AUL American Series Fund, Inc.
Annual Report
December 31, 1998
This report and the financial statements contained herein are submitted for the
general information of the Participants. The report is not be distributed to
prospective investors as sales literature unless accompanied or preceded by an
effective prospectus of AUL American Series Fund, Inc., AUL American Unit Trust,
AUL American Individual Unit Trust, or AUL American Individual Variable Life
Unit Trust which contains further information concerning the sales charge,
expenses and other pertinent information.
<PAGE>
Directors and Officers of AUL American Series Fund, Inc.
James W. Murphy, Chairman of the Board and President
James P. Shanahan, Director
Dr. Ronald D. Anderson, Director
Professor, Kelley School of Business, Indiana University, Indianapolis, Indiana
Dr. Leslie Lenkowsky, Director
Professor, Indiana University, Center of Philanthropy, Indianapolis, Indiana
R. Stephen Radcliffe, Director, Vice President and Treasurer
Richard A. Wacker, Secretary
<PAGE>
A Message From The Chairman of the Board and President
The current economic expansion has been particularly impressive and is now
entering its eighth year, setting a new record as the longest period of
peacetime growth. This expansion has been unique in that it has been accompanied
by low inflation, low interest rates and low unemployment. At the same time,
positive consumer confidence has translated into greater consumer spending and
strong corporate profits have resulted in increased capital spending, both major
drivers to economic growth.
However, the playing field changed dramatically during the third quarter of 1998
when financial difficulties in Russia, Asia and Latin America and the losses
incurred by several well-known hedge funds caused a great deal of concern. In
addition, the capital markets had to contend with a possible credit crunch,
increased antagonism with Iraq, and the threat of political instability here at
home.
The stock market experienced a marked downturn during the third quarter in
response to these concerns. To help alleviate market stress, the Federal Reserve
Board intervened on three occasions by cutting the federal funds rate a total of
75 basis points (0.75%). The Fed's actions, coupled with an easing of the global
concerns, provided renewed vigor for the stock market during the last three
months of the year.
Treasury yields declined sharply in the second half of the year as investors
around the world sought the safety and liquidity of U.S. government-backed,
dollar denominated securities. Yield declines for corporate bonds and
mortgage-backed securities, however, were much smaller. Investors were
particularly leery of smaller, less liquid bond issues, especially those backed
by lower quality credits.
At the present time, most economists are expecting U.S. economic growth to
decelerate in 1999. The slowdown in foreign economies has led to a decline in
demand for American-made products which results in a contraction in U.S.
exports. Generally, economists are also expecting consumer spending to ease and
the level of corporate fixed investments to decline. In such an environment, it
will be difficult for the stock market to achieve above average returns in the
coming year. Bonds, on the other hand, should prosper in this environment,
especially if the Federal Reserve Board remains accommodative.
Investment performance for the AUL American Series Fund, Inc. for the year 1998
was:
Equity Portfolio 7.1% Tactical Asset Portfolio 7.2%
Money Market Portfolio 4.9% Aggressive Investor Portfolio(1) 5.0%
Bond Portfolio 8.8% Moderate Investor Portfolio(1) 5.1%
Managed Portfolio 8.3% Conservative Investor Portfolio(1) 5.8%
(1) Represents investment return for the period 3/31/98 to 12/31/98
We suggest your careful review of the Portfolio Manager comments found on the
following pages comparing these returns to other indices. The performance
numbers for the AUL American Series Fund, Inc. are net of investment advisory
fees and other expenses paid by each portfolio but do not reflect specified
contract charges and mortality and expense risk charges which may be incurred
when investing in a variable annuity or variable life contract.
In closing, American United Life remains committed to serving your investment
needs. We appreciate your continued confidence and support.
/s/James W. Murphy
James W. Murphy
Chairman of the Board of Directors and President
Indianapolis, Indiana
January 29, 1999
1
<PAGE>
A Message From Kathryn Hudspeth, Portfolio Manager of Equity Portfolio
The Equity Portfolio invests primarily in equity securities selected on the
basis of fundamental investment research for their long-term growth prospects.
Using a bottom-up approach, the Portfolio concentrates on companies which appear
undervalued compared to the market and to their own historic valuation levels.
Other important considerations include management ability, free cashflow,
insider ownership and industry dominance.
The 1990s can be characterized as the decade of the relentless bull market with
steady, noninflationary growth, low interest rates, and solid corporate profit
gains. The U.S. stock market continued its powerful advance during the first six
months of 1998. But investor psychology quickly deteriorated during the third
quarter of 1998 as economic turmoil overseas, rising political tensions at home,
and the decline in corporate profitability shook investor confidence.
In an attempt to bolster our economy and settle U.S. capital markets, the
Federal Reserve Board decided to lower the Federal Funds rate by 0.75%. Equity
investors reacted positively to the Fed's actions, driving the S&P 500 (a
commonly used capitalization weighted index) to new highs by the end of the
year.
Calendar 1998 marks an unprecedented fourth year in a row that the S&P 500 has
achieved gains in excess of 20%. Despite this phenomenal performance, not every
stock was selling at record prices by the end of the year. The U.S. stock market
experienced a "two-tiered" condition with a limited number of large growth
companies substantially outperforming the rest of the market. Although the S&P
500 achieved a 28.6% return during 1998, 43% of all the stocks listed in this
index actually reported negative returns for the year. This dramatic disparity
in returns among different types of stocks indicates how narrow 1998's advance
really was and why approximately 90% of equity fund managers were unable to beat
the S&P 500's 1998 investment return.
The Equity Portfolio achieved a 7.1% investment return for calendar 1998. As
this Portfolio focuses on mid-sized value companies, it did not perform as well
as the S&P 500. However, the Portfolio performed much better than the broader
Russell 2000 Index (a stock index comprised of 2000 small to mid-sized
companies) which ended 1998 with a twelve month return of -2.6%. The Equity
Portfolio benefitted from its technology and health care holdings during the
year. Sun Microsystems is a prime example, which appreciated 115% during 1998.
However, by being a value Portfolio, the Equity Portfolio also owned several
names in the basic industry sector, which came under severe pressure during the
year in response to fears of a global economic slowdown. At current levels, this
sector is extremely undervalued compared to the rest of the market and offers an
opportunity for improvement for the long-term investor.
Lingering international problems suggest a slower rate of economic growth for
the United States during 1999. Equity investors will be closely watching the
level of interest rates and for any slowdown in corporate profit growth. Should
profit warnings become widespread, investors should expect increased volatility
and more modest returns for 1999.
2
<PAGE>
AUL American Series Fund, Inc. Equity Portfolio
EQUITY S&P 500
Date Hypothetical Hypothetical
$10,000 $10,000
investment investment
4/10/90 10,000 10,000
6/90 10,257 10,540
9/90 9,096 9,092
12/90 9,886 9,906
3/91 11,454 11,346
6/91 11,868 11,320
9/91 12,084 11,925
12/91 12,415 12,925
3/92 12,765 12,598
6/92 12,868 12,838
9/92 12,920 13,243
12/92 13,660 13,909
3/93 14,477 14,517
6/93 14,283 14,588
9/93 14,804 14,964
12/93 15,681 15,311
3/94 15,696 14,731
6/94 15,399 14,793
9/94 16,165 15,516
12/94 16,094 15,513
3/95 16,544 17,024
6/95 17,870 18,650
9/95 18,900 20,114
12/95 19,228 21,325
3/96 19,997 22,470
6/96 20,846 23,479
9/96 21,758 24,204
12/96 22,915 26,223
3/97 23,378 26,926
6/97 26,745 31,627
9/97 29,696 33,996
12/97 29,694 34,972
3/98 32,626 39,850
6/98 32,500 41,165
9/98 28,200 37,069
12/98 31,807 44,965
Average Annual Returns for the period ended December 31, 1998
Equity S&P 500
Portfolio
One Year 7.1% 28.6%
Five Years 15.2% 24.0%
Since Inception (4/10/90) 14.2% 18.8%
Value of a hypothetical $10,000 investment made 4/10/90 $31,807 $44,965
The charts show the Equity Portfolio's total returns, which include changes in
share price and reinvestment of dividends and capital gains. Figures for the S&P
500, an unmanaged index of common stocks, include reinvestment of dividends and
capital gains. S&P 500 is a registered trademark of Standard & Poor's
Corporation. Investors cannot directly invest in an index. The inception figures
are from the Portfolio's commencement of operations.
Performance numbers for the Equity Portfolio are net of all portfolio operating
expenses, but do not include separate account or contract charges. If the
performance data included the effect of these charges, the returns would be
lower. Past performance is no guarantee of future results. Principal and
investment return will vary so shares may be worth more or less than their
original cost when redeemed.
3
<PAGE>
A Message From Kent Adams, Portfolio Manager of Bond Portfolio
The AUL American Bond Portfolio invests primarily in U.S. Treasury and Agency
bonds and notes, investment grade corporate bonds, and U.S. Agency-backed
residential mortgage obligations. Portfolio holdings may range in maturity from
overnight money market investments to bonds with maturities as long as 30 years.
The average maturity of the Portfolio is shortened or lengthened depending on
the outlook for interest rates. The mix of corporate bonds, U.S. Agencies and
Treasuries, and mortgage-backed securities in the Portfolio varies depending on
the relative attractiveness of these sectors.
The Bond Portfolio's total return was 8.8% in 1998. This return represents
interest income and the price change of the fixed income securities held in the
Portfolio. The total return for the Lehman Aggregate Bond Index was 8.7% in
1998.
Approximately 33% of the Portfolio was invested in U. S. Treasury and Agency
bonds and notes at year-end 1998. The remainder of the Portfolio was allocated
to corporate bonds (26%), high quality residential mortgage securities (36%),
and short-term money market instruments (5%). At year-end, the duration of the
Portfolio was 102% of the Lehman Aggregate Bond Index's duration, which
represents a slight increase from the beginning of the year.
Declining inflation, a federal budget surplus, and global economic concerns,
combined with accommodative actions by the Federal Reserve Board, resulted in
lower interest rates and rising bond prices in 1998. The yield on the
thirty-year Treasury bond finished the year at 5.1%, down from 5.9% at the start
of 1998. Short and intermediate maturity Treasuries ended the year yielding
around 4.5%.
Although the domestic economy remains in good shape with low unemployment, low
inflation, and reasonable GDP growth, significant weakness in overseas economies
could still put a damper on future growth. Despite the current low level of
Treasury yields, many analysts remain optimistic on the outlook for bonds.
In 1997, bond funds with the highest risk finished the year with the highest
returns. Just the opposite was true in 1998. High quality bonds, especially
Treasuries, were the best performers. Corporate bond spreads, particularly less
liquid and lower quality issues, widened dramatically in the second half of the
year. Some recovery occurred in the final weeks of the year. Korean bonds
rallied strongly at year-end after Moody's announced a positive ratings outlook.
Non-investment grade (junk) bonds were poor performers in 1998.
The Bond Portfolio's underweighting in residential mortgage securities during
the early part of the year contributed significantly to the portfolio's good
relative performance in 1998.
4
<PAGE>
AUL American Series Fund, Inc. Bond Portfolio
BOND SLH Aggregate
Date Hypothetical Hypothetical
$10,000 $10,000
investment investment
4/10/90 10,000 10,000
6/90 10,257 10,304
9/90 10,182 10,392
12/90 10,895 10,917
3/91 11,091 11,224
6/91 11,186 11,405
9/91 11,976 12,053
12/91 12,678 12,664
3/92 12,361 12,503
6/92 12,935 13,008
9/92 13,690 13,567
12/92 13,590 13,602
3/93 14,318 14,165
6/93 14,650 14,541
9/93 15,118 14,920
12/93 15,043 14,928
3/94 14,563 14,499
6/94 14,388 14,350
9/94 14,454 14,438
12/94 14,507 14,493
3/95 15,181 15,224
6/95 16,071 16,151
9/95 16,348 16,469
12/95 17,086 17,170
3/96 16,675 16,864
6/96 16,703 16,960
9/96 16,973 17,273
12/96 17,468 17,791
3/97 17,379 17,692
6/97 17,944 18,344
9/97 18,481 18,956
12/97 18,841 19,514
3/98 19,191 19,815
6/98 19,594 20,278
9/98 20,344 21,135
12/98 20,490 21,207
Average Annual Returns for the period ended December 31, 1998
Bond Lehman Brothers
Portfolio Aggregate Index
One Year 8.8% 8.7%
Five Years 6.4% 7.3%
Since Inception (4/10/90) 8.6% 9.0%
Value of a hypothetical $10,000
investment made 4/10/90 $20,490 $21,207
The charts show the Bond Portfolio's total returns, which include changes in
share price and reinvestment of income and capital gains. Figures for the Lehman
Brothers Aggregate Index, an unmanaged index of government and corporate bonds,
which is a broad measure of the performance of the U.S. bond market, include
reinvestment of income and capital gains. Investors cannot directly invest in an
index. The inception figures are from the Portfolio's commencement of
operations.
Performance numbers for the Bond Portfolio are net of all portfolio operating
expenses, but do not include separate account or contract charges. If the
performance data included the effect of these charges, the returns would be
lower. Past performance is no guarantee of future results. Principal and
investment return will vary so shares may be worth more or less than their
original cost when redeemed.
5
<PAGE>
A Message From Kathryn Hudspeth and Kent Adams, Portfolio Managers of Managed
Portfolio
The Managed Portfolio utilizes a fully managed investment policy by allocating
assets among publicly traded common stocks, debt securities, and money market
instruments. Asset allocation decisions are based on economic factors and the
valuation of each asset class compared to historic levels.
The capital markets started off 1998 on a strong note. But as the months passed,
many crosscurrents began to surface. As investors began questioning the strength
of our domestic markets, global concerns also emerged. By many measures, 1998
was one of the most turbulent periods in recent history, as investors rushed
into safe assets with little concern for relative valuation. Equity investors
focused almost exclusively on a small group of large growth companies, believing
these companies had higher average credit quality and liquidity than the broader
equity market.
As a result, stock returns were mixed in 1998. The S&P 500 (which is dominated
by the returns of large, growth companies) achieved a return in excess of 20%
for the year. But increasingly, this index is becoming less reflective of the
broader market, as the average stock on the New York Stock Exchange fell 6% in
1998.
A sharp decline in Treasury yields was the driving factor in the Lehman
Aggregate Bond Index's 8.7% return in 1998. The thirty-year Treasury ended the
year yielding 5.1%, down from 5.9% at the start of the year. Short and
intermediate maturity Treasuries were yielding around 4.5% at year-end.
Corporate bonds and mortgage-backed securities experienced much smaller yield
reductions as spreads to Treasuries widened significantly during the year.
The Managed Portfolio continued to be overweighted in stocks, compared to bonds
and cash. By the end of 1998, 55% of the Portfolio was invested in stocks, while
41% was invested in bonds and 4% was invested in money market instruments. This
can be compared to an asset allocation of 54% stocks, 41% bonds and 5% cash
equivalents at year-end 1997.
The stocks held in the Managed Portfolio typically have a value orientation, a
segment of the marketplace which was out of favor in 1998. However, the
Portfolio benefitted from its health care and technology holdings during the
year. Merger transactions also helped the Portfolio's overall stock return.
At the current time, most economists are projecting a slowdown in U.S. economic
growth during 1999. Downward pressure on economic growth and corporate earnings
will increase the volatility for equity investors. As a result, the stock market
may face a difficult road in 1999. Although Treasury bond yields are now at
levels that haven't been seen in decades, most analysts are projecting the
continuation of lower interest rates given the outlook for a slowing economy.
6
<PAGE>
AUL American Series Fund, Inc. Managed Portfolio
MANAGED S&P 500 SLH
Aggregate
Date HypotheticalHypotheticalHypothetical
$10,000 $10,000 $10,000
investment investment investment
4/10/90 10,000 10,000 10,000
6/90 10,238 10,540 10,304
9/90 9,936 9,092 10,392
12/90 10,601 9,906 10,917
3/91 11,122 11,346 11,224
6/91 11,320 11,320 11,405
9/91 11,833 11,925 12,053
12/91 12,375 12,925 12,664
3/92 12,285 12,598 12,503
6/92 12,615 12,838 13,008
9/92 13,010 13,243 13,567
12/92 13,358 13,909 13,602
3/93 14,134 14,517 14,165
6/93 14,214 14,588 14,541
9/93 14,696 14,964 14,920
12/93 15,092 15,311 14,928
3/94 14,835 14,731 14,499
6/94 14,543 14,793 14,350
9/94 14,993 15,516 14,438
12/94 14,951 15,513 14,493
3/95 15,560 17,024 15,224
6/95 16,658 18,650 16,151
9/95 17,319 20,114 16,469
12/95 17,811 21,325 17,170
3/96 18,043 22,470 16,864
6/96 18,515 23,479 16,960
9/96 19,068 24,204 17,273
12/96 19,913 26,223 17,791
3/97 20,110 26,926 17,692
6/97 22,120 31,627 18,344
9/97 23,905 33,996 18,956
12/97 24,083 34,972 19,514
3/98 25,689 39,850 19,815
6/98 25,871 41,165 20,278
9/98 24,162 37,069 21,135
12/98 26,067 44,965 21,207
Average Annual Returns for the period ended December 31, 1998
Managed S&P 500 Lehman
Brothers
Portfolio Aggregate
Index
One Year 8.3% 28.6% 8.7%
Five Years 11.5% 24.0% 7.3%
Since Inception (4/10/90) 11.6% 18.8% 9.0%
Value of a hypothetical $10,000
investment made 4/10/90 $26,067 $44,965 $21,207
The charts show the Managed Portfolio's total returns, which include changes in
share price and reinvestment of dividends and capital gains. Figures for the S&P
500, an unmanaged index of common stocks, include reinvestment of dividends and
capital gains. S&P 500 is a registered trademark of Standard & Poor's
Corporation. Figures for the Lehman Brothers Aggregate Index, an unmanaged index
of government and corporate bonds, which are broad measures of the performance
of the U.S. bond market, include reinvestment of income and capital gains.
Investors cannot directly invest in an index. The inception figures are from the
Portfolio's commencement of operations.
Performance numbers for the Managed Portfolio are net of all portfolio operating
expenses, but do not include separate account or contract charges. If the
performance data included the effect of these charges, it would be lower. Past
performance is no guarantee of future results. Principal and investment return
will vary so shares may be worth more or less than their original cost when
redeemed.
7
<PAGE>
A Message From John Riazzi, Portfolio Manager of Tactical Asset Allocation
Portfolio
The 1998 stock market was more volatile than at any point in the 1990s. After a
strong first half, stocks entered a corrective phase in the third quarter,
driven by sluggish corporate earnings growth and worsening overseas economic
conditions. This bear market proved to be short-lived. With the Federal Reserve
easing interest rates in September, the markets recovered strongly in the fourth
quarter. By year-end the major indexes were back near all-time highs.
The S&P 500 index rose more than 20% for the fourth straight year, but never
before have these gains been concentrated in so few stocks. The top 10
contributors to the index's 1998 performance accounted for 44.5% of the total
increase in the index. Meantime, 43.5% of the companies in the index had
negative price returns for the year, and the median price increase for an S&P
500 stock was a mere 4.3%. The portfolio's 7.2% return for the year, while not
satisfactory compared to the relevant benchmark, appears consistent with a
market where the gains were not very widespread.
We believe that tremendous opportunities are currently available, given the wide
valuation disparity between large-cap growth stocks and the remainder of the
market. This disparity has created an environment where equity selection is
likely to be a dominant factor in determining portfolio returns. In choosing
stocks to include in the portfolio, we have recently emphasized the following
investment themes:
(1) Increase the portfolio's average market capitalization. Small-cap stocks (in
aggregate) have recently suffered far more than their large-cap counterparts.
The popularity of "index funds," which buy stocks according to their relative
weight in an index, may partially explain this phenomenon. It's also evident
that in times of uncertainty, investors will gravitate toward stocks with high
liquidity and familiar "brand names." In short, a certain number of large-cap
stocks are needed as a "foundation of stability" in the portfolio. Stocks such
as Philip Morris and AT&T provide this large-cap foundation and meet our value
criteria.
(2) Search for out-of-favor stocks with favorable operating fundamentals. We are
finding a growing number of stocks that were caught in the market's July-October
downturn, but did not participate in the subsequent recovery. Many of these
firms enjoy exciting business prospects, and continue to meet or exceed their
Wall Street earnings expectations. As these companies continue to produce on the
earnings front, we believe the market will recognize the underlying
fundamentals, and reward the shareholders.
(3) Maintain commitment to "defense." Our overall allocation to equities (54.9%
as of year-end, below the 60% "neutral" positioning) reflects the discipline of
our asset allocation models. Presently, these models are proposing a fairly
cautious intermediate term outlook, with a likelihood of continued volatility.
In addition, we have made meaningful investments in traditionally "defensive"
stock market sectors. Real estate investment trusts ("REITs") have solid
potential, and their high yield will provide current income and downside
protection.
Our stock selection process and asset allocation models have provided long-term
investors with relatively stable returns that have been competitive with the
market indexes. Going forward, we expect our approach to continue to reward
investors, while providing downside protection in times of market instability.
8
<PAGE>
AUL American Series Fund, Inc. Tactical Asset Allocation Portfolio
Tactical S & P Lehman
Date Asset 500 Int
Govts
07/31/95 10,000 10,000 10,000
9/95 10,218 10,442 10,150
12/95 10,650 11,070 10,489
3/96 11,033 11,666 10,417
6/96 11,144 12,183 10,488
9/96 11,515 12,559 10,667
12/96 12,320 13,609 10,914
3/97 12,180 13,973 10,911
6/97 13,204 16,408 11,216
9/97 14,594 17,640 11,503
12/97 14,228 18,147 11,757
3/98 15,448 20,681 11,934
6/98 15,482 21,356 12,155
9/98 14,151 19,229 12,721
12/98 15,254 23,333 12,753
Average Annual Returns for the period ended December 31, 1998
Tactical S&P 500 Lehman
Asset Brothers
Allocation Inter.Govt.
Portfolio Index
One Year 7.2% 28.6% 8.5%
Since Inception (7/31/95) 13.2% 28.1% 7.4%
Value of a hypothetical $10,000
investment made 7/31/95 $15,254 $23,333 $12,753
The charts show the Tactical Asset Allocation Portfolio's total returns, which
include changes in share price and reinvestment of dividends and capital gains.
Figures for the S&P 500, an unmanaged index of common stocks, include
reinvestment of dividends and capital gains. S&P 500 is a registered trademark
of Standard & Poor's Corporation. Figures for the Lehman Brothers Intermediate
Government Bond Index, an unmanaged index of government and corporate bonds,
which is a broad measure of the performance of the U.S. bond market, include
reinvestment of income and capital gains. Investors cannot directly invest in an
index. The inception figures are from the Portfolio's commencement of
operations.
Performance numbers for the Tactical Asset Allocation Portfolio are net of all
portfolio operating expenses, but do not include separate account or contract
charges. If the performance data included the effect of these charges, returns
would be lower. Past performance is no guarantee of future results. Principal
and investment return will vary so shares may be worth more or less than their
original cost when redeemed.
9
<PAGE>
A Message From Kathryn Hudspeth, Kent Adams, Eric Remole and William Sterling,
Portfolio Managers of the Aggressive Investor, Moderate Investor and
Conservative Investor Portfolios (LifeStyle Portfolios)
The LifeStyle Portfolios are three individual Portfolios that invest, in
different proportions, in three broad asset categories - equity securities,
bonds, and money market instruments. Each of the LifeStyle Portfolios is
designed to fit a different general risk profile. Investors are encouraged to
choose the appropriate Portfolio or mix of Portfolios based upon their own
risk/return profile.
The LifeStyle Portfolios offer a broadly diversified mix of financial assets
representing both domestic and international equities as well as fixed income
investments of varying maturity and quality. The risk (volatility) of returns
increases as the investor moves from the Conservative Investor Portfolio with
its lower equity position to the Moderate Investor and Aggressive Investor
Portfolios with their increasing allocations to equities.
The relative performance of the three Portfolios since their inception at the
end of the first quarter of 1998 reflects the different risk characteristics of
the individual Portfolios. Returns were greatly impacted by the turmoil in the
domestic and global markets. The Conservative Investor Portfolio proved the best
at weathering this volatile market and registered the highest return through
year-end of the three Portfolios. The Aggressive Investor Portfolio, however,
rebounded strongly in the fourth quarter as equities recovered from the beating
taken in the previous quarter.
The domestic growth sector, managed by Credit Suisse Asset Management,
emphasizes stable companies with improving earnings expectations among Wall
Street analysts. The value sector of the LifeStyle Portfolios (managed by AUL)
continues to focus more on medium sized companies that are undervalued relative
to the marketplace.
The international financial markets endured wide swings during 1998 as
investors' emotions reflected a mix of risk aversion and investment optimism.
When the fourth quarter began, the MSCI EAFE Index (a commonly used benchmark
for international equity markets) had a nine month return of -0.4%. By the end
of the year, sentiment had changed so dramatically that the EAFE Index ended the
year with a 20.3% return. The LifeStyle Portfolio's international equity
holdings are also managed by Credit Suisse Asset Management. Within the
Portfolios, the allocation to European markets was the prominent driver of
performance. Europe's rally was fueled by merger and acquisition activity in the
face of the imminent arrival of the Euro. The absence of holdings in Asian
markets also proved effective on a full-year basis.
A great deal of uncertainty exists about the current economic environment both
at home and abroad. Successful navigation of the stock market in early 1999 will
depend on correctly determining which path the U.S. economy will take.
The bond portion of the LifeStyle Portfolios, which is managed by AUL,
benefitted in 1998 from substantial holdings in Treasuries and good quality
corporate bonds. Higher quality bonds, especially Treasuries, performed well in
1998. Yields on Treasury bonds declined to levels not seen in decades. Prices
for lower quality and less liquid bonds, however, lagged in the last half of the
year as yield spreads to Treasuries widened significantly. The non-investment
grade sector of the bond market had a particularly poor year.
Despite the current low level of interest rates, many analysts remain optimistic
that the bond market will improve, given the prospects for a slowing economy.
Investment grade bonds, high yield bonds, domestic growth stocks, international
equities, value stocks and money market instruments are each included in the
asset allocations of the LifeStyle Portfolios. Allocations, by sector, as of
year-end 1998 are shown in the following graphs.
10
<PAGE>
Aggressive ModerateConservative
Equities
AUL Value 40.4% 30.7% 21.1%
BEA International 7.4% 22.5% 17.1%
BEA Growth 33.6% 7.2% 3.8%
Fixed Income
AUL Investment Grade 13.0% 30.1% 44.4%
AUL High Yield 3.8% 4.1% 4.8%
Cash 1.8% 5.4% 8.8%
These allocations change, subject to the limitations shown in the prospectus,
depending on market conditions.
11
<PAGE>
AUL American Series Fund, Inc. Aggressive Investor Portfolio
AGGRESSIVE SLH RUSS 3000
Aggregate INDEX
Year HypotheticalHypotheticalHypothetical
$10,000 $10,000 $10,000
investment investment investment
- --------------------------------------------------------------------------------
1998 10,000 10,000 10,000
1998 10,037 10,052 10,098
1998 9,902 10,147 9,849
1998 10,146 10,234 10,181
1998 9,892 10,255 9,996
1998 8,702 10,422 8,465
1998 9,136 10,666 9,042
1998 9,620 10,610 9,728
1998 9,994 10,670 10,324
1998 10,496 10,702 10,980
Average Annual Returns for the period ended December 31, 1998
AggressiveRussell 3000 Lehman
Investor Aggregrate
Portfolio Bond Index
Since Inception (3/31/98) 5.0% 9.8% 7.0%
Value of a hypothetical $10,000
investment made 3/31/98 $10,496 $10,980 $10,702
The charts show the Aggressive Investor Portfolio's total returns, which include
changes in share price and reinvestment of dividends and capital gains. Figures
for the Russell 3000 Index, a performance measurement of the 3,000 largest
publicly traded U.S. companies based on total market capitalization, include
reinvestment of income and capital gains. Figures for the Lehman Aggregate Bond
Index, an unmanaged index of government and corporate bonds, which is a broad
measure of the performance of the U.S. bond market, include reinvestment of
income and capital gains. Investors cannot directly invest in an index. The
inception figures are from the Portfolio's commencement of operations.
Performance numbers for the Aggressive Investor Portfolio are net of all
portfolio operating expenses, but do not include separate account or contract
charges. If the performance data included the effect of these charges, returns
would be lower. Past performance is no guarantee of future results. Principal
and investment return will vary so shares may be worth more or less than their
original cost when redeemed.
12
<PAGE>
AUL American Series Fund, Inc. Moderate Investor Portfolio
MODERATE SLH RUSS 3000
Aggregate INDEX
Year HypotheticalHypotheticalHypothetical
$10,000 $10,000 $10,000
investment investment investment
1998 10,000 10,000 10,000
1998 10,028 10,052 10,098
1998 9,956 10,147 9,849
1998 10,136 10,234 10,181
1998 9,957 10,255 9,996
1998 9,115 10,422 8,465
1998 9,465 10,666 9,042
1998 9,835 10,610 9,728
1998 10,134 10,670 10,324
1998 10,509 10,702 10,980
Average Annual Returns for the period ended December 31, 1998
Moderate Russell Lehman
Investor 3000 Aggregrate
Portfolio Bond Index
Since Inception (3/31/98) 5.1% 9.8% 7.0%
Value of a hypothetical $10,000
investment made 3/31/98 $10,509 $10,980 $10,702
The charts show the Moderate Investor Portfolio's total returns, which include
changes in share price and reinvestment of dividends and capital gains. Figures
for the Russell 3000 Index, a performance measurement of the 3,000 largest
publicly traded U.S. companies based on total market capitalization, include
reinvestment of income and capital gains. Figures for the Lehman Aggregate Bond
Index, an unmanaged index of government and corporate bonds, which is a broad
measure of the performance of the U.S. bond market, include reinvestment of
income and capital gains. Investors cannot directly invest in an index. The
inception figures are from the Portfolio's commencement of operations.
Performance numbers for the Moderate Investor Portfolio are net of all portfolio
operating expenses, but do not include separate account or contract charges. If
the performance data included the effect of these charges, returns would be
lower. Past performance is no guarantee of future results. Principal and
investment return will vary so shares may be worth more or less than their
original cost when redeemed.
13
<PAGE>
AUL American Series Fund, Inc. Conservative Investor Portfolio
CONSERVATIVE SLH RUSS 3000
Aggregate INDEX
Year HypotheticalHypotheticalHypothetical
$10,000 $10,000 $10,000
investment investment investment
1998 10,000 10,000 10,000
1998 10,028 10,052 10,098
1998 9,994 10,147 9,849
1998 10,145 10,234 10,181
1998 10,028 10,255 9,996
1998 9,476 10,422 8,465
1998 9,802 10,666 9,042
1998 10,011 10,610 9,728
1998 10,248 10,670 10,324
1998 10,584 10,702 10,980
Average Annual Returns for the period ended December 31, 1998
Conservative Russell Lehman
Investor 3000 Aggregrate
Portfolio Bond Index
Since Inception (3/31/98) 5.8% 9.8% 7.0%
Value of a hypothetical $10,000
investment made 3/31/98 $10,584 $10,980 $10,702
The charts show the Conservative Investor Portfolio's total returns, which
include changes in share price and reinvestment of dividends and capital gains.
Figures for the Russell 3000 Index, a performance measurement of the 3,000
largest publicly traded U.S. companies based on total market capitalization,
include reinvestment of income and capital gains. Figures for the Lehman
Aggregate Bond Index, an unmanaged index of government and corporate bonds,
which is a broad measure of the performance of the U.S. bond market, include
reinvestment of income and capital gains. Investors cannot directly invest in an
index. The inception figures are from the Portfolio's commencement of
operations.
Performance numbers for the Conservative Investor Portfolio are net of all
portfolio operating expenses, but do not include separate account or contract
charges. If the performance data included the effect of these charges, returns
would be lower. Past performance is no guarantee of future results. Principal
and investment return will vary so shares may be worth more or less than their
original cost when redeemed.
14
<PAGE>
Report of Independent Accountants
The Shareholders and Board of Directors
AUL American Series Fund, Inc.
In our opinion, the accompanying statements of net assets, including the
schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Equity Portfolio, Money Market
Portfolio, Bond Portfolio, Managed Portfolio, Tactical Asset Allocation
Portfolio, Aggressive Investor Portfolio, Moderate Investor Portfolio, and
Conservative Investor Portfolio (constituting the AUL American Series Fund,
Inc., hereafter referred to as the "Fund") at December 31, 1998, the results of
each of their operations, the changes in each of their net assets and the
financial highlights for each the periods indicated, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's 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 December 31, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
/s/PriceWaterhouseCoopers
Indianapolis, Indiana
February 1, 1999
15
<PAGE>
AUL American Series Fund, Inc.
Statements of Net Assets
December 31, 1998
Portfolio
Equity Money Bond Managed Tactical
Market Asset
Assets:
Investments at
value (cost:
$75,733,246,
$81,698,290,
$50,088,688,
$63,741,210,
and $6,045,996,
respectively) $ 95,821,766 $81,698,290 $51,032,507 $74,023,271 $ 6,423,761
Capital stock
sold 79,898 773,092 169,990 54,137 910
Receivable for
investments
sold _ _ _ _ _
Dividends and
interest
receivable 142,065 368,996 541,992 384,173 51,681
Prepaid expenses 884 203 2,218 1,533 1,455
Deferred
organization
costs _ _ _ _ 2,555
Total assets 96,044,613 82,840,581 51,746,707 74,463,114 6,480,362
Liabilities:
Capital stock
reacquired 92,050 720,989 139,029 63,419 183
Distribution
payable _ 10,101 _ _ _
Payable
for investments
purchased 396,104 _ 1,483,391 1,236,211 _
Investment
advisory fees
payable 40,298 35,216 22,558 32,082 4,566
Accrued expenses 30,608 19,022 12,018 19,442 1,994
Organization costs
payable _ _ _ _ 4,830
Total liabilities 559,060 785,328 1,656,996 1,351,154 11,473
Net Assets $95,485,553 $82,055,253 $50,089,711 $73,111,960 $468,889
Shares
outstanding 4,710,131 82,055,253 4,624,949 4,832,940 500,212
Net Asset Value
per share $ 20.27 $ 1.00 $ 10.83 $ 15.13 $ 12.93
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
AUL American Series Fund, Inc.
Statements of net assets (continued)
December 31, 1998
LifeStyle Portfolios
Aggressive ModerateConservative
Investor Investor Investor
Assets:
Investments at
value (cost:
$6,471,525,
$6,711,158,
and $6,277,317,
respectively) $6,768,491 $6,931,188 $6,438,123
Capital Stock
sold 1,756 3,568 8,225
Receivable for
investments
sold 100 100 10,050
Dividends and
interest
receivable 15,450 24,678 29,201
Prepaid expenses 1,286 1,042 983
Deferred
organization
costs 6,640 6,640 6,640
Total assets 6,793,723 6,967,216 6,493,222
Liabilities:
Capital Stock
reacquired _ _ _
Distribution
payable _ _ _
Payable for
investments
purchased 99,139 148,708 198,277
Investment
advisory fees
payable 3,926 4,023 3,785
Accrued expenses 2,497 3,392 2,513
Organization
costs payable 7,406 7,406 7,406
Total liabilities 112,968 163,529 211,981
Net Assets $6,680,755 $6,803,687 $6,281,241
Shares
outstanding 644,280 659,392 609,958
Net Asset Value
per share $ 10.37 $ 10.32 $ 10.30
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
AUL American Series Fund, Inc.
Statements of operations
For the year ended December 31, 1998
Portfolio
Equity Money Bond Managed Tactical
Market Asset
Investment Income:
Income:
Dividends $1,504,879 $ _ $ _ $ 680,964 $ 53,221
Interest 487,229 3,627,475 2,559,494 1,956,021 155,233
1,992,108 3,627,475 2,559,494 2,636,985 208,454
Expenses:
Investment
advisory fee 447,358 333,382 209,661 339,371 45,828
Custodian and
service agent
fee 72,849 50,950 35,463 56,324 7,753
Professional
fees 7,975 4,760 3,203 5,932 427
Amortization of
deferred
organization
costs _ _ _ _ 1,610
Director fees 4,950 3,446 2,369 3,740 321
Printing 16,323 11,414 8,160 12,339 1,008
Other 2,778 2,573 1,997 2,348 984
Total expenses
before
reduction 552,233 406,525 260,853 420,054 57,931
Investment
advisory
expense
reduction _ _ _ _ (623)
552,233 406,525 260,853 420,054 57,308
Net investment
income 1,439,875 3,220,950 2,298,641 2,216,931 151,146
Gain (Loss) on
Investments:
Net realized
gain 10,566,405 _ 895,159 5,358,469 160,641
Net change in
unrealized
appreciation (5,994,103) _ 327,099 (2,340,871) 14,520
Net gain 4,572,302 _ 1,222,258 3,017,598 175,161
Net Increase in
Net Assets from
Operations $6,012,177 $3,220,950 $3,520,899 $5,234,529 $326,307
The accompanying notes are an integral part of the financial statement.
18
<PAGE>
AUL American Series Fund, Inc.
Statements of operations (continued)
March 31, 1998 (Commencement of Operations) to December 31, 1998
LifeStyle Portfolios
Aggressive ModerateConservative
Investor Investor Investor
Investment Income:
Income:
Dividends (net
of foreign
taxes withheld
of $1,322,
$1,214, and
$641,
respectively) $ 44,415 $ 34,470 $ 22,421
Interest 56,624 106,550 146,529
101,039 141,020 168,950
Expenses:
Investment
advisory fee 29,155 30,065 29,203
Custodian and
service agent
fee 39,940 41,034 40,376
Professional
fees 341 327 335
Amortization of
deferred
organization
costs 766 766 766
Director fees 193 199 195
Printing 725 754 737
Other 491 503 495
Total expenses
before
reduction 71,611 73,648 72,107
Investment
advisory
expense
reduction (20,889) (21,689) (21,330)
50,722 51,959 50,777
Net investment
income 50,317 89,061 118,173
Gain (Loss) on
Investments and
Foreign Currency:
Net realized
gain on
investments 79,149 73,835 93,838
Net realized loss
on foreign
currency
transactions (58) (58) (29)
Net change in
unrealized
appreciation
on investments 296,389 219,453 160,515
Translation of
assets and
liabilities in
foreign
currencies 577 577 291
Net gain 376,057 293,807 254,615
Net Increase in
Net Assets from
Operations $426,374 $382,868 $372,788
The accompanying notes are an integral part of the financial statement.
19
<PAGE>
AUL American Series Fund, Inc.
Statements of changes in net assets
Portfolio
Equity Money Market
Year ended Year ended Year ended Year ended
12/31/98 12/31/97 12/31/98 12/31/97
Increase in Net Assets
from Operations:
Net investment
income $1,439,875 $999,336 $3,220,950 $2,268,259
Net realized gain 10,566,405 1,058,100 _ _
Net change in
unrealized
appreciation (5,994,103) 14,404,527 _ _
Increase in Net Assets
from Operations 6,012,177 16,461,963 3,220,950 2,268,259
Dividends and Distributions:
From net investment
income (1,440,136) (1,011,139) (3,220,950) (2,268,259)
From net realized
gain (8,225,847) (841,088) _ _
Decrease (9,665,983) (1,852,227) (3,220,950) (2,268,259)
Shareholder Transactions:
Proceeds from shares
sold 29,215,767 23,646,772 145,189,479 89,738,967
Reinvested
distributions 8,968,761 1,693,617 3,210,840 2,268,259
Cost of shares
redeemed (19,321,125)(10,326,275)(122,102,008)(76,477,759)
Increase 18,863,403 15,014,114 26,298,311 15,529,467
Net increase 15,209,597 29,623,850 26,298,311 15,529,467
Net Assets at beginning
of year 80,275,956 50,652,106 55,756,942 40,227,475
Net Assets at end
of year $95,485,553 $80,275,956 $82,055,253 $55,756,942
Shares sold 1,345,932 1,225,237 145,189,479 89,738,967
Reinvested
distributions 447,614 83,382 3,210,840 2,268,259
Shares redeemed (899,821) (535,202)(122,102,008)(76,477,759)
Net Increase 893,725 773,417 26,298,311 15,529,467
Shares outstanding at
beginning of year 3,816,406 3,042,989 55,756,942 40,227,475
Shares outstanding at
end of year 4,710,131 3,816,406 82,055,253 55,756,942
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
AUL American Series Fund, Inc.
Statements of changes in net assets (continued)
Portfolio
Bond Managed
Year ended Year ended Year ended Year ended
12/31/98 12/31/97 12/31/98 12/31/97
Increase in Net Assets
from Operations:
Net investment
income $2,298,641 $1,708,663 $2,216,931 $1,687,068
Net realized gain 895,159 687,635 5,358,469 1,443,799
Net change in
unrealized
appreciation 327,099 (27,147) (2,340,871) 6,578,271
Increase in Net Assets
from Operations 3,520,899 2,369,151 5,234,529 9,709,138
Dividends and Distributions:
From net investment
income (2,291,894) (1,707,647) (2,190,819) (1,691,973)
From net realized
gain (816,901) (633,130) (4,289,275) (1,443,799)
Decrease (3,108,795) (2,340,777) (6,480,094) (3,135,772)
Shareholder Transactions:
Proceeds from shares
sold 43,342,207 13,713,183 21,066,727 15,228,291
Reinvested
distributions 3,108,795 2,340,777 6,480,094 3,135,773
Cost of shares
redeemed (31,491,315) (9,552,294)(13,666,306) (7,552,037)
Increase 14,959,687 6,501,666 13,880,515 10,812,027
Net increase 15,371,791 6,530,040 12,634,950 17,385,393
Net Assets at beginning
of year 34,717,920 28,187,880 60,477,010 43,091,617
Net Assets at end
of year $50,089,711 $34,717,920 $73,111,960 $60,477,010
Shares sold 3,953,961 1,268,900 1,328,874 1,035,603
Reinvested
distributions 286,109 219,241 428,239 208,366
Shares redeemed (2,867,165) (884,186) (869,396) (513,935)
Net Increase 1,372,905 603,955 887,717 730,034
Shares outstanding at
beginning of year 3,252,044 2,648,089 3,945,223 3,215,189
Shares outstanding at
end of year 4,624,949 3,252,044 4,832,940 3,945,223
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
AUL American Series Fund, Inc.
Statements of changes in net assets (continued)
Portfolio
Tactical Aggressive Moderate
Asset Investor Investor
3/31/98 3/31/98
Year ended Year ended (Commencement) (Commencement)
12/31/98 12/31/97 12/31/98 12/31/98
Increase in Net Assets
from Operations:
Net investment income $151,146 $76,273 $50,317 $89,061
Net realized gain 160,641 257,170 79,091 73,777
Net change in
unrealized
appreciation 14,520 130,402 296,966 220,030
Increase in Net Assets
from Operations 326,307 463,845 426,374 382,868
Dividends and Distributions:
From net investment
income (151,092) (76,151) (49,549) (88,193)
From net realized gain (38,730) (257,170) (22,684) (22,874)
Decrease (189,822) (333,321) (72,233) (111,067)
Shareholder Transactions:
Proceeds from shares
sold 2,415,625 2,246,655 6,428,191 6,611,350
Reinvested
distributions 149,415 232,373 11,097 17,784
Cost of shares redeemed(684,871) (302,190) (112,674) (97,248)
Increase 1,880,169 2,176,838 6,326,614 6,531,886
Net increase 2,016,654 2,307,362 6,680,755 6,803,687
Net Assets at beginning
of year 4,452,235 2,144,873 _ _
Net Assets at end
of year $6,468,889 $4,452,235 $6,680,755 $6,803,687
Shares sold 184,743 178,777 654,923 667,640
Reinvested
distributions 11,650 18,622 1,097 1,777
Shares redeemed (54,078) (23,548) (11,740) (10,025)
Net Increase 142,315 173,851 644,280 659,392
Shares outstanding at
beginning of year 357,897 184,046 _ _
Shares outstanding at
end of year 500,212 357,897 644,280 659,392
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
AUL American Series Fund, Inc.
StatementS of changes in net assets (continued)
Portfolio
Conservative
Investor
3/31/98
(Commencement)
to
12/31/98
Increase in Net Assets from Operations:
Net investment income $118,173
Net realized gain 93,809
Net change in
unrealized
appreciation 160,806
Increase in Net Assets
from Operations 372,788
Dividends and Distributions:
From net investment
income (117,427)
From net realized gain (37,694)
Decrease (155,121)
Shareholder Transactions:
Proceeds from shares
sold 6,102,927
Reinvested
distributions 16,586
Cost of shares redeemed (55,939)
Increase 6,063,574
Net increase 6,281,241
Net Assets at beginning
of year _
Net Assets at end
of year $6,281,241
Shares sold 614,081
Reinvested
distributions 1,631
Shares redeemed (5,754)
Net Increase 609,958
Shares outstanding at
beginning of year _
Shares outstanding at
end of year 609,958
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
AUL American Series Fund, Inc.
Schedule of investments
Equity Portfolio
December 31, 1998
Market
Description Shares Value
Common Stock (91.5%)
Aerospace (1.6%)
Boeing Co. 25,600 $835,200
Precision Castparts Corp 16,300 721,275
1,556,475
Automotive & Auto Parts (8.3%)
Bandag, Inc. 57,300 2,288,419
Carlisle Companies Inc. 32,300 1,667,488
Ford Motor Co. 49,900 2,928,507
TBC Corp.* 153,100 1,090,837
7,975,251
Banks & Financial (12.7%)
American Express Co. 19,400 1,983,650
Associates First Capital Corp. 31,324 1,327,355
Bank One Corp. 40,063 2,045,717
Citigroup, Inc. 59,800 2,960,100
Ohio Casualty Corp. 48,000 1,974,000
Washington Mutual, Inc. 49,185 1,878,252
12,169,074
Broadcasting & Publishing (4.9%)
Chris-Craft Industries, Inc.* 29,950 1,443,215
Gibson Greetings, Inc.* 43,800 520,125
Meredith Corp. 43,500 1,647,563
Moore Corp., Ltd. 97,800 1,075,800
4,686,703
Electrical Equipment & Electronics (3.2%)
Baldor Electric Co. 98,480 1,994,220
General Electric Co. 10,500 1,071,657
3,065,877
Entertainment & Leisure (4.1%)
CPI Corp. 48,000 1,272,000
Fleetwood Enterprises, Inc. 75,900 2,637,525
3,909,525
Furniture & Apparel (10.3%)
Hillenbrand Industries, Inc. 30,700 1,746,062
Kellwood Co. 51,700 1,292,500
La-Z-Boy Chair Co. 175,800 3,131,438
Liz Claiborne, Inc. 57,400 1,811,688
Reebok International* 125,800 1,871,275
9,852,963
Health Care (2.9%)
Acuson Corp.* 68,000 1,011,500
McKesson Corp. 9,700 766,906
Merck & Co. 7,000 1,033,812
2,812,218
Information Processing & Telecommunications (9.3%)
A T & T Corp. 13,900 1,045,975
Ascend Communications, Inc.* 19,225 1,264,043
International Business Machines Corp. 5,700 1,053,075
Sun Microsystems, Inc.* 54,800 4,692,250
Telxon Corp. 62,200 863,025
8,918,368
Merchandising (6.7%)
Enesco Group Inc. 30,900 718,425
Gymboree Corp.* 143,700 916,087
Lands' End, Inc.* 60,400 1,627,025
Longs Drug Stores Corp. 83,100 3,116,250
6,377,787
Metals & Mining (11.0%)
AK Steel Holding Corp. 117,100 2,751,850
Aluminum Company of America 36,400 2,714,075
Cleveland-Cliffs, Inc. 49,000 1,975,312
Oregon Steel Mills, Inc. 114,800 1,363,250
Phelps Dodge Corp. 33,600 1,709,400
10,513,887
Oil & Oil Services (5.0%)
Royal Dutch Petroleum 42,700 2,044,262
Tidewater Inc. 55,500 1,286,907
Valero Energy Corp. 68,300 1,451,375
4,782,544
Transportation (4.5%)
Alexander & Baldwin, Inc. 84,400 1,962,300
Norfolk Southern Corp. 72,800 2,306,850
4,269,150
Miscellaneous (7.0%)
Kelly Services, Inc. 70,400 2,235,200
Michael Foods, Inc. 58,700 1,761,000
P G & E Corp. 58,994 1,858,312
Park Electrochemical Corp. 30,900 884,512
6,739,024
Total common stock (cost: $67,540,326) 87,628,846
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
AUL American Series Fund, Inc.
Schedule of investments
Equity portfolio (continued)
December 31, 1998
Market
Description Shares Value
Money Market Mutual Funds (4.3%)
Federated Investors Prime Obligation 4,126,287 $4,126,287
Total money market mutual funds (cost: $4,126,287) 4,126,287
Interest Maturity Principal
Rate Date Amount
Short-term Notes (1.0%)
American General Finance Group 5.160% 01/25/99 $1,000,000 996,560
Total short-term notes (cost: $996,560) 996,560
Cash and Cash Equivalents (3.2%)
BONY Cash Reserve 3,070,073
Total cash and cash equivalent (cost: $3,070,073) 3,070,073
Total Investments (cost: $75,733,246) $95,821,766
All investments are in United States enterprises.
The accompanying notes are an integral part of the financial statements.
25
<PAGE>
AUL American Series Fund, Inc.
Schedule of investments
Money Market Portfolio
December 31, 1998
Interest Maturity Principal Market
Description Rate Date Amount Value
Short-term Notes (93.3%)
U.S. Government & Agency Obligations (47.7%)
Federal Home Loan Bank
Discount Notes 4.080% 01/04/99 $3,200,000 $3,198,672
Federal Home Loan Bank
Discount Notes 5.040% 01/06/99 3,000,000 2,997,925
Federal Home Loan Mortgage
Corp. Discount Notes 5.020% 01/22/99 5,500,000 5,483,960
Federal Home Loan Mortgage
Corp. Discount Notes 4.920% 03/09/99 9,200,000 9,115,758
Federal Home Loan Mortgage
Corp. Discount Notes 4.950% 02/03/99 5,200,000 5,176,405
Federal Home Loan Mortgage
Corp. Discount Notes 5.000% 02/05/99 4,100,000 4,080,070
Federal National Mortgage
Association Discount Notes 4.950% 03/02/99 6,000,000 5,950,500
Federal National Mortgage
Association Discount Notes 4.920% 01/15/99 3,000,000 2,994,260
38,997,550
Corporate Obligations (45.6%)
Automotive (7.5%)
Ford Motor Credit Corp. 5.080% 01/11/99 2,400,000 2,400,000
General Motors Acceptance
Corp. 5.112% 01/15/99 1,800,000 1,800,000
General Motors Acceptance
Corp. 5.125% 01/21/99 1,900,000 1,900,000
6,100,000
Electrical Equipment (12.5%)
General Electric Capital
Corp. 5.000% 01/20/99 2,600,000 2,600,000
General Electric Capital
Corp 5.103% 01/22/99 3,200,000 3,200,000
General Electric Capital
Corp 5.217% 02/01/99 2,200,000 2,200,000
International Business
Machines Credit Corp. 4.880% 01/20/99 2,200,000 2,200,000
10,200,000
Financial (14.8%)
American Express 5.050% 01/06/99 1,400,000 1,400,000
American Express 5.000% 02/18/99 1,000,000 1,000,000
American General Finance 5.145% 01/27/99 3,300,000 3,300,000
Associates Corporation of
North America 5.091% 01/18/99 2,200,000 2,200,000
Household Finance 5.115% 01/14/99 1,200,000 1,200,000
Prudential Financing Corp. 5.248% 01/13/99 3,000,000 3,000,000
12,100,000
Machinery (5.4%)
John Deere Capital Corp. 5.279% 02/08/99 3,200,000 3,200,000
John Deere Capital Corp. 5.289% 02/11/99 1,200,000 1,200,000
4,400,000
Oil and Gas (5.4%)
Chevron Oil Finance Co. 5.061% 01/29/99 2,300,000 2,300,000
Texaco, Inc. 5.093% 01/08/99 2,100,000 2,100,000
4,400,000
Total short-term notes (cost: $76,197,550) 76,197,550
The accompanying notes are an integral part of the financial statements.
26
<PAGE>
AUL American Series Fund, Inc.
Schedule of investments
Money Market Portfolio (continued)
December 31, 1998
Market
Description Shares Value
Money Market Mutual Funds (5.9%)
Dreyfus Masternote Account 2,017,040 $2,017,040
Federated Investors Prime Obligation 2,835,530 2,835,530
Total money market mutual funds (cost: $4,852,570) 4,852,570
Cash and Cash Equivalent (0.8%)
BONY Cash Reserve 648,170
Total cash and cash equivalents (cost: $648,170) 648,170
Total Investments (cost: $81,698,290) $81,698,290
All investments are in United States enterprises.
The accompanying notes are an integral part of the financial statements.
27
<PAGE>
AUL American Series Fund, Inc.
Schedule of investments
Bond Portfolio
December 31, 1998
Interest Maturity Principal Market
Description Rate Date Amount Value
Long-term Notes and Bonds (95.0%)
U.S. Government & Agency Obligations (32.7%)
Federal National Mortgage
Association 5.750% 04/15/03 $1,000,000 $1,028,490
Federal Home Loan Bank 8.375% 10/25/99 1,300,000 1,335,140
U.S. Treasury Bonds 6.125% 08/15/07 700,000 764,533
U.S. Treasury Bonds 7.250% 05/15/16 2,575,000 3,119,380
U.S. Treasury Bonds 8.000% 11/15/21 1,800,000 2,406,654
U.S. Treasury Notes 11.750% 02/15/10 900,000 1,223,940
U.S. Treasury Notes 4.750% 11/15/08 500,000 503,905
U.S. Treasury Notes 5.625% 05/15/08 100,000 106,718
U.S. Treasury Notes 6.250% 02/28/02 1,700,000 1,777,741
U.S. Treasury Notes 6.250% 04/30/01 2,025,000 2,096,200
U.S. Treasury Notes 6.375% 03/31/01 800,000 829,432
U.S. Treasury Notes 6.750% 04/30/00 1,450,000 1,488,062
16,680,195
Mortgage-Backed and Asset-Backed Securities (36.2%)
American Southwest
Financial Corp. CMO 8.900% 03/01/18 143,646 145,801
California Infrastructure 6.220% 03/25/04 400,000 403,112
Federal Home Loan Mortgage
Corp. Gold Pool #E72468 5.500% 10/01/13 702,025 693,503
Federal Home Loan Mortgage
Corp. Gold Pool #E00543 6.000% 04/01/13 232,482 233,354
Federal Home Loan Mortgage
Corp. Gold Pool #E00565 6.000% 08/01/13 502,256 504,225
Federal Home Loan Mortgage
Corp. Gold Pool #E69858 6.000% 04/01/13 628,141 630,603
Federal Home Loan Mortgage
Corp. Gold Pool #E69878 6.000% 04/01/13 52,494 52,700
Federal Home Loan Mortgage
Corp. Gold Pool #E71048 6.000% 07/01/13 37,985 38,134
Federal Home Loan Mortgage
Corp. Gold Pool #E71645 6.000% 08/01/13 488,041 489,954
Federal Home Loan Mortgage
Corp. Gold Pool #E72105 6.000% 09/01/13 488,561 490,476
Federal Home Loan Mortgage
Corp. Gold Pool #G10817 6.000% 06/01/13 684,410 687,093
Federal Home Loan Mortgage
Corp. Gold Pool #C14364 6.500% 09/01/28 704,163 709,430
Federal Home Loan Mortgage
Corp. Gold Pool #C14872 6.500% 09/01/28 181,176 182,531
Federal Home Loan Mortgage
Corp. To Be Allocated 6.000% 01/14/29 700,000 691,467
Federal Home Loan Mortgage
Corp. To Be Allocated 6.000% 01/14/29 800,000 790,250
Federal Home Loan Mortgage
Corp. CMO 6.500% 04/15/21 400,000 406,500
Federal National Mortgage
Association CMO 7.500% 12/25/09 600,000 639,750
GNMA Pool #480714 6.000% 11/15/28 329,689 326,940
GNMA Pool #482825 6.000% 11/15/28 554,873 550,245
GNMA Pool #492362 6.000% 10/15/28 263,958 261,757
GNMA Pool #436282 6.500% 03/15/28 331,092 334,540
GNMA Pool #456941 6.500% 06/15/28 580,761 586,731
GNMA Pool #462829 6.500% 07/15/28 402,115 406,301
GNMA Pool #463145 6.500% 04/15/28 1,003,453 1,013,900
GNMA Pool #465364 6.500% 08/15/28 489,938 495,038
GNMA Pool #468723 6.500% 02/15/28 364,171 367,962
GNMA Pool #474638 6.500% 08/15/28 394,530 398,637
GNMA Pool #399083 7.000% 01/15/27 2,719,407 2,783,802
GNMA Pool #462142 7.000% 05/12/26 215,034 220,126
GNMA Pool #416402 7.500% 07/15/26 21,170 21,830
GNMA Pool #424739 7.500% 05/15/26 484,735 499,796
GNMA Pool #425039 7.500% 05/15/26 38,790 39,995
GNMA Pool #452827 7.500% 05/15/28 358,424 369,900
(continued on next page)
The accompanying notes are an integral part of the financial statements.
28
<PAGE>
AUL American Series Fund, Inc.
Schedule of investments
Bond Portfolio (continued)
December 31, 1998
Interest Maturity Principal Market
Description Rate Date Amount Value
Long-term Notes and Bonds (95.0%) (continued)
Mortgage-Backed and Asset-Backed Securities (36.2%) (continued)
GNMA Pool #415539 8.000% 07/15/27 $229,097 $238,116
GNMA Pool #443216 8.000% 07/15/27 472,318 490,913
Green Tree Manufactured
Housing ABS 7.290% 03/15/28 1,200,000 1,260,750
18,456,162
Corporate Obligations (26.1%)
American Express Debentures 8.500% 08/15/01 400,000 430,196
Anheuser-Busch Cos. Inc.
Debentures 6.750% 12/15/27 400,000 436,424
Associates Corporation of
North America Notes 5.600% 01/15/01 1,600,000 1,606,224
Commercial Credit Company 5.550% 02/15/02 1,000,000 1,002,890
El Paso Natural Gas
Company Notes 7.750% 01/15/02 200,000 210,220
Eli Lilly & Company
Debentures 7.125% 06/01/25 400,000 458,712
Enron Corp. Notes 6.450% 11/15/01 400,000 406,130
Ford Motor Credit
Corp. Notes 7.750% 11/15/02 850,000 915,526
General Motors Acceptance
Corporation Notes 5.850% 04/06/00 500,000 503,005
GTE Corp. Debentures 6.940% 04/15/28 500,000 543,025
Hydro-Quebec Debentures 8.050% 07/07/24 400,000 480,020
ICI Wilmington Notes 6.750% 09/15/02 600,000 613,500
Key Bank NA Notes 6.500% 10/15/27 300,000 315,975
Korean Development
Bank Notes 7.375% 09/17/04 500,000 456,420
Petroliam Nasional
Berhad Notes 7.125% 10/18/06 500,000 405,912
PNC Funding Corp. Notes 6.875% 03/01/03 400,000 417,376
Public Service New Mexico 7.100% 08/01/05 350,000 352,220
Raytheon Co. Notes 5.950% 03/15/01 800,000 807,024
Service Corp. Notes 6.750% 06/01/01 900,000 921,160
Signet Bank Notes 7.800% 09/15/06 400,000 452,292
Sprint Capital Corp 6.875% 11/15/28 700,000 727,510
Tyco International Group
SA Series 144A 6.125% 11/01/08 600,000 605,000
Union Pacific Resources
Debentures 7.050% 05/15/18 300,000 279,483
13,346,244
Total long-term notes and bonds (cost: $47,538,782) 48,482,601
Shares
Money Market Mutual Funds (2.0%)
Federated Investors Prime Obligation 1,014,205 1,014,205
Total money market mutual funds (cost: $1,014,205) 1,014,205
Cash and Cash Equivalents (3.0%)
BONY Cash Reserve 1,535,701
Total cash and cash equivalent (cost: $1,535,701)
1,535,701
Total Investments (costs: $50,088,688) $51,032,507
All investments are in United States enterprises.
The accompanying notes are an integral part of the financial statements.
29
<PAGE>
AUL American Series Fund, Inc.
Schedule of investments
Managed Portfolio
December 31, 1998
Market
Description Shares Value
Common Stock (55.0%)
Aerospace (1.0%)
Boeing Co. 13,500 $440,437
Precision Castparts Corp. 7,300 323,025
763,462
Automotive & Auto Parts (4.9%)
Bandag, Inc. 26,200 1,046,362
Carlisle Companies Inc. 16,000 826,000
Ford Motor Co. 21,900 1,285,256
TBC Corp.* 68,300 486,638
3,644,256
Banks & Financial (7.6%)
American Express Co. 8,600 879,350
Associates First Capital Corp. 15,440 654,270
Bank One Corp. 18,985 969,421
Citigroup, Inc. 27,109 1,341,895
Ohio Casualty Corp. 21,900 900,638
Washington Mutual, Inc. 23,305 889,960
5,635,534
Broadcasting & Publishing (3.0%)
Chris-Craft Industries, Inc.* 14,065 677,758
Gibson Greetings, Inc.* 22,700 269,562
Meredith Corp. 21,300 806,738
Moore Corp., Ltd 41,500 456,500
2,210,558
Electrical Equipment & Electronics (1.9%)
Baldor Electric Co. 45,400 919,350
General Electric Co. 5,100 520,520
1,439,870
Entertainment & Leisure (2.4%)
CPI Corp. 21,800 577,700
Fleetwood Enterprises, Inc. 34,500 1,198,875
1,776,575
Furniture & Apparel (6.0%)
Hillenbrand Industries, Inc. 13,400 762,125
Kellwood Co. 24,500 612,500
La-Z-Boy Chair Co. 76,200 1,357,313
Liz Claiborne, Inc. 26,800 845,875
Reebok International* 58,700 873,163
4,450,976
Health Care (1.9%)
Acuson Corp.* 34,500 513,188
McKesson Corp. 3,200 472,600
Merck & Co. 5,000 395,312
1,381,100
Information Processing & Telecommunications (5.6%)
A T & T Corp. 7,300 549,325
Ascend Communications Inc.* 8,975 590,106
International Business Machines Corp. 2,900 535,775
Sun Microsystems, Inc.* 24,200 2,072,125
Telxon Corp. 30,600 424,575
4,171,906
Merchandising (3.7%)
Enesco Group Inc. 8,200 190,650
Gymboree Corp.* 68,100 434,137
Lands' End, Inc.* 25,500 686,906
Longs Drug Stores Corp. 37,200 1,395,000
2,706,693
Metals & Mining (6.6%)
AK Steel Holding Corp. 54,000 1,269,000
Aluminum Company of America 16,400 1,222,825
Cleveland-Cliffs, Inc. 22,800 919,125
Oregon Steel Mills, Inc. 56,000 665,000
Phelps Dodge Corp. 15,600 793,650
4,869,600
Oil & Oil Services (3.1%)
Royal Dutch Petroleum Co. 19,300 923,987
Tidewater Inc. 28,200 653,888
Valero Energy Corp. 32,100 682,125
2,260,000
Transportation (2.9%)
Alexander & Baldwin, Inc. 39,200 911,400
Norfolk Southern Corp. 38,100 1,207,293
2,118,693
Miscellaneous (4.4%)
Kelly Services, Inc. 32,100 1,019,175
Michael Foods, Inc. 24,700 741,000
P G & E Corp. 27,254 858,501
Park Electrochemical Corp. 21,100 603,987
3,222,663
Total common stock (cost: $31,016,013) 40,651,886
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.
30
<PAGE>
AUL American Series Fund, Inc.
Schedule of investments
Managed Portfolio (continued)
December 31, 1998
Interest Maturity Principal Market
Description Rate Date Amount Value
Long-Term Notes and Bonds (41.0%)
U.S. Government and Agency Obligations (13.4%)
Federal National Mortgage
Association Bonds 8.350% 11/10/99 $500,000 $514,140
Federal Home Loan Bank 8.375% 10/25/99 900,000 924,328
Federal Home Loan Bank 8.600% 06/25/99 500,000 508,280
U.S. Treasury Bonds 7.250% 05/15/16 1,125,000 1,362,836
U.S. Treasury Bonds 8.000% 11/15/21 1,350,000 1,804,990
U.S. Treasury Notes 11.750% 02/15/10 350,000 475,976
U.S. Treasury Notes 4.750% 11/15/08 150,000 151,171
U.S. Treasury Notes 5.625% 05/15/08 200,000 213,438
U.S. Treasury Notes 5.750% 08/15/03 1,375,000 1,435,802
U.S. Treasury Notes 6.250% 02/28/02 400,000 418,292
U.S. Treasury Notes 6.250% 04/30/01 1,200,000 1,242,192
U.S. Treasury Notes 6.375% 03/31/01 850,000 881,271
9,932,716
Mortgage-Backed and Asset-Backed Securites (15.6%)
California Infrastructure 6.220% 03/25/04 300,000 302,334
Federal Home Loan Mortgage
Corp. Gold Pool #E69502 6.000% 03/01/13 475,368 477,231
Federal Home Loan Mortgage
Corp. Gold Pool #E00543 6.000% 04/01/13 477,615 479,406
Federal Home Loan Mortgage
Corp. Gold Pool #C14872 6.500% 09/01/28 678,164 683,238
Federal Home Loan Mortgage
Corp. To Be Allocated 6.000% 01/14/29 750,000 740,857
Federal Home Loan Mortgage
Corp. To Be Allocated 6.000% 01/14/29 500,000 493,906
Federal Home Loan Mortgage
Corp. CMO 6.500% 04/15/21 300,000 304,875
GNMA Pool #407966 6.500% 02/15/28 756,194 763,953
GNMA Pool #422407 6.500% 01/15/26 185,850 187,844
GNMA Pool #424578 6.500% 04/15/26 480,766 485,925
GNMA Pool #425983 6.500% 03/15/26 253,794 256,517
GNMA Pool #431962 6.500% 05/15/26 362,978 366,873
GNMA Pool #443577 6.500% 07/15/28 301,682 304,822
GNMA Pool #465963 6.500% 03/15/28 114,134 115,310
GNMA Pool #468340 6.500% 08/15/28 483,716 488,752
GNMA Pool #471262 6.500% 05/15/28 1,003,302 1,013,747
GNMA Pool #474638 6.500% 08/15/28 108,137 109,263
GNMA Pool #399069 7.000% 01/15/27 1,730,557 1,771,537
GNMA Pool #416741 7.000% 05/15/26 467,748 478,824
GNMA Pool #436741 7.500% 01/15/27 476,964 491,784
GNMA Pool #443216 8.000% 07/15/27 247,069 256,796
GNMA Pool #451312 8.000% 07/15/27 173,551 180,383
Green Tree Manufacturing
Housing ABS 7.290% 03/15/28 800,000 840,500
11,594,677
The accompanying notes are an integral part of the financial statements.
31
<PAGE>
AUL American Series Fund, Inc.
Schedule of investments
Managed portfolio (continued)
December 31, 1998
Interest Maturity Principal Market
Description Rate Date Amount Value
Long-Term Notes and Bonds(41.0%) (continued)
Corporate Obligations (12.0%)
American Express Debentures 8.500% 08/15/01 $200,000 $215,100
Anheuser-Busch Cos. Inc.
Debentures 6.750% 12/15/27 450,000 490,978
Associates Corporation of
North America Notes 5.600% 01/15/01 400,000 401,556
Commercial Credit Company 5.550% 02/15/01 700,000 702,023
El Paso Natural Gas Company
Notes 7.750% 01/15/02 100,000 105,110
Eli Lilly & Company
Debentures 7.125% 06/01/25 300,000 344,034
Enron Corp. Notes 6.450% 11/15/01 300,000 304,596
Ford Motor Credit Corp.
Notes 7.750% 11/15/02 600,000 646,254
General Motors Acceptance
Corp. 5.850% 04/06/00 750,000 754,507
GTE Corp. Debentures 6.940% 04/15/28 350,000 380,117
Hydro-Quebec Debenture 8.050% 07/07/24 250,000 300,012
ICI Wilmington Notes 6.750% 09/15/02 400,000 409,000
Key Bank NA Notes 6.500% 10/15/27 250,000 263,313
Korean Development Bank
Notes 7.375% 09/17/04 400,000 365,136
Petroliam Nasional Berhad
Notes 7.125% 10/18/06 500,000 405,912
PNC Funding Corp. Notes 6.875% 03/01/03 300,000 313,032
Public Service New Mexico 7.100% 08/01/05 200,000 201,270
Raytheon Co. Notes 5.950% 03/15/01 650,000 655,707
Service Company International
Notes 6.750% 06/01/01 700,000 716,458
Signet Bank Notes 7.800% 09/15/06 300,000 339,220
Sprint Capital Corp 6.875% 11/15/28 300,000 311,790
Union Pacific Resources
Debentures 7.050% 05/15/18 250,000 232,902
8,858,027
Total long-term notes and bonds (cost: $29,739,232) 30,385,420
Shares
Money Market Mutual Funds (0.7%)
Federated Investors Prime Obligation 523,271 523,271
Total money market mutual funds (cost: $523,271) 523,271
Cash and Cash Equivalents (3.3%)
BONY Cash Reserve 2,462,694
Total cash and cash equivalent (cost: $2,462,694) 2,462,694
Total Investments (cost: $63,741,210) $74,023,271
All investments are in United States enterprises.
The accompanying notes are an integral part of the financial statements.
32
<PAGE>
AUL American Series Fund, Inc.
Schedule of investments
Tactical Asset Allocation Portfolio
December 31, 1998
Market
Description Shares Value
Common Stock (54.7%)
Airlines (1.2%)
Comair Holdings, Inc. 2,250 $75,937
75,937
Automotive (4.2%)
Daimler Chrysler Corp.* 1,247 119,790
Ford Motor Co. 1,200 70,425
Paccar, Inc. 2,000 82,250
272,465
Banks & Financial (1.8%)
Bank One Corp. 1,500 76,594
Republic New York Co. 800 36,450
113,044
Building Materials (1.5%)
Martin marietta Materials, Inc. 1,500 93,281
93,281
Capital Goods (2.7%)
AGCO Corp. 10,000 78,750
Trinity Industries 2,500 96,250
175,000
Chemicals (1.0%)
Potash Corporation of Saskatchewan 1,000 63,875
63,875
Energy (4.1%)
Diamond Offshore Drilling 4,000 94,750
R & B Falcon Corp.* 7,000 53,375
Tidewater Inc. 5,000 115,938
264,063
Financial Services (4.5%)
AMBAC Financial Group, Inc. 2,000 120,375
Chase Manhattan Corp. 1,500 102,093
Lehman Brothers Holding, Inc. 1,500 66,093
288,561
Government Sponsored Enterprises (1.2%)
Fannie Mae 1,000 74,000
74,000
Insurance (7.8%)
AFLAC, Inc. 3,000 132,000
Allstate Corp. 2,500 96,563
American National Insurance 800 66,200
Conseco, Inc. 4,207 128,577
Frontier Insurance Group, Inc. 6,000 77,250
500,590
Manufactured Housing (1.5%)
Clayton Homes, Inc. 5,000 69,063
Oakwood Homes Corp. 2,000 30,375
99,438
Mortgage Services (3.3%)
Countrywide Credit Industries, Inc. 2,000 100,375
MGIC Investment Corp. 1,500 59,718
PMI Group, Inc. 1,000 49,375
209,468
Real Estate (2.9%)
Duke Realty Investments, Inc. 2,000 46,500
Simon Property Group 1,000 28,500
Storage USA 2,000 64,625
Winston Hotels, Inc. 6,000 49,125
188,750
Restaurants (2.6%)
Cracker Barrel Old Country Store, Inc. 3,000 69,938
Tricon Global Restaurants Inc.* 2,000 100,250
170,188
Retail (3.0%)
Burlington Coat Factory Warehouse 5,000 81,563
Fingerhut Companies, Inc.* 5,000 77,187
Payless Shoesource, Inc.* 764 36,195
194,945
Technology (2.4%)
ECI Telecommunications Limited Designs 3,000 106,875
Miami Computer Supply Corp.* 2,000 49,250
156,125
Telecommunications (5.1%)
A T& T Corp. 1,000 75,250
Alltel Corp. 2,960 177,045
Sprint Corp. (PCS Group)* 400 9,250
Sprint Corp. (Fon Group) 800 67,300
328,845
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.
33
<PAGE>
AUL American Series Fund, Inc.
Schedule of investments
Tactical Asset Allocation Portfolio (continued)
December 31, 1998
Market
Description Shares Value
Common Stock (54.7%) (continued)
Tobacco (1.4%)
Philip Morris Companies, Inc. 1,700 $90,950
90,950
Transportation (1.4%)
Halter Marine Group, Inc.* 5,000 24,375
Norfolk Southern Corp. 2,000 63,375
87,750
Miscellaneous (1.1%)
Minnesota Mining & Manufacturing Co. 1,000 71,125
71,125
Total common stock (cost: $3,209,785) 3,518,400
Preferred Stock (0.8%)
News Corp LTD. 2,000 49,375
Total preferred stock (cost: $35,535) 49,375
The accompanying notes are an integral part of the financial statements.
34
<PAGE>
AUL American Series Fund, Inc.
Schedule of investments
Tactical Asset Allocation Portfolio (continued)
December 31, 1998
Interest Maturity Principal Market
Description Rate Date Amount Value
Long-Term Notes (37.0%)
U.S. Government and Agency Obligations (22.6%)
Federal National Mortgage
Association Notes 5.250% 01/15/03 $200,000 $201,374
Federal National Mortgage
Association Notes 5.625% 03/15/01 150,000 152,445
Federal National Mortgage
Association Notes 7.500% 02/02/07 150,000 153,687
Federal Home Loan Bank Notes 6.100% 04/29/04 150,000 149,343
Federal Home Loan Bank 5.500% 07/14/00 150,000 151,327
US Treasury Notes 6.125% 08/15/07 200,000 218,440
US Treasury Notes 5.500% 04/15/00 100,000 101,016
US Treasury Notes 5.875% 02/15/04 150,000 158,250
US Treasury Notes 6.500% 10/15/06 150,000 166,383
1,452,265
Corporate Obligations (14.4%)
Cendant Corp. 7.750% 12/01/03 150,000 151,600
Commercial Credit Co. 6.500% 08/01/04 150,000 156,140
E.I. Dupont De Nemours 6.500% 09/01/02 150,000 156,721
Merrill Lynch & Co. 6.020% 05/11/01 150,000 151,875
PHH Corp. 7.020% 11/09/01 150,000 157,138
Washington Water Power 5.990% 12/10/07 150,000 149,437
922,911
Total long-term notes and bonds (cost: $2,319,866) 2,375,176
Short-Term Notes (5.9%)
General Motors Acceptance
Corp. 5.600% 01/11/99 125,000 124,806
Windmill CP 6.000% 01/04/99 256,000 255,872
Total short-term notes and bonds (cost: $380,678) 380,678
Cash and Cash Equivalents (1.6%)
BONY Cash Reserve 100,132
Total cash and cash equivalents (cost: $100,132) 100,132
Total Investments (cost: $6,045,996) $6,423,761
All investments are in United States enterprises.
The accompanying notes are an integral part of the financial statements.
35
<PAGE>
AUL American Series Fund, Inc.
Schedule of investments
Aggressive Investor Portfolio
December 31, 1998
Market
Description Shares Value
Common Stock (80.4%)
Aerospace & Air Transport (1.3%)
Boeing Co. 900 $29,363
Precision Castparts Corp. 900 39,825
U.S. Airways Group, Inc. 300 15,600
84,788
Appliances & Household Durables (0.2%)
Electrolux AB Sponsored ADR 170 5,930
Foreningssparbanken AB ADR 264 6,840
12,770
Automotive & Auto Parts (3.7%)
Bandag, Inc. 1,700 67,894
Carlisle Companies, Inc. 1,000 51,625
Ford Motor Co. 1,400 82,163
Honda Motor Co. 71 4,740
TBC Corp.* 4,600 32,775
Volkswagen AG Sponsored ADR 546 8,801
247,998
Banks & Financial (9.3%)
American Express Co. 700 71,575
Associates First Capital Corp. 976 41,360
AXA UAP ADR. 201 14,523
Banco Central Hispanoamericano ADR 657 7,885
Bank of Ireland ADR 131 11,790
Bank of Tokyo-Mitsubshi ADR 496 5,210
Bank One Corp. 1,500 76,593
Barclays PLC ADR 67 6,030
Citigroup, Inc. 1,800 89,100
Countrywide Credit Industries, Inc. 400 20,075
Dresdner Bank AG Sponsored ADR. 190 7,930
Fannie Mae 300 22,200
Federal Home Loan Mortgage Association 300 19,331
Fifth Third Bancorp. 400 28,525
Finova Group 200 10,787
ING Groep N.V. ADR 112 6,965
National Westminster Bank ADR 46 5,451
Ohio Casualty Corp. 1,500 61,687
San Paolo-IMI SPA Sponsored ADR 307 10,975
SLM Holdings Corp. 500 24,000
Societe Generale ADR 227 7,330
Telecom Italia SPA Sponsored ADR 189 16,443
UBS AG+ 15 4,610
Washington Mutual Inc. 1,500 57,281
627,656
Broadcasting & Publishing (3.7%)
Cablevision Systems Corp., Class A 300 15,056
CBS Corp. 600 19,650
Chris-Craft Industries, Inc.* 900 43,370
Clear Channel Communication. 500 27,250
Gannett Co. 700 45,150
Gibson Greetings, Inc.* 1,300 15,438
Meredith Corp. 1,300 49,238
Moore Corp., Ltd. 2,600 28,600
WPP Group PLC ADR. 150 9,262
253,014
Building & Forest Products (0.1%)
Cementos De Mexico ADR 7 30
CRH PLS Sponsored ADR 370 6,660
6,690
Business & Public Services (2.6%)
Aetna, Inc. 200 15,725
Allied Waste Industries, Inc. 500 11,812
Kelly Services, Inc. 2,100 66,675
Waste Management, Inc. 300 13,987
Interpublic Group of Companies, Inc. 600 47,850
Paychex Inc. 400 20,575
176,624
Chemicals (0.6%)
Henkel KGAA ADR 129 10,380
Montedison SPA ADR 406 5,354
Praxair Inc. 300 10,575
Rhone-Poulenc ADR 263 13,215
39,524
Electrical Equipment & Electronics (5.3%)
Baldor Electric Co. 2,700 54,675
Bayerische Moteren Werke (BMW) ADR 10 7,822
Canon Inc. ADR 236 5,075
(continued on next page)
+not a United States enterprise
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.
36
<PAGE>
AUL American Series Fund, Inc.
Schedule of investments
Aggressive Investor Portfolio (continued)
December 31, 1998
Market
Description Shares Value
Common Stock (80.4%) (continued)
Electrical Equipment & Electronics (5.3%) (continued)
Dai Nippon Print Unsponsored ADR 50 $7,855
Fuji Photo Film ADR 144 5,275
General Electric Co. 1,400 142,887
Honeywell, Inc. 200 15,062
ITO-Yokado Co. Ltd. Sponsored ADR 164 11,316
Lucent Technologies, Inc. 200 22,000
Minebea Company LTD Sponsored ADR 390 8,800
Mitsubishi Corp. Sponsored ADR 650 7,364
Nippon Telegraph & Telephone Sponsored ADR 188 7,050
Nokia Corporation ADR-A 161 19,390
Pitney-Bowes, Inc. 200 13,212
Royal Philips Electronics NV. ADR 64 4,332
Sekisui House, Ltd. Unsponsored ADR 100 10,417
Sony Corp. ADR 88 6,314
Sterling Software Inc. 400 10,825
359,671
Energy Source (0.3%)
RWE AG ADR 196 10,682
Total S.A. ADR 182 9,054
19,736
Entertainment & Leisure (2.0%)
CPI Corp. 1,400 37,100
Fleetwood Enterprises, Inc. 2,200 76,450
McDonald's Corp. 200 15,325
Nintendo Company Ltd. 660 7,873
136,748
Food, Beverage, Tobacco (3.3%)
Coca-Cola Co. 1,300 86,937
Compass Group PLC ADR 518 5,951
Diageo PLC ADR 165 7,631
Groupe Danone ADR 231 12,993
Michael Foods, Inc. 1,800 54,000
Nestle SA ADR 122 13,310
Pepsico Inc. 500 20,470
Philip Morris Companies, Inc. 200 10,700
Tootsie Roll Industries, Inc. 300 11,738
223,730
Furniture & Apparel (4.5%)
Ethan Allen Interiors, Inc. 300 12,300
Hillenbrand Industries, Inc. 700 39,812
Kellwood Co. 1,500 37,500
La-Z-Boy Inc. 4,600 81,938
Liz Claiborne, Inc. 1,800 56,813
Reebok International* 3,800 56,525
Safeskin Corp. 500 12,062
Sealed Air Corp. 200 10,213
307,163
Health Care (7.2%)
Acuson Corp.* 2,300 34,213
Amgen Inc. 500 52,281
Bristol-Myers Squibb Co. 700 93,670
McKesson Corp. 500 39,531
Merck & Co. 900 132,920
Novartis AG ADR 134 13,170
Pfizer Inc. 100 12,543
Schering-Plough 900 49,725
Watson Pharmaceutical Inc. 300 18,862
Wellpoint Health Networks, Inc. 400 34,800
Zeneca Group PLC ADR 132 5,923
487,638
Household Products (1.4%)
Colgate-Palmolive Co. 200 18,575
Procter & Gamble Co. 700 63,920
Unilever N.V ADR 105 8,710
Unilever PLC Sponsored ADR 125 5,625
96,830
Information Processing & Telecommunications (13.8%)
A T & T Corp. 400 30,100
Airtouch Communications, Inc. 200 14,425
Alcatel Alsthom CGE Sponsored ADR 368 8,993
Ameritech Corp. 800 50,700
Ascend Communications, Inc.* 625 41,093
BASF AF Unsponsored ADR 222 8,436
Bell Atlantic Corp. 200 10,600
BMC Software Inc. 400 17,825
Cisco Systems, Inc. 1,100 102,093
Compaq Computer Corp. 600 25,162
Dell Computer Corp. 900 65,868
France Telecom S.A. Sponsored ADR 223 17,603
Intel Corp. 900 106,706
International Business Machines Corp 400 73,900
(continued on next page)
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.
37
<PAGE>
AUL American Series Fund, Inc.
Schedule of investments
Aggressive Investor Portfolio (continued)
December 31, 1998
Market
Description Shares Value
Common Stock (80.4%) (continued)
Information Processing & Telecommunications (13.8%) (continued)
MCI Worldcom, Inc. 200 $14,350
Microsoft Corp. 800 110,950
Portugal Telecom S.A. ADR 92 4,105
Sun Microsystems, Inc.* 1,700 145,562
Systeme, Anwendungen, Produkte AG ADR 208 7,501
Tele-Danmark A/S ADR 133 9,027
Telefonica SA ADR 36 4,873
Tellabs Inc. 300 20,570
Telxon Corp. 1,900 26,362
TNT Post Group N.V. Sponsored ADR 96 3,120
Vodafone Group PLC ADR 78 12,567
932,491
Media (0.3%)
Omnicon Group Inc. 300 17,400
Royal PTT Nederland ADR 76 3,820
21,220
Merchandising (6.6%)
Albertson's, Inc. 500 31,843
Amazon Com, Inc. 200 64,250
Dayton-Hudson Corp. 700 37,975
Enesco Group, Inc. 1,800 41,850
Gymboree Corp.* 4,900 31,237
Kroger Co. 500 30,250
Lands' End, Inc.* 2,200 59,262
Longs Drug Stores, Inc. 2,400 90,000
Sears Roebuck & Company 300 12,750
Staples Inc. 800 34,950
Whole Foods Market, Inc. 200 9,675
444,042
Metals & Mining (4.8%)
AK Steel Holding Corp. 3,500 82,250
Aluminum Company of America 1,100 82,018
Cleveland-Cliffs, Inc. 1,500 60,468
Oregon Steel Mills, Inc. 4,300 51,062
Phelps Dodge Corp. 1,000 50,875
326,673
Oil & Oil Services (2.2%)
BP Amoco PLC ADR 68 6,094
Royal Dutch Petroleum Co. 1,200 57,450
Tidewater, Inc. 1,900 44,056
Valero Energy Corp. 2,100 44,625
152,225
Personal Care (1.4%)
Johnson & Johnson 400 $33,550
Warner-Lambert Co. 800 60,150
93,700
Real Estate (1.2%)
Boston Properties, Inc. 500 15,250
Post Properties, Inc. 700 26,906
Starwood Financial Trust 600 36,000
78,156
Retailing (0.6%)
Boots Company PLC ADR 240 8,191
Costco Companies Inc. 400 28,875
The Great Universal Stores PLC ADR 447 4,697
41,763
Transportation (1.8%)
Alexander & Baldwin, Inc. 2,500 58,125
Norfolk Southern Corp. 2,100 66,543
124,668
Utilities (0.9%)
BG PLC ADR 186 6,080
P G & E Corp. 1,700 53,550
59,630
Miscellaneous (1.3%)
Hercules, Inc. 400 10,950
Mannesmann AG ADR 100 11,530
Park Electrochemical Corp. 1,300 37,212
Transocean Offshore, Inc. 1,000 26,812
86,504
Total common stock (cost: $5,132,960) 5,441,652
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.
38
<PAGE>
AUL American Series Fund, Inc.
Schedule of investments
Aggressive Investor Portfolio (continued)
December 31, 1998
Market
Description Shares Value
Mutual Funds (3.4%)
Federated High Yield Fund 25,614 $228,227
Total mutual funds (cost: $250,000) 228,227
Interest Maturity Principal
Rate Date Amount
Long-Term Notes and Bonds (13.2%)
U.S. Government & Agency Obligations (4.3%)
U.S. Treasury Bonds 8.000% 11/15/21 $25,000 33,425
U.S. Treasury Notes 4.750% 11/15/08 25,000 25,195
U.S. Treasury Notes 5.750% 08/15/03 75,000 78,316
U.S. Treasury Notes 6.250% 02/28/02 125,000 130,665
U.S. Treasury Notes 6.375% 03/31/01 25,000 25,921
293,522
Mortgage Backed Securities (5.8%)
Federal Home Loan Mortgage
Corp. To Be Allocated 6.000% 01/14/29 100,000 98,781
GNMA Pool #482825 6.000% 11/15/28 100,886 100,045
GNMA Pool #454007 6.500% 04/15/28 98,301 99,325
GNMA Pool #474143 7.000% 04/15/28 91,815 93,990
392,141
Corporate Obligations (3.1%)
Anheuser-Busch Cos. Inc.
Debentures 6.750% 12/15/27 25,000 27,277
Ford Motor Credit 7.750% 11/15/02 25,000 26,928
General Motors Acceptance
Corporation Notes 5.850% 04/06/00 25,000 25,150
GTE Corp. Debentures 6.940% 04/15/28 25,000 27,151
Key Bank NA Notes 6.500% 10/15/27 25,000 26,331
Public Service New Mexico 7.100% 08/01/05 25,000 25,160
Sprint Capital Corp 6.875% 11/15/28 25,000 25,982
Union Pacific Resources
Debentures 7.050% 05/15/18 25,000 23,290
207,269
Total notes and bonds (cost: $882,885) 892,932
Cash and Cash Equivalents (3.0%)
BONY Cash Reserve 205,680
Total cash and cash equivalents (cost: $205,680) 205,680
Total Investments (cost: $6,471,525) $6,768,491
Investments are in United States enterprises unless otherwise noted.
The accompanying notes are an integral part of the financial statements.
39
<PAGE>
AUL American Series Fund, Inc.
schedule of investments
Moderate Investor Portfolio
December 31, 1998
Market
Description Shares Value
Common Stock (59.4%)
Aerospace & Air Transport (0.8%)
Boeing Co. 700 $22,838
Precision Castparts Corp. 700 30,975
U.S. Airways Group, Inc. 200 10,400
64,213
Appliances & Household Durables (0.2%)
Electrolux AB Sponsored ADR 168 5,860
Foreningssparbanken AB ADR 262 6,788
12,648
Automotive & Auto Parts (3.0%)
Bandag, Inc. 1,500 59,906
Carlisle Companies, Inc. 800 41,300
Ford Motor Co. 1,100 64,556
Honda Motor Co. 70 4,672
TBC Corp.* 3,800 27,075
Volkswagen AG Sponsored ADR 542 8,738
206,247
Banks & Financial (6.9%)
American Express Co. 500 51,125
Associates First Capital Corp. 818 34,662
AXA UAP ADR 200 14,450
Banco Central Hispanoamericano ADR 651 7,812
Bank of Ireland ADR 130 11,700
Bank of Tokyo-Mitsubshi ADR 493 5,176
Bank One Corp. 1,100 56,170
Barclays PLC ADR 67 6,030
Citigroup, Inc. 1,400 69,300
Countrywide Credit Industries, Inc. 200 10,038
Dresdner Bank AG Sponsored ADR 190 7,930
Fannie Mae 200 14,800
Federal Home Loan Mortgage Association 200 12,888
Fifth Third Bancorp. 200 14,262
Finova Group 100 5,393
ING Groep N.V. ADR 111 6,903
National Westminster Bank ADR 46 5,451
Ohio Casualty Corp. 1,100 45,238
San Paolo-IMI SPA Sponsored ADR 307 10,975
SLM Holdings Corp. 300 14,400
Societe Generale ADR 225 7,265
Telecom Italia SPA Sponsored ADR 189 16,443
UBS AG+ 15 4,610
Washington Mutual Inc. 1,200 45,825
478,846
Broadcasting & Publishing (2.7%)
Cablevision Systems Corp., Class A 200 10,038
CBS Corp. 400 13,100
Chris-Craft Industries, Inc.* 700 33,731
Clear Channel Communication 300 16,350
Gannett Co. 500 32,250
Gibson Greetings, Inc.* 1,100 13,063
Meredith Corp. 1,000 37,875
Moore Corp., Ltd. 1,900 20,900
WPP Group PLC ADR 150 9,263
186,570
Building & Forest Products (0.1%)
Cementos De Mexico ADR 7 30
CRH PLS Sponsored ADR 370 6,660
6,690
Business & Public Services (1.8%)
Aetna, Inc. 200 15,725
Allied Waste Industries, Inc. 400 9,450
Kelly Services, Inc. 1,600 50,800
Waste Management, Inc. 200 9,325
Interpublic Group of Companies, Inc. 400 31,900
Paychex Inc. 200 10,287
127,487
Chemicals (0.5%)
Henkel KGAA ADR 129 10,380
Montedison SPA ADR 403 5,314
Praxair Inc. 200 7,050
Rhone-Poulenc ADR 262 13,165
35,909
Electrical Equipment & Electronics (4.3%)
Baldor Electric Co. 2,200 44,550
Bayerische Moteren Werke (BMW) ADR 10 7,822
Canon Inc. ADR 234 5,031
(continued on next page)
+not a United States enterprise
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.
40
<PAGE>
AUL American Series Fund, Inc.
Schedule of Investments
Moderate Investor Portfolio (continued)
December 31, 1998
Market
Description Shares Value
Common Stock (59.4%) (continued)
Electrical Equipment & Electronics (4.3%) (continued)
Dai Nippon Print Unsponsored ADR 50 $7,854
Fuji Photo Film ADR 143 5,237
General Electric Co. 1,100 112,270
Honeywell, Inc. 100 7,531
ITO-Yokado Co. Ltd. Sponsored ADR 163 11,248
Lucent Technologies, Inc. 200 22,000
Minebea Company LTD Sponsored ADR 385 8,685
Mitsubishi Corp. Sponsored ADR 646 7,320
Nippon Telegraph & Telephone Sponsored ADR 187 7,012
Nokia Corporation ADR 159 19,150
Pitney-Bowes, Inc. 100 6,606
Royal Philips Electronics NV. ADR 64 4,332
Sekisui House, Ltd. Unsponsored ADR 99 10,312
Sony Corp. ADR 87 6,242
Sterling Software Inc. 300 8,120
301,322
Energy Source (0.3%)
RWE AG ADR 195 10,627
Total S.A. ADR 180 8,955
19,582
Entertainment & Leisure (1.6%)
CPI Corp. 1,100 29,150
Fleetwood Enterprises, Inc. 1,800 62,550
McDonald's Corp. 100 7,662
Nintendo Company Ltd. 650 7,754
107,116
Food, Beverage, Tobacco (2.5%)
Coca-Cola Co. 900 60,188
Compass Group PLC ADR 515 5,918
Diageo PLC ADR 165 7,631
Groupe Danone ADR 230 12,938
Michael Foods, Inc. 1,500 45,000
Nestle SA ADR 121 13,201
Pepsico Inc. 300 12,281
Philip Morris Companies, Inc. 100 5,350
Tootsie Roll Industries, Inc. 200 7,825
170,332
Furniture & Apparel (3.5%)
Ethan Allen Interiors, Inc. 200 8,200
Hillenbrand Industries, Inc. 500 28,438
Kellwood Co. 1,200 30,000
La-Z-Boy Inc. 3,800 67,688
Liz Claiborne, Inc. 1,400 44,188
Reebok International 2,900 43,138
Safeskin Corp. 300 7,238
Sealed Air Corp. 200 10,212
239,102
Health Care (5.3%)
Acuson Corp.* 1,800 26,775
Amgen Inc. 300 31,370
Bristol-Myers Squibb Co. 500 66,906
McKesson Corp. 400 31,625
Merck & Co. 700 103,381
Novartis AG ADR 133 13,072
Pfizer Inc. 100 12,543
Schering-Plough 600 33,150
Watson Pharmaceutical Inc. 200 12,575
Wellpoint Health Networks, Inc. 300 26,100
Zeneca Group PLC ADR 130 5,833
363,330
Household Products (1.0%)
Colgate-Palmolive Co. 100 9,288
Procter & Gamble Co. 500 45,656
Unilever N.V. ADR 105 8,710
Unilever PLC Sponsored ADR 125 5,625
69,279
Information Processing & Telecommunications (10.1%)
A T & T Corp. 400 30,100
Airtouch Communications, Inc. 100 7,212
Alcatel Alsthom CGE Sponsored ADR 367 8,970
Ameritech Corp. 600 38,025
Ascend Communications, Inc.* 500 32,875
BASF AF Unsponsored ADR 220 8,360
Bell Atlantic Corp. 100 5,300
BMC Software Inc. 200 8,912
Cisco Systems, Inc. 700 64,970
Compaq Computer Corp. 400 16,775
Dell Computer Corp. 600 43,912
France Telecom S.A. Sponsored ADR 200 15,787
Intel Corp. 600 71,137
International Business Machines Corp 400 73,900
(continued on next page)
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.
41
<PAGE>
AUL American Series Fund, Inc.
Schedule of investments
Moderate Investor Portfolio (continued)
December 31, 1998
Market
Description Shares Value
Common Stock (59.4%) (continued)
Information Processing & Telecommunications (10.1%) (continued)
MCI Worldcom, Inc. 100 $7,175
Microsoft Corp. 500 69,343
Portugal Telecom S.A. ADR 90 4,016
Tele-Danmark A/S ADR 130 8,823
Sun Microsystems, Inc.* 1,400 119,875
Systeme, Anwendungen, Produkte AG ADR 200 7,212
Telefonica SA ADR 36 4,873
Tellabs Inc. 200 13,712
Telxon Corp. 1,500 20,812
TNT Post Group N.V. Sponsored ADR 96 3,120
Vodafone Group PLC ADR 77 12,406
697,602
Media (0.2%)
Omnicon Group Inc. 200 11,600
Royal PTT Nederland ADR 76 3,820
15,420
Merchandising (4.1%)
Albertson's, Inc. 300 19,106
Amazon Com, Inc. 100 32,125
Dayton-Hudson Corp. 500 27,125
Enesco Group, Inc. 100 2,325
Gymboree Corp.* 3,800 24,225
Kroger Co. 300 18,150
Lands' End, Inc.* 1,700 45,793
Longs Drug Stores, Inc. 1,900 71,250
Sears Roebuck & Company 200 8,500
Staples Inc. 600 26,212
Whole Foods Market, Inc. 200 9,675
284,486
Metals & Mining (3.7%)
AK Steel Holding Corp. 2,700 63,450
Aluminum Company of America 900 67,106
Cleveland-Cliffs, Inc. 1,200 48,375
Oregon Steel Mills, Inc. 2,800 33,250
Phelps Dodge Corp. 800 40,700
252,881
Oil & Oil Services (1.4%)
BP Amoco PLC ADR 68 6,094
Royal Dutch Petroleum Co. 1,000 47,875
Tidewater, Inc. 400 9,275
Valero Energy Corp. 1,600 34,000
97,244
Personal Care (1.0%)
Johnson & Johnson 300 25,162
Warner-Lambert Co. 600 45,112
70,274
Real Estate (0.7%)
Boston Properties, Inc. 300 9,150
Post Properties, Inc. 500 19,220
Starwood Financial Trust 400 24,000
52,370
Retailing (0.5%)
Boots Company PLC ADR 239 8,157
Costco Companies Inc. 300 21,656
The Great Universal Stores PLC ADR 443 4,655
34,468
Transportation (1.5%)
Alexander & Baldwin, Inc. 2,000 46,500
Norfolk Southern Corp. 1,700 53,868
100,368
Utilities (0.7%)
BG PLC ADR 186 6,080
P G & E Corp. 1,400 44,100
50,180
Miscellaneous (1.0%)
Hercules, Inc. 300 8,212
Mannesmann AG ADR 100 11,530
Park Electrochemical Corp. 1,100 31,487
Transocean Offshore, Inc. 700 18,770
69,999
Total common stock (cost: $3,898,923) 4,113,965
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.
42
<PAGE>
AUL American Series Fund, Inc.
Schedule of investments
Moderate Investor Portfolio (continued)
December 31, 1998
Market
Description Shares Value
Money Market Mutual Funds (2.5%)
Federated Investors Prime Obligation 170,000 $170,000
Total mutual funds (cost: $170,000) 170,000
Mutual Funds (3.3%)
Federated High Yield Fund 25,614 228,227
Total mutual funds (cost: $250,000) 228,227
Interest Maturity Principal
Rate Date Amount
Long-Term Notes and Bonds (30.2%)
U.S. Government & Agency Obligations (13.6%)
U.S. Treasury Bonds 8.000% 11/15/21 $50,000 66,851
U.S. Treasury Notes 4.750% 11/15/08 50,000 50,390
U.S. Treasury Notes 5.750% 08/15/03 150,000 156,634
U.S. Treasury Notes 6.250% 02/28/02 75,000 78,400
U.S. Treasury Notes 6.250% 04/30/01 475,000 491,701
U.S. Treasury Notes 6.375% 03/31/01 50,000 51,843
U.S. Treasury Notes 6.750% 04/30/00 50,000 51,312
947,131
Mortgage Backed Securities (10.6%)
Federal Home Loan Mortgage
Corp. To Be Allocated 6.000% 01/14/29 150,000 148,171
GNMA Pool #482825 6.000% 11/15/28 151,329 150,067
GNMA Pool #454007 6.500% 04/15/28 221,178 223,481
GNMA Pool #474143 7.000% 04/15/28 206,585 211,478
733,197
Corporate Obligations (6.0%)
Anheuser-Busch Cos. Inc.
Debentures 6.750% 12/15/27 50,000 54,553
Ford Motor Credit 7.750% 11/15/02 50,000 53,855
General Motors Acceptance
Corporation Notes 5.850% 04/06/00 50,000 50,300
GTE Corp. Debentures 6.940% 04/15/28 50,000 54,302
Key Bank NA Notes 6.500% 10/15/27 50,000 52,663
Public Service New Mexico 7.100% 08/01/05 50,000 50,317
Sprint Capital Corp. 6.875% 11/15/28 50,000 51,965
Union Pacific Resources
Debentures 7.050% 05/15/18 50,000 46,580
414,535
Total notes and bonds (cost: $2,068,102) 2,094,863
The accompanying notes are an integral part of the financial statements.
43
<PAGE>
AUL American Series Fund, Inc.
Schedule of investments
Moderate Investor Portfolio (continued)
December 31, 1998
Interest Maturity Principal Market
Description Rate Date Amount Value
Cash and Cash Equivalents (4.6%)
BONY Cash Reserve $324,133
Total cash and cash equivalents (cost: $324,133) 324,133
Total Investments (cost: $6,711,158) $6,931,188
Investments are in United States enterprises unless otherwise noted.
The accompanying notes are an integral part of the financial statements.
44
<PAGE>
AUL American Series Fund, Inc.
Schedule of investments
Conservative Investor Portfolio
December 31, 1998
Market
Description Shares Value
Common Stock (41.0%)
Aerospace & Air Transport (0.4%)
Boeing Co. 500 $16,313
Precision Castparts Corp. 100 4,426
U.S. Airways Group, Inc. 100 5,200
25,939
Appliances & Household Durables (0.1%)
Electrolux AB Sponsored ADR 78 2,720
Foreningssparbanken AB ADR 112 2,901
5,621
Automotive & Auto Parts (2.0%)
Bandag, Inc. 900 35,943
Carlisle Companies, Inc. 500 25,813
Ford Motor Co. 700 41,081
Honda Motor Co. 36 2,404
TBC Corp.* 2,500 17,813
Volkswagen AG Sponsored ADR 249 4,014
127,068
Banks & Financial (5.0%)
American Express Co. 400 40,900
Associates First Capital Corp. 514 21,780
AXA UAP ADR 100 7,225
Banco Central Hispanoamericano ADR 327 3,925
Bank of Ireland ADR 66 5,940
Bank of Tokyo-Mitsubshi ADR 238 2,500
Bank One Corp 800 40,850
Barclays PLC ADR 33 2,970
Citigroup, Inc 900 44,550
Countrywide Credit Industries, Inc. 200 10,038
Dresdner Bank AG Sponsored ADR 90 3,756
Fannie Mae 200 14,800
Federal Home Loan Mortgage Association 100 6,445
Fifth Third Bancorp 200 14,263
Finova Group 100 5,393
ING Groep N.V. ADR 56 3,483
National Westminster Bank ADR 23 2,725
Ohio Casualty Corp. 700 28,788
San Paolo-IMI SPA Sponsored ADR 155 5,541
SLM Holdings Corp. 200 9,600
Societe Generale ADR 113 3,650
Telecom Italia SPA Sponsored ADR 94 8,180
UBS AG+ 7 2,150
Washington Mutual Inc. 800 30,550
320,002
Broadcasting & Publishing (1.9%)
Cablevision Systems Corp., Class A 100 5,020
CBS Corp. 400 13,100
Chris-Craft Industries, Inc.* 500 24,094
Clear Channel Communication 200 10,900
Gannett Co. 300 19,350
Gibson Greetings, Inc.* 700 8,313
Meredith Corp. 700 26,513
Moore Corp., Ltd. 1,000 11,000
WPP Group PLC ADR 75 4,632
122,922
Building & Forest Products (0.1%)
Cementos De Mexico ADR 3 13
CRH PLS Sponsored ADR 185 3,330
3,343
Business & Public Services (1.3%)
Aetna, Inc. 100 7,862
Allied Waste Industries, Inc. 300 7,088
Kelly Services, Inc. 1,000 31,750
Waste Management, Inc. 100 4,663
Interpublic Group of Companies, Inc. 300 23,925
Paychex Inc. 200 10,288
85,576
Chemicals (0.3%)
Henkel KGAA ADR 65 5,230
Montedison SPA ADR 203 2,677
Praxair Inc. 200 7,050
Rhone-Poulenc ADR 131 6,583
21,540
Electrical Equipment & Electronics (2.8%)
Baldor Electric Co. 1,400 28,350
Bayerische Moteren Werke (BMW) ADR 5 3,911
Canon Inc. ADR 118 2,537
(continued on next page)
+not a United States enterprise
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.
45
<PAGE>
AUL American Series Fund, Inc.
Schedule of investments
Conservative Investor Portfolio (continued)
December 31, 1998
Market
Description Shares Value
Common Stock (41.0%) (continued)
Electrical Equipment & Electronics (2.8%) (continued)
Dai Nippon Print Unsponsored ADR 24 $3,770
Fuji Photo Film ADR 81 2,966
General Electric Co. 700 71,443
Honeywell, Inc. 100 7,531
ITO-Yokado Co. Ltd. Sponsored ADR 71 4,900
Lucent Technologies, Inc. 100 11,000
Minebea Company LTD Sponsored ADR 193 4,354
Mitsubishi Corp. Sponsored ADR 324 3,670
Nippon Telegraph & Telephone Sponsored ADR 93 3,488
Nokia Corporation ADR-A 79 9,514
Pitney-Bowes, Inc. 100 6,606
Royal Philips Electronics NV. ADR 30 2,030
Sekisui House, Ltd. Unsponsored ADR 50 5,208
Sony Corp. ADR 44 3,157
Sterling Software Inc. 200 5,412
179,847
Energy Source (0.2%)
RWE AG ADR 98 5,341
Total S.A. ADR 90 4,477
9,818
Entertainment & Leisure (1.1%)
CPI Corp. 700 18,550
Fleetwood Enterprises, Inc. 1,100 38,225
McDonald's Corp. 100 7,662
Nintendo Company Ltd. 325 3,878
68,315
Food, Beverage, Tobacco (1.6%)
Coca-Cola Co. 600 40,125
Compass Group PLC ADR 259 2,975
Diageo PLC ADR 82 3,793
Groupe Danone ADR 116 6,525
Michael Foods, Inc. 800 24,000
Nestle SA ADR 61 6,655
Pepsico Inc. 200 8,188
Philip Morris Companies, Inc. 100 5,350
Tootsie Roll Industries, Inc. 100 3,912
101,523
Furniture & Apparel (2.3%)
Ethan Allen Interiors, Inc. 100 4,100
Hillenbrand Industries, Inc. 400 22,750
Kellwood Co. 800 20,000
La-Z-Boy Inc. 2,400 42,750
Liz Claiborne, Inc. 900 28,406
Reebok International* 1,500 22,312
Safeskin Corp. 300 7,238
Sealed Air Corp. 100 5,106
152,662
Health Care (3.5%)
Acuson Corp.* 1,100 16,362
Amgen Inc. 200 20,912
Bristol-Myers Squibb Co. 300 40,143
McKesson Corp. 200 15,812
Merck & Co. 500 73,843
Novartis AG ADR 67 6,585
Schering-Plough 500 27,625
Watson Pharmaceutical Inc. 100 6,288
Wellpoint Health Networks, Inc. 200 17,400
Zeneca Group PLC ADR 65 2,916
227,886
Household Products (0.8%)
Colgate-Palmolive Co. 100 9,288
Procter & Gamble Co. 400 36,525
Unilever N.V. ADR 52 4,312
Unilever PLC Sponsored ADR 62 2,790
52,915
Information Processing & Telecommunications (7.2%)
A T & T Corp. 300 22,575
Airtouch Communications, Inc. 100 7,212
Alcatel Alsthom CGE Sponsored ADR 184 4,497
Ameritech Corp. 400 25,350
Ascend Communications, Inc.* 350 23,012
BASF AF Unsponsored ADR 111 4,220
Bell Atlantic Corp. 100 5,300
BMC Software Inc. 200 8,912
Cisco Systems, Inc. 500 46,406
Compaq Computer Corp. 300 12,581
Dell Computer Corp. 400 29,275
France Telecom S.A. Sponsored ADR 104 8,210
Intel Corp. 400 47,425
International Business Machines Corp. 200 36,950
MCI Worldcom, Inc. 100 7,175
(continued on next page)
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.
46
<PAGE>
AUL American Series Fund, Inc.
Schedule of investments
Conservative Investor Portfolio (continued)
December 31, 1998
Market
Description Shares Value
Common Stock (41.0%) (continued)
Information Processing & Telecommunications (7.2%) (continued)
Microsoft Corp. 400 $55,475
Portugal Telecom S.A. ADR 45 2,010
Sun Microsystems, Inc.* 900 77,062
Systeme, Anwendungen, Produkte AG ADR 104 3,750
Tele-Danmark A/S ADR 65 4,411
Telefonica SA ADR 18 2,436
Tellabs Inc. 100 6,856
Telxon Corp. 1,000 13,875
TNT Post Group N.V. Sponsored ADR 48 1,560
Vodafone Group PLC ADR 38 6,122
462,657
Media (0.1%)
Omnicon Group Inc. 100 5,800
Royal PTT Nederland ADR 38 1,910
7,710
Merchandising (3.0%)
Albertson's, Inc. 200 12,737
Amazon Com, Inc. 100 32,125
Dayton-Hudson Corp. 300 16,275
Enesco Group, Inc. 100 2,325
Gymboree Corp.* 2,400 15,300
Kroger Co. 200 12,100
Lands' End, Inc.* 1,100 29,631
Longs Drug Stores, Inc. 1,200 45,000
Sears Roebuck & Company 100 4,250
Staples Incorp. 400 17,475
Whole Foods Market, Inc. 100 4,837
192,055
Metals & Mining (2.6%)
AK Steel Holding Corp. 1,800 42,300
Aluminum Company of America 600 44,737
Cleveland-Cliffs, Inc. 800 32,250
Oregon Steel Mills, Inc. 1,800 21,375
Phelps Dodge Corp. 500 25,438
166,100
Oil & Oil Services (1.0%)
BP Amoco PLC ADR 34 3,048
Royal Dutch Petroleum Co. 600 28,725
Tidewater, Inc. 300 6,956
Valero Energy Corp. 1,100 23,375
62,104
Personal Care (0.7%)
Johnson & Johnson 200 16,775
Warner-Lambert Co. 400 30,075
46,850
Real Estate (0.6%)
Boston Properties, Inc. 200 6,100
Post Properties, Inc. 300 11,531
Starwood Financial Trust 300 18,000
35,631
Retailing (0.3%)
Boots Company PLC ADR 120 4,095
Costco Companies Inc. 200 14,438
The Great Universal Stores PLC ADR 222 2,333
20,866
Transportation (1.0%)
Alexander & Baldwin, Inc. 1,300 30,225
Norfolk Southern Corp. 1,100 34,857
65,082
Utilities (0.5%)
BG PLC ADR 93 3,040
P G & E Corp. 900 28,350
31,390
Miscellaneous (0.6%)
Hercules, Inc. 200 5,475
Mannesmann AG ADR 50 5,764
Park Electrochemical Corp. 700 20,037
Transocean Offshore, Inc. 500 13,406
44,682
Total common stock (cost: $2,498,989) 2,640,104
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.
47
<PAGE>
AUL American Series Fund, Inc.
schedule of investments
CONSERVATIVE INVESTOR portfolio (continued)
December 31, 1998
Market
Description Shares Value
Money Market Mutual Funds (3.1%)
Federated Investors Prime Obligation 200,000 $200,000
Total mutual funds (cost: $200,000) 200,000
Mutual Funds (3.5%)
Federated High Yield Fund 25,614 228,227
Total mutual funds (cost: $250,000) 228,227
Interest Maturity Principal
Rate Date Amount
Long-Term Notes and Bonds (44.5%)
U.S. Government & Agency Obligations (19.2%)
U.S. Treasury Bonds 8.000% 11/15/21 $75,000 100,278
U.S. Treasury Notes 4.750% 11/15/08 75,000 75,585
U.S. Treasury Notes 6.250% 04/30/01 900,000 931,645
U.S. Treasury Notes 6.375% 03/31/01 75,000 77,765
U.S. Treasury Notes 6.750% 04/30/00 50,000 51,313
1,236,586
Mortgage Backed Securities (15.6%)
Federal Home Loan Mortgage
Corp. To Be Allocated 6.000% 01/14/29 200,000 197,562
GNMA Pool #482825 6.000% 11/15/28 201,772 200,090
GNMA Pool #456155 6.500% 04/15/28 302,098 305,243
GNMA Pool #474143 7.000% 04/15/28 298,400 305,468
1,008,363
Corporate Obligations (9.7%)
Anheuser-Busch Cos. Inc.
Debentures 6.750% 12/15/27 75,000 81,830
Ford Motor Credit 7.750% 11/15/02 75,000 80,781
General Motors Acceptance
Corporation Notes 5.850% 04/06/00 75,000 75,450
GTE Corp. Debentures 6.940% 04/15/28 75,000 81,453
Key Bank NA Notes 6.500% 10/15/27 75,000 78,994
Public Service New Mexico 7.100% 08/01/05 75,000 75,475
Sprint Capital Corp. 6.875% 11/15/28 75,000 77,950
Union Pacific Resources
Debentures 7.050% 05/15/18 75,000 69,870
621,803
Total notes and bonds (cost: $2,825,399) 2,866,752
The accompanying notes are an integral part of the financial statements.
48
<PAGE>
AUL American Series Fund, Inc.
Schedule of investments
Conservative Investor Portfolio (continued)
December 31, 1998
Interest Maturity Principal Market
Description Rate Date Amount Value
Short-Term Notes (4.7%)
American General Finance 01/07/99 $150,000 $149,935
John Deere Capital Corp. 01/07/99 150,000 149,935
Total short-term notes and bonds (cost: $299,759) 299,870
Cash and Cash Equivalents (3.2%)
BONY Cash Reserve 203,170
Total cash and cash equivalents (cost: $203,170) 203,170
Total Investments (cost: $6,277,317) $6,438,123
Investments are in United State enterprises unless otherwise noted.
The accompanying notes are an integral part of the financial statements.
49
<PAGE>
Notes to financial statements
1. Summary of Significant Accounting Policies
The AUL American Series Fund, Inc. (Fund) was incorporated under the laws of
Maryland on July 26, 1989, and is registered under the Investment Company Act of
1940, as amended, as an open-end, diversified management investment company. As
a "series" type of mutual fund, the Fund issues shares of common stock relating
to separate investment portfolios consisting of the Equity Portfolio, Money
Market Portfolio, Bond Portfolio, Managed Portfolio, Tactical Asset Allocation
Portfolio (Tactical Asset), Aggressive Investor Portfolio, Moderate Investor
Portfolio and Conservative Investor Portfolio, hereinafter, referred to as
Portfolios. The Aggressive Investor Portfolio, Moderate Investor Portfolio, and
Conservative Investor Portfolio are collectively referred to as the LifeStyle
Portfolios. Currently, the Fund offers shares only to separate accounts of
American United Life Insurance Company (AUL) to serve as an underlying
investment vehicle for variable annuity and variable life contracts. The Fund
commenced operations on April 10, 1990. The LifeStyle Portfolios commenced
operations on March 31, 1998.
Investments
Securities traded on a national or international securities exchange are valued
at the last trade price. Listed securities for which no sale was reported on the
valuation date are valued at the latest bid price. Short-term notes are valued
at amortized cost which approximates market value. Fixed income securities for
which representative market quotes are readily available are valued at the
latest bid price as quoted by one or more dealers who make a market in such
securities. U.S. Government obligations are valued at the latest bid price;
however, short term obligations maturing in 60 days or less, when purchased, are
valued at amortized cost which approximates market value. The Money Market
Portfolio securities are valued at amortized cost. The Fund's use of the
amortized cost method is conditioned on its compliance with certain provisions
of Rule 2a-7 of the Investment Company Act of 1940. AUL (the Investment Advisor)
reviews this method of valuation to ensure that the portfolio securities are
reflected at their fair value. Security transactions are recorded on the trade
date. Realized gains and losses are determined on specific identification basis.
Discounts and premiums on securities purchased are amortized over the life of
the respective securities. Income and Expense Dividend income is recorded on the
ex-dividend date, and interest income is accrued daily. Portfolio expenses are
recorded on an accrual basis.
Foreign Currency Transactions
The accounting records of the Portfolios are maintained in U.S. dollars. All
assets and liabilities initially expressed in foreign currencies are converted
into U.S. dollars at prevailing exchange rates. Purchases and sales of
investment securities, dividend and interest income, and certain expenses are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
Net realized foreign currency exchange gains or losses arise from sales of
foreign currencies and the difference between asset and liability amounts
initially stated in foreign currencies and the U.s. dollar value of the amounts
actually received or paid. net unrealized foreign currency translation gains or
losses arise from changes in the value of assets and liabilities, other than
portfolio securities, resulting from changes in the exchange rates.
Net realized and unrealized foreign currency exchange gains or losses occurring
during the holding period of portfolio securities are a component of realized
gain (loss) on investments and unrealized appreciation (depreciation) on
investments, respectively.
Forward Foreign Currency Exchange Contracts
The Tactical Asset Allocation and LifeStyle Portfolios may enter into forward
foreign currency exchange contracts for the purpose of settling specific
purchases or sales of securities denominated in a foreign currency or to hedge
the Portfolios' exposure to foreign currency exchange rate fluctuations. When
required, the Portfolios will segregate assets in an amount sufficient to cover
their obligations under the hedge contracts. The net U.S. dollar value of
foreign currency underlying all contractual commitments held by the Portfolios
and the resulting unrealized appreciation or depreciation are determined daily
using prevailing exchange rates. Forward contracts involve elements of market
risk in excess of the amount reflected in the Statements of Net Assets.
50
<PAGE>
Notes to financial statements (continued)
1.Summary of Significant Accounting Policies (continued)
The Portfolios bear the risk of an unfavorable change in the foreign currency
exchange rate underlying the forward contract. Additionally, losses may arise if
the counterparties do not perform under the contract terms.
There are no outstanding forward foreign currency exchange contracts.
Deferred Organization Costs
Expenses incurred by the Fund in connection with its organization have been
capitalized and are amortized over five years on a straight-line basis.
Taxes
The fund qualifies as a regulated investment company under section M of the
Internal Revenue Code. The Fund's policy is to distribute all income to
shareholders, therefore, no provision has been made for income taxes.
Dividend and Capital Gain Distributions
For the Money Market Portfolio, dividends from net investment income are
declared and paid daily. During 1998, for all other portfolios, dividends from
net investment income were declared and paid quarterly. Distributions from net
realized gains on investments are declared and paid at least annually for all
portfolios.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increases and decreases in net assets from operations
during the reporting period. Actual results could differ from those estimates.
2. Transactions with AUL
As of December 31, 1998, AUL's investment at value in the Fund is:
Equity $6,276,394
Tactical Asset Allocation 646,613
Aggressive Investor 5,184,500
Moderate Investor 5,159,000
Conservative Investor 5,149,000
$22,415,507
The Fund has an investment advisory agreement with AUL to act as its investment
advisor. AUL has a sub-advisory agreement with Dean Investment Associates (Dean)
under which Dean acts as the Sub-Advisor to the Tactical Asset Allocation
Portfolio. AUL also has a subadvisory agreement with Credit Suisse Asset
Management under which Credit Suisse Asset Management acts as the Sub-Advisor to
a portion of the assets of the LifeStyle Portfolios. AUL has agreed that its
fees may be reduced if the aggregate expenses of the Portfolios exceed 1% of the
average daily net assets during the year. As of December 31, 1998, AUL's
investment advisory fee was reduced for the Tactical Asset Allocation and
LifeStyle Portfolios. To the extent that AUL has reduced its advisory fees to
prevent a Portfolio's aggregate expenses from exceeding 1% of its average daily
net assets, it may increase its advisory fee during any of the next succeeding 5
years, provided that the aggregate expenses in any given year do not exceed 1%
of the average daily net assets in that year. The total amount of any increase
in AUL's fees will not exceed the amount of the prior fee reduction.
Under the Investment Advisory Agreement, the Investment Adviser is compensated
for its services by a monthly fee based on an annual percentage of the average
daily net assets of each Portfolio. For each Portfolio, the Fund pays the
Investment Adviser a fee at an annual rate of 50% of the Portfolio's average
daily net assets, except for the Tactical Asset Allocation Portfolio, the fee
for which is an annual rate of 80% of the Portfolio's average daily net assets.
For the LifeStyle Portfolios, the Fund pays the Investment Adviser a fee at an
annual rate of 70% of the average daily net assets of each Portfolio.
AUL may terminate the policy of reducing its fee and/or assuming Fund expenses
upon 30 days prior written notice to the Fund, and in any event, the policy will
automatically terminate if the Investment Advisory Agreement is terminated. The
investment advisory fee incurred during the year ended December 31, 1998, was
$1,464,023.
51
<PAGE>
Notes to financial statements (continued)
2. Transactions with AUL (continued)
As a result of certain Portfolio expenses exceeding 1% of the average daily net
assets, AUL has reduced its investment advisory fee by:
1998 Previous
Years
Tactical Asset Allocation $623 $11,328
Aggressive Investor 20,889 0
Moderate Investor 21,689 0
Conservative Investor 21,330 0
$64,531 $11,328
Certain directors of the Fund are officers of AUL.
3. Agreements with Banks
The Fund has agreements with The Bank of New York (Bank) whereby the Bank serves
as custodian of the securities and other assets of the Fund, and as the fund
accountant.
4. Investment Transactions
Purchases and sales of investment securities (excluding short-term securities
and money market mutual funds) during the year ended December 31, 1998, were:
Portfolio
Equity Money Bond Managed Tactical
Market Asset
Common Stock:
Purchases $33,082,903 $ _ $ _ $15,563,753 $ 2,156,742
Proceeds
from sales 20,960,174 _ _ 9,443,899 994,732
Corporate Bonds:
Purchases _ _ 12,815,035 8,915,487 1,001,677
Proceeds
from sales _ _ 13,232,255 8,675,503 399,145
Government Bonds:
Purchases _ _ 57,160,884 29,286,936 1,276,661
Proceeds
from sales _ _ 41,968,620 24,814,707 972,990
LifeStyle Portfolios
Aggressive ModerateConservative
Investor Investor Investor
Common Stock:
Purchases $ 6,687,980 $5,097,399 $3,768,638
Proceeds
from sales 1,371,374 1,004,865 1,100,202
Corporate Bonds:
Purchases 326,389 652,777 979,166
Proceeds
from sales 125,595 251,191 376,786
Government Bonds:
Purchases 1,865,404 3,706,108 5,146,363
Proceeds
from sales 1,188,385 2,047,799 2,928,183
52
<PAGE>
Notes to financial statements (continued)
5. Authorized Capital Shares
The Fund has 325,000,000 authorized shares of $.001 par value capital stock,
which includes 20,000,000 unallocated shares. The remaining shares are allocated
to each of the Fund's portfolios as follows:
Equity Portfolio 20,000,000
Money Market Portfolio 125,000,000
Bond Portfolio 20,000,000
Managed Portfolio 40,000,000
Tactical Asset Allocation Portfolio 25,000,000
Aggressive Investor Portfolio 25,000,000
Moderate Investor Portfolio 25,000,000
Conservative Investor Portfolio 25,000,000
305,000,000
6. Net Assets
Net Assets at December 31, 1998, are:
Portfolio
Equity Money Bond Managed Tactical
Market Asset
Proceeds from
shares sold and
reinvested
distributions $118,387,094$404,456,949$112,493,094$101,377,777 $7,053,280
Cost of shares
redeemed (45,330,407)(322,401,696)(63,492,195)(39,647,076)(1,084,352)
Undistributed net
investment
income _ _ 12,232 30,005 285
Undistributed net
realized gain 2,340,346 _ 132,761 1,069,193 121,911
Unrealized
appreciation 20,088,520 _ 943,819 10,282,061 377,765
$95,485,553 $82,055,253 $50,089,711 $73,111,960 $6,468,889
LifeStyle Portfolios
Aggressive ModerateConservative
Investor Investor Investor
Proceeds from
shares sold and
reinvested
distributions $6,439,288 $6,629,134 $6,119,513
Cost of shares
redeemed (112,674) (97,249) (55,939)
Undistributed net
investment
income 709 811 717
Undistributed net
realized gain 56,466 50,961 56,144
Unrealized
appreciation 296,966 220,030 160,806
$6,680,755 $6,803,687 $6,281,241
53
<PAGE>
Notes to financial statements (continued)
7. Unrealized Appreciation (Depreciation)
Unrealized Appreciation (Depreciation) for the book and tax purposes at December
31, 1998, is:
Portfolio
Equity Money Bond Managed Tactical
Market Asset
Appreciation $24,799,152 $ _ $1,124,099 $12,553,345 $890,233
Depreciation (4,710,632) _ (180,280) (2,271,284) (512,468)
$20,088,520 $ _ $943,819 $10,282,061 $377,765
LifeStyle Portfolios
Aggressive ModerateConservative
Investor Investor Investor
Appreciation $713,616 $543,797 $370,434
Depreciation (416,650) (323,767) (209,628)
$296,966 $220,030 $160,806
8. Net Shareholders
Shares outstanding at December 31, 1998, are:
Portfolio
Equity Money Bond Managed Tactical
Market Asset
AUL 309,609 _ _ _ 50,001
Dean Investment
Associates _ _ _ _ 50,000
AUL American
Unit Trust 2,028,696 10,853,271 1,195,607 1,869,035 3,256
AUL Group
Retirement
Annuity
Separate
Account II 1,772,862 61,761,229 2,837,424 2,297,069 14,863
AUL American
Individual
Unit Trust 594,248 9,309,755 588,615 664,906 382,092
AUL American
Individual
Variable Life
Unit Trust 4,716 130,998 3,303 1,930 _
4,710,131 82,055,253 4,624,949 4,832,940 500,212
LifeStyle Portfolios
Aggressive ModerateConservative
Investor Investor Investor
AUL 500,000 500,000 500,000
AUL American
Unit Trust 13,895 18,541 9,824
AUl Group
Retirement
Annuity
Separate
Account I 61,833 50,825 76,467
AUL Group
Retirement
Annuity
Separate
Account II 68,552 90,026 23,667
644,280 659,392 609,958
54
<PAGE>
Financial Highlights
The per share amounts are based on shares outstanding throughout the year.
Equity Portfolio
For years ended
12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
Per Share Data:
Investment
Income $0.48 $0.42 $0.39 $0.37 $0.33
Expense 0.13 0.13 0.11 0.09 0.09
Net investment
income 0.35 0.29 0.28 0.28 0.24
Net gain (loss)
on investments 1.23 4.64 2.44 2.12 0.26
Shareholder
distributions:
Net investment
income (0.35) (0.30) (0.28) (0.27) (0.24)
Realized gain (1.99) (0.25) _ (0.19) (0.67)
Net increase
(decrease) (0.76) 4.38 2.44 1.94 (0.41)
Net asset value
at beginning
of period 21.03 16.65 14.21 12.27 12.68
Net asset value
at end of
period $20.27 $21.03 $16.65 $14.21 $12.27
Ratio to average net assets:
Expense 0.62% 0.66% 0.70% 0.70% 0.73%
Net investment
income 1.61% 1.52% 1.81% 2.08% 1.85%
Total return 7.10% 29.59% 19.17% 19.45% 2.64%
Portfolio
turnover rate 23% 9% 11% 10% 20%
Shares
outstanding 4,710,131 3,816,406 3,042,989 2,483,962 1,675,654
The accompanying notes are an integral part of the financial statements.
55
<PAGE>
Financial Highlights (continued)
The per share amounts are based on shares outstanding throughout the year.
Money Market Portfolio
For years ended
12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
Per Share Data:
Investment
Income $0.06 $0.06 $0.06 $0.06 $0.05
Expense 0.01 0.01 0.01 0.01 0.01
Net investment
income 0.05 0.05 0.05 0.05 0.04
Net gain on
investments _ _ _ _ _
Shareholder
distributions:
Net investment
income (0.05) (0.05) (0.05) (0.05) (0.04)
Realized gain _ _ _ _ _
Net increase
(decrease) _ _ _ _ _
Net asset value
at beginning
of period 1.00 1.00 1.00 1.00 1.00
Net asset value
at end of
period $1.00 $1.00 $1.00 $1.00 $1.00
Ratio to average net assets:
Expense 0.61% 0.66% 0.70% 0.73% 0.75%
Net investment
income 4.82% 4.83% 4.64% 5.13% 3.71%
Total return 4.86% 4.85% 4.63% 5.09% 3.38%
Portfolio
turnover rate _ _ _ _ _
Shares
outstanding 82,055,253 55,756,942 40,227,475 24,290,006 15,495,643
The accompanying notes are an integral part of the financial statements.
56
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
The per share amounts are based on shares outstanding throughout the year.
Bond Portfolio
For years ended
12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
Per Share Data:
Investment
Income $0.67 $0.67 $0.70 $0.75 $0.72
Expense 0.07 0.07 0.08 0.08 0.08
Net investment
income 0.60 0.60 0.62 0.67 0.64
Net gain (loss)
on investments 0.36 0.25 (0.39) 1.07 (1.01)
Shareholder
distributions:
Net investment
income (0.60) (0.59) (0.63) (0.66) (0.64)
Realized gain (0.21) (0.23) (0.01) (0.01) _
Net increase
(decrease) 0.15 0.03 (0.41) 1.07 (1.01)
Net asset value
at beginning
of period 10.68 10.65 11.06 9.99 11.00
Net asset value
at end of
period $10.83 $10.68 $10.65 $11.06 $9.99
Ratio to average net assets:
Expense 0.62% 0.67% 0.71% 0.70% 0.73%
Net investment
income 5.48% 5.53% 5.85% 6.28% 6.19%
Total return 8.80% 7.85% 2.23% 17.79% (3.56%)
Portfolio turnover
rate 132% 107% 62% 55% 50%
Shares
outstanding 4,624,949 3,252,044 2,648,089 2,298,581 2,046,361
The accompanying notes are an integral part of the financial statements.
57
<PAGE>
Financial Highlights (continued)
The per share amounts are based on shares outstanding throughout the year.
Managed Portfolio
For years ended
12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
Per Share Data:
Investment
Income $0.61 $0.58 $0.53 $0.54 $0.50
Expense 0.10 0.10 0.09 0.08 0.08
Net investment
income 0.51 0.48 0.44 0.46 0.42
Net gain (loss)
on investments 0.79 2.34 1.01 1.62 (0.45)
Shareholder
distributions:
Net investment
income (0.51) (0.48) (0.44) (0.46) (0.42)
Realized gain (0.99) (0.41) (0.03) (0.20) (0.30)
Net increase
(decrease) (0.20) 1.93 0.98 1.42 (0.75)
Net asset value
at beginning
of period 15.33 13.40 12.42 11.00 11.75
Net asset value
at end of
period $15.13 $15.33 $13.40 $12.42 $11.00
Ratio to average net assets:
Expense 0.62% 0.67% 0.70% 0.70% 0.73%
Net investment
income 3.27% 3.27% 3.43% 3.86% 3.63%
Total return 8.30% 20.95% 11.79% 19.13% (0.92%)
Portfolio
turnover rate 63% 27% 34% 35% 34%
Shares
outstanding 4,832,940 3,945,223 3,215,189 2,484,037 2,233,298
The accompanying notes are an integral part of the financial statements.
58
<PAGE>
Financial Highlights (continued)
The per share amounts are based on shares outstanding throughout the year.
Tactical Asset Allocation Portfolio
7/31/95
For years ended (commencement)
to
12/31/98 12/31/97 12/31/96 12/31/95
Per Share Data:
Investment
Income $0.47 $0.41 $0.39 $0.20
Expense 0.13 0.13 0.11 0.04
Net investment
income 0.34 0.28 0.28 0.16
Net gain on
investments 0.58 1.75 1.38 0.49
Shareholder
distributions:
Net investment
income (0.34) (0.28) (0.28) (0.16)
Realized gain (0.09) (0.96) (0.17) (0.05)
Net increase
(decrease) 0.49 0.79 1.21 0.44
Net asset value
at beginning
of period 12.44 11.65 10.44 10.00
Net asset value
at end of
period $12.93 $12.44 $11.65 $10.44
Ratio to average net assets:
Expense 1.00% 1.00% 1.00% 1.00%
Expense before
expense
reductions 1.01% 1.30% 1.06% 1.00%
Net investment
income 2.64% 2.24% 2.62% 3.70%
Total return** 7.20% 15.48% 15.67% 6.49%
Portfolio
turnover rate 41% 52% 25% 4%
Shares
outstanding 500,212 357,897 184,046 109,147
**Total returns for periods less than one year are not annualized. Total return
assumes reinvestment of dividends and capital gain distributions, if any.
The accompanying notes are an integral part of the financial statements.
59
<PAGE>
Financial Highlights (continued)
The per share amounts are based on shares outstanding throughout the year.
Aggressive ModerateConservative
Investor Investor Investor
3/31/98 3/31/98 3/31/98
(commencement)(commencement)(commencement)
12/31/98 12/31/98 12/31/98
Per Share Data:
Investment
Income $0.18 $0.25 $0.31
Expense 0.09 0.09 0.09
Net investment
income 0.09 0.16 0.22
Net gain on
investments 0.41 0.36 0.37
Shareholder
distributions:
Net investment
income (0.09) (0.16) (0.22)
Realized gain (0.04) (0.04) (0.07)
Net increase
(decrease) 0.37 0.32 0.30
Net asset value
at beginning
of period 10.00 10.00 10.00
Net asset value
at end of
period $10.37 $10.32 $10.30
Ratio to average net assets:
Expense 0.95% 0.94% 0.95%
Expense before
expense
reductions 1.34% 1.34% 1.35%
Net investment
income 0.94% 1.62% 2.21%
Total return** 5.0% 5.1% 5.8%
Portfolio
turnover rate 50% 60% 82%
Shares
outstanding 644,280 659,392 609,958
**Total returns for periods less than one year are not annualized. Total return
assumes reinvestment of dividends and capital gain distributions, if any.
The accompanying notes are an integral part of the financial statements.
60
<PAGE>
American United Life Insurance Company
PO Box 368
Indianapolis, IN 46206-0368
www.aul.com
P-12757A (1/99)
