SEC. File Nos. 2-86838
811-3857
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
Registration Statement
Under
the Securities Act of 1933
Post-Effective Amendment No. 19
and
Registration Statement
Under
The Investment Company Act of 1940
Amendment No. 19
AMERICAN VARIABLE INSURANCE SERIES
(Exact Name of Registrant as specified in charter)
333 South Hope Street
Los Angeles, CA 90071
(Address of principal executive offices)
Registrant's telephone number, including area code:
(213) 486-9200
CHAD L. NORTON
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, CA 90071
(name and address of agent for service)
Copies to:
CARY I. KLAFTER, ESQ.
MORRISON & FOERSTER
345 California Street
San Francisco, California 94104
(Counsel for the Registrant)
The Registrant has filed a declaration pursuant to rule 24f-2
registering an indefinite number of shares under the Securities Act of 1933.
On January 17, 1995, it filed its 24f-2 notice for fiscal 1994.
Approximate date of proposed public offering:
It is proposed that this filing become effective on August 1, 1995, pursuant
to paragraph (a) of rule 485.
AMERICAN VARIABLE INSURANCE SERIES
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
ITEM NUMBER OF CAPTIONS IN PROSPECTUS (PART "A")
PART "A" OF FORM N-1A
<S> <C> <C>
1. COVER PAGE COVER PAGE
2. SYNOPSIS N/A
3. FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS
4. GENERAL DESCRIPTION OF REGISTRANT INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS
5. MANAGEMENT OF THE FUND FINANCIAL HIGHLIGHTS; FUND ORGANIZATION AND MANAGEMENT
6. CAPITAL STOCK AND OTHER SECURITIES INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS; FUND
ORGANIZATION AND MANAGMENT; DIVIDENDS, DISTRIBUTIONS AND
TAXES
7. PURCHASE OF SECURITIES BEING OFFERED PURCHASES AND REDEMPTIONS OF SHARES
8. REDEMPTION OR REPURCHASE PURCHASES AND REDEMPTIONS OF SHARES
9. LEGAL PROCEEDINGS N/A
</TABLE>
<TABLE>
<CAPTION>
ITEM NUMBER OF CAPTIONS IN STATEMENT OF
PART "B" OF FORM N-1A ADDITIONAL INFORMATION (PART "B")
<S> <C> <C>
10. COVER PAGE COVER
11. TABLE OF CONTENTS TABLE OF CONTENTS
12. GENERAL INFORMATION AND HISTORY NONE
13. INVESTMENT OBJECTIVES AND POLICIES INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS
(PART "A")
14. MANAGEMENT OF THE REGISTRANT SERIES OFFICERS AND TRUSTEES
15. CONTROL PERSONS AND PRINCIPAL HOLDERS SERIES OFFICERS AND TRUSTEES
OF SECURITIES
16. INVESTMENT ADVISORY AND OTHER SERVICES INVESTMENT ADVISORY AND SERVICE AGREEMENT
17. BROKERAGE ALLOCATION AND OTHER PRACTICES EXECUTION OF PORTFOLIO TRANSACTIONS
18. CAPITAL STOCK AND OTHER SECURITIES NONE
19. PURCHASE, REDEMPTION AND PRICING OF PURCHASES AND REDEMPTIONS OF SHARES (PART "A");
SECURITIES BEING OFFERED
20. TAX STATUS DIVIDENDS, DISTRIBUTIONS AND TAXES
21. UNDERWRITERS N/A
22. CALCULATION OF PERFORMANCE DATA FINANCIAL HIGHLIGHTS
23. FINANCIAL STATEMENTS FINANCIAL STATEMENTS
</TABLE>
<TABLE>
<CAPTION>
ITEM IN PART "C"
<S> <C>
24. FINANCIAL STATEMENTS AND EXHIBITS
25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL
26. NUMBER OF HOLDERS OF SECURITIES
27. INDEMNIFICATION
28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
29. PRINCIPAL UNDERWRITERS
30. LOCATION OF ACCOUNTS AND RECORDS
31. MANAGEMENT SERVICES
32. UNDERTAKINGS
SIGNATURE PAGE
<PAGE>
Prospectus
American
Variable
Insurance
Series(R)
August , 1995
<PAGE>
AMERICAN VARIABLE INSURANCE SERIES
333 South Hope Street
Los Angeles, California 90071
(213) 486-9200
American Variable Insurance Series (the "Series") is a fully managed,
diversified, open-end investment company. The Series consists of eight funds,
each of which has its own investment objective(s) and policies.
Shares of the Series are offered only to insurance company separate accounts
to serve as the funding vehicle for certain variable annuity and life
insurance contracts ("Contract" or "Contracts").
THE CONTRACTS INVOLVE CERTAIN FEES AND EXPENSES NOT DESCRIBED IN THIS
PROSPECTUS AND ALSO MAY INVOLVE CERTAIN RESTRICTIONS OR LIMITATIONS ON THE
ALLOCATION OF PURCHASE PAYMENTS OR CONTRACT VALUES TO ONE OR MORE FUNDS OF THE
SERIES. IN PARTICULAR, CERTAIN FUNDS MAY NOT BE AVAILABLE IN CONNECTION WITH A
PARTICULAR CONTRACT. SEE THE APPLICABLE CONTRACT PROSPECTUS FOR INFORMATION
REGARDING FEES AND EXPENSES OF THE CONTRACT AND ANY APPLICABLE RESTRICTIONS OR
LIMITATIONS.
The GROWTH FUND seeks growth of capital by investing primarily in common
stocks or securities with common stock characteristics, such as convertible
preferred stocks, which demonstrate the potential for appreciation.
The INTERNATIONAL FUND seeks long-term growth of capital by investing
primarily in securities of issuers domiciled outside the United States.
The GROWTH-INCOME FUND seeks growth of capital and income by investing
primarily in common stocks or other securities which demonstrate the potential
for appreciation and/or dividends.
The ASSET ALLOCATION FUND seeks high total return (including income and
capital gains) consistent with preservation of capital over the long-term
through a diversified portfolio that can include common stocks and other
equity-type securities, bonds and other intermediate and long-term fixed-
income securities and money market instruments in any combination.
The HIGH-YIELD BOND FUND seeks high current income and secondarily seeks
capital appreciation by investing primarily in intermediate and long-term
corporate obligations, with emphasis on higher yielding, higher risk, lower
rated or unrated securities. IN ADDITION TO OTHER RISKS, HIGH-YIELD, HIGH-RISK
BONDS (ALSO KNOWN AS "JUNK BONDS") ARE SUBJECT TO GREATER FLUCTUATIONS IN
VALUE AND RISK OF LOSS OF INCOME AND PRINCIPAL DUE TO DEFAULT BY THE ISSUER
THAN ARE INVESTMENTS IN LOWER YIELDING, HIGHER RATED BONDS.
The BOND AND INCOME FUND seeks to provide as high a level of current income
as is consistent with the preservation of capital by investing primarily in
fixed-income securities.
The U.S. GOVERNMENT/AAA-RATED SECURITIES FUND seeks a high level of current
income consistent with prudent investment risk and preservation of capital by
investing primarily in a combination of securities guaranteed by the U.S.
Government and other debt securities rated AAA or Aaa.
The CASH MANAGEMENT FUND seeks high current yield while preserving capital
by investing in a diversified selection of high-quality money market
instruments.
This prospectus sets forth concisely the information an investor should know
before investing in the Series. You may obtain the statement of additional
information dated August , 1995, which contains the Series' financial
statements, without charge, by writing to the Secretary of the Series at the
above address or telephoning 800/421-0180. All such requests will be honored
within three business days of receipt.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED, OR
GUARANTEED BY, THE U.S. GOVERNMENT, ANY FINANCIAL INSTITUTION, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, OR ANY OTHER AGENCY, ENTITY OR PERSON.
THE PURCHASE OF FUND SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY A CURRENT PROSPECTUS OF THE
APPLICABLE CONTRACT. THIS PROSPECTUS AND THE APPLICABLE CONTRACT PROSPECTUS
SHOULD BE READ CAREFULLY AND THEN RETAINED FOR FUTURE REFERENCE.
The date of this prospectus is August , 1995
<PAGE>
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following condensed financial information for 1991 through 1994 has
been derived from financial statements which have been audited by Price
Waterhouse LLP, independent accountants. The information for the years
prior to 1991 was audited by other independent accountants. This
information should be read in conjunction with the financial statements and
accompanying notes which are included in the statement of additional
information.
</TABLE>
<TABLE>
<CAPTION>
Net realized Total
Net asset & unrealized income Dividends Distributions Net asset Net assets,
Period value, Net gain (loss) from from net from net value, end of
ended beginning investment on investment investment realized Total end of Total period
11/30 of period income investments operations income gains distributions period return (in millions)
- ------ --------- ---------- ------------ ---------- ---------- ------------- ------------- --------- ------ -------------
Growth Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1985 $ 9.72 $ .06 $ 1.88 $ 1.94 $ (.03) -- $ (.03) $11.63 20.11% $ 20
1986 11.63 .10 4.30 4.40 (.13) $ (.24) (.37) 15.66 38.77 44
1987 15.66 .14 (.78) (.64) (.11) (.34) (.45) 14.57 (4.34) 99
1988 14.57 .33 2.85 3.18 (.28) (.61) (.89) 16.86 22.34 48
1989 16.86 .49 6.01 6.50 (.45) -- (.45) 22.91 38.87 173
1990 22.91 .54 (2.27) (1.73) (.56) (.64) (1.20) 19.98 (7.87) 304
1991 19.98 .41 4.48 4.89 (.47) (.22) (.69) 24.18 24.90 700
1992 24.18 .29 4.25 4.54 (.31)/2/ -- (.31) 28.41 18.90 1,212
1993 28.41 .25 4.13 4.38 (.24) (.21) (.45) 32.34 15.59 1,737
1994 32.34 .24 .69 .93 (.24) (1.09) (1.33) 31.94 2.92 2,027
<CAPTION>
Ratio of Ratio
expenses of net
to income to
Period average average Portfolio
ended net net turnover
11/30 assets assets rate
- ------- ---------- ----------- ----------
<S> <C> <C> <C>
1985 .83% .78% 28.4%
1986 .71 .76 27.4
1987 .63 .97 14.0
1988 .72 1.72 7.1/1/
1989 .60 2.97 29.2
1990 .59 3.00 16.8
1991 .56 1.94 9.8
1992 .53 1.15 11.2
1993 .50 .86 20.4
1994 .49 .78 29.6
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
International Fund/3/
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1990 $10.00 $ .11 $ (.62) $ (.51) $ (.04) -- $ (.04) $ 9.45 (5.08)% $ 66
1991 9.45 .22 .59 .81 (.24) -- (.24) 10.02 8.67 197
1992 10.02 .19 (.09) .10 (.21) $ (.02) (.23) 9.89 .90 360
1993 9.89 .17 2.50 2.67 (.16) -- (.16) 12.40 27.20 840
1994 12.40 .25 1.04 1.29 (.20) (.22) (.42) 13.27 10.48 1,405
<CAPTION>
International Fund/3/
<S> <C> <C> <C>
1990 1.03%/4/ 3.18%/4/ 4.5%
1991 1.04 2.62 8.2
1992 1.00 2.11 16.7
1993 .96 1.75 17.7
1994 .80 2.03 19.7
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Growth-Income Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1985 $10.54 $ .20 $ 3.28 $ 3.48 $ (.07) -- $ (.07) $13.95 33.13% $ 42
1986 13.95 .41 3.91 4.32 (.48) $ (.33) (.81) 17.46 32.10 129
1987 17.46 .47 (1.87) (1.40) (.46) (.08) (.54) 15.52 (8.59) 217
1988 15.52 .72 2.66 3.38 (.68) (.18) (.86) 18.04 22.13 102
1989 18.04 .78 3.93 4.71 (.74) (.58) (1.32) 21.43 27.32 305
1990 21.43 .82 (1.91) (1.09) (.86) (.25) (1.11) 19.23 (5.27) 535
1991 19.23 .75 2.63 3.38 (.79) (.10) (.89) 21.72 17.83 1,022
1992 21.72 .65 2.74 3.39 (.67) (.27) (.94) 24.17 15.90 1,704
1993 24.17 .63 2.12 2.75 (.63) (.28) (.91) 26.01 11.63 2,436
1994 26.01 .68 .14 .82 (.65) (.88) (1.53) 25.30 3.21 2,740
<CAPTION>
Growth-Income Fund
<S> <C> <C> <C>
1985 .73% 2.88% 25.6%
1986 .61 3.08 11.2
1987 .59 2.85 6.8
1988 .67 3.59 14.3/1/
1989 .58 4.94 16.7
1990 .56 4.77 9.7
1991 .56 3.80 11.1
1992 .52 3.01 13.6
1993 .49 2.66 24.9
1994 .47 2.72 29.3
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Asset Allocation Fund/5/
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 $10.00 $ .08 $ .10 $ .18 $ (.01) -- $ (.01) $10.17 1.70% $ 33
1990 10.17 .50 (.75) (.25) (.42) -- (.42) 9.50 (2.34) 106
1991 9.50 .53 1.11 1.64 (.55) -- (.55) 10.59 17.63 194
1992 10.59 .48 .94 1.42 (.49) $ (.05) (.54) 11.47 13.69 359
1993 11.47 .51 .67 1.18 (.49) (.15) (.64) 12.01 10.59 578
1994 12.01 .51 (.57) (.06) (.52) (.18) (.70) 11.25 (.54) 637
<CAPTION>
<S> <C> <C> <C>
Asset Allocation Fund/5/
1989 .59%/2/ 5.78%/2/ --
1990 .64 6.70 14.4%
1991 .59 5.56 15.1
1992 .57 4.73 19.7
1993 .55 4.66 19.0
1994 .53 4.55 36.1
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
High-Yield Bond Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1985 $10.96 $ .81 $ 1.54 $ 2.35 $ (.29) -- $ (.29) $13.02 21.79% $ 23
1986 13.02 1.35 1.30 2.65 (1.98) $ (.20) (2.18) 13.49 22.64 53
1987 13.49 1.35 (.94) .41 (1.36) (.32) (1.68) 12.22 2.96 70
1988 12.22 1.26 .68 1.94 (1.33) (.17) (1.50) 12.66 16.95 26
1989 12.66 1.22 .10 1.32 (1.16) -- (1.16) 12.82 10.85 50
1990 12.82 1.33 (1.02) .31 (1.30) -- (1.30) 11.83 2.49 58
1991 11.83 1.17 1.78 2.95 (1.25) -- (1.25) 13.53 26.22 107
1992 13.53 1.10 .62 1.72 (1.08) -- (1.08) 14.17 13.14 197
1993 14.17 1.09 1.20 2.29 (1.10) (.19) (1.29) 15.17 17.09 379
1994 15.17 1.27 (2.07) (.80) (1.23) (.25) (1.48) 12.89 (5.71) 390
<CAPTION>
High-Yield Bond Fund
<S> <C> <C> <C>
1985 .87% 11.71% 67.7%
1986 .67 11.59 56.3
1987 .63 10.89 61.9
1988 .77 10.62 23.6/1/
1989 .72 12.30 28.2
1990 .68 11.17 22.7
1991 .63 9.81 18.1
1992 .59 8.88 47.4
1993 .56 8.18 34.1
1994 .54 9.37 38.5
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
U.S. Government/AAA-Rated Securities Fund/6/
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1986 $10.00 $ .53 $ 1.45 $ 1.98 $ (.36) -- $ (.36) $11.62 19.65% $ 32
1987 11.62 .85 (1.21) (.36) (.79) -- (.79) 10.47 (3.17) 47
1988 10.47 .93 .02 .95 (.97) -- (.97) 10.45 9.50 28
1989 10.45 .78 .30 1.08 (.79) -- (.79) 10.74 10.82 78
1990 10.74 .83 (.11) .72 (.80) -- (.80) 10.66 7.11 126
1991 10.66 .77 .58 1.35 (.79) -- (.79) 11.22 13.24 240
1992 11.22 .75 .32 1.07 (.76) -- (.76) 11.53 9.83 360
1993 11.53 .74 .68 1.42 (.75) $ (.05) (.80) 12.15 12.65 505
1994 12.15 .76 (1.30) (.54) (.74) (.07) (.81) 10.80 (4.58) 463
<CAPTION>
U.S. Government/AAA-Rated Securities Fund/6/
<S> <C> <C> <C>
1986 .64% 6.86% 18.7%
1987 .67 8.24 105.6
1988 .77 8.32 47.5/1/
1989 .66 8.61 14.5
1990 .61 8.58 24.0
1991 .58 7.91 27.1
1992 .57 7.08 40.0
1993 .55 6.42 21.7
1994 .54 6.69 45.2
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Cash Management Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1985 $10.77 $ .78 -- $ .78 $ (.43) -- $ (.43) $11.12 7.41% $ 13
1986 11.12 .67 $ (.02) .65 (1.12) -- (1.12) 10.65 6.30 19
1987 10.65 .54 .08 .62 (.54) -- (.54) 10.73 6.01 57
1988 10.73 .60 .11 .71 (.56) -- (.56) 10.88 6.88 31
1989 10.88 .81 .12 .93 (.81) -- (.81) 11.00 8.90 58
1990 11.00 .71 .13 .84 (.70) -- (.70) 11.14 7.91 143
1991 11.14 .62 .01 .63 (.66) -- (.66) 11.11 5.84 163
1992 11.11 .35 .01 .36 (.43) -- (.43) 11.04 3.31 197
1993 11.04 .29 -- .29 (.31) -- (.31) 11.02 2.67 206
1994 11.02 .37 .02 .39 (.32) -- (.32) 11.09 3.59 221
<CAPTION>
Cash Management Fund
<S> <C> <C> <C>
1985 1.07% 6.99% --
1986 .85 5.82 --
1987 .68 5.90 --
1988 .76 6.75 --
1989 .68 8.26 --
1990 .60 7.48 --
1991 .58 5.65 --
1992 .53 3.24 --
1993 .51 2.57 --
1994 .49 3.60 --
</TABLE>
- ------
1. Percentages are exclusive of the redemption in kind which occurred March 29,
1988.
2. Amount includes net realized short-term gains treated as net investment
income for federal income tax purposes.
3. Commenced operations May 1, 1990.
4. Annualized
5. Commenced operations August 1, 1989.
6. Commenced operations December 1, 1985.
No information is given for the Bond and Income Fund because it had not yet
commenced operations at November 30, 1994.
2
<PAGE>
- --------------------------------------------------------------------------------
THE FUNDS The Series consists of eight funds,
INVESTMENT each representing a separate fully managed diver-
OBJECTIVES AND sified portfolio of securities. The eight funds
POLICIES OF THE are the Growth Fund, the International Fund, the
FUNDS Growth-Income Fund, the Asset Allocation Fund,
the High-Yield Bond Fund, the Bond and Income
The Series consists Fund, the U.S. Government/AAA-Rated Securities
of eight funds, Fund and the Cash Management Fund. The Board of
each with its own Trustees may establish additional funds in the
investment future. The investment objective(s) and policies
objective(s) and of each fund are discussed below.
policies.
Shares of the Series are currently offered only
to separate accounts of various insurance compa-
nies to serve as the underlying investment for
both variable annuity and variable life insurance
Contracts. All such shares may be purchased or
redeemed by the separate accounts without any
sales or redemption charges at net asset value.
Due to differences in tax treatment or other con-
siderations, the interests of various Contract
owners participating in a fund might at some time
be in conflict. The Board of Trustees will moni-
tor for any material conflicts and determine what
action, if any, should be taken.
INVESTMENT RESTRICTIONS Each fund has certain in-
vestment restrictions that are described in the
statement of additional information. The invest-
ment restrictions and the objective(s) of each
fund cannot be changed without shareholder ap-
proval. All other investment practices may be
changed by the Series' Board of Trustees.
The Growth Fund GROWTH FUND The investment objective of the
seeks to provide Growth Fund is growth of capital. Whatever cur-
you with growth of rent income is generated by the fund is likely to
capital. be incidental to the objective of capital growth.
Ordinarily, the fund seeks to achieve this objec-
tive by investing primarily in common stocks or
securities with common stock characteristics.
When the outlook for common stocks is not consid-
ered promising, for temporary defensive purposes,
a substantial portion of the assets may be in-
vested in securities of the U.S. Government, its
agencies and instrumentalities, cash, and money
market instruments. See "Certain Securities and
Investment Techniques" below.
The fund's assets may be invested in securities
of non-U.S. issuers, which are generally denomi-
nated in currencies other than the U.S. dollar,
although there is no requirement that the fund
maintain investments in non-U.S. issuers. See
"Certain Securities and Investment Techniques--
Investing Around the World" below.
Up to 10% of the fund's assets may be invested in
straight debt securities rated BB or below by
Standard & Poor's Corporation or Ba or below by
Moody's Investors Services, Inc. or in unrated
securities that are determined to be of equiva-
lent quality, provided the fund's investment ad-
viser, Capital Research and Management Company,
determines that these securities have character-
istics similar to the equity securities eligible
for purchase by the fund. These securities are
commonly referred to as "junk bonds" or "high-
yield, high-risk bonds," carry a higher degree of
investment risk than higher rated bonds and are
considered speculative. See the Appendix for a
further description of the various bond ratings.
See "High-Yield Bond Fund--Risks of Investing in
High-Yield, High-Risk Securities" below and the
statement of additional information. As of Novem-
ber 30, 1994, the last day of the fund's fiscal
year, the portfolio did not contain any bonds.
The International INTERNATIONAL FUND The investment objective of
Fund aims to the International Fund is to achieve long-term
provide you with growth of capital by investing primarily in secu-
long-term growth rities of issuers domiciled outside the United
of capital by States. The fund's investment approach is based
investing in on the belief that economic and political devel-
securities opments have helped to create new opportunities
ofissuers outside the U.S.
domiciled outside
the U.S. The fund may also invest in securities through
depositary receipts which may be denominated in
various currencies. For example, the fund may
3
<PAGE>
- --------------------------------------------------------------------------------
purchase American Depositary Receipts which are
U.S. dollar denominated securities designed for
use in the U.S. securities markets which repre-
sent and may be converted to the underlying secu-
rity.
When prevailing market, economic, political or
currency conditions warrant, the fund may invest
in securities convertible into common stocks,
straight debt securities (generally rated in the
top three quality categories by Standard & Poor's
Corporation or Moody's Investors Service, Inc. or
determined to be of equivalent quality by Capital
Research and Management Company), government se-
curities, or nonconvertible preferred stocks;
however, up to 5% of the fund's assets may be in-
vested in lower rated straight debt securities
(including securities commonly referred to as
"junk bonds" or "high-yield, high-risk bonds") or
in unrated securities that are determined to be
of equivalent quality. High-yield, high-risk
bonds carry a higher degree of investment risk
than higher rated bonds and are considered specu-
lative. See the Appendix for a description of the
various bond ratings. These securities will also
be issued by non-U.S. entities.
Under normal circumstances, the fund will invest
at least 65% of its assets in equity securities
(including depositary receipts) of issuers domi-
ciled outside the U.S. The fund may at times hold
a portion of its assets in various currencies or
in cash equivalents which may be denominated in
U.S. dollars or other currencies (including U.S.
Government securities, certificates of deposit,
time deposits, commercial paper, bankers' accept-
ances and other high-quality short-term debt se-
curities). Additionally, for temporary defensive
purposes the fund may at times maintain all or
any part of its assets in cash and cash equiva-
lents.
Investments may be made from time to time in is-
suers domiciled in, or governments of, developing
countries. The fund's investment adviser, Capital
Research and Management Company, currently does
not intend to invest more than 20% of the fund's
total assets (taken at cost) in issuers domiciled
in, or governments of, developing countries. See
"Certain Securities and Investment Techniques--
Investing Around the World."
The Growth-Income GROWTH-INCOME FUND The investment objective of
Fund seeks to the Growth-Income Fund is growth of capital and
provide you with income. In the selection of securities for in-
income and capital vestment, the possibilities of appreciation and
growth. potential dividends are given more weight than
current yield. Ordinarily, the fund will invest
primarily in common stocks. But the fund may in-
vest in other types of securities, including
other equity-type securities (such as convertible
bonds and preferred stocks), bonds (and other
types of fixed-income securities) and money mar-
ket instruments, to the extent consistent with
its investment objective.
Up to 5% of the fund's assets may be invested in
straight debt securities rated BB or below by
Standard & Poor's Corporation or Ba or below by
Moody's Investors Services, Inc. or in unrated
securities that are determined to be of equiva-
lent quality by Capital Research and Management
Company. These securities are commonly referred
to as "junk bonds" or "high-yield, high-risk
bonds," carry a higher degree of investment risk
than higher rated bonds and are considered specu-
lative. See the Appendix for a description of the
various bond ratings.
Up to 10% of the fund's assets may be invested in
the equity securities of issuers domiciled
outside the U.S., provided those securities are
either held through depositary receipts which are
U.S. dollar denominated or are traded on the New
York Stock Exchange. Since the fund limits its
4
<PAGE>
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investments in non-U.S. securities as described
above, the fund has no current intention to
engage in forward currency transactions. See
"Investing Around the World."
The Asset ASSET ALLOCATION FUND The investment objective of
Allocation Fund the Asset Allocation Fund is high total return
aims to provide you (including income and capital gains) consistent
with high total with preservation of capital over the long-term.
return and The fund seeks to achieve its objective by in-
preservation of vesting in a diversified portfolio that can in-
capital over the clude common stocks and other equity-type securi-
long-term. ties (such as convertible bonds and preferred
stocks), bonds and other intermediate and long-
term fixed income securities, and money market
instruments (debt securities maturing in one year
or less).
Capital Research and Management Company will de-
termine the relative mix of equities, fixed-in-
come securities and money market instruments for
the fund's portfolio. The determination will be
based on its view of long-term economic and mar-
ket trends and the relative risks and opportuni-
ties for long-term total return of the different
classes of assets. Under normal conditions, Capi-
tal Research and Management Company expects (but
is not required) to maintain an investment mix
falling within the following ranges: 40% to 80%
in equities; 20% to 50% in fixed-income securi-
ties, and 0% to 40% in money market instruments.
Capital Research and Management Company does not
intend to make frequent shifts within these broad
ranges. Rather it intends in normal situations to
make any shifts in the fund's asset allocation
gradually over time based on its views of long-
term trends and conditions.
Up to 10% of the fund's assets may be invested in
the equity securities of issuers domiciled out-
side the U.S., provided those securities are ei-
ther held through depositary receipts which are
U.S. dollar denominated or are traded on the New
York Stock Exchange. Since the fund limits its
investments in non-U.S. securities as described
above, the fund has no current intention to en-
gage in forward currency transactions. See "In-
vesting Around the World."
The fund's fixed-income investments will consist
primarily of "investment grade" bonds; that is,
bonds that are rated BBB or better by Standard &
Poor's Corporation or Baa or better by Moody's
Investors Service, Inc., or that are unrated but
considered by Capital Research and Management
Company to be of equivalent credit quality. Up to
25% of the fund's fixed-income assets may be in-
vested in securities that are below investment
grade as defined above, including securities
rated as low as CC by S&P or Ca by Moody's. See
"High-Yield Bond Fund--Risks of Investing in
High-Yield, High-Risk Securities" below and the
statement of additional information. See the Ap-
pendix for a further description of the various
bond ratings. The fund's investments in non-U.S.
fixed-income securities will be concentrated in
securities issued or guaranteed as to principal
and interest by foreign governments or their
agencies or instrumentalities or by multinational
agencies. During the previous fiscal year, the
approximate monthly average percentages of the
Asset Allocation Fund's fixed-income net assets
in the following Moody's rating categories were:
Aaa --18.25%; Aa --1.11%; A --1.67%; Baa --
9.58%; Ba -- 0.94%; and B -- 1.09%. Non-rated
investments (including equity-type securities)
and cash or cash equivalents amounted to 60.81%
and 6.55%, respectively, of the fund's assets.
5
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The High-Yield Bond HIGH-YIELD BOND FUND The primary investment ob-
Fund seeks to jective of the High-Yield Fund is high current
provide you with income and its secondary investment objective is
high current income capital appreciation. Under normal market condi-
and, secondarily, tions the High-Yield Bond Fund will be invested
capital substantially in long-term (over 10 years to ma-
appreciation. turity) and intermediate-term (3 to 10 years to
maturity) fixed-income securities, with emphasis
on higher yielding, higher risk, lower rated or
unrated corporate bonds. These "high-yield, high-
risk bonds" typically are subject to greater mar-
ket fluctuations and risk of loss of income and
principal due to default by the issuer than are
lower yielding, higher rated bonds.
High-yield, high-risk bonds (also known as "junk
bonds") generally include any bonds rated Ba or
below by Moody's Investors Service, Inc., or BB
or below by Standard & Poor's Corporation or
unrated but are deter-mined to be of equivalent
quality by Capital Research and Management Compa-
ny. Bonds rated Ba or BB or below are considered
speculative. The High-Yield Bond Fund may invest
without limitation in bonds rated as low as Ca by
Moody's or CC by S&P (or bonds that are unrated
but are determined to be of equivalent quality).
Bonds rated Ca or CC aredescribed by the rating
agencies as "speculative in a high degree, often
in default or [having] other marked shortcom-
ings." In addition, the fund may invest up to 10%
of its total assets in bonds rated C by Moody's
or D by S&P (or bonds that are unrated but are
determined to be of equivalent quality). Bonds
rated C or D generally are in default or arrears
and are described as having extremely poor pros-
pects of attaining any real invest- ment stand-
ing. See the Appendix on page 16 for a further
description of the various bond ratings. During
the previous fiscal year, the approximate monthly
average percentages of the High-Yield Bond Fund's
net assets in the following Moody's rating cate-
gories were: Aaa -- 6.43%; A -- 0.01%; Baa --
0.12%; Ba -- 33.23%; B -- 47.10%; and Caa --
5.53%. Non-rated investments (including equity-
type securities) and cash or cash equivalents
amounted to 2.31% and 5.28%, respectively, of the
fund's assets.
Up to 25% of the fund's assets may be invested in
securities of non-U.S. issuers, which are gener-
ally denominated in currencies other than the
U.S. dollar. See "Investing Around the World" and
"Currency Transactions" below.
Under normal conditions the fund will invest pri-
marily in higher yielding obligations which may
include loan participations in addition to corpo-
rate bonds. The fund also may invest in securi-
ties of the U.S. Government, its agencies and in-
strumentalities, cash and money market instru-
ments. See "Certain Securities and Investment
Techniques" below. See also the statement of ad-
ditional information.
RISKS OF INVESTING IN HIGH-YIELD, HIGH-RISK
SECURITIES High-yield, high-risk bonds, also
known as "junk bonds," typically are subject to
greater market fluctuations and to greater loss
of income and principal due to the lower credit
quality of the issuer than are higher rated
bonds. Their values tend to be more sensitive to
adverse economic changes than lower yielding,
higher rated bonds. In addition, it may be more
difficult to dispose of, or to determine the
value of, high-yield, high-risk bonds.
High-yield, high-risk bonds can be very sensitive
to adverse economic changes. During an economic
downturn or substantial period of rising interest
rates, highly leveraged issuers may experience
financial stress that would adversely affect
their ability to service their principal and in-
terest payment obligations, to meet projected fi-
nancial goals, and to obtain additional financ-
ing. If the issuer of a bond defaulted on its ob-
ligations to pay
6
<PAGE>
- --------------------------------------------------------------------------------
interest or principal, the fund may incur losses
or expenses in seeking recovery of amounts owed
to it. In addition, periods of economic uncer-
tainty and changes can be expected to result in
increased volatility of market prices and yields
of high-yield, high-risk bonds and the fund's net
asset value.
High-yield, high-risk bonds may contain redemp-
tion or call provisions. If an issuer exercised
these provisions in a declining interest rate
market, the fund would have to replace the secu-
rity with a lower yielding security, resulting in
a decreased return for investors. Conversely, a
high-yield, high-risk bond's value will decrease
in a rising interest rate market, as will the
value of the fund's assets. If the fund experi-
ences unexpected net redemptions, this may force
it to sell high-yield, high-risk bonds without
regard to their investment merits, thereby de-
creasing the asset base upon which expenses can
be spread and possibly reducing the fund's rate
of return.
There may be little trading in the secondary mar-
ket for particular bonds, which may affect ad-
versely the fund's ability to value accurately or
dispose of such bonds. Adverse publicity and in-
vestor perceptions, whether or not based on fun-
damental analysis, may decrease the values and
liquidity of high-yield, high-risk bonds, espe-
cially in a thin market.
Capital Research and Management Company attempts
to reduce these risks through diversification of
the portfolio and by credit analysis of each is-
suer, as well as by monitoring broad economic
trends and corporate and legislative develop-
ments.
There can be, of course, no assurance that the
fund's investment objective will be realized or
that the net return on an investment in the fund
will equal or exceed that which could have been
obtained through other investment or savings ve-
hicles. Contract owners should carefully review
the investment objectives and policies of the
fund and consider their ability to assume the
risks involved before making any investment in
the fund.
The Bond and Income BOND AND INCOME FUND The investment objective of
Fund seeks to the Bond and Income Fund is to provide as high a
provide you with level of current income as is consistent with the
high current income preservation of capital. The fund invests in a
while preserving broad variety of fixed-income securities, includ-
your capital. ing marketable corporate debt securities, loan
participations, U.S. Government securities, mort-
gage-related securities, other asset-backed secu-
rities and cash or money market instruments. Nor-
mally, at least 65% of the fund's assets will be
invested in bonds. (For this purpose, bonds are
considered any debt securities having initial ma-
turities in excess of one year.)
At least 65% of the value of the fund's assets,
measured at the time of purchase, must be in-
vested in securities that are rated Baa or better
by Moody's Investors Service, Inc. or BBB or bet-
ter by Standard & Poor's Corporation (all ratings
discussed below refer to those assigned by these
two rating agencies) or, if not rated by either
of these rating agencies, determined by Capital
Research and Management Company as being of in-
vestment quality equivalent to securities rated
Baa/BBB or better. Securities rated Baa or BBB
have speculative characteristics. See the Appen-
dix for a description of the various bond rat-
ings.
At least 35% of the value of the fund's assets,
measured at the time of purchase, must be in-
vested in securities that are rated A or better
or, if not rated, determined as being of invest-
ment quality equivalent to securities rated A or
better.
7
<PAGE>
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Up to 35% of the assets of the fund may be in-
vested in debt securities rated Ba/BB or below,
in unrated securities that are determined to be
of equivalent quality or in preferred stocks.
These securities may be rated as low as Ca by
Moody's or CC by S&P. However, no more than 10%
of the fund's assets, measured at the time of
purchase, will be invested in preferred stocks.
Securities rated below Baa or BBB or unrated se-
curities that are determined to be of equivalent
quality (commonly known as "junk" or "high-yield,
high-risk" bonds) are subject to special review
before purchase. These bonds are considered spec-
ulative and typically are subject to greater mar-
ket fluctuations and risk of loss of income and
principal due to default by the issuer than are
investments in lower yielding, higher-rated
bonds. See "High-Yield Bond Fund--Risks of In-
vesting in High-Yield, High-Risk Securities"
above and the statement of additional informa-
tion.
Subject to the above rating limitations, the fund
may invest without limit in fixed-income securi-
ties of corporations or governmental entities
outside the U.S., and the fund may purchase or
sell various currencies on either a spot or for-
ward basis in connection with these investments.
However, no more than 20% of the fund's assets,
measured at the time of purchase, will be in-
vested in non U.S. dollar denominated securities.
The fund may invest from time to time in issuers
domiciled in, or governments of, developing coun-
tries. See "Certain Securities and Investment
Techniques--Investing Around the World" for a de-
scription of developing countries. However, the
fund may not invest more than 20% of the fund's
assets, measured at the time of purchase, in is-
suers domiciled in, or governments of, developing
countries.
See "Certain Securities and Investment Tech-
niques" below. See also the statement of addi-
tional information.
The U.S. U.S. GOVERNMENT/AAA-RATED SECURITIES FUND The in-
Government/AAA- vestment objective of the U.S. Government/AAA-
Rated Securities Rated Securities Fund is a high level of current
Fund aims to income consistent with prudent investment risk
provide you with and preservation of capital. It seeks to achieve
high current income its objective by investing primarily in a combi-
while preserving nation of (i) securities guaranteed by the U.S.
your capital. Government (i.e., backed by the full faith and
credit of the United States) and (ii) other debt
securities (including corporate bonds) rated AAA
by Standard & Poor's Corporation or Aaa by
Moody's Investors Service, Inc. (or that have not
received a rating but are determined to be of
comparable quality by Capital Research and Man-
agement Company). The fund may purchase obliga-
tions of non-U.S. corporations or governmental
entities, provided they are dollar denominated
and highly liquid. Except when the fund is in a
temporary defensive investment position, at least
65% of its total assets will be invested in these
securities, including the securities held subject
to repurchase agreements.
The fund anticipates that it will invest in Gov-
ernment National Mortgage Association ("GNMA")
certificates, which are mortgage-backed securi-
ties representing part ownership of a pool of
mortgage loans on which timely payment of inter-
est and principal is guaranteed by the U.S. Gov-
ernment. The fund also may invest in securities
issued by U.S. Government agencies or instrumen-
talities that are not backed by the full faith
and credit of the U.S. Government; in short-term
debt securities of private issuers (including
certificates of deposit, bankers' acceptances,
and commercial paper rated A-1 by S&P or Prime-1
by Moody's); and in securities issued by finan-
cial
8
<PAGE>
- --------------------------------------------------------------------------------
institutions such as commercial banks, savings
and loan associations, mortgage bankers and secu-
rities broker-dealers which represent a direct or
indirect interest in a pool of mortgages. See
"Certain Securities and Investment Techniques"
below. See also the statement of additional in-
formation. The fund may not purchase any security
other than a U.S. Government security or a short-
term debt security described above, that is not
rated AAA by S&P or Aaa by Moody's (or that has
not received a rating but is determined to be of
comparable quality by Capital Research and Man-
agement Company). However, if the rating of a se-
curity currently being held by the fund is re-
duced below AAA or Aaa the fund is not required
to dispose of the security.
The Cash Management CASH MANAGEMENT FUND The investment objective of
Fund seeks to the Cash Management Fund is high current yield
provide you with while preserving capital. It seeks to achieve
high current yield this objective by investing in high quality money
while preserving market instruments that mature, or may be re-
capital. deemed or resold, in 13 months or less (25 months
or less in the case of U.S. Government securi-
ties). The fund invests only in such instruments
that are determined, in accordance with proce-
dures established by the Series' Board of Trust-
ees, to present minimal credit risks. The fund's
investments may include, but are not limited to,
commercial paper rated in the highest rating cat-
egory by Moody's Investors Service, Inc. and
Standard & Poor's Corporation, instruments is-
sued, guaranteed or insured by the U.S. Govern-
ment, its agencies or instrumentalities as to the
payment of principal and interest, and other se-
curities rated in the highest two categories by
either Moody's or S&P, provided the issuer has
commercial paper rated in the highest rating cat-
egory by Moody's or S&P. The fund also may enter
into repurchase agreements. See "Certain Securi-
ties and Investment Techniques" below. See also
the statement of additional information.
Although there is no guarantee that the fund's
investment objective will be achieved, invest-
ments in the Cash Management Fund should present
the least market risk of any of the funds because
it invests only in high- quality short-term debt
obligations. However, an investment in this fund
is subject to the risks of changes in market in-
terest rates and of the economy as a whole. Note
that the return on an investment in the Cash Man-
agement Fund should not be the same as the return
on an investment in a money market fund which is
available directly to the public, even where
gross yields are equivalent, due to the fees im-
posed at the Contract level. The Cash Management
Fund yield for the seven days ended November 30,
1994 was 3.58% on an annualized basis.
CERTAIN SECURITIES PORTFOLIO TURNOVER With respect to all funds,
AND INVESTMENT portfolio changes will be made without regard to
TECHNIQUES the length of time a particular investment may
have been held. Under certain market conditions,
The eight funds of the investment policies of the Asset Allocation
the Series invest Fund, the High-Yield Bond Fund, the Bond and In-
in a wide variety come Fund, and the U.S. Government/AAA-Rated Se-
of securities which curities Fund may result in higher portfolio
are subject to turnover than those of the other funds, although
varying degrees of no fund's annual portfolio turnover rate is ex-
risk. pected to exceed 100%. A 100% annual portfolio
turnover rate would occur, for example, if all
the investments in a fund's portfolio (exclusive
of securities with less than one year to maturi-
ty) were replaced in a period of one year. High
portfolio turnover involves correspondingly
greater brokerage commissions, to the extent such
commissions are payable, and other transaction
costs, which will be borne directly by the fund
involved.
9
<PAGE>
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RISKS OF INVESTING IN STOCKS AND BONDS Those
funds that invest in stocks or securities con-
vertible into stocks are subject to various stock
market related risks. For example, these funds
are subject to the possibility that stock prices
in general will decline over short or even ex-
tended periods.
The market values of fixed-income securities such
as bonds tend to vary inversely with the level of
interest rates -- when interest rates rise, their
values generally will decline; when interest
rates decline, their values generally will rise.
Under normal market conditions longer term secu-
rities yield more than short term securities but
are subject to greater price fluctuations. Fluc-
tuations in the value of a fund's investments
will be reflected in the fund's net asset value
per share.
U.S. GOVERNMENT SECURITIES Securities guaranteed
by the U.S. Government include: (1) direct obli-
gations of the U.S. Treasury (such as Treasury
bills, notes and bonds) and (2) federal agency
obligations guaranteed as to principal and inter-
est by the U.S. Treasury (such as securities is-
sued by the Government National Mortgage Associa-
tion which are commonly known as "GNMA certifi-
cates," (described below) and Federal Housing Ad-
ministration debentures). In these securities,
the payment of principal and interest is uncondi-
tionally guaranteed by the U.S. Government, and
thus they are of the highest possible credit
quality. Such securities are subject to varia-
tions in market value due to fluctuations in in-
terest rates, but, if held to maturity, will be
paid in full.
Securities issued by U.S. Government instrumen-
talities and certain federal agencies are neither
direct obligations of, nor guaranteed by, the
U.S. Treasury. However, they generally involve
federal sponsorship in one way or another: some
are backed by specific types of collateral; some
are supported by the issuer's right to borrow
from the Treasury; some are supported by the dis-
cretionary authority of the Treasury to purchase
certain obligations of the issuer; and others are
supported only by the credit of the issuing gov-
ernment agency or instrumentality. These agencies
and instrumentalities include, but are not lim-
ited to, Federal Land Banks, Farmers Home Admin-
istration, Central Bank for Cooperatives, Federal
Intermediate Credit Banks, and Federal Home Loan
Banks.
MORTGAGE-RELATED SECURITIES The funds may invest
in various types of mortgage-related securities
and the U.S. Government/AAA-Rated Secu- rities
Fund expects to invest substantially in these se-
curities. Mortgage- related securities may be is-
sued by governmental agencies (such as the GNMA
or the Federal Home Loan Mortgage Corporation
("FHLMC")), by the Federal National Mortgage As-
sociation ("FNMA"), which is a federally chart-
ered and privately-owned corporation, or by pri-
vate finan- cial institutions such as commercial
banks, savings and loan associations, mortgage
bankers and securities broker-dealers (or sepa-
rate trusts or affiliates of such institutions
established to issue these securities).
Most mortgage-related securities, including the
securities issued by GNMA, FHLMC and FNMA, are
so-called "pass-through" securities representing
interests in a pool of underlying mortgage loans,
on which the regular interest and principal pay-
ments (including any prepayments) are passed
through to the holder of the securities. Although
the mortgage loans in a pool will have stated ma-
turities of up to 30 years, due to both normal
principal repayment and prepayments, the average
effective ma- turities of these securities will
vary and will tend to fall when interest rates
fall and to rise when interest rates rise. Their
value also may change due to changes in the mar-
ket's perception of the credit worthiness of the
entity that issues or guarantees them. For addi-
tional information regarding mortgage-related se-
curities see the statement of additional informa-
tion.
10
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MONEY MARKET INSTRUMENTS These are shorter-term
debt securitiesgenerally maturing in one year or
less which include (1) commercial paper (short-
term notes (up to 9 months) issued by
corporations or governmental bodies), (2)
commercial bank obligations (certificates of
deposit (interest-bearing time deposits),
bankers' acceptances (time drafts on a commercial
bank where the bank accepts an irrevocable
obligation to pay at maturity), and documented
discount notes (corporate promissory discount
notes accompanied by a commercial bank guarantee
to pay at maturity)), (3) corporate bonds and
notes (corporate obligations that mature, or that
may be redeemed, in one year or less), and (4)
savings association obligations (certificates of
deposit issued by savings banks or savings and
loan associations). Although certain floating or
variable rate obligations (securities which have
a coupon rate that changes at least annually and
generally more frequently) have maturities in
excess of one year, they are also considered to
be short-term debt securities.
REPURCHASE AGREEMENTS The funds may enter into
repurchase agreements, under which a fund buys
a security and obtains a simultaneous commitment
from the seller to repurchase the security at a
specified time and price. The seller must main-
tain with the Series' custodian collateral equal
to at least 100% of the repurchase price includ-
ing accrued interest, as monitored daily by Capi-
tal Research and Management Company. A fund only
will enter into repurchase agreements involving
securities in which it could otherwise invest and
with selected banks and securities dealers whose
financial condition is monitored by Capital Re-
search and Management Company. If the seller un-
der the repurchase agreement defaults, the fund
may incur a loss if the value of the collateral
securing the repurchase agreement has declined
and may incur disposition costs in connection
with liquidating the collateral. If bankruptcy
proceedings are commenced with respect to the
seller, liquidation of the collateral by the fund
may be delayed or limited.
WHEN-ISSUED SECURITIES, FIRM COMMITMENT AGREE-
MENTS AND "ROLL" TRANSACTIONS The funds may pur-
chase securities on a delayed delivery or "when-
issued" basis and enter into firm commitment
agreements (transactions whereby the payment ob-
ligation and interest rate are fixed at the time
of the transaction but the settlement is de-
layed). These transactions may involve either
corporate or government securities. A fund as
purchaser assumes the risk of any decline in
value of the security beginning on the date of
the agreement or purchase. As a fund's aggregate
commitments under these transactions increase,
the opportunity for leverage similarly increases.
Should the market values of a fund's portfolio
securities decline while the fund is in this po-
sition, greater depreciation would likely occur
than were it not in such a position.
The Asset Allocation Fund, the High-Yield Bond
Fund, the Bond and Income Fund and the U.S.
Government/AAA-Rated Securities Fund also may en-
ter into "roll" transactions, which consist of
the sale of GNMA certificates or other securities
together with a commitment (for which the fund
typically receives a fee) to purchase similar,
but not identical securities at a future date.
Each fund will segregate liquid assets such as
cash, U.S. Government securities or other appro-
priate high grade debt obligations in an amount
sufficient to meet its payment obligations in
these transactions.
11
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INVERSE FLOATING RATE NOTES The Bond and Income
Fund and the U.S. Government/AAA-Rated Securities
Fund may invest to a very limited extent in in-
verse floating rate notes (a type of derivative
instrument). These notes have rates that move in
the opposite direction of prevailing interest
rates (often as a multiple of changes in prevail-
ing rates); thus, a change in prevailing interest
rates will often result in a greater change in
the instruments' interest rates. As a result, the
maturities of these instruments may have a
greater degree of volatility than other types of
interest-bearing securities.
INVESTING AROUND THE WORLD The Growth Fund, the
International Fund, the Growth-Income Fund, the
Asset Allocation Fund, the High-Yield Bond Fund
and the Bond and Income Fund may invest in the
securities of issuers domiciled outside the U.S.
Of course, investing outside the U.S. involves
special risks caused by, among other things:
fluctuating currency values; different account-
ing, auditing, and financial reporting regula-
tions and practices in some countries; changing
local and regional economic, political, and so-
cial conditions; differing securities market
structures; and various administrative difficul-
ties such as delays in clearing and settling
portfolio transactions or in receiving payment of
dividends. However, in the opinion of Capital Re-
search and Management Company, global investing
also can reduce certain portfolio risks due to
greater diversification opportunities. In addi-
tion, the U.S. Government/AAA-Rated Securities
Fund also may invest in the securities of issuers
domiciled outside the U.S.; however, these secu-
rities must be dollar denominated and highly liq-
uid. Accordingly, while the risks mentioned above
are still present, they are present to a lesser
extent.
Although there is no universally accepted defini-
tion, a developing country is generally consid-
ered to be a country which is in the initial
stages of its industrialization cycle with a low
per capita gross national product. Historical ex-
perience indicates that the markets of developing
countries have been more volatile than the mar-
kets of developed countries and will involve each
of the risks described above, although poten-
tially to a greater degree; however, such markets
can provide higher rates of return to investors.
Additional costs could be incurred in connection
with the funds' investment activities outside the
U.S. Brokerage commissions are generally higher
outside the U.S., and the funds will bear certain
expenses in connection with their currency trans-
actions. Furthermore, increased custodian costs
may be associated with the maintenance of assets
in certain jurisdictions.
CURRENCY TRANSACTIONS The Growth Fund, Interna-
tional Fund, High-Yield Bond Fund and Bond and
Income Fund have the ability to hold a portion of
their assets in U.S. dollars and other currencies
and to enter into certain currency contracts in
connection with investing in non-U.S. dollar de-
nominated securities. The Growth Fund does not
currently intend to enter into currency contracts
other than foreign exchange contracts which will
be used to facilitate settlements of trades.
The International Fund, High-Yield Bond Fund and
Bond and Income Fund, in addition to entering
into foreign exchange contracts, may enter into
forward currency contracts to hedge against
changes in currency exchange rates relative to
the U.S. dollar. However, there is no assurance
that the use of forward currency contracts will
be successful. Moreover, due to the expenses in-
volved, these funds will not generally attempt to
protect against all potential changes in exchange
rates. For additional information, see "Currency
Transactions" in the statement of additional in-
formation.
12
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MULTIPLE PORTFOLIO COUNSELOR SYSTEM The basic in-
vestment philosophy of Capital Research and Man-
agement Company is to seek fundamental values at
reasonable prices, using a system of multiple
portfolio counselors in managing mutual fund as-
sets. Under this system the portfolios of the
funds are divided into segments which are managed
by individual counselors. Each counselor decides
how the segment will be invested (within the lim-
its provided by each fund's objective(s) and pol-
icies and by Capital Research and Management
Company's investment committee). In addition,
Capital Research and Management Company's re-
search professionals make investment decisions
with respect to a portion of each fund's portfo-
lio. The primary individual portfolio counselors
for the Series are listed below.
<TABLE>
<CAPTION>
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PORTFOLIO YEARS OF EXPERIENCE AS
COUNSELORS PRIMARY TITLE(S) INVESTMENT PROFESSIONAL (APPROXIMATE)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
James F. Rothenberg President and Trustee of the Series. Asset Allocation Fund--1 year;
President and Director, Capital Growth Fund--3 years
Research and Management Company
- -------------------------------------------------------------------------------------------------------------
James K. Dunton Senior Vice President of the Series. Growth-Income Fund--since the fund
Senior Vice President and Director, began operations in 1984
Capital Research and Management
Company
- -------------------------------------------------------------------------------------------------------------
Abner D. Goldstine Senior Vice President of the Series. Asset Allocation Fund--since the fund
Senior Vice President and Director, began operations in 1989;
Capital Research and Management Bond and Income Fund--since the fund
Company began operations in 1995;
U.S. Government Fund--since the fund
began operations in 1985
- -------------------------------------------------------------------------------------------------------------
Claudia P. Huntington Vice President of the Series. Growth Fund--1 year (plus 5 years as a
Senior Vice President, research professional prior to becoming a
Capital Research Company* portfolio counselor for the fund);
Growth-Income Fund--1 year (plus 5 years
as a research professional prior to becoming
a portfolio counselor for the fund);
Asset Allocation Fund--less than 1 year
- -------------------------------------------------------------------------------------------------------------
Dina N. Perry Vice President of the Series. Asset Allocation Fund--1 year;
Vice President, Capital Research and Growth-Income Fund--3 years
Management Company
- -------------------------------------------------------------------------------------------------------------
John H. Smet Vice President of the Series. Bond and Income Fund--since the fund
Vice President, Capital Research and began operations in 1995;
Management Company U.S. Government Fund--3 years
- -------------------------------------------------------------------------------------------------------------
David C. Barclay Executive Vice President, Capital High-Yield Bond Fund--2 years
Research Company*
- -------------------------------------------------------------------------------------------------------------
Stephen E. Bepler Senior Vice President and Director, International Fund--since the fund
Capital Research Company* began operations in 1990
- -------------------------------------------------------------------------------------------------------------
Martial Chaillet Senior Vice President, Capital International Fund--2 years
Research Company*
- -------------------------------------------------------------------------------------------------------------
Gordon Crawford Senior Vice President and Director, Growth Fund--1 year (plus 5 years as a
Capital Research Company* research professional prior to becoming a
portfolio counselor for the fund)
- -------------------------------------------------------------------------------------------------------------
James E. Drasdo Senior Vice President and Director, Growth Fund--8 years;
Capital Research and Management Growth-Income Fund--1 year
Company
- -------------------------------------------------------------------------------------------------------------
Robert W. Lovelace Executive Vice President, Capital International Fund--1 year
Research Company*
- -------------------------------------------------------------------------------------------------------------
Janet A. McKinley Senior Vice President, Capital International Fund--4 years
Research Company*
- -------------------------------------------------------------------------------------------------------------
George A. Miller Senior Vice President and Director, Asset Allocation Fund--since the fund
Capital Research and Management began operations in 1989
Company
- -------------------------------------------------------------------------------------------------------------
Robert G. O'Donnell Senior Vice President and Director, Growth-Income Fund--5 years (plus
Capital Research and Management 1 year as a research professional prior to
Company becoming a portfolio counselor for the fund)
- -------------------------------------------------------------------------------------------------------------
Donald D. O'Neal Vice President, Capital Research and Growth Fund--4 years (plus 4 years as a
Management Company research professional prior to becoming a
portfolio counselor for the fund)
- -------------------------------------------------------------------------------------------------------------
Richard T. Schotte Senior Vice President, Capital High-Yield Bond Fund--8 years;
Research and Management Company Bond and Income Fund--since the fund
began operations in 1995
- -------------------------------------------------------------------------------------------------------------
Susan M. Tolson Vice President, Capital Research High-Yield Bond Fund--less than 1 year
Company* (plus 2 years as a research professional prior
to becoming a portfolio counselor for the fund)
- -------------------------------------------------------------------------------------------------------------
WITH CAPITAL
RESEARCH AND
PORTFOLIO MANAGEMENT
COUNSELORS COMPANY OR ITS TOTAL
FOR THE SERIES AFFILIATES YEARS
<S> <C> <C>
James F. Rothenberg 25 25
- -------------------------------------------------------------------------------------------------------------
James K. Dunton 33 33
- -------------------------------------------------------------------------------------------------------------
Abner D. Goldstine 28 43
- -------------------------------------------------------------------------------------------------------------
Claudia P. Huntington 17 19
- -------------------------------------------------------------------------------------------------------------
Dina N. Perry 3 28
- -------------------------------------------------------------------------------------------------------------
John H. Smet 12 13
- -------------------------------------------------------------------------------------------------------------
David C. Barclay 7 14
- -------------------------------------------------------------------------------------------------------------
Stephen E. Bepler 22 29
- -------------------------------------------------------------------------------------------------------------
Martial Chaillet 23 23
- -------------------------------------------------------------------------------------------------------------
Gordon Crawford 24 24
- -------------------------------------------------------------------------------------------------------------
James E. Drasdo 18 23
- -------------------------------------------------------------------------------------------------------------
Robert W. Lovelace 10 10
- -------------------------------------------------------------------------------------------------------------
Janet A. McKinley 13 19
- -------------------------------------------------------------------------------------------------------------
George A. Miller 20 34
- -------------------------------------------------------------------------------------------------------------
Robert G. O'Donnell 20 23
- -------------------------------------------------------------------------------------------------------------
Donald D. O'Neal 10 10
- -------------------------------------------------------------------------------------------------------------
Richard T. Schotte 17 28
- -------------------------------------------------------------------------------------------------------------
Susan M. Tolson 5 7
- -------------------------------------------------------------------------------------------------------------
</TABLE>
* COMPANY AFFILIATED WITH CAPITAL RESEARCH AND MANAGEMENT COMPANY.
13
<PAGE>
- --------------------------------------------------------------------------------
DIVIDENDS, It is the Series' policy to distribute to the
DISTRIBUTIONS AND shareholders (the insurance company separate ac-
TAXES counts) all of its net investment income and cap-
ital gains realized during each fiscal year.
The Series Each fund of the Series is subject to asset di-
distributes to versification regulation prescribed by the U.S.
shareholders all Treasury Department under the Code. These regula-
its income and tions generally provide that, as of the end of
capital gains each calendar quarter or within 30 days thereaf-
realized during ter, no more than 55% of the total assets of the
each fiscal year. fund may be represented by any one investment, no
more than 70% by any two investments, no more
than 80% by any three investments, and no more
than 90% by any four investments. For this pur-
pose, all securities of the same issuer are con-
sidered a single investment. Furthermore, each
U.S. Government agency or instrumentality is
treated as a separate issuer. There are also al-
ternative diversification tests which may be sat-
isfied by the funds under the regulations. The
Series intends to comply with the diversification
regulations. If a fund should fail to comply with
these regulations, Contracts invested in that
fund shall not be treated as annuity, endowment
or life insurance contracts under the Code.
See the applicable Contract prospectus for infor-
mation regarding the federal income tax treatment
of the Contracts and distributions to the sepa-
rate accounts.
FEDERAL TAXES Each fund of the Series intends to
operate as a "regulated investment company" under
the Internal Revenue Code. In any fiscal year in
which a fund so qualifies and distributes to
shareholders its net investment income and real-
ized capital gains, the fund itself is relieved
of federal income tax.
SERIES SERIES ORGANIZATION The Series, an open-end in-
ORGANIZATION AND vestment company, was organized as a Massachu-
MANAGEMENT setts business trust in 1983. The Series' Board
of Trustees is responsible for the overall super-
vision of the Series' operations and performs
various duties. Members of the board who are not
employed by Capital Research and Management Com-
pany or its affiliates are paid for services ren-
dered to the Series as described in the statement
of additional information. They may elect to de-
fer all or a portion of these fees through a de-
ferred compensation plan in effect for the Se-
ries. The Board of Trustees has approved the re-
tention of the companies listed below to provide
certain services to the Series.
INVESTMENT ADVISER Capital Research and Manage-
ment Company, a large and experienced investment
management organization founded in 1931, is the
investment adviser to the Series and other mutual
funds, including those in The American Funds
Group. Capital Research and Management Company is
located at 333 South Hope Street, Los Angeles, CA
90071 and 135 South State College Boulevard,
Brea, CA 92621. See the statement of additional
information under "Management" for a listing of
these funds.
Capital Research and Management Company manages
the investment portfolio and business affairs of
the Series and receives a monthly fee as compen-
sation for its services pursuant to an Investment
Advisory and Service Agreement. The fee, which is
accrued daily, is based on the net assets of each
fund as indicated below.
Growth Fund: 0.60% of the first $30 million, plus
0.50% greater than $30 million but not exceeding
$600 million, plus 0.45% greater than $600 mil-
lion but not exceeding $1.2 billion, plus 0.42%
greater than $1.2 billion but not exceeding $2.0
billion, plus 0.37% in excess of $2.0 billion;
14
<PAGE>
- --------------------------------------------------------------------------------
International Fund: 0.90% of the first $60 mil-
lion, plus 0.78% greater than $60 million but not
exceeding $600 million, plus 0.60% in excess of
$600 million;
Growth-Income Fund: 0.60% of the first $30 mil-
lion, plus 0.50% greater than $30 million but not
exceeding $600 million, plus 0.45% greater than
$600 million but not exceeding $1.5 billion, plus
0.40% greater than $1.5 billion but not exceeding
$2.5 billion, plus 0.32% in excess of $2.5 bil-
lion;
Asset Allocation Fund: 0.60% of the first $30
million, plus 0.50% greater than $30 million but
not exceeding $600 million, plus 0.42% in excess
of $600 million;
High-Yield Bond Fund: 0.60% of the first $30 mil-
lion, plus 0.50% greater than $30 million but not
exceeding $600 million, plus 0.46% in excess of
$600 million;
Bond and Income Fund: 0.60% of the first $30 mil-
lion, plus 0.50% in excess of $30 million;
U.S. Government/AAA-Rated Securities Fund: 0.60%
of the first $30 million, plus 0.50% greater than
$30 million but not exceeding $600 million, plus
0.40% in excess of $600 million;
Cash Management Fund: 0.50% of the first $100
million, plus 0.42% greater than $100 million but
not exceeding $400 million, plus 0.38% in excess
of $400 million.
The compensation paid to the Investment Adviser
for the most recent fiscal year as a percentage
of average net assets amounted to the follow-
ing: Growth Fund -- .46%; International Fund --
.69%; Growth-In come Fund -- .44%; Asset Alloca-
tion Fund -- .50%; High-Yield Bond Fund -- .51%;
U.S. Government/AAA-Rated Securities Fund --
.51%; and Cash Management Fund -- .46%.
Capital Research and Management Company is a
wholly owned subsidiary of the The Capital Group
Companies, Inc. (formerly "The Capital Group,
Inc."), 333 South Hope Street, Los Angeles, CA
90071. The research activities of Capital Re-
search and Management Company are conducted by
affiliated companies which have offices in Los
Angeles, San Francisco, New York, Washington,
D.C., London, Geneva, Singapore, Hong Kong and
Tokyo.
Capital Research and Management Company and its
affiliated companies have adopted a personal in-
vesting policy that is consistent with the recom-
mendations contained in the report dated May 9,
1994 issued by the Investment Company Institute's
Advisory Group on Personal Investing. (See the
statement of additional information.)
PORTFOLIO TRANSACTIONS Order for the Series'
portfolio securities transactions are placed by
Capital Research and Management Company which
strives to obtain the best available prices, tak-
ing into account the costs and quality of execu-
tions. There is no agreement or commitment to
place orders with any broker-dealer. Fixed-income
securities are generally traded on a "net" basis
with a dealer acting as principal for its own ac-
count without a stated commission, although the
price of the security usually includes a profit
to the dealer. In underwritten offerings, securi-
ties are usually purchased at a fixed price which
includes an amount of compensation to the un-
derwriter, generally referred to as the under-
writer's concession or discount. On occasion, se-
curities may be purchased directly from an issu-
er, in which case no commissions or discounts are
paid.
Subject to the above policy, when two or more
brokers are in a position to offer comparable
prices and executions, preference may be given to
brokers that have sold Contracts or have pro-
vided investment research, statistical and other
related services for the benefit of the Series
and/or of other funds served by Capital Research
and Management Company.
15
<PAGE>
- --------------------------------------------------------------------------------
SHAREHOLDER VOTING RIGHTS All shares of the Se-
ries have equal voting rights and are entitled to
one vote per share with proportional voting for
fractional shares. There will not usually be a
shareholder meeting in any year, except, for ex-
ample, when the election of the board is required
to be acted upon by shareholders under the In-
vestment Company Act of 1940.
In matters which only affect a particular fund,
the matter shall have been effectively acted upon
by a majority vote of that fund even though: (1)
the matter has not been approved by a majority
vote of any other fund; or (2) the matter has not
been approved by a majority vote of the Series.
The insurance company separate accounts, as the
shareholders of the Series, have the right to
vote Series shares at any meeting of sharehold-
ers. However, the Contracts provide that the sep-
arate accounts will vote Series shares in accor-
dance with instructions received from owners of
the Contracts. See the applicable Contract pro-
spectus for information regarding Contract own-
ers' voting rights. Since the funds use a com-
bined prospectus, each fund may be liable for
misstatements, inaccuracies, or incomplete dis-
closure concerning any other fund contained in
this prospectus.
PURCHASES AND Shares of the Series are currently offered only
REDEMPTIONS to insurance company separate accounts which fund
OF SHARES the Contracts. All such shares may be purchased
or redeemed by the separate accounts at net asset
value, without any sales or redemption charges.
Such purchases and redemptions are made subse-
quent to corresponding purchases and redemptions
of units of the separate accounts without delay.
Except in extraordinary circumstances and as per-
missible under the 1940 Act, the redemption pro-
ceeds will be paid on or before the seventh day
following the request for redemption.
PRICE OF SHARES The net asset value per share is
calculated once daily at the close of trading
(currently 4:00 p.m., New York time) on each day
the New York Stock Exchange is open. The current
value of each fund's total assets, less all lia-
bilities, is divided by the total number of
shares outstanding (excluding treasury shares),
and the result, rounded to the nearer cent, is
the net asset value per share. For a more com-
plete description of the procedures involved in
valuing assets, see the statement of additional
information.
16
<PAGE>
APPENDIX
DESCRIPTION OF BOND RATINGS
Moody's Investors Service, Inc. rates the long-term debt securities issued
by various entities in categories ranging from "Aaa" to "C," according to
quality as described below.
"AAA -- Best quality. These securities carry the smallest degree of investment
risk and are generally referred to as "gilt edge." Interest payments are
protected by a large, or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the fundamentally
strong position of such issues."
"AA -- High quality by all standards. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude, or there may
be other elements present which make the long-term risks appear somewhat
greater."
"A -- Upper medium grade obligations. These bonds possess many favorable
investment attributes. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future."
"BAA -- Medium grade obligations. Interest payments and principal security
appear adequate for the present but certain protective elements may be lacking
or may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and, in fact, have
speculative characteristics as well."
"BA -- Generally lack characteristics of the desirable investment; assurance
of interest and principal payments or of maintenance of other terms of the
contract over any long period of time may be small."
"CAA -- Of poor standing. Issues may be in default or there may be present
elements of danger with respect to principal or interest."
"CA -- Speculative in a high degree; often in default or have other marked
shortcomings."
"C -- Lowest rated class of bonds; can be regarded as having extremely poor
prospects of ever attaining any real investment standing."
Standard & Poor's Corporation rates the long-term debt securities issued by
various entities in categories ranging from "AAA" to "D," according to quality
as described below.
"AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong."
"AA -- High grade. Very strong capacity to pay interest and repay principal.
Generally, these bonds differ from AAA issues only in a small degree."
"A -- Have a strong capacity to pay interest and repay principal, although
they are somewhat more susceptible to the adverse effects of change in
circumstances and economic conditions, than debt in higher rated categories."
"BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay interest and repay principal than for debt in
higher rated categories."
"BB, B, CCC, CC, C -- Regarded, on balance, as predominantly speculative with
respect to capacity to pay interest and repay principal in accordance with the
terms of the obligation. BB indicates the lowest degree of speculation and C
the highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions."
"C1 -- Reserved for income bonds on which no interest is being paid."
"D -- In default and payment of interest and/or repayment of principal is in
arrears."
[LOGO OF This prospectus has been printed on recycled
RECYCLED PAPER] paper that meets the guidelines of the United
States Environmental Protection Agency
AMERICAN VARIABLE INSURANCE SERIES
Part B
Statement of Additional Information
AUGUST __, 1995
This document is not a prospectus but should be read in conjunction with the
current prospectus of American Variable Insurance Series (the "Series") dated
August __, 1995. The prospectus may be obtained from your investment dealer or
financial planner or by writing to the Series at the following address:
American Variable Insurance Series
Attention: Secretary
333 South Hope Street
Los Angeles, CA 90071
(213) 486-9200
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE NO.
<S> <C>
INVESTMENT POLICIES 1
INVESTMENT RESTRICTIONS 6
SERIES OFFICERS AND TRUSTEES 11
TRUSTEE COMPENSATION 11
MANAGEMENT 15
PRICE OF SHARES 16
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES 17
EXECUTION OF PORTFOLIO TRANSACTIONS 18
GENERAL INFORMATION 19
APPENDIX 20
FINANCIAL STATEMENTS ATTACHED
</TABLE>
INVESTMENT POLICIES
The discussion below is intended to supplement the information contained in
the prospectus.
GROWTH FUND, GROWTH-INCOME FUND, ASSET ALLOCATION FUND, HIGH-YIELD BOND FUND
AND BOND AND INCOME FUND
CERTAIN RISK FACTORS RELATING TO HIGH-YIELD, HIGH-RISK SECURITIES:
SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES - High-yield, high-risk
securities can be sensitive to adverse economic changes and corporate
developments. During an economic downturn or substantial period of rising
interest rates, highly leveraged issuers may experience financial stress that
would adversely affect their ability to service their principal and interest
payment obligations, to meet projected business goals, and to obtain additional
financing. If the issuer of a bond defaulted on its obligations to pay
interest or principal or entered into bankruptcy proceedings, each fund may
incur losses or expenses in seeking recovery of amounts owed to it. In
addition, periods of economic uncertainty and changes can be expected to result
in increased volatility of market prices and yields of high-yield, high-risk
bonds and each fund's net asset value.
PAYMENT EXPECTATIONS - High-yield, high-risk bonds may contain redemption or
call provisions. If an issuer exercised these provisions in a declining
interest rate market, each fund would have to replace the security with a lower
yielding security, resulting in a decreased return for investors. Conversely,
a high-yield, high-risk bond's value will decrease in a rising interest rate
market, as will the value of each fund's assets. If a fund experiences
unexpected net redemptions, this may force it to sell high-yield, high-risk
bonds without regard to their investment merits, thereby decreasing the asset
base upon which expenses can be spread and possibly reducing each fund's rate
of return.
LIQUIDITY AND VALUATION - There may be little trading in the secondary market
for particular bonds, which may affect adversely each fund's ability to value
accurately or dispose of such bonds. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of high-yield, high-risk bonds, especially in a thin
market.
GROWTH FUND, INTERNATIONAL FUND, HIGH-YIELD BOND FUND AND BOND AND INCOME FUND
CURRENCY TRANSACTIONS -- The Growth Fund, International Fund, High-Yield Bond
Fund and Bond and Income Fund have the ability to hold a portion of their
assets in U.S. dollars and other currencies and to enter into certain currency
contracts (on either a spot or forward basis) in connection with investing in
non-U.S. dollar denominated securities. A forward currency contract is an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. The funds might purchase
a particular currency or enter into a forward currency contract to preserve the
U.S. dollar price of securities it intends or has contracted to purchase.
The Growth Fund does not currently intend to engage in any transactions other
than purchasing and selling currencies and foreign exchange contracts which
will be used to facilitate settlement of trades. For example, the fund might
purchase a currency or enter into a foreign exchange contract to preserve the
U.S. dollar price of securities it has contracted to purchase.
The International Fund, in addition to purchasing and selling currencies and
entering into foreign exchange contracts, may enter into forward currency
contracts to hedge against changes in currency exchange rates relative to the
U.S. dollar. For example, the fund might enter into a forward currency
contract to protect against an anticipated decline in value of a foreign
currency against the U.S. dollar when it holds securities denominated in that
foreign currency.
The High-Yield Bond Fund and the Bond and Income Fund may enter into the
transactions described above and may also enter into exchange-traded futures
contracts relating to foreign currencies ("currency contracts") in connection
with investments in securities of foreign issuers in anticipation of, or to
protect against, fluctuations in exchange rates. In addition, forward currency
contracts may be used by these funds to purchase or sell a currency against
another currency at a future date and price as agreed upon by the parties. An
exchange-traded futures contract relating to foreign currency is similar to a
forward foreign currency contract but has a standardized size and exchange
date. Although currency contracts typically will involve the purchase and sale
of a currency against the U.S. dollar, these funds also may enter into currency
contracts not involving the U.S. dollar. In connection with these futures
transactions, the Series has filed a notice of eligibility with the Commodities
Futures Trading Association ("CFTC") that exempts the Series from CFTC
registration as a "commodity pool operator" as defined under the Commodities
Exchange Act. Pursuant to this notice, these funds will observe certain CFTC
guidelines with respect to its futures transactions that, among other things,
require these funds to use futures for bona fide "hedging" purposes only (as
defined by CFTC rules) and to limit initial margin deposits to no more than 5%
of its net assets.
The High-Yield Bond Fund and Bond and Income Fund may attempt to accomplish
objectives similar to those involved in their use of currency contracts by
purchasing put or call options on currencies. A put option gives the funds, as
purchasers, the right (but not the obligation) to sell a specified amount of
currency at the exercise price until the expiration of the option. A call
option gives the funds, as purchasers, the right (but not the obligation) to
purchase a specified amount of currency at the exercise price until its
expiration. The funds might purchase a currency put option, for example, to
protect themselves during the contract period against a decline in the U.S.
dollar value of a currency in which they hold or anticipate holding securities.
If the currency's value should decline against the U.S. dollar, the loss in
currency value should be offset, in whole or in part, by an increase in the
value of the put. If the value of the currency instead should rise against the
U.S. dollar, any gain to the funds would be reduced by the premium they had
paid for the put option. A currency call option might be purchased, for
example, in anticipation of, or to protect against, a rise in the value against
the U.S. dollar of a currency in which the funds anticipate purchasing
securities.
Currency options may be either listed on an exchange or traded
over-the-counter ("OTC options"). Listed options are third-party contracts
(I.E., performance of the obligations of the purchaser and seller is guaranteed
by the exchange or clearing corporation) and have standardized strike prices
and expiration dates. OTC options are two-party contracts with negotiated
strike prices and expiration dates. The High-Yield Bond Fund and Bond and
Income Fund will not purchase an OTC option unless it is believed that daily
valuations for such options are readily obtainable. OTC options differ from
exchange-traded options in that OTC options are transacted with dealers
directly and not through a clearing corporation which guarantees performance.
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of a quote provided
by the dealer. In the case of OTC options, there can be no assurance that a
liquid secondary market will exist for any particular option at any specific
time.
To avoid having an amount greater than its net assets subject to market risk
in connection with currency contract transactions, each fund will segregate
cash, cash equivalents, or high quality debt instruments in an amount equal to
the value of the currency it has committed to purchase.
ASSET ALLOCATION FUND, BOND AND INCOME FUND AND U.S. GOVERNMENT/AAA-RATED
SECURITIES FUND
GNMA CERTIFICATES, FNMA AND FHLMC MORTGAGE-BACKED OBLIGATIONS, OTHER
MORTGAGE-RELATED SECURITIES -- The funds may purchase certificates issued by
the Government National Mortgage Association ("GNMA") and the U.S.
Government/AAA-Rated Securities Fund expects to invest in these securities.
GNMA certificates are mortgage-backed securities representing part ownership of
a pool of mortgage loans on which timely payment of interest and principal is
guaranteed by the full faith and credit of the U.S. Government. A pool of
these mortgages is assembled and, after being approved by GNMA, is offered to
investors through securities dealers. GNMA certificates differ from typical
bonds because principal is repaid monthly over the term of the loan rather than
returned in a lump sum at maturity. Because both interest and principal
payments (including prepayments) on the underlying mortgage loans are passed
through to the holder of the certificate, GNMA certificates are called
"pass-through" securities.
The Federal National Mortgage Association ("FNMA"), a federally chartered and
privately-owned corporation, issues pass-through securities representing
interests in a pool of conventional mortgage loans. FNMA guarantees the timely
payment of principal and interest, but this guarantee is not backed by the full
faith and credit of the U.S. Government. The Federal Home Loan Mortgage
Corporation ("FHLMC"), a corporate instrumentality of the U.S. Government,
issues participation certificates which represent an interest in a pool of
conventional mortgage loans. FHLMC guarantees the timely payment of interest
and the ultimate collection of principal and maintains reserves to protect
holders against losses due to default, but the certificates are not backed by
the full faith and credit of the U.S. Government. As is the case with GNMA
certificates, the actual maturity of and realized yield on particular FNMA and
FHLMC pass-through securities will vary based on the prepayment experience of
the underlying pool of mortgages.
The funds may invest in mortgage-related securities issued by financial
institutions such as commercial banks, savings and loan associations, mortgage
bankers and securities broker-dealers (or separate trusts or affiliates of such
institutions established to issue the securities) including collateralized
mortgage obligations ("CMO's") and mortgage-backed bonds. CMO's (including
real estate mortgage investment conduits as authorized under the Internal
Revenue Code of 1986, as amended) are issued in series that are made up of a
group of bonds that together are fully collateralized directly or indirectly by
a pool of mortgages on which the payments of principal and interest are
dedicated to payment of principal and interest on the bonds in the series.
Each class of bonds in the series may have a different maturity than the other
classes of bonds in the series, bear a different coupon and have a different
priority in receiving payments. The different maturities come from the fact
that all principal payments, both regular principal payments as well as any
prepayment of principal, are passed through first to the holders of the class
with the shortest maturity until it is completely retired. Thereafter,
principal payments are passed through to the next class of bonds in the series,
until all the classes have been paid off. As a result, an acceleration in the
rate of prepayments that may be associated with declining interest rates
shortens the expected life of each class, with the greatest impact on those
classes with the shortest maturities. Similarly, should the rate of
prepayments slow down, as may happen in times of rising interest rates, the
expected life of each class lengthens, again with the greatest impact on those
classes with the shortest maturities. In the case of some CMO series, each
class may receive a differing proportion of the monthly interest and principal
repayments on the underlying collateral. In these series the classes having
proportionally greater interests in principal repayments generally would be
more affected by an acceleration (or slowing) in the rate of prepayments.
Mortgage-backed bonds are general obligations of the issuer fully
collateralized directly or indirectly by a pool of mortgages. The mortgages
serve as collateral for the issuer's payment obligations on the bonds, but
interest and principal payments on the mortgages are not passed through either
directly (as with GNMA certificates and FNMA and FHLMC pass-through securities)
or on a modified basis (as with CMO's). Accordingly, a change in the rate of
prepayments on the pool of mortgages could change the effective maturity of a
CMO but not that of a mortgage-backed bond (although, like many bonds,
mortgage-backed bonds can provide that they are callable by the issuer prior to
maturity).
BOND AND INCOME FUND AND U.S. GOVERNMENT/AAA-RATED SECURITIES FUND
REVERSE REPURCHASE AGREEMENTS -- Although the Bond and Income Fund and the U.S.
Government/AAA-Rated Securities Fund have no current intention of doing so
during the next 12 months, each fund is authorized to enter into reverse
repurchase agreements. A reverse repurchase agreement is the sale of a
security by a fund and its agreement to repurchase the security at a specified
time and price. Each fund will maintain in a segregated account with its
custodian cash, cash equivalents or U.S. Government securities in an amount
sufficient to cover its obligations under reverse repurchase agreements with
broker-dealers (but no collateral is required on reverse repurchase agreements
with banks). Under the Investment Company Act of 1940 (the "1940 Act"),
reverse repurchase agreements may be considered borrowings by a fund. The use
of reverse repurchase agreements by each fund creates leverage which increases
the funds' investment risk. As the funds' aggregate commitments under these
reverse repurchase agreements increase, the opportunity for leverage similarly
increases. If the income and gains on securities purchased with the proceeds
of reverse repurchase agreements exceed the costs of the agreements, the funds'
earnings or net asset value will increase faster than otherwise would be the
case; conversely, if the income and gains fail to exceed the costs, earnings or
net asset value would decline faster than otherwise would be the case.
ASSET ALLOCATION FUND, HIGH-YIELD BOND FUND, BOND AND INCOME FUND AND U.S.
GOVERNMENT/AAA-RATED SECURITIES FUND
LOANS OF PORTFOLIO SECURITIES -- Although the Asset Allocation Fund, High-Yield
Bond Fund, Bond and Income Fund and U.S. Government/AAA-Rated Securities Fund
have no current intention of doing so during the next 12 months, these funds
are authorized to lend portfolio securities to selected securities dealers or
other institutional investors whose financial condition is monitored by Capital
Research and Management Company (the "Investment Adviser"). The borrower must
maintain with the Series' custodian collateral consisting of cash, cash
equivalents or U.S. Government securities equal to at least 100% of the value
of the borrowed securities, plus any accrued interest. The Investment Adviser
will monitor the adequacy of the collateral on a daily basis. Each fund may at
any time call a loan of its portfolio securities and obtain the return of the
loaned securities. Each fund will receive any interest paid on the loaned
securities and a fee or a portion of the interest earned on the collateral.
Each fund will limit its loans of portfolio securities to an aggregate of 10%
of the value of its total assets, determined at the time any such loan is made.
PORTFOLIO TRADING OF FIXED-INCOME SECURITIES -- The funds intend to engage in
portfolio trading of fixed-income securities when it is believed that the sale
of a fixed-income security owned and the purchase of another security of better
value can enhance principal and/or increase income. A security may be sold to
avoid any prospective decline in market value in light of what is evaluated as
an expected rise in prevailing yields, or a security may be purchased in
anticipation of a market rise (a decline in prevailing yields). A security
also may be sold and a comparable security purchased coincidentally in order to
take advantage of what is believed to be a disparity in the normal yield and
price relationship between the two securities.
"ROLL" TRANSACTIONS -- Although the Asset Allocation Fund, High-Yield Bond
Fund, Bond and Income Fund and U.S. Government/AAA-Rated Securities Fund have
no current intention of doing so during the next 12 months, these funds may
engage in "roll" transactions. A "roll" transaction is the sale of securities
together with a commitment (for which a fund may receive a fee) to purchase
similar, but not identical, securities at a future date. Under the 1940 Act,
these transactions may be considered borrowings by the funds. The funds will
segregate liquid assets such as cash, U.S. Government securities or other high
grade debt obligations in an amount sufficient to meet their payment
obligations in these transactions. Although these transactions will not be
entered into for leveraging purposes, to the extent a fund's aggregate
commitments under these transactions exceed its holdings of cash and securities
that do not fluctuate in value (such as short-term money market instruments),
the fund temporarily will be in a leveraged position (I.E., it will have an
amount greater than its net assets subject to market risk). Should market
value of a fund's portfolio securities decline while the fund is in a leveraged
position, greater depreciation of its net assets would likely occur than were
it not in such a position. As the funds' aggregate commitments under these
transactions increase, the opportunity for leverage similarly increases.
HIGH-YIELD BOND FUND AND BOND AND INCOME FUND
LOAN PARTICIPATIONS The High-Yield Bond Fund and the Bond and Income Fund may
each invest up to 10% of their assets in loan participations. Loan
participations typically are made by a syndicate of banks to U.S. and non-U.S.
corporate or governmental borrowers for a variety of purposes. The underlying
loans may be secured or unsecured, and will vary in term and legal structure.
Typically, price quotations with respect to loan participations are available
from the originating bank (the bank that makes the underlying loan). The
originating bank also serves as the market maker for the resale of loan
participations. When purchasing such instruments, a fund may assume the
credit risks associated with the original bank lender as well as the credit
risks associated with the borrower. In addition, if the loan is foreclosed,
a fund could be part owner of any collateral, and could bear the costs and
liabilities of owning and disposing of the collateral. Loan participations
generally are not rated by major rating agencies and may not be protected by
the securities laws. Also, loan participations may be liquid or illiquid.
To the extent these instruments are illiquid, each fund may have difficulty
determining their value or selling the instruments as generally there is no
secondary market. Each fund will purchase these instruments only to the
extent that such a purchase would be consistent with each fund's investment
policies regarding debt securities and/or illiquid securities.
In determining whether to purchase a particular loan participation, the
Investment Adviser will take into account all relevant factors including the
instrument's potential volatility, liquidity and risks (including whether the
fund could be put in an undesirable position as lender and/or owner of
collateral).
CASH MANAGEMENT FUND
The Cash Management Fund seeks to achieve its investment objective by
investing in a diversified selection of money market instruments, and the other
funds generally will invest a portion of their assets in money market
instruments. These money market instruments include the following:
1. Commercial Paper: Short-term notes (up to nine months) issued by companies
or governmental bodies. The Cash Management Fund may only purchase commercial
paper judged by the Investment Adviser to be of suitable investment quality.
This includes (a) commercial paper that is rated in the two highest categories
by Standard & Poor's Corporation and by Moody's Investors Service, Inc. or (b)
other commercial paper deemed on the basis of the issuer's creditworthiness to
be of a quality appropriate for the Cash Management Fund. (No more than 5% of
the Cash Management Fund's assets may be invested in commercial paper rated in
the second highest rating category by either Moody's or Standard & Poor's; no
more than the greater of 1% of the Cash Management Fund's assets or $1 million
may be invested in such securities of any one issuer.) See the Appendix for a
description of the ratings. The commercial paper in which the Cash Management
Fund may invest includes variable amount master demand notes. Variable amount
master demand notes permit the Cash Management Fund to invest varying amounts
at fluctuating rates of interest pursuant to the agreement in the master note.
These are direct lending obligations between the lender and borrower, they are
generally not traded, and there is no secondary market. Such instruments are
payable with accrued interest in whole or in part on demand. The amounts of
the instruments are subject to daily fluctuations as the participants increase
or decrease the extent of their participations. Investments in these
instruments are limited to those that have a demand feature enabling the Cash
Management Fund unconditionally to receive the amount invested from the issuer
upon seven or fewer days' notice. (Generally, the Cash Management Fund
attempts to invest in instruments having a one-day notice provision). In
connection with master demand note arrangements, the Investment Adviser,
subject to the direction of the Trustees, monitors on an ongoing basis, the
earning power, cash flow, and other liquidity ratios of the borrower and its
ability to pay principal and interest on demand. The Investment Adviser also
considers the extent to which the variable amount master demand notes are
backed by bank letters of credit. These notes generally are not rated by
Moody's or Standard & Poor's. The Cash Management Fund may invest in them only
if it is deemed that at the time of investment the notes are of comparable
quality to the other commercial paper in which the Cash Management Fund may
invest. Master demand notes are considered to have a maturity equal to the
repayment notice period unless the Investment Adviser has reason to believe
that the borrower could not make timely repayment upon demand.
2. Commercial Bank Obligations: Certificates of deposit (interest-bearing
time deposits), bankers acceptances (time drafts drawn on a commercial bank
where the bank accepts an irrevocable obligation to pay at maturity)
representing direct or contingent obligations of commercial banks with assets
in excess of $1 billion, based on latest published reports or obligations
issued by commercial banks with assets of less than $1 billion if the principal
amount of such obligation is fully insured by the U.S. Government.
3. Corporate Bonds and Notes: The Cash Management Fund may purchase corporate
obligations that mature or that may be redeemed in one year or less. These
obligations originally may have been issued with maturities in excess of one
year. The Cash Management Fund may invest only in corporate bonds or notes of
issuers having outstanding short-term securities rated as described above in
"Commercial Paper."
4. Savings Association Obligations: Certificates of deposit (interest-bearing
time deposits) issued by savings banks or savings and loan associations that
have assets in excess of $1 billion, based on latest published reports, or
obligations issued by institutions with assets of less than $1 billion if the
principal amount of such obligation is fully insured by the U.S. Government.
5. Floating Rate Obligations: These securities have a coupon rate that
changes at least annually and generally more frequently. The coupon rate is
set in relation to money market rates. The obligations, issued primarily by
banks, other corporations, governments and semi-governmental bodies, may have a
maturity in excess of one year. In some cases, the coupon rate may vary with
changes in the yield on Treasury bills or notes or with changes in LIBOR
(London Interbank Offering Rate). The Investment Adviser considers floating
rate obligations to be liquid investments because a number of U.S. and non-U.S.
securities dealers make active markets in these securities.
INVESTMENT RESTRICTIONS
The Series has adopted certain investment restrictions for each fund which are
fundamental policies and cannot be changed without approval by a majority of
its outstanding shares. Such majority is defined by the 1940 Act as the vote
of the lesser of (i) 67% or more of the outstanding shares present at a
meeting, if the holders of more than 50% of the outstanding voting securities
are present in person or by proxy, or (ii) more than 50% of the outstanding
voting securities. All percentage limitations expressed in the following
investment restrictions are measured immediately after the relevant transaction
is made.
INVESTMENT RESTRICTIONS OF THE GROWTH FUND, INTERNATIONAL FUND, GROWTH-INCOME
FUND, ASSET ALLOCATION FUND, HIGH-YIELD BOND FUND AND BOND AND INCOME FUND
The Growth Fund, International Fund, Growth-Income Fund, Asset Allocation
Fund, High-Yield Bond Fund and Bond and Income Fund may not:
1. Invest more than 5% of the value of the total assets of the fund in the
securities of any one issuer, provided that this limitation shall apply only to
75% of the value of the fund's total assets and, provided further, that the
limitation shall not apply to obligations of the government of the U.S. under a
general Act of Congress. The short-term obligations of commercial banks are
excluded from this 5% limitation with respect to 25% of the fund's total
assets.
2. As to 75% of its total assets, purchase more than 10% of the outstanding
voting securities of an issuer.
3. Invest more than 25% of the fund's total assets in the securities of
issuers in the same industry. Obligations of the U.S. Government, its agencies
and instrumentalities, are not subject to this 25% limitation on industry
concentration. In addition, the fund may, if deemed advisable, invest more
than 25% of its assets in the obligations of domestic commercial banks.
4. Enter into any repurchase agreement maturing in more than seven days or
invest in any other illiquid security if, as a result, more than 10% of the
fund's total assets would be so invested.
5. Invest in real estate (including limited partnership interests, but
excluding securities of companies, such as real estate investment trusts, which
deal in real estate or interests therein).
6. Purchase commodities or commodity contracts; except that the International
Fund, Asset Allocation Fund, High-Yield Bond Fund and Bond and Income Fund may
engage in transactions involving currencies (including forward or futures
contracts and put and call options).
7. Invest in companies for the purpose of exercising control or management.
8. Make loans to others except for (a) the purchase of debt securities; (b)
entering into repurchase agreements; (c) the loaning of its portfolio
securities; and (d) entering into loan participations.
9. Borrow money, except from banks for temporary purposes, and then in an
amount not in excess of 5% of the value of the fund's total assets. Moreover,
in the event that the asset coverage for such borrowings falls below 300%, the
fund will reduce, within three days, the amount of its borrowings in order to
provide for 300% asset coverage.
10. Purchase securities on margin.
11. Pledge or hypothecate the fund's assets.
12. Sell securities short, except to the extent that the fund
contemporaneously owns, or has the right to acquire at no additional cost,
securities identical to those sold short.
13. Invest in puts, calls, straddles, spreads or any combination thereof;
except as described above in Investment Restriction number 6.
14. Purchase or sell securities of other investment companies (except in
connection with a merger, consolidation, acquisition or reorganization).
15. Engage in underwriting of securities issued by others, except to the
extent it may be deemed to be acting as an underwriter in the purchase or
resale of portfolio securities.
Notwithstanding investment restriction number 14, the funds may invest in
securities of other managed investment companies if deemed advisable by its
officers in connection with the administration of a deferred compensation plan
adopted by Trustees pursuant to an exemptive order granted by the Securities
and Exchange Commission.
The International Fund and High-Yield Bond Fund may not invest more than 10%
of the value of their total assets in securities which are restricted as to
resale. The Growth Fund, Growth-Income Fund and Asset Allocation Fund may not
invest more than 5% of the value of their total assets in securities which are
restricted as to resale. As a condition to the acquisition of the type of
securities mentioned herein, the funds will ordinarily require that the issuer
of such securities shall agree to bear the expenses of registration under the
Securities Act of 1933, if and when the funds desire to sell such securities.
The need to effect such registration could result in a delay in disposing of
such securities. The Bond and Income Fund may not invest more than 10% of the
value of its total assets in securities which are not readily marketable or
engage in the business of underwriting securities of other issuers, except to
the extent that the disposal of an investment position may technically
constitute the fund an underwriter as that term is defined under the Securities
Act of 1933. These policies of the Series are not deemed fundamental policies
and therefore may be changed without shareholder approval.
To the extent a fund invests in non-U.S. securities, the Series has undertaken
to the California Department of Insurance (which regulates certain contracts
that use the Series as an underlying investment) to adhere to the following
guidelines with respect to such investments:
1. The fund will have no more than 20% of its net asset value invested in
securities of issuers located in any one country. An additional 15% of the
fund's assets may be invested in securities of issuers located in any one of
the following countries: Australia, Canada, France, Japan, the United Kingdom
or the former West Germany.
2. The fund will be invested in a minimum of five different non-U.S. countries
at all times. However, this minimum is reduced to four countries when non-U.S.
investments comprise less than 80% of the fund's net asset value; to three
countries when less than 60%; to two countries when less than 40% and to one
country when less than 20%.
INVESTMENT RESTRICTIONS OF THE U.S. GOVERNMENT/AAA-RATED SECURITIES FUND
The U.S. Government/AAA-Rated Securities Fund may not:
1. Purchase any security (other than securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities ("U.S. Government
securities")) if, immediately after and as a result of such investment, more
than 5% of the value of the fund's total assets would be invested in securities
of the issuer.
2. Invest 25% or more of the value of its total assets in the securities of
issuers conducting their principal business activities in the same industry,
except that this limitation shall not apply to U.S. Government securities or
other securities to the extent they are backed by or represent interests in
U.S. Government securities or U.S. Government-guaranteed mortgages.
3. Invest in companies for the purpose of exercising control or management.
4. Knowingly purchase securities of other investment companies, except in
connection with a merger, consolidation, acquisition, or reorganization.
5. Buy or sell real estate or commodities or commodity contracts in the
ordinary course of its business; however, the fund may purchase or sell readily
marketable debt securities secured by real estate or interests therein or
issued by companies which invest in real estate or interests therein, including
real estate investment trusts.
6. Acquire securities subject to restrictions on disposition imposed by the
Securities Act of 1933, if, immediately after and as a result of such
acquisition, the value of such restricted securities and all other illiquid
securities held by the fund would exceed 10% of the value of the fund's total
assets.
7. Engage in the business of underwriting securities of other issuers, except
to the extent that the disposal of an investment position may technically cause
it to be considered an underwriter as that term is defined under the Securities
Act of 1933.
8. Make loans, except that the fund may: (a) purchase readily marketable debt
securities; (b) invest in repurchase agreements; (c) make loans of portfolio
securities; and (d) enter into loan participations. The fund will not invest
in repurchase agreements maturing in more than seven days if any such
investment, together with any illiquid securities (including securities which
are subject to legal or contractual restrictions on resale) held by the fund,
exceeds 10% of the value of its total assets.
9. Sell securities short, except to the extent that the fund contemporaneously
owns or has the right to acquire at no additional cost securities identical to
those sold short.
10. Purchase securities on margin, except that the fund may obtain such
short-term credits as may be necessary for the clearance of purchases and sales
of securities.
11. Borrow money, except from banks for temporary or emergency purposes not in
excess of 5% of the value of the fund's total assets, except that the fund may
enter into reverse repurchase agreements.
12. Mortgage, pledge, or hypothecate any of its assets, provided that this
restriction shall not apply to the sale of securities pursuant to a reverse
repurchase agreement.
13. Write, purchase or sell puts, calls or combinations thereof.
Notwithstanding investment restriction number 4, the fund may invest in
securities of other managed investment companies if deemed advisable by its
officers in connection with the administration of a deferred compensation plan
adopted by Trustees pursuant to an exemptive order granted by the Securities
and Exchange Commission.
INVESTMENT RESTRICTIONS OF THE CASH MANAGEMENT FUND
The Cash Management Fund may not:
1. Invest more than 5% of the value of the total assets of the fund in the
securities of any one issuer, provided that this limitation shall apply only to
75% of the value of the fund's total assets and, provided further, that the
limitation shall not apply to obligations of the government of the U.S. under a
general Act of Congress. The short-term obligations of commercial banks are
excluded from this 5% limitation with respect to 25% of fund's total assets.
2. As to 75% of its total assets, purchase more than 10% of the outstanding
voting class of securities of an issuer.
3. Invest more than 25% of the fund's total assets in the securities of
issuers in the same industry. Obligations of the U.S. Government, its agencies
and instrumentalities, are not subject to this 25% limitation on industry
concentration. In addition, the fund may, if deemed advisable, invest more
than 25% of its assets in the obligations of domestic commercial banks.
4. Enter into any repurchase agreement maturing in more than seven days or
invest in any other illiquid security if, as a result, more than 10% of the
fund's total assets would be so invested.
5. Make loans to others except for the purchase of the debt securities listed
above. The fund may enter into repurchase agreements as described above.
6. Borrow money, except from banks for temporary purposes, and then in an
amount not in excess of 5% of the value of the fund's total assets. Moreover,
in the event that the asset coverage for such borrowings falls below 300%, the
fund will reduce within three days the amount of its borrowings in order to
provide for 300% asset coverage.
7. Pledge or hypothecate the fund's assets.
8. Sell securities short except to the extent that the fund contemporaneously
owns or has the right to acquire at no additional cost, securities identical to
those sold short.
9. Invest in puts, calls, straddles, spreads or any combination thereof.
10. Purchase or sell securities of other investment companies (except in
connection with a merger, consolidation, acquisition or reorganization), real
estate or commodities.
11. Act as underwriter of securities issued by others, engage in distribution
of securities for others, or make investments in other companies for the
purpose of exercising control or management.
Notwithstanding investment restriction number 10, the fund may invest in
securities of other investment companies if deemed advisable by its officers in
connection with the administration of a deferred compensation plan adopted by
Trustees pursuant to an exemptive order granted by the Securities and Exchange
Commission.
Notwithstanding investment restriction number 1 above, in order to comply with
Rule 2a-7 under the 1940 Act, the Cash Management Fund has adopted a
non-fundamental policy (that may be changed by the Board of Trustees without
shareholder approval) of investing no more than 5% of its assets (measured at
the time of purchase) in the securities of any one issuer (other than the U.S.
Government); provided however, that the Cash Management Fund may invest, as to
25% of its assets, more than 5% of its assets in certain high-quality
securities (as defined in the Rule) of a single issuer for a period of up to
three business days. Investment restriction number 9 above does not prevent
the purchase by the Cash Management Fund of securities that have "put" or
"stand-by" commitment features.
* * * * * *
To the extent that any fund is used with a variable life insurance contract
sold in the state of California, it will limit its borrowing activities to (1)
10% of net asset value when borrowing for any general purpose and (2) 25% of
net asset value when borrowing as a temporary measure to facilitate
redemptions. For this purpose, reverse repurchase agreements shall constitute
borrowing. This policy is not deemed a fundamental policy and therefore may be
changed without shareholder approval.
SERIES OFFICERS AND TRUSTEES
Trustees and Trustee Compensation
(with their principal occupations during the past five years)#
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION WITH PRINCIPAL OCCUPATION(S) AGGREGATE COMPENSATION TOTAL COMPENSATION TOTAL
REGISTRANT DURING PAST 5 YEARS# (INCLUDING FROM ALL FUNDS NUMBER OF
VOLUNTARILY DEFERRED MANAGED BY CAPITAL FUND BOARDS
COMPENSATION/1/) FROM RESEARCH AND ON WHICH
SERIES DURING FISCAL MANAGEMENT TRUSTEE
YEAR ENDED 11/30/94 COMPANY/2/ SERVES/2/
<S> <C> <C> <C> <C> <C>
Charles H. Black Trustee Private investor and consultant; $21,900 $102,300 4
525 Alma Real Drive Former Executive Vice President
Pacific Palisades, CA and Director, Kaiser Steel
90272 Corporation
Age: 68
+ H. Frederick Christie Trustee Private Investor; Former President $15,700 $135,583 18
P. O. Box 144 and Chief Executive Officer, The
Palos Verdes, CA 90274 Mission Group (non-utility holding
Age: 61 Company, subsidiary of Southern
California Edison Company)
Joe E. Davis Trustee Private Investor. Former Chairman, $23,100 $23,100 1
3436 Caribeth Drive Linear Corporation; former
Encino, CA 91436 President and Chief Executive
Age: 60 Officer, National Health
Enterprises, Inc.
Martin Fenton, Jr. Trustee Chairman, Senior Resource Group none $93,050 15
4350 Executive Drive (management of senior living
Suite 101 centers)
San Diego, CA 92123
Age: 59
++ Richard H. M. Holmes Trustee Retired. Former Vice President, $19,500 $19,500 4
580 Laurent Road Capital Research and Management
Hillsborough, CA 94010 Company
Age: 69
Mary Myers Kauppila Trustee Founder and President, Energy $15,700/3/ $67,200 4
286 Congress Street Investment, Inc.
Boston, MA 02110
Age: 40
@* James F. Rothenberg President and President and Director, Capital none/4/ none/4/ 1
Age: 48 Trustee Research and Management
Company
@* Thomas E. Terry Chairman of Retired. Former Vice President and none/4/ none/4/ 3
Age: 57 the Board Secretary, Capital Research and
Management Company
Leonard Weil Trustee Consultant, President Emeritus, $23,100 $23,100 1
515 South Figueroa Street Manufacturers Bank. Former
Los Angeles, CA 90071 President, Manufacturers Bank
Age: 72
</TABLE>
# Positions within the organizations listed may have changed during this
period.
+ May be deemed an "interested person" of the Series due to membership on the
board of directors of the parent company of a registered broker-dealer.
++ Not considered an "interested person" within the meaning of the Investment
Company Act of 1940, as amended (the "1940 Act"), but he does not participate
on the Contracts or Nominating Committees due to his former affiliation with
the Investment Adviser.
@ Trustees who are considered "interested persons as defined in the 1940 Act,
on the basis of their affiliation with the Series' Investment Adviser, Capital
Research and Management Company.
* Address is 333 South Hope Street, Los Angeles, CA 90071//
/1/ Amounts may be deferred by eligible trustees under a non-qualified deferred
compensation plan adopted by the Series in 1993. Deferred amounts accumulate
at an earnings rate determined by the total return of one or more funds in The
American Funds Group as designated by the Trustee.
/2/ Capital Research and Management Company manages The American Funds Group
consisting of 28 funds: AMCAP Fund, Inc., American Balanced Fund, Inc.,
American High-Income Municipal Bond Fund, Inc., American High-Income Trust,
American Mutual Fund, Inc., The Bond Fund of America, Inc., The Cash Management
Trust of America, Capital Income Builder, Inc., Capital World Growth and Income
Fund, Inc., Capital World Bond Fund, Inc., EuroPacific Growth Fund, Fundamental
Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America,
Inc., Intermediate Bond Fund of America, The Investment Company of America,
Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund, New
Perspective Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of
America, Inc., The Tax-Exempt Fund of California, The Tax-Exempt Fund of
Maryland, The Tax-Exempt Fund of Virginia, The Tax-Exempt Money Fund of
America, The U. S. Treasury Money Fund of America, U.S. Government Securities
Fund and Washington Mutual Investors Fund, Inc. Capital Research and
Management Company also manages Anchor Pathway Fund which serves as the
underlying investment vehicle for certain variable insurance contracts; and
Bond Portfolio for Endowments, Inc. and Endowments, Inc. whose shares may be
owned only by tax-exempt organizations. These amounts reflect the aggregate
compensation paid during the most recent fiscal year of the funds involved.
/3/ Since the plan's adoption, the total amount of deferred compensation
accrued by the Series (plus earnings thereon) for participating Trustees is as
follows: Mary Myers Kauppila ($16,089). Amounts deferred and accumulated
earnings thereon are not funded and are general unsecured liabilities of the
Series until paid to the Trustee.
/4/ James F. Rothenberg and Thomas E. Terry are affiliated with the Investment
Adviser and, accordingly, receive no remuneration from the Series.
OFFICERS
(with their principal occupations during the past five years)#
THOMAS E. TERRY, CHAIRMAN OF THE BOARD (see above).
JAMES F. ROTHENBERG, PRESIDENT (see above).
* JAMES K. DUNTON, SENIOR VICE PRESIDENT
Senior Vice President and Director - Capital Research and Management Company.
* ABNER D. GOLDSTINE, SENIOR VICE PRESIDENT
Senior Vice President and Director - Capital Research and Management Company.
* MICHAEL J. DOWNER, VICE PRESIDENT.
Assistant General Counsel - Legal Division, The Capital Group Companies, Inc.;
Secretary, Capital Research and Managment Company; Secretary, American Funds
Distributors, Inc.
* CLAUDIA P. HUNTINGTON, VICE PRESIDENT.
Senior Vice President, Capital Research Company.
** STEVEN N. KEARSLEY, VICE PRESIDENT AND TREASURER.
Vice President and Treasurer, Capital Research and Management Company.
* DINA N. PERRY, VICE PRESIDENT.
Vice President, Capital Research and Management Company.
JOHN H. SMET, VICE PRESIDENT. 11100 Santa Monica Boulevard, Los Angeles, CA
90025.
Vice President, Capital Research and Management Company.
* CHAD L. NORTON, SECRETARY.
Vice President - Fund Business Management Group, Capital Research and
Management Company.
* DAVID E. CARTER, ASSISTANT SECRETARY.
Associate, Capital Research and Management Company.
** MARY C. CREMIN, ASSISTANT TREASURER.
Senior Vice President - Fund Business Management Group, Capital Research and
Management Company.
** ROBERT P. SIMMER, ASSISTANT TREASURER.
Vice President - Fund Business Management Group, Capital Research and
Management Company.
__________________________________
# The principal occupation shown reflects the principal employment of each
individual during the past five years. Corporate positions may, in some
instances, have changed during this period.
* Address is 333 South Hope Street, Los Angeles, CA 90071.
** Address is 135 South State College Boulevard, Brea, CA 92621.
All of the Officers listed above are officers of the Investment Adviser or its
affiliated companies. No compensation is paid by the Series to any Officer or
Trustee who is a director or officer of the Investment Adviser or its
affiliated companies. The compensation paid by the Series to each unaffiliated
Trustee is $15,000 per annum, plus $1,200 for each Board of Trustees meeting
attended, plus $600 for each meeting attended as a member of a committee of the
Board of Trustees. No pension or retirement benefits are accrued as part of
fund expenses. The Trustees may elect, on a voluntary basis, to defer all or a
portion of their fees through a deferred compensation plan in effect for the
Series. The Series also reimburses certain expenses of the Trustees who are
not affiliated with the Investment Adviser.
MANAGEMENT
INVESTMENT ADVISER - The Investment Adviser, founded in 1931, maintains
research facilities in the U.S. and abroad, with a staff of professionals, many
of whom have a number of years of investment experience. The Investment
Adviser's research professionals travel several million miles a year, making
more than 5,000 research visits in more than 50 countries around the world.
The Investment Adviser believes that it is able to attract and retain quality
personnel.
An affiliate of the Investment Adviser compiles indices for major stock
markets around the world and compiles and edits the Morgan Stanley Capital
International Perspective, providing financial and market information about
more than 2,400 companies around the world.
The Investment Adviser and its affiliated companies are responsible for
approximately $100 billion of stocks, bonds and money market instruments and
serve over five million investors of all types throughout the world. These
investors include privately owned businesses and large corporations as well as
schools, colleges, foundations and other non-profit and tax-exempt
organizations.
INVESTMENT ADVISORY AND SERVICE AGREEMENT - The Investment Advisory and Service
Agreement (the "Agreement") between the Series and the Investment Adviser,
unless sooner terminated, will continue in effect until November 30, 1995, and
may be renewed from year to year thereafter, provided that any such renewal has
been specifically approved at least annually by (i) the Board of Trustees, or
by the vote of a majority (as defined in the 1940 Act) of the outstanding
voting securities of the Series, and (ii) the vote of a majority of Trustees
who are not parties to the Agreement or interested persons (as defined in the
1940 Act) of any such party, cast in person at a meeting called for the purpose
of voting on such approval. The Agreement provides that the Investment Adviser
has no liability to the Series for its acts or omissions in the performance of
its obligations to the Series not involving willful misconduct, bad faith,
gross negligence or reckless disregard of its obligations under the Agreement.
The Agreement also provides that either party has the right to terminate it,
without penalty, upon 60 days' written notice to the other party and that the
Agreement automatically terminates in the event of its assignment (as defined
in the 1940 Act).
The Investment Adviser is waiving (effective December 1, 1994) any fees
received from the International Fund under the current Agreement that would
exceed the fees payable under an amended Agreement, containing additional fee
breakpoints, to be presented to the Board of Trustees in June 1995.
The Investment Adviser, in addition to providing investment advisory services,
furnishes the services and pays the compensation and travel expenses of
qualified persons to perform the executive, and related administrative
functions of the Series, provides necessary office space, office equipment and
utilities, and general purpose accounting forms, supplies, and postage used at
the office of the Series relating to the services furnished by the Investment
Adviser. Subject to the expense agreement described below, the Series will pay
all expenses not expressly assumed by the Investment Adviser, including, but
not limited to, registration and filing fees with federal and state agencies;
blue sky expenses (if any); expenses of shareholders' meetings; the expense of
reports to existing shareholders; expenses of printing proxies and
prospectuses; insurance premiums; legal and auditing fees; dividend
disbursement expenses; the expense of the issuance, transfer, and redemption of
its shares; custodian fees; printing and preparation of registration
statements; taxes; compensation, fees and expenses paid to Trustees
unaffiliated with the Investment Adviser; association dues; and costs of
stationery and forms prepared exclusively for the Series.
The Agreement provides for an advisory fee reduction to the extent that each
fund's annual ordinary net operating expenses, except the International Fund's,
exceed 1 1/2% of the first $30 million of the average month-end total net
assets of the fund and 1% of the average month-end total net assets in excess
thereof. For the International Fund, the advisory fee will be reduced to the
extent that its annual ordinary net operating expenses exceed 1 1/2% of its
average month-end total net assets. Expenditures, including costs incurred in
connection with the purchase or sale of portfolio securities, which are
capitalized in accordance with generally accepted accounting principles
applicable to investment companies, are accounted for as capital items and not
as expenses.
During the fiscal years ended November 30, 1994, 1993 and 1992, the Investment
Adviser's total fees, respectively, amounted to the following: Growth Fund
$8,735,000, $7,048,000 and $4,746,000; International Fund $8,330,000,
$4,318,000 and $2,321,000; Growth-Income Fund $11,517,000, $9,526,000 and
$6,586,000; Asset Allocation Fund $3,129,000, $2,390,000 and $1,411,000;
High-Yield Bond Fund $2,022,000, $1,454,000 and $791,000; U. S.
Government/AAA-Rated Securities Fund $2,459,000, $2,238,000 and $1,532,000;
and Cash Management Fund $905,000, $750,000 and $826,000.
The Investment Adviser also serves as investment adviser to the following
registered investment companies: AMCAP Fund, Inc., American Balanced Fund,
Inc., American High-Income Municipal Bond Fund, Inc., American High-Income
Trust, American Mutual Fund, Inc., Anchor Pathway Fund, The Bond Fund of
America, Inc., Bond Portfolio for Endowments Inc., Capital Income Builder,
Inc., Capital World Bond Fund, Inc., Capital World Growth and Income Fund,
Inc., The Cash Management Trust of America, Endowments, Inc., EuroPacific
Growth Fund, Fundamental Investors, Inc., The Growth Fund of America, Inc., The
Income Fund of America, Inc., Intermediate Bond Fund of America, The Investment
Company of America, Limited Term Tax-Exempt Bond Fund of America, The New
Economy Fund, New Perspective Fund, Inc., SMALLCAP World Fund, Inc., The
Tax-Exempt Bond Fund of America, Inc., The Tax-Exempt Fund of California, The
Tax-Exempt Fund of Maryland, The Tax-Exempt Fund of Virginia, The Tax-Exempt
Money Fund of America, U.S. Government Securities Fund, The U.S. Treasury Money
Fund of America and Washington Mutual Investors Fund, Inc.
PRICE OF SHARES
The price paid for shares, the net asset value price, is calculated for each
of the funds once daily at the close of trading (currently 4:00 p.m., New York
Time) each day the New York Stock Exchange is open as set forth below. The New
York Stock Exchange is currently closed on weekends and on the following
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas Day. The net asset
value per share is determined as follows:
1. Stocks, and convertible bonds and debentures traded on securities exchanges
are valued at the last sale price on such exchange on the day of the valuation,
or, if no sales have occurred on that day, or if the securities are traded in
the over-the-counter market, at the last-reported price bid.
2. Non-convertible bonds and debentures, and other long-term debt securities
and Treasury notes normally are valued at prices obtained for the day of
valuation from a bond pricing service, when such prices are available; except
that, in circumstances where the Investment Adviser deems it appropriate to do
so, an over-the-counter or exchange quotation (at the mean of representative
quoted bid or asked prices for such securities or, if such prices are not
available, at such prices for securities of comparable maturity, quality and
type) may be used. Securities traded primarily on securities exchanges outside
the U.S. are valued at the last sale price on such exchanges on the day of
valuation, or if there is no sale on the day of valuation, at the last-reported
bid price. Short-term securities other than Treasury notes with original or
remaining maturities in excess of 60 days are valued at the mean of
representative quoted bid and asked prices for such securities or, if such
prices are not available, at such prices for securities of comparable maturity,
quality and type. Short-term securities with 60 days or less remaining to
maturity are amortized to maturity based on their cost to the fund if acquired
within 60 days of maturity or, if already held by the fund on the 60th day,
based on the value determined on the 61st day. Options on currencies purchased
by the fund are valued at their last bid price in the case of listed options or
at the average of the last bid prices obtained from dealers in the case of OTC
options. Futures contracts involving foreign currencies traded on exchanges
are valued at their last sale or settlement price as of the close of such
exchanges or if no sales are reported, at the mean between the last reported
bid and asked prices. Other securities are valued on the basis of last sale or
bid prices (if a last sale price is not available) in what is, in the opinion
of the Investment Adviser, the broadest and most representative market, which
may be either a securities exchange or over-the-counter market.
3. Where quotations are not readily available, securities are valued at fair
value as determined in good faith by the Board of Trustees. The fair value of
all other assets is added to the value of securities to arrive at the
respective fund's total assets;
4. The value of any security denominated in a currency other than U.S. dollars
will be translated into U.S. dollars at the prevailing market rate as
determined by the Series' officers;
5. There are deducted from the total assets, thus determined, the liabilities
of the respective funds including proper accruals of expense items; and
6. The net assets of the respective fund so obtained is then divided by the
total number of shares outstanding (excluding treasury shares), and the result,
rounded to the nearer cent, is the fund's net asset value per share.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
Each fund of the Series intends to qualify to be taxed as a "regulated
investment company" under the provisions of Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). To qualify for the tax
treatment afforded a regulated investment company under the Code, a fund must
annually distribute at least 90% of its net investment income and certain
short-term capital gains and meet certain diversification of assets and other
requirements of the Code. If a fund qualifies for such tax treatment, it will
not be subject to Federal income tax on the part of its ordinary income and its
net realized capital gains which it distributes to shareholders. To meet the
requirements of the Code, a fund must (a) derive at least 90% of its gross
income from dividends, interest, payments with respect to securities loans, and
gains from the sale or other disposition of stock or securities or currencies;
(b) derive less than 30% of its gross income from the sale or other disposition
of securities held less than three months; and (c) diversify its holdings so
that, at the end of each fiscal quarter, (i) at least 50% of the market value
of the fund's assets is represented by cash, U.S. Government securities and
other securities, limited, in respect of any one issuer, to an amount not
greater than 5% of the fund's assets and 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of its
assets is invested in the securities of any one issuer (other than U.S.
Government securities or the securities of other regulated investment
companies), or in two or more issuers which each fund controls and which are
engaged in the same or similar trades or businesses. It is the Series' policy
to distribute to the shareholders (the insurance company separate accounts) all
of its net investment income and capital gains realized during each fiscal
year.
Under the Code, the Asset Allocation Fund's and the International Fund's
taxable income for each year will be computed without regard to any net foreign
currency loss attributable to transactions after October 31, and any such net
foreign currency loss will be treated as arising on the first day of the
following taxable year.
The amount of any realized gain or loss of the Asset Allocation Fund and the
International Fund on closing out a currency contract will generally result in
a realized capital gain or loss for tax purposes. Under Code Section 1256,
currency contracts held by each fund at the end of each fiscal year will be
required to be "marked to market" for federal income tax purposes, that is,
deemed to have been sold at market value. Sixty percent (60%) of any net gain
or loss recognized on these deemed sales and sixty percent (60%) of any net
realized gain or loss from any actual sales, will be treated as long-term
capital gain or loss, and the remainder will be treated as short-term capital
gain or loss. Code Section 988 may also apply to currency contracts. Under
Section 988, each foreign currency gain or loss is generally computed
separately and treated as ordinary income or loss. In the case of overlap
between Sections 1256 and 988, special provisions determine the character and
timing of any income, gain or loss. Each fund will attempt to monitor Section
988 transactions to avoid an adverse tax impact.
Each fund, except for Cash Management Fund, may be required to pay withholding
and other taxes imposed by foreign countries which would reduce investment
income. Tax conventions between certain countries and the United States may
reduce or eliminate such taxes.
In addition to the asset diversification and other requirements for
qualification as a regulated investment company, the funds are subject to
another set of asset diversification requirements applicable to insurance
company separate accounts and their underlying funding vehicles. To satisfy
these diversification requirements, as of the end of each calendar quarter or
within 30 days thereafter, no more than 55% of the total assets of a fund may
be represented by any one investment, no more than 70% by any two investments,
no more than 80% by any three investments, and no more than 90% by any four
investments. For this purpose all securities of the same issuer are considered
a single investment, and each agency or instrumentality of the U.S. government
is treated as a separate issue of securities. The Series intends to comply
with these regulations. If a fund should fail to comply with these
regulations, Contracts invested in that fund shall not be treated as annuity,
endowment or life insurance contracts under the Code.
See the applicable Contract prospectus for information regarding the Federal
income tax treatment of the Contracts and distributions to the separate
accounts.
EXECUTION OF PORTFOLIO TRANSACTIONS
There are occasions on which portfolio transactions for the Series may be
executed as part of concurrent authorizations to purchase or sell the same
security for other funds served by the Investment Adviser, or for trusts or
other accounts served by affiliated companies of the Investment Adviser.
Although such concurrent authorizations potentially could be either
advantageous or disadvantageous to the Series, they are effected only when the
Investment Adviser believes that to do so is in the interest of the Series.
When such concurrent authorizations occur, the objective is to allocate the
executions in an equitable manner. The Series will not pay a mark-up for
research in principal transactions.
Brokerage commissions paid on portfolio transactions, including dealer
concessions on underwritings for the fiscal years ended November 30, 1994, 1993
and 1992, respectively, amounted to the following: Growth Fund $2,230,000,
$1,927,000, and $1,484,000; International Fund $2,251,000, $1,078,000, and
$558,000; Growth-Income Fund $2,590,000, $2,218,000, and $1,733,000; Asset
Allocation Fund $628,000, $586,000, and $199,000; High-Yield Bond Fund
$2,760,000, $2,123,000, and $748,000. No brokerage commissions were paid by
the U.S. Government/AAA-Rated Securities Fund during those periods. Because
all portfolio transactions for the Cash Management Fund were on a "net price"
basis and involved short-term money market instrumets only, that fund did not
pay any brokerage commissions during those periods.
GENERAL INFORMATION
CUSTODIAN OF ASSETS -- Securities and cash owned by the Series', including
proceeds from the sale of shares of the Series and of securities in the Series
portfolio, are held by State Street Bank and Trust Company, 225 Franklin
Street, Boston, Massachusetts 02110, as Custodian. Non-U.S. securities may be
held by the Custodian in non-U.S. banks or securities depositories or foreign
branches of U.S. banks.
INDEPENDENT ACCOUNTANTS -- Price Waterhouse LLP, 400 South Hope Street, Los
Angeles, CA 90071, has served as the Series' independent accountants since
March 18, 1991, providing audit services, preparation of tax returns and review
of certain documents to be filed with the Securities and Exchange Commission.
The financial statements, included in this Statement of Additional Information,
have been so included in reliance on the report of Price Waterhouse LLP given
on the authority of said firm as experts in auditing and accounting. Prior to
March 18, 1991, KPMG Peat Marwick, 725 South Figueroa Street, Los Angeles, CA
90017, served as the Series' independent public accountants. The selection of
the Series' independent accountant is reviewed and determined annually by the
Board of Trustees.
REPORTS TO SHAREHOLDERS -- The Series' fiscal year ends November 30. Contract
owners are provided at least semi-annually with reports showing the investment
portfolio, financial statements and other information. The financial
statements included in the Annual Report are audited by the independent
accounting firm of Price Waterhouse LLP.
PERSONAL INVESTING POLICY - Capital Research and Management Company and its
affiliated companies have adopted a personal investing policy consistent with
Investment Company Institute guidelines. This policy includes: a ban on
acquisitions of securities pursuant to an initial public offering; restrictions
on acquisitions of private placement securities; pre-clearance and reporting
requirements; review of duplicate confirmation statements; annual
recertification of compliance with codes of ethics; disclosure of personal
holdings by certain investment personnel prior to recommendation for purchase
for the fund; blackout periods on personal investing for certain investment
personnel; ban on short-term trading profits for investment personnel;
limitations on service as a director of publicly traded companies; and
disclosure of personal securities transactions.
SHAREHOLDER AND TRUSTEE RESPONSIBILITY -- Under the laws of certain states,
including Massachusetts, where the Series was organized, and California, where
the Series' principal office is located, shareholders of a Massachusetts
business trust may, under certain circumstances, be held personally liable as
partners for the obligations of the Series. However, the risk of a shareholder
incurring any financial loss on account of shareholder liability is limited to
circumstances in which the Series itself would be unable to meet its
obligations. The Declaration of Trust contains an express disclaimer of
shareholder liability for acts or obligations of the Series and provides that
notice of the disclaimer may be given in each agreement, obligation, or
instrument which is entered into or executed by the Series or trustees. The
Declaration of Trust provides for indemnification out of Series property of any
shareholder personally liable for the obligations of the Series and also
provides for the Series to reimburse such shareholder for all legal and other
expenses reasonably incurred in connection with any such claim or liability.
Under the Declaration of Trust, the Trustees or officers are not liable for
actions or failure to act; however, they are not protected from liability by
reason of their willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office. The Series
will provide indemnification to its Trustees and officers as authorized by its
By-Laws and by the 1940 Act and the rules and regulations thereunder.
REGISTRATION STATEMENT -- A registration statement has been filed with the
Securities and Exchange Commission under the Securities Act of 1933 and the
1940 Act, with respect to the Series. The prospectus and this Statement of
Additional Information do not contain all information set forth in the
registration statement, its amendments and exhibits, to which reference is made
for further information concerning the Series. Statements contained in the
prospectus and this Statement of Additional Information as to the content of
the Contracts issued through the separate accounts and other legal instruments
are summaries. For a complete statement of the terms thereof, reference is
made to the registration statements of the separate accounts and Contracts as
filed with the Securities and Exchange Commission.
AUTHORIZED SHARES -- The Series was organized as a Massachusetts Business Trust
which permits each fund of the Series to issue an unlimited number of shares of
beneficial interest of a single class.
APPENDIX
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's Investors Service, Inc. top two rating designations for commercial
paper are described as follows: issuers rated Prime-1 have a superior capacity
for repayment of short-term promissory obligations. Prime-1 repayment capacity
will normally be evidenced by the following characteristics: leading market
positions in well-established industries; high rates of return on funds
employed; conservative capitalization structures with moderate reliance on debt
and ample asset protection; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and well-established
access to a range of financial markets and assured sources of alternate
liquidity. Issues rated Prime-2 have a strong capacity for repayment of
short-term promissory obligations. This will normally be evidenced by many of
the characteristics cited above, but to a lesser degree. Earnings trends and
coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected
by external conditions. Ample alternate liquidity is maintained.
Standard & Poor's Corporation's top two rating categories for commercial
paper are described as follows: A -- Issues assigned its highest rating are
regarded as having the greatest capacity for timely payment. Issues in this
category are delineated with numbers 1 or 2 to indicate the relative degree of
safety. A-1 -- This designation indicates that the degree of safety regarding
timely payment is either overwhelming or very strong. Those issues determined
to possess overwhelming safety characteristics will be denoted with a plus (+)
sign designation. A-2 -- Capacity for timely payments on issues with this
designation is strong. However, the relative degree of safety is not as high
as for issues designated "A-1".
INVESTMENTS PRIMARILY IN STOCKS
Growth Fund
Investment Portfolio, November 30, 1994
STOCKS 88.01%
CASH 11.99%
<TABLE>
<CAPTION>
LARGEST Percent of
INDIVIDUAL EQUITY HOLDINGS Net Assets
Tele-Communications 3.25%
<S> <C>
Intel 2.81
Walt Disney 2.33
Microsoft 2.17
Silicon Graphics 2.08
Compaq Computer 1.86
Texas Instruments 1.77
Capital Cities/ABC 1.65
Adobe Systems 1.55
Time Warner 1.51
</TABLE>
- --------------
<TABLE>
<CAPTION>
Market Percent
Number of Value Of
STOCKS (COMMON AND PREFERRED) Shares (000) Net Assets
DATA PROCESSING & REPRODUCTION- 10.74%
<S> <C> <C> <C>
Microsoft Corp./1/ 700,000 $43,925 2.17%
Silicon Graphics, Inc./1/ 1,370,000 42,127 2.08
Compaq Computer Corp./1/ 962,500 37,658 1.86
Adobe Systems Inc. 950,000 31,350 1.55
Lotus Development Corp./1/ 375,000 16,781 0.83
Oracle Systems Corp./1/ 355,000 14,644 0.72
International Business Machines Corp. 190,000 13,443 0.66
Mentor Graphics Corp./1/ 1,000,000 13,250 0.65
Sequent Computer Systems, Inc./1/ 570,000 10,616 0.52
Apple Computer, Inc. 235,000 8,695 0.43
Electronic Arts/1/ 425,000 8,447 0.42
Tandem Computers Inc./1/ 440,000 7,480 0.37
Legent Corp./1/ 140,000 4,480 0.22
Chipcom Corp./1/ 90,000 3,690 0.18
Structural Dynamics Research Corp./1/ 475,000 2,731 0.14
Amdahl Corp./1/ 127,100 1,239 0.06
Data General Corp./1/ 100,000 1,075 0.05
Tripos, Inc./1/ 19,333 85 0
BROADCASTING & PUBLISHING- 12.20%
Tele-Communications, Inc., Class A/1/ 2,789,950 65,913 3.25
Capital Cities/ABC, Inc. 410,000 33,517 1.65
Time Warner Inc. 908,000 30,645 1.51
News Corp. Ltd. (American Depositary Receipts) (Australia) 1,270,000 20,002 1.42
News Corp. Ltd., preferred shares (American Depositary
Receipts)/1/ 635,000 8,811
Turner Broadcasting System, Inc., Class B 1,065,100 16,376 0.81
Gaylord Entertainment Co., Class A 550,000 12,444 0.61
Cablevision Systems Corp., Class A/1/ 240,000 12,150 0.6
New York Times Co., Class A 450,000 10,687 0.53
CBS Inc. 160,445 8,905 0.44
Comcast Corp., Class A, special stock/1/ 500,000 7,812 0.39
United International Holdings, Inc., Class A/1/ 485,000 7,154 0.35
Jones Intercable, Inc., Class A/1/ 370,000 4,995 0.25
Adelphia Communications Corp., Class A/1/ 350,000 3,762 0.19
Infinity Broadcasting Corp., Class A/1/ 112,500 3,319 0.16
BHC Communications, Inc., Class A/1/ 11,189 820 0.04
BUSINESS & PUBLIC SERVICES- 12.04%
United HealthCare Corp. 589,000 27,978 1.38
WMX Technologies, Inc. 1,025,000 26,394 1.3
Columbia Healthcare Corp. 640,000 24,240 1.2
FHP International Corp./1/ 805,100 21,536 1.06
General Motors Corp., Class E 555,000 20,396 1.01
Federal Express Corp./1/ 350,000 19,906 0.98
Bay Networks Inc./1/ 680,125 17,428 0.86
CUC International Inc./1/ 562,600 17,300 0.85
U.S. Healthcare, Inc. 325,000 14,463 0.71
Oxford Health Plans, Inc./1/ 172,200 12,011 0.59
ADT Ltd./1/ 955,000 10,624 0.52
Avery Dennison Corp. 200,000 6,450 0.32
Humana Inc./1/ 250,000 5,594 0.28
Pitney Bowes Inc. 150,000 4,988 0.25
Ceridian Corp./1/ 150,000 3,750 0.18
Value Health, Inc./1/ 100,000 3,687 0.18
Dun & Bradstreet Corp. 50,000 2,644 0.13
BHA Group, Inc., Class A 195,000 2,389 0.12
Air & Water Technologies Corp., Class A/1/ 285,000 1,674 0.08
Safety-Kleen Corp. 50,000 725 0.04
ELECTRONIC COMPONENTS- 11.42%
Intel Corp. 905,200 56,914 2.81
Texas Instruments Inc. 475,000 35,862 1.77
LSI Logic Corp./1/ 710,000 30,353 1.5
National Semiconductor Corp./1/ 1,365,000 25,082 1.24
Analog Devices, Inc./1/ 455,000 15,072 0.74
Newbridge Networks Corp./1/ 400,000 13,450 0.66
Micron Technology, Inc. 312,500 12,969 0.64
SCI Systems, Inc./1/ 646,263 11,875 0.58
Advanced Micro Devices, Inc./1/ 290,000 7,322 0.36
Motorola, Inc. 122,000 6,878 0.34
EMC Corp./1/ 200,000 4,500 0.22
Rogers Corp./1/ 95,400 3,995 0.2
Park Electrochemical Corp. 125,000 3,875 0.19
Xilinx, Inc./1/ 30,000 1,755 0.09
Quantum Corp./1/ 100,000 1,575 0.08
TELECOMMUNICATIONS- 5.82%
Vanguard Cellular Systems, Inc./1/ 1,035,000 27,169 1.34
MCI Communications Corp. 1,010,000 19,695 0.97
LIN Broadcasting Corp./1/ 129,400 18,472 0.91
United States Cellular Corp./1/ 510,000 15,938 0.79
AirTouch Communications/1/ 475,000 12,884 0.63
Cellular Communications, Inc., convertible preferred/1/ 165,000 8,250 0.41
Associated Communications Corp., Class A/1/ 275,000 6,944 0.47
Associated Communications Corp., Class B/1/ 100,000 2,550
Centennial Cellular Corp./1/ 300,000 4,800 0.24
Cellular Communications of Puerto Rico, Inc./1/ 37,500 1,237 0.06
LEISURE & TOURISM- 5.23%
Walt Disney Co. 1,085,000 47,333 2.33
Marriott International, Inc. 500,000 13,125 0.65
Mirage Resorts, Inc./1/ 600,000 11,850 0.59
Promus Companies Inc./1/ 375,000 10,406 0.51
Circus Circus Enterprises, Inc./1/ 475,000 9,975 0.49
Host Marriott Corp./1/ 655,000 6,223 0.31
Luby's Cafeterias, Inc. 250,000 5,500 0.27
International Game Technology 100,000 1,662 0.08
HEALTH & PERSONAL CARE- 4.27%
Cordis Corp./1/ 255,000 15,045 0.74
Tambrands Inc. 300,000 11,588 0.57
Genetics Institute, Inc./1/ 260,000 10,075 0.5
Omnicare, Inc. 200,000 8,325 0.41
Forest Laboratories, Inc./1/ 151,000 7,078 0.35
Genentech, Inc./1/ 150,000 7,050 0.35
AB Astra, Class A (Sweden) 250,000 6,728 0.33
Paragon Trade Brands, Inc./1/ 300,000 5,625 0.28
Acuson Corp./1/ 195,000 3,266 0.16
Johnson & Johnson 48,800 2,605 0.13
Puritan-Bennett Corp. 111,600 2,372 0.12
Alpha-Beta Technology, Inc./1/ 200,000 2,150 0.1
Liposome Technology, Inc./1/ 300,000 1,987 0.1
Biogen, Inc./1/ 50,000 1,938 0.09
Upjohn Co. 25,000 803 0.04
BANKING- 3.92%
BayBanks, Inc. 409,400 21,596 1.07
Mercantile Bancorporation Inc. 517,500 15,719 0.78
Banc One Corp. 530,750 14,264 0.7
Huntington Bancshares Inc. 468,087 8,601 0.42
Commerce Bancshares, Inc. 275,000 7,975 0.39
Northern Trust Corp. 125,000 4,187 0.21
Golden West Financial Corp. 90,000 3,150 0.16
BankAmerica Corp. 50,000 2,050 0.1
Bay View Capital Corp. 100,000 1,900 0.09
INSURANCE- 2.61%
EXEL Ltd. (Bermuda) 355,000 13,312 0.66
Transatlantic Holdings, Inc. 230,000 11,989 0.59
NAC Re Corp. 285,000 7,196 0.36
NYMAGIC, Inc. 368,300 6,031 0.3
TIG Holdings, Inc. 325,000 5,688 0.28
Trenwick Group Inc. 118,400 4,351 0.21
American Re Corp./1/ 165,000 4,269 0.21
MERCHANDISING- 2.54%
Toys "R" Us, Inc./1/ 310,000 11,354 0.56
Spiegel, Inc., Class A 752,600 9,972 0.49
Barnes & Noble, Inc./1/ 350,000 9,581 0.47
Staples, Inc./1/ 416,250 9,053 0.45
ShopKo Stores, Inc. 575,000 5,750 0.29
Goody's Family Clothing, Inc./1/ 415,000 3,424 0.17
TJX Companies, Inc. 150,000 2,269 0.11
Phar-Mor, Inc./1/ 60,000 60 0
TRANSPORTATION: AIRLINES-1.89%
Southwest Airlines Co. 1,166,900 24,651 1.22
AMR Corp./1/ 195,000 9,896 0.49
Delta Air Lines, Inc. 75,000 3,759 0.18
CHEMICALS- 1.69%
Loctite Corp. 250,000 11,312 0.56
Valspar Corp. 350,000 11,113 0.55
Raychem Corp. 305,000 10,561 0.52
McWhorter, Inc./1/ 50,000 856 0.04
Lubrizol Corp. 11,000 346 0.02
RECREATION & OTHER CONSUMER PRODUCTS- 1.41%
Mattel, Inc. 727,625 19,464 0.96
Hasbro, Inc. 185,000 5,458 0.27
Duracell International Inc. 80,000 3,600 0.18
ENERGY EQUIPMENT- 1.03%
Schlumberger Ltd. (Netherlands Antilles) 295,000 15,672 0.77
Western Atlas Inc./1/ 120,000 5,235 0.26
FINANCIAL SERVICES- 0.88%
Federal National Mortgage Assn. 250,000 17,781 0.88
TRANSPORTATION: RAIL & ROAD- 0.74%
Chicago & North Western Holdings Corp./1/ 775,000 15,113 0.74
ENERGY SOURCES- 0.71%
Murphy Oil Corp. 200,000 8,950 0.44
Parker & Parsley Petroleum Co. 240,000 5,550 0.27
ELECTRICAL & ELECTRONICS- 0.67%
Telefonaktiebolaget LM Ericsson, Class B (American Depositary
Receipts) (Sweden) 245,000 13,598 0.67
TEXTILES & APPAREL- 0.59%
Phillips-Van Heusen Corp. 750,000 11,906 0.59
BEVERAGES & TOBACCO- 0.47%
Philip Morris Companies Inc. 160,000 9,560 0.47
APPLIANCES & HOUSEHOLD DURABLES- 0.39%
Mohawk Industries, Inc./1/ 475,000 7,956 0.39
INDUSTRIAL COMPONENTS- 0.28%
Cooper Tire & Rubber Co. 240,000 5,610 0.28
MACHINERY & ENGINEERING- 0.27%
Caterpillar Inc. 100,000 5,400 0.27
FOOD & HOUSEHOLD PRODUCTS- 0.26%
Archer Daniels Midland Co. 192,937 5,330 0.26
ELECTRONIC INSTRUMENTS- 0.24%
Applied Materials, Inc./1/ 104,000 4,940 0.24
AEROSPACE & MILITARY TECHNOLOGY- 0.20%
Litton Industries, Inc./1/ 120,000 4,095 0.2
CONSTRUCTION & HOUSING- 0.15%
Stone & Webster, Inc. 90,000 2,992 0.15
MULTI-INDUSTRY- 0.06%
Textron Inc. 20,000 940 0.05
Tenneco Inc. 7,900 307 0.01
FOREST PRODUCTS & PAPER- 0.03%
ITT Rayonier Inc. 25,000 700 0.03
MISCELLANEOUS
Other stocks in initial period of acquisition 62,581 3.09
TOTAL STOCKS (cost: $1,462,065,000) 1,784,303 88.01
--------- -------
Principal
Amount
SHORT-TERM SECURITIES (000)
CORPORATE SHORT-TERM NOTES- 10.26%
Ford Motor Credit Co. 5.20%-5.93% due 12/6/94-1/19/95 $37,200 36,936 1.82
Texaco Inc. 5.42% due 1/20/95 25,000 24,795 1.22
Beneficial Corp. 5.07%-5.60% due 12/27/94-1/11/95 23,100 22,966 1.13
Commercial Credit Co. 5.15%-5.75% due 12/12/94-1/12/95 20,900 20,787 1.03
J.C. Penney Funding Corp. 5.62% due 1/17/95 20,000 19,847 0.98
AT&T 5.37%-5.43% due 1/5-1/18/95 19,900 19,776 0.98
Eli Lilly & Co. 5.73% due 1/9/95 16,300 16,196 0.8
H.J. Heinz Co. 5.02% due 12/13/94 13,300 13,276 0.66
Ameritech Capital Funding Corp. 5.16% due 12/14/94 11,400 11,377 0.56
Associates Corp. of North America 5.72% due 12/1/94 10,000 9,999 0.49
National Rural Utilities Cooperative Finance Corp. 5.70% due
1/6/95 7,000 6,959 0.34
Union Pacific Corp. 5.02% due 12/7/94 5,000 4,995 0.25
FEDERAL AGENCY DISCOUNT NOTES- 1.96%
Federal National Mortgage Assn. 4.81% due 12/5/94 19,770 19,756 0.97
Tennessee Valley Authority 5.09% due 12/2/94 8,300 8,297 0.41
Federal Farm Credit Bank 4.94% due 12/8/94 7,000 6,992 0.35
Federal Home Loan Mortgage Corp. 5.11% due 12/2/94 4,700 4,699 0.23
----------- --------
TOTAL SHORT-TERM SECURITIES (cost: $247,679,000) 247,653 12.22
-------- -------
TOTAL INVESTMENT SECURITIES (cost: $1,709,744,000) 2,031,956 100.23
Excess of payables over money market account, cash and
receivables 4,615 0.23
-------- --------
NET ASSETS $2,027,341 100.00%
============ ========
</TABLE>
/1/ Non-income-producing securities
/2/ Purchased in a private placement
transaction; resale potential extends
to qualified institutional buyers.
See Notes to Financial Statements
Stocks appearing in the portfolio
since May 31, 1994
- ----------------------------------
AirTouch Communications
Amdahl
Barnes & Noble
Bay Networks
Bay View Capital
Biogen
CBS
Circus Circus Enterprises
Cooper Tire & Rubber
Cordis
EMC
Gaylord Entertainment
Humana
International Game Technology
ITT Rayonier
Micron Technology
Mohawk Industries
Newbridge Networks
Oracle Systems
Promus Companies
Tripos
Xilinx
Stocks eliminated from the
portfolio since May 31, 1994
- -------------------------------
Adaptec
Bancorp Hawaii
C.R. Bard
Betz Laboratories
Century Telephone Enterprises
Contel Cellular
Evans & Sutherland Computer
Informix
ITT
Keystone International
Liberty Media
QVC Network
Student Loan Marketing
Sun Microsystems
SynOptics Communications
Tektronix
20th Century Industries
U.S. Bancorp
Unisys
VLSI Technology
***************************************************************************
***************************************************************************
***************************************************************************
AMERICAN VARIABLE INSURANCE SERIES INTERNATIONAL FUND
Investment Portfolio, November 30, 1994
OTHER 1.79%
THE AMERICAS 9.41%
CASH 18.15%
ASIA/PACIFIC 21.51%
EUROPE 49.14%
<TABLE>
<CAPTION>
LARGEST INDIVIDUAL EQUITY HOLDINGS Percent of
Net Assets
<S> <C>
Daimler-Benz 1.98%
Telefonos de Mexico 1.84
Nokia 1.46
Bayerische Motoren Werke 1.45
Forte 1.31
Volkswagen 1.28
TNT 1.26
Telecom Corp. of New Zealand 1.24
ABN AMRO 1.21
Australia and New Zealand Banking Group 1.21
</TABLE>
- ----------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Market Percent
Number of Value of Net
Stocks (common and preferred) Shares (000) Assets
TELECOMMUNICATIONS - 7.02%
Telefonos de Mexico, SA de CV, Class L (American Depositary
Receipts)(Mexico) 487,000 $25,811 1.84%
Telecom Corp. of New Zealand Ltd. (New Zealand)/1/ 4,956,800 16,810
Telecom Corp. of New Zealand Ltd.(American Depositary
Receipts) 11,700 633 1.24
Tele Danmark AS, Class B (American Depositary Receipts)
(Denmark)/2/ 600,000 15,525 1.11
Telecomunicacoes Brasileiras SA, preferred nominative
(Brazil) 256,722,053 12,290 0.87
Telecom Italia SpA (Italy) 3,861,000 9,967
Telecom Italia SpA, savings shares 276,000 572 0.75
BCE Inc. (Canada) 293,000 9,768 0.7
Telefonica de Espana, SA (American Depositary Receipts)
(Spain) 158,000 6,103 0.43
Rogers Cantel Mobile Communications Inc., Class B (Canada)/2/ 195,000 5,728 0.41
STET - Societa Finanziaria Telefonica p.a. (Italy) 950,000 2,769
STET - Societa Finanziaria Telefonica p.a., nonconvertible
savings shares 950,000 2,268 0.36
Philippine Long Distance Telephone Co. (Global
Depositary Receipts)(Philippines)/2/ 80,000 3,980 0.28
Cable and Wireless PLC (United Kingdom) 587,700 3,570 0.25
Nippon Telegraph & Telephone Corp. (Japan) 400 3,396 0.24
Vodafone Group PLC (American Depositary Receipts)(United
Kingdom) 66,000 2,145
Vodafone Group PLC 392,976 1,249 0.24
Pakistan Telecommunication Corp. (Global Depositary
Receipts)(Pakistan)/12/ 12,800 1,958 0.14
AUTOMOBILES - 7.41%
Daimler-Benz AG (Germany) 58,920 27,840 1.98
Bayerische Motoren Werke AG (Germany) 35,000 16,816
Bayerische Motoren Werke AG, perferred shares 10,472 3,599 1.45
Volkswagen AG, preferred shares (Germany) 83,000 17,932 1.28
Peugeot SA (France) 110,000 16,089 1.15
Toyota Motor Corp. (Japan) 398,000 8,487 0.6
Suzuki Motor Corp. (Japan) 612,000 6,989 0.5
Renault V.I. SA (France)/1/ 129,500 4,356 0.31
Nissan Motor Co., Ltd. (Japan) 226,000 1,907 0.14
BANKING - 6.95%
Australia and New Zealand Banking Group Ltd. (Australia) 5,614,016 17,067 1.21
ABN AMRO Holding NV (Netherlands) 491,334 16,985 1.21
Westpac Banking Corp. (Australia) 3,815,761 12,303 0.88
P.T. Bank Internasional Indonesia (Indonesia) 1,863,000 6,329 0.45
Banco Bradesco SA, preferred nominative (Brazil) 725,076,991 5,914 0.42
Kansallis-Osake-Pankki (Finland)/2/ 4,100,000 5,053 0.36
Canadian Imperial Bank of Commerce (Canada) 200,000 4,778 0.34
Bank of Montreal (Canada) 220,000 4,057 0.29
CS Holding Group (Switzerland) 8,000 3,382
CS Holding Group, registered shares 8,000 653 0.29
Safra Republic Holdings SA (Luxembourg) 42,000 3,685 0.26
Banco Bilbao Vizcaya, SA (American Depositary Receipts)
(Spain) 130,000 3,396 0.24
Bank of Ayudhya, Ltd. (Thailand) 765,000 3,084 0.22
Credit local de France (France) 39,800 3,067 0.22
National Australia Bank Ltd. (Australia) 290,201 2,339 0.17
Bangkok Bank Ltd. (Thailand) 212,500 2,104 0.15
Deutsche Bank AG (Germany) 3,300 1,556 0.11
Philippine National Bank (Philippines) 98,049 1,309 0.09
Bayerische Vereinsbank AG (Germany) 2,000 582 0.04
MULTI-INDUSTRY - 6.91%
Nokia Corp., preferred shares (Finland) 80,000 10,929
Nokia Corp. 70,000 9,548 1.46
Brierley Investments Ltd. (New Zealand) 20,901,870 15,620
Brierley Investments Ltd., 9.00% convertible preferred 1,445,000 1,007 1.18
Groupe Bruxelles Lambert SA (Belgium) 83,000 9,938 0.71
Preussag AG (Germany) 29,000 7,991 0.57
Pearson PLC (United Kingdom) 540,000 5,199 0.37
Lend Lease Corp. Ltd. (Australia) 420,901 5,138 0.37
Industriforvaltnings AB Kinnevik, Class A (Sweden) 101,600 3,071
Industriforvaltnings AB Kinnevik, Class B 65,000 2,025 0.36
Orkla AS, Class A (Norway) 155,000 4,944 0.35
Swire Pacific Ltd., Class A (Hong Kong) 718,000 4,781 0.34
Hutchison Whampoa Ltd. (Hong Kong) 1,200,000 4,779 0.34
Investor AB, Class B (Sweden) 170,000 4,327 0.31
Chargeurs (France) 17,000 4,048 0.29
B-A-T Industries PLC (United Kingdom) 512,000 3,591 0.26
BROADCASTING & PUBLISHING - 4.86%
Television Broadcasts Ltd. (Hong Kong) 2,562,000 10,270 0.73
News Corp. Ltd. (American Depositary Receipts)(Australia) 362,000 5,701
News Corp. Ltd., preferred shares (American Depositary
Receipts)/2/ 181,000 2,511 0.58
NV Verenigd Bezit VNU (Netherlands) 77,000 7,565 0.54
Grupo Televisa, SA (American Depositary Receipts)(Mexico) 149,000 6,742 0.48
Rogers Communications Inc., Class B (Canada)/2/ 475,000 6,559 0.47
Independent Newspapers, PLC (Ireland) 994,450 4,347 0.31
Elsevier NV (Netherlands) 340,000 3,383 0.24
Europe 1 Communication (Monaco) 8,571 2,673 0.19
Holdingmaatschappij De Telegraaf NV (Netherlands) 23,500 2,605 0.19
John Fairfax Holdings Ltd. (Australia) 1,280,000 2,575 0.18
CANAL+ (France) 14,778 2,496 0.18
Daily Mail and General Trust PLC, Class A (United Kingdom) 145,000 2,202 0.16
News International PLC, special dividend shares (United
Kingdom) 580,000 2,134 0.15
Tokyo Broadcasting System, Inc. (Japan) 113,000 1,907 0.14
Wolters Kluwer NV (Netherlands) 25,740 1,815 0.13
AUDIOFINA (Luxembourg) 2,455 1,240
AUDIOFINA, 5.00% convertible preferred 223 109 0.1
Sing Tao Holdings Ltd. (Hong Kong - Incorporated in Bermuda) 2,223,230 1,294 0.09
UTILITIES: ELECTRIC & GAS - 3.90%
Hongkong Electric Holdings Ltd. (Hong Kong) 5,025,000 12,475 0.89
Korea Electric Power Corp. (Korea) 188,000 7,019
Korea Electric Power Corp. (American Depositary Receipt)/2/ 215,000 4,515 0.82
Centrais Eletricas Brasileiras SA, Class B,
preferred nominative (Brazil) 31,000,000 10,736 0.76
China Light & Power Co., Ltd. (Hong Kong) 1,517,800 6,535 0.47
Iberdrola, SA (Spain) 915,000 6,135 0.44
Companhia Energetica de Sao Paulo, preferred nominative,
(American Depositary Receipts)(Brazil)/12/ 183,998 2,760
Companhia Energetica de Sao Paulo, units/2/ 681,500 918 0.26
Scottish Power PLC (United Kingdom) 600,000 3,311 0.24
Hong Kong and China Gas Co. Ltd. (Hong Kong) 202,320 330 0.02
CHEMICALS - 3.73%
L'Air Liquide (France) 73,977 10,202 0.73
Akzo NV (Netherlands) 92,000 10,200 0.73
DSM NV (Netherlands) 98,902 7,366 0.52
Sumitomo Chemical Co., Ltd. (Japan) 1,221,000 7,071 0.5
Ciba-Geigy Ltd. (Switzerland) 10,400 6,031
Ciba-Geigy Ltd., warrants, expire 1995/2/ 1,060 4 0.43
Bayer AG (Germany) 22,500 4,923 0.35
BASF AG (Germany) 19,000 3,678 0.26
Hoechst AG (Germany) 15,000 3,002 0.21
BUSINESS & PUBLIC SERVICES - 3.55%
Autopistas, Concesionaria Espanola, SA (Spain) 1,035,000 8,645 0.62
Reuters Holdings PLC (United Kingdom) 932,000 7,179 0.51
Havas SA (France) 67,757 5,500 0.39
Eurotunnel SA, units (France)/2/ 1,376,000 5,427 0.39
Thames Water PLC (United Kingdom) 608,202 4,656 0.33
Saatchi & Saatchi Co. PLC (United Kingdom) 1,808,995 4,315 0.31
Welsh Water PLC (United Kingdom) 394,000 3,911 0.28
De La Rue PLC (United Kingdom) 200,000 3,189 0.23
Cross-Harbour Tunnel Co., Ltd. (Hong Kong) 1,500,000 3,123 0.22
Securicor Group PLC, Class A (United Kingdom) 165,000 2,436 0.17
Lex Service PLC (United Kingdom) 281,400 1,454 0.1
ELECTRICAL & ELECTRONICS - 3.15%
ASEA AB, Class A (Sweden) 130,000 9,237
ASEA AB, Class B 69,300 4,924 1.01
Siemens AG (Germany) 23,850 9,266 0.66
BBC Brown Boveri Ltd, Class A (Switzerland) 9,292 7,779 0.55
Telefonaktiebolaget LM Ericsson, Class B (Sweden) 121,500 6,684
Telefonaktiebolaget LM Ericsson, Class B, 4.25% convertible
preferred 14,500 28 0.48
Alcatel Alsthom (France) 47,354 3,999 0.28
Johnson Electric Holdings Ltd. (Hong Kong - Incorporated in
Bermuda) 495,000 1,267 0.09
Hitachi, Ltd. (Japan) 115,000 1,135 0.08
INSURANCE - 2.49%
Munchener Ruckversicherungs-Gesellschaft (Germany) 4,349 7,777
Munchener Ruckversicherungs-Gesellschaft, warrants,
expire 1998/2/ 483 57 0.56
Irish Life PLC (Ireland) 2,506,000 7,111 0.51
GIO Australia Holdings Ltd. (Australia) 2,788,794 4,946 0.35
Corporation Mapfre, CIR, SA (Spain) 98,652 4,500 0.32
Willis Corroon Group PLC (United Kingdom) 1,712,250 3,860 0.27
United Friendly Group PLC, Class B, (United Kingdom) 500,000 3,491 0.25
Refuge Group PLC (United Kingdom) 800,000 3,194 0.23
MACHINERY & ENGINEERING - 2.42%
Mannesmann AG (Germany) 45,187 11,790 0.84
VA Technologie AG (Austria)/1/ 55,100 5,368 0.38
Atlas Copco AB, Class A (Sweden) 410,000 5,272 0.38
Sembawang Shipyard Ltd. (Singapore) 645,000 4,628 0.33
Sandvik AB, Class B (Sweden) 175,000 2,946 0.21
GEA AG, preferred shares (Germany) 5,000 1,511
GEA AG 3,750 1,420 0.21
Siu-Fung Ceramics Holdings Ltd. (Hong Kong - Incorporated
in Bermuda) 5,000,000 1,009 0.07
LEISURE & TOURISM - 2.25%
Forte PLC (United Kingdom) 4,968,836 18,436 1.31
PolyGram NV (New York Registered Shares)(Netherlands) 175,000 7,306 0.52
Mandarin Oriental International Ltd. (Hong Kong -
Incorporated in Bermuda) 5,665,277 5,897 0.42
BUILDING MATERIALS & COMPONENTS - 2.13%
Holderbank Financiere Glaris Ltd. (Switzerland) 16,300 12,616
Holderbank Financiere Glaris Ltd., warrants, expire 1994/2/ 81,500 126 0.91
CEMEX, SA, Class A (Mexico) 1,086,250 10,226 0.73
Poliet (France) 40,782 2,960 0.21
Sika Finanz AG, participation certificates (Switzerland) 6,500 1,785 0.13
Tolmex, SA de CV, Class B2 (Mexico) 85,000 1,241 0.09
CAMAS PLC (United Kingdom) 668,750 817 0.06
HEALTH & PERSONAL CARE - 1.90%
AB Astra, Class A (Sweden) 470,000 12,648 0.9
Glaxo Holdings PLC (American Depositary Receipts)
(United Kingdom) 500,000 9,625 0.69
Sandoz Ltd., participation certificates (Switzerland) 8,500 4,360 0.31
BEVERAGES & TOBACCO - 1.79%
Coca-Cola Amatil Ltd. (Australia)/1/ 2,083,417 13,595 0.97
Heineken NV (Netherlands) 45,017 6,504 0.46
Grupo Embotellador de Mexico, SA de CV (Global Depositary
Receipts)(Mexico) 212,100 5,064 0.36
FOOD & HOUSEHOLD PRODUCTS - 1.79%
Reckitt & Colman PLC (United Kingdom) 1,300,000 11,356 0.81
Nestle SA (Switzerland) 11,936 11,061 0.79
Hazlewood Foods PLC (United Kingdom) 1,500,000 2,654 0.19
MERCHANDISING - 1.75%
Tesco PLC (United Kingdom) 2,000,000 7,702 0.55
WHSmith Group PLC, Class A (United Kingdom) 700,000 4,887 0.35
Amway Japan Ltd. (American Depositary Receipts)(Japan) 200,000 3,200 0.23
Kwik-Fit Holdings PLC (United Kingdom) 1,200,000 3,109 0.22
Ito-Yokado Co., Ltd. (Japan) 50,000 2,653 0.19
Cifra, SA de CV, Class C (Mexico) 832,000 2,265 0.16
Aoyama Trading Co., Ltd. (Japan) 30,000 670 0.05
MISCELLANEOUS MATERIALS & COMMODITIES - 1.72%
Compagnie de Saint-Gobain (France) 79,954 9,617 0.68
English China Clays PLC (United Kingdom) 1,419,050 7,575 0.54
Pilkington PLC (United Kingdom) 2,700,000 7,080 0.5
TRANSPORTATION: AIRLINES - 1.62%
Cathay Pacific Airways Ltd. (Hong Kong) 8,460,000 12,088 0.86
British Airways PLC (American Depositary Receipts)
(United Kingdom) 63,750 3,833
British Airways PLC 560,000 3,314 0.51
Singapore Airlines Ltd. (Singapore) 358,000 3,474 0.25
APPLIANCES & HOUSEHOLD DURABLES - 1.55%
THORN EMI PLC (United Kingdom) 460,000 7,223 0.51
AB Electrolux, Class B (Sweden) 137,900 7,038 0.5
Sony Corp. (Japan) 101,000 5,359 0.38
Philips Electronics NV (Netherlands) 70,000 2,117 0.15
Samsung Electronics Co., Ltd. (South Korea) 666 110 0.01
INDUSTRIAL COMPONENTS - 1.26%
Compagnie Generale des Etablissements Michelin, Class B
(France) 348,000 13,371
Compagnie Generale des Etablissements Michelin, 2.50%
convertible preferred 23,200 1,113 1.03
Magna International Inc., Class A (Canada) 43,000 1,451 0.1
Pirelli SpA (Italy)/2/ 900,000 1,194 0.08
Orbital Engine Corp. Ltd. (Australia)/2/ 611,040 699 0.05
TRANSPORTATION: RAIL & ROAD - 1.26%
TNT Ltd., 8.00% convertible preferred (Australia)/1/ 5,790,400 10,713
TNT Ltd. 3,945,500 7,027 1.26
FOREST PRODUCTS & PAPER - 1.09%
Repola Ltd. (Finland) 385,000 7,039 0.5
Fletcher Challenge Ltd. (New Zealand) 2,200,000 5,526
Fletcher Challenge Ltd. (American Depositary Receipts) 51,670 594 0.44
Carter Holt Harvey Ltd. (New Zealand) 981,674 2,176 0.15
ENERGY SOURCES - 1.02%
Societe Nationale Elf Aquitane (American Depositary
Receipts)(France) 150,000 5,100 0.36
Petrofina SA (Belgium) 15,175 4,419 0.31
TOTAL, Class B (France) 55,022 3,442 0.24
Petron Corp. (Global Depositary Receipts)(Philippines)/12/ 36,000 1,548 0.11
METALS: STEEL - 0.88%
British Steel PLC (United Kingdom) 2,223,000 5,533 0.39
Thyssen AG (Germany) 21,000 3,735 0.27
Svenskt Stal AB, Class A (Sweden) 60,000 2,645 0.19
Tubos de Acero de Mexico, SA (American Depositary Receipts)
(Mexico)/2/ 85,000 420 0.03
WHOLESALE & INTERNATIONAL TRADE - 0.62%
ITOCHU Corp. (Japan) 600,000 4,390 0.31
Mitsubishi Corp. (Japan) 325,000 4,336 0.31
METALS: NONFERROUS - 0.53%
Falconbridge Ltd (Canada)/12/ 250,000 4,133 0.29
Teck Corp., Class B (Canada) 200,000 3,434 0.24
REAL ESTATE - 0.46%
Sun Hung Kai Properities Ltd. (Hong Kong) 1,000,000 6,427 0.46
AEROSPACE & MILITARY TECHNOLOGY - 0.37%
Rolls-Royce PLC (United Kingdom) 1,875,000 5,240 0.37
ELECTRONIC INSTRUMENTS - 0.27%
Scitex Corp. Ltd. (Israel) 210,000 3,754 0.27
DATA PROCESSING & REPRODUCTION - 0.25%
Oce-van der Grinten NV (Netherlands) 81,000 3,542 0.25
FINANCIAL SERVICES - 0.17%
Pioneer Industries International (Holdings) Ltd. (Hong Kong) 3,200,000 2,255
Pioneer Industries International (Holdings) Ltd., warrants,
expire 1995/2/ 640,000 147 0.17
TEXTILES & APPAREL - 0.08%
Wacoal Corp. (Japan) 103,000 1,155 0.08
------------ -------------
-
TOTAL STOCKS (cost: $997,156,000) 1,109,658 78.99
------------ -------------
-
Principal
Amount
Convertible Debentures (000)
- -------------------------------------------------------------- ------------- ------------ -------------
- ---------- -
FINANCIALS - 0.23%
Bangkok Bank Ltd. 3.25% convertible bonds 2004/1/ $3,675 3,271 0.23
MULTI-INDUSTRY - 0.08%
Jardine Strategic Holdings Ltd., 7.50% convertible bonds 2049 1,000 1,080 0.08
------------ -------------
-
TOTAL CONVERTIBLE DEBENTURES (cost: $4,630,000) 4,351 0.31
------------ -------------
-
MISCELLANEOUS
Other equity-type securities in initial period of acquisition
(cost: $27,516,000) 26,771 1.9
------------ -------------
-
TOTAL EQUITY-TYPE SECURITIES (cost: $1,029,302,000) 1,140,780 81.2
------------ -------------
-
Bonds & Notes
- -------------------------------------------------------------- ------------- ------------ -------------
- ---------- -
GOVERNMENTS (EXCLUDING U.S. GOVERNMENT) - 0.58%
New Zealand Government 9.00% 1996 NZ8,000 4,984 0.35
Republic of Argentina 4.25%, Eurobonds, Series L, 2023/3/ 7000 3,159 0.23
INDUSTRIALS - 0.07%
Rogers Cantel Mobile Communications Inc. 10.75% 2001 1,000 1,010 0.07
------------ -------------
-
TOTAL BONDS & NOTES (cost: $9,406,000) 9,153 0.65
------------ -------------
-
Principal Market Percent
Amount Value of Net
SHORT-TERM SECURITIES (000) (000) Assets
- -------------------------------------------------------------- ------------- ------------ -------------
- ---------- -
CORPORATE SHORT-TERM NOTES - 10.93%
ABN-AMRO North America Finance Inc. 4.80%-5.03% due
12/1-12/19/94 24,400 $24,385 1.73
Barclays Bank of Canada 5.20% due 12/14/94 16,500 16,467 1.17
Dresdner U.S. Finance Inc. 5.70% due 1/3/95 15,000 14,921 1.06
British Telecommunications PLC 5.73% due 1/27/95 15,000 14,864 1.06
Nestle Capital Corp. 5.31%-5.49% due 12/19-12/29/94 13,000 12,955 0.92
Arco Coal Australia Inc. 5.62% due 1/12/95 10,144 10,076 0.72
Toronto-Dominion Holdings USA Inc. 5.10% due 12/12/94 10,000 9,983 0.71
Panasonic Finance Inc. 5.50% due 12/29/94 10,000 9,956 0.71
Halifax Building Society 5.00% due 12/19/94 9,100 9,076 0.65
Daimler-Benz North America Corp. 5.70% due 1/4/95 9,000 8,950 0.64
SmithKline Beecham Corp. 5.48% due 12/2/94 8,300 8,297 0.59
Siemens Corp. 5.37% due 1/13/95 5,200 5,164 0.37
National Australia Funding (Delaware) Inc. 5.57% due 1/5/95 5,000 4,972 0.35
Canadian Wheat Board 5.12% due 12/8/94 3,500 3,496 0.25
FEDERAL AGENCY DISCOUNT NOTES - 2.80%
Federal National Mortgage Assn. 4.81%-4.97% due 12/5-12/21/94 36,930 36,841 2.62
Federal Home Loan Mortgage Corp. 5.65% due 12/1/94 2,500 2,500 0.18
CERTIFICATES OF DEPOSIT - 4.56%
Canadian Imperial Bank of Commerce 5.12% due 12/12/94 25,000 25,000 1.78
Banque Nationale de Paris 5.00% due 12/1/94 15,000 15,000 1.07
Morgan Guaranty Trust Co. of New York 5.14% due 12/5/94 10,000 10,000 0.71
Societe Generale 5.55% due 1/31/95 9,000 8,992 0.64
Lloyds Bank PLC 5.23% due 12/13/94 5,000 5,000 0.36
------------ -------------
-
TOTAL SHORT-TERM SECURITIES (cost: $256,901,000) 256,895 18.29
------------ -------------
-
TOTAL INVESTMENT SECURITIES (cost: $1,295,609,000) 1,406,828 100.14
Excess of payables over money market account, cash and
receivables 1,942 0.14
------------ -------------
-
NET ASSETS $1,404,886 100.00%
=========== ========
</TABLE>
/1/ Purchased in a private placement transaction; resale to the
public may require registration or may extend only to
qualified institutional buyers.
/2/ Non-income-producing securities
/3/ Coupon rate may change periodically
See Notes to Financial Statements
Equity-type securities appearing in the
portfolio since May 31, 1994
- ----------------------------------------
Amway Japan
CAMAS
Companhia Energetica de Sao Paulo
Falconbridge
Kansallis-Osake-Pankki
Mandarin Oriental International
Nippon Telegraph & Telephone
Pakistan Telecommunication
Petrofina
Petron
Philippine Long Distance Telephone
Renault V.I.
Scottish Power
Sumitomo Chemical
Television Broadcasts
Wacoal
Equity-type securities eliminated from the
portfolio since May 31, 1994
- --------------------------------------------
British Telecommunications
Champion Technology
Commonwealth Bank of Australia
Compagnie Generale des Eaux
Compania de Telefonos de Chile
Dominion Mining
Elf Gabon
Grupo Financiero Bancomer
Kajima
Koninklijke Nederlandsche Hoogovens en Staalfabrieken
Kyocera
Mori Seiki
Motor-Columbus
P.T. Inti Indorayon Utama
Schweizerischer Bankgesellschaft
Sekisui House
Shun Tak Holdings
Sumitomo Forestry
Television Francaise 1
Valeo
Woodside Petroleum
***************************************************************************
***************************************************************************
***************************************************************************
American Variable Insurance Series
GROWTH-INCOME FUND
Investment Portfolio - November 30, 1994
STOCKS 85.29%
CASH 14.71%
<TABLE>
<CAPTION>
Percent
of Net
LARGEST INDIVIDUAL EQUITY HOLDINGS Assets
<S> <C>
WMX Technologies 1.63%
International Business Machines 1.36
Aluminum Co. of America 1.34
Philip Morris 1.33
Tele-Communications 1.31
Telefonos de Mexico 1.29
BankAmerica 1.26
Boeing 1.26
Dun & Bradstreet 1.12
AT&T 1.09
</TABLE>
- ------------------------------------------------
<TABLE>
<CAPTION>
Number Market Percent
of Value of Net
Stocks (common and preferred) Shares (000) Assets
<S> <C> <C> <C>
HEALTH & PERSONAL CARE - 6.63%
Schering-Plough Corp. 370,200 $27,719 1.01%
American Home Products Corp. 410,000 26,701 0.97
Eli Lilly and Co. 420,000 26,303 0.96
Merck & Co., Inc. 650,000 24,213 0.88
Warner-Lambert Co. 260,000 20,118 0.73
Pfizer Inc. 235,000 18,183 0.66
Bristol-Myers Squibb Co. 295,000 17,036 0.62
Abbott Laboratories 460,000 14,663 0.54
C.R. Bard, Inc. 440,000 11,440 0.42
Baxter International Inc. 350,000 9,013 0.33
Johnson & Johnson 100,000 5,337 0.19
Upjohn Co. 165,000 5,301 0.19
McKesson Corp. 125,000 3,922 0.14
BANKING - 6.97%
BankAmerica Corp. 845,000 34,645 1.26
Banc One Corp. 662,550 17,806 0.65
First Interstate Bancorp 210,000 14,805 0.54
First Fidelity Bancorporation 313,000 14,085 0.51
PNC Bank Corp. 636,000 13,197 0.48
Bankers Trust New York Corp. 210,000 12,443 0.45
Wells Fargo & Co. 80,000 11,550 0.42
Wachovia Corp. 350,000 11,419 0.42
SunTrust Banks, Inc. 225,000 10,603 0.39
First Union Corp. 225,000 8,972 0.33
Citicorp $5.375 convertible preferred, Series 13/1/ 40,000 4,610
Citicorp 100,000 4,163 0.32
Huntington Bancshares Inc. 477,400 8,772 0.32
First Tennessee National Corp. 200,000 8,450 0.31
J.P. Morgan & Co. Inc. 100,000 5,875 0.21
Bank of New York Co., Inc. 200,000 5,575 0.2
Signet Banking Corp. 150,000 4,481 0.16
TELECOMMUNICATIONS- 6.28%
Telefonos de Mexico, SA de CV, Class L
(American Depositary Receipts)(Mexico) 665,800 35,287 1.29
AT&T Corp. 610,000 29,966 1.09
Ameritech Corp. 510,000 20,145 0.74
Sprint Corp. 625,000 18,672 0.68
MCI Communications Corp. 859,800 16,766 0.61
U S WEST Communications, Inc. 463,200 16,328 0.6
GTE Corp. 335,000 10,259 0.37
AirTouch Communications/2/ 332,323 9,014 0.33
Pacific Telesis Group 250,000 7,250 0.26
Bell Atlantic Corp. 90,000 4,511 0.16
Southwestern Bell Corp. 100,000 4,138 0.15
ENERGY SOURCES - 5.76%
Amoco Corp. 455,000 27,641 1.01
Phillips Petroleum Co. 740,000 24,420 0.89
Exxon Corp. 355,000 21,433 0.78
Royal Dutch Petroleum Co. (New York Registered
Shares) (Netherlands) 195,000 21,182 0.77
Atlantic Richfield Co. 150,000 15,525 0.57
Texaco Inc. 235,000 14,599 0.53
Valero Energy Corp. 560,000 10,640 0.39
Mobil Corp. 100,000 8,525 0.31
British Petroleum Co. PLC (American Depositary
Receipts) (United Kingdom) 101,828 8,083 0.3
Chevron Corp. 130,000 5,671 0.21
BROADCASTING & PUBLISHING - 5.70%
Tele-Communications, Inc., Class A/2/ 1,525,000 36,028 1.31
Gannett Co., Inc. 430,000 20,371 0.74
Time Warner Inc. 592,000 19,980 0.73
News Corp. Ltd. (American Depositary Receipts)
(Australia) 800,000 12,600
News Corp. Ltd., preferred shares
(American Depositary Receipts)/2/ 400,000 5,550 0.66
Capital Cities/ABC, Inc. 220,000 17,985 0.66
Times Mirror Co., Series A 520,000 16,055 0.59
CBS Inc. 220,075 12,214 0.45
New York Times Co., Class A 344,300 8,177 0.3
Tribune Co. 140,000 7,018 0.26
BUSINESS & PUBLIC SERVICES - 4.92%
WMX Technologies, Inc. 1,730,000 44,548 1.63
Dun & Bradstreet Corp. 580,000 30,668 1.12
General Motors Corp., Class E 610,000 22,418 0.82
Browning-Ferris Industries, Inc. 434,800 11,740 0.43
Federal Express Corp./2/ 190,000 10,806 0.39
Omnicom Group Inc. 170,000 8,861 0.32
Pitney Bowes Inc. 175,000 5,819 0.21
DATA PROCESSING & REPRODUCTION - 4.29%
International Business Machines Corp. 525,000 37,144 1.36
Xerox Corp. 250,000 24,563 0.9
Compaq Computer Corp./2/ 540,000 21,128 0.77
Microsoft Corp./2/ 280,000 17,570 0.64
Apple Computer, Inc. 250,000 9,250 0.34
Novell, Inc./2/ 212,000 4,214 0.15
Hewlett-Packard Co. 35,000 3,430 0.13
CHEMICALS - 3.23%
Monsanto Co. 245,000 17,640 0.64
Praxair, Inc. 850,000 17,213 0.63
Eastman Chemical Co. 325,000 15,316 0.56
Dow Chemical Co. 190,000 12,160 0.44
Betz Laboratories, Inc. 150,000 6,712 0.25
E.I. du Pont de Nemours and Co. 100,000 5,388 0.2
PPG Industries, Inc. 140,000 5,040 0.18
Imperial Chemical Industries PLC (American
Depositary Receipts) (United Kingdom) 100,000 4,775 0.17
BFGoodrich Co. 100,000 4,450 0.16
MULTI-INDUSTRY - 3.16%
Harsco Corp. 515,000 21,115 0.77
Tenneco Inc. 505,000 19,632 0.72
ITT Corp. 200,000 15,925 0.58
Minnesota Mining and Manufacturing Co. 240,000 12,300 0.45
Textron Inc. 240,000 11,280 0.41
Hanson PLC (American Depositary Receipts)
(United Kingdom) 340,000 6,205 0.23
UTILITIES: ELECTRIC & GAS - 3.15%
Entergy Corp. 900,000 20,250 0.74
Pacific Gas and Electric Co. 705,000 16,832 0.61
Allegheny Power System, Inc. 550,000 11,962 0.44
Central and South West Corp. 450,000 9,563 0.35
Consolidated Edison Co. of New York, Inc. 350,000 9,056 0.33
Houston Industries Inc. 250,000 8,500 0.31
Detroit Edison Co. 200,000 5,350 0.2
General Public Utilities Corp. 120,000 3,090 0.11
Long Island Lighting Co. 95,000 1,591 0.06
BEVERAGES & TOBACCO - 3.03%
Philip Morris Companies Inc. 610,000 36,447 1.33
Seagram Co. Ltd. (Canada) 650,000 18,931 0.69
PepsiCo, Inc. 435,000 15,388 0.56
American Brands, Inc. 350,000 12,381 0.45
AEROSPACE & MILITARY TECHNOLOGY - 2.96%
Boeing Co. 770,000 34,457 1.26
Litton Industries, Inc./2/ 441,800 15,076 0.55
United Technologies Corp. 200,000 11,700 0.43
E-Systems, Inc. 300,000 10,987 0.4
Raytheon Co. 70,000 4,401 0.16
Coltec Industries Inc./2/ 260,000 4,257 0.16
INSURANCE - 2.83%
SAFECO Corp. 465,000 22,785 0.83
Allstate Corp. 800,000 18,900 0.69
American General Corp. 600,000 15,750 0.58
Arthur J. Gallagher & Co. 195,600 6,112 0.22
St. Paul Companies, Inc. 120,000 4,950 0.18
General Re Corp. 40,000 4,695 0.17
TIG Holdings, Inc. 150,000 2,625 0.1
American International Group, Inc. 17,500 1,603 0.06
MACHINERY & ENGINEERING - 2.16%
Sundstrand Corp. 375,000 16,031 0.59
Cincinnati Milacron Inc. 575,000 13,728 0.5
Deere & Co. 172,200 11,064 0.4
Ingersoll-Rand Co. 300,000 9,675 0.35
Parker Hannifin Corp. 200,000 8,775 0.32
FINANCIAL SERVICES - 1.85%
Student Loan Marketing Assn. 500,000 17,125 0.62
American Express Co. 410,000 12,146 0.44
Household International, Inc. 300,000 11,550 0.42
Beneficial Corp. 200,000 7,300 0.27
ADVANTA Corp., Class A 100,000 2,725 0.1
METALS: NONFERROUS - 1.79%
Aluminum Co. of America 450,000 36,731 1.34
Inco Ltd. (Canada) 262,200 7,210 0.26
Phelps Dodge Corp. 50,000 2,863 0.11
Alumax Inc./2/ 80,000 2,100 0.08
TRANSPORTATION: RAIL & ROAD - 1.72%
Conrail, Inc. 460,000 23,920 0.87
Norfolk Southern Corp. 245,000 14,822 0.54
Union Pacific Corp. 140,000 6,510 0.24
Roadway Services, Inc. 40,000 2,010 0.07
MERCHANDISING - 1.65%
Limited Inc. 1,100,000 21,312 0.78
May Department Stores Co. 250,000 9,062 0.33
Melville Corp. 287,400 9,053 0.33
Walgreen Co. 140,000 5,810 0.21
ENERGY EQUIPMENT - 1.64%
Cooper Industries, Inc. 570,000 19,808 0.72
Western Atlas Inc./2/ 371,900 16,224 0.59
Schlumberger Ltd. (Netherland Antilles) 170,000 9,031 0.33
LEISURE & TOURISM - 1.47%
Walt Disney Co. 585,000 25,521 0.93
Circus Circus Enterprises, Inc./2/ 350,000 7,350 0.27
Marriott International, Inc. 200,000 5,250 0.19
Host Marriott Corp./2/ 240,000 2,280 0.08
FOREST PRODUCTS & PAPER - 1.47%
Union Camp Corp. 440,000 20,405 0.75
James River Corp. of Virginia 500,000 10,562 0.39
ITT Rayonier Inc. 325,000 9,100 0.33
FOOD & HOUSEHOLD PRODUCTS - 1.26%
CPC International Inc. 400,000 20,500 0.75
Archer Daniels Midland Co. 308,000 8,509 0.31
ConAgra, Inc. 180,000 5,558 0.2
ELECTRICAL & ELECTRONICS - 1.24%
General Electric Co. 590,000 27,140 0.99
Honeywell Inc. 236,200 6,909 0.25
Hubbell Inc., Class B 700 38 0
TRANSPORTATION: AIRLINES - 1.18%
AMR Corp./2/ 295,000 14,971 0.55
Delta Air Lines, Inc. 190,000 9,524 0.35
UAL Corp./2/ 80,000 7,640 0.28
MISCELLANEOUS MATERIALS & COMMODITIES - 0.89%
Potash Corp. of Saskatchewan Inc. (Canada) 600,000 21,375 0.78
TRINOVA Corp. 100,000 2,963 0.11
ELECTRONIC COMPONENTS - 0.86%
Motorola, Inc. 240,000 13,530 0.49
Intel Corp. 100,000 6,288 0.23
Texas Instruments Inc. 50,000 3,775 0.14
INDUSTRIAL COMPONENTS - 0.80%
Dana Corp. 403,100 8,717 0.32
Rockwell International Corp. 250,000 8,469 0.31
TRW Inc. 75,000 4,763 0.17
AUTOMOBILES - 0.63%
General Motors Corp. 450,000 17,156 0.63
APPLIANCES & HOUSEHOLD DURABLES - 0.54%
Corning Inc. 300,000 9,000 0.33
LADD Furniture, Inc. 979,400 5,754 0.21
ELECTRONIC INSTRUMENTS - 0.50%
Johnson Controls, Inc. 280,000 13,580 0.5
TEXTILES & APPAREL - 0.41%
VF Corp. 230,000 11,155 0.41
RECREATION & OTHER CONSUMER PRODUCTS - 0.37%
Eastman Kodak Co. 220,000 10,037 0.37
MISCELLANEOUS
Other stocks in initial period of acquisition 80,498 2.94
----------- -----------
TOTAL STOCKS (COST: $2,197,851,000) 2,337,284 85.29
----------- -----------
Principal
Amount
SHORT-TERM SECURITIES (000)
CORPORATE SHORT-TERM NOTES - 13.86%
AT&T Corp. 5.37%-5.68% due 1/4-1/18/95 $59,100 58,721 2.14
Beneficial Corp. 5.07%-5.60% due 12/27/94-1/11/95 47,800 47,572 1.74
Commercial Credit Co. 5.37%-5.75% due
12/21/94-1/23/95 36,700 36,515 1.33
Ford Motor Credit Co. 5.45%-5.50% due 1/6-1/17/95 34,000 33,779 1.23
Central and South West Corp. 5.00%-5.52% due
12/2/94-1/9/95 32,500 32,431 1.18
Texaco Inc. 5.30%-5.70% due 12/16/94-1/20/95 32,000 31,853 1.16
John Deere Capital Corp. 5.70% due 1/23/95 30,000 29,740 1.09
H.J. Heinz Co. 4.97% due 12/12/94 20,000 19,967 0.73
National Rural Utilities Cooperative Finance Corp.
5.70% due 1/6-1/11/95 20,000 19,875 0.73
J.C. Penney Funding Corp. 5.50% due 1/4/95 15,900 15,815 0.58
Intel Corp. 5.03% due 12/23/94 15,000 14,952 0.55
Chevron Oil Finance Co. 5.36% due 1/18/95 12,600 12,501 0.46
American Express Credit Corp. 5.48% due 12/29/94 8,900 8,861 0.32
Ameritech Capital Funding Corp. 5.16% due 12/14/94 8,800 8,782 0.32
Weyerhaeuser Co. 4.99% due 12/7/94 8,300 8,292 0.3
FEDERAL AGENCY DISCOUNT NOTES - 2.24%
Federal Home Loan Mortgage Corp. 4.81%-5.65% due
12/1-12/9/94 25,800 25,772 0.94
Federal Home Loan Bank 5.42% due 12/27/94 18,500 18,425 0.67
Federal Farm Credit Bank 4.94% due 12/8/94 12,000 11,986 0.44
Federal National Mortgage Assn. 4.97% due 12/19/94 5,300 5,286 0.19
BANKERS' ACCEPTANCES - 0.36%
Morgan Guaranty Trust Co. 5.08% due 12/15/94 10,000 9,979 0.36
----------- --------
TOTAL SHORT-TERM SECURITIES (COST: $451,146,000) 451,104 16.46
----------- ---------
TOTAL INVESTMENT SECURITIES (COST: $2,648,997,000) 2,788,388 101.75
Excess of payables over money market account, cash
and receivables 48,022 1.75
----------- -----------
NET ASSETS $2,740,366 100.00%
============ ===========
</TABLE>
/1/Purchased in a private placement transaction;
resale potential extends to qualifed institutional
buyers.
/2/Non-income-producing securities.
See Notes to Financial Statements
Stocks appearing in the portfolio
since May 31, 1994
- -------------------------------------
ADVANTA
Airtouch Communications
Alumax
Apple Computer
Beneficial
Chevron
Cincinnati Milacron
Circus Circus Enterprises
E-Systems
Federal Express
First Tennessee National
First Union
Harsco
Hubbell
Huntington Bancshares
Imperial Chemical Industries
ITT Rayonier
Johnson & Johnson
Johnson Controls
Limited
McKesson
Microsoft
Novell
Pitney Bowes
Signet Banking
TRINOVA
Valero Energy
Wachovia
Walgreen
Stocks eliminated from the portfolio
since May 31, 1994
- ------------------------------------
American Cyanimid
Anheuser-Bush
BellSouth
Gerber Products
Great Western Financial
Kmart
Lehman Brothers Holdings
NBD Bancorp
Southern New England Telecommunications
Sun Microsystems
Syntex
Unisys
Woolworth
***************************************************************************
***************************************************************************
***************************************************************************
American Variable Insurance Series
Asset Allocation Fund
Investment Portfolio, November 30, 1994
- ----------------------------------------------------
Common Stocks 62.81%
Government Bonds 15.66%
Corporate Bonds 13.07%
Cash 6.51%
Convertible Debentures 1.95%
<TABLE>
<CAPTION>
Percent
of Net
Assets
LARGEST INDIVIDUAL HOLDINGS
<S> <C>
American Home Products 2.30%
Warner Lambert 1.82
Eli Lilly 1.77
American Express 1.63
Amoco 1.62
International Business Machines 1.55
Dun & Bradstreet 1.41
Mobil 1.40
Citicorp 1.37
DuPont 1.35
</TABLE>
- --------------
<TABLE>
<CAPTION>
Market Percent
Number of Value of Net
Common Stocks Shares (000) Assets
- ---------------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
HEALTH & PERSONAL CARE- 6.55%
American Home Products Corp. 225,000 $14,653 2.30%
Warner-Lambert Co. 150,000 11,606 1.82
Eli Lilly and Co. 180,000 11,273 1.77
Bristol-Myers Squibb Co. 145,000 8,374 1.31
Baxter International Inc. 175,000 4,506 0.71
Pfizer Inc. 57,500 4,449 0.7
Abbott Laboratories 48,000 1,530 0.24
ENERGY SOURCES- 6.62%
Amoco Corp. 170,000 10,328 1.62
Mobil Corp. 105,000 8,951 1.4
Phillips Petroleum Co. 245,000 8,085 1.27
Royal Dutch Petroleum Co. (New York Registered
Shares) (Netherlands) 60,000 6,518 1.02
Kerr-McGee Corp. 80,000 3,780 0.59
Texaco Inc. 40,000 2,485 0.39
Atlantic Richfield Co. 20,000 2,070 0.33
BANKING- 6.54%
Citicorp 210,000 8,741 1.37
First Interstate Bancorp 85,000 5,993 0.94
BankAmerica Corp. 100,000 4,100 0.64
First Fidelity Bancorporation 90,000 4,050 0.64
Fleet Financial Group, Inc. 120,000 3,735 0.59
PNC Bank Corp. 160,000 3,320 0.52
First Union Corp. 80,000 3,190 0.5
Bankers Trust New York Corp. 50,000 2,963 0.47
U.S. Bancorp 120,000 2,730 0.43
J.P.Morgan & Co. Inc. 35,000 2,056 0.32
Comerica Inc. 30,000 791 0.12
INSURANCE- 3.36%
SAFECO Corp. 145,000 7,105 1.11
American General Corp. 200,000 5,250 0.82
AMBAC Inc. 130,000 4,501 0.71
St. Paul Companies, Inc. 80,000 3,300 0.52
Ohio Casualty Corp. 44,000 1,254 0.2
DATA PROCESSING & REPRODUCTION- 3.25%
International Business Machines Corp. 140,000 9,905 1.55
Xerox Corp. 40,000 3,930 0.62
Hewlett-Packard Co. 40,000 3,920 0.62
Apple Computer, Inc. 80,000 2,960 0.46
UTILITIES: ELECTRIC & GAS- 3.13%
Entergy Corp. 200,000 4,500 0.71
Long Island Lighting Co. 195,000 3,266 0.51
Unicom Corp. 120,000 2,805 0.44
Detroit Edison Co. 100,000 2,675 0.42
General Public Utilities Corp. 90,000 2,317 0.36
Houston Industries Inc. 60,000 2,040 0.32
Texas Utilities Co. 47,749 1,558 0.24
Consolidated Edison Co. of New York, Inc. 33,000 854 0.13
MULTI-INDUSTRY- 2.35%
Textron Inc. 120,000 5,640 0.9
Tenneco Inc. 120,000 4,665 0.73
Minnesota Mining and Manufacturing Co. 90,000 4,612 0.72
BEVERAGES & TOBACCO- 2.25%
American Brands, Inc. 150,000 5,306 0.83
PepsiCo, Inc. 150,000 5,306 0.83
Seagram Co. Ltd. (Canada) 130,000 3,787 0.59
AEROSPACE & MILITARY TECHNOLOGY- 2.24%
Boeing Co. 150,000 6,713 1.05
Litton Industries, Inc./1/ 150,000 5,119 0.8
Northrop Grumman Corp. 60,000 2,437 0.39
FOOD & HOUSEHOLD PRODUCTS- 1.97%
General Mills, Inc. 100,000 5,375 0.84
H.J. Heinz Co. 100,000 3,638 0.57
Archer Daniels Midland Co. 130,000 3,591 0.56
CHEMICALS- 1.79%
E.I. du Pont de Nemours and Co. 160,000 8,620 1.35
Eastman Chemical Co. 60,000 2,827 0.44
BROADCASTING & PUBLISHING- 1.77%
CBS Inc. 150,000 8,325 1.31
Times Mirror Co., Series A 95,000 2,933 0.46
MERCHANDISING- 1.72%
Melville Corp. 125,000 3,937 0.62
May Department Stores Co. 100,000 3,625 0.57
Limited Inc. 175,000 3,391 0.53
TELECOMMUNICATIONS- 1.70%
Bell Atlantic Corp. 100,000 5,012 0.79
GTE Corp. 100,000 3,063 0.48
LIN Broadcasting Corp./1/ 19,100 2,727 0.43
INDUSTRIAL COMPONENTS- 1.69%
Rockwell International Corp. 240,000 8,130 1.28
Dana Corp. 120,000 2,595 0.41
FINANCIAL SERVICES- 1.63%
American Express Co. 350,000 10,369 1.63
TRANSPORTATION: RAIL & ROAD- 1.52%
CSX Corp. 50,000 3,475 0.55
Union Pacific Corp. 70,000 3,255 0.5
Norfolk Southern Corp. 50,000 3,025 0.47
BUSINESS & PUBLIC SERVICES- 1.41%
Dun & Bradstreet Corp. 170,000 8,989 1.41
ELECTRICAL & ELECTRONICS- 1.03%
Hubbell Inc., Class B 60,000 3,285 0.52
General Electric Co. 70,000 3,220 0.51
FOREST PRODUCTS & PAPER- 1.02%
Union Camp Corp. 80,000 3,710 0.58
ITT Rayonier Inc. 100,000 2,800 0.44
ENERGY EQUIPMENT- 0.89%
Cooper Industries, Inc. 100,000 3,475 0.55
Western Atlas Inc./1/ 50,000 2,181 0.34
METALS: NONFERROUS- 0.64%
Aluminum Co. of America 50,000 4,081 0.64
TRANSPORTATION: AIRLINES- 0.64%
AMR Corp./1/ 80,000 4,060 0.64
RECREATION & OTHER CONSUMER PRODUCTS- 0.50%
Eastman Kodak Co. 70,000 3,194 0.5
AUTOMOBILES- 0.48%
General Motors Corp. 80,000 3,050 0.48
TEXTILES & APPAREL- 0.44%
Brown Group, Inc. 90,000 2,857 0.44
LEISURE & TOURISM- 0.43%
Circus Circus Enterprises, Inc./1/ 130,000 2,730 0.43
MISCELLANEOUS
Other common stocks in initial period of acquisition 18,783 2.95
----------- -----------
TOTAL COMMON STOCKS (cost: $396,045,000) 400,330 62.81
----------- -----------
Principal
Amount
Convertible Debentures (000)
- ---------------------------------------------------- ---------- ---------- ----------
INDUSTRIALS & SERVICES- 1.95%
Turner Broadcasting System, Inc. 0% 2007/2/ $10,000 3,925 0.62
Hanson America Inc. 2.39% 2001/2/ 5,000 3,575 0.56
USX Corp. 0% 2005 8,000 3,480 0.54
Time Warner Inc. 0% 2012 4,800 1,458 0.23
---------- ----------
TOTAL CONVERTIBLE DEBENTURES (cost: $12,309,000) 12,438 1.95
---------- ----------
TOTAL EQUITY-TYPE SECURITIES (cost: $408,354,000) 412,768 64.76
---------- ----------
Bonds & Notes
- -----------------------------------------------
U.S. TREASURY OBLIGATIONS- 15.32%
6.75% 1997 12,000 11,781 1.85
5.75% 1997 12,000 11,415 1.79
8.875% 1996 11,000 11,215 1.76
5.375% 1998 12,000 11,147 1.75
6.875% 1996 10,000 9,911 1.55
6.50% 1996 10,000 9,850 1.55
8.75% 1997 6,000 6,169 0.96
9.25% 1998 5,000 5,236 0.82
8.75% 2008 5,000 5,200 0.82
4.25% 1996 5,000 4,791 0.75
8.75% 2000 3,000 3,124 0.49
8.875% 1999 2,500 2,598 0.41
8.50% 1997 1,000 1,022 0.16
8.00% 1996 1,000 1,011 0.16
7.875% 1996 1,000 1,008 0.16
6.75% 1997 1,000 985 0.15
11.75% 2010 500 627 0.1
10.75% 2003 500 587 0.09
INDUSTRIALS- 6.19%
Container Corp. of America 9.75% 2003 6,500 6,110 0.96
Federal Paper Board Co., Inc. 10.00% 2011 5,000 5,317 0.83
Polaroid Corp. 8.00% 1999 5,000 4,836 0.76
Tele-Communications, Inc. 9.25% 2002 3,000 3,003
Tele-Communications, Inc. 9.25% 2023 1,000 918 0.61
Oryx Energy Co. 9.50% 1999 3,000 2,824
Oryx Energy Co. 10.00% 1999 1,000 983 0.6
Pohang Iron & Steel 7.50% 2002 3,000 2,761 0.43
General Motors Corp. 8.80% 2021 2,500 2,609 0.41
News America Holdings Inc. 10.125% 2012 2,000 2,067 0.33
USX Corp. 9.625% 2003 2,000 2,014 0.32
Acme Metals Inc. 12.50% 2002 2,000 1,970 0.31
Coso Funding Corp. 8.87% 2001/2/ 2,000 1,924 0.3
CenCall Communications Corp. 0%/10.125% 2004/3/ 3,000 1,125 0.18
Dayton Hudson Corp. 9.35% 2020 900 976 0.15
FINANCIAL- 4.56%
General Motors Acceptance Corp. 8.875% 2010 3,235 3,410
General Motors Acceptance Corp. 7.00% 2000 3,000 2,782
General Motors Acceptance Corp. 9.625% 2001 2,000 2,086
General Motors Acceptance Corp. 6.70% 1997 2,000 1,936
General Motors Acceptance Corp. 8.375% 1997 1,500 1,500 1.83
American Re Corp. 10.875% 2004 4,500 4,880 0.77
First Federal Michigan 0% Eurobonds 2005 10,000 4,131 0.65
General Electric Capital Corp. 8.875% 2009 2,000 2,037 0.32
H.F. Ahmanson & Co. 9.875% 1999 1,400 1,467 0.23
B.F. Saul Real Estate Investment Trust 11.625% 2002 1,500 1,305 0.2
Security Pacific Corp. 10.25% 2001 1,000 1,094 0.17
National Westminster Bancorp Inc. 9.45% 2001 1,000 1,053 0.17
Shopping Center Associates 6.75% 2004/2/ 1,000 865 0.14
Golden West Financial Corp. 10.25% 2000 500 539 0.08
TRANSPORTATION- 1.12%
Delta Air Lines, Inc. 9.875% 2000 2,000 1,992
Delta Air Lines, Inc. 10.375% 2011 1,000 959
Delta Air Lines, Inc. 9.20% 2014 1,000 857
Delta Air Lines, Inc. 10.125% 2010 500 471 0.67
Federal Express Corp. 7.53% 2006 1,500 1,384 0.22
AMR Corp. 9.75% 2000 1,000 1,006 0.16
United Air Lines, Inc. 9.00% 2003 500 457 0.07
COLLATERALIZED MORTGAGE OBLIGATIONS-
(PRIVATELY ORIGINATED)/4/- 0.48%
American Airlines Inc., 1991-A, 9.71% 2007 2,374 2,294 0.36
Resolution Trust Corp., Series 1992-C5,
Class C, 8.85% 2022 803 763 0.12
ELECTRIC UTILITIES- 0.40%
Texas Utilities Electric Co. 9.75% 2021 2,500 2,560 0.4
FEDERAL AGENCY OBLIGATIONS-OTHER- 0.34%
Resolution Funding Corp. 8.875% 2020 2,000 2,139 0.34
TELEPHONE UTILITIES- 0.20%
GTE Corp. 10.25% 2020 1,205 1,266 0.2
ASSET-BACKED OBLIGATIONS /4/- 0.12%
Standard Credit Card Trust, 1990-6A, 9.375% 1998 750 771 0.12
---------- ----------
TOTAL BONDS & NOTES (cost: $194,972,000) 183,118 28.73
---------- ----------
Short-Term Securities
- ------------------------------------------------
CORPORATE SHORT-TERM NOTES- 5.80%
Campbell Soup Co. 5.20% due 12/22/94 11,400 11,364 1.78
Vermont American Corp. 5.52% due 12/15/94 6,700 6,685 1.05
J.C. Penney Funding Corp. 5.25% due 12/16/94 4,400 4,390 0.69
McDonald's Corp. 5.47% due 12/5/94 4,000 3,997 0.63
Xerox Corp. 5.72% due 1/5/95 4,000 3,977 0.62
Associates Corp. of North America 5.72% due 12/1/94 3,590 3,590 0.56
Union Pacific Corp. 5.02% due 12/16/94 3,000 2,993 0.47
U.S. TREASURY OBLIGATIONS- 0.33%
11.50% due 11/15/95 2,000 2,084 0.33
--------- ---------
TOTAL SHORT-TERM SECURITIES (cost: $39,289,000) 39,080 6.13
--------- ---------
TOTAL INVESTMENT SECURITIES (cost: $642,615,000) 634,966 99.62
--------- ---------
Excess of money market account, cash and
receivables over payables 2,404 0.38
--------- ---------
NET ASSETS $637,370 100.00%
========= =========
</TABLE>
/1/Non-income-producing securities.
/2/Purchased in a private placement transaction;
resale potential extends to qualified institutional
buyers.
/3/Represents a zero coupon bond which will
convert to a coupon-bearing security at a
later date.
/4/ Pass-through securities backed by a pool of
mortgages or other loans on which principal payments
are periodically made. Therefore, the effective
maturity of these securities is shorter than the
stated maturity.
See Notes to Financial Statements
Equity-type securities appearing in the portfolio
since May 31, 1994
- -------------------------------------------------
AMBAC
Apple Computer
Circus Circus Enterprises
Cooper Industries
Dana
Detroit Edison
First Fidelity Bancorporation
General Mills
H.J. Heinz
ITT Rayonier
LIN Broadcasting
Northrop Grumman
PepsiCo
Seagram
Time Warner
Unicom
USX
Equity-type securities eliminated from the portfolio
since May 31, 1994
- ----------------------------------------------------
H.F. Ahmanson
Barnett Banks
Commonwealth Edison
Delta Air Lines
Dow Chemical
Great Western Financial
Lehman Brothers Holdings
Philip Morris
Shared Medical Systems
Sprint
Stone & Webster
Upjohn
Woolworth
***************************************************************************
***************************************************************************
***************************************************************************
AMERICAN VARIABLE INSURANCE SERIES
HIGH-YIELD BOND FUND
INVESTMENT PORTFOLIO - NOVEMBER 30, 1994
CORPORATE BONDS 82.89%
U.S. GOVERNMENT BONDS 5.34%
NON-U.S. GOVERNMENT BONDS 1.83%
UTILITIES 2.90%
CASH 7.00%
STOCKS 0.04%
<TABLE>
<CAPTION>
Percent
of Net
LARGEST HOLDINGS Assets
<S> <C>
U.S. Treasury 5.34%
Rogers Cantel Mobile Communications 3.56
Comcast/Comcast Cellular 3.12
NEXTEL Communications 3.09
Container Corp. of America 2.83
Continental Cablevision 2.75
Coltec Industries 2.55
MFS Communications 2.52
California Energy 2.51
Dial Call Communications 2.22
</TABLE>
- ----------
<TABLE>
<CAPTION>
Number Market Percent
Common Stocks of Value of Net
shares (000) Assets
<S> <C> <C> <C>
SERVICES - 0.01%
Marriott International, Inc. 4,512 $118 .03%
Host Marriott Corp./1/ 4,512 43 0.01
-------- --------
TOTAL COMMON STOCKS (cost: $142,000) 161 0.04
-------- --------
Principal
Bonds & Notes Amount
(000)
INDUSTRIALS & SERVICES - 81.63%
Rogers Cantel Mobile Communications Inc. 10.75%
2001 $11,248 11,360
Rogers Cantel Mobile Communications Inc. 11.125%
2002 2,500 2,537 3.56
NEXTEL Communications, Inc. 0%/11.50% 2003/2/ 15,500 6,665
NEXTEL Communications, Inc. 0%/9.75% 2004/2/ 14,500 5,401 3.09
Container Corp. of America 9.75% 2003 11,750 11,045 2.83
Continental Cablevision, Inc. 8.625% 2003 5,000 4,475
Continental Cablevision, Inc. 10.625% 2002 4,000 4,010
Continental Cablevision, Inc. 8.50% 2001 1,500 1,365
Continental Cablevision, Inc. 8.875% 2005 1,000 880 2.75
Coltec Industries Inc 9.75% 2000 8,450 8,281
Coltec Industries Inc 9.75% 1999 1,750 1,662 2.55
MFS Communications Co., Inc. 0%/9.375% 2004/2/ 17,250 9,833 2.52
California Energy Co., Inc. 0%/10.25% 2004/2/ 13,800 9,798 2.51
Comcast Cellular Corp., Series B, 0% 2000 10,000 6,525
Comcast Cellular Corp., Series A, 0% 2000 4,500 2,936 2.43
Dial Call Communications, Inc. 0%/12.25% 2004/2/ 22,750 8,645 2.22
Fort Howard Corp. 8.25% 2002 4,500 4,005
Fort Howard Corp. 9.25% 2001 3,750 3,469
Fort Howard Corp. 9.00% 2006 1,250 1,053 2.19
Centennial Cellular Corp. 8.875% 2001 9,500 8,408 2.16
Riverwood International Corp. 10.75% 2000 5,500 5,555
Riverwood International Corp. 11.25% 2002 2,000 2,050
Riverwood International Corp., Series 2, 10.75%
2000 500 505 2.08
PanAmSat, LP 9.75% 2000 5,000 4,850
PanAmSat, LP 0%/11.375% 2003/2/ 4,000 2,640 1.92
Foodmaker, Inc. 9.25% 1999 5,500 4,703
Foodmaker, Inc. 9.75% 2002 3,750 2,756 1.91
MobileMedia 0%/10.50% 2003/2/ 12,750 7,395 1.9
Global Marine, Inc. 12.75% 1999 6,700 7,169 1.84
Videotron Holdings 0%/11.125% 2004/2/ 13,000 6,760 1.73
Century Communications Corp. 9.75% 2002 3,500 3,325
Century Communications Corp. 9.50% 2000 3,500 3,308 1.7
CenCall Communications Corp. 0%/10.125% 2004/2/ 17,250 6,469 1.66
Paging Network, Inc. 11.75% 2002 5,300 5,512
Paging Network, Inc. 8.875% 2006 1,000 805 1.62
Marvel Holdings Inc., Series B, 0% 1998 9,900 6,237 1.6
Bell Cablemedia 0%/11.95% 2004/2/ 12,000 6,180 1.58
Horizon Finance Corp., Series B, 0%/11.375% 2000/2/ 8,500 6,163 1.58
Ralphs Grocery Co. 10.25% 2002 6,350 6,128 1.57
International CableTel Inc. 0%/10.875% 2003/2/ 12,250 6,125 1.57
Dr Pepper Bottling Co. of Texas 10.25% 2000 5,500 5,527 1.42
Star Markets Co., Inc. 13.00% 2004/3/ 5,000 4,950 1.27
MagneTek, Inc. 10.75% 1998 5,000 4,925 1.26
Barnes & Noble, Inc. 11.875% 2003 4,250 4,548 1.17
P.T. Indah Kiat Pulp & Paper Corp. 8.875% 2000/3/ 5,250 4,502 1.16
Dr Pepper/Seven-Up Companies, Inc. 0%/11.50% 2002/2/ 5,465 4,317 1.11
Owens-Illinois, Inc. 11.00% 2003 4,000 4,100 1.05
Canandaigua Wine Co., Inc. 8.75% 2003 4,500 3,960 1.02
Thrifty PayLess, Inc. 11.75% 2003 3,000 2,895
Thrifty PayLess, Inc. 12.25% 2004 units 1,000 1,025 1.01
Pacific Lumber Co. 10.50% 2003 4,000 3,720 0.95
Kloster Cruise Ltd. 13.00% 2003 3,500 3,325 0.85
Stater Bros. Holdings Inc. 11.00% 2001 3,500 3,255 0.83
Four Seasons Hotels Inc. 9.125% 2000/3/ 3,500 3,220 0.83
Cellular, Inc. 0%/11.75% 2003/2/ 4,500 3,038 0.78
Triton Energy Corp. 0%/9.75% 2000/2/ 3,000 2,220
Triton Energy Corp. 0% 1997 1,000 730 0.76
Infinity Broadcasting Corp. 10.375% 2002 2,750 2,750 0.71
Coleman Holdings Inc. 0% 1998 4,000 2,680 0.69
Univision Television Group, Inc. 11.75% 2001 2,500 2,612 0.67
Comcast Corp. 10.25% 2001 2,650 2,571 0.66
Embassy Suites, Inc. 8.75% 2000 2,500 2,313 0.59
WestPoint Stevens Inc. 8.75% 2001 2,500 2,262 0.58
American Media Operations, Inc. 11.625% 2004 2,250 2,258 0.58
Wilrig AS 11.25% 2004 2,500 2,225 0.57
Acme Metals Inc. 0%/13.50% 2004/2/ 3,000 2,018 0.52
CompUSA 9.50% 2000 2,425 2,013 0.52
Tuboscope Corp. 10.75% 2003 2,000 1,960 0.5
Neodata Services, Inc., Series B, 0%/12.00% 2003/2/ 2,500 1,950 0.5
Vons Companies, Inc. 9.625% 2002 2,000 1,940 0.5
American Standard Inc. 0%/10.50% 2005/2/ 3,000 1,890 0.48
MAXXAM Group Inc. 11.25% 2003 2,000 1,860 0.48
Maxus Energy Corp. 9.875% 2002 2,000 1,820 0.47
Plitt Theatres, Inc. 10.875% 2004 1,500 1,410 0.36
Summitt Communications Group, Inc. 10.50% 2005 1,000 1,050 0.27
Tjiwi Kimia International Finance Co. BV 13.25%
2001 1,000 1,031 0.26
Harrah's Jazz Finance Corp. 14.25% 2001 1,000 1,025 0.26
Levitz Furniture Corp. 12.375% 1997 1,000 1,020 0.26
Safeway Inc. 10.00% 2002 1,000 1,010 0.26
PriCellular Wireless Corp. 0.5%/14.00% 2001 /3/,/4/ 1,500 997 0.26
P.T. Indah Kiat International Finance Co. BV,
Series B, 11.875% 2002 1,000 986 0.25
Anchor Glass Container Corp. 10.25% 2002 1,000 970 0.25
AnnTaylor, Inc. 8.75% 2000 1,000 940 0.24
Rykoff-Sexton, Inc. 8.875% 2003 1,000 915 0.23
Haynes International 11.25% 1998 1,000 890 0.23
P.T. Inti Indorayon Utama 9.125% 2000 1,000 862 0.22
Toll Corp. 9.50% 2003 1,000 855 0.22
Payless Cashways, Inc. 9.125% 2003 750 675 0.17
Primark Corp. 8.75% 2000 700 644 0.17
Jones Intercable, Inc. 11.50% 2004 500 525 0.13
Storer Communications, Inc. 10.00% 2003 134 127 0.03
U.S. TREASURY OBLIGATIONS - 5.34%
7.75% 2001 8,000 7,979 2.05
11.625% 2004 4,600 5,744 1.47
8.50% 2000 5,000 5,161 1.32
6.875% 1999 2,000 1,929 0.5
INDEPENDENT POWER PRODUCERS - 2.14%
Midland Cogeneration Venture LP 10.33% 2002 8,800 8,359 2.14
GOVERNMENTS (EXCLUDING U.S. GOVERNMENT) - 1.83%
Republic of Argentina, 4.25% Eurobonds, Series L,
2023 /4/ 8,000 3,610 0.93
United Mexican State Government 6.25% Eurobonds,
Series B, 2019 3,000 1,920
United Mexican State Government 6.25% Eurobonds,
Series A, 2019 2,500 1,600 0.9
TRANSPORTATION - 1.24%
TNT (USA) Inc. 11.50% 2004 3,000 3,000 0.77
Viking Star Shipping Inc. 9.625% 2003 2,000 1,840 0.47
GAS UTILITIES - 0.76%
Transco Energy Co. 9.625% 2000 2,000 1,970
Transco Energy Co. 9.125% 1998 1,000 985 0.76
COLLATERALIZED MORTGAGE OBLIGATIONS
(PRIVATELY ORIGINATED)/5/ - 0.02%
Collateralized Mortgage Obligation Trust 21-Z
8.45% 2017 73 65 0.02
-------- -------
TOTAL BONDS & NOTES (cost: $405,045,000) 362,461 92.96
-------- --------
Short-Term Securities
CORPORATE SHORT-TERM NOTES - 5.50%
Xerox Corp. 5.73% due 1/12/95 9,000 8,939 2.29
Associates Corp. of North America 5.72% due
12/1/94 6,500 6,499 1.67
National Rural Utilities Cooperative Finance Corp.
4.97% due 12/2/94 6,000 5,998 1.54
-------- -------
TOTAL SHORT-TERM SECURITIES (cost: $21,436,000) 21,436 5.5
-------- -------
TOTAL INVESTMENT SECURITIES (cost: $426,623,000) 384,058 98.5
Excess of money market account, cash and
receivables over payables 5,867 1.5
--------- -------
NET ASSETS $389,925 100.00%
========= =======
</TABLE>
/1/ Non-income-producing security.
/2/ Represents a zero coupon bond which will convert
to a coupon-bearing security at a later date.
/3/ Purchased in a private placement transaction;
resale potential extends to qualified
institutional buyers.
/4/ Coupon rate may change periodically.
/5/ Pass-through security backed by a pool of
mortgages or other loans on which principal
payments are periodically made. Therefore, the
effective maturity of this security is shorter
than the stated maturity.
See Notes to Financial Statements
***************************************************************************
***************************************************************************
***************************************************************************
American Variable Insurance Series
U.S. Government/AAA-Rated Securities Fund
Investment Portfolio, November 30, 1994
- ------------------------------------------------ --------
U.S. TREASURY BONDS 41.84%
CASH 20.26%
FEDERAL AGENCY MORTGAGE-RELATED SECURITIES 13.40%
PRIVATE MORTGAGE & ASSET-BACKED SECURITIES 9.64%
OTHER FEDERAL OBLIGATIONS 5.77%
CORPORATE BONDS 5.29%
DEVELOPMENT AGENCIES & NON-U.S. GOVT. BONDS 3.80%
<TABLE>
<CAPTION>
Principal Market Percent
Amount Value of Net
Bonds & Notes (000) (000) Assets
<S> <C> <C> <C>
- ------------------------------------------------ -------- -------- --------
U.S. TREASURY OBLIGATIONS- 34.63%
8.125% 1998 $33,000 $33,387 7.21%
9.25% 1998 20,000 20,944 4.53
12.00% 2013 13,000 17,142 3.7
8.875% 2000 16,250 17,019 3.68
9.375% 1996 11,500 11,815 2.55
8.75% 2008 10,000 10,400 2.25
8.875% 1997 10,000 10,320 2.23
8.875% 1996 10,000 10,195 2.2
6.50% 1996 10,000 9,850 2.13
10.375% 2009 7,500 8,677 1.87
8.00% 1997 8,000 8,081 1.75
11.75% 2010 5,500 6,895 1.49
8.875% 2017 6,000 6,463 1.4
8.375% 2008 5,000 5,081 1.1
7.25% 1996 5,000 4,991 1.08
8.75% 2000 2,750 2,864 0.62
14.25% 2002 2,000 2,693 0.58
15.75% 2001 1,500 2,127 0.46
13.125% 2001 1,500 1,897 0.41
10.75% 2003 1,250 1,467 0.32
9.00% 1998 1,250 1,298 0.28
FEDERAL AGENCY OBLIGATIONS-MORTGAGE PASS-
THROUGHS/1/-11.08%
Government National Mortgage Assn. 9.50% 2019-2020 5,799 5,955
Government National Mortgage Assn. 8.50% 2022 5,969 5,839
Government National Mortgage Assn. 7.50% 2022-2023 5,438 5,006
Government National Mortgage Assn. 5.00% 2024 5,055 4,684
Government National Mortgage Assn. 4.50% 2024 4,787 4,362
Government National Mortgage Assn. 8.00% 2022 4,056 3,856 7.05
Government National Mortgage Assn. 9.00% 2009-2016 2,138 2,156
Government National Mortgage Assn. 10.50% 2019 580 626
Government National Mortgage Assn. 11.00% 2019 114 122
Government National Mortgage Assn. 12.00% 2012-2014 11 13
Federal National Mortgage Assn. 8.50% 2023 9,190 9,012
Federal National Mortgage Assn. 9.00% 2011-2025 4,991 5,027 3.38
Federal National Mortgage Assn. 7.00% 2018-2023 1,746 1,587
Federal Home Loan Mortgage Corp. 9.00% 2021-2022 2,738 2,755
Federal Home Loan Mortgage Corp. 9.50% 2016 240 247 0.65
Federal Home Loan Mortgage Corp. 12.00% 2010 3 4
FEDERAL AGENCY OBLIGATIONS-OTHER- 5.77%
FNSM Principal STRIPS 0%/7.56% 2001/2/ 15,000 12,225
FNSM Principal STRIPS 0%/8.62% 2022/2/ 10,000 7,088
FNSM Principal STRIPS 0%/7.94% 2001/2/ 5,000 4,150 5.35
FNSM Principal STRIPS 0%/8.25% 2022/2/ 2,000 1,279
Federal National Mortgage Assn. 8.625% 2021 2,000 1,936 0.42
ASSET-BACKED OBLIGATIONS/1/- 4.97%
Standard Credit Card Master Trust 1991-1, Class A,
8.50% 1997 8,000 8,100
Standard Credit Card Master Trust 1991-3, Class A,
8.875% 1999 5,500 5,623 3.35
Standard Credit Card Trust 1990-6, Series A,
9.375% 1998 1,750 1,800
MBNA Credit Card Trust, 1991-A, 7.75% 1998 7,500 7,479 1.62
COLLATERALIZED MORTGAGE OBLIGATIONS
(PRIVATELY ORIGINATED)/1/- 4.67%
GE Capital Mortgage Services, Inc., Series 1994-15,
Class A-10, 6.00% 2009 8,000 6,210 1.34
Prudential Home Mortgage Securities Co., Inc.,
Series 1992-33, Class A-12, 7.50% 2022 5,724 5,556 1.2
CMC Securities Corp. I, Series 1993-E, Class S-9,
6.50% 2008 4,518 3,554 0.77
Residential Funding Mortgage Securities I, Inc.,
Series 1992-43, Class A-3, 7.00% 2022 3,274 3,199 0.69
Nomura Asset Securities, Series 1994-MD1, Class
A-1B, 7.526% 2018/3/ 3,250 3,081 0.67
FINANCIAL- 4.22%
The Trustees of Columbia University in the City of
New York, Series B, 8.65% 2003 3,000 3,050
The Trustees of Columbia University in the City of 1.1
New York, Series B, 8.62% 2001 2,000 2,033
General Electric Capital Corp. 8.70% 2007 2,500 2,527
General Electric Capital Corp. 8.625% 2008 2,000 2,044 0.99
Signal Capital Corp. 9.95% 2006 4,169 4,376 0.94
First Federal Michigan 0% Eurobonds 2005 10,000 4,131 0.89
National Westminster Bancorp Inc. 12.125% 2002 1,256 1,379 0.3
DEVELOPMENTAL AUTHORITIES- 3.06%
International Bank for Reconstruction & Development
7.90% 1998 3,000 2,993
International Bank for Reconstruction & Development
14.90% 1997 1,200 1,371
International Bank for Reconstruction & Development 1.39
9.76% 1998 1,000 1,048
International Bank for Reconstruction & Development
9.77% 1998 1,000 1,044
Inter-American Development Bank 9.50% 1997 4,000 4,154 0.9
European Investment Bank 8.875% 2001 2,000 2,064 0.45
Asian Development Bank 8.00% Eurobonds 1996 1,500 1,507 0.32
COLLATERALIZED MORTGAGE OBLIGATIONS
(FEDERAL AGENCIES)/1/- 2.32%
Federal Home Loan Mortgage Corp., Series 1625,
Class SG, 7.492% 2008/3/4 4,304 2,238
Federal Home Loan Mortgage Corp., Series 1716,
Class A, 6.50% 2009 2,250 1,909
Federal Home Loan Mortgage Corp., Series 1609,
Class IJ, 4.078% 2023/3/4 6,100 1,586
Federal Home Loan Mortgage Corp., Series 1625,
Class SC, 7.492% 2008/3/4 3,150 1,260
Federal Home Loan Mortgage Corp., Series 21, 2.32
Class SE, 8.419%, 2023/3/4 2,896 1,108
Federal Home Loan Mortgage Corp., Series 1585,
Class PL, 5.383% 2023/3/4 3,987 1,066
Federal Home Loan Mortgage Corp., Series 83-B,
Class B-3, 12.50% 2013 882 943
Federal Home Loan Mortgage Corp., Series 1673,
Class SA, 6.769% 2024/3/4 2,000 640
TELEPHONE UTILITIES- 0.94%
Nippon Telegraph & Telephone Corp. 9.50% 1998 3,000 3,130 0.68
BellSouth Savings and Security ESOP Trust 9.125%
2003 1,186 1,216 0.26
GOVERNMENTS (EXCLUDING U.S. GOVERNMENT)- 0.74%
Ontario (Province of) 15.75% 2012 1,700 2,049
Ontario (Province of) 15.25% 2012 1,145 1,393 0.74
INDUSTRIALS- 0.13%
DeBartolo Capital Corp. II 8.00% Euronotes 1996 575 579 0.13
-------- --------
TOTAL BONDS & NOTES (cost: $394,078,000) 368,975 79.74
-------- --------
Short-Term Securities
- ------------------------------------------------
CORPORATE SHORT-TERM NOTES- 19.45%
Ford Motor Credit Co. 5.82% due 1/9/95 14,500 14,406 3.11
U S WEST Communications, Inc. 5.13%-5.48%
due 12/5-12/16/94 12,000 11,980 2.59
AIG Funding Inc. 5.48% due 12/12/94 11,400 11,379 2.46
Commercial Credit Co. 5.15% due 12/7/94 10,200 10,190 2.2
Wal-Mart Stores, Inc. 5.45% due 12/13/94 10,200 10,180 2.2
Associates Corp. of North America 5.72% due 12/1/94 8,600 8,599 1.86
Texaco Inc. 5.25% due 12/14/94 7,500 7,485 1.62
Intel Corp. 5.49% due 12/14/94 6,400 6,386 1.38
J.C. Penney Funding Corp. 5.25% due 12/16/94 5,700 5,687 1.23
National Rural Utilities Cooperative Finance
Corp. 5.15% due 12/12/94 3,200 3,194 0.69
Holiday Inns, Inc. 9.00% due 2/15/95 500 500 0.11
U.S. TREASURY OBLIGATIONS- 0.33%
12.625% due 5/15/95 1,500 1,548 0.33
-------- --------
TOTAL SHORT-TERM SECURITIES (cost: $91,755,000) 91,534 19.78
-------- --------
TOTAL INVESTMENT SECURITIES (cost: $485,833,000) 460,509 99.52
Excess of money market account, cash and receivables
over payables 2,228 0.48
-------- --------
NET ASSETS $462,737 100.00%
======== ========
</TABLE>
/1/ Pass-through securities backed by a pool of
mortgages or other loans on which principal
payments are periodically made. Therefore, the
effective maturity of these securities is shorter
than the stated maturity.
/2/ Represents a zero coupon bond which will convert
to a coupon-bearing security at a later date.
/3/ Coupon rates may change periodically.
/4/ Represents an inverse floater, which is a floating
rate note whose interest rate moves in the
opposite direction of prevailing interest rates.
See Notes to Financial Statements
***************************************************************************
***************************************************************************
***************************************************************************
AMERICAN VARIABLE INSURANCE SERIES
CASH MANAGEMENT FUND
INVESTMENT PORTFOLIO, NOVEMBER 30, 1994
<TABLE>
<CAPTION>
Principal Market
Amount Value Percent of
Short-Term Securities (000) (000) Net Assets
<S> <C> <C> <C>
CORPORATE SHORT-TERM NOTES-79.10%
Eli Lilly & Co. 5.70% due 1/6/95 $8,000 $7,953 3.60%
Pitney Bowes Credit Corp. 5.15% due 12/15/94 7,800 7,783 3.53
Commercial Credit Co. 4.90% due 12/6/94 7,500 7,494 3.41
Melville Corp. 5.18% due 12/12/94 7,500 7,487 3.39
Ford Motor Credit Co. 5.06% due 12/20/94 7,200 7,180 3.25
Duke Power Co. 5.20% due 12/12/94 7,100 7,088 3.21
U S WEST Communications, Inc. 5.15% due
12/7/94 7,000 6,993 3.17
John Deere Capital Corp. 5.15% due 12/12/94 7,000 6,988 3.17
Union Pacific Corp. 5.02% due 12/16/94 7,000 6,984 3.16
Campbell Soup Co. 5.20% due 12/22/94 7,000 6,978 3.16
Procter & Gamble Co. 5.54% due 1/9/95 6,900 6,857 3.10
Beneficial Corp. 5.00% due 12/9/94 6,700 6,692 3.03
Norfolk Southern Corp. 5.10% due 12/5/94 6,200 6,196 2.81
Motorola, Inc. 4.87% due 12/1/94 6,100 6,099 2.76
American Express Credit Corp. 5.50% due
12/21/94 6,100 6,080 2.76
Texaco Inc. 5.25% due 12/14/94 6,000 5,988 2.71
Xerox Corp. 5.72% due 1/5/95 6,000 5,966 2.70
A.I. Credit Corp. 5.75% due 1/10/95 6,000 5,961 2.70
Intel Corp. 5.49% due 12/14/94 5,200 5,189 2.35
H.J. Heinz Co. 5.70% due 1/19/95 5,200 5,159 2.34
Schering Corp. 5.55% due 12/7/94 5,100 5,094 2.31
Baltimore Gas & Electric Co. 5.50%
due 12/16/94 5,000 4,988 2.26
PACCAR Financial Corp. 5.72% due 1/12/95 5,000 4,966 2.25
Weyerhaeuser Co. 4.99% due 12/7/94 4,600 4,595 2.08
Ameritech Capital Funding Corp. 5.16%
due 12/14/94 4,600 4,591 2.08
Wal-Mart Stores, Inc. 5.45% due 12/13/94 4,400 4,391 1.99
AT&T Corp. 5.48% due 1/4/95 4,100 4,078 1.85
National Rural Utilities Cooperative Finance
Corp. 5.70% due 1/6/95 3,500 3,479 1.57
Vermont American Corp. 5.52% due 12/15/94 2,700 2,694 1.22
Toys "R" Us, Inc. 5.46% due 12/6/94 2,600 2,598 1.18
FEDERAL AGENCY DISCOUNT NOTES-21.39%
Federal Home Loan Mortgage Corp. 4.90%-5.11%
due 12/2-12/5/94 19,085 19,078 8.64
Tennessee Valley Authority 4.90%-4.92%
due 12/2-12/9/94 13,300 13,287 6.02
Federal Home Loan Bank 5.42% due 12/27/94 7,900 7,868 3.56
Federal National Mortgage Assn. 4.93% due
12/5/94 7,000 6,995 3.17
------------- ------------
TOTAL INVESTMENT SECURITIES (cost:
$221,817,000) 221,817 100.49
Excess of payables over cash and
receivables 1,086 0.49
------------- ------------
NET ASSETS $220,731 100.00%
============= ============
</TABLE>
See Notes to Financial Statements
American Variable Insurance Series
Financial Statements
Statement of Assets and Liabilities
at November 30, 1994
<TABLE>
<CAPTION>
Inter- Growth- Asset
Growth national Income Allocation
Fund Fund Fund Fund
- --------------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
ASSETS:
Investment securities at market
(cost: $1,709,744; $1,295,609;
$2,648,997; $642,615; $426,623;
$485,833; $221,817
and $7,431,238, respectively) $2,031,956 $1,406,828 $2,788,388 $634,966
Money market account 100 100 100 100
Cash 137 81 100 5
Receivables for-
Sales of investments 15,962 2,182 555 4,961
Sales of fund's shares 2,000 1,736 1,798 153
Dividends and accrued
interest 1,223 4,236 9,204 4,899
---------- ---------- ---------- ----------
2,051,378 1,415,163 2,800,145 645,084
LIABILITIES: ---------- ---------- ---------- ----------
Payables for-
Purchases of investments 22,483 8,592 58,272 7,065
Repurchases of fund's shares 759 689 478 374
Management services 759 798 981 264
Accrued expenses 36 198 48 11
---------- ---------- ---------- ----------
24,037 10,277 59,779 7,714
NET ASSETS AT ---------- ---------- ---------- ----------
NOVEMBER 30, 1994 $2,027,341 $1,404,886 $2,740,366 $637,370
=========== =========== =========== ===========
Shares of beneficial interest
outstanding (unlimited
shares authorized) 63,475,904 105,875,564 108,327,575 56,639,797
Net asset value per share $31.94 $13.27 $25.30 $11.25
</TABLE>
(continued)
<TABLE>
<CAPTION>
U.S. (dollars
Government/ in
High-Yield AAA-Rated Cash thousands)
Bond Securities Management
Fund Fund Fund Total
- --------------------------------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS:
Investment securities at market
(cost: $1,709,744; $1,295,609;
$2,648,997; $642,615; $426,623;
$485,833; $221,817
and $7,431,238, respectively) $384,058 $460,509 $221,817 $7,928,522
Money market account 100 100 - 600
Cash 57 68 91 539
Receivables for-
Sales of investments 2,018 3,231 - 28,909
Sales of fund's shares 691 345 168 6,891
Dividends and accrued
interest 6,369 5,616 - 31,547
---------- ---------- ---------- ----------
393,293 469,869 222,076 7,997,008
LIABILITIES: ---------- ---------- ---------- ----------
Payables for-
Purchases of investments 3,092 6,464 - 105,968
Repurchases of fund's shares 104 469 1,259 4,132
Management services 165 191 82 3,240
Accrued expenses 7 8 4 312
---------- ---------- ---------- ----------
3,368 7,132 1,345 113,652
NET ASSETS AT ---------- ---------- ---------- ----------
NOVEMBER 30, 1994 $389,925 $462,737 $220,731 $7,883,356
=========== =========== =========== ===========
Shares of beneficial interest
outstanding (unlimited
shares authorized) 30,260,277 42,851,930 19,895,148
Net asset value per share $12.89 $10.80 $11.09
</TABLE>
See Notes to Financial Statements
American Variable Insurance Series
Financial Statements
Statement of Operations
for the year ended November 30,1994
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Inter- Growth- Asset
Growth national Income Allocation
Fund Fund Fund Fund
---------- ---------- --------- ----------
INVESTMENT INCOME:
Income:
Dividends $13,525 $21,729 $64,111 $13,742
Interest 10,827 12,287 19,812 17,927
---------- ---------- --------- ----------
24,352 34,016 83,923 31,669
---------- ---------- --------- ----------
Expenses:
Management services fee 8,735 8,330 11,517 3,129
Reports to shareholders 120 75 165 39
Registration statement and
prospectus 166 90 228 54
Postage, stationery and
supplies 3 2 4 1
Trustees' fees 44 23 60 14
Auditing and legal fees 31 16 40 12
Custodian fee 187 1,021 245 63
Taxes other than federal
income tax 29 17 39 10
Other expenses 20 38 18 7
---------- ---------- --------- ----------
9,335 9,612 12,316 3,329
---------- ---------- --------- ----------
Net investment income 15,017 24,404 71,607 28,340
---------- ---------- --------- ----------
REALIZED GAIN (LOSS) AND
UNREALIZED APPRECIATION
(DEPRECIATION) ON INVESTMENTS:
Realized gain (loss) before
non-U.S. taxes 52,610 43,615 112,012 9,504
Non-U.S. taxes - 57 - -
---------- ---------- ---------- -----------
Net realized gain (loss) 52,610 43,558 112,012 9,504
---------- ---------- ---------- -----------
Net change in unrealized
appreciation (depreciation):
Beginning of year 338,142 89,602 245,362 33,961
End of year 322,212 111,219 139,391 (7,649)
---------- ---------- ---------- -----------
Net unrealized appreciation
(depreciation) (15,930) 21,617 (105,971) (41,610)
---------- ---------- ---------- -----------
Net realized gain (loss) and
unrealized appreciation
(depreciation) on investments 36,680 65,175 6,041 (32,106)
---------- ---------- ---------- -----------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS $51,697 $89,579 $77,648 $(3,766)
========= =========== ========= =========
See Notes to Financial Statements
</TABLE>
(continued)
<TABLE>
<CAPTION>
(dollars
in
U.S. thousands)
High- Government/ Cash
Yield AAA-Rated Manage-
Bond Securities ment
Fund Fund Fund Total
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Income:
Dividends $1 - - $113,108
Interest 39,401 $35,133 $8,081 143,468
---------- ----------- ---------- ---------
39,402 35,133 8,081 256,576
---------- ----------- ---------- ---------
Expenses:
Management services fee 2,022 2,459 905 37,097
Reports to shareholders 25 31 13 468
Registration statement and
prospectus 36 46 14 634
Postage, stationery and
supplies 1 1 - 12
Trustees' fees 9 12 4 166
Auditing and legal fees 8 10 5 122
Custodian fee 43 50 21 1,630
Taxes other than federal
income tax 7 8 3 113
Other expenses 5 6 4 98
---------- ----------- ---------- ---------
2,156 2,623 969 40,340
---------- ----------- ---------- ---------
Net investment income 37,246 32,510 7,112 216,236
---------- ----------- ---------- ---------
REALIZED GAIN (LOSS) AND
UNREALIZED APPRECIATION
(DEPRECIATION) ON INVESTMENTS:
Realized gain (loss) before
non-U.S. taxes (27) (2,512) - 215,202
Non-U.S. taxes - - - 57
---------- ----------- ---------- ---------
Net realized gain (loss) (27) (2,512) - 215,145
---------- ----------- ---------- ---------
Net change in unrealized
appreciation (depreciation):
Beginning of year 18,642 28,031 - 753,740
End of year (42,565) (25,324) - 497,284
---------- ----------- ---------- ---------
Net unrealized appreciation
(depreciation) (61,207) (53,355) - (256,456)
---------- ----------- ---------- ---------
Net realized gain (loss) and
unrealized appreciation
(depreciation) on investments (61,234) (55,867) - (41,311)
---------- ----------- ---------- ---------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS $(23,988) $(23,357) $7,112 $174,925
========= ========== ========= =========
</TABLE>
See Notes to Financial Statements
American Variable Insurance Series
Financial Statements
Statement of Changes in Net Assets
for the year ended November 30, 1994
<TABLE>
<CAPTION>
Inter- Growth- Asset
Growth national Income Allocation
Fund Fund Fund Fund
- ---------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income $15,017 $24,404 $71,607 $28,340
Net realized gain (loss) on investments 52,610 43,558 112,012 9,504
Net unrealized appreciation
(depreciation) on investments (15,930) 21,617 (105,971) (41,610)
----------- ----------- ----------- -----------
Net increase (decrease) in net
assets resulting from operations 51,697 89,579 77,648 (3,766)
----------- ----------- ----------- -----------
DIVIDENDS AND
DISTRIBUTIONS PAID TO
SHAREHOLDERS:
Dividends from net investment income (14,164) (18,349) (66,032) (27,518)
Distributions from net realized
gain on investments (59,961) (15,818) (83,551) (8,793)
----------- ----------- ----------- -----------
Total dividends and distributions (74,125) (34,167) (149,583) (36,311)
----------- ----------- ----------- -----------
CAPITAL SHARE
TRANSACTIONS:
Proceeds from shares sold:
14,010,480; 43,466,926; 13,134,545;
7,970,745; 6,513,155; 4,821,568;
28,332,973 and 118,250,392 shares,
respectively 448,195 581,497 337,011 92,993
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions
of net realized gain on investments:
2,334,569; 2,609,004; 5,881,586;
3,143,664; 2,912,711; 3,038,723;
552,766 and 20,473,023 shares,
respectively 74,125 34,167 149,583 36,311
Cost of shares repurchased:
6,590,651; 7,999,702; 4,320,323;
2,577,232; 4,132,973; 6,589,305;
27,641,214 and 59,851,400 shares,
respectively (209,659) (106,589) (110,017) (29,742)
'Net increase in net assets ----------- ----------- ----------- -----------
resulting from capital share
transactions 312,661 509,075 376,577 99,562
----------- ----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS 290,233 564,487 304,642 59,485
NET ASSETS:
Beginning of year 1,737,108 840,399 2,435,724 577,885
----------- ----------- ----------- -----------
End of year (including
undistributed net investment
income: $4,555; $7,823; $21,198;
$7,533; $10,069; $8,556; $2,143
and $61,877, respectively) $2,027,341 $1,404,886 $2,740,366 $637,370
============ ============ ============ ============
See Notes to Financial Statements
</TABLE>
(continued)
<TABLE>
<CAPTION>
(dollars
in
U.S. thousands)
Government/
High-Yield AAA-Rated Cash
Bond Securities Management
Fund Fund Fund Total
- ---------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income $37,246 $32,510 $7,112 $216,236
Net realized gain (loss) on investments (27) (2,512) - 215,145
Net unrealized appreciation
(depreciation) on investments (61,207) (53,355) - (256,456)
----------- ----------- ----------- -----------
Net increase (decrease) in net
assets resulting from operations (23,988) (23,357) 7,112 174,925
----------- ----------- ----------- -----------
DIVIDENDS AND
DISTRIBUTIONS PAID TO
SHAREHOLDERS:
Dividends from net investment income (34,372) (31,462) (6,080) (197,977)
Distributions from net realized
gain on investments (6,377) (2,925) - (177,425)
----------- ----------- ----------- -----------
Total dividends and distributions (40,749) (34,387) (6,080) (375,402)
----------- ----------- ----------- -----------
CAPITAL SHARE
TRANSACTIONS:
Proceeds from shares sold:
14,010,480; 43,466,926; 13,134,545;
7,970,745; 6,513,155; 4,821,568;
28,332,973 and 118,250,392 shares,
respectively 93,032 55,095 313,018 1,920,841
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions
of net realized gain on investments:
2,334,569; 2,609,004; 5,881,586;
3,143,664; 2,912,711; 3,038,723;
552,766 and 20,473,023 shares,
respectively 40,749 34,387 6,080 375,402
Cost of shares repurchased:
6,590,651; 7,999,702; 4,320,323;
2,577,232; 4,132,973; 6,589,305;
27,641,214 and 59,851,400 shares,
respectively (57,974) (74,350) (304,971) (893,302)
'Net increase in net assets ----------- ----------- ----------- -----------
resulting from capital share
transactions 75,807 15,132 14,127 1,402,941
----------- ----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS 11,070 (42,612) 15,159 1,202,464
NET ASSETS:
Beginning of year 378,855 505,349 205,572 6,680,892
----------- ----------- ----------- -----------
End of year (including
undistributed net investment
income: $4,555; $7,823; $21,198;
$7,533; $10,069; $8,556; $2,143
and $61,877, respectively) $389,925 $462,737 $220,731 $7,883,356
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements
American Variable Insurance Series
Financial Statements
Statement of Changes in Net Assets
for the year ended November 30, 1993
<TABLE>
<CAPTION>
Inter- Growth- Asset
Growth national Income Allocation
Fund Fund Fund Fund
- ---------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income $13,029 $9,582 $56,147 $21,997
Net realized gain on investments 59,726 15,963 82,772 8,909
Net unrealized appreciation on
investments 144,638 101,559 88,992 14,253
----------- ----------- ----------- -----------
Net increase in net assets resulting
from operations 217,393 127,104 227,911 45,159
----------- ----------- ----------- -----------
DIVIDENDS AND
DISTRIBUTIONS PAID TO
SHAREHOLDERS:
Dividends from net investment income (11,826) (7,893) (52,017) (19,186)
Distributions from net realized
gain on investments (9,216) - (20,243) (4,847)
----------- ----------- ----------- -----------
Total dividends and distributions (21,042) (7,893) (72,260) (24,033)
----------- ----------- ----------- -----------
CAPITAL SHARE
TRANSACTIONS:
Proceeds from shares sold:
15,769,183; 31,639,630; 22,464,776;
15,165,342; 11,473,807; 9,704,277;
22,204,821 and 128,421,836 shares,
respectively 474,158 363,435 561,027 178,823
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions
of net realized gain on investments:
714,558; 706,625; 2,921,495;
2,063,370; 1,601,297; 2,385,881;
410,128 and 10,803,354 shares,
respectively 21,042 7,893 72,260 24,033
Cost of shares repurchased:
5,439,739; 907,755; 2,285,222;
442,583; 2,024,904; 1,760,218;
21,839,022 and 34,699,443 shares,
respectively (166,884) (9,829) (57,693) (5,256)
'Net increase in net assets ----------- ----------- ----------- -----------
resulting from capital share
transactions 328,316 361,499 575,594 197,600
----------- ----------- ----------- -----------
TOTAL INCREASE IN NET ASSETS 524,667 480,710 731,245 218,726
NET ASSETS:
Beginning of year 1,212,441 359,689 1,704,479 359,159
----------- ----------- ----------- -----------
End of year (including
undistributed net investment
income: $3,702; $2,703; $15,623;
$6,711; $7,195; $7,508; $1,111
and $44,553, respectively) $1,737,108 $840,399 $2,435,724 $577,885
============ ============ ============ ============
See Notes to Financial Statements
</TABLE>
(continued)
<TABLE>
<CAPTION>
(dollars
in
U.S. thousands)
Government/
High-Yield AAA-Rated Cash
Bond Securities Management
Fund Fund Fund Total
<S> <C> <C> <C> <C>
- ---------------------------------- ----------- ----------- ----------- -----------
OPERATIONS:
Net investment income $23,370 $28,356 $4,241 $156,722
Net realized gain on investments 6,321 2,831 - 176,522
Net unrealized appreciation on
investments 13,363 18,067 - 380,872
----------- ----------- ----------- -----------
Net increase in net assets resulting
from operations 43,054 49,254 4,241 714,116
----------- ----------- ----------- -----------
DIVIDENDS AND
DISTRIBUTIONS PAID TO
SHAREHOLDERS:
Dividends from net investment income (20,359) (26,819) (4,502) (142,602)
Distributions from net realized
gain on investments (2,703) (1,588) - (38,597)
----------- ----------- ----------- -----------
Total dividends and distributions (23,062) (28,407) (4,502) (181,199)
----------- ----------- ----------- -----------
CAPITAL SHARE
TRANSACTIONS:
Proceeds from shares sold:
15,769,183; 31,639,630; 22,464,776;
15,165,342; 11,473,807; 9,704,277;
22,204,821 and 128,421,836 shares,
respectively 168,457 116,874 244,540 2,107,314
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions
of net realized gain on investments:
714,558; 706,625; 2,921,495;
2,063,370; 1,601,297; 2,385,881;
410,128 and 10,803,354 shares,
respectively 23,062 28,407 4,502 181,199
Cost of shares repurchased:
5,439,739; 907,755; 2,285,222;
442,583; 2,024,904; 1,760,218;
21,839,022 and 34,699,443 shares,
respectively (29,835) (21,222) (240,582) (531,301)
'Net increase in net assets ----------- ----------- ----------- -----------
resulting from capital share
transactions 161,684 124,059 8,460 1,757,212
----------- ----------- ----------- -----------
TOTAL INCREASE IN NET ASSETS 181,676 144,906 8,199 2,290,129
NET ASSETS:
Beginning of year 197,179 360,443 197,373 4,390,763
----------- ----------- ----------- -----------
End of year (including
undistributed net investment
income: $3,702; $2,703; $15,623;
$6,711; $7,195; $7,508; $1,111
and $44,553, respectively) $378,855 $505,349 $205,572 $6,680,892
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS
1. American Variable Insurance Series (the "series") is registered under the
Investment Company Act of 1940 as an open-end, diversified management
investment company with seven different funds. The assets of each fund are
segregated, with each fund, in effect, accounted for separately. The following
paragraphs summarize the significant accounting policies consistently followed
by the series in the preparation of its financial statements:
Equity-type securities are stated at market value based upon closing sales
prices reported on recognized securities exchanges on the last business day of
the year or, for listed securities having no sales reported and for unlisted
securities, upon last-reported bid prices on that date. Bonds and notes are
valued at prices obtained from a bond-pricing service provided by a major
dealer in bonds, when such prices are available; however, in circumstances
where the investment adviser deems it appropriate to do so, such securities
will be valued at the mean of their representative quoted bid and asked prices
or, if such prices are not available, at the mean of such prices for securities
of comparable maturity, quality, and type. Short-term securities with original
or remaining maturities in excess of 60 days are valued at the mean of their
quoted bid and asked prices. Short-term securities with 60 days or less to
maturity are valued at amortized cost, which approximates market value.
Securities for which market quotations are not readily available are valued at
fair value as determined in good faith by the Valuation Committee of the Board
of Trustees.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. Realized gains
and losses from securities transactions are reported on an identified cost
basis. Dividend and interest income is reported on the accrual basis.
Discounts on securities purchased are amortized over the life of the respective
securities. Distributions to shareholders are recorded on the ex-dividend
date.
Investment securities and other assets and liabilities denominated in
non-U.S. currencies are recorded in the financial statements after translation
into U.S. dollars utilizing rates of exchange on the last business day of the
year. Purchases and sales of investment securities, income, and expenses are
calculated using the prevailing exchange rate as accrued. The series does not
identify the portion of each amount shown in the series' Statement of
Operations under the caption "Realized Gain (Loss) and Unrealized Appreciation
(Depreciation) on Investments" that arises from changes in non-U.S. currency
exchange rates.
Common expenses incurred by the series are allocated among the funds based
upon relative net assets. In all other respects, expenses are charged to each
fund as incurred on a specific identification basis.
Pursuant to the custodian agreement, each fund within the series receives
credits against its custodian fee for imputed interest on certain balances with
the custodian bank. Custodian fees for the series aggregated $1,630,000 of
which $20,000 was paid by these credits rather than in cash.
During the current year, the series adopted Statement of Position 93-2
"Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies."
Accordingly, book and tax basis differences relating to shareholder
distributions are reclassified to or from paid-in capital. As of December 1,
1993, for the International Fund, the cumulative effect of such differences
totaling $878,000 was reclassified from undistributed net investment income to
undistributed net realized gains. During the year ended November 30, 1994, the
International Fund reclassified $57,000 from undistributed net investment
income to undistributed net realized gains. There were no reclassifications
made for the remaining funds in the series. Net investment income, net
realized gains and net assets were not affected by this change.
2. It is the series' policy to continue to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its net taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision
is required. There was no difference between book and tax realized gains on
securities transactions for the year ended November 30, 1994. During the year
ended November 30, 1994, the U.S. Government/AAA-Rated Securities Fund realized
a capital loss of $1,925,000, which may be used to offset capital gains
realized during subsequent years through November 30, 2002. For book and
federal income tax purposes, the amounts of unrealized appreciation and
depreciation and the cost of portfolio securities at November 30, 1994 were as
follows:
(dollars in thousands)
<TABLE>
<CAPTION>
Growth- Asset
Growth International Income Allocation
Fund Fund Fund Fund
<S> <C> <C> <C> <C>
Unrealized appreciation $407,856 $163,838 $239,448 $26,643
Unrealized depreciation 85,644 52,619 100,057 34,292
Net unrealized appreciation
(depreciation) 322,212 111,219 139,391 (7,649)
Cost of portfolio securities 1,709,744 1,295,609 2,648,997 642,615
</TABLE>
(continued)
<TABLE>
<CAPTION>
U.S.
High-Yield Government/ Cash
Bond AAA-Rated Management
Fund Securities Fund Fund Total
<S> <C> <C> <C> <C>
Unrealized appreciation $1,370 $2,210 - $841,365
Unrealized depreciation 43,935 27,534 - 344,081
Net unrealized appreciation
(depreciation) (42,565) (25,324) - 497,284
Cost of portfolio securities 426,623 485,833 $221,817 7,431,238
</TABLE>
- -----
3. The fees for management services were paid pursuant to an agreement with
Capital Research and Management Company (CRMC), with which certain officers and
Trustees of the series are affiliated. The Investment Advisory and Service
Agreement provides for monthly fees, accrued daily, based on the following
annual rates: Growth Fund - 0.60% of the first $30 million of average net
assets; 0.50% of such assets in excess of $30 million but not exceeding $600
million; 0.45% of such assets in excess of $600 million but not exceeding $1.2
billion; 0.42% of such assets in excess of $1.2 billion but not exceeding $2.0
billion; and 0.37% of such assets in excess of $2.0 billion; International Fund
- - 0.90% of the first $60 million of average net assets; 0.78% of such assets in
excess of $60 million but not exceeding $600 million; and 0.60% of such assets
in excess of $600 million; Growth-Income Fund - 0.60% of the first $30 million
of average net assets; 0.50% of such assets in excess of $30 million but not
exceeding $600 million; 0.45% of such assets in excess of $600 million but not
exceeding $1.5 billion; 0.40% of such assets in excess of $1.5 billion but not
exceeding $2.5 billion; and 0.32% of such assets in excess of $2.5 billion;
Asset Allocation Fund - 0.60% of the first $30 million of average net assets;
0.50% of such assets in excess of $30 million but not exceeding $600 million;
and 0.42% of such assets in excess of $600 million; High-Yield Bond Fund -
0.60% of the first $30 million of average net assets; 0.50% of such assets in
excess of $30 million but not exceeding $600 million; and 0.46% of such assets
in excess of $600 million; U.S. Government/AAA-Rated Securities Fund - 0.60% of
the first $30 million of average net assets; 0.50% of such assets in excess of
$30 million but not exceeding $600 million; and 0.40% of such assets in excess
of $600 million; Cash Management Fund - 0.50% of the first $100 million of
average net assets; 0.42% of such assets in excess of $100 million but not
exceeding $400 million; and 0.38% of such assets in excess of $400 million.
4.
(dollars in thousands)
<TABLE>
<CAPTION>
Growth- Asset
Growth International Income Allocation
Fund Fund Fund Fund
<S> <C> <C> <C> <C>
As of November 30, 1994:
Accumulated undistributed
net realized gain (loss) on
investments $51,164 $43,362 $111,125 $9,449
Paid-in capital 1,649,410 1,242,482 2,468,652 628,037
For the year ended
November 30, 1994:
Purchases of investment
securities* 814,748 594,357 1,049,551 342,994
Sales of investment
securities* 491,089 184,676 629,807 209,047
</TABLE>
(continued)
<TABLE>
<CAPTION>
U.S.
High-Yield Government/ Cash
Bond AAA-Rated Management
Fund Securities Fund Fund Total
<S> <C> <C> <C> <C>
As of November 30, 1994:
Accumulated undistributed
net realized gain (loss) on
investments $(97) $(2,642) - $212,361
Paid-in capital 422,518 482,147 $218,588 7,111,834
For the year ended
November 30, 1994:
Purchases of investment
securities* 202,376 184,296 - 3,188,322
Sales of investment
securities* 144,885 182,518 - 1,842,022
</TABLE>
*Excludes short-term securities
5. Dividend and interest income for the International Fund is recorded net of
non-U.S. taxes paid. For the year ended November 30, 1994, such non-U.S. taxes
were $2,993,000.
PER-SHARE DATA AND RATIOS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Net realized Total Distri-
& unrealized income Dividends butions
Net asset Net gain from from net from
Period value, invest- (loss) on invest- invest- net Total
ended beginning ment invest- ment ment realized distri-
11/30 of period income ments operations income gains butions
- ------ -------- -------- -------- -------- -------- -------- --------
Growth Fund
1990 $22.91 $.54 $(2.27) $(1.73) $(.56) $(.64) $(1.20)
1991 19.98 .41 4.48 4.89 (.47) (.22) (.69)
1992 24.18 .29 4.25 4.54 (.31)/1/ - (.31)
1993 28.41 .25 4.13 4.38 (.24) (.21) (.45)
1994 32.34 .24 .69 .93 (.24) (1.09) (1.33)
International Fund
1990 $10.00 $.11 $(.62) $(.51) $(.04) - $(.04)
1991 9.45 .22 .59 .81 (.24) - (.24)
1992 10.02 .19 (.09) .10 (.21) (.02) (.23)
1993 9.89 .17 2.50 2.67 (.16) - (.16)
1994 12.40 .25 1.04 1.29 (.20) (.22) (.42)
Growth-Income Fund
1990 $21.43 $.82 $(1.91) $(1.09) $(.86) $(.25) $(1.11)
1991 19.23 .75 2.63 3.38 (.79) (.10) (.89)
1992 21.72 .65 2.74 3.39 (.67) (.27) (.94)
1993 24.17 .63 2.12 2.75 (.63) (.28) (.91)
1994 26.01 .68 .14 .82 (.65) (.88) (1.53)
Asset Allocation Fund
1990 $10.17 $.50 $(.75) $(.25) $(.42) - $(.42)
1991 9.50 .53 1.11 1.64 (.55) - (.55)
1992 10.59 .48 .94 1.42 (.49) $(.05) (.54)
1993 11.47 .51 .67 1.18 (.49) (.15) (.64)
1994 12.01 .51 (.57) (.06) (.52) (.18) (.70)
High-Yield Bond Fund
1990 $12.82 $1.33 $(1.02) $.31 $(1.30) - $(1.30)
1991 11.83 1.17 1.78 2.95 (1.25) - (1.25)
1992 13.53 1.10 .62 1.72 (1.08) - (1.08)
1993 14.17 1.09 1.20 2.29 (1.10) $(.19) (1.29)
1994 15.17 1.27 (2.07) (.80) (1.23) (.25) (1.48)
U.S. Government/AAA Rated
Securities Fund
1990 $10.74 $.83 $(.11) $.72 ($.80) - $(.80)
1991 10.66 .77 .58 1.35 (.79) - (.79)
1992 11.22 .75 .32 1.07 (.76) - (.76)
1993 11.53 .74 .68 1.42 (.75) $(.05) (.80)
1994 12.15 .76 (1.30) (.54) (.74) (.07) (.81)
Cash Management Fund
1990 $11.00 $.71 $.13 .84 $(.70) - $(.70)
1991 11.14 .62 .01 .63 (.66) - (.66)
1992 11.11 .35 .01 .36 (.43) - (.43)
1993 11.04 .29 - .29 (.31) - (.31)
1994 11.02 .37 .02 .39 (.32) - (.32)
</TABLE>
(continued)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PER-SHARE
DATA AND
RATIOS Ratio
Net asset Net assets, Ratio of of net
Period value, end of expenses income to Portfolio
ended end of Total period (in to average average turnover
11/30 period return millions) net assets net assets rate
- --------- --------- --------- --------- --------- --------- ---------
Growth Fund
1990 $19.98 (7.87)% $304 .59% 3.00% 16.8%
1991 24.18 24.90 700 .56 1.94 9.8
1992 28.41 18.90 1,212 .53 1.15 11.2
1993 32.34 15.59 1,737 .50 .86 20.4
1994 31.94 2.92 2,027 .49 .78 29.6
International Fund /2/
1990 $9.45 (5.08)% $66 1.03%/3/ 3.18%/3/ 4.5%
1991 10.02 8.67 197 1.04 2.62 8.2
1992 9.89 .90 360 1.00 2.11 16.7
1993 12.40 27.20 840 .96 1.75 17.7
1994 13.27 10.48 1,405 .80 2.03 19.7
Growth-Income Fund
1990 $19.23 (5.27)% $535 .56% 4.77% 9.7%
1991 21.72 17.83 1,022 .56 3.80 11.1
1992 24.17 15.90 1,704 .52 3.01 13.6
1993 26.01 11.63 2,436 .49 2.66 24.9
1994 25.30 3.21 2,740 .47 2.72 29.3
Asset Allocation Fund
1990 $9.50 (2.34)% $106 .64% 6.70% 14.4%
1991 10.59 17.63 194 .59 5.56 15.1
1992 11.47 13.69 359 .57 4.73 19.7
1993 12.01 10.59 578 .55 4.66 19.0
1994 11.25 (.54) 637 .53 4.55 36.1
High-Yield Bond Fund
1990 $11.83 2.49% $58 .68% 11.17% 22.7%
1991 13.53 26.22 107 .63 9.81 18.1
1992 14.17 13.14 197 .59 8.88 47.4
1993 15.17 17.09 379 .56 8.18 34.1
1994 12.89 (5.71) 390 .54 9.37 38.5
U.S. Government/AAA Rated
Securities Fund
1990 $10.66 7.11% $126 .61% 8.58% 24.0%
1991 11.22 13.24 240 .58 7.91 27.1
1992 11.53 9.83 360 .57 7.08 40.0
1993 12.15 12.65 505 .55 6.42 21.7
1994 10.80 (4.58) 463 .54 6.69 45.2
Cash Management Fund
1990 $11.14 7.91% $143 .60% 7.48% -
1991 11.11 5.84 163 .58 5.65 -
1992 11.04 3.31 197 .53 3.24 -
1993 11.02 2.67 206 .51 2.57 -
1994 11.09 3.59 221 .49 3.60 -
</TABLE>
/1/ Amount includes net realized short-term gains treated as net investment
income
for federal income tax purposes.
/2/ Commenced operations May 1, 1990.
/3/ Annualized
REPORT OF INDEPENDENT ACCOUNTANTS
_________________________________________________________________
To the Board of Trustees and Shareholders of
American Variable Insurance Series
In our opinion, the accompanying statements of assets and liabilities,
including the investment portfolios, and the related statements of operations
and of changes in net assets and the per-share data and ratios present fairly,
in all material respects, the financial position of the Growth Fund, the
International Fund, the Growth-Income Fund, the Asset Allocation Fund, the
High-Yield Bond Fund, the U.S. Government/AAA-Rated Securities Fund and the
Cash Management Fund (constituting the American Variable Insurance Series,
hereafter referred to as the "Series") at November 30, 1994, the results of
each of their operations for the year then ended, the changes in each of their
net assets for each of the two years in the period then ended, and the
per-share data and ratios for each of the four years in the period then ended,
in conformity with generally accepted accounting principles. These financial
statements and per-share data and ratios (hereafter referred to as "financial
statements") are the responsibility of the Series' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of securities at November 30, 1994 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above. The financial statements of the American
Variable Insurance Series at and for the year ended November 30, 1990,
including the per-share data and ratios for the yearthen ended, were audited by
other independent accountants whose report dated December 26, 1990 expressed an
unqualified opinion on those statements.
/s/Price Waterhouse LLP
Los Angeles, California
December 30, 1994
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS:
Included in Prospectus - Part A
Financial Highlights
Included in Statement of Additional Information - Part B
Statement of Assets and Liabilities Per Share Data and Ratios
Statement of Operations Notes to Financial Statements
Statement of Changes in Net Assets Report of Independent Accountants
(B) EXHIBITS:
1. On file (see SEC files nos. 811-3857 and 2-86838)
2. On file (see SEC files nos. 811-3857 and 2-86838)
3. None.
4. None.
5. On file (see SEC files nos. 811-3857 and 2-86838)
6. None.
7. None.
8. On file (see SEC files nos. 811-3857 and 2-86838)
9. On file (see SEC files nos. 811-3857 and 2-86838)
10. Not applicable to this filing.
11. Consent of Independent Accountants.
12. None.
13. On file (see SEC files nos. 811-3857 and 2-86838)
14. None.
15. None.
16. None.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
As of November 30, 1994.
<TABLE>
<CAPTION>
Title of Class Number of
Record-Holders
<S> <C>
Beneficial Interest 9
(no par value)
</TABLE>
ITEM 27. INDEMNIFICATION.
Registrant is a joint-insured under an Investment Adviser/Mutual Fund Errors
and Omissions Policy. The carrier of the primary policy in the amount of $15
million is American International Surplus Lines Insurance Company and it has a
$250,000 deductible. The carrier of the secondary policy in the amount of $10
million is Chubb Custom Insurance Company. The carrier of the excess policy in
the amount of $20 million is ICI Mutual Insurance Company.
Article VI of the Trust's By-Laws states:
(a) The Trust shall indemnify any Trustee or officer of the Trust who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than action by or in the right of the Trust) by reason
of the fact that such person is or was such Trustee or officer or an employee
or agent of the Trust, or is or was serving at the request of the Trust as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the Trust, and, with respect
to any criminal action or pro-ceeding, had no reasonable cause to believe such
person's conduct was unlawful.
(b) The Trust shall indemnify any Trustee or officer of the Trust who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Trust to procure a judgment
in its favor by reason of the fact that such person is or was such Trustee or
officer or an employee or agent of the Trust, or is or was serving at the
request of the Trust as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), actually and reasonably incurred by such
person in connection with the defense or settlement of such action or suit if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the Trust, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of such person's duty to the Trust unless and
only to the extent that the court in which such action or suit was brought, or
any other court having jurisdiction in the premises, shall determine upon
application that, despite the adjudication of liability but in view of all
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such court shall deem proper.
(c) To the extent that a Trustee or officer of the Trust has been successful
on the merits in defense of any action, suit or proceeding referred to in
subparagraphs (a) or (b) above or in defense of any claim, issue or matter
therein, such person shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
therewith, without the necessity for the determination as to the standard of
conduct as provided in subparagraph (d).
(d) Any indemnification under subparagraph (a) or (b) (unless ordered by a
court) shall be made by the Trust only as authorized in the specific case upon
a determination that indemnification of the Trustee or officer is proper under
the standard of conduct set forth in subparagraph (a) or (b). Such
determination shall be made (i) by the Board by a majority vote of a quorum
consisting of Trustees who were not parties to such action, suit or proceeding,
and are disinterested Trustees or (ii) if such a quorum of disinterested
Trustees so directs, by independent legal counsel in a written opinion; and any
determinations so made shall be conclusive.
(e) Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the Trust in advance of the final disposition of such
action, suit or proceeding, as authorized in the particular case, upon receipt
of an undertaking and security by or on behalf of the Trustee or officer to
repay such amount unless it shall ultimately be determined that such person is
entitled to be indemnified by the Trust as authorized herein.
(f) Agents and employees of the Trust who are not Trustees or officers of the
Trust may be indemnified under the same standards and procedures set forth
above, in the discretion of the Board.
(g) Any indemnification pursuant to this Article shall not be deemed exclusive
of any other rights to which those indemnified may be entitled and shall
continue as to a person who has ceased to be Trustee or officer and shall inure
to the benefit of the heirs, executors and administrators of such person.
(h) Nothing in the Declaration of Trust or in these By-Laws shall be deemed to
protect any Trustee, officer, distributor, investment adviser or controlling
shareholder of the Trust against any liability to the Trust or to its
shareholders to which such person would otherwise be subject by reason of
willful malfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such person's office.
(i) The Trust shall have power to purchase and maintain insurance on behalf of
any person against any liability asserted against or incurred by such person,
whether or not the Trust would have the power to indemnify such person against
such liability under the provisions of this Article. Nevertheless, insurance
will not be purchased or maintained by the Trust if the purchase or maintenance
of such insurance would result in the indemnification or any person in
contravention of any rule or regulation of the Securities and Exchange
Commission.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to Trustees, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a Trustee, officer of controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by
such Trustee, officer of controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
None.
ITEM 29. PRINCIPAL UNDERWRITERS.
Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
Accounts, books and other records required by Rules 31a-1 and 31a-2
under the Investment Company Act of 1940, as amended, are maintained and kept
in the offices of the Series and its investment adviser, Capital Research and
Management Company, 333 South Hope Street, Los Angeles, CA 90071. Certain
accounting records are maintained and kept in the offices of the Investment
Adviser's accounting department, 135 South State College Blvd., Brea, CA
92621.
Records covering portfolio transactions are also maintained and kept by the
custodian, State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02101.
ITEM 31. MANAGEMENT SERVICES.
None.
ITEM 32. UNDERTAKINGS.
None.
SIGNATURE OF REGISTRANT
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Los Angeles, and State of California, on the 28th day of April,
1995.
AMERICAN VARIABLE INSURANCE SERIES
By /s/ James F. Rothenberg
(James F. Rothenberg, President and Trustee)
Pursuant to the requirements of the Securities Act of 1933, this amendment to
Registration Statement has been signed below on April 28, 1995, by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C> <C>
(1) Principal Executive Officer:
/s/ James F. Rothenberg President
James F. Rothenberg
(2) Principal Financial Officer and
Principal Accounting Officer:
Steven N. Kearsley* Vice President and Treasurer
(3) Trustees:
Charles H. Black* Trustee
H. Frederick Christie* Trustee
Joe E. Davis* Trustee
Martin Fenton, Jr.* Trustee
Richard H. M. Holmes* Trustee
Mary Myers Kauppila* Trustee
/s/ James F. Rothenberg
James F. Rothenberg President and Trustee
Thomas E. Terry* Chairman of the Board
Leonard Weil* Trustee
</TABLE>
*By /s/ Chad L. Norton
Chad L. Norton (Attorney-in-Fact)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 19 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
December 30, 1994, relating to the financial statements and selected per share
data and ratios of American Variable Insurance Series, which appears in such
Statement of Additional Information, and to the incorporation by reference of
our report into the Prospectus which constitutes part of this Registration
Statement. We also consent to the references to us under the headings "General
Information-Independent Accountants" and "General Information-Reports to
Shareholders" in such Statement of Additional Information and to the reference
to us under the heading "Financial Highlights" in such Prospectus.
PRICE WATERHOUSE LLP
Los Angeles, California
April 27, 1995
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 26
<NAME> GROWTH-INCOME FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-START> DEC-1-1993
<PERIOD-END> NOV-30-1994
<INVESTMENTS-AT-COST> 2,648,997
<INVESTMENTS-AT-VALUE> 2,788,388
<RECEIVABLES> 11,557
<ASSETS-OTHER> 200
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,800,145
<PAYABLE-FOR-SECURITIES> 58,272
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,507
<TOTAL-LIABILITIES> 59,779
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,468,652
<SHARES-COMMON-STOCK> 108,327,575
<SHARES-COMMON-PRIOR> 93,631,767
<ACCUMULATED-NII-CURRENT> 21,198
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 111,125
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 139,391
<NET-ASSETS> 2,740,366
<DIVIDEND-INCOME> 64,111
<INTEREST-INCOME> 19,812
<OTHER-INCOME> 0
<EXPENSES-NET> 12,316
<NET-INVESTMENT-INCOME> 71,607
<REALIZED-GAINS-CURRENT> 112,012
<APPREC-INCREASE-CURRENT> (105,971)
<NET-CHANGE-FROM-OPS> 77,648
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 66,032
<DISTRIBUTIONS-OF-GAINS> 83,551
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 13,134,545
<NUMBER-OF-SHARES-REDEEMED> 4,320,323
<SHARES-REINVESTED> 5,881,586
<NET-CHANGE-IN-ASSETS> 304,642
<ACCUMULATED-NII-PRIOR> 15,623
<ACCUMULATED-GAINS-PRIOR> 82,664
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 11,517
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 12,316
<AVERAGE-NET-ASSETS> 2,636,453
<PER-SHARE-NAV-BEGIN> 26.01
<PER-SHARE-NII> .68
<PER-SHARE-GAIN-APPREC> .14
<PER-SHARE-DIVIDEND> .65
<PER-SHARE-DISTRIBUTIONS> .88
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 25.30
<EXPENSE-RATIO> .005
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 27
<NAME> GROWTH FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-START> DEC-1-1993
<PERIOD-END> NOV-30-1994
<INVESTMENTS-AT-COST> 1,709,744
<INVESTMENTS-AT-VALUE> 2,031,956
<RECEIVABLES> 19,185
<ASSETS-OTHER> 237
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,051,378
<PAYABLE-FOR-SECURITIES> 22,483
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,554
<TOTAL-LIABILITIES> 24,037
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,649,410
<SHARES-COMMON-STOCK> 63,475,904
<SHARES-COMMON-PRIOR> 53,721,506
<ACCUMULATED-NII-CURRENT> 4,555
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 51,164
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 322,212
<NET-ASSETS> 2,027,341
<DIVIDEND-INCOME> 13,525
<INTEREST-INCOME> 10,827
<OTHER-INCOME> 0
<EXPENSES-NET> 9,335
<NET-INVESTMENT-INCOME> 15,017
<REALIZED-GAINS-CURRENT> 52,610
<APPREC-INCREASE-CURRENT> (15,930)
<NET-CHANGE-FROM-OPS> 51,697
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 14,164
<DISTRIBUTIONS-OF-GAINS> 59,961
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 14,010,480
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</TABLE>
<TABLE> <S> <C>
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<SERIES>
<NUMBER> 28
<NAME> HIGH-YIELD BOND FUND
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<S> <C>
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<PERIOD-START> DEC-1-1993
<PERIOD-END> NOV-30-1994
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 29
<NAME> CASH MANAGEMENT FUND
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<S> <C>
<PERIOD-TYPE> YEAR
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<PERIOD-START> DEC-1-1993
<PERIOD-END> NOV-30-1994
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<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
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<EXPENSE-RATIO> .005
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 30
<NAME> U.S. GOVERNMENT/AAA-RATED SECURITIES FUND
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<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-START> DEC-1-1993
<PERIOD-END> NOV-30-1994
<INVESTMENTS-AT-COST> 485,833
<INVESTMENTS-AT-VALUE> 460,509
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<SHARES-COMMON-PRIOR> 41,580,944
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 70
<NAME> ASSET ALLOCATION FUND
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<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-START> DEC-1-1993
<PERIOD-END> NOV-30-1994
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<PER-SHARE-NII> .51
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 71
<NAME> INTERNATIONAL FUND
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<S> <C>
<PERIOD-TYPE> YEAR
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<PERIOD-START> DEC-1-1993
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<PER-SHARE-DIVIDEND> .20
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</TABLE>
