<PAGE>
VARIABLE INVESTORS SERIES TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 1996
COMMON STOCK AND MULTIPLE STRATEGIES PORTFOLIOS [LOGO]
SUB-ADVISOR: VALUE LINE ASSET MANAGEMENT
The market environment for 1996 followed closely the script from 1995. The
economy continued to show moderate growth and inflation once again failed to
rear its ugly head. After a slow start the economy seemed to pick up
strength in the second quarter, only to slow down in the third quarter.
Preliminary data indicates the economy strengthened again in the fourth
quarter, but for the year as a whole growth was a modest 2% to 2.5%.
Inflation remains benign. The stock market exhibited a roller coaster ride
to this stop/start movement of the economy. After rallying strongly during
the first six months, the market had a sharp correction in early summer in
reaction to the second quarter's economic growth and the corresponding rise
in interest rates. The yield on the 30-year U.S. Treasury bond surged from
less than 6.00% to nearly 7.25%. The S&P 500 retreated nearly 10% from its
high in May. As evidence mounted that growth was slowing again in the third
quarter, while corporate profits were exceeding expectations, the stock
market rallied sharply in late summer and finished the year near all time
highs.
While fourth quarter economic growth appears to be stronger than expectations,
1997 is forecasted to be another year of moderate economic growth, low
inflation, and modest increases in corporate profitability. The stock market
should continue to do well in this type of environment.
COMMON STOCK PORTFOLIO
The investment objective of the Common Stock Portfolio is capital growth
which it seeks to achieve through a policy of investing primarily in a
diversified portfolio of common stocks and securities convertible into or
exchangeable for common stock. The secondary objective is current income when
consistent with the primary objective.
The Common Stock Portfolio had a total return (including dividends and
income) for 1996 of 25.74% as compared to 22.99% for the unmanaged Standard &
Poor's 500 Index ("S&P 500"). Stock selection is guided by the Value Line
Timeliness Ranking System which favorably ranks stocks with superior earnings
growth and price momentum. The Portfolio benefited from an overweighting in
three economic sectors that outperformed the overall market. The largest
overweighting was in technology stocks, particularly networking and
enterprise software companies. The technology stocks in the S&P 500 were up
more than 40% on average. The Portfolio was also overweighted in energy
stocks, especially oil service and drillers, and this was one of the best
performing industries last year. The third overweighted sector was financial
services, primarily banks and insurance companies, two industries that are
undergoing consolidation and have excess capital. The financial services
stocks in the S&P 500 returned more than 35% in 1996. In addition, the
Portfolio benefited from a significant underweighting in utility stocks which
were weak due to increases in interest rates.
For 1997, we have a more subdued outlook for the stock market, following two
strong years, and believe that a high single digit or low double digit return
is likely. In this scenario, issue selection will be increasingly more
important than it was the last several years. We expect to remain
overweighted in technology, a new growth area, with a primary focus on
networking stocks. Financial services will also continue to see heavy
overweighting. During 1996, we built up a substantial energy position due to
favorable fundamentals for service and drilling companies, and expect to
increase this position slightly. Utilities and consumer staples will remain
underweighted, due to poor earnings and a lack of pricing power.
VALUE LINE ASSET MANAGEMENT
<PAGE>
VARIABLE INVESTORS SERIES TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 1996
CONTINUED
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE COMMON STOCK
PORTFOLIO AND THE S&P 500 INDEX *
- --------------------------------------------------------------------------------
[GRAPH]
* This Index is an unmanaged index in which investors can not 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, 1996
Past 1 Past 5 Past 10
year years years
---- ----- -----
Common Stock Portfolio 25.74% 11.51% 13.75%
"Total Return" is calculated- including reinvestment of all income dividends
and capital gain distributions. Results represent past performance and do
not indicate future results. The value of an investment in the Common Stock
Portfolio and the return on the investment both will fluctuate and redemption
proceeds may be higher or lower than an investor's original cost.
** On April 1, 1994, First Variable Advisory Services Corp. became investment
adviser. Prior to that date, results were achieved by former investment
advisers. Performance data is historical and includes changes in share price
and reinvestment of dividends and capital gains. Performance numbers are net
of all fund 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.
2
<PAGE>
VARIABLE INVESTORS SERIES TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 1996
CONTINUED
MULTIPLE STRATEGIES PORTFOLIO
The investment objective of the Multiple Strategies Portfolio is to seek as
high a level of return as is considered consistent with prudent investment
risk by investing in a portfolio of equity securities, bonds, and short term
instruments in varying proportions.
On December 31, 1996, the Portfolio was 72% invested in common stocks, 16% in
bonds with a mixture of high grade corporates, government, and government
agencies, and approximately 11% in short term securities. This mixture (more
weighted in stocks than a typical 60% equities/40% bonds balanced portfolio)
proved to be beneficial as the stock market posted a 20%+ return last year,
while the bond market had a negative total return. The Portfolio had a total
return of 18.29% for the year, compared to 15.16% for a 60% S&P 500/40%
Lehman Brothers Government Corporate Bond Index mixture.
The equity holdings in the Portfolio mirror those of the Common Stock
Portfolio and will continue to do so. Stock selection is guided by the Value
Line Timeliness Ranking System which favorably ranks stocks with superior
earnings growth and price momentum. We anticipate a slightly more
conservative equity position in the Portfolio, to around 65%, based upon our
view of only a modest upside for the stock market in 1997. With bonds having
underperformed in 1996, we anticipate an increase in the bond position from
the current low level, particularly if the economy shows signs of slowing
down from the fast pace of the fourth quarter of 1996.
VALUE LINE ASSET MANAGEMENT
3
<PAGE>
VARIABLE INVESTORS SERIES TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 1996
CONTINUED
- --------------------------------------------------------------------------------
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 *
- --------------------------------------------------------------------------------
[GRAPH]
* These Indices are unmanaged indices in which investors can not 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, 1996
Past 1 Past 5 Life of
year years Portfolio***
---- ----- ------------
Multiple Strategies Portfolio 18.29% 11.47% 10.94%
"Total Return" is calculated including reinvestment of all income dividends
and capital gain 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.
** On April 1, 1994, First Variable Advisory Services Corp. became investment
adviser. Prior to that date, results were achieved by former investment
advisers. Performance data is historical and includes changes in share price
and reinvestment of dividends and capital gains. Performance numbers are net
of all fund 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 5, 1987)
4
<PAGE>
VARIABLE INVESTORS SERIES TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 1996
CONTINUED
HIGH INCOME BOND PORTFOLIO [LOGO]
SUB-ADVISOR: FEDERATED INVESTORS
The High Income Bond Portfolio invests in lower quality corporate bonds with
a goal of obtaining high current income and capital appreciation. During
1996, the high yield bond market delivered very attractive returns to
investors. The recession that many economic forecasters expected to begin in
1996 failed to materialize. Instead, the domestic economy continued its
pattern of moderate economic growth coupled with low inflation. In this
environment, stock prices rose while high quality bond prices fell as
interest rates, in response to the stronger economic growth, moved higher.
However, high yield bond prices actually increased as the better than
expected economic environment, which reduced investors' fears of negative
credit outcomes, offset the general rise in interest rates. For example, the
yield spread between the First Boston High Yield Index and Treasuries
narrowed from 484 basis points to 355 basis points during the year more than
offsetting the approximately 85 basis point rise in the rate for 10 year
Treasury securities. The technical environment for high yield bonds was also
very strong during the year. Over $70 billion worth of new issues were easily
absorbed by strong demand. Moderate economic growth, low default rates, and
strong demand resulted in superior performance for high yield bonds relative
to high quality bonds. For example, the Lehman Brothers High Yield Bond
Index returned 11.35% while the Lehman Brothers Aggregate Bond Index, a
measure of high quality bond performance, returned 3.63%.
The High Income Bond Portfolio outperformed the Lehman Brothers High Yield
Bond Index during 1996 returning 14.20% versus 11.35% for the Index. Several
factors were responsible for the Portfolio's strong performance. First, the
Portfolio had a greater portion of its assets allocated to the single B
sector than the Index. Given the general rise in interest rates, the more
credit sensitive single B sector outperformed the more interest rate
sensitive double B sector by over 450 basis points. The Portfolio also
benefited by substantial merger and acquisition activity involving high yield
issuers. For example, CONTINENTAL CABLEVISION, PACE INDUSTRIES, MOTOR WHEEL,
PARK COMMUNICATION AND TRANS OCEAN CONTAINER were all acquired by stronger
entities during the year. The Portfolio also benefited from its under weight
position in the restaurant sector which performed poorly during the year.
Finally, the Portfolio benefited from a good security selection during the
period as deteriorating credit situations were minimal. On the negative side
the Portfolio's underweight in specialty retail and gaming hurt performance
as these sectors outperformed the overall market. Also the Portfolio's
overweight in the broadcasting sector negatively impacted performance.
Our outlook for 1997 remains optimistic for high yield securities. We
believe that economic growth will continue to be moderate, inflation will
remain under control and interest rates should remain in a trading range.
From a macro economic stand point this is a very attractive scenario for high
yield securities as issuer creditworthiness should remain at acceptable
levels. The technical environment is also attractive. Demand for high yield
securities continues to be strong. We believe these two factors will result
in a narrowing of the yield spread or risk premium between high yield bonds
and Treasuries. However, the yield spread between high yield bonds and
Treasuries exits 1996 at its low point for this economic cycle. This has two
implications. First, the relative total return advantage of high yield bonds
over high quality bonds will probably not approach the roughly 775 basis
points advantage experienced in 1996. Second, individual companies which do
not meet expectations will be dealt with harshly by the market as current
spread levels leave little room for disappointment.
FEDERATED INVESTORS
5
<PAGE>
VARIABLE INVESTORS SERIES TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 1996
CONTINUED
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE HIGH INCOME BOND
PORTFOLIO AND THE LEHMAN BROTHERS SINGLE "B" INDEX *
- --------------------------------------------------------------------------------
[GRAPH]
* This Index is an unmanaged index in which investors can not 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, 1996
Past 1 Past 5 Life of
year years Portfolio***
---- ----- ------------
High Income Bond Portfolio 14.20% 10.93% 10.27%
"Total Return" is calculated including reinvestment of all income dividends
and capital gain 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.
** On April 1, 1994, First Variable Advisory Services Corp. became investment
adviser. Prior to that date, results were achieved by former investment
advisers. Performance data is historical and includes changes in share price
and reinvestment of dividends and capital gains. 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 (June 1, 1987)
6
<PAGE>
<TABLE>
<CAPTION>
growth of $10,000
year/qtr vist lehman vist lehman vist
high inc single "B" us govt govt tr tilt utility s&p util
<S> <C> <C> <C> <C> <C> <C>
1994 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
APR 1, 1994 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
JUN 30 $9,906 $10,010 $9,929 $9,885 $9,940 $9,987
SEP 30 $9,879 $10,198 $9,960 $9,927 $10,180 $10,076
DEC 31, 1994 $9,655 $10,215 $9,959 $9,962 $10,009 $9,821
MAR 31 $10,167 $10,745 $10,474 $10,431 $10,604 $10,484
JUN 30 $10,729 $11,299 $11,162 $11,078 $11,153 $11,259
SEP 30 $11,102 $11,641 $11,403 $11,273 $12,369 $12,521
DEC 31, 1995 $11,487 $11,907 $11,968 $11,788 $13,357 $13,923
MAR 31 $11,795 $12,213 $11,663 $11,522 $12,989 $13,260
JUN 30 $11,948 $12,464 $11,666 $11,576 $13,446 $13,974
SEP 30 $12,635 $13,053 $11,839 $11,772 $12,835 $13,503
DEC 31, 1996 $13,123 $13,523 $12,217 $12,115 $13,973 $14,403
</TABLE>
<TABLE>
<CAPTION>
growth of $10,000
year/qtr vist
comm stk s&p 500
<S> <C> <C>
1994 $10,000 $10,000
APR 1, 1994 $10,000 $10,000
JUN 30 $9,393 $9,966
SEP 30 $10,141 $10,380
DEC 31, 1994 $10,264 $10,303
MAR 31 $10,834 $11,305
JUN 30 $12,461 $12,383
SEP 30 $14,180 $13,365
DEC 31, 1995 $14,075 $14,169
MAR 31 $15,209 $14,930
JUN 30 $15,970 $15,599
SEP 30 $16,924 $16,081
DEC 31, 1996 $17,708 $17,420
</TABLE>
<TABLE>
<CAPTION>
growth of $10,000
year/qtr vist vist lehman
world equity msci world mul strat govt/corp s&p 500
<S> <C> <C> <C> <C> <C>
1994 $10,000 $10,000 $10,000 $10,000 $10,000
APR 1, 1994 $10,000 $10,000 $10,000 $10,000 $10,000
JUN 30 $9,830 $10,301 $9,364 $9,876 $9,966
SEP 30 $10,523 $10,522 $9,913 $9,925 $10,380
DEC 31, 1994 $10,707 $10,447 $9,974 $9,962 $10,303
MAR 31 $10,921 $10,957 $10,475 $10,458 $11,305
JUN 30 $11,806 $11,375 $11,845 $11,136 $12,383
SEP 30 $13,312 $11,849 $13,154 $11,343 $13,365
DEC 31, 1995 $13,310 $12,329 $13,189 $11,872 $14,169
MAR 31 $13,721 $12,772 $13,884 $11,594 $14,930
JUN 30 $14,646 $13,131 $14,351 $11,648 $15,599
SEP 30 $14,263 $13,187 $15,053 $11,854 $16,081
DEC 31, 1996 $14,956 $13,666 $15,609 $12,217 $17,420
</TABLE>
<TABLE>
<CAPTION>
growth of $10,000
year/qtr vist russell vist
small cap 2000.00 gro & inc s&p 500
<S> <C> <C> <C> <C>
1994
ARIL 1, 1994
JUNE 30
SEPT 30
DEC 31, 1994
MARCH 31
MAY 4, 1995 $10,000 $10,000 $10,000 $10,000
JUN 30 $10,939 $10,676 $10,152 $10,232
SEP 30 $12,593 $11,731 $11,145 $11,043
DEC 31, 1995 $13,008 $11,985 $11,310 $11,708
MAR 31 $14,439 $12,600 $12,747 $12,337
JUN 30 $16,705 $13,230 $12,907 $12,890
SEP 30 $17,587 $13,275 $12,162 $13,288
DEC 31, 1996 $16,582 $13,965 $12,680 $14,395
</TABLE>
<PAGE>
VARIABLE INVESTORS SERIES TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 1996
CONTINUED
TILT UTILITY PORTFOLIO [LOGO]
SUB-ADVISOR: STATE STREET GLOBAL ADVISORS
The investment objective of the Tilt Utility Portfolio is capital
appreciation and current income. The Portfolio will seek to achieve its
investment objective by investing in a diversified portfolio of common stock
and income securities issued by companies engaged in the utilities industry
(electric, gas, water, and telecommunications).
The strategy employed by State Street Global Advisors evaluates a broad
universe of approximately 200 utility stocks based upon two independent
criteria - value and growth. The manager looks for stocks that, in
aggregate, represent what we believe are the best value and future growth
opportunities. The strategy, which is computer-model driven, is based on a
stock selection methodology which builds a Portfolio that seeks to be neutral
to broad economic events within the utility sector, while focusing on stocks
that have increasing earnings estimates and are undervalued on a fundamental
basis.
The utility sector was a market laggard in 1996. The Portfolio had a total
return for 1996 of 4.62%, while the S&P Utility Index returned 3.12%, as
compared to 22.99% for the S&P 500 Index. Interest rate uncertainty,
independent power producer issues, and pending telecommunication deregulation
have led to uncertainty, and hence sluggish performance for the utility
sector.
Predictions for a market correction could positively influence the utilities
sector, as investors shift assets to a defensive sector of the market.
Historically, the utility sector has provided defense in such market
conditions, as it is usually less affected by market corrections than the
market as a whole.
The Portfolio is currently well-positioned, holding stocks which have rising
earning estimates that we believe are undervalued from a fundamental
perspective.
STATE STREET GLOBAL ADVISORS
7
<PAGE>
VARIABLE INVESTORS SERIES TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 1996
CONTINUED
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE TILT UTILITY
PORTFOLIO AND THE S&P UTILITY INDEX *
- --------------------------------------------------------------------------------
[GRAPH]
* This Index is an unmanaged index in which investors can not 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, 1996
Past 1 Past 5 Life of
year years Portfolio***
---- ----- ------------
Tilt Utility Portfolio 4.62% 10.48% 12.60%
"Total Return" is calculated including reinvestment of all income dividends
and capital gain distributions. Results represent past performance and do
not indicate future results. The value of an investment in the Tilt Utility
Portfolio and the return on the investment both will fluctuate and redemption
proceeds may be higher or lower than an investor's original cost.
** On April 1, 1994, First Variable Advisory Services Corp. became investment
adviser. Prior to that date, results were achieved by former investment
advisers. Performance data is historical and includes changes in share price
and reinvestment of dividends and capital gains. 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 (June 16, 1988)
8
<PAGE>
[LOGO]
VARIABLE INVESTORS SERIES TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 1996
CONTINUED
U.S. GOVERNMENT BOND PORTFOLIO
SUB-ADVISOR: STRONG CAPITAL MANAGEMENT, INC.
The investment objective of the U.S. Government Bond Portfolio is to seek
current income and preservation of capital through investing primarily in
bonds issued by the U.S. Government and its agencies. The majority of the
investments in the Portfolio are issued or guaranteed as to timely payment of
principal and interest by the U.S. Government, its agencies or its
instrumentalities. While the U.S. Government guarantees individual
securities in the Portfolio, it does not guarantee the Portfolio's share
price.
THE PORTFOLIO HELD ITS OWN IN A DIFFICULT MARKET
During a year when the bond market offered a variety of challenges for
investors, the Portfolio performed well versus its peers. For the 12-month
period ended December 31, 1996, the Portfolio achieved a total return of
2.36%, compared to 2.01% for the Lipper General U.S. Government Bond Index.
A TURBULENT MARKET AT THE LONG END
The Portfolio achieved its return amid a skittish year when the market
couldn't seem to make up its mind about interest rates or the economy.
Coming into the year, many investors and analysts expected weak economic
growth to continue in the United States. In fact, the Federal Reserve cut
the Federal Funds rate to 5.25% in January, a continuing of the easing it
began the previous July, and a sign that the Fed believed the economy needed
at least a modest stimulus. However, in February 1996, an unexpectedly large
number of new jobs--and subsequent indications of a strengthening
economy--led many to believe that economic growth was accelerating rather
than weakening. In response, yields across all maturities reversed direction
and headed higher, particularly on longer term bonds, where prices fell
through mid-June. Through the summer and into fall, however, the market
seemed to become more comfortable with the underlying fundamentals of the
economy. Despite slightly stronger growth, inflation remained subdued and it
appeared that GDP was unlikely to grow faster than 3%. Against this
backdrop, the chances of substantially higher rates diminished, the Federal
Reserve left the Federal Funds rate unchanged, and interest rates began to
moderate as the fiscal year drew to a close.
OUR VIEW CHANGED LITTLE
While the market's psychology shifted several times during the fiscal year,
our outlook remained fundamentally unchanged. We saw little justification
for major alterations in the Portfolio, a view vindicated by the fact that
inflation remained subdued throughout the fiscal year, and the fact that the
Federal Reserve made no move to raise the Federal Funds rate. Most of our
strategy revolved around making tactical moves to help add value through the
turbulent market. Primarily, we overweighted mortgages through most of the
year, because they tend to offer more income than similar maturity
Treasuries, helping make the Portfolio less sensitive to price moves.
9
<PAGE>
VARIABLE INVESTORS SERIES TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 1996
CONTINUED
WE ANTICIPATE CURRENT CONDITIONS TO REMAIN IN PLACE
While 1996 was a difficult year for investors in longer-term bonds, the
market now appears to have settled down in anticipation of slow, steady
economic growth. There are several reasons why we anticipate these conditions
will remain in place for the near term. First, it's unlikely that inflation
will pick up if the economy's growth rate remains between 2-3%. Second, the
market appears fairly valued, given a slow growth outlook, which should help
stabilize prices. And finally, the November election has kept in place a
political status quo in Washington that, so far, has been beneficial for the
financial markets. Overall, the environment appears quite favorable for bond
investors.
STRONG CAPITAL MANAGEMENT, INC.
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE U.S. GOVERNMENT
BOND PORTFOLIO AND THE LEHMAN BROTHERS GOVERNMENT BOND INDEX *
- --------------------------------------------------------------------------------
[GRAPH]
* This Index is an unmanaged index in which investors can not 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.
10
<PAGE>
VARIABLE INVESTORS SERIES TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 1996
CONTINUED
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS **
- --------------------------------------------------------------------------------
Periods ended December 31, 1996
Past 1 Past 5 Life of
year years Portfolio***
---- ----- ------------
U.S. Government Bond Portfolio 2.36% 6.79% 8.43%
"Total Return" is calculated including reinvestment of all income dividends
and capital gain 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.
** On April 1, 1994, First Variable Advisory Services Corp. became investment
adviser. Prior to that date, results were achieved by former investment
advisers. Performance data is historical and includes changes in share price
and reinvestment of dividends and capital gains. 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 27, 1987)
11
<PAGE>
VARIABLE INVESTORS SERIES TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 1996
CONTINUED
WORLD EQUITY PORTFOLIO [LOGO]
SUB-ADVISOR: KEYSTONE INVESTMENT MANAGEMENT COMPANY
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.
1996 PERFORMANCE
The World Equity Portfolio consists of 44% U.S. small cap stocks and 56%
international blue chips. The Portfolio's total return for 1996 was 12.33%
which is broken down into U.S. small caps performing 11.07% and international
stocks performing 13.36%. The Portfolio outperformed relative to its
benchmark, the Morgan Stanley Capital International World Index, which
returned 10.84% for the year 1996.
INTERNATIONAL PORTION
International performance for 1996 in Europe was due to low inflation, low
interest rates, slow growth, strong bond markets and cost cutting by more
European corporations. At the end of the year, 32% of the Portfolio was
invested in European stocks. In Asia, the positive performance came from
Hong Kong, while Japan ended down. The Portfolio invested 17% of its stocks
from the Far East with 10.3% in Japan. Lastly, in Latin America, the
important market of Brazil did well. The Portfolio has 0.7% in Brazil, and 5%
in emerging markets worldwide. During 1996, the U.S. dollar appreciated
12.4% vs. the Yen and 8.1% vs. the deutsche mark. In economic terms, 65% of
the Portfolio was in U.S. dollars during the year. This was made up of 43%
in U.S. equities, 9% in countries whose currency is linked to the U.S. dollar
and 13% in currency hedges.
INTERNATIONAL OUTLOOK FOR 1997
We are positive on the outlook for international equity markets in 1997.
Worldwide economic growth should increase moderately at about 2.5% for the
G-7 countries with emerging economies growing at 5%. Inflation and interest
rates should continue to be moderate and well below U.S. interest rates.
Restructuring should continue in Europe and Japan. The dollar, difficult to
forecast in the best of times, should end 1997 at levels moderately above
current January 1997 levels. The dollar "strength" seen in 1996 should make
itself felt in 1997 by making non-U.S. goods marginally more price
competitive to U.S. goods. The Japanese market has had a rocky start in
1997, but the Portfolio's holdings are principally in large blue chip
exporters, which benefit from a weaker Yen. The biggest risks to our positive
outlook would be the ripple effects coming from a sharp decline in the U.S.
market (which we do not expect). Valuations on international equities are
reasonable on an absolute basis and relative to the United States. We would
expect emerging markets generally to offer higher returns than the more
mature economies.
DOMESTIC PORTION
During 1996, the U.S. small cap market was a difficult arena for investing.
Small cap stocks did reasonably well in the first half of the year but then
fears surrounding the economy, interest rates and inflation persuaded
investors to stay with large cap, more liquid stocks and, as a result, large
cap stocks outperformed small cap stocks significantly.
12
<PAGE>
VARIABLE INVESTORS SERIES TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 1996
CONTINUED
The Portfolio's U.S. small cap portion 1996 performance was 11.07% versus the
benchmark, the Russell 2000 Growth Index, of 11.26%. The 1996
underperformance was attributed to a more aggressive stance and volatility in
the Portfolio versus its benchmark and the Portfolio's conviction to staying
with smaller cap issues relative to its benchmark.
OUTLOOK
Our investment strategy is long term and we strongly believe small cap stocks
will perform well in 1997. There is already evidence of this happening as
small cap stocks have outperformed the large cap indices since the second
half of December 1996 and the first part of January 1997.
We believe this trend will continue. As the economy, interest rates and
inflation remain stable, investment interest will broaden out into the
secondary smaller cap markets as these issues will continue to show
accelerating earnings growth rates. It is also clear on a valuation basis
that small companies have lagged larger companies, so there is room for price
appreciation with small caps despite record highs for the broad stock market.
KEYSTONE INVESTMENT MANAGEMENT COMPANY
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE WORLD EQUITY
PORTFOLIO AND THE MSCI WORLD INDEX *
- --------------------------------------------------------------------------------
[GRAPH]
* 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.
13
<PAGE>
VARIABLE INVESTORS SERIES TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 1996
CONTINUED
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS **
- --------------------------------------------------------------------------------
Periods ended December 31, 1996
Past 1 Past 5 Life of
year years Portfolio***
---- ----- ------------
World Equity Portfolio 12.33% 12.08% 8.05%
"Total Return" is calculated including reinvestment of all income dividends
and capital gain 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.
** On April 1, 1994, First Variable Advisory Services Corp. became investment
adviser. Prior to that date, results were achieved by former investment
advisers. Performance data is historical and includes changes in share price
and reinvestment of dividends and capital gains. 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 (June 10, 1988)
14
<PAGE>
VARIABLE INVESTORS SERIES TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 1996
CONTINUED
SMALL CAP PORTFOLIO [LOGO]
SUB-ADVISOR: PILGRIM, BAXTER & ASSOCIATES, LTD.
The investment objective of the Small Cap Portfolio is to seek capital
appreciation by investing, under normal conditions, at least 65% of its total
assets in securities of companies with market capitalizations or annual
revenues under $1 billion at time of purchase.
During 1996, we continued to find strong growth ideas and managements to
invest in, and looked forward with renewed confidence after each quarterly
reporting season. Unfortunately, the market seemed to ignore the positive
earnings surprises posted by so many growth companies and opted instead for
the perceived "safety" of large-cap blue-chip names. Many of the year's
standout names in the small cap arena were in the technology sector (REMEDY,
up 172%; MCAFEE ASSOCIATES, up 140%; and ASPECT TELECOMMUNICATIONS, up 90%).
Shares of service companies also made significant advances during 1996
(UNITED WASTE SYSTEMS, up 85%; and U.S. FILTER, up 79%), while consumer and
health care names struggled for much of the year.
For the 12 month period ended December 31, 1996, the Small Cap Portfolio
achieved a total return of 27.39% compared to 16.54% for the unmanaged
Russell 2000 Index. Although our performance numbers for the year are very
respectable, we believe they reflect far more commendable work on the part of
our investment team than some years with much more banner-waving
outperformance. It's been an uphill battle for small cap stock managers
since May, when the Dow Jones Industrial Average took over the market
leadership from the Russell 2000 Index. Not only have small stocks lagged,
but growth-style investing has been out of favor over the last six months of
1996 as well. When reviewing the Wilshire style indexes (Large Value, Large
Growth, Small Value and Small Growth), the Small Growth Index outperformed
the other styles in only one month since May.
It is with these challenges in mind that we look ahead to 1997 with cautious
optimism. Most importantly, the macro-economic picture of moderate economic
growth, benign inflation and continued earnings strength--the ideal
combination for growth stocks--remains in place. While the earnings growth
of the larger, more mature S&P 500 names will likely slow back down to single
digits. This will only serve to widen the gap between those companies and
the small cap growth names in the Pilgrim Baxter universe.
Certainly, we are mindful of the remarkable run the market has seen over the
last two years and the advances small cap growth companies have made since
late 1990. In the last few weeks market prognosticators have been busy
running numbers to prove that the market is due for at least a stall this
year. Studies of the S&P 500 show that of the 13 instances in which the
index was up for two years, the third year was down in 12 (92%) of those
cases.
Although we don't expect any of the fundamentals that have created such a
positive environment over the last 6 years to change in the near future, it
probably wouldn't be prudent of us to expect another year of extraordinary
performance. Therefore, we view the 1997 market the same way many of our
companies present their performance--we're setting expectations at a
reasonable level and hope to surprise on the upside.
We expect the new year to continue to reward companies which can provide
sustainable earnings growth in a moderate economic environment, and it is in
the small cap growth arena where we most consistently find such investment
opportunities.
PILGRIM BAXTER & ASSOCIATES, LTD.
15
<PAGE>
VARIABLE INVESTORS SERIES TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 1996
CONTINUED
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE SMALL CAP PORTFOLIO
AND THE RUSSELL 2000 INDEX *
- --------------------------------------------------------------------------------
[GRAPH]
* This Index is an unmanaged index in which investors can not 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, 1996
Past 1 Life of
Year Portfolio***
---- ------------
Small Cap Portfolio 27.39% 35.47%
"Total Return" is calculated including reinvestment of all income dividends
and capital gain distributions. Results represent past performance and do
not indicate future results. The value of an investment in the Small Cap
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. 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)
16
<PAGE>
VARIABLE INVESTORS SERIES TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 1996
CONTINUED
GROWTH & INCOME PORTFOLIO [LOGO]
SUB-ADVISOR: WARBURG PINCUS COUNSELLORS, INC.
The Growth & Income Portfolio's investment objective is to provide growth of
capital and income.
The Portfolio enjoyed a strong showing in the first quarter of 1996. The
Portfolio's weightings in precious metal and cyclical stocks were major
contributors to its performance for the period, as these groups were among
the market's leaders. Gold climbed to over $415 per ounce in January 1996,
its highest level in several years, though it closed the quarter at $400.
The Portfolio began the year very much committed to the precious metal
sector. Our bullishness was based on what we projected would be a long-term
imbalance between supply/demand, coupled with finite production capacity,
which would lead to a markedly higher price over time. Outside forces, such
as forward-selling by gold mining companies and selling by central banks,
might suppress gold's price over the short to intermediate term, but the
overall trend looked positive. The Portfolio continued to build it's
exposure to cyclical stocks, primarily industrial cyclicals, based on our
expectations for a stronger economy in the second half of the year. As
noted, these issues saw good performance in the first quarter, aided greatly
by the release of February's employment report and other data which suggested
renewed economic activity.
The Portfolio's disappointing second quarter was largely due to weakness on
two of the more heavily weighted areas: gold and industrial cyclicals. Gold
and precious metal shares suffered a sizable correction during the period
(reflected in a 6.5% loss for the average gold fund, per Lipper Analytical
Services) after outpacing much of the market in the year's first three
months. The Portfolio's cyclical exposure, notably its steel and paper
stocks, barely budged in price over the three months despite mounting
evidence that the economy was growing strong and would potentially continue
to expand. Historically, the correlation between stronger economic growth
and the performance of cyclical stocks has been very high, but in this
instance the two bore very little relation. The Portfolio made a number of
fairly significant adjustments during the period, both as a defensive measure
and in an effort to better position the Portfolio for the remainder of the
year. The Portfolio cut back its cyclical exposure across the board with a
particularly sharp reduction in its holdings of steel companies. The
Portfolio made smaller reductions to its weightings in oil services and
paper/forest products. The rationale for these moves was that economic
growth, while currently strong, would at some point--in the next three to six
months--begin to slow, the result of higher bond yields and the likely
tightening of credit by the Federal Reserve. The Portfolio increased its
exposure to banks and financial services because we felt these issues would
do well in a slower-growth environment.
Weakness in gold-related stocks weighed heavily on the Portfolio's
performance, negating gains in other areas and preventing the Portfolio from
making up ground lost during the previous quarter. Gold's fundamentals
asserted themselves in January, when the metal's spot price rose to $415 an
ounce, its highest level in several years. This marked the first time in a
decade that gold had risen above the $400 mark without the benefit of an
exogenous shock (previously, gold had risen above $400 in response to the
market crash of 1987, the Tiananmen Square uprising in China and the Gulf
War), and seemed to suggest that gold was poised for an extended run.
Unfortunately, the rally proved short-lived, and the metal's price fell back
below $400. Since it was difficult to predict when gold would finally and
decisively break out of its range, we significantly scaled back the
Portfolio's exposure in this sector. Proceeds from the sale of gold stocks
were used to increase the emphasis in banks and financial services and health
care and pharmaceuticals. Other areas of the Portfolio where we built
further concentration (but to a lesser extent) were computers,
telecommunications and oil services.
17
<PAGE>
VARIABLE INVESTORS SERIES TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 1996
CONTINUED
The Portfolio showed positive performance in the fourth quarter with strong
performance from a number of its holdings during the period, but some of this
was negated by weakness in the Portfolio's remaining precious metal stocks.
We began to significantly scale back the Portfolio's exposure to the sector
in August, and completed the sale of virtually all of its holdings in this
area by the end of October. Positive contributors to the Portfolio's returns
during the fourth quarter were its banking and financial services stocks, and
we used much of the proceeds from the sale of the Portfolio's precious metal
stocks to further increase the Portfolio's weightings in these areas. We
also analyzed and revised the Portfolio's health care weighting focusing
primarily on medium-capitalization companies selling at attractive
valuations. In addition, we also boosted the Portfolio's technology
exposure, particularly in the telecommunications area, concentrating on
companies whose earnings and share prices had suffered due to difficulties in
product-cycle transitions but whose fortunes appeared to be rising. Lastly,
another area that we added to during the period was aerospace, an industry
that has benefited from the accelerating trend toward consolidation.
WARBURG, PINCUS COUNSELLORS, INC.
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE GROWTH & INCOME
PORTFOLIO AND THE S&P 500 INDEX *
- --------------------------------------------------------------------------------
[GRAPH]
* This Index is an unmanaged index in which investors can not 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.
18
<PAGE>
VARIABLE INVESTORS SERIES TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 1996
CONTINUED
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS **
- --------------------------------------------------------------------------------
Periods ended December 31, 1996
Past 1 Life of
Year Portfolio***
---- ------------
Growth & Income Portfolio 12.15% 16.16%
"Total Return" is calculated including reinvestment of all income dividends
and capital gain 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. 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)
19
<PAGE>
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
(comprising, respectively, the Cash Management, Common Stock, High Income
Bond, Multiple Strategies, Tilt Utility, U.S. Government Bond, World Equity,
Small Cap and Growth & Income Portfolios) as of December 31, 1996, the
related statements of operations for the year then ended, and the statements
of changes in net assets and financial highlights for each of the periods in
the two years 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. The financial
highlights for each of the three years in the period ended December 31, 1994
were audited by other auditors whose report dated February 14, 1995 expressed
an unqualified opinion on those financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. 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, 1996, by
correspondence with the custodian and brokers, or by other appropriate
auditing procedures where replies from brokers were not received. 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, 1996, the results of their operations for the year then
ended, and the changes in their net assets and financial highlights for each
of the periods in the two years then ended, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Boston, Massachusetts
February 7, 1997
20
<PAGE>
VARIABLE INVESTORS SERIES TRUST
CASH MANAGEMENT PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
<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
U.S. GOVERNMENT SECURITIES--(99.7%)
Federal Home Loan Bank
Consolidated Discount Note. . . . . . . . . . . 6.500% 01/02/1997 $1,780,000 $1,779,678
Federal Home Loan Mortgage
Discount Note . . . . . . . . . . . . . . . . . 6.500% 01/02/1997 1,780,000 1,779,678
Federal National Mortgage
Association Discount Note . . . . . . . . . . . 6.500% 01/02/1997 1,780,000 1,779,679
Student Loan Marketing
Discount Note . . . . . . . . . . . . . . . . . 6.500% 01/02/1997 1,780,000 1,779,679
United States Treasury Note . . . . . . . . . . . 3.500% 01/02/1997 1,780,000 1,779,827
----------
TOTAL GOVERNMENT AND AGENCY SECURITIES--(Cost $8,898,541) 99.7% 8,898,541
----------
VARIABLE RATE INSTRUMENT
BANKING--(0.6%)
Vista Funding Corporation
(Fifth Third Bank, LOC) (a) . . . . . . . . . . 5.710% 01/02/1997 50,000 50,000
----------
TOTAL VARIABLE RATE INSTRUMENT--(Cost $50,000) 0.6% 50,000
----------
TOTAL INVESTMENTS--(Cost $8,948,541) 100.3% 8,948,541
OTHER ASSETS LESS LIABILITIES-- (0.3)% (25,669)
----- ----------
NET ASSETS-- 100.0% $8,922,872
----- ----------
----- ----------
</TABLE>
(a) Variable rate demand note. Interest rate is the rate in effect and
maturity date represents the next reset date at December 31, 1996.
See notes to financial statements.
21
<PAGE>
VARIABLE INVESTORS SERIES TRUST
COMMON STOCK PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS
AEROSPACE-(3.6%)
McDonnell Douglas Corporation. . . . . . . . . . 17,000 $1,088,000
Precision Castparts Corporation. . . . . . . . . 17,500 868,437
----------
1,956,437
BANKS--(3.0%)
Bankamerica Corporation. . . . . . . . . . . . . 10,000 997,500
Fifth Third Bancorp. . . . . . . . . . . . . . . 10,500 659,531
----------
1,657,031
CHEMICALS--(1.7%)
Praxair, Inc.. . . . . . . . . . . . . . . . . . 20,500 945,563
----------
COMMUNICATION EQUIPMENT--(1.3%)
Andrew Corporation (a) . . . . . . . . . . . . . 13,300 705,731
----------
COMPUTER RELATED--(8.8%)
3Com Corporation (a) . . . . . . . . . . . . . . 10,000 733,750
Cisco Systems, Inc. (a). . . . . . . . . . . . . 30,000 1,908,750
Compaq Computer Corporation (a). . . . . . . . . 10,000 742,500
First Data Corporation . . . . . . . . . . . . . 22,000 803,000
HBO & Company. . . . . . . . . . . . . . . . . . 10,000 593,750
----------
4,781,750
COMPUTER SERVICES--(2.6%)
Computer Associates International, Inc.. . . . . 17,250 858,187
Sterling Commerce, Inc. (a). . . . . . . . . . . 15,926 561,392
----------
1,419,579
COSMETICS & TOILETRIES--(2.2%)
Gillette Company . . . . . . . . . . . . . . . . 15,500 1,205,125
----------
DRUGS--(4.9%)
Amgen, Inc. (a). . . . . . . . . . . . . . . . . 14,000 761,250
Cardinal Health, Inc.. . . . . . . . . . . . . . 16,200 943,650
Pfizer, Inc. . . . . . . . . . . . . . . . . . . 12,000 994,500
----------
2,699,400
ELECTRIC UTILITIES--(1.4%)
AES Corporation (a). . . . . . . . . . . . . . . 17,000 790,500
----------
ELECTRONICS--(4.7%)
Adaptec, Inc. (a). . . . . . . . . . . . . . . . 26,000 1,040,000
C Cube Microsystems, Inc. (a). . . . . . . . . . 18,000 664,875
Dynatech Corporation (a) . . . . . . . . . . . . 20,000 885,000
----------
2,589,875
ENVIRONMENTAL--(1.5%)
Thermo Electron Corporation. . . . . . . . . . . 20,000 825,000
----------
</TABLE>
See notes to financial statements.
22
<PAGE>
VARIABLE INVESTORS SERIES TRUST
COMMON STOCK PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS
FINANCIAL SERVICES--(7.5%)
Finova Group, Inc. . . . . . . . . . . . . . . . . . . 10,500 $ 674,625
Green Tree Financial, Inc. . . . . . . . . . . . . . . 15,000 579,375
Money Store, Inc.. . . . . . . . . . . . . . . . . . . 15,000 414,375
Sunamerica, Inc. . . . . . . . . . . . . . . . . . . .. 21,000 931,875
Travelers, Inc.. . . . . . . . . . . . . . . . . . . . 33,000 1,497,375
-----------
4,097,625
FOOD & BEVERAGES--(1.2%)
Coca-Cola Company. . . . . . . . . . . . . . . . . . . 12,000 631,500
-----------
HEALTHCARE--(1.5%)
Omnicare, Inc. . . . . . . . . . . . . . . . . . . . . 26,000 835,250
-----------
INSURANCE--(6.7%)
Allstate Corporation . . . . . . . . . . . . . . . . . 10,000 578,750
American International Group, Inc. . . . . . . . . . . 8,000 866,000
Conseco, Inc.. . . . . . . . . . . . . . . . . . . . . 22,000 1,402,500
Frontier Insurance Group, Inc. . . . . . . . . . . . . 21,000 803,250
-----------
3,650,500
MACHINERY & EQUIPMENT--(2.6%)
Bombardier, Inc. . . . . . . . . . . . . . . . . . . . 49,000 905,353
Dover Corporation. . . . . . . . . . . . . . . . . . . 10,000 502,500
-----------
1,407,853
MEDICAL SUPPLIES & SERVICES--(3.3%)
Healthcare Compare Corporation (a) . . . . . . . . . . 13,500 572,063
Johnson & Johnson. . . . . . . . . . . . . . . . . . . 15,000 746,250
United States Surgical Corporation . . . . . . . . . . 12,000 472,500
-----------
1,790,813
METALS--(2.1%)
Oregon Metallurgical Corporation (a) . . . . . . . . . 18,000 580,500
Wyman-Gordon Company (a) . . . . . . . . . . . . . . . 25,000 556,250
-----------
1,136,750
OIL & GAS--(11.5%)
ENSCO International, Inc. (a). . . . . . . . . . . . . 2,500 121,250
Helmerich & Payne, Inc.. . . . . . . . . . . . . . . . 18,000 938,250
Louisiana Land & Exploration Company . . . . . . . . . 30,000 1,608,750
Oryx Energy Company (a). . . . . . . . . . . . . . . . 30,000 742,500
Panenergy Corporation. . . . . . . . . . . . . . . . . 15,000 675,000
Transocean Offshore, Inc.. . . . . . . . . . . . . . . 24,000 1,503,000
Williams Companies, Inc. . . . . . . . . . . . . . . . 18,000 675,000
-----------
6,263,750
PACKAGING--(1.2%)
Sealed Air Corporation (a) . . . . . . . . . . . . . . 16,000 666,000
-----------
</TABLE>
See notes to financial statements.
23
<PAGE>
VARIABLE INVESTORS SERIES TRUST
COMMON STOCK PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C> <C>
COMMON STOCKS
PETROLEUM SERVICES--(6.9%)
Baker Hughes, Inc. . . . . . . . . . . . . . . . . . . 25,000 $ 862,500
Rowan Companies, Inc. (a). . . . . . . . . . . . . . . 35,000 791,875
Smith International, Inc. (a). . . . . . . . . . . . . 27,000 1,211,625
Tidewater, Inc.. . . . . . . . . . . . . . . . . . . . 20,000 905,000
----------
3,771,000
PRINTING & PUBLISHING--(1.1%)
Omnicom Group. . . . . . . . . . . . . . . . . . . . . 13,000 594,750
----------
RETAIL-SPECIALTY--(1.7%)
Consolidated Stores Corporation (a). . . . . . . . . . 18,750 602,344
Gap, Inc.. . . . . . . . . . . . . . . . . . . . . . . 10,000 301,250
----------
903,594
SOFTWARE--(5.6%)
BMC Software, Inc. (a) . . . . . . . . . . . . . . . . 50,000 2,068,750
Microsoft Corporation (a). . . . . . . . . . . . . . . 12,000 991,500
----------
3,060,250
TELECOMMUNICATIONS--(9.1%)
ADC Telecommunications, Inc. (a) . . . . . . . . . . . 20,000 622,500
Allied Signal, Inc.. . . . . . . . . . . . . . . . . . 9,000 603,000
Cascade Communications Corporation (a) . . . . . . . . 23,000 1,267,875
Sprint Corporation . . . . . . . . . . . . . . . . . . 20,000 797,500
Tellabs, Inc. (a). . . . . . . . . . . . . . . . . . . 30,000 1,128,750
Worldcom, Inc. (a) . . . . . . . . . . . . . . . . . . 20,000 521,250
----------
4,940,875
----------
TOTAL COMMON STOCKS--(Cost $38,502,696) 97.7% 53,326,501
----------
<CAPTION>
INTEREST MATURITY MATURITY
RATE DATE AMOUNT
---- ---- ------
<S> <C> <C> <C> <C> <C>
SHORT TERM INVESTMENT
REPURCHASE AGREEMENT--(2.5%)
State Street Bank and Trust Company (b). . . . . . . . 4.250% 01/02/1997 $1,370,323 1,370,000
-----------
TOTAL SHORT TERM INVESTMENT--(Cost $1,370,000) 2.5% 1,370,000
-----------
TOTAL INVESTMENTS--(Cost $39,872,696) 100.2% 54,696,501
OTHER ASSETS LESS LIABILITIES-- (0.2)% (131,749)
------- -----------
NET ASSETS-- 100.0% $54,564,752
------- -----------
------- -----------
</TABLE>
(a) Non-income producing security.
(b) The repurchase agreement, dated 12/31/96, is fully collateralized by a
United States Treasury Bond, 8.50%, 02/15/20, with a value of $1,401,856.
See notes to financial statements.
24
<PAGE>
VARIABLE INVESTORS SERIES TRUST
HIGH INCOME BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST MATURITY PRINCIPAL
AND TITLE OF ISSUE RATE DATE AMOUNT VALUE
------------------- ---- ---- ------ -----
<S> <C> <C> <C> <C>
CORPORATE BONDS
AUTOMOTIVE--(4.4%)
Aftermarket Technology Company. . . . . . . . . . 12.000% 08/01/2004 $75,000 $ 83,812
Blue Bird Body Company (a). . . . . . . . . . . . 10.750% 11/15/2006 50,000 52,250
Collins & Aikman Products Company . . . . . . . . 11.500% 04/15/2006 150,000 164,250
Exide Corporation . . . . . . . . . . . . . . . . 10.000% 04/15/2005 100,000 104,000
Lear Corporation. . . . . . . . . . . . . . . . . 9.500% 07/15/2006 100,000 107,250
Safelite Glass Corporation (a). . . . . . . . . . 9.875% 12/15/2006 50,000 51,500
----------
563,062
BANKING--(1.3%)
First Nationwide Escrow Corporation (a) . . . . . 10.625% 10/01/200 350,000 53,875
First Nationwide Holdings, Inc. . . . . . . . . . 12.250% 05/15/2001 100,000 113,000
----------
166,875
BEVERAGE & TOBACCO--(1.1%)
Delta Beverage Group, Inc. (a). . . . . . . . . . 9.750% 12/15/2003 50,000 51,375
Dr Pepper Bottling Holdings Company (b) . . . . . 10.253% 02/15/2003 100,000 94,250
----------
145,625
BROADCAST RADIO & TELEVISION--(6.4%)
Chancellor Broadcasting Company . . . . . . . . . 12.500% 10/01/2004 75,000 84,375
Heritage Media Corporation. . . . . . . . . . . . 8.750% 02/15/2006 125,000 120,156
Jacor Communications, Inc.. . . . . . . . . . . . 9.750% 12/15/2006 50,000 51,125
Pegasus Media & Communications, Inc.. . . . . . . 12.500% 07/01/2005 50,000 54,000
SCI Television, Inc.. . . . . . . . . . . . . . . 11.000% 06/30/2005 50,000 53,625
SFX Broadcasting, Inc.. . . . . . . . . . . . . . 10.750% 05/15/2006 75,000 79,125
Sinclair Broadcast Group, Inc.. . . . . . . . . . 10.000% 12/15/2003 175,000 178,500
Sullivan Broadcasting . . . . . . . . . . . . . . 10.250% 12/15/2005 100,000 101,250
Young Broadcasting, Inc.. . . . . . . . . . . . . 10.125% 02/15/2005 50,000 51,750
Young Broadcasting, Inc.. . . . . . . . . . . . . 9.000% 01/15/2006 50,000 48,500
----------
822,406
BUILDING AND DEVELOPMENT--(0.4%)
Building Materials Corporation of
America (a) . . . . . . . . . . . . . . . . . . 8.625% 12/15/2006 50,000 49,750
----------
BUSINESS EQUIPMENT & SERVICES--(2.8%)
Knoll, Inc. . . . . . . . . . . . . . . . . . . . 10.875% 03/15/2006 75,000 82,688
Monarch Acquisition Corporation . . . . . . . . . 12.500% 07/01/2003 125,000 146,250
Outsourcing Solutions, Inc. (a) . . . . . . . . . 11.000% 11/01/2006 50,000 52,375
United Stationers Supply Company. . . . . . . . . 12.750% 05/01/2005 75,000 83,250
----------
364,563
CABLE TELEVISION--(9.5%)
Australis Holdings Pty. Ltd. (a) (b). . . . . . . 14.943% 11/01/2002 75,000 43,313
Bell Cablemedia plc (b) . . . . . . . . . . . . . 9.348% 07/15/2004 50,000 43,750
Cablevision Systems Company . . . . . . . . . . . 9.875% 02/15/2013 150,000 147,375
Charter Communications Southeast, LP. . . . . . . 11.250% 03/15/2006 50,000 51,813
CS Wireless Systems, Inc. (b) . . . . . . . . . . 18.928% 03/01/2006 100,000 36,000
Echostar Satellite Broadcasting (b) . . . . . . . 11.072% 03/15/2004 75,000 56,625
International CableTel, Inc. (b). . . . . . . . . 10.639% 02/01/2006 150,000 101,625
</TABLE>
See notes to financial statements.
25
<PAGE>
VARIABLE INVESTORS SERIES TRUST
HIGH INCOME BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST MATURITY PRINCIPAL
AND TITLE OF ISSUE RATE DATE AMOUNT VALUE
------------------- ---- ---- ------ -----
<S> <C> <C> <C> <C>
CORPORATE BONDS
CABLE TELEVISION--(CONTINUED)
International CableTel, Inc. (b). . . . . . . . . 10.686% 10/15/2003 $125,000 $ 104,687
International CableTel, Inc. (b). . . . . . . . . 11.066% 04/15/2005 125,000 93,437
Le Group Videotron Ltee.. . . . . . . . . . . . . 10.625% 02/15/2005 100,000 110,000
Lenfest Communications, Inc.. . . . . . . . . . . 10.500% 06/15/2006 50,000 52,625
Peoples Choice TV Corporation (b) . . . . . . . . 20.084% 06/01/2004 100,000 42,500
Rogers Cablesystems Ltd.. . . . . . . . . . . . . 10.000% 12/01/2007 100,000 106,250
TeleWest plc (b). . . . . . . . . . . . . . . . . 10.635% 10/01/2007 175,000 120,969
UIH Australia / Pacific, Inc. (b) . . . . . . . . 14.849% 05/15/2006 125,000 65,000
Wireless One, Inc.. . . . . . . . . . . . . . . . 13.000% 10/15/2003 50,000 48,500
----------
1,224,469
CHEMICALS & PLASTICS--(4.1%)
Astor Corporation (a) . . . . . . . . . . . . . . 10.500% 10/15/2006 50,000 51,563
Crain Industries, Inc.. . . . . . . . . . . . . . 13.500% 08/15/2005 50,000 56,375
Foamex LP . . . . . . . . . . . . . . . . . . . . 11.875% 10/01/2004 50,000 53,812
Harris Chemical North America, Inc. . . . . . . . 10.250% 07/15/2001 100,000 104,500
Polymer Group, Inc. . . . . . . . . . . . . . . . 12.250% 07/15/2002 83,000 90,055
RBX Corporation . . . . . . . . . . . . . . . . . 11.250% 10/15/2005 50,000 42,063
Sterling Chemicals, Inc.. . . . . . . . . . . . . 11.750% 08/15/2006 50,000 52,750
Uniroyal Technology Corporation . . . . . . . . . 11.750% 06/01/2003 75,000 74,812
----------
525,930
CLOTHING & TEXTILES--(2.0%)
Pillowtex Corporation (a) . . . . . . . . . . . . 10.000% 11/15/2006 50,000 52,063
WestPoint Stevens, Inc. . . . . . . . . . . . . . 9.375% 12/15/2005 200,000 206,500
----------
258,563
CONSUMER PRODUCTS--(2.6%)
American Safety Razor Company . . . . . . . . . . 9.875% 08/01/2005 50,000 52,813
Hosiery Corporation of America, Inc.. . . . . . . 13.750% 08/01/2002 50,000 55,000
ICON Fitness Corporation (a) (b). . . . . . . . . 13.638% 11/15/2006 100,000 53,375
Playtex Family Products Corporation . . . . . . . 9.000% 12/15/2003 100,000 99,250
Simmons Company . . . . . . . . . . . . . . . . . 10.750% 04/15/2006 75,000 78,937
----------
339,375
CONTAINER & GLASS PRODUCTS--(3.1%)
Owens Illinois, Inc.. . . . . . . . . . . . . . . 9.750% 08/15/2004 50,000 52,250
Owens Illinois, Inc.. . . . . . . . . . . . . . . 9.950% 10/15/2004 225,000 237,937
Packaging Resources, Inc. . . . . . . . . . . . . 11.625% 05/01/2003 50,000 52,750
Plastic Containers, Inc. (a). . . . . . . . . . . 10.000% 12/15/2006 50,000 51,625
----------
394,562
COSMETICS & TOILETRIES--(0.8%)
Revlon Consumer Products Corporation. . . . . . . 9.375% 04/01/2001 100,000 102,375
----------
ECOLOGICAL SERVICES & EQUIPMENT--(1.1%)
Allied Waste North America, Inc. (a). . . . . . . 10.250% 12/01/2006 50,000 52,500
ICF Kaiser International, Inc.. . . . . . . . . . 13.000% 12/31/2003 50,000 47,000
Mid-American Waste Systems, Inc. (c). . . . . . . 12.250% 02/15/2003 125,000 47,500
----------
147,000
</TABLE>
See notes to financial statements.
26
<PAGE>
VARIABLE INVESTORS SERIES TRUST
HIGH INCOME BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST MATURITY PRINCIPAL
AND TITLE OF ISSUE RATE DATE AMOUNT VALUE
------------------- ---- ---- ------ -----
<S> <C> <C> <C> <C>
CORPORATE BONDS
ELECTRONICS--(0.4%)
Advanced Micro Devices, Inc.. . . . . . . . . . . 11.000% 08/01/2003 $50,000 $ 54,250
----------
FOOD & DRUG RETAILERS--(2.3%)
Carr Gottstein Foods Company. . . . . . . . . . . 12.000% 11/15/2005 50,000 53,063
Ralph's Grocery Company . . . . . . . . . . . . . 10.450% 06/15/2004 100,000 106,250
Ralph's Grocery Company . . . . . . . . . . . . . 11.000% 06/15/2005 75,000 78,937
Smiths Food & Drug Centers, Inc.. . . . . . . . . 11.250% 05/15/2007 50,000 55,250
----------
293,500
FOOD PRODUCTS--(2.2%)
Curtice-Burns Foods, Inc. . . . . . . . . . . . . 12.250% 02/01/2005 50,000 51,750
International Home Foods, Inc. (a). . . . . . . . 10.375% 11/01/2006 75,000 78,188
Specialty Foods Corporation . . . . . . . . . . . 11.250% 08/15/2003 125,000 95,000
Van De Kamp's, Inc. . . . . . . . . . . . . . . . 12.000% 09/15/2005 50,000 55,125
----------
280,063
FOREST PRODUCTS--(3.2%)
Four M Corporation. . . . . . . . . . . . . . . . 12.000% 06/01/2006 75,000 78,375
Repap New Brunswick, Inc. . . . . . . . . . . . . 10.625% 04/15/2005 75,000 78,375
Riverwood International Corporation . . . . . . . 10.875% 04/01/2008 100,000 92,500
S.D. Warren Company . . . . . . . . . . . . . . . 12.000% 12/15/2004 75,000 80,719
Stone Container Corporation . . . . . . . . . . . 11.500% 10/01/2004 75,000 78,937
----------
408,906
HEALTHCARE--(2.5%)
Dade International, Inc.. . . . . . . . . . . . . 11.125% 05/01/2006 100,000 108,250
Genesis Health Ventures, Inc. (a) . . . . . . . . 9.250% 10/01/2006 50,000 51,375
Prime Succession Acquisition
Corporation (a) . . . . . . . . . . . . . . . . 10.750% 08/15/2004 50,000 54,125
Tenet Healthcare Corporation. . . . . . . . . . . 10.125% 03/01/2005 100,000 110,500
----------
324,250
HOTELS, MOTELS, INNS & CASINOS--(0.4%)
Courtyard by Marriott II LP . . . . . . . . . . . 10.750% 02/01/2008 50,000 52,875
----------
INDUSTRIAL PRODUCTS & EQUIPMENT--(4.1%)
Cabot Safety Acquisition Corporation. . . . . . . 12.500% 07/15/2005 100,000 111,500
Euramax International plc (a) . . . . . . . . . . 11.250% 10/01/2006 75,000 77,625
Hawk Corporation (a). . . . . . . . . . . . . . . 10.250% 12/01/2003 50,000 51,125
IMO Industries, Inc.. . . . . . . . . . . . . . . 11.750% 05/01/2006 50,000 46,750
International Knife & Saw, Inc. (a) . . . . . . . 11.375% 11/15/2006 50,000 51,500
Mettler Toledo, Inc.. . . . . . . . . . . . . . . 9.750% 10/01/2006 125,000 131,562
Unifrax Investment Corporation. . . . . . . . . . 10.500% 11/01/2003 50,000 51,000
----------
521,062
LEISURE & ENTERTAINMENT--(5.4%)
AMF Group, Inc. (b) . . . . . . . . . . . . . . . 11.165% 03/15/2006 200,000 132,000
Cobblestone Golf Group, Inc.. . . . . . . . . . . 11.500% 06/01/2003 75,000 78,094
Premier Parks, Inc. . . . . . . . . . . . . . . . 12.000% 08/15/2003 50,000 54,625
Six Flags Theme Parks, Inc. (b) . . . . . . . . . 10.355% 06/15/2005 150,000 141,750
Viacom, Inc.. . . . . . . . . . . . . . . . . . . 8.000% 07/07/2006 300,000 289,875
----------
696,344
</TABLE>
See notes to financial statements.
27
<PAGE>
VARIABLE INVESTORS SERIES TRUST
HIGH INCOME BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST MATURITY PRINCIPAL
AND TITLE OF ISSUE RATE DATE AMOUNT VALUE
------------------- ---- ---- ------ -----
<S> <C> <C> <C> <C>
CORPORATE BONDS
MACHINERY & EQUIPMENT--(2.4%)
Alvey Systems, Inc. . . . . . . . . . . . . . . . 11.375% 01/31/2003 $ 75,000 $ 78,937
Clark Material Handling Corporation (a) . . . . . 10.750% 11/15/2006 75,000 77,813
Primeco, Inc. . . . . . . . . . . . . . . . . . . 12.750% 03/01/2005 67,000 76,380
Tokheim Corporation (a) . . . . . . . . . . . . . 11.500% 08/01/2006 75,000 79,875
----------
313,005
METALS & MINING--(0.6%)
Royal Oaks Mines, Inc . . . . . . . . . . . . . . 11.000% 08/15/2006 75,000 76,125
----------
OIL & GAS--(3.6%)
Abraxas Petroleum Corporation (a) . . . . . . . . 11.500% 11/01/2004 50,000 53,500
Falcon Drilling Company, Inc. . . . . . . . . . . 12.500% 03/15/2005 100,000 111,625
Forcenergy, Inc.. . . . . . . . . . . . . . . . . 9.500% 11/01/2006 100,000 104,250
HS Resources, Inc. (a). . . . . . . . . . . . . . 9.250% 11/15/2006 50,000 51,375
Mesa Operating Company. . . . . . . . . . . . . . 10.625% 07/01/2006 50,000 54,375
United Meridian Corporation . . . . . . . . . . . 10.375% 10/15/2005 75,000 82,312
----------
457,437
PRINTING & PUBLISHING--(2.0%)
Affiliated Newspaper Investments,
Inc. (b) . . . . . . . . . . . . . . . . . . . 11.502% 07/01/2006 250,000 205,000
Petersen Publishing Company,
L.L.C. (a). . . . . . . . . . . . . . . . . . . 11.125% 11/15/2006 50,000 52,250
----------
257,250
RETAILERS--(0.6%)
Brylane Capital Corporation . . . . . . . . . . . 10.000% 09/01/2003 75,000 76,875
----------
SERVICES--(1.2%)
Coinmach Corporation. . . . . . . . . . . . . . . 11.750% 11/15/2005 50,000 53,875
Intertek Finance plc (a). . . . . . . . . . . . . 10.250% 11/01/2006 50,000 52,000
Ryder TRS, Inc. (a) . . . . . . . . . . . . . . . 10.000% 12/01/2006 50,000 52,000
----------
157,875
STEEL--(2.5%)
Acme Metals, Inc. (b) . . . . . . . . . . . . . . 11.447% 08/01/2004 50,000 51,500
Bar Technologies, Inc.. . . . . . . . . . . . . . 13.500% 04/01/2001 25,000 25,563
Bayou Steel Corporation . . . . . . . . . . . . . 10.250% 03/01/2001 50,000 46,000
EnviroSource, Inc.. . . . . . . . . . . . . . . . 9.750% 06/15/2003 50,000 46,750
GS Technologies Operating
Company, Inc. . . . . . . . . . . . . . . . . . 12.000% 09/01/2004 100,000 103,875
Republic Engineered Steels, Inc.. . . . . . . . . 9.875% 12/15/2001 50,000 46,875
----------
320,563
SURFACE TRANSPORTATION--(3.2%)
Gearbulk Holdings Ltd.. . . . . . . . . . . . . . 11.250% 12/01/2004 100,000 110,000
Statia Terminals International (a). . . . . . . . 11.750% 11/15/2003 75,000 76,875
Stena AB. . . . . . . . . . . . . . . . . . . . . 10.500% 12/15/2005 100,000 108,000
Trism, Inc. . . . . . . . . . . . . . . . . . . . 10.750% 12/15/2000 125,000 120,000
----------
414,875
</TABLE>
See notes to financial statements.
28
<PAGE>
VARIABLE INVESTORS SERIES TRUST
HIGH INCOME BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
-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
TELECOMMUNICATIONS & CELLULAR--(8.3%)
Brooks Fiber Properties, Inc. (b) . . . . . . . . 10.415% 03/01/2006 $250,000 $166,875
Cellular Communications
International, Inc. (b) . . . . . . . . . . . . 10.455% 08/15/2000 100,000 69,250
Dial Call Communications, Inc. (b). . . . . . . . 13.382% 04/15/2004 100,000 71,500
Fonorola, Inc.. . . . . . . . . . . . . . . . . . 12.500% 08/15/2002 25,000 27,219
Intermedia Communications of
Florida, Inc. (b) . . . . . . . . . . . . . . . 11.101% 05/15/2006 200,000 131,500
Millicom International Cellular
S.A. (b) . . . . . . . . . . . . . . . . . . . 12.245% 06/01/2006 150,000 93,000
Paging Network, Inc.. . . . . . . . . . . . . . . 10.000% 10/15/2008 75,000 76,031
Phonetel Technologies, Inc. . . . . . . . . . . . 12.000% 12/15/2006 50,000 51,625
Sygnet Wireless, Inc. . . . . . . . . . . . . . . 11.500% 10/01/2006 50,000 51,625
Teleport Communications Group,
Inc. (b). . . . . . . . . . . . . . . . . . . . 9.833% 07/01/2007 125,000 85,938
USA Mobile Communications, Inc. . . . . . . . . . 9.500% 02/01/2004 125,000 118,125
Vanguard Cellular Systems, Inc. . . . . . . . . . 9.375% 04/15/2006 125,000 125,937
----------
1,068,625
UTILITIES--(1.9%)
California Energy Company, Inc. (b) . . . . . . . 9.123% 01/15/2004 175,000 184,625
El Paso Electric Company. . . . . . . . . . . . . 9.400% 05/01/2011 50,000 52,949
----------
237,574
----------
TOTAL CORPORATE BONDS--(Cost $10,571,484) 86.6% 11,116,009
----------
GOVERNMENT AND AGENCY SECURITY
U.S. GOVERNMENT SECURITY--(3.9%)
United States Treasury Note . . . . . . . . . . . 6.375% 08/15/2002 500,000 503,140
----------
TOTAL GOVERNMENT AND AGENCY SECURITY--(Cost $509,453) 3.9% 503,140
----------
<CAPTION>
SHARES
------
<S> <C> <C> <C>
PREFERRED STOCKS
BROADCAST RADIO & TELEVISION--(0.4%)
Chancellor Broadcasting Company,
PIK Pfd., 12.25% (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500 55,750
----------
PRINTING & PUBLISHING--(1.0%)
K III Communications Corporation,
Pfd., Series D, 10.00% (d) . . . . . . . . . . . . . . . . . . . . . . . . . 750 73,313
K III Communications Corporation,
PIK Pfd., Series B, 11.625% . . . . . . . . . . . . . . . . . . . . . . . . . 529 53,610
----------
126,923
TELECOMMUNICATIONS & CELLULAR--(0.6%)
PanAmSat Corporation, PIK Pfd.,
12.75% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 79,251
----------
</TABLE>
See notes to financial statements.
29
<PAGE>
VARIABLE INVESTORS SERIES TRUST
HIGH INCOME BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------- ------ ------
<S> <C> <C> <C>
PREFERRED STOCKS
UTILITIES--(0.5%)
El Paso Electric Company, PIK Pfd.,
Series A, 11.40% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 542 $ 60,230
----------
TOTAL PREFERRED STOCKS--(Cost $272,960) 2.5% 322,154
----------
COMMON STOCKS
BROADCAST RADIO & TELEVISION--(0.0%)
CS Wireless Systems, Inc. (a) (d) . . . . . . . . . . . . . . . . . . . . . . . 28 0
Pegasus Media & Communications,
Inc. (a) (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 0
----------
0
CONSUMER PRODUCTS--(0.0%)
Hosiery Corporation of America,
Inc. (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 275
----------
FOOD & DRUG RETAILERS--(0.1%)
Grand Union Company (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,535 17,675
----------
PRINTING & PUBLISHING--(0.1%)
Affiliated Newspaper Investments,
Inc. (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250 15,000
----------
TOTAL COMMON STOCKS--(Cost $201,313) 0.3% 32,950
----------
WARRANTS
CABLE TELEVISION--(0.0%)
Wireless One, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 150
----------
CONSUMER PRODUCTS--(0.0%)
IHF Capital, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 6,012
----------
ECOLOGICAL SERVICES & EQUIPMENT--(0.0%)
ICF Kaiser International, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . 240 150
----------
STEEL--(0.0%)
Bar Technologies, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . . . 25 1,375
----------
TELECOMMUNICATIONS & CELLULAR--(0.0%)
Cellular Communications
International, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 2,000
NEXTEL Communications, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 100 2
----------
2,002
----------
TOTAL WARRANTS--(Cost $1,558) 0.1% 9,689
----------
</TABLE>
See notes to financial statements.
30
<PAGE>
VARIABLE INVESTORS SERIES TRUST
HIGH INCOME BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST MATURITY PRINCIPAL
AND TITLE OF ISSUE RATE DATE AMOUNT VALUE
------------------ ---- ---- ------ -----
<S> <C> <C> <C> <C> <C>
SHORT TERM INVESTMENT
REPURCHASE AGREEMENT--(5.8%)
State Street Bank and Trust Company (e) . . . . 4.250% 01/02/1997 $741,175 $ 741,000
-----------
TOTAL SHORT TERM INVESTMENT--(Cost $741,000) 5.8% 741,000
-----------
TOTAL INVESTMENTS--(Cost $12,297,768) 99.2% 12,724,942
OTHER ASSETS LESS LIABILITIES-- 0.8% 109,569
------ -----------
NET ASSETS-- 100.0% $12,834,511
------ -----------
------ -----------
</TABLE>
(a) 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, 1996,
these securities aggregated $1,482,577 or 11.6% of the net assets of
the Portfolio.
(b) Step bond. Interest rate shown represents yield to maturity.
(c) On February 15, 1996 and August 15, 1996, Mid-American failed to make
its scheduled interest payments. The Portfolio ceased earning income
on this security on February 15, 1996. The Company is in discussions
with its senior lending group and has hired an investment bank to
evaluate its options.
(d) Non-income producing security.
(e) The repurchase agreement, dated 12/31/96, is fully collateralized by a
United States Treasury Bond, 8.50%, 02/15/20, with a value of $760,117.
See notes to financial statements.
31
<PAGE>
VARIABLE INVESTORS SERIES TRUST
MULTIPLE STRATEGIES PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS
AEROSPACE--(2.6%)
McDonnell Douglas Corporation . . . . . . . . . . . . . . . . . . . . . . . . . 4,800 $ 307,200
Precision Castparts Corporation . . . . . . . . . . . . . . . . . . . . . . . . 10,500 521,062
----------
828,262
BANKS--(2.5%)
Bankamerica Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,800 478,800
Fifth Third Bancorp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,960 311,550
----------
790,350
CHEMICALS--(1.3%)
Praxair, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,800 405,900
----------
COMMUNICATION EQUIPMENT--(0.7%)
Andrew Corporation (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,200 222,863
----------
COMPUTER RELATED--(5.8%)
3Com Corporation (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,300 388,887
Cisco Systems, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 636,250
Compaq Computer Corporation (a) . . . . . . . . . . . . . . . . . . . . . . . . 4,800 356,400
First Data Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,200 299,300
HBO & Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,100 184,063
----------
1,864,900
COMPUTER SERVICES--(2.1%)
Computer Associates International, Inc. . . . . . . . . . . . . . . . . . . . . 9,100 452,725
Sterling Commerce, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . 6,066 213,827
----------
666,552
COSMETICS & TOILETRIES--(1.3%)
Gillette Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,520 429,180
----------
DRUGS--(3.8%)
Amgen, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,600 358,875
Cardinal Health, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,410 431,632
Pfizer, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,960 411,060
----------
1,201,567
ELECTRIC UTILITIES--(1.3%)
AES Corporation (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,800 409,200
----------
ELECTRONICS--(3.2%)
Adaptec, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,800 352,000
C Cube Microsystems, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . 8,100 299,194
Dynatech Corporation (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,400 371,700
----------
1,022,894
ENVIRONMENTAL--(1.6%)
Thermo Electron Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . 12,750 525,938
----------
</TABLE>
See notes to financial statements.
32
<PAGE>
VARIABLE INVESTORS SERIES TRUST
MULTIPLE STRATEGIES PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS
FINANCIAL SERVICES--(5.4%)
Finova Group, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,760 $ 241,580
Green Tree Financial, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . 7,200 278,100
Money Store, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,100 168,512
Sunamerica, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,200 452,625
Travelers, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,720 577,170
----------
1,717,987
FOOD & BEVERAGES--(0.7%)
Coca-Cola Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 210,500
----------
HEALTHCARE--(1.3%)
Omnicare, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,000 417,625
----------
INSURANCE--(5.4%)
Allstate Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,200 358,825
American International Group, Inc.. . . . . . . . . . . . . . . . . . . . . . . 3,460 374,545
Conseco, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,700 618,375
Frontier Insurance Group, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . 9,700 371,025
----------
1,722,770
MACHINERY & EQUIPMENT--(1.6%)
Bombardier, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,400 284,540
Dover Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,780 240,195
----------
524,735
MEDICAL SUPPLIES & SERVICES--(2.4%)
Healthcare Compare Corporation (a). . . . . . . . . . . . . . . . . . . . . . . 5,000 211,875
Johnson & Johnson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,600 378,100
United States Surgical Corporation. . . . . . . . . . . . . . . . . . . . . . . 4,800 189,000
----------
778,975
METALS--(1.3%)
Oregon Metallurgical Corporation (a). . . . . . . . . . . . . . . . . . . . . . 7,300 235,425
Wyman-Gordon Company (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,500 189,125
----------
424,550
OIL & GAS--(8.2%)
ENSCO International, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 48,500
Helmerich & Payne, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,300 380,513
Louisiana Land & Exploration Company. . . . . . . . . . . . . . . . . . . . . . 13,200 707,850
Oryx Energy Company (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,200 301,950
Panenergy Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000 315,000
Transocean Offshore, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,500 594,937
Williams Companies, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,500 281,250
----------
2,630,000
PACKAGING--(0.9%)
Sealed Air Corporation (a). . . . . . . . . . . . . . . . . . . . . . . . . . . 6,820 283,883
----------
</TABLE>
See notes to financial statements.
33
<PAGE>
VARIABLE INVESTORS SERIES TRUST
MULTIPLE STRATEGIES PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS
PETROLEUM SERVICES--(4.7%)
Baker Hughes, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,800 $ 338,100
Rowan Companies, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,400 461,550
Smith International, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,100 408,362
Tidewater, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,100 276,025
----------
1,484,037
PRINTING & PUBLISHING--(0.8%)
Omnicom Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,900 269,925
----------
RETAIL-SPECIALTY--(2.6%)
Consolidated Stores Corporation (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,375 365,422
Gap, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,800 174,725
Price Costco, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,093 278,711
----------
818,858
SOFTWARE--(3.8%)
BMC Software, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,080 748,060
Microsoft Corporation (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,680 469,310
----------
1,217,370
TELECOMMUNICATIONS--(6.7%)
ADC Telecommunications, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,800 336,150
Allied Signal, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 335,000
Cascade Communications Corporation (a) . . . . . . . . . . . . . . . . . . . . . . . . . . 8,900 490,613
Sprint Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000 279,125
Tellabs, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,200 496,650
Worldcom, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,100 211,106
----------
2,148,644
----------
TOTAL COMMON STOCKS--(Cost $18,294,287) 72.2% 23,017,465
----------
<CAPTION>
INTEREST MATURITY PRINCIPAL
RATE DATE AMOUNT
---- ---- ------
<S> <C> <C> <C> <C> <C>
CONVERTIBLE BOND
MEDICAL SUPPLIES & SERVICES--(0.8%)
Alza Corporation. . . . . . . . . . . . . . . . 5.000% 05/01/2006 $ 250,000 245,000
----------
TOTAL CONVERTIBLE BOND--(Cost $240,217) 0.8% 245,000
----------
CORPORATE BONDS
INDUSTRIALS--(1.6%)
BP America, Inc.. . . . . . . . . . . . . . . . 8.500% 04/15/2001 250,000 267,662
duPont (E.I.) deNemours . . . . . . . . . . . . 8.650% 12/01/1997 250,000 255,485
----------
TOTAL CORPORATE BONDS--(Cost $501,951) 1.6% 523,147
----------
</TABLE>
See notes to financial statements.
34
<PAGE>
VARIABLE INVESTORS SERIES TRUST
MULTIPLE STRATEGIES PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST MATURITY PRINIPAL
AND TITLE OF ISSUE RATE DATE AMOUNT VALUE
------------------ ---- ---- ------ -----
<S> <C> <C> <C> <C> <C>
GOVERNMENT AND AGENCY SECURITIES
FEDERAL AGENCY--(1.2%)
Government National Mortgage Association . . . 6.000% 11/15/2008 $ 125,423 $ 121,817
Government National Mortgage Association . . . 6.500% 10/15/2008 127,909 126,688
Government National Mortgage Association . . . 7.000% 10/15/2008 122,814 123,774
----------
372,279
U.S. GOVERNMENT SECURITIES--(12.8%)
United States Treasury Note . . . . . . . . . . 5.375% 05/31/1998 500,000 497,420
United States Treasury Note . . . . . . . . . . 6.375% 08/15/2002 500,000 503,280
United States Treasury Note . . . . . . . . . . 6.500% 05/31/2001 500,000 505,470
United States Treasury Note . . . . . . . . . . 6.875% 05/15/2006 1,000,000 1,030,470
United States Treasury Note . . . . . . . . . . 7.500% 01/31/1997 500,000 500,780
United States Treasury Bond . . . . . . . . . . 7.250% 08/15/2022 1,000,000 1,057,810
----------
4,095,230
----------
TOTAL GOVERNMENT AND AGENCY SECURITIES--(Cost $4,389,962) 14.0% 4,467,509
----------
MATURITY
AMOUNT
------
SHORT TERM INVESTMENT
REPURCHASE AGREEMENT--(11.0%)
State Street Bank and Trust Company (b) . . . . 4.250% 01/02/1997 3,516,830 3,516,000
-----------
TOTAL SHORT TERM INVESTMENT--(Cost $3,516,000) 11.0% 3,516,000
TOTAL INVESTMENTS--(Cost $26,942,417) 99.6% 31,769,121
OTHER ASSETS LESS LIABILITIES-- 0.4% 114,388
----- -----------
NET ASSETS-- 100.0% $31,883,509
----- -----------
----- -----------
</TABLE>
(a) Non-income producing security.
(b) The repurchase agreement, dated 12/31/96, is fully collateralized by a
United States Treasury Bond, 8.50%, 02/15/20, with a value of
$3,588,751.
See notes to financial statements.
35
<PAGE>
VARIABLE INVESTORS SERIES TRUST
TILT UTILITY PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS
ELECTRIC UTILITIES--(38.1%)
American Electric Power, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 7,900 $ 324,887
Atlantic Energy, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,700 63,363
Boston Edison Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900 24,188
Central Maine Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . 22,700 263,887
Consolidated Edison Company . . . . . . . . . . . . . . . . . . . . . . . . . . 22,600 661,050
Delmarva Power & Light Company. . . . . . . . . . . . . . . . . . . . . . . . . 19,700 401,387
DQE, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,800 429,200
Enova Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,500 443,625
Entergy Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,200 477,300
GPU, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,600 390,050
LG & E Energy Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,900 95,550
Long Island Lighting Company. . . . . . . . . . . . . . . . . . . . . . . . . . 34,400 761,100
Ohio Edison Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,700 698,425
Rochester Gas & Electric Corporation. . . . . . . . . . . . . . . . . . . . . . 6,100 116,663
Texas Utilities Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,400 97,800
Tuscon Electric Power Company (a) . . . . . . . . . . . . . . . . . . . . . . . 15,300 254,362
-----------
5,502,837
GAS & PIPELINE UTILITIES--(9.7%)
Columbia Gas Systems, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . 400 25,450
Consolidated Natural Gas Company. . . . . . . . . . . . . . . . . . . . . . . . 2,900 160,225
Pacific Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,200 400,950
Panenergy Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,600 612,000
Washington Gas Light Company. . . . . . . . . . . . . . . . . . . . . . . . . . 8,900 201,363
-----------
1,399,988
TECHNONLOGY--(0.7%)
Lucent Technologies, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,171 100,409
-----------
TELEPHONE--(49.8%)
360 Communications Company (a). . . . . . . . . . . . . . . . . . . . . . . . . 16,900 390,813
Alltel Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,400 451,800
Ameritech Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,300 685,062
AT&T Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,700 291,450
Bell Atlantic Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,500 679,875
Bellsouth Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000 646,000
Century Telephone Enterprises, Inc. . . . . . . . . . . . . . . . . . . . . . . 17,800 549,575
GTE Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,900 723,450
NYNEX Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,700 659,312
Pacific Telesis Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,100 665,175
SBC Communications, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,000 672,750
Southern N E Telecommunications Corporation . . . . . . . . . . . . . . . . . . 15,700 610,338
Sprint Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,400 175,450
-----------
7,201,050
-----------
TOTAL COMMON STOCKS--(Cost $11,937,642) 98.3% 14,204,284
-----------
</TABLE>
See notes to financial statements.
36
<PAGE>
VARIABLE INVESTORS SERIES TRUST
TILT UTILITY PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST
AND TITLE OF ISSUE RATE SHARES VALUE
------------------ ---- ------ -----
<S> <C> <C> <C> <C>
MUTUAL FUNDS--(1.4%)
Dreyfus Cash Management Plus (b) . . . . . . . . 5.320% 200,546 $ 200,546
-----------
TOTAL MUTUAL FUNDS--(Cost $200,546) 1.4% 200,546
-----------
TOTAL INVESTMENTS--(Cost $12,138,188) 99.7% 14,404,830
OTHER ASSETS LESS LIABILITIES-- 0.3% 42,775
----- -----------
NET ASSETS-- 100.0% $14,447,605
----- -----------
----- -----------
</TABLE>
(a) Non-income producing security.
(b) Interest rate shown is the 7 day yield as of December 31, 1996.
See notes to financial statements.
37
<PAGE>
VARIABLE INVESTORS SERIES TRUST
U.S. GOVERNMENT BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
<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
MORTGAGE BACKED SECURITIES--(43.5%)
Federal Home Loan Mortgage
Corporation (a) . . . . . . . . . . . . . . . 6.775% 11/01/2003 $ 325,000 $ 328,136
Federal Home Loan Mortgage Corporation. . . . . 8.500% 01/01/2003 169,127 175,564
Federal Home Loan Mortgage Corporation. . . . . 9.000% 03/01/2010 266,293 280,297
Federal Home Loan Mortgage Corporation. . . . . 9.000% 06/01/2016 217,422 233,109
Federal Home Loan Mortgage Corporation. . . . . 9.500% 04/01/2007 126,905 134,897
Federal Home Loan Mortgage Corporation. . . . . 10.000% 10/01/2005 116,107 124,356
Federal National Mortgage Association (a) . . . 6.869% 04/01/2020 168,184 173,814
Federal National Mortgage Association . . . . . 9.000% 12/01/2026 505,000 532,775
Federal National Mortgage Association . . . . . 10.000% 04/01/2020 131,597 144,344
Federal National Mortgage Association . . . . . 12.500% 05/01/2015 565,368 653,746
FHA Project Loan. . . . . . . . . . . . . . . . 3.025% 11/01/2006 439,780 382,151
FHA Project Loan. . . . . . . . . . . . . . . . 7.500% 11/15/2030 275,000 272,336
Government National Mortgage
Association (a) . . . . . . . . . . . . . . . 6.500% 03/20/2018 313,332 318,173
Government National Mortgage Association . . . 7.500% 04/15/2024 257,486 257,969
Government National Mortgage Association. . . . 9.000% 12/15/2006 250,259 264,697
Government National Mortgage Association. . . . 9.000% 01/15/2008 368,156 389,490
----------
4,665,854
U.S. GOVERNMENT SECURITIES--(40.8%)
United States Treasury Note . . . . . . . . . . 5.875% 11/30/2001 650,000 640,657
United States Treasury Note . . . . . . . . . . 5.875% 11/15/2005 225,000 217,125
United States Treasury Note . . . . . . . . . . 6.250% 07/31/1998 255,000 256,275
United States Treasury Note . . . . . . . . . . 6.250% 02/15/2003 225,000 224,860
United States Treasury Note . . . . . . . . . . 6.500% 04/30/1999 150,000 151,781
United States Treasury Note . . . . . . . . . . 6.625% 06/30/2001 365,000 370,931
United States Treasury Note . . . . . . . . . . 6.875% 07/31/1999 245,000 250,053
United States Treasury Note . . . . . . . . . . 7.875% 08/15/2001 345,000 367,856
United States Treasury Note . . . . . . . . . . 8.000% 08/15/1999 240,000 251,400
United States Treasury Bond . . . . . . . . . . 6.000% 02/15/2026 200,000 182,000
United States Treasury Bond . . . . . . . . . . 6.875% 08/15/2025 535,000 545,366
United States Treasury Bond . . . . . . . . . . 7.500% 11/15/2024 115,000 125,781
United States Treasury Bond . . . . . . . . . . 11.625% 11/15/2004 600,000 791,812
----------
4,375,897
----------
TOTAL GOVERNMENT AND AGENCY SECURITIES--(Cost $9,011,989) 84.2% 9,041,751
----------
</TABLE>
See notes to financial statements.
38
<PAGE>
VARIABLE INVESTORS SERIES TRUST
U.S. GOVERNMENT BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
-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
ENTERTAINMENT--(2.8%)
Time Warner, Inc. . . . . . . . . . . . . . . . 7.750% 06/15/2005 $ 300,000 $ 303,108
----------
FINANCIAL SERVICES--(8.6%)
Countrywide Capital I . . . . . . . . . . . . . 8.000% 12/15/2026 385,000 384,538
Wells Fargo Capital I . . . . . . . . . . . . . 7.960% 12/15/2026 540,000 539,956
----------
924,494
INSURANCE--(2.1%)
American Re-insurance Corporation (b) . . . . . 7.450% 12/15/2026 225,000 225,133
----------
TOTAL CORPORATE BONDS--(Cost $1,459,951) 13.5% 1,452,735
----------
MATURITY
AMOUNT
-------
SHORT TERM INVESTMENT
REPURCHASE AGREEMENT--(1.7%)
State Street Bank and Trust Company (c) . . . . 4.250% 01/02/1997 $186,044 186,000
----------
TOTAL SHORT TERM INVESTMENT--(Cost $186,000) 1.7% 186,000
----------
TOTAL INVESTMENTS--(Cost $10,657,940) 99.5% 10,680,486
OTHER ASSETS LESS LIABILITIES-- 0.5% 53,135
----- -----------
NET ASSETS-- 100.0% $10,733,621
----- -----------
----- -----------
</TABLE>
(a) Variable rate security. Interest rate is the rate in effect at December
31, 1996.
(b) Pursuant to Rule 144A under the Securities Act of 1933, this security may
be resold in transactions exempt from registration, normally to qualified
institutional buyers. At December 31, 1996, this security aggregated
$225,133 or 2.1% of the net assets of the Portfolio.
(c) The repurchase agreement, dated 12/31/96, is fully collateralized by a
United States Treasury Bond, 8.50%, 02/15/20, with a value of $193,145.
See notes to financial statements.
39
<PAGE>
VARIABLE INVESTORS SERIES TRUST
WORLD EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS
AUSTRALIA--(3.3%)
Broken Hill Proprietary Company . . . . . . . . . . . . . . . . . . . . . . . . 20,079 $ 285,999
CRA Ltd.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,580 40,503
Memtec Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,509 114,354
National Australia Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,754 138,271
Sonic Healthcare Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111,000 132,342
WMC Ltd.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000 94,547
----------
806,016
CANADA--(5.6%)
Brascan Ltd.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 89,097
Canadian Occidental Petroleum Ltd.. . . . . . . . . . . . . . . . . . . . . . . 6,100 98,229
E L Financial Ltd.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 93,477
Hudsons Bay Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,555 42,730
Loewen Group, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,500 136,749
National Bank Canada Montreal Quebec. . . . . . . . . . . . . . . . . . . . . . 31,900 321,493
Potash Corporation Saskatchewan, Inc. . . . . . . . . . . . . . . . . . . . . . 3,520 299,996
Quebecor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,839 298,337
----------
1,380,108
FINLAND--(1.0%)
Huhtamaki Oy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,300 107,000
Kemira Oy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,200 128,609
----------
235,609
FRANCE--(4.4%)
Axa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,500 349,813
Carrefour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 97,600
Credit Commerce France. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,601 120,312
Lafarge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,900 233,992
Michelin. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500 134,962
Society Elf Aquitaine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,652 150,379
----------
1,087,058
GERMANY--(3.5%)
Bayer AG. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,700 110,190
Daimler Benz AG (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500 103,327
Hoechst AG. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,400 160,631
Karstadt AG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300 101,378
Schering AG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350 29,546
Schmalbach Lubeca AG (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . 500 122,823
SGL Carbon AG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,800 226,930
----------
854,825
</TABLE>
See notes to financial statements.
40
<PAGE>
VARIABLE INVESTORS SERIES TRUST
WORLD EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS
HONG KONG--(3.0%)
HSBC Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,000 $ 513,543
Regal Hotels International. . . . . . . . . . . . . . . . . . . . . . . . . . . 316,000 110,311
Sime Darby HK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88,000 110,932
----------
734,786
HUNGARY--(1.8%)
Egis Gyogyszergyar. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,607 210,687
Richter Gedeon Veg. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 233,766
----------
444,453
ITALY--(1.9%)
Telecom Italia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86,000 217,409
Telecom Italia Mobilaire. . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,800 248,815
----------
466,224
JAPAN--(10.3%)
Bridgestone Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000 227,960
Fuji Photo Film Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,000 461,790
Fujitsu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,000 130,559
Jusco Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 339,349
Nichiei Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000 147,656
Sharp Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,000 256,455
Sony Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,200 668,491
Taisho Pharmaceutical Company . . . . . . . . . . . . . . . . . . . . . . . . . 3,000 70,719
Toyota Motor Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000 230,032
----------
2,533,011
MALAYSIA--(0.9%)
Genting Berhad. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000 82,677
Sime Darby Berhad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,000 137,893
----------
220,570
NETHERLANDS--(2.1%)
Philips Electronic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,750 273,675
Van Ommeren Kon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,400 243,962
----------
517,637
SPAIN--(1.3%)
BCO Santander SA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,900 249,636
Repsol SA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,470 56,388
----------
306,024
</TABLE>
See notes to financial statements.
41
<PAGE>
VARIABLE INVESTORS SERIES TRUST
WORLD EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS
SWEDEN--(4.5%)
Asea AB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000 $ 226,396
Astra AB Series A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,500 172,950
Astra AB Series B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,890 91,176
Electrolux AB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000 116,131
Esselte AB. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,100 223,625
Trygg-Hansa AB. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,400 101,350
Volvo AB. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,100 178,749
----------
1,110,377
SWITZERLAND--(2.4%)
CS Holding AG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000 205,454
Holderbank Financiere Glarus AG (a) . . . . . . . . . . . . . . . . . . . . . . 130 92,850
Nestle SA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180 193,246
Novartis AG (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 97,727
----------
589,277
UNITED KINGDOM--(7.8%)
British Airways . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 103,906
British Telecom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,700 255,122
Compass Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,300 183,759
Glaxo Holdings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,500 268,545
Lloyds TSB Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,902 161,723
London Clubs International. . . . . . . . . . . . . . . . . . . . . . . . . . . 20,700 107,809
London International Group. . . . . . . . . . . . . . . . . . . . . . . . . . . 84,800 239,712
Pearson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,300 195,280
Premier Farnell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 128,491
Smithkline Beecham. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,827 122,190
Vodafone Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,237 119,489
Williams Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,900 34,771
----------
1,920,797
UNITED STATES--(44.3%)
Action Performance Companies, Inc. (a). . . . . . . . . . . . . . . . . . . . . 10,000 180,000
Alternative Resources Corporation (a) . . . . . . . . . . . . . . . . . . . . . 9,000 156,375
Applebees International, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 6,000 165,000
Aspect Telecommunications Corporation (a) . . . . . . . . . . . . . . . . . . . 2,900 184,150
Barret Business Services, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . 9,400 143,350
BJ Services Company (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,300 270,300
Black Box Corporation (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,700 70,125
Blyth Industries, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . . . 2,800 127,750
Cognex Corporation (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 74,000
Devry, Inc., Delaware (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000 376,000
Dura Automotive Systems, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . 30,000 675,000
Emeritus Corporation (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,700 117,450
Epic Design Technology, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . 8,000 200,000
Falcon Drilling, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,000 353,250
</TABLE>
See notes to financial statements.
42
<PAGE>
VARIABLE INVESTORS SERIES TRUST
WORLD EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS
UNITED STATES--(CONTINUED)
Family Golf Centers, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . 3,500 $ 105,437
Furniture Brands International, Inc. (a). . . . . . . . . . . . . . . . . . . . 7,000 98,000
G & K Services Class A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,100 41,525
Geoworks (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,500 159,250
Gilead Sciences, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 100,000
Health Management Associates (a). . . . . . . . . . . . . . . . . . . . . . . . 13,500 303,750
HFS, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000 418,250
Hindalco Industries Ltd. GDR (b). . . . . . . . . . . . . . . . . . . . . . . . 4,500 110,250
Hudson Foods, Inc. Class A. . . . . . . . . . . . . . . . . . . . . . . . . . . 10,700 203,300
IDEXX Laboratories, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . . 9,100 327,600
Industrie Natuzzi Spa ADR . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,600 197,800
Inso Corporation (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,400 214,650
Lattice Semiconductor Corporation (a) . . . . . . . . . . . . . . . . . . . . . 2,700 124,200
Loehmann's, Inc. New (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,500 126,500
Microchip Technology, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . 5,500 279,812
Mossimo, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,700 21,038
National Data Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,400 147,900
Neurogen Corporation (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,150 60,638
Newpark Resource, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . . . 6,300 234,675
Norrell Corporation Georgia . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500 68,125
Occusystems, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000 216,000
OM Group, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,900 105,300
Outdoor Systems, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,750 189,844
P Common, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,300 127,388
Pediatrix Medical Group (a) . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000 110,625
Project Software & Development, Inc. (a). . . . . . . . . . . . . . . . . . . . 9,000 381,375
Pulte Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 153,750
Railtex, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,600 141,400
Rental Service Corporation (a). . . . . . . . . . . . . . . . . . . . . . . . . 7,000 192,500
Sports Authority, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . . . 5,800 126,150
Stone Energy Corporation (a). . . . . . . . . . . . . . . . . . . . . . . . . . 1,900 56,763
Studio Plus Hotels, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . . 9,000 141,750
Synopsys, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000 370,000
TCF Financial Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000 348,000
Telecomunicacoes Brasileras ADR . . . . . . . . . . . . . . . . . . . . . . . . 1,500 114,750
Teradyne, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000 146,250
Thermedics, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000 145,000
Tiffany & Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,200 117,200
Toll Brothers, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,500 146,250
Tower Automotive, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500 140,625
</TABLE>
See notes to financial statements.
43
<PAGE>
VARIABLE INVESTORS SERIES TRUST
WORLD EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C> <C>
COMMON STOCKS
UNITED STATES--(CONTINUED)
TSX Corporation (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000 $ 133,125
United Meridian Corporation (a) . . . . . . . . . . . . . . . . . . . . . . . . 5,200 269,100
USA Detergents, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,800 158,175
USA Waste Services, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . . 5,500 175,313
Winstar Communications, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . 11,000 231,000
-----------
10,873,083
-----------
TOTAL COMMON STOCKS--(Cost $19,157,844) 98.1% 24,079,855
-----------
PREFERRED STOCKS
BRAZIL--(0.7%)
Companhia Vale do Rio Doce. . . . . . . . . . . . . . . . . . . . . . . . . . . 5,900 113,560
Unibanco Uniao de Bancos. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,900,000 61,986
-----------
175,546
GERMANY--(0.4%)
Grohe Friedrich AG. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380 104,952
-----------
HUNGARY--(1.0%)
OTP Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,900 231,353
-----------
TOTAL PREFERRED STOCKS--(Cost $492,716) 2.1% 511,851
-----------
TOTAL INVESTMENTS--(Cost $19,650,560) 100.2% 24,591,706
OTHER ASSETS LESS LIABILITIES-- (0.2)% (57,546)
------ -----------
NET ASSETS-- 100.0% $24,534,160
------ -----------
------ -----------
</TABLE>
(a) Non-income producing security.
(b) Pursuant to Rule 144A under the Securities Act of 1933, this security
may be resold in transactions exempt from registration, normally to
qualified institutional buyers. At December 31, 1996, this security
aggregated $110,250 or 0.4% of the net assets of the Portfolio.
See notes to financial statements.
44
<PAGE>
VARIABLE INVESTORS SERIES TRUST
WORLD EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
ANALYSIS OF INDUSTRY CLASSIFICATIONS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS VALUE
-------- ---------- -----
<S> <C> <C>
Apparel & Textiles. . . . . . . . . . . 0.2% $ 41,525
Appliances. . . . . . . . . . . . . . . 6.6 1,610,552
Automobiles . . . . . . . . . . . . . . 2.2 549,406
Automotive. . . . . . . . . . . . . . . 0.4 103,327
Automotive Parts. . . . . . . . . . . . 4.2 1,037,922
Banking . . . . . . . . . . . . . . . . 8.2 2,003,773
Broadcasting/Publishing . . . . . . . . 2.8 683,461
Building Materials. . . . . . . . . . . 0.1 34,771
Building Materials & Construction . . . 1.8 431,795
Business/Public Services. . . . . . . . 6.6 1,627,715
Chemicals . . . . . . . . . . . . . . . 1.4 344,098
Computers & Business Equipment. . . . . 4.8 1,166,025
Computer Software & Services. . . . . . 1.6 385,750
Conglomerates . . . . . . . . . . . . . 1.8 447,550
Datacommunications. . . . . . . . . . . 0.6 147,900
Drugs & Health Care . . . . . . . . . . 2.3 562,118
Electrical Equipment. . . . . . . . . . 1.0 252,691
Electronics . . . . . . . . . . . . . . 4.0 990,142
Energy Sources. . . . . . . . . . . . . 2.6 647,758
Fertilizer. . . . . . . . . . . . . . . 1.2 299,996
Financial Services. . . . . . . . . . . 2.0 495,656
Food & Beverages. . . . . . . . . . . . 0.8 193,246
Food Products . . . . . . . . . . . . . 1.5 361,475
Health & Personal Care. . . . . . . . . 9.7 2,386,487
Hotels, Leisure & Tourism . . . . . . . 6.4 1,578,537
Insurance . . . . . . . . . . . . . . . 2.2 544,641
Machinery Engineering . . . . . . . . . 0.8 192,500
Metals. . . . . . . . . . . . . . . . . 1.0 245,299
Misc. Materials . . . . . . . . . . . . 0.9 226,930
Oil Services. . . . . . . . . . . . . . 4.6 1,127,325
Packaging . . . . . . . . . . . . . . . 0.5 122,823
Real Estate . . . . . . . . . . . . . . 1.2 300,000
Recreation. . . . . . . . . . . . . . . 0.9 213,246
Restaurants . . . . . . . . . . . . . . 0.7 165,000
Retail. . . . . . . . . . . . . . . . . 4.0 971,944
Telecommunications. . . . . . . . . . . 6.1 1,498,123
Transportation. . . . . . . . . . . . . 2.0 489,267
Wholesale . . . . . . . . . . . . . . . 0.5 110,932
------- -----------
TOTAL . . . . . . . . . . . . . . . . . 100.2% $24,591,706
------- -----------
------- -----------
</TABLE>
See notes to financial statements.
45
<PAGE>
VARIABLE INVESTORS SERIES TRUST
SMALL CAP PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS
AIRLINES--(2.4%)
Atlas Air, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,900 $ 329,475
----------
APPAREL--(4.8%)
Nautica Enterprises, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . 7,400 186,850
North Face, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,400 103,950
St. John Knits, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,400 191,400
Wolverine World Wide, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . 6,350 184,150
----------
666,350
APPLICATION SOFTWARE--(1.1%)
Citrix Systems, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,900 152,344
----------
AUTO FINANCE--(1.1%)
Oxford Resources Corporation (a). . . . . . . . . . . . . . . . . . . . . . . . 4,700 145,112
----------
AUTO PARTS MANUFACTURERS--(0.8%)
Miller Industries, Inc. Tennessee (a) . . . . . . . . . . . . . . . . . . . . . 5,600 112,000
----------
CHEMICALS--(1.3%)
Waters Corporation (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000 182,250
----------
CLIENT-SERVER HELP DESK--(1.4%)
Remedy Corporation (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,500 188,125
----------
CLIENT-SERVER SOFTWARE--(4.6%)
Applix, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,100 111,563
Network Appliance, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . 2,700 137,362
Project Software & Development, Inc. (a) . . . . . . . . . . . . . . . . . . . 5,600 237,300
Scopus Technology (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,300 153,450
----------
639,675
COMPUTER SOFTWARE & SERVICES--(5.8%)
Pegasystems, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,600 108,450
Sapient Corporation (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,100 88,462
Sykes Enterprises, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 150,000
Transaction Systems Architects, Inc. (a) . . . . . . . . . . . . . . . . . . . 5,700 189,525
Verilink Corporation (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,900 162,925
Viasoft, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000 94,500
----------
793,862
CONNECTORS--(0.9%)
Cable Design Technologies Corporation (a) . . . . . . . . . . . . . . . . . . . 4,000 124,500
----------
CONSUMER FINANCE--(1.0%)
Contifinancial Corporation (a). . . . . . . . . . . . . . . . . . . . . . . . . 4,000 144,500
----------
CONTRACT RESEARCH--(1.2%)
Clintrials Research, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . 7,000 159,250
----------
</TABLE>
See notes to financial statements.
46
<PAGE>
VARIABLE INVESTORS SERIES TRUST
SMALL CAP PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS
CORRECTIONAL SERVICES--(1.0%)
Corrections Corporation of America (a) . . . . . . . . . . . . . . . . . . . . 4,600 $ 140,875
----------
DESIGN-MANUFACTURING AUTOMATION--(0.8%)
Epic Design Technology, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . 4,600 115,000
----------
DRUGS--(4.0%)
Dura Pharmaceuticals, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . 4,900 233,975
Jones Medical Industries, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . 5,400 197,775
Medicis Pharmaceutical Corporation (a). . . . . . . . . . . . . . . . . . . . . 2,600 114,400
----------
546,150
EDUCATIONAL SERVICES--(1.9%)
ITT Educational Services, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . 5,450 126,031
Learning Tree International, Inc. (a) . . . . . . . . . . . . . . . . . . . . . 4,500 132,750
----------
258,781
ELECTRONICS--(0.4%)
Input/Output, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,800 51,800
----------
EMPLOYMENT SERVICE--(1.3%)
Corestaff, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,650 181,209
----------
ENVIRONMENTAL--(2.8%)
Tetra Tech, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,675 112,081
United Waste Systems, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . 7,900 271,563
----------
383,644
FINANCIAL SERVICES--(0.9%)
Henry Jack & Associates, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 3,400 121,550
----------
FOOD RETAILERS--(2.2%)
Einstein Noah Bagel Corporation (a) . . . . . . . . . . . . . . . . . . . . . . 4,100 121,975
Landrys Seafood Restaurant, Inc. (a). . . . . . . . . . . . . . . . . . . . . . 3,900 83,363
Papa Johns International, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . 3,075 103,781
----------
309,119
FURNITURE & APPLIANCES--(2.9%)
Blyth Industries, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . . . 4,700 214,437
Chicago Miniature Lamp, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . 4,350 180,525
----------
394,962
HOTELS & RESTAURANTS--(1.3%)
Wyndham Hotel Corporation (a) . . . . . . . . . . . . . . . . . . . . . . . . . 7,200 177,300
----------
INFORMATION SYSTEMS--(0.6%)
Medic Computer Systems, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . 2,200 88,688
----------
MANAGED CARE-DENTAL--(0.8%)
Orthodontic Centers of America, Inc. (a) . . . . . . . . . . . . . . . . . . . 7,200 115,200
----------
</TABLE>
See notes to financial statements.
47
<PAGE>
VARIABLE INVESTORS SERIES TRUST
SMALL CAP PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS
MEDIA--(1.5%)
Emmis Broadcasting Corporation (a). . . . . . . . . . . . . . . . . . . . . . . 3,300 $ 108,075
Heftel Broadcasting Corporation (a) . . . . . . . . . . . . . . . . . . . . . . 3,300 103,950
----------
212,025
MEDICAL DEVICES--(0.5%)
CNS, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,100 73,313
----------
MEDICAL SERVICES--(1.4%)
Rural/Metro Corporation (a) . . . . . . . . . . . . . . . . . . . . . . . . . . 5,200 187,200
----------
MEDICAL SUPPLIES & SERVICES--(1.5%)
Compdent Corporation (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000 105,750
Physician Sales & Service, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . 7,500 107,812
----------
213,562
METALS & MINING--(0.9%)
RMI Titanium Company (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,200 118,125
----------
MISCELLANEOUS--(2.5%)
Amresco, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,500 173,875
Sirrom Capital Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500 165,375
----------
339,250
NETWORKING--(0.4%)
Premisys Communications, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . 1,800 60,750
----------
NETWORKING SECURITY--(1.1%)
Security Dynamics Technology, Inc. (a). . . . . . . . . . . . . . . . . . . . . 4,700 148,050
----------
NETWORKING SOFTWARE--(1.4%)
Vitesse Semiconductor Corporation (a) . . . . . . . . . . . . . . . . . . . . . 4,300 195,650
----------
PHYSICAL THERAPY CARE SPECIALTY--(3.5%)
National Surgery Centers, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . 4,500 171,000
Renal Treatment Centers, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . 6,400 163,200
Total Renal Care Holdings, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . 4,200 152,250
----------
486,450
PHYSICIAN PRACTICE MANAGEMENT--(1.2%)
Pediatrix Medical Group (a). . . . . . . . . . . . . . . . . . . . . . . . . . 4,600 169,625
----------
PROFESSIONAL SERVICES--(0.7%)
Nova Corporation (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,400 97,350
----------
RECREATION--(2.4%)
Dover Downs Entertainment, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . 5,700 101,888
Regal Cinemas, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,675 236,006
----------
337,894
</TABLE>
See notes to financial statements.
48
<PAGE>
VARIABLE INVESTORS SERIES TRUST
SMALL CAP PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C> <C>
COMMON STOCKS
RETAIL-CATALOG--(2.1%)
CDW Computer Centers, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . 3,250 $ 192,766
Insight Enterprises, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . 3,400 95,200
----------
287,966
RETAIL-OFFICE PRODUCTS--(1.3%)
US Office Products Company (a). . . . . . . . . . . . . . . . . . . . . . . . . 5,300 180,863
----------
RETAIL-SPECIALTY--(2.5%)
Dollar Tree Stores, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . . 3,500 133,875
Finish Line, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,700 204,912
----------
338,787
SEMICONDUCTOR MANUFACTURING--(2.0%)
DSP Communications, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . . 11,800 228,625
Supertex, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,500 45,937
----------
274,562
SOFTWARE-GENERAL--(8.3%)
Inso Corporation (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,400 95,400
JDA Software Group, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . . 3,800 108,300
Rational Software Corporation (a) . . . . . . . . . . . . . . . . . . . . . . . 8,500 336,281
Veritas Software Company (a). . . . . . . . . . . . . . . . . . . . . . . . . . 3,500 174,125
Videoserver, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,300 182,750
Visio Corporation (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,400 118,800
Wind River Systems, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . . 2,700 127,913
----------
1,143,569
SYSTEMS INTERGRATED VALUE ADDED RESELLERS--(3.6%)
Cambridge Technology Partners (a) . . . . . . . . . . . . . . . . . . . . . . . 4,500 151,031
Computer Horizons Corporation (a) . . . . . . . . . . . . . . . . . . . . . . . 5,100 196,350
Technology Solutions Company (a). . . . . . . . . . . . . . . . . . . . . . . . 3,500 145,250
----------
492,631
TELECOMMUNICATION EQUIPMENT--(0.8%)
Allen Group, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,200 115,700
----------
TELEMARKETING--(1.6%)
Precision Response Corporation (a). . . . . . . . . . . . . . . . . . . . . . . 2,800 98,350
Sitel Corporation (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,000 127,125
----------
225,475
VOICE-CALL TRANSACTION PROCESSING--(4.3%)
Aspect Telecommunications Corporation (a) . . . . . . . . . . . . . . . . . . . 4,700 298,450
Comverse Technology, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . 5,100 192,844
National Data Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500 108,750
----------
600,044
----------
TOTAL COMMON STOCKS--(Cost $10,815,337) 92.9% 12,820,562
----------
</TABLE>
See notes to financial statements.
49
<PAGE>
VARIABLE INVESTORS SERIES TRUST
SMALL CAP PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
-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--(9.1%)
State Street Bank and Trust Company (b).. 4.250% 01/02/1997 $1,259,297 $ 1,259,000
-----------
TOTAL SHORT TERM INVESTMENT--(Cost $1,259,000) 9.1% 1,259,000
-----------
TOTAL INVESTMENTS--(Cost $12,074,337) 102.0% 14,079,562
OTHER ASSETS LESS LIABILITIES-- (2.0)% (276,453)
----- -----------
NET ASSETS-- 100.0% $13,803,109
----- -----------
----- -----------
</TABLE>
(a) Non-income producing security.
(b) The repurchase agreement, dated 12/31/96, is fully collateralized by a
United States Treasury Bond, 7.875%, 11/15/07, with a value of $1,288,286.
See notes to financial statements.
50
<PAGE>
VARIABLE INVESTORS SERIES TRUST
GROWTH AND INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS
AEROSPACE & DEFENSE--(9.6%)
Boeing Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500 $ 53,188
General Motors Corporation Class H. . . . . . . . . . . . . . . . . . . . . . . 3,800 213,750
GRC International, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000 65,000
Litton Industries, Inc. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . 6,500 309,562
Lockheed Martin Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . 1,300 118,950
Loral Space & Communications (a). . . . . . . . . . . . . . . . . . . . . . . . 3,000 55,125
Sundstrand Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 170,000
----------
985,575
BANKS AND SAVINGS & LOANS--(15.9%)
Bank of New York Co., Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 6,500 219,375
Bankamerica Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,500 349,125
Bankers Trust New York Corporation. . . . . . . . . . . . . . . . . . . . . . . 3,500 301,875
Chase Manhattan Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . 3,200 285,600
J.P. Morgan & Company, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 97,625
PNC Bank Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500 169,312
Wells Fargo & Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800 215,800
----------
1,638,712
BUSINESS SERVICES--(0.9%)
First Data Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500 91,250
----------
CAPITAL EQUIPMENT--(0.8%)
Allied Signal, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,300 87,100
----------
COMMUNICATION & BROADCASTING--(2.7%)
Infinity Broadcasting Corporation (a) Class A . . . . . . . . . . . . . . . . . 6,500 218,562
Spelling Entertainment Group, Inc. (a). . . . . . . . . . . . . . . . . . . . . 8,500 62,688
----------
281,250
COMPUTERS--(1.6%)
Informix Corporation (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500 50,938
Newbridge Networks Corporation (a). . . . . . . . . . . . . . . . . . . . . . . 4,000 113,000
----------
163,938
COMPUTERS & BUSINESS EQUIPMENT--(6.8%)
Amdahl Corporation (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000 145,500
Hewlett Packard Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500 75,375
Honeywell, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,800 381,350
Sun Microsystems, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 102,750
----------
704,975
CONSUMER DURABLES--(3.0%)
Ford Motor Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000 255,000
General Motors Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 55,750
----------
310,750
ELECTRONICS--(1.6%)
General Instrument Corporation (a). . . . . . . . . . . . . . . . . . . . . . . 3,400 73,525
VeriFone, Inc. (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000 88,500
----------
162,025
</TABLE>
See notes to financial statements.
51
<PAGE>
VARIABLE INVESTORS SERIES TRUST
GROWTH AND INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCKS
TRANSPORTATION--(2.4%)
CSX Corporation . . . . . . . . . . . . . . . . . 3,000 $ 126,750
Southwest Airlines Company. . . . . . . . . . . . 5,500 121,687
----------
248,437
----------
TOTAL COMMON STOCKS--(Cost $8,717,875) 90.5% 9,317,637
----------
NAME OF ISSUER INTEREST MATURITY MATURITY
AND TITLE OF ISSUE RATE DATE AMOUNT
------------------ ---- ---- ------
SHORT TERM INVESTMENT
REPURCHASE AGREEMENT--(9.4%)
State Street Bank and Trust Company (b).. 5.000% 01/02/1997 $969,269 969,000
-----------
TOTAL SHORT TERM INVESTMENT--(Cost $969,000) 9.4% 969,000
-----------
TOTAL INVESTMENTS--(Cost $9,686,875) 99.9% 10,286,637
OTHER ASSETS LESS LIABILITIES-- 0.1% 13,409
----- -----------
NET ASSETS-- 100.0% $10,300,046
----- -----------
----- -----------
</TABLE>
(a) Non-income producing security.
(b) The repurchase agreement, dated 12/31/96, is fully collateralized by a
United States Treasury Bond, 8.50%, 02/15/20, with a value of $990,645.
See notes to financial statements.
52
<PAGE>
VARIABLE INVESTORS SERIES TRUST
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
CASH COMMON HIGH INCOME MULTIPLE
MANAGEMENT STOCK BOND STRATEGIES
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
ASSETS
Investments - securities, at value . . . . . . . . $ 8,948,541 $ 53,326,501 $ 11,983,942 $ 28,253,121
Investments - repurchase agreements. . . . . . . . 0 1,370,000 741,000 3,516,000
Foreign currency holdings, at value (Cost $3,409). 0 0 0 0
Cash . . . . . . . . . . . . . . . . . . . . . . . 27,786 791 369 991
Income receivable. . . . . . . . . . . . . . . . . 4,477 18,362 229,540 87,488
Receivable for securities sold . . . . . . . . . . 0 0 124,581 0
Unrealized appreciation on forward currency
contracts. . . . . . . . . . . . . . . . . . . . 0 0 0 0
Receivable for trust shares sold . . . . . . . . . 0 51,715 48 101,189
Foreign income tax reclaim receivable. . . . . . . 0 0 0 0
Due from adviser . . . . . . . . . . . . . . . . . 10,963 0 6,092 2,593
------------ ------------ ------------ ------------
TOTAL ASSETS. . . . . . . . . . . . . . . . . 8,991,767 54,767,369 13,085,572 31,961,382
LIABILITIES
Payable for securities purchased . . . . . . . . . 0 0 166,718 0
Unrealized depreciation on forward currency
contracts. . . . . . . . . . . . . . . . . . . . 0 0 0 0
Payable to custodian . . . . . . . . . . . . . . . 0 0 0 0
Advisory fee payable . . . . . . . . . . . . . . . 4,344 32,567 7,183 18,177
Accounts payable and accrued expenses. . . . . . . 57,648 66,084 51,934 54,612
Payable for trust shares redeemed. . . . . . . . . 6,903 103,966 25,226 5,084
------------ ------------ ------------ ------------
TOTAL LIABILITIES . . . . . . . . . . . . . . 68,895 202,617 251,061 77,873
------------ ------------ ------------ ------------
TOTAL NET ASSETS. . . . . . . . . . . . . . . $ 8,922,872 $ 54,564,752 $ 12,834,511 $ 31,883,509
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
NET ASSETS
Capital paid - in. . . . . . . . . . . . . . . . . $ 8,923,612 $ 38,955,378 $ 12,804,330 $ 26,796,764
Undistributed (distributions in
excess of) net investment income . . . . . . . . 0 0 (44,464) 9,919
Accumulated net realized gain (loss) on
investments and foreign currency transactions. . (740) 785,569 (352,529) 250,122
Net unrealized appreciation of:
Investments. . . . . . . . . . . . . . . . . . . 0 14,823,805 427,174 4,826,704
Foreign currency . . . . . . . . . . . . . . . . 0 0 0 0
------------ ------------ ------------ ------------
TOTAL NET ASSETS . . . . . . . . . . . . . . . $ 8,922,872 $ 54,564,752 $ 12,834,511 $ 31,883,509
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
NET ASSET VALUE PER SHARE
(based on shares of beneficial interest
outstanding, unlimited number of shares
authorized without par value). . . . . . . . . . . $ 1.000 $ 30.623 $ 9.173 $ 12.699
Total shares outstanding at end of period. . . . . 8,923,612 1,781,846 1,399,203 2,510,680
Cost of investment securities. . . . . . . . . . . $ 8,948,541 $ 39,872,696 $ 12,297,768 $ 26,942,417
</TABLE>
See notes to financial statements.
54
<PAGE>
VARIABLE INVESTORS SERIES TRUST
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
-CONTINUED-
<TABLE>
<CAPTION>
TILT U.S. WORLD
UTILITY GOVERNMENT BOND EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- ---------
<S> <C> <C> <C>
ASSETS
Investments - securities, at value . . . . . . . . $ 14,404,830 $ 10,494,486 $ 24,591,706
Investments - repurchase agreements. . . . . . . . 0 186,000 0
Foreign currency holdings, at value (Cost $3,409). 0 0 3,365
Cash . . . . . . . . . . . . . . . . . . . . . . . 54,105 949 0
Income receivable. . . . . . . . . . . . . . . . . 68,285 113,861 19,087
Receivable for securities sold . . . . . . . . . . 140,779 2,422 69,844
Unrealized appreciation on forward currency
contracts. . . . . . . . . . . . . . . . . . . . 0 0 79,848
Receivable for trust shares sold . . . . . . . . . 7,696 1,424 114,115
Foreign income tax reclaim receivable. . . . . . . 0 0 4,302
Due from adviser . . . . . . . . . . . . . . . . . 2,884 7,223 3,144
------------ ------------ ------------
TOTAL ASSETS. . . . . . . . . . . . . . . . . 14,678,579 10,806,365 24,885,411
LIABILITIES
Payable for securities purchased . . . . . . . . . 0 0 165,728
Unrealized depreciation on forward currency
contracts. . . . . . . . . . . . . . . . . . . . 0 0 16,737
Payable to custodian . . . . . . . . . . . . . . . 0 0 84,583
Advisory fee payable . . . . . . . . . . . . . . . 8,141 5,501 14,102
Accounts payable and accrued expenses. . . . . . . 51,915 48,567 61,677
Payable for trust shares redeemed. . . . . . . . . 170,918 18,676 8,424
------------ ------------ ------------
TOTAL LIABILITIES . . . . . . . . . . . . . . 230,974 72,744 351,251
------------ ------------ ------------
TOTAL NET ASSETS. . . . . . . . . . . . . . . $ 14,447,605 $ 10,733,621 $ 24,534,160
------------ ------------ ------------
------------ ------------ ------------
NET ASSETS
Capital paid - in. . . . . . . . . . . . . . . . . $ 11,908,437 $ 10,681,891 $ 19,259,948
Undistributed (distributions in
excess of) net investment income . . . . . . . . 50,423 21,757 127,481
Accumulated net realized gain (loss) on
investments and foreign currency transactions. . 222,103 7,427 143,454
Net unrealized appreciation of:
Investments. . . . . . . . . . . . . . . . . . . 2,266,642 22,546 4,941,102
Foreign currency . . . . . . . . . . . . . . . . 0 0 62,175
------------ ------------ ------------
TOTAL NET ASSETS . . . . . . . . . . . . . . . $ 14,447,605 $ 10,733,621 $ 24,534,160
------------ ------------ ------------
------------ ------------ ------------
NET ASSET VALUE PER SHARE
(based on shares of beneficial interest
outstanding, unlimited number of shares
authorized without par value). . . . . . . . . . . $ 15.254 $ 9.938 $ 15.062
Total shares outstanding at end of period. . . . . 947,157 1,080,081 1,628,910
Cost of investment securities. . . . . . . . . . . $ 12,138,188 $ 10,657,940 $ 19,650,560
</TABLE>
See notes to financial statements.
55
<PAGE>
VARIABLE INVESTORS SERIES TRUST
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
-CONTINUED-
<TABLE>
<CAPTION>
GROWTH &
SMALL CAP INCOME
PORTFOLIO PORTFOLIO
--------- ---------
<S> <C> <C>
ASSETS
Investments - securities, at value . . . . . . . . $ 12,820,562 $ 9,317,637
Investments - repurchase agreements. . . . . . . . 1,259,000 969,000
Foreign currency holdings, at value. . . . . . . . 0 0
Cash . . . . . . . . . . . . . . . . . . . . . . . 178 25
Income receivable. . . . . . . . . . . . . . . . . 406 7,007
Receivable for securities sold . . . . . . . . . . 8,627 152,202
Unrealized appreciation on forward currency
contracts. . . . . . . . . . . . . . . . . . . . 0 0
Receivable for trust shares sold . . . . . . . . . 50,092 17,400
Foreign income tax reclaim receivable. . . . . . . 0 0
Due from adviser . . . . . . . . . . . . . . . . . 6,344 4,751
------------ ------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . 14,145,209 10,468,022
LIABILITIES
Payable for securities purchased . . . . . . . . . 227,440 25,578
Unrealized depreciation on forward currency
contracts. . . . . . . . . . . . . . . . . . . . 0 0
Payable to custodian . . . . . . . . . . . . . . . 0 0
Advisory fee payable . . . . . . . . . . . . . . . 9,687 6,327
Accounts payable and accrued expenses. . . . . . . 67,271 52,772
Payable for trust shares redeemed. . . . . . . . . 37,702 83,299
------------ ------------
TOTAL LIABILITIES. . . . . . . . . . . . . . . 342,100 167,976
------------ ------------
TOTAL NET ASSETS . . . . . . . . . . . . . . . $ 13,803,109 $ 10,300,046
------------ ------------
------------ ------------
NET ASSETS
Capital paid - in. . . . . . . . . . . . . . . . . $ 11,803,182 $ 9,849,523
Undistributed (distributions in
excess of) net investment income . . . . . . . . 0 0
Accumulated net realized gain (loss) on
investments and foreign currency transactions. . (5,298) (149,239)
Net unrealized appreciation of:
Investments. . . . . . . . . . . . . . . . . . . 2,005,225 599,762
Foreign currency . . . . . . . . . . . . . . . . 0 0
------------ ------------
TOTAL NET ASSETS . . . . . . . . . . . . . . . $ 13,803,109 $ 10,300,046
------------ ------------
------------ ------------
NET ASSET VALUE PER SHARE
(based on shares of beneficial interest
outstanding, unlimited number of shares
authorized without par value). . . . . . . . . . . $ 16.050 $ 12.421
Total shares outstanding at end of period. . . . . 860,011 829,257
Cost of investment securities. . . . . . . . . . . $ 12,074,337 $ 9,686,875
</TABLE>
See notes to financial statements.
56
<PAGE>
VARIABLE INVESTORS SERIES TRUST
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
CASH COMMON
MANAGEMENT STOCK
PORTFOLIO PORTFOLIO
---------- ---------
<S> <C> <C>
INVESTMENT INCOME
Dividend income. . . . . . . . . . . . . . . . . . $ 0 $ 345,330
Interest income. . . . . . . . . . . . . . . . . . 666,415 118,860
Foreign taxes withheld . . . . . . . . . . . . . . 0 (1,111)
------------ ------------
TOTAL INCOME . . . . . . . . . . . . . . . . . 666,415 463,079
EXPENSES
Investment management fee. . . . . . . . . . . . . 61,368 343,480
Administrative fee . . . . . . . . . . . . . . . . 30,524 118,438
Custodian fee. . . . . . . . . . . . . . . . . . . 51,145 52,383
Audit fee and expenses . . . . . . . . . . . . . . 14,777 14,777
Legal fee. . . . . . . . . . . . . . . . . . . . . 10,000 10,000
Trustees fee and expenses. . . . . . . . . . . . . 7,111 7,111
Printing expenses. . . . . . . . . . . . . . . . . 5,000 5,000
Transfer agent fee . . . . . . . . . . . . . . . . 4,675 4,675
Insurance. . . . . . . . . . . . . . . . . . . . . 3,752 16,282
Other. . . . . . . . . . . . . . . . . . . . . . . 1,062 3,680
Expenses borne by the adviser. . . . . . . . . . . (97,435) 0
Expense reductions . . . . . . . . . . . . . . . . (304) (23)
------------ ------------
TOTAL EXPENSES . . . . . . . . . . . . . . . . . 91,675 575,803
------------ ------------
NET INVESTMENT INCOME (LOSS) . . . . . . . . . . 574,740 (112,724)
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain (loss) on investments. . . . . . . (740) 3,885,594
Net realized gain (loss) on foreign currency
transactions . . . . . . . . . . . . . . . . . . . 0 4
Change in unrealized appreciation (depreciation) of:
Investments. . . . . . . . . . . . . . . . . . . . 0 7,359,129
Foreign currency . . . . . . . . . . . . . . . . . 0 0
------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS). . . . . (740) 11,244,727
------------ ------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS. . . . . . . . . . . . . $ 574,000 $ 11,132,003
------------ ------------
------------ ------------
</TABLE>
See notes to financial statements.
57
<PAGE>
VARIABLE INVESTORS SERIES TRUST
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
-CONTINUED-
<TABLE>
<CAPTION>
HIGH INCOME MULTIPLE TILT U.S.
BOND STRATEGIES UTILITY GOVERNMENT BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- ---------- --------- ---------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend income. . . . . . . . . . . . . . . . . . $ 3,756 $ 135,473 $ 768,907 $ 0
Interest income. . . . . . . . . . . . . . . . . . 872,619 518,120 1,239 730,212
Foreign taxes withheld . . . . . . . . . . . . . . 0 (443) 0 0
------------ ------------ ------------ ------------
TOTAL INCOME . . . . . . . . . . . . . . . . . . 876,375 653,150 770,146 730,212
EXPENSES
Investment management fee. . . . . . . . . . . . . 67,009 193,474 102,375 66,078
Administrative fee . . . . . . . . . . . . . . . . 24,294 66,999 38,545 28,109
Custodian fee. . . . . . . . . . . . . . . . . . . 53,771 51,171 42,372 42,720
Audit fee and expenses . . . . . . . . . . . . . . 14,777 14,777 14,777 14,777
Legal fee. . . . . . . . . . . . . . . . . . . . . 10,000 10,000 10,000 10,000
Trustees fee and expenses. . . . . . . . . . . . . 7,111 7,111 7,111 7,111
Printing expenses. . . . . . . . . . . . . . . . . 5,000 5,000 5,000 5,000
Transfer agent fee . . . . . . . . . . . . . . . . 4,675 4,675 4,675 4,675
Insurance. . . . . . . . . . . . . . . . . . . . . 3,284 10,062 6,142 4,194
Other. . . . . . . . . . . . . . . . . . . . . . . 902 2,278 1,530 0
Expenses borne by the adviser. . . . . . . . . . . (75,882) (33,862) (51,109) (89,049)
Expense reductions . . . . . . . . . . . . . . . . (1,835) (25) (1,009) (409)
------------ ------------ ------------ ------------
TOTAL EXPENSES . . . . . . . . . . . . . . . . . 113,106 331,660 180,409 93,206
------------ ------------ ------------ ------------
NET INVESTMENT INCOME (LOSS) . . . . . . . . . . 763,269 321,490 589,737 637,006
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain (loss) on investments. . . . . . . 284,309 3,291,193 587,821 115,107
Net realized gain (loss) on foreign currency
transactions . . . . . . . . . . . . . . . . . . . 0 17,576 0 0
Change in unrealized appreciation (depreciation) of:
Investments. . . . . . . . . . . . . . . . . . . . 287,545 1,125,428 (546,460) (496,161)
Foreign currency . . . . . . . . . . . . . . . . . 0 0 0 0
------------ ------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS). . . . . 571,854 4,434,197 41,361 (381,054)
------------ ------------ ------------ ------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS. . . . . . . . . . . . . $ 1,335,123 $ 4,755,687 $ 631,098 $ 255,952
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
See notes to financial statements.
58
<PAGE>
VARIABLE INVESTORS SERIES TRUST
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
-CONTINUED-
<TABLE>
<CAPTION>
WORLD GROWTH &
EQUITY SMALL CAP INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- ---------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividend income. . . . . . . . . . . . . . . . . . $ 215,697 $ 3,998 $ 77,639
Interest income. . . . . . . . . . . . . . . . . . 93,286 34,600 70,188
Foreign taxes withheld . . . . . . . . . . . . . . (24,983) 0 (1,032)
------------ ------------ ------------
TOTAL INCOME . . . . . . . . . . . . . . . . . . 284,000 38,598 146,795
EXPENSES
Investment management fee. . . . . . . . . . . . . 153,378 73,697 53,346
Administrative fee . . . . . . . . . . . . . . . . 53,330 52,370 38,825
Custodian fee. . . . . . . . . . . . . . . . . . . 71,173 36,846 52,325
Audit fee and expenses . . . . . . . . . . . . . . 14,777 14,777 14,777
Legal fee. . . . . . . . . . . . . . . . . . . . . 10,000 10,000 10,000
Trustees fee and expenses. . . . . . . . . . . . . 7,111 7,111 6,666
Printing expenses. . . . . . . . . . . . . . . . . 5,000 5,000 5,000
Transfer agent fee . . . . . . . . . . . . . . . . 4,675 4,675 4,675
Insurance. . . . . . . . . . . . . . . . . . . . . 7,065 1,479 1,455
Other. . . . . . . . . . . . . . . . . . . . . . . 1,712 376 309
Expenses borne by the adviser. . . . . . . . . . . (64,846) (89,290) (97,776)
Expense reductions . . . . . . . . . . . . . . . . (396) (171) (925)
------------ ------------ ------------
TOTAL EXPENSES . . . . . . . . . . . . . . . . . 262,979 116,870 88,677
------------ ------------ ------------
NET INVESTMENT INCOME (LOSS) . . . . . . . . . . 21,021 (78,272) 58,118
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain (loss) on investments. . . . . . . 878,643 (1,760) (135,171)
Net realized gain (loss) on foreign currency
transactions . . . . . . . . . . . . . . . . . . . (170,197) 0 0
Change in unrealized appreciation (depreciation) of:
Investments. . . . . . . . . . . . . . . . . . . . 1,675,486 1,590,340 505,901
Foreign currency . . . . . . . . . . . . . . . . . 47,547 0 0
------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS). . . . . 2,431,479 1,588,580 370,730
------------ ------------ ------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS. . . . . . . . . . . . . $ 2,452,500 $ 1,510,308 $ 428,848
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
See notes to financial statements.
59
<PAGE>
VARIABLE INVESTORS SERIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CASH MANAGEMENT PORTFOLIO COMMON STOCK PORTFOLIO
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
12/31/96 12/31/95 12/31/96 12/31/95
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
From operations:
Net investment income (loss) . . . $ 574,740 $ 522,535 $ (112,724) $ 2,498
Net realized gain (loss) on
investments . . . . . . . . . . . (740) 65 3,885,594 4,418,581
Net realized gain (loss) on
foreign currency transactions . . 0 0 4 899
Change in unrealized appreciation
(depreciation) of:
Investments . . . . . . . . . . . 0 0 7,359,129 7,157,127
Foreign currency. . . . . . . . . 0 0 0 0
------------ ------------ ------------ ------------
Net increase in net assets
resulting from operations . . . . 574,000 522,600 11,132,003 11,579,105
Dividends and distributions to
Shareholders from:
Net investment income. . . . . . . (574,740) (522,535) 0 (267,715)
Net realized gain on investments . 0 (53) (3,224,517) (2,264,091)
Dividends and distributions to
Shareholders in excess of:
Net investment income. . . . . . . 0 0 (2,498) 0
Net realized gain on investments . 0 0 0 0
Trust share transactions . . . . . (1,172,111) 1,897,366 3,741,040 3,056,280
------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE) . . . . (1,172,851) 1,897,378 11,646,028 12,103,579
Net assets
Beginning of period. . . . . . . . 10,095,723 8,198,345 42,918,724 30,815,145
------------ ------------ ------------ ------------
END OF PERIOD (1). . . . . . . . . $ 8,922,872 $ 10,095,723 $ 54,564,752 $ 42,918,724
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
(1) Including undistributed
(distributions in excess of)
net investment income . . . . . . $ 0 $ 0 $ 0 $ 2,498
</TABLE>
See notes to financial statements.
60
<PAGE>
VARIABLE INVESTORS SERIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
-CONTINUED-
<TABLE>
<CAPTION>
HIGH INCOME BOND PORTFOLIO MULTIPLE STRATEGIES PORTFOLIO TILT UTILITY PORTFOLIO
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
12/31/96 12/31/95 12/31/96 12/31/95 12/31/96 12/31/95
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
From operations:
Net investment income (loss) . . . $ 763,269 $ 730,675 $ 321,490 $ 271,086 $ 589,737 $ 547,641
Net realized gain (loss) on
investments . . . . . . . . . . . 284,309 (19,728) 3,291,193 2,272,079 587,821 346,305
Net realized gain (loss) on
foreign currency transactions . . 0 3,252 17,576 3 0 0
Change in unrealized appreciation
(depreciation) of:
Investments . . . . . . . . . . . 287,545 723,665 1,125,428 3,961,315 (546,460) 3,179,720
Foreign currency. . . . . . . . . 0 0 0 0 0 0
------------ ------------ ------------ ------------ ------------ ------------
Net increase in net assets
resulting from operations . . . . 1,335,123 1,437,864 4,755,687 6,504,483 631,098 4,073,666
Dividends and distributions to
Shareholders from:
Net investment income. . . . . . . (763,269) (730,675) (321,490) (270,194) (589,737) (481,008)
Net realized gain on investments . 0 0 (3,160,559) (2,115,878) (476,096) (286,632)
Dividends and distributions to
Shareholders in excess of:
Net investment income. . . . . . . (60,285) (43,548) (95) 0 (100) 0
Net realized gain on investments . 0 0 0 0 0 0
Trust share transactions . . . . . 3,559,102 329,113 4,230,258 1,111,737 (1,135,870) 400,523
------------ ------------ ------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE) . . . . 4,070,671 992,754 5,503,801 5,230,148 (1,570,705) 3,706,549
Net assets
Beginning of period. . . . . . . . 8,763,840 7,771,086 26,379,708 21,149,560 16,018,310 12,311,761
------------ ------------ ------------ ------------ ------------ ------------
END OF PERIOD (1). . . . . . . . . $ 12,834,511 $ 8,763,840 $ 31,883,509 $ 26,379,708 $ 14,447,605 $ 16,018,310
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
(1) Including undistributed
(distributions in excess of)
net investment income . . . . . . $ (44,464) $ (14,589) $ 9,919 $ 10,013 $ 50,423 $ 67,014
</TABLE>
See notes to financial statements.
61
<PAGE>
VARIABLE INVESTORS SERIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
-CONTINUED-
<TABLE>
<CAPTION>
U.S. GOVERNMENT BOND PORTFOLIO WORLD EQUITY PORTFOLIO
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
12/31/96 12/31/95 12/31/96 12/31/95
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
From operations:
Net investment income (loss) . . . . . . . . $ 637,006 $ 756,605 $ 21,021 $ 55,247
Net realized gain (loss) on investments. . . 115,107 678,846 878,643 957,186
Net realized gain (loss) on foreign
currency transactions. . . . . . . . . . . 0 0 (170,197) 223,542
Change in unrealized appreciation
(depreciation) of:
Investments. . . . . . . . . . . . . . . . (496,161) 843,009 1,675,486 2,212,725
Foreign currency . . . . . . . . . . . . . 0 0 47,547 (62,988)
------------ ------------ ------------ ------------
Net increase in net assets
resulting from operations. . . . . . . . . 255,952 2,278,460 2,452,500 3,385,712
Dividends and distributions to Shareholders
from:
Net investment income. . . . . . . . . . . . (617,580) (756,605) (21,021) 0
Net realized gain on investments . . . . . . (211,853) (352,027) (565,417) (1,008,027)
Dividends and distributions to Shareholders
in excess of:
Net investment income. . . . . . . . . . . . 0 (49,391) (81,014) 0
Net realized gain (loss) on investments. . . 0 0 0 0
Trust share transactions . . . . . . . . . . . (310,953) (3,946,311) 4,558,380 4,313,369
------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE). . . . . . . . . (884,434) (2,825,874) 6,343,428 6,691,054
Net assets
Beginning of period. . . . . . . . . . . . . 11,618,055 14,443,929 18,190,732 11,499,678
------------ ------------ ------------ ------------
END OF PERIOD (1). . . . . . . . . . . . . . $ 10,733,621 $ 11,618,055 $ 24,534,160 $ 18,190,732
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
(1) Including undistributed (distributions
in excess of) net investment income. . . . . $ 21,757 $ 2,331 $ 127,481 $ (11,431)
</TABLE>
(2) From commencement of operations May 4, 1995.
(3) From commencement of operations May 31, 1995.
See notes to financial statements.
62
<PAGE>
VARIABLE INVESTORS SERIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
-CONTINUED-
<TABLE>
<CAPTION>
SMALL CAP PORTFOLIO GROWTH & INCOME PORTFOLIO
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
12/31/96 12/31/95(2) 12/31/96 12/31/95(3)
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
From operations:
Net investment income (loss) . . . . . . . . $ (78,272) $ (12,679) $ 58,118 $ 13,071
Net realized gain (loss) on investments. . . (1,760) 148,029 (135,171) 43,303
Net realized gain (loss) on foreign
currency transactions. . . . . . . . . . . 0 0 0 0
Change in unrealized appreciation
(depreciation) of:
Investments. . . . . . . . . . . . . . . . 1,590,340 414,885 505,901 93,861
Foreign currency . . . . . . . . . . . . . 0 0 0 0
------------ ------------ ------------ ------------
Net increase in net assets
resulting from operations. . . . . . . . . 1,510,308 550,235 428,848 150,235
Dividends and distributions to Shareholders
from:
Net investment income. . . . . . . . . . . . 0 0 (58,118) (13,071)
Net realized gain on investments . . . . . . 0 (98,802) (29,710) (27,661)
Dividends and distributions to Shareholders
in excess of:
Net investment income. . . . . . . . . . . . 0 0 (737) 0
Net realized gain (loss) on investments. . . (40,086) 0 0 0
Trust share transactions . . . . . . . . . . . 8,519,785 3,361,669 6,625,007 3,225,253
------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE). . . . . . . . . 9,990,007 3,813,102 6,965,290 3,334,756
Net assets
Beginning of period. . . . . . . . . . . . . 3,813,102 0 3,334,756 0
------------ ------------ ------------ ------------
END OF PERIOD (1). . . . . . . . . . . . . . $ 13,803,109 $ 3,813,102 $ 10,300,046 $ 3,334,756
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
(1) Including undistributed (distributions
in excess of) net investment income. . . . . $ 0 $ 0 $ 0 $ 0
</TABLE>
(2) From commencement of operations May 4, 1995.
(3) From commencement of operations May 31, 1995.
See notes to financial statements.
63
<PAGE>
VARIABLE INVESTORS SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
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 comprises nine 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 Cash
Management Portfolio, the Common Stock Portfolio, the High Income Bond
Portfolio, the Multiple Strategies Portfolio, the Tilt Utility Portfolio, the
U.S. Government Bond Portfolio, the World Equity Portfolio, the Small Cap
Portfolio and the Growth & Income Portfolio.
As of December 31, 1996, 93.2% of the assets of the Trust are owned by
First Variable Life Insurance Company ("First Variable") and 6.8% of the assets
of the Trust are owned by Monarch Life Insurance Company ("MLIC"), through
separate accounts maintained by First Variable and MLIC, respectively.
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 Trust's 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 estimated by a broker or
dealer. Debt securities are generally valued on the basis of valuations
furnished by a pricing service which determines 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. The Cash Management Portfolio
values its securities using the amortized cost method, which values securities
initially at cost and thereafter assumes a constant amortization to maturity of
any discount or premium. Securities 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.
64
<PAGE>
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
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 realized
capital gains, for the fiscal year. In addition, by distributing during each
calendar year substantially all of their net investment income, capital gains
and certain other amounts, if any, the Portfolios of the Trust will not be
subject to a federal excise tax.
As of December 31, 1996, the High Income Bond Portfolio has a realized
capital loss carryforward, for Federal income tax purposes, of $344,480
($291,888 expires on December 31, 2002, $52,592 expires on December 31, 2003),
available to be used to offset future realized capital gains.
65
<PAGE>
Any net capital 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 losses as follows, during
such period in fiscal 1996:
PORTFOLIO AMOUNT
--------- ------
Cash Management Portfolio . . . . . . . . . . $ 740
High Income Bond Portfolio. . . . . . . . . . 8,049
U.S. Government Bond Portfolio. . . . . . . . 7,466
Growth & Income Portfolio . . . . . . . . . . 147,308
EXPENSES: Expenses directly attributable to a Portfolio are charged to
that Portfolio. Expenses not directly attributable to a Portfolio are split
evenly 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, other than the Cash
Management Portfolio, declares and distributes dividends from net investment
income, if any, and distributes its net realized capital gains, if any, at least
annually. The Cash Management Portfolio declares daily and pays monthly
dividends from net investment income. 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 carryforwards, 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 an Annuity Account to receive dividends and
capital gain distributions in cash. The Trust made the following
reclassifications as of December 31, 1996:
<TABLE>
<CAPTION>
INCREASE INCREASE/(DECREASE)
INCREASE/(DECREASE) UNDISTRIBUTED NET ACCUMULATED
PAID IN CAPITAL INVESTMENT INCOME REALIZED GAIN/(LOSS)
--------------- ----------------- --------------------
<S> <C> <C> <C>
Common Stock Portfolio . . . . . . $ 0 $ 112,724 $ (112,724)
High Income Bond Portfolio . . . . (118) 30,410 (30,292)
Multiple Strategies Portfolio. . . 0 1 (1)
World Equity Portfolio . . . . . . 0 219,926 (219,926)
Small Cap Portfolio. . . . . . . . (78,272) 78,272 0
Growth & Income Portfolio. . . . . (737) 737 0
</TABLE>
Net investment income, net realized gains and net assets were not affected by
these changes.
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: Federated Investment Counseling as sub-adviser to the Cash Management and
the High Income Bond Portfolios, Value Line, Inc. as sub-adviser to the Multiple
Strategies and the Common Stock Portfolios, Strong Capital Management, Inc. as
sub-adviser to the U.S. Government
66
<PAGE>
Bond Portfolio and State Street Bank and Trust Company as sub-adviser to the
Tilt Utility 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 Portfolio and Warburg,
Pincus Counsellors, 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: 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 agreement, the Trust pays
compensation monthly to FVAS at the following annual rates based on the average
daily net assets of each Portfolio taken separately: 0.70% of average daily net
assets for the Common Stock 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 Tilt Utility 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; 0.70% 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; 0.60% 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; 0.50% of the first $70 million of average daily net assets and
0.45% of average daily net assets in excess of $70 million for the Cash
Management Portfolio; 0.85% of average daily net assets for the Small Cap
Portfolio; and, 0.75% of average daily net assets for the Growth & Income
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, 1997 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 Cash Management Portfolio and the U.S. Government Bond Portfolio).
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 period ended
December 31, 1996, the Trust's expenses were reduced by $5,097.
TRUSTEES' COMPENSATION
Trustees' fees of $8,000 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, MLIC or FVAS. No remuneration is paid by the Trust to any Trustee or
Officer of the Trust who is affiliated with First Variable, ILoNA, MLIC or FVAS.
67
<PAGE>
NOTE D -- INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investments, excluding
short-term securities for each Portfolio other than the Cash Management
Portfolio, for the period ended December 31, 1996 were as follows:
<TABLE>
<CAPTION>
NON- NON-
GOVERNMENT GOVERNMENT GOVERNMENT GOVERNMENT
PURCHASES PURCHASES SALES SALES
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Cash Management Portfolio. . . . . $ 1,393,334,179 $ 32,213,727 $ 1,402,592,159 $ 24,303,578
Common Stock Portfolio . . . . . . 33,164,834 0 31,335,576 0
High Income Bond Portfolio . . . . 11,101,335 1,503,438 8,848,616 1,004,219
Multiple Strategies Portfolio. . . 19,961,648 2,512,500 20,708,766 1,010,261
Tilt Utility Portfolio . . . . . . 3,013,691 0 4,617,844 0
U.S. Government Bond Portfolio . . 5,406,467 20,641,545 5,745,987 20,273,633
World Equity Portfolio . . . . . . 18,310,186 0 12,425,793 0
Small Cap Portfolio. . . . . . . . 13,930,016 0 5,775,489 0
Growth & Income Portfolio. . . . . 13,724,410 308,268 7,611,049 0
</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, 1996 were as follows:
<TABLE>
<CAPTION>
GROSS UNREALIZED NET UNREALIZED
IDENTIFIED COST APPRECIATION (DEPRECIATION) APPRECIATION
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Cash Management Portfolio. . . . . $ 8,948,591 $ 0 $ 0 $ 0
Common Stock Portfolio . . . . . . 39,872,696 15,538,469 (714,664) 14,823,805
High Income Bond Portfolio . . . . 12,417,863 682,337 (375,258) 307,079
Multiple Strategies Portfolio. . . 26,947,408 5,151,462 (329,749) 4,821,713
Tilt Utility Portfolio . . . . . . 12,169,298 2,360,120 (124,588) 2,235,532
U.S. Government Bond Portfolio . . 10,676,022 84,586 (80,122) 4,464
World Equity Portfolio . . . . . . 19,650,560 5,437,287 (496,185) 4,941,102
Small Cap Portfolio. . . . . . . . 12,085,060 2,444,963 (450,461) 1,994,502
Growth & Income Portfolio. . . . . 9,688,806 903,047 (305,216) 597,831
</TABLE>
NOTE E -- TRUST SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>
CASH MANAGEMENT PORTFOLIO
Shares sold. . . . . . . . . . . . . 34,085,496 $ 34,085,496 20,464,576 $ 20,464,576
Shares issued to shareholders in
reinvestment . . . . . . . . . . . 574,728 574,728 522,595 522,595
------------ ------------ ------------ ------------
34,660,224 34,660,224 20,987,171 20,987,171
Shares repurchased . . . . . . . . . (35,832,335) (35,832,335) (19,089,805) (19,089,805)
------------ ------------ ------------ ------------
Net increase (decrease). . . . . . . (1,172,111) $ (1,172,111) 1,897,366 $ 1,897,366
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
68
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>
COMMON STOCK PORTFOLIO
Shares sold. . . . . . . . . . . . . 424,439 $ 12,507,958 363,229 $ 8,619,361
Shares issued to shareholders in
reinvestment . . . . . . . . . . . 105,176 3,227,017 98,408 2,531,806
------------ ------------ ------------ ------------
529,615 15,734,975 461,637 11,151,167
Shares repurchased . . . . . . . . . (407,036) (11,993,935) (338,854) (8,094,887)
------------ ------------ ------------ ------------
Net increase . . . . . . . . . . . . 122,579 $ 3,741,040 122,783 $ 3,056,280
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
HIGH INCOME BOND PORTFOLIO
Shares sold. . . . . . . . . . . . . 980,079 $ 9,025,755 685,858 $ 6,023,295
Shares issued to shareholders in
reinvestment . . . . . . . . . . . 89,263 817,769 90,256 774,223
------------ ------------ ------------ ------------
1,069,342 9,843,524 776,114 6,797,518
Shares repurchased . . . . . . . . . (690,441) (6,284,422) (737,813) (6,468,405)
------------ ------------ ------------ ------------
Net increase . . . . . . . . . . . . 378,901 $ 3,559,102 38,301 $ 329,113
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
MULTIPLE STRATEGIES PORTFOLIO
Shares sold. . . . . . . . . . . . . 1,191,576 $ 16,014,171 407,094 $ 4,796,839
Shares issued to shareholders in
reinvestment . . . . . . . . . . . 272,676 3,482,144 199,328 2,386,073
------------ ------------ ------------ ------------
1,464,252 19,496,315 606,422 7,182,912
Shares repurchased . . . . . . . . . (1,144,091) (15,266,057) (526,172) (6,071,175)
------------ ------------ ------------ ------------
Net increase . . . . . . . . . . . . 320,161 $ 4,230,258 80,250 $ 1,111,737
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
TILT UTILITY PORTFOLIO
Shares sold. . . . . . . . . . . . . 198,705 $ 3,085,526 345,562 $ 4,803,339
Shares issued to shareholders in
reinvestment . . . . . . . . . . . 69,597 1,065,932 49,831 767,641
------------ ------------ ------------ ------------
268,302 4,151,458 395,393 5,570,980
Shares repurchased . . . . . . . . . (341,137) (5,287,328) (370,564) (5,170,457)
------------ ------------ ------------ ------------
Net increase (decrease). . . . . . . (72,835) $ (1,135,870) 24,829 $ 400,523
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
U.S. GOVERNMENT BOND PORTFOLIO
Shares sold. . . . . . . . . . . . . 241,930 $ 2,487,211 252,791 $ 2,717,003
Shares issued to shareholders in
reinvestment . . . . . . . . . . . 82,843 829,433 110,604 1,158,024
------------ ------------ ------------ ------------
324,773 3,316,644 363,395 3,875,027
Shares repurchased . . . . . . . . . (350,145) (3,627,597) (744,322) (7,821,338)
------------ ------------ ------------ ------------
Net decrease . . . . . . . . . . . . (25,372) $ (310,953) (380,927) $ (3,946,311)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
WORLD EQUITY PORTFOLIO
Shares sold. . . . . . . . . . . . . 872,836 $ 12,579,417 659,927 $ 8,568,833
Shares issued to shareholders in
reinvestment . . . . . . . . . . . 45,499 667,451 72,816 1,008,027
------------ ------------ ------------ ------------
918,335 13,246,868 732,743 9,576,860
Shares repurchased . . . . . . . . . (605,395) (8,688,488) (395,278) (5,263,491)
------------ ------------ ------------ ------------
Net increase . . . . . . . . . . . . 312,940 $ 4,558,380 337,465 $ 4,313,369
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
69
<PAGE>
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED MAY 4, 1995 TO
DECEMBER 31, 1996 DECEMBER 31, 1995
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>
SMALL CAP PORTFOLIO
Shares sold. . . . . . . . . . . . . 848,253 $ 12,925,499 504,211 $ 5,867,210
Shares issued to shareholders in
reinvestment . . . . . . . . . . . 2,623 40,086 7,913 98,802
------------ ------------ ------------ ------------
850,876 12,965,585 512,124 5,966,012
Shares repurchased . . . . . . . . . (292,589) (4,445,800) (210,400) (2,604,343)
------------ ------------ ------------ ------------
Net increase . . . . . . . . . . . . 558,287 $ 8,519,785 301,724 $ 3,361,669
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM
MAY 31, 1995 TO
DECEMBER 31, 1995
--------------------------------
<S> <C> <C> <C> <C>
GROWTH & INCOME PORTFOLIO
Shares sold. . . . . . . . . . . . . 648,884 $ 8,072,912 357,601 $ 3,877,668
Shares issued to shareholders in
reinvestment . . . . . . . . . . . 7,099 88,565 3,645 40,731
------------ ------------ ------------ ------------
655,983 8,161,477 361,246 3,918,399
Shares repurchased . . . . . . . . . (125,254) (1,536,470) (62,718) (693,146)
------------ ------------ ------------ ------------
Net increase . . . . . . . . . . . . 530,729 $ 6,625,007 298,528 $ 3,225,253
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
NOTE F -- FORWARD FOREIGN CURRENCY CONTRACTS
As of December 31, 1996 the World Equity Portfolio had open nine forward
foreign currency contracts which contractually obligates the Portfolio to
deliver currencies at a specified date, as follows:
<TABLE>
<CAPTION>
NET UNREALIZED
CURRENCY SOLD SETTLEMENT DATE COST VALUE APPRECIATION/(DEPRECIATION)
------------- --------------- ---- ----- ---------------------------
<S> <C> <C> <C> <C>
471,867 Australian Dollars 01/09/97 $ 375,016 $ 370,000 $ (5,016)
1,139,008 Belgian Francs 02/20/97 36,036 37,000 964
1,187,182 French Francs 02/06/97 229,309 233,000 3,691
786,359 German Marks 02/20/97 512,729 526,000 13,271
144,560,000 Japanese Yen 01/27/97 1,253,034 1,300,000 46,966
396,904 Netherland Guilder 02/20/97 230,661 237,000 6,339
254,612 Pound Sterling 02/20/97 435,688 424,000 (11,688)
167,354 Swiss Francs 02/20/97 125,688 133,000 7,312
CURRENCY PURCHASED
------------------
1,139,008 Belgian Francs 02/20/97 36,036 35,706 330
----------
$ 62,169
----------
----------
</TABLE>
70
<PAGE>
NOTE G -- SHAREHOLDER MEETING
A meeting of Shareholders of Variable Investors Series Trust World Equity
Portfolio was held on Monday, December 9, 1996 at the offices of First Variable,
10 Post Office Square, Boston, Massachusetts. The matter voted upon by
Shareholders and the resulting votes are presented below:
1. Approval of new Sub-advisory Agreement
Number of Votes
---------------
For Against Abstain
--- ------- -------
1,480,002.258 33,095.778 105,115.466
NOTE H -- TAX INFORMATION NOTICE
For Federal income tax purposes, the following information is furnished
with respect to the distributions of the Trust for its fiscal year ended
December 31, 1996:
Common Stock Portfolio, Multiple Strategies Portfolio, Tilt Utility Portfolio,
U.S. Government Bond Portfolio and World Equity Portfolio designate $2,516,973,
$1,707,107, $245,689, $29,502 and $322,325, respectively as long term capital
gains dividends paid.
NOTE I - PORTFIOLIO LIQUIDATION
On January 2, 1997, First Variable redeemed its entire position of 8,214,891.968
shares in the Cash Management Portfolio and transferred it to the Federated
Prime Money Fund II after receiving approval from the Securities and Exchange
Commission ("SEC"). MLIC is also in the process of petitioning the SEC to
redeem its shares in the Cash Management Portfolio. After MLIC receives
approval from the SEC and redeems its shares, the Cash Management Portfolio will
be liquidated.
71
<PAGE>
VARIABLE INVESTORS SERIES TRUST
CASH MANAGEMENT PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1996 1995 1994 (1) 1993 1992
---- ---- -------- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD . . . $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income . . . . . . . . . . 0.047 0.052 0.036 0.024 0.032
Net Realized and Unrealized Gain
(Loss) on Investments. . . . . . . . . 0.000 0.000 0.000 0.000 0.000
--------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS . . . . . . 0.047 0.052 0.036 0.024 0.032
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
From Net Investment Income. . . . . . . . (0.047) (0.052) (0.036) (0.024) (0.032)
From Net Realized Capital Gains . . . . . (0.000) (0.000) (0.000) (0.000) (0.000)
--------- --------- --------- --------- ---------
Total Distributions . . . . . . . . . . . (0.047) (0.052) (0.036) (0.024) (0.032)
--------- --------- --------- --------- ---------
NET ASSET VALUE AT END OF PERIOD . . . . . . $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
TOTAL RETURN (2) (3) . . . . . . . . . . . . 4.81% 5.43% 3.68% 2.46% 3.22%
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's) . . . $ 8,923 $ 10,096 $ 8,198 $ 9,081 $ 18,405
Ratio of Operating Expenses to
Average Net Assets (4) . . . . . . . . 0.75% 0.75% 0.75% 0.75% 0.75%
Ratio of Operating Expenses to
Average Net Assets before Expense
Reductions (5) . . . . . . . . . . . . 0.75% 0.75% - - -
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . 4.67% 5.30% 3.64% 2.46% 3.20%
</TABLE>
(1) On April 1, 1994, FVAS became investment adviser. Prior to that date,
results were achieved by former investment advisers.
(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) Net Investment Income is after payment or reimbursement of certain expenses
by affiliates in 1996 and 1995 and waiver of business management fee and
payment or reimbursement of certain other expenses by affiliates in 1994,
1993 and 1992. (See Note C to the Trust's financial statements.) Had
affiliates not undertaken to waive their fees and/or pay or reimburse
expenses related to the Portfolio, the Ratio of Operating Expenses to
Average Net Assets would have been as follows: 1996 - 1.54%; 1995 - 1.72%;
1994 - 1.46%; 1993 - 1.46% and 1992 - 1.13%.
(5) For fiscal years ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without expense reductions.
72
<PAGE>
VARIABLE INVESTORS SERIES TRUST
COMMON STOCK PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
-CONTINUED-
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1996 1995 1994 (1) 1993 1992
---- ---- -------- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD . . . $ 25.866 $ 20.056 $ 20.390 $ 20.454 $ 26.290
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss). . . . . . . (0.063) 0.007 0.173 0.468 0.254
Net Realized and Unrealized Gain
(Loss) on Investments. . . . . . . . . 6.736 7.419 (0.335) 1.401 (2.256)
--------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS . . . . . . 6.673 7.426 (0.162) 1.869 (2.002)
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
From Net Investment Income. . . . . . . . (0.000) (0.173) (0.086) (0.436) (0.254)
In Excess of Net Investment Income. . . . (0.002) (0.000) (0.000) (0.373) (0.000)
From Net Realized Capital Gains . . . . . (1.914) (1.443) (0.086) (1.124) (3.580)
--------- --------- --------- --------- ---------
Total Distributions . . . . . . . . . . . (1.916) (1.616) (0.172) (1.933) (3.834)
--------- --------- --------- --------- ---------
NET ASSET VALUE AT END OF PERIOD . . . . . . $ 30.623 $ 25.866 $ 20.056 $ 20.390 $ 20.454
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
TOTAL RETURN (2) (3). . . . . . . . . . . . 25.74% 37.12% (0.79)% 9.09% (7.59)%
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's) . . . $ 54,565 $ 42,919 $ 30,815 $ 42,530 $ 52,538
Ratio of Operating Expenses to
Average Net Assets (4). . . . . . . . 1.17% 1.17% 1.20% 1.20% 1.16%
Ratio of Operating Expenses to
Average Net Assets before Expense
Reductions (5) . . . . . . . . . . . . 1.17% 1.17% - - -
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . (0.23)% 0.01% 0.78% 1.74% 1.06%
Portfolio Turnover Rate . . . . . . . . . 67.82% 166.87% 155.12% 6.05% 133.30%
Average Commission per Share (6). . . . . $ 0.05 - - - -
</TABLE>
(1) On April 1, 1994, FVAS became investment adviser. Prior to that date,
results were achieved by former investment advisers.
(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) Net Investment Income is after payment or reimbursement of certain expenses
by affiliates in 1995 and waiver of business management fee and payment or
reimbursement of certain other expenses by affiliates in 1994, 1993 and
1992. (See Note C to the Trust's financial statements.) Had affiliates
not undertaken to waive their fees and/or pay or reimburse expenses related
to the Portfolio, the Ratio of Operating Expenses to Average Net Assets
would have been as follows: 1995 - 1.17%; 1994 - 1.33%; 1993 - 1.21% and
1992 - 1.16%.
(5) For fiscal years ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without expense reductions.
(6) For fiscal years beginning on or after September 1, 1995, the Portfolio is
required to disclose its average commission rate per share for trades on
which commissions are charged. This rate does not reflect mark-ups,
mark-downs or spreads on shares traded on a principal basis.
73
<PAGE>
VARIABLE INVESTORS SERIES TRUST
HIGH INCOME BOND PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
-CONTINUED-
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1996 1995 1994 (1) 1993 1992
---- ---- -------- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD . . . $ 8.589 $ 7.914 $ 9.704 $ 9.492 $ 9.187
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income . . . . . . . . . . 0.596 0.779 1.018 0.848 0.972
Net Realized and Unrealized Gain
(Loss) on Investments. . . . . . . . . 0.624 0.717 (1.711) 0.567 0.481
--------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS . . . . . . 1.220 1.496 (0.693) 1.415 1.453
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
From Net Investment Income. . . . . . . . (0.596) (0.779) (1.005) (0.849) (0.975)
In Excess of Net Investment Income. . . . (0.040) (0.042) (0.006) (0.000) (0.000)
From Net Realized Capital Gains . . . . . (0.000) (0.000) (0.075) (0.354) (0.173)
In Excess of Net Realized Capital Gains . (0.000) (0.000) (0.011) (0.000) (0.000)
--------- --------- --------- --------- ---------
Total Distributions . . . . . . . . . . . (0.636) (0.821) (1.097) (1.203) (1.148)
--------- --------- --------- --------- ---------
NET ASSET VALUE AT END OF PERIOD . . . . . . $ 9.173 $ 8.589 $ 7.914 $ 9.704 $ 9.492
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
TOTAL RETURN (2) (3). . . . . . . . . . . . 14.20% 18.98% (7.08)% 14.91% 15.77%
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's) . . . $ 12,835 $ 8,764 $ 7,771 $ 14,496 $ 12,448
Ratio of Operating Expenses to
Average Net Assets (4) . . . . . . . . 1.18% 1.20% 1.20% 1.20% 1.20%
Ratio of Operating Expenses to
Average Net Assets before Expense
Reductions (5) . . . . . . . . . . . . 1.20% 1.21% - - -
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . 7.96% 8.62% 8.70% 8.04% 9.70%
Portfolio Turnover Rate . . . . . . . . . 105.48% 82.15% 200.19% 90.82% 166.27%
</TABLE>
1) On April 1, 1994, FVAS became investment adviser. Prior to that date,
results were achieved by former investment advisers.
(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) Net Investment Income is after payment or reimbursement of certain expenses
by affiliates in 1996 and 1995 and waiver of business management fee and
payment or reimbursement of certain other expenses by affiliates in 1994,
1993 and 1992. (See Note C to the Trust's financial statements.) Had
affiliates not undertaken to waive their fees and/or pay or reimburse
expenses related to the Portfolio, the Ratio of Operating Expenses to
Average Net Assets would have been as follows: 1996 - 1.99%; 1995 - 2.04%;
1994 - 2.03%; 1993 - 1.59% and 1992 - 1.68%.
(5) For fiscal years ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without expense reductions.
74
<PAGE>
VARIABLE INVESTORS SERIES TRUST
MULTIPLE STRATEGIES PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
-CONTINUED-
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1996 1995 1994 (1) 1993 1992
---- ---- -------- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD . . . $ 12.043 $ 10.022 $ 12.182 $ 11.785 $ 12.515
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income . . . . . . . . . . 0.143 0.137 0.236 0.424 0.499
Net Realized and Unrealized Gain
(Loss) on Investments. . . . . . . . . 2.069 3.086 (0.711) 0.835 (0.060)
--------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS . . . . . . 2.212 3.223 (0.475) 1.259 0.439
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
From Net Investment Income. . . . . . . . (0.144) (0.136) (0.235) (0.424) (0.506)
In Excess of Net Investment Income (2). . (0.000) (0.000) (0.008) (0.000) (0.000)
From Net Realized Capital Gains . . . . . (1.412) (1.066) (1.418) (0.438) (0.663)
In Excess of Net Realized Capital Gains . (0.000) (0.000) (0.024) (0.000) (0.000)
--------- --------- --------- --------- ---------
Total Distributions . . . . . . . . . . . (1.556) (1.202) (1.685) (0.862) (1.169)
--------- --------- --------- --------- ---------
NET ASSET VALUE AT END OF PERIOD . . . . . . $ 12.699 $ 12.043 $ 10.022 $ 12.182 $ 11.785
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
TOTAL RETURN (3) (4) . . . . . . . . . . . . 18.29% 32.24% (3.91)% 10.52% 3.62%
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's) . . . $ 31,884 $ 26,380 $ 21,150 $ 24,522 $ 26,012
Ratio of Operating Expenses to
Average Net Assets (5) . . . . . . . . 1.20% 1.20% 1.20% 1.20% 1.20%
Ratio of Operating Expenses to
Average Net Assets before Expense
Reductions (6) . . . . . . . . . . . . 1.20% 1.20% - - -
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . 1.16% 1.14% 1.74% 3.20% 3.73%
Portfolio Turnover Rate . . . . . . . . . 92.21% 161.10% 153.64% 25.57% 52.11%
Average Commission per Share (7). . . . . $ 0.05 - - - -
</TABLE>
(1) On April 1, 1994, FVAS became investment adviser. Prior to that date,
results were achieved by former investment advisers.
(2) For 1996, amount was less than $0.001 per share.
(3) Total returns would have been lower had certain expenses not been borne by
the adviser or its affiliates.
(4) 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.
(5) Net Investment Income is after payment or reimbursement of certain expenses
by affiliates in 1996 and 1995 and waiver of business management fee and
payment or reimbursement of certain other expenses by affiliates in 1994,
1993 and 1992. (See Note C to the Trust's financial statements.) Had
affiliates not undertaken to waive their fees and/or pay or reimburse
expenses related to the Portfolio, the Ratio of Operating Expenses to
Average Net Assets would have been as follows: 1996 - 1.32%; 1995 - 1.33%;
1994 - 1.48%; 1993 - 1.35% and 1992 - 1.24%.
(6) For fiscal years ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without expense reductions.
(7) For fiscal years beginning on or after September 1, 1995, the Portfolio is
required to disclose its average commission rate per share for trades on
which commissions are charged. This rate does not reflect mark-ups,
mark-downs or spreads on shares traded on a principal basis.
75
<PAGE>
VARIABLE INVESTORS SERIES TRUST
TILT UTILITY PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
-CONTINUED-
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1996 1995 1994 (1) 1993 1992
---- ---- -------- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD . . . $ 15.704 $ 12.372 $ 14.650 $ 13.891 $ 14.057
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income . . . . . . . . . . 0.659 0.559 0.521 0.314 0.326
Net Realized and Unrealized Gain
(Loss) on Investments. . . . . . . . . 0.063 3.560 (0.651) 2.171 (0.168)
--------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS . . . . . . 0.722 4.119 (0.130) 2.485 0.158
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
From Net Investment Income. . . . . . . . (0.654) (0.494) (0.521) (0.296) (0.324)
In Excess of Net Investment Income (2). . (0.000) (0.000) (0.000) (0.170) (0.000)
From Net Realized Capital Gains . . . . . (0.518) (0.293) (1.627) (1.260) (0.000)
--------- --------- --------- --------- ---------
Total Distributions . . . . . . . . . . . (1.172) (0.787) (2.148) (1.726) (0.324)
--------- --------- --------- --------- ---------
NET ASSET VALUE AT END OF PERIOD . . . . . . $ 15.254 $ 15.704 $ 12.372 $ 14.650 $ 13.891
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
TOTAL RETURN (3) (4) . . . . . . . . . . . . 4.62% 33.45% (1.05)% 17.87% 1.12%
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's) . . . $ 14,448 $ 16,018 $ 12,312 $ 15,251 $ 12,693
Ratio of Operating Expenses to
Average Net Assets (5) . . . . . . . . 1.15% 1.15% 1.16% 1.20% 1.20%
Ratio of Operating Expenses to
Average Net Assets before Expense
Reductions (6) . . . . . . . . . . . . 1.15% 1.17% - - -
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . 3.74% 3.89% 3.16% 1.85% 2.49%
Portfolio Turnover Rate . . . . . . . . . 19.41% 48.20% 193.40% 109.57% 308.39%
Average Commission per Share (7). . . . . $ 0.03 - - - -
</TABLE>
(1) On April 1, 1994, FVAS became investment adviser. Prior to that date,
results were achieved by former investment advisers.
(2) For 1996, amount was less than $0.001 per share.
(3) Total returns would have been lower had certain expenses not been borne by
the adviser or its affiliates.
(4) 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.
(5) Net Investment Income is after payment or reimbursement of certain expenses
by affiliates in 1996 and 1995 and waiver of business management fee and
payment or reimbursement of certain other expenses by affiliates in 1994,
1993 and 1992. (See Note C to the Trust's financial statements.) Had
affiliates not undertaken to waive their fees and/or pay or reimburse
expenses related to the Portfolio, the Ratio of Operating Expenses to
Average Net Assets would have been as follows: 1996 - 1.48%; 1995 - 1.51%;
1994 - 1.60%; 1993 - 1.59% and 1992 - 1.64%.
(6) For fiscal years ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without expense reductions.
(7) For fiscal years beginning on or after September 1, 1995, the Portfolio is
required to disclose its average commission rate per share for trades on
which commissions are charged. This rate does not reflect mark-ups,
mark-downs or spreads on shares traded on a principal basis.
76
<PAGE>
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,
----------------------------------------------------
1996 1995 1994 (1) 1993 1992
---- ---- -------- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD . . . $ 10.510 $ 9.718 $ 10.923 $ 10.659 $ 11.372
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income . . . . . . . . . . 0.629 0.765 0.690 0.674 0.886
Net Realized and Unrealized Gain
(Loss) on Investments. . . . . . . . . (0.385) 1.191 (0.986) 0.328 (0.187)
--------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS . . . . . . 0.244 1.956 (0.296) 1.002 0.699
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
From Net Investment Income. . . . . . . . (0.610) (0.765) (0.690) (0.673) (0.887)
In Excess of Net Investment Income. . . . (0.000) (0.045) (0.000) (0.000) (0.000)
From Net Realized Capital Gains . . . . . (0.206) (0.354) (0.105) (0.062) (0.525)
In Excess of Net Realized Capital Gains . (0.000) (0.000) (0.112) (0.000) (0.000)
Tax Return of Capital . . . . . . . . . . (0.000) (0.000) (0.002) (0.003) (0.000)
--------- --------- --------- --------- ---------
Total Distributions . . . . . . . . . . . (0.816) (1.164) (0.909) (0.738) (1.412)
--------- --------- --------- --------- ---------
NET ASSET VALUE AT END OF PERIOD . . . . . . $ 9.938 $ 10.510 $ 9.718 $ 10.923 $ 10.659
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
TOTAL RETURN (2) (3) . . . . . . . . . . . . 2.36% 20.18% (2.72)% 9.38% 6.13%
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's) . . . $ 10,734 $ 11,618 $ 14,444 $ 20,710 $ 24,280
Ratio of Operating Expenses to
Average Net Assets (4) . . . . . . . . 0.85% 0.85% 0.85% 0.85% 0.85%
Ratio of Operating Expenses to
Average Net Assets before Expense
Reductions (5) . . . . . . . . . . . . 0.85% 0.85% - - -
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . 5.80% 6.18% 5.65% 5.20% 6.41%
Portfolio Turnover Rate . . . . . . . . . 244.96% 252.94% 289.71% 27.84% 133.86%
</TABLE>
(1) On April 1, 1994, FVAS became investment adviser. Prior to that date,
results were achieved by former investment advisers.
(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) Net Investment Income is after payment or reimbursement of certain expenses
by affiliates in 1996 and 1995 and waiver of business management fee and
payment or reimbursement of certain other expenses by affiliates in 1994,
1993 and 1992. (See Note C to the Trust's financial statements.) Had
affiliates not undertaken to waive their fees and/or pay or reimburse
expenses related to the Portfolio, the Ratio of Operating Expenses to
Average Net Assets would have been as follows: 1996 - 1.66%; 1995 - 1.59%;
1994 - 1.45%; 1993 - 1.30% and 1992 - 1.17%.
(5) For fiscal years ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without expense reductions.
77
<PAGE>
VARIABLE INVESTORS SERIES TRUST
WORLD EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
-CONTINUED-
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1996 1995 1994 (1) 1993 1992
---- ---- -------- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD . . . $ 13.823 $ 11.752 $ 11.348 $ 10.177 $ 10.377
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income . . . . . . . . . . 0.016 0.014 0.013 0.086 0.128
Net Realized and Unrealized Gain
(Loss) on Investments. . . . . . . . . 1.647 2.872 1.119 1.679 (0.319)
--------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS . . . . . . 1.663 2.886 1.132 1.765 (0.191)
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
From Net Investment Income. . . . . . . . (0.013) (0.000) (0.023) (0.091) (0.009)
In Excess of Net Investment Income. . . . (0.051) (0.000) (0.000) (0.007) (0.000)
From Net Realized Capital Gains . . . . . (0.360) (0.815) (0.698) (0.496) (0.000)
In Excess of Net Realized Capital Gains . (0.000) (0.000) (0.007) (0.000) (0.000)
--------- --------- --------- --------- ---------
Total Distributions . . . . . . . . . . . (0.424) (0.815) (0.728) (0.594) (0.009)
--------- --------- --------- --------- ---------
NET ASSET VALUE AT END OF PERIOD . . . . . . $ 15.062 $ 13.823 $ 11.752 $ 11.348 $ 10.177
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
TOTAL RETURN (2) (3) . . . . . . . . . . . . 12.33% 24.32% 10.02% 17.32% (1.83)%
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's) . . . $ 24,534 $ 18,191 $ 11,500 $ 12,230 $ 9,280
Ratio of Operating Expenses to
Average Net Assets (4) . . . . . . . . 1.20% 1.20% 1.20% 1.20% 1.20%
Ratio of Operating Expenses to
Average Net Assets before Expense
Reductions (5) . . . . . . . . . . . . 1.20% 1.20% - - -
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . 0.10% 0.12% 0.16% 0.92% 1.34%
Portfolio Turnover Rate . . . . . . . . . 61.14% 97.85% 110.12% 78.50% 103.43%
Average Commission per Share (6). . . . . $ 0.02 - - - -
</TABLE>
(1) On April 1, 1994, FVAS became investment adviser. Prior to that date,
results were achieved by former investment advisers.
(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) Net Investment Income is after payment or reimbursement of certain expenses
by affiliates in 1996 and 1995 and waiver of business management fee and
payment or reimbursement of certain other expenses by affiliates in 1994,
1993 and 1992. (See Note C to the Trust's financial statements.) Had
affiliates not undertaken to waive their fees and/or pay or reimburse
expenses related to the Portfolio, the Ratio of Operating Expenses to
Average Net Assets would have been as follows: 1996 - 1.50%; 1995 - 1.67%;
1994 - 2.22%; 1993 - 1.79% and 1992 - 2.26%.
(5) For fiscal years ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without expense reductions.
(6) For fiscal years beginning on or after September 1, 1995, the Portfolio is
required to disclose its average commission rate per share for trades on
which commissions are charged. This rate does not reflect mark-ups,
mark-downs or spreads on shares traded on a principal basis.
78
<PAGE>
VARIABLE INVESTORS SERIES TRUST
SMALL CAP PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
-CONTINUED-
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995 (1)
----------------- ---------------------
<S> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD . . . $ 12.638 $ 10.000
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Loss . . . . . . . . . . . (0.091) (0.042)
Net Realized and Unrealized Gain
(Loss) on Investments. . . . . . . . . 3.560 3.047
---------- ----------
TOTAL FROM INVESTMENT OPERATIONS . . . . . . 3.469 3.005
---------- ----------
LESS DISTRIBUTIONS:
From Net Investment Income. . . . . . . . (0.000) (0.000)
From Net Realized Capital Gains . . . . . (0.000) (0.367)
In Excess of Net Realized Capital Gains . (0.057) (0.000)
---------- ----------
Total Distributions . . . . . . . . . . . (0.057) (0.367)
---------- ----------
NET ASSET VALUE AT END OF PERIOD . . . . . . $ 16.050 $ 12.638
---------- ----------
---------- ----------
TOTAL RETURN (2) (3) . . . . . . . . . . . . 27.39% 30.08%(4)
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's) . . . $ 13,803 $ 3,813
Ratio of Operating Expenses to
Average Net Assets (5) . . . . . . . . 1.35% 1.35%(6)
Ratio of Operating Expenses to
Average Net Assets Before Expense
Reductions (7) . . . . . . . . . . . . 1.35% 1.38%(6)
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . (0.90)% (0.79)%(6)
Portfolio Turnover Rate . . . . . . . . . 72.66% 73.76%(4)
Average Commission per Share (8). . . . . $ 0.05 -
</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) Not annualized.
(5) Net Investment Income is after payment or reimbursement of certain expenses
by affiliates in 1996 and 1995. (See Note C to the Trust's financial
statements.) Had affiliates not undertaken to waive their fees and/or pay
or reimburse expenses related to the Portfolio, the Ratio of Operating
Expenses to Average Net Assets would have been as follows: 1996 - 2.38%;
1995 - 9.00%.
(6) Annualized.
(7) For fiscal years ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without expense reductions.
(8) For fiscal years beginning on or after September 1, 1995, the Portfolio is
required to disclose its average commission rate per share for trades on
which commissions are charged. This rate does not reflect mark-ups,
mark-downs or spreads on shares traded on a principal basis.
79
<PAGE>
VARIABLE INVESTORS SERIES TRUST
GROWTH & INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
-CONTINUED-
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995 (1)
----------------- ---------------------
<S> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD . . . $ 11.171 $ 10.000
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income . . . . . . . . . . 0.070 0.045
Net Realized and Unrealized Gain
(Loss) on Investments. . . . . . . . . 1.291 1.266
---------- ----------
TOTAL FROM INVESTMENT OPERATIONS . . . . . . 1.361 1.311
---------- ----------
LESS DISTRIBUTIONS:
From Net Investment Income. . . . . . . . (0.070) (0.045)
In Excess of Net Investment Income. . . . (0.001) (0.000)
From Net Realized Capital Gains . . . . . (0.040) (0.095)
---------- ----------
Total Distributions . . . . . . . . . . . (0.111) (0.140)
---------- ----------
NET ASSET VALUE AT END OF PERIOD . . . . . . $ 12.421 $ 11.171
---------- ----------
---------- ----------
TOTAL RETURN (2) (3) . . . . . . . . . . . . 12.15% 13.09%(4)
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's) . . . $ 10,300 $ 3,335
Ratio of Operating Expenses to
Average Net Assets (5) . . . . . . . . 1.25% 1.25%(6)
Ratio of Operating Expenses to
Average Net Assets Before Expense
Reductions (7) . . . . . . . . . . . . 1.26% 1.49%(6)
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . 0.82% 1.17%(6)
Portfolio Turnover Rate . . . . . . . . . 131.85% 33.49%(4)
Average Commission per Share (8). . . . . $ 0.06 -
</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) Not annualized.
(5) Net Investment Income is after payment or reimbursement of certain expenses
by affiliates in 1996 and 1995. (See Note C to the Trust's financial
statements.) Had affiliates not undertaken to waive their fees and/or pay
or reimburse expenses related to the Portfolio, the Ratio of Operating
Expenses to Average Net Assets would have been as follows: 1996 - 2.63%;
1995 - 7.27%.
(6) Annualized.
(7) For fiscal years ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without expense reductions.
(8) For fiscal years beginning on or after September 1, 1995, the Portfolio is
required to disclose its average commission rate per share for trades on
which commissions are charged. This rate does not reflect mark-ups,
mark-downs or spreads on shares traded on a principal basis.
80
<PAGE>
PRINCIPAL OFFICERS AND TRUSTEES OF
VARIABLE INVESTORS SERIES TRUST
----------------
NORMAN A. FAIR, TRUSTEE
WESLEY E. HORTON, TRUSTEE
W. LAWRENCE HOWE, TRUSTEE
LAIRD E. WIGGIN, TRUSTEE
PAUL G. CHENAULT, TRUSTEE
STEPHAN M. LARGENT, PRESIDENT AND TRUSTEE
ARNOLD R. BERGMAN, SECRETARY
MARK T. KELLY, 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.
- --------------------------------------------------------------------------------
