AMERICAN VARIABLE INSURANCE SERIES
PART B
STATEMENT OF ADDITIONAL INFORMATION
APRIL 1, 1998
(as amended April 30, 1998)
This document is not a prospectus but should be read in conjunction with the
current prospectuses of American Variable Insurance Series (the "Series") dated
April 1, 1998. The prospectuses may be obtained from your investment dealer or
financial planner or by writing to the Series at the following address:
AMERICAN VARIABLE INSURANCE SERIES
Attention: Secretary
333 South Hope Street
Los Angeles, CA 90071
(213) 486-9200
TABLE OF CONTENTS
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ITEM PAGE NO.
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INVESTMENT POLICIES 1
INVESTMENT RESTRICTIONS 8
SERIES TRUSTEES AND OFFICERS 13
MANAGEMENT 17
PRICE OF SHARES 19
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES 20
EXECUTION OF PORTFOLIO TRANSACTIONS 21
GENERAL INFORMATION 22
APPENDIX 26
FINANCIAL STATEMENTS ATTACHED
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INVESTMENT POLICIES
With respect to all funds, portfolio changes will be made without regard to the
length of time a particular investment may have been held. Under certain
market conditions, the investment policies of the Asset Allocation Fund, the
Bond Fund, the High-Yield Bond Fund, and the U.S. Government/AAA-Rated
Securities Fund may result in higher portfolio turnover than those of the other
funds, although no fund's annual portfolio turnover rate is expected to exceed
100%. A 100% annual portfolio turnover rate would occur, for example, if all
the investments in a fund's portfolio (exclusive of securities with less than
one year to maturity) were replaced in a period of one year. High portfolio
turnover involves correspondingly greater brokerage commissions, to the extent
such commissions are payable, and other transaction costs, which will be borne
directly by the fund involved.
GLOBAL GROWTH FUND, GLOBAL SMALL CAPITALIZATION FUND, GROWTH FUND,
GROWTH-INCOME FUND, ASSET ALLOCATION FUND, BOND FUND AND HIGH-YIELD BOND FUND
CERTAIN RISK FACTORS RELATING TO HIGH-YIELD, HIGH-RISK SECURITIES:
SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES - High-yield, high-risk
securities can be sensitive to adverse economic changes and corporate
developments. During an economic downturn or substantial period of rising
interest rates, highly leveraged issuers may experience financial stress that
would adversely affect their ability to service their principal and interest
payment obligations, to meet projected business goals, and to obtain additional
financing. If the issuer of a bond defaulted on its obligations to pay
interest or principal or entered into bankruptcy proceedings, a fund may incur
losses or expenses in seeking recovery of amounts owed to it. In addition,
periods of economic uncertainty and changes can be expected to result in
increased volatility of market prices and yields of high-yield, high-risk bonds
and each fund's net asset value.
PAYMENT EXPECTATIONS - High-yield, high-risk bonds may contain redemption or
call provisions. If an issuer exercised these provisions in a declining
interest rate market, a fund would have to replace the security with a lower
yielding security, resulting in a decreased return for investors. Conversely,
the value of high-yield, high-risk bonds held by each fund will decrease in a
rising interest rate market, as will the value of each fund's assets. If a
fund experiences unexpected net redemptions, this may force it to sell
high-yield, high-risk bonds without regard to their investment merits, thereby
decreasing the asset base upon which expenses can be spread and possibly
reducing each fund's rate of return.
LIQUIDITY AND VALUATION - There may be little trading in the secondary market
for particular bonds, which may affect adversely a fund's ability to value
accurately or dispose of such bonds. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of high-yield, high-risk bonds, especially in a thin
market.
GLOBAL GROWTH FUND, GLOBAL SMALL CAPITALIZATION FUND, GROWTH FUND,
GROWTH-INCOME FUND, INTERNATIONAL FUND, ASSET ALLOCATION FUND, BOND FUND AND
HIGH-YIELD BOND FUND
CURRENCY TRANSACTIONS -- The Global Growth Fund, the Global Small
Capitalization Fund, the Growth Fund, the International Fund, the Bond Fund and
the High-Yield Bond Fund have the ability to enter into forward currency
contracts to protect against changes in currency exchange rates. A forward
currency contract is an obligation to purchase or sell a specific currency at a
future date and price, both of which are set at the time of the contract. The
funds intend to enter into forward currency contracts solely to hedge into the
U.S. dollar its exposure to other currencies. The fund will segregate liquid
assets which will be marked to market daily to meet its forward contract
commitments to the extent required by the Securities and Exchange Commission.
The Growth-Income Fund and the Asset Allocation Fund do not currently intend to
engage in any transactions other than purchasing and selling currencies and
foreign exchange contracts which will be used to facilitate settlement of
trades.
The Bond Fund and the High-Yield Bond Fund may enter into the transactions
described above and may also enter into exchange-traded futures contracts
relating to foreign currencies ("currency contracts") in connection with
investments in securities of foreign issuers in anticipation of, or to protect
against, fluctuations in exchange rates. In addition, forward currency
contracts may be used by these funds to purchase or sell a currency against
another currency at a future date and price as agreed upon by the parties. An
exchange-traded futures contract relating to foreign currency is similar to a
forward foreign currency contract but has a standardized size and exchange
date. Although currency contracts typically will involve the purchase and sale
of a currency against the U.S. dollar, these funds also may enter into currency
contracts not involving the U.S. dollar. In connection with these futures
transactions, the Series has filed a notice of eligibility with the Commodities
Futures Trading Association ("CFTC") that exempts the Series from CFTC
registration as a "commodity pool operator" as defined under the Commodities
Exchange Act. Pursuant to this notice, these funds will observe certain CFTC
guidelines with respect to its futures transactions that, among other things,
limit initial margin deposits in connection with the use of futures contracts
and related options for purposes other than "hedging" (as defined by CFTC
rules) to 5% of a fund's net assets.
The Bond Fund and the High-Yield Bond Fund may attempt to accomplish objectives
similar to those involved in their use of currency contracts by purchasing put
or call options on currencies. A put option gives a fund, as purchaser, the
right (but not the obligation) to sell a specified amount of currency at the
exercise price until the expiration of the option. A call option gives a fund,
as purchaser, the right (but not the obligation) to purchase a specified amount
of currency at the exercise price until its expiration. The funds might
purchase a currency put option, for example, to protect themselves during the
contract period against a decline in the U.S. dollar value of a currency in
which they hold or anticipate holding securities. If the currency's value
should decline against the U.S. dollar, the loss in currency value should be
offset, in whole or in part, by an increase in the value of the put. If the
value of the currency instead should rise against the U.S. dollar, any gain to
the funds would be reduced by the premium they had paid for the put option. A
currency call option might be purchased, for example, in anticipation of, or to
protect against, a rise in the value against the U.S. dollar of a currency in
which the funds anticipate purchasing securities.
Currency options may be either listed on an exchange or traded over-the-counter
("OTC options"). Listed options are third-party contracts (I.E., performance
of the obligations of the purchaser and seller is guaranteed by the exchange or
clearing corporation) and have standardized strike (exercise) prices and
expiration dates. OTC options are two-party contracts with negotiated strike
prices and expiration dates. The High-Yield Bond Fund and Bond Fund will not
purchase an OTC option unless it is believed that daily valuations for such
options are readily obtainable. OTC options differ from exchange-traded
options in that OTC options are transacted with dealers directly and not
through a clearing corporation which guarantees performance. Consequently,
there is a risk of non-performance by the dealer. Since no exchange is
involved, OTC options are valued on the basis of a quote provided by the
dealer. In the case of OTC options, there can be no assurance that a liquid
secondary market will exist for any particular option at any specific time.
Certain provisions of the Internal Revenue code may limit the extent to which
the fund may enter into forward contracts. Such transactions may also affect,
for U.S. federal tax purposes, the character and timing of income, gain or loss
recognized by the fund.
ASSET ALLOCATION FUND, BOND FUND AND U.S. GOVERNMENT/AAA-RATED SECURITIES FUND
PASS-THROUGH SECURITIES -- The funds may purchase certificates issued by the
Government National Mortgage Association ("GNMA") and the U.S.
Government/AAA-Rated Securities Fund expects to invest substantially in these
securities. GNMA certificates are mortgage-backed securities representing part
ownership of a pool of mortgage loans on which timely payment of interest and
principal is guaranteed by the full faith and credit of the U.S. Government. A
pool of these mortgages is assembled and, after being approved by GNMA, is
offered to investors through securities dealers. GNMA certificates differ from
typical bonds because principal is repaid monthly over the term of the loan
rather than returned in a lump sum at maturity. Because both interest and
principal payments (including prepayments) on the underlying mortgage loans are
passed through to the holder of the certificate, GNMA certificates are called
"pass-through" securities.
The Federal National Mortgage Association ("FNMA"), a federally chartered and
privately-owned corporation, issues pass-through securities representing
interests in a pool of conventional mortgage loans. FNMA guarantees the timely
payment of principal and interest, but this guarantee is not backed by the full
faith and credit of the U.S. Government. The Federal Home Loan Mortgage
Corporation ("FHLMC"), a corporate instrumentality of the U.S. Government,
issues participation certificates which represent an interest in a pool of
conventional mortgage loans. FHLMC guarantees the timely payment of interest
and the ultimate collection of principal and maintains reserves to protect
holders against losses due to default, but the certificates are not backed by
the full faith and credit of the U.S. Government. As is the case with GNMA
certificates, the actual maturity of and realized yield on particular FNMA and
FHLMC pass-through securities will vary based on the prepayment experience of
the underlying pool of mortgages.
The funds may invest in mortgage-related securities issued by financial
institutions such as commercial banks, savings and loan associations, mortgage
bankers and securities broker-dealers (or separate trusts or affiliates of such
institutions established to issue the securities) including collateralized
mortgage obligations ("CMO's") and mortgage-backed bonds. CMO's (including
real estate mortgage investment conduits as authorized under the Internal
Revenue Code of 1986, as amended) are issued in series that are made up of a
group of bonds that together are fully collateralized directly or indirectly by
a pool of mortgages on which the payments of principal and interest are
dedicated to payment of principal and interest on the bonds in the series.
Each class of bonds in the series may have a different maturity than the other
classes of bonds in the series, bear a different coupon and have a different
priority in receiving payments. The different maturities come from the fact
that all principal payments, both regular principal payments as well as any
prepayment of principal, are passed through first to the holders of the class
with the shortest maturity until it is completely retired. Thereafter,
principal payments are passed through to the next class of bonds in the series,
until all the classes have been paid off. As a result, an acceleration in the
rate of prepayments that may be associated with declining interest rates
shortens the expected life of each class, with the greatest impact on those
classes with the shortest maturities. Similarly, should the rate of
prepayments slow down, as may happen in times of rising interest rates, the
expected life of each class lengthens, again with the greatest impact on those
classes with the shortest maturities. In the case of some CMO series, each
class may receive a differing proportion of the monthly interest and principal
repayments on the underlying collateral. In these series the classes having
proportionally greater interests in principal repayments generally would be
more affected by an acceleration (or slowing) in the rate of prepayments.
Mortgage-backed bonds are general obligations of the issuer fully
collateralized directly or indirectly by a pool of mortgages. The mortgages
serve as collateral for the issuer's payment obligations on the bonds, but
interest and principal payments on the mortgages are not passed through either
directly (as with GNMA certificates and FNMA and FHLMC pass-through securities)
or on a modified basis (as with CMO's). Accordingly, a change in the rate of
prepayments on the pool of mortgages could change the effective maturity of a
CMO but not that of a mortgage-backed bond (although, like many bonds,
mortgage-backed bonds can provide that they are callable by the issuer prior to
maturity).
BOND FUND AND U.S. GOVERNMENT/AAA-RATED SECURITIES FUND
REVERSE REPURCHASE AGREEMENTS -- Although the Bond Fund and the U.S.
Government/AAA-Rated Securities Fund have no current intention of doing so
during the next 12 months, each fund is authorized to enter into reverse
repurchase agreements. A reverse repurchase agreement is the sale of a
security by a fund and its agreement to repurchase the security at a specified
time and price. Each fund will segregate liquid assets which will be marked to
market daily in an amount sufficient to cover its obligations under reverse
repurchase agreements with broker-dealers (but no collateral is required on
reverse repurchase agreements with banks). Under the Investment Company Act of
1940 (the "1940 Act"), reverse repurchase agreements may be considered
borrowings by a fund. The use of reverse repurchase agreements by a fund
creates leverage which increases the fund's investment risk. As a fund's
aggregate commitments under these reverse repurchase agreements increase, the
opportunity for leverage similarly increases. If the income and gains on
securities purchased with the proceeds of reverse repurchase agreements exceed
the costs of the agreements, a fund's earnings or net asset value will increase
faster than otherwise would be the case; conversely, if the income and gains
fail to exceed the costs, a fund's earnings or net asset value would decline
faster than otherwise would be the case.
ASSET ALLOCATION FUND, BOND FUND, HIGH-YIELD BOND FUND, AND U.S.
GOVERNMENT/AAA-RATED SECURITIES FUND
LOANS OF PORTFOLIO SECURITIES -- Although the Asset Allocation Fund, the Bond
Fund, the High-Yield Bond Fund and the U.S. Government/AAA-Rated Securities
Fund have no current intention of doing so during the next 12 months, these
funds are authorized to lend portfolio securities to selected securities
dealers or other institutional investors whose financial condition is monitored
by Capital Research and Management Company (the "Investment Adviser"). The
borrower must maintain with the Series' custodian collateral consisting of
cash, cash equivalents or U.S. Government securities equal to at least 100% of
the value of the borrowed securities, plus any accrued interest. The
Investment Adviser will monitor the adequacy of the collateral on a daily
basis. Each fund may at any time call a loan of its portfolio securities and
obtain the return of the loaned securities. Each fund will receive any
interest paid on the loaned securities and a fee or a portion of the interest
earned on the collateral. Each fund will limit its loans of portfolio
securities to an aggregate of 10% of the value of its total assets, determined
at the time any such loan is made.
PORTFOLIO TRADING OF FIXED-INCOME SECURITIES -- The funds intend to engage in
portfolio trading of fixed-income securities when it is believed that the sale
of a fixed-income security owned and the purchase of another security of better
value can enhance principal and/or increase income. A security may be sold to
avoid any prospective decline in market value in light of what is evaluated as
an expected rise in prevailing yields, or a security may be purchased in
anticipation of a market rise (a decline in prevailing yields). A security
also may be sold and a comparable security purchased coincidentally in order to
take advantage of what is believed to be a disparity in the normal yield and
price relationship between the two securities.
"ROLL" TRANSACTIONS -- Although the Asset Allocation Fund, the High-Yield Bond
Fund, the Bond Fund and the U.S. Government/AAA-Rated Securities Fund have no
current intention of doing so during the next 12 months, these funds may engage
in "roll" transactions. A "roll" transaction is the sale of mortgage-backed or
other securities together with a commitment to purchase similar, but not
identical, securities at a future date. The funds intend to treat "roll"
transactions as two separate transactions; one involving the purchase of a
security and a separate transaction involving the sale of a security. Since
the funds do not intend to enter into "roll" transactions for financing
purposes, they may treat these transaction as not falling within the definition
of "borrowing" set forth in Section 2(a)(23) of the 1940 Act. As a fund's
aggregate commitments under these transactions increase, the opportunity for
leverage similarly may increase; however, it is not the intent of the fund to
engage in these transactions for leveraging purposes. In addition, a fund may
enter into other purchase and sale transactions involving securities which are
not settled in the ordinary course of business and under various terms when to
do so is in the best interest of the fund.
A fund will segregate liquid assets, which will be marked to market daily, in
an amount sufficient to meet its payment obligations in these transactions.
Although these transactions will not be entered into for leveraging purposes,
to the extent a fund's aggregate commitments under these transactions exceed
its holdings of cash and securities that do not fluctuate in value (such as
short-term money market instruments), the funds temporarily will be in a
leveraged position (i.e., it will have an amount greater than its net assets
subject to market risk). Should market values of the funds' portfolio
securities decline while the funds are in a leveraged position, greater
depreciation of its net assets would likely occur than were it not in such a
position. A fund will not borrow money to settle these transactions and,
therefore, will liquidate other portfolio securities in advance of settlement
if necessary to generate additional cash to meet its obligations thereunder.
BOND FUND AND HIGH-YIELD BOND FUND
LOAN PARTICIPATIONS AND ASSIGNMENTS -- The funds may invest in loan
participations or assignments, typically made by a syndicate of banks to U.S.
and non-U.S. corporate or governmental borrowers for a variety of purposes.
Loan participations are loans or other direct debt instruments which are
interests in amounts owed by a corporate, governmental or other borrower to
another party. They may represent amounts owed to lenders or lending
syndicates, to suppliers of goods or services, or to other parties. A fund
will have the right to receive payments of principal, interest and any fees to
which it is entitled only from the lender selling the participation and only
upon receipt by the lender of the payments from the borrower. In connection
with purchasing participations, a fund generally will have no right to enforce
compliance by the borrower with the terms of the loan agreement relating to
loan, nor any rights of set-off against the borrower, and the fund may not
directly benefit from any collateral supporting the loan in which it has
purchased the participation. As a result, the fund will assume the credit risk
of both the borrower and the lender that is selling the participation. In the
event of the insolvency of the lender selling a participation, a fund may be
treated as a general creditor of the lender and may not benefit from any
set-off between the lender and the borrower.
When a fund purchases assignments from lenders it will acquire direct rights
against the borrower on the loan. However, because assignments are arranged
through private negotiations between potential assignees and potential
assignors, the rights and obligations acquired by a fund as the purchaser of an
assignment may differ from, and be more limited than, those held by the
assigning lender. Because there is no liquid market for such securities, the
fund's anticipate that such securities could be sold only to a limited number
of institutional investors.
Investments in loan participations and assignments present the possibility that
the fund could be held liable as a co-lender under emerging legal theories of
lender liability. In addition, if the loan is foreclosed, a fund could be part
owner of any collateral, and could bear the costs and liabilities of owning and
disposing of the collateral. Loan participations and assignments are generally
not rated by major rating agencies, may not be protected by the securities
laws, and are generally considered to be illiquid.
HIGH-YIELD BOND FUND
REINSURANCE RELATED NOTES AND BONDS -- The High-Yield Bond Fund may invest in
reinsurance related notes and bonds. These instruments, which are typically
issued by special purpose reinsurance companies, transfer an element of
insurance risk to the note or bond holders. For example, the reinsurance
company would not be required to repay all or a portion of the principal value
of the notes or bonds if losses due to a catastrophic event under the policy
(such as a major hurricane) exceed certain dollar thresholds. Consequently,
the fund may lose the entire amount of its investment in such bonds or notes if
such an event occurs and losses exceed certain dollar thresholds. In this
instance, investors would have no recourse against the insurance company.
These instruments may be issued with fixed or variable interest rates and rated
in a variety of credit quality categories by the rating agencies.
CASH MANAGEMENT FUND
The Cash Management Fund seeks to achieve its investment objective by investing
in a diversified selection of money market instruments, and the other funds
generally will invest a portion of their assets in money market instruments.
These money market instruments include the following:
COMMERCIAL PAPER -- Commercial paper is short-term notes (up to nine months)
issued by companies or governmental bodies. The Cash Management Fund may only
purchase commercial paper judged by the Investment Adviser to be of suitable
investment quality. This includes (a) commercial paper that is rated in the
two highest categories by Standard & Poor's Corporation and by Moody's
Investors Service, Inc. or (b) other commercial paper deemed on the basis of
the issuer's creditworthiness to be of a quality appropriate for the Cash
Management Fund. (No more than 5% of the Cash Management Fund's assets may be
invested in commercial paper rated in the second highest rating category by
either Moody's or Standard & Poor's; no more than the greater of 1% of the Cash
Management Fund's assets or $1 million may be invested in such securities of
any one issuer.) See the Appendix for a description of the ratings.
The commercial paper in which the Cash Management Fund may invest includes
variable amount master demand notes. Variable amount master demand notes
permit the Cash Management Fund to invest varying amounts at fluctuating rates
of interest pursuant to the agreement in the master note. These are direct
lending obligations between the lender and borrower, they are generally not
traded, and there is no secondary market. Such instruments are payable with
accrued interest in whole or in part on demand. The amounts of the instruments
are subject to daily fluctuations as the participants increase or decrease the
extent of their participations. Investments in these instruments are limited
to those that have a demand feature enabling the Cash Management Fund
unconditionally to receive the amount invested from the issuer upon seven or
fewer days' notice. (Generally, the Cash Management Fund attempts to invest in
instruments having a one-day notice provision). In connection with master
demand note arrangements, the Investment Adviser, subject to the direction of
the Trustees, monitors on an ongoing basis the earning power, cash flow, and
other liquidity ratios of the borrower and its ability to pay principal and
interest on demand. The Investment Adviser also considers the extent to which
the variable amount master demand notes are backed by bank letters of credit.
These notes generally are not rated by Moody's or Standard & Poor's. The Cash
Management Fund may invest in them only if it is deemed that at the time of
investment the notes are of comparable quality to the other commercial paper in
which the Cash Management Fund may invest. Master demand notes are considered
to have a maturity equal to the repayment notice period unless the Investment
Adviser has reason to believe that the borrower could not make timely repayment
upon demand.
COMMERCIAL BANK OBLIGATIONS -- Commercial bank obligations are certificates of
deposit (interest-bearing time deposits), bankers acceptances (time drafts
drawn on a commercial bank where the bank accepts an irrevocable obligation to
pay at maturity) representing direct or contingent obligations of commercial
banks with assets in excess of $1 billion, based on latest published reports,
or other obligations issued by commercial banks with assets of less than $1
billion if the principal amount of such obligation is fully insured by the U.S.
Government.
CORPORATE BONDS AND NOTES -- The Cash Management Fund may purchase corporate
obligations that mature or that may be redeemed in one year or less. These
obligations originally may have been issued with maturities in excess of one
year. The Cash Management Fund may invest only in corporate bonds or notes of
issuers having outstanding short-term securities rated as described above in
"Commercial Paper."
SAVINGS ASSOCIATION OBLIGATIONS -- Certificates of deposit (interest-bearing
time deposits) issued by savings banks or savings and loan associations that
have assets in excess of $1 billion, based on latest published reports, or
obligations issued by institutions with assets of less than $1 billion if the
principal amount of such obligation is fully insured by the U.S. Government.
FLOATING RATE OBLIGATIONS -- These securities have a coupon rate that changes
at least annually and generally more frequently. The coupon rate is set in
relation to money market rates. The obligations, issued primarily by banks,
other corporations, governments and semi-governmental bodies, may have a
maturity in excess of one year. In some cases, the coupon rate may vary with
changes in the yield on Treasury bills or notes or with changes in LIBOR
(London Interbank Offering Rate). The Investment Adviser considers floating
rate obligations to be liquid investments because a number of U.S. and non-U.S.
securities dealers make active markets in these securities.
INVESTMENT RESTRICTIONS
The Series has adopted the following fundamental policies and investment
restrictions for each fund which may not be changed without a majority vote of
the fund's outstanding shares. Such majority is defined by the 1940 Act as the
vote of the lesser of (i) 67% or more of the outstanding shares of the fund
present at a meeting, if the holders of more than 50% of the outstanding voting
securities of the fund are present in person or by proxy, or (ii) more than 50%
of the outstanding voting securities of the fund. Investment limitations
expressed in the following restrictions are considered at the time securities
are purchased and are based on the fund's net assets unless otherwise
indicated.
INVESTMENT RESTRICTIONS OF THE GLOBAL GROWTH FUND, GLOBAL SMALL CAPITALIZATION
FUND, GROWTH FUND, INTERNATIONAL FUND, GROWTH-INCOME FUND, ASSET ALLOCATION
FUND, BOND FUND AND HIGH-YIELD BOND FUND
The Global Growth Fund, Global Small Capitalization Fund, Growth Fund,
International Fund, Growth-Income Fund, Asset Allocation Fund, Bond Fund and
High-Yield Bond Fund may not:
1. Invest more than 5% of the value of the total assets of the fund in the
securities of any one issuer, provided that this limitation shall apply only to
75% of the value of the fund's total assets and, provided further, that the
limitation shall not apply to obligations of the government of the U.S. under a
general Act of Congress. The short-term obligations of commercial banks are
excluded from this 5% limitation with respect to 25% of the fund's total
assets.
2. As to 75% of its total assets, purchase more than 10% of the outstanding
voting securities of an issuer.
3. Invest more than 25% of the fund's total assets in the securities of
issuers in the same industry. Obligations of the U.S. Government, its agencies
and instrumentalities, are not subject to this 25% limitation on industry
concentration. In addition, the fund may, if deemed advisable, invest more
than 25% of its assets in the obligations of domestic commercial banks.
4. Enter into any repurchase agreement maturing in more than seven days or
invest in any other illiquid security if, as a result, more than 10% of the
fund's total assets would be so invested.
5. Invest in real estate (including limited partnership interests, but
excluding securities of companies, such as real estate investment trusts, which
deal in real estate or interests therein).
6. Purchase commodities or commodity contracts; except that the Global Small
Capitalization Fund, International Fund, Asset Allocation Fund, High-Yield Bond
Fund and Bond Fund may engage in transactions involving currencies (including
forward or futures contracts and put and call options).
7. Invest in companies for the purpose of exercising control or management.
8. Make loans to others except for (a) the purchase of debt securities; (b)
entering into repurchase agreements; (c) the loaning of its portfolio
securities; and (d) entering into loan participations.
9. Borrow money, except from banks for temporary purposes, and then in an
amount not in excess of 5% of the value of the fund's total assets. Moreover,
in the event that the asset coverage for such borrowings falls below 300%, the
fund will reduce, within three days, the amount of its borrowings in order to
provide for 300% asset coverage.
10. Purchase securities on margin.
11. Pledge or hypothecate the fund's assets.
12. Sell securities short, except to the extent that the fund
contemporaneously owns, or has the right to acquire at no additional cost,
securities identical to those sold short.
13. Invest in puts, calls, straddles, spreads or any combination thereof;
except as described above in Investment Restriction number 6.
14. Purchase or sell securities of other investment companies (except in
connection with a merger, consolidation, acquisition or reorganization); except
that the Global Small Capitalization Fund may invest up to 5% of its total
assets in the securities of other managed investment companies. Any such
investments by the Global Small Capitalization Fund shall be limited to 3% of
the voting stock of any investment company, provided, however that investment
in the open market of a closed-end investment company where no more than
customary broker's commissions are involved shall not be prohibited by this
restriction.
15. Engage in underwriting of securities issued by others, except to the
extent it may be deemed to be acting as an underwriter in the purchase or
resale of portfolio securities.
Notwithstanding investment restriction number 14, the funds may invest in
securities of other managed investment companies if deemed advisable by its
officers in connection with the administration of a deferred compensation plan
adopted by Trustees pursuant to an exemptive order granted by the Securities
and Exchange Commission.
Notwithstanding investment restriction number 15, the funds may not engage in
the business of underwriting securities of other issuers, except to the extent
that the disposal of an investment position may technically constitute the fund
an underwriter as that term is defined under the Securities Act of 1933.
The Global Growth Fund, Global Small Capitalization Fund, International Fund
and High-Yield Bond Fund may not invest more than 10% of the value of their
total assets in securities which are restricted as to resale; the Growth Fund,
Growth-Income Fund and Asset Allocation Fund may not invest more than 5% of the
value of their respective total assets in securities which are restricted as to
resale. (Rule 144A securities and Section 4(2) commerical paper, as defined in
the Securities Act of 1933, are excluded from these investment limits.) As a
condition to the acquisition of the type of securities mentioned herein, the
funds will ordinarily require that the issuer of such securities agree to bear
the expenses of registration under the Securities Act of 1933, if and when the
funds desire to sell such securities. The need to effect such registration
could result in a delay in disposing of such securities.
INVESTMENT RESTRICTIONS OF THE U.S. GOVERNMENT/AAA-RATED SECURITIES FUND
The U.S. Government/AAA-Rated Securities Fund may not:
1. Purchase any security (other than securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities ("U.S. Government
securities")) if, immediately after and as a result of such investment, more
than 5% of the value of the fund's total assets would be invested in securities
of the issuer.
2. Invest 25% or more of the value of its total assets in the securities of
issuers conducting their principal business activities in the same industry,
except that this limitation shall not apply to U.S. Government securities or
other securities to the extent they are backed by or represent interests in
U.S. Government securities or U.S. Government-guaranteed mortgages.
3. Invest in companies for the purpose of exercising control or management.
4. Knowingly purchase securities of other investment companies, except in
connection with a merger, consolidation, acquisition, or reorganization.
5. Buy or sell real estate or commodities or commodity contracts in the
ordinary course of its business; however, the fund may purchase or sell readily
marketable debt securities secured by real estate or interests therein or
issued by companies which invest in real estate or interests therein, including
real estate investment trusts.
6. Acquire securities subject to restrictions on disposition imposed by the
Securities Act of 1933, if, immediately after and as a result of such
acquisition, the value of such restricted securities and all other illiquid
securities held by the fund would exceed 10% of the value of the fund's total
assets.
7. Engage in the business of underwriting securities of other issuers, except
to the extent that the disposal of an investment position may technically cause
it to be considered an underwriter as that term is defined under the Securities
Act of 1933.
8. Make loans, except that the fund may: (a) purchase readily marketable
debt securities; (b) invest in repurchase agreements; (c) make loans of
portfolio securities; and (d) enter into loan participations. The fund will
not invest in repurchase agreements maturing in more than seven days if any
such investment, together with any illiquid securities (including securities
which are subject to legal or contractual restrictions on resale) held by the
fund, exceeds 10% of the value of its total assets.
9. Sell securities short, except to the extent that the fund
contemporaneously owns or has the right to acquire at no additional cost,
securities identical to those sold short.
10. Purchase securities on margin, except that the fund may obtain such
short-term credits as may be necessary for the clearance of purchases and sales
of securities.
11. Borrow money, except from banks for temporary or emergency purposes not in
excess of 5% of the value of the fund's total assets, except that the fund may
enter into reverse repurchase agreements.
12. Mortgage, pledge, or hypothecate any of its assets, provided that this
restriction shall not apply to the sale of securities pursuant to a reverse
repurchase agreement.
13. Write, purchase or sell puts, calls or combinations thereof.
Notwithstanding investment restriction number 4, the fund may invest in
securities of other managed investment companies if deemed advisable by its
officers in connection with the administration of a deferred compensation plan
adopted by Trustees pursuant to an exemptive order granted by the Securities
and Exchange Commission.
INVESTMENT RESTRICTIONS OF THE CASH MANAGEMENT FUND
The Cash Management Fund may not:
1. Invest more than 5% of the value of the total assets of the fund in the
securities of any one issuer, provided that this limitation shall apply only to
75% of the value of the fund's total assets and, provided further, that the
limitation shall not apply to obligations of the government of the U.S. under a
general Act of Congress. The short-term obligations of commercial banks are
excluded from this 5% limitation with respect to 25% of the fund's total
assets.
2. As to 75% of its total assets, purchase more than 10% of the outstanding
voting class of securities of an issuer.
3. Invest more than 25% of the fund's total assets in the securities of
issuers in the same industry. Obligations of the U.S. Government, its agencies
and instrumentalities, are not subject to this 25% limitation on industry
concentration. In addition, the fund may, if deemed advisable, invest more
than 25% of its assets in the obligations of domestic commercial banks.
4. Enter into any repurchase agreement maturing in more than seven days or
invest in any other illiquid security if, as a result, more than 10% of the
fund's total assets would be so invested.
5. Make loans to others except for the purchase of the debt securities listed
above. The fund may enter into repurchase agreements as described above.
6. Borrow money, except from banks for temporary purposes, and then in an
amount not in excess of 5% of the value of the fund's total assets. Moreover,
in the event that the asset coverage for such borrowings falls below 300%, the
fund will reduce, within three days, the amount of its borrowings in order to
provide for 300% asset coverage.
7. Pledge or hypothecate the fund's assets.
8. Sell securities short except to the extent that the fund contemporaneously
owns or has the right to acquire at no additional cost, securities identical to
those sold short.
9. Invest in puts, calls, straddles, spreads or any combination thereof.
10. Purchase or sell securities of other investment companies (except in
connection with a merger, consolidation, acquisition or reorganization), real
estate or commodities.
11. Act as underwriter of securities issued by others, engage in distribution
of securities for others, or make investments in other companies for the
purpose of exercising control or management.
Notwithstanding investment restriction number 10, the fund may invest in
securities of other managed investment companies if deemed advisable by its
officers in connection with the administration of a deferred compensation plan
adopted by Trustees pursuant to an exemptive order granted by the Securities
and Exchange Commission.
Notwithstanding investment restriction number 1 above, in order to comply with
Rule 2a-7 under the 1940 Act, the Cash Management Fund has adopted a
non-fundamental policy (that may be changed by the Board of Trustees without
shareholder approval) of investing no more than 5% of its assets (measured at
the time of purchase) in the securities of any one issuer (other than the U.S.
Government); provided however, that the Cash Management Fund may invest, as to
25% of its assets, more than 5% of its assets in certain high-quality
securities (as defined in the Rule) of a single issuer for a period of up to
three business days. Investment restriction number 9 above does not prevent
the purchase by the Cash Management Fund of securities that have "put" or
"stand-by" commitment features.
SERIES TRUSTEES AND OFFICERS
TRUSTEES AND TRUSTEE COMPENSATION
<TABLE>
<CAPTION>
NAME, ADDRESS POSITION PRINCIPAL AGGREGATE TOTAL TOTAL
AND AGE WITH OCCUPATION(S) COMPENSATION COMPENSATION NUMBER OF
REGISTRANT DURING PAST 5 (INCLUDING (INCLUDING FUND BOARDS
YEARS VOLUNTARILY VOLUNTARILY ON WHICH
(POSITIONS DEFERRED DEFERRED TRUSTEE
WITHIN THE COMPENSATION/1/) COMPENSATION/1/) SERVES/2/
ORGANIZATIONS FROM FROM ALL FUNDS
LISTED MAY SERIES DURING MANAGED BY
HAVE CHANGED FISCAL CAPITAL
DURING THIS YEAR ENDED RESEARCH AND
PERIOD) 11/30/97 MANAGEMENT
COMPANY
<S> <C> <C> <C> <C> <C>
Charles H. Trustee Private $29,500/3/ $122,900 4
Black investor and
525 Alma Real consultant;
Drive Former
Pacific Executive Vice
Palisades, CA President
90272 and Director,
Age: 71 Kaiser Steel
Corporation
H. Frederick Trustee Private $28,511 $163,900 18
Christie Investor;
P. O. Box 144 Former
Palos Verdes, President
CA 90274 and Chief
Age: 64 Executive
Officer, The
Mission Group
(non-utility
holding
Company,
subsidiary of
Southern
California
Edison
Company)
Joe E. Davis Trustee Private $30,400 $30,400 1
3436 Caribeth Investor;
Drive Former
Encino, CA Chairman,
91436 Linear
Age: 63 Corporation;
former
President and
Chief
Executive
Officer,
National
Health
Enterprises,
Inc.
Martin Fenton, Trustee Chairman, $29,125/3/ $133,000 16
Jr. Senior
4350 Executive Resource Group
Drive (management of
Suite 101 senior living
San Diego, CA centers)
92123
Age: 62
Mary Myers Trustee Founder and $27,700/3/ $89,000 4
Kauppila President,
286 Congress Energy
Street Investment,
Boston, MA Inc.
02110
Age: 43
Kirk P. Trustee President, $27,600/3/ $93,850 5
Pendleton Cairnwood,
Cairnwood, Inc.
Inc.
75 James Way
Southampton,
PA 18966
Age: 58
+James F. President President and none/4/ none/4/ 1
Rothenberg and Director,
333 South Hope Trustee Capital
Street Research and
Los Angeles, Management
CA 90071 Company
Age: 51
+Thomas E. Chairman of Retired. none/4/ none/4/ 3
Terry the Board Former Vice
6048 S. President and
Highlands Secretary,
Avenue Capital
Madison, WI Research and
53705 Management
Age: 60 Company
</TABLE>
+ Trustees who are considered "interested persons" of the Series as defined in
the 1940 Act on the basis of their affiliation with the Series' Investment
Adviser, Capital Research and Management Company.
/1/ Amounts may be deferred by eligible trustees under a non-qualified deferred
compensation plan adopted by the Series in 1993. Deferred amounts accumulate
at an earnings rate determined by the total return of one or more funds in The
American Funds Group as designated by the Trustee.
/2/ Capital Research and Management Company manages The American Funds Group
consisting of 28 funds: AMCAP Fund, Inc., American Balanced Fund, Inc.,
American High-Income Municipal Bond Fund, Inc., American High-Income Trust,
American Mutual Fund, Inc., The Bond Fund of America, Inc., The Cash Management
Trust of America, Capital Income Builder, Inc., Capital World Growth and Income
Fund, Inc., Capital World Bond Fund, Inc., EuroPacific Growth Fund, Fundamental
Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America,
Inc., Intermediate Bond Fund of America, The Investment Company of America,
Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund, New
Perspective Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of
America, Inc., The Tax-Exempt Fund of California, The Tax-Exempt Fund of
Maryland, The Tax-Exempt Fund of Virginia, The Tax-Exempt Money Fund of
America, The U. S. Treasury Money Fund of America, U.S. Government Securities
Fund and Washington Mutual Investors Fund, Inc. Capital Research and
Management Company also manages Anchor Pathway Fund which serves as the
underlying investment vehicle for certain variable insurance contracts; and
Bond Portfolio for Endowments, Inc. and Endowments, Inc. whose shares may be
owned only by tax-exempt organizations. These amounts reflect the aggregate
compensation paid during the most recent fiscal year of the funds involved.
/3/ Since the deferred compensation plan's adoption, the total amount of
deferred compensation accrued by the Series (plus earnings thereon) for
participating Trustees is as follows: Charles H. Black ($38,127); H . Frederick
Christie ($36,851); Martin Fenton ($23,084); Mary Myers Kauppila ($129,340) and
Kirk P. Pendleton ($31,915). Amounts deferred and accumulated earnings thereon
are not funded and are general unsecured liabilities of the Series until paid
to the Trustee.
/4/ James F. Rothenberg and Thomas E. Terry are affiliated with the Investment
Adviser and, accordingly, receive no remuneration from the Series.
OFFICERS
<TABLE>
<CAPTION>
NAME AND ADDRESS AGE POSITION(S) WITH PRINCIPAL OCCUPATION(S)
REGISTRANT DURING PAST 5 YEARS
<S> <C> <C> <C>
Thomas E. Terry 60 Chairman of the Retired. Former Vice President and
6048 S. Highlands Avenue Board Secretary, Capital Research and
Madison, WI 53705 Management Company
James F. Rothenberg 51 President and President and Director, Capital Research
333 South Hope Street Trustee and Management Company
Los Angeles, CA 90071
James K. Dunton 52 Senior Vice Senior Vice President and Director,
333 South Hope Stree President Capital Research and Management Company
Los Angeles, CA 90071
Abner D. Goldstine 68 Senior Vice Senior Vice President and Director,
11100 Santa Monica President Capital Research and Management Company
Boulevard
Los Angeles, CA 90025
Michael J. Downer 43 Vice President Vice President - Fund Business
333 South Hope Street Management Group, Capital Research and
Los Angeles, CA 90071 Management Company
Claudia P. Huntington 46 Vice President Senior Vice President, Capital Research
333 South Hope Street Company
Los Angeles, CA 90071
John H. Smet 41 Vice President Vice President, Capital Research and
11100 Santa Monica Management Company
Boulevard
Los Angeles, CA 90025
Chad L. Norton 37 Secretary Vice President - Fund Business Managment
333 South Hope Street Group, Capital Research and Management
Los Angeles, CA 90071 Company
Robert P. Simmer 36 Treasurer Vice President - Fund Business Managment
5300 Robin Hood Road Group, Capital Research and Management
Norfolk, VA 23513 Company
Sheryl F. Johnson 29 Assistant Assistant Vice President - Fund Business
5300 Robin Hood Road Treasurer Management Group, Capital Research and
Norfolk, VA 23513 Management Company
</TABLE>
All of the Trustees and officers also are officers or employees of the
Investment Adviser or affiliated companies. No compensation is paid by the
Series to any officer or Trustee who is a director, officer or employee of the
Investment Adviser or affiliated companies. The Series pays fees of $20,000
per annum to Trustees who are not affiliated with the Investment Adviser, plus
$1,500 for each Board of Trustees meeting attended, plus $600 for each meeting
attended as a member of a committee of the Board of Trustees. The Trustees may
elect, on a voluntary basis, to defer all or a portion of these fees through a
deferred compensation plan in effect for the Series. The Series also
reimburses certain expenses of the Trustees who are not affiliated with the
Investment Adviser.
MANAGEMENT
INVESTMENT ADVISER -- The Investment Adviser, founded in 1931, maintains
research facilities in the U.S. and abroad (Los Angeles, San Francisco, New
York, Washington D.C., London, Geneva, Hong Kong, Singapore and Tokyo), with a
staff of professionals, many of whom have a number of years of investment
experience. The Investment Adviser is located at 333 South Hope Street, Los
Angeles, CA 90071, and at 135 South State College Boulevard, Brea, CA 92821.
The Investment Adviser's professionals travel several million miles a year,
making more than 5,000 research visits in more than 50 countries around the
world. The Investment Adviser believes that it is able to attract and retain
quality personnel. The Investment Adviser is a wholly owned subsidiary of The
Capital Group Companies, Inc.
An affiliate of the Investment Adviser compiles indices for major stock markets
around the world and compiles and edits the Morgan Stanley Capital
International Perspective, providing financial and market information about
more than 2,400 companies around the world.
The Investment Adviser is responsible for more than $175 billion of stocks,
bonds and money market instruments and serves over eight million investors of
all types. These investors include privately owned businesses and large
corporations as well as schools, colleges, foundations and other non-profit and
tax-exempt organizations.
INVESTMENT ADVISORY AND SERVICE AGREEMENT - An Amended Investment Advisory and
Service Agreement (the "Agreement") between the Series and the Investment
Adviser, unless sooner terminated, will continue in effect until November 30,
1998, and may be renewed from year to year thereafter, provided that any such
renewal has been specifically approved at least annually by (i) the Board of
Trustees, or by the vote of a majority (as defined in the 1940 Act) of the
outstanding voting securities of the Series, and (ii) the vote of a majority of
Trustees who are not parties to the Agreement or interested persons (as defined
in the 1940 Act) of any such party, cast in person at a meeting called for the
purpose of voting on such approval. The Agreement provides that the Investment
Adviser has no liability to the Series for its acts or omissions in the
performance of its obligations to the Series not involving willful misconduct,
bad faith, gross negligence or reckless disregard of its obligations under the
Agreement. The Agreement also provides that either party has the right to
terminate it, without penalty, upon 60 days' written notice to the other party,
and that the Agreement automatically terminates in the event of its assignment
(as defined in the 1940 Act).
As compensation for its services, the Investment Adviser receives a monthly fee
which is accrued daily, calculated at the annual rates of:
GLOBAL GROWTH FUND: 0.69% of net assets;
GLOBAL SMALL CAPITALIZATION FUND: .80% of net assets;
GROWTH FUND: 0.50% of the first $600 million of net assets, plus 0.45% on net
assets greater than $600 million but not exceeding $1.2 billion, plus 0.42% on
net assets greater than $1.2 billion but not exceeding $2.0 billion, plus 0.37%
on net assets greater than $2.0 billion but not exceeding $3.2 billion, plus
0.35% on net assets in excess of $3.2 billion;
INTERNATIONAL FUND: 0.78% of the first $600 million of net assets, plus 0.60%
on net assets greater than $600 million but not exceeding $1.2 billion, plus
0.48% on net assets greater than $1.2 billion but not exceeding $2.0 billion,
plus 0.465% on net assets in excess of $2.0 billion;
GROWTH-INCOME FUND: 0.50% of the first $600 million of net assets, plus 0.45%
on net assets greater than $600 million but not exceeding $1.5 billion, plus
0.40% on net assets greater than $1.5 billion but not exceeding $2.5 billion,
plus 0.32% on net assets greater than $2.5 billion but not exceeding $4.0
billion, plus 0.285% on net assets in excess of $4.0 billion;
ASSET ALLOCATION FUND: 0.50% of the first $600 million of net assets, plus
0.42% on net assets greater than $600 million but not exceeding $1.2 billion,
plus 0.36% on net assets in excess of $1.2 billion;
BOND FUND: 0.6% of the first $30 million of net assets, plus 0.50% on net
assets in excess of $30 million;
HIGH-YIELD BOND FUND: 0.60% of the first $30 million of net assets, plus 0.50%
on net assets greater than $30 million but not exceeding $600 million, plus
0.46% on net assets in excess of $600 million;
U.S. GOVERNMENT/AAA-RATED SECURITIES FUND: 0.60% of the first $30 million of
net assets, plus 0.50% on net assets greater than $30 million but not exceeding
$600 million, plus 0.40% on net assets in excess of $600 million;
CASH MANAGEMENT FUND: 0.50% of the first $100 million of net assets, plus
0.42% on net assets greater than $100 million but not exceeding $400 million,
plus 0.38% on net assets in excess of $400 million.
The Investment Adviser, in addition to providing investment advisory services,
furnishes the services and pays the compensation and travel expenses of
qualified persons to perform the executive, and related administrative
functions of the Series, provides necessary office space, office equipment and
utilities, and general purpose accounting forms, supplies, and postage used at
the office of the Series relating to the services furnished by the Investment
Adviser. Subject to the expense agreement described below, the Series will pay
all expenses not expressly assumed by the Investment Adviser, including, but
not limited to, registration and filing fees with federal and state agencies;
blue sky expenses (if any); expenses of shareholders' meetings; the expense of
reports to existing shareholders; expenses of printing proxies and
prospectuses; insurance premiums; legal and auditing fees; dividend
disbursement expenses; the expense of the issuance, transfer, and redemption of
its shares; custodian fees; printing and preparation of registration
statements; taxes; compensation, fees and expenses paid to Trustees
unaffiliated with the Investment Adviser; association dues; and costs of
stationary and forms prepared exclusively for the Series.
The Agreement provides for an advisory fee reduction to the extent that each
fund's annual ordinary net operating expenses, except the International Fund's,
exceed 1 1/2% of the first $30 million of the average month-end total net
assets of the fund and 1% of the average month-end total net assets in excess
thereof. For the International Fund, the advisory fee will be reduced to the
extent that its annual ordinary net operating expenses exceed 1 1/2% of its
average month-end total net assets. Expenditures, including costs incurred in
connection with the purchase or sale of portfolio securities, which are
capitalized in accordance with generally accepted accounting principles
applicable to investment companies, are accounted for as capital items and not
as expenses.
During the fiscal years ended November 30, 1997, 1996 and 1995, the Investment
Adviser's total fees, respectively, amounted to the following: Growth Fund
$17,154,000, $14,284,000 and $11,222,000; International Fund $15,477,000,
$12,370,000 and $9,882,000; Growth-Income Fund $21,263,000, $17,451,000 and
$13,593,000; Asset Allocation Fund $5,806,000, $4,663,000 and $3,620,000;
High-Yield Bond Fund $3,624,000, $2,996,000 and $2,350,000; U. S.
Government/AAA-Rated Securities Fund $2,444,000, $2,661,000 and $2,550,000;
and Cash Management Fund $1,113,000, $1,007,000 and $907,000. During the
fiscal years ended November 30, 1997 and 1996, the Investment Adviser's total
fees for the Bond Fund amounted to $557,000 and $204,000. During the fiscal
period ended November 30, 1997, the Investment Adviser's total fee for the
Global Growth Fund amounted to $310,000.
PLAN OF DISTRIBUTION The Series has adopted a Plan of Distribution (the
"Plan") for its Class 2 shares, pursuant to rule 12b-1 under the 1940 Act. As
required by rule 12b-1, the Plan has been approved by a majority of the entire
Board of Trustees, and separately by a majority of the Trustees who are not
"interested persons" of the Series and who have no direct or indirect financial
interest in the operation of the Plan. The officers and Trustees who are
"interested persons" of the Series may be considered to have a direct or
indirect financial interest in the operation of the Plan due to present or past
affiliations with the Investment Adviser and related companies. Potential
benefits of the Plan to the Series include improved shareholder services,
benefits to the investment process from growth or stability of assets and
maintenance of a financially healthy management organization. The selection
and nomination of Trustees who are not "interested persons" of the Series is
committed to the discretion of the Trustees who are not "interested persons"
during the existence of the Plan. The Plan is reviewed quarterly and must be
renewed annually by the Board of Trustees.
Under the Plan the Series will pay Lincoln National Life Insurance ("Lincoln
National") Company 0.25% of each fund's average net assets annually (Class 2
shares only) to finance any distribution activity which is primarily intended
to benefit the Class 2 shares of the Series, provided that the Board of
Trustees of the Series has approved the categories of expenses for which
payment is being made. During the fiscal period ended November 30, 1997, the
Series paid $274,000 to Lincoln National under the Plan.
PRICE OF SHARES
The price paid for shares, the net asset value price, is determined as of 4:00
p.m., Eastern time (the normal close of trading) every day the New York Stock
Exchange is open. For example, if the Exchange closes at 1:00 p.m. on one day
and at 4:00 p.m. on the next, the funds' share prices would be determined as of
4:00 p.m. on both days. The New York Stock Exchange is currently closed on
weekends and on the following holidays: New Year's Day, Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas Day. Certain of the funds invest in securities
listed on foreign exchanges which trade on Saturdays or other U.S. business
holidays. Since the funds typically do not calculate their net asset values on
Saturdays or other U.S. business holidays, the value of the funds' redeemable
securities may be affected on days when shareholders do not have access to the
funds. The net asset value per share is determined as follows:
1. Equity securities, including depositary receipts, are valued at the last
reported sale price on the exchange or market on which such securities are
traded, as of the close of business on the day the securities are being valued
or, lacking any sales, at the last available bid price. In cases where equity
securities are traded on more than one exchange, the securities are valued on
the exchange or market determined by the Investment Adviser to be the broadest
and most representative market, which may be either a securities exchange or
the over-the-counter market. Fixed-income securities are valued at prices
obtained from a pricing service, 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 quoted bid and asked prices or at prices
for securities of comparable maturity, quality and type. Securities with
original maturities of one year or less having 60 days or less to maturity are
amortized to maturity based on their cost if acquired within 60 days of
maturity or, if already held on the 60th day, based on the value determined on
the 61st day. Forward currency contracts are valued at the mean of
representative quoted bid and asked prices.
Assets or liabilities initially expressed in terms of foreign currencies are
translated prior to the next determination of the net asset value of the fund's
shares into U.S. dollars at the prevailing market rates.
Securities and assets for which representative market quotations are not
readily available are valued at fair value as determined in good faith under
policies approved by the fund's Board. The fair value of all other assets is
added to the value of securities to arrive at the total assets;
2. Liabilities, including accruals of taxes and other expense items, are
deducted from total assets; and
3. Net assets so obtained are then divided by the total number of shares
outstanding, and the result, rounded to the nearer cent, is the net asset value
per share.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
Each fund of the Series intends to qualify to be taxed as a "regulated
investment company" under the provisions of Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). To qualify for the tax
treatment afforded a regulated investment company under the Code, a fund must
annually distribute at least 90% of its net investment income and certain
short-term capital gains and meet certain diversification of assets and other
requirements of the Code. If a fund qualifies for such tax treatment, it will
not be subject to Federal income tax on the part of its ordinary income and its
net realized capital gains which it distributes to shareholders. To meet the
requirements of the Code, a fund must (a) derive at least 90% of its gross
income from dividends, interest, payments with respect to securities loans, and
gains from the sale or other disposition of stock or securities or currencies;
(b) derive less than 30% of its gross income from the sale or other disposition
of securities held less than three months; and (c) diversify its holdings so
that, at the end of each fiscal quarter, (i) at least 50% of the market value
of the fund's assets is represented by cash, U.S. Government securities and
other securities, limited, in respect of any one issuer, to an amount not
greater than 5% of the fund's assets and 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of its
assets is invested in the securities of any one issuer (other than U.S.
Government securities or the securities of other regulated investment
companies), or in two or more issuers which each fund controls and which are
engaged in the same or similar trades or businesses. It is the Series' policy
to distribute to the shareholders (the insurance company separate accounts) all
of its net investment income and net realized capital gains during each fiscal
year.
Under the Code, a fund's taxable income for each year will be computed without
regard to any net foreign currency loss attributable to transactions after
October 31, and any such net foreign currency loss will be treated as arising
on the first day of the following taxable year.
The amount of any realized gain or loss by a fund on closing out a currency
contract will generally result in a realized capital gain or loss for tax
purposes. Under Code Section 1256, currency contracts held by each fund at the
end of each fiscal year will be required to be "marked to market" for federal
income tax purposes, that is, deemed to have been sold at market value. Sixty
percent of any net gain or loss recognized on these deemed sales and 60% of any
net realized gain or loss from any actual sales, will be treated as long-term
capital gain or loss, and the remainder of gain or loss from deemed and actual
sales will be treated as short-term capital gain or loss. Code Section 988
may also apply to currency contracts. Under Section 988, each foreign currency
gain or loss is generally computed separately and treated as ordinary income or
loss. In the case of overlap between Sections 1256 and 988, special provisions
determine the character and timing of any income, gain or loss. Each fund will
attempt to monitor Section 988 transactions to avoid an adverse tax impact.
Each fund, except for the Cash Management Fund, may be required to pay
withholding and other taxes imposed by foreign countries which would reduce
investment income. Tax conventions between certain countries and the United
States may reduce or eliminate such taxes.
In addition to the asset diversification and other requirements for
qualification as a regulated investment company, the funds are subject to
another set of asset diversification requirements applicable to insurance
company separate accounts and their underlying funding vehicles. To satisfy
these diversification requirements, as of the end of each calendar quarter or
within 30 days thereafter, no more than 55% of the total assets of a fund may
be represented by any one investment, no more than 70% by any two investments,
no more than 80% by any three investments, and no more than 90% by any four
investments. For this purpose all securities of the same issuer are considered
a single investment, and each agency or instrumentality of the U.S. government
is treated as a separate issue of securities. The Series intends to comply
with these regulations. If a fund should fail to comply with these
regulations, Contracts invested in that fund will not be treated as annuity,
endowment or life insurance contracts under the Code.
See the applicable Contract prospectus for information regarding the Federal
income tax treatment of the Contracts and distributions to the separate
accounts.
EXECUTION OF PORTFOLIO TRANSACTIONS
Orders for the funds' portfolio securities transactions are placed by the
Investment Adviser. The Investment Adviser strives to obtain the best
available prices in its portfolio transactions taking into account the costs
and promptness of executions. When circumstances relating to a proposed
transaction indicate that a particular broker (either directly or through their
correspondent clearing agents) is in a position to obtain the best price and
execution, the order is placed with that broker. This may or may not be a
broker who has provided investment research, statistical, or other related
services to the Investment Adviser or has sold shares of the funds or other
funds served by the Investment Adviser. The funds do not consider that they
have an obligation to obtain the lowest available commission rate to the
exclusion of price, service and qualitative considerations.
There are occasions on which portfolio transactions for the Series may be
executed as part of concurrent authorizations to purchase or sell the same
security for other funds served by the Investment Adviser, or for trusts or
other accounts served by affiliated companies of the Investment Adviser.
Although such concurrent authorizations potentially could be either
advantageous or disadvantageous to the Series, they are effected only when the
Investment Adviser believes that to do so is in the interest of the Series.
When such concurrent authorizations occur, the objective is to allocate the
executions in an equitable manner. The Series will not pay a mark-up for
research in principal transactions.
Brokerage commissions paid on portfolio transactions for the fiscal years ended
November 30, 1997, 1996 and 1995, respectively, amounted to the following:
Growth Fund $2,869,000, $2,358,000, and $1,928,000; International Fund
$5,252,000, $3,813,000, and $1,301,000; Growth-Income Fund $3,955,000,
$3,389,000, and $2,291,000; Asset Allocation Fund $581,000, $557,000, and
$700,000. Brokerage commissions paid on portfolio transactions for the Global
Growth Fund for the period ended November 30, 1997 amounted to $194,000.
GENERAL INFORMATION
CUSTODIAN OF ASSETS -- Securities and cash owned by the Series, including
proceeds from the sale of shares of the Series and of securities in the Series'
portfolios, are held by State Street Bank and Trust Company, 225 Franklin
Street, Boston, Massachusetts 02110, as Custodian. Non-U.S. securities may be
held by the Custodian in non-U.S. banks or securities depositories or foreign
branches of U.S. banks.
INDEPENDENT ACCOUNTANTS -- Price Waterhouse LLP, 400 South Hope Street, Los
Angeles, CA 90071, has served as the Series' independent accountants since
March 18, 1991, providing audit services, preparation of tax returns and review
of certain documents to be filed with the Securities and Exchange Commission.
The financial statements included in this Statement of Additional Information
have been so included in reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting. Prior to March 18, 1991, KPMG Peat Marwick, 725 South
Figueroa Street, Los Angeles, CA 90017, served as the Series' independent
public accountants. The selection of the Series' independent accountant is
reviewed and determined annually by the Board of Trustees.
REPORTS TO SHAREHOLDERS -- The Series' fiscal year ends November 30. Contract
owners are provided at least semi-annually with reports showing the investment
portfolio, financial statements and other information. The financial
statements included in the Annual Report are audited by the independent
accounting firm of Price Waterhouse LLP.
YEAR 2000 - The Series and its shareholders depend on the proper functioning of
computer systems maintained by the Investment Adviser and its affiliates and
other key service providers. Many computer systems in use today will require
reprogramming or replacement prior to the year 2000 because of the way they
store dates and make date-related calculations. The Series understands that
these service providers are taking steps to address the 'Year 2000 problem."
However, there can be no assurance that these steps will be sufficient to avoid
any adverse impact on the Series. In addition, the funds' investments could be
adversely affected by the Year 2000 problem. For example, the markets for
securities in which the funds invest could experience settlement problems and
liquidity issues. Corporate and governmental data processing errors may cause
losses for individual companies and overall economic uncertainties. Earnings
of individual issuers are likely to be affected by the costs of addressing the
problem, which may be substantial and may be reported inconsistently. The
Series and its Investment Adviser will continue to monitor developments
relating to this issue.
PERSONAL INVESTING POLICY -- Capital Research and Management Company and its
affiliated companies have adopted a personal investing policy consistent with
Investment Company Institute guidelines. This policy includes: a ban on
acquisitions of securities pursuant to an initial public offering; restrictions
on acquisitions of private placement securities; pre-clearance and reporting
requirements; review of duplicate confirmation statements; annual
recertification of compliance with codes of ethics; blackout periods on
personal investing for certain investment personnel; a ban on short-term
trading profits for investment personnel; limitations on service as a director
of publicly traded companies; and disclosure of personal securities
transactions.
SHAREHOLDER AND TRUSTEE RESPONSIBILITY -- Under the laws of certain states,
including Massachusetts, where the Series was organized, and California, where
the Series' principal office is located, shareholders of a Massachusetts
business trust may, under certain circumstances, be held personally liable as
partners for the obligations of the Series. However, the risk of a shareholder
incurring any financial loss on account of shareholder liability is limited to
circumstances in which the Series itself would be unable to meet its
obligations. The Declaration of Trust contains an express disclaimer of
shareholder liability for acts or obligations of the Series and provides that
notice of the disclaimer may be given in each agreement, obligation, or
instrument which is entered into or executed by the Series or Trustees. The
Declaration of Trust provides for indemnification out of Series property of any
shareholder personally liable for the obligations of the Series and also
provides for the Series to reimburse such shareholder for all legal and other
expenses reasonably incurred in connection with any such claim or liability.
Under the Declaration of Trust, the Trustees or officers are not liable for
actions or failure to act; however, they are not protected from liability by
reason of their willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office. The Series
will provide indemnification to its Trustees and officers as authorized by its
By-Laws and by the 1940 Act and the rules and regulations thereunder.
REGISTRATION STATEMENT -- A registration statement has been filed with the
Securities and Exchange Commission under the Securities Act of 1933 and the
1940 Act, with respect to the Series. The prospectus and this Statement of
Additional Information do not contain all information set forth in the
registration statement, its amendments and exhibits, to which reference is made
for further information concerning the Series. Statements contained in the
prospectus and this Statement of Additional Information as to the content of
the Contracts issued through the separate accounts and other legal instruments
are summaries. For a complete statement of the terms thereof, reference is
made to the registration statements of the separate accounts and Contracts as
filed with the Securities and Exchange Commission.
AUTHORIZED SHARES -- The Series was organized as a Massachusetts Business Trust
which permits each fund of the Series to issue an unlimited number of shares of
beneficial interest of a single class.
APPENDIX
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's Investors Service, Inc.'s top two rating designations for commercial
paper are described as follows: issues rated Prime-1 have a superior capacity
for repayment of short-term promissory obligations. Prime-1 repayment capacity
will normally be evidenced by the following characteristics: leading market
positions in well-established industries; high rates of return on funds
employed; conservative capitalization structures with moderate reliance on debt
and ample asset protection; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and well-established
access to a range of financial markets and assured sources of alternate
liquidity. Issues rated Prime-2 have a strong capacity for repayment of
short-term promissory obligations. This will normally be evidenced by many of
the characteristics cited above, but to a lesser degree. Earnings trends and
coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected
by external conditions. Ample alternate liquidity is maintained.
Standard & Poor's Corporation's top two rating categories for commercial paper
are described as follows: A -- Issues assigned its highest rating are regarded
as having the greatest capacity for timely payment. Issues in this category
are delineated with numbers 1 or 2 to indicate the relative degree of safety.
A-1 -- This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics will be denoted with a plus (+)
sign designation. A-2 -- Capacity for timely payments on issues with this
designation is strong. However, the relative degree of safety is not as high
as for issues designated "A-1".
<TABLE>
AMERICAN VARIABLE INSURANCE SERIES GLOBAL GROWTH FUND
Investment Portfolio, November 30, 1997
(Unaudited)
<S> <C> <C> <C>
Where the Fund's Assets Are Invested
Percent of Percent of
Net Assets Net Assets
-----------------------
The Americas 38.63%
Europe 32.01%
Asia/Pacific 13.81%
Other Countries 3.10%
Cash & Equivalent 12.45%
100.00%
Largest Individual Equity Holdings
Zeneca Group 4.73%
Telefonica de Espana 3.28
Telecom Argentina STET-France Telecom 3.11
ForeningsSparbanken 2.96
Rentokil Group 2.29
Bank of Nova Scotia 2.23
Time Warner 2.23
Schlumberger 2.22
Suzuki Motor 2.14
Reuters Holdings 2.02
Market Percent
Number of Value of Net
Stocks (common and preferred) Shares (000) Assets
- ------------------------------------------------------ ----------- --------- ------
TELECOMMUNICATIONS - 13.75%
Telefonica de Espana, SA (American Depositary
Receipts) (Spain) 47900 $ 4,143
Telefonica de Espana, SA 500 14 3.28%
Telecom Argentina STET-France Telecom SA, Class B
(American Depositary Receipts) (Argentina) 128500 3943 3.11
Telecom Italia SpA, nonconvertible shares (Italy) (formerly
STET - Societa Finanziaria Telefonica p.a.) 445000 1748 1.38
AirTouch Communications (USA) (1) 36500 1433 1.13
Mannesmann AG (Germany) 2850 1325 1.05
Orange PLC (United Kingdom) (1) 262000 1103 .87
Cable and Wireless PLC (United Kingdom) 211100 937 .74
France Telecom (France) 19400 712 .56
TELECEL - Comunicacoes Pessoais, SA (Portugal) 6700 612 .48
Telefonos de Mexico, SA de CV, Class L (American Depositary
Receipts) (Mexico) 10800 535 .42
Millicom International Cellular SA (Luxembourg) (1) 14000 522 .41
Compania de Telecomunicaciones de Chile SA (American
Depositary Receipts) (Chile) 15000 406 .32
BUSINESS & PUBLIC SERVICES - 10.26%
Rentokil Group PLC (United Kingdom) 690,800 2,909 2.29
Reuters Holdings PLC (United Kingdom) 226,700 2,556 2.02
America Online, Inc. (USA) (1) 24,500 1,850 1.46
Brambles Industries Ltd. (Australia) 90,200 1,719 1.36
Cie. Generale des Eaux (France) 11,800 1,558 1.23
USA Waste Services, Inc. (USA) (1) 42,000 1,389 1.10
Columbia/HCA Healthcare Corp. (USA) 19,000 561 .44
CUC International Inc. (USA) (1) 16,000 460 .36
HEALTH & PERSONAL CARE - 10.03%
Zeneca Group PLC (United Kingdom) 184960 5901
Zeneca Group PLC (American Depositary Receipts) 1000 96 4.73
Avon Products, Inc. (USA) 42900 2480 1.96
Pfizer Inc (USA) 27650 2012 1.59
Glaxo Wellcome PLC (United Kingdom) 52900 1161 .91
Omnicare, Inc. (USA) 37000 1068 .84
ELECTRONIC COMPONENTS - 7.44%
Rohm Co., Ltd. (Japan) 21000 2071 1.63
Murata Manufacturing Co., Ltd. (Japan) 68000 2038 1.61
Texas Instruments Inc. (USA) 34000 1675 1.32
Micron Technology, Inc. (USA) (1) 57500 1430 1.13
Altera Corp. (USA) (1) 19000 889 .70
Advanced Micro Devices, Inc. (USA)(1) 40,000 873 .69
Kyocera Corp. (Japan) 9500 458 .36
BANKING - 6.17%
ForeningsSparbanken AB (Sweden) (formerly Sparbanken
Sverige AB) 147200 3,745 2.96
Bank of Nova Scotia (Canada) 64500 2,827 2.23
Washington Mutual, Inc. (USA) 18000 1,244 .98
BROADCASTING & PUBLISHING - 5.75%
Time Warner Inc. (USA) 48,500 2,825 2.23
ProSieben Media AG non-voting, preferred shares (Germany) (1) 36,000 1,725 1.36
Viacom Inc., Class B, non-voting shares (USA)(1) 33,000 1,155 .91
TV Azteca, SA de CV (American Depositary Receipts) (Mexico) ( 47,600 985 .78
SOFTBANK CORP. (Japan) 17600 317 .25
Nasionale Pers Beperk (South Africa) 34,800 287 .22
LEISURE & TOURISM - 5.17%
HFS Inc. (USA)(1) 25000 1716 1.35
Village Roadshow Ltd., Class A, preferred
shares (Australia) 866000 1680 1.33
Host Marriott Corp. (USA)(1) 65000 1353 1.07
Walt Disney Co. (USA) 10225 971 .77
Carnival Corp., Class A (USA) 15350 830 .65
AUTOMOBILES - 4.48%
Suzuki Motor Corp. (Japan) 249000 2709 2.14
Bayerische Motoren Werke AG (Germany) 2200 1641 1.29
Chrysler Corp. (USA) 38800 1331 1.05
ENERGY SOURCES - 3.87%
Fletcher Challenge Energy (New Zealand) 467,088 1,899 1.50
Woodside Petroleum Ltd. (Australia) 142,000 1,015 .80
Oryx Energy Co. (USA) (1) 29,000 783 .62
Oil Co. LUKoil (American Depositary Receipts) (Russia) 9,200 706 .55
TOTAL, Class B (American Depositary Receipts) (France) 9,600 505 .40
MERCHANDISING - 3.34%
Consolidated Stores Corp. (USA)(1) 40,000 1,945 1.53
Viking Office Products, Inc. (USA) (1) 55,000 1,275 1.01
Cifra, SA de CV, Class B (American Depositary
Receipts) (Mexico) 485000 1009 .80
DATA PROCESSING & REPRODUCTION - 2.73%
Netscape Communications Corp. (USA)(1) 48300 1376 1.08
Oracle Corp. (USA)(1) 34600 1153 .91
Dassault Systemes SA (France) 29600 787 .62
Ascend Communications, Inc. (USA) (1) 6000 150 .12
ENERGY EQUIPMENT - 2.22%
Schlumberger Ltd. (Netherlands Antilles) 34,200 2,815 2.22
METALS: NONFERROUS - 2.03%
Aluminum Co. of America (USA) 11000 740 .58
Freeport-McMoRan Copper & Gold Inc. (USA) 35000 733 .58
Rio Tinto PLC (United Kingdom) (formerly RTZ Corp.) 46400 560 .45
Inco Ltd. (Canada) 28000 534 .42
APPLIANCES & HOUSEHOLD DURABLES - 1.72%
Sony Corp. (Japan) 25,600 2,184 1.72
MULTI-INDUSTRY - 1.58%
Orkla AS, Class A (Norway) 13,300 1,146 .91
Incentive AB, Class A (Sweden) 9,600 851 .67
ELECTRICAL & ELECTRONICS - 1.51%
Northern Telecom Ltd. (Canada) 11200 1006 .79
Thomson-CSF (France) 31300 905 .72
BEVERAGES & TOBACCO - 0.78%
Fomento Economico Mexicano, SA de CV, Class B (Mexico) 75000 618 .49
Coca-Cola Amatil Ltd. (Australia) 50310 373 .29
MACHINERY & ENGINEERING - 0.78%
Kaerner AS (Norway) 20,000 987 .78
CHEMICALS - 0.69%
BOC Group PLC (United Kingdom) 55,000 877 .69
AEROSPACE & MILITARY - 0.67%
General Motors Corp., Class H (USA) 12,700 851 .67
FINANCIAL SERVICES - 0.66%
Credicorp Ltd. (Peru) 46,000 840 .66
FOOD & HOUSEHOLD PRODUCTS - 0.66%
Raisio Group (Finland) 7,300 839 .66
TEXTILES & APPAREL - 0.43%
Nine West Group Inc. (USA) (1) 20,000 544 .43
MISCELLANEOUS
Other stocks in initial period of acquisition 1046 .83
----------------------
TOTAL STOCKS (cost: $112,505,000) 110980 87.55
----------------------
Principal Market Percent
Amount Value of Net
Short-Term Securities (000) (000) Assets
- ----------------------------------------------------------------------------------- -------
CORPORATE SHORT-TERM NOTES - 9.64%
Bell Atlantic Financial Services, Inc. 5.70% due 1/14/98 $2,500 2,482 1.96
General Mills, Inc. 5.62% due 1/9/98 2,400 2,385 1.88
Sara Lee Corp. 5.53% due 12/4/97 2,300 2,299 1.81
American Express Credit Corp. 5.54% due 12/22/97 1,300 1,296 1.02
Beneficial Corp. 5.70% due 1/12/98 1,300 1,291 1.02
Lucent Technologies Inc. 5.49% due 12/18/97 1,100 1,097 .87
Monsanto Co. 5.48% due 12/4/97 (2) 800 799 .63
Associates Corp. of North America 5.75% due 12/1/97 569 569 .45
FEDERAL AGENCY DISCOUNT NOTES - 2.52%
Freddie Mac 5.43%-5.47% due 12/11-12/15/97 3,200 3,194 2.52
---------------------
TOTAL SHORT-TERM SECURITIES (cost: $15,412,000) 15,412 12.16
---------------------
TOTAL INVESTMENT SECURITIES (cost: $127,917,000) 126,392 99.71
Excess of cash and receivables over payables 370 .29
------------------------
NET ASSETS $126,762 100.00%
======== ========
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, 1997
AirTouch Communications
Altera
BOC Group
Cable and Wireless
Credicorp
CUC International
Dassault Systemes
Fletcher Challenge Energy
Fomento Economico Mexicano
France Telecom
Freeport-McMoRan Copper & Gold
General Motors
Glaxo Wellcome
Incentive
Kvaerner
Kyocera
Mannesmann
Micron Technology
Millicom International Cellular
Nine West Group
Oil Co. LUKoil
Orange
Orkla
Oryx Energy
ProSieben Media
Raisio Group
Sony
TELECEL - Comunicacoes Pessoais
Telecomunicaciones de Chile
Telefonos de Mexico
Texas Instruments
Thomson-CSF
Time Warner
TOTAL
TV Azteca
Viking Office Products
Washington Mutual
Stocks eliminated from the portfolio since May 31, 1997
HSBC Holdings
Sybase
U S WEST Media
Waste Management
</TABLE>
<TABLE>
GROWTH FUND
Investment Portfolio November 30, 1997
- ------------------------------------------------------
<S> <C> <C> <C>
STOCKS 89.86%
CASH &
EQUIVALENTS 10.14%
- ------------------------------------------------------
Percent
Of Net
Largest Individual Stocks Assets
- ------------------------------------------------------ -
America Online 5.60%
Time Warner 4.05
Walt Disney 2.80
Viacom 2.51
Tele-Communications, Liberty Media Group 2.22
Tele-Communications, TCI Group 2.10
Texas Instruments 1.97
King World Productions 1.72
Oracle 1.70
Guidant 1.62
Market Percent
Number of Value of Net
Stocks (common and preferred) Shares (000) Assets
- -------------------------------------------- - - -
Broadcasting & Publishing- 17.91%
Time Warner Inc. 3,302,575 $192,375 4.05%
Viacom Inc., Class B (1) 3,400,000 119,000 2.51
Tele-Communications, Inc., Series A, Liberty Media Gro 3,120,137 105,305 2.22
Tele-Communications, Inc., Series A, TCI Group (1) 4,350,000 99,642 2.10
HSN, Inc. (1) 1,485,000 66,268 1.40
News Corp. Ltd., preferred shares (American
Depositary Receipts) (Australia) 1,867,500 36,883
News Corp. Ltd. (American Depositary Receipts) 1,270,000 27,543 1.36
Comcast Corp., Class A, special stock 2,000,000 56,000 1.18
Cox Communications, Inc., Class A (1) 1,400,000 47,513 1.00
BHC Communications, Inc., Class A (1) 286,189 35,917 .76
Jones Intercable, Inc., Class A (1) 1,525,000 21,350 .45
Cablevision Systems Corp., Class A (1) 240,000 19,665 .41
United International Holdings, Inc., Class A (1) 1,180,000 12,390 .26
Adelphia Communications Corp., Class A (1) 393,400 5,704 .12
Jacor Communications, Inc. (1) 100,000 4,375 .09
Business & Public Services- 11.60%
America Online, Inc. (1) 3,520,000 265,760 5.60
Columbia/HCA Healthcare Corp. 1,597,500 47,126 .99
Federal Express Corp. (1) 550,000 36,884 .78
CUC International Inc. (1) 1,061,250 30,511 .64
Electronic Data Systems Corp. 741,700 28,185 .59
USA Waste Services, Inc. (1) 750,000 24,797 .52
Manpower Inc. 700,200 23,544 .50
Waste Management, Inc. 700,628 17,253 .36
Ecolab Inc. 300,000 15,300 .32
Shared Medical Systems Corp. 235,000 15,040 .32
Universal Health Services, Inc., Class B (1) 300,000 13,106 .28
Avery Dennison Corp. 220,000 9,213 .19
APAC Teleservices, Inc. (1) 638,500 8,939 .19
Ceridian Corp. (1) 150,000 6,581 .14
Paychex, Inc. 147,600 6,052 .13
Quorum Health Group, Inc. (1) 73,950 1,775 .04
PacifiCare Health Systems, Inc., Class A (1) 6,323 326 .01
Electronic Components- 10.95%
Texas Instruments Inc. 1,900,000 93,575 1.97
Intel Corp. 800,800 62,162 1.31
Adaptec, Inc. (1) 1,236,000 61,182 1.29
SCI Systems, Inc. (1) 1,000,526 45,837 .97
Analog Devices, Inc. (1) 1,366,666 42,879 .90
LSI Logic Corp. (1) 1,750,000 40,687 .86
ADC Telecommunications, Inc. (1) 605,900 22,532 .47
National Semiconductor Corp. (1) 665,000 22,028 .46
Newbridge Networks Corp. (Canada) (1) 460,000 19,377 .41
Microchip Technology Inc. (1) 500,000 17,500 .37
Quantum Corp. (1) 500,000 13,313 .28
Flextronics International Ltd. (Incorporated in Singap 300,000 12,000 .25
Bay Networks, Inc. (1) 350,000 10,522 .22
Xilinx, Inc. (1) 300,000 10,369 .22
Advanced Micro Devices, Inc. (1) 475,000 10,361 .22
Altera Corp. (1) 200,000 9,362 .20
Rogers Corp. (1) 190,800 7,787 .16
Park Electrochemical Corp. 250,000 6,563 .14
Seagate Technology (1) 200,000 4,537 .10
Actel Corp. (1) 300,000 4,425 .09
Motorola, Inc. 42,000 2,641 .06
Data Processing & Reproduction- 9.87%
Oracle Corp. (1) 2,425,000 80,783 1.70
Netscape Communications Corp. (1) 2,082,900 59,363 1.25
Digital Equipment Corp. (1) 1,000,000 49,250 1.04
Solectron Corp. (1) 1,271,000 46,312 .98
Intuit Inc. (1) 1,193,300 36,023 .76
Computer Associates International, Inc. 630,000 32,799 .69
Silicon Graphics, Inc. (1) 2,420,000 31,762 .67
Sequent Computer Systems, Inc. (1) 1,200,000 27,900 .59
3Com Corp. (1) 730,000 26,462 .56
Lexmark International Group, Inc., Class A (1) 750,000 23,906 .50
Autodesk, Inc. 400,000 15,375 .32
Sybase, Inc. (1) 860,700 12,050 .25
Structural Dynamics Research Corp. (1) 475,000 7,927 .17
Mentor Graphics Corp. (1) 800,000 7,600 .16
Ascend Communications, Inc. (1) 300,000 7,481 .16
Data General Corp. (1) 100,000 1,794 .04
Danka Business Systems PLC (American Depositary Receipts)
(United Kingdom) 45,000 1,654 .03
Leisure & Tourism- 9.12%
Walt Disney Co. 1,400,000 132,912 2.80
King World Productions, Inc. (1) 1,500,000 81,563 1.72
HFS Inc. (1) 900,000 61,762 1.30
Host Marriott Corp. (1) 1,800,000 37,463 .79
Carnival Corp., Class A 650,000 35,141 .74
Mirage Resorts, Inc. (1) 1,100,000 26,125 .55
MGM Grand, Inc. (1) 650,000 25,431 .54
Marriott International, Inc. 250,000 18,109 .38
Harrah's Entertainment, Inc. (1) 700,000 14,044 .30
Health & Personal Care- 4.45%
Guidant Corp. 1,200,000 77,100 1.62
Omnicare, Inc. 1,000,000 28,875 .61
Medtronic, Inc. 377,600 18,030 .38
Forest Laboratories, Inc. (1) 380,000 17,005 .36
Dura Pharmaceuticals, Inc. (1) 300,000 13,162 .28
Sepracor Inc. (1) 300,000 11,063 .23
BioChem Pharma Inc. (Canada) (1) 400,000 10,200 .21
Gillette Co. 95,100 8,779 .18
United States Surgical Corp. 233,200 6,151 .13
Johnson & Johnson 97,600 6,143 .13
Avon Products, Inc. 100,000 5,781 .12
SONUS Pharmaceuticals, Inc. (1) (2) 106,910 4,116 .09
SEQUUS Pharmaceuticals, Inc. (1) 400,000 3,100
SEQUUS Pharmaceuticals, Inc., warrants, expire 4/17/98 40,416 20 .07
Pharmacia & Upjohn, Inc. 36,250 1,223 .03
Alpha-Beta Technology, Inc. (1) 200,000 588 .01
Merchandising- 3.43%
Consolidated Stores Corp. (1) 1,465,625 71,266 1.50
Payless ShoeSource, Inc. (1) 295,000 18,732 .40
Barnes & Noble, Inc. (1) 550,000 17,016 .36
Woolworth Corp. (1) 775,000 16,759 .35
Limited Inc. 575,000 13,836 .29
Lowe's Companies, Inc. 200,000 9,187 .19
Circuit City Stores, Inc. - Circuit City Group 200,000 6,563 .14
Boise Cascade Office Products Corp. (1) 300,000 5,438 .12
Spiegel, Inc., Class A (1) 726,600 3,905 .08
Banking- 2.25%
Washington Mutual, Inc. 440,000 30,415 .64
BankBoston Corp. 290,840 25,921 .55
Norwest Corp. 500,000 18,719 .39
Charter One Financial, Inc. 275,625 16,331 .34
Northern Trust Corp. 250,000 15,562 .33
Energy Sources- 2.10%
Union Texas Petroleum Holdings, Inc. 1,500,000 32,719 .69
Oryx Energy Co. (1) 800,000 21,600 .45
Murphy Oil Corp. 350,000 19,250 .41
Enterprise Oil PLC (United Kingdom) 1,500,000 14,786 .31
Pogo Producing Co. 274,300 8,606 .18
Talisman Energy Inc. (Canada) (1) 100,000 2,953 .06
Telecommunications- 2.06%
Tele-Communications Inc., Series A, TCI Ventures Group 1,875,000 42,422 .89
AirTouch Communications Inc. (1) 1,000,000 39,250 .83
LCI International, Inc. (1) 400,000 11,025 .23
MCI Communications Corp. 120,000 5,272 .11
Transportation: Airlines- 2.03%
Southwest Airlines Co. 2,625,450 64,159 1.35
AMR Corp. (1) 195,000 23,632 .50
Delta Air Lines, Inc. 75,000 8,358 .18
Insurance- 1.67%
EXEL Ltd. (Incorporated in Bermuda) 510,000 31,365 .66
Transatlantic Holdings, Inc. 405,000 28,932 .61
Aetna Inc. 150,000 11,306 .24
Everest Reinsurance Holdings, Inc. 200,000 7,588 .16
Electrical & Electronics- 1.33%
Telefonaktiebolaget LM Ericsson, Class B
(American Depositary Receipts) (Sweden) 1,040,000 42,055 .88
Nokia Corp., Class A (American Depositary Receipts) (F 210,000 17,456 .37
NextLevel Systems, Inc. (1) (formerly of General Instr 286,700 3,799 .08
Chemicals- 1.27%
Valspar Corp. 990,400 30,083 .63
Mycogen Corp. (1) 800,000 15,600 .33
Air Products and Chemicals, Inc. 125,000 9,586 .20
Engelhard Corp. 284,400 5,066 .11
Recreation & Other Consumer Products- 1.26%
Mattel, Inc. 1,250,000 50,078 1.05
Midway Games Inc. (1) 368,500 7,416 .16
Electronic Arts (1) 69,000 2,312 .05
Energy Equipment- 1.08%
Reading & Bates Corp. (1) 800,000 30,700 .65
Schlumberger Ltd. (Netherlands Antilles) 250,000 20,578 .43
Financial Services- 0.98%
Fannie Mae (formerly Federal National Mortgage Assn.) 600,000 31,687 .67
Capital One Financial Corp. 200,000 9,063 .19
Freddie Mac (formerly Federal Home Loan Mortgage Corp. 137,000 5,651 .12
Textiles & Apparel- 0.79%
Nine West Group Inc. (1) 905,000 24,605 .52
NIKE, Inc., Class B 175,000 8,520 .18
Liz Claiborne Inc. 86,000 4,321 .09
Beverages & Tobacco - 0.48%
Philip Morris Companies Inc. 355,000 15,443 .32
PepsiCo, Inc. 200,000 7,375 .16
Aerospace & Military- 0.22%
Gulfstream Aerospace Corp. (1) 350,000 10,281 .22
Machinery & Engineering- 0.16%
Thermo Electron Corp. (1) 200000 7,363 .16
Utilities: Electric & Gas- 0.10%
K N Energy, Inc. 100000 4,675 .10
Construction & Housing- 0.09%
Stone & Webster, Inc. 90,000 4,219 .09
Electronic Instruments- 0.05%
ANTEC Corp. (1) 150000 2,288 .05
Real Estate- 0.05%
Security Capital Group Inc., Class B (1) 70100 2,252 .05
Miscellaneous
Other stocks in initial period of acquisition 216,451 4.56
- -
TOTAL STOCKS (cost: $2,936,133,000) 4,264,084 89.86
- -
Principal
Amount
Short-Term Securities (000)
- ------------------------------------------------------ - - -
Corporate Short-Term Notes- 6.52%
J.C. Penney Funding Corp. 5.50%-5.60% due 12/12/97-2/3 $65,000 64,531 1.36
Warner-Lambert Co. 5.50%-5.51% due 12/16/97-2/11/98 (2 61,600 61,116 1.29
E.I. du Pont de Nemours and Co. 5.53%-5.59% due 1/14-1 58,400 57,989 1.22
Procter & Gamble Co. 5.48%-5.57% due 1/6-2/12/98 37,600 37,281 .79
H.J. Heinz Co. 5.55% due 1/8/98 17,400 17,295 .36
Wal-Mart Stores, Inc. 5.49% due 12/1/97 15,800 15,798 .33
National Rural Utilities Cooperative Finance Corp.
5.49%-5.66% due 2/19-3/2/98 14,000 13,813 .29
Monsanto Co. 5.48% 12/8/97 13,700 13,683 .29
Lucent Technologies Inc. 5.50% due 1/5/98 13,000 12,928 .27
General Electric Capital Corp. 5.71% due 2/24/98 9,500 9,367 .20
International Lease Finance Corp. 5.67% due 1/21/98 6,000 5,951 .12
Federal Agency Discount Notes- 3.02%
Fannie Mae 5.44%-5.475% due 1/20-2/5/98 74,100 73,442 1.55
Student Loan Marketing Assn. (formerly Student Loan Marketing Assn.)
5.47% due 1/27/98 36,800 36,470 .77
Freddie Mac 5.39%-5.43% due 12/5-12/24/97 33,300 33,246 .70
- -
TOTAL SHORT-TERM SECURITIES (cost: $452,972,000) 452,910 9.54
- -
TOTAL INVESTMENT SECURITIES (cost: $3,389,105,000) 4,716,994 99.40
Excess of cash and receivables over payables 28,389 .60
- -
NET ASSETS $4,745,383 100.00%
= =
(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, 1997
- ------------------------------------------------------
Aetna
Altera
Avon
BioChem Pharma
Capital One Financial
Cox Communications
Dura Pharmaceuticals
Jacor Communications
K N Energy
Lowe's Companies
Nine West Group
Oryx Energy
Pogo Producing
Quantum
Quorum Health Group
Security Capital Group
Sepracor
Talisman Energy
Thermo Electron
Universal Health Services
Washington Mutual
Woolworth
- ------------------------------------------------------
Stocks eliminated from the portfolio
since May 31, 1997
- ------------------------------------------------------
AccuStaff
Air & Water Technologies
Amway Asia Pacific
Cardinal Health
Commerce Bancshares
CompuServe
Gaylord Entertainment
Kimberly-Clark
Nellcor Puritan Bennett
Oxford Health Plans
Pioneer Hi-Bred International
Republic Industries
Tandem Computers
Trump Hotels & Casino Resorts
U S WEST Media Group
United HealthCare
</TABLE>
<TABLE>
AMERICAN VARIABLE INSURANCE SERIES INTERNATIONAL FUND
Investment Portfolio, November 30, 1997
<S> <C> <C> <C>
Where the Fund's Assets Are Invested
Percent of Percent of
Net Assets Net Assets
-----------------------------------
EUROPE 48.51%
United Kingdom 13.0%
Germany 4.5
Sweden 4.5
Italy 3.8
France 3.6
Spain 3.6
Switzerland 3.6
Netherlands 2.5
Norway 2.0
Finland 1.6
Luxembourg 1.2
Other Europe 1.2
ASIA/PACIFIC 25.87%
Japan 13.8
Hong Kong 6.0
Australia 5.5
South Korea 1.9
Other Asia/Pacific 3.1
THE AMERICAS 14.51%
Canada 5.6
Brazil 4.3
Mexico 3.2
Other Americas 0.8
OTHER COUNTRIES 2.28%
CASH AND EQUIVALENTS 8.83%
TOTAL 100.0%
Largest Individual Equities
Telefonica de Espana 3.32%
Novartis 2.24
Orkla 1.80
Telefonos de Mexico 1.64
France Telecom 1.57
Centrais Eletricas Brasileiras - ELETROBRAS 1.48
Bank of Nova Scotia 1.44
TELECEL - Comunicacoes Pessoais 1.40
Forenings Sparbanken 1.39
Bayerische Motoren Werke 1.35
Market Percent
Number of Value of Net
Stocks (common and preferred) Shares (000) Assets
- -------------------------------------------------------------------------------- ------------- ----------
TELECOMMUNICATIONS - 15.38%
Telefonica de Espana, SA (Spain) 2590000 $74,645
Telefonica de Espana, SA (American Depositary Receipts) 158000 13667 3.32%
Telefonos de Mexico, SA de CV, Class L
(American Depositary Receipts) (Mexico) 882000 43659 1.64
France Telecom (France) 1139200 41818 1.57
TELECEL - Comunicacoes Pessoais, SA (Portugal) 406000 37134 1.40
Hong Kong Telecommunications Ltd. (Hong Kong) 14706553 27968 1.05
Telecom Italia Mobile SpA (Italy) 6023000 24298
Telecom Italia Mobile SpA, savings shares 1588800 3472 1.04
Mannesmann AG (Germany) 45000 20928 .79
Koninklijke PTT Nederland NV (Netherlands) 490000 19659 .74
Orange PLC (United Kingdom) (1) 4240000 17856 .67
Telefonica de Argentina SA, Class B (American Depositary
Receipts) (Argentina) 417000 13787 .52
Telecomunicacoes Brasileiras SA, preferred nominative
(American Depositary Receipts) (Brazil) 116000 12107 .46
Telecom Italia SpA, nonconvertible savings shares (Italy) (formerly
STET - Societa Finanziaria Telefonica p.a.) 3060465 12019 .45
TELUS Corp. (Canada) 518600 11164 .42
Philippine Long Distance Telephone Co., convertible preferred
(Global Depositary Receipts) (Philippines) 80000 3890
Philippine Long Distance Telephone Co. (American Depositary Recei 154000 3812
Philippine Long Distance Telephone Co., ordinary shares 135000 3273 .41
Perusahaan Perseroan (Persero) PT Indonesian Satellite Corp. (Ind 2108000 4792
Perusahaan Perseroan (Persero) PT Indonesian Satellite Corp. .32
(American Depositary Receipts) 164200 3674
Cable and Wireless PLC (United Kingdom) 1900000 8434 .32
Deutsche Telekom AG (Germany) 195100 3951 .15
SK Telecom Co., Ltd. (South Korea) 4871 1553 .06
Videsh Sanchar Nigam Ltd. (Global Depositary Receipts) (India) (2 108600 1439 .05
BANKING - 7.47%
Bank of Nova Scotia (Canada) 874200 38,313 1.44
ForeningsSparbanken AB (Sweden) 1454500 37,004 1.39
Safra Republic Holdings SA (Luxembourg) 253000 25,553 .96
Bank of Scotland (United Kingdom) 3005200 25,515 .96
Australia and New Zealand Banking Group Ltd. (Australia) 2957627 20,210 .76
Lloyds TSB Group PLC (United Kingdom) 1140000 12,988 .49
Westpac Banking Corp. (Australia) 1900000 11,884 .45
Banco de Santander, SA (Spain) 300000 9,068 .34
Sakura Bank, Ltd. (Japan) 1720000 6,004 .23
Toronto-Dominion Bank (Canada) 130000 4,606 .17
Grupo Financiero Banamex Accival, SA de CV, Class B (Mexico)(1) 1130397 2,478
Grupo Financiero Banamex Accival, SA de CV, Class L(1) 92128 191 .10
Fuji Bank, Ltd. (Japan) 470000 2,520 .09
Hanil Bank (South Korea) 804980 1,962 .07
Fuji International Finance (Bermuda) Trust,
convertible preference share units (Japan) 40 453 .02
BROADCASTING & PUBLISHING - 6.95%
CANAL+ (France) 124418 21635 .81
FLEXTECH PLC (United Kingdom) (1) 2,250,000 21,315 .80
ProSieben Media AG (Germany) (1) 400,000 19,170 .72
News Corp. Ltd. (American Depositary Receipts) (Australia) 362000 7851
News Corp. Ltd., preferred shares (American Depositary Receipts) 181000 3575 .57
News Corp. Ltd., preferred shares (United Kingdom) 790115 3830
Pathe (France) 73,000 14,066 .53
Seven Network Ltd. (Australia) 3600000 13108 .49
Metropole Television (France) 106,000 10,338 .39
Mediaset SpA (Italy) 1,967,000 9,720 .37
Grupo Televisa, SA (American Depositary Receipts) (Mexico) (1) 261000 9657 .36
TV Azteca, SA de CV (American Depositary Receipts) (Mexico) (1) 438,100 9,063 .34
Independent Newspapers, PLC (Ireland) 1,221,420 7,153 .27
Nippon Television Network Corp. (Japan) 21000 6772 .25
Television Broadcasts Ltd. (Hong Kong) 2259300 5553 .21
Springer Axel (Germany) 6,329 4,948 .19
Carlton Communications PLC (United Kingdom) 540,000 4,133 .16
Multicanal Participacoes SA (American Depositary Receipts) (Brazi 791,000 3,757 .14
SOFTBANK CORP. (Japan) 206800 3723 .14
Publishing & Broadcasting Ltd. (Australia) 500,000 2,824 .11
Modern Times Group MTG AB, Class B (American Depositary Receipts)
(Sweden) (1) 61,000 2,135
Modern Times Group MTG AB, Class A (1) 101,600 638 .10
MULTI-INDUSTRY - 5.66%
Orkla AS, Class A (Norway) 555000 47836 1.80
Hutchison Whampoa Ltd. (Hong Kong) 5,200,000 34,645 1.30
Siebe PLC (United Kingdom) 920,000 16,724 .63
Imasco Ltd. (Canada) 450,000 16,087 .60
Incentive AB, Class A (Sweden) 106100 9410 .35
Lend Lease Corp. Ltd. (Australia) 452616 9211 .35
Suez Lyonnaise des Eaux (France) 83038 8928 .34
Benpres Holdings Corp. (Global Depositary Receipts) (Philippines) 1,876,000 5,534 .21
Swire Pacific Ltd., Class A (Hong Kong) 450,000 2,253 .08
HEALTH & PERSONAL CARE - 4.97%
Novartis AG (Switzerland) 37,324 59,612 2.24
Sankyo Co., Ltd. (Japan) 912,000 29,051 1.09
AB Astra, Class A (Sweden) 1,613,333 27,990 1.05
Zeneca Group PLC (United Kingdom) 320,000 10,208 .38
Elan Corp., PLC (American Depositary Receipts) (Ireland) (1) 60,400 3,186 .12
SmithKline Beecham PLC (American Depositary Receipts) (United Kin 50,000 2,481 .09
ELECTRICAL & ELECTRONICS - 4.13%
Telefonaktiebolaget LM Ericsson, Class B (Sweden) 804600 32814
Telefonaktiebolaget LM Ericsson, Class B, 4.25% convertible prefe 14,500 83 1.24
Nokia Corp., Class A (Finland) 180000 14485
Nokia Corp., Class K 150000 12043 1.00
Northern Telecom Ltd. (Canada) 230000 20657 .78
Thomson-CSF (France) 560000 16195 .61
Premier Farnell PLC (United Kingdom) 1000000 6811 .26
ABB AB, Class A (Sweden) (formerly ASEA AB) 500000 6376 .24
AUTOMOBILES - 3.96%
Bayerische Motoren Werke AG (Germany) 48000 35810 1.35
Honda Motor Co., Ltd. (Japan) 806,000 29,144 1.10
Volkswagen AG (Germany) 33,900 19,204 .72
Suzuki Motor Corp. (Japan) 1700000 18494 .70
Hyundai Motor Co., preferred shares (Global Depositary Receipts)
(South Korea) 705,000 2,379 .09
BUSINESS & PUBLIC SERVICES - 3.64%
Rentokil Group PLC (United Kingdom) 8,080,000 34,027 1.28
Brambles Industries Ltd. (Australia) 920,182 17,540 .66
Reuters Holdings PLC (United Kingdom) 896,000 10,102 .38
Thames Water PLC (United Kingdom) 475,000 7,152 .27
Vedior NV (Netherlands) 360,000 6,823 .26
Generale des Eaux (France) 42,500 5,613 .21
United Utilities PLC (United Kingdom) 400,000 5,138 .19
Zhejiang Expressway Co. Ltd. (China) 25,000,000 4,593 .17
Havas SA (France) 67,335 4,395 .17
Severn Trent PLC (United Kingdom) 76,287 1,205 .05
MERCHANDISING - 3.36%
Kingfisher PLC (United Kingdom) 2,390,000 32,918 1.24
Cifra, SA de CV, Class C (Mexico) 6000000 11371
Cifra, SA de CV, Class B 1500000 3216
Cifra, SA de CV, Class A 917306 1788 .62
Tesco PLC (United Kingdom) 1,979,302 15,986 .60
Carrefour SA (France) 29,000 15,512 .58
Coles Myer Ltd. (Australia) 1,000,227 4,901 .18
Amway Japan Ltd. (American Depositary Receipts) (Japan) 300,000 2625
Amway Japan Ltd. 65,000 1053 .14
UTILITIES: ELECTRIC & GAS - 3.21%
Centrais Eletricas Brasileiras SA - ELETROBRAS Class B, preferred
nominative (American Depositary Receipts) (Brazil) 1,628,000 39,683 1.48
Hongkong Electric Holdings Ltd. (Hong Kong) 5875000 19875 .75
Cia. Paranaense de Energia-Copel, Class B, preferred nominative
(Brazil) (1) 732873000 10904 .41
Cia. Paranaense de Energia-Copel, ordinary nominative (1) 492941000 5956 .22
Scottish Power PLC (United Kingdom) 661200 5357 .20
CESP - Cia. Energetica de Sao Paulo, preferred nominative
(American Depositary Receipts) (Brazil) (1) 94096 1811
CESP - Cia. Energetica de Sao Paulo, ordinary nominative (1) 8,869,000 475 .09
Cia. Energetica de Minas Gerais - CEMIG (Brazil) 35692000 1480 .06
BEVERAGES & TOBACCO - 3.20%
Coca-Cola Amatil Ltd. (Australia) 2722747 20203 .76
Cia. Cervejaria Brahma, preferred nominative (Brazil) 26,300,000 17,431 .66
Panamerican Beverages, Inc., Class A (Mexico) 486000 16646 .63
South African Breweries Ltd. (South Africa) 593,238 14,535 .55
Hellenic Bottling Co. SA (Greece) 555,220 13,071 .49
San Miguel Corp., Class B (Philippines) 2357000 2959 .11
FOOD & HOUSEHOLD PRODUCTS - 2.89%
Nestle SA (Switzerland) 20936 30796 1.16
Reckitt & Colman PLC (United Kingdom) 1218375 17748 .67
Cadbury Schweppes PLC (United Kingdom) 1,500,000 15,571 .59
Groupe Danone (France) 50,987 8,132 .31
PT Indofood Sukses Makmur (Indonesia) 6518100 4298 .16
ELECTRONIC COMPONENTS - 2.72%
Rohm Co., Ltd. (Japan) 354000 34910 1.31
Hoya Corp. (Japan) 475000 14499 .55
Murata Manufacturing Co., Ltd. (Japan) 420000 12590 .47
Hirose Electric Co., Ltd. (Japan) 91000 5463 .21
Kyocera Corp. (Japan) 99000 4773 .18
ENERGY SOURCES - 2.39%
TOTAL, Class B (France) 156372 16416
TOTAL, Class B, (American Depositary Receipts) 75000 3942 .77
RAO Gazprom (American Depositary Receipts) (Russia) 460000 9867 .37
Oil Cos LUKoil (American Depositary Receipts) (Russia) 124500 9562 .36
ENI SpA (American Depositary Receipts) (Italy) 140000 8129 .31
Elf Aquitaine (France) 40000 4639 .17
Woodside Petroleum Ltd. (Australia) 600000 4287 .16
"Shell" Transport and Trading Co., PLC (United Kingdom) 90000 3752 .14
Imperial Oil Ltd. (Canada) 51200 3043 .11
DATA PROCESSING & REPRODUCTION - 1.91%
Acer Inc. (Taiwan) 9200000 13958
Acer Inc. (Global Depositary Receipts) (1) 308300 2343 .61
Dassault Systemes SA (France) 466000 12388 .47
Fujitsu Ltd. (Japan) 1070000 11975 .45
Olivetti SpA (Italy) (1) 18112000 10165 .38
FINANCIAL SERVICES - 1.65%
Shohkoh Fund & Co., Ltd. (Japan) 109000 30967 1.16
Credicorp Ltd. (Peru) 720000 13140 .49
BUILDING MATERIALS & COMPONENTS - 1.61%
Cemex, SA de CV, ordinary participation certificates (Mexico) 4562700 19729
Cemex, SA de CV, Class A 2321450 10010 1.12
Holderbank Financiere Glaris Ltd. (Switzerland) 15000 13072 .49
APPLIANCES & HOUSEHOLD DURABLES - 1.57%
Sony Corp. (Japan) 340000 29005 1.09
Philips Electronics NV (Netherlands) 195000 12873 .48
Samsung Electronics Co., Ltd. (South Korea) 1,118 40 .00
METALS: NONFERROUS - 1.23%
Alcan Aluminium Ltd. (Canada) 310000 8351 .31
Noranda Inc. (Canada) 400,000 6,728 .25
WMC Ltd. (Australia) 1928134 6148 .23
Teck Corp., Class B (Canada) 300000 4298 .16
Pechiney, Class A (France) 101813 3996 .15
Inco Ltd. (Canada) 180000 3431 .13
RECREATION & OTHER CONSUMER PRODUCTS - 1.15%
Sony Music Entertainment (Japan) Inc. (Japan) 270,000 8,960 .34
Yue Yuen Industrial (Holdings) Ltd. (Hong Kong - Incorporated in 3,600,000 7,871 .30
TAG Heuer International SA (Switzerland) 58,000 5,632 .21
Nintendo Co., Ltd. (Japan) 50,000 5,165 .19
Square Co. Ltd. (Japan) 102,000 2,882 .11
AEROSPACE & MILITARY TECHNOLOGY - 1.12%
Bombardier Inc., Class B (Canada) 793900 16449 .62
British Aerospace PLC (United Kingdom) 490000 13365 .50
INDUSTRIAL COMPONENTS - 1.11%
Minebea Co., Ltd. (Japan) 1000000 11114 .42
Sumitomo Electric Industries, Ltd. (Japan) 820000 10974 .41
Cie. Generale des Etablissements Michelin, Class B (France) 70661 3805 .14
Bridgestone Corp. (Japan) 175000 3794 .14
MISCELLANEOUS MATERIALS & COMMODITIES - 0.94%
English China Clays PLC (United Kingdom) 3168750 13692 .51
De Beers Consolidated Mines Ltd. (South Africa) 345000 7245 .27
SGL Carbon AG (Germany) 25300 3260 .12
Bunzl PLC (United Kingdom) 267700 1028 .04
REAL ESTATE - 0.76%
Cheung Kong (Holdings) Ltd. (Hong Kong) 2427000 17112 .64
Mitsui Fudosan Co., Ltd. (Japan) 300000 3170 .12
INSURANCE - 0.60%
Royal & Sun Alliance Insurance Group PLC (United Kingdom) 1761988 15852 .60
ELECTRONIC INSTRUMENTS - 0.47%
Tokyo Electron Ltd. (Japan) 328000 12553 .47
MACHINERY & ENGINEERING - 0.47%
Valmet Corp. (Finland) 600000 8948 .34
Kawasaki Heavy Industries, Ltd. (Japan) 1400000 3430 .13
ENERGY EQUIPMENT - 0.45%
Petroleum Geo-Services ASA (American Depositary Receipts) (Norway 187200 12039 .45
FOREST PRODUCTS & PAPER - 0.41%
UPM-Kymmene Corp. (Finland) 509590 10945 .41
TRANSPORTATION: SHIPPING - 0.41%
Stolt-Nielsen SA, Class B (American Depositary Receipts)
(Multinational) 327000 7,685 .29
Nippon Yusen KK (Japan) 1000000 3,060 .12
TRANSPORTATION: AIRLINES - 0.39%
China Southern Airlines Co. Ltd., Class H (China) 30206000 8,597 .32
KLM Royal Dutch Airlines (Netherlands) 50000 1,797 .07
GOLD MINES - 0.34%
Ashanti Goldfields Co. Ltd. (Global Depositary Receipts) (Ghana) 508540 3655
Ashanti Goldfields Co. Ltd. (Australia) 392212 2883 .25
Normandy Mining Ltd. (Australia) 2900000 2487 .09
LEISURE & TOURISM - 0.18%
Mandarin Oriental International Ltd. (Singapore) 6911218 4838 .18
CONSTRUCTION & HOUSING - 0.17%
Leighton Holdings Ltd. (Australia) 1163700 4514 .17
MISCELLANEOUS
Other stocks in initial period of acquisition 88029 3.31
------------- -----------
TOTAL STOCKS (cost: $2,119,075,000) 2398571 90.18
------------- -----------
Principal
Amount
Convertible Debentures (000)
- ----------------------------------------------------------------- ------------- ------------- ----------
BROADCASTING & PUBLISHING - 0.31%
United News & Media PLC 6.125% 2003 (1) $4,500 8175 .31
ELECTRONIC COMPONENTS - 0.24%
LG Electronics-LG Semiconduct 0.25% 2007 KW5,000 3550 .13
Acer Peripherals Inc. 1.25% 2006 $2,680 2948 .11
UTILITIES: ELECTRIC & GAS - 0.16%
Korea Electric Power Corp. 5.00% 2001 KW5,000 4388 .16
ENERGY SOURCES - 0.04%
Zhenhai Refining & Chemical Co. Ltd. 3.00% 2003(2) $950 1111 .04
------------- -----------
TOTAL CONVERTIBLE DEBENTURES (cost: $21,151,000) 20,172 .75
------------- --------
TOTAL EQUITY-TYPE SECURITIES (cost: $2,140,226,000) 2,418,743 90.93
------------- --------
Bonds and Notes
- ----------------------------------------------------------------- ------------- ------------- ----------
INDUSTRIALS - 0.24%
RBS Participaco+A294es SA 11.00% 2007 (2) $7,000 6335 .24
------------- -----------
TOTAL BONDS & NOTES (cost: $7,023,000) 6,335 .24
------------- -----------
Principal Market Percent
Amount Value of Net
Short-Term Securities (000) (000) Assets
- ----------------------------------------------------------------- ------------- ------------- -------
CORPORATE SHORT-TERM NOTES - 7.49%
Electricite de France 5.47%-5.64% due 12/11/97-1/20/98 $29,500 29,290 1.10
Svenska Handelsbanken Inc. 5.51%-5.67% due 12/9/97-2/19/98 23,500 23,352 .87
Glaxo Wellcome PLC 5.50% due 12/11/97 (2) 23,000 22,961 .86
Ford Credit Europe PLC 5.55% due 1/9/98 20,000 19,876 .75
Toyota Motor Credit Corp. 5.65% due 1/16/98 20,000 19,855 .75
Caisse d'amortissement de la dette sociale 5.50%-5.60%
due 12/12/97-2/13/98 15,500 15,396 .58
General Electric Capital Corp. 5.80% due 12/1/97 12800 12798 .48
Telstra Corp. Ltd. 5.55% due 1/21/98 12,500 12,398 .47
Lloyds Bank PLC 5.55% due 1/12/98 10,000 9,933 .37
Barclays U.S. Funding Corp. 5.55% due 1/26/98 10000 9911 .37
National Australia Funding (Delaware) Inc. 5.48% due 2/10/98 10000 9885 .37
Deutsche Bank Financial Inc. 5.52% due 1/8/98 7,000 6,958 .26
Rank Xerox Capital (Europe) PLC 5.55% due 1/14/98 7,000 6,950 .26
FEDERAL AGENCY DISCOUNT NOTES - 0.96%
Freddie Mac (formerly Federal Home Loan Mortgage Corp.)
5.39%-5.45% due 12/5-12/11/97 15500 15475 .58
Fannie Mae (formerly Federal National Mortgage Assn.)
5.45% due 12/11/97 10000 9983 .38
CERTIFICATES OF DEPOSIT - 0.41%
Dresdner Bank AG 5.65%-5.68% due 1/9-2/10/98 11000 10997 .41
NON-U.S. CURRENCY - 0.07%
New Taiwanese Dollar NT$57,450 1790 .07
------------- ----------
TOTAL SHORT-TERM SECURITIES (cost: $238,048,000) 237,808 8.93
------------- ----------
TOTAL INVESTMENT SECURITIES (cost: $2,385,297,000) 2,662,886 100.10
Excess of payables over cash and receivables 2,767 .10
------------- -------------
NET ASSETS $2,660,119 100.00%
======== ========
(1) Non-income-producing securities.
(2) Purchased in a private placement transaction; resale to the public may
require registration or sale only to qualified institutional buyers.
See Notes to Financial Statements
Equity-type securities appearing in the portfolio
since May 31, 1997
Acer
Cable and Wireless
Cheung Kong (Holdings)
China Southern Airlines
Coles Myer
Credicorp
Dassault Systemes
Elf Aquitaine
FLEXTECH
ForeningsSparbanken
France Telecom
Generale des Eaux
Hellenic Bottling
Imperial Oil
Incentive
Leighton Holdings
LG Electronics-LG SEMICONDUCT
Metropole Television
Minebea
Modern Times Group
Oil Cos Lukoil
Orange
Petroleum Geo-Services
Premier Farnell
ProSieben Media
Publishing & Broadcasting
RAO Gazprom
Shohkoh Fund & Co.
Springer Axel
Suez Lyonnaise des Eaux
Telefonica de Argentina
TELUS
Thomson-CSF
TV Azteca
United Utilities
Vedior
Zhejiang Expressway
Equity-type securities eliminated from the portfolio
since May 31, 1997
Anglovaal
B.A.T Industries
BEC World
Ciba Specialty Chemicals Holdings
Electrolux
Elsevier
EMI Group
George Weston
Granges
HSBC Holdings
Industriforvaltnings AB Kinnevik
Kawasaki Steel
Korea Electric Power
LVMH Moet Hennessy Louis Vuitton
NTT Data Communications Systems
Pearson
Repsol
Rothmans of Pall Mall (Malaysia)
Royal Bank of Canada
Seat
SmarTone Telecommunications Holdings
Svedala Industri
Telecom Corp. of New Zealand
Telefonica del Peru
Toyota Motor
Unilever
United News & Media
Verenigd Bezit
Volvo
Wolters Kluwer
</TABLE>
<TABLE>
American Variable Insurance Series
GROWTH-INCOME FUND
Investment Portfolio - November 30, 1997
<S> <C> <C> <C>
Equity-Type Securities 86.45%
Cash & Equivalents 13.55%
Percent
of Net
Largest Individual Equities Assets
AT&T 1.82%
Schering-Plough 1.43
Pfizer 1.33
Ultramar Diamond Shamrock 1.28
Valero Energy 1.28
Repsol 1.19
Atlantic Richfield 1.15
Walt Disney 1.14
Potash Corp. of Saskatchewan 1.08
Ameritech 1.06
Market Percent
Number of Value of Net
Stocks (common and preferred) Shares (000) Assets
Energy Sources - 8.95%
Ultramar Diamond Shamrock Corp. 2780400 $84,628 1.28%
Valero Energy Corp. 2688250 84344 1.28
Repsol SA (American Depositary Receipts) (Spain) 1825000 78703 1.19
Atlantic Richfield Co. 930000 75795 1.15
Pennzoil Co. 780900 52028 .80
Texaco Inc. 810,000 45,765 .69
Amoco Corp. 450000 40500 .61
Pioneer Natural Resources Co. 1000000 31938 .48
Murphy Oil Corp. 463200 25476 .40
Elf Aquitaine (American Depositary Receipts) (France) 300000 17175 .26
Kerr-McGee Corp. 225000 14920 .23
Norsk Hydro AS (American Depositary Receipts) (Norway 250000 12953 .20
Phillips Petroleum Co. 250000 12109 .18
Ashland Inc. 200000 9338 .14
Chevron Corp. 50000 4009 .06
Health & Personal Care - 7.81%
Schering-Plough Corp. 1500000 94031 1.43
Pfizer Inc 1200000 87300 1.33
Warner-Lambert Co. 460000 64343 .98
AB Astra, Class A (American Depositary Receipts) (Swe 2600000 44200 .67
Glaxo Wellcome PLC (American Depositary Receipts)
(United Kingdom) 950,000 43,403 .66
Merck & Co., Inc. 425,000 40189 .61
Guidant Corp. 450,000 28,913 .44
Bristol-Myers Squibb Co. 275000 25747 .39
Abbott Laboratories 350,000 22,750 .35
American Home Products Corp. 255500 17853 .27
Avon Products, Inc. 300000 17,344 .26
Johnson & Johnson 250,000 15,734 .24
Kimberly-Clark Corp. 240,000 12,495 .18
Banking - 6.10%
Norwest Corp. 1600000 59900 .91
Chase Manhattan Corp. 319400 34695 .53
BankAmerica Corp. 470800 34368 .52
Marshall & Ilsley Corp. 599,800 31864 .48
KeyCorp 400000 26975 .41
Northern Trust Corp. 400000 24900 .38
First Chicago NBD Corp. 275,500 21558 .33
Bank of New York Co., Inc. 400,000 21500 .33
First Union Corp. 430000 20963 .32
SunTrust Banks, Inc. 280,000 19880 .30
J.P. Morgan & Co. Inc. 150000 17,128 .26
Hibernia Corp., Class A 800000 14500 .22
Huntington Bancshares Inc. 417,890 14208 .22
CoreStates Financial Corp 172800 13,360 .20
Citicorp 100,000 11994 .18
Fleet Financial Group, Inc. 150000 9909 .15
Bank of Tokyo-Mitsubishi, Ltd. (American Depositary
Receipts) (Japan) 600000 8,700 .13
Banc One Corp. 166375 8548 .13
Sakura Bank, Ltd. (American Depositary Receipts) (Jap 200000 6,900 .10
Merchandising - 5.85%
Wal-Mart Stores, Inc. 1,400,000 55,912 .85
Federated Department Stores, Inc. (1) 1200000 54675 .83
Albertson's, Inc. 1218700 54080 .82
J.C. Penney Co., Inc. 717800 46119 .70
Limited Inc. 1494900 35971 .55
Circuit City Stores Inc. - Circuit City Group 1025000 33633 .51
Gap, Inc. 600000 32212 .49
Giant Food Inc., Class A 825,000 27,844 .42
Circuit City Stores Inc. - Carmax Group (1) 1,300,000 15,519 .24
Lowe's Companies, Inc. 250000 11484 .17
Woolworth Corp. (1) 500000 10813 .16
Cardinal Health, Inc., Class A 96700 7325 .11
Business & Public Services - 5.40%
Browning-Ferris Industries, Inc. 1858600 66329 1.01
Electronic Data Systems Corp. 1199500 45581 .69
Hertz Corp., Class A 991800 39114 .59
Waste Management, Inc. 1560628 38430 .58
IKON Office Solutions, Inc. 1000000 30438 .46
Cognizant Corp. 655000 28083 .43
Alexander & Baldwin, Inc. 1,020,000 27,540 .42
Federal Express Corp.(1) 380000 25484 .40
Avery Dennison Corp. 500000 20937 .32
Pitney Bowes Inc. 175000 14711 .22
Manpower Inc. 300,000 10,088 .15
Columbia/HCA Healthcare Corp. 300,000 8,850 .13
Broadcasting & Publishing - 4.88%
Viacom Inc., Class B (1) 1725000 60375 .92
Time Warner Inc. 942,000 54,872 .83
Tele-Communications, Inc., Series A, Liberty
Media Group (1) 1090625 36808 .57
Harte-Hanks Communications, Inc. 922800 31837 .48
News Corp. Ltd. (American Depositary Receipts) (Austr 1100000 23856
News Corp. Ltd., preferred shares (American Depositary
Receipts) 400000 7900 .48
Media General Inc., Class A 636100 27114 .41
E.W. Scripps Co., Class A 630000 26499 .40
Comcast Corp., Class A, special stock 729706 20432 .31
Gannett Co., Inc. 340000 19741 .30
Houston Industries Inc., 7.00% convertible preferred 123300 6843 .10
Chris-Craft Industries, Inc. 104875 5257 .08
Telecommunications- 4.64%
AT&T Corp. 2140000 119573 1.82
Ameritech Corp. 905900 69811 1.06
U S WEST Communications, Inc. 850,000 38,409 .58
AirTouch Communications (1) 549,621 21,573 .33
Telefonica de Espana, SA (American Depositary Receipts)
(Spain) 200,000 17,300 .26
Telefonos de Mexico, SA de CV, Class L
(American Depositary Receipts) (Mexico) 335000 16582 .25
MCI Communications Corp. 350,000 15,378 .23
SBC Communications Inc. 100000 7281 .11
Chemicals - 4.46%
Millennium Chemicals Inc. 2050000 47150 .72
Praxair, Inc. 975400 42857 .65
E.I. du Pont de Nemours and Co. 625,000 37,851 .57
Monsanto Co. 673,000 29,402 .45
Mallinckrodt Inc. 780100 28864 .44
Dow Chemical Co. 250000 24687 .37
Witco Corp. 500000 21563 .33
PPG Industries, Inc. 350000 20278 .31
Lyondell Petrochemical Co. 640000 16280 .25
Imperial Chemical Industries PLC (American
Depositary Receipts) (United Kingdom) 200000 11887 .18
Air Products and Chemicals, Inc. 100000 7669 .11
Engelhard Corp. 284400 5066 .08
Forest Products & Paper - 4.06%
Bowater Inc. 1495000 67088 1.02
Union Camp Corp. 780000 46849 .71
Fort James Corp.
(formerly James River Corp. of Virginia) 869499 34019 .52
Georgia-Pacific Corp. 300000 25612 .39
Weyerhaeuser Co. 450000 23766 .36
International Paper Co. 450000 21347 .32
Rayonier Inc. 425000 20772 .32
Sonoco Products Co. 500000 16406 .25
Westvaco Corp. 187500 6117 .09
Louisiana-Pacific Corp. 200000 4038 .06
Deltic Timber Corp. 46628 1340 .02
Data Processing & Reproduction - 3.46%
Oracle Corp. (1) 1,312,500 43,723 .66
Computer Associates International, Inc. 709,500 36,938 .56
International Business Machines Corp. 325,400 35,652 .54
Xerox Corp. 450,000 34,959 .53
3Com Corp. (1) 900000 32625 .50
Silicon Graphics, Inc. (1) 2,074,300 27,225 .41
Adobe Systems Inc. 400,000 16,800 .26
Machinery & Engineering - 3.14%
Caterpillar Inc. 1310000 62798 .95
Parker Hannifin Corp. 960100 42725 .65
Deere & Co. 716600 39279 .60
Ingersoll-Rand Co. 525000 21459 .33
Crompton & Knowles Corp. 700000 18550 .28
New Holland NV (Netherlands) 625000 15664 .24
Greenfield Capital Trust, 6.00% convertible preferred 118000 6195 .09
Insurance - 2.44%
General Re Corp. 240000 47640 .72
Allstate Corp. 300000 25762 .39
USF&G Corp. 1275000 25739 .39
Liberty Corp. 400000 18000 .27
American General Corp. 320000 17240 .26
Royal & Sun Alliance Insurance Group PLC (United King 1500000 13495 .20
St. Paul Companies, Inc. 120000 9600 .15
Arthur J. Gallagher & Co. 84300 3014 .06
Beverages & Tobacco - 2.31%
Philip Morris Companies Inc. 1,405,000 61,118 .93
Seagram Co. Ltd. (Canada) 1350000 43622 .66
PepsiCo, Inc. 870000 32081 .49
UST Inc. 500000 15437 .23
Aerospace & Military Technology - 2.28%
Boeing Co. 770000 40906 .62
United Technologies Corp. 519,800 38,953 .59
Sundstrand Corp. 500000 25656 .39
General Motors Corp., Class H 370000 24790 .38
Raytheon Co. 350,000 19,578 .30
Utilities: Electric & Gas - 2.18%
Duke Energy Corp. (formerly Duke Power Co.) 625000 32500 .49
DPL Inc. 1000000 26250 .40
Union Electric Co. 500000 19906 .30
Consolidated Edison Co. of New York, Inc. 450000 16988 .26
GPU, Inc. 400000 15800 .24
Williams Companies, Inc. 261000 13947 .21
Scottish Power PLC (American Depositary Receipts)
(United Kingdom) 350000 11550 .18
Edison International 250000 6703 .10
Electronic Components - 1.88%
Intel Corp. 750,000 58,219 .88
Texas Instruments Inc. 700,000 34,475 .52
AMP Inc. 725000 31492 .48
Electrical & Electronics - 1.70%
Nokia Corp., Class A (American Depositary Receipts)
(Finland) 550000 45719 .69
York International Corp. 725000 33576 .51
Lucent Technologies Inc. 232320 18615 .29
Telefonaktiebolaget LM Ericsson, Class B
(American Depositary Receipts) (Sweden) 350000 14153 .21
Multi-Industry - 1.45%
FMC Corp. (1) 448300 32754 .50
Tenneco Inc. 645000 27936 .41
Textron Inc. 340000 20103 .31
AlliedSignal Inc. 400000 14850 .23
Miscellaneous Materials & Commodities - 1.45%
Potash Corp. of Saskatchewan Inc. (Canada) 900000 70819 1.08
Crown Cork & Seal Co., Inc. 500000 24406 .37
Financial Services - 1.43%
Household International, Inc. 350000 44100 .67
FINOVA Group Inc. 360000 16965 .26
Beneficial Corp. 200,000 15,525 .24
Capital One Financial Corp. 300000 13594 .20
Associates First Capital Corp., Class A 60000 3855 .06
Food & Household Products - 1.34%
McCormick & Co. 950000 25175 .38
Unilever NV (New York Registered Shares) (Netherlands 400000 23225 .35
CPC International Inc. 200000 20675 .32
Kellogg Co. 250000 11594 .18
General Mills, Inc. 100000 7400 .11
Leisure & Tourism - 1.33%
Walt Disney Co. 789932 74994 1.14
Host Marriott Corp. (1) 600000 12488 .19
Automobiles - 1.14%
Ford Motor Co. 997100 42875 .65
Chrysler Corp. 500000 17156 .26
General Motors Corp. 250000 15250 .23
Energy Equipment - 1.09%
Western Atlas Inc. (1) 521800 36298 .55
Schlumberger Ltd. (Netherlands Antilles) 270000 22224 .34
Dresser Industries, Inc. 300000 11212 .17
Baker Hughes Inc. 50000 2094 .03
Industrial Components - 1.04%
Goodyear Tire & Rubber Co. 395,000 23,971 .36
Federal-Mogul Corp. 400000 16450 .26
Dana Corp. 231,800 10,837 .16
Cooper Industries, Inc. 179802 9282 .14
Echlin Inc. 250,000 7,922 .12
Transportation: Rail & Road - 0.80%
Union Pacific Corp. 595050 35703 .54
Norfolk Southern Corp. 540,000 17,179 .26
Metals: Nonferrous - 0.72%
Aluminum Co. of America 634800 42690 .64
Alumax Inc. (1) 160000 5030 .08
Textiles & Apparel - 0.54%
VF Corp. 460,000 21,246 .32
NIKE, Inc., Class B 300,000 14,606 .22
Transportation: Airlines - 0.40%
AMR Corp. (1) 162500 19693 .30
Delta Air Lines, Inc. 60000 6686 .10
Recreation & Other Consumer Products - 0.24%
Harley-Davidson Motor Co., Inc. 600000 15863 .24
Metals: Steel - 0.20%
Allegheny Teledyne Inc. 500,000 12,875 .20
Appliances & Household Durables - 0.15%
Rubbermaid Inc. 400000 9700 .15
Miscellaneous
Other stocks in initial period of acquisition 90974 1.38
- -
TOTAL STOCKS (cost:$3,979,482,000) 5,680,744 86.24
- -
Principal
Convertible Debentures Amount Market ValuPercent of
Business & Public Services - 0.21% (000) (000) Net Assets
CUC International Inc., 3.00% convertible debentures $12,000 13530 .21
- -
TOTAL CONVERTIBLE DEBENTURES (cost: $11,977,000) 13530 .21
- -
TOTAL EQUITY-TYPE SECURITIES (cost: $3,991,459,000) 5694274 86.45
- -
Short-Term Securities
Corporate Short-Term Notes - 11.26%
J.C. Penney Funding Corp. 5.50%-5.60% due 12/5/97-2/3 61800 61383 .93
Wal-Mart Stores, Inc. 5.49%-5.50% due 12/1/97 53710 53702 .82
International Lease Finance Corp. 5.48%-5.67%
due 12/3/97-1/21/98 51000 50770 .77
Lucent Technologies Inc. 5.48%-5.50% due 12/4/97-1/5/ 50800 50668 .77
Kimberly-Clark Corp. 5.51%-5.54% due 12/3-12/17/97 (2 50691 50587 .76
Ameritech Capital Funding Corp. 5.48%-5.50%
due 12/9-12/11/97 (2) 49700 49625 .75
H.J. Heinz Co. 5.50%-5.55% due 12/8/97-1/8/98 49100 48958 .74
Procter & Gamble Co. 5.48%-5.60% due 1/12-1/20/98 48000 47660 .72
Duke Energy Corp. 5.50%-5.62% due 12/12/97-1/15/98 42300 42145 .64
National Rural Utilities Cooperative
Finance Corp. 5.49%-5.66% due 2/19-3/2/98 42000 41449 .63
Walt Disney Co. 5.52%-5.58% due 1/2-1/22/98 40800 40541 .62
Xerox Corp. 5.48% due 12/11/97 36000 35940 .55
E.I. du Pont de Nemours and Co. 5.51%-5.53%
due 1/14-1/16/98 33200 32964 .50
Coca-Cola Co. 5.47%-5.53% due 12/16/97-1/13/98 31000 30834 .47
Electronic Data Systems Corp. 5.49% due 12/2/97 (2) 25000 24992 .38
AIG Funding, Inc. 5.49%-5.50% due 12/9-12/10/97 24900 24863 .38
Warner-Lambert Co. 5.50% due 2/11/98 (2) 24400 24118 .37
Monsanto Co. 5.50%-5.68% due 12/8/97-1/6/98 (2) 15200 15157 .23
General Electric Capital Corp. 5.71% due 2/24/98 15250 15037 .23
Federal Agency Discount Notes - 2.04%
Freddie Mac (formerly Federal Home Loan Mortgage Corp.)
5.39%-5.47% due 12/5-12/24/97 89200 89058 1.35
Fannie Mae (formerly Federal National Mortgage Assn.)
5.475% due 1/29/98 46000 45573 .69
- -
TOTAL SHORT-TERM SECURITIES (cost: $876,085,000) 876024 13.30
- -
TOTAL INVESTMENT SECURITIES (cost: $4,867,544,000) 6570298 99.75
Excess of cash and receivables over payables 16,712 .25
- -
NET ASSETS $6,587,010 100.00%
======================
(1) Non-income-producing securities.
(2) Purchased in a private placement transaction;
resale to the public may require registration or
sale only to qualified institutional buyers.
See Notes to Financial Statements
Equity-type securities appearing in the portfolio
since May 31, 1997
Albertson's
Avery Dennison
Avon Products
Bristol-Myers Squibb
Cardinal Health
Computer Associates International
DPL
Glaxo Wellcome
Guidant
Harte-Hanks Communications
Hertz
Houston Industries
Huntington Bancshares
IKON Office Solutions
Kellogg
Kerr-McGee
Lowe's
Marshall & Ilsley
Millennium Chemicals
NIKE
Pioneer Natural Resources
Royal & Sun Alliance Insurance Group
Scottish Power
USF&G
Williams Companies
Equity-type securities eliminated from the portfolio
since May 31, 1997
ACNielsen
Dun & Bradstreet
Eastman Kodak
El Paso Natural Gas
Eli Lilly
Exxon
Great Lakes Chemical
Inco
ITT Industries
Litton Industries
McDermott
New York Times
Newport News Shipbuilding
PacifiCare Health Systems
Philips Electronics
Pioneer Hi-Bred International
Polaroid
Rockwell International
Royal Dutch Petroleum
SAFECO
Sears, Roebuck
Tambrands
TOTAL
Tribune
U S WEST Media
</TABLE>
<TABLE>
Asset Allocation Fund Percent
Investment Portfolio November 30, 1997 of Net
Assets
- --------------------------------------------------------------
<S> <C> <C> <C>
Equity-Type Securities 61.16%
Corporate Bonds 14.80
U.S. Government Bonds 14.18
Non-U.S. Government Bonds .43
Cash & Equivalents 9.43
LARGEST INDIVIDUAL EQUITIES
Pfizer 2.03%
Atlantic Richfield 1.82
Praxair 1.68
DuPont 1.52
Carnival 1.51
Rentokil Group 1.46
Warner-Lambert 1.46
BankAmerica 1.37
PepsiCo 1.34
Royal Dutch Petroleum 1.32
Market Percent
Number Valu of Net
Stocks (common and preferred) Shares (000) Assets
- -------------------------------------------------------------- -------------------
Energy Sources- 8.99%
Atlantic Richfield Co. 320,000 $26,080 1.82%
Royal Dutch Petroleum Co. (New York Registered
Shares) (Netherlands) 360,000 18,968 1.32
Chevron Corp. 225,000 18,042 1.26
Pioneer Natural Resources Co. 475,000 15,170 1.06
Kerr-McGee Corp. 200,000 13,263 .92
Phillips Petroleum Co. 200,000 9,688 .67
Murphy Oil Corp. 175,300 9,641 .67
Ultramar Diamond Shamrock Corp. 300,000 9,131 .64
Amoco Corp. 100,000 9,000 .63
Chemicals- 6.87%
Praxair, Inc. 550000 24,166 1.68
E.I. du Pont de Nemours and Co. 360000 21,803 1.52
Air Products and Chemicals, Inc. 210000 16,104 1.12
Millennium Chemicals Inc. 485100 11,157 .78
Mallinckrodt Inc. 250000 9,250 .64
PPG Industries, Inc. 150000 8,691 .61
Dow Chemical Co. 75000 7,406 .52
Banking- 5.48%
BankAmerica Corp. 270,000 19,710 1.37
NationsBank Corp. 200,000 12,012 .84
Citicorp 100000 11,994 .84
H.F. Ahmanson & Co. 200000 11,900 .83
CoreStates Financial Corp 125,000 9,664 .67
Fleet Financial Group, Inc. 120000 7,928 .55
KeyCorp 80000 5,395 .38
Merchandising- 5.37%
J.C. Penney Co., Inc. 290000 18,633 1.30
Wal-Mart Stores, Inc. 400000 15,975 1.11
Giant Food Inc., Class A 400000 13,500 .94
Limited Inc. 550000 13,234 .92
Walgreen Co. 400000 12,875 .90
Circuit City Stores, Inc. - Circuit City Group 88200 2,894 .20
Health & Personal Care- 5.23%
Pfizer Inc. 400000 29,100 2.03
Warner-Lambert Co. 150000 20,981 1.46
SmithKline Beecham PLC (American Depositary
Receipts) (United Kingdom) 300000 14,888 1.04
Gillette Co. 108,480 10,014 .70
Insurance- 3.48%
USF&G Corp. 900000 18,169 1.27
General Re Corp. 70000 13,895 .97
American General Corp. 176700 9,520 .66
CIGNA Corp. 50000 8,362 .58
Aerospace & Military Technology- 2.61%
General Motors Corp., Class H 275000 18,425 1.28
Boeing Co. 200000 10,625 .74
Raytheon Co. 150000 8,391 .59
Business & Public Services- 2.47%
Rentokil Group PLC (American Depositary Receipts)
(United Kingdom) 500000 21,000 1.46
Avery Dennison Corp. 250000 10,469 .73
Alexander & Baldwin, Inc. 150000 4,050 .28
Telecommunications- 2.32%
Century Telephone Enterprises, Inc. 357,500 16,467 1.15
Telefonica de Espana, SA (American Depositary Receipts)
(Spain) 175000 15,137 1.05
NEXTEL Communications, Inc. 13.00% exchangeable
preferred, Series D (1) (2) (3) 1250 1,394 .10
Iridium LLC, warrants, expire 2005 (2) (3) 1500 210 .01
Esat Holdings Ltd., warrants, expire 2007 (Ireland) 3500 105 .01
McCaw International, Ltd., warrants, expire 2007 (2) 2000 5 .00
Forest Products & Paper- 2.02%
Weyerhaeuser Co. 176500 9,321 .65
Georgia-Pacific Corp. 100000 8,538 .59
Union Camp Corp. 100000 6,006 .42
Sonoco Products Co. 158300 5,194 .36
Beverages & Tobacco- 1.98%
PepsiCo, Inc. 520000 19,175 1.34
UST Corp. 300000 9,262 .64
Electrical & Electronics- 1.95%
Nokia Corp., Class A (American Depositary
Receipts) (Finland) 170000 14,131 .98
York International Corp. 175000 8,105 .57
Hubbell Inc., Class B 126000 5,725 .40
Leisure & Tourism- 1.51%
Carnival Corp., Class A 400000 21,625 1.51
Transportation: Rail & Road- 1.25%
Union Pacific Corp. 300000 18,000 1.25
Industrial Components- 1.16%
Genuine Parts Co. 300000 9,600 .67
Dana Corp. 150000 7,012 .49
Data Processing & Reproduction- 1.11%
International Business Machines Corp. 145000 15,887 1.11
Metals: Nonferrous- 0.94%
Aluminum Co. of America 200000 13,450 .94
Electronic Components- 0.91%
AMP Inc. 300000 13,031 .91
Food & Household Products- 0.77%
General Mills, Inc. 150000 11,100 .77
Machinery & Engineering- 0.69%
Deere & Co. 180000 9,866 .69
Broadcasting & Publishing- 0.61%
Time Warner Inc. 10.25% exchangeable preferred,
Series M (1) 2871 3,273 .23
American Radio Systems Corp. 11.375%
exchangeable preferred (1) (2) (3) 26320 3,092 .22
Adelphia Communications Corp. 13.00% exchangeable
preferred, Series A (2) (3) 20000 2,320 .16
Metals: Steel- 0.54%
Allegheny Teledyne Inc. 300000 7,725 .54
Multi-Industry- 0.49%
Textron Inc. 120000 7,095 .49
Miscellaneous Materials & Commodities- 0.44%
Potash Corp. of Saskatchewan Inc. (Canada) 80000 6,295 .44
Automobiles- 0.42%
General Motors Corp. 100000 6,100 .42
Utilities: Electric & Gas- 0.16%
Nevada Power Co. 100000 2,319 .16
Real Estate- 0.09%
CarrAmerica Realty Corp. 8.57% redeemable preferred,
Series B 50000 1,247 .09
--------------------
MISCELLANEOUS
Other stocks in initial period of acquisition 9,537 .66
-------------------
TOTAL STOCKS (cost: $604,139,000) 868512 60.52
--------------------
Principal
Amount
Convertible Debentures (000)
- -------------------------------------------------------------- -------------------
Industrials & Services- 0.64%
Time Warner Inc.:
0% 2013 $7,000 3,509
0% 2012 2,500 994 .32
Sunglass Hut International, Inc. 5.25% 2003 3375 2,480 .17
Rogers Communications Inc. 0% 2013 5,000 2,137 .15
Discovery Zone Inc. 0% 2013 6,000 15 .00
-------------------
TOTAL CONVERTIBLE DEBENTURES (cost: $10,857,000) 9135 .64
-------------------
TOTAL EQUITY-TYPE SECURITIES (cost: $614,996,000) 877,647 61.16
-------------------
Bonds & Notes
- -----------------------------------------------
Diversified Media, Cable Television &
Telecommunications- 2.09%
Time Warner Inc.:
9.125% 2013 4,000 4,703
6.10% 2001 (2) 2,750 2,680 .51
Tele-Communications, Inc.:
8.75% 2015 2,000 2,272
9.25% 2023 2,000 2,202 .31
Consorcio Ecuatoriano de Telecomunicaciones SA
CONECEL:
Units, 14.00% 2000 (2) 3000 3,030 .28
14.00% 2002 (2) 1000 1,010
U S WEST Capital Funding, Inc. 7.30% 2007 2500 2,582 .18
Qwest Communications International Inc.
0%/9.47% 2007 (2) (4) 4000 2,580 .18
CEI Citicorp Holdings SA 11.25% 2007 (2) 2750 2,366 .17
Telesystem International Wireless Inc.
0%/13.25% 2007 (2) (4) 3700 2,202 .15
Iridium LLC 13.00% 2005 (2) 1500 1,537 .11
Comtel Brasileira Ltda. 10.75% 2004 (2) 1,500 1,432 .10
Orion Network Systems, Inc. 11.25% 2007 1,250 1,403 .10
Transportation- 1.79%
Continental Airlines, Inc.:
Series 1996-A, 6.94% 2013 3922 4,006
Series 1996-2C, 10.22% 2014 2187 2,635 .58
Series 1997-4A, 6.90% 2018 1700 1,726
United Air Lines, Inc.:
1996-A2, 7.87% 2019 2500 2,666
1995-A1, 9.02% 2012 1388 1,574 .34
9.00% 2003 500 558
Delta Air Lines, Inc.:
1993-A2, 10.50% 2016 2000 2,579
1992-A2, 9.20% 2014 1000 1,176 .26
Airplanes Pass Through Trust, Class C, 8.15% 2019 (5 3000 3,173 .22
Jet Equipment Trust, Series 1995-B, 7.83% 2015 (2) 2372 2,472 .17
USAir, Inc., 1996-B, 7.50% 2008 1901 1,982 .14
AMR Corp. 9.75% 2000 1000 1,071 .08
Financial Services- 1.40%
Capital One Bank:
7.35% 2000 7500 7,667
7.30% 2027 (2) (6) 1250 1,183 .62
Ocwen Financial Corp. 11.875% 2003 2850 3,192 .23
BTC Capital Trust I 6.469% 2026 (6) 2250 2,205 .15
Pan Pacific Industrial Investments PLC 0% 2007 (2) 6,000 2,180 .15
Central Fidelity Capital Trust I 6.758% 2027 (2) (6) 2000 2,030 .14
Wharf International Finance Ltd., Series A, 7.625% 2 1750 1,615 .11
Banking & Thrifts- 1.35%
Imperial Capital Trust I, Series A, 9.98% 2026 2950 3,277 .23
Advanta Capital Trust I, Series B, 8.99% 2026 3000 2,970 .21
Dime Capital Trust I, Series A, 9.33% 2027 2500 2,793 .19
Chase Capital II 6.25% 2027 (6) 2500 2,375 .16
Chevy Chase Bank, FSB 9.25% 2008 2000 2,040 .14
Advanta National Bank 6.45% 2000 1950 1,896 .13
First Nationwide Holdings Inc. 10.625% 2003 1500 1,684 .12
First Union Corp. 6.82%/7.57% 2026 (4) 1250 1,288 .09
National Westminster Bancorp Inc. 9.45% 2001 1000 1,091 .08
Broadcasting & Publishing- 1.03%
Fox/Liberty Networks, LLC 0%/9.75% 2007 (2) (4) 4000 2,510 .18
News America Holdings Inc.:
7.43% 2026 1,250 1,323
10.125% 2012 1,000 1,158 .17
ITT Publimedia BV 9.375% 2007 (2) 2,250 2,357 .16
Chancellor Radio Broadcasting Co. 8.75% 2007 (2) 2,250 2,284 .16
Adelphia Communications Corp. 9.25% 2002 (2) 2000 1,995 .14
RBS Participacoes SA 11.00% 2007 (2) 2,000 1,810 .13
Cablevision Systems Corp. 8.125% 2009 (2) 1,250 1,272 .09
Energy & Related Companies- 0.86%
Oryx Energy Co.:
9.50% 1999 3,000 3,147
8.375% 2004 2,500 2,679 .48
10.00% 1999 1,000 1,045
USX Corp. 9.125% 2013 2,500 2,965 .21
OXYMAR 7.50% 2016 (2) 2500 2,520 .17
Cellular, Paging & Wireless Communications- 0.79%
CenCall Communications Corp. 0%/10.125% 2004 (4) 3000 2,621 .18
Esat Holdings Ltd. 0%/12.50% 2007 (4) 3,500 2,450 .17
McCaw International, Ltd. 0%/13.00% 2007 (4) 3000 1,763 .12
Omnipoint Corp. 11.625% 2006 1500 1,590 .11
NEXTEL Communications, Inc. 0%/9.75% 2007 (2) (4) 2,000 1,155 .08
Clearnet Communications Inc. 0%/11.75% 2007 (4) C$2,250 956 .07
PriCellular Wireless Corp. 10.75% 2004 $ 750 814 .06
Collateralized Mortgage Obligations
(Privately Originated) (5)- 0.73%
Asset-Backed Securities Investment Trust,
Series 1997-D, 6.79% 2003 (2) 5000 5,026 .35
Asset Securitization Corp., Series 1997-D5, Class A-1A,
6.50% 2043 2975 2,998 .21
GMAC Commercial Mortgage Securities, Inc.,
Series 1997-C1, Class A-1, 6.83% 2003 2467 2,502 .17
Real Estate- 0.70%
SocGen Real Estate Co. LLC, Series A, 7.64% 2049 (2) 2500 2,524 .18
Security Capital Industrial Trust 7.95% 2008 1500 1,609 .11
B.F. Saul Real Estate Investment Trust 11.625% 2002 1500 1,605 .11
Irvine Co. 7.46% 2006 (2) (7) 1500 1,509 .10
Shopping Center Associates 6.75% 2004 (2) 1500 1,508 .10
Irvine Apartment Communities, LP 7.00% 2007 1500 1,494 .10
Asset-Backed Obligations (5)- 0.47%
IMC Home Equity Loan Trust, Series 1996-2,
Class A-2, 6.78% 2011 3979 3,974 .28
FIRSTPLUS Home Loan Owner Trust, Series 1997-1,
Class A-6, 6.95% 2015 1500 1,522 .11
Green Tree Financial Corp., Series 1995-A, Class NIM,
7.25% 2005 1197 1,162 .08
Health & Personal Care- 0.42%
Allegiance Corp. 7.00% 2026 3000 3,077 .21
Integrated Health Services, Inc.:
9.25% 2008 (2) 1,750 1,746
9.50% 2007 (2) 1,250 1,262 .21
Forest Products & Paper- 0.39%
Fort James Corp. 6.625% 2004 2,500 2,490 .17
Container Corp. of America 9.75% 2003 2000 2,150 .15
Pindo Deli Finance Mauritius Ltd. 10.75% 2007 (2) 1000 938 .07
Manufacturing & Materials- 0.32%
Freeport-McMoRan Copper & Gold Inc. 7.20% 2026 2750 2,692 .19
Owens-Illinois, Inc. 8.10% 2007 1,750 1,853 .13
Utilities: Electric & Gas- 0.30%
Israel Electric Corp. Ltd. 7.25% 2006 (2) 2500 2,532 .18
Commonwealth Edison Co., Series 75, 9.875% 2020 1500 1,793 .12
Metals: Nonferrous- 0.27%
Inco Ltd.:
9.60% 2022 2000 2,264
9.875% 2019 1,500 1,607 .27
Insurance- 0.24%
Terra Nova (Bermuda) Holdings Ltd. 10.75% 2005 2000 2,217 .15
Aetna Services, Inc. 6.97% 2036 1250 1,281 .09
Merchandising- 0.24%
Dayton Hudson Corp. 8.50% 2022 2500 2,674 .19
Woolworth Corp., Series A, 7.00% 2002 750 762 .05
Beverages & Tobacco- 0.21%
Sparkling Spring Water Group Ltd. 11.50% 2007 (2) 3,000 3,060 .21
Leisure, Tourism & Restaurants- 0.21%
Royal Caribbean Cruises Ltd. 7.00% 2007 3000 3,009 .21
Food & Household Products- 0.20%
Fage Dairy Industry SA 9.00% 2007 2000 1,933 .13
GRUMA, SA de CV 7.625% 2007 (2) 1000 976 .07
Cable & Telephone in the United Kingdom- 0.20%
COLT Telecom Group PLC, Units, 0%/12.00% 2006 (4) 3,750 2,869 .20
Electrical & Electronics- 0.15%
Philips Electronics NV 7.20% 2026 2000 2,078 .15
Data Processing & Reproduction- 0.14%
Unisys Corp. 11.75% 2004 1750 1,986 .14
Machinery & Engineering- 0.10%
United Defense Industries, Inc. 8.75% 2007 (2) 1,400 1,390 .10
Appliances & Household Durables- 0.10%
Samsung Electronics Co., Ltd. 7.45% 2002 (2) 1,500 1,358 .10
Business & Public Services- 0.08%
Federal Express Corp. 7.53% 2006 1046 1,081 .08
Recreation & Other Consumer Products- 0.02%
CLN Holdings Inc. 0% 2001 500 316 .02
Non-U.S. Governments & Governmental
Authorities- 0.43%
Argentina (Republic of) 11.75% 2007 (2) 2500 2,407 .17
Canadian Government 4.366% 2026 (8) C$2,000 1,499 .10
Mendoza (Province of) 10.00% 2007 (2) $1,500 1,427 .10
Poland (Republic of) Past Due Interest Bond 4.00% 20 1000 850 .06
Federal Agency Obligations-Mortgage
Pass-Throughs (5)- 3.02%
Government National Mortgage Assn.:
8.00% 2020-2026 18538 19,233
7.50% 2026 6315 6,442
8.50% 2022-2026 4965 5,217 2.24
10.00% 2019 1102 1,232
Fannie Mae (formerly Federal National Mortgage Assn.):
8.50% 2024 8711 9,095
7.00% 2009 1547 1,572 .78
9.00% 2019 475 508
Federal Agency Obligations-Other- 0.63%
Fannie Mae:
6.53% 2006 5000 4,927
7.52% 2004 4000 4,060 .63
U.S. Treasury Obligations- 10.53%
7.00% 2006 25000 26,812
7.125% 2000 25000 25,683
7.25% 2004 20000 21,466
10.375% 2009-2012 14000 18,329
6.50% 2002 15000 15,366
3.626% 2002 (8) 12,500 12,613
8.75% 2000-2008 8000 8,897
8.25% 2005 5000 5,279 10.53
9.25% 1998 5000 5,120
11.875% 2003 2500 3,241
8.875% 1999 2,500 2,589
11.125% 2003 2000 2,501
7.50% 2016 1700 1,959
11.75% 2010 500 667
10.75% 2003 500 611
-------------------
TOTAL BONDS & NOTES (cost: $413,100,000) 421946 29.41
-------------------
Short-Term Securities
- ------------------------------------------------
Corporate Short-Term Notes- 7.56%
E.I. du Pont de Nemours and Co. 5.51%-5.59%
due 1/15-1/16/98 23,900 23,727 1.65
Minnesota Mining and Manufacturing Co. 5.53% due 12/ 20,000 19,948 1.39
J.C. Penney Funding Corp. 5.50%-5.52%
due 12/12/97-1/9/98 (2) 15,200 15,124 1.05
Coca-Cola Co. 5.53% due 1/9/98 12,700 12,622 .88
General Electric Capital Corp. 5.80% due 12/1/97 11,600 11,598 .81
Procter & Gamble Co. 5.49% due 2/12/98 10,600 10,476 .73
Ameritech Capital Funding Corp. 5.48% due 12/11/97 ( 9,400 9,384 .66
H.J. Heinz Co. 5.55% due 1/8/98 3,500 3,479 .24
Monsanto Co. 5.48% due 12/8/97 2,191 2,189 .15
Federal Agency Discount Notes- 1.33%
Fannie Mae 5.47%-5.53% due 1/29-2/20/98 19,300 19,081 1.33
------------------
TOTAL SHORT-TERM SECURITIES (cost: $127,637,000) 127628 8.89
------------------
TOTAL INVESTMENT SECURITIES (cost: $1,155,733,000) 1427221 99.46
Excess of cash and receivables over payables 7,761 .54
------------------
NET ASSETS $1,434,98 100.00%
==================
/1/Payment in kind. The issuer has the option of paying
additional securities in lieu of cash.
/2/Purchased in a private placement transaction;
resale to the public may require registration or sale
only to qualified institutional buyers.
/3/Non-income-producing securities.
/4/ Step bond; coupon rate will increase at a later date.
/5/ Pass-through securities backed by a pool of
mortgages or other loans on which principal payments
are periodically made. Therefore, the effective
maturity is shorter than the stated maturity.
/6/ Coupon rate changes periodically.
/7/ Valued under procedures established by the
Board of Trustees.
/8/ Index-linked bond, which is a floating rate bond whose
principal amount moves with a government retail price
index.
See Notes to Financial Statements
Equity-type securities appearing in the portfolio
since May 31, 1997
Adelphia Communications
AMP
Avery Dennison
CarrAmerica Realty
Dow Chemical
Esat Holdings
Genuine Parts
Giant Food
Iridium LLC
McCaw International
Millennium Chemicals
Murphy Oil
NEXTEL Communications
Pioneer Natural Resources
Praxair
Raytheon
Rogers Communications
Sonoco Products
Sunglass Hut International
USF&G
UST
York International
Equity-type securities eliminated from the portfolio
since May 31, 1997
American Home Products
AT&T
Crompton & Knowles
Dun & Bradstreet
Echlin
Kimberly-Clark
McCormick & Co.
Rayonier
Rochester Gas and Electric
Rockwell International
SAFECO
SBC Communications
Tambrands
Tenneco
U S WEST Communications
</TABLE>
<TABLE>
AMERICAN VARIABLE INSURANCE SERIES
BOND FUND
INVESTMENT PORTFOLIO - November 30, 1997
<S> <C> <C> <C>
CORPORATE BONDS 46.09%
U.S. GOVERNMENT BONDS 24.89
EQUITY-TYPE SECURITIES 4.80
NON-U.S. GOVERNMENT BONDS 3.12
CASH & EQUIVALENTS 21.10
Principal Market Percent
Amount Value Of Net
Bonds & Notes (000) (000) Assets
Diversified Media, Cable Television &
Telecommunications - 6.38%
Tele-Communications, Inc.:
9.80% 2012 $ 485 $ 594
9.25% 2023 500 550 .79%
Consorcio Ecuatoriano de Telecomunicaciones SA CONECEL:
Units, 14.00% 2000 (1) 600 606
14.00% 2002 (1) 500 505 .77
Time Warner Inc.:
7.95% 2000 500 514 .70
6.10% 2001 (1) 500 487
Comtel Brasileira Ltda. 10.75% 2004 (1) 1000 955 .66
Comcast Corp.:
9.50% 2007 500 518 .55
8.375% 2007 250 275
Brooks Fiber Properties, Inc.:
10.00% 2007 500 570
0%/10.875% 2006 (2) 200 164 .51
WorldCom, Inc. 8.875% 2006 500 536 .37
U S WEST Capital Funding, Inc. 6.95% 2037 500 509 .35
RCN Corp. 10.00% 2007 (1) 500 501 .35
Qwest Communications International Inc. 0%/9.47% 2007 (1) (2) 750 484 .34
Telesystem International Wireless Inc. 0%/13.25% 2007 (1) (2) 625 372 .26
Orion Network Systems, Inc. 11.25% 2007 250 281 .19
Iridium LLC 13.00% 2005 250 256 .18
Northern Telecom Ltd. 6.875% 2002 250 255 .18
Viacom International Inc. 9.125% 1999 250 253 .18
Cellular, Paging & Wireless Communications - 6.35%
Omnipoint Corp. 11.625% 2006 1,500 1,590 1.11
Esat Holdings Ltd. 0%/12.50% 2007 (2) 2,000 1,400 .97
McCaw International, Ltd. 0%/13.00% 2007 (2) 2,000 1,175 .82
NEXTEL Communications, Inc.:
0%/9.75% 2004 (1) (2) 1,000 862
0%/9.75% 2007 (1) (2) 500 289 .80
Crown Castle International Corp. 10.625% 2007 (1) 1,000 610 .42
Cellular Communications International, Inc.:
0% 2000 500 393
Units 0% 2000 (3) 250 201 .41
Clearnet Communications Inc. 0%/11.75% 2007 (2) C$1,358 577 .40
PriCellular Wireless Corp. 10.75% 2004 $500 542 .38
NEXTLINK Communications, Inc. 9.625% 2007 500 505 .35
Globalstar, LP, 11.375% 2004 500 500 .35
Cellular Communications of Puerto Rico, Inc.) 10.00% 2007 500 490 .34
Financial Services - 4.45%
J.P. Morgan & Co. Inc., Series A, 5.994% 2012 (4) (5) 2,000 1,912 1.33
Ocwen Financial Corp. 11.875% 2003 1 .89
Capital One Bank:
7.15% 2006 500 507
8.125% 2000 250 259 .70
7.30% 2027 (1), (5) 250 236
Central Fidelity Capital Trust I 6.758% 2027 (1) (5) 500 507 .35
Wharf International Finance Ltd. 7.625% 2007 515 475 .33
MBNA Capital 8.278% 2026 400 413 .29
Pan Pacific Industrial Investments PLC 0% 2007 (1) 785 285 .20
Hutchison Whampoa Finance Ltd. 6.988% 2037 (1) 300 283 .19
BTC Capital Trust I 6.469% 2026 (5) 250 245 .17
Broadcasting & Publishing - 4.26%
Fox/Liberty Networks, LLC 0%/9.75% 2007 (1) (2) 2250 1412 .98
Cablevision Systems Corp. 8.125% 2009 (1) 1250 1272 .88
Chancellor Media Corp. 8.75% 2007 (1) 750 761 .53
ITT Publimedia BV 9.375% 2007 (1) 500 524 .36
TV Azteca, SA de CV 10.125% 2004 500 517 .36
TCI Communications, Inc. 6.375% 1999 500 499 .35
American Radio Systems Corp. 9.00% 2006 400 425 .30
News America Holdings Inc. 7.43% 2026 250 265 .18
Globo Comunicacoes E Participacoes LTDA. 10.50% 2006 (1) 250 235 .16
RBS Participacoes SA 11.00% 2007 (1) 250 226 .16
Cable & Telephone in the United Kingdom - 3.07%
COLT Telecom Group PLC:
10.125% 2007 GBP1,000 1,688
Units, 0%/12.00% 2006 (2) $1,000 765 2.00
8.875% 2007 DM750 425
TeleWest Communications PLC 0%/11.00% 2007 (2) $1,000 762 .53
Comcast UK Cable Partners Ltd. 0%/11.20% 2007 (2) 650 518 .36
International CableTel Inc., Series B, 10.00% 2007 250 262 .18
Health & Personal Care - 2.63%
Integrated Health Services, Inc.:
9.25% 2008 (1) 1,000 998
9.50% 2007 (1) 750 757 1.22
Paracelsus Healthcare Corp. 10.00% 2006 500 520 .36
Allegiance Corp. 7.00% 2026 500 513 .36
Sun HealthCare Group, Inc. 9.50% 2007 (1) 500 508 .35
Vencor, Inc. 8.625% 2007 (1) 500 493 .34
Manufacturing & Materials - 2.57%
AK Steel Corp. 9.125% 2006 750 773 .54
Hyundai Semiconductor America, Inc. 8.625% 2007 (1) 700 596 .42
Printpack, Inc. 10.625% 2006 500 530 .37
Fairchild Semiconductor Corp. 10.125% 2007 500 522 .36
Freeport-McMoRan Copper & Gold Inc. 7.20% 2026 500 489 .34
Owens-Illinois, Inc. 8.10% 2007 250 265 .18
U.S. Can Corp. 10.125% 2006 250 265 .18
Kaiser Aluminum & Chemical Corp. 9.875% 2002 250 259 .18
Transportation - 2.44%
Continental Airlines, Inc.:
7.42% 2007 500 516
Series 1997-4A 6.90% 2018 300 305 .77
Series 1996-C 9.50% 2015 (6) 245 281
Airplanes Pass Through Trust:
Class C, 8.15% 2019 (6) 500 529
Class D, 10.875% 2019 (6) 275 308 .58
Jet Equipment Trust:
Series 1995-A, 11.44% 2014 (1) 300 398
Series 1994-A, 11.79% 2013 (1) 250 333 .51
United Air Lines, Inc. 10.67% 2004 500 596 .41
Teekay Shipping Corp. 8.32% 2008 250 252 .17
Banking & Thrifts - 2.24%
Imperial Capital Trust I, Series A, 9.98% 2026 550 611 .43
First Nationwide Holdings Inc. 10.625% 2003 500 561 .39
Dime Capital Trust I, Series A, 9.33% 2027 500 559 .39
Chevy Chase Bank, FSB 9.25% 2008 500 510 .35
Advanta Capital Trust I 8.99% 2026 500 495 .34
Advanta National Bank 6.45% 2000 500 486 .34
Energy & Related Companies - 1.21%
J. Ray McDermott, SA 9.375% 2006 500 528
McDermott Inc. 9.375% 2002 400 425 .66
Petrozuata Finance Inc. 7.63% 2009 (1) 750 787 .55
Forest Products & Paper - 1.17%
Pindo Deli Finance Mauritius Ltd.:
10.75% 2007 (1) 750 703
10.25% 2002 (1) 500 476 .82
Fort James Corp. 6.625% 2004 500 498 .35
Real Estate - 1.05%
SocGen Real Estate Co. LLC, Series A, 7.64% 2049 (1) 1,000 1,010 .70
Irvine Apartment Communities, LP 7.00% 2007 500 498 .35
Asset- Backed Obligations (6) - 1.04%
FIRSTPLUS Home Loan Owner Trust, Series 1997-1,
Class A-6, 6.95% 2015 500 508 .35
IMC Home Equity Loan Trust, Series 1996-2,
Class A-2, 6.78% 2011 398 397 .28
EQCC Home Equity Loan Trust, Asset-Backed Certificates, Series 1996-A,
Class A-2, 6.95% 2012 300 304 .21
Green Tree Financial Corp., Series 1995-A, Class NIM, 7.25% 2005 299 290 .20
Collateralized Mortgage Obligations (Privately Originated) (6) - 0.92%
Asset Securitization Corp., Series 1997-D5, Class A-1A, 6.50% 2043 496 500 .35
GMAC Commercial Mortgage Securities, Inc., Series 1997-C1,
Class A-1, 6.83% 2003 493 500 .35
Merrill Lynch Mortgage Investors, Inc., Series 1995-C2,
Class A, 7.124% 2021 315 320 .22
Food & Household Products - 0.85%
GRUMA, SA de CV 7.625% 2007 (1) 1,000 976 .68
Fage Dairy Industry SA 9.00% 2007 250 242 .17
Machinery & Engineering - 0.76%
United Defense Industries, Inc. 8.75% 2007 (1) 800 794 .55
Deere & Co. 8.95% 2019 250 295 .21
Leisure, Tourism & Restaurants - 0.72%
Rio Hotel & Casino, Inc. 9.50% 2007 500 529 .37
Royal Caribbean Cruises Ltd. 7.00% 2007 500 501 .35
Beverages & Tobacco - 0.71%
Sparkling Spring Water Group Ltd. 11.50% 2007 (1) 1,000 1,020 .71
Insurance - 0.65%
Integon Capital I, Integon Corp., Series A, 10.75% 2027 500 660 .46
Terra Nova (Bermuda) Holdings Ltd. 10.75% 2005 250 277 .19
Business & Public Services - 0.57%
Allied Waste North America, Inc. 10.25% 2006 500 545 .38
Federal Express Corp. 9.875% 2002 250 280 .19
Chemicals - 0.38%
Texas Petrochemicals Corp. 11.125% 2006 500 550 .38
Miscellaneous Services - 0.37%
Petro Stopping Centers, LP, Petro Financial Corp. 10.50% 2007 500 525 .37
Multi-Industry - 0.35%
Reliance Industries Ltd.:
10.25% 2097 (1) 250 251 .18
Series B, 10.25% 2097 250 251 .17
Utilities: Electric & Gas - 0.33%
Commonwealth Edison Co., Series 75, 9.875% 2020 400 478 .33
Data Processing & Reproduction - 0.20%
Unisys Corp. 11.75% 2004 250 284 .20
Appliances & Household Durables - 0.16%
Samsung Electronics Co., Ltd. 7.45% 2002 (1) 250 226 .16
Independent Power Producers - 0.15%
California Energy Co., Inc. 9.875% 2003 200 217 .15
Recreation & Other Consumer Products - 0.11%
CLN Holdings Inc. 0% 2001 250 158 .11
Non-U.S. Governments & Governmental
Authorities - 3.12%
Canadian Government:
4.618% 2021 (4) C$2,00 1,585
4.366% 2026 (4) 1,000 750 1.62
Argentina (Republic of) 11.75% 2007 (1) $750 722 .50
Ireland (Republic of) 8.00% 2006 IRpounds25 424 .29
Mendoza (Province of) 10.00% 2007 (1) $250 238 .17
Brazil (Federal Republic of) Capitalization Bond 8.00% 2014 (7) 285 214 .15
Poland (Republic of) Past Due Interest Bond 4.00% 2014 (5) 250 212 .15
South Africa (Republic of) 13.00% 2010 ZAR1,00 190 .13
Deutschland Republic 8.00% 2002 DM250 159 .11
Federal Agency Obligations - Mortgage Pass-Throughs (5) - 7.92%
Government National Mortgage Assn.:
5.00% 2026 (5) $3,654 3,682
6.00% 2026 (5) 1,372 1,387
6.50% 2025-2026 1,217 1,197 5.83
10.00% 2019 735 822
9.50% 2021 749 814
7.00% 2026 493 494
Fannie Mae (formerly Federal National Mortgage Assn.):
10.00% 2018-2025 1,048 1,150
6.137% 2033 (5) 915 912
9.00% 2021 636 679
6.50% 2026 270 265 2.09
Federal Agency Obligations-Other - 1.23%
Fannie Mae 7.04% 2005 890 886 .62
Freddie Mac (formerly Federal Home Loan Mortgage Corp.):
6.78% 2005 500 496
5.78% 2003 400 388 .61
U.S. Treasury Obligations - 15.74%
6.25% 2003 10,500 10,677
8.875% 2017 4,000 5,250
7.25% 2004 2,000 2,150 15.74
5.875% 1999 2,000 2,003
10.375% 2009-2012 1,000 1,283
3.626% 2002 (4) 1,000 1,009
7.50% 2016 250 288
----------------
TOTAL BONDS & NOTES (cost: $104,416,000) 106,642 74.10
---------------
Number
of
Shares
Stocks
Common & Preferred Stocks - 3.74%
American Radio Systems Corp. 11.375% exchangeable preferred (1) (3) (7 18,423 2,165 1.50
Time Warner Inc. 10.25% exchangeable preferred, Series M (7) 580 661 .46
Chancellor Radio Broadcasting Co. 12.00% preferred (1) (3) (7) 5,294 625 .44
Adelphia Communications Corp., 13.00% exchangeable preferred,
Series A (1) (3) 5,000 580 .40
CarrAmerica Realty Corp. 8.57% redeemable preferred, Series B 20,000 499 .35
Swire Pacific Capital Ltd. 8.84% cumulative guaranteed perpetual capital 20,000 480 .33
NEXTEL Communications, Inc., 13.00% exchangeable preferred, Series D, (1) 250 279 .19
Esat Holdings Ltd., warrants, expire 2007 (Ireland) (1) (3) 2,000 60 .04
Iridium LLC, warrants, expire 2005 (1) (3) 250 35 .03
McCaw International, Ltd., warrants, expire 2007 (1) (3) 2,000 4 .00
Miscellaneous
Other stocks in initial period of acquisition 83 .06
----------------
TOTAL STOCKS (cost: $4,661,000) 5,471 3.80
----------------
Principal
Convertible Debentures Amount (000)
Industrials & Services - 1.00%
Time Warner Inc. 0% 2013 1,000 502 .35
Kelley Oil & Gas Corp. 8.50% 2000 $500 493 .34
Sunglass Hut International, Inc. 5.25% 2003 600 440 .31
----------------
TOTAL CONVERTIBLE DEBENTURES (cost: $1,387,000) 1,435 1.00
----------------
TOTAL EQUITY-TYPE SECURITIES (cost: $6,048,000) 6,906 4.80
----------------
Short-Term Securities
Corporate Short-Term Notes - 19.99%
E.I. du Pont de Nemours and Co. 5.50% due 12/23/97 2,500 2,491 1.73
Ford Motor Credit Co. 5.72% due 1/8/98 2,500 2,484 1.73
Pitney Bowes Credit Corp. 5.54% due 12/01/97 2,200 2,200 1.53
Duke Energy Corp. 5.56% due 12/9/97 2,100 2,097 1.46
Procter & Gamble Co. 5.49% due 12/9/97 2,000 1,997 1.39
Campbell Soup Co. 5.49% due 12/12/97 2,000 1,996 1.39
General Mills, Inc. 5.62% due 1/9/98 2,000 1,987 1.38
Associates Corp. of North America 5.75% due 12/1/97 1,900 1,900 1.32
Wal-Mart Stores, Inc. 5.50% due 12/2/97 1,900 1,899 1.32
American Express Credit Corp. 5.54% due 12/15/97 1,900 1,896 1.32
Motorola Credit Corp. 5.52% due 12/22/97 1,700 1,694 1.18
Sara Lee Corp. 5.53% due 12/4/97 1600 1599 1.11
General Electric Capital Corp. 5.72% due 1/20/98 1500 1488 1.03
Gannett Co., Inc. 5.65% due 1/20/98 (1) 1151 1142 .79
Ameritech Capital Funding Corp. 5.50% due 12/29/97 (1) 1000 996 .69
Lucent Technologies Inc. 5.49% due 12/18/97 900 899 .62
---------------
TOTAL SHORT-TERM SECURITIES (cost: $28,765,000) 28,765 19.99
---------------
TOTAL INVESTMENT SECURITIES (cost: $139,229,000) 142,313 98.89
Excess of cash and receivables over payables 1,613 1.11
---------------
NET ASSETS $143,926 100.00%
-----------------
-----------------
1 Purchased in a private placement transaction;
resale to the public may require registration or sale
only to qualified institutional buyers.
2 Step bond; coupon rate will increase at a later date.
3 Non-income-producing securities.
4 Index-linked bond, which is a floating rate bond whose principal amount
moves with a government retail price index.
5 Coupon rate changes periodically.
6 Pass-through securities backed by a pool of mortgages or other loans
on which principal payments are periodically made. Therefore, the
effective maturity of these securities is shorter than the stated maturity.
7 Payment in kind. The issuer has the option of paying additional
securities in lieu of cash.
See Notes to Financial Statements
</TABLE>
<TABLE>
AMERICAN VARIABLE INSURANCE SERIES
HIGH-YIELD BOND FUND
INVESTMENT PORTFOLIO - NOVEMBER 30, 1997
<S> <C> <C> <C>
CORPORATE BONDS 79.95%
NON-U.S. CORPORATE BONDS 0.00%
U.S. TREASURY BONDS 5.75%
NON-U.S. GOVERNMENT BONDS 1.77%
CASH & EQUIVALENTS 7.25%
EQUITY-TYPE SECURITIES 5.28%
Percent
of Net
Largest Corporate Holdings Assets
Integrated Health 2.44%
Chancellor Media 2.05
USAir 2.01
Paracelsus Healthcare 1.79
Container Corp. of America 1.79
COLT Telecom 1.79
International CableTel/NTL 1.74
American Radio Systems 1.70
Omnipoint 1.68
Orion Network Systems 1.63
Principal Market Percent
Amount Value Of Net
Bonds & Notes (000) (000) Assets
Cellular, Paging & Wireless Communications - 12.75%
Omnipoint Corp. 11.625% 2006 $12,500 $13,250 1.68%
Orion Network Systems, Inc. Units, 11.25% 2007 11,250 12,628 1.61
PriCellular Wireless Corp.:
0%/12.25% 2003(1) 6,000 6,007 1.45
10.75% 2004 2,750 2,984
0%/14.00% 2001(1) 2,185 2,414
Centennial Cellular Corp. 8.875% 2001 10,000 10,150 1.29
Cellular Communications of Puerto Rico, Inc. 10.00% 2007 7,250 7,105 .90
Cellular Communications International, Inc.:
Units, 0% 2000(2) 6,500 5,233 .72
0% 2000 500 393
Comcast Cellular Holdings, Inc.:
Series B, 9.50% 2007 4,000 4,140 .66
10.25% 2001 925 1,013
Clearnet Communications Inc. 0%/11.75% 2007(1) C$ 11,825 5,025 .64
CenCall Communications Corp. 0%/10.125% 2004(1) $4,750 4,150 .53
Mobile Telecommunications Technology Corp. 13.50% 2002 3,500 3,999 .51
Comunicacion Celular SA 0%/13.125% 2003(1) 5,000 3,775 .48
Powertel Inc.(formerly InterCel, Inc.):
0%/12.00% 2006(1) 2,500 1,784 .43
11.125% 2007 1,500 1,590
NEXTEL Communications, Inc.:
0%/9.75% 2007(1) 4,500 2,599 .41
0%/9.75% 2004(1) 750 647
Telesystems International, Inc. 0%/13.25% 2007(1),(3) 3,950 2,350 .30
Western Wireless Corp. 10.50% 2006 1,500 1,586 .20
McCaw International, Ltd. 0%/13.00% 2007(1) 2,500 1,469 .19
Heartland Wireless Communications, Inc. 13.00% 2003 3,500 1,225 .16
Sprint Spectrum LP, Sprint Spectrum Finance Corp. 11.00% 2006 1000 1125 .14
Rogers Cantel Mobile Communications Inc. 9.375% 2008 1,000 1,055 .13
Vanguard Cellular Systems, Inc. 9.375% 2006 1,000 1,030 .13
Globalstar LP 11.375% 2004 1,000 1,000 .13
MobileMedia Communications, Inc. 0%/10.50% 2003(1) 4,000 460 .06
Diversified Media, Cable Television &
Telecommunications - 8.97%
Cablevision Systems Corp.:
8.125% 2009(3) 4,500 4,579 1.00
9.875% 2013 3,000 3,255
Adelphia Communications Corp. 9.25% 2002(3) 7,500 7,481 .95
GST Equipment Funding, Inc.
(formerly GST Telecommunications, Inc.) 13.25% 2007 6,000 6,900 .88
WorldCom, Inc. 9.375% 2004 6,319 6,689 .85
Nextlink Communications LLC,:
Nextlink Communications, Inc. 9.625% 2007 5,000 5,050 .79
Nextlink Capital, Inc. 12.50% 2006 1,000 1,135
Hermes Euro Railtel BV 11.50% 2007(3) 5,000 5,475 .70
Brooks Fiber Properties, Inc.:
10.00% 2007 2,500 2,850 .55
0%/10.875% 2006(1) 1,750 1,437
Netia Holdings B.V.:
0%/11.25% 2007(1),(3) 3,000 1,695 .40
10.25% 2007(3) 1,500 1,421
Qwest Communications International Inc.:
10.875% 2007 1,500 1,687 .37
0%/9.47% 2007(1),(3) 2,000 1,290
Multicanal Participacoes SA, Series B, 12.625% 2004 3,000 2,880 .37
Consorcio Ecuatoriano de Telecommunicaciones SA Conecel
Units, 14.00% 2000(3) 1,000 1,010 .22
14.00% 2002(3) 750 758
RCN Corporation 0%/11.125% 2007(1),(3) 3,000 1,762 .22
Jones Intercable, Inc. 9.625% 2002 1,500 1,596 .20
Viacom International Inc. 7.75% 2005 1,500 1,512 .19
Teligent, Inc. 11.50% 2007 1,500 1,502 .19
Intermedia Communications Inc. 0%/11.25% 2007(1) 2,000 1,370 .17
Verio Inc. Units, 13.50% 2004(3) 1,000 1,180 .15
IXC Communications Inc., Series B, 12.50% 2005 1,000 1,140 .15
Teleport Communications Group Inc. 9.875% 2006 1,000 1,100 .14
TCI Communications, Inc. 6.375% 1999 1,000 998 .13
Comtel Brasileira Ltda. 10.75% 2004(3) 1,000 955 .12
Esat Holdings Ltd. 0%/12.50% 2007(1) 1,250 875 .11
Fox/Liberty Networks, LLC 8.875% 2007(3) 500 496 .06
ICG Holdings, Inc. 0%/13.50% 2005(1) 500 400 .05
Manufacturing & Materials - 8.34%
Kaiser Aluminum & Chemical Corp.:
12.75% 2003 3,850 4,119 1.21
Series B, 10.875% 2006 2,500 2,713
9.875% 2002 2,350 2,432
Series D, 10.875% 2006 250 271
Flextronics International Ltd. 8.75% 2007(3) 7,250 7,196 .93
Texas Petrochemicals Corp. 11.125% 2006 6,250 6,875 .87
Derlan Manufacturing Inc. 10.00% 2007 6,050 6,352 .81
Anchor Glass Container Corp. 11.25% 2005(3) 5,000 5,400 .69
Impress Metal Packaging Holdings BV 9.875% 2007 DM7,000 3,965 .50
Consumers International Inc. 10.25% 2005(3) $3,250 3,542 .45
Fairchild Semiconductor Corp. 10.125% 2007 3,250 3,396 .43
AK Steel Corp.:
9.125% 2006 2,000 2,060 .40
10.75% 2004 1,000 1,070
Key Plastics, Inc., Series B, 10.25% 2007 3,000 3,120 .40
Westinghouse Air Brake Co. 9.375% 2005 3,000 3,113 .40
U.S. Can Corp. 10.125% 2006 1,750 1,855 .24
Altos Hornos de Mexico, Series A, 11.375% 2002 1,750 1,820 .23
UCAR Global Enterprises Inc. 12.00% 2005 1,500 1,680 .21
Printpack, Inc. 10.625% 2006 1,500 1,590 .20
Friendly Ice Cream Corp. 10.50% 2007 1,500 1,515 .19
Nortek, Inc. 9.25% 2007 1,000 1,012 .13
Polymer Group, Inc. 9.00% 2007 500 495 .06
Cable & Telephone in the United Kingdom - 7.46%
COLT Telecom Group PLC:
Units, 0%/12.00% 2006(1) $11,250 $8,606
8.875% 2007 DM6,500 3,682 1.79
10.125% 2007 Pounds 1,0 1,688
International CableTel Inc. 0%/10.875% 2003 (1) $13,250 12,124 1.54
NTL Inc., Series B, 10.00% 2007 1,500 1,571 .20
Videotron Holdings PLC:
0%/11.125% 2004(1) 10,000 9,452 1.48
0%/11.00% 2005(1) 2,500 2,199
Comcast UK Cable Partners Ltd. 0%/11.20% 2007(1) 10,000 7,975 1.01
TeleWest Communications PLC:
9.625% 2006 3,500 3,622 .85
0%/11.00% 2007(1) 4,000 3,050
Bell Cablemedia PLC 0%/11.95% 2004(1) 5,000 4,645 .59
Broadcasting & Publishing - 6.26%
Chancellor Media Corp.:
8.75% 2007(3) 5,500 5,583 .96
9.375% 2004 1500 1564
8.75% 2007 500 508
American Media Operations, Inc. 11.625% 2004 4,750 5,154 .66
American Radio Systems Corp. 9.00% 2006 4,750 5,047 .64
Newsquest Capital PLC:
11.00% 2006 3,000 3,345 .64
Series B, 11.00% 2006 1,500 1,672
Globo Comunicacoes E Participacoes LTDA. 10.50% 2006(3) 4,600 4,324 .55
ITT Publimedia BV 9.375% 2007(3) 3,750 3,928 .50
Acme Intermediate Holdings Units, 0%/12.00% 2005(1),(3) 5,970 3,343 .43
Antenna TV SA 9.00% 2007(3) 2,750 2,688 .34
Young Broadcasting Inc. 10.125% 2005 2,000 2,085 .27
TV Azteca, SA de CV 10.125% 2004 1,750 1,809 .23
Gray Communications Systems, Inc. 10.625% 2006 1,500 1,598 .20
TEVECAP SA 12.625% 2004 1,750 1,593 .20
STC Broadcasting, Inc. 11.00% 2007 1,250 1,344 .17
ITT Promedia CVA 9.125% 2007(3) DM2,000 1,167 .15
Transwestern Publishing Company, LP, TWP Capital Corp. 9.625% 2007 $1,000 1,014 .13
RBS Participacoes SA 11.00% 2007(3) 1,000 905 .12
Sun Media Corp. 9.50% 2007 500 531 .07
Health & Personal Care - 5.69%
Integrated Health Services, Inc.:
10.25% 2006 5,000 5,263 1.81
9.50% 2007(3) 4,750 4,797
9.25% 2008(3) 4,250 4,239
Paracelsus Healthcare Corp. 10.00% 2006 13,500 14,040 1.79
Mariner Health Group, Inc. 9.50% 2006 4,750 4,845 .62
Vencor, Inc. 8.625% 2007(3) 3,500 3,448 .44
Universal Health Services, Inc. 8.75% 2005 2,900 3,052 .39
Unison HealthCare Corp. 13.00% 2006(3) 3,100 2,542 .32
Sun Healthcare Group, Inc. 9.50% 2007(3) 1,500 1,523 .19
Tenet Healthcare Corp. 8.00% 2005 1,000 1,010 .13
Energy & Related Companies - 5.58%
Abraxas Petroleum Corp. 11.50% 2004 8,500 9,180 1.17
Kelley Oil & Gas Corp. 10.375% 2006 7,000 7,385 .94
Benton Oil and Gas Co.:
11.625% 2003 3,000 3,308 .81
9.375% 2007(3) 3,000 3,038
Forcenergy Inc:
9.50% 2006 2,250 2,368 .56
8.50% 2007 2,000 2,005
Pogo Producing Co. 8.75% 2007 4,250 4,335 .55
McDermott Inc. 9.375% 2002 3,250 3,457 .44
Falcon Drilling Co., Inc.:
Series B, 8.875% 2003 2,250 2,374 .43
Series B, 9.75% 2001 1,000 1,047
Lomak Petroleum, Inc. 8.75% 2007 2,250 2,250 .29
J. Ray McDermott, SA 9.375% 2006 1,000 1,055 .13
Mariner Energy, Inc. 10.50% 2006 1,000 1,040 .13
Ocean Energy, Inc. 8.875% 2007 1,000 1,035 .13
Leisure, Tourism & Restaurants - 4.73%
AMF Group Inc.:
0%/12.25% 2006(1) 10,150 7,892 1.52
10.875% 2006 3,750 4,078
Station Casinos, Inc.:
9.625% 2003 5,600 5,600 .84
9.625% 2003 1,000 1,008
Boyd Gaming Corp.:
9.25% 2003 3,500 3,623 .79
9.50% 2007(4) 2,500 2,575
Rio Hotel & Casino, Inc.:
10.625% 2005 2,250 2,441 .44
9.50% 2007 1,000 1,057
Wyndham Hotel Corp. 10.50% 2006 2,500 2,912 .37
Sun International Hotels Ltd., Sun International
North America, Inc. 9.00% 2007 1,500 1,545 .20
Foodmaker, Inc. 9.25% 1999 1,429 1,461 .19
FelCor Suites LP 7.375% 2004(3) 1,250 1,241 .16
CLN Holdings, Inc. 0% 2001 1,500 949 .12
California Hotel Finance Corp. 11.00% 2002 750 781 .10
Miscellaneous Services - 3.66%
CellNet Data Systems, Inc. Units, 0%/14.00% 2007(1),(3) 20,870 10,800 1.38
Allied Waste North America, Inc. 10.25% 2006 7,300 7,957 1.01
Petro Stopping Centers, LP, Petro Financial Corp. 10.50% 2007 2,750 2,887 .37
Teletrac, Inc. Units, 14.00% 2007(3) 2,000 2,060 .26
EarthWatch Inc. Units, 12.50% 2001(3),(4) 2,000 2,000 .26
Iron Mountain Inc.:
10.125% 2006 1,500 1,627 .25
8.75% 2009(3) 350 355
Katz Media Corp., Series B, 10.50% 2007 1,000 1,102 .14
Forest Products & Paper - 3.61%
Container Corp. of America:
9.75% 2003 10,000 10,750 1.79
Series A, 11.25% 2004 2,000 2,190
Series B, 10.75% 2002 1,000 1,092
Pacific Lumber Co. 10.50% 2003 4,000 4,120 .52
Advance Agro PLC 13.00% 2007(4) 3,000 2,723 .35
MAXXAM Group Inc. 11.25% 2003 2,000 2,125 .27
Indah Kiat Finance Mauritius Ltd. 10.00% 2007(3) 2,000 1,820 .23
Pindo Deli Finance Mauritius Ltd. 10.25% 2002(3) 1,500 1,429 .18
Copamex Industrias, SA de CV 11.375% 2004 1,000 1,081 .14
U.S. Timberlands Finance Corp. 9.625% 2007 1,000 1,023 .13
Food & Food Retailing - 3.26%
Fage Dairy Industry SA 9.00% 2007 8,500 8,213 1.04
Randall's Food Markets, Inc. 9.375% 2007(3) 4,750 4,821 .62
Carr-Gottstein Foods Co. 12.00% 2005 3,000 3,315 .42
Stater Brothers Holdings Inc. 11.00% 2001 2,000 2,210 .28
Rykoff-Sexton, Inc. 8.875% 2003 2,100 2,132 .27
Bruno's, Inc. 10.50% 2005 5,700 1,995 .25
DGS International Finance Co. BV 10.00% 2007(3) 2,000 1,888 .24
Quality Food Centers, Inc., Series B, 8.70% 2007 1,000 1,075 .14
Transportation - 3.25%
USAir, Inc.:
10.00% 2003 5,750 5,980 2.01
9.625% 2001 4,250 4,420
Pass-Through Trust, Series 1993-A3, 10.375% 2013(5) 3,000 3,344
Pass-Through Trust, Series 1993-A2, 9.625% 2003(5) 1,500 1,613
Pass-Through Trust, Series 1993-A1 8.625% 1998(5) 500 505
Kitty Hawk, Inc. 9.95% 2004(3) 4,000 4,050 .52
Teekay Shipping Corp. 8.32% 2008 3,500 3,535 .45
Delta Air Lines, Inc. 10.00% 2014(3) 1,000 1,248 .16
Airplanes Pass Through Trust, Class D, 10.875% 2019(5) 750 840 .11
Beverages - 2.58%
Canandaigua Wine Co., Inc.:
Series C, 8.75% 2003 3,750 3,778 .84
8.75% 2003 2,750 2,778
Delta Beverage Group, Inc. 9.75% 2003 4,700 4900 .62
Sparkling Spring Water Group Ltd. 11.50% 2007(3) 4,500 4,590 .58
Standard Commercial Corp. 8.875% 2005(3) 3,250 3,258 .41
Dr Pepper Bottling Co. of Texas 10.25% 2000 1,000 1015 .13
Independent Power Producers - 1.57%
California Energy Co., Inc. 10.25% 2004 11,300 12,346 1.57
Protection Services - 0.54%
Protection One Alarm Monitoring, Inc. 0%/13.625% 2005(1),(4) 2,000 2,170 .28
Borg-Warner Security Corp. 9.625% 2007 2,000 2,060 .26
Banking & Financial Services - 0.39%
First Nationwide Holdings Inc. 10.625% 2003 1,500 1,684 .21
Ocwen Financial Corp. 11.875% 2003 1,250 1,400 .18
Merchandising - 0.30%
Loehmann's, Inc. 11.875% 2003 1,250 1,262 .16
Barnes & Noble, Inc., Series B, 11.875% 2003 1,000 1,070 .14
Real Estate - 0.27%
B.F. Saul Real Estate Investment Trust 11.625% 2002 2,000 2,140 .27
Electric & Gas Utilities - 0.26%
Columbia Gas Systems, Inc., Series A, 6.39% 2000 2,000 2,011 .26
Textiles & Apparel - 0.24%
WestPoint Stevens Inc. 8.75% 2001 1,000 1,040 .13
Tultex Corp. 10.625% 2005 750 812 .10
Insurance - 0.18%
Integon Capital I, Integon Corp., Series A, 10.75% 2027 1,100 1,452 .18
Machinery & Engineering - 0.06%
United Defense Industries, Inc. 8.75% 2007(3) 500 496 .06
Non-U.S. Governments & Governmental
Authorities - 1.77%
Argentina (Republic of):
11.75% 2007(3) ARP 4,500 4333 1.19
Eurobond, Series L, 6.688% 2005 (6) $4,464 3962
11.375% 2017 1,000 1068
Panama (Republic of) Interest Reduction Bond 3.75% 2014(3),(6) 3000 2284 .29
United Mexican States Government 11.375% 2016 1250 1417 .18
Poland (Republic of) Past Due Interest Bond 4.00% 2014(6) 1,000 850 .11
U.S. Treasury Obligations - 5.75%
11.625% 2004 13,600 17,975 5.75
7.75% 2001 8,000 8,441
6.875% 1999 7,000 7,117
8.50% 2000 5,000 5,357
8.00% 2001 4,000 4,264
6.625% 2002 2,000 2,058
----------------
TOTAL BONDS & NOTES (cost: $664,895,000) 687,583 87.47
---------------
Number
of
Stocks Shares
Common & Preferred Stocks - 4.80%
Chancellor Media Corp. 12.00% exchangeable preferred(2),(3),(7) 72,764 8,586 1.09
American Radio Systems Corp. 11.375% exchangeable preferred(2),(3), 67,823 7,969
American Radio Systems Corp., Class A(2) 7,500 373 1.06
NEXTEL Communications, Inc. 13.00% exchangeable preferred(2),(3),(7 3,500 3,902 .51
NEXTEL Communications, Inc. Class A(2) 5,422 137
NEXTEL Communications, Inc., warrants, expire 1999(2),(4) 9,500 -
Time Warner Inc. 10.25% exchangeable preferred, Series M(7) 3,479 3,966 .50
IXC Communications, Inc. 12.50% exchangeable preferred, 2009(3),(7) 2,576 2,938 .37
EarthWatch Inc. 12.00% convertible preferred, Series C(2),(3),(4),( 350,000 2,800 .36
Kelley Oil & Gas Corp. convertible preferred 90,000 2,025 .26
Integrated Health Services, Inc. 39,000 1,187 .15
Jacor Communications, Inc.(2) 25,000 1,094 .14
CellNet Data Systems, Inc.(2),(4) 112,000 750 .10
Cellular Communications International, Inc.(2) 10,200 444 .06
Acme Television, LLC(2),(3) 362 363 .05
Marriott International, Inc. 4,512 327 .04
Comunicacion Celular SA, Class B, warrants, expire 2003(2),(3) 5,000 300 .04
ICG Holdings, Inc., warrants, expire 2005(2),(3) 13,200 178 .02
Orion Network Systems, Inc., warrants, expire 2007 (2) 11,250 173 .02
Globalstar Telesystem, warrants, expire 2004 (2) 1,000 120 .02
Protection One Alarm Monitoring, Inc., warrants, expire 2005(2),(3) 6,400 70 .01
Esat Holdings Ltd., warrants, expire 2007(2),(3) 1,250 37 .00
McCaw International, Ltd., warrants, expire 2007(2),(3) 2,500 6 .00
Heartland Wireless Communications, Inc., warrants, expire 2000(2),( 18,000 -
----------------
TOTAL STOCKS (cost: $33,545,000) 37,745 4.80
----------------
Principal Market Percent
Amount Value Of Net
Convertible Debentures (000) (000) Assets
Industrials & Services - 0.48%
Integrated Health Services, Inc. 5.75% 2001 $ 3,500 3,780 .48
----------------
TOTAL CONVERTIBLE DEBENTURES (cost: $3,446,000) 3,780 .48
----------------
TOTAL EQUITY -TYPE SECURITIES (cost: $36,991,000) 41,525 5.28
----------------
Short-Term Securities
Corporate Short-Term Notes - 4.74%
Ameritech Corp. 5.48%-5.50% due 12/11-12/19/97(3) 15,800 15,764 2.01
E.I. du Pont de Nemours and Co. 5.55%-5.59% due 12/1/97-1/5/98 11,600 11,545 1.47
International Lease Finance Corp. 5.50% due 01/05/98 10,000 9,945 1.27
Federal Agency Discount Notes - .61%
Fannie Mae 5.44%-5.62% due 12/11/97-1/20/98 4,800 4,772 .61
---------------
TOTAL SHORT-TERM SECURITIES (cost: $42,027,000) 42,026 5.35
---------------
TOTAL INVESTMENT SECURITIES (cost: $743,913,000) 771,134 98.10
Excess of cash and receivables over payables 14,924 1.90
---------------
NET ASSETS $786,058100.00%
===============
(1) Step bond; coupon rate will increase at a later date.
(2) Non-income-producing securities.
(3) Purchased in a private placement transaction; resale to the public
may require registration or sale only to qualified institutional buyers.
(4) Valued under procedures established by the Board of Trustees.
(5) Pass-through securities backed by a pool of mortgages or other loans
on which principal payments are periodically made. Therefore, the effective
maturity of these securities is shorter than the stated maturity.
(6) Coupon rate changes periodically.
(7) Payment in kind. The issuer has the option of
paying additional securities in lieu of cash.
</TABLE>
<TABLE>
American Variable Insurance Series
U.S. Government/AAA-Rated Securities Fund
Investment Portfolio, November 30, 1997
<S> <C> <C> <C>
- ------------------------------------------------ -------- ----------------
U.S. TREASURY BONDS 44.97%
PRIVATE MORTGAGE & ASSET-BACKED SECURITIES 22.78
FEDERAL AGENCY MORTGAGE-RELATED SECURITIES 21.12
CASH & EQUIVALENTS 7.60
OTHER FEDERAL OBLIGATIONS 3.08
CORPORATE BONDS 0.45
- ------------------------------------------------ -------- ----------------
Principal Market Percent
Amount Value of Net
Bonds & Notes (000) (000) Assets
- ------------------------------------------------ -------- ----------------
U.S. Treasury Obligations - 44.97%
10.75% 2003 $53,000 $64,801
8.875% 2017 39800 52238
10.375% 2009 33,500 41,718
12.00% 2013 10000 14631
7.25% 2004 11150 11967
3.626% 2002 (1) 11000 11099 44.97%
7.125% 2023 6,750 7,602
5.875% 1999 5,000 5,008
14.25% 2002 2000 2621
13.125% 2001 1500 1839
9.00% 1998 1,250 1,269
Federal Agency Obligations - Mortgage
Pass-Throughs (2) - 16.44%
Government National Mortgage Assn.:
7.00% 2018-2024 16375 16751
8.50% 2021-2026 11711 12397
9.50% 2019-2021 4876 5293
6.50% 2027 3975 3912
7.375% 2024 3420 3504
10.00% 2019 2939 3287 10.18
6.875% 2018 1911 1964
9.00% 2009-2016 1193 1283
10.50% 2019 134 152
11.00% 2019 46 53
12.00% 2012-2014 7 8
Fannie Mae (formerly Federal National Mortgage Assn.):
8.00% 2024 7288 7610
8.50% 2023 5268 5530
7.50% 2009-2027 4274 4375
10.00% 2018 3698 4065 5.88
7.00% 2010-2027 3403 3431
9.00% 2011-2025 2882 3068
Feddie Mac (formerly Federal Home Loan Mortgage Corp.):
9.00% 2021-2022 1589 1707
9.50% 2016 107 114 .38
12.00% 2010 2 2
Collateralized Mortgage Obligations
(Privately Originated) (2) - 13.65%
Prudential-Bache CMO Trust III, 9.44% 2018 14000 14648 3.06
GE Capital Mortgage Services, Inc.:
Series 1994-15, Class A-10, 6.00% 2009 8000 7,560
Series 1995-10, Class A-1, 7.00% 2010 6833 6,850 3.02
Westam Mortgage, Class 4-H, 8.95% 2018 11000 11,656 2.44
Morgan Stanley Capital I, Series 1997-HF1,
Class A-1, 6.86% 2006 (3) 4924 5019 1.05
Merrill Lynch Mortgage Investors, Inc.:
Series 1997-C1, Class A-1, 6.95% 2029 2,925 2,987
Series 1995-C3, Class A-2, 6.847% 2025 (4) 1,500 1,522 .94
Structured Asset Securities Corp., Series 1996-CFL,
Class A1-C, 5.944% 2028 4316 4292 .90
AMRESCO Commercial Mortgage Funding I Corp.,
Series 1997-C1, Class A-1, 6.73% 2029 3928 3981 .83
J.P. Morgan Commercial Mortgage Finance Corp., Series 1995-C1,
Class A2, 7.403% 2010 (4) 3000 3133 .66
DLJ Mortgage Acceptance Corp., Series 1995-CF2,
Class A-1B, 6.85% 2027 (3) 2250 2285 .48
Prudential Home Mortgage Securities Co., Inc., Series 1992-33,
Class A-12, 7.50% 2022 1289 1286 .27
Asset-Backed Obligations (2) - 9.13%
ContiMortgage Home Equity Loan Trust 1996-4,
Class A-4, 6.37% 2011 12000 11,963 2.51
Green Tree Financial Corp.:
Series 1995-9, Class A-5, 6.80% 2027 5000 5034
Series 1995-3, Class A-5, 7.30% 2025 2050 2092 1.91
Series 1996-10, Class A-5, 6.83% 2028 2000 2009
UCFL Acceptance Corp., Series 1996-D1,
Class A-5, 6.918% 2019 8500 8,594 1.80
Standard Credit Card Master Trust 1991-3, Class A,
8.875% 1999 5500 5589 1.17
California Infrasturcture and Economic Development Bank Special
Purpose Trust PG&E-1, Series 1997-1, Class A-6, 6.32% 2005 5500 5507 1.15
EQCC Home Equity Loan Asset-Backed Certificates,
Series 1996-A, Class A-2, 6.95% 2012 2000 2024 .42
IMC Home Equity Loan Trust, Series 1996-2,
Class A-2, 6.78% 2011 797 795 .17
Collateralized Mortgage Obligations
(Federal Agencies) (2) - 3.64%
Feddie Mac:
Series 1567, Class A, 6.15% 2023 (4) 9577 9026
Series 1948, Class PJ, 6.65% 2027 4000 3941
Series 1716, Class A, 6.50% 2009 2250 2198
Series 1507, Class JZ, 7.00% 2023 548 544 3.46
Series 83-B, Class B-3, 12.50% 2013 409 448
Series 1983, Class FB, 6.25% 2026 (4) 391 392
Fannie Mae, Series 1994-4, Class ZA, 6.50% 2024 904 841 .18
Federal Agency Obligations - Other - 3.08%
Freddie Mac, 6.555% 2006 8500 8383 1.76
FNSM Principal STRIPS:
0%/8.62% 2022 (5) 4500 4430
0%/8.25% 2022 (5) 2000 1882 1.32
Federal Collateralized Mortgage Obligations
(Privately Originated) (2) - 1.04%
Fannie Mae, 6.85% 2026 5087 4992 1.04
Financial - 0.25%
Signal Capital Corp. 9.95% 2006 1150 1182 .25
Telephone Utilities - 0.20%
BellSouth Savings and Security ESOP Trust 9.125% 2003 890 957 .20
----------------
TOTAL BONDS & NOTES (cost: $431,559,000) 441,341 92.40
----------------
Short-Term Securities
- ------------------------------------------------
Corporate Short-Term Notes - 9.22%
General Electric Capital Corp. 5.80% due 12/1/97 17700 17697 3.71
International Lease Finance Corp. 5.52% due 12/16/97 17400 17357 3.63
Kellogg Co. 5.50% due 12/12/97 9000 8984 1.88
----------------
TOTAL SHORT-TERM SECURITIES (cost: $44,038,000) 44038 9.22
----------------
TOTAL INVESTMENT SECURITIES (cost: $475,597,000) 485379 101.62
Excess of payables over cash and receivables 7,730 1.62
----------------
NET ASSETS $477,649100.00%
================
(1) Index-linked bond, which is a floating rate
bond whose principal amount moves with a
government retail price index.
(2) Pass-through securities backed by a pool of
mortgages or other loans on which principal
payments are periodically made. Therefore,
the effective maturity of these securities is
shorter than the stated maturity.
(3) Purchased in a private placement transaction;
resale to the public may require registration or sale only to
qualified institutional buyers.
(4) Coupon rate may change periodically.
(5) Step bond; coupon rate will
increase at a later date.
See Notes to Financial Statements
</TABLE>
<TABLE>
American Variable Insurance Series
Cash Management Fund
Investment Portfolio, November 30, 1997
<S> <C> <C> <C>
Principa Market
Amount Value Percent of
Short-Term Securities (000) (000) Net Assets
Corporate Short-Term Notes - 71.95%
General Mills, Inc. 5.62%-5.65% due 1/7-1/9/98 $ 8,500 $ 8,448 3.52%
General Electric Capital Corp. 5.48% due 12/8/97 8,000 7,990 3.33
Beneficial Corp. 5.50% due 12/12-12/19/97 8,000 7,980 3.33
Sherwin-Williams Co. 5.48% due 12/5/97 (1) 7,500 7,494 3.13
Gillette Co. 5.48% due 12/5/97 (1) 7,300 7,295 3.04
J.C. Penney Funding Corp. 5.60%-5.70% due 1/5-1/12/98 7,300 7,253 3.02
Gannett Co., Inc. 5.67%-5.75% due 1/8-1/15/98 (1) 7,300 7,250 3.02
Merck & Co., Inc. 5.47% due 12/1/97 7,100 7,099 2.96
Atlantic Richfield Co. 5.47% due 12/22/97 7,000 6,977 2.91
Pfizer Inc 5.50% due 12/2/97 (1) 6,500 6,498 2.71
Procter & Gamble Co. 5.49% due 12/9/97 6,000 5,992 2.50
H.J. Heinz Co. 5.48%-5.60% due 12/4/97-1/5/98 6,000 5,991 2.49
SBC Communications Inc. 5.52% due 12/8/97 (1) 5,500 5,493 2.29
Bell Atlantic Financial Services, Inc. 5.68%-5.70%
due 1/14-1/16/98 5,500 5,460 2.28
E.I. du Pont de Nemours and Co. 5.55% due 12/11/97 5,400 5,391 2.25
A.I. Credit Corp. 5.52% due 12/3/97 5,300 5,298 2.21
Kellogg Co. 5.63% due 1/15/98 5,200 5164 2.15
Xerox Corp. 5.49% due 12/2/97 5,000 4,999 2.08
Electronic Data Systems Corp. 5.49% due 12/11/97 (1) 5,000 4,992 2.08
Hershey Foods Corp. 5.50% due 12/11/97 5,000 4992 2.08
American Express Credit Corp. 5.49% due 12/16/97 5,000 4,988 2.08
Ameritech Corp. 5.50% due 12/16/97 (1) 5,000 4988 2.08
Albertson's, Inc. 5.57% due 12/16/97 5,000 4,988 2.08
Yale University 5.50% due 12/23/97 5,000 4982 2.08
Wal-Mart Stores, Inc. 5.52% due 12/1/97 4,300 4,299 1.79
Ford Motor Credit Co. 5.71% due 1/6/98 3,800 3778 1.58
Commercial Credit Co. 5.48% due 12/4/97 3,400 3,398 1.42
Lucent Technologies Inc. 5.48% due 12/2/97 3,000 2999 1.25
Schering Corp. 5.53% due 12/23/97 3,000 2989 1.25
Pitney Bowes Credit Corp. 5.60% due 1/9/98 3,000 2,981 1.24
Duke Energy Corp. 5.50% due 12/12/97 2,200 2,196 .92
Motorola Credit Corp. 5.60% due 12/31/97 1930 1921 .80
Federal Agency Obligations - 23.14%
Freddie Mac (formerly Federal Home Loan
Mortgage Corp.) 5.43%-5.50% due 12/11-12/31/97 31,700 31607 13.17
Fannie Mae (formerly Federal National
Mortgage Assn.) 5.46%-5.50% due 12/8-12/19/97 16,080 16049 6.70
Federal Home Loan Banks 5.50%-5.53% due 1/9-1/14/98 7,900 7850 3.27
Certificates of Deposit - 4.16%
Morgan Guaranty Trust Co. of New York 5.59% due 12/19 5000 5000 2.08
Wachovia Corp. 5.52% due 12/8/97 5000 5000 2.08
Bankers' Acceptances - 0.83%
BankAmerica Corp. 5.50% due 12/29/97 2,000 1991 0.83
-------------------
TOTAL INVESTMENT SECURITIES (cost: $240,060,000) 240060 100.08
Excess of payables over cash and receivables 185 0.08
-------------------
NET ASSETS $239,875 100.00%
===================
(1) 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
</TABLE>
<TABLE>
American Variable Insurance Series
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
at November 30, 1997
(dollars
in
thousands) Global Inter- Growth-
Growth Growth national Income
Fund Fund Fund Fund
- --------------------------------- ----------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investment securities at market $126,392 $4,716,994$2,662,886$6,570,298
Cash 5 114 32 233
Receivables for-
Sales of investments 414 30,779 7,685 13,709
Sales of fund's shares 31 73 31 52
Open forward currency
contracts - - 1,826 -
Dividends and accrued
interest 151 991 5,911 11,431
--------- --------- --------- ----------
126,993 4,748,951 2,678,371 6,595,723
LIABILITIES: --------- --------- --------- ----------
Payables for-
Purchases of investments 136 1,264 16,184 5,575
Repurchases of fund's shares 11 652 422 1,103
Management services 69 1,548 1,253 1,887
Distribution fees - Class 2 (1) 9 14
Accrued expenses 6 90 384 119
--------- --------- --------- ----------
231 3,568 18,252 8,713
NET ASSETS AT ----------------------------------------
November 30, 1997 $126,762 $4,745,383$2,660,119$6,587,010
=========================================
Investment securities at cost $127,917 $3,389,105$2,385,297$4,867,544
=========================================
Class 1 (unlimited shares authorized):
Net Assets $80,271 $4,670,771$2,612,322$6,429,794
Shares of beneficial interest
outstanding 7,559,756 93,190,502162,594,75160,872,178
Net asset value per share $10.62 $50.12 $16.07 $39.97
Class 2 (unlimited shares authorized) (1):
Net Assets $46,491 $74,612 $47,797 $157,216
Shares of beneficial interest
outstanding 4,381,550 1,489,554 2,976,975 3,935,910
Net asset value per share $10.61 $50.09 $16.06 $39.94
U.S.
Government/
Asset High-YieldAAA-Rated
Allocation Bond Bond Securities
Fund Fund Fund Fund
----------------------------------------
ASSETS:
Investment securities at market $1,427,221 $142,313 $771,134 $485,379
Cash 1,113 62 929 26
Receivables for-
Sales of investments - - 1,885 -
Sales of fund's shares 45 15 11 -
Open forward currency
contracts - 7 147 -
Dividends and accrued
interest 8,418 1,717 13,884 3,984
--------- --------- --------- ----------
1,436,797 144,114 787,990 489,389
LIABILITIES: --------- --------- --------- ----------
Payables for-
Purchases of investments 1,055 103 1,434 11,447
Repurchases of fund's shares 204 21 158 78
Management services 518 60 317 198
Distribution fees - Class 2 (1)
Accrued expenses 31 2 19 15
--------- --------- --------- ----------
1,815 188 1,932 11,740
NET ASSETS AT ----------------------------------------
November 30, 1997 $1,434,982 $143,926 $786,058 $477,649
=========================================
Investment securities at cost $1,155,733 $139,229 $743,913 $475,597
=========================================
Class 1 (unlimited shares authorized):
Net Assets $1,393,415 $132,172 $765,413 $470,624
Shares of beneficial interest
outstanding 86,209,60812,449,55851,175,56242,109,994
Net asset value per share $16.16 $10.62 $14.96 $11.18
Class 2 (unlimited shares authorized) (1):
Net Assets $41,567 $11,754 $20,645 $7,025
Shares of beneficial interest
outstanding 2,573,220 1,107,877 1,381,229 628,985
Net asset value per share $16.15 $10.61 $14.95 $11.17
Cash
Management
Fund Total
--------------------
ASSETS:
Investment securities at market $240,060 $17,142,677
Cash 39 2,553
Receivables for-
Sales of investments - 54,472
Sales of fund's shares - 258
Open forward currency
contracts - 1,980
Dividends and accrued
interest 72 46,559
--------- ----------
240,171 17,248,499
LIABILITIES: --------- ----------
Payables for-
Purchases of investments - 37,198
Repurchases of fund's shares 195 2,844
Management services 92 5,942
Distribution fees - Class 2 (1) 78
Accrued expenses 7 673
--------- ----------
296 46,735
NET ASSETS AT --------------------
November 30, 1997 $239,875 $17,201,764
=====================
Investment securities at cost $240,060 $13,524,395
=====================
Class 1 (unlimited shares authorized):
Net Assets $226,046
Shares of beneficial interest
outstanding 20,316,468
Net asset value per share $11.13
Class 2 (unlimited shares authorized) (1):
Net Assets $13,829
Shares of beneficial interest
outstanding 1,243,706
Net asset value per share $11.12
1 Shares offered for sale
commencing on April 30, 1997.
See Notes to Financial Statements
</TABLE>
<TABLE>
American Variable Insurance Series (dollars
FINANCIAL STATEMENTS in
thousands)
Statement of Operations
for the year ended November 30, 1997
Global Inter- Growth-
Growth Growth national Income
Fund (1) Fund Fund Fund
--------------------------- ---------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Income:
Dividends $439 $18,508 $49,121 $96,848
Interest 473 24,088 10,452 43,091
--------------------------- ----------
912 42,596 59,573 139,939
--------------------------- ----------
Expenses:
Management services fee 310 17,154 15,477 21,263
Distribution fees - Class 2 (2) 32 46 34 99
Reports to shareholders 1 119 78 166
Registration statement and
prospectus 1 77 46 102
Postage, stationery and
supplies 1 67 47 98
Trustees' fees - 52 34 73
Auditing and legal fees - 49 32 71
Custodian fee 15 125 2,039 146
Taxes other than federal
income tax - 52 32 70
Other expenses 3 34 160 44
--------------------------- ----------
363 17,775 17,979 22,132
--------------------------- ----------
Net investment income 549 24,821 41,594 117,807
--------------------------- ----------
REALIZED GAIN (LOSS) AND
UNREALIZED APPRECIATION
(DEPRECIATION) ON INVESTMENTS:
Realized gain (loss) (99) 561,323 277,748 631,933
--------------------------- ----------
Net change in unrealized appreciation
(depreciation) on investments (1,529) 342,407 (93,902) 464,898
Net increase in unrealized appreciation
on open forward currency contracts - - 1,826 -
--------------------------- ----------
Net unrealized appreciation
(depreciation) (1,529) 342,407 (92,076) 464,898
--------------------------- ----------
Net realized gain (loss) and
unrealized appreciation (depreciation)
on investments (1,628) 903,730 185,672 1,096,831
--------------------------- ----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $(1,079)$928,551 $227,266 $1,214,638
=========================== =========
U.S.
High- Government/
Asset Yield AAA-Rated
Allocatio Bond Bond Securities
Fund Fund Fund Fund
------------------------------------------
<S>
INVESTMENT INCOME:
Income:
Dividends $16,612 $ 124 $447 -
Interest 35,802 7,467 68,229 $35,077
--------------------------- ----------
52,414 7,591 68,676 35,077
--------------------------- ----------
Expenses:
Management services fee 5,806 557 3,624 2,444
Distribution fees - Class 2 (2) 26 7 14 5
Reports to shareholders 36 3 21 14
Registration statement and
prospectus 22 2 12 8
Postage, stationery and
supplies 21 2 12 8
Trustees' fees 16 1 9 7
Auditing and legal fees 15 1 9 7
Custodian fee 57 7 39 24
Taxes other than federal
income tax 16 2 10 7
Other expenses 12 2 8 7
--------------------------- ----------
6,027 584 3,758 2,531
--------------------------- ----------
Net investment income 46,387 7,007 64,918 32,546
--------------------------- ----------
REALIZED GAIN (LOSS) AND
UNREALIZED APPRECIATION
(DEPRECIATION) ON INVESTMENTS:
Realized gain (loss) 78,404 1,649 14,913 (9,383)
--------------------------- ----------
Net change in unrealized appreciation
(depreciation) on investments 86,689 1,006 4,975 6,202
Net increase in unrealized appreciation
on open forward currency contracts - 1 147 -
------------------------------------------
Net unrealized appreciation
(depreciation) 86,689 1,007 5,122 6,202
------------------------------------------
Net realized gain (loss) and
unrealized appreciation (depreciation)
on investments 165,093 2,656 20,035 (3,181)
--------------------------- ----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $211,480 $9,663 $84,953 $29,365
==========================================
Cash
Manage-
ment
Fund Total
------------------
<S>
INVESTMENT INCOME:
Income:
Dividends - $182,099
Interest $13,554 238,233
-------------------
13,554 420,332
-------------------
Expenses:
Management services fee 1,113 67,748
Distribution fees - Class 2 (2) 11 274
Reports to shareholders 7 445
Registration statement and
prospectus 8 278
Postage, stationery and
supplies 4 260
Trustees' fees 4 196
Auditing and legal fees 3 187
Custodian fee 12 2,464
Taxes other than federal
income tax 4 193
Other expenses 6 276
-------------------
1,172 72,321
-------------------
Net investment income 12,382 348,011
-------------------
REALIZED GAIN (LOSS) AND
UNREALIZED APPRECIATION
(DEPRECIATION) ON INVESTMENTS:
Realized gain (loss) - 1,556,488
-------------------
Net change in unrealized appreciation
(depreciation) on investments - 810,746
Net increase in unrealized appreciation
on open forward currency contracts - 1,974
-------------------
Net unrealized appreciation
(depreciation) - 812,720
-------------------
Net realized gain (loss) and
unrealized appreciation (depreciation)
on investments 2,369,208
-------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $12,382 $2,717,219
==================
1 For the period April 30, 1997, commencement of
operations, through November 30, 1997.
2 Shares offered for sale commencing on
April 30, 1997.
See Notes to Financial Statements
</TABLE>
<TABLE>
American Variable Insurance Series
FINANCIAL STATEMENTS
Statement of Changes in Net Assets Global
Growth Fund Growth Fund
-------- --------
Period ended Year ended Year ended
November 30, November 30, November 30,
1997 (1) 1997 1996
- ---------------------------------- -------- -------- --------
<S> <C> <C> <C>
OPERATIONS:
Net investment income $549 $24,821 $20,827
Net realized gain (loss) on investments (99) 561,323 269,265
Net unrealized appreciation (depreciation)
on investments (1,529) 342,407 183,049
-------- -------- --------
Net increase (decrease) in net assets
resulting from operations (1,079) 928,551 473,141
-------- -------- --------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income:
Class 1 (176) (24,809) (24,246)
Class 2 (3)
-------- -------- --------
Total dividends from net investment income
Distributions from net realized gain on
investments - (268,039) (259,930)
-------- -------- --------
Total dividends and distributions (238) (292,898) (284,176)
-------- -------- --------
CAPITAL SHARE TRANSACTIONS:
Class 1:
Proceeds from shares sold 81,956 238,801 506,249
Proceeds from shares issued on reinvestment
of dividends and distributions 176 292,848 284,176
Cost of shares repurchased (6,631) (354,956) (273,482)
-------- -------- --------
Net increase (decrease) from Class 1 transac 75,501 176,693 516,943
-------- -------- --------
Class 2: (3)
Proceeds from shares sold 47,516 72,649 -
Proceeds from shares issued on reinvestment
of dividends 62 50 -
Cost of shares repurchased - (11) -
-------- -------- --------
Net increase from Class 2 transactions 47,578 72,688 -
Net increase (decrease) in net -------- -------- --------
assets resulting from capital share
transactions 123,079 249,381 516,943
-------- -------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS 121,762 885,034 705,908
NET ASSETS:
Beginning of year 5,000 (4) 3,860,349 3,154,441
-------- -------- --------
End of year $126,762 $4,745,383 $3,860,349
============ ============ ============
Undistributed net investment income $311 $4,612 $4,638
============ ============ ============
SHARES OF BENEFICIAL INTEREST:
Class 1:
Shares sold 7,649,183 5,361,345 12,825,093
Shares issued on reinvestment of dividends
and distributions 15,620 7,259,293 7,512,662
Shares repurchased (605,047) (8,120,252) (7,086,581)
----------- -------- --------
Net increase (decrease) in shares outstandi 7,059,756 4,500,386 13,251,174
============ ============ ============
Class 2: (3)
Shares sold 4,376,072 1,488,730 -
Shares issued on reinvestment of dividends 5,510 1,040 -
Shares repurchased (32) (216) -
-------- -------- --------
Net increase in shares outstanding 4,381,550 1,489,554 -
============ ============ ============
International Fund Growth-Income Fund
-------- --------
Year ended Year ended Year ended
November 30, November 30, November 30,
1997 1996 1997
- ---------------------------------- -------- -------- --------
<S> <C> <C> <C>
OPERATIONS:
Net investment income $41,594 $40,449 $117,807
Net realized gain (loss) on investments 277,748 96,629 631,933
Net unrealized appreciation (depreciation)
on investments (92,076) 177,135 464,898
-------- -------- --------
Net increase (decrease) in net assets
resulting from operations 227,266 314,213 1,214,638
-------- -------- --------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income:
Class 1 (43,541) (42,718) (112,850)
Class 2 (3)
-------- -------- --------
Total dividends from net investment income (1
Distributions from net realized gain on
investments (94,763) (35,844) (373,625)
-------- -------- --------
Total dividends and distributions (138,470) (78,562) (487,043)
-------- -------- --------
CAPITAL SHARE TRANSACTIONS:
Class 1:
Proceeds from shares sold 208,181 412,624 258,887
Proceeds from shares issued on reinvestment
of dividends and distributions 138,304 78,562 486,475
Cost of shares repurchased (196,240) (60,680) (287,990)
-------- -------- --------
Net increase (decrease) from Class 1 transac 150,245 430,506 457,372
-------- -------- --------
Class 2: (3)
Proceeds from shares sold 51,308 - 152,837
Proceeds from shares issued on reinvestment
of dividends 166 - 568
Cost of shares repurchased (24) - (2)
-------- -------- --------
Net increase from Class 2 transactions 51,450 - 153,403
Net increase (decrease) in net -------- -------- --------
assets resulting from capital share
transactions 201,695 430,506 610,775
-------- -------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS 290,491 666,157 1,338,370
NET ASSETS:
Beginning of year 2,369,628 1,703,471 5,248,640
-------- -------- --------
End of year $2,660,119 $2,369,628 $6,587,010
============ ============ ============
Undistributed net investment income $9,642 $7,669 $29,653
============ ============ ============
SHARES OF BENEFICIAL INTEREST:
Class 1:
Shares sold 12,876,841 28,612,329 7,261,018
Shares issued on reinvestment of dividends
and distributions 8,982,981 5,605,115 14,498,052
Shares repurchased (11,853,859) (4,238,963) (7,793,511)
-------- -------- --------
Net increase (decrease) in shares outstandi 10,005,963 29,978,481 13,965,559
============ ============ ============
Class 2: (3)
Shares sold 2,969,078 - 3,921,601
Shares issued on reinvestment of dividends 9,366 - 14,358
Shares repurchased (1,469) - (49)
-------- -------- --------
Net increase in shares outstanding 2,976,975 - 3,935,910
============ ============ ============
Growth- Asset
Income Fund Allocation Fund
---------- -------- ---------
Year ended Year ended Year ended
November 30, November 30, November 30,
1996 1997 1996
-------- -------- --------
OPERATIONS:
Net investment income $101,854 $46,387 $38,391
Net realized gain (loss) on investments 373,978 78,404 72,509
Net unrealized appreciation (depreciation)
on investments 407,012 86,689 62,633
-------- -------- --------
Net increase (decrease) in net assets
resulting from operations 882,844 211,480 173,533
-------- -------- --------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income:
Class 1 (101,529) (43,924) (36,923)
Class 2 (3)
-------- -------- --------
Total dividends from net investment income
Distributions from net realized gain on
investments (159,645) (72,976) (30,506)
-------- -------- --------
Total dividends and distributions (261,174) (117,167) (67,429)
-------- -------- --------
CAPITAL SHARE TRANSACTIONS:
Class 1:
Proceeds from shares sold 540,891 94,533 131,175
Proceeds from shares issued on reinvestment
of dividends and distributions 261,174 116,900 67,429
Cost of shares repurchased (128,364) (52,765) (33,309)
-------- -------- --------
Net increase (decrease) from Class 1 transac 673,701 158,668 165,295
-------- -------- --------
Class 2: (3)
Proceeds from shares sold - 40,846 -
Proceeds from shares issued on reinvestment
of dividends - 267 -
Cost of shares repurchased - (203) -
-------- -------- --------
Net increase from Class 2 transactions - 40,910 -
Net increase (decrease) in net -------- -------- --------
assets resulting from capital share
transactions 673,701 199,578 165,295
-------- -------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,295,371 293,891 271,399
NET ASSETS:
Beginning of year 3,953,269 1,141,091 869,692
-------- -------- --------
End of year $5,248,640 $1,434,982 $1,141,091
============ ============ ============
Undistributed net investment income $25,264 $12,170 $9,974
============ ============ ============
SHARES OF BENEFICIAL INTEREST:
Class 1:
Shares sold 16,813,646 6,313,389 9,441,738
Shares issued on reinvestment of dividends
and distributions 8,475,637 8,150,386 4,980,163
Shares repurchased (4,001,696) (3,428,456) (2,391,438)
-------- -------- --------
Net increase (decrease) in shares outstandi 21,287,587 11,035,319 12,030,463
============ ============ ============
Class 2: (3)
Shares sold - 2,569,382 -
Shares issued on reinvestment of dividends - 16,640 -
Shares repurchased - (12,802) -
-------- -------- --------
Net increase in shares outstanding - 2,573,220 -
============ ============ ============
Bond Fund High-Yield Bond Fund
-------- --------
Year ended Year ended Year ended
November 30, November 30, November 30,
1997 1996 (2) 1997
-------- -------- --------
OPERATIONS:
Net investment income $7,007 $2,470 $64,918
Net realized gain (loss) on investments 1,649 38 14,913
Net unrealized appreciation (depreciation)
on investments 1,007 2,083 5,122
-------- -------- --------
Net increase (decrease) in net assets
resulting from operations 9,663 4,591 84,953
-------- -------- --------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income:
Class 1 (5,948) (1,349) (61,513)
Class 2 (3)
-------- -------- --------
Total dividends from net investment income
Distributions from net realized gain on
investments - - -
-------- -------- --------
Total dividends and distributions (6,074) (1,349) (61,900)
-------- -------- --------
CAPITAL SHARE TRANSACTIONS:
Class 1:
Proceeds from shares sold 52,881 73,438 74,311
Proceeds from shares issued on reinvestment
of dividends and distributions 5,948 1,349 61,513
Cost of shares repurchased (7,585) (1,604) (55,586)
-------- -------- --------
Net increase (decrease) from Class 1 transac 51,244 73,183 80,238
-------- -------- --------
Class 2: (3)
Proceeds from shares sold 11,571 - 20,198
Proceeds from shares issued on reinvestment
of dividends 126 - 387
Cost of shares repurchased (29) - (3)
-------- -------- --------
Net increase from Class 2 transactions 11,668 - 20,582
Net increase (decrease) in net -------- -------- --------
assets resulting from capital share
transactions 62,912 73,183 100,820
-------- -------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS 66,501 76,425 123,873
NET ASSETS:
Beginning of year 77,425 1,000 (5) 662,185
-------- -------- --------
End of year $143,926 $77,425 $786,058
============ ============ ============
Undistributed net investment income $2,081 $1,121 $17,389
============ ============ ============
SHARES OF BENEFICIAL INTEREST:
Class 1:
Shares sold 5,092,091 7,434,995 5,078,465
Shares issued on reinvestment of dividends
and distributions 579,221 137,024 4,250,842
Shares repurchased (732,975) (160,798) (3,792,325)
-------- -------- --------
Net increase (decrease) in shares outstandi 4,938,337 7,411,221 5,536,982
============ ============ ============
Class 2: (3)
Shares sold 1,098,637 - 1,355,310
Shares issued on reinvestment of dividends 12,011 - 26,144
Shares repurchased (2,771) - (225)
-------- -------- --------
Net increase in shares outstanding 1,107,877 - 1,381,229
============ ============ ============
U.S. Government/
AAA-Rated
Securities Fund
--------
Year ended Year ended Year ended
November 30, November 30, November 30,
1996 1997 1996
-------- -------- --------
OPERATIONS:
Net investment income $55,086 $ 32,546 $38,502
Net realized gain (loss) on investments 4,194 (9,383) (2,883)
Net unrealized appreciation (depreciation)
on investments 17,642 6,202 (8,951)
-------- -------- --------
Net increase (decrease) in net assets
resulting from operations 76,922 29,365 26,668
-------- -------- --------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income:
Class 1 (53,386) (34,740) (38,383)
Class 2 (3)
-------- -------- --------
Total dividends from net investment income
Distributions from net realized gain on
investments - - -
-------- -------- --------
Total dividends and distributions (53,386) (34,863) (38,383)
-------- -------- --------
CAPITAL SHARE TRANSACTIONS:
Class 1:
Proceeds from shares sold 91,739 23,001 39,469
Proceeds from shares issued on reinvestment
of dividends and distributions 53,386 34,740 38,383
Cost of shares repurchased (40,681) (93,774) (96,167)
-------- -------- --------
Net increase (decrease) from Class 1 transac 104,444 (36,033) (18,315)
-------- -------- --------
Class 2: (3)
Proceeds from shares sold - 8,344 -
Proceeds from shares issued on reinvestment
of dividends - 123 -
Cost of shares repurchased - (1,538) -
-------- -------- --------
Net increase from Class 2 transactions - 6,929 -
Net increase (decrease) in net -------- -------- --------
assets resulting from capital share
transactions 104,444 (29,104) (18,315)
-------- -------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS 127,980 (34,602) (30,030)
NET ASSETS:
Beginning of year 534,205 512,251 542,281
-------- -------- --------
End of year $662,185 $477,649 $512,251
============ ============ ============
Undistributed net investment income $14,357 $7,461 $9,778
============ ============ ============
SHARES OF BENEFICIAL INTEREST:
Class 1:
Shares sold 6,502,188 2,087,594 3,523,988
Shares issued on reinvestment of dividends
and distributions 3,834,396 3,195,318 3,478,224
Shares repurchased (2,875,119) (8,543,011) (8,689,601)
-------- -------- --------
Net increase (decrease) in shares outstandi 7,461,465 (3,260,099) (1,687,389)
============ ============ ============
Class 2: (3)
Shares sold - 756,866 -
Shares issued on reinvestment of dividends - 11,218 -
Shares repurchased - (139,099) -
-------- -------- --------
Net increase in shares outstanding - 628,985 -
============ ============ ============
Cash Cash
Management Fund Management Fund
-------- --------
Year ended Year ended
November 30, November 30,
1997 1996
-------- --------
OPERATIONS:
Net investment income $12,382 10939
Net realized gain (loss) on investments - -
Net unrealized appreciation (depreciation)
on investments - -
-------- -------
Net increase (decrease) in net assets
resulting from operations 12,382 10,939
-------- --------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income:
Class 1 (11,948) (10,336)
Class 2 (3) -
-------- --------
Total dividends from net investment income (10,336)
Distributions from net realized gain on
investments - -
-------- --------
Total dividends and distributions (12,130) (10,336)
-------- --------
CAPITAL SHARE TRANSACTIONS:
Class 1:
Proceeds from shares sold 252,946 269,588
Proceeds from shares issued on reinvestment
of dividends and distributions 11,948 10,336
Cost of shares repurchased (279,424) (233,296)
-------- --------
Net increase (decrease) from Class 1 transac (14,530) 46,628
-------- --------
Class 2: (3)
Proceeds from shares sold 19,573 -
Proceeds from shares issued on reinvestment
of dividends 182 -
Cost of shares repurchased (5,950) -
-------- --------
Net increase from Class 2 transactions 13,805 -
Net increase (decrease) in net -------- --------
assets resulting from capital share
transactions (725) 46,628
-------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS (473) 47,231
NET ASSETS:
Beginning of year 240,348 193,117
-------- --------
End of year $239,875 $240,348
============ ============
Undistributed net investment income $3,341 $3,089
============ ============
SHARES OF BENEFICIAL INTEREST:
Class 1:
Shares sold 22,809,829 24,337,746
Shares issued on reinvestment of dividends
and distributions 1,083,759 937,903
Shares repurchased (25,187,883) (21,049,530)
-------- --------
Net increase (decrease) in shares outstandi (1,294,295) 4,226,119
============ ============
Class 2: (3)
Shares sold 1,763,820 -
Shares issued on reinvestment of dividends 16,540 -
Shares repurchased (536,654) -
-------- --------
Net increase in shares outstanding 1,243,706 -
============ ============
Total
Year ended Year ended
November 30, November 30,
1997 1996
-------- --------
OPERATIONS:
Net investment income 348011 308518
Net realized gain (loss) on investments 1,556,488 813,730
Net unrealized appreciation (depreciation)
on investments 812,720 840,603
-------- --------
Net increase (decrease) in net assets
resulting from operations 2,717,219 1,962,851
-------- --------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income:
Class 1 (339,449) (308,870)
Class 2 (3) -
-------- --------
Total dividends from net investment income (308,870)
Distributions from net realized gain on
investments (809,403) (485,925)
-------- --------
Total dividends and distributions (1,150,783) (794,795)
-------- --------
CAPITAL SHARE TRANSACTIONS:
Class 1:
Proceeds from shares sold 1,285,497 2,065,173
Proceeds from shares issued on reinvestment
of dividends and distributions 1,148,852 794,795
Cost of shares repurchased (1,334,951) (867,583)
-------- --------
Net increase (decrease) from Class 1 transac 1,099,398 1,992,385
-------- --------
Class 2: (3)
Proceeds from shares sold 424,842 -
Proceeds from shares issued on reinvestment
of dividends 1,931 -
Cost of shares repurchased (7,760) -
-------- --------
Net increase from Class 2 transactions 419,013 -
Net increase (decrease) in net -------- --------
assets resulting from capital share
transactions 1,518,411 1,992,385
-------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS 3,084,847 3,160,441
NET ASSETS:
Beginning of year 14,116,917 10,951,476
-------- --------
End of year $17,201,764 $14,111,917
============ ============
Undistributed net investment income $86,660 $75,890
============ ============
SHARES OF BENEFICIAL INTEREST:
Class 1:
Shares sold 74,529,755 109,491,723
Shares issued on reinvestment of dividends
and distributions 48,015,472 34,961,124
Shares repurchased (70,057,319) (50,493,726)
-------- --------
Net increase (decrease) in shares outstandi 52,487,908 93,959,121
============ ============
Class 2: (3)
Shares sold 20,299,496 -
Shares issued on reinvestment of dividends 112,827 -
Shares repurchased (693,317) -
-------- --------
Net increase in shares outstanding 19,719,006 -
============ ============
1 For the period April 30, 1997, commencement
of operations, through November 30, 1997.
2 For the period January 2, 1996, commencement
of operations, through November 30, 1996
3 Shares offered for sale commencing
April 30, 1997.
4 Represents initial capitalization from sale
of 500,000 Class 1 shares of beneficial interest.
5 Represents initial capitalization from sale
of 100,000 Class 1 shares of beneficial interest
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 nine different funds. The ninth fund, the Global Growth
Fund, commenced operations on April 30, 1997. Also on that date, the series
commenced dual-class operations. The assets of each fund are segregated, with
each fund accounted for separately. The funds' investment objectives are as
follows: Global Growth
Fund - growth of capital by investing primarily in common stocks or securities
with common stock characteristics of issuers domiciled around the world; Growth
Fund - growth of capital by investing primarily in common stocks or securities
with common stock characteristics; International Fund - long-term growth of
capital by investing primarily in securities of issuers domiciled outside the
United States; Growth-Income Fund - growth of capital and income by investing
primarily in common stocks or other securities which demonstrate the potential
for appreciation and/or dividends; Asset Allocation Fund - high total return
(including income and capital gains) consistent with long-term preservation of
capital; Bond Fund - as high a level of current income as is consistent with
the preservation of capital by investing primarily in fixed-income securities;
High-Yield Bond Fund - high current income and secondarily capital appreciation
by investing primarily in intermediate and long-term corporate obligations,
with emphasis on higher yielding, higher risk, lower rated or unrated
securities; U.S. Government/AAA-Rated Securities Fund - a high level of current
income consistent with prudent investment risk and preservation of capital by
investing primarily in a combination of securities guaranteed by the U.S.
government and other debt securities rated AAA or Aaa; Cash Management Fund -
high current yield while preserving capital by investing in a diversified
selection of high-quality money market instruments.
Each fund in the series is authorized to offer multiple classes of shares.
Currently, each fund offers two classes of shares: Class 1 and Class 2. Class
1 shares are not subject to either an initial or contingent deferred sales
charge nor have they adopted a Plan of Distribution to cover any distribution
expenses. Class 2 shares are subject to certain fees pursuant to a Plan of
Distribution as described below. Both classes of shares have identical voting,
dividend, liquidation and other rights and shall have exclusive rights to vote
on matters affecting only individual classes. Income, expenses, and any
realized capital gains and losses not allocated to a particular class will be
allocated to each class on the basis of the net asset value of that class in
relation to net assets of the fund. Class-specific expenses will be allocated
to that particular class on a specific identification basis.
The following paragraphs summarize the significant accounting policies
consistently followed by the series in the preparation of its financial
statements:
Equity securities, including depositary receipts, are valued at the last
reported sale price on the exchange or market on which such securities are
traded, as of the close of business on the day the securities are being valued
or, lacking any sales, at the last available bid price. In cases where equity
securities are traded on more than one exchange, the securities are valued on
the exchange or market determined by the investment adviser to be the broadest
and most representative market, which may be either a securities exchange or
the over-the-counter market. Fixed-income securities are valued at prices
obtained from a pricing service, 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 quoted bid and asked prices or at prices
for securities of comparable maturity, quality and type.
Securities with original maturities of one year or less having 60 days or less
to maturity are amortized to maturity based on their cost if acquired within 60
days of maturity or, if already held on the 60th day, based on the value
determined on the 61st day. Forward currency contracts are valued at the mean
of representative quoted bid and asked prices.
Assets or liabilities initially expressed in terms of foreign currencies are
translated prior to the next determination of the net asset value of the fund's
shares into U.S. dollars at the prevailing market rates. 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.
Securities and assets for which representative market quotations are not
readily available are valued at fair value as determined in good faith by a
committee appointed by the Board of Trustees.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. In the event
the series 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. The series does not amortize premiums on securities
purchased. Dividends and distributions paid to shareholders are recorded on the
ex-dividend date.
The series 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 series enters into these contracts to reduce its
exposure to fluctuations in foreign exchange rates arising from investments
denominated in non-U.S. currencies. The series' 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 series
records realized gains or losses at the time the forward contract is closed or
offset by a matching contract. The face or contract amount in U.S. dollars
reflects the total exposure the series has in that particular contract. Risks
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.
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.
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, 1997, the High-Yield Bond Fund utilized the
remaining capital loss carryforward totaling $6,501,000 to offset, for tax
purposes, capital gains realized during the year up to such amount. The U.S.
Government/AAA-Rated Securities Fund had available at November 30, 1997 a
capital loss carryforward totaling $19,579,000, which may be used to offset
capital gains realized during subsequent years through November 30, 2005. It is
the intention of the fund not to make distributions from capital gains while
there are capital loss carryforwards. During the year ended November 30, 1997,
the amounts of tax basis net capital gains/losses on securities transactions,
and the amounts of net gains related to non-U.S. currency transactions which
were treated as ordinary income for federal income tax purposes; and as of
November 30, 1997 the amounts for book and federal income tax purposes of
unrealized appreciation and depreciation, and the cost of portfolio securities,
excluding forward currency contracts, were as follows:
<TABLE>
(dollars in thousands)
Global Growth-
Growth Growth Interna- Income
Fund Fund tional Fu Fund
<S> <C> <C> <C> <C>
Tax basis net capital
gain (loss) $268 $581,546 $274,229 $631,933
Tax basis net currency
gain (loss) - 14 1,138 -
Unrealized
appreciation 6,548 1,513,114 517,233 1,787,152
Unrealized
depreciation 8,073 185,225 239,644 84,398
Net unrealized
appreciation
(depreciation) (1,525)1,327,889 277,589 1,702,754
Cost of portfolio
securities 127,917 3,389,1052,385,297 4,867,544
footnote Asset High-YielU.S. Government/
2) Allocati Bond Bond AAA-Rated
Fund Fund Fund Securities Fund
Tax basis net capital
gain (loss) $78,404 $1,634 $13,925 $(9,756)
Tax basis net currency
gain (loss) - 29 161 -
Unrealized
appreciation 283,615 4,025 40,812 10,977
Unrealized
depreciation 12,127 941 13,591 1,195
Net unrealized
appreciation
(depreciation) 271,488 3,084 27,221 9,782
Cost of portfolio
securities 1,155,73 139,229 743,913 475,597
Cash
Management
Fund Total
1,332,973 2,056,179
1,261,458 1,918,049
Tax basis net capital
gain (loss) - $1,572,183
Tax basis net currency
gain (loss) - 1,342
Unrealized
appreciation - 4,163,476
Unrealized
depreciation - 545,194
Net unrealized
appreciation
(depreciation) - 3,618,282
Cost of portfolio
securities $240,06013,524,395
</TABLE>
3. The fees for management services were paid pursuant to an agreement with
Capital Research and Management Company (CRMC), with which certain officers and
Trustees of the series are affiliated. The Investment Advisory and Service
Agreement provides for monthly fees, accrued daily, based on the following
annual rates: Global Growth Fund - 0.69% of average net assets; Growth Fund -
0.50% of the first $600 million of average net assets; 0.45% of such assets in
excess of $600 million but not exceeding $1.2 billion; 0.42% of such assets in
excess of $1.2 billion but not exceeding $2.0 billion; 0.37% of such assets in
excess of $2.0 billion but not exceeding $3.2 billion; and 0.35% of such assets
in excess of $3.2 billion; International Fund - 0.90% of the first $60 million
of average net assets; 0.78% of such assets in excess of $60 million but not
exceeding $600 million; 0.60% of such assets in excess of $600 million but not
exceeding $1.2 billion; 0.48% of such assets in excess of $1.2 billion but not
exceeding $2.0 billion; and 0.465% of such assets in excess of $2.0 billion;
Growth-Income Fund - 0.50% of the first $600 million of average net assets;
0.45% of such assets in excess of $600 million but not exceeding $1.5 billion;
0.40% of such assets in excess of $1.5 billion but not exceeding $2.5 billion;
0.32% of such assets in excess of $2.5 billion but not exceeding $4.0 billion;
and 0.285% of such assets in excess of $4.0 billion; Asset Allocation Fund -
0.50% of the first $600 million of average net assets; 0.42% of such assets in
excess of $600 million but not exceeding $1.2 billion; and 0.36% of such assets
in excess of $1.2 billion; Bond Fund - 0.60% of the first $30 million of
average net assets; and 0.50% of such assets in excess of $30 million;
High-Yield Bond Fund - 0.60% of the first $30 million of average net assets;
0.50% of such assets in excess of $30 million but not exceeding $600 million;
and 0.46% of such assets in excess of $600 million; U.S. Government/AAA-Rated
Securities Fund - 0.60% of the first $30 million of average net assets; 0.50%
of such assets in excess of $30 million but not exceeding $600 million; and
0.40% of such assets in excess of $600 million; Cash Management Fund - 0.50% of
the first $100 million of average net assets; 0.42% of such assets in excess of
$100 million but not exceeding $400 million; and 0.38% of such assets in excess
of $400 million.
The Board of Trustees has approved an amended Investment Advisory and Service
Agreement, which provides for reduced fees for the International Fund effective
December 1, 1997, at the following annual rates: 0.78% of the first $600
million of average net assets; 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. Beginning October 1, 1997, 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
30,1997, aggregate amounts deferred and earnings thereon were $253,000.
Pursuant to a Plan of Distribution, each fund is authorized to pay 0.25% of
the average daily net assets of Class 2 shares in connection with certain
distribution services and related activities. During the year ended November
30, 1997, Plan expenses for the series aggregated $274,000. As of November 30,
1997, accrued and unpaid distribution expenses were $78,000.
4.
(dollars in thousands)
<TABLE>
Global Growth-
Growth Growth Interna- Income
Fund Fund tional Fu Fund
<S> <C> <C> <C> <C>
As of November 30, 1997:
Accumulated
undistributed
net realized
gain (loss) on
investments ($99) $561,009 $274,343 $631,524
Reclassification from
undistributed net
realized gain to
undistributed net
investment income - 12 4,086 -
Paid-in capital 128,079 2,851,8722,096,760 4,223,073
For the year
ended November 30,1997:
Purchases of
investment
securities (1) 120,913 (1,705,3721,332,973 2,056,179
Sales of invest-
ment securities (1) 8,310 (2) 1,810,9291,261,458 1,918,049
Asset High-YielU.S. Government/
Allocatio Bond Bond AAA-Rated
Fund Fund Fund Securities Fund
As of November 30, 1997:
Accumulated
undistributed
net realized
gain (loss) on
investments $77,850 $1,660 $7,736 ($20,405)
Reclassification from
undistributed net
realized gain to
undistributed net
investment income - 27 14 -
Paid-in capital 1,093,475 137,095 733,570 480,811
For the year
ended November 30,1997:
Purchases of
investment
securities (1) 540,208 96,410 444,916 241,610
Sales of invest-
ment securities (1) 385,045 44,969 334,892 287,863
Cash
Management
Fund Total
As of November 30, 1997:
Accumulated
undistributed
net realized
gain (loss) on
investments - $1,533,618
Reclassification from
undistributed net
realized gain to
undistributed net
investment income - 4,139
Paid-in capital $236,534 11,981,269
For the year
ended November 30,1997:
Purchases of
investment
securities (1) - 6,538,579
Sales of invest-
ment securities (1) - 6,051,515
(1) Excludes short-
term securities
(2) For the period
April 30, 1997,
commencement of
operations, through
May 31, 1997.
</TABLE>
5. 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 $2,464,000, of
which $252,000 was paid by these credits rather than in cash.
Dividend and interest income for the Global Growth Fund and the International
Fund is recorded net of non-U.S. taxes paid. For the year ended November 30,
1997, such non-U.S. taxes were $39,000 and $6,089,000, respectively. Net
realized currency gains/(losses) on dividends, interest, withholding taxes
reclaimable, and sales of non-U.S. bonds and notes for the year ended November
30, 1997 were $14,000, ($787,000), ($5,000) and ($5,000) for the Growth Fund,
the International Fund, the Bond Fund and the High-Yield Bond Fund,
respectively.
At November 30, 1997, the International Fund, the Bond Fund and the High-Yield
Bond Fund had outstanding forward currency contracts to sell non-U.S.
currencies as follows:
<TABLE>
Non-U.S. Currency Sale Contracts U.S.
<S>
Contract Valuation
Amount at 11/30/97 Unrealized
Fund Non-U.S. U.S. Amount Appreciation
--------------- --------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Brazilian Real
expiring 10/6/98 International Fun BRL 9,251,0 $ 7,500,000 $ 6,952,000 $ 548,000
Japanese Yen
expiring 2/12/98 International FunJPY 5,593,500,0 45,587,000 44,309,000 1,278,000
Deutsche Marks
expiring 1/23/98 Bond Fund DM 983,0 566,000 559,000 7,000
expiring 2/3-2/25/98 High-Yield Bond F DM 14,809,0 8,573,000 8,426,000 147,000
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
PER-SHARE
DATA AND
RATIOS
Total
Net income
realized & (loss) 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
- --------- --------- --------- --------- --------- ---------
Global Growth Fund (2)
Class 1
1997 $10.00 $.06 $.59 $ 0.65 $(.03)
Class 2 (4)
1997 10.00 .03 0.60 (3) .63 (.02)
Growth Fund
Class 1
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)
1997 43.53 .27 9.61 9.88 (.27)
Class 2 (4)
1997 40.59 .11 9.51 9.62 (.12)
International Fund
Class 1
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)
1997 15.53 .25 1.18 1.43 (.27)
Class 2 (4)
1997 15.86 .13 .23 .36 (.16)
Growth Income Fund
Class 1
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)
1997 35.73 .73 6.78 7.51 (.72)
Class 2 (4)
1997 34.10 .37 5.82 6.19 (.35)
Asset Allocation Fund
Class 1
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)
1997 15.18 .55 1.94 2.49 (.54)
Class 2 (4)
1997 14.43 .29 1.69 1.98 (.26)
Bond Fund (5)
Class 1
1996 $10.00 $.40 $.16 $.56 $(.25)
1997 10.31 .63 .30 .93 (.62)
Class 2 (4)
1997 10.11 .35 .46 .81 (.31)
High-Yield Bond Fund
Class 1
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)
1997 14.51 1.29 .43 1.72 (1.27)
Class 2 (4)
1997 14.28 .69 .61 1.30 (.63)
U.S. Government/AAA-Rated Securities Fund
Class 1
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)
1997 11.29 .76 (.07) .69 (.80)
Class 2 (4)
1997 10.83 .38 .33 .71 (.37)
Cash Management Fund
Class 1
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)
1997 11.12 .57 (.01) .56 (.55)
Class 2 (4)
1997 11.07 .28 .03 .31 (.26)
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)
- --------- --------- --------- --------- --------- ---------
Global Growth Fund (2)
Class 1
1997 - $ (.03) $10.62 6.45% (3) $80
Class 2 (4)
1997 - (.02) 10.61 6.28 (3) 46
Growth Fund
Class 1
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
1997 (3.02) (3.29) 50.12 24.57 4,671
Class 2 (4)
1997 - (.12) 50.09 23.73 (3) 75
International Fund
Class 1
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
1997 (.62) (.89) 16.07 9.52 2,612
Class 2 (4)
1997 - (.16) 16.06 2.20 (3) 48
Growth Income Fund
Class 1
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
1997 (2.55) (3.27) 39.97 22.92 6,430
Class 2 (4)
1997 - (.35) 39.94 18.18 (3) 157
Asset Allocation Fund
Class 1
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
1997 (.97) (1.51) 16.16 17.90 1,393
Class 2 (4)
1997 - (.26) 16.15 13.80 (3) 42
Bond Fund (5)
Class 1
1996 - $(.25) $10.31 5.74% (3) $ 77
1997 - (.62) 10.62 9.36 132
Class 2 (4)
1997 - (.31) 10.61 8.09 (3) 12
High-Yield Bond Fund
Class 1
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
1997 - (1.27) 14.96 12.45 765
Class 2 (4)
1997 - (.63) 14.95 9.20 (3) 21
U.S. Government/AAA-Rated Securities Fund
Class 1
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
1997 - (.80) 11.18 6.49 471
Class 2 (4)
1997 - (.37) 11.17 6.65 (3) 7
Cash Management Fund
Class 1
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
1997 - (.55) 11.13 5.21 226
Class 2 (4)
1997 - (.26) 11.12 2.87 (3) 14
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
- --------- --------- --------- --------- ---------
Global Growth Fund (2)
Class 1
1997 0.44% (3) .80% (3) 3.70 c 13.22% (3)
Class 2 (4)
1997 .56 (3) .56 (3) 3.70 13.22 (3)
Growth Fund
Class 1
1993 0.50% 0.86% 6.43 c 20.40%
1994 .49 .78 6.09 29.58
1995 .47 .92 5.91 35.47
1996 .44 .61 5.42 30.88
1997 .42 .59 4.81 45.14
Class 2 (4)
1997 .37 (3) .08 (3) 4.81 45.14
International Fund
Class 1
1993 0.96% 1.75% .23 c 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
1997 .67 1.56 .41 50.12
Class 2 (4)
1997 .53 (3) .34 (3) .41 50.12
Growth Income Fund
Class 1
1993 0.49% 2.66% 7.02c 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
1997 .38 2.01 4.87 37.55
Class 2 (4)
1997 .35 (3) .93 (3) 4.87 37.55
Asset Allocation Fund
Class 1
1993 0.55% 4.66% 6.85c 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
1997 .47 3.63 4.98 34.14
Class 2 (4)
1997 .40 (3) 1.81 (3) 4.98 34.14
Bond Fund (5)
Class 1
1996 .52% (3) 6.18% (3) - 32.83% (3)
1997 .55 6.63 - 52.93
Class 2 (4)
1997 .44 (3) 3.50 (3) - 52.93
High-Yield Bond Fund
Class 1
1993 0.56% 8.18% - 34.05%
1994 .54 9.37 - 38.46
1995 .54 10.12 - 31.73
1996 .53 9.27 - 44.81
1997 .51 8.92 - 50.22
Class 2 (4)
1997 .43 (3) 4.92 (3) - 50.22
U.S. Government/AAA-Rated Securities Fund
Class 1
1993 0.55% 6.42% - 21.69%
1994 .54 6.69 - 45.21
1995 .54 7.37 - 30.11
1996 .53 7.33 - 30.45
1997 .52 6.73 - 53.80
Class 2 (4)
1997 .44 (3) 3.45 (3) - 53.80
Cash Management Fund
Class 1
1993 0.51% 2.57% - -
1994 .49 3.60 - -
1995 .49 5.37 - -
1996 .47 4.94 - -
1997 .47 4.99 - -
Class 2 (4)
1997 .41 (3) 2.80 (3) - -
(1) Brokerage
commissions paid on
portfolio transactions
increase the cost of
securities purchased
or reduce the proceeds
of securities sold,
and are not separately
reflected in the funds'
statement of
operations. Shares
traded on a principal
basis (without
commissions), such as
most over-the-counter
and fixed-income
transactions, are
excluded. Generally,
non-U.S. commissions
are lower than U.S.
commissions when
expressed as cents per
share but higher when
expressed as a
percentage of
transactions because
of the lower per-share
prices of many
non-U.S. securities.
(2) Commenced
operations April 30,
1997.
(3) Based on operations
for the period shown
and, accordingly, not
representative of a
full year's operations.
(4) Shares offered for
sale commencing
April 30, 1997.
(5) Commenced operations
January 2, 1996
</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 Global
Growth Fund, 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, 1997, 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, 1997 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 9, 1998
