AMERICAN VARIABLE INSURANCE SERIES
ANNUAL REPORT
for the year ended November 30, 1996
[Cover: Four seasonal photos superimposed onto photo of grassy field]
FUND RESULTS AT A GLANCE
American Variable Insurance Series
TOTAL RETURNS
<TABLE>
<CAPTION>
at fiscal year-end at calendar year-end
(11/30/96) (12/31/96)
5-Year 10-Year 5-Year 10-Year
Average Average Average Average
Annual Annual Annual Annual
Compound Compound Compound Compound
1 Year Return Return 1 Year Return Return
<S> <C> <C> <C> <C> <C> <C> <C>
Page
6 Growth Fund +14.32% +16.96% +15.13% +13.36% +14.37% +15.03%
12 International Fund
(since 5/1/90) +16.66% +12.88% +10.15%* +17.53% +12.45% +10.27%*
19 Growth-Income Fund +21.02% +16.56% +13.06% +18.72% +14.33% +13.06%
25 Asset Allocation Fund
(since 8/1/89) +18.65% +13.95% +11.66%* +15.78% +12.38% +11.36%*
31 Bond Fund (since 1/2/96) + 5.74%* - - + 5.84%* - -
35 High-Yield Bond Fund +13.75% +11.23% +11.39% +13.21% +11.03% +11.41%
41 U.S. Government/AAA-Rated
Securities Fund + 5.49% + 7.40% + 7.37% + 3.11% + 6.37% + 7.28%
44 Cash Management Fund + 5.09% + 4.06% + 5.57% + 5.09% + 4.07% + 5.56%
</TABLE>
*FIGURE REFLECTS AVERAGE ANNUAL RETURN FOR THE LIFETIME
OF THE FUND, WHICH IS SHORTER THAN THE COMPLETE PERIOD.
BOND FUND FIGURE REFLECTS TOTAL RETURN.
This table shows the investment results for the funds in American Variable
Insurance Series. The variable annuity and life insurance contracts that use
the series' funds contain certain fees and expenses not reflected here.
Investment results as of November 30, 1996 are through the close of our most
recent fiscal year. Investment results at December 31, 1996 are as of the end
of the most recent calendar quarter.
THE FIGURES IN THIS REPORT REFLECT PAST 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: As sure as winter gives way to spring, financial goals change
over time. With eight fund options, American Variable Insurance Series offers
investors a lifetime of choices to help adapt to those changes.
DEAR INVESTORS:
WE ARE PLEASED TO REPORT that American Variable Insurance Series - which serves
as the underlying investment vehicle for the American Legacy variable annuities
and other insurance contracts - posted another year of solid gains. For fiscal
1996, representing the 12 months ended November 30, every fund in the series
recorded positive results.
Financial markets around the world continued to advance during the fiscal year,
as investors surveying the global landscape were encouraged by positive
economic growth, mild inflation and favorable interest rates. Stock and bond
prices were further bolstered by high cash flows into mutual funds, which by
September of 1996 had already exceeded the previous year's record inflow.
U.S. stocks showed particular strength as they continued their astonishing
march upward. On top of exuberant gains last year, equity returns over the
12-month fiscal period rose 27.9%, as measured by the unmanaged Standard &
Poor's 500 Composite Index. This year's climb was notable for its concentrated
intensity: Nearly two-thirds of that gain came in the final three months of the
fiscal year. On a cautionary note, we would add that this type of "froth" might
suggest the possibility of a correction in a market that has seen an
unprecedented 73 months without a decline of 10% or more. Meanwhile, returns on
bonds showed a more modest increase of 6.0%, as measured by the unmanaged
Salomon Brothers Broad Investment-Grade Index, reflecting uncertainty in the
first half of the fiscal year about the pace of economic growth in the United
States.
While we continuously monitor overall market levels, our primary focus is on
finding good values among individual securities, even in expensive markets.
Here are brief comments on the investment activities of each of the funds:
THE GROWTH FUND rose 14.3% for the 12 months ended November 30. A brief market
dip from May through July, caused in part by concerns about the direction of
interest rates, produced severe losses among many technology stocks held in the
fund. That said, several sizable investments in this area actually showed
significant price gains over the year. These included the fund's largest
holding, semiconductor giant Intel (+108.4%), and Oracle (+62.0%), a leading
developer of database software which, at 2.3% of net assets, was the fund's
fifth-largest holding. Results were also hampered somewhat by media and
entertainment stocks, which had a disappointing 1996. This sector has made
positive contributions to the fund in the past, and we believe it will return
to winning form. Other areas of strength for the fund included retailers and
leisure & tourism companies, many of which benefited from an increase in
consumer spending. At fiscal year-end, 90% of the fund's assets was invested in
151 companies, with the remaining 10% in cash and equivalents as a buying
reserve.
THE INTERNATIONAL FUND posted a gain of 16.7% for fiscal 1996, as optimism
about global economic conditions prevailed. As of November 30, every developed
market in which the fund was invested finished on the plus side, measured in
local currency. (Measured in U.S. dollars, only the Japanese market declined.)
In Europe - where more than half of the fund's assets are invested - monetary
measures taken by many governments began at last to have their desired effect
and most markets posted impressive double-digit gains. Elsewhere, Japan's slow
recovery was accompanied by an uncertain political environment and a steady
decline in the yen. Stock prices slid 4.4% in dollar terms; we used this
opportunity to add significantly to our holdings in that country. Although the
fund is still relatively underweighted in Japanese stocks, they now account for
9.1% of net assets, up from 5.2% a year ago. The fund's largest industry
concentration is in telecommunications stocks, many of which benefited from
consumer demand for increasingly sophisticated services. Several of these
companies accounted for the fund's largest price gains over the 12-month
period, including Telecom Italia and its parent company STET, which increased
72.9% and 56.5%, respectively; Telefonica de Espana, which rose 59.0%; and
Telecomunicacoes Brasileiras (Telebras), which increased 57.8%.
THE GROWTH-INCOME FUND increased 21.0% for the year. The fund, which emphasizes
established companies with the potential for rising dividends, was well served
by a market surge driven in large part by blue chip stocks. These gains,
combined with continued cash inflows, pushed the fund's net assets up to more
than $5 billion, from about $4 billion 12 months ago. There was broad strength
throughout the portfolio: Of 161 stocks held over the course of the year, 134
rose in price, 25 declined and two were unchanged. Several of the fund's
largest gainers were chemical companies that improved profits by expanding
product lines or tapping into new markets, such as Monsanto (+73.6%) and
Praxair (+67.0%). In other areas, rising fuel costs led to price gains for
energy companies, the fund's largest industry exposure. The fund also benefited
from its sizable investments in health care, banking and insurance companies,
many of which experienced substantial increases during the year. As a
cautionary measure, we added to our cash position in this last four-month
market rise. As of November 30, about 85% was invested in stocks, with 15% in
cash and other assets.
THE ASSET ALLOCATION FUND posted a gain of 18.7% for the year. The fund has the
flexibility to participate in market cycles in all three major asset classes,
with holdings in carefully selected, high-quality common stocks, bonds and
money market instruments. On November 30, 62% of net assets was in stocks, 24%
in bonds and 14% in cash and equivalents. The equity portion, which is similar
to a conservative growth and income fund, is concentrated on typically stable
industries, such as health care and financial services. Efforts to streamline
operations in these areas have translated into improved profits for many
companies, and a number of the fund's largest investments were among the top
gainers. These included pharmaceutical concerns Warner Lambert (+60.2%) and
Pfizer (+54.5%), Citicorp (+54.4%) and NationsBank (+45.2%). Together, these
four investments account for more than 6% of net assets. On the fixed-income
side, declining long-term interest rates in the second half of the year boosted
bond prices and contributed to the fund's positive result for the full fiscal
period. The fund has shown remarkable growth over its seven-year lifetime: Net
assets passed the $1 billion mark this year.
THE BOND FUND increased 5.7% since inception at the start of 1996. Our newest
fund began operations in an environment of rising interest rates and declining
bond prices. In the second half of the fiscal year, however, bond prices rose
as a moderate economic growth rate in the U.S. helped convince the Federal
Reserve Board to leave short-term interest rates untouched. The fund has the
flexibility to invest in a wide spectrum of fixed-income securities, and we
spent our first year uncovering attractive investments in a number of markets.
As of November 30, about half of the portfolio was held in investment-grade
securities, with 25% in lower rated bonds (those rated Ba and BB and below by
Moody's Investors Service and Standard & Poor's respectively). While the
majority of assets was concentrated in the U.S., we also took small positions
in non-U.S. markets that we believe can offer opportunities for higher returns.
At fiscal year-end, the fund had 7% invested in bonds from 10 countries outside
the United States. In keeping with its quality orientation, the fund had 33%
invested in U.S. Treasury securities and federal agency mortgage-backed
securities. The fund also maintained a sizable cash position, nearly
one-quarter of net assets, to take advantage of buying opportunities. Net
assets now exceed $75 million.
THE HIGH-YIELD BOND FUND rose 13.7%. The stock market's continued strength
created a favorable environment for lower rated, higher risk bonds. High-yield
securities provided substantially higher returns than their investment-grade
counterparts over the year. In many cases, rising equity prices and increased
merger activity provided highly leveraged companies with an infusion of
capital. Their stronger financial positions and healthy growth in turn boosted
the credit quality and value of their bonds. In a year which set a record for
the number of new high-yield issues, the task of finding promising, well-priced
companies with good long-term prospects became even more challenging. The
fund's analysts take a research-intensive approach and continue to uncover
attractive investment opportunities around the world among such diverse
industries as telecommunications, forest products, broadcasting and energy. At
fiscal year-end, the fund held about 65% of assets in U.S. corporate bonds, 14%
in non-U.S. securities and 7% in U.S. Treasuries. About 14% was held in the
form of cash and other assets.
THE U.S. GOVERNMENT/AAA-RATED SECURITIES FUND rose 5.5% for the 12 months
through November 30, recovering ground lost early in the year. Bond prices,
which had dipped sharply amid speculation that the Federal Reserve would take
steps to temper economic growth, rose again as interest rate hikes failed to
materialize. (Bond prices and interest rates typically move in opposite
directions.) Despite periods of dramatic fluctuations, yields on 10-year
Treasury bonds ended the fiscal year only slightly higher than where they
began. The fund invests in top-rated fixed-income obligations, the majority of
which are backed by the full faith and credit of the U.S. government for the
timely payment of principal and interest. During the year, we increased our
investments in mortgage-backed securities to 18%, which provided a yield
advantage and good total return. The fund also held about 48% in Treasury
issues, with the balance in a combination of corporate and government agency
issues and short-term instruments.
THE CASH MANAGEMENT FUND had a 5.1% return for the 12 months ended November 30.
The fiscal year began with a slight decline in short-term interest rates as the
Fed lowered the federal funds rate - the rate that banks charge each other for
overnight loans - in December and January. Rates began inching upward in
February, reflecting concern that the economy might be overheating. The fund
maintains a high-quality orientation by concentrating its assets in top-grade
commercial paper. All its money market securities carry the highest rating from
Standard & Poor's or Moody's. The fund offers an alternative to investors who
wish to temporarily reduce their stock or bond investments, or can be used as a
base for making regular investments into other funds.
Investors in American Variable Insurance Series have a wide range of
professionally managed options to help them reach their long-term goals. To
that end, we remain dedicated to finding the best values that financial markets
have to offer.
We look forward to reporting to you again in six months.
Cordially,
/s/ Thomas E. Terry
Thomas E. Terry
Chairman of the Board
American Variable Insurance Series
/s/ James F. Rothenberg
James F. Rothenberg
President
American Variable Insurance Series
International Fund
January 15, 1997
<TABLE>
<CAPTION>
INTERNATIONAL FUND
Where the Fund's Assets Are Invested
(as of 11/30/96)
Percent of Net Assets
<S> <C>
EUROPE
United Kingdom 11.4%
Sweden 8.2
France 5.6
Germany 5.5
Netherlands 4.0
Italy 4.0
Spain 3.7
Switzerland 3.4
Norway 2.4
Finland 1.7
Other Europe 1.6
51.5
ASIA/PACIFIC
Japan 9.1
Australia 7.4
Hong Kong 4.3
South Korea 1.5
New Zealand 1.4
Other Asia/Pacific 1.6
25.3
THE AMERICAS
Canada 5.5
Brazil 3.3
Mexico 3.2
Other Americas .6
12.6
OTHER COUNTRIES 2.1
Cash & Equivalents 8.5
Total 100.0%
</TABLE>
HOW A $10,000 INVESTMENT HAS GROWN
These charts show the growth of a $10,000 investment over the past 10 years -
or lifetime, if shorter than 10 years - of each of the investment portfolios in
American Variable Insurance Series (with the exception of the Cash Management
Fund, which is managed to provide preservation of principal). The tables below
the charts show the average annual compound returns on an investment over
various periods. The funds in American Variable Insurance Series have no sales
charges. However, the variable annuity and life insurance contracts that use
the series' funds contain certain fees and expenses not reflected here.
Investments primarily in stocks
GROWTH FUND
[chart]
<TABLE>
<CAPTION>
Consumer
Year ended S&P 500 Growth Price
November 30 Index Fund Index
<S> <C> <C> <C>
11/86 $10,000 $10,000 $10,000
11/87 9,524 9,566 10,453
11/88 11,744 11,703 10,897
11/89 15,368 16,252 11,404
11/90 14,817 14,972 12,120
11/91 17,839 18,700 12,482
11/92 21,145 22,234 12,862
11/93 23,277 25,700 13,207
11/94 23,512 26,450 13,560
11/95 32,221 35,801 13,913
11/96 41,207 40,929 14,366
</TABLE>
[end chart]
<TABLE>
<CAPTION>
ENDED ENDED
11/30/96 12/31/96
<S> <C> <C>
One Year +14.32% +13.36%
Five Years +16.96 +14.37
10 Years +15.13 +15.03
Lifetime +15.90 +15.61
</TABLE>
Investments in both stocks and bonds
ASSET ALLOCATION FUND
[chart]
<TABLE>
<CAPTION>
Asset Salomon Consumer
Year ended S&P 500 Allocation Bros. BIG Price
November 30 Index Fund Index /2/ Index
<S> <C> <C> <C> <C>
8/89 $10,000 $10,000 $10,000 $10,000
11/89 10,146 10,170 10,233 10,121
11/90 9,782 9,932 11,015 10,756
11/91 11,778 11,683 12,602 11,077
11/92 13,960 13,283 13,749 11,415
11/93 15,368 14,690 15,261 11,720
11/94 15,523 14,611 14,797 12,034
11/95 21,273 18,915 17,432 12,347
11/96 27,214 22,443 18,475 12,749
</TABLE>
[end chart]
<TABLE>
<CAPTION>
ENDED ENDED
11/30/96 12/31/96
<S> <C> <C>
One Year +18.65% +15.78%
Five Years +13.95 +12.38
Lifetime +11.66 +11.36
(since 8/1/89)
</TABLE>
Investments primarily in bonds
BOND FUND
scale adjusted for shorter time period
[chart]
<TABLE>
<CAPTION>
Salomon Consumer
End of Bond Bros. BIG Price
month Fund Index /2/ Index
<S> <C> <C> <C>
1/2/96 $10,000 $10,000 $10,000
1/31/96 10,080 10,068 10,059
2/29/96 9,850 9,897 10,091
3/31/96 9,790 9,825 10,143
4/30/96 9,760 9,753 10,182
5/31/96 9,750 9,748 10,202
6/30/96 9,860 9,874 10,209
7/31/96 9,880 9,900 10,228
8/31/96 9,961 9,886 10,248
9/30/96 10,164 10,058 10,280
10/31/96 10,318 10,284 10,313
11/30/96 10,574 10,454 10,332
</TABLE>
[end chart]
<TABLE>
<CAPTION>
ENDED ENDED
11/30/96 12/31/96
<S> <C> <C>
Lifetime +5.74% +5.84%
(since 1/2/96)
</TABLE>
Investments primarily in stocks
INTERNATIONAL FUND
[chart]
<TABLE>
<CAPTION>
Consumer
Year ended International MSCI EAFE Price
November 30 Fund Index /1/ Index
<S> <C> <C> <C>
5/90 $10,000 $10,000 $10,000
11/90 9,492 9,483 10,380
11/91 10,314 10,310 10,691
11/92 10,407 9,508 11,016
11/93 13,238 11,852 11,311
11/94 14,626 13,646 11,614
11/95 16,202 14,724 11,916
11/96 18,902 16,504 12,304
</TABLE>
[end chart]
<TABLE>
<CAPTION>
ENDED ENDED
11/30/96 12/31/96
<S> <C> <C>
One Year +16.66% +17.53%
Five Years +12.88 +12.45
Lifetime +10.15 +10.27
(since 5/1/90)
</TABLE>
Investments primarliy in stocks
GROWTH-INCOME FUND
[chart]
<TABLE>
<CAPTION>
Growth- Consumer
Year ended S&P 500 Income Price
November 30 Index Fund Index
<S> <C> <C> <C>
11/86 $10,000 $10,000 $10,000
11/87 9,524 9,141 10,453
11/88 11,744 11,164 10,897
11/89 15,368 14,214 11,404
11/90 14,817 13,465 12,120
11/91 17,839 15,866 12,482
11/92 21,145 18,388 12,862
11/93 23,277 20,527 13,207
11/94 23,512 21,185 13,560
11/95 32,221 28,206 13,913
11/96 41,207 34,135 14,366
</TABLE>
[end chart]
<TABLE>
<CAPTION>
ENDED ENDED
11/30/96 12/31/96
<S> <C> <C>
One Year +21.02% +18.72%
Five Years +16.56 +14.33
10 Years +13.06 +13.06
Lifetime +15.49 +15.29
(since 2/8/84)
</TABLE>
Investments primarily in bonds
HIGH-YIELD BOND FUND
[chart]
<TABLE>
<CAPTION>
Salomon Bros. Salomon Consumer
Year ended High-Yield High-Yield Bros. BIG Price
November 30 Index Bond Fund Index/2/ Index
<S> <C> <C> <C> <C>
11/86 $10,000 $10,000 $10,000 $10,000
11/87 10,365 10,296 10,170 10,453
11/88 12,118 12,042 11,111 10,897
11/89 12,093 13,349 12,691 11,404
11/90 10,880 13,681 13,661 12,120
11/91 15,638 17,269 15,629 12,482
11/92 18,637 19,538 17,051 12,862
11/93 22,468 22,877 18,927 13,207
11/94 21,520 21,571 18,351 13,560
11/95 27,544 25,844 21,619 13,913
11/96 30,299 29,398 22,912 14,366
</TABLE>
[end chart]
<TABLE>
<CAPTION>
ENDED ENDED
11/30/96 12/31/96
<S> <C> <C>
One Year +13.75% +13.21%
Five Years +11.23 +11.03
10 Years +11.39 +11.41
Lifetime +13.05 +13.07
(since 2/8/84)
</TABLE>
Investments primarily in bonds
U.S. GOVERNMENT/AAA-RATED SECURITIES FUND
[chart]
<TABLE>
<CAPTION>
Salomon Bros. U.S. Govt./
Treasury/ AAA-Rated Consumer
Year ended Govt.-sponsored Securities Price
November 30 Mortgage Index Fund Index
<S> <C> <C> <C>
11/86 $10,000 $10,000 $10,000
11/87 10,173 9,683 10,453
11/88 11,069 10,602 10,897
11/89 12,649 11,749 11,404
11/90 13,668 12,584 12,120
11/91 15,571 14,250 12,482
11/92 16,945 15,651 12,862
11/93 18,718 17,631 13,207
11/94 18,182 16,824 13,560
11/95 21,297 19,303 13,913
11/96 22,558 20,363 14,366
</TABLE>
[end chart]
<TABLE>
<CAPTION>
ENDED ENDED
11/30/96 12/31/96
<S> <C> <C>
One Year +5.49% +3.11%
Five Years +7.40 +6.37
10 Years +7.37 +7.28
Lifetime +8.44 +8.27
(since 12/1/85)
</TABLE>
/1/ Morgan Stanley Capital International EAFE(R) (Europe, Australia, Far East)
Index
/2/ Salomon Brothers Bond Investment-Grade (BIG) Bond Index
The indexes are unmanaged and do not reflect sales charges, commissions or
expenses.
<TABLE>
<S> <C> <C> <C>
GROWTH FUND
Investments primarily in stocks
Investment Portfolio November 30, 1996
- --------------------------------------------------------------------
STOCKS 89.58%
CASH &
EQUIVALENTS 10.42%
- --------------------------------------------------------------------
Percent
Of Net
Largest Individual Stocks Assets
- --------------------------------------------------------------------------------
Intel 3.78%
Walt Disney 3.39
America Online 2.90
Time Warner 2.66
Oracle 2.33
Viacom 2.15
Solectron 1.53
Adaptec 1.48
Xilinx 1.42
LSI Logic 1.42
Market Percent
Number of Value of Net
Stocks (common and preferred) Shares (000) Assets
- -------------------------------------------- ---------------------------------
Electronic Components- 18.07%
Intel Corp. 1,150,400 $145,957 3.78%
Adaptec, Inc./1/ 1,536,000 57,216 1.48
Xilinx,Inc./1/ 1,250,000 54,844 1.42
LSI Logic Corp./1/ 1,820,000 54,828 1.42
Analog Devices, Inc./1/ 1,700,000 54,613 1.42
Texas Instruments Inc. 570,000 36,337 .94
Linear Technology Corp. 715,000 33,694 .87
National Semiconductor Corp./1/ 1,265,000 30,993 .80
Maxim Integrated Products, Inc./1/ 600,000 27,825 .72
SCI Systems, Inc./1/ 500,263 26,389 .68
Bay Networks, Inc./1/ 937,000 25,065 .65
EMC Corp./1/ 600,000 19,350 .50
Altera Corp./1/ 250,000 18,875 .49
Quantum Corp./1/ 700,000 18,725 .49
ADC Telecommunications, Inc./1/ 500,000 18,125 .47
Newbridge Networks Corp. (Canada)/1/ 460,000 13,685 .35
Microchip Technology Inc./1/ 248,400 11,861 .31
Flextronics International Ltd. (Incorporated In Singapore)/1/ 300,000 10,500 .27
Western Digital Corp./1/ 156,300 8,401 .22
Seagate Technology/1/ 200,000 7,900 .20
Actel Corp./1/ 300,000 6,600 .17
Park Electrochemical Corp. 250,000 5,687 .15
Rogers Corp./1/ 190,800 5,247 .14
Motorola, Inc. 42,000 2,326 .06
ANTEC Corp./1/ 150,000 1,463 .04
Advanced Micro Devices, Inc./1/ 50,000 1,212 .03
Business & Public Services- 14.64%
America Online, Inc./1/ 3,170,000 112,139 2.90
United HealthCare Corp. 1,265,000 54,553 1.41
Oxford Health Plans, Inc./1/ 804,000 46,632 1.21
Columbia/HCA Healthcare Corp. 997,500 39,900 1.03
Electronic Data Systems Corp.(formerly General Motors Corp.,
Class E) 741,700 35,880 .93
Manpower Inc. 1,000,200 32,632 .85
Federal Express Corp./1/ 700,000 30,975 .80
WMX Technologies, Inc. 800,000 28,800 .75
CUC International Inc./1/ 1,061,250 27,990 .73
ADT Ltd./1/ 1,255,000 25,727 .67
PacifiCare Health Systems, Inc., Class B/1/ 265,000 21,995 .57
Avery Dennison Corp. 310,000 21,894 .57
Ecolab Inc. 429,000 16,677 .43
FHP International Corp./1/ 388,100 13,923 .36
USA Waste Services, Inc./1/ 400,000 12,900 .33
Loewen Group Inc. (Canada) 250,000 10,094 .26
Shared Medical Systems Corp. 200,000 9,950 .26
Ceridian Corp./1/ 150,000 7,219 .19
Apria Healthcare Group Inc./1/ 400,000 7,200 .19
Value Health, Inc./1/ 350,000 6,344 .16
Air & Water Technologies Corp., Class A/1/ 285,000 1,763 .04
Broadcasting & Publishing- 10.54%
Time Warner Inc. 2,519,325 102,662 2.66
Viacom Inc., Class B/1/ 2,200,000 83,050 2.15
News Corp. Ltd. (American Depositary Receipts) (Australia) 1,270,000 26,987
News Corp. Ltd. preferred shares (American .98
Depositary Receipts) 635,000 10,954
Tele-Communications, Inc., Series A, Liberty Media Group/1/ 1,459,050 36,476 .94
BHC Communications, Inc., Class A/1/ 286,189 29,227 .76
Tele-Communications, Inc., Series A, TCI Group/1/ 2,052,500 27,709 .72
New World Communications Group Inc., Class A/1/ 850,000 20,931 .54
U S WEST Media Group/1/ 1,000,000 19,125 .50
Gaylord Entertainment Co., Class A 820,500 17,538 .45
United International Holdings, Inc., Class A/1/ 685,000 9,333 .24
Comcast Corp., Class A, special stock 500,000 8,375 .22
Cablevision Systems Corp., Class A/1/ 240,000 7,230 .19
Jones Intercable, Inc., Class A/1/ 370,000 3,978 .10
Adelphia Communications Corp., Class A/1/ 350,000 2,319 .06
Marvel Entertainment Group, Inc./1/ 363,800 1,000 .03
Data Processing & Reproduction- 10.44%
Oracle Corp./1/ 1,837,500 90,038 2.33
Solectron Corp./1/ 1,009,000 59,027 1.53
Silicon Graphics, Inc./1/ 1,920,000 38,160 .99
Adobe Systems Inc. 920,000 36,340 .94
Digital Equipment Corp./1/ 750,000 27,563 .71
3Com Corp./1/ 350,000 26,294 .68
Sybase, Inc./1/ 1,300,000 22,913 .59
Dell Computer Corp,/1/ 200,000 20,325 .53
Intuit Inc./1/ 554,200 19,813 .51
Autodesk, Inc. 600,000 16,800 .44
Sequent Computer Systems, Inc./1/ 850,000 14,344 .37
Structural Dynamics Research Corp./1/ 475,000 9,203 .24
Mentor Graphics Corp./1/ 800,000 7,800 .20
Tandem Computers Inc./1/ 440,000 5,995 .16
Danka Business Systems PLC (American Depository Receipts)
(United Kingdom) 125,000 5,250 .14
CompuServe Corp./1/ 150,000 1,575 .04
Data General Corp./1/ 100,000 1,462 .04
Leisure & Tourism- 6.45%
Walt Disney Co. 1,775,000 130,906 3.39
King World Productions, Inc./1/ 650,000 24,781 .64
Host Marriott Corp./1/ 1,550,000 23,637 .61
Marriott International, Inc. 400,000 22,300 .58
Carnival Corp., Class A 650,000 20,556 .53
Harrah's Entertainment, Inc./1/ 950,000 16,863 .44
Trump Hotels & Casino Resorts, Inc./1/ 650,000 9,181 .24
Luby's Cafeterias, Inc. 40,000 880 .02
Merchandising- 4.04%
Circuit City Stores, Inc. 1,250,000 41,719 1.08
Barnes & Noble, Inc./1/ 825,000 25,781 .67
Wal-Mart Stores, Inc. 950,000 24,225 .63
Consolidated Stores Corp./1/ 572,900 21,197 .55
Home Shopping Network, Inc./1/ 1,700,000 19,125 .50
Staples, Inc./1/ 711,562 14,053 .36
Spiegel, Inc., Class A/1/ 726,600 6,267 .16
Limited Inc. 150,000 2,700 .07
Amway Asia Pacific Ltd. (Multinational) 24,600 987 .02
Health & Personal Care- 3.35%
Guidant Corp. 700,000 37,012 .96
Omnicare, Inc. 879,602 26,828 .69
Genetics Institute, Inc./1/ 260,000 17,680 .46
Forest Laboratories, Inc./1/ 380,000 14,725 .38
Kimberly-Clark Corp. 100,000 9,775 .25
Nellcor Puritan Bennett Inc./1/ 300,000 6,225 .16
SEQUUS Pharmaceuticals, Inc./1/ 380,808 5,474
SEQUUS Pharmaceuticals, Inc., warrants, expire 1998/1//2/ 40,416 263 .15
Johnson & Johnson 97,600 5,185 .13
Paragon Trade Brands, Inc./1/ 105,000 2,914 .08
Alpha-Beta Technology, Inc./1/ 200,000 1,850 .05
Pharmacia & Upjohn, Inc. 36,250 1,400 .04
Banking- 2.41%
Banc One Corp. 447,700 21,322 .55
Bank of Boston Corp. 290,840 20,322 .53
Commerce Bancshares, Inc. 428,596 19,287 .50
Norwest Corp. 250,000 11,688 .30
Charter One Financial, Inc. 262,500 11,419 .30
Northern Trust Corp. 125,000 9,078 .23
Chemicals- 2.19%
Valspar Corp. 690,000 39,589 1.03
Great Lakes Chemical Corp. 325,000 17,428 .45
Mycogen Corp./1/ 800,000 13,400 .35
Air Products and Chemicals, Inc. 125,000 8,688 .22
Engelhard Corp. 284,400 5,546 .14
Insurance- 2.19%
EXEL Ltd. (Incorporated in Bermuda) 810,000 30,679 .79
Transatlantic Holdings, Inc. 270,000 21,499 .56
Trenwick Group Inc. 266,800 13,006 .34
CNA Financial Corp./1/ 80,000 8,600 .22
Everest Reinsurance Holdings, Inc. 200,000 5,625 .15
NAC Re Corp. 135,000 4,927 .13
Electrical & Electronics- 1.90%
Telefonaktiebolaget LM Ericsson, Class B (American
Depositary Receipts) (Sweden) 1,184,500 36,571 .95
Nokia Corp., Class A (American Depositary Receipts) (Finland) 360,000 20,205 .52
General Instrument Corp./1/ 661,700 14,640 .38
Lucent Technologies Inc. 35,000 1,794 .05
Telecommunications- 1.79%
MCI Communications Corp. 1,420,000 43,310 1.12
AirTouch Communications/1/ 850,000 21,781 .56
United States Cellular Corp./1/ 144,000 4,032 .11
Recreation & Other Consumer Products- 1.78%
Mattel, Inc. 1,596,288 49,285 1.28
Duracell International Inc. 150,000 9,994 .26
Hasbro, Inc. 185,000 7,608 .20
Electronic Arts/1/ 54,400 1,748 .04
Transportation: Airlines- 1.73%
Southwest Airlines Co. 1,750,300 43,320 1.12
AMR Corp./1/ 195,000 17,794 .46
Delta Air Lines, Inc. 75,000 5,644 .15
Energy Equipment- 1.40%
Schlumberger Ltd. (Netherlands Antilles) 325,000 33,800 .87
Reading & Bates Corp./1/ 700,000 20,300 .53
Miscellaneous Materials & Commodities- 1.15%
Pioneer Hi-Bred International, Inc. 635,000 44,291 1.15
Electronic Instruments- 1.10%
Applied Materials, Inc./1/ 650,000 24,781 .64
KLA Instruments Corp./1/ 500,000 17,750 .46
Energy Sources- 0.78%
Murphy Oil Corp. 298,000 15,198 .39
Enterprise Oil PLC (United Kingdom) 1,500,000 15,003 .39
Beverages & Tobacco - 0.65%
Philip Morris Companies Inc. 185,000 19,078 .49
PepsiCo, Inc. 200,000 5,975 .16
Financial Services- 0.64%
Federal National Mortgage Assn. 600,000 24,750 .64
Multi-Industry- 0.32%
U.S. Industries, Inc./1/ 420,000 12,390 .32
Utilities: Electric & Gas- 0.30%
Columbia Gas System, Inc. 178,200 11,516 .30
Construction & Housing- 0.08%
Stone & Webster, Inc. 90,000 2,936 .08
Miscellaneous
Other stocks in initial period of acquisition 63,280 1.64
- -
TOTAL STOCKS (cost: $2,472,575,000 ) 3,458,067 89.58
---------------------
Principal
Amount
Short-Term Securities (000)
- -----------------------------------------------------------------------------------------------------
Corporate Short-Term Notes- 8.17%
National Rural Utilities Cooperative Finance Corp. $54,500 54,124 1.40
5.30%-5.31% due 12/13/96-1/28/97
Walt Disney Co. 5.26%-5.28% due 1/7-1/8/97 37,100 36,890 .96
Lucent Technologies Inc. 5.24%-5.28% due 12/19/96-1/17/97 35,400 35,215 .91
Weyerhaeuser Co. 5.28%-5.29% due 1/22-1/29/97 32,300 32,033 .83
Warner-Lambert Co. 5.28% due 3/4/97 30,000 29,585 .77
General Electric Capital Corp. 5.25%-5.34% due 12/18/96-1/29/97 18,700 18,602 .48
Kellogg Co. 5.23% due 12/9/96 18,200 18,179 .47
American Express Credit Corp. 5.32% due 1/6/97 18,200 18,100 .47
J.C. Penney Funding Corp. 5.24%-5.25% due 12/17-12/20/96 17,500 17,455 .45
Beneficial Corp. 5.25%-5.30% due 12/2/96-1/16/97 17,150 17,079 .44
H.J. Heinz Co. 5.23%-5.28% due 12/10-12/18/96 16,300 16,260 .42
IBM Credit Corp. 5.30% due 1/23/97 15,900 15,773 .41
Sara Lee Corp. 5.26% due 12/24/96 6,300 6,278 .16
Certificates of Deposit- 1.04%
Morgan Guaranty Trust Co. of New York 5.29% due 12/12/96 40,000 40,000 1.04
Federal Agency Discount Notes- 0.80%
Federal Home Loan Mortgage Corp. 5.215% 12/11-12/16/96 24,200 24,151 .63
Federal National Mortgage Assn. 5.00%-5.45% 12/10/96 6,665 6,656 .17
---------------------
TOTAL SHORT-TERM SECURITIES (cost: $386,387,000) 386,380 10.01
---------------------
3,844,447 99.59
TOTAL INVESTMENT SECURITIES (cost: $2,858,962,000)
Excess of cash and receivables over payables 15,902 .41
---------------------
NET ASSETS $3,860,349 100.00%
=====================
/1/ Non-income-producing securities.
/2/ Valued under procedures established by the Board of Trustees.
See Notes to Financial Statements
- --------------------------------------------------------------------
Stocks appearing in the portfolio
since May 31, 1996
- --------------------------------------------------------------------
3Com
Adaptec
Advanced Micro Devices
Altera
Amway Asia Pacific
Bank of Boston
Columbia Gas System
CompuServe
Danka Business Systems
Enterprise Oil
Everest Reinsurance Holdings
KLA Instruments
Limited
Mycogen
Norwest
Quantum
Shared Medical Systems
Solectron
Western Digital
Woolworth
- --------------------------------------------------------------------
Stocks eliminated from the portfolio
since May 31, 1996
- --------------------------------------------------------------------
Bausch & Lomb
BayBanks
Centennial Cellular
Cerner
Circus Circus Enterprises
Cirrus Logic
Compuware
Coram Healthcare
Electronic Arts
Fruit of the Loom
Greyhound Lines
H&R Block
Host Marriott Services
Huntington Bancshares
Infinity Broadcasting
Informix
International Business Machines
LIN Television
Loctite
Mercantile Bancorporation
Mercury General
Michaels Stores
Mirage Resorts
Mohawk Industries
New York Times
Nintendo
Noble Affiliates
Nucor
Phillips-Van Heusen
Pitney Bowes
Rayonier
Revlon
Southern Pacific Rail
Tambrands
Telephone and Data Systems
TIG Holdings
Toys "R" Us
Turner Broadcasting System
</TABLE>
<TABLE>
<S> <C> <C> <C>
INTERNATIONAL FUND
Investments primarily in stocks
Investment Portfolio, November 30, 1996
EUROPE 51.53%
ASIA/PACIFIC 25.24%
THE AMERICAS 12.61%
OTHER 2.14%
CASH AND EQUIVALENTS 8.48%
Largest Individual Equity Holdings
Astra 2.27%
Orkla 2.12
Telecomunicacoes Brasileiras 1.95
Australia and New Zealand Banking Group 1.72
Telefonica de Espana 1.70
Mannesmann 1.67
Volvo 1.47
Coca-Cola Amatil 1.39
ASEA/BBC Brown Boveri 1.39
United News & Media 1.35
Market Percent
Number of Value of Net
Stocks (common and preferred) Shares (000) Assets
- --------------------------------------------------------------------- -------------------------------------
TELECOMMUNICATIONS - 11.53%
Telecomunicacoes Brasileiras SA, preferred nominative
(American Depositary Receipts) (Brazil) 609,722 $46,186 1.95%
Telefonica de Espana, SA (Spain) 1,360,000 29,802
Telefonica de Espana, SA (American Depositary Receipts) 158,000 10,428 1.70
Telecom Italia Mobile SpA (Italy) 11,961,000 28,001
Telecom Italia Mobile SpA, savings shares 1,242,200 1,653 1.25
Telecom Corp. of New Zealand Ltd. (New Zealand)/1/ 4,956,800 26,119
Telecom Corp. of New Zealand Ltd. (American Depositary Receipts) 11,700 984 1.14
Telefonos de Mexico, SA de CV, Class L
(American Depositary Receipts) (Mexico) 882,000 26,791 1.13
Hong Kong Telecommunications Ltd. (Hong Kong) 14,333,663 24,843 1.05
STET - Societa Finanziaria Telefonica p.a. (Italy) 3,300,000 14,050
STET - Societa Finanziaria Telefonica p.a., nonconvertible .97
savings shares 2,900,000 8,921
Telefonica del Peru SA (American Depositary Receipts) (Peru) 766,700 14,855 .63
Telecom Italia SpA (Italy) 6,075,200 14,210
Telecom Italia SpA, savings shares 276,000 508 .62
Koninklijke PTT Nederland NV (Netherlands) 230,000 8,610 .36
Perusahaan Perseroan (Persero) PT Indonesian Satellite Corp. (Indonesia) 1,600,000 4,420
Perusahaan Perseroan (Persero) PT Indonesian Satellite Corp. .23
(American Depositary Receipts) 40,000 1,105
Korea Mobile Telecommunications Corp. (South Korea) 4,730 4,782 .20
Philippine Long Distance Telephone Co. (Global Depositary Receipts)
(Philippines) 80,000 4,400 .19
SmarTone Telecommunications Holdings Ltd. (Hong Kong -
Incorporated in Bermuda) 1,300,000 2,640 .11
BROADCASTING & PUBLISHING - 8.85%
United News & Media plc (United Kingdom) 2,816,000 32,023 1.35
Pathe (France) 73,000 17,055 .72
Television Broadcasts Ltd. (Hong Kong) 4,092,000 15,719 .66
NV Verenigd Bezit VNU (Netherlands) 770,000 15,707 .66
CANAL+ (France) 67,132 15,401 .65
News Corp. Ltd. (American Depositary Receipts) (Australia) 362,000 7,693
News Corp. Ltd., preferred shares (American Depositary Receipts) 181,000 3,122 .61
News Corp. Ltd., preferred shares (United Kingdom) 777,162 3,415
Wolters Kluwer NV (Netherlands) 108,118 14,129 .60
Seven Network Ltd. (Australia) 3,600,000 11,717 .49
Nippon Television Network Corp. (Japan) 39,000 11,716 .49
Independent Newspapers, PLC (Ireland) 2,007,020 10,293 .43
Mediaset SPA (Italy)/2/ 1,967,000 9,411 .40
Grupo Televisa, SA (American Depositary Receipts) (Mexico)/2/ 261,000 7,112 .30
SOFTBANK CORP. (Japan) 94,600 7,063 .30
TeleWest Communications PLC (American Depositary Receipts)
(United Kingdom)/2/ 351,000 7,020 .30
Pearson PLC (United Kingdom) 540,000 6,672 .28
Elsevier NV (Netherlands) 340,000 5,793 .24
Multicanal Participacoes SA (American Depositary Receipts) (Brazil)/2/ 346,000 4,887 .21
Sing Tao Holdings Ltd. (Hong Kong - Incorporated in Bermuda) 6,121,230 2,494 .11
AUDIOFINA (Luxembourg) 26,780 1,195 .05
BANKING - 6.45%
Australia and New Zealand Banking Group Ltd. (Australia) 6,196,216 40,688 1.72
Bank of Nova Scotia (Canada) 874,200 30,259 1.28
HSBC Holdings plc (United Kingdom) 1,000,000 20,824 .88
Banco de Santander, SA (Spain) 287,800 15,589 .66
Westpac Banking Corp. (Australia) 1,900,000 11,363 .48
ABN AMRO Holding NV (Netherlands) 125,000 8,091 .34
Allied Irish Banks, PLC (Ireland) 1,160,253 7,636 .32
Safra Republic Holdings SA (Luxembourg) 42,000 5,775 .24
Hanil Bank (South Korea) 804,980 5,323 .22
Korea First Bank (South Korea)/2/ 850,000 4,923 .21
Grupo Financiero Banamex Accival, SA de CV, Class B (Mexico)/2/ 1,130,397 2,231
Grupo Financiero Banamex Accival, SA de CV, Class L (Mexico)/2/ 92,127 167 .10
AUTOMOBILES - 6.02%
Volvo AB, Class B (Sweden) 1,580,000 34,737 1.47
Bayerische Motoren Werke AG (Germany) 48,000 31,126 1.31
Daimler-Benz AG (Germany)/2/ 320,000 20,907 .88
Toyota Motor Corp. (Japan) 680,000 18,577 .78
Suzuki Motor Corp. (Japan) 1,700,000 17,771 .75
Peugeot SA (France) 110,000 13,524 .57
Hyundai Motor Co. (Global Depositary Receipts) (South Korea) 628,440 6,128 .26
MULTI-INDUSTRY - 5.77%
Orkla AS, Class A (Norway) 755,000 50,297 2.12
Hutchison Whampoa Ltd. (Hong Kong) 3,500,000 27,048 1.14
Industriforvaltnings AB Kinnevik, Class B (Sweden) 305,000 8,547
Industriforvaltnings AB Kinnevik, Class A 101,600 2,756 .48
Benpres Holdings Corp. (Global Depositary Receipts ) (Philippines)/2/ 1,400,000 10,290 .43
Anglovaal LTD, Class N (South Africa) 270,000 8,229 .35
Lend Lease Corp. Ltd. (Australia) 443,522 8,228 .35
Incentive AB, Class A (Sweden) 120,000 8,013 .34
Groupe Bruxelles Lambert SA (Belgium) 57,000 7,230 .31
Brierley Investments Ltd. (New Zealand) 5,985,000 5,362
Brierley Investments Ltd., 9.00% convertible preferred 722,000 626 .25
HEALTH & PERSONAL CARE - 4.92%
AB Astra, Class A (Sweden) 1,120,000 53,755 2.27
Ciba-Geigy Ltd. (Switzerland) 24,540 30,378 1.28
Glaxo Wellcome plc (American Depositary Receipts)
(United Kingdom) 500,000 16,438 .69
Hoya Corp. (Japan) 300,000 11,253 .47
Banyu Pharmaceutical Co., Ltd. (Japan) 250,000 3,206 .14
SmithKline Beecham PLC (American Depositary Receipts) (United Kingdom) 25,000 1,722 .07
ELECTRICAL & ELECTRONICS - 4.66%
ASEA AB, Class A (Sweden) 130,000 15,056
ASEA AB, Class B 69,300 7,974 1.39
BBC Brown Boveri Ltd, Class A (Switzerland) 7,822 9,791
ELECTRICAL & ELECTRONICS (continued)
Telefonaktiebolaget LM Ericsson, Class B (Sweden) 804,600 24,825
Telefonaktiebolaget LM Ericsson, Class B, 4.25% convertible preferred 14,500 62 1.05
Siemens AG (Germany) 400,000 19,278 .81
Nokia Corp., Class A (Finland) 180,000 10,009
Nokia Corp., Class K 150,000 8,309 .77
Northern Telecom Ltd. (Canada) 230,000 15,123 .64
FOOD & HOUSEHOLD PRODUCTS - 4.15%
Nestle SA (Switzerland) 20,936 22,736 .96
Groupe Danone (France) 151,171 22,262 .94
Reckitt & Colman PLC (United Kingdom) 1,687,437 19,884 .84
Cadbury Schweppes PLC (United Kingdom) 2,277,584 19,583 .83
PT Indofood Sukses Makmur (Indonesia) 4,017,000 8,397 .35
Dalgety PLC (United Kingdom) 1,000,000 5,589 .23
BUSINESS & PUBLIC SERVICES - 3.03%
Reuters Holdings PLC (United Kingdom) 2,632,000 31,966 1.35
Rentokil Group PLC (United Kingdom) 2,610,000 19,041 .80
Brambles Industries Ltd. (Australia) 700,000 12,246 .52
NTT Data Communications Systems Corp. (Japan) 160 4,750 .20
Autopistas del Mare Nostrum, SA Concesionaria del Estado (Spain) 250,000 3,848 .16
MACHINERY & ENGINEERING - 2.95%
Mannesmann AG (Germany) 95,000 39,637 1.67
Valmet Corp. (Finland) 600,000 9,886 .42
Svedala Industri AB (Sweden) 530,000 9,085 .38
Kawasaki Heavy Industries, Ltd. (Japan) 1,400,000 6,420 .27
VA Technologie AG (Austria) 31,764 4,998 .21
BEVERAGES & TOBACCO - 2.94%
Coca-Cola Amatil Ltd. (Australia) 2,908,736 32,851 1.39
LVMH Moet Hennessy Louis Vuitton (France) 48,000 12,170 .51
Panamerican Beverages, Inc., Class A (Mexico) 190,000 8,883 .37
San Miguel Corp., Class B (Philippines) 1,870,000 7,470 .32
Swedish Match AB (Sweden) 1,580,000 5,181 .22
South African Breweries Ltd. (South Africa) 121,928 3,075 .13
UTILITIES: ELECTRIC & GAS - 2.85%
Hongkong Electric Holdings Ltd. (Hong Kong) 5,875,000 18,845 .80
Centrais Eletricas Brasileiras SA, Class B, preferred nominative
(American Depositary Receipts) (Brazil) 948,000 15,524 .65
Iberdrola, SA (Spain) 1,275,000 14,708 .62
Korea Electric Power Corp. (South Korea) 188,000 6,011
Korea Electric Power Corp. (American Depositary Receipts) 200,000 3,525 .40
Scottish Power PLC (United Kingdom) 661,200 3,757 .16
Consolidated Electric Power Asia Ltd. (Hong Kong -
Incorporated in Bermuda) 1,181,400 2,781 .12
CESP-Companhia Energetica de Sao Paulo, preferred nominative
(American Depositary Receipts) (Brazil)/2/ 204,096 1,939
CESP-Companhia Energetica de Sao Paulo, ordinary nominative 9,745,000 377 .10
ELECTRONIC COMPONENTS - 2.53%
Rohm Co., Ltd. (Japan) 330,000 20,292 .86
Murata Manufacturing Co., Ltd. (Japan) 420,000 14,352 .61
Kyocera Corp. (Japan) 199,000 12,796 .54
ASM Lithography Holding NV (Netherlands)/2/ 240,000 10,556 .44
Hirose Electric Co., Ltd. (Japan) 30,000 1,818 .08
METALS: NONFERROUS - 2.42%
Western Mining Corp. Holdings Ltd. (Australia) 2,390,451 15,172 .64
Inco Ltd. (Canada) 420,000 14,648 .62
Alcan Aluminium Ltd. (Canada) 310,000 10,928 .46
Noranda Inc. (Canada) 400,000 9,457 .40
Teck Corp., Class B (Canada) 300,000 7,093 .30
MERCHANDISING - 1.87%
Carrefour, SA (France) 20,000 12,355 .52
Tesco PLC (United Kingdom) 2,064,980 11,820 .50
Cifra, SA de CV, Class C (Mexico)/2/ 6,000,000 8,294 .35
Woolworths Ltd. (Australia) 2,533,042 6,307 .27
Amway Japan Ltd. (American Depositary Receipts) (Japan) 300,000 5,588 .23
INSURANCE - 1.82%
Royal Sun Alliance (United Kingdom) 2,978,861 22,458 .95
Internationale Nederlanden Groep NV, warrants, expire 2001
(Netherlands)/2/ 1,500,000 10,266 .43
Corporacion Mapfre, CIR, SA (Spain) 109,798 5,788 .25
National Mutual Asia Ltd. (Hong Kong) 5,000,000 4,559 .19
APPLIANCES & HOUSEHOLD DURABLES - 1.74%
Philips Electronics NV (Netherlands) 464,000 18,742 .79
Sony Corp. (Japan) 224,000 14,344 .61
AB Electrolux, Class B (Sweden) 137,900 8,088 .34
RECREATION & OTHER CONSUMER PRODUCTS - 1.54%
EMI Group PLC (United Kingdom) (formerly THORN EMI) 468,712 10,814 .45
Fuji Photo Film Co., Ltd. (Japan) 300,000 9,408 .40
Sony Music Entertainment Inc. (Japan) 215,000 8,839 .37
Square Co. Ltd. (Japan) 102,000 4,928 .21
PolyGram NV (New York Registered Shares) (Netherlands) 52,500 2,553 .11
BUILDING MATERIALS & COMPONENTS - 1.43%
Cemex, SA de CV, ordinary participation certificates (Mexico) 4,562,700 15,219
Cemex, SA de CV, Class A 2,321,450 7,773 .97
Holderbank Financiere Glaris Ltd. (Switzerland) 15,000 10,833 .46
CHEMICALS - 1.38%
AGA AB, Class B (Sweden) 800,000 12,222
AGA AB, Class A 220,000 3,410 .66
L'Air Liquide (France) 83,159 13,265 .56
Hoechst AG (Germany) 88,000 3,852 .16
MISCELLANEOUS MATERIALS & COMMODITIES - 1.31%
SGL Carbon AG (Germany) 89,600 11,014 .47
De Beers Consolidated Mines Ltd. (South Africa) 345,000 10,533 .44
English China Clays PLC (United Kingdom) 3,168,750 9,535 .40
ENERGY SOURCES - 1.01%
TOTAL, Class B (France) 156,372 12,508
TOTAL, Class B, preferred nominative (American Depositary Receipts) 75,000 3,028 .66
ENI SpA (American Depositary Receipts) (Italy) 140,000 7,350 .31
"Shell" Transport and Trading Co., PLC (United Kingdom) 10,000 998 .04
GOLD MINES - 0.53%
Ashanti Goldfields Co. Ltd. (Global Depositary Receipts) (Ghana) 500,600 7,196
Ashanti Goldfields Co. Ltd. (Australia) 386,088 5,454 .53
Normandy Mining Ltd. (Australia) 7,400,000 9,935 .42
AEROSPACE & MILITARY TECHNOLOGY - 0.60%
Bombardier Inc., Class B (Canada) 793,900 14,122 .60
INDUSTRIAL COMPONENTS - 0.52%
Compagnie Generale des Etablissements Michelin, Class B (France) 220,000 11,286
Compagnie Generale des Etablissements Michelin, .50
2.50% convertible preferred 10,000 574
Orbital Engine Corp. Ltd. (Australia)/2/ 611,040 452 .02
TRANSPORTATION: RAIL & ROAD - 0.50%
TNT Ltd. (Australia)/2/ 5,248,007 10,334
TNT Ltd., 8.00% convertible preferred 783,255 1,555 .50
LEISURE & TOURISM - 0.45%
Mandarin Oriental International Ltd. (Singapore) 6,911,218 10,574 .45
DATA PROCESSING & REPRODUCTION - 0.42%
Olivetti SpA (Italy)/2/ 28,300,000 10,066 .42
TRANSPORTATION: SHIPPING - 0.40%
Stolt-Nielsen SA, Class B (American Depositary Receipts)
(Multinational) 327,000 5,723 .24
Nippon Yusen KK (Japan) 790,000 3,782 .16
METALS: STEEL - 0.36%
Kawasaki Steel Corp. (Japan) 2,700,000 8,467 .36
FOREST PRODUCTS & PAPER - 0.33%
UPM-Kymmene Corp. (Finland)/2/ 385,000 7,712 .33
FINANCIAL SERVICES - 0.19%
ACOM CO., LTD. (Japan) 100,000 4,392 .19
REAL ESTATE - 0.15%
Mitsui Fudosan Co., Ltd. (Japan) 300,000 3,558 .15
MISCELLANEOUS
Other stocks in initial period of acquisition 118,420 5.00
------------------------
TOTAL STOCKS (cost: $1,785,725,000) 2,157,219 91.04
------------------------
Principal
Amount
Convertible Debentures (000)
- --------------------------------------------------------------------- ------------- -----------------------
ELECTRIC & GAS - 0.21%
Korea Electric Power Corp 5.00% 2001 KW5,000 4,925 .21
FOREST PRODUCTS & PAPER - 0.18%
UPM-Kymmene Corp. 8.25% 2043 FM17,000 4,183 .18
ELECTRONIC COMPONENTS - 0.08%
Acer Peripherals Inc. 1.25% 2006 $2000 2,010 .08
AUTOMOBILES - 0.01%
Daimler-Benz AG 4.125% 2003 DM463 348 .01
----------------------
TOTAL CONVERTIBLE DEBENTURES (cost: $11,595,000) 11,466 .48
----------------------
TOTAL EQUITY-TYPE SECURITIES (cost: $1,797,320,000) 2,168,685 91.52
----------------------
Principal Market Percent
Amount Value of Net
Short-Term Securities (000) (000) Assets
- --------------------------------------------------------------------- ------------- ----------------------
CORPORATE SHORT-TERM NOTES - 6.90%
Daimler-Benz North America Corp. 5.34%-5.42% due 12/11-12/17/96 $20,400 20,355 .86
Panasonic Finance Inc. 5.28% due 2/7/97/1/ 20,000 19,795 .84
Siemens Corp. 5.24%-5.31% due 12/5/96-1/31/97 19,800 19,685 .83
SmithKline Beecham Corp. 5.23%-5.25% due 12/2-12/3/96 19,600 19,594 .83
Toyota Motor Corp. 5.28%-5.29% due 12/3-12/4/96 16,200 16,192 .68
France Telecom 5.30% due 2/10-2/25/97 13,990 13,823 .58
Halifax Building Society 5.40% due 1/3/97 13,300 13,232 .56
Canada Bills 5.23%-5.27% due 12/9-12/12/96 13,200 13,181 .56
Sony Capital Corp. 5.31% due 1/13-1/15/97/1/ 8,100 8,046 .34
Abbey National North America 5.31% due 12/30/96 7,000 6,969 .29
Svenska Handelsbanken Inc. 5.43% due 12/19/96 5,000 4,986 .21
Dresdner U.S. Finance Inc. 5.30% due 1/6/97 4,000 3,978 .17
ABN AMRO North America Finance Inc. 5.50% due 12/3/96 3,600 3,598 .15
CERTIFICATES OF DEPOSIT - 0.21%
National Westminster Bank PLC 5.53% due 12/12/96 5,000 5,000 .21
-----------------------
TOTAL SHORT-TERM SECURITIES (cost: $168,440,000) 168,434 7.11
-----------------------
TOTAL INVESTMENT SECURITIES (cost: $1,965,760,000) 2,337,119 98.63
Excess of cash and receivables over payables 32,509 1.37
-----------------------
NET ASSETS 2,369,628 100.00%
======== ========
/1/ Purchased in a private placement transaction; resale to the public
may require registration or sale only to qualified institutional buyers.
/2/ Non-income-producing securities.
See Notes to Financial Statements
Equity-type securities appearing in the portfolio
since May 31, 1996
Acer Peripherals
Anglovaal
ASM Lithography Holding
Benpres Holdings
De Beers Consolidated Mines
Hirose Electric
Hoechst
Hong Kong Telecommunications
Hyundai Motor
Kawasaki Steel
Korea Electric Power
Korea Mobile Telecommunications
Mediaset
Mitsui Fudosan
Multicanal Participacoes
Normandy Mining
Pathe
SGL Carbon
"Shell" Transport and Trading
SmarTone Telecommunications Holdings
SmithKline Beecham
Sony Music Entertainment
Square
Svedala Industri
Telefonica del Peru
Equity-type securities eliminated from the portfolio
since May 31, 1996
Air New Zealand
Atlas Copco
Autopistas, Concesionaria Espanola
Banco Popular Espanol
Bank of Montreal
BARCO nv
British Airways
British Sky Broadcasting Group
Canadian National Railway
Chargeurs
China Light & Power
Compagnie de Saint-Gobain
Deutsche Bank
Engen
Hazlewood Foods
Irish Life
Ito-Yokado
ITOCHU
John Fairfax Holdings
Munchener Ruckversicherungs-Gesellschaft
NetCom Systems
News International
Nippon Telegraph and Telephone
Pohang Iron & Steel
Preussag
Rank Organisation
Securicor Group
Sidel
Sun Hung Kai Properties
Svenskt Stal
Swire Pacific
Tele Danmark
Telefonica de Sao Paulo
Uni-Charm
Vodafone Group
</TABLE>
<TABLE>
<S> <C> <C> <C>
GROWTH-INCOME FUND
Investments primarily in stocks
Investment Portfolio November 30, 1996
Stocks 84.96%
Cash & Equivalents 15.04%
Percent
of Net
Largest Individual Stocks Assets
AT&T 1.62%
Aluminum Co. of America 1.43
Walt Disney 1.39
Atlantic Richfield 1.31
Potash Corp. of Saskatchewan 1.19
Seagram 1.17
WMX Technologies 1.12
Schering-Plough 1.09
Bowater 1.07
Philip Morris 1.05
Number Market Percent
of Value of Net
Stocks (common and preferred) Shares (000) Assets
Energy Sources - 8.79%
Atlantic Richfield Co. 495,000 68,867 1.31%
Phillips Petroleum Co. 1,075,000 48,509 .93
Diamond Shamrock, Inc. 1,460,000 47,450 .90
Amoco Corp. 600,000 46,575 .89
Pennzoil Co. 750,000 42,188 .80
Valero Energy Corp. 1,275,000 38,250 .73
Unocal Corp. 835,000 34,026 .65
Exxon Corp. 300,000 28,387 .54
Texaco Inc. 175,000 17,347 .33
Royal Dutch Petroleum Co. (New York Registered Shares)
(Netherlands) 100,000 16,988 .32
Chevron Corp. 250,000 16,750 .32
TOTAL, Class B (American Depositary Receipts) (France) 409,455 16,532 .32
Union Pacific Resources Group, Inc. 419,281 12,526 .24
Ashland Inc. 200,000 9,600 .18
Societe Nationale Elf Aquitaine (American Depositary Receipts) .00
(France) 200,000 8,775 .17
Murphy Oil Corp. 163,200 8,323 .16
Health & Personal Care - 6.82%
Schering-Plough Corp. 800,000 57,000 1.09
Pfizer Inc 600,000 53,775 1.02
Merck & Co., Inc. 575,000 47,725 .91
American Home Products Corp. 660,000 42,405 .81
Warner-Lambert Co. 520,000 37,180 .71
Kimberly-Clark Corp. 370,000 36,167 .69
Abbott Laboratories 350,000 19,513 .37
Johnson & Johnson 300,000 15,938 .30
AB Astra, Class A (American Depositary Receipts) (Sweden) 300,000 14,475 .28
Eli Lilly and Co. 180,000 13,770 .26
Bristol-Myers Squibb Co. 100,000 11,375 .22
Tambrands Inc. 200,000 8,550 .16
Banking - 6.44%
Norwest Corp. 800,000 37,400 .71
First Union Corp. 365,000 27,877 .53
PNC Bank Corp. 700,000 27,650 .53
BankAmerica Corp. 260,000 26,780 .51
Banc One Corp. 551,375 26,259 .50
KeyCorp 450,000 23,569 .45
SunTrust Banks, Inc. 450,000 22,837 .43
Chase Manhattan Corp. 200,000 18,900 .36
National City Corp. 400,000 18,550 .35
Fleet Financial Group, Inc. 300,000 16,613 .32
First Chicago NBD Corp. 250,000 14,687 .28
Northern Trust Corp. 200,000 14,525 .28
Bank of New York Co., Inc. 400,000 14,350 .27
Wells Fargo & Co. 50,000 14,231 .27
CoreStates Financial Corp 250,000 13,469 .26
Citicorp 100,000 10,925 .21
J.P. Morgan & Co. Inc. 100,000 9,438 .18
Business & Public Services - 5.89%
WMX Technologies, Inc. 1,630,000 58,680 1.12
Browning-Ferris Industries, Inc. 1,450,000 38,969 .74
Cognizant Corp./1/ 960,000 33,120 .63
Electronic Data Systems Corp.
(formerly General Motors Corp., Class E) 649,500 31,419 .60
Alexander & Baldwin, Inc. 1,020,000 27,030 .51
Dun & Bradstreet Corp. 960,000 21,720 .41
Omnicom Group Inc. 340,000 17,340 .33
Federal Express Corp./1/ 380,000 16,815 .32
Manpower Inc. 450,000 14,681 .28
PacifiCare Health Systems, Inc., Class A/1/ 160,000 12,640 .24
Humana Inc./1/ 600,000 11,325 .22
Pitney Bowes Inc. 175,000 10,325 .20
Ecolab Inc. 250,000 9,719 .18
A.C. Nielsen Corp./1/ 320,000 5,560 .11
Broadcasting & Publishing - 4.11%
Viacom Inc., Class B/1/ 1,235,000 46,621 .89
Time Warner Inc. 942,000 38,386 .73
News Corp. Ltd. (American Depositary Receipts) (Australia) 1,100,000 23,375
News Corp. Ltd., preferred shares (American Depositary
Receipts) 400,000 6,900 .58
New York Times Co., Class A 645,000 24,107 .46
E.W. Scripps Co., Class A 630,000 21,892 .42
U S WEST Media Group/1/ 775,000 14,822 .28
Gannett Co., Inc. 170,000 13,345 .25
Comcast Corp., Class A, special stock 729,706 12,223 .23
Tele-Communications, Inc., Series A, Liberty
Media Group/1/ 393,750 9,844 .19
Chris-Craft Industries, Inc./1/ 101,821 4,162 .08
Telecommunications- 4.06%
AT&T Corp. 2,170,000 85,172 1.62
Ameritech Corp. 804,100 47,341 .90
U S WEST Communications, Inc. 850,000 26,563 .51
Telefonos de Mexico, SA de CV, Class L
(American Depositary Receipts) (Mexico) 575,000 17,466 .33
MCI Communications Corp. 539,800 16,464 .31
AirTouch Communications/1/ 449,621 11,522 .22
SBC Communications Inc. 100,000 5,262 .10
ALLTEL Corp. 108,200 3,449 .07
Merchandising - 3.74%
Circuit City Stores, Inc. 1,418,000 47,326 .90
Wal-Mart Stores, Inc. 1,650,000 42,075 .80
Limited Inc. 1,294,900 23,308 .45
Giant Food Inc., Class A 450,000 15,187 .29
Federated Department Stores/1/ 400,000 13,650 .26
J.C. Penney Co., Inc. 250,000 13,437 .26
Mercantile Stores Co., Inc. 250,000 12,563 .24
May Department Stores Co. 250,000 12,188 .23
Sears, Roebuck and Co. 200,000 9,950 .19
Gap, Inc. 200,000 6,425 .12
Chemicals - 3.71%
Mallinckrodt, Inc. 799,600 35,182 .67
Praxair, Inc. 600,000 29,175 .56
Monsanto Co. 673,000 26,752 .51
E.I. du Pont de Nemours and Co. 275,000 25,919 .49
Dow Chemical Co. 180,000 15,075 .29
Great Lakes Chemical Corp. 250,000 13,406 .26
Imperial Chemical Industries PLC (American
Depositary Receipts) (United Kingdom) 200,000 10,350 .20
Eastman Chemical Co. 175,000 9,997 .19
PPG Industries, Inc. 140,000 8,575 .16
Lyondell Petrochemical Co. 340,000 7,650 .15
Air Products and Chemicals, Inc. 100,000 6,950 .13
Engelhard Corp. 284,400 5,546 .10
Forest Products & Paper - 3.50%
Bowater Inc. 1,495,000 56,249 1.07
Union Camp Corp. 750,000 36,844 .70
Weyerhaeuser Co. 450,000 20,700 .40
Rayonier Inc. 525,000 20,344 .39
International Paper Co. 450,000 19,125 .36
Georgia-Pacific Corp. 150,000 10,912 .21
James River Corp. of Virginia 300,000 9,600 .18
Westvaco Corp. 187,500 5,297 .10
Louisiana-Pacific Corp. 200,000 4,525 .09
Insurance - 3.15%
SAFECO Corp. 1,078,800 44,905 .86
General Re Corp. 156,000 26,325 .50
Allstate Corp. 400,000 24,100 .46
American General Corp. 420,000 17,272 .33
Liberty Corp. 350,000 13,344 .25
Aetna Inc. 181,100 13,062 .25
AMBAC Inc. 129,900 8,898 .17
St. Paul Companies, Inc. 120,000 7,065 .13
Arthur J. Gallagher & Co. 188,100 5,784 .11
American International Group, Inc. 41,250 4,744 .09
Machinery & Engineering - 3.08%
Caterpillar Inc. 625,000 49,453 .94
Parker Hannifin Corp. 1,000,000 40,625 .77
Deere & Co. 716,600 31,978 .61
Ingersoll-Rand Co. 350,000 16,275 .31
Crompton & Knowles Corp. 700,000 12,863 .25
Greenfield Capital Trust, 6.00% convertible preferred/2/ 118,000 5,428 .10
Case Corp. 100,000 5,250 .10
Beverages & Tobacco - 2.84%
Seagram Co. Ltd. (Canada) 1,500,000 61,313 1.17
Philip Morris Companies Inc. 535,000 55,172 1.05
PepsiCo, Inc. 870,000 25,991 .49
Anheuser-Busch Companies, Inc. 160,000 6,780 .13
Food & Household Products - 2.71%
Unilever NV (New York Registered Shares) (Netherlands) 250,000 43,281 .82
McCormick & Co. 950,000 23,394 .45
Archer Daniels Midland Co. 850,000 18,700 .36
CPC International Inc. 200,000 16,650 .32
H.J. Heinz Co. 375,000 14,203 .27
General Mills, Inc. 210,200 13,348 .25
ConAgra, Inc. 240,000 12,750 .24
Aerospace & Military Technology - 2.15%
United Technologies Corp. 145,000 20,336 .39
General Motors Corp., Class H 370,000 20,165 .38
Boeing Co. 200,000 19,875 .38
Sundstrand Corp. 500,000 19,500 .37
Raytheon Co. 350,000 17,894 .34
Litton Industries, Inc./1/ 321,800 15,044 .29
Miscellaneous Materials & Commodities - 2.05%
Potash Corp. of Saskatchewan Inc. (Canada) 830,000 62,561 1.19
Crown Cork & Seal Co., Inc. 450,000 23,850 .46
Pioneer Hi-Bred International, Inc. 300,000 20,925 .40
Metals: Nonferrous - 1.78%
Aluminum Co. of America 1,180,000 75,078 1.43
Inco Ltd. (Canada) 280,000 9,765 .18
Alumax Inc./1/ 160,000 5,180 .10
Phelps Dodge Corp. 50,000 3,631 .07
Recreation & Other Consumer Products - 1.74%
Polaroid Corp. 950,000 40,494 .77
Eastman Kodak Co. 220,000 17,820 .34
Stanley Works 400,000 11,800 .22
American Greetings Corp., Class A 400,000 11,300 .22
Duracell International Inc. 150,000 9,994 .19
Financial Services - 1.74%
Household International, Inc. 300,000 28,425 .54
Beneficial Corp. 400,000 24,850 .47
Finova Group Inc. 180,000 11,880 .23
ADVANTA Corp., Class A 200,000 8,900 .17
American Express Co. 170,000 8,882 .17
Capital One Financial Corp. 150,000 5,419 .10
Associates First Capital Corp., Class A 60,000 2,903 .06
Transportation: Rail & Road - 1.68%
Conrail, Inc. 352,122 34,244 .65
Union Pacific Corp. 548,250 31,935 .61
Norfolk Southern Corp. 245,000 22,050 .42
Leisure & Tourism - 1.67%
Walt Disney Co. 989,932 73,007 1.39
Host Marriott Corp./1/ 600,000 9,150 .17
Marriott International, Inc. 100,000 5,575 .11
Data Processing & Reproduction - 1.50%
Silicon Graphics, Inc./1/ 1,300,000 25,837 .49
Xerox Corp. 510,000 25,054 .48
Adobe Systems Inc. 400,000 15,800 .30
International Business Machines Corp. 75,000 11,953 .23
Electronic Components - 1.41%
Texas Instruments Inc. 500,000 31,875 .61
Intel Corp. 200,000 25,375 .48
Linear Technology Corp. 350,000 16,494 .32
Multi-Industry - 1.36%
Tenneco Inc. 555,000 28,305 .54
Textron Inc. 170,000 16,214 .31
AlliedSignal Inc. 200,000 14,650 .28
Harsco Corp. 100,000 6,975 .13
Minnesota Mining and Manufacturing Co. 60,000 5,025 .10
Energy Equipment - 1.21%
Western Atlas Inc./1/ 296,800 20,924 .40
Schlumberger Ltd. (Netherlands Antilles) 170,000 17,680 .34
Baker Hughes Inc. 300,000 10,988 .21
Cooper Industries, Inc. 179,802 7,462 .14
Dresser Industries, Inc. 200,000 6,550 .12
Electrical & Electronics - 0.93%
Nokia Corp., Class A (American Depositary Receipts) (Finland)
(Finland) 600,000 33,675 .64
Lucent Technologies Inc. 297,136 15,228 .29
Telefonaktiebolaget LM Ericsson, Class B
(American Depositary Receipts) (Sweden) 350,000 10,806 .21
Industrial Components - 1.02%
Goodyear Tire & Rubber Co. 595,000 28,857 .55
Rockwell International Corp. 200,000 12,850 .24
Dana Corp. 231,800 7,215 .14
ITT Industries, Inc. 200,000 4,675 .09
Utilities: Electric & Gas - 0.95%
Union Electric Co. 500,000 19,875 .38
Consolidated Edison Co. of New York, Inc. 450,000 13,050 .25
Pacific Gas and Electric Co. 500,000 12,062 .23
Edison International 250,000 4,969 .09
Automobiles - 0.95%
General Motors Corp. 550,000 31,694 .61
Ford Motor Co., Class A 550,000 18,012 .34
Transportation: Airlines - 0.80%
AMR Corp./1/ 412,500 37,641 .72
Delta Air Lines, Inc. 60,000 4,515 .08
Appliances & Household Durables - 0.71%
Corning Inc. 670,000 27,135 .52
Philips Electronics NV (New York Registered Shares)
(Netherlands) 250,000 10,125 .19
Textiles & Apparel - 0.30%
VF Corp. 230,000 15,611 .30
Electronic Instruments
Imation Corp./1/ 6,000 182 .00
Miscellaneous
Other stocks in initial period of acquisition 103,038 1.96
- -
TOTAL STOCKS (cost: $3,221,455,000) 4,459,328 84.96
- -
Short-Term Securities
Corporate Short-Term Notes - 12.05%
H.J. Heinz Co. 5.23%-5.30% due 12/9/96-1/8/97 68,900 68,709 1.31
IBM Credit Corp. 5.30% due 1/15-1/30/97 56,200 55,750 1.06
Coca-Cola Co. 5.25% due 12/19-12/26/96 55,000 54,822 1.04
Lucent Technologies Inc. 5.24%-5.29% due 12/3/96-2/5/97 53,200 52,973 1.01
Walt Disney Co. 5.26%-5.28% due 1/7-2/14/97 50,200 49,779 .95
Southwestern Bell Capital Corp. 5.24%-5.30%
due 12/3/96-1/22/97/2/ 43,000 42,846 .82
General Electric Capital Corp. 5.25%-5.34%
due 12/18/96-1/29/97 42,800 42,486 .81
National Rural Utilities Cooperative Finance Corp. 5.28%-5.31%
due 1/6-2/18/97 41,200 40,839 .78
Weyerhaeuser Co. 5.28%-5.30% due 1/13-1/24/97 39,700 39,415 .75
Hershey Foods Corp. 5.24%-5.26% due 12/2/96-1/14/97 34,600 34,466 .66
Kellogg Co. 5.23%-5.30% due 12/4/96-1/2/97 27,000 26,949 .51
American Express Credit Corp. 5.32% due 1/6/97 26,800 26,653 .51
Monsanto Co. 5.25% due 12/13/96/2/ 25,200 25,152 .48
Sara Lee Corp. 5.28% due 12/27/96 20,000 19,921 .38
Beneficial Corp. 5.30% due 1/16/97 16,000 15,889 .30
Gannett Co., Inc. 5.25% due 12/5/96/2/ 13,600 13,590 .26
J.C. Penney Funding Corp. 5.24%-5.25% due 12/10-12/20/96 12,200 12,176 .23
United Parcel Service of America Inc. 5.40% due 12/11/96 10,000 9,984 .19
Federal Agency Discount Notes - 1.52%
Federal Home Loan Mortgage Corp. 5.215% due 12/11-12/16/96 79,715 79,560 1.52
Certificates of Deposit - 0.95%
Morgan Guaranty Trust Co. of New York 5.29% due 12/12/96 50,000 50,000 .95
- -
TOTAL SHORT-TERM SECURITIES (cost: $761,970,000) 761,959 14.52
- -
TOTAL INVESTMENT SECURITIES (cost: $3,983,425,000) 5,221,287 99.48
Excess of cash and receivables
over payables 27,353 .52
- -
NET ASSETS 5,248,640 100.00%
=======================
/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
Stocks appearing in the portfolio
since May 31, 1996
AB Astra
A.C. Nielsen
Aetna
Air Products and Chemicals
Ashland
Associates First Capital
Circuit City Stores
Cognizant
Comcast
Crown Cork & Seal
Dresser Industries
Federated Department Stores
Finova Group
Humana
Imation
ITT Industries
Limited
Linear Technology
Lucent Technologies
Lyondell Petrochemical
McCormick & Co.
PacifiCare Health Systems
Pennzoil
Philips Electronics
Pioneer Hi-Bred International
Raytheon
Societe Nationale Elf Aquitaine
Telefonaktiebolaget LM Ericsson
Union Pacific
Stocks eliminated from the portfolio
since May 31, 1996
360/0/ Communications
Bankers Trust New York
Bausch & Lomb
Betz Laboratories
Boatmen's Bancshares
Cleveland-Cliffs
Colgate-Palmolive
Cox Communications
Digital Equipment
General Electric
General Public Utilities
Johnson Controls
LADD Furniture
McKesson
Novell
Oracle
Pacific Telesis Group
Southern Pacific Rail
TIG Holdings
Times Mirror
Tosco
Tribune
TRINOVA
TRW
Walgreen
</TABLE>
<TABLE>
<S> <C> <C> <C>
Asset Allocation Fund Percent
Investments in both stocks and bonds of Net
Investment Portfolio November 30, 1996 Assets
- ---------------------------------------------------- ----------
Equity-Type Securities 62.13%
Cash & Equivalents 14.30
U.S. Government Bonds 12.05
Corporate Bonds 11.31
Non-U.S. Government Bonds .21
LARGEST INDIVIDUAL EQUITIES
Atlantic Richfield 1.95%
Warner-Lambert 1.88
Pfizer 1.81
Rockwell International 1.74
DuPont 1.65
Tenneco 1.56
NationsBank 1.41
Rentokil Group 1.39
J.C. Penney 1.37
PepsiCo 1.36
Market Percent
Number of Value of Net
Stocks (common and preferred) Shares (000) Assets
- ---------------------------------------------------- ---------- ---------- ----------
Energy Sources- 7.21%
Atlantic Richfield Co. 160,000 22,260 1.95%
Royal Dutch Petroleum Co. (New York Registered
Shares) (Netherlands) 90,000 15,289 1.34
Chevron Corp. 225,000 15,075 1.32
Phillips Petroleum Co. 200,000 9,025 .79
Kerr-McGee Corp. 100,000 7,000 .61
Diamond Shamrock, Inc. 175,000 5,687 .50
Amoco Corp. 60,000 4,658 .41
Unocal Corp. 80,000 3,260 .29
Health & Personal Care- 7.06%
Warner-Lambert Co. 300,000 21,450 1.88
Pfizer Inc 230,000 20,614 1.81
SmithKline Beecham PLC (American Depositary
Receipts) (United Kingdom) 150,000 10,331 .90
Bristol-Myers Squibb Co. 70,000 7,962 .70
Tambrands Inc. 170,000 7,268 .64
American Home Products Corp. 110,000 7,068 .62
Kimberly-Clark Corp. 60,000 5,865 .51
Banking- 7.03%
NationsBank Corp. 155,000 16,062 1.41
Citicorp 140,000 15,295 1.34
First Union Corp. 94,500 7,217 .63
Jefferson BankShares, Inc. 238,700 6,997 .61
CoreStates Financial Corp 125,000 6,734 .59
Fleet Financial Group, Inc. 120,000 6,645 .58
H.F. Ahmanson & Co. 200,000 6,600 .58
PNC Bank Corp. 135,000 5,333 .47
BankAmerica Corp. 50,000 5,150 .45
KeyCorp 80,000 4,190 .37
Merchandising- 5.91%
J.C. Penney Co., Inc. 290,000 15,587 1.37
Wal-Mart Stores, Inc. 525,000 13,388 1.17
Walgreen Co. 300,000 12,525 1.10
Limited Inc. 550,000 9,900 .87
May Department Stores Co. 125,000 6,094 .53
Circuit City Stores, Inc. 130,000 4,339 .38
Sears, Roebuck and Co. 60,000 2,985 .26
Mercantile Stores Co., Inc. 52,400 2,633 .23
Chemicals- 4.92%
E.I. du Pont de Nemours and Co. 200,000 18,850 1.65
Air Products and Chemicals, Inc. 195,000 13,552 1.19
PPG Industries, Inc. 150,000 9,187 .81
Mallinckrodt Inc. 150,000 6,600 .58
Armor All Products Corp. 250,000 4,719 .41
Great Lakes Chemical Corp. 60,000 3,218 .28
Industrial Components- 2.74%
Rockwell International Corp. 310,000 19,917 1.74
Echlin Inc. 200,000 6,725 .59
Dana Corp. 150,000 4,669 .41
Food & Household Products- 2.37%
McCormick & Co. 400,000 9,850 .86
General Mills, Inc. 100,000 6,350 .56
H.J. Heinz Co. 150,000 5,681 .50
Archer Daniels Midland Co. 236,250 5,198 .45
Insurance- 2.25%
American General Corp. 176,700 7,267 .64
CIGNA Corp. 50,000 7,069 .62
SAFECO Corp. 150,000 6,244 .55
General Re Corp. 30,000 5,062 .44
Beverages & Tobacco- 2.19%
PepsiCo, Inc. 520,000 15,535 1.36
Seagram Co. Ltd. (Canada) 230,000 9,401 .83
Business & Public Services- 2.13%
Rentokil Group PLC (American Depositary Receipts)
(United Kingdom) 214,000 15,836 1.39
Dun & Bradstreet Corp. 200,000 4,525 .39
Alexander & Baldwin, Inc. 150,000 3,975 .35
Multi-Industry- 2.06%
Tenneco Inc. 350,000 17,850 1.56
Textron Inc. 60,000 5,722 .50
Recreation & Other Consumer Products- 1.96%
American Greetings Corp., Class A 300,000 8,475 .74
Duracell International Inc. 120,000 7,995 .70
Stanley Works 200,000 5,900 .52
Forest Products & Paper- 1.71%
Georgia-Pacific Corp. 100,000 7,275 .64
Union Camp Corp. 100,000 4,912 .43
Weyerhaeuser Co. 100,000 4,600 .40
Rayonier Inc. 70,000 2,713 .24
Transportation: Rail & Road- 1.56%
Union Pacific Corp. 230,000 13,397 1.17
Conrail, Inc. 45,929 4,467 .39
Aerospace & Military Technology- 1.48%
General Motors Corp., Class H 200,000 10,900 .96
Boeing Co. 60,000 5,963 .52
Electrical & Electronics- 1.30%
Nokia Corp., Class A (American Depositary
Receipts) (Finland) 170,000 9,541 .84
Hubbell Inc., Class B 126,000 5,292 .46
Machinery & Engineering- 1.19%
Deere & Co. 180,000 8,032 .71
Crompton & Knowles Corp. 300,000 5,513 .48
Leisure & Tourism- 1.11%
Carnival Corp., Class A 400,000 12,650 1.11
Data Processing & Reproduction- 0.87%
Adobe Systems Inc. 130,000 5,135 .45
International Business Machines Corp. 30,000 4,781 .42
Telecommunications- 0.80%
Pacific Telesis Group 150,000 5,550 .49
AT&T Corp. 90,000 3,533 .31
Metals: Nonferrous- 0.78%
Aluminum Co. of America 140,000 8,907 .78
Miscellaneous Materials & Commodities- 0.53%
Potash Corp. of Saskatchewan Inc. (Canada) 80,000 6,030 .53
Automobiles- 0.50%
General Motors Corp. 100,000 5,762 .50
Broadcasting & Publishing- 0.44%
Time Warner Inc., preferred equity redemption
cumulative stock 55,000 2,200
Time Warner Inc., 10.25% cumulative exchangeable
preferred, Series K/1/ 2,597 2,811 .44
----------- -----------
TOTAL STOCKS (cost: $504,469,000) 685,822 60.10
----------- -----------
Principal
Amount
Convertible Debentures (000)
- ---------------------------------------------------- ---------- ---------- ----------
Industrials & Services- 0.90%
Turner Broadcasting System, Inc. 0% 2007/1/ 10,000 4,850 .43
Hanson America Inc. 2.39% 2001/1/ 5,000 4,375 .38
Time Warner Inc. 0% 2012 2,500 944 .08
Discovery Zone 0% 2013 6,000 75 .01
Telecommunications- 0.25%
U S WEST Communications, Inc. 0% 2011 8,000 2,890 .25
---------- ----------
TOTAL CONVERTIBLE DEBENTURES (cost: $14,695,000) 13,134 1.15
---------- ----------
MISCELLANEOUS
Other equity-type securities in initial period of
acquisition (cost:$9,725,000) 9,986 .88
---------- ----------
TOTAL EQUITY-TYPE SECURITIES (cost: $528,889,000) 708,942 62.13
---------- ----------
Bonds & Notes
- -----------------------------------------------
Industrials- 9.06%
Oryx Energy Co.:
9.50% 1999 3,000 3,195
8.375% 2004 2,500 2,641
10.00% 1999 1,000 1,070 .61
Time Warner Inc. 9.125% 2013 4,000 4,430 .39
Inco Ltd.:
9.60% 2022 2,000 2,240
9.875% 2019 1,500 1,621 .34
News America Holdings Inc.:
10.125% 2012 2,000 2,369
7.43% 2026 1,250 1,303 .32
Mobil Corp. 8.00% 2032 3,000 3,182 .28
Allegiance Corp. 7.00% 2026 3,000 3,105 .27
General Motors Corp. 8.80% 2021 2,500 2,948 .26
USX Corp. 9.125% 2013 2,500 2,896 .25
Dayton Hudson Corp. 8.50% 2022 2,500 2,666 .23
Philips Electronics NV 7.20% 2026 2,500 2,597 .23
360/0/ Communications Co. 7.50% 2006 2,500 2,530 .22
Freeport-McMoRan Copper & Gold Inc. 7.20% 2026 2,500 2,525 .22
OXYMAR 7.50% 2016/1/ 2,500 2,450 .21
Acme Metals Inc. 12.50% 2002 2,000 2,140 .19
Container Corp. of America 9.75% 2003 2,000 2,085 .18
CenCall Communications Corp. 0%/10.125% 2004/2/ 3,000 1,995 .18
TCI Communications, Inc. 8.75% 2015 2,000 1,967 .17
Tele-Communications, Inc. 9.25% 2023 2,000 1,957 .17
Unisys Corp. 11.75% 2004 1,750 1,829 .16
Comtel Brasileira Ltda. 10.75% 2004/1/ 1,500 1,556 .14
Loehmann's, Inc. 11.875% 2003 1,000 1,080 .09
Omnipoint Corp. 11.625% 2006/1/ 1,000 1,052 .09
Kaiser Aluminum Corp. 12.75% 2003 750 791 .07
PriCellular Wireless Corp. 10.75% 2004/1/ 750 780 .07
Woolworth Corp., Series A, 7.00% 2002 750 753 .07
Federal Agency Obligations-Mortgage
Pass-Throughs /4/- 3.65%
Government National Mortgage Assn.:
8.00% 2020-2026 20,729 21,438
7.50% 2026 9,900 10,042
8.50% 2022-2026 5,695 5,980
10.00% 2019 1,384 1,525 3.42
Federal National Mortgage Assn.:
7.00% 2009 1,812 1,826
9.00% 2019 759 809 .23
Financial- 3.48%
Capital One Bank:
7.35% 2000 7,500 7,699
7.15% 2006 2,000 2,051 .85
General Motors Acceptance Corp.:
8.875% 2010 3,235 3,865
9.625% 2001 2,000 2,275 .54
Ocwen Financial Corp. 11.875% 2003 2,850 3,028 .26
Aetna Services, Inc. 6.97% 2036 2,500 2,593 .23
Terra Nova (Bermuda) Holdings Ltd. 10.75% 2005 2,000 2,265 .20
First Union Corp. 6.82%/7.57% 2026/2/ 2,000 2,059 .18
Chevy Chase Bank, F.S.B. 9.25% 2008 2,000 2,020 .18
American Re Corp. 10.875% 2004 1,500 1,623 .14
B.F. Saul Real Estate Investment Trust 11.625% 2002 1,500 1,620 .14
First Nationwide Holdings Inc. 10.625% 2003/1/ 1,500 1,605 .14
Security Capital Industrial Trust 7.95% 2008 1,500 1,587 .14
Shopping Center Associates 6.75% 2004/1/ 1,500 1,488 .13
Irvine Co. 7.46% 2006/1/ /3/ 1,500 1,466 .13
Metropolitan Life Insurance Co. 7.45% 2023/1/ 1,500 1,438 .12
National Westminster Bancorp Inc. 9.45% 2001 1,000 1,124 .10
Collateralized Mortgage Obligations
(Privately Originated) /4/- 2.05%
Continental Airlines, Inc.:
1996-A, 6.94% 2013/1/ 4,000 4,045
1996-2C, 10.22% 2014/1/ 2,250 2,693 .59
United Air Lines, Inc.:
1996-A2, 7.87% 2019 2,500 2,512
1995-A1, 9.02% 2012 1,417 1,573 .36
Delta Air Lines, Inc.:
1993-A2, 10.50% 2016 2,000 2,481
1992-A2, 9.20% 2014 1,000 1,128 .31
Airplanes Pass Through Trust, Class C, 8.15% 2019 3,000 3,157 .28
Jet Equipment Trust, Series 1995-B, 7.83% 2015/1/ 2,431 2,575 .22
USAir, Inc., 1996-B, 7.50% 2008/1/ 1,948 2,026 .18
Federal Express Corp. 7.53% 2006 1,238 1,279 .11
Federal Agency Obligations-Other- 1.42%
Federal National Mortgage Assn.:
6.53% 2006 10,000 9,742
7.52% 2004 4,000 4,090 1.21
Federal Home Loan Mortgage Corp. 6.555% 2006 2,400 2,358 .21
Non-U.S. Government Obligations- 0.21%
Israel (State of) 6.375% 2005 2,500 2,437 .21
Transportation- 0.15%
AMR Corp. 9.75% 2000 1,000 1,090 .10
United Air Lines, Inc. 9.00% 2003 500 549 .05
Asset-Backed Obligations 4- 0.13%
Green Tree Financial Corp., Series 1995-A, Class NIM,
7.25% 2005 1,429 1,427 .13
Electric & Gas Utilities- 0.09%
Columbia Gas System Inc., Series E, 7.32% 2010 1,000 1,017 .09
U.S. Treasury Obligations- 6.98%
10.375% 2012 17,000 22,453
7.25% 2004 13,000 13,985
7.125% 2000 8,000 8,325
8.75% 1997 6,000 6,166
8.75% 2008 5,000 5,738
8.25% 2005 5,000 5,335
9.25% 1998 5,000 5,295
8.75% 2000 3,000 3,295
8.875% 1999 2,500 2,666
11.125% 2003 2,000 2,563
10.375% 2009 2,000 2,528
11.75% 2010 500 679
10.75% 2003 500 627 6.98
---------- ----------
TOTAL BONDS & NOTES (cost: $264,266,000) 269,013 23.57
---------- ----------
Short-Term Securities
- ------------------------------------------------
Corporate Short-Term Notes- 12.66%
J.C. Penney Funding Corp. 5.23%-5.31% due 12/12/96-1/30/97 25,300 25,218 2.21
American Express Credit Corp. 5.25%-5.26% due 12/5-12/18/96 20,000 19,967 1.75
Warner-Lambert Co. 5.28% due 3/5/97/1/ 20,000 19,721 1.73
Lucent Technologies Inc. 5.24%-5.26% due 12/5/96-1/6/97 13,500 13,467 1.18
PACCAR Financial Corp. 5.24% due 12/19/96 12,000 11,967 1.05
Walt Disney Co. 5.28% due 1/7/97 10,700 10,640 .93
Hershey Foods Corp. 5.24% due 12/2/96 10,400 10,397 .91
Sara Lee Corp. 5.28% due 12/27/96 10,000 9,961 .87
IBM Credit Corp. 5.30% due 1/15-1/30/97 9,900 9,820 .86
General Electric Capital Corp. 5.34% due 1/29/97 7,700 7,631 .67
National Rural Utilities Cooperative Finance Corp.
5.30% due 12/13/96 5,700 5,689 .50
Federal Agency Discount Notes- 1.14%
Federal National Mortgage Assn. 5.45% due 12/10/96 13,000 12,981 1.14
--------- ---------
TOTAL SHORT-TERM SECURITIES (cost: $157,461,000) 157,459 13.80
--------- ---------
TOTAL INVESTMENT SECURITIES (cost: $950,616,000) 1,135,414 99.50
Excess of cash and receivables over payables 5,677 .50
--------- ---------
NET ASSETS 1,141,091 100.00%
========= =========
/1/Purchased in a private placement transaction;
resale to the public may require registration or sale
only to qualified institutional buyers.
/2/Represents a step bond; coupon rate will increase
at a later date.
/3/Valued under procedures established by the
Board of Trustees.
/4/ Pass-through securities backed by a pool of
mortgages or other loans on which principal payments
are periodically made. Therefore, the effective
maturity is shorter than the stated maturity.
See Notes to Financial Statements
Equity-type securities appearing in the portfolio
since May 31, 1996
Carnival
Discovery Zone
General Re
Limited
Mallinckrodt
Potash Corp of Saskatchewan
PPG Industries
Rentokil Group
Equity-type securities eliminated from the portfolio
since May 31, 1996
AMBAC
Anheuser-Busch
Baker Hughes
Bausch & Lomb
H&R Block
Colgate-Palmolive
Comerica
Cooper Cameron
CSX
Eastman Chemical
Eastman Kodak
Gap
General Public Utilities
Greenfield Capital Trust
Hancock Fabrics
Long Island Lighting
Louisiana-Pacific
Minnesota Mining and Manufacturing
Norfolk Southern
Ralston Purina
Texaco
</TABLE>
<TABLE>
<S> <C> <C> <C>
BOND FUND
Investments primarily in bonds
INVESTMENT PORTFOLIO - NOVEMBER 30, 1996
U.S. GOVERNMENT BONDS 33.10%
CORPORATE BONDS 35.87
CASH & EQUIVALENTS 23.76
EQUITY-TYPE SECURITIES 4.21
NON-U.S. GOVERNMENT BONDS 3.06
Principal Market Percent
Amount Value Of Net
Bonds & Notes (000) (000) Assets
Diversified Media, Cable Television &
Telecommunications - 4.88%
MFS Communications Co., Inc.:
0%/9.375% 2004/1/ $800 $692
0%/8.875% 2006/1/ 750 544 1.60%
Comtel Brasileira Ltda. 10.75% 2004/2/ 1,000 1,038 1.34
Brooks Fiber Properties, Inc. 0%/10.875% 2006/1/ 700 459 .59
AT&T Corp. 8.625% 2031 250 272 .35
Time Warner Inc. 7.95% 2000 250 260 .34
Muzak LP/Capital 10.00% 2003 250 256 .33
Viacom International Inc. 9.125% 1999 250 256 .33
Transportation - 4.21%
USAir, Inc. 9.625% 2001 1,000 985 1.27
Airplanes Pass Through Trust:
Class C, 8.15% 2019/3/ 500 526
Class D, 10.875% 2019/3/ 275 307 1.08
Jet Equipment Trust:
Series 1995-A, 11.44% 2014/2/ /3/ 300 362
Series 1994-A, 11.79% 2013/2/ /3/ 250 308 .86
Continental Airlines, Inc., Series 1996-C, 9.50% 2015/3/ 250 287 .37
Teekay Shipping Corp. 8.32% 2008 250 247 .32
United Air Lines, Inc. 10.67% 2004 200 241 .31
Financial Services - 3.88%
Ocwen Financial Corp. 11.875% 2003 1,150 1,222 1.58%
Capital One Bank 7.15% 2006 500 513 .66
Aames Financial Corp. 9.125% 2003 500 510 .66
Ford Motor Credit Co. 6.85% 2000 500 510 .66
General Motors Acceptance Corp. 6.625% 2005 250 249 .32
Manufacturing & Materials - 3.75%
Kaiser Aluminum & Chemical Corp.:
10.875% 2006/2/ 500 516
9.875% 2002 250 252 .99
Knoll Group, Inc. 10.875% 2006 500 545 .70
Printpack Inc. 10.625% 2006/2/ 500 520 .67
Freeport-McMoRan Copper & Gold Inc. 7.20% 2026 300 303 .39
U.S. Can Corp. 10.125% 2006/2/ 250 261 .34
Northern Telecom Ltd. 6.875% 2002 250 257 .33
AMTROL Inc. 10.625% 2006/2/ 250 253 .33
Energy & Related Companies - 3.30%
Oryx Energy Co. 8.375% 2004 500 528 .68
J. Ray McDermott, SA 9.375% 2006 500 525 .68
Mariner Energy, Inc. 10.50% 2006/2/ 500 519 .67
Chesapeake Energy Corp. 9.125% 2006 500 517 .67
Falcon Drilling Co., Inc., Series B, 8.875% 2003 250 253 .33
McDermott Inc. 9.375% 2002 200 211 .27
Cellular, Paging & Wireless Communications - 2.57%
PriCellular Wireless Corp. 10.75% 2004/2/ 500 520 .67
NEXTEL Communications, Inc. 0%/11.50% 2003/1/ 500 376 .49
360/0/ Communications Co. 7.50% 2006 325 329 .43
Sprint Spectrum LP, Sprint Spectrum Finance Corp. 500 325 .42
0%/12.50% 2006/1/
Omnipoint Corp. 11.625% 2006/2/ 250 263 .34
Cellular Communications International, Inc.
Units, 0% 2000 250 170 .22
Banking & Thrifts - 2.37%
First Nationwide Holdings Inc. 10.625% 2003/2/ 1,000 1,070 1.38
Chevy Chase Bank, FSB 9.25% 2008 500 505 .66
First Union Corp. 6.82%/7.57% 2026/1/ 250 257 .33
Health & Personal Care - 1.92%
Integrated Health Services, Inc. 10.75% 2004 500 529 .68
Allegiance Corp. 7.00% 2026 500 517 .67
Paracelsus Healthcare Corp. 10.00% 2006 500 443 .57
Collateralized Mortgage Obligations (Privately
Originated) /3/ - 1.86%
Wells Fargo Capital Markets APT Financing Trust 6.56% 2005/2/ 1,000 1,007 1.30
Merrill Lynch Mortgage Investors, Inc., Series 1995-C2,
Class A, 7.452% 2021 /4/ 427 436 .56
Broadcasting & Publishing - 1.73%
Young Broadcasting Inc. 10.125% 2005 500 502 .65
Grupo Televisa, S.A. 0%/13.25% 2008/1/ 500 329 .42
News America Holdings Inc. 7.43% 2026 250 261 .34
Chancellor Broadcasting Co. 9.375% 2004 250 249 .32
Business & Public Services - 1.03%
Allied Waste North America, Inc. 10.25% 2006/2/ 500 510 .66
Federal Express Corp. 9.875% 2002 250 288 .37
Merchandising - 0.92%
Loehmann's, Inc. 11.875% 2003 500 540 .70
Woolworth Corp., Series A, 7.00% 2002 170 171 .22
Asset- Backed Obligations/3/ - 0.85%
Green Tree Financial Corp., Series 1995-A, Class NIM, 7.25% 2005 357 357 .46
EQCC Home Equity Loan Asset-Backed Certificates, Series 1996-A
Class A-2, 6.95% 2012 300 304 .39
Insurance - 0.70%
Terra Nova (Bermuda) Holdings Ltd. 10.75% 2005 250 283 .37
Aetna Services, Inc. 6.97% 2036 250 259 .33
Cable & Telephone in the United Kingdom - 0.57%
Comcast UK Cable Partners Ltd. 0%/11.20% 2007/1/ 650 444 .57
Machinery & Engineering - 0.38%
Deere & Co. 8.95% 2019 250 294 .38
Data Processing & Reproduction - 0.34%
Unisys Corp. 11.75% 2004 250 261 .34
Electrical & Electronics - 0.34%
Philips Electronics NV 7.20% 2026 250 260 .34
Independent Power Producers - 0.27%
California Energy Co., Inc. 9.875% 2003 200 209 .27
Non-U.S. Governments & Governmental
Authorities - 3.06%
Canadian Government 4.599% 2021 /4/ C$1000 833 1.08
Argentina (Republic of):
Eurobond Series L, 6.625% 2005 /4/ $319 275
8.375% 2003 250 233 .66
Ireland (Republic of) 8.00% 2006 IRE250 461 .59
Brazil (Federal Republic of) Capitalization Bond 8.00% 2014 /5/ $275 202 .26
Deutschland Republic 8.00% 2002 DM250 185 .24
South Africa (Republic of) 13.00% 2010 ZAR1,000 180 .23
Federal Agency Obligations-Mortgage Pass-Throughs/3/ - 11.17%
Government National Mortgage Assn.:
5.00% 2026 $2,181 2,156
6.50% 2025-2026 1,310 1,273 7.72
9.50% 2021 955 1,040
10.00% 2019 923 1,016
7.00% 2026 498 495
Federal National Mortgage Assn.:
10.00% 2018-2025 1,392 1,542 3.45
9.00% 2021 781 833
6.50% 2026 303 294
Federal Agency Obligations-Other - 2.28%
Federal National Mortgage Assn. 7.04% 2005 890 884 1.14
Federal Home Loan Mortgage Corp.:
6.78% 2005 500 496
5.78% 2003 400 384 1.14
U.S. Treasury Obligations - 19.65%
6.25% 2003 7,500 7,634 19.65
10.375% 2009-2012 3,000 3,934
7.25% 2004 2,500 2,691
8.875% 2017 750 955
-------- --------
TOTAL BONDS & NOTES (cost: $54,281,000) 55,768 72.03
-------- -------
Number
of
Shares
or Principal
Amount
(000)
Equity-Type Securities
Preferred Stocks - 1.04%
Time Warner Inc. exchangeable preferred, Series K/2/ 524 567 .73
El Paso Electric Co., 11.40% preferred,
Series, A 2008 /5/ 2,168 239 .31
Convertible Debentures - 0.70%
U S WEST Communications, Inc. 0% 2011 $1,500 542 .70
Miscellaneous
Equity-type securities in initial period of acquisition 1,909 2.47
-------- --------
TOTAL EQUITY-TYPE SECURITIES (cost: $2,667,000) 3,257 4.21
-------- --------
Principal
Amount
Short-Term Securities (000)
Corporate Short-Term Notes - 22.35%
Southwestern Bell Telephone Co. 5.25% due 12/6/96 $ 2,000 1,998 2.58
H.J. Heinz Co. 5.25% due 12/4/96 1,900 1,899 2.45
CIT Group Holdings Inc. 5.26% 12/16/96 1,900 1,896 2.45
Abbott Laboratories Inc. 5.25% due 12/5/96 1,500 1,499 1.94
Lucent Technologies Inc. 5.25% due 12/17/96 1,500 1,496 1.93
Coca-Cola Co. 5.24% due 12/30/96 1,400 1,394 1.80
Raytheon Co. 5.25% due 12/10/96 1,300 1,298 1.68
International Lease Finance Corp. 5.23% due 12/13/96 1,300 1,297 1.67
IBM Credit Corp. 5.33% due 1/14/97 1,300 1,291 1.67
American Express Credit Corp. 5.26% due 12/9/96 1,000 999 1.29
General Electric Capital Corp. 5.75% due 12/2/96 900 900 1.16
PACCAR Financial Corp. 5.26% due 12/19/96 838 836 1.08
BellSouth Telecommunications, Inc. 5.22% due 12/4/96 502 502 .65
Federal Agency Discount Notes - 1.29%
Federal Farm Credit Bank 5.22% due 12/6/96 1,000 999 1.29
-------- -------
TOTAL SHORT-TERM SECURITIES (cost: $18,304,000) 18,304 23.64
-------- -------
TOTAL INVESTMENT SECURITIES (cost: $75,252,000) 77,329 99.88
Excess of cash and receivables over payables 96 .12
--------- -------
NET ASSETS $77,425 100.00
--------- ---------
/1/ Represents a step bond; coupon rate will increase
at a later date.
/2/ Purchased in a private placement transaction;
resale to the public may require registration or sale
only to qualified institutional buyers.
/3/ Pass-through securities backed by a pool of
mortgages or other loans on which principal
payments are periodically made. Therefore, the
effective maturity is shorter than the stated maturity.
/4/ Coupon rate may change periodically.
/5/ Payment in kind. The issuer has the option of
paying additional securities in lieu of cash.
See Notes to Financial Statements
</TABLE>
<TABLE>
<S> <C> <C> <C>
HIGH-YIELD BOND FUND
Investments primarily in bonds
INVESTMENT PORTFOLIO - NOVEMBER 30, 1996
CORPORATE BONDS 77.19%
U.S. TREASURY BONDS 7.36%
NON-U.S. GOVERNMENT BONDS 1.72%
CASH & EQUIVALENTS 11.42%
STOCKS & CONVERTIBLE DEBENTURES 2.31%
Percent
of Net
Largest Corporate Holdings Assets
MFS Communications 3.17%
Bell Cablemedia 2.39
Videotron Holdings 2.18
Integrated Health Services 2.10
California Energy 2.08
Container Corp. of America 2.06
Coltec Industries 1.82
USAir 1.81
International CableTel 1.62
CellNet Data Systems 1.57
Principal Market Percent
Amount Value Of Net
Bonds & Notes (000) (000) Assets
Cellular, Paging & Wireless Communications - 12.55%
Centennial Cellular Corp. 8.875% 2001 $10,000 $9,600 1.45%
PriCellular Wireless Corp.:
0%/12.25% 2003/1/ 6,000 5,055
10.75% 2004/2/ 2,250 2,340 1.44
0%/14.00% 2001/1/ 2,185 2,152
CellNet Data Systems, Inc. 0%/13.00% 2005/1/ /2/ /3/ 14,000 9,170 1.38
PanAmSat, LP:
9.75% 2000 6,000 6,345 1.24
0%/11.375% 2003/1/ 2,000 1,840
Paging Network, Inc. 11.75% 2002 7,300 7,884 1.19
NEXTEL Communications, Inc.:
0%/10.125% 2004 (formerly CenCall Communications)/1/ 4,750 3,159
0%/11.50% 2003/1/ 3,000 2,257 1.07
0%/9.75% 2004/1/ 2,500 1,653
Cellular Communications International, Inc. Units, 0% 2000 6,500 4,420 .67
Cellular, Inc. 0%/11.75% 2003/1/ 4,500 4,050 .61
Rogers Cantel Mobile Communications Inc.:
11.125% 2002 2,500 2,637 .56
9.375% 2008 1,000 1,050
Comunicacion Celular SA 0%/13.125% 2003/1/ 5,000 3,263 .49
Omnipoint Corp. 11.625% 2006/2/ 3,000 3,157 .48
Heartland Wireless Communications, Inc. 13.00% 2003 3,000 3,090 .47
MobileMedia Communications, Inc. 0%/10.50% 2003/1/ 5,250 2,284 .35
Sprint Spectrum LP, Sprint Spectrum
Finance Corp. 11.00% 2006 2,000 2,125 .32
Mobile Telecommunications Technology Corp. 13.50% 2002 1,750 1,811 .27
Western Wireless Corp. 10.50% 2006/2/ 1,500 1,545 .23
InterCel, Inc. 0%/12.00% 2006/1/ 2,000 1,190 .18
Vanguard Cellular Systems, Inc. 9.375% 2006 1,000 1,004 .15
Manufacturing & Materials - 8.52%
Coltec Industries Inc.:
9.75% 2000 9,450 10,230 1.82
9.75% 1999 1,750 1,881
Kaiser Aluminum & Chemical Corp.:
12.75% 2003 4,850 5,117
10.875% 2006/2/ 2,500 2,581 1.52
9.875% 2002 2,350 2,374
Texas Petrochemicals Corp. 11.125% 2006/2/ 5,500 5,885 .89
Acme Metals Inc.:
0%/13.50% 2004/1/ 3,000 3,030 .86
12.50% 2002 2,500 2,675
MagneTek, Inc. 10.75% 1998 3,500 3,605 .54
AGCO Corp. 8.50% 2006 3,500 3,587 .54
UCAR Global Enterprises Inc. 12.00% 2005 2,865 3,305 .50
Westinghouse Air Brake Co. 9.375% 2005 3,000 3,090 .47
Owens-Illinois, Inc. 11.00% 2003 2,500 2,766 .42
Sterling Chemicals, Inc. 11.75% 2006 2,000 2,040 .31
U.S. Can Corp. 10.125% 2006/2/ 1,750 1,829 .28
Knoll Group, Inc. 10.875% 2006 1,250 1,363 .21
AK Steel Corp. 10.75% 2004 1,000 1,072 .16
Cable & Telephone in the United Kingdom - 8.14%
Bell Cablemedia PLC 0%/11.95% 2004/1/ 18,500 15,817 2.39
Videotron Holdings PLC:
0%/11.125% 2004/1/ 14,500 12,470 2.18
0%/11.00% 2005/1/ 2,500 1,969
International CableTel Inc. 0%/10.875% 2003/1/ 13,250 10,699 1.62
Comcast UK Cable Partners Ltd. 0%/11.20% 2007/1/ 11,500 7,849 1.18
TeleWest PLC:
9.625% 2006 2,500 2,556 .49
0%/11.00% 2007/1/ 1,000 678
Ionica, PLC Units 13.50% 2006/2/ 1,750 1,873 .28
Energy & Related Companies - 6.13%
Triton Energy Corp. 0%/9.75% 2000/1/ 4,500 4,669 .70
Chesapeake Energy Corp.:
9.125% 2006 3,000 3,105 .63
10.50% 2002 1,000 1,095
Mariner Energy, Inc. 10.50% 2006/2/ 4,000 4,150 .63
Abraxas Petroleum Corp. 11.50% 2004/2/ 4,000 4,130 .62
Kelley Oil & Gas Corp. 10.375% 2006/2/ 4,000 4,080 .62
Dual Drilling Co. 9.875% 2004 3,500 3,780 .57
Benton Oil and Gas Co. 11.625% 2003 3,000 3,300 .50
Falcon Drilling Co., Inc.:
Series B, 8.875% 2003 2,250 2,273 .50
Series B, 9.75% 2001 1,000 1,024
Global Marine, Inc. 12.75% 1999 2,700 2,903 .44
Tuboscope Vetco International Inc. 10.75% 2003 2,000 2,195 .33
Flores & Rucks, Inc. 13.50% 2004 1,750 2,069 .31
J. Ray McDermott, SA 9.375% 2006 1,000 1,050 .16
Forcenergy Inc. 9.50% 2006 750 780 .12
Diversified Media, Cable Television &
Telecommunications - 6.04%
MFS Communications Co., Inc. 0%/9.375% 2004/1/ 24,250 20,976 3.17
Multicanal Participacoes SA 12.625% 2004/2/ 4,000 4,310 .65
Cablevision Systems Corp. 9.875% 2013 3,000 2,925 .44
Brooks Fiber Properties, Inc. 0%/10.875% 2006/1/ 3,250 2,129 .32
Jones Intercable, Inc. 9.625% 2002 1,500 1,545 .23
Viacom International Inc. 7.75% 2005 1,500 1,492 .22
Telecom Argentina STET-France Telecom SA 12.00% 2002 1,000 1,102 .17
Summitt Communications Group, Inc. 10.50% 2005 1,000 1,097 .17
Teleport Communications Group Inc. 9.875% 2006 1,000 1,057 .16
Comtel Brasileira Ltda. 10.75% 2004/2/ 1,000 1,038 .16
Comcast Corp. 10.25% 2001 925 983 .15
IntelCom Group Inc. 0%/13.50% 2005/1/ 1,000 688 .10
Storer Communications, Inc. 10.00% 2003 634 640 .10
Health & Personal Care - 5.76%
Integrated Health Services, Inc.:
10.25% 2006/2/ 5,000 5,150
9.625% 2002 2,750 2,812 1.60
10.75% 2004 2,500 2,644
Regency Health Services, Inc.:
9.875% 2002 6,250 6,312 1.28
12.25% 2003 2,000 2,128
Paracelsus Healthcare Corp. 10.00% 2006 8,250 7,301 1.10
Universal Health Services, Inc. 8.75% 2005 6,500 6,711 1.01
Merit Behavioral Care Corp. 11.50% 2005 2,500 2,650 .40
Mariner Health Group, Inc. 9.50% 2006 2,500 2,438 .37
Leisure, Tourism & Restaurants - 4.83%
Foodmaker, Inc.:
9.75% 2002 3,750 3,825 .96
9.25% 1999 2,500 2,538
AMF Group Inc.:
0%/12.25% 2006/1/ 6,000 3,795 .85
10.875% 2006 1,750 1,838
Four Seasons Hotels Inc. 9.125% 2000/2/ 3,500 3,579 .54
Trump Atlantic City Associates, Trump Atlantic
City Funding, Inc. 11.25% 2006 3,750 3,544 .53
Station Casinos, Inc. 9.625% 2003 3,600 3,510 .53
California Hotel Finance Corp. 11.00% 2002 3,250 3,372 .51
Wyndham Hotel Corp. 10.50% 2006 2,500 2,650 .40
Rio Hotel & Casino, Inc. 10.625% 2005 2,250 2,379 .36
Casino America, Inc. 12.50% 2003 1,000 970 .15
Broadcasting & Publishing - 4.38%
American Media Operations, Inc. 11.625% 2004 7,000 7,473 1.13
American Radio Systems Corp. 9.00% 2006 4,750 4,631 .70
Chancellor Broadcasting Co.:
12.50% 2004 1,750 1,975 .53
9.375% 2004 1500 1496
Newsquest Capital PLC 11.00% 2006/2/ 3,000 3,060 .46
Infinity Broadcasting Corp. 10.375% 2002 2,750 2,929 .44
Univision Television Group, Inc. 11.75% 2001 2,500 2,608 .39
Young Broadcasting Inc. 10.125% 2005 2,000 2,010 .30
Tevecap SA 12.625% 2004/2/ 1,500 1,543 .23
Gray Communications Systems, Inc. 10.625% 2006 1,250 1,288 .20
Forest Products & Paper - 4.35%
Container Corp. of America:
9.75% 2003 10,000 10,425
Series A, 11.25% 2004 2,000 2,160 2.06
Series B, 10.75% 2002 1,000 1,070
Fort Howard Paper Corp.:
9.25% 2001 3,750 3,909
8.25% 2002 3,000 3,008 1.33
11.00% 2002 /4/ 1,813 1,908
Pacific Lumber Co. 10.50% 2003 4,000 4,005 .61
MAXXAM Group Inc. 11.25% 2003 2,000 2,045 .31
Four M Corp., Series B, 12.00% 2006 250 256 .04
Food Retailing - 4.25%
Stater Brothers Holdings Inc. 11.00% 2001 6,750 7,222 1.09
Bruno's, Inc. 10.50% 2005 6,250 6,469 .98
Star Markets Co., Inc. 13.00% 2004 5,000 5,525 .83
Carr-Gottstein Foods Co. 12.00% 2005 4,000 4,240 .64
Rykoff-Sexton, Inc. 8.875% 2003 4,400 4,147 .63
The Penn Traffic Co. 9.625% 2005 1,000 540 .08
Transportation - 3.64%
USAir, Inc.:
10.00% 2003 4,500 4,432
Pass Through Trust, Series 1993-A3, 10.375% 2013 /4/ 3,500 3,570 1.81
9.625% 2001 3,000 2,955
Series 1993-A2, 9.625% 2003 1,000 1,015
Airplanes Pass Through Trust, Class D, 10.875% 2019 /4/ 5,370 5,987 .90
Teekay Shipping Corp. 8.32% 2008 5,000 4,950 .75
Delta Air Lines, Inc. 10.00% 2014/2/ 1,000 1,191 .18
Independent Power Producers - 2.08%
California Energy Co., Inc. 0%/10.25% 2004/1/ 13,300 13,766 2.08
Merchandising - 2.07%
Barnes & Noble, Inc., Series B, 11.875% 2003 5,250 5,736 .87
Thrifty PayLess, Inc. 12.25% 2004 3,250 3,802 .57
Loehmann's, Inc. 11.875% 2003 2,500 2,700 .41
AnnTaylor, Inc. 8.75% 2000 1,500 1,455 .22
Beverages - 1.28%
Canandaigua Wine Co., Inc.:
8.75% 2003 2,750 2,685 .73
Series B, 8.75% 2003/2/ 2,250 2,171
Dr Pepper Bottling Co. of Texas 10.25% 2000 3,500 3623 .55
Construction & Housing - 1.00%
M.D.C. Holdings, Inc. 11.125% 2003 3,850 3,889 .59
Toll Corp. 8.75% 2006 1,500 1,500 .22
Del Webb Corp. 9.75% 2003 1,250 1,238 .19
Banking & Financial Services - 0.67%
First Nationwide Holdings Inc., 10.625% 2003/2/ 1,500 1,605 .24
Chevy Chase Bank, FSB 9.25% 2008 1,500 1,515 .23
Ocwen Financial Corp. 11.875% 2003 1,250 1,328 .20
Protection Services - 0.59%
ADT Operations, Inc. 9.25% 2003 2,000 2,120 .32
Protection One Alarm Monitoring, Inc. 0%/13.625% 2005/1/ 2,000 1,820 .27
Real Estate - 0.33%
B.F. Saul Real Estate Investment Trust 11.625% 2002 2,000 2,160 .33
Electric & Gas Utilities - 0.30%
Columbia Gas System, Inc., Series A, 6.39% 2000 2,000 2,010 .30
Textiles & Apparel - 0.28%
WestPoint Stevens Inc. 8.75% 2001 1,000 1,027 .16
Tultex Corp. 10.625% 2005 750 810 .12
Non-U.S. Governments & Governmental
Authorities - 1.72%
Argentina (Republic of):
Eurobond, Series L, 6.625% 2005 /5/ 5880 5079
Bocon 4.751% 2007 /5/ /6/ ARP2,500 1420 1.05
8.375% 2003 $ 500 465
Panama (Republic of) Interest Reduction Bond 3.50% 2014/2/ /5/ 3000 2055 .31
United Mexican States Government:
11.375% 2016 1250 1299 .28
9.75% 2001 500 518
Ecuador (Republic of) Past Due Interest Bond 6.50% 2015 /5/ /6/ 529 320 .05
Brazil (Federal Republic of) Eligible Interest Bond
6.50% 2006 /5/ 250 217 .03
U.S. Treasury Obligations - 7.36%
11.625% 2004 9,600 12,958
7.375% 1997 10,000 10,173
7.75% 2001 8,000 8,576
6.875% 1999 7,000 7,203 7.36
8.50% 2000 5,000 5,475
8.00% 2001 4,000 4,341
-------- --------
TOTAL BONDS & NOTES (cost: $549,728,000) 571,254 86.27
-------- -------
Number
of
Stocks Shares
Common & Preferred Stocks - 1.39%
EarthWatch Inc., 12.00% convertible preferred,
Series C /2/ /3/ /6/ /7/ 350,000 3,751 .56
Time Warner Inc., 10.25% cumulative exchangeable
preferred, Series K/2/ 3,145 3,405 .51
CellNet Data Systems, Inc., warrants, expire 1997 /3/ /7/ 56,000 1,232 .19
Marriott International, Inc. 4,512 251 .04
El Paso Electric Co., 11.40% preferred, Series A 2008 /6/ 2,168 239 .04
IntelCom Group Inc., warrants, expire 2005/2/ /7/ 13,200 165 .02
Protection One Alarm Monitoring, Inc., warrants,
expire 2005/2/ /7/ 6,400 50 .01
Heartland Wireless Communications, Inc.,
warrants, expire 2000/2/ /7/ 18,000 36 .01
Sterling Chemicals Inc., warrants, expire 2008 /7/ 1,000 35 .01
Comunicacion Celular, SA, warrants, expire 2003/2/ /7/ 5,000 31 .00
NEXTEL Communications, Inc., warrants, expire 1999/3/ /7/ 9,500 0 .00
-------- --------
TOTAL STOCKS (cost: $8,375,000) 9,195 1.39
-------- --------
Principal
Amount
Convertible Debentures - 0.92% (000)
Integrated Health Services, Inc. 5.75% 2001 $ 3,500 3,316 .50
Ashland Capital Group Inc. 9.50% 2006 1700 2,772 .42
-------- --------
TOTAL CONVERTIBLE DEBENTURES (cost: $6,191,000) 6,088 .92
-------- --------
Short-Term Securities
Corporate Short-Term Notes - 9.73%
Lucent Technologies Inc. 5.23%-5.29% due 12/10/96-2/5/97 21,300 21,167 3.20
H.J. Heinz Co. 5.24% due 12/13/96 11,400 11,378 1.72
National Rural Utilities Cooperative Finance Corp. 9400 9382 1.42
5.30% due 12/13/96
J.C. Penney Funding Corp. 5.31% due 12/9/96-1/30/97 7,000 6,951 1.05
IBM Credit Corp. 5.30% due 1/23/97 6,000 5,952 .90
Southwestern Bell Telephone Co. 5.27% due 12/3/96/2/ 5,000 4,998 .75
General Electric Capital Corp. 5.75% due 12/2/96 4,600 4,599 .69
-------- -------
TOTAL SHORT-TERM SECURITIES (cost: $64,430,000) 64,427 9.73
-------- -------
TOTAL INVESTMENT SECURITIES (cost: $628,724,000) 650,964 98.31
Excess of cash and receivables over payables 11,221 1.69
--------- -------
NET ASSETS $662,185 100.00%
========= =======
/1/ Represents a step bond; coupon rate will increase
at a later date.
/2/ Purchased in a private placement transaction; resale
to the public may require registration or sale only to
qualified institutional buyers.
/3/Valued under procedures established by the
Board of Trustees.
/4/ Pass-through securities backed by a pool of
mortgages or other loans on which principal payments
are periodically made. Therefore, the effective
maturity 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
Investments primarily in bonds
Investment Portfolio, November 30, 1996
- ------------------------------------------------ -------- -------- --------
U.S. TREASURY BONDS 47.61%
PRIVATE MORTGAGE & ASSET-BACKED SECURITIES 18.16
FEDERAL AGENCY MORTGAGE-RELATED SECURITIES 17.95
OTHER FEDERAL OBLIGATIONS 8.82
CASH & EQUIVALENTS 5.21
CORPORATE BONDS 1.40
DEVELOPMENTAL AGENCIES & NON-U.S.
GOVERNMENT BONDS .85
- ------------------------------------------------ -------- -------- --------
Principal Market Percent
Amount Value of Net
Bonds & Notes (000) (000) Assets
- ------------------------------------------------ -------- -------- --------
U.S. Treasury Obligations - 47.61%
10.375% 2012 $47,500 $62,737
8.875% 2017 40,300 51,320
10.375% 2009 33,500 42,341
12.00% 2013 13,000 19,086
8.75% 2008 10,000 11,477
7.25% 2004 10,000 10,758
9.25% 1998 10,000 10,591 47.61%
8.875% 1997 10,000 10,312
11.75% 2010 5,500 7,470
8.375% 2008 5,000 5,620
12.50% 2014 3,000 4,606
14.25% 2002 2,000 2,746
13.125% 2001 1,500 1,923
10.75% 2003 1,250 1,567
9.00% 1998 1,250 1,310
Federal Agency Obligations - Mortgage
Pass-Throughs/1/ - 17.41%
Government National Mortgage Assn.:
8.50% 2021-2026 24,347 25,612
9.50% 2019-2021 7,437 8,094
7.50% 2022-2023 4,698 4,795
7.00% 2024 4,327 4,411
6.50% 2024 4,030 4,098
10.00% 2019 3,690 4,066 10.96
8.00% 2022 3,106 3,242
9.00% 2009-2016 1,495 1,608
10.50% 2019 151 169
11.00% 2019 69 79
12.00% 2012-2014 8 9
Federal National Mortgage Assn.:
8.00% 2024 8,504 8,827
8.50% 2023 6,328 6,658
10.00% 2018 4,521 5,005 6.04
7.50% 2009 3,854 3,947
9.00% 2011-2025 3,483 3,696
7.00% 2010 2,785 2,805
Federal Home Loan Mortgage Corp.:
9.00% 2021-2022 1,797 1,915
9.50% 2016 151 164 .41
12.00% 2010 2 2
Collateralized Mortgage Obligations
(Privately Originated)/1/ - 12.73%
GE Capital Mortgage Services, Inc.:
Series 1995-10, Class A-1, 7.00% 2010 9,934 10,008
Series 1994-15, Class A-10, 6.00% 2009 8,000 7,600 3.44
Prudential-Bache CMO Trust III, 9.44 2018 14,000 15,133 2.95
Westam Mortgage, Class 4-H, 8.95% 2018 11,000 11,894 2.32
Structured Asset Securities Corp., Series 1996-CFL,
Class A1-C, 5.944% 2028 4,900 4,839 .94
CMC Securities Corp. I, Series 1993-E, Class S-9, 6.50% 2008 4,518 4,331 .85
Prudential Home Mortgage Securities Co., Inc., Series 1992-33,
Class A-12, 7.50% 2022 4,029 4,035 .79
J.P. Morgan Commercial Mortgage Finance Corp., Series 1995-C1,
Class A2, 7.399% 2010/2/ 3,000 3,112 .61
CS First Boston Mortgage Securities Corp., Series 1995-AEW1,
Class A-1, 6.665% 2027 2,725 2,740 .53
Merrill Lynch Mortgage Investors, Inc., Series 1995-C3,
Class A-2, 6.848% 2025/2/ 1,500 1,514 .30
Federal Agency Obligations - Other - 8.82%
FNSM Principal STRIPS:
0%/7.56% 2001/3/ 15,000 14,976
0%/8.62% 2022/3/ 10,000 9,164 5.05
0%/8.25% 2022/3/ 2,000 1,736
Federal Home Loan Mortgage Corp.:
6.555% 2006 8,500 8,350
6.945% 2005 2,000 1,996 2.02
Federal National Mortgage Assn.:
6.53% 2006 7,000 6,820
8.625% 2021 2,000 2,112 1.75
Asset-Backed Obligations/1/ - 5.43%
ContiMortgage Home Equity Loan Trust 1996-4,
Class A-4, 6.37% 2006 15,000 15,015 2.93
Standard Credit Card Master Trust 1991-3, Class A,
8.875% 1999 5,500 5,751 1.12
Green Tree Financial Corp., Series 1995-9, Class A-5,
6.80% 2027 5,000 5,004 .98
EQCC Home Equity Loan Asset Backed Certificates,
Series 1996-A, Class A-2, 6.95% 2012 2,000 2,030 .40
Electric & Gas Utilities - 0.75%
Public Service Electric and Gas Co. First and Refunding Mortgage
Bonds, Series SS, MBIA insured, 7.00% 2024 4,000 3,860 .75
Non-U.S. Government Obligations - 0.61%
Ontario (Province of):
15.75% 2012 1,700 1,852
15.25% 2012 1,145 1,287 .61
Collateralized Mortgage Obligations
(Federal Agencies)/1/ - 0.54%
Federal Home Loan Mortgage Corp.:
Series 1716, Class A, 6.50% 2009 2,250 2,194
Series 83-B, Class B-3, 12.50% 2013 523 587 .54
Financial - 0.44%
Signal Capital Corp. 9.95% 2006 2,157 2,217 .44
Developmental Authorities - 0.24%
International Bank for Reconstruction & Development 14.90%
1997 1,200 1,251 .24
Telephone Utilities - 0.21%
BellSouth Savings and Security ESOP Trust 9.125% 2003 999 1,086 .21
-------- --------
TOTAL BONDS & NOTES (cost: $481,978,000) 485,560 94.79
-------- --------
Short-Term Securities
- ------------------------------------------------
Corporate Short-Term Notes - 7.22%
IBM Credit Corp. 5.30% due 1/23/97 14,600 14,483 2.83
National Rural Utilities Cooperative Finance Corp.
5.30% due 12/13/96 8,400 8,384 1.64
General Electric Capital Corp. 5.75% due 12/2/96 7,700 7,698 1.50
Lucent Technologies Inc. 5.29% due 2/5/97 6,500 6,435 1.25
-------- --------
TOTAL SHORT-TERM SECURITIES (cost: $37,002,000) 37,000 7.22
-------- --------
TOTAL INVESTMENT SECURITIES (cost: $518,980,000) 522,560 102.01
Excess of payables over cash and receivables 10,309 2.01
-------- --------
NET ASSETS $512,251 100.00%
======== ========
/1/ Pass-through securities backed by a pool of
mortgages or other loans on which principal
payments are periodically made. Therefore,
the effective maturity is shorter than the
stated maturity.
/2/ Coupon rates may change periodically.
/3/ Represents a step bond; coupon rate will
increase at a later date.
See Notes to Financial Statements
</TABLE>
<TABLE>
<S> <C> <C> <C>
Cash Management Fund
Investments in short-term securities
Investment Portfolio November 30, 1996
Principal Market
Amount Value Percent of
Short-Term Securities (000) (000) Net Assets
Corporate Short-Term Notes - 83.69%
Coca-Cola Co. 5.22%-5.23% due 12/3-12/20/96 $ 9,600 $ 9,583 3.99%
General Electric Capital Corp. 5.24%-5.25% due 12/5-12/18/96 8,700 8,685 3.61
Harvard University 5.24% due 12/11/96 8,300 8,287 3.45
American Express Credit Corp. 5.23%-5.25% due 12/5-12/26/96 8,300 8,283 3.45
IBM Credit Corp. 5.25% due 12/10-12/19/96 8,250 8,233 3.43
E.I. du Pont de Nemours and Co. 5.23% due 12/18/96 8,100 8,079 3.36
Motorola Credit Corp. 5.24% due 12/10/96 8,000 7,988 3.32
H.J. Heinz Co. 5.23%-5.25% due 12/9-12/12/96 7,500 7,488 3.12
Beneficial Corp. 5.25% due 12/4/96 7,000 6,996 2.91
J.C. Penney Funding Corp. 5.24% due 12/17/96 7,000 6,983 2.91
American General Finance Corp. 5.25% due 12/27/96 7,000 6,972 2.90
Walt Disney Co. 5.25%-5.26% due 12/10/96-1/9/97 7,000 6,968 2.90
CIT Group Holdings, Inc. 5.31% due 1/13/97 7,000 6,955 2.89
Warner-Lambert Co. 5.24% due 12/9/96 6,900 6,891 2.87
John Deere Capital Corp. 5.23% due 12/12/96 6,500 6,489 2.70
Ford Motor Credit Co. 5.25% due 12/13/96 6,500 6,488 2.70
Minnesota Mining and Manufacturing Co. 5.23% due 12/16/96 6,500 6,485 2.70
Campbell Soup Co. 5.25% due 12/6/96 6,000 5,995 2.49
Lucent Technologies Inc. 5.25% due 12/20/96 5,800 5,783 2.41
International Lease Finance Corp. 5.29% due 1/27/97 5,600 5,552 2.31
National Rural Utilities Cooperative Finance Corp.
5.29% due 1/7/97 5,400 5,370 2.23
Monsanto Co. 5.25% due 12/3/96 5,000 4,998 2.08
Weyerhaeuser Co. 5.24% due 12/19/96 5,000 4,986 2.08
Ameritech Corp. 5.24% due 12/23/96 5,000 4,984 2.07
U S WEST Communications, Inc. 5.26% due 12/24/96 5,000 4,982 2.07
Albertson's Inc. 5.27% due 1/7/97 5,000 4,974 2.07
Atlantic Richfield Co. 5.28% due 1/15/97 5,000 4,967 2.07
SAFECO Credit Co. Inc. 5.29% due 1/22/97 5,000 4,961 2.06
American Brands, Inc. 5.30% due 1/8/97 4,000 3,977 1.65
Sara Lee Corp. 5.25% due 12/2/96 3,900 3,899 1.62
BellSouth Telecommunications, Inc. 5.25% due 12/23/96 3,000 2,990 1.24
Southwestern Bell Telephone Co. 5.22% due 12/23/96 2,600 2,591 1.08
Commercial Credit Co. 5.24% due 12/17/96 2,300 2,294 .95
Federal Agency Discount Notes - 13.98%
Federal Farm Credit Bank 5.22%-5.23% due 12/6-12/16/96 14,985 14,966 6.23
Federal Home Loan Mortgage Corp. 5.20%-5.22% due 10,400 10,365 4.31
12/20-12/27/96
International Bank for Reconstruction and Development
5.22% due 12/30/96 5,700 5,675 2.36
Federal National Mortgage Assn. 5.23% due 12/16/96 2,600 2,594 1.08
Certificates of Deposit - 2.08%
Morgan Guaranty Trust Co. of New York 5.29% due 12/13/96 5,000 5,000 2.08
---------- ----------
TOTAL INVESTMENT SECURITIES (cost: $239,756,000) 239,756 99.75
Excess of cash and receivables over payables 592 .25
---------- ----------
NET ASSETS $240,348 100.00%
========== ==========
See Notes to Financial Statements
</TABLE>
<TABLE>
<S> <C> <C> <C>
American Variable Insurance Series
FINANCIAL STATEMENTS
(dollars
Statement of Assets and Liabilities in
at November 30, 1996 thousands)
Inter- Growth-
Growth national Income
Fund Fund Fund
- --------------------------------- ---------- ---------- ----------
ASSETS:
Investment securities at market
(cost: $2,858,962; $1,965,760;
$3,983,425; $950,616; $75,252;
$628,724; $518,980; $239,756
and $11,221,475, respectively) $3,844,447 $2,337,119 $5,221,287
Cash 81 1,857 316
Receivables for-
Sales of investments 19,989 32,469 21,750
Sales of fund's shares 797 1,047 1,081
Open forward currency
contracts
Dividends and accrued
interest 1,245 7,973 10,257
---------- ---------- ----------
3,866,559 2,380,465 5,254,691
LIABILITIES: ---------- ---------- ----------
Payables for-
Purchases of investments 4,596 9,338 4,301
Repurchases of fund's shares 312 95 135
Management services 1,254 1,126 1,555
Accrued expenses 48 278 60
---------- ---------- ----------
6,210 10,837 6,051
NET ASSETS AT ---------- ---------- ----------
November 30, 1996 $ 3,860,3 $2,369,628 $5,248,640
=========== =========== ===========
Shares of beneficial interest
outstanding (unlimited
shares authorized) 88,690,116 152,588,793 146,906,619
Net asset value per share $43.53 $15.53 $35.73
Asset High-Yield
Allocation Bond Bond
Fund Fund Fund
- --------------------------------- ---------- ---------- ----------
ASSETS:
Investment securities at market
(cost: $2,858,962; $1,965,760;
$3,983,425; $950,616; $75,252;
$628,724; $518,980; $239,756
and $11,221,475, respectively) $1,135,414 $77,329 $650,964
Cash 156 1 11
Receivables for-
Sales of investments 2,373 - 2,265
Sales of fund's shares 620 251 142
Open forward currency
contracts 6
Dividends and accrued
interest 6,188 871 10,628
---------- ---------- ----------
1,144,751 78,458 664,010
LIABILITIES: ---------- ---------- ----------
Payables for-
Purchases of investments 3,206 1,000 1,500
Repurchases of fund's shares 14 - 44
Management services 423 32 269
Accrued expenses 17 1 12
---------- ---------- ----------
3,660 1,033 1,825
NET ASSETS AT ---------- ---------- ----------
November 30, 1996 $1,141,091 $77,425 $662,185
=========== =========== ===========
Shares of beneficial interest
outstanding (unlimited
shares authorized) 75,174,289 7,511,221 45,638,580
Net asset value per share $15.18 $10.31 $14.51
U.S.
Government/
AAA-Rated Cash
Securities Management
Fund Fund Total
- --------------------------------- ---------- ---------- ----------
ASSETS:
Investment securities at market
(cost: $2,858,962; $1,965,760;
$3,983,425; $950,616; $75,252;
$628,724; $518,980; $239,756
and $11,221,475, respectively) $522,560 $239,756 $14,028,876
Cash 27 81 2,530
Receivables for-
Sales of investments - 78,846
Sales of fund's shares 117 732 4,787
Open forward currency
contracts - 6
Dividends and accrued
interest 4,914 16 42,092
---------- ---------- ----------
527,618 240,585 14,157,137
LIABILITIES: ---------- ---------- ----------
Payables for-
Purchases of investments 15,047 38,988
Repurchases of fund's shares 97 141 838
Management services 213 91 4,963
Accrued expenses 10 5 431
---------- ---------- ----------
15,367 237 45,220
NET ASSETS AT ---------- ---------- ----------
November 30, 1996 $512,251 $240,348 $14,111,917
=========== =========== ===========
Shares of beneficial interest
outstanding (unlimited
shares authorized) 45,370,093 21,610,763
Net asset value per share $11.29 $11.12
See Notes to Financial Statements
</TABLE>
<TABLE>
<S> <C> <C> <C>
Statement of Operations (dollars
for the year ended November 30, 1996 in
thousands)
Inter- Growth-
Growth national Income
Fund Fund Fund
---------- ---------- ---------
INVESTMENT INCOME:
Income:
Dividends $16,764 $41,019 $88,452
Interest 19,020 13,569 31,672
---------- ---------- ----------
35,784 54,588 120,124
---------- ---------- ----------
Expenses:
Management services fee 14,284 12,370 17,451
Reports to shareholders 113 72 157
Registration statement and
prospectus 197 104 223
Postage, stationery and
supplies 70 36 81
Trustees' fees 45 26 57
Auditing and legal fees 40 22 50
Custodian fee 136 1,428 158
Taxes other than federal
income tax 46 27 60
Other expenses 26 54 33
---------- ---------- ----------
14,957 14,139 18,270
---------- ---------- ----------
Net investment income 20,827 40,449 101,854
---------- ---------- ----------
REALIZED GAIN (LOSS) AND
UNREALIZED APPRECIATION
(DEPRECIATION) ON INVESTMENTS:
Realized gain (loss) 269,265 96,629 373,978
---------- ---------- ----------
Net change in unrealized appreciation
(depreciation) on investments 183,049 177,135 407,012
Net increase in unrealized appreciation
on open forward currency contracts - - -
---------- ---------- ----------
Net unrealized appreciation
(depreciation) 183,049 177,135 407,012
---------- ---------- ----------
Net realized gain (loss) and
unrealized appreciation (depreciation)
on investments 452,314 273,764 780,990
---------- ---------- ----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $473,141 $314,213 $882,844
========= =========== =========
High-
Asset Yield
Allocation Bond Bond
Fund Fund /1/ Fund
---------- ---------- ----------
INVESTMENT INCOME:
Income:
Dividends $16,529 $51 $163
Interest 26,719 2,629 58,061
---------- ---------- ----------
43,248 2,680 58,224
---------- ---------- ----------
Expenses:
Management services fee 4,663 204 2,996
Reports to shareholders 34 1 20
Registration statement and
prospectus 41 1 44
Postage, stationery and
supplies 18 1 11
Trustees' fees 13 - 7
Auditing and legal fees 11 - 7
Custodian fee 54 2 37
Taxes other than federal
income tax 14 - 9
Other expenses 9 1 7
---------- ---------- ----------
4,857 210 3,138
---------- ---------- ----------
Net investment income 38,391 2,470 55,086
---------- ---------- ----------
REALIZED GAIN (LOSS) AND
UNREALIZED APPRECIATION
(DEPRECIATION) ON INVESTMENTS:
Realized gain (loss) 72,509 38 4,194
---------- ---------- ----------
Net change in unrealized appreciation
(depreciation) on investments 62,633 2,077 17,642
Net increase in unrealized appreciation
on open forward currency contracts - 6 -
----------- ----------- ----------
Net unrealized appreciation
(depreciation) 62,633 2,083 17,642
----------- ----------- ----------
Net realized gain (loss) and
unrealized appreciation (depreciation)
on investments 135,142 2,121 21,836
----------- ----------- ----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $173,533 $4,591 $76,922
========= ========= =========
U.S.
Government/ Cash
AAA-Rated Manage-
Securities ment
Fund Fund Total
--------------- ---------- ---------
INVESTMENT INCOME:
Income:
Dividends - - $162,978
Interest $ 41,273 $ 11,985 204,
---------- ---------- ----------
41,273 11,985 367,906
---------- ---------- ----------
Expenses:
Management services fee 2,661 1,007 55,636
Reports to shareholders 18 8 423
Registration statement and
prospectus 23 3 636
Postage, stationery and
supplies 10 4 231
Trustees' fees 7 3 158
Auditing and legal fees 7 2 139
Custodian fee 29 12 1,856
Taxes other than federal
income tax 9 3 168
Other expenses 7 4 141
---------- ---------- ----------
2,771 1,046 59,388
---------- ---------- ----------
Net investment income 38,502 10,939 308,518
---------- ---------- ----------
REALIZED GAIN (LOSS) AND
UNREALIZED APPRECIATION
(DEPRECIATION) ON INVESTMENTS:
Realized gain (loss) (2,883) - 813,730
---------- ---------- ----------
Net change in unrealized appreciation
(depreciation) on investments (8,951) - 840,597
Net increase in unrealized appreciation
on open forward currency contracts - - 6
--------------- ---------- ----------
Net unrealized appreciation
(depreciation) (8,951) - 840,603
--------------- ---------- ----------
Net realized gain (loss) and
unrealized appreciation (depreciation)
on investments (11,834) - 1,654,333
--------------- ---------- ----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $26,668 $10,939 $1,962,851
=============== ========= =========
/1/ For the period January 2, 1996,
commencement of operations, through
November 30, 1996.
See Notes to Financial Statements
</TABLE>
<TABLE>
<S> <C> <C> <C>
Statement of Changes in Net Assets (dollars
for the year ended November 30, 1996 in
thousands)
Inter- Growth-
Growth national Income
Fund Fund Fund
- ---------------------------------- ----------- ----------- -----------
OPERATIONS:
Net investment income $ 20,827 $ 40,449 $ 101,854
Net realized gain (loss) on investments 269,265 96,629 373,978
Net unrealized appreciation (depreciation)
on investments 183,049 177,135 407,012
----------- ----------- -----------
Net increase in net assets
resulting from operations 473,141 314,213 882,844
----------- ----------- -----------
DIVIDENDS AND
DISTRIBUTIONS PAID TO
SHAREHOLDERS:
Dividends from net investment income (24,246) (42,718) (101,529)
Distributions from net realized
gain on investments (259,930) (35,844) (159,645)
----------- ----------- -----------
Total dividends and distributions (284,176) (78,562) (261,174)
----------- ----------- -----------
CAPITAL SHARE
TRANSACTIONS:
Proceeds from shares sold:
12,825,093; 28,612,329; 16,813,646;
9,441,738; 7,434,995; 6,502,188;
3,523,988; 24,337,746 and 109,491,723
shares, respectively 506,249 412,624 540,891
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions
of net realized gain on investments:
7,512,662; 5,605,115; 8,475,637;
4,980,163; 137,024; 3,834,396;
3,478,224; 937,903 and 34,961,124 shares,
respectively 284,176 78,562 261,174
Cost of shares repurchased:
7,086,581; 4,238,963; 4,001,696;
2,391,438; 160,798; 2,875,119;
8,689,601; 21,049,530 and 50,493,726
shares, respectively (273,482) (60,680) (128,364)
Net increase (decrease) in net ----------- ----------- -----------
assets resulting from capital share
transactions 516,943 430,506 673,701
----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS 705,908 666,157 1,295,371
NET ASSETS:
Beginning of year 3,154,441 1,703,471 3,953,269
----------- ----------- -----------
End of year (including
undistributed net investment
income: $4,638; $7,669; $25,264;
$9,974; $1,121; $14,357; $9,778;
$3,089 and $75,890, respectively) $3,860,349 $2,369,628 $5,248,640
============ ============ ============
Asset High-Yield
Allocation Bond Bond
Fund Fund/1/ Fund
- ---------------------------------- ----------- ----------- -----------
OPERATIONS:
Net investment income $ 38,391 $ 2,470 $ 55,086
Net realized gain (loss) on investments 72,509 38 4,194
Net unrealized appreciation (depreciation)
on investments 62,633 2,083 17,642
----------- ----------- -----------
Net increase in net assets
resulting from operations 173,533 4,591 76,922
----------- ----------- -----------
DIVIDENDS AND
DISTRIBUTIONS PAID TO
SHAREHOLDERS:
Dividends from net investment income (36,923) (1,349) (53,386)
Distributions from net realized
gain on investments (30,506) - -
----------- ----------- -----------
Total dividends and distributions (67,429) (1,349) (53,386)
----------- ----------- -----------
CAPITAL SHARE
TRANSACTIONS:
Proceeds from shares sold:
12,825,093; 28,612,329; 16,813,646;
9,441,738; 7,434,995; 6,502,188;
3,523,988; 24,337,746 and 109,491,723
shares, respectively 131,175 73,438 91,739
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions
of net realized gain on investments:
7,512,662; 5,605,115; 8,475,637;
4,980,163; 137,024; 3,834,396;
3,478,224; 937,903 and 34,961,124 shares,
respectively 67,429 1,349 53,386
Cost of shares repurchased:
7,086,581; 4,238,963; 4,001,696;
2,391,438; 160,798; 2,875,119;
8,689,601; 21,049,530 and 50,493,726
shares, respectively (33,309) (1,604) (40,681)
Net increase (decrease) in net ----------- ----------- -----------
assets resulting from capital share
transactions 165,295 73,183 104,444
----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS 271,399 76,425 127,980
NET ASSETS:
Beginning of year 869,692 1,000/2/ 534,205
----------- ----------- -----------
End of year (including
undistributed net investment
income: $4,638; $7,669; $25,264;
$9,974; $1,121; $14,357; $9,778;
$3,089 and $75,890, respectively) $1,141,091 $77,425 $662,185
============ ============ ============
U.S.
Government/
AAA-Rated Cash
Securities Management
Fund Fund Total
- ---------------------------------- ----------- ----------- -----------
OPERATIONS:
Net investment income $ 38,502 $ 10,939 $ 308,518
Net realized gain (loss) on investments (2,883) - 813,730
Net unrealized appreciation (depreciation)
on investments (8,951) - 840,603
----------- ----------- -----------
Net increase in net assets
resulting from operations 26,668 10,939 1,962,851
----------- ----------- -----------
DIVIDENDS AND
DISTRIBUTIONS PAID TO
SHAREHOLDERS:
Dividends from net investment income (38,383) (10,336) (308,870)
Distributions from net realized
gain on investments - - (485,925)
----------- ----------- -----------
Total dividends and distributions (38,383) (10,336) (794,795)
----------- ----------- -----------
CAPITAL SHARE
TRANSACTIONS:
Proceeds from shares sold:
12,825,093; 28,612,329; 16,813,646;
9,441,738; 7,434,995; 6,502,188;
3,523,988; 24,337,746 and 109,491,723
shares, respectively 39,469 269,588 2,065,173
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions
of net realized gain on investments:
7,512,662; 5,605,115; 8,475,637;
4,980,163; 137,024; 3,834,396;
3,478,224; 937,903 and 34,961,124 shares,
respectively 38,383 10,336 794,795
Cost of shares repurchased:
7,086,581; 4,238,963; 4,001,696;
2,391,438; 160,798; 2,875,119;
8,689,601; 21,049,530 and 50,493,726
shares, respectively (96,167) (233,296) (867,583)
Net increase (decrease) in net ----------- ----------- -----------
assets resulting from capital share
transactions (18,315) 46,628 1,992,385
----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS (30,030) 47,231 3,160,441
NET ASSETS:
Beginning of year 542,281 193,117 10,951,476
----------- ----------- -----------
End of year (including
undistributed net investment
income: $4,638; $7,669; $25,264;
$9,974; $1,121; $14,357; $9,778;
$3,089 and $75,890, respectively) $512,251 $240,348 $14,111,917
============ ============ ============
/1/ For the period January 2, 1996, commencement of
operations, through November 30, 1996.
/2/ Represents initial capitalization from sale of
100,000 shares of beneficial interest.
See Notes to Financial Statements
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Statement of Changes in Net Assets (dollars
for the year ended November 30, 1995 in
thousands)
Inter- Growth- Asset
Growth national Income Allocation
Fund Fund Fund Fund
- ---------------------------------- ----------- ----------- ----------- -----------
OPERATIONS:
Net investment income $ 23,635 $ 40,140 $ 88,796 $ 30,480
Net realized gain (loss) on investments 259,039 34,945 160,279 30,610
Net unrealized appreciation
on investments 480,224 83,096 691,459 129,814
----------- ----------- ----------- -----------
Net increase in net assets
resulting from operations 762,898 158,181 940,534 190,904
----------- ----------- ----------- -----------
DIVIDENDS AND
DISTRIBUTIONS PAID TO
SHAREHOLDERS:
Dividends from net investment income (20,133) (37,537) (85,055) (29,507)
Distributions from net realized
gain on investments (51,801) (44,136) (112,521) (9,640)
----------- ----------- ----------- -----------
Total dividends and distributions (71,934) (81,673) (197,576) (39,147)
----------- ----------- ----------- -----------
CAPITAL SHARE
TRANSACTIONS:
Proceeds from shares sold:
14,348,086; 19,173,422; 13,715,393;
6,084,975; 7,379,725; 6,989,389;
20,995,679 and 88,686,669 shares,
respectively 528,750 254,241 387,075 76,296
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions
of net realized gain on investments:
2,225,519; 6,335,172; 7,750,200;
3,296,555; 3,356,613; 3,279,414;
937,931 and 27,181,404 shares,
respectively 71,934 81,673 197,576 39,147
Cost of shares repurchased:
4,610,567; 8,773,846; 4,174,136;
2,877,501; 2,819,500; 6,063,251;
24,444,114 and 53,762,915 shares,
respectively (164,548) (113,837) (114,706) (34,878)
Net increase (decrease) in net ----------- ----------- ----------- -----------
assets resulting from capital share
transactions 436,136 222,077 469,945 80,565
----------- ----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,127,100 298,585 1,212,903 232,322
NET ASSETS:
Beginning of year 2,027,341 1,404,886 2,740,366 637,370
----------- ----------- ----------- -----------
End of year (including
undistributed net investment
income: $8,057; $9,938; $24,939;
$8,506; $12,657; $9,659; $2,486
and $76,242, respectively) $3,154,441 $1,703,471 $3,953,269 $869,692
============ ============ ============ ============
U.S.
Government/
High-Yield AAA-Rated Cash
Bond Securities Management
Fund Fund Fund Total
- ---------------------------------- ----------- ----------- ----------- -----------
OPERATIONS:
Net investment income $ 46,966 $ 37,218 $ 10,687 $ 277,922
Net realized gain (loss) on investments (11,260) (5,497) - 468,116
Net unrealized appreciation
on investments 47,164 37,855 - 1,469,612
----------- ----------- ----------- -----------
Net increase in net assets
resulting from operations 82,870 69,576 10,687 2,215,650
----------- ----------- ----------- -----------
DIVIDENDS AND
DISTRIBUTIONS PAID TO
SHAREHOLDERS:
Dividends from net investment income (44,378) (36,115) (10,344) (263,069)
Distributions from net realized
gain on investments - - - (218,098)
----------- ----------- ----------- -----------
Total dividends and distributions (44,378) (36,115) (10,344) (481,167)
----------- ----------- ----------- -----------
CAPITAL SHARE
TRANSACTIONS:
Proceeds from shares sold:
14,348,086; 19,173,422; 13,715,393;
6,084,975; 7,379,725; 6,989,389;
20,995,679 and 88,686,669 shares,
respectively 99,350 77,672 233,089 1,656,473
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions
of net realized gain on investments:
2,225,519; 6,335,172; 7,750,200;
3,296,555; 3,356,613; 3,279,414;
937,931 and 27,181,404 shares,
respectively 44,378 36,115 10,344 481,167
Cost of shares repurchased:
4,610,567; 8,773,846; 4,174,136;
2,877,501; 2,819,500; 6,063,251;
24,444,114 and 53,762,915 shares,
respectively (37,940) (67,704) (271,390) (805,003)
Net increase (decrease) in net ----------- ----------- ----------- -----------
assets resulting from capital share
transactions 105,788 46,083 (27,957) 1,332,637
----------- ----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS 144,280 79,544 (27,614) 3,067,120
NET ASSETS:
Beginning of year 389,925 462,737 220,731 7,883,356
----------- ----------- ----------- -----------
End of year (including
undistributed net investment
income: $8,057; $9,938; $24,939;
$8,506; $12,657; $9,659; $2,486
and $76,242, respectively) $534,205 $542,281 $193,117 $10,950,476
============ ============ ============ ============
See Notes to Financial Statements
</TABLE>
Notes to Financial Statements
1. American Variable Insurance Series (the "series") is registered under the
Investment Company Act of 1940 as an open-end, diversified management
investment company with eight different funds. The eighth fund, the Bond Fund,
commenced operations on January 2, 1996. The assets of each fund are
segregated, with each fund accounted for separately. The funds' investment
objectives are as follows: 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. 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 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 $1,856,000, of
which $60,000 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 year ended November 30, 1996, the International Fund
realized, on a tax basis, a net capital gain of $96,027,000 on securities
transactions. During the year ended November 30, 1996, the High-Yield Bond Fund
utilized a capital loss carryforward of $2,806,000 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
November 30, 1996 capital loss carryforwards totaling $6,501,000 and $9,822,000
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 November 30,
1996 were as follows:
<TABLE>
<S> <C> <C> <C> <C> <C>
(dollars
in
thousands)
Growth- Asset
Growth Interna- Income Allocation Bond
Fund tional Fund Fund Fund Fund
Unrealized
appreciation $1,099,498 $ 461,949 $1,280,331 $190,020 $ 2,234
Unrealized
depreciation 114,013 90,590 42,469 5,222 157
Net unrealized
appreciation 985,485 371,359 1,237,862 184,798 2,077
Cost of portfolio
securities 2,858,962 1,965,760 3,983,425 950,616 75,252
High-Yield U.S. Government/ Cash
Bond AAA-Rated Management
Fund Securities Fund Fund Total
Unrealized
appreciation $ 28,039 $ 9,479 - $ 3,071,550
Unrealized
depreciation 5,799 5,899 - 264,149
Net unrealized
appreciation 22,240 3,580 - 2,807,401
Cost of portfolio
securities 628,724 518,980 $239,756 11,221,475
</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: Growth Fund - 0.60% of the first $30 million of average net
assets; 0.50% of such assets in excess of $30 million but not exceeding $600
million; 0.45% of such assets in excess of $600 million but not exceeding $1.2
billion; 0.42% of such assets in excess of $1.2 billion but not exceeding $2.0
billion; and 0.37% of such assets in excess of $2.0 billion; International Fund
- - 0.90% of the first $60 million of average net assets; 0.78% of such assets in
excess of $60 million but not exceeding $600 million; 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 - 0.60% of the first $30
million of average net assets; 0.50% of such assets in excess of $30 million
but not exceeding $600 million; 0.45% of such assets in excess of $600 million
but not exceeding $1.5 billion; 0.40% of such assets in excess of $1.5 billion
but not exceeding $2.5 billion; and 0.32% of such assets in excess of $2.5
billion; Asset Allocation Fund - 0.60% of the first $30 million of average net
assets; 0.50% of such assets in excess of $30 million but not exceeding $600
million; and 0.42% of such assets in excess of $600 million; 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.
The Board of Trustees has approved an amended Investment Advisory and Service
agreement, which provides for reduced fees for the Growth Fund, Growth-Income
Fund, and the Asset Allocation Fund effective December 1, 1996, at the
following annual rates: 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;
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. Beginning October 1, 1996, CRMC has voluntarily
agreed to waive its management fees in excess of those provided by the amended
agreement.
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 November 30,
1996, aggregate amounts deferred and earnings thereon were $110,000.
4.
<TABLE>
<S> <C> <C> <C>
(dollars
in
thousands)
Growth-
Growth Interna- Income
Fund tional Fund Fund
As of November 30,
1996:
Accumulated
undistributed
net realized
gain (loss) on
investments $ 267,737 $ 95,444 $ 373,216
Paid-in capital 2,602,489 1,895,065 3,612,298
For the year
ended November 30,
1996:
Purchases of
investment
securities /1/ 1,304,842 1,121,564 1,584,674
Sales of invest-
ment securities /1/ 946,236 576,765 1,223,882
Asset High-Yield
Allocation Bond Bond
Fund Fund Fund
As of November 30,
1996:
Accumulated
undistributed
net realized
gain (loss) on
investments $ 72,422 $ 38 $ (7,163)
Paid-in capital 873,897 74,183 632,750
For the year
ended November 30,
1996:
Purchases of
investment
securities /1/ 458,007 66,769/2/ 295,440
Sales of invest-
ment securities /1/ 436,285 10,095/2/ 245,208
U.S. Government/ Cash
AAA-Rated Management
Securities Fund Fund Total
As of November 30,
1996:
Accumulated
undistributed
net realized
gain (loss) on
investments $ (11,022) - $ 790,672
Paid-in capital 509,915 $237,259 10,437,856
For the year
ended November 30,
1996:
Purchases of
investment
securities /1/ 167,672 - 4,998,968
Sales of invest-
ment securities /1/ 149,264 - 3,587,735
/1/ Excludes short-
term securities
/2/ For the period
January 2, 1996,
commencement of
operations, through
November 30, 1996.
</TABLE>
5. Dividend and interest income for the International Fund is recorded net of
non-U.S. taxes paid. For the year ended November 30, 1996, such non-U.S. taxes
were $5,796,000. Net realized currency gains on dividends, interest,
withholding taxes reclaimable, and sales of non-U.S. bonds and notes were
$877,000 for the year ended November 30, 1996.
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 November 30, 1996, the Bond Fund had an
outstanding forward currency contract to sell non-U.S. currencies as follows:
<TABLE>
<S> <C> <C> <C> <C>
Contract Amount U.S. Valuation at 11/30/96
Unrealized
Non-U.S. Currency Sale Contract Non-U.S. U.S. Amount Appreciation
------------------------------ --------------- ---------------
Deutsche Markes
expiring 1/8/97 DM275,000 $185,000 $179,000 $6,000
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
PER-SHARE DATA AND RATIOS
Net Total
realized & income Dividends
Net asset Net unrealized from from net
Year value, invest- gain (loss) invest- invest-
Ended beginning ment on invest- ment ment
11/30 of year income ments operations income
- --------- --------- --------- --------- --------- ---------
Growth Fund
1992 $24.18 $ .29 $ 4.25 $ 4.54 $(.31) /2/
1993 28.41 .25 4.13 4.38 (.24)
1994 32.34 .24 .69 .93 (.24)
1995 31.94 .33 10.63 10.96 (.29)
1996 41.81 .24 5.17 5.41 (.29)
International Fund
1992 $10.02 $ .19 $ (.09) $ .10 $ (.21)
1993 9.89 .17 2.50 2.67 (.16)
1994 12.40 .25 1.04 1.29 (.20)
1995 13.27 .34 1.02 1.36 (.33)
1996 13.89 .28 1.96 2.24 (.31)
Growth-Income Fund
1992 $21.72 $ .65 $ 2.74 $ 3.39 $ (.67)
1993 24.17 .63 2.12 2.75 (.63)
1994 26.01 .68 .14 .82 (.65)
1995 25.30 .73 7.20 7.93 (.73)
1996 31.47 .71 5.55 6.26 (.74)
Asset Allocation Fund
1992 $10.59 $ .48 $ .94 $ 1.42 $ (.49)
1993 11.47 .51 .67 1.18 (.49)
1994 12.01 .51 (.57) (.06) (.52)
1995 11.25 .50 2.69 3.19 (.50)
1996 13.77 .53 1.89 2.42 (.53)
Bond Fund /3/
1996 $10.00 $ .40 $ .16 $ .56 $ (.25)
High-Yield Bond Fund
1992 $13.53 $1.10 $ .62 $ 1.72 $(1.08)
1993 14.17 1.09 1.20 2.29 (1.10)
1994 15.17 1.27 (2.07) (.80) (1.23)
1995 12.89 1.32 1.10 2.42 (1.32)
1996 13.99 1.28 .54 1.82 (1.30)
U.S. Government/AAA-
Rated Securities Fund
1992 $11.22 $ .75 $ .32 $ 1.07 $ (.76)
1993 11.53 .74 .68 1.42 (.75)
1994 12.15 .76 (1.30) (.54) (.74)
1995 10.80 .82 .71 1.53 (.81)
1996 11.52 .83 (.24) .59 (.82)
Cash Management Fund
1992 $11.11 $ .35 $ .01 $ .36 $ (.43)
1993 11.04 .29 - .29 (.31)
1994 11.02 .37 .02 .39 (.32)
1995 11.09 .63 (.02) .61 (.59)
1996 11.11 .54 .01 .55 (.54)
Distri-
butions
from Net asset Net assets,
Year net Total value, end of
Ended realized distri- end of Total year (in
11/30 gains butions year return millions)
- --------- --------- --------- --------- --------- ---------
Growth Fund
1992 - $ (.31) $28.41 18.90% $1,212
1993 $ (.21) (.45) 32.34 15.59 1,737
1994 (1.09) (1.33) 31.94 2.92 2,027
1995 (.80) (1.09) 41.81 35.35 3,154
1996 (3.40) (3.69) 43.53 14.32 3,860
International Fund
1992 $ (.02) $ (.23) $ 9.89 0.90% $ 360
1993 - (.16) 12.40 27.20 840
1994 (.22) (.42) 13.27 10.48 1,405
1995 (.41) (.74) 13.89 10.78 1,703
1996 (.29) (.60) 15.53 16.66 2,370
Growth-Income Fund
1992 $ (.27) $ (.94) $24.17 15.90% $1,704
1993 (.28) (.91) 26.01 11.63 2,436
1994 (.88) (1.53) 25.30 3.21 2,740
1995 (1.03) (1.76) 31.47 33.14 3,953
1996 (1.26) (2.00) 35.73 21.02 5,249
Asset Allocation Fund
1992 $ (.05) $ (.54) $11.47 13.69% $ 359
1993 (.15) (.64) 12.01 10.59 578
1994 (.18) (.70) 11.25 (.54) 637
1995 (.17) (.67) 13.77 29.45 870
1996 (.48) (1.01) 15.18 18.65 1,141
Bond Fund /3/
1996 - $ (.25) $10.31 5.74% /4/ $ 77
High-Yield Bond Fund
1992 - $(1.08) $14.17 13.14% $ 197
1993 $ (.19) (1.29) 15.17 17.09 379
1994 (.25) (1.48) 12.89 (5.71) 390
1995 - (1.32) 13.99 19.81 534
1996 - (1.30) 14.51 13.75 662
U.S. Government/AAA-
Rated Securities Fund
1992 - $ (.76) $11.53 9.83% $ 360
1993 $ (.05) (.80) 12.15 12.65 505
1994 (.07) (.81) 10.80 (4.58) 463
1995 - (.81) 11.52 14.73 542
1996 - (.82) 11.29 5.49 512
Cash Management Fund
1992 - $ (.43) $11.04 3.31% $ 197
1993 - (.31) 11.02 2.67 206
1994 - (.32) 11.09 3.59 221
1995 - (.59) 11.11 5.65 193
1996 - (.54) 11.12 5.09 240
Ratio
Ratio of of net Average
Year expenses income to commissions Portfolio
Ended to average average paid per turnover
11/30 net assets net assets share /1/ rate
- --------- --------- --------- --------- ---------
Growth Fund
1992 0.53% 1.15% 6.89 cents 11.15%
1993 .50 .86 6.43 20.40
1994 .49 .78 6.09 29.58
1995 .47 .92 5.91 35.47
1996 .44 .61 5.42 30.88
International Fund
1992 1.00% 2.11% 1.22 cents 16.73%
1993 .96 1.75 .23 17.70
1994 .80 2.03 1.01 19.66
1995 .75 2.64 .16 24.66
1996 .69 1.99 1.24 32.08
Growth-Income Fund
1992 0.52% 3.01% 7.46 cents 13.60%
1993 .49 2.66 7.02 24.93
1994 .47 2.72 6.39 29.26
1995 .44 2.70 6.21 26.91
1996 .41 2.26 5.75 31.27
Asset Allocation Fund
1992 0.57% 4.73% 7.12 cents 19.74%
1993 .55 4.66 6.85 19.01
1994 .53 4.55 6.38 36.13
1995 .52 4.11 6.27 39.89
1996 .49 3.88 5.60 50.62
Bond Fund /3/
1996 .52% /4/ 6.18% /4/ - 32.83%/4/
High-Yield Bond Fund
1992 0.59% 8.88% - 47.44%
1993 .56 8.18 - 34.05
1994 .54 9.37 - 38.46
1995 .54 10.12 - 31.73
1996 .53 9.27 - 44.81
U.S. Government/AAA-
Rated Securities Fund
1992 0.57% 7.08% - 39.96%
1993 .55 6.42 - 21.69
1994 .54 6.69 - 45.21
1995 .54 7.37 - 30.11
1996 .53 7.33 - 30.45
Cash Management Fund
1992 0.53% 3.24% - -
1993 .51 2.57 - -
1994 .49 3.60 - -
1995 .49 5.37 - -
1996 .47 4.94 - -
/1/ Brokerage commissions paid on portfolio transactions
increase the cost of securities purchased or reduce the proceeds
of securities sold, and are not reflected in the funds'
statement of operations. Shares traded on a principal
basis, 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.
/2/ Amount includes net realized short-term gains treated as net
investment income for federal income tax purposes.
/3/ Commenced operations January 2, 1996.
/4/ Based on operations for the period shown
and, accordingly, not representative of a
full year's operations.
See Notes to Financial Statements
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
_________________________________________________________________
To the Board of Trustees and Shareholders of
American Variable Insurance Series:
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of
operations and of changes in net assets and the per-share data and ratios
present fairly, in all material respects, the financial position of the Growth
Fund, the International Fund, the Growth-Income Fund, the Asset Allocation
Fund, the Bond Fund, the High-Yield Bond Fund, the U.S. Government/AAA-Rated
Securities Fund and the Cash Management Fund (constituting the American
Variable Insurance Series, hereafter referred to as the "Series") at November
30, 1996, the results of each of their operations for the year then ended, the
changes in each of their net assets for the years indicated, and the per-share
data and ratios for the years indicated, in conformity with generally accepted
accounting principles. These financial statements and per-share data and
ratios (hereafter referred to as "financial statements") are the responsibility
of the Series' management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at November 30, 1996 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above
PRICE WATERHOUSE LLP
Los Angeles, California
January 8, 1997
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
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
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
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
400 South Hope Street
Los Angeles, California 90071-2889
This report is for the information of American Variable Insurance Series
investors, and may only be used 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 after March 31, 1997,
this report must be accompanied by an American Legacy Statistical Update for
the most recently completed calendar quarter.
Litho in USA MED/FS/3158
(C) 1997 American Funds Distributors, Inc.
Lit. No. VI-011-0197Printed on recycled paper
