulated net investment loss (147,124) Accumulated net realized loss (42,468,941) Net unrealized appreciation on investments 6,249,718 --------------- NET ASSETS $ 56,037,603 =============== CLASS A: Net assets $ 56,036,819 Shares outstanding 6,949,700 =============== Net asset value per share $ 8.06 =============== CLASS B: Net assets $ 784 Shares outstanding 98 =============== Net asset value per share $ 8.00 =============== </Table> See Notes to Financial Statements. 208 <Page> STATEMENT OF OPERATIONS Liberty Small Company Growth Fund, Variable Series For the Six Months Ended June 30, 2003 (Unaudited) <Table> INVESTMENT INCOME: Dividends $ 36,288 Interest 9,060 --------------- Total Investment Income (net of foreign taxes withheld of $384) 45,348 --------------- EXPENSES: Management fee 121,200 Administration fee 36,360 Distribution fee--Class B 1 Pricing and bookkeeping fees 5,466 Transfer agent fee 3,720 Trustees' fee 2,209 Custody fee 4,546 Audit fee 12,365 Other expenses 11,664 --------------- Total Expenses 197,531 Fees and expenses waived or reimbursed by Manager (6,149) Custody earnings credit (28) --------------- Net Expenses 191,354 --------------- Net Investment Loss (146,006) --------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized loss on investments (2,920,982) Net change in unrealized appreciation/depreciation on investments 11,401,269 --------------- Net Gain 8,480,287 --------------- Net Increase in Net Assets from Operations $ 8,334,281 =============== </Table> See Notes to Financial Statements. 209 <Page> STATEMENT OF CHANGES IN NET ASSETS Liberty Small Company Growth Fund, Variable Series <Table> <Caption> (UNAUDITED) SIX MONTHS ENDED YEAR ENDED JUNE 30, DECEMBER 31, INCREASE (DECREASE) IN NET ASSETS: 2003 2002 - ---------------------------------- --------------- --------------- OPERATIONS: Net investment loss $ (146,006) $ (350,644) Net realized loss on investments (2,920,982) (7,350,449) Net change in unrealized appreciation/depreciation on investments 11,401,269 (10,352,594) --------------- --------------- Net Increase (Decrease) from Operations 8,334,281 (18,053,687) --------------- --------------- SHARE TRANSACTIONS: Class A: Subscriptions 1,561,876 5,528,253 Proceeds received in connection with merger 2,419,589 -- Redemptions (5,210,859) (17,837,585) --------------- --------------- Net Decrease from Share Transactions (1,229,394) (12,309,332) --------------- --------------- Total Increase (Decrease) in Net Assets 7,104,887 (30,363,019) NET ASSETS: Beginning of period 48,932,716 79,295,735 --------------- --------------- End of period (including accumulated net investment loss of $(147,124) and $(1,118), respectively) $ 56,037,603 $ 48,932,716 =============== =============== CHANGES IN SHARES: Class A: Subscriptions 225,017 696,301 Issued in connection with merger 368,840 -- Issued for distributions reinvested -- (2,304,947) Redemptions (752,208) -- --------------- --------------- Net Decrease (158,351) (1,608,646) --------------- --------------- </Table> See Notes to Financial Statements. 210 <Page> NOTES TO FINANCIAL STATEMENTS Liberty Small Company Growth Fund, Variable Series / June 30, 2003 (Unaudited) NOTE 1. ORGANIZATION AND ACCOUNTING POLICIES ORGANIZATION--Liberty Small Company Growth Fund, Variable Series (the "Fund"), a series of SteinRoe Variable Investment Trust (the "Trust"), is a diversified portfolio of a Massachusetts business trust, registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund's investment goal is to seek long-term growth of capital by investing at least 85% of its assets in common stocks of small-cap companies. The Fund's capitalization consists of an unlimited number of shares of beneficial interest without par value that represent a separate series of the Trust. The Fund offers two classes of shares: Class A and Class B. Each share of a class represents an equal proportionate beneficial interest in that share class and, when issued and outstanding, is fully paid and nonassessable. Shareholders would be entitled to share proportionally in the net assets of their share class available for distribution to shareholders upon liquidation of the Fund. Shares of the Fund are available and are being marketed exclusively as a pooled funding vehicle for variable annuity contracts ("VA contracts") and Variable Life Insurance Policies ("VLI Policies") offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies"). The Participating Insurance Companies and their separate accounts own all the shares of the Fund. On April 1, 2003, Stein Roe & Farnham Incorporated, the investment advisor to the Fund, merged into Columbia Management Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co., an indirect wholly owned subsidiary of FleetBoston Financial Corporation. At the time of the merger, Columbia assumed the obligations of Stein Roe & Farnham Incorporated with respect to the Fund. The merger did not change the way the Fund is managed, the investment personnel assigned to manage the Fund or the fees paid by the Fund. Columbia provides investment management and advisory services to the Fund pursuant to its Management Agreement with the Fund. Columbia also provides pricing and bookkeeping services to the Fund. Liberty Funds Distributor, Inc. ("LFD"), an affiliate of Columbia, serves as the principal underwriter of the Fund. On April 14, 2003, the Galaxy VIP Small Company Growth Fund (the target fund), previously a single class fund of Galaxy VIP Fund, a separate Massachusetts business trust, merged into the Stein Roe Small Company Growth Fund, Variable Series Class A shares. The Stein Roe Small Company Growth Fund, Variable Series received a tax-free transfer of assets from the Galaxy VIP Small Company Growth Fund as follows: <Table> <Caption> SHARES NET ASSETS UNREALIZED ISSUED RECEIVED DEPRECIATION(1) ------- ------------ --------------- 368,840 $ 2,419,589 $ 86,415 <Caption> NET ASSETS NET ASSETS NET ASSETS OF STEIN ROE OF STEIN ROE OF GALAXY VIP SMALL COMPANY SMALL COMPANY SMALL COMPANY GROWTH FUND, GROWTH FUND, GROWTH FUND VARIABLE SERIES VARIABLE SERIES IMMEDIATELY IMMEDIATELY PRIOR TO PRIOR TO AFTER COMBINATION COMBINATION COMBINATION --------------- -------------- --------------- $ 44,410,684 $ 2,419,589 $ 46,830,273 </Table> (1)Unrealized depreciation is included in the Net Assets Received amount shown above. Also on April 14, 2003, subsequent to the merger described above, the Stein Roe Small Company Growth Fund, Variable Series was renamed the Liberty Small Company Growth Fund, Variable Series. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION AND TRANSACTIONS--Equity securities generally are valued at the last sale price or, in the case of unlisted or listed securities for which there were no sales during the day, at the current quoted bid price. Short-term obligations with a maturity of 60 days or less are valued at amortized cost. Investments for which market quotations are not readily available, or quotations which management believes are not appropriate, are valued at fair value under procedures approved by the Board of Trustees. Security transactions are accounted for on the date the securities are purchased, sold or mature. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. 211 <Page> DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS--All income, expenses (other than the Class B distribution fee), and realized and unrealized gains (losses) are allocated to each class proportionately on a daily basis for purposes of determining the net asset value of each class. The per share data was calculated using average shares outstanding during the period. In addition, Class B net investment income per share data and ratios reflect the distribution fee applicable to Class B shares only. FEDERAL INCOME TAXES--Consistent with the Fund's policy to qualify as a regulated investment company and to distribute all of its taxable income, no federal income tax has been accrued. DISTRIBUTIONS TO SHAREHOLDERS--The Fund intends to distribute as income dividends or capital gains distributions, at least annually, substantially all of its net investment income and net profits realized from the sale of investments. All dividends and distributions are reinvested in additional shares of the Fund at net asset value as of the record date of the distribution. Income and capital gain distributions are determined in accordance with federal income tax regulations. OTHER--Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date. The Fund's custodian takes possession through the federal book-entry system of securities collateralizing repurchase agreements. Collateral is marked-to-market daily to ensure that the market value of the underlying assets remains sufficient to protect the Fund. The Fund may experience costs and delays in liquidating the collateral if the issuer defaults or enters bankruptcy. NOTE 2. FEDERAL TAX INFORMATION Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. The following capital loss carryforwards, determined as of December 31, 2002, are available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: <Table> <Caption> YEAR OF CAPITAL LOSS EXPIRATION CARRYFORWARD ---------- ------------ 2009 $ 28,523,554 2010 9,969,519 ------------ $ 38,493,073 ============ </Table> NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES MANAGEMENT AND ADMINISTRATIVE FEES--Columbia receives monthly fees equal to 0.50% and 0.15% annually of the Fund's average daily net assets for management and administrative services, respectively. PRICING AND BOOKKEEPING FEES--Columbia is responsible for providing pricing and bookkeeping services to the Fund under a Pricing and Bookkeeping Agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Bank & Trust Company ("State Street"). Columbia pays fees to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual flat fee of $10,000, paid monthly, and in any month that the Fund's average daily net assets are more than $50 million, a monthly fee equal to the average daily net assets of the Fund for that month multiplied by a fee rate that is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. The Fund also pays out-of-pocket costs for pricing services. TRANSFER AGENT FEE--Liberty Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia, provides shareholder services for an annual rate of $7,500. DISTRIBUTION FEE--The Fund has adopted a 12b-1 plan, which requires it to pay LFD a monthly distribution fee equal to 0.25% annually of Class B average daily net assets. EXPENSE LIMITS--Effective April 14, 2003, Columbia has voluntarily agreed to waive expenses at the rate of 0.02% annually of the Fund's average daily net assets. This waiver agreement will continue until April 14, 2004, after which it may be modified or terminated at any time. Prior to April 14, 2003, Stein Roe & Farnham Incorporated had voluntarily agreed to reimburse all expenses, including management fees, but excluding interest, taxes, distribution fees, brokerage and extraordinary expenses of the Fund in excess of 0.80% annually of the Fund's average daily net assets. 212 <Page> OTHER--The Fund pays no compensation to its officers, all of whom are employees of Columbia or its affiliates. The Fund's Independent Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. The Fund has an agreement with its custodian bank under which $28 of custody fees were reduced by balance credits for the six months ended June 30, 2003. The Fund could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if it had not entered into such an agreement. NOTE 4. PORTFOLIO INFORMATION INVESTMENT ACTIVITY--For the six months ended June 30, 2003, purchases and sales of investments, other than short-term obligations, were $32,089,624 and $35,992,982, respectively. Unrealized appreciation (depreciation) at June 30, 2003, based on cost of investments for federal income tax purposes, was: <Table> Gross unrealized appreciation $ 8,409,187 Gross unrealized depreciation (2,159,469) ------------ Net unrealized appreciation $ 6,249,718 ============ </Table> OTHER--The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. 213 <Page> FINANCIAL HIGHLIGHTS Liberty Small Company Growth Fund, Variable Series--Class A Shares Selected data for a share outstanding throughout each period is as follows: <Table> <Caption> (UNAUDITED) SIX MONTHS YEAR ENDED DECEMBER 31, ENDED ------------------------------------------------------------------- JUNE 30, 2003 2002 2001 2000 1999 1998 ------------- --------- --------- --------- --------- ----------- NET ASSET VALUE, BEGINNING OF PERIOD $ 6.88 $ 9.10 $ 19.08 $ 20.16 $ 13.62 $ 18.00 INCOME FROM INVESTMENT OPERATIONS: Net investment loss (a) (0.02) (0.04) (0.03) (0.05) (0.03) (0.04) Net realized and unrealized gain (loss) on investments 1.20 (2.18) (2.31) (1.03) 6.57 (2.77) ------------- --------- --------- --------- --------- ----------- Total from Investment Operations 1.18 (2.22) (2.34) (1.08) 6.54 (2.81) ------------- --------- --------- --------- --------- ----------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains -- -- (7.64) -- -- (1.57) ------------- --------- --------- --------- --------- ----------- NET ASSET VALUE, END OF PERIOD $ 8.06 $ 6.88 $ 9.10 $ 19.08 $ 20.16 $ 13.62 ============= ========= ========= ========= ========= =========== Total return (b)(c) 17.15%(d)(e) (24.40)%(d) (10.03)%(d) (5.36)% 48.02% (17.30)% RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (f) 0.78%(g) 0.80% 0.82% 0.73% 0.72%(h) 0.75% Net investment loss (f) (0.60)%(g) (0.57)% (0.32)% (0.24)% (0.27)%(h) (0.22)% Waiver/reimbursement 0.03%(g) 0.02% 0.04% --% --% --% Portfolio turnover rate 67%(e) 117% 146% 155% 110% 103% Net assets, end of period (000's) $ 56,037 $ 48,932 $ 79,295 $ 109,856 $ 139,849 $ 131,929 </Table> (a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested. (c) Total return figures do not include any insurance company charges associated with a variable annuity. If included, total return would be reduced. (d) Had the Manager not waived or reimbursed a portion of expenses, total return would have been reduced. (e) Not Annualized. (f) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (g) Annualized. (h) During the year ended December 31, 1999, the Fund experienced a one-time reduction in its expenses of five basis points as a result of expenses accrued in a prior period. The Fund's ratios disclosed above reflect the actual rate at which expenses were incurred throughout the fiscal year without the reduction. 214 <Page> SHAREHOLDER MEETING RESULTS Liberty SmallCompany Growth Fund, Variable Series RESULTS OF THE ANNUAL MEETING OF SHAREHOLDERS On February 19, 2003, the Annual Meeting of Shareholders of the Trust was held to conduct a vote for or against the approval of the following items listed on the Trust's Proxy Statement for said Meeting. On December 2, 2002, the record date for the Meeting, the Galaxy VIP Small Company Growth Fund had 361,265.328 common shares outstanding. The votes cast were as follows: SHAREHOLDER RESPONSE SUMMARY REPORT LIBERTY VARIABLE INVESTMENT TRUST/STEINROE VARIABLE INVESTMENT TRUST GALAXY VIP SMALL COMPANY GROWTH FUND FEBRUARY 19, 2003 1. To approve an Agreement and Plan of Reorganization providing for (i) the sale of all of the assets of the Galaxy VIP Small Company Growth Fund to, and the assumption of all of the liabilities of the Galaxy VIP Small Company Growth Fund by, the Stein Roe Small Company Growth Fund, Variable Series, in exchange for shares of the Stein Roe Small Company Growth Fund, Variable Series, and the distribution of such shares to the shareholders of the Galaxy VIP Small Company Growth Fund in complete liquidation of the Galaxy VIP Small Company Growth Fund; (ii) the de-registration of The Galaxy VIP Fund as an investment company under the Investment Company Act of 1940, as amended, and (iii) The Galaxy VIP Fund's termination as a Massachusetts business trust under Massachusetts law. <Table> <Caption> % OF % OF NO. OF OUTSTANDING SHARES SHARES SHARES VOTED -------------- ----------- -------- Affirmative 302,442.104 83.717% 86.300% Against 15,518.917 4.296% 4.428% Abstain 32,494.839 8.995% 9.272% TOTAL 350,455.860 97.008% 100.000% <Caption> ** FUND TOTALS: SHARES RECORD TOTAL 361,265.328 VOTED SHARES 350,455.860 PERCENT VOTED 97.008% </Table> 215 <Page> PORTFOLIO MANAGER'S DISCUSSION Stein Roe Growth Stock Fund, Variable Series / June 30, 2003 Stein Roe Growth Stock Fund, Variable Series seeks long-term growth. Erik P. Gustafson, portfolio manager of the fund, has been with Columbia Management Advisors, Inc., or its predecessors since 1992. For the six-month period ended June 30, 2003, the fund's performance fell short of the S&P 500 Index. The fund's emphasis on large capitalization, high-quality companies hindered performance during a period when many smaller companies made surprising comebacks. BETTER MARKET FOR GROWTH STOCKS The first six months of the year were marked by continued instability in world politics, including the war with Iraq and concerns about SARS. The markets responded first by selling off in anticipation of the war. Then, they rebounded strongly when the major military campaign against Iraq ended faster than expected. Technology and telecommunications stock--sectors that have been the weakest for the last three years--led the rebound. The fund benefited from a larger weighting than the market in technology. However, our focus was on large cap, high quality stocks. During this rally, the smaller, speculative tech stocks--those that had suffered the greatest losses in previous years--posted the most spectacular gains. Health care stocks also were strong performers during the period. Teva Pharmaceuticals and Watson Pharmaceuticals (2.0% and 2.5% of assets, respectively), generic drug manufacturers, did well in an environment of rising health care costs and growing demand for less expensive alternatives. Biotechnology shares were also strong. In this area, the fund benefited from a large stake in Amgen (2.8% of net assets). Increasing demand for its core products, including those that treat anemia and help the immune system fight viral infections, bode well for the company's prospects. NEW NAMES IN THE PORTFOLIO We increased the fund's holdings from 36 to 46 during the period. We added to our technology position, believing that the current recovery has additional potential. Among the new names we added were Analog Devices, Maxim and Comverse, which makes the software for such popular services as call waiting and caller ID (2.0%, 1.5% and 0.2% of net assets, respectively). We also bolstered holdings in the retail sector, based on our belief that a combination of lower taxes and lower interest rates will indeed spur economic growth in the second half of the year. We added to or initiated positions in companies that we think may benefit from increased consumer spending. These include Coach, WalMart and Carnival (1.0%, 1.5% and 2.0% of net assets, respectively). We also initiated a position in Clear Channel (2.0% of net assets), the largest radio station owner in the country, with 1500 outlets nationwide. We feel the company stands to benefit from rising advertising revenues and a favorable regulatory climate. Finally, we added to our oil service holdings in anticipation of the start of a strong cycle for drilling. New names in oil service include Schlumberger, Smith International and Transocean (2.3%, 1.5% and 1.2% of net assets respectively). BETTER GROWTH PROSPECTS AHEAD We believe the US economy will experience faster growth in the second half of the year. Greater geopolitical stability, continued low interest rates and new tax incentives should ultimately spur businesses to reinvest in their infrastructure. Improved economic growth should lead to further market advances, and we believe that high quality growth stocks--which have been among the weakest performers in recent years--have the potential to regain their position as market leaders. Economic and market conditions can frequently change. There is no assurance that the trends described here will continue or commence. An investment in Stein Roe Growth Stock Fund, Variable Series offers the potential for long-term growth, but also involves certain risks, including stock market fluctuations due to economic and business developments. The fund may also invest up to 25% of its assets in foreign stocks. There are also specific risks involved when investing in foreign stocks, such as currency exchange rate fluctuations, economic change, instability of emerging countries and political developments. Holdings are disclosed as of June 30, 2003, and are subject to change. 216 <Page> PERFORMANCE INFORMATION Stein Roe Growth Stock Fund, Variable Series, / June 30, 2003 AVERAGE ANNUAL TOTAL RETURN AS OF JUNE 30, 2003 (%) <Table> <Caption> (CUMULATIVE) 6-MONTH 1-YEAR 5-YEAR 10-YEAR - --------------------------------------------------------------------------------------------- Class A (1/1/89) 10.85 -5.00 -5.39 7.24 S&P 500 Index 11.75 0.25 -1.61 10.04 </Table> Inception date of share class is in parentheses. [CHART] VALUE OF A $10,000 INVESTMENT, 6/30/93 - 6/30/03 <Table> <Caption> CLASS A SHARES S&P 500 INDEX JUN-93 $ 10,348 $ 10,186 10/01/1993 - 12/31/1993 $ 10,808 $ 10,353 01/01/1994 - 03/31/1994 $ 10,123 $ 9,893 04/01/1994 - 06/30/1994 $ 9,809 $ 9,861 07/01/1994 - 09/30/1994 $ 10,260 $ 10,270 10/01/1994 - 12/31/1994 $ 10,122 $ 10,194 01/01/1995 - 03/31/1995 $ 10,860 $ 11,114 04/01/1995 - 06/30/1995 $ 11,944 $ 12,093 07/01/1995 - 09/30/1995 $ 13,145 $ 12,973 10/01/1995 - 12/31/1995 $ 13,941 $ 13,672 01/01/1996 - 03/31/1996 $ 14,590 $ 14,328 04/01/1996 - 06/30/1996 $ 15,588 $ 14,886 07/01/1996 - 09/30/1996 $ 16,061 $ 15,256 10/01/1996 - 12/31/1996 $ 16,906 $ 16,442 01/01/1997 - 03/31/1997 $ 16,816 $ 16,805 04/01/1997 - 06/30/1997 $ 20,214 $ 19,647 07/01/1997 - 09/30/1997 $ 21,403 $ 21,026 10/01/1997 - 12/31/1997 $ 22,362 $ 21,539 01/01/1998 - 03/31/1998 $ 24,956 $ 24,453 04/01/1998 - 06/30/1998 $ 26,541 $ 25,165 07/01/1998 - 09/30/1998 $ 22,623 $ 22,573 10/01/1998 - 12/31/1998 $ 28,602 $ 27,284 01/01/1999 - 03/31/1999 $ 31,906 $ 28,553 04/01/1999 - 06/30/1999 $ 32,879 $ 30,469 07/01/1999 - 09/30/1999 $ 31,120 $ 28,470 10/01/1999 - 12/31/1999 $ 39,165 $ 32,609 01/01/2000 - 03/31/2000 $ 45,024 $ 33,262 04/01/2000 - 06/30/2000 $ 42,984 $ 32,287 07/01/2000 - 09/30/2000 $ 41,604 $ 31,887 10/01/2000 - 12/31/2000 $ 34,457 $ 29,307 01/01/2001 - 03/31/2001 $ 28,561 $ 25,758 04/01/2001 - 06/30/2001 $ 29,352 $ 27,180 07/01/2001 - 09/30/2001 $ 23,467 $ 23,106 10/01/2001 - 12/31/2001 $ 25,969 $ 25,483 01/01/2002 - 03/31/2002 $ 24,972 $ 25,468 04/01/2002 - 06/30/2002 $ 21,171 $ 21,971 07/01/2002 - 09/30/2002 $ 17,316 $ 18,098 10/01/2002 - 12/31/2002 $ 18,145 $ 19,529 01/01/2003- 03/31/2003 $ 17,643 $ 22,464 Jun-03 $ 20,117 $ 25,922 </Table> <Table> <Caption> NET ASSET VALUE PER SHARE ($) 12/31/02 6/30/03 - ----------------------------------------------------------------- Class A 19.48 21.49 </Table> PAST PERFORMANCE CANNOT PREDICT FUTURE INVESTMENT RESULTS. SHARE PRICE AND INVESTMENT RETURN WILL VARY, SO YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. Total return performance includes changes in share price and reinvestment of all distributions. The S&P (Standard & Poor's) 500 Index is an unmanaged index that tracks the performance of 500 widely held, large-capitalization US stocks. Indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. MUTUAL FUND PERFORMANCE CHANGES OVER TIME. CURRENT RETURNS FOR THE FUND MAY BE DIFFERENT THAN THAT SHOWN. Performance numbers reflect all fund expenses, but do not include any insurance charges imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. 217 <Page> INVESTMENT PORTFOLIO Stein Roe Growth Stock Fund, Variable Series / June 30, 2003 (Unaudited) <Table> <Caption> SHARES VALUE -------- --------------- COMMON STOCKS--99.7% CONSUMER DISCRETIONARY--15.9% HOTELS RESTAURANTS & LEISURE--2.0% Carnival Corp. 90,000 $ 2,925,900 --------------- MEDIA--5.1% Clear Channel Communications, Inc. 70,000 2,967,300 Liberty Media Corp., Class A (a) 380,000 4,392,800 --------------- 7,360,100 --------------- MULTILINE RETAIL--4.0% Kohl's Corp. (a) 70,000 3,596,600 Wal-Mart Stores, Inc. 40,000 2,146,800 --------------- 5,743,400 --------------- SPECIALTY RETAIL--3.8% Chico's FAS, Inc. (a) 40,000 842,000 Home Depot, Inc. 140,000 4,636,800 --------------- 5,478,800 --------------- TEXTILES & APPAREL--1.0% Coach, Inc. (a) 30,000 1,492,200 --------------- CONSUMER STAPLES--9.0% BEVERAGES--4.1% Coca-Cola Co. 60,000 2,784,600 PepsiCo, Inc. 70,000 3,115,000 --------------- 5,899,600 --------------- HOUSEHOLD PRODUCTS--2.7% Procter & Gamble Co. 45,000 4,013,100 --------------- PERSONAL PRODUCTS--2.2% Gillette Co. 100,000 3,186,000 --------------- ENERGY--5.0% ENERGY EQUIPMENT & SERVICES--5.0% Smith International, Inc. 60,000 2,204,400 Schlumberger, Ltd. 70,000 3,329,900 Transocean, Inc. 80,000 1,757,600 --------------- 7,291,900 --------------- FINANCIALS--7.5% DIVERSIFIED FINANCIALS--4.8% Citigroup, Inc. 135,000 5,778,000 Merrill Lynch & Co., Inc. 25,000 1,167,000 --------------- 6,945,000 --------------- INSURANCE--2.7% American International Group, Inc. 70,000 3,862,600 --------------- HEALTH CARE--24.4% BIOTECHNOLOGY--4.0% Amgen, Inc. (a) 60,000 3,986,400 Gilead Sciences, Inc. (a) 20,000 1,128,598 Idec Pharmaceuticals Corp. (a) 20,000 680,000 --------------- 5,794,998 --------------- HEALTH CARE EQUIPMENT & SUPPLIES--7.1% Boston Scientific Corp. (a) 75,000 $ 4,582,500 Medtronic, Inc. 120,000 5,756,400 --------------- 10,338,900 --------------- HEALTH CARE PROVIDERS & SERVICES--1.7% UnitedHealth Group, Inc. 50,000 2,512,500 --------------- PHARMACEUTICALS--11.6% Johnson & Johnson 80,000 4,136,000 Pfizer, Inc. 180,000 6,147,000 Teva Pharmaceutical Industries, Ltd. ADR 50,000 2,846,500 Watson Pharmaceuticals, Inc. 90,000 3,633,300 --------------- 16,762,800 --------------- INDUSTRIALS--13.5% AEROSPACE & DEFENSE--2.0% Lockheed Martin Corp. 60,000 2,854,200 --------------- COMMERCIAL SERVICES & SUPPLIES--3.5% First Data Corp. 70,000 2,900,800 Paychex, Inc. 75,000 2,198,250 --------------- 5,099,050 --------------- INDUSTRIAL CONGLOMERATES--4.4% General Electric Co. 220,000 6,309,600 --------------- MACHINERY--3.6% Caterpillar, Inc. 95,000 5,287,700 --------------- INFORMATION TECHNOLOGY--23.6% COMMUNICATIONS EQUIPMENT--5.5% Cisco Systems, Inc. (a) 325,000 5,424,250 Comverse Technology, Inc. (a) 20,000 300,600 Nokia Oyj ADR 135,000 2,218,050 --------------- 7,942,900 --------------- COMPUTERS & PERIPHERALS--3.1% Dell Computer Corp. (a) 140,000 4,474,400 --------------- SEMICONDUCTOR EQUIPMENT & PRODUCTS--5.2% Analog Devices, Inc. (a) 85,000 2,959,700 Maxim Integrated Products, Inc. 65,000 2,222,350 Texas Instruments, Inc. 135,000 2,376,000 --------------- 7,558,050 --------------- SOFTWARE--9.8% Microsoft Corp. 300,000 7,683,000 Oracle Corp. (a) 200,000 2,404,000 SAP AG ADR 80,000 2,337,600 VERITAS Software Corp. (a) 60,000 1,720,200 --------------- 14,144,800 --------------- TELECOMMUNICATION SERVICES--0.8% WIRELESS TELECOMMUNICATION SERVICES--0.8% Sprint Corp.--PCS Group (a) 200,000 1,150,000 --------------- TOTAL COMMON STOCKS (cost of $137,364,098) 144,428,498 --------------- </Table> See Notes to Investment Portfolio. 218 <Page> <Table> <Caption> PAR VALUE ------------ ------------- SHORT-TERM OBLIGATION--0.5% Repurchase agreement with State Street Bank & Trust Co., dated 6/30/03, due 07/01/03 at 1.000%, collateralized by U.S. Treasury Bond maturing 2/15/2029, market value $699,621 (repurchase proceeds $685,019) (cost of $685,000) $ 685,000 $ 685,000 ------------- TOTAL INVESTMENTS--100.2% (cost of $138,049,098) (b) 145,113,498 ------------- OTHER ASSETS & LIABILITIES, NET--(0.2)% (338,572) ------------- NET ASSETS--100.0% $ 144,774,926 ============= </Table> NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing. (b) Cost for both financial statement and federal income tax purposes is the same. <Table> <Caption> ACRONYM NAME ------- ---- ADR American Depositary Receipt </Table> See Notes to Financial Statements. 219 <Page> STATEMENT OF ASSETS & LIABILITIES Stein Roe Growth Stock Fund, Variable Series / June 30, 2003 (Unaudited) <Table> ASSETS: Investments, at cost $ 138,049,098 --------------- Investments, at value $ 145,113,498 Cash 347 Receivable for: Investments sold 2,317,566 Fund shares sold 178,345 Interest 19 Dividends 77,375 Expense reimbursement due from Distributor 806 Deferred Trustees' compensation plan 2,761 --------------- TOTAL ASSETS 147,690,717 --------------- LIABILITIES: Payable for: Investments purchased 1,952,552 Fund shares repurchased 810,236 Distributions--Class B 251 Management fee 65,593 Administration fee 18,796 Transfer agent fee 594 Pricing and bookkeeping fees 8,639 Reports to Shareholders 40,729 Deferred Trustees' fee 2,761 Other liabilities 15,640 --------------- TOTAL LIABILITIES 2,915,791 --------------- NET ASSETS $ 144,774,926 =============== COMPOSITION OF NET ASSETS: Paid-in capital $ 215,711,428 Undistributed net investment income 147,682 Accumulated net realized loss (78,148,584) Net unrealized appreciation on investments 7,064,400 --------------- NET ASSETS $ 144,774,926 =============== CLASS A: Net assets $ 122,501,944 Shares outstanding 5,700,193 =============== Net asset value per share $ 21.49 =============== CLASS B: Net assets $ 22,272,982 Shares outstanding 1,039,232 =============== Net asset value per share $ 21.43 =============== </Table> See Notes to Financial Statements. 220 <Page> STATEMENT OF OPERATIONS Stein Roe Growth Stock Fund, Variable Series For the Six Months Ended June 30, 2003 (Unaudited) <Table> INVESTMENT INCOME: Dividends $ 700,583 Interest 8,992 --------------- Total Investment Income (net of foreign taxes withheld of $14,632) 709,575 --------------- EXPENSES: Management fee 349,087 Administration fee 104,726 Distribution fee--Class B 27,252 Pricing and bookkeeping fees 28,729 Transfer agent fee 3,720 Trustees' fee 3,313 Custody fee 4,575 Other expenses 38,340 --------------- Total Expenses 559,742 Fees reimbursed by Distributor--Class B (6,640) Custody earnings credit (65) --------------- Net Expenses 553,037 --------------- Net Investment Income 156,538 --------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, Net realized loss on investments (21,177,579) Net change in unrealized appreciation/depreciation on investments 35,236,114 --------------- Net Gain 14,058,535 --------------- Net Increase in Net Assets from Operations $ 14,215,073 =============== </Table> See Notes to Financial Statements. 221 <Page> STATEMENT OF CHANGES IN NET ASSETS Stein Roe Growth Stock Fund, Variable Series <Table> <Caption> (UNAUDITED) SIX MONTHS ENDED YEAR ENDED JUNE 30, DECEMBER 31, INCREASE (DECREASE) IN NET ASSETS: 2003 2002 - ---------------------------------- --------------- --------------- OPERATIONS: Net investment income $ 156,538 $ 567,697 Net realized loss on investments (21,177,579) (17,315,003) Net change in unrealized appreciation/depreciation on investments 35,236,114 (55,764,886) --------------- --------------- Net Increase (Decrease) from Operations 14,215,073 (72,512,192) DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income: Class A (506,499) (370,940) Class B (55,280) -- --------------- --------------- Total Distributions Declared to Shareholders (561,779) (370,940) --------------- --------------- SHARE TRANSACTIONS: Class A: Subscriptions 1,719,944 6,190,686 Distributions reinvested 506,499 370,940 Redemptions (14,217,013) (45,952,620) --------------- --------------- Net Decrease (11,990,570) (39,390,994) --------------- --------------- Class B: Subscriptions 857,476 5,347,058 Distributions reinvested 55,280 -- Redemptions (2,857,838) (5,774,260) --------------- --------------- Net Decrease (1,945,082) (427,202) --------------- --------------- Net Decrease from Share Transactions (13,935,652) (39,818,196) --------------- --------------- Total Decrease in Net Assets (282,358) (112,701,328) NET ASSETS: Beginning of period 145,057,284 257,758,612 --------------- --------------- End of period (including undistributed net investment income of $147,682 and $552,923, respectively) $ 144,774,926 $ 145,057,284 =============== =============== CHANGES IN SHARES: Class A: Subscriptions 83,535 264,894 Issued for distributions reinvested 28,632 13,805 Redemptions (727,947) (2,015,798) --------------- --------------- Net Decrease (615,780) (1,737,099) --------------- --------------- Class B: Subscriptions 43,065 224,649 Issued for distributions reinvested 3,130 -- Redemptions (142,958) (268,599) --------------- --------------- Net Decrease (96,763) (43,950) --------------- --------------- </Table> See Notes to Financial Statements. 222 <Page> NOTES TO FINANCIAL STATEMENTS Stein Roe Growth Stock Fund, Variable Series / June 30, 2003 (Unaudited) NOTE 1. ORGANIZATION AND ACCOUNTING POLICIES ORGANIZATION--Stein Roe Growth Stock Fund, Variable Series (the "Fund"), a series of SteinRoe Variable Investment Trust (the "Trust"), is a diversified portfolio of a Massachusetts business trust, registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund's investment goal is to seek long-term growth of capital. The Fund's capitalization consists of an unlimited number of shares of beneficial interest without par value that represent a separate series of the Trust. The Fund offers two classes of shares: Class A and Class B. Each share of a class represents an equal proportionate beneficial interest in that share class and, when issued and outstanding, is fully paid and nonassessable. Shareholders would be entitled to share proportionally in the net assets of their share class available for distribution to shareholders upon liquidation of the Fund. Shares of the Fund are available and are being marketed exclusively as a pooled funding vehicle for variable annuity contracts ("VA contracts") and Variable Life Insurance Policies ("VLI Policies") offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies"). The Participating Insurance Companies and their separate accounts own all the shares of the Fund. On April 1, 2003, Stein Roe & Farnham Incorporated, the investment advisor to the Fund, merged into Columbia Management Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co., an indirect wholly owned subsidiary of FleetBoston Financial Corporation. At the time of the merger, Columbia assumed the obligations of Stein Roe & Farnham Incorporated with respect to the Fund. The merger did not change the way the Fund is managed, the investment personnel assigned to manage the Fund or the fees paid by the Fund. Columbia provides investment management and advisory services to the Fund pursuant to its Management Agreement with the Fund. Columbia also provides pricing and bookkeeping services to the Fund. Liberty Funds Distributor, Inc. ("LFD"), an affiliate of Columbia, serves as the principal underwriter of the Fund. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION AND TRANSACTIONS--Equity securities generally are valued at the last sale price or, in the case of unlisted or listed securities for which there were no sales during the day, at the current quoted bid price. Short-term obligations with a maturity of 60 days or less are valued at amortized cost. The values of all assets and liabilities quoted in foreign currencies are translated into U.S. dollars at that day's exchange rates. Investments for which market quotations are not readily available, or quotations which management believes are not appropriate, are valued at fair value under procedures approved by the Board of Trustees. Generally, trading in foreign securities is substantially completed each day at various times prior to the close of the New York Stock Exchange ("NYSE"). The values of such securities used in computing the net asset value of the Fund's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which they are determined and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If events materially affecting the value of such securities occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Trustees. Security transactions are accounted for on the date the securities are purchased, sold or mature. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS--All income, expenses (other than the Class B distribution fee), and realized and unrealized gains (losses) are allocated to each class proportionately on a daily basis for purposes of determining the net asset value of each class. The per share data was calculated using average shares outstanding during the period. In addition, Class B net investment income per share data and ratios reflect the distribution fee applicable to Class B shares only. FEDERAL INCOME TAXES--Consistent with the Fund's policy to qualify as a regulated investment company and to distribute all of its taxable income, no federal income tax has been accrued. 223 <Page> DISTRIBUTIONS TO SHAREHOLDERS--The Fund intends to distribute as income dividends or capital gains distributions, at least annually, substantially all of its net investment income and net profits realized from the sale of investments. All dividends and distributions are reinvested in additional shares of the Fund at net asset value as of the record date of the distribution. Income and capital gain distributions are determined in accordance with federal income tax regulations. FOREIGN CURRENCY TRANSACTIONS--Net realized and unrealized gains (losses) on foreign currency transactions and translations includes gains (losses) arising from the fluctuations in exchange rates between trade and settlement dates on securities transactions, gains (losses) arising from the disposition of foreign currency, and currency gains (losses) between the accrual and payment dates on dividends, interest income and foreign withholding taxes. The Fund does not distinguish that portion of gains (losses) on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the investments. Such fluctuations are included with the net realized and unrealized gains (losses) on investments. OTHER--Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date (except for certain foreign securities which are recorded as soon after ex-date as the Fund becomes aware of such), net of non-reclaimable tax withholdings. Where a high level of uncertainty as to collection exists, income on securities is recorded net of all tax withholdings with any rebates recorded when received. The Fund's custodian takes possession through the federal book-entry system of securities collateralizing repurchase agreements. Collateral is marked-to-market daily to ensure that the market value of the underlying assets remains sufficient to protect the Fund. The Fund may experience costs and delays in liquidating the collateral if the issuer defaults or enters bankruptcy. NOTE 2. FEDERAL TAX INFORMATION Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. The following capital loss carryforwards, determined as of December 31, 2002, are available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: <Table> <Caption> YEAR OF CAPITAL LOSS EXPIRATION CARRYFORWARD ------------ ------------- 2009 $ 28,434,611 2010 28,364,195 ------------- $ 56,798,806 ============= </Table> NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES MANAGEMENT AND ADMINISTRATIVE FEES--Columbia receives a monthly management fee equal to 0.50% annually of the first $1 billion of the Fund's average daily net assets and 0.45% in excess of $1 billion for management services. Columbia receives a monthly administration fee equal to 0.15% annually of average daily net assets for administrative services. PRICING AND BOOKKEEPING FEES--Columbia is responsible for providing pricing and bookkeeping services to the Fund under a Pricing and Bookkeeping Agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Bank & Trust Company ("State Street"). Columbia pays fees to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual flat fee of $10,000, paid monthly, and in any month that the Fund's average daily net assets are more than $50 million, a monthly fee equal to the average daily net assets of the Fund for that month multiplied by a fee rate that is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. For the six months ended June 30, 2003, the annualized net asset based fee rate was 0.033%. The Fund also pays out-of-pocket costs for pricing services. TRANSFER AGENT FEE--Liberty Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia, provides shareholder services for an annual rate of $7,500. DISTRIBUTION FEE--The Fund has adopted a 12b-1 plan, which requires it to pay LFD a monthly distribution fee equal to 0.25% annually of Class B average daily net assets. EXPENSE LIMITS--Columbia has voluntarily agreed to reimburse all expenses, including management fees, but excluding interest, taxes, distribution fees, brokerage and extraordinary expenses of the Fund in excess of 0.80% annually of the Fund's average daily net assets. 224 <Page> LFD has voluntarily agreed to reimburse the Fund's Class B share distribution fee in excess of 0.15% when the total operating expenses of the Fund applicable to Class B shares, including distribution fees, are in excess of 0.95% annually of Class B average daily net assets. These arrangements may be terminated or modified by Columbia or LFD at any time. OTHER--The Fund pays no compensation to its officers, all of whom are employees of Columbia or its affiliates. The Fund's Independent Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. The Fund has an agreement with its custodian bank under which $65 of custody fees were reduced by balance credits for the six months ended June 30, 2003. The Fund could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if it had not entered into such an agreement. NOTE 4. PORTFOLIO INFORMATION INVESTMENT ACTIVITY--For the six months ended June 30, 2003, purchases and sales of investments, other than short-term obligations, were $69,764,083 and $82,309,620, respectively. Unrealized appreciation (depreciation) at June 30, 2003, based on cost of investments for federal income tax purposes, was: <Table> Gross unrealized appreciation $ 23,050,987 Gross unrealized depreciation (15,986,587) ------------- Net unrealized appreciation $ 7,064,400 ============= </Table> OTHER--There are certain additional risks involved when investing in foreign securities that are not inherent with investments in domestic securities. These risks may involve foreign currency exchange rate fluctuations, adverse political and economic developments and the possible prevention of foreign currency exchange or the imposition of other foreign governmental laws or restrictions. The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. 225 <Page> FINANCIAL HIGHLIGHTS Stein Roe Growth Stock Fund, Variable Series--Class A Shares Selected data for a share outstanding throughout each period is as follows: <Table> <Caption> (UNAUDITED) SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ------------------------------------------------------------- 2003 2002 2001 2000 1999 1998 ---------- --------- --------- --------- --------- --------- NET ASSET VALUE, BEGINNING OF PERIOD $ 19.48 $ 27.93 $ 44.65 $ 57.93 $ 43.53 $ 36.13 ---------- --------- --------- --------- --------- --------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (a) 0.03 0.07 0.04 (0.11) (0.03) 0.08 Net realized and unrealized gain (loss) on investments 2.07 (8.47) (10.28) (5.13) 15.79 9.54 ---------- --------- --------- --------- --------- --------- Total from Investment Operations 2.10 (8.40) (10.24) (5.24) 15.76 9.62 ---------- --------- --------- --------- --------- --------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.09) (0.05) --(b) -- (0.08) (0.10) From net realized gains -- -- (6.48) (8.04) (1.28) (2.12) ---------- --------- --------- --------- --------- --------- Total Distributions Declared to Shareholders (0.09) (0.05) (6.48) (8.04) (1.36) (2.22) ---------- --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 21.49 $ 19.48 $ 27.93 $ 44.65 $ 57.93 $ 43.53 ========== ========= ========= ========= ========= ========= Total return (c)(d) 10.85%(e) (30.13)% (24.64)% (12.02)% 36.94% 27.91% RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (f) 0.76%(g) 0.77% 0.76% 0.68% 0.67% 0.70% Net investment income (loss) (f) 0.25%(g) 0.32% 0.13% (0.20)% (0.05)% 0.21% Portfolio turnover rate 50%(e) 68% 57% 65% 70% 40% Net assets, end of period (000's) $ 122,502 $ 123,015 $ 224,928 $ 376,243 $ 403,836 $ 271,584 </Table> (a) Per share data was calculated using shares outstanding during the period. (b) Rounds to less than $0.01 per share. (c) Total return at net asset value assuming all distribution reinvested. (d) Total return figure does not include any insurance company charges associated with a variable annuity. If included, total return would be reduced. (e) Not annualized. (f) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (g) Annualized. 226 <Page> STEINROE VARIABLE INVESTMENT TRUST INVESTMENT MANAGER AND ADMINISTRATOR Columbia Management Advisors, Inc. 100 Federal Street Boston, MA 02110 TRANSFER AGENT Liberty Funds Services, Inc. PO Box 8081 Boston, MA 02266-8081 227 <Page> (This page intentionally left blank) 228 <Page> [KEYPORT LOGO] P.O. BOX 9133 Wellesley Hills, MA 02481 2003 SEMIANNUAL REPORT Liberty Variable Investment Trust - - SteinRoe Variable Investment Trust - - Wanger Advisors Trust ANN-03/625O-0603 (08/03) 03/2166 <Page> ITEM 2. CODE OF ETHICS. Not applicable at this time. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable at this time. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable at this time. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable at this time. ITEM 6. [RESERVED] ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES Not applicable at this time. ITEM 8. [RESERVED] ITEM 9. CONTROLS AND PROCEDURES. (a) The Registrant's Chief Executive Officer and Chief Financial Officer, based on their evaluation of the Registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, have concluded that such controls and procedures are adequately designed to ensure that information required to be disclosed by the Registrant in its reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to the Registrant's management, including the Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. (b) There was no change in the registrant's internal control over financial reporting that occurred over the registrant's last fiscal half-year that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 10. EXHIBITS. (a) File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated. (a)(1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit: Not applicable at this time. (a)(2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)). Attached hereto as Exhibit 99.CERT. (b) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)). Attached hereto as Exhibit 99.906CERT. <Page> SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) Liberty Variable Investment Trust SteinRoe Variable Investment Trust ------------------------------------------------------------------- By (Signature and Title)* /s/ Joseph R. Palombo ------------------------------------------------------ Joseph R. Palombo, President Date September 5, 2003 --------------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title)* /s/ Joseph R. Palombo ------------------------------------------------------ Joseph R. Palombo, President Date September 5, 2003 --------------------------------------------------------------------------- By (Signature and Title)* /s/ J. Kevin Connaughton ------------------------------------------------------ J. Kevin Connaughton, Treasurer Date September 5, 2003 ---------------------------------------------------------------------------