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. 22
and
Registration Statement
Under
The Investment Company Act of 1940
Amendment No. 22
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 29, 1996, it filed its 24f-2 notice for fiscal 1995.
Approximate date of proposed public offering:
It is proposed that this filing become effective on April 1, 1996, pursuant
to paragraph (b) 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
</TABLE>
<PAGE>
PROSPECTUS
AMERICAN VARIABLE INSURANCE SERIES (r)
April 1, 1996
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 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 April 1, 1996, 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.
IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUNDS. THE LIKELIHOOD
OF LOSS IS GREATER IF YOU INTEND TO INVEST FOR A SHORTER PERIOD OF
TIME. 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.
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 April 1, 1996
<PAGE>
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following condensed financial information for 1991 through 1995 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>
<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
1995 31.94 .33 10.63 10.96 (.29) (.80) (1.09) 41.81 35.35 3,154
- --------------------------------------------------------------------------------------------------------------------------------
International Fund/3/
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
1995 13.27 .34 1.02 1.36 (.33) (.41) (.74) 13.89 10.78 1,703
- --------------------------------------------------------------------------------------------------------------------------------
Growth-Income Fund
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
1995 25.30 .73 7.20 7.93 (.73) (1.03) (1.76) 31.47 33.14 3,953
- --------------------------------------------------------------------------------------------------------------------------------
Asset Allocation Fund/5/
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
1995 11.25 .50 2.69 3.19 (.50) (.17) (.67) 13.77 29.45 870
- --------------------------------------------------------------------------------------------------------------------------------
High-Yield Bond Fund
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
1995 12.89 1.32 1.10 2.42 (1.32) -- (1.32) 13.99 19.81 534
- --------------------------------------------------------------------------------------------------------------------------------
U.S. Government/AAA-Rated Securities Fund/6/
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
1995 10.80 .82 .71 1.53 (.81) -- (.81) 11.52 14.73 542
- --------------------------------------------------------------------------------------------------------------------------------
Cash Management Fund
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
1995 11.09 .63 (.02) .61 (.59) -- (.59) 11.11 5.65 193
<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
1995 .47 .92 35.47
- ------------------------------------------
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
1995 .75 2.64 24.66
- ------------------------------------------
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
1995 .44 2.70 26.91
- ------------------------------------------
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
1995 .52 4.11 39.89
- ------------------------------------------
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
1995 .54 10.12 31.73
- ------------------------------------------
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
1995 .54 7.37 30.11
- ------------------------------------------
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 --
1995 .49 5.37 --
</TABLE>
- ------
1. Percentages are exclusive of the redemption in kind which occurredMarch 29,
1988.
4. Annualized
5. Commenced operations August 1,
2. Amount includes net realized 1989.
short-term gains treated as net 6. Commenced operations December 1,
investment income for federal 1985.
income tax purposes. No information is given for the Bond
3. Commenced operations May 1, 1990. Fund because it had not yet commenced
operations at November 30, 1995.
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 Fund, the U.S.
The Series consists Government/AAA-Rated Securities Fund and the Cash
of Management Fund. The Board of Trustees may estab-
eight funds, each lish additional funds in the future. The invest-
with ment objective(s) and policies of each fund are
its own investment discussed below. Investment policy limits as
objective(s) and stated below are measured at the time of pur-
policies. chase.
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 Growth Fund is growth of capital. Whatever cur-
to provide you with rent income is generated by the fund is likely to
growth of 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 and 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, 1995, the last day of the fund's fiscal
year, the portfolio did not contain any bonds.
3
<PAGE>
- --------------------------------------------------------------------------------
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
ofcapital by States. The fund's investment approach is based
investingin on the belief that economic and political devel-
securities opments have helped to create new opportunities
ofissuers outside the U.S.
domiciledoutside
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
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 may 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-
capital growth and vestment, the possibilities of appreciation and
income. 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 and 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.
4
<PAGE>
- --------------------------------------------------------------------------------
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
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 "Cer-
tain Securities and Investment Techniques--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
based on the higher of the Moody's or S&P rating
categories were: Aaa/AAA --13.45%; Aa/AA --
0.15%; A/A -- 2.43%; Baa/BBB -- 5.09%; Ba/BB --
0.76%; B/B -- 1.80%; and Caa/CCC -- 0.18%. Non-
rated investments (including equity-type securi-
ties) and cash or cash equivalents amounted to
69.03% and 7.11%, respectively, of the fund's as-
sets.
5
<PAGE>
- --------------------------------------------------------------------------------
The High-Yield Bond HIGH-YIELD BOND FUND The primary investment ob-
Fund seeks to jective of the High-Yield Bond Fund is high cur-
provide you with rent income and its secondary investment objec-
high current income tive is capital appreciation. Under normal market
and, secondarily, conditions the fund will be invested in fixed-in-
capital come securities, with emphasis on higher yield-
appreciation. ing, higher risk, lower rated or unrated corpo-
rate bonds. These "high-yield, high-risk bonds"
typically are subject to greater market fluctua-
tions 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. and BB
or below by Standard & Poor's Corporation or
unrated but determined to be of equivalent qual-
ity by Capital Research and Management Company.
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).
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). See the Appendix
for a further description of the various bond
ratings. During the previous fiscal year, the ap-
proximate monthly average percentages of the
High-Yield Bond Fund's net assets based on the
higher of the Moody's or S&P rating categories
were: Aaa/AAA -- 7.27%; Baa/BBB -- 0.72%;
Ba/BB -- 26.16%; B/B --52.80%; and Caa/CCC --
5.30%. Non-rated investments (including equity-
type securities) and cash or cash equivalents
amounted to 1.77% and 5.98%, 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 "Certain Securities and Invest-
ment Techniques--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 interest or principal, the 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 the fund's net asset value.
6
<PAGE>
- --------------------------------------------------------------------------------
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 Fund seeks BOND FUND The investment objective of the Bond
to provide you with Fund is to provide as high a level of current in-
high current income come as is consistent with the preservation of
while preserving capital. The fund invests in a broad variety of
yourcapital. fixed-income securities, including marketable
corporate debt securities, loan participations,
U.S. Government securities, mortgage-related se-
curities, other asset-backed securities and cash
or money market instruments. Normally, at least
65% of the fund's assets will be invested in
bonds. (For this purpose, bonds are considered
any debt securities having initial maturities in
excess of one year.) In addition, the fund may
invest up to 20% in preferred stocks.
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 equiva-
lent quality.
Up to 35% of the assets of the fund may be in-
vested in debt securities rated Ba and BB or be-
low, or in unrated securities that are determined
to be of equivalent quality. These securities may
be rated as low as Ca by Moody's or CC by S&P.
Securities rated Ba and BB or below or unrated
securities that are determined to be of equiva-
lent quality (commonly known as "junk" or "high-
yield, high-risk" bonds) are subject to special
review before purchase. These bonds
7
<PAGE>
- --------------------------------------------------------------------------------
are considered speculative and typically are sub-
ject to greater market fluctuations and risk of
loss of income and principal due to default by
the issuer than are investments in lower yield-
ing, higher-rated bonds. See "High-Yield Bond
Fund--Risks of Investing in High-Yield, High-Risk
Securities" above and the statement of additional
information.
The fund may invest in fixed-income securities of
corporations or governmental entities outside the
U.S.; however, no more than 20% of the fund's as-
sets will be invested in non-U.S. dollar denomi-
nated securities. The fund may purchase or sell
various currencies on either a spot or forward
basis in connection with non-U.S. dollar invest-
ments. See "Certain Securities and Investment
Techniques--Currency Transactions" below.
The fund may invest up to 20% of its assets in
issuers domiciled in, or governments of, develop-
ing countries. See "Certain Securities and In-
vestment Techniques--Investing Around the World"
and the statement of additional 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 institutions such as commercial banks, sav-
ings and loan associations, mortgage bankers and
securities broker-dealers which represent a di-
rect or indirect interest in a pool of mortgages.
See "Certain Securities and Investment Tech-
niques" below. See also the statement of addi-
tional information. 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 Management Company). However, if the rating
of a security currently being held by the fund is
reduced below AAA or Aaa the fund is not required
to dispose of the security.
8
<PAGE>
- --------------------------------------------------------------------------------
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,
1995 was 5.28% 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 Fund,
in a wide variety and the U.S. Government/AAA-Rated Securities Fund
of securities which may result in higher portfolio turnover than
are subject to those of the other funds, although no fund's an-
varying degrees of nual portfolio turnover rate is expected to ex-
risk. ceed 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 maturity) were re-
placed in a period of one year. High portfolio
turnover involves correspondingly greater broker-
age commissions, to the extent such commissions
are payable, and other transaction costs, which
will be borne directly by the fund involved.
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
9
<PAGE>
- --------------------------------------------------------------------------------
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 financial 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 maturities 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.
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
10
<PAGE>
- --------------------------------------------------------------------------------
(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 agree- ments, 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. If the
seller under 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 con-
nection with liquidating the collateral. If bank-
ruptcy 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 Fund and the U.S. Government/AAA-
Rated Securities Fund also may enter 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 se-
curities 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.
PRIVATE PLACEMENTS The Growth Fund, the
International Fund, the Growth-Income Fund, the
Asset Allocation Fund, and the High-Yield Bond
Fund may invest in private placements. Private
placements may either be purchased from another
institutional investor that originally acquired
the securities in a private placement or directly
from the issuers of the securities. Generally,
securities acquired in private placements are
subject to contractual restrictions on resale and
may not be resold except pursuant to a registra-
tion statement under the Securities Act of 1933
or in reliance upon an exemption from the regis-
tration requirements under the Act (for example,
private placements sold pursuant to Rule 144A).
Accordingly, any such obligations will be deemed
illiquid unless it has been specifically deter-
mined to be liquid under procedures adopted by
the Series' board.
In determining whether these securities are
liquid, factors such as frequency and volume of
trading and the commitment of dealers to make
markets will be considered. Additionally, the li-
quidity of any particular security will depend on
such factors as the availability of "qualified"
institutional investors and the extent of in-
vestor interest in the security, which can change
from time to time.
11
<PAGE>
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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 Fund may invest in the securities of
issuers domiciled outside the U.S. Of course, in-
vesting outside the U.S. involves special risks,
particularly in developing countries, caused by,
among other things: fluctuating currency values;
less stringent accounting, auditing, and finan-
cial reporting regulations and practices in some
countries; changing local and regional economic,
political, and social conditions; differing secu-
rities market structures; and various administra-
tive difficulties such as delays in clearing and
settling portfolio transactions or in receiving
payment of dividends. However, in the opinion of
Capital Research and Management Company, global
investing also can reduce certain portfolio risks
due to greater diversification opportunities.
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
transactions. Furthermore, increased custodian
costs may be associated with the maintenance of
assets in certain jurisdictions.
In addition, the U.S. Government/AAA-Rated Secu-
rities Fund also may invest in the securities of
issuers domiciled outside the U.S.; however,
these securities must be dollar denominated and
highly liquid. Accordingly, while the risks men-
tioned above are still present, they are present
to a lesser extent.
CURRENCY TRANSACTIONS The Growth Fund, the
International Fund, the High-Yield Bond Fund and
the Bond Fund have the ability to purchase and
sell currencies to facilitate securities
transactions and to enter into forward currency
contracts to hedge against changes in currency
exchange rates. While entering into forward
transactions could minimize the risk of loss due
to a decline in the value of the hedged currency,
it could also limit any potential gain which
might result from an increase in the value of the
currency. The Growth Fund has no current
intention of entering into forward currency
contracts.
For additional information, see "Currency Trans-
actions" in the statement of additional informa-
tion.
MATURITY The maturity composition of the fixed-
income securities of the High-Yield Bond Fund and
the Bond Fund will be adjusted in response to
market conditions and expectations. There are no
restrictions on the maturity composition of the
portfolios, although it is anticipated that the
funds normally will be invested substantially in
intermediate-term (3 to 10 years to maturity) and
long-term (over 10 years to maturity) securities.
12
<PAGE>
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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 their segment will be invested (within the
limits provided by each fund's objective(s) and
policies 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>
YEARS OF EXPERIENCE AS
PORTFOLIO COUNSELOR (AND RESEARCH PROFESSIONAL,
PORTFOLIO IF APPLICABLE) FOR THE FUNDS
COUNSELORS INDICATED
FOR THE SERIES PRIMARY TITLE(S) (APPROXIMATE)
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
YEARS OF EXPERIENCE AS
INVESTMENT PROFESSIONAL
(APPROXIMATE)
WITH CAPITAL
RESEARCH AND
PORTFOLIO MANAGEMENT
COUNSELORS COMPANY OR ITS TOTAL
FOR THE SERIES AFFILIATES YEARS
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
James F. Rothenberg President and Trustee of the Series. Asset Allocation Fund--2 years;
President and Director, Capital Growth Fund--4 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 Fund--since the fund began
Company operations in 1996;
U.S. Government Fund--since the fund
began operations in 1985
- -------------------------------------------------------------------------------------------------------------
Claudia P. Huntington Vice President of the Series. Growth Fund--2 years (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--2 years (plus 5 years
as a research professional prior to becoming
a portfolio counselor for the fund);
Asset Allocation Fund--1 year
- -------------------------------------------------------------------------------------------------------------
Dina N. Perry Vice President of the Series. Asset Allocation Fund--2 years;
Vice President, Capital Research and Growth-Income Fund--4 years
Management Company
- -------------------------------------------------------------------------------------------------------------
John H. Smet Vice President of the Series. Bond Fund--since the fund began
Vice President, Capital Research and operations in 1996;
Management Company U.S. Government Fund--4 years
- -------------------------------------------------------------------------------------------------------------
David C. Barclay Executive Vice President, Capital High-Yield Bond Fund--3 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--3 years
Research Company*
- -------------------------------------------------------------------------------------------------------------
Gordon Crawford Senior Vice President and Director, Growth Fund--2 years (plus 5 years as a
Capital Research and Management research professional prior to becoming a
Company portfolio counselor for the fund)
- -------------------------------------------------------------------------------------------------------------
James E. Drasdo Senior Vice President and Director, Growth Fund--9 years;
Capital Research and Management Growth-Income Fund--2 years
Company
- -------------------------------------------------------------------------------------------------------------
Robert W. Lovelace Executive Vice President, Capital International Fund--2 years
Research Company*
- -------------------------------------------------------------------------------------------------------------
Robert G. O'Donnell Senior Vice President and Director, Growth-Income Fund--6 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--5 years (plus 4 years as a
Management Company research professional prior to becoming a
portfolio counselor for the fund)
- -------------------------------------------------------------------------------------------------------------
Victor M. Parachini Senior Vice President, Capital Asset Allocation Fund--less than 1 year
Research and Management Company
- -------------------------------------------------------------------------------------------------------------
Richard T. Schotte Senior Vice President, Capital High-Yield Bond Fund--9 years;
Research and Management Company Bond Fund--since the fund began
operations in 1996
- -------------------------------------------------------------------------------------------------------------
Susan M. Tolson Vice President, Capital Research High-Yield Bond Fund--1 year
Company* (plus 2 years as a research professional prior
to becoming a portfolio counselor for the fund)
<S> <C> <C> <C>
James F. Rothenberg 26 26
- -------------------------------------------------------------------------------------------------------------
James K. Dunton 34 34
- -------------------------------------------------------------------------------------------------------------
Abner D. Goldstine 29 44
- -------------------------------------------------------------------------------------------------------------
Claudia P. Huntington 18 20
- -------------------------------------------------------------------------------------------------------------
Dina N. Perry 4 29
- -------------------------------------------------------------------------------------------------------------
John H. Smet 13 14
- -------------------------------------------------------------------------------------------------------------
David C. Barclay 8 15
- -------------------------------------------------------------------------------------------------------------
Stephen E. Bepler 23 30
- -------------------------------------------------------------------------------------------------------------
Martial Chaillet 24 24
- -------------------------------------------------------------------------------------------------------------
Gordon Crawford 25 25
- -------------------------------------------------------------------------------------------------------------
James E. Drasdo 19 24
- -------------------------------------------------------------------------------------------------------------
Robert W. Lovelace 11 11
- -------------------------------------------------------------------------------------------------------------
Robert G. O'Donnell 21 24
- -------------------------------------------------------------------------------------------------------------
Donald D. O'Neal 11 11
- -------------------------------------------------------------------------------------------------------------
Victor M. Parachini 19 29
- -------------------------------------------------------------------------------------------------------------
Richard T. Schotte 18 29
- -------------------------------------------------------------------------------------------------------------
Susan M. Tolson 6 8
- -------------------------------------------------------------------------------------------------------------
</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
distributes to Each fund of the Series is subject to asset di-
shareholders all versification regulation prescribed by the U.S.
its income and Treasury Department under the Internal Revenue
capital gains Code (the "Code"). These regulations generally
realized during provide that, as of the end of each calendar
each fiscal year. quarter or within 30 days thereafter, no more
than 55% of the total assets of the 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 secu-
rities of the same issuer are considered a single
investment. Furthermore, each U.S. Government
agency or instrumentality is treated as a sepa-
rate issuer. There are also alternative diversi-
fication tests which may be satisfied by the
funds under the regulations. The Series intends
to comply with the diversification regulations.
If a fund should fail to comply with these regu-
lations, Contracts invested in that fund shall
not be treated as annuity, endowment or life in-
surance 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 supervises Series operations and per-
forms duties required by applicable state and
federal law. Members of the board who are not em-
ployed by Capital Research and Management Company
or its affiliates are paid for services rendered
to the Series as described in the statement of
additional information. They may elect to defer
all or a portion of these fees through a deferred
compensation plan in effect for the Series. The
Board of Trustees has approved the retention 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% greater than
$600 million but not exceeding $1.2 billion, plus
0.48% greater than $1.2 billion but not exceeding
$2.0 billion, plus 0.465% in excess of $2.0 bil-
lion;
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 Fund: 0.60% of the first $30 million, 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 following:
Growth Fund -- .44%; International Fund -- .65%;
Growth-Income Fund -- .41%; Asset Allocation
Fund -- .49%; 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.) This policy
has been incorporated into the Series' "code of
ethics" which is available from the Series' Sec-
retary upon request.
PORTFOLIO TRANSACTIONS Order for the Series'
portfolio securities transac- tions 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 under-
writer, generally referred to as the underwrit-
er's concession or discount. On occasion, securi-
ties may be purchased directly from an issuer, in
which case no commissions or discounts are paid.
15
<PAGE>
- --------------------------------------------------------------------------------
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 provided
investment research, statistical and other re-
lated services for the benefit of the Series
and/or of other funds served by Capital Research
and Management Company.
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."
This prospectus has been printed on recycled
[LOGO RECYCLED] paper that meets the guidelines of the United
States Environmental Protection Agency
17
AMERICAN VARIABLE INSURANCE SERIES
PART B
STATEMENT OF ADDITIONAL INFORMATION
APRIL 1, 1996
This document is not a prospectus but should be read in conjunction
with the current prospectus of American Variable Insurance Series (the
"Series") dated April 1, 1996. 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 8
SERIES OFFICERS AND TRUSTEES 13
TRUSTEE COMPENSATION 13
MANAGEMENT 17
PRICE OF SHARES 18
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES 19
EXECUTION OF PORTFOLIO TRANSACTIONS 20
GENERAL INFORMATION 20
APPENDIX 23
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 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 FUND
CURRENCY TRANSACTIONS -- The Growth Fund, the International Fund, the
High-Yield Bond Fund and the Bond Fund have the ability to purchase and sell
currencies to facilitate securities transactions and to enter into forward
currency contracts to hedge against changes in currency exchange rates. The
funds purchase or sell currencies in connection with settling transactions
involving securities denominated in currencies other than the U.S. dollar. A
forward currency contract is an obligation to purchase or sell a specific
currency at a future date and price, both of which are set at the time of the
contract. For example, the funds might sell a currency on a forward basis to
hedge against an anticipated decline in the currency in which a portfolio
security is denominated. Although this strategy could minimize the risk of
loss due to a decline in the value of the hedged currency, it could also limit
any potential gain which might result from an increase in the value of the
currency.
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.
The High-Yield Bond Fund and the Bond 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 the Bond 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 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 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 FUND AND U.S. GOVERNMENT/AAA-RATED SECURITIES FUND
REVERSE REPURCHASE AGREEMENTS -- Although the Bond 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 FUND AND U.S.
GOVERNMENT/AAA-RATED SECURITIES FUND
LOANS OF PORTFOLIO SECURITIES -- Although the Asset Allocation Fund, the
High-Yield Bond Fund, the Bond Fund and the 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, the High-Yield
Bond Fund, the Bond Fund and the 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. The funds intend to
treat "roll" transactions as two separate transactions; one involving the
purchase of a security and a separate transaction involving the sale of a
security. Since the funds do not intend to enter into "roll" transactions for
for financing purposes, they may treat these transaction as not falling within
the definition of "borrowing" set forth in Section 2(a)(23) of the 1940 Act.
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 FUND
LOAN PARTICIPATIONS The High-Yield Bond Fund and the Bond Fund may each invest
up to 10% of their assets in loan participations. These participations, which
can also include loan assignments, typically involve loans made by a syndicate
of banks to U.S. and non-U.S. corporate or governmental borrowers for a variety
of purposes which 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 FUND
The Growth Fund, International Fund, Growth-Income Fund, Asset Allocation
Fund, High-Yield Bond Fund and Bond 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 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 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 TRUSTEES AND OFFICERS
TRUSTEES AND TRUSTEE COMPENSATION
<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
(POSITIONS WITHIN THE ORGANIZATIONS LISTED MAY HAVE CHANGED DURING THIS PERIOD)
VOLUNTARILY DEFERRED MANAGED BY CAPITAL FUND BOARDS
COMPENSATION/1/) FROM RESEARCH AND ON WHICH
SERIES DURING FISCAL MANAGEMENT TRUSTEE
YEAR ENDED 11/30/95 COMPANY/2/ SERVES/2/
<S> <C> <C> <C> <C> <C>
Charles H. Black Trustee Private investor and consultant; $23,050 $101,700 4
525 Alma Real Drive Former Executive Vice President
Pacific Palisades, CA 90272 and Director, Kaiser Steel
Age: 70 Corporation
+ H. Frederick Christie Trustee Private Investor; Former President $22,258/3/ $140,200 18
P. O. Box 144 and Chief Executive Officer, The
Palos Verdes, CA 90274 Mission Group (non-utility holding
Age: 62 Company, subsidiary of Southern
California Edison Company)
Joe E. Davis Trustee Private Investor; Former Chairman, $22,600 $22,600 1
3436 Caribeth Drive Linear Corporation; former
Encino, CA 91436 President and Chief Executive
Age: 61 Officer, National Health
Enterprises, Inc.
Martin Fenton, Jr. Trustee Chairman, Senior Resource Group $17,250 $103,650 16
4350 Executive Drive (management of senior living
Suite 101 centers)
San Diego, CA 92123
Age: 60
++ Richard H. M. Holmes Trustee Retired. Former Vice President, $20,050 $55,450 4
580 Laurent Road Capital Research and Management
Hillsborough, CA 94010 Company
Age: 70
Mary Myers Kauppila Trustee Founder and President, Energy $20,650/3/ $78,150 4
286 Congress Street Investment, Inc.
Boston, MA 02110
Age: 41
@ James F. Rothenberg President and President and Director, Capital none/4/ none/4/ 1
333 South Hope Street Trustee Research and Management
Los Angeles, CA 90071 Company
Age: 49
@ Thomas E. Terry Chairman of Retired. Former Vice President and none/4/ none/4/ 3
6034 S. Highlands Avenue the Board Secretary, Capital Research and
Madison, WI 53705 Management Company
Age: 58
</TABLE>
+ May be deemed an "interested person" within the meaning of the Investment
Company Act of 1940 (the "1940 Act") 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 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 "interested persons" within the meaning of the 1940 Act
on the basis of their affiliation with the Investment Adviser.
/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: H. Frederick Christie ($15,043); and Mary Myers Kauppila ($43,706).
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. 11100 Santa Monica Boulevard, Los
Angeles, CA 90025. 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. 135 South State College Boulevard,
Brea, CA 92621.
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.
ROBERT P. SIMMER, TREASURER. 5300 Robin Hood Road, Norfolk, VA 23513.
Vice President - Fund Business Management Group, Capital Research and
Management Company.
__________________________________
# Positions within the organizations listed may have changed during this
period.
* Address is 333 South Hope Street, Los Angeles, CA 90071.
All of the officers listed above also are officers and/or
directors/trustees of one or more of the other funds served by the Investment
Adviser or its affiliated companies. Each unaffiliated Trustee is paid a fee
of $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. 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 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 more than $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, 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, 1995, 1994 and 1993, the
Investment Adviser's total fees, respectively, amounted to the following:
Growth Fund $11,222,000, $8,735,000 and $7,048,000; International Fund
$9,882,000, $8,330,000 and $4,318,000; Growth-Income Fund $13,593,000,
$11,517,000 and $9,526,000; Asset Allocation Fund $3,620,000, $3,129,000 and
$2,390,000; High-Yield Bond Fund $2,350,000, $2,022,000 and $1,454,000; U. S.
Government/AAA-Rated Securities Fund $2,550,000, $2,459,000 and $2,238,000;
and Cash Management Fund $907,000, $905,000 and $750,000.
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
or the over-the-counter market are valued at the last reported sale price on
the day of valuation, or, lacking any sales on that day, at the last-reported
bid price.
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 on
the day of valuation; however, in circumstances where the Investment Adviser
deems it appropriate to do so, such securities will be valued 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. Securities traded on exchanges outside the U.S. are valued
at the last sale price on the day of valuation, or lacking any sales on that
day, 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 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 to maturity are valued at
amortized cost, which approximates market value. Options on currencies
purchased by the fund are valued at their last sale 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, lacking any sales, at the mean between the last reported bid
and asked prices. Other securities are valued on the basis of last sale or bid
prices 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 net realized capital gains 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 of gain or loss from deemed and actual
sales 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, 1995, 1994
and 1993, respectively, amounted to the following: Growth Fund $2,930,000,
$2,230,000, and $1,927,000; International Fund $1,889,000, $2,251,000, and
$1,078,000; Growth-Income Fund $2,452,000, $2,590,000, and $2,218,000; Asset
Allocation Fund $849,000, $628,000, and $586,000; High-Yield Bond Fund
$1,456,000, $2,760,000, and $2,123,000. Brokerage commissions were paid by the
U.S. Government/AAA-Rated Securities Fund during 1995 only and amounted to
$73,190. Because all portfolio transactions for the Cash Management Fund were
on a "net price" basis and involved short-term money market instruments 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,
independent accountants, 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.'s 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".
<PAGE>
American Variable Insurance Series
GROWTH-INCOME FUND
Investment Portfolio - November 30, 1995
Equity-Type Securities 83.30%
Cash & Equivalents 16.70%
Percent
of Net
LARGEST INDIVIDUAL EQUITY HOLDINGS Assets
AT&T 2.17%
Merck & Co. 1.38
Philip Morris Companies 1.35
Aluminum Co. of America 1.33
Boeing 1.32
WMX Technologies 1.29
Minnesota Mining and Manufacturing 1.26
Potash Corp. of Saskatchewan 1.19
Schering-Plough 1.16
Phillips Petroleum 1.03
<TABLE>
<CAPTION>
Number Market Percent
of Value of Net
Stocks (common and preferred) Shares (000) Assets
<S> <C> <C> <C>
HEALTH & PERSONAL CARE - 7.79%
Merck & Co., Inc. 880,000 $54,450 1.38%
Schering-Plough Corp. 800,000 45,900 1.16
Pfizer Inc 570,000 33,060 .84
American Home Products Corp. 330,000 30,112 .76
Bristol-Myers Squibb Co. 295,000 23,674 .60
Warner-Lambert Co. 260,000 23,205 .59
Eli Lilly and Co. 220,000 21,890 .55
Abbott Laboratories 500,000 20,312 .51
Pharmacia & Upjohn Inc. (formerly Upjohn Co.) 384,250 13,785 .35
Johnson & Johnson 150,000 12,994 .33
Kimberly-Clark Corp. 155,800 11,977 .30
Tambrands Inc. 150,000 7,819 .20
McKesson Corp. 125,000 6,422 .16
Bausch & Lomb Inc. 67,400 2,435 .06
BANKING - 6.64%
Banc One Corp. 666,250 25,401 .64
First Fidelity Bancorporation 300,000 22,012 .56
First Interstate Bancorp 150,000 20,100 .51
BankAmerica Corp. 310,000 19,724 .50
PNC Bank Corp. 636,000 18,603 .47
Boatmen's Bancshares, Inc. 400,000 15,500 .39
SunTrust Banks, Inc. 225,000 15,356 .39
Chase Manhattan Corp. 240,000 14,610 .37
Fleet Financial Group, Inc. 300,000 12,525 .32
First Union Corp. 225,000 12,291 .31
Comerica Inc. 296,000 11,063 .28
KeyCorp 300,000 11,063 .28
Northern Trust Corp. 200,000 10,450 .26
Norwest Corp. 300,000 9,900 .25
Bankers Trust New York Corp. 150,000 9,731 .25
CoreStates Financial Corp 250,000 9,687 .24
Bank of New York Co., Inc. 200,000 9,425 .24
J.P. Morgan & Co. Inc. 100,000 7,850 .20
Citicorp 100,000 7,075 .18
BROADCASTING & PUBLISHING - 5.83%
Capital Cities/ABC, Inc. 320,000 39,560 1.00
Tele-Communications, Inc., Series A, TCI Group/1/ 1,575,000 29,137 .74
E.W. Scripps Co., Class A 630,000 25,594 .65
News Corp. Ltd. (American Depositary Receipts)
(Australia) 800,000 16,800
News Corp. Ltd., preferred shares
(American Depositary Receipts) 400,000 7,550 .61
Time Warner Inc. 592,000 23,680 .60
Viacom Inc./1/ 335,000 16,164 .41
Gannett Co., Inc. 260,000 15,860 .40
Times Mirror Co., Series A 224,220 7,287
Times Mirror Co., preferred equity redemption
cumulative stock, Series B 155,641 4,008 .28
Tele-Communications, Inc., Series A, Liberty
Media Group/1/ 393,750 11,025 .28
U S WEST Media Group/1/ 588,200 10,587 .27
New York Times Co., Class A 344,300 10,157 .26
Tribune Co. 140,000 9,030 .23
Cox Communications, Inc., Class A/1/ 196,892 3,938 .10
TELECOMMUNICATIONS- 5.61%
AT&T Corp. 1,300,000 85,800 2.17
Telefonos de Mexico, SA de CV, Class L
(American Depositary Receipts)(Mexico) 788,800 26,030 .66
MCI Communications Corp. 859,800 23,000 .58
Sprint Corp. 565,000 22,600 .57
U S WEST Communications, Inc. 588,200 18,381 .47
AirTouch Communications/1/ 449,621 13,095 .33
Ameritech Corp. 175,000 9,625 .24
Pacific Telesis Group 300,000 9,000 .23
ALLTEL Corp. 300,000 8,850 .22
SBC Communications Inc. 100,000 5,400 .14
(formerly Southwestern Bell Corp.)
ENERGY SOURCES - 5.15%
Phillips Petroleum Co. 1,225,000 40,731 1.03
Amoco Corp. 355,000 24,051 .61
Exxon Corp. 305,000 23,600 .60
Valero Energy Corp. 785,000 20,312 .51
Royal Dutch Petroleum Co. (New York Registered
Shares) (Netherlands) 145,000 18,614 .47
Unocal Corp. 650,000 17,469 .44
Texaco Inc. 235,000 17,390 .44
Tosco Corp. 290,000 11,056 .28
Atlantic Richfield Co. 100,000 10,838 .28
Chevron Corp. 200,000 9,875 .25
Murphy Oil Corp. 163,200 6,426 .16
TOTAL, Class B (American Depositary Receipts) 102,454 3,163 .08
(France)
BUSINESS & PUBLIC SERVICES - 4.32%
WMX Technologies, Inc. 1,730,000 51,035 1.29
Dun & Bradstreet Corp. 580,000 36,177 .92
General Motors Corp., Class E 549,500 27,750 .70
Browning-Ferris Industries, Inc. 500,000 15,062 .38
Federal Express Corp./1/ 190,000 14,203 .36
Omnicom Group Inc. 170,000 11,348 .29
Pitney Bowes Inc. 175,000 7,831 .20
Ecolab Inc. 250,000 7,188 .18
CHEMICALS - 3.59%
Monsanto Co. 223,400 25,579 .65
Praxair, Inc. 850,000 24,756 .63
Eastman Chemical Co. 325,000 21,328 .54
E.I. du Pont de Nemours and Co. 275,000 18,287 .46
Dow Chemical Co. 230,000 16,301 .41
Imperial Chemical Industries PLC (American
Depositary Receipts) (United Kingdom) 200,000 9,350 .24
Great Lakes Chemical Corp. 100,000 7,113 .18
Engelhard Corp. 284,400 6,648 .17
PPG Industries, Inc. 140,000 6,353 .16
Betz Laboratories, Inc. 150,000 6,038 .15
MULTI-INDUSTRY - 3.57%
Minnesota Mining and Manufacturing Co. 760,000 49,780 1.26
Harsco Corp. 515,000 30,385 .77
Tenneco Inc. 555,000 26,640 .67
Textron Inc. 240,000 18,390 .47
AlliedSignal Inc. 200,000 9,450 .24
Hanson PLC (American Depositary Receipts)
(United Kingdom) 420,000 6,405 .16
INSURANCE - 3.42%
SAFECO Corp. 525,000 37,275 .94
Allstate Corp. 889,055 36,451 .92
CIGNA Corp. 120,000 13,200 .34
Liberty Corp. 350,000 11,594 .29
St. Paul Companies, Inc. 120,000 6,720 .17
Arthur J. Gallagher & Co. 195,600 6,406 .16
General Re Corp. 40,000 5,985 .15
AMBAC Inc. 129,900 5,732 .15
American General Corp. 120,000 4,065 .10
TIG Holdings, Inc. 150,000 4,050 .10
American International Group, Inc. 41,250 3,702 .10
BEVERAGES & TOBACCO - 3.20%
Philip Morris Companies Inc. 610,000 53,527 1.35
Seagram Co. Ltd. (Canada) 1,050,000 38,325 .97
PepsiCo, Inc. 435,000 24,034 .61
American Brands, Inc. 250,000 10,437 .27
FOREST PRODUCTS & PAPER - 3.19%
Union Camp Corp. 750,000 36,844 .93
ITT Rayonier Inc. 525,000 20,081 .51
International Paper Co. 350,000 13,344 .34
Federal Paper Board Co., Inc. 250,000 13,000 .33
Georgia-Pacific Corp. 150,000 11,662 .29
Weyerhaeuser Co. 250,000 11,313 .28
James River Corp. of Virginia 300,000 9,450 .24
Louisiana-Pacific Corp. 200,000 5,400 .14
Westvaco Corp. 187,500 5,133 .13
AEROSPACE & MILITARY TECHNOLOGY - 3.12%
Boeing Co. 715,000 52,106 1.32
Litton Industries, Inc./1/ 461,200 20,696 .52
General Motors Corp., Class H 370,000 17,575 .45
Sundstrand Corp. 250,000 16,187 .41
United Technologies Corp 160,000 15,000 .38
Coltec Industries Inc./1/ 160,000 1,760 .04
MERCHANDISING - 2.64%
Wal-Mart Stores, Inc. 1,404,000 33,696 .85
Giant Food Inc., Class A 450,000 14,513 .37
Walgreen Co. 480,000 13,980 .35
May Department Stores Co. 300,000 13,088 .33
Sears, Roebuck and Co. 300,000 11,812 .30
J.C. Penney Co., Inc. 200,000 9,375 .24
Gap, Inc. 100,000 4,525 .11
Melville Corp. 112,400 3,498 .09
DATA PROCESSING & REPRODUCTION - 2.14%
International Business Machines Corp. 375,000 36,234 .91
Xerox Corp. 250,000 34,281 .87
Apple Computer, Inc. 280,500 10,694 .27
Novell, Inc./1/ 212,000 3,578 .09
TRANSPORTATION: RAIL & ROAD - 2.03%
Conrail, Inc. 460,000 32,142 .81
Union Pacific Corp. 425,000 28,794 .73
Norfolk Southern Corp. 245,000 19,294 .49
INDUSTRIAL COMPONENTS - 1.96%
Johnson Controls, Inc. 310,900 21,530 .54
Goodyear Tire & Rubber Co. 500,000 21,187 .54
Dana Corp. 581,800 17,018 .43
Rockwell International Corp. 250,000 12,250 .31
TRW Inc. 75,000 5,616 .14
METALS: NONFERROUS - 1.96%
Aluminum Co. of America 900,000 52,650 1.33
Inco Ltd. (Canada) 530,000 18,881 .48
Phelps Dodge Corp. 50,000 3,394 .08
Alumax Inc./1/ 80,000 2,660 .07
FOOD & HOUSEHOLD PRODUCTS - 1.96%
CPC International Inc. 400,000 27,500 .70
ConAgra, Inc. 360,000 14,355 .36
Archer Daniels Midland Co. 700,000 12,075 .31
H.J. Heinz Co. 375,000 11,953 .30
General Mills, Inc. 210,200 11,587 .29
MACHINERY & ENGINEERING - 1.74%
Caterpillar Inc. 300,000 18,413 .46
Deere & Co. 516,600 16,983 .43
Ingersoll-Rand Co. 350,000 13,431 .34
Parker Hannifin Corp. 300,000 11,025 .28
Crompton & Knowles Corp. 700,000 9,100 .23
UTILITIES: ELECTRIC & GAS - 1.59%
Union Electric Co. 450,000 18,057 .46
Pacific Gas and Electric Co. 500,000 13,750 .35
Consolidated Edison Co. of New York, Inc. 350,000 10,106 .25
Entergy Corp. 350,000 9,756 .25
Detroit Edison Co. 200,000 6,525 .16
General Public Utilities Corp. 120,000 3,795 .09
Long Island Lighting Co. 62,200 1,065 .03
MISCELLANEOUS MATERIALS & COMMODITIES - 1.45%
Potash Corp. of Saskatchewan Inc. (Canada) 680,000 47,005 1.19
Cleveland-Cliffs Inc 180,000 7,043 .18
TRINOVA Corp. 100,000 3,075 .08
ELECTRONIC COMPONENTS - 1.41%
Intel Corp. 400,000 24,350 .61
Motorola, Inc. 240,000 14,700 .37
Micron Technology, Inc. 200,000 10,950 .28
Texas Instruments Inc. 100,000 5,787 .15
LEISURE & TOURISM - 1.16%
Walt Disney Co. 585,000 35,173 .89
Marriott International, Inc. 200,000 7,450 .19
Host Marriot Corp./1/ 240,000 3,090 .08
FINANCIAL SERVICES - 1.11%
Household International, Inc. 300,000 18,750 .47
Beneficial Corp. 200,000 10,150 .26
American Express Co. 170,000 7,225 .18
ADVANTA Corp., Class A 100,000 4,150 .10
Capital One Financial Corp. 150,000 3,788 .10
RECREATION & OTHER CONSUMER PRODUCTS - 1.07%
Eastman Kodak Co. 220,000 14,960 .38
American Greetings Corp., Class A 380,000 10,355 .26
Stanley Works 200,000 10,125 .26
Polaroid Corp. 150,000 6,919 .17
AUTOMOBILES - 0.97%
General Motors Corp. 500,000 24,250 .61
Ford Motor Co., Class A 500,000 14,125 .36
ENERGY EQUIPMENT - 0.96%
Western Atlas Inc./1/ 346,800 16,603 .42
Schlumberger Ltd. (Netherlands Antilles) 170,000 10,795 .27
Cooper Industries, Inc. 179,802 6,563 .17
Cooper Cameron Corp./1/ 157,945 4,106 .10
ELECTRICAL & ELECTRONICS - 0.60%
General Electric Co. 350,000 23,537 .60
TRANSPORTATION: AIRLINES - 0.46%
AMR Corp./1/ 175,000 13,409 .34
Delta Air Lines, Inc. 60,000 4,658 .12
APPLIANCES & HOUSEHOLD DURABLES - 0.34%
Corning Inc. 300,000 9,038 .23
LADD Furniture, Inc. 326,466 4,366 .11
TEXTILES & APPAREL - 0.30%
VF Corp. 230,000 11,960 .30
MISCELLANEOUS
Other stocks in initial period of acquisition 73,190 1.85
- -
TOTAL STOCKS (COST: $2,458,738,000) 3,286,346 83.13
- -
Principal
Amount
CONVERTIBLE DEBENTURES (000)
ELECTRONIC COMPONENTS - 0.17%
Seagate Technology 5.00% 2003/2/ $3,280 6,790 .17
- -
TOTAL CONVERTIBLE DEBENTURES (COST: $3,543,000) 6,790 .17
- -
TOTAL EQUITY-TYPE SECURITIES (COST: $2,462,281,000) 3,293,136 83.30
- -
SHORT-TERM SECURITIES
CORPORATE SHORT-TERM NOTES - 15.95%
Xerox Corp. 5.68%-5.70% due 12/5/95-1/18/96 74,100 73,660 1.86
Procter & Gamble Co. 5.65%-5.67% due 12/28/95-1/18/96 63,300 62,901 1.59
Wal-Mart Stores, Inc. 5.68%-5.70% due 12/5-12/15/95 62,200 62,119 1.57
J.C. Penney Funding Corp. 5.68% due 1/18-1/22/96 50,000 49,595 1.25
CIT Group Holdings, Inc. 5.70%-5.75% due 47,200 47,141 1.19
12/1-12/18/95
Pitney Bowes Inc. 5.66%-5.68% due 12/14/95-1/31/96 47,200 46,937 1.19
Pfizer Inc 5.70% due 12/8/95/2/ 45,500 45,442 1.15
Coca-Cola Co. 5.68%-5.70% due 12/13-12/14/95/2/ 44,100 44,006 1.11
Beneficial Corp. 5.69%-5.75% due 12/7/95-1/2/96 44,000 43,872 1.11
AT&T Corp. 5.59%-5.70% due 12/21/95-2/27/96 42,600 42,293 1.07
General Electric Capital Corp. 5.69%-5.70%
due 12/4-12/11/95 34,800 34,761 .88
Motorola, Inc. 5.70% due 12/29/95 30,000 29,862 .76
Sara Lee Corp. 5.67%-5.68% due 12/28-12/29/95 24,100 23,993 .61
National Rural Utilities Cooperative Finance Corp.
5.68% due 1/19/96 18,200 18,058 .46
Nordstrom Credit Inc. 5.70% due 12/26/95 5,900 5,876 .15
- -
TOTAL SHORT-TERM SECURITIES (COST: $630,521,000) 630,516 15.95
- -
TOTAL INVESTMENT SECURITIES (COST: $3,092,802,000) 3,923,652 99.25
Excess of money market account, cash
and receivables over payables 29,617 .75
- -
NET ASSETS $3,953,269 100.00%
============ ========
</TABLE>
/1/ Non-income-producing securities.
/2/ Purchased in a private placement transaction; resale potential extends only
to qualifed institutional buyers.
See Notes to Financial Statements
Equity-type securities appearing in the portfolio since May 31, 1995
- --------------------------------------------------------------------
AMBAC
Archer Daniels Midland
Boatmen's Bancshares
Chevron
Cooper Cameron
CoreStates Financial
Ecolab
Federal Paper Board
Gap
General Mills
Georgia-Pacific
Great Lakes Chemical
International Paper
KeyCorp
Kimberly-Clark
Liberty
Louisiana-Pacific
Murphy Oil
Polaroid
Tambrands
U S WEST Media Group
Union Electric
Viacom
Equity-type securities eliminated from the portfolio
since May 31, 1995
- -----------------------------------------------------
Baxter International
Bell Atlantic
British Petroleum
CBS
Central and South West
Chubb
First Tennessee National
General Signal
GTE
Hubbell
Huntington Bancshares
Limited
Microsoft
Mobil
Oracle Systems
Signet Banking
Student Loan Marketing
UAL
Wachovia
Wells Fargo
<PAGE>
AMERICAN VARIABLE INSURANCE SERIES
GROWTH FUND
Investment Portfolio November 30, 1995
EQUITY-TYPE SECURITIES 83.22%
CASH & EQUIVALENTS 16.78%
<TABLE>
<CAPTION>
Percent
Of Net
Largest Individual Equity Holdings Assets
- --------------------------------- --------
<S> <C> <C> <C>
Walt Disney 2.72
Intel 2.39
Viacom 2.31
United HealthCare 1.97
LSI Logic 1.89
Adobe Systems 1.81
Capital Cities/ABC 1.67
Tele-Communications, TCI Group 1.67
Turner Broadcasting System 1.66
Silicon Graphics 1.59
Market Percent
Number of Value of Net
Stocks (common and preferred) Shares (000) Assets
- -------------------------------------------- --------- ------- -------
BROADCASTING & PUBLISHING- 14.05%
Viacom Inc., Class B/1/ 1,513,500 $73,026 2.31%
Capital Cities/ABC, Inc. 427,000 52,788 1.67
Tele-Communications, Inc., Series A, TCI Group/1/ 2,849,950 52,724 1.67
Turner Broadcasting System, Inc., Class B 1,865,100 52,223 1.66
News Corp. Ltd. (American Depositary Receipts)
(Australia) 1,270,000 26,670
News Corp. Ltd., preferred shares (American 1.23
Depositary Receipts) 635,000 11,986
Time Warner Inc. 933,000 37,320 1.18
BHC Communications, Inc., Class A 286,189 25,793 .82
Tele-Communications, Inc., Series A, Liberty
Media Group/1/ 819,187 22,937 .73
LIN Television Corp./1/ 591,300 17,000 .54
Gaylord Entertainment Co., Class A 660,000 16,665 .53
Cablevision Systems Corp., Class A/1/ 240,000 13,320 .42
Comcast Corp., Class A, special stock 500,000 9,875 .31
United International Holdings, Inc., Class A/1/ 685,000 9,590 .30
New York Times Co., Class A 300,000 8,850 .28
Infinity Broadcasting Corp., Class A/1/ 168,750 5,400 .17
Jones Intercable, Inc., Class A/1/ 370,000 4,856 .15
Adelphia Communications Corp., Class A/1/ 350,000 2,625 .08
BUSINESS & PUBLIC SERVICES- 13.82%
United HealthCare Corp. 990,000 62,246 1.97
America Online, Inc./1/ 1,123,800 45,935 1.46
CUC International Inc./1/ 1,207,500 45,885 1.45
Columbia/HCA Healthcare Corp. 665,000 34,331 1.09
(formerly Columbia Healthcare Corp.)
WMX Technologies, Inc. 1,060,000 31,270 .99
FHP International Corp./1/ 960,000 27,840 .88
General Motors Corp., Class E 525,000 26,513 .84
Federal Express Corp./1/ 350,000 26,163 .83
Oxford Health Plans, Inc./1/ 289,500 21,713 .69
ADT Ltd./1/ 1,255,000 17,570 .56
Avery Dennison Corp. 310,000 14,764 .47
PacifiCare Health Systems, Inc., Class B/1/ 165,000 14,314 .45
Value Health, Inc./1/ 500,000 12,563 .40
Ecolab Inc. 350,000 10,063 .31
U.S. Healthcare, Inc. 200,000 9,100 .29
Apria Healthcare Group Inc./1/ 300,000 9,075 .29
Pitney Bowes Inc. 150,000 6,713 .21
H&R Block, Inc. 150,000 6,675 .21
Ceridian Corp./1/ 150,000 6,300 .20
Dun & Bradstreet Corp. 50,000 3,119 .09
BHA Group, Inc., Class A 195,000 2,730 .09
Air & Water Technologies Corp., Class A/1/ 285,000 1,568 .05
DATA PROCESSING & REPRODUCTION- 9.68%
Adobe Systems Inc. 842,100 56,947 1.81
Silicon Graphics, Inc./1/ 1,370,000 50,005 1.59
Digital Equipment Corp./1/ 650,000 38,269 1.21
Sybase, Inc./1/ 1,041,900 36,597 1.16
Oracle Corp.(formerly Oracle Systems Corp.)/1/ 675,000 30,628 .97
Mentor Graphics Corp./1/ 1,000,000 20,125 .64
Compuware Corp./1/ 945,000 19,372 .61
International Business Machines Corp. 175,000 16,909 .54
Autodesk, Inc. 400,000 14,100 .45
Structural Dynamics Research Corp./1/ 475,000 9,678 .31
Sequent Computer Systems, Inc./1/ 350,000 5,556 .18
Tandem Computers Inc./1/ 440,000 5,500 .17
Data General Corp./1/ 100,000 1,212 .04
Tripos, Inc./1/ 19,333 150 .00
ELECTRONIC COMPONENTS- 8.96%
Intel Corp. 1,240,400 75,509 2.39
LSI Logic Corp./1/ 1,420,000 59,462 1.89
Texas Instruments Inc. 570,000 32,989 1.05
Analog Devices, Inc./1/ 600,000 22,200 .70
SCI Systems, Inc./1/ 646,263 21,650 .69
Seagate Technology/1/ 400,000 21,100 .67
National Semiconductor Corp./1/ 945,000 20,199 .64
Park Electrochemical Corp. 250,000 7,594 .24
Newbridge Networks Corp. (Canada)/1/ 150,000 6,394 .20
Rogers Corp./1/ 190,800 4,627 .15
Actel Corp./1/ 300,000 3,975 .13
Motorola, Inc. 42,000 2,572 .08
ANTEC Corp./1/ 150,000 2,175 .07
Advanced Micro Devices, Inc./1/ 100,000 2,050 .06
LEISURE & TOURISM- 5.81%
Walt Disney Co. 1,425,000 85,678 2.72
Harrah's Entertainment, Inc./1/ 825,000 20,522 .65
Mirage Resorts, Inc./1/ 600,000 20,325 .64
Circus Circus Enterprises, Inc./1/ 725,000 20,119 .64
Marriott International, Inc. 500,000 18,625 .59
Host Marriott Corp./1/ 765,000 9,849 .31
Luby's Cafeterias, Inc. 250,000 5,500 .17
Promus Hotel Corp./1/ 126,100 2,790 .09
BANKING- 3.09%
Mercantile Bancorporation Inc. 517,500 23,740 .75
Banc One Corp. 530,750 20,235 .64
Commerce Bancshares, Inc. 408,187 15,256 .48
Northern Trust Corp. 245,000 12,801 .41
BayBanks, Inc. 132,200 10,973 .35
Charter One Financial, Inc. 250,000 8,000 .25
Huntington Bancshares Inc. 273,750 6,673 .21
TELECOMMUNICATIONS- 3.07%
MCI Communications Corp. 1,120,000 29,960 .95
AirTouch Communications/1/ 975,000 28,397 .90
Vanguard Cellular Systems, Inc./1/ 819,200 18,534 .59
Centennial Cellular Corp./1/ 300,000 5,700 .18
United States Cellular Corp./1/ 144,000 5,040 .16
Cellular Communications, Inc., convertible
preferred/1/ 100,704 4,821 .15
Associated Group, Inc., Class A/1/ 93,750 1,687
(formerly Associated Communications Corp.)
Associated Group, Inc., Class B/1/ 93,750 1,687 .11
Cellular Communications of Puerto Rico, Inc./1/ 37,500 1,003 .03
MERCHANDISING- 3.06%
Barnes & Noble, Inc./1/ 625,000 22,969 .73
Wal-Mart Stores, Inc. 950,000 22,800 .72
Home Shopping Network, Inc./1/ 1,300,000 12,187 .39
Staples, Inc./1/ 474,375 12,097 .38
Gap, Inc. 150,000 6,787 .21
Spiegel, Inc., Class A 752,600 6,773 .21
Michaels Stores, Inc./1/ 300,000 4,950 .16
Circuit City Stores, Inc. 150,000 4,350 .14
Toys "R" Us, Inc./1/ 160,000 3,720 .12
INSURANCE- 2.68%
EXEL Ltd. (Incorporated in Bermuda) 405,000 25,262 .80
Transatlantic Holdings, Inc. 270,000 18,563 .59
Progressive Corp. 250,000 11,125 .35
NAC Re Corp. 285,000 9,405 .30
TIG Holdings, Inc. 325,000 8,775 .28
Trenwick Group Inc. 148,400 7,606 .24
NYMAGIC, Inc. 218,300 3,629 .12
RECREATION & OTHER CONSUMER PRODUCTS- 2.12%
Mattel, Inc. 1,277,031 35,757 1.13
Duracell International Inc. 277,000 14,681 .47
Nintendo Co., Ltd. (Japan) 135,000 10,588 .34
Hasbro, Inc. 185,000 5,642 .18
CHEMICALS- 2.09%
Valspar Corp. 660,000 26,978 .86
Great Lakes Chemical Corp. 275,000 19,559 .62
Loctite Corp. 250,000 12,219 .39
Engelhard Corp. 284,400 6,648 .21
Lubrizol Corp. 11,000 315 .01
HEALTH & PERSONAL CARE- 1.86%
Forest Laboratories, Inc./1/ 330,000 14,025 .45
Genetics Institute, Inc./1/ 260,000 11,407 .36
Nellcor Puritan Bennett Inc./1/ 150,000 8,625 .27
(formerly Puritan-Bennett Corp.)
Tambrands Inc. 150,000 7,819 .25
SEQUUS Pharmaceuticals, Inc./1/ 300,000 3,750
(formerly Liposome Technology, Inc.)
SEQUUS Pharmaceuticals, Inc., convertible reset 24,000 984 .16
preferred/1/ /2/
SEQUUS Pharmaceuticals, Inc., warrants expire 1998/1/ 40,416 192
Johnson & Johnson 48,800 4,227 .13
Bausch & Lomb Inc. 100,000 3,612 .11
Alpha-Beta Technology, Inc./1/ 200,000 1,325 .04
Pharmacia & Upjohn, Inc. (formerly Upjohn Co.) 36,250 1,300 .04
Paragon Trade Brands, Inc./1/ 42,600 889 .03
Perrigo Co./1/ 35,000 459 .02
TRANSPORTATION: AIRLINES- 1.83%
Southwest Airlines Co. 1,491,900 37,298 1.18
AMR Corp./1/ 195,000 14,942 .47
Delta Air Lines, Inc. 75,000 5,822 .18
ELECTRICAL & ELECTRONICS- 1.42%
Telefonaktiebolaget LM Ericsson, Class B (American
Depositary Receipts) (Sweden) 1,284,500 30,507 .97
Nokia Corp., Class A (American Depositary Receipts)
(Finland) 260,000 14,105 .45
ENERGY EQUIPMENT- 0.84%
Schlumberger Ltd. (Netherlands Antilles) 295,000 18,733 .59
Reading & Bates Corp./1/ 600,000 7,875 .25
TEXTILES & APPAREL- 0.82%
Fruit of the Loom, Inc./1/ 925,000 17,922 .57
Phillips-Van Heusen Corp. 750,000 7,781 .25
BEVERAGES & TOBACCO- 0.71%
Philip Morris Companies Inc. 160,000 14,040 .45
PepsiCo, Inc. 150,000 8,287 .26
ENERGY SOURCES- 0.61%
Murphy Oil Corp. 275,000 10,828 .34
Noble Affiliates, Inc. 226,500 6,144 .19
HS Resources, Inc./1/ 200,000 2,675 .08
FINANCIAL SERVICES- 0.52%
Federal National Mortgage Assn. 150,000 16,425 .52
APPLIANCES & HOUSEHOLD DURABLES- 0.37%
Mohawk Industries, Inc./1/ 650,000 11,538 .37
ELECTRONIC INSTRUMENTS- 0.32%
Applied Materials, Inc./1/ 208,000 10,114 .32
METALS: STEEL- 0.21%
Nucor Corp. 130,000 6,484 .21
MACHINERY & ENGINEERING- 0.16%
Caterpillar Inc. 80,000 4,910 .16
FOREST PRODUCTS & PAPER- 0.13%
ITT Rayonier Inc. 105,000 4,016 .13
CONSTRUCTION & HOUSING- 0.11%
Stone & Webster, Inc. 90,000 3,330 .11
MULTI-INDUSTRY- 0.06%
Textron Inc. 20,000 1,532 .05
Tenneco Inc. 7,900 379 .01
TRANSPORTATION: RAIL & ROAD- 0.04%
Southern Pacific Rail Corp./1/ 46,720 1,115 .04
AEROSPACE & MILITARY TECHNOLOGY- 0.03%
Litton Industries, Inc./1/ 20,000 898 .03
MISCELLANEOUS
Other stocks in initial period of acquisition 133,810 4.24
-------- ------
TOTAL STOCKS (cost: $1,809,811,000) 2,609,066 82.71
-------- ------
Principal
Amount
Convertible Debentures (000)
- ----------------------------- --------- -------- ------
HEALTH & PERSONAL CARE- 0.51%
Omnicare, Inc. 5.75% 2003 $6,350 15,939 .51%
------ ------
TOTAL CONVERTIBLE DEBENTURES (cost: $12,754,000) 15,939 .51
------ ------
TOTAL EQUITY-TYPE SECURITIES (cost: $1,822,565,000) 2,625,005 83.22
Short-Term Securities
- -------------------------------- -------- ------ ------
CORPORATE SHORT-TERM NOTES- 16.68%
Xerox Corp. 5.68%-5.70% due 12/5/95-1/17/96 52,500 52,127 1.65
Wal-Mart Stores, Inc. 5.68%-5.70%
due 12/7-12/15/95 48,655 48,570 1.54
CPC International Inc. 5.64%-5.72%
due 12/5/95-2/20/96/2/ 40,000 39,623 1.26
Beneficial Corp. 5.70%-5.75% due 12/6/95-1/2/96 39,400 39,314 1.25
Pitney Bowes Credit Corp 5.66%-5.67%
due 12/20/95-1/31/96 36,800 36,551 1.16
Procter & Gamble Co. 5.66%-5.67%
due 12/28/95-1/18/96 36,300 36,058 1.14
Hewlett-Packard Co. 5.60%-5.65% due 1/16-2/13/96 34,425 34,136 1.08
AT&T Corp. 5.64%-5.70% due 12/21/95-1/29/96 34,300 34,085 1.08
J.C. Penney Funding Corp. 5.68% due 1/18-1/22/96 33,700 33,431 1.06
National Rural Utilities Cooperative Finance Corp.
5.68%-5.69% due 12/7/95-1/19/96 31,800 31,719 1.01
Coca-Cola Co. 5.68%-5.70% due 12/13-12/14/95/2/ 30,900 30,834 .98
Hershey Foods Corp. 5.70% due 12/20/95 25,000 24,921 .79
Sara Lee Corp. 5.67% due 12/28/95 24,700 24,591 .78
American Express Credit Corp. 5.67%-5.70%
due 12/1/95-1/9/96 21,600 21,531 .68
General Electric Capital Corp. 5.69% due 12/4/95 21,350 21,336 .67
H.J. Heinz Co. 5.70% due 12/18/95-1/12/96 12,400 12,335 .39
Nordstrom Credit Inc. 5.70% due 12/26/95 4,100 4,083 .13
Associates Corp. of North America 5.89% due 12/1/95 1,100 1,100 .03
------- -----
TOTAL SHORT-TERM SECURITIES (cost: $526,349,000) 526,345
------- -----
TOTAL INVESTMENT SECURITIES (cost: $2,348,914,000) 3,151,350
Excess of money market account, cash and
receivables over payables 3,091 .10
------- -----
NET ASSETS $3,154,441 100.00%
======= =====
</TABLE>
/1/ Non-income-producing securities.
/2/ Purchased in a private placement transaction; resale potential extends only
to qualified institutional buyers.
See Notes to Financial Statements
- ------------------------------------------------
Equity-type securities appearing in the portfolio
since May 31, 1995
- ------------------------------------------------
Apria Healthcare Group
Charter One Financial
Compuware
Ecolab
Fruit of the Loom
Gap
H&R Block
Harrah's Entertainment
HS Resources
Michaels Stores
Nintendo
Nucor
Progressive
Reading & Bates
Wal-Mart Stores
- ----------------------------------------------------
Equity-type securities eliminated from the portfolio
since May 31, 1995
- ----------------------------------------------------
American Re
Apple Computer
Bay Networks
Biogen
CBS
Compaq Computer
Cordis
Cyrix
Dell Computer
Electronic Arts
Humana
Jefferson Smurfit
LIN Broadcasting
Lotus Development
McWhorter
Micron Technology
Microsoft
Ralston Purina
Raychem
ShopKo Stores
Xilinx
<PAGE>
AMERICAN VARIABLE INSURANCE SERIES
HIGH-YIELD BOND FUND
INVESTMENT PORTFOLIO - NOVEMBER 30, 1995 (Unaudited)
U.S. CORPORATE BONDS 72.98%
NON-U.S. CORPORATE BONDS 11.42%
U.S. GOVERNMENT BONDS 7.35%
NON-U.S. GOVERNMENT BONDS 1.83%
CASH & EQUIVALENTS 6.16%
STOCKS .26%
<TABLE>
<CAPTION>
Percent
of Net
LARGEST CORPORATE HOLDINGS Assets
<S> <C> <C> <C>
Container Corp. of America 2.73%
MSF Communications 2.64
California Energy 2.55
Rogers Cantel Mobile Communications 2.52
Thrifty PayLess 2.42
Foodmaker 2.20
Bell Cablemedia 1.99
Marvel Holdings 1.98
Coltec Industries 1.96
Fort Howard Corp. 1.95
Principal Market Percent
Amount Value Of Net
BONDS & NOTES (000) (000) Assets
CELLULAR, PAGING & WIRELESS COMMUNICATIONS - 17.93%
Rogers Cantel Mobile Communications Inc. 10.75% 2001 $10,248 $10,786
Rogers Cantel Mobile Communications Inc. 11.125% 2002 2,500 2,662 2.52%
PanAmSat, LP 9.75% 2000 8,000 8,400
PanAmSat, LP 0%/11.375% 2003 /1/ 2,000 1,610 1.87
Centennial Cellular Corp. 8.875% 2001 10,000 9,775 1.83
MobileMedia Communications, Inc. 0%/10.50% 2003 /1/ 12,750 9,690 1.81
Horizon Cellular Telephone Co., LP
0%/11.375% 2000/1/ 8,500 7,310 1.37
CellNet Data Systems, Inc. 0%/13.00% 2005 /1/ /2/ 14,000 6,897 1.29
Paging Network, Inc. 11.75% 2002 5,800 6,395 1.20
PriCellular Wireless Corp. 0%/12.25% 2003 /1/ 5,500 4,235
PriCellular Wireless Corp. 0%/14.00% 2001 /1/ 1,500 1,305 1.04
NEXTEL Communications, Inc. 0%/11.50% 2003 /1/ /3/ 5,500 3,314
NEXTEL Communications, Inc. 0%/9.75% 2004 /1/ /3/ 4,000 2,070 1.01
CenCall Communications Corp. 0%/10.125% 2004 /1/ 8,000 4,300 .80
Cellular Communications International, Inc., Units 0%
2000 6,500 3,851 .72
Cellular, Inc. 0%/11.75% 2003 /1/ 4,500 3,499 .65
Heartland Wireless Communications, Inc., Units
13.00% 2003 /2/ 3,000 3,405 .64
Comunicacion Celular SA 0%/13.125% 2003 /1/ /2/ 5,000 2,756 .52
Dial Call Communications, Inc. 0%/12.25% 2004 /1/ 5,000 2,725 .51
CAI Wireless Systems, Inc. 12.25% 2002 750 787 .15
FOREST PRODUCTS & PAPER - 8.42%
Container Corp. of America 9.75% 2003 11,750 11,544
Container Corp. of America 11.25% 2004 2,000 2,050
Container Corp. of America 10.75% 2002 1,000 1,012 2.73
Fort Howard Corp. 9.25% 2001 4,250 4,314
Fort Howard Corp. 8.25% 2002 3,000 2,910
Fort Howard Corp. 11.00% 2002 /4/ 1,873 1,950
Fort Howard Corp. 9.00% 2006 1,250 1,219 1.95
Riverwood International Corp. 10.75% 2000 4,000 4,280
Riverwood International Corp. 11.25% 2002 1,000 1,072
Riverwood International Corp. II 10.75% 2000 500 531 1.10
P T Indah Kiat Pulp & Paper Corp. 8.875% 2000 /2/ 4,750 4,418
P T Indah Kiat Pulp & Paper Corp., Series B, 11.875%
2002 1,000 1,005 1.02
Pacific Lumber Co. 10.50% 2003 4,000 3,760 .70
MAXXAM Group Inc. 11.25% 2003 2,000 1,960 .37
P T Pabrik Kertas Tjiwi Kimia 13.25% 2001 1,000 1,072 .20
Repap Wisconsin, Inc. Second Priority 9.875% 2006 1,000 960 .18
P T Inti Indorayon Utama 9.125% 2000 1,000 920 .17
MANUFACTURING & MATERIALS - 8.30%
Coltec Industries Inc. 9.75% 2000 8,450 8,682
Coltec Industries Inc. 9.75% 1999 1,750 1,794 1.96
Kaiser Aluminum & Chemical Corp. 12.75% 2003 5,350 5,858 1.10
Acme Metals Inc. 12.50% 2002 2,500 2,456
Acme Metals Inc. 0%/13.50% 2004 /1/ 3,000 2,340 .90
AK Steel Corp. 10.75% 2004 4,000 4,420 .83
MagneTek, Inc. 10.75% 1998 3,500 3,640 .68
UCAR Global Enterprises Inc. 12.00% 2005 2,865 3,252 .61
Building Materials Corp. of America 0%/11.75% 2004 /1/ 4,500 3,060 .57
Exide Corp. 10.00% 2005 2,750 2,956 .55
Owens-Illinois, Inc. 11.00% 2003 2,500 2,791 .52
Westinghouse Air Brake Co. 9.375% 2005 2,000 2,060 .39
WestPoint Stevens Inc. 8.75% 2001 1,000 1,015 .19
DIVERSIFIED MEDIA & CABLE TELEVISION &
TELECOMMUNICATIONS - 7.63%
MFS Communications Co., Inc. 0%/9.375% 2004 /1/ 18,250 14,121 2.64
Continental Cablevision, Inc. 10.625% 2002 3,500 3,728
Continental Cablevision, Inc. 8.625% 2003 2,000 2,065
Continental Cablevision, Inc. 8.50% 2001 1,500 1,530
Continental Cablevision, Inc. 8.875% 2005 1,000 1,040 1.57
American Media Operations, Inc. 11.625% 2004 6,500 6,598 1.23
IntelCom Group Inc., Units 0%/13.50% 2005 /1/ /2/ 4,000 2,310 .43
Century Communications Corp. 9.50% 2000 2,000 2,050 .38
People's Choice TV Corp., Units 0%/13.125% 2004 /1/ 3,500 1,977 .37
Jones Intercable, Inc. 9.625% 2002 1,500 1,605 .30
ProNet, Inc. 11.875% 2005 1,000 1,080 .20
Telecom Argentina Stet-France Telecom SA 12.00% 2002 1,000 1,046 .20
Comcast Corp. 10.25% 2001 925 994 .19
Storer Communications, Inc. 10.00% 2003 634 638 .12
CABLE & TELEPHONE IN THE UNITED KINGDOM - 6.79%
Bell Cablemedia PLC 0%/11.95% 2004 /1/ 15,500 10,618 1.99
Videotron Holdings PLC 0%/11.125% 2004 /1/ 14,500 9,751 1.82
International CableTel Inc. 0%/10.875% 2003 /1/ 13,250 9,143 1.71
Comcast UK Cable Partners Ltd. 0%/11.20% 2007 /1/ 6,500 3,705 .69
TeleWest PLC 9.625% 2006 2,500 2,497
TeleWest PLC 0%/11.00% 2007 /1/ 1,000 580 .58
ENERGY & RELATED COMPANIES - 5.50%
TransTexas Gas Corp. 11.50% 2002 5,500 5,679 1.06
Flores & Rucks, Inc. 13.50% 2004 4,500 5,085 .95
Wilrig AS 11.25% 2004 4,000 4,360 .82
Triton Energy Corp. 0%/9.75% 2000 /1/ 4,500 4,174 .78
Dual Drilling Co. 9.875% 2004 3,500 3,325 .62
Global Marine, Inc. 12.75% 1999 2,700 2,983 .56
Tuboscope Vetco International Corp. 10.75% 2003 2,000 1,970 .37
Mesa Capital Corp. 0%/12.75% 1998 /1/ 2,000 1,815 .34
LEISURE, TOURISM & RESTAURANTS - 5.29%
Foodmaker, Inc. 9.75% 2002 7,250 6,525
Foodmaker, Inc. 9.25% 1999 5,500 5,225 2.20
Plitt Theatres, Inc. 10.875% 2004 5,750 5,204 .97
Kloster Cruise Ltd. 13.00% 2003 5,750 4,543 .85
Four Seasons Hotels Inc. 9.125% 2000 /2/ 3,500 3,474 .65
Rio Hotel & Casino, Inc. 10.625% 2005 /2/ 1,500 1,500 .28
Station Casinos, Inc. 9.625% 2003 1,100 1,067 .20
Harrah's Jazz Finance Corp. 14.25% 2001 2,500 725 .14
INDEPENDENT POWER PRODUCERS - 3.78%
California Energy Co., Inc. 0%/10.25% 2004 /1/ 14,800 13,616 2.55
Midland Cogeneration Venture LP, Series C-94 10.33%
2002 /4/ 4,178 4,366
Midland Cogeneration Venture LP, Series C-91 10.33%
2002 /4/ 2,151 2,237 1.23
MERCHANDISING - 3.63%
Thrifty PayLess, Inc. 12.25% 2004 6,500 6,939
Thrifty PayLess, Inc. 11.75% 2003 4,500 4,849
Thrifty PayLess, Inc., Units 12.25% 2004 1,000 1,150 2.42
Barnes & Noble, Inc. 11.875% 2003 4,250 4,739 .89
AnnTaylor, Inc. 8.75% 2000 1,500 1,267 .24
Levitz Furniture Corp. 12.375% 1997 500 450 .08
TRANSPORTATION - 3.42%
Delta Air Lines, Inc. 10.375% 2011 2,000 2,438
Delta Air Lines, Inc. 10.00% 2014 /2/ 2,000 2,348
Delta Air Lines, Inc., 1993 pass-through trusts,
Series A2, 10.50% 2016 /4/ 1,000 1,231
Delta Air Lines, Inc. 10.375% 2022 750 938 1.30
Atlas Air, pass-through certificates, 12.25% 2002 /4/ 4,000 4,020 .75
TNT Transport (Europe) PLC TNT (USA) Inc. 11.50% 2004 3,000 3,113 .58
NWA Trust, Class D, 13.875% 2008 1,250 1,447
NWA Inc. 12.092% 2000 /4/ 655 677 .40
Viking Star Shipping Inc. 9.625% 2003 2,000 2,055 .39
BROADCASTING & PUBLISHING - 3.35%
Marvel Holdings Inc., Series B, 0% 1998 14,900 10,579 1.98
Infinity Broadcasting Corp. 10.375% 2002 3,250 3,478 .65
Univision Television Group, Inc. 11.75% 2001 2,500 2,719 .51
Summitt Communications Group, Inc. 10.50% 2005 1,000 1,107 .21
FOOD RETAILING - 3.19%
Stater Bros. Holdings Inc. 11.00% 2001 6,750 6,818 1.27
Star Markets Co., Inc. 13.00% 2004 5,000 5,063 .95
Carr-Gottstein Foods Co. 12.00% 2005 /2/ 4,000 4,010 .75
Safeway Inc. 10.00% 2002 1,000 1,160 .22
BUSINESS & PUBLIC SERVICES - 3.03%
Regency Health Services, Inc. 9.875% 2002 6,000 5,895 1.10
Universal Health Services, Inc. 8.75% 2005 4,000 4,035 .75
Merit Behavioral Care Corp. 11.50% 2005 /2/ 2,500 2,547 .48
ADT Operations, Inc. 9.25% 2003 2,000 2,130 .40
Protection One Alarm Monitoring, Inc.
0%/13.625% 2005/1/ 2,000 1,600 .30
CONSTRUCTION & HOUSING - 1.47%
Triangle Pacific Corp. 10.50% 2003 3,300 3,432 .64
Del Webb Corp. 9.75% 2003 1,500 1,526
Del Webb Corp. 9.00% 2006 750 703 .42
Toll Corp. 9.50% 2003 1,500 1,534
Toll Corp. 10.50% 2002 650 683 .41
BEVERAGES - 1.45%
Dr Pepper Bottling Co. of Texas 10.25% 2000 5,000 5,275 .99
Canandaigua Wine Co., Inc. 8.75% 2003 2,500 2,450 .46
MISCELLANEOUS - 0.84%
Neodata Services, Inc., Series B, 0%/12.00% 2003 /1/ 5,000 4,475 .84
REAL ESTATE - 0.38%
B.F. Saul Real Estate Investment Trust 11.625% 2002 2,000 2,020 .38
NON-U.S. GOVERNMENTS & GOVERNMENTAL
AUTHORITIES - 1.83%
Argentina (Republic of) 6.813% 2005 /5/ 7,000 4,568 .86
United Mexican States Collateralized Eurobond:
Series B, 6.25% 2019 2,000 1,230
Series A, 6.25% 2019 1,500 922 .40
Poland PDI Bonds 3.75% 2014 /5/ 3,000 1,935 .36
Poland Discount Eurobonds 6.875% 2024 /5/ 750 570 .11
Brazil (Federal Republic of) DCB, 6.875% 2012 /5/ 1,000 540 .10
U.S. TREASURY OBLIGATIONS - 7.35%
7.375% 1997 10,000 10,359 1.94
11.625% 2004 6,600 9,255 1.73
7.75% 2001 8,000 8,779 1.64
8.50% 2000 5,000 5,631 1.06
6.875% 1999 5,000 5,223 .98
-------- --------
TOTAL BONDS & NOTES (cost: $495,419,000) 499,934 93.58
-------- -------
NUMBER
OF
SHARES
COMMON STOCKS - 0.26%
CELLNET DATA SYSTEMS, INC., WARRANTS, EXPIRE 2005 /6/ 56,000 1,120 .21
MARRIOTT INTERNATIONAL, INC. 4,512 168 .03
HOST MARRIOTT CORP. /6/ 4,512 58 .01
PROTECTION ONE ALARM MONITORING, INC., WARRANTS, 6,400 35 .01
EXPIRE 2005/2/ /6/
DIAL PAGE, INC., WARRANTS, EXPIRE 1996 /6/ 9,500 - .00
-------- --------
TOTAL COMMON STOCKS (COST: $1,297,000) 1,381 .26
-------- --------
PRINCIPAL
AMOUNT
SHORT-TERM SECURITIES (000)
CORPORATE SHORT-TERM NOTES - 5.87%
PFIZER INC 5.70% DUE 12/8/95 $ 9,500 9,488 1.78
CENTRAL & SOUTH WEST CORP. 5.70% DUE 12/12/95 8,500 8,484 1.59
COCA-COLA CO. 5.67%-5.68% DUE 12/6/95 6,200 6,194 1.16
XEROX CORP. 5.71% DUE 12/8/95 5,000 4,994 .93
ASSOCIATES CORP. OF NORTH AMERICA 5.89% DUE 12/1/95 2,200 2,199 .41
-------- -------
TOTAL SHORT-TERM SECURITIES (COST: $31,359,000) 31,359 5.87
-------- -------
TOTAL INVESTMENT SECURITIES (COST: $528,075,000) 532,674 99.71
EXCESS OF MONEY MARKET ACCOUNT, CASH AND
RECEIVABLES OVER PAYABLES 1,531 .29
--------- -------
NET ASSETS $534,205 100.00%
========= =======
</TABLE>
/1/ REPRESENTS A ZERO COUPON BOND WHICH WILL CONVERT TO A COUPON-BEARING
SECURITY AT A LATER DATE.
/2/ PURCHASED IN A PRIVATE PLACEMENT TRANSACTION; RESALE POTENTIAL EXTENDS ONLY
TO QUALIFIED INSTITUTIONAL BUYERS.
/3/COMPANY HAS ACQUIRED DIAL CALL AND CENCALL, ALSO HELD IN THE PORTFOLIO.
/4/ PASS-THROUGH SECURITIES BACKED BY A POOL OF MORTGAGES OR OTHER LOANS ON
WHICH PRINCIPAL PAYMENTS ARE PERIODICALLY MADE. DUE TO THE POSSIBILITY OF EARLY
PRINCIPAL PAYMENTS, THE EFFECTIVE MATURITY OF THESE SECURITIES IS SHORTER THAN
THE STATED MATURITY.
/5/ COUPON RATE MAY CHANGE PERIODICALLY.
/6/ NON-INCOME-PRODUCING SECURITIES.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
American Variable Insurance Series
Cash Management Fund
Investment Portfolio, November 30, 1995
<TABLE>
<CAPTION>
Principal Market
Amount Value Percent of
Short-Term Securities (000) (000) Net Assets
<S> <C> <C> <C>
Corporate Short-Term Notes - 94.08%
Weyerhaeuser Co. 5.72% due 1/2/96 $7,900 $7,859 4.07%
American Express Credit Corp. 5.70% due 7,800 7,776 4.03
12/6/95-1/11/96
Xerox Corp. 5.67%-5.70% due 12/18/95-1/8/96 7,500 7,465 3.87
Eli Lilly and Co. 5.70% due 12/11/95 7,000 6,988 3.62
John Deere Capital Corp. 5.70% due 1/11/96 6,600 6,556 3.39
Pitney Bowes Credit Corp. 5.67% due 12/18/95 6,500 6,482 3.36
AVCO Financial Services Inc. 5.71% due 12/7/95 6,200 6,193 3.21
H.J. Heinz Co. 5.70% due 1/11/96 6,100 6,059 3.14
Beneficial Corp. 5.70% due 12/12/95 6,000 5,989 3.10
Ameritech Corp. 5.67% due 12/14/95 6,000 5,987 3.10
Commercial Credit Co. 5.72% due 1/9/96 6,000 5,962 3.09
Procter & Gamble Co. 5.66% due 1/10/96 6,000 5,961 3.09
Albertson's Inc. 5.70% due 1/18/96 6,000 5,953 3.08
PepsiCo, Inc. 5.68% due 12/15/95 5,700 5,687 2.94
Associates Corp. of North America 5.89% due 12/1/95 5,400 5,399 2.80
McDonald's Corp. 5.69% due 12/11/95 5,100 5,091 2.64
United Parcel Service of America Inc. 5.70% due 5,000 4,995 2.59
12/6/95
National Rural Utilities Cooperative Finance Corp.
5.68% due 12/8/95 5,000 4,994 2.59
Shell Oil Co. 5.69% due 12/13/95 5,000 4,990 2.58
CIT Group Holdings Inc. 5.70% due 12/14/95 5,000 4,989 2.58
General Electric Capital Corp. 5.70% due 12/15/95 5,000 4,988 2.58
Paccar Financial Corp. 5.71% due 12/20/95 5,000 4,984 2.58
Ford Motor Credit Co. 5.73% due 1/2/96 5,000 4,974 2.58
J.C. Penney Funding Corp. 5.68% due 1/5/96 5,000 4,972 2.57
BellSouth Telecommunications, Inc. 5.71% due 12/7/95 4,600 4,595 2.38
Coca-Cola Co. 5.68% due 12/27/95 4,300 4,282 2.22
Hewlett-Packard Co. 5.67% due 12/21/95 4,100 4,086 2.11
Kimberly-Clark Corp. 5.68% due 12/22/95 4,000 3,986 2.06
Sara Lee Corp. 5.68% due 12/29/95 4,000 3,982 2.06
Nordstrom Credit Inc. 5.69% due 12/11/95 3,800 3,793 1.96
Emerson Electric Co. 5.65% due 12/5/95 3,700 3,697 1.91
Kellogg Co. 5.68% due 12/15/95 3,600 3,591 1.86
Hershey Foods Corp. 5.68% due 1/12/96 3,400 3,377 1.75
Southwestern Bell Telephone Co. 5.68% due 12/4/95 2,600 2,598 1.35
SAFECO Credit Co. Inc. 5.71% due 12/1/95 2,400 2,400 1.24
Federal Agency Discount Notes - 11.20%
Federal Farm Credit Bank 5.65% due 12/18/95 9,500 9,473 4.91
Federal Home Loan Bank 5.66%-5.70% due 12/19-12/26/95 7,600 7,577 3.92
Federal Home Loan Mortgage Corp. 5.68% due 12/20/95 4,600 4,585 2.37
---------- ----------
TOTAL INVESTMENT SECURITIES (cost: $203,315,000) 203,315 105.28
Excess of payables over cash and receivables 10,198 5.28
---------- ----------
NET ASSETS $193,117 100.00$
</TABLE>
See Notes to Financial Statements
American Variable Insurance Series
U.S. Government/AAA-Rated Securities Fund
Investment Portfolio, November 30, 1995
U.S. TREASURY BONDS 50.93%
FEDERAL AGENCY MORTGAGE-RELATED SECURITIES 15.67%
CASH & EQUIVALENTS 11.34%
PRIVATE MORTGAGE & ASSET-BACKED SECURITIES 9.55%
OTHER FEDERAL OBLIGATIONS 6.15%
CORPORATE BONDS 3.30%
DEVELOPMENTAL AGENCIES & NON-U.S.
GOVERNMENT BONDS 3.06%
<TABLE>
<CAPTION>
Principal Market Percent
Amount Value of Net
Bonds & Notes (000) (000) Assets
- ------------------------------------------------ -------- -------- --------
<S> <C> <C> <C>
U.S. TREASURY OBLIGATIONS - 50.93%
8.875% 2017 $40,300 $52,799 9.74%
10.375% 2012 30,000 40,922 7.55
10.375% 2009 28,500 37,250 6.87
8.125% 1998 25,250 26,662 4.92
9.25% 1998 20,000 21,900 4.04
12.00% 2013 13,000 19,756 3.64
8.875% 2000 16,250 18,375 3.39
8.75% 2008 10,000 11,775 2.17
8.875% 1997 10,000 10,636 1.96
11.75% 2010 5,500 7,770 1.43
8.375% 2008 5,000 5,783 1.07
12.50% 2014 3,000 4,769 .88
10.625% 2015 3,000 4,507 .83
8.75% 2000 2,750 3,110 .57
14.25% 2002 2,000 2,889 .53
15.75% 2001 1,500 2,258 .42
13.125% 2001 1,500 2,030 .37
10.75% 2003 1,250 1,627 .30
9.00% 1998 1,250 1,352 .25
FEDERAL AGENCY OBLIGATIONS - MORTGAGE
PASS-THROUGHS/1/ - 15.13%
Government National Mortgage Assn. 8.50% 2022-2025 28,975 30,264
Government National Mortgage Assn. 9.50% 2019-2021 9,776 10,511
Government National Mortgage Assn. 7.50% 2022-2023 5,166 5,272
Government National Mortgage Assn. 6.00% 2024 4,855 4,913
Government National Mortgage Assn. 5.50% 2024 4,540 4,567 11.42
Government National Mortgage Assn. 8.00% 2022 3,748 3,878
Government National Mortgage Assn. 9.00% 2009-2016 1,794 1,898
Government National Mortgage Assn. 10.50% 2019 444 495
Government National Mortgage Assn. 11.00% 2019 89 99
Government National Mortgage Assn. 12.00% 2012-2014 10 12
Federal National Mortgage Assn. 8.50% 2023 7,889 8,198
Federal National Mortgage Assn. 7.50% 2009 4,747 4,857 3.24
Federal National Mortgage Assn. 9.00% 2011-2025 4,307 4,525
Federal Home Loan Mortgage Corp. 9.00% 2021-2022 2,303 2,413
Federal Home Loan Mortgage Corp. 9.50% 2016 154 164 .47
Federal Home Loan Mortgage Corp. 12.00% 2010 3 3
FEDERAL AGENCY OBLIGATIONS - OTHER - 6.15%
FNSM Principal STRIPS 0%/7.56% 2001/2/ 15,000 14,105
FNSM Principal STRIPS 0%/8.62% 2022/2/ 10,000 8,648
FNSM Principal STRIPS 0%/7.94% 2001/2/ 5,000 4,731 5.38
FNSM Principal STRIPS 0%/8.25% 2022/2/ 2,000 1,705
Federal National Mortgage Assn. 8.625% 2021 2,000 2,145 .40
Federal Home Loan Mortgage Corp. 6.945% 2005 2,000 2,015 .37
COLLATERALIZED MORTGAGE OBLIGATIONS
(PRIVATELY ORIGINATED)/1/ - 4.91%
GE Capital Mortgage Services, Inc., Series 1994-15, Class A-10,
6.00% 2009 8,000 7,360 1.36
CS First Boston Mortgage Securities Corp., Series
1995-AEW1,
Class A-1, 6.665% 2027 5,983 6,021 1.11
Prudential Home Mortgage Securities Co., Inc., Series 1992-33,
Class A-12, 7.50% 2022 5,724 5,742 1.06
CMC Securities Corp. I, Series 1993-E, Class S-9, 6.50% 4,518 4,346 .80
2008
J.P. Morgan Commercial Mortgage Finance Corp., Series 1995-C1,
Class A2, 7.398% 2010/3/ 3,000 3,176 .58
ASSET-BACKED OBLIGATIONS/1/ - 4.36%
MBNA Credit Card Trust 1991-A, 7.75% 1998 7,500 7,613 1.40
Standard Credit Card Master Trust 1991-3, Class A,
8.875% 1999 5,500 5,895
Standard Credit Card Trust 1990-6, Series A,
9.375% 1998 875 920 1.26
Green Tree Financial Corp., Series 1995-9, Class A-5,
6.80% 2027 5,000 5,038 .93
Case Equipment Loan Trust 1995-A, 7.30% 2002 4,087 4,162 .77
FINANCIAL - 2.97%
The Trustees of Columbia University in the City of New
York,
Series B, 8.65% 2003 3,000 3,425
The Trustees of Columbia University in the City of New
York,
Series B, 8.62% 2001 2,000 2,232 1.04
General Electric Capital Corp. 8.70% 2007 2,500 3,010
General Electric Capital Corp. 8.625% 2008 2,000 2,378 .99
Signal Capital Corp. 9.95% 2006 3,162 3,629 .67
National Westminster Bancorp Inc. 12.125% 2002 1,256 1,402 .27
DEVELOPMENTAL AUTHORITIES - 2.44%
International Bank for Reconstruction & Development 7.90%
1998 3,000 3,145
International Bank for Reconstruction & Development 14.90%
1997 1,200 1,354
International Bank for Reconstruction & Development 9.77%
1998 1,000 1,094 1.23
International Bank for Reconstruction & Development 9.76%
1998 1,000 1,093
Inter-American Development Bank 9.50% 1997 4,000 4,266 .79
European Investment Bank 8.875% 2001 2,000 2,268 .42
NON-U.S. GOVERNMENT OBLIGATIONS - 0.62%
Ontario (Province of) 15.75% 2012 1,700 1,993
Ontario (Province of) 15.25% 2012 1,145 1,382 .62
COLLATERALIZED MORTGAGE OBLIGATIONS
(FEDERAL AGENCIES)/1/ - 0.54%
Federal Home Loan Mortgage Corp., Series 1716, Class A,
6.50% 2009 2,250 2,177
Federal Home Loan Mortgage Corp., Series 83-B, Class B-3,
12.50% 2013 687 752 .54
PRIVATE ISSUE PASS-THROUGHS/1/ - 0.28%
Merrill Lynch Mortgage Investors Inc., Series 1995-C3,
Class A-2, 6.85% 2025 1,500 1,517 .28
TELEPHONE UTILITIES - 0.22%
BellSouth Savings and Security ESOP Trust 9.125% 2003 1,097 1,212 .22
INDUSTRIALS - 0.11%
DeBartolo Capital Corp. II 8.00% Euronotes 1996 575 576 .11
-------- --------
TOTAL BONDS & NOTES (cost: $468,234,000) 480,766 88.66
-------- --------
Short-Term Securities
- ------------------------------------------------
CORPORATE SHORT-TERM NOTES - 9.63%
Pfizer Inc 5.70% due 12/8/95 /4/ 15,000 14,981 2.76
Xerox Corp. 5.70% due 1/9/96 13,400 13,315 2.46
H.J. Heinz Co. 5.70%-5.72% due 12/13-12/18/95 12,900 12,865 2.37
AT&T Corp. 5.69% due 12/11/95 7,700 7,687 1.42
Associates Corp. of North America 5.89% due 12/1/95 3,400 3,399 .62
-------- --------
TOTAL SHORT-TERM SECURITIES (cost: $52,248,000) 52,247 9.63
-------- --------
TOTAL INVESTMENT SECURITIES (cost: $520,482,000) 533,013 98.29
Excess of money market account, cash and receivables
over payables 9,268 1.71
-------- --------
NET ASSETS $542,281 100.00%
======== ========
</TABLE>
/1/ Pass-through securities backed by a pool of mortgages or other loans on
which principal
payments are periodically made. Due to the possibility of early principal
payments, 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/ Purchased in a private placement transaction; resale potential extends only
to qualified institutional buyers.
See Notes to Financial Statements
<PAGE>
Asset Allocation Fund
Investment Portfolio November 30, 1995
<TABLE>
<CAPTION>
Percent
of Net
Assets
<S> <C> <C> <C>
Equity-Type Securities 69.76%
U.S. Government Bonds 10.53
Corporate Bonds 9.85
Cash & Equivalents 9.63
Non-U.S. Government Bonds .23
LARGEST INDIVIDUAL EQUITY HOLDINGS
American Home Products 2.36%
CIGNA 2.21
Eli Lilly 1.72
Minnesota Mining and Manufacturing 1.58
Warner-Lambert 1.54
Pfizer 1.53
Wal-Mart Stores 1.45
Chevron 1.45
Textron 1.41
Phillips Petroleum 1.40
Market Percent
Number of Value of Net
Stocks (common and preferred) Shares (000) Assets
- ---------------------------------------------------- ---------- ------- -------
HEALTH & PERSONAL CARE- 10.97%
American Home Products Corp. 225,000 $20,531 2.36%
ELI LILLY AND CO. 150,000 14,925 1.72
WARNER-LAMBERT CO. 150,000 13,388 1.54
PFIZER INC 230,000 13,340 1.53
BRISTOL-MYERS SQUIBB CO. 145,000 11,636 1.34
SmithKline Beecham PLC (American Depositary
Receipts) (United Kingdom) 120,000 6,390 .74
TAMBRANDS INC. 110,000 5,734 .66
KIMBERLY-CLARK CORP. 60,000 4,612 .53
BAUSCH & LOMB INC. 80,000 2,890 .33
ABBOTT LABORATORIES 48,000 1,950 .22
BANKING- 8.38%
NationsBank Corp. 155,000 11,063 1.27
CITICORP 140,000 9,905 1.14
FIRST INTERSTATE BANCORP 55,000 7,370 .85
PNC BANK CORP. 195,000 5,704 .66
FIRST FIDELITY BANCORPORATION 70,000 5,136 .59
FLEET FINANCIAL GROUP, INC. 120,000 5,010 .58
FIRST UNION CORP. 80,000 4,370 .50
U.S. BANCORP 120,000 4,065 .47
CoreStates Financial Corp 100,000 3,875 .44
CHASE MANHATTAN CORP. 55,000 3,348 .38
BANKAMERICA CORP. 50,000 3,181 .36
FIRST TENNESSEE NATIONAL CORP. 50,000 3,025 .35
KeyCorp 80,000 2,950 .34
J.P. MORGAN & CO. INC. 35,000 2,747 .32
COMERICA INC. 30,000 1,121 .13
ENERGY SOURCES- 6.32%
CHEVRON CORP. 255,000 12,591 1.45
PHILLIPS PETROLEUM CO. 365,000 12,136 1.40
ROYAL DUTCH PETROLEUM CO. (NEW YORK REGISTERED
SHARES) (NETHERLANDS) 60,000 7,702 .89
KERR-MCGEE CORP. 100,000 5,787 .66
ATLANTIC RICHFIELD CO. 50,000 5,419 .62
UNOCAL CORP. 155,000 4,166 .48
AMOCO CORP. 60,000 4,065 .47
Texaco Inc. 41,200 3,049 .35
INSURANCE- 6.17%
CIGNA CORP. 175,000 19,250 2.21
ALLSTATE CORP. 275,622 11,300 1.30
SAFECO CORP. 145,000 10,295 1.18
AMERICAN GENERAL CORP. 176,700 5,986 .69
AMBAC INC. 130,000 5,736 .66
ST. PAUL COMPANIES, INC. 20,000 1,120 .13
MERCHANDISING- 5.12%
WAL-MART STORES, INC. 525,000 12,600 1.45
J.C. PENNEY CO., INC. 210,000 9,844 1.13
WALGREEN CO. 200,000 5,825 .67
MAY DEPARTMENT STORES CO. 125,000 5,453 .63
SEARS, ROEBUCK AND CO. 120,000 4,725 .54
Gap, Inc. 70,000 3,167 .37
Hancock Fabrics, Inc. 300,000 2,888 .33
MULTI-INDUSTRY- 4.10%
MINNESOTA MINING AND MANUFACTURING CO. 210,000 13,755 1.58
TEXTRON INC. 160,000 12,260 1.41
TENNECO INC. 200,000 9,600 1.11
INDUSTRIAL COMPONENTS- 3.05%
ROCKWELL INTERNATIONAL CORP. 240,000 11,760 1.35
Johnson Controls, Inc. 150,000 10,388 1.20
DANA CORP. 150,000 4,388 .50
TRANSPORTATION: RAIL & ROAD- 2.92%
CSX CORP. 120,000 10,515 1.21
UNION PACIFIC CORP. 100,000 6,775 .78
CONRAIL, INC. 60,000 4,193 .48
NORFOLK SOUTHERN CORP. 50,000 3,937 .45
AEROSPACE & MILITARY TECHNOLOGY- 2.46%
GENERAL MOTORS CORP., CLASS H 200,000 9,500 1.09
BOEING CO. 130,000 9,474 1.09
NORTHROP GRUMMAN CORP. 40,000 2,460 .28
CHEMICALS- 2.39%
E.I. DU PONT DE NEMOURS AND CO. 120,000 7,980 .92
Monsanto Co. 40,000 4,580 .53
GREAT LAKES CHEMICAL CORP. 60,000 4,267 .49
EASTMAN CHEMICAL CO. 60,000 3,938 .45
BEVERAGES & TOBACCO- 2.30%
PEPSICO, INC. 210,000 11,603 1.33
SEAGRAM CO. LTD. (CANADA) 230,000 8,395 .97
FOREST PRODUCTS & PAPER- 2.19%
UNION CAMP CORP. 100,000 4,913 .56
WEYERHAEUSER CO. 100,000 4,525 .52
ITT RAYONIER INC. 100,000 3,825 .44
GEORGIA-PACIFIC CORP. 40,000 3,110 .36
Louisiana-Pacific Corp. 100,000 2,700 .31
FOOD & HOUSEHOLD PRODUCTS- 1.65%
H.J. HEINZ CO. 150,000 4,781 .55
McCormick & Co., Inc. 150,000 3,544 .41
Archer Daniels Midland Co. 200,000 3,450 .40
RALSTON PURINA CO. 40,000 2,560 .29
BUSINESS & PUBLIC SERVICES- 1.37%
DUN & BRADSTREET CORP. 120,000 7,485 .86
H&R Block, Inc. 100,000 4,450 .51
UTILITIES: ELECTRIC & GAS- 1.25%
LONG ISLAND LIGHTING CO. 195,000 3,339 .38
DETROIT EDISON CO. 100,000 3,262 .38
GENERAL PUBLIC UTILITIES CORP. 90,000 2,846 .33
ENTERGY CORP. 50,000 1,394 .16
MACHINERY & ENGINEERING- 1.05%
Deere & Co. 180,000 5,918 .68
CROMPTON & KNOWLES CORP. 250,000 3,250 .37
RECREATION & OTHER CONSUMER PRODUCTS- 1.05%
EASTMAN KODAK CO. 70,000 4,760 .55
STANLEY WORKS 60,000 3,038 .34
AMERICAN GREETINGS CORP., CLASS A 50,000 1,363 .16
DATA PROCESSING & REPRODUCTION- 0.91%
APPLE COMPUTER, INC. 130,500 4,975 .57
INTERNATIONAL BUSINESS MACHINES CORP. 30,000 2,899 .34
TELECOMMUNICATIONS- 0.90%
PACIFIC TELESIS GROUP 150,000 4,500 .52
AT&T CORP. 50,000 3,300 .38
ENERGY EQUIPMENT- 0.81%
SCHLUMBERGER LTD. (NETHERLANDS ANTILLES) 70,000 4,445 .51
COOPER INDUSTRIES, INC. 71,921 2,625 .30
METALS: NONFERROUS- 0.67%
ALUMINUM CO. OF AMERICA 100,000 5,850 .67
AUTOMOBILES- 0.56%
GENERAL MOTORS CORP. 100,000 4,850 .56
ELECTRICAL & ELECTRONICS- 0.44%
HUBBELL INC., CLASS B 63,000 3,851 .44
MISCELLANEOUS MATERIALS & COMMODITIES- 0.42%
TRINOVA CORP. 120,000 3,690 .42
BROADCASTING & PUBLISHING- 0.21%
TIME WARNER INC., PREFERRED EQUITY REDEMPTION
CUMULATIVE STOCK 55,000 1,794 .21
------- -------
TOTAL STOCKS (COST: $467,678,000) 588,430 67.66
------- -------
PRINCIPAL
AMOUNT
CONVERTIBLE DEBENTURES (000)
- ---------------------------------------------------- ---------- ------- -------
INDUSTRIALS & SERVICES- 1.21%
TURNER BROADCASTING SYSTEM, INC. 0% 2007/1/ $10,000 4,550 .52
HANSON AMERICA INC. 2.39% 2001/1/ 5,000 4,119 .47
U S WEST Communications, Inc. 0% 2011 3,000 1,016 .12
TIME WARNER INC. 0% 2012 2,500 872 .10
------- -------
TOTAL CONVERTIBLE DEBENTURES (COST: $9,626,000) 10,557 1.21
------- -------
MISCELLANEOUS
OTHER EQUITY-TYPE SECURITIES IN INITIAL PERIOD OF
ACQUISITION (COST:$9,086,000) 7,736 .89
------- -------
TOTAL EQUITY-TYPE SECURITIES (COST: $486,390,000) 606,723 69.76
------- -------
BONDS & NOTES
- -----------------------------------------------
U.S. TREASURY OBLIGATIONS- 9.96%
10.375% 2012 15,000 20,461 2.35
6.75% 1997 13,000 13,243 1.52
5.75% 1997 12,000 12,082 1.39
5.375% 1998 12,000 11,987 1.38
8.75% 1997 6,000 6,353 .73
8.75% 2008 5,000 5,888 .68
9.25% 1998 5,000 5,475 .63
8.75% 2000 3,000 3,393 .39
8.875% 1999 2,500 2,746 .32
10.375% 2009 2,000 2,614 .30
8.50% 1997 1,000 1,047 .12
11.75% 2010 500 706 .08
10.75% 2003 500 651 .07
INDUSTRIALS- 4.88%
CONTAINER CORP. OF AMERICA 9.75% 2003 6,500 6,386 .73
Time Warner Inc. 9.125% 2013 4,000 4,426 .51
ORYX ENERGY CO. 9.50% 1999 3,000 3,229
ORYX ENERGY CO. 10.00% 1999 1,000 1,080 .50
MARVEL HOLDINGS INC., SERIES B, 0% 1998 4,800 3,408 .39
POHANG IRON & STEEL 7.50% 2002 3,000 3,168 .36
GENERAL MOTORS CORP. 8.80% 2021 2,500 3,008 .35
USX Corp. 9.125% 2013 2,500 2,831 .33
NEWS AMERICA HOLDINGS INC. 10.125% 2012 2,000 2,387 .27
Inco Ltd. 9.60% 2022 2,000 2,261 .26
TCI Communications, Inc. 8.75% 2015 2,000 2,159 .25
Tele-Communications, Inc. 9.25% 2023 2,000 2,119 .24
ACME METALS INC. 12.50% 2002 2,000 1,965 .23
CENCALL COMMUNICATIONS CORP. 0%/10.125% 2004/2/ 3,000 1,613 .18
Parker & Parsley Petroleum Co. 8.25% 2007 1,500 1,600 .18
Kaiser Aluminum Corp. 12.75% 2003 750 821 .10
FINANCIAL- 3.36%
GENERAL MOTORS ACCEPTANCE CORP. 8.875% 2010 3,235 3,912
GENERAL MOTORS ACCEPTANCE CORP. 7.00% 2000 3,000 3,092
GENERAL MOTORS ACCEPTANCE CORP. 9.625% 2001 2,000 2,333 1.07
CAPITAL ONE BANK 6.61% 1999 7,500 7,575 .87
GENERAL ELECTRIC CAPITAL CORP. 8.875% 2009 2,000 2,462 .28
American Re Corp. 10.875% 2004 1,500 1,672 .19
H.F. AHMANSON & CO. 9.875% 1999 1,400 1,580 .18
B.F. Saul Real Estate Investment Trust 11.625% 2002 1,500 1,515 .18
SECURITY PACIFIC CORP. 10.25% 2001 1,000 1,193 .14
NATIONAL WESTMINSTER BANCORP INC. 9.45% 2001 1,000 1,154 .13
Bankers Trust New York Corp. 8.25% 2005 1,000 1,104 .13
Shopping Center Associates 6.75% 2004/1/ 1,000 989 .12
Golden West Financial Corp. 10.25% 2000 500 583 .07
COLLATERALIZED MORTGAGE OBLIGATIONS
(PRIVATELY ORIGINATED)/3/- 0.89%
Delta Air Lines, Inc., 1993-A2, 10.50% 2016 2,000 2,463
Delta Air Lines, Inc., 1992-A2, 9.20% 2014 1,000 1,104 .41
American Airlines, Inc., 1991-A, 9.71% 2007 2,311 2,646 .31
FEDERAL EXPRESS CORP. 7.53% 2006 1,416 1,480 .17
FEDERAL AGENCY OBLIGATIONS-MORTGAGE
PASS-THROUGHS/3/- 0.57%
Government National Mortgage Assn. 8.50% 2025 4,730 4,939 .57
TRANSPORTATION- 0.49%
Jet Equipment Trust Series 1995-B 7.83% 2015/1/ 2,500 2,597 .30
AMR CORP. 9.75% 2000 1,000 1,111 .13
UNITED AIR LINES, INC. 9.00% 2003 500 547 .06
NON-U.S. GOVERNMENT OBLIGATIONS- 0.23%
POLAND GOVERNMENT 7.75% 2000/1/ 2,000 2,034 .23
GAS UTILITIES- 0.23%
COLUMBIA SYSTEMS 7.05% 2007 2,000 2,030 .23
------- -------
TOTAL BONDS & NOTES (COST: $176,501,000) 179,222 20.61
------- -------
SHORT-TERM SECURITIES
- ------------------------------------------------
CORPORATE SHORT-TERM NOTES- 5.38%
CPC International Inc. 5.71% due 12/7/95/1/ 15,400 15,383 1.77
Procter & Gamble Co. 5.67% due 1/16/96 11,000 10,918 1.26
CIT Group Holdings Inc. 5.72%-5.75% due 12/1-12/18/95 10,300 10,283 1.18
Xerox Corp. 5.67%-5.69% due 12/8/95-1/18/96 10,200 10,155 1.17
U.S. TREASURY OBLIGATIONS- 3.82%
6.875% DUE 10/31/96 10,000 10,125 1.16
6.50% DUE 9/30/96 10,000 10,084 1.16
8.875% DUE 2/15/96 6,000 6,038 .69
4.25% DUE 5/15/96 5,000 4,973 .57
8.00% DUE 10/15/96 1,000 1,021 .12
7.875% DUE 7/15/96 1,000 1,014 .12
------- -------
TOTAL SHORT-TERM SECURITIES (COST: $80,883,000) 79,994 9.20
------- -------
TOTAL INVESTMENT SECURITIES (COST: $743,774,000) 865,939 99.57
EXCESS OF MONEY MARKET ACCOUNT, CASH AND
RECEIVABLES OVER PAYABLES 3,753 .43
------- -------
NET ASSETS $869,692 100.00%
======= =======
</TABLE>
/1/Purchased in a private placement transaction; resale potential extends only
to qualified institutional buyers.
/2/Represents a zero coupon bond which will convert to a coupon-bearing
security at a
later date.
/3/Pass-through securities backed by a pool of mortgages or other loans on
which principal payments are periodically made. Due to the possibility of early
principal payments, 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, 1995
- ---------------------------------------------------
Archer Daniels Midland
CoreStates Financial
Deere & Co.
Gap
H&R Block
Hancock Fabrics
KeyCorp
Louisiana-Pacific
McCormick & Co.
Monsanto
NationsBank
SmithKline Beecham
Texaco
U S WEST Communications
Equity-type securities eliminated from the portfolio
since May 31,1995
- -----------------------------------------------------
Advanced Micro Devices
American International Group
Bankers Trust New York
Baxter International
Bell Atlantic
CBS
General Mills
Houston Industries
Limited
Melville
Ohio Casualty
Sprint
Times Mirror
USX
<PAGE>
AMERICAN VARIABLE INSURANCE SERIES INTERNATIONAL FUND
Investment Portfolio, November 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Where the Fund's Assets Are Invested
Percent of Percent of
Net Assets Net Assets
---------- ----------
EUROPE 48.64%
ASIA/PACIFIC 23.90%
THE AMERICAS 6.04%
OTHER .38%
CASH AND EQUIVALENTS 21.04%
Largest Individual Equity Holdings
Orkla 2.26%
Forte 1.78
Australia and New Zealand Banking Group 1.58
Astra 1.54
Compagnie Generale des Etablissements Michelin 1.44
Bayerische Motoren Werke 1.33
ABN AMRO 1.28
Telecom Corp. of New Zealand 1.26
Coca-Cola Amatil 1.26
Tele Danmark 1.23
Market Percent
Number of Value of Net
Stocks (common and preferred) Shares (000) Assets
- -------------------------------------------------------- ---------- -------- ------
TELECOMMUNICATIONS - 7.82%
Telecom Corp. of New Zealand Ltd. (New Zealand)/1/ 4,956,800 $20,732
Telecom Corp. of New Zealand Ltd. (American Depositary 11,700 784 1.26%
Receipts)
Tele Danmark AS, Class B (American Depositary Receipts)
(Denmark) 750,000 20,906 1.23
Telecom Italia Mobile SpA (Italy) 11,961,000 19,398
Telecom Italia Mobile SpA, savings shares 276,000 268 1.16
Telefonos de Mexico, SA de CV, Class L (American
Depositary Receipts) (Mexico) 487,000 16,071 .94
Telecomunicacoes Brasileiras SA, preferred nominative
(American Depositary Receipts) (Brazil) 256,722 12,323 .72
Nippon Telegraph and Telephone Corp. (Japan) 1,108 9,027 .53
Telefonica de Espana, SA (American Depositary Receipts) 158,000 6,557 .39
(Spain)
Koninklijke PTT Nederland NV (Netherlands) 150,000 5,339 .31
STET - Societa Finanziaria Telefonica p.a. (Italy) 950,000 2,588
STET - Societa Finanziaria Telefonica p.a., .26
nonconvertible
savings shares 950,000 1,864
Philippine Long Distance Telephone Co. (Global Depositary
Receipts) (Philippines) 80,000 4,320 .25
Telecom Italia SpA (Italy) 2,875,200 3,881
Telecom Italia SpA, savings shares 276,000 302 .25
Vodafone Group PLC (American Depositary Receipts)
(United Kingdom) 66,000 2,384 .22
Vodafone Group PLC 392,976 1,408
Cable and Wireless PLC (United Kingdom) 533,600 3,704 .22
Perusahaan Perseroan (Persero) PT Indonesian Satellite Corp.
(American Depositary Receipts) (Indonesia) 40,000 1,370 .08
BANKING - 6.48%
Australia and New Zealand Banking Group Ltd. (Australia) 6,023,299 26,852 1.58
ABN AMRO Holding NV (Netherlands) 491,334 21,854 1.28
Westpac Banking Corp. (Australia) 3,815,761 15,820 .93
Banco de Santander, SA (Spain) 240,800 11,217
Banco de Santander, SA (American Depositary Receipts) 13,200 609 .69
PT Bank Internasional Indonesia (Indonesia) 1,863,000 5,957 .35
Banco Popular Espanol, SA (Spain) 30,000 5,031 .29
Bank of Montreal (Canada) 220,000 4,978 .29
CS Holding Group, registered shares (Switzerland) 48,000 4,551 .27
Safra Republic Holdings SA (Luxembourg) 42,000 3,717 .22
Kansallis-Yhtymae (Finland) 4,022,800 3,366 .20
(FORMERLY KANSALLIS-OSAKE-PANKKI)
Svenska Handelsbanken Group, Class A (Sweden) 107,000 2,161
Svenska Handelsbanken Group, Class B 47,300 923 .18
Grupo Financiero Banamex Accival, SA de CV, Class B 1,130,397 1,740
(Mexico)
Grupo Financiero Banamex Accival, SA de CV, Class L 56,520 80 .11
Philippine National Bank (Philippines) 98,049 869 .05
Deutsche Bank AG (Germany) 13,000 609 .04
MULTI-INDUSTRY - 5.95%
Orkla AS, Class A (Norway) 755,000 38,493 2.26
Brierley Investments Ltd. (New Zealand) 20,901,871 15,820
Brierley Investments Ltd., 9.00% convertible preferred 1,445,000 1,028 .99
Hutchison Whampoa Ltd. (Hong Kong) 2,000,000 11,301 .66
Groupe Bruxelles Lambert SA (Belgium) 83,000 10,793 .63
Industriforvaltnings AB Kinnevik, Class B (Sweden) 165,000 4,678
Industriforvaltnings AB Kinnevik, Class A 101,600 2,788 .44
Lend Lease Corp. Ltd. (Australia) 443,522 6,143 .36
Chargeurs (France) 18,700 4,046 .24
Swire Pacific Ltd., Class A (Hong Kong) 495,000 3,744 .22
Preussag AG (Germany) 9,200 2,644 .15
AUTOMOBILES - 5.05%
Bayerische Motoren Werke AG (Germany) 35,000 18,827
Bayerische Motoren Werke AG, preferred shares 10,472 3,901 1.33
Peugeot SA (France) 110,000 14,216 .83
Volvo AB, Class B (Sweden) 640,000 13,267 .78
Suzuki Motor Corp. (Japan) 1,100,000 12,186 .72
Toyota Motor Corp. (Japan) 598,000 11,784 .69
Daimler-Benz AG (Germany) 16,610 8,161 .48
Renault V.I. SA (France) 129,500 3,700 .22
BROADCASTING & PUBLISHING - 4.85%
News Corp. Ltd. (American Depositary Receipts) 362,000 7,602
(Australia)
News Corp. Ltd., preferred shares (American Depositary 181,000 3,416 .65
Receipts)
NV Verenigd Bezit VNU (Netherlands) 77,000 10,854 .64
Television Broadcasts Ltd. (Hong Kong) 2,562,000 9,673 .57
CANAL+ (France) 37,540 6,830 .40
Independent Newspapers, PLC (Ireland) 1,003,511 6,062 .36
Grupo Televisa, SA (American Depositary Receipts) 261,000 5,644 .33
(Mexico)
Pearson PLC (United Kingdom) 540,000 5,365 .31
Elsevier NV (Netherlands) 340,000 4,635 .27
Sing Tao Holdings Ltd. (Hong Kong - Incorporated in 7,723,230 3,994 .23
Bermuda)
TeleWest Communications PLC (American Depositary
Receipts)
(United Kingdom)/2/ 141,000 3,595 .21
News International PLC, special dividend shares (United 580,000 2,726 .16
Kingdom)
John Fairfax Holdings Ltd. (Australia) 1,280,000 2,587 .15
British Sky Broadcasting Group PLC (American Depositary
Receipts) (United Kingdom) 58,600 2,337 .14
Wolters Kluwer NV (Netherlands) 26,118 2,201 .13
Tokyo Broadcasting System, Inc. (Japan) 113,000 1,883 .11
Rogers Communications Inc., Class B (Canada)/2/ 175,000 1,835 .11
AUDIOFINA (Luxembourg) 24,550 1,196
AUDIOFINA, 5.00% convertible preferred 2,230 114 .08
UTILITIES: ELECTRIC & GAS - 4.26%
Hongkong Electric Holdings Ltd. (Hong Kong) 5,875,000 19,712 1.16
Korea Electric Power Corp. (American Depositary Receipts) 445,000 10,818
(Korea)
Korea Electric Power Corp. 188,000 8,137 1.11
Centrais Eletricas Brasileiras SA, Class B, preferred
nominative (American Depositary Receipts) (Brazil) 948,000 13,154 .77
Iberdrola, SA (Spain) 915,000 7,709 .45
China Light & Power Co., Ltd. (Hong Kong) 1,589,800 7,482 .44
Scottish Power PLC (United Kingdom) 600,000 3,454 .20
CESP-Companhia Energetica de Sao Paulo, preferred
nominative (American Depositary Receipts) (Brazil)/1/ /2/ 204,096 1,633 .13
CESP-Companhia Energetica de Sao Paulo, ordinary 20,445,000 482
nominative
ELECTRICAL & ELECTRONICS - 3.76%
ASEA AB, Class A (Sweden) 130,000 12,603
ASEA AB, Class B 69,300 6,687 1.13
Nokia Corp., Class A (Finland) 180,000 9,875
Nokia Corp., Class K 150,000 8,264 1.07
Telefonaktiebolaget LM Ericsson, Class B (Sweden) 534,600 12,590
Telefonaktiebolaget LM Ericsson, Class B, 4.25%
convertible preferred 14,500 46 .74
BBC Brown Boveri Ltd, Class A (Switzerland) 9,292 10,667 .63
Hitachi, Ltd. (Japan) 115,000 1,161 .07
Siemens AG (Germany) 2,050 1,069 .06
Johnson Electric Holdings Ltd. (Hong Kong - Incorporated
in Bermuda) 495,000 1,024 .06
FOOD & HOUSEHOLD PRODUCTS - 3.50%
Reckitt & Colman PLC (United Kingdom) 1,776,250 18,204 1.07
Nestle SA (Switzerland) 15,436 16,447 .97
Groupe Danone (France) 70,000 10,926 .64
PT Indofood Sukses Makmur (Indonesia) 1,008,500 4,417 .26
Cadbury Schweppes PLC (United Kingdom) 500,454 4,255 .25
Dalgety PLC (United Kingdom) 500,000 2,970 .17
Hazlewood Foods PLC (United Kingdom) 1,500,000 2,342 .14
CHEMICALS - 2.66%
L'Air Liquide (France) 75,229 12,103 .71
Ciba-Geigy Ltd. (Switzerland) 10,400 9,268 .55
DSM NV (Netherlands) 98,902 7,871 .46
Akzo NV (Netherlands) 62,000 6,999 .41
AGA AB, Class B (Sweden) 360,000 4,994 .29
Sumitomo Chemical Co., Ltd. (Japan) 826,000 4,098 .24
HEALTH & PERSONAL CARE - 2.65%
AB Astra, Class A (Sweden) 703,000 26,200 1.54
Glaxo Holdings PLC (American Depositary Receipts)
(United Kingdom) 500,000 13,375 .78
Banyu Pharmaceutical Co., Ltd. (Japan) 495,000 5,630 .33
MACHINERY & ENGINEERING - 2.43%
Mannesmann AG (Germany) 60,187 19,354 1.14
Atlas Copco AB, Class A (Sweden) 815,200 12,302 .72
VA Technologie AG (Austria) 55,100 6,349 .37
Sandvik AB, Class B (Sweden) 99,700 1,831 .11
GEA AG, preferred shares (Germany) 5,000 1,588 .09
LEISURE & TOURISM - 2.35%
Forte PLC (United Kingdom) 5,768,836 30,246 1.78
Mandarin Oriental International Ltd. (Singapore) 6,699,277 7,570 .44
Rank Organisation PLC (United Kingdom) 350,000 2,186 .13
INSURANCE - 2.21%
Irish Life PLC (Ireland) 2,636,889 10,180 .60
Munchener Ruckversicherungs-Gesellschaft (Germany) 3,673 6,754
Munchener Ruckversicherungs-Gesellschaft, rights, expire 3,673 411 .42
12/5/95/2/
Munchener Ruckversicherungs-Gesellschaft, warrants, 483 51
expire 1998/2/
GIO Australia Holdings Ltd. (Australia) 2,851,201 6,377 .37
Corporacion Mapfre, CIR, SA (Spain) 98,652 5,546 .32
Internationale Nederlanden Groep NV, warrants, expire
2001
(Netherlands)/2/ 1,500,000 5,062 .30
PartnerRe Holdings Ltd. (Bermuda) 127,100 3,368 .20
RECREATION & OTHER CONSUMER PRODUCTS - 1.94%
Nintendo Co., Ltd. (Japan) 145,000 11,373 .67
THORN EMI PLC (United Kingdom) 468,712 11,175 .65
PolyGram NV (New York Registered Shares) (Netherlands) 175,000 10,500 .62
MISCELLANEOUS MATERIALS & COMMODITIES - 1.93%
Compagnie de Saint-Gobain (France) 121,879 14,066 .82
English China Clays PLC (United Kingdom) 2,168,750 10,906 .64
Pilkington PLC (United Kingdom) 2,700,000 7,956 .47
BEVERAGES & TOBACCO - 1.80%
Coca-Cola Amatil Ltd. (Australia) 2,656,602 21,515 1.26
LVMH Moet Hennessy Louis Vuitton (France) 48,000 9,117 .54
INDUSTRIAL COMPONENTS - 1.65%
Compagnie Generale des Etablissements Michelin, Class B 573,000 23,283
(France)
Compagnie Generale des Etablissements Michelin, 2.50% 1.44
convertible preferred 23,200 1,239
Magna International Inc., Class A (Canada) 43,000 1,871 .11
Pirelli SpA (Italy)/2/ 900,000 1,090 .07
Orbital Engine Corp. Ltd. (Australia)/2/ 611,040 540 .03
BUSINESS & PUBLIC SERVICES - 1.57%
Autopistas, Concesionaria Espanola, SA (Spain) 1,035,000 11,361 .67
Reuters Holdings PLC (United Kingdom) 932,000 8,796 .52
Cordiant PLC (United Kingdom) 1,808,995 2,518
Cordiant PLC, rights, expire 12/13/95/2/ 1,808,995 831 .19
Securicor Group PLC, Class A (United Kingdom) 165,000 2,349 .14
Eurotunnel SA, units (France)/2/ 592,000 866 .05
ENERGY SOURCES - 1.51%
YPF SA, Class D (American Depositary Receipts) 634,000 12,363 .73
(Argentina)
TOTAL, Class B (France) 142,872 8,788 .52
Petrofina SA (Belgium) 15,175 4,492 .26
MERCHANDISING - 1.29%
Tesco PLC (United Kingdom) 2,043,081 9,023 .53
Amway Japan Ltd. (American Depositary Receipts) (Japan) 200,000 4,050 .24
Woolworths Ltd. (Australia) 1,672,631 3,915 .23
Ito-Yokado Co., Ltd. (Japan) 50,000 2,755 .16
Chain Store Okuwa Co., Ltd. (Japan) 100,000 1,431 .08
Cifra, SA de CV, Class C (Mexico) 832,000 880 .05
BUILDING MATERIALS & COMPONENTS - 1.25%
Holderbank Financiere Glaris Ltd. (Switzerland) 21,307 15,872
Holderbank Financiere Glaris Ltd., warrants, expire 1995/2/ 106,535 104 .94
CEMEX, SA, Class A (Mexico) 1,086,250 3,327 .19
Poliet (France) 20,782 1,674 .10
Tolmex, SA de CV, Class B2 (Mexico) 85,000 345 .02
METALS: NONFERROUS - 1.20%
Inco Ltd. (Canada) 180,000 6,413 .38
Western Mining Corp. Holdings Ltd. (Australia) 900,000 6,038 .35
Noranda Inc. (Canada) 200,000 4,231 .25
Teck Corp., Class B (Canada) 200,000 3,826 .22
TRANSPORTATION: AIRLINES - 1.15%
British Airways PLC (American Depositary Receipts)
(United Kingdom) 63,750 4,487 .49
British Airways PLC 560,000 3,943
Cathay Pacific Airways Ltd. (Hong Kong) 3,656,000 5,460 .32
Singapore Airlines Ltd. (Singapore) 358,000 3,350 .20
Air New Zealand Ltd., Class B (New Zealand) 660,000 2,304 .14
APPLIANCES & HOUSEHOLD DURABLES - 0.96%
Sony Corp. (Japan) 144,000 7,623 .45
AB Electrolux, Class B (Sweden) 137,900 5,917 .35
Philips Electronics NV (Netherlands) 70,000 2,751 .16
TRANSPORTATION: RAIL & ROAD - 0.95%
TNT Ltd., 8.00% convertible preferred (Australia) 5,790,400 8,432
TNT Ltd./2/ 5,336,044 7,454 .93
Canadian National Railway Co. (Canada)/2/ 25,000 375 .02
FOREST PRODUCTS & PAPER - 0.95%
Repola Ltd. (Finland) 385,000 7,491 .44
Fletcher Challenge Ltd. (New Zealand) 2,200,000 5,455
Fletcher Challenge Forests Division (American Depositary
Receipts) 51,670 723 .39
Fletcher Challenge Forests Division 312,150 440
Carter Holt Harvey Ltd. (New Zealand) 981,674 2,069 .12
REAL ESTATE - 0.47%
Sun Hung Kai Properties Ltd. (Hong Kong) 1,000,000 8,049 .47
WHOLESALE & INTERNATIONAL TRADE - 0.46%
ITOCHU Corp. (Japan) 600,000 3,971 .23
Mitsubishi Corp. (Japan) 325,000 3,887 .23
AEROSPACE & MILITARY TECHNOLOGY - 0.41%
Bombardier Inc., Class B (Canada) 550,000 7,032 .41
TRANSPORTATION: SHIPPING - 0.27%
Nippon Yusen KK (Japan) 790,000 4,601 .27
ELECTRONIC INSTRUMENTS - 0.18%
Scitex Corp. Ltd. (Israel) 210,000 3,019 .18
METALS: STEEL - 0.18%
Svenskt Stal AB, Class A (Sweden) 240,000 2,396 .14
Tubos de Acero de Mexico, SA (American Depositary
Receipts)(Mexico)/2/ 85,000 595 .04
MISCELLANEOUS
Other stocks in initial period of acquisition 75,068 4.41
-------- ------
TOTAL STOCKS (cost: $1,143,527,000) 1,337,241 78.50
-------- ------
Principal
Amount
Convertible Debentures (000)
- --------------------------------------------------------- ---------- -------- ------
FOREST PRODUCTS & PAPER - 0.24%
Kymmene Corp. 8.25% 2043 $17,000 4,090 .24
BANKING - 0.22%
Bangkok Bank Ltd. 3.25% 2004/1/ 3,675 3,693 .22
-------- ------
TOTAL CONVERTIBLE DEBENTURES (cost: $7,821,000) 7,783 .46
-------- ------
TOTAL EQUITY-TYPE SECURITIES (cost: $1,151,348,000) 1,345,024 78.96
-------- ------
Principal Market Percent
Amount Value of Net
Short-Term Securities (000) (000) Assets
- --------------------------------------------------------- ---------- -------- ------
CORPORATE SHORT-TERM NOTES - 16.27%
Toyota Motor Credit Corp. 5.71% due 1/11-1/12/96 39,500 39,237 2.30
Daimler-Benz North America Corp. 5.72% due 12/8/95-1/3/96 30,000 29,901 1.76
Caisse Nationale des Telecommunications 5.68%-5.70% due 29,793 29,769 1.75
12/4-12/8/95
Glaxo Wellcome PLC 5.69%-5.72% due 12/18/95-1/19/96/1/ 28,400 28,268 1.66
National Australia Funding (Delaware) Inc. 5.67%-5.70% 26,000 25,823 1.51
due
1/12/96
Siemens Corp. 5.68% due 1/18/96 25,000 24,807 1.46
Abbey National North America 5.72% due 1/29/96 20,000 19,810 1.16
Nestle Capital Corp. 5.69% due 12/7/95 18,800 18,779 1.10
Bank of Montreal 5.70% due 1/23/96 18,300 18,143 1.06
Associates Corp. of North America 5.89% due 12/1/95 15,830 15,827 .93
Canadian Wheat Board 5.70% due 12/4/95 13,800 13,791 .81
CPC International Inc. 5.71% due 12/7/95/1/ 13,100 13,086 .77
CERTIFICATES OF DEPOSIT - 4.46%
Societe Generale 5.75%-5.78% due 12/1/95-1/2/96 46,000 46,000 2.70
Bayerische Landesbank Girozentrale 5.80% due 1/24/96 20,000 20,000 1.17
National Westminster Bank PLC 5.78%-5.82% due 10,000 10,000 .59
1/12-1/16/96
NON-U.S. GOVERNMENT OBLIGATIONS - 0.31%
New Zealand Government 9.00% due 11/15/96 NZ 8,000 5,271 .31
-------- ------
TOTAL SHORT-TERM SECURITIES (cost: $357,842,000) 358,512 21.04
-------- ------
TOTAL INVESTMENT SECURITIES (cost: $1,509,190,000) 1,703,536 100.00
Excess of payables over money market account, cash and 65 .00
receivables
-------- ------
NET ASSETS $1,703,471 100.00%
======== ======
</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.
See Notes to Financial Statements
Equity-type securities appearing in the
portfolio since May 31, 1995
- -----------------------------------------
AGA
Air New Zealand
Banco de Santander
Cadbury Schweppes
Canadian National Railway
Dalgety
Groupe Danone
Koninklijke PTT Nederland
LVMH Moet Hennessy Louis Vuitton
Noranda
PartnerRe Holdings
Perusahaan Perseroan (Persero) PT Indonesian Satellite
Svenska Handelsbanken Group
Telecom Italia Mobile
Woolworths
Equity-type securities eliminated from the
portfolio since May 31, 1995
- --------------------------------------------
Alusuisse-Lonza Holding
Banco Bilbao Vizcaya
Bank of Ayudhya
BASF
Bayer
Bayerische Vereinsbank
British Steel
Canadian Imperial Bank of Commerce
Credit local de France
Cross-Harbour Tunnel
Daily Mail and General Trust
Europe 1 Communication
Falconbridge
Havas
Hoechst
Holdingmaatschappij De Telegraaf
Kwik-Fit Holdings
Pakistan Telecommunication
Pioneer Industries International
Refuge Group
Rogers Cantel Mobile Communications
Rolls-Royce
Sembawang Shipyard
Sika Finanz
Siu-Fung Ceramics Holdings
Thames Water
Thyssen
Volkswagen
Welsh Water
WHSmith Group
American Variable Insurance Series
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
at November 30, 1995
(dollars in thousands)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Inter- Growth- Asset
Growth national Income Allocation
Fund Fund Fund Fund
- --------------------------------- ---------- ---------- ---------- ----------
ASSETS:
Investment securities at market
(cost: $2,348,914; $1,509,190;
$3,092,802; $743,774; $528,075;
$520,482; $203,315
and $8,946,552, respectively) $3,151,350 $1,703,536 $3,923,652 $865,939
Money market account 142 100 194 196
Cash 5 3 5 5
Receivables for-
Sales of investments 11,749 2,522 19,947 1,102
Sales of fund's shares 4,745 9,213 1,927 306
Dividends and accrued
interest 1,314 5,140 9,968 5,308
---------- ---------- ---------- ----------
3,169,305 1,720,514 3,955,693 872,856
---------- ---------- ---------- ----------
U.S.
Government/
High-Yield AAA-Rated Cash
Bond Securities Management
Fund Fund Fund Total
---------- ---------- ---------- ----------
ASSETS:
Investment securities at market
(cost: $2,348,914; $1,509,190;
$3,092,802; $743,774; $528,075;
$520,482; $203,315
and $8,946,552, respectively) $532,674 $533,013 $203,315 $10,913,479
Money market account 175 183 - 990
Cash 5 5 25 53
Receivables for-
Sales of investments 995 8,767 - 45,082
Sales of fund's shares 462 416 135 17,204
Dividends and accrued
interest 8,527 5,401 - 35,658
---------- ---------- ---------- ----------
542,838 547,785 203,475 11,012,466
---------- ---------- ---------- ----------
Inter- Growth- Asset
Growth national Income Allocation
Fund Fund Fund Fund
---------- ---------- ---------- ----------
LIABILITIES:
Payables for-
Purchases of investments 13,628 15,957 1,037 2,815
Repurchases of fund's shares 113 8 63 -
Management services 1,073 871 1,263 334
Accrued expenses 50 207 61 15
---------- ---------- ---------- ----------
14,864 17,043 2,424 3,164
NET ASSETS AT ---------- ---------- ---------- ----------
NOVEMBER 30, 1995 $3,154,441 $1,703,471 $3,953,269 $869,692
=========== =========== =========== ===========
U.S.
Government/
High-Yield AAA-Rated Cash
Bond Securities Management
Fund Fund Fund Total
LIABILITIES: ---------- ---------- ---------- ----------
Payables for-
Purchases of investments 8,349 5,264 - 47,050
Repurchases of fund's shares 53 7 10,274 10,518
Management services 221 223 80 4,065
Accrued expenses 10 10 4 357
---------- ---------- ---------- ----------
8,633 5,504 10,358 61,990
NET ASSETS AT ---------- ---------- ---------- ----------
NOVEMBER 30, 1995 $534,205 $542,281 $193,117 $10,950,476
=========== =========== =========== ===========
Inter- Growth- Asset
Growth national Income Allocation
Fund Fund Fund Fund
---------- ---------- ---------- ----------
Shares of beneficial interest
outstanding (unlimited
shares authorized) 75,438,942 122,610,312 125,619,032 63,143,826
Net asset value per share $41.81 $13.89 $31.47 $13.77
U.S.
Government/
High-Yield AAA-Rated Cash
Bond Securities Management
Fund Fund Fund Total
---------- ---------- ---------- ----------
Shares of beneficial interest
outstanding (unlimited
shares authorized) 38,177,115 47,057,482 17,384,644
Net asset value per share $13.99 $11.52 $11.11
</TABLE>
See Notes to Financial Statements
American Variable Insurance Series
FINANCIAL STATEMENTS
<PAGE>
Statement of Operations
for the year ended November 30, 1995
(dollars in thousands)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Inter- Growth- Asset
Growth national Income Allocation
Fund Fund Fund Fund
---------- ---------- --------- ----------
INVESTMENT INCOME:
Income:
Dividends $14,993 $31,190 $76,846 $15,947
Interest 20,613 20,348 26,502 18,376
---------- ---------- ---------- ----------
35,606 51,538 103,348 34,323
---------- ---------- ---------- ----------
Expenses:
Management services fee 11,222 9,882 13,593 3,620
Reports to shareholders 96 56 123 28
Registration statement and
prospectus 120 79 151 35
Postage, stationery and
supplies 170 106 230 52
Trustees' fees 41 26 54 12
Auditing and legal fees 32 22 41 12
Custodian fee 233 1,170 285 65
Taxes other than federal
income tax 36 24 49 11
Other expenses 21 33 26 8
---------- ---------- ---------- ----------
11,971 11,398 14,552 3,843
---------- ---------- ---------- ----------
Net investment income 23,635 40,140 88,796 30,480
---------- ---------- ---------- ----------
REALIZED GAIN (LOSS) AND
UNREALIZED APPRECIATION
ON INVESTMENTS:
Realized gain (loss) before
non-U.S. taxes 259,039 35,433 160,279 30,610
Non-U.S. taxes - (488) - -
---------- ---------- ---------- ----------
Net realized gain (loss) 259,039 34,945 160,279 30,610
---------- ---------- ---------- ----------
Net change in unrealized
appreciation (depreciation):
Beginning of year 322,212 111,219 139,391 (7,649)
End of year 802,436 194,315 830,850 122,165
---------- ---------- ---------- -----------
Net unrealized appreciation 480,224 83,096 691,459 129,814
---------- ---------- ---------- -----------
Net realized gain (loss) and
unrealized appreciation
on investments 739,263 118,041 851,738 160,424
---------- ---------- ---------- -----------
NET INCREASE IN
NET ASSETS RESULTING
FROM OPERATIONS $762,898 $158,181 $940,534 $190,904
========= =========== ========= =========
U.S.
High- Government/ Cash
Yield AAA-Rated Manage-
Bond Securities ment
Fund Fund Fund Total
---------- -------------- ---------- ---------
-
INVESTMENT INCOME:
Income:
Dividends $1 - - $138,977
Interest 49,461 $39,926 $11,661 186,887
---------- ---------- ---------- ----------
49,462 39,926 11,661 325,864
---------- ---------- ---------- ----------
Expenses:
Management services fee 2,350 2,550 907 44,124
Reports to shareholders 17 19 8 347
Registration statement and
prospectus 22 26 11 444
Postage, stationery and
supplies 31 35 14 638
Trustees' fees 8 9 4 154
Auditing and legal fees 9 10 6 132
Custodian fee 46 45 17 1,861
Taxes other than federal
income tax 7 8 4 139
Other expenses 6 6 3 103
---------- ---------- ---------- ----------
2,496 2,708 974 47,942
---------- ---------- ---------- ----------
Net investment income 46,966 37,218 10,687 277,922
---------- ---------- ---------- ----------
REALIZED GAIN (LOSS) AND
UNREALIZED APPRECIATION
ON INVESTMENTS:
Realized gain (loss) before
non-U.S. taxes (11,260) (5,497) - 468,604
Non-U.S. taxes - - - (488)
---------- ---------- ---------- ----------
Net realized gain (loss) (11,260) (5,497) - 468,116
---------- ---------- ---------- ----------
Net change in unrealized
appreciation (depreciation):
Beginning of year (42,565) (25,324) - 497,284
End of year 4,599 12,531 - 1,966,896
---------- -------------- ---------- ----------
-
Net unrealized appreciation 47,164 37,855 - 1,469,612
---------- -------------- ---------- ----------
-
Net realized gain (loss) and
unrealized appreciation
on investments 35,904 32,358 - 1,937,728
---------- -------------- ---------- ----------
-
NET INCREASE IN
NET ASSETS RESULTING
FROM OPERATIONS $82,870 $69,576 $10,687 $2,215,650
========= ============== ========= =========
=
</TABLE>
See Notes to Financial Statements
American Variable Insurance Series
FINANCIAL STATEMENTS
<PAGE>
Statement of Changes in Net Assets
for the year ended November 30, 1995
(dollars in thousands)
<TABLE>
<CAPTION>
Inter- Growth- Asset
Growth national Income Allocation
Fund Fund Fund Fund
- ---------------------------------- -------- -------- -------- ---------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income $23,635 $40,140 $88,796 $30,480
Net realized gain (loss) on investments 259,039 34,945 160,279 30,610
Net unrealized appreciation
on investments 480,224 83,096 691,459 129,814
-------- -------- -------- ---------
Net increase in net assets
resulting from operations 762,898 158,181 940,534 190,904
-------- -------- -------- ---------
DIVIDENDS AND
DISTRIBUTIONS PAID TO
SHAREHOLDERS:
Dividends from net investment income (20,133) (37,537) (85,055) (29,507)
Distributions from net realized
gain on investments (51,801) (44,136) (112,521) (9,640)
-------- -------- -------- ---------
Total dividends and distributions (71,934) (81,673) (197,576) (39,147)
-------- -------- -------- ---------
CAPITAL SHARE
TRANSACTIONS:
Proceeds from shares sold:
14,348,086; 19,173,422; 13,715,393;
6,084,975; 7,379,725; 6,989,389;
20,995,679 and 88,686,669 shares,
respectively 528,750 254,241 387,075 76,296
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions
of net realized gain on investments:
2,225,519; 6,335,172; 7,750,200;
3,296,555; 3,356,613; 3,279,414;
937,931 and 27,181,404 shares,
respectively 71,934 81,673 197,576 39,147
Cost of shares repurchased:
4,610,567; 8,773,846; 4,174,136;
2,877,501; 2,819,500; 6,063,251;
24,444,114 and 53,762,915 shares,
respectively (164,548) (113,837) (114,706) (34,878)
Net increase (decrease) in net -------- -------- -------- ---------
assets resulting from capital share
transactions 436,136 222,077 469,945 80,565
-------- -------- -------- ---------
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,127,100 298,585 1,212,903 232,322
NET ASSETS:
Beginning of year $2,027,341 $1,404,886 $2,740,366 $637,370
-------- -------- -------- ---------
End of year (including
undistributed net investment
income: $8,057; $9,938; $24,939;
$8,506; $12,657; $9,659; $2,486
and $76,242, respectively) $3,154,441 $1,703,471 $3,953,269 $869,692
======== ======== ======== =========
U.S.
Government/
High-Yield AAA-Rated Cash
Bond Securities Management
Fund Fund Fund Total
- ---------------------------------- -------- -------- -------- ---------
OPERATIONS:
Net investment income $ 46,966 $ 37,218 $10,687 $277,922
Net realized gain (loss) on investments (11,260) (5,497) - 468,116
Net unrealized appreciation
on investments 47,164 37,855 - 1,469,612
-------- -------- -------- ---------
Net increase in net assets
resulting from operations 82,870 69,576 10,687 2,215,650
-------- -------- -------- ---------
DIVIDENDS AND
DISTRIBUTIONS PAID TO
SHAREHOLDERS:
Dividends from net investment income (44,378) (36,115) (10,344) (263,069)
Distributions from net realized
gain on investments - - - (218,098)
-------- -------- -------- ---------
Total dividends and distributions (44,378) (36,115) (10,344) (481,167)
-------- -------- -------- ---------
CAPITAL SHARE
TRANSACTIONS:
Proceeds from shares sold:
14,348,086; 19,173,422; 13,715,393;
6,084,975; 7,379,725; 6,989,389;
20,995,679 and 88,686,669 shares,
respectively 99,350 77,672 233,089 1,656,473
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions
of net realized gain on investments:
2,225,519; 6,335,172; 7,750,200;
3,296,555; 3,356,613; 3,279,414;
937,931 and 27,181,404 shares,
respectively 44,378 36,115 10,344 481,167
Cost of shares repurchased:
4,610,567; 8,773,846; 4,174,136;
2,877,501; 2,819,500; 6,063,251;
24,444,114 and 53,762,915 shares,
respectively (37,940) (67,704) (271,390) (805,003)
Net increase (decrease) in net -------- -------- -------- ---------
assets resulting from capital share
transactions 105,788 46,083 (27,957) 1,332,637
-------- -------- -------- ---------
TOTAL INCREASE (DECREASE) IN NET ASSETS 144,280 79,544 (27,614) 3,067,120
NET ASSETS:
Beginning of year $389,925 $462,737 $ 220,731 $7,883,356
-------- -------- -------- ---------
End of year (including
undistributed net investment
income: $8,057; $9,938; $24,939;
$8,506; $12,657; $9,659; $2,486
and $76,242, respectively) $534,205 $542,281 $ 193,117 $10,950,476
======== ======== ======== =========
</TABLE>
See Notes to Financial Statements
American Variable Insurance Series
Financial Statements
<PAGE>
Statement of Changes in Net Assets
for the year ended November 30, 1994
(dollars in thousands)
<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 52,610 43,558 112,012 9,504
investments
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 290,233 564,487 304,642 59,485
ASSETS
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
========= ======== ======== =========
U.S.
Government
/
High-Yield AAA-Rated Cash
Bond Securities Management
Fund Fund Fund Total
- ---------------------------------- --------- -------- -------- ---------
OPERATIONS:
Net investment income $ 37,246 $ 32,510 $ 7,112 $ 216,23
Net realized gain (loss) on (27) (2,512) - 215,145
investments
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 11,070 (42,612) 15,159 1,202,464
ASSETS
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
<PAGE>
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 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 traded on a national securities exchange (or reported
on the NASDAQ national market) and securities traded in the over-the-counter
market
are stated at the last reported sales price on the day of valuation; other
securities, and securities for which no sale was reported on that date, are
stated at the last quoted bid price. 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 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. The series does not amortize premiums on securities purchased.
Dividends and distributions paid 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
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 $1,861,000, of
which $27,000 was paid by these credits rather than in cash.
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, 1995. The High-Yield
Bond Fund and the U.S. Government/AAA-Rated Securities Fund had available at
November 30, 1995 capital loss carryforwards totaling $9,307,000 and $7,165,000
respectively, which may be used to offset capital gains realized during
subsequent years through November 30, 2003. It is the intention of these funds
not to make distributions from capital gains while there are capital loss
carryforwards. For book and federal income tax purposes, the amounts of
unrealized appreciation and depreciation and the cost of portfolio securities
at November 30, 1995 were as follows:
(dollars in thousands)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Asset
Growth Interna- Growth-Income Allocation
Fund tional Fund Fund Fund
Unrealized
appreciation $ 868,821 $ 257,761 $ 869,261 $ 128,961
Unrealized
depreciation 66,385 63,415 38,411 6,796
Net unrealized
appreciation 802,436 194,346 830,850 122,165
Cost of portfolio
securities 2,348,914 1,509,190 3,092,802 743,774
High-Yield U.S. Cash
Government/
Bond AAA-Rated Management
Fund Securities Fund Total
Fund
Unrealized
appreciation $ 15,665 $ 16,770 - $2,157,239
Unrealized
depreciation 11,066 4,239 - 190,312
Net unrealized
appreciation 4,599 12,531 - 1,966,927
Cost of portfolio
securities 528,075 520,482 $203,315 8,946,552
</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; 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. For the International Fund,
the Board of Trustees has approved an amended Investment Advisory and Service
Agreement containing a reduced fee schedule. Effective December 1, 1994, the
amended agreement provides for reduced fees at the following annual rates:
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; 0.60% of such assets in
excess of $600 million but not exceeding $1.2 billion; 0.48% of such assets in
excess of $1.2 billion but not exceeding $2 billion; and 0.465% of such assets
in excess of $2 billion.
Trustees of the series who are unaffiliated with CRMC may elect to defer part
or all of the fees earned for services as members of the Board. Amounts
deferred are not funded and are general unsecured liabilities of the series. As
of November 30, 1995, aggregate amounts deferred were $50,000.
4. (dollars in thousands)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Asset
Growth Interna- Growth-Income Allocation
Fund tional Fund Fund Fund
As of November 30,
1995:
Accumulated
undistributed
net realized
gain (loss) on
investments $258,402 $34,659/1/ $158,883 $30,419
Paid-in capital 2,085,546 1,464,559 2,938,597 708,602
For the year
ended November 30,
1995:
Purchases of
investment
securities/2/ 890,949 375,683 867,384 340,041
Sales of invest-
ment securities/2/ 789,487 294,525 763,232 280,803
High-Yield U.S. Cash
Government/
Bond AAA-Rated Management
Fund Securities Fund Total
Fund
As of November 30,
1995:
Accumulated
undistributed
net realized
gain (loss) on
investments $(11,357) $(8,139) - $462,867
Paid-in capital 528,306 528,230 $190,631 8,444,471
For the year
ended November 30,
1995:
Purchases of
investment
securities/2/ 224,774 202,086 - 2,900,917
Sales of invest-
ment securities/2/ 138,132 128,005 - 2,394,184
</TABLE>
/1/ The fund reclassified permanent book and tax differences relating to
shareholder
distributions of $488,000 from undistributed net investment income to
undistributed net
realized gains for the year ended November 30, 1995.
/2/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, 1995, such non-U.S. taxes
were $3,803,000. Net realized currency losses on dividends, interest, and
withholding taxes reclaimable were $35,000 for the year ended November 30,
1995.
<PAGE>
PER-SHARE
DATA AND
RATIOS
<TABLE>
<CAPTION>
Net realized Total Distri-
& unrealized income Dividends butions
Net asset Net gain from from net from
Year value, invest- (loss) on invest- invest- net
ended beginning ment invest- ment ment realized
11/30 of year income ments operations income gains
- ------ --------- -------- --------- --------- --------- ---------
-
<S> <C> <C> <C> <C> <C> <C> <C>
GROWTH FUND
1991 $19.98 $ .41 $4.48 $4.89 $(.47) $(.22)
1992 24.18 .29 4.25 4.54 (.31)1/1/ -
1993 28.41 .25 4.13 4.38 (.24) (.21)
1994 32.34 .24 .69 .93 (.24) (1.09)
1995 31.94 .33 10.63 10.96 (.29) (.80)
Ratio
Net asset Net assets, of net
Total value, end of expenses income to Portfolio
distri- end of Total year (in to average average turnover
butions year return millions) net assets net assets rate
--------- -------- --------- --------- --------- --------- ---------
-
1991 $(.69) $24.18 24.90% $ 700 .56% 1.94% 9.83%
1992 (.31) 28.41 18.90 1,212 .53 1.15 11.15
1993 (.45) 32.34 15.59 1,737 .50 .86 20.40
1994 (1.33) 31.94 2.92 2,027 .49 .78 29.58
1995 (1.09) 41.81 35.35 3,154 .47 .92 35.47
INTERNATIONAL FUND
Net realized Total Distri-
& unrealized income Dividends butions
Net asset Net gain from from net from
Year value, invest- (loss) on invest- invest- net
ended beginning ment invest- ment ment realized
11/30 of year income ments operations income gains
- ----- --------- -------- --------- --------- --------- ---------
-
1991 $9.45 $ .22 $.59 $.81 $(.24) -
1992 10.02 .19 (.09) .10 (.21) $(.02)
1993 9.89 .17 2.50 2.67 (.16) -
1994 12.40 .25 1.04 1.29 (.20) (.22)
1995 13.27 .34 1.02 1.36 (.33) (.41)
Ratio
Net asset Net assets, of net
Total value, end of expenses income to Portfolio
distri- end of Total year (in to average average turnover
butions year return millions) net assets net assets rate
--------- -------- --------- --------- --------- --------- ---------
-
1991 $(.24) $10.02 8.67% $197 1.04% 2.62% 8.21%
1992 (.23) 9.89 .90 360 1.00 2.11 16.73
1993 (.16) 12.40 27.20 840 .96 1.75 17.70
1994 (.42) 13.27 10.48 1,405 .80 2.03 19.66
1995 (.74) 13.89 10.78 1,703 .75 2.64 24.66
GROWTH-INCOME FUND
Net realized Total Distri-
& unrealized income Dividends butions
Net asset Net gain from from net from
Year value, invest- (loss) on invest- invest- net
ended beginning ment invest- ment ment realized
11/30 of year income ments operations income gains
- ------ --------- -------- --------- --------- --------- ---------
-
1991 $19.23 $ .75 $2.63 $3.38 $(.79) $(.10)
1992 21.72 .65 2.74 3.39 (.67) (.27)
1993 24.17 .63 2.12 2.75 (.63) (.28)
1994 26.01 .68 .14 .82 (.65) (.88)
1995 25.30 .73 7.20 7.93 (.73) (1.03)
Ratio
Net asset Net assets, of net
Total value, end of expenses income to Portfolio
distri- end of Total year (in to average average turnover
butions year return millions) net assets net assets rate
--------- -------- --------- --------- --------- --------- ---------
-
1991 $(.89) $21.72 17.83% $1,022 .56% 3.80% 11.14%
1992 (.94) 24.17 15.90 1,704 .52 3.01 13.60
1993 (.91) 26.01 11.63 2,436 .49 2.66 24.93
1994 (1.53) 25.30 3.21 2,740 .47 2.72 29.26
1995 (1.76) 31.47 33.14 3,953 .44 2.70 26.91
ASSET ALLOCATION FUND
Net realized Total Distri-
& unrealized income Dividends butions
Net asset Net gain from from net from
Year value, invest- (loss) on invest- invest- net
ended beginning ment invest- ment ment realized
11/30 of year income ments operations income gains
- ------ --------- -------- --------- --------- --------- ---------
-
1991 $9.50 $ .53 $1.11 $1.64 $(.55) -
1992 10.59 .48 .94 1.42 (.49) $ (.05)
1993 11.47 .51 .67 1.18 (.49) (.15)
1994 12.01 .51 (.57) (.06) (.52) (.18)
1995 11.25 .50 2.69 3.19 (.50) (.17)
RATIO
NET ASSET NET ASSETS, OF NET
TOTAL VALUE, END OF EXPENSES INCOME TO PORTFOLIO
DISTRI- END OF TOTAL YEAR (IN TO AVERAGE AVERAGE TURNOVER
BUTIONS YEAR RETURN MILLIONS) NET ASSETS NET ASSETS RATE
--------- -------- --------- --------- --------- --------- ---------
-
1991 $(.55) $10.59 17.63% $194 .59% 5.56% 15.08%
1992 (.54) 11.47 13.69 359 .57 4.73 19.74
1993 (.64) 12.01 10.59 578 .55 4.66 19.01
1994 (.70) 11.25 (.54) 637 .53 4.55 36.13
1995 (.67) 13.77 29.45 870 .52 4.11 39.89
HIGH-YIELD BOND FUND
Net realized Total Distri-
& unrealized income Dividends butions
Net asset Net gain from from net from
Year value, invest- (loss) on invest- invest- net
ended beginning ment invest- ment ment realized
11/30 of year income ments operations income gains
- ------ --------- -------- --------- --------- --------- ---------
-
1991 $11.83 $1.17 $1.78 $2.95 $(1.25) -
1992 13.53 1.10 .62 1.72 (1.08) -
1993 14.17 1.09 1.20 2.29 (1.10) $ (.19)
1994 15.17 1.27 (2.07) (.80) (1.23) (.25)
1995 12.89 1.32 1.10 2.42 (1.32) -
Ratio
Net asset Net assets, of net
Total value, end of expenses income to Portfolio
distri- end of Total year (in to average average turnover
butions year return millions) net assets net assets rate
--------- -------- --------- --------- --------- --------- ---------
-
1991 $(1.25) $13.53 26.22% $107 .63% 9.81% 18.07%
1992 (1.08) 14.17 13.14 197 .59 8.88 47.44
1993 (1.29) 15.17 17.09 379 .56 8.18 34.05
1994 (1.48) 12.89 (5.71) 390 .54 9.37 38.46
1995 (1.32) 13.99 19.81 534 .54 10.12 31.73
U.S. GOVERNMENT/AAA-RATED SECURITIES FUND
Net realized Total Distri-
& unrealized income Dividends butions
Net asset Net gain from from net from
Year value, invest- (loss) on invest- invest- net
ended beginning ment invest- ment ment realized
11/30 of year income ments operations income gains
- ------ --------- -------- --------- --------- --------- ---------
-
1991 $10.66 $ .77 $ .58 $1.35 $(.79) -
1992 11.22 .75 .32 1.07 (.76) -
1993 11.53 .74 .68 1.42 (.75) $ (.05)
1994 12.15 .76 (1.30) (.54) (.74) (.07)
1995 10.80 .82 .71 1.53 (.81) -
Ratio
Net asset Net assets, of net
Total value, end of expenses income to Portfolio
distri- end of Total year (in to average average turnover
butions year return millions) net assets net assets rate
--------- -------- --------- --------- --------- --------- ---------
-
1991 $(.79) $11.22 13.24% $240 .58% 7.91% 27.06%
1992 (.76) 11.53 9.83 360 .57 7.08 39.96
1993 (.80) 12.15 12.65 505 .55 6.42 21.69
1994 (.81) 10.80 (4.58) 463 .54 6.69 45.21
1995 (.81) 11.52 14.73 542 .54 7.37 30.11
CASH MANAGEMENT FUND
Net realized Total Distri-
& unrealized income Dividends butions
Net asset Net gain from from net from
Year value, invest- (loss) on invest- invest- net
ended beginning ment invest- ment ment realized
11/30 of year income ments operations income gains
- ------ --------- -------- --------- --------- --------- ---------
-
1991 $11.14 $ .62 $.01 $.63 $(.66) -
1992 11.11 .35 .01 .36 (.43) -
1993 11.04 .29 - .29 (.31) -
1994 11.02 .37 .02 .39 (.32) -
1995 11.09 .63 (.02) .61 (.59) -
Ratio
Net asset Net assets, of net
Total value, end of expenses income to Portfolio
distri- end of Total year (in to average average turnover
butions year return millions) net assets net assets rate
--------- -------- --------- --------- --------- --------- ---------
-
1991 $(.66) $11.11 5.84% $163 .58% 5.65% -
1992 (.43) 11.04 3.31 197 .53 3.24 -
1993 (.31) 11.02 2.67 206 .51 2.57 -
1994 (.32) 11.09 3.59 221 .49 3.60 -
1995 (.59) 11.11 5.65 193 .49 5.37 -
</TABLE>
/1/ Amount includes net realized short-term gains treated as net investment
income for federal income tax purposes.
<PAGE>
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 schedules of investments, 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, 1995, 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 five 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, 1995 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
PRICE WATERHOUSE LLP
Los Angeles, California
January 5, 1996
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.
17. Financial data schedule (EDGAR)
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
As of November 30, 1995.
<TABLE>
<CAPTION>
Number of
Title of Class 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 written by American International Surplus Lines
Insurance Company, Chubb Custom Insurance Company and ICI Mutual Insurance
Company, which insures its officers and Trustees against certain
liabilities.
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 certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and 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
25th day of March, 1996.
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 March 25, 1996, by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C> <C>
(1) Principal Executive Officer:
/s/ James F. Rothenberg President and Trustee
James F. Rothenberg
(2) Principal Financial Officer and
Principal Accounting Officer:
/s/ Robert P. Simmer Vice President and Treasurer
Robert P. Simmer
(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
</TABLE>
*By /s/ Chad L. Norton
Chad L. Norton (Attorney-in-Fact)
Counsel reports that the amendment does not contain disclosures that would
make the amendment ineligible for effectiveness under the provisions of rule
485(b).
/s/ Michele Y. Yang
Michele Y. YangC-5
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 22 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
January 5, 1996, relating to the financial statements and 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
March 28, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 26
<NAME> THE GROWTH-INCOME FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1994
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 3,092,802
<INVESTMENTS-AT-VALUE> 3,923,652
<RECEIVABLES> 31,842
<ASSETS-OTHER> 199
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,955,693
<PAYABLE-FOR-SECURITIES> 1,037
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,387
<TOTAL-LIABILITIES> 2,424
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,938,597
<SHARES-COMMON-STOCK> 125,619,032
<SHARES-COMMON-PRIOR> 108,327,575
<ACCUMULATED-NII-CURRENT> 24,939
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 158,883
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 830,850
<NET-ASSETS> 3,953,269
<DIVIDEND-INCOME> 76,846
<INTEREST-INCOME> 26,502
<OTHER-INCOME> 0
<EXPENSES-NET> 14,552
<NET-INVESTMENT-INCOME> 88,796
<REALIZED-GAINS-CURRENT> 160,279
<APPREC-INCREASE-CURRENT> 691,459
<NET-CHANGE-FROM-OPS> 940,534
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 85,055
<DISTRIBUTIONS-OF-GAINS> 112,521
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 13,715,393
<NUMBER-OF-SHARES-REDEEMED> 4,174,136
<SHARES-REINVESTED> 7,750,200
<NET-CHANGE-IN-ASSETS> 1,212,903
<ACCUMULATED-NII-PRIOR> 21,198
<ACCUMULATED-GAINS-PRIOR> 111,125
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 13,593
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 14,552
<AVERAGE-NET-ASSETS> 3,291,107
<PER-SHARE-NAV-BEGIN> 25.30
<PER-SHARE-NII> .73
<PER-SHARE-GAIN-APPREC> 7.20
<PER-SHARE-DIVIDEND> .73
<PER-SHARE-DISTRIBUTIONS> 1.03
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 31.47
<EXPENSE-RATIO> .004
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 27
<NAME> THE GROWTH FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1994
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 2,348,914
<INVESTMENTS-AT-VALUE> 3,151,350
<RECEIVABLES> 17,808
<ASSETS-OTHER> 147
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,169,305
<PAYABLE-FOR-SECURITIES> 13,628
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,236
<TOTAL-LIABILITIES> 14,864
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,085,546
<SHARES-COMMON-STOCK> 75,438,942
<SHARES-COMMON-PRIOR> 63,475,904
<ACCUMULATED-NII-CURRENT> 8,057
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 258,402
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 802,436
<NET-ASSETS> 3,154,441
<DIVIDEND-INCOME> 14,993
<INTEREST-INCOME> 20,613
<OTHER-INCOME> 0
<EXPENSES-NET> 11,971
<NET-INVESTMENT-INCOME> 23,635
<REALIZED-GAINS-CURRENT> 259,039
<APPREC-INCREASE-CURRENT> 480,224
<NET-CHANGE-FROM-OPS> 762,898
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 20,133
<DISTRIBUTIONS-OF-GAINS> 51,801
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 14,348,086
<NUMBER-OF-SHARES-REDEEMED> 4,610,567
<SHARES-REINVESTED> 2,225,519
<NET-CHANGE-IN-ASSETS> 1,127,100
<ACCUMULATED-NII-PRIOR> 4,555
<ACCUMULATED-GAINS-PRIOR> 51,164
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 11,222
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11,971
<AVERAGE-NET-ASSETS> 2,572,772
<PER-SHARE-NAV-BEGIN> 31.94
<PER-SHARE-NII> .33
<PER-SHARE-GAIN-APPREC> 10.63
<PER-SHARE-DIVIDEND> .29
<PER-SHARE-DISTRIBUTIONS> .80
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 41.81
<EXPENSE-RATIO> .005
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 28
<NAME> THE HIGH-YIELD BOND FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1994
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 528,075
<INVESTMENTS-AT-VALUE> 532,674
<RECEIVABLES> 9,984
<ASSETS-OTHER> 180
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 542,838
<PAYABLE-FOR-SECURITIES> 8,349
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 284
<TOTAL-LIABILITIES> 8,633
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 528,306
<SHARES-COMMON-STOCK> 38,177,115
<SHARES-COMMON-PRIOR> 30,260,277
<ACCUMULATED-NII-CURRENT> 12,657
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (11,357)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,599
<NET-ASSETS> 534,205
<DIVIDEND-INCOME> 1
<INTEREST-INCOME> 49,461
<OTHER-INCOME> 0
<EXPENSES-NET> 2,496
<NET-INVESTMENT-INCOME> 46,966
<REALIZED-GAINS-CURRENT> (11,260)
<APPREC-INCREASE-CURRENT> 47,164
<NET-CHANGE-FROM-OPS> 82,870
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 44,378
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,379,725
<NUMBER-OF-SHARES-REDEEMED> 2,819,500
<SHARES-REINVESTED> 3,356,613
<NET-CHANGE-IN-ASSETS> 144,280
<ACCUMULATED-NII-PRIOR> 10,069
<ACCUMULATED-GAINS-PRIOR> (97)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,350
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,496
<AVERAGE-NET-ASSETS> 464,300
<PER-SHARE-NAV-BEGIN> 12.89
<PER-SHARE-NII> 1.32
<PER-SHARE-GAIN-APPREC> 1.10
<PER-SHARE-DIVIDEND> 1.32
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.99
<EXPENSE-RATIO> .006
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 29
<NAME> THE CASH MANAGEMENT FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1994
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 203,315
<INVESTMENTS-AT-VALUE> 203,315
<RECEIVABLES> 135
<ASSETS-OTHER> 25
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 203,475
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 10,358
<TOTAL-LIABILITIES> 10,358
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 190,631
<SHARES-COMMON-STOCK> 17,384,644
<SHARES-COMMON-PRIOR> 19,895,148
<ACCUMULATED-NII-CURRENT> 2,486
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 193,117
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11,661
<OTHER-INCOME> 0
<EXPENSES-NET> 974
<NET-INVESTMENT-INCOME> 10,687
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 10,687
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 10,344
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 20,995,679
<NUMBER-OF-SHARES-REDEEMED> 24,444,114
<SHARES-REINVESTED> 937,931
<NET-CHANGE-IN-ASSETS> (27,614)
<ACCUMULATED-NII-PRIOR> 2,143
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 907
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 974
<AVERAGE-NET-ASSETS> 198,957
<PER-SHARE-NAV-BEGIN> 11.09
<PER-SHARE-NII> .63
<PER-SHARE-GAIN-APPREC> (.02)
<PER-SHARE-DIVIDEND> .59
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.11
<EXPENSE-RATIO> .005
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 30
<NAME> THE U.S. GOVERNMENT/AAA-RATED SECURITIES FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1994
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 520,482
<INVESTMENTS-AT-VALUE> 533,013
<RECEIVABLES> 14,584
<ASSETS-OTHER> 188
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 547,785
<PAYABLE-FOR-SECURITIES> 5,264
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 240
<TOTAL-LIABILITIES> 5,504
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 582,230
<SHARES-COMMON-STOCK> 47,057,482
<SHARES-COMMON-PRIOR> 42,851,930
<ACCUMULATED-NII-CURRENT> 9,659
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (8,139)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12,531
<NET-ASSETS> 542,281
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 39,926
<OTHER-INCOME> 0
<EXPENSES-NET> 2,708
<NET-INVESTMENT-INCOME> 37,218
<REALIZED-GAINS-CURRENT> (5,497)
<APPREC-INCREASE-CURRENT> 37,855
<NET-CHANGE-FROM-OPS> 69,576
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 36,115
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,989,389
<NUMBER-OF-SHARES-REDEEMED> 6,063,251
<SHARES-REINVESTED> 3,279,414
<NET-CHANGE-IN-ASSETS> 79,544
<ACCUMULATED-NII-PRIOR> 8,556
<ACCUMULATED-GAINS-PRIOR> (2,642)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,550
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,708
<AVERAGE-NET-ASSETS> 504,704
<PER-SHARE-NAV-BEGIN> 10.80
<PER-SHARE-NII> .82
<PER-SHARE-GAIN-APPREC> .71
<PER-SHARE-DIVIDEND> .81
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.52
<EXPENSE-RATIO> .005
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 70
<NAME> THE ASSET ALLOCATION FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1994
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 743,774
<INVESTMENTS-AT-VALUE> 865,939
<RECEIVABLES> 6,716
<ASSETS-OTHER> 201
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 872,856
<PAYABLE-FOR-SECURITIES> 2,815
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 349
<TOTAL-LIABILITIES> 3164
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 708,602
<SHARES-COMMON-STOCK> 63,143,826
<SHARES-COMMON-PRIOR> 56,639,797
<ACCUMULATED-NII-CURRENT> 8,506
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 30,419
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 122,165
<NET-ASSETS> 869,692
<DIVIDEND-INCOME> 15,947
<INTEREST-INCOME> 18,376
<OTHER-INCOME> 0
<EXPENSES-NET> 3,843
<NET-INVESTMENT-INCOME> 30,480
<REALIZED-GAINS-CURRENT> 30,610
<APPREC-INCREASE-CURRENT> 129,814
<NET-CHANGE-FROM-OPS> 190,904
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 29,507
<DISTRIBUTIONS-OF-GAINS> 9,640
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,084,975
<NUMBER-OF-SHARES-REDEEMED> 2,877,501
<SHARES-REINVESTED> 3,296,555
<NET-CHANGE-IN-ASSETS> 232,322
<ACCUMULATED-NII-PRIOR> 7,533
<ACCUMULATED-GAINS-PRIOR> 9,449
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,620
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,843
<AVERAGE-NET-ASSETS> 741,488
<PER-SHARE-NAV-BEGIN> 11.25
<PER-SHARE-NII> .50
<PER-SHARE-GAIN-APPREC> 2.69
<PER-SHARE-DIVIDEND> .50
<PER-SHARE-DISTRIBUTIONS> .17
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.77
<EXPENSE-RATIO> .005
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 71
<NAME> THE INTERNATIONAL FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1994
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 1,509,190
<INVESTMENTS-AT-VALUE> 1,703,536
<RECEIVABLES> 16,875
<ASSETS-OTHER> 103
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,720,514
<PAYABLE-FOR-SECURITIES> 15,957
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,086
<TOTAL-LIABILITIES> 17,043
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,464,559
<SHARES-COMMON-STOCK> 122,610,312
<SHARES-COMMON-PRIOR> 105,875,564
<ACCUMULATED-NII-CURRENT> 9,938
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 34,659
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 194,315
<NET-ASSETS> 1,703,471
<DIVIDEND-INCOME> 31,190
<INTEREST-INCOME> 20,348
<OTHER-INCOME> 0
<EXPENSES-NET> 11,398
<NET-INVESTMENT-INCOME> 40,140
<REALIZED-GAINS-CURRENT> 34,945
<APPREC-INCREASE-CURRENT> 83,096
<NET-CHANGE-FROM-OPS> 158,181
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 37,537
<DISTRIBUTIONS-OF-GAINS> 44,136
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 19,173,422
<NUMBER-OF-SHARES-REDEEMED> 8,773,846
<SHARES-REINVESTED> 6,335,172
<NET-CHANGE-IN-ASSETS> 298,585
<ACCUMULATED-NII-PRIOR> 7,823
<ACCUMULATED-GAINS-PRIOR> 43,362
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9,882
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11,398
<AVERAGE-NET-ASSETS> 1,520,066
<PER-SHARE-NAV-BEGIN> 13.27
<PER-SHARE-NII> .34
<PER-SHARE-GAIN-APPREC> 1.02
<PER-SHARE-DIVIDEND> .33
<PER-SHARE-DISTRIBUTIONS> .41
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.89
<EXPENSE-RATIO> .008
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
