AMERICAN VARIABLE INSURANCE SERIES
1998 ANNUAL REPORT
FOR THE YEAR ENDED NOVEMBER 30
CULTIVATING AN INVESTMENT GARDEN
[photos: part of a plant; packet of seeds; seeds]
FUND RESULTS AT A GLANCE
American Variable Insurance Series(r)
American Variable Insurance Series is the underlying investment vehicle for the
American Legacy III variable annuity.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Total Returns
periods ended November 30, 1998
5-Year Average 10-Year Average
1-Year Annual Compound Annual Compound
Total Return Return Return
16 Global Growth Fund 24.06% +19.04 -
(since 4/30/97)
21 Global Small -8.49 - -
Capitalization Fund
(since 4/30/98)
26 Growth Fund +25.97 19.66 18.17
31 International Fund +16.63 +12.53 +10.55*
(since 5/1/90)
37 Growth-Income Fund +14.49 +18.28 +15.40
43 Asset Allocation Fund 12.05 14.83 +12.06*
(since 8/1/89)
51 Bond Fund (since 4.85 + 6.66* -
1/2/96)
58 High-Yield Bond Fund +1.18 +7.65 +10.42
65 U.S. Government/ +8.46 +5.69 +7.98
AAA-Rated
Securities Fund
69 Cash Management +4.92 +4.66 +5.00
Fund
*Reflects results for the lifetime of the fund, which is
shorter than the complete period.
Total Returns
periods ended December 31, 1998
5-Year 10-Year
Average Average
1-Year Annual Annual
Compound Compound
Total Return Return Return
16 Global Growth Fund +28.75% +22.03%* -
(since 4/30/97)
21 Global Small +2.47* - -
Capitalization Fund
(since 4/30/98)
26 Growth Fund +35.24 +21.46 +18.83%
31 International Fund +20.92 +12.00 +11.05*
(since 5/1/90)
37 Growth-Income Fund +18.09 +18.84 +15.67
43 Asset Allocation +12.94 +15.02 +12.16*
Fund(since 8/1/89)
51 Bond Fund +4.11 + 6.51* -
(since 1/2/96)
58 High-Yield Bond Fund +0.27 +7.50 +10.35
65 U.S. Government/ +7.93 +5.68 +8.00
AAA-Rated
Securities Fund
69 Cash Management +4.90 +4.70 +4.98
Fund
*Reflects results for the lifetime of the fund, which is
shorter than the complete period.
</TABLE>
This table shows the investment results for Class 2 shares of the funds in
American Variable Insurance Series. Class 2 shares began operations on April
30, 1997. Results that encompass periods prior to April 30, 1997, assume a
hypothetical investment in Class 1 shares, and include deduction of the 0.25%
annual expense for Class 2 shares under the series' Plan of Distribution. The
variable annuity and life insurance contracts that use the series' funds
contain certain fees and expenses not reflected here. Investment results
through November 30, 1998, are through the close of our most recent fiscal
year. Investment results as of December 31, 1998, are as of the end of the most
recent calendar quarter.
As of December 31, 1998, the Cash Management Fund's annualized seven-day yield
was 5.26%.
FIGURES SHOWN ARE PAST RESULTS. SHARE PRICES AND RETURNS WILL VARY, SO YOU MAY
LOSE MONEY. INVESTING FOR SHORT PERIODS MAKES LOSSES MORE LIKELY. INVESTMENTS
ARE NOT FDIC-INSURED, NOR ARE THEY DEPOSITS OF OR GUARANTEED BY A BANK OR ANY
OTHER ENTITY. INVESTING OUTSIDE THE UNITED STATES IS SUBJECT TO ADDITIONAL
RISKS, SUCH AS CURRENCY FLUCTUATIONS AND POLITICAL INSTABILITY, WHICH ARE
DETAILED IN THE PROSPECTUS.
ABOUT OUR COVER: With 10 investment options and a wide range of features and
services, American Legacy helps contractholders sow the seeds of a strong
financial future.
DEAR INVESTORS:
This report covers the 1998 fiscal year - the 12 months ended November 30 - for
American Variable Insurance Series, which serves as the underlying investment
vehicle for the American Legacy variable annuities and other insurance
products.
Financial markets provided a study in contrasts during fiscal 1998. In our
report to you six months ago, we remarked that, with investors mostly sanguine
about the Asian crisis, stock prices in most major markets had soared to
impressive heights. Almost immediately afterward, the tide turned dramatically.
Investors grew skittish when it became increasingly apparent that Asia's
difficulties had deeper roots than suspected and had begun to spread. As fresh
currency turmoil beset first Russia and then Latin America, global stock
markets plummeted. Standard & Poor's 500 Composite Index, an unmanaged proxy
for the largest U.S. stocks, fell almost 20% from mid-July to the end of
August, while international stocks and those of smaller companies retreated as
well. Then, just as investors began to resign themselves to a gloomy winter,
stock markets staged a turnaround, rising from
the ashes of the summer downturn to regain most or all of their lost ground.
Most major markets finished the fiscal year higher than where they began, but
the fits and starts of the past year may have been a warning sign about what
may lie ahead. Indeed, there are indications that the fallout of the global
slowdown has begun to impact our record peacetime expansion. Although the U.S.
economy continues to expand, it is doing so at a less vigorous pace than in
recent years. Shrinking demand in Asia and the arrival of low-cost imports to
the United States have begun to soften corporate earnings. While that is
keeping inflation fears at bay and interest rates low, the net effect is a less
buoyant U.S. economy. Meanwhile, it remains to be seen whether the historic
impeachment proceedings in Washington will have repercussions on financial
markets.
One of the benefits of investing for the long term is that it allows us to make
carefully reasoned judgments rather than react emotionally. As we evaluate
events, we try to be mindful not only of their immediate consequences, but of
the underlying patterns that may influence the fortunes of the companies and
regions in which we invest on your behalf.
[Begin Sidebar]
GLOBAL GROWTH FUND
Where the Fund's Assets Are Invested
(as of November 30, 1998)
<TABLE>
<CAPTION>
<S> <C>
Percent of
Net Assets
THE AMERICAS
United States 33.5%
Canada 3.8
Mexico 3.0
Argentina 1.5
Other Americas .4
42.2
EUROPE
United Kingdom 11.1
Germany 4.8
Sweden 3.8
France 2.6
Italy 2.5
Spain 2.4
Finland 1.1
Norway .6
Denmark .5
Greece .5
Netherlands .5
Portugal .5
Other Europe .2
31.1
ASIA/PACIFIC
Japan 7.4
Australia 3.5
People's Republic of China .5
Other Asia .3
11.7
OTHER COUNTRIES 1.3
Cash & Equivalents 13.7
Total 100.0%
</TABLE>
[End Sidebar]
Here are brief comments on each of the funds:
THE GLOBAL GROWTH FUND posted a substantial 24.1% increase during its first
full fiscal year. The fund, which can invest virtually anywhere in the world,
was well-positioned to benefit in the United States and Europe, two regions
where stock prices rose the most (see table on page 1). In the U.S., stock
prices increased 25% for the 12 months, even accounting for the decline in late
summer.* In Europe every market but Norway rose. Stock markets in the United
Kingdom gained 19%, Germany 32%, France 41% and Finland a remarkable 77%.
Elsewhere in the world, the news was less propitious. Stock prices declined in
Japan (-4%), where efforts to stimulate an economic recovery have thus far been
frustrated by a credit crunch in the banking system; other countries such as
New Zealand (-25%), Mexico (-32%) and China (-39%) also fared poorly. With a
relatively small exposure to the world's hardest hit markets, though, the
fund's results were not hampered by the declines. At the close of the period,
the fund held stocks of 111 companies based in 25 countries. Many are recent
additions: The market downturn provided good buying opportunities for a number
of companies we believe have excellent prospects but which had been somewhat
overvalued in the stock market. Cash and equivalents account for about 14% of
net assets, providing additional buying reserves and a cushion against
declines.
*Market returns are based on MSCI indexes, which track stock markets in
individual countries, and are expressed in dollar terms with dividends
reinvested.
[Begin Sidebar]
GLOBAL SMALL
CAPITALIZATION FUND
Where the Fund's Assets Are Invested
(as of November 30, 1998)
<TABLE>
<CAPTION>
<S> <C>
Percent of
Net Assets
THE AMERICAS
United States 49.4%
Canada 4.3
Argentina 1.8
Mexico 1.6
Chile .9
58.0
EUROPE
United Kingdom 3.6
Germany 2.1
France 1.0
Turkey .9
Denmark .7
Ireland .7
Sweden .7
Switzerland .6
Other Europe .9
11.2
Asia/Pacific
Australia 2.2
Japan 2.1
Singapore 1.8
Hong Kong .9
Philippines .5
7.5
OTHER COUNTRIES 1.9
Cash & Equivalents 21.4
Total 100.0%
</TABLE>
[End Sidebar]
THE GLOBAL SMALL CAPITALIZATION FUND, the series' newest investment option,
began life near what proved to be the year's market high for small-company
stocks. The market rout took the sector 30% lower from its high before
bottoming out in October, as measured by the Salomon Smith Barney World
Smallcap Index, which tracks stocks in 22 countries with market capitalizations
between $100 million and $1.2 billion. While prices have since begun to
recover, at November 30 the fund was still off 8.5% from its inception on April
30. It is always disappointing to see the value of an investment decline, but
we believe there is a silver lining to this cloud. Prices of small-company
stocks have fallen to levels that offer the best value, relative to larger
companies, in a quarter century; this has enabled us to buy promising companies
at what may be bargain-basement prices. As of November 30, the portfolio held
stocks of 93 companies. Many of these are specialized technology firms, such as
PMC-Sierra, which makes communications semiconductors for the networking
industry, and Sanmina, which assembles circuit boards for electronics and
telecommunications systems. Other holdings include The Cheesecake Factory, a
U.S. restaurant chain, and Imax, a producer of film and equipment for special
projection movies. Roughly half of net assets are invested in U.S.-based
companies, with about 30% abroad (see table above). Given the uncertainty
during the period, we maintained a fairly cautious stance, keeping 21% of net
assets in cash and equivalents. As the past seven months have made abundantly
clear, smaller company stocks are typically more volatile than their larger
counterparts. The upside, however, is a greater potential for growth over
longer, more meaningful periods.
[Begin Sidebar]
INTERNATIONAL FUND
Where the Fund's Assets Are Invested
(as of November 30, 1998)
<TABLE>
<CAPTION>
<S> <C>
Percent of
Net Assets
EUROPE
United Kingdom 14.3%
France 8.4
Germany 7.9
Italy 6.6
Finland 5.6
Switzerland 5.3
Spain 4.5
Netherlands 4.4
Sweden 4.1
Portugal 2.3
Luxembourg 1.6
Norway 1.3
Other Europe .5
66.8
ASIA/PACIFIC
Japan 9.0
Australia 4.4
Philippines 1.1
Hong Kong .7
People's Republic of China .6
Other Asia/Pacific .9
16.7
THE AMERICAS
Canada 3.7
Mexico 3.0
Argentina .5
Other Americas 1.0
8.2
OTHER COUNTRIES 2.2
Cash & Equivalents 6.1
Total 100.0%
</TABLE>
[End Sidebar]
THE GROWTH FUND was the series' biggest gainer, increasing 25.0% for the 12
months ended November 30. The fund's primary objective is growth of capital,
and we are pleased to note that the majority of holdings appreciated in price.
That was especially true for media-related companies. Cable television
providers, such as CSC Holdings (+102%) and Comcast (+74%), have emerged from a
difficult period of reregulation, while entertainment conglomerates such as
Viacom (+90%) and Time Warner (+82%) consolidated gains from recent mergers and
acquisitions. At the other end of the spectrum, a number of technology
companies are still struggling with reduced demand from Asia and an inventory
"correction" working its way through the industry. Silicon Graphics (-7%), LSI
Logic (-33%) and National Semiconductor (-57%) ended the year lower, extending
earlier declines. Not all technology companies declined, however: Amid signs
that demand may be picking up, stock prices rose for Texas Instruments (+55%)
and Micron Technology (+66%). At fiscal year-end, 92% of the portfolio was held
in the stocks of 143 companies, with the balance in cash and equivalents.
THE INTERNATIONAL FUND rose 16.6% for fiscal 1998, mostly on the strength of
its Europe-based investments (see table at left). Stock prices in Europe fed
off a heady combination of strong corporate earnings, a wave of merger
announcements and optimism about the upcoming monetary union. Despite the
frenzied selling that hobbled markets in late summer, losses were more than
offset by gains made during the rest of the year. Telecommunications-related
issues once again posted extraordinary increases. Among the fund's larger
holdings, these included the Scandinavian mobile phone giants Nokia (+144%) and
Ericsson (+36%), as well as service providers TELECEL (+114%) of Portugal,
Deutsche Telekom (+39%) and Spain's Telefonica (+63%). Olivetti, the fund's
sixth-largest holding, appreciated an astonishing 368% in price due to
escalating profits from its telecommunications business. On the other side of
the ledger, a number of our Japanese and Latin American securities declined in
price. We have trimmed our exposure to the latter to around 5% of net assets
from about 10% a year ago. Among companies that were sold were Telecomunicacoes
Brasileiras and ELETROBRAS, two long-time Brazilian holdings that have made
considerable contributions to past results.
THE GROWTH-INCOME FUND continued to do well, posting a 12-month increase of
14.5%. The fund, which emphasizes established U.S. companies with the potential
for rising dividends, was generally well-served by a robust economic
environment. Consumer spending rose, boosting revenues for retailers; inflation
hovered around 1.5%, keeping interest rates low; and a spate of well-publicized
merger announcements helped inspire optimism among investors about the
direction of stock prices. Among industries, pharmaceutical firms and a number
of technology companies were especially successful. By year-end, the
portfolio's exposure to the latter had more than doubled to become the largest
sector of concentration. Oracle (+3%) became the fund's single largest holding
when we significantly increased the fund's position in the stock near its low
in October. Texas Instruments, our second-largest holding, was up 55% for the
year. Drug concerns constitute the fund's second-largest industry; we would
note among them Schering-Plough (+70%), Merck (+64%), Warner-Lambert (+62%) and
Pfizer (+53%). Other areas that did well were telephone service providers and
broadcasting companies. The fund was restrained by its fairly large positions
in chemical, energy and paper stocks, industries that have seen profits
contract as the difficulties in Asia deepened. Overall, about 30 industries and
184 companies are represented in the portfolio. About 11% is held in cash and
equivalents.
THE ASSET ALLOCATION FUND had a 12.0% return for the year. The fund is managed
as though it constitutes the complete portfolio of a prudent investor, with a
balanced combination of carefully selected securities from all three major
asset classes. At fiscal year-end, 61% of net assets were in equity securities,
30% in bonds and 9% in cash and equivalents, reflecting the relative growth
potential of each market. The equity portion comprises stocks of 80 companies
in a wide range of industries. Among larger positions, gainers included Century
Telephone Enterprises (+86%), Rentokil (+53%), IBM (+51%) and Carnival (+28%).
A number of larger holdings declined in price, however, trimming overall
returns somewhat. These included Citigroup (-1%), the entity created from the
recent merger of Citicorp and Travelers; Praxair (-13%), a producer of
industrial gases, and Atlantic Richfield (-18%), which was hurt by falling oil
prices. The bond component is invested in a combination of U.S. Treasuries,
federal agency obligations and corporate bonds. With most of the appreciation
in the bond market occurring on the longer end of the yield curve, we extended
the average effective maturity of the bonds in the portfolio to take advantage
of rising prices. (The longer a bond's maturity, the more sensitive its price
tends to be to interest-rate changes.) On November 30, the fund's average
effective maturity was 8.4 years, up from 7.1 years 12 months ago.
THE BOND FUND rose 4.9% for the 12 months ended November 30. Most of the fund's
gain occurred in the first half of the year, when low inflation, a flourishing
economy and a flight to bonds by anxious stock investors benefited virtually
every sector of the U.S. bond market. Later in the year, however, that benefit
narrowed considerably. With U.S. Treasury securities the darlings of the bond
market and the Asian crisis throwing business growth in doubt, corporate bonds
suffered as investors grew concerned about issuers making good on their debt.
Because bond market sectors tend to move cyclically, the portfolio is well
diversified among many types of bonds. Longer term, that helps cushion the fund
against drops in a single sector as well as take advantage of upturns in each.
The lion's share is held in corporate bonds, including a number of lower rated
instruments that offer higher yields to compensate for the greater risk of
default. U.S. Treasuries and federal agency bonds account for roughly
one-quarter of the portfolio, while a small portion, about 4% of assets, is
invested in bonds denominated in non-U.S. currencies. About 10% is held in cash
and equivalents. We are also pleased to note that as of November 30, fund
assets had increased more than 50% from a year earlier, to more than $230
million.
THE HIGH-YIELD BOND FUND registered a small 1.2% gain. After a long span of
extraordinary returns, lower rated bonds suffered a setback in the latter half
of the year. These instruments occupy a unique position in the fixed-income
universe. They are sensitive not only to interest-rate swings, but also to the
rise and fall of a company's fortunes. In that regard, they share many of the
characteristics of stocks and were thus plagued by some of the same fundamental
concerns that bedeviled equity prices in late summer: fears of recession,
slowing revenues, tighter profit margins and the increased possibility of
default. In that environment, demand for lower rated bonds all but evaporated.
If the fund was not immune to the decline - the downturn was indiscriminate,
taking down many fundamentally healthy issuers - it did bring a number of
promising securities within an attractive price range. At the time of this
writing, a recovery may be under way: The sector rallied in November on the
heels of the Federal Reserve's interest-rate cuts, and liquidity, or the ease
with which securities are traded, has improved sharply.
THE U.S. GOVERNMENT/AAA-RATED SECURITIES FUND made substantial progress,
increasing 8.5% for the 12 months. U.S. Treasury securities moved higher as
anxious investors clamored for the relative safety of dollar-denominated
government bonds. Prices received an additional boost from a budget surplus
that has slowed the pace of bond issuance by the federal government, leading to
a shrinking supply of securities in the face of renewed demand. With scant
evidence of inflation on the economic horizon, yields on 30-year Treasuries,
which serve as the primary benchmark for U.S. interest rates, dropped from
6.04% at the beginning of the period to 5.08% at its close. (Bond prices and
yields move in opposite directions.) Meanwhile, mortgage-backed securities,
which account for about 63% of the portfolio, did less well during the year.
Low interest rates and a strong economy led to a spate of refinancings and
record reissuance of new securities last year, creating a surplus in the
marketplace. That dampened prices somewhat, but it also offered buying
opportunities, and we have been adding selectively to our mortgage holdings.
THE CASH MANAGEMENT FUND provided investors with a 4.9% gain. The Fed lowered
short-term rates three times this fall in an effort to loosen credit markets
and stave off recessionary pressures caused by weakness abroad. Managed for
relative stability and a reasonable rate of return, the fund can be an
important diversification tool as well as a base from which to make investments
into other funds in the series. The fund maintains a high-quality orientation
by concentrating its assets in top-grade commercial paper (short-term loans to
major, well-known corporations), all of which carry the highest credit ratings
from Moody's or Standard & Poor's, and federal agency discount notes
(short-term loans to federal government agencies).
We look forward to reporting to you again in six months.
Cordially,
/s/Thomas E. Terry /s/James F. Rothenberg
Thomas E. Terry James F. Rothenberg
Chairman of the Board President
American Variable Insurance American Variable Insurance
Series Series
January 14, 1999
HOW A $10,000 INVESTMENT HAS GROWN
These charts show the growth of a $10,000 investment over the past 10 years -
or lifetime, if shorter than 10 years - of each of the investment portfolios in
American Variable Insurance Series (with the exception of the Cash Management
Fund, which is managed to provide preservation of principal). The tables below
the charts show the average annual compound returns on an investment over
various periods. The funds in American Variable Insurance Series have no sales
charges. However, the variable annuity and life insurance contracts that use
the series' funds contain certain fees and expenses not reflected here.
GLOBAL GROWTH FUND
[begin mountain chart]
Investments primarily in stocks
Scale adjusted for
shorter time period
$13,334
MSCI World Index/1/
$13,185
Global Growth Fund
$10,237
Consumer Price Index/2/
<TABLE>
<CAPTION>
<S> <C> <C> <C>
End of Month Global Growth MSCI Consumer
Fund World Index/1/ Price Index/2/
4/97 10,000 10,000 10,000
5/97 10,420 10,619 9,994
8/97 10,580 10,887 10,037
11/97 10,628 11,072 10,081
2/98 11,900 12,304 10,106
5/98 12,524 12,792 10,162
8/98 11,282 11,336 10,200
11/98 13,185 13,334
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Ended 11/30/98 12/31/98
One Year +24.06% +28.75%
Lifetime (since 4/30/97) +19.04 +22.03
</TABLE>
[end chart]
GLOBAL SMALL CAPITALIZATION FUND
[begin mountain chart]
Investments primarily in stocks
Scale adjusted for
shorter time period
$10,092
Consumer Price Index/2/
$9,151
Global Small Capitalization Fund
$8,563
Salomon Smith Barney World Smallcap Index
<TABLE>
<CAPTION>
<S> <C> <C> <C>
End of Month Global Small Consumer Salomon
Capitalization Price Index/2/ Smith Barney
Fund World Smallcap
Index
4/98 10,000 10,000 10,000
5/98 9,479 10,018 9,716
6/98 9,543 10,031 9,536
7/98 9,152 10,043 8,997
8/98 7,797 10,055 7,532
9/98 7,935 10,068 7,760
10/98 8,528 10,092 8,195
11/98 9,151 8,563
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Ended 11/30/98 12/31/98
Lifetime -8.49% +2.47%
(total return since 4/30/98)
</TABLE>
[end chart]
GROWTH FUND
[begin mountain chart]
Investments primarily in stocks
$55,755
S&P 500 Index
$53,084
Growth Fund
$13,633
Consumer Price Index/2/
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Year ended Growth S&P 500 Consumer
Nov. 30 Fund Index Price Index/2/
1988 10,000 10,000 10,000
1989 13,847 13,083 10,466
1990 12,713 12,617 11,122
1991 15,831 15,193 11,455
1992 18,774 17,997 11,804
1993 21,642 19,810 12,120
1994 22,211 20,022 12,444
1995 29,984 27,422 12,768
1996 34,182 35,066 13,184
1997 42,477 45,082 13,425
1998 53,084 55,755
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Ended 11/30/98 12/31/98
One Year +24.97% +35.24%
Five Years +19.66 +21.46
10 Years +18.17 +18.83
Lifetime (since 2/8/84) +16.75 +17.45
</TABLE>
[end chart]
INTERNATIONAL FUND
Investments primarily in stocks
$23,657
International Fund
$19,249
MSCI EAFE Index/3/
$12,723
Consumer Price Index/2/
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Year ended International MSCI EAFE Consumer
November 30 Fund Index/3/ Price Index/2/
1989 10,000 10,000 10,000
1990 9,477 10,380 9,483
1991 10,270 10,691 10,310
1992 10,333 11,016 9,508
1993 13,109 11,311 11,852
1994 14,444 11,614 13,646
1995 15,956 11,916 14,724
1996 18,566 12,304 16,504
1997 20,284 12,529 16,483
1998 23,657 19,249
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Ended 11/30/98 12/31/98
One Year +16.63% +20.92%
Five Years +12.53 +12.00
Lifetime (since 5/1/90) +10.55 +11.05
</TABLE>
[end chart]
GROWTH-INCOME FUND
[begin mountain chart]
Investments primarily in stocks
$55,755
S&P 500 Index
$41,872
Growth-Income Fund
$13,633
Consumer Price Index/2/
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Year ended Growth- S&P 500 Consumer
Nov. 30 Income Index Price Index/2/
Fund
1988 10,000 10,000 10,000
1989 12,683 13,083 10,466
1990 11,974 12,617 11,122
1991 14,065 15,193 11,455
1992 16,252 17,997 11,804
1993 18,090 19,810 12,120
1994 18,616 20,022 12,444
1995 24,714 27,422 12,768
1996 29,829 35,066 13,184
1997 36,572 45,082 13,425
1998 41,872 55,755
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Ended 11/30/98 12/31/98
One Year +14.49% +18.09%
Five Years +18.28 +18.84
10 Years +15.40 +15.67
Lifetime (since 2/8/84) +15.58 +15.82
</TABLE>
[end chart]
BOND FUND
[begin mountain chart]
Investments primarily in bonds
Scale adjusted for
shorter time period
$12,312
Salomon Smith Barney BIG Index/4/
$12,064
Bond Fund
$10,684
Consumer Price Index/2/
<TABLE>
<CAPTION>
<S> <C> <C> <C>
End of month Bond Fund Consumer Salomon
Price Index/2/ Smith Barney
BIG Index/4/
1/96 10,000 10,000 10,000
2/96 9,846 10,091 9,897
5/96 9,740 10,202 9,748
8/96 9,945 10,248 9,886
11/96 10,550 10,332 10,454
2/97 10,719 10,397 10,413
5/97 10,844 10,430 10,554
8/97 11,258 10,476 10,875
11/97 11,505 10,521 11,246
2/98 11,823 10,547 11,498
5/98 11,979 10,606 11,714
8/98 11,631 10,645 12,017
11/98 12,064 12,312
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Ended 11/30/98 12/31/98
One Year +4.85% +4.11%
Lifetime (since 1/2/96) +6.66 +6.51
</TABLE>
[end chart]
U.S. GOVERNMENT/AAA-RATED SECURITIES FUND
[begin mountain chart]
Investments primarily in bonds
$23,998
Salomon Smith Barney Treasury/Govt.-Sponsored Mortgage Index
$21,548
U.S. Govt./AAA-Rated Securities Fund
$13,633
Consumer Price Index/2/
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Year ended U.S. Govt./ Smith Barney Consumer
Nov. 30 AAA-Rated Treasury/ Price Index/2/
Securities Govt.-Sponsored
Fund Mortgage
Index
1988 10,000 10,000 10,000
1989 11,039 11,427 10,466
1990 11,778 12,348 11,122
1991 13,290 14,067 11,455
1992 14,548 15,308 11,804
1993 16,338 16,909 12,120
1994 15,543 16,425 12,444
1995 17,782 19,240 12,768
1996 18,709 20,379 13,184
1997 19,867 21,915 13,425
1998 21,548 23,998
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Ended 11/30/98 12/31/98
One Year +8.46% +7.93%
Five Years +5.69 +5.68
10 Years +7.98 +8.00
Lifetime (since 12/1/85) +7.95 +7.92
</TABLE>
[end chart]
ASSET ALLOCATION FUND
[begin mountain chart]
Investments in both stocks and bonds
$43,239
S&P 500 Index
$29,934
Asset Allocation Fund
$21,759
Salomon Smith Barney BIG Index/4/
$13,183
Consumer Price Index/2/
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Year ended Asset S&P 500 Consumer Salomon
Nov. 30 Allocation Index Price Smith
Fund Index/2/ Barney
BIG
Index/4/
1,988 10,000 10,000 10,000 10,000
1,989 10,162 10,147 10,121 10,233
1,990 9,892 9,785 10,756 11,015
1,991 11,598 11,783 11,077 12,602
1,992 13,145 13,958 11,415 13,749
1,993 14,494 15,364 11,720 15,261
1,994 14,373 15,528 12,034 14,797
1,995 18,555 21,267 12,347 17,432
1,996 21,957 27,194 12,749 18,475
1,997 25,823 34,962 12,982 19,874
1,998 28,934 43,239 21,759
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Ended 11/30/98 12/31/98
One Year +12.05% +12.94%
Five Years +14.83 +15.02
Lifetime (since 8/1/89) +12.06 +12.16
</TABLE>
[end chart]
HIGH-YIELD BOND FUND
[begin mountain chart]
Investments primarily in bonds
$32,045
Salomon Smith Barney Long-Term High-Yield Index
$26,937
High-Yield Bond Fund
$24,287
Salomon Smith Barney BIG Index/4/
$13,633
Consumer Price Index/2/
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Year ended High-Yield Consumer Salomon Salomon
Nov. 30 Bond Fund Price Smith Smith
Index/2/ Barney Barney
BIG Long-Term
Index/4/ High-Yield
Index
1,988 10,000 10,000 10,000 10,000
1,989 11,039 10,466 11,422 9,979
1,990 11,266 11,122 12,295 8,978
1,991 14,164 11,455 14,066 12,904
1,992 15,970 11,804 15,346 15,379
1,993 18,636 12,120 17,034 18,540
1,994 17,515 12,444 16,516 17,758
1,995 20,923 12,768 19,457 22,729
1,996 23,735 13,184 20,621 25,002
1,997 26,624 13,425 22,183 29,107
1,998 26,937 24,287 32,045
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Ended 11/30/98 12/31/98
One Year + 1.18% + 0.27%
Five Years + 7.65 + 7.50
10 Years +10.42 +10.35
Lifetime (since 2/8/84) +11.76 +11.71
</TABLE>
[end chart]
The indexes are unmanaged and do not reflect sales charges, commissions or
expenses.
Past results are not predictive of future results.
/1/Morgan Stanley Capital International World Index
/2/Computed from data supplied by U.S. Department of Labor, Bureau of Labor
Statistics.
/3/Morgan Stanley Capital International EAFE(r) (Europe, Australasia, Far East)
Index
/4/Salomon Smith Barney Broad Investment-Grade (BIG) Bond Index
CULTIVATING AN INVESTMENT GARDEN
SOWING THE SEEDS OF A DIVERSIFIED PORTFOLIO
Whether you're landscaping a large estate or planting a flower box on a
building rooftop, any experienced horticulturist will tell you that the secret
to a well-laid garden is balance. Different plants blossom during different
seasons. Gardeners must choose a combination of blooms to achieve a
long-lasting array of colors and textures.
Successful investors, like skilled gardeners, make balance a fundamental part
of building their investment portfolios. The practice of asset allocation -
that is, diversifying across different types of investments - can help reduce
risk while exposing investors to a wide range of opportunities.
One of the advantages of your American Legacy variable annuity is that it
offers under a single plan a variety of "seeds" to help you plant for the
future. With 10 variable funds to choose from, investors can tailor a portfolio
that exposes them to a variety of financial markets - U.S. stocks and bonds,
international securities and money market instruments - which move at different
rhythms and carry distinct risk/reward relationships. Contract owners may also
select from two fixed accounts that guarantee a fixed rate of return.*
Each fund is itself diversified because each owns dozens of securities. Most
contract owners, however, find that investing in a number of funds with
different objectives can be a sensible way to seek more consistent returns over
time. They also find that, just as planting seeds requires patience, a
long-term perspective is important when setting financial goals.
Your American Legacy contract offers another type of diversification as well: a
broad spectrum of features and benefits to help you customize your retirement
plan. These include the advantage of tax deferral, a choice of payout options,
several dollar cost averaging programs and the security of a guaranteed minimum
death benefit.*
*Guarantees are based on the claims-paying ability of The Lincoln National Life
Insurance Company, which issues the American Legacy contracts. Dollar cost
averaging cannot assure a profit or protect against loss.
On the following pages, you'll meet several real-life American Legacy contract
owners who are cultivating their "investment gardens." While these examples may
help you generate ideas about how best to balance your portfolio, everyone's
needs are unique. Your financial planner can help you create a program that
reflects your own risk tolerance, tax situation and investment time horizon.
[Begin Sidebar]
Spreading investments across different asset classes can help reduce risk while
exposing investors
to a wide range of opportunities.
[End Sidebar]
[Begin Photo Caption]
Bob and Claudia Mendell, Alamo, California
[End Photo Caption]
[photo: packet of seeds]
[Begin Caption]
The Mendells' Portfolio
[End Caption]
[Begin pie chart]
Asset Allocation 33.3%
Global Growth 33.3%
International 33.3%
[End pie chart]
HOW MIGHT YOUR GARDEN GROW?
SEEKING OPPORTUNITIES IN A VARIETY OF MARKETS
As the nutritional director for a hospital in northern California, Claudia
Mendell knows better than most the benefits of diversification. "One of the
first lessons of Health 101," she says, "is that you can't get all your
nutrients from one type of food. You need a balanced diet - many different
foods - to maintain adequate physical growth."
Claudia and her husband Bob view their investment strategy in much the same
way. Both are still working - Bob is director of training for a wine and
spirits company in the heart of vineyard country - but with life expectancies
on the rise, they realize that they have to plan carefully for a retirement
they hope will last a very long time. Their financial adviser helped them set
up a growth-oriented portfolio within American Legacy that emphasizes stocks
but is still diversified among market sectors.
Although U.S. stocks have been unusually strong in recent years, that has not
always been the case. In the past there have been times when bonds or
international stocks have done better. The Mendells are well-positioned to take
advantage of potential gains in all three of these markets, with investments in
American Legacy's Asset Allocation Fund, Global Growth Fund and International
Fund. "There's no crystal ball that can predict which market will do the best
in any given year," says Bob. "By spreading our investments among several of
them, there's a good chance that at least part of our portfolio should do
well."
Diversifying through American Legacy has the unique advantage of tax deferral.
Although the Mendells will pay taxes on earnings they eventually withdraw, the
ability to let all of their money work for them right away can make a big
difference in their overall returns. What's more, when they recently decided to
transfer assets from one fund to another, those exchanges were not only free,
but tax-free.
Of course, as Claudia would note, nutrition encompasses more than diet. It
requires regular exercise, plenty of rest and stress reduction. Similarly,
American Legacy is only one part of the Mendells' financial plan. When they
retire, they intend to draw income from other retirement vehicles first and
leave their Legacy assets untouched for as long as possible to maximize the
tax-deferred growth potential of their diversified portfolio.
[Begin Photo Caption]
Phil and Annie Yarick, Santa Fe, New Mexico
[End Photo Caption]
[Begin Caption]
The Yaricks' Portfolio
[End Caption]
[Begin pie chart]
International 40%
Growth 20%
Growth-Income 20%
Bond 10%
High-Yield Bond 10%
[End pie chart]
[photo: plant branch]
A PORTFOLIO FOR ALL SEASONS MANAGING RISK
The city of Santa Fe, New Mexico, exudes a seamless mix of the Spanish, Mexican
and Native American cultures that have settled here over the centuries. Amid
this high desert community of artists and adobe architecture, Phil and Annie
Yarick are making the most of a well-earned retirement. These transplants from
New Jersey spend their days exploring the rugged terrain of the Pecos
Wilderness, attending the opera and lavishing attention on their irascible
English bulldog, Ryder.
Although Phil and Annie share many interests, when it comes to investing, the
Yaricks find themselves at opposite ends of the risk spectrum. Annie is a
self-described "bury-it-in-a-can-in-the-yard" type, while her husband likes to
"shoot for the moon." Assembling a portfolio that would meet both their
objectives was a challenge, but they have found a balance of funds that allows
them to capture growth opportunities while at the same time helping to diminish
the damage of severe market declines.
Because equities have historically provided the best solution to outpacing
inflation, their financial adviser suggested they concentrate the bulk of their
American Legacy assets in a combination of stock funds - the Growth Fund, the
Growth-Income Fund and the International Fund. That would not only give them a
broad exposure to equity markets around the world, but might also increase the
likelihood that losses in U.S. stocks, for example, could be offset by gains in
non-U.S. markets. (Of course, the Yaricks had to consider the special risks
associated with international investing.)
The rest was divided between the Bond Fund and the High-Yield Bond Fund to help
add the stability Annie sought. Bonds have tended to be less volatile than
stocks, although their returns have been lower. They also respond somewhat
differently to economic circumstances (including the recent Asian crisis).
While asset allocation won't eliminate the risk that their account balance
could go down, it can reduce the probability that severe fluctuations will
impede the long-term progress of their overall portfolio. American Legacy gives
Phil and Annie yet another hedge against market declines: a guaranteed minimum
death benefit, which assures that their contract's beneficiaries will receive
at least the amount of the original investment (less any money already
withdrawn).
[Begin Photo Caption]
Verne and Betty Colburn St. Albans, Vermont (with their granddaughter, Deanna]
[End Photo Caption]
[Begin Caption]
The Colburns' Portfolio
[End Caption]
[Begin pie chart]
Asset Allocation 50%
Growth-Income 25%
Bond 15%
Global Growth 10%
[End pie chart]
ENJOYING THE FRUITS
MEETING MULTIPLE OBJECTIVES WITH A SINGLE PLAN
When Verne Colburn retired two years ago, more than 100 of his former students
surprised him with a rousing musical tribute. It was a fitting capstone to a
three-decade career of bringing music to the schoolchildren of St. Albans,
Vermont, a small town near the U.S.-Canadian border.
It was also time to finally focus on financial goals, since Verne and his wife
Betty, who had been a teacher as well, had a little catching up to do. "With
seven children to raise," Betty explains, "there was very little left to put
away."
Although Social Security and their teachers' pensions would provide some of the
income they needed, they knew it wouldn't be enough to maintain the kind of
lifestyle they hoped to enjoy in retirement. After talking with their financial
adviser, Verne rolled over his 403(b) plan - a 401(k)-type account for
educational institutions - into an American Legacy Individual Retirement
Account. Then, he set up a systematic withdrawal program that would not only
provide enough income to help meet current expenses, but might leave enough to
generate growth for future income.
Because the Colburns needed to begin drawing income right away,* they wanted an
investment that could deliver reasonably consistent returns. Their financial
adviser helped them assemble a fairly conservative portfolio. He used the Asset
Allocation Fund as their core holding, which immediately diversified their
money among three primary asset classes: U.S. stocks, bonds and money market
instruments. He then augmented the growth component with the Growth-Income
Fund, which invests primarily in large U.S. companies, and the Global Growth
Fund, which could take advantage of similar opportunities around the world.
Finally, a portion was allocated to the Bond Fund for current income and
additional stability.
*Contingent deferred sales charges apply in the first seven years after each
payment, but contract owners may withdraw up to 10% of their account value each
year without triggering those charges.
Verne and Betty expect this plan to tide them over for many years to come, and
perhaps one day leave something for a much more valuable legacy: their family.
[photo: packet of seeds]
<TABLE>
AMERICAN VARIABLE INSURANCE SERIES GLOBAL GROWTH FUND
Investment Portfolio, November 30, 1998
<S> <C> <C> <C>
Where the Fund's Assets Are Invested
Percent
Net Asse
--------
The Americas 42.22%
Europe 31.06%
Asia/Pacific 11.70%
Other Countries 1.27%
Cash & Equivalents 13.75%
100.00%
Largest Individual Stocks
Zeneca Group 3.36%
Telefonica 2.45
Pfizer 2.15
Telecom Italia 2.15
Time Warner 2.09
Cendant 2.09
CKS Group 1.92
Viacom 1.88
Rentokil Initial 1.81
Telefonaktiebolaget LM Ericsson 1.79
Market Percent
Number o Value of Net
Stocks (common and preferred) Shares (000) Assets
- ----------------------------------------------------------------------------------------------
TELECOMMUNICATIONS - 12.78%
Telefonica SA (American Depositary Receipts) (Spain) 44,800 $6,244 2.45%
Telecom Italia SpA, nonconvertible savings shares (Italy) 741,100 4,594
Telecom Italia SpA 110,000 890 2.15
Mannesmann AG (Germany) 39,650 4,289 1.68
AirTouch Communications (USA) (1) 69,000 3,946 1.55
Telecom Argentina STET-France Telecom SA, Class B
(American Depositary Receipts) (Argentina) 128,500 3,919 1.54
Deutsche Telekom AG (Germany) 107,500 3,016 1.18
Orange PLC (United Kingdom) (1) 192,000 1,963 .77
Cable & Wireless Communications PLC (United Kingdom) (1) 211,100 1,883 .74
TELECEL - Comunicacoes Pessoais, SA (Portugal) 6,700 1,310 .51
Stet Hellas Telecommunications SA (American Depositary
Receipts) (Greece) (1) 35,300 1,227 .48
China Telecom (Hong Kong) Ltd. (American Depositary
Receipts) (Peoples Republic of China) (1) 31,000 1,227 .48
AT&T Corp. (USA) 18,750 1,168 .46
France Telecom, SA (France) 13,000 903 .35
Nippon Telegraph and Telephone Corp. (Japan) 120 897 .35
Telefonos de Mexico, SA de CV, Class L
(American Depositary Receipts) (Mexico) 12,000 559 .22
Millicom International Cellular SA (Luxembourg) (1) 14,000 467 .18
Compania de Telecomunicaciones de Chile SA
(American Depositary Receipts) (Chile) 15,948 370 .14
BUSINESS & PUBLIC SERVICES - 13.00%
Cendant Corp. (USA) (1) 281,000 5,339 2.09
CKS Group, Inc. (USA) (1) 146,400 4,905 1.92
Rentokil Initial PLC (formerly Rentokil Group PLC)
(United Kingdom) 690,800 4,615 1.81
America Online, Inc. (USA) (1) 45,000 3,940 1.54
Reuters Group PLC (United Kingdom) 383,140 3,699 1.45
Brambles Industries Ltd. (Australia) 123,800 3,025 1.19
Vivendi SA (France) 11,800 2,667 1.05
Waste Management, Inc. (formerly USA Waste
Services, Inc.) (USA) 42,700 1,831 .72
Suez Lyonnaise des Eaux (France) 7,000 1,382 .54
Ratin, A/S Class B (Denmark) 6,300 1,178 .46
Columbia/HCA Healthcare Corp. (USA) 24,000 591 .23
BROADCASTING & PUBLISHING - 10.56%
Time Warner Inc. (USA) 50,500 5,340 2.09
Viacom Inc., Class B (USA) (1) 72,000 4,793 1.88
Fox Entertainment Group, Inc., Class A (USA) (1) 130,000 3,071 1.20
Grupo Televisa, SA, ordinary participation certificates
(American Depositary Receipts) (Mexico) (1) 119,900 3,050 1.19
TV Azteca, SA de CV (American Depositary
Receipts) (Mexico) 400,000 3,000 1.17
News Corp. Ltd. (Australia) 290,467 2,033 .80
ProSieben Media AG (Germany) (1) 36,000 1,725 .68
Fuji Television (Japan) 410 1,633 .64
Ziff-Davis Inc.(USA) (1) 60,000 686 .27
Sinclair Broadcast Group, Inc., Class A (USA) (1) 53,800 663 .26
Tele-Communications, Inc., Series A, TCI Group (USA) (1) 13,800 583 .23
SOFTBANK CORP. (Japan) 6,600 381 .15
HEALTH & PERSONAL CARE - 8.69%
Zeneca Group PLC (United Kingdom) 203,960 8,459
Zeneca Group PLC (American Depositary Receipts) 3,000 126 3.36
Pfizer Inc (USA) 49,150 5,486 2.15
Avon Products, Inc. (USA) 55,800 2,267 .89
Glaxo Wellcome PLC (United Kingdom) 52,900 1,672 .65
Astra AB, Class A (Sweden) 90,000 1,648 .65
Guidant Corp. (USA) 18,000 1,545 .61
Luxottica Group SpA (American Depositary Receipts) (Italy) 75,000 778 .30
Omnicare, Inc. (USA) 7,000 200 .08
ELECTRONIC COMPONENTS - 5.43%
Murata Manufacturing Co., Ltd. (Japan) 82,000 3,212 1.26
Microchip Technology Inc. (USA) (1) 70,000 2,437 .96
Intel Corp. (USA) 20,000 2,152 .84
Rohm Co., Ltd. (Japan) 23,000 1,944 .76
Micron Technology, Inc. (USA) (1) 41,100 1,698 .67
Texas Instruments Inc. (USA) 15,000 1,145 .45
Quantum Corp. (USA) (1) 35,000 774 .30
Altera Corp. (USA) (1) 10,000 491 .19
DATA PROCESSING & REPRODUCTION - 4.74%
Oracle Corp. (USA) (1) 105,000 3,596 1.41
Microsoft Corp. (USA) (1) 28,000 3,416 1.34
PeopleSoft, Inc. (USA) (1) 127,000 2,611 1.02
Computer Associates International, Inc. (USA) 30,000 1,328 .52
Dassault Systemes SA (France) 29,600 1,155 .45
BANKING - 4.40%
Bank of Nova Scotia (Canada) 161,000 3,533 1.39
BankAmerica Corp. (USA) 38,400 2,503 .98
Washington Mutual, Inc. (USA) 60,000 2,325 .91
ForeningsSparbanken AB, Class A (Sweden) 52,000 1,457 .57
Westpac Banking Corp.(Australia) 211,148 1,405 .55
ELECTRICAL & ELECTRONICS - 3.17%
Telefonaktiebolaget LM Ericsson, Class B (Sweden) 165,000 4,583 1.79
Nokia Corp., Class A (American
Depositary Receipts) (Finland) 20,000 1,960 .77
Northern Telecom Ltd. (Canada) 33,400 1,559 .61
AUTOMOBILES - 2.81%
Suzuki Motor Corp. (Japan) 281,000 3,220 1.26
Bayerische Motoren Werke AG (Germany) 2,200 1,699
Bayerische Motoren Werke AG (1) 660 498 .86
Nissan Motor Co., Ltd. (Japan) 570,000 1,760 .69
CHEMICALS - 2.31%
Monsanto Co. (USA) 61,400 2,782 1.09
BOC Group PLC (United Kingdom) 145,000 2,105 .83
Valspar Corp. (USA) 30,000 998 .39
MERCHANDISING - 1.51%
Consolidated Stores Corp. (USA) (1) 113,700 2,445 .96
Cifra, SA de CV (American Depositary Receipts)
(Mexico) (1) 60,000 742 .29
Koninklijke Ahold NV (Netherlands) 19,600 679 .26
LEISURE & TOURISM - 1.46%
Village Roadshow Ltd., Class A,
5.50% preferred shares (Australia) 1,078,30 1,553 .61
Mirage Resorts, Inc. (USA) (1) 65,000 967 .38
Walt Disney Co. (USA) 15,000 483 .19
King World Productions, Inc. (USA) (1) 17,250 470 .18
Carnival Corp., Class A (USA) 7,100 245 .10
RECREATION & OTHER CONSUMER PRODUCTS - 1.30%
EMI Group PLC (United Kingdom) 557,000 3,316 1.30
ELECTRONIC INSTRUMENTS - 1.17%
Applied Materials, Inc. (USA) (1) 40,000 1,550 .61
ADVANTEST CORP. (Japan) 21,600 1,443 .56
MULTI-INDUSTRY - 1.13%
Orkla AS, Class A (Norway) 72,000 1,201 .47
Preussag AG (Germany) (1) 3,000 1,098 .43
Gambro AB, Class A (formerly Incentive AB) (Sweden) 48,000 587 .23
METALS: NONFERROUS - 0.99%
Aluminum Co. of America (USA) 28,000 2,076 .81
Freeport-McMoRan Copper & Gold Inc.,
Class B (USA) 35,000 457 .18
ENERGY SOURCES - 0.96%
Fletcher Challenge Energy (New Zealand) 398,974 840 .33
Woodside Petroleum Ltd. (Australia) 142,000 720 .28
TOTAL, Class B (American Depositary
Receipts) (France) 9,600 587 .23
Shell Transport and Trading Co., PLC (New York
Registered) (United Kingdom) 8,500 309 .12
AEROSPACE & MILITARY TECHNOLOGY - 0.87%
Bombardier Inc., Class B (Canada) 170,000 2,215 .87
MISCELLANEOUS MATERIALS & COMMODITIES - 0.86%
Sealed Air Corp. (USA) (1) 50,000 2,206 .86
APPLIANCES & HOUSEHOLD DURABLES - 0.85%
Sony Corp. (Japan) 29,600 2,167 .85
INSURANCE - 0.63%
Fairfax Financial Holdings Ltd. (Canada) (1) 5,000 1,603 .63
FINANCIAL SERVICES - 0.61%
Shohkoh Fund & Co., Ltd. (Japan) 3,000 990 .39
Credicorp Ltd. (Peru) 50,600 556 .22
ENERGY EQUIPMENT - 0.60%
Schlumberger Ltd. (Netherlands Antilles) 34,200 1,528 .60
BEVERAGES & TOBACCO - 0.58%
Seagram Co. Ltd. (Canada) 25,000 858 .33
Grupo Industrial Emprex-B (Mexico) 150,000 352 .14
Coca-Cola Amatil Ltd. (Australia) 51,820 174 .07
Coca-Cola Beverages PLC (United Kingdom) (1) 50,728 105 .04
GOLD MINES - 0.57%
Anglogold Ltd. (South Africa) 30,000 1,466 .57
REAL ESTATE - 0.54%
Mandamus AB (Sweden) (1) (2) 262,600 1,388 .54
INDUSTRIAL COMPONENTS - 0.49%
NGK Spark Plug Co., Ltd. (Japan) 135,000 1,248 .49
FOOD & HOUSEHOLD PRODUCTS - 0.37%
Raisio Group PLC (Finland) 73,000 946 .37
MACHINERY & ENGINEERING - 0.12%
Kvaerner AS, Class A (Norway) 20,600 311 .12
TEXTILES & APPAREL - 0.06%
Nine West Group Inc. (USA) (1) 12,900 161 .06
MISCELLANEOUS - 0.24%
Other stocks in initial period of acquisition 637 .24
----------------------
TOTAL STOCKS (cost: $194,792,000) 220,208 83.80
----------------------
Principa
Amount
Short-Term Securities (000)
- ------------------------------------------------------------------------------------ -------
CORPORATE SHORT-TERM NOTES - 9.64%
Kellogg Co. 4.97-5.30% 12/4-12/17/1998 3,100 3,094 1.21
Siemens Capital Corp. 5.02% due 1/22/1999 2,800 2,779 1.09
Electricite de France 5.05% due 2/16/1999 2,600 2,572 1.01
General Electric Capital Corp. 5.06% due 12/1/1998 2,500 2,500 .98
Bayer AG 5.17% due 12/8/1998 (3) 2,000 1,998 .78
AMERICAN HONDA FINANCE 5.20% due 1/28/1999 2,000 1,983 .78
KFW International Finance Inc. 5.15% due 12/11/1998 1,700 1,697 .66
HOUSEHOLD FINANCE CORP. 5.03% due 12/2/1998 1,600 1,600 .63
Coca-Cola Co. 4.85% due 12/22/1998 1,600 1,595 .62
BMW US CAPITAL CORP. 5.10% due 12/15/1998 1,400 1,397 .55
Johnson & Johnson 5.00% due 12/14/1998 (3) 1,400 1,397 .55
Diageo Capital PLC 5.15% due 12/18/1998 (3) 1,400 1,396 .55
Pfizer Inc 5.09% due 12/2/1998 (3) 600 600 .23
FEDERAL AGENCY DISCOUNT NOTES - 3.57%
Federal Home Loan Banks 5.00% due 1/29/1999 4,300 4,264 1.67
Fannie Mae 4.92-5.12% due 1/8-3/18/1999 3,000 2,965 1.16
Freddie Mac 4.95% due 1/25/1999 1,900 1,885 .74
---------------------
TOTAL SHORT-TERM SECURITIES (cost: $33,722,000) 33,722 13.21
---------------------
TOTAL INVESTMENT SECURITIES (cost: $228,514,000) 253,930 97.01
Excess of cash and receivables over payables 1,372 .54
------------------------
NET ASSETS $255,302 97.55%
======== ========
(1) Non-income-producing securities.
(2) Valued under procedures established by the Board of Trustees.
(3) Purchased in a private placement transaction; resale to the public
may require registration or sale only to qualified institutional buyers.
See Notes to Financial Statements
Stocks appearing in the portfolio
since May 31, 1998
Anglogold
Applied Materials
Astra
AT&T
BankAmerica
Coca-Cola Beverages
Computer Associates International
Deutsche Telekom
Fox Entertainment Group
Fuji Television
Grupo Televisa
Guidant
Koninklijke Ahold
Luxottica Group
Mirage Resorts
News Corp.
NGK Spark Plug
Nippon Telegraph and Telephone
Nissan Motor
PeopleSoft
Preussag
Quantum
Sealed Air
Shell Transport and Trading
Shohkoh Fund
Stet Hellas Telecommunications
Tele-Communications
Telefonaktiebolaget LM Ericsson
Stocks eliminated from the portfolio
since May 31, 1998
Advanced Micro Devices
Chrysler
General Motors
Home Depot
Host Marriott
Inco
Kyocera
Oil Co. LUKoil
Oryx Energy
Rambus
Raytheon
Rio Tinto
Thomson-CSF
Viking Office Products
</TABLE>
<TABLE>
AMERICAN VARIABLE INSURANCE SERIES GLOBAL SMALL CAPITALIZATION FUND
Investment Portfolio, NOVEMBER 30, 1998
<S> <C> <C> <C>
Where the Fund's Assets Are Invested
Percent of
Net Assets
--------
The Americas 58.02%
Europe 11.22%
Asia/Pacific 7.54%
Other Countries 1.85%
Cash & Equivalent 21.37%
100.00%
Largest Individual Stocks
PMC-Sierra 2.61%
Sanmina 2.41
ABR Information Services 2.24
HNC Software 1.87
Sapient 1.56
Laurentian Bank of Canada 1.53
Jones Intercable 1.50
Black Box 1.43
USWeb 1.39
Flextronics International 1.38
Market Percent
Number of Value of Net
STOCKS (common and preferred) Shares (000) Assets
- --------------------------------------------------------------------- -------- -------- --------
BUSINESS & PUBLIC SERVICES - 14.56%
ABR Information Services, Inc. (USA)(1) 95,000 $ 1 2.24%
Sapient Corp. (USA)(1) 24,400 1,128 1.56
Black Box Corp. (USA)(1) 29,500 1,036 1.43
USWeb Corp. (USA)(1) 44,000 1,001 1.39
Flextronics International Ltd. (Singapore)(1) 15,000 998 1.38
Midas, Inc. (USA) 28,700 895 1.24
Protection One, Inc. (USA)(1) 62,400 601 .83
Kroll-O'Gara Co. (USA)(1) 18,700 580 .80
Medicis Pharmaceutical Corp., Class A (USA)(1) 9,200 580 .80
NCO Group, Inc. (USA)(1) 15,100 557 .77
Strayer Education, Inc. (USA) 13,500 502 .70
Rhon-Klinikum AG (Germany) 5,000 486 .67
Corporate Services Group PLC (United Kingdom) 178,750 433 .60
International Container Terminal Services, Inc. (Philippines)(1) 4,500,000 401 .56
Budget Group, Inc., Class A (USA)(1) 28,500 356 .49
Renaissance Worldwide Inc. (USA)(1) 46,700 333 .46
ARIS Corp. (USA)(1) 20,000 327 .45
Brunel International NV (Netherlands) 13,048 252 .35
Fujitsu Support and Service Inc. (Japan)(2) 1,000 56 .08
ELECTRONIC COMPONENTS - 10.56%
PMC-Sierra, Inc. (USA)(1) 35,000 1,886 2.61
Sanmina Corp. (USA)(1) 35,000 1,743 2.41
Level One Communications, Inc. (USA)(1) 30,000 928 1.29
Venture Manufacturing (Singapore) Ltd (Singapore) 150,000 574
Venture Manufacturing Ltd (Singapore)(2) 90,000 344 1.28
Micrel, Inc. (USA)(1) 20,000 811 1.12
NatSteel Electronics Ltd (Singapore)(2) 175,000 378 .52
Megachips Corp. (Japan)(1,2) 10,000 358 .50
Cymer, Inc. (USA)(1) 14,100 212 .29
Towa Corp. (Japan) 8,500 202 .28
Cicorel Holding AG (Switzerland)(1) 700 133 .18
QPL International Holdings Ltd. (Hong Kong -
Incorporated in Bermuda) 664,000 57 .08
MERCHANDISING - 8.00%
Disco SA (ADR) (Argentina)(1) 44,250 916 1.27
Rent-Way, Inc. (USA)(1) 30,000 814 1.13
DFS Furniture Co. PLC (United Kingdom) 250,000 701 .97
EUROBIKE AG (Germany) 40,000 691 .95
White Cap Industries, Inc. (USA)(1) 50,000 663 .92
Migros Turk TAS (Turkey) 650,000 642 .89
Komori Corp. (Japan) 40,000 569 .79
GrandVision SA (France) 20,000 448 .62
Dickson Concepts (International) Ltd. (Hong Kong-
Incorporated in Bermuda) 310,000 334 .46
DATA PROCESSING & REPRODUCTION - 7.61%
HNC Software Inc. (USA)(1) 40,900 1,350 1.87
Aspect Development, Inc. (USA)(1) 25,000 836 1.16
Platinum Software Corp. (USA)(1) 69,300 736 1.02
Macromedia, Inc. (USA)(1) 25,900 724 1.00
National Computer Systems, Inc. 20,000 657 .91
Remedy Corp. (USA)(1) 50,000 522 .72
Vantive Corp. (USA)(1) 60,000 510 .71
Edify Corp. (USA)(1) 19,300 159 .22
BROADCASTING & PUBLISHING - 6.93%
Jones Intercable, Inc., Class A (USA)(1) 35,000 1,087 1.51
Century Communications Corp., Class A (USA)(1) 40,000 977 1.35
Westwood One, Inc. (USA)(1) 32,100 851 1.18
United Television, Inc. (USA) 6,000 660 .91
APN News and Media, Ltd. (Australia) 400,000 541 .75
Central European Media Enterprises Ltd., Class A (1)
(USA - Incorporated in Bermuda) 80,000 520 .72
Sondagsavisen A/S (Denmark) 7,500 372 .51
LEISURE & TOURISM - 4.34%
Morton's Restaurant Group, Inc. (USA)(1) 35,000 696 .96
Navigant International, Inc. (USA)(1) 100,000 637 .88
Lions Gate Entertainment Corp. (Canada)(1) 200,000 620 .86
Imax Corp. (Canada)(1) 20,000 545 .76
Cheesecake Factory Inc. (USA)(1) 14,300 372 .52
Hoyts Cinemas Ltd., units (Australia) 282,300 262 .36
BANKING - 2.52%
Laurentian Bank of Canada (Canada) 63,700 1,107 1.53
Citizens Banking Corp. (USA) 22,100 714 .99
FOOD & HOUSEHOLD PRODUCTS - 2.28%
Santa Isabel SA (ADR) (Chile) 75,000 642 .89
Grupo Industrial Maseca, SA de CV, Class B (ADR) (Mexico) 31,300 421 .58
Geest PLC (United Kingdom) 45,000 301 .42
Metro-Richelieu Inc., Class A (Canada) 24,000 282 .39
RECREATION & OTHER CONSUMER PRODUCTS - 2.21%
Radica Games Ltd. (1) 52,000 812 1.12
Movado Group, Inc. (USA) 30,000 608 .84
Metromedia International Group, Inc. (USA)(1) 40,000 178 .25
HEALTH & PERSONAL CARE - 1.76%
Aviron (USA)(1) 29,200 628 .87
Pharmacyclics, Inc. (USA)(1) 20,000 347 .48
Grupo Casa Autrey, SA de CV (ADR) (Mexico) 45,000 298 .41
ELECTRONIC INSTRUMENTS - 1.52%
Etec Systems, Inc. (USA)(1) 16,600 546 .76
Disco Corp. (Japan) 10,000 283 .39
ASM Pacific Technology Ltd. (Hong Kong) 700,000 267 .37
BEVERAGES & TOBACCO - 1.28%
Robert Mondavi Corp., Class A (USA) (1) 13,600 498 .69
Quilmes Industrial SA, preferred shares
(ADR) (Luxembourg) 45,000 425 .59
BUILDING MATERIALS & COMPONENTS - 1.08%
Futuris Corp. Ltd. (Australia) 675,000 778 1.08
INSURANCE - 1.02%
LandAmerica Financial Group, Inc. (USA) 12,000 736 1.02
MISCELLANEOUS MATERIALS & COMMODITIES - 0.97%
SPARTECH Corp. (USA) 35,000 698 .97
FINANCIAL SERVICES - 0.84%
American Capital Strategies, Ltd. (USA) 40,000 610 .84
INDUSTRIAL COMPONENTS - 0.70%
Hayes Lemmerz International, Inc. (USA)(1) 16,000 504 .70
CHEMICALS - 0.60%
Gurit-Heberlein AG (Switzerland) 130 321 .44
Kalon Group PLC (United Kingdom) 78,000 117 .16
TELECOMMUNICATIONS - 0.55%
Western Telecom (France)(1) 25,000 277 .38
CESKE RADIOKOMUNIKACE AS (GDR) (Czech Republic)(1,2) 4,200 123 .17
REAL ESTATE - 0.45%
TBI PLC (United Kingdom) 204,100 328 .45
MACHINERY & ENGINEERING - 0.40%
KCI Konecranes International Corp. (Finland) 6,800 290 .40
ENERGY SOURCES - 0.38%
Premier Oil PLC (United Kingdom) 430,000 152 .21
Ramco Energy PLC (United Kingdom) 26,400 122 .17
TRANSPORTATION: SHIPPING - 0.38%
ICB Shipping AB, Class B (Sweden) 35,400 274 .38
EQUITY COMMON TRUSTS - 0.32%
Atle AB, Class A (Sweden) 16,800 233 .32
AEROSPACE & MILITARY TECHNOLOGY - 0.16%
Alvis PLC (United Kingdom) 38,400 115 .16
MISCELLANEOUS - 4.97%
Other stocks in initial period of acquisition 3592 4.97
-------- --------
TOTAL STOCKS (cost: $60,509,000) 56802 76.39
-------- --------
Principal Market Percent
Amount Value of Net
SHORT-TERM SECURITIES (000) (000) Assets
- --------------------------------------------------------------------- -------- -------- --------
CORPORATE SHORT-TERM NOTES - 19.15%
BP Capital PLC 5.30% due 12/1/98 $ 1,500 2.08
Canadian Wheat Board 5.02% due 2/19/99 1,300 1,285 1.78
BMW U.S. Capital Corp. 5.10% due 12/10/98 1,000 999 1.38
E.I. du Pont de Nemours and Co. 5.17% due 12/7/98 1,000 999 1.38
Reed Elsevier Inc. 5.11% due 12/4/98 (2) 1,000 999 1.38
Unilever PLC 5.00% due 12/4/98 (2) 1,000 999 1.38
Siemens Corp. 5.02% due 1/22/99 1,000 993 1.37
Vermont American Corp. 5.11% due 12/18/98 (2) 900 898 1.24
Kellogg Co. 5.30% due 12/4/98 825 824 1.14
Pfizer Inc. 5.09% due 12/2/98 (2) 800 800 1.11
France Telecom 5.15% due 12/14/98 800 798 1.11
KFW International Finance Inc. 5.15% due 12/9/98 700 699 .97
Household Finance Corp. 5.00% due 12/22/98 550 548 .76
Diageo Capital PLC 5.15% due 12/18/98 (2) 500 499 .69
American Honda Finance Corp. 5.40% 1/13/99 500 497 .69
Mobil Australia Finance Co. 5.08% due 2/8/99 (2) 500 495 .69
FEDERAL AGENCY DISCOUNT NOTES - 4.26%
Federal Home Loan Bank 5.00%-5.04% due 12/4/98-1/29/99 2,500 2,483 3.44
Freddie Mac 4.95% due 1/25/99 600 595 .82
-------- --------
TOTAL SHORT-TERM SECURITIES (cost: $16,911,000) 16,910 23.41
-------- --------
TOTAL INVESTMENT SECURITIES (cost: $77,420,000) 73,712 99.80
Excess of payables over cash and receivables 1,470 2.04
-------- --------
NET ASSETS $72,242 97.76%
======== ========
(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.
ADR = American Depositary Receipts
GDR = Global Depositary Receipts
See Notes to Financial Statements
</TABLE>
<TABLE>
Stocks appearing in the portfolio Stocks eliminated from the portfolio
since November 30, 1998 since November 30, 1998
<S> <C>
American Capital Strategies Dr Solomon's Group
Aspect Development Four Media
Century Communications Hartmarx
CESKE RADOKOMUNIDACE Medallion
EUROBIKE Petco Animal Supplies
Fujitsu Support and Service Rambus
Futuris
Imax
Megachips
Morton's Restaurant Group
Movado Group
National Computer Systems
NatSteel Electronics
Navigant International
PMC- Sierra
Radica Games
Rent- Way
Rhon-Klinikum
Sanmina
Santa Isabel
Sapient
Venture Manufacturing
Western Telecom
White Cap Industries
</TABLE>
<TABLE>
GROWTH FUND
Investment Portfolio November 30, 1998
- ------------------------------------------------------------
<S> <C> <C> <C>
STOCKS 91.99%
CASH &
EQUIVALENTS 8.01%
- ------------------------------------------------------------
Percent
Of Net
Largest Individual Stocks Assets
- ------------------------------------------------------------ -------
Time Warner 5.08%
Viacom 4.89
Tele-Communications, Liberty Media Group 3.05
Cendant 2.89
Texas Instruments 2.72
Disney 2.06
Comcast 1.79
Altera 1.79
King World Productions 1.72
USA Networks 1.67
Market Percent
Number of Value of Net
Stocks (common and preferred) Shares (000) Assets
- -------------------------------------------- ------- ------- -------
Broadcasting & Publishing - 24.74%
Time Warner Inc. 2,702,575 $285,797 5.08%
Viacom Inc., Class B (1) 3,700,000 246,281 4.89
Viacom Inc., Class A (1) 439,200 28,850
Tele-Communications, Inc., Series A, Liberty Media Group (1 4,255,205 171,538 3.05
Comcast Corp., Class A, special 2,075,000 100,897 1.79
USA Networks, Inc. (1) 2,970,000 93,741 1.67
News Corp. Ltd., preferred (ADR) (Australia) 2,102,500 52,957 1.58
News Corp. Ltd. (ADR) 1,270,000 35,560
Fox Entertainment Group, Inc., Class A (1) 2,750,000 64,969 1.16
CSC Holdings, Inc. (Formerly Cablevision Systems Corp.), Cla 1,500,000 62,062 1.10
Cox Communications, Inc., Class A (1) 1,105,600 58,251 1.04
Jones Intercable, Inc., Class A (1) 1,525,000 47,370 .84
Tele-Communications, Inc., Series A, TCI Group (1) 1,089,078 46,014 .82
BHC Communications, Inc., Class A (1) 286,189 31,910 .57
Tele-Communications, Inc., Series A, TCI Ventures Group (1) 1,545,698 30,624 .55
United International Holdings, Inc., Class A (1) 1,180,000 19,912 .35
Jacor Communications, Inc. (1) 100,000 5,819 .10
Adelphia Communications Corp., Class A (1) 135,000 4,717 .08
Chancellor Media Corp., Class A (1) 100,000 3,769 .07
Electronic Components - 15.22%
Texas Instruments Inc. 2,000,000 152,750 2.72
Altera Corp. (1) 2,050,000 100,578 1.79
Intel Corp. 860,800 92,644 1.65
Microchip Technology Inc. (1) 2,105,000 73,280 1.30
Micron Technology, Inc. (1) 1,696,300 70,078 1.25
SCI Systems, Inc. (1) 1,213,326 58,998 1.05
Linear Technology Corp. 800,000 56,050 1.00
Quantum Corp. (1) 2,275,000 50,334 .89
ADC Telecommunications, Inc. (1) 1,305,900 39,014 .69
Adaptec, Inc. (1) 2,336,000 37,960 .68
Xilinx, Inc. (1) 700,000 35,525 .63
Analog Devices, Inc. (1) 1,366,666 27,931 .50
LSI Logic Corp. (1) 1,000,000 15,500 .28
Newbridge Networks Corp. (Canada) (1) 460,000 13,455 .24
National Semiconductor Corp. (1) 665,000 9,559 .17
Motorola, Inc. 103,400 6,411 .11
Seagate Technology (1) 200,000 5,900 .10
Rogers Corp. (1) 190,800 5,176 .09
Park Electrochemical Corp. 250,000 4,797 .08
Business & Public Services - 9.38%
Cendant Corp. (1) 8,564,800 162,731 2.89
Columbia/HCA Healthcare Corp. 2,047,500 50,420 .90
Waste Management, Inc. (formerly USA Waste Services, Inc.) 1,070,597 45,902 .82
Federal Express Corp. (1) 700,000 45,413 .81
America Online, Inc. (1) 436,000 38,177 .68
Cambridge Technology Partners (Massachusetts), Inc. (1) 1,400,000 29,225 .52
Concord EFS, Inc. (1) 850,900 27,069 .48
Universal Health Services, Inc., Class B (1) 500,000 26,813 .48
Allied Waste Industries, Inc. (1) 1,257,100 25,613 .46
Flextronics International Ltd. (USA - Incorporated in Singap 300,000 19,950 .35
First Data Corp. 500,000 13,344 .24
Avery Dennison Corp. 220,000 10,546 .19
Ceridian Corp. (1) 150,000 9,759 .17
Paychex, Inc. 125,000 6,219 .11
Electronic Data Systems Corp. 150,000 5,850 .10
TeleTech Holdings, Inc. (1) 640,000 5,840 .10
APAC TeleServices, Inc. (1) 700,000 4,550 .08
Data Processing & Reproduction - 8.42%
Solectron Corp. (1) 1,271,000 84,124 1.50
Oracle Corp. (1) 2,425,000 83,056 1.48
PeopleSoft, Inc. (1) 3,100,000 63,744 1.13
Ascend Communications, Inc. (1) 750,000 42,141 .75
Microsoft Corp. (1) 300,000 36,600 .65
Autodesk, Inc. 859,100 31,250 .56
Silicon Graphics, Inc. (1) 2,170,000 26,582 .47
Intuit Inc. (1) 393,300 22,762 .41
Lexmark International Group, Inc., Class A (1) 200,000 15,275 .27
Computer Associates International, Inc. 320,800 14,195 .25
Vantive Corp. (1) 1,269,156 10,788 .19
Compaq Computer Corp. 300,000 9,750 .17
Gateway 2000, Inc. (1) 150,000 8,419 .15
Structural Dynamics Research Corp. (1) 475,000 8,283 .15
3Com Corp. (1) 205,000 7,931 .14
Mentor Graphics Corp. (1) 800,000 6,900 .12
Data General Corp. (1) 100,000 1,813 .03
Leisure & Tourism - 5.58%
Walt Disney Co. 3,600,000 115,875 2.06
King World Productions, Inc. (1) 3,550,000 96,737 1.72
Carnival Corp. 1,284,800 44,326 .79
Mirage Resorts, Inc. (1) 2,700,000 40,162 .71
MGM Grand, Inc. (1) 650,000 16,697 .30
Insurance - 2.99%
American International Group, Inc. 800,000 75,200 1.34
EXEL Ltd., Class A (Incorporated in Bermuda) 635,000 47,704 .85
Transatlantic Holdings, Inc. 405,000 30,780 .55
MGIC Investment Corp. 320,000 14,060 .25
Health & Personal Care - 2.51%
Sepracor Inc. (1) 300,000 24,900 .44
Guidant Corp. 250,000 21,453 .38
Warner-Lambert Co. 244,400 18,452 .33
Gilead Sciences, Inc. (1) 500,000 15,563 .28
Pfizer Inc 100,000 11,163 .20
BioChem Pharma Inc. (Canada) (1) 400,000 9,750 .17
SEQUUS Pharmaceuticals, Inc. (1) 440,416 8,698 .16
Johnson & Johnson 97,600 7,930 .14
Forest Laboratories, Inc. (1) 160,000 7,460 .13
Novoste Corp. (1) 400,000 6,500 .12
Omnicare, Inc. 150,000 4,294 .08
Guilford Pharmaceuticals, Inc. (1) 200,000 2,825 .05
Pharmacia & Upjohn, Inc. 36,250 1,887 .03
Chemicals - 2.37%
Monsanto Co. 1,721,200 77,992 1.39
Valspar Corp. 750,000 24,938 .44
Air Products and Chemicals, Inc. 450,000 17,156 .31
Praxair, Inc. 200,000 7,638 .13
Engelhard Corp. 284,400 5,492 .10
Banking - 2.23%
Washington Mutual, Inc. 1,225,000 47,469 .84
BankBoston Corp. 581,680 24,212 .43
Charter One Financial, Inc. 791,824 23,507 .42
Wells Fargo & Co. 500,000 18,000 .32
M&T Bank Corp. 25,000 12,463 .22
Telecommunications - 2.23%
AirTouch Communications (1) 1,550,000 88,641 1.58
MCI WorldCom, Inc. (formerly MCI Communications Corp.) (1) 460,243 27,154 .48
Paging Network, Inc. (1) 1,500,000 9,281 .17
Electronic Instruments - 2.13%
Applied Materials, Inc. (1) 2,041,700 79,116 1.41
Perkin-Elmer Corp. 363,900 33,934 .60
Security Dynamics Technologies, Inc. (1) 250,000 3,812 .07
ANTEC Corp. (1) 150,000 2,775 .05
Transportation:Airlines - 1.97%
AMR Corp. (1) 790,000 52,091 .93
Southwest Airlines Co. 2,350,675 50,539 .90
Delta Air Lines, Inc. 150,000 8,053 .14
Merchandising - 1.95%
Consolidated Stores Corp. (1) 2,152,425 46,277 .82
Limited Inc. 617,700 17,875 .32
Lowe's Companies, Inc. 400,000 16,900 .30
Cardinal Health, Inc., Class A 222,300 15,255 .27
Circuit City Stores, Inc. - Circuit City Group 200,000 7,237 .13
Venator Group, Inc. (formerly Woolworth Corp.) (1) 774,300 6,098 .11
Electrical & Electronics - 1.56%
Telefonaktiebolaget LM Ericsson, Class B (ADR) (Sweden) 1,590,000 43,924 .78
Northern Telecom Ltd. (Canada) 390,000 18,208 .32
General Instrument Corp. (1) 600,000 16,875 .30
Nokia Corp., Class A (ADR) (Finland) 90,000 8,820 .16
Financial Services - 1.37%
Fannie Mae 500,000 36,375 .65
Household International, Inc. 700,000 27,388 .49
Capital One Financial Corp. 120,000 13,200 .23
Energy Sources - 0.89%
Murphy Oil Corp. 350,000 13,956 .25
Pogo Producing Co. 1,124,300 13,070 .23
Enterprise Oil PLC (United Kingdom) 1,700,000 9,335 .17
Talisman Energy Inc. (Canada) (1) 400,000 6,961 .12
TOTAL, Class B (ADR) (France) 110,000 6,724 .12
Textiles & Apparel - 0.83%
NIKE, Inc., Class B 1,000,000 40,000 .71
Nine West Group Inc. (1) 544,500 6,806 .12
Beverages & Tabacco - 0.69%
Philip Morris Companies Inc. 555,000 31,045 .55
PepsiCo, Inc. 200,000 7,738 .14
Miscellaneous Materials & Commodities - 0.67%
Sealed Air Corp. (1) 850,000 37,506 .67
Recreation & Other Consumer Products - 0.48%
Hasbro, Inc. 770,700 27,023 .48
Food & Household Products - 0.26%
Keebler Foods Co. (1) 250,000 8,422 .15
Dole Food Co., Inc. 200,000 6,325 .11
Energy Equipment - 0.25%
Schlumberger Ltd. (Netherlands Antilles) 250,000 11,172 .20
Baker Hughes Inc. 162,500 2,976 .05
Aerospace & Military Technology - 0.24%
Gulfstream Aerospace Corp. (1) 267,000 13,717 .24
Transportation: Rail & Road - 0.06%
Wisconsin Central Transportation Corp. (1) 200,000 3,625 .06
Machinery & Engineering - 0.06%
Thermo Electron Corp. (1) 200,000 3,375 .06
Miscellaneous - 2.91%
Other stocks in intial period of acquisition 163,859 2.91
------- -------
TOTAL STOCKS (cost: $3,548,234,000) 5,172,758 91.99
------- -------
Principal
Amount
Short-Term Securities (000)
CORPORATE SHORT - TERM NOTES - 8.14%
A.I. Credit Corp. 5.00%-5.14% due 12/9/1998-1/6/1999 $64,900 64,648 1.15
Lucent Technologies Inc. 5.05%-5.17%
due 12/4-12/10/1998 52,605 52,559 .94
E.I. du Pont de Nemours and Co. 5.23%-5.28%
due 1/13-1/20/1999 50,000 49,662 .88
Johnson & Johnson 5.08% due 1/21/1999 50,000 49,635 .88
Ford Motor Credit Co. 5.04% due 1/8/1999 40,000 39,777 .71
PACCAR Financial Corp. 4.99%-5.12%
due 12/3/1998-2/22/1999 29,500 29,320 .52
General Electric Capital Corp. 5.00% due 2/1/1999 27,500 27,246 .48
PepsiCo. Inc. 5.03%-5.05% due 1/7-1/12/1999 26,000 25,858 .46
H.J. Heinz Co. 5.05%-5.18% due 1/7-1/25/1999 25,875 25,708 .46
National Rural Utilities Cooperative Finance Corp. 5.00%
due 1/11/1999 22,600 22,460 .40
General Motors Acceptance Corp. 5.11%-5.19%
due 12/7/1998-1/4/1999 19,400 19,359 .34
BellSouth Telecommunications, Inc. 4.95%-5.00%
due 1/27-2/4/1999 16,340 16,200 .29
Associates Corp. of North America 5.06% due 1/11/1999 15,000 14,906 .27
Household Finance Corp. 5.05% due 1/14/1999 15,000 14,901 .26
Associates First Capital Corp. 5.34% due 12/2/1998 5,500 5,498 .10
FEDERAL AGENCY DISCOUNT NOTES - 0.37%
Fannie Mae 4.92% due 3/18/1999 13,000 12,807 .23
Freddie Mac 5.07%-5.21% due 12/3/1998-2/11/1999 8,151 8,078 .14
------- -------
TOTAL SHORT-TERM SECURITIES (cost: $478,657,000) 478,622 8.51
------- -------
TOTAL INVESTMENT SECURITIES (cost: $4,026,891,000) 5,651,380 100.50
Excess of payables over cash and receivables 28,272 .50
------- -------
NET ASSETS $5,623,108 100.00%
======= =======
(1) Non-income-producing securities.
ADR = American Depositary Receipts
See notes to Financial Statements
Stocks appearing in the portfolio
since May 31, 1998
American International
Applied Materials
Compaq Computer
Computer Associates International
Fox Entertainment
Gateway 2000
General Instrument
Gilead Sciences
Keebler Foods
MGIC Investment
Northern Telecom
Paging Network
PeopleSoft
Praxair
Sealed Air
TeleTech Holdings
WorldCom
Stocks eliminated from the portfolio
since May 31, 1998
Aetna
Avon Products
Barnes & Noble
Bay Networks
Boise Cascade Office Products
Coram Healthcare
Digital Equipment
Dura Pharmaceuticals
Ecolab
Harrah's Entertainment
Host Marriott
KLA-Tencor
LCI International
Midway Games
Mycogen
Netscape Communications
NextLevel Systems
Oryx Energy
Payless ShoeSource
Rambus
Security Capital
Sequent Computer Systems
Shared Medical Systems
Spiegel
Stone & Webster
Transocean Offshore
Union Texas Petroleum Holdings
Western Atlas
Western Digital
</TABLE>
<TABLE>
AMERICAN VARIABLE INSURANCE SERIES INTERNATIONAL FUND
Investment Portfolio, November 30, 1998
<S> <C> <C>
Where the Fund's Assets Are Invested
Percent of
Net Assets
-----------
EUROPE 66.76%
ASIA/PACIFIC 16.75%
THE AMERICAS 8.17%
OTHER COUNTRIES 2.19%
CASH AND EQUIVALENTS 6.13%
TOTAL 100.0%
Largest Individual Stocks
Telefonica 4.48%
Nokia 3.43
Telefonaktiebolaget LM Ericsson 2.72
TELECEL - Comunicacoes Pessoais 2.32
Deutsche Telekom 2.24
Olivetti 2.17
Koninklijke Philips Electronics 2.02
Novartis 2.02
Bayerische Motoren Werke 1.76
Rentokil Initial 1.76
Market Percent
Number of Value of Net
Stocks (common and preferred) Shares (000) Assets
- -----------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS - 21.76%
Telefonica, SA (Spain) 2,077,636 97,652
Telefonica, SA (ADR) 172,363 24,023 4.48%
TELECEL - Comunicacoes Pessoais, SA (Portugal) 322,835 63,134 2.32
Deutsche Telekom AG (Germany) 2,167,400 60,812 2.24
Orange PLC (United Kingdom) (1) 4,440,000 45,394 1.67
Telefonos de Mexico, SA de CV, Class L (ADR) (Mexico) 882,000 41,068 1.51
Telecom Italia SpA, nonconvertible savings (Italy) 5,754,265 35,673
Telecom Italia SpA 345,000 2,793 1.41
Mannesmann AG (Germany) 350,000 37,857 1.39
Koninklijke PTT Nederland NV (Netherlands) 634,000 27,348 1.01
France Telecom, SA (France) 365,000 25,341 .93
Telecom Italia Mobile SpA (Italy) 2,000,000 13,144
Telecom Italia Mobile SpA savings 1,312,800 5,554 .69
Cable & Wireless Communications PLC (United Kingdom) (1) 1,900,000 16,950 .62
Telefonica de Argentina SA, Class B (ADR) (Argentina) 417,000 13,500 .50
Philippine Long Distance Telephone Co. (Philippines) 205,000 5,380
Philippine Long Distance Telephone Co. (ADR) 154,000 4,033 .48
Philippine Long Distance Telephone Co., convertible preferred (GDR) 80,000 3,780
China Telecom (Hong Kong) Ltd. (ADR) (People's Republic of China) (1 314,600 12,446 .46
Cia. de Telecomunicaciones de Chile SA (ADR) (Chile) 425,300 9,862 .36
DDI Corp. (Japan) 2,600 8,451 .31
Hong Kong Telecommunications Ltd. (Hong Kong) 4,000,000 7,647 .28
Bayan Telecommunications Holdings Corp., 150,000 7,500
convertible preferred (Philippines) (1,2,3)
Bayan Telecommunications Holdings Corp. (1,2,3) 57,209 146 .28
NTT Mobile Communications Network, Inc. (Japan) (1) 163 6,225 .23
Panafon Hellenic Telecommunications Co., SA (Greece) (1,3) 300,400 5,385 .20
SK Telecom Co., Ltd. (South Korea) 5,017 3,506 .13
Telstra Corp. Ltd. (Australia) (1) 700,000 3,105 .11
Perusahaan Perseroan (Persero) PT Indonesian Satellite Corp. (Indone 1,600,000 2,314
Perusahaan Perseroan (Persero) PT Indonesian Satellite Corp. (ADR) 40,000 560 .11
Videsh Sanchar Nigam Ltd. (GDR) (India) 108,600 1,110 .04
BROADCASTING & PUBLISHING - 8.86%
Mediaset SpA (Italy) (1) 4,000,000 28,358
Mediaset SpA 1,967,000 13,945 1.56
CANAL+ (France) 124,418 28,582 1.05
Societe Europeenne des Satellites, Class A (FDR) (Luxembourg) (1) 143,000 22,176 .82
FLEXTECH PLC (United Kingdom) (1) 2,250,000 21,575 .79
News Corp. Ltd. (ADR) (Australia) 362,000 10,136
News Corp. Ltd., preferred (United Kingdom) 793,719 4,973 .72
News Corp. Ltd., preferred (ADR) 181,000 4,559
ProSieben Media AG (Germany) 400,000 19,169 .71
Metropole Television (France) 106,000 17,439 .64
Fuji Television (Japan) 3,733 14,864 .55
Television Francaise 1 SA (France) 80,000 13,991 .51
Grupo Televisa, SA (ADR) (Mexico) (1) 321,100 8,168 .30
Nippon Television Network Corp. (Japan) 21,000 6,672 .25
Television Broadcasts Ltd. (Hong Kong) 2,259,300 5,836 .21
Modern Times Group MTG AB, Class B (ADR) (Sweden) (1) 61,000 3,923
Modern Times Group MTG AB, Class A (1) 101,600 1,286 .19
Seven Network Ltd. (Australia) 1,531,083 5,084 .19
TV Azteca, SA de CV (ADR) (Mexico) 463,900 3,479 .13
Hachette Filipacchi Medias (France) 14,909 3,132 .12
Primedia Ltd. units (South Africa) 391,631 1,094
Primedia Ltd. units, Class N 167,842 389 .05
SOFTBANK CORP. (Japan) 24,900 1,437 .05
Publishing & Broadcasting Ltd. (Australia) 150,000 651 .02
ELECTRICAL & ELECTRONICS - 7.95%
Nokia Corp., Class A (Finland) 652,000 63,853
Nokia Corp., Class K 300,000 29,380 3.43
Telefonaktiebolaget LM Ericsson, Class B (Sweden) 2,269,200 63,022
Telefonaktiebolaget LM Ericsson, Class B (ADR) 400,000 11,050 2.72
Siemens AG (Germany) 350,000 24,344 .90
Northern Telecom Ltd. (Canada) 460,000 21,476 .79
Premier Farnell PLC (United Kingdom) 1,000,000 2,968 .11
BUSINESS & PUBLIC SERVICES - 6.90%
Rentokil Initial PLC (formerly Rentokil Group PLC) (United Kingdom) 7,144,100 47,728 1.76
Vivendi, SA (France) 166,934 37,733 1.39
Suez Lyonnaise des Eaux (France) 145,000 28,621 1.05
Brambles Industries Ltd. (Australia) 925,682 22,621 .83
TNT Post Groep (Netherlands) 634,000 15,944 .59
Aegis Group PLC (United Kingdom) 7,350,000 10,878 .40
Thames Water PLC (United Kingdom) 435,416 8,602 .32
Reuters Holdings PLC (United Kingdom) 776,533 7,497 .27
United Utilities PLC (United Kingdom) 320,424 4,671 .17
Zhejiang Expressway Co. Ltd., Class H (People's Republic of China) 17,262,000 3,233 .12
Sasani Ltd. (South Africa) 1,229,528 50 .00
FOOD & HOUSEHOLD PRODUCTS - 4.92%
Nestle SA (Switzerland) 20,936 43,470 1.60
Raisio Group PLC (Finland) 2,319,300 30,045 1.10
Cadbury Schweppes PLC (United Kingdom) 1,500,000 22,675 .83
Reckitt & Colman PLC (United Kingdom) 1,076,375 15,122 .56
Groupe Danone (France) 50,987 14,877 .55
Kerry Group PLC, Class A (United Kingdom) 560,000 7,572 .28
MERCHANDISING - 4.03%
Dixons Group PLC (United Kingdom) 3,850,000 46,520 1.71
Carrefour SA (France) 39,000 27,591 1.02
Koninklijke Ahold NV (Netherlands) 437,436 15,164 .56
Cifra, SA de CV, Class C (Mexico) (1) 6,000,000 7,336
Cifra, SA de CV, Class V (1) 3,397,506 4,195 .42
Kingfisher PLC (United Kingdom) 553,798 5,278 .19
Coles Myer Ltd. (Australia) 660,436 3,413 .13
HEALTH & PERSONAL CARE - 3.67%
Novartis AG (Switzerland) 29,324 55,007 2.02
AB Astra, Class A (Sweden) 1,333,333 24,414 .90
Zeneca Group PLC (United Kingdom) 418,200 17,344 .64
SmithKline Beecham PLC (ADR) (United Kingdom) 50,000 3,047 .11
BANKING - 3.58%
Safra Republic Holdings SA (Luxembourg) 468,000 22,464 .83
Bank of Nova Scotia (Canada) 975,000 21,393 .79
Westpac Banking Corp. (Australia) 2,349,948 15,635 .57
Royal Bank of Scotland Group PLC (United Kingdom) 650,000 9,797 .36
ForeningsSparbanken AB, Class A (Sweden) 310,000 8,686 .32
Bank of Scotland (United Kingdom) 707,000 7,858 .29
Sakura Bank, Ltd. (Japan) 1,720,000 4,389 .16
Commonwealth Bank of Australia (Australia) 304,105 4,182 .15
Fuji Bank, Ltd. (Japan) 470,000 1,860 .07
Standard Chartered Bank (United Kingdom) 100,000 1,062 .04
DATA PROCESSING & REPRODUCTION - 3.30%
Olivetti SpA (Italy) (1) 20,602,400 54,072
Olivetti SpA, warrants, expire 2002 (1) 2,490,400 5,058 2.17
Dassault Systemes SA (France) 466,000 18,183 .67
Fujitsu Ltd. (Japan) 1,070,000 12,364 .46
APPLIANCES & HOUSEHOLD DURABLES - 3.07%
Koninklijke Philips Electronics NV (formerly 870,000 55,040 2.02
Philips Electronics NV) (Netherlands)
Sony Corp. (Japan) 340,000 24,894 .92
Samsung Electronics Co., Ltd. (South Korea) 65,000 3,477 .13
ELECTRONIC COMPONENTS - 2.82%
Rohm Co., Ltd. (Japan) 340,000 28,734 1.06
Hoya Corp. (Japan) 475,000 19,956 .73
Murata Manufacturing Co., Ltd. (Japan) 455,000 17,821 .66
Hirose Electric Co., Ltd. (Japan) 111,000 7,441 .27
LG Semicon Co., Ltd. (South Korea) (1) 239,820 2,697 .10
AUTOMOBILES - 2.72%
Bayerische Motoren Werke AG (Germany) 48,000 37,064
Bayerische Motoren Werke AG (1) 14,400 10,865 1.76
Suzuki Motor Corp. (Japan) 1,700,000 19,478 .72
Mazda Motor Corp. (Japan) (1) 1,535,000 5,925 .22
Honda Motor Co., Ltd. (Japan) 14,000 503 .02
BEVERAGES & TOBACCO - 2.24%
South African Breweries Ltd. (South Africa) 1,416,686 23,977 .88
Coca-Cola Beverages PLC (United Kingdom) (1) 6,505,950 13,518
Coca-Cola Amatil Ltd. (Australia) 2,408,093 8,068 .80
Panamerican Beverages, Inc., Class A (Multinational-Incorporated in 486,000 11,208 .41
San Miguel Corp., Class B (Philippines) 2,357,000 4,144 .15
MULTI-INDUSTRY - 2.15%
Orkla AS, Class A (Norway) 1,835,700 30,636 1.13
Lend Lease Corp. Ltd. (Australia) 452,616 11,016 .41
Siebe PLC (United Kingdom) 3,060,000 10,988 .40
Benpres Holdings Corp. (GDR) (Philippines) (1) 2,156,000 5,821 .21
FINANCIAL SERVICES - 1.64%
Shohkoh Fund & Co., Ltd. (Japan) 109,000 35,961 1.32
Credicorp Ltd. (Peru) 792,000 8,712 .32
ENERGY SOURCES - 1.41%
Broken Hill Proprietary Co. Ltd. (Australia) 2,078,038 16,469 .61
Imperial Oil Ltd. (Canada) 330,000 5,981 .22
Elf Aquitaine (France) 40,000 4,985 .18
TOTAL, Class B (ADR) (France) 75,000 4,584 .17
"Shell" Transport and Trading Co., PLC (New York Registered) (United 90,000 3,268 .12
Woodside Petroleum Ltd. (Australia) 600,000 3,045 .11
AEROSPACE & MILITARY TECHNOLOGY - 1.34%
Bombardier Inc., Class B (Canada) 2,787,800 36,320 1.34
BUILDING MATERIALS & COMPONENTS - 1.27%
Holderbank Financiere Glaris Ltd. (Switzerland) 15,000 17,355 .64
Cemex, SA de CV (Mexico) 4,769,224 11,567
Cemex, SA de CV, Class A 2,321,450 5,584 .63
RECREATION & OTHER CONSUMER PRODUCTS - 1.24%
EMI Group PLC (United Kingdom) 3,800,000 22,621 .83
Nintendo Co., Ltd. (Japan) 50,000 4,636 .17
Sony Music Entertainment (Japan) Inc. (Japan) 90,000 3,964 .15
Square Co., Ltd. (Japan) 125,000 2,580 .09
CHEMICALS - 0.89%
Bayer AG (Germany) 590,000 24,205 .89
METALS: NONFERROUS - 0.79%
Alcan Aluminium Ltd. (Canada) 310,000 8,254 .30
WMC Ltd. (Australia) 1,928,134 6,063 .22
Pechiney, Class A (France) 90,000 2,996 .11
Inco Ltd. (Canada) 180,000 2,081 .08
Teck Corp., Class B (Canada) 300,000 2,028 .08
FOREST PRODUCTS & PAPER - 0.77%
UPM-Kymmene Corp. (Finland) 795,000 20,813 .77
INSURANCE - 0.76%
Royal & Sun Alliance Insurance Group PLC (United Kingdom) 1,786,407 14,906 .55
ING Groep NV (Netherlands) 100,000 5,725 .21
GOLD MINES & PAPER - 0.49%
Anglogold Ltd. (South Africa) 275,000 13,436 .49
UTILITIES: ELECTRIC & GAS - 0.42%
Cia. Paranaense de Energia-COPEL, Class B, preferred nominative (Bra480,373,000 4,619
Cia. Paranaense de Energia-COPEL, ordinary nominative 328,207,800 2,104 .25
Scottish Power PLC (United Kingdom) 350,000 3,723 .14
Cia. Energetica de Minas Gerais - CEMIG (Brazil) 43,678,798 673 .02
Centrais Geradoras do Sul do Brasil SA - GERASUL, 53,800 350 .01
Class B, preferred nominative (ADR) (Brazil) (1)
MACHINERY & ENGINEERING - 0.34%
Valmet Corp. (Finland) 600,000 8,145 .30
Kvaerner AS, Class A (Norway) 80,000 1,207 .04
CONSTRUCTION & HOUSING - 0.30%
YTL Corp. Bhd. (Malaysia) (3) 10,000,000 8,032 .30
ELECTRONIC INSTRUMENTS - 0.29%
ADVANTEST CORP. (Japan) 118,400 7,909 .29
INDUSTRIAL COMPONENTS - 0.23%
Bridgestone Corp. (Japan) 175,000 4,096 .15
Minebea Co., Ltd. (Japan) 200,000 2,150 .08
REAL ESTATE - 0.22%
Cheung Kong (Holdings) Ltd. (Hong Kong) 500,000 3,600 .13
Mitsui Fudosan Co., Ltd. (Japan) 159,000 1,220 .05
Kerry Properties Ltd. (Hong Kong - Incorporated In Bermuda) 1,411,000 1,139 .04
LEISURE & TOURISM - 0.20%
Mandarin Oriental International Ltd. (Singapore) 6,911,218 5,460 .20
TRANSPORTATION: SHIPPING - 0.18%
Stolt-Nielsen SA, Class B (ADR) (Multinational) 327,000 3,924 .14
Nippon Yusen KK (Japan) 353,000 1,076 .04
ENERGY EQUIPMENT - 0.16%
Petroleum Geo-Services ASA (ADR) (Norway) (1) 311,600 4,382 .16
MISCELLANEOUS MATERIALS & COMMODITIES - 0.15%
English China Clays PLC (United Kingdom) 1,583,750 4,100 .15
MISCELLANEOUS -- 2.32%
Other stocks in initial period of acquisition 63,143 2.32
----------------------
TOTAL STOCKS (cost: $1,924,615,000) 2,538,817 93.38
----------------------
Principal
Amount
Convertible Debentures (000)
- ----------------------------------------------------------------------------------------------------
BROADCASTING & PUBLISHING - 0.29%
United News & Media PLC 6.125% 2003 GBP4,500 7,708 .29
ELECTRONIC COMPONENTS - 0.11%
Acer Peripherals Inc. 1.25% 2006 (2) $2,680 2,948 .11
ENERGY SOURCES - 0.03%
Zhenhai Refining & Chemical Co. Ltd. 3.00% 2003 (2) 950 817 .03
MISCELLANEOUS -- 0.06%
Other equities in initial period of acquisition 1,682 .06
----------------------
TOTAL CONVERTIBLE DEBENTURES (cost: $12,793,000) 13,155 .49
----------------------
TOTAL EQUITY-TYPE SECURITIES (cost: $1,937,408,000) 2,551,972 93.87
----------------------
Principal Market Percent
Amount Value of Net
Short-Term Securities (000) (000) Assets
- -----------------------------------------------------------------------------------------------------
CORPORATE SHORT-TERM NOTES - 6.34%
British Gas Capital Inc. 5.25% due 1/4/1999 24,100 23,977 .88
General Electric Capital Corp. 5.45% due 12/1/1998 17,700 17,697 .65
Shell Finance (UK) PLC 5.12% due 2/2/1999 16,700 16,548 .61
Siemens Capital Corp. 5.18% due 1/20/1999 15,100 14,992 .55
Export Development Corp. 5.02% due 1/28/1999 15,000 14,874 .55
Electricite de France 5.12% due 2/16/1999 14,900 14,736 .54
Rio Tinto America, Inc. 5.15% due 1/8/1999 (2) 14,000 13,922 .51
Unilever NV 5.00% due 12/4/1998 (2) 13,000 12,993 .48
Diageo Capital PLC 5.07% due 12/11/1998 (2) 12,000 11,982 .44
Nestle Capital Corp. 5.00% due 1/27/1999 11,300 11,207 .41
International Lease Finance Corp. 5.19% due 1/14/1999 10,000 9,935 .37
General Motors Acceptance Corp. 5.17% due 1/4/1999 9,700 9,651 .35
NON-U.S. CURRENCY - 0.09%
New Taiwanese Dollar NT$77,697 2,399 .09
----------------------
TOTAL SHORT-TERM SECURITIES (cost: $174,774,000) 174,913 6.43
----------------------
TOTAL INVESTMENT SECURITIES (cost: $2,112,182,000) 2,726,885 100.30
Excess of payables over cash and receivables 8,172 .30
------------------------
NET ASSETS $2,718,713 100.00%
======== ========
(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.
(3) Valued under procedures established by the Board of Trustees.
ADR = American Depositary Receipts
FDR = Fiduciary Depositary Receipts
GDR = Global Depositary Receipts
See Notes to Financial Statements
Stocks appearing in the portfolio
since May 31, 1998
ADVANTEST
Anglogold
Bayer
Broken Hill Proprietary
Centrais Geradoras do Sul do Brasil - GERASUL
DDI
Fuji Television
NTT Mobile Communications Network
Panafon Hellenic Telecommunications
Siemens
Societe Europeenne des Satellites
Telstra
TNT POST
Stocks eliminated from the portfolio
since May 31, 1998
Amway Japan
Australia and New Zealand Banking
Ayala Land
Bank of Montreal
BOC Group
Centrais Eletricas Brasileiras SA - ELETROBRAS
CESP - Cia. Energetica de Sao Paulo
China Southern Airlines
Christiania Bank
Cia. Cervejaria Brahma
Cie. Generale des Etablissements Michelin
Deutsche Bank
Grupo Financiero Banamex Accival
Havas
Hellenic Bottling
Hongkong Electric Holdings
Hutchison Whampoa
Hyundai Electronics Industries
Imasco
Incentive
Kawasaki Heavy Industries
Kyocera
LG Electronics-LG Semiconductors
Mandamus
Oil Co. LUKoil
Pathe
RAO Gazprom
SGL Carbon
Societe Centrale des Assurances Generales de France
Springer (Axel) Verlag
Swire Pacific
Telecomunicacoes Brasileiras
Tesco
Toronto-Dominion Bank
Unidanmark
</TABLE>
<TABLE>
American Variable Insurance Series
GROWTH-INCOME FUND
Investment Portfolio - November 30, 1998
<S> <C> <C> <C>
Equity Securities 88.76%
Cash & Equivalents 11.24%
Percent
of Net
Largest Individual Stocks Assets
Oracle 1.71%
Texas Instruments 1.58
Monsanto 1.45
Viacom 1.31
First Union 1.28
Wells Fargo 1.24
Time Warner 1.15
York International 1.10
Warner-Lambert 1.04
3Com 1.01
Market Percent
Number of Value of Net
Stocks (common and preferred) Shares (000) Assets
Data Processing & Reproduction - 7.13%
Oracle Corp. (1) 3,622,700 $124,077 1.71%
3Com Corp. (1) 1,900,000 73,506 1.01
Xerox Corp. 609,400 65,510 .90
Microsoft Corp. (1) 500,000 61,000 .84
Computer Associates International, Inc. 1,000,000 44,250 .61
Hewlett-Packard Co. 500,000 31,375 .43
Silicon Graphics, Inc. (1) 2,424,300 29,698 .41
Adobe Systems Inc. 600,000 26,850 .37
International Business Machines Corp. 135,400 22,341 .31
Cisco Systems, Inc. (1) 200,000 15,075 .21
Compaq Computer Corp. 400,000 13,000 .18
Gateway 2000, Inc. (1) 200,000 11,225 .15
Health & Personal Care - 6.99%
Warner-Lambert Co. 1,000,000 75,500 1.04
Schering-Plough Corp. 600,000 63,825 .88
Glaxo Wellcome PLC (ADR) (United Kingdom) 950,000 60,325 .83
Guidant Corp. 600,000 51,487 .71
Astra AB, Class A (ADR) (Sweden) 2,600,000 48,100 .66
Pfizer Inc 400,000 44,650 .61
Kimberly-Clark Corp. 740,000 38,942 .54
Merck & Co., Inc. 250,000 38,719 .53
Bristol-Myers Squibb Co. 275,000 33,705 .46
Avon Products, Inc. 800,000 32,500 .45
Johnson & Johnson 250,000 20,313 .28
Banking - 6.37%
First Union Corp. 1,530,000 92,947 1.28
Wells Fargo & Co. 2,497,000 89,892 1.24
BankAmerica Corp. 856,537 55,835 .77
Washington Mutual Savings Bank 1,200,000 46,500 .64
Marshall & Ilsley Corp. 599,800 30,552 .42
Bank of New York Co., Inc. 800,000 27,400 .37
Chase Manhattan Corp. 400,000 25,375 .35
KeyCorp 800,000 24,550 .33
SunTrust Banks, Inc. 280,000 19,547 .27
J.P. Morgan & Co. Inc. 150,000 16,031 .22
Huntington Bancshares Inc. 459,679 13,618 .19
BANK ONE CORP. 183,012 9,391 .13
Bank of Tokyo - Mitsubishi, Ltd. (ADR) (Japan) 600,000 6,337 .09
Sakura Bank, Ltd. (ADR) (Japan) 200,000 5,000 .07
Broadcasting & Publishing - 6.26%
Viacom Inc., Class B (1) 1,425,000 94,851 1.31
Time Warner Inc. 792,000 83,754 1.15
Tele-Communications, Inc., Series A, Liberty Media Group (1) 1,285,937 51,839 .71
Harte-Hanks Communications, Inc. 1,845,600 43,602 .60
News Corp. Ltd. (ADR) (Australia) 1,100,000 30,800
News Corp. Ltd., preferred (ADR) 400,000 10,075 .56
Houston Industries Inc. 7.00% ACES convertible preferred 2000 350,000 32,200 .44
Media General, Inc., Class A 636,100 30,175 .42
Gannett Co., Inc. 385,400 24,882 .34
E.W. Scripps Co., Class A 372,800 19,176 .26
Comcast Corp., Class A, special stock 350,000 17,019 .24
Fox Entertainment Group, Inc., Class A (1) 700,000 16,537 .23
Chemicals - 5.60%
Monsanto Co. 2,325,000 105,352 1.45
Morton International, Inc. 2,200,000 64,763 .89
International Flavors & Fragrances Inc. 1,100,000 46,063 .63
Praxair, Inc. 1,094,100 41,781 .58
Millennium Chemicals Inc. 1,641,600 39,193 .54
E.I. du Pont de Nemours and Co. 600,000 35,250 .49
Mallinckrodt Inc. 770,000 24,881 .34
Dow Chemical Co. 180,000 17,528 .24
PPG Industries, Inc. 250,000 15,297 .21
Witco Corp. 500,000 9,531 .13
Air Products and Chemicals, Inc. 200,000 7,625 .10
Energy Sources - 5.59%
Ultramar Diamond Shamrock Corp. 2,780,400 71,595 .99
Valero Energy Corp. (2) 2,809,000 58,989 .81
Atlantic Richfield Co. 750,000 49,875 .69
Conoco Inc., Class A (1) 1,374,000 32,547 .45
Noble Affiliates, Inc. 1,160,000 29,362 .40
Pennzoil Co. 780,900 28,991 .40
Amoco Corp. 450,000 26,522 .36
Texaco Inc. 350,000 20,147 .28
Murphy Oil Corp. 463,200 18,470 .25
Kerr-McGee Corp. 450,000 17,775 .24
Oryx Energy Co. (1) 1,250,000 17,266 .24
Pioneer Natural Resources Co. 930,700 12,332 .17
Ashland Inc. 250,000 12,156 .17
Phillips Petroleum Co. 250,000 10,500 .14
Merchandising - 4.38%
American Stores Co. 1,750,000 58,734 .81
J.C. Penney Co., Inc. 1,050,000 57,750 .79
Circuit City Stores, Inc. - Circuit City Group 1,425,000 51,567 .71
Albertson's, Inc. 818,700 46,717 .64
Federated Department Stores, Inc. (1) 700,000 29,181 .40
Limited Inc. 900,000 26,044 .36
AutoZone, Inc. (1) 750,000 22,594 .31
Lowe's Companies, Inc. 300,000 12,675 .17
Circuit City Stores, Inc. - CarMax Group (1) 1,300,000 6,987 .10
Venator Group, Inc. (formerly Woolworth Corp.) (1) 798,600 6,289 .09
Business & Public Services - 4.28%
Cendant Corp. (1) 2,800,000 53,200 .73
Electronic Data Systems Corp. 1,349,500 52,631 .73
Browning-Ferris Industries, Inc. 1,656,100 .67
IKON Office Solutions, Inc. 4,050,000 39,488 .54
Hertz Corp., Class A 991,800 36,449 .50
Waste Management, Inc. 725,000 31,084 .43
Alexander & Baldwin, Inc. 1,020,000 23,460 .32
Pitney Bowes Inc. 350,000 19,600 .27
Avery Dennison Corp. 127,500 6,112 .09
Telecommunications- 4.09%
Ameritech Corp. 1,161,800 62,882 .87
AT&T Corp. 1,000,000 62,312 .86
GTE Corp. 739,900 45,874 .63
AirTouch Communications (1) 755,000 43,176 .59
Telefonica, SA (ADR) (Spain) 218,181 30,409 .42
MCI Communications Corp. (1) 435,365 25,686 .35
U S WEST Communications, Inc. 275,000 17,119 .24
SBC Communications Inc. 200,000 9,588 .13
Forest Products & Paper - 3.89%
Bowater Inc. 1,495,000 59,052 .81
Weyerhaeuser Co. 950,000 47,619 .66
Fort James Corp. 1,169,499 45,757 .63
Union Camp Corp. 600,000 38,812 .53
Georgia-Pacific Corp., Georgia-Pacific Group 448,300 25,441
Georgia-Pacific Corp., Timber Group 300,000 6,900 .45
Sonoco Products Co. 800,000 23,950 .33
International Paper Co. 450,000 19,547 .27
Chesapeake Energy Corp. 192,600 6,681 .09
Westvaco Corp. 187,500 5,273 .07
Louisiana-Pacific Corp. 200,000 3,400 .05
Electronic Components - 3.54%
Texas Instruments Inc. 1,500,000 114,562 1.58
Intel Corp. 500,000 53,813 .74
AMP Inc. 632,381 30,591 .42
Corning Inc. 679,500 27,265 .38
Micron Technology, Inc. (1) 300,000 12,394 .17
SCI Systems, Inc. (1) 200,000 9,725 .13
Quantum Corp. (1) 400,000 8,850 .12
Beverages & Tobacco - 3.35%
Philip Morris Companies Inc. 1,305,000 72,998 1.00
RJR Nabisco Holdings Corp. 1,800,000 51,863 .71
Seagram Co. Ltd. (Canada) 1,300,000 44,606 .62
PepsiCo, Inc. 820,000 31,724 .44
Anheuser-Busch Companies, Inc. 350,000 21,219 .29
UST Inc. 600,000 20,850 .29
Insurance - 2.41%
St. Paul Companies, Inc. 937,254 33,038 .46
Aetna Inc. 375,000 28,992 .40
General Re Corp. 110,000 25,685 .35
Allstate Corp. 600,000 24,450 .34
American General Corp. 320,000 22,540 .31
MGIC Investment Corp. 500,000 21,969 .30
Royal & Sun Alliance Insurance Group PLC (United Kingdom) 2,200,000 18,357 .25
Utilities: Electric & Gas - 2.29%
Ameren Corp. 1,145,400 47,176 .65
DPL Inc. 1,600,000 32,000 .44
GPU, Inc. 725,000 31,764 .43
TECO Energy, Inc. 1,050,000 28,219 .39
Williams Companies, Inc. 622,000 17,921 .25
Duke Energy Corp. 150,000 9,384 .13
Electrical & Electronics - 2.20%
York International Corp. 1,902,900 79,922 1.10
Northern Telecom Ltd. (Canada) 978,840 45,700 .63
Nokia Corp., Class A (ADR) (Finland) 180,000 17,640 .24
Siemens AG (Germany) 240,000 16,693 .23
Financial Services - 2.09%
Household International, Inc. 1,813,320 70,946 .98
Capital One Financial Corp. 300,000 33,000 .45
FINOVA Group Inc. 360,000 19,013 .26
Transamerica Corp. 170,000 18,063 .25
Associates First Capital Corp., Class A 138,732 10,804 .15
Machinery & Engineering - 2.03%
Deere & Co. 1,016,600 35,517 .49
Ingersoll-Rand Co. 525,000 24,577 .34
Parker Hannifin Corp. 675,000 23,456 .32
New Holland NV (Netherlands) 1,570,900 21,502 .30
Caterpillar Inc. 400,000 19,775 .27
Pall Corp. 700,000 16,275 .22
Greenfield Capital Trust 6.00% convertible preferred 118,000 6,136 .09
Aerospace & Military Technology - 1.90%
United Technologies Corp. 350,000 37,516 .51
Raytheon Co., Class B 350,000 19,381
Raytheon Co., Class A 224,030 12,252 .44
Boeing Co. 750,000 30,469 .42
Sundstrand Corp. 500,000 27,000 .37
Gulfstream Aerospace Corp. (1) 225,000 11,559 .16
Industrial Components - 1.49%
Eaton Corp. 520,000 35,523 .49
Federal-Mogul Corp. 456,600 25,912 .36
TRW Inc. 400,000 22,025 .30
Tower Automotive, Inc. (1) 400,000 9,100 .13
Dana Corp. 231,800 9,040 .12
Genuine Parts Co. 200,000 6,588 .09
Multi-Industry - 1.32%
FMC Corp. (1) 550,000 31,969 .44
Textron Inc. 340,000 26,414 .36
Loews Corp. 200,000 20,000 .28
AlliedSignal Inc. 400,000 17,600 .24
Energy Equipment - 1.18%
Schlumberger Ltd. (Netherlands Antilles) 1,170,000 52,284 .72
Baker Hughes Inc. 1,810,120 33,148 .46
Electronic Instruments - 1.17%
Perkin-Elmer Corp. 500,000 46,625 .64
Applied Materials, Inc. (1) 1,000,000 38,750 .53
Food & Household Products - 1.07%
General Mills, Inc. 500,000 37,750 .52
Bestfoods 400,000 23,250 .32
Colgate-Palmolive Co. 200,000 17,125 .23
Textiles & Apparel - 0.88%
NIKE, Inc., Class B 1,040,000 41,600 .57
VF Corp. 460,000 22,569 .31
Miscellaneous Materials & Commodities - 0.72%
Crown Cork & Seal Co., Inc. 1,100,000 37,125 .51
Potash Corp. of Saskatchewan Inc. (Canada) 250,000 15,422 .21
Real Estate - 0.62%
Boston Properties, Inc. 750,000 23,672 .33
Equity Residential Properties Trust 500,000 21,156 .29
Leisure & Tourism - 0.60%
Walt Disney Co. 1,364,796 43,929 .60
Metals: Nonferrous - 0.35%
Aluminum Co. of America 340,000 25,203 .35
Metals: Steel - 0.34%
Allegheny Teledyne Inc. 1,200,000 24,675 .34
Transportation: Rail & Road - 0.23%
Norfolk Southern Corp. 540,000 16,403 .23
Miscellaneous - 4.25%
Other stocks in initial period of acquisition 309,202 4.25
--------- ---------
TOTAL STOCKS (cost:$4,972,455,000) 6,439,754 88.61
--------- ---------
Principal
Amount Market ValuePercent of
Convertible Debentures (000) (000) Net Assets
Business & Public Services - 0.15%
Cendant Corp. (formerly CUC International Inc.) 3.00% 2002(3) $12,000 10,965 .15
--------- ---------
TOTAL CONVERTIBLE DEBENTURES (cost: $11,982,000) 10,965 .15
--------- ---------
TOTAL EQUITY SECURITIES (cost: $4,984,437,000) 6,450,719 88.76
--------- ---------
Short-Term Securities
Corporate Short-Term Notes - 8.91%
International Lease Finance Corp. 5.10%-5.18% due 12/8/98-2/12/99 75,900 75,367 1.04
A.I. Credit Corp. 5.10%-5.12% due 12/4-12/9/98 54,600 54,548 .75
H.J. Heinz Co. 5.05%-5.20% due 1/7-1/25/99 43,100 42,791 .59
Procter & Gamble Co. 4.95%-5.00% due 12/11/98-1/22/99 38,100 37,932 .52
PepsiCo, Inc. 5.03%-5.05% due 1/7-1/12/99 38,100 37,885 .52
Coca-Cola Co. 5.00%-5.08% due 1/12/99 34,000 33,795 .47
Eastman Kodak Co. 5.11%-5.12% due 12/3-12/4/98 31,000 30,985 .43
General Motors Acceptance Corp. 5.11%-5.16% due 12/7/1998-1/14/1999 30,400 30,246 .42
Ford Motor Credit Co. 5.18% due 12/1/98 30,000 29,996 .41
Associates First Capital Corp. 5.32%-5.34% due 12/2/98-1/6/99 28,500 28,414 .39
CIT Group Holdings, Inc. 5.09% due 12/14/98 27,500 27,445 .38
American Express Credit Corp. 5.05% due 12/15/98-1/26/99 27,000 26,855 .37
PACCAR Financial Corp. 4.99%-5.12% 12/7/98-1/26/99 26,000 25,867 .36
St. Paul Companies, Inc. 5.07%-5.16% due 12/3-12/10/98 (3) 25,000 24,984 .34
Ameritech Capital Funding Corp. 5.00%-5.04% due 1/12-1/20/99 (3) 25,100 24,928 .34
Lucent Technologies Inc. 5.17% due 12/8/98 22,700 22,674 .31
Sara Lee Corp. 5.00% due 12/23/98 20,000 19,936 .27
Associates Corp. of North America 5.06%-5.26% due 1/5-1/11/99 20,000 19,881 .27
National Rural Utilities Cooperative
Finance Corp. 5.00%-5.33% due 1/7-1/11/99 19,500 19,387 .27
General Electric Capital Corp. 5.00% due 2/1/99 18,500 18,329 .25
Kellogg Co. 5.10% due 12/10/98 12,000 11,983 .16
Gannett Co., Inc. 5.05% due 1/11/99 (3) 3,600 3,579 .05
Federal Agency Discount Notes - 2.28%
Freddie Mac 4.66%-5.30% due 12/3/98-2/24/99 111,650 110,805 1.52
Federal Home Loan Banks 5.02%-5.10% due 12/4/98-1/13/99 55,300 55,069 .76
--------- ---------
TOTAL SHORT-TERM SECURITIES (cost: $813,716,000) 813,681 11.19
--------- ---------
TOTAL INVESTMENT SECURITIES (cost: $5,798,153,000) 7,264,400 99.95
Excess of cash and receivables over payables 3,317 .05
--------- ---------
NET ASSETS $7,267,717 100.00%
=======================
(1)Non-income-producing securities.
(2)The Fund owns 5.03% of the outstanding voting securities of Valero Energy,
which represent investments in affiliates as defined in the Investment
Company Act of 1940.
(3)Purchased in a private placement transaction; resale to the public
may require registration or sale only to qualified institutional buyers.
ADR = American Depositary Receipts
See Notes to Financial Statements
Stocks appearing in the portfolio
since May 31, 1998
Applied Materials
Boston Properties
Cendant
Cisco Systems
Compaq Computer
Conoco
Equity Residential Properties Trust
Fox Entertainment
Gateway 2000
Genuine Parts
GTE
Gulfstream Aerospace
International Flavors & Fragrances
Loews
MGIC Investment
Micron Technology
Morton International
Northern Telecom
Pall
Perkin-Elmer
Quantum
RJR Nabisco Holdings
SCI Systems
Transamerica
TRW
Washington Mutual Savings Bank
Stocks eliminated from the portfolio
since May 31, 1998
Abbott Laboratories
Alumax
Beneficial
Cardinal Health
Chrysler
Citicorp
Columbia/HCA Healthcare
Crompton & Knowles
DePuy
Elf Aquitaine
Ford Motor
General Motors
Goodyear Tire & Rubber
Harley Davidson
McCormick
Norsk Hydro
Norwest
Rayonier
Regions Financial
Scottish Power
Telefonaktiebolaget LM Ericsson
Unilever
Union Pacific
UNOVA
Wal-Mart Stores
Western Atlas
</TABLE>
<TABLE>
Asset Allocation Fund Percent
Investment Portfolio November 30, 1998 of Net
Assets
<S> <C> <C> <C>
- ---------------------------------------------------- ----------
Equity Securities 61.16%
Corporate Bonds 15.33
U.S. Government Bonds 14.02
Non-U.S. Government Bonds 0.20
Cash & Equivalents 9.29
LARGEST INDIVIDUAL EQUITY SECURITIES
BankAmerica 2.18%
Rentokil Initial 1.92
Century Telephone Enterprises 1.83
Household International 1.76
Zeneca Group 1.66
Carnival 1.65
International Business Machines 1.43
Warner-Lambert 1.35
Citigroup 1.35
Pfizer 1.34
Market Percent
Number of Value of Net
Stocks (common and preferred) Shares (000) Assets
- ---------------------------------------------------- ---------- ---------- ----------
Chemicals- 5.12%
Praxair, Inc. 550,000 $21,003 1.26%
Monsanto Co. 365,600 16,566 .99
Air Products and Chemicals, Inc. 420,000 16,012 .96
Morton International, Inc. 500,000 14,719 .88
Millennium Chemicals Inc. 600,000 14,325 .86
PPG Industries, Inc. 200,000 12,237 .73
E.I. du Pont de Nemours and Co. 200,000 11,750 .70
Energy Sources- 6.26%
Atlantic Richfield Co. 320,000 21,280 1.27
Royal Dutch Petroleum Co. (New York Registered
Shares) (Netherlands) 360,000 16,920 1.01
Chevron Corp. 150,000 12,544 .75
Ultramar Diamond Shamrock Corp. 350,000 9,013 .54
Amoco Corp. 150,000 8,841 .53
Phillips Petroleum Co. 200,000 8,400 .50
Kerr-McGee Corp. 200,000 7,900 .47
Murphy Oil Corp. 175,300 6,990 .42
Oryx Energy Co. (1) 500,000 6,906 .42
Pioneer Natural Resources Co. 442,100 5,858 .35
Banking- 6.18%
BankAmerica Corp. 558,620 36,415 2.18
Citigroup Inc. (formerly Citicorp) 450,000 22,584 1.35
Washington Mutual Savings Bank 400,000 15,500 .93
First Union Corp. 202,500 12,302 .74
KeyCorp 250,000 7,672 .46
Tokai Preferred Capital Co. LLC 9.98% noncumulative
preferred, Series A (2) 5,000 4,400 .26
BNP U.S. Funding Co. LLC 7.738% noncumulative preferred, 2,500 2,414 .14
Series A (2)
IBJ Preferred Capital Co. LLC 8.79% noncumulative preferred,
Series A (2) 1,500 1,305 .08
Fuji JGB investment LLC 9.87% noncumulative preferred, 1,000 711 .04
Series A (Japan) (2)
Health & Personal Care- 6.04%
Zeneca Group PLC (American Depositary Receipts)
(United Kingdom) 660,000 27,761 1.66
Warner-Lambert Co. 300,000 22,650 1.35
Pfizer Inc 200,000 22,325 1.34
SmithKline Beecham PLC (American Depositary
Receipts) (United Kingdom) 300,000 18,281 1.09
Gillette Co. 216,960 9,967 .60
Business & Public Services- 3.44%
Rentokil Initial PLC (American Depositary Receipts)
(United Kingdom) 500,000 32,062 1.92
Reuters Group PLC (American Depositary Receipts)
(United Kingdom) 216,740 12,463 .75
Avery Dennison Corp. 250,000 11,984 .72
Alexander & Baldwin, Inc. 37,500 862 .05
Insurance- 3.22%
St. Paul Companies, Inc. 575,000 20,269 1.21
American General Corp. 176,700 12,446 .75
CIGNA Corp. 150,000 11,672 .70
General Re Corp. 40,000 9,340 .56
Telecommunications- 3.09%
Century Telephone Enterprises, Inc. 536,250 30,566 1.83
Telefonica SA (American Depositary
Receipts) (Spain) 125,000 17,422 1.04
NEXTEL Communications, Inc. 13.00% exchangeable
preferred, Series D (1) (3) 1,461 1,505 .10
NEXTEL Communications, Inc., Class A (1) 4,647 100
Omnipoint Corp. 7.00% convertible preferred (2) 40,000 830 .05
COLT Telecom Group PLC, warrants, expire 2006 (1) (2) 3,750 750 .04
Iridium LLC, warrants, expire 2005 (1) (2) 1,500 218 .01
Conecel Holdings Ltd., Class B, warrants,
expire 2000 (Ecuador) (2) (1) 77,700 117 .01
Esat Telecom Group PLC, warrants, expire 2007
(Ireland) (1) (2) 3,500 108 .01
Loral Space & Communication Ltd.,warrants, expire 2007 1,250 15 .00
(formerly Orion Network Systems, Inc.) (1)
McCaw International, Ltd., warrants, expire 2007 (1) (2) 2,000 6 .00
Aerospace & Military Technology- 2.73%
United Technologies Corp. 190,100 20,376 1.22
Raytheon Co., Class A 161,037 8,807 1.02
Raytheon Co., Class B 150,000 8,306
Boeing Co. 200,000 8,125 .49
Merchandising- 2.39%
J.C. Penney Co., Inc. 290,000 15,950 .96
Limited Inc. 550,000 15,916 .95
Walgreen Co. 150,000 8,053 .48
Electrical & Electronics- 2.35%
Nokia Corp., Class A (American Depositary
Receipts) (Finland) 200,000 19,600 1.17
York International Corp. 400,000 16,800 1.01
Hubbell Inc., Class B 72,300 2,915 .17
Forest Products & Paper- 2.34%
Weyerhaeuser Co. 300,000 15,037 .90
Sonoco Products Co. 400,000 11,975 .71
Union Camp Corp. 100,000 6,469 .39
Georgia-Pacific Corp. 100,000 5,675 .34
Beverages & Tobacco- 2.04%
PepsiCo, Inc. 520,000 20,118 1.21
UST Corp. 400,000 13,900 .83
Financial Services- 1.76%
Household International, Inc. 39 29,344 1.76
Leisure & Tourism- 1.65%
Carnival Corp., Class A 800,000 27,600 1.65
Discovery Zone, Inc. (1) (4) 2,940 15 .00
Discovery Zone, Inc., warrants, expire 2007 (1) (4) 326 0
Data Processing & Reproduction- 1.43%
International Business Machines Corp. 145,000 23,925 1.43
Automobiles- 1.26%
General Motors Corp. 75 21,000 1.26
Food & Household Products- 0.90%
General Mills, Inc. 200,000 15,100 .90
Electronic Components- 0.88%
AMP Inc. 305,287 14,768 .88
Industrial Components- 0.86%
Dana Corp. 200,000 7,800 .47
Genuine Parts Co. 200,000 6,587 .39
Multi-Industry- 0.66%
Textron Inc. 120,000 9,322 .56
Swire Pacific Capital Ltd. 8.84% cumulative
guaranteed perpetual capital securities (Hong Kong) (2) 100,000 1,650 .10
Machinery & Engineering- 0.62%
Deere & Co. 300,000 10,481 .63
Metals: Steel- 0.37%
Allegheny Teledyne Inc. 300,000 6,169 .37
Broadcasting & Publishing- 0.14%
Adelphia Communications Corp. 13.00% exchangeable
preferred, Series B (1) 20,000 2,360 .14
Real Estate- 0.07%
CarrAmerica Realty Corp. 8.57% redeemable preferred,
Series B 50,000 1,116 .07
Recreation-Other Consumer Products- 0.00%
V2 Music Holdings, warrants, expire 2008 1,250 0 .00
(United Kingdom) (2) (1)
Miscellaneous- 3.41%
Other stocks in initial period of acquisition 56,890 3.41
---------- ----------
TOTAL STOCKS (cost: $735,121,000) 1,010,435 59.22
----------- -----------
Principal
Amount
Convertible Debentures (000)
- ---------------------------------------------------- ---------- ----------
Industrials & Services- 0.68% ----------
Bell Atlantic Financial Services, Inc., senior $4,000 4,115 .46
exchangeable notes, 4.25% 2005 (2)
Bell Atlantic Financial Services, Inc. 5.75% 2003 (2) 3,500 3,592
Sunglass Hut International, Inc. 5.25% 2003 3,375 2,160 .13
Advanced Micro Devices, Inc. 6.00% convertible 1,500 1,462 .09
subordinated notes 2005
---------- ----------
TOTAL CONVERTIBLE DEBENTURES (cost: $11,331,000) 11,329 .68
---------- ----------
TOTAL EQUITY SECURITIES (cost: $746,452,000) 1,021,764 59.90
---------- ----------
Bonds & Notes
- -----------------------------------------------
Diversified Media, Cable Television &
Telecommunications- 3.05%
Time Warner Inc.:
9.125% 2013 4,000 4,989 .40
7.25% 2017 1,500 1,633
Cable & Wireless Communications PLC:
6.625% 2005 3,300 3,326 .32
6.75% 2008 2,000 2,009
Comcast Cable Communications, Inc. 8.875% 2017 2,500 3,138 .19
Qwest Communications International Inc. 0%/9.47% 2007 (5) 4,000 3,100 .19
CBS Radio Inc. 11.375% 2009 2,632 3,066 .18
Fox/Liberty Networks, LLC 0%/9.75% 2007 (5) 4,000 2,860 .17
TCI Communications, Inc. 8.75% 2015 2,000 2,505 .15
Tele-Communications, Inc. 9.25% 2023 2,000 2,389 .14
Telemundo Holdings, Inc. 0%/11.50% 2008 (5) 4,000 2,360 .14
Hearst-Argyle Television 7.50% 2027 2,000 2,095 .13
Sprint Capital Corp. 6.875% 2028 2,000 2,093 .13
CBS Corp. 7.15% 2005 2,000 2,077 .12
Falcon Holding Group, LP 0%/9.285% 2010 (5) 3,000 2,077 .12
Conecel Holdings Ltd.:
Series A, 14.00% 2000 (2) 3,000 1,395 .12
14.0% 2002 1,000 560
CEI Citicorp Holdings SA 11.25% 2007 (2) 2,500 1,700 .10
Telesystem International Wireless Inc. 0%/13.25% 2007 (5) 3,700 1,665 .10
Cox Communications, Inc. 6.40% 2008 1,500 1,562 .09
Cablevision Systems Corp. 8.125% 2009 (2) 1,250 1,337 .08
Iridium LLC, Series A, 13.00% 2005 1,500 1,320 .08
WorldCom, Inc. 6.40% 2005 1,000 1,040 .06
V2 Music (Holdings) PLC, units, 0%/14.00% 2008 (2) (5) 1,250 663 .04
Financial Services- 1.66%
Capital One Bank:
7.35% 2000 5,000 5,053 .45
6.375% 2003 2,500 2,457
GS Escrow Corp. 7.125% 2005 (2) 3,000 2,946 .18
Ocwen Financial Corporation 11.875% 2003 2,850 2,508 .15
MBNA America Bank, NA 6.75% 2008 2,500 2,495 .15
Household Finance Corp. 6.40% 2008 2,250 2,304 .14
Pan Pacific Industrial Investments PLC 0% 2007 (2) 6,000 2,100 .12
AT&T Capital Corp. 6.60% 2005 2,000 1,947 .12
PDVSA Finance Ltd. 7.40% 2016 (2) 2,250 1,943 .12
Capital One Financial Corp. 7.125% 2008 1,500 1,433 .08
Wharf International Finance Ltd., Series A, 7.625% 2007 1,750 1,415 .08
Capital One Capital I 6.769% 2027 1,250 1,097 .07
Transportation- 1.62%
Continental Airlines, Inc.:
Series 1996-A, 6.94% 2015 3,816 3,933 .57
Series 1996-2C 10.22% 2014 2,135 2,519
Series 1998-3C 7.25% 2005 1,500 1,504
Series 1997-4A, 6.90% 2018 1,500 1,496
United Air Lines, Inc.:
1996-A2, 7.87% 2019 (7) 2,500 2,544 .28
1995-A1, 9.02% 2012 1,356 1,516
9.00% 2003 500 549
Delta Air Lines, Inc. Pass Through Trust:
1993-A2, 10.50% 2016 (7) 2,000 2,568 .23
1992-A2, 9.20% 2014 (7) 1,000 1,221
Airplanes Pass Through Trust, Class 1-C, 8.15% 2019 (7) 2,948 3,037 .18
Jet Equipment Trust, Series 1995-B, 7.83% 2015 (2) 2,311 2,424 .14
USAir, Inc., 1996-B, 7.50% 2009 2,322 2,386 .14
Canadian National Railway Company 6.45% 2036 1,250 1,293 .08
Banking & Thrifts- 1.61%
National Westminster Bank PLC:
7.75% 2049 3,200 3,361 .27
9.450% 2001 1,000 1,091
Imperial Capital Trust I, Series B, 9.98% 2026 2,950 3,155 .19
MBNA Corp.:
MBNA Capital A, Series A, 8.278% 2026 2,010 2,071 .18
MBNA Capital B, Series B, 6.019% 2027 (6) 1,000 887
Dime Capital Trust I, Series A, 9.33% 2027 2,500 2,718 .16
Chase Capital II, Series B, 5.719% 2027 (6) 2,500 2,366 .14
Bankers Trust New York Corp. 6.70% 2007 2,080 2,145 .13
Chevy Chase Bank, FSB 9.25% 2005 2,000 1,980 .12
Advanta Capital Trust I 8.99% 2026 3,000 1,770 .10
First Union Corp. 6.82%/7.57% 2026 (5) 1,250 1,364 .08
Korea Development Bank 6.50% 2002 1,300 1,159 .07
Chase Capital II 7.67% 2026 1,000 1,068 .06
Abbey National PLC 6.70% 2049 1,000 980 .06
Komercni Banka AS 9.00%/10.75% 2008 (2) (5) 1,000 765 .05
Cellular, Paging & Wireless Communications- 0.90%
NEXTEL Communications, Inc.:
0%/9.95% 2008 (5) 4,500 2,790 .30
0%/9.75% 2007 (5) 2,000 1,265
0%/10.65% 2007 (5) 1,500 994
Clearnet Communications Inc.:
0%/11.75% 2007 (5) 5,250 2,109 .21
0%/10.40% 2008 (5) 4,000 1,411
McCaw International, Ltd. 0%/13.00% 2007 (5) 6,000 3,240 .19
Esat Telecom Group PLC, 0%/12.50% 2007 (5) 3,500 2,328 .14
Omnipoint Corp. 11.625% 2006 1,500 964 .06
Real Estate- 0.85%
CarrAmerica Realty Corp. 6.875% 2008 3,000 2,832 .17
SocGen Real Estate Co. LLC
7.64%/8.40% preferred, Series A (5) 3,000 2,799 .17
Security Capital Pacific Trust 7.20% 2013 2,000 1,796 .11
Irvine Co., Series A, 7.46% 2006 (2) (4) 1,500 1,506 .09
Security Capital Industrial Trust 7.95% 2008 1,500 1,505 .09
Irvine Apartment Communities, LP 7.00% 2007 1,500 1,454 .09
Shopping Center Associates 6.75% 2004 (2) 1,500 1,447 .08
EOP Operating LP 7.25% 2018 1,000 949 .05
Energy & Related Companies- 0.72%
Oryx Energy Co.:
9.50% 1999 3,000 3,086 .40
8.375% 2004 2,500 2,671
10.00% 1999 1,000 1,022
USX Corp. 9.125% 2013 2,500 2,976 .18
OXYMAR 7.50% 2016 (2) 2,500 2,368 .14
Collateralized Mortgage Obligations
(Privately Originated) (7)- 0.58%
DLJ Mortgage Acceptance Corp., Series 1996-CF2:
Class A1, 7.29% 2021 (2) 3,000 3,187 .19
Morgan Stanley Capital I, Inc., Series 1998-HF2,
Class A-2, 6.48% 2030 (6) (7) 3,000 3,110 .19
GMAC Commercial Mortgage Securities, Inc.,
Series 1997-C1, Class A-1, 6.83% 2003 1,985 2,037 .12
Asset-Backed Securities Investment Trust,
Series 1997-D, 6.79% 2003 (2) 1,416 1,418 .08
Broadcasting & Publishing- 0.54%
Chancellor Media Corp:
Series B, 8.75% 2007 2,250 2,312 .23
8.125% 2007 1,500 1,500
News America Holdings Inc.:
7.43% 2026 1,250 1,326 .15
10.125% 2012 1,000 1,171
Ziff-Davis Inc. 8.50% 2008 1,500 1,417 .08
RBS Participacoes SA 11.00% 2007 (2) 2,000 1,300 .08
Utilities: Electric & Gas- 0.54%
Israel Electric Corp. Ltd.:
7.25% 2006 (2) 2,500 2,475 .34
7.70% 2018 (2) 1,750 1,725
7.75% 2027 (2) 1,500 1,443
Commonwealth Edison Co., Series 75, 9.875% 2020 1,500 1,813 .11
Energen Corp., Series B, 7.125% 2028 1,500 1,499 .09
Food & Household Products- 0.48%
Home Products International, Inc. 9.625% 2008 3,000 2,910 .17
AKI Inc. 10.50% 2008 2,500 2,400 .14
Fage Dairy Industry SA 9.00% 2007 2,000 1,700 .10
Gruma, SA de CV 7.625% 2007 1,000 909 .06
Forest Products & Paper- 0.47%
Fort James Corp. 6.625% 2004 2,500 2,540 .15
Container Corp. of America 9.75% 2003 2,000 2,040 .12
Scotia Pacific Company LLC, Class A-2, 7.11% 2028 2,000 1,995 .12
Norampac Inc. 9.375% 2008 (2) 1,000 676 .04
Pindo Deli Finance Mauritius Ltd. 10.75% 2007 1,000 605 .04
Metals: Nonferrous- 0.41%
Inco Ltd.:
9.60% 2022 2,000 2,339 .23
9.875% 2019 1,500 1,570
Freeport-McMoRan Copper & Gold Inc. 7.20% 2026 2,750 1,884 .11
Doe Run Resources Corp. 11.696% 2003 (6) 1,500 1,110 .07
Health & Personal Care- 0.37%
Allegiance Corp. 7.00% 2026 300 3,190 .19
Integrated Health Services, Inc., Series A:
9.25% 2008 1,750 1,706 .18
9.50% 2007 1,250 1,234
Asset-Backed Obligations (7) - 0.28%
SCAMT 98-2 5.25% 2008 3,250 3,176 .19
FIRSTPLUS Home Loan Owner Trust, Series 1997-1,
Class A-6, 6.95% 2015 1,500 1,513 .09
Cable & Telephone in the United Kingdom- 0.26%
COLT Telecom Group PLC 0%/12.00% 2006 (5) 3,750 3,216 .19
NTL Inc. 11.5% 2008 1,000 1,097 .07
Merchandising- 0.21%
Dayton Hudson Corp. 8.50% 2022 2,500 2,728 .16
Woolworth Corp., Series A, 7.00% 2002 750 735 .05
Beverages & Tobacco- 0.18%
Sparkling Spring Water Group Ltd. 11.50% 2007 3,000 2,970 .18
Leisure, Tourism & Restaurants- 0.18%
Royal Caribbean Cruises Ltd. 7.00% 2007 3,000 2,963 .18
Electrical & Electronics- 0.13%
Philips Electronics NV 7.20% 2026 2,000 2,111 .13
Manufacturing & Materials- 0.11%
Owens-Illinois, Inc. 8.10% 2007 1,750 1,845 .11
Machinery & Engineering- 0.08%
United Defense Industries, Inc. 8.75% 2007 1,400 1,414 .08
Business & Public Services- 0.06%
Federal Express Corp., Series A-310, Class A-1,
7.53% 2006 945 968 .06
Appliances & Household Durables- 0.05%
Samsung Electronics Co., Ltd. 7.45% 2002 (2) 1,000 870 .05
Non-U.S. Governments & Governmental
Authorities- 0.20%
Canadian Government 4.36% 2026 (8) 2,000 1,384 .08
Mendoza (Province of) 10.00% 2007 (2) 1,300 985 .06
Poland (Republic of), Past Due Interest Bond 5.00% 2014 (6) 1,000 940 .06
Federal Agency Obligations-Mortgage
Pass-Throughs (7)- 2.08%
Fannie Mae:
6.50% 2013 9,578 9,716 1.59
6.00% 2013 9,669 9,681
8.50% 2024 5,229 5,471
7.00% 2009 1,222 1,250
9.00% 2019 360 382
Government National Mortgage Assn.:
8.50% 2027 3,525 3,747 .49
8.00% 2020-2022 3,447 3,612
10.00% 2019 777 843
Federal Agency Obligations-Other- 0.54%
Fannie Mae:
6.53% 2006 5,000 4,992 .54
7.52% 2004 4,000 4,022
U.S. Treasury Obligations- 11.40%
6.50% 2002-2005 50,000 53,725 11.40
7.00% 2006 25,000 28,445
7.13% 2000 25,000 25,734
7.25% 2004 20,000 22,425
10.38% 2009-2012 14,000 19,164
3.63% 2002 12,500 12,747
8.75% 2000-2008 8,000 9,054
8.25% 2005 5,000 5,245
11.88% 2003 2,500 3,275
11.13% 2003 2,000 2,530
8.88% 1999 2,500 2,521
7.50% 2016 2,000 2,505
9.13% 2009 1,500 1,803
11.75% 2010 500 681
10.75% 2003 500 619
---------- ----------
TOTAL BONDS & NOTES (cost: $491,142,000) 493,684 29.55
---------- ----------
Short-Term Securities
- ------------------------------------------------
Corporate Short-Term Notes- 7.88%
BellSouth Telecommunications, Inc. 5.06% due 2/2/1999 20,000 19,820 1.19
National Ruaral Utilities Cooperative Finance Corp. 19,500 19,381 1.16
5.12% due 1/12/1999
International Lease Finance Corp. 5.05% due 12/1/1998 16,900 16,898 1.01
A. I. Credit Corp. 5.17% due 12/14/1998 16,800 16,766 1.00
Lucent Technology 5.17% due 12/8/1998 14,500 14,483 .87
St. Paul Companies 5.15%-5.25% due 12/18/1998-1/25/1999 14,000 13,925 .83
Procter & Gamble Co. 5.00% due 12/11/1998 13,800 13,779 .82
PepsiCo Inc. 5.05% due 1/7/1999 10,000 9,947 .60
Ameritech Corp. 5.00% due 1/12/1999 6,700 6,660 .40
Federal Agency Discount Notes- 1.02%
Fannie Mae 5.00% due 1/26-2/9/1999 17,200 17,043 1.02
---------- ----------
TOTAL SHORT-TERM SECURITIES (cost: $148,686,000) 148,702 8.90
---------- ----------
TOTAL INVESTMENT SECURITIES (cost: $1,386,280,000) 1,664,150 98.35
Excess of cash and receivables over payables 6,461 .39
--------- ---------
NET ASSETS 1,670,611 98.74
========= =========
(1)Non-income-producing securities.
resale to the public may require registration or sale
only to qualified institutional buyers.
(2)Purchased in a private placement transaction;
(3)Payment in kind. The issuer has the option of paying
additional securities in lieu of cash.
(4) Valued under procedures established by the
Board of Trustees.
(5) Step bond; coupon rate will increase at a later date.
(6) Coupon rate changes periodically.
(7)+A465 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.
(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 securities appearing in the portfolio
since May 31, 1998
Corning Inc.
General Motors Corp.
Hewlett-Packard Co.
Household International, Inc.
Millipore Corp
Monsanto Co.
Morton International, Inc.
Schlumberger Ltd.
United Technologies Corp.
Washington Mutual Savings Bank
Equity securities eliminated from the portfolio
since May 31, 1998
Aluminum Co. of America
American Radio Systems Corp
H.F. Ahmanson
Nationsbank (merger with BankAmerica)
Rogers Communications Inc.
Time Warner
Union Pacific Corp.
Wal-Mart Stores, Inc.
</TABLE>
<TABLE>
AMERICAN VARIABLE INSURANCE SERIES
BOND FUND
INVESTMENT PORTFOLIO - November 30, 1998
<S> <C> <C> <C>
CORPORATE BONDS 55.36%
U.S. GOVERNMENT BONDS 24.47
EQUITY SECURITIES 7.45
NON-U.S. GOVERNMENT BONDS 2.88
CASH & EQUIVALENTS 9.84
Percent
of Net
Largest Industry Holdings Assets
Diversified Media, Cable Television
& Telecommunications 5.73%
Transportation 4.21
Financial Services 3.88
Manufacturing & Materials 3.75
Energy & Related Companies 3.30
MFS Communications 1.60%
Ocwen Financial 1.58
First Nationwide Holdings 1.38
Comtel Brasileira 1.34
USAir 1.27
Airplanes Pass 1.08
Time Warner 1.07
Kaiser Aluminum & Chemical 1.00
McDermott 0.95
Jet Equipment 0.87
Banking & Thrifts 2.37
Principal Market Percent
Amount Value Of Net
Bonds & Notes (000) (000) Assets
Diversified Media, Cable Television &
Telecommunications - 7.66%
CBS Corp. 7.15% 2005 3,000 $ 1.35%
Fox/Liberty Networks, LLC:
0%/9.75% 2007 (1) 2,250 1,609
8.875% 2007 500 515 .92
Time Warner Inc.:
7.75% 2005 500 550
7.25% 2017 500 544
7.95% 2000 500 511 .69
WorldCom, Inc.:
8.875% 2006 1,000 1,098
6.40% 2005 250 260 .59
Cablevision Systems Corp. 8.125% 2009 1250 1,337 .58
Comcast Corp.:
Class B, 9.50% 2007 500 540
8.875% 2017 250 314
8.375% 2007 250 292 .50
Qwest Communications International Inc.:
0%/9.47% 2007 (1) 750 581
0%/8.29% 2008 (1) 750 564 .49
PanAmSat Corp. 6.125% 2005 1,000 980 .42
News America Holdings Inc.:
6.625% 2008 500 511
7.43% 2026 250 265 .33
Sprint Capital Corp. 6.875% 2028 625 654 .28
Tele-Communications, Inc. 9.25% 2023 500 597 .26
Consorcio Ecuatoriano de Telecomunicaciones SA CONECEL:
14.00% 2002 500 280
14.00% 2000 (2) 600 279 .24
V2 Music Holdings, units 0%/14.00% 2008 (1) (2) GBP575 503 .22
TVN Entertainment Corp. 14.00% 2008 $550 484 .21
Ziff-Davis Inc. 8.50% 2008 500 472 .20
SpectraSite Holdings, Inc. 0%/12.00% 2008 (1) (2) 500 267 .12
Northern Telecom Ltd. 6.875% 2002 250 259 .11
Iridium LLC, Series A, 13.00% 2005 250 220 .10
Viatel, Inc. 11.25% 2008 125 125 .05
Cellular, Paging & Wireless Communications - 7.65%
Nextel Communications, Inc.:
0%/9.95% 2008 (1) 2,625 1,627
0%/9.75% 2004 (1) 1,000 980
0%/9.75% 2007 (1) 1,500 949
12.00% 2008 (2) 500 553
0%/10.65% 2007 (1) 750 497
0%/12.125% 2008 (1) 1,000 460 2.18
Cable & Wireless Communications PLC:
6.625% 2005 3,660 3,689
6.75% 2008 500 502 1.81
Clearnet Communications Inc.:
0%/11.75% 2007 (1) C$2,658 1,068
0%/10.40% 2008 (1) 3,000 1,058 .92
Esat Telecom Group PLC 0%/12.50% 2007 (1) $2,000 1,330 .57
McCaw International, Ltd. 0%/13.00% 2007 (1) 2,125 1,147 .50
Omnipoint Corp. 11.625% 2006 1,500 964 .42
PageMart Wireless, Inc.:
0%/15.00% 2005 (1) 500 447
0%/11.25% 2008 (1) 750 352 .35
Crown Castle International Corp. 0%/10.625% 2007 (1) 1,000 685 .30
Cellular Communications of Puerto Rico, Inc. 10.00% 2007 500 508 .22
NEXTLINK Communications, Inc. 9.625% 2007 500 495 .21
Globalstar LP 11.375% 2004 500 382 .17
Financial Services - 7.12%
Capital One Bank:
7.15% 2006 810 818
6.375% 2003 500 491
7.125% 2008 500 478
6.769% 2027 (2), (3) 250 219 .87
J.P. Morgan & Co. Inc. 5.861% 2012 (3), (4) 2,000 1,789 .77
Lindsey Morden Group Inc. 7.00% 2008 (2) C$2,750 1,742 .75
MBNA Capital:
Series A, 8.278% 2026 $1,000 1,031
6.75% 2008 500 499 .66
Toyota Motor Credit Corp. 6.00% 2003 1,000 1,020 .44
Ocwen Financial Corp. 11.875% 2003 1,012 .44
AT&T Capital Corp. 6.60% 2005 1,000 974 .42
Abbey National PLC 6.70% 2049 970 951 .41
PDVSA Finance Ltd. 7.40% 2016 (2) 1,000 864 .37
Sintab AB 7.50% 2049 (2) 750 755 .33
National Westminster Bank PLC 7.75% 2049 500 525 .23
Household Finance Corp. 6.40% 2008 500 512 .22
GS Escrow Corp. 7.125% 2005 (2) 500 491 .21
Wharf International Finance Ltd. 7.625% 2007 515 416 .18
BT Capital Trust, Series A, 7.90% 2027 340 362 .16
Pan Pacific Industrial Investments PLC 0% 2007 (1) 785 275 .12
Hutchison Whampoa Finance Ltd., Series D, 6.988% 2037 (2) 300 272 .12
Chase Capital I, Capital Securities, Series A, 7.67% 2026 250 267 .12
Bankers Trust New York Corp. 6.70% 2007 250 258 .11
Bankunited Capital Trust, Bankunited Financial Corp., 10.25% 2026 250 255 .11
Komercni Banka AS 9.00%/10.75% 2008 (1), (2) 250 191 .08
Collateralized Mortgage Obligations (Privately Originated) (5) - 5.73%
Morgan Stanley Capital I, Inc.:
Series 1998-HF2, Class A2, 6.48% 2030 2,500 2,592
Series 98-1, Class A5, 6.75% 2013 705 713 1.42
Nomura Asset Securities Corp., Series 1998-D6, Class A-1A, 6.28% 2030 1,912 1,947 .84
Chase Commercial Mortgage Securities Corp., Series 1998-2, 1,500 1,548 .67
Class A2, 6.39% 2008
Merrill Lynch Mortgage Investors, Inc.:
Series 1995-C3, Class A3, 7.062% 2025 1,000 1,038
Series 1995-C2, Class A, 7.009% 2021 213 216 .54
CS First Boston Mortgage Securities Corp., Series 1998-C1, 1,216 1,241 .54
Class A-1A, 6.26% 2040
Norwest Asset Securities Corp., Series 1998-31, Class A1, 6.25% 2013 1,000 998 .43
GMAC Commercial Mortgage Securities, Inc., Series 1997-C1:
Class A-3, 6.869% 2007 500 530
Class A-1, 6.83% 2003 397 407 .41
Structured Asset Securities Corp., Series 1998-RF2, Class A, 8.577% 2 844 902 .39
DLJ Mortgage Acceptance Corp., Series 1995-CF2, Class A1, 6.85% 2027 600 621 .27
Commercial Mortgage Acceptance Corp., Series 1998-C1, Class A1, 6.23% 491 500 .22
Broadcasting & Publishing - 3.90%
CBS Radio, Inc. 11.375% 2009 (6) 1,842 2,146 .93
Chancellor Media Corp.:
8.125% 2007 1,000 1,000
Class B, 8.75% 2007 750 771 .76
Hearst-Argyle Television, Inc. 7.00% 2018 1500 1,528 .66
Time Warner Telecom Inc. 9.75% 2008 975 1,034 .45
Clear Channel Communications, Inc. 7.25% 2027 750 751 .32
Telemundo Holdings, Inc. 0%/11.50% 2008 (1), (2) 1,000 590 .25
Cox Communications, Inc. 6.40% 2008 500 521 .23
American Radio Systems Corp. 9.00% 2006 400 434 .19
RBS Participacoes SA 11.00% 2007 (2) 250 163 .07
Globo Comunicacoes E Participacoes Ltda. 10.50% 2006 (2) 120 91 .04
Health & Personal Care - 3.25%
Columbia/HCA Healthcare Corp.:
6.91% 2005 2,000 1,908
8.85% 2007 500 524
7.15% 2004 500 488 1.27
Integrated Health Services, Inc., Series A:
9.25% 2008 2,000 1,950
9.50% 2007 750 741 1.16
Paracelsus Healthcare Corp. 10.00% 2006 1,500 1,365 .59
Allegiance Corp. 7.00% 2026 500 532 .23
Banking & Thrifts - 2.49%
Advanta Corp.:
Series B, 7.00% 2001 1,900 1,756
6.98% 2002 1,000 892
6.925% 2002 500 445
Capital Trust I, Series B, 8.99% 2026 500 295 1.47
Dime Capital Trust I, Series A, 9.33% 2027 725 788 .34
Imperial Capital Trust I, Series B, 9.98% 2026 550 588 .25
Riggs Capital Trust II 8.875% 2027 (2) 500 519 .22
Chevy Chase Bank, FSB 9.25% 2008 500 495 .21
Leisure, Tourism & Restaurants - 2.46%
Mirage Resorts, Inc. 6.625% 2005 2,000 1,961 .85
Royal Caribbean Cruises Ltd.:
7.25% 2018 1,000 944
7.00% 2007 500 494 .62
William Hill Finance PLC 10.625% 2008 GBP750 1,274 .55
Regal Cinemas, Inc. 9.50% 2008 (2) $500 525 .23
Boyd Gaming Corp. 9.50% 2007 500 490 .21
Transportation - 2.44%
Continental Airlines, Inc.:
Series 1998-3, Class C-2, 7.25% 2005 500 501
7.78% 2007 (5) 491 498
Series 1998-3, Class A-2, 6.32% 2008 500 497
Series 1998-1, Class A, 6.648% 2019 (5) 500 496
Series 1996-C 9.50% 2015 (5) 239 268 .97
Atlas Air, Inc., Pass-Through Trust, Series 1998-1, Class A,
7.38% 2018 (5) 1,500 1,551 .67
Jet Equipment Trust:
Series 1995-D, 11.44% 2014 (2) 300 393
Series 1994-A, 11.79% 2013 (2) 250 339 .32
United Air Lines, Inc. 10.67% 2004 500 594 .26
Airplanes Pass Through Trust, Class C, 8.15% 2019 (5) 491 506 .22
Utilities: Electric & Gas - 1.51%
Israel Electric Corp. Ltd.:
7.70% 2018 (2) 1,000 986
7.75% 2027 (2) 620 596 .68
Cia. de Transporte de Energia Electrica en Alta Tension
TRANSENER SA 9.25% 2008 (2) 1,000 940 .41
United Utilities 6.875% 2028 500 491 .21
Commonwealth Edison Co., Series 75, 9.875% 2020 400 484 .21
Forest Products & Paper - 1.50%
Pindo Deli Finance Mauritius Ltd.:
10.75% 2007 1,450 877
10.25% 2002 500 303 .51
Container Corp. of America 9.75% 2003 1,000 1,020 .44
Fort James Corp.:
6.625% 2004 500 508
6.875% 2007 250 257 .33
Norampac Inc. 9.50% 2008 500 515 .22
Multi-Industry - 1.48%
Sony Corp. 6.125% 2003 2,500 2,541 1.10
Graham Packaging Co. 8.75% 2008 500 513 .22
Reliance Industries Ltd.:
10.25% 2097 (2) 250 188
Series B, 10.25% 2097 250 188 .16
Energy & Related Companies - 1.37%
Pioneer Natural Resources Co. 7.20% 2028 1,500 1,303 .56
J. Ray McDermott, SA 9.375% 2006 500 528 .23
McDermott Inc. 9.375% 2002 400 427 .18
Petrozuata Finance Inc. 7.63% 2009 (2) 750 683 .30
Kelley Oil & Gas Corp. 10.375% 2006 300 237 .10
Cable & Telephone in the United Kingdom - 1.14%
COLT Telecom Group PLC:
7.625% 2008 DM 1,0 592
8.875% 2007 750 467
0%/12.00% 2006 (1) $250 214 .55
NTL Inc.:
11.50% 2008 (2) 500 549
Series B, 10.00% 2007 250 260 .35
Comcast UK Cable Partners Ltd. 0%/11.20% 2007 (1) 650 562 .24
Real Estate - 1.13%
SocGen Real Estate Co. LLC, Series A, 7.64% 2049 (2) 1,000 933 .40
EOP Operating LP 6.625% 2005 500 491 .21
Irvine Apartment Communities, LP 7.00% 2007 500 485 .21
Security Capital Pacific Trust 7.20% 2013 500 449 .20
ProLogis Trust 7.05% 2006 250 246 .11
Business & Public Services - 1.00%
Cendant Corp. 7.75% 2003 2,000 2,010 .87
Allied Waste North America, Inc. 10.25% 2006 250 293 .13
Asset- Backed Obligations (5) - 0.93%
Sears Credit Account Master Trust II, Series 1998-2, Class A, 5.25% 2 1,425 1,392 .60
FIRSTPLUS Home Loan Owner Trust, Series 1997-1, Class A-6, 6.95% 2015 500 504 .22
EQCC Home Equity Loan Trust, Asset-Backed Certificates, Series 1996-A,
Class A-2, 6.95% 2012 243 244 .11
Food & Household Products - 0.69%
Gruma, SA de CV 7.625% 2007 1,000 910 .39
AKI Inc. 10.50% 2008 (2) 500 480 .21
Fage Dairy Industry SA 9.00% 2007 250 213 .09
Manufacturing & Materials - 0.58%
Printpack, Inc. 10.625% 2006 500 520 .22
Freeport-McMoRan Copper & Gold Inc. 7.20% 2026 500 343 .15
Kaiser Aluminum & Chemical Corp. 9.875% 2002 250 253 .11
BREED Technologies, Inc. 9.25% 2008 (2) 275 237 .10
Beverages & Tobacco - 0.43%
Sparkling Spring Water Group Ltd. 11.50% 2007 1,000 990 .43
Insurance - 0.32%
Jefferson-Pilot Corp. 8.14% 2046 (2) 700 731 .32
Machinery & Engineering - 0.25%
United Defense Industries, Inc. 8.75% 2007 300 303 .13
Deere & Co. 8.95% 2019 250 288 .12
Miscellaneous Services - 0.23%
Petro Stopping Centers, LP 10.50% 2007 500 526 .23
Independent Power Producers - 0.10%
California Energy Co., Inc. 9.875% 2003 200 221 .10
Non-U.S. Governments & Governmental
Authorities - 2.88%
Canadian Government:
4.615% 2021 (4) C$2,000 1,462
4.362% 2026 (4) 1,000 692 .93
Ontario (Province of) 5.50% 2008 $1,500 1,508 .65
Panama (Republic of) 8.875% 2027 1,250 1,182 .51
Argentina (Republic of) 11.00% 2005 500 526 .23
United Mexican States Government Eurobonds, Global, 11.375% 2016 250 269 .12
Venezuela (Republic of) Eurobond 6.625% 2007 (3) 452 260 .11
Poland (Republic of) Past Due Interest Bond, Bearer, 5.00% 2014 (3) 250 235 .10
Korea (Republic of) 8.875% 2008 200 198 .09
Deutschland Republic 8.00% 2002 DM 2 170 .07
Mendoza (Province of) 10.00% 2007 (2) $200 151 .07
Federal Agency Obligations - Mortgage Pass-Throughs (5) - 8.00%
Government National Mortgage Assn.:
7.00% 2023-2026 4,653 4,763
8.00% 2023 2,759 2,869
7.50% 2023-2024 1,319 1,362
6.50% 2025-2028 1,184 1,196
5.00% 2026 (3) 786 794
6.63% 2026 (3) 665 671
10.00% 2019 518 562
9.50% 2021 508 548 5.52
Fannie Mae:
7.00% 2026 1,500 1,533
6.50% 2013-2026 1,197 1,212
6.00% 2013 947 949
6.131% 2033 (3) 780 787
10.00% 2018-2025 697 757
9.00% 2021 466 494 2.48
Federal Agency Obligations-Other - 0.22%
Freddie Mac: 6.78% 2005 500 500 .22
U.S. Treasury Obligations - 16.25%
6.25% 2003 16,000 16,94
7.25% 2004 6,330 7,105
7.50% 2005-2016 5,000 5,835
8.875% 2017 3,025 4,294
10.375% 2009-2012 1,000 1,332
5.75% 2002 1,000 1,038
3.711% 2002 (4) 1,000 1,020 16.25
-------- --------
TOTAL BONDS & NOTES (cost: $192,896,000) 191,298 82.71
-------- -------
Shares
or Principal
Amount (000)
Stocks
Common & Preferred Stocks - 4.60%
SB Treasury Co. LLC, Series A, 9.40% noncumulative $2,500 2,449 1.06
preferred securities, perpetual (2)
Tokai Preferred Capital Co. LLC, Series A, 9.98% $1,500 1,320 .57
noncumulative preferred securities(2)
BNP U.S. Funding LLC, Series A, 7.738% noncumulative preferred (2) $1,300 1,255 .54
Swire Pacific Capital Ltd. 8.84% cumulative guaranteed perpetual
capital securities (Hong Kong) (2) 40,000 660 .47
Swire Pacific Offshore Financing Ltd. 9.33% cumulative guaranteed
perpetual capital securities (Hong Kong) (2) 25,000 438
Fuji JGB Investment LLC, Series A, 9.87% noncumulative
preferred securities, perpetual (Japan) (2) $1,500 1,066 .46
ProLogis Trust(formerly Security Capital Industrial Trust), 40,000 995 .43
Series D, 7.92% preferred
IBJ Preferred Capital Co. LLC, Series A, 8.79% $1,000 870 .38
noncumulative preferred securities (2)
Adelphia Communications Corp., Series B, 13.00% exchangeable preferre 5,000 590 .26
CarrAmerica Realty Corp., Series B, 8.57% redeemable preferred 20,000 446 .19
Nextel Communications, Inc.:
Series D, 13.00% exchangeable preferred, redeemable 2009 (6), (7) 290 299
Class A (7) 774 17 .14
Esat Telecom Group PLC, warrants, expire 2007 (Ireland) (2), (7) 2,000 62 .03
COLT Telecom Group PLC, warrants, expire 2006 (United Kingdom) (2), ( 250 50 .02
Iridium World Communications Ltd. warrants, expire 2005 (2), (7) 250 36 .02
Globalstar Telecommunications Ltd., warrants, expire 2004 (7) 500 30 .01
Conecel Holdings Ltd., Class B, warrants, expire 2000 15,500 23 .01
(Ecuador) (2), (7), (8)
Cellular Communications International, Inc., warrants, expire 2003 (7 250 18 .01
NTL Inc., warrants, expire 2008 (United Kingdom - 237 7 .00
Incorporated in USA) (2), (7), (8)
McCaw International, Ltd., warrants, expire 2007 (2), (7) 2,000 6 .00
Viatel, Inc., Series A, 10.00% convertible preferred 2015 (6) (7) 62 4 .00
Loral Space & Communications Ltd., warrants, expire 2007 (7) 250 3 .00
V2 Music Holdings, warrants, expire 2000 (7) 575 .00
Miscellaneous - 0.22%
Other stocks in initial period of acquisition 517 .22
-------- --------
TOTAL STOCKS (cost: $11,556,000) 11,161 4.82
-------- --------
Principal
Convertible Debentures Amount (000)
Industrials & Services - 2.63%
Bell Atlantic Financial Services, Inc.:
4.25% senior exchangeable note 2005 (2) $2,500 2,572
5.75% senior exchangeable note 2003 (2) 750 770 1.45
Micron Technology, Inc. 7.00% convertible subordinated notes 2004 1,000 1,038 .45
Advanced Micro Devices, Inc. 6.00% convertible subordinated notes 200 625 609 .26
Kelley Oil & Gas Corp. 8.50% 2000 500 400 .17
Sunglass Hut International, Inc. 5.25% convertible subordinated notes 600 384 .17
MBI Finance Ltd. 0% 2001 500 312 .13
-------- --------
TOTAL CONVERTIBLE DEBENTURES (cost: $5,909,000) 6,085 2.63
-------- --------
TOTAL EQUITY SECURITIES (cost: $17,465,000) 17,246 7.45
-------- --------
Short-Term Securities
Corporate Short-Term Notes - 10.56%
PepsiCo, Inc. 5.12% due 12/15/1998 3,000 2,994 1.29
CIT Group Holdings, Inc. 5.14% due 12/14/1998 2,500 2,495 1.08
IBM Credit Corp. 5.30% due 1/5/1999 2,500 2,488 1.08
General Mills, Inc. 5.08% due 1/8/1999 2,500 2,486 1.08
Eastman Kodak Co. 5.00% due 1/25/1999 2,500 2,480 1.07
Vermont American Corp. 5.11% due 12/18/1998 (2) 2,200 2,194 .95
Nordstrom Credit Inc. 5.12% due 12/18/1998 2,200 2,194 .95
General Electric Capital Corp. 5.45% due 12/1/1998 2100 2,100 .91
St. Paul Companies, Inc. 5.16% due 12/16/1998 (2) 2000 1,995 .86
Procter & Gamble Co. 5.07% due 12/22/1998 1500 1,495 .65
A.I. Credit Corp. 5.14% due 1/4/1999 1100 1,095 .47
Coca-Cola Co. 5.00% due 1/19/1999 400 397 .17
-------- -------
TOTAL SHORT-TERM SECURITIES (cost: $24,413,000) 24,413 10.56
-------- -------
TOTAL INVESTMENT SECURITIES (cost: $234,774,000) 232,957 100.72
Excess of payables over cash and receivables 1,678 .72
----------------
NET ASSETS $231,279 100.00%
------------------
------------------
1 Step bond; coupon rate will increase at a later date.
2 Purchased in a private placement transaction;
resale to the public may require registration or sale
only to qualified institutional buyers.
3 Coupon rate may change periodically.
4 Index-linked bond, whose principal amount moves with a government retail
price index.
5 Pass-through securities backed by a pool of mortgages or
other loans on which
principal payments are periodically made. Therefore,
the effective maturities are
shorter than the stated maturities.
6 Payment in kind. The issuer has the option of paying
additional securities in lieu of cash.
7 Non-income-producing securities.
8 Valued under procedures established by the Board of Trustees.
See Notes to Financial Statements
</TABLE>
<TABLE>
AMERICAN VARIABLE INSURANCE SERIES
HIGH-YIELD BOND FUND
INVESTMENT PORTFOLIO - NOVEMBER 30, 1998
<S> <C> <C> <C>
CORPORATE BONDS 82.00%
NON-U.S. GOVERNMENT BONDS 1.77%
U.S. GOVERNMENT BONDS 1.43%
EQUITY SECURITIES 7.76%
CASH & EQUIVALENTS 7.04%
Percent
of Net
Largest Corporate Holdings Assets
Nextel Communications 4.76%
Integrated Health Services 2.47
Container Corp. of America 2.30
COLT Telecom 2.04
Viatel 1.81
NTL 1.66
Paracelsus Healthcare 1.63
Chancellor Media 1.57
Fox/Liberty Networks 1.50
Falcon Holding 1.45
Principal Market Percent
Amount Value Of Net
Bonds & Notes (000) (000) Assets
Cellular, Paging & Wireless Communications - 13.97%
Nextel Communications, Inc.:
0%/9.95% 2008 (1) $11,000 $6,820 2.72%
0%/10.65% 2007 (1) 7,500 4,969
0%/9.75% 2004 (1) 3,750 3,675
0%/9.75% 2007 (1) 3,000 1,897
12% 2008 (2) 1,000 1,105
Nextel International, Inc. 0%/12.125% 2008 (1) 6,000 2,760
Clearnet Communications Inc.:
0%/11.75% 2007 (1) C$ 20,825 8,364 1.38
0%/10.40% 2008 (1) 7,000 2,468
PageMart Wireless, Inc. 0%/11.25% 2008 (1), (2) $21,650 10,176 1.30
Omnipoint Corp.:
11.625% 2006 11,200 7,196 1.10
8.66% 2006 1,549 1,379
Centennial Cellular Corp. 8.875% 2001 8,000 8,360 1.07
CCPR Services, Inc. 10.00% 2007 7,250 7,359 .94
American Cellular Corp. 10.50% 2008 (2) 5,250 5,197 .66
CTI Holdings SA 0%/11.50% 2008 (1) 10,500 4,804 .61
Comcast Cellular Corp., Series B, 9.50% 2007 4,000 4,320 .55
Mobile Telecommunication Technologies Corp. 13.50% 2002 3,500 3,920 .50
Loral Space & Communications Ltd. 3,900 3,744 .48
(formerly Orion Network Systems, Inc. ) 11.25% 2007
McCaw International, Ltd. 0%/13.00% 2007 (1) 6,500 3,510 .45
Comunicacion Celular SA 0%/13.125% 2003 (1) 5,000 3,500 .45
Occidente Y Caribe Celular SA 0%/14.00% 2004 (1) 3,700 2,738 .35
CellNet Data Systems, Inc. 0%/14.00% 2007 (1) 9,982 1,897 .24
SpectraSite Holdings, Inc. 0%/12.00% 2008 (1), (2) 3,500 1,872 .24
Western Wireless Corp. 10.50% 2006 1,500 1,575 .20
Telesystem International Wireless Inc. 0%/13.25% 2007 (1) 3,450 1,552 .20
PTC International Finance BV 0%/10.75% 2007 (1) 2,000 1,340 .17
Vanguard Cellular Systems, Inc. 9.375% 2006 1,000 1,130 .14
Price Communications Cellular Holdings, Inc. 11.25% 2008 (3) 1,000 975 .12
Globalstar, LP 11.375% 2004 1,000 765 .10
Diversified Media, Cable Television &
Telecommunications - 13.95%
Viatel Inc.:
11.25% 2008 6,000 6,000 1.73
11.15% 2008 DM7,000 4,064
0%/12.50% 2008 (1) $5,250 3,045
0%/12.40% 2008 (1) DM1,000 360
Fox/Liberty Networks, LLC:
0%/9.75% 2007 (1) $8,765 6,267 1.50
8.875% 2007 5,250 5,407
Falcon Holding Group, LP:
8.375% 2010 6,250 6,438 1.45
0%/9.285% 2010 (1) 7,000 4,847
Time Warner Telecom Inc. 9.75% 2008 7,625 8,083 1.03
NEXTLINK Communications LLC:
NEXTLINK Communications, Inc.:
9.625% 2007 3,500 3,465 .95
9.00% 2008 3,000 2,880 .
NEXTLINK Capital, Inc. 12.50% 2006 1,000 1,100
TVN Entertainment Corp. 14.00% 2008 6,500 5,720 .73
US Xchange 15.0% 2008 (2) 4,625 4,856 .62
Esat Telecom Group PLC:
0%/12.50% 2007 (1) 4,250 2,826 .59
11.875% 2008 (2) 1,750 1,811
V2 Music Holdings:
0%/14.00% 2008 (1), (2) 6,900 3,657 .58
0%/14.00% 2008 (1), (2) L1,000 874
Century Communications Corp. 0% 2008 $8,900 4,405 .56
CSC Holdings, Inc. (formerly Cablevision Systems Corp.):
9.875% 2013 3,000 3,330 .56
8.125% 2009 1,000 1,070
KMC Telecom Holdings, Inc. 0%/12.50% 2008 (1) 8,500 4,080 .52
Netia Holdings BV:
0%/11.25% 2007 (1) 3,500 2,117 .44
10.25% 2007 1,500 1,328
Global TeleSystems Group, Inc. 9.875% 2005 3,600 3,384 .43
GST Equipment Funding, Inc. 13.25% 2007 3,000 3,090 .39
Lenfest Communications, Inc. 8.25% 2008 3,000 3,090 .39
Multicanal Participacoes SA, Series B, 12.625% 2004 2,600 2,411 .31
Hermes Euro Railtel BV 11.50% 2007 1,500 1,650 .21
Newsquest Capital PLC:
11.00% 2006 900 999 .20
Series B, 11.00% 2006 500 555
IMPSAT Corp. 12.375% 2008 1,750 1,518 .19
Level 3 Communications, Inc. 9.125% 2008 1,500 1,496 .19
Teligent, Inc. 11.50% 2007 1,500 1,432 .18
Consorcio Ecuatoriano de Telecomunicaciones SA CONECEL :
14.00% 2000 (2) 1,000 465 .11
14.00% 2002 750 420
TEVECAP SA 12.625% 2004 750 487 .06
Cellco Finance NV 15.00% 2005 (2) 250 215 .03
Manufacturing & Materials - 9.06%
Anchor Glass Container Corp.:
11.25% 2005 5,000 5,350 1.01
9.875% 2008 2,500 2,513
BREED Technologies, Inc. 9.25% 2008 (2) 8,500 7,310 .93
Impress Metal Packaging Holdings BV 9.875% 2007 DM10,250 6,661 .85
Tekni-Plex, Inc. 9.25% 2008 $5,500 5,720 .73
Flextronics International Ltd. 8.75% 2007 5,500 5,637 .72
Boyds Collection Ltd. 9.00% 2008 (2) 5,250 5,408 .69
Lifestyle Furnishings International Ltd. 10.875% 2006 4,000 4,380 .56
Printpack, Inc. 10.625% 2006 3,750 3,900 .50
Consumers International Inc. 10.25% 2005 3,250 3,494 .45
Westinghouse Air Brake Co. 9.375% 2005 3,000 3,105 .40
Key Plastics, Inc., Series B, 10.25% 2007 3,000 2,850 .36
Samsung Electronics Co., Ltd. 7.45% 2002 (2) 3,150 2,740 .35
Fairchild Semiconductor Corp. 10.125% 2007 2,750 2,722 .35
Kaiser Aluminum and Chemical Corp. 12.75% 2003 2,350 2,326 .30
Advanced Micro Devices, Inc. 11.00% 2003 2,000 2,135 .27
Ball Corp. 7.75% 2006 (2) 1,750 1,829 .23
Doe Run Resources Corp. 11.25% 2005 2,000 1,460 .19
DGS International Finance Co. BV 10.00% 2007 (2) 2,000 1,360 .17
Broadcasting & Publishing - 8.11%
Chancellor Media Corp., Series B, 8.75% 2007 6,000 6,165 1.57
Chancellor Radio Broadcasting Co.:
8.125% 2007 4,500 4,500
9.375% 2004 1,500 1,590
CBS Radio, Inc. 11.375% 2009 (3) 6,782 7,901 1.01
Acme Intermediate Holdings, LLC, 0%/12.00% 2005 (1) 8,911 5,347 .68
American Radio Systems Corp. 9.00% 2006 4,750 5,154 .66
Ziff-Davis Inc. 8.50% 2008 5,000 4,725 .60
Gray Communications Systems, Inc. 10.625% 2006 3,750 4,031 .52
Big City Radio, Inc. 0%/11.25% 2005 (1) 6,000 4,020 .51
FrontierVision 11.00% 2006 3,000 3,360 .43
Globo Comunicacoes E Participacoes Ltda. 10.50% 2006 (2) 3,750 2,850 .36
Antenna TV, SA 9.00% 2007 2,750 2,489 .32
TransWestern Publishing Company:
9.625% 2007 2,000 2,090 .30
9.625% 2007 (2) 250 261
Young Broadcasting Inc. 10.125% 2005 2,000 2,090 .27
Telemundo Holdings, Inc. 0%/11.50% 2008 (1), (2) 3,000 1,770 .23
Sun Media Corp. 9.50% 2007 1,300 1,372 .18
STC Broadcasting, Inc. 11.00% 2007 1,250 1,341 .17
Coaxial Communications of Central Ohio, Inc. 10.00% 2006 1,000 1,005 .13
Fox Family Worldwide, Inc. 0%/10.25% 2007 (1) 1,000 670 .09
RBS Participacoes SA 11.00% 2007 (2) 1,000 650 .08
Forest Products & Paper - 5.57%
Container Corp. of America:
9.75% 2003 14,600 14,892 2.30
Series A, 11.25% 2004 2,000 2,060
Series B, 10.75% 2002 1,000 1,025
Graham Packaging Co., GPC Capital Corp. I 8.75% 2008 4,250 4,356 1.11
Graham Packaging Holdings Co. 0%/10.75% 2009 (1) 6,250 4,344
Paperboard Industries International Inc. 8.375% 2007 4,000 3,960 .51
Indah Kiat Finance Mauritius Ltd.:
11.875% 2002 2,900 2,139 .48
10.00% 2007 2,550 1,651
Advance Agro PCL 13.00% 2007 (2) 4,500 3,780 .48
Pindo Deli Finance Mauritius Ltd.:
10.75% 2007 2,200 1,331 .29
10.25% 2002 1,500 907
Norampac Inc.:
9.50% 2008 1,500 1,545 .28
9.375% 2008 C$ 1,000 676
Copamex Industrias, SA de CV, Series B, 11.375% 2004 $1,000 960 .12
Leisure, Tourism & Restaurants - 5.28%
AMF Bowling Worldwide, Inc. (formerly AMF Group):
10.875% 2006 8,000 6,800 1.19
0%/12.25% 2006 (1) 4,466 2,546
Boyd Gaming Corp.:
9.25% 2003 6,250 6,406 .94
9.50% 2007 1,000 980
Hard Rock Hotel, Inc. 9.25% 2005 6,000 6,030 .77
William Hill Finance PLC 10.625% 2008 L3,550 6,030 .77
Friendly Ice Cream Corp. 10.50% 2007 $3,000 3,090 .39
Premier Parks, Inc. 0%/10.00% 2008 (1) 3,750 2,550 .33
Sun International Hotels Ltd., Sun International
North America, Inc.:
8.625% 2007 1,500 1,549 .30
9.00% 2007 750 787
Regal Cinemas, Inc. 9.50% 2008 (2) 2,000 2,100 .27
FelCor Suites LP 7.375% 2004 1,750 1,617 .21
Rio Hotel & Casino, Inc. 10.625% 2005 750 825 .11
Health & Personal Care - 4.92%
Integrated Health Services, Inc.:
Series A, 9.25% 2008 6,750 6,581 2.09
10.25% 2006 5,000 5,100
Series A, 9.50% 2007 4,750 4,691
Paracelsus Healthcare Corp. 10.00% 2006 14,000 12,740 1.63
Mariner Health Group, Inc. 9.50% 2006 6,625 6,492 .83
Tenet Healthcare Corp. 8.00% 2005 1,500 1,553 .20
Unison HealthCare Corp. 13.00% 2006 (2), (4), (5) 6,600 1,320 .17
Cable & Telephone in the United Kingdom - 4.78%
COLT Telecom Group PLC:
0%/12.00% 2006 (1) 11,250 9,647 1.75
8.875% 2007 DM6,500 4,049
NTL Inc.:
0%/10.75% 2008 (1), (2) L7,500 6,184 1.65
0%/9.75% 2008 (1), (2) $5,500 3,520
11.5% 2008 (2) 1,500 1,646
Series B, 10.00% 2007 1,500 1,560
Comcast UK Cable Partners Ltd. 0%/11.20% 2007 (1) 10,000 8,650 1.11
TeleWest Communications PLC 9.625% 2006 2,000 2,090 .27
Food & Food Retailing - 3.57%
Fage Dairy Industry SA 9.00% 2007 10,500 8,925 1.14
Home Products International, Inc. 9.625% 2008 7,500 7,275 .93
Randall's Food Markets, Inc. 9.375% 2007 5,750 6,095 .78
Favorite Brands International, Inc. 10.75% 2006 (2) 4,125 3,383 .43
Carr-Gottstein Foods Co. 12.00% 2005 2,000 2,300 .29
Beverages - 2.77%
Delta Beverage Group, Inc. 9.75% 2003 6,200 6,541 .84
Sparkling Spring Water Group, Ltd. 11.50% 2007 5,500 5,445 .70
Canandaigua Wine Co., Inc.:
Series C, 8.75% 2003 3,750 3,834 .69
8.75% 2003 1,500 1,534
Standard Commercial Corp. 8.875% 2005 4,250 4,186 .54
Energy & Related Companies - 2.73%
Kelley Oil & Gas Corp. 10.375% 2006 8,000 6,320 .81
Cross Timbers Oil Co.:
Series B, 9.25% 2007 3,000 3,000 .54
8.75% 2009 1,250 1,216
Benton Oil and Gas Co.:
11.625% 2003 2,000 1,500 .34
9.375% 2007 1,950 1,189
Michael Petroleum Corp. 11.50% 2005 2,450 1,960 .25
Pogo Producing Co. 8.75% 2007 2,000 1,960 .25
Crown Castle International Corp. 0%/10.625% 2007 (1) 2,500 1,713 .22
McDermott Inc. 9.375% 2002 1,000 1,068 .17
J. Ray McDermott, SA 9.375% 2006 250 264
Lomak Petroleum, Inc. 8.75% 2007 1,250 1,188 .15
Miscellaneous Services - 1.90%
Allied Waste North America, Inc. 10.25% 2006 8,300 9,711 1.24
Iron Mountain Inc.:
10.125% 2006 1,500 1,635 .25
8.75% 2009 350 357
EarthWatch Inc., units, 12.50% 2001 (2), (4), (5) 2,000 1,600 .20
Teletrac, Inc. 14.00% 2007 4,100 1,435 .18
Reliance Industries Ltd. 10.50% 2046 250 200 .03
Banking & Financial Services - 1.82%
Advanta Corp.:
6.98% 2002 2,000 1,784 .58
6.925% 2002 2,000 1,781
7.50% 2000 1,000 950
Wharf International Finance Ltd. 7.625% 2007 3,000 2,426 .31
Dime Capital Trust I, Dime Bancorp, Inc., 2,000 2,175 .28
Series A, 9.33% 2027
AT&T Capital Corp. 6.60% 2005 1,500 1,460 .19
Chase Commercial Mortgage Securities Corp. 6.39% 2008 1,522 1,295 .17
BT Institutional Capital Trust B 7.75% 12-01-26 (2) 1,000 1,030 .13
Komercni Finance BV 9.00%/10.75% 2008 (1), (2) 750 574 .07
Amresco Inc. 9.875% 2005 600 432 .06
Wilshire Financial Services Group Inc. 13.00% 2004 1,500 270 .03
Transportation - 1.04%
Teekay Shipping Corp. 8.32% 2008 3,500 3,482 .45
USAir, Inc. Pass-Through Trust, Series 1993-A3, 3,000 3,387 .43
10.375% 2013 (6)
Delta Air Lines, Inc., Series 1991-I, 10.00% 2014 (2) 1,000 1,255 .16
Consumer Products - 0.90%
AKI Inc. 10.50% 2008 (2) 3,250 3,120 .53
AKI Holding Inc. 0%/13.50% 2009 (1), (2) 2,750 1,059
Zilog, Inc. 9.50% 2005 3,000 2,340 .30
WestPoint Stevens Inc. 7.875% 2005 500 515 .07
Machinery & Engineering - 0.75%
LES, Inc. 9.25% 2008 (2) 5,625 5,850 .75
Private Issue Collateralized Mortgage/
Asset-Backed Obligations (6)
Kmart Corp., Series K-2, 9.78% 2020 2,000 2,191 .28
Dr Structured Finance Corp., Series 1994 K-2, 9.35% 2019 1,500 1,530 .20
Textiles & Apparel - 0.21%
Tultex Corp. 10.625% 2005 2,500 1,625 .21
Protection Services - 0.19%
Protection One Alarm Monitoring, Inc. 0%/13.625% 2005 (1) 1,300 1,482 .19
Non-U.S. Governments & Governmental
Authorities - 1.77%
Panama (Republic of):
Interest Reduction Bond 3.75% 2014 (2), (7) $3,000 2,303 .57
8.875% 2027 2,250 2,127
United Mexican States Government:
11.375% 2016 2,750 2,963 .41
11.50% 2026 250 269
Argentina (Republic of):
11.00% 2006 1,500 1,534 .32
9.75% 2027 800 720
11.375% 2017 250 254
Philippines (Republic of) 8.875% 2008 1,750 1,732 .22
Korea (Republic of) 8.875% 2008 1,000 989 .13
Poland (Republic of) Past Due Interest Bond 5.00% 2014 (7) 1,000 940 .12
U.S. Treasury Obligations - 1.43%
7.50% 2005 8,000 9,164 1.43
6.875% 2006 1,770 1,999
TOTAL BONDS & NOTES (cost: $699,597,000) 666,490 82.48
Number
of
Stocks Shares
Common & Preferred Stocks - 6.13%
Nextel Communications, Inc., Series E, 11.125% 2010 (3), (8) 12,881 11,594 2.04
Nextel Communications, Inc., Series D, 13.00% exchangeable 4,078 4,201
preferred (3), (8)
Nextel Communications, Inc. Class A (8) 5,422 117
Nextel Communications, Inc., warrants, expire 1999 (4), (8) 9,500 1
Dobson Communications Corp. 12.250% 2008 (3), (8) 4,126 3,919 .51
Fuji JGB Investment LLC, Series A, 9.87% noncumulative
preferred securities, perpetual (Japan) (2) $5,000 3,554 .45
Tokai Preferred Capital Co. LLC, Series A, $4,000 3,520 .45
9.98% noncumulative preferred (2)
IXC Communications, Inc. 12.50% exchangeable preferred 2,911 3,115 .40
2009 (3), (8)
Swire Pacific Capital Ltd. 8.84% cumulative guaranteed
perpetual capital securities (Hong Kong) (2) 160,000 2,640 .34
COLT Telecom Group PLC warrants, expire 2006 11,250 2,250 .29
(United Kingdom) (2), (8)
Jacor Communications, Inc. (8) 35,000 2,037 .26
Chevy Chase Preferred Capital Corp. 10.375% 39,000 1,989 .25
exchangeable preferred
Cellular Communications International, Inc. (8) 15,300 954 .18
Cellular Communications International, Inc. warrants, expire 2003 (8) 6,500 468
Omnipoint Corp. 7.00% convertible preferred (2) 62,000 1,286 .16
Kelley Oil & Gas Corp., convertible preferred 90,000 1,283 .16
Adelphia Communications Corp., preferred, 10,000 1,180 .15
Series B, 13.00% 2009 (8)
IBJ Preferred Capital Co. LLC, Series A, 8.79%
noncumulative
preferred securities, perpetual (2) $1,000 870 .11
CellNet Data Systems, Inc. (5), (8) 112,000 526 .09
CellNet Data Systems, Inc. warrants, expire 2007 (2), (8) 20,870 167
Comunicacion Celular SA, Class B, warrants, expire 2003 5,000 400 .05
(Colombia) (2), (8)
Acme Televison, LLC (2), (8) 363 362 .05
ACME Intermediate Holdings, LLC (2), (8) 5,970 358 .05
Viatel, Inc., Series A, 10.00% convertible preferred (3), (8) 5,114 337 .04
Verio Inc., warrants, expire 2004 (2), (8) 7,350 239 .03
EarthWatch Inc.12.00% convertible preferred, 350,000 175 .02
Series C (2), (3), (5), (8)
Loral Space & Communications Ltd. (formerly Orion Network
Systems, Inc. ), warrants, expire 2007 (8) 11,250 135 .02
Protection One Alarm Monitoring, Inc. warrants, 6,400 67 .01
expire 2005 (2), (8)
Globalstar Telesystem, warrants, expire 2004 (8) 1,000 60 .01
NTL Inc., warrants, expire 2008 (United Kingdom-- 1,425 42 .01
Incorporated in USA) (2), (8)
Conecel Holdings Ltd., Class B, warrants, expire 25,900 39 .00
2000 (Ecuador) (2), (8)
Esat Telecom Group PLC, warrants, expire 2007 1,250 39 .00
(Ireland) (2), (8)
KMC Telecom Holdings Inc., warrants expire 2008 (2), (8) 9,500 24 .00
Teletrac Holdings, Inc., warrants, expire 2007 (2), (8) 4,100 23 .00
McCaw International, Ltd. warrants, expire 2007 (2), (8) 2,500 7 .00
V2 Music Holdings, warrants (United Kingdom):
expire 2008 (2), (8) 6,900 0 .00
expire 2008 (8) 1,000 0
Miscellaneous - 0.18%
Other stocks in initial period of acquisition 1,386 .18
-------- --------
TOTAL STOCKS (cost: $55,131,000) 49,364 6.31
-------- --------
Principal Market Percent
Amount Value Of Net
Convertible Debentures (000) (000) Assets
Industrials & Services - 1.41%
Integrated Health Services, Inc. 5.75% 2001 $ 3,500 3,045 .38
Advanced Micro Devices, Inc. 6.00% 2005 2,400 2,340 .30
Jacor Communications, Inc.0% 2018 4,750 2,138 .27
Sunglass Hut International, Inc. 5.25% 2003 2,125 1,360 .17
Pilipino Telephone International Holding Corp. 1.75% 2006 1,875 994 .13
MBI Finance Ltd. 0.0% 2001 1,500 937 .12
Viatel, Inc.10.00% 2011 DM422 286 .04
Miscellaneous - 0.04%
Other convertible debentures in initial period of acquisition 280 .04
-------- --------
TOTAL CONVERTIBLE DEBENTURES (cost: $11,940,000) 11,380 1.45
-------- --------
TOTAL EQUITY SECURITIES (cost: $67,071,000) 60,744 7.76
-------- --------
Short-Term Securities
Corporate Short-Term Notes - 2.91%
General Electric Capital Corp. 5.45% due 12/1/98 $ 13,100 13,098 1.68
Ameritech Corp. 5.04% due 1/12/99 9,700 9,641 1.23
Federal Agency Discount Notes - 2.42%
Federal Home Loan Banks 4.81%-5.10% due 12/16/98-1/31/99 19,000 18,943 2.42
-------- --------
TOTAL SHORT-TERM SECURITIES (cost: $41,683,000) 41,682 5.33
-------- -------
TOTAL INVESTMENT SECURITIES (cost: $808,351,000) 768,916 0.96%
Excess of cash and receivables over payables 13,386 1.71
--------- -------
NET ASSETS $782,302 1.71
========= =======
(1) Step bond; coupon rate will increase at a later date.
(2) Purchased in a private placement transaction; resale
to the public may require registration or sale only to
qualified institutional buyers.
(3) Payment in kind. The issuer has the option of paying
additional securities in lieu of cash.
(4) Issue in Default.
(5) Valued under procedures established by the Board of Trustees.
(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) Coupon rate changes periodically.
(8) Non-income-producing securities.
</TABLE>
<TABLE>
American Variable Insurance Series
U.S. Government/AAA-Rated Securities Fund
Investment Portfolio, November 30, 1998
<S> <C> <C> <C>
- ------------------------------------------------ -------- -------- --------
U.S. TREASURY OBLIGATIONS 29.34%
FEDERAL AGENCY MORTGAGE-RELATED SECURITIES 29.50
PRIVATE MORTGAGE & ASSET-BACKED SECURITIES 33.12
CASH & EQUIVALENTS 2.11
CORPORATE BONDS 2.91
OTHER FEDERAL OBLIGATIONS 3.02
- ------------------------------------------------ -------- -------- --------
Principal Market Percent
Amount Value of Net
Bonds & Notes (000) (000) Assets
- ------------------------------------------------ -------- -------- --------
U.S. Treasury Obligations - 29.34%
8.875% 2017 $34,800 $49,394
10.375% 2009 27,500 35,243
7.25% 2004 17,840 20,003
12.00% 2013 10,000 15,302
10.75% 2003 9,850 12,192
7.125% 2023 7,200 8,940
7.875% 2021 5,750 7,628
6.125% 2007 4,655 5,078
11.625% 2004 2,820 3,810
3.493% 2007 (1) 2,750 2,772 29.34%
3.65% 2028 (1) 2,000 2,014
7.50% 2005 1,740 1,993
7.00% 2006 1,478 1,682
6.25% 2007 750 824
Collateralized Mortgage Obligations
(Privately Originated) (2) - 26.20%
Morgan Stanley Capital I, Inc.:
Series 1998-HF2, Class A-2, 6.48% 2030 10,000 10,367
Series 1998-1, Class A-5, 6.75% 2013 8,147 8,236
Series 1997-HF1, Class A-1, 6.86% 2006 (3) 4,572 4,709
Series 1998-HF2, Class A-1, 6.01% 2030 3,000 3,035
Series 1998-WF2, Class A-1, 6.34% 2030 2,926 2,999
Series 1998-WF1, Class A-1, 6.25% 2007 2,529 2,577 5.61
Prudential-Bache CMO Trust III, 9.44% 2018 14,000 14,066 2.47
Westam Mortgage, Class 4-H, 8.95% 2018 11,000 11,337 1.99
Ocwen Residential MBS Corp.,
Series 1998-R1, Class AWC, 2.459% 2027 (3) 9,671 9,525 1.68
Structured Asset Securities Corp.:
Series 1998-RF2, Class A, 8.577% 2027 (3) 3,561 3,805
Series 1998-RF1, Class A, 8.696% 2027 (3) 3,393 3,649
Series 1996-CFL, Class A1-C, 5.944% 2028 1,465 1,462 1.57
Nomura Asset Securities Corp., Series 1998-D6,
Class A-A1, 6.28% 2030 7,649 7,789 1.37
G E Capital Mortgage Services, Inc., Series 1994-15,
Class A-10, 6.00% 2009 8,000 7,655 1.35
Deutsche Mortgage & Asset Receiving Corp., Series 1998-C1,
Class A-1, 6.22% 2031 7,236 7,354 1.29
Mortgage Capital Funding, Inc., Series 1998-MC1,
Class A-1, 6.42% 2030 6,274 6,465 1.14
CS First Boston Mortgage Securities Corp., Series 1998-C1,
Class A-1A, 6.26% 2040 6,131 6,257 1.10
Chase Commercial Mortgage Securities Corp.:
Series 1998-2, Class A-2, 6.39% 2008 3,000 3,096
Series 1998-1, Class A-1, 6.34% 2030 2,907 2,976 1.07
Merrill Lynch Mortgage Investors, Inc.:
Series 1997-C1, Class A-1, 6.95% 2029 (4) 2,803 2,916
Series 1995-C3, Class A-3, 7.062% 2025 1,500 1,558
Series 1995-C3, Class A-2, 6.822% 2025 (4) 1,500 1,536 1.06
Commercial Mortgage Acceptance Corp.:
Series 1998-C1, Class A-1, 6.23% 2007 2,454 2,501
Series 1998-C2, Class A-1, 5.80% 2006 1,486 1,494 .70
AMRESCO Commercial Mortgage Funding I Corp., Series 1997-C1,
Class A-1, 6.73% 2029 3,346 3,424 .60
J.P. Morgan Commercial Mortgage Finance Corp., Series 1995-C1,
Class A-2, 7.452% 2010 (4) 3,000 3,041 .53
Nationsbanc Montgomery Funding Corp., Series 1998-5,
Class A-1, 6.00% 2013 3,000 2,974 .52
Norwest Asset Securities Corp.:
Series 1998-8, Class A-1,6.50% 2013 1,415 1,422
Series 1998-31, Class A-1, 6.25% 2014 1,300 1,297 .48
Freddie Mac, Series 1998-A, Class A-3, 6.69% 2020 (3) 2,000 2,023 .36
LB Commercial Conduit Mortgage Trust, Series 1998-C1,
Class A-1, 6.33% 2004 1,901 1,940 .34
DLJ Mortgage Acceptance Corp., Series 1996-CF1,
Class A-1A, 7.28% 2028 1,653 1,734 .30
GMAC Commercial Mortgage Securities Inc., Series 1997-C1,
Class A-3, 6.869% 2007 1,500 1,590 .28
DLJ Commercial Mortgage Corp., Series 1998-CF2,
Class A-1B, 6.24% 2031 1,250 1,277 .23
Ryland Acceptance Corp., Series 1988-E(Z), 7.95% 2019 907 934 .16
Federal Agency Obligations - Mortgage
Pass-Throughs (2) - 25.30%
Government National Mortgage Assn.:
7.00% 2023-2026 15,377 15,744
8.50% 2021-2023 6,993 7,467
6.875% 2021-2024 (4) 7,198 7,275
6.00% 2013 6,838 6,876
6.50% 2028 6,346 6,403
8.00% 2023-2026 5,837 6,070
9.50% 2019-2021 3,427 3,700 11.63
7.50% 2022-2028 3,516 3,632
7.375% 2024 (4) 2,287 2,312
10.00% 2019 2,073 2,249
7.00% 2018 (4) 1,514 1,535
5.50% 2013 1,096 1,080
9.00% 2009-2016 931 998
6.625% 2018 (4) 666 677
10.50% 2019 87 96
11.00% 2019 27 30
12.00% 2012-2014 5 5
Fannie Mae:
6.00% 2013 10,971 10,985
6.50% 2013-2028 9,166 9,267
8.50% 2023-2027 6,770 7,107
8.00% 2024 5,358 5,571
7.00% 2026-2028 5,311 5,425
13.00% 2015 2,565 3,065
10.00% 2018 2,574 2,789
12.00% 2028 1,901 2,207 9.27
7.50% 2009 2,122 2,183
9.00% 2011-2025 2,023 2,137
5.50% 2013 2,012 1,982
Freddie Mac:
6.00% 2013 8,920 8,937
8.25% 2008-2009 2,982 3,093
8.00% 2012 2,897 2,982
6.50% 2013 2,144 2,175
5.50% 2013 1,980 1,951 4.02
7.00% 2008 1,873 1,917
9.00% 2022 1,240 1,311
8.50% 2018 390 412
9.50% 2016 93 99
12.00% 2016 1 1
Freddie Mac Gold 9.00% 2028 2,033 2,142 .38
Asset-Backed Obligations (2) - 6.92%
Green Tree Financial Corp.:
Series 1995-9, Class A-5, 6.80% 2027 5,000 5,053
Series 1996-7, Class A-6, 7.65% 2027 3,000 3,094
Series 1996-10, Class A-5, 6.83% 2028 2,500 2,535
Series 1997-6, Class A-6, 6.90% 2029 2,500 2,534
Series 1995-3, Class A-5, 7.30% 2025 2,050 2,085 2.69
Sears Credit Account Master Trust, Series 1998-2,
Class A, 5.25%, 2008 5,300 5,179 .91
Chase Credit Card Master Trust, Series 1997-5, Class A, 6.194% 4,000 4,116 .72
ContiMortgage Home Equity Loan Trust 1996-4,
Class A-4, 6.37% 2011 3,742 3,734 .66
First Chicago Master Trust II, Series 1995-M,
Class A, 5.518% 2003 (4) 3,500 3,488 .61
Chevy Chase Master Credit Card Trust, Series 1996-C,
Class A, 5.418% 2007 (4) 3,000 2,962 .52
Standard Credit Card Master Trust 1994-4, Class A,
8.25% 2003 2,500 2,659 .47
Bombardier Capital Mortgage Securitization Corp., Series 1998-A,
Class A-3, 6.23% 2028 2,000 1,943 .34
Collateralized Mortgage Obligations
(Federal Agencies) (2) - 4.20%
Freddie Mac:
Series 1567, Class A, 5.713% 2023 (4) 8,145 7,873
Series 1948, Class PJ, 6.65% 2027 4,000 3,971
Series 1716, Class A, 6.50% 2009 2,250 2,254
Series 1507, Class JZ, 7.00% 2023 587 606
Series 2030, Class F, 5.778% 2028 379 382
Series 83-B, Class B-3, 12.50% 2013 312 352 2.71
Fannie Mae:
Series 1997-M6, Class ZA, 6.85% 2026 5,446 5,458
Series 1998-M6, Class A-2, 6.32% 2008 1,000 1,036
Series 1997-28, Class C, 7.00% 2027 1,000 1,015
Series 1994-4, 6.50% 2024 964 941 1.49
Federal Agency Obligations - Other - 3.02%
Fannie Mae:
5.75% 2005 3,000 3,108
6.00% 2008 2,000 2,101 .92
Freddie Mac 5.75% 2008 4,500 4,637 .82
Federal Home Loan Bank:
5.80% 2008 2,000 2,062
5.125% 2003 2,500 2,508 .80
Tennesee Valley Authority, Series G, 5.375% 2008 2,750 2,761 .48
Development Authorities - 2.41%
Inter-American Development Bank 8.875% 2009 10,000 12,683 2.23
Asian Development Bank 5.75% 2003 1,000 1,021 .18
Financial - 0.31%
Toyota Motor Credit Corp., 6.00% 2003 (Japan) 1,750 1,785 .31
Foreign Governmental Authorities - 0.19%
KfW International Finance Inc., 7.625% 2004 (Germany) 1,000 1,100 .19
--------------------
TOTAL BONDS & NOTES (cost: $541,273,000) 556,818 97.89
--------------------
Short-Term Securities
- ------------------------------------------------
Corporate Short-Term Notes - 5.76%
General Motors Acceptance Corp. 5.19% due 12/14/1998 11,800 11,776 2.07
General Electric Capital Corp. 5.45% due 12/1/1998 11,000 10,998 1.93
Eastman Kodak Co. 5.11% due 12/8/1998 10,000 9,989 1.76
Federal Agency Discount Notes - 0.61%
Freddie Mac 4.93% due 2/5/1999 3,500 3,467 .61
--------------------
TOTAL SHORT-TERM SECURITIES (cost: $36,230,000) 36,230 6.37
--------------------
TOTAL INVESTMENT SECURITIES (cost: $577,503,000) 593,048 104.26
Excess of payables over cash and receivables 24,219 4.26
--------------------
NET ASSETS $568,829 100.00%
====================
(1) Index-linked bond, which is a floating rate
bond whose principal amount moves with a
government retail price index.
(2) Pass-through securities backed by a pool of
mortgages or other loans on which principal
payments are periodically made. Therefore,
the effective maturity of these securities is
shorter than the stated maturity.
(3) 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, 1998
<S> <C> <C> <C>
Principal Market
Amount Value Percent of
Short-Term Securities (000) (000) Net Assets
Corporate Short-Term Notes - 74.03%
Shell Oil Co. 5.06% due 12/10/1998 $10,000 $ 9,986 3.52%
Procter & Gamble Co. 5.02%-5.12% due 12/11/1998-1/6/1999 8,500 8465 2.99
A.I. Credit Corp. 5.14%-5.18% due 1/4-1/12/1999 8,100 8054 2.84
E.I. du Pont de Nemours and Co. 5.00%-5.17% due 12/7-12/8/1998 7,600 7,592 2.68
Yale University 5.20% due 1/7/1999 7,500 7459 2.63
Consolidated Natural Gas Co. 5.12% due 12/10/1998 7,200 7190 2.54
Eastman Kodak Co. 5.00% due 12/17/1998 6,700 6684 2.36
Lucent Technologies Inc. 5.05% due 1/8-1/13/1999 6,700 6660 2.35
Harvard University 5.15% due 12/3/1998 6,500 6497 2.29
General Electric Capital Corp. 5.23% due 12/4/1998 6,500 6,496 2.29
American Express Credit Corp. 5.21% due 12/11/1998 6500 6490 2.29
IBM Credit Corp. 5.30% due 1/5/1999 6,300 6,267 2.21
Colgate-Palmolive Co. 5.15% due 12/1/1998 (1) 6,000 5,999 2.12
General Motors Acceptance Corp. 5.16% due 12/3/1998 6,000 5998 2.12
Motorola, Inc. 5.17% due 12/3/1998 6,000 5,997 2.12
SBC Communications Inc. 4.85% due 12/11/1998 (1) 6,000 5,991 2.11
Amoco Corp. 4.83% due 12/15/1998 6,000 5,988 2.11
Minnesota Mining and Manufacturing Co. 5.06% due 12/15/1998 6,000 5987 2.11
St Paul Companies, Inc. 5.16% due 12/16/1998 (1) 6,000 5986 2.11
Rockwell International Corp. 4.87% due 12/22/1998 6,000 5982 2.11
BellSouth Telecommunications, Inc. 4.99%-5.08%
due 12/8/1998-1/20/1999 6,000 5975 2.11
General Mills Inc. 5.25% due 1/11/1999 6,000 5963 2.10
International Lease Finance Corp. 5.11% due 1/19/1999 6,000 5957 2.10
Household Finance Corp. 5.00%-5.03% due 12/2-12/22/1998 5,900 5892 2.08
Vermont American Corp. 4.82%-5.11% due 12/18-12/31/1998 (1) 5,100 5083 1.79
Hershey Foods Corp. 4.97% due 12/10/1998 5,000 4993 1.76
Ameritech Corp. 5.00% due 1/12/1999 5,000 4,970 1.75
Duke Energy Corp. 5.05% due 1/12/1999 5,000 4970 1.75
Duke University 5.10% due 1/15/1999 5,000 4967 1.75
Gannett Co. 5.05% due 1/11/1999 (1) 4,500 4474 1.58
Ford Motor Credit Co. 5.24% due 1/29/1999 4,200 4,163 1.47
H.J. Heinz Co. 5.15% due 12/1/1998 4,000 3999 1.41
Coca-Cola Co. 5.00% due 1/19/1999 4,000 3,972 1.40
PepsiCo, Inc. 5.05% due 1/5/1999 3,800 3,781 1.33
Walt Disney Co. 5.13% due 12/7/1998 3,600 3,596 1.27
Johnson & Johnson 5.00% due 12/14/1998 (1) 3,600 3,593 1.27
CIT Group Holdings, Inc. 5.24% due 1/14/1999 3,500 3,477 1.23
Nordstrom Credit Inc. 5.12% due 12/18/1998 2,000 1,995 0.70
Schering Corp. 5.00% due 12/2/1998 1,372 1,372 0.48
Pfizer Inc 5.09% due 12/2/1998 (1) 900 900 0.32
Federal Agency Discount Notes - 22.66%
Federal Home Loan Banks 5.00%-5.056% due 12/4/1998-1/29/1999 25,300 25246 8.90
Fannie Mae 5.00%-5.12% due 12/22/1998-1/15/1999 22,643 22514 7.94
Freddie Mac 5.05%-5.06% due 12/1-12/2/1998 16,500 16497 5.82
---------- ----------
TOTAL INVESTMENT SECURITIES (cost: $284,117,000) 284117 100.21
Excess of payables over cash and receivables 601 0.21
---------- ----------
NET ASSETS $283,516 100.00%
========== ==========
(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
<S> <C> <C> <C> <C>
Statement of Assets and Liabilities
at November 30, 1998
(dollars in thousands, except per-share
data) Global
Global Small Inter-
Growth Capitalization Growth national
Fund Fund Fund Fund
- --------------------------------- ---------- ---------- ---------- ----------
ASSETS:
Investment securities at market $253,930 $73,712 $5,651,380 $2,726,885
Cash 78
Receivables for-
Sales of investments 18,927 4,275
Sales of fund's shares 100 105 911 174
Open forward currency
contracts - - -
Dividends and
interest 149 61 964 6,725
---------- ---------- ---------- ----------
257,490 73,914 5,672,213 2,738,354
LIABILITIES: ---------- ---------- ---------- ----------
Payables for-
Purchases of investments 2,010 1,618 43,658 15,322
Repurchases of fund's shares 3,503
Open forward currency
contracts - - - -
Management services 139 46 1,754 1,254
Distribution fees - Class 2
Other expenses 14 2 130 407
---------- ---------- ---------- ----------
2,188 1,672 49,105 19,641
NET ASSETS AT ---------- ---------- ---------- ----------
November 30, 1998 (Total $19,473,619) $255,302 $72,242 $5,623,108 $2,718,713
=========== =========== =========== ===========
Investment securities at cost $228,514 $77,420 $4,026,891 $2,112,182
=========== =========== =========== ===========
Class 1 (unlimited shares authorized):
Net assets $131,691 $54,833 $5,312,603 $2,592,639
Shares of beneficial interest
outstanding 10,111,982 6,019,266 96,747,129 156,465,710
Net asset value per share $13.02 $9.11 $54.91 $16.57
Class 2 (unlimited shares authorized):
Net assets $123,611 $17,409 $310,505 $126,074
Shares of beneficial interest
outstanding 9,496,959 1,912,201 5,657,846 7,612,694
Net asset value per share $13.02 $9.10 $54.88 $16.56
Growth- Asset High-Yield
Income Allocation Bond Bond
Fund Fund Fund Fund
- --------------------------------- ---------- ---------- ---------- ----------
ASSETS:
Investment securities at market $7,264,400 $1,664,150 $232,957 $768,916
Cash 382 85 4 30
Receivables for-
Sales of investments 18,088 823 - 231
Sales of fund's shares 1,218 419 334 873
Open forward currency
contracts - - -
Dividends and
interest 9,854 9,064 3,363 13,692
---------- ---------- ---------- ----------
7,293,942 1,674,541 236,677 783,742
LIABILITIES: ---------- ---------- ---------- ----------
Payables for-
Purchases of investments 21,270 3,268 5,289 1,065
Repurchases of fund's shares 21
Open forward currency
contracts - - - 9
Management services 2,037 586 95 308
Distribution fees - Class 2
Other expenses 191 40 3 24
---------- ---------- ---------- ----------
26,225 3,930 5,398 1,440
NET ASSETS AT ---------- ---------- ---------- ----------
November 30, 1998 (Total $19,473,619) $7,267,717 $1,670,611 $231,279 $782,302
=========== =========== =========== ===========
Investment securities at cost $5,798,153 $1,386,280 $234,774 $808,351
=========== =========== =========== ===========
Class 1 (unlimited shares authorized):
Net assets $6,703,872 $1,497,375 $186,105 $714,640
Shares of beneficial interest
outstanding 164,600,954 90,363,732 17,950,462 51,917,114
Net asset value per share $40.73 $16.57 $10.37 $13.77
Class 2 (unlimited shares authorized):
Net assets $563,845 $173,236 $45,174 $67,662
Shares of beneficial interest
outstanding 13,852,224 10,460,667 4,359,683 4,918,329
Net asset value per share $40.70 $16.56 $10.36 $13.76
U.S.
Government/
AAA-Rated Cash
Securities Management
Fund Fund
- --------------------------------- ---------- ----------
ASSETS:
Investment securities at market $593,048 $284,117
Cash 26 30
Receivables for-
Sales of investments 1,771 -
Sales of fund's shares 259 695
Open forward currency
contracts - -
Dividends and
interest 4,624
---------- ----------
599,728 284,842
LIABILITIES: ---------- ----------
Payables for-
Purchases of investments 30,162 -
Repurchases of fund's shares 1,202
Open forward currency
contracts - -
Management services 238 108
Distribution fees - Class 2 7
Other expenses 18 9
---------- ----------
30,899 1,326
NET ASSETS AT ---------- ----------
November 30, 1998 (Total $19,473,619) $568,829 $283,516
=========== ===========
Investment securities at cost $577,503 $284,117
=========== ===========
Class 1 (unlimited shares authorized):
Net assets $536,795 $249,403
Shares of beneficial interest
outstanding 46,973,661 22,406,554
Net asset value per share $11.43 $11.13
Class 2 (unlimited shares authorized):
Net assets $32,034 $34,113
Shares of beneficial interest
outstanding 2,804,954 3,066,851
Net asset value per share $11.42 $11.12
See Notes to Financial Statements
</TABLE>
<TABLE>
American Variable Insurance Series
FINANCIAL STATEMENTS
Statement of Operations
for the year ended November 30, 1998
(dollars in thousands)
<S> <C> <C> <C> <C>
Global
Global Small Inter-
Growth Capitalization Growth national
Fund Fund (1) Fund Fund
---------- ---------- ---------- ----------
INVESTMENT INCOME:
Income:
Dividends $2,147 $249 $17,697 $45,118
Interest 1,510 425 23,289 10,544
---------- ---------- ---------- ----------
3,657 674 40,986 55,662
---------- ---------- ---------- ----------
Expenses:
Management services fee 1,341 240 20,494 15,732
Distribution fees - Class 2 217 13 479 225
Reports to shareholders 6 1 155 82
Registration statement and
prospectus 38 2 125 87
Postage, stationery and
supplies 2 1 67 37
Trustees' fees 2 - 55 30
Auditing and legal fees 2 - 54 30
Custodian fee 61 7 112 2,067
Taxes other than federal
income tax 3 - 58 49
Other expenses 5 1 28 92
---------- ---------- ---------- ----------
1,677 265 21,627 18,431
---------- ---------- ---------- ----------
Net investment income 1,980 409 19,359 37,231
---------- ---------- ---------- ----------
REALIZED GAIN AND
UNREALIZED APPRECIATION
(DEPRECIATION) ON INVESTMENTS:
Realized gain 9,087 925 847,243 47,635
---------- ---------- ---------- ----------
Net change in unrealized appreciation
(depreciation) on investments 26,951 (3,708) 296,599 337,298
Net change in unrealized appreciation
(depreciation) on open forward currency
contracts - - - (1,826)
---------- ---------- ---------- ----------
Net unrealized appreciation
(depreciation) 26,951 (3,708) 296,599 335,472
---------- ---------- ---------- ----------
Net realized gain and
unrealized appreciation (depreciation)
on investments 36,038 (2,783) 1,143,842 383,107
---------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $38,018 $ $1,163,201 $420,338
========= ========= ========= ===========
High-
Growth- Asset Yield
Income Allocation Bond Bond
Fund Fund Fund Fund
--------- ---------- ---------- ----------
INVESTMENT INCOME:
Income:
Dividends $101,871 $19,125 $ 505 $2,097
Interest 44,403 45,430 13,230 72,491
---------- ---------- ---------- ----------
146,274 64,555 13,735 74,588
---------- ---------- ---------- ----------
Expenses:
Management services fee 24,542 6,916 952 4,018
Distribution fees - Class 2 917 268 70 116
Reports to shareholders 211 48 6 24
Registration statement and
prospectus 250 75 20 38
Postage, stationery and
supplies 92 20 2 11
Trustees' fees 75 17 2 9
Auditing and legal fees 75 16 2 9
Custodian fee 155 44 9 33
Taxes other than federal
income tax 81 14 2 5
Other expenses 47 9 2 6
---------- ---------- ---------- ----------
26,445 7,427 1,067 4,269
---------- ---------- ---------- ----------
Net investment income 119,829 57,128 12,668 70,319
---------- ---------- ---------- ----------
REALIZED GAIN AND
UNREALIZED APPRECIATION
(DEPRECIATION) ON INVESTMENTS:
Realized gain 1,068,839 115,877 1,054 6,948
---------- ---------- ---------- ----------
Net change in unrealized appreciation
(depreciation) on investments (236,509) 6,383 (4,900) (66,641)
Net change in unrealized appreciation
(depreciation) on open forward currency
contracts 12 (133)
---------- ----------- ----------- ----------
Net unrealized appreciation
(depreciation) (236,509) 6,383 (4,888) (66,774)
---------- ----------- ----------- ----------
Net realized gain and
unrealized appreciation (depreciation)
on investments 832,330 122,260 (3,834) (59,826)
---------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $952,159 $179,388 $8,834 $10,493
========= ========= ========= =========
U.S.
Government/ Cash
AAA-Rated Manage-
Securities ment
Fund Fund
--------------- ----------
INVESTMENT INCOME:
Income:
Dividends $ -
Interest 33,531 $14,295
---------- ----------
33,531 14,295
---------- ----------
Expenses:
Management services fee 2,553 1,164
Distribution fees - Class 2 42 56
Reports to shareholders 16 8
Registration statement and
prospectus - 2
Postage, stationery and
supplies 6 3
Trustees' fees 4 3
Auditing and legal fees 5 3
Custodian fee 16 7
Taxes other than federal
income tax 2 -
Other expenses 2 4
---------- ----------
2,646 1,250
---------- ----------
Net investment income 30,885 13,045
---------- ----------
REALIZED GAIN AND
UNREALIZED APPRECIATION
(DEPRECIATION) ON INVESTMENTS:
Realized gain 4,748 1
---------- ----------
Net change in unrealized appreciation
(depreciation) on investments 5,763 -
Net change in unrealized appreciation
(depreciation) on open forward currency
contracts - -
--------------- ----------
Net unrealized appreciation
(depreciation) 5,763 -
--------------- ----------
Net realized gain and
unrealized appreciation (depreciation)
on investments 10,511 1
---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $41,396 $13,046
=============== =========
(1) For the period April 30, 1998, commencement of
operations, through November 30, 1998.
See Notes to Financial Statements
</TABLE>
<TABLE>
American Variable Insurance Series
FINANCIAL STATEMENTS
<S> <C> <C> <C> <C>
Global Small
Statement of Changes in Net Assets Global Capitalization
(dollars in thousands) Growth Fund Fund
------------- ------------- -------------
Year ended Period ended Period ended
November 30, November 30, November 30,
1998 1997 (1) 1998(2)
- ---------------------------------- ----------- ----------- -----------
OPERATIONS:
Net investment income $1,980 $549 $409
Net realized gain (loss) on investments 9,087 (99) 925
Net unrealized appreciation (depreciation)
on investments 26,951 (1,529) (3,708)
----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations 38,018 (1,079) (2,374)
----------- ----------- -----------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income:
Class 1 (1,226) (176) (194)
Class 2 (766) (62) (36)
----------- ----------- -----------
Total dividends from net investment income (1,992) (238) (230)
Distributions from net realized gain on
investments (277) - -
----------- ----------- -----------
Total dividends and distributions (2,269) (238) (230)
----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Class 1:
Proceeds from shares sold 45,339 81,956 50,353
Proceeds from shares issued on reinvestment
of dividends and distributions 1,395 176 194
Cost of shares repurchased (15,055) (6,631) (2,874)
----------- ----------- -----------
Net increase (decrease) from Class 1 transactions 31,679 75,501 47,673
----------- ----------- -----------
Class 2:
Proceeds from shares sold 61,131 47,516 17,199
Proceeds from shares issued on reinvestment
of dividends and distributions 874 62 36
Cost of shares repurchased (893) - (62)
----------- ----------- -----------
Net increase from Class 2 transactions 61,112 47,578 17,173
Net increase (decrease) in net ----------- ----------- -----------
assets resulting from capital share
transactions 92,791 123,079 64,846
----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS 128,540 121,762 62,242
NET ASSETS:
Beginning of year 126,762 5,000 10,000
----------- ----------- -----------
End of year $255,302 $126,762 $72,242
============ ============ ============
Undistributed net investment income $296 $311 $182
============ ============ ============
SHARES OF BENEFICIAL INTEREST:
Class 1:
Shares sold 3,748,614 7,649,183 5,351,886
Shares issued on reinvestment of dividends
and distributions 118,716 15,620 23,072
Shares repurchased (1,315,104) (605,047) (355,692)
----------- ----------- -----------
Net increase (decrease) in shares outstanding 2,552,226 7,059,756 5,019,266
============ ============ ============
Class 2:
Shares sold 5,120,157 4,376,072 1,915,704
Shares issued on reinvestment of dividends
and distributions 73,850 5,510 4,349
Shares repurchased (78,598) (32) (7,852)
----------- ----------- -----------
Net increase in shares outstanding 5,115,409 4,381,550 1,912,201
============ ============ ============
Growth Fund International Fund
------------- -------------
Year ended Year ended Year ended Year ended
November 30, November 30, November 30, November 30,
1998 1997 1998 1997
- ---------------------------------- ----------- ----------- ----------- -----------
OPERATIONS:
Net investment income $19,359 $24,821 $37,231 $41,594
Net realized gain (loss) on investments 847,243 561,323 47,635 277,748
Net unrealized appreciation (depreciation)
on investments 296,599 342,407 335,472 (92,076)
----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations 1,163,201 928,551 420,338 227,266
----------- ----------- ----------- -----------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income:
Class 1 (16,761) (24,809) (45,333) (43,541)
Class 2 (125) (50) (1,201) (166)
----------- ----------- ----------- -----------
Total dividends from net investment income (16,886) (24,859) (46,534) (43,707)
Distributions from net realized gain on
investments (580,855) (268,039) (272,318) (94,763)
----------- ----------- ----------- -----------
Total dividends and distributions (597,741) (292,898) (318,852) (138,470)
----------- ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Class 1:
Proceeds from shares sold 109,347 238,801 41,886 208,181
Proceeds from shares issued on reinvestment
of dividends and distributions 586,639 292,848 312,120 138,304
Cost of shares repurchased (589,670) (354,956) (471,251) (196,240)
----------- ----------- ----------- -----------
Net increase (decrease) from Class 1 transactions 106,316 176,693 (117,245) 150,245
----------- ----------- ----------- -----------
Class 2:
Proceeds from shares sold 195,304 72,649 68,884 51,308
Proceeds from shares issued on reinvestment
of dividends and distributions 11,102 50 6,732 166
Cost of shares repurchased (457) (11) (1,263) (24)
----------- ----------- ----------- -----------
Net increase from Class 2 transactions 205,949 72,688 74,353 51,450
Net increase (decrease) in net ----------- ----------- ----------- -----------
assets resulting from capital share
transactions 312,265 249,381 (42,892) 201,695
----------- ----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS 877,725 885,034 58,594 290,491
NET ASSETS:
Beginning of year 4,745,383 3,860,349 2,660,119 2,369,628
----------- ----------- ----------- -----------
End of year $5,623,108 $4,745,383 $2,718,713 $2,660,119
============ ============ ============ ============
Undistributed net investment income $7,091 $4,612 $ $9,642
============ ============ ============ ============
SHARES OF BENEFICIAL INTEREST:
Class 1:
Shares sold 2,196,906 5,361,345 2,567,211 12,876,841
Shares issued on reinvestment of dividends
and distributions 13,311,288 7,259,293 21,440,773 8,982,981
Shares repurchased (11,951,567) (8,120,252) (30,137,030) (11,853,859)
----------- ----------- ----------- -----------
Net increase (decrease) in shares outstanding 3,556,627 4,500,386 (6,129,046) 10,005,963
============ ============ ============ ============
Class 2:
Shares sold 3,926,116 1,488,730 4,258,892 2,969,078
Shares issued on reinvestment of dividends
and distributions 252,355 1,040 460,573 9,366
Shares repurchased (10,179) (216) (83,746) (1,469)
Net increase in shares outstanding ----------- ----------- ----------- -----------
4,168,292 1,489,554 4,635,719 2,976,975
============ ============ ============ ============
Growth-Income Asset
Fund Allocation Fund
------------- -------------
Year ended Year ended Year ended Year ended
November 30, November 30, November 30, November 30,
1998 1997 1998 1997
- ---------------------------------- ----------- ----------- ----------- -----------
OPERATIONS:
Net investment income $119,829 $117,807 $57,128 $46,387
Net realized gain (loss) on investments 1,068,839 631,933 115,877 78,404
Net unrealized appreciation (depreciation)
on investments (236,509) 464,898 6,383 86,689
----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations 952,159 1,214,638 179,388 211,480
----------- ----------- ----------- -----------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income:
Class 1 (115,861) (112,850) (51,238) (43,924)
Class 2 (5,220) (568) (3,336) (267)
----------- ----------- ----------- -----------
Total dividends from net investment income (121,081) (113,418) (54,574) (44,191)
Distributions from net realized gain on
investments (633,062) (373,625) (78,277) (72,976)
----------- ----------- ----------- -----------
Total dividends and distributions (754,143) (487,043) (132,851) (117,167)
----------- ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Class 1:
Proceeds from shares sold 79,575 258,887 55,514 94,533
Proceeds from shares issued on reinvestment
of dividends and distributions 730,769 486,475 126,847 116,900
Cost of shares repurchased (713,841) (287,990) (120,895) (52,765)
----------- ----------- ----------- -----------
Net increase (decrease) from Class 1 transactions 96,503 457,372 61,466 158,668
----------- ----------- ----------- -----------
Class 2:
Proceeds from shares sold 363,643 152,837 121,817 40,846
Proceeds from shares issued on reinvestment
of dividends and distributions 23,374 568 6,004 267
Cost of shares repurchased (829) (2) (195) (203)
----------- ----------- ----------- -----------
Net increase from Class 2 transactions 386,188 153,403 127,626 40,910
Net increase (decrease) in net ----------- ----------- ----------- -----------
assets resulting from capital share
transactions 482,691 610,775 189,092 199,578
----------- ----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS 680,707 1,338,370 235,629 293,891
NET ASSETS:
Beginning of year 6,587,010 5,248,640 1,434,982 1,141,091
----------- ----------- ----------- -----------
End of year $7,267,717 $6,587,010 $1,670,611 $1,434,982
============ ============ ============ ============
Undistributed net investment income $28,393 $29,653 $14,723 $12,170
============ ============ ============ ============
SHARES OF BENEFICIAL INTEREST:
Class 1:
Shares sold 2,066,094 7,261,018 3,472,672 6,313,389
Shares issued on reinvestment of dividends
and distributions 20,193,738 14,498,052 8,206,467 8,156,386
Shares repurchased (18,531,056) (7,793,511) (7,525,015) (3,428,456)
----------- ----------- ----------- -----------
Net increase (decrease) in shares outstanding 3,728,776 13,965,559 4,154,124 11,041,319
============ ============ ============ ============
Class 2:
Shares sold 9,296,520 3,921,601 7,514,429 2,569,382
Shares issued on reinvestment of dividends
and distributions 643,598 14,358 385,691 16,640
Shares repurchased (23,804) (49) (12,673) (12,802)
Net increase in shares outstanding ----------- ----------- ----------- -----------
9,916,314 3,935,910 7,887,447 2,573,220
============ ============ ============ ============
High-Yield
Bond Fund Bond Fund
------------- -------------
Year ended Year ended Year ended Year ended
November 30, November 30, November 30, November 30,
1998 1997 1998 1997
- ---------------------------------- ----------- ----------- ----------- -----------
OPERATIONS:
Net investment income $12,668 $7,007 $70,319 $64,918
Net realized gain (loss) on investments 1,054 1,649 6,948 14,913
Net unrealized appreciation (depreciation)
on investments (4,888) 1,007 (66,774) 5,122
----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations 8,834 9,663 10,493 84,953
----------- ----------- ----------- -----------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income:
Class 1 (9,573) (5,948) (65,776) (61,513)
Class 2 (1,605) (126) (3,726) (387)
----------- ----------- ----------- -----------
Total dividends from net investment income (11,178) (6,074) (69,502) (61,900)
Distributions from net realized gain on
investments (1,717) - (8,320) -
----------- ----------- ----------- -----------
Total dividends and distributions (12,895) (6,074) (77,822) (61,900)
----------- ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Class 1:
Proceeds from shares sold 64,860 52,881 45,293 74,311
Proceeds from shares issued on reinvestment
of dividends and distributions 11,132 5,948 73,843 61,513
Cost of shares repurchased (18,584) (7,585) (107,252) (55,586)
----------- ----------- ----------- -----------
Net increase (decrease) from Class 1 transactions 57,408 51,244 11,884 80,238
----------- ----------- ----------- -----------
Class 2:
Proceeds from shares sold 33,674 11,571 49,128 20,198
Proceeds from shares issued on reinvestment
of dividends and distributions 1,763 126 3,979 387
Cost of shares repurchased (1,431) (29) (1,418) (3)
----------- ----------- ----------- -----------
Net increase from Class 2 transactions 34,006 11,668 51,689 20,582
Net increase (decrease) in net ----------- ----------- ----------- -----------
assets resulting from capital share
transactions 91,414 62,912 63,573 100,820
----------- ----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS 87,353 66,501 (3,756) 123,873
NET ASSETS:
Beginning of year 143,926 77,425 786,058 662,185
----------- ----------- ----------- -----------
End of year $231,279 $143,926 $782,302 $786,058
============ ============ ============ ============
Undistributed net investment income $3,506 $2,081 $17,744 $17,389
============ ============ ============ ============
SHARES OF BENEFICIAL INTEREST:
Class 1:
Shares sold 6,220,296 5,092,091 3,143,506 5,078,465
Shares issued on reinvestment of dividends
and distributions 1,070,589 579,221 5,138,832 4,250,842
Shares repurchased (1,789,981) (732,975) (7,540,786) (3,792,325)
----------- ----------- ----------- -----------
Net increase (decrease) in shares outstanding 5,500,904 4,938,337 741,552 5,536,982
============ ============ ============ ============
Class 2:
Shares sold 3,219,589 1,098,637 3,361,669 1,355,310
Shares issued on reinvestment of dividends
and distributions 169,961 12,011 280,937 26,144
Shares repurchased (137,744) (2,771) (105,506) (225)
Net increase in shares outstanding ----------- ----------- ----------- -----------
3,251,806 1,107,877 3,537,100 1,381,229
============ ============ ============ ============
U.S. Government/
AAA-Rated Cash Management
Securities Fund Fund
------------- -------------
Year ended Year ended Year ended Year ended
November 30, November 30, November 30, November 30,
1998 1997 1998 1997
- ---------------------------------- ----------- ----------- ----------- -----------
OPERATIONS:
Net investment income $30,885 $32,546 $13,045 $12,382
Net realized gain (loss) on investments 4,748 (9,383) 1 -
Net unrealized appreciation (depreciation)
on investments 5,763 6,202 - -
----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations 41,396 29,365 13,046 12,382
----------- ----------- ----------- -----------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income:
Class 1 (29,472) (34,740) (11,431) (11,948)
Class 2 (938) (123) (984) (182)
----------- ----------- ----------- -----------
Total dividends from net investment income (30,410) (34,863) (12,415) (12,130)
Distributions from net realized gain on
investments - - - -
----------- ----------- ----------- -----------
Total dividends and distributions (30,410) (34,863) (12,415) (12,130)
----------- ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Class 1:
Proceeds from shares sold 97,521 23,001 269,818 252,946
Proceeds from shares issued on reinvestment
of dividends and distributions 29,472 34,740 11,431 11,948
Cost of shares repurchased (71,432) (93,774) (258,426) (279,424)
----------- ----------- ----------- -----------
Net increase (decrease) from Class 1 transactions 55,561 (36,033) 22,823 (14,530)
----------- ----------- ----------- -----------
Class 2:
Proceeds from shares sold 26,930 8,344 40,995 19,573
Proceeds from shares issued on reinvestment
of dividends and distributions 938 123 984 182
Cost of shares repurchased (3,235) (1,538) (21,792) (5,950)
----------- ----------- ----------- -----------
Net increase from Class 2 transactions 24,633 6,929 20,187 13,805
Net increase (decrease) in net ----------- ----------- ----------- -----------
assets resulting from capital share
transactions 80,194 (29,104) 43,010 (725)
----------- ----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS 91,180 (34,602) 43,641 (473)
NET ASSETS:
Beginning of year 477,649 512,251 239,875 240,348
----------- ----------- ----------- -----------
End of year $568,829 $477,649 $283,516 $239,875
============ ============ ============ ============
Undistributed net investment income $7,936 $7,461 $3,971 $3,341
============ ============ ============ ============
SHARES OF BENEFICIAL INTEREST:
Class 1:
Shares sold 8,582,116 2,087,594 24,352,691 22,809,829
Shares issued on reinvestment of dividends
and distributions 2,630,834 3,195,318 1,037,352 1,083,759
Shares repurchased (6,349,283) (8,543,011) (23,299,957) (25,187,883)
----------- ----------- ----------- -----------
Net increase (decrease) in shares outstanding 4,863,667 (3,260,099) 2,090,086 (1,294,295)
============ ============ ============ ============
Class 2:
Shares sold 2,379,800 756,866 3,700,810 1,763,820
Shares issued on reinvestment of dividends
and distributions 83,414 11,218 89,256 16,540
Shares repurchased (287,245) (139,099) (1,966,921) (536,654)
Net increase in shares outstanding ----------- ----------- ----------- -----------
2,175,969 628,985 1,823,145 1,243,706
(1) For the period April 30, 1997, commencement ============ ============ ============ ============
of operations, through November 30, 1997.
(2) For the period April 30, 1998, commencement
of operations, through November 30, 1998.
(3) Represents initial capitalization from the sale
of 500,000 Class 1 shares of beneficial interest.
(4) Represents initial capitalization from the sale
of 1,000,000 Class 1 shares of beneficial interest.
See Notes to Financial Statements
</TABLE>
Notes to Financial Statements
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION -- American Variable Insurance Series (the "series") is registered
under the Investment Company Act of 1940 as an open-end, diversified management
investment company with 10 different funds. The 10th fund, the Global Small
Capitalization Fund, commenced operations on April 30, 1998. 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; Global Small
Capitalization Fund - long-term growth of capital by investing primarily in
smaller companies in the U.S. and 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 specific 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.
SIGNIFICANT ACCOUNTING POLICIES -- The following is a summary of the
significant accounting policies consistently followed by the series in the
preparation of its financial statements:
SECURITY VALUATION -- 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 their representative quoted bid and asked prices. 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.
NON-U.S. CURRENCY TRANSLATION -- Assets or liabilities initially expressed in
terms of non-U.S. currencies are translated into U.S. dollars at the prevailing
market rates at the end of the reporting period. Purchases and sales of
securities and income and expenses are translated into U.S. dollars at the
prevailing market rates on the dates of such transactions. The effects of
changes in non-U.S. currency exchange rates on investment securities are
included with the net realized and unrealized gain or loss on investment
securities.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME -- 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 and premiums on securities purchased
are amortized.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends and distributions paid
to shareholders are recorded on the ex-dividend date.
FORWARD CURRENCY CONTRACTS -- The series may enter into forward currency
contracts, which represent agreements to exchange currencies of different
countries at specified future dates at specified rates. 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 -- 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. FEDERAL INCOME TAXATION
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, 1998, the U.S. Government/AAA-Rated
Securities Fund utilized a capital loss carryforward of $4,051,000 to offset,
for tax purposes, capital gains realized during the period up to such amount.
The U.S. Government/AAA-Rated Securities Fund had available at November 30,
1998 capital loss carryforward totaling $15,528,000, which may be used to
offset capital gains realized during subsequent years through November 30,
2005, and thereby relieve the fund and its shareholders of any federal income
tax liability with respect to the capital gains that are so offset. It is the
intention of this fund not to make distributions from capital gains while there
is a capital loss carryforward.
Additional tax basis disclosures for and as of the year ended November 30, 1998
are as follows:
<TABLE>
<S> <C> <C> <C> <C> <C>
(dollars in
thousands)
Global Global Small Growth-
Growth Capitalization Growth Interna- Income
Fund Fund Fund tional Fund Fund
For the year
ended November 30, 1998
Tax basis net capital
gain 8,723 $1,054 * $827,001 $47,635 $1,068,847
Tax basis net currency
gain (loss) (3) 3 * 9 - (8)
Losses during the period
November 1, 1998 to
November 30, 1998 deferred to
fiscal year ending
November 30,1999 related to
the following:
Currency - - 3 - -
Capital gains - 132 132 - -
As of November 30, 1998 (tax
basis amounts,
excluding forward
currency contracts):
Unrealized
appreciation 42,825 6,330 1,892,039 776,874 1,743,049
Unrealized
depreciation 17,409 10,038 267,550 162,171 276,802
Net unrealized
appreciation
(depreciation) 25,416 (3,708) 1,624,489 614,703 1,466,247
Cost of portfolio
securities 228,514 77,420 4,026,891 2,112,182 5,798,153
(dollars in
thousands)
Asset High-Yield U.S. Government/ Cash
Allocation Bond Bond AAA-Rated Management
Fund Fund Fund Securities Fund Fund
For the year
ended November 30, 1998
Tax basis net capital
gain $115,878 $1,107 $10,784 $4,051 $1
Tax basis net currency
gain (loss) (1) (53) (595) - -
Losses during the period
November 1, 1998 to
November 30, 1998 deferred to
fiscal year ending
November 30,1999 related to
the following:
Currency - - - - -
Capital gains - - 3,903 - -
As of November 30, 1998 (tax
basis amounts,
excluding forward
currency contracts):
Unrealized
appreciation 330,738 5,476 24,943 17,543 -
Unrealized
depreciation 52,868 7,274 64,378 1,998 -
Net unrealized
appreciation
(depreciation) 277,870 (1,798) 39,435 15,545 -
Cost of portfolio
securities 1,386,280 234,774 808,351 577,503 284,117
* For the period
April 30, 1998,
commencement of operations,
through November 30, 1998.
</TABLE>
3. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE -- The fees for management services were incurred
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; Global Small Capitalization Fund - 0.80% 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 -0.78%
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; 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 Global Growth Fund, Global
Small Capitalization Fund, Growth Fund, Growth-Income Fund, and Asset
Allocation Fund effective December 1, 1998, at the following annual rates:
Global Growth Fund - 0.69% of the first $600 million of average net assets;
0.59% of such assets in excess of $600 million but not exceeding $1.2 billion;
and 0.53% of such assets in excess of $1.2 billion; Global Small Capitalization
Fund - 0.80% of the first $600 million of average net assets; and 0.74% of such
assets in excess of $600 million; 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; 0.35% of such assets in excess of $3.2 billion but not
exceeding $5.2 billion; 0.33% of such assets in excess of $5.2 billion but not
exceeding $8.4 billion; and 0.315% of such assets in excess of $8.4 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;
0.285% of such assets in excess of $4.0 billion but not exceeding $6.5 billion;
0.256% of such assets in excess of $6.5 billion but not exceeding $10.5
billion; and 0.242% of such assets in excess of $10.5 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; 0.36% of such
assets in excess of $1.2 billion but not exceeding $2.0 billion; and 0.32% of
such assets in excess of $2.0 billion. Beginning July 1, 1998, CRMC has
voluntarily agreed to waive its management fees in excess of those provided by
the amended agreement. For the Growth Fund and the Growth-Income Fund, the
amounts waived were $15,000 and $55,000 respectively.
DISTRIBUTION EXPENSES -- Pursuant to a Plan of Distribution, each fund is
authorized to pay an annual rate of 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, 1998, Plan expenses for the
series aggregated $2,403,000. As of November 30, 1998, accrued and unpaid
distribution expenses were $293,000.
DEFERRED TRUSTEES' FEES -- 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 30,1998, aggregate amounts deferred and earnings thereon
were $386,000. Certain trustees and officers of the series are or may be
considered to be affiliated with CRMC. No such persons received any
remuneration directly from the series.
4. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The following table presents additional information for and as of November 30,
1998:
<TABLE>
<S> <C> <C> <C><C> <C> <C>
(dollars in
thousands)
Global Global Small Growth-
Growth Capitalization Growth Interna- Income
Fund Fund Fund tional Fund Fund
For the year
ended November 30,1998:
Purchases of
investment
securities (1) 121,673 70,231 (2)2,396,436 875,181 2,658,486
Sales of invest-
ment securities (1) 48,490 10,644 (2)2,632,263 1,133,256 2,734,346
Book basis net currency
gain (loss) on dividends,
interest, withholding
taxes reclaimable, and
sale of non-U.S. bonds (3) 3 (2) 6 (775) (8)
As of November 30, 1998:
Accumulated
undistributed
net realized
gain (loss) on
Investments $8,714 $922 $827,391 $50,374 $1,067,309
Reclassification from (to)
undistributed net investment
income to (from)undistributed
net realized gain 3 (3) (6) 828 8
Paid-in capital 220,870 74,846 3,164,137 2,053,868 4,705,764
(dollars in
thousands)
Asset High-YieldU.S. Government/ Cash
Allocation Bond Bond AAA-Rated Management
Fund Fund Fund Securities Fund Fund
For the year
ended November 30,1998:
Purchases of
investment
securities (1) 478,986 195,963 542,112 520,241 -
Sales of invest-
ment securities (1) 397,678 98,164 497,096 419,153 -
Book basis net currency
gain (loss) on dividends,
interest, withholding
taxes reclaimable, and
sale of non-U.S. bonds (1) (145) (112) - -
As of November 30, 1998:
Accumulated
undistributed
net realized
gain (loss) on
Investments $115,451 $1,062 $6,826 $ (15,657) $1
Reclassification from (to)
undistributed net investment
income to (from)undistributed
net realized gain 1 65 462 - -
Paid-in capital 1,262,567 228,509 797,143 561,005 254,071
(1) Excludes short-
term securities
(2) For the period
April 30, 1998,
commencement of operations,
through November 30, 1998.
</TABLE>
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 $2,511,000, of
which $132,000 was paid by these credits rather than in cash.
Dividend and interest income for the Global Growth Fund, the Global Small
Capitalization Fund and the International Fund is recorded net of non-U.S.
taxes paid. For the year ended November 30, 1998, such non-U.S. taxes were
$187,000, $29,000 and $5,327,000, respectively.
At November 30, 1998, the Bond Fund and the High-Yield Bond Fund had
outstanding forward currency contracts to sell non-U.S. currencies as follows:
<TABLE>
<S> <C> <C> <C>
Non-U.S. Currency Sale Contracts
Contract Amount
--------- ---------
Fund Non-U.S. U.S.
--------- --------- ---------
Deutsche Marks
expiring 2/3/1999 Bond DM 983,000 $ 600,000
expiring 2/3-2/25/1999 High-Yield Bond 21,424,000 12,723,000
Great British Pound
expiring 12/21/1998-8/10/1999 High-Yield Bond GBP 6,696,000 10,950,000
U.S. Valuation at 11/30/98
--------- ---------
Unrealized
Appreciation
Fund Amount (Depreciation)
--------- --------- ---------
Deutsche Marks
expiring 2/3/1999 Bond $ 581,000 $ 19,000
expiring 2/3-2/25/1999 High-Yield Bond 12,675,000 48,000
Great British Pound
expiring 12/21/1998-8/10/1999 High-Yield Bond 10,984,000 (34,000)
</TABLE>
<PAGE>
<TABLE>
PER-SHARE DATA AND RATIOS
<S> <C> <C> <C> <C> <C>
Net gains Total Dividends
Net asset Net or losses on from (from net
value, invest- securities invest- invest-
Year beginning ment (both realized ment ment
Ended of year income and unrealized) operations income)
- --------- --------- --------- --------- --------- ---------
Global Growth Fund (1)
Class 1
1997 $10.00 $.06 $ .59 $ .65 $(.03)
1998 10.62 .13 2.43 2.56 (.14)
Class 2 (3)
1997 10.00 .03 .60 .63 (.02)
1998 10.61 .10 2.44 2.54 (.11)
Global Small Capitalization Fund (4)
Class 1
1998 $10.00 $.06 $(.91) $(.85) $(.04)
Class 2
1998 10.00 .04 (.91) (.87) (.03)
Growth Fund
Class 1
1994 $ $.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)
1998 50.12 .19 10.91 11.10 (.17)
Class 2 (3)
1997 40.59 .11 9.51 9.62 (.12)
1998 50.09 .08 10.90 10.98 (.05)
International Fund
Class 1
1994 $ $.25 $ $ $(.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)
1998 16.07 .22 2.21 2.43 (.28)
Class 2 (3)
1997 15.86 .13 .23 .36 (.16)
1998 16.06 .20 2.19 2.39 (.24)
Growth Income Fund
Class 1
1994 $ $.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)
1998 39.97 .67 4.60 5.27 (.68)
Class 2 (3)
1997 34.10 .37 5.82 6.19 (.35)
1998 39.94 .58 4.60 5.18 (.59)
Asset Allocation Fund
Class 1
1994 $ $.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)
1998 16.16 .58 1.27 1.85 (.57)
Class 2 (3)
1997 14.43 .29 1.69 1.98 (.26)
1998 16.15 .53 1.28 1.81 (.53)
Bond Fund (5)
Class 1
1996 $10.00 $.40 $.16 $.56 $(.25)
1997 10.31 .63 .30 .93 (.62)
1998 10.62 .67 (.15) .52 (.65)
Class 2 (3)
1997 10.11 .35 .46 .81 (.31)
1998 10.61 .65 (.15) .50 (.63)
High-Yield Bond Fund
Class 1
1994 $ $ $ (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)
1998 14.96 1.26 (1.04) .22 (1.25)
Class 2 (3)
1997 14.28 .69 .61 1.30 (.63)
1998 14.95 1.23 (1.04) .19 (1.22)
U.S. Government/
AAA-Rated Securities Fund
Class 1
1994 $ $.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)
1998 11.18 .68 .26 .94 (.69)
Class 2 (3)
1997 10.83 .38 .33 .71 (.37)
1998 11.17 .68 .24 .92 (.67)
Cash Management Fund
Class 1
1994 $ $.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)
1998 11.13 .57 (.01) .56 (.56)
Class 2 (3)
1997 11.07 .28 .03 .31 (.26)
1998 11.12 .55 (.02) .53 (.53)
Distri-
butions Net asset Net assets,
(from Total value, end of
Year capital distri- end of Total year (in
Ended gains) butions year return millions)
- --------- --------- --------- --------- --------- ---------
Global Growth Fund (1)
Class 1
1997 - $(.03) $10.62 6.45% (2) $ 80
1998 $(.02) (.16) 13.02 24.26 132
Class 2 (3)
1997 - (.02) 10.61 6.28 (2) 46
1998 (.02) (.13) 13.02 24.06 124
Global Small Capitalization Fund (4)
Class 1
1998 $(.04) $ (8.31)% (2) $55
Class 2
1998 (.03) 9.10 (8.49) (2) 17
Growth Fund
Class 1
1994 $(1.09) $(1.33) $ 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
1998 (6.14) (6.31) 54.91 25.27 5,313
Class 2 (3)
1997 - (.12) 50.09 23.73 (2) 75
1998 (6.14) (6.19) 54.88 24.97 310
International Fund
Class 1
1994 $ (.22) $ (.42) $ 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
1998 (1.65) (1.93) 16.57 16.94 2,593
Class 2 (3)
1997 - (.16) 16.06 2.20 (2) 48
1998 (1.65) (1.89) 16.56 16.63 126
Growth Income Fund
Class 1
1994 $ (.88) $ (1.53) $ 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
1998 (3.83) (4.51) 40.73 14.77 6,704
Class 2 (3)
1997 - (.35) 39.94 18.18 (2) 157
1998 (3.83) (4.42) 40.70 14.49 564
Asset Allocation Fund
Class 1
1994 $(.18) $ (.70) $ (.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
1998 (.87) (1.44) 16.57 12.32 1,497
Class 2 (3)
1997 - (.26) 16.15 13.80 (2) 42
1998 (.87) (1.40) 12.05 173
Bond Fund (5)
Class 1
1996 - $(.25) $10.31 5.74% (2) $ 77
1997 - (.62) 10.62 9.36 132
1998 $(.12) (.77) 10.37 5.12 186
Class 2 (3)
1997 - (.31) 10.61 8.09 (2) 12
1998 (.12) (.75) 10.36 4.85 45
High-Yield Bond Fund
Class 1
1994 $ (.25) $(1.48) $ (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
1998 (.16) (1.41) 13.77 1.44 715
Class 2 (3)
1997 - (.63) 14.95 9.20 (2) 21
1998 (.16) (1.38) 13.76 1.18 68
U.S. Government/
AAA-Rated Securities Fund
Class 1
1994 $(.07) $ (.81) $ (4.58)% $463
1995 - (.81) 11.52 14.73 542
1996 - (.82) 11.29 5.49 512
1997 - (.80) 11.18 6.49 471
1998 - (.69) 11.43 8.72 537
Class 2 (3)
1997 - (.37) 11.17 6.65 (2) 7
1998 - (.67) 11.42 8.46 32
Cash Management Fund
Class 1
1994 - $(.32) $ 3.59% $221
1995 - (.59) 11.11 5.65 193
1996 - (.54) 11.12 5.09 240
1997 - (.55) 11.13 5.21 226
1998 - (.56) 11.13 5.17 250
Class 2 (3)
1997 - (.26) 2.87 (2) 14
1998 - (.53) 4.92 34
Ratio
Ratio of of net
expenses income to Portfolio
Year to average average turnover
Ended net assets net assets rate
- --------- --------- --------- ---------
Global Growth Fund (1)
Class 1
1997 .44% (2) .80% (2) 13.22% (2)
1998 .75 1.14 25.56
Class 2 (3)
1997 .57 (2) .56 (2) 13.22 (2)
1998 1.00 .87 25.56
Global Small Capitalization Fund (4)
Class 1
1998 .51% (2) .86% (2) 28.20% (2)
Class 2
1998 .62 (2) .63 (2) 28.2 (2)
Growth Fund
Class 1
1994 .49% .78% 29.58%
1995 .47 .92 35.47
1996 .44 .61 30.88
1997 .42 .59 45.14
1998 .41 .38 49.91
Class 2 (3)
1997 .37 (2) .08 (2) 45.14
1998 .66 .15 49.91
International Fund
Class 1
1994 .80% 2.03% 19.66%
1995 .75 2.64 24.66
1996 .69 1.99 32.08
1997 .67 1.56 50.12
1998 .66 1.36 34.08
Class 2 (3)
1997 .53 (2) .34 (2) 50.12
1998 .91 1.03 34.08
Growth Income Fund
Class 1
1994 .47% 2.72% 29.26%
1995 .44 2.70 26.91
1996 .41 2.26 31.27
1997 .38 2.01 37.55
1998 .36 1.74 42.72
Class 2 (3)
1997 .35 (2) .93 (2) 37.55
1998 .61 1.02 42.72
Asset Allocation Fund
Class 1
1994 .53% 4.55% 36.13%
1995 .52 4.11 39.89
1996 .49 3.88 50.62
1997 .47 3.63 34.14
1998 .45 3.63 27.97
Class 2 (3)
1997 .40 (2) 1.81 (2) 34.14
1998 .70 3.39 27.97
Bond Fund (5)
Class 1
1996 .52% (2) 6.18% (2) 32.83% (2)
1997 .55 6.63 52.93
1998 .54 6.89 61.54
Class 2 (3)
1997 .44 (2) 3.50 (2) 52.93
1998 .78 6.62 61.54
High-Yield Bond Fund
Class 1
1994 .54% 9.37% 38.46%
1995 .54 10.12 31.73
1996 .53 9.27 44.81
1997 .51 8.92 50.22
1998 .51 8.66 65.80
Class 2 (3)
1997 .43 (2) 4.92 (2) 50.22
1998 .76 8.60 65.80
U.S. Government/
AAA-Rated Securities Fund
Class 1
1994 .54% 6.69% 45.21%
1995 .54 7.37 30.11
1996 .53 7.33 30.45
1997 .52 6.73 53.80
1998 .51 6.11 89.25
Class 2 (3)
1997 .44 (2) 3.45 (2 53.80
1998 .75 5.68 89.25
Cash Management Fund
Class 1
1994 .49% 3.60% -
1995 .49 5.37 -
1996 .47 4.94 -
1997 .47 4.99 -
1998 .46 5.07 -
Class 2 (3)
1997 .41 (2) 2.80 (2) -
1998 .70 4.75 -
1 Commenced operations
April 30, 1997.
2 Based on operations
for the period shown
and, accordingly, not
representative of a
full year.
3 Shares offered for
sale commencing
April 30, 1997.
4 Commenced operations
April 30, 1998.
5 Commenced operations
January 2, 1996.
See Notes to Financial Statements
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
_________________________________________________________________
To the Board of Trustees and Shareholders of
American Variable Insurance Series:
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investment portfolios, and the related statements of
operations and of changes in net assets and the per-share data and ratios
present fairly, in all material respects, the financial position of the Global
Growth Fund, the Global Small Capitalization 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, 1998, 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, 1998 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.
PricewaterhouseCoopers LLP
Los Angeles, California
January 8, 1999
AMERICAN VARIABLE INSURANCE SERIES
BOARD OF TRUSTEES
CHARLES H. BLACK
Pacific Palisades, California
Private investor and consultant; former
Executive Vice President and Director,
KaiserSteel Corporation
H. FREDERICK CHRISTIE
Rolling Hills Estates, California
Private investor; former President and
Chief Executive Officer,
The Mission Group; former President,
Southern California Edison Company
JOE E. DAVIS
Encino, California
Private investor; former Chairman of the Board,
Linear Corporation; former President and
Chief Executive Officer,
National Health Enterprises, Inc.
MARTIN FENTON, JR.
San Diego, California
Chairman of the Board,
Senior Resource Group, Inc.
(senior living centers management)
MARY MYERS KAUPPILA
Boston, Massachusetts
Private investor;
former owner and President,
Energy Investment, Inc.
KIRK P. PENDLETON
Southampton, Pennsylvania
Chairman of the Board and
Chief Executive Officer,
Cairnwood, Inc.
(venture capital investment)
JAMES F. ROTHENBERG
Los Angeles, California
President of the series
President and Director,
Capital Research and Management Company
THOMAS E. TERRY
Los Angeles, California
Chairman of the Board of the series
Consultant;
former Vice President and Secretary,
Capital Research and Management Company
OTHER OFFICERS
JAMES K. DUNTON
Los Angeles, California
Senior Vice President of the series
Senior Vice President and Director,
Capital Research and Management Company
ABNER D. GOLDSTINE
Los Angeles, California
Senior Vice President of the series
Senior Vice President and Director,
Capital Research and Management Company
ALAN N. BERRO
Los Angeles, California
Vice President of the series
Senior Vice President,
Capital Research Company
MICHAEL J. DOWNER
Los Angeles, California
Vice President of the series
Senior Vice President - Fund Business
Management Group,
Capital Research and Management Company
CLAUDIA P. HUNTINGTON
Los Angeles, California
Vice President of the series
Senior Vice President,
Capital Research and Management Company
ROBERT W. LOVELACE
Los Angeles, California
Vice President of the series
Executive Vice President and Director,
Capital Research Company
DONALD D. O'NEAL
San Francisco, California
Vice President of the series
Vice President,
Capital Research and Management Company
JOHN H. SMET
Los Angeles, California
Vice President of the series
Vice President,
Capital Research and Management Company
CHAD L. NORTON
Los Angeles, California
Secretary of the series
Vice President - Fund Business
Management Group,
Capital Research and Management Company
ROBERT P. SIMMER
Norfolk, Virginia
Treasurer of the series
Vice President - Fund Business
Management Group,
Capital Research and Management Company
SHERYL F. JOHNSON
Norfolk, Virginia
Assistant Treasurer of the series
Vice President - Fund Business
Management Group,
Capital Research and Management Company
OFFICES OF THE SERIES AND OF
THE INVESTMENT ADVISER,
CAPITAL RESEARCH AND
MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92821-5823
CUSTODIAN OF ASSETS
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02105-1713
COUNSEL
Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street
Los Angeles, California 90071-2371
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
400 South Hope Street
Los Angeles, California 90071-2889
This report is for the information of American Variable Insurance Series
investors, but it may also be used as sales literature when preceded or
accompanied by the current prospectus for American Variable Insurance Series
and the prospectus for the applicable insurance contract, which gives details
about charges, expenses, investment objectives and operating policies. If used
as sales material after March 31, 1999, this report must be accompanied by an
American Legacy III Statistical Update for the most recently completed calendar
quarter.
Printed on recycled paper
Litho in USA A/L/3929
(c) 1999 American Funds Distributors, Inc.
Lit. No. VI3-011-0199
