<PAGE> 1
VARIABLE INVESTORS
SERIES TRUST
[PHOTO OF COUPLE KISSING]
JUNE 30, 1999 SEMI-ANNUAL REPORT
[BUILD, ENJOY, PRESERVE LOGO](SM)
[FIRST VARIABLE LIFE INSURANCE COMPANY LOGO]
<PAGE> 2
TABLE OF CONTENTS [BUILD, ENJOY, PRESERVE LOGO]
<TABLE>
<S> <C>
Report of the President 1
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Management's Discussion & Analysis
Small Cap Growth 3
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World Equity 5
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Growth 7
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Matrix Equity 9
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Growth & Income 11
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Multiple Strategies 13
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High Income Bond 15
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U.S. Government Bond 17
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Schedule of Investments 19
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Statements of Assets and Liabilities 54
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Statements of Operations 56
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Statements of Changes in Net Assets 58
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Financial Highlights 62
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Notes to the Financial Statements 70
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</TABLE>
<PAGE> 3
[FIRST VARIABLE LIFE INSURANCE COMPANY LOGO]
August 1999
Dear First Variable Contract Holder:
I am pleased to present the semi-annual report for the Variable Investors Series
Trust. This report gives you information on how the investment choices inside
your First Variable Contract have performed over the past six months.
During the first half of 1999, the capital markets experienced significant
fluctuations. The Dow Jones Industrial Average closed above 11,000 for the first
time in mid-May, up almost 22% from its 9,121 low in January. The broader market
indices rose substantially from their lows earlier in the year. The Standard &
Poor's 500 Index, for example, was up 12.38% year-to-date through June 30, 1999
and the Russell 2000 up 9.28%.
The interest rate environment is one of the primary drivers of the fixed income
markets. In anticipation of the Federal Reserve rate increase in rates at the
end of June, the bond markets fell. The Salomon Brother Broad Investment Grade
Index returned -1.66% year-to-date through June 1999.
High yield bonds, however, behave a little differently. The continued strong
domestic economic growth strengthened the returns of high bonds to 2.82% for the
first half of the year (as measured by the First Boston High Yield Bond Index).
Because different types of investments can be up or down at various times, a
well-diversified investment portfolio is crucial to your success. Ask your
financial professional for assistance in constructing a portfolio that meets
your investment goals and objectives.
And, thank you for choosing First Variable Life Insurance... the company that
has been helping investors like you BUILD wealth, ENJOY income and PRESERVE
assets since 1968. We look forward to serving your needs for many years to come.
Sincerely,
/s/ John M. Soukup
John M. Soukup
President, Variable Investors Series Trust
<PAGE> 4
SMALL CAP GROWTH PORTFOLIO
OBJECTIVE
Seeks capital appreciation by investing primarily in common stocks of emerging
companies with the potential for significant capital appreciation and strong
earnings growth with attendant risk. The Portfolio normally invests at least 65%
of assets in common stocks and convertible securities issued by companies with
market capitalization or annual revenues not exceeding $1 billion at the time of
purchase.
MANAGEMENT'S DISCUSSION & ANALYSIS
The first six months of the year have carried a wide variety of investment
themes, some of which small cap aggressive growth managers could participate in,
some we could not. The fourth quarter of 1998 was historic, if not mythic when
it comes to what the Internet stocks accomplished. Demand for Internet issues
continued to be insatiable, but remained disconnected from the underlying
fundamentals. Our portfolios were mostly absent from the Internet fray; as
earnings based, small cap investors, we struggled both with the lack of economic
earnings generated by most of these companies, as well as the fact that very few
were truly "small cap."
If you look at our portfolios versus the benchmark without the Internet
contribution, what you'll find is that all but 77 basis points of our second
quarter underperformance to the Russell 2000 can be explained away and we
actually added 23 basis points of value in the second quarter above the Russell
2000 Growth. (Without Internet, we added 287 basis points of value in the first
quarter to the Russell 2000 and we added 173 basis points of value to the
Russell 2000 Growth). Not withstanding, other themes had also emerged throughout
the first half of the year that conspired to hurt the small cap growth piece of
the market.
In February our underperformance was partially driven by our exposure to
Healthcare names like Quadramed, Eclipsys and Sunrise Assisted Living. We are
notoriously absent from sectors like Utilities, Energy and Financials; because
of our myopic focus on superior rates of growth and positive rate of change
analysis, we are typically
PILGRIM BAXTER & ASSOCIATES, LTD.
[PILGRIM BAXTER & ASSOCIATES LOGO]
SMALL CAP GROWTH
PERFORMANCE
<TABLE>
<CAPTION>
- ------------------------------------------
Average Annual Total Return as of 6/30/99
- ------------------------------------------
<S> <C>
1 Year 2.04%
- ------------------------------------------
5 Year N/A
- ------------------------------------------
Since Inception* 13.66%
</TABLE>
*May 4, 1995
TOP 10 HOLDINGS
<TABLE>
<CAPTION>
- ---------------------------------------------------------
% of % of
As of 6/30/99 Portfolio Top 10
- ---------------------------------------------------------
<S> <C> <C>
RF Micro Devices, Inc. 2.71% 13.24%
- ---------------------------------------------------------
Applied Micro Circuits Corporation 2.66% 12.97%
- ---------------------------------------------------------
Qlogic Corporation 2.13% 10.41%
- ---------------------------------------------------------
Dentrite International, Inc. 2.13% 10.40%
- ---------------------------------------------------------
New Era of Networks, Inc. 2.02% 9.87%
- ---------------------------------------------------------
Mercury Interactive Corporation 1.89% 9.21%
- ---------------------------------------------------------
BroadVision, Inc. 1.79% 8.72%
- ---------------------------------------------------------
Network Appliance, Inc. 1.76% 8.59%
- ---------------------------------------------------------
Whittman-Hart, Inc. 1.72% 8.39%
- ---------------------------------------------------------
Legato Systems, Inc. 1.68% 8.20%
</TABLE>
TOP 5 SECTOR WEIGHTINGS
<TABLE>
<CAPTION>
- --------------------------------------------------
% of
As of 6/30/99 Portfolio
- --------------------------------------------------
<S> <C>
Semiconductor Manufacturing 7.91%
- --------------------------------------------------
Electronic Components 5.11%
- --------------------------------------------------
Systems Integrator 5.00%
- --------------------------------------------------
Software-Client/Server 4.88%
- --------------------------------------------------
Telecommunication Equipment 4.64%
</TABLE>
Special risks due to small size such as limited markets and financial resources
should be considered when investing in small cap stocks.
3
<PAGE> 5
MANAGEMENT'S DISCUSSION & ANALYSIS (Continued)
drawn to secular growth stories, not cyclical. However, year-to-date, the
Energy sector is up a strong 43%, Utilities are up 60% and Financials are up
16%; all areas that typically fall below of our parameters of growth. Through
May, the Internet had contributed 86% of the Russell 2000 Growth's performance.
Of the top 15 performers in the index, three were investable based on earnings,
only two of which were within our market cap parameters.
June ushered in a breath of fresh air for our portfolios. Technology was back!
The oversold Software sector came back to life helping names in the portfolio
like Actuate Software, Mercury Interactive and Advent Software. We outperformed
the benchmarks by anywhere from 900 to 1000 basis points in June.
OUTLOOK
As the market continues to recognize the inherent growth prospects of our
portfolio companies coupled with still near bottom valuations, we would continue
to be very constructive on our outlook for small caps. The market is, however,
struggling with fears of a Fed increase, slowing domestic growth and the specter
of rising inflation, so by no means will it be easy pickings. The market has
shown an aptitude for fickleness, and we expect nothing less in the coming
months. What we do best is adhere to our consistent application of a proven,
successful investment process.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE SMALL CAP GROWTH
PORTFOLIO AND THE RUSSELL 2000 INDEX*
VIST SMALL CAP GROWTH RUSSELL 2000 INDEX
MAY 4, 1995 10,000 10,000
JUNE 30 10,939 10,676
SEP 30 12,593 11,731
DEC 31, 1995 13,008 11,985
MAR 31 14,439 12,600
JUN 30 16,705 13,230
SEP 30 17,587 13,275
DEC 31, 1996 16,582 13,965
MAR 31 13,401 13,242
JUN 30 16,540 15,655
SEP 30 18,778 17,984
DEC 31, 1997 16,703 17,382
MAR 31 18,207 19,127
JUN 30, 1998 16,690 18,234
SEP 30 12,902 14,560
DEC 31, 1998 16,181 16,934
MAR 31 15,120 16,015
DEC 31, 1999 17,031 18,505
* This Index is an unmanaged index in which investors cannot invest. Results for
the Index do not reflect the expenses and investment management fees incurred by
the Portfolio. Past performance is not predictive of future performance.
AVERAGE ANNUAL TOTAL RETURNS**
PERIODS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
Past 1 Life of
Year Portfolio***
------ ------------
<S> <C> <C>
Small Cap Growth Portfolio 2.04% 13.66%
</TABLE>
"Total Return" is calculated including reinvestment of all income dividends and
capital gains distributions. Results represent past performance and do not
indicate future results. The value of an investment in the Small Cap Growth
Portfolio and the return on the investment both will fluctuate and redemption
proceeds may be higher or lower than an investor's original cost.
** Performance data is historical and includes changes in share price and
reinvestment of dividends and capital gains distributions. Performance numbers
are net of all Portfolio operating expenses, but do not include any insurance
charges imposed in connection with your variable insurance contract. If this
performance information included the effect of the insurance charges,
performance numbers would be lower.
*** From commencement of operations (May 4, 1995)
4
<PAGE> 6
WORLD EQUITY PORTFOLIO
OBJECTIVE
The investment objective of the World Equity Portfolio is to seek maximum
long-term total return by investing primarily in common stocks, and securities
convertible into common stocks, traded in securities markets located around the
world, including the United States. This objective per First Variable's
instruction, is to be obtained via international "blue chips" and domestic U.S.
small cap stocks.
MANAGEMENT'S DISCUSSION & ANALYSIS
INTERNATIONAL COMMENTARY
Our strategy was focused on (1) being "overweight" in European equities, (2)
increasing Japan to a neutral weight, and keeping emerging market exposure low.
We currently have approximately 46% of the Portfolio invested in Europe. Our
largest country weights in Europe are the UK (11%), Netherlands (5%) and France
(5%). We expect restructuring and M&A to continue, but are becoming concerned
about higher interest rates.
Additionally, the Portfolio has approximately 2% in the markets of Australia and
Canada. Our positions in these markets are primarily focused on their
banking/financial sectors.
Our industry positions are focused on telecommunications (10%), business
services (6%), publishing (6%), food and beverages (6%), and electronics (6%).
We eliminated our hedge on the Euro (from 50% at the beginning of the quarter),
and have reduced the Yen hedge from 50% to 25%. These changes were made because
of the weakening of the dollar during the period. Currently, 62% of the total
portfolio is US$ denominated.
Due to the increase in interest rates in the US and Europe, equity markets are
starting to become nervous. Currency volatility has also increased. We will be
positioning the portfolio more defensively in the period ahead.
EVERGREEN
INVESTMENT
MANAGEMENT
[EVERGREEN LOGO]
WORLD EQUITY
PERFORMANCE
<TABLE>
- -------------------------------------------
Average Annual Total Return as of 6/30/99
- -------------------------------------------
<S> <C>
1 Year (1.69)%
- -------------------------------------------
5 Year 13.79%
- -------------------------------------------
10 Year 9.09%
</TABLE>
TOP 10 HOLDINGS
<TABLE>
<CAPTION>
- -------------------------------------------------------
% of % of
As of 6/30/99 Portfolio Top 10
- -------------------------------------------------------
<S> <C> <C>
Arnoldo Mondadori Editore SPA 2.12% 12.90%
- -------------------------------------------------------
Nokia Oyj ADR 1.91% 11.62%
- -------------------------------------------------------
Jones Apparel Group, Inc. 1.73% 10.52%
- -------------------------------------------------------
Fuji Heavy Industries Ltd. 1.72% 10.43%
- -------------------------------------------------------
PMC-Sierra, Inc. 1.69% 10.26%
- -------------------------------------------------------
Pearson Plc 1.53% 9.32%
- -------------------------------------------------------
Deutsche Telekom AG 1.50% 9.11%
- -------------------------------------------------------
Invensys Plc 1.46% 8.85%
- -------------------------------------------------------
Applied Micro Circuits Corp. 1.42% 8.65%
- -------------------------------------------------------
Cognex Corp. 1.37% 8.34%
</TABLE>
TOP 5 COUNTRIES
<TABLE>
<CAPTION>
- -----------------------------------------------------
% of
As of 6/30/99 Portfolio
- -----------------------------------------------------
<S> <C>
United States 48.05%
- -----------------------------------------------------
United Kingdom 11.24%
- -----------------------------------------------------
Japan 10.32%
- -----------------------------------------------------
France 4.79%
- -----------------------------------------------------
Netherlands 4.61%
</TABLE>
Special risks such as currency fluctuations and political changes should be
considered when investing internationally.
5
<PAGE> 7
MANAGEMENT'S DISCUSSION & ANALYSIS (Continued)
DOMESTIC COMMENTARY
The 2nd quarter marked a long awaited turnaround in the performance of Small Cap
stocks. The Small Cap universe outperformed larger cap indices.
The gains in the Portfolio were concentrated in technology stocks. The 20.2% of
the Portfolio we had invested in technology hardware returned an impressive
54.5%. Several areas of technology investment offer exciting growth potential.
The semiconductor industry, which is cyclical, is moving into a recovery phase
with new products and technologies. Semiconductors have long been linked to
personal computers, which are now becoming commoditized. We believe there is a
new area of semiconductor growth in telecommunications products. Accordingly, we
have eliminated exposure to personal computer manufacturing, and now have
substantial investments in telecommunications products.
Another area of technology which has performed well is the area of data storage.
A new technology called fibre channel allows for inexpensive storage of data at
remote locations. A leading vendor, Emulex Corp. appreciated 237% during the
quarter.
Looking to the 3rd quarter, we are encouraged by broader global economic
strength, and stronger relative earnings growth. These drivers, when combined
with the long observed fact that small caps are cheap, make the outlook for
relative small cap returns to be the strongest in several years. However, the
concentrated areas of outperformance in the 2nd quarter make portions of the
market susceptible to the inevitable corrections the market experiences. In the
upcoming quarter, we will be focused on managing the risk in our performance,
even as our outlook becomes increasingly optimistic.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE WORLD EQUITY
PORTFOLIO AND THE MSCI WORLD INDEX*
VIST WORLD EQUITY MSCI WORLD INDEX
APR 1, 1994 10,000 10,000
JUN 30 9,830 10,301
SEP 30 10,523 10,522
DEC 31, 1994 10,707 10,447
MAR 31 10,921 10,957
JUN 30 11,806 11,375
SEP 30 13,312 11,849
DEC 31, 1995 13,310 12,329
MAR 31 13,721 12,772
JUN 30 14,646 13,131
SEP 30 14,263 13,187
DEC 31, 1996 14,956 13,666
MAR 31 14,544 13,749
JUN 30 16,506 15,728
SEP 30 17,645 16,022
DEC 31, 1997 16,449 15,391
MAR 31 18,895 17,595
JUN 30, 1998 19,078 17,952
SEP 30 15,329 15,799
DEC 31, 1998 17,289 19,135
MAR 31 17,070 20,281
JUN 30, 1999 18,755 21,481
* This Index is an unmanaged index in which investors cannot invest. Results for
the Index do not reflect the expenses and investment management fees incurred by
the Portfolio. Past performance is not predictive of future performance.
AVERAGE ANNUAL TOTAL RETURNS**
PERIODS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
Past 1 Past 5 Past 10
Year Years Years
------ ------ -------
<S> <C> <C> <C>
World Equity Portfolio (1.69)% 13.79% 9.09%
</TABLE>
"Total Return" is calculated including reinvestment of all income dividends and
capital gains distributions. Results represent past performance and do not
indicate future results. The value of an investment in the World Equity
Portfolio and the return on the investment both will fluctuate and redemption
proceeds may be higher or lower than an investor's original cost.
** Performance data is historical and includes changes in share price and
reinvestment of dividends and capital gains distributions. Performance numbers
are net of all Portfolio operating expenses, but do not include any insurance
charges imposed in connection with your variable insurance contract. If this
performance information included the effect of the insurance charges,
performance numbers would be lower. Prior to April 1, 1994 results were achieved
by different portfolio managers.
6
<PAGE> 8
GROWTH PORTFOLIO
OBJECTIVE
Seeks capital growth by investing primarily in common stocks and securities
convertible into common stock. Also seeks current income when consistent with
the primary objective. Securities are selected on the basis of their issuers'
long-term potential for expanding their earnings, profitability, and size and on
the basis of potential increases in market recognition of their securities.
MANAGEMENT'S DISCUSSION & ANALYSIS
MARKET COMMENTARY The performance of the portfolio in the first six months of
1999 reflected a dramatic change in market sentiment. In the March quarter, the
returns were bolstered by the strong performance in large-capitalization growth
stocks. The June period was more difficult, with the funds suffering from a
market rotation into cyclicals and value stocks before returning to a growth
orientation at the end of the quarter.
PORTFOLIO PERFORMANCE
In the second quarter of 1999, the Growth Portfolio had a negative return of
.10%, significantly lagging the 7.05% return of the S&P 500. However, strong
first-quarter performance brought the six-month return to 11.25%, about 100
basis points below the 12.38% benchmark return.
Over the first six months of 1999, the best performing S&P 500 industry sectors
were technology (up 24.7%), basic materials (22.1%), energy (18.9%), capital
goods (17.5%), communication services (16.6%), and finance (12.7%). A lack of
exposure to cyclicals, such as, paper, energy, chemicals, and metals, which did
not screen well in the earnings-and price-momentum-driven Value Line Timeliness
Ranking System, impaired portfolio returns. Moreover, significant weightings in
technology, healthcare and financials, all of which increased performance
considerably in the first quarter, hurt the funds in the second quarter.
Technology suffered disproportionately with the rotation out of large-cap growth
into cyclicals. The prospect of higher interest rates had a negative effect on
financials; stock prices of banks, insurance firms and
VALUE LINE, INC.
[VALUE LINE LOGO]
GROWTH
PERFORMANCE
<TABLE>
<CAPTION>
- ------------------------------------------
Average Annual Total Return as of 6/30/99
- ------------------------------------------
<S> <C>
1 Year 29.65%
- ------------------------------------------
5 Year 28.15%
- ------------------------------------------
10 Year 17.08%
</TABLE>
TOP 10 HOLDINGS
<TABLE>
<CAPTION>
- ----------------------------------------------------
% of % of
As of 6/30/99 Portfolio Top 10
- ----------------------------------------------------
<S> <C> <C>
Microsoft Corporation 3.99% 11.53%
- ----------------------------------------------------
Cisco Systems, Inc. 3.80% 10.98%
- ----------------------------------------------------
America Online, Inc. 3.69% 10.65%
- ----------------------------------------------------
Intel Corporation 3.60% 10.41%
- ----------------------------------------------------
Omnicom Group 3.48% 10.05%
- ----------------------------------------------------
EMC Corporation 3.41% 9.87%
- ----------------------------------------------------
Tyco International Ltd. 3.31% 9.56%
- ----------------------------------------------------
Wal-Mart Stores, Inc. 3.22% 9.30%
- ----------------------------------------------------
Pfizer, Inc. 3.07% 8.86%
- ----------------------------------------------------
Dell Computer Corporation 3.04% 8.79%
</TABLE>
TOP 5 SECTOR WEIGHTINGS
<TABLE>
<CAPTION>
- -----------------------------------------------------
% of
As of 6/30/99 Portfolio
- -----------------------------------------------------
<S> <C>
Computer Related 17.47%
- -----------------------------------------------------
Drugs 8.55%
- -----------------------------------------------------
Broadcasting 7.75%
- -----------------------------------------------------
Computer Software 7.68%
- -----------------------------------------------------
Financial Services 7.65%
</TABLE>
7
<PAGE> 9
MANAGEMENT'S DISCUSSION & ANALYSIS (Continued)
specialty financial companies fell sharply. The healthcare sector was adversely
affected by two factors--its large-cap status and the concern that new Medicare
legislation would take its toll on drug companies, medical supply firms and
healthcare providers. Nonetheless, over the two-quarter period, the portfolio
ultimately benefited from overweightings in technology and consumer cyclicals.
During the January through June period, we initiated a number of changes to the
portfolio to provide better diversification and reduce risk. These included
taking profits in some of the technology holdings as they continued to
appreciate. Increased exposure to media, entertainment, and cable--CBS, Viacom,
Time Warner--should benefit the portfolio, as access to digital television,
telephony and the Internet begin to converge. We also added to our holdings in
capital goods (Illinois Tool Works, Ingersoll Rand, United Technologies, Allied
Signal and Tyco International) and in consumer staples (Clorox and Dial), in an
effort to better position the portfolio for a cyclical recovery.
OUTLOOK
The economic environment is favorable with continued, but moderating growth in
Gross Domestic Product (GDP). Inflation remains muted, due in large part to the
Fed's ongoing efforts. The combination of effective monetary policy and constant
jawboning, on the part of Chairman Greenspan, has prompted a sharp rise in the
interest rates on the 30-year Treasury bond from a record low of 4.7% last
October, to a recent high of nearly 6.2% in June. This, in turn, has helped slow
GDP growth in the US from 6.0% in the fourth quarter of 1998 to 4.3% in the
first quarter of 1999. Growth is likely to decelerate further to an estimated
3.0% in the second quarter and to 2.0% to 2.5% during the second half of 1999.
We anticipate lower long-term interest rates, as well, perhaps in the area of
5.5%.
As we move toward the end of the millennium, we believe that the market will
continue to exhibit a great deal of volatility. Given the strong returns in
recent years and investor anxiety regarding Y2K issues, it would not be
surprising to see some profit taking. However, barring any unforeseen global
events that would have a negative impact, we believe that Y2K-related
disruptions in the market will be only temporary in nature and, moreover, will
likely provide attractive investment opportunities.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE GROWTH PORTFOLIO
AND THE S&P 500 INDEX*
VIST GROWTH S&P 500 INDEX
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
MAR 31 16,850 17,889
JUN 30 19,920 21,009
SEP 30 22,475 22,582
DEC 31, 1997 21,890 23,231
MAR 31 23,984 26,469
JUN 30, 1998 25,036 27,342
SEP 30 22,919 24,627
DEC 31, 1998 29,177 29,868
MAR 31 32,492 31,355
JUN 30, 1999 32,459 33,566
* This Index is an unmanaged index in which investors cannot invest. Results for
the Index do not reflect the expenses and investment management fees incurred by
the Portfolio. Past performance is not predictive of future performance.
AVERAGE ANNUAL TOTAL RETURNS**
PERIODS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
Past 1 Past 5 Past 10
Year Years Years
------ ------ -------
<S> <C> <C> <C>
Growth Portfolio 29.65% 28.15% 17.08%
</TABLE>
"Total Return" is calculated including reinvestment of all income dividends and
capital gains distributions. Results represent past performance and do not
indicate future results. The value of an investment in the Growth Portfolio and
the return on the investment both will fluctuate and redemption proceeds may be
higher or lower than an investor's original cost.
** Performance data is historical and includes changes in share price and
reinvestment of dividends and capital gains distributions. Performance numbers
are net of all Portfolio operating expenses, but do not include any insurance
charges imposed in connection with your variable insurance contract. If this
performance information included the effect of the insurance charges,
performance numbers would be lower. Prior to April 1, 1994 results were achieved
by different portfolio managers.
8
<PAGE> 10
MATRIX EQUITY PORTFOLIO
OBJECTIVE
Seeks capital appreciation and current income by investing in a diversified
portfolio of equity securities that is selected on the basis of a proprietary
analytical model.
MANAGEMENT'S DISCUSSION & ANALYSIS
MARKET COMMENTARY
While market breadth increased for the quarter, it is still narrow on a
historical basis. At the end of the first quarter, according to Salomon Smith
Barney, lack of market breadth was at a historical high, as 80% of all US listed
stocks lagged the S&P 500. The measure stood at 69% on June 30, lower, but still
high on a historical basis. Any number above 50% warrants watching, as this
degree of narrowness was last reached in 1990, and previously in 1987 and 1973.
The volatility across large caps has decreased from the first quarter,
especially in Energy, Communication Services and Technology.
PORTFOLIO PERFORMANCE
Matrix Equity lagged the S&P 500 Index for the second quarter 1999, posting a
5.47% return versus 7.05% for that of the Index.
Overall, in April, while the earnings/price component of the valuation process
was sound, as well as the recently implemented price factor, the cash flow
portion of the valuation process and estimate revision were weak. In May, the
valuation process was also sound, as earnings/price and cash flow were strong,
as well as price. Estimate revision was weak for the month of May.
At the sector level, stock selection was strong in Basic materials and Consumer
Staples, as well as Technology, and weak in Capital Goods, Communications
Services, Consumer Cyclicals, Energy and Health Care.
One of the weakest industries was Brokers/Asset Management, lead by Morgan
Stanley and Merrill Lynch, two stocks in which we were overweight relative to
the benchmark. Towards the end of the quarter, this industry, as well as these
issues had begun to rebound, on expectations of improved quarterly earnings.
STATE STREET
GLOBAL ADVISORS
[SSGA LOGO]
MATRIX EQUITY
PERFORMANCE
<TABLE>
<CAPTION>
- -----------------------------------------
Average Annual Total Return as of 6/30/99
- -----------------------------------------
<S> <C>
1 Year 12.61%
- -----------------------------------------
5 Year 17.30%
- -----------------------------------------
10 Year 13.68%
</TABLE>
TOP 10 HOLDINGS
<TABLE>
<CAPTION>
- ---------------------------------------------------
% of % of
As of 6/30/99 Portfolio Top 10
- ---------------------------------------------------
<S> <C> <C>
Microsoft Corporation 4.21% 14.60%
- ---------------------------------------------------
Wal-Mart Stores, Inc. 3.49% 12.10%
- ---------------------------------------------------
Citigroup, Inc. 3.03% 10.50%
- ---------------------------------------------------
Intl. Business Machines Corp. 2.99% 10.37%
- ---------------------------------------------------
AT&T Corporation 2.85% 9.89%
- ---------------------------------------------------
General Electric Company 2.76% 9.56%
- ---------------------------------------------------
Cisco Systems, Inc. 2.74% 9.49%
- ---------------------------------------------------
Lucent Technologies, Inc. 2.67% 9.25%
- ---------------------------------------------------
MCI WorldCom, Inc. 2.14% 7.41%
- ---------------------------------------------------
Ford Motor Company 1.97% 6.83%
</TABLE>
TOP 5 SECTOR WEIGHTINGS
<TABLE>
<CAPTION>
- --------------------------------------------------
% of
As of 6/30/99 Portfolio
- --------------------------------------------------
<S> <C>
Telecommunications 10.25%
- --------------------------------------------------
Financial Services 7.81%
- --------------------------------------------------
Computer & Business Equipment 6.62%
- --------------------------------------------------
Computer Related 6.12%
- --------------------------------------------------
Banks 5.76%
</TABLE>
9
<PAGE> 11
MANAGEMENT'S DISCUSSION & ANALYSIS (Continued)
Another weak industry for the quarter was Medical Products, Tyco and Guidant, in
particular. While the strategy has been underweight Tyco due to its stretched
valuation, the stock was very strong over the quarter. The strategy was
overweight Guidant, the medical products manufacturer and distributor. Although
Guidant was weak for the early portion of the quarter, margins and earnings
estimates are solid and improving, and FDA approvals have recently enhanced
price movement. Other weak industries for the quarter include: Apparel Retail,
Computer Software, Energy Production, and Semiconductors.
Strong stock selection at the industry level was seen in computer hardware
(Apple Computer), Metals and Mining (Alcoa), Oil Refining (Coastal Corp.), Banks
(Fleet Financial, Citigroup), and Household Products, given a zero weight to
Gillette.
In Medical Services, Columbia/HCA HealthCare was problematic, as the stock
suffered due to a government investigation involving two senior executives.
Earnings estimates were weakening, but have now turned the corner as the market
has absorbed this "event risk." COL is a leading medical care provider in the
US, and is a great value relative to industry peers.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE MATRIX EQUITY
PORTFOLIO AND THE S&P 500 INDEX*
MATRIX EQUITY S&P 500 INDEX
APR 1, 1994 10,000 10,000
JUN 30 9,940 9,966
SEP 30 10,180 10,380
DEC 31, 1994 10,009 10,303
MAR 31 10,604 11,305
JUN 30 11,153 12,383
SEP 30 12,369 13,365
DEC 31, 1995 13,357 14,169
MAR 31 12,989 14,930
JUN 30 13,446 15,599
SEP 30 12,835 16,081
DEC 31, 1996 13,973 17,420
MAR 31 13,767 17,889
JUN 30 15,284 21,009
SEP 30 17,057 22,582
DEC 31, 1997 17,055 23,231
MAR 31 19,342 26,469
JUN 30, 1998 19,607 27,342
SEP 30 16,940 24,267
DEC 31, 1998 20,655 29,868
MAR 31 20,933 31,355
JUN 30, 1999 22,078 33,566
* This Index is an unmanaged index in which investors cannot invest. Results for
the Index do not reflect the expenses and investment management fees incurred by
the Portfolio. Past performance is not predictive of future performance.
AVERAGE ANNUAL TOTAL RETURNS**
PERIODS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
Past 1 Past 5 Past 10
Year Years Years
------ ------ -------
<S> <C> <C> <C>
Matrix Equity Portfolio 12.61% 17.30% 13.68%
</TABLE>
"Total Return" is calculated including reinvestment of all income dividends and
capital gains distributions. Results represent past performance and do not
indicate future results. The value of an investment in the Matrix Equity
Portfolio and the return on the investment both will fluctuate and redemption
proceeds may be higher or lower than an investor's original cost.
** Performance data is historical and includes changes in share price and
reinvestment of dividends and capital gains distributions. Performance numbers
are net of all Portfolio operating expenses, but do not include any insurance
charges imposed in connection with your variable insurance contract. If this
performance information included the effect of the insurance charges,
performance numbers would be lower. Prior to April 1, 1994 results were achieved
by different portfolio managers.
10
<PAGE> 12
GROWTH & INCOME PORTFOLIO
OBJECTIVE
Seeks long-term growth of capital and income and a reasonable current return by
investing primarily in dividend-paying common stocks, convertibles, and readily
marketable securities that derive their value from common stocks, as well as
fixed income securities. The Portfolio does not strive to maintain a specific
balance of stocks, bonds, and money market instruments. Instead the manager
selects the industry sectors and individual securities he believes have the
highest potential for attractive total returns.
MANAGEMENT'S DISCUSSION & ANALYSIS
MARKET COMMENTARY
The second quarter was a positive one for the U.S. Stock market, with most major
equity indices advancing at least modestly despite rising bond yields through
the period. The market's rally was paced by a surge in value-type stocks (e.g.,
recently out-of-favor cyclical issues). This contrasted sharply with 1998 and
this year's first quarter, when a handful of large-cap growth stocks propelled
the market's continued advance. Driving the market's rotation toward
value/cyclical stocks over the April-through-June span were signs of a robust
economy and positive profit surprises announced by some highly visible
commodity-sensitive companies.
PORTFOLIO PERFORMANCE
Against this backdrop, the VIST Growth & Income Portfolio had a gain this
quarter of 16.2%, vs. gains of 7.05% and 9.28%, respectively, for the S&P 500
Index and the Lipper Growth & Income Funds Index. A number of the Portfolio's
holdings saw good performances, supported by the more-hospitable environment
for value-type stocks through the period (we continued to employ a value-based
investment approach), in particular its energy, retail, capital-equipment and
industrial holdings. Also contributing positively to the Portfolio's return were
its computer holdings, which were aided by an improving inventory backdrop.
We made few material changes to the Portfolio during the quarter with respect to
sector allocation. Our largest area of concentration remained financial stocks,
where we continued to have a modest overweighting. We maintained significant
CREDIT SUISSE
ASSET MANAGEMENT, LLP
[WARBURG PINCUS LOGO]
GROWTH & INCOME
PERFORMANCE
<TABLE>
<CAPTION>
- -----------------------------------------
Average Annual Total Return as of 6/30/99
- -----------------------------------------
<S> <C>
1 Year 15.23%
- -----------------------------------------
5 Year N/A
- -----------------------------------------
Since Inception* 20.09%
</TABLE>
*May 31, 1995
TOP 10 HOLDINGS
<TABLE>
<CAPTION>
- ----------------------------------------------------
% of % of
As of 6/30/99 Portfolio Top 10
- ----------------------------------------------------
<S> <C> <C>
Royal Dutch Petroleum Co. ADR 3.13% 14.02%
- ----------------------------------------------------
Comerica, Inc. 2.88% 12.89%
- ----------------------------------------------------
Bell Atlantic Corporation 2.26% 10.13%
- ----------------------------------------------------
Intl. Business Machines Corp. 2.16% 9.66%
- ----------------------------------------------------
Intel Corporation 2.14% 9.57%
- ----------------------------------------------------
Philip Morris Companies, Inc. 2.01% 9.01%
- ----------------------------------------------------
Lehman Brothers Holdings, Inc. 1.96% 8.76%
- ----------------------------------------------------
BP Amoco Plc ADR 1.95% 8.73%
- ----------------------------------------------------
Unisys Corporation 1.92% 8.62%
- ----------------------------------------------------
BMC Software, Inc. 1.92% 8.61%
</TABLE>
TOP 5 SECTOR WEIGHTINGS
<TABLE>
<CAPTION>
- -----------------------------------------------------
% of
As of 6/30/99 Portfolio
- -----------------------------------------------------
<S> <C>
Financial Services 8.86%
- -----------------------------------------------------
Banks 8.17%
- -----------------------------------------------------
Oil & Gas 7.48%
- -----------------------------------------------------
Telecommunications 5.08%
- -----------------------------------------------------
Computers & Business Equipment 4.13%
</TABLE>
11
<PAGE> 13
MANAGEMENT'S DISCUSSION & ANALYSIS (Continued)
exposure to the financial-services sector in part due to our optimism regarding
pricing power in the insurance area. We also had a significant weighting in the
banks and savings & loan sector. We had a limited weighting here through much of
1998, but saw a number of buying opportunities emerge late last year and early
this year as credit-quality concerns weighed on the sector. We judged specific
bank stocks to be oversold, believing that the market was overly pessimistic
regarding certain companies' loan-growth prospects (our increased weighting here
was also based on a steepening yield curve, which can enhance profit margins for
lenders). We continued, through the quarter, to find the best values among banks
that concentrate primarily on commercial (e.g., industrial) loans.
We also maintained a weighting in the capital-equipment sector. We made little
in the way of noteworthy changes here, other than to eliminate a position which
had appreciated to reach our sell target. Notwithstanding the healthy rally
exhibited by these stocks during the quarter, we remain optimistic regarding the
group's longer-term prospects. A number of capital-equipment companies continue
to operate well below full capacity, and hence offer significant "operating
leverage" (such companies can potentially keep a firm hand on unit costs during
periods of rising demand for their products).
Another noteworthy area of concentration for the Portfolio remained the
technology area, most specifically the computer sector. We maintained a bias
here toward equipment companies with relatively healthy balance sheets and
leadership status within their respective markets. We continued to largely avoid
the electronics sector, reflecting our ongoing concerns regarding valuations
here. That aside, we did add an electronics stock during the quarter that we
considered to be attractive, in part due to the company's increasingly efficient
use of capital.
Sector weightings we lowered somewhat during the quarter included
telecommunications & equipment, reflecting our general concerns over relatively
high valuations in the area. We continued to see attractive stocks here,
however, most specifically stocks of regional Bell operating companies. We also
reduced our exposure to the healthcare sector, again based on valuation
considerations.
OUTLOOK
Looking ahead to the next several months, we see ample grounds for optimism
regarding equities. For one, the economy's buoyancy stands to support earnings
growth, particularly within certain areas. The interest-rate backdrop,
meanwhile, could stabilize given the Federal Reserve's stated near-term
disinclination to raise rates in the wake of its June 30 increase. That said, we
believe stock performance could vary greatly by sector and company,
necessitating continued careful analysis of company fundamentals.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE GROWTH & INCOME
PORTFOLIO AND THE S&P500 INDEX*
GROWTH & INCOME S&P 500 INDEX
MAY 4, 1995 10,000 10,000
JUN 30 10,152 10,232
SEP 30 11,145 11,043
DEC 31, 1995 11,310 11,708
MAR 31 12,747 12,337
JUN 30 12,907 12,890
SEP 30 12,162 13,288
DEC 31, 1996 12,680 14,395
MAR 31 12,833 14,782
JUN 30 14,608 17,360
SEP 30 16,139 18,660
DEC 31, 1997 16,257 19,196
MAR 31 18,121 21,872
JUN 30, 1998 18,324 22,593
SEP 30 15,669 20,350
DEC 31, 1998 18,276 24,680
MAR 31 18,134 25,910
JUN 30, 1999 21,113 27,736
* This Index is an unmanaged index in which investors cannot invest. Results for
the Index do not reflect the expenses and investment management fees incurred by
the Portfolio. Past performance is not predictive of future performance.
AVERAGE ANNUAL TOTAL RETURNS**
PERIODS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
Past 1 Life of
Year Portfolio***
------ ------------
<S> <C> <C>
Growth & Income Portfolio 15.23% 20.09%
</TABLE>
"Total Return" is calculated including reinvestment of all income dividends and
capital gains distributions. Results represent past performance and do not
indicate future results. The value of an investment in the Growth & Income
Portfolio and the return on the investment both will fluctuate and redemption
proceeds may be higher or lower than an investor's original cost.
** Performance data is historical and includes changes in share price and
reinvestment of dividends and capital gains distributions. Performance numbers
are net of all Portfolio operating expenses, but do not include any insurance
charges imposed in connection with your variable insurance contract. If this
performance information included the effect of the insurance charges,
performance numbers would be lower.
*** From commencement of operations (May 31, 1995)
12
<PAGE> 14
MULTIPLE STRATEGIES PORTFOLIO
OBJECTIVE
Seeks as high a level of total return over an extended period of time as is
consistent with prudent investment risk by investing in equity securities, bonds
and money market instruments in varying proportions, depending upon prevailing
economic and financial market conditions.
MANAGEMENT'S DISCUSSION & ANALYSIS
For the second quarter of 1999, the Multiple Strategies Portfolio lost .71%,
underperforming the 3.79% of the composite benchmark, comprised of 60% S&P
500/40% Lehman Government Corporate Bond Index. However, significant
outperformance in the first quarter brought total return over the six-month
period to 8.67%, beating the benchmark return of 6.52% by about 200 basis
points.
The equity holdings in the Multiple Strategies Portfolio mirror those of the
Growth Portfolio. Our heaviest sector weightings are in technology, financials,
consumer staples, healthcare and consumer cyclicals, sectors that are relatively
more attractive in terms of above-trendline growth patterns.
On the fixed income side, the favorable equity returns outweighed the negative
impact of a spike in bond yields over the first six months of 1999. The year
began with Brazil's currency devaluation, reinforcing concerns of global
economic problems. The yield on the 30-year Treasury fell from 5.31% to 5.05% in
early January. By February, a robust 1998 fourth quarter GDP release, coupled
with Fed Chairman Greenspan's hints at a possible overreaction in its Fall 1998
rate cuts sent the bond market reeling. Long-term interest rates rose to 5.61%,
producing the worst monthly return (-2.55%) since 1981. Between March and April
rates meandered. A stronger than expected Consumer Price Index report in May for
the prior month shook the markets, but the June data proved to be benign. Rates
rebounded again in May and June, peaking at 6.16% late in the second quarter.
VALUE LINE, INC.
[VALUE LINE LOGO]
MULTIPLE STRATEGIES
PERFORMANCE
<TABLE>
<CAPTION>
- -----------------------------------------
Average Annual Total Return as of 6/30/99
- -----------------------------------------
<S> <C>
1 Year 25.72%
- -----------------------------------------
5 Year 23.30%
- -----------------------------------------
10 Year 15.29%
</TABLE>
TOP 10 HOLDINGS
<TABLE>
<CAPTION>
- ----------------------------------------------------
% of % of
As of 6/30/99 Portfolio Top 10
- ----------------------------------------------------
<S> <C> <C>
FHLB, 4.875%, 01/22/2002 4.09% 14.43%
- ----------------------------------------------------
FNMA, 5.750%, 06/15/2005 3.06% 10.78%
- ----------------------------------------------------
Microsoft Corporation 3.00% 10.58%
- ----------------------------------------------------
Cisco Systems, Inc. 2.84% 10.01%
- ----------------------------------------------------
America Online, Inc. 2.84% 10.01%
- ----------------------------------------------------
Intel Corporation 2.63% 9.29%
- ----------------------------------------------------
Omnicom Group 2.59% 9.14%
- ----------------------------------------------------
Tyco International Ltd. 2.49% 8.80%
- ----------------------------------------------------
Wal-Mart Stores, Inc. 2.42% 8.53%
- ----------------------------------------------------
Pfizer, Inc. 2.39% 8.43%
</TABLE>
TOP 5 SECTOR WEIGHTINGS
<TABLE>
<CAPTION>
- ----------------------------------------------------
% of
As of 6/30/99 Portfolio
- ----------------------------------------------------
<S> <C>
Computer Related 12.86%
- ----------------------------------------------------
Federal Agencies 9.17%
- ----------------------------------------------------
Drugs 6.53%
- ----------------------------------------------------
Financial Services 5.85%
- ----------------------------------------------------
Broadcasting 5.85%
</TABLE>
13
<PAGE> 15
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*
VIST MULTIPLE LEHMAN BROS. INDEX S&P
STRATEGIES GOV'T/CORP. BOND 500 INDEX
APR 1, 1994 10,000 10,000 10,000
JUN 30 9,364 9,876 9,966
SEP 30 9,913 9,925 10,380
DEC 31, 1994 9,974 9,962 10,303
MAR 31 10,475 10,458 11,305
JUN 30 11,845 11,136 12,383
SEP 30 13,154 11,343 13,365
DEC 31, 1995 13,189 11,872 14,169
MAR 31 13,884 11,594 14,930
JUN 30 14,351 11,648 15,599
SEP 30 15,053 11,854 16,081
DEC 31, 1996 15,609 12,217 17,420
MAR 31 15,008 11,875 17,889
JUN 30 17,212 12,525 21,009
SEP 30 19,151 13,211 22,582
DEC 31, 1997 19,011 13,991 23,231
MAR 31 20,380 14,191 26,469
JUN 30 21,223 14,792 27,342
SEP 30 20,032 15,525 24,627
DEC 31, 1998 24,552 15,545 29,868
MAR 31 26,873 15,021 31,355
JUN 30, 1999 26,682 14,621 33,566
* These Indices are unmanaged indices in which investors cannot invest. Results
for the Indices do not reflect the expenses and investment management fees
incurred by the Portfolio. Past performance is not predictive of future
performance.
AVERAGE ANNUAL TOTAL RETURNS**
PERIODS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
Past 1 Past 5 Past 10
Year Years Years
------ ------ -------
<S> <C> <C> <C>
Multiple Strategies Portfolio 25.72% 23.30% 15.29%
</TABLE>
"Total Return" is calculated including reinvestment of all income dividends and
capital gains distributions. Results represent past performance and do not
indicate future results. The value of an investment in the Multiple Strategies
Portfolio and the return on the investment both will fluctuate and redemption
proceeds may be higher or lower than an investor's original cost.
** Performance data is historical and includes changes in share price and
reinvestment of dividends and capital gains distributions. Performance numbers
are net of all Portfolio operating expenses, but do not include any insurance
charges imposed in connection with your variable insurance contract. If this
performance information included the effect of the insurance charges,
performance numbers would be lower. Prior to April 1, 1994 results were achieved
by different portfolio managers.
14
<PAGE> 16
HIGH INCOME BOND PORTFOLIO
OBJECTIVE
Seeks a high level of current income while secondarily seeking capital
appreciation by investing primarily in fixed-income securities, including
corporate bonds and notes, discount bonds, zero-coupon bonds, convertible
securities, and preferred stocks and bonds issued with warrants, which are rated
Baa or below by Moody's or BBB or below by Standard & Poor's or in unrated
securities determined to be of comparable quality.
MANAGEMENT'S DISCUSSION & ANALYSIS
MARKET COMMENTARY
High yield bonds delivered excellent relative returns for the six months ending
June 30, 1999. These returns were driven by continued strong domestic economic
growth coupled with stable to improving foreign economies. Reflecting the strong
domestic economic situation, the yield spread between the CS First Boston High
Yield Index and a comparable US Treasury security narrowed 83 basis points
during the period. Given the bright economic outlook, the basic material sectors
such as forest products, metals and mining were standouts while healthcare was a
noticeable laggard as concerns about government reimbursements in the long-term
care segment negatively impacted the sector. In general, credit risk was
rewarded as illustrated by the performance of the Lehman CCC Index, which
returned 8.58%, while the BB and B indices returned 0.4% and 2.09% respectively.
While relative returns were attractive, absolute returns were negatively
impacted by rising interest rates in the high quality fixed income markets. For
the period as a whole, the Lehman Brothers High Yield Bond Index returned 2.20%,
outperforming the Lehman Brothers Aggregate Bond Index, a measure of high
quality bond performance, which returned -1.37 %.
PORTFOLIO PERFORMANCE
The fund outperformed the First Boston High Yield Bond Index and modestly
underperformed the Lipper High Current Yield Fund Average for the period.
Several factors led to the Portfolio's
FEDERATED INVESTMENT
COUNSELING, INC.
[FEDERATED LOGO]
HIGH INCOME BOND
PERFORMANCE
<TABLE>
<CAPTION>
- -----------------------------------------
Average Annual Total Return as of 6/30/99
- -----------------------------------------
<S> <C>
1 Year 2.08%
- -----------------------------------------
5 Year 9.86%
- -----------------------------------------
10 Year 9.69%
</TABLE>
TOP 10 HOLDINGS
<TABLE>
<CAPTION>
- -----------------------------------------------------
% of % of
As of 6/30/99 Portfolio Top 10
- -----------------------------------------------------
<S> <C> <C>
Telewest Communications Plc 1.70% 13.44%
- -----------------------------------------------------
Level 3 Communications, Inc. 1.61% 12.72%
- -----------------------------------------------------
Revlon Corporation 1.42% 11.18%
- -----------------------------------------------------
Fox/Liberty Networks LLC 1.28% 10.08%
- -----------------------------------------------------
Nextel Communications, Inc. 1.20% 9.44%
- -----------------------------------------------------
Ameriserve Food Dist., Inc. 1.16% 9.15%
- -----------------------------------------------------
Hermes Europe Railtel B.V. 1.14% 9.01%
- -----------------------------------------------------
Sinclair Broadcast Group Inc. 1.06% 8.37%
- -----------------------------------------------------
GS Escrow Corporation 1.05% 8.31%
- -----------------------------------------------------
Chancellor Media Corp. 1.05% 8.30%
</TABLE>
TOP 5 SECTOR WEIGHTINGS
<TABLE>
<CAPTION>
- ----------------------------------------------------
% of
As of 6/30/99 Portfolio
- ----------------------------------------------------
<S> <C>
Telecommuncation & Cellular 12.71%
- ----------------------------------------------------
Telecommunications 11.50%
- ----------------------------------------------------
Cable Television 11.24%
- ----------------------------------------------------
Broadcast Radio & Television 8.38%
- ----------------------------------------------------
Industrial Products & Equipment 5.16%
</TABLE>
High yield bonds are subject to greater risk of principal and income than
higher quality bonds.
15
<PAGE> 17
MANAGEMENT'S DISCUSSION & ANALYSIS (Continued)
outperformance. First, while the Portfolio was overweight the telecommunications
sector, the Portfolio had no exposure to the satellite segment as
disappointments at Iridium, a satellite phone company, dragged the sector lower.
The Portfolio was also underweight healthcare, which substantially
underperformed and had little exposure to the long-term care segment within
healthcare, which led to the sector problems. Specific holdings in Fox/Liberty
and Metronet outperformed as stronger credits took operating control of both
companies. Triton PCS, Telesystems International and Teligent, three aggressive
telecommunications issuers, outperformed as lower quality issues surged. On the
negative side, the Portfolio was underweight the basic material sectors which
outperformed, given the strong economy. Also, positions in Paging Network, the
largest US paging company and Stena Lines, a major European ferry operator,
underperformed because of disappointing financial performance. Quality
weightings both helped and hurt the fund as the underweight in BB-rated
securities helped performance while the underweight in the more aggressive CCC
and non-rated sectors hurt performance, especially versus the Lipper average.
OUTLOOK
For the balance of 1999, we believe high yield bonds offer attractive relative
returns given strong domestic economic growth and stable to improving
international economics, which should lead to additional spread tightening
between high yield bonds and treasuries. Absolute returns will be influenced by
the direction of interest rates. The June 30th hike in the Fed Funds rate by the
Federal Reserve signals their concern about strong economic growth leading to
inflationary pressures and their willingness to raise rates to head off
inflation.
From a portfolio perspective, we continue to be overweight the
telecommunications sector, given the powerful secular growth characteristics of
the sector. We remain biased to modestly decreasing interest rate risk and
increasing credit risk given the strong economic conditions, while also looking
to increase exposure to basic materials. This bias will be carefully implemented
given the rising trend in default rates.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE HIGH INCOME BOND
PORTFOLIO, FIRST BOSTON HIGH YIELD INDEX AND THE LEHMAN BROTHERS SINGLE "B"
INDEX*
<TABLE>
<CAPTION>
HIGH INCOME FUND LEHMAN BROTHERS SINGLE "B" INDEX FIRST BOSTON HIGH YIELD INDEX
<S> <C> <C> <C>
APR 1, 1994 10,000 10,000 10,000
JUN 30 9,906 10,010 9,856
SEP 30 9,879 10,198 10,014
DEC 31, 1994 9,655 10,215 10,010
MAR 31 10,167 10,745 10,481
JUN 30 10,729 11,299 11,089
SEP 30 11,102 11,641 11,423
DEC 31, 1995 11,487 11,907 11,752
MAR 31 11,795 12,213 12,006
JUN 30 11,948 12,464 12,195
SEP 30 12,635 13,053 12,653
DEC 31, 1996 13,123 13,523 13,211
MAR 31 13,269 13,694 13,405
JUN 30 13,931 14,259 13,984
SEP 30 14,621 14,919 14,641
DEC 31, 1997 14,899 15,159 14,878
MAR 31 15,431 15,746 15,326
JUN 30, 1998 15,526 15,854 15,519
SEP 30 14,857 14,946 14,565
DEC 31, 1998 15,352 15,356 14,964
MAR 31 15,872 15,653 15,209
JUN 30, 1999 15,850 15,674 15,386
</TABLE>
* These Indices are unmanaged indices in which investors cannot invest. Results
for the Indices do not reflect the expenses and investment management fees
incurred by the Portfolio. Past performance is not predictive of future
performance.
AVERAGE ANNUAL TOTAL RETURNS**
PERIODS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
Past 1 Past 5 Past 10
Year Years Years
------ ------ -------
<S> <C> <C> <C>
High Income Bond Portfolio 2.08% 9.86% 9.69%
</TABLE>
"Total Return" is calculated including reinvestment of all income dividends and
capital gains distributions. Results represent past performance and do not
indicate future results. The value of an investment in the High Income Bond
Portfolio and the return on the investment both will fluctuate and redemption
proceeds may be higher or lower than an investor's original cost.
** Performance data is historical and includes changes in share price and
reinvestment of dividends and capital gains distributions. Performance numbers
are net of all Portfolio operating expenses, but do not include any insurance
charges imposed in connection with your variable insurance contract. If this
performance information included the effect of the insurance charges,
performance numbers would be lower. Prior to April 1, 1994 results were achieved
by different portfolio managers.
16
<PAGE> 18
U.S. GOVERNMENT BOND PORTFOLIO
OBJECTIVE
Seeks current income and preservation of capital. Under normal circumstances, at
least 80% of the Portfolio's assets will be invested in U.S. Government
Securities; the remainder may be invested in investment grade corporate
securities and in cash and money market instruments.
MANAGEMENT'S DISCUSSION & ANALYSIS
MARKET COMMENTARY
The first quarter of 1999 saw a return to more normal conditions in the fixed
income markets. As the global economic environment started to show signs of
stabilizing, U.S. fixed income investors refocused on U.S. economic
fundamentals. The unwinding of the flight to quality continued as interest rates
trended higher and credit spreads continued to narrow. Credit spreads narrowed
most quickly in the larger, well-known sectors of the corporate and mortgage
market, as investors are now turning their attention to the lesser known issues
in these sectors looking for relative value opportunities.
The second quarter was marked with inflationary fears. Investors became
entranced with each domestic economic release, searching for a sign that would
provide insight into the intentions of the Federal Reserve. Two events during
the quarter stood as focal points of market sentiment. First, the release of the
April CPI report showing an increase in inflation of 0.7% and an increase in
core inflation of 0.4%. Second, was the Fed's hawkish posture towards the risk
of inflation.
A change in bias, towards tightening, was announced at the May Federal Open
Market Committee Meeting. The June 17th Congressional testimony of Chairman Alan
Greenspan all but announced an increase in rates at the June 30th FOMC Meeting.
The market sensing the increase was already pricing into the markets, began a
quarter end rally, sending the 30-year Treasury yield back down from a 6.16%
high to 5.96%. On June 30th, the Fed affirmed its earlier indications by
increasing rates 25 basis points and shifting to a neutral bias.
STRONG CAPITAL MANAGEMENT
[STRONG LOGO]
U.S. GOVERNMENT BOND
PERFORMANCE
<TABLE>
<CAPTION>
- -----------------------------------------
Average Annual Total Return as of 6/30/99
- -----------------------------------------
<S> <C>
1 Year 2.33%
- -----------------------------------------
5 Year 7.42%
- -----------------------------------------
10 Year 7.59%
</TABLE>
TOP 10 HOLDINGS
<TABLE>
<CAPTION>
- ---------------------------------------------------
% of % of
As of 6/30/99 Portfolio Top 10
- ---------------------------------------------------
<S> <C> <C>
USTB, 6.125%, 11/15/2027 10.00% 20.43%
- ---------------------------------------------------
USTN, 7.875%, 11/15/2004 6.54% 13.35%
- ---------------------------------------------------
Fed. Agric. Mort. Co.
7.012%, 1/25/2003 5.31% 10.86%
- ---------------------------------------------------
USTN, 5.625%, 05/15/2008 5.03% 10.27%
- ---------------------------------------------------
FNMA, 11.000%, 02/01/2019 3.99% 8.14%
- ---------------------------------------------------
FNMA, 11.500%, 02/01/2019 3.89% 7.96%
- ---------------------------------------------------
USTN, 5.875%, 11/30/2001 3.85% 7.88%
- ---------------------------------------------------
USTB, 7.250%, 05/15/2016 3.60% 7.37%
- ---------------------------------------------------
FNMA, 9.500%, 03/25/2019 3.45% 7.05%
- ---------------------------------------------------
Fed. Agric. Mort. Co.
6.710%, 07/25/2008 3.27% 6.69%
</TABLE>
TOP 5 SECTOR WEIGHTINGS
<TABLE>
<CAPTION>
- ----------------------------------------------------
% of
As of 6/30/99 Portfolio
- ----------------------------------------------------
<S> <C>
Mortgage Backed Securities 40.52%
- ----------------------------------------------------
U.S. Government Securities 34.47%
- ----------------------------------------------------
Collateralized Mortgage Obligations 8.59%
- ----------------------------------------------------
Corporate Bonds 8.16%
- ----------------------------------------------------
Non-Agency Mortgage and Asset Backed 1.75%
</TABLE>
Investment in the U.S. Government Bond Portfolio is not guaranteed by the U.S.
Government.
17
<PAGE> 19
MANAGEMENT'S DISCUSSION & ANALYSIS (Continued)
The U.S. economy remains strong with GDP up 4.3% in the first quarter with
expectations of 3 to 3.5 for the second quarter. Thus far, the continued
strength in the economy has not had a significant impact on inflation. The
benefits of technological advances and e-commerce appear to be taking effect, as
increases in productivity are currently supporting the strength of the economy.
PORTFOLIO PERFORMANCE
The Trust outperformed its Salomon Brothers Broad Investment Grade Index for the
first half of 1999, returning -1.66% compared to -2.45% for the index. The
duration was slightly below the benchmark for the most of the first half, being
brought back to neutral in recent weeks. We believe that the bond market has
overreacted to inflationary concerns, presenting opportunities going forward.
Global competition and increased productivity, through the utilization of
technology should hold inflation in check. As Y2K efforts are phased out in the
fourth quarter, those resources will be redeployed, further enhancing
productivity.
OUTLOOK
Our outlook calls for lower interest rates, beginning in the next three to six
months, once the burgeoning demand side of the U.S. economy begins to show signs
of softening. We look to extend duration when evidence of softer demand dispels
the market's fear of renewed inflation. However, there needs to be a catalyst to
change the market psychology. Once that happens, the market could move quickly.
The Market remains focused on domestic economic data releases and will keep a
close eye on the Fed's next meeting on August 24th.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE U.S. GOVERNMENT
BOND PORTFOLIO AND THE LEHMAN BROTHERS GOVERNMENT BOND INDEX*
LEHMAN BROS.
U.S. GOV'T BOND GOV'T BOND INDEX
APR 1, 1994 10,000 10,000
JUN 30 9,929 9,885
SEP 30 9,960 9,921
DEC 31, 1994 9,959 9,862
MAR 31 10,474 10,431
JUN 30 11,162 11,078
SEP 30 11,403 11,273
DEC 31, 1995 11,968 11,788
MAR 31 11,663 11,522
JUN 30 11,666 11,576
SEP 30 11,839 11,772
DEC 31, 1996 12,217 12,115
MAR 31 12,143 11,729
JUN 30 12,578 12,385
SEP 30 13,010 12,800
DEC 31, 1997 13,362 13,224
MAR 31 13,543 13,424
JUN 30 13,842 13,779
SEP 30 14,379 14,541
DEC 31, 1998 14,403 14,527
MAR 31 14,297 14,320
JUN 30, 1999 14,164 14,198
* This Index is an unmanaged index in which investors cannot invest. Results for
the Index do not reflect the expenses and investment management fees incurred by
the Portfolio. Past performance is not predictive of future performance.
AVERAGE ANNUAL TOTAL RETURNS**
PERIODS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
Past 1 Past 5 Past 10
Year Years Years
------ ------ -------
<S> <C> <C> <C>
U.S. Government Bond Portfolio 2.33% 7.42% 7.59%
</TABLE>
"Total Return" is calculated including reinvestment of all income dividends and
capital gains distributions. Results represent past performance and do not
indicate future results. The value of an investment in the U.S. Government Bond
Portfolio and the return on the investment both will fluctuate and redemption
proceeds may be higher or lower than an investor's original cost.
** Performance data is historical and includes changes in share price and
reinvestment of dividends and capital gains distributions. Performance numbers
are net of all Portfolio operating expenses, but do not include any insurance
charges imposed in connection with your variable insurance contract. If this
performance information included the effect of the insurance charges,
performance numbers would be lower. Prior to April 1, 1994 results were achieved
by different portfolio managers.
18
<PAGE> 20
VARIABLE INVESTORS SERIES TRUST
SMALL CAP GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS
AIRLINES -- (0.7%)
Frontier Airlines, Inc. (a) ...................... 5,700 $ 91,913
----------
CIRCUITS -- (1.1%)
ANADIGICS, Inc. (a) .............................. 3,600 133,200
----------
COMMERCIAL SERVICES -- (2.9%)
Lason, Inc. (a) .................................. 2,100 104,212
NCO Group, Inc. (a) .............................. 3,200 121,600
Quanta Services, Inc. (a) ........................ 2,900 127,600
----------
353,412
COMPUTER RELATED -- (2.1%)
Extreme Networks, Inc. (a) ....................... 2,200 127,737
NVIDIA Corporation (a) ........................... 6,800 130,050
----------
257,787
COMPUTER SERVICES -- (2.7%)
Cognizant Technology Solutions Corporation,
Class A (a) .................................... 3,600 93,825
International Integration, Inc. (a) .............. 5,900 132,750
QRS Corporation (a) .............................. 1,400 109,200
----------
335,775
COMPUTER SOFTWARE -- (3.6%)
Advent Software, Inc. (a) ........................ 2,000 134,000
Exchange Applications, Inc. (a) .................. 4,100 167,075
Verity, Inc. (a) ................................ 2,600 140,887
----------
441,962
CONSULTING SERVICES -- (2.1%)
Professional Detailing, Inc. (a) ................. 4,200 98,700
The Metzler Group, Inc. (a) ...................... 2,300 63,538
USWeb Corporation (a) ............................ 4,300 95,406
----------
257,644
CONSUMER PRODUCTS-MISCELLANEOUS -- (1.0%)
Blyth Industries, Inc. (a) ....................... 3,600 123,750
----------
DATA STORAGE -- (1.8%)
Network Appliance, Inc. (a) ...................... 3,900 217,912
----------
DRUGS/PHARMACEUTICALS -- (3.4%)
Advance Paradigm, Inc. (a) ....................... 1,600 97,600
Jones Pharma, Inc. ............................... 3,200 126,000
Medicis Pharmaceutical Corporation, Class A (a) .. 3,450 87,544
Roberts Pharmaceutical Corporation (a) ........... 4,800 116,400
----------
427,544
ELECTRONIC COMMERCE -- (1.3%)
Pegasus Systems, Inc. (a) ........................ 1,800 67,388
Transaction Systems Architects, Inc.,
Class A (a) .................................... 2,400 93,600
----------
160,988
</TABLE>
See notes to financial statements.
19
<PAGE> 21
VARIABLE INVESTORS SERIES TRUST
SMALL CAP GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS -- (CONTINUED)
ELECTRONIC COMPONENTS -- (5.1%)
Cymer, Inc. (a) .................................. 5,500 $ 137,500
Optical Coating Laboratory, Inc. ................. 1,900 158,888
RF Micro Devices, Inc. (a) ....................... 4,500 335,812
----------
632,200
ENVIRONMENTAL -- (2.2%)
Catalytica, Inc. (a) ............................. 7,900 110,600
Tetra Tech, Inc. (a) ............................. 9,700 160,050
----------
270,650
FOOD & BEVERAGES -- (0.7%)
Suiza Foods Corporation (a) ...................... 2,000 83,750
----------
HEALTH CARE -- (2.0%)
Eclipsys Corporation (a) ......................... 5,000 119,687
Laser Vision Centers, Inc. (a) ................... 2,100 132,300
----------
251,987
HUMAN RESOURCES -- (1.3%)
AHL Services, Inc. (a) ........................... 6,300 157,106
----------
INDUSTRIAL PRODUCTS & EQUIPMENT -- (4.3%)
Applied Science & Technology, Inc. (a) ........... 4,900 110,250
Brooks Automation, Inc. (a) ...................... 4,300 116,369
Cognex Corporation (a) ........................... 4,800 151,500
PRI Automation, Inc. (a) ......................... 4,300 155,875
----------
533,994
INFORMATION SYSTEMS -- (1.6%)
MedQuist, Inc. (a) ............................... 4,500 196,875
----------
MACHINERY & EQUIPMENT -- (0.9%)
United Rentals, Inc. (a) ......................... 3,700 109,150
----------
MEDICAL PRODUCTS & SUPPLIES -- (3.9%)
Molecular Devices Corporation (a) ................ 3,400 127,500
Osteotech, Inc. (a) .............................. 3,000 86,250
Perclose, Inc. (a) ............................... 1,900 91,319
Xomed Surgical Products, Inc., Class A (a) ....... 3,600 175,275
----------
480,344
NETWORKING -- (2.4%)
MMC Networks, Inc. (a) ........................... 2,600 116,350
Proxim, Inc. (a) ................................. 3,200 185,600
----------
301,950
NETWORKING SOFTWARE -- (3.8%)
Bindview Development Corporation (a) ............. 4,400 104,500
Micromuse, Inc. (a) .............................. 2,400 119,700
New Era of Networks, Inc. (a) .................... 5,700 250,444
----------
474,644
</TABLE>
See notes to financial statements.
20
<PAGE> 22
VARIABLE INVESTORS SERIES TRUST
SMALL CAP GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS -- (CONTINUED)
POLLUTION CONTROL -- (1.5%)
Waste Connections, Inc. (a) ...................... 6,300 $ 192,150
---------
RADIO/TELEVISION -- (1.1%)
Citadel Communications Corporation (a) ........... 3,800 137,513
----------
RAILROAD -- (0.8%)
Motive Power Industries, Inc. (a) ................ 5,450 98,100
----------
RESTAURANTS -- (2.5%)
Dave & Busters, Inc. (a) ......................... 3,500 101,500
P.F. Chang's China Bistro, Inc. (a) .............. 4,600 99,475
Rubio's Restaurants, Inc. (a) .................... 7,300 112,694
----------
313,669
RETAIL-APPAREL -- (3.0%)
Ann Taylor Stores Corporation (a) ................ 2,900 130,500
K-Swiss, Inc., Class A ........................... 3,500 162,750
Tarrant Apparel Group (a) ........................ 3,300 75,075
----------
368,325
RETAIL-CATALOG -- (1.5%)
Insight Enterprises, Inc. (a) .................... 7,700 190,575
----------
RETAIL-GROCERY -- (0.8%)
Whole Foods Market, Inc. (a) ..................... 2,000 96,125
----------
RETAIL-SPECIALTY -- (1.7%)
CSK Auto Corporation (a) ......................... 4,200 113,400
Sonic Automotive, Inc. (a) ....................... 7,500 103,125
----------
216,525
SEMICONDUCTOR MANUFACTURING -- (7.9%)
Applied Micro Circuits Corporation (a) ........... 4,000 329,000
Galileo Technology Ltd. (a) ...................... 3,000 135,937
Hi/fn, Inc. (a) .................................. 2,000 152,250
QLogic Corporation (a) ........................... 2,000 264,000
SDL, Inc. (a) .................................... 1,900 97,019
----------
978,206
SOFTWARE -- (2.6%)
Actuate Software Corporation (a) ................. 3,400 90,100
DSET Corporation (a) ............................. 6,400 89,200
TSI International Software Ltd. (a) .............. 5,000 141,875
----------
321,175
SOFTWARE-CLIENT/SERVER -- (4.9%)
Dendrite International, Inc. (a) ................. 7,300 263,712
Great Plains Software, Inc. (a) .................. 2,800 132,125
Legato Systems, Inc. (a) ......................... 3,600 207,900
----------
603,737
</TABLE>
See notes to financial statements.
21
<PAGE> 23
VARIABLE INVESTORS SERIES TRUST
SMALL CAP GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C> <C>
COMMON STOCKS -- (CONTINUED)
SOFTWARE-DESKTOP -- (1.9%)
Macromedia, Inc. (a) .......................... 3,100 $ 109,275
Visio Corporation (a) ......................... 3,200 121,800
----------
231,075
SOFTWARE-INTERNET -- (1.8%)
BroadVision, Inc. (a) ......................... 3,000 221,250
----------
SOFTWARE-TESTING -- (1.9%)
Mercury Interactive Corporation (a) ........... 6,600 233,475
----------
SPECIAL OUTPATIENT FACILITY -- (0.7%)
Renal Care Group, Inc. (a) .................... 3,200 82,800
----------
SYSTEMS INTEGRATOR -- (5.0%)
Diamond Technology Partners, Inc.,
Class A (a) ................................. 6,400 143,200
International Network Services (a) ............ 3,550 143,331
Sapient Corporation (a) ....................... 2,100 118,913
Whittman-Hart, Inc. (a) ....................... 6,700 212,725
----------
618,169
TELECOMMUNICATION EQUIPMENT -- (4.6%)
ADTRAN, Inc. (a) .............................. 3,500 127,312
Aware, Inc. (a) ............................... 2,700 124,538
Carrier Access Corporation (a) ................ 2,800 122,675
Excel Switching Corporation (a) ............... 3,000 89,813
Harmonic, Inc. (a) ............................ 1,900 109,131
----------
573,469
TRANSPORTATION -- (0.8%)
Coach USA, Inc. (a) ........................... 2,300 96,456
----------
TOTAL COMMON STOCKS -- (Cost $8,931,118) 95.9% 11,867,331
----------
</TABLE>
<TABLE>
<CAPTION>
INTEREST MATURITY MATURITY
RATE DATE AMOUNT
---- ---- ------
<S> <C> <C> <C> <C> <C>
SHORT TERM INVESTMENT
REPURCHASE AGREEMENT -- (1.8%)
State Street Bank and
Trust Company (b) 3.750% 07/01/1999 $215,022 215,000
-----------
TOTAL SHORT TERM INVESTMENT -- (Cost $215,000) 1.8% 215,000
-----------
TOTAL INVESTMENTS -- (Cost $9,146,118) 97.7% 12,082,331
OTHER ASSETS LESS LIABILITIES -- 2.3% 289,936
----- -----------
NET ASSETS -- 100.0% $12,372,267
===== ===========
</TABLE>
(a) Non-income producing security.
(b) The agreement with State Street Bank and Trust Company, dated 6/30/99, is
fully collateralized by a United States Treasury Note, 5.625%, 11/30/99,
with a value of $221,427.
See notes to financial statements.
22
<PAGE> 24
VARIABLE INVESTORS SERIES TRUST
WORLD EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS
AUSTRALIA -- (1.8%)
Foster's Brewing Group Ltd. ...................... 64,200 $ 180,707
Lend Lease Corporation Ltd. ...................... 13,400 183,743
----------
364,450
CANADA -- (0.6%)
Genesis Microchip, Inc. (a) ...................... 5,500 129,937
----------
FINLAND -- (2.1%)
Nokia Oyj ADR .................................... 4,415 386,852
UPM-Kymmene Oyj .................................. 1,260 36,109
----------
422,961
FRANCE -- (4.8%)
Axa .............................................. 624 76,097
Cap Gemini N.V. .................................. 1,452 228,111
Danone ........................................... 400 103,085
France Telecom S.A. .............................. 511 38,585
Rhone Poulenc S.A. ............................... 2,249 102,728
Societe Eurafrance S.A. .......................... 183 113,565
Society Elf Aquitaine ............................ 431 63,223
Total S.A., Class B .............................. 961 123,930
Vivendi .......................................... 1,489 120,569
----------
969,893
GERMANY -- (4.0%)
BASF AG .......................................... 1,145 50,577
DaimlerChrysler AG ............................... 1,239 107,287
Deutsche Telekom AG .............................. 7,226 303,171
Fresenius AG ..................................... 584 103,246
Karstadt AG ...................................... 87 41,793
Mannesmann AG .................................... 499 74,525
Thyssen Krupp AG (a) ............................. 5,411 118,977
----------
799,576
HONG KONG -- (0.1%)
Dairy Farm International Holdings Ltd. ........... 8,000 9,600
----------
ITALY -- (2.9%)
Arnoldo Mondadori Editore SPA .................... 24,800 429,494
ENI SPA .......................................... 24,000 143,247
Tecnost SPA ...................................... 8,607 21,205
----------
593,946
</TABLE>
See notes to financial statements.
23
<PAGE> 25
VARIABLE INVESTORS SERIES TRUST
WORLD EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS -- (CONTINUED)
JAPAN -- (10.3%)
Amada Company Ltd. ............................... 19,000 $ 134,290
Bellsystem 24, Inc. .............................. 600 245,267
Canon, Inc. ...................................... 1,000 28,767
Citizen Watch Company ............................ 10,000 86,798
Fuji Heavy Industries Ltd. ....................... 45,000 347,442
Fujitsu .......................................... 3,000 60,387
Matsushita Communication Industrial Company Ltd. . 1,000 71,505
Nikon Corporation ................................ 1,000 16,368
Nippon Express Company Ltd. ...................... 10,000 59,932
Nippon Telegraph & Telephone Corporation ......... 6 69,935
Nippon Telegraph & Telephone Corporation ADR ..... 3,800 237,975
Oracle Corporation Japan ......................... 2,000 223,196
SMC Corporation .................................. 1,300 145,615
Taisho Pharmaceutical Company .................... 1,000 33,066
Tokyo Ohka Kogyo Company Ltd. .................... 5,600 159,246
Toshiba Corporation .............................. 13,000 92,742
Yamanouchi Pharmaceutical Company Ltd. ........... 2,000 76,548
----------
2,089,079
NETHERLANDS -- (4.4%)
Akzo Nobel N.V. .................................. 2,855 120,077
Heineken N.V. .................................... 3,525 180,415
Koninklijke Ahold N.V. ........................... 6,575 226,380
Unilever N.V. .................................... 1,679 113,108
VNU N.V. ......................................... 3,245 129,623
Wolters Kluwer N.V. .............................. 3,008 119,691
----------
889,294
SOUTH AFRICA -- (0.4%)
Anglo American Plc (a) ........................... 1,716 80,198
----------
SPAIN -- (0.5%)
Corporacion Bancaria de Espana (Argentaria) ...... 4,800 109,105
----------
SWEDEN -- (3.1%)
AstraZeneca Group Plc ............................ 4,510 175,852
Ericsson LM, Class B ............................. 6,600 211,863
Pharmacia & Upjohn, Inc. ......................... 2,251 124,628
Svenska Handelsbanken AB, Class A ................ 10,080 121,117
----------
633,460
SWITZERLAND -- (3.1%)
Edipresse S.A. ................................... 750 243,553
Lindt & Spruengli ................................ 86 218,996
Nestle S.A. ...................................... 63 113,474
Roche Holdings AG ................................ 5 51,379
----------
627,402
</TABLE>
See notes to financial statements.
24
<PAGE> 26
VARIABLE INVESTORS SERIES TRUST
WORLD EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS -- (CONTINUED)
UNITED KINGDOM -- (11.2%)
Allied Zurich AG ................................. 11,069 $ 139,144
Billiton Plc ..................................... 22,450 78,559
BP Amoco Plc ..................................... 10,112 181,067
British Aerospace Plc ............................ 4,000 26,040
British Telecommunications Plc ................... 5,637 94,362
Compass Group Plc ................................ 22,600 224,248
Cordiant Communications Group Plc ................ 58,700 161,458
HSBC Holdings Plc ................................ 6,400 233,444
Invensys Plc ..................................... 62,313 294,663
Pearson Plc ...................................... 15,265 310,152
Saatchi & Saatchi Plc ............................ 58,700 198,560
Shell Transport & Trading Company ................ 10,830 81,257
Smithkline Beecham Plc ........................... 11,486 149,365
Vodafone Group Plc ............................... 5,247 103,217
----------
2,275,536
UNITED STATES -- (48.1%)
24/7 Media, Inc. (a) ............................. 4,500 173,250
Abacus Direct Corporation (a) .................... 1,100 100,650
Action Performance Companies, Inc. (a) ........... 2,000 66,000
Alkermes, Inc. (a) ............................... 4,200 97,125
Annuity and Life Re (Holdings) Ltd. .............. 6,300 141,356
Applied Micro Circuits Corporation (a) ........... 3,500 287,875
Arch Chemicals, Inc. ............................. 5,000 121,563
Astec Industries, Inc. (a) ....................... 4,500 183,375
BancTec, Inc. (a) ................................ 2,900 52,019
Big Flower Holdings, Inc. (a) .................... 7,000 223,125
Boise Cascade Corporation ........................ 2,400 102,900
Bright Horizons, Inc. (a) ........................ 5,000 94,375
Brio Technology, Inc. (a) ........................ 9,200 184,000
Cambridge Technology Partners, Inc. (a) .......... 5,700 100,106
Capstar Broadcasting Corporation, Class A (a) .... 5,400 147,825
Chattem, Inc. (a) ................................ 3,700 117,706
Citadel Communications Corporation (a) ........... 4,600 166,463
CMP Group, Inc. .................................. 5,300 138,794
Coach USA, Inc. (a) .............................. 4,100 171,944
Cognex Corporation (a) ........................... 8,800 277,750
Cytec Industries, Inc. (a) ....................... 6,000 191,250
Diamond Technology Partners, Inc., Class A (a) ... 4,200 93,975
Eagle USA Airfreight, Inc. (a) ................... 6,300 267,356
Electronics for Imaging, Inc. (a) ................ 3,300 169,537
Emulex Corporation (a) ........................... 1,500 166,781
Entercom Communications Corporation (a) .......... 2,400 102,600
Forrester Research, Inc. (a) ..................... 3,800 95,000
Gadzooks, Inc. (a) ............................... 8,600 137,600
</TABLE>
See notes to financial statements.
25
<PAGE> 27
VARIABLE INVESTORS SERIES TRUST
WORLD EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C> <C>
COMMON STOCKS -- (CONTINUED)
UNITED STATES -- (CONTINUED)
Global Industries, Inc. (a) .................. 11,200 $ 143,500
Investors Financial Services Corporation ..... 5,500 220,000
ITC DeltaCom, Inc. (a) ....................... 6,200 173,600
ITT Educational Services, Inc. (a) ........... 4,100 106,856
Jones Apparel Group, Inc. (a) ................ 10,209 350,296
Kemet Corporation (a) ........................ 7,500 172,031
Labor Ready, Inc. (a) ........................ 7,800 253,500
Lamar Advertising Company, Class A (a) ....... 4,600 188,312
Lattice Semiconductor Corporation (a) ........ 2,500 155,625
Manitowoc Company, Inc. ...................... 3,700 154,013
Marimba, Inc. (a) ............................ 400 21,075
Mastech Corporation (a) ...................... 3,800 70,775
MAXIMUS, Inc. (a) ............................ 6,500 186,875
Media Metrix, Inc. (a) ....................... 600 31,950
MiniMed, Inc. (a) ............................ 1,300 100,019
National R.V. Holdings, Inc. (a) ............. 5,500 133,375
Newfield Exploration Company (a) ............. 8,100 230,344
Newpark Resource, Inc. (a) ................... 7,700 68,338
Nuevo Energy Company (a) ..................... 3,300 43,725
Osteotech, Inc. (a) .......................... 4,500 129,375
Pacific Gateway Exchange, Inc. (a) ........... 2,900 84,463
Pediatrix Medical Group (a) .................. 5,000 106,250
PMC-Sierra, Inc. (a) ......................... 5,800 341,837
Premiere Technologies, Inc. (a) .............. 16,200 186,300
QLogic Corporation (a) ....................... 1,700 224,400
Radiant Systems, Inc. (a) .................... 9,900 141,075
Roper Industries, Inc. ....................... 5,600 179,200
Safeguard Scientifics, Inc. (a) .............. 2,500 155,000
Silknet Software, Inc. (a) ................... 4,100 166,050
SportsLine USA, Inc. (a) ..................... 2,900 104,038
Superior Consultant Holdings Corporation (a).. 4,300 106,156
The Metzler Group, Inc. (a) .................. 4,100 113,263
The Scotts Company (a) ....................... 4,600 219,075
Transaction Network Services, Inc. (a) ....... 5,600 163,800
US LEC Corporation, Class A (a) .............. 6,500 146,250
Wind River Systems, Inc. (a) ................. 11,400 183,112
----------
9,726,153
TOTAL COMMON STOCKS -- (Cost $16,602,275) 97.4% 19,720,590
----------
RIGHTS
FRANCE -- (0.0%)
Vivendi ..................................... 1 1
----------
TOTAL RIGHTS -- (Cost $0) 0.0% 1
----------
</TABLE>
See notes to financial statements.
26
<PAGE> 28
VARIABLE INVESTORS SERIES TRUST
WORLD EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST MATURITY PRINCIPAL
AND TITLE OF ISSUE RATE DATE AMOUNT VALUE
------------------ ---- ---- ------ -----
<S> <C> <C> <C> <C> <C>
CORPORATE NOTES
NETHERLANDS -- (0.2%)
Tecnost
International
N.V. ... 4.487% 06/23/2004 $ 41,601 $ 43,544
-----------
TOTAL CORPORATE NOTES -- (Cost $62,550) 0.2% 43,544
-----------
SHARES
------
WARRANTS
BRAZIL -- (0.0%)
Vale Rio Doce Cia............ 12/31/1999 9,500 0
TOTAL WARRANTS -- (Cost $0) 0.0% 0
----- -----------
TOTAL INVESTMENTS -- (Cost $16,664,825) 97.6% 19,764,135
OTHER ASSETS LESS LIABILITIES -- 2.4% 478,323
----- -----------
NET ASSETS -- 100.0% $20,242,458
===== ===========
</TABLE>
(a) Non-income producing security.
See notes to financial statements.
27
<PAGE> 29
VARIABLE INVESTORS SERIES TRUST
WORLD EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
ANALYSIS OF INDUSTRY CLASSIFICATIONS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS VALUE
---------- -----
<S> <C> <C>
Advertising ........................ 2.7% $ 548,331
Aerospace & Defense ................ 0.1 26,040
Aluminum ........................... 0.4 78,559
Apparel & Textiles ................. 1.7 350,296
Automotive ......................... 2.2 454,728
Banks .............................. 2.3 463,666
Broadcasting/Publishing ............ 2.8 560,577
Building Materials & Construction .. 0.7 133,375
Business Services .................. 6.3 1,277,897
Chemicals .......................... 3.1 642,713
Computer Services .................. 2.3 462,799
Computer Software .................. 3.1 635,307
Consulting Services ................ 1.6 314,419
Consumer Electronics ............... 0.2 45,135
Consumer Services .................. 0.5 104,038
Cosmetics & Toiletries ............. 0.6 117,706
Diversified ........................ 1.5 294,663
Drugs .............................. 2.7 537,714
Drugs & Health Care ................ 1.9 376,223
Educational Services ............... 1.0 201,231
Electronics ........................ 5.1 1,024,065
Embedded Software .................. 0.9 183,113
Energy Sources ..................... 0.3 63,223
Fertilizer ......................... 1.1 219,075
Financial Services ................. 2.2 447,287
Food & Beverages ................... 5.6 1,136,164
Graphic-Image Processing ........... 0.8 169,538
Industrial Products & Equipment .... 2.3 471,253
Insurance .......................... 1.8 356,597
Investment Companies ............... 1.0 193,762
Machinery & Equipment .............. 3.0 617,292
Manufacturing ...................... 0.9 179,200
Medical Products & Supplies ........ 0.6 129,375
Medical Supplies & Services ........ 0.5 100,019
Networking Software ................ 0.8 166,781
Oil & Gas .......................... 4.6 934,151
Paper and Forest Products .......... 0.7 139,009
Petroleum Services ................. 0.4 81,257
Physician Practice Management ...... 0.5 106,250
Publishing ......................... 5.7 1,145,486
Radio/Television ................... 0.8 166,463
Retail-Specialty ................... 0.4 86,798
Retail-Trade ....................... 1.3 254,993
Semiconductor Manufacturing ........ 2.5 512,275
Software-Internet .................. 1.8 371,250
Software-Other ..................... 0.8 162,150
Systems Integrator ................. 1.0 194,081
Telecommunications ................. 10.1 2,036,572
Transportation ..................... 1.1 231,876
Utilities .......................... 1.3 259,363
----- -----------
TOTAL ............................ 97.6% $19,764,135
===== ===========
</TABLE>
See notes to financial statements.
28
<PAGE> 30
VARIABLE INVESTORS SERIES TRUST
GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS
BANKS -- (4.4%)
Chase Manhattan Corporation ...................... 7,500 $ 649,687
Fifth Third Bancorp .............................. 12,225 813,727
Firstar Corporation .............................. 30,000 840,000
Zions Bancorporation ............................. 8,000 508,000
----------
2,811,414
BROADCASTING -- (7.8%)
Cablevision Systems Corporation, Class A (a) ..... 7,500 525,000
CBS Corporation .................................. 21,000 912,187
Clear Channel Communications (a) ................. 13,500 930,656
Time Warner, Inc. ................................ 26,500 1,947,750
Viacom, Inc. (a) ................................. 15,500 683,938
----------
4,999,531
COMMUNICATION EQUIPMENT -- (3.6%)
Lucent Technologies, Inc. ........................ 19,500 1,315,031
Tellabs, Inc. (a) ................................ 15,000 1,013,438
----------
2,328,469
COMPUTERS & BUSINESS EQUIPMENT -- (1.8%)
International Business Machines Corporation ...... 9,000 1,163,250
----------
COMPUTER RELATED -- (17.5%)
Cisco Systems, Inc. (a) .......................... 38,000 2,448,625
Dell Computer Corporation (a) .................... 53,000 1,961,000
EMC Corporation (a) .............................. 40,000 2,200,000
Intel Corporation ................................ 39,000 2,320,500
Lexmark International Group, Inc., Class A (a) ... 6,000 396,375
Sun Microsystems, Inc. (a) ....................... 28,000 1,928,500
----------
11,255,000
COMPUTER SOFTWARE -- (7.7%)
America Online, Inc. ............................. 21,500 2,375,750
Microsoft Corporation (a) ........................ 28,500 2,570,344
----------
4,946,094
CONSUMER PRODUCTS -- (1.5%)
Clorox Company ................................... 6,000 640,875
Dial Corporation ................................. 9,500 353,281
----------
994,156
COSMETICS & TOILETRIES -- (1.3%)
CVS Corporation .................................. 8,546 433,710
Walgreen Company ................................. 14,000 411,250
----------
844,960
DIVERSIFIED MANUFACTURING -- (5.8%)
AlliedSignal, Inc. ............................... 5,000 315,000
Illinois Tool Works, Inc. ........................ 8,000 656,000
Tyco International Ltd. .......................... 22,500 2,131,875
United Technologies Corporation .................. 9,000 645,188
----------
3,748,063
</TABLE>
See notes to financial statements.
29
<PAGE> 31
VARIABLE INVESTORS SERIES TRUST
GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS -- (CONTINUED)
DRUGS -- (8.6%)
Merck & Company, Inc. .................................................... 7,500 $ 555,000
Pfizer, Inc. ............................................................. 18,000 1,975,500
Schering-Plough Corporation .............................................. 32,000 1,696,000
Warner Lambert Company ................................................... 18,500 1,283,437
----------
5,509,937
ELECTRICAL EQUIPMENT -- (1.5%)
General Electric Company ................................................. 8,500 960,500
----------
FINANCIAL SERVICES -- (7.6%)
American Express Company ................................................. 5,000 650,625
Charles Schwab Corporation ............................................... 6,500 714,187
Citigroup, Inc. .......................................................... 28,500 1,353,750
Federal Home Loan Mortgage Corporation ................................... 14,500 841,000
Federal National Mortgage Association .................................... 13,500 923,062
FINOVA Group, Inc. ....................................................... 8,500 447,313
----------
4,929,937
FOOD RETAILERS -- (1.4%)
Safeway, Inc. (a) ........................................................ 18,500 915,750
----------
INSURANCE -- (2.9%)
American International Group, Inc. ....................................... 16,012 1,874,405
----------
MACHINERY & EQUIPMENT -- (1.0%)
Ingersoll-Rand Company ................................................... 10,000 646,250
----------
MEDICAL PRODUCTS & SUPPLIES -- (3.1%)
Guidant Corporation ...................................................... 19,000 977,313
Medtronic, Inc. .......................................................... 13,500 1,051,312
----------
2,028,625
MEDICAL SUPPLIES & SERVICES -- (1.3%)
Cardinal Health, Inc. .................................................... 13,000 833,625
----------
PRINTING & PUBLISHING -- (3.5%)
Omnicom Group ............................................................ 28,000 2,240,000
----------
RETAIL -- (4.0%)
Dayton Hudson Corporation ................................................ 8,000 520,000
Wal-Mart Stores, Inc. .................................................... 43,000 2,074,750
----------
2,594,750
RETAIL-DISCOUNT -- (0.5%)
TJX Companies, Inc. ...................................................... 9,500 316,469
----------
</TABLE>
See notes to financial statements.
30
<PAGE> 32
VARIABLE INVESTORS SERIES TRUST
GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C> <C>
COMMON STOCKS -- (CONTINUED)
RETAIL-SPECIALTY -- (5.5%)
Costco Companies, Inc. ................................................... 8,500 $ 680,531
Gap, Inc. ................................................................ 28,500 1,435,687
Home Depot, Inc. ......................................................... 12,500 805,469
Staples, Inc. (a) ........................................................ 20,500 634,219
-----------
3,555,906
TELECOMMUNICATIONS -- (5.7%)
AT&T Corporation ......................................................... 29,250 1,632,516
MCI WorldCom, Inc. (a) ................................................... 16,500 1,420,031
Nokia Oyj ADR ............................................................ 6,500 595,156
-----------
3,647,703
TOTAL COMMON STOCKS -- (Cost $41,876,215) 98.0% 63,144,794
-----------
</TABLE>
<TABLE>
<CAPTION>
INTEREST MATURITY MATURITY
RATE DATE AMOUNT
---- ---- ------
<S> <C> <C> <C> <C> <C>
SHORT TERM INVESTMENT
REPURCHASE AGREEMENT -- (2.1%)
State Street Bank and Trust Company (b) ... 3.750% 07/01/1999 $ 1,370,143 1,370,000
-----------
TOTAL SHORT TERM INVESTMENT -- (Cost $1,370,000) 2.1% 1,370,000
-----------
TOTAL INVESTMENTS -- (Cost $43,246,215) 100.1% 64,514,794
LIABILITIES LESS OTHER ASSETS- (0.1)% (75,432)
----- -----------
NET ASSETS -- 100.0% $64,439,362
===== ===========
</TABLE>
(a) Non-income producing security.
(b) The agreement with State Street Bank and Trust Company, dated 6/30/99, is
fully collateralized by a United States Treasury Bond, 8.125%, 08/15/19,
with a value of $1,402,611.
See notes to financial statements.
31
<PAGE> 33
VARIABLE INVESTORS SERIES TRUST
MATRIX EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS
AEROSPACE & DEFENSE -- (0.6%)
General Dynamics Corporation ............................................. 2,200 $ 150,700
-----------
AIRLINES -- (0.0%)
UAL Corporation (a) ...................................................... 100 6,500
US Airways Group, Inc. ................................................... 100 4,356
-----------
10,856
ALUMINUM -- (1.6%)
Alcoa, Inc. .............................................................. 6,000 371,250
-----------
AUTOMOTIVE -- (2.0%)
Ford Motor Company ....................................................... 8,300 468,431
-----------
BANKS -- (5.8%)
Bank One Corporation ..................................................... 200 11,912
BankAmerica Corporation .................................................. 2,200 161,287
Chase Manhattan Corporation .............................................. 4,800 415,800
Dime Bancorp, Inc. ....................................................... 300 6,038
J.P. Morgan & Company, Inc. .............................................. 3,100 435,550
Pacific Century Financial Corporation .................................... 300 6,469
UnionBanCal Corporation .................................................. 8,600 310,675
Wells Fargo & Company .................................................... 500 21,375
-----------
1,369,106
BROADCASTING -- (0.2%)
Time Warner, Inc. ........................................................ 700 51,450
-----------
BROADCASTING/PUBLISHING -- (0.8%)
Tribune Company .......................................................... 2,100 182,963
-----------
CHEMICALS & PLASTICS -- (1.8%)
Du Pont (E.I.) de Nemours & Company ...................................... 500 34,156
FMC Corporation (a) ...................................................... 3,300 225,431
Octel Corporation (a) .................................................... 600 7,500
Solutia, Inc. ............................................................ 7,500 159,844
-----------
426,931
COMMERCIAL SERVICES -- (1.2%)
Nielsen Media Research, Inc. ............................................. 100 2,925
SABRE Group Holdings, Inc., Class A (a) .................................. 100 6,875
Viad Corporation ......................................................... 8,700 269,156
-----------
278,956
COMMUNICATION EQUIPMENT -- (4.4%)
Lucent Technologies, Inc. ................................................ 9,400 633,913
Tellabs, Inc. (a) ........................................................ 6,100 412,131
-----------
1,046,044
</TABLE>
See notes to financial statements.
32
<PAGE> 34
VARIABLE INVESTORS SERIES TRUST
MATRIX EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS -- (CONTINUED)
COMPUTERS & BUSINESS EQUIPMENT -- (6.6%)
Apple Computer, Inc. ..................................................... 8,400 $ 389,025
Gateway 2000, Inc. (a) ................................................... 1,200 70,800
Hewlett-Packard Company .................................................. 4,000 402,000
International Business Machines Corporation .............................. 5,500 710,875
----------
1,572,700
COMPUTER RELATED -- (6.1%)
Cisco Systems, Inc. (a) .................................................. 10,100 650,819
Dell Computer Corporation (a) ............................................ 2,700 99,900
Intel Corporation ........................................................ 5,000 297,500
Lexmark International Group, Inc., Class A (a) ........................... 4,400 290,675
Sun Microsystems, Inc. (a) ............................................... 200 13,775
Unisys Corporation (a) ................................................... 2,600 101,237
----------
1,453,906
COMPUTER SOFTWARE -- (4.9%)
America Online, Inc. ..................................................... 1,600 176,800
Microsoft Corporation (a) ................................................ 11,100 1,001,081
----------
1,177,881
CONSUMER PRODUCTS -- (1.2%)
Fortune Brands, Inc. ..................................................... 7,000 289,625
----------
COSMETICS & TOILETRIES -- (0.0%)
Alberto-Culver Company, Class A .......................................... 300 7,988
----------
DIVERSIFIED MANUFACTURING -- (0.5%)
Tyco International Ltd. .................................................. 300 28,425
United Technologies Corporation .......................................... 1,200 86,025
----------
114,450
DRUGS -- (4.9%)
Abbott Laboratories ...................................................... 300 13,650
Amgen, Inc. (a) .......................................................... 4,000 243,500
Bristol-Myers Squibb Company ............................................. 4,600 324,012
Eli Lilly & Company ...................................................... 700 50,138
Merck & Company, Inc. .................................................... 3,500 259,000
Nu Skin Enterprises, Inc. (a) ............................................ 400 7,975
Pfizer, Inc. ............................................................. 1,800 197,550
Schering-Plough Corporation .............................................. 1,100 58,300
----------
1,154,125
ELECTRIC UTILITIES -- (2.5%)
GPU, Inc. ................................................................ 8,400 354,375
PP&L Resources, Inc. ..................................................... 8,000 246,000
----------
600,375
ELECTRICAL EQUIPMENT -- (2.8%)
General Electric Company ................................................. 5,800 655,400
----------
</TABLE>
See notes to financial statements.
33
<PAGE> 35
VARIABLE INVESTORS SERIES TRUST
MATRIX EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS -- (CONTINUED)
ELECTRONICS -- (2.3%)
Altera Corporation (a) ................................................... 7,400 $ 272,412
Applied Materials, Inc. (a) .............................................. 3,500 258,563
Xilinx, Inc. (a) ......................................................... 100 5,725
----------
536,700
FINANCIAL SERVICES -- (7.8%)
AMRESCO, Inc. ............................................................ 800 5,150
Astoria Financial Corporation ............................................ 100 4,394
Citigroup, Inc. .......................................................... 15,150 719,625
Federal National Mortgage Association .................................... 5,200 355,550
Fleet Financial Group, Inc. .............................................. 7,700 341,687
Merrill Lynch & Company, Inc. ............................................ 4,200 335,737
The PMI Group, Inc. ...................................................... 1,500 94,219
----------
1,856,362
FOOD & BEVERAGES -- (3.9%)
Anheuser-Busch Companies, Inc. ........................................... 2,700 191,531
Coca-Cola Company ........................................................ 3,400 212,500
General Mills, Inc. ...................................................... 1,700 136,638
IBP, Inc. ................................................................ 6,100 144,875
Interstate Bakeries Corporation .......................................... 4,000 89,750
Quaker Oats Company ...................................................... 2,200 146,025
----------
921,319
FOOD RETAILERS -- (0.1%)
Safeway, Inc. (a) ........................................................ 400 19,800
----------
HEALTH CARE -- (1.3%)
Columbia / HCA Healthcare Corporation .................................... 12,700 289,719
Triad Hospitals, Inc. (a) ................................................ 800 10,800
----------
300,519
HOTELS & RESTAURANTS -- (0.7%)
Tricon Global Restaurants, Inc. (a) ...................................... 3,200 173,200
----------
HOUSEHOLD PRODUCTS -- (2.0%)
Kroger Company (a) ....................................................... 3,000 83,812
Lancaster Colony Corporation ............................................. 200 6,900
Premark International, Inc. .............................................. 6,400 240,000
Procter & Gamble Company ................................................. 1,600 142,800
----------
473,512
INSURANCE -- (1.4%)
American International Group, Inc. ....................................... 1,300 152,181
Loews Corporation ........................................................ 2,200 174,075
Reliance Group Holdings, Inc. ............................................ 1,000 7,438
----------
333,694
INVESTMENT COMPANIES -- (1.2%)
Lehman Brothers Holdings, Inc. ........................................... 4,700 292,575
----------
</TABLE>
See notes to financial statements.
34
<PAGE> 36
VARIABLE INVESTORS SERIES TRUST
MATRIX EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS -- (CONTINUED)
MANUFACTURING -- (0.3%)
York International Corporation ........................................... 1,900 $ 81,344
--------
MEDICAL PRODUCTS & SUPPLIES -- (0.8%)
C.R. Bard, Inc. .......................................................... 4,000 191,250
--------
MEDICAL SUPPLIES & SERVICES -- (1.4%)
DENTSPLY International, Inc. ............................................. 300 8,400
Johnson & Johnson ........................................................ 3,300 323,400
--------
331,800
OIL & GAS -- (3.4%)
Coastal Corporation ...................................................... 8,700 348,000
Exxon Corporation ........................................................ 5,200 401,050
Mobil Corporation ........................................................ 600 59,400
--------
808,450
PAPER AND FOREST PRODUCTS -- (1.1%)
Boise Cascade Corporation ................................................ 2,500 107,188
Georgia-Pacific Group .................................................... 3,200 151,600
--------
258,788
PETROLEUM SERVICES -- (0.2%)
Tidewater, Inc. .......................................................... 1,600 48,800
--------
PUBLISHING SERVICES -- (0.9%)
R.R. Donnelley & Sons Company ............................................ 5,700 211,256
--------
REAL ESTATE -- (0.1%)
Meditrust Companies ...................................................... 600 7,837
Rouse Company ............................................................ 300 7,613
--------
15,450
RETAIL -- (3.7%)
Best Buy Company, Inc. (a) ............................................... 900 60,750
Wal-Mart Stores, Inc. .................................................... 17,200 829,900
--------
890,650
RETAIL-DISCOUNT -- (1.3%)
TJX Companies, Inc. ...................................................... 9,200 306,475
--------
RETAIL-SPECIALTY -- (1.7%)
Costco Companies, Inc. ................................................... 100 8,006
Home Depot, Inc. ......................................................... 2,500 161,094
Intimate Brands, Inc. .................................................... 3,255 154,206
Toys "R" Us, Inc. (a) .................................................... 4,300 88,956
--------
412,262
RETAIL-TRADE -- (2.7%)
Federated Department Stores, Inc. (a) .................................... 7,100 375,856
May Department Stores Company ............................................ 6,300 257,513
--------
633,369
</TABLE>
See notes to financial statements.
35
<PAGE> 37
VARIABLE INVESTORS SERIES TRUST
MATRIX EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C> <C>
COMMON STOCKS -- (CONTINUED)
TELECOMMUNICATIONS -- (10.2%)
Ameritech Corporation .................................................... 700 $ 51,450
AT&T Corporation ......................................................... 12,150 678,122
Bell Atlantic Corporation ................................................ 5,800 379,175
BellSouth Corporation .................................................... 6,000 281,250
GTE Corporation .......................................................... 300 22,725
MCI WorldCom, Inc. (a) ................................................... 5,900 507,769
SBC Communications, Inc. ................................................. 3,600 208,800
U.S. West, Inc. .......................................................... 5,200 305,500
-----------
2,434,791
TOBACCO -- (0.5%)
Philip Morris Companies, Inc. ............................................ 2,500 100,469
Universal Corporation .................................................... 300 8,531
-----------
109,000
TRANSPORTATION -- (0.3%)
Burlington Northern Santa FeCorporation .................................. 2,200 68,200
-----------
UTILITIES -- (1.8%)
PECO Energy Company ...................................................... 4,100 171,688
UtiliCorp United, Inc. ................................................... 10,600 257,712
-----------
429,400
TOTAL COMMON STOCKS -- (Cost $20,172,213) 99.0% 23,522,103
-----------
</TABLE>
<TABLE>
<CAPTION>
INTEREST
RATE
----
<S> <C> <C> <C> <C>
MUTUAL FUNDS -- (1.0%)
Dreyfus Cash Management Plus (b) .......... 4.830% 241,137 241,137
-----------
TOTAL MUTUAL FUNDS -- (Cost $241,137) 1.0% 241,137
-----------
TOTAL INVESTMENTS -- (Cost $20,413,350) 100.0% 23,763,240
OTHER ASSETS LESS LIABILITIES -- 0.0% 2,361
----- -----------
NET ASSETS -- 100.0% $23,765,601
===== ===========
</TABLE>
(a) Non-income producing security.
(b) Interest rate shown is the 7 day yield as of June 30, 1999.
See notes to financial statements.
36
<PAGE> 38
VARIABLE INVESTORS SERIES TRUST
GROWTH & INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS
AEROSPACE & DEFENSE -- (2.4%)
Gulfstream Aerospace Corporation (a) ..................................... 3,200 $ 216,200
Litton Industries, Inc. (a) .............................................. 3,300 236,775
Raytheon Company, Class A ................................................ 4,350 299,606
----------
752,581
ALUMINUM -- (1.8%)
Alcoa, Inc. .............................................................. 8,948 553,658
----------
AUTOMOTIVE -- (2.9%)
Dana Corporation ......................................................... 3,100 142,794
Ford Motor Company ....................................................... 10,600 598,237
Meritor Automotive, Inc. ................................................. 6,200 158,100
----------
899,131
BANKS -- (8.2%)
AmSouth Bancorporation ................................................... 4,800 111,300
Bank One Corporation ..................................................... 9,200 547,975
Comerica, Inc. ........................................................... 15,100 897,506
Compass Bancshares, Inc. ................................................. 4,600 125,350
Golden West Financial Corporation ........................................ 2,900 284,200
UnionBanCal Corporation .................................................. 4,900 177,012
Wachovia Corporation ..................................................... 4,700 402,144
----------
2,545,487
BUILDING MATERIALS & CONSTRUCTION -- (2.4%)
American Standard Companies, Inc. (a) .................................... 7,000 336,000
USG Corporation .......................................................... 7,650 428,400
----------
764,400
BUSINESS SERVICES -- (0.7%)
WPP Group Plc ADR ........................................................ 25,900 219,270
----------
CAPITAL EQUIPMENT -- (3.6%)
Emerson Electric Company ................................................. 2,500 157,188
Federal Mogul Corporation ................................................ 10,600 551,200
ITT Industries, Inc. ..................................................... 4,300 163,937
Navistar International Corporation (a) ................................... 5,200 260,000
----------
1,132,325
CHEMICALS -- (1.7%)
Ferro Corporation ........................................................ 9,100 250,250
Rhone Poulenc S.A. ADR, Series A ......................................... 5,950 274,444
----------
524,694
COMPUTERS & BUSINESS EQUIPMENT -- (4.1%)
Hewlett-Packard Company .................................................. 4,200 422,100
International Business Machines Corporation .............................. 5,200 672,100
Pitney Bowes, Inc. ....................................................... 3,000 192,750
----------
1,286,950
</TABLE>
See notes to financial statements.
37
<PAGE> 39
VARIABLE INVESTORS SERIES TRUST
GROWTH & INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS -- (CONTINUED)
COMPUTER RELATED -- (4.1%)
Intel Corporation ........................................................ 11,200 $ 666,400
Unisys Corporation (a) ................................................... 15,400 599,638
----------
1,266,038
COMPUTER SOFTWARE -- (1.9%)
BMC Software, Inc. (a) ................................................... 11,100 599,400
----------
CONSTRUCTION MATERIALS -- (1.1%)
Harsco Corporation ....................................................... 9,100 291,200
Kennametal, Inc. ......................................................... 1,700 52,700
----------
343,900
DIVERSIFIED MANUFACTURING -- (1.9%)
AlliedSignal, Inc. ....................................................... 4,400 277,200
Minnesota Mining & Manufacturing Company ................................. 3,700 321,669
----------
598,869
ELECTRIC UTILITIES -- (2.0%)
Allegheny Energy, Inc. ................................................... 6,600 211,612
American Electric Power Company, Inc. .................................... 4,100 154,006
Illinova Corporation ..................................................... 4,500 122,625
Wisconsin Energy Corporation ............................................. 5,800 145,363
----------
633,606
ENVIRONMENTAL -- (2.4%)
Allied Waste Industries, Inc. (a) ........................................ 9,500 187,625
Waste Management, Inc. ................................................... 10,400 559,000
----------
746,625
FINANCIAL SERVICES -- (8.9%)
Citigroup, Inc. .......................................................... 2,900 137,750
Countrywide Credit Industries, Inc. ...................................... 9,600 410,400
FINOVA Group, Inc. ....................................................... 3,800 199,975
Household International, Inc. ............................................ 9,600 454,800
MBIA, Inc. ............................................................... 7,400 479,150
Terra Nova (Bermuda) Holdings, Ltd., Class A ............................. 11,700 315,169
The PMI Group, Inc. ...................................................... 8,300 521,344
Waddell & Reed Financial, Inc., Class A .................................. 3,800 104,262
Washington Mutual, Inc. .................................................. 3,900 137,962
----------
2,760,812
FOOD & BEVERAGES -- (3.0%)
Anheuser-Busch Companies, Inc. ........................................... 3,000 212,813
Corn Products International, Inc. ........................................ 4,800 146,100
H.J. Heinz Company ....................................................... 2,700 135,338
Keebler Foods Company (a) ................................................ 14,900 452,587
----------
946,838
HEALTH CARE -- (2.2%)
Baxter International, Inc. ............................................... 5,700 345,562
Trigon Healthcare, Inc. (a) .............................................. 9,050 329,194
----------
674,756
</TABLE>
See notes to financial statements.
38
<PAGE> 40
VARIABLE INVESTORS SERIES TRUST
GROWTH & INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS -- (CONTINUED)
HOUSEHOLD PRODUCTS -- (0.7%)
Premark International, Inc. .............................................. 5,600 $ 210,000
----------
INDUSTRIAL MANUFACTURING & PROCESSING -- (2.1%)
Eaton Corporation ........................................................ 2,700 248,400
UNOVA, Inc. (a) .......................................................... 25,500 404,813
----------
653,213
INSURANCE -- (2.1%)
Ace, Ltd. ................................................................ 8,700 245,775
MGIC Investment Corporation .............................................. 8,200 398,725
----------
644,500
INVESTMENT COMPANIES -- (1.9%)
Lehman Brothers Holdings, Inc. ........................................... 9,800 610,050
----------
MACHINERY & EQUIPMENT -- (2.2%)
Case Corporation ......................................................... 4,000 192,500
Ingersoll-Rand Company ................................................... 7,500 484,688
----------
677,188
MEDICAL SUPPLIES & SERVICES -- (0.8%)
Becton, Dickinson & Company .............................................. 8,100 243,000
----------
OIL & GAS -- (7.5%)
Amerada Hess Corporation ................................................. 5,500 327,250
BP Amoco Plc ADR ......................................................... 5,602 607,817
Royal Dutch Petroleum Company ADR ........................................ 16,200 976,050
Total S.A. ADR ........................................................... 3,600 231,975
Union Pacific Resources Group, Inc. ...................................... 11,500 187,594
----------
2,330,686
OIL SERVICES -- (1.4%)
Baker Hughes, Inc. ....................................................... 7,300 244,550
Halliburton Company ...................................................... 4,000 181,000
----------
425,550
PRINTING & PUBLISHING -- (0.5%)
The New York Times Company ............................................... 4,100 150,931
----------
REAL ESTATE -- (0.2%)
Equity Residential Properties Trust ...................................... 1,300 58,581
----------
RETAIL -- (0.4%)
OfficeMax, Inc. (a) ...................................................... 11,900 142,800
----------
RETAIL-DISCOUNT -- (2.0%)
Consolidated Stores Corporation (a) ...................................... 5,600 151,200
TJX Companies, Inc. ...................................................... 14,300 476,369
----------
627,569
RETAIL-SPECIALTY -- (1.7%)
Ross Stores, Inc. ........................................................ 10,400 523,900
----------
</TABLE>
See notes to financial statements.
39
<PAGE> 41
VARIABLE INVESTORS SERIES TRUST
GROWTH & INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C> <C>
COMMON STOCKS -- (CONTINUED)
RETAIL-TRADE -- (4.0%)
Federated Department Stores, Inc. (a) .................................... 7,450 $ 394,384
May Department Stores Company ............................................ 11,200 457,800
Payless Shoesource, Inc. (a) ............................................. 2,285 122,248
Saks, Inc. (a) ........................................................... 4,600 132,825
Sears, Roebuck & Company ................................................. 3,400 151,512
-----------
1,258,769
TELECOMMUNICATIONS -- (5.1%)
Ameritech Corporation .................................................... 6,900 507,150
Bell Atlantic Corporation ................................................ 10,780 704,742
SBC Communications, Inc. ................................................. 6,400 371,200
-----------
1,583,092
TOBACCO -- (2.0%)
Philip Morris Companies, Inc. ............................................ 15,600 626,925
-----------
TRANSPORTATION -- (0.5%)
Burlington Northern Santa Fe Corporation ................................. 4,800 148,800
-----------
TOTAL COMMON STOCKS -- (Cost $23,714,471) 90.4% 28,164,894
-----------
PREFERRED STOCKS
REAL ESTATE -- (0.5%)
Equity Residential Properties Trust, Series G ........................... 6,300 150,019
-----------
TOTAL PREFERRED STOCKS -- (Cost $159,102) 0.5% 150,019
-----------
</TABLE>
<TABLE>
<CAPTION>
INTEREST MATURITY PRINCIPAL
RATE DATE AMOUNT
---- ---- ------
<S> <C> <C> <C> <C> <C>
CONVERTIBLE BOND
ELECTRONICS -- (0.4%)
National Semiconductor Corporation ........ 6.500% 10/01/2002 $ 140,000 133,000
--------
TOTAL CONVERTIBLE BOND -- (Cost $133,144) 0.4% 133,000
--------
</TABLE>
<TABLE>
<CAPTION>
MATURITY
AMOUNT
------
<S> <C> <C> <C> <C> <C>
SHORT TERM INVESTMENT
REPURCHASE AGREEMENT -- (8.6%)
State Street Bank and Trust Company (b) ... 4.700% 07/01/1999 2,668,348 2,668,000
-----------
TOTAL SHORT TERM INVESTMENT -- (Cost $2,668,000) 8.6% 2,668,000
-----------
TOTAL INVESTMENTS -- (Cost $26,674,717) 99.9% 31,115,913
OTHER ASSETS LESS LIABILITIES -- 0.1% 35,460
----- -----------
NET ASSETS -- 100.0% $31,151,373
===== ===========
</TABLE>
(a) Non-income producing security.
(b) The agreement with State Street Bank and Company, dated 6/30/99, is fully
collateralized by a United States Treasury Note, 5.625%, 11/30/99, with a
value of $2,722,545.
See notes to financial statements.
40
<PAGE> 42
VARIABLE INVESTORS SERIES TRUST
MULTIPLE STRATEGIES PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS
BANKS -- (3.3%)
Chase Manhattan Corporation .............................................. 4,000 $ 346,500
Fifth Third Bancorp ...................................................... 6,760 449,963
Firstar Corporation ...................................................... 17,700 495,600
Zions Bancorporation ..................................................... 4,300 273,050
-----------
1,565,113
BROADCASTING -- (5.8%)
Cablevision Systems Corporation, Class A (a) ............................. 3,800 266,000
CBS Corporation .......................................................... 11,800 512,562
Clear Channel Communications (a) ......................................... 7,900 544,606
Time Warner, Inc. ........................................................ 15,100 1,109,850
Viacom, Inc. (a) ......................................................... 8,300 366,238
-----------
2,799,256
COMMUNICATION EQUIPMENT -- (2.8%)
Lucent Technologies, Inc. ................................................ 11,000 741,812
Tellabs, Inc. (a) ........................................................ 8,700 587,794
-----------
1,329,606
COMPUTERS & BUSINESS EQUIPMENT -- (1.3%)
International Business Machines Corporation .............................. 5,000 646,250
-----------
COMPUTER RELATED -- (12.9%)
Cisco Systems, Inc. (a) .................................................. 21,100 1,359,631
Dell Computer Corporation (a) ............................................ 29,700 1,098,900
EMC Corporation (a) ...................................................... 20,400 1,122,000
Intel Corporation ........................................................ 21,200 1,261,400
Lexmark International Group, Inc., Class A (a) ........................... 3,900 257,644
Sun Microsystems, Inc. (a) ............................................... 15,400 1,060,675
-----------
6,160,250
COMPUTER SOFTWARE -- (5.8%)
America Online, Inc. ..................................................... 12,300 1,359,150
Microsoft Corporation (a) ................................................ 15,920 1,435,785
-----------
2,794,935
CONSUMER PRODUCTS -- (1.3%)
Clorox Company ........................................................... 3,800 405,888
Dial Corporation ......................................................... 5,200 193,375
-----------
599,263
COSMETICS & TOILETRIES -- (1.1%)
CVS Corporation .......................................................... 4,918 249,589
Walgreen Company ......................................................... 9,000 264,375
-----------
513,964
DIVERSIFIED MANUFACTURING -- (4.4%)
AlliedSignal, Inc. ....................................................... 2,700 170,100
Illinois Tool Works, Inc. ................................................ 4,400 360,800
Tyco International Ltd. .................................................. 12,600 1,193,850
United Technologies Corporation .......................................... 5,600 401,450
-----------
2,126,200
</TABLE>
See notes to financial statements.
41
<PAGE> 43
VARIABLE INVESTORS SERIES TRUST
MULTIPLE STRATEGIES PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C>
COMMON STOCKS -- (CONTINUED)
DRUGS -- (6.5%)
Merck & Company, Inc. .................................................... 4,400 $ 325,600
Pfizer, Inc. ............................................................. 10,420 1,143,595
Schering-Plough Corporation .............................................. 17,400 922,200
Warner Lambert Company ................................................... 10,600 735,375
----------
3,126,770
ELECTRICAL EQUIPMENT -- (1.0%)
General Electric Company ................................................. 4,200 474,600
----------
FINANCIAL SERVICES -- (5.8%)
American Express Company ................................................. 2,600 338,325
Charles Schwab Corporation ............................................... 3,500 384,562
Citigroup, Inc. .......................................................... 16,620 789,450
Federal Home Loan Mortgage Corporation ................................... 8,850 513,300
Federal National Mortgage Association .................................... 7,400 505,975
FINOVA Group, Inc. ....................................................... 5,120 269,440
----------
2,801,052
FOOD RETAILERS -- (1.1%)
Safeway, Inc. (a) ........................................................ 10,500 519,750
----------
INSURANCE -- (2.0%)
American International Group, Inc. ....................................... 8,353 977,823
----------
MACHINERY & EQUIPMENT -- (0.7%)
Ingersoll-Rand Company ................................................... 5,200 336,050
----------
MEDICAL PRODUCTS & SUPPLIES -- (2.4%)
Guidant Corporation ...................................................... 11,400 586,387
Medtronic, Inc. .......................................................... 7,300 568,488
----------
1,154,875
MEDICAL SUPPLIES & SERVICES -- (1.1%)
Cardinal Health, Inc. .................................................... 8,115 520,374
----------
PRINTING & PUBLISHING -- (2.6%)
Omnicom Group ............................................................ 15,500 1,240,000
----------
RETAIL -- (3.1%)
Dayton Hudson Corporation ................................................ 5,000 325,000
Wal-Mart Stores, Inc. .................................................... 24,000 1,158,000
----------
1,483,000
RETAIL-DISCOUNT -- (0.4%)
TJX Companies, Inc. ...................................................... 5,200 173,225
----------
RETAIL-SPECIALTY -- (5.0%)
Costco Companies, Inc. ................................................... 8,793 703,989
Gap, Inc. ................................................................ 16,575 834,966
Home Depot, Inc. ......................................................... 7,200 463,950
Staples, Inc. (a) ........................................................ 12,500 386,719
----------
2,389,624
</TABLE>
See notes to financial statements.
42
<PAGE> 44
VARIABLE INVESTORS SERIES TRUST
MULTIPLE STRATEGIES PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C> <C>
COMMON STOCKS -- (CONTINUED)
TELECOMMUNICATIONS -- (4.3%)
AT&T Corporation ......................................................... 15,700 $ 876,256
MCI WorldCom, Inc. (a) ................................................... 9,000 774,562
Nokia Oyj ADR ............................................................ 4,300 393,719
-----------
2,044,537
TOTAL COMMON STOCKS -- (Cost $23,822,503) 74.7% 35,776,517
-----------
</TABLE>
<TABLE>
<CAPTION>
INTEREST MATURITY PRINCIPAL
RATE DATE AMOUNT
---- ---- ------
<S> <C> <C> <C> <C>
GOVERNMENT AND AGENCY SECURITIES
FEDERAL AGENCIES -- (9.2%)
Federal Home Loan Bank .................... 4.875% 01/22/2002 $ 2,000,000 1,958,740
Federal National Mortgage Association ..... 5.750% 06/15/2005 1,500,000 1,463,430
6.000% 05/15/2008 1,000,000 969,840
---------
4,392,010
U.S. GOVERNMENT SECURITIES -- (3.4%)
United States Treasury Bond ............... 7.250% 08/15/2022 1,000,000 1,119,690
United States Treasury Notes .............. 6.500% 05/31/2001 500,000 508,750
---------
1,628,440
---------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL GOVERNMENT AND AGENCY SECURITIES -- (Cost $6,081,778) 12.6% 6,020,450
---------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
CORPORATE BOND
INDUSTRIALS -- (0.6%)
BP America, Inc. .......................... 8.500% 04/15/2001 250,000 260,115
-------
TOTAL CORPORATE BOND -- (Cost $250,929) 0.6% 260,115
-------
</TABLE>
<TABLE>
<CAPTION>
MATURITY
AMOUNT
------
<S> <C> <C> <C> <C> <C>
SHORT TERM INVESTMENT
REPURCHASE AGREEMENT -- (11.9%)
State Street Bank and Trust Company (b) ... 3.750% 07/01/1999 5,719,596 5,719,000
-----------
TOTAL SHORT TERM INVESTMENT -- (Cost $5,719,000) 11.9% 5,719,000
-----------
TOTAL INVESTMENTS -- (Cost $35,874,210) 99.8% 47,776,082
OTHER ASSETS LESS LIABILITIES -- 0.2% 110,287
----- -----------
NET ASSETS -- 100.0% $47,886,369
===== ===========
</TABLE>
(a) Non-income producing security.
(b) The agreement with State Street Bank and Trust Company, dated 6/30/99, is
fully collateralized by a United States Treasury Bond, 8.125%, 08/15/19,
with a value of $5,837,068.
See notes to financial statements.
43
<PAGE> 45
VARIABLE INVESTORS SERIES TRUST
HIGH INCOME BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST MATURITY PRINCIPAL
AND TITLE OF ISSUE RATE DATE AMOUNT VALUE
------------------ ---- ---- ------ -----
<S> <C> <C> <C> <C>
CORPORATE BONDS
AUTOMOTIVE -- (2.5%)
Accuride Corporation ...................... 9.250% 02/01/2008 $ 75,000 $ 74,250
Aftermarket Technology Company ............ 12.000% 08/01/2004 56,000 58,660
American Axle & Manufacturing, Inc. ....... 9.750% 03/01/2009 100,000 100,750
Collins & Aikman Products Company ......... 11.500% 04/15/2006 100,000 101,500
JL French Automotive Castings (b) ......... 11.500% 06/01/2009 50,000 51,250
Transportation Manufacturing Operations (b) 11.250% 05/01/2009 75,000 75,375
----------
461,785
BANKS -- (1.1%)
GS Escrow Corporation ..................... 7.125% 08/01/2005 200,000 194,070
----------
BEVERAGE & TOBACCO -- (0.5%)
Dimon, Inc. ............................... 8.875% 06/01/2006 100,000 88,500
----------
BROADCAST RADIO & TELEVISION -- (6.4%)
Acme Television LLC (a) ................... 12.024% 09/30/2004 100,000 83,500
Big City Radio, Inc. (a) .................. 14.524% 03/15/2005 100,000 71,250
Capstar Radio Broadcasting Partners, Inc. . 9.250% 07/01/2007 50,000 52,625
Chancellor Media Corporation .............. 10.500% 01/15/2007 100,000 109,500
8.125% 12/15/2007 200,000 194,000
9.000% 10/01/2008 75,000 76,500
Cumulus Media, Inc. ....................... 10.375% 07/01/2008 50,000 53,250
Fox/Liberty Networks LLC (a) .............. 8.966% 08/15/2007 300,000 235,500
Sinclair Broadcast Group, Inc. ............ 9.000% 07/15/2007 50,000 49,375
8.750% 12/15/2007 200,000 195,500
Young Broadcasting, Inc. .................. 9.000% 01/15/2006 50,000 49,000
----------
1,170,000
BUILDING & DEVELOPMENT -- (1.0%)
American Builders & Contractors
Supply Company ............................ 10.625% 05/15/2007 50,000 47,250
Building Materials Corporation of America . 8.625% 12/15/2006 50,000 49,125
8.000% 10/15/2007 50,000 46,875
Formica Corporation (b) ................... 10.875% 03/01/2009 50,000 48,500
----------
191,750
BUSINESS EQUIPMENT & SERVICES -- (2.7%)
Avis Rental A Car, Inc. (b) ............... 11.000% 05/01/2009 50,000 51,000
Dialog Corporation ........................ 11.000% 11/15/2007 125,000 113,750
Electronic Retailing Systems
International, Inc. (a) ................ 52.105% 02/01/2004 50,000 14,250
Fisher Scientific International, Inc. ..... 9.000% 02/01/2008 150,000 143,250
9.000% 02/01/2008 50,000 47,750
U.S. Office Products Company .............. 9.750% 06/15/2008 125,000 79,375
United Stationers Supply Company .......... 12.750% 05/01/2005 50,000 55,000
----------
504,375
</TABLE>
See notes to financial statements.
44
<PAGE> 46
VARIABLE INVESTORS SERIES TRUST
HIGH INCOME BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST MATURITY PRINCIPAL
AND TITLE OF ISSUE RATE DATE AMOUNT VALUE
------------------ ---- ---- ------ -----
<S> <C> <C> <C> <C>
CORPORATE BONDS -- (CONTINUED)
CABLE TELEVISION -- (10.3%)
CSC Holdings, Inc. ........................ 9.250% 11/01/2005 $ 25,000 $ 25,875
7.875% 12/15/2007 100,000 100,753
9.875% 02/15/2013 150,000 162,000
Diamond Holdings Plc ...................... 9.125% 02/01/2008 125,000 127,500
Diva Systems Corporation (a) .............. 24.080% 03/01/2008 50,000 14,750
EchoStar DBS Corporation (b) .............. 11.316% 02/01/2009 75,000 76,312
International CableTel, Inc. (a) .......... 11.316% 04/15/2005 125,000 120,937
(a) 10.643% 02/01/2006 125,000 109,688
Lenfest Communications, Inc. .............. 8.250% 02/15/2008 150,000 154,875
NTL Communications Corporation (a) ........ 10.590% 10/01/2008 100,000 69,000
11.500% 10/01/2008 100,000 110,750
Pegasus Communications Corporation ........ 9.750% 12/01/2006 50,000 49,250
Pegasus Media & Communications, Inc. ...... 12.500% 07/01/2005 50,000 55,563
Rogers Cablesystems Ltd. .................. 10.000% 12/01/2007 150,000 162,750
TeleWest Communications Plc (a) ........... 10.595% 10/01/2007 350,000 314,125
11.250% 11/01/2008 50,000 56,500
UIH Australia/Pacific, Inc. (a) ........... 15.741% 05/15/2006 125,000 88,750
United International Holdings, Inc. ....... 10.750% 02/15/2008 150,000 100,500
----------
1,899,878
CHEMICALS & PLASTICS -- (4.2%)
Buckeye Cellulose Corporation ............. 9.250% 09/15/2008 125,000 129,572
Huntsman Corporation (b) .................. 9.500% 07/01/2007 100,000 96,000
Huntsman ICI Chemicals, Inc. (b) .......... 10.125% 07/01/2009 50,000 50,688
ISP Holdings, Inc. ........................ 9.750% 02/15/2002 100,000 101,250
Lyondell Chemical Company (b) ............. 10.875% 05/01/2009 75,000 77,625
Polymer Group, Inc. ....................... 9.000% 07/01/2007 175,000 168,437
8.750% 03/01/2008 50,000 47,625
Sterling Chemicals Holdings, Inc. (a) ..... 29.851% 08/15/2008 75,000 25,125
Sterling Chemicals, Inc. .................. 11.750% 08/15/2006 50,000 38,750
Texas Petrochemicals Corporation .......... 11.125% 07/01/2006 50,000 44,750
----------
779,822
CLOTHING & TEXTILES -- (1.9%)
Collins & Aikman Floorcoverings, Inc. ..... 10.000% 01/15/2007 75,000 75,750
GFSI, Inc. ................................ 9.625% 03/01/2007 50,000 42,250
Glenoit Corporation ....................... 11.000% 04/15/2007 100,000 88,500
Pillowtex Corporation ..................... 10.000% 11/15/2006 100,000 100,750
9.000% 12/15/2007 50,000 50,000
----------
357,250
CONGLOMERATES -- (0.7%)
Eagle Picher Industries, Inc. ............. 9.375% 03/01/2008 125,000 119,375
----------
</TABLE>
See notes to financial statements.
45
<PAGE> 47
VARIABLE INVESTORS SERIES TRUST
HIGH INCOME BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST MATURITY PRINCIPAL
AND TITLE OF ISSUE RATE DATE AMOUNT VALUE
------------------ ---- ---- ------ -----
<S> <C> <C> <C> <C>
CORPORATE BONDS -- (CONTINUED)
CONSUMER PRODUCTS -- (3.9%)
Albecca, Inc. ............................. 10.750% 08/15/2008 $ 100,000 $ 82,500
American Safety Razor Company ............. 9.875% 08/01/2005 50,000 50,750
Amscan Holdings, Inc. ..................... 9.875% 12/15/2007 100,000 83,000
Chattem, Inc. ............................. 8.875% 04/01/2008 75,000 72,375
Revlon Corporation ........................ 8.625% 02/01/2008 275,000 261,250
Sealy Mattress Company .................... 9.875% 12/15/2007 50,000 49,250
True Temper Sports, Inc. (b) .............. 10.875% 12/01/2008 50,000 42,750
Volume Services America, Inc. (b) ......... 11.250% 03/01/2009 75,000 82,875
--------
724,750
CONTAINER & GLASS PRODUCTS -- (0.8%)
Russell-Stanley Holdings, Inc. (b) ........ 10.875% 02/15/2009 50,000 49,000
Tekni Plex, Inc. .......................... 9.250% 03/01/2008 100,000 97,500
--------
146,500
ELECTRONICS -- (0.9%)
Fairchild Semiconductor Corporation (b) ... 10.375% 10/01/2007 50,000 49,250
Telecommunications Techniques Company ..... 9.750% 05/15/2008 125,000 123,750
--------
173,000
FOOD PRODUCTS -- (3.1%)
Agrilink Foods, Inc. ...................... 11.875% 11/01/2008 100,000 103,750
Aurora Foods, Inc. ........................ 9.875% 02/15/2007 100,000 104,250
Eagle Family Foods, Inc. .................. 8.750% 01/15/2008 150,000 134,250
International Home Foods, Inc. ............ 10.375% 11/01/2006 150,000 159,000
Triarc Consumer Products Group (b) ........ 10.250% 02/15/2009 75,000 74,250
--------
575,500
FOOD SERVICES -- (2.0%)
Ameriserve Food Distribution, Inc. ........ 10.125% 07/15/2007 250,000 213,750
Carrols Corporation ....................... 9.500% 12/01/2008 100,000 95,250
Dominos, Inc. ............................. 10.375% 01/15/2009 50,000 50,625
--------
359,625
FOREST PRODUCTS -- (0.7%)
Packaging Corporation of America (b) ...... 9.625% 04/01/2009 50,000 51,000
Stone Container Corporation ............... 12.580% 08/01/2016 75,000 81,375
--------
132,375
HEALTH CARE -- (3.1%)
Alliance Imaging, Inc. .................... 9.625% 12/15/2005 50,000 47,750
Conmed Corporation ........................ 9.000% 03/15/2008 100,000 99,500
Dade International, Inc. .................. 11.125% 05/01/2006 150,000 159,375
Genesis Health Ventures, Inc. ............. 9.250% 10/01/2006 100,000 79,500
Hudson Respiratory Care, Inc. ............. 9.125% 04/15/2008 100,000 83,500
Tenet Healthcare Corporation .............. 8.625% 01/15/2007 100,000 98,500
--------
568,125
</TABLE>
See notes to financial statements.
46
<PAGE> 48
VARIABLE INVESTORS SERIES TRUST
HIGH INCOME BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST MATURITY PRINCIPAL
AND TITLE OF ISSUE RATE DATE AMOUNT VALUE
------------------ ---- ---- ------ -----
<S> <C> <C> <C> <C>
CORPORATE BONDS -- (CONTINUED)
HOTELS, MOTELS, INNS & CASINOS -- (1.6%)
Courtyard by Marriott II LP ............... 10.750% 02/01/2008 $ 50,000 $ 51,250
Florida Panthers Holdings, Inc. ........... 9.875% 04/15/2009 75,000 71,625
HMH Properties, Inc. ...................... 7.875% 08/01/2005 100,000 96,000
8.450% 12/01/2008 75,000 71,625
--------
290,500
INDUSTRIAL PRODUCTS & EQUIPMENT -- (5.2%)
Amphenol Corporation ...................... 9.875% 05/15/2007 100,000 102,500
Cabot Safety Acquisition Corporation ...... 12.500% 07/15/2005 100,000 108,000
Continental Global Group, Inc. ............ 11.000% 04/01/2007 100,000 82,500
Euramax International Plc ................. 11.250% 10/01/2006 75,000 76,125
International Utility Structures, Inc. .... 10.750% 02/01/2008 50,000 50,375
ISG Resources, Inc. ....................... 10.000% 04/15/2008 100,000 103,000
Johnstown America Industries, Inc. ........ 11.750% 08/15/2005 75,000 79,500
MMI Products, Inc. ........................ 11.250% 04/15/2007 100,000 103,000
Neenah Corporation ........................ 11.125% 05/01/2007 100,000 99,000
Wesco Distribution, Inc. .................. 9.125% 06/01/2008 150,000 147,000
--------
951,000
LEISURE & ENTERTAINMENT -- (2.3%)
AMF Bowling Worldwide (a) ................. 17.804% 03/15/2006 122,000 75,030
Premier Parks, Inc. (a) ................... 10.510% 04/01/2008 250,000 167,188
Regal Cinemas, Inc. ....................... 9.500% 06/01/2008 200,000 189,000
--------
431,218
MACHINERY & EQUIPMENT -- (2.4%)
Alvey Systems, Inc. ....................... 11.375% 01/31/2003 52,000 52,780
Clark Material Handling Corporation ....... 10.750% 11/15/2006 75,000 65,625
Fairchild Corporation (b) ................. 10.750% 04/15/2009 50,000 49,500
National Equipment Services, Inc. ......... 10.000% 11/30/2004 50,000 51,000
10.000% 11/30/2004 100,000 102,000
United Rentals, Inc. ...................... 9.250% 01/15/2009 125,000 124,375
--------
445,280
METALS & MINING -- (0.9%)
AEI Holding Company (b) ................... 10.500% 12/15/2005 75,000 74,813
AEI Resources, Inc. (b) ................... 11.500% 12/15/2006 100,000 98,750
--------
173,563
OIL & GAS -- (3.7%)
Continental Resources, Inc. ............... 10.250% 08/01/2008 100,000 73,750
Dailey International, Inc. ................ 9.500% 02/15/2008 100,000 64,000
Forcenergy Gas Exploration, Inc. .......... 9.500% 11/01/2006 100,000 70,500
Nuevo Energy Company ...................... 8.875% 06/01/2008 100,000 97,500
Pride Petroleum Services, Inc. ............ 9.375% 05/01/2007 150,000 149,250
R & B Falcon Corporation (b) .............. 12.250% 03/15/2006 75,000 77,250
The Houston Exploration Company ........... 8.625% 01/01/2008 75,000 73,125
Universal Compression, Inc. (a) ........... 11.392% 02/15/2008 125,000 79,687
--------
685,062
</TABLE>
See notes to financial statements.
47
<PAGE> 49
VARIABLE INVESTORS SERIES TRUST
HIGH INCOME BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST MATURITY PRINCIPAL
AND TITLE OF ISSUE RATE DATE AMOUNT VALUE
------------------ ---- ---- ------ -----
<S> <C> <C> <C> <C>
CORPORATE BONDS -- (CONTINUED)
PRINTING & PUBLISHING -- (1.5%)
Garden State Newspapers, Inc. ............. 8.750% 10/01/2009 $ 100,000 $ 98,000
Hollinger International Publishing, Inc. .. 9.250% 03/15/2007 175,000 180,250
----------
278,250
RETAILERS -- (0.3%)
Leslie's Poolmart, Inc. ................... 10.375% 07/15/2004 50,000 51,375
----------
SERVICES -- (1.0%)
Coinmach Corporation ...................... 11.750% 11/15/2005 50,000 55,000
Sitel Corporation ......................... 9.250% 03/15/2006 100,000 85,750
URS Corporation (b) ....................... 12.250% 05/01/2009 50,000 50,750
----------
191,500
STEEL -- (0.4%)
Metals USA, Inc. .......................... 8.625% 02/15/2008 75,000 70,688
----------
SURFACE TRANSPORTATION -- (3.1%)
Allied Holdings, Inc. ..................... 8.625% 10/01/2007 50,000 47,750
Gearbulk Holdings Ltd. .................... 11.250% 12/01/2004 150,000 155,250
Railworks Corporation (b) ................. 11.500% 04/15/2009 50,000 50,625
Stena AB .................................. 10.500% 12/15/2005 175,000 176,312
8.750% 06/15/2007 50,000 46,125
StenaLine AB .............................. 10.625% 06/01/2008 50,000 37,875
The Holt Group, Inc. (b) .................. 9.750% 01/15/2006 75,000 49,875
----------
563,812
TELECOMMUNICATIONS -- (11.5%)
Call-Net Enterprises, Inc. (a) ............ 11.677% 08/15/2007 225,000 144,000
(a) 11.647% 08/15/2008 100,000 56,500
Hermes Europe Railtel B.V. ................ 11.500% 08/15/2007 200,000 210,500
ICG Holdings, Inc. (a) .................... 13.012% 05/01/2006 50,000 39,021
ICG Services, Inc. (a) .................... 12.962% 05/01/2008 125,000 68,780
IXC Communications, Inc. .................. 9.000% 04/15/2008 100,000 96,125
Level 3 Communications, Inc. .............. 9.125% 05/01/2008 300,000 297,375
(a) 10.819% 12/01/2008 300,000 186,375
Metronet Communications Corporation ....... 12.000% 08/15/2007 100,000 115,750
(a) 8.970% 11/01/2007 75,000 60,000
(b) 10.625% 11/01/2008 75,000 84,937
NEXTEL International, Inc. (a) ............ 15.367% 04/15/2008 75,000 38,156
Pathnet, Inc. ............................. 12.250% 04/15/2008 100,000 49,500
PSInet, Inc. .............................. 10.000% 02/15/2005 100,000 100,000
11.500% 11/01/2008 50,000 52,750
Qwest Communications International, Inc. .. 10.875% 04/01/2007 65,000 73,775
(a) 8.742% 10/15/2007 175,000 136,063
Teligent, Inc. ............................ 11.500% 12/01/2007 150,000 150,750
United States Xchange LLC ................. 15.000% 07/01/2008 50,000 52,125
Viatel, Inc. .............................. 11.250% 04/15/2008 75,000 76,875
(a) 12.233% 04/15/2008 50,000 32,250
----------
2,121,607
</TABLE>
See notes to financial statements.
48
<PAGE> 50
VARIABLE INVESTORS SERIES TRUST
HIGH INCOME BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST MATURITY PRINCIPAL
AND TITLE OF ISSUE RATE DATE AMOUNT VALUE
------------------ ---- ---- ------ -----
<S> <C> <C> <C> <C> <C>
CORPORATE BONDS -- (CONTINUED)
TELECOMMUNICATIONS & CELLULAR -- (12.2%)
American Cellular Corporation ............. 10.500% 05/15/2008 $ 125,000 $ 128,750
Centennial Cellular Corporation (b) ....... 10.750% 12/15/2008 75,000 78,187
Intermedia Communications of Florida,
Inc. (a)................................. 11.668% 05/15/2006 200,000 167,000
(a). 11.106% 07/15/2007 125,000 90,625
Intermedia Communications, Inc. ........... 8.600% 06/01/2008 75,000 70,125
McLeodUSA, Inc. (a) ....................... 10.289% 03/01/2007 150,000 115,875
9.250% 07/15/2007 50,000 50,000
8.375% 03/15/2008 50,000 47,375
9.500% 11/01/2008 50,000 50,250
Millicom International Cellular S.A. (a) .. 14.617% 06/01/2006 200,000 147,000
NEXTEL Communications, Inc. (a) ........... 10.310% 09/15/2007 300,000 220,500
(a) 10.184% 02/15/2008 200,000 138,500
Nextlink Communications, Inc. ............. 9.625% 10/01/2007 50,000 48,875
9.000% 03/15/2008 75,000 71,250
(a) 11.584% 06/01/2009 225,000 133,875
Paging Network, Inc. ...................... 10.000% 10/15/2008 200,000 155,000
Rogers Cantel Mobile Communications, Inc. . 8.800% 10/01/2007 150,000 150,375
Telesystem International Wireless, Inc. (a) 17.740% 06/30/2007 200,000 103,000
(a) 17.427% 11/01/2007 50,000 22,250
Triton PCS, Inc. (a) ...................... 11.295% 05/01/2008 175,000 113,750
USA Mobile Communications, Inc. ........... 9.500% 02/01/2004 125,000 100,625
Verio, Inc. ............................... 11.250% 12/01/2008 50,000 52,625
-----------
2,255,812
-----------
TOTAL CORPORATE BONDS -- (Cost $17,290,395) 91.9% 16,956,347
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
------
<S> <C> <C>
PREFERRED STOCKS
BANKS -- (0.2%)
California Federal Preferred Capital Corporation, 9.125% ................. 1,000 26,125
-------
BROADCAST RADIO & TELEVISION -- (2.0%)
Benedek Communications Corporation, 11.50% (c) ........................... 75 57,375
Capstar Broadcasting Partners, Inc., PIK, 12.00% ......................... 633 73,538
Capstar Radio Broadcasting Partners, Inc., PIK, Series E, 12.625% (c) .... 601 72,981
Cumulus Media, Inc., Sr., 13.75% ......................................... 56 61,618
Sinclair Broadcast Group, Inc., 11.625% .................................. 1,050 110,775
-------
376,287
CABLE TELEVISION -- (0.9%)
Pegasus Communications Corporation, PIK, Series A, 12.75% ................ 164 169,820
-------
FOOD SERVICES -- (0.1%)
Nebco Evans Holding Company, PIK, 11.25% ................................. 285 11,249
-------
</TABLE>
See notes to financial statements.
49
<PAGE> 51
VARIABLE INVESTORS SERIES TRUST
HIGH INCOME BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C> <C>
PREFERRED STOCKS -- (CONTINUED)
MACHINERY & EQUIPMENT -- (0.4%)
Fairfield Manufacturing Company, Inc., Exch., 11.25% ..................... 75 $ 77,156
----------
OIL & GAS -- (0.3%)
R & B Falcon Corporation (b) ............................................. 50 51,025
----------
PRINTING & PUBLISHING -- (1.4%)
Primedia, Inc., Series D, 10.00% ......................................... 750 77,063
Primedia, Inc., Series E, 9.20% .......................................... 1,850 184,075
----------
261,138
TELECOMMUNICATIONS & CELLULAR -- (0.5%)
NEXTEL Communications, Inc., 13.00% ...................................... 58 62,728
NEXTEL Communications, Inc., PIK,11.125% ................................. 25 25,125
----------
87,853
TOTAL PREFERRED STOCKS -- (Cost $980,791) 5.8% 1,060,653
----------
COMMON STOCKS
CABLE TELEVISION -- (0.0%)
CS Wireless Systems, Inc. (b), (c) ....................................... 13 0
Pegasus Communications Corporation (c) ................................... 112 4,417
----------
4,417
PRINTING & PUBLISHING -- (0.2%)
Affiliated Newspaper Investments, Inc. (c) ............................... 250 37,500
----------
TOTAL COMMON STOCKS -- (Cost $99) 0.2% 41,917
----------
WARRANTS
BUSINESS EQUIPMENT & SERVICES -- (0.0%)
Electronic Retailing Systems International, Inc. (b), (c) 50 250
----------
CABLE TELEVISION -- (0.0%)
Australis Holdings Property Ltd. (b), (c) ................................ 50 0
Diva Systems Corporation (c) ............................................. 150 0
Pegasus Communications Corporation (c) ................................... 75 4,537
UIH Australia/Pacific, Inc. (c) .......................................... 125 0
Wireless One, Inc. (c) ................................................... 150 2
----------
4,539
CONSUMER PRODUCTS -- (0.0%)
IHF Capital, Inc. (b), (c) ............................................... 100 50
----------
STEEL -- (0.0%)
Bar Technologies, Inc. (b), (c) .......................................... 25 500
----------
</TABLE>
See notes to financial statements.
50
<PAGE> 52
VARIABLE INVESTORS SERIES TRUST
HIGH INCOME BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
-CONTINUED-
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C> <C>
WARRANTS -- (CONTINUED)
TELECOMMUNICATIONS -- (0.1%)
Metronet Communications Corporation (b), (c) ............................. 100 $ 7,500
Pathnet, Inc. (b), (c) ................................................... 100 0
-----------
7,500
-----------
TOTAL WARRANTS -- (Cost $0) 0.1% 12,839
-----------
TOTAL INVESTMENTS -- (Cost $18,271,285) 98.0% 18,071,756
OTHER ASSETS LESS LIABILITIES -- 2.0% 373,986
----- -----------
NET ASSETS -- 100.0% $18,445,742
===== ===========
</TABLE>
(a) Step bond. Interest rate shown represents yield to maturity.
(b) Pursuant to Rule 144A under the Securities Act of 1933, these securities
may be resold in transactions exempt from registration, normally to
qualified institutional buyers. At June 30, 1999, these securities
aggregated $1,549,887 or 8.4% of the net assets of the Portfolio.
(c) Non-income producing security.
See notes to financial statements.
51
<PAGE> 53
VARIABLE INVESTORS SERIES TRUST
U.S. GOVERNMENT BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST MATURITY PRINCIPAL
AND TITLE OF ISSUE RATE DATE AMOUNT VALUE
------------------ -------- -------- --------- -----
<S> <C> <C> <C> <C>
GOVERNMENT AND AGENCY SECURITIES
COLLATERALIZED MORTGAGE OBLIGATIONS -- (8.6%)
Federal Agricultural Mortgage Corporation (a) 7.012% 01/25/2003 $ 756,176 $ 776,737
6.710% 07/25/2008 479,972 478,623
-----------
1,255,360
MORTGAGE BACKED SECURITIES -- (40.5%)
FHA Insured Project Loan .................. 3.025% 11/01/2006 305,574 284,215
7.500% 11/15/2030 269,691 264,044
FHLMC Participation Certificates .......... 8.500% 01/01/2003 45,890 47,446
10.000% 10/01/2005 48,418 50,886
9.500% 04/01/2007 50,447 52,499
9.000% 06/01/2016 91,754 98,566
7.625% 08/25/2022 120,615 120,670
6.250% 09/15/2022 200,000 193,937
(a) 7.997% 08/01/2025 107,842 109,733
FNMA Guaranteed Real Estate Mortgage
Investment Pass-Thru Certificates ...... 6.740% 08/25/2007 300,000 301,123
8.400% 02/25/2009 267,572 275,991
6.000% 09/01/2012 149,492 144,702
(a) 7.298% 08/17/2018 235,000 238,305
11.000% 02/01/2019 520,620 582,813
11.500% 02/01/2019 504,569 569,264
9.500% 03/25/2019 470,095 504,039
(a) 6.395% 04/01/2020 83,741 84,381
10.000% 04/01/2020 74,478 80,957
7.000% 06/25/2022 322,098 322,300
(a) 5.827% 11/01/2035 353,349 346,604
GNMA Guaranteed Pass-Thru Certificates .... 9.000% 12/15/2006 101,736 106,311
9.000% 01/15/2008 128,797 134,121
(a) 6.375% 03/20/2018 198,415 202,810
7.500% 04/15/2024 165,814 167,872
SLM Holding Corporation (a) ............... 5.132% 04/25/2004 347,159 346,973
(a) 5.148% 10/25/2004 294,096 293,316
-----------
5,923,878
U.S. GOVERNMENT SECURITIES -- (34.5%)
U.S. Treasury Bonds ....................... 11.625% 11/15/2004 315,000 396,900
7.250% 05/15/2016 480,000 526,950
7.500% 11/15/2024 115,000 133,148
6.125% 11/15/2027 1,475,000 1,461,634
U.S. Treasury Notes ....................... 5.875% 11/30/2001 560,000 563,500
7.875% 11/15/2004 875,000 955,665
6.125% 08/15/2007 265,000 267,981
5.625% 05/15/2008 750,000 734,766
-----------
5,040,544
-----------
TOTAL GOVERNMENT AND AGENCY SECURITIES -- (Cost $12,561,839) 83.6% 12,219,782
-----------
</TABLE>
See notes to financial statements.
52
<PAGE> 54
VARIABLE INVESTORS SERIES TRUST
U.S. GOVERNMENT BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
-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
BANKS -- (2.6%)
GS Escrow Corporation ..................... 7.000% 08/01/2003 $ 390,000 $ 381,890
-------------
BROADCASTING -- (2.2%)
Time Warner, Inc. ......................... 8.110% 08/15/2006 300,000 314,451
-------------
REAL ESTATE -- (1.4%)
Colonial Realty LP ........................ 7.000% 07/14/2007 215,000 200,557
-------------
TELECOMMUNICATIONS -- (2.0%)
Sprint Capital Corporation ................ 6.875% 11/15/2028 325,000 296,801
-------------
TOTAL CORPORATE BONDS -- (Cost $1,255,575) 8.2% 1,193,699
-------------
MUNICIPAL BOND -- (0.7%)
New Jersey Economic Development Authority 7.425% 02/15/2029 100,000 101,802
-------------
TOTAL MUNICIPAL BOND -- (Cost $100,000) 0.7% 101,802
-------------
NON-AGENCY MORTGAGES AND ASSET BACKED -- (1.7%)
Community Program Loan .................... 4.500% 04/01/2029 340,000 256,258
-------------
TOTAL NON-AGENCY MORTGAGES AND
ASSET BACKED -- (Cost $254,044) 1.7% 256,258
-------------
</TABLE>
<TABLE>
<CAPTION>
MATURITY
AMOUNT
--------
<S> <C> <C> <C> <C> <C>
SHORT TERM INVESTMENT
REPURCHASE AGREEMENT -- (4.7%)
State Street Bank and Trust Company (b).... 4.000% 07/01/1999 682,076 682,000
-------------
TOTAL SHORT TERM INVESTMENT -- (Cost $682,000) 4.7% 682,000
-------------
TOTAL INVESTMENTS -- (Cost $14,853,458) 98.9% 14,453,541
OTHER ASSETS LESS LIABILITIES -- 1.1% 167,568
----- -------------
NET ASSETS -- 100.0% $ 14,621,109
===== =============
</TABLE>
(a) Variable rate instrument. Interest rate is the rate in effect at
June 30, 1999.
(b) The agreement with State Street Bank and Trust Company, dated 6/30/99,
is fully collateralized by a United States Treasury Bond, 8.125%, 08/15/19,
with a value of $698,243.
53
<PAGE> 55
VARIABLE INVESTORS SERIES TRUST
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
SMALL CAP WORLD
GROWTH EQUITY GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- ---------
<S> <C> <C> <C>
ASSETS
Investments - securities, at value ..................... $ 11,867,331 $ 19,764,135 $ 63,144,794
Investments - repurchase agreements .................... 215,000 0 1,370,000
Foreign currency holdings, at value (cost $86,285, $25) 0 86,264 0
Cash ................................................... 971 135,097 273
Income receivable ...................................... 186 18,807 28,256
Receivable for securities sold ......................... 392,581 480,446 813,139
Unrealized appreciation on forward currency
contracts ......................................... 0 86,545 0
Receivable for trust shares sold ....................... 0 0 0
Prepaid expenses ....................................... 1,175 2,463 6,869
Foreign income tax reclaim receivable .................. 0 17,640 0
Due from adviser ....................................... 19,125 24,412 0
------------ ------------ ------------
TOTAL ASSETS ....................................... 12,496,369 20,615,809 65,363,331
LIABILITIES
Payable for securities purchased ....................... 39,940 218,515 658,691
Unrealized depreciation on forward currency
contracts ......................................... 0 72,766 0
Payable to custodian ................................... 0 0 0
Advisory fee payable ................................... 15,922 23,411 71,560
Accounts payable and accrued expenses .................. 25,816 40,292 38,213
Payable for trust shares redeemed ...................... 42,424 18,367 155,505
------------ ------------ ------------
TOTAL LIABILITIES .................................. 124,102 373,351 923,969
------------ ------------ ------------
TOTAL NET ASSETS ................................... $ 12,372,267 $ 20,242,458 $ 64,439,362
============ ============ ============
NET ASSETS
Capital paid - in ...................................... $ 9,830,095 $ 15,133,681 $ 19,598,918
Undistributed (distributions in
excess of) net investment income .................. (77,549) (361,570) (166,219)
Accumulated net realized gain (loss) on
investments and foreign currency transactions ..... (316,492) 2,362,202 23,738,084
Net unrealized appreciation (depreciation) of:
Investments ....................................... 2,936,213 3,099,310 21,268,579
Foreign currency .................................. 0 8,835 0
------------ ------------ ------------
TOTAL NET ASSETS ................................ $ 12,372,267 $ 20,242,458 $ 64,439,362
============ ============ ============
NET ASSET VALUE PER SHARE (based on shares of beneficial
interest outstanding, unlimited number of shares
authorized without par value) .......................... $ 15.885 $ 14.773 $ 45.631
Total shares outstanding at end of period .............. 778,873 1,370,201 1,412,174
Cost of investment securities .......................... $ 9,146,118 $ 16,664,825 $ 43,246,215
</TABLE>
See Notes to Financial Statements
54
<PAGE> 56
<TABLE>
<CAPTION>
MATRIX GROWTH & MULTIPLE HIGH INCOME U.S. GOVERNMENT
EQUITY INCOME STRATEGIES BOND BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
$ 23,763,240 $ 28,447,913 $ 42,057,082 $ 18,071,756 $ 13,771,541
0 2,668,000 5,719,000 0 682,000
0 24 0 0 0
14 316 376 0 672
20,827 39,170 105,799 375,597 168,701
2,588,956 79,722 593,847 311,266 1,158
0 0 0 0 0
0 87,925 0 0 14,388
1,799 2,626 3,712 2,015 1,113
0 6,009 0 188 0
15,026 9,951 0 13,368 21,403
- ------------ ------------ ------------ ------------ ------------
26,389,862 31,341,656 48,479,816 18,774,190 14,660,976
2,539,754 118,013 427,365 0 0
0 0 0 0 0
0 0 0 248,844 0
25,273 37,917 53,407 22,735 14,961
32,889 34,353 31,373 34,123 24,906
26,345 0 81,302 22,746 0
- ------------ ------------ ------------ ------------ ------------
2,624,261 190,283 593,447 328,448 39,867
- ------------ ------------ ------------ ------------ ------------
$ 23,765,601 $ 31,151,373 $ 47,886,369 $ 18,445,742 $ 14,621,109
============ ============ ============ ============ ============
$ 17,862,997 $ 23,027,127 $ 28,341,980 $ 18,001,126 $ 14,690,593
7,306 77,280 88,727 523,183 403,611
2,545,408 3,605,782 7,553,790 120,962 (73,178)
3,349,890 4,441,196 11,901,872 (199,529) (399,917)
0 (12) 0 0 0
- ------------ ------------ ------------ ------------ ------------
$ 23,765,601 $ 31,151,373 $ 47,886,369 $ 18,445,742 $ 14,621,109
============ ============ ============ ============ ============
$ 17.479 $ 18.369 $ 18.634 $ 9.463 $ 10.151
1,359,632 1,695,848 2,569,784 1,949,317 1,440,363
$ 20,413,350 $ 26,674,717 $ 35,874,210 $ 18,271,285 $ 14,853,458
</TABLE>
55
<PAGE> 57
VARIABLE INVESTORS SERIES TRUST
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
SMALL CAP WORLD
GROWTH EQUITY GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividend income ........................................ $ 441 $ 160,723 $ 155,937
Interest income ........................................ 4,021 9,073 48,273
Foreign taxes withheld ................................. 0 (20,325) 0
------------ ------------ ------------
TOTAL INCOME ...................................... 4,462 149,471 204,210
EXPENSES
Investment management fee .............................. 51,663 72,514 262,673
Administrative fee ..................................... 12,061 18,917 63,968
Custodian fee .......................................... 27,773 50,387 14,450
Audit fee and expenses ................................. 8,125 8,125 8,125
Legal fee .............................................. 2,495 2,495 2,495
Printing expenses ...................................... 2,988 2,988 2,988
Trustees fee and expenses .............................. 6,688 6,688 6,688
Transfer agent fee ..................................... 2,554 867 867
Insurance .............................................. 1,822 2,414 6,932
Other .................................................. 262 461 1,537
------------ ------------ ------------
TOTAL EXPENSES ....................................... 116,431 165,856 370,723
------------ ------------ ------------
Expenses borne by the adviser .......................... (33,997) (40,571) 0
Expense reductions ..................................... (423) (978) (294)
------------ ------------ ------------
NET EXPENSES ......................................... 82,011 124,307 370,429
------------ ------------ ------------
NET INVESTMENT INCOME (LOSS) ....................... (77,549) 25,164 (166,219)
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain (loss) on investments .................. 1,481,997 2,143,783 21,329,043
Net realized gain (loss) on foreign currency transactions 0 177,022 0
Change in unrealized appreciation (depreciation) of:
Investments ............................................ (948,463) (802,927) (11,549,361)
Foreign currency ....................................... 0 72,027 0
------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS) .............. 533,534 1,589,905 9,779,682
------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .............................. $ 455,985 $ 1,615,069 $ 9,613,463
============ ============ ============
</TABLE>
See notes to financial statements.
56
<PAGE> 58
<TABLE>
<CAPTION>
MATRIX GROWTH & MULTIPLE HIGH INCOME U.S. GOVERNMENT
EQUITY INCOME STRATEGIES BOND BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
$ 129,596 $ 197,837 $ 71,467 $ 23,723 $ 0
9,379 60,870 251,497 904,483 468,164
0 (3,034) 0 (660) 0
- ----------- ----------- ----------- ----------- -----------
138,975 255,673 322,964 927,546 468,164
74,208 107,654 154,491 71,529 45,881
20,731 25,832 38,768 19,806 15,498
35,084 31,441 15,418 36,956 21,838
8,125 8,125 8,125 8,125 8,125
2,495 2,495 2,495 2,495 2,495
2,988 2,988 2,988 2,988 2,988
6,688 6,688 6,688 6,688 6,688
867 2,554 867 867 867
1,759 2,697 3,625 1,977 1,084
429 562 796 459 326
- ----------- ----------- ----------- ----------- -----------
153,374 191,036 234,261 151,890 105,790
- ----------- ----------- ----------- ----------- -----------
(21,070) (11,880) 0 (27,402) (40,752)
(635) (69) (24) (1,614) (18)
- ----------- ----------- ----------- ----------- -----------
131,669 179,087 234,237 122,874 65,020
- ----------- ----------- ----------- ----------- -----------
7,306 76,586 88,727 804,672 403,144
2,177,225 3,035,563 6,272,214 99,969 (78,250)
0 (1) 0 0 0
(649,861) 1,073,735 (2,799,985) (202,909) (585,698)
0 (12) 0 0 0
- ----------- ----------- ----------- ----------- -----------
1,527,364 4,109,285 3,472,229 (102,940) (663,948)
- ----------- ----------- ----------- ----------- -----------
$ 1,534,670 $ 4,185,871 $ 3,560,956 $ 701,732 $ (260,804)
=========== =========== =========== =========== ===========
</TABLE>
See notes to financial statements.
57
<PAGE> 59
VARIABLE INVESTORS SERIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SMALL CAP GROWTH PORTFOLIO
SIX MONTHS ENDED YEAR ENDED
6/30/99 12/31/98
---------------- ----------
(UNAUDITED)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
From operations:
Net investment income (loss) .................................... $ (77,549) $ (178,387)
Net realized gain (loss) on investments ......................... 1,481,997 (1,643,534)
Net realized gain (loss) on foreign currency transactions ....... 0 0
Change in unrealized appreciation (depreciation) of:
Investments ................................................... (948,463) 1,647,584
Foreign currency .............................................. 0 0
------------ ------------
Net increase (decrease) in net assets resulting from operations . 455,985 (174,337)
Dividends and distributions to Shareholders from:
Net investment income ........................................... 0 0
Net realized gain on investments ................................ 0 0
In excess of net investment income .............................. 0 0
In excess of net realized gain on investments ................... 0 0
------------ ------------
Net decrease in net assets resulting from distributions ......... 0 0
Trust share transactions:
Shares sold ..................................................... 1,851,865 7,082,026
Shares issued to shareholders in reinvestments .................. 0 0
Shares repurchased .............................................. (4,573,663) (10,523,136)
------------ ------------
Net increase (decrease) in net assets resulting from
trust share transactions ...................................... (2,721,798) (3,441,110)
------------ ------------
Total increase (decrease) in net assets ......................... (2,265,813) (3,615,447)
Net assets
Beginning of period ............................................. 14,638,080 18,253,527
------------ ------------
END OF PERIOD (1) ............................................... $ 12,372,267 $ 14,638,080
============ ============
(1) Including undistributed (distributions in
excess of) net investment income ................................ $ (77,549) $ 0
CHANGE IN FUND SHARES:
Shares sold ..................................................... 128,565 504,990
Shares issued to shareholders in reinvestments .................. 0 0
Shares repurchased .............................................. (319,261) (707,191)
------------ ------------
Net (decrease) increase ....................................... (190,696) (202,201)
============ ============
</TABLE>
See Notes to financial statements.
58
<PAGE> 60
<TABLE>
<CAPTION>
WORLD EQUITY PORTFOLIO GROWTH PORTFOLIO MATRIX EQUITY PORTFOLIO
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
6/30/99 12/31/98 6/30/99 12/31/98 6/30/99 12/31/98
- ---------------- ---------- ---------------- ----------- ---------------- ----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
$ 25,164 $ 64,589 $ (166,219) $ (274,079) $ 7,306 $ 65,471
2,143,783 1,634,127 21,329,043 11,544,968 2,177,225 1,112,486
177,022 8,967 0 0 0 0
(802,927) 46,584 (11,549,361) 10,132,342 (649,861) 2,335,203
72,027 (335,881) 0 0 0 0
------------ ------------ ------------ ------------ ------------ ------------
1,615,069 1,418,386 9,613,463 21,403,231 1,534,670 3,513,160
0 (261,531) 0 0 0 (65,471)
0 (1,363,543) 0 (9,536,196) 0 (1,024,778)
0 (278,838) 0 0 0 (53,864)
0 0 0 0 0 0
------------ ------------ ------------ ------------ ------------ ------------
0 (1,903,912) 0 (9,536,196) 0 (1,144,113)
1,685,966 10,235,565 7,003,314 12,710,333 3,339,259 6,573,307
0 1,903,912 0 9,536,196 0 1,144,113
(6,458,680) (13,025,399) (37,040,859) (14,522,739) (3,359,188) (2,356,812)
------------ ------------ ------------ ------------ ------------ ------------
(4,772,714) (885,922) (30,037,545) 7,723,790 (19,929) 5,360,608
------------ ------------ ------------ ------------ ------------ ------------
(3,157,645) (1,371,448) (20,424,082) 19,590,825 1,514,741 7,729,655
23,400,103 24,771,551 84,863,444 65,272,619 22,250,860 14,521,205
------------ ------------ ------------ ------------ ------------ ------------
$ 20,242,458 $ 23,400,103 $ 64,439,362 $ 84,863,444 $ 23,765,601 $ 22,250,860
============ ============ ============ ============ ============ ============
$ (361,570) $ (386,734) $ (166,219) $ 0 $ 7,306 $ 0
123,851 692,396 158,808 341,748 200,125 427,178
0 138,416 0 235,070 0 70,970
(471,918) (871,336) (816,286) (388,098) (201,297) (154,561)
------------ ------------ ------------ ------------ ------------ ------------
(348,067) (40,524) (657,478) 188,720 (1,172) 343,587
============ ============ ============ ============ ============ ============
</TABLE>
59
<PAGE> 61
VARIABLE INVESTORS SERIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
-CONTINUED-
<TABLE>
<CAPTION>
GROWTH & INCOME PORTFOLIO
SIX MONTHS ENDED YEAR ENDED
6/30/99 12/31/98
---------------- ----------
(UNAUDITED)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
From operations:
Net investment income (loss) .................................... $ 76,586 $ 187,410
Net realized gain (loss) on investments ......................... 3,035,563 1,029,650
Net realized gain (loss) on foreign currency transactions ....... (1) (11)
Change in unrealized appreciation (depreciation) of:
Investments ................................................... 1,073,735 1,018,985
Foreign currency .............................................. (12) 0
------------ ------------
Net increase (decrease) in net assets resulting from operations . 4,185,871 2,236,034
Dividends and distributions to Shareholders from:
Net investment income ........................................... 0 (185,661)
Net realized gain on investments ................................ 0 (622,669)
In excess of net investment income .............................. 0 (8,816)
In excess of net realized gain on investments ................... 0 0
------------ ------------
Net decrease in net assets resulting from distributions ......... 0 (817,146)
Trust share transactions:
Shares sold ..................................................... 3,224,128 14,032,668
Shares issued to shareholders in reinvestments .................. 0 817,146
Shares repurchased .............................................. (4,402,290) (9,186,505)
------------ ------------
Net increase (decrease) in net assets resulting from
trust share transactions ...................................... (1,178,162) 5,663,309
------------ ------------
Total increase (decrease) in net assets ......................... 3,007,709 7,082,197
Net assets
Beginning of year ............................................... 28,143,664 21,061,467
------------ ------------
END OF PERIOD (1) ............................................... $ 31,151,373 $ 28,143,664
============ ============
(1) Including undistributed (distributions in
excess of) net investment income ................................ $ 77,280 $ 694
CHANGE IN FUND SHARES:
Shares sold ..................................................... 193,071 897,454
Shares issued to shareholders in reinvestments .................. 0 51,415
Shares repurchased .............................................. (267,107) (624,788)
------------ ------------
Net increase (decrease) ....................................... (74,036) 324,081
============ ============
</TABLE>
See notes to financial statements.
60
<PAGE> 62
<TABLE>
<CAPTION>
MULTIPLE STRATEGIES PORTFOLIO HIGH INCOME BOND PORTFOLIO U.S. GOVERNMENT BOND PORTFOLIO
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
6/30/99 12/31/98 6/30/99 12/31/98 6/30/99 12/31/98
------------ ------------ ------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
$ 88,727 $ 185,100 $ 804,672 $ 1,387,819 $ 403,144 $ 619,720
6,272,214 3,693,846 99,969 595,756 (78,250) 269,972
0 0 0 0 0 0
(2,799,985) 6,061,258 (202,909) (1,312,647) (585,698) (75,641)
0 0 0 0 0 0
------------ ------------ ------------ ------------ ------------ ------------
3,560,956 9,940,204 701,732 670,928 (260,804) 814,051
0 (183,824) 0 (1,387,819) 0 (599,416)
0 (2,499,972) 0 (21,504) 0 (269,972)
0 (610) 0 (295,487) 0 (10,635)
0 0 0 0 0 (2,866)
------------ ------------ ------------ ------------ ------------ ------------
0 (2,684,406) 0 (1,704,810) 0 (882,889)
10,376,449 6,809,962 2,839,883 13,842,830 1,900,274 12,659,425
0 2,684,406 0 1,704,810 0 882,889
(9,347,348) (8,572,541) (6,611,937) (10,913,520) (2,488,763) (7,682,181)
------------ ------------ ------------ ------------ ------------ ------------
1,029,101 921,827 (3,772,054) 4,634,120 (588,489) 5,860,133
------------ ------------ ------------ ------------ ------------ ------------
4,590,057 8,177,625 (3,070,322) 3,600,238 (849,293) 5,791,295
43,296,312 35,118,687 21,516,064 17,915,826 15,470,402 9,679,107
------------ ------------ ------------ ------------ ------------ ------------
$ 47,886,369 $ 43,296,312 $ 18,445,742 $ 21,516,064 $ 14,621,109 $ 15,470,402
============ ============ ============ ============ ============ ============
$ 88,727 $ 0 $ 523,183 $ (281,489) $ 403,611 $ 467
567,254 453,065 303,316 1,415,009 185,242 1,181,963
0 158,139 0 185,314 0 85,783
(523,020) (566,210) (701,520) (1,095,976) (243,630) (721,568)
------------ ------------ ------------ ------------ ------------ ------------
44,234 44,994 (398,204) 504,347 (58,388) 546,178
============ ============ ============ ============ ============ ============
</TABLE>
See notes to financial statements.
61
<PAGE> 63
VARIABLE INVESTORS SERIES TRUST
SMALL CAP GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1999 --------------------------------- PERIOD ENDED
(UNAUDITED) 1998 1997 1996 DECEMBER 31, 1995 (1)
---------------- --------------------------------- ---------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD...... $ 15.098 $ 15.578 $ 16.050 $ 12.638 $ 10.000
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Loss.................... (0.100) (0.000) (0.152) (0.091) (0.042)
Net Realized and Unrealized Gain
(losses) on Investments............. 0.887 (0.480) 0.243 3.560 3.047
----------- ---------- ---------- --------- -----------
TOTAL FROM INVESTMENT OPERATIONS............ 0.787 (0.480) 0.091 3.469 3.005
----------- ---------- ---------- --------- -----------
LESS DISTRIBUTIONS:
From Net Investment Income............. (0.000) (0.000) (0.000) (0.000) (0.000)
From Net Realized Capital Gains........ (0.000) (0.000) (0.435) (0.057) (0.367)
In Excess of Net Realized Capital Gains (0.000) (0.000) (0.128) (0.000) (0.000)
----------- ---------- ---------- --------- -----------
Total Distributions.................... (0.000) (0.000) (0.563) (0.057) (0.367)
----------- ---------- ---------- --------- -----------
NET ASSET VALUE AT END OF PERIOD............ $ 15.885 $ 15.098 $ 15.578 $ 16.050 $ 12.638
=========== ========= ========= ======== ===========
TOTAL RETURN (2) (3)........................ 5.25% (3.12)% 0.73% 27.39% 30.08%
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's).... $ 12,372 $ 14,638 $ 18,254 $ 13,803 $ 3,813
Ratios to Average Net Assets:
Gross Expenses (4)................... 1.92% 1.84% 1.79% 2.38% 9.00%
Net Expenses (4)..................... 1.35% 1.35% 1.35% 1.35% 1.35%
Net Investment Income (4)............ (1.28)% (1.20)% (1.06)% (0.90)% (0.79)%
Portfolio Turnover Rate................ 66.58% 105.35% 104.72% 72.66% 73.76%
</TABLE>
(1) From commencement of operations May 4, 1995.
(2) Total returns would have been lower had certain expenses not been borne
by the adviser or its affiliates.
(3) The performance of the Portfolio shown on this page does not reflect
expenses and charges of the applicable separate accounts and variable
products, all of which vary to a considerable extent and are described
in your product's prospectus.
(4) Annualized for periods of less than one year.
See notes to financial statements.
62
<PAGE> 64
VARIABLE INVESTORS SERIES TRUST
WORLD EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
-CONTINUED-
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1999 -----------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994(1)
----------- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD ....... $13.618 $14.084 $15.062 $13.823 $11.752 $11.348
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income ................... (0.039) 0.130 0.068 0.016 0.014 0.013
Net Realized and Unrealized Gain
on Investments ....................... 1.194 0.593 1.392 1.647 2.872 1.119
------- ------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS ............. 1.155 0.723 1.460 1.663 2.886 1.132
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From Net Investment Income .............. (0.000) (0.165) (0.161) (0.013) (0.000) (0.023)
In Excess of Net Investment Income ...... (0.000) (0.174) (0.126) (0.051) (0.000) (0.000)
From Net Realized Capital Gains ......... (0.000) (0.850) (2.056) (0.360) (0.815) (0.698)
In Excess of Net Realized Capital Gains.. (0.000) (0.000) (0.095) (0.000) (0.000) (0.007)
------- ------- ------- ------- ------- -------
Total Distributions ..................... (0.000) (1.189) (2.438) (0.424) (0.815) (0.728)
------- ------- ------- ------- ------- -------
NET ASSET VALUE AT END OF PERIOD ............. $14.773 $13.618 $14.084 $15.062 $13.823 $11.752
======= ======= ======= ======= ======= =======
TOTAL RETURN (2) (3) ......................... 8.48% 5.11% 9.98% 12.33% 24.32% 10.02%
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's) ..... $20,242 $23,400 $24,772 $24,534 $18,191 $11,500
Ratios to average net assets:
Gross Expenses (4) .................... 1.60% 1.51% 1.47% 1.50% 1.67% 2.22%
Net Expenses (4) ...................... 1.20% 1.20% 1.20% 1.20% 1.20% 1.20%
Net Investment Income (4) ............. 0.24% 0.27% 0.25% 0.10% 0.12% 0.16%
Portfolio Turnover Rate ................. 91.75% 150.22% 120.50% 61.14% 97.85% 110.12%
</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) Annualized for periods of less than one year.
See notes to financial statements.
63
<PAGE> 65
VARIABLE INVESTORS SERIES TRUST
GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
-CONTINUED-
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1999 ----------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994(1)
----------- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD ... $41.004 $34.702 $30.623 $25.866 $20.056 $20.390
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss) ........ (0.118) (0.000) (0.082) (0.063) 0.007 0.173
Net Realized and Unrealized Gain
(Loss) on Investments ............ 4.745 11.465 7.226 6.736 7.419 (0.335)
------- ------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS ......... 4.627 11.465 7.144 6.673 7.426 (0.162)
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From Net Investment Income .......... (0.000) (0.000) (0.000) (0.000) (0.173) (0.086)
In Excess of Net Investment Income... (0.000) (0.000) (0.000) (0.002) (0.000) (0.000)
From Net Realized Capital Gains ..... (0.000) (5.163) (3.065) (1.914) (1.443) (0.086)
------- ------- ------- ------- ------- -------
Total Distributions ................. (0.000) (5.163) (3.065) (1.916) (1.616) (0.172)
------- ------- ------- ------- ------- -------
NET ASSET VALUE AT END OF PERIOD ......... $45.631 $41.004 $34.702 $30.623 $25.866 $20.056
======= ======= ======= ======= ======= =======
TOTAL RETURN (2) (3) ..................... 11.25% 33.29% 23.62% 25.74% 37.12% (0.79)%
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's).. $64,439 $84,863 $65,273 $54,565 $42,919 $30,815
Ratios to average net assets:
Gross Expenses (4) ................ 0.99% 1.03% 1.10% 1.17% 1.17% 1.33%
Net Expenses (4) .................. 0.99% 1.02% 1.10% 1.17% 1.17% 1.20%
Net Investment Income (4) ......... (0.44)% (0.39)% (0.25)% (0.23)% 0.01% 0.78%
Portfolio Turnover Rate ............. 36.33% 86.91% 54.74% 67.82% 166.87% 155.12%
</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) Annualized for periods of less than one year.
See notes to financial statements.
64
<PAGE> 66
VARIABLE INVESTORS SERIES TRUST
MATRIX EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
-CONTINUED-
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1999 -------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994(1)
----------- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD ... $16.351 $14.275 $15.254 $15.704 $12.372 $14.650
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income ............... 0.005 0.047 0.287 0.659 0.559 0.521
Net Realized and Unrealized Gain
(Loss) on Investments ............ 1.123 2.939 2.965 0.063 3.560 (0.651)
------- ------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS ......... 1.128 2.986 3.252 0.722 4.119 (0.130)
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From Net Investment Income .......... (0.000) (0.056) (0.291) (0.654) (0.494) (0.521)
In Excess of Net Investment Income .. (0.000) (0.041) (0.000) (0.000) (0.000) (0.000)
From Net Realized Capital Gains ..... (0.000) (0.813) (3.940) (0.518) (0.293) (1.627)
------- ------- ------- ------- ------- -------
Total Distributions ................. (0.000) (0.910) (4.231) (1.172) (0.787) (2.148)
------- ------- ------- ------- ------- -------
NET ASSET VALUE AT END OF PERIOD ......... $17.479 $16.351 $14.275 $15.254 $15.704 $12.372
======= ======= ======= ======= ======= =======
TOTAL RETURN (2) (3) ..................... 6.89% 21.11% 22.05% 4.62% 33.45% (1.05)%
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's).. $23,766 $22,251 $14,521 $14,448 $16,018 $12,312
Ratios to average net assets:
Gross Expenses (4) ................ 1.34% 1.48% 1.54% 1.48% 1.51% 1.60%
Net Expenses (4) .................. 1.15% 1.15% 1.15% 1.15% 1.15% 1.16%
Net Investment Income (4) ......... 0.06% 0.36% 1.63% 3.74% 3.89% 3.16%
Portfolio Turnover Rate ............. 87.67% 138.23% 169.75% 19.41% 48.20% 193.40%
</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) Annualized for periods of less than one year.
See notes to financial statements.
65
<PAGE> 67
VARIABLE INVESTORS SERIES TRUST
GROWTH & INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
-CONTINUED-
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1999 -------------------------- PERIOD ENDED
(UNAUDITED) 1998 1997 1996 DECEMBER 31, 1995(1)
----------- ---- ---- ---- --------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD ... $15.901 $14.567 $12.421 $11.171 $10.000
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income ............... 0.045 0.112 0.127 0.070 0.045
Net Realized and Unrealized Gain
(Loss) on Investments ............ 2.423 1.696 3.351 1.291 1.266
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS ......... 2.468 1.808 3.478 1.361 1.311
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From Net Investment Income .......... (0.000) (0.107) (0.127) (0.070) (0.045)
In Excess of Net Investment Income .. (0.000) (0.005) (0.000) (0.001) (0.000)
From Net Realized Capital Gains ..... (0.000) (0.362) (1.205) (0.040) (0.095)
------- ------- ------- ------- -------
Total Distributions ................. (0.000) (0.474) (1.332) (0.111) (0.140)
------- ------- ------- ------- -------
NET ASSET VALUE AT END OF PERIOD ......... $18.369 $15.901 $14.567 $12.421 $11.171
======= ======= ======= ======= =======
TOTAL RETURN (2) (3) ..................... 15.52% 12.43% 28.20% 12.15% 13.09%
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's).. $31,151 $28,144 $21,061 $10,300 $ 3,335
Ratios to Average Net Assets:
Gross Expenses (4) ................ 1.33% 1.33% 1.60% 2.63% 7.27%
Net Expenses (4) .................. 1.25% 1.25% 1.25% 1.25% 1.25%
Net Investment Income (4) ......... 0.53% 0.70% 1.05% 0.82% 1.17%
Portfolio Turnover Rate ............. 50.04% 78.37% 162.94% 131.85% 33.49%
</TABLE>
(1) From commencement of operations May 31, 1995.
(2) Total returns would have been lower had certain expenses not been borne by
the adviser or its affiliates.
(3) The performance of the Portfolio shown on this page does not reflect
expenses and charges of the applicable separate accounts and variable
products, all of which vary to a considerable extent and are described in
your product's prospectus.
(4) Annualized for periods of less than one year.
See notes to financial statements.
66
<PAGE> 68
VARIABLE INVESTORS SERIES TRUST
MULTIPLE STRATEGIES PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
-CONTINUED-
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1999 ------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994(1)
----------- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD ....... $17.143 $14.158 $12.699 $12.043 $10.022 $12.182
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income ................... 0.035 0.078 0.103 0.143 0.137 0.236
Net Realized and Unrealized Gain
(Loss) on Investments ................ 1.456 4.035 2.629 2.069 3.086 (0.711)
------- ------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS ............. 1.491 4.113 2.732 2.212 3.223 (0.475)
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From Net Investment Income .............. (0.000) (0.078) (0.103) (0.144) (0.136) (0.235)
In Excess of Net Investment Income (2)... (0.000) (0.000) (0.000) (0.000) (0.000) (0.008)
From Net Realized Capital Gains ......... (0.000) (1.050) (1.170) (1.412) (1.066) (1.418)
In Excess of Net Realized Capital Gains.. (0.000) (0.000) (0.000) (0.000) (0.000) (0.024)
------- ------- ------- ------- ------- -------
Total Distributions ..................... (0.000) (1.128) (1.273) (1.556) (1.202) (1.685)
------- ------- ------- ------- ------- -------
NET ASSET VALUE AT END OF PERIOD ............. $18.634 $17.143 $14.158 $12.699 $12.043 $10.022
======= ======= ======= ======= ======= =======
TOTAL RETURN (3) (4) ......................... 8.67% 29.15% 21.79% 18.29% 32.24% (3.91)%
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's) ..... $47,886 $43,296 $35,119 $31,884 $26,380 $21,150
Ratios to average net assets:
Gross Expenses (5) .................... 1.06% 1.15% 1.21% 1.32% 1.33% 1.48%
Net Expenses (5) ...................... 1.06% 1.15% 1.19% 1.20% 1.20% 1.20%
Net Investment Income (5) ............. 0.40% 0.50% 0.69% 1.16% 1.14% 1.74%
Portfolio Turnover Rate ................. 42.59% 74.00% 45.87% 92.21% 161.10% 153.64%
</TABLE>
(1) On April 1, 1994, FVAS became investment adviser. Prior to that date,
results were achieved by former investment advisers.
(2) For 1998 and 1997, 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) Annualized for periods of less than one year.
See notes to financial statements.
67
<PAGE> 69
VARIABLE INVESTORS SERIES TRUST
HIGH INCOME BOND PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
-CONTINUED-
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1999 ---------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994(1)
----------- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD ....... $ 9.165 $ 9.720 $ 9.173 $ 8.589 $7.914 $9.704
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income ................... 0.388 0.766 0.640 0.596 0.779 1.018
Net Realized and Unrealized Gain
(Loss) on Investments ................ (0.090) (0.471) 0.598 0.624 0.717 (1.711)
------- ------- ------- ------- ------ ------
TOTAL FROM INVESTMENT OPERATIONS ............. 0.298 0.295 1.238 1.220 1.496 (0.693)
------- ------- ------- ------- ------ ------
LESS DISTRIBUTIONS:
From Net Investment Income .............. (0.000) (0.691) (0.681) (0.596) (0.779) (1.005)
In Excess of Net Investment Income ...... (0.000) (0.148) (0.010) (0.040) (0.042) (0.006)
From Net Realized Capital Gains ......... (0.000) (0.011) (0.000) (0.000) (0.000) (0.075)
In Excess of Net Realized Capital Gains.. (0.000) (0.000) (0.000) (0.000) (0.000) (0.011)
------- ------- ------- ------- ------ ------
Total Distributions ..................... (0.000) (0.850) (0.691) (0.636) (0.821) (1.097)
------- ------- ------- ------- ------ ------
NET ASSET VALUE AT END OF PERIOD ............. $ 9.463 $ 9.165 $ 9.720 $ 9.173 $8.589 $7.914
======= ======= ======= ======= ====== ======
TOTAL RETURN (2) (3) ......................... 3.24% 3.04% 13.54% 14.20% 18.98% (7.08)%
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's) ..... $18,446 $21,516 $17,916 $12,835 $8,764 $7,771
Ratios to average net assets:
Gross Expenses (4) .................... 1.48% 1.46% 1.64% 1.99% 2.04% 2.03%
Net Expenses (4) ...................... 1.20% 1.20% 1.20% 1.18% 1.20% 1.20%
Net Investment Income (4) ............. 7.86% 6.89% 7.15% 7.96% 8.62% 8.70%
Portfolio Turnover Rate ................. 16.50% 54.70% 91.54% 105.48% 82.15% 200.19%
</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) Annualized for periods of less than one year.
See notes to financial statements.
68
<PAGE> 70
VARIABLE INVESTORS SERIES TRUST
U.S. GOVERNMENT BOND PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
-CONTINUED-
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1999 -------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994(1)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD ....... $10.322 $10.161 $ 9.938 $10.510 $ 9.718 $10.923
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income ................... 0.280 0.430 0.630 0.629 0.765 0.690
Net Realized and Unrealized Gain
(Loss) on Investments ................ (0.451) 0.360 0.299 (0.385) 1.191 (0.986)
------- ------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS ............. (0.171) 0.790 0.929 0.244 1.956 (0.296)
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From Net Investment Income .............. (0.000) (0.427) (0.617) (0.610) (0.765) (0.690)
In Excess of Net Investment Income ...... (0.000) (0.008) (0.000) (0.000) (0.045) (0.000)
From Net Realized Capital Gains ......... (0.000) (0.192) (0.068) (0.206) (0.354) (0.105)
In Excess of Net Realized Capital Gains.. (0.000) (0.002) (0.021) (0.000) (0.000) (0.112)
Tax Return of Capital ................... (0.000) (0.000) (0.000) (0.000) (0.000) (0.002)
------- ------- ------- ------- ------- -------
Total Distributions ..................... (0.000) (0.629) (0.706) (0.816) (1.164) (0.909)
------- ------- ------- ------- ------- -------
NET ASSET VALUE AT END OF PERIOD ............. $10.151 $10.322 $10.161 $ 9.938 $10.510 $ 9.718
======= ======= ======= ======= ======= =======
TOTAL RETURN (2) (3) ......................... (1.66)% 7.79% 9.37% 2.36% 20.18% (2.72)%
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's) ..... $14,621 $15,470 $9,679 $10,734 $11,618 $14,444
Ratios to average net assets:
Gross Expenses (4) .................... 1.38% 1.59% 1.73% 1.66% 1.59% 1.45%
Net Expenses (4) ...................... 0.85% 0.85% 0.85% 0.85% 0.85% 0.85%
Net Investment Income (4) ............. 5.27% 5.43% 5.86% 5.80% 6.18% 5.65%
Portfolio Turnover Rate ................. 24.32% 66.12% 124.75% 244.96% 252.94% 289.71%
</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) Annualized for periods of less than one year.
See notes to financial statements.
69
<PAGE> 71
VARIABLE INVESTORS SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
NOTE A -- ORGANIZATION
Variable Investors Series Trust (the "Trust") was established as a
Massachusetts business trust under the laws of Massachusetts by an Agreement and
Declaration of Trust dated December 23, 1986. The Trust is an open-end, series
management investment company which currently is comprised of eight series of
shares of beneficial interest (the "Portfolios") each of which represents the
entire interest in a separate portfolio of investments. The Portfolios are the
Small Cap Growth Portfolio, the World Equity Portfolio, the Growth Portfolio,
the Matrix Equity Portfolio, the Growth & Income Portfolio, the Multiple
Strategies Portfolio, the High Income Bond Portfolio, and the U.S. Government
Bond Portfolio.
NOTE B -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Trust in the preparation of its financial statements.
ESTIMATES: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
VALUATION OF INVESTMENTS: The Portfolios' equity securities, including
American Depositary Receipts (ADR's) and other forms of depository receipts,
traded on a national securities exchange are valued at the last sales price, or,
if no closing price is available, at a bid price estimated by a broker or
dealer. Debt securities are generally valued on the basis of valuations
furnished by pricing services which determine valuations for normal
institutional size trading units of debt securities, without exclusive reliance
upon quoted prices. Short-term securities maturing in 60 days or less are valued
at amortized cost, which approximates market value. 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, and the Portfolio
may suffer a loss
70
<PAGE> 72
VARIABLE INVESTORS SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
-CONTINUED-
INVESTMENT TRANSACTIONS: Investment security transactions are recorded on
the trade date. 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 Portfolio 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 Portfolios 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 Portfolio 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 a Portfolio 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
Portfolio on contracts which have matured or which the Portfolio has terminated
by entering into an offsetting closing transaction.
FORWARD COMMITMENTS: To secure prices or yields deemed advantageous at a
particular time, each Portfolio of the Trust may enter into a forward commitment
in which a Portfolio agrees on trade date to either make or receive delivery
against payment for securities on a delayed delivery basis. The price and
interest rate of such securities are fixed at trade date. For forward commitment
purchases, the Portfolio does not earn interest on such security until
settlement date.
FEDERAL INCOME TAXES: Each Portfolio of the Trust is treated as a separate
entity for Federal tax purposes. Each Portfolio of the Trust has qualified and
intends to continue to qualify each year as a "regulated investment company"
under Subchapter M of the Internal Revenue Code, as amended. By so qualifying,
the Portfolios of the Trust will not be subject to Federal income taxes to the
extent that they distribute all of their taxable income, including net realized
capital gains, for the fiscal year. In addition, by distributing during each
calendar year substantially all of their net investment income, net capital
gains and certain other amounts, if any, the Portfolios of the Trust will not be
subject to a Federal excise tax.
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.
71
<PAGE> 73
VARIABLE INVESTORS SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
-CONTINUED-
DIVIDENDS AND DISTRIBUTIONS: Each of the Portfolios declares and
distributes dividends from net investment income, if any, and distributes its
net realized capital gains, if any, at least annually. Income and capital gain
distributions are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. These differences are
primarily due to utilization of capital loss carryovers, differing treatments
for foreign currency transactions and differences in the timing of recognition
of certain capital losses for financial reporting and tax purposes. Both
dividends and capital gain distributions are made in shares of such Portfolios
unless an election is made on behalf of a Separate Account to receive dividends
and capital gain distributions in cash.
NOTE C -- INVESTMENT ADVISORY AND OTHER RELATED PARTY AGREEMENTS
INVESTMENT ADVISORY AGREEMENT
First Variable Advisory Services Corp. ("FVAS") is the investment adviser
to all Portfolios of the Trust under an investment advisory agreement with the
Trust dated September 22, 1994. FVAS retained the following sub-advisers at its
own cost and expense pursuant to sub-advisory agreements dated September 22,
1994: Value Line, Inc. as sub-adviser to the Growth and Multiple Strategies
Portfolios, State Street Bank and Trust Company through its investment
management division State Street Global Advisors as sub-adviser to the Matrix
Equity Portfolio, Federated Investment Counseling as sub-adviser to the High
Income Bond Portfolio and Strong Capital Management, Inc. as sub-adviser to the
U.S. Government Bond Portfolio. FVAS retained the following sub-advisers at its
own cost and expense pursuant to sub-advisory agreements dated May 1, 1995:
Pilgrim Baxter & Associates, Ltd. as sub-adviser to the Small Cap Growth
Portfolio and Warburg Pincus Asset Management, Inc. as sub-adviser to the Growth
& Income Portfolio. FVAS retained the following sub-adviser at its own cost and
expense pursuant to a sub-advisory agreement dated December 9, 1996: Evergreen
Investment Management Company (formerly known as the Keystone Investment
Management Company) as sub-adviser to the World Equity Portfolio.
FVAS is a Massachusetts corporation which was incorporated on October 8,
1993 and which is registered with the Securities and Exchange Commission as an
investment adviser under the Investment Advisers Act of 1940, as amended. FVAS
is a wholly-owned subsidiary of First Variable, which is a wholly-owned
subsidiary of Irish Life of North America, Inc. ("ILoNA"), which is a
wholly-owned subsidiary of Irish Life Plc., of Dublin, Ireland.
As compensation for all services rendered, facilities provided and
expenses paid or assumed by FVAS under the advisory 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: 0.85% of average daily net
assets for the Small Cap Growth Portfolio; 0.70% of the first $200 million of
average daily net assets, 0.625% of the next $300 million of average daily net
assets, and 0.50% of average daily net assets in excess of $500 million for the
World Equity Portfolio; 0.70% of average daily net assets for the Growth and the
Multiple Strategies Portfolios; 0.65% of the first $100 million of average daily
net assets and 0.55% of average daily net assets in excess of $100 million for
the Matrix Equity Portfolio; 0.75% of average daily net assets for the Growth &
Income Portfolio; 0.70% of the first $40 million of average daily net assets,
0.65% of the next $20 million of average daily net assets, 0.55% of the next $15
million of average daily net assets, and 0.50% of average daily net assets in
excess of $75 million for the High Income Bond Portfolio; 0.60% of the first
$200 million of average daily net assets and 0.50% of average daily net assets
in excess of $200 million for the U.S. Government Bond Portfolio.
LIMITATIONS
First Variable has agreed to reduce its compensation for certain services
to the Trust (and, if necessary, bear certain expenses of each of the
Portfolios) through April 1, 2000 with respect to each of the Portfolios to the
extent that Portfolio expenses, other than FVAS's compensation, exceed the
annual rate of 0.50% of a Portfolio's average daily net assets (0.25% in the
case of the U.S. Government Bond Portfolio).
72
<PAGE> 74
VARIABLE INVESTORS SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
-CONTINUED-
EXPENSE REDUCTIONS
State Street Bank and Trust Company, the Trust's custodian, has agreed to
compensate the Portfolios and decrease the Trust's custodian expenses for cash
balances left uninvested in each of the Portfolios. For the six months ended
June 30, 1999 the Trust's expenses were reduced by $4,055.
TRUSTEES' COMPENSATION
Trustees' fees of $10,000 per year, plus $1,500 per meeting of the Board
of Trustees and $750 for each Audit Committee meeting attended (if held on a day
other than when a Board of Trustees meeting is held), are paid by the Trust to
each Trustee who is not an interested person of the Trust, First Variable, ILoNA
or FVAS. No remuneration is paid by the Trust to any Trustee or officer of the
Trust who is affiliated with First Variable, ILoNA or FVAS.
NOTE D -- INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investments, excluding
short-term securities for each Portfolio for the six months ended June 30, 1999
were as follows:
<TABLE>
<CAPTION>
NON- NON-
GOVERNMENT GOVERNMENT GOVERNMENT GOVERNMENT
PURCHASES PURCHASES SALES SALES
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Small Cap Growth Portfolio ..... $ 8,231,628 $ 0 $11,018,081 $ 0
World Equity Portfolio ......... 18,956,967 0 23,277,108 0
Growth Portfolio ............... 25,489,993 514,413 55,072,856 1,300,710
Matrix Equity Portfolio ........ 19,525,332 411,641 19,696,166 223,153
Growth & Income Portfolio ...... 13,296,649 0 14,286,999 197,479
Multiple Strategies Portfolio .. 14,225,624 2,844,969 19,510,027 1,290,359
High Income Bond Portfolio ..... 3,280,524 0 4,833,735 0
U.S. Government Bond Portfolio.. 325,615 4,146,800 0 3,530,518
</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 June 30, 1999 were as follows:
<TABLE>
<CAPTION>
GROSS UNREALIZED NET UNREALIZED
IDENTIFIED COST APPRECIATION (DEPRECIATION) APPRECIATION/(DEPRECIATION)
--------------- ------------ -------------- ---------------------------
<S> <C> <C> <C> <C>
Small Cap Growth Portfolio...... $ 9,146,118 $ 3,269,423 $(333,210) $ 2,936,213
World Equity Portfolio.......... 16,664,825 3,631,543 (532,233) 3,099,310
Growth Portfolio................ 43,246,215 21,468,116 (199,537) 21,268,579
Matrix Equity Portfolio......... 20,413,350 3,683,699 (333,809) 3,349,890
Growth & Income Portfolio....... 26,674,717 4,950,822 (509,626) 4,441,196
Multiple Strategies Portfolio... 35,874,210 12,211,748 (309,876) 11,901,872
High Income Bond Portfolio...... 18,271,285 692,014 (891,543) (199,529)
U.S. Government Bond Portfolio.. 14,853,458 63,829 (463,746) (399,917
</TABLE>
73
<PAGE> 75
VARIABLE INVESTORS SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
-CONTINUED-
NOTE E -- FORWARD FOREIGN CURRENCY CONTRACT
As of June 30, 1999 the World Equity Portfolio had open 11 forward foreign
currency contracts which contractually obligate the Portfolio to deliver
currencies at a specified date, as follows:
<TABLE>
<CAPTION>
NET UNREALIZED
CURRENCY SOLD SETTLEMENT DATE COST VALUE (DEPRECIATION)
------------- --------------- ---- ----- --------------
<S> <C> <C> <C> <C>
351,142 Australian Dollars 07/07/99 $ 223,000 $ 232,139 $ (9,139)
223,254 Australian Dollars 09/01/99 145,000 147,747 (2,747)
457,857 Swiss Franc 08/26/99 305,000 296,307 8,693
1,981,344 Euro Currency 08/30/99 2,105,000 2,051,667 53,333
658,283 Pound Sterling 08/05/99 1,055,000 1,037,848 17,152
136,917,786 Japanese Yen 08/26/99 1,117,532 1,141,112 (23,580)
</TABLE>
<TABLE>
<CAPTION>
CURRENCY PURCHASED
------------------
<S> <C> <C> <C> <C>
351,142 Australian Dollars 07/07/99 228,183 232,139 3,956
153,000 Swiss Franc 08/26/99 101,361 99,016 (2,345)
947,000 Euro Currency 08/30/99 1,000,221 980,611 (19,610)
335,000 Pound Sterling 08/05/99 537,298 528,160 (9,138)
35,675,000 Japanese Yen 08/26/99 303,532 297,326 (6,206)
--------
$ 10,369
========
</TABLE>
NOTE F - YEAR 2000 ISSUE (UNAUDITED)
Like other mutual funds, as well as other financial and business
organizations around the world, the Trust could be adversely affected if the
computer systems used by the Adviser, the Sub-Advisers and other service
providers in performing their administrative functions do not properly process
and calculate date-related information and data as of and after January 1, 2000.
This is commonly known as the "Year 2000 issue." The Adviser and Sub-Advisers
are taking steps that they believe are reasonably designed to address the Year
2000 issue with respect to computer systems that they use and to obtain
reasonable assurances that comparable steps are being taken by the Trust's other
major service providers. At this time, however, there can be no assurance that
these steps will be sufficient to avoid any adverse impact to the Trust.
74
<PAGE> 76
PRINCIPAL OFFICERS AND TRUSTEES OF
VARIABLE INVESTORS SERIES TRUST
----------------
PAUL G. CHENAULT, TRUSTEE
NORMAN A. FAIR, TRUSTEE
WESLEY E. HORTON, TRUSTEE
W. LAWRENCE HOWE, TRUSTEE
LAIRD E. WIGGIN, TRUSTEE
JOHN SOUKUP, PRESIDENT AND TRUSTEE
ARNOLD R. BERGMAN, SECRETARY
CHRIS HARDEN, TREASURER
----------------
INVESTMENT ADVISER
FIRST VARIABLE ADVISORY SERVICES CORP.
----------------
THE INFORMATION CONTAINED IN THIS REPORT IS INTENDED FOR GENERAL INFORMATIONAL
PURPOSES ONLY. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE
INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY CURRENT TRUST AND SEPARATE ACCOUNT
PROSPECTUSES WHICH CONTAIN IMPORTANT INFORMATION CONCERNING THE TRUST, THE
COMPANY, AND ITS CURRENT PUBLIC OFFERING OF VARIABLE ANNUITY CONTRACTS AND
VARIABLE LIFE INSURANCE POLICIES.
75
<PAGE> 77
TAX ADVANTAGE PRODUCT CHOICES
FIRST VARIABLE
LIFE INSURANCE
COMPANY
[FIRST VARIABLE LIFE INSURANCE COMPANY LOGO]
Products
VARIABLE UNIVERSAL LIFE
CAPITAL SOLUTIONS VUL
With the potential to...
BUILD WEALTH with tax-deferred growth.
ENJOY INCOME with tax-advantages through loans and withdrawals.
PRESERVE ASSETS with a death benefit that can pass free of income tax
to heirs.*
SINGLE PREMIUM VARIABLE LIFE
CAPITAL ONE PAY VL
With the potential to...
BUILD WEALTH with tax-deferred growth.
Enjoy income through loans and withdrawals after age 59-1/2.**
PRESERVE ASSETS with a death benefit that can pass income tax free
to heirs.*
Variable Annuities
CAPITAL SIX VA
CAPITAL FIVE VA
CAPITAL NO LOAD VA
With the potential to...
BUILD WEALTH with tax-deferred growth.
ENJOY INCOME with tax-advantaged access through withdrawals and
annuitization.**
PRESERVE ASSETS with a death benefit that guarantees heirs receive at least
the original investment regardless of market performance.*
* May be subject to estate taxation
** Earnings are subject to income tax when withdrawn or paid as a death
benefit. Distributions before age 59-1/2 may also be subject to 10%
penalty.
All products not yet available in all states.
TAX ADVANTAGED PRODUCT CHOICES
Special Programs
ASSET ALLOCATION STRATEGIES
Asset Allocation is dividing your portfolio among several different investment
categories, such as stocks, bonds and money market instruments. Asset allocation
theory helps you and your investment professional design a portfolio that meets
your tolerance for risk. It can also help you gain the most potential return for
a certain risk level. First Variable Life offers a menu of asset allocation
models that can help you build, enjoy and preserve your wealth.
AUTOMATIC ASSET REBALANCING
Once you and your investment professional have selected a mix of investments,
automatic asset rebalancing helps you maintain it by rebalancing your portfolio.
Choose from quarterly, semi-annual or annual rebalancing. Your quarterly
statement will show activities to make tracking your investment easier.
DOLLAR COST AVERAGING
You can take advantage of a time-tested investment technique of dollar cost
averaging within your First Variable product. This strategy invests equal
amounts at regular intervals over time to take advantage of the natural ups and
downs of the financial markets. The key to dollar cost averaging is staying with
your plan, regardless of market performance. At First Variable, you can use
dollar cost averaging to move from one investment choice to another.
Dollar cost averaging does not assure a profit or protect against loss in
declining markets. Since prices fluctuate, consider your ability to continue
purchases through both high and low price levels.
<PAGE> 78
[FIRST VARIABLE LIFE INS. CO. LOGO]
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2122 York Road, Suite 300 - Oak Brook, IL 60523 800-499-0713
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First Variable Life Insurance
A History of Innovation
Founded in 1968, First Variable Life Insurance Company is an innovative
financial services company and the first to offer variable life insurance in the
United States. First Variable Life is a proud member of the Irish Life of North
America (ILoNA) family, the holding company for the U.S. operations of Irish
Life & Permanent plc.
Headquartered in Dublin, Ireland, Irish Life & Permanent plc is the market
leader for retail financial services in Ireland. With assets in excess of $25
billion, it specializes in life insurance, pension plans, investment management
and other personal financial services.
Together, the ILoNA family of companies markets a broad range of financial
products and services directed at the quickly evolving needs of today's
consumer. ILoNA's other business units include:
- - Interstate Assurance Company
- - IAC Securities Corporation
- - Guarantee Reserve Life Insurance Company
- - Money Matters Exchange
Trust the experience, knowledge and expertise of the company that specializes in
tax-deferred and tax-advantaged financial products. First Variable Life
Insurance Company strives to help investors build, enjoy and preserve wealth for
many generations to come.
Neither First Variable Life Insurance Company nor its agents give legal,
accounting or tax advice. Consult an attorney or tax advisor about the
consequences of financial decisions. All products not yet available in all
states.
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