<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 811-08630
---------------------------------------------
Mutual Fund Variable Annuity Trust
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
522 Fifth Avenue, New York, NY 10036
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
BISYS Fund Services, 3435 Stelzer Road, Columbus, OH 43219
- -------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 1-800-348-4782
----------------------------
Date of fiscal year end: August 31, 2003
-------------------------------------------------------
Date of reporting period: September 1, 2002 through August 31, 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.
ITEM 1. REPORTS TO STOCKHOLDERS.
Include a copy of the report transmitted to stockholders pursuant to Rule
30e-1 under the Act (17 CFR 270.30e-1).
<Page>
[GRAPHIC]
ANNUAL REPORT
AUGUST 31, 2003
VISTA CAPITAL ADVANTAGE(SM)
MUTUAL FUND VARIABLE ANNUITY TRUST
J.P. MORGAN FUND DISTRIBUTORS, INC., DISTRIBUTOR
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENT PROSPECTUS FOR VISTA
CAPITAL ADVANTAGE
<Page>
The Vista Capital Advantage (VCA) is distributed by J.P. Morgan Fund
Distributors, Inc., which is unaffiliated with JPMorgan Chase Bank, Anchor
National Life Insurance Company or First SunAmerica Life Insurance Company.
JPMorgan Chase is the portfolio administrator and custodian of the underlying
investment options of the variable annuity. VCA is issued by Anchor National
Life Insurance Company and in New York by First SunAmerica Life Insurance
Company.
Past performance is no guarantee for future performance. The general market
views expressed in this report are opinions based on current market conditions
and are subject to change without notice. These views are not intended to
predict the future performance of a Fund or the securities markets. References
to specific securities and their issuers are for illustrative purposes only and
are not intended to be, and should not be interpreted as, recommendations to
purchase or sell such securities. Such views are not meant as investment advice
and may not be relied on as an indication of trading intent on behalf of any
Fund.
INVESTMENTS IN VISTA CAPITAL ADVANTAGE ARE NOT DEPOSITS, OR GUARANTEED OR
ENDORSED BY, JPMORGAN CHASE BANK, AND ARE NOT INSURED BY THE FDIC, FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. INVESTMENTS IN VISTA CAPITAL
ADVANTAGE, INCLUDING THE UNDERLYING VARIABLE INVESTMENT OPTIONS, INVOLVE RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
<Page>
[GRAPHIC]
Dear Vista Capital Advantage Contract Owner:
Enclosed is the August 31, 2003 Annual Report of the Mutual Fund Variable
Annuity Trust, whose portfolios serve as the underlying investments for the
Vista Capital Advantage variable annuity.
The tables below show the one year, three years, five years and since inception
results, after the deduction of all insurance and withdrawal fees, of the
accounts in the Vista Capital Advantage at August 31, 2003. The insurance fees
include mortality and expense risk charges, surrender charges and the annual
contract administration charge. The surrender charges reflect the sales charges
that would have been assessed against the contract value had the contract been
surrendered.(1)
The first chart applies to all Vista Capital Advantage investors outside of
New York state, whose policy is issued by Anchor National Life Insurance
Company. The second chart applies to Vista Capital Advantage investors within
New York state, whose policy is issued by First SunAmerica Life Insurance
Company.
ANCHOR NATIONAL LIFE INSURANCE COMPANY POLICY HOLDERS
AVERAGE ANNUAL TOTAL RETUN AS OF 8/31/03(2)
<Table>
<Caption>
1 3 5 SINCE
PORTFOLIO (CONTRACT INCEPTION DATE) YEAR YEAR YEAR INCEPTION
---------------------------------------------------------------------------------------------------------------
Growth and Income (3/13/95) 3.73% -11.55% -1.56% 5.50%
Capital Growth (3/13/95) 15.86% -8.05% 5.45% 8.12%
International Equity (3/13/95) -0.13% -12.67% 0.17% 2.10%
Asset Allocation (3/13/95) 0.41% -9.21% -1.92% 3.64%
U.S. Government Income (7/13/95) -5.51% 4.01% 3.30% 4.49%
Money Market(3) (6/2/95) -6.78% -0.72% 1.24% 2.61%
7-DAY YIELD AS OF 8/31/03; -0.02%
</Table>
FIRST SUNAMERICA LIFE INSURANCE COMPANY POLICY HOLDERS (NEW YORK)
AVERAGE ANNUAL TOTAL RETUN AS OF 8/31/03(2)
<Table>
<Caption>
1 3 5 SINCE
PORTFOLIO (CONTRACT INCEPTION DATE) YEAR YEAR YEAR INCEPTION
---------------------------------------------------------------------------------------------------------------
Growth and Income (12/6/95) 3.73% -11.55% -1.35% 3.51%
Capital Growth (12/6/95) 15.86% -8.05% 5.61% 6.10%
International Equity (12/22/95) -0.13% -12.67% 0.37% 0.98%
Asset Allocation (12/22/95) 0.41% -9.21% -1.70% 2.23%
U.S. Government Income (12/22/95) -5.51% 4.01% 3.48% 4.30%
Money Market(3) (12/22/95) -6.78% -0.72% 1.43% 2.54%
7-DAY YIELD AS OF 8/31/03; -0.02%
</Table>
Your Vista Capital Advantage variable annuity represents a unique combination of
professional money management and tax advantages. It is designed to help
contribute to your plans for a financially secure future. If you have any
questions, please call your investment representative or 1-800-908-4782.
Sincerely,
/s/ George C.W. Gatch
George C.W. Gatch
President, JPMorgan Funds
- ----------
(1) The Surrender Charge schedule for each year in states other than NY is as
follows: 6%, 6%, 5%, 4%, 3%, 2%, 0%. In NY the Surrender Charge schedule for
each year is: 6%, 6%, 5%, 4%, 3%, 2%, 1%, 0%. A 10% Federal tax penalty may
apply to withdrawals before age 59 1/2.
(2) Past performance is no guarantee of future results. An investor's return and
principal value will fluctuate. An investor's units, when redeemed, may be
worth more or less than their original investment. This material is
authorized for public distribution only when accompanied or preceded by a
prospectus for Vista Capital Advantage.
(3) Fund shares are not insured or guaranteed by the FDIC or any other
government agency. There can be no guarantee that the Fund will maintain a
stable net asset value of $1.00.
The views expressed on this page are exclusively those of JPMorgan Fleming.
(UNAUDITED)
<Page>
TABLE OF CONTENTS
<Table>
3 PRESIDENT'S LETTER
PERFORMANCE & COMMENTARY
4 GROWTH AND INCOME
6 CAPITAL GROWTH
8 INTERNATIONAL EQUITY
10 ASSET ALLOCATION
12 U.S. GOVERNMENT INCOME
14 MONEY MARKET
PORTFOLIO OF INVESTMENTS
15 GROWTH AND INCOME
17 CAPITAL GROWTH
19 INTERNATIONAL EQUITY
21 ASSET ALLOCATION
25 U.S. GOVERNMENT INCOME
26 MONEY MARKET
MUTUAL FUND VARIABLE ANNUITY TRUST
27 STATEMENT OF ASSETS & LIABILITIES
28 STATEMENT OF OPERATIONS
29 STATEMENT OF CHANGES IN NET ASSETS
30 FINANCIAL HIGHLIGHTS
32 NOTES TO FINANCIAL STATEMENTS
HIGHLIGHTS
- - "Baghdad Bounce" revives U.S. and international markets
- - Economies strengthen in U.S. and Asia
- - Bond markets correct during late summer
- - High probability of synchronized global growth
</Table>
<Page>
3
[GRAPHIC]
PRESIDENT'S LETTER
October 6, 2003
DEAR SHAREHOLDER:
We are pleased to present this annual report for the Vista Capital Advantage
Variable Annuity Portfolios. Inside, you will find information detailing the
performance of the Portfolios for the year ended August 31, 2003, along with a
report from the portfolio manager.
THE "BAGHDAD BOUNCE" TRIGGERS A LIQUIDITY-DRIVEN RALLY
Despite the uncertainty of the first few months of 2003, global equity markets
found direction once it became clear that allied troops would cross the border
into Iraq in mid-March. Prior to that, wrangling in the United Nations regarding
the legitimacy of war dogged market sentiment. However, the combination of
action, followed by a quicker-than-expected war, led to a relief rally--the
"Baghdad Bounce."
This momentum, thanks to utterances by the U.S. Federal Reserve Board, confirmed
its determination to avoid deflation and to nurture growth (leading ultimately
to a 1/4-point rate cut in late June), Congress's approval of a $350 billion
package of tax cuts by the Bush administration in an attempt to boost consumer
demand, and the easy monetary stance adopted by the Bank of England and European
Central Bank. By late summer, there were clear signs of a strengthening U.S.
economy, matched by better-than-expected economic reports out of Japan and the
rest of Asia. Even in Europe, forward-looking indicators implied the economy
might soon turn around. By August 31, the S&P 500 Index of blue-chip U.S. stocks
had risen 16.0% year to date, and the MSCI EAFE Index of international stocks
was up 14.8%.
Fixed income markets suffered, with bond yields rising as fears that the United
States and Europe were headed for Japan-style deflation subsided. Earlier in
2003, there had been a significant rally in bond prices, both as the likelihood
of deflation had seemed to increase, and as some of the liquidity unleashed by
the swift end to the official war made its way to the bond markets. Yields on
10-year government bonds rose by 95 basis points in the United States and 35
basis points in Europe during July and August.
We expect U.S. share prices, going forward, will hinge on whether the improved
economy enables companies to deliver stronger earnings and to begin hiring
additional workers. Our best judgment is that companies will gradually begin to
deliver on both fronts, allowing the economy to keep growing and share prices to
keep moving up. Long-term interest rates may eventually rise further in this
scenario, dampening bond returns.
The balance of risks in the economy appears to have shifted further in the
direction of a renewed phase of global growth that may last longer and be spread
more widely than investors have been expecting. If Europe gradually breaks out
of its slump, and Japan remains on its improved course, the world may be able to
look forward to the first globally synchronized economic expansion in at least a
decade. Non-U.S. equities, given their comparatively attractive valuations,
would be likely, in such a scenario, to produce returns at least competitive
with those on U.S. stocks.
In this challenging environment, your portfolio managers will continue to work
hard to maintain strong performance. The portfolio management team and all of us
at JPMorgan Fleming Asset Management appreciate your continued investment with
us and we anticipate serving your investment needs for many years to come.
Sincerely,
/s/ George C.W. Gatch
George C.W. Gatch
President
JPMorgan Funds
<Page>
4
GROWTH AND INCOME PORTFOLIO
(UNAUDITED)
THE GROWTH AND INCOME PORTFOLIO SEEKS TO PROVIDE LONG-TERM CAPITAL APPRECIATION
AND DIVIDEND INCOME PRIMARILY THROUGH DIVERSIFIED HOLDINGS OF COMMON STOCKS.
Q: HOW DID THE PORTFOLIO PERFORM?
A: The Growth & Income Portfolio gained 11.33% in the twelve months through
August 31, 2003. The portfolio participated in the market's climb, although
results trailed the S&P 500/BARRA Value Index, which rose 14.15% for the same
period.
Q: WHY DID THE PORTFOLIO PERFORM THIS WAY?
A: The Portfolio's underperformance was mostly attributable to its underweight
position in the information technology sector as well as adverse stock selection
in the healthcare sector. Adept stock selection in the consumer discretionary
sector enhanced the Portfolio's relative return.
Among the Portfolio's main detractors was energy company TXU. In October 2002
management lowered its expectations for 2002 and 2003 as a result of low
wholesale prices and aggressive retail competition in the United Kingdom. The
depressed wholesale market in the U.K. led to intense retail competition that
eroded margins. As a result of these issues we sold our position in the company.
CIGNA Corp. declined after the company made several negative announcements. The
most significant announcements were related to a new technology platform that
the company is implementing. The time and costs of switching current clients
will be greater than expected and several products had been underpriced leading
to a financial shortfall. As a result of these issues we sold our position in
the company.
The top contributor for the period was Citigroup, which has shown strong and
steady profitability. Additionally, the company posted strong earnings, beating
consensus Wall Street expectations.
Q: HOW WAS THE PORTFOLIO MANAGED?
A: Despite the market's climb we still are finding high-quality companies in
which to invest. Holdings such as Pfizer, Wyeth, PepsiCo, and QUALCOMM reflect
short-term concerns in their prices rather than the potentially high returns and
durable business models that we see. We are also finding traditional value
plays: companies in lower growth industries that possess strong balance sheets
and generate excess cash flow. With interest rates and dividend tax rates low,
these companies are poised to attract more investor attention as they raise
their payout ratios. Holdings in this area include Altria Group, Mattel,
AutoZone and Automatic Data Processing.
<Page>
5
LIFE OF PORTFOLIO PERFORMANCE
A $10,000 tax-deferred investment in the Growth and Income Portfolio at NAV (Net
Asset Value) would have grown to $17,755 from inception on 3/1/95 through
8/31/03.*
INVESTMENT RESULTS
Average Annual Returns as of 8/31/03
<Table>
1 year 11.33%
3 year -8.12%
5 year 0.76%
Since Inception (3/1/95) 6.99%
</Table>
[CHART]
<Table>
<Caption>
GROWTH AND INCOME PORTFOLIO S&P 500/BARRA VALUE INDEX LIPPER GROWTH AND INCOME FUNDS INDEX
3/1/1995 $ 10,000 $ 10,000 $ 10,000
3/31/1995 $ 10,270 $ 10,276 $ 10,235
4/30/1995 $ 10,410 $ 10,614 $ 10,517
5/31/1995 $ 10,729 $ 11,086 $ 10,871
6/30/1995 $ 11,000 $ 11,171 $ 11,076
7/31/1995 $ 11,459 $ 11,556 $ 11,449
8/31/1995 $ 11,479 $ 11,654 $ 11,558
9/30/1995 $ 11,708 $ 12,060 $ 11,903
10/31/1995 $ 11,479 $ 11,872 $ 11,741
11/30/1995 $ 11,959 $ 12,494 $ 12,246
12/31/1995 $ 12,149 $ 12,840 $ 12,449
1/31/1996 $ 12,557 $ 13,224 $ 12,819
2/29/1996 $ 12,767 $ 13,348 $ 12,998
3/31/1996 $ 13,018 $ 13,660 $ 13,163
4/30/1996 $ 13,228 $ 13,800 $ 13,365
5/31/1996 $ 13,375 $ 14,008 $ 13,560
6/30/1996 $ 13,344 $ 13,941 $ 13,502
7/31/1996 $ 12,893 $ 13,353 $ 12,952
8/31/1996 $ 13,343 $ 13,721 $ 13,342
9/30/1996 $ 13,939 $ 14,308 $ 13,937
10/31/1996 $ 14,160 $ 14,793 $ 14,253
11/30/1996 $ 15,050 $ 15,925 $ 15,171
12/31/1996 $ 14,767 $ 15,664 $ 15,023
1/31/1997 $ 15,602 $ 16,386 $ 15,693
2/28/1997 $ 15,542 $ 16,506 $ 15,826
3/31/1997 $ 14,899 $ 15,941 $ 15,275
4/30/1997 $ 15,578 $ 16,539 $ 15,839
5/31/1997 $ 16,569 $ 17,576 $ 16,761
6/30/1997 $ 17,214 $ 18,247 $ 17,418
7/31/1997 $ 18,610 $ 19,707 $ 18,668
8/31/1997 $ 18,085 $ 18,816 $ 17,968
9/30/1997 $ 18,931 $ 19,919 $ 18,876
10/31/1997 $ 18,562 $ 19,186 $ 18,249
11/30/1997 $ 19,171 $ 19,917 $ 18,758
12/31/1997 $ 19,437 $ 20,359 $ 19,060
1/31/1998 $ 19,119 $ 20,109 $ 19,096
2/28/1998 $ 20,488 $ 21,617 $ 20,294
3/31/1998 $ 21,428 $ 22,713 $ 21,233
4/30/1998 $ 21,179 $ 22,981 $ 21,348
5/31/1998 $ 20,722 $ 22,657 $ 21,021
6/30/1998 $ 21,095 $ 22,829 $ 21,274
7/31/1998 $ 20,418 $ 22,334 $ 20,752
8/31/1998 $ 17,098 $ 18,742 $ 17,822
9/30/1998 $ 17,983 $ 19,882 $ 18,622
10/31/1998 $ 19,449 $ 21,439 $ 19,974
11/30/1998 $ 20,293 $ 22,556 $ 20,937
12/31/1998 $ 21,482 $ 23,347 $ 21,649
1/31/1999 $ 21,596 $ 23,819 $ 21,853
2/28/1999 $ 20,300 $ 23,307 $ 21,370
3/31/1999 $ 20,759 $ 24,013 $ 22,107
4/30/1999 $ 22,154 $ 26,083 $ 23,539
5/31/1999 $ 21,645 $ 25,621 $ 23,198
6/30/1999 $ 22,547 $ 26,605 $ 24,158
7/31/1999 $ 21,465 $ 25,786 $ 23,465
8/31/1999 $ 20,727 $ 25,133 $ 22,946
9/30/1999 $ 20,053 $ 24,151 $ 22,226
10/31/1999 $ 20,627 $ 25,515 $ 23,177
11/30/1999 $ 20,759 $ 25,365 $ 23,381
12/31/1999 $ 21,491 $ 26,318 $ 24,218
1/31/2000 $ 21,064 $ 25,481 $ 23,269
2/29/2000 $ 20,059 $ 23,889 $ 22,513
3/31/2000 $ 21,934 $ 26,380 $ 24,627
4/30/2000 $ 21,803 $ 26,204 $ 24,188
5/31/2000 $ 21,491 $ 26,285 $ 24,099
6/30/2000 $ 21,293 $ 25,247 $ 24,007
7/31/2000 $ 21,589 $ 25,752 $ 23,921
8/31/2000 $ 22,889 $ 27,477 $ 25,409
9/30/2000 $ 22,182 $ 27,472 $ 24,712
10/31/2000 $ 22,264 $ 27,985 $ 24,784
11/30/2000 $ 21,079 $ 26,552 $ 23,426
12/31/2000 $ 21,737 $ 27,920 $ 24,311
1/31/2001 $ 21,687 $ 29,098 $ 24,803
2/28/2001 $ 20,507 $ 27,169 $ 23,463
3/31/2001 $ 19,527 $ 26,096 $ 22,400
4/30/2001 $ 20,954 $ 27,865 $ 23,897
5/31/2001 $ 21,170 $ 28,158 $ 24,203
6/30/2001 $ 20,340 $ 27,245 $ 23,614
7/31/2001 $ 20,208 $ 26,774 $ 23,404
8/31/2001 $ 18,929 $ 25,226 $ 22,325
9/30/2001 $ 17,451 $ 22,830 $ 20,530
10/31/2001 $ 17,568 $ 22,830 $ 20,791
11/30/2001 $ 18,530 $ 24,280 $ 22,145
12/31/2001 $ 18,795 $ 24,649 $ 22,506
1/31/2002 $ 18,660 $ 23,973 $ 22,179
2/28/2002 $ 18,610 $ 23,760 $ 22,033
3/31/2002 $ 19,402 $ 24,976 $ 22,894
4/30/2002 $ 18,424 $ 23,725 $ 22,033
5/31/2002 $ 18,627 $ 23,820 $ 22,005
6/30/2002 $ 17,362 $ 22,317 $ 20,566
7/31/2002 $ 15,810 $ 19,904 $ 18,929
8/31/2002 $ 15,945 $ 20,042 $ 19,116
9/30/2002 $ 14,258 $ 17,751 $ 17,182
10/31/2002 $ 15,539 $ 19,226 $ 18,307
11/30/2002 $ 16,299 $ 20,578 $ 19,319
12/31/2002 $ 15,541 $ 19,508 $ 18,479
1/31/2003 $ 15,129 $ 18,973 $ 17,984
2/28/2003 $ 14,687 $ 18,457 $ 17,599
3/31/2003 $ 14,651 $ 18,433 $ 17,713
4/30/2003 $ 15,987 $ 20,256 $ 19,102
5/31/2003 $ 17,084 $ 21,747 $ 20,175
6/30/2003 $ 17,289 $ 21,906 $ 20,434
7/31/2003 $ 17,495 $ 22,392 $ 20,705
8/31/2003 $ 17,755 $ 22,876 $ 21,155
</Table>
Source for Index returns: Lipper Analytical Services, Inc.
* Past performance is no guarantee of future results. Investment returns and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than the original cost. Performance figures do not include
any insurance company charges associated with a variable annuity or reflect any
withdrawal charges. No expenses are deducted from the performance of the
indexes.
Hypothetical $10,000 investment assumes an initial investment on 3/1/95, shows
changes in Net Asset Value and reinvestment of all distributions, but does not
include the effect of any insurance charges or the annual maintenance fee. The
illustration above would be reduced if these fees were reflected. There is no
direct correlation between a hypothetical investment and the anticipated
performance of the Portfolio. The investment adviser is currently waiving
certain fees. This voluntary waiver may be modified or terminated at any time,
which would reduce performance.
The S&P 500/BARRA Value Index contains large U.S. Companies with low
price-to-book ratios relative to the S&P 500 Index.
The Lipper Growth and Income Funds Index represents the total returns of the
funds in the indicated category, as defined by Lipper, Inc.
Withdrawals prior to age 59 1/2 from the Vista Capital Advantage variable
annuity may be subject to a 10% IRS tax penalty, and are taxed as ordinary
income.
<Page>
6
CAPITAL GROWTH PORTFOLIO
(UNAUDITED)
THE CAPITAL GROWTH PORTFOLIO SEEKS TO PROVIDE LONG-TERM CAPITAL APPRECIATION
PRIMARILY THROUGH DIVERSIFIED HOLDINGS OF COMMON STOCKS.
Q: HOW DID THE PORTFOLIO PERFORM?
A: The Capital Growth Portfolio gained 23.63% in the twelve months through
August 31, 2003. The Portfolio participated in the market's climb, although
results trailed the Russell MidCap Growth Index, which rose 30.39% for the same
period.
Q: WHY DID THE PORTFOLIO PERFORM THIS WAY?
A: Despite the Portfolio's gains for the period, performance relative to the
benchmark was somewhat muted by lack of exposure to the highly cyclical and/or
highly leveraged segments of the market that have been the driving force behind
the rally. The Portfolio's overriding focus on quality generally results in the
construction of the Portfolio that has no exposure to the highly cyclical and
leveraged companies. Additionally, adverse stock selection in the healthcare
sector, in particular the Portfolio's biotechnology exposure, hindered relative
performance.
The primary detractors in healthcare were AmerisourceBergen, the largest U.S.
drug wholesaler, and Triad Hospitals, an owner and operator of hospitals. Shares
of AmerisourceBergen declined as expectations for the drug-wholesaling sector
remain depressed due to slowing pharmaceutical sales growth. Triad's stock price
decline resulted from the pressure the entire hospital group faced in the wake
of the emerging surgery and billing scandals at Tenet Healthcare.
The top contributor for the period was Expedia, the travel-booking website.
Expedia's stock price advanced on news of its merger with InterActiveCorp. The
deal was completed in August 2003. Another top contributor for the period was
Gilead Sciences, a biopharmaceutical company that discovers, develops and
commercializes therapeutics to advance the care of patients suffering from
life-threatening diseases. The stock has rallied as the company's HIV drug
Viread continues to see strong sales and costs remain low.
Q: HOW WAS THE PORTFOLIO MANAGED?
A: The portfolio manager's focus remains on stock selection, believing that
quality growth companies--regardless of their economic sector--should perform
well in the long-term. The portfolio manager has sought to maintain significant
sector diversification and to avoid any large bets contingent on macroeconomic
or sector trends. During the period, some changes were made to the Portfolio's
healthcare holdings. In particular, the Portfolio's weight in drug and
pharmaceutical stocks was reduced and we added a number of biotechnology names.
Valuation was the primary driver behind these changes. Additionally, the
Portfolio's consumer discretionary and technology weightings were decreased, as
both sectors performed well during the period.
<Page>
7
LIFE OF PORTFOLIO PERFORMANCE
A $10,000 tax-deferred investment in the Capital Growth Portfolio at NAV (Net
Asset Value) would have grown to $21,878 from inception on 3/1/95 through
8/31/03.*
INVESTMENT RESULTS
Average Annual Returns as of 8/31/03
<Table>
1 year 23.63%
3 year -4.75%
5 year 7.62%
Since Inception (3/1/95) 9.65%
</Table>
[CHART]
<Table>
<Caption>
CAPITAL GROWTH PORTFOLIO RUSSELL MIDCAP GROWTH INDEX LIPPER MID-CAP FUNDS INDEX
3/1/1995 $ 10,000 $ 10,000 $ 10,000
3/31/1995 $ 10,350 $ 10,397 $ 10,303
4/30/1995 $ 10,470 $ 10,484 $ 10,394
5/31/1995 $ 10,870 $ 10,743 $ 10,569
6/30/1995 $ 11,140 $ 11,232 $ 11,258
7/31/1995 $ 11,829 $ 11,939 $ 12,125
8/31/1995 $ 11,899 $ 12,070 $ 12,283
9/30/1995 $ 12,089 $ 12,339 $ 12,667
10/31/1995 $ 11,659 $ 12,027 $ 12,363
11/30/1995 $ 12,219 $ 12,565 $ 12,762
12/31/1995 $ 12,706 $ 12,571 $ 12,890
1/31/1996 $ 12,871 $ 12,793 $ 12,933
2/29/1996 $ 13,077 $ 13,277 $ 13,467
3/31/1996 $ 13,674 $ 13,382 $ 13,735
4/30/1996 $ 14,363 $ 14,028 $ 14,499
5/31/1996 $ 14,785 $ 14,314 $ 14,970
6/30/1996 $ 14,405 $ 13,882 $ 14,470
7/31/1996 $ 13,571 $ 12,805 $ 13,186
8/31/1996 $ 14,240 $ 13,498 $ 13,959
9/30/1996 $ 14,960 $ 14,355 $ 14,829
10/31/1996 $ 14,765 $ 14,187 $ 14,514
11/30/1996 $ 15,526 $ 15,022 $ 15,070
12/31/1996 $ 15,671 $ 14,770 $ 14,991
1/31/1997 $ 16,285 $ 15,424 $ 15,469
2/28/1997 $ 16,042 $ 15,085 $ 14,882
3/31/1997 $ 15,277 $ 14,233 $ 13,988
4/30/1997 $ 15,404 $ 14,581 $ 14,247
5/31/1997 $ 16,493 $ 15,888 $ 15,676
6/30/1997 $ 17,141 $ 16,328 $ 16,204
7/31/1997 $ 18,322 $ 17,890 $ 17,486
8/31/1997 $ 18,124 $ 17,715 $ 17,376
9/30/1997 $ 19,070 $ 18,611 $ 18,486
10/31/1997 $ 18,487 $ 17,679 $ 17,521
11/30/1997 $ 18,709 $ 17,865 $ 17,472
12/31/1997 $ 18,905 $ 18,099 $ 17,610
1/31/1998 $ 18,905 $ 17,773 $ 17,367
2/28/1998 $ 20,289 $ 19,444 $ 18,958
3/31/1998 $ 21,001 $ 20,258 $ 19,837
4/30/1998 $ 20,923 $ 20,534 $ 20,018
5/31/1998 $ 20,005 $ 19,690 $ 19,013
6/30/1998 $ 20,185 $ 20,247 $ 19,760
7/31/1998 $ 18,867 $ 19,380 $ 18,845
8/31/1998 $ 15,156 $ 15,681 $ 15,039
9/30/1998 $ 15,906 $ 16,866 $ 16,213
10/31/1998 $ 17,237 $ 18,108 $ 17,011
11/30/1998 $ 17,780 $ 19,328 $ 18,115
12/31/1998 $ 18,669 $ 21,330 $ 20,060
1/31/1999 $ 18,367 $ 21,970 $ 20,600
2/28/1999 $ 17,647 $ 20,896 $ 19,319
3/31/1999 $ 18,510 $ 22,060 $ 20,217
4/30/1999 $ 18,812 $ 23,066 $ 21,086
5/31/1999 $ 19,186 $ 22,768 $ 21,120
6/30/1999 $ 20,337 $ 24,357 $ 22,444
7/31/1999 $ 20,121 $ 23,583 $ 22,027
8/31/1999 $ 19,789 $ 23,338 $ 21,732
9/30/1999 $ 19,315 $ 23,139 $ 21,632
10/31/1999 $ 19,790 $ 24,928 $ 23,113
11/30/1999 $ 20,322 $ 27,510 $ 25,120
12/31/1999 $ 21,450 $ 32,275 $ 28,895
1/31/2000 $ 20,519 $ 32,269 $ 28,282
2/29/2000 $ 21,869 $ 39,052 $ 33,342
3/31/2000 $ 23,483 $ 39,091 $ 33,132
4/30/2000 $ 23,312 $ 35,295 $ 30,379
5/31/2000 $ 22,272 $ 32,722 $ 28,535
6/30/2000 $ 22,862 $ 36,194 $ 31,400
7/31/2000 $ 22,800 $ 33,903 $ 30,690
8/31/2000 $ 25,315 $ 39,015 $ 34,459
9/30/2000 $ 24,789 $ 37,107 $ 33,156
10/31/2000 $ 24,571 $ 34,569 $ 31,180
11/30/2000 $ 22,600 $ 27,057 $ 26,235
12/31/2000 $ 24,550 $ 28,483 $ 27,885
1/31/2001 $ 24,717 $ 30,110 $ 28,588
2/28/2001 $ 23,457 $ 24,901 $ 25,169
3/31/2001 $ 21,730 $ 21,337 $ 22,627
4/30/2001 $ 23,490 $ 24,894 $ 25,324
5/31/2001 $ 23,939 $ 24,777 $ 25,521
6/30/2001 $ 23,740 $ 24,790 $ 25,243
7/31/2001 $ 23,342 $ 23,119 $ 23,999
8/31/2001 $ 22,611 $ 21,443 $ 22,336
9/30/2001 $ 20,088 $ 17,898 $ 19,113
10/31/2001 $ 20,753 $ 19,779 $ 20,238
11/30/2001 $ 22,031 $ 21,910 $ 21,973
12/31/2001 $ 23,511 $ 22,742 $ 22,722
1/31/2002 $ 22,964 $ 22,003 $ 22,027
2/28/2002 $ 22,897 $ 20,756 $ 21,020
3/31/2002 $ 23,643 $ 22,339 $ 22,456
4/30/2002 $ 22,780 $ 21,157 $ 21,733
5/31/2002 $ 21,967 $ 20,527 $ 21,194
6/30/2002 $ 19,942 $ 18,261 $ 19,369
7/31/2002 $ 18,131 $ 16,486 $ 17,473
8/31/2002 $ 17,700 $ 16,428 $ 17,478
9/30/2002 $ 16,505 $ 15,122 $ 16,064
10/31/2002 $ 17,535 $ 16,294 $ 16,917
11/30/2002 $ 18,382 $ 17,570 $ 18,032
12/31/2002 $ 17,483 $ 16,509 $ 17,027
1/31/2003 $ 17,256 $ 16,347 $ 16,687
2/28/2003 $ 16,796 $ 16,205 $ 16,368
3/31/2003 $ 17,277 $ 16,506 $ 16,561
4/30/2003 $ 18,248 $ 17,630 $ 17,674
5/31/2003 $ 19,859 $ 19,326 $ 19,157
6/30/2003 $ 20,253 $ 19,603 $ 19,427
7/31/2003 $ 20,915 $ 20,302 $ 20,041
8/31/2003 $ 21,878 $ 21,421 $ 20,903
</Table>
Source for Index Returns: Lipper Analytical Services, Inc.
* Past performance is no guarantee of future results. Investment returns and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than the original cost. Performance figures do not include
any insurance company charges associated with a variable annuity or reflect any
withdrawal charges. No expenses are deducted from the performance of the
indexes.
Hypothetical $10,000 investment assumes an initial investment on 3/1/95, shows
changes in Net Asset Value and reinvestment of all distributions, but does not
include the effect of any insurance charges or the annual maintenance fee. The
illustration above would be reduced if these fees were reflected. There is no
direct correlation between a hypothetical investment and the anticipated
performance of the Portfolio. The investment adviser is currently waiving
certain fees. This voluntary waiver may be modified or terminated at any time,
which would reduce performance.
The Russell MidCap Growth Index measures the performance of those Russell Mid
Cap companies with higher price-to-book ratios and higher forecasted growth
values.
The Lipper Mid-Cap Funds Index represents the total returns of the funds in the
indicated category, as defined by Lipper, Inc.
Withdrawals prior to age 59 1/2 from the Vista Capital Advantage variable
annuity may be subject to a 10% IRS tax penalty, and are taxed as ordinary
income.
<Page>
8
INTERNATIONAL EQUITY PORTFOLIO
(UNAUDITED)
THE INTERNATIONAL EQUITY PORTFOLIO SEEKS TO PROVIDE A TOTAL RETURN ON ASSETS
FROM LONG-TERM GROWTH OF CAPITAL PRINCIPALLY THROUGH DIVERSIFIED HOLDINGS OF THE
STOCKS OF ESTABLISHED FOREIGN COMPANIES OUTSIDE THE UNITED STATES.
Q: HOW DID THE PORTFOLIO PERFORM?
A: The International Equity Portfolio had a total return of 7.28% during the
year ended August 31, 2003. This compares with a rise of 9.11% for the MSCI EAFE
Index, the Portfolio's benchmark.
Q: WHY DID THE PORTFOLIO PERFORM THIS WAY?
A: In a 12-month period that was dominated by the Iraq crisis, the Portfolio
trailed its MSCI EAFE Index benchmark by a small margin. Broadly speaking, the
underperformance occurred in the volatile months leading up to the outbreak of
hostilities in early March. Since then the Portfolio has outpaced the MSCI EAFE
Index, demonstrating its tendency to outperform in rising markets.
During the period prior to the Iraq war, there were a number of stock-specific
difficulties. BAE Systems, the British defense contractor, was the biggest
detractor from performance after it warned of cost overruns and delays on U.K.
military projects. In Korea, holdings such as Kookmin Bank were hit by concerns
over North Korea's nuclear intentions. Another poor performer was the German
company, Heidelberg Cement, where trading was damaged by a weak construction
market. There was also a period of poor performance from Japanese consumer
discretionary stocks including Nintendo and Sony, which extended into the second
quarter.
In the rally that celebrated the swift end to "the combat phase," of the
conflict in Iraq and the gradual emergence of stronger economic data, stock
selection drove outperformance. The portfolio manager succeeded in picking those
stocks most geared to a rebound in confidence. In the basic materials sector,
these included Wolseley of the U.K. and Compagnie de Saint Gobain of France.
Among insurers, AXA of France and Zurich Financial Services of Switzerland were
leading contributors to portfolio performance. And, in telecommunications, Nokia
and Vodafone, of Finland and the U.K. respectively, performed well.
Q: HOW WAS THE PORTFOLIO MANAGED?
A: As equity prices dipped in the early months of 2003, the portfolio manager
seized the opportunity to buy attractive companies trading at low valuations.
More recently, following the rally in cyclical stocks, we have taken profits in
industrial cyclical stocks. We have added to defensive holdings such as consumer
staples and healthcare, while maintaining the Fund's exposure to a pickup in the
world economy through additions to the energy and financial sectors. Broadly
speaking, the Portfolio continues to take an active fundamental approach,
focusing on proprietary research at both the local and sector levels.
<Page>
9
LIFE OF PORTFOLIO PERFORMANCE
A $10,000 tax-deferred investment in the International Equity Portfolio at NAV
(Net Asset Value) would have grown to $13,271 from inception on 3/1/95 through
8/31/03.*
INVESTMENT RESULTS
Average Annual Returns as of 8/31/03
<Table>
1 year 7.28%
3 year -9.25%
5 year 2.41%
Since Inception (3/1/95) 3.38%
</Table>
[CHART]
<Table>
<Caption>
INTERNATIONAL EQUITY PORTFOLIO MSCI EAFE INDEX LIPPER INTERNATIONAL FUNDS INDEX
3/1/1995 $ 10,000.00 $ 10,000.00 $ 10,000.00
3/31/1995 $ 10,180.00 $ 10,624.00 $ 10,263.00
4/30/1995 $ 10,350.01 $ 11,023.46 $ 10,640.68
5/31/1995 $ 10,480.42 $ 10,892.28 $ 10,744.96
6/30/1995 $ 10,469.94 $ 10,701.67 $ 10,785.79
7/31/1995 $ 11,010.18 $ 11,368.38 $ 11,379.01
8/31/1995 $ 10,890.17 $ 10,935.25 $ 11,186.70
9/30/1995 $ 11,069.86 $ 11,148.48 $ 11,373.52
10/31/1995 $ 10,909.35 $ 10,848.59 $ 11,136.95
11/30/1995 $ 10,868.98 $ 11,150.18 $ 11,252.77
12/31/1995 $ 10,888.55 $ 11,599.53 $ 11,579.10
1/31/1996 $ 11,057.32 $ 11,647.09 $ 11,852.37
2/29/1996 $ 11,131.40 $ 11,686.69 $ 11,903.34
3/31/1996 $ 11,426.39 $ 11,934.45 $ 12,089.03
4/30/1996 $ 11,753.18 $ 12,281.74 $ 12,483.13
5/31/1996 $ 11,616.84 $ 12,055.76 $ 12,469.40
6/30/1996 $ 11,679.58 $ 12,123.27 $ 12,582.87
7/31/1996 $ 11,121.29 $ 11,769.27 $ 12,158.83
8/31/1996 $ 11,152.43 $ 11,795.16 $ 12,316.89
9/30/1996 $ 11,446.86 $ 12,108.91 $ 12,592.79
10/31/1996 $ 11,299.19 $ 11,985.40 $ 12,542.42
11/30/1996 $ 11,689.01 $ 12,462.42 $ 13,131.91
12/31/1996 $ 11,646.93 $ 12,301.66 $ 13,248.79
1/31/1997 $ 11,531.63 $ 11,871.10 $ 13,266.01
2/28/1997 $ 11,796.86 $ 12,065.78 $ 13,506.13
3/31/1997 $ 11,750.85 $ 12,109.22 $ 13,577.71
4/30/1997 $ 11,727.35 $ 12,173.40 $ 13,637.45
5/31/1997 $ 12,212.86 $ 12,965.89 $ 14,406.60
6/30/1997 $ 12,686.72 $ 13,680.31 $ 15,098.12
7/31/1997 $ 13,288.07 $ 13,901.93 $ 15,582.77
8/31/1997 $ 12,074.87 $ 12,863.46 $ 14,459.25
9/30/1997 $ 12,732.95 $ 13,583.81 $ 15,387.54
10/31/1997 $ 11,728.32 $ 12,539.21 $ 14,219.62
11/30/1997 $ 11,659.12 $ 12,411.31 $ 14,100.18
12/31/1997 $ 11,815.35 $ 12,519.29 $ 14,210.16
1/31/1998 $ 12,096.56 $ 13,091.42 $ 14,554.04
2/28/1998 $ 12,867.11 $ 13,931.89 $ 15,478.23
3/31/1998 $ 13,442.27 $ 14,361.00 $ 16,318.69
4/30/1998 $ 13,747.41 $ 14,474.45 $ 16,570.00
5/31/1998 $ 13,796.90 $ 14,403.52 $ 16,603.14
6/30/1998 $ 13,625.82 $ 14,512.99 $ 16,458.69
7/31/1998 $ 14,016.88 $ 14,659.57 $ 16,710.51
8/31/1998 $ 11,778.38 $ 12,843.25 $ 14,305.87
9/30/1998 $ 11,154.13 $ 12,448.96 $ 13,860.96
10/31/1998 $ 11,875.80 $ 13,746.15 $ 14,879.74
11/30/1998 $ 12,425.65 $ 14,449.95 $ 15,625.21
12/31/1998 $ 12,885.40 $ 15,019.28 $ 16,009.59
1/31/1999 $ 13,676.56 $ 14,974.22 $ 16,107.25
2/28/1999 $ 13,132.24 $ 14,617.83 $ 15,693.29
3/31/1999 $ 13,417.20 $ 15,227.39 $ 16,215.88
4/30/1999 $ 14,039.76 $ 15,844.10 $ 16,971.54
5/31/1999 $ 13,236.69 $ 15,028.13 $ 16,340.20
6/30/1999 $ 13,755.57 $ 15,614.23 $ 17,114.73
7/31/1999 $ 14,443.35 $ 16,077.97 $ 17,496.38
8/31/1999 $ 14,727.88 $ 16,137.46 $ 17,634.61
9/30/1999 $ 14,819.19 $ 16,300.45 $ 17,691.04
10/31/1999 $ 15,351.20 $ 16,911.72 $ 18,308.45
11/30/1999 $ 17,217.91 $ 17,498.55 $ 19,650.46
12/31/1999 $ 19,549.21 $ 19,069.92 $ 22,065.50
1/31/2000 $ 18,921.68 $ 17,858.98 $ 20,774.67
2/29/2000 $ 20,416.49 $ 18,339.39 $ 22,145.80
3/31/2000 $ 20,402.20 $ 19,050.96 $ 22,203.38
4/30/2000 $ 18,947.53 $ 18,048.88 $ 20,795.69
5/31/2000 $ 18,079.73 $ 17,608.49 $ 20,223.80
6/30/2000 $ 18,506.41 $ 18,296.98 $ 21,160.17
7/31/2000 $ 17,651.42 $ 17,530.33 $ 20,474.58
8/31/2000 $ 17,759.09 $ 17,682.85 $ 20,820.60
9/30/2000 $ 16,663.35 $ 16,821.69 $ 19,606.76
10/31/2000 $ 16,196.78 $ 16,424.70 $ 18,940.13
11/30/2000 $ 15,769.18 $ 15,808.77 $ 18,140.85
12/31/2000 $ 16,281.68 $ 16,369.99 $ 18,817.51
1/31/2001 $ 16,265.40 $ 16,361.80 $ 18,928.53
2/28/2001 $ 14,990.19 $ 15,134.67 $ 17,599.75
3/31/2001 $ 14,066.80 $ 14,125.18 $ 16,362.49
4/30/2001 $ 15,040.22 $ 15,106.88 $ 17,357.32
5/31/2001 $ 14,604.05 $ 14,573.61 $ 16,937.28
6/30/2001 $ 14,016.97 $ 13,977.55 $ 16,459.65
7/31/2001 $ 13,680.56 $ 13,723.16 $ 16,031.70
8/31/2001 $ 13,361.81 $ 13,375.96 $ 15,709.46
9/30/2001 $ 12,236.74 $ 12,020.98 $ 13,997.13
10/31/2001 $ 12,606.29 $ 12,328.71 $ 14,376.45
11/30/2001 $ 13,126.93 $ 12,783.64 $ 14,912.69
12/31/2001 $ 13,411.79 $ 12,859.07 $ 15,178.14
1/31/2002 $ 12,824.35 $ 12,176.25 $ 14,564.94
2/28/2002 $ 12,959.01 $ 12,261.49 $ 14,768.85
3/31/2002 $ 13,680.82 $ 12,924.83 $ 15,550.12
4/30/2002 $ 13,948.97 $ 13,010.14 $ 15,658.97
5/31/2002 $ 14,116.35 $ 13,175.36 $ 15,882.90
6/30/2002 $ 13,714.04 $ 12,650.98 $ 15,255.52
7/31/2002 $ 12,269.95 $ 11,402.33 $ 13,733.02
8/31/2002 $ 12,370.56 $ 11,376.11 $ 13,744.01
9/30/2002 $ 10,893.52 $ 10,154.31 $ 12,263.78
10/31/2002 $ 11,548.22 $ 10,699.60 $ 12,900.27
11/30/2002 $ 12,118.70 $ 11,185.36 $ 13,510.45
12/31/2002 $ 11,735.75 $ 10,809.53 $ 13,078.12
1/31/2003 $ 11,053.90 $ 10,358.78 $ 12,599.46
2/28/2003 $ 10,763.00 $ 10,122.00 $ 12,227.00
3/31/2003 $ 10,576.99 $9,923.18 $ 11,926.96
4/30/2003 $ 11,771.13 $ 10,895.65 $ 13,107.73
5/31/2003 $ 12,572.75 $ 11,555.93 $ 13,949.25
6/30/2003 $ 12,794.03 $ 11,835.58 $ 14,278.45
7/31/2003 $ 13,033.28 $ 12,122.00 $ 14,678.25
8/31/2003 $ 13,271.00 $ 12,414.00 $ 15,102.00
</Table>
Source for Index Returns: Lipper Analytical Services, Inc.
* Past performance is no guarantee of future results. Investment returns and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than the original cost. Performance figures do not include
any insurance company charges associated with a variable annuity or reflect any
withdrawal charges. No expenses are deducted from the performance of the
indexes.
Hypothetical $10,000 investment assumes an initial investment on 3/1/95, shows
changes in Net Asset Value and reinvestment of all distributions, but does not
include the effect of any insurance charges or the annual maintenance fee. The
illustration above would be reduced if these fees were reflected. There is no
direct correlation between a hypothetical investment and the anticipated
performance of the Portfolio. The investment adviser is currently waiving
certain fees. This voluntary waiver may be modified or terminated at any time,
which would reduce performance.
International investing involves a greater degree of risk and increased
volatility. Changes in currency exchange rates and differences in accounting and
taxation policies outside the U.S. can raise or lower returns. Also, some
overseas markets may not be as politically and economically stable as the United
States and other nations.
The MSCI EAFE Index is unmanaged, is a replica (or model) of the performance of
the European, Australasia and Far Eastern equity markets, and assumes the
reinvestment of dividends. An individual cannot invest in an index.
The Lipper International Funds Index represents the total returns of the funds
in the indicated category, as defined by Lipper, Inc.
Withdrawals prior to age 59 1/2 from the Vista Capital Advantage variable
annuity may be subject to a 10% IRS tax penalty, and are taxed as ordinary
income.
<Page>
10
ASSET ALLOCATION PORTFOLIO
(UNAUDITED)
THE ASSET ALLOCATION PORTFOLIO SEEKS TO PROVIDE MAXIMUM RETURN THROUGH A
COMBINATION OF LONG-TERM CAPITAL GROWTH AND CURRENT INCOME BY INVESTING IN
COMMON STOCKS, CONVERTIBLE SECURITIES AND GOVERNMENT AND CORPORATE FIXED INCOME
OBLIGATIONS.
Q: HOW DID THE PORTFOLIO PERFORM?
A: The Asset Allocation Portfolio returned 7.97% during the year ended August
31, 2003. This compares to gains of 12.07% and 5.46% in the S&P 500 Index and
Lehman Gov't/Credit Index, respectively.
Q: WHY DID THE PORTFOLIO PERFORM THIS WAY?
A: On an absolute basis, both the equity and fixed income portions of the
Portfolio posted positive results for the trailing one-year time period. On a
relative basis, the large cap equity component of the Portfolio outperformed the
benchmark, but this positive contribution was offset to some extent by the
underperformance of the fixed income component, again relative to the benchmark.
Q: HOW WAS THE PORTFOLIO MANAGED?
A: Strong stock selection within the utilities, semiconductors and
pharmaceuticals sectors contributed the most to performance over the year. In
contrast, positions in the health services & systems, retail and software &
services sectors were the primary detractors. On a stock-specific level,
overweight positions in Countrywide Financial, Guidant Corp., and PG&E Corp.
aided performance, while overweight positions in Home Depot and Freddie Mac
detracted from it.
At the end of August 2003, the Fund's Top 10 holdings on an absolute basis were
General Electric Co., Citigroup, Microsoft Corp., Pfizer, Wal-Mart Stores, The
Coca-Cola Co., Procter & Gamble Co., Viacom, Cisco Systems and Ambac Financial
Group.
In the fixed-income portion of the Portfolio, security selection contributed to
performance, while our cross-sector and durations decisions detracted from it.
At the sector level, performance was enhanced by our underweight positions in
Treasuries and Agencies, which underperformed as interest rates rose. In
addition, we have held a position in investment-grade corporate bonds although
we were underweight vs. the benchmark. Corporate bonds have made a strong
recovery year-to-date as spreads tightened on light supply, lower volatility and
improvements in the equity markets and in the general business environment,
throughout the year.
Our prepayment-sensitive public mortgage allocation detracted from performance,
with most of the underperformance concentrated in the month of July when an
unprecedented backup in interest rates compelled prepayments to slow, mortgage
durations to extend and spreads to widen.
For our part, we continued to manage the equity portion of the Portfolio by
emphasizing the selection of undervalued securities, relative to their long-term
prospects within a sector neutral framework. On the fixed-income side, we seek
to add value by continuing to manage a diversified portfolio of high-quality
investments in both traditional and extended markets.
<Page>
11
LIFE OF PORTFOLIO PERFORMANCE
A $10,000 tax-deferred investment in the Asset Allocation Portfolio at NAV (Net
Asset Value) would have grown to $15,306 from inception on 3/1/95 through
8/31/03.*
INVESTMENT RESULTS
Average Annual Returns as of 8/31/03
<Table>
1 year 7.97%
3 year -5.87%
5 year 0.40%
Since Inception (3/1/95) 5.13%
</Table>
[CHART]
<Table>
<Caption>
ASSET ALLOCATION PORTFOLIO S&P 500 INDEX LEHMAN GOV'T/CREDIT INDEX LIPPER BALANCED FUNDS INDEX
3/1/1995 $ 10,000 $ 10,000 $ 10,000 $ 10,000
3/31/1995 $ 10,160 $ 10,295 $ 10,067 $ 10,177
4/30/1995 $ 10,270 $ 10,599 $ 10,207 $ 10,368
5/31/1995 $ 10,570 $ 11,023 $ 10,635 $ 10,700
6/30/1995 $ 10,729 $ 11,278 $ 10,720 $ 10,890
7/31/1995 $ 10,979 $ 11,653 $ 10,678 $ 11,119
8/31/1995 $ 11,040 $ 11,682 $ 10,815 $ 11,206
9/30/1995 $ 11,200 $ 12,175 $ 10,925 $ 11,474
10/31/1995 $ 11,120 $ 12,131 $ 11,085 $ 11,445
11/30/1995 $ 11,440 $ 12,664 $ 11,268 $ 11,801
12/31/1995 $ 11,595 $ 12,908 $ 11,434 $ 11,986
1/31/1996 $ 11,880 $ 13,347 $ 11,505 $ 12,203
2/29/1996 $ 11,935 $ 13,471 $ 11,261 $ 12,209
3/31/1996 $ 12,045 $ 13,600 $ 11,166 $ 12,256
4/30/1996 $ 12,132 $ 13,800 $ 11,089 $ 12,337
5/31/1996 $ 12,198 $ 14,156 $ 11,071 $ 12,463
6/30/1996 $ 12,231 $ 14,210 $ 11,219 $ 12,504
7/31/1996 $ 12,000 $ 13,582 $ 11,245 $ 12,182
8/31/1996 $ 12,241 $ 13,869 $ 11,218 $ 12,375
9/30/1996 $ 12,625 $ 14,649 $ 11,417 $ 12,834
10/31/1996 $ 12,834 $ 15,054 $ 11,683 $ 13,106
11/30/1996 $ 13,361 $ 16,192 $ 11,898 $ 13,717
12/31/1996 $ 13,218 $ 15,871 $ 11,766 $ 13,552
1/31/1997 $ 13,595 $ 16,863 $ 11,780 $ 13,971
2/28/1997 $ 13,555 $ 16,995 $ 11,805 $ 14,023
3/31/1997 $ 13,192 $ 16,296 $ 11,665 $ 13,615
4/30/1997 $ 13,594 $ 17,269 $ 11,835 $ 14,024
5/31/1997 $ 14,100 $ 18,321 $ 11,945 $ 14,599
6/30/1997 $ 14,464 $ 19,142 $ 12,088 $ 15,083
7/31/1997 $ 15,320 $ 20,665 $ 12,458 $ 15,942
8/31/1997 $ 15,009 $ 19,508 $ 12,319 $ 15,437
9/30/1997 $ 15,464 $ 20,577 $ 12,512 $ 16,053
10/31/1997 $ 15,360 $ 19,890 $ 12,712 $ 15,761
11/30/1997 $ 15,646 $ 20,811 $ 12,780 $ 16,051
12/31/1997 $ 15,823 $ 21,169 $ 12,914 $ 16,304
1/31/1998 $ 15,725 $ 21,404 $ 13,096 $ 16,420
2/28/1998 $ 16,360 $ 22,947 $ 13,070 $ 17,072
3/31/1998 $ 16,812 $ 24,122 $ 13,110 $ 17,594
4/30/1998 $ 16,770 $ 24,365 $ 13,176 $ 17,717
5/31/1998 $ 16,642 $ 23,946 $ 13,317 $ 17,539
6/30/1998 $ 16,882 $ 24,918 $ 13,453 $ 17,861
7/31/1998 $ 16,515 $ 24,654 $ 13,463 $ 17,652
8/31/1998 $ 15,006 $ 21,089 $ 13,726 $ 16,131
9/30/1998 $ 15,570 $ 22,441 $ 14,119 $ 16,827
10/31/1998 $ 16,262 $ 24,266 $ 14,018 $ 17,457
11/30/1998 $ 16,684 $ 25,736 $ 14,102 $ 18,096
12/31/1998 $ 17,290 $ 27,218 $ 14,136 $ 18,763
1/31/1999 $ 17,368 $ 28,356 $ 14,237 $ 19,064
2/28/1999 $ 16,647 $ 27,474 $ 13,898 $ 18,606
3/31/1999 $ 16,913 $ 28,573 $ 13,967 $ 19,066
4/30/1999 $ 17,556 $ 29,679 $ 14,002 $ 19,691
5/31/1999 $ 17,259 $ 28,979 $ 13,858 $ 19,388
6/30/1999 $ 17,605 $ 30,587 $ 13,815 $ 19,923
7/31/1999 $ 17,119 $ 29,633 $ 13,776 $ 19,550
8/31/1999 $ 16,790 $ 29,484 $ 13,765 $ 19,345
9/30/1999 $ 16,587 $ 28,677 $ 13,889 $ 19,097
10/31/1999 $ 16,837 $ 30,492 $ 13,925 $ 19,651
11/30/1999 $ 16,758 $ 31,111 $ 13,917 $ 19,864
12/31/1999 $ 17,378 $ 32,943 $ 13,832 $ 20,451
1/31/2000 $ 16,940 $ 31,289 $ 13,828 $ 19,938
2/29/2000 $ 16,940 $ 30,698 $ 14,001 $ 19,890
3/31/2000 $ 17,996 $ 33,700 $ 14,202 $ 21,062
4/30/2000 $ 17,607 $ 32,686 $ 14,133 $ 20,676
5/31/2000 $ 17,088 $ 32,016 $ 14,120 $ 20,482
6/30/2000 $ 17,704 $ 32,804 $ 14,408 $ 20,810
7/31/2000 $ 17,720 $ 32,292 $ 14,561 $ 20,754
8/31/2000 $ 18,353 $ 34,297 $ 14,766 $ 21,679
9/30/2000 $ 17,656 $ 32,486 $ 14,822 $ 21,224
10/31/2000 $ 17,543 $ 32,350 $ 14,916 $ 21,205
11/30/2000 $ 16,715 $ 29,801 $ 15,171 $ 20,435
12/31/2000 $ 16,763 $ 29,947 $ 15,470 $ 20,944
1/31/2001 $ 17,113 $ 31,010 $ 15,729 $ 21,388
2/28/2001 $ 16,213 $ 28,182 $ 15,891 $ 20,558
3/31/2001 $ 15,597 $ 26,395 $ 15,965 $ 19,894
4/30/2001 $ 16,280 $ 28,446 $ 15,845 $ 20,730
5/31/2001 $ 16,280 $ 28,636 $ 15,937 $ 20,914
6/30/2001 $ 16,030 $ 27,941 $ 16,013 $ 20,594
7/31/2001 $ 16,113 $ 27,667 $ 16,412 $ 20,580
8/31/2001 $ 15,563 $ 25,935 $ 16,622 $ 19,993
9/30/2001 $ 15,047 $ 23,842 $ 16,775 $ 19,032
10/31/2001 $ 15,430 $ 24,297 $ 17,201 $ 19,349
11/30/2001 $ 15,964 $ 26,161 $ 16,919 $ 20,119
12/31/2001 $ 16,014 $ 26,391 $ 16,785 $ 20,264
1/31/2002 $ 15,927 $ 26,006 $ 16,908 $ 20,086
2/28/2002 $ 15,671 $ 25,504 $ 17,051 $ 19,949
3/31/2002 $ 16,014 $ 26,463 $ 16,705 $ 20,386
4/30/2002 $ 15,431 $ 24,859 $ 17,029 $ 19,897
5/31/2002 $ 15,363 $ 24,675 $ 17,186 $ 19,887
6/30/2002 $ 14,678 $ 22,918 $ 17,332 $ 19,038
7/31/2002 $ 14,044 $ 21,131 $ 17,540 $ 18,061
8/31/2002 $ 14,182 $ 21,270 $ 17,933 $ 18,247
9/30/2002 $ 13,410 $ 18,958 $ 18,319 $ 17,158
10/31/2002 $ 13,908 $ 20,626 $ 18,143 $ 17,873
11/30/2002 $ 14,439 $ 21,841 $ 18,154 $ 18,599
12/31/2002 $ 14,035 $ 20,559 $ 18,635 $ 18,097
1/31/2003 $ 13,807 $ 20,021 $ 18,635 $ 18,070
2/28/2003 $ 13,766 $ 19,720 $ 18,966 $ 17,934
3/31/2003 $ 13,843 $ 19,912 $ 18,942 $ 18,008
4/30/2003 $ 14,578 $ 21,552 $ 19,144 $ 18,982
5/31/2003 $ 15,208 $ 22,688 $ 19,688 $ 19,821
6/30/2003 $ 15,278 $ 22,978 $ 19,609 $ 19,972
7/31/2003 $ 15,085 $ 23,383 $ 18,788 $ 20,018
8/31/2003 $ 15,306 $ 23,839 $ 18,912 $ 20,356
</Table>
Source for Index Returns: Lipper Analytical Services, Inc.
* Past performance is no guarantee of future results. Investment returns and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than the original cost. Performance figures do not include
any insurance company charges associated with a variable annuity or reflect any
withdrawal charges. No expenses are deducted from the performance of the
indexes.
Hypothetical $10,000 investment assumes an initial investment on 3/1/95, shows
changes in Net Asset Value and reinvestment of all distributions, but does not
include the effect of any insurance charges or the annual maintenance fee. The
illustration above would be reduced if these fees were reflected. There is no
direct correlation between a hypothetical investment and the anticipated
performance of the Portfolio. The investment adviser is currently waiving
certain fees. This voluntary waiver may be modified or terminated at any time,
which would reduce performance.
The S&P 500 Index is an unmanaged broad-based index that replicates the U.S.
stock market. It includes 500 widely held common stocks and assumes reinvestment
of all dividends.
The Lehman Gov't./Credit Index includes the government and corporate bond
indices, including U.S. government and treasury agency securities, corporate and
Yankee bonds. Investors cannot invest directly in an index.
The Lipper Balanced Funds Index represents the total returns of the funds in the
indicated category, as defined by Lipper, Inc.
Withdrawals prior to age 59 1/2 from the Vista Capital Advantage variable
annuity may be subject to a 10% IRS tax penalty, and are taxed as ordinary
income.
<Page>
12
U.S. GOVERNMENT INCOME PORTFOLIO
(UNAUDITED)
THE U.S. GOVERNMENT INCOME PORTFOLIO SEEKS TO PROVIDE ANNUAL DIVIDENDS AS WELL
AS TO PRESERVE PRINCIPAL.
Q: HOW DID THE PORTFOLIO PERFORM?
A: The U.S. Government Income Portfolio returned 1.97% for the one-year period
ending August 31, 2003. This compares to the 2.98% return of its benchmark
index, the Lehman U.S. Government Bond Index.
Q: WHY DID THE PORTFOLIO PERFORM THIS WAY?
A: Our residential mortgage positioning was positive through the spring but
hindered returns during July. Although our Treasury underweight helped
performance, our Agency underweight was negative.
Q: HOW WAS THE PORTFOLIO MANAGED?
A: During the final months of 2002, the fixed-income markets were highly
volatile as investors continued to react to disappointing economic data and
increased geopolitical risk. To support the economy, the Federal Reserve Board
lowered the Federal Funds Rate in November by one-half percent to 1.25%. Early
in 2003, the war in Iraq, SARS and persistent labor market and economic weakness
dominated the market's attention. By spring, the nation saw improving corporate
earnings, the passage of a tax package and a brighter economic
outlook--supported by an extraordinary mortgage-refinancing wave driven by low
interest rates. However, persistent job losses and excess capacity increased
deflation worries. Interest rates fell to levels not seen for generations. In
June, the Fed cut the Federal Funds Rate to 1%; but the optimistic tone of Alan
Greenspan's subsequent Congressional testimony, combined with an uptick in
economic data, sparked an enormous bond market sell-off in mid-June and July.
Rising interest rates shocked the mortgage market in July. Interest rates
continued to move higher in August on increasing demand growth and improving
economic fundamentals. Because of the improving economy, credit spreads narrowed
substantially from the fall of 2002.
Because of their attractive yields, we overweighted prepayment-sensitive
mortgage-backed securities throughout the period. We actively managed coupon
selection, focusing on 30-year current coupon mortgages (i.e., Fannie Mae, 5%
and 5.5%). We balanced our mortgage overweight primarily with an underweight to
Agency debentures, as well as a modest underweight to Treasuries.
<Page>
13
LIFE OF PORTFOLIO PERFORMANCE
A $10,000 tax-deferred investment in the U.S. Government Income Portfolio at NAV
(Net Asset Value) would have grown to $17,241 from inception on 3/1/95 through
8/31/03.*
INVESTMENT RESULTS
Average Annual Returns as of 8/31/03
<Table>
1 year 1.97%
3 year 7.08%
5 year 5.52%
Since Inception (3/1/95) 6.62%
</Table>
[CHART]
<Table>
<Caption>
U.S. GOVERNMENT INCOME PORTFOLIO LEHMAN U.S. GOV'T BOND INDEX LIPPER GENERAL U.S. GOV'T FUNDS INDEX
3/1/1995 $ 10,000 $ 10,000 $ 10,000
3/31/1995 $ 10,050 $ 10,063 $ 10,046
4/30/1995 $ 10,170 $ 10,195 $ 10,170
5/31/1995 $ 10,550 $ 10,606 $ 10,539
6/30/1995 $ 10,620 $ 10,687 $ 10,602
7/31/1995 $ 10,570 $ 10,648 $ 10,565
8/31/1995 $ 10,690 $ 10,772 $ 10,688
9/30/1995 $ 10,800 $ 10,876 $ 10,789
10/31/1995 $ 10,950 $ 11,041 $ 10,931
11/30/1995 $ 11,100 $ 11,213 $ 11,085
12/31/1995 $ 11,236 $ 11,373 $ 11,240
1/31/1996 $ 11,293 $ 11,442 $ 11,297
2/29/1996 $ 11,029 $ 11,209 $ 11,065
3/31/1996 $ 10,925 $ 11,116 $ 10,972
4/30/1996 $ 10,856 $ 11,044 $ 10,897
5/31/1996 $ 10,822 $ 11,026 $ 10,856
6/30/1996 $ 10,971 $ 11,168 $ 10,982
7/31/1996 $ 10,994 $ 11,196 $ 11,003
8/31/1996 $ 10,971 $ 11,171 $ 10,975
9/30/1996 $ 11,132 $ 11,357 $ 11,159
10/31/1996 $ 11,350 $ 11,606 $ 11,401
11/30/1996 $ 11,523 $ 11,808 $ 11,602
12/31/1996 $ 11,431 $ 11,688 $ 11,482
1/31/1997 $ 11,456 $ 11,701 $ 11,506
2/28/1997 $ 11,431 $ 11,717 $ 11,530
3/31/1997 $ 11,305 $ 11,593 $ 11,394
4/30/1997 $ 11,469 $ 11,760 $ 11,563
5/31/1997 $ 11,557 $ 11,861 $ 11,659
6/30/1997 $ 11,683 $ 11,994 $ 11,797
7/31/1997 $ 11,999 $ 12,334 $ 12,122
8/31/1997 $ 11,859 $ 12,212 $ 11,996
9/30/1997 $ 12,049 $ 12,396 $ 12,180
10/31/1997 $ 12,238 $ 12,610 $ 12,359
11/30/1997 $ 12,289 $ 12,674 $ 12,403
12/31/1997 $ 12,397 $ 12,807 $ 12,528
1/31/1998 $ 12,527 $ 12,999 $ 12,688
2/28/1998 $ 12,527 $ 12,964 $ 12,663
3/31/1998 $ 12,566 $ 13,001 $ 12,695
4/30/1998 $ 12,617 $ 13,059 $ 12,745
5/31/1998 $ 12,734 $ 13,194 $ 12,863
6/30/1998 $ 12,877 $ 13,344 $ 12,972
7/31/1998 $ 12,890 $ 13,364 $ 12,992
8/31/1998 $ 13,176 $ 13,712 $ 13,247
9/30/1998 $ 13,475 $ 14,082 $ 13,546
10/31/1998 $ 13,397 $ 14,034 $ 13,446
11/30/1998 $ 13,436 $ 14,038 $ 13,475
12/31/1998 $ 13,461 $ 14,069 $ 13,512
1/31/1999 $ 13,517 $ 14,151 $ 13,589
2/28/1999 $ 13,188 $ 13,814 $ 13,295
3/31/1999 $ 13,244 $ 13,868 $ 13,363
4/30/1999 $ 13,271 $ 13,900 $ 13,398
5/31/1999 $ 13,120 $ 13,777 $ 13,250
6/30/1999 $ 13,065 $ 13,750 $ 13,181
7/31/1999 $ 13,038 $ 13,729 $ 13,106
8/31/1999 $ 13,023 $ 13,729 $ 13,071
9/30/1999 $ 13,133 $ 13,840 $ 13,232
10/31/1999 $ 13,173 $ 13,862 $ 13,253
11/30/1999 $ 13,133 $ 13,843 $ 13,241
12/31/1999 $ 13,088 $ 13,753 $ 13,151
1/31/2000 $ 13,102 $ 13,772 $ 13,110
2/29/2000 $ 13,280 $ 13,968 $ 13,277
3/31/2000 $ 13,518 $ 14,214 $ 13,476
4/30/2000 $ 13,488 $ 14,174 $ 13,426
5/31/2000 $ 13,503 $ 14,182 $ 13,411
6/30/2000 $ 13,726 $ 14,435 $ 13,681
7/31/2000 $ 13,845 $ 14,575 $ 13,786
8/31/2000 $ 14,039 $ 14,791 $ 13,998
9/30/2000 $ 14,069 $ 14,832 $ 14,050
10/31/2000 $ 14,188 $ 14,974 $ 14,163
11/30/2000 $ 14,486 $ 15,269 $ 14,436
12/31/2000 $ 14,754 $ 15,573 $ 14,712
1/31/2001 $ 14,911 $ 15,731 $ 14,875
2/28/2001 $ 15,067 $ 15,910 $ 15,021
3/31/2001 $ 15,082 $ 15,966 $ 15,058
4/30/2001 $ 14,895 $ 15,803 $ 14,930
5/31/2001 $ 14,942 $ 15,855 $ 15,000
6/30/2001 $ 15,004 $ 15,928 $ 15,050
7/31/2001 $ 15,363 $ 16,310 $ 15,401
8/31/2001 $ 15,520 $ 16,512 $ 15,573
9/30/2001 $ 15,816 $ 16,800 $ 15,793
10/31/2001 $ 16,253 $ 17,233 $ 16,173
11/30/2001 $ 15,801 $ 16,847 $ 15,845
12/31/2001 $ 15,625 $ 16,700 $ 15,693
1/31/2002 $ 15,760 $ 16,809 $ 15,833
2/28/2002 $ 15,946 $ 16,964 $ 16,000
3/31/2002 $ 15,592 $ 16,596 $ 15,669
4/30/2002 $ 15,946 $ 16,991 $ 16,015
5/31/2002 $ 16,046 $ 17,092 $ 16,115
6/30/2002 $ 16,231 $ 17,332 $ 16,279
7/31/2002 $ 16,550 $ 17,713 $ 16,569
8/31/2002 $ 16,905 $ 18,064 $ 16,857
9/30/2002 $ 17,292 $ 18,486 $ 17,140
10/31/2002 $ 17,139 $ 18,339 $ 17,029
11/30/2002 $ 17,004 $ 18,181 $ 16,930
12/31/2002 $ 17,380 $ 18,621 $ 17,259
1/31/2003 $ 17,343 $ 18,574 $ 17,236
2/28/2003 $ 17,616 $ 18,873 $ 17,462
3/31/2003 $ 17,540 $ 18,819 $ 17,399
4/30/2003 $ 17,612 $ 18,905 $ 17,483
5/31/2003 $ 18,077 $ 19,397 $ 17,783
6/30/2003 $ 17,970 $ 19,296 $ 17,698
7/31/2003 $ 17,111 $ 18,499 $ 18,353
8/31/2003 $ 17,241 $ 18,603 $ 18,456
</Table>
Source for Index Returns: Lipper Analytical Services, Inc.
* Past performance is no guarantee of future results. Investment returns and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than the original cost. Performance figures do not include
any insurance company charges associated with a variable annuity or reflect any
withdrawal charges. No expenses are deducted from the performance of the
indexes.
Hypothetical $10,000 investment assumes an initial investment on 3/1/95 and
shows changes in Net Asset Value, but does not include the effect of any
insurance charges or the annual maintenance fee. The illustration above would be
reduced if these fees were reflected. There is no direct correlation between a
hypothetical investment and the anticipated performance of the Portfolio. The
investment adviser is currently waiving certain fees. This voluntary waiver may
be modified or terminated at any time, which would reduce performance.
The Lehman U.S. Gov't Bond Index is composed of the U.S. Treasury Bond Index and
the Agency Bond Index and includes U.S. Treasury and Agency bond issues. The
index is unmanaged and reflects the reinvestment of dividends. An individual
cannot invest directly in an index.
The Lipper General U.S. Gov't Funds Index represents the total returns of the
funds in the indicated category, as defined by Lipper, Inc.
Withdrawals prior to age 59 1/2 from the Vista Capital Advantage variable
annuity may be subject to a 10% IRS tax penalty, and are taxed as ordinary
income.
<Page>
14
MONEY MARKET PORTFOLIO
(UNAUDITED)
THE MONEY MARKET PORTFOLIO SEEKS TO PROVIDE MAXIMUM CURRENT INCOME CONSISTENT
WITH PRESERVATION OF CAPITAL AND MAINTENANCE OF LIQUIDITY.
Q: HOW DID THE PORTFOLIO PERFORM?
A: The Money Market Portfolio returned 0.70% for the year ended August 31, 2003.
Q: HOW WAS THE PORTFOLIO MANAGED?
A: During the final months of 2002, the fixed-income markets were highly
volatile as investors continued to react to the falling equity market,
contradictory economic data and increased geopolitical risk. In support of the
economy, the Federal Reserve Board lowered the Federal Funds Rate by one-half
percent in November. War fears, terrorism, SARS and economic weakness sent large
numbers of investors into the relative safety of the bond market in early 2003.
However, by the spring, investors turned their attention to deflation,
better-than-expected corporate earnings, passage of a tax package and a brighter
economic outlook. In June, the Fed cut the Federal Funds Rate to 1%. During
July, interest rates in the market surged higher as investors focused on the
prospects for economic recovery. Rates continued to increase in August because
of improved economic fundamentals and the expectation of a Fed rate increase in
2004.
The dominant event during the fourth quarter of 2002 was the Fed's half-percent
interest rate reduction. We focused on purchasing commercial paper and
certificates of deposit with six-month maturities. Because we were positioned
for two eases of a quarter percent each, the Portfolio performed well. After the
announcement, we maintained a longer weighted average maturity (WAM) to take
advantage of the positively sloped LIBOR curve. Toward the end of the year, we
let our cash positions build, shortening the WAM and giving us flexibility
through year-end. As the LIBOR curve flattened in early 2003 and we were
challenged by the resulting lack of relative value, we extended our WAM by
purchasing one-year paper.
We continued to maintain a longer WAM during the spring in expectation of
another Fed ease. We concentrated our purchases in four- to six-month
maturities. However, as the time for Fed action drew near, the market priced in
a more aggressive cut than was actually announced. Consequently, we saw little
value in investing in extended maturities and let our WAM shorten. In July, we
extended by purchasing six-month agency discount notes. As interest rates moved
higher in August, we added one-year paper and additional six-month agency
discount notes.
AN INVESTMENT IN THE MONEY MARKET PORTFOLIO IS NOT INSURED BY THE FDIC OR ANY
OTHER GOVERNMENT AGENCY. ALTHOUGH PORTFOLIO SHARES STRIVE TO PRESERVE THE VALUE
OF THE INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING
IN THIS PORTFOLIO.
WITHDRAWALS PRIOR TO AGE 59 1/2 FROM THE VISTA CAPITAL ADVANTAGE VARIABLE
ANNUITY MAY BE SUBJECT TO A 10% IRS TAX PENALTY, AND ARE TAXED AS ORDINARY
INCOME.
<Page>
15
GROWTH AND INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS AS OF AUGUST 31, 2003
<Table>
<Caption>
SHARES ISSUER VALUE
------ ------ -----
LONG-TERM INVESTMENTS--98.1%
COMMON STOCKS--98.1%
AEROSPACE--2.8%
700 GENERAL DYNAMICS CORP. $ 60,277
1,500 UNITED TECHNOLOGIES CORP. 120,375
-------------
180,652
-------------
APPAREL--1.5%
600 NIKE, INC., CLASS B 34,188
1,600 VF CORP. 64,160
-------------
98,348
-------------
AUTOMOTIVE--0.4%
900 GENUINE PARTS CO. 28,818
-------------
BANKING--11.6%
1,500 BANK OF AMERICA CORP. 118,875
2,200 BB&T CORP. 80,344
1,900 NORTH FORK BANCORPORATION, INC. 64,163
800 PNC FINANCIAL SERVICES GROUP, INC. 38,080
1,800 SUNTRUST BANKS, INC. 110,034
1,924 THE BANK OF NEW YORK CO., INC. 56,604
4,900 U.S. BANCORP 117,110
2,100 WACHOVIA CORP. 88,515
1,525 WELLS FARGO & CO. 76,464
-------------
750,189
-------------
BROADCASTING/CABLE--0.6%
1,900 CABLEVISION SYSTEMS CORP., CLASS A* 38,285
-------------
BUSINESS SERVICES--1.5%
1,000 AUTOMATIC DATA PROCESSING, INC. 39,910
3,000 IMS HEALTH, INC. 58,410
-------------
98,320
-------------
CHEMICALS--0.6%
700 PPG INDUSTRIES, INC. 38,437
-------------
COMPUTER SOFTWARE--1.1%
2,700 COMPUTER ASSOCIATES INTERNATIONAL, INC. 69,201
-------------
COMPUTERS/COMPUTER HARDWARE--2.6%
2,600 HEWLETT-PACKARD CO. 51,792
800 INTERNATIONAL BUSINESS MACHINES CORP. 65,608
800 LEXMARK INTERNATIONAL, INC.* 53,632
-------------
171,032
-------------
CONSTRUCTION MATERIALS--1.0%
1,600 VULCAN MATERIALS CO. 66,256
-------------
CONSUMER PRODUCTS--2.0%
3,125 ALTRIA GROUP, INC. 128,813
-------------
DIVERSIFIED--0.8%
2,450 TYCO INTERNATIONAL LTD (BERMUDA) 50,421
-------------
ENTERTAINMENT/LEISURE--0.9%
1,600 CARNIVAL CORP. 55,344
-------------
ENVIRONMENTAL SERVICES--1.1%
2,700 WASTE MANAGEMENT, INC. $ 71,847
-------------
FINANCIAL SERVICES--14.0%
2,750 AMERICAN EXPRESS CO. 123,888
7,191 CITIGROUP, INC. 311,729
1,500 FREDDIE MAC 79,725
1,500 GOLDEN WEST FINANCIAL CORP. 129,405
3,200 JANUS CAPITAL GROUP, INC. 55,264
550 MERRILL LYNCH & CO., INC. 29,579
1,600 PRUDENTIAL FINANCIAL, INC. 58,256
1,500 T. ROWE PRICE GROUP, INC. 63,750
1,300 WASHINGTON MUTUAL, INC. 50,674
-------------
902,270
-------------
FOOD/BEVERAGE PRODUCTS--2.3%
404 BROWN-FORMAN CORP., CLASS B 31,932
2,200 KRAFT FOODS, INC., CLASS A 65,340
1,100 PEPSICO, INC. 48,994
-------------
146,266
-------------
HEALTH CARE/HEALTH CARE SERVICES--0.7%
600 WELLPOINT HEALTH NETWORKS, INC.* 46,800
-------------
INSURANCE--8.5%
3,025 AMERICAN INTERNATIONAL GROUP, INC. 180,199
1,300 CHUBB CORP. 88,322
550 MARSH & MCLENNAN COMPANIES, INC. 27,500
1,600 MGIC INVESTMENT CORP. 90,192
1,000 PRINCIPAL FINANCIAL GROUP, INC. 31,460
1,700 SAFECO CORP. 61,302
4,323 TRAVELERS PROPERTY CASUALTY CORP., CLASS A 66,531
-------------
545,506
-------------
MANUFACTURING--1.4%
1,000 COOPER INDUSTRIES LTD, CLASS A 50,890
1,325 HONEYWELL INTERNATIONAL, INC. 38,412
-------------
89,302
-------------
METALS/MINING--0.6%
1,300 ALCOA, INC. 37,128
-------------
MULTI-MEDIA--9.0%
7,125 AOL TIME WARNER, INC.* 116,564
2,493 COMCAST CORP., CLASS A* 74,167
800 DOW JONES & CO., INC. 33,976
600 E.W. SCRIPPS CO., CLASS A 51,954
900 GANNETT CO., INC. 70,578
440 KNIGHT RIDDER, INC. 29,858
8,816 LIBERTY MEDIA CORP., CLASS A* 106,674
1,575 THE WALT DISNEY CO. 32,288
1,434 VIACOM, INC., CLASS B 64,530
-------------
580,589
-------------
OIL & GAS--10.8%
1,300 BURLINGTON RESOURCES, INC. 62,946
1,950 CHEVRONTEXACO CORP. 142,097
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
<Page>
16
<Table>
<Caption>
SHARES ISSUER VALUE
------ ------ -----
OIL & GAS (CONT'D)
2,341 CONOCOPHILLIPS $ 130,721
1,400 DEVON ENERGY CORP. 72,450
7,616 EXXON MOBIL CORP. 287,123
-------------
695,337
-------------
PHARMACEUTICALS--2.4%
800 AMERISOURCEBERGEN CORP. 46,568
1,700 PFIZER, INC. 50,864
1,350 WYETH 57,848
-------------
155,280
-------------
PIPELINES--1.3%
1,600 KINDER MORGAN, INC. 85,200
-------------
REAL ESTATE--0.7%
1,900 BROOKFIELD PROPERTIES CORP. (CANADA) 44,308
-------------
REAL ESTATE INVESTMENT TRUST--0.7%
1,300 PUBLIC STORAGE, INC. 47,957
-------------
RESTAURANTS/FOOD SERVICES--0.9%
1,500 OUTBACK STEAKHOUSE, INC. 57,975
-------------
RETAILING--4.0%
800 AUTOZONE, INC.* 73,440
3,900 CIRCUIT CITY STORES, INC. 40,677
2,400 HOME DEPOT, INC. 77,184
900 KROGER CO.* 17,289
2,400 THE TJX COMPANIES, INC. 51,984
-------------
260,574
-------------
TELECOMMUNICATIONS--7.0%
2,300 ALLTEL CORP. 105,340
1,225 BELLSOUTH CORP. 30,870
4,700 GENERAL MOTORS - HUGHES ELECTRONICS CORP.,
CLASS H* 70,218
5,725 SBC COMMUNICATIONS, INC. 128,755
3,200 VERIZON COMMUNICATIONS, INC. 113,024
-------------
448,207
-------------
TELECOMMUNICATIONS EQUIPMENT--0.6%
1,000 QUALCOMM, INC. 41,280
-------------
TOYS & GAMES--1.4%
4,600 MATTEL, INC. 88,872
-------------
UTILITIES--3.3%
1,300 CONSOLIDATED EDISON, INC. 51,389
1,225 DOMINION RESOURCES, INC. 74,211
1,600 ENERGY EAST CORP. 34,544
1,900 FIRSTENERGY CORP. 55,594
-------------
215,738
-------------
TOTAL COMMON STOCKS
(COST $5,938,422) 6,334,552
-------------
SHORT-TERM INVESTMENT--1.9%
MONEY MARKET FUND--1.9%
120,208 JPMORGAN PRIME MONEY MARKET FUND(a)
(COST $120,208) $ 120,208
-------------
TOTAL INVESTMENTS--100.0%
(COST $6,058,630) $ 6,454,760
=============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
<Page>
17
CAPITAL GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS AS OF AUGUST 31, 2003
<Table>
<Caption>
SHARES ISSUER VALUE
------ ------ -----
LONG-TERM INVESTMENTS--98.7%
COMMON STOCKS--98.7%
AIRLINES--0.8%
2,520 SKYWEST, INC. $ 44,050
-------------
AUTOMOTIVE--1.3%
870 POLARIS INDUSTRIES, INC. 67,216
-------------
BANKING--2.4%
1,000 BOK FINANCIAL CORP.* 39,620
560 M&T BANK CORP. 47,174
800 TCF FINANCIAL CORP. 36,792
-------------
123,586
-------------
BIOTECHNOLOGY--4.4%
770 BIOGEN, INC.* 30,384
1,210 GILEAD SCIENCES, INC.* 80,707
1,170 ICOS CORP.* 45,560
1,800 MEDIMMUNE, INC.* 62,766
1,000 MYRIAD GENETICS, INC.* 12,520
-------------
231,937
-------------
BROADCASTING/CABLE--1.7%
4,260 MEDIACOM COMMUNICATIONS CORP.* 29,138
1,590 UNIVISION COMMUNICATIONS, INC., CLASS A* 59,610
-------------
88,748
-------------
BUSINESS SERVICES--6.4%
896 CHOICEPOINT, INC.* 35,168
760 CINTAS CORP. 30,347
1,610 EQUIFAX, INC. 36,933
1,070 FAIR ISAAC CORP. 62,702
1,310 HEWITT ASSOCIATES, INC., CLASS A* 32,685
1,070 IRON MOUNTAIN, INC.* 39,590
1,380 MOODY'S CORP. 71,567
940 SUNGARD DATA SYSTEMS, INC.* 26,508
-------------
335,500
-------------
COMPUTER NETWORKS--2.8%
3,830 JUNIPER NETWORKS, INC.* 65,953
3,510 NETWORK APPLIANCE, INC.* 78,659
-------------
144,612
-------------
COMPUTER SOFTWARE--8.5%
900 ADOBE SYSTEMS, INC. 34,947
1,200 AFFILIATED COMPUTER SERVICES, INC., CLASS A* 59,532
900 COGNOS, INC. (CANADA)* 27,585
1,600 COMPUTER ASSOCIATES INTERNATIONAL, INC. 41,008
680 ELECTRONIC ARTS, INC.* 61,029
630 INTUIT, INC.* 28,552
1,600 MACROMEDIA, INC.* 38,144
920 MERCURY INTERACTIVE CORP.* 40,379
1,170 NATIONAL INSTRUMENTS CORP. 46,344
900 TAKE-TWO INTERACTIVE SOFTWARE, INC.* 26,793
1,070 VERITAS SOFTWARE CORP.* 36,894
-------------
441,207
-------------
COMPUTERS/COMPUTER HARDWARE--4.8%
1,930 APPLE COMPUTER, INC.* $ 43,676
1,020 EMULEX CORP.* 24,694
500 LEXMARK INTERNATIONAL, INC.* 33,520
3,900 MAXTOR CORP.* 44,577
1,170 TECH DATA CORP.* 39,020
1,170 ZEBRA TECHNOLOGIES CORP., CLASS A* 62,735
-------------
248,222
-------------
CONSTRUCTION--1.3%
97 LENNAR CORP., B SHARES 6,281
940 LENNAR CORP., CLASS A 63,215
-------------
69,496
-------------
CONSUMER SERVICES--1.4%
500 RENT-A-CENTER, INC.* 40,185
780 WEIGHT WATCHERS INTERNATIONAL, INC.* 33,813
-------------
73,998
-------------
ELECTRONICS/ELECTRICAL EQUIPMENT--4.2%
1,160 AMPHENOL CORP., CLASS A* 63,255
1,000 FISHER SCIENTIFIC INTERNATIONAL* 39,220
1,650 JABIL CIRCUIT, INC.* 46,448
4,270 VISHAY INTERTECHNOLOGY, INC.* 70,326
-------------
219,249
-------------
ENTERTAINMENT/LEISURE--0.9%
1,820 INTERNATIONAL GAME TECHNOLOGY 47,029
-------------
FINANCIAL SERVICES--1.7%
2,100 T. ROWE PRICE GROUP, INC. 89,250
-------------
FOOD/BEVERAGE PRODUCTS--0.6%
3,630 DEL MONTE FOODS CO.* 32,597
-------------
HEALTH CARE/HEALTH CARE SERVICES--13.8%
970 AETNA, INC. 55,290
990 ANTHEM, INC.* 72,467
1,860 CAREMARK RX, INC.* 46,742
1,070 DENTSPLY INTERNATIONAL, INC. 46,813
2,370 HEALTH MANAGEMENT ASSOCIATES, INC., CLASS A 52,804
1,260 LABORATORY CORP. OF AMERICA HOLDINGS* 38,115
950 MANOR CARE, INC. 26,220
2,840 OMNICARE, INC. 96,275
1,000 RENAL CARE GROUP, INC.* 36,310
1,310 STERIS CORP.* 30,680
690 STRYKER CORP. 52,302
850 VARIAN MEDICAL SYSTEMS, INC.* 47,473
610 WELLPOINT HEALTH NETWORKS, INC.* 47,580
1,400 ZIMMER HOLDINGS, INC.* 72,436
-------------
721,507
-------------
HOTELS/OTHER LODGING--1.0%
2,000 FAIRMONT HOTELS & RESORTS, INC. (CANADA) 53,100
-------------
INSURANCE--0.9%
1,550 HCC INSURANCE HOLDINGS, INC. 45,384
-------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
<Page>
18
<Table>
<Caption>
SHARES ISSUER VALUE
------ ------ -----
INTERNET SERVICES/SOFTWARE--2.2%
770 CHECKFREE CORP.* $ 17,695
1,357 INTERACTIVECORP* 50,222
800 SYMANTEC CORP.* 45,944
-------------
113,861
-------------
MANUFACTURING--0.7%
1,000 HARSCO CORP. 38,990
-------------
MULTI-MEDIA--1.8%
2,700 CITADEL BROADCASTING CORP.* 59,616
390 E.W. SCRIPPS CO., CLASS A 33,770
-------------
93,386
-------------
OIL & GAS--4.3%
1,540 FMC TECHNOLOGIES, INC.* 36,452
830 NABORS INDUSTRIES LTD (BARBADOS)* 33,325
920 PATTERSON-UTI ENERGY, INC.* 27,453
1,710 PIONEER NATURAL RESOURCES CO.* 43,365
1,900 PRIDE INTERNATIONAL, INC.* 32,471
1,070 TALISMAN ENERGY, INC. (CANADA) 50,771
-------------
223,837
-------------
PHARMACEUTICALS--5.4%
390 AMERISOURCEBERGEN CORP. 22,702
1,700 ANDRX CORP.* 30,600
1,640 MEDICIS PHARMACEUTICAL CORP., CLASS A 100,171
1,600 MILLENNIUM PHARMACEUTICALS, INC.* 22,240
3,300 NBTY, INC.* 87,285
1,700 VERTEX PHARMACEUTICALS, INC.* 21,420
-------------
284,418
-------------
RESTAURANTS/FOOD SERVICES--2.6%
1,960 CBRL GROUP, INC. 68,364
1,070 OUTBACK STEAKHOUSE, INC. 41,356
1,100 RUBY TUESDAY, INC. 25,047
-------------
134,767
-------------
RETAILING--11.5%
1,000 ABERCROMBIE & FITCH CO., CLASS A* 30,440
400 ADVANCED AUTO PARTS, INC.* 29,860
1,010 BED BATH & BEYOND, INC.* 43,460
1,500 BIG LOTS, INC.* 27,450
1,486 CARMAX, INC.* 57,285
1,270 CDW CORP.* 65,545
2,500 DOLLAR GENERAL CORP. 57,325
1,460 FASTENAL CO. 59,028
2,030 PETSMART, INC.* 48,558
680 ROSS STORES, INC. 34,258
3,620 STAPLES, INC.* 89,161
1,070 WHOLE FOODS MARKET, INC.* 58,133
-------------
600,503
-------------
SEMI-CONDUCTORS--8.0%
2,980 ALTERA CORP.* 66,871
1,490 INTERSIL CORP., CLASS A* 43,404
1,620 KLA-TENCOR CORP.* 96,162
1,000 MAXIM INTEGRATED PRODUCTS, INC. $ 44,910
4,300 MEMC ELECTRONICS MATERIALS* 55,814
1,460 MICROCHIP TECHNOLOGY, INC. 40,895
1,710 NOVELLUS SYSTEMS, INC.* 68,332
-------------
416,388
-------------
TELECOMMUNICATIONS--1.6%
2,200 NEXTEL COMMUNICATIONS, INC., CLASS A* 42,416
4,800 NEXTEL PARTNERS, INC., CLASS A* 39,504
-------------
81,920
-------------
TELECOMMUNICATIONS EQUIPMENT--1.7%
3,200 CIENA CORP.* 20,800
3,600 CORNING, INC.* 29,700
5,900 JDS UNIPHASE CORP.* 20,296
8,500 LUCENT TECHNOLOGIES, INC.* 16,235
-------------
87,031
-------------
TOTAL COMMON STOCKS
(COST $4,368,782) 5,151,789
-------------
SHORT-TERM INVESTMENT--1.3%
MONEY MARKET FUND--1.3%
66,996 JPMORGAN PRIME MONEY MARKET FUND(a)
(COST $66,996) 66,996
-------------
TOTAL INVESTMENTS--100.0%
(COST $4,435,778) $ 5,218,785
=============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
<Page>
19
INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS AS OF AUGUST 31, 2003
<Table>
<Caption>
SHARES ISSUER VALUE
------ ------ -----
LONG-TERM INVESTMENTS--100.0%
COMMON STOCKS--100.0%
AUSTRALIA--2.3%
4,100 BHP BILLITON LTD $ 29,032
1,100 NATIONAL AUSTRALIA BANK LTD 22,156
3,188 NEWS CORP., LTD 27,263
3,345 WOODSIDE PETROLEUM LTD 28,930
-------------
107,381
-------------
BELGIUM--1.7%
4,150 DEXIA 52,123
1,580 FORTIS 26,621
-------------
78,744
-------------
BRAZIL--0.3%
400 COMPANHIA VALE DO RIO DOCE , ADR 14,980
-------------
FINLAND--2.2%
6,213 NOKIA OYJ 101,949
-------------
FRANCE--12.7%
1,591 AVENTIS SA 77,410
3,096 AXA 54,990
1,440 BNP PARIBAS 71,869
1,720 COMPAGNIE DE SAINT-GOBAIN 67,324
1,210 DASSAULT SYSTEMES SA 43,782
330 IMERYS SA 54,476
320 RENAULT SA 19,321
1,250 TOTAL SA 192,052
-------------
581,224
-------------
GERMANY--7.6%
500 BASF AG 23,063
2,259 BAYERISCHE MOTOREN WERKE AG 89,416
1,127 DEUTSCHE BANK AG 65,246
2,706 DEUTSCHE POST AG 43,450
798 HEIDELBERGCEMENT AG* 29,401
900 SCHERING AG 36,267
993 SIEMENS AG 61,595
-------------
348,438
-------------
IRELAND--0.6%
2,400 BANK OF IRELAND 28,507
-------------
ITALY--4.2%
10,533 ENI-ENTE NAZIONALE IDROCARBURI SPA 159,399
19,805 TELECOM ITALIA SPA* 31,322
-------------
190,721
-------------
JAPAN--19.4%
450 ACOM CO., LTD 18,668
2,000 CANON, INC. 96,169
2,700 CHUGAI PHARMACEUTICAL CO., LTD 28,604
2,000 FUJI PHOTO FILM CO., LTD 59,998
400 HIROSE ELECTRIC CO., LTD 42,822
1,600 HONDA MOTOR CO., LTD 65,141
700 HOYA CORP. 53,578
2,000 KAO CORP. 37,713
3,000 MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD $ 38,262
900 MURATA MANUFACTURING CO., LTD 50,604
8,000 NIKKO CORDIAL CORP. 38,467
400 NINTENDO CO., LTD 33,290
8 NIPPON TELEGRAPH & TELEPHONE CORP. 35,245
2 NIPPON UNIPAC HOLDING 9,154
13 NTT DOCOMO, INC. 33,428
1,000 SECOM CO., LTD 34,285
700 SHIN-ETSU CHEMICAL CO., LTD 27,479
1,000 SONY CORP. 32,913
5,000 SUMITOMO CORP. 30,985
1,600 TAKEDA CHEMICAL INDUSTRIES LTD 57,873
520 TAKEFUJI CORP. 29,416
1,300 YAMANOUCHI PHARMACEUTICAL CO., LTD 34,096
-------------
888,190
-------------
RUSSIA--0.6%
444 YUKOS, ADR 25,575
-------------
SOUTH KOREA--3.1%
800 KOOKMIN BANK 29,255
970 POSCO, ADR 29,100
340 SAMSUNG ELECTRONICS CO.,LTD, GDR 63,070
1,200 SK TELECOM CO., LTD , ADR 22,872
-------------
144,297
-------------
SPAIN--2.3%
1,700 ALTADIS SA 40,198
1,407 BANCO POPULAR ESPANOL 63,444
-------------
103,642
-------------
SWEDEN--1.5%
13,034 NORDEA AB 66,338
-------------
SWITZERLAND--7.6%
1,200 HOLCIM LTD 47,614
410 NESTLE SA 89,401
2,460 NOVARTIS AG 90,574
1,010 ROCHE HOLDING AG 77,442
332 ZURICH FINANCIAL SERVICES AG 42,724
-------------
347,755
-------------
THE NETHERLANDS--6.1%
2,757 ABN AMRO HOLDING NV 48,363
222 HEINEKEN NV 8,499
3,212 ING GROEP NV 62,738
2,725 KONINKLIJKE PHILIPS ELECTRONICS NV 66,532
4,030 REED ELSEVIER NV 44,499
3,130 WOLTERS KLUWER NV 48,778
-------------
279,409
-------------
UNITED KINGDOM--27.8%
2,349 ABBEY NATIONAL PLC 19,553
5,930 ALLIED DOMECQ PLC 35,616
4,534 AVIVA PLC 35,915
18,081 BAE SYSTEMS PLC 48,764
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
<Page>
20
<Table>
<Caption>
SHARES ISSUER VALUE
------ ------ -----
UNITED KINGDOM (CONT'D)
11,362 BARCLAYS PLC $ 82,553
17,287 BG GROUP PLC 74,474
4 BP PLC 27
4,480 BRAMBLES INDUSTRIES PLC 13,197
9,500 CENTRICA PLC 26,672
5,440 COMPASS GROUP PLC 30,095
6,105 GKN PLC 25,288
6,346 GLAXOSMITHKLINE PLC 120,984
4,311 INTERCONTINENTAL HOTELS GROUP PLC* 33,297
7,000 KINGFISHER PLC 30,074
7,400 NATIONAL GRID TRANSCO PLC 45,263
3,770 RECKITT BENCKISER PLC 70,861
2,000 RIO TINTO PLC 43,942
2,300 ROYAL BANK OF SCOTLAND GROUP PLC 57,181
4,760 SCHRODERS PLC 46,766
2,900 STANDARD CHARTERED PLC 38,751
25,457 TESCO PLC 86,852
6,801 THE BRITISH LAND CO., PLC 53,362
1,562 UNILEVER PLC 12,694
80,164 VODAFONE GROUP PLC 146,561
8,530 WOLSELEY PLC 97,680
-------------
1,276,422
-------------
TOTAL INVESTMENTS--100.0%
(COST $4,774,043) $ 4,583,572
=============
</Table>
SUMMARY OF INVESTMENTS BY INDUSTRY, AUGUST 31, 2003
<Table>
<Caption>
INDUSTRY % OF INVESTMENT SECURITIES
Banking 14.1%
Pharmaceuticals 11.4
Oil & Gas 10.5
Telecommunications 8.1
Electronics/Electrical Equipment 5.8
Food/Beverage Products 5.7
Automotive 4.3
Construction Materials 4.3
Insurance 4.3
Financial Services 3.5
Consumer Products 3.2
Distribution 2.8
Office/Business Equipment 2.1
Metals/Mining 1.9
Multi-Media 1.7
Utilities 1.6
Semi-Conductors 1.4
Diversified 1.3
Photographic Equipment 1.3
Other (Below 1.3%) 10.7
- -----------------------------------------------------------------------------
Total 100.0%
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
<Page>
21
ASSET ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS AS OF AUGUST 31, 2003
<Table>
<Caption>
SHARES ISSUER VALUE
------ ------ -----
LONG-TERM INVESTMENTS--89.3%
COMMON STOCKS--54.7%
AEROSPACE--1.3%
390 LOCKHEED MARTIN CORP. $ 19,980
620 UNITED TECHNOLOGIES CORP. 49,755
-------------
69,735
-------------
APPAREL--0.7%
340 JONES APPAREL GROUP, INC. 10,503
480 NIKE, INC., CLASS B 27,350
-------------
37,853
-------------
AUTOMOTIVE--0.6%
770 FORD MOTOR CO. 8,901
230 JOHNSON CONTROLS, INC. 22,770
-------------
31,671
-------------
BANKING--2.2%
390 BANK ONE CORP. 15,393
300 CITY NATIONAL CORP. 15,510
610 MELLON FINANCIAL CORP. 19,124
300 SUNTRUST BANKS, INC. 18,339
2,060 U.S. BANCORP 49,234
-------------
117,600
-------------
BIOTECHNOLOGY--0.8%
500 AMGEN, INC.* 32,950
340 MEDIMMUNE, INC.* 11,856
-------------
44,806
-------------
BUSINESS SERVICES--1.0%
870 ACCENTURE LTD, (BERMUDA), CLASS A* 18,409
480 FIRST DATA CORP. 18,432
500 SUNGARD DATA SYSTEMS, INC.* 14,100
-------------
50,941
-------------
CHEMICALS--0.8%
460 EASTMAN CHEMICAL CO. 16,473
440 PRAXAIR, INC. 28,080
-------------
44,553
-------------
COMPUTER NETWORKS--1.3%
3,040 CISCO SYSTEMS, INC.* 58,216
690 JUNIPER NETWORKS, INC.* 11,882
-------------
70,098
-------------
COMPUTER SOFTWARE--2.0%
3,250 MICROSOFT CORP. 86,190
1,730 ORACLE CORP.* 22,109
-------------
108,299
-------------
COMPUTERS/COMPUTER HARDWARE--2.0%
1,045 DELL COMPUTER CORP.* 34,098
425 INTERNATIONAL BUSINESS MACHINES CORP. 34,854
960 SEAGATE TECHNOLOGY (CAYMAN ISLANDS) 22,090
3,470 SUN MICROSYSTEMS, INC.* 13,394
-------------
104,436
-------------
CONSUMER PRODUCTS--2.6%
1,145 ALTRIA GROUP, INC. $ 47,197
710 PROCTER & GAMBLE CO. 61,976
970 THE GILLETTE CO. 31,486
-------------
140,659
-------------
DIVERSIFIED--3.1%
3,705 GENERAL ELECTRIC CO. 109,557
2,640 TYCO INTERNATIONAL LTD (BERMUDA) 54,331
-------------
163,888
-------------
ENTERTAINMENT/LEISURE--0.3%
390 CARNIVAL CORP. 13,490
-------------
FINANCIAL SERVICES--6.2%
790 CAPITAL ONE FINANCIAL CORP. 42,186
760 CIT GROUP, INC. 20,710
2,500 CITIGROUP, INC. 108,375
570 COUNTRYWIDE FINANCIAL CORP. 38,675
1,030 FREDDIE MAC 54,745
340 GOLDMAN SACHS GROUP, INC. 30,087
700 MORGAN STANLEY 34,153
-------------
328,931
-------------
FOOD/BEVERAGE PRODUCTS--1.5%
370 PEPSICO, INC. 16,480
1,455 THE COCA-COLA CO. 63,321
-------------
79,801
-------------
HEALTH CARE/HEALTH CARE SERVICES--2.0%
340 ANTHEM, INC.* 24,888
190 BOSTON SCIENTIFIC CORP.* 11,419
820 GUIDANT CORP. 41,164
420 HCA, INC. 15,956
460 OMNICARE, INC. 15,594
-------------
109,021
-------------
INSURANCE--2.8%
895 AMBAC FINANCIAL GROUP, INC. 58,103
310 AMERICAN INTERNATIONAL GROUP, INC. 18,467
990 AON CORP. 21,978
680 RENAISSANCERE HOLDINGS LTD (BERMUDA) 28,424
1,572 TRAVELERS PROPERTY CASUALTY CORP., CLASS A 24,193
-------------
151,165
-------------
INTERNET SERVICES/SOFTWARE--0.4%
420 EBAY, INC.* 23,323
-------------
MACHINERY & ENGINEERING EQUIPMENT--0.3%
290 INGERSOLL-RAND CO., LTD (BERMUDA), CLASS A 17,261
-------------
MANUFACTURING--0.3%
190 EATON CORP. 17,792
-------------
METALS/MINING--0.6%
1,130 ALCOA, INC. 32,273
-------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
<Page>
22
<Table>
<Caption>
SHARES ISSUER VALUE
------ ------ -----
MULTI-MEDIA--2.1%
1,010 AOL TIME WARNER, INC.* $ 16,524
620 COMCAST CORP., SPECIAL CLASS A* 17,583
190 E.W. SCRIPPS CO., CLASS A 16,452
1,320 VIACOM, INC., CLASS B 59,400
-------------
109,959
-------------
OIL & GAS--3.8%
410 ANADARKO PETROLEUM CORP. 17,835
510 BAKER HUGHES, INC. 17,065
365 CHEVRONTEXACO CORP. 26,598
310 CONOCOPHILLIPS 17,310
668 DEVON ENERGY CORP. 34,569
1,280 EXXON MOBIL CORP. 48,256
720 GLOBALSANTAFE CORP. 17,856
860 ROWAN COMPANIES, INC.* 21,534
-------------
201,023
-------------
PAPER/FOREST PRODUCTS--0.3%
390 BOWATER, INC. 16,891
-------------
PHARMACEUTICALS--5.1%
370 ABBOTT LABORATORIES 14,911
840 BRISTOL-MYERS SQUIBB CO. 21,311
635 ELI LILLY & CO. 42,247
470 FOREST LABORATORIES, INC.* 22,090
650 JOHNSON & JOHNSON 32,227
63 MEDCO HEALTH SOLUTIONS, INC.* 1,682
310 MERCK & CO., INC. 15,599
2,611 PFIZER, INC. 78,120
1,010 WYETH 43,279
-------------
271,466
-------------
RESTAURANTS/FOOD SERVICES--0.6%
830 DARDEN RESTAURANTS, INC. 18,094
500 YUM! BRANDS, INC.* 14,825
-------------
32,919
-------------
RETAILING--3.7%
510 ABERCROMBIE & FITCH CO., CLASS A* 15,524
860 CVS CORP. 28,036
1,520 HOME DEPOT, INC. 48,883
490 PIER 1 IMPORTS, INC. 10,079
650 TARGET CORP. 26,390
1,165 WAL-MART STORES, INC. 68,934
-------------
197,846
-------------
SEMI-CONDUCTORS--2.5%
770 ALTERA CORP.* 17,279
290 ANALOG DEVICES, INC.* 11,890
1,805 INTEL CORP. 51,658
520 INTERSIL CORP., CLASS A* 15,148
410 NOVELLUS SYSTEMS, INC.* 16,384
970 TEXAS INSTRUMENTS, INC. 23,135
-------------
135,494
-------------
SHIPPING/TRANSPORTATION--0.4%
370 UNITED PARCEL SERVICE, INC., CLASS B $ 23,221
-------------
TELECOMMUNICATIONS--1.8%
1,320 SBC COMMUNICATIONS, INC. 29,687
2,550 SPRINT CORP. - PCS GROUP* 13,235
1,453 VERIZON COMMUNICATIONS, INC. 51,319
-------------
94,241
-------------
UTILITIES--1.6%
1,250 PG&E CORP.* 27,713
1,061 PINNACLE WEST CAPITAL CORP. 36,391
1,350 XCEL ENERGY, INC. 19,778
-------------
83,882
-------------
TOTAL COMMON STOCKS
(COST $2,639,607) 2,924,538
-------------
<Caption>
PRINCIPAL
AMOUNT
(USD)
- ---------
U.S. TREASURY SECURITIES--7.9%
U.S. TREASURY NOTES & BONDS,
$ 10,000 2.13%, 10/31/04@+ 10,087
65,000 1.13%, 06/30/05+ 64,190
95,000 2.63%, 05/15/08+ 92,009
50,000 3.25%, 08/15/08 49,559
20,000 3.88%, 02/15/13+ 19,161
80,000 4.25%, 08/15/13+ 78,700
45,000 7.88%, 02/15/21+ 58,605
50,000 5.38%, 02/15/31+ 51,074
-------------
TOTAL U.S. TREASURY SECURITIES
(COST $433,500) 423,385
-------------
U.S. GOVERNMENT AGENCY SECURITIES--3.4%
FEDERAL HOME LOAN MORTGAGE CORP.,
25,000 4.25%, 06/15/05 25,964
75,000 3.50%, 09/15/07 75,098
FEDERAL NATIONAL MORTGAGE ASSOCIATION,
50,000 3.88%, 03/15/05 51,596
25,000 7.13%, 01/15/30 29,102
-------------
TOTAL U.S. GOVERNMENT AGENCY SECURITIES
(COST $179,036) 181,760
-------------
STATE AND MUNICIPAL OBLIGATION--0.1%
5,000 STATE OF ILLINOIS, TAXABLE PENSION, GO,
5.10%, 06/01/33
(COST $5,000) 4,375
-------------
CORPORATE NOTES & BONDS--5.7%
AEROSPACE--0.1%
5,000 GENERAL DYNAMICS CORP., 2.13%, 05/15/06 4,925
-------------
AUTOMOTIVE--0.6%
FORD MOTOR CREDIT CO.,
10,000 5.80%, 01/12/09 9,710
5,000 7.25%, 10/25/11 5,052
5,000 GENERAL MOTORS ACCEPTANCE CORP.,
8.00%, 11/01/31 4,810
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
<Page>
23
<Table>
<Caption>
PRINCIPAL
AMOUNT
(USD) ISSUER VALUE
- --------- ------ -----
AUTOMOTIVE (CONT'D)
$ 10,000 GENERAL MOTORS CORP., 8.38%, 07/15/33 $ 9,885
-------------
29,457
-------------
BANKING--1.0%
5,000 ABBEY NATIONAL CAPITAL TRUST I,
8.96%, 12/31/49, FRN+ 6,462
BANK OF AMERICA CORP.,
5,000 3.25%, 08/15/08+ 4,824
5,000 4.88%, 09/15/12+ 4,897
5,000 CBA CAPITAL TRUST I, 5.80%, 12/31/49,#+ 4,936
5,000 DEUTSCHE BANK FINANCIAL LLC, 5.38%, 03/02/15 4,907
5,000 HSBC CAPITAL FUNDING LP (CHANNEL ISLANDS),
4.61%, 12/31/49, FRN,# 4,625
5,000 KFW INTERNATIONAL FINANCE, INC.,
4.75%, 01/24/07 5,312
5,000 POPULAR NORTH AMERICA, INC., 4.25%, 04/01/08 5,005
5,000 ROYAL BANK OF SCOTLAND GROUP PLC
(UNITED KINGDOM), 7.65%, 12/31/49, FRN 5,825
5,000 WACHOVIA BANK NA, 5.00%, 08/15/15 4,839
5,000 WESTPAC CAPITAL TRUST III, 5.82%, 12/31/49,
FRN,# 4,984
-------------
56,616
-------------
DIVERSIFIED--0.3%
15,000 GENERAL ELECTRIC CAPITAL CORP.,
5.88%, 02/15/12, SER. A, MTN 15,713
-------------
FINANCIAL SERVICES--1.5%
5,000 AMERICAN EXPRESS CO., 4.88%, 07/15/13+ 4,875
5,000 AMERICAN EXPRESS CREDIT CORP.,
3.00%, 05/16/08+ 4,793
5,000 AMERICAN GENERAL FINANCE CORP.,
5.38%, 10/01/12, SER. H, MTN+ 5,028
5,000 CIT GROUP, INC., 5.50%, 11/30/07+ 5,275
5,000 CITIGROUP, INC., 7.25%, 10/01/10 5,726
5,000 CREDIT SUISSE FIRST BOSTON USA, INC.,
5.50%, 08/15/13 4,968
GOLDMAN SACHS GROUP, INC.,
5,000 5.70%, 09/01/12 5,123
5,000 4.75%, 07/15/13 4,728
HOUSEHOLD FINANCE CORP.,
5,000 8.00%, 07/15/10 5,855
5,000 6.38%, 10/15/11 5,352
5,000 ING CAPITAL FUNDING TRUST III,
8.44%, 12/31/49, FRN 5,857
10,000 MORGAN STANLEY, 5.80%, 04/01/07 10,736
5,000 SLM CORP., 5.63%, 08/01/33, MTN 4,568
5,000 UBS PREFERRED FUNDING TRUST I,
8.62%, 12/31/49, FRN 6,016
5,000 UFJ FINANCE AEC (ARUBA), 6.75%, 07/15/13 4,949
-------------
83,849
-------------
INSURANCE--0.4%
$ 5,000 AEGON NV (THE NETHERLANDS), 4.75%, 06/01/13+ $ 4,715
5,000 AXA FINANCIAL, INC., 7.75%, 08/01/10+ 5,813
5,000 MONUMENTAL GLOBAL FUNDING II,
3.85%, 03/03/08,# 4,973
5,000 NATIONWIDE FINANCIAL SERVICES, INC.,
5.90%, 07/01/12 5,142
-------------
20,643
-------------
MULTI-MEDIA--0.2%
5,000 AOL TIME WARNER, INC., 7.63%, 04/15/31+ 5,413
5,000 LIBERTY MEDIA CORP., 5.70%, 05/15/13 4,811
-------------
10,224
-------------
OIL & GAS--0.2%
5,000 ANADARKO FINANCE CO., 6.75%, 05/01/11, SER. B+ 5,569
5,000 DEVON FINANCING CORP. ULC, 7.88%, 09/30/31 5,760
-------------
11,329
-------------
PACKAGING--0.1%
5,000 SEALED AIR CORP., 6.88%, 07/15/33,# 4,848
-------------
PIPELINES--0.1%
5,000 KINDER MORGAN ENERGY PARTNERS LP,
7.40%, 03/15/31 5,525
-------------
RETAILING--0.1%
5,000 SAFEWAY, INC., 6.50%, 03/01/11 5,351
-------------
TELECOMMUNICATIONS--0.6%
5,000 AT&T BROADBAND CORP., 8.38%, 03/15/13+ 5,939
5,000 DEUTSCHE TELEKOM INTERNATIONAL FINANCE BV
(THE NETHERLANDS), 5.25%, 07/22/13 4,812
5,000 FRANCE TELECOM SA (FRANCE), 9.25%, 03/01/11 SUB 5,968
5,000 SPRINT CAPITAL CORP., 8.75%, 03/15/32 5,681
10,000 VERIZON NEW YORK, INC., 6.88%, 04/01/12, SER. A 11,013
-------------
33,413
-------------
UTILITIES--0.5%
5,000 CONSOLIDATED EDISON COMPANY OF NEW YORK,
5.63%, 07/01/12, SER. 2002-A 5,181
5,000 CONSTELLATION ENERGY GROUP, INC.,
4.55%, 06/15/15 4,405
5,000 DUKE CAPITAL CORP., 6.25%, 02/15/13 4,885
5,000 FLORIDA POWER & LIGHT CO., 4.85%, 02/01/13 4,941
5,000 NATIONAL RURAL UTILITIES COOPERATIVE
FINANCE CORP., 7.25%, 03/01/12, SER. C, MTN 5,647
-------------
25,059
-------------
TOTAL CORPORATE NOTES & BONDS
(COST $298,427) 306,952
-------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
<Page>
24
<Table>
<Caption>
PRINCIPAL
AMOUNT
(USD) ISSUER VALUE
- --------- ------ -----
RESIDENTIAL MORTGAGE BACKED SECURITIES--11.7%
MORTGAGE BACKED PASS-THROUGH SECURITIES--11.7%
$ 500,000 FEDERAL HOME LOAN MORTGAGE CORP.,
5.50%, 08/15/33, GOLD POOL, TBA $ 498,173
126,519 FEDERAL NATIONAL MORTGAGE ASSOCIATION,
5.50%, 10/01/32, POOL 657269 126,081
-------------
TOTAL RESIDENTIAL MORTGAGE BACKED SECURITIES
(COST $631,168) 624,254
-------------
COMMERCIAL MORTGAGE BACKED SECURITIES--1.5%
65,000 CREDIT SUISSE FIRST BOSTON MORTGAGE
SECURITIES CORP., 3.94%, 05/15/38, SER.
2003-C3, CLASS A5 58,847
20,000 LB-UBS COMMERCIAL MORTGAGE TRUST,
6.65%, 11/15/27, SER. 2001-C2, CLASS A2 22,018
-------------
TOTAL COMMERCIAL MORTGAGE BACKED SECURITIES
(COST $85,421) 80,865
-------------
ASSET BACKED SECURITIES--4.3%
25,000 AMERICREDIT AUTOMOBILE RECEIVABLES TRUST,
5.37%, 06/12/08, SER. 2001-B, CLASS A4+ 25,876
5,000 BANK ONE ISSUANCE TRUST,
4.77%, 02/16/16, SER. 2003-C3, CLASS C3+ 4,506
CAPITAL AUTO RECEIVABLES ASSET TRUST,
10,000 1.15%, 02/15/07, SER. 2003-2, CLASS A3B, FRN 9,999
5,000 1.96%, 01/15/09, SER. 2003-2, CLASS A4A 4,806
45,000 CAPITAL ONE MASTER TRUST,
5.45%, 03/16/09, SER. 2001-3A, CLASS A 47,556
5,000 CITIBANK CREDIT CARD ISSUANCE TRUST,
5.00%, 06/10/15, SER. 2003-C4, CLASS C4 4,542
5,000 DISCOVER CARD MASTER TRUST I,
1.16%, 05/16/07, SER. 2002-5, CLASS A, FRN 4,997
15,000 FORD CREDIT AUTO OWNER TRUST,
5.25%, 09/15/05, SER. 2001-C, CLASS A5 15,298
20,000 HOUSEHOLD AUTOMOTIVE TRUST,
2.22%, 11/17/09, SER. 2003-1, CLASS A4 19,411
45,000 MBNA CREDIT CARD MASTER NOTE TRUST,
5.75%, 10/15/08, SER. 2001-A1, CLASS A1 48,583
15,000 NISSAN AUTO RECEIVABLES OWNER TRUST,
2.05%, 03/16/09, SER. 2003-B, CLASS A4 14,519
5,000 ONYX ACCEPTANCE GRANTOR TRUST,
2.66%, 05/17/10, SER. 2003-C, CLASS A4 4,913
4,989 OPTION ONE MORTGAGE LOAN TRUST,
1.43%, 07/01/33, SER. 2003-5, CLASS A2, FRN 4,994
RESIDENTIAL ASSET SECURITIES CORP.,
7,344 1.36%, 07/25/32, SER. 2002-KS4, CLASS AIIB,
FRN 7,332
9,916 1.40%, 07/25/33, SER. 2003-KS5, CLASS AIIB,
FRN 9,897
5,000 WACHOVIA ASSET SECURITIZATION, INC.,
1.54%, 12/25/32, SER. 2002-HE2, CLASS A, FRN 5,009
-------------
TOTAL ASSET BACKED SECURITIES
(COST $227,133) 232,238
-------------
TOTAL LONG-TERM INVESTMENTS
(COST $4,499,292) 4,778,367
-------------
<Caption>
SHARES ISSUER VALUE
------ ------ -----
SHORT-TERM INVESTMENT--10.7%
MONEY MARKET FUND--10.7%
573,809 JPMORGAN PRIME MONEY MARKET FUND(a)+
(COST $573,809) $ 573,809
-------------
TOTAL INVESTMENTS--100.0%
(COST $5,073,101) $ 5,352,176
=============
</Table>
FUTURES CONTRACTS
<Table>
<Caption>
NOTIONAL UNREALIZED
NUMBER VALUE AT APPRECIATION/
OF EXPIRATION 8/31/03 (DEPRECIATION)
CONTRACTS DESCRIPTION DATE (USD) (USD)
- -----------------------------------------------------------------------------------
LONG FUTURES OUTSTANDING
1 2 Year Treasury Notes December, 2003 $ 213,047 $ 402
SHORT FUTURES OUTSTANDING
(2) 5 Year Treasury Notes December, 2003 (219,719) (423)
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
<Page>
25
U.S. GOVERNMENT INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS AS OF AUGUST 31, 2003
<Table>
<Caption>
PRINCIPAL
AMOUNT
(USD) ISSUER VALUE
- --------- ------ ------
LONG-TERM INVESTMENTS--93.3%
U.S. TREASURY SECURITIES--56.1%
U.S. TREASURY NOTES & BONDS,
$ 65,000 3.38%, 04/30/04 $ 65,960
250,000 1.13%, 06/30/05 246,885
115,000 3.50%, 11/15/06 118,046
90,000 3.00%, 11/15/07 89,546
100,000 2.63%, 05/15/08 96,852
60,000 4.38%, 08/15/12 60,038
35,000 4.25%, 08/15/13 34,431
25,000 3.88%, 02/15/13 23,951
150,000 8.50%, 02/15/20+ 205,342
85,000 6.25%, 08/15/23 94,353
75,000 6.75%, 08/15/26 88,623
5,000 6.13%, 08/15/29 5,533
15,000 6.25%, 05/15/30 16,930
-------------
TOTAL U.S. TREASURY SECURITIES
(COST $1,114,244) 1,146,490
-------------
U.S. GOVERNMENT AGENCY SECURITIES--29.2%
210,001 FEDERAL FARM CREDIT BANK, 3.88%, 12/15/04 215,793
FEDERAL HOME LOAN BANK,
175,000 2.13%, 12/15/04 176,172
35,000 4.50%, 11/15/12 34,081
180,000 FEDERAL HOME LOAN MORTGAGE CORP.,
4.50%, 07/15/13 172,229
-------------
TOTAL U.S. GOVERNMENT AGENCY SECURITIES
(COST $599,093) 598,275
-------------
RESIDENTIAL MORTGAGE BACKED SECURITY--8.0%
MORTGAGE BACKED PASS-THROUGH SECURITY--8.0%
165,000 FEDERAL NATIONAL MORTGAGE ASSOCIATION,
5.50%, 09/25/33, TBA+
(COST $162,473) 164,278
-------------
TOTAL LONG-TERM INVESTMENTS
(COST $1,875,810) 1,909,043
-------------
<Caption>
SHARES
------
SHORT-TERM INVESTMENT--6.7%
MONEY MARKET FUND--6.7%
136,406 JPMORGAN U.S. GOVERNMENT MONEY
MARKET FUND(a)
(COST $136,406) 136,406
-------------
TOTAL INVESTMENTS--100.0%
(COST $2,012,216) $ 2,045,449
=============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
<Page>
26
MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS AS OF AUGUST 31, 2003
<Table>
<Caption>
PRINCIPAL
AMOUNT
(USD) ISSUER VALUE
- --------- ------ -----
MONEY MARKET INSTRUMENTS--100.0%
U.S. TREASURY SECURITY--51.8%
$ 1,047,000 U.S. TREASURY BILL, 0.96%, 09/25/03
(COST $1,046,327) $ 1,046,327
-------------
U.S. GOVERNMENT AGENCY SECURITIES--48.2%
300,000 FEDERAL HOME LOAN BANK, DN, 0.99%, 09/17/03 299,868
260,000 FEDERAL HOME LOAN MORTGAGE CORP., DN,
0.94%, 12/22/03 259,240
260,000 FEDERAL NATIONAL MORTGAGE ASSOCIATION, DN,
0.92%, 12/10/03 259,339
155,000 STUDENT LOAN MARKETING ASSOCIATION, DN,
0.93%, 09/02/03 154,996
-------------
TOTAL U.S. GOVERNMENT AGENCY SECURITIES
(COST $973,443) 973,443
-------------
TOTAL INVESTMENTS--100.0%
(COST $2,019,770)** $ 2,019,770
=============
</Table>
INDEX:
* = Non-income producing security.
** = The cost of securities is substantially the same for federal income tax
purposes.
# = All or a portion of this security is a 144A or private placement
security and can only be sold to qualified institutional buyers.
+ = All or a portion of this security is segregated with the custodian for
futures contracts, TBA, when issued, or delayed delivery securities.
@ = Security is fully or partially segregated with brokers as initial
margin for futures contracts.
(a) = Affiliated. Money market fund registered under the Investment Company
Act of 1940, as amended and advised by JPMorgan Fleming Asset
Management, Inc.
ADR = American Depositary Receipt.
DN = Discount Note. The rate shown is the effective yield at the date of
purchase.
FRN = Floating Rate Note. The maturity date is the actual maturity date; the
rate shown is the rate in effect as August 31, 2003.
GDR = Global Depositary Receipt.
GO = General Obligation Bond.
MTN = Medium Term Note.
SUB = Step-up Bond. The rate shown is the rate in effect as August 31, 2003.
SER.= Series.
TBA = To Be Announced.
USD = United States Dollar.
SEE NOTES TO FINANCIAL STATEMENTS.
<Page>
27
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2003
<Table>
<Caption>
GROWTH AND CAPITAL INTERNATIONAL ASSET U.S. GOVERNMENT MONEY
INCOME GROWTH EQUITY ALLOCATION INCOME MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------- ------------ --------------- ------------
ASSETS:
Investment securities, at value $ 6,454,760 $ 5,218,785 $ 4,583,572 $ 5,352,176 $ 2,045,449 $ 2,019,770
Cash 546 354 18,113 274 -- 59
Foreign currency, at value -- -- 4,819 -- -- --
Receivables:
Investment securities sold 18,984 -- 11,272 165,297 -- --
Interest and dividends 12,196 731 8,251 14,508 9,636 --
Foreign tax reclaim -- -- 9,467 -- -- --
Expense reimbursement from Administrator 2,713 4,642 8,934 6,691 6,249 5,271
------------ ------------ ------------ ------------ ------------ ------------
TOTAL ASSETS 6,489,199 5,224,512 4,644,428 5,538,946 2,061,334 2,025,100
------------ ------------ ------------ ------------ ------------ ------------
LIABILITIES:
Payables:
Investment securities purchased 34,598 -- -- 663,493 196,942 --
Fund shares redeemed 62,418 52,148 251 8,540 281 --
Variation margin -- -- -- 219 -- --
Accrued liabilities:
Custodian fees 7,622 5,648 4,850 7,178 6,265 11,386
Trustees' fees--deferred compensation plan 3,258 1,584 1,994 2,204 1,128 1,266
Other 30,446 32,488 35,900 28,551 29,054 21,195
------------ ------------ ------------ ------------ ------------ ------------
TOTAL LIABILITIES 138,342 91,868 42,995 710,185 233,670 33,847
------------ ------------ ------------ ------------ ------------ ------------
NET ASSETS:
Paid in capital 8,219,905 4,946,135 5,933,239 6,197,678 1,481,763 1,989,391
Accumulated undistributed (overdistributed)
net investment income 47,359 (1,586) 67,775 48,190 66,871 1,831
Accumulated net realized gain (loss) on
investments, futures and foreign exchange
transactions (2,312,537) (594,912) (1,209,199) (1,696,161) 245,797 31
Net unrealized appreciation (depreciation)
of investments, futures and foreign
currency translations 396,130 783,007 (190,382) 279,054 33,233 --
------------ ------------ ------------ ------------ ------------ ------------
NET ASSETS APPLICABLE TO INVESTORS'
BENEFICIAL INTERESTS $ 6,350,857 $ 5,132,644 $ 4,601,433 $ 4,828,761 $ 1,827,664 $ 1,991,253
============ ============ ============ ============ ============ ============
Shares of beneficial interest outstanding
($0.001 par value; unlimited number of
shares authorized) 613,053 484,566 591,209 551,693 189,863 1,989,339
Net asset value, maximum offering price
per share and redemption price per
share $ 10.36 $ 10.59 $ 7.78 $ 8.75 $ 9.63 $ 1.00
============ ============ ============ ============ ============ ============
Cost of investments $ 6,058,630 $ 4,435,778 $ 4,774,043 $ 5,073,101 $ 2,012,216 $ 2,019,770
============ ============ ============ ============ ============ ============
Cost of foreign currency $ -- $ -- $ 4,814 $ -- $ -- $ --
============ ============ ============ ============ ============ ============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
<Page>
28
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2003
<Table>
<Caption>
GROWTH AND CAPITAL INTERNATIONAL ASSET U.S. GOVERNMENT MONEY
INCOME GROWTH EQUITY ALLOCATION INCOME MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------- ------------ --------------- ------------
INVESTMENT INCOME:
Interest $ -- $ -- $ -- $ 70,213 $ 157,151 $ 40,640
Dividend 136,782 11,201 129,374 47,599 -- --
Dividend income from affiliated investments* 1,462 1,240 -- 13,479 10,593 --
Foreign tax withheld -- -- (15,747) -- -- --
------------ ------------ ------------ ------------ ------------ ------------
TOTAL INVESTMENT INCOME 138,244 12,441 113,627 131,291 167,744 40,640
------------ ------------ ------------ ------------ ------------ ------------
EXPENSES:
Investment advisory fees 38,281 28,715 33,567 29,855 22,847 7,522
Administration fees 9,570 7,179 6,294 8,143 6,854 4,513
Accounting fees -- -- 64,839 -- -- --
Custodian fees 31,610 30,235 13,695 45,225 33,901 9,570
Printing and postage 6,967 4,647 4,882 3,686 5,243 3,624
Professional fees 34,805 39,214 46,261 39,515 32,568 24,907
Transfer agent fees 14,028 13,316 16,586 13,878 11,550 10,404
Trustees' fees 64 48 42 54 46 31
Other 6,005 6,232 7,180 6,183 5,594 4,832
------------ ------------ ------------ ------------ ------------ ------------
TOTAL EXPENSES 141,330 129,586 193,346 146,539 118,603 65,403
------------ ------------ ------------ ------------ ------------ ------------
Less amounts waived 47,851 35,894 39,861 37,998 29,701 12,035
Less expense reimbursements 36,050 50,108 107,331 62,382 52,298 36,819
Less earnings credits 8 511 -- 19 49 --
------------ ------------ ------------ ------------ ------------ ------------
NET EXPENSES 57,421 43,073 46,154 46,140 36,555 16,549
------------ ------------ ------------ ------------ ------------ ------------
NET INVESTMENT INCOME (LOSS) 80,823 (30,632) 67,473 85,151 131,189 24,091
------------ ------------ ------------ ------------ ------------ ------------
NET REALIZED GAIN (LOSS) ON TRANSACTIONS FROM:
Investments (963,229) (567,928) (280,371) (275,707) 288,354 31
Futures -- -- -- (14,667) -- --
Foreign currency -- -- 2,714 -- -- --
CHANGE IN NET UNREALIZED APPRECIATION
(DEPRECIATION) OF:
Investments 1,509,993 1,592,599 500,501 531,907 (235,372) --
Futures -- -- -- 23,539 -- --
Foreign currency translations -- -- 1,079 -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Net realized and unrealized gain (loss) 546,764 1,024,671 223,923 265,072 52,982 31
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net assets from
operations $ 627,587 $ 994,039 $ 291,396 $ 350,223 $ 184,171 $ 24,122
============ ============ ============ ============ ============ ============
* Includes Reimbursements of Investment
Advisory and Administration fees: $ 244 $ 158 $ -- $ 1,725 $ 1,287 $ --
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
<Page>
29
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIODS INDICATED
<Table>
<Caption>
GROWTH AND INCOME CAPITAL GROWTH INTERNATIONAL EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
-------------------------- -------------------------- --------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
8/31/03 8/31/02 8/31/03 8/31/02 8/31/03 8/31/02
------------ ------------ ------------ ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss) $ 80,823 $ 100,865 $ (30,632) $ (26,107) $ 67,473 $ 48,854
Net realized gain (loss) on investments,
futures and foreign exchange transactions (963,229) (881,803) (567,928) 420,201 (277,657) (712,959)
Change in net unrealized appreciation
(depreciation) on investments, futures
and foreign currency translations 1,509,993 (719,509) 1,592,599 (2,071,240) 501,580 278,229
------------ ------------ ------------ ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS 627,587 (1,500,447) 994,039 (1,677,146) 291,396 (385,876)
------------ ------------ ------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (101,287) (158,117) -- (1,217) (67,750) --
Net realized gain on investment
transactions -- -- (962,703) -- -- --
------------ ------------ ------------ ------------ ------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (101,287) (158,117) (962,703) (1,217) (67,750) --
------------ ------------ ------------ ------------ ------------ ------------
INCREASE (DECREASE) FROM CAPITAL SHARE
TRANSACTIONS:
Proceeds from shares issued 120,953 117,157 227,262 142,281 95,931 74,842
Dividends reinvested 101,287 158,117 962,703 1,217 67,750 --
Cost of shares redeemed (1,574,502) (3,072,327) (1,362,946) (3,617,731) (342,935) (575,277)
------------ ------------ ------------ ------------ ------------ ------------
INCREASE (DECREASE) FROM CAPITAL SHARE
TRANSACTIONS (1,352,262) (2,797,053) (172,981) (3,474,233) (179,254) (500,435)
------------ ------------ ------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (825,962) (4,455,617) (141,645) (5,152,596) 44,392 (886,311)
NET ASSETS:
Beginning of period 7,176,819 11,632,436 5,274,289 10,426,885 4,557,041 5,443,352
------------ ------------ ------------ ------------ ------------ ------------
End of period $ 6,350,857 $ 7,176,819 $ 5,132,644 $ 5,274,289 $ 4,601,433 $ 4,557,041
============ ============ ============ ============ ============ ============
Accumulated undistributed
(overdistrubuted) net investment income $ 47,359 $ 67,823 $ (1,586) $ (1,918) $ 67,775 $ 65,338
------------ ------------ ------------ ------------ ------------ ------------
Share Transactions:
Issued 12,549 11,091 22,820 10,834 13,312 9,480
Reinvested 10,950 14,335 112,071 87 9,876 --
Redeemed (169,693) (286,609) (144,895) (282,163) (50,220) (74,907)
------------ ------------ ------------ ------------ ------------ ------------
Change in Shares (146,194) (261,183) (10,004) (271,242) (27,032) (65,427)
============ ============ ============ ============ ============ ============
<Caption>
ASSET ALLOCATION U.S. GOVERNMENT INCOME MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO
-------------------------- -------------------------- --------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
8/31/03 8/31/02 8/31/03 8/31/02 8/31/03 8/31/02
------------ ------------ ------------ ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss) $ 85,151 $ 110,842 $ 131,189 $ 218,711 $ 24,091 $ 61,574
Net realized gain (loss) on investments,
futures and foreign exchange transactions (290,374) (725,672) 288,354 206,984 31 638
Change in net unrealized appreciation
(depreciation) on investments, futures
and foreign currency translations 555,446 566 (235,372) 101,074 -- --
------------ ------------ ------------ ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS 350,223 (614,264) 184,171 526,769 24,122 62,212
------------ ------------ ------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (120,067) (205,827) (238,159) (355,820) (22,237) (61,574)
Net realized gain on investment
transactions -- -- (137,744) (84,486) (66) (138)
------------ ------------ ------------ ------------ ------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (120,067) (205,827) (375,903) (440,306) (22,303) (61,712)
------------ ------------ ------------ ------------ ------------ ------------
INCREASE (DECREASE) FROM CAPITAL SHARE
TRANSACTIONS:
Proceeds from shares issued 23,491 64,303 305,094 472,485 283,023 548,026
Dividends reinvested 120,067 205,827 375,903 440,306 22,303 59,898
Cost of shares redeemed (1,685,965) (599,602) (4,789,465) (1,043,067) (1,897,547) (901,383)
------------ ------------ ------------ ------------ ------------ ------------
INCREASE (DECREASE) FROM CAPITAL SHARE
TRANSACTIONS (1,542,407) (329,472) (4,108,468) (130,276) (1,592,221) (293,459)
------------ ------------ ------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (1,312,251) (1,149,563) (4,300,200) (43,813) (1,590,402) (292,959)
NET ASSETS:
Beginning of period 6,141,012 7,290,575 6,127,864 6,171,677 3,581,655 3,874,614
------------ ------------ ------------ ------------ ------------ ------------
End of period $ 4,828,761 $ 6,141,012 $ 1,827,664 $ 6,127,864 $ 1,991,253 $ 3,581,655
============ ============ ============ ============ ============ ============
Accumulated undistributed
(overdistrubuted) net investment income $ 48,190 $ 83,096 $ 66,871 $ 173,841 $ 1,831 $ (23)
------------ ------------ ------------ ------------ ------------ ------------
Share Transactions:
Issued 2,803 7,303 30,164 50,246 283,023 548,026
Reinvested 14,823 22,037 39,116 47,962 22,303 59,898
Redeemed (208,200) (67,990) (489,808) (107,913) (1,897,547) (901,383)
------------ ------------ ------------ ------------ ------------ ------------
Change in Shares (190,574) (38,650) (420,528) (9,705) (1,592,221) (293,459)
============ ============ ============ ============ ============ ============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
<Page>
30
FINANCIAL HIGHLIGHTS
<Table>
<Caption>
GROWTH AND INCOME PORTFOLIO
-------------------------------------------------------------
YEAR ENDED AUGUST 31,
2003 2002 2001 2000 1999
---- ---- ---- ---- ----
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period $ 9.45 $ 11.40 $ 13.91 $ 12.63 $ 12.36
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.13 0.15 0.14 0.11 0.06
Net gains (losses) on investments
(both realized and unrealized) 0.92 (1.92) (2.53) 1.21 2.58
---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 1.05 (1.77) (2.39) 1.32 2.64
---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS FROM:
Net investment income 0.14 0.18 0.12 0.04 0.09
Net realized gains -- -- -- -- 2.28
---------- ---------- ---------- ---------- ----------
TOTAL DISTRIBUTIONS 0.14 0.18 0.12 0.04 2.37
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 10.36 $ 9.45 $ 11.40 $ 13.91 $ 12.63
========== ========== ========== ========== ==========
TOTAL RETURN 11.33% (15.77%) (17.29%) 10.44% 21.23%
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period (thousands) $ 6,351 $ 7,177 $ 11,632 $ 16,223 $ 19,153
Ratios to Average Net Assets:
Expenses 0.90% 0.90% 0.90% 0.90% 0.90%
Net investment income (loss) 1.27% 1.06% 0.99% 0.73% 0.54%
Expenses without waivers,
reimbursements and earning credits 2.21% 1.95% 1.51% 1.37% 1.33%
Net investment income (loss) without
waivers, reimbursements and
earning credits (0.04%) 0.01% 0.38% 0.26% 0.11%
Portfolio turnover 33% 57% 14% 65% 114%
<Caption>
CAPITAL GROWTH PORTFOLIO
--------------------------------------------------------------
YEAR ENDED AUGUST 31,
2003 2002 2001 2000 1999
---- ---- ---- ---- ----
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period $ 10.66 $ 13.62 $ 16.31 $ 13.75 $ 11.72
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.07) (0.06) --(a) 0.03 0.07
Net gains (losses) on investments
(both realized and unrealized) 2.10 (2.90) (1.73) 3.54 3.37
---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 2.03 (2.96) (1.73) 3.57 3.44
---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS FROM:
Net investment income -- --(a) -- 0.09 0.09
Net realized gains 2.10 -- 0.96 0.92 1.32
---------- ---------- ---------- ---------- ----------
TOTAL DISTRIBUTIONS 2.10 -- 0.96 1.01 1.41
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 10.59 $ 10.66 $ 13.62 $ 16.31 $ 13.75
========== ========== ========== ========== ==========
TOTAL RETURN 23.63% (21.72%) (10.70%) 27.92% 30.59%
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period (thousands) $ 5,133 $ 5,274 $ 10,427 $ 13,177 $ 12,649
Ratios to Average Net Assets:
Expenses 0.90% 0.90% 0.90% 0.90% 0.90%
Net investment income (loss) (0.64%) (0.34%) (0.01%) 0.21% 0.59%
Expenses without waivers,
reimbursements and earning credits 2.71% 2.29% 1.75% 1.69% 1.70%
Net investment income (loss) without
waivers, reimbursements and
earning credits (2.45%) (1.73%) (0.86%) (0.58%) (0.21%)
Portfolio turnover 53% 98% 47% 128% 27%
<Caption>
INTERNATIONAL EQUITY PORTFOLIO
--------------------------------------------------------------
YEAR ENDED AUGUST 31,
2003 2002 2001 2000 1999
---- ---- ---- ---- ----
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period $ 7.37 $ 7.96 $ 13.30 $ 11.36 $ 9.63
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.11 0.08 0.08 (0.03) --
Net gains (losses) on investments
(both realized and unrealized) 0.41 (0.67) (2.98) 2.38 2.32
---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 0.52 (0.59) (2.90) 2.35 2.32
---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS FROM:
Net investment income 0.11 -- -- -- 0.10
Net realized gains -- -- 2.44 0.41 0.49
---------- ---------- ---------- ---------- ----------
TOTAL DISTRIBUTIONS 0.11 -- 2.44 0.41 0.59
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 7.78 $ 7.37 $ 7.96 $ 13.30 $ 11.36
========== ========== ========== ========== ==========
TOTAL RETURN 7.28% (7.41%) (24.76%) 20.58% 25.03%
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period (thousands) $ 4,601 $ 4,557 $ 5,443 $ 7,960 $ 7,337
Ratios to Average Net Assets:
Expenses 1.10% 1.10% 1.10% 1.10% 1.10%
Net investment income (loss) 1.60% 0.95% 0.71% (0.15%) 0.04%
Expenses without waivers,
reimbursements and earning credits 4.60% 3.88% 3.38% 2.62% 3.24%
Net investment income (loss) without
waivers, reimbursements and
earning credits (1.90%) (1.83%) (1.57%) (1.67%) (2.10%)
Portfolio turnover 16% 74% 98% 102% 170%
<Caption>
ASSET ALLOCATION PORTFOLIO
-------------------------------------------------------------------
YEAR ENDED AUGUST 31,
2003 2002 2001 2000 1999
---- ---- ---- ---- ----
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period $ 8.27 $ 9.34 $ 11.31 $ 10.72 $ 10.64
---------- ---------- ------------ ------------ ------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.15 0.15 0.25 0.29 0.24
Net gains (losses) on investments
(both realized and unrealized) 0.50 (0.95) (1.95) 0.68 1.04
---------- ---------- ------------ ------------ ------------
TOTAL FROM INVESTMENT OPERATIONS 0.65 (0.80) (1.70) 0.97 1.28
---------- ---------- ------------ ------------ ------------
LESS DISTRIBUTIONS FROM:
Net investment income 0.17 0.27 0.27 0.30 0.18
Net realized gains -- -- -- 0.08 1.02
---------- ---------- ------------ ------------ ------------
TOTAL DISTRIBUTIONS 0.17 0.27 0.27 0.38 1.20
---------- ---------- ------------ ------------ ------------
NET ASSET VALUE, END OF PERIOD $ 8.75 $ 8.27 $ 9.34 $ 11.31 $ 10.72
========== ========== ============ ============ ============
TOTAL RETURN 7.97% (8.90%) (15.20%) 9.31% 11.88%
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period (thousands) $ 4,829 $ 6,141 $ 7,291 $ 9,112 $ 9,324
Ratios to Average Net Assets:
Expenses 0.85% 0.85% 0.85% 0.85% 0.85%
Net investment income (loss) 1.57% 1.59% 2.39% 2.52% 2.48%
Expenses without waivers,
reimbursements and earning credits 2.70% 3.31% 2.25% 2.16% 1.90%
Net investment income (loss) without
waivers, reimbursements and
earning credits (0.28%) (0.87%) 0.99% 1.21% 1.43%
Portfolio turnover 243% 312% 100% 145% 112%
</Table>
(a) Amount is less than $0.005.
SEE NOTES TO FINANCIAL STATEMENTS.
<Page>
31
<Table>
<Caption>
U.S. GOVERNMENT INCOME PORTFOLIO
-----------------------------------------------------------
YEAR ENDED AUGUST 31,
2003 2002 2001 2000 1999
---- ---- ---- ---- ----
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period $ 10.04 $ 9.95 $ 9.44 $ 9.51 $ 10.12
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.45 0.37 0.51 0.59 0.52
Net gains (losses) on investments
(both realized and unrealized) (0.26) 0.45 0.46 0.10 (0.62)
---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 0.19 0.82 0.97 0.69 (0.10)
---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS FROM:
Net investment income 0.38 0.59 0.46 0.58 0.51
Net realized gains 0.22 0.14 -- 0.18 --
---------- ---------- ---------- ---------- ----------
TOTAL DISTRIBUTIONS 0.60 0.73 0.46 0.76 0.51
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 9.63 $ 10.04 $ 9.95 $ 9.44 $ 9.51
========== ========== ========== ========== ==========
TOTAL RETURN 1.97% 8.92% 10.53% 7.80% (1.15%)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period (thousands) $ 1,828 $ 6,128 $ 6,172 $ 5,885 $ 6,433
Ratios to Average Net Assets:
Expenses 0.80% 0.80% 0.80% 0.80% 0.80%
Net investment income (loss) 2.87% 3.61% 5.21% 5.70% 5.35%
Expenses without waivers,
reimbursements and earning credits 2.59% 2.47% 2.26% 2.49% 1.97%
Net investment income (loss) without
waivers, reimbursements and
earning credits 1.08% 1.94% 3.75% 4.01% 4.18%
Portfolio turnover 249% 458% 91% 37% 31%
<Caption>
MONEY MARKET PORTFOLIO
-------------------------------------------------------------
YEAR ENDED AUGUST 31,
2003 2002 2001 2000 1999
---- ---- ---- ---- ----
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.01 0.02 0.05 0.05 0.05
Net gains (losses) on investments
(both realized and unrealized) --(a) -- -- -- --
---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 0.01 0.02 0.05 0.05 0.05
---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS FROM:
Net investment income 0.01 0.02 0.05 0.05 0.05
Net realized gains --(a) --(a) -- -- --
---------- ---------- ---------- ---------- ----------
TOTAL DISTRIBUTIONS 0.01 0.02 0.05 0.05 0.05
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
TOTAL RETURN 0.70% 1.62% 5.05% 5.57% 4.66%
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period (thousands) $ 1,991 $ 3,582 $ 3,875 $ 3,883 $ 3,991
Ratios to Average Net Assets:
Expenses 0.55% 0.55% 0.55% 0.55% 0.55%
Net investment income (loss) 0.80% 1.61% 4.90% 5.43% 4.54%
Expenses without waivers,
reimbursements and earning credits 2.17% 2.55% 2.77% 2.51% 2.28%
Net investment income (loss) without
waivers, reimbursements and
earning credits (0.82%) (0.39%) 2.68% 3.47% 2.81%
Portfolio turnover -- -- -- -- --
</Table>
(a) Amount is less than $0.005.
SEE NOTES TO FINANCIAL STATEMENTS.
<Page>
32
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION--Mutual Fund Variable Annuity Trust ("MFVAT"), (the "Trust")
was organized on April 14, 1994 as a Massachusetts business trust, and is
registered under the Investment Company Act of 1940 (the "1940 Act"), as
amended, as an open-end management investment company. The Trust was
established to provide a funding medium for variable annuity contracts
issued by life insurance companies. Shares of the Trust are issued only to
insurance company separate accounts in connection with variable annuity
contracts. The Trust issues six separate series of shares (the
"Portfolio(s)"), each of which represents a separately managed portfolio of
securities with its own investment objectives. The Portfolios are the
Growth and Income Portfolio ("GIP"), Capital Growth Portfolio ("CGP"),
International Equity Portfolio ("IEP"), Asset Allocation Portfolio ("AAP"),
U.S. Government Income Portfolio ("USGIP") and Money Market Portfolio
("MMP").
On July 17, 2003, the Board of Trustees of MFVAT and on June 12, 2003, the
Board of Trustees of SunAmerica Series Trust ("SAST", together with MFVAT,
the "Trusts"), approved an agreement and plan of reorganization pursuant to
which each Current Fund listed in the table below will transfer all of its
assets and liabilities to a Successor Fund listed across from it in the
table below in exchange for shares of such Successor Fund (each, a
"reorganization") subject to approval by shareholders of the applicable
Current Fund. Upon consummation of a reorganization, each shareholder of
the Current Fund would receive the number of Class 1 shares of the
applicable Successor Fund with a total net asset value equal to the total
net asset value of such shareholder's Current Fund shares on the date of
the exchange. If a reorganization is approved by shareholders of a Current
Fund, such Current Fund's existence as a series of MFVAT will be terminated
following the applicable reorganization. If all reorganizations are
approved, it is the intention of the Board of Trustees of MFVAT to
terminate MFVAT.
A special meeting of shareholders of each Current Fund has been called for
Monday, December 1, 2003, to consider the applicable reorganization and
related transactions. Before these special meetings, shareholders will
receive a combined prospectus/proxy statement containing information about
the proposed reorganization relating to their Current Fund and information
about the relevant Successor Fund. If approved by the shareholders of a
Current Fund, the applicable reorganization will take place on Friday,
December 5, 2003, or another date determined by the Trusts that are
involved in the particular reorganization.
<Table>
<Caption>
CURRENT FUND SUCCESSOR FUND
------------------------------------ -----------------------------------------
Growth and Income Portfolio Davis Venture Value Portfolio
Capital Growth Portfolio Marsico Growth Portfolio
International Equity Portfolio International Growth and Income Portfolio
Asset Allocation Portfolio MFS Total Return Portfolio
U.S. Government Income Portfolio Cash Management Portfolio
Money Market Portfolio Cash Management Portfolio
</Table>
Effective August 20, 2003, the Portfolios closed to new shareholders.
2. SIGNIFICANT ACCOUNTING POLICIES
THE FOLLOWING IS A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOLLOWED BY
THE PORTFOLIOS:
The preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could
differ from those estimates.
A. VALUATION OF INVESTMENTS--Equity securities, purchased options and
futures contracts are valued at the last sale price on the exchange on
which they are primarily traded. The value of National Market Systems
equity securities quotes by the Nasdaq Stock Market, Inc. shall
generally be the Nasdaq Official Closing Price. Securities for which
sale prices are not available and other over-the-counter securities
are valued at the mean between the bid and ask quotations. Fixed
income securities, other than convertible bonds, with a maturity of 61
days or more held by the Portfolios will be valued each day based on
readily available market quotations received from independent or
affiliated commercial pricing services. Such pricing services will
generally provide bidside quotations. Convertible bonds are valued at
the last sale price on the primary exchange on which the bond is
principally traded. When valuations are not readily available,
securities are valued at fair value as determined in accordance with
procedures adopted by the Trustees. Valuations of securities may be
based upon current market prices of securities, which are comparable
in coupon, rating, maturity and industry. It is possible that the
estimated values may differ significantly from the values that would
have been used had a ready market for the
<Page>
33
investments existed and such differences could have been material. For
foreign securities, if activity in the local shares indicates that a
current local price should be used, or the market quotation is
determined to be not readily available or unreliable or material
events or conditions affecting the value of a portfolio security has
occurred since the last sale, such securities may be valued at fair
value in accordance with procedures adopted by the Trustees.
Short-term investments with 60 days or less to maturity at time of
purchase are valued at amortized cost, which approximates market
value.
Money market instruments held in the MMP are valued at amortized cost
which approximates market value. The MMP's use of amortized cost is
subject to the MMP's compliance with certain conditions as specified
under Rule 2a-7 of the 1940 Act.
B. FUTURES CONTRACTS--When a Portfolio enters into a futures contract, it
makes an initial margin deposit in a segregated account, either in
cash or liquid securities. Thereafter, the futures contract is marked
to market and the Portfolio makes (or receives) additional cash
payments daily to (or from) the broker. Changes in the value of the
contract are recorded as unrealized appreciation (depreciation) until
the contract is closed or settled.
The Portfolios may invest in exchange-traded interest rate futures for
hedging purposes, to either modify the duration of the Portfolios,
modify the yield curve exposure of the Portfolios, or in anticipation
of buying or selling a specific security.
IEP may invest in index futures contracts to control the asset mix of
the Portfolio in the most efficient manner, allowing the fund manager
to adjust country exposures while incurring minimal transaction costs.
Long index futures contracts are used to gain exposure to equities
when it is anticipated that this will be more efficient than buying
stocks directly. Short index futures contracts are used for hedging
purposes; i.e., to reduce the exposure to equities.
Use of long futures contracts subjects the Portfolios to risk of loss
in excess of the amounts shown on the Statement of Assets and
Liabilities, up to the notional value of the futures contracts. Use of
short futures contracts subjects the Portfolios to unlimited risk.
The Portfolios enter into futures contracts only on exchanges or
boards of trade. The exchange or board of trade acts as the
counterparty to each futures transaction; therefore, the Portfolio's
credit risk is limited to failure of the exchange or board of trade.
As of August 31, 2003, AAP had open futures contracts as shown on its
Portfolio of Investments.
C. FOREIGN CURRENCY TRANSLATIONS--The books and records of the Portfolios
are maintained in U.S. dollars. Foreign currency amounts are
translated into U.S. dollars at the prevailing exchange rates, or at
the mean of the current bid and asked prices, of such currencies
against the U.S. dollar as quoted by a major bank, on the following
basis:
1. Market value of investment securities and other assets and
liabilities: at the rate of exchange at the valuation date.
2. Purchases and sales of investment securities, income and
expenses: at the rates of exchange prevailing on the respective
dates of such transactions.
Although the net assets of the Portfolio are presented at the foreign
exchange rates and market values at the close of the periods, the
Portfolios do not isolate that portion of the results of operations
arising as a result of changes in the foreign exchange rates from the
fluctuations arising from changes in the market prices of securities
held or sold during the year. Accordingly, such realized foreign
currency gains (losses) are included in the reported net realized
gains (losses) on investment transactions.
Reported realized foreign exchange gains or losses arise from
disposition of foreign currency, currency gains or losses realized
between the trade and settlement dates on securities transactions, and
the difference between the amounts of dividends, interest, and foreign
withholding taxes recorded on the Portfolios' books on the transaction
date and the U.S. dollar equivalent of the amounts actually received
or paid. Unrealized foreign exchange gains and losses arise from
changes (due to the changes in the exchange rate) in the value of
foreign currency and other assets and liabilities denominated in
foreign currencies, which are held at period end.
D. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS--The Portfolios may enter
into forward foreign currency contracts (obligations to purchase or
sell foreign currency in the future on a date and price fixed at the
time the contracts are entered into) to manage the Portfolio's
exposure to foreign currency exchange fluctuations. Each day the
forward contract is open, changes in the
<Page>
34
value of the contract are recognized as unrealized gains or losses by
"marking to market". When the forward contract is closed, or the
delivery of the currency is made or taken, the Portfolio records a
realized gain or loss equal to the difference between the proceeds
from (or cost of) the closing transaction and the Portfolio's basis in
the contract. The Portfolios are subject to off-balance sheet risk to
the extent of the value of the contracts for purchases of foreign
currency and in an unlimited amount for sales of foreign currency.
As of August 31, 2003, the Portfolios had no outstanding forward
foreign currency exchange contracts.
E. SECURITY TRANSACTIONS AND INVESTMENT INCOME--Investment transactions
are accounted for on the trade date (the date the order to buy or sell
is executed). Securities gains and losses are calculated on the
identified cost basis. Interest income is determined on the basis of
coupon interest accrued using the interest method adjusted for
amortization of premiums and accretion of discounts. Dividend income
is recorded on the ex-dividend date or when the Portfolios first learn
of the dividend.
Purchases of To Be Announced (TBA), when-issued or delayed delivery
securities may be settled a month or more after the trade date;
interest income is not accrued until settlement date. It is each
Portfolio's policy to segregate assets with a current value at least
equal to the amount of its TBA, when-issued or delayed delivery
purchase commitments.
F. ALLOCATION OF EXPENSES--Expenses directly attributable to a Portfolio
are charged to that Portfolio; other expenses of the Trust are
allocated proportionately among each of the Portfolios within the
Trust in relation to the net assets of each Portfolio or on another
reasonable basis.
G. FEDERAL INCOME TAX STATUS--Each Portfolio is treated as a separate
taxable entity for Federal income tax purposes. The policy of the
Portfolios is to comply with the provisions of the Internal Revenue
Code applicable to regulated investment companies and to distribute to
shareholders all of their distributable net investment income and net
realized gain on investments. In addition, the Portfolios intend to
make distributions as required to avoid excise taxes. Accordingly, no
provision for Federal income or excise tax is necessary.
H. DISTRIBUTIONS TO SHAREHOLDERS--Dividends and distributions paid to
shareholders are recorded on the ex-dividend date. The amount of
dividends and distributions from net investment income and net
realized capital gains is determined in accordance with Federal income
tax regulations, which may differ from accounting principles generally
accepted in the United States of America. To the extent these
"book/tax" differences are permanent in nature, (i.e., that they
result from other than timing of recognition -- "temporary
differences") such amounts are reclassified within the capital
accounts based on their Federal tax-basis treatment.
The following amounts were reclassified within the capital accounts:
<Table>
<Caption>
ACCUMULATED ACCUMULATED
UNDISTRIBUTED/ NET REALIZED
PAID-IN (OVERDISTRIBUTED) GAIN (LOSS)
CAPITAL NET INVESTMENT INCOME ON INVESTMENTS
--------- --------------------- --------------
CGP $ (30,964) $ 30,964 $ --
IEP -- 2,714 (2,714)
AAP -- 10 (10)
</Table>
The reclassifications for CGP relate primarily to the character for
tax purposes of non-deductible net operating losses. The
reclassifications for IEP relate primarily to the character for tax
purposes of foreign currency gains and losses. The reclassifications
for AAP relate primarily to the character for tax purposes of
paydowns.
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
A. INVESTMENT ADVISORY FEE--Pursuant to an Investment Advisory Agreement,
J.P. Morgan Fleming Asset Management (USA), Inc. ("JPMFAM" or
"Advisor") acts as the investment advisor to the Portfolios. JPMFAM is
a direct wholly owned subsidiary of JPMorgan Chase Bank ("JPMCB") and
an indirect wholly owned subsidiary of J.P. Morgan Chase & Co.
("JPMorgan"). The Advisor supervises the investments of each
respective Portfolio and for such services is paid a fee. The fee is
accrued daily and paid monthly based on each Portfolio's respective
average daily net assets. The annual fee for each Portfolio is as
follows:
<Table>
<Caption>
INVESTMENT
PORTFOLIO: ADVISORY FEE (%)
----------------
GIP 0.60
CGP 0.60
IEP 0.80
AAP 0.55
USGIP 0.50
MMP 0.25
</Table>
<Page>
35
J.P. Morgan Fleming Asset Management (London) "JPMFAM(London)" Ltd:, a
wholly owned subsidiary of JPMCB, is the sub-advisor to IEP pursuant
to a sub-advisory agreement between JPMFAM and JPMFAM(London). For its
services as sub-advisor, JPMFAM(London) receives a portion of the fees
payable to JPMFAM as advisor.
The Advisor waived fees as outlined in Note 3.D.
The Portfolios, other than MMP, may invest in one or more of the
affiliated JPMorgan Money Market Funds. The Advisor has agreed to
waive and/or reimburse its advisory fee from the Portfolios in an
amount sufficient to offset any doubling up of investment advisory,
administration and shareholder servicing fees related to each
Portfolio's investment in an affiliated money market fund.
B. CUSTODIAN AND ACCOUNTING FEES--JPMCB provided portfolio accounting and
custody services for GIP, CGP, AAP and USGIP, (only custody services
is provided for IEP by JPMCB) for the entire year. As of May 5, 2003,
JPMCB provided portfolio accounting and custody services for MMP.
Compensation for such services is presented in the Statement of
Operations as custodian fees. The amounts paid to JPMCB for these
services from GIP, CGP, IEP, AAP, USGIP and MMP were: $31,610,
$30,235, $695, $45,225, $33,901 and $5,086, respectively. The
custodian fees may be reduced by credits earned by each Portfolio,
based on uninvested cash balances held by the custodian. Such earnings
credits are presented separately in the Statement of Operations.
C. ADMINISTRATION FEE--Pursuant to the Administration Agreement, JPMCB
(the "Administrator") provides certain administration services to the
Portfolios. In consideration of these services, the Administrator
receives a fee computed daily and paid monthly at the annual rate of
0.15% of each Portfolio's average daily net assets.
BISYS Fund Services, LP ("BISYS") serves as the Portfolios'
sub-administrator. For its services as sub-administrator, BISYS
receives a portion of the fees payable to JPMCB as Administrator.
The Administrator waived fees and reimbursed expenses as outlined in
Note 3.D.
D. WAIVERS AND REIMBURSEMENTS--For the year ended August 31, 2003, the
Portfolios' vendors voluntarily waived expenses as follows:
<Table>
<Caption>
GIP CGP IEP AAP USGIP MMP
--- --- --- --- ----- ---
Advisory $ 38,281 $ 28,715 $ 33,567 $ 29,855 $ 22,847 $ 7,522
Administration 9,570 7,179 6,294 8,143 6,854 4,513
-------- -------- -------- -------- -------- --------
Total $ 47,851 $ 35,894 $ 39,861 $ 37,998 $ 29,701 $ 12,035
</Table>
The Administrator voluntarily reimbursed certain expenses of the
portfolios as follows:
<Table>
<Caption>
GIP CGP IEP AAP USGIP MMP
--- --- --- --- ----- ---
Assumed Expenses $ 36,050 $ 50,108 $107,331 $ 62,382 $ 52,298 $ 36,819
</Table>
E. OTHER--Certain officers of the Trust are officers of JPMorgan or of
BISYS or their subsidiaries.
For the year ended August 31, 2003, there were no brokerage
commissions with brokers/dealers affiliated with JPMCB.
4. INVESTMENT TRANSACTIONS--For the year ended August 31, 2003, purchases and
sales of investments (excluding short-term investments) were as follows:
<Table>
<Caption>
GIP CGP IEP AAP USGIP
--- --- --- --- -----
Purchases (excluding U.S. Government) $ 2,052,121 $ 2,545,406 $ 666,749 $ 3,468,858 $ --
Sales (excluding U.S. Government) 3,261,854 3,692,874 874,949 4,297,675 --
Purchases of U.S. Government -- -- -- 8,743,330 10,672,203
Sales of U.S. Government -- -- -- 9,060,450 14,275,592
</Table>
5. FEDERAL INCOME TAX MATTERS--For Federal income tax purposes, the cost and
unrealized appreciation(depreciation) in value of the investment securities
at August 31, 2003, are as follows:
<Table>
<Caption>
GIP CGP IEP AAP USGIP
--- --- --- --- -----
Aggregate cost $ 6,173,018 $ 4,441,345 $ 5,415,704 $ 5,332,213 $ 2,014,072
----------- ----------- ----------- ----------- -----------
Gross unrealized appreciation 619,676 966,303 318,913 118,085 48,997
Gross unrealized depreciation (337,934) (188,863) (1,151,045) (98,122) (17,620)
----------- ----------- ----------- ----------- -----------
Net unrealized appreciation (depreciation) $ 281,742 $ 777,440 $ (832,132) $ 19,963 $ 31,377
=========== =========== =========== =========== ===========
</Table>
<Page>
36
The tax character of distributions paid during the years ended August 31,
2003, and August 31, 2002, respectively were as follows:
<Table>
<Caption>
YEAR ENDED AUGUST 31, 2003
--------------------------
ORDINARY LONG-TERM TOTAL
INCOME CAPITAL GAIN DISTRIBUTIONS
---------- ------------ -------------
GIP $ 101,287 $ -- $ 101,287
CGP -- 962,703 962,703
IEP 67,750 -- 67,750
AAP 120,067 -- 120,067
USGIP 319,927 55,976 375,903
MMP 22,303 -- 22,303
<Caption>
YEAR ENDED AUGUST 31, 2002
--------------------------
ORDINARY LONG-TERM TOTAL
INCOME CAPITAL GAIN DISTRIBUTIONS
---------- ------------ -------------
GIP $ 158,117 $ -- $ 158,117
CGP -- 1,217 1,217
AAP 205,827 -- 205,827
USGIP 410,879 29,427 440,306
MMP 61,712 -- 61,712
</Table>
At August 31, 2003, the components of net assets (excluding paid in
capital) on a tax basis were as follows:
<Table>
<Caption>
GIP CGP IEP
--- --- ---
Current distributable ordinary income $ 50,619 $ -- $ 73,951
Plus/Less: cumulative timing differences (3,260) (1,586) (1,996)
------------ ------------ ------------
Undistributed ordinary income or overdistribution of ordinary income $ 47,359 $ (1,586) $ 71,955
============ ============ ============
Current distributable long-term capital gain or tax basis capital loss carryover (1,339,183) (412,041) (240,887)
Plus/Less: cumulative timing differences (858,966) (177,304) (330,831)
------------ ------------ ------------
Undistributed long-term gains/accumulated capital loss (2,198,149) (589,345) (571,718)
============ ============ ============
Unrealized appreciation (depreciation) $ 281,742 $ 777,440 $ (832,043)
============ ============ ============
<Caption>
AAP USGIP MMP
--- ----- ---
Current distributable ordinary income $ 50,396 $ 165,766 $ 3,129
Plus/Less: cumulative timing differences (2,206) (1,129) (1,267)
------------ ------------ ------------
Undistributed ordinary income or overdistribution of ordinary income $ 48,190 $ 164,637 $ 1,862
============ ============ ============
Current distributable long-term capital gain or tax basis capital loss carryover (1,210,121) 149,887 --
Plus/Less: cumulative timing differences (226,856) -- --
------------ ------------ ------------
Undistributed long-term gains/accumulated capital loss (1,436,977) 149,887 --
============ ============ ============
Unrealized appreciation (depreciation) $ 19,870 $ 31,377 $ --
============ ============ ============
</Table>
For GIP, the difference between book and tax basis unrealized
appreciation/(depreciation) is primarily attributed to wash sale loss
deferrals. The cumulative timing difference account primarily consists of
deferred compensation, and post October capital loss deferrals. For CGP,
the difference between book and tax basis unrealized
appreciation/(deprecation) is primarily attributed to wash sale loss
deferrals. The cumulative timing difference account primarily consists of
deferred compensation, and post October capital loss deferrals. For IEP,
the difference between book and tax basis unrealized
appreciation/(depreciation) is primarily attibuted to wash sale loss
deferrals, and mark to market of Passive Foreign Investment Companies. The
cumulative timing difference account primarily consists of deferred
compensation, and post October capital loss deferrals. For AAP, the
difference between book and tax basis unrealized
appreciation/(depreciation) is primarily attributed to wash sale loss
deferrals, straddle loss deferrals, and the mark to market of futures. The
cumulative timing difference account primarily consists of deferred
compensation, and post October capital loss deferrals. For USGIP, the
difference between book and tax basis unrealized
appreciation/(depreciation) is primarily attributed to wash sale loss
deferrals. The cumulative timing difference account primarily consists of
deferred compensation. For MMP, the cumulative timing difference account
primarily consists of deferred compensation.
As of August 31, 2003, the following Portfolios have capital loss
carryovers which will be available to offset capital gains. To the extent
that any net capital loss carryovers are used to offset future capital
gains, it is probable that the gains so offset will not be distributed to
shareholders.
<Table>
<Caption>
EXPIRATION
FUND AMOUNT DATE
--- ------------ ---------------
GIP $ 467,476 August 31, 2008
200,302 August 31, 2010
671,405 August 31, 2011
------------
1,339,183
============
CGP 412,041 August 31, 2011
============
IEP 163,873 August 31, 2010
77,014 August 31, 2011
------------
240,887
============
AAP 67,791 August 31, 2008
299,875 August 31, 2009
346,788 August 31, 2010
495,667 August 31, 2011
------------
$ 1,210,121
============
</Table>
<Page>
37
Capital losses incurred after October 31, within a Portfolio's fiscal year
are deemed to arise on the first business day of the following fiscal year
for tax purposes. The following Portfolios have incurred the following
post-October realized losses.
<Table>
<Caption>
FUND AMOUNT
---- ---------
GIP $ 858,966
CGP 177,305
IEP 330,831
AAP 226,856
</Table>
6. CONCENTRATIONS AND INDEMNIFICATIONS--As of August 31, 2003, all shares
outstanding for each Portfolio are owned either directly or indirectly by a
single insurance company.
IEP may have elements of risk not typically associated with investments in
the United States of America due to concentrated investments in a limited
number of countries or regions which may vary throughout the year. Such
concentrations may subject the Portfolio to additional risks resulting from
political or economic conditions in such countries or regions and the
possible imposition of adverse governmental laws or currency exchange
restrictions could cause the securities and their markets to be less liquid
and their prices more volatile than those of comparable U.S. securities.
As of August 31, 2003, IEP invested 28.0% of its total investments in the
United Kingdom. The issuers' abilities to meet their obligations may be
affected by economic or political developments in a specific country or
region.
In the normal course of business, the Portfolios enter into contracts that
contain a variety of representations which provide general
indemnifications. Each Portfolio's maximum exposure under these
arrangements is unknown as this would involve future claims that may be
made against each Portfolio that have not yet occurred. However, based on
experience, the Portfolios expect the risk of loss to be remote.
7. SUBSEQUENT EVENT--On September 1, 2003, Robert Fleming, Inc. and J.P.
Morgan Fleming Asset Management (USA), Inc. merged into J.P. Morgan
Investment Management, Inc. ("JPMIM"). The investment advisory services and
personnel providing investment advice have not changed as a result of the
merger. Effective September 1, 2003, JPMIM, the surviving entity, will
serve as advisor to all the Portfolios.
On October 1, 2003, JPMIM changed from being a wholly owned subsidiary of
JPMorgan ("Parent") to being an indirectly wholly owned subsidiary of the
Parent, with the intermediary being J.P. Morgan Fleming Asset Management
Holdings, Inc.
<Page>
38
REPORT OF INDEPENDENT AUDITORS
To the Trustees and Shareholders of Mutual Fund Variable Annuity Trust:
In our opinion, the accompanying statements of assets and liabilities, including
the portfolios of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Growth and Income Portfolio,
Capital Growth Portfolio, International Equity Portfolio, Asset Allocation
Portfolio, U.S. Government Income Portfolio and Money Market Portfolio (separate
portfolios of Mutual Fund Variable Annuity Trust, hereafter referred to as the
"Trust") at August 31, 2003, the results of each of their operations for the
year then ended, the changes in each of their net assets for each of the two
years in the period then ended and the financial highlights for each of the five
years in the period then ended, in conformity with accounting principles
generally accepted in the United States of America. These financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Trust's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at August
31, 2003 by correspondence with the custodian and brokers, provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
October 20, 2003
<Page>
39
TRUSTEE AND OFFICER INFORMATION (UNAUDITED)
The following tables contain basic information regarding the Trustees and
Officers, respectively, that oversee operations of the Trusts and other
investment companies within the JPMorgan Funds complex.
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN
POSITIONS TERM OF JPMORGAN
HELD WITH OFFICE AND PRINCIPAL FUND OTHER DIRECTORSHIPS
NAME, CONTACT EACH LENGTH OF OCCUPATIONS COMPLEX(1) HELD OUTSIDE
ADDRESS AND JPMORGAN TIME DURING PAST OVERSEEN BY JPMORGAN FUND
DATE OF BIRTH TRUST SERVED 5 YEARS TRUSTEE COMPLEX
- -------------------------- -------------- ------------ ---------------------- --------------- ----------------------------
NON-INTERESTED TRUSTEE(S)
William J. Armstrong; Trustee Since 1994 Retired; Vice 71 None
522 Fifth Avenue, President and
New York, NY 10036; Treasurer of
12/4/1941 Ingersoll-Rand
Company
(manufacturer of
industrial equipment)
(1972-2000)
Roland R. Eppley, Jr.; Trustee Since 1994 Retired 71 Director, Janel Hydro Inc.
522 Fifth Avenue, (1993-Present)
New York, NY 10036;
4/1/1932
Ann Maynard Gray; Trustee Since 2001 Vice President of 71 Director of Duke Energy
522 Fifth Avenue, Capital Cities/ABC, Corporation, (1997-Present);
New York, NY 10036; Inc. (communications) Director of Elan
8/22/1945 (1986-1998); Corporation, Plc
President of (pharmaceuticals)
Diversified (2001-Present);
Publishing Director of The Phoenix
Group (1991-1997) Companies (wealth
management) (2002-Present)
Matthew Healey; Trustee and Since 2001 Retired; Chief 71 None
522 Fifth Avenue, President of Executive
New York, NY 10036; the Board Officer of certain
8/23/1937 of Trustees J.P. Morgan
Fund Trusts
(1982-2001)
Fergus Reid, III; Trustee and Since 1994 Chairman of 71 Trustee of 16 Morgan
522 Fifth Avenue, Chairman of Lumelite Stanley Funds
New York, NY 10036; the Board Corporation (plastics (1995-Present)
8/12/1932 of Trustees manufacturing)
(1985-Present)
James J. Schonbachler; Trustee Since 2001 Retired; Managing 71 None
522 Fifth Avenue, Director of Bankers
New York, NY 10036; Trust Company,
1/26/1943 (financial services)
(1968-1998); Group
Head and Director of
Bankers Trust, A.G.,
Zurich and BT
Brokerage Corp.
(financial services)
(1995-2002)
Robert J. Higgins; Trustee Since 2002 Director of 71 Director of Providian
522 Fifth Avenue, Administration of Financial Corp. (banking)
New York, NY 10036; the State of Rhode (2002-Present)
10/9/1945 Island (2003-Present);
President--
Consumer Banking
and Investment
Services Fleet Boston
Financial (1971-2002)
</Table>
(1) A Fund Complex means two or more investment companies that hold themselves
out to investors as related companies for purposes of investment and
investment services or have a common investment advisor or have an
investment advisor that is an affiliated person of the investment advisor
of any of the other investment companies. The JPMorgan Fund Complex for
which the Trustees serve includes 11 investment companies.
<Page>
40
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN
POSITIONS TERM OF JPMORGAN
HELD WITH OFFICE AND PRINCIPAL FUND OTHER DIRECTORSHIPS
NAME, CONTACT EACH LENGTH OF OCCUPATIONS COMPLEX HELD OUTSIDE
ADDRESS AND JPMORGAN TIME DURING PAST OVERSEEN BY JPMORGAN FUND
DATE OF BIRTH TRUST SERVED 5 YEARS TRUSTEE COMPLEX
- -------------------------- -------------- ------------ ---------------------- --------------- ----------------------------
Dr. Matthew Goldstein; Trustee Since 2003 Chancellor of the 71 Trustee of the
522 Fifth Avenue, City University of Albert Einstein School of
New York, NY 10036; New York, since Medicine (1998-present);
11/10/1941 September 1, 1999; Trustee of Bronx Lebanon
President, Adelphi Hospital Center
University (1992-present); Director of
(New York) New Plan Excel Realty
(1998-1999). Trust, Inc (real estate
investment company)
(2000-present); Director of
Lincoln Center Institute for
the Arts in Education
(1999-present); Director of
Jewish Community
Relations Counsel of
New York, Inc.
(2000-present);
Director of United Way of
New York City
(2002-present).
William G. Morton, Jr.; Trustee Since 2003 Formerly Chairman 71 Director of Radio Shack
522 Fifth Avenue, Emeritus (March Corporation (electronics)
New York, NY 10036; 2001 - October 2002), (1987-present); Director of
3/13/1937 and Chairman and the Griswold Company
Chief Executive (securities brokerage)
Officer, Boston (2002-present); Director of
Stock Exchange The National Football
(June 1985 - Foundation and College
March 2001). Hall of Fame (1994-present);
Trustee of the Berklee
College of Music
(1998-present); Trustee of
the Stratton Mountain
School (2001-present).
INTERESTED TRUSTEE(S)
Leonard M. Spalding* Trustee Since 1998 Retired; Chief 71 Director of Glenview
522 Fifth Avenue, Executive Officer Trust; Director of Pizza
New York, NY 10036; of Chase Mutual Magia; Trustee of
7/20/1935 Funds (investment St. Catherine College
company) Trust; Trustee of Bellarmine
(1989-1998); Chief University Trust; Director
Investment Executive of Marion Washington
of Chase Manhattan Airport Board Trust;
Private Bank Director of Springfield
(investment Washington Economic
management) Development Board Trust;
(1990-1995)
</Table>
* Mr. Spalding is deemed to be an "interested person" due to his ownership of
equity securities of J.P. Morgan Chase & Co.
<Page>
41
<Table>
<Caption>
POSITIONS
HELD WITH PRINCIPAL
NAME, EACH TERM OF OFFICE OCCUPATIONS
CONTACT ADDRESS JPMORGAN AND LENGTH OF DURING PAST
AND DATE OF BIRTH TRUST TIME SERVED 5 YEARS
- -------------------------- -------------- ---------------------- ------------------------------------
George Gatch; President Since 2001 Managing Director, J.P. Morgan
522 Fifth Avenue, Investment Management Inc.;
New York, NY Head of J.P. Morgan Fleming's
10036; U.S. Mutual Funds and Financial
12/21/1962 Intermediaries Business ("FFI");
he has held numerous positions
throughout the firm in business
management, marketing and sales.
David Wezdenko; Treasurer Since 2001 Managing Director, J.P. Morgan
522 Fifth Avenue, Investment Management Inc.;
New York, NY Chief Operating Officer for FFI;
10036; since joining J.P. Morgan Chase in
10/2/1963 1996, he has held numerous financial
and operation related positions
supporting the J.P. Morgan pooling
funds business.
Sharon J. Weinberg; Secretary Since 2001 Managing Director, J.P. Morgan
522 Fifth Avenue, Investment Management Inc.;
New York, NY Head of Business and Product
10036; Strategy for FFI; since joining
6/15/1959 J.P. Morgan Chase in 1996, she has
held numerous positions throughout
the asset management business in
mutual funds marketing, legal and
product development.
Stephen M. Ungerman; Vice President Since 2001 Vice President, J.P. Morgan
522 Fifth Avenue and Assistant Investment Management Inc. Business
New York, NY Treasurer Head for Vehicle Services Group
10036; within Fund Administration; prior
6/2/1953 to joining J.P. Morgan Chase in
2000, he held a number of senior
management positions in Prudential
Insurance Co. of America's asset
management business, including
Associate General Counsel, Tax
Director and Co-head of Fund
Administration Department; Mr.
Ungerman was also the Assistant
Treasurer of all mutual funds
managed by Prudential.
Judy R. Bartlett; Vice President Since 2001 Vice President and Assistant
522 Fifth Avenue, and Assistant General Counsel, J.P. Morgan
New York, NY Secretary Investment Management Inc., since
10036; September 2000; from August 1998
5/29/1965 through August 2000, she was an
attorney at New York Life
Insurance Company where she served
as Assistant Secretary for the
Mainstay Funds.
Joseph J. Bertini; Vice President Since 2001 Vice President and Assistant
522 Fifth Avenue, and Assistant General Counsel, J.P. Morgan
New York, NY Secretary Investment Management Inc.
10036;
11/4/1965
Wayne H. Chan Vice President Since 2003 Vice President and Assistant
522 Fifth Avenue, and Assistant General Counsel, J.P. Morgan
New York, NY Secretary Investment Management Inc., since
10036 September 2002; Mr. Chan was an
6/27/1965 associate at the law firm of
Shearman & Sterling LLP from May
2001 through September 2002;
Swidler Berlin Shereff Friedman
LLP from June 1999 through May
2001 and Whitman Breed Abbott &
Morgan LLP from September 1997
through May 1999
</Table>
<Page>
42
<Table>
<Caption>
POSITIONS
HELD WITH PRINCIPAL
NAME, EACH TERM OF OFFICE OCCUPATIONS
CONTACT ADDRESS JPMORGAN AND LENGTH OF DURING PAST
AND DATE OF BIRTH TRUST TIME SERVED 5 YEARS
- -------------------------- -------------- ---------------------- ----------------------------------
Paul M. DeRusso Assistant Since 2001 Vice President, J.P. Morgan
522 Fifth Avenue, Treasurer Investment Management, Inc.;
New York, NY Manager of the Budgeting and
10036 Expense Group of Funds
12/3/1954 Administration Group.
Lai Ming Fung Assistant Since 2001 Associate, J.P. Morgan Investment
522 Fifth Avenue, Treasurer Management, Inc.; Budgeting
New York, NY Analyst for the Budgeting and
10036 Expense Group of Funds
9/8/1974 Administration Group.
Mary D. Squires Assistant Since 2001 Vice President, J.P. Morgan
522 Fifth Avenue, Treasurer Investment Management, Inc.;
New York, NY Ms. Squires has held numerous
10036 financial and operations positions
1/8/1955 supporting the J.P. Morgan Chase
organization complex.
Nimish S. Bhatt Assistant Since 2001 Senior Vice President of
3435 Stelzer Rd. Treasurer Alternative Investment Products
Columbus, OH and Tax Services of BISYS Fund
43219 Services, Inc. since January 2002;
6/6/1963 held various positions within
BISYS since 1996, including Senior
Vice President of Fund
Administration and Financial
Services, Vice President and
Director of International
Operation, Vice President of
Financial Administration and Vice
President of Tax.
Arthur A. Jensen Assistant Since 2001 Vice President of Financial
3435 Stelzer Rd. Treasurer Services of BISYS Fund Services,
Columbus, OH Inc. since June 2001; formerly
43219 Section Manager of Northern Trust
9/28/1966 Company and Accounting Supervisor
at Allstate Insurance Company.
Martin R. Dean Assistant Since 2001 Vice President of Regulatory
3435 Stelzer Rd. Treasurer Services of BISYS Fund Services,
Columbus, OH Inc.
43219
11/27/1963
Alaina Metz Assistant Since 2001 Chief Administrative Officer of
3435 Stelzer Rd. Secretary BISYS Fund Services, Inc.;
Columbus, OH formerly, Supervisor of the Blue
43219 Sky Department of Alliance Capital
4/7/1967 Management, L.P.
Ryan M. Louvar Assistant Since 2003 Counsel of Legal Services, BISYS
60 State Street, Secretary Fund Services, Inc. since 2000;
Suite 1300 formerly Attorney at Hill, Farrer
Boston, MA & Burrill LLP from 1999 to 2000
02109 and Knapp Petersen & Clarke, PC
2/18/1972 from 1997 to 1999.
Lisa Hurley Assistant Since 2001 Executive Vice President and
60 State Street, Secretary General Counsel of BISYS Fund
Suite 1300 Services, Inc.
Boston, MA
02109
5/29/1955
Thomas J. Smith Vice President Since 2002 Managing Director, Head of
522 Fifth Avenue, and Assistant Compliance for J.P. Morgan Chase &
New York, NY Secretary Co.'s asset management business in
10036 the Americas.
6/24/1955
</Table>
Additional information concerning the Trustees is contained in the Statement of
Additional Information and is available without charge by calling
1-800-348-4782.
<Page>
43
TAX LETTER
(UNAUDITED)
Certain tax information for the Mutual Fund Variable Annuity Portfolios is
required to be provided to shareholders based upon the Portfolio's income and
distributions for the taxable year end August 31, 2003. The information and
distributions reported in this letter may differ from the information and
distributions taxable to the shareholders for the calendar year ending December
31, 2003. The information necessary to complete your income tax returns for the
calendar year ending December 31, 2003 will be received under separate cover.
FOR THE FISCAL YEAR ENDED AUGUST 31, 2003:
The following represents the long-term capital gains distributed by the
Portfolio:
<Table>
<Caption>
LONG-TERM
CAPITAL GAINS
PORTFOLIO DISTRIBUTIONS
- -------------------------------------------------------------------------
CGP $ 962,703
USGIP 55,976
</Table>
<Page>
THIS PAGE IS INTENTIONALLY LEFT BLANK
<Page>
[GRAPHIC]
A-7036-CRT
(C)J.P. MORGAN CHASE & CO., 2003.
ALL RIGHTS RESERVED. OCTOBER, 2003 F-7036(CMB)
AN-VCA-803
<Page>
ITEM 2. CODE OF ETHICS.
(a) Disclose whether, as of the end of the period covered by the report,
the registrant has adopted a code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party. If the registrant has not adopted such a code
of ethics, explain why it has not done so.
THE REGISTRANT HAS ADOPTED A CODE OF ETHICS THAT APPLIES TO THE REGISTRANT'S
PRINCIPAL EXECUTIVE OFFICER, PRINCIPAL FINANCIAL OFFICER, PRINCIPAL ACCOUNTING
OFFICER OR CONTROLLER, OR PERSONS PERFORMING SIMILAR FUNCTIONS.
THE REGISTRANT WILL PROVIDE ANY PERSON WITHOUT CHARGE, UPON REQUEST, A COPY OF
THE CODE OF ETHICS. A REQUEST MAY BE MADE BY CALLING 1-800-348-4782.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) Disclose that the registrant's board of directors has determined
that the registrant either:
(i) Has at least one audit committee financial expert
serving on its audit committee; or
(ii) Does not have an audit committee financial expert
serving on its audit committee.
THE REGISTRANT'S BOARD OF DIRECTORS HAS DETERMINED THAT THE REGISTRANT HAS AT
LEAST ONE AUDIT COMMITTEE FINANCIAL EXPERT SERVING ON ITS AUDIT COMMITTEE.
(2) If the registrant provides the disclosure required by paragraph
(a)(1)(i) of this Item, it must disclose the name of the audit
committee financial expert and whether that person is
"independent." In order to be considered "independent" for
purposes of this Item, a member of an audit committee may not,
other than in his or her capacity as a member of the audit
committee, the board of directors, or any other board committee:
(i) Accept directly or indirectly any consulting, advisory, or
other compensatory fee from the issuer; or
(ii) Be an "interested person" of the investment company as
defined in Section 2(a)(19) of the Act (15 U.S.C. 80a-
2(a)(19)).
THE AUDIT COMMITTEE FINANCIAL EXPERT IS WILLIAM ARMSTRONG. HE IS A
"NON-INTERESTED" TRUSTEE AND IS ALSO "INDEPENDENT" AS DEFINED BY THE SECURITIES
AND EXCHANGE COMMISSION FOR PURPOSES AUDIT COMMITTEE FINANCIAL EXPERT
DETERMINATIONS.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption AUDIT FEES, the aggregate fees billed for
each of the last two fiscal years for professional services rendered by the
principal accountant for the audit of the registrant's annual financial
statements or services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements for those fiscal
years.
(b) Disclose, under the caption AUDIT-RELATED FEES, the aggregate fees
billed in each of the last two fiscal years for assurance and related services
by the principal accountant that are reasonably related to the performance of
the audit of the registrant's financial statements and are not reported under
paragraph (a) of this Item. Registrants shall describe the nature of the
services comprising the fees disclosed under this category.
(c) Disclose, under the caption TAX FEES, the aggregate fees billed in each
of the last two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning. Registrants shall
describe the nature of the services comprising the fees disclosed under this
category.
(d) Disclose, under the caption ALL OTHER FEES, the aggregate fees billed in
each of the last two fiscal years for products and services provided by the
principal accountant, other than the services reported in paragraphs (a) through
(c) of this Item. Registrants shall describe the nature of the services
comprising the fees disclosed under this category.
(e) (1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
(2) Disclose the percentage of services described in each of
paragraphs (b) through (d) of this Item that were approved
<Page>
by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of
Regulation S-X.
(f) If greater than 50 percent, disclose the percentage of hours expended on
the principal accountant's engagement to audit the registrant's financial
statements for the most recent fiscal year that were attributed to work
performed by persons other than the principal accountant's full-time, permanent
employees.
(g) Disclose the aggregate non-audit fees billed by the registrant's
accountant for services rendered to the registrant, and rendered to the
registrant's investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the registrant for
each of the last two fiscal years of the registrant.
(h) Disclose whether the registrant's audit committee of the board of
directors has considered whether the provision of nonaudit services that were
rendered to the registrant's investment adviser (not including any subadviser
whose role is primarily portfolio management and is subcontracted with or
overseen by another investment adviser), and any entity controlling, controlled
by, or under common control with the investment adviser that provides ongoing
services to the registrant that were not pre-approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the
principal accountant's independence.
NOT APPLICABLE - ONLY EFFECTIVE FOR ANNUAL REPORTS WITH FISCAL YEARS ENDING ON
OR AFTER DECEMBER 15, 2003.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
NOT APPLICABLE.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
A closed-end management investment company that is filing an annual report
on this Form N-CSR must, unless it invests exclusively in non-voting securities,
describe the policies and procedures that it uses to determine how to vote
proxies relating to portfolio securities, including the procedures that the
company uses when a vote presents a conflict between the interests of its
shareholders, on the one hand, and those of the company's investment adviser;
principal underwriter; or any affiliated person (as defined in Section 2(a)(3)
of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules
thereunder) of the company, its investment adviser, or its principal
underwriter, on the other. Include any policies and procedures of the company's
investment adviser, or any other third party, that the company uses, or that are
used on the company's behalf, to determine how to vote proxies relating to
portfolio securities.
NOT APPLICABLE
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Disclose the conclusions of the registrant's principal executive officer
or officers and principal financial officer or officers, or persons performing
similar functions, about the effectiveness of the registrant's disclosure
controls and procedures (as defined in Rule 30a-2(c) under the Act (17 CFR
270.30a-2(c))) based on their evaluation of these controls and procedures as of
a date within 90 days of the filing date of the report that includes the
disclosure required by this paragraph.
THE REGISTRANT'S PRINCIPAL EXECUTIVE AND PRINCIPAL FINANCIAL OFFICERS HAVE
CONCLUDED, 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, THAT
THE REGISTRANT'S DISCLOSURE CONTROLS AND PROCEDURES ARE REASONABLY DESIGNED TO
ENSURE THAT INFORMATION REQUIRED TO BE DISCLOSED BY THE REGISTRANT ON FORM N-CSR
IS RECORDED, PROCESSED, SUMMARIZED AND REPORTED WITHIN THE REQUIRED TIME PERIODS
AND THAT INFORMATION REQUIRED TO BE DISCLOSED BY THE REGISTRANT IN THE REPORTS
THAT IT FILES OR SUBMITS ON FORM N-CSR IS ACCUMULATED AND COMMUNICATED TO THE
REGISTRANT'S MANAGEMENT, INCLUDING ITS PRINCIPAL EXECUTIVE AND PRINCIPAL
FINANCIAL OFFICERS, AS APPROPRIATE TO ALLOW TIMELY DECISIONS REGARDING REQUIRED
DISCLOSURE.
<Page>
(b) Disclose whether or not there were significant changes in the
registrant's internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
THERE WERE NO CHANGES IN THE REGISTRANT'S INTERNAL CONTROL OVER FINANCIAL
REPORTING THAT OCCURRED DURING THE REGISTRANT'S MOST RECENT FISCAL HALF-YEAR
(THE REGISTRANT'S SECOND FISCAL HALF-YEAR IN THE CASE OF AN ANNUAL REPORT) THAT
HAVE MATERIALLY AFFECTED, OR ARE 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 - SEE ITEM 2 ABOVE.
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2 under
the Act (17 CFR 270.30a-2).
CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 ARE
ATTACHED HERETO.
(b) A separate or combined certification for each principal executive
officer and principal officer of the registrant as required by Rule 30a-2(b)
under the Act of 1940.
CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 ARE
ATTACHED HERETO.
<Page>
SIGNATURES
[See General Instruction F]
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) Mutual Fund Variable Annuity Trust
--------------------------------------------------------------------
By (Signature and Title)* /s/ David Wezdenko
-------------------------------------------------------
David Wezdenko, Treasurer
Date October 21, 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/ David Wezdenko
-------------------------------------------------------
David Wezdenko, Treasurer
Date October 21, 2003
----------------------------------------------------------------------------
By (Signature and Title)* /s/ George C.W. Gatch
-------------------------------------------------------
George C.W. Gatch, President
Date October 21, 2003
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.
- --------------------------------------------------------------------------------