<Page> ----------------------------- OMB APPROVAL ----------------------------- OMB Number: 3235-0570 Expires: November 30, 2005 Estimated average burden hours per response....... 5.0 ----------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-7556 --------------------------------------------- Liberty Variable Investment Trust - ------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) One Financial Center, Boston, Massachusetts 02111 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Russell L. Kane, Esq. Columbia Management Group, Inc. One Financial Center Boston, MA 02111 - ------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 1-617-426-3363 ---------------------------- Date of fiscal year end: December 31, 2003 -------------------------- Date of reporting period: December 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. <Page> ITEM 1. REPORTS TO STOCKHOLDERS ANNUAL REPORT DECEMBER 31, 2003 [GRAPHIC] LIBERTY VARIABLE INVESTMENT TRUST 2003 ANNUAL REPORT LIBERTY VARIABLE INVESTMENT TRUST <Page> PRESIDENT'S MESSAGE Liberty Variable Investment Trust Dear Shareholder: After three years of disappointment, the recovery in the US economy came as a welcome relief. However, 2003 did not start on a strong note. During the first four months of the 12-month period that ended December 31, 2003, the overall mood of the country was restrained as war loomed, the US economy struggled to maintain positive growth and the job picture worsened. By May, many of the uncertainties that had plagued the economy showed signs of dissipating and the stage was finally set for a full-blown economic recovery. An end to the major military conflicts of the war with Iraq boosted consumer confidence. Corporations began to report significantly higher profits. The Federal Reserve Board cut short-term interest rates to a 45-year low of 1%--and promised to keep rates low until the economy was on solid ground. A tax package provided financial stimulus, which began to work its way into the economy during the summer months. Many economists grew optimistic that official gross domestic product (GDP) figures would reflect this renewed vigor. Yet, no one seemed prepared for how extraordinary that growth might be--8.2% in the third quarter, with estimates of 4% to 5% growth in the fourth quarter. The business sector had finally kicked into gear. Industrial production rose in the second half of 2003 and business spending--especially on technology-related items--showed strength. Even the labor market improved by year-end, with unemployment declining to 5.9% from a peak of 6.4% earlier in the year. The US financial markets anticipated the economy's rebound and many sectors picked up in advance of the most positive economic news. The US stock market came to life at the end of March. It suffered modest reversals as the period commenced, but generally speaking, the direction was upward. The S&P 500 Index returned 28.68% for the 12-month period as all major sectors of the market benefited from renewed investor enthusiasm and rising corporate profits. Foreign stock markets reported even higher gains. The MSCI EAFE Index rose 38.59% and the MSCI AC Free Asia ex Japan Index returned 46.98%. Most sectors of the US bond market also delivered positive returns for the calendar year, but they experienced extraordinary volatility as interest rates fell to historical lows, rose sharply as the economy improved and then came back down in the final months of 2003. High-yield bonds led the fixed-income markets. In fact, many high-yield bond funds outperformed stocks during the period. The debt of companies that had been beaten down over the past three years got the biggest boost as investors gained confidence that their prospects could improve with a stronger economy and a more accommodating climate in which to refinance debt at lower interest rates. Treasury and mortgage bonds suffered most from the shift in interest rates. Municipal bonds, however, held onto solid gains by the end of the period. Money market fund yields fell below 1%, reflecting historically low short-term interest rates. The recent rebound in economies and markets around the world serves as a strong reminder that a diversified portfolio offers an investor the opportunity to participate in the returns of a variety of markets over time. We encourage you to speak with your financial professional about the diversification opportunities offered by your annuity. And, we encourage you to read the following reports, which provide more detailed information about the performance and strategies used by individual portfolio managers. Sincerely, /s/ Joseph R. Palombo Joseph R. Palombo President Not FDIC May Lose Value Insured No Bank Guarantee Economic and market conditions change frequently. There is no assurance that the trends described in this report will continue or commence. <Page> PERFORMANCE AT A GLANCE Liberty Variable Investment Trust <Table> <Caption> AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/03 (%) INCEPTION 1-YEAR 5-YEAR 10-YEAR LIFE - --------------------------------------------------------------------------------------------------------------------------- LIBERTY VARIABLE INVESTMENT TRUST Colonial Small Cap Value Fund, Variable Series -- Class A 5/19/98 39.30 12.56 -- 8.33 Colonial Strategic Income Fund, Variable Series -- Class A 7/5/94 18.54 6.32 -- 7.93 Columbia High Yield Fund, Variable Series -- Class A 3/3/98 12.37 5.03 -- 5.95 Columbia International Fund, Variable Series -- Class A 5/2/94 35.54 0.36 -- 1.63 Columbia Real Estate Equity Fund, Variable Series -- Class A 3/3/98 33.69 12.09 -- 8.39 Liberty All-Star Equity Fund, Variable Series -- Class A 11/17/97 40.91 0.92 -- 3.75 Liberty Equity Fund, Variable Series -- Class A 1/11/93 24.14 -1.70 8.72 -- Liberty Growth & Income Fund, Variable Series -- Class A 7/5/94 19.79 1.52 -- 11.57 Liberty S&P 500 Index Fund, Variable Series -- Class A 5/30/00 27.80 -- -- -5.22 Liberty Select Value Fund, Variable Series -- Class A 5/30/00 27.61 -- -- 7.78 Newport Tiger Fund, Variable Series -- Class A 5/1/95 44.79 6.80 -- 1.63 </Table> Past performance does not guarantee future results. Current performance may be lower or higher than the performance data provided. For current month-end performance information, please contact your insurance company. <Page> TABLE OF CONTENTS Liberty Variable Investment Trust <Table> PORTFOLIO MANAGERS' DISCUSSIONS Colonial Small Cap Value Fund, Variable Series 2 Colonial Strategic Income Fund, Variable Series 18 Columbia High Yield Fund, Variable Series 39 Columbia International Fund, Variable Series 55 Columbia Real Estate Equity Fund, Variable Series 70 Liberty All-Star Equity Fund, Variable Series 83 Liberty Equity Fund, Variable Series 99 Libery Growth & Income Fund, Variable Series 113 Liberty S&P 500 Index Fund, Variable Series 127 Liberty Select Value Fund, Variable Series 146 Newport Tiger Fund, Variable Series 159 FINANCIAL STATEMENTS Colonial Small Cap Value Fund, Variable Series 4 Colonial Strategic Income Fund, Variable Series 20 Columbia High Yield Fund, Variable Series 41 Columbia International Fund, Variable Series 57 Columbia Real Estate Equity Fund, Variable Series 72 Liberty All-Star Equity Fund, Variable Series 85 Liberty Equity Fund, Variable Series 101 Libery Growth & Income Fund, Variable Series 115 Liberty S&P 500 Index Fund, Variable Series 129 Liberty Select Value Fund, Variable Series 148 Newport Tiger Fund, Variable Series 161 </Table> Must be preceded or accompanied by a prospectus. Columbia Funds Distributor, Inc. 2/2004 <Page> LIBERTY VARIABLE INVESTMENT TRUST Liberty Variable Investment Trust <Page> PORTFOLIO MANAGER'S DISCUSSION Colonial Small Cap Value Fund, Variable Series / December 31, 2003 Colonial Small Cap Value Fund, Variable Series seeks long-term growth by investing primarily in smaller capitalization equities. Stephen Barbaro has managed the fund since June 2002. For the year ended December 31, 2003, the fund delivered strong returns in line with its benchmark, the S&P SmallCap 600/Barra Value Index, as stocks rose sharply. The stock market's gains were propelled by an improving economy, strong consumer spending and continued low interest rates. Small-cap stocks led the market, benefiting from improved prospects that made bankers more willing to offer financing at reasonable rates. Lower-quality stocks dominated the market's gains, as many companies bounced back from the verge of bankruptcy in the first half of the year. Higher-quality stocks regained favor in the second half of the year. HIGH-QUALITY BIAS AND GOOD SECTOR ALLOCATION HELPED PERFORMANCE The fund maintained its focus on companies with strong competitive and financial positions, good earnings growth prospects and reasonable stock valuations. Our strategy was rewarded during the period as investors began to move away from more speculative stocks and focused on higher-quality stocks with the potential to do well in a steadily improving economy. STRONGEST RETURNS CAME FROM ECONOMICALLY-SENSITIVE AND FINANCE STOCKS The fund's biggest gains came from industrial and technology stocks, both of which had suffered sharp declines during the recession but made strong comebacks as the economy improved. In the industrial sector, the fund benefited from strong stock selection among machinery and equipment, transportation, business services and construction stocks. Within the technology sector, the fund owned a mix of software and hardware names, including semiconductor stocks, which did quite well. Many industrials and technology stocks with overseas sales also benefited from the weak US dollar. The fund was underweight in thrifts and real estate investment trusts, both of which trailed other financials. Our focus was on banks, insurance companies and specialty finance stocks. DISCIPLINED STOCK SELECTION DRIVES RETURNS FOR HEALTH CARE AND CONSUMER SECTORS Consumer discretionary and health care stocks generated strong absolute returns for the fund, even though we did not own what turned out to be the best performers in each sector. In the consumer discretionary sector, we maintained our focus on stocks with attractive valuations, which meant we did not hold some of the more expensive stocks that posted the biggest gains. Our investments, which included retailers and restaurants with attractive valuations, did, however, fare well. In the health care sector, we avoided speculative biotechnology stocks, which were especially strong gainers in the first half of the year, as well as hospitals. Our investments included nursing homes, specialty medical facilities and health maintenance organizations, which moved up nicely during the year. ECONOMY EXPECTED TO PLAY A KEY ROLE IN 2004 We expect the economy to continue to recover in 2004, providing a favorable environment for the stock market. However, we expect that the pace of any gains could slow as the recovery unfolds and interest rates edge higher. We believe small-cap stocks remain reasonably valued and have the potential to participate fully in any rally. We plan to maintain an economically-sensitive tilt to the portfolio, focusing on small-cap companies with strong balance sheets, market leadership positions and good earnings prospects. Economic and market conditions frequently change. There is no assurance that the trends described here will continue or commence. Investing in Colonial Small Cap Value Fund, Variable Series may present special risks, including possible illiquidity and greater price volatility than stocks of larger, more established companies. Value stocks are securities of companies that may have experienced adverse business or industry developments or may be subject to special risks that have caused the stocks to be out of favor. If the advisor's assessment of a company's prospects is wrong, the price of its stock may not approach the value the advisor has placed on it. 2 <Page> PERFORMANCE INFORMATION Colonial Small Cap Value Fund, Variable Series / December 31, 2003 AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 2003 (%) <Table> <Caption> 1-YEAR 5-YEAR LIFE - ------------------------------------------------------------- Class A (5/19/98) 39.30 12.56 8.33 S&P SmallCap 600/Barra Value Index(1) 40.06 11.03 7.45 </Table> Inception date of share class is in parentheses. <Table> <Caption> NET ASSET VALUE PER SHARE ($) 12/31/02 12/31/03 - -------------------------------------------------------------- Class A 10.48 14.23 </Table> [CHART] VALUE OF A $10,000 INVESTMENT, 5/19/98 - 12/31/03 Class A: $15,676 <Table> <Caption> CLASS A SHARES S&P SMALLCAP 600/BARRA VALUE INDEX 5/1998 $ 10,000 $ 10,000 5/31/1998 $ 10,020 $ 10,000 6/30/1998 $ 10,050 $ 9,995 7/31/1998 $ 9,120 $ 9,070 8/31/1998 $ 7,201 $ 7,434 9/30/1998 $ 7,461 $ 7,829 10/31/1998 $ 7,881 $ 8,171 11/30/1998 $ 8,401 $ 8,520 12/31/1998 $ 8,675 $ 8,855 1/31/1999 $ 8,464 $ 8,753 2/28/1999 $ 7,626 $ 8,040 3/31/1999 $ 7,525 $ 8,009 4/30/1999 $ 8,030 $ 8,707 5/31/1999 $ 8,354 $ 9,055 6/30/1999 $ 8,788 $ 9,604 7/31/1999 $ 8,778 $ 9,454 8/31/1999 $ 8,324 $ 9,057 9/30/1999 $ 8,273 $ 8,891 10/31/1999 $ 8,313 $ 8,685 11/30/1999 $ 8,545 $ 8,879 12/31/1999 $ 9,226 $ 9,123 1/31/2000 $ 8,640 $ 8,656 2/29/2000 $ 9,216 $ 9,047 3/31/2000 $ 9,358 $ 9,381 4/30/2000 $ 9,459 $ 9,446 5/31/2000 $ 9,317 $ 9,292 6/30/2000 $ 9,702 $ 9,559 7/31/2000 $ 9,793 $ 9,747 8/31/2000 $ 10,582 $ 10,317 9/30/2000 $ 10,582 $ 10,296 10/31/2000 $ 10,633 $ 10,346 11/30/2000 $ 9,874 $ 9,662 12/31/2000 $ 10,969 $ 11,026 1/31/2001 $ 11,071 $ 11,899 2/28/2001 $ 10,744 $ 11,397 3/31/2001 $ 10,570 $ 10,923 4/30/2001 $ 11,358 $ 11,581 5/31/2001 $ 11,695 $ 11,877 6/30/2001 $ 11,777 $ 12,332 7/31/2001 $ 11,849 $ 12,216 8/31/2001 $ 11,614 $ 12,019 9/30/2001 $ 10,226 $ 10,298 10/31/2001 $ 10,462 $ 10,769 11/30/2001 $ 11,167 $ 11,630 12/31/2001 $ 11,990 $ 12,470 1/31/2002 $ 12,083 $ 12,703 2/28/2002 $ 12,321 $ 12,648 3/31/2002 $ 13,182 $ 13,747 4/30/2002 $ 13,421 $ 14,310 5/31/2002 $ 13,006 $ 13,767 6/30/2002 $ 12,591 $ 13,152 7/31/2002 $ 11,056 $ 11,013 8/31/2002 $ 11,305 $ 10,999 9/30/2002 $ 10,531 $ 10,190 10/31/2002 $ 10,749 $ 10,394 11/30/2002 $ 11,581 $ 10,956 12/31/2002 $ 11,255 $ 10,665 1/31/2003 $ 10,912 $ 10,225 2/28/2003 $ 10,353 $ 9,847 3/31/2003 $ 10,385 $ 9,816 4/30/2003 $ 11,202 $ 10,704 5/31/2003 $ 12,126 $ 11,702 6/30/2003 $ 12,384 $ 12,050 7/31/2003 $ 13,039 $ 12,639 8/31/2003 $ 13,630 $ 13,247 9/30/2003 $ 13,509 $ 12,812 10/31/2003 $ 14,598 $ 13,954 11/30/2003 $ 15,174 $ 14,530 12/31/2003 $ 15,676 $ 14,940 </Table> PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA PROVIDED. FOR CURRENT MONTH-END PERFORMANCE INFORMATION, PLEASE CONTACT YOUR INSURANCE COMPANY. Total return performance includes changes in share price and reinvestment of all distributions. The S&P Small Cap 600/Barra Value Index is an unmanaged index that tracks the performance of value stocks, as determined by low price-to-book ratios included in the S&P SmallCap 600 Index. Indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. Performance numbers reflect all fund expenses, but do not include any insurance charges imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. (1) Index performance is from May 31, 1998. 3 <Page> INVESTMENT PORTFOLIO Colonial Small Cap Value Fund, Variable Series / December 31, 2003 <Table> <Caption> SHARES VALUE ------------ ------------ COMMON STOCKS--97.4% CONSUMER DISCRETIONARY--16.0% AUTO COMPONENTS--1.2% BorgWarner, Inc. 4,500 $ 382,815 Federal Signal Corp. 5,546 97,166 Modine Manufacturing Co. 6,950 187,511 Standard Motor Products, Inc. 15,800 191,970 ------------ 859,462 ------------ HOTELS, RESTAURANTS & LEISURE--3.0% Bally Total Fitness Holding Corp. (a) 29,100 203,700 Bob Evans Farms, Inc. 3,941 127,925 Buffalo Wild Wings, Inc. (a) 5,700 147,915 Landry's Restaurants, Inc. 15,250 392,230 Lone Star Steakhouse & Saloon 20,350 471,713 Prime Hospitality Corp. (a) 25,020 255,204 Scientific Games Corp., Class A (a) 27,600 469,476 ------------ 2,068,163 ------------ HOUSEHOLD DURABLES--1.8% American Greetings Corp. (a) 7,800 170,586 CSS Industries, Inc. 9,500 294,595 Interface, Inc., Class A (a) 31,400 173,642 Kimball International, Inc., Class B 20,500 318,775 Russ Berrie & Co, Inc. 3,200 108,480 Toro Co. 3,400 157,760 ------------ 1,223,838 ------------ LEISURE EQUIPMENT & PRODUCTS--0.8% Jakks Pacific, Inc. (a) 19,550 257,278 Johnson Outdoors, Inc. (a) 10,500 157,532 M&F Worldwide Corp. (a) 7,700 102,872 Travis Boats & Motors, Inc. (a) 18,136 11,970 ------------ 529,652 ------------ MEDIA--2.4% Alliance Atlantis Communications, Inc. (a) 31,000 474,920 Catalina Marketing Corp. (a) 13,600 274,176 Journal Communications, Inc., Class A 12,100 224,213 Liberty Corp. 8,700 393,153 Media General, Inc. 5,100 332,010 ------------ 1,698,472 ------------ MULTI-LINE RETAIL--0.6% BJ's Wholesale Club, Inc. (a) 8,200 188,272 ShopKo Stores, Inc. (a) 13,650 208,162 ------------ 396,434 ------------ SPECIALTY RETAIL--3.6% Building Material Holding Corp. 9,100 141,323 Compucom Systems, Inc. (a) 31,997 167,664 Friedman's, Inc. 21,200 142,252 Gadzooks, Inc. (a) 23,100 35,805 GameStop Corp., Class A (a) 15,000 231,150 Goody's Family Clothing, Inc. 26,300 246,168 Linens 'n Things, Inc. (a) 8,100 243,648 Monro Muffler, Inc. (a) 19,975 399,700 Movie Gallery, Inc. 6,500 $ 121,420 Rent-Way, Inc. (a) 43,700 357,903 TBC Corp. (a) 5,550 143,246 United Rentals, Inc. (a) 14,700 283,122 ------------ 2,513,401 ------------ TEXTILES, APPAREL & LUXURY GOODS--2.6% Delta Apparel, Inc. 6,150 109,532 Hampshire Group Ltd. (a) 10,500 329,385 Kellwood Co. 13,550 555,550 Maxwell Shoe Co. (a) 21,250 360,612 Russell Corp. 15,000 263,400 Stride Rite Corp. 18,700 212,806 ------------ 1,831,285 ------------ CONSUMER STAPLES--3.0% FOOD & DRUG RETAILING--0.8% NeighborCare, Inc. (a) 17,100 337,725 Winn-Dixie Stores, Inc. 20,900 207,955 ------------ 545,680 ------------ FOOD PRODUCTS--2.0% Central Garden and Pet Co. (a) 8,400 235,452 Corn Products International, Inc. 15,000 516,750 Omega Protein Corp. (a) 21,200 163,664 Ralcorp Holdings, Inc. (a) 16,250 509,600 ------------ 1,425,466 ------------ TOBACCO--0.2% Schweitzer-Mauduit International, Inc. 4,600 136,988 ------------ ENERGY--4.5% ENERGY EQUIPMENT & SERVICES--1.5% Lufkin Industries, Inc. 12,150 349,798 Universal Compression Holdings, Inc. (a) 10,650 278,604 Willbros Group, Inc. (a) 32,540 391,131 ------------ 1,019,533 ------------ OIL & GAS--3.0% Harvest Natural Resources, Inc. (a) 26,550 264,172 Stone Energy Corp. (a) 10,500 445,725 Vintage Petroleum, Inc. 30,100 362,103 Western Gas Resources, Inc. 5,500 259,875 Westport Resources Corp. (a) 15,650 467,309 Whiting Petroleum Corp. (a) 16,300 299,920 ------------ 2,099,104 ------------ FINANCIALS--22.4% BANKS--11.0% BancFirst Corp. 1,900 111,534 BancorpSouth, Inc. 14,100 334,452 BancTrust Financial Group, Inc. 4,942 79,171 Bank of Granite Corp. 13,500 294,030 </Table> See Notes to Investment Portfolio. 4 <Page> <Table> <Caption> SHARES VALUE ------------ ------------ Bryn Mawr Bank Corp. 16,700 $ 408,983 Capitol Bancorp Ltd. 6,100 173,240 Chemical Financial Corp. 13,467 490,064 Chittenden Corp. 15,400 518,056 Community First Bankshares, Inc. 10,650 308,211 Community Trust Bancorp, Inc. 8,284 250,177 Corus Bankshares, Inc. 14,300 451,308 First Citizens BancShares, Inc. 2,200 267,366 First Financial Bankshares, Inc. 6,875 286,687 Greater Bay Bancorp 10,900 310,432 Hancock Holding Co. 3,200 174,624 MainSource Financial Group, Inc. 5,445 166,998 MASSBANK Corp. 4,600 195,960 Merchants Bancshares, Inc. 10,900 332,995 MetroCorp. Bancshares, Inc. 2,150 32,014 Mid-State Bancshares 19,350 492,264 Northrim BanCorp., Inc. 10,000 229,500 Omega Financial Corp. 2,300 88,527 Riggs National Corp. 21,480 355,064 S.Y. Bancorp, Inc. 2,000 41,120 Simmons First National Corp. 10,000 279,000 Sterling Bancshares, Inc. 15,200 202,616 Trico Bancshares 13,750 433,950 Whitney Holding Corp. 7,900 323,821 ------------ 7,632,164 ------------ DIVERSIFIED FINANCIALS--2.2% Cash America International, Inc. 25,240 534,583 LaBranche & Co, Inc. 17,300 201,891 Metris Companies, Inc. 41,400 183,816 MFC Bancorp Ltd. (a) 33,400 614,560 ------------ 1,534,850 ------------ INSURANCE--4.0% AmerUs Group Co. 5,500 192,335 CNA Surety Corp. (a) 16,300 155,013 Commerce Group, Inc. 6,900 272,550 Delphi Financial Group 14,286 514,296 Horace Mann Educators Corp. 16,400 229,108 Kansas City Life Insurance Co. 1,600 73,920 Navigators Group, Inc. (a) 6,400 197,568 Phoenix Companies, Inc. 34,650 417,186 RLI Corp. 10,000 374,600 State Auto Financial Corp. 10,250 239,748 Universal American Financial Corp. (a) 14,100 139,731 ------------ 2,806,055 ------------ REAL ESTATE--5.2% American Financial Realty Trust, REIT 6,600 112,530 Boykin Lodging Co., REIT 27,700 253,455 EastGroup Properties, Inc., REIT 10,150 328,657 Equity One, Inc., REIT 16,200 273,456 First Potomac Realty Trust, REIT (a) 6,200 116,188 Getty Realty Corp. 10,750 281,112 Gladstone Commercial Corp. 13,000 219,050 Keystone Property Trust, REIT 10,950 $ 241,886 Mid-America Apartment Communities, Inc., REIT 10,750 360,985 Nationwide Health Properties, Inc., REIT 17,750 347,012 PS Business Parks, Inc., REIT 11,500 474,490 Tanger Factory Outlet Centers, Inc., REIT 4,000 162,800 Universal Health Reality Income Trust, REIT 7,200 216,720 Urstadt Biddle Properties, REIT 15,900 224,985 ------------ 3,613,326 ------------ HEALTH CARE--4.4% HEALTH CARE EQUIPMENT & SUPPLIES--0.3% Sola International, Inc. (a) 10,000 188,000 ------------ HEALTH CARE PROVIDERS & SERVICES--4.1% Chronimed, Inc. (a) 21,800 184,864 Cross Country Healthcare, Inc. (a) 15,500 231,260 Genesis HealthCare Corp. (a) 8,500 193,630 Hooper Holmes, Inc. 16,700 103,206 Kindred Healthcare, Inc. (a) 9,100 473,018 MAXIMUS, Inc. (a) 5,500 215,215 Pediatrix Medical Group, Inc. (a) 7,900 435,211 Province Healthcare Co. (a) 10,900 174,400 Stewart Enterprises, Inc. (a) 51,400 291,952 US Oncology, Inc. (a) 53,070 571,033 ------------ 2,873,789 ------------ INDUSTRIALS--19.6% AEROSPACE & DEFENSE--2.4% AAR Corp. (a) 21,223 317,284 Armor Holdings, Inc. (a) 8,500 223,635 Herley Industries, Inc. (a) 11,500 238,050 InVision Technologies, Inc. (a) 8,700 292,059 Ladish Co., Inc. (a) 24,350 197,503 Precision Castparts Corp. 9,400 426,854 ------------ 1,695,385 ------------ AIR FREIGHT & LOGISTICS--0.6% HUB Group, Inc., Class A (a) 2,456 52,902 Ryder System, Inc. 11,200 382,480 ------------ 435,382 ------------ AIRLINES--0.8% Atlantic Coast Airlines Holdings, Inc. (a) 14,300 141,570 MAIR Holdings, Inc. (a) 13,050 95,004 Skywest, Inc. 17,100 309,852 ------------ 546,426 ------------ BUILDING PRODUCTS--1.8% Hughes Supply, Inc. 6,600 327,492 Jacuzzi Brands, Inc. (a) 29,800 211,282 NCI Building Systems, Inc. (a) 12,500 298,750 Watsco, Inc. 18,950 430,734 ------------ 1,268,258 ------------ </Table> See Notes to Investment Portfolio. 5 <Page> <Table> <Caption> SHARES VALUE ------------ ------------ COMMERCIAL SERVICES & SUPPLIES--6.5% ActivCard Corp. (a) 26,500 $ 208,820 Angelica Corp. 7,200 158,400 Casella Waste Systems, Inc. (a) 38,700 529,803 Century Business Services, Inc. (a) 43,000 192,210 Consolidated Graphics, Inc. (a) 16,050 506,859 Danka Business Systems, ADR (a) 41,900 184,360 Electro Rent Corp. (a) 7,050 94,047 First Consulting Group, Inc. (a) 17,027 95,862 Healthcare Services Group, Inc. 13,700 264,273 Imagistics International, Inc. (a) 17,750 665,625 Ionics, Inc. (a) 9,700 308,945 Lightbridge. Inc. (a) 16,399 149,231 MPS Group, Inc. (a) 60,100 561,935 NCO Group, Inc. (a) 10,900 248,193 RemedyTemp, Inc., Class A (a) 685 7,473 SourceCorp. (a) 10,900 279,367 Teletech Holdings, Inc. (a) 3,132 35,392 ------------ 4,490,795 ------------ CONSTRUCTION & ENGINEERING--1.7% Comfort Systems USA, Inc. (a) 36,550 200,294 EMCOR Group, Inc. (a) 5,200 228,280 MasTec, Inc. (a) 6,600 97,746 Quanta Services, Inc. (a) 10,900 79,570 Shaw Group, Inc. (a) 17,850 243,117 Washington Group International, Inc. (a) 10,200 346,494 ------------ 1,195,501 ------------ ELECTRICAL EQUIPMENT--2.0% C&D Technologies, Inc. 15,800 302,886 Genlyte Group, Inc. (a) 6,100 356,118 Tecumseh Products Co. 7,400 358,382 Woodward Governor Co. 6,000 340,980 ------------ 1,358,366 ------------ MACHINERY--2.9% Alamo Group, Inc. 7,700 117,502 Briggs & Stratton 5,600 377,440 Esterline Technologies Corp. (a) 15,800 421,386 Harsco Corp. 12,200 534,604 Kadant, Inc. (a) 16,000 346,400 UNOVA, Inc. (a) 8,900 204,255 ------------ 2,001,587 ------------ ROAD & RAIL--0.9% Covenant Transport, Inc. (a) 12,350 234,773 Dollar Thrifty Automotive Group, Inc. (a) 10,800 280,152 U.S. Xpress Enterprises, Inc., Class A (a) 7,400 90,650 ------------ 605,575 ------------ INFORMATION TECHNOLOGY--14.9% COMMUNICATIONS EQUIPMENT--3.0% Advanced Fibre Communications, Inc. (a) 17,100 344,565 Anaren, Inc. (a) 21,900 309,228 Andrew Corp. (a) 25,915 $ 298,282 Black Box Corp. 6,600 304,062 Cable Design Technologies Corp. (a) 20,900 187,891 McDATA Corp., Class A (a) 25,900 246,827 Optical Communication Products, Inc. (a) 43,100 159,470 Tollgrade Communications, Inc. (a) 13,350 234,026 ------------ 2,084,351 ------------ COMPUTERS & PERIPHERALS--1.4% Advanced Digital Information Corp. (a) 4,500 63,000 Electronics for Imaging, Inc. (a) 11,200 291,424 Imation Corp. 3,000 105,450 Innovex, Inc. (a) 20,700 174,501 Intergraph Corp. (a) 6,866 164,235 Iomega Corp. (a) 29,500 176,410 ------------ 975,020 ------------ ELECTRONIC EQUIPMENT & INSTRUMENTS--3.4% Analogic Corp. 4,600 188,600 Anixter International, Inc. (a) 6,750 174,690 Benchmark Electronics, Inc. (a) 6,100 212,341 Checkpoint Systems, Inc. (a) 16,600 313,906 MTS Systems Corp. 18,150 349,024 NU Horizons Electronics Corp. (a) 27,700 271,460 OSI Systems, Inc. (a) 10,900 209,389 Planar Systems, Inc. (a) 8,000 194,560 Plexus Corp. (a) 8,400 144,228 Vishay Intertechnology, Inc. (a) 14,200 325,180 ------------ 2,383,378 ------------ INFORMATION TECHNOLOGY CONSULTING & SERVICES--1.5% Acxiom Corp. (a) 16,100 298,977 Agilysys, Inc. 13,350 148,852 American Management Systems, Inc. (a) 18,900 284,823 Computer Horizons Corp. (a) 30,500 119,865 Inforte Corp. (a) 20,900 173,261 ------------ 1,025,778 ------------ INTERNET SOFTWARE & SERVICES--1.3% Equinix, Inc. (a) 18,400 518,880 Keynote Systems, Inc. (a) 21,100 251,090 Modem Media, Inc. (a) 19,700 160,949 ------------ 930,919 ------------ SEMICONDUCTOR EQUIPMENT & PRODUCTS--1.3% Dupont Photomasks, Inc. (a) 11,950 288,473 Exar Corp. (a) 16,800 286,944 FSI International, Inc. (a) 17,300 127,674 Pericom Semiconductor Corp. (a) 16,800 179,088 ------------ 882,179 ------------ SOFTWARE--3.0% Captaris, Inc. (a) 30,800 173,096 Group 1 Software, Inc. (a) 15,700 276,634 Internet Security Systems, Inc. (a) 15,700 295,631 Lawson Software, Inc. (a) 20,900 172,007 MSC.Software Corp. (a) 27,100 256,095 </Table> See Notes to Investment Portfolio. 6 <Page> <Table> <Caption> SHARES VALUE ------------ ------------ PLATO Learning, Inc. (a) 40,562 $ 427,929 Sybase, Inc. (a) 12,900 265,482 Transaction Systems Architects, Inc. (a) 8,100 183,303 ------------ 2,050,177 ------------ MATERIALS--8.0% CHEMICALS--3.2% Cytec Industries, Inc. (a) 8,200 314,798 HB Fuller Co. 9,500 282,530 Hercules, Inc. (a) 12,100 147,620 Lubrizol Corp. 11,800 383,736 Minerals Technologies, Inc. 6,100 361,425 Schulman (A.), Inc. 12,450 265,434 Sensient Technologies Corp. 12,300 243,171 Stepan Co. 7,500 192,375 ------------ 2,191,089 ------------ CONSTRUCTION MATERIALS--1.0% AMCOL International Corp. 11,200 227,360 Centex Construction Products, Inc. 7,900 476,133 ------------ 703,493 ------------ CONTAINERS & PACKAGING--1.0% Aptargroup, Inc. 7,200 280,800 Greif, Inc., Class A 12,050 427,895 ------------ 708,695 ------------ METALS & MINING--2.4% Carpenter Technology Corp. 17,100 505,647 Peabody Energy Corp. 19,150 798,746 RTI International Metals, Inc. (a) 21,650 365,236 ------------ 1,669,629 ------------ PAPER & FOREST PRODUCTS--0.4% Glatfelter 9,100 113,295 Mercer International, Inc. (a) 21,200 135,256 ------------ 248,551 ------------ TELECOMMUNICATION SERVICES--0.6% DIVERSIFIED TELECOMMUNICATION SERVICES--0.3% North Pittsburgh Systems, Inc. 12,800 242,048 ------------ WIRELESS TELECOMMUNICATION SERVICES--0.3% Price Communications Corp. (a) 15,700 215,561 ------------ UTILITIES--4.0% ELECTRIC UTILITIES--3.0% Central Vermont Public Service Corp. 18,000 423,000 CH Energy Group, Inc. 12,100 567,490 El Paso Electric Co. (a) 20,500 273,675 Maine & Maritimes Corp. 3,900 136,539 MGE Energy, Inc. 7,100 223,721 Northeast Utilities 14,500 292,465 Otter Tail Corp. 6,400 171,072 ------------ 2,087,962 ------------ GAS UTILITIES--1.0% Cascade Natural Gas Corp. 7,800 $ 164,502 MDU Resources Group, Inc. 7,400 176,194 Northwest Natural Gas Co. 5,800 178,350 WGL Holdings, Inc. 6,200 172,298 ------------ 691,344 ------------ TOTAL COMMON STOCKS (cost of $58,803,952) 67,683,111 ------------ SINGLE PURPOSE TRUST--0.0% MATERIALS--0.0% PAPER & FOREST PRODUCTS--0.0% PRT Forest Regeneration Income Fund (a) (cost of $16,809) 2,599 18,100 ------------ <Caption> PAR ------------ SHORT-TERM OBLIGATION--2.7% Repurchase agreement with State Street Bank & Trust Co., dated 12/31/03, due 01/02/04 at 0.780%, collateralized by a U.S. Treasury Bond maturing 05/15/18, market value $1,889,081 (repurchase proceeds $1,846,080) (cost of $1,846,000) $ 1,846,000 1,846,000 ------------ TOTAL INVESTMENTS--100.1% (cost of $60,666,761) (b) 69,547,211 ------------ OTHER ASSETS & LIABILITIES, NET--(0.1)% (79,078) ------------ NET ASSETS--100.0% $ 69,468,133 ============ </Table> NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing. (b) Cost for federal income tax purposes is $60,661,428. <Table> <Caption> ACRONYM NAME ------- ---- ADR American Depositary Receipt REIT Real Estate Investment Trust </Table> See Notes to Financial Statements. 7 <Page> STATEMENT OF ASSETS & LIABILITIES Colonial Small Cap Value Fund, Variable Series / December 31, 2003 <Table> ASSETS: Investments, at cost $ 60,666,761 --------------- Investments, at value $ 69,547,211 Cash 872 Foreign currency (cost of $286) 286 Receivable for: Investments sold 104,407 Fund shares sold 1,214,011 Interest 40 Dividends 50,462 Expense reimbursement due from Investment Advisor/Distributor 43,117 Deferred Trustees' compensation plan 3,463 --------------- TOTAL ASSETS 70,963,869 --------------- LIABILITIES: Payable for: Investments purchased 1,197,209 Fund shares repurchased 207,776 Investment advisory fee 42,609 Transfer agent fee 624 Pricing and bookkeeping fees 2,857 Trustees' fees 413 Audit fee 22,010 Custody fee 3,256 Distribution fee--Class B 11,150 Deferred Trustees' fees 3,463 Other liabilities 4,369 --------------- TOTAL LIABILITIES 1,495,736 --------------- NET ASSETS $ 69,468,133 =============== COMPOSITION OF NET ASSETS: Paid-in capital $ 59,263,006 Undistributed net investment income 26,748 Accumulated net realized gain 1,297,929 Net unrealized appreciation on investments 8,880,450 --------------- NET ASSETS $ 69,468,133 =============== CLASS A: Net assets $ 10,738,479 Shares outstanding 754,473 =============== Net asset value per share $ 14.23 =============== CLASS B: Net assets $ 58,729,654 Shares outstanding 4,129,378 =============== Net asset value per share $ 14.22 =============== </Table> See Notes to Financial Statements. 8 <Page> STATEMENT OF OPERATIONS Colonial Small Cap Value Fund, Variable Series For the Year Ended December 31, 2003 <Table> INVESTMENT INCOME: Dividends $ 495,828 Interest 8,997 --------------- Total Investment Income (net of foreign taxes withheld of $1,250) 504,825 --------------- EXPENSES: Investment advisory fee 243,991 Distribution fee--Class B 54,357 Transfer agent fee 7,500 Pricing and bookkeeping fees 16,947 Trustees' fees 7,533 Custody fee 43,488 Audit fee 34,317 Other expenses 16,131 --------------- Total Expenses 424,264 Fees and expenses waived or reimbursed by Investment Advisor (33,956) Fees reimbursed by Distributor--Class B (54,357) Custody earnings credit (57) --------------- Net Expenses 335,894 --------------- Net Investment Income 168,931 --------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: Net realized gain on: Investments 2,016,791 Foreign currency transactions 213 --------------- Net realized gain 2,017,004 --------------- Net change in unrealized appreciation/depreciation on: Investments 9,341,975 Foreign currency translations 23 --------------- Net change in unrealized appreciation/depreciation 9,341,998 --------------- Net Gain 11,359,002 --------------- Net Increase in Net Assets from Operations $ 11,527,933 =============== </Table> See Notes to Financial Statements. 9 <Page> STATEMENT OF CHANGES IN NET ASSETS Colonial Small Cap Value Fund, Variable Series <Table> <Caption> YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, INCREASE (DECREASE) IN NET ASSETS: 2003 2002 - ---------------------------------- --------------- --------------- OPERATIONS: Net investment income $ 168,931 $ 37,492 Net realized gain on investments and foreign currency transactions 2,017,004 1,098,128 Net change in unrealized appreciation/depreciation on investments and foreign currency translations 9,341,998 (2,952,616) --------------- --------------- Net Increase (Decrease) from Operations 11,527,933 (1,816,996) --------------- --------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income: Class A (22,479) (8,389) Class B (119,531) (12,808) From net realized gains: Class A (238,640) (263,235) Class B (908,385) (401,913) --------------- --------------- Total Distributions Declared to Shareholders (1,289,035) (686,345) --------------- --------------- SHARE TRANSACTIONS: Class A: Subscriptions 2,010,453 4,146,927 Distributions reinvested 259,626 271,624 Redemptions (2,180,602) (4,761,716) --------------- --------------- Net Increase (Decrease) 89,477 (343,165) --------------- --------------- Class B: Subscriptions 40,839,812 6,130,731 Distributions reinvested 1,029,409 414,721 Redemptions (2,701,725) (2,107,183) --------------- --------------- Net Increase 39,167,496 4,438,269 --------------- --------------- Net Increase from Share Transactions 39,256,973 4,095,104 --------------- --------------- Total Increase in Net Assets 49,495,871 1,591,763 NET ASSETS: Beginning of period 19,972,262 18,380,499 --------------- --------------- End of period (including undistributed net investment income of $26,748 and $4,356, respectively) $ 69,468,133 $ 19,972,262 =============== =============== CHANGES IN SHARES: Class A: Subscriptions 173,870 350,768 Issued for distributions reinvested 19,197 25,946 Redemptions (191,845) (433,274) --------------- --------------- Net Increase (Decrease) 1,222 (56,560) --------------- --------------- Class B: Subscriptions 3,132,027 524,962 Issued for distributions reinvested 74,615 39,619 Redemptions (230,723) (191,963) --------------- --------------- Net Increase 2,975,919 372,618 --------------- --------------- </Table> See Notes to Financial Statements. 10 <Page> NOTES TO FINANCIAL STATEMENTS Colonial Small Cap Value Fund, Variable Series / December 31, 2003 NOTE 1. ORGANIZATION Colonial Small Cap Value Fund, Variable Series (the "Fund"), a series of Liberty Variable Investment Trust (the "Trust"), is a diversified portfolio. The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. INVESTMENT GOAL--The Fund seeks long-term growth by investing primarily in smaller capitalization stocks of U.S. companies. FUND SHARES--The Fund may issue an unlimited number of shares and offers two classes of shares: Class A and Class B. Each share class has its own expense structure. Shares of the Fund are available exclusively as a pooled funding vehicle for variable annuity contracts ("VA Contracts") and Variable Life Insurance Policies ("VLI Policies") offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies"). The Participating Insurance Companies and their separate accounts own all the shares of the Fund. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES--The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION--Equity securities are valued at the last sale price at the close of the principal exchange on which they trade. Unlisted securities or listed securities for which there were no sales during the day are valued at the closing bid price on such exchanges or over-the-counter markets. Short-term obligations maturing within 60 days are valued at amortized cost, which approximates market value. Investments for which market quotations are not readily available are valued at fair value as determined in good faith under consistently applied procedures established by and under the general supervision of the Board of Trustees. SECURITY TRANSACTIONS--Security transactions are accounted for on the trade date. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. REPURCHASE AGREEMENTS--The Fund may engage in repurchase agreement transactions with institutions that the Fund's investment advisor has determined are credit-worthy. The Fund, through its custodian, receives delivery of underlying securities collateralizing a repurchase agreement. Collateral is at least equal, at all times, to the value of the repurchase obligation including interest. A repurchase agreement transaction involves certain risks in the event of default or insolvency of the counterparty. These risks include possible delays or restrictions upon the Fund's ability to dispose of the underlying securities and a possible decline in the value of the underlying securities during the period while the Fund seeks to assert its rights. INCOME RECOGNITION--Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date. FOREIGN CURRENCY TRANSACTIONS--The values of all assets and liabilities quoted in foreign currencies are translated into U.S. dollars at that day's exchange rates. Net realized and unrealized gains (losses) on foreign currency transactions include gains (losses) arising from the fluctuation in exchange rates between trade and settlement dates on securities transactions, gains (losses) arising from the disposition of foreign currency and currency gains (losses) between the accrual and payment dates on dividends, interest income and foreign withholding taxes. The Fund does not distinguish that portion of gains (losses) on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the investments. Such fluctuations are included with the net realized and unrealized gains (losses) on investments. DETERMINATION OF CLASS NET ASSET VALUES--All income, expenses (other than class-specific expenses, as shown on the Statement of Operations), and realized and unrealized gains (losses) are allocated to each class of the Fund on a daily basis, based on the relative net assets of each class, for purposes of determining the net asset value of each class. FEDERAL INCOME TAX STATUS--The Fund intends to qualify each year as a "regulated investment company" under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its taxable income, if any, for its tax year, and as such will not be subject to federal income taxes. In addition, by distributing in each calendar year substantially all of its net investment 11 <Page> income, capital gains and certain other amounts, if any, the Fund will not be subject to federal excise tax. Therefore, no federal income or excise tax provision is recorded. DISTRIBUTIONS TO SHAREHOLDERS--Distributions to shareholders are recorded on ex-date. Net realized capital gains, if any, are distributed at least annually. Income and capital gains dividends are determined in accordance with income tax regulations which may differ from GAAP. All dividends and distributions are reinvested in additional shares of the Fund at net asset value as of the record date of the distribution. NOTE 3. FEDERAL TAX INFORMATION The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund's capital accounts for permanent tax differences to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. For the year ended December 31, 2003, permanent differences resulting primarily from differing treatments for foreign currency transactions, distribution reclassifications and Real Estate Investment Trust ("REIT") adjustments were identified and reclassified among the components of the Fund's net assets as follows: <Table> <Caption> UNDISTRIBUTED NET INVESTMENT ACCUMULATED PAID-IN INCOME NET REALIZED GAIN CAPITAL -------------- ----------------- ------- $ (4,529) $ 4,529 $ -- </Table> Net investment income and net realized gains (losses), as disclosed on the Statement of Operations, and net assets were not affected by this reclassification. The tax character of distributions paid during the years ended December 31, 2003 and December 31, 2002 was as follows: <Table> <Caption> DECEMBER 31, DECEMBER 31, 2003 2002 ------------ ------------ Distributions paid from: Ordinary Income* $ 977,202 $ 86,968 Long-Term Capital Gains 311,833 599,377 </Table> * For tax purposes short-term capital gains distributions, if any, are considered ordinary income distributions. As of December 31, 2003, the components of distributable earnings on a tax basis were as follows: <Table> <Caption> UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM NET UNREALIZED INCOME CAPITAL GAINS APPRECIATION* ------------- ------------- -------------- $ 1,050,494 $ 266,278 $ 8,885,783 </Table> * The differences between book-basis and tax-basis net unrealized appreciation are primarily due to deferral of losses from wash sales and REIT adjustments. Unrealized appreciation and depreciation at December 31, 2003, based on cost of investments for federal income tax purposes was: <Table> Unrealized appreciation $ 9,914,329 Unrealized depreciation (1,028,546) ------------- Net unrealized appreciation $ 8,885,783 ============= </Table> NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES INVESTMENT ADVISOR MERGER--On April 1, 2003, Liberty Advisory Services Corp., the previous investment advisor to the Fund, and Colonial Management Associates, Inc., the previous sub-advisor to the Fund, merged into Columbia Management Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co. Columbia is an indirect, wholly owned subsidiary of FleetBoston Financial Corporation. As a result of the merger, Columbia now serves as the Fund's investment advisor. The merger did not change the way the Fund is managed, the investment personnel assigned to manage the Fund or the fees paid by the Fund. INVESTMENT ADVISORY FEE--Columbia is the investment advisor to the Fund and provides administrative and other services. Columbia receives a monthly fee based on the Fund's average daily net assets at the following annual rates: <Table> <Caption> AVERAGE DAILY NET ASSETS FEE RATE - ------------------------ -------- First $500 million 0.80% Next $500 million 0.75% Over $1 billion 0.70% </Table> Prior to November 1, 2003, Columbia received a monthly investment advisory fee at the annual rate of 0.80% of the Fund's average daily net assets. For the year ended December 31, 2003, the Fund's effective investment advisory fee rate was 0.80%. PRICING AND BOOKKEEPING FEES--Columbia is responsible for providing pricing and bookkeeping services to the Fund under a pricing and bookkeeping agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Corporation 12 <Page> ("State Street"). Columbia pays the total fees collected to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual flat fee of $10,000 paid monthly, and in any month that the Fund's average daily net assets exceed $50 million, an additional monthly fee. The additional fee rate is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. This rate is applied to the average daily net assets of the Fund for that month. The Fund also pays additional fees for pricing services. For the year ended December 31, 2003, the effective pricing and bookkeeping fee rate was 0.055%. TRANSFER AGENT FEE--Columbia Funds Services, Inc. (the "Transfer Agent"), formerly Liberty Funds Services, Inc., an affiliate of Columbia, provides shareholder services for a monthly fee at an annual rate of $7,500. Effective October 13, 2003, Liberty Funds Services, Inc. changed its name to Columbia Funds Services, Inc. DISTRIBUTION FEES--Columbia Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia, is the principal underwriter of the Fund. Prior to October 13, 2003, Columbia Funds Distributor, Inc. was known as Liberty Funds Distributor, Inc. The Fund has adopted a 12b-1 plan which requires the payment of a monthly distribution fee to the Distributor at the annual rate of 0.25% of Class B average daily net assets. FEE WAIVERS--Columbia and the Distributor have voluntarily agreed to waive fees and reimburse the Fund for certain expenses so that total expenses (exclusive of brokerage commissions, interest, taxes and extraordinary expenses, if any) would not exceed 1.10% annually of the Fund's average daily net assets. The Distributor will first reimburse the Class B distribution fee up to 0.25% annually to reach the 1.10% limit on Class B expenses. If additional reimbursement is needed to meet the limit for each class, Columbia will then reimburse other expenses to the extent necessary. If additional reimbursement is still needed in order to reach the expense limit, Columbia will then waive a portion of its investment advisory fee to the extent necessary. Columbia or the Distributor, at their discretion, may revise or discontinue this arrangement any time. CUSTODY CREDITS--The Fund has an agreement with its custodian bank under which custody fees may be reduced by balance credits. The Fund could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if it had not entered into such an agreement. FEES PAID TO OFFICERS AND TRUSTEES--The Fund pays no compensation to its officers, all of whom are employees of Columbia or its affiliates. The Fund's Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. NOTE 5. PORTFOLIO INFORMATION PURCHASES AND SALES OF SECURITIES--For the year ended December 31, 2003, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were $53,708,618 and $17,135,780, respectively. NOTE 6. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES INDUSTRY FOCUS--The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. LEGAL PROCEEDINGS--Columbia, the Distributor and certain of their affiliates (collectively, "the Columbia Group") have received information requests and subpoenas from various regulatory authorities, including the Securities and Exchange Commission ("SEC") and the New York Attorney General, in connection with their investigations of late trading and market timing in mutual funds. The Columbia Group has not uncovered any instances where Columbia or the Distributor was knowingly involved in late trading of mutual fund shares. The Columbia Group has identified a limited number of investors who had informal arrangements for trading certain Columbia Fund shares between 1998 and 2003. A substantial majority of the trading had ended by October 2002. None of these arrangements exists today. Information relating to those trading arrangements has been supplied to various regulatory authorities. To the extent that any Columbia Fund, whose shares were involved in those trading activities, was harmed by them, the Columbia Group has undertaken to reimburse such fund. The SEC staff has issued notices to the effect that it has made a preliminary determination to recommend that the SEC bring civil enforcement actions, including injunctive proceedings, against Columbia and the Distributor, alleging that they have violated certain provisions of the federal securities laws. The Columbia Group believes that those allegations are based principally on the trading arrangements referred to above. Columbia and the Distributor are engaged in discussions with the SEC staff in an effort to reach a satisfactory resolution of these matters. However, there can be no assurance that such a resolution will be reached. Any potential resolution of these matters may include, but not be limited to, sanctions, 13 <Page> financial penalties, damages or injunctions regarding Columbia or the Distributor, and structural changes in the conduct of their business. Although the Columbia Group does not believe that these regulatory developments or their resolution will have a material adverse effect on the Columbia Funds, or on the ability of Columbia and the Distributor to provide services to the Columbia Funds, there can be no assurance that these matters or any adverse publicity or other developments resulting from them will not result in increased redemptions or reduced sales of Columbia Fund shares, which could increase transactions costs or operating expenses, or other consequences for the Columbia Funds. 14 <Page> FINANCIAL HIGHLIGHTS Colonial Small Cap Value Fund, Variable Series--Class A Shares Selected data for a share outstanding throughout each period is as follows: <Table> <Caption> YEAR ENDED DECEMBER 31, --------------------------------------------------------------------------- 2003 2002 2001 2000 1999 ----------- ----------- ----------- ----------- ----------- NET ASSET VALUE, BEGINNING OF PERIOD $ 10.48 $ 11.56 $ 10.73 $ 9.12 $ 8.59 ----------- ----------- ----------- ----------- ----------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (a) 0.07 0.02 0.02 0.07 0.02 Net realized and unrealized gain (loss) on investments and foreign currency 4.03 (0.73) 0.98 1.65 0.52 ----------- ----------- ----------- ----------- ----------- Total from Investment Operations 4.10 (0.71) 1.00 1.72 0.54 ----------- ----------- ----------- ----------- ----------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.03) (0.01) (0.02) (0.05) (0.01) From net realized gains (0.32) (0.36) (0.15) (0.06) -- ----------- ----------- ----------- ----------- ----------- Total Distributions Declared to Shareholders (0.35) (0.37) (0.17) (0.11) (0.01) ----------- ----------- ----------- ----------- ----------- NET ASSET VALUE, END OF PERIOD $ 14.23 $ 10.48 $ 11.56 $ 10.73 $ 9.12 =========== =========== =========== =========== =========== Total return (b)(c)(d) 39.30% (6.12)% 9.30% 18.88% 6.34% RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (e) 1.10% 1.10% 1.10% 1.07% 1.00% Net investment income (e) 0.59% 0.18% 0.22% 0.76% 0.23% Waiver/reimbursement 0.11% 0.04% 0.22% 0.82% 2.66% Portfolio turnover rate 55% 125% 56% 54% 74% Net assets, end of period (000's) $ 10,738 $ 7,893 $ 9,361 $ 7,616 $ 3,817 </Table> (a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested. (c) Had the Investment Advisor not waived or reimbursed a portion of expenses, total return would have been reduced. (d) Total return figure does not include any insurance company charges associated with a variable annuity. If included, total return would be reduced. (e) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. 15 <Page> REPORT OF INDEPENDENT AUDITORS To the Trustees of Liberty Variable Investment Trust and the Class A Shareholders of Colonial Small Cap Value Fund, Variable Series In our opinion, the accompanying statement of assets and liabilities, including the investment portfolio, and the related statements of operations and of changes in net assets and the Class A financial highlights present fairly, in all material respects, the financial position of Colonial Small Cap Value Fund, Variable Series (the "Fund") (a series of Liberty Variable Investment Trust) at December 31, 2003, and the results of its operations, the changes in its net assets and the Class A financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and the Class A financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund'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 December 31, 2003 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts February 12, 2004 16 <Page> UNAUDITED INFORMATION FEDERAL INCOME TAX INFORMATION 55.39% of the ordinary income distributed by the Fund, for the year ended December 31, 2003, qualifies for the corporate dividends received deduction. For the fiscal year ended December 31, 2003, the Fund designates long-term capital gains of $443,998. 17 <Page> PORTFOLIO MANAGER'S DISCUSSION Colonial Strategic Income Fund, Variable Series / December 31, 2003 Colonial Strategic Income Fund, Variable Series seeks current income consistent with prudent risk and maximum total return. Laura A. Ostrander is the fund's portfolio manager and has managed or co-managed the fund since September 2000. FUND BENEFITED FROM SURGING HIGH-YIELD MARKET The fund set the stage for strong performance in 2003 by reducing its position in US Treasuries and increasing holdings in high-yield securities. Our motivation for this move was that Treasury yields had hit new lows in September 2002, and we believed that the spread between the yield on Treasuries and those offered by high-yield bonds was excessively wide, especially in light of the potential for an improving economy. When a genuine economic recovery took shape in 2003, investors became increasingly willing to assume the risks of lower quality bonds in return for their significantly higher yields. And as money became more available to the high-yield sector, issuers were able to improve their balance sheets by refinancing their bank debt and reissuing debt at more favorable terms. The result was a narrowing of yield spreads that resulted in one of the best years ever for the high-yield sector. The CSFB High Yield Index, a measure of the high-yield market, rose 27% for 2003. For the year ended December 31, 2003, the fund outperformed its benchmark, the Lehman Brothers Government/Credit Bond Index, due to the fund's investment in high yield and foreign government bonds, both of which outperformed the US Government bond and US investment grade corporate bond sectors included in the benchmark. The bonds of beleaguered sectors such as telecom and electric utilities did especially well. The fund's investments in Charter Communications, AES and Calpine (0.7%, 0.3% and 0.3% of net assets, respectively) in these sectors also aided the fund's performance. STRONG RETURNS FROM FOREIGN BONDS The fund also benefited from its ongoing commitment to foreign bonds. Among emerging markets, one particularly important holding for the fund was Brazil, where a newly elected president gained investor confidence by appointing a pro-market cabinet and initiating fiscal reforms. Russia was another important fund holding. Russian bonds benefited from high oil prices, sound fiscal policy, relative government stability and improving economic prospects. The weakness of the US dollar contributed to the superior performance of many other foreign markets. Bonds denominated in the Euro, the South African rand and the Canadian, Australian and New Zealand dollars were all pushed higher in dollar terms because of the appreciation of the underlying currency. Treasuries were the worst performing major asset class for the year. Although they posted strong gains during the first half of 2003, July and August were difficult months for high quality, interest rate-sensitive bonds, which as a group eked out only modest positive total returns for the year. FUND POSITIONED FOR A RECOVERING ECONOMY We anticipate that the US economy will continue to be a major driver of global growth during 2004. Although economic recovery is clearly underway in the US, we agree with the consensus opinion that the Federal Reserve is unlikely to raise short-term interest rates in the near future because core inflation remains extremely low and it is essential to maintain a relatively easy and generous money flow within the economy to ensure sustainable growth. A substantial current account deficit and growing fiscal deficit in the US is also likely to continue to put pressure on the dollar. At some point the government may address the fiscal deficit by cutting spending, but any such effort is likely to be delayed by election year considerations. With yields expected to remain in a fairly tight range, and with signs of growth in the US and abroad, we continue to be favorably disposed to the high-yield and emerging markets. At the end of the year, the fund held 39% of its net assets in high-yield bonds, 33% in foreign government bonds, 24% in US government securities and a small balance in short-term instruments and other securities. Economic and market conditions frequently change. There is no assurance that the trends described here will continue or commence. Strategic investing offers attractive income and total return opportunities, but also involves certain risks. The value and return of your investment may fluctuate as a result of changes in interest rates, the financial strength of issuers of lower-rated bonds, foreign, political and economic developments, and changes in currency exchange rates. Some of the countries in which the fund invests are considered emerging economies, which means there may be greater risks associated with investing there than in more developed countries. In addition, concentration of investments in a single region may result in greater volatility. Investing in high-yield securities offers the potential for high current income and attractive total return, but involves certain risks. Lower-rated bond risks include default of the issuer, rising interest rates and risk associated with investing in securities of foreign and emerging markets, including currency exchange rate fluctuations and economic and political change. Holdings are disclosed as of December 31, 2003, and are subject to change. 18 <Page> PERFORMANCE INFORMATION Colonial Strategic Income Fund, Variable Series / December 31, 2003 AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 2003 (%) <Table> <Caption> 1-YEAR 5-YEAR LIFE - ------------------------------------------------------------- Class A (7/5/94) 18.54 6.32 7.93 Lehman Brothers Government/ Credit Bond Index(1) 4.67 6.66 7.84 JP Morgan Global High Yield Index(2) 27.50 5.99 8.15 </Table> Inception date of share class is in parentheses. <Table> <Caption> NET ASSET VALUE PER SHARE ($) 12/31/02 12/31/03 - ------------------------------------------------------------- Class A 8.90 9.80 </Table> [CHART] VALUE OF A $10,000 INVESTMENT, 7/5/94 - 12/31/03 Class A: $20,639 <Table> <Caption> CLASS A SHARES LEHMAN BROTHERS GOVERNMENT/CREDIT BOND INDEX JP MORGAN GLOBAL HIGH YIELD INDEX 7/1994 $ 10,000 $ 10,000 $ 10,000 7/31/1994 $ 10,080 $ 10,168 8/31/1994 $ 10,130 $ 10,172 $ 10,040 9/30/1994 $ 10,091 $ 10,018 $ 10,039 10/31/1994 $ 10,131 $ 10,007 $ 10,054 11/30/1994 $ 10,021 $ 9,989 $ 9,962 12/31/1994 $ 10,110 $ 10,055 $ 10,260 1/31/1995 $ 10,244 $ 10,248 $ 10,392 2/28/1995 $ 10,492 $ 10,486 $ 10,762 3/31/1995 $ 10,678 $ 10,556 $ 10,870 4/30/1995 $ 10,875 $ 10,704 $ 11,151 5/31/1995 $ 11,174 $ 11,153 $ 11,469 6/30/1995 $ 11,225 $ 11,242 $ 11,515 7/31/1995 $ 11,328 $ 11,198 $ 11,694 8/31/1995 $ 11,328 $ 11,341 $ 11,740 9/30/1995 $ 11,524 $ 11,457 $ 11,879 10/31/1995 $ 11,679 $ 11,626 $ 11,990 11/30/1995 $ 11,792 $ 11,817 $ 12,068 12/31/1995 $ 11,959 $ 11,991 $ 12,263 1/31/1996 $ 12,134 $ 12,065 $ 12,496 2/29/1996 $ 12,036 $ 11,810 $ 12,571 3/31/1996 $ 11,982 $ 11,710 $ 12,530 4/30/1996 $ 12,036 $ 11,630 $ 12,608 5/31/1996 $ 12,046 $ 11,610 $ 12,703 6/30/1996 $ 12,122 $ 11,764 $ 12,758 7/31/1996 $ 12,220 $ 11,791 $ 12,843 8/31/1996 $ 12,362 $ 11,762 $ 13,034 9/30/1996 $ 12,612 $ 11,971 $ 13,342 10/31/1996 $ 12,807 $ 12,250 $ 13,465 11/30/1996 $ 13,112 $ 12,476 $ 13,713 12/31/1996 $ 13,134 $ 12,337 $ 13,860 1/31/1997 $ 13,099 $ 12,352 $ 13,969 2/28/1997 $ 13,195 $ 12,378 $ 14,209 3/31/1997 $ 13,005 $ 12,231 $ 13,978 4/30/1997 $ 13,171 $ 12,409 $ 14,109 5/31/1997 $ 13,386 $ 12,525 $ 14,435 6/30/1997 $ 13,576 $ 12,675 $ 14,626 7/31/1997 $ 13,898 $ 13,063 $ 15,015 8/31/1997 $ 13,803 $ 12,916 $ 15,024 9/30/1997 $ 14,101 $ 13,119 $ 15,323 10/31/1997 $ 14,125 $ 13,329 $ 15,301 11/30/1997 $ 14,197 $ 13,400 $ 15,439 12/31/1997 $ 14,335 $ 13,540 $ 15,578 1/31/1998 $ 14,566 $ 13,731 $ 15,819 2/28/1998 $ 14,604 $ 13,704 $ 15,941 3/31/1998 $ 14,706 $ 13,746 $ 16,102 4/30/1998 $ 14,771 $ 13,815 $ 16,183 5/31/1998 $ 14,836 $ 13,963 $ 16,205 6/30/1998 $ 14,861 $ 14,105 $ 16,239 7/31/1998 $ 14,990 $ 14,117 $ 16,376 8/31/1998 $ 14,435 $ 14,392 $ 15,315 9/30/1998 $ 14,757 $ 14,803 $ 15,299 10/31/1998 $ 14,782 $ 14,698 $ 14,970 11/30/1998 $ 15,207 $ 14,787 $ 15,795 12/31/1998 $ 15,198 $ 14,824 $ 15,730 1/31/1999 $ 15,321 $ 14,929 $ 15,919 2/28/1999 $ 15,143 $ 14,573 $ 15,838 3/31/1999 $ 15,349 $ 14,646 $ 16,033 4/30/1999 $ 15,555 $ 14,683 $ 16,440 5/31/1999 $ 15,239 $ 14,532 $ 13,547 6/30/1999 $ 15,253 $ 14,487 $ 16,206 7/31/1999 $ 15,239 $ 14,446 $ 16,211 8/31/1999 $ 15,184 $ 14,435 $ 16,049 9/30/1999 $ 15,266 $ 14,564 $ 15,933 10/31/1999 $ 15,266 $ 14,602 $ 15,845 11/30/1999 $ 15,362 $ 14,594 $ 16,104 12/31/1999 $ 15,468 $ 14,505 $ 16,262 1/31/2000 $ 15,320 $ 14,500 $ 16,200 2/29/2000 $ 15,513 $ 14,681 $ 16,265 3/31/2000 $ 15,454 $ 14,894 $ 15,988 4/30/2000 $ 15,321 $ 14,821 $ 15,985 5/31/2000 $ 15,188 $ 14,808 $ 15,758 6/30/2000 $ 15,468 $ 15,110 $ 16,068 7/31/2000 $ 15,588 $ 15,270 $ 16,210 8/31/2000 $ 15,751 $ 15,486 $ 16,335 9/30/2000 $ 15,565 $ 15,544 $ 16,121 10/31/2000 $ 15,284 $ 15,642 $ 15,648 11/30/2000 $ 15,016 $ 15,910 $ 15,050 12/31/2000 $ 15,494 $ 16,223 $ 15,315 1/31/2001 $ 16,135 $ 16,496 $ 16,243 2/28/2001 $ 16,185 $ 16,666 $ 16,432 3/31/2001 $ 15,840 $ 16,742 $ 16,110 4/30/2001 $ 15,709 $ 16,617 $ 15,941 5/31/2001 $ 15,775 $ 16,713 $ 16,253 6/30/2001 $ 15,594 $ 16,793 $ 15,972 7/31/2001 $ 15,659 $ 17,212 $ 16,133 8/31/2001 $ 15,938 $ 17,432 $ 16,343 9/30/2001 $ 15,477 $ 17,592 $ 15,264 10/31/2001 $ 15,921 $ 18,039 $ 15,644 11/30/2001 $ 16,135 $ 17,743 $ 16,176 12/31/2001 $ 16,064 $ 17,603 $ 16,155 1/31/2002 $ 16,136 $ 17,732 $ 16,273 2/28/2002 $ 16,171 $ 17,882 $ 16,151 3/31/2002 $ 16,225 $ 17,519 $ 16,516 4/30/2002 $ 16,531 $ 17,859 $ 16,767 5/31/2002 $ 16,604 $ 18,023 $ 16,710 6/30/2002 $ 16,388 $ 18,177 $ 16,109 7/31/2002 $ 16,208 $ 18,395 $ 15,661 8/31/2002 $ 16,497 $ 18,807 $ 15,805 9/30/2002 $ 16,587 $ 19,211 $ 15,620 10/31/2002 $ 16,642 $ 19,027 $ 15,508 11/30/2002 $ 17,002 $ 19,038 $ 16,311 12/31/2002 $ 17,416 $ 19,543 $ 16,500 1/31/2003 $ 17,632 $ 19,543 $ 16,929 2/28/2003 $ 18,004 $ 19,891 $ 17,176 3/31/2003 $ 18,161 $ 19,865 $ 17,590 4/30/2003 $ 18,826 $ 20,077 $ 18,463 5/31/2003 $ 19,334 $ 20,647 $ 18,719 6/30/2003 $ 19,471 $ 20,565 $ 19,266 7/31/2003 $ 19,021 $ 19,703 $ 19,144 8/31/2003 $ 19,099 $ 19,833 $ 19,334 9/30/2003 $ 19,745 $ 20,462 $ 19,870 10/31/2003 $ 19,804 $ 20,202 $ 20,239 11/30/2003 $ 20,117 $ 20,257 $ 20,522 12/31/2003 $ 20,639 $ 20,465 $ 21,065 </Table> PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA PROVIDED. FOR CURRENT MONTH-END PERFORMANCE INFORMATION, PLEASE CONTACT YOUR INSURANCE COMPANY. Total return performance includes changes in share price and reinvestment of all distributions. The Lehman Brothers Government/Credit Bond Index is an unmanaged index that tracks the performance of a selection of US Government and investment grade US corporate bonds. The JP Morgan Global High Yield Index is designed to mirror the investable universe of the US dollar global high-yield corporate debt market, including domestic and international issues. Indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. Performance numbers reflect all fund expenses, but do not include any insurance charges imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. (1) Index performance is from July 5, 1994. (2) Index performance is from June 30, 1994. 19 <Page> INVESTMENT PORTFOLIO Colonial Strategic Income Fund, Variable Series / December 31, 2003 <Table> <Caption> PAR VALUE ---------------- ------------- BONDS & NOTES--95.6% CORPORATE FIXED-INCOME BONDS & NOTES--39.0% AGRICULTURE--0.2% AGRICULTURE PRODUCTION--0.2% Hines Nurseries, Inc., 10.250% 10/01/11 (a) USD 95,000 $ 103,550 Seminis Vegetable Seeds, 10.250% 10/01/13 (a) 283,000 304,225 ------------- 407,775 ------------- CONSTRUCTION--1.7% BUILDING CONSTRUCTION--1.5% Associated Materials, Inc., 9.750% 04/15/12 190,000 208,050 Atrium Companies, Inc.: 10.500% 05/01/09 285,000 304,950 Series B, 10.500% 05/01/09 130,000 139,100 Congoleum Corp., 8.625% 08/01/08 (b) 140,000 84,000 D.R. Horton, Inc., 9.750% 09/15/10 575,000 681,375 K. Hovnanian Enterprises, Inc.: 8.875% 04/01/12 45,000 49,275 10.500% 10/01/07 250,000 294,375 Nortek Holdings, Inc., (c) 05/15/11 (10.000% 11/15/07) (a) 325,000 235,625 Standard Pacific Corp., 9.250% 04/15/12 275,000 308,000 William Lyon Homes, Inc., 10.750% 04/01/13 140,000 158,900 ------------- 2,463,650 ------------- SPECIAL TRADE CONTRACTORS--0.2% Ship Finance International Ltd., 8.500% 12/15/13 345,000 343,672 ------------- CONSUMER STAPLES--0.3% HOUSEHOLD PRODUCTS--0.3% Playtex Products, Inc., 9.375% 06/01/11 380,000 381,900 Scotts Co., 6.625% 11/15/13 (a) 30,000 30,750 ------------- 412,650 ------------- FINANCE, INSURANCE & REAL ESTATE--1.0% DEPOSITORY INSTITUTIONS--0.1% Dollar Financial Group, 9.750% 11/15/11 (a) 225,000 232,875 Western Financial Bank, 9.625% 05/15/12 35,000 38,937 ------------- 271,812 ------------- FINANCIAL SERVICES--0.7% Finova Group, Inc., 7.500% 11/15/09 USD 390,000 $ 234,000 LaBranche & Co., 12.000% 03/02/07 195,000 195,000 MDP Acquisitions PLC, 9.625% 10/01/12 340,000 380,800 Orion Power Holdings, Inc., 12.000% 05/01/10 100,000 123,000 Trump Holdings & Funding, 11.625% 03/15/10 175,000 168,875 ------------- 1,101,675 ------------- REAL ESTATE--0.2% Forest City Enterprises, Inc., 7.625% 06/01/15 105,000 111,300 Thornburg Mortgage, Inc., 8.000% 05/15/13 160,000 168,000 ------------- 279,300 ------------- INDUSTRIALS--0.0% CONSTRUCTION & FARM MACHINERY--0.0% Case New Holland, Inc., 9.250% 08/01/11 (a) 50,000 56,000 ------------- MANUFACTURING--10.3% APPAREL--0.4% Broder Brothers Co., 11.250% 10/15/10 (a) 190,000 188,100 Levi Strauss & Co., 12.250% 12/15/12 360,000 234,000 Perry Ellis International, Inc., 8.875% 09/15/13 (a) 25,000 26,125 Phillips Van-Heusen, 8.125% 05/01/13 (a) 90,000 95,400 Warnaco, Inc., 8.875% 06/15/13 (a) 65,000 66,950 William Carter Co., 10.875% 08/15/11 65,000 74,587 ------------- 685,162 ------------- AUTO PARTS & EQUIPMENT--0.5% Asbury Automotive Group, 8.000% 03/15/14 (a) 165,000 165,825 Delco Remy International, Inc., 10.625% 08/01/06 95,000 95,475 Goodyear Tire & Rubber Co., 7.857% 08/15/11 350,000 305,375 Rexnord Corp., 10.125% 12/15/12 85,000 93,500 TRW Automotive, Inc.: 9.375% 02/15/13 (a) 55,000 62,975 11.000% 02/15/13 (a) 40,000 47,400 ------------- 770,550 ------------- </Table> See Notes to Investment Portfolio. 20 <Page> <Table> <Caption> PAR VALUE ---------------- ------------- CHEMICALS & ALLIED PRODUCTS--1.9% Avecia Group PLC, 11.000% 07/01/09 USD 220,000 $ 198,000 Equistar Chemicals Funding LP: 10.125% 09/01/08 145,000 159,500 10.625% 05/01/11 (a) 130,000 143,000 FMC Corp., 10.250% 11/01/09 145,000 169,650 Huntsman ICI Holdings LLC, (d) 12/31/09 1,825,000 880,562 IMC Global, Inc., 10.875% 08/01/13 (a) 155,000 169,725 Lyondell Chemical Co., 9.625% 05/01/07 290,000 305,950 MacDermid, Inc., 9.125% 07/15/11 260,000 291,200 Phibro Animal Health Corp., 13.000% 12/01/07 (a) 200,000 208,000 Polyone Corp., 10.625% 05/15/10 60,000 60,300 Terra Capital, Inc., 12.875% 10/15/08 310,000 359,600 Westlake Chemical Corp., 8.750% 07/15/11 (a) 130,000 142,350 ------------- 3,087,837 ------------- ELECTRONIC & ELECTRICAL EQUIPMENT--0.3% Amkor Technology, Inc., 9.250% 02/15/08 185,000 209,050 General Cable Corp., 9.500% 11/15/10 (a) 50,000 53,375 TransDigm, Inc., 8.375% 07/15/11 (a) 130,000 138,450 Xerox Corp., 7.125% 06/15/10 100,000 106,750 ------------- 507,625 ------------- FABRICATED METAL--0.2% Earle M. Jorgensen & Co., 9.750% 06/01/12 250,000 278,750 ------------- FOOD & KINDRED PRODUCTS--2.0% Bavaria SA, 8.875% 11/01/10 (a) 215,000 220,375 Constellation Brands, Inc., 8.125% 01/15/12 175,000 193,813 Del Monte Corp., 9.250% 05/15/11 420,000 464,100 Dole Food Co., Inc., 8.625% 05/01/09 (e) 275,000 301,813 Merisant Co., 9.500% 07/15/13 (a) 135,000 142,425 Pinnacle Foods Holdings, 8.250% 12/01/13 (a) 245,000 249,900 Premier International Foods PLC, 12.000% 09/01/09 750,000 821,250 Roundy's, Inc., 8.875% 06/15/12 275,000 294,250 Smithfield Foods, Inc., 8.000% 10/15/09 USD 295,000 $ 309,750 Tabletop Holdings, Inc., (c) 05/15/14 (12.250% 11/15/08) (a) 340,000 187,000 United Agri Products, Inc., 8.250% 12/15/11 (a) 160,000 164,400 ------------- 3,349,076 ------------- FOREST PRODUCTS--0.1% Millar Western Forest, 7.750% 11/15/13 (a) 145,000 149,350 ------------- FURNITURE & FIXTURES--0.3% Juno Lighting, Inc., 11.875% 07/01/09 195,000 212,550 Norcraft Companies, 9.000% 11/01/11 (a) 90,000 96,300 Tempur-Pedic, Inc., 10.250% 08/15/10 (a) 170,000 189,763 ------------- 498,613 ------------- MACHINERY & COMPUTER EQUIPMENT--0.1% Cummins, Inc., 9.500% 12/01/10 (a) 195,000 224,738 ------------- MISCELLANEOUS MANUFACTURING--1.5% Agco Corp., 9.500% 05/01/08 220,000 240,350 Applied Extrusion Technologies, Inc., 10.750% 07/01/11 215,000 176,300 Crown European Holdings SA, 10.875% 03/01/13 190,000 222,300 Flowserve Corp., 12.250% 08/15/10 205,000 237,800 Hexcel Corp., 9.750% 01/15/09 145,000 151,887 Kinetic Concepts, Inc., 7.375% 05/15/13 (a) 80,000 83,600 Koppers Industries, Inc., 9.875% 10/15/13 (a) 240,000 265,200 Owens-Illinois, Inc.: 7.150% 05/15/05 45,000 46,350 7.350% 05/15/08 240,000 246,600 7.500% 05/15/10 45,000 45,900 SPX Corp., 7.500% 01/01/13 165,000 179,437 Tekni-Plex, Inc., 12.750% 06/15/10 320,000 350,400 Terex Corp., Series 2001 B, 10.375% 04/01/11 215,000 243,487 ------------- 2,489,611 ------------- PAPER PRODUCTS--0.7% Berry Plastics Corp., 10.750% 07/15/12 (a) 160,000 184,200 Blue Ridge Paper Products, 9.500% 12/15/08 (a) 25,000 25,250 Buckeye Technologies, Inc., 8.500% 10/01/13 (a) 40,000 42,800 </Table> See Notes to Investment Portfolio. 21 <Page> <Table> <Caption> PAR VALUE ---------------- ------------- Caraustar Industries, Inc., 9.875% 04/01/11 USD 190,000 $ 205,200 Georgia-Pacific Corp., 8.000% 01/15/24 240,000 244,800 Norske Skog Canada Ltd., 8.625% 06/15/11 90,000 94,275 Smurfit-Stone Container Corp., 8.250% 10/01/12 165,000 178,200 Sweetheart Cup Co., Inc., 9.500% 01/15/07 (a) 105,000 106,575 Tembec Industries, Inc., 8.500% 02/01/11 150,000 155,250 ------------- 1,236,550 ------------- POLLUTION CONTROL--0.0% EnviroSource, Inc., 14.000% 12/15/08 (f) 68,416 66,101 ------------- PRIMARY METAL--0.5% Bayou Steel Corp., 9.500% 05/15/08 (g) 500,000 112,500 Kaiser Aluminum & Chemical Corp., 10.875% 10/15/06 (g) 420,000 369,600 Oregon Steel Mills, Inc., 10.000% 07/15/09 180,000 160,200 Steel Dynamics, Inc.: 9.500% 03/15/09 (a) 55,000 61,325 9.500% 03/15/09 50,000 55,750 ------------- 759,375 ------------- PRINTING & PUBLISHING--1.4% Dex Media, Inc., 8.000% 11/15/13 (a) 220,000 232,650 Dex Media East LLC, 12.125% 11/15/12 370,000 456,950 Dex Media West LLC, 9.875% 08/15/13 (a) 180,000 209,250 Hollinger, Inc., 11.875% 03/01/11 (a) 195,000 213,525 Primedia, Inc., 8.875% 05/15/11 395,000 415,737 Von Hoffman Corp.: 10.250% 03/15/09 (a) 75,000 79,500 10.250% 03/15/09 285,000 302,100 Yell Finance BV, 10.750% 08/01/11 305,000 358,375 ------------- 2,268,087 ------------- STONE, CLAY, GLASS & CONCRETE--0.2% Owens-Brockway Glass Container, 8.250% 05/15/13 (a) 370,000 396,825 ------------- TEXTILE MILL PRODUCTS--0.1% Collins & Aikman Floor Covering, Inc., 9.750% 02/15/10 150,000 160,500 ------------- TRANSPORTATION EQUIPMENT--0.1% Sequa Corp., 8.875% 04/01/08 145,000 157,325 Teekay Shipping Corp., 8.875% 07/15/11 USD 85,000 $ 96,475 ------------- 253,800 ------------- MINING & ENERGY--3.9% METAL MINING--0.2% TriMas Corp., 9.875% 06/15/12 405,000 423,225 ------------- OIL & GAS EXTRACTION--3.4% Benton Oil & Gas Co., 9.375% 11/01/07 215,000 215,000 Chesapeake Energy Corp.: 7.750% 01/15/15 185,000 200,725 8.125% 04/01/11 100,000 111,250 Coastal Corp., 7.750% 06/15/10 380,000 359,100 Compton Petroleum Corp., 9.900% 05/15/09 195,000 213,038 Denbury Resources, Inc., 7.500% 04/01/13 (a) 110,000 113,850 Dynegy Holdings, Inc.: 8.750% 02/15/12 200,000 201,000 9.875% 07/15/10 (a) 110,000 124,300 10.125% 07/15/13 (a) 30,000 34,575 Encore Acquisition Co., 8.375% 06/15/12 195,000 211,575 Energy Partners Ltd., 8.750% 08/01/10 125,000 130,000 Forest Oil Corp., 8.000% 06/15/08 250,000 271,875 Gazprom, 9.625% 03/01/13 210,000 232,050 Gulfterra Energy Partners, 8.500% 06/01/10 149,000 169,860 Houston Exploration Co., 7.000% 06/15/13 (a) 50,000 51,500 Magnum Hunter Resources, Inc., 9.600% 03/15/12 100,000 113,500 Northwest Pipeline Corp., 8.125% 03/01/10 85,000 94,987 PDVSA Finance Ltd.: 6.250% 02/15/06 EUR 325,450 409,231 6.650% 02/15/06 USD 240,000 243,000 Petroleos Mexicanos, 6.500% 02/01/05 400,000 418,500 Pogo Producing Co., 8.250% 04/15/11 155,000 170,500 Premcor Refining Group, 7.500% 06/15/15 165,000 169,537 Sonat, Inc., 7.625% 07/15/11 275,000 253,000 Southern Natural Gas Co., 8.875% 03/15/10 130,000 146,087 Stone Energy Corp., 8.250% 12/15/11 135,000 146,812 </Table> See Notes to Investment Portfolio. 22 <Page> <Table> <Caption> PAR VALUE ---------------- ------------- Tom Brown, Inc., 7.250% 09/15/13 USD 120,000 $ 126,900 Williams Companies, Inc., 8.125% 03/15/12 625,000 700,000 ------------- 5,631,752 ------------- OIL & GAS FIELD SERVICES--0.3% J. Ray McDermott SA, 11.000% 12/15/13 (a) 265,000 267,650 Newpark Resources, Inc., 8.625% 12/15/07 195,000 200,850 ------------- 468,500 ------------- RETAIL TRADE--1.1% FOOD STORES--0.4% Delhaize America, Inc., 8.125% 04/15/11 300,000 342,651 Winn-Dixie Stores, Inc., 8.875% 04/01/08 260,000 263,250 ------------- 605,901 ------------- MISCELLANEOUS RETAIL--0.5% General Nutrition Centers, 8.500% 12/01/10 (a) 80,000 82,000 JC Penney Co., Inc., 8.000% 03/01/10 60,000 68,550 Rite Aid Corp., 9.250% 06/01/13 (a) 375,000 411,562 Saks, Inc., 7.000% 12/01/13 55,000 55,137 Steinway Musical Instruments, Inc., 8.750% 04/15/11 270,000 286,200 Suburban Propane Partners, 6.875% 12/15/13 (a) 30,000 30,150 ------------- 933,599 ------------- RESTAURANTS--0.2% Domino's, Inc., 8.250% 07/01/11 (a) 50,000 54,000 Yum! Brands, Inc., 7.700% 07/01/12 200,000 230,250 ------------- 284,250 ------------- SERVICES--7.2% AMUSEMENT & RECREATION--3.0% Ameristar Casinos, Inc., 10.750% 02/15/09 215,000 247,250 Bombardier Recreational, 8.375% 12/15/13 (a) 260,000 270,400 Boyd Gaming Corp., 8.750% 04/15/12 85,000 93,075 Circus & Eldorado/Silver Legacy Capital Corp., 10.125% 03/01/12 125,000 129,687 Corus Entertainment, Inc., 8.750% 03/01/12 115,000 125,925 Equinox Holdings, Inc., 9.000% 12/15/09 (a) 175,000 182,000 Hollywood Casino Shreveport, 13.000% 08/01/06 (h) USD 470,000 $ 282,000 Hollywood Entertainment Corp., 9.625% 03/15/11 235,000 250,862 Inn of the Mountain Gods Resort, 12.000% 11/15/10 (a) 130,000 138,450 Mohegan Tribal Gaming Authority: 8.000% 04/01/12 350,000 378,000 8.375% 07/01/11 125,000 136,250 Park Place Entertainment Corp., 9.375% 02/15/07 285,000 322,762 Pinnacle Entertainment, Inc., 9.250% 02/15/07 (a) 750,000 774,375 Poster Financial Group, Inc., 8.750% 12/01/11 (a) 40,000 42,300 Regal Cinemas, Inc., 9.375% 02/01/12 210,000 237,300 River Rock Entertainment, 9.750% 11/01/11 (a) 210,000 225,488 Six Flags, Inc., 9.500% 02/01/09 550,000 574,750 Town Sports International, Inc., 9.625% 04/15/11 (a) 115,000 123,050 Venetian Casino Resort LLC, 11.000% 06/15/10 (a) 205,000 237,800 Wynn Las Vegas LLC, 12.000% 11/01/10 145,000 169,287 ------------- 4,941,011 ------------- AUTO EQUIPMENT & RENTAL SERVICES--0.9% Accuride Corp., 9.250% 02/01/08 75,000 77,250 Dana Corp.: 9.000% 08/15/11 135,000 162,675 10.125% 03/15/10 125,000 145,938 Dura Operating Corp.: 8.625% 04/15/12 225,000 237,375 9.000% 05/01/09 190,000 190,000 NationsRent, Inc., 9.500% 10/15/10 (a) 275,000 295,625 United Rentals, Inc., 10.750% 04/15/08 190,000 213,750 Williams Scotsman, Inc., 9.875% 06/01/07 125,000 126,250 ------------- 1,448,863 ------------- BUSINESS SERVICES--0.6% IMCO Recycling, Inc., 10.375% 10/15/10 (a) 140,000 144,900 Iron Mountain, Inc., 6.625% 01/01/16 340,000 330,650 Moore North America Finance, Inc., 7.875% 01/15/11 110,000 124,300 Stratus Technologies, Inc., 10.375% 12/01/08 (a) 210,000 222,600 Wackenhut Corrections, 8.250% 07/15/13 (a) 100,000 106,500 ------------- 928,950 ------------- </Table> See Notes to Investment Portfolio. 23 <Page> <Table> <Caption> PAR VALUE ---------------- ------------- FUNERAL SERVICES--0.4% Service Corp. International, 7.700% 04/15/09 USD 400,000 $ 426,000 Stewart Enterprises, Inc., 10.750% 07/01/08 235,000 265,550 ------------- 691,550 ------------- HEALTH SERVICES--1.6% Bio-Rad Laboratories, Inc., 7.500% 08/15/13 220,000 242,000 Coventry Health Care, Inc., 8.125% 02/15/12 265,000 294,150 HCA, Inc., 8.750% 09/01/10 140,000 165,824 IASIS Healthcare Corp., 13.000% 10/15/09 185,000 208,125 Insight Health Services Corp., 9.875% 11/01/11 230,000 246,100 Magellan Health Services, Inc., 9.375% 11/15/07 (a)(i) 210,000 220,500 MedQuest, Inc., 11.875% 08/15/12 (a) 335,000 367,662 Pacificare Health Systems, Inc., 10.750% 06/01/09 211,000 247,397 Tenet Healthcare Corp., 6.375% 12/01/11 405,000 388,800 United Surgical Partners International, Inc., 10.000% 12/15/11 250,000 283,750 ------------- 2,664,308 ------------- HOTELS, CAMPS & LODGING--0.6% Hard Rock Hotel, Inc., 8.875% 06/01/13 (a) 185,000 197,025 Host Marriott LP, 9.500% 01/15/07 225,000 251,437 Royal Caribbean Cruises Ltd., 8.000% 05/15/10 145,000 158,050 Starwood Hotels & Resorts Worldwide, Inc., 7.875% 05/01/12 (a) 375,000 420,000 ------------- 1,026,512 ------------- OTHER SERVICES--0.1% Corrections Corp. of America, 9.875% 05/01/09 180,000 201,600 ------------- TRANSPORTATION, COMMUNICATIONS, ELECTRIC, GAS & SANITARY SERVICES--13.3% AEROSPACE--0.2% BE Aerospace, Inc., 8.875% 05/01/11 245,000 227,850 Vought Aircraft Industries, Inc., 8.000% 07/15/11 (a) 105,000 107,100 ------------- 334,950 ------------- AIR TRANSPORTATION--0.7% Delta Airlines, Inc., 7.900% 12/15/09 USD 340,000 $ 278,800 Northwest Airlines, Inc., 9.875% 03/15/07 295,000 267,712 Petroleum Helicopters, Inc., 9.375% 05/01/09 325,000 344,500 U.S. Airways, Inc., 10.375% 03/01/13 (j) 803,301 277,139 ------------- 1,168,151 ------------- BROADCASTING--2.0% Advanstar Communications, Inc., 12.000% 02/15/11 300,000 315,750 Canwest Media, Inc., 10.625% 05/15/11 390,000 444,600 Emmis Communications Corp., (c) 03/15/11 (12.500% 03/15/06) 317,000 292,433 Nexstar Finance, Inc., 7.000% 01/15/14 (a) 85,000 85,425 Quebecor Media, Inc., 11.125% 07/15/11 400,000 463,000 Sinclair Broadcast Group, Inc., 8.750% 12/15/11 250,000 277,500 Spanish Broadcasting System, 9.625% 11/01/09 310,000 330,925 TV Azteca SA de CV, 10.500% 02/15/07 470,000 474,700 Videotron Ltee, 6.875% 01/15/14 (a) 155,000 159,650 Vivendi Universal, 9.250% 04/15/10 (a) 175,000 206,500 XM Satellite Radio, Inc., (c) 12/31/09 (14.000% 12/31/05) 325,485 291,309 ------------- 3,341,792 ------------- CABLE--2.2% Charter Communications Holding LLC: (c) 04/01/11 (9.920% 04/01/04) 1,045,000 893,475 10.000% 04/01/09 115,000 102,350 10.250% 09/15/10 (a) 160,000 167,600 Comcast UK Cable Partners Ltd., 11.200% 11/15/07 450,000 450,000 CSC Holdings, Inc., 7.625% 04/01/11 195,000 204,750 DirecTV Holdings LLC, 8.375% 03/15/13 200,000 232,000 EchoStar DBS Corp., 6.375% 10/01/11 (a) 390,000 400,725 Granite Broadcasting, 9.750% 12/01/10 (a) 260,000 258,050 Insight Communications, Inc., (c) 02/15/11 (12.250% 02/15/06) 275,000 235,125 </Table> See Notes to Investment Portfolio. 24 <Page> <Table> <Caption> PAR VALUE ---------------- ------------- Northland Cable Television, Inc., 10.250% 11/15/07 USD 305,000 $ 302,331 Rogers Cable, Inc., 6.250% 06/15/13 105,000 105,834 Shaw Communications, Inc., 7.500% 11/20/13 CAD 260,000 202,991 Telenet Group Holding NV, (c) 06/15/14 (11.500% 12/15/08) (a) USD 260,000 161,704 ------------- 3,716,935 ------------- COMMUNICATION SERVICES--0.8% Axtel SA, 11.000% 12/15/13 (a) 270,000 273,037 Crown Castle International Corp., 10.750% 08/01/11 230,000 258,750 Fairpoint Communications, 11.875% 03/01/10 180,000 210,600 Lucent Technologies, Inc., 6.450% 03/15/29 220,000 170,500 SBA Communications Corp.: (c) 12/15/11 (9.750% 12/15/07) 160,000 112,800 10.250% 02/01/09 355,000 350,562 ------------- 1,376,249 ------------- ELECTRIC, GAS & SANITARY SERVICES--0.5% Allied Waste North America, Inc.: 6.500% 11/15/10 (a) 470,000 475,875 Series 2001 B, 8.500% 12/01/08 305,000 338,550 ------------- 814,425 ------------- ELECTRIC SERVICES--2.4% AES Corp.: 9.000% 05/15/15 (a) 330,000 372,900 9.500% 06/01/09 182,000 201,793 Beaver Valley Funding Corp., 9.000% 06/01/17 235,000 269,169 Caithness Coso Funding Corp., 9.050% 12/15/09 292,950 317,851 Calpine Corp.: 8.500% 07/15/10 (a) 210,000 203,700 8.500% 02/15/11 295,000 232,312 8.625% 08/15/10 140,000 109,200 CMS Energy Corp., 8.900% 07/15/08 265,000 288,188 Edison Mission Energy, 9.875% 04/15/11 250,000 260,938 Illinova Power Co., 11.500% 12/15/10 75,000 90,750 MSW Energy Holdings Finance: 7.375% 09/01/10 (a) 90,000 94,050 8.500% 09/01/10 (a) 270,000 294,300 Nevada Power Co.: 9.000% 08/15/13 (a) 125,000 138,281 10.875% 10/15/09 215,000 246,175 NRG Energy, Inc., 8.000% 12/15/13 (a) 90,000 94,612 PSE&G Energy Holdings, Inc., 8.625% 02/15/08 USD 275,000 $ 300,437 Tiers-Mir-2001-14, Fixed Rate Certificates, 7.200% 06/15/04 (a)(g) 270,000 157,950 UCAR Finance, Inc., 10.250% 02/15/12 250,000 281,250 ------------- 3,953,856 ------------- MARINE SERVICES--0.2% Stena AB: 7.500% 11/01/13 (a) 105,000 105,816 9.625% 12/01/12 (a) 170,000 191,250 ------------- 297,066 ------------- MOTOR FREIGHT & WAREHOUSING--0.2% Allied Holdings, Inc., 8.625% 10/01/07 155,000 148,413 QDI Capital Corp., 9.000% 11/15/10 (a) 240,000 250,800 ------------- 399,213 ------------- RADIO & TELEPHONE COMMUNICATIONS--2.2% ACC Escrow Corp., 10.000% 08/01/11 (a) 180,000 199,800 AirGate PCS, Inc., (c) 10/01/09 (13.500% 10/01/04) 50,000 35,500 Avaya, Inc., 11.125% 04/01/09 150,000 174,000 Cincinnati Bell, Inc., 8.375% 01/15/14 (a) 210,000 226,800 Dobson Communications Corp., 8.875% 10/01/13 (a) 290,000 293,625 Horizon PCS, Inc., 13.750% 06/15/11 (g) 285,000 71,250 MCI Communications Corp.: 7.125% 06/15/27 (g) 80,000 64,800 7.500% 08/20/04 (g) 305,000 247,050 Nextel Communications, Inc., 9.375% 11/15/09 785,000 853,687 Nextel Partners, Inc., 11.000% 03/15/10 265,000 293,487 Rogers Cantel, Inc., 9.750% 06/01/16 500,000 595,000 US Unwired, Inc., (c) 11/01/09 (13.375% 11/01/04) 500,000 362,500 Western Wireless Corp., 9.250% 07/15/13 130,000 137,150 ------------- 3,554,649 ------------- RAILROAD--0.3% Kansas City Southern, 7.500% 06/15/09 140,000 144,200 TFM SA de CV, 12.500% 06/15/12 (a) 230,000 262,200 ------------- 406,400 ------------- </Table> See Notes to Investment Portfolio. 25 <Page> <Table> <Caption> PAR VALUE ---------------- ------------- TELECOMMUNICATIONS--1.6% American Towers, Inc., 7.250% 12/01/11 (a) USD 130,000 $ 131,950 Carrier1 International SA, 13.250% 02/15/09 (g) 500,000 45,000 Innova S de R.L., 9.375% 09/19/13 (a) 70,000 71,838 Insight Midwest, 9.750% 10/01/09 (a) 135,000 142,425 Level 3 Communications, 10.500% 12/01/08 260,000 245,700 Qwest Capital Funding: 7.250% 02/15/11 565,000 553,700 7.750% 02/15/31 265,000 245,125 Qwest Services Corp., 13.500% 12/15/10 (a) 390,000 473,850 Spectrasite, Inc., 8.250% 05/15/10 (a) 130,000 139,425 Time Warner Telecom LLC: 9.750% 07/15/08 200,000 206,500 10.125% 02/01/11 255,000 271,575 Triton PCS, Inc., 8.750% 11/15/11 85,000 83,725 ------------- 2,610,813 ------------- TOTAL CORPORATE FIXED-INCOME BONDS & NOTES (cost of $59,770,225) 64,743,604 ------------- FOREIGN GOVERNMENT OBLIGATIONS--33.0% European Investment Bank, 7.625% 12/07/07 GBP 455,000 891,920 Government of Australia, 8.750% 08/15/08 AUD 3,030,000 2,573,888 Government of Canada: 5.500% 06/01/10 CAD 1,020,000 841,659 10.000% 06/01/08 2,846,000 2,747,650 Government of New Zealand: 6.000% 11/15/11 NZD 3,715,000 2,448,263 6.500% 04/15/13 2,545,000 1,732,625 Government of Sweden: 5.000% 01/28/09 SEK 18,785,000 2,712,188 5.500% 10/08/12 5,105,000 751,896 6.750% 05/05/14 4,960,000 798,670 Kingdom of Norway, 6.000% 05/16/11 NOK 13,260,000 2,176,176 Ministry Finance Russia, 12.750% 06/24/28 USD 555,000 883,837 Poland Government Bond, 8.500% 05/12/07 PLN 3,357,000 950,089 Republic of Brazil: 9.250% 10/22/10 USD 500,000 $ 537,500 9.500% 01/24/11 EUR 500,000 663,049 11.000% 08/17/40 USD 1,283,000 1,411,300 11.500% 04/02/09 EUR 480,000 688,235 12.750% 01/15/20 USD 490,000 622,300 14.500% 10/15/09 725,000 947,937 Republic of Bulgaria: 1.000% 07/28/24 (e) 310,000 306,125 7.500% 01/15/13 EUR 838,000 1,196,265 Republic of Colombia: 9.750% 04/09/11 USD 373,991 424,480 10.000% 01/23/12 782,000 856,290 10.750% 01/15/13 240,000 273,000 11.500% 05/31/11 EUR 335,000 483,075 Republic of France: 5.000% 10/25/16 1,100,000 1,451,922 5.500% 10/25/10 975,000 1,342,298 Republic of Germany: 5.375% 01/04/10 905,000 1,234,840 6.000% 07/04/07 1,210,000 1,661,518 Republic of Greece: 5.350% 05/18/11 1,115,000 1,509,926 8.600% 03/26/08 381,000 575,675 Republic of Italy, 5.250% 08/01/11 2,330,000 3,151,651 Republic of Peru, 9.875% 02/06/15 USD 660,000 765,600 Republic of Philippines, 8.250% 01/15/14 400,000 395,000 Republic of South Africa: 5.250% 05/16/13 EUR 855,000 1,028,781 13.000% 08/31/10 ZAR 8,805,000 1,571,128 Republic of Venezuela: 9.250% 09/15/27 USD 1,728,000 1,572,480 10.750% 09/19/13 (a) 300,000 319,050 Russian Federation: 5.000% 03/31/30 1,800,000 1,725,750 11.000% 07/24/18 445,000 600,750 Treasury of Corp. Victoria, 7.500% 08/15/08 AUD 2,200,000 1,778,450 United Kingdom Treasury: 5.000% 03/07/12 GBP 635,000 1,151,417 7.500% 12/07/06 350,000 676,124 9.000% 07/12/11 615,000 1,392,553 United Mexican States: 7.500% 03/08/10 EUR 605,000 846,882 11.375% 09/15/16 USD 887,000 1,257,332 11.500% 05/15/26 500,000 728,250 ------------- TOTAL FOREIGN GOVERNMENT OBLIGATIONS (cost of $45,362,268) 54,655,794 ------------- </Table> See Notes to Investment Portfolio. 26 <Page> <Table> <Caption> PAR VALUE ---------------- ------------- U.S. GOVERNMENT AGENCIES & OBLIGATIONS--23.6% Federal Home Loan Mortgage Corp: 5.000% 08/25/10 USD 500,000 $ 510,785 8.000% 10/01/26 236,978 257,418 ------------- 768,203 ------------- Federal National Mortgage Association, To Be Announced, 6.500% 01/14/34 (k) 2,795,000 2,922,522 ------------- Government National Mortgage Association, 8.000% 04/15/17 65,824 72,509 ------------- U.S. Treasury Notes/Bonds: 5.625% 05/15/08 2,500,000 2,769,335 6.500% 10/15/06 2,550,000 2,840,361 7.500% 11/15/24 1,310,000 1,708,578 8.750% 05/15/17 4,911,000 6,882,305 10.375% 11/15/12 3,800,000 4,848,116 11.625% 11/15/04 2,900,000 3,159,187 12.000% 08/15/13 9,548,000 13,191,908 ------------- 35,399,790 ------------- TOTAL U.S. GOVERNMENT AGENCIES & OBLIGATIONS (cost of $39,300,121) 39,163,024 ------------- TOTAL BONDS & NOTES (cost of $144,432,614) 158,562,422 ------------- CONVERTIBLE BONDS--0.5% TRANSPORTATION, COMMUNICATIONS, ELECTRIC, GAS & SANITARY SERVICES--0.5% RADIO & TELEPHONE COMMUNICATIONS--0.3% Nortel Networks Corp., 4.250% 09/01/08 470,000 444,732 ------------- TELECOMMUNICATIONS--0.2% COLT Telecom Group PLC: 2.000% 03/29/06 (a) EUR 175,000 238,131 2.000% 12/16/06 (a) 80,000 109,868 ------------- 347,999 ------------- TOTAL CONVERTIBLE BONDS (cost of $629,583) 792,731 ------------- <Caption> UNITS VALUE ---------------- ------------- WARRANTS (f)(l)--0.0% TRANSPORTATION, COMMUNICATIONS, ELECTRIC, GAS & SANITARY SERVICES--0.0% CABLE--0.0% Cable Satisfaction International, Inc., expires 03/01/05 515 $ --(m) ------------- Ono Finance PLC, expires 02/15/11 (a) 150 --(m) ------------- COMMUNICATION SERVICES--0.0% UbiquiTel, Inc., expires 04/15/10 (a) 225 --(m) ------------- MOTOR FREIGHT & WAREHOUSING--0.0% QDI LLC, expires 01/15/07 (a) 1,020 14,892 ------------- TELECOMMUNICATIONS--0.0% Carrier1 International SA, expires 02/19/09 (a)(g) 235 --(m) Horizon PCS, Inc., expires 10/01/10 (a) 315 --(m) Jazztel PLC, expires 07/15/10 (a) 95 --(m) ------------- -- ------------- TOTAL WARRANTS (cost of $17,080) 14,892 ------------- <Caption> SHARES ---------------- COMMON STOCKS (f)(l)--0.0% TRANSPORTATION, COMMUNICATIONS, ELECTRIC, GAS & SANITARY SERVICES--0.0% CABLE--0.0% Ono Finance PLC (a) 500 --(m) ------------- POLLUTION CONTROL--0.0% Fairlane Management Corp. 2,000 --(m) ------------- TOTAL COMMON STOCKS (cost of $46,125) -- ------------- </Table> See Notes to Investment Portfolio. 27 <Page> <Table> <Caption> PAR VALUE ---------------- ------------- SHORT-TERM OBLIGATION--3.7% Repurchase agreement with State Street Bank & Trust Co., dated 12/31/03, due 01/02/04 at 0.780%, collateralized by a U.S. Treasury Bond maturing 02/15/27, market value $6,222,269 (repurchase proceeds $6,095,264) (cost of $6,095,000) USD 6,095,000 $ 6,095,000 ------------- TOTAL INVESTMENTS--99.8% (cost of $151,220,402) (n) 165,465,045 ------------- OTHER ASSETS & LIABILITIES, NET--0.2% 254,673 ------------- NET ASSETS--100.0% $ 165,719,718 ============= </Table> NOTES TO INVESTMENT PORTFOLIO: (a) This security is exempt from registration under Rule 144A of the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2003, the value of these securities amounted to $17,957,092, which represents 10.8% of net assets. (b) As of December 31, 2003, the Fund held securities of certain issuers that have filed for bankruptcy protection under Chapter 11, representing 0.1% of net assets. Income is being accrued. (c) Stepped coupon bond. Currently accruing at zero. Shown parenthetically is the next interest rate to be paid and the date the Fund will begin accruing this rate. (d) Zero coupon bond. (e) Interest rates on variable rate securities change periodically. The rate listed is as of December 31, 2003. (f) Represents fair value as determined in good faith under the direction of the Board of Trustees. (g) As of December 31, 2003, the Fund held securities of certain issuers that have filed for bankruptcy protection under Chapter 11, representing 0.6% of net assets. This issuer is in default of certain debt convenants. Income is not being accrued. (h) This issuer is in default of certain debt covenants. Income is not being accrued. (i) As of December 31, 2003, this issuer had filed for bankruptcy protection under Chapter 11, however, effective January 5, 2004, this issuer emerged from bankruptcy protection and began to accrue income. (j) Income is not being accrued on this security. (k) This security, or a portion thereof, has been purchased on a delayed delivery basis whereby the terms that are fixed are the purchase price, interest rate and settlement date. The exact quantity purchased may be slightly more or less than the amount shown. (l) Non-income producing. (m) Security has no value. (n) Cost for federal income tax purposes is $153,440,652. As of December 31, 2003, the Fund had entered into the following forward currency exchange contracts: <Table> <Caption> CONTRACTS IN EXCHANGE SETTLEMENT NET UNREALIZED TO DELIVER FOR DATE DEPRECIATION - ---------------- ------------- ---------- -------------- CAD 260,000 USD 198,314 01/15/04 $ (2,732) EUR 186,400 USD 225,264 01/08/04 (9,538) EUR 1,585,000 USD 1,940,000 01/15/04 (56,152) EUR 880,000 USD 1,091,640 01/26/04 (16,319) EUR 2,077,500 USD 2,581,107 01/26/04 (34,556) EUR 119,000 USD 147,798 01/26/04 (2,028) EUR 341,000 USD 423,454 01/26/04 (5,880) EUR 480,000 USD 596,064 01/26/04 (8,277) GBP 410,000 USD 713,790 01/15/04 (17,246) GBP 142,500 USD 250,373 01/26/04 (3,495) GBP 56,000 USD 98,448 01/26/04 (1,317) GBP 149,000 USD 261,659 01/26/04 (3,788) NOK 589,000 USD 87,591 01/26/04 (688) NOK 4,219,000 USD 627,109 01/29/04 (5,166) ---------- $ (167,182) ========== </Table> <Table> <Caption> ACRONYM NAME ------- ---- AUD Australian Dollar CAD Canadian Dollar EUR Euro GBP Great British Pound NOK Norwegian Kroner NZD New Zealand Dollar PLN Polish Zloty USD United States Dollar SEK Swedish Krona ZAR South African Rand </Table> See Notes to Financial Statements. 28 <Page> STATEMENT OF ASSETS & LIABILITIES Colonial Strategic Income Fund, Variable Series / December 31, 2003 <Table> ASSETS: Investments, at cost $ 151,220,402 --------------- Investments, at value $ 165,465,045 Cash 87,438 Foreign currency (cost of $6,541) 6,603 Receivable for: Investments sold 6,687 Fund shares sold 134,315 Interest 3,445,696 Expense reimbursement due from Distributor 3,612 Deferred Trustees' compensation plan 6,653 Other assets 7,970 --------------- TOTAL ASSETS 169,164,019 --------------- LIABILITIES: Net unrealized depreciation on foreign forward currency contracts 167,182 Payable for: Investments purchased 93,129 Investments purchased on a delayed delivery basis 2,923,886 Fund shares repurchased 102,495 Investment advisory fee 87,827 Transfer agent fee 625 Pricing and bookkeeping fees 6,008 Trustees' fees 266 Audit fee 34,050 Custody fee 1,251 Distribution fee--Class B 12,709 Deferred Trustees' fees 6,653 Other liabilities 8,220 --------------- TOTAL LIABILITIES 3,444,301 --------------- NET ASSETS $ 165,719,718 =============== COMPOSITION OF NET ASSETS: Paid-in capital $ 182,089,129 Overdistributed net investment income (2,487,200) Accumulated net realized loss (28,042,636) Net unrealized appreciation (depreciation) on: Investments 14,244,643 Foreign currency translations (84,218) --------------- NET ASSETS $ 165,719,718 =============== CLASS A: Net assets $ 109,894,248 Shares outstanding 11,211,698 =============== Net asset value per share $ 9.80 =============== CLASS B: Net assets $ 55,825,470 Shares outstanding 5,699,377 =============== Net asset value per share $ 9.80 =============== </Table> See Notes to Financial Statements. 29 <Page> STATEMENT OF OPERATIONS Colonial Strategic Income Fund, Variable Series For the Year Ended December 31, 2003 <Table> INVESTMENT INCOME: Dividends $ 41,787 Interest 11,001,454 Dollar roll fee income 37,058 Other 45,775 --------------- Total Investment Income (net of foreign taxes withheld of $22,688) 11,126,074 --------------- EXPENSES: Investment advisory fee 1,003,522 Distribution fee--Class B 115,511 Transfer agent fee 7,500 Pricing and bookkeeping fees 85,593 Trustees' fees 10,929 Custody fee 50,322 Other expenses 76,315 --------------- Total Expenses 1,349,692 Fees reimbursed by Distributor--Class B (22,294) Custody earnings credit (733) --------------- Net Expenses 1,326,665 --------------- Net Investment Income 9,799,409 --------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: Net realized gain (loss) on: Investments 3,379,859 Foreign currency transactions (1,461,701) --------------- Net realized gain 1,918,158 --------------- Net change in unrealized appreciation/depreciation on: Investments 14,219,344 Foreign currency translations 70,128 --------------- Net change in unrealized appreciation/depreciation 14,289,472 --------------- Net Gain 16,207,630 --------------- Net Increase in Net Assets from Operations $ 26,007,039 =============== </Table> See Notes to Financial Statements. 30 <Page> STATEMENT OF CHANGES IN NET ASSETS Colonial Strategic Income Fund, Variable Series <Table> <Caption> YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, INCREASE (DECREASE) IN NET ASSETS: 2003 2002 - ---------------------------------- --------------- --------------- OPERATIONS: Net investment income $ 9,799,409 $ 9,896,562 Net realized gain (loss) on investments and foreign currency transactions 1,918,158 (8,483,465) Net change in unrealized appreciation/depreciation on investments and foreign currency translations 14,289,472 9,597,438 --------------- --------------- Net Increase from Operations 26,007,039 11,010,535 --------------- --------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income: Class A (7,812,669) (8,337,510) Class B (3,845,123) (2,438,046) Return of capital: Class A -- (171,968) Class B -- (50,287) --------------- --------------- Total Distributions Declared to Shareholders (11,657,792) (10,997,811) --------------- --------------- SHARE TRANSACTIONS: Class A: Subscriptions 5,759,085 3,738,599 Distributions reinvested 7,812,669 8,509,478 Redemptions (20,673,030) (29,202,076) --------------- --------------- Net Decrease (7,101,276) (16,953,999) --------------- --------------- Class B: Subscriptions 23,225,342 15,913,161 Distributions reinvested 3,845,123 2,488,333 Redemptions (7,420,489) (5,160,875) --------------- --------------- Net Increase 19,649,976 13,240,619 --------------- --------------- Net Increase (Decrease) from Share Transactions 12,548,700 (3,713,380) --------------- --------------- Total Increase (Decrease) in Net Assets 26,897,947 (3,700,656) NET ASSETS: Beginning of period 138,821,771 142,522,427 --------------- --------------- End of period (including overdistributed net investment income of $(2,487,200) and $(1,605,285), respectively) $ 165,719,718 $ 138,821,771 =============== =============== CHANGES IN SHARES: Class A: Subscriptions 594,081 407,376 Issued for distributions reinvested 798,025 956,121 Redemptions (2,137,164) (3,201,245) --------------- --------------- Net Decrease (745,058) (1,837,748) --------------- --------------- Class B: Subscriptions 2,427,732 1,749,903 Issued for distributions reinvested 393,162 279,902 Redemptions (766,395) (572,003) --------------- --------------- Net Increase 2,054,499 1,457,802 --------------- --------------- </Table> See Notes to Financial Statements. 31 <Page> NOTES TO FINANCIAL STATEMENTS Colonial Strategic Income Fund, Variable Series / December 31, 2003 NOTE 1. ORGANIZATION Colonial Strategic Income Fund, Variable Series (the "Fund"), a series of Liberty Variable Investment Trust (the "Trust") is a diversified portfolio. The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. INVESTMENT GOAL--The Fund seeks current income consistent with prudent risk and maximum total return. FUND SHARES--The Fund may issue an unlimited number of shares and offers two classes of shares: Class A and Class B. Each share class has its own expense structure. Shares of the Fund are available exclusively as a pooled funding vehicle for variable annuity contracts ("VA Contracts") and Variable Life Insurance Policies ("VLI Policies") offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies"). The Participating Insurance Companies and their separate accounts own all the shares of the Fund. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES--The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION--Debt securities generally are valued by a pricing service approved by the Trust's Board of Trustees, based upon market transactions for normal, institutional-size trading units of similar securities. The services may use various pricing techniques which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as broker quotes. Debt securities for which quotations are readily available are valued at an over-the-counter or exchange bid quotation. Certain debt securities, which tend to be more thinly traded and of lesser quality, are priced based on fundamental analysis of the financial condition of the issuer and the estimated value of any collateral. Valuations developed through pricing techniques may vary from the actual amounts realized upon sale of the securities, and the potential variation may be greater for those securities valued using fundamental analysis. Equity securities are valued at the last sale price at the close of the principal exchange on which they trade. Unlisted securities or listed securities for which there were no sales during the day are valued at the closing bid price on such exchanges or over-the-counter markets. Short-term obligations maturing within 60 days are valued at amortized cost, which approximates market value. Forward currency exchange contracts are valued at the prevailing forward exchange rate of the underlying currencies. Foreign securities are generally valued at the closing price on the foreign exchange or market on which they trade. If any foreign share prices are not readily available as a result of limited share activity, the securities are valued at the last sale price of the local shares in the principal market in which such securities are normally traded. Investments for which market quotations are not readily available, which tend to be more thinly traded and of lesser quality are valued at fair value as determined in good faith under consistently applied procedures established by and under the general supervision of the Board of Trustees. Foreign markets close each day at various times prior to the close of the New York Stock Exchange ("NYSE"). Foreign currency exchange rates are generally determined prior to the close of the NYSE at 12:00 p.m. Eastern (U.S.) time. Occasionally, events affecting the value of a foreign security may occur subsequent to the close of the exchange or market which would not be reflected in the computation of the Fund's net asset value. In such an event, the foreign security will be valued at the fair value. SECURITY TRANSACTIONS--Security transactions are accounted for on the trade date. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS-- Forward foreign currency exchange contracts are agreements to exchange one currency for another at a future date at a specified price. These contracts are used to minimize the exposure to foreign exchange rate fluctuations during the period between trade and settlement date of the contracts. The Fund may utilize forward foreign currency exchange contracts in connection with the settlement of purchases and sales of securities. The Fund may also enter into these contracts to hedge certain other foreign currency denominated assets. Contracts to buy generally are used to acquire exposure to foreign currencies, while contracts to sell are used to hedge a Fund's investments against currency fluctuations. Forward currency contracts are valued daily at the current exchange rate of the underlying currency, resulting in unrealized gains (losses) which 32 <Page> become realized at the time the foreign currency contracts are closed or mature. Realized and unrealized gains (losses) arising from such transactions are included in net realized and unrealized gains (losses) on foreign currency transactions. The use of forward currency contracts does not eliminate fluctuations in the prices of the Fund's portfolio securities. While the maximum potential loss from such contracts is the aggregate face value in U.S. dollars at the time the contract was opened, exposure is typically limited to the change in value of the contract (in U.S. dollars) over the period it remains open. The Fund could also be exposed to risk if the counterparties of the contracts are unable to fulfill the terms of the contracts. REPURCHASE AGREEMENTS--The Fund may engage in repurchase agreement transactions with institutions that the Fund's investment advisor has determined are credit-worthy. The Fund, through its custodian, receives delivery of underlying securities collateralizing a repurchase agreement. Collateral is at least equal, at all times, to the value of the repurchase obligation including interest. A repurchase agreement transaction involves certain risks in the event of default or insolvency of the counterparty. These risks include possible delays or restrictions upon the Fund's ability to dispose of the underlying securities and a possible decline in the value of the underlying securities during the period while the Fund seeks to assert its rights. MORTGAGE DOLLAR ROLL TRANSACTIONS--The Fund may enter into mortgage dollar roll transactions. A mortgage dollar roll transaction involves a sale by the Fund of securities that it holds with an agreement by the Fund to repurchase substantially similar securities at an agreed upon price and date. During the period between the sale and repurchase, the Fund will not be entitled to accrue interest and receive principal payment on the securities sold. Mortgage dollar roll transactions involve the risk that the market value of the securities sold by the Fund may decline below the repurchase price of those securities. In the event the buyer of the securities under a mortgage dollar roll transaction files for bankruptcy or becomes insolvent, the Fund's use of proceeds of the transaction may be restricted pending a determination by or with respect to the other party. The Fund identifies U.S. Government securities or other liquid high-grade debt obligations as segregated with the custodian in an amount equal to the mortgage dollar roll transactions. DELAYED DELIVERY SECURITIES--The Fund may trade securities on other than normal settlement terms, including securities purchased or sold on a "when-issued" basis. This may increase the risk if the other party to the transaction fails to deliver and causes the Fund to subsequently invest at less advantageous prices. The Fund identifies cash or liquid portfolio securities as segregated with the custodian in an amount equal to the delayed delivery commitment. INCOME RECOGNITION--Interest income is recorded on the accrual basis. Premium and discount are amortized and accreted, respectively, on all debt securities. Corporate actions and dividend income are recorded on the ex-date, except for foreign securities which are recorded as soon after ex-date as the Fund becomes aware of such, net of non-reclaimable tax withholdings. The value of additional securities received as an income payment is recorded as income and as the cost basis of such securities. FOREIGN CURRENCY TRANSACTIONS--The values of all assets and liabilities quoted in foreign currencies are translated into U.S. dollars at that day's exchange rates. Net realized and unrealized gains (losses) on foreign currency transactions include gains (losses) arising from the fluctuation in exchange rates between trade and settlement dates on securities transactions, gains (losses) arising from the disposition of foreign currency and currency gains (losses) between the accrual and payment dates on dividends, interest income and foreign withholding taxes. The Fund does not distinguish that portion of gains (losses) on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the investments. Such fluctuations are included with the net realized and unrealized gains (losses) on investments. DETERMINATION OF CLASS NET ASSET VALUES--All income, expenses (other than class-specific expenses, as shown on the Statement of Operations), and realized and unrealized gains (losses), are allocated to each class of the Fund on a daily basis, for purposes of determining the net asset value of each class. Income and expenses are allocated to each class based on the settled shares method, while realized and unrealized gains (losses) are allocated based on the relative net assets of each class. FEDERAL INCOME TAX STATUS--The Fund intends to qualify each year as a "regulated investment company" under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its taxable income, if any, for its tax year, and as such will not be subject to federal income taxes. In addition, by distributing in each calendar year substantially all of its net investment income, capital gains and certain other amounts, if any, the Fund will not be subject to federal excise tax. Therefore, no federal income or excise tax provision is recorded. 33 <Page> DISTRIBUTIONS TO SHAREHOLDERS--Distributions to shareholders are recorded on ex-date. Net realized capital gains, if any, are distributed at least annually. Income and capital gains dividends are determined in accordance with income tax regulations which may differ from GAAP. All dividends and distributions are reinvested in additional shares of the Fund at net asset value as of the record date of the distribution. NOTE 3. FEDERAL TAX INFORMATION The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund's capital accounts for permanent tax differences to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. For the year ended December 31, 2003, permanent differences resulting primarily from differing treatments for foreign currency transactions, discount accretion/premium amortization on debt securities, distributions in excess, market discount reclassifications and paydowns were identified and reclassified among the components of the Fund's net assets as follows: <Table> <Caption> OVERDISTRIBUTED NET INVESTMENT ACCUMULATED PAID-IN INCOME NET REALIZED LOSS CAPITAL --------------- ----------------- ----------- $ 976,468 $ (770,718) $ (205,750) </Table> Net investment income and net realized gains (losses), as disclosed on the Statement of Operations, and net assets were not affected by this reclassification. The tax character of distributions paid during the years ended December 31, 2003 and December 31, 2002 was as follows: <Table> <Caption> DECEMBER 31, DECEMBER 31, 2003 2002 ------------ ------------ Distributions paid from: Ordinary Income* $ 11,657,792 $ 10,775,556 Long-Term Capital Gains -- -- Tax Return of Capital -- 222,255 </Table> * For tax purposes short-term capital gains distributions, if any, are considered ordinary income distributions. As of December 31, 2003, the components of distributable earnings on a tax basis were as follows: <Table> <Caption> UNDISTRIBUTED UNDISTRIBUTED NET ORDINARY LONG-TERM UNREALIZED INCOME CAPITAL GAINS APPRECIATION* ------------- ------------- ------------- $ -- $ -- $ 12,107,356 </Table> * The differences between book-basis and tax-basis net unrealized appreciation are primarily due to deferral of losses from wash sales and discount accretion/premium amortization on debt securities. Unrealized appreciation and depreciation at December 31, 2003, based on cost of investments for federal income tax purposes and excluding any unrealized appreciation and depreciation from changes in the value of assets and liabilities resulting from changes in exchange rates, was: <Table> Unrealized appreciation $ 15,654,939 Unrealized depreciation (3,630,546) ------------- Net unrealized appreciation $ 12,024,393 ============= </Table> The following capital loss carryforwards are available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: <Table> <Caption> YEAR OF CAPITAL LOSS EXPIRATION CARRYFORWARD ---------- ------------ 2008 $ 5,670,014 2009 11,079,118 2010 11,028,566 ------------ $ 27,777,698 ============ </Table> Capital loss carryforwards of $1,113,591 were utilized and/or expired during the year ended December 31, 2003 for the Fund. Expired capital loss carryforwards are recorded as a reduction of paid-in capital. POST-OCTOBER LOSSES--Under current tax rules, certain currency and capital losses realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of December 31, 2003, post-October currency losses of $605,663 were deferred to January 1, 2004. 34 <Page> NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES INVESTMENT ADVISOR MERGER--On April 1, 2003, Liberty Advisory Services Corp., the previous investment advisor to the Fund, and Colonial Management Associates, Inc., the previous sub-advisor to the Fund, merged into Columbia Management Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co. Columbia is an indirect, wholly owned subsidiary of FleetBoston Financial Corporation. As a result of the merger, Columbia now serves as the Fund's investment advisor. The merger did not change the way the Fund is managed, the investment personnel assigned to manage the Fund or the fees paid by the Fund. INVESTMENT ADVISORY FEE--Columbia is the investment advisor to the Fund and provides administrative and other services. Columbia receives a monthly fee based on the Fund's average daily net assets at the following annual rates: <Table> <Caption> AVERAGE DAILY NET ASSETS FEE RATE - ------------------------ -------- First $1 billion 0.65% Next $1 billion 0.60% Over $2 billion 0.55% </Table> Prior to November 1, 2003, Columbia received a monthly investment advisory fee at the annual rate of 0.65% of the Fund's average daily net assets. For the year ended December 31, 2003, the Fund's effective investment advisory fee rate was 0.65%. PRICING AND BOOKKEEPING FEES--Columbia is responsible for providing pricing and bookkeeping services to the Fund under a pricing and bookkeeping agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Corporation ("State Street"). Columbia pays the total fees collected to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual flat fee of $10,000 paid monthly, and in any month that the Fund's average daily net assets exceed $50 million, an additional monthly fee. The additional fee rate is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. This rate is applied to the average daily net assets of the Fund for that month. The Fund also pays additional fees for pricing services. For the year ended December 31, 2003, the effective pricing and bookkeeping fee rate was 0.055%. TRANSFER AGENT FEE--Columbia Funds Services, Inc. (the "Transfer Agent"), formerly Liberty Funds Services, Inc., an affiliate of Columbia, provides shareholder services for a monthly fee at an annual rate of $7,500. Effective October 13, 2003, Liberty Funds Services, Inc. changed its name to Columbia Funds Services, Inc. DISTRIBUTION FEES--Columbia Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia, is the principal underwriter of the Fund. Prior to October 13, 2003 Columbia Funds Distributor, Inc. was known as Liberty Funds Distributor, Inc. The Fund has adopted a 12b-1 plan which requires the payment of a monthly distribution fee to the Distributor at the annual rate of 0.25% of Class B average daily net assets. FEE WAIVERS--Columbia and the Distributor have voluntarily agreed to waive fees and reimburse the Fund for certain expenses so that total expenses (exclusive of brokerage commissions, interest, taxes and extraordinary expenses, if any) will not exceed 1.00% annually of the Fund's average daily net assets. The Distributor will first reimburse the Class B distribution fee up to 0.25% annually to reach the 1.00% limit on Class B expenses. If additional reimbursement is needed to meet the limit for each class, Columbia will then reimburse other expenses to the extent necessary. If additional reimbursement is still needed in order to reach the expense limit, Columbia will then waive a portion of its investment advisory fee to the extent necessary. Columbia or the Distributor, at their discretion, may revise or discontinue this arrangement any time. CUSTODY CREDITS--The Fund has an agreement with its custodian bank under which custody fees may be reduced by balance credits. The Fund could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if it had not entered into such an agreement. FEES PAID TO OFFICERS AND TRUSTEES--The Fund pays no compensation to its officers, all of whom are employees of Columbia or its affiliates. The Fund's Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. NOTE 5. PORTFOLIO INFORMATION PURCHASES AND SALES OF SECURITIES--For the year ended December 31, 2003, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were $98,021,133 and $91,069,282, respectively of which $6,840,899 and $582,842, respectively, were U.S. Government securities. 35 <Page> NOTE 6. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES FOREIGN SECURITIES--There are certain additional risks involved when investing in foreign securities that are not inherent with investments in domestic securities. These risks may involve foreign currency exchange rate fluctuations, adverse political and economic developments and the possible prevention of currency exchange or other foreign governmental laws or restrictions. In addition, the liquidity of foreign securities may be more limited than that of domestic securities. HIGH-YIELD SECURITIES--Investing in high-yield securities may involve greater credit risk and considerations not typically associated with investing in U.S. Government bonds and other higher quality fixed income securities. These securities are non-investment grade securities, often referred to as "junk bonds." Economic downturns may disrupt the high yield market and impair the ability of issuers to repay principal and interest. Also, an increase in interest rates would likely have an adverse impact on the value of such obligations. Moreover, high-yield securities may be less liquid due to the extent that there is no established retail secondary market and because of a decline in the value of such securities. INDUSTRY FOCUS--The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. LEGAL PROCEEDINGS--Columbia, the Distributor and certain of their affiliates (collectively, "the Columbia Group") have received information requests and subpoenas from various regulatory authorities, including the Securities and Exchange Commission ("SEC") and the New York Attorney General, in connection with their investigations of late trading and market timing in mutual funds. The Columbia Group has not uncovered any instances where Columbia or the Distributor was knowingly involved in late trading of mutual fund shares. The Columbia Group has identified a limited number of investors who had informal arrangements for trading certain Columbia Fund shares between 1998 and 2003. A substantial majority of the trading had ended by October 2002. None of these arrangements exists today. Information relating to those trading arrangements has been supplied to various regulatory authorities. To the extent that any Columbia Fund, whose shares were involved in those trading activities, was harmed by them, the Columbia Group has undertaken to reimburse such fund. The SEC staff has issued notices to the effect that it has made a preliminary determination to recommend that the SEC bring civil enforcement actions, including injunctive proceedings, against Columbia and the Distributor, alleging that they have violated certain provisions of the federal securities laws. The Columbia Group believes that those allegations are based principally on the trading arrangements referred to above. Columbia and the Distributor are engaged in discussions with the SEC staff in an effort to reach a satisfactory resolution of these matters. However, there can be no assurance that such a resolution will be reached. Any potential resolution of these matters may include, but not be limited to, sanctions, financial penalties, damages or injunctions regarding Columbia or the Distributor, and structural changes in the conduct of their business. Although the Columbia Group does not believe that these regulatory developments or their resolution will have a material adverse effect on the Columbia Funds, or on the ability of Columbia and the Distributor to provide services to the Columbia Funds, there can be no assurance that these matters or any adverse publicity or other developments resulting from them will not result in increased redemptions or reduced sales of Columbia Fund shares, which could increase transactions costs or operating expenses, or other consequences for the Columbia Funds. 36 <Page> FINANCIAL HIGHLIGHTS Colonial Strategic Income Fund, Variable Series--Class A Shares Selected data for a share outstanding throughout each period is as follows: <Table> <Caption> YEAR ENDED DECEMBER 31, --------------------------------------------------------------------------- 2003 2002 2001 2000 1999 ----------- ----------- ----------- ----------- ----------- NET ASSET VALUE, BEGINNING OF PERIOD $ 8.90 $ 8.92 $ 9.43 $ 10.44 $ 11.08 ----------- ----------- ----------- ----------- ----------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (a) 0.62 0.65 0.81(b) 0.97 0.95 Net realized and unrealized gain (loss) on investments and foreign currency 1.03 0.10 (0.46)(b) (0.96) (0.75) ----------- ----------- ----------- ----------- ----------- Total from Investment Operations 1.65 0.75 0.35 0.01 0.20 ----------- ----------- ----------- ----------- ----------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.75) (0.75) (0.84) (0.99) (0.84) Return of capital -- (0.02) (0.02) (0.03) -- ----------- ----------- ----------- ----------- ----------- Total Distributions Declared to Shareholders (0.75) (0.77) (0.86) (1.02) (0.84) ----------- ----------- ----------- ----------- ----------- NET ASSET VALUE, END OF PERIOD $ 9.80 $ 8.90 $ 8.92 $ 9.43 $ 10.44 =========== =========== =========== =========== =========== Total return (c)(d) 18.54% 8.41% 3.68% 0.16% 1.78% RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (e) 0.80% 0.76% 0.85% 0.76% 0.75% Net investment income (e) 6.42% 7.16% 8.42%(b) 9.36% 8.57% Portfolio turnover rate 61% 62% 62% 31% 35% Net assets, end of period (000's) $ 109,894 $ 106,415 $ 123,041 $ 143,629 $ 170,702 </Table> (a) Per share data was calculated using average shares outstanding during the period. (b) Effective January 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing and accreting premium and discount on all debt securities. The effect of this change for the year ended December 31, 2001 was to decrease net investment income per share by $0.03, increase net realized and unrealized gain/loss per share by $0.03 and decrease the ratio of net investment income to average net assets from 8.70% to 8.42%. Per share data and ratios for periods prior to December 31, 2001 have not been restated to reflect this change in presentation. (c) Total return at net asset value assuming all distributions reinvested. (d) Total return figure does not include any insurance company charges associated with a variable annuity. If included, total return would be reduced. (e) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. 37 <Page> REPORT OF INDEPENDENT AUDITORS To the Trustees of Liberty Variable Investment Trust and the Class A Shareholders of Colonial Strategic Income Fund, Variable Series In our opinion, the accompanying statement of assets and liabilities, including the investment portfolio, and the related statements of operations and of changes in net assets and the Class A financial highlights present fairly, in all material respects, the financial position of Colonial Strategic Income Fund, Variable Series (the "Fund") (a series of Liberty Variable Investment Trust) at December 31, 2003, and the results of its operations, the changes in its net assets and the Class A financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and the Class A financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund'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 December 31, 2003 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts February 12, 2004 38 <Page> PORTFOLIO MANAGERS' DISCUSSION Columbia High Yield Fund, Variable Series / December 31, 2003 Columbia High Yield Fund, Variable Series seeks a high level of current income, with capital appreciation as a secondary goal, by investing primarily in non-investment-grade corporate debt securities, commonly referred to as "junk" or "high-yield" bonds. Jeffrey L. Rippey and Kurt M. Havnaer are portfolio managers for the fund. Mr. Rippey has managed or co-managed the fund and its predecessor since 1998. Mr. Havnaer has co-managed the fund and its predecessor since 2000. EMPHASIS ON HIGH QUALITY HURT FUND PERFORMANCE For bond investors, 2003 will be remembered as a year in which the lowest quality securities produced the best performance. The flight to quality that had characterized the previous two years ended as investors abandoned Treasuries and shifted into C-rated and other high-yielding issues. This trend had a markedly negative impact on the relative performance of the fund, whose investments were concentrated in the highest quality segment of the high-yield market. In particular, the fund was underweight in previously beleaguered sectors such as telecom and electric utilities, whose fundamental prospects were enhanced as the economic recovery took shape. For the twelve-month period that ended December 31, 2003, the fund underperformed its benchmark, the Merrill Lynch US High Yield, Cash Pay Only Index. IMPROVEMENT WITHIN THE HIGH-YIELD SECTOR One of the most important developments within the high-yield universe was the dramatic drop in the corporate default rate. At the beginning of 2003, the Moody's trailing 12-month default rate was 8.4%, a number that declined to just 5.2% by the end of 2003. Many companies that were on the verge of bankruptcy a year ago were able to renegotiate their bank debt and lengthen the maturities of their remaining obligations. The financial health of the sector was also helped by the fact that over 500 new issues were brought to market, with a total par value of almost $150 billion. That was far in excess of the mere $68 billion raised by the high-yield markets in 2002. Although many struggling companies improved their competitive position in 2003, the major credit rating agencies continued to downgrade many more issues than they upgraded. This trend demonstrates that the high-yield rally was dependent on more than fundamental improvement; it also required that investors were willing to assume higher levels of risk. A CONSERVATIVE STANCE FOR 2004 If economic growth remains strong, the yield premium on high-yield bonds could come down further. We may also see lower-quality bonds continue to outperform higher-quality issuers. However, we have some concern about the longer-term sustainability of economic growth, based largely on record increases in debt levels for both the government and household sectors. Against that backdrop--and despite the fact that the fund's focus on quality hurt relative performance in 2003--we continue to maintain a conservative posture within the portfolio. Because the yield advantage of low-quality bonds versus Treasury securities has contracted sharply, the relative risk of owning lower-quality securities is also higher. In addition to maintaining the fund's focus on quality issuers, we expect to keep the fund's average maturity shorter than its benchmark, a stance that offers a potential cushion against higher interest rates. Economic and market conditions change frequently. There is no assurance that the trends described here will continue or commence. An investment in the Columbia High Yield Fund, Variable Series offers the potential for high income and attractive total returns, but also involves certain risks, including credit risks associated with lower-rated bonds, and interest rate risks. 39 <Page> PERFORMANCE INFORMATION Columbia High Yield Fund, Variable Series / December 31, 2003 AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 2003 (%) <Table> <Caption> 1-YEAR 5-YEAR LIFE - ------------------------------------------------------------- Class A (3/3/98) 12.37 5.03 5.95 Merrill Lynch US High Yield, Cash Pay Only Index(1) 27.23 5.47 5.00 </Table> Inception date of share class is in parentheses. <Table> <Caption> NET ASSET VALUE PER SHARE ($) 12/31/02 12/31/03 - ------------------------------------------------------------------------ Class A 8.96 9.42 </Table> [CHART] VALUE OF A $10,000 INVESTMENT, 3/3/98 - 12/31/03 Class A: $14,006 <Table> <Caption> CLASS A SHARES MERRILL LYNCH US HIGH YIELD, CASH PAY ONLY INDEX 3/1998 $ 10,000 $ 10,000 3/31/1998 $ 10,146 $ 10,086 4/30/1998 $ 10,173 $ 10,133 5/31/1998 $ 10,223 $ 10,204 6/30/1998 $ 10,307 $ 10,255 7/31/1998 $ 10,442 $ 10,314 8/31/1998 $ 10,319 $ 9,868 9/30/1998 $ 10,586 $ 9,888 10/31/1998 $ 10,543 $ 9,726 11/30/1998 $ 10,901 $ 10,168 12/31/1998 $ 10,959 $ 10,171 1/31/1999 $ 11,063 $ 10,272 2/28/1999 $ 11,011 $ 10,194 3/31/1999 $ 11,030 $ 10,282 4/30/1999 $ 11,152 $ 10,442 5/31/1999 $ 11,007 $ 10,370 6/30/1999 $ 10,974 $ 10,350 7/31/1999 $ 10,961 $ 10,366 8/31/1999 $ 10,845 $ 10,260 9/30/1999 $ 10,785 $ 10,221 10/31/1999 $ 10,806 $ 10,161 11/30/1999 $ 10,947 $ 10,277 12/31/1999 $ 11,022 $ 10,330 1/31/2000 $ 10,938 $ 10,278 2/29/2000 $ 10,930 $ 10,288 3/31/2000 $ 10,871 $ 10,144 4/30/2000 $ 10,891 $ 10,147 5/31/2000 $ 10,866 $ 10,035 6/30/2000 $ 11,119 $ 10,207 7/31/2000 $ 11,211 $ 10,280 8/31/2000 $ 11,386 $ 10,406 9/30/2000 $ 11,394 $ 10,345 10/31/2000 $ 11,223 $ 10,042 11/30/2000 $ 11,062 $ 9,728 12/31/2000 $ 11,426 $ 9,939 1/31/2001 $ 11,912 $ 10,531 2/28/2001 $ 12,027 $ 10,698 3/31/2001 $ 11,951 $ 10,556 4/30/2001 $ 11,942 $ 10,441 5/31/2001 $ 12,036 $ 10,642 6/30/2001 $ 11,838 $ 10,423 7/31/2001 $ 11,907 $ 10,584 8/31/2001 $ 12,049 $ 10,687 9/30/2001 $ 11,647 $ 10,002 10/31/2001 $ 11,992 $ 10,296 11/30/2001 $ 12,234 $ 10,631 12/31/2001 $ 12,132 $ 10,555 1/31/2002 $ 12,181 $ 10,614 2/28/2002 $ 12,122 $ 10,512 3/31/2002 $ 12,225 $ 10,762 4/30/2002 $ 12,354 $ 10,934 5/31/2002 $ 12,314 $ 10,875 6/30/2002 $ 12,067 $ 10,101 7/31/2002 $ 11,906 $ 9,699 8/31/2002 $ 12,078 $ 9,942 9/30/2002 $ 12,006 $ 9,783 10/31/2002 $ 12,031 $ 9,701 11/30/2002 $ 12,397 $ 10,279 12/31/2002 $ 12,464 $ 10,435 1/31/2003 $ 12,587 $ 10,735 2/28/2003 $ 12,704 $ 10,874 3/31/2003 $ 12,897 $ 11,156 4/30/2003 $ 13,234 $ 11,783 5/31/2003 $ 13,251 $ 11,910 6/30/2003 $ 13,443 $ 12,235 7/31/2003 $ 13,215 $ 12,060 8/31/2003 $ 13,244 $ 12,218 9/30/2003 $ 13,544 $ 12,544 10/31/2003 $ 13,708 $ 12,800 11/30/2003 $ 13,836 $ 12,977 12/31/2003 $ 14,006 $ 13,292 </Table> PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA PROVIDED. FOR CURRENT MONTH-END PERFORMANCE INFORMATION, PLEASE CONTACT YOUR INSURANCE COMPANY. Total return performance includes changes in share price and reinvestment of all distributions. The Merrill Lynch US High Yield, Cash Pay Only Index is an unmanaged index of non-investment-grade corporate bonds. Indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. Performance numbers reflect all fund expenses, but do not include any insurance charges imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. (1) Index performance is from March 3, 1998. 40 <Page> INVESTMENT PORTFOLIO Columbia High Yield Fund, Variable Series / December 31, 2003 <Table> <Caption> PAR VALUE ------------ ------------ CORPORATE FIXED-INCOME BONDS & NOTES--91.5% CONSTRUCTION--3.0% BUILDING CONSTRUCTION--3.0% KB Home: 8.625% 12/15/08 $ 400,000 $ 443,000 9.500% 02/15/11 150,000 167,625 Toll Corp.: 8.000% 05/01/09 50,000 52,375 8.250% 02/01/11 325,000 357,500 8.250% 12/01/11 175,000 192,500 ------------ 1,213,000 ------------ FINANCE, INSURANCE & REAL ESTATE--1.9% REAL ESTATE--1.9% Health Care REIT, Inc., 7.500% 08/15/07 325,000 361,124 iStar Financial, Inc.: 6.000% 12/15/10 30,000 30,600 7.000% 03/15/08 110,000 118,800 8.750% 08/15/08 220,000 253,000 ------------ 763,524 ------------ MANUFACTURING--26.1% AUTO PARTS & EQUIPMENT--2.7% American Axle & Manufacturing, Inc., 9.750% 03/01/09 495,000 523,462 Lear Corp.: 7.960% 05/15/05 50,000 53,500 8.110% 05/15/09 420,000 494,025 ------------ 1,070,987 ------------ CHEMICALS & ALLIED PRODUCTS--4.5% Acetex Corp.: 10.875% 08/01/09 35,000 38,850 10.875% 08/01/09 (a) 175,000 194,250 Airgas, Inc., 9.125% 10/01/11 350,000 393,750 Equistar Chemical Funding LP: 10.125% 09/01/08 155,000 170,500 10.625% 05/01/11 165,000 181,500 Ethyl Corp., 8.875% 05/01/10 255,000 272,850 MacDermid, Inc., 9.125% 07/15/11 300,000 336,000 Nalco Co., 7.750% 11/15/11 (a) 225,000 240,750 ------------ 1,828,450 ------------ CONSUMER PRODUCTS--2.7% Bombardier Recreational, 8.375% 12/15/13 (a) 35,000 36,400 Hasbro, Inc., 6.150% 07/15/08 725,000 766,688 Scotts Co., 6.625% 11/15/13 (a) 300,000 307,500 ------------ 1,110,588 ------------ ELECTRONIC & ELECTRICAL EQUIPMENT--0.1% General Cable Corp., 9.500% 11/15/10 (a) $ 25,000 $ 26,687 ------------ FABRICATED METAL PRODUCTS--0.7% Kennametal, Inc., 7.200% 06/15/12 265,000 282,967 ------------ FOOD & KINDRED PRODUCTS--3.2% Constellation Brands, Inc.: 8.125% 01/15/12 200,000 221,500 8.500% 03/01/09 225,000 237,094 8.625% 08/01/06 25,000 27,687 Cott Beverages, Inc., 8.000% 12/15/11 750,000 811,875 ------------ 1,298,156 ------------ FURNITURE & FIXTURES--0.1% Congoleum Corp., 8.625% 08/01/08 (b) 65,000 39,000 ------------ PAPER & FOREST PRODUCTS--3.1% Abitibi Consolidated, Inc., 7.875% 08/01/09 300,000 323,703 Cascades, Inc., 7.250% 02/15/13 320,000 334,400 Smurfit-Stone Container Corp.: 8.250% 10/01/12 70,000 75,600 8.375% 07/01/12 125,000 136,875 9.750% 02/01/11 350,000 386,750 ------------ 1,257,328 ------------ PACKAGING--4.4% Ball Corp.: 6.875% 12/15/12 645,000 674,025 7.750% 08/01/06 100,000 108,000 Owens-Illinois, Inc.: 7.150% 05/15/05 40,000 41,200 7.350% 05/15/08 50,000 51,375 7.500% 05/15/10 90,000 91,800 8.100% 05/15/07 50,000 52,625 8.875% 02/15/09 250,000 273,125 Silgan Corp., 6.750% 11/15/13 (a) 485,000 485,000 ------------ 1,777,150 ------------ PRINTING & PUBLISHING--4.0% Dex Media East LLC, 12.125% 11/15/12 345,000 426,075 Houghton Mifflin Co., 9.875% 02/01/13 390,000 429,000 R.H. Donnelley Finance Corp.: 10.875% 12/15/12 125,000 148,438 10.875% 12/15/12 (a) 510,000 605,625 ------------ 1,609,138 ------------ TRANSPORTATION EQUIPMENT--0.6% Wabtec Corp., 6.875% 07/31/13 (a) 250,000 258,750 ------------ </Table> See Notes to Investment Portfolio. 41 <Page> <Table> <Caption> PAR VALUE ------------ ------------ MINING & ENERGY--12.6% OIL & GAS EXTRACTION--7.0% Chesapeake Energy Corp.: 7.500% 09/15/13 $ 25,000 $ 27,031 8.125% 04/01/11 200,000 222,500 9.000% 08/15/12 550,000 633,875 Pogo Producing Co., 8.250% 04/15/11 205,000 225,500 Pride International, Inc., 10.000% 06/01/09 25,000 26,875 Tom Brown, Inc., 7.250% 09/15/13 25,000 26,437 Westport Resources Corp., 8.250% 11/01/11 650,000 715,000 Vintage Petroleum, Inc.: 7.875% 05/15/11 25,000 26,375 8.250% 05/01/12 290,000 314,650 XTO Energy, Inc.: 6.250% 04/15/13 100,000 105,500 7.500% 04/15/12 455,000 516,425 ------------ 2,840,168 ------------ OIL & GAS FIELD SERVICES--3.4% Grant Prideco, Inc.: 9.000% 12/15/09 25,000 27,500 9.625% 12/01/07 525,000 589,312 Key Energy Services, Inc., 6.375% 05/01/13 365,000 370,475 Offshore Logistics, Inc., 6.125% 06/15/13 215,000 210,700 Universal Compression, Inc., 7.250% 05/15/10 175,000 182,000 ------------ 1,379,987 ------------ METALS & MINING--2.2% Arch Western Financial LLC, 6.750% 07/01/03 (a) 550,000 563,750 Peabody Energy Corp., 6.875% 03/15/13 300,000 316,500 ------------ 880,250 ------------ RETAIL TRADE--3.0% AUTOMOBILES--0.5% AutoNation, Inc., 9.000% 08/01/08 170,000 195,075 ------------ MISCELLANEOUS RETAIL--0.6% Couche-Tard, 7.500% 12/15/13 (a) 120,000 126,300 Suburban Propane Partners, 6.875% 12/15/13 (a) 130,000 130,650 ------------ 256,950 ------------ RESTAURANTS--1.9% Tricon Global Restaurants, Inc.: 8.500% 04/15/06 50,000 55,750 8.875% 04/15/11 575,000 691,438 ------------ 747,188 ------------ SERVICES--27.3% AMUSEMENT & RECREATION--9.9% Cinemark USA, Inc., 9.000% 02/01/13 $ 485,000 $ 545,625 Harrah's Operating Co., Inc., 7.875% 12/15/05 600,000 654,000 International Game Technology: 7.875% 05/15/04 25,000 25,625 8.375% 05/15/09 25,000 29,625 MGM Mirage: 6.000% 10/01/09 250,000 256,875 9.750% 06/01/07 475,000 543,875 Park Place Entertainment: 7.875% 03/15/10 100,000 110,750 9.375% 02/15/07 550,000 622,875 Six Flags, Inc.: 9.500% 02/01/09 50,000 52,250 9.625% 06/01/14 (a) 150,000 156,750 Speedway Motorsports, Inc., 6.750% 06/01/13 325,000 334,750 Station Casinos, Inc.: 8.875% 12/01/08 50,000 51,625 9.875% 07/01/10 570,000 627,000 ------------ 4,011,625 ------------ AUTO EQUIPMENT & RENTAL SERVICES--1.3% United Rentals, Inc.: 7.750% 11/15/13 (a) 455,000 468,650 9.250% 01/15/09 50,000 52,500 ------------ 521,150 ------------ BUSINESS SERVICES--3.9% Iron Mountain, Inc.: 7.750% 01/15/15 50,000 52,625 8.625% 04/01/13 650,000 703,625 Lamar Media Corp., 7.250% 01/01/13 775,000 833,125 ------------ 1,589,375 ------------ HEALTH SERVICES--9.0% AdvancePCS, 8.500% 04/01/08 375,000 407,812 AmerisourceBergen Corp.: 7.250% 11/15/12 330,000 354,750 8.125% 09/01/08 200,000 226,000 Apogent Technologies, Inc., 6.500% 05/15/13 495,000 515,013 Omnicare, Inc.: 6.125% 06/01/13 400,000 402,000 8.125% 03/15/11 275,000 301,125 Province Healthcare Co., 7.500% 06/01/13 300,000 299,250 Select Medical Corp.: 7.500% 08/01/13 200,000 212,000 9.500% 06/15/09 325,000 356,688 Triad Hospital, Inc., 8.750% 05/01/09 525,000 567,000 ------------ 3,641,638 ------------ </Table> See Notes to Investment Portfolio. 42 <Page> <Table> <Caption> PAR VALUE ------------ ------------ HOTELS, CAMPS & LODGING--2.0% Extended Stay America, Inc.: 9.150% 03/15/08 $ 50,000 $ 52,062 9.875% 06/15/11 350,000 393,313 ITT Corp., 6.750% 11/15/05 35,000 36,838 Starwood Hotels & Resorts Worldwide, Inc., 7.875% 05/01/12 290,000 324,800 ------------ 807,013 ------------ OTHER SERVICES--1.2% Corrections Corp. of America: 7.500% 05/01/11 275,000 289,437 7.500% 05/01/11 (a) 100,000 105,250 9.875% 05/01/09 100,000 112,000 ------------ 506,687 ------------ TRANSPORTATION, COMMUNICATIONS, ELECTRIC, GAS & SANITARY SERVICES--17.6% AEROSPACE--3.8% K&F Industries, 9.625% 12/15/10 320,000 358,400 L-3 Communications Corp., 7.625% 06/15/12 710,000 773,900 Transdigm, Inc., 8.375% 07/15/11 375,000 399,375 ------------ 1,531,675 ------------ BROADCASTING--2.1% LIN Television Corp., 6.500% 05/15/13 (a) 350,000 350,000 Sinclair Broadcast Group, Inc., 8.750% 12/15/11 450,000 499,500 ------------ 849,500 ------------ CABLE--5.5% British Sky Broadcasting PLC: 7.300% 10/15/06 20,000 22,288 8.200% 07/15/09 200,000 238,128 DirecTV Holdings Finance, 8.375% 03/15/13 515,000 597,400 EchoStar DBS Corp., 5.750% 10/01/08 (a) 725,000 733,156 Rogers Cable, Inc., 6.250% 06/15/13 650,000 655,161 ------------ 2,246,133 ------------ ENVIRONMENTAL SERVICES--2.3% Allied Waste North America, Inc.: 9.250% 09/01/12 50,000 56,500 10.000% 08/01/09 650,000 702,000 Synagro Technologies, Inc., 9.500% 04/01/09 175,000 191,188 ------------ 949,688 ------------ MARINE TRANSPORTATION--1.7% Teekay Shipping Corp., 8.875% 07/15/11 610,000 692,350 ------------ TELECOMMUNICATIONS--2.2% Cincinnati Bell, Inc., 8.375% 01/15/14 (a) $ 115,000 $ 124,200 Nextel Communications, Inc.: 7.375% 08/01/15 125,000 134,375 9.375% 11/15/09 500,000 543,750 9.500% 02/01/11 60,000 67,950 ------------ 870,275 ------------ TOTAL CORPORATE FIXED-INCOME BONDS & NOTES (cost of $36,093,769) 37,052,452 ------------ CONVERTIBLE BOND--0.1% TRANSPORTATION, COMMUNICATIONS, ELECTRIC, GAS & SANITARY SERVICES--0.1% TELECOMMUNICATIONS--0.1% COLT Telecom Group PLC, 2.000% 03/29/06 (a) (cost of $24,150) 40,000 54,430 ------------ <Caption> UNITS ------------ WARRANTS (c)--0.0% TRANSPORTATION, COMMUNICATIONS, ELECTRIC, GAS & SANITARY SERVICES--0.0% CABLE--0.0% Cable Satisfaction International, Inc., expires 03/01/05 (d) 220 --(e) Ono Finance PLC, expires 03/16/11 (a)(d) 85 --(e) ------------ -- ------------ BROADCASTING--0.0% XM Satellite Radio Holdings, Inc., expires 03/15/10 (a) 150 3,113 ------------ COMMUNICATION SERVICES--0.0% UbiquiTel, Inc., expires 04/15/10 (a)(d) 50 --(e) ------------ MOTOR FREIGHT & WAREHOUSING--0.0% QDI LLC, expires 01/15/07 (a)(d) 153 2,234 ------------ TELECOMMUNICATIONS--0.0% Carrier 1 International SA, expires 02/19/09 (a)(d)(f) 113 --(e) Horizon PCS, Inc., expires 10/01/10 (a)(d)(f) 145 --(e) Jazztel PLC, expires 07/15/10 (a)(d) 60 --(e) ------------ -- ------------ TOTAL WARRANTS (cost of $22,709) 5,347 ------------ </Table> See Notes to Investment Portfolio. 43 <Page> <Table> <Caption> SHARES VALUE ------------ ------------ COMMON STOCK (c)--0.0% TRANSPORTATION, COMMUNICATIONS, ELECTRIC, GAS & SANITARY SERVICES--0.0% POLLUTION CONTROL--0.0% Fairlane Management Corp. (d) (cost of $0) 1,200 $ --(e) ------------ <Caption> PAR ------------ SHORT-TERM OBLIGATION--6.5% Repurchase agreement with State Street Bank & Trust Co., dated 12/31/03, due 01/02/04 at 0.730%, collateralized by a U.S. Treasury Note maturing 08/15/07, market value $2,671,746 (repurchase proceeds $2,618,106) (cost of $2,618,000) $ 2,618,000 2,618,000 ------------ TOTAL INVESTMENTS--98.1% (cost of $38,758,628) (g) 39,730,229 ------------ OTHER ASSETS & LIABILITIES, NET--1.9% 758,328 ------------ NET ASSETS--100.0% $ 40,488,557 ============ </Table> NOTES TO INVESTMENT PORTFOLIO: (a) This security is exempt from registration under Rule 144A of the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2003, the value of these securities amounted to $4,973,445, which represents 12.3% of net assets. (b) As of December 31, 2003, the Fund held securities of certain issuers that have filed for bankruptcy protection under Chapter 11, representing 0.1% of net assets. Income is being accrued. (c) Non-income producing. (d) Represents fair value as determined in good faith under the direction of the Board of Trustees. (e) Security has no value. (f) As of December 31, 2003, the Fund held a security of an issuer that has filed for bankruptcy protection under Chapter 11. At December 31, 2003, the security had no value. This issuer is in default of certain debt covenants. Income is not being accrued. (g) Cost for federal income tax purposes is $38,883,438. <Table> <Caption> ACRONYM NAME ------- ---- REIT Real Estate Investment Trust </Table> See Notes to Financial Statements. 44 <Page> STATEMENT OF ASSETS & LIABILITIES Columbia High Yield Fund, Variable Series / December 31, 2003 <Table> ASSETS: Investments, at cost $ 38,758,628 --------------- Investments, at value $ 39,730,229 Cash 3,724 Receivable for: Fund shares sold 145,971 Interest 652,393 Expense reimbursement due from Investment Advisor 9,008 Deferred Trustees' compensation plan 1,138 Other assets 153 --------------- TOTAL ASSETS 40,542,616 --------------- LIABILITIES: Payable for: Fund shares repurchased 1,004 Distributions 1,561 Investment advisory fee 20,156 Transfer agent fee 417 Pricing and bookkeeping fees 2,051 Audit fee 18,949 Custody fee 1,041 Distribution fee--Class B 1,703 Deferred Trustees' fees 1,138 Other liabilities 6,039 --------------- TOTAL LIABILITIES 54,059 --------------- NET ASSETS $ 40,488,557 =============== COMPOSITION OF NET ASSETS: Paid-in capital $ 49,103,518 Overdistributed net investment income (113,376) Accumulated net realized loss (9,473,252) Net unrealized appreciation on: Investments 971,601 Foreign currency translations 66 --------------- NET ASSETS $ 40,488,557 =============== CLASS A: Net assets $ 12,132,064 Shares outstanding 1,288,029 =============== Net asset value per share $ 9.42 =============== CLASS B: Net assets $ 28,356,493 Shares outstanding 3,010,584 =============== Net asset value per share $ 9.42 =============== </Table> See Notes to Financial Statements. 45 <Page> STATEMENT OF OPERATIONS Columbia High Yield Fund, Variable Series For the Year Ended December 31, 2003 <Table> INVESTMENT INCOME: Dividends $ 4,281 Interest 1,840,484 Other 19,220 --------------- Total Investment Income 1,863,985 --------------- EXPENSES: Investment advisory fee 161,189 Administration fee 17,244 Distribution fee--Class B 42,008 Transfer agent fee 5,000 Pricing and bookkeeping fees 29,652 Trustees' fees 202 Custody fee 9,691 Audit fee 40,802 Amortization of organization expense 375 Other expenses 14,577 --------------- Total Expenses 320,740 Fees and expenses waived or reimbursed by Investment Advisor (82,476) Fees waived by Distributor--Class B (31,926) Custody earnings credit (413) --------------- Net Expenses 205,925 --------------- Net Investment Income 1,658,060 --------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: Net realized loss on: Investments (854,136) Foreign currency transactions (1,976) --------------- Net realized loss (856,112) --------------- Net change in unrealized appreciation/depreciation on: Investments 2,257,438 Foreign currency translations 66 --------------- Net change in unrealized appreciation/depreciation 2,257,504 --------------- Net Gain 1,401,392 --------------- Net Increase in Net Assets from Operations $ 3,059,452 =============== </Table> See Notes to Financial Statements. 46 <Page> STATEMENT OF CHANGES IN NET ASSETS Columbia High Yield Fund, Variable Series <Table> <Caption> YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, INCREASE (DECREASE) IN NET ASSETS: 2003 2002 - ---------------------------------- --------------- --------------- OPERATIONS: Net investment income $ 1,658,060 $ 153,065 Net realized loss on investments and foreign currency transactions (856,112) (126,213) Net change in unrealized appreciation/depreciation on investments and foreign currency translations 2,257,504 30,091 --------------- --------------- Net Increase from Operations 3,059,452 56,943 --------------- --------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income: Class A (666,816) (149,903) Class B (1,094,776) -- From net realized gains: Class A (20,678) -- Class B (48,075) -- --------------- --------------- Total Distributions Declared to Shareholders (1,830,345) (149,903) --------------- --------------- SHARE TRANSACTIONS: Class A: Subscriptions 8,243,839 626,496 Proceeds received in connection with merger 12,120,783 -- Distributions reinvested 687,494 149,903 Redemptions (11,587,253) (907,995) --------------- --------------- Net Increase (Decrease) 9,464,863 (131,596) --------------- --------------- Class B: Subscriptions 13,066,846 -- Proceeds received in connection with merger 17,750,911 -- Distributions reinvested 1,142,851 -- Redemptions (4,362,756) -- --------------- --------------- Net Increase 27,597,852 -- --------------- --------------- Net Increase (Decrease) from Share Transactions 37,062,715 (131,596) --------------- --------------- Total Increase (Decrease) in Net Assets 38,291,822 (224,556) NET ASSETS: Beginning of period 2,196,735 2,421,291 --------------- --------------- End of period (including overdistributed net investment income of $(113,376) and undistributed net investment income of $13,747, respectively) $ 40,488,557 $ 2,196,735 =============== =============== CHANGES IN SHARES: Class A: Subscriptions 896,663 69,617 Issued in connection with merger 1,328,306 -- Issued for distributions reinvested 73,952 16,631 Redemptions (1,256,145) (101,745) --------------- --------------- Net Increase (Decrease) 1,042,776 (15,497) --------------- --------------- Class B: Subscriptions 1,411,911 -- Issued in connection with merger 1,946,759 -- Issued for distributions reinvested 122,973 -- Redemptions (471,059) -- --------------- --------------- Net Increase 3,010,584 -- --------------- --------------- </Table> See Notes to Financial Statements. 47 <Page> NOTES TO FINANCIAL STATEMENTS Columbia High Yield Fund, Variable Series / December 31, 2003 NOTE 1. ORGANIZATION Columbia High Yield Fund, Variable Series (formerly Galaxy VIP Columbia High Yield Fund II) (the "Fund"), a series of Liberty Variable Investment Trust (the "Trust") is a diversified portfolio. The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. INVESTMENT GOAL--The Fund seeks a high level of income by investing primarily in non-investment grade corporate debt securities, commonly referred to as "junk" or "high yield" bonds. The Fund's secondary goal is capital appreciation. FUND SHARES--The Fund may issue an unlimited number of shares and offers two classes of shares: Class A and Class B. Each share class has its own expense structure. Shares of the Fund are available exclusively as a pooled funding vehicle for variable annuity contracts ("VA Contracts") and Variable Life Insurance Policies ("VLI Policies") offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies"). The Participating Insurance Companies and their separate accounts own all the shares of the Fund. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES--The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION--Debt securities generally are valued by a pricing service approved by the Trust's Board of Trustees, based upon market transactions for normal, institutional-size trading units of similar securities. The services may use various pricing techniques which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as broker quotes. Debt securities for which quotations are readily available are valued at an over-the-counter or exchange bid quotation. Certain debt securities, which tend to be more thinly traded and of lesser quality, are priced based on fundamental analysis of the financial condition of the issuer and the estimated value of any collateral. Valuations developed through pricing techniques may vary from the actual amounts realized upon sale of the securities, and the potential variation may be greater for those securities valued using fundamental analysis. Equity securities are valued at the last sale price at the close of the principal exchange on which they trade. Unlisted securities or listed securities for which there were no sales during the day are valued at the closing bid price on such exchanges or over-the-counter markets. Short-term obligations maturing within 60 days are valued at amortized cost, which approximates market value. Investments in other investment companies are valued at net asset value. Foreign securities are generally valued at the closing price on the foreign exchange or market on which they trade. If any foreign share prices are not readily available as a result of limited share activity, the securities are valued at the last sale price of the local shares in the principal market in which such securities are normally traded. Investments for which market quotations are not readily available, which tend to be more thinly traded and of lesser quality are valued at fair value as determined in good faith under consistently applied procedures established by and under the general supervision of the Board of Trustees. Foreign markets close each day at various times prior to the close of the New York Stock Exchange ("NYSE"). Foreign currency exchange rates are generally determined prior to the close of the NYSE at 12:00 p.m. Eastern (U.S.) time. Occasionally, events affecting the value of a foreign security may occur subsequent to the close of the exchange or market which would not be reflected in the computation of the Fund's net asset value. In such an event, the foreign security will be valued at the fair value. SECURITY TRANSACTIONS--Security transactions are accounted for on the trade date. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. REPURCHASE AGREEMENTS--The Fund may engage in repurchase agreement transactions with institutions that the Fund's investment advisor has determined are credit-worthy. The Fund, through its custodian, receives delivery of underlying securities collateralizing a repurchase agreement. Collateral is at least equal, at all times, to the value of the repurchase obligation including interest. A repurchase agreement transaction involves certain risks in the event of default or insolvency of the counterparty. These risks include possible delays or restrictions upon the Fund's ability to dispose of the underlying securities and a possible decline in the value of the underlying securities during the period while the Fund seeks to assert its rights. 48 <Page> INCOME RECOGNITION--Interest income is recorded on the accrual basis. Premium and discount are amortized and accreted, respectively, on all debt securities. Corporate actions and dividend income are recorded on the ex-date, except for certain foreign securities which are recorded as soon after ex-date as the Fund becomes aware of such, net of non-reclaimable tax withholdings. The value of additional securities received as an income payment is recorded as income and as the cost basis of such securities. FOREIGN CURRENCY TRANSACTIONS--The values of all assets and liabilities quoted in foreign currencies are translated into U.S. dollars at that day's exchange rates. Net realized and unrealized gains (losses) on foreign currency transactions include gains (losses) arising from the fluctuation in exchange rates between trade and settlement dates on securities transactions, gains (losses) arising from the disposition of foreign currency and currency gains (losses) between the accrual and payment dates on dividends, interest income and foreign withholding taxes. The Fund does not distinguish that portion of gains (losses) on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the investments. Such fluctuations are included with the net realized and unrealized gains (losses) on investments. DETERMINATION OF CLASS NET ASSET VALUES--All income, expenses (other than class-specific expenses, as shown on the Statement of Operations), and realized and unrealized gains (losses), are allocated to each class of the Fund on a daily basis, for purposes of determining the net asset value of each class. Income and expenses are allocated to each class based on the settled shares method, while realized and unrealized gains (losses) are allocated based on the relative net assets of each class. FEDERAL INCOME TAX STATUS--The Fund intends to qualify each year as a "regulated investment company" under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its taxable income, if any, for its tax year, and as such will not be subject to federal income taxes. In addition, by distributing in each calendar year substantially all of its net investment income, capital gains and certain other amounts, if any, the Fund will not be subject to federal excise tax. Therefore, no federal income or excise tax provision is recorded. DISTRIBUTIONS TO SHAREHOLDERS--Dividends from net investment income are declared daily and paid monthly. Net realized capital gains, if any, are distributed at least annually. Income and capital gains dividends are determined in accordance with income tax regulations and may differ from GAAP. All dividends and distributions are reinvested in additional shares of the Fund at net asset value as of the record date of the distribution. ORGANIZATION COSTS--The Fund has borne all costs in connection with its organization, including the fees and expenses of registering and qualifying its initial shares for distribution under federal and state securities laws. All such costs are amortized using the straight-line method over a period of five years, beginning with the commencement of the Fund's operation. As of December 31, 2003, all organization costs have been fully amortized. NOTE 3. FEDERAL TAX INFORMATION The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund's capital accounts for permanent tax differences to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. For the year ended December 31, 2003, permanent differences resulting primarily from differing treatments for foreign currency transactions, discount accretion/premium amortization on debt securities, market discount reclassifications and distribution reclassifications were identified and reclassified among the components of the Fund's net assets as follows: <Table> <Caption> OVERDISTRIBUTED NET INVESTMENT ACCUMULATED PAID-IN INCOME NET REALIZED LOSS CAPITAL --------------- ----------------- ----------- $ (23,591) $ (8,184,224) $ 8,207,815 </Table> Net investment income and net realized gains (losses), as disclosed on the Statement of Operations, and net assets were not affected by this reclassification. The tax character of distributions paid during the years ended December 31, 2003 and December 31, 2002 was as follows: <Table> <Caption> DECEMBER 31, DECEMBER 31, 2003 2002 ------------ ------------ Distributions paid from: Ordinary Income* $ 1,830,345 $ 149,903 Long-Term Capital Gains -- -- </Table> * For tax purposes short-term capital gains distributions, if any, are considered ordinary income distributions. As of December 31, 2003, the components of distributable earnings on a tax basis were as follows: <Table> <Caption> UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM NET UNREALIZED INCOME CAPITAL GAINS APPRECIATION* ------------- ------------- -------------- $ 11,859 $ -- $ 846,857 </Table> * The differences between book-basis and tax-basis net unrealized appreciation are primarily due to deferral of losses from wash sales and discount accretion/premium amortization on debt securities. 49 <Page> Unrealized appreciation and depreciation at December 31, 2003, based on cost of investments for federal income tax purposes and excluding any unrealized appreciation and depreciation from changes in the value of assets and liabilities resulting from changes in exchange rates was: <Table> Unrealized appreciation $ 951,274 Unrealized depreciation (104,483) ----------- Net unrealized appreciation $ 846,791 =========== </Table> The following capital loss carryforwards are available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: <Table> <Caption> YEAR OF CAPITAL LOSS EXPIRATION CARRYFORWARD ---------- ------------ 2005 $ 48,985 2006 52,900 2007 1,170,066 2008 2,794,418 2009 4,226,387 2010 260,165 2011 908,941 ------------ $ 9,461,862 ============ </Table> Of the capital loss carryforwards attributable to the Fund, $8,182,430 was obtained upon the Fund's merger with Colonial High Yield Securities Fund, Variable Series (See Note 7). No capital loss carryforwards were utilized and/or expired during the year ended December 31, 2003 for the Fund. Any capital loss carryforwards acquired as part of a merger that are permanently lost due to provisions under Internal Revenue Code are included as being expired. Expired capital loss carryforwards are recorded as a reduction of paid-in capital. POST-OCTOBER LOSSES--Under current tax rules, certain currency and capital losses realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of December 31, 2003, post-October capital losses of $6,713 attributed to security transactions were deferred to January 1, 2004. NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES INVESTMENT ADVISOR MERGER--On April 1, 2003, Fleet Investment Advisors Inc., the previous investment advisor to the Fund, merged into Columbia Management Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co., an indirect, wholly owned subsidiary of FleetBoston Financial Corporation. As a result of the merger, Columbia now serves as the Fund's investment advisor. The merger did not change the way the Fund is managed, the investment personnel assigned to manage the Fund or the fees paid by the Fund. INVESTMENT ADVISORY FEE--Columbia is the investment advisor to the Fund and receives a monthly fee based on the Fund's average daily net assets at the following annual rates: <Table> <Caption> AVERAGE DAILY NET ASSETS FEE RATE - ------------------------ -------- First $1 billion 0.60% Next $500 million 0.55% Over $1.5 billion 0.50% </Table> Prior to November 1, 2003, Columbia received a monthly investment advisory fee at the annual rate of 0.60% of the Fund's average daily net assets. For the year ended December 31, 2003, the Fund's effective investment advisory fee rate was 0.60%. ADMINISTRATION FEE--Columbia provides administrative and other services to the Fund. Effective November 1, 2003, the Board of Trustees approved an administration fee reduction for the Fund. As a result of the fee reduction, Columbia no longer receives fees from the Fund for its administration services. For the period April 14, 2003 through October 31, 2003, Columbia was entitled to receive fees, computed daily and payable monthly, at the annual rate of 0.085% of the Fund's average daily net assets. Prior to April 14, 2003, Columbia was entitled to receive fees, computed daily and payable monthly, based on the combined average daily net assets of the funds in the Galaxy VIP Fund (the "predecessor trust") at the following annual rates: <Table> <Caption> AVERAGE DAILY NET ASSETS FEE RATE - ------------------------ -------- First $1 billion 0.085% Next $1.5 billion 0.078% Over $2.5 billion 0.073% </Table> For the year ended December 31, 2003, the Fund's effective administration fee rate was 0.064%. PRICING AND BOOKKEEPING FEES--Columbia is responsible for providing pricing and bookkeeping services to the Fund under a pricing and bookkeeping agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Corporation ("State Street"). Columbia pays fees to State Street under the Outsourcing Agreement. Columbia pays the total fees collected to State Street under the Outsourcing Agreement. 50 <Page> Under its pricing and bookkeeping agreement with the Fund, Columbia receives an annual fee based on the average daily net assets of the Fund at the following annual rates: <Table> <Caption> AVERAGE DAILY NET ASSETS FEE RATE - ------------------------ ---------- Under $50 million $ 25,000 Of $50 million but less than $200 million $ 35,000 Of $200 million but less than $500 million $ 50,000 Of $500 million but less than $1 billion $ 85,000 Over $1 billion $ 125,000 </Table> The Fund also pays additional fees for pricing services. For the year ended December 31, 2003, the effective pricing and bookkeeping fee rate was 0.110%. TRANSFER AGENT FEE--Columbia Funds Services, Inc. (the "Transfer Agent"), formerly Liberty Funds Services, Inc., an affiliate of Columbia, provides shareholder services for a monthly fee at an annual rate of $5,000. Effective October 13, 2003, Liberty Funds Services, Inc. changed its name to Columbia Funds Services, Inc. DISTRIBUTION FEES--Columbia Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia, is the principal underwriter of the Fund. Prior to October 13, 2003, Columbia Funds Distributor, Inc. was known as Liberty Funds Distributor, Inc. The Fund has adopted a 12b-1 plan which requires the payment of a monthly distribution fee to the Distributor at the annual rate of 0.25% of Class B average daily net assets. The Distributor has voluntarily agreed to waive a portion of the Class B share distribution fee so that it would not exceed 0.06% annually. FEE WAIVERS--Effective April 14, 2003, Columbia has agreed to reimburse fees at the annual rate of 0.27% of the Fund's average daily net assets. This agreement will continue until April 13, 2004, after which it may be revised or discontinued any time. Prior to April 14, 2003, Fleet Investment Advisors, Inc. and/or its affiliates and/or PFPC Inc., the former administrator, could waive all or a portion of the fees payable to them by the predecessor fund. CUSTODY CREDITS--The Fund has an agreement with its custodian bank under which custody fees may be reduced by balance credits. The Fund could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if it had not entered into such an agreement. FEES PAID TO OFFICERS AND TRUSTEES--The Fund pays no compensation to its officers, all of whom are employees of Columbia or its affiliates. The Fund's Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. NOTE 5. PORTFOLIO INFORMATION PURCHASES AND SALES OF SECURITIES--For the year ended December 31, 2003, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were $37,400,135 and $26,673,477, respectively. NOTE 6. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES FOREIGN SECURITIES--There are certain additional risks involved when investing in foreign securities that are not inherent with investments in domestic securities. These risks may involve foreign currency exchange rate fluctuations, adverse political and economic developments and the possible prevention of currency exchange or other foreign governmental laws or restrictions. In addition, the liquidity of foreign securities may be more limited than that of domestic securities. HIGH-YIELD SECURITIES--Investing in high-yield securities may involve greater credit risk and considerations not typically associated with investing in U.S. Government bonds and other higher quality fixed income securities. These securities are non-investment grade securities, often referred to as "junk bonds." Economic downturns may disrupt the high yield market and impair the ability of issuers to repay principal and interest. Also, an increase in interest rates would likely have an adverse impact on the value of such obligations. Moreover, high-yield securities may be less liquid due to the extent that there is no established retail secondary market and because of a decline in the value of such securities. INDUSTRY FOCUS--The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. LEGAL PROCEEDINGS--Columbia, the Distributor and certain of their affiliates (collectively, "the Columbia Group") have received information requests and subpoenas from various regulatory authorities, including the Securities and Exchange Commission ("SEC") and the New York Attorney General, in connection with their investigations of late trading and market timing in mutual funds. The Columbia Group has not uncovered any instances where Columbia or the Distributor was knowingly involved in late trading of mutual fund shares. The Columbia Group has identified a limited number of investors who had informal arrangements for trading certain Columbia Fund shares between 1998 and 2003. A substantial majority of the trading had ended by October 2002. None of these arrangements 51 <Page> exists today. Information relating to those trading arrangements has been supplied to various regulatory authorities. To the extent that any Columbia Fund, whose shares were involved in those trading activities, was harmed by them, the Columbia Group has undertaken to reimburse such fund. The SEC staff has issued notices to the effect that it has made a preliminary determination to recommend that the SEC bring civil enforcement actions, including injunctive proceedings, against Columbia and the Distributor, alleging that they have violated certain provisions of the federal securities laws. The Columbia Group believes that those allegations are based principally on the trading arrangements referred to above. Columbia and the Distributor are engaged in discussions with the SEC staff in an effort to reach a satisfactory resolution of these matters. However, there can be no assurance that such a resolution will be reached. Any potential resolution of these matters may include, but not be limited to, sanctions, financial penalties, damages or injunctions regarding Columbia or the Distributor, and structural changes in the conduct of their business. Although the Columbia Group does not believe that these regulatory developments or their resolution will have a material adverse effect on the Columbia Funds, or on the ability of Columbia and the Distributor to provide services to the Columbia Funds, there can be no assurance that these matters or any adverse publicity or other developments resulting from them will not result in increased redemptions or reduced sales of Columbia Fund shares, which could increase transactions costs or operating expenses, or other consequences for the Columbia Funds. NOTE 7. BUSINESS COMBINATIONS AND MERGERS FUND MERGERS--On April 14, 2003, the Colonial High Yield Securities Fund, Variable Series merged into the Galaxy VIP Columbia High Yield Fund II, previously a fund of the Galaxy VIP Fund, a separate Massachusetts business trust. Also on April 14, 2003, Galaxy VIP Columbia High Yield Fund II, created a Class B into which Colonial High Yield Securities Fund, Variable Series Class B shares were reorganized. Galaxy VIP Columbia High Yield Fund II received a tax-free transfer of assets from Colonial High Yield Securities Fund, Variable Series as follows: <Table> <Caption> SHARES NET ASSETS UNREALIZED ISSUED RECEIVED DEPRECIATION(1) --------- ------------ --------------- 3,275,065 $ 29,871,694 $ 1,355,526 <Caption> NET ASSETS OF GALAXY VIP NET ASSETS NET ASSETS OF COLUMBIA OF COLONIAL HIGH GALAXY VIP COLUMBIA HIGH YIELD YIELD SECURITIES HIGH YIELD FUND II FUND II FUND, VARIABLE SERIES IMMEDIATELY PRIOR TO IMMEDIATELY PRIOR TO AFTER COMBINATION COMBINATION COMBINATION ------------- --------------------- ------------------- $ 2,264,927 $ 29,871,694 $ 32,136,621 </Table> (1) Unrealized depreciation is included in the Net Assets Received amount shown above. Also on April 14, 2003, subsequent to the merger described above, the Galaxy VIP Columbia High Yield Fund II was reorganized as the Columbia High Yield Fund, Variable Series. The accompanying statement of operations, statement of changes in net assets and financial highlights for the Fund represents the historical operations of the Galaxy VIP Columbia High Yield Fund II for periods prior to April 14, 2003. 52 <Page> FINANCIAL HIGHLIGHTS Columbia High Yield Fund, Variable Series--Class A Shares (a) Selected data for a share outstanding throughout each period is as follows: <Table> <Caption> YEAR ENDED DECEMBER 31, ----------------------------------------------------------------------- 2003 2002 2001 2000 1999 ---------- ---------- ---------- ---------- ---------- NET ASSET VALUE, BEGINNING OF PERIOD $ 8.96 $ 9.29 $ 9.35 $ 9.70 $ 10.36 ---------- ---------- ---------- ---------- ---------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.56(b) 0.59 0.64(c) 0.69 0.70 Net realized and unrealized gain (loss) on investments and foreign currency 0.52 (0.35) (0.07)(c) (0.35) (0.65) ---------- ---------- ---------- ---------- ---------- Total from Investment Operations 1.08 0.24 0.57 0.34 0.05 ---------- ---------- ---------- ---------- ---------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.60) (0.57) (0.63) (0.69) (0.70) From net realized gains (0.02) -- -- -- (0.01) ---------- ---------- ---------- ---------- ---------- Total Distributions Declared to Shareholders (0.62) (0.57) (0.63) (0.69) (0.71) ---------- ---------- ---------- ---------- ---------- NET ASSET VALUE, END OF PERIOD $ 9.42 $ 8.96 $ 9.29 $ 9.35 $ 9.70 ========== ========== ========== ========== ========== Total return (d)(e)(f) 12.37% 2.74% 6.18% 3.66% 0.56% RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (g) 0.77% 1.68% 1.60% 1.60% 1.60% Net investment income (g) 6.06% 6.46% 6.89%(c) 7.29% 7.00% Waiver/reimbursement 0.36% 1.68% 1.63% 1.58% 1.29% Portfolio turnover rate 112% 49% 54% 46% 35% Net assets, end of period (000's) $ 12,132 $ 2,197 $ 2,421 $ 2,188 $ 2,403 </Table> (a) The information shown in this table for the periods prior to April 14, 2003, relates to shares of the Galaxy VIP Columbia High Yield Fund II, the predecessor to the Columbia High Yield Fund, Variable Series. (b) Per share data was calculated using average shares outstanding during the period. (c) The Fund adopted the provisions of the AICPA Audit Guide for Investment Companies effective January 1, 2001. The effect of the changes for the year ended December 31, 2001 (which is reflected in the amounts shown above) on the net investment income per share, the net realized and unrealized gain (loss) per share and the ratio of net investment income to average net assets is $0.01, $(0.01) and 0.25%, respectively. (d) Total return at net asset value assuming all distributions reinvested. (e) Total return figure does not include any insurance company charges associated with a variable annuity. If included, total return would be reduced. (f) Had the Investment Advisor not waived or reimbursed a portion of expenses, total return would have been reduced. (g) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. 53 <Page> REPORT OF INDEPENDENT AUDITORS To the Trustees of Liberty Variable Investment Trust and the Class A Shareholders of Columbia High Yield Fund, Variable Series In our opinion, the accompanying statement of assets and liabilities, including the investment portfolio, and the related statements of operations and of changes in net assets and the Class A financial highlights present fairly, in all material respects, the financial position of Columbia High Yield Fund, Variable Series (the "Fund") (formerly Galaxy VIP Columbia High Yield Fund II) (a series of Liberty Variable Investment Trust) (formerly a series of Galaxy VIP Fund) at December 31, 2003, and the results of its operations, the changes in its net assets and the Class A financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and the Class A financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with 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 audit, which included confirmation of securities at December 31, 2003 by correspondence with the custodian and brokers, provides a reasonable basis for our opinion. The financial statements and financial highlights of the Fund for periods prior to January 1, 2003 were audited by other independent accountants whose report dated February 7, 2003 expressed an unqualified opinion on those statements. PricewaterhouseCoopers LLP Boston, Massachusetts February 12, 2004 54 <Page> PORTFOLIO MANAGER'S DISCUSSION Columbia International Fund, Variable Series / December 31, 2003 Columbia International Fund, Variable Series seeks long-term capital growth by investing primarily in equity securities of growth companies located outside the United States. James M. McAlear has managed the fund since February 2003. He has managed international portfolios since joining Columbia Management Advisors, Inc. and its predecessors in 1992. The portfolio slightly underperformed its benchmark because of its relatively small commitment to Germany. The German market rebounded strongly in response to government changes in financial policy, and the fund did not fully participate in those gains. The portfolio benefited from investments in the materials, energy and industrials sectors which responded positively to the global economic recovery. A weak US dollar also had a positive impact on returns. During the period, the Japanese yen rose more than 10% and the Euro went up more than 20% against the US dollar. Because portfolio securities were purchased in local currencies, their values rose when converted to US dollars. A YEAR OF STRONG RETURNS FROM MANY FOREIGN STOCK MARKETS Despite cautious initial forecasts, international markets enjoyed a year of strong returns in 2003. At the beginning of the year, global markets faced several uncertainties, including possible war in Iraq, prospects for mediocre economic growth, the SARS (severe acute respiratory syndrome) epidemic in Asia and depressed business and consumer confidence. After a weak first quarter, investor sentiment improved quickly, as major military action in Iraq ended, SARS was controlled and global economic growth picked up. AN EMPHASIS ON JAPAN Japan was the portfolio's largest country weight. Around mid-year, severely depressed banks and insurance companies in Japan reacted positively to changes in government policies regarding financial institutions. Following this development, we added Japanese banks and insurance companies to the portfolio and benefited from substantial gains. New Japanese investments included UFJ Holdings, a large bank, and insurance company Millea Holdings (0.9% and 1.8% of net assets, respectively). The performance of the Japanese stock market lagged other world markets in the fourth quarter of 2003. However, we continue to believe that Japanese stocks have the potential for gains in a strengthening economy. We maintained a relatively large weight in Thailand, the strongest performing market of 2003. In Thailand we favored stocks with the potential to benefit from the country's infrastructure development. Examples are Siam Cement and Land & House Public, both of which added to the fund's total return (1.2% and 0.5% of net assets, respectively.) However, we reduced our exposure to other emerging markets, including China, near the end of the period because valuations were high. While we continue to believe in China's prospects, we became concerned about the country's ability to sustain its recent strong economic growth. The emergence of a property construction bubble, structural weakness in the banking system and rapidly developing shortages in electric power capacity could cause Chinese authorities to slow the country's extraordinary growth. ADDED TO EUROPEAN HOLDINGS We added to our German holdings after research visits to Europe provided a more positive view of the country's investment and economic environment. We invested in Allianz (2.3% of net assets), an insurance company that performed well. We made modest new investments in the emerging markets of Eastern Europe that we believe could perform well as they become more integrated with Western Europe. PORTFOLIO POSITIONED TO CAPITALIZE ON VALUATIONS AND RESTRUCTURING We believe prospects for international markets are attractive for 2004. We expect the dollar to continue to weaken but at a slower rate than in 2003. The portfolio is positioned to take advantage of the restructuring of European companies and attractive valuations and earnings forecasts of Japanese companies. While we reduced exposure to emerging markets, we will continue to monitor these markets and take advantage of investment opportunities as they arise. Economic and market conditions change frequently. There is no assurance that the trends described here will continue or commence. An investment in the Columbia International Fund, Variable Series may present certain risks, including stock market fluctuations that occur in response to economic and business developments. The fund invests in foreign securities, which have special risks, including political or economic instability and higher transactions costs; different regulations, accounting standards, trading practices and levels of information; and currency exchange rate fluctuations. As a non-diversified portfolio, the fund may invest a significant percentage of its assets in a single issuer. As a result it may have increased risk compared to a more diversified fund. Holdings are disclosed as of December 31, 2003, and are subject to change. 55 <Page> PERFORMANCE INFORMATION Columbia International Fund, Variable Series / December 31, 2003 AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 2003 (%) <Table> <Caption> 1-YEAR 5-YEAR LIFE - ---------------------------------------------------------------- Class A (5/2/94) 35.54 0.36 1.63 MSCI All Country World Free ex-US Index(1) 41.38 1.54 4.20 MSCI EAFE Index(1) 38.59 -0.05 3.80 </Table> Inception date of share class is in parentheses. <Table> <Caption> NET ASSET VALUE PER SHARE ($) 12/31/02 12/31/03 - ------------------------------------------------------------ Class A 1.26 1.69 </Table> [CHART] VALUE OF A $10,000 INVESTMENT, 5/2/94 - 12/31/03 Class A: $11,692 <Table> <Caption> CLASS A SHARES MSCI AC WORLD FREE EX-US INDEX MSCI EAFE INDEX 05/1994 $ 10,000 $ 10,000 $ 10,000 5/31/1994 $ 9,900 $ 10,003 $ 9,943 6/30/1994 $ 9,700 $ 10,074 $ 10,083 7/31/1994 $ 9,950 $ 10,238 $ 10,180 8/31/1994 $ 10,251 $ 10,582 $ 10,421 9/30/1994 $ 9,950 $ 10,320 $ 10,093 10/31/1994 $ 10,000 $ 10,597 $ 10,429 11/30/1994 $ 9,550 $ 10,087 $ 9,927 12/31/1994 $ 9,400 $ 10,063 $ 9,990 1/31/1995 $ 8,850 $ 9,607 $ 9,606 2/28/1995 $ 8,701 $ 9,555 $ 9,579 3/31/1995 $ 8,850 $ 10,094 $ 10,176 4/30/1995 $ 9,100 $ 10,488 $ 10,559 5/31/1995 $ 9,100 $ 10,441 $ 10,433 6/30/1995 $ 9,050 $ 10,297 $ 10,251 7/31/1995 $ 9,549 $ 10,881 $ 10,889 8/31/1995 $ 9,549 $ 10,503 $ 10,474 9/30/1995 $ 9,699 $ 10,683 $ 10,679 10/31/1995 $ 9,549 $ 10,398 $ 10,391 11/30/1995 $ 9,699 $ 10,642 $ 10,680 12/31/1995 $ 9,949 $ 11,063 $ 11,111 1/31/1996 $ 9,898 $ 11,215 $ 11,156 2/29/1996 $ 9,898 $ 11,215 $ 11,194 3/31/1996 $ 10,100 $ 11,425 $ 11,431 4/30/1996 $ 10,656 $ 11,771 $ 11,764 5/31/1996 $ 10,555 $ 11,594 $ 11,548 6/30/1996 $ 10,605 $ 11,653 $ 11,612 7/31/1996 $ 10,201 $ 11,266 $ 11,273 8/31/1996 $ 10,353 $ 11,333 $ 11,298 9/30/1996 $ 10,455 $ 11,614 $ 11,599 10/31/1996 $ 10,202 $ 11,498 $ 11,480 11/30/1996 $ 10,606 $ 11,942 $ 11,937 12/31/1996 $ 10,508 $ 11,803 $ 11,783 1/31/1997 $ 10,562 $ 11,586 $ 11,371 2/28/1997 $ 10,670 $ 11,798 $ 11,557 3/31/1997 $ 10,670 $ 11,773 $ 11,599 4/30/1997 $ 10,616 $ 11,873 $ 11,660 5/31/1997 $ 11,421 $ 12,606 $ 12,419 6/30/1997 $ 12,010 $ 13,302 $ 13,104 7/31/1997 $ 12,064 $ 13,570 $ 13,316 8/31/1997 $ 11,226 $ 12,502 $ 12,321 9/30/1997 $ 11,656 $ 13,179 $ 13,011 10/31/1997 $ 10,635 $ 12,056 $ 12,011 11/30/1997 $ 10,312 $ 11,905 $ 11,888 12/31/1997 $ 10,165 $ 12,042 $ 11,992 1/31/1998 $ 10,508 $ 12,402 $ 12,540 2/28/1998 $ 11,021 $ 13,229 $ 13,345 3/31/1998 $ 11,707 $ 13,687 $ 13,756 4/30/1998 $ 11,935 $ 13,786 $ 13,864 5/31/1998 $ 11,935 $ 13,535 $ 13,796 6/30/1998 $ 11,650 $ 13,485 $ 13,901 7/31/1998 $ 11,992 $ 13,613 $ 14,042 8/31/98 $ 10,238 $ 11,693 $ 12,302 9/30/98 $ 9,780 $ 11,447 $ 11,924 10/31/98 $ 10,524 $ 12,646 $ 13,167 11/30/98 $ 11,095 $ 13,325 $ 13,841 12/31/98 $ 11,481 $ 13,784 $ 14,386 1/31/1999 $ 11,481 $ 13,769 $ 14,343 2/28/1999 $ 11,252 $ 13,460 $ 14,002 3/31/1999 $ 11,653 $ 14,110 $ 14,586 4/30/1999 $ 12,342 $ 14,816 $ 15,176 5/31/1999 $ 11,768 $ 14,120 $ 14,395 6/30/1999 $ 12,456 $ 14,769 $ 14,956 7/31/1999 $ 12,916 $ 15,115 $ 15,400 8/31/1999 $ 13,031 $ 15,168 $ 15,457 9/30/1999 $ 13,088 $ 15,269 $ 15,613 10/31/1999 $ 13,433 $ 15,837 $ 16,199 11/30/1999 $ 14,294 $ 16,471 $ 16,761 12/31/1999 $ 16,139 $ 18,042 $ 18,266 1/31/2000 $ 15,156 $ 17,062 $ 17,106 2/29/2000 $ 15,735 $ 17,523 $ 17,566 3/31/2000 $ 15,966 $ 18,182 $ 18,248 4/30/2000 $ 14,751 $ 17,167 $ 17,288 5/31/2000 $ 14,462 $ 16,728 $ 16,866 6/30/2000 $ 14,520 $ 17,440 $ 17,526 7/31/2000 $ 14,057 $ 16,751 $ 16,791 8/31/2000 $ 14,230 $ 16,959 $ 16,938 9/30/2000 $ 13,777 $ 16,018 $ 16,113 10/31/2000 $ 13,309 $ 15,509 $ 15,732 11/30/2000 $ 12,899 $ 14,814 $ 15,142 12/31/2000 $ 13,159 $ 15,319 $ 15,680 1/31/2001 $ 12,750 $ 15,549 $ 15,672 2/28/2001 $ 11,795 $ 14,317 $ 14,497 3/31/2001 $ 10,841 $ 13,305 $ 13,530 4/30/2001 $ 11,386 $ 14,210 $ 14,470 5/31/2001 $ 11,046 $ 13,818 $ 13,959 6/30/2001 $ 10,910 $ 13,288 $ 13,388 7/31/2001 $ 10,568 $ 12,992 $ 13,145 8/31/2001 $ 10,432 $ 12,670 $ 12,812 9/30/2001 $ 9,750 $ 11,326 $ 11,514 10/31/2001 $ 9,818 $ 11,643 $ 11,809 11/30/2001 $ 9,955 $ 12,175 $ 12,245 12/31/2001 $ 9,955 $ 12,332 $ 12,317 1/31/2002 $ 9,478 $ 11,804 $ 14,505 2/28/2002 $ 9,614 $ 11,889 $ 11,744 3/31/2002 $ 9,819 $ 12,520 $ 12,436 4/30/2002 $ 9,956 $ 12,617 $ 12,461 5/31/2002 $ 9,956 $ 12,754 $ 12,619 6/30/2002 $ 9,819 $ 12,203 $ 12,117 7/31/2002 $ 8,932 $ 11,013 $ 10,921 8/31/2002 $ 8,932 $ 11,015 $ 10,896 9/30/2002 $ 8,387 $ 9,847 $ 9,726 10/31/2002 $ 8,591 $ 10,375 $ 10,248 11/30/2002 $ 8,659 $ 10,874 $ 10,713 12/31/2002 $ 8,625 $ 10,524 $ 10,353 1/31/2003 $ 8,283 $ 10,154 $ 9,922 2/28/2003 $ 8,283 $ 9,948 $ 9,694 3/31/2003 $ 8,352 $ 9,755 $ 9,504 4/30/2003 $ 8,900 $ 10,696 $ 10,436 5/31/2003 $ 9,447 $ 11,377 $ 11,068 6/30/2003 $ 9,584 $ 11,692 $ 11,336 7/31/2003 $ 9,652 $ 12,003 $ 11,610 8/31/2003 $ 9,858 $ 12,361 $ 11,890 9/30/2003 $ 10,202 $ 12,707 $ 12,256 10/31/2003 $ 10,749 $ 13,530 $ 13,020 11/30/2003 $ 10,955 $ 13,825 $ 13,309 12/31/2003 $ 11,692 $ 14,881 $ 14,350 </Table> PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA PROVIDED. FOR CURRENT MONTH-END PERFORMANCE INFORMATION, PLEASE CONTACT YOUR INSURANCE COMPANY. Total return performance includes changes in share price and reinvestment of all distributions. The MSCI (Morgan Stanley Capital International) All Country World Free ex-US Index is an unmanaged index of global stock market performance excluding the US. The MSCI EAFE Index is an unmanaged index that tracks the performance of equity securities of developed countries outside North America. As reported in the semiannual report dated June 30, 2003, the MSCI EAFE Index used to be the fund's primary benchmark. Indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. Performance numbers reflect all fund expenses, but do not include any insurance charges imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. (1) Index performance is from April 30, 1994. 56 <Page> INVESTMENT PORTFOLIO Columbia International Fund, Variable Series / December 31, 2003 <Table> <Caption> SHARES VALUE ------------ ------------ COMMON STOCKS--98.8% CONSUMER DISCRETIONARY--12.5% AUTO COMPONENTS--0.7% Continental AG 10,837 $ 410,578 FCC Co., Ltd. 6,700 207,626 ------------ 618,204 ------------ AUTOMOBILES--1.1% Honda Motor Co., Ltd. 9,100 404,312 Toyota Motor Corp. 14,400 486,564 ------------ 890,876 ------------ HOTELS, RESTAURANTS & LEISURE--1.5% Accor SA 18,480 835,891 Compass Group PLC 63,690 432,022 ------------ 1,267,913 ------------ HOUSEHOLD DURABLES--4.0% Koninklijke Philips Electronics NV 33,700 982,957 Matsushita Electric Industrial Co., Ltd. 113,000 1,563,131 Sanyo Electric Co., Ltd. 144,000 752,695 ------------ 3,298,783 ------------ MEDIA--1.7% JC Decaux SA (a) 30,100 491,502 Pearson PLC 79,000 877,138 ------------ 1,368,640 ------------ MULTI-LINE RETAIL--0.4% Seiyu Ltd. (a) 85,000 288,001 ------------ SPECIALTY RETAIL--2.1% Aoyama Trading Co., Ltd. 20,300 401,699 Next PLC 30,042 602,226 Shimamura Co., Ltd. 6,200 421,300 USS Co., Ltd. 4,580 324,044 ------------ 1,749,269 ------------ TEXTILES, APPAREL & LUXURY GOODS--1.0% LVMH Moet Hennessy Louis Vuitton SA 8,000 581,593 Sanyo Shokai Ltd. 32,000 207,290 ------------ 788,883 ------------ CONSUMER STAPLES--3.2% BEVERAGES--0.3% Pernod-Ricard 2,300 255,449 ------------ FOOD & DRUG RETAILING--0.4% Seven-Eleven Japan Co., Ltd. 10,000 303,356 ------------ FOOD PRODUCTS--0.8% Nestle SA 2,710 676,788 ------------ HOUSEHOLD PRODUCTS--1.1% Reckitt Benckiser PLC 40,534 914,571 ------------ TOBACCO--0.6% Imperial Tobacco Group PLC 22,876 449,183 ------------ ENERGY--6.0% OIL & GAS--6.0% BP PLC 108,060 873,804 EnCana Corp. 25,200 994,467 ENI-Ente Nazionale Idrocarburi SpA 58,500 $ 1,102,658 Fortum Oyj 100,000 1,030,639 PTT Public Co., Ltd., NVDR 147,000 686,352 Total SA 1,300 241,432 ------------ 4,929,352 ------------ FINANCIALS--20.1% BANKS--9.1% Anglo Irish Bank Corp., PLC 33,600 529,603 Banco Popular Espanol SA 7,257 432,486 Banco Santander Central Hispano SA 81,100 959,489 Credit Agricole SA 52,315 1,247,758 Credit Suisse Group 52,390 1,915,984 Fortis Bank Nederland NV (a)(b)(c) 525 -- Royal Bank of Scotland Group PLC 20,220 594,103 Siam Commercial Bank Public Co., Ltd., Registered Shares (a) 320,500 448,931 Standard Chartered PLC 37,335 614,799 UFJ Holdings, Inc. 151 725,860 ------------ 7,469,013 ------------ DIVERSIFIED FINANCIALS--2.9% ING Groep NV 72,917 1,698,710 Nomura Holdings, Inc. 42,000 715,452 ------------ 2,414,162 ------------ INSURANCE--5.6% Allianz AG, Registered Shares 15,200 1,916,657 Daido Life Insurance Co., Ltd. 108 321,576 Irish Life & Permanent PLC 31,800 512,850 Millea Holdings, Inc. 112 1,463,574 Mitsui Sumitomo Insurance Co., Ltd. 42,000 344,985 ------------ 4,559,642 ------------ REAL ESTATE--2.5% Mitsubishi Estate Co., Ltd. 163,000 1,545,788 Sun Hung Kai Properties Ltd. 59,000 486,363 ------------ 2,032,151 ------------ HEALTH CARE--6.6% HEALTH CARE EQUIPMENT & SUPPLIES--2.3% Olympus Optical Co., Ltd. 43,000 933,168 Smith & Nephew PLC 115,697 969,119 ------------ 1,902,287 ------------ PHARMACEUTICALS--4.3% Chugai Pharmaceutical Co., Ltd. 32,400 466,033 Dr. Reddy's Laboratories Ltd., ADR 11,700 370,305 GlaxoSmithKline PLC 41,876 956,810 Novartis AG, Registered Shares 18,450 837,281 Ranbaxy Laboratories Ltd., GDR 14,600 372,300 Teva Pharmaceutical Industries Ltd., ADR 9,400 533,074 ------------ 3,535,803 ------------ </Table> See Notes to Investment Portfolio. 57 <Page> <Table> <Caption> SHARES VALUE ------------ ------------ INDUSTRIALS--12.5% COMMERCIAL SERVICES & SUPPLIES--2.1% Adecco SA, Registered Shares 16,480 $ 1,058,886 Capita Group PLC 152,270 660,498 ------------ 1,719,384 ------------ CONSTRUCTION & ENGINEERING--0.5% Land & House Public Co., Ltd., NVDR 1,211,100 375,961 ------------ ELECTRICAL EQUIPMENT--2.1% Siemens AG, Registered Shares 21,569 1,725,668 ------------ INDUSTRIAL CONGLOMERATES--1.2% Burberry Group PLC 88,400 576,754 Smiths Group PLC 32,900 388,193 ------------ 964,947 ------------ MACHINERY--1.1% Atlas Copco AB, Class B 14,800 482,510 Linde AG 8,400 451,919 ------------ 934,429 ------------ TRADING COMPANIES & DISTRIBUTORS--0.5% Mitsubishi Corp. 42,000 445,345 ------------ TRANSPORTATION INFRASTRUCTURE--5.0% Abertis Infraestructuras SA 174,036 2,629,128 BAA PLC 69,384 614,625 Brisa-Auto Estradas de Portugal SA 129,200 862,764 ------------ 4,106,517 ------------ INFORMATION TECHNOLOGY--10.9% COMMUNICATIONS EQUIPMENT--0.8% Nortel Networks Corp. (a) 142,700 606,200 ------------ ELECTRONIC EQUIPMENT & INSTRUMENTS--2.6% Ibiden Co., Ltd. 31,000 390,629 Keyence Corp. 1,700 358,454 Samsung Electronics Co., Ltd., GDR 4,073 765,724 TDK Corp. 8,700 626,910 ------------ 2,141,717 ------------ INTERNET SOFTWARE & SERVICES--1.2% T-Online International AG (a) 72,800 944,761 ------------ INFORMATION TECHNOLOGY CONSULTING & SERVICES--0.6% Indra Sistemas SA 39,200 502,297 ------------ OFFICE ELECTRONICS--1.0% Canon, Inc. 18,000 838,381 ------------ SEMICONDUCTOR EQUIPMENT & PRODUCTS--4.0% ARM Holdings PLC (a) 182,000 417,470 Infineon Technologies AG 27,253 378,398 Nikon Corp. 30,000 452,513 STMicroelectronics NV, N.Y. Shares 14,300 386,243 Taiwan Semiconductor Manufacturing Co., Ltd., ADR (a) 53,300 545,792 Tokyo Electron Ltd. 14,900 1,132,086 ------------ 3,312,502 ------------ SOFTWARE--0.7% Dassault Systemes SA 12,520 $ 570,409 ------------ MATERIALS--3.9% CHEMICALS--1.6% BASF AG 7,652 429,802 MG Technologies AG 31,400 439,143 Nitto Denko Corp. 7,900 420,311 ------------ 1,289,256 ------------ CONSTRUCTION MATERIALS--1.2% Siam Cement Public Co., Ltd., NVDR 152,700 978,883 ------------ METALS & MINING--1.1% BHP Billiton Ltd. 97,180 891,963 ------------ TELECOMMUNICATION SERVICES--6.5% DIVERSIFIED TELECOMMUNICATION SERVICES--3.0% France Telecom SA 15,049 429,656 Nippon Telegraph & Telephone Corp. 81 390,881 Telecom Italia SpA 134,675 398,757 Telefonica SA 82,872 1,215,386 ------------ 2,434,680 ------------ WIRELESS TELECOMMUNICATION SERVICES--3.5% NTT DoCoMo, Inc. 565 1,281,514 Vodafone Group PLC 657,646 1,625,896 ------------ 2,907,410 ------------ UTILITIES--16.6% ELECTRIC UTILITIES--8.8% Edison International (a) 57,400 1,258,782 Exelon Corp. 13,100 869,316 FirstEnergy Corp. 12,300 432,960 National Grid Transco PLC 127,404 910,259 Pepco Holdings, Inc. 28,300 552,982 PG&E Corp. (a) 30,400 844,208 Pinnacle West Capital Corp. 19,500 780,390 Public Service Enterprise Group, Inc. 9,000 394,200 Scottish & Southern Energy PLC 100,000 1,201,339 ------------ 7,244,436 ------------ GAS UTILITIES--7.8% Enagas SA 366,311 3,969,190 Snam Rete Gas SpA 577,000 2,442,691 ------------ 6,411,881 ------------ TOTAL COMMON STOCKS (cost of $61,283,272) 81,059,353 ------------ PREFERRED STOCK--0.5% CONSUMER DISCRETIONARY--0.5% MEDIA--0.5% ProSiebenSat.1 Media AG (cost of $401,229) 22,984 383,703 ------------ </Table> See Notes to Investment Portfolio. 58 <Page> <Table> <Caption> PAR VALUE ------------ ------------ SHORT-TERM OBLIGATION--0.2% Repurchase agreement with State Street Bank & Trust Co., dated 12/31/03, due 01/02/04 at 0.780%, collateralized by a U.S. Treasury Note maturing 08/15/11, market value $186,619 (repurchase proceeds $180,008) (cost of $180,000) $ 180,000 $ 180,000 ------------ TOTAL INVESTMENTS--99.5% (cost of $61,864,501) (d) 81,623,056 ------------ OTHER ASSETS & LIABILITIES, NET--0.5% 378,752 ------------ NET ASSETS--100.0% $ 82,001,808 ============ </Table> NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing. (b) Represents fair value as determined in good faith under the direction of the Board of Trustees. (c) Security has no value. (d) Cost for federal income tax purposes is $63,597,997. <Table> <Caption> SUMMARY OF SECURITIES % OF TOTAL BY COUNTRY (UNAUDITED): VALUE INVESTMENTS - ----------------------- ------------- ----------- Japan $ 18,213,476 22.3% United Kingdom 13,678,809 16.8 Spain 9,707,976 11.9 Germany 7,080,630 8.7 United States 5,312,838 6.5 France 4,653,689 5.7 Switzerland 4,488,940 5.5 Italy 3,944,106 4.8 Netherlands 3,067,909 3.7 Thailand 2,490,128 3.0 Canada 1,600,668 2.0 Ireland 1,042,453 1.3 Finland 1,030,639 1.3 Australia 891,963 1.1 Portugal 862,764 1.1 South Korea 765,724 0.9 India 742,605 0.9 Taiwan 545,792 0.7 Israel 533,074 0.6 Hong Kong 486,363 0.6 Sweden 482,510 0.6 ------------- ----- $ 81,623,056 100.0% ============= ===== </Table> Certain securities are listed by country of underlying exposure but may trade predominantly on other exchanges. <Table> <Caption> ACRONYM NAME ------- ---- ADR American Depositary Receipt GDR Global Depositary Receipt NVDR Non-Voting Depositary Receipt </Table> See Notes to Financial Statements. 59 <Page> STATEMENT OF ASSETS & LIABILITIES Columbia International Fund, Variable Series / December 31, 2003 <Table> ASSETS: Investments, at cost $ 61,864,501 ---------------- Investments, at value $ 81,623,056 Cash 853 Foreign currency (cost of $533,420) 569,737 Receivable for: Investments sold 557,080 Interest 270 Dividends 109,802 Expense reimbursement due from Investment Advisor 25,816 Deferred Trustees' compensation plan 3,872 ---------------- TOTAL ASSETS 82,890,486 ---------------- LIABILITIES: Payable for: Fund shares repurchased 702,853 Investment advisory fee 46,926 Transfer agent fee 625 Pricing and bookkeeping fees 3,073 Audit fee 8,700 Custody fee 9,538 Distribution fees - Class B 1,845 Deferred Trustees' fees 3,872 Foreign capital gains tax accrued 103,767 Other liabilities 7,479 ---------------- TOTAL LIABILITIES 888,678 ---------------- NET ASSETS $ 82,001,808 ================ COMPOSITION OF NET ASSETS: Paid-in capital $ 87,143,501 Undistributed net investment income 101,611 Accumulated net realized loss (24,945,888) Net unrealized appreciation (depreciation) on: Investments 19,758,555 Foreign currency translations 47,796 Foreign capital gains tax (103,767) ---------------- NET ASSETS $ 82,001,808 ================ CLASS A: Net assets $ 75,184,498 Shares outstanding 44,392,198 ================ Net asset value per share $ 1.69 ================ CLASS B: Net assets $ 6,817,310 Shares outstanding 4,036,722 ================ Net asset value per share $ 1.69 ================ </Table> See Notes to Financial Statements. 60 <Page> STATEMENT OF OPERATIONS Columbia International Fund, Variable Series For the Year Ended December 31, 2003 <Table> INVESTMENT INCOME: Dividends $ 1,734,377 Interest 31,860 ---------------- Total Investment Income (net of foreign taxes withheld of $135,256) 1,766,237 ---------------- EXPENSES: Investment advisory fee 564,108 Distribution fee--Class B 11,521 Pricing and bookkeeping fees 27,631 Transfer agent fee 7,500 Trustees' fees 3,755 Custody fee 62,433 Other expenses 59,886 ---------------- Total Expenses 736,834 Fees and expenses waived or reimbursed by Investment Advisor (115,632) Custody earnings credit (113) ---------------- Net Expenses 621,089 ---------------- Net Investment Income 1,145,148 ---------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY AND FOREIGN CAPITAL GAINS TAX: Net realized loss on: Investments (2,389,735) Foreign currency transactions (210,604) Foreign capital gains tax (1,686) ---------------- Net realized loss (2,602,025) ---------------- Net change in unrealized appreciation/depreciation on: Investments 24,821,359 Foreign currency translations 41,237 Foreign capital gains tax (103,767) ---------------- Net change in unrealized appreciation/depreciation 24,758,829 ---------------- Net Gain 22,156,804 ---------------- Net Increase in Net Assets from Operations $ 23,301,952 ================ </Table> See Notes to Financial Statements. 61 <Page> STATEMENT OF CHANGES IN NET ASSETS Columbia International Fund, Variable Series <Table> <Caption> YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, INCREASE (DECREASE) IN NET ASSETS: 2003 2002 - ---------------------------------- ---------------- ---------------- OPERATIONS: Net investment income $ 1,145,148 $ 213,923 Net realized loss on investments, foreign currency transactions and foreign capital gains tax (2,602,025) (8,171,078) Net change in unrealized appreciation/depreciation on investments, foreign currency translations and foreign capital gains tax 24,758,829 3,002,063 ---------------- ---------------- Net Increase (Decrease) from Operations 23,301,952 (4,955,092) ---------------- ---------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income: Class A (780,341) (113,012) Class B (54,564) (1) ---------------- ---------------- Total Distributions Declared to Shareholders (834,905) (113,013) ---------------- ---------------- SHARE TRANSACTIONS: Class A: Subscriptions 22,045,783 3,503,319 Proceeds received in connection with merger 35,910,049 -- Distributions reinvested 780,341 113,012 Redemptions (33,015,574) (10,964,351) ---------------- ---------------- Net Increase (Decrease) 25,720,599 (7,348,020) ---------------- ---------------- Class B: Subscriptions 261,779 -- Proceeds received in connection with merger 5,503,084 -- Distributions reinvested 54,564 1 Redemptions (888,774) -- ---------------- ---------------- Net Increase 4,930,653 1 ---------------- ---------------- Net Increase (Decrease) from Share Transactions 30,651,252 (7,348,019) ---------------- ---------------- Total Increase (Decrease) in Net Assets 53,118,299 (12,416,124) NET ASSETS: Beginning of period 28,883,509 41,299,633 ---------------- ---------------- End of period (including undistributed net investment income of $101,611 and $7,075, respectively) $ 82,001,808 $ 28,883,509 ================ ================ CHANGES IN SHARES: Class A: Subscriptions 15,774,129 2,647,684 Issued in connection with merger 28,728,067 -- Issued for distributions reinvested 468,404 90,410 Redemptions (23,430,429) (8,091,137) ---------------- ---------------- Net Increase (Decrease) 21,540,171 (5,353,043) ---------------- ---------------- Class B: Subscriptions 180,431 -- Issued in connection with merger 4,437,971 -- Issued for distributions reinvested 32,782 1 Redemptions (614,950) -- ---------------- ---------------- Net Increase 4,036,234 1 ---------------- ---------------- </Table> See Notes to Financial Statements. 62 <Page> NOTES TO FINANCIAL STATEMENTS Columbia International Fund, Variable Series / December 31, 2003 NOTE 1. ORGANIZATION Columbia International Fund, Variable Series (formerly Colonial International Fund for Growth, Variable Series) (the "Fund"), a series of Liberty Variable Investment Trust (the "Trust") is a non-diversified portfolio. The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. INVESTMENT GOAL--The Fund seeks long-term growth. FUND SHARES--The Fund may issue an unlimited number of shares and offers two classes of shares: Class A and Class B. Each share class has its own expense structure. Shares of the Fund are available exclusively as a pooled funding vehicle for variable annuity contracts ("VA Contracts") and Variable Life Insurance Policies ("VLI Policies") offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies"). The Participating Insurance Companies and their separate accounts own all the shares of the Fund. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES--The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION--Equity securities are valued at the last sale price at the close of the principal exchange on which they trade. Unlisted securities or listed securities for which there were no sales during the day are valued at the closing bid price on such exchanges or over-the-counter markets. Short-term obligations maturing within 60 days are valued at amortized cost, which approximates market value. Foreign securities are generally valued at the closing price on the foreign exchange or market on which they trade. If any foreign share prices are not readily available as a result of limited share activity, the securities are valued at the last sale price of the local shares in the principal market in which such securities are normally traded. Investments for which market quotations are not readily available, which tend to be more thinly traded and of lesser quality are valued at fair value as determined in good faith under consistently applied procedures established by and under the general supervision of the Board of Trustees. Foreign markets close each day at various times prior to the close of the New York Stock Exchange ("NYSE"). Foreign currency exchange rates are generally determined prior to the close of the NYSE at 12:00 p.m. Eastern (U.S.) time. Occasionally, events affecting the value of a foreign security may occur subsequent to the close of the exchange or market which would not be reflected in the computation of the Fund's net asset value. In such an event, the foreign security will be valued at the fair value. SECURITY TRANSACTIONS--Security transactions are accounted for on the trade date. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS--Forward foreign currency exchange contracts are agreements to exchange one currency for another at a future date at a specified price. These contracts are used to minimize the exposure to foreign exchange rate fluctuations during the period between trade and settlement date of the contracts. The Fund may utilize forward foreign currency exchange contracts in connection with the settlement of purchases and sales of securities. The Fund may also enter into these contracts to hedge certain other foreign currency denominated assets. Contracts to buy generally are used to acquire exposure to foreign currencies, while contracts to sell are used to hedge a Fund's investments against currency fluctuations. Forward currency contracts are valued daily at the current exchange rate of the underlying currency, resulting in unrealized gains (losses) which become realized at the time the foreign currency contracts are closed or mature. Realized and unrealized gains (losses) arising from such transactions are included in net realized and unrealized gains (losses) on foreign currency transactions. The use of forward currency contracts does not eliminate fluctuations in the prices of the Fund's portfolio securities. While the maximum potential loss from such contracts is the aggregate face value in U.S. dollars at the time the contract was opened, exposure is typically limited to the change in value of the contract (in U.S. dollars) over the period it remains open. The Fund could also be exposed to risk if the counterparties of the contracts are unable to fulfill the terms of the contracts. REPURCHASE AGREEMENTS--The Fund may engage in repurchase agreement transactions with institutions that the Fund's investment advisor has determined are 63 <Page> creditworthy. The Fund, through its custodian, receives delivery of underlying securities collateralizing a repurchase agreement. Collateral is at least equal, at all times, to the value of the repurchase obligation including interest. A repurchase agreement transaction involves certain risks in the event of default or insolvency of the counterparty. These risks include possible delays or restrictions upon the Fund's ability to dispose of the underlying securities and a possible decline in the value of the underlying securities during the period while the Fund seeks to assert its rights. INCOME RECOGNITION--Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date except for certain foreign securities which are recorded as soon after ex-date as the Fund becomes aware of such, net on non-reclaimable tax withholdings. FOREIGN CURRENCY TRANSACTIONS--The values of all assets and liabilities quoted in foreign currencies are translated into U.S. dollars at that day's exchange rates. Net realized and unrealized gains (losses) on foreign currency transactions include gains (losses) arising from the fluctuation in exchange rates between trade and settlement dates on securities transactions, gains (losses) arising from the disposition of foreign currency and currency gains (losses) between the accrual and payment dates on dividends, interest income and foreign withholding taxes. The Fund does not distinguish that portion of gains (losses) on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the investments. Such fluctuations are included with the net realized and unrealized gains (losses) on investments. DETERMINATION OF CLASS NET ASSET VALUES--All income, expenses (other than class-specific expenses, as shown on the Statement of Operations), and realized and unrealized gains (losses) are allocated to each class of the Fund on a daily basis, based on the relative net assets of each class, for purposes of determining the net asset value of each class. FOREIGN CAPITAL GAINS TAX--Realized gains in certain countries may be subject to foreign taxes at the Fund level, at rates ranging from approximately 10% to 30%. The Fund accrues for such foreign taxes on net realized and unrealized gains at the rate appropriate for each jurisdiction. FEDERAL INCOME TAX STATUS--The Fund intends to qualify each year as a "regulated investment company" under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its taxable income, if any, for its tax year, and as such will not be subject to federal income taxes. In addition, by distributing in each calendar year substantially all of its net investment income, capital gains and certain other amounts, if any, the Fund will not be subject to federal excise tax. Therefore, no federal income or excise tax provision is recorded. DISTRIBUTIONS TO SHAREHOLDERS--Distributions to shareholders are recorded on ex-date. Net realized capital gains, if any, are distributed at least annually. Income and capital gains dividends are determined in accordance with income tax regulations which may differ from GAAP. All dividends and distributions are reinvested in additional shares of the Fund at net asset value as of the record date of the distribution. NOTE 3. FEDERAL TAX INFORMATION The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund's capital accounts for permanent tax differences to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. For the year ended December 31, 2003, permanent differences resulting primarily from differing treatments for foreign currency transactions, capital loss carryforwards permanently lost and capital loss carryforwards from the merger were identified and reclassified among the components of the Fund's net assets as follows: <Table> <Caption> UNDISTRIBUTED NET ACCUMULATED PAID-IN INVESTMENT INCOME NET REALIZED LOSS CAPITAL ----------------- ----------------- ------- $ (215,707) $ (6,528,304) $ 6,744,011 </Table> Net investment income and net realized gains (losses), as disclosed on the Statement of Operations, and net assets were not affected by this reclassification. The tax character of distributions paid during the years ended December 31, 2003 and December 31, 2002 was as follows: <Table> <Caption> DECEMBER 31, DECEMBER 31, 2003 2002 ------------ ------------ Distributions paid from: Ordinary Income* $ 834,905 $ 113,013 Long-Term Capital Gains -- -- </Table> * For tax purposes short-term capital gains distributions, if any, are considered ordinary income distributions. 64 <Page> As of December 31, 2003, the components of distributable earnings on a tax basis were as follows: <Table> <Caption> UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM NET UNREALIZED INCOME CAPITAL GAINS APPRECIATION* ------------- ------------- -------------- $ 102,117 $ - $ 17,969,509 </Table> * The differences between book-basis and tax-basis net unrealized appreciation are primarily due to deferral of losses from wash sales. Unrealized appreciation and depreciation at December 31, 2003, based on cost of investments for federal income tax purposes and excluding any unrealized appreciation and depreciation from changes in the value of assets and liabilities resulting from changes in exchange rates was: <Table> Unrealized appreciation $ 18,639,220 Unrealized depreciation (614,161) -------------- Net unrealized appreciation $ 18,025,059 ============== </Table> The following capital loss carryforwards are available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: <Table> <Caption> YEAR OF CAPITAL LOSS EXPIRATION CARRYFORWARD ---------- ------------ 2006 $ 5,245 2007 771,402 2008 668,968 2009 17,959,809 2010 3,027,462 2011 779,506 ------------ $ 23,212,392 ============ </Table> Of the capital loss carryforwards attributable to the Fund, $12,752,633 was obtained upon the Fund's merger with Colonial International Horizons Fund, Variable Series, Colonial Global Equity Fund, Variable Series and Stein Roe Global Utilities Fund, Variable Series (See Note 7). Capital loss carryforwards of $11,903,481 were utilized and/or expired during the year ended December 31, 2003 for the Fund. Any capital loss carryforwards acquired as part of a merger that are permanently lost due to provisions under Internal Revenue Code are included as being expired. Expired capital loss carryforwards are recorded as a reduction of paid-in capital. NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES INVESTMENT ADVISOR MERGER--On April 1, 2003, Liberty Advisory Services Corp., the previous investment advisor to the Fund, and Colonial Management Associates, Inc., the previous sub-advisor to the Fund, merged into Columbia Management Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co. Columbia is an indirect, wholly owned subsidiary of FleetBoston Financial Corporation. As a result of the merger, Columbia now serves as the Fund's investment advisor. The merger did not change the way the Fund is managed, the investment personnel assigned to manage the Fund or the fees paid by the Fund. INVESTMENT ADVISORY FEE--Columbia is the investment advisor to the Fund and provides administrative and other services. Columbia receives a monthly fee based on the Fund's average daily net assets at the following annual rates: <Table> <Caption> AVERAGE DAILY NET ASSETS FEE RATE - ------------------------ -------- First $1 billion 0.90% Next $500 million 0.85% Over $1.5 billion 0.80% </Table> Prior to November 1, 2003, Columbia received a monthly investment advisory fee based on the Fund's average daily net assets at the following annual rates: <Table> <Caption> AVERAGE DAILY NET ASSETS FEE RATE - ------------------------ -------- First $1 billion 0.90% Over $1 billion 0.85% </Table> For the year ended December 31, 2003, the Fund's effective investment advisory fee rate was 0.90%. PRICING AND BOOKKEEPING FEES--Columbia is responsible for providing pricing and bookkeeping services to the Fund under a pricing and bookkeeping agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Corporation ("State Street"). Columbia pays the total fees collected to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual flat fee of $10,000 paid monthly, and in any month that the Fund's average daily net assets exceed $50 million, an additional monthly fee. The additional fee rate is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. This rate is applied to the average daily net assets of the Fund for that month. The Fund also pays additional fees for pricing services. For the year ended December 31, 2003, the effective pricing and bookkeeping fee rate was 0.044%. TRANSFER AGENT FEE--Columbia Funds Services, Inc. (the "Transfer Agent"), formerly Liberty Funds Services, Inc., an affiliate of Columbia, provides shareholder services for a monthly fee at an annual rate of $7,500. Effective October 13, 2003, Liberty Funds Services, Inc. changed its name to Columbia Funds Services, Inc. 65 <Page> DISTRIBUTION FEES--Columbia Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia, is the principal underwriter of the Fund. Prior to October 13, 2003, Columbia Funds Distributor, Inc. was known as Liberty Funds Distributor, Inc. The Fund has adopted a 12b-1 plan which requires the payment of a monthly distribution fee to the Distributor at the annual rate of 0.25% of Class B average daily net assets. FEE WAIVERS--Effective April 7, 2003, Columbia has agreed to reimburse fees at the annual rate of 0.21% of the Fund's average daily net assets. This agreement will continue until April 6, 2004, after which it may be revised or discontinued any time. CUSTODY CREDITS--The Fund has an agreement with its custodian bank under which custody fees may be reduced by balance credits. The Fund could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if it had not entered into such an agreement. FEES PAID TO OFFICERS AND TRUSTEES--The Fund pays no compensation to its officers, all of whom are employees of Columbia or its affiliates. The Fund's Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. NOTE 5. PORTFOLIO INFORMATION PURCHASES AND SALES OF SECURITIES--For the year ended December 31, 2003, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were $61,711,477 and $75,201,057, respectively. NOTE 6. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES FOREIGN SECURITIES--There are certain additional risks involved when investing in foreign securities that are not inherent with investments in domestic securities. These risks may involve foreign currency exchange rate fluctuations, adverse political and economic developments and the possible prevention of currency exchange or other foreign governmental laws or restrictions. In addition, the liquidity of foreign securities may be more limited than that of domestic securities. INDUSTRY FOCUS--The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. LEGAL PROCEEDINGS--Columbia, the Distributor and certain of their affiliates (collectively, "the Columbia Group") have received information requests and subpoenas from various regulatory authorities, including the Securities and Exchange Commission ("SEC") and the New York Attorney General, in connection with their investigations of late trading and market timing in mutual funds. The Columbia Group has not uncovered any instances where Columbia or the Distributor was knowingly involved in late trading of mutual fund shares. The Columbia Group has identified a limited number of investors who had informal arrangements for trading certain Columbia Fund shares between 1998 and 2003. A substantial majority of the trading had ended by October 2002. None of these arrangements exists today. Information relating to those trading arrangements has been supplied to various regulatory authorities. To the extent that any Columbia Fund, whose shares were involved in those trading activities, was harmed by them, the Columbia Group has undertaken to reimburse such fund. The SEC staff has issued notices to the effect that it has made a preliminary determination to recommend that the SEC bring civil enforcement actions, including injunctive proceedings, against Columbia and the Distributor, alleging that they have violated certain provisions of the federal securities laws. The Columbia Group believes that those allegations are based principally on the trading arrangements referred to above. Columbia and the Distributor are engaged in discussions with the SEC staff in an effort to reach a satisfactory resolution of these matters. However, there can be no assurance that such a resolution will be reached. Any potential resolution of these matters may include, but not be limited to, sanctions, financial penalties, damages or injunctions regarding Columbia or the Distributor, and structural changes in the conduct of their business. Although the Columbia Group does not believe that these regulatory developments or their resolution will have a material adverse effect on the Columbia Funds, or on the ability of Columbia and the Distributor to provide services to the Columbia Funds, there can be no assurance that these matters or any adverse publicity or other developments resulting from them will not result in increased redemptions or reduced sales of Columbia Fund shares, which could increase transactions costs or operating expenses, or other consequences for the Columbia Funds. 66 <Page> NOTE 7. BUSINESS COMBINATIONS AND MERGERS FUND MERGERS--On April 7, 2003, the Colonial International Horizons Fund, Variable Series, Colonial Global Equity Fund, Variable Series and Stein Roe Global Utilities Fund, Variable Series (collectively, "the target funds"), merged into the Colonial International Fund for Growth, Variable Series. The Colonial International Fund for Growth, Variable Series, received a tax-free transfer of assets from the target funds as follows: <Table> <Caption> SHARES NET ASSETS UNREALIZED ISSUED RECEIVED DEPRECIATION(1) ------ ------------ --------------- Colonial International Horizons Fund, Variable Series 3,046,706 $ 3,777,920 $ 852,127 Colonial Global Equity Fund, Variable Series 1,391,632 1,725,629 1,018,882 Stein Roe Global Utilities Fund, Variable Series 28,727,700 35,909,584 610,951 </Table> <Table> <Caption> NET ASSETS NET ASSETS NET ASSETS OF COLONIAL OF COLONIAL OF THE INTERNATIONAL INTERNATIONAL TARGET FUND FOR FUND FOR FUNDS GROWTH, VS GROWTH, VS IMMEDIATELY IMMEDIATELY PRIOR TO PRIOR TO AFTER COMBINATION COMBINATION COMBINATION ------------- ------------ ------------- $ 27,327,712 $ 41,413,133 $ 68,740,845 </Table> (1) Unrealized depreciation is included in the respective Net Assets Received amount shown above. Also on April 7, 2003, subsequent to the merger described above, the Colonial International Fund for Growth, Variable Series was renamed the Columbia International Fund, Variable Series. 67 <Page> FINANCIAL HIGHLIGHTS Columbia International Fund, Variable Series--Class A Shares Selected data for a share outstanding throughout each period is as follows: <Table> <Caption> YEAR ENDED DECEMBER 31, --------------------------------------------------------------------- 2003 2002 2001 2000 1999 ---------- ---------- ---------- ---------- ---------- NET ASSET VALUE, BEGINNING OF PERIOD $ 1.26 $ 1.46 $ 1.93 $ 2.79 $ 2.00 ---------- ---------- ---------- ---------- ---------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (a) 0.03 0.01 0.01 0.03 0.03 Net realized and unrealized gain (loss) on investments, foreign currency and foreign capital gains tax 0.42 (0.20) (0.48) (0.55) 0.78 ---------- ---------- ---------- ---------- ---------- Total from Investment Operations 0.45 (0.19) (0.47) (0.52) 0.81 ---------- ---------- ---------- ---------- ---------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.02) (0.01) -- (0.04) (0.02) In excess of net investment income -- -- -- --(b) -- From net realized gains -- -- -- (0.30) -- In excess of net realized gains -- -- -- --(b) -- ---------- ---------- ---------- ---------- ---------- Total Distributions Declared to Shareholders (0.02) (0.01) -- (0.34) (0.02) ---------- ---------- ---------- ---------- ---------- NET ASSET VALUE, END OF PERIOD $ 1.69 $ 1.26 $ 1.46 $ 1.93 $ 2.79 ========== ========== ========== ========== ========== Total return (c)(d) 35.54%(e) (13.35)% (24.35)% (18.47)% 40.58% RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (f) 0.97% 1.13% 1.23% 1.08% 1.10% Net investment income (f) 1.84% 0.62% 0.41% 1.20% 1.14% Waiver/reimbursement 0.18% -- -- -- -- Portfolio turnover rate 104% 39% 34% 76% 35% Net assets, end of period (000's) $ 75,184 $ 28,883 $ 41,299 $ 61,372 $ 82,071 </Table> (a) Per share data was calculated using average shares outstanding during the period. (b) Rounds to less than $0.01 per share. (c) Total return at net asset value assuming all distributions reinvested. (d) Total return figure does not include any insurance company charges associated with a variable annuity. If included, total return would be reduced. (e) Had the Investment Advisor not waived or reimbursed a portion of expenses, total return would have been reduced. (f) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. 68 <Page> REPORT OF INDEPENDENT AUDITORS To the Trustees of Liberty Variable Investment Trust and the Class A Shareholders of Columbia International Fund, Variable Series In our opinion, the accompanying statement of assets and liabilities, including the investment portfolio, and the related statements of operations and of changes in net assets and the Class A financial highlights present fairly, in all material respects, the financial position of Columbia International Fund, Variable Series (formerly Colonial International Fund for Growth, Variable Series) (the "Fund") (a series of Liberty Variable Investment Trust) at December 31, 2003, and the results of its operations, the changes in its net assets and the Class A financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and the Class A financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund'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 December 31, 2003 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts February 12, 2004 69 <Page> PORTFOLIO MANAGER'S DISCUSSION Columbia Real Estate Equity Fund, Variable Series / December 31, 2003 Columbia Real Estate Equity Fund, Variable Series seeks capital appreciation and above-average current income. David W. Jellison has managed the fund and its predecessor since its inception in March 1998. The market for real estate investment trusts (REITs) was resilient in 2003, as the NAREIT Equity Index outperformed the S&P 500 Index for the fourth consecutive year. Against this backdrop the fund generated a strong absolute return and outperformed the S&P 500 Index but underperformed the NAREIT Equity Index primarily because of its more defensive posture. An overweight allocation to securities in the forest products sector detracted from performance relative to the index. In addition, the fund was underexposed to health care REITs, one of the better-performing sectors of the index. SECTOR ALLOCATION DECISIONS AIDED RESULTS Average vacancy rates in major office markets during the year were significantly higher than their historical average. Similarly, apartment vacancy rates increased as weaker job growth decreased demand while low mortgage rates increased home ownership. We maintained an underweight position in both types of companies, which benefited the fund's return. Cyclically oriented sectors of the real estate markets, including higher-quality regional malls and shopping centers, industrial and lodging companies, were also solid performers. Nevertheless, we did not participate in the rally in health care REITs. These companies rarely meet our selection criteria because their cash flow streams are dependent on government policy. CAPITAL INFLOWS BOOSTED VALUATIONS REITs continued to attract inflows of investor capital over the course of the year, in many cases driving prices up to premium levels. As a result, we maintained the fund's defensive positioning. We added to our investment in non-real-estate related companies--primarily in paper and forest products companies, which accounted for approximately 8.5% of the fund's assets by the end of the period. (The fund's investment policy permits us to hold up to 20% of assets in non-real-estate related companies.) We like the paper and forest-products sectors because we believe they are early in their product pricing cycles and that cash flows are set to grow strongly. These stocks, many of which were disappointments when we first purchased them in the fourth quarter of 2002 and in early 2003, recovered nicely as manufacturing activity rebounded. We also added a relatively new investment vehicle called an income deposit security (IDS) by initiating a small position in Volume Services of America, a nationally franchised operator of concessions at stadiums and convention centers. (1.3% of net assets). Popular in Canada, an IDS combines a share of dividend-paying common stock along with an interest in corporate subordinated debt. The security pays both a dividend, which is now taxed at the lower corporate dividend, and interest, which is taxed at ordinary tax rates. We purchased the security for its income potential--the yield was 9.4% on December 31, 2003. RISKS RISE FOR REITs Strong performance by REITs during the year was driven, in part, by investors seeking higher yields than they can get from alternative investments. However, the sector faces a number of challenges. Recent tax legislation may cause REITs to look relatively less attractive because, generally speaking, the dividends they pay are taxed at a higher rate than other dividends. Although the business conditions underlying the REIT markets appear to be improving, the timing of increased cash flows from property investments may be slower to materialize than in other sectors of the investment markets. At the same time, real estate stocks have become pricier and risk is rising. We believe the portfolio's defensive positioning is appropriate for this environment. Over the long term, we believe our investments have the potential to benefit from the economic recovery that is now underway. Economic and market conditions frequently change. There is no assurance that the trends described here will continue or commence. An investment in the fund may present certain risks, including stock market fluctuations that occur in response to economic and business developments. The fund may be subject to the same types of risks associated with direct ownership of real estate including the decline of property value due to general, local and regional economic conditions. In addition, the fund's share price will likely be subject to more volatility than the overall stock market because it concentrates in real estate stocks. Holdings are disclosed as of December 31, 2003, and are subject to change. 70 <Page> PERFORMANCE INFORMATION Columbia Real Estate Equity Fund, Variable Series / December 31, 2003 AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 2003 (%) <Table> <Caption> 1-YEAR 5-YEAR LIFE - --------------------------------------------------------- Class A (3/3/98) 33.69 12.09 8.39 NAREIT Index(1) 37.13 14.35 8.95 S&P 500 Index(2) 28.68 -0.57 2.42 </Table> Inception date of share class is in parentheses. <Table> <Caption> NET ASSET VALUE PER SHARE ($) 12/31/02 12/31/03 - --------------------------------------------------------- Class A 9.64 10.96 </Table> [CHART] VALUE OF A $10,000 INVESTMENT, 3/3/98 - 12/31/03 Class A: $15,998 <Table> <Caption> CLASS A SHARES NAREIT INDEX S&P 500 INDEX 3/1998 $ 10,000 $ 10,000 $ 10,000 3/31/1998 $ 10,350 $ 10,179 $ 10,485 4/30/1998 $ 9,981 $ 9,847 $ 10,591 5/31/1998 $ 9,931 $ 9,778 $ 10,409 6/30/1998 $ 9,908 $ 9,712 $ 10,831 7/31/1998 $ 9,356 $ 9,081 $ 10,717 8/31/1998 $ 8,664 $ 8,224 $ 9,167 9/30/1998 $ 9,079 $ 8,690 $ 9,755 10/31/1998 $ 8,917 $ 8,529 $ 10,548 11/30/1998 $ 9,079 $ 8,654 $ 11,187 12/31/1998 $ 9,044 $ 8,436 $ 11,831 1/31/1999 $ 8,889 $ 8,260 $ 12,326 2/28/1999 $ 8,827 $ 8,066 $ 11,942 3/31/1999 $ 8,753 $ 8,029 $ 12,420 4/30/1999 $ 9,406 $ 8,791 $ 12,901 5/31/1999 $ 9,675 $ 8,985 $ 12,596 6/30/1999 $ 9,443 $ 8,839 $ 13,295 7/31/1999 $ 9,077 $ 8,558 $ 12,880 8/31/1999 $ 9,066 $ 8,450 $ 12,817 9/30/1999 $ 8,645 $ 8,128 $ 12,466 10/31/1999 $ 8,454 $ 7,928 $ 13,255 11/30/1999 $ 8,370 $ 7,799 $ 13,524 12/31/1999 $ 8,670 $ 8,046 $ 14,321 1/31/2000 $ 8,702 $ 8,073 $ 13,602 2/29/2000 $ 8,487 $ 7,977 $ 13,345 3/31/2000 $ 8,925 $ 8,239 $ 14,650 4/30/2000 $ 9,466 $ 8,793 $ 14,209 5/31/2000 $ 9,552 $ 8,879 $ 13,918 6/30/2000 $ 9,874 $ 9,107 $ 14,262 7/31/2000 $ 10,772 $ 9,903 $ 14,039 8/31/2000 $ 10,323 $ 9,501 $ 14,911 9/30/2000 $ 10,731 $ 9,804 $ 14,124 10/31/2000 $ 10,234 $ 9,379 $ 14,064 11/30/2000 $ 10,521 $ 9,499 $ 12,956 12/31/2000 $ 11,145 $ 10,168 $ 13,020 1/31/2001 $ 11,023 $ 10,274 $ 13,482 2/28/2001 $ 10,866 $ 10,109 $ 12,252 3/31/2001 $ 10,659 $ 10,207 $ 11,475 4/30/2001 $ 11,041 $ 10,451 $ 12,367 5/31/2001 $ 11,254 $ 10,704 $ 12,450 6/30/2001 $ 11,776 $ 11,331 $ 12,147 7/31/2001 $ 11,527 $ 11,106 $ 12,028 8/31/2001 $ 11,900 $ 11,512 $ 11,275 9/30/2001 $ 11,101 $ 11,035 $ 10,364 10/31/2001 $ 10,688 $ 10,719 $ 10,562 11/30/2001 $ 11,352 $ 11,309 $ 11,372 12/31/2001 $ 11,668 $ 11,584 $ 11,472 1/31/2002 $ 11,737 $ 11,608 $ 11,305 2/28/2002 $ 11,979 $ 11,832 $ 11,087 3/31/2002 $ 12,477 $ 12,542 $ 11,504 4/30/2002 $ 12,569 $ 12,648 $ 10,807 5/31/2002 $ 12,812 $ 12,819 $ 10,727 6/30/2002 $ 13,010 $ 13,169 $ 9,963 7/31/2002 $ 12,277 $ 12,480 $ 9,187 8/31/2002 $ 12,149 $ 12,455 $ 9,246 9/30/2002 $ 11,642 $ 11,977 $ 8,241 10/31/2002 $ 11,256 $ 11,401 $ 8,967 11/30/2002 $ 11,852 $ 11,938 $ 9,495 12/31/2002 $ 11,966 $ 12,026 $ 8,937 1/31/2003 $ 11,643 $ 11,676 $ 8,703 2/28/2003 $ 11,768 $ 11,869 $ 8,573 3/31/2003 $ 11,988 $ 12,106 $ 8,656 4/30/2003 $ 12,510 $ 12,639 $ 9,369 5/31/2003 $ 13,121 $ 13,402 $ 9,863 6/30/2003 $ 13,382 $ 13,694 $ 9,989 7/31/2003 $ 14,056 $ 14,427 $ 10,165 8/31/2003 $ 14,294 $ 14,505 $ 10,363 9/30/2003 $ 14,644 $ 14,998 $ 10,253 10/31/2003 $ 14,833 $ 15,270 $ 10,834 11/30/2003 $ 15,410 $ 15,935 $ 10,929 12/31/2003 $ 15,998 $ 16,495 $ 11,498 </Table> PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA PROVIDED. FOR CURRENT MONTH-END PERFORMANCE INFORMATION, PLEASE CONTACT YOUR INSURANCE COMPANY. Total return performance includes changes in share price and reinvestment of all distributions. The NAREIT (National Association of Real Estate Investment Trusts) Index is an unmanaged index that reflects performance of all publicly traded equity REITs. The S&P (Standard & Poor's) 500 Index is an unmanaged index that tracks the performance of 500 widely held, large-capitalization US stocks. Indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. Performance numbers reflect all fund expenses, but do not include any insurance charges imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. (1) Index performance is from February 28, 1998. (2) Index performance is from March 3, 1998. 71 <Page> INVESTMENT PORTFOLIO Columbia Real Estate Equity Fund, Variable Series / December 31, 2003 <Table> <Caption> SHARES VALUE ------------ ------------ COMMON STOCKS--97.2% CONSUMER DISCRETIONARY--5.4% HOTELS, RESTAURANTS & LEISURE--5.4% Hilton Hotels Corp. 4,025 $ 68,948 La Quinta Corp. (a) 6,300 40,383 Marriott International, Inc. 940 43,428 Starwood Hotels & Resorts Worldwide, Inc. 835 30,035 ------------ 182,794 ------------ FINANCIALS--80.8% REAL ESTATE--80.8% Alexandria Real Estate Equities, Inc., REIT 2,160 125,064 AMB Property Corp., REIT 1,530 50,306 American Financial Realty Trust, REIT 1,800 30,690 Apartment Investment & Management Co., Class A, REIT 1,170 40,365 Archstone-Smith Trust, REIT 2,160 60,437 AvalonBay Communities, Inc., REIT 1,220 58,316 Boston Properties, Inc., REIT 1,145 55,178 Brookfield Properties Corp. 1,340 38,458 CarAmerica Realty Corp., REIT 875 26,057 Catellus Development Corp., REIT (a) 1,365 32,924 CenterPoint Properties Corp., REIT 875 65,538 Chelsea Property Group, Inc., REIT 720 39,463 Cousins Properties, Inc., REIT 4,450 136,170 Duke Realty Corp., REIT 3,920 121,520 Equity Office Properties Trust, REIT 3,036 86,981 Equity Residential, REIT 2,070 61,086 First Industrial Realty Trust, Inc., REIT 1,015 34,256 General Growth Properties, Inc., REIT 6,005 166,639 iStar Financial, Inc., REIT 3,735 145,291 Kimco Realty Corp., REIT 1,917 85,786 Liberty Property Trust, REIT 2,260 87,914 Manufactured Home Communities, Inc., REIT 605 22,778 Newcastle Investment Corp., REIT 2,005 54,336 Pan Pacific Retail Properties, Inc., REIT 940 44,791 Parkway Properties, Inc., REIT 285 11,856 Prentiss Properties Trust, REIT 655 21,608 ProLogis Trust, REIT 4,680 150,181 Public Storage, Inc., REIT 2,050 88,950 Reckson Associates Realty Corp., REIT 720 17,496 Regency Centers Corp., REIT 3,060 121,941 Rouse Co., REIT 2,660 125,020 Simon Property Group, Inc., REIT 4,100 189,994 SL Green Realty Corp., REIT 1,260 51,723 St. Joe Co. 2,460 91,733 Taubman Centers, Inc., REIT 3,035 62,521 United Dominion Realty Trust, Inc., REIT 2,125 40,800 Vornado Realty Trust, REIT 1,195 65,426 ------------ 2,709,593 ------------ MATERIALS--11.0% CONTAINERS & PACKAGING--2.5% Smurfit-Stone Container Corp. (a) 3,050 $ 56,638 Temple-Inland, Inc. 450 28,202 ------------ 84,840 ------------ PAPER & FOREST PRODUCTS--8.5% Bowater, Inc. 2,935 135,920 International Paper Co. 2,290 98,722 MeadWestvaco Corp. 1,685 50,129 ------------ 284,771 ------------ TOTAL COMMON STOCKS (cost of $2,611,825) 3,261,998 ------------ INCOME DEPOSIT SECURITY--1.3% CONSUMER DISCRETIONARY--1.3% HOTELS, RESTAURANTS & LEISURE--1.3% Volume Services of America Holdings, Inc. (cost of $37,515) 2,500 41,625 ------------ TOTAL INVESTMENTS--98.5% (cost of $2,649,340) (b) 3,303,623 ------------ OTHER ASSETS & LIABILITIES, NET--1.5% 51,214 ------------ NET ASSETS--100.0% $ 3,354,837 ============ </Table> NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing. (b) Cost for federal income tax purposes is $2,664,615. <Table> <Caption> ACRONYM NAME ------- ---- REIT Real Estate Investment Trust </Table> See Notes to Financial Statements. 72 <Page> STATEMENT OF ASSETS & LIABILITIES Columbia Real Estate Equity Fund, Variable Series / December 31, 2003 <Table> ASSETS: Investments, at cost $ 2,649,340 ---------------- Investments, at value $ 3,303,623 Cash 66,721 Receivable for: Fund shares sold 6,539 Dividends 12,904 Expense reimbursement due from Investment Advisor 2,762 Deferred Trustees' compensation plan 667 ---------------- TOTAL ASSETS 3,393,216 ---------------- LIABILITIES: Payable for: Fund shares repurchased 7,597 Investment advisory fee 2,285 Administration fee 257 Transfer agent fee 417 Pricing and bookkeeping fees 2,040 Trustees' fees 49 Audit fee 23,410 Custody fee 361 Distribution fee--Class B 535 Deferred Trustees' fees 667 Other liabilities 761 ---------------- TOTAL LIABILITIES 38,379 ---------------- NET ASSETS $ 3,354,837 ================ COMPOSITION OF NET ASSETS: Paid-in capital $ 2,652,539 Overdistributed net investment income (785) Accumulated net realized gain 48,800 Net unrealized appreciation on investments 654,283 ---------------- NET ASSETS $ 3,354,837 ================ CLASS A: Net assets $ 914,189 Shares outstanding 83,424 ================ Net asset value per share $ 10.96 ================ CLASS B: Net assets $ 2,440,648 Shares outstanding 222,089 ================ Net asset value per share $ 10.99 ================ </Table> See Notes to Financial Statements. 73 <Page> STATEMENT OF OPERATIONS Columbia Real Estate Equity Fund, Variable Series For the Year Ended December 31, 2003 <Table> <Caption> INVESTMENT INCOME: Dividends $ 95,682 Interest 1,570 ---------------- Total Investment Income (net of foreign taxes withheld of $65) 97,252 ---------------- EXPENSES: Investment advisory fee 19,560 Administration fee 2,217 Distribution fee--Class B 3,961 Transfer agent fee 5,000 Pricing and bookkeeping fees 25,993 Trustees' fees 584 Custody fee 4,845 Audit fee 32,230 Amortization of organization expense 375 Other expenses 2,629 ---------------- Total Expenses 97,394 Fees and expenses waived or reimbursed by Investment Advisor (21,088) Custody earnings credit (28) ---------------- Net Expenses 76,278 ---------------- Net Investment Income 20,974 ---------------- NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain on investments 540,776 Net change in unrealized appreciation/depreciation on investments 323,613 ---------------- Net Gain 864,389 ---------------- Net Increase in Net Assets from Operations $ 885,363 ================ </Table> See Notes to Financial Statements. 74 <Page> STATEMENT OF CHANGES IN NET ASSETS Columbia Real Estate Equity Fund, Variable Series <Table> <Caption> YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, INCREASE (DECREASE) IN NET ASSETS: 2003 2002 - ---------------------------------- ------------ ------------ OPERATIONS: Net investment income $ 20,974 $ 41,411 Net realized gain on investments 540,776 40,621 Net change in unrealized appreciation/depreciation on investments 323,613 (66,916) ------------ ------------ Net Increase from Operations 885,363 15,116 ------------ ------------ DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income: Class A (6,669) (33,393) Class B (12,646) -- From net realized gains: Class A (127,579) (39,385) Class B (344,419) -- ------------ ------------ Total Distributions Declared to Shareholders (491,313) (72,778) ------------ ------------ SHARE TRANSACTIONS: Class A: Subscriptions 689,817 224,088 Proceeds received in connection with merger 1,269 -- Distributions reinvested 137,660 72,778 Redemptions (1,058,627) (372,423) ------------ ------------ Net Decrease (229,881) (75,557) ------------ ------------ Class B: Subscriptions 429,718 -- Proceeds received in connection with merger 1,868,312 -- Distributions reinvested 353,653 -- Redemptions (440,174) -- ------------ ------------ Net Increase 2,211,509 -- ------------ ------------ Net Increase (Decrease) from Share Transactions 1,981,628 (75,557) ------------ ------------ Total Increase (Decrease) in Net Assets 2,375,678 (133,219) NET ASSETS: Beginning of period 979,159 1,112,378 ------------ ------------ End of period (including overdistributed net investment income of $(785) and $(14), respectively) $ 3,354,837 $ 979,159 ============ ============ CHANGES IN SHARES: Class A: Subscriptions 50,234 20,934 Issued in connection with merger 129 -- Issued for distributions reinvested 12,550 7,407 Redemptions (81,080) (36,726) ------------ ------------ Net Decrease (18,167) (8,385) ------------ ------------ Class B: Subscriptions 38,575 -- Issued in connection with merger 190,256 -- Issued for distributions reinvested 32,073 -- Redemptions (38,815) -- ------------ ------------ Net Increase 222,089 -- ------------ ------------ </Table> See Notes to Financial Statements. 75 <Page> NOTES TO FINANCIAL STATEMENTS Columbia Real Estate Equity Fund, Variable Series / December 31, 2003 NOTE 1. ORGANIZATION Columbia Real Estate Equity Fund, Variable Series (formerly Galaxy VIP Real Estate Equity Fund II) (the "Fund"), a series of Liberty Variable Investment Trust (the "Trust") is a diversified portfolio. The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. INVESTMENT GOAL--The Fund seeks to provide capital appreciation and above-average current income. FUND SHARES--The Fund may issue an unlimited number of shares and offers two classes of shares: Class A and Class B. Each share class has its own expense structure. Shares of the Fund are available exclusively as a pooled funding vehicle for variable annuity contracts ("VA Contracts") and Variable Life Insurance Policies ("VLI Policies") offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies"). The Participating Insurance Companies and their separate accounts own all the shares of the Fund. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES--The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION--Equity securities are valued at the last sale price at the close of the principal exchange on which they trade. Unlisted securities or listed securities for which there were no sales during the day are valued at the closing bid price on such exchanges or over-the-counter markets. Short-term obligations maturing within 60 days are valued at amortized cost, which approximates market value. Investments in other investment companies are valued at net asset value. Investments for which market quotations are not readily available are valued at fair value as determined in good faith under consistently applied procedures established by and under the general supervision of the Board of Trustees. SECURITY TRANSACTIONS--Security transactions are accounted for on the trade date. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. REPURCHASE AGREEMENTS--The Fund may engage in repurchase agreement transactions with institutions that the Fund's investment advisor has determined are creditworthy. The Fund, through its custodian, receives delivery of underlying securities collateralizing a repurchase agreement. Collateral is at least equal, at all times, to the value of the repurchase obligation including interest. A repurchase agreement transaction involves certain risks in the event of default or insolvency of the counterparty. These risks include possible delays or restrictions upon the Fund's ability to dispose of the underlying securities and a possible decline in the value of the underlying securities during the period while the Fund seeks to assert its rights. INCOME RECOGNITION--Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date. The Fund estimates components of distributions from Real Estate Investment Trusts ("REITs"). Distributions received in excess of income are recorded as a reduction of the cost of the related investments. Effective January 1, 2003, the Fund adopted the policy to reduce cost of investments for financial statement purposes by the distributions received in excess of income from REITs. The cumulative effect of this accounting change did not impact total net assets of the Fund, but resulted in reclassifications as follows: <Table> <Caption> DECREASE IN UNDISTRIBUTED DECREASE IN COST NET INVESTMENT LOSS - ---------------- ------------------------- $ 45,011 $ 45,011 </Table> The effect of this change for the year ended December 31, 2003 is as follows: <Table> <Caption> DECREASE IN DECREASE IN UNREALIZED NET INVESTMENT INCREASE IN APPRECIATION INCOME NET REALIZED GAIN - -------------- -------------- ----------------- $ 32,503 $ 43,149 $ 75,652 </Table> DETERMINATION OF CLASS NET ASSET VALUES--All income, expenses (other than class-specific expenses, as shown on the Statement of Operations), and realized and unrealized gains (losses), are allocated to each class of the Fund on a daily basis, based on relative net assets of each class, for purposes of determining the net asset value of each class. FEDERAL INCOME TAX STATUS--The Fund intends to qualify each year as a "regulated investment company" under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its taxable income, if any, for its tax year, and as such will not be subject to federal income taxes. In addition, by distributing in each calendar year substantially all of its net investment income, capital gains and certain other amounts, if any, the Fund will not be subject to federal excise tax. Therefore, no federal income or excise tax provision is recorded. 76 <Page> DISTRIBUTIONS TO SHAREHOLDERS--Distributions to shareholders are recorded on ex-date. Net realized capital gains, if any, are distributed at least annually. Income and capital gains dividends are determined in accordance with income tax regulations which may differ from GAAP. All dividends and distributions are reinvested in additional shares of the Fund at net asset value as of the record date of the distribution. ORGANIZATION COSTS--The Fund has borne all costs in connection with its organization, including the fees and expenses of registering and qualifying its initial shares for distribution under federal and state securities laws. All such costs are amortized using the straight-line method over a period of five years, beginning with the commencement of the Fund's operation. As of December 31, 2003, all organization costs have been fully amortized. NOTE 3. FEDERAL TAX INFORMATION The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund's capital accounts for permanent tax differences to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. For the year ended December 31, 2003, permanent differences resulting primarily from differing treatments for non-deductible expenses from the merger, capital loss carryforwards from the merger, Real Estate Investment Trust ("REIT") adjustments from the merger and distribution reclassifications were identified and reclassified among the components of the Fund's net assets as follows: <Table> <Caption> OVERDISTRIBUTED ACCUMULATED PAID-IN NET INVESTMENT INCOME NET REALIZED GAIN CAPITAL --------------------- ----------------- --------- $ 42,581 $ (20,488) $ (22,093) </Table> Net investment income and net realized gains (losses), as disclosed on the Statement of Operations, and net assets were not affected by this reclassification. The tax character of distributions paid during the years ended December 31, 2003 and December 31, 2002 was as follows: <Table> <Caption> DECEMBER 31, DECEMBER 31, 2003 2002 ------------ ------------ Distributions paid from: Ordinary Income* $ 165,123 $ 32,622 Long-Term Capital Gains 326,190 40,156 </Table> * For tax purposes short-term capital gains distributions, if any, are considered ordinary income distributions. As of December 31, 2003, the components of distributable earnings on a tax basis were as follows: <Table> <Caption> UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM NET UNREALIZED INCOME CAPITAL GAINS APPRECIATION* ------------- -------------- -------------- $ 7,629 $ 56,446 $ 639,008 </Table> * The differences between book-basis and tax-basis net unrealized appreciation are primarily due to deferral of losses from wash sales. Unrealized appreciation and depreciation at December 31, 2003, based on cost of investments for federal income tax purposes was: <Table> Unrealized appreciation $ 642,576 Unrealized depreciation (3,568) ----------- Net unrealized appreciation $ 639,008 =========== </Table> Capital loss carryforwards are available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code. As of December 31, 2003, the Fund had no capital loss carryforwards. Capital loss carryforwards of $14,380 were utilized and/or expired during the year ended December 31, 2003 for the Fund. Any capital loss carryforwards acquired as part of a merger that are permanently lost due to provisions under Internal Revenue Code are included as being expired. Expired capital loss carryforwards are recorded as a reduction of paid-in capital. NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES INVESTMENT ADVISOR MERGER--On April 1, 2003, Fleet Investment Advisors, Inc., the previous investment advisor to the Fund, merged into Columbia Management Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co., an indirect, wholly owned subsidiary of FleetBoston Financial Corporation. As a result of the merger, Columbia now serves as the Fund's investment advisor. The merger did not change the way the Fund is managed, the investment personnel assigned to manage the Fund or the fees paid by the Fund. INVESTMENT ADVISORY FEE--Columbia is the investment advisor to the Fund and receives a monthly fee based on the Fund's average daily net assets at the following annual rates: <Table> <Caption> AVERAGE DAILY NET ASSETS FEE RATE - ------------------------ -------- First $500 million 0.75% Next $500 million 0.70% Over $1 billion 0.65% </Table> Prior to November 1, 2003, Columbia received a monthly investment advisory fee at the annual rate of 0.75% of the Fund's average daily net assets. For the year ended December 31, 2003, the Fund's effective investment advisory fee rate was 0.75%. 77 <Page> ADMINISTRATION FEE--Columbia provides administrative and other services for a monthly fee based on the Fund's average daily net assets at the following annual rates: <Table> <Caption> AVERAGE DAILY NET ASSETS FEE RATE - ------------------------ -------- First $1 billion 0.085% Next $1.5 billion 0.078% Over $2.5 billion 0.073% </Table> For the period April 14, 2003 through October 31, 2003, Columbia was entitled to receive fees, computed daily and payable monthly, at the annual rate of 0.085% of the Fund's average daily net assets. Prior to April 14, 2003, Columbia was entitled to receive fees at current rates based on the combined average daily net assets of the funds in the Galaxy VIP Fund (the "predecessor trust"). For the year ended December 31, 2003, the Fund's effective administration fee rate was 0.085%. PRICING AND BOOKKEEPING FEES--Columbia is responsible for providing pricing and bookkeeping services to the Fund under a pricing and bookkeeping agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Corporation ("State Street"). Columbia pays fees to State Street under the Outsourcing Agreement. Columbia pays the total fees collected to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives an annual fee based on the average daily net assets of the Fund at the following annual rates: <Table> <Caption> AVERAGE DAILY NET ASSETS FEE RATE - ------------------------ ---------- Under $50 million $ 25,000 Of $50 million but less than $200 million $ 35,000 Of $200 million but less than $500 million $ 50,000 Of $500 million but less than $1 billion $ 85,000 Over $1 billion $ 125,000 </Table> The Fund also pays additional fees for pricing services. For the year ended December 31, 2003, the effective pricing and bookkeeping fee rate was 0.995%. TRANSFER AGENT FEE--Columbia Funds Services, Inc. (the "Transfer Agent"), formerly Liberty Funds Services, Inc., an affiliate of Columbia, provides shareholder services for a monthly fee at an annual rate of $5,000. Effective October 13, 2003, Liberty Funds Services, Inc. changed its name to Columbia Funds Services, Inc. DISTRIBUTION FEES--Columbia Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia, is the principal underwriter of the Fund. Prior to October 13, 2003, Columbia Funds Distributor, Inc. was known as Liberty Funds Distributor, Inc. The Fund has adopted a 12b-1 plan which requires the payment of a monthly distribution fee to the Distributor at the annual rate of 0.25% of Class B average daily net assets. FEE WAIVERS--Effective April 14, 2003, Columbia has agreed to reimburse fees at the annual rate of 0.90% of the Fund's average daily net assets. This agreement will continue until April 13, 2004, after which it may be revised or discontinued any time. Prior to April 14, 2003, Fleet Investment Advisors, Inc. and/or its affiliates and/or PFPC Inc., the former administrator, could waive all or a portion of the fees payable to them by the predecessor fund. CUSTODY CREDITS--The Fund has an agreement with its custodian bank under which custody fees may be reduced by balance credits. The Fund could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if it had not entered into such an agreement. FEES PAID TO OFFICERS AND TRUSTEES--The Fund pays no compensation to its officers, all of whom are employees of Columbia or its affiliates. The Fund's Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. NOTE 5. PORTFOLIO INFORMATION PURCHASES AND SALES OF SECURITIES--For the year ended December 31, 2003, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were $3,666,022 and $6,045,516, respectively. NOTE 6. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES INDUSTRY FOCUS--The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. LEGAL PROCEEDINGS--Columbia, the Distributor and certain of their affiliates (collectively, "the Columbia Group") have received information requests and subpoenas from various regulatory authorities, including the Securities and Exchange Commission ("SEC") and the New York Attorney General, in connection with their investigations of late trading and market timing in mutual funds. The Columbia Group has not uncovered any instances where Columbia or the Distributor was knowingly involved in late trading of mutual fund shares. The Columbia Group has identified a limited number of investors who had informal arrangements for trading certain Columbia Fund shares between 1998 and 2003. A substantial majority of the trading had ended by October 2002. None of these arrangements exists today. Information relating to those trading arrangements has been supplied to various regulatory authorities. To the extent that any Columbia Fund, 78 <Page> whose shares were involved in those trading activities, was harmed by them, the Columbia Group has undertaken to reimburse such fund. The SEC staff has issued notices to the effect that it has made a preliminary determination to recommend that the SEC bring civil enforcement actions, including injunctive proceedings, against Columbia and the Distributor, alleging that they have violated certain provisions of the federal securities laws. The Columbia Group believes that those allegations are based principally on the trading arrangements referred to above. Columbia and the Distributor are engaged in discussions with the SEC staff in an effort to reach a satisfactory resolution of these matters. However, there can be no assurance that such a resolution will be reached. Any potential resolution of these matters may include, but not be limited to, sanctions, financial penalties, damages or injunctions regarding Columbia or the Distributor, and structural changes in the conduct of their business. Although the Columbia Group does not believe that these regulatory developments or their resolution will have a material adverse effect on the Columbia Funds, or on the ability of Columbia and the Distributor to provide services to the Columbia Funds, there can be no assurance that these matters or any adverse publicity or other developments resulting from them will not result in increased redemptions or reduced sales of Columbia Fund shares, which could increase transactions costs or operating expenses, or other consequences for the Columbia Funds. NOTE 7. BUSINESS COMBINATIONS AND MERGERS FUND MERGERS--On April 14, 2003, the Crabbe Huson Real Estate Investment Fund, Variable Series merged into the Galaxy VIP Columbia Real Estate Equity Fund II, previously a fund of the Galaxy VIP Fund, a separate Massachusetts business trust. Also on April 14, 2003, the Galaxy VIP Columbia Real Estate Equity Fund II, created a Class B into which Crabbe Huson Real Estate Investment Fund, Variable Series Class B shares were reorganized. The Galaxy VIP Columbia Real Estate Equity Fund II received a tax-free transfer of assets from the Crabbe Huson Real Estate Investment Fund, Variable Series as follows: <Table> <Caption> NET ASSETS UNREALIZED SHARES ISSUED RECEIVED APPRECIATION(1) ------------- ---------- --------------- 190,385 $ 1,869,581 $ 243,393 </Table> <Table> <Caption> NET ASSETS OF NET ASSETS CRABBE HUSON OF GALAXY VIP REAL ESTATE NET ASSETS OF GALAXY COLUMBIA REAL INVESTMENT FUND, VIP COLUMBIA ESTATE EQUITY VARIABLE SERIES REAL ESTATE EQUITY FUND II PRIOR TO IMMEDIATELY FUND II IMMEDIATELY COMBINATION PRIOR TO COMBINATION AFTER COMBINATION ---------------- -------------------- -------------------- $ 998,543 $ 1,869,581 $ 2,868,124 </Table> (1) Unrealized appreciation is included in the Net Assets Received amount shown above. Also on April 14, 2003, subsequent to the merger described above, the Galaxy VIP Columbia Real Estate Equity Fund II was reorganized as the Columbia Real Estate Equity Fund, Variable Series. The accompanying statement of operations, statement of changes in net assets and financial highlights for the Fund represents the historical operations of the Galaxy VIP Columbia Real Estate Equity Fund II for periods prior to April 14, 2003. 79 <Page> FINANCIAL HIGHLIGHTS Columbia Real Estate Equity Fund, Variable Series--Class A Shares (a) Selected data for a share outstanding throughout each period is as follows: <Table> <Caption> YEAR ENDED DECEMBER 31, -------------------------------------------------------------------- 2003 2002 2001 2000 1999 ---------- ---------- ---------- ---------- ---------- NET ASSET VALUE, BEGINNING OF PERIOD $ 9.64 $ 10.11 $ 9.96 $ 8.08 $ 8.78 ---------- ---------- ---------- ---------- ---------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.11(b) 0.40 0.38 0.41 0.38 Net realized and unrealized gain (loss) on investments 3.12 (0.14) 0.07 1.86 (0.74) ---------- ---------- ---------- ---------- ---------- Total from Investment Operations 3.23 0.26 0.45 2.27 (0.36) ---------- ---------- ---------- ---------- ---------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.11) (0.32) (0.30) (0.38) (0.34) In excess of net investment income -- -- -- (0.01) -- From net realized gains (1.80) (0.41) -- -- -- ---------- ---------- ---------- ---------- ---------- Total Distributions Declared to Shareholders (1.91) (0.73) (0.30) (0.39) (0.34) ---------- ---------- ---------- ---------- ---------- NET ASSET VALUE, END OF PERIOD $ 10.96 $ 9.64 $ 10.11 $ 9.96 $ 8.08 ========== ========== ========== ========== ========== Total return (c)(d)(e) 33.69% 2.57% 4.68% 28.57% (4.13)% RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (f) 2.59% 1.78% 1.70% 1.70% 1.70% Net investment income (f) 1.05% 3.68% 3.81% 4.39% 4.84% Waiver/reimbursement 0.67% 5.85% 4.29% 4.06% 4.21% Portfolio turnover rate 152% 98% 54% 41% 33% Net assets, end of period (000's) $ 914 $ 979 $ 1,112 $ 1,092 $ 983 </Table> (a) The information shown in this table, for the periods prior to April 14, 2003, relates to shares of the Galaxy VIP Real Estate Equity Fund II, the predecessor to the Columbia Real Estate Equity Fund, Variable Series. (b) Per share data was calculated using average shares outstanding during the period. (c) Total return at net asset value assuming all distributions reinvested. (d) Had the Investment Advisor not waived or reimbursed a portion of expenses, total return would have been reduced. (e) Total return figure does not include any insurance company charges associated with a variable annuity. If included, total return would be reduced. (f) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. 80 <Page> REPORT OF INDEPENDENT AUDITORS To the Trustees of Liberty Variable Investment Trust and the Class A Shareholders of Columbia Real Estate Equity Fund, Variable Series In our opinion, the accompanying statement of assets and liabilities, including the investment portfolio, and the related statements of operations and of changes in net assets and the Class A financial highlights present fairly, in all material respects, the financial position of Columbia Real Estate Equity Fund, Variable Series (the "Fund") (formerly Galaxy VIP Columbia Real Estate Equity Fund II) (a series of Liberty Variable Investment Trust) (formerly a series of Galaxy VIP Fund) at December 31, 2003, and the results of its operations, the changes in its net assets and the Class A financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and the Class A financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with 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 audit, which included confirmation of securities at December 31, 2003 by correspondence with the custodian and brokers, provides a reasonable basis for our opinion. The financial statements and financial highlights of the Fund for periods prior to January 1, 2003 were audited by other independent accountants whose report dated February 7, 2003 expressed an unqualified opinion on those statements. PricewaterhouseCoopers LLP Boston, Massachusetts February 12, 2004 81 <Page> UNAUDITED INFORMATION FEDERAL INCOME TAX INFORMATION For the fiscal year ended December 31, 2003, the Fund designates long-term capital gains of $382,636. 82 <Page> PORTFOLIO MANAGERS' DISCUSSION Liberty All-Star Equity Fund, Variable Series / December 31, 2003 Liberty All-Star Equity Fund, Variable Series seeks total investment return, which is composed of long-term capital appreciation and current income, through investment primarily in a diversified portfolio of equity securities. The fund's investment program is based upon Liberty Asset Management Company's (LAMCO) multi-manager concept. LAMCO allocates the fund's portfolio assets on an approximately equal basis among a number of independent investment management organizations ("Portfolio Managers")--currently five in number. Each Portfolio Manager employs a different investment style. LAMCO, from time to time, rebalances the portfolio among the Portfolio Managers to maintain an approximately equal allocation of the portfolio among them throughout all market cycles. The fund's current Portfolio Managers are: - - Boston Partners Asset Management, L.P.; INVESTMENT STYLE-VALUE - - Pzena Investment Management, LLC; INVESTMENT STYLE-VALUE (replacing Oppenheimer Capital effective October 15, 2003) - - Schneider Capital Management Corporation; INVESTMENT STYLE-VALUE - - Mastrapasqua Asset Management, Inc.; INVESTMENT STYLE-GROWTH - - TCW Investment Management Company; INVESTMENT STYLE-GROWTH INVESTMENT APPROACH Instead of relying on a single investment manager, LAMCO employs a multi-management approach to the portfolio. Because investment styles go in and out of favor, a style that produces strong returns one year may produce disappointing results the next. By contrast, a multi-management approach combines managers who practice different investment styles in an attempt to reduce volatility while providing attractive returns. Liberty All-Star Equity Fund, Variable Series is structured as a core investment, combining both growth and value style managers within the fund. Using our expertise, experience and state-of-the-art tools, we select managers for the fund and evaluate them on an ongoing basis. The investment managers LAMCO selects for the fund are distinguished by the following characteristics: - - a consistent focus on a particular style of investing - - a disciplined investment decision-making process - - a record of success relative to their peers who practice the same strategy - - continuity among the investment professionals, so that those who have built the record remain the managers - - a well-managed, highly responsive organization LAMCO performs all the due diligence, research, selection and monitoring that would be expected of a professional investment management firm. LAMCO adds value by selecting best of breed managers and replacing them when necessary. 2003--A REWARDING YEAR FOR EQUITY INVESTORS In 2003, the equity markets experienced their first gain since the start of the new millennium. Extreme pessimism on the part of investors, which peaked during the fourth quarter of 2002, gave way to an increasingly optimistic outlook as the economy began to show signs of improvement. In addition, an acceleration in business spending during the second half of 2003 led investors to believe that the recovery might be sustainable. As a result, stocks that are most closely linked to the economic cycle were generally the best performers. The fund was positioned to take advantage of the improving economic and market conditions. Several of the fund's managers began to move into economically-sensitive stocks near the end of 2002, particularly in the technology sector. The timing of that decision was one of the factors that contributed to the fund's strong relative performance compared to both the S&P 500 Index and the Russell 3000 Index in 2003. Based on average annual returns, the fund also outperformed the S&P 500 Index for the 3- and 5-year periods ended December 31, 2003. The fund slightly underperformed the Russell 3000 Index for the 3-year period, but outperformed the index for the 5-year period ended December 31, 2003. Economic and market conditions frequently change. There is no assurance that the trends described here will continue or commence. The fund is intended to be a long-term investment vehicle and is not designed to provide a means of speculating on short-term stock market movements. The fund has adopted certain investment policies in managing its portfolio that are designed to maintain the diversity of the fund's investment portfolio and reduce risk. The fund may not always achieve its investment objective. The fund's investment objective and non-fundamental investment policies may be changed without shareholder approval. 83 <Page> PERFORMANCE INFORMATION Liberty All-Star Equity Fund, Variable Series / December 31, 2003 AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 2003 (%) <Table> <Caption> 1-YEAR 5-YEAR LIFE - ------------------------------------------------------------ Class A (11/17/97) 40.91 0.92 3.75 Russell 3000 Index (1) 31.06 0.37 4.39 S&P 500 Index (1) 28.68 -0.57 4.17 </Table> Inception date of share class is in parentheses. <Table> <Caption> NET ASSET VALUE PER SHARE ($) 12/31/02 12/31/03 - ---------------------------------------------------------------- Class A 7.77 10.93 </Table> [CHART] VALUE OF A $10,000 INVESTMENT, 11/17/97 - 12/31/03 Class A: $12,524 <Table> <Caption> CLASS A SHARES RUSSELL 3000 INDEX S&P 500 INDEX 11/17/1997 $ 10,000 $ 10,000 $ 10,000 11/30/1997 $ 10,000 $ 10,085 $ 10,104 12/31/1997 $ 10,080 $ 10,287 $ 10,278 1/31/1998 $ 10,030 $ 10,340 $ 10,392 2/28/1998 $ 10,900 $ 11,080 $ 11,141 3/31/1998 $ 11,421 $ 11,629 $ 11,712 4/30/1998 $ 11,522 $ 11,743 $ 11,830 5/31/1998 $ 11,212 $ 11,453 $ 11,626 6/30/1998 $ 11,462 $ 11,840 $ 12,098 7/31/1998 $ 11,221 $ 11,625 $ 11,970 8/31/1998 $ 9,469 $ 9,844 $ 10,239 9/30/1998 $ 10,080 $ 10,515 $ 10,896 10/31/1998 $ 10,821 $ 11,313 $ 11,781 11/30/1998 $ 11,351 $ 12,006 $ 12,495 12/31/1998 $ 11,962 $ 12,769 $ 13,215 1/31/1999 $ 11,982 $ 13,203 $ 13,767 2/28/1999 $ 11,561 $ 12,736 $ 13,339 3/31/1999 $ 11,963 $ 13,203 $ 13,873 4/30/1999 $ 12,677 $ 13,799 $ 14,410 5/31/1999 $ 12,496 $ 13,536 $ 14,070 6/30/1999 $ 12,988 $ 14,220 $ 14,851 7/31/1999 $ 12,456 $ 13,789 $ 14,387 8/31/1999 $ 12,073 $ 13,632 $ 14,317 9/30/1999 $ 11,782 $ 13,283 $ 13,924 10/31/1999 $ 12,275 $ 14,116 $ 14,806 11/30/1999 $ 12,395 $ 14,511 $ 15,106 12/31/1999 $ 12,976 $ 15,437 $ 15,996 1/31/2000 $ 12,550 $ 14,832 $ 15,193 2/29/2000 $ 12,404 $ 14,970 $ 14,906 3/31/2000 $ 13,653 $ 16,142 $ 16,364 4/30/2000 $ 13,466 $ 15,574 $ 15,871 5/31/2000 $ 13,497 $ 15,136 $ 15,546 6/30/2000 $ 13,570 $ 15,584 $ 15,930 7/31/2000 $ 13,445 $ 15,308 $ 15,681 8/31/2000 $ 14,371 $ 16,444 $ 16,655 9/30/2000 $ 14,064 $ 15,699 $ 15,776 10/31/2000 $ 14,285 $ 15,476 $ 15,710 11/30/2000 $ 13,170 $ 14,049 $ 14,472 12/31/2000 $ 13,800 $ 14,285 $ 14,543 1/31/2001 $ 14,000 $ 14,774 $ 15,059 2/28/2001 $ 12,879 $ 13,424 $ 13,685 3/31/2001 $ 12,024 $ 12,548 $ 12,818 4/30/2001 $ 12,989 $ 13,555 $ 13,814 5/31/2001 $ 13,067 $ 13,663 $ 13,906 6/30/2001 $ 12,834 $ 13,412 $ 13,568 7/31/2001 $ 12,534 $ 13,191 $ 13,435 8/31/2001 $ 11,746 $ 12,412 $ 12,594 9/30/2001 $ 10,427 $ 11,318 $ 11,577 10/31/2001 $ 10,871 $ 11,581 $ 11,798 11/30/2001 $ 11,884 $ 12,473 $ 12,703 12/31/2001 $ 12,031 $ 12,649 $ 12,815 1/31/2002 $ 11,792 $ 12,491 $ 12,627 2/28/2002 $ 11,358 $ 12,236 $ 12,384 3/31/2002 $ 11,997 $ 12,772 $ 12,849 4/30/2002 $ 11,358 $ 12,101 $ 12,071 5/31/2002 $ 11,084 $ 11,961 $ 11,981 6/30/2002 $ 10,011 $ 11,100 $ 11,128 7/31/2002 $ 9,075 $ 10,217 $ 10,261 8/31/2002 $ 9,087 $ 10,265 $ 10,328 9/30/2002 $ 8,048 $ 9,186 $ 9,205 10/31/2002 $ 8,779 $ 9,918 $ 10,016 11/30/2002 $ 9,612 $ 10,518 $ 10,605 12/31/2002 $ 8,888 $ 9,923 $ 9,983 1/31/2003 $ 8,682 $ 9,680 $ 9,721 2/28/2003 $ 8,602 $ 9,521 $ 9,576 3/31/2003 $ 8,740 $ 9,621 $ 9,668 4/30/2003 $ 9,484 $ 10,407 $ 10,465 5/31/2003 $ 10,331 $ 11,035 $ 11,017 6/30/2003 $ 10,376 $ 11,184 $ 11,158 7/31/2003 $ 10,708 $ 11,440 $ 11,354 8/31/2003 $ 11,109 $ 11,694 $ 11,575 9/30/2003 $ 10,880 $ 11,567 $ 11,453 10/31/2003 $ 11,681 $ 12,267 $ 12,101 11/30/2003 $ 11,932 $ 12,436 $ 12,207 12/31/2003 $ 12,524 $ 13,009 $ 12,842 </Table> PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA PROVIDED. FOR CURRENT MONTH-END PERFORMANCE INFORMATION, PLEASE CONTACT YOUR INSURANCE COMPANY. Total return performance includes changes in share price and reinvestment of all distributions. The Russell 3000 Index is an unmanaged index that tracks the performance of the 3,000 largest US companies based on total market capitalization. The S&P (Standard & Poor's) 500 Index is an unmanaged index that tracks the performance of 500 widely held, large-capitalization US stocks. Indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. Performance numbers reflect all fund expenses, but do not include any insurance charges imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. (1) Index performance is from November 17, 1997. 84 <Page> INVESTMENT PORTFOLIO Liberty All-Star Equity Fund, Variable Series / December 31, 2003 <Table> <Caption> SHARES VALUE ------------ ------------ COMMON STOCKS--96.4% CONSUMER DISCRETIONARY--14.4% AUTO COMPONENTS--0.8% Johnson Controls, Inc. 1,925 $ 223,531 Visteon Corp. 14,550 151,466 ------------ 374,997 ------------ AUTOMOBILES--0.4% Harley-Davidson, Inc. 3,350 159,226 ------------ HOTELS, RESTAURANTS & LEISURE--2.4% Carnival Corp. 4,600 182,758 Cendant Corp. (a) 8,375 186,511 Harrah's Entertainment, Inc. 4,100 204,057 Starbucks Corp. (a) 6,035 199,517 Starwood Hotels & Resorts Worldwide, Inc. 9,450 339,917 ------------ 1,112,760 ------------ HOUSEHOLD DURABLES--0.8% Newell Rubbermaid, Inc. 3,500 79,695 Whirlpool Corp. 3,850 279,703 ------------ 359,398 ------------ INTERNET & CATALOG RETAIL--2.6% Amazon.com, Inc. (a) 13,600 715,904 eBay, Inc. (a) 7,200 465,048 ------------ 1,180,952 ------------ LEISURE EQUIPMENT & PRODUCTS--0.4% Brunswick Corp. 3,050 97,081 Mattel, Inc. 4,300 82,861 ------------ 179,942 ------------ MEDIA--2.9% Comcast Corp. (a) 2,500 78,200 Fox Entertainment Group, Inc. (a) 5,000 145,750 Liberty Media Corp. (a) 47,761 567,878 Pixar, Inc. (a) 4,100 284,089 Viacom, Inc., Class B 3,250 144,235 Walt Disney Co. 3,200 74,656 ------------ 1,294,808 ------------ MULTI-LINE RETAIL--1.7% JC Penney Co., Inc. 15,450 406,026 Target Corp. 4,800 184,320 Wal-Mart Stores, Inc. 3,750 198,938 ------------ 789,284 ------------ SPECIALTY RETAIL--1.9% Gap, Inc. 8,500 197,285 Home Depot, Inc. 5,000 177,450 RadioShack Corp. 11,900 365,092 TJX Companies, Inc. 4,300 94,815 Toys "R" US, Inc. (a) 1,350 17,064 ------------ 851,706 ------------ TEXTILES, APPAREL & LUXURY GOODS--0.5% Liz Claiborne, Inc. 6,100 216,306 ------------ CONSUMER STAPLES--5.1% BEVERAGES--0.5% PepsiCo, Inc. 4,500 209,790 ------------ FOOD & DRUG RETAILING--0.8% CVS Corp. 6,100 $ 220,332 Walgreen Co. 4,500 163,710 ------------ 384,042 ------------ FOOD PRODUCTS--2.3% Archer-Daniels-Midland Co. 7,600 115,672 H.J. Heinz Co. 3,700 134,791 Sara Lee Corp. 15,250 331,078 Smithfield Foods, Inc. (a) 5,700 117,990 Tate & Lyle PLC 13,450 300,008 Tyson Foods, Inc. 3,400 45,016 ------------ 1,044,555 ------------ HOUSEHOLD PRODUCTS--0.9% Procter & Gamble Co. 4,000 399,520 ------------ TOBACCO--0.6% Altria Group, Inc. 2,750 149,655 UST, Inc. 3,700 132,053 ------------ 281,708 ------------ ENERGY--4.8% ENERGY EQUIPMENT & SERVICES--1.1% Schlumberger Ltd. 1,500 82,080 Transocean, Inc. (a) 17,000 408,170 ------------ 490,250 ------------ OIL & GAS--3.7% Ashland, Inc. 2,500 110,150 Canadian Natural Resources Ltd. 4,100 206,804 ChevronTexaco Corp. 3,400 293,726 ConocoPhillips 4,475 293,426 Kerr-McGee Corp. 9,875 459,089 Premcor, Inc. (a) 6,350 165,100 Shell Transport & Trading Co. PLC, ADR 3,100 139,593 Valero Energy Corp. 450 20,853 ------------ 1,688,741 ------------ FINANCIALS--19.0% BANKS--2.0% Comerica, Inc. 3,450 193,407 FleetBoston Financial Corp. (b) 8,000 349,200 National City Corp. 3,900 132,366 Washington Mutual, Inc. 5,950 238,714 ------------ 913,687 ------------ DIVERSIFIED FINANCIALS--7.2% Charles Schwab Corp. 28,185 333,710 CIT Group, Inc. 20,400 733,380 Citigroup, Inc. 3,999 194,111 Countrywide Financial Corp. 3,500 265,475 Fannie Mae 2,850 213,921 Freddie Mac 15,550 906,876 Goldman Sachs Group, Inc. 1,700 167,841 Merrill Lynch & Co., Inc. 4,700 275,655 Morgan Stanley 3,000 173,610 ------------ 3,264,579 ------------ </Table> See Notes to Investment Portfolio. 85 <Page> <Table> <Caption> SHARES VALUE ------------ ------------ INSURANCE--9.4% ACE Ltd. 10,200 $ 422,484 AFLAC, Inc. 6,250 226,125 Allstate Corp. 5,225 224,779 American International Group, Inc. 2,400 159,072 AON Corp. 13,725 328,577 Berkshire Hathaway, Inc., Class B (a) 115 323,725 Loews Corp. 8,000 395,600 MBIA, Inc. 3,500 207,305 Metlife, Inc. 5,375 180,976 Nationwide Financial Services, Inc. 300 9,918 Progressive Corp. 10,560 882,711 Radian Group, Inc. 3,250 158,438 Torchmark Corp. 4,875 222,007 Travelers Property Casualty Corp. 14,200 238,276 XL Capital Ltd. 3,650 283,057 ------------ 4,263,050 ------------ REAL ESTATE-- 0.4% St. Joe Co. 4,350 162,212 ------------ HEALTH CARE--13.0% BIOTECHNOLOGY--5.9% Amgen, Inc. (a) 10,100 624,180 Biogen Idec, Inc. (a) 3,900 143,442 Cephalon, Inc. (a) 2,800 135,548 Genentech, Inc. (a) 9,170 858,037 Genzyme Corp. (a) 6,000 296,040 Invitrogen Corp. (a) 4,100 287,000 MedImmune, Inc. (a) 12,800 325,120 ------------ 2,669,367 ------------ HEALTH CARE EQUIPMENT & SUPPLIES--0.8% Alcon, Inc. 2,450 148,323 Baxter International, Inc. 1,050 32,046 Fisher Scientific International, Inc. 4,000 165,480 ------------ 345,849 ------------ HEALTH CARE PROVIDERS & SERVICES--3.4% Aetna, Inc. 8,550 577,809 AmerisourceBergen Corp. 4,000 224,600 Cigna Corp. 7,900 454,250 Tenet Healthcare Corp. (a) 18,625 298,931 ------------ 1,555,590 ------------ PHARMACEUTICALS--2.9% Bristol-Myers Squibb Co. 7,000 200,200 Eli Lilly & Co. 4,400 309,452 Pfizer, Inc. 13,020 459,997 Schering-Plough Corp. 10,150 176,509 Shire Pharmaceuticals Group PLC (a) 5,300 153,965 ------------ 1,300,123 ------------ INDUSTRIALS--8.7% AEROSPACE & DEFENSE--2.8% Boeing Co. 23,925 1,008,199 Lockheed Martin Corp. 5,100 $ 262,140 ------------ 1,270,339 ------------ AIR FREIGHT & LOGISTICS--0.9% Expeditors International of Washington, Inc. 4,500 169,470 FedEx Corp. 1,200 81,000 Ryder System, Inc. 4,400 150,260 ------------ 400,730 ------------ AIRLINES--0.6% Delta Air Lines, Inc. 2,700 31,887 Southwest Airlines Co. 13,850 223,539 ------------ 255,426 ------------ INDUSTRIAL CONGLOMERATES--2.1% General Electric Co. 4,700 145,606 Tyco International Ltd. 29,750 788,375 ------------ 933,981 ------------ MACHINERY--0.6% Navistar International Corp. (a) 5,250 251,422 PACCAR, Inc. 500 42,560 ------------ 293,982 ------------ ROAD & RAIL--1.7% CSX Corp. 7,250 260,565 Swift Transportation Co., Inc. (a) 6,050 127,171 Union Pacific Corp. 3,525 244,917 Werner Enterprises, Inc. 6,787 132,279 ------------ 764,932 ------------ INFORMATION TECHNOLOGY--22.9% COMMUNICATIONS EQUIPMENT--1.7% Cisco Systems, Inc. (a) 25,200 612,108 QUALCOMM, Inc. 3,200 172,576 ------------ 784,684 ------------ COMPUTERS & PERIPHERALS--3.6% Dell, Inc. (a) 9,300 315,828 EMC Corp. (a) 16,100 208,012 Hewlett-Packard Co. 15,800 362,926 Network Appliance, Inc. (a) 23,970 492,104 Seagate Technology (a) 6,500 122,850 Sun Microsystems, Inc. (a) 29,200 131,108 ------------ 1,632,828 ------------ ELECTRONIC EQUIPMENT & INSTRUMENTS--3.8% Agilent Technologies, Inc. (a) 17,100 500,004 Arrow Electronics, Inc. (a) 800 18,512 Avnet, Inc. (a) 14,700 318,402 Jabil Circuit, Inc. (a) 6,700 189,610 Sanmina-SCI Corp. (a) 36,750 463,418 Waters Corp. (a) 6,000 198,960 ------------ 1,688,906 ------------ INTERNET SOFTWARE & SERVICES--1.1% Yahoo! Inc. (a) 10,800 487,836 ------------ </Table> See Notes to Investment Portfolio. 86 <Page> <Table> <Caption> SHARES VALUE ------------ ------------ INFORMATION TECHNOLOGY CONSULTING & SERVICES--0.9% Accenture Ltd., Class A (a) 6,500 $ 171,080 Electronic Data Systems Corp. 9,400 230,676 ------------ 401,756 ------------ OFFICE ELECTRONICS--1.1% Xerox Corp. (a) 36,700 506,460 ------------ SEMICONDUCTOR EQUIPMENT & PRODUCTS--7.3% Analog Devices, Inc. 5,000 228,250 Applied Materials, Inc. (a) 33,100 743,095 Intel Corp. 17,800 573,160 Maxim Integrated Products, Inc. 9,800 488,040 Micron Technology, Inc. (a) 14,900 200,703 Novellus Systems, Inc. (a) 5,000 210,250 Teradyne, Inc. (a) 10,100 257,045 Texas Instruments, Inc. 8,700 255,606 Xilinx, Inc. (a) 8,500 329,290 ------------ 3,285,439 ------------ SOFTWARE--3.4% BMC Software, Inc. (a) 9,900 184,635 Computer Associates International, Inc. 11,875 324,662 Microsoft Corp. 16,015 441,053 Oracle Corp. (a) 23,300 307,560 Symantec Corp. (a) 2,000 69,300 VERITAS Software Corp. (a) 5,600 208,096 ------------ 1,535,306 ------------ MATERIALS--3.8% CHEMICALS--1.3% Dow Chemical Co. 4,000 166,280 IMC Global, Inc. 24,050 238,816 Monsanto Co. 6,382 183,674 ------------ 588,770 ------------ CONTAINERS & PACKAGING--0.5% Smurfit-Stone Container Corp. (a) 12,300 228,411 ------------ METALS & MINING--1.5% Alcan, Inc. 5,450 255,877 CONSOL Energy, Inc. 6,700 173,530 Freeport-McMoRan Copper & Gold, Inc. 350 14,745 Nucor Corp. 450 25,200 United States Steel Corp. 6,250 218,875 ------------ 688,227 ------------ PAPER & FOREST PRODUCTS--0.5% Abitibi-Consolidated, Inc. 20,400 165,444 International Paper Co. 900 38,799 Weyerhaeuser Co. 50 3,200 ------------ 207,443 ------------ TELECOMMUNICATION SERVICES--2.7% DIVERSIFIED TELECOMMUNICATION SERVICES--1.8% BellSouth Corp. 11,325 $ 320,497 CenturyTel, Inc. 6,000 195,720 SBC Communications, Inc. 11,600 302,412 ------------ 818,629 ------------ WIRELESS TELECOMMUNICATION SERVICES--0.9% AT&T Wireless Services, Inc. (a) 52,500 419,475 ------------ UTILITIES--2.0% ELECTRIC UTILITIES--1.8% PG&E Corp. (a) 14,300 397,111 Reliant Resources, Inc. (a) 31,650 232,944 Wisconsin Energy Corp. 5,300 177,285 ------------ 807,340 ------------ MULTI-UTILITIES & UNREGULATED POWER--0.2% Scana Corp. 2,375 81,344 ------------ TOTAL COMMON STOCKS (cost of $41,261,784) 43,574,686 ------------ <Caption> PAR ------------ CONVERTIBLE BONDS--0.6% INFORMATION TECHNOLOGY--0.1% TELECOMMUNICATIONS EQUIPMENT--0.1% Corning, Inc. 3.500%, 01/31/06 $ 38,000 47,073 ------------ MATERIALS--0.5% METALS & MINING--0.5% Freeport McMoRan Copper & Gold, Inc. 8.250%, 01/31/06 77,000 228,786 ------------ TOTAL CONVERTIBLE BONDS (cost of $159,116) 275,859 ------------ <Caption> SHARES ------------ INVESTMENT MANAGEMENT COMPANY--0.9% iShares Russell 1000 Value Index Fund (cost of $344,483) 6,550 382,323 ------------ </Table> See Notes to Investment Portfolio. 87 <Page> <Table> <Caption> PAR VALUE ------------ ------------ SHORT-TERM OBLIGATION--3.3% Repurchase agreement with State Street Bank & Trust Co., dated 12/31/03, due 01/02/04 at 0.780%, collateralized by U.S. Treasury Bonds with various maturities to 02/15/27, market value $1,548,756 (repurchase proceeds $1,506,065) (cost of $1,506,000) $ 1,506,000 $ 1,506,000 ------------ TOTAL INVESTMENTS--101.2% (cost of $43,271,383) (c) 45,738,868 ------------ OTHER ASSETS & LIABILITIES, NET--(1.2)% (551,071) ------------ NET ASSETS--100.0% $ 45,187,797 ============ </Table> NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing. (b) Investments in Affiliates during the year ended December 31, 2003: Security Name: FleetBoston Financial Corp., the parent company of the Investment Advisor. <Table> Shares as of 12/31/02: 12,000 Shares sold: 4,000 Shares as of 12/31/03: 8,000 Net realized loss: $ (7,913) Dividend income earned: $ 15,400 Value at end of period: $ 349,200 </Table> (c) Cost for federal income tax purposes is $43,807,913. <Table> ACRONYM NAME ------- ---- ADR American Depositary Receipt </Table> See Notes to Financial Statements. 88 <Page> STATEMENT OF ASSETS & LIABILITIES Liberty All-Star Equity Fund, Variable Series / December 31, 2003 <Table> <Caption> ASSETS: Investments, at cost $ 43,271,383 ---------------- Investments, at value $ 45,738,868 Cash 2,634 Receivable for: Investments sold 189,257 Fund shares sold 37,523 Interest 3,100 Dividends 47,615 Expense reimbursement due from Investment Advisor/Distributor 7,910 Deferred Trustees' compensation plan 4,562 ---------------- TOTAL ASSETS 46,031,469 ---------------- LIABILITIES: Payable for: Investments purchased 188,000 Fund shares repurchased 580,828 Investment advisory fee 31,191 Transfer agent fee 626 Pricing and bookkeeping fees 833 Audit fee 29,630 Custody fee 3,561 Distribution fee--Class B 985 Deferred Trustees' fees 4,562 Other liabilities 3,456 ---------------- TOTAL LIABILITIES 843,672 ---------------- NET ASSETS $ 45,187,797 ================ COMPOSITION OF NET ASSETS: Paid-in capital $ 49,440,718 Overdistributed net investment income (4,430) Accumulated net realized loss (6,715,989) Net unrealized appreciation on: Investments 2,467,485 Foreign currency translations 13 ---------------- NET ASSETS $ 45,187,797 ================ CLASS A: Net assets $ 40,278,207 Shares outstanding 3,686,275 ================ Net asset value per share $ 10.93 ================ CLASS B: Net assets $ 4,909,590 Shares outstanding 449,181 ================ Net asset value per share $ 10.93 ================ </Table> See Notes to Financial Statements. 89 <Page> STATEMENT OF OPERATIONS Liberty All-Star Equity Fund, Variable Series For the Year Ended December 31, 2003 <Table> INVESTMENT INCOME: Dividends $ 432,446 Interest 17,467 ---------------- Total Investment Income (net of foreign taxes withheld of $3,591) 449,913 ---------------- EXPENSES: Investment advisory fee 299,665 Distribution fee--Class B 8,500 Pricing and bookkeeping fees 13,728 Transfer agent fee 7,500 Trustees' fees 6,433 Custody fee 39,498 Audit fee 34,655 Other expenses 15,693 ---------------- Total Expenses 425,672 Fees and expenses waived or reimbursed by Investment Advisor (41,706) Fees reimbursed by Distributor--Class B (8,500) Custody earnings credit (601) ---------------- Net Expenses 374,865 ---------------- Net Investment Income 75,048 ---------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: Net realized gain (loss) on: Investments (697,388) Foreign currency transactions 5 ---------------- Net realized loss (697,383) ---------------- Net change in unrealized appreciation/depreciation on: Investments 13,634,002 Foreign currency translations 18 ---------------- Net change in unrealized appreciation/depreciation 13,634,020 ---------------- Net Gain 12,936,637 ---------------- Net Increase in Net Assets from Operations $ 13,011,685 ================ </Table> See Notes to Financial Statements. 90 <Page> STATEMENT OF CHANGES IN NET ASSETS Liberty All-Star Equity Fund, Variable Series <Table> <Caption> YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, INCREASE (DECREASE) IN NET ASSETS: 2003 2002 - --------------------------------- ------------ ------------ OPERATIONS: Net investment income $ 75,048 $ 63,580 Net realized loss on investments (697,383) (4,338,083) Net change in unrealized appreciation/depreciation on investments and foreign currency 13,634,020 (9,538,018) ------------ ------------ Net Increase (Decrease) from Operations 13,011,685 (13,812,521) ------------ ------------ DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income: Class A (69,041) (65,711) Class B (8,010) (6,028) ------------ ------------ Total Distributions Declared to Shareholders (77,051) (71,739) ------------ ------------ SHARE TRANSACTIONS: Class A: Subscriptions 2,507,877 1,891,429 Distributions reinvested 69,041 65,711 Redemptions (5,387,913) (10,155,230) ------------ ------------ Net Decrease (2,810,995) (8,198,090) ------------ ------------ Class B: Subscriptions 1,451,464 665,510 Distributions reinvested 8,010 6,028 Redemptions (645,149) (965,793) ------------ ------------ Net Increase (Decrease) 814,325 (294,255) ------------ ------------ Net Decrease from Share Transactions (1,996,670) (8,492,345) ------------ ------------ Total Increase (Decrease) in Net Assets 10,937,964 (22,376,605) NET ASSETS: Beginning of period 34,249,833 56,626,438 ------------ ------------ End of period (including overdistributed net investment income of $(4,430) and $(3,895), respectively) $ 45,187,797 $ 34,249,833 ============ ============ CHANGES IN SHARES: Class A: Subscriptions 259,645 233,321 Issued for distributions reinvested 6,324 8,478 Redemptions (610,562) (1,168,100) ------------ ------------ Net Decrease (344,593) (926,301) ------------ ------------ Class B: Subscriptions 147,692 70,849 Issued for distributions reinvested 733 777 Redemptions (73,508) (113,272) ------------ ------------ Net Increase (Decrease) 74,917 (41,646) ------------ ------------ </Table> See Notes to Financial Statements. 91 <Page> NOTES TO FINANCIAL STATEMENTS Liberty All-Star Equity Fund, Variable Series / December 31, 2003 NOTE 1. ORGANIZATION Liberty All-Star Equity Fund, Variable Series (the "Fund"), a series of Liberty Variable Investment Trust (the "Trust") is a diversified portfolio. The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. INVESTMENT GOAL--The Fund seeks total investment return comprised of long-term capital appreciation and current income, through investments primarily in a diversified portfolio of equity securities. FUND SHARES--The Fund may issue an unlimited number of shares and offers two classes of shares: Class A and Class B. Each share class has its own expense structure. Shares of the Fund are available exclusively as a pooled funding vehicle for variable annuity contracts ("VA Contracts") and Variable Life Insurance Policies ("VLI Policies") offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies"). The Participating Insurance Companies and their separate accounts own all the shares of the Fund. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES--The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION--Equity securities are valued at the last sale price at the close of the principal exchange on which they trade. Unlisted securities or listed securities for which there were no sales during the day are valued at the closing bid price on such exchanges or over-the-counter markets. Debt securities generally are valued by a pricing service approved by the Trust's Board of Trustees, based upon market transactions for normal, institutional-size trading units of similar securities. The services may use various pricing techniques, which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as broker quotes. Debt securities for which quotations are readily available are valued at an over-the-counter or exchange bid quotation. Short-term obligations maturing within 60 days are valued at amortized cost, which approximates market value. Investments in other investment companies are valued at net asset value. Investments for which market quotations are not readily available are valued at fair value as determined in good faith under consistently applied procedures established by and under the general supervision of the Board of Trustees. SECURITY TRANSACTIONS--Security transactions are accounted for on the trade date. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. REPURCHASE AGREEMENTS--The Fund may engage in repurchase agreement transactions with institutions that the Fund's investment advisor has determined are creditworthy. The Fund, through its custodian, receives delivery of underlying securities collateralizing a repurchase agreement. Collateral is at least equal, at all times, to the value of the repurchase obligation including interest. A repurchase agreement transaction involves certain risks in the event of default or insolvency of the counterparty. These risks include possible delays or restrictions upon the Fund's ability to dispose of the underlying securities and a possible decline in the value of the underlying securities during the period while the Fund seeks to assert its rights. INCOME RECOGNITION--Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date. FOREIGN CURRENCY TRANSACTIONS--The values of all assets and liabilities quoted in foreign currencies are translated into U.S. dollars at that day's exchange rates. Net realized and unrealized gains (losses) on foreign currency transactions include gains (losses) arising from the fluctuation in exchange rates between trade and settlement dates on securities transactions, gains (losses) arising from the disposition of foreign currency and currency gains (losses) between the accrual and payment dates on dividends, interest income and foreign withholding taxes. The Fund does not distinguish that portion of gains (losses) on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the investments. Such fluctuations are included with the net realized and unrealized gains (losses) on investments. DETERMINATION OF CLASS NET ASSET VALUES--All income, expenses (other than class-specific expenses, as shown on the Statement of Operations), and realized and unrealized gains (losses) are allocated to each class of the Fund on a daily basis, based on the relative net assets of each class, for purposes of determining the net asset value of each class. 92 <Page> FEDERAL INCOME TAX STATUS--The Fund intends to qualify each year as a "regulated investment company" under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its taxable income, if any, for its tax year, and as such will not be subject to federal income taxes. In addition, by distributing in each calendar year substantially all of its net investment income, capital gains and certain other amounts, if any, the Fund will not be subject to federal excise tax. Therefore, no federal income or excise tax provision is recorded. DISTRIBUTIONS TO SHAREHOLDERS--Distributions to shareholders are recorded on ex-date. Net realized capital gains, if any, are distributed at least annually. Income and capital gains dividends are determined in accordance with income tax regulations which may differ from GAAP. All dividends and distributions are reinvested in additional shares of the Fund at net asset value as of the record date of the distribution. NOTE 3. FEDERAL TAX INFORMATION The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund's capital accounts for permanent tax differences to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. For the year ended December 31, 2003, permanent differences resulting primarily from differing treatments for foreign currency and distributions in excess were identified and reclassified among the components of the Fund's net assets as follows: <Table> <Caption> OVERDISTRIBUTED NET INVESTMENT ACCUMULATED NET PAID-IN INCOME REALIZED LOSS CAPITAL --------------- --------------- --------- $ 1,468 $ (5) $ (1,463) </Table> Net investment income and net realized gains (losses), as disclosed on the Statement of Operations, and net assets were not affected by this reclassification. The tax character of distributions paid during the years ended December 31, 2003 and December 31, 2002 was as follows: <Table> <Caption> DECEMBER 31, DECEMBER 31, 2003 2002 ------------ ------------ Distributions paid from: Ordinary Income* $ 77,051 $ 71,739 Long-Term Capital Gains -- -- </Table> * For tax purposes short-term capital gains distributions, if any, are considered ordinary income distributions. As of December 31, 2003, the components of distributable earnings on a tax basis were as follows: <Table> <Caption> UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM NET UNREALIZED INCOME CAPITAL GAINS APPRECIATION* -------------- --------------- ------------- $ -- $ -- $ 1,930,955 </Table> * The differences between book-basis and tax-basis net unrealized appreciation/depreciation are primarily due to deferral of losses from wash sales. Unrealized appreciation and depreciation at December 31, 2003, based on cost of investments for federal income tax purposes was: <Table> Unrealized appreciation $ 6,372,753 Unrealized depreciation (4,441,798) ------------ Net unrealized appreciation $ 1,930,955 ============ </Table> The following capital loss carryforwards are available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: <Table> <Caption> YEAR OF CAPITAL LOSS EXPIRATION CARRYFORWARD ---------- ------------ 2009 $ 524,787 2010 3,157,493 2011 2,497,179 ----------- $ 6,179,459 =========== </Table> No capital loss carryforwards were utilized and/or expired during the year ended December 31, 2003 for the Fund. Expired capital loss carryforwards are recorded as a reduction of paid-in capital. NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES INVESTMENT ADVISOR MERGER--On April 1, 2003, Liberty Advisory Services Corp., the previous investment advisor to the Fund, merged into Columbia Management Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co. Columbia is an indirect, wholly owned subsidiary of FleetBoston Financial Corporation. As a result of the merger, Columbia now serves as the Fund's investment advisor. The merger did not change the way the Fund is managed, the investment personnel assigned to manage the Fund or the fees paid by the Fund. INVESTMENT ADVISORY FEE--Columbia is the investment advisor to the Fund and provides administrative and other services. Columbia receives a monthly fee based on the Fund's average daily net assets at the following annual rates: <Table> <Caption> AVERAGE DAILY NET ASSETS FEE RATE - ------------------------ -------- First $500 million 0.80% Next $500 million 0.75% Over $1 billion 0.70% </Table> 93 <Page> Prior to November 1, 2003, Columbia received a monthly investment advisory fee at the annual rate of 0.80% of the Fund's average daily net assets. For the year ended December 31, 2003, the Fund's effective investment advisory fee rate was 0.80%. SUB-ADVISORY FEE--Liberty Asset Management Company ("LAMCO") has been retained by Columbia as sub-advisor to the Fund. As the sub-advisor, LAMCO is responsible for daily investment operations, including placing all orders for the purchase and sale of portfolio securities for the fund. Columbia, out of the management fee it receives, pays LAMCO a monthly sub-advisory fee at an annual rate of 0.60% of the Fund's average daily net assets. Under Portfolio Management Agreements, LAMCO pays each Portfolio Manager a portfolio management fee based on the portion of the investment portfolio on which they manage. The portfolio management fee is paid from the sub-advisory fees collected by LAMCO and is equal to 0.30% annually of the portion of the Fund's average daily net assets assigned to the given portfolio manager. PRICING AND BOOKKEEPING FEES--Columbia is responsible for providing pricing and bookkeeping services to the Fund under a pricing and bookkeeping agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Corporation ("State Street"). Columbia pays the total fees collected to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual flat fee of $10,000 paid monthly, and in any month that the Fund's average daily net assets exceed $50 million, an additional monthly fee. The additional fee rate is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. This rate is applied to the average daily net assets of the Fund for that month. The Fund also pays additional fees for pricing services. For the year ended December 31, 2003, the effective pricing and bookkeeping fee rate was 0.037%. TRANSFER AGENT FEE--Columbia Funds Services, Inc. (the "Transfer Agent"), formerly Liberty Funds Services, Inc., an affiliate of Columbia, provides shareholder services for a monthly fee at an annual rate of $7,500. Effective October 13, 2003, Liberty Funds Services, Inc. changed its name to Columbia Funds Services, Inc. DISTRIBUTION FEES--Columbia Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia, is the principal underwriter of the Fund. Prior to October 13, 2003, Columbia Funds Distributor, Inc. was known as Liberty Funds Distributor, Inc. The Fund has adopted a 12b-1 plan which requires the payment of a monthly distribution fee to the Distributor at the annual rate of 0.25% of Class B average daily net assets. FEE WAIVERS--Columbia and the Distributor have voluntarily agreed to waive fees and reimburse the Fund for certain expenses so that total expenses (exclusive of brokerage commissions, interest, taxes and extraordinary expenses, if any) would not exceed 1.00% annually of the Fund's average daily net assets. The Distributor will first reimburse the Class B distribution fee up to 0.25% annually to reach the 1.00% limit on Class B expenses. If additional reimbursement is needed to meet the limit for each class, Columbia will then reimburse other expenses to the extent necessary. If additional reimbursement is still needed in order to reach the expense limit, Columbia will then waive a portion of its investment advisory fee to the extent necessary. Columbia or the Distributor, at their discretion, may revise or discontinue this arrangement any time. CUSTODY CREDITS--The Fund has an agreement with its custodian bank under which custody fees may be reduced by balance credits. The Fund could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if it had not entered into such an agreement. FEES PAID TO OFFICERS AND TRUSTEES--The Fund pays no compensation to its officers, all of whom are employees of Columbia or its affiliates. The Fund's Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. NOTE 5. PORTFOLIO INFORMATION PURCHASES AND SALES OF SECURITIES--For the year ended December 31, 2003, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were $23,403,029 and $25,834,856, respectively. NOTE 6. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES INDUSTRY FOCUS--The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. LEGAL PROCEEDINGS--Columbia, the Distributor and certain of their affiliates (collectively, "the Columbia Group") have received information requests and subpoenas from various regulatory authorities, including the Securities and Exchange Commission ("SEC") and the New York Attorney General, in connection with their investigations of late trading and market timing in mutual funds. The 94 <Page> Columbia Group has not uncovered any instances where Columbia or the Distributor was knowingly involved in late trading of mutual fund shares. The Columbia Group has identified a limited number of investors who had informal arrangements for trading certain Columbia Fund shares between 1998 and 2003. A substantial majority of the trading had ended by October 2002. None of these arrangements exists today. Information relating to those trading arrangements has been supplied to various regulatory authorities. To the extent that any Columbia Fund, whose shares were involved in those trading activities, was harmed by them, the Columbia Group has undertaken to reimburse such fund. The SEC staff has issued notices to the effect that it has made a preliminary determination to recommend that the SEC bring civil enforcement actions, including injunctive proceedings, against Columbia and the Distributor, alleging that they have violated certain provisions of the federal securities laws. The Columbia Group believes that those allegations are based principally on the trading arrangements referred to above. Columbia and the Distributor are engaged in discussions with the SEC staff in an effort to reach a satisfactory resolution of these matters. However, there can be no assurance that such a resolution will be reached. Any potential resolution of these matters may include, but not be limited to, sanctions, financial penalties, damages or injunctions regarding Columbia or the Distributor, and structural changes in the conduct of their business. Although the Columbia Group does not believe that these regulatory developments or their resolution will have a material adverse effect on the Columbia Funds, or on the ability of Columbia and the Distributor to provide services to the Columbia Funds, there can be no assurance that these matters or any adverse publicity or other developments resulting from them will not result in increased redemptions or reduced sales of Columbia Fund shares, which could increase transactions costs or operating expenses, or other consequences for the Columbia Funds. NOTE 7. SUBSEQUENT EVENT On February 11, 2004, the Board of Trustees of the Fund voted to liquidate the Fund. The effective date of the liquidation is expected to be no later than May 1, 2004 95 <Page> FINANCIAL HIGHLIGHTS Liberty All-Star Equity Fund, Variable Series--Class A Shares Selected data for a share outstanding throughout each period is as follows: <Table> <Caption> YEAR ENDED DECEMBER 31, ----------------------------------------------------------------------- 2003 2002 2001 2000 1999 ---------- ---------- ---------- ---------- ---------- NET ASSET VALUE, BEGINNING OF PERIOD $ 7.77 $ 10.54 $ 12.43 $ 12.47 $ 11.90 ---------- ---------- ---------- ---------- ---------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (a) 0.02 0.01 0.03 0.05 0.06 Net realized and unrealized gain (loss) on investments and foreign currency 3.16 (2.76) (1.66) 0.75 0.94 ---------- ---------- ---------- ---------- ---------- Total from Investment Operations 3.18 (2.75) (1.63) 0.80 1.00 ---------- ---------- ---------- ---------- ---------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.02) (0.02) (0.03) (0.05) (0.05) From net realized gains -- -- (0.23) (0.79) (0.38) ---------- ---------- ---------- ---------- ---------- Total Distributions Declared to Shareholders (0.02) (0.02) (0.26) (0.84) (0.43) ---------- ---------- ---------- ---------- ---------- NET ASSET VALUE, END OF PERIOD $ 10.93 $ 7.77 $ 10.54 $ 12.43 $ 12.47 ========== ========== ========== ========== ========== Total return (b)(c) 40.91%(d) (26.13)%(d) (12.81)% 6.35%(d) 8.47% RATIOS TO AVERAGE NET ASSETS/ SUPPLEMENTAL DATA: Expenses (e) 1.00% 1.00% 1.00% 0.98% 0.95% Net investment income (e) 0.20% 0.14% 0.26% 0.37% 0.47% Waiver/reimbursement 0.11% 0.04% -- 0.02% -- Portfolio turnover rate 64% 84% 62% 97% 75% Net assets, end of period (000's) $ 40,278 $ 31,339 $ 52,245 $ 69,249 $ 80,095 </Table> (a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested. (c) Total return figure does not include any insurance company charges associated with a variable annuity. If included, total return would be reduced. (d) Had the Investment Advisor not waived or reimbursed a portion of expenses, total return would have been reduced. (e) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. 96 <Page> REPORT OF INDEPENDENT AUDITORS To the Trustees of Liberty Variable Investment Trust and the Class A Shareholders of Liberty All-Star Equity Fund, Variable Series In our opinion, the accompanying statement of assets and liabilities, including the investment portfolio, and the related statements of operations and of changes in net assets and the Class A financial highlights present fairly, in all material respects, the financial position of Liberty All-Star Equity Fund, Variable Series (the "Fund") (a series of Liberty Variable Investment Trust) at December 31, 2003, and the results of its operations, the changes in its net assets and the Class A financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and the Class A financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund'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 December 31, 2003 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts February 12, 2004 97 <Page> UNAUDITED INFORMATION FEDERAL INCOME TAX INFORMATION 98.10% of the ordinary income distributed by the Fund, for the year ended December 31, 2003, qualifies for the corporate dividends received deduction. 98 <Page> PORTFOLIO MANAGERS' DISCUSSION Liberty Equity Fund, Variable Series / December 31, 2003 Liberty Equity Fund, Variable Series seeks long-term growth by investing in companies that the fund's investment advisor believes have above-average earnings potential. Paul Berlinguet and Ed Hickey have co-managed the fund since October 2003. Mr. Berlinguet is co head of the large cap growth team for Columbia Management Advisors, Inc. Ed Hickey has been with Columbia Management Advisors, Inc. or its predecessor since 1998. Prior to October 2003, Robert G. Armknecht, CFA, was the fund's portfolio manager. In a year that was generally strong for the US stock market, the portfolio delivered solid double-digit returns. Consumer cyclical, health care and industrial stocks all made positive contributions to performance. However, the portfolio lagged its benchmark for the year, in part because some of its investments in biotechnology and technology were disappointments. STOCKS BOOSTED BY PROFIT GROWTH, GLOBAL RECOVERY US stocks fell in the first quarter of 2003 but more than made up for those losses by the end of the year. As the year progressed, and as concerns about the war in Iraq eased, it became clear that the economy and corporate profits were getting stronger. Stocks also benefited from a mid-year cut in short-term interest rates and an accelerated reduction in federal income tax rates. A synchronized global recovery, which included Japan, China, India and Europe, provided additional fuel for US markets and also helped overseas stock markets advance. Consistent with historical patterns, the stocks of smaller, more speculative companies outperformed those of larger, more-established companies during the early stages of the current economic recovery. POSITIVE CONTRIBUTIONS FROM CONSUMER, HEALTH CARE AND INDUSTRIAL STOCKS In health care, Teva Pharmaceutical Industries Ltd., which makes generic drugs, and Boston Scientific Corp., a medical device manufacturer, made positive contributions to performance (1.6% and 1.3% of net assets, respectively). Among industrial stocks, the fund's investments in United Technologies Corp., General Electric Co. and Illinois Tool Works, Inc. also aided performance (2.6%, 3.1% and 1.9% of net assets, respectively). During this period, consumer cyclical companies benefited from a gradual increase in consumer confidence. Lowe's Companies, Inc. and Bed Bath & Beyond, Inc. capitalized on this environment (1.6% and 1.1% of net assets, respectively). Although technology stocks led the market's advance, stock selection dampened the fund's returns from its technology holdings. Microsoft Corp. (4.6% of net assets) continued to suffer from concerns about its near-term business prospects. In the biotechnology industry, Amgen, Inc. shares (0.9% of net assets) declined in price because investors were concerned about government reimbursement for some of its drugs, particularly those that treat anemia in cancer patients. However, we have confidence in the growth prospects for each company. Microsoft is expected to benefit from a corporate PC upgrade cycle in 2004. We are also confident that government reimbursement on Amgen's drugs will be satisfactory and that the company's growth has the potential to result in a positive surprise. INCREASED EXPOSURE TO INDUSTRIAL AND CONSUMER CYCLICAL STOCKS In the second half of the year, we raised the fund's exposure to industrial and consumer cyclical stocks by increasing our positions in General Electric and Illinois Tool Works, Inc. Earlier in the year, we added Lexmark International, Inc., which makes computer printers (0.6% of net assets). We believe Lexmark has the potential to benefit from a partnership with Dell, Inc., which we also added to the portfolio (2.0% of net assets). All of these additions made positive contributions to the fund's returns. IMPROVING ECONOMIC ENVIRONMENT IS FAVORABLE FOR STOCKS Following three difficult years, the stock market posted a remarkable turnaround in 2003 as the S&P 500 gained 28.68%. While we do not expect that performance to be repeated in the coming year, we think improved world economic growth will continue to aid the US and world stock markets. We also believe that certain areas of technology and health care have the potential to continue to exceed expectations. As a result, we have increased the fund's exposure to technology and to some of the higher-growth areas of health care, such as generic drugs and medical devices. We have reduced our exposure to energy and banking, based on our belief that these sectors have below-average growth potential. Economic and market conditions frequently change. There is no assurance that the trends described here will continue or commence. An investment in the fund offers the potential for long-term growth, but also involves certain risks, including stock market fluctuations due to economic and business development. The fund's approach offers the potential for long-term growth, but also involves the possibility of losses due to the sensitivity of growth stock prices to changes in current or expected earnings. Holdings are disclosed as of December 31, 2003, and are subject to change. 99 <Page> PERFORMANCE INFORMATION Liberty Equity Fund, Variable Series / December 31, 2003 AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 2003 (%) <Table> <Caption> 1-YEAR 5-YEAR 10-YEAR - -------------------------------------------------------------- Class A (1/11/93) 24.14 -1.70 8.72 S&P 500 Index 28.68 -0.57 11.07 </Table> Inception date of share class is in parentheses. <Table> <Caption> NET ASSET VALUE PER SHARE ($) 12/31/02 12/31/03 - ------------------------------------------------------- Class A 11.56 14.30 </Table> [CHART] VALUE OF A $10,000 INVESTMENT, 1/1/94 - 12/31/03 Class A: $23,075 <Table> <Caption> CLASS A SHARES S&P 500 INDEX 1/1/1994 $ 10,000 $ 10,000 1/31/1994 $ 10,293 $ 10,340 2/28/1994 $ 10,137 $ 10,059 3/31/1994 $ 9,844 $ 9,620 4/30/1994 $ 9,922 $ 9,743 5/31/1994 $ 10,128 $ 9,903 6/30/1994 $ 9,932 $ 9,660 7/31/1994 $ 10,139 $ 9,977 8/31/1994 $ 10,494 $ 10,386 9/30/1994 $ 10,290 $ 10,132 10/31/1994 $ 10,528 $ 10,360 11/30/1994 $ 10,271 $ 9,983 12/31/1994 $ 10,348 $ 10,131 1/31/1995 $ 10,587 $ 10,393 2/28/1995 $ 10,906 $ 10,798 3/31/1995 $ 11,211 $ 11,117 4/30/1995 $ 11,461 $ 11,444 5/31/1995 $ 11,800 $ 11,901 6/30/1995 $ 12,020 $ 12,178 7/31/1995 $ 12,360 $ 12,582 8/31/1995 $ 12,220 $ 12,613 9/30/1995 $ 12,460 $ 13,146 10/31/1995 $ 12,541 $ 13,098 11/30/1995 $ 13,034 $ 13,673 12/31/1995 $ 13,118 $ 13,937 1/31/1996 $ 13,471 $ 14,411 2/29/1996 $ 13,501 $ 14,545 3/31/1996 $ 13,751 $ 14,685 4/30/1996 $ 13,913 $ 14,901 5/31/1996 $ 14,268 $ 15,285 6/30/1996 $ 14,242 $ 15,343 7/31/1996 $ 13,826 $ 14,665 8/31/1996 $ 14,141 $ 14,974 9/30/1996 $ 14,781 $ 15,817 10/31/1996 $ 15,045 $ 16,254 11/30/1996 $ 16,095 $ 17,483 12/31/1996 $ 15,936 $ 17,137 1/31/1997 $ 16,753 $ 18,208 2/28/1997 $ 16,661 $ 18,350 3/31/1997 $ 16,343 $ 17,595 4/30/1997 $ 17,481 $ 18,646 5/31/1997 $ 18,189 $ 19,781 6/30/1997 $ 18,772 $ 20,668 7/31/1997 $ 20,180 $ 22,313 8/31/1997 $ 19,357 $ 21,063 9/30/1997 $ 20,085 $ 22,218 10/31/1997 $ 19,528 $ 21,475 11/30/1997 $ 20,085 $ 22,470 12/31/1997 $ 20,356 $ 22,856 1/31/1998 $ 20,491 $ 23,110 2/28/1998 $ 21,669 $ 24,776 3/31/1998 $ 22,431 $ 26,045 4/30/1998 $ 22,649 $ 26,308 5/31/1998 $ 22,119 $ 25,855 6/30/1998 $ 22,632 $ 26,905 7/31/1998 $ 22,288 $ 26,620 8/31/1998 $ 18,564 $ 22,771 9/30/1998 $ 20,003 $ 24,230 10/31/1998 $ 22,013 $ 26,200 11/30/1998 $ 23,210 $ 27,788 12/31/1998 $ 25,139 $ 29,388 1/31/1999 $ 26,306 $ 30,617 2/28/1999 $ 25,140 $ 29,665 3/31/1999 $ 26,493 $ 30,851 4/30/1999 $ 27,057 $ 32,045 5/31/1999 $ 26,324 $ 31,289 6/30/1999 $ 28,451 $ 33,025 7/31/1999 $ 27,523 $ 31,995 8/31/1999 $ 27,245 $ 31,838 9/30/1999 $ 26,981 $ 30,966 10/31/1999 $ 28,414 $ 32,926 11/30/1999 $ 29,647 $ 33,594 12/31/1999 $ 31,977 $ 35,573 1/31/2000 $ 30,711 $ 33,787 2/29/2000 $ 31,604 $ 33,149 3/31/2000 $ 34,800 $ 36,391 4/30/2000 $ 34,152 $ 35,295 5/31/2000 $ 32,769 $ 34,572 6/30/2000 $ 33,821 $ 35,426 7/31/2000 $ 33,334 $ 34,873 8/31/2000 $ 35,877 $ 37,039 9/30/2000 $ 34,202 $ 35,083 10/31/2000 $ 33,645 $ 34,936 11/30/2000 $ 30,334 $ 32,183 12/31/2000 $ 31,396 $ 32,341 1/31/2001 $ 32,171 $ 33,489 2/28/2001 $ 28,828 $ 30,434 3/31/2001 $ 26,372 $ 28,505 4/30/2001 $ 28,369 $ 30,720 5/31/2001 $ 28,655 $ 30,926 6/30/2001 $ 27,297 $ 30,174 7/31/2001 $ 26,912 $ 29,878 8/31/2001 $ 25,179 $ 28,008 9/30/2001 $ 22,742 $ 25,745 10/31/2001 $ 23,528 $ 26,237 11/30/2001 $ 25,310 $ 28,249 12/31/2001 $ 25,694 $ 28,498 1/31/2002 $ 24,700 $ 28,082 2/28/2002 $ 23,929 $ 27,540 3/31/2002 $ 25,583 $ 28,575 4/30/2002 $ 23,979 $ 26,843 5/31/2002 $ 23,401 $ 26,645 6/30/2002 $ 21,253 $ 24,748 7/31/2002 $ 19,552 $ 22,820 8/31/2002 $ 19,681 $ 22,968 9/30/2002 $ 17,389 $ 20,471 10/31/2002 $ 18,929 $ 22,273 11/30/2002 $ 20,069 $ 23,585 12/31/2002 $ 18,596 $ 22,200 1/31/2003 $ 18,081 $ 21,619 2/28/2003 $ 17,920 $ 21,295 3/31/2003 $ 18,137 $ 21,501 4/30/2003 $ 19,569 $ 23,273 5/31/2003 $ 20,665 $ 24,499 6/30/2003 $ 20,810 $ 24,813 7/31/2003 $ 21,068 $ 25,250 8/31/2003 $ 21,487 $ 25,742 9/30/2003 $ 21,036 $ 25,469 10/31/2003 $ 22,035 $ 26,911 11/30/2003 $ 22,326 $ 27,147 12/31/2003 $ 23,075 $ 28,563 </Table> PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA PROVIDED. FOR CURRENT MONTH-END PERFORMANCE INFORMATION, PLEASE CONTACT YOUR INSURANCE COMPANY. Total return performance includes changes in share price and reinvestment of all distributions. The S&P (Standard & Poor's) 500 Index is an unmanaged index that tracks the performance of 500 widely held, large-capitalization US stocks. Indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. Performance numbers reflect all fund expenses, but do not include any insurance charges imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. 100 <Page> INVESTMENT PORTFOLIO Liberty Equity Fund, Variable Series / December 31, 2003 <Table> <Caption> SHARES VALUE ------------ ------------ COMMON STOCKS--98.0% CONSUMER DISCRETIONARY--16.8% HOTELS, RESTAURANTS & LEISURE--0.9% Wendy's International, Inc. 9,700 $ 380,628 ------------ INTERNET & CATALOG RETAIL--0.8% eBay, Inc. (a) 3,000 193,770 InterActiveCorp (a) 4,540 154,042 ------------ 347,812 ------------ MEDIA--4.3% Liberty Media Corp., Class A (a) 42,750 508,297 News Corp., Ltd., ADR 13,500 487,350 Viacom, Inc., Class B 20,730 919,997 ------------ 1,915,644 ------------ MULTI-LINE RETAIL--5.7% Costco Wholesale Corp. (a) 12,250 455,455 Target Corp. 22,870 878,208 Wal-Mart Stores, Inc. 22,150 1,175,058 ------------ 2,508,721 ------------ SPECIALTY RETAIL--5.1% AutoZone, Inc. (a) 5,000 426,050 Bed Bath & Beyond, Inc. (a) 11,000 476,850 Home Depot, Inc. 18,410 653,371 Lowe's Companies, Inc. 12,900 714,531 ------------ 2,270,802 ------------ CONSUMER STAPLES--7.4% BEVERAGES--2.1% PepsiCo, Inc. 19,510 909,556 ------------ FOOD & DRUG RETAILING--1.2% Walgreen Co. 14,700 534,786 ------------ FOOD PRODUCTS--1.5% Bunge Ltd. 6,620 217,930 Dean Foods Co. (a) 13,880 456,236 ------------ 674,166 ------------ HOUSEHOLD PRODUCTS--2.0% Procter & Gamble Co. 9,000 898,920 ------------ PERSONAL PRODUCTS--0.6% Gillette Co. 6,530 239,847 ------------ ENERGY--7.4% ENERGY EQUIPMENT & SERVICES--3.8% Baker Hughes, Inc. 15,900 511,344 Noble Corp. (a) 17,800 636,884 Smith International, Inc. (a) 12,530 520,246 ------------ 1,668,474 ------------ OIL & GAS--3.6% Apache Corp. 6,730 545,803 BP PLC, ADR 20,800 1,026,480 ------------ 1,572,283 ------------ FINANCIALS--18.8% BANKS--5.2% Bank of America Corp. 7,500 $ 603,225 Bank of New York Co., Inc. 20,000 662,400 Wells Fargo & Co. 17,500 1,030,575 ------------ 2,296,200 ------------ DIVERSIFIED FINANCIALS--10.4% Citigroup, Inc. 29,700 1,441,638 Fannie Mae 11,300 848,178 Goldman Sachs Group, Inc. 10,000 987,300 J.P. Morgan Chase & Co. 23,500 863,155 Merrill Lynch & Co., Inc. 7,360 431,664 ------------ 4,571,935 ------------ INSURANCE--3.2% American International Group, Inc. 12,500 828,500 Marsh & McLennan Companies, Inc. 12,500 598,625 ------------ 1,427,125 ------------ HEALTH CARE--16.2% BIOTECHNOLOGY--0.9% Amgen, Inc. (a) 6,000 370,800 ------------ HEALTH CARE EQUIPMENT & SUPPLIES--4.1% Alcon, Inc. 10,000 605,400 Boston Scientific Corp. (a) 15,730 578,235 Medtronic, Inc. 12,670 615,889 ------------ 1,799,524 ------------ HEALTH CARE PROVIDERS & SERVICES--2.2% Caremark Rx, Inc. (a) 19,500 493,935 WellPoint Health Networks, Inc. (a) 5,000 484,950 ------------ 978,885 ------------ PHARMACEUTICALS--9.0% Abbott Laboratories 10,270 478,582 Johnson & Johnson 13,000 671,580 Pfizer, Inc. 46,460 1,641,432 Teva Pharmaceutical Industries Ltd., ADR 12,390 702,637 Watson Pharmaceuticals, Inc. (a) 10,300 473,800 ------------ 3,968,031 ------------ INDUSTRIALS--9.8% AEROSPACE & DEFENSE--2.6% United Technologies Corp. 12,100 1,146,717 ------------ COMMERCIAL SERVICES & SUPPLIES--1.4% Cendant Corp. (a) 27,500 612,425 ------------ INDUSTRIAL CONGLOMERATES--3.9% 3M Co. 3,880 329,916 General Electric Co. 44,410 1,375,822 ------------ 1,705,738 ------------ MACHINERY--1.9% Illinois Tool Works, Inc. 10,140 850,847 ------------ </Table> See Notes to Investment Portfolio. 101 <Page> <Table> <Caption> SHARES VALUE ------------ ------------ INFORMATION TECHNOLOGY--20.4% COMMUNICATIONS EQUIPMENT--4.1% Cisco Systems, Inc. (a) 73,900 $ 1,795,031 ------------ COMPUTERS & PERIPHERALS--3.6% Dell, Inc. (a) 25,800 876,168 International Business Machines Corp. 4,800 444,864 Lexmark International, Inc. (a) 3,200 251,648 ------------ 1,572,680 ------------ ELECTRONIC EQUIPMENT & INSTRUMENTS--1.5% Flextronics International Ltd. (a) 45,000 667,800 ------------ INFORMATION TECHNOLOGY CONSULTING & SERVICES--0.6% Accenture Ltd., Class A (a) 10,000 263,200 ------------ SEMICONDUCTOR EQUIPMENT & PRODUCTS--4.8% Analog Devices, Inc. 6,600 301,290 Intel Corp. 34,230 1,102,206 Marvell Technology Group Ltd. (a) 5,830 221,132 Maxim Integrated Products, Inc. 10,000 498,000 ------------ 2,122,628 ------------ SOFTWARE--5.8% Microsoft Corp. 74,100 2,040,714 Oracle Corp. (a) 16,350 215,820 VERITAS Software Corp. (a) 8,000 297,280 ------------ 2,553,814 ------------ TELECOMMUNICATION SERVICES--1.2% DIVERSIFIED TELECOMMUNICATION SERVICES--1.2% American Tower Corp., Class A (a) 50,000 541,000 ------------ TOTAL COMMON STOCKS (cost of $38,229,466) 43,166,019 ------------ PREFERRED STOCK--1.0% CONSUMER DISCRETIONARY--1.0% MEDIA--1.0% News Corp., Ltd., ADR (cost of $423,789) 14,650 $ 443,162 ------------ <Caption> PAR ------------ SHORT-TERM OBLIGATION--1.4% Repurchase agreement with State Street Bank & Trust Co., dated 12/31/03, due 01/02/04 at 0.780%, collateralized by a U.S. Treasury Bond maturing 02/15/21, market value $619,369 (repurchase proceeds $603,026) (cost of $603,000) $ 603,000 603,000 ------------ TOTAL INVESTMENTS--100.4% (cost of $39,256,255) (b) 44,212,181 ------------ OTHER ASSETS & LIABILITIES, NET--(0.4)% (162,208) ------------ NET ASSETS--100.0% $ 44,049,973 ============ </Table> NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing. (b) Cost for federal income tax purposes is $39,387,172. <Table> <Caption> ACRONYM NAME ------- ---- ADR American Depositary Receipt </Table> See Notes to Financial Statements. 102 <Page> STATEMENT OF ASSETS & LIABILITIES Liberty Equity Fund, Variable Series / December 31, 2003 <Table> ASSETS: Investments, at cost $ 39,256,255 ---------------- Investments, at value $ 44,212,181 Cash 553 Receivable for: Fund shares sold 297 Interest 13 Dividends 22,275 Expense reimbursement due from Investment Advisor 739 Deferred Trustees' compensation plan 3,130 ---------------- TOTAL ASSETS 44,239,188 ---------------- LIABILITIES: Payable for: Fund shares repurchased 100,734 Investment advisory fee 27,677 Administration fee 2,455 Transfer agent fee 416 Pricing and bookkeeping fees 2,039 Trustees' fees 2,087 Audit fee 25,774 Custody fee 481 Reports to shareholders 16,477 Deferred Trustees' fees 3,130 Other liabilities 7,945 ---------------- TOTAL LIABILITIES 189,215 ---------------- NET ASSETS $ 44,049,973 ================ COMPOSITION OF NET ASSETS: Paid-in capital $ 51,947,624 Overdistributed net investment income (1,896) Accumulated net realized loss (12,851,681) Net unrealized appreciation on investments 4,955,926 ---------------- NET ASSETS $ 44,049,973 ================ CLASS A: Net assets $ 44,048,741 Shares outstanding 3,079,918 ================ Net asset value per share $ 14.30 ================ CLASS B: Net assets $ 1,232 Shares outstanding 86 ================ Net asset value per share $ 14.33 ================ </Table> See Notes to Financial Statements. 103 <Page> STATEMENT OF OPERATIONS Liberty Equity Fund, Variable Series For the Year Ended December 31, 2003 <Table> INVESTMENT INCOME: Dividends $ 584,714 Interest 5,535 ---------------- Total Investment Income (net of foreign taxes withheld of $5,525) 590,249 ---------------- EXPENSES: Investment advisory fee 330,439 Administration fee 36,137 Distribution fee--Class B 2 Transfer agent fee 5,000 Pricing and bookkeeping fees 25,823 Trustees' fees 2,653 Custody fee 9,276 Audit fee 29,642 Other expenses 17,122 ---------------- Total Expenses 456,094 Fees and expenses waived or reimbursed by Investment Advisor (12,583) Custody earnings credit (4) ---------------- Net Expenses 443,507 ---------------- Net Investment Income 146,742 ---------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized loss on investments (4,782,702) Net change in unrealized appreciation/depreciation on investments 14,341,706 ---------------- Net Gain 9,559,004 ---------------- Net Increase in Net Assets from Operations $ 9,705,746 ================ </Table> See Notes to Financial Statements. 104 <Page> STATEMENT OF CHANGES IN NET ASSETS Liberty Equity Fund, Variable Series <Table> <Caption> YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, INCREASE (DECREASE) IN NET ASSETS: 2003 2002 - --------------------------------- ------------ ------------ OPERATIONS: Net investment income $ 146,742 $ 108,103 Net realized loss on investments (4,782,702) (3,306,702) Net change in unrealized appreciation/depreciation on investments 14,341,706 (17,120,856) ------------ ------------ Net Increase (Decrease) from Operations 9,705,746 (20,319,455) ------------ ------------ DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income: Class A (147,146) (125,623) ------------ ------------ SHARE TRANSACTIONS: Class A: Subscriptions 2,333,191 851,624 Proceeds received in connection with merger 4,822,551 -- Distributions reinvested 147,146 125,623 Redemptions (16,415,799) (16,742,361) ------------ ------------ Net Decrease (9,112,911) (15,765,114) ------------ ------------ Class B: Subscriptions 1,000 -- ------------ ------------ Net Decrease from Share Transactions (9,111,911) (15,765,114) ------------ ------------ Total Increase (Decrease) in Net Assets 446,689 (36,210,192) NET ASSETS: Beginning of period 43,603,284 79,813,476 ------------ ------------ End of period (including overdistributed net investment income of $(1,896) and $(1,604), respectively) $ 44,049,973 $ 43,603,284 ============ ============ CHANGES IN SHARES: Class A: Subscriptions 177,747 58,751 Issued in connection with merger 416,815 -- Issued for distributions reinvested 11,315 10,720 Redemptions (1,296,537) (1,280,602) ------------ ------------ Net Decrease (690,660) (1,211,131) ------------ ------------ Class B: Subscriptions 86 -- ------------ ------------ </Table> See Notes to Financial Statements. 105 <Page> NOTES TO FINANCIAL STATEMENTS Liberty Equity Fund, Variable Series / December 31, 2003 NOTE 1. ORGANIZATION Liberty Equity Fund, Variable Series (formerly Galaxy VIP Equity Fund) (the "Fund"), a series of Liberty Variable Investment Trust (the "Trust") is a diversified portfolio. The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. INVESTMENT GOAL--The Fund seeks long-term growth by investing in companies which are believed to have above average earnings potential. FUND SHARES--The Fund may issue an unlimited number of shares and offers two classes of shares: Class A and Class B. Each share class has its own expense structure. Shares of the Fund are available exclusively as a pooled funding vehicle for variable annuity contracts ("VA Contracts") and Variable Life Insurance Policies ("VLI Policies") offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies"). The Participating Insurance Companies and their separate accounts own all the shares of the Fund. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES--The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION--Equity securities are valued at the last sale price at the close of the principal exchange on which they trade. Unlisted securities or listed securities for which there were no sales during the day are valued at the closing bid price on such exchanges or over-the-counter markets. Short-term obligations maturing within 60 days are valued at amortized cost, which approximates market value. Investments for which market quotations are not readily available are valued at fair value as determined in good faith under consistently applied procedures established by and under the general supervision of the Board of Trustees. SECURITY TRANSACTIONS--Security transactions are accounted for on the trade date. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. REPURCHASE AGREEMENTS--The Fund may engage in repurchase agreement transactions with institutions that the Fund's investment advisor has determined are creditworthy. The Fund, through its custodian, receives delivery of underlying securities collateralizing a repurchase agreement. Collateral is at least equal, at all times, to the value of the repurchase obligation including interest. A repurchase agreement transaction involves certain risks in the event of default or insolvency of the counterparty. These risks include possible delays or restrictions upon the Fund's ability to dispose of the underlying securities and a possible decline in the value of the underlying securities during the period while the Fund seeks to assert its rights. INCOME RECOGNITION--Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date. DETERMINATION OF CLASS NET ASSET VALUES--All income, expenses (other than class-specific expenses, as shown on the Statement of Operations), and realized and unrealized gains (losses), are allocated to each class of the Fund on a daily basis, based on the relative net assets of each class, for purposes of determining the net asset value of each class. FEDERAL INCOME TAX STATUS--The Fund intends to qualify each year as a "regulated investment company" under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its taxable income, if any, for its tax year, and as such will not be subject to federal income taxes. In addition, by distributing in each calendar year substantially all of its net investment income, capital gains and certain other amounts, if any, the Fund will not be subject to federal excise tax. Therefore, no federal income or excise tax provision is recorded. DISTRIBUTIONS TO SHAREHOLDERS--Distributions to shareholders are recorded on ex-date. Net realized capital gains, if any, are distributed at least annually. Income and capital gains dividends are determined in accordance with income tax regulations which may differ from GAAP. All dividends and distributions are reinvested in additional shares of the Fund at net asset value as of the record date of the distribution. NOTE 3. FEDERAL TAX INFORMATION The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund's capital accounts for permanent tax differences to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. 106 <Page> For the year ended December 31, 2003, permanent differences resulting primarily from differing treatments for capital loss carryforwards from the merger and capital loss carryforwards permanently lost from the merger were identified and reclassified among the components of the Fund's net assets as follows: <Table> <Caption> OVERDISTRIBUTED ACCUMULATED NET PAID-IN NET INVESTMENT INCOME REALIZED LOSS CAPITAL - --------------------- --------------- ------- $ 112 $ (593,954) $ 593,842 </Table> Net investment income and net realized gains (losses), as disclosed on the Statement of Operations, and net assets were not affected by this reclassification. The tax character of distributions paid during the years ended December 31, 2003 and December 31, 2002 was as follows: <Table> <Caption> DECEMBER 31, DECEMBER 31, 2003 2002 ------------ ------------ Distributions paid from: Ordinary Income* $ 147,146 $ 125,623 Long-Term Capital Gains -- -- </Table> * For tax purposes short-term capital gains distributions, if any, are considered ordinary income distributions. As of December 31, 2003, the components of distributable earnings on a tax basis were as follows: <Table> <Caption> UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM NET UNREALIZED INCOME CAPITAL GAINS APPRECIATION* - -------------- ------------- -------------- $ -- $ -- $ 4,825,009 </Table> * The differences between book-basis and tax-basis net unrealized appreciation are primarily due to deferral of losses from wash sales. Unrealized appreciation and depreciation at December 31, 2003, based on cost of investments for federal income tax purposes was: <Table> Unrealized appreciation $ 7,477,970 Unrealized depreciation (2,652,961) ------------ Net unrealized appreciation $ 4,825,009 ============ </Table> The following capital loss carryforwards are available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: <Table> <Caption> YEAR OF CAPITAL LOSS EXPIRATION CARRYFORWARD ---------- ------------ 2008 $ 25,237 2009 3,277,087 2010 4,000,679 2011 5,417,761 ------------ $ 12,720,764 ============ </Table> Of the capital loss carryforwards attributable to the Fund, $695,798 was obtained upon the Fund's merger with Galaxy VIP Growth & Income Fund (See Note 7). Capital loss carryforwards of $101,845 were utilized and/or expired during the year ended December 31, 2003 for the Fund. Any capital loss carryforwards acquired as part of a merger that are permanently lost due to provisions under Internal Revenue Code are included as being expired. Expired capital loss carryforwards are recorded as a reduction of paid-in capital. NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES INVESTMENT ADVISOR MERGER--On April 1, 2003, Fleet Investment Advisors Inc., the previous investment advisor to the Fund, merged into Columbia Management Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co., an indirect, wholly owned subsidiary of FleetBoston Financial Corporation. As a result of the merger, Columbia now serves as the Fund's investment advisor. The merger did not change the way the Fund is managed, the investment personnel assigned to manage the Fund or the fees paid by the Fund. INVESTMENT ADVISORY FEE--Columbia is the investment advisor to the Fund and receives a monthly fee based on the Fund's average daily net assets at the following annual rates: <Table> <Caption> AVERAGE DAILY NET ASSETS FEE RATE - ------------------------ -------- First $500 million 0.75% Next $500 million 0.70% Next $500 million 0.65% Next $500 million 0.60% Over $2 billion 0.55% </Table> Prior to November 1, 2003, Columbia received a monthly investment advisory fee at the annual rate of 0.75% of the Fund's average net assets. In addition, for the period July 1, 2003 through October 31, 2003, Columbia voluntarily waived a portion of its investment advisory fee so that it did not exceed 0.71% annually. For the year ended December 31, 2003, the Fund's effective investment advisory fee rate was 0.74%. ADMINISTRATION FEE--Columbia provides administrative and other services for a monthly fee based on the Fund's average daily net assets at the following annual rates: <Table> <Caption> AVERAGE DAILY NET ASSETS FEE RATE - ------------------------ -------- First $1 billion 0.067% Next $1.5 billion 0.060% Over $2.5 billion 0.055% </Table> For the period April 14, 2003 through October 31, 2003, Columbia was entitled to receive fees, computed daily and payable monthly, at the annual rate of 0.085% of the 107 <Page> Fund's average daily net assets. Prior to April 14, 2003, Columbia was entitled to receive fees, computed daily and payable monthly, based on the combined average daily net assets of the funds in the Galaxy VIP Fund (the "predecessor trust") at the following annual rates: <Table> <Caption> AVERAGE DAILY NET ASSETS FEE RATE - ------------------------ -------- First $1 billion 0.085% Next $1.5 billion 0.078% Over $2.5 billion 0.073% </Table> For the year ended December 31, 2003, the Fund's effective administration fee rate was 0.082%. PRICING AND BOOKKEEPING FEES--Columbia is responsible for providing pricing and bookkeeping services to the Fund under a pricing and bookkeeping agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Corporation ("State Street"). Columbia pays fees to State Street under the Outsourcing Agreement. Columbia pays the total fees collected to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives an annual fee based on the average daily net assets of the Fund at the following annual rates: <Table> <Caption> AVERAGE DAILY NET ASSETS FEE RATE - ------------------------ -------- Under $50 million $ 25,000 Of $50 million but less than $200 million $ 35,000 Of $200 million but less than $500 million $ 50,000 Of $500 million but less than $1 billion $ 85,000 Over $1 billion $ 125,000 </Table> The Fund also pays additional fees for pricing services. For the year ended December 31, 2003, the effective pricing and bookkeeping fee rate was 0.058%. TRANSFER AGENT FEE--Columbia Funds Services, Inc. (the "Transfer Agent"), formerly Liberty Funds Services, Inc., an affiliate of Columbia, provides shareholder services for a monthly fee at an annual rate of $5,000. Effective October 13, 2003, Liberty Funds Services, Inc. changed its name to Columbia Funds Services, Inc. DISTRIBUTION FEES--Columbia Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia, is the principal underwriter of the Fund. Prior to October 13, 2003, Columbia Funds Distributor, Inc. was known as Liberty Funds Distributor, Inc. The Fund has adopted a 12b-1 plan which requires the payment of a monthly distribution fee to the Distributor at the annual rate of 0.25% of Class B average daily net assets. FEE WAIVERS--Effective April 14, 2003, Columbia has agreed to reimburse fees at the annual rate of 0.02% of the Fund's average daily net assets. This agreement will continue until April 13, 2004, after which it may be revised or discontinued any time. Prior to April 14, 2003, Fleet Investment Advisors, Inc. and/or its affiliates and/or PFPC Inc., the former administrator, could waive all or a portion of the fees payable to them by the predecessor fund. CUSTODY CREDITS--The Fund has an agreement with its custodian bank under which custody fees may be reduced by balance credits. The Fund could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if it had not entered into such an agreement. FEES PAID TO OFFICERS AND TRUSTEES--The Fund pays no compensation to its officers, all of whom are employees of Columbia or its affiliates. The Fund's Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. NOTE 5. PORTFOLIO INFORMATION PURCHASES AND SALES OF SECURITIES--The year ended December 31, 2003, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were $20,146,674 and $34,714,275, respectively. NOTE 6. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES INDUSTRY FOCUS--The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. LEGAL PROCEEDINGS--Columbia, the Distributor and certain of their affiliates (collectively, "the Columbia Group") have received information requests and subpoenas from various regulatory authorities, including the Securities and Exchange Commission ("SEC") and the New York Attorney General, in connection with their investigations of late trading and market timing in mutual funds. The Columbia Group has not uncovered any instances where Columbia or the Distributor was knowingly involved in late trading of mutual fund shares. The Columbia Group has identified a limited number of investors who had informal arrangements for trading certain Columbia Fund shares between 1998 and 2003. A substantial majority of the trading had ended by October 2002. None of these arrangements exists today. Information relating to those trading arrangements has been supplied to various regulatory authorities. To the extent that any Columbia Fund, whose shares were involved in those trading activities, was harmed by them, the Columbia Group has undertaken to reimburse such fund. 108 <Page> The SEC staff has issued notices to the effect that it has made a preliminary determination to recommend that the SEC bring civil enforcement actions, including injunctive proceedings, against Columbia and the Distributor, alleging that they have violated certain provisions of the federal securities laws. The Columbia Group believes that those allegations are based principally on the trading arrangements referred to above. Columbia and the Distributor are engaged in discussions with the SEC staff in an effort to reach a satisfactory resolution of these matters. However, there can be no assurance that such a resolution will be reached. Any potential resolution of these matters may include, but not be limited to, sanctions, financial penalties, damages or injunctions regarding Columbia or the Distributor, and structural changes in the conduct of their business. Although the Columbia Group does not believe that these regulatory developments or their resolution will have a material adverse effect on the Columbia Funds, or on the ability of Columbia and the Distributor to provide services to the Columbia Funds, there can be no assurance that these matters or any adverse publicity or other developments resulting from them will not result in increased redemptions or reduced sales of Columbia Fund shares, which could increase transactions costs or operating expenses, or other consequences for the Columbia Funds. NOTE 7. BUSINESS COMBINATIONS AND MERGERS FUND MERGERS--On April 14, 2003, the Galaxy VIP Growth & Income Fund, previously a fund of the Galaxy VIP Fund, a separate Massachusetts business trust, merged into the Galaxy VIP Equity Fund, also previously a fund of the predecessor trust. The Galaxy VIP Equity Fund received a tax-free transfer of assets from the Galaxy VIP Growth & Income Fund, as follows: <Table> <Caption> SHARES NET ASSETS UNREALIZED ISSUED RECEIVED DEPRECIATION(1) -------- ---------- ------------- 416,815 $ 4,822,551 $ 1,331,049 </Table> <Table> <Caption> NET ASSETS NET ASSETS NET ASSETS OF GALAXY OF GALAXY OF GALAXY VIP EQUITY FUND VIP EQUITY VIP GROWTH & INCOME IMMEDIATELY FUND PRIOR TO FUND IMMEDIATELY AFTER COMBINATION PRIOR TO COMBINATION COMBINATION ------------- -------------------- --------------- $ 39,395,832 $ 4,822,551 $ 44,218,383 </Table> (1) Unrealized depreciation is included in the Net Assets Received amount shown above. Also on April 14, 2003, subsequent to the merger described above, the Galaxy VIP Equity Fund was renamed the Liberty Equity Fund, Variable Series. The accompanying statement of operations, statement of changes in net assets and financial highlights for the Fund represent the historical operations of the Galaxy VIP Equity Fund for periods prior to April 14, 2003. 109 <Page> FINANCIAL HIGHLIGHTS Liberty Equity Fund, Variable Series--Class A Shares (a) Selected data for a share outstanding throughout each period is as follows: <Table> <Caption> YEAR ENDED DECEMBER 31, ------------------------------------------------------------------------- 2003 2002 2001 2000 1999 ---------- ---------- ---------- ---------- ---------- NET ASSET VALUE, BEGINNING OF PERIOD $ 11.56 $ 16.02 $ 19.81 $ 22.21 $ 19.20 ---------- ---------- ---------- ---------- ---------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) 0.03(b) 0.03 --(c) (0.02) (0.02) Net realized and unrealized gain (loss) on investments 2.76 (4.46) (3.58) (0.37) 5.05 ---------- ---------- ---------- ---------- ---------- Total from Investment Operations 2.79 (4.43) (3.58) (0.39) 5.03 ---------- ---------- ---------- ---------- ---------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.05) (0.03) -- -- -- From net realized gains -- -- (0.21) (2.01) (2.02) ---------- ---------- ---------- ---------- ---------- Total Distributions Declared to Shareholders (0.05) (0.03) (0.21) (2.01) (2.02) ---------- ---------- ---------- ---------- ---------- NET ASSET VALUE, END OF PERIOD $ 14.30 $ 11.56 $ 16.02 $ 19.81 $ 22.21 ========== ========== ========== ========== ========== Total return (d)(e) 24.14%(f) (27.64)% (18.17)% (1.82)% 27.18% RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (g) 1.01% 1.09% 1.02% 0.98% 0.96% Net investment income (loss) (g) 0.33% 0.18% 0.00% (0.11)% (0.11)% Waiver/reimbursement 0.03% -- -- -- -- Portfolio turnover rate 46% 35% 51% 54% 60% Net assets, end of period (000's) $ 44,049 $ 43,603 $ 79,813 $ 120,712 $ 119,799 </Table> (a) The information shown in this table, for the periods prior to April 14, 2003, relates to shares of the Galaxy VIP Equity Fund, the predecessor to the Liberty Equity Fund, Variable Series. (b) Per share data was calculated using average shares outstanding during the period. (c) Rounds to less than $0.01 per share. (d) Total return at net asset value assuming all distributions reinvested. (e) Total return figure does not include any insurance company charges associated with a variable annuity. If included, total return would be reduced. (f) Had the Investment Advisor not waived or reimbursed a portion of expenses, total return would have been reduced. (g) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. 110 <Page> REPORT OF INDEPENDENT AUDITORS To the Trustees of Liberty Variable Investment Trust and the Class A Shareholders of Liberty Equity Fund, Variable Series In our opinion, the accompanying statement of assets and liabilities, including the investment portfolio, and the related statements of operations and of changes in net assets and the Class A financial highlights present fairly, in all material respects, the financial position of Liberty Equity Fund, Variable Series (formerly Galaxy VIP Equity Fund) (the "Fund") (a series of Liberty Variable Investment Trust) (formerly a series of Galaxy VIP Fund) at December 31, 2003, and the results of its operations, the changes in its net assets and the Class A financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and the Class A financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with 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 audit, which included confirmation of securities at December 31, 2003 by correspondence with the custodian and brokers, provides a reasonable basis for our opinion. The financial statements and financial highlights of the Fund for the periods prior to January 1, 2003 were audited by other independent accountants whose report dated February 7, 2003 expressed an unqualified opinion on those statements. PricewaterhouseCoopers LLP Boston, Massachusetts February 12, 2004 111 <Page> UNAUDITED INFORMATION FEDERAL INCOME TAX INFORMATION 100% of the ordinary income distributed by the Fund, for the year ended December 31, 2003, qualifies for the corporate dividends received deduction. 112 <Page> PORTFOLIO MANAGERS' DISCUSSION Liberty Growth & Income Fund, Variable Series / December 31, 2003 Liberty Growth & Income Fund, Variable Series seeks long-term growth and income. Brian Cunningham, Gregory M. Miller and Richard Dahlberg are co-managers of the fund. Mr. Cunningham has co-managed the fund since November 2003 and has been with Columbia Management Advisors, Inc. and its predecessors ("Columbia") since 1987. Mr. Miller has co-managed the fund since April 2003 and joined Columbia in 1985. Mr. Dahlberg, head of Columbia large-cap value team, has co-managed the fund since October 2003. He joined Columbia in September 2003. The fund provided a strong return for the year, but it did not perform as well as its benchmark index. Disappointing results in the consumer staples area and low exposure to financial services companies hurt relative performance early in the year. When we initially took over management of the fund in April 2003, we sought to upgrade the quality of the portfolio. We reduced the fund's exposure to more speculative companies with less certain prospects and focused on companies that represented good value relative to our estimate of their future earnings potential. However, the initiation of this strategy was poorly timed. When the stock market began to bounce back, it favored riskier stocks over more stable issues, and the fund did not keep up with its benchmark. Nevertheless, we are comfortable with the long-term potential of the portfolio that we put in place during the year and we believe that our positioning will serve the fund well over time. CHALLENGING YEAR IN CONSUMER STAPLES Three of the fund's largest holdings --Safeway, Sara Lee and ConAgra--generated disappointing returns early in the year. We sold Safeway and Sara Lee at a loss. ConAgra generated a small loss for the year, but it gained ground later in the period when it restructured to emphasize its key food processing business. We continue to own the stock, which represents 1.0% of net assets. Within the consumer staples sector, we initiated a position in Procter & Gamble Co. (1.2% of net assets), which has performed well. We believe P & G's strong product introductions, good sales momentum, renewed financial discipline and focus on profitability made it a solid addition to the portfolio. STRONG RETURNS FROM FINANCIALS, INDUSTRIALS Starting in April, we began to increase the fund's exposure to the financial sector, which represents roughly one-fifth of the S&P 500 Index. The fund's relatively low allocation to financial stocks hindered relative performance in the first part of the year, but we caught up somewhat as the year progressed. New positions in U.S. Bancorp and Wells Fargo (2.2% and 2.0% of net assets, respectively) contributed to positive returns, as did our sizeable investment in Citigroup Inc. (5.5% of net assets). Industrial companies Textron Inc. and Honeywell International (1.9% and 1.1% of net assets, respectively) were also strong performers as the economy's comeback strengthened the outlook for the sector. NEW POSITION IN TECHNOLOGY One of the year's best performing sectors--technology--was underrepresented in the fund because, in our opinion, technology stocks that met our definition of "good value" were difficult to find. However, we were attracted to Finnish company Nokia (1.1% of net assets), a leading cell phone manufacturer, when it lost market share and its price declined to within our target range early in the period. We initiated a position in Nokia's because we believe its strong management and low production costs will help it regain its position in the highly competitive wireless telephone industry. FOCUSED ON QUALITY AND VALUE On the surface, we believe that the economy is healthy and continuing to expand, with low interest rates and rising stock values. However, digging deeper, we have concerns about high unemployment levels and corporate spending--both essential ingredients for maintaining economic growth. As quality-oriented value investors, we continue to take a long-term view and select stocks for the fund that we believe have the potential to prosper under a variety of economic conditions. Economic and market conditions frequently change. There is no assurance that the trends described here will continue or commence. An investment in the Liberty Growth & Income Fund, Variable Series offers significant long-term growth potential, but also involves certain risks. The fund may be affected by stock market fluctuations due to economic and business developments. Value stocks are securities of companies that may have experienced adverse business or industry developments or may be subject to special risks that have caused the stocks to be out of favor. If the advisor's assessment of a company's prospects is wrong, the price of its stock may not approach the value the advisor has placed on it. Holdings are disclosed as of December 31, 2003, and are subject to change. 113 <Page> PERFORMANCE INFORMATION Liberty Growth & Income Fund, Variable Series / December 31, 2003 AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 2003 (%) <Table> <Caption> 1-YEAR 5-YEAR LIFE - -------------------------------------------------------------- Class A (7/5/94) 19.79 1.52 11.57 S&P 500 Index(1) 28.68 -0.57 12.04 </Table> Inception date of share class is in parentheses. <Table> <Caption> NET ASSET VALUE PER SHARE ($) 12/31/02 12/31/03 - ------------------------------------------------------ Class A 11.97 14.15 </Table> [CHART] VALUE OF A $10,000 INVESTMENT, 7/5/94 - 12/31/03 Class A: $28,262 <Table> <Caption> CLASS A SHARES S&P 500 INDEX 07/1994 $ 10,000 $ 10,000 7/31/1994 $ 10,260 $ 10,275 8/31/1994 $ 10,670 $ 10,696 9/30/1994 $ 10,460 $ 10,434 10/31/1994 $ 10,631 $ 10,669 11/30/1994 $ 10,251 $ 10,281 12/31/1994 $ 10,441 $ 10,433 1/31/1995 $ 10,705 $ 10,703 2/28/1995 $ 11,132 $ 11,120 3/31/1995 $ 11,427 $ 11,448 4/30/1995 $ 11,661 $ 11,785 5/31/1995 $ 12,078 $ 12,256 6/30/1995 $ 12,342 $ 12,541 7/31/1995 $ 12,769 $ 12,957 8/31/1995 $ 12,718 $ 12,990 9/30/1995 $ 13,145 $ 13,538 10/31/1995 $ 13,094 $ 13,489 11/30/1995 $ 13,592 $ 14,081 12/31/1995 $ 13,541 $ 14,353 1/31/1996 $ 13,903 $ 14,841 2/29/1996 $ 14,177 $ 14,979 3/31/1996 $ 14,253 $ 15,123 4/30/1996 $ 14,779 $ 15,345 5/31/1996 $ 15,130 $ 15,741 6/30/1996 $ 14,801 $ 15,801 7/31/1996 $ 14,089 $ 15,102 8/31/1996 $ 14,560 $ 15,421 9/30/1996 $ 15,272 $ 16,289 10/31/1996 $ 15,655 $ 16,739 11/30/1996 $ 16,773 $ 18,004 12/31/1996 $ 16,498 $ 17,648 1/31/1997 $ 17,704 $ 18,751 2/28/1997 $ 17,692 $ 18,897 3/31/1997 $ 16,984 $ 18,120 4/30/1997 $ 17,889 $ 19,202 5/31/1997 $ 18,911 $ 20,372 6/30/1997 $ 19,629 $ 21,284 7/31/1997 $ 21,196 $ 22,978 8/31/1997 $ 20,465 $ 21,692 9/30/1997 $ 21,520 $ 22,880 10/31/1997 $ 20,535 $ 22,116 11/30/1997 $ 21,371 $ 23,140 12/31/1997 $ 21,815 $ 23,538 1/31/1998 $ 22,055 $ 23,799 2/28/1998 $ 23,581 $ 25,515 3/31/1998 $ 24,772 $ 26,822 4/30/1998 $ 24,760 $ 27,093 5/31/1998 $ 24,143 $ 26,627 6/30/1998 $ 25,068 $ 27,708 7/31/1998 $ 24,572 $ 27,414 8/31/1998 $ 20,569 $ 23,450 9/30/1998 $ 21,519 $ 24,953 10/31/1998 $ 23,355 $ 26,982 11/30/1998 $ 24,775 $ 28,617 12/31/1998 $ 26,209 $ 30,265 1/31/1999 $ 26,893 $ 31,530 2/28/1999 $ 25,820 $ 30,550 3/31/1999 $ 26,657 $ 31,772 4/30/1999 $ 27,395 $ 33,001 5/31/1999 $ 27,034 $ 32,222 6/30/1999 $ 28,610 $ 34,011 7/31/1999 $ 27,897 $ 32,950 8/31/1999 $ 27,590 $ 32,788 9/30/1999 $ 26,641 $ 31,890 10/31/1999 $ 27,702 $ 33,908 11/30/1999 $ 28,064 $ 34,597 12/31/1999 $ 29,355 $ 36,634 1/31/2000 $ 27,773 $ 34,795 2/29/2000 $ 26,826 $ 34,138 3/31/2000 $ 29,474 $ 37,476 4/30/2000 $ 29,444 $ 36,348 5/31/2000 $ 29,297 $ 35,603 6/30/2000 $ 28,899 $ 36,483 7/31/2000 $ 29,107 $ 35,913 8/31/2000 $ 30,970 $ 38,144 9/30/2000 $ 30,248 $ 36,130 10/31/2000 $ 30,463 $ 35,978 11/30/2000 $ 28,991 $ 33,143 12/31/2000 $ 30,418 $ 33,305 1/31/2001 $ 30,217 $ 34,488 2/28/2001 $ 30,018 $ 31,342 3/31/2001 $ 28,853 $ 29,355 4/30/2001 $ 29,369 $ 31,636 5/31/2001 $ 29,919 $ 31,848 6/30/2001 $ 29,219 $ 31,074 7/31/2001 $ 30,069 $ 30,770 8/31/2001 $ 29,885 $ 28,843 9/30/2001 $ 28,702 $ 26,513 10/31/2001 $ 28,848 $ 27,019 11/30/2001 $ 30,008 $ 29,092 12/31/2001 $ 30,236 $ 29,348 1/31/2002 $ 29,731 $ 28,919 2/28/2002 $ 29,419 $ 28,361 3/31/2002 $ 30,781 $ 29,427 4/30/2002 $ 29,673 $ 27,644 5/31/2002 $ 29,634 $ 27,440 6/30/2002 $ 26,484 $ 25,486 7/31/2002 $ 24,307 $ 23,501 8/31/2002 $ 24,618 $ 23,653 9/30/2002 $ 21,078 $ 21,082 10/31/2002 $ 22,887 $ 22,937 11/30/2002 $ 24,638 $ 24,288 12/31/2002 $ 23,600 $ 22,863 1/31/2003 $ 22,753 $ 22,264 2/28/2003 $ 21,490 $ 21,930 3/31/2003 $ 21,411 $ 22,142 4/30/2003 $ 22,967 $ 23,967 5/31/2003 $ 24,860 $ 25,230 6/30/2003 $ 25,432 $ 25,553 7/31/2003 $ 25,332 $ 26,003 8/31/2003 $ 25,766 $ 26,510 9/30/2003 $ 25,273 $ 26,229 10/31/2003 $ 26,181 $ 27,713 11/30/2003 $ 26,456 $ 27,957 12/31/2003 $ 28,262 $ 29,410 </Table> PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA PROVIDED. FOR CURRENT MONTH-END PERFORMANCE INFORMATION, PLEASE CONTACT YOUR INSURANCE COMPANY. Total return performance includes changes in share price and reinvestment of all distributions. The S&P (Standard & Poor's) 500 Index is an unmanaged index that tracks the performance of 500 widely held, large-capitalization US stocks. Indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. Performance numbers reflect all fund expenses, but do not include any insurance charges imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. (1) Index performance is from July 5, 1994. 114 <Page> INVESTMENT PORTFOLIO Liberty Growth & Income Fund, Variable Series / December 31, 2003 <Table> <Caption> SHARES VALUE -------------- -------------- COMMON STOCKS--96.0% CONSUMER DISCRETIONARY--7.8% AUTO COMPONENTS--1.0% Delphi Corp. 246,178 $ 2,513,477 -------------- HOTELS, RESTAURANTS & LEISURE--1.7% Harrah's Entertainment, Inc. 12,743 634,219 Wendy's International, Inc. 99,400 3,900,456 -------------- 4,534,675 -------------- LEISURE EQUIPMENT & PRODUCTS--0.4% Mattel, Inc. 60,700 1,169,689 -------------- MEDIA--3.7% Clear Channel Communications, Inc. 28,626 1,340,556 Gannett Co., Inc. 14,600 1,301,736 McGraw-Hill Companies, Inc. 38,600 2,698,912 Time Warner, Inc. (a) 163,700 2,944,963 Viacom, Inc., Class A 28,600 1,266,122 -------------- 9,552,289 -------------- SPECIALTY RETAIL--1.0% Office Depot, Inc. (a) 155,800 2,603,418 -------------- CONSUMER STAPLES--7.8% BEVERAGES--1.5% PepsiCo, Inc. 82,900 3,864,798 -------------- FOOD PRODUCTS--2.0% ConAgra Foods, Inc. 103,700 2,736,643 Kraft Foods, Inc., Class A 79,600 2,564,712 -------------- 5,301,355 -------------- HOUSEHOLD PRODUCTS--3.3% Clorox Co. 53,600 2,602,816 Kimberly-Clark Corp. 48,500 2,865,865 Procter & Gamble Co. 31,100 3,106,268 -------------- 8,574,949 -------------- TOBACCO--1.0% Altria Group, Inc. 47,677 2,594,582 -------------- ENERGY--12.3% ENERGY EQUIPMENT & SERVICES--2.9% Baker Hughes, Inc. 85,500 2,749,680 Halliburton Co. 188,300 4,895,800 -------------- 7,645,480 -------------- OIL & GAS--9.4% BP PLC, ADR 108,400 5,349,540 ConocoPhillips 82,170 5,387,887 Exxon Mobil Corp. 176,070 7,218,870 Marathon Oil Corp. 121,200 4,010,508 Royal Dutch Petroleum Co., NY Shares 51,700 2,708,563 -------------- 24,675,368 -------------- FINANCIALS--33.0% BANKS--10.4% Bank of America Corp. 77,857 $ 6,262,039 Bank of New York Co., Inc. 111,500 3,692,880 Bank One Corp. 81,502 3,715,676 Fifth Third Bancorp 24,300 1,436,130 National City Corp. 35,268 1,196,996 U.S. Bancorp 188,900 5,625,442 Wells Fargo & Co. 88,100 5,188,209 -------------- 27,117,372 -------------- DIVERSIFIED FINANCIALS--12.3% American Express Co. 50,700 2,445,261 Citigroup, Inc. 298,800 14,503,752 Countrywide Financial Corp. 22,933 1,739,493 Freddie Mac 69,400 4,047,408 J.P. Morgan Chase & Co. 99,617 3,658,933 Merrill Lynch & Co., Inc. 34,162 2,003,601 Morgan Stanley 33,997 1,967,406 State Street Corp. 34,400 1,791,552 -------------- 32,157,406 -------------- INSURANCE--9.0% AFLAC, Inc. 34,700 1,255,446 Ambac Financial Group, Inc. 34,400 2,387,016 American International Group, Inc. 78,000 5,169,840 Berkshire Hathaway, Inc., Class A (a) 63 5,307,750 Lincoln National Corp. 109,914 4,437,228 Travelers Property Casualty Corp., Class B 150,800 2,559,076 Willis Group Holdings Ltd. 70,792 2,411,884 -------------- 23,528,240 -------------- REAL ESTATE--1.3% Archstone-Smith Trust 42,200 1,180,756 Kimco Realty Corp. 23,212 1,038,737 Vornado Realty Trust 23,307 1,276,058 -------------- 3,495,551 -------------- HEALTH CARE--5.5% HEALTH CARE PROVIDERS & SERVICES--3.0% Aetna, Inc. 76,200 5,149,596 McKesson Corp. 80,800 2,598,528 -------------- 7,748,124 -------------- PHARMACEUTICALS--2.5% Bristol-Myers Squibb Co. 43,682 1,249,305 Johnson & Johnson 22,800 1,177,848 Merck & Co., Inc. 27,710 1,280,202 Pfizer, Inc. 82,900 2,928,857 -------------- 6,636,212 -------------- INDUSTRIALS--10.2% AEROSPACE & DEFENSE--3.7% General Dynamics Corp. 29,400 2,657,466 Honeywell International, Inc. 85,800 2,868,294 Raytheon Co. 91,200 2,739,648 United Technologies Corp. 14,400 1,364,688 -------------- 9,630,096 -------------- </Table> See Notes to Investment Portfolio. 115 <Page> <Table> <Caption> SHARES VALUE -------------- -------------- COMMERCIAL SERVICES & SUPPLIES--2.6% Avery Dennison Corp. 22,600 $ 1,266,052 Waste Management, Inc. 190,100 5,626,960 -------------- 6,893,012 -------------- INDUSTRIAL CONGLOMERATES--1.9% Textron, Inc. 85,300 4,867,218 -------------- MACHINERY--2.0% Deere & Co. 40,486 2,633,614 Dover Corp. 68,050 2,704,988 -------------- 5,338,602 -------------- INFORMATION TECHNOLOGY--6.0% COMMUNICATIONS EQUIPMENT--1.1% Nokia Oyj, ADR 166,700 2,833,900 -------------- COMPUTERS & PERIPHERALS--0.9% International Business Machines Corp. 26,700 2,474,556 Silicon Graphics, Inc. (a) 2,204 3,020 -------------- 2,477,576 -------------- INFORMATION TECHNOLOGY CONSULTING & SERVICES--1.8% Accenture Ltd., Class A (a) 178,400 4,695,488 -------------- OFFICE ELECTRONICS--1.8% Xerox Corp. (a) 342,100 4,720,980 -------------- SOFTWARE--0.4% Microsoft Corp. 39,400 1,085,076 -------------- MATERIALS--3.3% CHEMICALS--1.5% Air Products & Chemicals, Inc. 71,568 3,780,938 -------------- PAPER & FOREST PRODUCTS--1.8% MeadWestvaco Corp. 94,500 2,811,375 Weyerhaeuser Co. 30,991 1,983,424 -------------- 4,794,799 -------------- TELECOMMUNICATION SERVICES--4.8% DIVERSIFIED TELECOMMUNICATION SERVICES--4.8% BellSouth Corp. 144,600 4,092,180 CenturyTel, Inc. 16,600 541,492 SBC Communications, Inc. 155,400 4,051,278 Verizon Communications, Inc. 108,300 3,799,164 -------------- 12,484,114 -------------- UTILITIES--5.3% ELECTRIC UTILITIES--4.3% American Electric Power Co., Inc. 79,100 $ 2,413,341 Consolidated Edison, Inc. 89,400 3,845,094 PG&E Corp. (a) 80,800 2,243,816 TXU Corp. 115,300 2,734,916 -------------- 11,237,167 -------------- MULTI-UTILITIES & UNREGULATED POWER--1.0% Duke Energy Corp. 126,600 2,588,970 -------------- TOTAL COMMON STOCKS (cost of $214,181,192) 251,140,921 -------------- INVESTMENT MANAGEMENT COMPANY--3.8% iShares Russell 1000 Value Index Fund (cost of $9,072,882) 168,866 9,856,708 -------------- <Caption> PAR -------------- SHORT-TERM OBLIGATION--0.6% Repurchase agreement with State Street Bank & Trust Co., dated 12/31/03, due 01/02/04 at 0.780%, collateralized by a U.S. Treasury Bond maturing 08/15/28, market value $1,470,697 (repurchase proceeds $1,437,062) (cost of $1,437,000) $ 1,437,000 1,437,000 -------------- TOTAL INVESTMENTS--100.4% (cost of $224,691,074) (b) 262,434,629 -------------- OTHER ASSETS & LIABILITIES, NET--(0.4)% (917,680) -------------- NET ASSETS--100.0% $ 261,516,949 ============== </Table> NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing. (b) Cost for federal income tax purposes is $225,102,907. <Table> <Caption> ACRONYM NAME ------- ---- ADR American Depositary Receipt </Table> See Notes to Financial Statements. 116 <Page> STATEMENT OF ASSETS & LIABILITIES Liberty Growth & Income Fund, Variable Series/December 31, 2003 <Table> ASSETS: Investments, at cost $ 224,691,074 -------------- Investments, at value $ 262,434,629 Cash 870 Receivable for: Fund shares sold 58,335 Interest 31 Dividends 322,761 Expense reimbursement due from Investment Advisor/Distributor 21,183 Deferred Trustees' compensation plan 14,275 -------------- TOTAL ASSETS 262,852,084 -------------- LIABILITIES: Payable for: Fund shares repurchased 1,069,259 Investment advisory fee 174,578 Transfer agent fee 625 Pricing and bookkeeping fees 8,237 Trustees' fees 1,102 Custody fee 617 Distribution fee--Class B 10,052 Deferred Trustees' fees 14,275 Other liabilities 56,390 -------------- TOTAL LIABILITIES 1,335,135 -------------- NET ASSETS $ 261,516,949 ============== COMPOSITION OF NET ASSETS: Paid-in capital $ 298,452,984 Undistributed net investment income 103,584 Accumulated net realized loss (74,783,174) Net unrealized appreciation on investments 37,743,555 -------------- NET ASSETS $ 261,516,949 ============== CLASS A: Net assets $ 216,923,181 Shares outstanding 15,331,886 ============== Net asset value per share $ 14.15 ============== CLASS B: Net assets $ 44,593,768 Shares outstanding 3,154,564 ============== Net asset value per share $ 14.14 ============== </Table> See Notes to Financial Statements. 117 <Page> STATEMENT OF OPERATIONS Liberty Growth & Income Fund, Variable Series For the Year Ended December 31, 2003 <Table> INVESTMENT INCOME: Dividends $ 5,176,678 Interest 81,550 -------------- Total Investment Income (net of foreign taxes withheld of $72,738) 5,258,228 -------------- EXPENSES: Investment advisory fee 1,716,268 Distribution fee--Class B 90,508 Transfer agent fee 7,500 Pricing and bookkeeping fees 70,470 Trustees' fees 8,708 Custody fee 10,665 Other expenses 93,882 -------------- Total Expenses 1,998,001 Fees and expenses waived or reimbursed by Investment Advisor (209,396) Fees waived by Distributor--Class B (5,806) Custody earnings credit (40) -------------- Net Expenses 1,782,759 -------------- Net Investment Income 3,475,469 -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized loss on investments (27,529,590) Net change in unrealized appreciation/depreciation on investments 74,661,609 -------------- Net Gain 47,132,019 -------------- Net Increase in Net Assets from Operations $ 50,607,488 ============== </Table> See Notes to Financial Statements. 118 <Page> STATEMENT OF CHANGES IN NET ASSETS Liberty Growth & Income Fund, Variable Series <Table> <Caption> YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, INCREASE (DECREASE) IN NET ASSETS: 2003 2002 - ---------------------------------- -------------- -------------- OPERATIONS: Net investment income $ 3,475,469 $ 1,860,948 Net realized loss on investments (27,529,590) (28,158,847) Net change in unrealized appreciation/depreciation on investments 74,661,609 (19,133,885) -------------- -------------- Net Increase (Decrease) from Operations 50,607,488 (45,431,784) -------------- -------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income: Class A (2,859,733) (1,556,810) Class B (497,712) (354,201) -------------- -------------- Total Distributions Declared to Shareholders (3,357,445) (1,911,011) -------------- -------------- SHARE TRANSACTIONS: Class A: Subscriptions 7,840,182 6,842,505 Proceeds received in connection with merger 88,842,502 -- Distributions reinvested 2,859,733 1,556,810 Redemptions (35,938,840) (35,673,636) -------------- -------------- Net Increase (Decrease) 63,603,577 (27,274,321) -------------- -------------- Class B: Subscriptions 14,226,069 13,543,954 Proceeds received in connection with merger 7,935,880 -- Distributions reinvested 497,712 354,201 Redemptions (13,087,318) (3,985,341) -------------- -------------- Net Increase 9,572,343 9,912,814 -------------- -------------- Net Increase (Decrease) from Share Transactions 73,175,920 (17,361,507) -------------- -------------- Total Increase (Decrease) in Net Assets 120,425,963 (64,704,302) NET ASSETS: Beginning of period 141,090,986 205,795,288 -------------- -------------- End of period (including undistributed net investment income of $103,584 and overdistributed net investment income of $(6,499), respectively) $ 261,516,949 $ 141,090,986 ============== ============== CHANGES IN SHARES: Class A: Subscriptions 613,478 498,777 Issued in connection with merger 7,939,987 -- Issued for distributions reinvested 202,962 131,377 Redemptions (2,893,899) (2,737,362) -------------- -------------- Net Increase (Decrease) 5,862,528 (2,107,208) -------------- -------------- Class B: Subscriptions 1,213,974 950,359 Issued in connection with merger 710,257 -- Issued for distributions reinvested 35,349 29,941 Redemptions (1,128,428) (314,657) -------------- -------------- Net Increase 831,152 665,643 -------------- -------------- </Table> See Notes to Financial Statements. 119 <Page> NOTES TO FINANCIAL STATEMENTS Liberty Growth & Income Fund, Variable Series / December 31, 2003 NOTE 1. ORGANIZATION Liberty Growth & Income Fund, Variable Series (formerly Colonial U.S. Growth & Income Fund, Variable Series) (the "Fund"), a series of Liberty Variable Investment Trust (the "Trust") is a diversified portfolio. The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. INVESTMENT GOAL--The Fund seeks long-term growth and income. FUND SHARES--The Fund may issue an unlimited number of shares and offers two classes of shares: Class A and Class B. Each share class has its own expense structure. Shares of the Fund are available exclusively as a pooled funding vehicle for variable annuity contracts ("VA Contracts") and Variable Life Insurance Policies ("VLI Policies") offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies"). The Participating Insurance Companies and their separate accounts own all the shares of the Fund. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES--The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION--Equity securities are valued at the last sale price at the close of the principal exchange on which they trade. Unlisted securities or listed securities for which there were no sales during the day are valued at the closing bid price on such exchanges or over-the-counter markets. Short-term obligations maturing within 60 days are valued at amortized cost, which approximates market value. Investments in other investment companies are valued at net asset value. Investments for which market quotations are not readily available are valued at fair value as determined in good faith under consistently applied procedures established by and under the general supervision of the Board of Trustees. SECURITY TRANSACTIONS--Security transactions are accounted for on the trade date. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. REPURCHASE AGREEMENTS--The Fund may engage in repurchase agreement transactions with institutions that the Fund's investment advisor has determined are creditworthy. The Fund, through its custodian, receives delivery of underlying securities collateralizing a repurchase agreement. Collateral is at least equal, at all times, to the value of the repurchase obligation including interest. A repurchase agreement transaction involves certain risks in the event of default or insolvency of the counterparty. These risks include possible delays or restrictions upon the Fund's ability to dispose of the underlying securities and a possible decline in the value of the underlying securities during the period while the Fund seeks to assert its rights. INCOME RECOGNITION--Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date. Awards from class action litigation are recorded as a reduction of cost if the Fund still owns the applicable securities on the payment date. If the Fund no longer owns the applicable securities, the proceeds are recorded as realized gains. DETERMINATION OF CLASS NET ASSET VALUES--All income, expenses (other than class-specific expenses, as shown on the Statement of Operations), and realized and unrealized gains (losses), are allocated to each class of the Fund on a daily basis, based on the relative net assets of each class, for purposes of determining the net asset value of each class. FEDERAL INCOME TAX STATUS--The Fund intends to qualify each year as a "regulated investment company" under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its taxable income, if any, for its tax year, and as such will not be subject to federal income taxes. In addition, by distributing in each calendar year substantially all of its net investment income, capital gains and certain other amounts, if any, the Fund will not be subject to federal excise tax. Therefore, no federal income or excise tax provision is recorded. DISTRIBUTIONS TO SHAREHOLDERS--Distributions to shareholders are recorded on ex-date. Net realized capital gains, if any, are distributed at least annually. Income and capital gains dividends are determined in accordance with income tax regulations which may differ from GAAP. All dividends and distributions are reinvested in additional shares of the Fund at net asset value as of the record date of the distribution. NOTE 3. FEDERAL TAX INFORMATION The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund's capital accounts 120 <Page> for permanent tax DIF ferences to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. For the year ended December 31, 2003, permanent differences resulting primarily from differing treatments for deferral of losses from wash sales, capital loss carryforwards from the merger, non-deductible expenses from the merger and Real Estate Investment Trust ("REIT") adjustments were identified and reclassified among the components of the Fund's net assets as follows: <Table> <Caption> UNDISTRIBUTED NET INVESTMENT ACCUMULATED NET PAID-IN INCOME REALIZED LOSS CAPITAL -------------- --------------- ------- $ (7,941) $ (18,218,000) $ 18,225,941 </Table> Net investment income and net realized gains (losses), as disclosed on the Statement of Operations, and net assets were not affected by this reclassification. The tax character of distributions paid during the years ended December 31, 2003 and December 31, 2002 was as follows: <Table> <Caption> DECEMBER 31, DECEMBER 31, 2003 2002 ------------ ------------ Distributions paid from: Ordinary Income* $ 3,357,445 $ 1,911,011 Long-Term Capital Gains -- -- </Table> * For tax purposes short-term capital gains distributions, if any, are considered ordinary income distributions. As of December 31, 2003, the components of distributable earnings on a tax basis were as follows: <Table> <Caption> UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM NET UNREALIZED INCOME CAPITAL GAINS APPRECIATION* - ------------- -------------- -------------- $ 118,561 $ -- $ 37,331,722 </Table> * The differences between book-basis and tax-basis net unrealized appreciation are primarily due to deferral of losses from wash sales. Unrealized appreciation and depreciation at December 31, 2003, based on cost of investments for federal income tax purposes was: <Table> Unrealized appreciation $ 40,639,247 Unrealized depreciation (3,307,525) ------------ Net unrealized appreciation $ 37,331,722 ============ </Table> The following capital loss carryforwards are available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: <Table> <Caption> YEAR OF CAPITAL LOSS EXPIRATION CARRYFORWARD ---------- ------------ 2009 $ 11,754,808 2010 34,444,008 2011 26,847,476 ------------ $ 73,046,292 ============ </Table> Of the capital loss carryforwards attributable to the Fund, $17,706,480 was obtained upon the Fund's merger with Liberty Value Fund, Variable Series (See Note 7). No capital loss carryforwards were utilized and/or expired during the year ended December 31, 2003 for the Fund. Any capital loss carryforwards acquired as part of a merger that are permanently lost due to provisions under Internal Revenue Code are included as being expired. Expired capital loss carryforwards are recorded as a reduction of paid-in capital. POST-OCTOBER LOSSES--Under current tax rules, certain currency and capital losses realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of December 31, 2003, post-October capital losses of $1,325,049 attributed to security transactions were deferred to January 1, 2004. NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES INVESTMENT ADVISOR MERGER--On April 1, 2003, Liberty Advisory Services Corp., the previous investment advisor to the Fund, and Colonial Management Associates, Inc., the previous sub-advisor to the Fund, merged into Columbia Management Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co. Columbia is an indirect, wholly owned subsidiary of FleetBoston Financial Corporation. As a result of the merger, Columbia now serves as the Fund's investment advisor. The merger did not change the way the Fund is managed, the investment personnel assigned to manage the Fund or the fees paid by the Fund. INVESTMENT ADVISORY FEE--Columbia is the investment advisor to the Fund and provides administrative and other services. Columbia receives a monthly fee based on the Fund's average daily net assets at the following annual rates: <Table> <Caption> AVERAGE DAILY NET ASSETS FEE RATE - ------------------------ -------- First $500 million 0.80% Next $500 million 0.75% Over $1 billion 0.70% </Table> Prior to November 1, 2003, Columbia received a monthly investment advisory fee based on the Fund's average daily net assets at the following annual rates: <Table> <Caption> AVERAGE DAILY NET ASSETS FEE RATE - ------------------------ -------- First $1 billion 0.80% Over $1 billion 0.70% </Table> For the year ended December 31, 2003, the Fund's effective investment advisory fee rate was 0.80%. PRICING AND BOOKKEEPING FEES--Columbia is responsible for providing pricing and bookkeeping services to the Fund under a pricing and bookkeeping agreement. Under a 121 <Page> separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Corporation ("State Street"). Columbia pays the total fees collected to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual flat fee of $10,000 paid monthly, and in any month that the Fund's average daily net assets exceed $50 million, an additional monthly fee. The additional fee rate is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. This rate is applied to the average daily net assets of the Fund for that month. The Fund also pays additional fees for pricing services. For the year ended December 31, 2003, the effective pricing and bookkeeping fee rate was 0.033%. TRANSFER AGENT FEE--Columbia Funds Services, Inc. (the "Transfer Agent"), formerly Liberty Funds Services, Inc., an affiliate of Columbia, provides shareholder services for a monthly fee at an annual rate of $7,500. Effective October 13, 2003, Liberty Funds Services, Inc. changed its name to Columbia Funds Services, Inc. DISTRIBUTION FEES--Columbia Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia, is the principal underwriter of the Fund. Prior to October 13, 2003, Columbia Funds Distributor, Inc. was known as Liberty Funds Distributor, Inc. The Fund has adopted a 12b-1 plan which requires the payment of a monthly distribution fee to the Distributor at the annual rate of 0.25% of Class B average daily net assets. FEE WAIVERS--Effective April 7, 2003, Columbia has agreed to reimburse fees at the annual rate of 0.11% of the Fund's average daily net assets. In addition, the Distributor has voluntarily agreed to waive Class B distribution fees at the annual rate of 0.02% of the Class B average daily net assets. These agreements will continue until April 6, 2004, after which they may be revised or discontinued any time. Prior to April 7, 2003, Liberty Advisory Services Corp. and the Distributor had voluntarily agreed to reimburse the Fund for certain expenses so that total expenses (exclusive of brokerage commissions, interest, taxes and extraordinary expenses, if any) would not exceed 1.00% annually of the Fund's average daily net assets. The Distributor would first reimburse the Class B distribution fee up to 0.25% annually to reach the 1.00% limit on Class B expenses. If additional reimbursement was needed to meet the limit for each class, Liberty Advisory Services Corp. would then reimburse other expenses to the extent necessary. If additional reimbursement was still needed in order to reach the expense limit, Liberty Advisory Services Corp. would then waive a portion of its investment advisory fee to the extent necessary. CUSTODY CREDITS--The Fund has an agreement with its custodian bank under which custody fees may be reduced by balance credits. The Fund could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if it had not entered into such an agreement. FEES PAID TO OFFICERS AND TRUSTEES--The Fund pays no compensation to its officers, all of whom are employees of Columbia or its affiliates. The Fund's Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. NOTE 5. PORTFOLIO INFORMATION PURCHASES AND SALES OF SECURITIES--For the year ended December 31, 2003, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were $146,430,202 and $169,510,507, respectively, of which $197,009 and $12,566, respectively, were U.S. Government securities. NOTE 6. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES INDUSTRY FOCUS--The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. LEGAL PROCEEDINGS--Columbia, the Distributor and certain of their affiliates (collectively, "the Columbia Group") have received information requests and subpoenas from various regulatory authorities, including the Securities and Exchange Commission ("SEC") and the New York Attorney General, in connection with their investigations of late trading and market timing in mutual funds. The Columbia Group has not uncovered any instances where Columbia or the Distributor was knowingly involved in late trading of mutual fund shares. The Columbia Group has identified a limited number of investors who had informal arrangements for trading certain Columbia Fund shares between 1998 and 2003. A substantial majority of the trading had ended by October 2002. None of these arrangements exists today. Information relating to those trading arrangements has been supplied to various regulatory authorities. To the extent that any Columbia Fund, whose shares were involved in those trading activities, was harmed by them, the Columbia Group has undertaken to reimburse such fund. The SEC staff has issued notices to the effect that it has made a preliminary determination to recommend that the 122 <Page> SEC bring civil enforcement actions, including injunctive proceedings, against Columbia and the Distributor, alleging that they have violated certain provisions of the federal securities laws. The Columbia Group believes that those allegations are based principally on the trading arrangements referred to above. Columbia and the Distributor are engaged in discussions with the SEC staff in an effort to reach a satisfactory resolution of these matters. However, there can be no assurance that such a resolution will be reached. Any potential resolution of these matters may include, but not be limited to, sanctions, financial penalties, damages or injunctions regarding Columbia or the Distributor, and structural changes in the conduct of their business. Although the Columbia Group does not believe that these regulatory developments or their resolution will have a material adverse effect on the Columbia Funds, or on the ability of Columbia and the Distributor to provide services to the Columbia Funds, there can be no assurance that these matters or any adverse publicity or other developments resulting from them will not result in increased redemptions or reduced sales of Columbia Fund shares, which could increase transactions costs or operating expenses, or other consequences for the Columbia Funds. NOTE 7. BUSINESS COMBINATIONS AND MERGERS FUND MERGERS--On April 7, 2003, the Liberty Value Fund, Variable Series (the "target fund") merged into the Colonial U.S. Growth & Income Fund, Variable Series (the "surviving fund"). The Colonial U.S. Growth & Income Fund, Variable Series received a tax-free transfer of assets from the Liberty Value Fund, Variable Series as follows: <Table> <Caption> SHARES NET ASSETS UNREALIZED ISSUED RECEIVED DEPRECIATION(1) ------ ---------- --------------- 8,650,244 $ 96,778,382 $ 17,342,259 <Caption> NET ASSETS NET ASSETS OF COLONIAL OF COLONIAL U.S. GROWTH & NET ASSETS OF U.S. GROWTH & INCOME FUND, LIBERTY VALUE FUND, INCOME FUND, VARIABLE SERIES VARIABLE SERIES VARIABLE SERIES PRIOR TO IMMEDIATELY PRIOR IMMEDIATELY AFTER COMBINATION TO COMBINATION COMBINATION --------------- ------------------- ------------------ $ 126,206,600 $ 96,778,382 $ 222,984,982 </Table> (1) Unrealized depreciation is included in the Net Assets Received amount shown above. Also on April 7, 2003, subsequent to the merger described above, the Colonial U.S. Growth & Income Fund, Variable Series was renamed the Liberty Growth & Income Fund, Variable Series. Class A and Class B shares of the surviving fund were issued in exchange for Class A and Class B shares, respectively, of the target fund. 123 <Page> FINANCIAL HIGHLIGHTS Liberty Growth & Income Fund, Variable Series--Class A Shares Selected data for a share outstanding throughout each period is as follows: <Table> <Caption> YEAR ENDED DECEMBER 31, ------------------------------------------------------------------------- 2003 2002 2001 2000 1999 ---------- ---------- ---------- ---------- ---------- NET ASSET VALUE, BEGINNING OF PERIOD $ 11.97 $ 15.55 $ 18.27 $ 19.85 $ 18.79 ---------- ---------- ---------- ---------- ---------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (a) 0.21 0.15 0.16 0.17 0.14 Net realized and unrealized gain (loss) on investments 2.16 (3.56) (0.35) 0.54 2.07 ---------- ---------- ---------- ---------- ---------- Total from Investment Operations 2.37 (3.41) (0.19) 0.71 2.21 ---------- ---------- ---------- ---------- ---------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.19) (0.17) (0.15) (0.17) (0.11) In excess of net investment income -- -- -- --(b) -- From net realized gains -- -- (2.34) (2.12) (1.04) Return of capital -- -- (0.04) -- -- ---------- ---------- ---------- ---------- ---------- Total Distributions Declared to Shareholders (0.19) (0.17) (2.53) (2.29) (1.15) ---------- ---------- ---------- ---------- ---------- NET ASSET VALUE, END OF PERIOD $ 14.15 $ 11.97 $ 15.55 $ 18.27 $ 19.85 ========== ========== ========== ========== ========== Total return (c)(d) 19.79%(e) (21.95)% (0.60)% 3.60% 12.00% RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (f) 0.80% 0.88% 0.96% 0.88% 0.88% Net investment income (f) 1.66% 1.08% 0.92% 0.85% 0.69% Waiver/reimbursement 0.09% -- -- -- -- Portfolio turnover rate 73% 69% 53% 120% 101% Net assets, end of period (000's) $ 216,923 $ 113,335 $ 180,053 $ 203,366 $ 212,355 </Table> (a) Per share data was calculated using average shares outstanding during the period. (b) Rounds to less than $0.01 per share. (c) Total return at net asset value assuming all distributions reinvested. (d) Total return figure does not include any insurance company charges associated with a variable annuity. If included, total return would be reduced. (e) Had the Investment Advisor not waived or reimbursed a portion of expenses, total return would have been reduced. (f) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. 124 <Page> REPORT OF INDEPENDENT AUDITORS To the Trustees of Liberty Variable Investment Trust and the Class A Shareholders of Liberty Growth & Income Fund, Variable Series In our opinion, the accompanying statement of assets and liabilities, including the investment portfolio, and the related statements of operations and of changes in net assets and the Class A financial highlights present fairly, in all material respects, the financial position of Liberty Growth & Income Fund, Variable Series (formerly Colonial U.S. Growth and Income Fund, Variable Series) (the "Fund") (a series of Liberty Variable Investment Trust) at December 31, 2003, and the results of its operations, the changes in its net assets and the Class A financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and the Class A financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund'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 December 31, 2003 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts February 12, 2004 125 <Page> UNAUDITED INFORMATION FEDERAL INCOME TAX INFORMATION 100% of the ordinary income distributed by the Fund, for the year ended December 31, 2003, qualifies for the corporate dividends received deduction. 126 <Page> PORTFOLIO MANAGER'S DISCUSSION Liberty S&P 500 Index Fund, Variable Series / December 31, 2003 Liberty S&P 500 Index Fund, Variable Series seeks capital appreciation by matching the performance of a benchmark index that measures the investment returns of stocks of large US companies. Tom O'Brien, a principal of SSgA Funds Management, Inc., is the portfolio manager of the fund. After three consecutive years of loss, the S&P 500 Index returned 28.68% for the 12-month period ended December 31, 2003. Investors responded favorably to low interest rates, which made borrowing easier; lower tax rates; and to signs of an improving economy and reduced geo-political risk. The fund's performance was comparable to the index for the period. Large-cap stocks trailed both mid-cap and small-cap stocks during the year. Overall, small-cap stocks were the best performers. For the year, the S&P MidCap 400 Index gained 35.62% and the S&P SmallCap 600 Index returned 38.79%. Value stocks edged out growth stocks during 2003, with the S&P 500/Barra Value Index returning 31.79% and the S&P 500/Barra Growth Index returning 25.66%. ALL SECTORS GAIN All ten economic sectors of the S&P 500 had positive returns for 2003. Information technology and materials were the best performers for the year, with gains of over 46% and 38%, respectively. Yahoo!, Inc.; Intel Corp. and EMC Corp. made the strongest contributions to the index's performance (0.3%, 2.0% and 0.3% of net assets, respectively). Noteworthy names in the materials sector included Alcoa Inc., Newmont Mining Corp. and Dow Chemical Co. (0.3%, 0.2% and 0.4% of net assets, respectively). The S&P telecommunications sector turned in the most disappointing performance for the year. It gained 3.28%. Nextel Communications Inc. was the only standout performer (0.3% of net assets). The biggest detractors in this sector included Verizon Communications, AT&T Corp. and Qwest Communications International Inc. (0.9%, 0.2% and 0.1% of net assets, respectively). FOCUS ON COST-EFFECTIVE EXECUTION Our focus on cost-effective trade execution is one hallmark of our management style. We also manage the fund with a full replication investment strategy. This approach means that the fund generally holds each of the 500 securities included in the S&P 500 Index in approximately the same weighting as the company's representation in the index. A full replication strategy tends to match the performance of the index more closely than other methods. Since the fund incurs trading costs in seeking to maintain the appropriate weight of each security in the index, the fund's return may be different than that of the index. In addition, the fund may be required to sell securities to meet redemption demand or buy securities to invest new monies that come into the fund. Economic and market conditions frequently change. There is no assurance that the trends described here will continue or commence. The primary risks involved with investing in the fund include equity risk, market risk and tracking error risk. Unlike the S&P 500 Index, the fund incurs administrative expenses and transaction costs in trading stocks. The composition of the S&P 500 Index and the stocks held by the fund may occasionally diverge. Holdings are disclosed as of December 31, 2003, and are subject to change. 127 <Page> PERFORMANCE INFORMATION Liberty S&P 500 Index Fund, Variable Series / December 31, 2003 AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 2003 (%) <Table> <Caption> 1-YEAR LIFE - --------------------------------------------------------- Class A (5/30/00) 27.80 -5.22 S&P 500 Index(1) 28.68 -4.36 </Table> Inception date of share class is in parentheses. <Table> <Caption> NET ASSET VALUE PER SHARE ($) 12/31/02 12/31/03 - --------------------------------------------------------- Class A 7.59 9.62 </Table> [CHART] VALUE OF A $10,000 INVESTMENT, 5/30/00 - 12/31/03 Class A: $8,249 <Table> <Caption> CLASS A SHARES S&P 500 INDEX 5/30/2000 $ 10,000 $ 10,000 5/31/2000 $ 10,008 $ 10,312 6/30/2000 $ 10,316 $ 10,567 7/31/2000 $ 10,167 $ 10,402 8/31/2000 $ 10,792 $ 11,048 9/30/2000 $ 10,225 $ 10,464 10/31/2000 $ 10,209 $ 10,421 11/30/2000 $ 9,426 $ 9,599 12/31/2000 $ 9,471 $ 9,646 1/31/2001 $ 9,815 $ 9,989 2/28/2001 $ 8,944 $ 9,078 3/31/2001 $ 8,367 $ 8,502 4/30/2001 $ 9,012 $ 9,163 5/31/2001 $ 9,070 $ 9,224 6/30/2001 $ 8,835 $ 9,000 7/31/2001 $ 8,743 $ 8,912 8/31/2001 $ 8,207 $ 8,354 9/30/2001 $ 7,554 $ 7,679 10/31/2001 $ 7,688 $ 7,826 11/30/2001 $ 8,274 $ 8,426 12/31/2001 $ 8,336 $ 8,500 1/31/2002 $ 8,201 $ 8,376 2/28/2002 $ 8,042 $ 8,214 3/31/2002 $ 8,336 $ 8,523 4/30/2002 $ 7,822 $ 8,007 5/31/2002 $ 7,764 $ 7,948 6/30/2002 $ 7,216 $ 7,382 7/31/2002 $ 6,652 $ 6,807 8/31/2002 $ 6,694 $ 6,851 9/30/2002 $ 5,970 $ 6,106 10/31/2002 $ 6,483 $ 6,644 11/30/2002 $ 6,853 $ 7,035 12/31/2002 $ 6,454 $ 6,622 1/31/2003 $ 6,284 $ 6,448 2/28/2003 $ 6,182 $ 6,352 3/31/2003 $ 6,242 $ 6,413 4/30/2003 $ 6,751 $ 6,942 5/31/2003 $ 7,100 $ 7,308 6/30/2003 $ 7,194 $ 7,401 7/31/2003 $ 7,312 $ 7,531 8/31/2003 $ 7,448 $ 7,678 9/30/2003 $ 7,372 $ 7,597 10/31/2003 $ 7,780 $ 8,027 11/30/2003 $ 7,848 $ 8,097 12/31/2003 $ 8,249 $ 8,519 </Table> PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA PROVIDED. FOR CURRENT MONTH-END PERFORMANCE INFORMATION, PLEASE CONTACT YOUR INSURANCE COMPANY. Total return performance includes changes in share price and reinvestment of all distributions. The S&P (Standard & Poor's) 500 Index is an unmanaged index that tracks the performance of 500 widely held, large-capitalization US stocks. Indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. Performance numbers reflect all fund expenses, but do not include any insurance charges imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. (1) Index performance is from May 30, 2000. 128 <Page> INVESTMENT PORTFOLIO Liberty S&P 500 Index Fund, Variable Series / December 31, 2003 <Table> <Caption> SHARES VALUE -------------- -------------- COMMON STOCKS--98.6% CONSUMER DISCRETIONARY--13.4% AUTO COMPONENTS--0.2% Cooper Tire & Rubber Co. 300 $ 6,414 Dana Corp. 657 12,056 Delphi Corp. 2,741 27,986 Goodyear Tire & Rubber Co. (a) 731 5,746 Johnson Controls, Inc. 416 48,306 Visteon Corp. 746 7,766 -------------- 108,274 -------------- AUTOMOBILES--0.7% Ford Motor Co. 8,550 136,800 General Motors Corp. 2,629 140,389 Harley-Davidson, Inc. 1,396 66,352 -------------- 343,541 -------------- HOTELS, RESTAURANTS & LEISURE--1.3% Carnival Corp. 2,924 116,171 Darden Restaurants, Inc. 671 14,118 Harrah's Entertainment, Inc. 519 25,831 Hilton Hotels Corp. 1,761 30,166 International Game Technology, Inc. 1,597 57,013 Marriott International, Inc., Class A 1,126 52,021 McDonald's Corp. 5,991 148,757 Starbucks Corp. (a) 1,813 59,938 Starwood Hotels & Resorts Worldwide, Inc. 931 33,488 Wendy's International, Inc. 540 21,190 Yum! Brands, Inc. (a) 1,363 46,887 -------------- 605,580 -------------- HOUSEHOLD DURABLES--0.5% American Greetings Corp., Class A (a) 257 5,621 Black & Decker Corp. 378 18,643 Centex Corp. 292 31,434 Fortune Brands, Inc. 693 49,543 KB Home Corp. 190 13,779 Leggett & Platt, Inc. 816 17,650 Maytag Corp. 351 9,775 Newell Rubbermaid, Inc. 1,350 30,740 Pulte Homes, Inc. 270 25,277 Snap-On, Inc. 238 7,673 Stanley Works 381 14,428 Tupperware Corp. 250 4,335 Whirlpool Corp. 295 21,432 -------------- 250,330 -------------- INTERNET & CATALOG RETAIL--0.4% eBay, Inc. (a) 2,990 193,124 -------------- LEISURE EQUIPMENT & PRODUCTS--0.2% Brunswick Corp. 391 12,446 Eastman Kodak Co. 1,257 32,267 Hasbro, Inc. 772 16,428 Mattel, Inc. 1,925 37,095 -------------- 98,236 -------------- MEDIA--4.0% Clear Channel Communications, Inc. 2,866 $ 134,215 Comcast Corp., Class A (a) 10,494 344,938 Dow Jones & Co., Inc. 347 17,298 Gannett Co., Inc. 1,265 112,787 Interpublic Group of Companies, Inc. (a) 1,872 29,203 Knight-Ridder, Inc. 412 31,876 McGraw-Hill Companies, Inc. 861 60,201 Meredith Corp. 257 12,544 New York Times Co., Class A 707 33,788 Omnicom Group, Inc. 915 79,907 Time Warner, Inc. (a) 20,938 376,675 Tribune Co. 1,451 74,872 Univision Communications, Inc., Class A (a) 1,445 57,352 Viacom, Inc., Class B 8,175 362,806 Walt Disney Co. 9,485 221,285 -------------- 1,949,747 -------------- MULTI-LINE RETAIL--3.4% Big Lots, Inc. (a) 501 7,119 Costco Wholesale Corp. (a) 2,072 77,037 Dillard's, Inc., Class A 322 5,300 Dollar General Corp. 1,564 32,828 Family Dollar Stores, Inc. 812 29,135 Federated Department Stores, Inc. 824 38,835 JC Penney Co., Inc. 1,276 33,533 Kohl's Corp. (a) 1,571 70,601 May Department Stores Co. 1,291 37,529 Nordstrom, Inc. 620 21,266 Sears, Roebuck and Co. 1,201 54,633 Target Corp. 4,185 160,704 Wal-Mart Stores, Inc. 20,135 1,068,162 -------------- 1,636,682 -------------- SPECIALTY RETAIL--2.4% Autonation, Inc. (a) 1,204 22,117 AutoZone, Inc. (a) 388 33,061 Bed Bath & Beyond, Inc. (a) 1,377 59,693 Best Buy Co., Inc. 1,561 81,547 Circuit City Stores, Inc. 972 9,846 Gap, Inc. 4,136 95,997 Home Depot, Inc. 10,619 376,868 Lowe's Companies, Inc. 3,707 205,331 Limited Brands 2,376 42,839 Office Depot, Inc. (a) 1,476 24,664 RadioShack Corp. 706 21,660 Sherwin-Williams Co. 618 21,469 Staples, Inc. (a) 2,261 61,725 Tiffany & Co. 689 31,143 TJX Companies, Inc. 2,306 50,847 Toys "R" US, Inc. (a) 846 10,693 -------------- 1,149,500 -------------- TEXTILES, APPAREL & LUXURY GOODS-- 0.3% Jones Apparel Group, Inc. 531 18,707 Liz Claiborne, Inc. 506 17,943 Nike, Inc. 1,281 87,697 </Table> See Notes to Investment Portfolio. 129 <Page> <Table> <Caption> SHARES VALUE -------------- -------------- Reebok International Ltd. 285 $ 11,206 VF Corp. 453 19,588 -------------- 155,141 -------------- CONSUMER STAPLES--8.5% BEVERAGES--2.6% Adolph Coors Co. 229 12,847 Anheuser-Busch Companies, Inc. 3,771 198,656 Brown-Forman Corp., Class B 331 30,932 Coca-Cola Co. 11,371 577,078 Coca-Cola Enterprises, Inc. 2,205 48,223 Pepsi Bottling Group, Inc. 1,332 32,208 PepsiCo, Inc. 7,977 371,888 -------------- 1,271,832 -------------- FOOD & DRUG RETAILING--1.1% Albertson's, Inc. 1,614 36,557 CVS Corp. 1,795 64,835 Kroger Co. (a) 3,400 62,934 Safeway, Inc. (a) 1,972 43,207 Supervalu, Inc. 629 17,983 Sysco Corp. 3,031 112,844 Walgreen Co. 4,761 173,205 Winn-Dixie Stores, Inc. 458 4,557 -------------- 516,122 -------------- FOOD PRODUCTS--1.2% Archer-Daniels-Midland Co. 2,928 44,564 Campbell Soup Co. 1,841 49,339 ConAgra Foods, Inc. 2,506 66,133 General Mills, Inc. 1,691 76,602 Hershey Foods Corp. 578 44,500 HJ Heinz Co. 1,614 58,798 Kellogg Co. 1,879 71,552 McCormick & Co., Inc. 613 18,451 Sara Lee Corp. 3,646 79,155 WM Wrigley Jr. Co. 1,084 60,932 -------------- 570,026 -------------- HOUSEHOLD PRODUCTS--1.9% Clorox Co. 1,026 49,823 Colgate-Palmolive Co. 2,474 123,824 Kimberly-Clark Corp. 2,336 138,034 Procter & Gamble Co. 6,055 604,773 -------------- 916,454 -------------- PERSONAL PRODUCTS--0.5% Alberto-Culver Co., Inc., Class B 319 20,123 Avon Products, Inc. 1,148 77,479 Gillette Co. 4,721 173,402 -------------- 271,004 -------------- TOBACCO--1.2% Altria Group, Inc. 9,457 514,650 RJ Reynolds Tobacco Holdings, Inc. 400 23,260 UST, Inc. 724 25,840 -------------- 563,750 -------------- ENERGY--5.7% ENERGY EQUIPMENT & SERVICES--0.8% Baker Hughes, Inc. 1,562 $ 50,234 BJ Services Co. (a) 756 27,140 Halliburton Co. 2,111 54,886 Nabors Industries Ltd. (a) 634 26,311 Noble Corp. (a) 617 22,076 Rowan Companies, Inc. (a) 440 10,195 Schlumberger Ltd. 2,746 150,261 Transocean, Inc. (a) 1,537 36,903 -------------- 378,006 -------------- OIL & GAS--4.9% Amerada Hess Corp. 442 23,501 Anadarko Petroleum Corp. 1,155 58,917 Apache Corp. 772 62,609 Ashland, Inc. 276 12,161 Burlington Resources, Inc. 931 51,559 ChevronTexaco Corp. 4,949 427,544 ConocoPhillips 3,205 210,152 Devon Energy Corp. 1,143 65,448 EOG Resources, Inc. 545 25,163 Exxon Mobil Corp. 30,780 1,261,980 Kerr-McGee Corp. 488 22,687 Marathon Oil Corp. 1,420 46,988 Occidental Petroleum Corp. 1,775 74,976 Sunoco, Inc. 339 17,340 Unocal Corp. 1,214 44,712 -------------- 2,405,737 -------------- FINANCIALS--20.4% BANKS--7.2% AmSouth Bancorp 1,545 37,852 Bank of America Corp. 6,928 557,219 Bank of New York Co., Inc. 3,557 117,808 Bank One Corp. 5,231 238,481 BB&T Corp. 2,520 97,373 Charter One Financial, Inc. 1,026 35,448 Comerica, Inc. 788 44,175 Fifth Third Bancorp 2,687 158,802 First Tennessee National Corp. 567 25,005 FleetBoston Financial Corp. (b) 4,858 212,052 Golden West Financial Corp. 743 76,670 Huntington Bancshares, Inc. 1,061 23,872 KeyCorp 1,890 55,415 Marshall & Ilsley Corp. 1,030 39,398 Mellon Financial Corp. 1,986 63,770 National City Corp. 2,849 96,695 North Fork Bancorporation, Inc. 712 28,815 Northern Trust Corp. 1,072 49,762 PNC Financial Services Group, Inc. 1,306 71,477 Regions Financial Corp. 974 36,233 SouthTrust Corp. 1,497 48,997 SunTrust Banks, Inc. 1,342 95,953 Synovus Financial Corp. 1,416 40,951 Union Planters Corp. 902 28,404 </Table> See Notes to Investment Portfolio. 130 <Page> <Table> <Caption> SHARES VALUE -------------- -------------- US Bancorp 9,072 $ 270,164 Wachovia Corp. 6,126 285,410 Washington Mutual, Inc. 4,194 168,263 Wells Fargo & Co. 7,901 465,290 Zions Bancorporation 440 26,985 -------------- 3,496,739 -------------- DIVERSIFIED FINANCIALS--8.2% American Express Co. 6,032 290,923 Bear Stearns Companies, Inc. 437 34,938 Capital One Financial Corp. 1,121 68,706 Charles Schwab Corp. 6,330 74,947 Citigroup, Inc. 24,066 1,168,164 Countrywide Financial Corp. 845 64,118 Fannie Mae 4,512 338,671 Federated Investors, Inc. 528 15,502 Franklin Resources, Inc. 1,133 58,984 Freddie Mac 3,236 188,724 Goldman Sachs Group, Inc. 2,252 222,340 Janus Capital Group, Inc. 1,008 16,541 JP Morgan Chase & Co. 9,487 348,458 Lehman Brothers Holdings, Inc. 1,291 99,691 MBNA Corp. 5,917 147,037 Merrill Lynch & Co., Inc. 4,456 261,344 Moody's Corp. 706 42,748 Morgan Stanley 5,078 293,864 Principal Financial Group 1,448 47,885 Providian Financial Corp. (a) 1,446 16,831 SLM Corp. 2,067 77,885 State Street Corp. 1,516 78,953 T Rowe Price Group, Inc. 631 29,916 -------------- 3,987,170 -------------- INSURANCE--4.6% ACE Ltd. 1,333 55,213 AFLAC, Inc. 2,415 87,375 Allstate Corp. 3,308 142,310 Ambac Financial Group, Inc. 536 37,193 American International Group, Inc. 12,186 807,688 AON Corp. 1,531 36,652 Chubb Corp. 866 58,975 Cincinnati Financial Corp. 764 31,996 Hartford Financial Services Group, Inc. 1,295 76,444 Jefferson-Pilot Corp. 645 32,669 John Hancock Financial Services, Inc. 1,372 51,450 Lincoln National Corp. 817 32,982 Loews Corp. 863 42,675 Marsh & McLennan Companies, Inc. 2,433 116,516 MBIA, Inc. 646 38,263 MetLife, Inc. 3,540 119,192 MGIC Investment Corp. 513 29,210 Progressive Corp. 1,040 86,934 Prudential Financial, Inc. 2,494 104,174 SAFECO Corp. 655 25,499 St. Paul Companies 1,099 43,575 Torchmark Corp. 487 22,178 Travelers Property Casualty Corp., Class B 4,709 $ 79,912 UnumProvident Corp. 1,314 20,722 XL Capital Ltd., Class A 678 52,579 -------------- 2,232,376 -------------- REAL ESTATE--0.4% Apartment Investment & Management Co., REIT 400 13,800 Equity Office Properties Trust, REIT 1,862 53,346 Equity Residential, REIT 1,281 37,802 Plum Creek Timber Co, Inc., REIT 781 23,781 ProLogis, REIT 900 28,881 Simon Property Group, Inc., REIT 900 41,706 -------------- 199,316 -------------- HEALTH CARE--13.1% BIOTECHNOLOGY--1.1% Amgen, Inc. (a) 6,009 371,356 Biogen Idec, Inc. (a) 1,516 55,758 Chiron Corp. (a) 840 47,872 Genzyme Corp. (a) 1,042 51,412 MedImmune, Inc. (a) 1,106 28,092 -------------- 554,490 -------------- HEALTH CARE EQUIPMENT & SUPPLIES--2.0% Applera Corp.--Applied Biosystems Group 904 18,722 Bausch & Lomb, Inc. 279 14,480 Baxter International, Inc. 2,818 86,005 Becton Dickinson & Co. 1,199 49,327 Biomet, Inc. 1,217 44,311 Boston Scientific Corp. (a) 3,754 137,997 CR Bard, Inc. 213 17,306 Guidant Corp. 1,426 85,845 IMS Health, Inc. 867 21,554 Medtronic, Inc. 5,598 272,119 Millipore Corp. (a) 201 8,653 St. Jude Medical, Inc. (a) 796 48,835 Stryker Corp. 915 77,784 Zimmer Holdings, Inc. (a) 1,169 82,298 -------------- 965,236 -------------- HEALTH CARE PROVIDERS & SERVICES--1.7% Aetna, Inc. 706 47,711 AmerisourceBergen Corp. 551 30,939 Anthem, Inc. (a) 703 52,725 Cardinal Health, Inc. 1,985 121,403 CIGNA Corp. 665 38,238 Express Scripts, Inc. (a) 400 26,572 HCA, Inc. 2,287 98,250 Health Management Associates, Inc. 1,026 24,624 Humana, Inc. (a) 717 16,383 Manor Care, Inc. 358 12,376 McKesson Corp. 1,349 43,384 Quest Diagnostics, Inc. (a) 471 34,435 Tenet Healthcare Corp. (a) 2,080 33,384 </Table> See Notes to Investment Portfolio. 131 <Page> <Table> <Caption> SHARES VALUE -------------- -------------- UnitedHealth Group, Inc. 2,782 $ 161,857 WellPoint Health Networks (a) 678 65,759 -------------- 808,040 -------------- PHARMACEUTICALS--8.3% Abbott Laboratories 7,251 337,897 Allergan, Inc. 652 50,080 Bristol-Myers Squibb Co. 8,970 256,542 Eli Lilly & Co. 5,286 371,764 Forest Laboratories, Inc. (a) 1,724 106,543 Johnson & Johnson 13,817 713,786 King Pharmaceuticals, Inc. (a) 1,027 15,672 Medco Health Solutions, Inc. (a) 1,230 41,808 Merck & Co., Inc. 10,378 479,464 Pfizer, Inc. 35,569 1,256,653 Schering-Plough Corp. 6,857 119,243 Watson Pharmaceuticals, Inc. (a) 462 21,252 Wyeth 6,239 264,845 -------------- 4,035,549 -------------- INDUSTRIALS--11.6% AEROSPACE & DEFENSE--1.5% Boeing Co. 3,928 165,526 General Dynamics Corp. 895 80,899 Goodrich Corp. 485 14,400 Lockheed Martin Corp. 2,133 109,636 Northrop Grumman Corp. 840 80,304 Raytheon Co. 1,865 56,025 Rockwell Collins, Inc. 773 23,213 United Technologies Corp. 2,200 208,494 -------------- 738,497 -------------- AIR FREIGHT & LOGISTICS--1.0% FedEx Corp. 1,395 94,162 Ryder System, Inc. 264 9,016 United Parcel Service, Inc. 5,293 394,593 -------------- 497,771 -------------- AIRLINES--0.1% Delta Air Lines, Inc. 600 7,086 Southwest Airlines Co. 3,639 58,733 -------------- 65,819 -------------- BUILDING PRODUCTS--0.2% American Standard Companies, Inc. (a) 340 34,238 Crane Co. 250 7,685 Masco Corp. 2,160 59,206 -------------- 101,129 -------------- COMMERCIAL SERVICES & SUPPLIES--1.9% Allied Waste Industries, Inc. (a) 1,470 20,404 Apollo Group, Inc., Class A (a) 868 59,024 Automatic Data Processing, Inc. 2,800 110,908 Avery Dennison Corp. 481 26,946 Cendant Corp. (a) 4,751 105,805 Cintas Corp. 782 39,202 Concord EFS, Inc. (a) 2,145 31,832 Convergys Corp. (a) 680 11,873 Deluxe Corp. 237 9,795 Equifax, Inc. 596 $ 14,602 First Data Corp. 3,397 139,583 Fiserv, Inc. (a) 864 34,137 H&R Block, Inc. 832 46,068 Monster Worldwide, Inc. (a) 500 10,980 Paychex, Inc. 1,759 65,435 Pitney Bowes, Inc. 1,052 42,732 Robert Half International, Inc. (a) 700 16,338 R.R. Donnelley & Sons Co. 481 14,502 Sabre Holdings Corp. 708 15,286 Waste Management, Inc. 2,715 80,364 -------------- 895,816 -------------- CONSTRUCTION & ENGINEERING--0.0% Fluor Corp. 409 16,213 -------------- ELECTRICAL EQUIPMENT--0.4% American Power Conversion Corp. 893 21,834 Cooper Industries Ltd. 399 23,114 Emerson Electric Co. 1,984 128,464 Power-One, Inc. (a) 467 5,058 Rockwell Automation, Inc. 809 28,800 Thomas & Betts Corp. (a) 250 5,722 -------------- 212,992 -------------- INDUSTRIAL CONGLOMERATES--4.5% 3M Co. 3,634 308,999 General Electric Co. 46,739 1,447,974 Honeywell International, Inc. 4,014 134,188 Textron, Inc. 665 37,945 Tyco International Ltd. 9,229 244,568 -------------- 2,173,674 -------------- MACHINERY--1.4% Caterpillar, Inc. 1,592 132,168 Cummins, Inc. 180 8,809 Danaher Corp. 746 68,446 Deere & Co. 1,097 71,360 Dover Corp. 940 37,365 Eaton Corp. 333 35,957 Illinois Tool Works, Inc. 1,433 120,243 Ingersoll-Rand Co. 778 52,811 ITT Industries, Inc. 481 35,695 Navistar International Corp. (a) 371 17,767 Paccar, Inc. 513 43,667 Pall Corp. 500 13,415 Parker Hannifin Corp. 556 33,082 -------------- 670,785 -------------- ROAD & RAIL--0.5% Burlington Northern Santa Fe Corp. 1,703 55,092 CSX Corp. 963 34,610 Norfolk Southern Corp. 1,762 41,671 Union Pacific Corp. 1,239 86,086 -------------- 217,459 -------------- TRADING COMPANIES & DISTRIBUTORS--0.1% Genuine Parts Co. 745 24,734 WW Grainger, Inc. 425 20,141 -------------- 44,875 -------------- </Table> See Notes to Investment Portfolio. 132 <Page> <Table> <Caption> SHARES VALUE -------------- -------------- INFORMATION TECHNOLOGY--16.7% COMMUNICATIONS EQUIPMENT--2.9% ADC Telecommunications, Inc. (a) 3,064 $ 9,100 Andrew Corp. (a) 587 6,756 Avaya, Inc. (a) 1,898 24,560 CIENA Corp. (a) 2,019 13,406 Cisco Systems, Inc. (a) 32,135 780,559 Comverse Technology, Inc. (a) 921 16,200 Corning, Inc. (a) 6,009 62,674 JDS Uniphase Corp. (a) 6,993 25,524 Lucent Technologies, Inc. (a) 19,298 54,806 Motorola, Inc. 10,808 152,069 QUALCOMM, Inc. 3,745 201,968 Scientific-Atlanta, Inc. 705 19,246 Tellabs, Inc. (a) 1,791 15,098 -------------- 1,381,966 -------------- COMPUTERS & PERIPHERALS--3.8% Apple Computer, Inc. (a) 1,736 37,098 Dell, Inc. (a) 11,979 406,807 EMC Corp. (a) 11,092 143,309 Gateway, Inc. (a) 1,545 7,107 Hewlett-Packard Co. 14,109 324,084 International Business Machines Corp. 8,010 742,367 Lexmark International Group, Inc. (a) 595 46,791 NCR Corp. (a) 480 18,624 Network Appliance, Inc. (a) 1,584 32,520 Sun Microsystems, Inc. (a) 15,475 69,483 -------------- 1,828,190 -------------- ELECTRONIC EQUIPMENT & INSTRUMENTS--0.5% Agilent Technologies, Inc. (a) 2,173 63,539 Jabil Circuit, Inc. (a) 915 25,894 Molex, Inc. 915 31,924 PerkinElmer, Inc. 537 9,167 Sanmina Corp. (a) 2,403 30,302 Solectron Corp. (a) 3,886 22,966 Symbol Technologies, Inc. 1,094 18,478 Tektronix, Inc. 387 12,229 Thermo Electron Corp. (a) 677 17,060 Waters Corp. (a) 539 17,873 -------------- 249,432 -------------- INTERNET SOFTWARE & SERVICES--0.3% Yahoo!, Inc. (a) 3,094 139,756 -------------- INFORMATION TECHNOLOGY CONSULTING & SERVICES--0.3% Computer Sciences Corp. (a) 841 37,197 Electronic Data Systems Corp. 2,291 56,221 Sungard Data Systems, Inc. (a) 1,323 36,660 Unisys Corp. (a) 1,537 22,824 -------------- 152,902 -------------- OFFICE ELECTRONICS--0.1% Xerox Corp. (a) 3,709 51,184 -------------- SEMICONDUCTOR EQUIPMENT & PRODUCTS--4.2% Advanced Micro Devices, Inc. (a) 1,537 22,901 Altera Corp. (a) 1,817 41,246 Analog Devices, Inc. 1,708 77,970 Applied Materials, Inc. (a) 7,730 $ 173,538 Applied Micro Circuits Corp. (a) 1,304 7,798 Broadcom Corp., Class A (a) 1,441 49,124 Intel Corp. 30,409 979,170 KLA-Tencor Corp. (a) 913 53,566 Linear Technology Corp. 1,423 59,866 LSI Logic Corp. (a) 1,591 14,112 Maxim Integrated Products, Inc. 1,487 74,053 Micron Technology, Inc. (a) 2,915 39,265 National Semiconductor Corp. (a) 895 35,272 Novellus Systems, Inc. (a) 742 31,201 NVIDIA Corp. (a) 780 18,135 PMC-Sierra, Inc. (a) 698 14,065 QLogic Corp. (a) 455 23,478 Teradyne, Inc. (a) 876 22,294 Texas Instruments, Inc. 8,063 236,891 Xilinx, Inc. (a) 1,626 62,991 -------------- 2,036,936 -------------- SOFTWARE--4.6% Adobe Systems, Inc. 1,093 42,955 Autodesk, Inc. 500 12,290 BMC Software, Inc. (a) 962 17,941 Citrix Systems, Inc. (a) 793 16,820 Computer Associates International, Inc. 2,739 74,884 Compuware Corp. (a) 1,536 9,277 Electronic Arts, Inc. (a) 1,428 68,230 Intuit, Inc. (a) 913 48,307 Mercury Interactive Corp. (a) 407 19,796 Microsoft Corp. 50,339 1,386,336 Novell, Inc. (a) 1,536 16,159 Oracle Corp. (a) 24,442 322,634 Parametric Technology Corp. (a) 1,191 4,693 PeopleSoft, Inc. (a) 1,681 38,327 Siebel Systems, Inc. (a) 2,348 32,567 Symantec Corp. (a) 1,416 49,064 Veritas Software Corp. (a) 1,994 74,097 -------------- 2,234,377 -------------- MATERIALS--3.0% CHEMICALS--1.5% Air Products & Chemicals, Inc. 1,092 57,690 Dow Chemical Co. 4,310 179,167 Du Pont EI de Nemours & Co. 4,624 212,195 Eastman Chemical Co. 367 14,508 Ecolab, Inc. 1,120 30,654 Engelhard Corp. 584 17,491 Great Lakes Chemical Corp. 255 6,933 Hercules, Inc. (a) 383 4,673 International Flavors & Fragrances, Inc. 416 14,527 Monsanto Co. 1,155 33,241 PPG Industries, Inc. 821 52,560 Praxair, Inc. 1,540 58,828 Rohm & Haas Co. 1,081 46,170 Sigma-Aldrich Corp. 301 17,211 -------------- 745,848 -------------- </Table> See Notes to Investment Portfolio. 133 <Page> <Table> <Caption> SHARES VALUE -------------- -------------- CONSTRUCTION MATERIALS--0.1% Vulcan Materials Co. 522 $ 24,832 -------------- CONTAINERS & PACKAGING--0.2% Ball Corp. 290 17,275 Bemis Co., Inc. 298 14,900 Pactiv Corp. (a) 672 16,061 Sealed Air Corp. (a) 390 21,115 Temple-Inland, Inc. 313 19,616 -------------- 88,967 -------------- METALS & MINING--0.7% Alcoa, Inc. 3,982 151,316 Allegheny Technologies, Inc. 282 3,728 Freeport-McMoRan Copper & Gold, Inc., Class B 880 37,074 Newmont Mining Corp. 1,989 96,685 Nucor Corp. 394 22,064 Phelps Dodge Corp. (a) 414 31,501 United States Steel Corp. 509 17,825 Worthington Industries, Inc. 301 5,427 -------------- 365,620 -------------- PAPER & FOREST PRODUCTS--0.5% Boise Cascade Corp. 450 14,787 Georgia-Pacific Corp. 1,145 35,117 International Paper Co. 2,220 95,704 Louisiana-Pacific Corp. (a) 370 6,616 MeadWestvaco Corp. 911 27,102 Weyerhaeuser Co. 1,057 67,648 -------------- 246,974 -------------- TELECOMMUNICATION SERVICES--3.4% DIVERSIFIED TELECOMMUNICATION SERVICES-- 2.8% Alltel Corp. 1,443 67,215 AT&T Corp. 3,620 73,486 BellSouth Corp. 8,682 245,701 CenturyTel, Inc. 689 22,475 Citizens Communications Co. (a) 1,179 14,643 Qwest Communications International, Inc. (a) 7,856 33,938 SBC Communications, Inc. 15,451 402,808 Sprint Corp. (FON Group) 4,095 67,240 Verizon Communications, Inc. 12,905 452,707 -------------- 1,380,213 -------------- WIRELESS TELECOMMUNICATION SERVICES--0.6% AT&T Wireless Services, Inc. (a) 12,640 100,994 Nextel Communications, Inc., Class A (a) 5,109 143,359 Sprint Corp. (PCS Group) (a) 5,046 28,359 -------------- 272,712 -------------- UTILITIES--2.8% ELECTRIC UTILITIES--2.2% AES Corp. (a) 2,926 $ 27,621 Allegheny Energy, Inc. 567 7,235 Ameren Corp. 764 35,144 American Electric Power Co., Inc. 1,832 55,894 CenterPoint Energy, Inc. 1,293 12,529 Cinergy Corp. 778 30,194 CMS Energy Corp. (a) 600 5,112 Consolidated Edison, Inc. 1,060 45,591 Constellation Energy Group, Inc. 787 30,819 Dominion Resources, Inc. 1,545 98,617 DTE Energy Co. 804 31,678 Edison International (a) 1,506 33,027 Entergy Corp. 1,028 58,730 Exelon Corp. 1,499 99,474 FirstEnergy Corp. 1,532 53,926 FPL Group, Inc. 875 57,242 PG&E Corp. (a) 1,922 53,374 Pinnacle West Capital Corp. 412 16,488 PPL Corp. 857 37,494 Progress Energy, Inc. 1,129 51,099 Public Service Enterprise Group, Inc. 1,100 48,180 Southern Co. 3,359 101,610 TECO Energy, Inc. 800 11,528 TXU Corp. 1,428 33,872 Xcel Energy, Inc. 1,857 31,532 -------------- 1,068,010 -------------- GAS UTILITIES--0.3% El Paso Corp. 2,764 22,637 KeySpan Corp. 769 28,299 Kinder Morgan, Inc. 546 32,269 Nicor, Inc. 145 4,936 Peoples Energy Corp. 152 6,390 Sempra Energy 980 29,459 -------------- 123,990 -------------- MULTI-UTILITIES & UNREGULATED POWER--0.3% Calpine Corp. (a) 1,526 7,340 Duke Energy Corp. 4,286 87,649 Dynegy, Inc. 1,600 6,848 NiSource, Inc. 1,209 26,525 Williams Companies, Inc. 2,258 22,173 -------------- 150,535 -------------- TOTAL COMMON STOCKS (cost of $46,278,377) 47,839,476 -------------- </Table> See Notes to Investment Portfolio. 134 <Page> <Table> <Caption> PAR VALUE -------------- -------------- SHORT-TERM OBLIGATIONS--3.2% U.S. GOVERNMENT OBLIGATION--0.2% U.S. Treasury Bill, 0.870%, 03/11/04 (c) $ 80,000 $ 79,865 -------------- REPURCHASE AGREEMENT--3.0% Repurchase agreement with State Street Bank & Trust Co., dated 12/31/03, due 01/02/04 at 0.780%, collateralized by a U.S. Treasury Bond maturing 08/15/28, market value $1,481,316 (repurchase proceeds $1,452,063) 1,452,000 1,452,000 -------------- TOTAL SHORT-TERM OBLIGATIONS (cost of $1,531,865) 1,531,865 -------------- TOTAL INVESTMENTS--101.8% (cost of $47,810,242)(d) 49,371,341 -------------- OTHER ASSETS & LIABILITIES, NET--(1.8)% (847,114) -------------- NET ASSETS--100.0% $ 48,524,227 ============== </Table> NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing. (b) Investments in Affiliates during the year ended December 31, 2003: Security Name: FleetBoston Financial Corp., the parent company of the Investment Advisor. <Table> Shares as of 12/31/02: 3,612 Shares purchased: 1,299 Shares sold: 53 Shares as of 12/31/03: 4,858 Net realized loss: $ (785) Dividend income earned: $ 5,854 Value at end of period: $ 212,052 </Table> (c) This security, with a total market value of $79,865, is being used to collateralize open future contracts. (d) Cost for federal income tax purposes is $49,656,743. Long future contracts open on December 31, 2003: <Table> <Caption> NUMBER EXPIRATION UNREALIZED TYPE OF CONTRACTS MONTH APPRECIATION - ---- ------------ ----------- ------------ S&P Mini 500 22 March $ 40,166 ======== </Table> <Table> <Caption> ACRONYM NAME ------- ---- REIT Real Estate Investment Trust </Table> See Notes to Financial Statements. 135 <Page> STATEMENT OF ASSETS & LIABILITIES Liberty S&P 500 Index Fund, Variable Series / December 31, 2003 <Table> ASSETS: Investments, at cost $ 47,810,242 -------------- Investments, at value $ 49,371,341 Cash 438 Receivable for: Fund shares sold 49,911 Interest 31 Dividends 63,570 Futures variation margin 3,268 Expense reimbursement due from Investment Advisor/Distributor 27,272 Deferred Trustees' compensation plan 1,825 -------------- TOTAL ASSETS 49,517,656 -------------- LIABILITIES: Payable for: Investments purchased 327,599 Fund shares repurchased 601,588 Investment advisory fee 15,985 Transfer agent fee 626 Pricing and bookkeeping fees 2,438 Audit fee 22,330 Custody fee 3,911 Distribution fee--Class B 10,834 Deferred Trustees' fees 1,825 Other liabilities 6,293 -------------- TOTAL LIABILITIES 993,429 -------------- NET ASSETS $ 48,524,227 ============== COMPOSITION OF NET ASSETS: Paid-in capital $ 50,296,473 Overdistributed net investment income (934) Accumulated net realized loss (3,372,577) Net unrealized appreciation on: Investments 1,561,099 Futures contracts 40,166 -------------- NET ASSETS $ 48,524,227 ============== CLASS A: Net assets $ 82,487 Shares outstanding 8,576 ============== Net asset value per share $ 9.62 ============== CLASS B: Net assets $ 48,441,740 Shares outstanding 5,049,349 ============== Net asset value per share $ 9.59 ============== </Table> See Notes to Financial Statements. 136 <Page> STATEMENT OF OPERATIONS Liberty S&P 500 Index Fund, Variable Series For the Year Ended December 31, 2003 <Table> INVESTMENT INCOME: Dividends $ 639,323 Interest 11,069 -------------- Total Investment Income 650,392 -------------- EXPENSES: Investment advisory fee 145,520 Distribution fee--Class B 90,677 Transfer agent fee 7,500 Pricing and bookkeeping fees 33,264 Trustees' fees 6,530 Custody fee 30,380 Audit fee 27,673 Other expenses 10,886 -------------- Total Expenses 352,430 Fees and expenses waived or reimbursed by Investment Advisor (9,478) Fees reimbursed by Distributor--Class B (69,991) Custody earnings credit (17) -------------- Net Expenses 272,944 -------------- Net Investment Income 377,448 -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES CONTRACTS: Net realized gain (loss) on: Investments (569,595) Futures contracts 198,161 -------------- Net realized loss (371,434) -------------- Net change in unrealized appreciation/depreciation on: Investments 9,202,919 Futures contracts 65,581 -------------- Net change in unrealized appreciation/depreciation 9,268,500 -------------- Net Gain 8,897,066 -------------- Net Increase in Net Assets from Operations $ 9,274,514 ============== </Table> See Notes to Financial Statements. 137 <Page> STATEMENT OF CHANGES IN NET ASSETS Liberty S&P 500 Index Fund, Variable Series <Table> <Caption> YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, INCREASE (DECREASE) IN NET ASSETS: 2003 2002 - ---------------------------------- -------------- -------------- OPERATIONS: Net investment income $ 377,448 $ 245,814 Net realized loss on investments and futures contracts (371,434) (2,364,659) Net change in unrealized appreciation/depreciation on investments and futures contracts 9,268,500 (5,099,064) -------------- -------------- Net Increase (Decrease) from Operations 9,274,514 (7,217,909) -------------- -------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income: Class A (680) (587) Class B (377,651) (243,630) Return of capital: Class A -- (53) Class B -- (21,942) -------------- -------------- Total Distributions Declared to Shareholders (378,331) (266,212) -------------- -------------- SHARE TRANSACTIONS: Class A: Distributions reinvested 680 640 -------------- -------------- Net Increase 680 640 -------------- -------------- Class B: Subscriptions 13,560,308 13,853,223 Distributions reinvested 377,651 265,572 Redemptions (3,136,822) (6,727,578) -------------- -------------- Net Increase 10,801,137 7,391,217 -------------- -------------- Net Increase from Share Transactions 10,801,817 7,391,857 -------------- -------------- Total Increase (Decrease) in Net Assets 19,698,000 (92,264) NET ASSETS: Beginning of period 28,826,227 28,918,491 -------------- -------------- End of period (including overdistributed net investment income of $(934) and $(792), respectively) $ 48,524,227 $ 28,826,227 ============== ============== CHANGES IN SHARES: Class A: Issued for distributions reinvested 71 85 -------------- -------------- Net Increase 71 85 -------------- -------------- Class B: Subscriptions 1,585,888 1,597,362 Issued for distributions reinvested 39,462 35,222 Redemptions (374,208) (749,858) -------------- -------------- Net Increase 1,251,142 882,726 -------------- -------------- </Table> See Notes to Financial Statements. 138 <Page> NOTES TO FINANCIAL STATEMENTS Liberty S&P 500 Index Fund, Variable Series / December 31, 2003 NOTE 1. ORGANIZATION Liberty S&P 500 Index Fund, Variable Series (the "Fund"), a series of Liberty Variable Investment Trust (the "Trust") is a diversified portfolio. The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. INVESTMENT GOAL--The Fund seeks capital appreciation by matching the performance of a benchmark index that measures the investment returns of stocks of large U.S. companies. FUND SHARES--The Fund may issue an unlimited number of shares and offers two classes of shares: Class A and Class B. Each share class has its own expense structure. Shares of the Fund are available exclusively as a pooled funding vehicle for variable annuity contracts ("VA Contracts") and Variable Life Insurance Policies ("VLI Policies") offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies"). The Participating Insurance Companies and their separate accounts own all the shares of the Fund. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES--The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION--Equity securities are valued at the last sale price at the close of the principal exchange on which they trade. Unlisted securities or listed securities for which there were no sales during the day are valued at the closing bid price on such exchanges or over-the-counter markets. Short-term obligations maturing within 60 days are valued at amortized cost, which approximates market value. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded. SECURITY TRANSACTIONS--Security transactions are accounted for on the trade date. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. FUTURES CONTRACTS--The Fund may invest in municipal, stock indices and U.S. Treasury futures contracts. The Fund will invest in these instruments to hedge against the effects of changes in the value of portfolio securities due to anticipated changes in interest rates and/or market conditions, for duration management, or when the transactions are economically appropriate to the reduction of risk inherent in the management of the Fund and not for trading purposes. The use of futures contracts involves certain risks, which include: (1) imperfect correlation between the price movement of the instruments and the underlying securities, (2) inability to close out positions due to differing trading hours, or the temporary absence of a liquid market, for either the instrument or the underlying securities, or (3) an inaccurate prediction by Columbia Management Advisors, Inc. of the future direction of interest rates. Any of these risks may involve amounts exceeding the variation margin recorded in the Fund's Statement of Assets and Liabilities at any given time. Upon entering into a futures contract, the Fund deposits cash or securities with the broker in an amount sufficient to meet the initial margin requirement. Subsequent payments are made or received by the Fund equal to the daily change in the contract value and are recorded as variation margin payable or receivable and offset in unrealized gains or losses. The Fund also identifies portfolio securities as segregated with the custodian in a separate account in an amount equal to the futures contract. The Fund recognizes a realized gain or loss when the contract is closed or expires. REPURCHASE AGREEMENTS--The Fund may engage in repurchase agreement transactions with institutions that the Fund's investment advisor has determined are creditworthy. The Fund, through its custodian, receives delivery of underlying securities collateralizing a repurchase agreement. Collateral is at least equal, at all times, to the value of the repurchase obligation including interest. A repurchase agreement transaction involves certain risks in the event of default or insolvency of the counterparty. These risks include possible delays or restrictions upon the Fund's ability to dispose of the underlying securities and a possible decline in the value of the underlying securities during the period while the Fund seeks to assert its rights. INCOME RECOGNITION--Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date. DETERMINATION OF CLASS NET ASSET VALUES--All income, expenses (other than class-specific expenses, as shown on the Statement of Operations), and realized and unrealized gains (losses) are allocated to each class of the Fund on a daily basis, based on the relative net assets of each class, for purposes of determining the net asset value of each class. 139 <Page> FEDERAL INCOME TAX STATUS--The Fund intends to qualify each year as a "regulated investment company" under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its taxable income, if any, for its tax year, and as such will not be subject to federal income taxes. In addition, by distributing in each calendar year substantially all of its net investment income, capital gains and certain other amounts, if any, the Fund will not be subject to federal excise tax. Therefore, no federal income or excise tax provision is recorded. DISTRIBUTIONS TO SHAREHOLDERS--Distributions to shareholders are recorded on ex-date. Net realized capital gains, if any, are distributed at least annually. Income and capital gains dividends are determined in accordance with income tax regulations which may differ from GAAP. All dividends and distributions are reinvested in additional shares of the Fund at net asset value as of the record date of the distribution. NOTE 3. FEDERAL TAX INFORMATION The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund's capital accounts for permanent tax differences to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. For the year ended December 31, 2003, permanent differences resulting primarily from differing treatments for Real Estate Investment Trust ("REIT") adjustments and distributions in excess were identified and reclassified among the components of the Fund's net assets as follows: <Table> <Caption> OVERDISTRIBUTED NET ACCUMULATED NET PAID-IN INVESTMENT INCOME REALIZED LOSS CAPITAL ------------------- --------------- ------- $ 741 $ 916 $ (1,657) </Table> Net investment income and net realized gains (losses), as disclosed on the Statement of Operations, and net assets were not affected by this reclassification. The tax character of distributions paid during the years ended December 31, 2003 and December 31, 2002 was as follows: <Table> <Caption> DECEMBER 31, DECEMBER 31, 2003 2002 ------------ ------------ Distributions paid from: Ordinary Income* $ 378,331 $ 244,217 Long-Term Capital Gains -- -- Tax Return of Capital -- 21,995 </Table> * For tax purposes short-term capital gains distributions, if any, are considered ordinary income distributions. As of December 31, 2003, the components of distributable earnings on a tax basis were as follows: <Table> <Caption> UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM NET UNREALIZED INCOME CAPITAL GAINS DEPRECIATION* ------------- -------------- -------------- $ -- $ -- $ (285,402) </Table> * The differences between book-basis and tax-basis net unrealized depreciation are primarily due to deferral of losses from wash sales. Unrealized appreciation and depreciation at December 31, 2003, based on cost of investments for federal income tax purposes was: <Table> Unrealized appreciation $ 4,599,890 Unrealized depreciation (4,885,292) -------------- Net unrealized depreciation $ (285,402) ============== </Table> The following capital loss carryforwards are available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: <Table> <Caption> YEAR OF CAPITAL LOSS EXPIRATION CARRYFORWARD ---------- ------------ 2008 $ 19,479 2009 243,840 2010 1,209,651 2011 12,140 ------------ $ 1,485,110 ============ </Table> No capital loss carryforwards were utilized and/or expired during the year ended December 31, 2003 for the Fund. Expired capital loss carryforwards are recorded as a reduction of paid-in capital. NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES INVESTMENT ADVISOR MERGER--On April 1, 2003, Liberty Advisory Services Corp., the previous investment advisor to the Fund, and Colonial Management Associates, Inc., the previous sub-advisor to the Fund, merged into Columbia Management Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co. Columbia is an indirect, wholly owned subsidiary of FleetBoston Financial Corporation. As a result of the merger, Columbia now serves as the Fund's investment advisor. The merger did not change the way the Fund is managed, the investment personnel assigned to manage the Fund or the fees paid by the Fund. INVESTMENT ADVISORY FEE--Columbia is the investment advisor to the Fund and provides administrative and other services. Columbia receives a monthly fee at the annual rate of 0.40% of the Fund's average daily net assets. For the period July 1, 2003 through October 31, 2003, Columbia 140 <Page> agreed to waive a portion of its fees at the annual rate of 0.07% of the Fund's average daily net assets. For the year ended December 31, 2003, the Fund's effective investment advisory fee rate was 0.37%. SUB-ADVISORY FEE--State Street Global Advisors ("SSgA") has been retained by Columbia as sub-advisor to the Fund. As the sub-advisor, SSgA is responsible for daily investment operations, including placing all orders for the purchase and sale of portfolio securities for the fund. Columbia, out of the management fee it receives, pays SSgA a monthly sub-advisory fee at the following annual rates: <Table> <Caption> AVERAGE DAILY NET ASSETS FEE RATE - ------------------------ -------- First $50 million $ 25,000 Over $50 million 0.05% </Table> PRICING AND BOOKKEEPING FEES--Columbia is responsible for providing pricing and bookkeeping services to the Fund under a pricing and bookkeeping agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Corporation ("State Street"). Columbia pays the total fees collected to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual flat fee of $10,000 paid monthly, and in any month that the Fund's average daily net assets exceed $50 million, an additional monthly fee. The additional fee rate is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. This rate is applied to the average daily net assets of the Fund for that month. The Fund also pays additional fees for pricing services. For the year ended December 31, 2003, the effective pricing and bookkeeping fee rate was 0.091%. TRANSFER AGENT FEE--Columbia Funds Services, Inc. (the "Transfer Agent"), formerly Liberty Funds Services, Inc., an affiliate of Columbia, provides shareholder services for a monthly fee at an annual rate of $7,500. Effective October 13, 2003, Liberty Funds Services, Inc. changed its name to Columbia Funds Services, Inc. DISTRIBUTION FEES--Columbia Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia, is the principal underwriter of the Fund. Prior to October 13, 2003, Columbia Funds Distributor, Inc. was known as Liberty Funds Distributor, Inc. The Fund has adopted a 12b-1 plan which requires the payment of a monthly distribution fee to the Distributor at the annual rate of 0.25% of Class B average daily net assets. FEE WAIVERS--Columbia and the Distributor have voluntarily agreed to waive fees and reimburse the Fund for certain expenses so that total expenses (exclusive of brokerage commissions, interest, taxes and extraordinary expenses, if any) would not exceed 0.75% annually of the Fund's average daily net assets. The Distributor will first reimburse the Class B distribution fee up to 0.25% annually to reach the 0.75% limit on Class B expenses. If additional reimbursement is needed to meet the limit for each class, Columbia will then reimburse other expenses to the extent necessary. If additional reimbursement is still needed in order to reach the expense limit, Columbia will then waive a portion of its investment advisory fee to the extent necessary. Columbia or the Distributor, at their discretion, may revise or discontinue this arrangement any time. CUSTODY CREDITS--The Fund has an agreement with its custodian bank under which custody fees may be reduced by balance credits. The Fund could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if it had not entered into such an agreement. FEES PAID TO OFFICERS AND TRUSTEES--The Fund pays no compensation to its officers, all of whom are employees of Columbia or its affiliates. The Fund's Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. NOTE 5. PORTFOLIO INFORMATION PURCHASES AND SALES OF SECURITIES--For the year ended December 31, 2003, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were $11,918,035 and $904,832, respectively. NOTE 6. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES INDUSTRY FOCUS--The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. LEGAL PROCEEDINGS--Columbia, the Distributor and certain of their affiliates (collectively, "the Columbia Group") have received information requests and subpoenas from various regulatory authorities, including the Securities and Exchange Commission ("SEC") and the New York Attorney General, in connection with their investigations of late trading and market timing in mutual funds. The Columbia Group has not uncovered any instances where Columbia or the Distributor was knowingly involved in late trading of mutual fund shares. The Columbia Group has identified a limited number of investors who had informal arrangements for trading certain Columbia Fund shares between 1998 and 2003. A substantial majority of the trading had ended by October 2002. None of these arrangements exists today. Information relating to those trading arrangements has been supplied to various regulatory authorities. To the extent that any Columbia Fund, whose shares were involved 141 <Page> in those trading activities, was harmed by them, the Columbia Group has undertaken to reimburse such fund. The SEC staff has issued notices to the effect that it has made a preliminary determination to recommend that the SEC bring civil enforcement actions, including injunctive proceedings, against Columbia and the Distributor, alleging that they have violated certain provisions of the federal securities laws. The Columbia Group believes that those allegations are based principally on the trading arrangements referred to above. Columbia and the Distributor are engaged in discussions with the SEC staff in an effort to reach a satisfactory resolution of these matters. However, there can be no assurance that such a resolution will be reached. Any potential resolution of these matters may include, but not be limited to, sanctions, financial penalties, damages or injunctions regarding Columbia or the Distributor, and structural changes in the conduct of their business. Although the Columbia Group does not believe that these regulatory developments or their resolution will have a material adverse effect on the Columbia Funds, or on the ability of Columbia and the Distributor to provide services to the Columbia Funds, there can be no assurance that these matters or any adverse publicity or other developments resulting from them will not result in increased redemptions or reduced sales of Columbia Fund shares, which could increase transactions costs or operating expenses, or other consequences for the Columbia Funds. 142 <Page> FINANCIAL HIGHLIGHTS Liberty S&P 500 Index Fund, Variable Series--Class A Shares Selected data for a share outstanding throughtout each period is as follows: <Table> <Caption> PERIOD YEAR ENDED DECEMBER 31, ENDED ------------------------------------- DECEMBER 31, 2003 2002 2001 2000 (a) -------- -------- -------- ------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 7.59 $ 9.90 $ 11.31 $ 12.00 -------- -------- -------- ------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (b) 0.09 0.09 0.07 0.07 Net realized and unrealized gain (loss) on investments and futures contracts 2.02 (2.32) (1.42) (0.70) -------- -------- -------- ------------ Total from Investment Operations 2.11 (2.23) (1.35) (0.63) -------- -------- -------- ------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.08) (0.07) (0.06) (0.06) Return of capital -- (0.01) -- -- -------- -------- -------- ------------ Total Distributions Declared to Shareholders (0.08) (0.08) (0.06) (0.06) -------- -------- -------- ------------ NET ASSET VALUE, END OF PERIOD $ 9.62 $ 7.59 $ 9.90 $ 11.31 ======== ======== ======== ============ Total return (c)(d) 27.80%(e) (22.55)% (11.98)%(e) (5.29)%(e)(f) RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (g) 0.69% 0.64% 0.75% 0.75%(h) Net investment income (g) 1.11% 0.99% 0.72% 0.89%(h) Waiver/reimbursement 0.03% -- 0.28% 0.36%(h) Portfolio turnover rate 3% 17% 7% 2%(f) Net assets, end of period (000's) $ 82 $ 65 $ 83 $ 95 </Table> (a) For the period from commencement of operations May 30, 2000 to December 31, 2000. (b) Per share data was calculated using average shares outstanding during the period. (c) Total return at net asset value assuming all distributions reinvested. (d) Total return figure does not include any insurance company charges associated with a variable annuity. If included, total return would be reduced. (e) Had the Investment Advisor not waived or reimbursed a portion of expenses, total return would have been reduced. (f) Not annualized. (g) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (h) Annualized. 143 <Page> REPORT OF INDEPENDENT AUDITORS To the Trustees of Liberty Variable Investment Trust and the Class A Shareholders of Liberty S&P 500 Index Fund, Variable Series In our opinion, the accompanying statement of assets and liabilities, including the investment portfolio, and the related statements of operations and of changes in net assets and the Class A financial highlights present fairly, in all material respects, the financial position of Liberty S&P 500 Index Fund, Variable Series (the "Fund") (a series of Liberty Variable Investment Trust) at December 31, 2003, and the results of its operations, the changes in its net assets and the Class A financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and the Class A financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund'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 December 31, 2003 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts February 12, 2004 144 <Page> UNAUDITED INFORMATION FEDERAL INCOME TAX INFORMATION 99.92% of the ordinary income distributed by the Fund, for the year ended December 31, 2003, qualifies for the corporate dividends received deduction. 145 <Page> PORTFOLIO MANAGERS' DISCUSSION Liberty Select Value Fund, Variable Series / December 31, 2003 Liberty Select Value Fund, Variable Series seeks long-term growth. Daniel K. Cantor and Jeffrey C. Kinzel are co-managers of the fund. Mr. Cantor has been affiliated with Columbia Management Advisors, Inc. and its predecessors since 1985. Mr. Kinzel has been with the firm and its predecessors since 1991. The fund posted a strong return for the year ended December 31, 2003, but did not perform as well as either the S&P MidCap 400 Index or its new benchmark, the Russell Midcap Value Index, which more closely reflects the fund's emphasis on value stocks. Early in the period, our emphasis on stable, less-risky companies restrained performance during a bull market led by sharp gains in more speculative stocks. By mid-year, we had positioned the portfolio somewhat more aggressively, and relative returns in the second half were more in line with the S&P MidCap 400 benchmark. TURNAROUND YEAR FOR VALUE STOCKS After several years of poor returns, equities roared back to life in 2003 as the S&P 500 Index, a broad measure of the stock market's performance, gained 28.68%. Uncertainty related to military action in Iraq held equity performance back early in the year. By the second quarter, expectations for economic recovery began to fuel a rally in stocks even though signs of an improvement were scant. The rally broadened in the second half as more tangible evidence of a recovery emerged. Industrial production rose, retail sales increased, interest rates remained low and inflation was minimal. Later in the year, capital spending by businesses also picked up, particularly helping the industrial, energy and telecommunications sectors. GAINS CAME FROM PAPER, INDUSTRIALS AND ENERGY Early in the year we boosted our holdings in stocks we believed would benefit from a more buoyant economy, and this strategy paid off. Paper company Georgia-Pacific and the diversified industrial firm Carlisle Companies (1.5% and 1.4% of net assets, respectively) were both up more than 50% for the year. The two largest contributors to performance were Navistar International and XTO Energy (1.8% and 2.7% of net assets, respectively). Navistar benefited from a budding recovery in medium and heavy-duty trucks, and natural gas producer XTO was helped by higher gas prices and strong production growth. Another large contributor was International Game Technology, which makes gaming products. Its growth was driven by gaming expansion in the United States, the proliferation of cashless slot machines and increasing opportunities overseas. We sold the stock in late December after it had risen strongly and appeared fully valued. DEFENSIVE HOLDINGS HURT RETURNS Most of the fund's underperformance occurred during the first half of the period, but it affected the full year. Our more defensive investments did not rise as quickly as more aggressive stocks when the market rallied, and this was a drag on performance. For example, we entered the year with a 1.5% stake in Lockheed Martin, which we subsequently sold. The stock had performed well the previous year, but performed poorly as defense companies moved out of favor. We also had disappointing performance from First Health Group (0.8% of net assets), which provides a variety of health care services such as cost management and claims processing. The value declined primarily due to increased competition and severe pricing pressure in one of its key business segments. MANAGING WITH AN EYE ON RISK Although we are generally optimistic that the economic recovery will continue to gain breadth and momentum, we continue to manage the fund with an eye on downside risk. Given the run in some of the industrial stocks in the portfolio, we may look for opportunities to take profits in this sector. As value managers, we will continue to seek out companies that meet our disciplined investment criteria. Our goal remains to focus on identifying well-managed companies in good or improving businesses that have the potential to do well under most market conditions. Economic and market conditions frequently change. There is no assurance that the trends described here will continue or commence. An investment in the Liberty Select Value Fund, Variable Series offers the potential for long-term growth, but also involves certain risks, including stock market fluctuations due to economic and business developments. The value and returns earned on an investment in the fund may also be affected by stock market fluctuations. Mid-cap stocks can present special risks including greater price volatility than stocks of larger, more established companies. Value stocks are securities of companies that may have experienced adverse business or industry developments or may be subject to special risks that have caused the stocks to be out of favor. If the advisor's assessment of a company's prospects is wrong, the price of its stock may not approach the value the advisor has placed on it. Holdings are disclosed as of December 31, 2003, and are subject to change. 146 <Page> PERFORMANCE INFORMATION Liberty Select Value Fund, Variable Series / December 31, 2003 AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 2003 (%) <Table> <Caption> 1-YEAR LIFE - -------------------------------------------------------------- Class A (5/30/00) 27.61 7.78 Russell Midcap Value Index(1) 38.07 11.99 S&P MidCap 400 Index(1) 35.62 7.77 </Table> Inception date of share class is in parentheses. <Table> <Caption> NET ASSET VALUE PER SHARE ($) 12/31/02 12/31/03 - -------------------------------------------------------------- Class A 12.12 15.42 </Table> [CHART] VALUE OF A $10,000 INVESTMENT, 5/30/00 - 12/31/03 Class A: $13,089 <Table> <Caption> CLASS A SHARES S&P MIDCAP 400 INDEX RUSSELL MIDCAP VALUE INDEX 5/30/2000 $ 10,000 $ 10,000 $ 10,000 5/31/2000 $ 10,200 $ 10,375 $ 10,183 6/30/2000 $ 10,066 $ 10,528 $ 9,803 7/31/2000 $ 10,333 $ 10,694 $ 10,033 8/31/2000 $ 11,184 $ 11,888 $ 10,648 9/30/2000 $ 10,983 $ 11,806 $ 10,750 10/31/2000 $ 11,034 $ 11,406 $ 10,954 11/30/2000 $ 10,309 $ 10,537 $ 10,812 12/31/2000 $ 11,139 $ 11,351 $ 11,765 1/31/2001 $ 11,551 $ 11,605 $ 11,723 2/28/2001 $ 11,206 $ 10,942 $ 11,674 3/31/2001 $ 10,961 $ 10,129 $ 11,350 4/30/2001 $ 11,769 $ 11,246 $ 11,975 5/31/2001 $ 12,106 $ 11,508 $ 12,315 6/30/2001 $ 11,870 $ 11,462 $ 12,151 7/31/2001 $ 11,971 $ 11,291 $ 12,102 8/31/2001 $ 11,676 $ 10,922 $ 11,881 9/30/2001 $ 10,238 $ 9,563 $ 10,747 10/31/2001 $ 10,439 $ 9,986 $ 10,804 11/30/2001 $ 11,070 $ 10,730 $ 11,561 12/31/2001 $ 11,533 $ 11,285 $ 12,040 1/31/2002 $ 11,626 $ 11,226 $ 12,162 2/28/2002 $ 11,828 $ 11,240 $ 12,359 3/31/2002 $ 12,377 $ 12,043 $ 12,991 4/30/2002 $ 12,411 $ 11,987 $ 12,981 5/31/2002 $ 12,444 $ 11,784 $ 12,962 6/30/2002 $ 11,760 $ 10,922 $ 12,384 7/31/2002 $ 10,923 $ 9,864 $ 11,171 8/31/2002 $ 11,000 $ 9,914 $ 11,301 9/30/2002 $ 9,835 $ 9,115 $ 10,160 10/31/2002 $ 10,038 $ 9,509 $ 10,483 11/30/2002 $ 10,620 $ 10,049 $ 11,143 12/31/2002 $ 10,256 $ 9,636 $ 10,878 1/31/2003 $ 9,993 $ 9,365 $ 10,577 2/28/2003 $ 9,764 $ 9,141 $ 10,401 3/31/2003 $ 9,748 $ 9,218 $ 10,436 4/30/2003 $ 10,366 $ 9,887 $ 11,230 5/31/2003 $ 10,957 $ 10,696 $ 12,218 6/30/2003 $ 11,033 $ 10,831 $ 12,303 7/31/2003 $ 11,363 $ 11,227 $ 12,686 8/31/2003 $ 11,727 $ 11,725 $ 13,136 9/30/2003 $ 11,506 $ 11,545 $ 13,034 10/31/2003 $ 12,284 $ 12,419 $ 13,991 11/30/2003 $ 12,554 $ 12,851 $ 14,396 12/31/2003 $ 13,089 $ 13,082 $ 15,018 </Table> PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA PROVIDED. FOR CURRENT MONTH-END PERFORMANCE INFORMATION, PLEASE CONTACT YOUR INSURANCE COMPANY. Total return performance includes changes in share price and reinvestment of all distributions. The S&P (Standard & Poor's) MidCap 400 Index is an unmanaged index that tracks the performance of middle-capitalization US stocks. The Russell Midcap Value Index is an unmanaged index that measures the performance of those Russell Midcap companies with lower price-to-book ratios and lower forecasted growth values. Indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. Performance numbers reflect all fund expenses, but do not include any insurance charges imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. (1) Index performance is from May 30, 2000. 147 <Page> INVESTMENT PORTFOLIO Liberty Select Value Fund, Variable Series / December 31, 2003 <Table> <Caption> SHARES VALUE -------------- -------------- COMMON STOCKS--96.1% CONSUMER DISCRETIONARY--17.2% AUTO COMPONENTS--4.3% Gentex Corp. 9,700 $ 428,352 Johnson Controls, Inc. 3,300 383,196 Lear Corp. 7,900 484,507 Superior Industries International 8,400 365,568 -------------- 1,661,623 -------------- HOTELS, RESTAURANTS & LEISURE--3.2% Brinker International, Inc. (a) 14,000 464,240 Darden Restaurants, Inc. 8,700 183,048 Harrah's Entertainment, Inc. 6,300 313,551 Six Flags, Inc. (a) 36,000 270,720 -------------- 1,231,559 -------------- HOUSEHOLD DURABLES--0.8% Newell Rubbermaid, Inc. 12,600 286,902 -------------- LEISURE EQUIPMENT & PRODUCTS--0.7% Mattel, Inc. 14,600 281,342 -------------- MEDIA--2.3% Knight-Ridder, Inc. 4,100 317,217 Mediacom Communications Corp. (a) 18,800 162,996 New York Times Co., Class A 8,000 382,320 -------------- 862,533 -------------- MULTI-LINE RETAIL--2.3% Federated Department Stores, Inc. 19,000 895,470 -------------- SPECIALTY RETAIL--3.2% Borders Group, Inc. (a) 16,100 352,912 Ross Stores, Inc. 10,800 285,444 TJX Companies, Inc. 26,000 573,300 -------------- 1,211,656 -------------- TEXTILES, APPAREL & LUXURY GOODS--0.4% Wolverine World Wide, Inc. 7,100 144,698 -------------- CONSUMER STAPLES--4.6% BEVERAGES--0.8% Pepsi Bottling Group, Inc. 12,000 290,160 -------------- FOOD PRODUCTS--2.7% Dean Foods Co. (a) 26,300 864,481 Hormel Foods Corp. 6,900 178,089 -------------- 1,042,570 -------------- PERSONAL PRODUCTS--1.1% Avon Products, Inc. 6,400 431,936 -------------- ENERGY--6.8% ENERGY EQUIPMENT & SERVICES--2.5% BJ Services Co. (a) 5,400 193,860 Noble Corp. (a) 8,200 293,396 Transocean, Inc. (a) 12,650 303,726 Weatherford International Ltd. (a) 4,400 158,400 -------------- 949,382 -------------- OIL & GAS--4.3% Amerada Hess Corp. 7,100 $ 377,507 Occidental Petroleum Corp. 6,100 257,664 XTO Energy, Inc. 35,833 1,014,074 -------------- 1,649,245 -------------- FINANCIALS--22.2% BANKS--11.6% Banknorth Group, Inc. 12,800 416,384 Charter One Financial, Inc. 10,895 376,422 City National Corp. 6,300 391,356 Cullen/Frost Bankers, Inc. 3,800 154,166 Golden West Financial Corp. 9,600 990,624 Greenpoint Financial Corp. 13,500 476,820 North Fork Bancorporation, Inc. 13,900 562,533 Sovereign Bancorp, Inc. 26,500 629,375 Webster Financial Corp. 9,100 417,326 -------------- 4,415,006 -------------- DIVERSIFIED FINANCIALS--3.9% Bear Stearns Companies, Inc. 4,200 335,790 Citigroup, Inc. 6,831 331,577 Janus Capital Group, Inc. 34,700 569,427 Lehman Brothers Holdings, Inc. 3,500 270,270 -------------- 1,507,064 -------------- INSURANCE--6.7% Ambac Financial Group, Inc. 7,250 503,077 Cincinnati Financial Corp. 5,300 221,964 Loews Corp. 4,300 212,635 Nationwide Financial Services, Class A 7,400 244,644 Old Republic International Corp. 4,500 114,120 PMI Group, Inc. 12,300 457,929 Radian Group, Inc. 9,900 482,625 St. Paul Companies, Inc. 7,900 313,235 -------------- 2,550,229 -------------- HEALTH CARE--4.6% HEALTH CARE EQUIPMENT & SUPPLIES--1.7% Biomet, Inc. 10,000 364,100 Millipore Corp. (a) 6,900 297,045 -------------- 661,145 -------------- HEALTH CARE PROVIDERS & SERVICES--2.9% Anthem, Inc. (a) 2,700 202,500 First Health Group Corp. (a) 15,800 307,468 HCA, Inc. 6,800 292,128 WellPoint Health Networks, Inc. (a) 3,200 310,368 -------------- 1,112,464 -------------- INDUSTRIALS--13.1% AEROSPACE & DEFENSE--1.0% Alliant Techsystems, Inc. (a) 4,300 248,368 Northrop Grumman Corp. 1,200 114,720 -------------- 363,088 -------------- </Table> See Notes to Investment Portfolio. 148 <Page> <Table> <Caption> SHARES VALUE -------------- -------------- AIR FREIGHT & LOGISTICS--0.6% CNF, Inc. 6,500 $ 220,350 -------------- AIRLINES--0.6% AMR Corp. (a) 18,600 240,870 -------------- COMMERCIAL SERVICES & SUPPLIES--4.1% Brink's Co. 20,000 452,200 Cendant Corp. (a) 24,400 543,388 DST Systems, Inc. (a) 6,500 271,440 Manpower, Inc. 6,700 315,436 -------------- 1,582,464 -------------- ELECTRICAL EQUIPMENT--0.5% Ametek, Inc. 4,000 193,040 -------------- INDUSTRIAL CONGLOMERATES--1.4% Carlisle Companies, Inc. 8,900 541,654 -------------- MACHINERY--4.9% AGCO Corp. (a) 6,000 120,840 Dover Corp. 5,800 230,550 Ingersoll-Rand Co., Class A 6,200 420,856 Mueller Industries, Inc. (a) 4,700 161,492 Navistar International Corp. (a) 14,300 684,827 Parker Hannifin Corp. 4,000 238,000 -------------- 1,856,565 -------------- INFORMATION TECHNOLOGY--8.7% COMMUNICATIONS EQUIPMENT--1.0% Andrew Corp. (a) 31,900 367,169 -------------- ELECTRONIC EQUIPMENT & INSTRUMENTS--5.0% Amphenol Corp., Class A (a) 10,000 639,300 Arrow Electronics, Inc. (a) 10,400 240,656 AVX Corp. 13,600 226,032 Littelfuse, Inc. (a) 11,000 317,020 Varian, Inc. (a) 6,700 279,591 Vishay Intertechnology, Inc. (a) 9,450 216,405 -------------- 1,919,004 -------------- INFORMATION TECHNOLOGY CONSULTING & SERVICES--1.0% Affiliated Computer Services, Inc., Class A (a) 6,900 375,774 -------------- OFFICE ELECTRONICS--0.6% Zebra Technologies Corp., Class A (a) 3,800 252,206 -------------- SOFTWARE--1.1% Reynolds & Reynolds Co., Class A 14,100 409,605 -------------- MATERIALS--12.2% CHEMICALS--7.3% Air Products & Chemicals, Inc. 6,800 359,244 Eastman Chemical Co. 9,100 359,723 Engelhard Corp. 11,200 335,440 International Flavors & Fragrances, Inc. 14,900 520,308 Lubrizol Corp. 7,900 256,908 OM Group, Inc. (a) 4,700 123,093 PPG Industries, Inc. 6,700 428,934 Praxair, Inc. 10,600 404,920 -------------- 2,788,570 -------------- CONTAINERS & PACKAGING--1.7% Crown Holdings, Inc. (a) 25,000 $ 226,500 Packaging Corp. of America 12,200 266,692 Pactiv Corp. (a) 6,000 143,400 -------------- 636,592 -------------- PAPER & FOREST PRODUCTS--3.2% Boise Cascade Corp. 8,500 279,310 Georgia-Pacific Corp. 18,100 555,127 MeadWestvaco Corp. 13,634 405,612 -------------- 1,240,049 -------------- TELECOMMUNICATION SERVICES--1.4% WIRELESS TELECOMMUNICATION SERVICES--1.4% Telephone & Data Systems, Inc. 8,500 531,675 -------------- UTILITIES--5.3% ELECTRIC UTILITIES--4.6% Allete, Inc. 6,700 205,020 Entergy Corp. 5,400 308,502 Exelon Corp. 7,850 520,926 PPL Corp. 5,700 249,375 Progress Energy, Inc. 10,800 488,808 -------------- 1,772,631 -------------- MULTI-UTILITIES & UNREGULATED POWER- 0.7% Energy East Corp. 11,300 253,120 -------------- TOTAL COMMON STOCKS (cost of $30,597,499) 36,729,410 -------------- <Caption> PAR -------------- SHORT-TERM OBLIGATION--5.0% Repurchase agreement with State Street Bank & Trust Co., dated 12/31/03, due 01/02/04 at 0.780%, collateralized by a U.S. Treasury Bond maturing 08/15/28, market value $1,937,922 (repurchase proceeds $1,896,082) (cost of $1,896,000) $ 1,896,000 1,896,000 -------------- TOTAL INVESTMENTS--101.1% (cost of $32,493,499) (b) 38,625,410 -------------- OTHER ASSETS & LIABILITIES, NET--(1.1)% (425,012) -------------- NET ASSETS--100.0% $ 38,200,398 ============== </Table> NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing. (b) Cost for federal income tax purposes is $32,542,033. See Notes to Financial Statements. 149 <Page> STATEMENT OF ASSETS & LIABILITIES Liberty Select Value Fund, Variable Series / December 31, 2003 <Table> ASSETS: Investments, at cost $ 32,493,499 -------------- Investments, at value $ 38,625,410 Cash 354 Receivable for: Fund shares sold 5,272 Interest 41 Dividends 29,802 Expense reimbursement due from Distributor 5,969 Deferred Trustees' compensation plan 1,736 -------------- TOTAL ASSETS 38,668,584 -------------- LIABILITIES: Payable for: Fund shares repurchased 410,122 Investment advisory fee 21,874 Transfer agent fee 625 Pricing and bookkeeping fees 856 Trustees' fees 209 Audit fee 21,280 Custody fee 733 Distribution fee--Class B 7,865 Deferred Trustees' fees 1,736 Other liabilities 2,886 -------------- TOTAL LIABILITIES 468,186 -------------- NET ASSETS $ 38,200,398 ============== COMPOSITION OF NET ASSETS: Paid-in capital $ 32,844,651 Overdistributed net investment income (1,403) Accumulated net realized loss (774,761) Net unrealized appreciation on investments 6,131,911 -------------- NET ASSETS $ 38,200,398 ============== CLASS A: Net assets $ 1,418,237 Shares outstanding 91,949 ============== Net asset value per share $ 15.42 ============== CLASS B: Net assets $ 36,782,161 Shares outstanding 2,387,050 ============== Net asset value per share $ 15.41 ============== </Table> See Notes to Financial Statements. 150 <Page> STATEMENT OF OPERATIONS Liberty Select Value Fund, Variable Series For the Year Ended December 31, 2003 <Table> INVESTMENT INCOME: Dividends $ 368,766 Interest 20,786 -------------- Total Investment Income 389,552 -------------- EXPENSES: Investment advisory fee 211,079 Distribution fee--Class B 72,709 Transfer agent fee 7,500 Pricing and bookkeeping fees 12,441 Trustees' fees 6,617 Custody fee 4,785 Audit fee 28,495 Other expenses 14,784 -------------- Total Expenses 358,410 Fees reimbursed by Distributor--Class B (28,337) Custody earnings credit (6) -------------- Net Expenses 330,067 -------------- Net Investment Income 59,485 -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized loss on investments (705,613) Net change in unrealized appreciation/depreciation on investments 8,564,493 -------------- Net Gain 7,858,880 -------------- Net Increase in Net Assets from Operations $ 7,918,365 ============== </Table> See Notes to Financial Statements. 151 <Page> STATEMENT OF CHANGES IN NET ASSETS Liberty Select Value Fund, Variable Series / December 31, 2003 <Table> <Caption> YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, INCREASE (DECREASE) IN NET ASSETS: 2003 2002 - ---------------------------------- -------------- -------------- OPERATIONS: Net investment income $ 59,485 $ 18,662 Net realized loss on investments (705,613) (64,635) Net change in unrealized appreciation/depreciation on investments 8,564,493 (2,874,205) -------------- -------------- Net Increase (Decrease) from Operations 7,918,365 (2,920,178) -------------- -------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income: Class A (4,195) (1,387) Class B (55,597) (20,257) -------------- -------------- Total Distributions Declared to Shareholders (59,792) (21,644) -------------- -------------- SHARE TRANSACTIONS: Class A: Subscriptions 578,918 546,422 Distributions reinvested 4,195 1,387 Redemptions (93,140) (9,127) -------------- -------------- Net Increase 489,973 538,682 -------------- -------------- Class B: Subscriptions 7,832,430 14,432,250 Distributions reinvested 55,597 20,257 Redemptions (3,283,568) (3,803,086) -------------- -------------- Net Increase 4,604,459 10,649,421 -------------- -------------- Net Increase from Share Transactions 5,094,432 11,188,103 -------------- -------------- Total Increase in Net Assets 12,953,005 8,246,281 NET ASSETS: Beginning of period 25,247,393 17,001,112 -------------- -------------- End of period (including overdistributed net investment income of $(1,403) and $(1,096), respectively) $ 38,200,398 $ 25,247,393 ============== ============== CHANGES IN SHARES: Class A: Subscriptions 46,620 44,354 Issued for distributions reinvested 272 115 Redemptions (7,103) (752) -------------- -------------- Net Increase 39,789 43,717 -------------- -------------- Class B: Subscriptions 601,441 1,069,404 Issued for distributions reinvested 3,606 1,685 Redemptions (251,382) (275,153) -------------- -------------- Net Increase 353,665 795,936 -------------- -------------- </Table> See Notes to Financial Statements. 152 <Page> NOTES TO FINANCIAL STATEMENTS Liberty Select Value Fund, Variable Series / December 31, 2003 NOTE 1. ORGANIZATION Liberty Select Value Fund, Variable Series (the "Fund"), a series of Liberty Variable Investment Trust (the "Trust") is a diversified portfolio. The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. INVESTMENT GOAL--The Fund seeks long-term growth. FUND SHARES--The Fund may issue an unlimited number of shares and offers two classes of shares: Class A and Class B. Each share class has its own expense structure. Shares of the Fund are available exclusively as a pooled funding vehicle for variable annuity contracts ("VA Contracts") and Variable Life Insurance Policies ("VLI Policies") offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies"). The Participating Insurance Companies and their separate accounts own all the shares of the Fund. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES--The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION--Equity securities are valued at the last sale price at the close of the principal exchange on which they trade. Unlisted securities or listed securities for which there were no sales during the day are valued at the closing bid price on such exchanges or over-the-counter markets. Short-term obligations maturing within 60 days are valued at amortized cost, which approximates market value. Investments for which market quotations are not readily available are valued at fair value as determined in good faith under consistently applied procedures established by and under the general supervision of the Board of Trustees. SECURITY TRANSACTIONS--Security transactions are accounted for on the trade date. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. REPURCHASE AGREEMENTS--The Fund may engage in repurchase agreement transactions with institutions that the Fund's investment advisor has determined are creditworthy. The Fund, through its custodian, receives delivery of underlying securities collateralizing a repurchase agreement. Collateral is at least equal, at all times, to the value of the repurchase obligation including interest. A repurchase agreement transaction involves certain risks in the event of default or insolvency of the counterparty. These risks include possible delays or restrictions upon the Fund's ability to dispose of the underlying securities and a possible decline in the value of the underlying securities during the period while the Fund seeks to assert its rights. INCOME RECOGNITION--Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date. DETERMINATION OF CLASS NET ASSET VALUES--All income, expenses (other than class-specific expenses, as shown on the Statement of Operations), and realized and unrealized gains (losses), are allocated to each class of the Fund on a daily basis, based on the relative net assets of each class, for purposes of determining the net asset value of each class. FEDERAL INCOME TAX STATUS--The Fund intends to qualify each year as a "regulated investment company" under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its taxable income, if any, for its tax year, and as such will not be subject to federal income taxes. In addition, by distributing in each calendar year substantially all of its net investment income, capital gains and certain other amounts, if any, the Fund will not be subject to federal excise tax. Therefore, no federal income or excise tax provision is recorded. DISTRIBUTIONS TO SHAREHOLDERS--Distributions to shareholders are recorded on ex-date. Net realized capital gains, if any, are distributed at least annually. Income and capital gains dividends are determined in accordance with income tax regulations which may differ from GAAP. All dividends and distributions are reinvested in additional shares of the Fund at net asset value as of the record date of the distribution. NOTE 3. FEDERAL TAX INFORMATION The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund's capital accounts for permanent tax differences to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. 153 <Page> The tax character of distributions paid during the years ended December 31, 2003 and December 31, 2002 was as follows: <Table> <Caption> DECEMBER 31, DECEMBER 31, 2003 2002 ------------ ------------ Distributions paid from: Ordinary Income* $ 59,792 $ 21,644 Long-Term Capital Gains -- -- </Table> * For tax purposes short-term capital gains distributions, if any, are considered ordinary income distributions. As of December 31, 2003, the components of distributable earnings on a tax basis were as follows: <Table> <Caption> UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM NET UNREALIZED INCOME CAPITAL GAINS APPRECIATION* ------------- ------------- -------------- $ 319 $ -- $ 6,083,377 </Table> * The differences between book-basis and tax-basis net unrealized appreciationare primarily due to deferral of losses from wash sales. Unrealized appreciation and depreciation at December 31, 2003, based on cost of investments for federal income tax purposes was: <Table> Unrealized appreciation $ 7,763,880 Unrealized depreciation (1,680,503) -------------- Net unrealized appreciation $ 6,083,377 ============== </Table> The following capital loss carryforwards are available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: <Table> <Caption> YEAR OF CAPITAL LOSS EXPIRATION CARRYFORWARD ---------- ------------ 2010 $ 20,614 2011 705,613 ---------- $ 726,227 ========== </Table> No capital loss carryforwards were utilized and/or expired during the year ended December 31, 2003 for the Fund. Expired capital loss carryforwards are recorded as a reduction of paid-in capital. NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES INVESTMENT ADVISOR MERGER--On April 1, 2003, Liberty Advisory Services Corp., the previous investment advisor to the Fund, and Colonial Management Associates, Inc., the previous sub-advisor to the Fund, merged into Columbia Management Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co. Columbia is an indirect, wholly owned subsidiary of FleetBoston Financial Corporation. As a result of the merger, Columbia now serves as the Fund's investment advisor. The merger did not change the way the Fund is managed, the investment personnel assigned to manage the Fund or the fees paid by the Fund. INVESTMENT ADVISORY FEE--Columbia is the investment advisor to the Fund and provides administrative and other services. Columbia receives a monthly fee based on the Fund's average daily net assets at the following annual rates: <Table> <Caption> AVERAGE DAILY NET ASSETS FEE RATE - ------------------------ -------- First $500 million 0.70% Next $500 million 0.65% Over $1 billion 0.60% </Table> Prior to November 1, 2003, Columbia received a monthly investment advisory fee at the annual rate of 0.70% of the Fund's average daily net assets. For the year ended December 31, 2003, the Fund's effective investment advisory fee rate was 0.70%. PRICING AND BOOKKEEPING FEES--Columbia is responsible for providing pricing and bookkeeping services to the Fund under a pricing and bookkeeping agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Corporation ("State Street"). Columbia pays the total fees collected to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual flat fee of $10,000 paid monthly, and in any month that the Fund's average daily net assets exceed $50 million, an additional monthly fee. The additional fee rate is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. This rate is applied to the average daily net assets of the Fund for that month. The Fund also pays additional fees for pricing services. For the year ended December 31, 2003, the effective pricing and bookkeeping fee rate was 0.041%. TRANSFER AGENT FEE--Columbia Funds Services, Inc. (the "Transfer Agent"), formerly Liberty Funds Services, Inc., an affiliate of Columbia, provides shareholder services for a monthly fee at an annual rate of $7,500. Effective October 13, 2003, Liberty Funds Services, Inc. changed its name to Columbia Funds Services, Inc. DISTRIBUTION FEES--Columbia Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia, is the principal underwriter of the Fund. Prior to October 13, 2003, Columbia Funds Distributor, Inc. was known as Liberty Funds Distributor, Inc. The Fund has adopted a 12b-1 plan which requires the payment of a monthly distribution fee to the Distributor at the annual rate of 0.25% of Class B average daily net assets. 154 <Page> FEE WAIVERS--Columbia and the Distributor have voluntarily agreed to waive fees and reimburse the Fund for certain expenses so that total expenses (exclusive of brokerage commissions, interest, taxes and extraordinary expenses, if any) will not exceed 1.10% annually of the Fund's average daily net assets. The Distributor will first reimburse the Class B distribution fee up to 0.25% annually to reach the 1.10% limit on Class B expenses. If additional reimbursement is needed to meet the limit for each class, Columbia will then reimburse other expenses to the extent necessary. If additional reimbursement is still needed in order to reach the expense limit, Columbia will then waive a portion of its investment advisory fee to the extent necessary. Columbia or the Distributor, at their discretion, may revise or discontinue this arrangement any time. CUSTODY CREDITS--The Fund has an agreement with its custodian bank under which custody fees may be reduced by balance credits. The Fund could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if it had not entered into such an agreement. FEES PAID TO OFFICERS AND TRUSTEES--The Fund pays no compensation to its officers, all of whom are employees of Columbia or its affiliates. The Fund's Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. NOTE 5. PORTFOLIO INFORMATION PURCHASES AND SALES OF SECURITIES--For the year ended December 31, 2003, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were $9,218,751 and $3,400,322, respectively. NOTE 6. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES INDUSTRY FOCUS--The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. LEGAL PROCEEDINGS--Columbia, the Distributor and certain of their affiliates (collectively, "the Columbia Group") have received information requests and subpoenas from various regulatory authorities, including the Securities and Exchange Commission ("SEC") and the New York Attorney General, in connection with their investigations of late trading and market timing in mutual funds. The Columbia Group has not uncovered any instances where Columbia or the Distributor was knowingly involved in late trading of mutual fund shares. The Columbia Group has identified a limited number of investors who had informal arrangements for trading certain Columbia Fund shares between 1998 and 2003. A substantial majority of the trading had ended by October 2002. None of these arrangements exists today. Information relating to those trading arrangements has been supplied to various regulatory authorities. To the extent that any Columbia Fund, whose shares were involved in those trading activities, was harmed by them, the Columbia Group has undertaken to reimburse such fund. The SEC staff has issued notices to the effect that it has made a preliminary determination to recommend that the SEC bring civil enforcement actions, including injunctive proceedings, against Columbia and the Distributor, alleging that they have violated certain provisions of the federal securities laws. The Columbia Group believes that those allegations are based principally on the trading arrangements referred to above. Columbia and the Distributor are engaged in discussions with the SEC staff in an effort to reach a satisfactory resolution of these matters. However, there can be no assurance that such a resolution will be reached. Any potential resolution of these matters may include, but not be limited to, sanctions, financial penalties, damages or injunctions regarding Columbia or the Distributor, and structural changes in the conduct of their business. Although the Columbia Group does not believe that these regulatory developments or their resolution will have a material adverse effect on the Columbia Funds, or on the ability of Columbia and the Distributor to provide services to the Columbia Funds, there can be no assurance that these matters or any adverse publicity or other developments resulting from them will not result in increased redemptions or reduced sales of Columbia Fund shares, which could increase transactions costs or operating expenses, or other consequences for the Columbia Funds. 155 <Page> FINANCIAL HIGHLIGHTS Liberty Select Value Fund, Variable Series--Class A Shares Selected data for a share outstanding throughout each period is as follows: <Table> <Caption> PERIOD YEAR ENDED DECEMBER 31, ENDED -------------------------------------- DECEMBER 31, 2003 2002 2001 2000 (a) -------- -------- -------- ------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 12.12 $ 13.66 $ 13.24 $ 12.00 -------- -------- -------- ------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (b) 0.05 0.03 0.05 0.09 Net realized and unrealized gain (loss) on investments 3.30 (1.54) 0.42 1.28 -------- -------- -------- ------------ Total from Investment Operations 3.35 (1.51) 0.47 1.37 -------- -------- -------- ------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.05) (0.03) (0.03) (0.07) From net realized gains -- -- (0.02) --(c) Return of capital -- -- -- (0.06) -------- -------- -------- ------------ Total Distributions Declared to Shareholders (0.05) (0.03) (0.05) (0.13) -------- -------- -------- ------------ NET ASSET VALUE, END OF PERIOD $ 15.42 $ 12.12 $ 13.66 $ 13.24 ======== ======== ======== ============ Total return (d)(e) 27.61% (11.07)% 3.55%(f) 11.38%(f)(g) RATIOS TO AVERAGE NET ASSETS/ SUPPLEMENTAL DATA: Expenses (h) 0.95% 0.93% 1.10% 1.10%(i) Net investment income (h) 0.35% 0.26% 0.34% 1.13%(i) Waiver/reimbursement -- -- 0.48% 1.31%(i) Portfolio turnover rate 12% 21% 15% 26%(g) Net assets, end of period (000's) $ 1,418 $ 632 $ 115 $ 111 </Table> (a) For the period from commencement of operations on May 30, 2000 to December 31, 2000. (b) Per share data was calculated using average shares outstanding during the period. (c) Rounds to less than $0.01 per share. (d) Total return at net asset value assuming all distributions reinvested. (e) Total return figure does not include any insurance company charges associated with a variable annuity. If included, total return would be reduced. (f) Had the Investment Advisor not waived or reimbursed a portion of expenses, total return would have been reduced. (g) Not annualized. (h) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (i) Annualized. 156 <Page> REPORT OF INDEPENDENT AUDITORS To the Trustees of Liberty Variable Investment Trust and the Class A Shareholders of Liberty Select Value Fund, Variable Series In our opinion, the accompanying statement of assets and liabilities, including the investment portfolio, and the related statements of operations and of changes in net assets and the Class A financial highlights present fairly, in all material respects, the financial position of Liberty Select Value Fund, Variable Series (the "Fund") (a series of Liberty Variable Investment Trust) at December 31, 2003, and the results of its operations, the changes in its net assets and the Class A financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and the Class A financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund'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 December 31, 2003 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts February 12, 2004 157 <Page> UNAUDITED INFORMATION FEDERAL INCOME TAX INFORMATION 100% of the ordinary income distributed by the Fund, for the year ended December 31, 2003, qualifies for the corporate dividends received deduction. 158 <Page> PORTFOLIO MANAGERS' DISCUSSION Newport Tiger Fund, Variable Series / December 31, 2003 Newport Tiger Fund, Variable Series seeks capital appreciation. Eric Sandlund and Christopher Legallet are co-managers of the fund. Mr. Sandlund has co-managed the fund since August 2002. Mr. Legallet, chief investment officer-international equities of Columbia Advisors, Inc., has co-managed the fund since January 1999. The fund posted substantial gains for the 12-month period ended December 31, 2003, but came out slightly behind its benchmark, the MSCI All Country Free Asia ex Japan Index. The fund benefited from a strong rebound in Asian markets during the second half of the year. Once SARS (severe acute respiratory syndrome) appeared under control, major military campaigns in Iraq ended and global economic growth improved, Asian stocks took off. The fund modestly trailed its benchmark in part because of selected technology investments, which suffered as investors worried that the strong product sales of 2003 might not be sustainable in 2004. GROWING COMMITMENTS TO INDIA AND THAILAND During the 12-month period, we added to our positions in countries with growing economies and strong upward trends in domestic consumption and infrastructure development, such as India and Thailand. The fund had a bigger stake than its benchmark in India, where the economy is expected to grow at a rate of 8.0% in 2004. During the past year, the Indian economy benefited from relatively low interest rates and expansion in the manufacturing and service sectors. In India, we purchased Bajaj Auto, a motorcycle distributor; Bharat Forge, a producer of axles and crankshafts for heavy vehicles and machinery and Maruti Udyog, a manufacturer of low-cost automobiles for the domestic population (0.3%, 0.4% and 1.0% of net assets, respectively). All three stocks added to total return. We also increased our investments in Thailand, making it the fifth largest country in the portfolio at the end of the period. In the consumer staples area, we added Thai Union Frozen Products (0.5% of net assets), one of the largest canned fish producers in the world. The company owns the Chicken of the Sea tuna brand and exports shrimp from Thailand to the United States. We took some profits in Land & House (1.6% of net assets), a company that has contributed significantly to performance for more than a year and continues to be a positive holding for the fund. This sale lowered our exposure to the property sector in Thailand. REDUCED EXPOSURE TO CHINA AND HONG KONG Although we maintained significant commitments to China and Hong Kong, we reduced our exposure to both markets for the following reasons. First, we viewed the prospects for individual holdings as less attractive than securities we found elsewhere. Second, we thought other stock markets offered more plentiful opportunities. In China, we cut back on Huaneng Power International (3.5% of net assets), the country's largest electric utility, when the stock's valuation rose beyond our target. In our opinion, Huaneng Power International continues to be a proxy for China's attractive long-term growth potential, and it remains an important position for the fund. After trimming our stake in a number of Hong Kong stocks that had done well, we added Standard Chartered (1.3% of net assets), a diversified financial institution that does business in the emerging economies of Asia. We maintained investments in Indonesia, South Korea, Malaysia, Taiwan and other parts of Asia. Certain South Korean investments, however, hampered returns. We held on even as an uncertain regulatory environment hurt telecommunications company KT Corporation, and concerns about the nation's growing level of debt hampered Kookmin Bank (1.4% and 1.8% of net assets, respectively). POSITIONED FOR GLOBAL ECONOMIC GROWTH If global economic growth picks up, we expect the Asian economies to benefit from increased export activity as well as expansion of their domestic markets. We have positioned the portfolio to take advantage of these trends. Economic and market conditions frequently change. There is no assurance that the trends described here will continue or commence. An investment in the Newport Tiger Fund, Variable Series offers long-term growth potential; however, the net asset value of the fund will fluctuate due to economic and political developments and currency exchange rate fluctuations. Many of the Asian countries are considered emerging economies, which means there may be greater risks associated with investing there than in more developed countries. In addition, concentration of investments in a single region may result in greater volatility. Holdings are disclosed as of December 31, 2003, and are subject to change. 159 <Page> PERFORMANCE INFORMATION Newport Tiger Fund, Variable Series / December 31, 2003 AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 2003 (%) <Table> <Caption> 1-YEAR 5-YEAR LIFE - -------------------------------------------------------------- Class A (5/1/95) 44.79 6.80 1.63 MSCI All Country Free Asia ex Japan Index(1) 46.98 6.68 -1.10 </Table> Inception date of share class is in parentheses. <Table> <Caption> NET ASSET VALUE PER SHARE ($) 12/31/02 12/31/03 - ------------------------------------------------------ Class A 1.45 2.08 </Table> [CHART] VALUE OF A $10,000 INVESTMENT, 5/1/95 - 12/31/03 Class A: $11,501 <Table> <Caption> CLASS A SHARES MSCI ALL COUNTRY FREE ASIA EX JAPAN INDEX 5/31/1995 $ 11,100 $ 11,125 6/30/1995 $ 10,900 $ 10,951 7/31/1995 $ 11,200 $ 11,157 8/31/1995 $ 10,851 $ 10,643 9/30/1995 $ 11,050 $ 10,770 10/31/1995 $ 11,000 $ 10,584 11/30/1995 $ 11,050 $ 10,344 12/31/1995 $ 11,501 $ 10,855 1/31/1996 $ 12,661 $ 11,699 2/29/1996 $ 12,560 $ 11,826 3/31/1996 $ 12,560 $ 11,912 4/30/1996 $ 12,510 $ 12,341 5/31/1996 $ 12,460 $ 12,203 6/30/1996 $ 12,208 $ 12,021 7/31/1996 $ 11,552 $ 11,134 8/31/1996 $ 11,956 $ 11,470 9/30/1996 $ 12,308 $ 11,668 10/31/1996 $ 12,207 $ 11,446 11/30/1996 $ 12,813 $ 11,986 12/31/1996 $ 12,851 $ 11,944 1/31/1997 $ 12,750 $ 12,191 2/28/1997 $ 12,750 $ 12,295 3/31/1997 $ 11,985 $ 11,600 4/30/1997 $ 11,781 $ 11,428 5/31/1997 $ 12,852 $ 11,944 6/30/1997 $ 13,464 $ 12,381 7/31/1997 $ 13,668 $ 12,485 8/31/1997 $ 11,324 $ 10,272 9/30/1997 $ 11,681 $ 10,225 10/31/1997 $ 9,028 $ 7,952 11/30/1997 $ 8,876 $ 7,407 12/31/1997 $ 8,850 $ 7,130 1/31/1998 $ 7,556 $ 6,514 2/28/1998 $ 9,212 $ 7,895 3/31/1998 $ 9,161 $ 7,779 4/30/1998 $ 8,385 $ 7,097 5/31/1998 $ 7,246 $ 6,014 6/30/1998 $ 6,522 $ 5,339 7/31/1998 $ 6,004 $ 5,204 8/31/1998 $ 5,124 $ 4,454 9/30/1998 $ 6,003 $ 4,896 10/31/1998 $ 7,763 $ 5,961 11/30/1998 $ 8,281 $ 6,442 12/31/1998 $ 8,281 $ 6,576 1/31/1999 $ 7,806 $ 6,471 2/28/1999 $ 7,806 $ 6,345 3/31/1999 $ 8,492 $ 7,106 4/30/1999 $ 10,338 $ 8,405 5/31/1999 $ 9,652 $ 8,223 6/30/1999 $ 10,707 $ 9,508 7/31/1999 $ 10,707 $ 9,299 8/31/1999 $ 10,760 $ 9,529 9/30/1999 $ 10,338 $ 8,862 10/31/1999 $ 11,023 $ 9,147 11/30/1999 $ 12,342 $ 10,017 12/31/1999 $ 13,912 $ 10,829 1/31/2000 $ 13,274 $ 10,775 2/29/2000 $ 13,646 $ 10,550 3/31/2000 $ 14,177 $ 10,798 4/30/2000 $ 13,274 $ 9,808 5/31/2000 $ 12,530 $ 8,955 6/30/2000 $ 13,857 $ 9,428 7/31/2000 $ 13,805 $ 9,024 8/31/2000 $ 13,698 $ 8,957 9/30/2000 $ 12,742 $ 7,931 10/31/2000 $ 12,159 $ 7,307 11/30/2000 $ 11,522 $ 7,024 12/31/2000 $ 11,736 $ 7,013 1/31/2001 $ 12,594 $ 7,916 2/28/2001 $ 11,843 $ 7,542 3/31/2001 $ 10,396 $ 6,688 4/30/2001 $ 10,985 $ 6,698 5/31/2001 $ 10,664 $ 6,688 6/30/2001 $ 10,342 $ 6,528 7/31/2001 $ 10,127 $ 6,281 8/31/2001 $ 9,484 $ 6,183 9/30/2001 $ 7,984 $ 5,211 10/31/2001 $ 8,198 $ 5,492 11/30/2001 $ 9,109 $ 6,226 12/31/2001 $ 9,566 $ 6,744 1/31/2002 $ 9,566 $ 7,013 2/28/2002 $ 9,404 $ 7,065 3/31/2002 $ 9,782 $ 7,538 4/30/2002 $ 9,782 $ 7,616 5/31/2002 $ 9,459 $ 7,444 6/30/2002 $ 8,972 $ 7,074 7/31/2002 $ 8,486 $ 6,806 8/31/2002 $ 8,270 $ 6,685 9/30/2002 $ 7,567 $ 5,949 10/31/2002 $ 7,891 $ 6,251 11/30/2002 $ 8,324 $ 6,583 12/31/2002 $ 7,944 $ 6,182 1/31/2003 $ 7,889 $ 6,233 2/28/2003 $ 7,616 $ 5,981 3/31/2003 $ 7,342 $ 5,701 4/30/2003 $ 7,451 $ 5,881 5/31/2003 $ 8,054 $ 6,389 6/30/2003 $ 8,547 $ 6,791 7/31/2003 $ 9,258 $ 7,370 8/31/2003 $ 9,970 $ 7,936 9/30/2003 $ 10,190 $ 7,996 10/31/2003 $ 10,902 $ 8,682 11/30/2003 $ 10,792 $ 8,575 12/31/2003 $ 11,501 $ 9,088 </Table> PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA PROVIDED. FOR CURRENT MONTH-END PERFORMANCE INFORMATION, PLEASE CONTACT YOUR INSURANCE COMPANY. Total return performance includes changes in share price and reinvestment of all distributions. The MSCI (Morgan Stanley Capital International) All Country Free Asia ex Japan Index is an unmanaged index that tracks the performance of equity securities in eleven countries in Asia, excluding Japan and taking into account local market restrictions on share ownership by foreigners. Indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. Performance numbers reflect all fund expenses, but do not include any insurance charges imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. (1) Index performance is from April 30, 1995. 160 <Page> INVESTMENT PORTFOLIO Newport Tiger Fund, Variable Series / December 31, 2003 <Table> <Caption> SHARES VALUE ------------ ------------ COMMON STOCKS--100.5% CONSUMER DISCRETIONARY--11.9% AUTOMOBILES--4.7% Bajaj Auto Ltd. 4,000 $ 99,987 Hyundai Motor Co., Ltd. 15,200 644,230 Maruti Udyog Ltd. (a) 35,462 293,282 PT Astra International, Inc. (a) 518,000 307,510 ------------ 1,345,009 ------------ HOTELS, RESTAURANTS & LEISURE--1.9% Genting Berhad 128,000 559,158 ------------ MEDIA--3.3% Singapore Press Holdings Ltd. 54,164 602,779 Television Broadcasts Ltd. 66,000 333,241 ------------ 936,020 ------------ TEXTILES, APPAREL & LUXURY GOODS--2.0% Li & Fung Ltd. 328,000 561,893 ------------ CONSUMER STAPLES--1.4% FOOD & DRUG RETAILING--0.2% Convenience Retail Asia Ltd. (a) 198,000 57,382 ------------ FOOD PRODUCTS--1.2% Nestle India Ltd. 14,800 224,277 Thai Union Frozen Products Public Co., Ltd. 163,600 132,127 ------------ 356,404 ------------ FINANCIALS--33.1% BANKS--19.6% Bangkok Bank Public Co., Ltd. (a) 297,400 818,136 Bank Rakyat Indonesia (a) 1,772,500 263,060 Chinatrust Financial Holding Co., Ltd. 532,000 534,351 DBS Group Holdings Ltd. 32,638 282,505 Hang Seng Bank Ltd. 27,700 363,922 Hong Leong Bank Berhad 167,000 228,526 Kasikornbank Public Co., Ltd., NVDR (a) 455,000 746,419 Kookmin Bank 13,783 516,501 Koram Bank (a) 12,860 151,104 Public Bank Berhad 657,187 536,126 Siam Commercial Bank Public Co., Ltd. (a) 189,500 265,436 Standard Chartered PLC 23,462 386,351 United Overseas Bank Ltd. 66,000 512,984 ------------ 5,605,421 ------------ DIVERSIFIED FINANCIALS--5.2% Hong Leong Credit Berhad 68,000 89,474 Housing Development Finance Corp., Ltd. 78,108 1,106,129 Swire Pacific Ltd., Series A 50,000 307,841 ------------ 1,503,444 ------------ REAL ESTATE--8.3% City Developments Ltd. 133,000 $ 473,797 Henderson Land Development Co., Ltd. 70,000 309,258 SM Prime Holdings, Inc. 2,573,000 301,234 Sun Hung Kai Properties Ltd. 158,000 1,302,463 ------------ 2,386,752 ------------ HEALTH CARE--3.7% HEALTH CARE EQUIPMENT & SUPPLIES--0.3% Pihsiang Machinery Manufacturing Co., Ltd. 24,150 83,938 ------------ PHARMACEUTICALS--3.4% Dr. Reddy's Laboratories Ltd., ADR 19,300 610,845 Ranbaxy Laboratories Ltd. (a) 14,700 354,803 ------------ 965,648 ------------ INDUSTRIALS--9.1% CONSTRUCTION & ENGINEERING--1.6% Land & House Public Co., Ltd. 1,478,100 473,768 ------------ ELECTRICAL EQUIPMENT--0.4% Phoenixtec Power Co., Ltd. 96,480 113,105 ------------ INDUSTRIAL CONGLOMERATES--5.0% China Merchants Holdings International Co., Ltd. 337,000 442,750 Hutchison Whampoa Ltd. 133,500 980,132 ------------ 1,422,882 ------------ MACHINERY--0.4% Bharat Forge Ltd. 6,200 108,214 ------------ TRANSPORTATION INFRASTRUCTURE--1.7% Zhejiang Expressway Co., Ltd. 692,000 485,770 ------------ INFORMATION TECHNOLOGY--20.8% COMPUTERS & PERIPHERALS--2.1% Ambit Microsystems Corp. 106,300 280,231 Asustek Computer, Inc. 148,500 328,056 ------------ 608,287 ------------ ELECTRONIC EQUIPMENT & INSTRUMENTS--1.3% Synnex Technology International Corp. 127,000 172,077 Venture Corp., Ltd. 18,000 211,977 ------------ 384,054 ------------ INFORMATION TECHNOLOGY CONSULTING & SERVICES--3.7% Infosys Technologies Ltd. 8,756 1,070,676 ------------ INTERNET SOFTWARE & SERVICES--1.0% NCsoft Corp. (a) 4,880 270,315 ------------ SEMICONDUCTOR EQUIPMENT & PRODUCTS--12.7% Realtek Semiconductor Corp. 110,400 188,607 Samsung Electronics Co., Ltd. 5,250 1,987,201 Taiwan Semiconductor Manufacturing Co., Ltd. (a) 775,624 1,450,725 ------------ 3,626,533 ------------ </Table> See Notes to Investment Portfolio. 161 <Page> <Table> <Caption> SHARES VALUE ------------ ------------ MATERIALS--2.7% CONSTRUCTION MATERIALS--2.7% Siam Cement Public Co., Ltd., NVDR 123,450 $ 791,376 ------------ TELECOMMUNICATION SERVICES--9.1% DIVERSIFIED TELECOMMUNICATION SERVICES--4.1% KT Corp. 10,400 389,291 Philippine Long Distance Telephone Co. (a) 27,600 482,205 PT Telekomunikasi 389,600 312,235 ------------ 1,183,731 ------------ WIRELESS TELECOMMUNICATION SERVICES--5.0% China Mobile Ltd. 385,500 1,181,761 Taiwan Cellular Corp. 297,000 258,071 ------------ 1,439,832 ------------ UTILITIES--8.7% ELECTRIC UTILITIES--5.2% Beijing Datang Power Generation Co., Ltd. 700,000 500,403 Huaneng Power International, Inc. 578,000 1,001,333 ------------ 1,501,736 ------------ GAS UTILITIES--3.5% Hong Kong & China Gas Co., Ltd 653,002 996,693 ------------ TOTAL COMMON STOCKS (cost of $18,844,535) 28,838,041 ------------ <Caption> PAR ------------ SHORT-TERM OBLIGATION--1.4% Repurchase agreement with State Street Bank & Trust Co., dated 12/31/03, due 01/02/04 at 0.780%, collateralized by a U.S. Treasury Bond maturing 02/15/29, market value $395,708 (repurchase proceeds $387,017) (cost of $387,000) $ 387,000 387,000 ------------ TOTAL INVESTMENTS--101.9% (cost of $19,231,535) (b) 29,225,041 ------------ OTHER ASSETS & LIABILITIES, NET--(1.9)% (541,424) ------------ NET ASSETS--100.0% $ 28,683,617 ============ </Table> NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing. (b) Cost for federal income tax purposes is $19,325,596. <Table> <Caption> SUMMARY OF SECURITIES % OF TOTAL BY COUNTRY (UNAUDITED): VALUE INVESTMENTS - ----------------------- ------------ ------------ Hong Kong $ 6,218,062 21.3% South Korea 3,958,641 13.6 India 3,868,214 13.2 Taiwan 3,409,160 11.7 Thailand 3,227,263 11.1 Singapore 2,084,042 7.1 China 1,987,506 6.8 Malaysia 1,413,284 4.8 Indonesia 882,805 3.0 Philippines 783,438 2.7 Bermuda 561,893 1.9 United States 387,000 1.3 United Kingdom 386,351 1.3 Cayman Islands 57,382 0.2 ------------ ------------ $ 29,225,041 100.0% ============ ============ </Table> Certain securities are listed by country of underlying exposure but may trade predominantly on other exchanges. <Table> <Caption> ACRONYM NAME ------- ----------------------------- ADR American Depositary Receipt NVDR Non-Voting Depositary Receipt </Table> See Notes to Financial Statements. 162 <Page> STATEMENT OF ASSETS & LIABILITIES Newport Tiger Fund, Variable Series / December 31, 2003 <Table> ASSETS: Investments, at cost $ 19,231,535 ------------- Investments, at value $ 29,225,041 Cash 3,548 Foreign currency (cost of $70,993) 71,099 Receivable for: Fund shares sold 24,981 Interest 8 Dividends 20,935 Deferred Trustees' compensation plan 4,078 ------------- TOTAL ASSETS 29,349,690 ------------- LIABILITIES: Payable for: Fund shares repurchased 171,266 Investment advisory fee 21,083 Transfer agent fee 625 Pricing and bookkeeping fees 950 Trustees' fees 524 Audit fee 32,690 Custody fee 4,165 Distribution fee--Class B 646 Deferred Trustees' fees 4,078 Foreign capital gains tax accrued 426,782 Other liabilities 3,264 ------------- TOTAL LIABILITIES 666,073 ------------- NET ASSETS $ 28,683,617 ============= COMPOSITION OF NET ASSETS: Paid-in capital $ 31,156,424 Overdistributed net investment income (5,343) Accumulated net realized loss (12,034,361) Net unrealized appreciation (depreciation) on: Investments 9,993,506 Foreign currency translations 173 Foreign capital gains tax (426,782) ------------- NET ASSETS $ 28,683,617 ============= CLASS A: Net assets $ 25,683,608 Shares outstanding 12,340,449 ============= Net asset value per share $ 2.08 ============= CLASS B: Net assets $ 3,000,009 Shares outstanding 1,415,831 ============= Net asset value per share $ 2.12 ============= </Table> See Notes to Financial Statements. 163 <Page> STATEMENT OF OPERATIONS Newport Tiger Fund, Variable Series For the Year Ended December 31, 2003 <Table> INVESTMENT INCOME: Dividends $ 601,916 Interest 3,948 ------------- Total Investment Income (net of foreign taxes withheld of $51,299) 605,864 ------------- EXPENSES: Investment advisory fee 213,330 Distribution fee--Class B 4,120 Pricing and bookkeeping fees 12,067 Transfer agent fee 7,500 Trustees' fees 7,807 Custody fee 58,510 Audit fee 45,370 Other expenses 14,938 ------------- Total Expenses 363,642 Custody earnings credit (88) ------------- Net Expenses 363,554 ------------- Net Investment Income 242,310 ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY AND FOREIGN CAPITAL GAINS TAX: Net realized gain (loss) on: Investments 82,247 Foreign currency transactions (22,348) Foreign capital gains tax (21,551) ------------- Net realized gain 38,348 ------------- Net change in unrealized appreciation/depreciation on: Investments 8,854,669 Foreign currency translations 614 Foreign capital gains tax (426,782) ------------- Net change in unrealized appreciation/depreciation 8,428,501 ------------- Net Gain 8,466,849 ------------- Net Increase in Net Assets from Operations $ 8,709,159 ============= </Table> See Notes to Financial Statements. 164 <Page> STATEMENT OF CHANGES IN NET ASSETS Newport Tiger Fund, Variable Series <Table> <Caption> YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, INCREASE (DECREASE) IN NET ASSETS: 2003 2002 - ---------------------------------- ------------- ------------- OPERATIONS: Net investment income $ 242,310 $ 304,732 Net realized gain (loss) on investments, foreign currency transactions and foreign capital gains tax 38,348 (48,595) Net change in unrealized appreciation/depreciation on investments, foreign currency translations and foreign capital gains tax 8,428,501 (3,025,068) ------------- ------------- Net Increase (Decrease) from Operations 8,709,159 (2,768,931) ------------- ------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income: Class A (238,610) (253,001) Class B (19,194) (11,587) Return of capital: Class A -- (62,217) Class B -- (2,850) ------------- ------------- Total Distributions Declared to Shareholders (257,804) (329,655) ------------- ------------- SHARE TRANSACTIONS: Class A: Subscriptions 4,595,945 349,774,001 Distributions reinvested 238,610 315,218 Redemptions (9,993,129) (357,739,000) ------------- ------------- Net Decrease (5,158,574) (7,649,781) ------------- ------------- Class B: Subscriptions 1,441,440 2,488,667 Distributions reinvested 19,194 14,437 Redemptions (242,928) (3,501,399) ------------- ------------- Net Increase (Decrease) 1,217,706 (998,295) ------------- ------------- Net Decrease from Share Transactions (3,940,868) (8,648,076) ------------- ------------- Total Increase (Decrease) in Net Assets 4,510,487 (11,746,662) NET ASSETS: Beginning of period 24,173,130 35,919,792 ------------- ------------- End of period (including overdistributed net investment income of $(5,343) and $(3,562), respectively) $ 28,683,617 $ 24,173,130 ============= ============= CHANGES IN SHARES: Class A: Subscriptions 2,997,732 199,407,089 Issued for distributions reinvested 115,267 214,434 Redemptions (6,743,620) (202,704,318) ------------- ------------- Net Decrease (3,630,621) (3,082,795) ------------- ------------- Class B: Subscriptions 802,770 1,369,557 Issued for distributions reinvested 9,140 9,625 Redemptions (134,468) (1,874,153) ------------- ------------- Net Increase (Decrease) 677,442 (494,971) ------------- ------------- </Table> See Notes to Financial Statements. 165 <Page> NOTES TO FINANCIAL STATEMENTS Newport Tiger Fund, Variable Series / December 31, 2003 NOTE 1. ORGANIZATION Newport Tiger Fund, Variable Series (the "Fund"), a series of Liberty Variable Investment Trust (the "Trust") is a diversified portfolio. The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. INVESTMENT GOAL--The Fund seeks capital appreciation. FUND SHARES--The Fund may issue an unlimited number of shares and offers two classes of shares: Class A and Class B. Each share class has its own expense structure. Shares of the Fund are available exclusively as a pooled funding vehicle for variable annuity contracts ("VA Contracts") and Variable Life Insurance Policies ("VLI Policies") offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies"). The Participating Insurance Companies and their separate accounts own all the shares of the Fund. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES--The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION--Equity securities are valued at the last sale price at the close of the principal exchange on which they trade. Unlisted securities or listed securities for which there were no sales during the day are valued at the closing bid price on such exchanges or over-the-counter markets. Short-term obligations maturing within 60 days are valued at amortized cost, which approximates market value. Foreign securities are generally valued at the closing price on the foreign exchange or market on which they trade. If any foreign share prices are not readily available as a result of limited share activity, the securities are valued at the last sale price of the local shares in the principal market in which such securities are normally traded. Investments for which market quotations are not readily available, which tend to be more thinly traded and of lesser quality are valued at fair value as determined in good faith under consistently applied procedures established by and under the general supervision of the Board of Trustees. Foreign markets close each day at various times prior to the close of the New York Stock Exchange ("NYSE"). Foreign currency exchange rates are generally determined prior to the close of the NYSE at 12:00 p.m. Eastern (U.S.) time. Occasionally, events affecting the value of a foreign security may occur subsequent to the close of the exchange or market which would not be reflected in the computation of the Fund's net asset value. In such an event, the foreign security will be valued at the fair value. SECURITY TRANSACTIONS--Security transactions are accounted for on the trade date. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. INCOME RECOGNITION--Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date except for certain foreign securities which are recorded as soon after ex-date as the Fund becomes aware of such, net of non-reclaimable tax withholdings. FOREIGN CURRENCY TRANSACTIONS--The values of all assets and liabilities quoted in foreign currencies are translated into U.S. dollars at that day's exchange rates. Net realized and unrealized gains (losses) on foreign currency transactions include gains (losses) arising from the fluctuation in exchange rates between trade and settlement dates on securities transactions, gains (losses) arising from the disposition of foreign currency and currency gains (losses) between the accrual and payment dates on dividends, interest income and foreign withholding taxes. The Fund does not distinguish that portion of gains (losses) on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the investments. Such fluctuations are included with the net realized and unrealized gains (losses) on investments. REPURCHASE AGREEMENTS--The Fund may engage in repurchase agreement transactions with institutions that the Fund's investment advisor has determined are creditworthy. The Fund, through its custodian, receives delivery of underlying securities collateralizing a repurchase agreement. Collateral is at least equal, at all times, to the value of the repurchase obligation including interest. A repurchase agreement transaction involves certain risks in the event of default or insolvency of the counterparty. These risks include possible delays or restrictions upon the Fund's ability to dispose of the underlying securities and a possible decline in the value of the underlying securities during the period while the Fund seeks to assert its rights. 166 <Page> DETERMINATION OF CLASS NET ASSET VALUES--All income, expenses (other than class-specific expenses, as shown on the Statement of Operations), and realized and unrealized gains (losses) are allocated to each class of the Fund on a daily basis, based on the relative net assets of each class, for purposes of determining the net asset value of each class. FOREIGN CAPITAL GAINS TAX--Realized gains in certain countries may be subject to foreign taxes at the Fund level, at rates ranging from approximately 10% to 30%. The Fund accrues for such foreign taxes on net realized and unrealized gains at the rate appropriate for each jurisdiction. FEDERAL INCOME TAX STATUS--The Fund intends to qualify each year as a "regulated investment company" under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its taxable income, if any, for its tax year, and as such will not be subject to federal income taxes. In addition, by distributing in each calendar year substantially all of its net investment income, capital gains and certain other amounts, if any, the Fund will not be subject to federal excise tax. Therefore, no federal income or excise tax provision is recorded. DISTRIBUTIONS TO SHAREHOLDERS--Distributions to shareholders are recorded on ex-date. Net realized capital gains, if any, are distributed at least annually. Income and capital gains dividends are determined in accordance with income tax regulations which may differ from GAAP. All dividends and distributions are reinvested in additional shares of the Fund at net asset value as of the record date of the distribution. NOTE 3. FEDERAL TAX INFORMATION The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund's capital accounts for permanent tax differences to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. For the year ended December 31, 2003, permanent differences resulting primarily from differing treatments for foreign currency transactions, excess return of capital distributions and foreign capital gains tax were identified and reclassified among the components of the Fund's net assets as follows: <Table> <Caption> OVERDISTRIBUTED NET ACCUMULATED PAID-IN INVESTMENT INCOME NET REALIZED LOSS CAPITAL ---------------------- ----------------- ----------- $ 13,713 $ 43,898 $ (57,611) </Table> Net investment income and net realized gains (losses), as disclosed on the Statement of Operations, and net assets were not affected by this reclassification. The tax character of distributions paid during the years ended December 31, 2003 and December 31, 2002 was as follows: <Table> <Caption> DECEMBER 31, DECEMBER 31, 2003 2002 ------------ ------------ Distributions paid from: Ordinary Income* $ 257,804 $ 264,588 Long-Term Capital Gains -- -- Tax Return of Capital -- 65,067 </Table> * For tax purposes short-term capital gains distributions, if any, are considered ordinary income distributions. As of December 31, 2003, the components of distributable earnings on a tax basis were as follows: <Table> <Caption> UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM NET UNREALIZED INCOME CAPITAL GAINS APPRECIATION* - ------------------ ----------------- ----------------- $ -- $ -- $ 9,472,836 </Table> * The differences between book-basis and tax-basis net unrealized appreciation are primarily due to deferral of losses from wash sales and foreign capital gains tax. Unrealized appreciation and depreciation at December 31, 2003, based on cost of investments for federal income tax purposes and excluding any unrealized appreciation and depreciation from changes in the value of assets and liabilities resulting from changes in exchange rates was: <Table> Unrealized appreciation $ 10,454,400 Unrealized depreciation (554,955) ------------ Net unrealized appreciation $ 9,899,445 ============ </Table> The following capital loss carryforwards are available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: <Table> <Caption> YEAR OF CAPITAL LOSS EXPIRATION CARRYFORWARD ---------- ------------- 2005 $ 2,121,889 2006 5,726,423 2007 1,050,865 2009 2,161,521 2010 879,602 ------------- $ 11,940,300 ============= </Table> Capital loss carryforwards of $69,477 were utilized and/or expired during the year ended December 31, 2003 for the Fund. Expired capital loss carryforwards are recorded as a reduction of paid-in capital. 167 <Page> POST-OCTOBER LOSSES--Under current tax rules, certain currency and capital losses realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of December 31, 2003, post-October currency losses of $1,046 were deferred to January 1, 2004. NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES INVESTMENT ADVISOR MERGER--On April 1, 2003, Liberty Advisory Services Corp., the previous investment advisor to the Fund, and Newport Fund Management, Inc., the previous sub-advisor to the Fund, merged into Columbia Management Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co. Columbia is an indirect, wholly owned subsidiary of FleetBoston Financial Corporation. As a result of the merger, Columbia now serves as the Fund's investment advisor. The merger did not change the way the Fund is managed, the investment personnel assigned to manage the Fund or the fees paid by the Fund. INVESTMENT ADVISORY FEE--Columbia is the investment advisor to the Fund and provides administrative and other services. Columbia receives a monthly fee based on the Fund's average daily net assets at the following annual rates: <Table> <Caption> AVERAGE DAILY NET ASSETS FEE RATE - ------------------------ -------- First $1 billion 0.90% Next $500 million 0.85% Over $1.5 billion 0.80% </Table> Prior to November 1, 2003, Columbia received a monthly investment advisory fee at the annual rate of 0.90% of the Fund's average daily net assets. For the year ended December 31, 2003, the Fund's effective investment advisory fee rate was 0.90%. PRICING AND BOOKKEEPING FEES--Columbia is responsible for providing pricing and bookkeeping services to the Fund under a pricing and bookkeeping agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Corporation ("State Street"). Columbia pays the total fees collected to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual flat fee of $10,000 paid monthly, and in any month that the Fund's average daily net assets exceed $50 million, an additional monthly fee. The additional fee rate is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. This rate is applied to the average daily net assets of the Fund for that month. The Fund also pays additional fees for pricing services. For the year ended December 31, 2003, the effective pricing and bookkeeping fee rate was 0.051%. TRANSFER AGENT FEE--Columbia Funds Services, Inc. (the "Transfer Agent"), formerly Liberty Funds Services, Inc., an affiliate of Columbia, provides shareholder services for a monthly fee at an annual rate of $7,500. Effective October 13, 2003, Liberty Funds Services, Inc. changed its name to Columbia Funds Services, Inc. DISTRIBUTION FEES--Columbia Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia, is the principal underwriter of the Fund. Prior to October 13, 2003, Columbia Funds Distributor, Inc. was known as Liberty Funds Distributor, Inc. The Fund has adopted a 12b-1 plan which requires the payment of a monthly distribution fee to the Distributor at the annual rate of 0.25% of Class B average daily net assets. CUSTODY CREDITS--The Fund has an agreement with its custodian bank under which custody fees may be reduced by balance credits. The Fund could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if it had not entered into such an agreement. FEES PAID TO OFFICERS AND TRUSTEES--The Fund pays no compensation to its officers, all of whom are employees of Columbia or its affiliates. The Fund's Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. NOTE 5. PORTFOLIO INFORMATION PURCHASES AND SALES OF SECURITIES--For the year ended December 31, 2003, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were $6,595,885 and $10,549,508, respectively. NOTE 6. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES FOREIGN SECURITIES--There are certain additional risks involved when investing in foreign securities that are not inherent with investments in domestic securities. These risks may involve foreign currency exchange rate fluctuations, adverse political and economic developments and the possible prevention of currency exchange or other foreign governmental laws or restrictions. In addition, the liquidity of foreign securities may be more limited than that of domestic securities. 168 <Page> INDUSTRY FOCUS --The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. LEGAL PROCEEDINGS--Columbia, the Distributor and certain of their affiliates (collectively, "the Columbia Group") have received information requests and subpoenas from various regulatory authorities, including the Securities and Exchange Commission ("SEC") and the New York Attorney General, in connection with their investigations of late trading and market timing in mutual funds. The Columbia Group has not uncovered any instances where Columbia or the Distributor was knowingly involved in late trading of mutual fund shares. The Columbia Group has identified a limited number of investors who had informal arrangements for trading certain Columbia Fund shares between 1998 and 2003. A substantial majority of the trading had ended by October 2002. None of these arrangements exists today. Information relating to those trading arrangements has been supplied to various regulatory authorities. To the extent that any Columbia Fund, whose shares were involved in those trading activities, was harmed by them, the Columbia Group has undertaken to reimburse such fund. The SEC staff has issued notices to the effect that it has made a preliminary determination to recommend that the SEC bring civil enforcement actions, including injunctive proceedings, against Columbia and the Distributor, alleging that they have violated certain provisions of the federal securities laws. The Columbia Group believes that those allegations are based principally on the trading arrangements referred to above. Columbia and the Distributor are engaged in discussions with the SEC staff in an effort to reach a satisfactory resolution of these matters. However, there can be no assurance that such a resolution will be reached. Any potential resolution of these matters may include, but not be limited to, sanctions, financial penalties, damages or injunctions regarding Columbia or the Distributor, and structural changes in the conduct of their business. Although the Columbia Group does not believe that these regulatory developments or their resolution will have a material adverse effect on the Columbia Funds, or on the ability of Columbia and the Distributor to provide services to the Columbia Funds, there can be no assurance that these matters or any adverse publicity or other developments resulting from them will not result in increased redemptions or reduced sales of Columbia Fund shares, which could increase transactions costs or operating expenses, or other consequences for the Columbia Funds. 169 <Page> FINANCIAL HIGHLIGHTS Newport Tiger Fund, Variable Series--Class A Shares Selected data for a share outstanding throughout each period is as follows: <Table> <Caption> YEAR ENDED DECEMBER 31, ----------------------------------------------------------------- 2003 2002 2001 2000 1999 ---------- ---------- ---------- ---------- ---------- NET ASSET VALUE, BEGINNING OF PERIOD $ 1.45 $ 1.77 $ 2.19 $ 2.62 $ 1.57 ---------- ---------- ---------- ---------- ---------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (a) 0.02 0.02 0.02 0.02 0.03 Net realized and unrealized gain (loss) on investments, foreign currency and foreign capital gains tax 0.63 (0.32) (0.42) (0.43) 1.04 ---------- ---------- ---------- ---------- ---------- Total from Investment Operations 0.65 (0.30) (0.40) (0.41) 1.07 ---------- ---------- ---------- ---------- ---------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.02) (0.02) (0.02) (0.02) (0.02) Return of capital -- --(b) -- -- -- ---------- ---------- ---------- ---------- ---------- Total Distributions Declared to Shareholders (0.02) (0.02) (0.02) (0.02) (0.02) ---------- ---------- ---------- ---------- ---------- NET ASSET VALUE, END OF PERIOD $ 2.08 $ 1.45 $ 1.77 $ 2.19 $ 2.62 ========== ========== ========== ========== ========== Total return (c)(d) 44.79% (16.96)% (18.48)% (15.63)% 68.01% RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (e) 1.52% 1.27% 1.31% 1.15% 1.21% Net investment income (e) 1.06% 0.96% 0.99% 0.80% 1.65% Portfolio turnover rate 28% 28% 24% 22% 12% Net assets, end of period (000's) $ 25,684 $ 23,087 $ 33,688 $ 44,346 $ 46,125 </Table> (a) Per share data was calculated using average shares outstanding during the period. (b) Rounds to less than $0.01 per share. (c) Total return at net asset value assuming all distributions reinvested. (d) Total return figure does not include any insurance company charges associated with a variable annuity. If included, total return would be reduced. (e) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. 170 <Page> REPORT OF INDEPENDENT AUDITORS To the Trustees of Liberty Variable Investment Trust and the Class A Shareholders of Newport Tiger Fund, Variable Series In our opinion, the accompanying statement of assets and liabilities, including the investment portfolio, and the related statements of operations and of changes in net assets and the Class A financial highlights present fairly, in all material respects, the financial position of Newport Tiger Fund, Variable Series (the "Fund") (a series of Liberty Variable Investment Trust) at December 31, 2003, and the results of its operations, the changes in its net assets and the Class A financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and the Class A financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund'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 December 31, 2003 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts February 12, 2004 171 <Page> TRUSTEES Liberty Variable Investment Trust Effective October 8, 2003, Patrick J. Simpson and Richard L. Woolworth were appointed to the Board of Trustees of the Fund. Messrs. Simpson and Woolworth had been directors of 15 Columbia Funds and 20 funds in the CMG Fund Trust. Also effective October 8, 2003, the incumbent trustees of the Fund were elected as directors of the 15 Columbia Funds and as trustees of the 20 funds in the CMG Fund Trust. The new combined Board of Trustees/Directors of the Fund now oversees 119 funds in the Columbia Funds Complex (including the former Liberty Funds, former Stein Roe Funds, Columbia Funds and CMG Funds). Several of these trustees/directors also serve on the Boards of other funds in the Columbia Funds Complex. The Trustees/Directors serve terms of indefinite duration. The names, addresses and ages of the Trustees/Directors and officers of the Funds in the Columbia Funds complex, the year each was first elected or appointed to office, their principal business occupations during at least the last five years, the number of portfolios overseen by each Trustee/Director and other directorships they hold are shown below. Each officer listed below serves as an officer of each Fund in the Columbia Funds Complex. <Table> <Caption> NUMBER OF YEAR FIRST PORTFOLIOS IN ELECTED OR COLUMBIA FUNDS OTHER POSITION WITH APPOINTED PRINCIPAL OCCUPATION(S) COMPLEX OVERSEEN DIRECTORSHIPS NAME, ADDRESS AND AGE FUNDS TO OFFICE(1) DURING PAST FIVE YEARS BY TRUSTEE/DIRECTOR HELD - ------------------------------------------------------------------------------------------------------------------------------------ DISINTERESTED TRUSTEES Douglas A. Hacker (age 48) Trustee 1996 Executive Vice 119 Orbitz (online P.O. Box 66100 President--Strategy of United travel company) Chicago, IL 60666 Airlines (airline) since December, 2002 (formerly President of UAL Loyalty Services (airline) from September, 2001 to December, 2002; Executive Vice President and Chief Financial Officer of United Airlines from March, 1993 to September, 2001). Janet Langford Kelly (age 45) Trustee 1996 Chief Administrative Officer 119 None 3100 West Beaver Road and Senior Vice President, Troy, MI 48084-3163 Kmart Holding Corporation (consumer goods) since September, 2003 (formerly Executive Vice President-- Corporate Development and Administration, General Counsel and Secretary, Kellogg Company (food manufacturer), from September, 1999 to August, 2003; Senior Vice President, Secretary and General Counsel, Sara Lee Corporation (branded, packaged, consumer-products manufacturer) from January, 1995 to September, 1999). Richard W. Lowry (age 67) Trustee 1995 Private Investor since 121(3) None 10701 Charleston Drive August, 1987 (formerly Vero Beach, FL 32963 Chairman and Chief Executive Officer, U.S. Plywood Corporation (building products manufacturer)). Charles R. Nelson (age 61) Trustee 1981 Professor of Economics, 119 None Department of Economics University of Washington, University of Washington since January, 1976; Ford and Seattle, WA 98195 Louisa Van Voorhis Professor of Political Economy, University of Washington, since September, 1993; Director, Institute for Economic Research, University of Washington, since September, 2001; Adjunct Professor of Statistics, University of Washington, since September, 1980; Associate Editor, Journal of Money Credit and Banking, since September, 1993; consultant on econometric and statistical matters. John J. Neuhauser (age 60) Trustee 1985 Academic Vice President and 122(3),(4) Saucony, Inc. 84 College Road Dean of Faculties since (athletic Chestnut Hill, MA 02467-3838 August, 1999, Boston College footwear); (formerly Dean, Boston SkillSoft Corp. College School of Management (e-learning) from September, 1977 to September, 1999). </Table> 172 <Page> <Table> <Caption> NUMBER OF YEAR FIRST PORTFOLIOS IN ELECTED OR COLUMBIA FUNDS OTHER POSITION WITH APPOINTED PRINCIPAL OCCUPATION(S) COMPLEX OVERSEEN DIRECTORSHIPS NAME, ADDRESS AND AGE FUNDS TO OFFICE(1) DURING PAST FIVE YEARS BY TRUSTEE/DIRECTOR HELD - ------------------------------------------------------------------------------------------------------------------------------------ DISINTERESTED TRUSTEES(CONTINUED) Patrick J. Simpson (age 58) Trustee 2000 Partner, Perkins Coie L.L.P. 119 None 1211 S.W. 5th Avenue (law firm). Suite 1500 Portland, OR 97204 Thomas E. Stitzel (age 67) Trustee 1998 Business Consultant since 119 None 2208 Tawny Woods Place 1999 (formerly Professor of Boise, ID 83706 Finance from 1975 to 1999, College of Business, Boise State University); Chartered Financial Analyst. Thomas C. Theobald (age 66) Trustee 1996 Managing Director, William 119 Anixter 27 West Monroe Street, and Blair Capital Partners International Suite 3500 Chairman of (private equity investing) (network support Chicago, IL 60606 the Board(6) since September, 1994. equipment distributor), Jones Lang LaSalle (real estate management services) and MONY Group (life insurance) Anne-Lee Verville (age 58) Trustee 1998 Author and speaker on 120(4) Chairman of the 359 Stickney Hill Road educational systems needs Board of Directors, Hopkinton, NH 03229 (formerly General Manager, Enesco Group, Inc. Global Education Industry, (designer, importer IBM Corporation (computer and and distributor of technology) from 1994 to giftware and 1997). collectibles) Richard L. Woolworth (age 62) Trustee 1991 Retired since December 2003 119 NW Natural (a 100 S.W. Market Street #1500 (formerly Chairman and Chief natural gas service Portland, OR 97207 Executive Officer, The provider) Regence Group (regional health insurer); Chairman and Chief Executive Officer, BlueCross BlueShield of Oregon; Certified Public Accountant, Arthur Young & Company). </Table> 173 <Page> <Table> <Caption> NUMBER OF YEAR FIRST PORTFOLIOS IN ELECTED OR COLUMBIA FUNDS OTHER POSITION WITH APPOINTED PRINCIPAL OCCUPATION(S) COMPLEX OVERSEEN BY DIRECTORSHIPS NAME, ADDRESS AND AGE FUNDS TO OFFICE(1) DURING PAST FIVE YEARS TRUSTEE/DIRECTOR HELD - ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED TRUSTEES William E. Mayer(2) (age 63) Trustee 1994 Managing Partner, Park Avenue 121(3) Lee Enterprises 399 Park Avenue Equity Partners (private (print media), WR Suite 3204 equity) since February, 1999 Hambrecht + Co. New York, NY 10022 (formerly Founding Partner, (financial service Development Capital LLC from provider) and First November 1996 to February, Health (healthcare) 1999). Joseph R. Palombo(2) (age 50) Trustee and 2000 Executive Vice President and 120(5) None One Financial Center President Chief Operating Officer of Boston, MA 02111 Columbia Management Group, Inc. since December, 2001 and Director, Executive Vice President and Chief Operating Officer of Columbia Management Advisors, Inc. (Advisor) since April, 2003 (formerly Chief Operations Officer of Mutual Funds, Liberty Financial Companies, Inc. from August, 2000 to November, 2001; Executive Vice President of Stein Roe & Farnham Incorporated (Stein Roe) from April, 1999 to April, 2003; Director of Colonial Management Associates, Inc. (Colonial) from April, 1999 to April, 2003; Director of Stein Roe from September, 2000 to April, 2003) President of Columbia Funds and Galaxy Funds since February, 2003 (formerly Vice President from September 2002 to February 2003); Manager of Columbia Floating Rate Limited Liability Company since October, 2000; (formerly Vice President of the Columbia Funds from April, 1999 to August, 2000; Chief Operating Officer and Chief Compliance Officer, Putnam Mutual Funds from December, 1993 to March, 1999). </Table> (1) In December 2000, the boards of each of the former Liberty Funds and former Stein Roe Funds were combined into one board of trustees responsible for the oversight of both fund groups (collectively, the "Liberty Board"). In October 2003, the trustees on the Liberty Board were elected to the boards of the Columbia Funds (the "Columbia Board") and of the CMG Fund Trust (the "CMG Funds Board"); simultaneous with that election, Patrick J. Simpson and Richard L. Woolworth, who had been directors on the Columbia Board and trustees on the CMG Funds Board, were appointed to serve as trustees of the Liberty Board. The date shown is the earliest date on which a trustee/director was elected or appointed to the board of a Fund in the Columbia Funds complex. (2) Mr. Mayer is an "interested person" (as defined in the Investment Company Act of 1940 (1940 Act)) by reason of his affiliation with WR Hambrecht + Co. Mr. Palombo is an interested person as an employee of the Advisor. (3) Messrs. Lowry, Neuhauser and Mayer each also serve as a director/trustee of the All-Star Funds, currently consisting of 2 funds, which are advised by an affiliate of the Advisor. (4) Mr. Neuhauser and Ms. Verville also serve as disinterested directors of Columbia Management Multi-Strategy Hedge Fund, LLC, which is advised by the Advisor. (5) Mr. Palombo also serves as an interested director of Columbia Management Multi-Strategy Hedge Fund, LLC, which is advised by the Advisor. (6) Mr. Theobald was appointed as Chairman of the Board effective December 10, 2003. Prior to that date, Mr. Palombo was Chairman of the Board. 174 <Page> OFFICERS Liberty Variable Investment Trust <Table> <Caption> YEAR FIRST ELECTED OR POSITION WITH APPOINTED PRINCIPAL OCCUPATION(S) NAME, ADDRESS AND AGE COLUMBIA FUNDS TO OFFICE DURING PAST FIVE YEARS - ------------------------------------------------------------------------------------------------------------------------------------ Vicki L. Benjamin (Age 42) Chief Accounting 2001 Controller of the Columbia Funds and of the Liberty All-Star One Financial Center Officer and Funds since May, 2002; Chief Accounting Officer of the Columbia Boston, MA 02111 Controller Funds and Liberty All-Star Funds since June, 2001; Controller and Chief Accounting Officer of the Galaxy Funds since September, 2002 (formerly Vice President, Corporate Audit, State Street Bank and Trust Company from May, 1998 to April, 2001). J. Kevin Connaughton (Age 39) Treasurer 2000 Treasurer of the Columbia Funds and of the Liberty All-Star One Financial Center Funds since December, 2000; Vice President of the Advisor since Boston, MA 02111 April, 2003 (formerly Controller of the Liberty Funds and of the Liberty All-Star Funds from February, 1998 to October, 2000); Treasurer of the Galaxy Funds since September 2002; Treasurer, Columbia Management Multi-Strategy Hedge Fund, LLC since December, 2002 (formerly Vice President of Colonial from February, 1998 to October, 2000). David A. Rozenson (Age 49) Secretary 2003 Secretary of the Columbia Funds and of the Liberty All-Star One Financial Center Funds since December, 2003; Senior Counsel, FleetBoston Boston, MA 02111 Financial Corporation since January, 1996; Associate General Counsel, Columbia Management Group since November, 2002. </Table> 175 <Page> LIBERTY VARIABLE INVESTMENT TRUST INVESTMENT MANAGER AND ADMINISTRATOR Columbia Management Advisors, Inc. 100 Federal Street Boston, MA 02110 TRANSFER AGENT Columbia Funds Services, Inc. PO Box 8081 Boston, MA 02266-8081 176 <Page> [KEYPORT LOGO] P.O. Box 9133 Wellesley Hills, MA 02481 ANN-02/727Q-1203 (02/04) 04/0389 <Page> ITEM 2. CODE OF ETHICS. (a) The registrant has, as of the end of the period covered by this report, 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. (b) During the period covered by this report, there were not any amendments to a provision of the code of ethics adopted in 2(a) above. (c) During the period covered by this report, there were not any waivers or implicit waivers to a provision of the code of ethics adopted in 2(a) above. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The registrant's Board of Trustees has determined that Douglas A. Hacker, Thomas E. Stitzel, Anne-Lee Verville and Richard L. Woolworth, each of whom are members of the registrant's Board of Trustees and Audit Committee, each qualify as an audit committee financial expert. Mr. Hacker, Mr. Stitzel, Ms. Verville and Mr. Woolworth are each independent trustees, as defined in paragraph (a)(2) of this item's instructions and collectively constitute the entire Audit Committee. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Fee information below is disclosed for the series of the registrant whose reports to stockholders are included in this annual filing, as well as the series of the registrant whose reports to stockholders would have been included in this filing had they not merged during the period. 4(a) Aggregate Audit Fees billed to the registrant by the principal accountant for professional services rendered during the fiscal years ended December 31, 2003 and December 31, 2002 are as follows: <Table> <Caption> 2003 2002 ---- ---- $238,600 $340,900 </Table> Audit Fees include amounts related to 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) Aggregate Audit-Related Fees billed to the registrant by the principal accountant for professional services rendered during the fiscal years ended December 31, 2003 and December 31, 2002 are as follows: <Table> <Caption> 2003 2002 ---- ---- $67,800 $34,000 </Table> Audit-Related Fees include amounts 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 in Audit Fees above. In fiscal year 2003, Audit-Related Fees primarily consist of certain agreed-upon procedures performed for semi-annual shareholder reports, as well as agreed-upon procedures relating to fund mergers. Audit-Related fees in fiscal year 2002 relate to certain agreed-upon procedures conducted during the conversion of the registrant's accounting system. The "de minimis" exception under paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X became effective on May 6, 2003. The percentage of Audit-Related services to the registrant that were approved under the "de minimis" exception during the fiscal years ended December 31, 2003 and December 31, 2002 are as follows: <Table> <Caption> 2003 2002 ---- ---- 0% N/A </Table> The pre-approval requirements for services to the 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 under paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X became effective on May 6, 2003. During the fiscal year ended December 31, 2003, there were no Audit-Related Fees that were approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X. <Page> The percentage of Audit-Related fees required to be approved under paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X that were approved under the "de minimis" exception during the fiscal years ended December 31, 2003 and December 31, 2002 are as follows: <Table> <Caption> 2003 2002 ---- ---- 0% N/A </Table> (c) Aggregate Tax Fees billed to the registrant by the principal accountant for professional services rendered during the fiscal years ended December 31, 2003 and December 31, 2002 are as follows: <Table> <Caption> 2003 2002 ---- ---- $94,400 $50,000 </Table> Tax Fees include amounts for professional services by the principal accountant for tax compliance, tax advice and tax planning. Tax Fees in fiscal year 2003 include the review of annual tax returns, the review of calculations of required shareholder distributions, tax compliance testing and agreed-upon procedures relating to fund mergers. Tax fees in fiscal year 2002 include the review of annual tax returns and assistance with foreign tax filings. The "de minimis" exception under paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X became effective on May 6, 2003. The percentage of Tax Fees billed to the registrant that were approved under the "de minimis" exception during the fiscal years ended December 31, 2003 and December 31, 2002 are as follows: <Table> <Caption> 2003 2002 ---- ---- 0% N/A </Table> The pre-approval requirements for services to the 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 under paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X became effective on May 6, 2003. During the fiscal year ended December 31, 2003, there were no Tax Fees that were approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X. The percentage of Tax Fees required to be approved under paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X that were approved under the "de minimis" exception during the fiscal years ended December 31, 2003 and December 31, 2002 are as follows: <Table> <Caption> 2003 2002 ---- ---- 0% N/A </Table> <Page> (d) Aggregate All Other Fees billed to the registrant by the principal accountant for professional services rendered during the fiscal years ended December 31, 2003 and December 31, 2002 are as follows: <Table> <Caption> 2003 2002 ---- ---- $0 $0 </Table> All Other Fees include amounts for products and services provided by the principal accountant, other than the services reported in (a)-(c) above. The "de minimis" exception under paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X became effective on May 6, 2003. The percentage of All Other Fees billed to the registrant that were approved under the "de minimis" exception during the fiscal years ended December 31, 2003 and December 31, 2002 are as follows: <Table> <Caption> 2003 2002 ---- ---- 0% N/A </Table> The pre-approval requirements for services to the 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 under paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X became effective on May 6, 2003. During the fiscal year ended December 31, 2003, All Other Fees that were approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X were approximately $95,000. During the fiscal year ended December 31, 2002, All Other Fees that would have been subject to pre-approval had paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X been applicable at the time, were approximately $95,000. For both fiscal years, All Other Fees relate to internal controls reviews of the registrant's transfer agent. The percentage of All Other Fees required to be approved under paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X that were approved under the "de minimis" exception during the fiscal years ended December 31, 2003 and December 31, 2002 are as follows: <Table> <Caption> 2003 2002 ---- ---- 0% N/A </Table> (e)(1) Audit Committee Pre-Approval Policies and Procedures I. GENERAL OVERVIEW The Audit Committee of the registrant has adopted a formal policy (the "Policy") which sets forth the procedures and the conditions pursuant to which the Audit Committee will pre-approve (i) all audit and non-audit (including audit related, tax and all other) services provided by the registrant's independent auditor to the registrant and individual funds <Page> (collectively "Fund Services"), and (ii) all non-audit services provided by the registrant's independent auditor to the funds' adviser or a control affiliate of the adviser, that relate directly to the funds' operations and financial reporting (collectively "Fund-related Adviser Services"). A "control affiliate" is an entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the funds, and the term "adviser" is deemed to exclude any unaffiliated sub-adviser whose role is primarily portfolio management and is sub-contracted or overseen by another investment adviser. The Audit Committee uses a combination of specific (on a case-by-case basis as potential services are contemplated) and general (pre-determined list of permitted services) pre-approvals. Unless a type of service has received general pre-approval, it will require specific pre-approval by the Audit Committee if it is to be provided by the independent auditor. The Policy does not delegate the Audit Committee's responsibilities to pre-approve services performed by the independent auditor to management. II. GENERAL PROCEDURES On an annual basis, the Fund Treasurer and/or Director of Trustee Administration shall submit to the Audit Committee a schedule of the types of Fund Services and Fund-related Adviser Services that are subject to general pre-approval. These services will provide a description of each type of service that is subject to general pre-approval and, where possible, will provide projected fees for each instance of providing each service. This general pre-approval and related fees (where provided) will generally cover the period from July 1 through June 30 of the following year. The Audit Committee will review and approve the types of services and review the projected fees for the next fiscal year and may add to, or subtract from, the list of general pre-approved services from time to time, based on subsequent determinations. This approval acknowledges that the Audit Committee is in agreement with the specific types of services that the independent auditor will be permitted to perform. The fee amounts will be updated to the extent necessary at other regularly scheduled meetings of the Audit Committee. In addition to the fees for each individual service, the Audit Committee has the authority to implement a fee cap on the aggregate amount of non-audit services provided to an individual fund. If, subsequent to general pre-approval, a fund, adviser or control affiliate determines that it would like to engage the independent auditor to perform a service that requires pre-approval and that is not included in the general pre-approval list, the specific pre-approval procedure shall be as follows: <Page> - A brief written request shall be prepared by management detailing the proposed engagement with explanation as to why the work is proposed to be performed by the independent auditor; - The request should be addressed to the Audit Committee with copies to the Fund Treasurer and/or Director of Trustee Administration; - The Fund Treasurer and/or Director of Trustee Administration will arrange for a discussion of the service to be included on the agenda for the next regularly scheduled Audit Committee meeting, when the Committee will discuss the proposed engagement and approve or deny the request. - If the timing of the project is critical and the project needs to commence before the next regularly scheduled meeting, the Chairperson of the Audit Committee may approve or deny the request on behalf of the Audit Committee, or, in the Chairperson's discretion, determine to call a special meeting of the Audit Committee for the purpose of considering the proposal. Should the Chairperson of the Audit Committee be unavailable, any other member of the Audit Committee may serve as an alternate for the purpose of approving or denying the request. Discussion with the Chairperson (or alternate, if necessary) will be arranged by the Fund Treasurer and/or Director of Trustee Administration. The independent auditor will not commence any such project unless and until specific approval has been given. III. ADDITIONAL PRE-APPROVAL INFORMATION The engagement of the independent auditor to provide Fund Services and Fund-related Adviser Services shall be approved by the Audit Committee prior to the commencement of any such engagement. A. Audit Services to the Funds The Audit Committee will monitor the Audit services engagement throughout the year and will also approve, if necessary, any changes in terms and conditions resulting from changes in audit scope, fund structure or other items. B. Audit-related Services to the Funds The Audit Committee believes that the provision of Audit-related Services is consistent with the SEC's rules on auditor independence, and will grant general pre-approval to specific Audit-related Services. C. Tax Services to the Funds The Audit Committee will grant general pre-approval to those specific Tax services that have historically been provided by the auditor, that the Audit Committee has reviewed and believes would not impair the independence of the auditor, and that are consistent with the SEC's rules on auditor independence. D. All Other Services to the Funds The Audit Committee will grant general pre-approval to those specific permissible non-audit services classified as All Other Services that it believes are routine and recurring services, would not impair the independence of the auditor and are consistent with the SEC's rules on auditor independence. E. Fund-Related Adviser Services The Audit Committee will grant general pre-approval to provide specific non-audit services to the funds' investment adviser, or any control affiliates, that relate directly to the funds' operations and financial statements. This includes services customarily required by one or more adviser entities or control affiliates in the ordinary course of their operations. F. Certain Other Services Provided to Adviser Entities The Audit Committee recognizes that there are cases where services proposed to be provided by the independent auditor to the adviser or control affiliates are not Fund-related Adviser Services within the meaning of the Policy, but nonetheless may be relevant to the Audit Committee's ongoing evaluation of the auditor's independence and objectivity with respect to its audit services to the funds. As a result, in all cases where an adviser or control affiliate engages the independent auditor to provide audit or non-audit services that are not Fund Services or Fund-related Adviser Services, were not subject to pre-approval by the Audit Committee, and the projected fees for any such engagement (or the aggregate of all such engagements) exceeds a pre-determined threshold established by the Audit Committee, the independent auditor, Fund Treasurer and/or Director of Trustee Administration will notify the Audit Committee not later than its next meeting. Such notification shall include a general description of the services provided, the entity that is to be the recipient of such services, the timing of the engagement, the entity's reasons for selecting the independent auditor, and the projected fees. Such information will allow the Audit Committee to consider whether non-audit services provided to the adviser and Adviser Entities, which were not subject to Audit Committee pre-approval, are compatible with maintaining the auditor's independence. IV. REPORTING TO THE AUDIT COMMITTEE The Fund Treasurer or Director of Trustee Administration shall report to the Audit Committee at each of its regular meetings regarding all Fund Services or Fund-related Adviser Services initiated since the last such report was rendered, including: - A general description of the services, and - Actual billed and projected fees, and - The means by which such Fund Services or Fund-related Adviser Services were approved by the Audit Committee. <Page> In addition, in accordance with Section 208-5 of the Sarbanes-Oxley Act of 2002, the independent auditor shall report to the Audit Committee annually, and no more than 90 days prior to the filing of audit reports with the SEC, all non-audit services provided to entities in the funds' "investment company complex," as defined by SEC rules. In addition, the independent auditor must annually disclose to the Audit Committee all relationships with the funds of which the independent auditor is aware that may be reasonably thought to bear on the auditor's independence. The independent auditor shall tabulate, calculate and disclose its fees annually for such relationships. V. AMENDMENTS; ANNUAL APPROVAL BY AUDIT COMMITTEE The Policy may be amended from time to time by the Audit Committee. Prompt notice of any amendments will be provided to the independent auditor, Fund Treasurer and Director of Trustee Administration. The Policy shall be reviewed and approved at least annually by the Audit Committee. ***** (f) Not applicable. (g) All non-audit fees billed by the registrant's accountant for services rendered to the registrant for the fiscal years ended December 31, 2003 and December 31, 2002 are disclosed in 4(b)-(d) above. All non-audit fees billed by the registrant's accountant for services 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 the fiscal years ended December 31, 2003 and December 31, 2002 are also disclosed in 4(b)-(d) above. Such fees were approximately $95,000 and $95,000, respectively. (h) The registrant's Audit Committee of the Board of Directors has considered whether the provision of non-audit services that were rendered to the registrant's 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 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. The Audit Committee determined that the provision of such services is compatible with maintaining the principal accountant's independence. 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. Not applicable. <Page> ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable at this time. ITEM 10. CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officer, based on their evaluation of the registrant's disclosure controls and procedures as of a date within 90 days of the filing of this report, have concluded that such controls and procedures are adequately designed to ensure that information required to be disclosed by the registrant in Form N-CSR is accumulated and communicated to the registrant's management, including the principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. (b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's last fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 11. EXHIBITS. (a)(1) Code of ethics required to be disclosed under Item 2 of Form N-CSR attached hereto as Exhibit 99.CODE ETH (a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT. (a)(3) Not applicable. (b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT. <Page> SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (registrant) Liberty Variable Investment Trust ---------------------------------------------------------------- By (Signature and Title) /s/ J. Kevin Connaughton ---------------------------------------------------- J. Kevin Connaughton, President and Treasurer Date March 4, 2004 ------------------------------------------------------------------------ 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/ J. Kevin Connaughton ---------------------------------------------------- J. Kevin Connaughton, President and Treasurer Date March 4, 2004 ------------------------------------------------------------------------