AMERICAN VARIABLE INSURANCE SERIES
333 South Hope Street, Los Angeles, California 90071
Telephone (213) 486-9200
CHAD L. NORTON
Secretary
May 30, 2000
Document Control
Division of Investment Management -
Office of Insurance Products
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-1004
Re: American Variable Insurance Series (the "Series")
File No. 2-86838 and No. 811-3857
Dear Sir or Madam:
Enclosed, pursuant to Rule 14a-6(b) are Letter to Shareholders, Notice, Proxy
Statement and Proxy Card, which were mailed to shareholders of the above-named
fund. The proxy materials are in connection with the meeting of shareholders
to be held on June 20, 2000.
Sincerely,
/s/ Chad L. Norton
Chad L. Norton
Enclosure
AMERICAN VARIABLE INSURANCE SERIES
333 SOUTH HOPE STREET, LOS ANGELES, CALIFORNIA 90071
GLOBAL GROWTH FUND
GLOBAL SMALL CAPITALIZATION FUND
GROWTH FUND
INTERNATIONAL FUND
NEW WORLD FUND
GROWTH-INCOME FUND
ASSET ALLOCATION FUND
BOND FUND
HIGH-YIELD BOND FUND
U.S. GOVERNMENT/AAA-RATED SECURITIES FUND
CASH MANAGEMENT FUND
Important Information for Contract Owners:
A meeting of shareholders of the 11 funds listed above (each a "Fund" and
collectively, the "Funds") comprising American Variable Insurance Series (the
"Series") will be held at the offices of the Series, 333 South Hope Street,
55th Floor, Los Angeles, California, on Tuesday, June 20, 2000 at 1:00 P.M.,
local time. These materials discuss the proposals to be voted on at the
meeting, and contain a Proxy Statement and Proxy Instruction Card.
All of the Funds' outstanding shares are owned of record by the separate
accounts of insurance companies. These companies use the Funds as the
underlying investments for variable annuity and variable life insurance
contracts issued by them. A Proxy Instruction Card is, in essence, a ballot.
When you complete your Proxy Instruction Card, it tells your insurance company
how to vote its proxy on important issues relating to the Fund(s) underlying
your insurance contract. If you complete and sign the Proxy Instruction Card,
the shares of the Funds related to your insurance contract will be voted
exactly as you instruct. If you simply sign the Proxy Instruction Card without
otherwise completing it, your insurance company will vote these shares for the
proposals. If you do not return a Proxy Instruction Card at all, your insurance
company will vote these shares in the same proportion as shares for which
instructions have been received from other owners of insurance contracts.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR ALL PROPOSALS.
We are sure that you, like most people, lead a busy life and are tempted to
put these materials aside for another day. Please don't delay. We urge you to
review the Proxy Statement and mark, sign and return the enclosed Proxy
Instruction Card today. If contract owners do not return their signed Proxy
Instruction Cards, additional expenses may be incurred to pay for follow-up
mailings and telephone calls. PLEASE BE SURE TO SIGN AND RETURN EACH PROXY
INSTRUCTION CARD REGARDLESS OF HOW MANY YOU RECEIVE.
Thank you for investing with us and for your continuing support.
Sincerely,
James F. Rothenberg James K. Dunton
CHAIRMAN OF THE BOARD PRESIDENT
AMERICAN VARIABLE INSURANCE SERIES
________
GLOBAL GROWTH FUND
GLOBAL SMALL CAPITALIZATION FUND
GROWTH FUND
INTERNATIONAL FUND
NEW WORLD FUND
GROWTH-INCOME FUND
ASSET ALLOCATION FUND
BOND FUND
HIGH-YIELD BOND FUND
U.S. GOVERNMENT/AAA-RATED SECURITIES FUND
CASH MANAGEMENT FUND
________
NOTICE OF MEETING OF SHAREHOLDERS
JUNE 20, 2000
________
TO THE SHAREHOLDERS OF
AMERICAN VARIABLE INSURANCE SERIES:
A meeting of shareholders of the funds listed above (each a "Fund" and
collectively, the "Funds") comprising American Variable Insurance Series (the
"Series") will be held at the offices of the Series, 333 South Hope Street,
55th Floor, Los Angeles, California, on Tuesday, June 20, 2000 at 1:00 P.M.,
local time. Each of the Funds represents a separate, fully managed portfolio of
securities with its own investment objective(s) and policies and two classes of
shares -- Class 1 and Class 2. The meeting is being held to consider and vote
on the following matters for each Fund as indicated below and described under
the corresponding numbers in the accompanying Proxy Statement:
1. The election of a Board of 10 Trustees (Proposal 1 -- ALL FUNDS).
2. A proposal to eliminate or revise certain of the Funds' investment
restrictions (Proposal 2 - ALL FUNDS except, for Items 2A and 2B,
Cash Management Fund).
3. Approval of an amendment to the Declaration of Trust to change the name of
the Series (Proposal 3 - ALL FUNDS).
4. Ratification of the selection of PricewaterhouseCoopers LLP as independent
public accountant for the Series for the fiscal year 2000 (Proposal 4
- ALL FUNDS).
The Board of Trustees has fixed the close of business on April 14, 2000 as
the record date for the determination of shareholders entitled to notice of and
to vote at the meeting.
THE PROPOSED BUSINESS CANNOT BE CONDUCTED AT THE MEETING UNLESS THE HOLDERS OF
A MAJORITY OF THE SHARES OF EACH FUND OUTSTANDING ON THE RECORD DATE ARE
PRESENT IN PERSON OR BY PROXY. THEREFORE, PLEASE MARK, DATE, SIGN AND RETURN
THE ENCLOSED PROXY INSTRUCTION CARD, WHICH IS SOLICITED BY THE BOARD OF
TRUSTEES. YOU MAY REVOKE IT AT ANY TIME BEFORE ITS USE. YOUR SIGNING IT WILL
NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
By order of the Board of Trustees,
CHAD L. NORTON
SECRETARY
May 26, 2000
IMPORTANT
YOU CAN HELP THE SERIES AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP
LETTERS TO ENSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY INSTRUCTION
CARD. PLEASE MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY INSTRUCTION CARD
SO THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE MEETING. THE ENCLOSED
ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
AMERICAN VARIABLE INSURANCE SERIES
333 SOUTH HOPE STREET, LOS ANGELES, CALIFORNIA 90071
________
PROXY STATEMENT
MEETING OF SHAREHOLDERS
JUNE 20, 2000
________
The enclosed proxy is solicited by the Board of Trustees of the Series in
connection with the meeting of shareholders of the Global Growth, Global Small
Capitalization, Growth, International, New World, Growth-Income, Asset
Allocation, Bond, High-Yield Bond, U.S. Government/AAA-Rated Securities and
Cash Management Funds to be held at the offices of the Series, 333 South Hope
Street, 55th Floor, Los Angeles, California, on Tuesday, June 20, 2000 at 1:00
P.M., local time.
All of the Funds' outstanding shares are owned of record by the separate
accounts of insurance companies (the "Participating Insurance Companies") that
use the Funds as the underlying investments for variable annuity and variable
life insurance contracts. Under current law, the Participating Insurance
Companies are required to solicit voting instructions from contract owners who
beneficially own shares in the Funds as of the record date noted below. If you
complete and sign the enclosed Proxy Instruction Card, the Participating
Insurance Company that issued your insurance contract will vote the shares of
the Fund(s) related to your contract exactly as you instruct. If you simply
sign the Proxy Instruction Card without otherwise completing it, your
Participating Insurance Company will vote these shares for the proposals. If
you do not return a Proxy Instruction Card at all, your Participating Insurance
Company will vote these shares in the same proportion as shares for which
instructions have been received from other owners of contracts.
You can revoke a Proxy Instruction Card before its exercise, either by filing
with the Participating Insurance Company a written notice of revocation, or by
delivering a duly executed Proxy Instruction Card bearing a later date.
Because contract owners are indirectly invested in the Funds through their
contracts and have the right to instruct the Participating Insurance Companies
how to vote shares of the Funds on all matters requiring a shareholder vote,
contract owners should consider themselves shareholders of the Funds for
purposes of this Proxy Statement. This Proxy Statement and Proxy Instruction
Card were first mailed to shareholders on or about May 26, 2000.
The Series is a fully managed, diversified, open-end investment company
consisting of 11 Funds, each of which represents a separate fully managed
portfolio of securities with its own investment objective(s) and policies, and
two classes of shares -- Class 1 and Class 2. At the close of business on
April 14, 2000, the record date fixed by the Board of Trustees for the
determination of shareholders entitled to notice of and to vote at the meeting,
the following were the outstanding share balances for the Funds:
<TABLE>
<CAPTION>
Fund Class 1 Class 2
<S> <C> <C>
Global Growth 18,740,277 23,377,520
Global Small Capitalization 16,437,397 10,176,051
Growth 114,660,634 20,149,139
International 152,208,345 18,286,271
New World 5,336,556 5,748,586
Growth-Income 191,607,224 42,410,793
Asset Allocation 84,704,203 24,244,955
Bond 15,711,906 10,532,634
High-Yield Bond 41,549,829 8,304,548
U.S. Government/AAA-Rated 35,730,545 4,472,961
Securities
Cash Management 22,280,251 3,700,166
</TABLE>
Each share of the Series (whether Class 1 or Class 2) is entitled to one vote.
There is no provision for cumulative voting. No contract owner is known by the
Series to own beneficially 5% or more of the outstanding shares of any Fund.
Shareholders of each Fund will vote separately with respect to Proposal 2 (if
applicable); shareholders of each Fund will vote together on Proposals 1, 3 and
4. Class 1 and Class 2 shareholders of each Fund will vote together on all
Proposals.
With respect to the election of trustees (Proposal 1), the 10 nominees
receiving the highest number of votes will be elected. The vote required to
approve Proposal 2 is the affirmative vote of the lesser of (a) 67% or more of
all shares present in person or by proxy, provided the holders of more than 50%
of all outstanding voting shares are present or represented by proxy, or (b)
more than 50% of all outstanding voting shares on the record date. The vote to
approve Proposal 3 is the affirmative vote of more than 50% of all outstanding
voting shares on the record date. The vote required to approve Proposal 4 is
the affirmative vote of a majority of all shares present in person or
represented by proxy.
If sufficient votes are not received by the meeting date, a person named as
proxy may propose one or more adjournments of the meeting for up to 120 days in
the aggregate to permit further solicitation of proxies. The persons named as
proxies may vote all proxies in favor of such adjournment.
PROPOSAL 1: ELECTION OF TRUSTEES
Ten trustees are to be elected at the meeting, each to hold office until the
next meeting and until a successor is elected and qualified. Because meetings
of shareholders will not be held each year, the trustees' terms will be
indefinite in length. All of the nominees for trustee except Lee A. Ault III,
James K. Dunton, Leonard R. Fuller, Donald D. O'Neal, and Kirk P. Pendleton
were elected by shareholders at their last meeting on March 14, 1995. Mr.
Pendleton was elected by the Board of Trustees in 1996, Mr. Ault and Mr.
Fuller were elected by the Board of Trustees in 1999, and Mr. Dunton and Mr.
O'Neal were nominated by the Board of Trustees in 2000.
Each of the nominees has agreed to serve as trustee if elected. If any
unforseen event prevents one or more of the nominees from serving as a trustee,
your votes will be cast (unless you have elected to withhold authority as to
the election of any nominee) for the election of such person or persons as the
Board of Trustees shall recommend. The table below sets forth certain
information regarding the nominees.
<TABLE>
<CAPTION>
MEMBERSHIPS ON
CURRENT PRINCIPAL YEAR BOARDS OF OTHER
NAME OF NOMINEE OCCUPATION AND FIRST REGISTERED INVESTMENT
(POSITION WITH FUND) PRINCIPAL EMPLOYMENT ELECTED A COMPANIES AND PUBLICLY
AND AGE DURING PAST FIVE YEARS # TRUSTEE HELD COMPANIES
<S> <C> <C> <C>
Lee A. Ault III Chairman, IN-Q-IT, Inc.; 1999 Equifax, Inc.
former Chairman
(Trustee) and Chief Executive Officer, Office Depot, Inc.
Telecredit, Inc.
63 Sunrise Medical, Inc.
H. Frederick Christie Private Investor; former 1994 The American Funds Group
President and
(Trustee) Chief Executive Officer, the (Director/Trustee - 18
Mission Group funds)
66 (non-utility holding company,
subsidiary of
Southern California Edison
Company)
Joe E. Davis Private Investor: former 1991 Anworth Mortgage
Chairman of the Securities, Inc.
(Trustee) Board, Linear Corporation; BMC Industries, Inc.
former President,
65 and Chief Executive Officer, Natural Alternatives, Inc.
National
Health Enterprises, Inc. Wilshire Technologies, Inc.
James K. Dunton* Senior Vice President and Nominee The American Funds Group
Director, Capital
(President and Nominee) Research and Management (Director - 1 fund)
Company
62
Martin Fenton Chairman, Senior Resource 1995 The American Funds Group
Group, LLC
(Trustee) (development and management (Director/Trustee - 14
of senior funds)
65 living communities)
Leonard R. Fuller President, Fuller Consulting 1999 The American Funds Group
(financial
(Trustee) management consulting firm) (Director/Trustee - 12
funds)
53
Mary Myers Kauppila Private investor, former 1994 The American Funds Group
Owner and President,
(Trustee) Energy Investment, Inc. (Director/Trustee - 4
funds)
46
Donald D. O'Neal* Vice President, Capital Nominee
Research and
(Nominee) Management Company
39
Kirk P. Pendleton Chairman and Chief Executive 1996 The American Funds Group
Officer,
(Trustee) Cairnwood, Inc. (venture (Director/Trustee - 5
capital investment) funds)
60 York Group, Inc.
James F. Rothenberg* President and Director, 1995 The American Funds Group
Capital Research and
(Chairman of the Board) Management Company (Director/Trustee - 2
funds)
53
</TABLE>
__________________
# Corporate positions, in some instances, may have changed during this period.
* Is considered an "interested person" of the Series within the meaning of the
Investment Company Act of 1940, as amended (the "1940 Act"), on the basis of
affiliation with Capital Research and Management Company (the "Investment
Adviser"). The Investment Adviser is a wholly owned subsidiary of The Capital
Group Companies, Inc.
Capital Research and Management Company, located at 333 South Hope Street, Los
Angeles, CA 90071 and at 135 South State College Boulevard, Brea CA 92821,
serves as the investment adviser and manages the business affairs of The
American Funds Group consisting of 29 funds: AMCAP Fund, American Balanced
Fund, Inc., American High-Income Municipal Bond Fund, Inc., American
High-Income Trust, American Mutual Fund, Inc., The Bond Fund of America, Inc.,
The Cash Management Trust of America, Capital Income Builder, Inc., Capital
World Growth and Income Fund, Inc., Capital World Bond Fund, Inc., EuroPacific
Growth Fund, Fundamental Investors, Inc., The Growth Fund of America, Inc., The
Income Fund of America, Inc., Intermediate Bond Fund of America, The Investment
Company of America, Limited Term Tax-Exempt Bond Fund of America, The New
Economy Fund, New Perspective Fund, Inc., New World Fund, Inc., SMALLCAP World
Fund, Inc., The Tax-Exempt Bond Fund of America, Inc., The Tax-Exempt Fund of
California, The Tax-Exempt Fund of Maryland, The Tax-Exempt Fund of Virginia,
The Tax-Exempt Money Fund of America, The U.S. Treasury Money Fund of America,
U.S. Government Securities Fund and Washington Mutual Investors Fund, Inc.
Capital Research and Management Company also manages American Variable
Insurance Series and Anchor Pathway Fund which serve as the underlying
investment vehicles for certain variable insurance contracts; and Endowments,
whose shareholders are limited to (i) any entity exempt from taxation under
Section 501(c)(3) of the Internal Revenue Code of 1986, as amended ("501(c)(3)
organization"); (ii) any trust, the present or future beneficiary of which is a
501(c)(3) organization; and (iii) any other entity formed for the primary
purpose of benefiting a 501(c)(3) organization. Capital International, Inc.,
an affiliate of Capital Research and Management Company, manages Emerging
Markets Growth Fund, Inc.
____________
The Series has an Audit Committee composed of Lee A. Ault III, H. Frederick
Christie, Joe E. Davis, and Martin Fenton. The function of the Committee
includes such specific matters as recommending the independent accountant to
the Board of Trustees, reviewing the audit plan and results of the audits and
considering other matters deemed appropriate for consideration by the Board of
Trustees and/or the Committee.
The Series has a Nominating Committee composed of Lee A. Ault III, Joe E.
Davis and Mary Myers Kauppila. The Committee's functions include selecting and
recommending to the Board of Trustees nominees for election as trustees of the
Series. While the Committee normally is able to identify from its own
resources an ample number of qualified candidates, it will consider shareholder
suggestions of persons to be considered as nominees to fill future vacancies on
the Board. Such suggestions must be sent in writing to the Nominating
Committee of the Series, c/o the Series' Secretary, and must be accompanied by
complete biographical and occupational data on the prospective nominee, along
with a written consent of the prospective nominee to consideration of his or
her name by the Committee. See also "Shareholder Proposals."
The Series has a Contracts Committee composed of all trustees who are not
considered to be "interested persons" of the Series within the meaning of the
1940 Act. The Contracts Committee's function is to request, review and
consider the information deemed necessary to evaluate the terms of any
investment advisory and service agreement and plan of distribution under rule
12b-1 that the Series proposes to enter into, renew or continue, and to make
its recommendations to the full Board of Trustees on these matters.
There were four Board of Trustees, two Audit Committee, one Nominating
Committee and one Contracts Committee meetings during the year ended December
31, 1999. All incumbent trustees attended 100% of all Board meetings and
meetings of the committees of which they were members.
The Series pays no salaries or other compensation to its trustees other than
trustees' fees, which are paid to those trustees who are unaffiliated with the
Investment Adviser as described below.
DIRECTOR COMPENSATION
<TABLE>
<CAPTION>
TOTAL COMPENSATION
(INCLUDING VOLUNTARILY
DEFERRED COMPENSATION/1/) TOTAL
AGGREGATE FROM ALL FUNDS MANAGED NUMBER
COMPENSATION
(INCLUDING BY CAPITAL RESEARCH AND OF FUND
VOLUNTARILY
DEFERRED MANAGEMENT COMPANY BOARDS
COMPENSATION/1/) ON
FROM THE SERIES OR ITS AFFILIATES/2/ FOR WHICH
DURING
THE FISCAL YEAR THE FISCAL YEAR ENDED 11/30/99 TRUSTEE
ENDED 11/30/99
TRUSTEE AND ONE-MONTH AND ONE-MONTH ENDED 12/31/99 serves
ENDED 12/31/99 /2/
11/30/99 12/31/99 11/30/99 12/31/99
<S> <C> <C> <C> <C> <C>
Lee A. Ault III $11,667 $13,500 $11,667 $13,500 1
H. Frederick 33,500/3/ 13,500/3/ 204,200 33,150 18
Christie
Joe E. Davis 36,500 13,500 36,500 13,500 1
James K. Dunton none/4/ none/4/ 1
(nominee)
Martin Fenton 34,500/3/ 13,500/3/ 124,700 15,900 16
Leonard R. Fuller 11,667 13,500 60,867 20,200 13
Mary Myers Kauppila 32,500/3/ 13,500/3/ 115,500 23,250 5
Donald D. O'Neal none/4/ none/4/
(nominee)
Kirk P. Pendleton 30,500/3/ 13,500/3/ 135,000 19,500 7
James F. Rothenberg none/4/ none/4/ 1
</TABLE>
/1/ Amounts may be deferred by eligible trustees under a non-qualified deferred
compensation plan adopted by the Series in 1993. Deferred amounts accumulate at
an earnings rate determined by the total return of one or more funds in The
American Funds Group as designated by the trustee.
/2/ Includes funds managed by Capital Research and Management Company and
affiliates.
/3/ Since the deferred compensation plan's adoption in 1993, the total amount
of deferred compensation accrued by the Series (plus earnings thereon) as of
the fiscal year ended December 31, 1999 for participating trustees is as
follows: H. Frederick Christie ($155,207), Martin Fenton ($49,789), Mary Myers
Kauppila ($223,397), and Kirk P. Pendleton ($164,951). Amounts deferred and
accumulated earnings thereon are not funded and are general unsecured
liabilities of the Series until paid to the trustee.
/4/ James K. Dunton, Donald D. O'Neal and James F. Rothenberg are affiliated
with the Series' Investment Adviser and, therefore, receive no remuneration
from the Series.
OTHER EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME OFFICER
(POSITION WITH SERIES) CONTINUOUSLY
AND AGE PRINCIPAL OCCUPATION /1/ SINCE/2/
<S> <C> <C>
Abner D. Goldstine Senior Vice President and Director, 1993
(Senior Vice President) Capital Research and Management
Company
70
Michael J. Downer Senior Vice President -- Fund 1991
Business Management
(Senior Vice President) Group, Capital Research and
Management Company
45
Alan N. Berro Senior Vice President, Capital 1999
Research Company
(Vice President)
40
Claudia P. Huntington Senior Vice President, Capital 1994
Research Company
(Vice President)
38
Robert W. Lovelace Vice President, Capital Research and 1997
Management
(Vice President) Company
38
John H. Smet Vice President, Capital Research and 1994
Management
(Vice President) Company
43
Susan M. Tolson Senior Vice President, Capital 1999
Research Company
(Vice President)
38
Chad L. Norton Vice President -- Fund Business 1994
Management Group,
(Secretary) Capital Research and Management
Company
39
Robert P. Simmer Vice President -- Fund Business 1994
Management Group,
(Treasurer) Capital Research and Management
Company
39
Sheryl F. Johnson Assistant Vice President - Fund 1997
Business Management
(Assistant Treasurer) Group, Capital Research and
Management Company
31
David A. Pritchett Assistant Vice President - Fund 1998
Business Management
(Assistant Treasurer) Group, Capital Research and
Management Company
33
</TABLE>
/1/ The occupations shown reflect the principal employment of each individual
during the past five years. Corporate positions, in some instances, may have
changed during this period.
/2/ Officers hold office until their respective successors are elected, or
until they resign or are removed.
PROPOSAL 2: APPROVAL OF THE ELIMINATION OR REVISION
OF CERTAIN OF THE SERIES' FUNDAMENTAL INVESTMENT POLICIES
INTRODUCTION AND SUMMARY
Each of the Funds is subject to investment restrictions which establish
percentage and other limits that govern its investment activities. Under the
Investment Company Act of 1940 (the "1940 Act"), investment restrictions
relating to certain activities are required to be "fundamental," which means
that any changes require shareholder approval. Investment companies, including
the Series on behalf of the Funds, are permitted to designate additional
restrictions as fundamental. They may also adopt "non-fundamental" investment
restrictions, which may be changed by the Series' Board of Trustees without
shareholder approval.
Some of the Funds' existing fundamental investment restrictions reflect
regulatory, business or industry conditions, practices or requirements that
have changed or no longer exist. With the passage of time, the development of
new practices, and changes in regulatory standards, the Investment Adviser
believes certain fundamental restrictions should be revised, eliminated or
reclassified as non-fundamental.
The Board of Trustees, together with the Series' senior officers, have
analyzed the current fundamental investment restrictions for each of the Funds,
and have concluded that certain restrictions should be revised and reclassified
as non-fundamental, and certain other restrictions should be eliminated. The
specific proposals are discussed below.
The proposed investment restrictions have been drafted to maintain important
investor protections while providing flexibility to respond to future legal,
regulatory and market changes. By reducing the number of policies that can be
changed only by shareholder vote, the Board of Trustees will have greater
flexibility to modify Fund policies, as appropriate, in response to changing
markets and in light of new investment opportunities and instruments. The
Series will then be able to avoid the costs and delays associated with a
shareholder meeting when making changes to the non-fundamental investment
policies that the Board may consider desirable.
IMPORTANTLY, THE PROPOSED AMENDMENTS DO NOT AFFECT THE INVESTMENT OBJECTIVES
OF THE FUNDS, WHICH REMAIN UNCHANGED. MOREOVER, THE BOARD DOES NOT ANTICIPATE
THAT THE CHANGES, INDIVIDUALLY OR IN THE AGGREGATE, WILL CHANGE TO A MATERIAL
DEGREE THE LEVEL OF INVESTMENT RISK ASSOCIATED WITH AN INVESTMENT IN ANY FUND.
The texts of the proposed changes to the Funds' fundamental restrictions are
set forth below. Shareholders owning either Class 1 or Class 2 shares of a Fund
(other than the Cash Management Fund) may vote for or against any or all of the
changes that are the subject of Proposal 2. Because Proposals 2A and 2B do not
apply to the Cash Management Fund, its shareholders may vote for or against
Proposal 2C only. If the proposed changes are approved by the Funds'
shareholders, the Series' prospectus and statement of additional information
will be revised accordingly.
RESTRICTIONS PROPOSED TO BE REVISED AND RECLASSIFIED AS NON-FUNDAMENTAL (AND
RELATED RESTRICTIONS PROPOSED TO BE ELIMINATED)
2A. PURCHASING SECURITIES OF OTHER INVESTMENT COMPANIES
These restrictions deal with certain anti-pyramiding concerns addressed by
the 1940 Act. The proposed revisions would allow the Funds (other than the Cash
Management Fund) to invest to a limited degree in entities falling within the
technical definition of an investment company. On occasion, certain issuers in
various lines of business, primarily financial, fall within this definition but
otherwise represent attractive investment opportunities, consistent with the
Funds' investment objectives. Current industry practice is to rely on the 1940
Act for investor protection.
CURRENT TEXT (ALL FUNDS EXCEPT U.S. GOVERNMENT/AAA-RATED SECURITIES FUND AND
CASH MANAGEMENT FUND)
[The Fund may not$] purchase securities of other investment companies, (except
in connection with a merger, consolidation, acquisition, or reorganization);
except that the Global Small Capitalization Fund may invest up to 5% of its
total assets in the securities of other managed investment companies. Any such
investments by the Global Small Capitalization Fund shall be limited to 3% of
the voting stock of any investment company, provided, however, that the
investment in the open market of a closed-end investment company where no more
than customary broker's commissions are involved shall not be prohibited by
this restriction.
CURRENT TEXT (U.S. GOVERNMENT/AAA-RATED SECURITIES FUND)
[The Fund may not...] knowingly purchase securities of other investment
companies, except in connection with a merger, consolidation, acquisition, or
reorganization.
PROPOSED TEXT (ALL FUNDS EXCEPT CASH MANAGEMENT FUND)
[The Fund may not$] invest in securities of other investment companies, except
as permitted by the Investment Company Act of 1940, as amended.
2B. ILLIQUID/RESTRICTED SECURITIES
Each of the Funds has fundamental policies limiting the acquisition of
"illiquid securities" (including repurchase agreements maturing in more than
seven days). In addition, the U.S. Government/AAA-Rated Securities Fund has a
fundamental policy prohibiting the acquisition of "restricted securities"
(I.E., securities with legal or contractual limitations on transfer). These
policies are not required to be fundamental by the 1940 Act. Historically,
there has been a concern that restricted securities, which typically cannot be
resold to the public, may be difficult for a mutual fund to sell at
approximately the value at which the fund is carrying the investment.
Restricted securities may or may not be illiquid, however. Some restricted
securities are actively traded among institutional investors and thus highly
liquid in the marketplace.
For all funds other than the Cash Management Fund (which would retain its
current restriction), investors would be protected by the proposed,
non-fundamental investment restriction covering illiquid securities. The
proposed increase in the limit on these investments, from 10% of total assets
to 15% of net assets, is consistent with current regulatory standards
applicable to all non-money market mutual funds. As part of this proposal, the
fundamental restriction covering restricted securities for the U.S.
Government/AAA-Rated Securities Fund would be eliminated. In addition, in
connection with their review of these proposals, the Board of Trustees approved
the elimination of the NON-FUNDAMENTAL restrictions set forth below.
CURRENT TEXT (ALL FUNDS)
[The Fund may not...] enter into any repurchase agreement maturing in more than
seven days or invest in any other illiquid security if, as a result, more than
10% of the Fund's total assets would be so invested.
CURRENT TEXT (U.S. GOVERNMENT/AAA-RATED SECURITIES FUND)
[The Fund may not$] acquire securities subject to restrictions on disposition
imposed by the 1933 Act, if immediately after and as a result of such
acquisition, the value of all such restricted securities and all other illiquid
securities held by the Fund would exceed 10% of the value of the Fund's total
assets.
CURRENT TEXT (NON-FUNDAMENTAL POLICY FOR ALL FUNDS EXCEPT U.S.
GOVERNMENT/AAA-RATED SECURITIES FUND AND CASH MANAGEMENT FUND)
The Global Growth Fund, Global Small Capitalization Fund, International Fund
and High-Yield Bond Fund may not invest more than 10% of the value of their
total assets in securities which are restricted as to resale; the Growth Fund,
Growth-Income Fund and Asset Allocation Fund may not invest more than 5% of the
value of their respective total assets in securities which are restricted as to
resale. (Rule 144A securities and Section 4(2) commercial paper, as defined in
the Securities Act of 1933, are excluded from these investment limits.) As a
condition to the acquisition of the type of securities mentioned herein, the
funds will ordinarily require that the issuer of such securities agree to bear
the expenses of registration under the Securities Act of 1933, if and when the
Funds desire to sell such securities. The need to effect such registration
could result in a delay in disposing of such securities.
PROPOSED TEXT (NON-FUNDAMENTAL POLICY FOR ALL FUNDS EXCEPT CASH MANAGEMENT
FUND)
[The Fund may not...] invest more than 15% of its net assets in illiquid
securities.
RESTRICTIONS PROPOSED TO BE ELIMINATED
The following investment restrictions are not required under the 1940 Act.
They were originally adopted in response to state law restrictions or
interpretations that no longer apply to the Funds. Therefore, in order to
increase the ability of the Investment Adviser to manage the Funds' assets
effectively and efficiently in response to market and regulatory change, it is
proposed that these investment restrictions, which are currently listed as
fundamental, be eliminated.
2C. PLEDGING ASSETS
In certain circumstances these restrictions could interfere with the Funds'
ability to borrow temporarily for extraordinary or emergency purposes. The
Funds' current borrowing limits would remain unchanged.
CURRENT TEXT (ALL FUNDS EXCEPT U.S. GOVERNMENT/AAA-RATED SECURITIES FUND)
[The Fund may not...] pledge, or hypothecate the Fund's assets.
CURRENT TEXT (U.S. GOVERNMENT/AAA-RATED SECURITIES FUND
[The Fund may not...] mortgage, pledge or hypothecate any of its assets,
provided that this restriction shall not apply to the sale of securities
pursuant to a reverse repurchase agreement.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THESE PROPOSED
CHANGES TO THE FUNDS' FUNDAMENTAL INVESTMENT RESTRICTIONS.
3. APPROVAL OF AMENDMENT TO THE DECLARATION OF TRUST TO CHANGE THE NAME OF THE
SERIES TO AMERICAN FUNDS INSURANCE SERIES.
The Series began selling shares to separate accounts of The Lincoln National
Life Insurance Company in 1987 under the name American Variable Insurance
Series. The Series subsequently entered into participation agreements with
other insurance companies to sell shares to separate accounts. These include:
Hartford Life Insurance Company, Travelers Life and Annuity Company, Prudential
Life Insurance Company, Transamerica Life Insurance Company and Paragon Life
Insurance Company.
In light of these new relationships and related marketing efforts, the Board
of Trustees believes it is important that there be broad recognition of the
Series' existing relationship with The American Funds Group.(r) Both the Series
and each of the mutual funds in The American Funds Group are managed by Capital
Research and Management Company. Accordingly, the Board of Trustees has
proposed that the name of the Series be changed to "American Funds Insurance
Series." The name change requires an amendment to the Declaration of Trust and
therefore must also be approved by a vote of a majority of the shares
outstanding and entitled to vote.
SECTION 1.1 OF ARTICLE I OF THE SERIES' DECLARATION OF TRUST WILL BE AMENDED
TO READ AS FOLLOWS:
Section 1.1 - Name.
The name of this Trust created hereby is $American Funds Insurance Series.'
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL.
4. RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT
PUBLIC ACCOUNTANT FOR THE YEAR 2000
Shareholders are requested to ratify the selection by the Board of Trustees
(including a majority of trustees who are not "interested persons" of the
Series as that term is defined in the 1940 Act) of PricewaterhouseCoopers LLP
to act as independent public accountant for the Series for the year 2000.
PricewaterhouseCoopers LLP has served as the Series' independent public
accountant since March 18, 1991. No representative of PricewaterhouseCoopers
LLP is expected to attend the shareholder meeting.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF
ITS SELECTION OF PRICEWATERHOUSECOOPERS LLP.
OTHER MATTERS
Neither the persons named in the enclosed proxy nor the Board of Trustees are
aware of any matters that will be presented for action at the meeting other
than matters described above. If any other matters properly requiring a vote
of shareholders arise, the proxies will confer upon the person or persons
entitled to vote the shares they represent a discretionary authority to vote
the shares in respect of any such matters in accordance with their best
judgment in the interests of the Funds and their shareholders.
SHAREHOLDER PROPOSALS
Any shareholder proposals for inclusion in proxy solicitation material for a
shareholders meeting should be submitted to the Secretary of the Series, at the
Series' principal executive offices, 333 South Hope Street, Los Angeles, CA
90071. Any such proposals must comply with the requirements of rule 14a-8 under
the Securities Exchange Act of 1934.
Under the laws of Massachusetts, where the Series is organized, and the
Series' Declaration of Trust and By-Laws, the Series is not required to hold
regular meetings of Fund shareholders. Under the 1940 Act, a vote of
shareholders is required from time to time for particular matters but not
necessarily on an annual basis. As a result, the Series does not expect to
hold shareholders meetings on a regular basis, and any shareholder proposal
received may not be considered until such a meeting is held.
GENERAL INFORMATION
Capital Research and Management Company is the investment adviser to the
Series and is located at 333 South Hope Street, Los Angeles, CA 90071 and 135
South State College Boulevard, Brea, CA 92821.
The enclosed proxy is solicited by and on behalf of the Board of Trustees of
the Series. The Series will pay the cost of soliciting proxies, consisting of
printing, handling and mailing of the proxies and related materials. In
addition to solicitation by mail, certain officers and trustees of the Series,
who will receive no extra compensation for their services, may solicit by
telephone, telegram or personally. WE URGE ALL SHAREHOLDERS TO MARK, DATE,
SIGN, AND RETURN THE PROXY INSTRUCTION CARD IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
You may obtain a copy of the Series' most recent annual report, without
charge, by writing to the Secretary of the Series at 333 South Hope Street,
55th Floor, Los Angeles, CA 90071, or by telephoning 800/421-0180. These
requests will be honored within three business days of receipt.
By Order of the Board of Trustees,
CHAD L. NORTON
Secretary
May 26, 2000
PROXY INSTRUCTION CARD PROXY INSTRUCTION CARD
AMERICAN VARIABLE INSURANCE SERIES
MEETING OF SHAREHOLDERS TO BE HELD JUNE 20, 2000
This Voting Instruction Card is being sent to contractholders who had unit
values in a Separate Account of the above-referenced Insurance Company (the
"Company") that invests in the below-referenced Fund(s) (the "Fund(s)") and who
are entitled to instruct the Company on how to vote the shares held by the
Separate Account.
The undersigned contractholder hereby instructs the Company to vote, at the
Special Meeting of Shareholders of the Series to be held at the office of
Capital Research and Management Company, 333 South Hope Street, 55th Floor, Los
Angeles, California, on Tuesday, June 20, 2000 at 1:00 p.m., and at any
adjournments thereof, all shares of the Fund(s) attributable to his or her
contract as directed below and on the reverse side of this card.
IF YOU FAIL TO PROPERLY EXECUTE AND RETURN THIS VOTING INSTRUCTION CARD, THE
COMPANY WILL VOTE ALL SHARES ATTRIBUTABLE TO YOUR CONTRACT IN PROPORTION TO THE
VOTING INSTRUCTIONS FOR THE FUND(S) ACTUALLY RECEIVED FROM CONTRACTHOLDERS IN
THE SEPARATE ACCOUNT. IF YOU SIGN BELOW BUT DO NOT MARK INSTRUCTIONS ON THIS
VOTING INSTRUCTION CARD, THE COMPANY WILL VOTE ALL SHARES OF THE FUND(S)
ATTRIBUTABLE TO YOUR CONTRACT "FOR" THE NOMINEES IN ITEM 1 AND "FOR" ITEMS 2, 3
AND 4, AND, IN THE DISCRETION OF THE COMPANY, UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE SPECIAL MEETING OR ANY ADJOURNMENTS THEREOF.
NOTE: Please sign exactly as your name(s) appear on this card. Joint owners
should each sign individually. Corporate proxies should be signed in full
corporate name by an authorized officer. Fiduciaries should give full titles.
Signature
Signature of joint owner, if any
,2000
Date
<TABLE>
<CAPTION>
Fund Fund Fund
<S> <C> <C> <C> <C> <C>
Asset Allocation XXXXXXX.XXX Global Small XXXXXXX.XXX International XXXXXXX.XXX
CL-1 Cap CL-1 CL-1
Asset XXXXXXX.XXX Global Small XXXXXXX.XXX International XXXXXXX.XXX
Allocation Cap CL-2 CL-2
CL-2
Bond CL-1 XXXXXXX.XXX Growth CL-1 XXXXXXX.XXX New World CL-1 XXXXXXX.XXX
Bond CL-2 XXXXXXX.XXX Growth CL-2 XXXXXXX.XXX New World CL-2 XXXXXXX.XXX
Cash Mngmnt XXXXXXX.XXX Growth-Income XXXXXXX.XXX US Govt/AAA-Sec XXXXXXX.XXX
CL-1 CL-1 CL-1
Cash Mngmnt XXXXXXX.XXX Growth-Income XXXXXXX.XXX US Govt/AAA-Sec XXXXXXX.XXX
CL-2 CL-2 CL-2
Global Growth XXXXXXX.XXX High-Yield XXXXXXX.XXX
CL-1 Bond CL-1
Global Growth XXXXXXX.XXX High-Yield XXXXXXX.XXX
CL-2 Bond CL-2
</TABLE>
PLEASE MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS. EXAMPLE: __
__ TO VOTE FOR ALL PROPOSALS, MARK THIS BOX. (NO OTHER VOTE IS NECESSARY.)
<TABLE>
<CAPTION>
1. Election of Trustees: FOR WITHHOLD FOR
ALL ALL ALL
EXCEPT
<S> <C> <C> <C> <C> <C>
Lee A. Ault III 05 Martin Fenton 09 Kirk P. Pendleton __ __ __
H. Frederick Christie 06 Leonard R. Fuller 10 James F. Rothenberg
Joe E. Davis 07 Mary Myers Kauppila
James K. Dunton 08 Donald D. O'Neal
</TABLE>
To withhold your vote for any individual nominee, mark the "For All Except" box
and write the nominee's number on the line provided.
.
2. Approval of the proposed changes to the Series' investment restrictions:
2A. Reclassify restriction regarding purchasing securities of other investment
companies as a non-fundamental restriction.
__ To vote ALL Funds FOR; __ to vote ALL Funds AGAINST; or
__ to ABSTAIN votes for ALL Funds mark the appropriate box, OR vote separately
by Fund below.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
Asset Allocation CL-1
Asset Allocation CL-2
Bond CL-1
Bond CL-2
Global Growth CL-1
Global Growth CL-2
Global Small Cap CL-1
Global Small Cap CL-2
Growth CL-1
Growth CL-2
Growth-Income CL-1
Growth-Income CL-2
High-Yield Bond CL-1
High-Yield Bond CL-2
International CL-1
International CL-2
New World CL-1
New World CL-2
US Govt/AAA-Sec CL-1
US Govt/AAA-Sec CL-2
</TABLE>
2B. Reclassify restriction regarding illiquid/restricted securities as a
non-fundamental restriction.
__ To vote ALL Funds FOR; __ to vote ALL Funds AGAINST; or
__ to ABSTAIN votes for ALL Funds mark the appropriate box, OR vote
separately by Fund below.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
Asset Allocation CL-1
Asset Allocation CL-2
Bond CL-1
Bond CL-2
Global Growth CL-1
Global Growth CL-2
Global Small Cap CL-1
Global Small Cap CL-2
Growth CL-1
Growth CL-2
Growth-Income CL-1
Growth-Income CL-2
High-Yield Bond CL-1
High-Yield Bond CL-2
International CL-1
International CL-2
New World CL-1
New World CL-2
US Govt/AAA-Sec CL-1
US Govt/AAA-Sec CL-2
</TABLE>
2C. Eliminate restriction regarding pledging assets.
__ To vote ALL Funds FOR; __ to vote ALL Funds AGAINST; or
__ to ABSTAIN votes for ALL Funds mark the appropriate box, OR vote
separately by Fund below.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
Asset Allocation CL-1
Asset Allocation CL-2
Bond CL-1
Bond CL-2
Global Growth CL-1
Global Growth CL-2
Global Small Cap CL-1
Global Small Cap CL-2
Growth CL-1
Growth CL-2
Growth-Income CL-1
Growth-Income CL-2
High-Yield Bond CL-1
High-Yield Bond CL-2
International CL-1
International CL-2
New World CL-1
New World CL-2
US Govt/AAA-Sec CL-1
US Govt/AAA-Sec CL-2
</TABLE>
__ 3. Approval of an amendment to the Declaration of Trust to change the name
of the Series. FOR AGAINST ABSTAIN
__ 4. Ratification of selection of PricewaterhouseCoopers LLP as independent
public accountant. FOR AGAINST ABSTAIN
In their discretion, upon other matters as may properly come before the
meeting.
IMPORTANT
CONTRACTHOLDERS CAN HELP THE SERIES AVOID THE NECESSITY AND EXPENSE OF SENDING
FOLLOW-UP LETTERS
BY PROMPTLY RETURNING THIS PROXY INSTRUCTION CARD.
