AMERICAN VARIABLE INSURANCE SERIES
SEMI-ANNUAL REPORT
for the six months ended May 31, 1997
Lit. No. VI3-013-0797
[Cover: Four seasonal photos superimposed onto photo of grassy field]
FUND RESULTS AT A GLANCE
AMERICAN VARIABLE INSURANCE SERIES (R)
<TABLE>
<CAPTION>
Total Returns
period periods ended 6/30/97
ended 5-Year 10-Year
5/31/97 Average Average
6-Month 1-Year Annual Annual
Total Total Compound Compound
Page Return Return Return Return
<S> <C> <C> <C> <C> <C>
14 Global Growth Fund +4.20%* +6.50%* - -
(since 4/30/97)
16 Growth Fund +7.96% +22.24% +17.46% +13.01%
22 International Fund +13.90% +25.59% +14.53% +11.71%*
(since 5/1/90)
29 Growth-Income Fund +9.80% +26.35% +17.12% +12.18%
36 Asset Allocation Fund +7.44% +22.07% +13.95% +11.86%*
(since 8/1/89)
42 Bond Fund +2.80% +11.61% + 6.54%* -
(since 1/2/96)
46 High-Yield Bond Fund +5.60% +15.08% +10.88% +11.24%
52 U.S. Government/AAA-Rated
Securities Fund +.41% +7.25% +6.25% +7.46%
55 Cash Management Fund +2.36% +4.88% +3.96% +5.21%
</TABLE>
*Figure reflects return for the lifetime of the fund, which is shorter than the
complete period.
This table shows the investment results for Class 2 shares of the funds in
American Variable Insurance Series. Class 2 shares began operations on April
30, 1997. Results which encompass periods prior to April 30, 1997 assume a
hypothetical investment in Class 1 shares, and include deduction of the 0.25%
annual expense under the series' Plan of Distribution. (Semi-annual returns
reflect approximately half of this expense.) The variable annuity that uses the
series' funds contains certain fees and expenses not reflected here. Investment
results through May 31, 1997 cover the first half of our current fiscal year.
Investment results as of June 30, 1997 are as of the end of the most recent
calendar quarter.
THE FIGURES IN THIS REPORT REFLECT PAST RESULTS AND ARE NOT PREDICTIVE OF
FUTURE RESULTS. UNIT PRICE AND RETURN WILL VARY, SO YOU MAY LOSE MONEY BY
INVESTING IN THE CONTRACT. THE SHORTER THE TIME PERIOD OF YOUR INVESTMENT, THE
GREATER THE POSSIBILITY OF LOSS. UNITS 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.
ABOUT OUR COVER: Financial goals, like the seasons, change over time. The
American Legacy variable annuity - with its broad range of fund options,
features and services - offers contractholders a lifetime of choices to help
adapt to those changes.
DEAR INVESTORS:
THIS REPORT COVERS THE FIRST HALF OF FISCAL 1997 - the six months ended May 31
- - for American Variable Insurance Series, which serves as the underlying
investment vehicle for the American Legacy III variable annuity.
All of the series' stock funds gained considerable ground over the period.
Equity markets around the world continued their extraordinary march upward,
propelled by the combined forces of mild inflation, low interest rates and
sustained infusions of cash from enthusiastic investors. In the U.S., a healthy
economy and strong productivity gains boosted corporate profits. At the same
time, a number of factors - including global competition and a drive toward
efficiency - kept a lid on inflationary pressures. Stock markets soared,
although not without some volatility. Equity prices fell sharply in mid-March,
only to rebound vigorously a month later. After erasing gains made in the first
half of the six-month period, the unmanaged Standard & Poor's 500 Composite
Index set new records and produced a total return of 13.2%.
If stock investors seemed doggedly optimistic at times, bond investors
tended to focus on the economy's half-empty glass. Concerns about the pace of
economic growth and the run-up in stock prices in recent years led the Federal
Reserve Board to raise its target for the federal funds rate in an attempt to
keep inflationary threats in check. (The federal funds rate is the rate banks
charge each other for overnight loans; it was increased in March to 5.5% from
5.25%.) Although retail prices remained essentially flat throughout the period,
the Fed's move depressed bond prices, which returned a scant 1.0% as measured
by the unmanaged Salomon Brothers Broad Investment-Grade Index. That weakness
was reflected, to varying degrees, in the results of the series' bond funds.
[Sidebar]
GLOBAL GROWTH FUND
Where the Fund's Assets Are Invested
(as of 5/31/97)
<TABLE>
<CAPTION>
Percent of
Net Assets
<S> <C>
THE AMERICAS
United States 31.1%
Canada 6.8
Argentina 3.2
Mexico 2.9
44.0
EUROPE
United Kingdom 10.2
Spain 3.5
Germany 2.8
France 1.5
Sweden 1.5
Italy 1.3
20.8
ASIA/PACIFIC
Japan 9.4
Australia 6.0
15.4
Other Countries 5.2
Cash & Equivalents 14.6
Total 100.0%
</TABLE>
[End Sidebar]
The series continues to show remarkable growth. Net assets stood at more
than $15 billion at the close of the period. We are also pleased to report that
we have expanded our portfolio of choices. The Global Growth Fund, the series'
ninth investment option, provides an opportunity to participate in the
long-term growth of companies around the world.
Here are brief comments on the investment activities of each of the funds:
THE GLOBAL GROWTH FUND was launched on April 30. It began operations in an
environment of rising stock prices, posting a 4.2% gain for its first month of
operations. As is the case with all our funds, the Global Growth Fund invests
on a company-by-company basis rather than emphasizing particular regions or
industries, and we have been carefully selecting attractive securities in a
variety of markets. A number of the fund's holdings are well-known
multinational companies - such as Japan's Suzuki Motor, maker of minicars and
motorcycles, and Avon, the U.S.-based cosmetics firm - which are finding new
markets for consumer goods in an increasingly global economy. Others, like
Telecom Argentina and Cifra, Mexico's largest retailer, are based in developing
countries with tremendous growth potential. We invite you to learn more about
the fund by reviewing the portfolio listing that begins on page 14. At the
close of the reporting period, the fund was invested in 47 companies in 14
countries. The United States was the largest concentration, with 31% of assets.
The fund also had sizable investments in the U.K., Japan and Canada (see table
on previous page). We maintained 15% in cash and equivalents as a buying
reserve. By prospectus, the fund will always be broadly diversified, with no
more than 40% of assets invested in a single country.
THE GROWTH FUND rose 8.0% for the six months ended May 31, as sustained
economic growth translated into gains for many U.S. corporations. Technology
stocks, which had experienced sharp declines in the previous year, rebounded
strongly during the period. Demand for personal computers helped sales of
electronic components, microprocessors and semiconductors, and a number of the
fund's larger investments in these areas posted sizable gains. They included
Texas Instruments (+41%), which manufactures computer chips; LSI Logic (+39%),
which produces integrated circuits; and the semiconductor giant Intel (+19%).
We believe the technology sector should continue to grow as companies find new
markets in which to sell their products. Media businesses were strongly
represented among our largest holdings. Many of these, such as Time Warner
(+14%) and Walt Disney (+11%), began to see the benefits of recent
consolidations, although Viacom, the fund's fifth-largest holding, declined
21%. Meanwhile, America Online, the world's largest provider of online services
and the fund's biggest holding, recovered from servicing difficulties to
increase a remarkable 56%. The fund has substantial investments in a number of
other industries, including leisure and tourism, merchandising, and health and
personal care. In all, 88% of net assets was held in equity-type securities,
with the balance in cash and equivalents.
[Sidebar]
INTERNATIONAL FUND
Where the Fund's Assets Are Invested
(as of 5/31/97)
<TABLE>
<CAPTION>
Percent of
Net Assets
<S> <C>
EUROPE
United Kingdom 13.0%
Sweden 4.5
Germany 4.5
Italy 3.8
France 3.6
Spain 3.6
Switzerland 3.6
Netherlands 2.5
Norway 2.0
Finland 1.6
Luxembourg 1.2
Ireland .5
Other Europe .7
45.1
ASIA/PACIFIC
Japan 13.8
Hong Kong 6.0
Australia 5.5
South Korea 1.9
Indonesia .9
Philippines .8
People's Republic of China .7
Other Asia/Pacific .7
30.3
THE AMERICAS
Canada 5.6
Brazil 4.3
Mexico 3.2
Argentina .5
Peru .3
13.9
OTHER COUNTRIES 2.4
Cash & Equivalents 8.3
Total 100.0%
</TABLE>
[End Sidebar]
THE INTERNATIONAL FUND posted the series' largest return for the period,
increasing 13.9%. Most major international markets recorded positive results,
with Japan a notable exception. In Europe, a number of factors contributed to
rising stock prices: moderate inflation and falling interest rates; a broad
focus on corporate restructuring and other streamlining measures; and the
falling value of many currencies relative to the U.S. dollar, which made the
products of export-oriented companies more competitive in world markets. With
nearly half of net assets invested in Europe, the fund was well-positioned to
take advantage of gains in those markets. (The table opposite shows the fund's
country breakdown.) Meanwhile, the Japanese economy continued to struggle with
an ongoing banking crisis and faltering consumer confidence. Although prospects
appear to be improving, overall weakness and a steadily declining yen
translated into a 5% loss in the Japanese market for U.S. investors. We took
the opportunity to make several large investments in that country: Japanese
stocks now account for nearly 14% of net assets, compared with 9% six months
ago. Elsewhere, the fund benefited from its holdings in Latin America, where
markets were buoyed by an increasingly stable economic environment. Five of the
fund's 10 biggest gainers are based in Latin America.
THE GROWTH-INCOME FUND increased 9.8%. The fund, which emphasizes large,
established U.S. companies, participated strongly in a market run-up dominated
by blue-chip stocks: Of 175 stocks held over the full six-month period, 135
rose in price, 38 declined and two were unchanged. Gains were broad-based, with
appreciation in virtually every sector. The fund also benefited from its
substantial holdings in pharmaceutical companies, such as Warner-Lambert (+41%)
and Schering-Plough (+27%), which have been developing new products and
expanding their markets. Forest products firms began to shake off their
doldrums, as tighter inventories helped boost prices of paper and pulp.
Bowater, the largest producer of newsprint in the U.S. and the fund's
eighth-largest holding, rose 31%. Meanwhile, oil stocks lagged the market
generally as weakness in crude oil and gas prices hurt many energy companies,
the fund's largest industry concentration. Given the continued growth in demand
for energy, however, we believe long-term prospects look favorable for the
sector. About 86% of the portfolio was invested in equities, with the remainder
in cash and equivalents. On a cautionary note, while it is always gratifying to
report strong returns, we would remind investors that the fund's results in
recent years have been extraordinarily high by historical measures.
Consequently, we would urge you not to extrapolate future returns from these
substantial gains.
THE ASSET ALLOCATION FUND rose 7.4% for the six months. The fund is managed as
though it constitutes the complete portfolio of a prudent investor, with
holdings in all three major classes of financial assets. As of May 31, 61% of
net assets was held in equities, 27% in bonds and 12% in cash and equivalents.
The stock portion of the fund, which is similar to a conservative growth and
income fund, concentrated on large, well-managed firms in typically stable
industries, such as banking, health care and energy. Many posted above-average
increases for the period as companies took steps to become more efficient and
increase productivity. The overall health of the economy gave new strength to
consumer spending, benefiting retailers such as Circuit City (+18%) and
Wal-Mart (+17%), as well as leisure and tourism companies such as cruise line
Carnival (+20%). On the fixed-income side, a lackluster bond market restrained
the fund's results somewhat.
THE BOND FUND had a 2.8% return. U.S. bond prices were generally weak as
economic data indicating above-average growth, low unemployment and strong
consumer spending raised concerns about potential increases in inflationary
pressures. The fund was cushioned somewhat from the full force of the decline
by being broadly diversified across a wide spectrum of fixed-income securities.
Extensive research has been the key to finding attractive opportunities in a
variety of markets. As of May 31, nearly 11% of assets was invested in bonds
from 13 countries outside the United States. While most were from developed
countries such as Canada and the U.K., the fund also held small positions in
bonds issued by governments of developing countries. These securities, which
offer higher yields than their U.S. counterparts, should benefit from
government commitments to tame inflation and improve fiscal balance sheets. The
fund also had substantial investments - 25% of net assets - in lower rated
bonds (those rated Ba or BB and below by Moody's Investors Service and Standard
& Poor's respectively), which held up better than higher quality bonds. In
keeping with the fund's quality orientation, 31% of net assets was held in U.S.
Treasury issues and federal agency obligations, and about 19% in cash and
equivalents. Net assets grew to more than $100 million.
THE HIGH-YIELD BOND FUND increased 5.6% during the six months. Strong stock
markets and record flows into lower rated, higher risk bonds led to a rally in
high-yield securities. The equity-like characteristics of these bonds also made
them less vulnerable to rising interest rates. As a result, they provided
substantially higher returns than their investment-grade counterparts. As we
mentioned six months ago, the health of the high-yield market presents us with
the challenge of finding attractive securities in which to invest. Prices have
remained relatively stable, while the quality and balance sheets of companies
continue to improve and defaults are very low. Building the fund's portfolio is
a never-ending process, one which relies on in-depth research to help uncover
companies that the market perceives as risky but which we believe are likely to
build value over the long term. We continue to maintain a fairly large cash and
equivalents position of 11% of net assets as we search for appropriate issues
for the fund.
THE U.S. GOVERNMENT/AAA-RATED SECURITIES FUND registered a small gain of 0.4%
as rising interest rates depressed bond prices. During the six-month period,
investor pessimism pushed up yields on 10-year Treasury bonds from a low of
6.1% in December to a high in April of 7.0%; home mortgage rates also rose.
While fixed-income securities are always vulnerable to interest rate changes,
we have been taking a number of steps to help deflect the effects of further
market declines. We have shortened the average maturity of the fund's holdings
- - 7.1 years compared with 7.7 years six months ago - in an effort to make it
less exposed to additional interest rate increases. (The longer a bond's
maturity, the more its price tends to rise and fall in response to interest
rate fluctuations.) At the same time, we have been steadily building up our
investments in mortgage-backed securities, which typically pay higher rates to
compensate for their prepayment risk. At the close of the period, these bonds
accounted for 44% of net assets, up from 36% six months ago. As always, the
fund maintained its conservative, quality-oriented approach, with 43% of net
assets in U.S. Treasury issues.
THE CASH MANAGEMENT FUND provided a return of 2.4%. After moving very little
for some time,short-term rates inched upward in response to the Fed's
pre-emptive strike against inflation. The recent turbulence in U.S. stock and
bond markets serves as a good reminder of the valuable role money market funds
can play in a long-term investment portfolio. Managed for stable value and a
reasonable rate of return, the fund can be an important diversification tool.
It can also be used as a base for making regular investments into other funds.
The fund maintains a high-quality orientation: Assets are concentrated in
top-grade commercial paper, and all of its money market securities carry the
highest credit rating from Standard & Poor's or Moody's.
Looking forward, a number of factors suggest that a favorable economic
environment could continue. Inflation remains low; a global pledge to reduce
government spending may continue to bolster financial markets. Meanwhile,
publicly traded companies around the world are taking steps to become globally
competitive and improve their return on capital. However, the recent
stratospheric gains will not continue indefinitely. We would urge investors to
temper their expectations and maintain a long-term view on their holdings.
The nine funds in American Variable Insurance Series offer investors a
wide range of professionally managed options to help them meet long-term
financial goals. On the following pages, you'll meet a few of your fellow
contractholders who have taken advantage of the choices the series provides.
We look forward to reporting to you again in six months.
Cordially,
[/s/ Thomas E. Terry] [/s/ James F. Rothenberg]
Thomas E. Terry James F. Rothenberg
Chairman of the Board President
American Variable Insurance Series American Variable Insurance
Series
July 15, 1997
A LIFETIME OF CHOICES
MAKING THE MOST OF AMERICAN LEGACY'S DIVERSIFICATION OPPORTUNITIES
Leo Tolstoy wrote that happy families are all alike, and in many ways that's
true of American Legacy's growing family of contractholders. Like most
investors, they share a number of views and concerns. They want financial
independence. They recognize that with life expectancy on the rise, they have
to plan for a longer retirement - and that Social Security will only meet a
portion of their income needs. They also realize that two very formidable
hurdles - taxes and inflation - will make meeting those challenges more
difficult.
[Photo: Patty and Steve Lucas]
At the same time, American Legacy's happy family - now 300,000 strong - is a
diverse group of individuals of all ages, each with unique circumstances, needs
and objectives. Some are using Legacy to fund all or part of an imminent
retirement. Others are building a nest egg for a retirement that is decades
away. Still others want to provide a true "legacy" for the most important
people in their lives - their children.
[Photo: Hall and Sallie Hosler]
[Logo: American Legacy(r)]
[A Variable Annuity]
FORTUNATELY, CONTRACTHOLDERS HAVE SOMETHING ELSE IN COMMON: a wealth of
choices. American Legacy's broad spectrum of variable fund options and features
gives contractholders the ability to create a retirement program that reflects
their individual goals. Moreover, Legacy has the flexibility to adapt to a
lifetime of changes: As needs and outlooks shift, contractholders can switch
among the variable funds free of charge and with no current tax consequences.
MOST CONTRACTHOLDERS SEE THE FUNDS IN AMERICAN LEGACY as a way to allow
potential gains - whether from interest income, dividends or capital gains - to
grow tax-deferred. Because stocks have historically been one of the best
solutions to overcoming the long-term effects of inflation and taxes, many
contractholders include at least one of Legacy's four equity options among
their investments. Many diversify their portfolios into non-U.S. markets with
the International or Global Growth funds, or choose the Asset Allocation Fund,
which invests in bonds as well as stocks. Income-oriented investors may opt for
one or more of Legacy's three variable bond funds. Contractholders concerned
about principal fluctuation often round out their holdings with the Cash
Management Fund or one of the fixed accounts.
WHEN IT COMES TO CHOICES, American Legacy contracts offer a diversity of other
features. These include the security of a minimum death benefit guarantee,
several payout options and the support of two of the nation's most respected
financial institutions. The investment adviser to the variable funds is Capital
Research and Management Company (CRMC), which manages more than $15 billion in
variable insurance assets and another $150 billion in The American Funds Group
[Registration Mark] of mutual funds. With more than 60 years of experience,
CRMC is dedicated to finding the best long-term values that financial markets
have to offer. The Lincoln National Life Insurance Company, the country's
largest issuer of variable annuities based on assets, issues the American
Legacy contracts and guarantees the fixed accounts and the death benefit
options.*
[Photo: Mary Hawks]
IN THE NEXT SIX PAGES, YOU'LL MEET A FEW contractholders who are taking
advantage of Legacy's lifetime of choices. While these real-life examples may
help you generate ideas about how best to use American Legacy, you should
consult your financial adviser to create a financial program that makes the
most sense for you.
*The guarantees are based on Lincoln Life's ability to meet its financial
obligations.
STEVE AND PATTY LUCAS:
SETTING THEIR SEIGHTS ON THE FUTURE
[Photo: Steve, Patty and Ryan Lucas]
MADISON IS A SMALL CITY WITH A SURPRISINGLY COSMOPOLITAN FEEL, a place where
the imposing granite dome of the state capitol rubs shoulders with the
University of Wisconsin's expansive campus along Lake Mendota. It is a
landscape Steve and Patty Lucas know well. A professor of communication arts
and the author of a widely used textbook on public speaking, Steve has helped
prepare thousands of students over the years for careers in a variety of
industries. Patty has been a reading specialist in the Madison school district
since the early $70s. Their eldest son, Jeff, lives in Washington, D.C. His
younger brother Ryan, pictured here, is a recent high school graduate headed
for college this fall.
AS STEVE'S BOOK BEGAN TO GAIN IN POPULARITY - it is currently going into a
sixth edition - the Lucases found themselves with assets they wanted to invest.
Their financial adviser suggested American Legacy. Steve particularly liked the
idea of being able to compound earnings on a tax-deferred basis. Even though
they will pay taxes on earnings they eventually withdraw, the way he sees it,
investing in American Legacy "lets all your money work for you now instead of
losing a good part of it to the government in taxes." The Lucases decided to
divide their portfolio among three equity investment options - the Growth Fund,
the Growth-Income Fund and the International Fund - and have been very happy
with the results.
NEITHER STEVE NOR PATTY plans to retire any time soon, and between raising two
children and paying off major expenses, they haven't spent much time thinking
about the future. But now that Jeff has graduated from college, and Ryan is
about to begin soon, they are ready to set their sights on the next financial
goal - funding their retirement.
THEY KNOW IT WON'T BE EASY. "These days you have to plan wisely," notes Patty,
"because you can't count on Social Security to see you through. Even state
retirement plans may not be enough." They plan to keep their assets in the
stock funds for quite a while, but may consider switching or adding to other
variable funds as their circumstances change.
[Sidebar]
AMERICAN LEGACY LETS YOU COMPOUND EARNINGS ON A TAX-DEFERRED BASIS. FOR PEOPLE
WITH A LONG INVESTMENT TIME HORIZON, THAT GROWTH POTENTIAL CAN BE CONSIDERABLE.
[End Sidebar]
HALL AND SALLIE HOSLER:
CREATING OPPORTUNITIES FOR RISING INCOME
[Photo: Hall and Sallie Hosler]
MANY PEOPLE VIEW RETIREMENT AS AN OPPORTUNITY to leave home and see the world.
Not Hall Hosler. After spending nearly 40,000 miles a year on the road as a
salesman for a women's sportswear company, he's looking forward to staying put
for a while. Several years ago, he and his wife, Sallie, bought a second house
in the Rockies, near their home in Denver. To reach their idyllic getaway -
which sits at an elevation of 9,600 feet - you pass old mining towns, herds of
buffalo and the Continental Divide. Hall and Sallie get up there as often as
they can, but with four lively granddaughters to dote on, their time gets
booked rather quickly.
LIKE MANY INVESTORS, HALL ONCE BELIEVED that he could progress toward his goals
simply by rolling over bank certificates of deposit every six months or so. "At
the time, my knowledge of the market was very elementary," he admits, "so the
fact that CDs were offering high rates with no volatility seemed to be enough."
Although the guaranteed return of principal offered by CDs shielded him from
the fluctuations of stock and bond prices, Hall soon discovered they exposed
him to a risk he hadn't considered: the risk that inflation and lower rates
could eat away at the income he was counting on.
TODAY, THE HOSLERS MAKE THE MOST OF AMERICAN LEGACY'S many options and features
by using the Dollar Cost Averaging Fixed Account as a base from which to make
automatic, tax-free transfers into four different variable funds. This
strategy, while it cannot assure a profit or protect against loss, has helped
them manage volatility by avoiding sizable investments at temporary market
peaks. It has also provided them with a broadly diversified portfolio of
investments with the potential to grow an income stream that keeps up with
inflation.
HALL KNOWS THE VALUE OF FINDING A GOOD THING and sticking with it. Before
retiring three years ago, he spent 30 years with the same company. He views his
holdings in American Legacy in much the same way. Right now, the couple is
leaving those assets untouched and taking distributions from Hall's IRA
rollover. Should they decide to withdraw income from American Legacy, there is
no requirement, as there is with an IRA, to begin at age 70-1/2.* And with
retirement lasting longer than ever, that can be tremendously reassuring.
[Sidebar]
FOR MANY PEOPLE, MAKING SYSTEMATIC INVESTMENTS INTO SEVERAL VARIABLE FUNDS IS
AN EFFICIENT WAY TO BUILD A DIVERSIFIED PORTFOLIO WITHOUT RISKING LARGE
INVESTMENTS AT TEMPORARY MARKET PEAKS.
[End Side Bar]
*Contractholders should note that withdrawals before age 591/2 are subject to
an additional 10% IRS penalty.
MARY HAWKS:
CREATING A "LEGACY" FOR THE FUTURE
[Photo: Mary Hawks]
AFTER SPENDING MORE THAN A QUARTER-CENTURY IN THE CLASSROOM, Mary Hawks has
learned a valuable lesson: Discipline pays off. That was true for her students,
who needed concentration and diligence to master the principles of geometry,
and true for herself when it came to commanding the attention of a group of
restless high school pupils. Mary still takes a disciplined approach to life,
even though she hasn't been near a blackboard for almost 15 years.
AS A MATH TEACHER, Mary has always had a facility with numbers, but it wasn't
until relatively late in her working life that she realized the rate she was
earning on her bank savings account would not be enough to help her reach her
financial goals. "I didn't know about stocks and bonds," she says. "Nobody back
then talked about investing." Then, a little more than a decade ago, a friend
suggested that she see a financial adviser. He started her on the path to
investing by assembling a carefully selected portfolio of professionally
managed stocks and bonds.
A PORTION OF MARY'S ASSETS WAS EARMARKED FOR HER SON, ANDRE. She helped him
finance a restaurant with the earnings from her investments and used the
balance to purchase an American Legacy contract, naming Andre as beneficiary.
As "unearned" income, that money could not be invested in an IRA or other
tax-deferred plan. It could be put into American Legacy, however, where it
could reap the benefits of tax-deferred compounding. There is an additional
benefit: When the time comes for Andre to receive his distribution, he can
avoid the time and expense of probate.
MARY JUST CAN'T SEEM TO RELAX. She still tutors algebra and trigonometry to
local students near her home in Rockford, Illinois. She volunteers at her
church, plays an active role in a number of social and educational
organizations and - when she can squeeze in the time - travels abroad. Is there
anything she would have done differently? Just one. "If I'd started earlier,
I'd be a heck of an investor now."
[Sidebar]
MOST TAX-DEFERRED PLANS RESTRICT CONTRIBUTIONS TO SALARY OR WAGES. AMERICAN
LEGACY CAN PROVIDE A SOLUTION FOR PEOPLE WHO WANT TO PUT INCOME FROM OTHER
SOURCES TO WORK FOR THEM.
[End Sidebar]
THESE VARIABLE ANNUITIES HAVE LIMITATIONS. FOR COSTS AND COMPLETE DETAILS OF
THE COVERAGE, CONTACT YOUR INSURANCE AGENT OR FINANCIAL ADVISER.
<TABLE>
<S> <C> <C> <C>
AMERICAN VARIABLE INSURANCE SERIES GLOBAL GROWTH FUND
Investment Portfolio, May 31, 1997
(Unaudited)
Where the Fund's Assets Are Invested
Percent of Percent of
Net Assets Net Assets
--------- ---------
The Americas 44.05%
Europe 20.82%
Asia/Pacific 15.37%
Other Countries 5.17%
Cash & Equivalent 14.59%
---------
100.00%
========
Largest Individual Equity Holdings
Suzuki Motor 4.08%
Zeneca Group 4.00
Telefonica de Espana 3.47
Telecom Argentina STET-France Telecom 3.26
Schlumberger 2.89
Bayerische Motoren Werke 2.79
Rentokil Group 2.38
Brambles Industries 2.30
Inco 2.27
Bank of Nova Scotia 2.26
Market Percent
Number of Value of Net
Stocks (common and preferred) Shares (000) Assets
- -------------------------------------------------- --------- --------- ---------
BUSINESS & PUBLIC SERVICES - 12.66%
Rentokil Group PLC (United Kingdom) 170,400 $ 659 2.38%
Brambles Industries Ltd. (Australia) 35,300 635 2.30
Cie. Generale des Eaux (France) 3,400 419 1.52
USA Waste Services, Inc. (USA)/1/ 11,200 406 1.47
Reuters Holdings PLC (United Kingdom) 36,000 405 1.46
Waste Management, Inc. (USA) 10,550 335 1.21
America Online, Inc. (USA)/1/ 5,925 327 1.18
Columbia/HCA Healthcare Corp. (USA) 8,625 316 1.14
TELECOMMUNICATIONS - 9.31%
Telefonica de Espana, SA (American Depositary
Receipts) (Spain) 11000 961 3.47
Telecom Argentina STET-France Telecom SA, Class B
(American Depositary Receipts) (Argentina) 16900 902 3.26
STET - Societa Finanziaria Telefonica p.a.,
non-convertible shares (Italy) 95500 376 1.36
Ascend Communications, Inc. (USA)/1/ 6025 336 1.22
AUTOMOBILES - 8.57%
Suzuki Motor Corp. (Japan) 90000 1129 4.08
Bayerische Motoren Werke AG (Germany) 940 770 2.79
Chrysler Corp. (USA) 14825 471 1.70
HEALTH & PERSONAL CARE - 8.19%
Zeneca Group PLC (United Kingdom) 36400 1105 4.00
Avon Products, Inc. (USA) 9250 590 2.13
Omnicare, Inc. (USA) 11350 325 1.17
Pfizer Inc (USA) 2400 247 .89
LEISURE & TOURISM - 6.25%
HFS Inc. (USA)/1/ 8250 445 1.61
Host Marriott Corp. (USA)/1/ 22600 398 1.44
Carnival Corp., Class A (USA) 8400 319 1.15
Walt Disney Co. (USA) 3875 317 1.15
Village Roadshow Ltd., Class A, preferred
shares (Australia) 98200 250 .90
BROADCASTING & PUBLISHING - 5.79%
SOFTBANK Corp. (Japan) 8200 554 2.00
Viacom Inc., Class B, non-voting shares (USA)/1/ 13,600 404 1.46
U S WEST Media Group (USA)/1/ 16,600 330 1.19
Nasionale Pers Beperk-N (South Africa) 31,300 315 1.14
BANKING - 4.70%
Bank of Nova Scotia (Canada) 15100 626 2.26
Sparbanken Sverige AB (Sweden) 20700 406 1.47
HSBC Holdings plc (United Kingdom) 8600 267 .97
ELECTRONIC COMPONENTS - 4.66%
Murata Manufacturing Co., Ltd. (Japan) 15000 594 2.15
Advanced Micro Devices, Inc. (USA)/1/ 9,550 382 1.38
Rohm Co., Ltd. (Japan) 3000 312 1.13
METALS: NONFERROUS - 4.56%
Inco Ltd. (Canada) 19000 627 2.27
RTZ Corp. PLC (United Kingdom) 22700 390 1.41
Aluminum Co. of America (USA) 3300 243 .88
DATA PROCESSING & REPRODUCTION - 4.55%
Netscape Communications Corp. (USA)/1/ 21000 621 2.24
Sybase, Inc. (USA)/1/ 20100 320 1.16
Oracle Corp. (USA)/1/ 6825 318 1.15
ENERGY EQUIPMENT - 2.89%
Schlumberger Ltd. (Netherlands Antilles) 6,700 798 2.89
MERCHANDISING - 2.56%
Consolidated Stores Corp. (USA)/1/ 10,150 388 1.40
Cifra, SA de CV, Class B (American Depositary
Receipts) (Mexico) 198200 319 1.16
ELECTRICAL & ELECTRONICS - 2.24%
Northern Telecom Ltd. (Canada) 7375 620 2.24
ENERGY SOURCES - 1.68%
Woodside Petroleum Ltd. (Australia) 55,200 465 1.68
MISCELLANEOUS MATERIALS & COMMODITIES - 1.44%
Pioneer Hi-Bred International, Inc. (USA) 5,700 398 1.44
BEVERAGES & TOBACCO - 1.12%
Coca-Cola Amatil Ltd. (Australia) 26900 311 1.12
MISCELLANEOUS
Other stocks in initial period of acquisition 1172 4.24
------------- -----------
TOTAL STOCKS (cost: $23,185,000) 23623 85.41
------------- -----------
Principal Market Percent
Amount Value of Net
Short-Term Securities (000) (000) Assets
- ---------------------------------------------------- ------------- ------------- -------
CORPORATE SHORT-TERM NOTES - 16.50%
Canada Bills 5.49% due 7/24/97 $500,000 496 1.79
Ford Motor Credit Co. 5.53% due 7/17/97 500,000 496 1.79
Nestle Capital Corp. 5.57% due 6/19/97 450,000 449 1.62
Gaz de France 5.52% due 6/18/97 400,000 399 1.44
Abbey National North America 5.50% due 6/27/97 400,000 398 1.44
Bank of Montreal 5.52% due 6/27/97 400,000 398 1.44
France Telecom 5.62% due 8/11/97 400000 395 1.43
Royal Bank of Canada 5.58% due 7/15/97 390,000 387 1.40
H. J. Heinz Co. 5.53% due 6/9/97 330,000 330 1.19
Southwestern Bell Telephone Co. 5.51% due 6/13/97 330,000 329 1.19
American Express Credit Corp. 5.53% due 6/11/97 250,000 250 .91
Beneficial Corp. 5.49% due 6/2/97 240,000 240 .87
--------- ---------
TOTAL SHORT-TERM SECURITIES (cost: $4,568,000) 4,567 16.51
--------- ---------
TOTAL INVESTMENT SECURITIES (cost: $27,753,000) 28,190 101.92
Excess of payables over cash and receivables 532 1.92
--------- ---------
NET ASSETS $27,658 100.00%
===== =====
/1/ Non-income-producing securities.
See Notes to Financial Statements
</TABLE>
<TABLE>
<S> <C> <C> <C>
GROWTH FUND
Investment Portfolio May 31, 1997
- -----------------------------------------------------------------
STOCKS 88.25%
CASH &
EQUIVALENTS 11.75%
- -----------------------------------------------------------------
Percent
Of Net
Largest Individual Stocks Assets
- ----------------------------------------------------------------- -----------
America Online 4.75%
Time Warner 3.75
Walt Disney 2.84
Oracle 2.37
Viacom 2.33
Columbia/HCA Healthcare 1.96
Pioneer Hi-Bred International 1.79
Texas Instruments 1.76
Intel 1.67
Tele-Communications, Liberty Media Group 1.66
Market Percent
Number of Value of Net
Stocks (common and preferred) Shares (000) Assets
- -------------------------------------------- ----------- ----------- -----------
Business & Public Services- 14.80%
America Online, Inc./1/ 3,520,000 194,480 4.75
Columbia/HCA Healthcare Corp. 2,197,500 80,483 1.96
Oxford Health Plans, Inc./1/ 839,000 59,150 1.44
Manpower Inc. 850,200 38,046 .93
Federal Express Corp./1/ 550,000 28,806 .70
Electronic Data Systems Corp. 741,700 27,721 .68
USA Waste Services, Inc./1/ 750,000 27,188 .66
Waste Management, Inc. (formerly WMX Technologies, Inc.) 800,628 25,420 .62
CUC International Inc./1/ 1,061,250 24,409 .60
Ecolab Inc. 550,000 22,894 .56
Republic Industries, Inc./1/ /2/ 750,000 18,047
Republic Industries, Inc./1/ 150,000 3,609 .53
Shared Medical Systems Corp. 235,000 12,455 .30
AccuStaff, Inc./1/ 440,700 10,577 .26
Avery Dennison Corp. 220,000 8,277 .20
PacifiCare Health Systems, Inc., Class B/1/ 65,000 5,151
PacifiCare Health Systems, Inc., Class A/1/ 21,733 1,630 .17
Ceridian Corp./1/ 150,000 5,513 .14
Paychex, Inc. 147,600 5,424 .13
APAC Teleservices, Inc./1/ 190,500 3,739 .09
United HealthCare Corp. 50,000 2,825 .07
Air & Water Technologies Corp., Class A/1/ 94,600 449 .01
Broadcasting & Publishing- 14.27%
Time Warner Inc. 3,302,575 153,570 3.75
Viacom Inc., Class B/1/ 3,215,000 95,445 2.33
Tele-Communications, Inc., Series A, Liberty Media Group/1/ 3,120,137 68,058 1.66
Tele-Communications, Inc., Series A, TCI Group/1/ 3,503,750 52,994 1.29
News Corp. Ltd., preferred shares (American
Depositary Receipts) (Australia) 1,867,500 27,546
News Corp. Ltd. (American Depositary Receipts) 1,270,000 22,543 1.22
HSN, Inc. (formerly Home Shopping Network, Inc.)/1/ 1,098,900 33,654 .82
BHC Communications, Inc., Class A/1/ 286,189 31,338 .77
Comcast Corp., Class A, special stock 1,750,000 30,406 .74
U S WEST Media Group/1/ 1,150,000 22,856 .56
Gaylord Entertainment Co., Class A 820,500 18,256 .45
United International Holdings, Inc., Class A/1/ 1,180,000 11,800 .29
Cablevision Systems Corp., Class A/1/ 240,000 7,830 .19
Jones Intercable, Inc., Class A/1/ 574,800 6,179 .15
Adelphia Communications Corp., Class A/1/ 350,000 2,012 .05
Electronic Components- 11.32%
Texas Instruments Inc. 800,000 71,900 1.76
Intel Corp. 450,400 68,236 1.67
LSI Logic Corp./1/ 1,320,000 55,110 1.35
Adaptec, Inc./1/ 1,236,000 45,423 1.11
Analog Devices, Inc./1/ 1,366,666 36,558 .89
SCI Systems, Inc./1/ 500,263 32,517 .79
National Semiconductor Corp./1/ 1,065,000 29,953 .73
ADC Telecommunications, Inc./1/ 605,900 20,752 .51
Newbridge Networks Corp. (Canada)/1/ 460,000 18,458 .45
Microchip Technology Inc./1/ 450,000 15,975 .39
Advanced Micro Devices, Inc./1/ 315,000 12,600 .31
Xilinx, Inc./1/ 200,000 10,725 .26
Bay Networks, Inc./1/ 350,000 8,575 .21
Seagate Technology/1/ 200,000 8,125 .20
Flextronics International Ltd. (Incorporated in Singapore)/1/ 300,000 7,088 .17
Actel Corp./1/ 300,000 6,300 .15
Rogers Corp./1/ 190,800 6,296 .15
Park Electrochemical Corp. 250,000 6,281 .15
Motorola, Inc. 42,000 2,788 .07
Data Processing & Reproduction- 11.18%
Oracle Corp./1/ 2,085,000 97,213 2.37
Solectron Corp./1/ 909,000 56,813 1.39
Netscape Communications Corp./1/ 1,701,300 50,295 1.23
Silicon Graphics, Inc./1/ 2,520,000 47,565 1.16
Computer Associates International, Inc. 675,000 36,956 .90
Intuit Inc./1/ 993,300 26,943 .66
3Com Corp./1/ 555,000 26,918 .66
Sybase, Inc./1/ 1,300,000 20,719 .51
Lexmark International Group, Inc. Class A /1/ 750,000 19,781 .48
Digital Equipment Corp./1/ 450,000 16,144 .40
Autodesk, Inc. 400,000 15,550 .38
Sequent Computer Systems, Inc./1/ 850,000 14,344 .35
Structural Dynamics Research Corp./1/ 475,000 11,638 .28
Tandem Computers Inc./1/ 440,000 6,270 .15
Mentor Graphics Corp./1/ 800,000 6,100 .15
Data General Corp./1/ 100,000 2,137 .05
Danka Business Systems PLC (American Depositary Receipts)
(United Kingdom) 45,000 1,806 .04
CompuServe Corp./1/ 84,100 946 .02
Leisure & Tourism- 7.67%
Walt Disney Co. 1,419,500 116,222 2.84
HFS Inc./1/ 685,500 36,931 .90
King World Productions, Inc./1/ 900,000 33,863 .83
Host Marriott Corp./1/ 1,700,000 29,963 .73
Carnival Corp., Class A 650,000 24,700 .60
Mirage Resorts, Inc./1/ 1,000,000 23,875 .58
Marriott International, Inc. 250,000 14,437 .35
Harrah's Entertainment, Inc./1/ 700,000 13,038 .32
Midway Games Inc./1/ 450,000 9,056 .22
Trump Hotels & Casino Resorts, Inc./1/ 650,000 6,337 .16
MGM Grand, Inc./1/ 150,000 5,681 .14
Health & Personal Care- 4.15%
Guidant Corp. 700,000 54,338 1.33
Omnicare, Inc. 1,000,000 28,625 .70
United States Surgical Corp. 500,000 16,875 .41
Forest Laboratories, Inc./1/ 380,000 16,055 .39
Medtronic, Inc. 200,000 14,800 .36
Kimberly-Clark Corp. 200,000 10,025 .25
Gillette Co. 95,100 8,452 .20
Nellcor Puritan Bennett Inc./1/ 300,000 6,412 .16
Johnson & Johnson 97,600 5,844 .14
SEQUUS Pharmaceuticals, Inc./1/ 400,000 2,825
SEQUUS Pharmaceuticals, Inc., warrants, expire 4/17/98/1/ 40,416 4 .07
SONUS Pharmaceuticals, Inc./1/ /2/ /3/ 106,910 2,431 .06
Alpha-Beta Technology, Inc./1/ 200,000 1,875 .05
Pharmacia & Upjohn, Inc. 36,250 1,255 .03
Merchandising- 3.39%
Consolidated Stores Corp./1/ 1,069 40,880 1.00
Barnes & Noble, Inc./1/ 675,000 28,097 .69
Cardinal Health, Inc. 245,000 14,271 .35
Payless ShoeSource, Inc./1/ 295,000 13,975 .34
Limited Inc. 575,000 11,644 .28
Amway Asia Pacific Ltd. (Multinational) 250,000 11,562 .28
Circuit City Stores, Inc. - Circuit City Group 200,000 7,900 .19
Boise Cascade Office Products Corp./1/ 300,000 5,850 .14
Spiegel, Inc., Class A/1/ 726,600 4,814 .12
Miscellaneous Materials & Commodities- 1.79%
Pioneer Hi-Bred International, Inc. 1,050,000 73,238 1.79
Transportation: Airlines- 1.75%
Southwest Airlines Co. 1,750,300 45,070 1.10
AMR Corp./1/ 195,000 19,378 .48
Delta Air Lines, Inc. 75,000 7,031 .17
Chemicals- 1.71%
Valspar Corp. 1,269,800 35,554 .87
Mycogen Corp./1/ 800,000 18,800 .46
Air Products and Chemicals, Inc. 125,000 9,719 .23
Engelhard Corp. 284,400 6,150 .15
Telecommunications- 1.61%
AirTouch Communications Inc./1/ 1,000,000 27,875 .68
Ascend Communications, Inc./1/ 425,000 23,694 .58
LCI International, Inc./1/ 400,000 9,700 .24
MCI Communications Corp. 120,000 4,605 .11
Banking- 1.58%
BankBoston Corp. 290,840 21,231 .52
Norwest Corp. 250,000 13,375 .32
Charter One Financial, Inc. 262,500 12,305 .30
Northern Trust Corp. 250,000 12,281 .30
Commerce Bancshares, Inc. 130,096 5,692 .14
Electrical & Electronics- 1.41%
Telefonaktiebolaget LM Ericsson, Class B
(American Depositary Receipts) (Sweden) 1,040,000 37,050 .90
Nokia Corp., Class A (American Depositary Receipts) (Finland) 210,000 13,860 .34
General Instrument Corp./1/ 286,700 6,952 .17
Recreation & Other Consumer Products- 1.32%
Mattel, Inc. 1,596,288 47,689 1.16
Electronic Arts/1/ 200,000 6,400 .16
Insurance- 1.31%
Transatlantic Holdings, Inc. 270,000 24,199 .59
EXEL Ltd. (Incorporated in Bermuda) 510,000 22,567 .55
Everest Reinsurance Holdings, Inc. 200,000 6,800 .17
Energy Equipment- 1.29%
Reading & Bates Corp./1/ 1,500,000 38,062 .93
Schlumberger Ltd. (Netherlands Antilles) 125,000 14,891 .36
Energy Sources- 1.19%
Enterprise Oil PLC (United Kingdom) 1,500,000 16,513 .40
Murphy Oil Corp. 350,000 16,231 .40
Union Texas Petroleum Holdings, Inc. 800,000 16,100 .39
Beverages & Tobacco - 0.78%
Philip Morris Companies Inc. 555,000 24,420 .60
PepsiCo, Inc. 200,000 7,350 .18
Financial Services- 0.75%
Federal National Mortgage Assn. 600,000 26,175 .64
Federal Home Loan Mortgage Corp. 137,000 4,521 .11
AEROSPACE & MILITARY- 0.43%
Gulfstream Aerospace Corp./1/ 600,000 17,625 .43
Construction & Housing- 0.09%
Stone & Webster, Inc. 90,000 3,859 .09
TEXTILES & APPAREL- 0.09%
Liz Claiborne Inc. 50,000 2,281 .06
NIKE, Inc. Class B 25,000 1,425 .03
Electronic Instruments- 0.05%
ANTEC Corp./1/ 150000 1856 .05
Miscellaneous
Other stocks in initial period of acquisition 177,015 4.32
----------- -----------
TOTAL STOCKS (cost: $2,710,951,000) 3,615,029 88.25
----------- -----------
Principal
Amount
Short-Term Securities (000)
- ----------------------------------------------------------------- ----------- ----------- -----------
Corporate Short-Term Notes- 9.29%
Monsanto Co. 5.57%-5.60% due 6/4-7/10/97 $35,000 34,867
Monsanto Co. 5.62% due 7/9/97/3/ 18,600 18,487 1.30%
Lucent Technologies Inc. 5.51%-5.53% due 6/5-6/20/97 52,000 51,898 1.27
H.J. Heinz Co. 5.50%-5.60% due 6/12-6/23/97 41,300 41,207 1.01
Weyerhaeuser Co. 5.56%-5.58% due 7/7-7/18/97 36,800 36,568 .89
Procter & Gamble Co. 5.48%-5.52% due 6/17-6/30/97 36,400 36,254 .88
Beneficial Corp. 5.55%-5.57% due 6/10-8/6/97 32,400 32,260 .79
International Lease Finance Corp. 5.55%-5.60% due 6/11-8/12/97 31,100 30,809 .75
Warner-Lambert Co. 5.53% due 6/16/97 18,370 18,325
Warner-Lambert Co. 5.52% due 6/24/97/3/ 7,300 7,273 .63
Coca-Cola Co. 5.48% due 6/2/97 25,000 24,992 .61
Commercial Credit Co. 5.50%-5.55% due 6/2-8/1/97 24,900 24,752 .60
National Rural Utilities Cooperative Finance Corp.
5.54%-5.56% due 6/3-6/20/97 22,800 22,764 .56
Federal Agency Discount Notes- 2.83%
Federal Home Loan Mortgage Corp. 5.275%-5.55% due 6/6-8/5/97 58,300 58,107 1.42
Federal National Mortgage Assn. 5.515%-5.53% due 8/4-8/7/97 39,800 39,404 .96
Federal Home Loan Banks 5.45%-5.535% due 6/19-8/7/97 18,560 18,398 .45
----------- -----------
TOTAL SHORT-TERM SECURITIES (cost: $496,503,000) 496,365 12.12
----------- -----------
TOTAL INVESTMENT SECURITIES (cost: $3,207,454,000) 4,111,394 100.37
Excess of payables over cash and receivables 15,206 .37
----------- -----------
NET ASSETS $4,096,188 100.00%
========== ==========
/1/ Non-income-producing securities.
/2/ Valued under procedures established by the
Board of Trustees.
/3/ Purchased in a private placement transaction;
resale to the public may require registration or
sale only to qualified institutional buyers.
See Notes to Financial Statements
- -----------------------------------------------------------------
Stocks appearing in the portfolio
since November 30, 1996
- -----------------------------------------------------------------
AccuStaff
APAC Teleservices
Ascend Communications
Boise Cascade Office Products
Cardinal Health
Computer Associates International
Federal Home Loan Mortgage
Gillette
Gulfstream Aerospace
HFS
LCI International
Lexmark International Group
Liz Claiborne
Medtronic
MGM Grand
Midway Games
Mirage Resorts
Netscape Communications
NIKE
Paychex
Payless ShoeSource
Republic Industries
SONUS Pharmaceuticals
United States Surgical
Union Texas Petroleum Holdings
- -----------------------------------------------------------------
Stocks eliminated from the portfolio
since November 30, 1996
- -----------------------------------------------------------------
Adobe Systems
ADT
Altera
Applied Materials
Apria Healthcare Group
Banc One
CNA Financial
Columbia Gas System
Dell Computer
Duracell International
EMC
FHP International
Genetics Institute
Great Lakes Chemical
Hasbro
KLA Instruments
Linear Technology
Loewen Group
Luby's Cafeterias
Lucent Technologies
Marvel Entertainment Group
Maxim Integrated Products
NAC Re
New World Communications Group
Paragon Trade Brands
Quantum
Staples
Trenwick Group
U.S. Industries
United States Cellular
Value Health
Wal-Mart Stores
Western Digital
</TABLE>
<TABLE>
<S> <C> <C> <C>
AMERICAN VARIABLE INSURANCE SERIES INTERNATIONAL FUND
Investment Portfolio, May 31, 1997
(Unaudited)
Where the Fund's Assets Are Invested
Percent of Percent of
Net Assets Net Assets
-------- --------
EUROPE 45.16%
ASIA/PACIFIC 30.30%
THE AMERICAS 13.87%
OTHER COUNTRIES 2.39%
CASH AND EQUIVALENTS 8.28%
TOTAL 100.0%
Largest Individual Equity Holdings
Telefonica de Espana 2.95%
Novartis 1.81
Hong Kong Telecommunications 1.77
Orkla 1.73
Hutchison Whampoa 1.55
Volkswagen 1.45
Centrais Eletricas Brasileiras 1.41
Bayerische Motoren Werke 1.40
Telefonos de Mexico 1.40
Telecom Italia Mobile 1.36
Market Percent
Number of Value of Net
Stocks (common and preferred) Shares (000) Assets
- ------------------------------------------------------ -------- -------- --------
TELECOMMUNICATIONS - 11.92%
Telefonica de Espana, SA (Spain) 2390000 $68,966
Telefonica de Espana, SA (American Depositary Receipts) 158000 13805 2.95%
Hong Kong Telecommunications Ltd. (Hong Kong) 22436953 49664 1.77
Telefonos de Mexico, SA de CV, Class L
(American Depositary Receipts) (Mexico) 882000 39139 1.40
Telecom Italia Mobile SpA (Italy) 11961000 35199
Telecom Italia Mobile SpA, savings shares 1588800 2788 1.36
STET - Societa Finanziaria Telefonica p.a. (Italy) 3300000 16677
STET - Societa Finanziaria Telefonica p.a., nonconvertible 1.00
savings shares 2900000 11418
Telecomunicacoes Brasileiras SA, preferred nominative
(American Depositary Receipts) (Brazil) 130000 17859 .64
Telecom Italia SpA (Italy) 6075200 16642
Telecom Italia SpA, savings shares 276000 610 .62
TELECEL - Comunicacoes Pessoais, SA (Portugal) 156400 12015 .43
Perusahaan Perseroan (Persero) PT Indonesian Satellite Corp. 2108000 6287
(Indonesia)
Perusahaan Perseroan (Persero) PT Indonesian Satellite Corp. .40
(American Depositary Receipts) 164200 4905
Telefonica del Peru SA, Class B, (American Depositary Receipts) 350000 8881 .32
(Peru)
Telecom Corp. of New Zealand Ltd. (New Zealand) 1489600 7156
Telecom Corp. of New Zealand Ltd. (American Depositary Receipts) 5000 192 .26
Deutsche Telekom AG (Germany) 195100 4331 .15
Philippine Long Distance Telephone Co. (Global Depositary Receipts)
(Philippines) 80000 4300 .15
Koninklijke PTT Nederland NV (Netherlands) 115000 4023 .14
SmarTone Telecommunications Holdings Ltd. (Hong Kong -
Incorporated in Bermuda) 2000000 3936 .14
SK Telecom Co., Ltd. (South Korea) (formerly Korea Mobile
Telecommunications Corp.) 4871 3006 .11
Videsh Sanchar Nigam Ltd. (Global Depositary Receipts) 108600 2237 .08
(India) /1/ /2/
BANKING - 7.93%
Bank of Nova Scotia (Canada) 874200 36,267 1.29
Safra Republic Holdings SA (Luxembourg) 154000 33,264 1.19
HSBC Holdings plc (United Kingdom) 1000000 30,330 1.08
Australia and New Zealand Banking Group Ltd. (Australia) 4261951 29,142 1.04
Royal Bank of Canada (Canada) 450000 19,500 .70
Bank of Scotland (United Kingdom) 3005200 18,929 .68
Lloyds TSB Group plc (United Kingdom) 1140000 11,467 .41
Westpac Banking Corp. (Australia) 1900000 10,304 .37
Banco de Santander, SA (Spain) 100000 8,532 .30
Fuji Bank, Ltd. (Japan) 470000 6,056 .22
Sakura Bank, Ltd. (Japan) 920000 5,508 .20
Hanil Bank (South Korea) 804980 4,977 .18
Toronto-Dominion Bank (Canada) 130000 3,924 .14
Grupo Financiero Banamex Accival, SA de CV, Class B (Mexico)/1/ 1130397 2,449
Grupo Financiero Banamex Accival, SA de CV, Class L/1/ 92128 183 .09
Fuji International Finance (Bermuda) Trust,
convertible preference share units (Japan) 40 997 .04
BROADCASTING & PUBLISHING - 7.71%
CANAL+ (France) 122132 20704 .74
United News & Media plc (United Kingdom) 1500000 19020 .68
Television Broadcasts Ltd. (Hong Kong) 4092000 17851 .64
NV Verenigd Bezit VNU (Netherlands) 770,000 17,398 .62
Pathe (France) 73,000 16,829 .60
Nippon Television Network Corp. (Japan) 39000 15579 .56
Seven Network Ltd. (Australia) 3600000 14923 .53
SOFTBANK CORP. (Japan) 215800 14589 .52
Wolters Kluwer NV (Netherlands) 108118 13008 .46
News Corp. Ltd. (American Depositary Receipts) (Australia) 362000 6426
News Corp. Ltd., preferred shares (American Depositary Receipts) 181000 2670 .43
News Corp. Ltd., preferred shares (United Kingdom) 784003 2946
Independent Newspapers, PLC (Ireland) 2,007,020 10,092 .36
Mediaset SPA (Italy) 1,967,000 8,485 .30
Grupo Televisa, SA (American Depositary Receipts) (Mexico)/1/ 261000 7471 .27
Pearson PLC (United Kingdom) 540000 6347 .23
Elsevier NV (Netherlands) 340000 5753 .21
BEC World PCL (Thailand)/1/ 658,400 5,746 .21
Multicanal Participacoes SA (American Depositary Receipts) 416,000 4,862 .17
(Brazil)/1/
Carlton Communications PLC (United Kingdom) 540,000 4,653 .17
Seat SpA (Italy)/1/ 1,272,400 377 .01
MULTI-INDUSTRY - 6.94%
Orkla AS, Class A (Norway) 555000 48411 1.73
Hutchison Whampoa Ltd. (Hong Kong) 5,200,000 43,289 1.55
Swire Pacific Ltd., Class A (Hong Kong) 2,800,000 23,490 .84
Imasco Ltd. (Canada) 580,000 16,265 .58
Siebe plc (United Kingdom) 970,000 15,247 .54
Industriforvaltnings AB Kinnevik, Class B (Sweden) 305000 8347
Industriforvaltnings AB Kinnevik, Class A 101600 2702 .39
Benpres Holdings Corp. (Global Depositary Receipts) 1,540,000 10,934 .39
(Philippines)/1/
B.A.T. Industries PLC (United Kingdom) 1,100,000 9,866 .35
Lend Lease Corp. Ltd. (Australia) 452616 8958 .32
Anglovaal Ltd., Class N (South Africa) 270,000 7,028 .25
AUTOMOBILES - 6.42%
Volkswagen AG (Germany) 62,900 40,671 1.45
Bayerische Motoren Werke AG (Germany) 48000 39330 1.40
Volvo AB, Class B (Sweden) 1,075,000 29,767 1.06
Honda Motor Co., Ltd. (Japan) 760,000 22,328 .80
Suzuki Motor Corp. (Japan) 1700000 21321 .76
Toyota Motor Corp. (Japan) 646000 18535 .66
Hyundai Motor Co. (Global Depositary Receipts) (South Korea) 705,000 8,160 .29
HEALTH & PERSONAL CARE - 4.70%
Novartis AG (Switzerland) 37,324 50,637 1.81
AB Astra, Class A (Sweden) 1,613,333 26,034 .93
Hoya Corp. (Japan) 475,000 21,585 .77
Sankyo Co., Ltd. (Japan) 582,000 18,448 .66
Zeneca Group PLC (United Kingdom) 320,000 9,716 .35
Elan Corp., PLC (American Depositary Receipts) (Ireland)/1/ 71,900 2,930 .10
SmithKline Beecham PLC (American Depositary Receipts) 25,000 2,188 .08
(United Kingdom)
UTILITIES: ELECTRIC & GAS - 3.64%
Centrais Eletricas Brasileiras SA, Class B, preferred nominative
(American Depositary Receipts) (Brazil) 1,628,000 39,683 1.41
Hongkong Electric Holdings Ltd. (Hong Kong) 5875000 21155 .76
Copel, Class B, preferred nominative (Brazil)/1/ 732873000 10819
Copel, ordinary nominative/1/ 452485000 6680 .62
Korea Electric Power Corp. (South Korea) 338000 10450
Korea Electric Power Corp. (American Depositary Receipts) 200000 3625 .50
Scottish Power PLC (United Kingdom) 661200 4159 .15
CESP-Cia. Energetica de Sao Paulo, preferred nominative
(American Depositary Receipts) (Brazil)/1/ 204096 3419
CESP-Cia. Energetica de Sao Paulo, ordinary nominative/1/ 9,745,000 544 .14
Cia. Energetica de Minas Gerais - CEMIG (Brazil) 35692000 1560 .06
BUSINESS & PUBLIC SERVICES - 3.57%
Rentokil Group PLC (United Kingdom) 8,080,000 31,239 1.11
Reuters Holdings PLC (United Kingdom) 2,632,000 29,579 1.06
Brambles Industries Ltd. (Australia) 700,000 12,592 .45
Severn Trent plc (United Kingdom) 863,259 11,002 .39
NTT Data Communications Systems Corp. (Japan) 160 5,869 .21
Thames Water PLC (United Kingdom) 475,000 5,342 .19
Havas SA (France) 66,000 4,450 .16
ELECTRICAL & ELECTRONICS - 3.49%
Telefonaktiebolaget LM Ericsson, Class B (Sweden) 804600 28252
Telefonaktiebolaget LM Ericsson, Class B, 14,500 71 1.01
4.25% convertible preferred
Nokia Corp., Class A (Finland) 180000 11764
Nokia Corp., Class K 150000 9812 .77
Northern Telecom Ltd. (Canada) 230000 19320 .69
Tokyo Electron Ltd. (Japan) 328000 16539 .59
ASEA AB, Class A (Sweden) 900000 12141 .43
BEVERAGES & TOBACCO - 3.32%
Coca-Cola Amatil Ltd. (Australia) 3089445 35718 1.27
Cia. Cervejaria Brahma (Brazil) 23,300,000 16,915 .60
Panamerican Beverages, Inc., Class A (Mexico) 474600 13763 .49
LVMH Moet Hennessy Louis Vuitton (France) 48,000 11,631 .42
San Miguel Corp., Class B (Philippines) 2057000 6206 .22
South African Breweries Ltd. (South Africa) 190,000 5,339 .19
Rothmans of Pall Mall (Malaysia) Bhd. (Malaysia) 351,100 3,703 .13
FOOD & HOUSEHOLD PRODUCTS - 3.25%
Nestle SA (Switzerland) 20936 26037 .93
Reckitt & Colman PLC (United Kingdom) 1218375 17165 .61
PT Indofood Sukses Makmur (Indonesia) 6309600 14210 .51
Cadbury Schweppes PLC (United Kingdom) 1,500,000 13,454 .48
Unilever PLC (United Kingdom) 470000 12600 .45
Groupe Danone (France) 50,987 7,680 .27
MERCHANDISING - 2.87%
Kingfisher PLC (United Kingdom) 2,390,000 27,955 1.00
Cifra, SA de CV, Class C (Mexico) 6000000 9490
Cifra, SA de CV, Class B 1500000 2574
Cifra, SA de CV, Class A 917306 1569 .49
Carrefour SA (France) 20,000 13,139 .47
Tesco PLC (United Kingdom) 2,064,980 12,703 .45
Amway Japan Ltd. (American Depositary Receipts) (Japan) 300,000 5963
Amway Japan Ltd. 65,000 2507 .30
George Weston Ltd. (Canada) 75,000 4,538 .16
ELECTRONIC COMPONENTS - 2.66%
Rohm Co., Ltd. (Japan) 361000 37523 1.34
Murata Manufacturing Co., Ltd. (Japan) 420000 16633 .59
Kyocera Corp. (Japan) 199000 14342 .51
Hirose Electric Co., Ltd. (Japan) 91000 6113 .22
METALS: NONFERROUS - 2.01%
Inco Ltd. (Canada) 420000 13860 .49
WMC Ltd. (Australia) 1905451 12304 .44
Alcan Aluminium Ltd. (Canada) 310000 11121 .40
Noranda Inc. (Canada) 400,000 8,928 .32
Teck Corp., Class B (Canada) 300000 6652 .24
Pechiney, Class A (France) 100000 3415 .12
Granges AB (Sweden) 9000 112 .00
MACHINERY & ENGINEERING - 2.01%
Mannesmann AG (Germany) 70000 28453 1.02
Valmet Corp. (Finland) 600000 10848 .39
Svedala Industri AB (Sweden) 530000 10673 .38
Kawasaki Heavy Industries, Ltd. (Japan) 1400000 6061 .22
RECREATION & OTHER CONSUMER PRODUCTS - 1.68%
Sony Music Entertainment (Japan) Inc. (Japan) 270,000 12,757 .46
EMI Group PLC (United Kingdom) 468,712 9,018 .31
TAG Heuer International SA (Switzerland) 58,000 8,115 .29
Yue Yuen Industrial (Holdings) Ltd. (Hong Kong - 3,600,000 7,899 .28
Incorporated in Bermuda)
Square Co. Ltd. (Japan) 102,000 4,732 .17
Nintendo Co., Ltd. (Japan) 60,000 4,690 .17
APPLIANCES & HOUSEHOLD DURABLES - 1.56%
Sony Corp. (Japan) 377000 31770 1.13
Philips Electronics NV (Netherlands) 200000 10943 .39
AB Electrolux, Class B (Sweden) 18,000 1,074 .04
Samsung Electronics Co., Ltd. (South Korea) 1,100 108 .00
Samsung Electronics Co., Ltd., subscription rights 18 1 .00
ENERGY SOURCES - 1.49%
TOTAL, Class B (France) 156372 14311
TOTAL, Class B, preferred nominative 75000 3422 .63
(American Depositary Receipts)
Repsol SA (American Depositary Receipts) (Spain) 200000 8425 .30
ENI SpA (American Depositary Receipts) (Italy) 140000 7105 .25
Woodside Petroleum Ltd. (Australia) 600000 5059 .18
"Shell" Transport and Trading Co., plc (United Kingdom) 30000 3581 .13
BUILDING MATERIALS & COMPONENTS - 1.39%
Cemex, SA de CV, ordinary participation certificates (Mexico) 4562700 17089
Cemex, SA de CV, Class A 2321450 8651 .92
Holderbank Financiere Glaris Ltd. (Switzerland) 15000 13164 .47
AEROSPACE & MILITARY TECHNOLOGY - 1.28%
British Aerospace PLC (United Kingdom) 940000 19133 .68
Bombardier Inc., Class B (Canada) 793900 16683 .60
MISCELLANEOUS MATERIALS & COMMODITIES - 1.10%
De Beers Consolidated Mines Ltd. (South Africa) 345000 12090 .43
English China Clays PLC (United Kingdom) 3168750 10460 .37
SGL Carbon AG (Germany) 50000 7233 .26
Bunzl plc (United Kingdom) 300000 985 .04
GOLD MINES - 0.75%
Ashanti Goldfields Co. Ltd. (Global Depositary Receipts) (Ghana) 508540 6611
Ashanti Goldfields Co. Ltd. (Australia) 386088 5038 .42
Normandy Mining Ltd. (Australia) 7509467 9196 .33
INDUSTRIAL COMPONENTS - 0.74%
Sumitomo Electric Industries, Ltd. (Japan) 820000 12891 .46
Bridgestone Corp. (Japan) 175000 3954 .14
Cie Generale des Etablissements Michelin, Class B (France) 70000 3826 .14
TRANSPORTATION: AIRLINES - 0.72%
KLM Royal Dutch Airlines (Netherlands) 695000 20,081 .72
DATA PROCESSING & REPRODUCTION - 0.70%
Fujitsu Ltd. (Japan) 940000 11466 .41
Olivetti SpA (Italy)/1/ 28300000 8261 .29
INSURANCE - 0.44%
Royal & SunAlliance Insurance Group plc (United Kingdom) 1631988 12285 .44
TRANSPORTATION: SHIPPING - 0.36%
Stolt-Nielsen SA, Class B (American Depositary Receipts)
(Multinational) 327000 5,968 .21
Nippon Yusen KK (Japan) 1000000 4,123 .15
FOREST PRODUCTS & PAPER - 0.32%
UPM-Kymmene Corp. (Finland)/1/ 385000 8847 .32
METALS: STEEL - 0.28%
Kawasaki Steel Corp. (Japan) 2700000 7,932 .28
LEISURE & TOURISM - 0.28%
Mandarin Oriental International Ltd. (Singapore) 6911218 7810 .28
REAL ESTATE - 0.14%
Mitsui Fudosan Co., Ltd. (Japan) 300000 3788 .14
CHEMICALS - 0.05%
Ciba Specialty Chemicals Holdings (Switzerland) 14581 1381 .05
MISCELLANEOUS
Other stocks in initial period of acquisition 139411 4.98
-------- --------
TOTAL STOCKS (cost: $2,002,933,000) 2541111 90.70
-------- --------
Principal
Amount
Convertible Debentures (000)
- ------------------------------------------------------ -------- -------- --------
BROADCASTING & PUBLISHING - 0.29%
United News & Media plc 6.125% 2003 4,500 8118 .29
UTILITIES: ELECTRIC & GAS - 0.18%
Korea Electric Power Corp. 5.00% 2001 KW5,000 4975 .18
FOREST PRODUCTS & PAPER - 0.15%
UPM-Kymmene Corp. 8.25% 2043 FM17,000 4191 .15
ELECTRONIC COMPONENTS - 0.11%
Acer Peripherals Inc. 1.25% 2006 $2,680 3176 .11
ENERGY SOURCES - 0.04%
Zhenhai Refining & Chemical Co. Ltd. 3.00% 2003/2/ 950 1078 .04
-------- --------
TOTAL CONVERTIBLE DEBENTURES (cost: $20,437,000) 21,538 .77
-------- --------
TOTAL EQUITY-TYPE SECURITIES (cost: $2,023,370,000) 2,562,649 91.47
-------- --------
Bonds and Notes
- ------------------------------------------------------ -------- -------- --------
INDUSTRIALS - 0.26%
RBS Participacoes SA 11.00% 2007/2/ $7,000 7298 .26
-------- --------
TOTAL BONDS & NOTES (cost: $7,025,000) 7,298 .26
-------- --------
Principal Market Percent
Amount Value of Net
Short-Term Securities (000) (000) Assets
- ------------------------------------------------------ -------- -------- -------
CORPORATE SHORT-TERM NOTES - 7.58%
Daimler-Benz North America Corp. 5.50%-5.60% due 6/11-7/9/97 $33,400 33,247 1.19
H.J. Heinz Co. 5.50%-5.60% due 6/13-7/15/97 23,200 23,123 .82
Halifax Building Society 5.50%-5.56% due 6/9-7/10/97 21,900 21,818 .78
Bayer, AG 5.56%-5.60% due 7/22-8/12/97/2/ 20,400 20,204 .72
International Lease Finance Corp. 5.55% due 7/7/97 19,800 19,687 .70
National Australia Funding (Delaware) Inc. 5.61% due 7/16/97 18,000 17,872 .64
Canadian Wheat Board 5.52% due 6/30/97 17,700 17,619 .63
Lloyds Bank PLC 5.53%-5.55% due 6/17-6/27/97 17,400 17,340 .62
Svenska Handelsbanken Inc. 5.64% due 7/25/97 15500 15369 .55
General Electric Capital Corp. 5.65% due 6/2/97 11800 11796 .42
RTZ America, Inc. 5.58% due 7/7/97/2/ 9,400 9,346 .33
France Telecom 5.53% due 6/23/97 5,000 4,983 .18
FEDERAL AGENCY DISCOUNT NOTES - 1.02%
Federal Home Loan Banks 5.45%-5.52% due 6/19-7/31/97 14350 14296 .51
Federal National Mortgage Assn. 5.45% due 8/27/97 7600 7498 .27
Federal Home Loan Mortgage Corp. 5.275% due 6/13/97 6900 6886 .24
-------- --------
TOTAL SHORT-TERM SECURITIES (cost: $241,083,000) 241,084 8.60
-------- --------
TOTAL INVESTMENT SECURITIES (cost: $2,271,478,000) 2,811,031 100.33
Excess of payables over cash and receivables 9,254 .33
-------- --------
NET ASSETS $2,801,777 100.00%
======== ========
/1/ Non-income-producing securities.
/2/ Purchased in a private placement transaction;
resale to the public may require registration or
sale only to qualified institutional buyers.
See Notes to Financial Statements
Equity-type securities appearing in the portfolio
since November 30, 1996
Bank of Scotland
B-A-T Industries
BEC World
Bridgestone
British Aerospace
Bunzl
Carlton Communications
Cervejaria Brahma
Ciba Specialty Chemicals
Copel
Deutsche Telekom
Elan
Energetica de Minas Gerais - CEMIG
Fuji Bank
Fuji International Finance
Fujitsu
George Weston
Granges
Havas
Honda Motor
Imasco
Kingfisher
KLM Royal Dutch Airlines
Lloyds TSB Group
Nintendo
Novartis
Pechiney
Repsol
Rothmans of Pall Mall
Royal Bank of Canada
Sakura Bank
Samsung Electronics
Sankyo
Seat
Severn Trent
Siebe
Sumitomo Electric Industries
Swire Pacific
TAG Heuer International
TELECEL - Comunicacoes Pessoais
Thames Water
Tokyo Electron
Toronto-Dominion Bank
Unilever
United News & Media
Videsh Sanchar Nigam
Volkswagen
Woodside Petroleum
Yue Yuen Industrial
Zeneca Group
Zhenhai Refining & Chemical
Equity-type securities eliminated from the portfolio
since November 30, 1996
ABN AMRO Holding
ACOM
AGA
Allied Irish Banks
ASM Lithography Holding
AUDIOFINA
Autopistas del Mare Nostrum
Banyu Pharmaceutical
BBC Brown Boveri
Brierley Investments
Ciba-Geigy
Consolidated Electric Power Asia
Corporacion Mapfre
Daimler-Benz
Dalgety
Fuji Photo Film
Glaxo Wellcome
Groupe Bruxelles Lambert
Hoechst
Iberdrola
Incentive
Internationale Nederlanden Groep
Korea First Bank
L'Air Liquide
National Mutual Asia
Orbital Engine
Peugeot
PolyGram
Siemens
Sing Tao Holdings
Swedish Match
TeleWest Communications
TNT
VA Technologie
Woolworths
</TABLE>
<TABLE>
<S> <C> <C> <C>
American Variable Insurance Series
GROWTH-INCOME FUND
Investment Portfolio - May 31, 1997
Equity-Type Securities 86.24%
Cash & Equivalents 13.76%
Percent
of Net
Largest Individual Equities Assets
AT&T 1.59%
Valero Energy 1.57
Circuit City Stores-Circuit City Group 1.51
Aluminum Co. of America 1.49
Atlantic Richfield 1.47
Ultramar Diamond Shamrock 1.38
Potash Corp. of Saskatchewan 1.27
Bowater 1.27
Schering-Plough 1.24
Caterpillar 1.20
Market Percent
Number of Value of Net
Stocks (common and preferred) Shares (000) Assets
Energy Sources - 9.32%
Valero Energy Corp. 2563250 $91,636 1.57%
Atlantic Richfield Co. 590000 85845 1.47
Ultramar Diamond Shamrock Corp.
(formerly Diamond Shamrock, Inc.) 2434800 80348 1.38
Pennzoil Co. 980000 54268 .93
Amoco Corp. 450000 40219 .69
TOTAL, Class B (American Depositary Receipts) (France) 609455 27806 .48
Phillips Petroleum Co. 611100 25972 .45
Murphy Oil Corp. 463200 21481 .37
Repsol SA (American Depositary Receipts) (Spain) 500000 21063 .36
Royal Dutch Petroleum Co. (New York Registered Shares)
(Netherlands) 100000 19525 .33
Texaco Inc. 175,000 19,097 .33
Elf Aquitaine (American Depositary Receipts) (France) 300000 15637 .27
Exxon Corp. 250000 14812 .25
Norsk Hydro AS (American Depositary Receipts) (Norway) 250000 12688 .22
Ashland Inc. 200000 9575 .16
Chevron Corp. 50000 3500 .06
Health & Personal Care - 6.92%
Schering-Plough Corp. 800000 72600 1.24
Pfizer Inc 600000 61725 1.06
Warner-Lambert Co. 607800 61236 1.05
American Home Products Corp. 660000 50325 .86
Kimberly-Clark Corp. 740,000 37,092 .64
Merck & Co., Inc. 375,000 33703 .58
AB Astra, Class A (American Depositary Receipts) (Sweden) 1400000 22925 .39
Abbott Laboratories 350,000 22,050 .38
Eli Lilly and Co. 180000 16,740 .29
Johnson & Johnson 250,000 14,969 .26
Tambrands Inc. 200,000 9,650 .17
Banking - 5.30%
Norwest Corp. 800000 42800 .73
BankAmerica Corp. 285400 33356 .57
First Union Corp. 365000 31344 .54
KeyCorp 400000 21750 .37
First Chicago NBD Corp. 350,000 20737 .36
Northern Trust Corp. 400000 19650 .34
Chase Manhattan Corp. 200000 18900 .32
Bank of New York Co., Inc. 400,000 17050 .29
CoreStates Financial Corp 290500 15,360 .26
SunTrust Banks, Inc. 280,000 14945 .26
Fleet Financial Group, Inc. 235500 14395 .25
Citicorp 100,000 11438 .20
J.P. Morgan & Co. Inc. 100000 10,750 .18
Bank of Tokyo-Mitsubishi, Ltd. (American Depositary
Receipts) (Japan) 600000 10,725 .18
Hibernia Corp., Class A 800000 10600 .18
Sakura Bank, Ltd. (American Depositary Receipts) (Japan) 150000 8,850 .15
Banc One Corp. 166375 7196 .12
Business & Public Services - 4.93%
Browning-Ferris Industries, Inc. 1729200 56631 .97
Electronic Data Systems Corp. 1199500 44831 .77
Waste Management, Inc.
(formerly WMX Technologies, Inc.) 1340628 42565 .73
Alexander & Baldwin, Inc. 1,020,000 27,667 .47
Cognizant Corp. 726500 26880 .46
Manpower Inc. 450,000 20,138 .35
Federal Express Corp./1/ 380000 19903 .34
Columbia/HCA Healthcare Corp. 500,000 18,312 .31
Pitney Bowes Inc. 175000 12294 .21
PacifiCare Health Systems, Inc., Class A/1/ 154000 11550 .20
ACNielsen Corp./1/ 320000 5400 .09
Dun & Bradstreet Corp. 70000 1829 .03
Merchandising - 4.77%
Circuit City Stores Inc. - Circuit City Group 2225000 87888 1.51
Wal-Mart Stores, Inc. 1,400,000 41,650 .71
Limited Inc. 1494900 30272 .52
Giant Food Inc., Class A 825,000 27,173 .47
Circuit City Stores Inc. - Carmax Group/1/ 1,300,000 18,850 .32
Federated Department Stores, Inc./1/ 500000 18500 .32
J.C. Penney Co., Inc. 350000 18025 .31
Gap, Inc. 400000 13700 .23
Woolworth Corp./1/ 500000 12062 .21
Sears, Roebuck and Co. 200000 9825 .17
Telecommunications- 4.74%
AT&T Corp. 2520000 92925 1.59
Ameritech Corp. 905900 59336 1.02
Telefonos de Mexico, SA de CV, Class L
(American Depositary Receipts) (Mexico) 775000 34391 .59
U S WEST Communications, Inc. 850,000 31,131 .53
MCI Communications Corp. 539,800 20,715 .35
Telefonica de Espana, SA (American Depositary Receipts)
(Spain) 200,000 17,475 .30
AirTouch Communications/1/ 549,621 15,321 .26
SBC Communications Inc. 100000 5850 .10
Chemicals - 4.14%
Mallinckrodt Inc. 1240000 46345 .79
Praxair, Inc. 600000 31575 .54
Monsanto Co. 673,000 29,612 .51
Dow Chemical Co. 300000 25012 .43
E.I. du Pont de Nemours and Co. 225,000 24,497 .42
Witco Corp. 500000 18500 .32
PPG Industries, Inc. 250000 14531 .25
Lyondell Petrochemical Co. 640000 14080 .24
Great Lakes Chemical Corp. 250000 12219 .21
Imperial Chemical Industries PLC (American
Depositary Receipts) (United Kingdom) 200000 10900 .19
Air Products and Chemicals, Inc. 100000 7775 .13
Engelhard Corp. 284400 6150 .11
Forest Products & Paper - 4.08%
Bowater Inc. 1495000 73816 1.27
Union Camp Corp. 780000 40950 .70
Rayonier Inc. 525000 22509 .39
Weyerhaeuser Co. 450000 22444 .38
International Paper Co. 450000 21600 .37
James River Corp. of Virginia 500000 17562 .30
Sonoco Products Co. 500000 14563 .25
Georgia-Pacific Corp. 150000 13237 .23
Westvaco Corp. 187500 5859 .10
Louisiana-Pacific Corp. 200000 3900 .07
Deltic Timber Corp. 46628 1230 .02
Broadcasting & Publishing - 3.77%
Time Warner Inc. 942,000 43,803 .75
Viacom Inc., Class B/1/ 1335000 39633 .68
News Corp. Ltd. (American Depositary Receipts) (Australia) 1100000 19525
News Corp. Ltd., preferred shares (American Depositary
Receipts) 400000 5900 .44
E.W. Scripps Co., Class A 630000 24019 .41
Gannett Co., Inc. 170000 15725 .27
U S WEST Media Group/1/ 775000 15403 .26
Media General Inc., Class A 500000 15281 .26
Tele-Communications, Inc., Series A, Liberty
Media Group/1/ 590625 12883 .22
Comcast Corp., Class A, special stock 729706 12679 .22
Tribune Co. 200000 8650 .15
Chris-Craft Industries, Inc./1/ 104875 4483 .08
New York Times Co., Class A 34300 1580 .03
Machinery & Engineering - 3.47%
Caterpillar Inc. 718600 70153 1.20
Parker Hannifin Corp. 700000 36838 .63
Deere & Co. 716600 36636 .63
Ingersoll-Rand Co. 350000 19075 .33
New Holland NV (Netherlands)/1/ 750000 18375 .31
Crompton & Knowles Corp. 700000 16362 .28
Greenfield Capital Trust, 6.00% convertible preferred/2/ 118000 5369 .09
Newport News Shipbuilding Inc. 8000 133 .00
Data Processing & Reproduction - 3.10%
Oracle Corp./1/ 900,000 41,963 .72
Silicon Graphics, Inc./1/ 2,074,300 39,152 .67
Xerox Corp. 510,000 34,553 .59
International Business Machines Corp. 325,400 28,147 .48
3Com Corp./1/ 400000 19400 .33
Adobe Systems Inc. 400,000 17,850 .31
Beverages & Tobacco - 2.79%
Philip Morris Companies Inc. 1,405,000 61,820 1.06
Seagram Co. Ltd. (Canada) 1420000 57155 .98
PepsiCo, Inc. 870000 31973 .55
UST Inc. 400000 11400 .20
Insurance - 2.46%
SAFECO Corp. 928800 40403 .69
General Re Corp. 220000 38555 .66
Allstate Corp. 300000 22087 .38
American General Corp. 320000 14160 .24
Liberty Corp. 350000 13912 .24
St. Paul Companies, Inc. 120000 8595 .15
Arthur J. Gallagher & Co. 188100 5972 .10
Miscellaneous Materials & Commodities - 2.26%
Potash Corp. of Saskatchewan Inc. (Canada) 900000 73912 1.27
Pioneer Hi-Bred International, Inc. 433200 30216 .52
Crown Cork & Seal Co., Inc. 475000 27669 .47
Aerospace & Military Technology - 2.00%
Sundstrand Corp. 500000 24875 .43
Boeing Co. 225000 23681 .41
United Technologies Corp. 290,000 23,309 .40
General Motors Corp., Class H 370000 20396 .35
Raytheon Co. 350,000 16,713 .29
McDonnell Douglas Corp. 100,000 6,437 .11
Litton Industries, Inc./1/ 6800 308 .01
Metals: Nonferrous - 1.76%
Aluminum Co. of America 1180000 86878 1.49
Inco Ltd. (Canada) 280000 9240 .16
Alumax Inc./1/ 160000 6180 .11
Electrical & Electronics - 1.68%
Nokia Corp., Class A (American Depositary Receipts)
(Finland) 550000 36300 .62
York International Corp. 628800 30497 .52
Lucent Technologies Inc. 297136 18905 .33
Telefonaktiebolaget LM Ericsson, Class B
(American Depositary Receipts) (Sweden) 350000 12469 .21
Industrial Components - 1.67%
Goodyear Tire & Rubber Co. 595,000 34,807 .59
Echlin Inc. 450,000 15,019 .26
Federal-Mogul Corp. 400000 11650 .20
ITT Industries, Inc. 400000 9900 .17
Cooper Industries, Inc. 179802 9170 .16
Rockwell International Corp. 136000 8772 .15
Dana Corp. 231,800 8,374 .14
Food & Household Products - 1.61%
Unilever NV (New York Registered Shares) (Netherlands) 200000 38750 .66
McCormick & Co. 950000 24819 .43
CPC International Inc. 200000 17200 .29
General Mills, Inc. 210200 13295 .23
Multi-Industry - 1.51%
Tenneco Inc. 645000 28864 .50
FMC Corp./1/ 325000 23400 .40
Textron Inc. 170000 20145 .35
AlliedSignal Inc. 200000 15350 .26
Energy Equipment - 1.50%
Western Atlas Inc./1/ 521800 35352 .60
Schlumberger Ltd. (Netherlands Antilles) 170000 20251 .35
McDermott Inc. 500000 13875 .24
Dresser Industries, Inc. 300000 10275 .18
Baker Hughes Inc. 200000 7500 .13
Financial Services - 1.48%
Household International, Inc. 350000 34388 .59
Beneficial Corp. 400,000 25,700 .44
FINOVA Group Inc. 180000 13410 .23
Capital One Financial Corp. 300000 9637 .17
Associates First Capital Corp., Class A 60000 2835 .05
Leisure & Tourism - 1.29%
Walt Disney Co. 789932 64676 1.11
Host Marriott Corp./1/ 600000 10575 .18
Utilities: Electric & Gas - 1.28%
Duke Power Co. 500000 22500 .39
Union Electric Co. 500000 18312 .31
GPU, Inc. 400000 14000 .24
Consolidated Edison Co. of New York, Inc. 450000 13106 .22
Edison International 250000 5844 .10
El Paso Natural Gas Co. 24180 1433 .02
Electronic Components - 1.26%
Intel Corp. 200,000 30,300 .52
Texas Instruments Inc. 300,000 26,962 .46
AMP Inc. 400000 16450 .28
Transportation: Rail & Road - 1.10%
Union Pacific Corp. 595050 40315 .69
Norfolk Southern Corp. 245,000 23,795 .41
Recreation & Other Consumer Products - 0.89%
Polaroid Corp. 400000 20400 .35
Eastman Kodak Co. 220000 18233 .31
Harley-Davidson Motor Co., Inc. 300000 13425 .23
Automobiles - 0.81%
Ford Motor Co., Class A 450000 16875 .29
Chrysler Corp. 500000 15875 .27
General Motors Corp. 250000 14312 .25
Transportation: Airlines - 0.80%
AMR Corp./1/ 412500 40992 .70
Delta Air Lines, Inc. 60000 5625 .10
Appliances & Household Durables - 0.53%
Philips Electronics NV (New York Registered Shares)
(Netherlands) 350000 19600 .34
Rubbermaid Inc. 400000 11150 .19
Textiles & Apparel - 0.31%
VF Corp. 230,000 17,969 .31
Metals: Steel - 0.22%
Allegheny Teledyne Inc. 500,000 12,875 .22
Miscellaneous
Other stocks in initial period of acquisition 133591 2.29
--------- ------
TOTAL STOCKS (cost: $3,582,309,000) 5,017,803 86.04
--------- ------
Principal
Convertible Debentures Amount Market Value Percent of
Business & Public Services - 0.20% (000) (000) Net Assets
CUC International Inc., 3.00% convertible debentures 2002/2/ $12,000 11880 .20
--------- ------
TOTAL CONVERTIBLE DEBENTURES (cost: $11,974,000) 11880 .20
--------- ------
TOTAL EQUITY-TYPE SECURITIES (cost: $3,594,283,000) 5029683 86.24
--------- ------
Short-Term Securities
Corporate Short-Term Notes - 10.04%
H.J. Heinz Co. 5.50%-5.60% due 6/12-6/26/97 89900 89625 1.54
Warner-Lambert Co. 5.56% due 6/25/97 45000 44826 1.07
Warner-Lambert Co. 5.51% due 6/18/97/2/ 17900 17851
Procter & Gamble Co. 5.50%-5.52% due 6/17-7/14/97 60200 59908 1.03
Lucent Technologies Inc. 5.51%-5.54% due 6/5-6/13/97 57900 57817 .99
Coca-Cola Co. 5.50%-5.52% due 6/3-8/4/97 50000 49738 .85
International Lease Finance Corp. 5.55%-5.57% due 6/11-7/22/97 47500 47277 .81
PepsiCo, Inc. 5.49%-5.50% due 6/4-7/9/97 47400 47270 .81
Weyerhaeuser Co. 5.55%-5.58% due 6/20-7/21/97 42100 41856 .72
Ford Motor Credit Co. 5.53%-5.60% due 6/12-7/28/97 41000 40757 .70
Beneficial Corp. 5.55% due 6/10-7/11/97 40050 39865 .68
E.I. du Pont de Nemours and Co. 5.49%-5.59% due 7/16-8/19/97 32500 32147 .55
General Electric Capital Corp. 5.65% due 6/2/97 16700 16695 .29
Federal Agency Discount Notes - 4.08%
Federal Home Loan Mortgage Corp. 5.275%-5.55% due
6/6-7/25/97 113558 113212 1.94
Federal Home Loan Banks 5.45%-5.52% due 6/19-7/31/97 65800 65311 1.12
Federal National Mortgage Assn. 5.515% due 8/4/97 60000 59411 1.02
--------- ------
TOTAL SHORT-TERM SECURITIES (cost: $823,550,000) 823566 14.12
--------- ------
TOTAL INVESTMENT SECURITIES (cost: $4,417,833,000) 5853249 100.36
Excess of payables over cash and receivables 20,852 .36
--------- ------
NET ASSETS $5,832,397 100.00%
========== ======
/1/Non-income-producing securities.
/2/Purchased in a private placement transaction; resale to the public
may require registration or sale only to qualified institutional buyers.
See Notes to Financial Statements
Equity-type securities appearing in the portfolio
since November 30, 1996
3Com
Allegheny Teledyne
AMP
Bank of Tokyo-Mitsubishi
Chrysler
Columbia/HCA Healthcare
CUC International
Deltic Timber
Duke Power
Echlin
El Paso Natural Gas
Federal-Mogul
FMC
GPU
Harley-Davidson Motor
Hibernia
McDermott
McDonnell Douglas
Media General
New Holland
Newport News Shipbuilding
Norsk Hydro
Oracle
Repsol
Rubbermaid
Sakura Bank
Sonoco Products
Telefonica de Espana
Tribune
UST
Witco
Woolworth
York International
Equity-type securities eliminated from the portfolio
since November 30, 1996
ADVANTA
Aetna
ALLTEL
AMBAC
American Express
American Greetings
American International Group
Anheuser-Busch Companies
Archer Daniels Midland
Bristol-Myers Squibb
Case
ConAgra
Conrail
Corning
Duracell International
Eastman Chemical
Ecolab
Harsco
H.J. Heinz
Humana
Imation
Linear Technology
Marriott International
May Department Stores
Mercantile Stores
Minnesota Mining and Manufacturing
National City
Omnicom Group
Pacific Gas and Electric
Phelps Dodge
PNC Bank
Stanley Works
Union Pacific Resources Group
Unocal
Wells Fargo
</TABLE>
<TABLE>
<S> <C> <C> <C>
Asset Allocation Fund Percent
Investment Portfolio May 31, 1997 of Net
Unaudited Assets
- ---------------------------------------------------- ----------
Equity-Type Securities 61.30%
Cash & Equivalents 11.71
U.S. Government Bonds 13.86
Corporate Bonds 12.92
Non-U.S. Government Bonds .21
LARGEST INDIVIDUAL EQUITIES
Pfizer 1.87%
Atlantic Richfield 1.84
Union Pacific Corp. 1.60
DuPont 1.54
Rentokil Group 1.54
PepsiCo 1.51
Rockwell International 1.41
Royal Dutch Petroleum 1.39
Air Products and Chemicals 1.29
Citicorp 1.26
Market Percent
Number of Value of Net
Stocks (common and preferred) Shares (000) Assets
- ---------------------------------------------------- ---------- ---------- ----------
Energy Sources- 7.13%
Atlantic Richfield Co. 160,000 $23,280 1.84%
Royal Dutch Petroleum Co. (New York Registered
Shares) (Netherlands) 90,000 17,572 1.39
Chevron Corp. 225,000 15,750 1.24
Ultramar Diamond Shamrock Corp., (formerly Diamond
Shamrock, Inc.) 300,000 9,900 .78
Amoco Corp. 100,000 8,938 .70
Phillips Petroleum Co. 200,000 8,500 .67
Kerr-McGee Corp. 100,000 6,475 .51
Health & Personal Care- 6.45%
Pfizer Inc 230000 23,661 1.87
Warner-Lambert Co. 150000 15,112 1.19
SmithKline Beecham PLC (American Depositary
Receipts) (United Kingdom) 150000 13,125 1.03
Gillette Co. 108,480 9,641 .76
Tambrands Inc. 170,000 8,203 .65
American Home Products Corp. 80000 6,100 .48
Kimberly-Clark Corp. 120,000 6,015 .47
Banking- 5.75%
Citicorp 140000 16,013 1.26
BankAmerica Corp. 135,000 15,778 1.25
NationsBank Corp. 250,000 14,719 1.16
H.F. Ahmanson & Co. 200000 8,150 .64
Fleet Financial Group, Inc. 120000 7,335 .58
CoreStates Financial Corp 125,000 6,609 .52
KeyCorp 80000 4,350 .34
Merchandising- 4.80%
Wal-Mart Stores, Inc. 525000 15,619 1.23
J.C. Penney Co., Inc. 290000 14,935 1.18
Walgreen Co. 300000 14,025 1.11
Limited Inc. 550000 11,137 .88
Circuit City Stores Inc.-Circuit City Group 130000 5,135 .40
Chemicals- 4.26%
E.I. du Pont de Nemours and Co. 180000 19,598 1.54
Air Products and Chemicals, Inc. 210000 16,327 1.29
Mallinckrodt Inc. 250000 9,344 .74
PPG Industries, Inc. 150000 8,719 .69
Insurance- 3.42%
SAFECO Corp. 335000 14,573 1.15
General Re Corp. 70000 12,267 .97
CIGNA Corp. 50000 8,687 .68
American General Corp. 176700 7,819 .62
Telecommunications- 2.77%
Telefonica De Espana, SA (American Depositary Receipts)
(Spain) 175000 15,291 1.20
AT&T Corp. 200000 7,375 .58
SBC Communications Inc. (formerly Pacific Telesis Group) 109717 6,418 .51
Century Telephone Enterprises, Inc. 200,000 6,050 .48
Industrial Components- 2.36%
Rockwell International Corp. 277400 17,892 1.41
Echlin Inc. 200000 6,675 .52
Dana Corp. 150000 5,419 .43
Business & Public Services- 2.27%
Rentokil Group PLC (American Depositary Receipts)
(United Kingdom) 500000 19,562 1.54
Dun & Bradstreet Corp. 200000 5,225 .41
Alexander & Baldwin, Inc. 150000 4,069 .32
Forest Products & Paper- 2.04%
Georgia-Pacific Corp. 100000 8,825 .70
Weyerhaeuser Co. 176500 8,803 .69
Union Camp Corp. 100000 5,250 .41
Rayonier Inc. 70000 3,001 .24
Aerospace & Military Technology- 1.80%
General Motors Corp., Class H 275000 15,160 1.19
Boeing Co. 73020 7,685 .61
Transportation: Rail & Road- 1.60%
Union Pacific Corp. 300000 20,325 1.60
Beverages & Tobacco- 1.51%
PepsiCo, Inc. 520000 19,110 1.51
Electrical & Electronics- 1.34%
Nokia Corp., Class A (American Depositary
Receipts) (Finland) 170000 11,220 .89
Hubbell Inc., Class B 126000 5,733 .45
Machinery & Engineering- 1.28%
Deere & Co. 180000 9,203 .73
Crompton & Knowles Corp. 300000 7,012 .55
Leisure & Tourism- 1.20%
Carnival Corp., Class A 400000 15,200 1.20
Metals: Nonferrous- 1.16%
Aluminum Co. of America 200000 14,725 1.16
Food & Household Products- 1.11%
General Mills, Inc. 125000 7,906 .62
McCormick & Co. 237500 6,205 .49
Multi-Industry- 0.91%
Textron Inc. 60000 7,110 .56
Tenneco Inc. 100,000 4,475 .35
Data Processing & Reproduction- 0.82%
International Business Machines Corp. 120000 10,380 .82
METALS: STEEL- 0.61%
Allegheny Teledyne Inc. 300000 7,725 .61
Miscellaneous Materials & Commodities- 0.52%
Potash Corp. of Saskatchewan Inc. (Canada) 80000 6,570 .52
Automobiles- 0.45%
General Motors Corp. 100000 5,725 .45
Broadcasting & Publishing- 0.45%
Time Warner Inc. 10.25% exchangeable preferred,
Series M/1/ 2731 3,009 .24
American Radio Systems Corp., 11.375%
exchangeable preferred/1/,/2/,/3/ 25592 2,713 .21
UTILITIES: ELECTRIC & GAS- 0.32%
Nevada Power Co. 100000 2,063 .16
Rochester Gas and Electric Corp. 100000 2,000 .16
----------- -----------
TOTAL STOCKS (cost: $501,761,000) 714520 56.33
----------- -----------
Principal
Amount
Convertible Debentures (000)
- ---------------------------------------------------- ---------- ---------- ----------
Industrials & Services- 0.33%
Time Warner Inc.:
0% 2013 $7,000 3,203 .25
0% 2012 2,500 962 .08
Discovery Zone Inc. 0% 2013 6,000 15 .00
Telecommunications- 0.24%
U S WEST Communications, Inc. 0% 2011 8,000 3,000 .24
---------- ----------
TOTAL CONVERTIBLE DEBENTURES (cost: $9,121,000) 7180 .57
---------- ----------
MISCELLANEOUS
Other equity-type securities in initial period of
acquisition (cost:$54,995,000) 55,799 4.40
---------- ----------
TOTAL EQUITY-TYPE SECURITIES (cost: $565,877,000) 777,499 61.30
---------- ----------
Bonds & Notes
- -----------------------------------------------
Industrials- 6.13%
Time Warner Inc.:
9.125% 2013 4,000 4,338
6.10% 2001/2/ 2,750 2,612 .55
Oryx Energy Co.:
9.50% 1999 3,000 3,145
8.375% 2004 2,500 2,587
10.00% 1999 1,000 1,051 .53
Tele-Communications, Inc.:
8.75% 2015 2,000 2,030
9.25% 2023 2,000 1,959 .31
Inco Ltd.:
9.60% 2022 2000 2,138
9.875% 2019 1,500 1,617 .30
Allegiance Corp. 7.00% 2026 3000 2,977 .23
USX Corp. 9.125% 2013 2,500 2,755 .22
Freeport-McMoRan Copper & Gold Inc. 7.20% 2026 2750 2,695 .21
Dayton Hudson Corp. 8.50% 2022 2500 2,512 .20
COLT Telecom Group plc Units, 0%/12.00% 2006 /4/ 3,750 2,405 .19
News America Holdings Inc.:
7.43% 2026 1,250 1,255
10.125% 2012 1,000 1,132 .19
OXYMAR 7.50% 2016/2/ 2500 2,365 .19
CenCall Communications Corp. 0%/10.125% 2004 /4/ 3000 2,310 .19
General Motors Corp. 8.80% 2021 2,000 2,236 .18
Acme Metals Inc. 12.50% 2002 2,000 2,180 .17
Pan Pacific Industrial Investments PLC 0% 2007/2/ 5,000 2,175 .17
Container Corp. of America 9.75% 2003 2000 2,095 .17
RBS Participacoes SA 11.00% 2007/2/ 2,000 2,085 .16
Comcast Cable Communications, Inc. 8.875% 2017/2/ 2,000 2,070 .16
Esat Holdings Ltd. Units, 0%/12.50% 2007/2/,/4/ 3,500 2,048 .16
Philips Electronics NV 7.20% 2026 2000 1,990 .16
Fage Dairy Industry SA 9.00% 2007/2/ 2000 1,905 .15
AK Steel Corp. 10.75% 2004 1750 1,899 .15
Unisys Corp. 11.75% 2004 1750 1,883 .15
Owens-Illinois, Inc. 8.10% 2007 1,750 1,765 .14
Revlon Worldwide (Parent) Corp. 0% 2001/2/ 2,500 1,684 .13
Comtel Brasileira Ltda. 10.75% 2004/2/ 1,500 1,595 .13
Integrated Health Services, Inc. 9.50% 2007/2/ 1,250 1,288 .10
Orion Network Systems, Inc. Units, 11.25% 2007 1,250 1,287 .10
Wharf International Finance Ltd., Series A, 7.625% 2007/2/ 1250 1,231 .10
Millennium America Inc. 7.00% 2006 1250 1,199 .09
Omnipoint Corp. 11.625% 2006 1000 890 .07
Kaiser Aluminum Corp. 12.75% 2003 750 821 .06
PriCellular Wireless Corp. 10.75% 2004 750 787 .06
Woolworth Corp., Series A, 7.00% 2002 750 738 .06
Federal Agency Obligations-Mortgage
Pass-Throughs 5- 3.62%
Government National Mortgage Assn.:
8.00% 2020-2026 19976 20,400
7.50% 2026 6540 6,514
8.50% 2022-2026 5296 5,512
10.00% 2019 1240 1,358 2.66
Federal National Mortgage Assn.:
8.50% 2024 9533 9,855
7.00% 2009 1689 1,688
9.00% 2019 580 614 .96
Financial- 3.30%
Capital One Bank:
7.35% 2000 7500 7,556
7.409% 2027/2/,/6/ 1250 1,198 .69
General Motors Acceptance Corp. 8.875% 2010 3235 3,666 .28
Ocwen Financial Corp. 11.875% 2003 2850 3,057 .23
Aetna Services, Inc. 6.97% 2036 2500 2,505 .20
Chase Capital 6.359% 2027 /6/ 2500 2,430 .19
BTC Capital Trust 6.512% 2026 /6/ 2250 2,224 .18
Terra Nova (Bermuda) Holdings Ltd. 10.75% 2005 2000 2,223 .18
Chevy Chase Bank, FSB 9.25% 2008 2000 1,990 .16
Central Fidelity Capital Trust I 6.832% 2027/2/,/6/ 2000 1,979 .16
First Nationwide Holdings Inc. 10.625% 2003 1500 1,635 .13
B.F. Saul Real Estate Investment Trust 11.625% 2002 1500 1,597 .13
American Re Corp. 10.875% 2004 1500 1,590 .13
Security Capital Industrial Trust 7.95% 2008 1500 1,539 .12
Shopping Center Associates 6.75% 2004/2/ 1500 1,454 .11
Irvine Co. 7.46% 2006/2/,/7/ 1500 1,435 .11
First Union Corp. 6.82%/7.57% 2026 /4/ 1250 1,233 .10
Advanta National Bank 6.45% 2000 1200 1,146 .09
National Westminster Bancorp Inc. 9.45% 2001 1000 1,087 .09
Imperial Bancorp 9.98% 2026/2/ 250 249 .02
Collateralized Mortgage Obligations
(Privately Originated) 5- 1.76%
Continental Airlines, Inc.:
1996-A, 6.94% 2013/2/ 3922 3,802
1996-2C, 10.22% 2014/2/ 2187 2,530 .50
United Air Lines, Inc.:
1996-A2, 7.87% 2019 2500 2,416
1995-A1, 9.02% 2012 1417 1,525 .31
Delta Air Lines, Inc.:
1993-A2, 10.50% 2016 2000 2,411
1992-A2, 9.20% 2014 1000 1,115 .28
Airplanes Pass Through Trust, Class C, 8.15% 2019 3000 3,082 .24
Jet Equipment Trust, Series 1995-B, 7.83% 2015/2/ 2398 2,445 .19
USAir, Inc., 1996-B, 7.50% 2008 1924 1,914 .15
Federal Express Corp. 7.53% 2006 1144 1,154 .09
Federal Agency Obligations-Other- 0.69%
Federal National Mortgage Assn.:
6.53% 2006 5000 4,787
7.52% 2004 4000 4,007 .69
Asset-Backed Obligations 5- 0.61%
IMC Home Equity Loan Trust, Series 1996-2,
Class A-2, 6.78% 2011 5000 4,998 .39
FIRSTPLUS Home Loan Owner Trust, Series 1997-1,
Class A-6, 6.95% 2015 1500 1,476 .12
Green Tree Financial Corp., Series 1995-A, Class NIM,
7.25% 2005 1247 1,222 .10
Telecommunications- 0.49%
CEI Citicorp Holdings, SA 11.25% 2007/2/ 2750 2,751 .22
U S WEST Capital Funding, Inc. 7.30% 2007 2500 2,475 .19
Consorcio Ecuatoriano de Telecomunicaciones SA CONECEL
14.00% 2002/2/ 1000 1,047 .08
Electric Utilities- 0.33%
Israel Electric Corp. Ltd. 7.25% 2006/2/ 2500 2,451 .20
Commonwealth Edison Co., Series 75, 9.875% 2020 1500 1,690 .13
Non-U.S. Government Obligations- 0.21%
Argentina (Republic of) 11.75% 2007/2/ 2500 2,720 .21
Transportation- 0.30%
Continental Airlines, Inc. 9.50% 2001 2000 2,082 .17
AMR Corp. 9.75% 2000 1000 1,071 .09
United Air Lines, Inc. 9.00% 2003 500 536 .04
U.S. Treasury Obligations- 9.55%
7.125% 2000 25000 25,481
7.25% 2004 20000 20,716
10.375% 2012 12000 15,118
3.394% 2007 /8/ 12,500 12,416
7.00% 2006 10,000 10,216
8.75% 1997 6000 6,071
8.75% 2008 5000 5,514
8.25% 2005 5000 5,213
9.25% 1998 5000 5,186
8.75% 2000 3000 3,201
11.875% 2003 2500 3,185
8.875% 1999 2,500 2,609
11.125% 2003 2000 2,458
10.375% 2009 2000 2,417
11.75% 2010 500 648
10.75% 2003 500 602 9.55
---------- ----------
TOTAL BONDS & NOTES (cost: $342,078,000) 342226 26.99
---------- ----------
Short-Term Securities
- ------------------------------------------------
Corporate Short-Term Notes- 9.27%
PepsiCo, Inc. 5.50% due 6/24-7/9/97 26,200 26,082 2.06
Ford Motor Credit Co. 5.53%-5.58% due 6/12-7/22/97 20,200 20,081 1.58
E.I. du Pont de Nemours and Co. 5.49% due 7/23/97 20,000 19,837 1.56
Procter & Gamble Co. 5.47%-5.50% due 6/17-6/18/97 15,400 15,359 1.21
Lucent Technologies Inc. 5.50% due 6/6/97 10,300 10,291 .81
Atlantic Richfield Co. 5.50% due 6/10/97 10,000 9,985 .79
Weyerhaeuser Co. 5.56% due 7/11/97 8,700 8,645 .68
General Electric Capital Corp. 5.65% due 6/2/97 7,300 7,298 .58
Federal Agency Discount Notes- 2.58%
Federal Home Loan Mortgage Corp. 5.275%-5.55%
due 6/9-6/30/97 20800 20737 1.64
Federal National Mortgage Assn. 5.515% due 8/4/97 6,100 6,040 .48
Federal Home Loan Banks 5.45% due 6/19/97 5900 5883 .46
--------- ---------
TOTAL SHORT-TERM SECURITIES (cost: $150,238,000) 150238 11.85
--------- ---------
TOTAL INVESTMENT SECURITIES (cost: $1,058,193,000) 1269963 100.14
Excess of payables over cash and receivables 1,805 .14
--------- ---------
NET ASSETS $1,268,158 100.00%
========= =========
/1/Payment in kind. The issuer has the option of paying additional
securities in lieu of cash.
/2/Purchased in a private placement transaction;
resale to the public may require registration or sale
only to qualified institutional buyers.
/3/Non-income-producing securities.
/4/ Step bond; coupon rate will increase at a later date.
/5/ Pass-through securities backed by a pool of
mortgages or other loans on which principal payments
are periodically made. Therefore, the effective
maturity of these securities is shorter than the stated maturity.
/6/ Coupon rate may change periodically.
/7/ Valued under procedures established by the
Board of Trustees.
/8/ Index-linked bond, which is a floating rate bond whose principal
amount moves with a government retail price index.
See Notes to Financial Statements
Equity-type securities appearing in the portfolio
since November 30, 1996
Allegheny Teledyne
American Radio Systems
Century Telephone Enterprises
Gillette
Nevada Power
Rochester Gas and Electric
Telefonica de Espana
Equity-type securities eliminated from the portfolio
since November 30, 1996
Adobe Systems
American Greetings
Archer Daniels Midland
Armor All Products
Bristol-Myers Squibb
Conrail
Duracell International
First Union
Great Lakes Chemical
Hanson America
H.J. Heinz
Jefferson BankShares
May Department Stores
Mercantile Stores
PNC Bank
Seagram Co.
Sears, Roebuck and Co.
Stanley Works
Turner Broadcasting System
Unocal
</TABLE>
<TABLE>
<S> <C> <C> <C>
AMERICAN VARIABLE INSURANCE SERIES
BOND FUND
INVESTMENT PORTFOLIO - May 31, 1997
U.S. GOVERNMENT BONDS 31.31%
CORPORATE BONDS 40.13
CASH & EQUIVALENTS 19.38
EQUITY-TYPE SECURITIES 5.25
NON-U.S. GOVERNMENT BONDS 3.93
Principal Market Percent
Amount Value Of Net
Bonds & Notes (000) (000) Assets
Diversified Media, Cable Television &
Telecommunications - 6.83%
Comcast Corp.:
8.375% 2007/1/ $ 500 $ 513
9.50% 2007/1/ 500 501 1.25%
8.50% 2027/1/ 250 261
Esat Holdings Ltd. Units, 0%/12.50% 2007/1/ /2/ 2,000 1,170 1.15
Comtel Brasileira Ltda. 10.75% 2004/1/ 1000 1063 1.04
Time Warner Inc.:
6.10% 2001/1/ 500 475 .71
7.95% 2000 250 256
Brooks Fiber Properties, Inc.:
10.00% 2007/1/ 500 503 .62
0%/10.875% 2006/2/ 200 136
Tele-Communications, Inc. 9.80% 2012 485 538 .53
Consorcio Ecuatoriano de Telecomunicaciones SA CONECEL 14.00% 2002/1/ 500 524 .51
U S WEST Capital Funding, Inc. 6.95% 2037 500 494 .48
Telefonica de Argentina 11.875% 2004 250 296 .29
Viacom International Inc. 9.125% 1999 250 256 .25
Financial Services - 5.02%
J.P. Morgan & Co. Inc., Series A, 4.00% 2012/3/ 2,000 1,948 1.91
Ocwen Financial Corp. 11.875% 2003 1 1.21
Capital One Bank 7.15% 2006 500 505
Capital One Capital I 7.409% 2027/1/ /4/ 250 240 .73
Central Fidelity Capital Trust I 6.832% 2027/1/ /4/ /5/ 500 495 .48
BT Capital Trust I 6.512% 2026 /4/ 250 247 .24
Wharf International Finance Ltd. 7.625% 2007/1/ 250 246 .24
Pan Pacific Industrial Investments PLC 0% 2007/1/ 500 217 .21
Manufacturing & Materials - 5.01%
AK Steel Corp.:
9.125% 2006 750 765 1.01
10.75% 2004 250 271
Fairchild Semiconductor Corp. 10.125% 2007/1/ 750 780 .76
Hyundai Semiconductor America, Inc. 8.625% 2007/1/ 750 751 .73
Printpack, Inc. 10.625% 2006 500 527 .52
Newport News Shipbuilding Inc. 9.25% 2006 500 518 .51
Freeport-McMoRan Copper & Gold Inc. 7.20% 2026 500 490 .48
U.S. Can Corp. 10.125% 2006 250 264 .26
Kaiser Aluminum & Chemical Corp. 9.875% 2002 250 256 .25
Owens-Illinois, Inc. 8.10% 2007 250 252 .25
Northern Telecom Ltd. 6.875% 2002 250 249 .24
Cellular, Paging & Wireless Communications - 4.41%
Omnipoint Corp. 11.625% 2006 1,250 1,113 1.09
Orion Network Systems, Inc. Units, 11.25% 2007 750 772 .75
PriCellular Wireless Corp. 10.75% 2004 500 525 .51
Globalstar, LP Units, 11.375% 2004/1/ 500 506 .50
Cellular Communications of Puerto Rico, Inc. 10.00% 2007/1/ 500 495 .48
McCaw International, Ltd. Units, 0%/13.00% 2007/1/ /2/ 1,000 486 .48
NEXTEL Communications, Inc. 0%/11.50% 2003/2/ 500 430 .42
Cellular Communications International, Inc.
Units, 0% 2000 250 186 .18
Transportation - 3.54%
Continental Airlines, Inc.:
9.50% 2001 500 521
7.42% 2008/1/ 500 500
Series 1996-C 9.50% 2015 /5/ 245 272 1.26
Airplanes Pass Through Trust:
Class C, 8.15% 2019 500 514 .80
Class D, 10.875% 2019 275 304
Jet Equipment Trust:
Series 1995-A, 11.44% 2014/1/ 300 368 .67
Series 1994-A, 11.79% 2013/1/ 250 314
United Air Lines, Inc. 10.67% 2004 500 579 .57
Teekay Shipping Corp. 8.32% 2008 250 249 .24
Health & Personal Care - 2.16%
Integrated Health Services, Inc.:
10.75% 2004 500 560 .80
9.50% 2007/1/ 250 257
Paracelsus Healthcare Corp. 10.00% 2006 500 497 .49
Allegiance Corp. 7.00% 2026 500 496 .48
Revlon Worldwide (Parent) Corp. 0% 2001/1/ 600 404 .39
Cable & Telephone in the United Kingdom - 2.02%
TeleWest PLC 0%/11.00% 2007/2/ 1000 695 .68
COLT Telecom Group plc Units, 0%/12.00% 2006/2/ 1000 641 .63
Comcast UK Cable Partners Ltd. 0%/11.20% 2007/2/ 650 483 .47
International CableTel Inc. 10.00% 2007/1/ 250 251 .24
Energy & Related Companies - 1.85%
Mariner Energy, Inc. 10.50% 2006 500 525 .51
J. Ray McDermott, SA 9.375% 2006 500 508 .50
Commonwealth Edison Co., Series 75, 9.875% 2020 400 451 .44
McDermott Inc. 9.375% 2002 400 409 .40
Banking & Thrifts - 1.73%
First Nationwide Holdings Inc. 10.625% 2003 500 545 .53
Chevy Chase Bank, FSB 9.25% 2008 500 498 .49
Advanta National Bank 6.45% 2000 500 478 .47
Imperial Capital Trust I 9.98% 2026/1/ 250 249 .24
Broadcasting & Publishing - 1.60%
TV Azteca, SA de CV 10.125% 2004/1/ 500 509 .50
Grupo Televisa, SA 0%/13.25% 2008/2/ 500 354 .35
RBS Participacoes SA 11.00% 2007/1/ 250 261 .25
Globo Comunicacoes E Participacoes LTDA. 10.50% 2006/1/ 250 261 .25
News America Holdings Inc. 7.43% 2026 250 251 .25
Asset- Backed Obligations 5 - 1.56%
IMC Home Equity Loan Trust, Series 1996-2,
Class A-2, 6.78% 2011 500 500 .48
FIRSTPLUS Home Loan Owner Trust, Series 1997-1,
Class A-6, 6.95% 2015 500 492 .48
Green Tree Financial Corp., Series 1995-A, Class NIM, 7.25% 2005 312 306 .30
EQCC Home Equity Loan Asset-Backed Certificates, Series 1996-A
Class A-2, 6.95% 2012 300 302 .30
Insurance - 1.01%
Integon Capital I Capital Securities, Series A, 10.75% 2027/1/ 500 500 .49
Terra Nova (Bermuda) Holdings Ltd. 10.75% 2005 250 278 .27
Aetna Services, Inc. 6.97% 2036 250 251 .25
Business & Public Services - 0.79%
Allied Waste North America, Inc. 10.25% 2006/1/ $500 $534 .52
Federal Express Corp. 9.875% 2002 250 278 .27
Miscellaneous Services - 0.51%
Petro Stopping Centers, LP, Petro Financial Corp. 10.50% 2007/1/ 500 517 .51
Leisure, Tourism & Restaurants - 0.50%
Rio Hotel & Casino, Inc. 9.50% 2007/1/ 500 510 .50
Collateralized Mortgage Obligations (Privately Originated) 5 - 0.38%
Merrill Lynch Mortgage Investors, Inc., Series 1995-C2,
Class A, 7.211% 2021 387 388 .38
Machinery & Engineering - 0.27%
Deere & Co. 8.95% 2019 250 279 .27
Data Processing & Reproduction - 0.26%
Unisys Corp. 11.75% 2004 250 269 .26
Chemicals - 0.24%
Millennium America Inc. 7.00% 2006 250 240 .24
Diversified Manufacturing - 0.23%
Fage Dairy Industry SA 9.00% 2007/1/ 250 238 .23
Independent Power Producers - 0.21%
California Energy Co., Inc. 9.875% 2003 200 214 .21
Non-U.S. Governments & Governmental
Authorities - 3.93%
Canadian Government:
4.671% 2021/3/ C$2,000 1,569 1.90
4.421% 2026/3/ 500 370
Argentina (Republic of) 11.75% 2007/1/ $1,000 1088 1.06
Ireland (Republic of) 8.00% 2006 IRL250 410 .40
Brazil (Federal Republic of) Capitalization Bond 8.00% 2014 /6/ $280 222 .22
South Africa (Republic of) 13.00% 2010 ZAR1,000 198 .19
Deutschland Republic 8.00% 2002 DM250 166 .16
Federal Agency Obligations-Mortgage Pass-Throughs 4 - 11.71%
Government National Mortgage Assn.:
5.00% 2026 $5,138 5,085
6.50% 2025-2026 1,303 1,232 8.43
9.50% 2021 855 921
10.00% 2019 827 905
7.00% 2026 495 482
Federal National Mortgage Assn.:
10.00% 2018-2025 1,249 1,360 3.28
6.092% 2033 965 954
9.00% 2021 715 758
6.50% 2026 297 281
Federal Agency Obligations-Other - 1.69%
Federal National Mortgage Assn. 7.04% 2005 890 866 .85
Federal Home Loan Mortgage Corp.:
6.78% 2005 500 482
5.78% 2003 400 377 .84
U.S. Treasury Obligations - 17.91%
6.25% 2003 8,500 8,384 17.91
10.375% 2009-2012 2,000 2,494
8.875% 2017 2,000 2,403
7.25% 2004 2,000 2,072
5.875% 1999 2,000 1,981
3.404% 2007/3/ 1,000 993
-------- --------
TOTAL BONDS & NOTES (cost: $76,823,000) 77,106 75.37
-------- -------
Number
of
Shares
Stocks
Preferred Stocks - 3.47%
American Radio Systems Corp. 11.375% exchangeable preferred/1/ /6/ /7/ 17,914 1,899 1.86
Time Warner Inc. 10.25% exchangeable preferred, Series M /6/ 552 608 .59
Chancellor Radio Broadcasting Co. 12.00% preferred 2009 /1/ /6/ /7/ 5,000 540 .53
Swire Pacific Capital Ltd. 9.33% cumulative guaranteed perpetual capital/1/ 20,000 503 .49
-------- --------
TOTAL STOCKS (cost: $3,302,000) 3,550 3.47
-------- --------
Principal
Convertible Debentures Amount (000)
Convertible Debentures - 1.78%
U S WEST Communications, Inc. 0% 2011 $1,500 563 .55
Kelley Oil & Gas Corp. 8.50% 2000 500 480 .47
Time Warner Inc. 0% 2013 1,000 458 .45
Diamond Offshore Drilling, Inc. 3.75% 2007 300 324 .31
-------- --------
TOTAL CONVERTIBLE DEBENTURES (cost: $1,778,000) 1,825 1.78
-------- --------
TOTAL EQUITY-TYPE SECURITIES (COST: $5,080,000) 5,375 5.25
-------- --------
Short-Term Securities
Corporate Short-Term Notes - 17.87%
American Express Credit Corp. 5.53% due 6/13/97 2,200 2,196 2.15
SAFECO Credit Co. Inc. 5.53% due 6/9/97 2000 1997 1.95
Shell Oil Co. 5.46% due 6/10/97 2000 1997 1.95
Coca-Cola Co. 5.47% due 6/25/97 2000 1992 1.95
General Electric Capital Corp. 5.59% due 7/9/97 2000 1988 1.94
J.C. Penney Funding Corp. 5.51% due 7/10/97/1/ 1800 1789 1.75
Ford Motor Credit Co. 5.53% due 7/7/97 1700 1690 1.65
Lucent Technologies Inc. 5.54% due 6/25/97 1600 1594 1.56
Amoco Corp. 5.50% due 6/5/97 1300 1299 1.27
Beneficial Corp. 5.54% due 6/23/97 750 747 .73
Yale University 5.55% due 6/16/97 540 539 .53
Associates Corp. of North America 5.62% due 6/2/97 450 450 .44
-------- -------
TOTAL SHORT-TERM SECURITIES (cost: $18,278,000) 18,278 17.87
-------- -------
TOTAL INVESTMENT SECURITIES (cost:$100,181,000) 100,759 98.49
Excess of cash and receivables over payables 1,548 1.51
--------- -------
NET ASSETS $102,307 100.00%
--------- ---------
--------- ---------
/1/ Purchased in a private placement transaction;
resale to the public may require registration or sale
only to qualified institutional buyers.
/2/ Step bond; coupon rate will increase at a later date.
/3/ Index-linked bond, which is a floating rate bond whose
principal amount moves with a goverment retail price index.
/4/ Coupon rate may change periodically.
/5/ Pass-through securities backed by a pool of mortgages
or other loans on which principal payments are periodically
made. Therefore, the effective maturity of these securities is
shorter than the stated maturity.
/6/ Payment in kind. The issuer has the option of paying
additional securities in lieu of cash.
/7/ Non-income producing securities.
See Notes to Financial Statements
</TABLE>
<TABLE>
<S> <C> <C> <C>
AMERICAN VARIABLE INSURANCE SERIES
HIGH-YIELD BOND FUND
INVESTMENT PORTFOLIO - MAY 31, 1997
CORPORATE BONDS 75.74%
NON-U.S. CORPORATE BONDS 0.00%
U.S. TREASURY BONDS 7.27%
NON-U.S. GOVERNMENT BONDS 2.44%
CASH & EQUIVALENTS 10.59%
STOCKS & CONVERTIBLE DEBENTURES 3.96%
Percent
of Net
Largest Corporate Holdings Assets
Integrated Health Services 2.78%
USAir 2.15
California Energy 1.98
Container Corp. of America 1.90
Bell Cablemedia 1.85
Videotron Holdings 1.77
International CableTel 1.75
Orion Network Systems 1.68
Omnipoint 1.54
Paracelsus Healthcare 1.50
Principal Market Percent
Amount Value Of Net
Bonds & Notes (000) (000) Assets
Cellular, Paging & Wireless Communications - 11.76%
Orion Network Systems, Inc. Units, 11.25% 2007 $11,750 $12,102 1.68%
Omnipoint Corp. 11.625% 2006 12,500 11,125 1.54
PriCellular Wireless Corp.:
0%/12.25% 2003/1/ 6,000 5,595
10.75% 2004 2,750 2,887 1.49
0%/14.00% 2001/1/ 2,185 2,300
Centennial Cellular Corp. 8.875% 2001 10,000 9,925 1.37
Cellular Communications of Puerto Rico, Inc. 10.00% 2007 /3/ 7,250 7,177 .99
Comcast Cellular Holdings, Inc. 9.50% 2007/3/ 5,000 5,006 .69
Cellular Communications International, Inc. Units, 0% 2000 6,500 4,826 .67
Rogers Cantel Mobile Communications Inc.:
11.125% 2002 2,500 2,606 .50
9.375% 2008 1,000 1,040
Mobile Telecommunications Technology Corp. 13.50% 2002 3,500 3,605 .50
Comunicacion Celular SA 0%/13.125% 2003/1/ 5,000 3,563 .49
NEXTEL Communications, Inc.:
0%/10.125% 2004/1/ 2,500 1,925 .39
0%/11.50% 2003/1/ 1,000 860
PanAmSat, LP 0%/11.375% 2003/1/ 2,000 1,930 .27
Western Wireless Corp. 10.50% 2006 1,500 1,508 .21
McCaw International, Ltd. 0%/13.00% 2007/1/ /3/ 2,500 1,216 .17
InterCel, Inc. 0%/12.00% 2006/1/ 2,000 1,180 .16
Sprint Spectrum LP, Sprint Spectrum Finance Corp. 11.00% 2006 1000 1105 .15
Heartland Wireless Communications, Inc. 13.00% 2003 3,500 1,085 .15
Globalstar LP Units, 11.375% 2004/3/ 1,000 1,013 .14
Vanguard Cellular Systems, Inc. 9.375% 2006 1,000 1,010 .14
MobileMedia Communications, Inc. 0%/10.50% 2003/1/ 4,000 430 .06
Manufacturing & Materials - 9.91%
Kaiser Aluminum & Chemical Corp.:
12.75% 2003 4,350 4,763
10.875% 2006 2,500 2,688 1.40
9.875% 2002 2,350 2,409
10.875% 2006 250 269
Fage Dairy Industry SA 9.00% 2007/3/ 8,500 8,096 1.12
Acme Metals Inc.:
12.50% 2002 3,000 3,270 .91
0%/13.50% 2004/1/ 3,000 3,270
Derlan Manufacturing Inc. 10.00% 2007/3/ 6,050 6,186 .86
Texas Petrochemicals Corp. 11.125% 2006 5,500 5,830 .81
Anchor Glass Container Corp. 11.25% 2005/3/ 5,000 5,300 .73
AK Steel Corp.:
9.125% 2006 4,000 4,080 .71
10.75% 2004 1,000 1,085
Fairchild Semiconductor Corp. 10.125% 2007/3/ 4,250 4,420 .61
Consumers International Inc. 10.25% 2005/3/ 3,250 3,453 .48
Westinghouse Air Brake Co. 9.375% 2005 3,000 3,053 .42
Sterling Chemicals, Inc. 11.75% 2006 2,000 2,160 .30
U.S. Can Corp. 10.125% 2006 1,750 1,848 .26
Altos Hornos de Mexico 11.375% 2002/3/ 1,750 1,835 .25
Newport News Shipbuilding Inc. 9.25% 2006 1,750 1,811 .25
UCAR Global Enterprises Inc. 12.00% 2005 1,500 1,697 .23
Knoll Group, Inc. 10.875% 2006 1,250 1,375 .19
Impress Metal Packaging Holdings BV 9.875% 2007/3/ DM2,000 1,201 .17
Nortek, Inc. 9.25% 2007/3/ $1,000 1,013 .14
Printpack, Inc. 10.625% 2006 500 527 .07
Cable & Telephone in the United Kingdom - 8.28%
Bell Cablemedia PLC 0%/11.95% 2004/1/ 15,000 13,387 1.85
Videotron Holdings PLC:
0%/11.125% 2004/1/ 12,000 10,710 1.77
0%/11.00% 2005/1/ 2,500 2,050
International CableTel Inc.:
0%/10.875% 2003/1/ 13,250 11,196 1.75
10.00% 2007/3/ 1,500 1,508
Comcast UK Cable Partners Ltd. 0%/11.20% 2007/1/ 10,000 7,425 1.03
COLT Telecom Group plc Units 0%/12.00% 2006/1/ 11,250 7,214 1.00
TeleWest PLC:
9.625% 2006 3,500 3,570 .88
0%/11.00% 2007/1/ 4,000 2,780
Health & Personal Care - 7.19%
Integrated Health Services, Inc.:
10.75% 2006/3/ 5,000 5,337
9.50% 2007/3/ 3,500 3,605 2.04
9.625% 2002 2,750 3,009
10.75% 2004 2,500 2,800
Paracelsus Healthcare Corp. 10.00% 2006 10,900 10,845 1.50
Regency Health Services, Inc.:
9.875% 2002 6,250 6,500 1.20
12.25% 2003 2,000 2,200
Mariner Health Group, Inc. 9.50% 2006 4,750 4,904 .68
UroHealth Systems, Inc. 12.50% 2004/3/ 3,000 3,124 .43
Universal Health Services, Inc. 8.75% 2005 2,900 3,016 .42
Merit Behavioral Care Corp. 11.50% 2005 2,500 2,713 .38
Tenet Healthcare Corp. 8.00% 2005 2,000 2,003 .28
Unison HealthCare Corp. 13.00% 2006/3/ 2,350 1,862 .26
Energy & Related Companies - 6.00%
Abraxas Petroleum Corp. 11.50% 2004 8,500 9,222 1.27
Kelley Oil & Gas Corp. 10.375% 2006 7,000 7,245 1.00
Mariner Energy, Inc. 10.50% 2006 4,000 4,200 .58
Mesa Operating Co. 10.625% 2006 3,650 4,079 .56
Dual Drilling Co. 9.875% 2004 3,500 3,736 .52
Falcon Drilling Co., Inc.:
Series B, 8.875% 2003 2,250 2,284 .46
Series B, 9.75% 2001 1,000 1,025
Benton Oil and Gas Co. 11.625% 2003 3,000 3,255 .45
Pogo Producing Co. 8.75% 2007/3/ 3,000 2,992 .42
McDermott Inc. 9.375% 2002 1,250 1,279 .32
J. Ray McDermott, SA 9.375% 2006 1,000 1,015
Lomak Petroleum, Inc. 8.75% 2007 2,250 2,233 .31
Forcenergy Inc. 9.50% 2006 750 773 .11
Diversified Media, Cable Television &
Telecommunications - 5.17%
MFS Communications Co., Inc. 0%/9.375% 2004/1/ 7,250 6,702 .93
GST Telecommunications, Inc. 13.25% 2007/3/ 6,000 6,202 .86
Brooks Fiber Properties, Inc.:
10.00% 2007/3/ 2,500 2,512 .51
0%/10.875% 2006/1/ 1,750 1,190
Multicanal Participacoes SA 12.625% 2004/3/ 3,000 3,402 .47
Cablevision Systems Corp. 9.875% 2013 3,000 3,008 .41
Nextlink Communications LLC, Nextlink Capital, Inc. 12.50% 2006 1,750 1,848 .25
Qwest Communications International Inc. 10.875% 2007/3/ 1,500 1,601 .22
Jones Intercable, Inc. 9.625% 2002 1,500 1,560 .22
Viacom International Inc. 7.75% 2005 1,500 1,476 .20
IXC Communications Inc., Series B, 12.50% 2005 1,000 1,128 .16
Summit Communications Group, Inc. 10.50% 2005 1,000 1,080 .15
Comtel Brasileira LTDA. 10.75% 2004/3/ 1,000 1,063 .15
Teleport Communications Group Inc. 9.875% 2006 1,000 1,060 .15
Comcast Corp. 10.25% 2001 925 1,008 .14
Consorcio Ecuatoriano de Telecomunicaciones SA CONECEL
14.00% 2002/3/ 750 786 .11
Esat Holdings Ltd. Units, 0%/12.50% 2007/1/ /3/ 1,250 731 .10
Storer Communications, Inc. 10.00% 2003 634 637 .09
IntelCom Group Inc. 0%/13.50% 2005/1/ 500 355 .05
Leisure, Tourism & Restaurants - 5.07%
AMF Group Inc.:
0%/12.25% 2006/1/ 7,000 4,830 1.00
10.875% 2006 2,250 2,385
Foodmaker, Inc.:
9.75% 2002 4,250 4,372 .89
9.25% 1999 2,000 2,050
Station Casinos, Inc.:
9.625% 2003 4,850 4,802 .80
9.625% 2003 1,000 990
Four Seasons Hotels Inc. 9.125% 2000/3/ 3,500 3,631 .50
Rio Hotel & Casino, Inc.:
10.625% 2005 2,250 2,396 .47
9.50% 2007/3/ 1,000 1,020
California Hotel Finance Corp. 11.00% 2002 3,250 3,388 .47
Wyndham Hotel Corp. 10.50% 2006 2,500 2,750 .38
Sun International Hotels Ltd., Sun International
North America, Inc. 9.00% 2007 1,500 1,515 .21
Boyd Gaming Corp. 9.25% 2003 1,500 1,489 .21
Trump Atlantic City Associates, Trump Atlantic
City Funding, Inc. 11.25% 2006 1,000 980 .14
Broadcasting & Publishing - 4.84%
American Media Operations, Inc. 11.625% 2004 7,000 7,507 1.04
American Radio Systems Corp. 9.00% 2006 4,750 4,845 .67
Newsquest Capital PLC:
11.00% 2006 3,000 3,217 .67
Series B, 11.00% 2006 1,500 1,609
Globo Comunicacoes E Participacoes LTDA.:
10.50% 2006/3/ 3,600 3,753 .66
10.50% 2006 1,000 1,042
Chancellor Broadcasting Co.:
12.50% 2004 1,750 2,045 .49
9.375% 2004 1500 1523
Young Broadcasting Inc. 10.125% 2005 2,000 2,120 .29
TEVECAP SA:
12.625% 2004/3/ 1,500 1,598 .26
12.625% 2004 250 266
TV Azteca, SA de CV:
10.125% 2004/3/ 1,000 1,018 .25
10.125% 2004 750 763
STC Broadcasting, Inc. 11.00% 2007/3/ 1,250 1,316 .18
Gray Communications Systems, Inc. 10.625% 2006 1,250 1,312 .18
RBS Participacoes SA 11.00% 2007/3/ 1,000 1,043 .15
Transportation - 3.51%
USAir, Inc.:
10.00% 2003 5,750 5,908
9.625% 2001 4,250 4,356
Pass-Through Trust, Series 1993-A3, 10.375% 2013 /4/ 3,000 3,195 2.15
Series 1993-A2, 9.625% 2003 1,500 1,545
Pass-Through Trust, Series 1993-A1 8.625% 1998 /4/ 500 505
Teekay Shipping Corp. 8.32% 2008 3,500 3,483 .48
Airplanes Pass Through Trust, Class D, 10.875% 2019 /4/ 2,370 2,619 .36
Continental Airlines, Inc. 9.50% 2001 2,500 2,603 .36
Delta Air Lines, Inc. 10.00% 2014/3/ 1,000 1,158 .16
Forest Products & Paper - 2.90%
Container Corp. of America:
9.75% 2003 10,000 10,475
Series A, 11.25% 2004 2,000 2,170 1.90
Series B, 10.75% 2002 1,000 1,082
Pacific Lumber Co. 10.50% 2003 4,000 4,100 .57
MAXXAM Group Inc. 11.25% 2003 2,000 2,075 .28
Copamex Industrias, SA de CV 11.375% 2004/3/ 1,000 1,073 .15
Miscellaneous Services - 2.37%
CellNet Data Systems, Inc. 0%/13.00% 2005/1/ /2/ 14,000 8,960 1.24
Allied Waste North America, Inc. 10.25% 2006/3/ 4,800 5,124 .71
EarthWatch Inc. Units, 12.50% 2001/2/ /3/ 2,000 2,000 .28
Petro Stopping Centers, LP, Petro Financial Corp. 10.50% 2007/3/ 1,000 1,034 .14
Food Retailing - 2.06%
Bruno's, Inc. 10.50% 2005 6,250 6,523 .90
Carr-Gottstein Foods Co. 12.00% 2005 3,000 3,300 .46
Stater Brothers Holdings Inc. 11.00% 2001 2,000 2,153 .30
Rykoff-Sexton, Inc. 8.875% 2003 2,100 2,037 .28
Star Markets Co., Inc. 13.00% 2004 750 849 .12
Independent Power Producers - 1.98%
California Energy Co., Inc. 10.25% 2004 13,300 14,298 1.98
Beverages - 1.72%
Canandaigua Wine Co., Inc.:
8.75% 2003 2,750 2,764 .69
Series C, 8.75% 2003 2,250 2,239
Delta Beverage Group, Inc. 9.75% 2003 4,700 4864 .67
Dr Pepper Bottling Co. of Texas 10.25% 2000 2,500 2588 .36
Banking & Financial Services - 0.69%
DGS International Finance Co. BV 10.00% 2007/3/ 2,000 2,025 .28
First Nationwide Holdings Inc. 10.625% 2003 1,500 1,635 .23
Ocwen Financial Corp. 11.875% 2003 1,250 1,341 .18
Protection Services - 0.56%
Protection One Alarm Monitoring, Inc. 0%/13.625% 2005/1/ 2,000 2,020 .28
Borg-Warner Security Corp. 9.625% 2007/3/ 2,000 2,010 .28
Construction & Housing - 0.55%
M.D.C. Holdings, Inc. 11.125% 2003 3,650 3,942 .55
Real Estate - 0.29%
B.F. Saul Real Estate Investment Trust 11.625% 2002 2,000 2,130 .29
Electric & Gas Utilities - 0.27%
Columbia Gas System, Inc., Series A, 6.39% 2000 2,000 1,970 .27
Textiles & Apparel - 0.25%
WestPoint Stevens Inc. 8.75% 2001 1,000 1,025 .14
Tultex Corp. 10.625% 2005 750 816 .11
Merchandising - 0.22%
Barnes & Noble, Inc., Series B, 11.875% 2003 1,000 1,082 .15
Loehmann's, Inc. 11.875% 2003 500 518 .07
Insurance - 0.15%
Integon Capital I, Integon Corp. 10.75% 2027/3/ 1,100 1,100 .15
Non-U.S. Governments & Governmental
Authorities - 2.44%
Argentina (Republic of):
11.75% 2007/3/ ARP6,000 6528
Eurobond, Series L, 6.75% 2005 /5/ $4,511 4207 1.86
11.375% 2017 2,500 2737
Panama (Republic of) Interest Reduction Bond 3.50% 2014/3/ /5/ 3000 2270 .32
United Mexican States Government 11.375% 2016 1250 1372 .19
Brazil (Federal Republic of) Eligible Interest Bond 6.875% 2006 /5/ 545 502 .07
U.S. Treasury Obligations - 7.27%
11.625% 2004 13,600 17,533
7.375% 1997 10,000 10,075
7.75% 2001 8,000 8,342 7.27
6.875% 1999 7,000 7,086
8.50% 2000 5,000 5,319
8.00% 2001 4,000 4,211
-------- --------
TOTAL BONDS & NOTES (cost: $596,448,000) 617,554 85.45
-------- -------
Number
of
Stocks Shares
Common & Preferred Stocks - 3.41%
Chancellor Radio Broadcasting Co. 12.00% exchangeable preferred/3/ /6/ /7/ 60,000 6,480 .99
Chancellor Broadcasting Co., Class A /7/ 20,000 690
American Radio Systems Corp. 11.375% exchangeable preferred/3/ /6/ /7/ 40,948 4,340 .68
American Radio Systems Corp., Class A /7/ 15,000 559
EarthWatch Inc.12.00% convertible preferred, Series C/2/ /3/ /6/ /7/ 350,000 3,979 .55
Time Warner Inc. 10.25% exchangeable preferred, Series M /6/ 3,309 3,646 .50
Kelley Oil & Gas Corp. convertible preferred 90,000 2,137 .30
Integrated Health Services, Inc. 39,000 1,404 .19
CellNet Data Systems, Inc., warrants, expire 2005 /2/ /7/ 112,000 661 .09
Cellular Communications International, Inc. /7/ 10,200 271 .04
Marriott International, Inc. 4,512 261 .04
ICG Holdings, Inc., warrants, expire 2005 (formerly IntelCom Group Inc.)/3/ /7/ 13,200 73 .01
Protection One Alarm Monitoring, Inc., warrants, expire 2005/3/ /7/ 6,400 43 .01
Comunicacion Celular SA, warrants, expire 2003/3/ /7/ 5,000 38 .01
Sterling Chemicals, Inc., warrants, expire 2008 /7/ 1,000 35 .00
UroHealth Systems, Inc., warrants, expire 2004/3/ /7/ 3,000 3 .00
Heartland Wireless Communications, Inc., warrants, expire 2000/2/ /3/ /7/ 18,000 0 .00
NEXTEL Communications, Inc., warrants, expire 1999/2/ /7/ 9,500 0 .00
-------- --------
TOTAL STOCKS (cost: $22,793,000) 24,620 3.41
-------- --------
Principal
Amount
Convertible Debentures - 0.55% (000)
Integrated Health Services, Inc. 5.75% 2001 $ 3,500 3,964 .55
-------- --------
TOTAL CONVERTIBLE DEBENTURES (cost: $3,437,000) 3,964 .55
-------- --------
TOTAL EQUITY -TYPE SECURITIES (cost: $26,230,000) 28,584 3.96
-------- --------
Short-Term Securities
Corporate Short-Term Notes - 8.00%
Lucent Technologies Inc. 5.51%-5.52% due 6/5-6/13/97 20,600 20,570 2.85
PepsiCo, Inc. 5.50%-5.52% due 6/17-6/26/97 11,950 11,908 1.65
E.I. du Pont de Nemours and Co. 5.49%-5.59% due 7/23-8/19/97 11,500 11,379 1.57
Warner-Lambert Co. 5.52% due 6/24/97/3/ 10,000 9,963 1.38
Weyerhaeuser Co. 5.55%-5.57% due 6/12-7/7/97 4,000 3,989 .55
-------- -------
TOTAL SHORT-TERM SECURITIES (cost: $57,809,000) 57,809 8.00
-------- -------
TOTAL INVESTMENT SECURITIES (cost: $680,487,000) 703,947 97.41
Excess of cash and receivables over payables 18,681 2.59
--------- -------
NET ASSETS $722,628 100.00%
========= =======
/1/ Step bond; coupon rate will increase at a later date.
/2/ Valued under procedures established by the Board of Trustees.
/3/ Purchased in a private placement transaction; resale
to the public may require registration or sale
only to qualified institutional buyers.
/4/ Pass-through securities backed by a pool of mortgages
or other loans on which principal payments are periodically
made. Therefore, the effective maturity of these securities is
shorter than the stated maturity.
/5/ Coupon rate may change periodically.
/6/ Payment in kind. The issuer has the option of paying
additional securities in lieu of cash.
/7/ Non-income-producing securities.
See Notes to Financial Statements
</TABLE>
<TABLE>
<S> <C> <C> <C>
American Variable Insurance Series
U.S. Government/AAA-Rated Securities Fund
Investment Portfolio, May 31, 1997
Unaudited
- ------------------------------------------------ -------- -------- --------
U.S. TREASURY BONDS 43.01%
PRIVATE MORTGAGE & ASSET-BACKED SECURITIES 22.36
FEDERAL AGENCY MORTGAGE-RELATED SECURITIES 21.23
CASH & EQUIVALENTS 7.46
OTHER FEDERAL OBLIGATIONS 5.22
CORPORATE BONDS 0.46
NON-U.S. GOVERNMENT BONDS 0.26
- ------------------------------------------------ -------- -------- --------
Principal Market Percent
Amount Value of Net
Bonds & Notes (000) (000) Assets
- ------------------------------------------------ -------- -------- --------
U.S. Treasury Obligations - 43.01%
10.75% 2003 $60,750 $73,128
8.875% 2017 36300 43622
10.375% 2009 33,500 40,488
12.00% 2013 10000 13969
8.875% 1997 10000 10142
3.404% 2007/1/ 8000 7946
5.875% 1999 5,000 4,952 43.01%
7.25% 2004 4150 4299
14.25% 2002 2000 2618
13.125% 2001 1500 1843
9.00% 1998 1,250 1,286
Federal Agency Obligations - Mortgage
Pass-Throughs/2/ - 19.90%
Government National Mortgage Assn.:
7.50% 2022-2027 14470 14446
8.50% 2021-2026 12398 13004
7.00% 2021-2024 9996 10087
7.125% 2018-2023 6524 6714
9.50% 2019-2021 5728 6172
6.50% 2024 4116 3942
10.00% 2019 3307 3621 13.64
8.00% 2022 2862 2952
6.875% 2018 2088 2145
9.00% 2009-2016 1384 1473
10.50% 2019 149 164
11.00% 2019 62 70
12.00% 2012-2014 7 8
Federal National Mortgage Assn.:
8.00% 2024 7783 7986
8.50% 2023 5747 6000
10.00% 2018 4058 4420 5.88
7.50% 2009 3550 3596
9.00% 2011-2025 3151 3321
7.00% 2010 2613 2596
Federal Home Loan Mortgage Corp.:
9.00% 2021-2022 1598 1700
9.50% 2016 107 115 .38
12.00% 2010 2 2
Collateralized Mortgage Obligations
(Privately Originated)/2/ - 11.65%
GE Capital Mortgage Services, Inc.:
Series 1995-10, Class A-1, 7.00% 2010 8700 8,701
Series 1994-15, Class A-10, 6.00% 2009 8000 7,173 3.34
Prudential-Bache CMO Trust III, 9.44% 2018 14000 14656 3.08
Westam Mortgage, Class 4-H, 8.95% 2018 11000 11,491 2.42
Structured Asset Securities Corp., Series 1996-CFL,
Class A1-C, 5.944% 2028 4900 4782 1.01
J.P. Morgan Commercial Mortgage Finance Corp., Series 1995-C1,
Class A2, 7.353% 2010/3/ 3000 3027 .64
Prudential Home Mortgage Securities Co., Inc., Series 1992-33,
Class A-12, 7.50% 2022 2798 2794 .59
Merrill Lynch Mortgage Investors, Inc., Series 1995-C3,
Class A-2, 6.848% 2025/3/ 1,500 1,474 .31
CS First Boston Mortgage Securities Corp., Series 1995-AEW1,
Class A-1, 6.665% 2027 1230 1230 .26
Asset-Backed Obligations/2/ - 10.71%
ContiMortgage Home Equity Loan Trust 1996-4,
Class A-4, 6.37% 2006 15000 14,850 3.13
Aames Mortgage Trust, Series 1996-D,
Class A-1C, 6.52% 2020 10000 9,968 2.10
Green Tree Financial Corp.:
Series 1995-9, Class A-5, 6.80% 2027 5000 4933
Series 1995-3, Class A-5, 7.30% 2025 2050 2086 1.89
Series 1996-10, Class A-5, 6.83% 2028 2000 1965
UCFL Acceptance Corp., Series 1996-D1,
Class A-5, 6.918% 2019 8500 8,406 1.77
Standard Credit Card Master Trust 1991-3, Class A,
8.875% 1999 5500 5653 1.19
EQCC Home Equity Loan Asset-Backed Certificates,
Series 1996-A, Class A-2, 6.95% 2012 2000 2010 .42
IMC Home Equity Loan Trust, Series 1996-2,
Class A-2, 6.78% 2011 1000 1,000 .21
Federal Agency Obligations - Other - 5.22%
Federal Home Loan Mortgage Corp.:
6.555% 2006 8500 8116
6.945% 2005 2000 1945 2.12
Federal National Mortgage Assn.:
6.53% 2006 7000 6703
8.625% 2021 2000 2056 1.84
FNSM Principal STRIPS:
0%/8.62% 2022 /4/ 4500 4220
0%/8.25% 2022 /4/ 2000 1763 1.26
Federal Collateralized Mortgage Obligations
(Privately Originated)/2/ - 0.77%
Federal Home Loan Mortgage Corp. 6.65% 2027 4000 3646 .77
Collateralized Mortgage Obligations
(Federal Agencies)/2/ - 0.56%
Federal Home Loan Mortgage Corp.:
Series 1716, Class A, 6.50% 2009 2250 2141
Series 83-B, Class B-3, 12.50% 2013 483 528 .56
Non-U.S. Government Obligations - 0.26%
Ontario (Province of) 15.25% 2012 1145 1236 .26
Financial - 0.25%
Signal Capital Corp. 9.95% 2006 1150 1176 .25
Telephone Utilities - 0.21%
BellSouth Savings and Security ESOP Trust 9.125% 2003 946 996 .21
-------- --------
TOTAL BONDS & NOTES (cost: $442,727,000) 439,552 92.54
-------- --------
Short-Term Securities
- ------------------------------------------------
Corporate Short-Term Notes - 9.55%
Weyerhaeuser Co. 5.50%-5.58% due 6/5-7/18/97 16100 16014 3.37
General Electric Capital Corp. 5.65% due 6/2/97 11800 11796 2.48
Lucent Technologies Inc. 5.51% due 6/5/97 9600 9593 2.02
Motorola Credit Corp. 5.52% due 7/8/97 8000 7953 1.68
-------- --------
TOTAL SHORT-TERM SECURITIES (cost: $45,356,000) 45356 9.55
-------- --------
TOTAL INVESTMENT SECURITIES (cost: $488,083,000) 484908 102.09
Excess of payables over cash and receivables 9,927 2.09
-------- --------
NET ASSETS $474,981 100.00%
======== ========
/1/ Index-linked bond, which is a floating rate
bond whose principal amount moves with a
government retail price index.
/2/ Pass-through securities backed by a pool of
mortgages or other loans on which principal
payments are periodically made. Therefore,
the effective maturity of these securities is
shorter than the stated maturity.
/3/ Coupon rate may change periodically.
/4/ Step bond; coupon rate will
increase at a later date.
See Notes to Financial Statements
</TABLE>
<TABLE>
<S> <C> <C> <C>
American Variable Insurance Series
Cash Management Fund
Investment Portfolio, May 31, 1997 (Unaudited)
Principal Market
Amount Value Percent of
Short-Term Securities (000) (000) Net Assets
Corporate Short-Term Notes - 71.27%
BellSouth Telecommunications, Inc. 5.50% due 6/24/97 $ 8,400 $ 8,369 3.30%
International Lease Finance Corp. 5.53% due 6/3/97 8,300 8,296 3.28
U S WEST Communications, Inc. 5.50% due 6/3/97 8,000 7996 3.16
General Mills, Inc. 5.51% due 7/10/97 7,200 7,156 2.83
AT&T Corp. 5.50% due 6/2/97 7,000 6998 2.76
Motorola Credit Corp. 5.50% due 6/19/97 7,000 6980 2.76
Anheuser-Busch, Inc. 5.50% due 7/23/97/1/ 7,000 6943 2.74
Shell Oil Co. 5.46%-5.50% due 6/10-6/17/97 6,800 6786 2.68
Ford Motor Credit Co. 5.53%-5.54% due 6/18-7/14/97 6,700 6,661 2.63
Gillette Co. 5.57% due 7/8/97/1/ 6,500 6,462 2.55
Lucent Technologies Inc. 5.51%-5.53% due 6/5-6/11/97 6,400 6,391 2.52
Weyerhaeuser Co. 5.54% due 6/23/97 6,400 6377 2.52
Emerson Electric Co. 5.48% due 6/4/97 6,000 5,996 2.37
Southwestern Bell Telephone Co. 5.50% due 6/6/97 6,000 5995 2.37
Chevron Corp. 5.56% due 6/12/97/1/ 5,900 5,889 2.33
Coca-Cola Co. 5.47% due 6/25/97 5,900 5,878 2.32
Amoco Corp. 5.50% due 6/5/97 5,600 5596 2.21
John Deere Capital Corp. 5.54% due 7/22/97 5,100 5,059 2.00
St. Paul Companies, Inc. 5.51% due 6/26/97/1/ 5,000 4981 1.97
J.C. Penney Funding Corp. 5.51% due 7/10/97/1/ 5,000 4969 1.96
Xerox Corp. 5.50% due 7/11/97 5,000 4,969 1.96
Kellogg Co. 5.48% due 7/18/97 5,000 4,963 1.96
CIT Group Holdings, Inc. 5.56% due 6/16/97 4,800 4,788 1.89
Abbott Laboratories 5.48% due 6/23/97 4500 4484 1.77
E.I. du Pont de Nemours and Co. 5.55% due 7/8/97 4,400 4,376 1.73
SAFECO Credit Co. Inc. 5.53% due 6/11/97 4,000 3993 1.58
Beneficial Corp. 5.57% due 7/7/97 4,000 3,977 1.57
Avco Financial Services, Inc. 5.53% due 7/21/97 3,500 3,473 1.37
Procter & Gamble Co. 5.50% due 6/30/97 3,400 3384 1.34
PepsiCo, Inc. 5.50% due 6/5/97 3,300 3,298 1.30
Yale University 5.55% due 6/16/97 2,600 2594 1.02
IBM Credit Corp. 5.56% due 7/9/97 2,600 2584 1.02
Walt Disney Co. 5.55% due 6/13/97 2,200 2,196 .87
American Express Credit Corp. 5.51% due 6/10/97 1,600 1,598 .63
Federal Agency Obligations - 27.61%
Federal Home Loan Mortgage Corp. 5.41%-5.46% due 6/9-6/24/97 25,400 25335 10.01
Federal Home Loan Banks 5.41%-5.495% due 6/19-7/3/97 23,900 23810 9.40
Federal National Mortgage Assn. 5.43%-5.50% due 6/12-7/3/97 10,800 10766 4.25
Student Loan Marketing Assn. 5.29% 1997/2/ 10000 10,005 3.95
---------- ----------
TOTAL INVESTMENT SECURITIES (cost: $250,366,000) 250371 98.88
Excess of cash and receivables over payables 2829 1.12
---------- ----------
NET ASSETS $253,200 100.00%
========== ==========
/1/ Purchased in a private placement transaction; resale to the public
may require registration or sale only to qualified institutional buyers.
/2/Coupon rate may change periodically.
See Notes to Financial Statements
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
American Variable Insurance Series
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
at May 31, 1997 (unaudited) (dollars
in
thousands)
Global Inter- Growth- Asset
Growth Growth national Income Allocation
Fund Fund Fund Fund Fund
- --------------------------------- ---------- ---------- ---------- ---------- ----------
ASSETS:
Investment securities at market $28,190 $4,111,394 $2,811,031 $5,853,249 $1,269,963
Cash 1 26 7
Receivables for-
Sales of investments - 11,729 10,239 14,791 4,549
Sales of fund's shares 605 174 454 722 306
Open forward currency
contracts - - - - -
Dividends and accrued
interest 20 1,332 14,274 12,492 7,527
---------- ---------- ---------- ---------- ----------
28,816 4,124,876 2,836,029 5,881,280 1,282,352
LIABILITIES: ---------- ---------- ---------- ---------- ----------
Payables for-
Purchases of investments 1,148 24,539 32,577 47,023 13,684
Repurchases of fund's shares - 2,687 - - -
Management services 9 1,385 1,330 1,758 483
Distribution fees - Class 2/1/ - - - -
Accrued expenses 1 77 345 101 27
---------- ---------- ---------- ---------- ----------
1,158 28,688 34,252 48,883 14,194
NET ASSETS AT ---------- ---------- ---------- ---------- ----------
May 31, 1997 $27,658 $4,096,188 $2,801,777 $5,832,397 $1,268,158
=========== =========== =========== =========== ===========
Investment securities at cost $27,753 $3,207,454 $2,271,478 $4,417,833 $1,058,193
=========== =========== =========== =========== ===========
Class 1 (unlimited shares authorized):
Net Assets (000's) $25,416 $4,093,794 $2,798,862 $5,824,821 $1,267,059
Shares of beneficial interest
outstanding 2,438,937 93,823,350 165,625,568 161,369,316 84,441,807
Net asset value per share $10.42 $43.63 $16.90 $36.10 $15.01
Class 2 (unlimited shares authorized)/1/:
Net Assets (000's) $2,242 $2,394 $2,915 $7,576 $1,099
Shares of beneficial interest
outstanding 215,190 54,869 172,510 209,908 73,243
Net asset value per share $10.42 $43.63 $16.90 $36.09 $15.00
U.S. (dollars
Government/ in
High-Yield AAA-Rated Cash thousands)
Bond Bond Securities Management
Fund Fund Fund Fund Total
- --------------------------------- ---------- ---------- ---------- ---------- ----------
ASSETS:
Investment securities at market $100,759 $703,947 $484,908 $250,371 $15,613,812
Cash 263 18 86 133 812
Receivables for-
Sales of investments 2 8,566 33 - 49,909
Sales of fund's shares 289 5 124 2,683 5,362
Open forward currency
contracts 16 10 - - 26
Dividends and accrued
interest 1,275 12,234 4,093 118 53,365
---------- ---------- ---------- ---------- ----------
102,604 724,780 489,244 253,305 15,723,286
LIABILITIES: ---------- ---------- ---------- ---------- ----------
Payables for-
Purchases of investments 250 1,519 13,592 - 134,332
Repurchases of fund's shares - 313 452 - 3,452
Management services 45 303 205 98 5,616
Distribution fees - Class 2/1/ - - - - 1
Accrued expenses 2 17 14 7 591
---------- ---------- ---------- ---------- ----------
297 2,152 14,263 105 143,992
NET ASSETS AT ---------- ---------- ---------- ---------- ----------
May 31, 1997 $102,307 $722,628 $474,981 $253,200 $15,579,294
=========== =========== =========== =========== ===========
Investment securities at cost $100,181 $680,487 $488,083 $250,366 $12,501,828
=========== =========== =========== =========== ===========
Class 1 (unlimited shares authorized):
Net Assets (000's) $101,766 $721,609 $474,313 $252,496
Shares of beneficial interest
outstanding 9,880,369 49,134,580 43,438,418 22,715,063
Net asset value per share $10.30 $14.69 $10.92 $11.12
Class 2 (unlimited shares authorized)/1/:
Net Assets (000's) $541 $1,019 $668 $704
Shares of beneficial interest
outstanding 52,556 69,428 61,193 63,321
Net asset value per share $10.30 $14.68 $10.92 $11.11
/1/ Shares offered for sale
commencing on April 30, 1997.
See Notes to Financial Statements
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
American Variable Insurance Series
FINANCIAL STATEMENTS
Statement of Operations (dollars
for the six months ended May 31, 1997 in
(unaudited) thousands)
Global Inter- Growth- Asset
Growth Growth national Income Allocation
Fund/1/ Fund Fund Fund Fund
---------- ---------- ---------- --------- ----------
INVESTMENT INCOME:
Income:
Dividends $20 $10,944 $29,193 $47,722 $8,424
Interest 28 12,419 5,092 19,975 16,934
---------- ---------- ---------- ---------- ----------
48 23,363 34,285 67,697 25,358
---------- ---------- ---------- ---------- ----------
Expenses:
Management services fee 9 7,921 7,288 9,902 2,710
Distribution fees - Class 2/2/ - - - 1 -
Reports to shareholders - 62 39 85 19
Registration statement and
prospectus - 34 19 43 10
Postage, stationery and
supplies - 24 17 36 8
Trustees' fees - 43 29 61 14
Auditing and legal fees - 47 30 66 14
Custodian fee 1 58 916 68 27
Taxes other than federal
income tax - 52 32 70 16
Other expenses - 24 71 31 7
---------- ---------- ---------- ---------- ----------
10 8,265 8,441 10,363 2,825
---------- ---------- ---------- ---------- ----------
Net investment income 38 15,098 25,844 57,334 22,533
---------- ---------- ---------- ---------- ----------
REALIZED GAIN (LOSS) AND
UNREALIZED APPRECIATION
(DEPRECIATION) ON INVESTMENTS:
Realized gain (loss) - 370,741 145,493 268,964 39,136
---------- ---------- ---------- ---------- ----------
Net change in unrealized appreciation
(depreciation) on investments 437 (81,542) 168,033 197,554 26,972
Net increase in unrealized appreciation
on open forward currency contracts - - - - -
---------- ---------- ---------- ---------- -----------
Net unrealized appreciation
(depreciation) 437 (81,542) 168,033 197,554 26,972
---------- ---------- ---------- ---------- -----------
Net realized gain (loss) and
unrealized appreciation (depreciation)
on investments 437 289,199 313,526 466,518 66,108
---------- ---------- ---------- ---------- ----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $475 $304,297 $339,370 $523,852 $88,641
========= ========= =========== ========= =========
(dollars
in
U.S. thousands)
High- Government/ Cash
Yield AAA-Rated Manage-
Bond Bond Securities ment
Fund Fund Fund Fund Total
---------- ---------- --------------- ---------- ---------
INVESTMENT INCOME:
Income:
Dividends $46 $194 - - $96,543
Interest 3,234 32,727 $18,524 $6,756 115,689
---------- ---------- ---------- ---------- ----------
3,280 32,921 18,524 6,756 212,232
---------- ---------- ---------- ---------- ----------
Expenses:
Management services fee 239 1,732 1,237 561 31,599
Distribution fees - Class 2/2/ - - - - 1
Reports to shareholders 1 11 8 4 229
Registration statement and
prospectus 1 6 3 5 121
Postage, stationery and
supplies 1 5 4 2 97
Trustees' fees 1 8 6 3 165
Auditing and legal fees 1 8 6 3 175
Custodian fee 3 18 12 6 1,109
Taxes other than federal
income tax 2 10 7 4 193
Other expenses 1 5 4 3 146
---------- ---------- ---------- ---------- ----------
250 1,803 1,287 591 33,835
---------- ---------- ---------- ---------- ----------
Net investment income 3,030 31,118 17,237 6,165 178,397
---------- ---------- ---------- ---------- ----------
REALIZED GAIN (LOSS) AND
UNREALIZED APPRECIATION
(DEPRECIATION) ON INVESTMENTS:
Realized gain (loss) 1,169 6,678 (8,464) - 823,717
---------- ---------- ---------- ---------- ----------
Net change in unrealized appreciation
(depreciation) on investments (1,502) 1,219 (6,755) 5 304,421
Net increase in unrealized appreciation
on open forward currency contracts 10 10 - - 20
----------- ---------- --------------- ---------- ----------
Net unrealized appreciation
(depreciation) (1,492) 1,229 (6,755) 5 304,441
----------- ---------- --------------- ---------- ----------
Net realized gain (loss) and
unrealized appreciation (depreciation)
on investments (323) 7,907 (15,219) 1,128,158
---------- ---------- ---------- ---------- ----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $2,707 $39,025 $2,018 $6,170 $1,306,555
========= ========= =============== ========= =========
/1/ For the period April 30, 1997,
commencement of operations, through
May 31, 1997.
/2/ Shares offered for sale
commencing on April 30, 1997.
See Notes to Financial Statements
</TABLE>
<TABLE>
<S> <C> <C> <C>
American Variable Insurance Series
FINANCIAL STATEMENTS
(dollars in thousands)
Statement of Changes in Net Assets Global
Growth Fund/1/ Growth Fund
------- ------- -------
Period Six months Year ended
ended ended November 30,
May 31, 1997/2/ May 31, 1997/2/ 1996
- ---------------------------------- ------- ------- -------
OPERATIONS:
Net investment income $38 $15,098 $20,827
Net realized gain (loss) on investments - 370,741 269,265
Net unrealized appreciation (depreciation)
on investments 437 (81,542) 183,049
------- ------- -------
Net increase in net assets
resulting from operations 475 304,297 473,141
------- ------- -------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income:
Class 1 - (10,114) (24,246)
Distributions from net realized gain on
investments - (268,039) (259,930)
------- ------- -------
Total dividends and distributions - (278,153) (284,176)
------- ------- -------
CAPITAL SHARE TRANSACTIONS:
Class 1:
Proceeds from shares sold 20,032 136,820 506,249
Proceeds from shares issued on reinvestment
of dividends and distributions - 278,153 284,176
Cost of shares repurchased (88) (207,646) (273,482)
------- ------- -------
Net Increase from Class 1 Transactions 19,944 207,327 516,943
------- ------- -------
Class 2 4:
Proceeds from shares sold 2,239 2,368 -
------- ------- -------
Net Increase from Class 2 Transactions 2,239 2,368 -
Net increase (decrease) in net ------- ------- -------
assets resulting from capital share
transactions 22,183 209,695 516,943
------- ------- -------
TOTAL INCREASE (DECREASE) IN NET ASSETS 22,658 235,839 705,908
NET ASSETS:
Beginning of year 5,000 3,860,349 3,154,441
------- ------- -------
End of year $27,658 $4,096,188 $3,860,349
======= ======= =======
Undistributed Net Investment Income $38 $9,622 $4,638
======= ======= =======
SHARES OF BENEFICIAL INTEREST:
Class 1:
Shares sold 1,947,392 3,271,739 12,825,093
Shares issued on reinvestment of dividends
and distributions - 6,945,256 7,512,662
Shares repurchased (8,455) (5,083,761) (7,086,581)
------- ------- -------
Net increase in shares outstanding 1,938,937 5,133,234 13,251,174
======= ======= =======
Class 2 4:
Shares sold 215,190 54,869 -
Shares repurchased - - -
------- ------- -------
Net increase in shares outstanding 215,190 54,869 -
======= ======= =======
Statement of Changes in Net Assets
International Fund
------- -------
Six months Year ended
ended November 30,
May 31, 1997/2/ 1996
- ---------------------------------- ------- -------
OPERATIONS:
Net investment income $25,844 $40,449
Net realized gain (loss) on investments 145,493 96,629
Net unrealized appreciation (depreciation)
on investments 168,033 177,135
------- -------
Net increase in net assets
resulting from operations 339,370 314,213
------- -------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income:
Class 1 (14,143) (42,718)
Distributions from net realized gain on
investments (94,763) (35,844)
------- -------
Total dividends and distributions (108,906) (78,562)
------- -------
CAPITAL SHARE TRANSACTIONS:
Class 1:
Proceeds from shares sold 138,357 412,624
Proceeds from shares issued on reinvestment
of dividends and distributions 108,906 78,562
Cost of shares repurchased (48,482) (60,680)
------- -------
Net Increase from Class 1 Transactions 198,781 430,506
------- -------
Class 2 4:
Proceeds from shares sold 2,904 -
------- -------
Net Increase from Class 2 Transactions 2,904 -
Net increase (decrease) in net ------- -------
assets resulting from capital share
transactions 201,685 430,506
------- -------
TOTAL INCREASE (DECREASE) IN NET ASSETS 432,149 666,157
NET ASSETS:
Beginning of year 2,369,628 1,703,471
------- -------
End of year $2,801,777 $2,369,628
======= =======
Undistributed Net Investment Income $19,370 $7,669
======= =======
SHARES OF BENEFICIAL INTEREST:
Class 1:
Shares sold 8,841,231 28,612,329
Shares issued on reinvestment of dividends
and distributions 7,317,092 5,605,115
Shares repurchased (3,121,548) (4,238,963)
------- -------
Net increase in shares outstanding 13,036,775 29,978,481
======= =======
Class 2 4:
Shares sold 172,510 -
Shares repurchased - -
------- -------
Net increase in shares outstanding 172,510 -
======= =======
(dollars in thousands)
Growth-Income Fund
------- -------
Six months Year ended
ended November 30,
May 31, 1997/2/ 1996
- ---------------------------------- ------- -------
OPERATIONS:
Net investment income $57,334 $101,854
Net realized gain (loss) on investments 268,964 373,978
Net unrealized appreciation (depreciation)
on investments 197,554 407,012
------- -------
Net increase in net assets
resulting from operations 523,852 882,844
------- -------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income:
Class 1 (52,131) (101,529)
Distributions from net realized gain on
investments (373,625) (159,645)
------- -------
Total dividends and distributions (425,756) (261,174)
------- -------
CAPITAL SHARE TRANSACTIONS:
Class 1:
Proceeds from shares sold 169,511 540,891
Proceeds from shares issued on reinvestment
of dividends and distributions 425,756 261,174
Cost of shares repurchased (117,114) (128,364)
------- -------
Net Increase from Class 1 Transactions 478,153 673,701
------- -------
Class 2 4:
Proceeds from shares sold 7,508 -
------- -------
Net Increase from Class 2 Transactions 7,508 -
Net increase (decrease) in net ------- -------
assets resulting from capital share
transactions 485,661 673,701
------- -------
TOTAL INCREASE (DECREASE) IN NET ASSETS 583,757 1,295,371
NET ASSETS:
Beginning of year 5,248,640 3,953,269
------- -------
End of year $5,832,397 $5,248,640
======= =======
Undistributed Net Investment Income $30,467 $25,264
======= =======
SHARES OF BENEFICIAL INTEREST:
Class 1:
Shares sold 4,960,884 16,813,646
Shares issued on reinvestment of dividends
and distributions 12,930,038 8,475,637
Shares repurchased (3,428,225) (4,001,696)
------- -------
Net increase in shares outstanding 14,462,697 21,287,587
======= =======
Class 2 4:
Shares sold 209,908 -
Shares repurchased - -
------- -------
Net increase in shares outstanding 209,908 -
======= =======
Asset Allocation Fund
------- -------
Six months Year ended
ended November 30,
May 31, 1997/2/ 1996
- ---------------------------------- ------- -------
OPERATIONS:
Net investment income $22,533 $38,391
Net realized gain (loss) on investments 39,136 72,509
Net unrealized appreciation (depreciation)
on investments 26,972 62,633
------- -------
Net increase in net assets
resulting from operations 88,641 173,533
------- -------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income:
Class 1 (20,542) (36,923)
Distributions from net realized gain on
investments (72,976) (30,506)
------- -------
Total dividends and distributions (93,518) (67,429)
------- -------
CAPITAL SHARE TRANSACTIONS:
Class 1:
Proceeds from shares sold 57,189 131,175
Proceeds from shares issued on reinvestment
of dividends and distributions 93,518 67,429
Cost of shares repurchased (19,853) (33,309)
------- -------
Net Increase from Class 1 Transactions 130,854 165,295
------- -------
Class 2 4:
Proceeds from shares sold 1,090 -
------- -------
Net Increase from Class 2 Transactions 1,090 -
Net increase (decrease) in net ------- -------
assets resulting from capital share
transactions 131,944 165,295
------- -------
TOTAL INCREASE (DECREASE) IN NET ASSETS 127,067 271,399
NET ASSETS:
Beginning of year 1,141,091 869,692
------- -------
End of year $1,268,158 $1,141,091
======= =======
Undistributed Net Investment Income $11,965 $9,974
======= =======
SHARES OF BENEFICIAL INTEREST:
Class 1:
Shares sold 3,964,657 9,441,738
Shares issued on reinvestment of dividends
and distributions 6,665,071 4,980,163
Shares repurchased (1,362,210) (2,391,438)
------- -------
Net increase in shares outstanding 9,267,518 12,030,463
======= =======
Class 2 4:
Shares sold 73,243 -
Shares repurchased - -
------- -------
Net increase in shares outstanding 73,243 -
======= =======
(dollars in thousands)
Bond Fund
------- -------
Six months Year ended
ended November 30,
May 31, 1997/2/ 1996/3/
- ---------------------------------- ------- -------
OPERATIONS:
Net investment income $3,030 $2,470
Net realized gain (loss) on investments 1,169 38
Net unrealized appreciation (depreciation)
on investments (1,492) 2,083
------- -------
Net increase in net assets
resulting from operations 2,707 4,591
------- -------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income:
Class 1 (2,548) (1,349)
Distributions from net realized gain on
investments - -
------- -------
Total dividends and distributions (2,548) (1,349)
------- -------
CAPITAL SHARE TRANSACTIONS:
Class 1:
Proceeds from shares sold 25,274 73,438
Proceeds from shares issued on reinvestment
of dividends and distributions 2,548 1,349
Cost of shares repurchased (3,638) (1,604)
------- -------
Net Increase from Class 1 Transactions 24,184 73,183
------- -------
Class 2 4:
Proceeds from shares sold 539 -
------- -------
Net Increase from Class 2 Transactions 539 -
Net increase (decrease) in net ------- -------
assets resulting from capital share
transactions 24,723 73,183
------- -------
TOTAL INCREASE (DECREASE) IN NET ASSETS 24,882 76,425
NET ASSETS:
Beginning of year 77,425 1,000
------- -------
End of year $102,307 $77,425
======= =======
Undistributed Net Investment Income $1,603 $1,121
======= =======
SHARES OF BENEFICIAL INTEREST:
Class 1:
Shares sold 2,473,676 7,434,995
Shares issued on reinvestment of dividends
and distributions 252,987 137,024
Shares repurchased (357,515) (160,798)
------- -------
Net increase in shares outstanding 2,369,148 7,411,221
======= =======
Class 2 4:
Shares sold 52,556 -
Shares repurchased - -
------- -------
Net increase in shares outstanding 52,556 -
======= =======
High-Yield Bond Fund
------- -------
Six months Year ended
ended November 30,
May 31, 1997/2/ 1996
- ---------------------------------- ------- -------
OPERATIONS:
Net investment income $31,118 $55,086
Net realized gain (loss) on investments 6,678 4,194
Net unrealized appreciation (depreciation)
on investments 1,229 17,642
------- -------
Net increase in net assets
resulting from operations 39,025 76,922
------- -------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income:
Class 1 (29,812) (53,386)
Distributions from net realized gain on
investments - -
------- -------
Total dividends and distributions (29,812) (53,386)
------- -------
CAPITAL SHARE TRANSACTIONS:
Class 1:
Proceeds from shares sold 47,819 91,739
Proceeds from shares issued on reinvestment
of dividends and distributions 29,812 53,386
Cost of shares repurchased (27,414) (40,681)
------- -------
Net Increase from Class 1 Transactions 50,217 104,444
------- -------
Class 2 4:
Proceeds from shares sold 1,013 -
------- -------
Net Increase from Class 2 Transactions 1,013 -
Net increase (decrease) in net ------- -------
assets resulting from capital share
transactions 51,230 104,444
------- -------
TOTAL INCREASE (DECREASE) IN NET ASSETS 60,443 127,980
NET ASSETS:
Beginning of year 662,185 534,205
------- -------
End of year $722,628 $662,185
======= =======
Undistributed Net Investment Income $15,663 $14,357
======= =======
SHARES OF BENEFICIAL INTEREST:
Class 1:
Shares sold 3,298,831 6,502,188
Shares issued on reinvestment of dividends
and distributions 2,098,864 3,834,396
Shares repurchased (1,901,695) (2,875,119)
------- -------
Net increase in shares outstanding 3,496,000 7,461,465
======= =======
Class 2 4:
Shares sold 69,428 -
Shares repurchased - -
------- -------
Net increase in shares outstanding 69,428 -
======= =======
(dollars in thousands)
U.S. Government/AAA-Rated
Securities Fund
------- -------
Six months Year ended
ended November 30,
May 31, 1997/2/ 1996
- ---------------------------------- ------- -------
OPERATIONS:
Net investment income $17,237 $38,502
Net realized gain (loss) on investments (8,464) (2,883)
Net unrealized appreciation (depreciation)
on investments (6,755) (8,951)
------- -------
Net increase in net assets
resulting from operations 2,018 26,668
------- -------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income:
Class 1 (18,713) (38,383)
Distributions from net realized gain on
investments - -
------- -------
Total dividends and distributions (18,713) (38,383)
------- -------
CAPITAL SHARE TRANSACTIONS:
Class 1:
Proceeds from shares sold 12,660 39,469
Proceeds from shares issued on reinvestment
of dividends and distributions 18,713 38,383
Cost of shares repurchased (52,613) (96,167)
------- -------
Net Increase from Class 1 Transactions (21,240) (18,315)
------- -------
Class 2 4:
Proceeds from shares sold 665 -
------- -------
Net Increase from Class 2 Transactions 665 -
Net increase (decrease) in net ------- -------
assets resulting from capital share
transactions (20,575) (18,315)
------- -------
TOTAL INCREASE (DECREASE) IN NET ASSETS (37,270) (30,030)
NET ASSETS:
Beginning of year 512,251 542,281
------- -------
End of year $474,981 $512,251
======= =======
Undistributed Net Investment Income $8,302 $9,778
======= =======
SHARES OF BENEFICIAL INTEREST:
Class 1:
Shares sold 1,152,679 3,523,988
Shares issued on reinvestment of dividends
and distributions 1,725,890 3,478,224
Shares repurchased (4,810,244) (8,689,601)
------- -------
Net increase in shares outstanding (1,931,675) (1,687,389)
======= =======
Class 2 4:
Shares sold 61,206 -
Shares repurchased (13) -
------- -------
Net increase in shares outstanding 61,193 -
======= =======
Cash Management Fund
------- -------
Six months Year ended
ended November 30,
May 31, 1997/2/ 1996
- ---------------------------------- ------- -------
OPERATIONS:
Net investment income $6,165 $10,939
Net realized gain (loss) on investments - -
Net unrealized appreciation (depreciation)
on investments 5 -
------- -------
Net increase in net assets
resulting from operations 6,170 10,939
------- -------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income:
Class 1 (6,270) (10,336)
Distributions from net realized gain on
investments - -
------- -------
Total dividends and distributions (6,270) (10,336)
------- -------
CAPITAL SHARE TRANSACTIONS:
Class 1:
Proceeds from shares sold 149,954 269,588
Proceeds from shares issued on reinvestment
of dividends and distributions 6,270 10,336
Cost of shares repurchased (143,975) (233,296)
------- -------
Net Increase from Class 1 Transactions 12,249 46,628
------- -------
Class 2 4:
Proceeds from shares sold 703 -
------- -------
Net Increase from Class 2 Transactions 703 -
Net increase (decrease) in net ------- -------
assets resulting from capital share
transactions 12,952 46,628
------- -------
TOTAL INCREASE (DECREASE) IN NET ASSETS 12,852 47,231
NET ASSETS:
Beginning of year 240,348 193,117
------- -------
End of year $253,200 $240,348
======= =======
Undistributed Net Investment Income $2,984 $3,089
======= =======
SHARES OF BENEFICIAL INTEREST:
Class 1:
Shares sold 13,524,344 24,337,746
Shares issued on reinvestment of dividends
and distributions 568,955 937,903
Shares repurchased (12,988,999) (21,049,530)
------- -------
Net increase in shares outstanding 1,104,300 4,226,119
======= =======
Class 2 4:
Shares sold 63,327 -
Shares repurchased (6) -
------- -------
Net increase in shares outstanding 63,321 -
======= =======
(dollars in thousands)
Total
------- -------
Six months Year ended
ended November 30,
May 31, 1997/2/ 1996
- ---------------------------------- ------- -------
OPERATIONS:
Net investment income $178,397 $308,518
Net realized gain (loss) on investments 823,717 813,730
Net unrealized appreciation (depreciation)
on investments 304,441 840,603
------- -------
Net increase in net assets
resulting from operations 1,306,555 1,962,851
------- -------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income:
Class 1 (154,273) (308,870)
Distributions from net realized gain on
investments (809,403) (485,925)
------- -------
Total dividends and distributions (963,676) (794,795)
------- -------
CAPITAL SHARE TRANSACTIONS:
Class 1:
Proceeds from shares sold 757,616 2,065,173
Proceeds from shares issued on reinvestment
of dividends and distributions 963,676 794,795
Cost of shares repurchased (620,823) (867,583)
------- -------
Net Increase from Class 1 Transactions 1,100,469 1,992,385
------- -------
Class 2 4:
Proceeds from shares sold 19,029 -
------- -------
Net Increase from Class 2 Transactions 19,029 -
Net increase (decrease) in net ------- -------
assets resulting from capital share
transactions 1,119,498 1,992,385
------- -------
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,462,377 3,160,441
NET ASSETS:
Beginning of year 14,116,917 10,951,476
------- -------
End of year $15,579,294 $14,111,917
======= =======
Undistributed Net Investment Income $100,014 $75,890
======= =======
SHARES OF BENEFICIAL INTEREST:
Class 1:
Shares sold 43,435,433 109,491,723
Shares issued on reinvestment of dividends
and distributions 38,504,153 34,961,124
Shares repurchased (33,062,652) (50,493,726)
------- -------
Net increase in shares outstanding 48,876,934 93,959,121
======= =======
Class 2 4:
Shares sold 972,237 -
Shares repurchased (19) -
------- -------
Net increase in shares outstanding 972,218 -
======= =======
/1/ For the period April 30, 1997, commencement
of operations, through May 31, 1997.
/2/ Unaudited
/3/ For the period January 2, 1996, commencement
of operations, through November 30, 1996
4 Shares offered for sale commencing on
April 30, 1997.
5 Represents initial capitalization from sale
of 500,000 Class 1 shares of beneficial interest.
6 Represents initial capitalization from sale
of 100,000 Class 1 shares of beneficial interest
See Notes to Financial Statements
</TABLE>
Notes to Financial Statements (Unaudited)
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 nine different funds. The ninth fund, the Global Growth
Fund, commenced operations on April 30, 1997. Also on that date, the series
commenced dual-class operations. The assets of each fund are segregated, with
each fund accounted for separately. The funds' investment objectives are as
follows: Global Growth Fund - growth of capital by investing primarily
in common stocks or securities with common stock characteristics of issuers
domiciled around the world; Growth Fund - growth of capital by investing
primarily in common stocks or securities with common stock characteristics;
International Fund - long-term growth of capital by investing primarily in
securities of issuers domiciled outside the United States; Growth-Income Fund -
growth of capital and income by investing primarily in common stocks or other
securities which demonstrate the potential for appreciation and/or dividends;
Asset Allocation Fund - high total return (including income and capital gains)
consistent with long-term preservation of capital; Bond Fund - as high a level
of current income as is consistent with the preservation of capital by
investing primarily in fixed-income securities; High-Yield Bond Fund - high
current income and secondarily capital appreciation by investing primarily in
intermediate and long-term corporate obligations; U.S. Government/AAA-Rated
Securities Fund - 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; Cash Management Fund - high current yield while
preserving capital by investing in a diversified selection of high-quality
money market instruments.
Each fund in the series is authorized to offer multiple classes of shares.
Currently, each fund offers two classes of shares: Class 1 and Class 2. Class
1 shares are not subject to either an initial or contingent deferred sales
charge nor have they adopted a Plan of Distribution to cover any distribution
expenses. Class 2 shares are subject to certain fees pursuant to a Plan of
Distribution as described below. Both classes of shares have identical voting,
dividend, liquidation and other rights and shall have exclusive rights to vote
on matters affecting only individual classes. Income, expenses, and any
realized capital gains and losses not allocated to a particular class will be
allocated to each class on the basis of the net asset value of that class in
relation to net assets of the fund. Class-specific expenses will be allocated
to that particular class on a specific identification basis.
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. Securities denominated in non-U.S. currencies are
generally valued on the basis of bid quotations. Short-term securities with
original or remaining maturities in excess of 60 days, including forward
currency contracts, 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 by
the Board of Trustees or a committee thereof.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. In the event
the fund purchases securities on a delayed delivery or "when-issued" basis, it
will segregate with its custodian liquid assets in an amount sufficient to meet
its payment obligations in these transactions. 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 and premiums 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, including forward
currency contracts, 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 effects of changes in foreign currency exchange
rates on investment securities are included with the net realized and
unrealized gain or loss on investment securities.
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 $1,109,000, of
which $99,000 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. During the six months ended May 31, 1997, net capital gains realized
on securities transactions, on a tax basis, were $145,224,000, $1,159,000, and
$5,189,000 for the International Fund, the Bond Fund, and the High-Yield Bond
Fund, respectively. During the six months ended May 31, 1997, net gains
(losses) related to non-U.S. currency transactions of ($196,000), $20,000, and
$10,000 were treated as ordinary income for federal income tax purposes for the
International Fund, the Bond Fund, and the High-Yield Bond Fund, respectively.
During the six months ended May 31, 1997, the High-Yield Bond Fund
utilized a capital loss carryforward of $5,189,000 to offset, for tax purposes,
capital gains realized during the year up to such amount. The High-Yield Bond
Fund and the U.S. Government/AAA-Rated Securities Fund had available at May 31,
1997 capital loss carryforwards totaling $485,000 and $19,486,000 respectively,
which may be used to offset capital gains realized during subsequent years
through November 30, 2003 and 2004, respectively. 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,
excluding forward currency contracts, at May 31, 1997 were as follows:
<TABLE>
<S> <C> <C> <C> <C> <C>
(dollars in
thousands)
Global Growth- Asset
Growth Growth Interna- Income Allocation
Fund Fund tional Fund Fund Fund
Unrealized
appreciation $706 $1,061,429 $599,843 $1,484,241 $220,671
Unrealized
depreciation 269 157,489 60,290 48,825 8,901
Net unrealized
appreciation
(depreciation) 437 903,940 539,553 1,435,416 211,770
Cost of portfolio
securities 27,753 3,207,454 2,271,478 4,417,833 1,058,193
(dollars in
thousands)
High-Yield U.S. Government/ Cash
Bond Bond AAA-Rated Management
Fund Fund Securities Fund Fund Total
Unrealized
appreciation $1,436 $31,548 $3,168 $5 $3,403,047
Unrealized
depreciation 858 8,088 6,343 - 291,063
Net unrealized
appreciation
(depreciation) 578 23,460 (3,175) 5 3,111,984
Cost of portfolio
securities 100,181 680,487 488,083 250,366 12,501,828
</TABLE>
3. The fees for management services were paid pursuant to an Investment
Advisory and Service Agreement with Capital Research and Management Company
(CRMC), with which certain officers and Trustees of the series are affiliated.
The agreement provides for monthly fees, accrued daily, based on the following
annual rates: Global Growth Fund - 0.69% of average net assets; Growth Fund -
0.50% of the first $600 million of average net assets; 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; 0.37% of such assets in
excess of $2.0 billion but not exceeding $3.2 billion; and 0.35% of such assets
in excess of $3.2 billion; International Fund - 0.90% of the first $60 million
of average net assets; 0.78% of such assets in excess of $60 million but not
exceeding $600 million; 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 $2.0 billion; and 0.465% of such assets in excess of $2.0 billion;
Growth-Income Fund - 0.50% of the first $600 million of average net assets;
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;
0.32% of such assets in excess of $2.5 billion but not exceeding $4.0 billion;
and 0.285% of such assets in excess of $4.0 billion; Asset Allocation Fund -
0.50% of the first $600 million of average net assets; 0.42% of such assets in
excess of $600 million but not exceeding $1.2 billion; and 0.36% of such assets
in excess of $1.2 billion; Bond Fund - 0.60% of the first $30 million of
average net assets; and 0.50% of such assets in excess of $30 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.
Trustees 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 May 31,1997,
aggregate amounts deferred and earnings thereon were $217,000.
Pursuant to a Plan of Distribution, each fund is authorized to pay 0.25% of
the average daily net assets of Class 2 shares in connection with certain
distribution services and related activities. During the period ended May 31,
1997, Plan expenses for the series aggregated $1,000.
4.
<TABLE>
<S> <C> <C> <C> <C> <C>
(dollars in
thousands)
Global Growth- Asset
Growth Growth Interna- Income Allocation
Fund Fund tional Fund Fund Fund
As of May 31, 1997:
Accumulated
undistributed
net realized
gain (loss) on
investments - $370,439 $146,174 $268,555 $38,582
Paid-in capital $27,183 2,812,184 2,096,750 4,097,959 1,005,841
For the six months
ended May 31,1997:
Purchases of
investment
securities /1/ 23,185 /2/ 945,624 687,131 1,371,325 282,092
Sales of invest-
ment securities /1/ - /2/ 1,085,797 599,589 1,190,368 206,962
(dollars in
thousands)
High-Yield U.S. Government/ Cash
Bond Bond AAA-Rated Management
Fund Fund Securities Fund Fund Total
As of May 31, 1997:
Accumulated
undistributed
net realized
gain (loss) on
investments $1,207 ($485) ($19,486) - $804,986
Paid-in capital 98,903 683,980 489,340 $250,211 11,562,351
For the six months
ended May 31,1997:
Purchases of
investment
securities /1/ 53,177 242,432 140,952 - 3,745,920
Sales of invest-
ment securities /1/ 29,590 194,431 182,024 - 3,488,763
/1/ Excludes short-term securities
/2/ For the period April 30, 1997, commencement of operations, through May 31, 1997.
</TABLE>
5. Dividend and interest income for the International Fund is recorded net of
non-U.S. taxes paid. For the six months ended May 31, 1997, such non-U.S. taxes
were $3,911,000. Net realized currency losses on dividends, interest,
withholding taxes reclaimable, and sales of non-U.S. bonds and notes for the
six months ended May 31, 1997 were $209,000, $1,000, and $5,000 for the
International Fund, the Bond Fund, and the High-Yield Bond Fund, respectively.
The funds may enter into forward currency contracts, which represent an
agreement to exchange currencies of different countries at a specified future
date at a specified rate. The funds enter into these contracts to reduce their
exposure to fluctuations in foreign exchange rates arising from investments
denominated in non-U.S. currencies. The funds' use of forward currency
contracts involves market risk in excess of the amount recognized in the
statement of assets and liabilities. The contracts are recorded in the
statement of assets and liabilities at their net unrealized value. The face or
contract amount in U.S. dollars reflects the total exposure the funds have in
that particular contract. Losses may arise upon entering these contracts from
the potential inability of counterparties to meet the terms of their contracts
and from possible movements in non-U.S. exchange rates and securities values
underlying these instruments. At May 31, 1997, the Bond Fund and the
High-Yield Bond Fund had outstanding forward currency contracts to sell
non-U.S. currencies as follows:
<TABLE>
<S> <C> <C> <C> <C> <C>
Non-U.S. Currency Sale Contracts U.S.
Contract Valuation
Amount at 5/31/97 Unrealized
Fund Non-U.S. U.S. Amount Appreciation
--------------- ------------------------------ --------------- ---------------
Deutsche Marks
expiring 07/08/97 Bond Fund DM 275,000 $ 177,000 $ 161,000 $ 16,000
expiring 11/28/97 High-Yield Bond Fund 1,900,000 1,138,000 1,128,000 10,000
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
PER-SHARE
DATA AND
RATIOS Total
Net income Distri-
realized & (loss) Dividends butions
Net asset Net unrealized from from net from
value, invest- gain (loss) invest- invest- net Total
Period beginning ment on invest- ment ment realized distri-
Ended/1/ of period income ments operations income gains butions
- --------- --------- --------- --------- --------- --------- --------- ---------
Global Growth Fund /3/
Class 1
1997 $10.00 $.03 /4/ $.39 /4/ $.42 - - -
Class 2 /7/
1997 10.00 .19 /4/ .23 /4/ .42 - - -
Ratio
Net asset Net assets, Ratio of of net Average
value, end of expenses income to commissions Portfolio
Period end of Total period (in to average average paid per turnover
Ended/1/ period return millions) net assets net assets share/2/ rate
- --------- --------- --------- --------- --------- --------- --------- ---------
Global Growth Fund /3/
Class 1
1997 $10.42 4.20% /5/ $26 .06% /5/ /6/ .23% /5/ /6/ 4.41 c -
Class 2 /7/
1997 10.42 4.20 /5/ 2 .09 /5/ /6/ .25 /5/ /6/ 4.41 -
Total
Net income Distri-
realized & (loss) Dividends butions
Net asset Net unrealized from from net from
value, invest- gain (loss) invest- invest- net Total
Period beginning ment on invest- ment ment realized distri-
Ended/1/ of period income ments operations income gains butions
- --------- --------- --------- --------- --------- --------- --------- ---------
Growth Fund
Class 1
1992 $24.18 $.29 $4.25 $4.54 $(.31) /8/ - $ (.31)
1993 28.41 .25 4.13 4.38 (.24) $ (.21) (.45)
1994 32.34 .24 .69 .93 (.24) (1.09) (1.33)
1995 31.94 .33 10.63 10.96 (.29) (.80) (1.09)
1996 41.81 .24 5.17 5.41 (.29) (3.40) (3.69)
1997 43.53 .16 /4/ 3.07 /4/ 3.23 (.11) (3.02) (3.13)
Class 2 /7/
1997 40.59 .05 /4/ 2.99 /4/ 3.04 - - -
Ratio
Net asset Net assets, Ratio of of net Average
value, end of expenses income to commissions Portfolio
Period end of Total period (in to average average paid per turnover
Ended/1/ period return millions) net assets net assets share/2/ rate
- --------- --------- --------- --------- --------- --------- --------- ---------
Growth Fund
Class 1
1992 $28.41 18.90% $1,212 .53% 1.15% 6.89 c 11.15%
1993 32.34 15.59 1,737 .50 .86 6.43 20.40
1994 31.94 2.92 2,027 .49 .78 6.09 29.58
1995 41.81 35.35 3,154 .47 .92 5.91 35.47
1996 43.53 14.32 3,860 .44 .61 5.42 30.88
1997 43.63 8.08 /5/ 4,094 .21 /5/ .39 /5/ 4.86 27.63 /5/
Class 2 /7/
1997 43.63 7.49 /5/ 2 .06 /5/ /6/ .07 /5/ /6/ 4.86 27.63 /5/
Total
Net income Distri-
realized & (loss) Dividends butions
Net asset Net unrealized from from net from
value, invest- gain (loss) invest- invest- net Total
Period beginning ment on invest- ment ment realized distri-
Ended/1/ of period income ments operations income gains butions
- --------- --------- --------- --------- --------- --------- --------- ---------
International Fund
Class 1
1992 $10.02 $.19 $ (.09) $.10 $ (.21) $(.02) $ (.23)
1993 9.89 .17 2.50 2.67 (.16) - (.16)
1994 12.40 .25 1.04 1.29 (.20) (.22) (.42)
1995 13.27 .34 1.02 1.36 (.33) (.41) (.74)
1996 13.89 .28 1.96 2.24 (.31) (.29) (.60)
1997 15.53 .16 /4/ 1.92 /4/ 2.08 (.09) (.62) (.71)
Class 2 /7/
1997 15.86 .16 /4/ .88 /4/ 1.04 - - -
Ratio
Net asset Net assets, Ratio of of net Average
value, end of expenses income to commissions Portfolio
Period end of Total period (in to average average paid per turnover
Ended/1/ period return millions) net assets net assets share/2/ rate
- --------- --------- --------- --------- --------- --------- --------- ---------
International Fund
Class 1
1992 $9.89 0.90% $360 1.00% 2.11% 1.22 c 16.73%
1993 12.40 27.20 840 .96 1.75 .23 17.70
1994 13.27 10.48 1,405 .80 2.03 1.01 19.66
1995 13.89 10.78 1,703 .75 2.64 .16 24.66
1996 15.53 16.66 2,370 .69 1.99 1.24 32.08
1997 16.90 14.03 /5/ 2,799 .33 /5/ 1.02 /5/ .26 25.45 /5/
Class 2 /7/
1997 16.90 6.56 /5/ 3 .09 /5/ /6/ .18 /5/ /6/ .26 25.45 /5/
Total
Net income Distri-
realized & (loss) Dividends butions
Net asset Net unrealized from from net from
value, invest- gain (loss) invest- invest- net Total
Period beginning ment on invest- ment ment realized distri-
Ended/1/ of period income ments operations income gains butions
- --------- --------- --------- --------- --------- --------- --------- ---------
Growth Income Fund
Class 1
1992 $21.72 $.65 $2.74 $3.39 $ (.67) $(.27) $ (.94)
1993 24.17 .63 2.12 2.75 (.63) (.28) (.91)
1994 26.01 .68 .14 .82 (.65) (.88) (1.53)
1995 25.30 .73 7.20 7.93 (.73) (1.03) (1.76)
1996 31.47 .71 5.55 6.26 (.74) (1.26) (2.00)
1997 35.73 .36 /4/ 2.90 /4/ 3.26 (.34) (2.55) (2.89)
Class 2 /7/
1997 34.10 .14 /4/ 1.85 /4/ 1.99 - - -
Ratio
Net asset Net assets, Ratio of of net Average
value, end of expenses income to commissions Portfolio
Period end of Total period (in to average average paid per turnover
Ended/1/ period return millions) net assets net assets share/2/ rate
- --------- --------- --------- --------- --------- --------- --------- ---------
Growth Income Fund
Class 1
1992 $24.17 15.90% $1,704 .52% 3.01% 7.46 c 13.60%
1993 26.01 11.63 2,436 .49 2.66 7.02 24.93
1994 25.30 3.21 2,740 .47 2.72 6.39 29.26
1995 31.47 33.14 3,953 .44 2.70 6.21 26.91
1996 35.73 21.02 5,249 .41 2.26 5.75 31.27
1997 36.10 9.95 /5/ 5,825 .19 /5/ 1.06 /5/ 4.89 25.38 /5/
Class 2 /7/
1997 36.09 5.84 /5/ 7 .06 /5/ /6/ .27 /5/ /6/ 4.89 25.38 /5/
Total
Net income Distri-
realized & (loss) Dividends butions
Net asset Net unrealized from from net from
value, invest- gain (loss) invest- invest- net Total
Period beginning ment on invest- ment ment realized distri-
Ended/1/ of period income ments operations income gains butions
- --------- --------- --------- --------- --------- --------- --------- ---------
Asset Allocation Fund
Class 1
1992 $10.59 $.48 $.94 $1.42 $ (.49) $(.05) $ (.54)
1993 11.47 .51 .67 1.18 (.49) (.15) (.64)
1994 12.01 .51 (.57) (.06) (.52) (.18) (.70)
1995 11.25 .50 2.69 3.19 (.50) (.17) (.67)
1996 13.77 .53 1.89 2.42 (.53) (.48) (1.01)
1997 15.18 .27 /4/ .79 /4/ 1.06 (.26) (.97) (1.23)
Class 2 /7/
1997 14.43 .06 /4/ .51 /4/ .57 - - -
Ratio
Net asset Net assets, Ratio of of net Average
value, end of expenses income to commissions Portfolio
Period end of Total period (in to average average paid per turnover
Ended/1/ period return millions) net assets net assets share/2/ rate
- --------- --------- --------- --------- --------- --------- --------- ---------
Asset Allocation Fund
Class 1
1992 $11.47 13.69% $359 .57% 4.73% 7.12 c 19.74%
1993 12.01 10.59 578 .55 4.66 6.85 19.01
1994 11.25 (.54) 637 .53 4.55 6.38 36.13
1995 13.77 29.45 870 .52 4.11 6.27 39.89
1996 15.18 18.65 1,141 .49 3.88 5.60 50.62
1997 15.01 7.62 /5/ 1,267 .24 /5/ 1.90 /5/ 4.93 20.24 /5/
Class 2 /7/
1997 15.00 3.95 /5/ 1 .07 /5/ /6/ .35 /5/ /6/ 4.93 20.24 /5/
Total
Net income Distri-
realized & (loss) Dividends butions
Net asset Net unrealized from from net from
value, invest- gain (loss) invest- invest- net Total
Period beginning ment on invest- ment ment realized distri-
Ended/1/ of period income ments operations income gains butions
- --------- --------- --------- --------- --------- --------- --------- ---------
Bond Fund /9/
Class 1
1996 $10.00 $.40 $.16 $.56 $ (.25) - $ (.25)
1997 10.31 .32 /4/ (.03) /4/ .29 (.30) - (.30)
Class 2 /7/A22
1997 10.11 .05 /4/ .14 /4/ .19 - - -
Ratio
Net asset Net assets, Ratio of of net Average
value, end of expenses income to commissions Portfolio
Period end of Total period (in to average average paid per turnover
Ended/1/ period return millions) net assets net assets share/2/ rate
- --------- --------- --------- --------- --------- --------- --------- ---------
Bond Fund /9/
Class 1 $10.31 5.74% /4/ $77 .52 /4/ 6.18 /4/ - 32.83% /4/
1996 10.30 2.90 /5/ 101 .28 /5/ 3.37 /5/ - 40.62 /5/
1997
Class 2 /7/A22 10.30 1.88 /5/ 1 .08 /5/ /6/ .60 /5/ /6/ - 40.62 /5/
1997
Total
Net income Distri-
realized & (loss) Dividends butions
Net asset Net unrealized from from net from
value, invest- gain (loss) invest- invest- net Total
Period beginning ment on invest- ment ment realized distri-
Ended/1/ of period income ments operations income gains butions
- --------- --------- --------- --------- --------- --------- --------- ---------
High-Yield Bond Fund
Class 1
1992 $13.53 $1.10 $.62 $1.72 $ (1.08) - $ (1.08)
1993 14.17 1.09 1.20 2.29 (1.10) $(.19) (1.29)
1994 15.17 1.27 (2.07) (.80) (1.23) (.25) (1.48)
1995 12.89 1.32 1.10 2.42 (1.32) - (1.32)
1996 13.99 1.28 .54 1.82 (1.30) - (1.30)
1997 14.51 .65 /4/ .16 /4/ .81 (.63) - (.63)
Class 2 /7/
1997 14.28 .15 /4/ .25 /4/ .40 - - -
Ratio
Net asset Net assets, Ratio of of net Average
value, end of expenses income to commissions Portfolio
Period end of Total period (in to average average paid per turnover
Ended/1/ period return millions) net assets net assets share/2/ rate
- --------- --------- --------- --------- --------- --------- --------- ---------
High-Yield Bond Fund
Class 1
1992 $14.17 13.14% $197 .59% 8.88% - 47.44%
1993 15.17 17.09 379 .56 8.18 - 34.05
1994 12.89 (5.71) 390 .54 9.37 - 38.46
1995 13.99 19.81 534 .54 10.12 - 31.73
1996 14.51 13.75 662 .53 9.27 - 44.81
1997 14.69 5.78 /5/ 722 .26 /5/ 4.48 /5/ - 30.91 /5/
Class 2 /7/
1997 14.68 2.80 /5/ 1 .07 /5/ /6/ .78 /5/ /6/ - 30.91 /5/
Total
Net income Distri-
realized & (loss) Dividends butions
Net asset Net unrealized from from net from
value, invest- gain (loss) invest- invest- net Total
Period beginning ment on invest- ment ment realized distri-
Ended/1/ of period income ments operations income gains butions
- --------- --------- --------- --------- --------- --------- --------- ---------
U.S. Government/AAA-Rated Securities Fund
Class 1
1992 $11.22 $.75 $.32 $1.07 $ (.76) - $ (.76)
1993 11.53 .74 .68 1.42 (.75) $(.05) (.80)
1994 12.15 .76 (1.30) (.54) (.74) (.07) (.81)
1995 10.80 .82 .71 1.53 (.81) - (.81)
1996 11.52 .83 (.24) .59 (.82) - (.82)
1997 11.29 .43 /4/ (.38) /4/ .05 (.42) - (.42)
Class 2 /7/
1997 10.83 .06 /4/ .03 /4/ .09 - - -
Ratio
Net asset Net assets, Ratio of of net Average
value, end of expenses income to commissions Portfolio
Period end of Total period (in to average average paid per turnover
Ended/1/ period return millions) net assets net assets share/2/ rate
- --------- --------- --------- --------- --------- --------- --------- ---------
U.S. Government/AAA-Rated Securities Fund
Class 1
1992 $11.53 9.83% $360 .57% 7.08% - 39.96%
1993 12.15 12.65 505 .55 6.42 - 21.69
1994 10.80 (4.58) 463 .54 6.69 - 45.21
1995 11.52 14.73 542 .54 7.37 - 30.11
1996 11.29 5.49 512 .53 7.33 - 30.45
1997 10.92 .51 /5/ 474 .26 /5/ 3.52 /5/ - 31.43 /5/
Class 2 /7/
1997 10.92 .83 /5/ 1 .07 /5/ /6/ .58 /5/ /6/ - 31.43 /5/
Total
Net income Distri-
realized & (loss) Dividends butions
Net asset Net unrealized from from net from
value, invest- gain (loss) invest- invest- net Total
Period beginning ment on invest- ment ment realized distri-
Ended/1/ of period income ments operations income gains butions
- --------- --------- --------- --------- --------- --------- --------- ---------
Cash Management Fund
Class 1
1992 $11.11 $.35 $.01 $.36 $ (.43) - $ (.43)
1993 11.04 .29 - .29 (.31) - (.31)
1994 11.02 .37 .02 .39 (.32) - (.32)
1995 11.09 .63 (.02) .61 (.59) - (.59)
1996 11.11 .54 .01 .55 (.54) - (.54)
1997 11.12 .28 /4/ - .28 (.28) - (.28)
Class 2 /7/
1997 11.07 .05 /4/ (.01) /4/ .04 - - -
Ratio
Net asset Net assets, Ratio of of net Average
value, end of expenses income to commissions Portfolio
Period end of Total period (in to average average paid per turnover
Ended/1/ period return millions) net assets net assets share/2/ rate
- --------- --------- --------- --------- --------- --------- --------- ---------
Cash Management Fund
Class 1
1992 $11.04 3.31% $197 .53% 3.24% - -
1993 11.02 2.67 206 .51 2.57 - -
1994 11.09 3.59 221 .49 3.60 - -
1995 11.11 5.65 193 .49 5.37 - -
1996 11.12 5.09 240 .47 4.94 - -
1997 11.12 2.56 /5/ 252 .24 /5/ 2.46 /5/ - -
Class 2 /7/
1997 11.11 .36 /5/ 1 .07 /5/ /6/ .50 /5/ /6/ - -
/1/ The periods ended 1992 through 1996 represent fiscal years ended November 30; the
period ended 1997 represents the six months ended May 31, 1997 (unaudited).
/2/ Brokerage commissions paid on portfolio transactions increase the cost of
securities purchased or reduce the proceeds of securities sold, and are not separately
reflected in the funds' statement of operations. Shares traded on a principal
basis (without commissions), such as most over-the-counter and fixed-income
transactions, are excluded. Generally, non-U.S. commissions are lower than U.S.
commissions when expressed as cents per share but higher when expressed as a
percentage of transactions because of the lower per-share prices of many
non-U.S. securities.
/3/ Commenced operations April 30, 1997.
/4/ Per share amounts based on relation to total income from investment operations.
/5/ Based on operations for the period shown and, accordingly, not representative of a
full year's operations.
/6/ Based on average daily net assets for the period.
/7/ Shares offered for commencing on April 30, 1997.
/8 / Amount includes net realized short-term gains treated as net investment income for
federal income tax purposes.
/9/ Commenced operations January 2, 1996.
</TABLE>
See Notes to Financial Statements
AMERICAN VARIABLE INSURANCE SERIES
BOARD OF TRUSTEES
CHARLES H. BLACK
Pacific Palisades, California
Private investor and consultant;
former Executive Vice President and Director,
KaiserSteel Corporation
H. FREDERICK CHRISTIE
Rolling Hills Estates, California
Private investor; former President and Chief Executive Officer, The Mission
Group; former President,Southern California Edison Company
JOE E. DAVIS
Encino, California
Private investor; former Chairman of the Board, Linear Corporation;
former President and Chief Executive Officer,
National Health Enterprises, Inc.
MARTIN FENTON, JR.
San Diego, California
Chairman of the Board,
Senior Resource Group, Inc.
(senior living centers management)
RICHARD H.M. HOLMES
Hillsborough, California
Retired; former Vice President,
Capital Research and Management Company
MARY MYERS KAUPPILA
Boston, Massachusetts
Founder and President,
Energy Investment, Inc.
KIRK P. PENDLETON
Southampton, Pennsylvania
Chairman of the Board and
Chief Executive Officer,
Cairnwood, Inc.
(venture capital investment)
JAMES F. ROTHENBERG
Los Angeles, California
President of the series
President and Director,
Capital Research and Management Company
THOMAS E. TERRY
Los Angeles, California
Chairman of the Board of the series
Consultant;
former Vice President and Secretary,
Capital Research and Management Company
OTHER OFFICERS
JAMES K. DUNTON
Los Angeles, California
Senior Vice President of the series
Senior Vice President and Director,
Capital Research and Management Company
ABNER D. GOLDSTINE
Los Angeles, California
Senior Vice President of the series
Senior Vice President and Director,
Capital Research and Management Company
MICHAEL J. DOWNER
Los Angeles, California
Vice President of the series
Senior Vice President - Fund Business Management Group,
Capital Research and Management Company
CLAUDIA P. HUNTINGTON
San Antonio, Texas
Vice President of the series
Senior Vice President,
Capital Research Company
STEVEN N. KEARSLEY
Brea, California
Vice President of the series
Vice President and Treasurer,
Capital Research and Management Company
ROBERT W. LOVELACE
Los Angeles, California
Vice President of the series
Executive Vice President and Director,
Capital Research Company
DINA N. PERRY
Washington, D.C.
Vice President of the series
Vice President,
Capital Research and Management Company
JOHN H. SMET
Los Angeles, California
Vice President of the series
Vice President,
Capital Research and Management Company
CHAD L. NORTON
Los Angeles, California
Secretary of the series
Vice President - Fund Business Management Group,
Capital Research and Management Company
ROBERT P. SIMMER
Norfolk, Virginia
Treasurer of the series
Vice President - Fund Business Management Group,
Capital Research and Management Company
SHERYL F. JOHNSON
Norfolk, Virginia
Assistant Treasurer of the series
Assistant Vice President - Fund Business Management Group,
Capital Research and Management Company
OFFICES OF THE SERIES AND OF
THE INVESTMENT ADVISER,
CAPITAL RESEARCH AND
MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92821-5804
CUSTODIAN OF ASSETS
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02105-1713
COUNSEL
Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street
Los Angeles, California 90071-2371
This report is for the information of American Variable Insurance Series
investors, but it may also be used as sales literature when preceded or
accompanied by the current prospectus for American Variable Insurance Series
and the prospectus for the applicable insurance contract, which give details
about charges, expenses, investment objectives and operating policies. If used
as sales material after September 30, 1997, this report must be accompanied by
an American Legacy III Statistical Update for the most recently completed
calendar quarter.
Printed on recycled paper
Litho in USA MED/FS/3441
[(c)]1997 American Funds Distributors, Inc.
