<PAGE> 1
VARIABLE INVESTORS
SERIES TRUST
[GRAPHIC BACKGROUND]
December 31, 1999 Annual Report
[LOGO FIRST VARIABLE LIFE]
<PAGE> 2
Table
of
Contents
[GRAPHIC]
<TABLE>
<S> <C>
Report of the President 2
Management's Discussion & Analysis
Small Cap Growth 3
World Equity 5
Growth 7
Matrix Equity 9
Growth & Income 11
Multiple Strategies 13
High Income Bond 15
U.S. Government Bond 17
Report of Independent Accountants 19
Schedule of Investments 20
Statements of Assets and Liabilities 56
Statements of Operations 58
Statements of Changes in Net Assets 60
Financial Highlights 64
Notes to the Financial Statements 72
</TABLE>
<PAGE> 3
[LOGO FIRST VARIABLE LIFE]
February 2000
Dear First Variable Contract Holder:
I am pleased to present the annual report for the Variable Investors Series
Trust. This report gives you information on how the investment choices inside
your First Variable Contract have performed over the past year.
During 1999, high growth rates in the United States coupled with a faster than
anticipated recovery in Asia drove the success of the equity markets. The
Standard & Poor's 500 Index returned 21.04%, marking the fifth year in a row its
return exceeded 20%. Quite an unusual run. The smaller stocks also rebounded
this year, and the Russell 2000 finished up 21.26%, beating the large cap sector
for the first time since 1993.
The interest rate environment is one of the primary drivers of the fixed income
markets. The Federal Reserve raised rates three times in 1999 to slow economic
growth. These rate hikes hurt the bond markets, and the Lehman Brothers
Government Bond Index returned -2.25% for the year.
The general rise in interest rates combined with increasing default rates also
tempered the returns of high yield bonds. The First Boston High Yield Index
performed better than government bonds and finished the year at 3.28%.
Even though the equity markets continue to return double-digits, it is important
to remember that a well-diversified investment portfolio is crucial to your
success. Your financial professional has the experience and tools to help you
construct a portfolio that meets your investment goals and objectives.
We appreciate your business and continued confidence in us. First Variable Life
has been helping investors like you BUILD wealth, ENJOY income and PRESERVE
assets since 1968. We look forward to serving you in the future.
Sincerely,
/s/ John M. Soukup
John M. Soukup
President, Variable Investors Series Trust
<PAGE> 4
SMALL CAP GROWTH PORTFOLIO
Objective
Seeks capital appreciation by investing primarily in common stocks of emerging
companies with the potential for significant capital appreciation and strong
earnings growth with attendant risk. The Portfolio normally invests at least 65%
of assets in common stocks and convertible securities issued by companies with
market capitalization or annual revenues not exceeding $1 billion at the time of
purchase.
Management's
Discussion & Analysis
You could not have been within an earshot of Wall Street and not heard the
thundering roar of the technology stocks as 1999 drew to a close. However, few
investors remain unnerved by the swift bursts and tumbles of individual stocks
over the last year. Price volatility, now a seemingly permanent fixture on the
Street of Dreams, seems greater than ever and outsized relative to the actual
event triggers. Under the presumption that investing is a marathon, not a
sprint, the tenants of our disciplined approach remain intact: forget the
day-to-day minutia and focus on the long-term ability of our companies to grow
faster than people expect and to surprise investors on the upside.
Compared to the Russell 2000, our portfolio had nothing short of a very strong
year. Finishing up the year with an 81% gain versus a 21% gain for the Russell
can be attributed to a handful of changes in the market throughout 1999. First
and foremost, technology was king. As investors in aggressive growth stocks, our
portfolios are routinely chock full of technology companies: this being the
sector of the market that is rich in the feature set that we strive to own. What
we witnessed in the market was an ardent desire to own companies in the
technology space, which has been our bread and butter sector for the past 15
years. With over 45% of the portfolio invested in technology, we garnered more
than our fair share of the upside witnessed in the market. Secondly, the market
began to focus more on earnings power. We saw that the companies with the
biggest upside surprises were afforded the highest returns. Movement within the
market to reward companies for beating expectations played well into our
strengths as a true business
Pilgrim Baxter &
Associates, Ltd.
[LOGO PILGRIM BAXTER & ASSOCIATES]
SMALL
CAP GROWTH
Performance
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/99
------------------------------------------
<S> <C>
1 Year 80.66%
5 Year N/A
Since Inception* 25.87%
</TABLE>
*May 4, 1995
Top 10 Holdings
<TABLE>
<CAPTION>
% OF % OF
AS OF 12/31/99 NET ASSETS TOP 10
-------------- ---------- ------
<S> <C> <C>
Diamond Technology Partners, Inc. 1.94% 11.95%
Dendrite International, Inc. 1.73% 10.68%
King Pharmaceuticals, Inc. 1.67% 10.32%
Acutate Software Corporation 1.66% 10.26%
Cree Research, Inc. 1.65% 10.20%
SanDisk Corporation 1.56% 9.65%
Intraware, Inc. 1.55% 9.56%
ArthroCare Corporation 1.53% 9.47%
Emulex Corporation 1.53% 9.46%
Puma Technology, Inc. 1.37% 8.45%
</TABLE>
Top 5 Sector Weightings
<TABLE>
<CAPTION>
% OF
AS OF 12/31/99 NET ASSETS
-------------- ----------
<S> <C>
Electronic Components 10.9%
Computer Software 7.5%
Drugs/Pharmaceuticals 7.5%
Telecommunication Equipment 5.7%
Computer Services 4.4%
</TABLE>
Special risks due to small size such as limited markets and financial resources
should be considered when investing in small cap stocks.
3
<PAGE> 5
Management's
Discussion & Analysis (Continued)
momentum investor: the idea that earnings surprise is a good leading indicator
of strength within a company means that we want to proliferate our portfolios
with companies exhibiting these characteristics.
Finally, the market also followed through on what we, and many in the business,
have been calling for which was a broadening of the market advance to include
the oft-neglected small cap stocks. In December, the trend towards small
outperforming large stayed firmly entrenched. A relatively unnoticed fact is
that small caps have outperformed large caps in 3 of the last 4 quarters. Small
caps have outperformed in 62% of the down markets of 1999 versus large caps.
Small caps have consistently yielded superior growth characteristics when
compared to large, and have consistently (over the past 3 years) traded near
historic lows on a relative valuation basis. Has the worm turned? Is the pattern
being formed the beginning of the small cap renaissance or just a head fake in
favor of large caps?
OUTLOOK
After a terrific 1999, we believe that small cap growth stocks continue to offer
superior investment opportunities as the new millennium unfolds. The companies
that proliferate our portfolios are never considered "cheap," but on a relative
basis they have been undervalued for a long time. Couple that idea with superior
growth rates and you create the tonic that may propel the space higher in the
coming year. Also, while difficult to quantify, there appears to have been a
fairly massive migration by traditional small cap managers away from their home
turf and into the foreign terrain of large cap stocks. The inevitable
repatriation of capital could have a very significant influence on the
appreciation potential of our small cap portfolios in the coming year.
As always, we remain committed to our investment mantra of finding the countries
fastest growing small cap stocks. We are solely focused on deploying capital
into companies that offer superior returns based on a defined set of
characteristics. Regardless of market environment, we will stay true to our
discipline and deliver a portfolio of small cap aggressive growth stocks.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE SMALL CAP GROWTH
PORTFOLIO AND THE RUSSELL 2000 INDEX*
<TABLE>
<CAPTION>
VIST SMALL CAP GROWTH RUSSELL 2000 INDEX
---- ---------------- ------------------
<S> <C> <C>
MAY 4, 1995 10000 10000
JUN 30 10939 10676
SEP 30 12593 11731
DEC 31, 1995 13008 11985
MAR 31 14439 12600
JUN 30 16705 13230
SEP 30 17587 13275
DEC 31, 1996 16582 13965
MAR 31 13401 13242
JUN 30 16540 15655
SEP 30 18778 17984
DEC 31, 1997 16703 17382
MAR 31 18207 19127
JUN 30 16690 18234
SEP 30 12902 14560
DEC 31, 1998 16181 16934
MAR 31 15120 16015
JUN 30 17031 18505
SEP 30 18331 17335
DEC 31, 1999 29234 20534
</TABLE>
* This Index is an unmanaged index in which investors cannot invest. Results for
the Index do not reflect the expenses and investment management fees incurred by
the Portfolio. Past performance is not predictive of future performance.
AVERAGE ANNUAL TOTAL RETURNS**
PERIODS ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Past 1 Life of
Year Portfolio***
---- ------------
<S> <C> <C>
Small Cap Growth Portfolio 80.66% 25.87%
</TABLE>
"Total Return" is calculated including reinvestment of all income dividends and
capital gains distributions. Results represent past performance and do not
indicate future results. The value of an investment in the Small Cap Growth
Portfolio and the return on the investment both will fluctuate and redemption
proceeds may be higher or lower than an investor's original cost.
** Performance data is historical and includes changes in share price and
reinvestment of dividends and capital gains distributions. Performance numbers
are net of all Portfolio operating expenses, but do not include any insurance
charges imposed in connection with your variable insurance contract. If this
performance information included the effect of the insurance charges,
performance numbers would be lower.
*** From commencement of operations (May 4, 1995)
4
<PAGE> 6
WORLD EQUITY PORTFOLIO
Objective
The investment objective of the World Equity Portfolio is to seek maximum
long-term total return by investing primarily in common stocks, and securities
convertible into common stocks, traded in securities markets located around the
world, including the United States. This objective per First Variable's
instruction, is to be obtained via international "blue chips" and domestic U.S.
small cap stocks.
Management's
Discussion & Analysis
INTERNATIONAL COMMENTARY
The 4th quarter saw the international portion of the fund rise 33.56% while the
international benchmark rose by only 16.62%. Emerging markets in general did
very well during this period, such as Brazil (up 71%) and Mexico (up 40%).
In the 4th quarter, the international portion of the fund outperformed the
international index by 16.94%. Of that, Japan explained 7.62% of the
outperformance, followed by UK (2.49%), and the Brazil (2.02%). Oracle Japan
appreciated 194% while in the UK, Compass Group increased by nearly 42%.
In 1999, the outperformance was 15.78% led, again, by Japan with 9.75%.
Selective stock picking such as Oracle Japan (up 285%) and Matsushita Comm
(212%) accounted for the excellent performance in Japan this year. Italy added
2.81% relative to the index. The UK with 2.63% and Brazil with 1.96% contributed
to the fund beating the index by a wide margin. Embraer (Aerospace) was our main
holding in Brazil and rose nearly 57% YTD.
Good opportunities ahead in emerging markets and commodity related equities.
Global growth should increase but we are vigilant on the tech front, where
valuations are high. We are focusing more on industry allocation rather than
country allocation. We expect a stable worldwide economic environment where
industry allocation matters more than regional allocation.
Evergreen Investment
Management
[EVERGREEN TREE]
WORLD
EQUITY
Performance
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/99
------------------------------------------
<S> <C>
1 Year 55.46%
5 Year 20.21%
10 Year 11.91%
</TABLE>
Top 10 Holdings
<TABLE>
<CAPTION>
% OF % OF
AS OF 12/31/99 NET ASSETS TOP 10
-------------- ---------- ------
<S> <C> <C>
Oracle Corporation 3.73% 18.73%
Silknet Software, Inc. 2.39% 12.00%
Interdigital Commerce Corporation 2.35% 11.80%
Matsushita Communication
Industrial Company Ltd. 2.12% 10.64%
Clarify, Inc. 1.72% 8.63%
Nokia Oyj ADR 1.68% 8.43%
HSBC Holdings PLC 1.54% 7.73%
Diamond Technology Partners, Inc. 1.48% 7.43%
Arnoldo Mondadori Editore SPA 1.48% 7.43%
Embraer - Empresa Brasileira
de Aeronautica S.A 1.43% 7.18%
</TABLE>
Top 5 Countries
<TABLE>
<CAPTION>
% OF
AS OF 12/31/99 NET ASSETS
-------------- ----------
<S> <C>
United States 47.3%
Japan 11.1%
United Kingdom 6.5%
France 5.3%
Germany 4.5%
</TABLE>
Special risks such as currency fluctuations and political changes should be
considered when investing internationally.
5
<PAGE> 7
Management's
Discussion & Analysis (Continued)
DOMESTIC COMMENTARY
The 4th quarter provided one of the strongest technology rallies in modern day
stock market experience. For the quarter, the Technology Services sector was up
over 95%, and the Electronic Technology and Telecommunications sectors were up
over 50%. Over 90% of the benchmark sectors were up over 5% for the quarter. The
results for the year were similar to the quarter. There was strong appreciation
in technology and telecommunications shares. This resulted from the large
opportunities being created by the Internet and powerful new products. Small cap
stocks outperformed larger caps for the first time in several years.
The fund outperformed small cap benchmarks for the month, quarter, and year.
This was the result of positive stock selection, combined with significant
weighting shifts during the year. Notable overweightings included
(chronologically) semiconductors, telecommunications, cyclicals, energy, and
software. Substantial underweightings in financials and consumer durables also
helped performance.
The large run up in technology shares has caused many issues to become
substantially overvalued. An understanding of this may be our edge next quarter.
We anticipate reducing these technology holdings as price momentum runs out. New
opportunities are emerging in Health Care. Reduced conviction regarding
available opportunities may cause our weightings to become more neutral than in
the past few quarters.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE WORLD EQUITY
PORTFOLIO AND THE MSCI WORLD INDEX*
<TABLE>
<CAPTION>
WORLD EQUITY MSCI WORLD INDEX
------------ ----------------
<S> <C> <C>
APR 1, 1994 10000 10000
JUN 30 9830 10301
SEP 30 10523 10522
DEC 31, 1994 10707 10447
MAR 31 10921 10957
JUN 30 11806 11375
SEP 30 13312 11849
DEC 31, 1995 13310 12329
MAR 31 13721 12772
JUN 30 14646 13131
SEP 30 14263 13187
DEC 31, 1996 14956 13666
MAR 31 14544 13749
JUN 30 16506 15728
SEP 30 17645 16022
DEC 31, 1997 16449 15391
MAR 31 18896 17595
JUN 30 19078 17952
SEP 30 15329 15799
DEC 31, 1998 17289 19135
MAR 31 17070 20281
JUN 30 18755 21481
SEP 30 18792 21164
DEC 31, 1999 26877 24734
</TABLE>
* This Index is an unmanaged index in which investors cannot invest. Results for
the Index do not reflect the expenses and investment management fees incurred by
the Portfolio. Past performance is not predictive of future performance.
AVERAGE ANNUAL TOTAL RETURNS**
PERIODS ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Past 1 Past 5 Past 10
Year Years Years
---- ----- -----
<S> <C> <C> <C>
World Equity Portfolio 55.46% 20.21% 11.91%
</TABLE>
"Total Return" is calculated including reinvestment of all income dividends and
capital gains distributions. Results represent past performance and do not
indicate future results. The value of an investment in the World Equity
Portfolio and the return on the investment both will fluctuate and redemption
proceeds may be higher or lower than an investor's original cost.
** Performance data is historical and includes changes in share price and
reinvestment of dividends and capital gains distributions. Performance numbers
are net of all Portfolio operating expenses, but do not include any insurance
charges imposed in connection with your variable insurance contract. If this
performance information included the effect of the insurance charges,
performance numbers would be lower. Prior to April 1, 1994 results were achieved
by different portfolio managers.
6
<PAGE> 8
GROWTH PORTFOLIO
Objective
Seeks capital growth by investing primarily in common stocks and securities
convertible into common stock. Also seeks current income when consistent with
the primary objective. Securities are selected on the basis of their issuers'
long-term potential for expanding their earnings, profitability, and size and on
the basis of potential increases in market recognition of their securities.
Management's
Discussion & Analysis
PORTFOLIO PERFORMANCE
For the fourth quarter of calendar 1999, the Growth Portfolio enjoyed a powerful
23.61% return, compared with 14.88% for the S&P 500. For the full year ended
December 31, 1999, the Growth Portfolio produced an excellent total return of
34.53%, compared with a total return of only 21.04% for the S&P 500. As a
result, Value Line outperformed its industry benchmark by nearly 9% and more
than 13%, respectively, for these two measurement periods.
The Growth Portfolio's strength was largely attributed to the equity market's
preference for large capitalization growth stocks and the portfolio's emphasis
on technology, telecommunications, healthcare, retail, and financial-service
stocks, which were largely big winners.
We had correctly anticipated that there would be a temporary surge in U.S. Gross
Domestic Product (GDP) during the second half of 1999, as many companies spent
aggressively to gain technological Y2K compliance. In addition, many consumers
and businesses shifted from a "Just in Time" to a "Just in Case" inventory model
as part of a precautionary buildup. As a result, the third quarter GDP was a
very strong 5.7%, compared with only 1.9% sequentially and the fourth quarter
followed with a similarly robust 5.8%, as we had forecast.
In addition, while we believed that the U.S. would be largely Y2K compliant by
year-end 1999, we anticipated that there would be pockets of the world, largely
in the Pacific Rim and in Latin America, which would fail to meet the deadline
and would need to get caught up
Value Line, Inc.
[LOGO]
growth
Performance
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/99
------------------------------------------
<S> <C>
1 Year 34.53%
5 Year 30.77%
10 Year 17.40%
</TABLE>
Top 10 Holdings
<TABLE>
<CAPTION>
% OF % OF
AS OF 12/31/99 NET ASSETS TOP 10
-------------- ---------- ------
<S> <C> <C>
QUALCOMM, Inc. 5.36% 13.44%
Cisco Systems, Inc. 4.89% 12.27%
EMC Corporation 4.85% 12.16%
Sun Microsystems, Inc. 4.13% 10.34%
Microsoft Corporation 4.00% 10.03%
America Online, Inc. 3.92% 9.84%
Wal-Mart Stores, Inc. 3.60% 9.01%
Omnicom Group 3.36% 8.43%
Time Warner, Inc. 2.89% 7.26%
Dell Computer Corporation 2.88% 7.22%
</TABLE>
Top 5 Sector Weightings
<TABLE>
<CAPTION>
% OF
AS OF 12/31/99 NET ASSETS
-------------- ----------
<S> <C>
Computer Related 13.9%
Telecommunication Equipment 8.6%
Computer Software 6.7%
Drugs 6.2%
Financial Services 5.6%
</TABLE>
7
<PAGE> 9
Management's
Discussion & Analysis (Continued)
in a hurry. Consequently, we believed that the large-cap technology and
telecommunications companies were particularly well positioned to benefit from
U.S. trends for compliance spending in the second half of 1999, as well as
global remedial work that we anticipated for the first half of 2000, which would
result in well-above average revenue and earnings growth.
Moreover, we forecasted that due to the strong economy and a Millennium spirit,
the Holiday shopping season in 1999 would be the best of the decade. As a
result, we loaded up on many different retail stocks that we thought would best
participate.
OUTLOOK
Looking forward, we believe that with global Y2K concerns hugely overblown,
inventory stockpiles must be worked down, which could result in significantly
slower economic growth during the second half of 2000, perhaps to a level of
about 3%.
Long bond yields have surged from a record low of 4.70% in October, 1998, to a
recent high of 6.75%, the highest such level in more than two years, as
investors have seemingly discounted at least a 25 basis point increase in
interest rates by the Federal Reserve at its upcoming FOMC meeting on February
2. This gives the Fed a free pass to tighten and then hope that still higher
interest rates will help to ensure slower future economic growth.
But we do not believe that enough time will have elapsed after the millennium
calendar changeover for the Fed to fully evaluate if the economy has, in fact,
begun to slow. Rather, we would prefer that this gradualist Fed, led by the
newly re-appointed Chairman, Alan Greenspan, shift to a tightening bias in
February, raise rates by a quarter point at the March 21 FOMC meeting, and then
evaluate the subsequent pace of economic growth at the May 16 meeting.
While long rates could retreat to about 7.00% near term, an eventual slowing of
the U.S. economy could spark a bond rally back to 6.00%, which could spur the
Dow Jones Industrial Average to an election-year rally that could approximate
13,000 by year end 2000.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE GROWTH PORTFOLIO
AND THE S&P 500 INDEX *
<TABLE>
<CAPTION>
VIST GROWTH S&P 500 INDEX
----------- -------------
<S> <C> <C>
APR 1, 1994 10000 10000
JUN 30 9393 9966
SEP 30 10141 10380
DEC 31, 1994 10264 10303
MAR 31 10834 11305
JUN 30 12461 12383
SEP 30 14180 13365
DEC 31, 1995 14075 14169
MAR 31 15209 14930
JUN 30 15970 15599
SEP 30 16924 16081
DEC 31, 1996 17708 17420
MAR 31 16850 17889
JUN 30 19920 21009
SEP 30 22475 22582
DEC 31, 1997 21890 23231
MAR 31 23984 26469
JUN 30 25036 27342
SEP 30 22919 24627
DEC 31, 1998 29177 29868
MAR 31 32492 31355
JUN 30 32459 33566
SEP 30 31756 31471
DEC 31, 1999 39253 36151
</TABLE>
* This Index is an unmanaged index in which investors cannot invest. Results for
the Index do not reflect the expenses and investment management fees incurred by
the Portfolio. Past performance is not predictive of future performance.
AVERAGE ANNUAL TOTAL RETURNS**
PERIODS ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Past 1 Past 5 Past 10
Year Years Years
---- ----- -----
<S> <C> <C> <C>
Growth Portfolio 34.53% 30.77% 17.40%
</TABLE>
"Total Return" is calculated including reinvestment of all income dividends and
capital gains distributions. Results represent past performance and do not
indicate future results. The value of an investment in the Growth Portfolio and
the return on the investment both will fluctuate and redemption proceeds may be
higher or lower than an investor's original cost.
** Performance data is historical and includes changes in share price and
reinvestment of dividends and capital gains distributions. Performance numbers
are net of all Portfolio operating expenses, but do not include any insurance
charges imposed in connection with your variable insurance contract. If this
performance information included the effect of the insurance charges,
performance numbers would be lower. Prior to April 1, 1994 results were achieved
by different portfolio managers.
8
<PAGE> 10
MATRIX EQUITY PORTFOLIO
Objective
Seeks capital appreciation and current income by investing in a diversified
portfolio of equity securities that is selected on the basis of a proprietary
analytical model.
Management's
Discussion & Analysis
MARKET COMMENTARY
One word summarizes the activity in the U.S. equity market in 1999: technology.
In 1999, the S&P 500 returned 21.04% making this the 5th straight year the
return exceeded 20%. The bulk of the 1999 return for the Index was generated by
the Technology sector (S&P 500 Sector classifications), which returned 105.6%
while the next highest returning sector was Communications at 44.5%. The
dominance of the Technology sector has also signaled continued narrowness in the
equity market -- in 1998 only 28% of S&P 500 companies outperformed and 25% of
these were in the Technology sector while in 1999 32% outperformed and 33% of
these were in the Technology sector. Without the Technology sector the return of
the S&P 500 Index in 1999 would have been a mere 6.76%.
The success of the U.S. equity market in 1999 was driven by sustained high
growth rates in the U.S. coupled with a faster than anticipated recovery in
Asia. Surprisingly, the abundance of growth and 1999's increasing interest rates
should have boded well for value stocks -- this was clearly not the case. At the
end of 1998, the year over year EPS growth rate associated with the S&P 500 was
- -5% while at the end of 1999 this number was 22%. However, stripping away the
Technology sector results in a much lower number (15%). Therefore, growth was
abundant primarily in one area of the market -- this may be why value stocks
have not come back in spite of the interest rate environment and the perceived
high growth rates.
Market breadth did expand to the small cap arena in 1999 -- unlike 1998, when
the Russell 1000 overwhelmed the Russell 2000 by nearly 30%, in 1999 small cap
names beat out the large caps by 0.34%. This was the first time since 1993 that
the Russell 2000 topped the Russell 1000, albeit by a small margin. In fact, the
best performing segment of the U.S. equity market,
State Street
Global Advisors
[SSGA LOGO]
matrix
equity
Performance
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/99
------------------------------------------
<S> <C>
1 Year 14.14%
5 Year 18.69%
10 Year 13.39%
</TABLE>
Top 10 Holdings
<TABLE>
<CAPTION>
% OF % OF
AS OF 12/31/99 NET ASSETS TOP 10
-------------- ---------- ------
<S> <C> <C>
Microsoft Corporation 5.14% 17.98%
General Electric Company 4.17% 14.59%
Cisco Systems, Inc. 4.00% 13.98%
Wal-Mart Stores, Inc. 3.11% 10.86%
Exxon Mobil Corporation 2.42% 8.47%
Intel Corporation 2.22% 7.76%
Home Depot, Inc. 1.94% 6.79%
Lucent Technologies, Inc. 1.92% 6.70%
Dreyfus Cash Management Plus 1.90% 6.62%
MCI WorldCom, Inc. 1.79% 6.25%
</TABLE>
Top 5 Sector Weightings
<TABLE>
<CAPTION>
% OF
AS OF 12/31/99 NET ASSETS
-------------- ----------
<S> <C>
Computers & Business Equipment 8.5%
Computer Software 8.3%
Telecommunications 8.2%
Drugs 7.1%
Banks 6.5%
</TABLE>
9
<PAGE> 11
Management's
Discussion & Analysis (Continued)
based on Russell's definitions, was the small/mid cap growth segment, as
represented by the Russell 2500 Growth Index. So, no longer is the major
question "when will small cap return to favor?" but "when will value return to
favor?"
Other issues that dominated the market in 1999 were IPO's, Internets and, of
course, Y2K. The first two go hand in hand as 210 Internet companies made their
IPO debut. We saw stellar returns among Internet stocks in spite of their lack
of earnings or track record. The Nasdaq returned a record 85.59% largely due to
the dominance of Technology (including Internet) names and the Dow Jones
Internet Commerce Index returned a whopping 167.30%. The Y2K fears that ran
throughout the year turned out to be unfounded as 2000 came in without any
significant problems.
PORTFOLIO PERFORMANCE
The troubles of the 4th quarter continued in the Variable Investors Series Trust
Matrix Equity Portfolio in December as the portfolio returned 5.71% versus the
S&P 500 Index return of 5.89%. Year-to-date this leaves the Portfolio behind the
benchmark return of 21.04% by approximately 690 basis points. Throughout the 4th
quarter, the valuation, specifically earnings-to-price (e/p), components of our
stock evaluation process did not exhibit good ranking ability and hurt our stock
selection skill. In December, the price and earnings estimate revision
components added value but not enough to counteract the impact of e/p.
Once again in December, the Technology sector played a significant role in the
underperformance of the strategy. In addition, our stock evaluation skill within
the Consumer Cyclicals sector was weak. Within Technology, the High Tech
Manufacturing and Computer Software industries had the greatest negative impact
on performance. Specifically, underweight positions in Nortel Networks (High
Tech Manufacturing), Qualcomm (High Tech Manufacturing), and Oracle (Computer
Software) resulted in underperformance in these industries. In Consumer
Cyclicals, stock selection in the Apparel Retail industry resulted in
underperformance. Specifically, an overweight position in TJX Companies
negatively impacted returns.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE MATRIX EQUITY
PORTFOLIO AND THE S&P 500 INDEX*
<TABLE>
<CAPTION>
MATRIX EQUITY S&P 500 INDEX
------------- -------------
<S> <C> <C>
APR 1, 1994 10000 10000
JUN 30 9940 9966
SEP 30 10180 10380
DEC 31, 1994 10009 10303
MAR 31 10604 11305
JUN 30 11153 12383
SEP 30 12369 13365
DEC 31, 1995 13357 14169
MAR 31 12989 14930
JUN 30 13446 15599
SEP 30 12835 16081
DEC 31, 1996 13973 17420
MAR 31 13767 17889
JUN 30 15284 21009
SEP 30 17056 22582
DEC 31, 1997 17054 23231
MAR 31 19342 26469
JUN 30 19606 27342
SEP 30 16940 24627
DEC 31, 1998 20655 29868
MAR 31 20933 31355
JUN 30 22078 33566
SEP 30 20989 31471
DEC 31, 1999 23576 36151
</TABLE>
* This Index is an unmanaged index in which investors cannot invest. Results for
the Index do not reflect the expenses and investment management fees incurred by
the Portfolio. Past performance is not predictive of future performance.
AVERAGE ANNUAL TOTAL RETURNS**
PERIODS ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Past 1 Past 5 Past 10
Year Years Years
---- ----- -----
<S> <C> <C> <C>
Matrix Equity Portfolio 14.14% 18.69% 13.39%
</TABLE>
"Total Return" is calculated including reinvestment of all income dividends and
capital gains distributions. Results represent past performance and do not
indicate future results. The value of an investment in the Matrix Equity
Portfolio and the return on the investment both will fluctuate and redemption
proceeds may be higher or lower than an investor's original cost.
** Performance data is historical and includes changes in share price and
reinvestment of dividends and capital gains distributions. Performance numbers
are net of all Portfolio operating expenses, but do not include any insurance
charges imposed in connection with your variable insurance contract. If this
performance information included the effect of the insurance charges,
performance numbers would be lower. Prior to April 1, 1994 results were achieved
by different portfolio managers.
10
<PAGE> 12
GROWTH & INCOME PORTFOLIO
Objective
Seeks long-term growth of capital and income and a reasonable current return by
investing primarily in dividend-paying common stocks, convertibles, and readily
marketable securities that derive their value from common stocks, as well as
fixed income securities. The Portfolio does not strive to maintain a specific
balance of stocks, bonds, and money market instruments. Instead the manager
selects the industry sectors and individual securities he believes have the
highest potential for attractive total returns.
Management's
Discussion & Analysis
Value stocks had a lackluster fourth quarter, reflecting investors' strong
appetite for growth stocks during the period, a sentiment that prevailed during
most of 1999. Displaying particular strength were technology and
Internet-related issues, which continued to pace the market's rally despite the
group entering the period with generally very lofty valuations.
Against this backdrop, Variable Investor Series Trust Growth & Income Portfolio
was hampered by the market's overwhelming preference for growth-oriented
companies during the quarter, and by weakness in certain areas, such as the
banking area.
We made no material change to the Portfolio during the quarter in terms of basic
strategy, notwithstanding the difficult backdrop for value stocks. Our focus
remained on relatively inexpensive stocks of companies that we believe have
improving prospects, due, e.g., to a restructuring, a new product or service or
a more-supportive macroeconomic backdrop. In our view, such an approach stands
to generate attractive returns over time while potentially limiting overall
portfolio volatility.
With respect to sector and industry positioning, we made few noteworthy changes
to the Portfolio, remaining well-diversified. We continued to have a modest
overweighting in the energy sector (13.11% of the Portfolio as of December 31).
Our focus here remained on multinational integrated oil companies that we
believe have good potential for profit-margin improvements. Representative
holdings included BP Amoco (3.37%), the Portfolio's largest position at the end
of the quarter, and Exxon Mobil (2.64%). Both companies, in our view, will
continue to enjoy
Credit Suisse
Asset Management, LLP
[WARBURG PINCUS LOGO]
growth &
income
Performance
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/99
------------------------------------------
<S> <C>
1 Year 6.27%
5 Year N/A
Since Inception* 15.58%
</TABLE>
*May 31, 1995
Top 10 Holdings
<TABLE>
<CAPTION>
% OF % OF
AS OF 12/31/99 NET ASSETS TOP 10
-------------- ---------- ------
<S> <C> <C>
BP Amoco Plc 3.37% 13.69%
Unisys Corporation 2.75% 11.20%
Exxon Mobil Corporation 2.64% 10.74%
SBC Communications, Inc. 2.54% 10.32%
Bell Atlantic Corporation 2.49% 10.13%
Comerica, Inc. 2.48% 10.07%
Lehman Brothers Holdings, Inc. 2.28% 9.26%
Ford Motor Company 2.13% 8.65%
Alcoa, Inc. 1.97% 8.02%
Ingersoll-Rand Company 1.95% 7.92%
</TABLE>
Top 5 Sector Weightings
<TABLE>
<CAPTION>
% OF
AS OF 12/31/99 NET ASSETS
-------------- ----------
<S> <C>
Financial Services 12.3%
Oil & Gas 11.9%
Retail 8.5%
Banks 8.3%
Capital Equipment 7.8%
</TABLE>
11
<PAGE> 13
Management's
Discussion & Analysis (Continued)
"economy of scale" efficiencies arising from their recent merger activity.
We also maintained a modest overweighting in both the financial-services and
banks and savings & loans sectors. Our financial-services holdings contributed
positively to the Portfolio's performance, though our bank stocks were hampered
by fears of rising interest rates and general balance sheet concerns. We
continue to have a favorable outlook on the financial area, and the Portfolio's
financial holdings in particular, given the relatively low valuations on these
stocks compared to the broader market and these companies' potential to benefit
from economic growth in the U.S. and abroad.
We continued to have significant exposure to consumer stocks, including a modest
overweighting in the retail sector. We maintained a mix of broadline retailers
(e.g., Federated Department Stores, 1.43%) and more niche-type companies (e.g.,
Toys R Us, 1.08%). In general, our favorable outlook here is based on the
group's reasonable valuations and the industry's continued improvements in
inventory management.
Elsewhere of note, we maintained an overweighting in the capital-equipment
sector and held a smaller but still-meaningful position in the industrial
manufacturing & processing sector. Our focus in these areas remained on
companies offering significant "operating leverage" (i.e., companies that, due
to excess capacity, could see a significant decline in per-unit costs as sales
rise -- and given current projections of global growth, we believe the sales
prospects for many industrial/capital-goods companies will remain healthy). One
industrial-type stock we added during the quarter was Tyco International (.90%),
a diversified manufacturing and services company. We established the position
after the stock declined on earnings uncertainties to a degree we deemed to be
excessive.
The rest of the Portfolio remained invested across a wide range of sectors,
including telecommunications & equipment, computers and pharmaceuticals. We
modestly increased our weighting in the last area, adding American Home Products
and Aventis, a recently formed company spawned by the merger of Rhone Poulenc
and Hoechst.
OUTLOOK
Looking ahead to the next few months, we are optimistic regarding the prospects
for the types of stocks held by the Portfolio, the Portfolio's clearly
disappointing recent performance notwithstanding. On the whole, value stocks are
very compellingly priced compared to growth stocks, with valuation discrepancies
between the two groups as wide as they have been in nearly three decades. Any
increased investor skittishness over growth stocks could therefore prompt
investors to favorably reassess value stocks, to a potentially significant
degree. Set within this environment, our focus will remain not on cheap stocks
per say, but on those we deem to be fundamentally undervalued, given factors
such as their underlying companies' balance sheet health and earnings prospects.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE GROWTH & INCOME
PORTFOLIO AND THE S&P 500 INDEX*
<TABLE>
<CAPTION>
GROWTH & INCOME S&P 500 INDEX
--------------- -------------
<S> <C> <C>
MAY 31, 1995 10000 10000
JUN 30 10152 10232
SEP 30 11145 11043
DEC 31, 1995 11310 11708
MAR 31 12747 12337
JUN 30 12907 12890
SEP 30 12162 13288
DEC 31, 1996 12680 14395
MAR 31 12833 14782
JUN 30 14608 17360
SEP 30 16139 18660
DEC 31, 1997 16256 19196
MAR 31 18120 21872
JUN 30 18323 22593
SEP 30 15669 20350
DEC 31, 1998 18282 24680
MAR 31 18140 25910
JUN 30 21120 27736
SEP 30 19428 26005
DEC 31, 1999 19434 29872
</TABLE>
* This Index is an unmanaged index in which investors cannot invest. Results for
the Index do not reflect the expenses and investment management fees incurred by
the Portfolio. Past performance is not predictive of future performance.
AVERAGE ANNUAL TOTAL RETURNS**
PERIODS ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Past 1 Life of
Year Portfolio***
---- ------------
<S> <C> <C>
Growth & Income Portfolio 6.27% 15.58%
</TABLE>
"Total Return" is calculated including reinvestment of all income dividends and
capital gains distributions. Results represent past performance and do not
indicate future results. The value of an investment in the Growth & Income
Portfolio and the return on the investment both will fluctuate and redemption
proceeds may be higher or lower than an investor's original cost.
** Performance data is historical and includes changes in share price and
reinvestment of dividends and capital gains distributions. Performance numbers
are net of all Portfolio operating expenses, but do not include any insurance
charges imposed in connection with your variable insurance contract. If this
performance information included the effect of the insurance charges,
performance numbers would be lower.
*** From commencement of operations (May 31, 1995)
12
<PAGE> 14
MULTIPLE STRATEGIES PORTFOLIO
Objective
Seeks as high a level of total return over an extended period of time as is
consistent with prudent investment risk by investing in equity securities, bonds
and money market instruments in varying proportions, depending upon prevailing
economic and financial market conditions.
Management's
Discussion & Analysis
MARKET COMMENTARY
For the fourth quarter of calendar 1999, the Multiple Strategies Portfolio rose
by 19.71%, more than double the 8.76% return of the composite benchmark,
comprised of 60% of the S&P 500 and 40% of the Lehman Government Corporate Bond
Index. For the full year ended December 31, 1999, the Multiple Strategies
Portfolio surged by 28.00%, compared with a total return of 11.76% for the 60/40
S&P 500/Lehman Government Corporate Bond Index split. Multiple Strategies,
therefore, outperformed its industry benchmark by nearly 11% and more than 16%,
respectively, for these two measurement periods.
The Multiple Strategies Portfolio was allocated 83% to stocks at year-end 1999.
So, like the Growth Portfolio, its strength was largely attributed to the equity
market's preference for large capitalization growth stocks and the portfolio's
emphasis on technology, telecommunications, healthcare, retail, and
financial-service stocks, which were largely big winners.
The fixed-income portion of the Multiple Strategies Portfolio, which was
allocated about 17% to bonds and cash at year-end 1999, produced mixed results
due to the poor performance of bonds during the year. The yield on the 30-year
Treasury, for example, surged from about 5.00% at the beginning of the year to
about 6.50% by the end of the year. Prices and yields move inversely, so the
significant backup in rates resulted in an equally significant decline in prices
over the course of the year.
We had correctly anticipated that there would be a temporary surge in U.S. Gross
Domestic Product (GDP) during the second half of 1999,
Value Line, Inc.
[LOGO]
multiple
strategies
Performance
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/99
------------------------------------------
<S> <C>
1 Year 28.00%
5 Year 25.80%
10 Year 16.09%
</TABLE>
Top 10 Holdings
<TABLE>
<CAPTION>
% OF % OF
AS OF 12/31/99 NET ASSETS TOP 10
-------------- ---------- ------
<S> <C> <C>
Cisco Systems, Inc. 4.48% 12.18%
EMC Corporation 4.27% 11.61%
QUALCOMM, Inc. 4.19% 11.40%
FHLB, 4.875%, 01/22/2002 3.84% 10.43%
Microsoft Corporation 3.69% 10.02%
America Online, Inc. 3.68% 10.01%
Sun Microsystems, Inc. 3.44% 9.35%
Wal-Mart Stores, Inc. 3.29% 8.95%
Omnicom Group 3.08% 8.36%
FNMA, 5.75%, 06/15/2005 2.83% 7.69%
</TABLE>
Top 5 Sector Weightings
<TABLE>
<CAPTION>
% OF
AS OF 12/31/99 NET ASSETS
-------------- ----------
<S> <C>
Computer Related 12.2%
Federal Agencies 9.5%
Telecommunication Equipment 7.2%
Computer Software 6.6%
Drugs 5.8%
</TABLE>
13
<PAGE> 15
Management's
Discussion & Analysis (Continued)
as many companies spent aggressively to gain technological Y2K compliance. In
addition, many consumers and businesses shifted from a "Just in Time" to a "Just
in Case" inventory model as part of a precautionary buildup. As a result, the
third quarter GDP was a very strong 5.7%, compared with only 1.9% sequentially
and the fourth quarter followed with a similarly robust 5.8%, as we had
forecast.
In addition, while we believed that the U.S. would be largely Y2K compliant by
year-end 1999, we anticipated that there would be pockets of the world, largely
in the Pacific Rim and in Latin America, which would fail to meet the deadline
and would need to get caught up in a hurry. Consequently, we believed that the
large-cap technology and telecommunications companies were particularly well
positioned to benefit from U.S. trends for compliance spending in the second
half of 1999, as well as global remedial work that we anticipated for the first
half of 2000, which would result in well-above average revenue and earnings
growth.
Moreover, we forecasted that due to the strong economy and a Millennium spirit,
the Holiday shopping season in 1999 would be the best of the decade. As a
result, we loaded up on many different retail stocks that we thought would best
participate.
OUTLOOK
Looking forward, we believe that with global Y2K concerns hugely overblown,
inventory stockpiles must be worked down, which could result in significantly
slower economic growth during the first half of 2000, perhaps to a level of
about 3%.
Long bond yields have surged from a record low of 4.70% in October, 1998, to a
recent high of 6.75%, the highest such level in more than two years, as
investors have seemingly discounted at least a 25 basis point increase in
interest rates by the Federal Reserve at its upcoming FOMC meeting on February
2. This gives the Fed a free pass to tighten and then hope that still higher
interest rates will help to ensure slower future economic growth.
But we do not believe that enough time will have elapsed after the millennium
calendar changeover for the Fed to fully evaluate if the economy has, in fact,
begun to slow. Rather, we would prefer that this gradualist Fed, led by the
newly re-appointed Chairman, Alan Greenspan, shift to a tightening bias in
February, raise rates by a quarter point at the March 21 FOMC meeting, and then
evaluate the subsequent pace of economic growth at the May 16 meeting.
While long rates could retreat to about 7.00% near term, an eventual slowing of
the U.S. economy could spark a bond rally back to 6.00%, which could spur the
DJIA to an election-year rally that could approximate 13,000 by year end 2000.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE MULTIPLE STRATEGIES
PORTFOLIO, THE S&P 500 INDEX* AND THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND
INDEX*
<TABLE>
<CAPTION>
LEHMAN BROS. GOV'T/
MULTIPLE STRATEGIES CORP BOND INDEX S&P 500 INDEX
------------------- --------------- -------------
<S> <C> <C> <C>
APR 1, 1994 10000 10000 10000
JUN 30 9364 9876 9966
SEP 30 9913 9925 10380
DEC 31, 1994 9974 9962 10303
MAR 31 10475 10458 11305
JUN 30 11845 11136 12383
SEP 30 13154 11343 13365
DEC 31, 1995 13189 11872 14169
MAR 31 13884 11594 14930
JUN 30 14351 11648 15599
SEP 30 15053 11854 16081
DEC 31, 1996 15609 12217 17420
MAR 31 15008 11875 17889
JUN 30 17212 12525 21009
SEP 30 19151 13221 22582
DEC 31, 1997 19011 13991 23231
MAR 31 20379 14191 26469
JUN 30, 21223 14792 27342
SEP 30, 20032 15525 24627
DEC 31, 1998 24552 15545 29868
MAR 31, 26873 15021 31355
JUN 30, 26682 14621 33566
SEP 30, 26251 14576 31471
DEC 31, 1999 31426 14357 36151
</TABLE>
* These Indices are unmanaged indices in which investors cannot invest. Results
for the Indices do not reflect the expenses and investment management fees
incurred by the Portfolio. Past performance is not predictive of future
performance.
AVERAGE ANNUAL TOTAL RETURNS**
PERIODS ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Past 1 Past 5 Past 10
Year Years Years
---- ----- -----
<S> <C> <C> <C>
Multiple Strategies Portfolio 28.00% 25.80% 16.09%
</TABLE>
"Total Return" is calculated including reinvestment of all income dividends and
capital gains distributions. Results represent past performance and do not
indicate future results. The value of an investment in the Multiple Strategies
Portfolio and the return on the investment both will fluctuate and redemption
proceeds may be higher or lower than an investor's original cost.
** Performance data is historical and includes changes in share price and
reinvestment of dividends and capital gains distributions. Performance numbers
are net of all Portfolio operating expenses, but do not include any insurance
charges imposed in connection with your variable insurance contract. If this
performance information included the effect of the insurance charges,
performance numbers would be lower. Prior to April 1, 1994 results were achieved
by different portfolio managers.
14
<PAGE> 16
HIGH INCOME BOND PORTFOLIO
Objective
Seeks a high level of current income while secondarily seeking capital
appreciation by investing primarily in fixed-income securities, including
corporate bonds and notes, discount bonds, zero-coupon bonds, convertible
securities, and preferred stocks and bonds issued with warrants, which are rated
Baa or below by Moody's or BBB or below by Standard & Poor's or in unrated
securities determined to be of comparable quality.
Management's
Discussion & Analysis
MARKET COMMENTARY
High yield bonds generated attractive relative returns in 1999, although
absolute returns were tempered by the general rise in interest rates and
increasing default rates. The spread between the First Boston High Yield Index
and US Treasury securities narrowed approximately 75 basis points as 1998's
emerging market problems did not dampen domestic economic growth in 1999. In
fact, strong economic growth and the resilience of emerging market economies
were the primary drivers in the roughly 175 basis point rise in the yield on 10
year Treasuries which dampened the performance of most fixed income securities.
Default rates, which reached their highest level since 1991, also negatively
impacted returns for high yield securities. The rise in default rates despite a
strong economy was the result of 1998's decline in energy prices which impacted
many energy companies in early 1999 and the high level of issuance and defaults
on a lagged basis. For the year as a whole, spread tightening coupled with the
higher coupon returns available on high yield securities more than offset the
increase in default losses as the Lehman Brothers High Yield Bond Index returned
2.39%, outperforming the Lehman Brothers Aggregate Bond Index, a measure of high
quality bond performance, which returned - 0.82%.
PORTFOLIO PERFORMANCE
The fund's overweight in the telecommunication sector positively impacted
performance. Strong performers include Telesystem International,
Federated Investment
Counseling, Inc.
[FEDERATED LOGO]
high
income
bond
Performance
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/99
------------------------------------------
<S> <C>
1 Year 1.83%
5 Year 10.12%
10 Year 9.44%
</TABLE>
Top 10 Holdings
<TABLE>
<CAPTION>
% OF % OF
AS OF 12/31/99 NET ASSETS TOP 10
-------------- ---------- ------
<S> <C> <C>
Allied Waste North America, Inc. 2.31% 16.11%
Fox/Liberty Networks LLC 1.57% 10.94%
TeleWest Communications Plc 1.52% 10.57%
Tenet Healthcare Corporation 1.41% 9.79%
Hermes Europe Railtel B.V 1.34% 9.29%
Echostar DBS Corporation 1.31% 9.11%
Fisher Scientific International, Inc. 1.24% 8.66%
Pegasus Communications
Corporation 1.24% 8.62%
Level 3 Communications, Inc. 1.23% 8.56%
Lyondell Chemical Company 1.20% 8.35%
</TABLE>
Top 5 Sector Weightings
<TABLE>
<CAPTION>
% OF
AS OF 12/31/99 NET ASSETS
-------------- ----------
<S> <C>
Telecommunications & Cellular 24.1%
Cable Television 13.7%
Broadcast Radio & Television 6.8%
Industrial Products & Equipment 6.2%
Health Care 4.9%
</TABLE>
High yield bonds are subject to greater risk of principal and income than higher
quality bonds.
15
<PAGE> 17
Management's
Discussion & Analysis (Continued)
Triton PCS, Nextel, Teligent and Millicom. The fund's overweight in cable TV and
broadcasting also aided performance. The fund also had a much lower default rate
than the approximately 4% rate for the market as a whole. Merger and acquisition
activity positively impacted total returns as companies such as Fox Liberty
Media, Alliance Imaging, Metronet and Statia Terminals engaged in transactions
which benefited bondholders. On the negative side, the fund's underweight in
energy hurt performance given the strong rebound in oil prices. Also, positions
in Paging Network, Ameriserve, Pillowtex, Dialog and Revlon negatively impacted
performance based on disappointing financial performance.
OUTLOOK
Looking into 2000, we believe that strong economic growth worldwide coupled with
attractive yield spreads will lead to good relative performance for high yield
bonds. However, possible Fed rate increases to slow the domestic economy may
temper absolute returns. We believe default rates, which increased in 1999 to
their highest level in eight years, will remain above average for the next few
quarters. However, given the high percentage of securities currently trading at
distressed levels, the performance impact of these defaults have, to some
degree, already been felt.
From a portfolio perspective, we continue to like the telecommunications sector
as strong operating gains and consolidation activity provide opportunities for
strong relative returns. We also think that cable TV plant upgrades in both the
US and western Europe will lead to strong Charter Communications. We also
believe that specific fund holdings in healthcare and chemicals, which
underperformed in 1999, are poised to rebound in 2000.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE HIGH INCOME BOND
PORTFOLIO, FIRST BOSTON HIGH YIELD INDEX AND THE LEHMAN BROTHERS SINGLE "B"
INDEX*
<TABLE>
<CAPTION>
LEHMAN BROTHERS FIRST BOSTON
HIGH INCOME BOND SINGLE "B" INDEX HIGH YIELD INDEX
---------------- ---------------- ----------------
<S> <C> <C> <C>
APR 1, 1994 10000 10000 10000
JUN 30 9906 10010 9856
SEP 30 9879 10198 10014
DEC 31, 1994 9655 10215 10010
MAR 31 10167 10745 10481
JUN 30 10729 11299 11089
SEP 30 11102 11641 11423
DEC 31, 1995 11487 11907 11752
MAR 31 11795 12213 12006
JUN 30 11948 12464 12195
SEP 30 12635 13053 12653
DEC 31, 1996 13123 13523 13211
MAR 31 13269 13694 13405
JUN 30 13931 14259 13984
SEP 30 14621 14919 14641
DEC 31, 1997 14899 15159 14878
MAR 31 15431 15746 15326
JUN 30 15527 15854 15519
SEP 30 14857 14946 14565
DEC 31, 1998 15352 15352 14964
MAR 31 15872 15653 15209
JUN 30 15850 15674 15386
SEP 30 15401 15647 15140
DEC 31, 1999 15633 16022 15455
</TABLE>
* These Indices are unmanaged indices in which investors cannot invest. Results
for the Indices do not reflect the expenses and investment management fees
incurred by the Portfolio. Past performance is not predictive of future
performance.
AVERAGE ANNUAL TOTAL RETURNS**
PERIODS ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Past 1 Past 5 Past 10
Year Years Years
---- ----- -----
<S> <C> <C> <C>
High Income Bond Portfolio 1.83% 10.12% 9.44%
</TABLE>
"Total Return" is calculated including reinvestment of all income dividends and
capital gains distributions. Results represent past performance and do not
indicate future results. The value of an investment in the High Income Bond
Portfolio and the return on the investment both will fluctuate and redemption
proceeds may be higher or lower than an investor's original cost.
** Performance data is historical and includes changes in share price and
reinvestment of dividends and capital gains distributions. Performance numbers
are net of all Portfolio operating expenses, but do not include any insurance
charges imposed in connection with your variable insurance contract. If this
performance information included the effect of the insurance charges,
performance numbers would be lower. Prior to April 1, 1994 results were achieved
by different portfolio managers.
16
<PAGE> 18
U.S. GOVERNMENT BOND PORTFOLIO
Objective
Seeks current income and preservation of capital. Under normal circumstances, at
least 80% of the Portfolio's assets will be invested in U.S. Government
Securities; the remainder may be invested in investment grade corporate
securities and in cash and money market instruments.
Management's
Discussion & Analysis
PORTFOLIO PERFORMANCE
A number of factors contributed to the Fund's performance during the year. As
you know, here at Strong we make fixed income investment decisions at four
distinct levels: duration, yield curve, sector/quality selection, and issue
selection. Over a complete market cycle, our objective is to provide value from
each of these levels, although in any given year, one or more may contribute a
greater proportion than the others.
Duration is the first level of decision-making, and it is one where a year can
be won or lost by making an incorrect decision. Consequently, we generally
deviate only modestly from benchmark duration, and in 1999 duration was
maintained from neutral to slightly short of the benchmark throughout much of
the year. In the final analysis, duration management contributed a minor portion
of the Fund's performance.
The second level of decision-making is yield-curve positioning. Throughout much
of 1999, we were underweighting bonds in the middle part of the curve (bonds
with maturities between five and ten years) and overweighting bonds with short
and long maturities to get to the targeted average duration. This "barbell"
positioning benefits when the yield curve flattens (i.e., when short rates and
long rates converge), which is what happened in 1999. The Treasury yield curve
as measured from the 2-year note to the 30-year bond flattened by approximately
30 basis points during the year. Thus, yield-curve positioning modestly
contributed to the Fund's performance.
Strong Capital
Management
[STRONG LOGO]
u.s.
government
bond
Performance
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/99
------------------------------------------
<S> <C>
1 Year (1.90)%
5 Year 7.31%
10 Year 7.09%
</TABLE>
Top 10 Holdings
<TABLE>
<CAPTION>
% OF % OF
AS OF 12/31/99 NET ASSETS TOP 10
-------------- ---------- ------
<S> <C> <C>
USTB, 5.25%, 02/15/2029 7.23% 15.17%
Fed. Agric. Mort. Co.
7.012%, 01/25/2003 5.97% 12.53%
USTN, 5.625%, 05/15/2008 5.61% 11.76%
USTB, 7.25%, 05/15/2016 5.23% 10.98%
FHLMC, 9.09%, 09/25/2028 4.63% 9.72%
FNMA, 11.00%, 02/01/2019 4.08% 8.56%
USTN, 6.00%, 08/15/2004 3.99% 8.37%
FNMA, 11.50%, 02/01/2019 3.97% 8.33%
Fed. Agric. Mort. Co.
6.71%, 07/25/2008 3.57% 7.50%
FNMA, 6.50%, 08/15/2004 3.37% 7.08%
</TABLE>
Top 5 Sector Weightings
<TABLE>
<CAPTION>
% OF
AS OF 12/31/99 NET ASSETS
-------------------------- -----
<S> <C>
Mortgage Backed Securities 43.6%
U.S. Government Securities 29.8%
Collateralized Mortgage Obligations 9.6%
Non-Agency Mortgages and Asset Backed 3.8%
Banks 2.9%
</TABLE>
Investment in the U.S. Government Bond Portfolio is not guaranteed by the U.S.
Government.
17
<PAGE> 19
Management's
Discussion & Analysis (Continued)
Spread products (i.e. corporate, mortgage-backed securities, and agencies)
outperformed other sectors of the fixed income market in the fourth quarter. The
Fund's above-benchmark exposure to mortgage securities and agency debentures
added to relative performance during the quarter
OUTLOOK
In nominal terms, we are looking for a more prosperous year in fixed income in
2000 than we experienced in 1999. We believe that this march toward higher rates
will ultimately affect the interest-rate sensitive parts of the economy, such as
housing and autos. This, coupled with the hidden tax in the form of higher
energy costs, will begin to restrain consumer spending, slowing down the economy
and taking the pressure off the Fed to continue to raise rates. Meanwhile, the
Federal Reserve will continue to raise the target rate for Federal Funds, with a
strong possibility that they will become more aggressive at the next meeting
(February 2, 2000) and increase the rate by 50 basis points.
Although increasing inflation is always a possibility with the economy running
at its current pace, we do not foresee it as a major threat. There are many
factors in the economy today preventing such an occurrence. Global excess
capacity, fierce competition, and continued productivity gains will exert
downward pressure on prices.
While current trends are not favorable, we do see good value in the bond market
at current levels. With core inflation running in the 2 percent range and the
ten-year Treasury trading to yield in the 6.50 percent range, we have an
attractive 4.5 percent real yield -- well above historical levels. At current
spreads, mortgages are even more attractively priced.
As we were throughout 1999, we expect to remain overweight in mortgage
securities. We expect mortgages to outperform Treasurys on a relative basis
during the year, although not to the same magnitude as we experienced in 1999.
We retain our emphasis in the more stable duration portions of the market,
including CMBS, FNMA Multifamily, and PAC bonds.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE U.S. GOVERNMENT
BOND PORTFOLIO AND THE LEHMAN BROTHERS GOVERNMENT BOND INDEX*
<TABLE>
<CAPTION>
LEHMAN BROS.
U.S. GOVT BOND GOVT. BOND INDEX
-------------- ----------------
<S> <C> <C>
APR 1, 1994 10000 10000
JUN 30 9929 9885
SEP 30 9960 9927
DEC 31, 1994 9959 9962
MAR 31 10474 10431
JUN 30 11162 11078
SEP 30 11403 11273
DEC 31, 1995 11968 11788
MAR 31 11663 11522
JUN 30 11666 11576
SEP 30 11839 11772
DEC 31, 1996 12217 12115
MAR 31 12143 11729
JUN 30 12578 12385
SEP 30 13010 12800
DEC 31, 1997 13362 13224
MAR 31 13542 13424
JUN 30 13842 13779
SEP 30 14379 14541
DEC 31, 1998 14443 14527
MAR 31 14336 14320
JUN 30 14204 14198
SEP 30 14260 14171
DEC 31, 1999 14169 13878
</TABLE>
* This Index is an unmanaged index in which investors cannot invest. Results for
the Index do not reflect the expenses and investment management fees incurred by
the Portfolio. Past performance is not predictive of future performance.
AVERAGE ANNUAL TOTAL RETURNS**
PERIODS ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Past 1 Past 5 Past 10
Year Years Years
---- ----- -----
<S> <C> <C> <C>
U.S. Government Bond Portfolio (1.90)% 7.31% 7.09%
</TABLE>
"Total Return" is calculated including reinvestment of all income dividends and
capital gains distributions. Results represent past performance and do not
indicate future results. The value of an investment in the U.S. Government Bond
Portfolio and the return on the investment both will fluctuate and redemption
proceeds may be higher or lower than an investor's original cost.
** Performance data is historical and includes changes in share price and
reinvestment of dividends and capital gains distributions. Performance numbers
are net of all Portfolio operating expenses, but do not include any insurance
charges imposed in connection with your variable insurance contract. If this
performance information included the effect of the insurance charges,
performance numbers would be lower. Prior to April 1, 1994 results were achieved
by different portfolio managers.
18
<PAGE> 20
Report of Ernst & Young LLP, Independent Auditors
To the Trustees and Contract Owners of
Variable Investors Series Trust
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of Variable Investors Series Trust (the
Trust) (comprising, respectively, the Small Cap Growth, World Equity, Growth,
Matrix Equity, Growth & Income, Multiple Strategies, High Income Bond, and
U.S. Government Bond Portfolios) as of December 31, 1999, the related
statements of operations for the year then ended, and the statements of changes
in net assets for each of the two years in the period then ended and financial
highlights for each of the five years in the period then ended. These
financial statements and financial highlights are the responsibility of Variable
Investors Series Trust's management. Our responsibility is to express an opinion
on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of December 31, 1999, by correspondence
with the custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting Variable Investors Series Trust at
December 31, 1999, the results of their operations for the year then ended, and
the changes in their net assets for each of the two years in the period then
ended and financial highlights for each of the periods in the five periods then
ended, in conformity with accounting principles generally accepted in the United
States.
Chicago, Illinois
February, 4, 2000
19
<PAGE> 21
VARIABLE INVESTORS SERIES TRUST
SMALL CAP GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS
CIRCUITS -- (1.0%)
ANADIGICS, Inc. (a) ...................................................... 4,200 $ 198,188
--------------
COMMERCIAL SERVICES -- (2.3%)
Mobile Mini, Inc. (a) .................................................... 4,400 94,600
NCO Group, Inc. (a) ...................................................... 3,400 102,425
Source Information Management Company (a) ................................ 5,300 88,775
Zomax, Inc. (a) .......................................................... 3,300 149,325
--------------
435,125
COMMUNICATION EQUIPMENT -- (1.8%)
Polycom, Inc. (a) ........................................................ 3,000 191,062
Titan Corporation (a) .................................................... 3,300 155,513
--------------
346,575
COMMUNICATION SERVICES -- (2.1%)
APAC Teleservices, Inc. (a) .............................................. 15,000 210,937
Digital Microwave Corporation (a) ........................................ 8,000 187,500
--------------
398,437
COMPUTERS & BUSINESS EQUIPMENT -- (0.8%)
Cacheflow, Inc. (a) ...................................................... 1,200 156,825
--------------
COMPUTER RELATED -- (3.9%)
Extreme Networks, Inc. (a) ............................................... 2,600 217,100
NVIDIA Corporation (a) ................................................... 3,400 159,587
PC Connection, Inc. (a) .................................................. 5,700 196,650
Silicon Storage Technology, Inc. (a) ..................................... 4,200 173,250
--------------
746,587
COMPUTER SERVICES -- (4.4%)
Advanced Digital Information Corporation (a) ............................. 3,800 184,775
Intraware, Inc. (a) ...................................................... 3,700 295,778
Netsolve, Inc. (a) ....................................................... 5,000 157,500
QRS Corporation (a) ...................................................... 2,000 210,000
--------------
848,053
COMPUTER SOFTWARE -- (7.5%)
Advent Software, Inc. (a) ................................................ 3,250 209,422
Broadbase Software, Inc. (a) ............................................. 1,300 146,250
Cysive, Inc. (a) ......................................................... 2,500 180,156
Exchange Applications, Inc. (a) .......................................... 3,400 189,975
Great Plains Software, Inc. (a) .......................................... 2,500 186,875
PC-Tel, Inc. (a) ......................................................... 2,800 147,000
Puma Technology, Inc. (a) ................................................ 2,000 261,250
Ravisent Technologies, Inc. (a) .......................................... 3,000 115,313
--------------
1,436,241
CONSULTING SERVICES -- (0.6%)
Professional Detailing, Inc. (a) ......................................... 3,700 110,769
--------------
</TABLE>
See notes to financial statements.
20
<PAGE> 22
VARIABLE INVESTORS SERIES TRUST
SMALL CAP GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS -- (CONTINUED)
CONSUMER PRODUCTS-MISCELLANEOUS -- (0.4%)
Blyth Industries, Inc. (a) ............................................... 3,200 $ 78,600
--------------
DATA STORAGE -- (1.6%)
SanDisk Corporation (a) .................................................. 3,100 298,375
--------------
DRUGS/PHARMACEUTICALS -- (7.5%)
Advance Paradigm, Inc. (a) ............................................... 5,200 112,125
Celgene Corporation (a) .................................................. 3,200 224,000
Emisphere Technologies, Inc. (a) ......................................... 6,000 180,375
Express Scripts, Inc., Class A ........................................... 2,300 147,200
Invitrogen Corporation (a) ............................................... 2,000 120,000
Jones Pharma, Inc. ....................................................... 4,150 180,266
King Pharmaceuticals, Inc. (a) ........................................... 5,700 319,556
Noven Pharmaceuticals, Inc. (a) .......................................... 7,900 143,187
--------------
1,426,709
ELECTRONIC COMMERCE -- (1.2%)
Proxicom, Inc. (a) ....................................................... 1,900 236,194
--------------
ELECTRONIC COMPONENTS -- (10.9%)
ACT Manufacturing, Inc. (a) .............................................. 3,400 127,500
Amphenol Corporation, Class A (a) ........................................ 2,700 179,719
Anaren Microwave, Inc. (a) ............................................... 4,000 216,500
CTS Corporation .......................................................... 3,200 241,200
Cymer, Inc. (a) .......................................................... 4,100 188,600
DSP Group, Inc. (a) ...................................................... 2,800 260,400
MKS Instruments, Inc. (a) ................................................ 3,000 108,375
Power Integrations, Inc. (a) ............................................. 3,600 172,575
RF Micro Devices, Inc. (a) ............................................... 3,400 232,687
TranSwitch Corporation (a) ............................................... 3,000 217,688
Xicor, Inc. (a) .......................................................... 10,000 136,875
--------------
2,082,119
ELECTRONICS -- (2.3%)
Credence Systems Corporation (a) ......................................... 2,900 250,850
Kemet Corporation (a) .................................................... 4,300 193,769
--------------
444,619
ENVIRONMENTAL -- (0.5%)
Tetra Tech, Inc. (a) ..................................................... 6,500 99,938
--------------
HUMAN RESOURCES -- (0.6%)
AHL Services, Inc. (a) ................................................... 5,200 108,550
--------------
INDUSTRIAL PRODUCTS & EQUIPMENT -- (3.0%)
Advanced Energy Industries, Inc. (a) ..................................... 3,700 182,225
Cognex Corporation (a) ................................................... 4,300 167,700
PRI Automation, Inc. (a) ................................................. 3,300 221,512
--------------
571,437
</TABLE>
See notes to financial statements.
21
<PAGE> 23
VARIABLE INVESTORS SERIES TRUST
SMALL CAP GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS -- (CONTINUED)
INFORMATION SYSTEMS -- (2.4%)
Allscripts, Inc. (a) ..................................................... 1,700 $ 74,800
MedQuist, Inc. (a) ....................................................... 4,200 108,412
RadiSys Corporation (a) .................................................. 3,450 175,950
Rare Medium Group, Inc. (a) .............................................. 2,800 95,550
--------------
454,712
MACHINERY & EQUIPMENT -- (1.3%)
Asyst Technologies, Inc. ................................................. 3,900 255,694
--------------
MEDICAL PRODUCTS & SUPPLIES -- (2.3%)
ArthroCare Corporation (a) ............................................... 4,800 292,800
Zoll Medical Corporation (a) ............................................. 3,600 137,475
--------------
430,275
NETWORKING -- (2.5%)
C-COR.net Corporation (a) ................................................ 2,000 153,250
Crossroads Systems, Inc. (a) ............................................. 1,000 84,500
Proxim, Inc. (a) ......................................................... 2,200 242,000
--------------
479,750
NETWORKING SOFTWARE -- (3.2%)
Brio Technology, Inc. (a) ................................................ 2,100 88,200
Emulex Corporation (a) ................................................... 2,600 292,500
Micromuse, Inc. (a) ...................................................... 1,400 238,000
--------------
618,700
POLLUTION CONTROL -- (0.4%)
Waste Connections, Inc. (a) .............................................. 4,800 69,300
--------------
PUBLISHING -- (1.0%)
Forrester Research, Inc. (a) ............................................. 2,800 192,850
--------------
RADIO/TELEVISION -- (1.1%)
Citadel Communications Corporation (a) ................................... 3,100 201,113
--------------
RESTAURANTS -- (0.7%)
P.F. Chang's China Bistro, Inc. (a) ...................................... 5,700 141,788
--------------
RETAIL-APPAREL -- (1.0%)
Ann Taylor Stores Corporation (a) ........................................ 2,500 86,094
Pacific Sunwear of California, Inc. (a) .................................. 3,300 105,187
--------------
191,281
RETAIL-CATALOG -- (1.2%)
Insight Enterprises, Inc. (a) ............................................ 5,500 223,437
--------------
</TABLE>
See notes to financial statements.
22
<PAGE> 24
VARIABLE INVESTORS SERIES TRUST
SMALL CAP GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C> <C>
COMMON STOCKS -- (CONTINUED)
RETAIL-SPECIALTY -- (3.1%)
Bebe Stores, Inc. (a) .................................................... 3,600 $ 97,200
Tweeter Home Entertainment Group, Inc. (a) ............................... 5,600 198,800
Urban Outfitters, Inc. (a) ............................................... 4,300 125,237
Whitehall Jewellers, Inc. (a) ............................................ 4,400 162,250
--------------
583,487
SEMICONDUCTOR MANUFACTURING -- (2.7%)
Applied Micro Circuits Corporation (a) ................................... 1,600 203,600
Cree Research, Inc. (a) .................................................. 3,700 315,887
--------------
519,487
SOFTWARE -- (4.4%)
Actuate Software Corporation (a) ......................................... 7,400 317,275
DSET Corporation (a) ..................................................... 5,000 186,875
Sonic Foundry, Inc. (a) .................................................. 8,000 189,500
WebTrends Corporation (a) ................................................ 1,900 153,900
--------------
847,550
SOFTWARE-CLIENT/SERVER -- (1.7%)
Dendrite International, Inc. (a) ......................................... 9,750 330,281
--------------
SOFTWARE-DESKTOP -- (0.9%)
Macromedia, Inc. (a) ..................................................... 2,300 168,188
--------------
SOFTWARE-INTERNET -- (4.0%)
Allaire Corporation (a) .................................................. 1,400 204,838
Bluestone Software, Inc. (a) ............................................. 1,500 172,500
USinternetworking, Inc. (a) .............................................. 2,550 178,181
Viant Corporation (a) .................................................... 2,100 207,900
--------------
763,419
SOFTWARE-TESTING -- (1.3%)
Mercury Interactive Corporation (a) ...................................... 2,300 248,256
--------------
SYSTEMS INTEGRATOR -- (3.0%)
Diamond Technology Partners, Inc., Class A (a) ........................... 4,300 369,531
Whittman-Hart, Inc. (a) .................................................. 3,700 198,413
--------------
567,944
TELECOMMUNICATION EQUIPMENT -- (5.7%)
AudioCodes Ltd. (a) ...................................................... 2,300 211,600
Digital Lightwave, Inc. (a) .............................................. 3,500 224,000
Ditech Communications Corporation (a) .................................... 1,200 112,200
Glenayre Technologies, Inc. (a) .......................................... 15,000 169,688
NetOptix Corporation (a) ................................................. 3,500 233,625
Tut Systems, Inc. (a) .................................................... 2,400 128,700
--------------
1,079,813
TOTAL COMMON STOCKS -- (Cost $11,374,683) 96.3% 18,390,666
--------------
</TABLE>
See notes to financial statements.
23
<PAGE> 25
VARIABLE INVESTORS SERIES TRUST
SMALL CAP GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST MATURITY MATURITY
AND TITLE OF ISSUE RATE DATE AMOUNT VALUE
------------------ ---- ---- ------ -----
<S> <C> <C> <C> <C> <C>
SHORT TERM INVESTMENT
REPURCHASE AGREEMENT -- (3.5%)
State Street Bank and Trust Company (b)........... 2.500% 01/03/2000 $ 663,138 $ 663,000
--------------
TOTAL SHORT TERM INVESTMENT -- (Cost $663,000) 3.5% 663,000
--------------
TOTAL INVESTMENTS -- (Cost $12,037,683) 99.8% 19,053,666
CASH AND OTHER ASSETS LESS LIABILITIES -- 0.2% 44,059
----- --------------
NET ASSETS -- 100.0% $ 19,097,725
===== ==============
</TABLE>
(a) Non-income producing security.
(b) The agreement with State Street Bank and Trust Company, dated 12/31/99,
is fully collateralized by a United States Treasury Note, 4.500%,
09/30/00, with a value of $680,000.
See notes to financial statements.
24
<PAGE> 26
VARIABLE INVESTORS SERIES TRUST
WORLD EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS
AUSTRALIA -- (1.5%)
Foster's Brewing Group Ltd. .............................................. 64,200 $ 184,184
Lend Lease Corporation Ltd. .............................................. 13,400 187,730
--------------
371,914
BRAZIL -- (2.2%)
Embratel Participacoes S.A., ADR ......................................... 8,200 223,450
Tele Norte Leste Participacoes S.A., ADR ................................. 6,700 170,850
Telecomunicacoes Brasileiras S.A., ADR ................................... 700 89,950
Uniao de Bancos Brasileiros S.A., GDR .................................... 2,100 63,262
--------------
547,512
CANADA -- (1.9%)
Bank Nova Scotia ......................................................... 2,000 43,020
BCE, Inc. ................................................................ 400 36,342
Clarica Life Insurance Company ........................................... 6,000 108,071
Laidlaw, Inc. ............................................................ 8,100 42,366
Manulife Financial Corporation (a) ....................................... 3,200 40,901
Petro-Canada ............................................................. 6,300 89,252
Sobeys, Inc. ............................................................. 3,800 52,650
Toronto Dominion Bank Ontario ............................................ 1,855 49,796
--------------
462,398
FINLAND -- (2.5%)
Nokia Oyj ADR ............................................................ 2,305 417,949
Stora Enso Oyj ........................................................... 5,604 97,718
UPM-Kymmene Oyj .......................................................... 2,791 112,461
--------------
628,128
FRANCE -- (5.3%)
Axa ...................................................................... 624 86,996
Banque Nationale de Paris ................................................ 695 64,130
Cap Gemini N.V. .......................................................... 290 73,617
Danone ................................................................... 185 43,608
France Telecom S.A. ...................................................... 1,511 199,853
Lafarge .................................................................. 600 69,870
PSA Peugeot Citroen ...................................................... 462 104,900
Rhone Poulenc S.A. ....................................................... 2,249 130,721
Societe Eurafrance S.A. .................................................. 183 110,238
STMicroelectronics ....................................................... 1,020 157,002
Totalfina S.A., Class B .................................................. 1,161 154,963
Vivendi .................................................................. 1,489 134,470
--------------
1,330,368
GERMANY -- (4.5%)
BASF AG .................................................................. 1,145 58,824
Bayer AG ................................................................. 733 34,704
Deutsche Bank AG (a) ..................................................... 3,570 301,545
Deutsche Telekom AG ...................................................... 3,626 258,242
Karstadt AG (a) .......................................................... 870 34,881
Mannesmann AG ............................................................ 846 204,106
Preussag AG .............................................................. 987 54,982
Thyssen Krupp AG ......................................................... 5,411 164,886
--------------
1,112,170
</TABLE>
See notes to financial statements.
25
<PAGE> 27
VARIABLE INVESTORS SERIES TRUST
WORLD EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS -- (CONTINUED)
HONG KONG -- (0.0%)
Dairy Farm International Holdings Ltd. ................................... 7,200 $ 6,480
--------------
IRELAND -- (0.6%)
Jefferson Smurfit Group Plc .............................................. 50,526 152,692
--------------
ITALY -- (3.0%)
Arnoldo Mondadori Editore SPA ............................................ 11,600 368,085
ENI SPA .................................................................. 36,500 200,755
Tecnost SPA (a) .......................................................... 44,881 169,541
--------------
738,381
JAPAN -- (11.1%)
Asahi Chemical Industry Company Ltd. ..................................... 8,000 41,108
Bank of Yokohama Ltd. .................................................... 16,000 73,759
Fanuc Ltd. ............................................................... 200 25,467
Itochu Corporation (a) ................................................... 7,000 34,873
Kanebo Ltd. (a) .......................................................... 18,000 29,069
Kawasaki Steel Corporation ............................................... 19,000 34,032
Marubeni Corporation ..................................................... 8,000 33,591
Matsushita Communication Industrial Company Ltd. ......................... 2,000 528,531
Nihon Unisys, Ltd. ....................................................... 3,000 103,357
Nippon Telegraph & Telephone Corporation ................................. 19 325,438
Oji Paper Company Ltd. ................................................... 3,000 18,058
Oracle Corporation ....................................................... 2,000 929,823
Sanyo Electric Company Ltd. .............................................. 17,000 69,052
SMC Corporation .......................................................... 1,300 287,687
Sumitomo Chemical Company Ltd. ........................................... 10,000 46,981
Taisho Pharmaceutical Company ............................................ 1,000 29,363
Toshiba Corporation ...................................................... 13,000 99,246
Yamanouchi Pharmaceutical Company Ltd. ................................... 2,000 69,884
--------------
2,779,319
MEXICO -- (3.0%)
Cemex S.A. de C.V., ADR (a) .............................................. 1,400 39,025
Fomento Economico Mexicano S.A. de C.V. .................................. 3,100 137,950
Grupo Financiero Banamex Accival, S.A. de C.V., Series O (a).............. 22,700 91,040
Grupo Financiero Bancomer, S.A. de C.V., Series O (a)..................... 395,000 165,087
Grupo Television S.A., GDR (a) ........................................... 2,700 184,275
Kimberly-Clark de Mexico, S.A. de CV ..................................... 34,800 135,894
--------------
753,271
NETHERLANDS -- (2.7%)
Akzo Nobel N.V. .......................................................... 2,855 143,224
ASM Lithography Holding N.V. (a) ......................................... 1,334 151,742
Heineken N.V. ............................................................ 881 42,972
Koninklijke (Royal) Philips Electronics N.V. ............................. 362 49,229
Orange Fund (a) .......................................................... 3,151 106,835
VNU N.V. ................................................................. 3,245 170,569
--------------
664,571
</TABLE>
See notes to financial statements.
26
<PAGE> 28
VARIABLE INVESTORS SERIES TRUST
WORLD EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS -- (CONTINUED)
SPAIN -- (0.6%)
Corporacion Bancaria de Espana (Argentaria) .............................. 4,800 $ 112,807
Telefonica S.A. (a) ...................................................... 1,785 44,593
--------------
157,400
SWEDEN -- (1.3%)
AstraZeneca Group Plc .................................................... 4,510 190,810
Svenska Handelsbanken AB, Class A (a) .................................... 10,080 126,755
--------------
317,565
SWITZERLAND -- (3.2%)
Edipresse S.A. ........................................................... 600 331,596
Holderbank Financiere Glarus AG .......................................... 50 68,455
Lindt & Spruengli ........................................................ 86 205,238
Logitech International S.A. (a) .......................................... 240 67,826
Nestle S.A. .............................................................. 33 60,454
Roche Holdings AG ........................................................ 5 59,348
--------------
792,917
TURKEY -- (0.4%)
Aksigorta AS ............................................................. 1,533,400 93,293
--------------
UNITED KINGDOM -- (6.5%)
Allied Zurich AG ......................................................... 3,360 39,620
Anglo American Plc ....................................................... 1,716 110,404
BP Amoco Plc ............................................................. 21,224 214,242
British Aerospace Plc .................................................... 4,000 26,297
British Telecommunications Plc ........................................... 2,817 68,255
COLT Telecom Group Plc (a) ............................................... 1,925 99,378
Compass Group Plc ........................................................ 22,600 310,299
HSBC Holdings Plc......................................................... 27,525 384,601
Invensys Plc ............................................................. 12,313 65,099
Pearson Plc .............................................................. 2,425 78,930
Shell Transport & Trading Company ........................................ 10,830 90,005
Vodafone Group Plc ....................................................... 29,340 146,250
--------------
1,633,380
UNITED STATES -- (47.3%)
Advanced Digital Information Corporation (a) ............................. 4,800 233,400
Advanced Energy Industries, Inc. (a) ..................................... 2,500 123,125
Alkermes, Inc. (a) ....................................................... 2,800 137,550
Apria Healthcare Group, Inc. (a) ......................................... 4,100 73,544
Astec Industries, Inc. (a) ............................................... 4,500 84,656
Citadel Communications Corporation (a) ................................... 3,100 201,112
Clarify, Inc. (a) ........................................................ 3,400 428,400
CMP Group, Inc. .......................................................... 5,300 146,081
Cymer, Inc. (a) .......................................................... 3,800 174,800
</TABLE>
See notes to financial statements.
27
<PAGE> 29
VARIABLE INVESTORS SERIES TRUST
WORLD EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS -- (CONTINUED)
UNITED STATES -- (CONTINUED)
Davox Corporation (a) .................................................... 7,700 $ 151,113
Diamond Technology Partners, Inc., Class A (a) ........................... 4,300 369,531
Documentum, Inc. (a) ..................................................... 4,600 275,425
Dycom Industries, Inc. (a) ............................................... 3,900 171,844
Eagle USA Airfreight, Inc. (a) ........................................... 6,150 265,219
Engage Technologies, Inc. (a) ............................................ 4,000 240,000
Entercom Communications Corporation (a) .................................. 2,900 191,400
Fatbrain.com, Inc. (a) ................................................... 5,000 125,313
Finisar Corporation (a) .................................................. 400 35,950
Genome Therapeutics Corporation (a) ...................................... 4,000 64,500
Geon Company ............................................................. 5,600 182,000
Georgia Gulf Corporation ................................................. 7,800 237,412
Great Plains Software, Inc. (a) .......................................... 2,700 201,825
Interdigital Commerce Corporation (a) .................................... 7,800 585,000
ITC DeltaCom, Inc. (a) ................................................... 6,200 171,275
ITT Educational Services, Inc. (a) ....................................... 2,800 43,225
Jones Apparel Group, Inc. (a) ............................................ 9 244
Kemet Corporation (a) .................................................... 7,500 337,969
Labor Ready, Inc. (a) .................................................... 12,600 152,775
Lamar Advertising Company, Class A (a) ................................... 4,600 278,587
Lattice Semiconductor Corporation (a) .................................... 2,800 131,950
LifePoint Hospitals, Inc. (a) ............................................ 12,800 151,200
MasTec, Inc. (a) ......................................................... 4,000 178,000
Maxtor Corporation (a) ................................................... 12,900 93,525
Media 100, Inc. (a) ...................................................... 8,600 227,362
Methode Electronics, Inc., Class A ....................................... 5,200 167,050
Modis Professional Services, Inc. (a) .................................... 11,900 169,575
Natural Microsystems Corporation (a) ..................................... 4,500 210,656
Navigant Consulting, Inc. (a) ............................................ 8,100 88,088
Netegrity, Inc. (a) ...................................................... 4,300 244,831
Newfield Exploration Company (a) ......................................... 5,500 147,125
Ondisplay, Inc. (a) ...................................................... 800 72,700
Oshkosh Truck Corporation ................................................ 6,300 184,669
PMC-Sierra, Inc. (a) ..................................................... 1,500 240,469
Preview Systems, Inc. (a) ................................................ 300 19,463
Primus Telecommunications Group, Inc. (a) ................................ 4,800 183,600
PSINet, Inc. (a) ......................................................... 849 52,426
Renal Care Group, Inc. (a) ............................................... 5,000 116,875
Retek, Inc. (a) .......................................................... 1,400 105,350
Roper Industries, Inc. ................................................... 6,200 234,437
Russ Berrie & Company, Inc. .............................................. 1,600 42,000
Silicon Image, Inc. (a) .................................................. 1,400 98,088
Silknet Software, Inc. (a) ............................................... 3,600 596,700
Spanish Broadcasting System, Inc., Class A (a) ........................... 5,400 217,350
Spyglass, Inc. (a) ....................................................... 6,300 238,908
</TABLE>
See notes to financial statements.
28
<PAGE> 30
VARIABLE INVESTORS SERIES TRUST
WORLD EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C> <C>
COMMON STOCKS -- (CONTINUED)
UNITED STATES -- (CONTINUED)
Standard Pacific Corporation ............................................. 12,900 $ 141,900
StarTek, Inc. (a) ........................................................ 5,000 181,250
Three-Five Systems, Inc. (a) ............................................. 6,667 273,333
Toll Brothers, Inc. (a) .................................................. 8,100 150,863
TSI International Software Ltd. (a) ...................................... 3,300 186,862
Universal Electronics, Inc. (a) .......................................... 3,700 170,200
US LEC Corporation, Class A (a) .......................................... 6,500 209,625
Viatel, Inc. (a) ......................................................... 4,900 262,762
Vitria Technology, Inc. (a) .............................................. 600 140,400
Whole Foods Market, Inc. (a) ............................................. 4,000 185,500
--------------
11,798,367
TOTAL COMMON STOCKS -- (Cost $15,911,922) 97.6% 24,340,126
--------------
PREFERRED STOCKS
BRAZIL -- (1.4%)
Embraer - Empresa Brasileira de Aeronautica S.A. ......................... 79,000 356,407
--------------
GERMANY -- (0.7%)
Fresenius AG ............................................................. 584 107,069
SAP AG ................................................................... 110 66,264
--------------
173,333
TOTAL PREFERRED STOCKS -- (Cost $385,177) 2.1% 529,740
--------------
WARRANTS
MEXICO -- (0.0%)
Cemex S.A. (a) ........................................................... 87 359
--------------
TOTAL WARRANTS -- (Cost $152) 0.0% 359
--------------
</TABLE>
<TABLE>
<CAPTION>
INTEREST MATURITY MATURITY
RATE DATE AMOUNT
---- ---- ------
<S> <C> <C> <C> <C> <C>
SHORT TERM INVESTMENT
UNITED STATES -- (0.5%)
State Street Bank and Trust Company (b).... 3.250% 01/03/2000 $ 122,033 122,000
--------------
TOTAL SHORT TERM INVESTMENT -- (Cost $122,000) 0.5% 122,000
--------------
TOTAL INVESTMENTS -- (Cost $16,419,251) 100.2% 24,992,225
LIABILITIES LESS CASH AND OTHER ASSETS -- (0.2)% (46,577)
----- --------------
NET ASSETS -- 100.0% $ 24,945,648
===== ==============
</TABLE>
(a) Non-income producing security.
(b) The agreement with State Street Bank and Trust Company, dated 12/31/99,
is fully collateralized by a Federal Home Loan Bank Bond, 6.315%,
08/24/01, with a value of $127,344.
ADR American Depository Receipts
GDR Global Depository Receipts
See notes to financial statements.
29
<PAGE> 31
VARIABLE INVESTORS SERIES TRUST
WORLD EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
ANALYSIS OF INDUSTRY CLASSIFICATIONS
December 31, 1999
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS VALUE
-------- ---------- -----
<S> <C> <C>
Advertising.................................... 1.1% $ 278,588
Aerospace & Defense............................ 1.5 382,705
Apparel & Textiles............................. 0.0 244
Automobiles.................................... 1.1 289,569
Banks.......................................... 5.9 1,475,803
Broadcasting/Publishing........................ 2.4 593,025
Building Materials & Construction.............. 1.9 470,471
Business Services.............................. 4.3 1,075,868
Chemicals...................................... 3.0 744,253
Communication Equipment........................ 0.1 35,950
Computers & Business Equipment................. 1.2 295,189
Computer Services.............................. 3.1 770,001
Computer Software.............................. 9.2 2,292,328
Consulting Services............................ 0.4 88,088
Consumer Products.............................. 0.2 42,000
Diversified.................................... 0.5 133,564
Drugs.......................................... 1.2 289,316
Drugs & Health Care............................ 3.4 841,548
Educational Services........................... 0.2 43,225
Electronic Components.......................... 2.2 546,221
Electronics.................................... 5.2 1,290,632
Engineering & Construction..................... 0.7 171,844
Financial Services............................. 0.8 187,730
Food & Beverages............................... 2.7 674,405
Industrial Products & Equipment................ 0.5 123,125
Insurance...................................... 1.5 368,881
Investment Companies........................... 0.9 217,073
Machinery & Equipment.......................... 2.3 576,450
Manufacturing.................................. 1.2 289,420
Metals & Mining................................ 0.4 110,404
Non-Ferrous Metals............................. 0.7 164,886
Oil & Gas...................................... 3.6 896,342
Paper and Forest Products...................... 2.1 516,823
Publishing..................................... 3.8 949,180
Radio/Television............................... 0.8 201,113
Retail-Grocery................................. 0.9 238,150
Retail-Specialty............................... 0.5 125,313
Retail-Trade................................... 0.2 41,360
Semiconductors................................. 0.6 157,001
Software-Client/Server......................... 1.4 348,125
Software-Internet.............................. 4.9 1,225,812
Steel.......................................... 0.1 34,032
Systems Integrator............................. 1.5 369,531
Telecommunication Equipment.................... 7.5 1,893,248
Telecommunications............................. 10.6 2,659,403
Textiles....................................... 0.1 29,069
Transportation................................. 0.2 42,366
Utilities...................................... 1.1 280,551
Repurchase Agreement........................... 0.5 122,000
------- ------------
TOTAL....................................... 100.2% $ 24,992,225
======= ============
</TABLE>
See notes to financial statements.
30
<PAGE> 32
VARIABLE INVESTORS SERIES TRUST
GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS
BANKS -- (3.1%)
Chase Manhattan Corporation .............................................. 14,900 $ 1,157,544
Fifth Third Bancorp ...................................................... 11,725 860,322
Zions Bancorporation ..................................................... 7,500 443,906
--------------
2,461,772
BROADCASTING -- (3.6%)
CBS Corporation (a) ...................................................... 13,000 831,187
Clear Channel Communications (a) ......................................... 13,000 1,160,250
Viacom, Inc. (a) ......................................................... 14,500 876,344
--------------
2,867,781
COMPUTERS & BUSINESS EQUIPMENT -- (4.0%)
Dell Computer Corporation (a) ............................................ 44,500 2,269,500
International Business Machines Corporation .............................. 8,500 918,000
--------------
3,187,500
COMPUTER RELATED -- (13.9%)
Cisco Systems, Inc. (a) .................................................. 36,000 3,856,500
EMC Corporation (a) ...................................................... 35,000 3,823,750
Sun Microsystems, Inc. (a) ............................................... 42,000 3,252,375
--------------
10,932,625
COMPUTER SOFTWARE -- (6.7%)
Adobe Systems, Inc. ...................................................... 11,400 766,650
BMC Software, Inc. (a) ................................................... 17,000 1,358,937
Microsoft Corporation (a) ................................................ 27,000 3,152,250
--------------
5,277,837
DIVERSIFIED MANUFACTURING -- (3.4%)
Honeywell International, Inc. ............................................ 19,000 1,096,063
Tyco International Ltd. .................................................. 41,000 1,593,875
--------------
2,689,938
DIVERSIFIED RETAIL -- (4.1%)
Costco Companies, Inc. (a) ............................................... 4,000 365,000
Wal-Mart Stores, Inc. .................................................... 41,000 2,834,125
--------------
3,199,125
DRUGS -- (6.2%)
Merck & Company, Inc. .................................................... 7,000 469,438
Pfizer, Inc. ............................................................. 51,500 1,670,531
Schering-Plough Corporation .............................................. 30,500 1,286,719
Warner Lambert Company ................................................... 17,500 1,433,906
--------------
4,860,594
ELECTRIC POWER -- (1.3%)
AES Corporation (a) ...................................................... 13,900 1,039,025
--------------
ELECTRICAL EQUIPMENT -- (1.6%)
General Electric Company ................................................. 8,000 1,238,000
--------------
</TABLE>
See notes to financial statements.
31
<PAGE> 33
VARIABLE INVESTORS SERIES TRUST
GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS -- (CONTINUED)
ELECTRONICS -- (2.4%)
Intel Corporation ........................................................ 23,000 $ 1,893,188
--------------
FINANCIAL SERVICES -- (5.6)
American Express Company ................................................. 4,700 781,375
Citigroup, Inc. .......................................................... 27,000 1,500,187
Donaldson, Lufkin & Jenrette, Inc. ....................................... 14,300 691,763
Federal Home Loan Mortgage Corporation ................................... 14,000 658,875
Federal National Mortgage Association .................................... 13,000 811,687
--------------
4,443,887
INSURANCE -- (2.6%)
American International Group, Inc. ....................................... 19,015 2,055,997
--------------
INTERNET -- (3.9%)
America Online, Inc. (a) ................................................. 41,000 3,092,937
--------------
MANUFACTURING -- (0.7%)
United Technologies Corporation .......................................... 8,500 552,500
--------------
MEDIA -- (2.9%)
Time Warner, Inc. ........................................................ 31,500 2,281,781
--------------
MEDICAL PRODUCTS & SUPPLIES -- (1.2%)
Medtronic, Inc. .......................................................... 26,000 947,375
--------------
MEDICAL SUPPLIES & SERVICES -- (2.1%)
Cardinal Health, Inc. .................................................... 12,500 598,438
VISX, Inc. (a) ........................................................... 20,500 1,060,875
--------------
1,659,313
PRINTING & PUBLISHING -- (3.4%)
Omnicom Group ............................................................ 26,500 2,650,000
--------------
RETAIL -- (3.5%)
Dayton Hudson Corporation ................................................ 7,500 550,781
Gap, Inc. ................................................................ 27,000 1,242,000
Safeway, Inc. (a) ........................................................ 27,000 960,188
--------------
2,752,969
RETAIL-SPECIALTY -- (4.1%)
Bed Bath & Beyond, Inc. (a) .............................................. 11,500 399,625
Home Depot, Inc. ......................................................... 18,000 1,234,125
Staples, Inc. (a) ........................................................ 39,000 809,250
Tandy Corporation ........................................................ 16,300 801,756
--------------
3,244,756
</TABLE>
See notes to financial statements.
32
<PAGE> 34
VARIABLE INVESTORS SERIES TRUST
GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C> <C>
COMMON STOCKS -- (CONTINUED)
TELECOMMUNICATION EQUIPMENT -- (8.6%)
QUALCOMM, Inc. ........................................................... 24,000 $ 4,227,000
Lucent Technologies, Inc. ................................................ 18,500 1,384,031
Scientific-Atlanta, Inc. ................................................. 4,500 250,312
Tellabs, Inc. (a) ........................................................ 14,500 930,719
--------------
6,792,062
TELECOMMUNICATIONS -- (1.7%)
MCI WorldCom, Inc. (a) ................................................... 24,750 1,313,297
--------------
TOTAL COMMON STOCKS -- (Cost $39,114,461) 90.6% 71,434,259
--------------
</TABLE>
<TABLE>
<CAPTION>
INTEREST MATURITY MATURITY
RATE DATE AMOUNT
---- ---- ------
<S> <C> <C> <C> <C> <C>
SHORT TERM INVESTMENT
REPURCHASE AGREEMENT -- (4.8%)
State Street Bank and Trust Company (b).......... 2.500% 01/03/2000 $ 3,758,783 3,758,000
--------------
TOTAL SHORT TERM INVESTMENT -- (Cost $3,758,000) 4.8% 3,758,000
--------------
TOTAL INVESTMENTS -- (Cost $42,872,461) 95.4% 75,192,259
CASH AND OTHER ASSETS LESS LIABILITIES -- 4.6% 3,623,064
----- --------------
NET ASSETS -- 100.0% $ 78,815,323
===== ==============
</TABLE>
(a) Non-income producing security.
(b) The agreement with State Street Bank and Trust Company, dated 12/31/99,
is fully collateralized by a United States Treasury Note, 4.500%,
09/30/00, with a value of $3,835,000.
See notes to financial statements.
33
<PAGE> 35
VARIABLE INVESTORS SERIES TRUST
MATRIX EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS
AEROSPACE & DEFENSE -- (0.4%)
Northrop Grumman Corporation ............................................. 1,500 $ 81,094
--------------
AIRLINES -- (0.0%)
US Airways Group, Inc. (a) ............................................... 100 3,206
--------------
ALCOHOL -- (0.7%)
Anheuser-Busch Companies, Inc. ........................................... 2,300 163,012
--------------
APPAREL -- (0.0%)
Intimate Brands, Inc. .................................................... 155 6,684
--------------
AUTOMOTIVE -- (1.2%)
Ford Motor Company ....................................................... 4,300 229,781
PACCAR, Inc. ............................................................. 900 39,881
--------------
269,662
BANKS -- (6.5%)
AmSouth Bancorporation ................................................... 4,300 83,044
BankAmerica Corporation .................................................. 1,600 80,300
Chase Manhattan Corporation .............................................. 3,700 287,444
Citigroup, Inc. .......................................................... 6,150 341,709
FleetBoston Financial Corporation ........................................ 6,600 229,762
J.P. Morgan & Company, Inc. .............................................. 1,600 202,600
Pacific Century Financial Corporation .................................... 300 5,606
PNC Bank Corporation ..................................................... 3,000 133,500
UnionBanCal Corporation .................................................. 1,800 70,988
Wells Fargo & Company .................................................... 500 20,219
--------------
1,455,172
CHEMICALS & PLASTICS -- (0.5%)
FMC Corporation (a) ...................................................... 1,000 57,312
Octel Corporation (a) .................................................... 600 6,225
Solutia, Inc. ............................................................ 3,300 50,944
--------------
114,481
COMPUTERS & BUSINESS EQUIPMENT -- (8.5%)
Apple Computer, Inc. (a) ................................................. 1,700 174,781
Cisco Systems, Inc. (a) .................................................. 8,300 889,138
Dell Computer Corporation (a) ............................................ 3,200 163,200
EMC Corporation (a) ...................................................... 2,400 262,200
Gateway 2000, Inc. (a) ................................................... 900 64,856
Hewlett-Packard Company .................................................. 500 56,969
Sun Microsystems, Inc. (a) ............................................... 3,600 278,775
--------------
1,889,919
COMPUTER SERVICES -- (1.4%)
First Data Corporation ................................................... 1,900 93,694
Viad Corporation ......................................................... 7,600 211,850
--------------
305,544
</TABLE>
See notes to financial statements.
34
<PAGE> 36
VARIABLE INVESTORS SERIES TRUST
MATRIX EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS -- (CONTINUED)
COMPUTER SOFTWARE -- (8.3%)
Computer Associates International, Inc. .................................. 1,800 $ 125,887
International Business Machines Corporation .............................. 2,500 270,000
Microsoft Corporation (a) ................................................ 9,800 1,144,150
Oracle Corporation (a) ................................................... 2,700 302,569
SABRE Group Holdings, Inc., Class A (a) .................................. 100 5,125
--------------
1,847,731
DRUGS -- (7.1%)
Allergan, Inc. ........................................................... 1,900 94,525
Amgen, Inc. (a) .......................................................... 5,400 324,338
Biogen, Inc. (a) ......................................................... 2,700 228,150
Bristol-Myers Squibb Company ............................................. 5,200 333,775
Eli Lilly & Company ...................................................... 700 46,550
Merck & Company, Inc. .................................................... 4,100 274,956
Nu Skin Enterprises, Inc. (a) ............................................ 400 3,625
Pfizer, Inc. ............................................................. 5,200 168,675
Schering-Plough Corporation .............................................. 1,600 67,500
Sigma-Aldrich Corporation ................................................ 1,200 36,075
--------------
1,578,169
ELECTRIC POWER -- (0.4%)
Cummins Engine, Inc. ..................................................... 1,800 86,963
--------------
ELECTRICAL UTILITIES -- (2.0%)
GPU, Inc. ................................................................ 3,300 98,794
PECO Energy Company ...................................................... 3,100 107,725
PP&L Resources, Inc. ..................................................... 4,000 91,500
Public Service Enterprise Group, Inc. .................................... 3,100 107,918
UtiliCorp United, Inc. ................................................... 1,700 33,044
--------------
438,981
ENERGY RESERVES -- (5.3%)
Apache Corporation ....................................................... 2,700 99,731
Burlington Resources, Inc. ............................................... 3,000 99,188
Chevron Corporation ...................................................... 2,400 207,900
Exxon Mobil Corporation (a) .............................................. 6,692 539,124
Phillips Petroleum Company ............................................... 2,400 112,800
Tosco Corporation ........................................................ 4,400 119,625
--------------
1,178,368
FINANCIAL SERVICES -- (6.1%)
American Express Company ................................................. 100 16,625
AMRESCO, Inc. (a) ........................................................ 800 1,125
Federal National Mortgage Association .................................... 5,200 324,675
General Electric Company ................................................. 6,000 928,500
Meditrust Companies ...................................................... 600 3,300
The PMI Group, Inc. ...................................................... 1,650 80,541
--------------
1,354,766
</TABLE>
See notes to financial statements.
35
<PAGE> 37
VARIABLE INVESTORS SERIES TRUST
MATRIX EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS -- (CONTINUED)
FOOD & BEVERAGES -- (4.2%)
Coca-Cola Company ........................................................ 2,900 $ 168,925
Dean Foods Company ....................................................... 4,600 182,850
General Mills, Inc. ...................................................... 3,800 135,850
IBP, Inc. ................................................................ 2,600 46,800
Interstate Bakeries Corporation .......................................... 2,100 38,063
Quaker Oats Company ...................................................... 2,300 150,937
SUPERVALU, INC. .......................................................... 10,500 210,000
--------------
933,425
HIGH TECHNOLOGY MANUFACTURING -- (4.2%)
Johnson Controls, Inc. ................................................... 1,300 73,938
Lucent Technologies, Inc. ................................................ 5,700 426,431
Motorola, Inc. ........................................................... 1,100 161,975
Tellabs, Inc. (a) ........................................................ 4,100 263,169
--------------
925,513
HOTELS & RESTAURANTS -- (0.9%)
Darden Restaurants, Inc. ................................................. 2,700 48,938
Tricon Global Restaurants, Inc. (a) ...................................... 3,800 146,775
--------------
195,713
HOUSEHOLD PRODUCTS -- (1.1%)
Fortune Brands, Inc. ..................................................... 2,400 79,350
Procter & Gamble Company ................................................. 1,600 175,300
--------------
254,650
INSURANCE -- (1.8%)
American International Group, Inc. ....................................... 1,925 208,141
Loews Corporation ........................................................ 3,200 194,200
--------------
402,341
INTERNET -- (2.6%)
America Online, Inc. (a) ................................................. 4,800 362,100
Yahoo, Inc. (a) .......................................................... 500 216,344
--------------
578,444
LEISURE & ENTERTAINMENT -- (1.3%)
Carnival Corporation ..................................................... 6,200 296,437
--------------
LIFE INSURANCE -- (0.7%)
Conseco, Inc. ............................................................ 8,200 146,575
--------------
MANUFACTURING -- (0.6%)
United Technologies Corporation .......................................... 1,500 97,500
York International Corporation ........................................... 1,000 27,438
--------------
124,938
MEDIA -- (1.2%)
Time Warner, Inc. ........................................................ 500 36,219
Tribune Company .......................................................... 4,200 231,262
--------------
267,481
</TABLE>
See notes to financial statements.
36
<PAGE> 38
VARIABLE INVESTORS SERIES TRUST
MATRIX EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS -- (CONTINUED)
MEDICAL PROVIDER SERVICES -- (1.0%)
United HealthCare Corporation ............................................ 4,100 $ 217,812
--------------
MEDICAL SUPPLIES & SERVICES -- (1.4%)
Johnson & Johnson ........................................................ 3,400 316,625
--------------
METALS & MINING -- (0.8%)
Alcoa, Inc. .............................................................. 2,300 190,900
--------------
OIL REFINING -- (0.5%)
Coastal Corporation ...................................................... 2,900 102,769
--------------
OIL SERVICES -- (0.3%)
McDermott International, Inc. ............................................ 1,700 15,406
Tidewater, Inc. .......................................................... 1,300 46,800
--------------
62,206
PAPER AND FOREST PRODUCTS -- (1.3%)
Boise Cascade Corporation ................................................ 2,800 113,400
Georgia-Pacific Group .................................................... 3,000 152,250
Louisiana-Pacific Corporation ............................................ 2,500 35,625
--------------
301,275
RAILROADS -- (1.0%)
Burlington Northern Santa Fe Corporation ................................. 4,300 104,275
Kansas City Southern Industries, Inc. .................................... 1,700 126,863
--------------
231,138
RETAIL-APPAREL -- (0.8%)
TJX Companies, Inc. ...................................................... 8,200 167,588
--------------
RETAIL-DIVERSIFIED -- (4.7%)
Federated Department Stores, Inc. (a) .................................... 4,900 247,756
May Department Stores Company ............................................ 3,600 116,100
Wal-Mart Stores, Inc. .................................................... 10,000 691,250
--------------
1,055,106
RETAIL-FOODS -- (0.6%)
Kroger Company (a) ....................................................... 6,600 124,575
--------------
RETAIL-SPECIALTY -- (2.2%)
Best Buy Company, Inc. (a) ............................................... 1,100 55,206
Home Depot, Inc. ......................................................... 6,300 431,944
Pep Boys - Manny, Moe & Jack ............................................. 700 6,387
--------------
493,537
SECURITIES/ASSET MANAGEMENT -- (2.4%)
Lehman Brothers Holdings, Inc. ........................................... 1,800 152,437
Merrill Lynch & Company, Inc. ............................................ 800 66,800
Morgan Stanley Dean Witter & Company ..................................... 1,400 199,850
Paine Webber Group, Inc. ................................................. 3,100 120,319
--------------
539,406
</TABLE>
See notes to financial statements.
37
<PAGE> 39
VARIABLE INVESTORS SERIES TRUST
MATRIX EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C> <C>
COMMON STOCKS -- (CONTINUED)
SEMICONDUCTORS -- (5.5%)
Altera Corporation (a) ................................................... 4,400 $ 218,075
Applied Materials, Inc. (a) .............................................. 2,900 367,394
Intel Corporation ........................................................ 6,000 493,875
Texas Instruments, Inc. .................................................. 1,400 135,625
--------------
1,214,969
TELECOMMUNICATION EQUIPMENT -- (1.9%)
Nortel Networks Corporation .............................................. 2,100 212,100
QUALCOMM, Inc. ........................................................... 1,200 211,350
--------------
423,450
TELECOMMUNICATIONS -- (8.2%)
AT&T Corporation ......................................................... 5,350 271,513
Bell Atlantic Corporation ................................................ 4,600 283,187
BellSouth Corporation .................................................... 6,000 280,875
GTE Corporation .......................................................... 500 35,281
MCI WorldCom, Inc. (a) ................................................... 7,500 397,969
SBC Communications, Inc. ................................................. 7,511 366,161
U.S. West, Inc. .......................................................... 2,700 194,400
--------------
1,829,386
THRIFTS -- (0.3%)
Astoria Financial Corporation ............................................ 100 3,044
Dime Bancorp, Inc. ....................................................... 300 4,537
Golden West Financial Corporation ........................................ 1,700 56,950
--------------
64,531
TOBACCO -- (0.2%)
Philip Morris Companies, Inc. ............................................ 1,900 44,056
--------------
TOTAL COMMON STOCKS -- (Cost $19,325,612) 100.1% 22,278,598
--------------
</TABLE>
<TABLE>
<CAPTION>
INTEREST
RATE
---- ------
<S> <C> <C> <C> <C>
MUTUAL FUNDS -- (1.9%)
Dreyfus Cash Management Plus............... 5.59% (b) 421,495 421,495
--------------
TOTAL MUTUAL FUNDS -- (Cost $421,495) 1.9% 421,495
--------------
TOTAL INVESTMENTS -- (Cost $19,747,107) 102.0% 22,700,093
LIABILITIES LESS CASH AND OTHER ASSETS -- (2.0)% (454,068)
----- --------------
NET ASSETS -- 100.0% $ 22,246,025
===== ==============
</TABLE>
(a) Non-income producing security.
(b) Interest rate shown is the 7 day yield as of December 31, 1999.
See notes to financial statements.
38
<PAGE> 40
VARIABLE INVESTORS SERIES TRUST
GROWTH AND INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS
AEROSPACE & DEFENSE -- (0.9%)
Honeywell International, Inc. ............................................ 4,500 $ 259,594
--------------
BANKS -- (8.3%)
AmSouth Bancorporation ................................................... 8,993 173,677
Chase Manhattan Corporation .............................................. 1,800 139,838
Comerica, Inc. ........................................................... 14,400 672,300
Compass Bancshares, Inc. ................................................. 9,700 216,431
Golden West Financial Corporation ........................................ 6,400 214,400
SunTrust Banks, Inc. ..................................................... 2,600 178,913
UnionBanCal Corporation .................................................. 5,000 197,187
Wachovia Corporation ..................................................... 4,800 326,400
Wells Fargo & Company .................................................... 3,300 133,444
--------------
2,252,590
BUILDING & BUILDING MATERIAL -- (1.3%)
USG Corporation .......................................................... 7,750 365,219
--------------
BUSINESS SERVICES -- (0.6%)
Reynolds & Reynolds Company, Class A ..................................... 7,200 162,000
--------------
CAPITAL EQUIPMENT -- (7.8%)
American Standard Companies, Inc. (a) .................................... 9,200 422,050
Caterpillar, Inc. ........................................................ 4,200 197,663
Emerson Electric Company ................................................. 2,600 149,175
Ingersoll-Rand Company ................................................... 9,600 528,600
ITT Industries, Inc. ..................................................... 6,800 227,375
Navistar International Corporation (a) ................................... 6,900 326,887
Parker-Hannifin Corporation .............................................. 5,300 271,956
--------------
2,123,706
CHEMICALS -- (0.8%)
Ferro Corporation ........................................................ 9,600 211,200
--------------
COMPUTERS & BUSINESS EQUIPMENT -- (1.3%)
Hewlett-Packard Company .................................................. 3,100 353,206
--------------
COMPUTER SOFTWARE -- (2.7%)
Unisys Corporation (a) ................................................... 23,400 747,338
--------------
CONGLOMERATES -- (1.1%)
Harsco Corporation ....................................................... 9,300 295,275
--------------
CONSUMER DURABLES -- (2.7%)
Ford Motor Company ....................................................... 10,800 577,125
Meritor Automotive, Inc. ................................................. 8,200 158,875
--------------
736,000
CONSUMER NON-DURABLES -- (0.6%)
Borg-Warner Automotive, Inc. ............................................. 3,800 153,900
--------------
</TABLE>
See notes to financial statements.
39
<PAGE> 41
VARIABLE INVESTORS SERIES TRUST
GROWTH AND INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS -- (CONTINUED)
DIVERSIFIED MANUFACTURING -- (0.9%)
Tyco International Ltd. .................................................. 6,500 $ 252,688
--------------
ELECTRIC UTILITIES -- (1.6%)
Allegheny Energy, Inc. ................................................... 6,700 180,481
American Electric Power Company, Inc. .................................... 3,300 106,013
Illinova Corporation ..................................................... 4,600 159,850
--------------
446,344
FINANCIAL SERVICES -- (12.3%)
American General Corporation ............................................. 3,800 288,325
Associates First Capital Corporation, Class A ............................ 11,800 323,762
Countrywide Credit Industries, Inc. ...................................... 9,500 239,875
Federal National Mortgage Association .................................... 5,200 324,675
Household International, Inc. ............................................ 7,300 271,925
Labranche & Company, Inc. (a) ............................................ 7,400 94,350
Lehman Brothers Holdings, Inc. ........................................... 7,300 618,219
MBIA, Inc. ............................................................... 3,400 179,562
MGIC Investment Corporation .............................................. 4,100 246,769
Terra Nova (Bermuda) Holdings, Ltd., Class A ............................. 9,800 294,000
The PMI Group, Inc. ...................................................... 5,700 278,231
XL Capital Ltd. .......................................................... 3,300 171,188
--------------
3,330,881
FOOD & BEVERAGES -- (4.0%)
Anheuser-Busch Companies, Inc. ........................................... 1,300 92,137
General Mills, Inc. ...................................................... 11,200 400,400
Hershey Foods Corporation ................................................ 3,500 166,250
Keebler Foods Company (a) ................................................ 15,200 427,500
--------------
1,086,287
HEALTH CARE -- (3.2%)
Baxter International, Inc. ............................................... 4,400 276,375
Becton, Dickinson & Company .............................................. 11,600 310,300
Trigon Healthcare, Inc. (a) .............................................. 9,150 269,925
--------------
856,600
INDUSTRIAL MANUFACTURING & PROCESSING -- (3.3%)
Eaton Corporation ........................................................ 2,800 203,350
Johnson Controls, Inc. ................................................... 3,500 199,063
Minnesota Mining & Manufacturing Company ................................. 5,100 499,162
--------------
901,575
METALS & MINING -- (2.0%)
Alcoa, Inc. .............................................................. 6,448 535,184
--------------
OFFICE EQUIPMENT -- (0.7%)
Pitney Bowes, Inc. ....................................................... 3,800 183,588
--------------
</TABLE>
See notes to financial statements.
40
<PAGE> 42
VARIABLE INVESTORS SERIES TRUST
GROWTH AND INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C> <C>
COMMON STOCKS -- (CONTINUED)
OIL & GAS -- (11.9%)
Amerada Hess Corporation ................................................. 6,800 $ 385,900
BP Amoco Plc ADR ......................................................... 15,404 913,650
Devon Energy Corporation ................................................. 7,800 256,425
Exxon Mobil Corporation .................................................. 8,900 717,006
Royal Dutch Petroleum Company ADR ........................................ 5,600 338,450
Total S.A. ADR ........................................................... 6,700 463,975
Union Pacific Resources Group, Inc. ...................................... 11,700 149,175
--------------
3,224,581
OIL SERVICES -- (1.7%)
Pride International, Inc. (a) ............................................ 11,900 174,038
R & B Falcon Corporation (a) ............................................. 21,200 280,900
--------------
454,938
PHARMACEUTICALS -- (3.8%)
American Home Products Corporation ....................................... 4,200 165,637
Aventis S.A. ADR.......................................................... 4,750 270,156
Eli Lilly & Company ...................................................... 6,200 412,300
Pharmacia & Upjohn, Inc. ................................................. 3,800 171,000
--------------
1,019,093
PRINTING & PUBLISHING -- (1.3%)
The New York Times Company ............................................... 7,000 343,875
--------------
RETAIL -- (8.5%)
Federated Department Stores, Inc. (a) .................................... 7,650 386,803
Gap, Inc. ................................................................ 2,300 105,800
May Department Stores Company ............................................ 15,300 493,425
Payless Shoesource, Inc. (a) ............................................. 2,285 107,395
Ross Stores, Inc. ........................................................ 21,200 380,275
Safeway, Inc. (a) ........................................................ 6,200 220,487
TJX Companies, Inc. ...................................................... 16,100 329,044
Toys "R" Us, Inc. (a) .................................................... 20,400 291,975
--------------
2,315,204
TELECOMMUNICATIONS -- (6.5%)
AT&T Corporation ......................................................... 7,700 390,775
Bell Atlantic Corporation ................................................ 10,980 675,956
SBC Communications, Inc. ................................................. 14,112 687,960
--------------
1,754,691
TRANSPORTATION -- (0.4%)
Burlington Northern Santa Fe Corporation ................................. 4,900 118,825
--------------
TOTAL COMMON STOCKS -- (Cost $23,087,767) 90.2% 24,484,382
--------------
CONVERTIBLE PREFERRED STOCKS
REAL ESTATE -- (0.5%)
Equity Residential Properties Trust, Series G, 7.250%..................... 6,400 126,400
--------------
TOTAL CONVERTIBLE PREFERRED STOCKS -- (Cost $161,308) 0.5% 126,400
--------------
</TABLE>
See notes to financial statements.
41
<PAGE> 43
VARIABLE INVESTORS SERIES TRUST
GROWTH AND INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
-CONTINUED-
<TABLE>
<CAPTION>
INTEREST MATURITY MATURITY
RATE DATE AMOUNT VALUE
---- ---- ------ -----
<S> <C> <C> <C> <C> <C>
SHORT TERM INVESTMENT
REPURCHASE AGREEMENT -- (9.5%)
State Street Bank and Trust Company (b).... 2.750% 01/03/2000 $ 2,578,591 $ 2,578,000
--------------
TOTAL SHORT TERM INVESTMENT -- (Cost $2,578,000) 9.5% 2,578,000
--------------
TOTAL INVESTMENTS -- (Cost $25,827,075) 100.2% 27,188,782
LIABILITIES LESS CASH AND OTHER ASSETS -- (0.2)% (56,353)
----- --------------
NET ASSETS -- 100.0% $ 27,132,429
===== ==============
</TABLE>
(a) Non-income producing security.
(b) The agreement with State Street Bank and Trust Company, dated 12/31/99,
is fully collateralized by a United States Treasury Bond, 8.875%,
12/15/19, with a value of $2,633,881.
ADR American Depository Receipts
See notes to financial statements.
42
<PAGE> 44
VARIABLE INVESTORS SERIES TRUST
MULTIPLE STRATEGIES PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS
BANKS -- (3.1%)
Chase Manhattan Corporation .............................................. 10,200 $ 792,412
Fifth Third Bancorp ...................................................... 6,760 496,015
Zions Bancorporation ..................................................... 4,300 254,506
--------------
1,542,933
BROADCASTING -- (3.5%)
CBS Corporation (a) ...................................................... 9,000 575,438
Clear Channel Communications (a) ......................................... 7,900 705,075
Viacom, Inc. (a) ......................................................... 8,300 501,631
--------------
1,782,144
COMPUTERS & BUSINESS EQUIPMENT -- (3.5%)
Dell Computer Corporation (a) ............................................ 23,900 1,218,900
International Business Machines Corporation .............................. 5,000 540,000
--------------
1,758,900
COMPUTER RELATED -- (12.2%)
Cisco Systems, Inc. (a) .................................................. 21,100 2,260,337
EMC Corporation (a) ...................................................... 19,700 2,152,225
Sun Microsystems, Inc. (a) ............................................... 22,400 1,734,600
--------------
6,147,162
COMPUTER SOFTWARE -- (6.6%)
Adobe Systems, Inc. ...................................................... 7,900 531,275
BMC Software, Inc. (a) ................................................... 12,000 959,250
Microsoft Corporation (a) ................................................ 15,920 1,858,660
--------------
3,349,185
DIVERSIFIED MANUFACTURING -- (3.2%)
Honeywell International, Inc. ............................................ 13,000 749,938
Tyco International Ltd. .................................................. 22,800 886,350
--------------
1,636,288
DIVERSIFIED RETAIL -- (3.8%)
Costco Companies, Inc. (a) ............................................... 2,700 246,375
Wal-Mart Stores, Inc. .................................................... 24,000 1,659,000
--------------
1,905,375
DRUGS -- (5.8%)
Merck & Company, Inc. .................................................... 4,400 295,075
Pfizer, Inc. ............................................................. 31,260 1,013,996
Schering-Plough Corporation .............................................. 17,400 734,063
Warner Lambert Company ................................................... 10,600 868,537
--------------
2,911,671
ELECTRIC POWER -- (1.4%)
AES Corporation (a) ...................................................... 9,500 710,125
--------------
ELECTRICAL EQUIPMENT -- (1.3%)
General Electric Company ................................................. 4,200 649,950
--------------
</TABLE>
See notes to financial statements.
43
<PAGE> 45
VARIABLE INVESTORS SERIES TRUST
MULTIPLE STRATEGIES PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS -- (CONTINUED)
ELECTRONICS -- (1.9%)
Intel Corporation ........................................................ 12,000 $ 987,750
--------------
FINANCIAL SERVICES -- (5.4%)
American Express Company ................................................. 2,600 432,250
Citigroup, Inc. .......................................................... 16,620 923,449
Donaldson, Lufkin & Jenrette, Inc. ....................................... 9,900 478,912
Federal Home Loan Mortgage Corporation ................................... 8,850 416,503
Federal National Mortgage Association .................................... 7,400 462,038
--------------
2,713,152
INSURANCE -- (2.2%)
American International Group, Inc. ....................................... 10,441 1,128,933
--------------
INTERNET -- (3.7%)
America Online, Inc. (a) ................................................. 24,600 1,855,762
--------------
MANUFACTURING -- (0.7%)
United Technologies Corporation .......................................... 5,600 364,000
--------------
MEDIA -- (2.4%)
Time Warner, Inc. ........................................................ 16,500 1,195,219
--------------
MEDICAL PRODUCTS & SUPPLIES -- (1.0%)
Medtronic, Inc. .......................................................... 14,600 531,988
--------------
MEDICAL SUPPLIES & SERVICES -- (2.3%)
Cardinal Health, Inc. .................................................... 8,115 388,506
VISX, Inc. (a) ........................................................... 14,500 750,375
--------------
1,138,881
PRINTING & PUBLISHING -- (3.1%)
Omnicom Group ............................................................ 15,500 1,550,000
--------------
RETAIL -- (3.6%)
Dayton Hudson Corporation ................................................ 5,000 367,188
Gap, Inc. ................................................................ 16,575 762,450
Safeway, Inc. (a) ........................................................ 19,000 675,687
--------------
1,805,325
RETAIL-SPECIALTY -- (4.0%)
Bed Bath & Beyond, Inc. (a) .............................................. 5,900 205,025
Home Depot, Inc. ......................................................... 10,800 740,475
Staples, Inc. (a) ........................................................ 25,000 518,750
Tandy Corporation ........................................................ 11,100 545,981
--------------
2,010,231
</TABLE>
See notes to financial statements.
44
<PAGE> 46
VARIABLE INVESTORS SERIES TRUST
MULTIPLE STRATEGIES PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C> <C>
COMMON STOCKS -- (CONTINUED)
TELECOMMUNICATION EQUIPMENT -- (7.2%)
QUALCOMM, Inc. ........................................................... 12,000 $ 2,113,500
Lucent Technologies, Inc. ................................................ 11,000 822,938
Scientific-Atlanta, Inc. ................................................. 2,400 133,500
Tellabs, Inc. (a) ........................................................ 8,700 558,431
--------------
3,628,369
TELECOMMUNICATIONS -- (1.4%)
MCI WorldCom, Inc. (a) ................................................... 13,500 716,344
--------------
TOTAL COMMON STOCKS -- (Cost $23,802,825) 83.3% 42,019,687
--------------
</TABLE>
<TABLE>
<CAPTION>
INTEREST MATURITY PRINCIPAL
RATE DATE AMOUNT
---- ---- ------
<S> <C> <C> <C> <C> <C>
GOVERNMENT AND AGENCY SECURITIES
FEDERAL AGENCIES -- (9.5%)
Federal Home Loan Bank .................... 4.875% 01/22/2002 $ 2,000,000 1,935,000
Federal National Mortgage Association...... 5.750% 06/15/2005 1,500,000 1,425,930
6.000% 05/15/2008 1,000,000 936,250
6.625% 09/15/2009 500,000 485,625
--------------
4,782,805
U.S. GOVERNMENT SECURITIES -- (3.1%)
United States Treasury Bond ............... 7.250% 08/15/2022 1,000,000 1,054,220
United States Treasury Note ............... 6.500% 05/31/2001 500,000 502,030
--------------
1,556,250
TOTAL GOVERNMENT AND AGENCY SECURITIES -- (Cost $6,580,997) 12.6% 6,339,055
--------------
CORPORATE BOND
INDUSTRIALS -- (0.5%)
BP America, Inc. .......................... 8.500% 04/15/2001 250,000 253,420
--------------
TOTAL CORPORATE BOND -- (Cost $250,682) 0.5% 253,420
--------------
TOTAL INVESTMENTS -- (Cost $30,634,504) 96.4% 48,612,162
CASH AND OTHER ASSETS LESS LIABILITIES -- 3.6% 1,794,096
----- --------------
NET ASSETS -- 100.0% $ 50,406,258
===== ==============
</TABLE>
(a) Non-income producing security.
See notes to financial statements.
45
<PAGE> 47
VARIABLE INVESTORS SERIES TRUST
HIGH INCOME BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST MATURITY PRINCIPAL
AND TITLE OF ISSUE RATE DATE AMOUNT VALUE
------------------ ---- ---- ------ -----
<S> <C> <C> <C> <C>
CORPORATE BONDS
AUTOMOTIVE -- (1.8%)
Aftermarket Technology Company ............ 12.000% 08/01/2004 $ 56,000 $ 56,420
American Axle & Manufacturing, Inc. ....... 9.750% 03/01/2009 100,000 101,250
J L French Automotive Casting (b).......... 11.500% 06/01/2009 50,000 51,375
Transportation Manufacturing Operations ... 11.250% 05/01/2009 75,000 77,250
--------------
286,295
BANKS -- (1.2%)
GS Escrow Corporation ..................... 7.125% 08/01/2005 200,000 181,538
--------------
BROADCAST RADIO & TELEVISION -- (4.9%)
Acme Television LLC (a).................... 10.875% 09/30/2004 100,000 90,500
AMFM, Inc. ................................ 12.625% 10/31/2006 63,700 76,599
Big City Radio, Inc (a).................... 11.250% 03/15/2005 100,000 65,000
Capstar Radio Broadcasting Partners,
Inc. ................................... 9.250% 07/01/2007 50,000 51,750
Chancellor Media Corporation .............. 10.500% 01/15/2007 100,000 109,500
9.000% 10/01/2008 75,000 78,375
Fox/Liberty Networks LLC (a)............... 9.750% 08/15/2007 300,000 243,000
Orion Network Systems, Inc. ............... 11.250% 01/15/2007 50,000 37,750
--------------
752,474
BUILDING & DEVELOPMENT -- (0.6%)
American Builders & Contractors
Supply Company ......................... 10.625% 05/15/2007 50,000 46,250
Formica Corporation ....................... 10.875% 03/01/2009 50,000 46,000
--------------
92,250
BUSINESS EQUIPMENT & SERVICES -- (2.8%)
Buhrmann US, Inc (b)....................... 12.250% 11/01/2009 50,000 52,250
Dialog Corporation ........................ 11.000% 11/15/2007 125,000 60,625
Electronic Retailing Systems
International, Inc (a).................. 13.250% 02/01/2004 50,000 11,250
Fisher Scientific International, Inc. ..... 9.000% 02/01/2008 200,000 192,500
U.S. Office Products Company .............. 9.750% 06/15/2008 125,000 65,625
United Stationers Supply Company .......... 12.750% 05/01/2005 50,000 54,125
--------------
436,375
CABLE TELEVISION -- (12.4%)
CSC Holdings, Inc. ........................ 9.250% 11/01/2005 25,000 25,687
7.875% 12/15/2007 100,000 98,655
9.875% 02/15/2013 150,000 158,625
Diamond Cable Communications Plc .......... 9.125% 02/01/2008 125,000 124,375
Diva Systems Corporation (a)............... 12.625% 03/01/2008 50,000 19,250
Echostar DBS Corporation .................. 9.375% 02/01/2009 200,000 202,500
International CableTel, Inc (a)............ 12.750% 04/15/2005 125,000 125,938
(a) 11.500% 02/01/2006 125,000 115,000
Lenfest Communications, Inc. .............. 8.250% 02/15/2008 150,000 150,750
NTL Communications Corporation (a)......... 12.375% 10/01/2008 100,000 109,000
</TABLE>
See notes to financial statements.
46
<PAGE> 48
VARIABLE INVESTORS SERIES TRUST
HIGH INCOME BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST MATURITY PRINCIPAL
AND TITLE OF ISSUE RATE DATE AMOUNT VALUE
------------------ ---- ---- ------ -----
<S> <C> <C> <C> <C>
CORPORATE BONDS -- (CONTINUED)
CABLE TELEVISION -- (CONTINUED)
Pegasus Communications Corporation ........ 9.750% 12/01/2006 $ 50,000 $ 51,125
Pegasus Media & Communications, Inc. ...... 12.500% 07/01/2005 50,000 54,250
RCN Corporation (a)........................ 11.125% 10/15/2007 75,000 53,625
TeleWest Communications Plc (a)............ 11.000% 10/01/2007 250,000 235,000
11.250% 11/01/2008 50,000 54,875
UIH Australia/Pacific, Inc. (a)............ 14.000% 05/15/2006 125,000 106,250
United International Holdings, Inc (a)..... 10.750% 02/15/2008 275,000 177,375
United Pan Europe Commerce (a)............. 13.375% 11/01/2009 100,000 57,500
--------------
1,919,780
CHEMICALS & PLASTICS -- (4.6%)
General Chemical Industrial Products,
Inc. ................................... 10.625% 05/01/2009 50,000 49,750
Georgia Gulf Corporation (b)............... 10.375% 11/01/2007 50,000 52,438
Huntsman Corporation (b)................... 9.500% 07/01/2007 100,000 95,500
Huntsman ICI Chemicals, Inc (b)............ 10.125% 07/01/2009 50,000 51,500
Lyondell Chemical Company ................. 10.875% 05/01/2009 175,000 185,500
Polymer Group, Inc. ....................... 9.000% 07/01/2007 175,000 170,625
Sterling Chemicals Holdings, Inc. ......... 11.750% 08/15/2006 50,000 37,750
13.500% 08/15/2008 75,000 22,125
Texas Petrochemicals Corporation .......... 11.125% 07/01/2006 50,000 43,750
--------------
708,938
CLOTHING & TEXTILES -- (1.3%)
Collins & Aikman Floorcoverings, Inc. ..... 10.000% 01/15/2007 75,000 73,875
GFSI, Inc. ................................ 9.625% 03/01/2007 50,000 31,250
Glenoit Corporation ....................... 11.000% 04/15/2007 100,000 25,500
Pillowtex Corporation ..................... 10.000% 11/15/2006 100,000 46,500
9.000% 12/15/2007 50,000 21,750
--------------
198,875
CONGLOMERATES -- (0.7%)
Eagle Picher Industries, Inc. ............. 9.375% 03/01/2008 125,000 110,000
--------------
CONSUMER PRODUCTS -- (3.2%)
Albecca, Inc. ............................. 10.750% 08/15/2008 100,000 68,500
Amscan Holdings, Inc. ..................... 9.875% 12/15/2007 100,000 85,000
Chattem, Inc. ............................. 8.875% 04/01/2008 75,000 70,500
Revlon Corporation ........................ 8.625% 02/01/2008 200,000 103,000
Sealy Mattress Company .................... 9.875% 12/15/2007 50,000 49,750
True Temper Sports, Inc. .................. 10.875% 12/01/2008 50,000 48,000
Volume Services America, Inc. ............. 11.250% 03/01/2009 75,000 74,250
--------------
499,000
CONTAINER & GLASS PRODUCTS -- (0.3%)
Russell-Stanley Holding, Inc. ............. 10.875% 02/15/2009 50,000 43,750
--------------
</TABLE>
See notes to financial statements.
47
<PAGE> 49
VARIABLE INVESTORS SERIES TRUST
HIGH INCOME BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST MATURITY PRINCIPAL
AND TITLE OF ISSUE RATE DATE AMOUNT VALUE
------------------ ---- ---- ------ -----
<S> <C> <C> <C> <C>
CORPORATE BONDS -- (CONTINUED)
ECOLOGICAL SERVICES & EQUIPMENT -- (2.3%)
Allied Waste North America, Inc (b)........ 10.000% 08/01/2009 $ 400,000 $ 358,000
-------------
ELECTRONICS -- (1.4%)
Fairchild Semiconductor Corporation. (b)... 10.375% 10/01/2007 50,000 51,250
Telecommunications Techniques
Company ................................ 9.750% 05/15/2008 175,000 160,125
--------------
211,375
FOOD PRODUCTS -- (2.9%)
Agrilink Foods, Inc. ...................... 11.875% 11/01/2008 100,000 101,000
Eagle Family Foods, Inc. .................. 8.750% 01/15/2008 150,000 114,750
International Home Foods, Inc. ............ 10.375% 11/01/2006 150,000 156,375
Triarc Consumer Products Group (b)......... 10.250% 02/15/2009 75,000 72,188
--------------
444,313
FOOD SERVICES -- (1.5%)
Ameriserve Food Distribution, Inc. (e) .... 10.125% 07/15/2007 250,000 86,250
Carrols Corporation ....................... 9.500% 12/01/2008 100,000 91,500
Dominos, Inc. ............................. 10.375% 01/15/2009 50,000 48,375
--------------
226,125
FOREST PRODUCTS -- (0.8%)
Packaging Corporation of America .......... 9.625% 04/01/2009 50,000 51,500
Stone Container Corporation ............... 12.580% 08/01/2016 75,000 80,250
--------------
131,750
HEALTH CARE -- (4.9%)
Conmed Corporation ........................ 9.000% 03/15/2008 100,000 94,000
Dade International, Inc. .................. 11.125% 05/01/2006 150,000 147,750
Genesis Health Ventures, Inc. ............. 9.250% 10/01/2006 100,000 41,500
Hanger Orthopedic Group ................... 11.250% 06/15/2009 50,000 51,625
Hudson Respiratory Care, Inc. ............. 9.125% 04/15/2008 100,000 80,500
Kinetic Concepts, Inc. .................... 9.625% 11/01/2007 50,000 37,250
Tenet Healthcare Corporation .............. 8.000% 01/15/2005 225,000 217,687
8.625% 01/15/2007 100,000 96,750
--------------
767,062
HOTELS, MOTELS, INNS & CASINOS -- (1.8%)
Courtyard by Marriott II LP ............... 10.750% 02/01/2008 50,000 49,375
Florida Panthers Holdings, Inc. ........... 9.875% 04/15/2009 75,000 73,125
HMH Properties, Inc. ...................... 7.875% 08/01/2005 100,000 94,750
8.450% 12/01/2008 75,000 70,125
--------------
287,375
</TABLE>
See notes to financial statements.
48
<PAGE> 50
VARIABLE INVESTORS SERIES TRUST
HIGH INCOME BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST MATURITY PRINCIPAL
AND TITLE OF ISSUE RATE DATE AMOUNT VALUE
------------------ ---- ---- ------ -----
<S> <C> <C> <C> <C>
CORPORATE BONDS -- (CONTINUED)
INDUSTRIAL PRODUCTS & EQUIPMENT -- (5.7%)
Amphenol Corporation ...................... 9.875% 05/15/2007 $ 100,000 $ 104,500
Cabot Safety Acquisition Corporation ...... 12.500% 07/15/2005 100,000 102,500
Continental Global Group, Inc. ............ 11.000% 04/01/2007 100,000 52,500
Euramax International Plc ................. 11.250% 10/01/2006 75,000 77,250
International Utility Structures, Inc. .... 10.750% 02/01/2008 50,000 41,250
ISG Resources, Inc. ....................... 10.000% 04/15/2008 100,000 85,500
Johnstown America Industries, Inc. ........ 11.750% 08/15/2005 75,000 76,687
MMI Products, Inc. ........................ 11.250% 04/15/2007 100,000 103,500
Neenah Corporation ........................ 11.125% 05/01/2007 100,000 93,000
Wesco Distribution, Inc. .................. 9.125% 06/01/2008 150,000 141,750
--------------
878,437
LEISURE & ENTERTAINMENT -- (2.1%)
Premier Parks, Inc (a)..................... 10.000% 04/01/2008 250,000 173,750
Regal Cinemas, Inc. ....................... 9.500% 06/01/2008 200,000 156,000
--------------
329,750
MACHINERY & EQUIPMENT -- (1.9%)
Alvey Systems, Inc. ....................... 11.375% 01/31/2003 52,000 54,340
Clark Material Handling Corporation ....... 10.750% 11/15/2006 75,000 23,625
Fairchild Corporation ..................... 10.750% 04/15/2009 50,000 42,750
National Equipment Services, Inc. ......... 10.000% 11/30/2004 50,000 50,375
United Rentals, Inc. ...................... 9.250% 01/15/2009 125,000 120,313
--------------
291,403
METALS & MINING -- (0.8%)
AEI Holding Company (b).................... 10.500% 12/15/2005 75,000 56,625
AEI Resources, Inc. (b).................... 11.500% 12/15/2006 100,000 65,500
--------------
122,125
OIL & GAS -- (1.1%)
Continental Resources, Inc. ............... 10.250% 08/01/2008 100,000 88,500
R&B Falcon Corporation .................... 12.250% 03/15/2006 75,000 83,250
--------------
171,750
RETAILERS -- (0.3%)
Leslie's Poolmart, Inc. ................... 10.375% 07/15/2004 50,000 42,750
--------------
SERVICES -- (1.3%)
Coinmach Corporation ...................... 11.750% 11/15/2005 50,000 51,750
Sitel Corporation ......................... 9.250% 03/15/2006 100,000 94,625
URS Corporation (b)........................ 12.250% 05/01/2009 50,000 52,625
--------------
199,000
STEEL -- (0.8%)
Metals USA, Inc. .......................... 8.625% 02/15/2008 75,000 70,875
RTI Capital Corporation ................... 13.750% 07/15/2009 75,000 49,875
--------------
120,750
</TABLE>
See notes to financial statements.
49
<PAGE> 51
VARIABLE INVESTORS SERIES TRUST
HIGH INCOME BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST MATURITY PRINCIPAL
AND TITLE OF ISSUE RATE DATE AMOUNT VALUE
------------------ ---- ---- ------ -----
<S> <C> <C> <C> <C>
CORPORATE BONDS -- (CONTINUED)
SURFACE TRANSPORTATION -- (3.2%)
Allied Holdings, Inc ...................... 8.625% 10/01/2007 $ 50,000 $ 44,500
Gearbulk Holdings Ltd. .................... 11.250% 12/01/2004 150,000 154,875
Railworks Corporation ..................... 11.500% 04/15/2009 50,000 50,875
Stena AB .................................. 10.500% 12/15/2005 175,000 161,000
StenaLine AB .............................. 10.625% 06/01/2008 50,000 30,250
The Holt Group, Inc. ...................... 9.750% 01/15/2006 75,000 49,125
--------------
490,625
TELECOMMUNICATIONS & CELLULAR -- (23.4%)
American Cellular Corporation ............. 10.500% 05/15/2008 125,000 138,437
Call-Net Enterprises, Inc. (a) ............ 9.270% 08/15/2007 225,000 125,437
(a) 8.940% 08/15/2008 100,000 49,750
Centennial Cellular ....................... 10.750% 12/15/2008 75,000 80,813
Global Crossing Holdings Ltd. (b).......... 9.500% 11/15/2009 150,000 149,062
Hermes Europe Railtel B.V. ................ 11.500% 08/15/2007 200,000 206,500
Intermedia Communications of
Florida, Inc. (a)....................... 12.500% 05/15/2006 200,000 176,000
(a) 11.250% 07/15/2007 125,000 93,125
Level 3 Communications, Inc. .............. 9.125% 05/01/2008 200,000 190,250
(a) 10.500% 12/01/2008 200,000 122,500
McLeodUSA, Inc. (a)........................ 10.500% 03/01/2007 150,000 123,750
9.250% 07/15/2007 50,000 50,250
8.375% 03/15/2008 50,000 47,250
9.500% 11/01/2008 50,000 50,625
Metromedia Fiber Network, Inc. ............ 10.000% 12/15/2009 50,000 51,250
Millicom International Cellular S.A. (a)... 13.500% 06/01/2006 200,000 166,000
NEXTEL Communications, Inc. (a)............ 10.650% 09/15/2007 200,000 152,000
(b) 9.375% 11/15/2009 150,000 148,125
NEXTEL International, Inc. (a)............. 12.125% 04/15/2008 75,000 44,596
Nextlink Communications, Inc. ............. 9.000% 03/15/2008 75,000 71,812
1.000% 06/01/2009 225,000 139,500
PSInet, Inc. (a)........................... 12.250% 02/15/2005 100,000 99,500
11.500% 11/01/2008 50,000 52,500
Qwest Communications
International, Inc. (a)................. 9.470% 10/15/2007 175,000 141,750
Telesystem International Wireless, Inc. (a) 13.250% 06/30/2007 200,000 129,000
(a) 10.500% 11/01/2007 50,000 27,750
Teligent, Inc. ............................ 11.500% 12/01/2007 150,000 147,750
Triton PCS, Inc. (a)....................... 11.000% 05/01/2008 175,000 125,125
United States Xchange LLC ................. 15.000% 07/01/2008 50,000 48,125
US Unwired, Inc. (a)(b).................... 13.375% 11/01/2009 50,000 29,250
USA Mobile Communications, Inc. ........... 9.500% 02/01/2004 50,000 40,750
Verio, Inc. ............................... 11.250% 12/01/2008 50,000 52,750
</TABLE>
See notes to financial statements.
50
<PAGE> 52
VARIABLE INVESTORS SERIES TRUST
HIGH INCOME BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST MATURITY PRINCIPAL
AND TITLE OF ISSUE RATE DATE AMOUNT VALUE
------------------ ---- ---- ------ -----
<S> <C> <C> <C> <C> <C>
CORPORATE BONDS -- (CONTINUED)
TELECOMMUNICATIONS & CELLULAR -- (CONTINUED)
Viatel, Inc. (a)........................... 12.500% 04/15/2008 $ 50,000 $ 31,750
11.250% 04/15/2008 75,000 75,750
Voicestream Wireless Corporation (a)(b).... 11.875% 11/15/2009 175,000 106,313
Williams Communications Group, Inc. ....... 10.875% 10/01/2009 75,000 78,469
Winstar Communications, Inc. .............. 11.000% 03/15/2008 50,000 51,250
--------------
3,614,814
TOTAL CORPORATE BONDS -- (Cost $14,833,035) 90.0% 13,916,679
--------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
------
<S> <C> <C> <C>
PREFERRED STOCKS
BANKS -- (0.1%)
California Federal Preferred Capital Corporation, 9.125% ................. 1,000 22,562
--------------
BROADCAST RADIO & TELEVISION -- (1.9%)
Benedek Communications Corporation, 11.50% (c) ........................... 75 60,375
Capstar Broadcasting Partners, Inc., PIK, 12.00% ......................... 631 73,985
Cumulus Media, Inc., Sr., 13.75% ......................................... 39 44,219
Sinclair Broadcast Group, Inc., 11.625% .................................. 1,050 107,100
--------------
285,679
CABLE TELEVISION -- (1.2%)
Pegasus Communications Corporation, PIK, Series A, 12.75% ................ 173 191,597
--------------
FOOD SERVICES -- (0.0%)
Nebco Evans Holding Company, PIK, 11.25% ................................. 299 1,645
--------------
INDUSTRIAL PRODUCTS & EQUIPMENT - (0.5%)
Fairfield Manufacturing Company, Inc., Exch., 11.25% ..................... 75 74,625
--------------
OIL & GAS -- (0.4%)
R&B Falcon Corporation, Sr., 13.87% ...................................... 54 56,932
--------------
PRINTING & PUBLISHING -- (1.6%)
Primedia, Inc., Series D, 10.00% ......................................... 750 74,063
Primedia, Inc., Series E, 9.20% .......................................... 1,850 173,437
--------------
247,500
TELECOMMUNICATIONS & CELLULAR -- (0.6%)
NEXTEL Communications, Inc., 13.00% ...................................... 59 64,015
NEXTEL Communications, Inc., PIK, 11.125% ................................ 26 26,113
--------------
90,128
TOTAL PREFERRED STOCKS -- (Cost $895,944) 6.3% 970,668
--------------
</TABLE>
See notes to financial statements.
51
<PAGE> 53
VARIABLE INVESTORS SERIES TRUST
HIGH INCOME BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C> <C>
COMMON STOCKS
CABLE TELEVISION -- (0.0%)
CS Wireless Systems, Inc.(b)(c) .......................................... 13 $ 0
--------------
PRINTING & PUBLISHING -- (0.3%)
Affiliated Newspaper Investments, Inc. (c) ............................... 250 40,000
--------------
TOTAL COMMON STOCKS -- (Cost $99) 0.3% 40,000
--------------
WARRANTS
BUSINESS EQUIPMENT & SERVICES -- (0.0%)
Electronic Retailing Systems International, Inc. (b)(c) .................. 50 50
--------------
CABLE TELEVISION -- (0.0%)
Australis Holdings Property Ltd.(b) (c) .................................. 50 0
Diva Systems Corporation (c) ............................................. 150 0
UIH Australia/Pacific, Inc. (c) .......................................... 125 0
Wireless One, Inc. (c) ................................................... 150 2
--------------
2
OIL & GAS -- (0.0%)
R&B Falcon Corporation (b) ............................................... 50 6,246
--------------
STEEL -- (0.0%)
Bar Technologies, Inc. (b)(c) ............................................ 25 500
--------------
TELECOMMUNICATIONS & CELLULAR -- (0.1%)
Metronet Communications Corporation (b)(c) ............................... 100 9,000
--------------
TOTAL WARRANTS -- (Cost $7,993) 0.1% 15,798
--------------
</TABLE>
<TABLE>
<CAPTION>
INTEREST MATURITY MATURITY
RATE DATE AMOUNT
---- ---- ------
<S> <C> <C> <C> <C> <C>
SHORT TERM INVESTMENT
REPURCHASE AGREEMENT -- (1.7%)
State Street Bank and Trust Company (d) ... 2.500% 01/03/2000 $ 271,056 271,000
--------------
TOTAL SHORT TERM INVESTMENT -- (Cost $271,000) 1.7% 271,000
--------------
TOTAL INVESTMENTS -- (Cost $16,008,071) 98.4% 15,214,145
CASH AND OTHER ASSETS LESS LIABILITIES -- 1.6% 252,420
----- --------------
NET ASSETS -- 100.0% $ 15,466,565
===== ==============
</TABLE>
(a) Step bond. Interest rate shown represents yield to maturity.
(b) Pursuant to Rule 144A under the Securities Act of 1933, these
securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At December 31 1999, these
securities aggregated $1,407,797 or 9.10 % of the net assets of the
Portfolio.
(c) Non-income producing security.
(d) The agreement with State Street Bank and Trust Company, dated 12/31/99,
is fully collateralized by a United States Treasury Note, 4.500 %,
9/30/00, with a value of $280.000.
(e) Issue in default
PIK Payment in kind
See notes to financial statements.
52
<PAGE> 54
VARIABLE INVESTORS SERIES TRUST
U.S. GOVERNMENT BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST MATURITY PRINCIPAL
AND TITLE OF ISSUE RATE DATE AMOUNT VALUE
------------------ ---- ---- ------ -----
<S> <C> <C> <C> <C>
GOVERNMENT AND AGENCY SECURITIES
COLLATERALIZED MORTGAGE OBLIGATIONS -- (9.6%)
Federal Agricultural Mortgage
Corporation (a)......................... 7.012% 01/25/2003 $ 756,176 $ 751,450
6.710% 07/25/2008 462,378 449,806
--------------
1,201,256
FEDERAL AGENCIES -- (2.3%)
Federal National Mortgage Association ..... 6.625% 09/15/2009 300,000 291,556
--------------
MORTGAGE BACKED SECURITIES -- (43.6%)
FHA Insured Project Loan .................. 3.025% 11/01/2006 277,487 252,899
FHLMC Participation Certificates .......... 8.500% 01/01/2003 38,755 39,652
10.000% 10/01/2005 41,291 42,523
9.500% 04/01/2007 40,656 41,797
9.000% 06/01/2016 80,814 85,293
7.625% 08/25/2022 39,482 39,377
6.250% 09/15/2022 200,000 190,129
(a) 7.898% 08/01/2025 85,027 86,077
9.090% 09/25/2028 559,749 583,191
FNMA Guaranteed Real Estate Mortgage
Investment Pass-Thru Certificates ...... 6.050% 04/17/2003 188,000 183,596
6.500% 08/15/2004 430,000 424,471
8.400% 02/25/2009 228,228 231,642
7.130% 10/01/2009 264,678 260,168
6.000% 09/01/2012 133,982 128,729
(a) 7.298% 08/17/2018 235,000 228,590
11.000% 02/01/2019 468,715 513,665
11.500% 02/01/2019 452,169 499,832
9.500% 03/25/2019 388,269 410,039
(a) 6.231% 04/01/2020 76,640 76,400
10.000% 04/01/2020 61,110 65,082
7.000% 06/25/2022 279,735 273,828
(a) 5.868% 11/01/2035 319,005 312,402
GNMA Guaranteed Pass-Thru
Certificates ........................... 9.000% 12/15/2006 80,862 83,179
9.000% 01/15/2008 99,089 101,534
(a) 6.375% 03/20/2018 183,285 185,729
7.500% 04/15/2024 149,794 148,281
--------------
5,488,105
U.S. GOVERNMENT SECURITIES -- (29.8%)
U.S. Treasury Bonds ....................... 7.250% 05/15/2016 630,000 658,744
7.500% 11/15/2024 115,000 125,530
6.000% 02/15/2026 175,000 160,125
5.250% 02/15/2029 1,100,000 910,250
</TABLE>
See notes to financial statements.
53
<PAGE> 55
VARIABLE INVESTORS SERIES TRUST
U.S. GOVERNMENT BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1999
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST MATURITY PRINCIPAL
AND TITLE OF ISSUE RATE DATE AMOUNT VALUE
------------------ ---- ---- ------ -----
<S> <C> <C> <C> <C> <C>
GOVERNMENT AND AGENCY SECURITIES -- (CONTINUED)
U.S. GOVERNMENT SECURITIES -- (CONTINUED)
U.S. Treasury Notes ....................... 6.000% 08/15/2004 $ 510,000 $ 502,191
7.000% 07/15/2006 160,000 163,950
6.125% 08/15/2007 265,000 258,375
5.625% 05/15/2008 750,000 705,703
6.000% 08/15/2009 280,000 271,338
--------------
3,756,206
TOTAL GOVERNMENT AND AGENCY
SECURITIES -- (Cost $11,155,049) 85.3% 10,737,123
--------------
CORPORATE BONDS
BANKS -- (2.9%)
GS Escrow Corporation ..................... 7.000% 08/01/2003 390,000 361,114
--------------
BROADCASTING -- (2.4%)
Time Warner, Inc. ......................... 8.110% 08/15/2006 300,000 307,146
--------------
TELECOMMUNICATIONS -- (2.3%)
Sprint Capital Corporation ................ 6.875% 11/15/2028 325,000 289,952
--------------
TOTAL CORPORATE BONDS -- (Cost $1,040,212)
7.6% 958,212
--------------
MUNICIPAL BOND -- (0.8%)
New Jersey Economic Development
Authority .............................. 7.425% 02/15/2029 100,000 96,529
--------------
TOTAL MUNICIPAL BOND -- (Cost $100,000) 0.8% 96,529
--------------
NON-AGENCY MORTGAGES AND ASSET BACKED -- (3.8%)
Community Program Loan .................... 4.500% 04/01/2029 340,000 235,929
SLM Student Loan Trust (a) ................ 5.626% 10/25/2004 249,546 248,639
--------------
TOTAL NON-AGENCY MORTGAGES AND
ASSET BACKED -- (Cost $502,376) 3.8% 484,568
--------------
</TABLE>
See notes to financial statements.
54
<PAGE> 56
<TABLE>
<CAPTION>
INTEREST MATURITY MATURITY
RATE DATE AMOUNT
---- ---- ------
<S> <C> <C> <C> <C> <C>
SHORT TERM INVESTMENT
REPURCHASE AGREEMENT -- (1.0%)
State Street Bank and Trust Company (b).... 2.500% 01/03/2000 121,025 121,000
--------------
TOTAL SHORT TERM INVESTMENT --
(Cost $121,000) 1.0% 121,000
--------------
TOTAL INVESTMENTS -- (Cost $12,918,637) 98.5% 12,397,432
CASH AND OTHER ASSETS LESS LIABILITIES -- 1.5% 190,140
----- --------------
NET ASSETS -- 100.0% $ 12,587,572
===== ==============
</TABLE>
(a) Variable rate instrument. Interest rate is the rate in effect at
December 31, 1999.
(b) The agreement with State Street Bank and Trust Company, dated 12/31/99,
is fully collateralized by a United States Treasury Note, 4.500%,
09/30/00, with a value of $125,000.
See notes to financial statements.
55
<PAGE> 57
VARIABLE INVESTORS SERIES TRUST
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<CAPTION>
SMALL CAP WORLD
GROWTH EQUITY GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- ---------
<S> <C> <C> <C>
ASSETS
Investments - securities, at value...................... $ 19,053,666 $ 24,992,225 $ 75,192,259
Foreign currency holdings, at value (cost $1,331)....... 0 1,337 0
Cash.................................................... 99 731 985
Receivable for securities sold.......................... 385,076 27,105 4,311,901
Due from adviser........................................ 14,062 13,775 0
Income receivable....................................... 216 5,552 17,799
Foreign income tax reclaim receivable................... 0 13,959 0
Prepaid expenses........................................ 0 10 0
-------------- -------------- --------------
TOTAL ASSETS........................................ 19,453,119 25,054,694 79,522,944
LIABILITIES
Payable for securities purchased........................ 274,327 0 524,667
Payable for trust shares redeemed....................... 30,406 29,485 61,361
Advisory fee payable.................................... 21,641 25,403 84,634
Net unrealized depreciation on forward foreign currency
contracts.......................................... 0 25,000 0
Cash Overdraft.......................................... 0 0 0
Accounts payable and accrued expenses................... 29,020 29,158 36,959
-------------- -------------- --------------
TOTAL LIABILITIES................................... 355,394 109,046 707,621
-------------- -------------- --------------
TOTAL NET ASSETS.................................... $ 19,097,725 $ 24,945,648 $ 78,815,323
============== ============== ==============
NET ASSETS
Paid in Capital......................................... $ 8,957,699 $ 12,416,352 $ 23,043,622
Undistributed (distributions in
excess of) net investment income................... 0 (22,295) 0
Accumulated net realized gain (loss) on
investments and foreign currency transactions...... 3,124,043 4,004,460 23,451,903
Net unrealized appreciation (depreciation) of:
Investments........................................ 7,015,983 8,572,974 32,319,798
Foreign currency................................... 0 (25,843) 0
-------------- -------------- --------------
TOTAL NET ASSETS................................. $ 19,097,725 $ 24,945,648 $ 78,815,323
============== ============== ==============
NET ASSET VALUE PER SHARE (based on shares of beneficial
interest outstanding, unlimited number of shares
authorized without par value)........................... $ 27.265 $ 20.844 $ 53.018
Total shares outstanding at end of period............... 700,459 1,196,779 1,486,580
Cost of investment securities........................... $ 12,037,683 $ 16,419,251 $ 42,872,461
</TABLE>
See notes to financial statements.
56
<PAGE> 58
<TABLE>
<CAPTION>
MATRIX GROWTH & MULTIPLE HIGH INCOME U.S. GOVERNMENT
EQUITY INCOME STRATEGIES BOND BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
$ 22,700,093 $ 27,188,782 $ 48,612,162 $ 15,214,145 $ 12,397,432
0 0 0 0 0
844 680 0 137 721
253,608 0 2,818,284 0 0
10,499 6,714 0 12,738 18,247
20,070 26,261 110,561 309,337 222,639
0 5,628 0 188 0
11 0 21 6 11
-------------- -------------- -------------- -------------- --------------
22,985,125 27,228,065 51,541,028 15,536,551 12,639,050
636,461 0 371,851 0 0
48,732 29,786 44,741 18,252 11,915
23,837 34,710 55,776 18,719 13,110
0 0 0 0 0
0 0 630,408 0 0
30,070 31,140 31,994 33,015 26,453
-------------- -------------- -------------- -------------- --------------
739,100 95,636 1,134,770 69,986 51,478
-------------- -------------- -------------- -------------- --------------
$ 22,246,025 $ 27,132,429 $ 50,406,258 $ 15,466,565 $ 12,587,572
============== ============== ============== ============== ==============
$ 15,378,184 $ 22,147,421 $ 24,652,521 $ 15,323,465 $ 12,704,710
13,840 169,133 137,538 1,260,531 790,927
3,901,015 3,454,168 7,638,541 (323,505) (386,860)
2,952,986 1,361,707 17,977,658 (793,926) (521,205)
0 0 0 0 0
-------------- -------------- -------------- -------------- --------------
$ 22,246,025 $ 27,132,429 $ 50,406,258 $ 15,466,565 $ 12,587,572
============== ============== ============== ============== ==============
$ 18.316 $ 16.539 $ 21.342 $ 9.321 $ 10.118
1,214,584 1,640,536 2,361,806 1,659,305 1,244,027
$ 19,747,107 $ 25,827,075 $ 30,634,504 $ 16,008,071 $ 12,918,637
</TABLE>
57
<PAGE> 59
VARIABLE INVESTORS SERIES TRUST
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1999
<TABLE>
<CAPTION>
SMALL CAP WORLD
GROWTH EQUITY GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- ---------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest income......................................... $ 13,994 $ 20,473 $ 94,707
Dividend income......................................... 797 602,262 282,018
Foreign taxes withheld.................................. 0 (25,088) 0
-------------- -------------- --------------
TOTAL INCOME....................................... 14,791 597,647 376,725
EXPENSES
Advisory fee............................................ 106,925 143,773 496,806
Custodian fee........................................... 63,216 102,695 49,246
Professional fees and expenses.......................... 17,183 25,066 26,741
Administrative fee...................................... 9,971 40,132 124,779
Transfer agent fee...................................... 2,025 (551) (551)
Trustees fees and other expenses........................ 12,463 12,188 27,289
-------------- -------------- --------------
TOTAL EXPENSES........................................ 211,783 323,303 724,310
-------------- -------------- --------------
Expenses borne by the adviser........................... (41,035) (73,345) 0
Expense reductions...................................... (967) (2,846) (357)
-------------- -------------- --------------
NET EXPENSES.......................................... 169,781 247,112 723,953
-------------- -------------- --------------
NET INVESTMENT INCOME (LOSS)........................ (154,990) 350,535 (347,228)
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain (loss) on investments................... 5,077,522 4,188,738 23,814,435
Net realized gain (loss) on foreign currency
transactions..................................... 0 91,535 0
Change in net unrealized appreciation/depreciation of:
Investments............................................. 3,131,307 4,670,737 (498,142)
Foreign currency........................................ 0 37,349 0
-------------- -------------- --------------
NET REALIZED AND UNREALIZED
GAIN (LOSS)......................................... 8,208,829 8,988,359 23,316,293
-------------- -------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............................... $ 8,053,839 $ 9,338,894 $ 22,969,065
============== ============== ==============
</TABLE>
See notes to financial statements.
58
<PAGE> 60
<TABLE>
<CAPTION>
MATRIX GROWTH & MULTIPLE HIGH INCOME U.S. GOVERNMENT
EQUITY INCOME STRATEGIES BOND BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
$ 11,372 $ 131,517 $ 489,042 $ 1,599,031 $ 919,279
262,001 406,729 144,471 47,445 0
0 (6,125) 0 (403) 0
-------------- -------------- -------------- -------------- --------------
273,373 532,121 633,513 1,646,073 919,279
146,479 217,470 316,341 132,321 87,177
67,637 57,493 60,368 73,878 52,485
20,185 18,402 26,724 26,871 22,878
42,488 54,470 80,752 42,648 31,616
(548) 2,435 (551) (82) (550)
10,091 15,162 13,770 8,400 8,941
-------------- -------------- -------------- -------------- --------------
286,332 365,432 497,404 284,036 202,547
-------------- -------------- -------------- -------------- --------------
(25,658) (2,954) 0 (52,303) (78,681)
(1,141) (353) (1,429) (4,665) (344)
-------------- -------------- -------------- -------------- --------------
259,533 362,125 495,975 227,068 123,522
-------------- -------------- -------------- -------------- --------------
13,840 169,996 137,538 1,419,005 795,757
3,957,832 3,519,557 7,638,542 (197,804) (385,416)
0 (24) 0 0 0
(1,046,765) (2,005,754) 3,275,801 (797,306) (706,986)
0 0 0 0 0
-------------- -------------- -------------- -------------- --------------
2,911,067 1,513,779 10,914,343 (995,110) (1,092,402)
-------------- -------------- -------------- -------------- --------------
$ 2,924,907 $ 1,683,775 $ 11,051,881 $ 423,895 $ (296,645)
============== ============== ============== ============== ==============
</TABLE>
59
<PAGE> 61
VARIABLE INVESTORS SERIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SMALL CAP GROWTH PORTFOLIO
YEAR ENDED YEAR ENDED
12/31/99 12/31/98
-------- --------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
From operations:
Net investment income (loss)..................................... $ (154,990) $ (178,387)
Net realized gain (loss) on investments.......................... 5,077,522 (1,643,534)
Net realized gain on foreign currency transactions............... 0 0
Change in net unrealized appreciation/depreciation of:
Investments.................................................... 3,131,307 1,647,584
Foreign currency............................................... 0 0
--------------- --------------
Net increase (decrease) in net assets resulting from operations.. 8,053,839 (174,337)
Dividends and distributions to Shareholders from:
Net investment income............................................ 0 0
Net realized gain on investments................................. 0 0
In excess of net investment income............................... 0 0
--------------- --------------
Net decrease in net assets resulting from distributions.......... 0 0
Trust share transactions:
Shares sold...................................................... 5,563,491 7,082,026
Shares issued to shareholders in reinvestments................... 0 0
Shares repurchased............................................... (9,157,685) (10,523,136)
--------------- --------------
Net increase (decrease) in net assets resulting from
trust share transactions....................................... (3,594,194) (3,441,110)
--------------- --------------
Total increase (decrease) in net assets.......................... 4,459,645 (3,615,447)
Net assets
Beginning of year................................................ 14,638,080 18,253,527
--------------- --------------
END OF YEAR (1).................................................. $ 19,097,725 $ 14,638,080
=============== ==============
(1) Including undistributed (distributions in
excess of) net investment income................................. $ 0 $ 0
CHANGE IN FUND SHARES:
Shares sold...................................................... 312,317 504,990
Shares issued to shareholders in reinvestments................... 0 0
Shares repurchased............................................... (581,427) (707,191)
--------------- --------------
Net (decrease) increase........................................ (269,110) (202,201)
=============== ==============
</TABLE>
See notes to financial statements.
60
<PAGE> 62
<TABLE>
<CAPTION>
WORLD EQUITY PORTFOLIO GROWTH PORTFOLIO MATRIX EQUITY PORTFOLIO
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
12/31/99 12/31/98 12/31/99 12/31/98 12/31/99 12/31/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 350,535 $ 64,589 $ (347,228) $ (274,079) $ 13,840 $ 65,471
4,188,738 1,634,127 23,814,435 11,544,968 3,957,832 1,112,486
91,535 8,967 0 0 0 0
4,670,737 46,584 (498,142) 10,132,342 (1,046,765) 2,335,203
37,349 (335,881) 0 0 0 0
-------------- ------------- - -------------- -------------- -------------- --------------
9,338,894 1,418,386 22,969,065 21,403,231 2,924,907 3,513,160
(93,872) (261,531) 0 0 0 (65,471)
(209,434) (1,363,543) (2,424,345) (9,536,196) (425,000) (1,024,778)
0 (278,838) 0 0 0 (53,864)
-------------- -------------- -------------- -------------- -------------- --------------
(303,306) (1,903,912) (2,424,345) (9,536,196) (425,000) (1,144,113)
3,048,195 10,235,565 13,815,441 12,710,333 3,899,628 6,573,307
303,306 1,903,912 2,424,345 9,536,196 425,000 1,144,113
(10,841,544) (13,025,399) (42,832,627) (14,522,739) (6,829,370) (2,356,812)
-------------- -------------- -------------- -------------- -------------- --------------
(7,490,043) (885,922) (26,592,841) 7,723,790 (2,504,742) 5,360,608
-------------- -------------- -------------- -------------- -------------- --------------
1,545,545 (1,371,448) (6,048,121) 19,590,825 (4,835) 7,729,655
23,400,103 24,771,551 84,863,444 65,272,619 22,250,860 14,521,205
-------------- -------------- -------------- -------------- -------------- --------------
$ 24,945,648 $ 23,400,103 $ 78,815,323 $ 84,863,444 $ 22,246,025 $ 22,250,860
============== ============== ============== ============== ============== ==============
$ (22,295) $ (386,734) $ 0 $ 0 $ 13,840 $ 0
211,317 692,396 303,739 341,748 233,036 427,178
20,889 138,416 56,747 235,070 25,613 70,970
(753,695) (871,336) (943,558) (388,098) (404,869) (154,561)
-------------- -------------- -------------- -------------- -------------- --------------
(521,489) (40,524) (583,072) 188,720 (146,220) 343,587
============== ============== ============== ============== ============== ==============
</TABLE>
61
<PAGE> 63
VARIABLE INVESTORS SERIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
GROWTH & INCOME PORTFOLIO
YEAR ENDED YEAR ENDED
12/31/99 12/31/98
-------- --------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
From operations:
Net investment income (loss)..................................... $ 169,996 $ 187,410
Net realized gain (loss) on investments.......................... 3,519,557 1,029,650
Net realized gain (loss) on foreign currency transactions........ (24) (11)
Change in net unrealized appreciation/depreciation of:
Investments.................................................... (2,005,754) 1,018,985
Foreign currency............................................... 0 0
--------------- --------------
Net increase (decrease) in net assets resulting from operations.. 1,683,775 2,236,034
Dividends and distributions to Shareholders from:
Net investment income............................................ 0 (185,661)
Net realized gain on investments................................. (637,116) (622,669)
In excess of net investment income............................... 0 (8,816)
In excess of net realized gain on investments.................... 0 0
--------------- --------------
Net decrease in net assets resulting from distributions.......... (637,116) (817,146)
Trust share transactions:
Shares sold...................................................... 5,810,394 14,032,668
Shares issued to shareholders in reinvestments................... 637,116 817,146
Shares repurchased............................................... (8,505,404) (9,186,505)
--------------- --------------
Net increase (decrease) in net assets resulting from
trust share transactions....................................... (2,057,894) 5,663,309
--------------- --------------
Total increase (decrease) in net assets.......................... (1,011,235) 7,082,197
Net assets
Beginning of year................................................ 28,143,664 21,061,467
--------------- --------------
END OF YEAR (1).................................................. $ 27,132,429 $ 28,143,664
=============== ==============
(1) Including undistributed (distributions in
excess of) net investment income................................. $ 169,133 $ 694
CHANGE IN FUND SHARES:
Shares sold...................................................... 343,836 897,454
Shares issued to shareholders in reinvestments................... 36,710 51,415
Shares repurchased............................................... (509,894) (624,788)
--------------- --------------
Net (decrease) increase........................................ (129,348) 324,081
=============== ==============
</TABLE>
See notes to financial statements.
62
<PAGE> 64
<TABLE>
<CAPTION>
MULTIPLE STRATEGIES PORTFOLIO HIGH INCOME BOND PORTFOLIO U.S. GOVERNMENT BOND PORTFOLIO
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
12/31/99 12/31/98 12/31/99 12/31/98 12/31/99 12/31/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 137,538 $ 185,100 $ 1,419,005 $ 1,387,819 $ 795,757 $ 619,720
7,638,542 3,693,846 (197,804) 595,756 (385,416) 269,972
0 0 0 0 0 0
3,275,801 6,061,258 (797,306) (1,312,647) (706,986) (75,641)
0 0 0 0 0 0
-------------- -------------- -------------- -------------- -------------- --------------
11,051,881 9,940,204 423,895 670,928 (296,645) 814,051
0 (183,824) (2,028) (1,387,819) 0 (599,416)
(1,281,577) (2,499,972) (21,651) (21,504) (11,813) (269,972)
0 (610) 0 (295,487) 0 (10,635)
0 0 0 0 0 (2,866)
-------------- -------------- -------------- -------------- -------------- ---------------
(1,281,577) (2,684,406) (23,679) (1,704,810) (11,813) (882,889)
13,297,504 6,809,962 7,799,154 13,842,830 3,074,040 12,659,425
1,281,577 2,684,406 23,679 1,704,810 11,813 882,889
(17,239,439) (8,572,541) (14,272,548) (10,913,520) (5,660,225) (7,682,181)
-------------- -------------- -------------- -------------- -------------- --------------
(2,660,358) 921,827 (6,449,715) 4,634,120 (2,574,372) 5,860,133
-------------- -------------- -------------- -------------- -------------- --------------
7,109,946 8,177,625 (6,049,499) 3,600,238 (2,882,830) 5,791,295
43,296,312 35,118,687 21,516,064 17,915,826 15,470,402 9,679,107
-------------- -------------- -------------- -------------- -------------- --------------
$ 50,406,258 $ 43,296,312 $ 15,466,565 $ 21,516,064 $ 12,587,572 $ 15,470,402
============== ============== ============== ============== ============== ==============
$ 137,538 $ 0 $ 1,260,531 $ (281,489) $ 790,927 $ 467
723,413 453,065 836,320 1,415,009 300,564 1,181,963
72,210 158,139 2,516 185,314 1,167 85,783
(959,367) (566,210) (1,527,052) (1,095,976) (556,455) (721,568)
- ----------------- -------------- -------------- -------------- -------------- --------------
(163,744) 44,994 (688,216) 504,347 (254,724) 546,178
================= ============== ============== ============== =============== ==============
</TABLE>
63
<PAGE> 65
VARIABLE INVESTORS SERIES TRUST
SMALL CAP GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------ PERIOD ENDED
1999 1998 1997 1996 DECEMBER 31, 1995 (1)
---- ---- ---- ---- ---------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD...... $ 15.098 $ 15.578 $ 16.050 $ 12.638 $ 10.000
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Loss.................... (0.199)(5) (0.000) (0.152) (0.091) (0.042)
Net Realized and Unrealized Gain
(Loss) on Investments.............. 12.366 (0.480) 0.243 3.560 3.047
----------- ---------- ---------- ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS............ 12.167 (0.480) 0.091 3.469 3.005
----------- ---------- ---------- ----------- -----------
LESS DISTRIBUTIONS:
From Net Investment Income............. (0.000) (0.000) (0.000) (0.000) (0.000)
From Net Realized Capital Gains........ (0.000) (0.000) (0.435) (0.057) (0.367)
In Excess of Net Realized Capital
Gains.............................. (0.000) (0.000) (0.128) (0.000) (0.000)
----------- ---------- ---------- ----------- -----------
Total Distributions.................... (0.000) (0.000) (0.563) (0.057) (0.367)
----------- ---------- ---------- ----------- -----------
NET ASSET VALUE AT END OF PERIOD............ $ 27.265 $ 15.098 $ 15.578 $ 16.050 $ 12.638
=========== ========== ========== =========== ===========
TOTAL RETURN (2) (3)........................ 80.66% (3.12)% 0.73% 27.39% 30.08%
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's).... $ 19,098 $ 14,638 $ 18,254 $ 13,803 $ 3,813
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses (4)................. 1.68% 1.84% 1.79% 2.38% 9.00%
Net Expenses (4)................... 1.35% 1.35% 1.35% 1.35% 1.35%
Net Investment Loss (4)............ (1.23)% (1.20)% (1.06)% (0.90)% (0.79)%
Portfolio Turnover Rate................ 172.48% 105.35% 104.72% 72.66% 73.76%
</TABLE>
(1) From commencement of operations May 4, 1995.
(2) Total returns would have been lower had certain expenses not been borne
by the adviser or its affiliates.
(3) The performance of the Portfolio shown on this page does not reflect
expenses and charges of the applicable separate accounts and variable
products, all of which vary to a considerable extent and are described
in your product's prospectus.
(4) Annualized for periods of less than one year.
(5) Based on monthly average shares outstanding during the period.
See notes to financial statements.
64
<PAGE> 66
VARIABLE INVESTORS SERIES TRUST
WORLD EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
-CONTINUED-
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD...... $ 13.618 $ 14.084 $ 15.062 $ 13.823 $ 11.752
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income.................. 0.277 0.130 0.068 0.016 0.014
Net Realized and Unrealized Gain
on Investments..................... 7.176 0.593 1.392 1.647 2.872
-------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS............ 7.453 0.723 1.460 1.663 2.886
-------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
From Net Investment Income............. (0.070) (0.165) (0.161) (0.013) (0.000)
In Excess of Net Investment Income..... (0.000) (0.174) (0.126) (0.051) (0.000)
From Net Realized Capital Gains........ (0.157) (0.850) (2.056) (0.360) (0.815)
In Excess of Net Realized Capital
Gains.............................. (0.000) (0.000) (0.095) (0.000) (0.000)
-------- --------- --------- --------- ---------
Total Distributions.................... (0.227) (1.189) (2.438) (0.424) (0.815)
-------- --------- --------- --------- ---------
NET ASSET VALUE AT END OF PERIOD............ $ 20.844 $ 13.618 $ 14.084 $ 15.062 $ 13.823
======== ========= ========= ========= =========
TOTAL RETURN (1) (2)........................ 55.46% 5.11% 9.98% 12.33% 24.32%
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's).... $ 24,946 $ 23,400 $ 24,772 $ 24,534 $ 18,191
Ratios to average net assets:
Gross Expenses (3)................. 1.57% 1.51% 1.47% 1.50% 1.67%
Net Expenses (3)................... 1.20% 1.20% 1.20% 1.20% 1.20%
Net Investment Income (3).......... 1.71% 0.27% 0.25% 0.10% 0.12%
Portfolio Turnover Rate................ 163.67% 150.22% 120.50% 61.14% 97.85%
</TABLE>
(1) Total returns would have been lower had certain expenses not been borne
by the adviser or its affiliates.
(2) The performance of the Portfolio shown on this page does not reflect
expenses and charges of the applicable separate accounts and variable
products, all of which vary to a considerable extent and are described
in your product's prospectus.
(3) Annualized for periods of less than one year.
See notes to financial statements.
65
<PAGE> 67
VARIABLE INVESTORS SERIES TRUST
GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
-CONTINUED-
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD...... $ 41.004 $ 34.702 $ 30.623 $ 25.866 $ 20.056
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss)........... (0.219)(4) (0.000) (0.082) (0.063) 0.007
Net Realized and Unrealized Gain
on Investments..................... 13.957 11.465 7.226 6.736 7.419
-------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS............ 13.738 11.465 7.144 6.673 7.426
-------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
From Net Investment Income............. (0.000) (0.000) (0.000) (0.000) (0.173)
In Excess of Net Investment Income..... (0.000) (0.000) (0.000) (0.002) (0.000)
From Net Realized Capital Gains........ (1.724) (5.163) (3.065) (1.914) (1.443)
-------- --------- --------- --------- ---------
Total Distributions.................... (1.724) (5.163) (3.065) (1.916) (1.616)
-------- --------- --------- --------- ---------
NET ASSET VALUE AT END OF PERIOD............ $ 53.018 $ 41.004 $ 34.702 $ 30.623 $ 25.866
======== ========= ========= ========= =========
TOTAL RETURN (1) (2)........................ 34.53% 33.29% 23.62% 25.74% 37.12%
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's).... $ 78,815 $ 84,863 $ 65,273 $ 54,565 $ 42,919
Ratios to average net assets:
Gross Expenses (3)................. 1.02% 1.03% 1.10% 1.17% 1.17%
Net Expenses (3)................... 1.02% 1.02% 1.10% 1.17% 1.17%
Net Investment Income (Loss) (3)... (0.49)% (0.39)% (0.25)% (0.23)% 0.01%
Portfolio Turnover Rate................ 56.23% 86.91% 54.74% 67.82% 166.87%
</TABLE>
(1) Total returns would have been lower had certain expenses not been borne
by the adviser or its affiliates.
(2) The performance of the Portfolio shown on this page does not reflect
expenses and charges of the applicable separate accounts and variable
products, all of which vary to a considerable extent and are described
in your product's prospectus.
(3) Annualized for periods of less than one year.
(4) Based on monthly average shares outstanding during the period.
See notes to financial statements.
66
<PAGE> 68
VARIABLE INVESTORS SERIES TRUST
MATRIX EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
-CONTINUED-
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD...... $ 16.351 $ 14.275 $ 15.254 $ 15.704 $ 12.372
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income.................. 0.011 0.047 0.287 0.659 0.559
Net Realized and Unrealized Gain
on Investments..................... 2.271 2.939 2.965 0.063 3.560
-------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS............ 2.282 2.986 3.252 0.722 4.119
-------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
From Net Investment Income............. (0.000) (0.056) (0.291) (0.654) (0.494)
In Excess of Net Investment Income..... (0.000) (0.041) (0.000) (0.000) (0.000)
From Net Realized Capital Gains........ (0.317) (0.813) (3.940) (0.518) (0.293)
-------- --------- --------- --------- ---------
Total Distributions.................... (0.317) (0.910) (4.231) (1.172) (0.787)
-------- --------- --------- --------- ---------
NET ASSET VALUE AT END OF PERIOD............ $ 18.316 $ 16.351 $ 14.275 $ 15.254 $ 15.704
======== ========= ========= ========= =========
TOTAL RETURN (1) (2)........................ 14.14% 21.11% 22.05% 4.62% 33.45%
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's).... $ 22,246 $ 22,251 $ 14,521 $ 14,448 $ 16,018
Ratios to average net assets:
Gross Expenses (3)................. 1.27% 1.48% 1.54% 1.48% 1.51%
Net Expenses (3)................... 1.15% 1.15% 1.15% 1.15% 1.15%
Net Investment Income (3).......... 0.06% 0.36% 1.63% 3.74% 3.89%
Portfolio Turnover Rate................ 127.65% 138.23% 169.75% 19.41% 48.20%
</TABLE>
(1) Total returns would have been lower had certain expenses not been borne
by the adviser or its affiliates.
(2) The performance of the Portfolio shown on this page does not reflect
expenses and charges of the applicable separate accounts and variable
products, all of which vary to a considerable extent and are described
in your product's prospectus.
(3) Annualized for periods of less than one year.
See notes to financial statements.
67
<PAGE> 69
VARIABLE INVESTORS SERIES TRUST
GROWTH & INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
-CONTINUED-
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, PERIOD ENDED
--------------------------------------------
1999 1998 1997 1996 DECEMBER 31, 1995 (1)
---- ---- ---- ---- ---------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD...... $ 15.901 $ 14.567 $ 12.421 $ 11.171 $ 10.000
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income.................. 0.103 0.112 0.127 0.070 0.045
Net Realized and Unrealized Gain
on Investments..................... 0.912 1.696 3.351 1.291 1.266
----------- ---------- ---------- ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS............ 1.015 1.808 3.478 1.361 1.311
----------- ---------- ---------- ----------- -----------
LESS DISTRIBUTIONS:
From Net Investment Income............. (0.000) (0.107) (0.127) (0.070) (0.045)
In Excess of Net Investment Income..... (0.000) (0.005) (0.000) (0.001) (0.000)
From Net Realized Capital Gains........ (0.377) (0.362) (1.205) (0.040) (0.095)
----------- ---------- ---------- ----------- -----------
Total Distributions.................... (0.377) (0.474) (1.332) (0.111) (0.140)
----------- ---------- ---------- ----------- -----------
NET ASSET VALUE AT END OF PERIOD............ $ 16.539 $ 15.901 $ 14.567 $ 12.421 $ 11.171
=========== ========== ========== =========== ===========
TOTAL RETURN (2) (3)........................ 6.27% 12.43% 28.20% 12.15% 13.09%
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's).... $ 27,132 $ 28,144 $ 21,061 $ 10,300 $ 3,335
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses (4)................. 1.26% 1.33% 1.60% 2.63% 7.27%
Net Expenses (4)................... 1.25% 1.25% 1.25% 1.25% 1.25%
Net Investment Income (4).......... 0.59% 0.70% 1.05% 0.82% 1.17%
Portfolio Turnover Rate................ 94.46% 78.37% 162.94% 131.85% 33.49%
</TABLE>
(1) From commencement of operations May 31, 1995.
(2) Total returns would have been lower had certain expenses not been borne
by the adviser or its affiliates.
(3) The performance of the Portfolio shown on this page does not reflect
expenses and charges of the applicable separate accounts and variable
products, all of which vary to a considerable extent and are described
in your product's prospectus.
(4) Annualized for periods of less than one year.
See notes to financial statements.
68
<PAGE> 70
VARIABLE INVESTORS SERIES TRUST
MULTIPLE STRATEGIES PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
-CONTINUED-
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD...... $ 17.143 $ 14.158 $ 12.699 $ 12.043 $ 10.022
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income.................. 0.058 0.078 0.103 0.143 0.137
Net Realized and Unrealized Gain
on Investments..................... 4.638 4.035 2.629 2.069 3.086
-------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS............ 4.696 4.113 2.732 2.212 3.223
-------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
From Net Investment Income............. (0.000) (0.078) (0.103) (0.144) (0.136)
In Excess of Net Investment Income (1). (0.000) (0.000) (0.000) (0.000) (0.000)
From Net Realized Capital Gains........ (0.497) (1.050) (1.170) (1.412) (1.066)
-------- --------- --------- --------- ---------
Total Distributions.................... (0.497) (1.128) (1.273) (1.556) (1.202)
-------- --------- --------- --------- ---------
NET ASSET VALUE AT END OF PERIOD............ $ 21.342 $ 17.143 $ 14.158 $ 12.699 $ 12.043
======== ========= ========= ========= =========
TOTAL RETURN (2) (3)........................ 28.00% 29.15% 21.79% 18.29% 32.24%
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's).... $ 50,406 $ 43,296 $ 35,119 $ 31,884 $ 26,380
Ratios to average net assets:
Gross Expenses (4)................. 1.10% 1.15% 1.21% 1.32% 1.33%
Net Expenses (4)................... 1.10% 1.15% 1.19% 1.20% 1.20%
Net Investment Income (4).......... 0.30% 0.50% 0.69% 1.16% 1.14%
Portfolio Turnover Rate................ 60.70% 74.00% 45.87% 92.21% 161.10%
</TABLE>
(1) For 1998 and 1997, amount was less than $0.001 per share.
(2) Total returns would have been lower had certain expenses not been borne
by the adviser or its affiliates.
(3) The performance of the Portfolio shown on this page does not reflect
expenses and charges of the applicable separate accounts and variable
products, all of which vary to a considerable extent and are described in
your product's prospectus.
(4) Annualized for periods of less than one year.
See notes to financial statements.
69
<PAGE> 71
VARIABLE INVESTORS SERIES TRUST
HIGH INCOME BOND PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
-CONTINUED-
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD...... $ 9.165 $ 9.720 $ 9.173 $ 8.589 $ 7.914
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income.................. 0.881 0.766 0.640 0.596 0.779
Net Realized and Unrealized Gain
(Loss) on Investments.............. (0.713) (0.471) 0.598 0.624 0.717
-------- ---------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS............ 0.168 0.295 1.238 1.220 1.496
-------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
From Net Investment Income............. (0.001) (0.691) (0.681) (0.596) (0.779)
In Excess of Net Investment Income..... (0.000) (0.148) (0.010) (0.040) (0.042)
From Net Realized Capital Gains........ (0.011) (0.011) (0.000) (0.000) (0.000)
-------- --------- --------- --------- ---------
Total Distributions.................... (0.012) (0.850) (0.691) (0.636) (0.821)
-------- --------- --------- --------- ---------
NET ASSET VALUE AT END OF PERIOD............ $ 9.321 $ 9.165 $ 9.720 $ 9.173 $ 8.589
======== ========= ========= ========= =========
TOTAL RETURN (1) (2)........................ 1.83% 3.04% 13.54% 14.20% 18.98%
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's).... $ 15,467 $ 21,516 $ 17,916 $ 12,835 $ 8,764
Ratios to average net assets:
Gross Expenses (3)................. 1.50% 1.46% 1.64% 1.99% 2.04%
Net Expenses (3)................... 1.20% 1.20% 1.20% 1.18% 1.20%
Net Investment Income (3).......... 7.50% 6.89% 7.15% 7.96% 8.62%
Portfolio Turnover Rate................ 38.23% 54.70% 91.54% 105.48% 82.15%
</TABLE>
(1) Total returns would have been lower had certain expenses not been borne
by the adviser or its affiliates.
(2) The performance of the Portfolio shown on this page does not reflect
expenses and charges of the applicable separate accounts and variable
products, all of which vary to a considerable extent and are described in
your product's prospectus.
(3) Annualized for periods of less than one year.
See notes to financial statements.
70
<PAGE> 72
VARIABLE INVESTORS SERIES TRUST
U.S. GOVERNMENT BOND PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
-CONTINUED-
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD...... $ 10.322 $ 10.161 $ 9.938 $ 10.510 $ 9.718
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income.................. 0.635 0.430 0.630 0.629 0.765
Net Realized and Unrealized Gain
(Loss) on Investments.............. (0.831) 0.360 0.299 (0.385) 1.191
-------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS............ (0.196) 0.790 0.929 0.244 1.956
-------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
From Net Investment Income............. (0.000) (0.427) (0.617) (0.610) (0.765)
In Excess of Net Investment Income..... (0.000) (0.008) (0.000) (0.000) (0.045)
From Net Realized Capital Gains........ (0.008) (0.192) (0.068) (0.206) (0.354)
In Excess of Net Realized
Capital Gains......................... (0.000) (0.002) (0.021) (0.000) (0.000)
-------- --------- --------- --------- ---------
Total Distributions.................... (0.008) (0.629) (0.706) (0.816) (1.164)
-------- --------- --------- --------- ---------
NET ASSET VALUE AT END OF PERIOD............ $ 10.118 $ 10.322 $ 10.161 $ 9.938 $ 10.510
======== ========= ========= ========= =========
TOTAL RETURN (1) (2)........................ (1.90)% 7.79% 9.37% 2.36% 20.18%
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's).... $ 12,588 $ 15,470 $ 9,679 $ 10,734 $ 11,618
Ratios to average net assets:
Gross Expenses (3)................. 1.39% 1.59% 1.73% 1.66% 1.59%
Net Expenses (3)................... 0.85% 0.85% 0.85% 0.85% 0.85%
Net Investment Income (3).......... 5.48% 5.43% 5.86% 5.80% 6.18%
Portfolio Turnover Rate................ 68.89% 66.12% 124.75% 244.96% 252.94%
</TABLE>
(1) Total returns would have been lower had certain expenses not been borne
by the adviser or its affiliates.
(2) The performance of the Portfolio shown on this page does not reflect
expenses and charges of the applicable separate accounts and variable
products, all of which vary to a considerable extent and are described in
your product's prospectus.
(3) Annualized for periods of less than one year.
See notes to financial statements.
71
<PAGE> 73
VARIABLE INVESTORS SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE A -- ORGANIZATION
Variable Investors Series Trust (the "Trust") was established as a
Massachusetts business trust under the laws of Massachusetts by an Agreement and
Declaration of Trust dated December 23, 1986. The Trust is an open-end, series
management investment company, which currently is comprised of eight series of
shares of beneficial interest (the "Portfolios") each of which represents the
entire interest in a separate portfolio of investments. The Portfolios are the
Small Cap Growth Portfolio, the World Equity Portfolio, the Growth Portfolio,
the Matrix Equity Portfolio, the Growth & Income Portfolio, the Multiple
Strategies Portfolio, the High Income Bond Portfolio, and the U.S. Government
Bond Portfolio.
NOTE B -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Trust in the preparation of its financial statements.
ESTIMATES: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
VALUATION OF INVESTMENTS: The Portfolios' equity securities, including
American Depositary Receipts (ADR's) and other forms of depository receipts,
traded on a national securities exchange are valued at the last sales price or,
if no closing price is available, at a bid price provided by a broker or dealer.
Debt securities are generally valued on the basis of valuations furnished by
pricing services which determine valuations for normal institutional size
trading units of debt securities, without exclusive reliance upon quoted prices.
These valuations are believed to reflect with greater accuracy the fair market
value of such securities. Short-term securities maturing in 60 days or less are
valued at cost plus earned discount to maturity (amortized cost), which
approximates market value. Investments in other mutual funds are valued at the
net asset value of those funds. Securities for which current market quotations
are not readily available are stated at fair value as determined in good faith
under the direction of the Trustees.
FOREIGN SECURITIES: Foreign securities traded on a recognized securities
exchange are valued at the last sales price in the principal market where they
are traded or, if closing prices are unavailable, at the last bid price
available prior to the time a Portfolio's net asset value is determined. Foreign
portfolio security prices are furnished by quotation services expressed in the
local currency's value and are translated into U.S. dollars at the current rate
of exchange. Foreign securities for which prices cannot be obtained by the
quotation services are valued using dealer supplied quotations.
REPURCHASE AGREEMENTS: In connection with transactions in repurchase
agreements, the Trust's custodian takes possession of the underlying collateral
securities, the value of which at least equals the principal amount, including
interest, of the repurchase transaction. To the extent that any repurchase
transaction exceeds one business day, the value of the collateral is
marked-to-market on a daily basis to ensure the adequacy of the collateral. In
the event of default of the obligation to repurchase, the Portfolio has the
right to liquidate the collateral and apply the proceeds in satisfaction of the
obligation. Under certain circumstances, in the event of default or bankruptcy
by the other party to the agreement, realization and/or retention of the
collateral or proceeds may be subject to legal proceedings, and the Portfolio
may suffer a loss.
72
<PAGE> 74
VARIABLE INVESTORS SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
-CONTINUED-
INVESTMENT TRANSACTIONS: Investment security transactions are recorded on
the date of purchase, sale, or maturity. Dividend income is recorded on the
ex-dividend date or, in the case of dividend income on foreign securities, on
the ex-dividend date or when the Trust becomes aware of its declaration.
Interest income is recorded on the accrual basis. Realized gains and losses from
security transactions are determined on the basis of identified cost.
FOREIGN CURRENCY TRANSLATIONS: The records of the Trust are maintained in
U.S. dollars. Foreign currency amounts are translated into U.S. dollars at a
current rate of exchange of such currency to determine the value of investments,
other assets and liabilities on the date of any determination of net asset value
of the Portfolios. Purchases and sales of securities and income and expenses are
converted at the prevailing rate of exchange on the respective dates of such
transactions. Net realized gain (loss) on foreign currency includes net realized
currency gains and losses recognized between accrual and payment dates. The
Portfolios do not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from fluctuations arising
from changes in market prices of securities held. Such fluctuations are included
with the net realized and unrealized gain or loss from investments.
FORWARD FOREIGN CURRENCY CONTRACTS: Upon the purchase or sale of a
security denominated in foreign currency, the Trust may enter into a forward
currency exchange contract for the purchase or sale, for a fixed amount of U.S.
dollars, of an amount of the foreign currency required to settle the security
transaction in order to hedge against a change in the foreign currency exchange
rate. Accordingly, the Trust would not realize currency gains or losses between
the trade and settlement dates on such security transactions. A Portfolio may
also engage in position hedging to protect against a decline in value relative
to the U.S. dollar of the currencies in which their portfolio securities are
denominated or quoted.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Trust on each day and the resulting net unrealized
appreciation (depreciation) and related net receivable (payable) amount are
determined by using foreign currency exchange rates supplied by a quotation
service.
Realized gain (loss) includes net gains or losses realized by the Trust on
contracts which have matured or which the Trust has terminated by entering into
an offsetting closing transaction.
FORWARD COMMITMENTS: To secure prices or yields deemed advantageous at a
particular time, each Portfolio of the Trust may enter into a forward commitment
in which a Portfolio agrees on trade date to either make or receive delivery
against payment for securities on a delayed delivery basis. The price and
interest rate of such securities are fixed at trade date. For forward commitment
purchases, the Portfolio does not earn interest on such security until
settlement date.
FEDERAL INCOME TAXES: Each Portfolio of the Trust is treated as a separate
entity for Federal tax purposes. Each Portfolio of the Trust has qualified and
intends to continue to qualify each year as a "regulated investment company"
under Subchapter M of the Internal Revenue Code, as amended. By so qualifying,
the Portfolios of the Trust will not be subject to Federal income taxes to the
extent that they distribute all of their taxable income, including net realized
capital gains, for the fiscal year.
73
<PAGE> 75
VARIABLE INVESTORS SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
-CONTINUED-
As of December 31, 1999, the High Income Bond Portfolio and the U.S.
Government Bond Portfolio had realized capital loss carryforwards, for Federal
income tax purposes, of $232,154 which expires on December 31, 2007, and
$376,206 which expires on December 31, 2007, respectively, available to be used
to offset future realized capital gains.
Any net capital and currency losses incurred after October 31, within a
Portfolio's tax year, are deemed to arise on the first day of a Portfolio's next
tax year. The Portfolios incurred and elected to defer net capital and currency
losses as follows, during such period in fiscal 1999:
<TABLE>
<CAPTION>
PORTFOLIO AMOUNT
<S> <C>
World Equity Portfolio $15,278
Growth & Income Portfolio 15
High Income Bond Portfolio 75,604
U.S. Government Bond Portfolio 10,654
</TABLE>
EXPENSES: Expenses directly attributable to a Portfolio are charged to
that Portfolio. Expenses not directly attributable to a Portfolio are allocated
equally among the affected Portfolios, allocated on the basis of relative
average net assets, or otherwise allocated among the Portfolios as the Trustees
may direct or approve.
DIVIDENDS AND DISTRIBUTIONS: Each of the Portfolios declares and
distributes dividends from net investment income, if any, and distributes its
net realized capital gains, if any, at least annually. Income and capital gain
distributions are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. These differences are
primarily due to utilization of capital loss carryovers, differing treatments
for foreign currency transactions and differences in the timing of recognition
of certain capital losses for financial reporting and tax purposes. Both
dividends and capital gain distributions are made in shares of such Portfolios
unless an election is made on behalf of the shareholder to receive dividends and
capital gain distributions in cash.
74
<PAGE> 76
VARIABLE INVESTORS SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
-CONTINUED-
NOTE C -- INVESTMENT ADVISORY AND OTHER RELATED PARTY AGREEMENTS
INVESTMENT ADVISORY AGREEMENT
First Variable Advisory Services Corp. ("FVAS") is the investment adviser
to all Portfolios of the Trust under an investment advisory agreement with the
Trust dated September 22, 1994. FVAS retained the following sub-advisers at its
own cost and expense pursuant to sub-advisory agreements dated September 22,
1994: Value Line, Inc. as sub-adviser to the Growth and Multiple Strategies
Portfolios, State Street Bank and Trust Company through its investment
management division State Street Global Advisors as sub-adviser to the Matrix
Equity Portfolio, Federated Investment Counseling as sub-adviser to the High
Income Bond Portfolio and Strong Capital Management, Inc. as sub-adviser to the
U.S. Government Bond Portfolio. FVAS retained the following sub-advisers at its
own cost and expense pursuant to sub-advisory agreements dated May 1, 1995:
Pilgrim Baxter & Associates, Ltd. as sub-adviser to the Small Cap Growth
Portfolio and Warburg Pincus Asset Management, Inc. as sub-adviser to the Growth
& Income Portfolio. FVAS retained the following sub-adviser at its own cost and
expense pursuant to a sub-advisory agreement dated December 9, 1996: Evergreen
Investment Management Company (formerly known as the Keystone Investment
Management Company) as sub-adviser to the World Equity Portfolio.
FVAS is a Massachusetts corporation which was incorporated on October 8,
1993 and which is registered with the Securities and Exchange Commission as an
investment adviser under the Investment Advisers Act of 1940, as amended. FVAS
is a wholly-owned subsidiary of First Variable, which is a wholly-owned
subsidiary of Irish Life of North America, Inc. ("ILoNA"), which is a
wholly-owned subsidiary of Irish Life Plc., of Dublin, Ireland.
As compensation for all services rendered, facilities provided and
expenses paid or assumed by FVAS under the advisory agreements, the Trust pays
compensation monthly to FVAS at the following annual rates based on the average
daily net assets of each Portfolio taken separately: 0.85% of average daily net
assets for the Small Cap Growth Portfolio; 0.70% of the first $200 million of
average daily net assets, 0.625% of the next $300 million of average daily net
assets, and 0.50% of average daily net assets in excess of $500 million for the
World Equity Portfolio; 0.70% of average daily net assets for the Growth and the
Multiple Strategies Portfolios; 0.65% of the first $100 million of average daily
net assets and 0.55% of average daily net assets in excess of $100 million for
the Matrix Equity Portfolio; 0.75% of average daily net assets for the Growth &
Income Portfolio; 0.70% of the first $40 million of average daily net assets,
0.65% of the next $20 million of average daily net assets, 0.55% of the next $15
million of average daily net assets, and 0.50% of average daily net assets in
excess of $75 million for the High Income Bond Portfolio; 0.60% of the first
$200 million of average daily net assets and 0.50% of average daily net assets
in excess of $200 million for the U.S. Government Bond Portfolio.
LIMITATIONS
First Variable has agreed to reduce its compensation for certain services
to the Trust (and, if necessary, bear certain expenses of each of the
Portfolios) through April 1, 2000 with respect to each of the Portfolios to the
extent that Portfolio expenses, other than FVAS's compensation, exceed the
annual rate of 0.50% of a Portfolio's average daily net assets (0.25% in the
case of the U.S. Government Bond Portfolio).
75
<PAGE> 77
VARIABLE INVESTORS SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
-CONTINUED-
EXPENSE REDUCTIONS
State Street Bank and Trust Company, the Trust's custodian, has agreed to
compensate the Portfolios and decrease the Trust's custodian expenses for cash
balances left uninvested in each of the Portfolios. For the year ended December
31, 1999 the Trust's expenses were reduced by $12,102.
TRUSTEES' COMPENSATION
Trustees' fees of $10,000 per year, plus $1,500 per meeting of the Board
of Trustees and $750 for each Audit Committee meeting attended (if held on a day
other than when a Board of Trustees meeting is held), are paid by the Trust to
each Trustee who is not an interested person of the Trust, First Variable, ILoNA
or FVAS. No remuneration is paid by the Trust to any Trustee or officer of the
Trust who is affiliated with First Variable, ILoNA or FVAS.
NOTE D -- INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investments, excluding
short-term securities for each Portfolio for the year ended December 31, 1999
were as follows:
<TABLE>
<CAPTION>
NON- NON-
GOVERNMENT GOVERNMENT GOVERNMENT GOVERNMENT
PURCHASES PURCHASES SALES SALES
--------- --------- ----- -----
<S> <C> <C> <C> <C>
Small Cap Growth Portfolio.............. $ 21,788,480 $ 0 $ 25,726,892 $ 0
World Equity Portfolio.................. 34,320,609 0 41,448,406 0
Growth Portfolio........................ 37,852,471 514,413 72,623,655 1,359,533
Matrix Equity Portfolio................. 28,020,916 411,641 30,818,959 223,153
Growth & Income Portfolio............... 24,569,116 312,745 27,113,877 197,479
Multiple Strategies Portfolio........... 22,111,936 3,343,334 28,781,344 1,290,359
High Income Bond Portfolio.............. 6,963,800 0 10,820,733 0
U.S. Government Bond Portfolio.......... 0 10,224,544 193,859 9,333,702
</TABLE>
The identified cost for federal income tax purposes of investments owned by each
Portfolio (including earned discount on corporate short-term notes and
commercial paper) and their respective gross unrealized appreciation and
depreciation at December 31, 1999 were as follows:
<TABLE>
<CAPTION>
GROSS UNREALIZED NET UNREALIZED
IDENTIFIED COST APPRECIATION (DEPRECIATION) APPRECIATION/(DEPRECIATION)
<S> <C> <C> <C> <C>
Small Cap Growth Portfolio............ $ 12,109,881 $ 7,176,035 $ (232,250) $ 6,943,785
World Equity Portfolio................ 16,545,943 8,874,123 (427,841) 8,446,282
Growth Portfolio...................... 42,887,761 32,841,548 (537,050) 32,304,498
Matrix Equity Portfolio............... 19,842,768 3,807,211 (949,886) 2,857,325
Growth & Income Portfolio............. 25,879,141 2,736,669 (1,427,028) 1,309,641
Multiple Strategies Portfolio......... 30,634,504 18,513,783 (536,125) 17,977,658
High Income Bond Portfolio............ 16,416,993 280,878 (1,483,726) (1,202,848)
U.S. Government Bond Portfolio........ 12,941,824 2,868 (547,260) (544,392)
</TABLE>
76
<PAGE> 78
VARIABLE INVESTORS SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
-CONTINUED-
NOTE E -- FORWARD FOREIGN CURRENCY CONTRACT
As of December 31, 1999 the World Equity Portfolio had open 3 forward
foreign currency contracts which contractually obligate the Portfolio to deliver
currencies at a specified date, as follows:
<TABLE>
<CAPTION>
NET UNREALIZED
CURRENCY PURCHASED SETTLEMENT DATE COST VALUE APPRECIATION(DEPRECIATION)
------------------ --------------- ---- ----- --------------------------
<S> <C> <C> <C> <C>
65,857,560 Japanese Yen 01/31/00 $ 642,864 $ 647,949 $ 5,085
-----------
CURRENCY SOLD
65,857,560 Japanese Yen 01/31/00 632,000 647,949 (15,949)
66,218,931 Japanese Yen 02/16/00 639,000 653,136 (14,136)
-----------
(30,085)
-----------
$ (25,000)
===========
</TABLE>
NOTE F - TAX INFORMATION (UNAUDITED)
For Federal income tax purposes, the following information is furnished with
respect to the distributions of the Trust for it's fiscal year ended December
31, 1999:
World Equity Portfolio, Growth Portfolio, Matrix Equity Portfolio, Growth &
Income Portfolio, Multiple Strategies Portfolio, and High Bond Income Portfolio
designate $209,434, $2,424,345, $301,257, $637,116, $1,150,841 and $21,651,
respectively, as long term capital gain dividends paid.
NOTE G: SPECIAL MEETING OF SHAREHOLDERS - APRIL 23, 1999 (UNAUDITED)
A Special Meeting of Shareholders of Variable Investors Series Trust was held on
April 23, 1999.
The Trustees elected at the meeting were: Paul G. Chenault and John M. Soukup.
The other Trustees now in office are: Wesley E. Horton, W. Lawrence Howe, Laird
E. Wiggin, and Norman A. Fair.
The matters voted upon and the results of the voting were as follows:
1. Election of Trustees:
<TABLE>
<CAPTION>
FOR: WITHHOLDING
--- AUTHORITY:
-----------
<S> <C> <C>
Paul G. Chenault 9,340,644.725 260,698.748
John M. Soukup 9,360,374.922 240,968.551
</TABLE>
77
<PAGE> 79
VARIABLE INVESTORS SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
-CONTINUED-
2. To approve a New Investment Advisory Agreement between the Trust and
First Variable Advisory Services Corp.
<TABLE>
<CAPTION>
NAME OF PORTFOLIO FOR: AGAINST: ABSTAIN:
<S> <C> <C> <C>
Growth 1,467,870.036 27,443.271 72,873.647
Growth & Income 1,479,217.970 25,582.757 86,166.801
High Income Bond 1,058,588.668 11,928.431 64,443.036
Matrix Equity 814,870.551 14,528.181 37,955,417
Multiple Strategies 1,228,402.241 29,191.681 56,163.113
Small Cap Growth 884,455.938 4,875.093 44,594.966
U.S. Government Bond 972,630.117 16,935.145 15,487.866
World Equity 1,117,869.012 26,449.446 42,820.087
</TABLE>
NOTE H: SPECIAL MEETING OF SHAREHOLDERS - JUNE 23, 1999 (UNAUDITED)
A Special Meeting of Shareholders of the Growth & Income Portfolio of Variable
Investors Series Trust was held on June 23, 1999.
The matter voted upon and the results of the voting were as follows:
To approve a New Sub-Advisory Agreement between First Variable Advisory
Services Corp. and a direct or indirect U.S. investment advisory subsidiary
of Credit Suisse Group (the "New Sub-Advisor"), such New Sub-Advisory
Agreement to contain the same terms and conditions as the Current
Investment Sub-Advisory Agreement, except for the dates of execution and
termination and the identification of the New Sub-Adviser.
FOR: AGAINST: ABSTAIN:
1,492,056.681 40,258.775 149,256.115
78
<PAGE> 80
PRINCIPAL OFFICERS AND TRUSTEES OF
VARIABLE INVESTORS SERIES TRUST
----------------
PAUL G. CHENAULT, TRUSTEE
NORMAN A. FAIR, TRUSTEE
WESLEY E. HORTON, TRUSTEE
W. LAWRENCE HOWE, TRUSTEE
LAIRD E. WIGGIN, TRUSTEE
JOHN SOUKUP, PRESIDENT AND TRUSTEE
JEFFREY HOELZEL, SECRETARY
CHRIS HARDEN, TREASURER
----------------
INVESTMENT ADVISER
FIRST VARIABLE ADVISORY SERVICES CORP.
----------------
THE INFORMATION CONTAINED IN THIS REPORT IS INTENDED FOR GENERAL INFORMATIONAL
PURPOSES ONLY. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE
INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY CURRENT TRUST AND SEPARATE ACCOUNT
PROSPECTUSES WHICH CONTAIN IMPORTANT INFORMATION CONCERNING THE TRUST, THE
COMPANY, AND ITS CURRENT PUBLIC OFFERING OF VARIABLE ANNUITY CONTRACTS AND
VARIABLE LIFE INSURANCE POLICIES.
79
<PAGE> 81
TAX ADVANTAGE PRODUCT CHOICES
First Variable
Life Insurance
Company
[FIRST VARIABLE LIFE INSURANCE COMPANY LOGO]
Products
VARIABLE UNIVERSAL LIFE
CAPITAL SOLUTIONS VUL
With the potential to...
BUILD WEALTH with tax-deferred growth.
ENJOY INCOME with tax-advantages through loans and withdrawals.
PRESERVE ASSETS with a death benefit that can pass free of income tax to
heirs.*
SINGLE PREMIUM VARIABLE LIFE
CAPITAL ONE PAY VL
With the potential to...
BUILD WEALTH with tax-deferred growth.
ENJOY INCOME through loans and withdrawals after age 59-1/2.**
PRESERVE ASSETS with a death benefit that can pass income tax free to
heirs.*
VARIABLE ANNUITIES
CAPITAL SIX VA
CAPITAL FIVE VA
CAPITAL NO LOAD VA
With the potential to...
BUILD WEALTH with tax-deferred growth.
ENJOY INCOME with tax-advantaged access through withdrawals and
annuitization.**
PRESERVE ASSETS with a death benefit that guarantees heirs receive at least
the original investment regardless of market performance.*
*May be subject to estate taxation
**Earnings are subject to income tax when withdrawn or paid as a death
benefit. Distributions before age 59-1/2 may also be subject to 10%
penalty.
All products not yet available in all states.
TAX
ADVANTAGED
PRODUCT CHOICES
Special Programs
ASSET ALLOCATION STRATEGIES
Asset Allocation is dividing your portfolio among several different investment
categories, such as stocks, bonds and money market instruments. Asset allocation
theory helps you and your investment professional design a portfolio that meets
your tolerance for risk. It can also help you gain the most potential return for
a certain risk level. First Variable Life offers a menu of asset allocation
models that can help you build, enjoy and preserve your wealth.
AUTOMATIC ASSET REBALANCING
Once you and your investment professional have selected a mix of investments,
automatic asset rebalancing helps you maintain it by rebalancing your portfolio.
Choose from quarterly, semi-annual or annual rebalancing. Your quarterly
statement will show activities to make tracking your investment easier.
DOLLAR COST AVERAGING
You can take advantage of a time-tested investment technique of dollar cost
averaging within your First Variable product. This strategy invests equal
amounts at regular intervals over time to take advantage of the natural ups and
downs of the financial markets. The key to dollar cost averaging is staying with
your plan, regardless of market performance. At First Variable, you can use
dollar cost averaging to move from one investment choice to another.
Dollar cost averaging does not assure a profit or protect against loss in
declining markets. Since prices fluctuate, consider your ability to continue
purchases through both high and low price levels.
<PAGE> 82
[FIRST VARIABLE LIFE INSURANCE COMPANY LOGO]
Securities distributed through First Variable Capital Services, Inc.
2122 York Road, Suite 300 - Oak Brook, IL 60523
800-499-0713 - www.firstvariable.com
Bulk Rate
U.S.POSTAGE
PAID
Permit #7
Ashland, MA
FIRST VARIABLE LIFE INSURANCE
A HISTORY OF INNOVATION
Founded in 1968, First Variable Life Insurance Company is an innovative
financial services company and the first to offer variable life insurance in the
United States. First Variable Life is a proud member of the Irish Life of North
America (ILoNA) family, the holding company for the U.S. operations of Irish
Life & Permanent plc.
Headquartered in Dublin, Ireland, Irish Life & Permanent plc is the market
leader for retail financial services in Ireland. With assets in excess of $25
billion, it specializes in life insurance, pension plans, investment management
and other personal financial services.
Together, the ILoNA family of companies markets a broad range of financial
products and services directed at the quickly evolving needs of today's
consumer. ILoNA's other business units include:
- - Interstate Assurance Company
- - IAC Securities Corporation
- - Guarantee Reserve Life Insurance Company
- - Money Matters Exchange
Trust the experience, knowledge and expertise of the company that specializes in
tax-deferred and tax-advantaged financial products. First Variable Life
Insurance Company strives to help investors build, enjoy and preserve wealth for
many generations to come.
[GRAPHIC]
Neither First Variable Life Insurance Company nor its agents give legal,
accounting or tax advice. Consult an attorney or tax advisor about the
consequences of financial decisions.
All products not yet available in all states.
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